1. Introduction
This unanimous decision clarifies the relationship between fiduciary loyalty, disclosure and informed consent. The Court of Appeal held that a fiduciary does not, merely by being a fiduciary, owe a separate positive duty to disclose all information relevant to the principal’s affairs. Disclosure is instead the usual means by which the fiduciary obtains informed consent and thereby avoids liability under the no-conflict and no-profit rules.
The appellants were a family investment company, G.I. Globinvestment Limited (“GIG”), and an experienced investor referred to here as MDM. The respondent, XY ERS UK Limited (“XY”), provided investment consultancy services. XY recommended investments in compartments of the Skew Base Fund, a Luxembourg reserved alternative investment fund connected with XY’s controlling owner and with companies under his control.
Following severe market falls during the Covid-19 pandemic, the appellants suffered substantial losses in the Fund’s MIN and HFPO compartments. They alleged, among other things, that XY had breached fiduciary duties by failing adequately to disclose its owner’s financial interests and the role and remuneration of Twinkle Capital SA, a related investment adviser.
Jacobs J rejected all claims at first instance. The appeal was confined to fiduciary duty and associated remedial grounds.
2. Factual and Legal Background
2.1 The investments
The appellants invested directly and through the Skew Base Fund in structured products, including Market Insurance Notes and “worst of” reverse barrier convertibles. These products offered coupons and repayment of principal unless specified market barriers were breached. Once a barrier or knock-in event occurred, investors could suffer substantial, sometimes geared, capital losses.
The investments were profitable during 2017 and 2018. In March 2020, however, extreme market volatility caused the appellants to lose all capital invested in the HFPO compartment and substantial proportions of their investments in the MIN compartments.
2.2 The alleged conflict
The Skew Base Fund’s general partner, SB GP, was owned by Twinkle, which was itself owned by the controlling figure behind the XY group. SB GP received management and performance fees. Twinkle also provided investment-advisory and technological services and received a substantial part of the available fee income.
The appellants knew that XY’s owner was the entrepreneur behind the Fund and owned its general partner. They were not expressly told, however, of Twinkle’s identity as investment adviser, its ownership, its precise operational role, or the exact division of fees among the connected entities.
5. Analysis
5.1 The core fiduciary principle
The Court began with Bristol and West Building Society v Mothew [1998] Ch 1. Millett LJ’s classic formulation identifies loyalty as the defining fiduciary obligation: a fiduciary must act in good faith, must not make an unauthorised profit, must not enter a position of conflicting duty and interest, and must not act for personal or third-party benefit without informed consent.
That formulation had recently been approved in Recovery Partners GP Ltd v Rukhadze [2025] UKSC 10, Hopcraft v Close Brothers Ltd [2025] UKSC 33 and Mitchell v Al Jaber [2025] UKSC 43. In particular, Hopcraft v Close Brothers Ltd confirms that the no-conflict and no-profit rules are subject to the principal’s informed consent.
5.2 Contract may define the scope of the fiduciary relationship
The Court recognised that fiduciary obligations must be shaped by the relationship in which they arise. New Zealand Netherlands Society 'Oranje' Inc v Kuys [1973] 1 WLR 1126 establishes that their precise scope may be moulded according to the relationship.
Likewise, Hospital Products Ltd. v. United States Surgical Corporation (1984) 156 CLR 41, as applied in Kelly v Cooper [1993] AC 205 and endorsed in Hopcraft v Close Brothers Ltd, provides that fiduciary duties arising within a contractual relationship must conform to, rather than rewrite, the contract. Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 similarly recognises that contractual and fiduciary duties may coexist, but the contract can modify the nature and extent of the fiduciary obligation.
This principle did not decide the appeal, however. The first-instance judge had not materially narrowed XY’s duties by reference to its contracts. The real question was whether fiduciary status itself imposed a positive duty of disclosure.
5.3 No freestanding fiduciary duty of disclosure
The appellants relied heavily on Daly v Sydney Stock Exchange (1986) 160 CLR 371, where an investment adviser was described as having a duty to disclose information revealing that a proposed loan to the adviser was highly disadvantageous to the client.
The Court held that subsequent Australian authority had undermined the suggested interpretation of Daly v Sydney Stock Exchange:
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Breen v Williams [1996] HCA 57 held that Australian fiduciary duties are generally proscriptive: they prevent unauthorised profit and conflicts rather than imposing broad positive duties to advance another’s interests.
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Maguire v Makaronis [1997] HCA 23 explained that there is no duty “as such” to obtain informed consent. Consent instead negatives what would otherwise be a breach.
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Aequitas v AEFC [2001] NSWSC 14 treated much of the disclosure language in Daly v Sydney Stock Exchange as arising from the contractual adviser-client relationship rather than fiduciary law.
