A new article by Kelvin Low addresses the titular debate:
Of all the duties a law student encounters in the study of law, few will prove as bewildering as fiduciary duties. Whilst their core is supposed to be “relatively clear”,1 the wider content of fiduciary obligations continue to elude us. Whilst we know that fiduciaries are expected to avoid unauthorised profits and conflicts of interests, whether any fiduciary duties exist beyond this core remains controversial. Beyond a few established categories of fiduciary relationships such as trustee and beneficiary, 2 director and company,3 agent and principal,4 partners, 5 and solicitor and client,6 it remains a mystery as to when fiduciary duties arise. This is problematic because “[i]t is not because a person is a ‘fiduciary’ … that a rule applies to him. It is because a particular rule applies to him that he is a fiduciary … for its purposes.” 7 Whilst the latter problem of who is a fiduciary is a very real one, the former problem surrounding its content is by far the more acute of the two. Until we know what fiduciary duties the law subjects fiduciaries to, it should not be surprising that the courts will remain circumspect in determining who is a fiduciary outside the established categories.
The most contentious dispute surrounding the content of the fiduciary obligation in recent years lies in its proscriptive or prescriptive nature. Despite case law suggesting that the fiduciary obligation may be prescriptive,8 some courts9 and commentators10 fiercely defend the exclusively proscriptive nature of fiduciary duties. This article proposes that fiduciary duties operate at two levels. The most commonly encountered fiduciary duties are the proscriptive duties preventing conflicts and unauthorised profits. These duties are prophylactic in nature, operate at a subsidiary level and are sometimes said to be better characterised as disabilities.11 At the primary level, the search for peculiarly fiduciary duties is an exercise in futility as fiduciary accountability is invariably and inextricably associated with duties of a nominate or even particular character that apply differently to various categories of fiduciaries. Rather, if at all desirable, it is perhaps more sensible to distinguish fiduciary breaches from non-fiduciary breaches of these complex duties. It is fiduciary accountability at the primary level that the subsidiary proscriptive duties seek to support rather than any non-fiduciary form of accountability. In this sense, at the primary level, fiduciary accountability can be prescriptive. However, in its prescriptive form, as it is inextricably embedded within a complex and compound nominate duty, it is pointless to search for an independent prescriptive fiduciary duty.
Low, Kelvin, Fiduciary Duties: The Case for Prescription (2016). Trust Law International, Vol 30, (3-25), 2016; Singapore Management University School of Law ResearchPaper No. 6/2017. Available at SSRN: https://ssrn.com/abstract=2928472
I addressed that debate in my article, The Parable of the Talents (August 15, 2016). UCLA School of Law, Law-Econ Research Paper No. 16-10. Available at SSRN: https://ssrn.com/abstract=2787452, in which I come down on the prescriptive side.