Account of Profits

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profits → flipside of loss

 not dealing with a loss here
 but looking at money sb made as fiduciary through breaching process

case law started with trust and migrated to other areas, in part because underlying breach is
usually breach of duty of loyalty, no conflict of profit
 fiduciaries, non Ts can also owe these duties

**in the writing assignments this term, breach isn’t controversial, what is
controversial is the consequences
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What counts as breach of fiduciary duty

What is a Breach of Fiduciary Duty (or Loyalty)

(i) Conflict of Interest, (ii) Secret/Unauthorized Profits

Bristol v Mothew (1998) Breach of Duty Care  Breach of Fiduciary Trust

Failed to Disclose Second Charge Incompetent
Best Not a Breach
Requires Causality for Duty of Care (as Solicitor)

The issue now is whether Wario breached his fiduciary duty to Mario.
According to Bristol v Mothew (1998), a fiduciary owes fiduciary duty
and also the duty of care to the beneficiary, breaching one does not
necessarily mean breaching the other. Although Wario acted with the best
of the motives, did his best and canvassed the entire publishing industry
with no avail, this only points to his not breaching his duty of care, and he
still may have broken his fiduciary duties

Boardman v Phipps (1967) – A fiduciary, without the informed consent of his principal,
must not make profits by using knowledge or opportunities derived from his position of
trust and confidence
Schemed to Gain Majority Ownership for Trust
Trust Profited, Kept Some Money
Disgorge Private Profits, If Any Conflict
(Equitable Allowance for Skill/Energy)

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Wario may have breached the No Conflict Duty when he pitched his idea
for a rebooted Captain Planet franchise. It is well established in e.g.
Phipps v Boardman (1967), potential conflict is enough for breach.
Wario’s own project is too similar to Mario’s project: both involved
rebooting old comic book series.

Kao, Lee & Yip – partnership/employees contemplating leaving… what can constitute
breach
 Facts: Kao Lee & Yip founders + partners of law firm.
 Koo joined KLY as partner, before was employed as an in-house counsel at Bank of
China. When he joined KLY, it was agreed between him and Kao and Yip that he
would continue to work as in-house counsel to BOC
 BOC sought advice from Koo as to how best to enlarge the in-house legal
department of the BOC Regional Office so as to better serve the Bank of China
Group.
 Koo’s advice = set up law centre
 It is clear that Koo intended to head the Law Centre himself and was in fact asked to
do so.
- In giving notice to quit the partnership, Koo did not tell either Kao or Yip that
he had been asked to set up the Law Centre on behalf of BOC. Nor did he tell
them of the advice he had given to BOC. All he did was to tell Yip that he was
returning to work in BOC as in-house counsel.
 BOC changed its mind about setting up the Law Centre and abandoned the idea. A
law firm set up by Koo. Koo recruited staff of KLY to join his own law firm
 Here clear that there is fiduciary relationship between Koo and other partners of
KLY, partnership is one of the recognized category.

 What can constitute breach of Non conflict duty: where the fiduciary obtains
information from a client or customer that is relevant to the interests of the
beneficiary.
- Here, the fiduciary is under a duty to pass this on to the beneficiary and not
keep it to himself or for his own personal interests even where such
information may have been received by the fiduciary in his private capacity:
- Equally, for instance, where the client or customer approaches the fiduciary
encouraging him to terminate his relationship with the beneficiary so that the
client can then pass on his business to the fiduciary after he leaves, the
fiduciary will be under the same duty to inform the beneficiary of this
 partners or employees who are contemplating leaving their present partnership or
employment or who have served a notice of termination
- Certainly, a fiduciary will not be able to use the time during which he was
meant to be working for the beneficiary to be working for his own and
anyone’s else’s interests. In other words, he must not use ‘company’ time
other than for ‘company’ purposes

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 - generally, a fiduciary is entitled to use his spare time for whatever activities
he chooses to indulge in, as long as these are not inconsistent with the
fiduciary duties he owes to the beneficiary or in direct competition with the
beneficiary’s interests
- The making of arrangements in his spare time during a person’s employment
to compete with the employer after termination of employment does not
necessarily always involve a breach of duty: it must also be recognised that a
fiduciary (usually an employee or a partner in a firm) should be able to make
preparations for and look to his future as long as this is kept within
reasonable limits
- it will not be a breach of duty for the fiduciary merely to evince an intention
to leave and set up in competition with the beneficiary
- example of where the employee (there, the managing director) went over
the boundary of what was permitted (in that case, the fiduciary had
approached an important client and also tried to induce another key
employee to join his new business).