The English authority Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244 did not establish a general disclosure duty either. Although a director had to reveal his own misconduct, Arden LJ expressly rejected a separate duty to disclose misconduct or all information relevant to the company. The obligation arose from the director’s duty to act in what he honestly considered to be the company’s best interests. The Court also noted the discussion of that decision in GHLM Trading Ltd v Maroo [2012] EWHC 61 (Ch).
Decisions such as Moody v Cox [1917] 2 Ch 71, Rhodes v Macalister (1924) 29 Com Cas 19, Hilton v Barker Booth and Eastwood [2005] UKHL 8 and Recovery Partners GP Ltd v Rukhadze sometimes describe a fiduciary as having a “duty” to disclose or seek consent. The Court treated that terminology as shorthand for the mechanism by which the fiduciary avoids liability for an otherwise unauthorised conflict or profit.
This conclusion was reinforced by Hopcraft v Close Brothers Ltd, which states that disclosure is required to negative what would otherwise be a breach, and by Expert Tooling and Automation Ltd v Engie Power Ltd [2025] EWCA Civ 292, which describes the conflict and profit rules as prohibiting only conflicts and profits that have not been consented to.
Accordingly, non-disclosure is not itself an independent fiduciary wrong. It becomes legally significant because, without adequate knowledge of material facts, the principal cannot give informed consent.
5.4 The limits of the ruling
The Court did not hold that every fiduciary duty is necessarily proscriptive. Nor did it decide that advisers can remain silent. Positive disclosure obligations may arise from contract, tort, regulation, statute or a distinct duty such as a director’s duty to act in the company’s interests. The narrower holding is that fiduciary status alone does not create a freestanding obligation to disclose all relevant information.
5.5 What counts as informed consent?
Under Hopcraft v Close Brothers Ltd, the fiduciary or commission recipient bears the burden of proving fully informed consent. All material facts must be disclosed or known; merely placing the principal on inquiry is insufficient.
Materiality nevertheless depends on context. The Court contrasted two authorities:
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In Liquidators of the Imperial Mercantile Credit Association v Coleman (1873) LR 6 HL 189, disclosure that a director was receiving a commission was inadequate because the payment was unusually large. The other directors were not given enough information to understand the nature and extent of his interest.
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In Anangel Atlas Cia Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd [1990] 1 Lloyd’s Rep 167, it was unnecessary to disclose exact payments to a naval architect where the shipowners knew of the payment arrangements, the amounts were reasonable, and the undisclosed details did not affect the transaction’s price.
The governing question is therefore whether the principal had sufficient information to understand the nature and extent of the fiduciary’s interest—not whether every possible detail was supplied.
5.6 Sophistication and actual understanding
Relying on Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, the Court held that the recipient’s sophistication and intelligence may affect the sufficiency of disclosure. A financially experienced recipient may immediately understand implications that would require explanation to an inexperienced investor.
The distinction is important. Sophistication cannot reduce the standard to constructive notice or merely put the principal on inquiry. It is relevant only where the evidence shows that the principal actually drew the inference and understood the material fact.
5.7 Application to the appellants
The trial judge had found that the appellants knew:
- that XY’s owner was the entrepreneur behind the Skew Base Fund;
- that he owned the Fund’s general partner;
- that the general partner had an important management and supervisory role;
- that substantial fees were paid from the Fund to the general partner;
- that the general partner would pay service providers, including any investment adviser, from those fees; and
- that XY’s owner had a significant financial interest in the Fund’s success.
The appellants were sophisticated and experienced investors. They understood alternative investment funds and the importance of a general partner. Indeed, the close involvement of XY’s owner was an attraction rather than an undiscovered risk.
They did not know the precise allocation of fees, Twinkle’s ownership, or the exact distinction between the roles of XY and Twinkle. Those details were not material in the circumstances. The structure was conventional for a Luxembourg fund, Twinkle was not the formal portfolio manager, and the identity of the particular connected vehicle did not alter the nature or scale of the conflict already understood.
The case therefore resembled Anangel Atlas Cia Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd rather than Liquidators of the Imperial Mercantile Credit Association v Coleman. The appellants had enough information to form an accurate understanding of the connected parties’ interest.
5.8 Appellate restraint
The Court also emphasised the limited grounds for disturbing factual findings and evaluative judgments. Under Henderson v Foxworth Investments Ltd [2014] UKSC 41, appellate intervention requires an identifiable error, such as a material legal mistake, a finding unsupported by evidence, a misunderstanding of evidence, or a conclusion no reasonable judge could reach.
Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 explains that the trial judge considers the whole “sea of evidence”, while the appellate court ordinarily engages in “island hopping”. Similar restraint in relation to evaluative conclusions appears in R (R) v Chief Constable of Greater Manchester [2018] UKSC 47 and In re Sprintroom Ltd [2019] EWCA Civ 932.
No error meeting that threshold was established. The Court considered the first-instance conclusion not merely permissible but correct.