 Non-profit rule: A fiduciary’s liability for taking advantage of a business

opportunity
 the business opportunity must be tangible (or mature) at the time the fiduciary was
in the position of trust and confidence. If at this time the business opportunity was
nebulous and uncertain, it would be unfair to deprive the fiduciary of the benefit of
the matured opportunity once this occurred
 Whether or not a business opportunity is sufficiently mature will be often a
question of degree for the Court to decide. Relevant factors will include, for
example, whether the business opportunity that eventually accrued to the fiduciary
was one that resulted from a prolonged fresh initiative on his part or the stage
reached in any discussions regarding the business.
 Timing may also feature as a factor. For example, where the relevant business
opportunity was obtained a long time after the fiduciary had resigned or left the
relevant fiduciary relationship, this may be relevant to show that the business
opportunity was not sufficiently mature. In Kishimoto, as noted above, the contract
did not appear on the horizon until a year after the senior manager left his
employment. Linked to this factor would be the reasons for the fiduciary leaving his
position as well. All these matters are for the judge trying the case to factor into the
scales.

 In the present case, clear breach of no conflict rule + no profit rule by Koo by
setting up law centre. As regards BOC, the idea of the Law Centre was to provide
legal services to the BOC Group and to clients of BOC. These legal services could
without doubt have been provided by KLY, whether or not in collaboration with BOC.
 In the establishment of the Law Centre, there was therefore to exist another entity,
akin to a rival firm of solicitors, that would be providing legal services. It was clearly
Koo’s duty to have informed KLY about this development and promote KLY’s
interests. Instead, not only did Koo keep silent (as far as KLY was concerned) about
this development, he actually advised on the setting up of this rival entity.

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  As between KLY and Koo, Koo was clearly preferring his own interests in advising and
helping establish the Law Centre. It was expressly envisaged that he would head the
Law Centre and, it will be recalled, that Koo’s advice was that the solicitor or
solicitors employed in the Law Centre could charge their clients fees for the legal
services rendered by them and these fees could then be set off against their salaries.
 Koo’s liability for diverting BOC work to his own firm. when BOC stated to Koo that
it wanted to use the services of a “friendly outside law firm”, this could be termed a
business opportunity.
 It was, moreover, an opportunity that had Koo complied with those fiduciary duties
identified above as the NonConflict Duty and the Not To Profit Duty, it should at least
have been communicated to the other partners of KLY. I would go so far as to say
that, pursuant to those duties, he was obliged to persuade BOC to consider
appointing KLY as that “friendly outside law firm”. Afterall, there was no evidence to
suggest that KLY could not handle such work. There was also no evidence that BOC
was somehow dissatisfied with the work that KLY had been doing for it. And even if
there was any such dissatisfaction, Koo still had to inform KLY about it so that they
could deal with any problems. By not doing what he should have, Koo was in breach
of his fiduciary duties.
 In addition, what Koo could not do was to seize this opportunity and take advantage
of it to benefit himself. This Koo did and this represents a further breach of the
duties I have referred to
 this business opportunity was sufficiently tangible to attract liability, or to put it in
other way, it was “a maturing business opportunity”. No great planning or
arrangements would be needed to implement the opportunity: as far as BOC was
concerned, all that was required was a “friendly outside law firm” to be in existence
to provide legal services to BOC and the BOC Group.
 What actually took a little time (but not much) was the setting up of K & P, including
the recruitment of staff, finding premises, securing credit facilities etc. If KLY had
been chosen as the law firm to provide legal services to BOC, this could have been
done almost instantaneously
___________________________________________________________________________

Account of profits
conceptual step
1. what thing is in the basket, potential source funds for B
2. quantification

will be great if clear there’s breach, causation, limitation, quantification

but in real cases, one of these will always be the focus crucial
 in Murad focus on limitation
 less controversy about amount involved
 bad behavior had causative effect

these cases here is important because you can win on breach, causation, but lose
on quantification

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 quantification becomes an issue only if things are not discrete

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Intervening cause
Canson Enterprises v Boughton (1991)
Intermediary Used to Boost Price of Property
Parties Gained Share of Intermediary Profits
Would Not Have Proceeded if Knew of Arrangement

Intervening Causes Apply to Account of Profits,

Thus Not Liable for Construction Issues

novus actus may break the causation and bar the claim (Canson). As in Canson, the
liability for loss of the solicitor, who merely forgot to make disclosure of interest, shall
not be extended to losses arising from intervening causes, which are the negligence
committed by the engineers.

Canson – intervening cause, introduces cut-off

 limitation: even if sb did sth wrong, how far will we go in that context

here intermediaries used to boost price of property, when they’re supposed to be

representing you

if purchasers knew about this scheme, wouldn’t have proceeded

here breach of duty not controversial, have to disgorge profits

issue = how much further we can trace things down the road
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Causation
The third issue concerns whether there is a causality between H’ breach and the rental
fee. In general rule, to determine whether a fiduciary’s profit has been caused by a
breach of duty, it is not necessary for the claimant to show a “but-for” causation.
Instead, it is sufficient if the breach has been one cause of the gain (Murad). In instant
case, the profit was generated due to the H’s ownership of the Body, which he obtained
from attending Latimer’s charity raffle. As the way of gaining the profit is through rental
service, the merely existence and ownership of the Body as a showpiece shall be

5
sufficient to generate profit for H. Therefore, this shows a direct causation between the
breach and the profit.

Once the causality is established by F, the burden would then shift to H to show that his
breach of duty had no causative effect at all in order to escape liability. To successfully
discharge such burden, he needs to prove that he acquired the profit exclusively as a
result of activities legitimately undertaken in his own interest (Murad). For example, H
would need to adduce new evidence or provide explanation to prove that his ownership
of the Body has nothing to do with his position as a Trustee, for reasons including e.g. he
may only be invited to the raffle not due to his position as a Trustee, but other private
reasons. However, as fact is inadequate to prove the above argument, the discussion
would continue on the basis that H failed to discharge burden, i.e. there is still a
causality between H’s breach and the profit.

Did Mario’s breach of fiduciary duties cause his gain? If a causal link
between the opportunity and the profits can be made, a fiduciary will be
liable to account, as laid down in Kao, Lee & Yip. Stevens v Premium
Real Estate (2009) held that the burden is on the fiduciary to show lack
of causation. Murad v Al-Saraj (2005) made it clear that this burden is
an onerous one: the fiduciary has to show that his breach has no
causative effect whatsoever in order to not to be liable to disgorge all
gains. That is, the breach needs to be one cause of the gain, but it need
not be the only cause, or a but-for cause, or even a predominant cause.
Whether the burden is discharged is factually sensitive and evaluative
discretion may well give different results. For example, in Stevens v
PremiumRealEstate, there was a split opinion where Elia sCJ,in the
minority, believed the defendant had met this burden, while the majority
did not

In Mario’s case, he must demonstrate that his role at BSL, which gave him
access to advanced materials like nano tech fiber and the chance to
network at industry events, did not contribute at all to his success in
creating self-cleaning briefs and his millions of dollars of financial gains. It
is exceedingly implausible to say that this burden can be discharged, and
therefore the causal link between his breach and his gain is established.

The final issue to consider is whether Mario and Wario are liable to account for all
of their profits gained in breach of their fiduciary duties.

A fiduciary is liable to disgorge all the profits made in breach of fiduciary duties
as long as there is a causal link between the gain and the breach. It is sufficient
that the breach was one of the causes of the profit (Murad v Al-Saraj).

For the question of causation, while Wario’s breach is not the sole cause nor the
predominant cause of the three types of profits as he has made those profits

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mainly with his own idea, skills and ability, applying the causation test in Murad,
it is sufficient that Wario’s breach of duty constitutes one of the causes for all
three types of profits that he earned. Wario could argue that there was no
causative effect between the breach and the profits as he acquired the profits
exclusively as a result of activities legitimately undertaken in his own interest.
However, considering Wario has met the director who has invested in his idea
while acting as Mario’s trustee, Wario’s defence will be relatively weak. Although
someone else also approached Wario to make Mario’s dream a reality, it
irrelevant that Wario’s profit was not made at the expense of Mario (Keech v
Sanford). As such, the causation between the breach and the gains would be
satisfied and Wario would be liable to account for all the profits

Murad v Al-Saraj (2005)

Bought Hotel Together, Didn’t Disclose Profit from Discharging Debt, Commission
Claim By Other Party They Would Have Still Made Deal, But Would Have Demanded Higher
Share

So Whole of Profits? Or Proportional To Difference in Shares?

Must Disgorge All Gains, Even if in Beneficiary’s Interest

Burden on Fiduciary to Show No “Causative Effect”
Fraud Only Relevant for Equitable Allowances

Stevens v Premium Real Estate (2009)

Agent Did Not Disclose Relationship with House Flipper
House Subsequently Sold For Higher Price
But, Couple Would Still Have Sold House at First Price
Damages Set by First Market Price, Commission Disgorged
Burden on Fiduciary to Show Lack of Causation

Stevens
 manipulation of value of property thru intermediaries
 if you know sb wants to buy a property, but you know other people can make offers
that is higher
 to manipulate that person to make a higher buy
 couple cannot claim they wouldn’t have bought it, but were essentially taking damage
on particular scheme
 hence agent has duty to disclose they had other relationships, then if have full info
about relationships involved,

intermediaries had to disgorge their commission

 gains by third parties → what do we do with this gain? this is the profit the fiduciary
holder made in this context
 if had done everything right, just getting commission itself not wrong; but because
engaged in bad behavior, had to disgorge profit they made

burden is on fiduciary to show lack of causation

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  there is possibility for F to show there is no causation
 burden not on B to show there is causation
 in practice this matters quite a bit

even an omission/not doing sth you’re supposed to do can be judged very harshly as in this
context

causality
 for T don’t need causality as a baseline for anything
 but definitely need for DOC for solicitor – treated differently from duty of loyalty
___________________________________________________________________________

Quantification
Lastly, the court would then turn to the question of quantification of the profit to be
disgorged. The quantification would be based on an assessment of the attributable value
of the profit acquired by Shane as a result of his breach (Lifeplan). The court would
adopt a flexible approach to allow for expenses and overheads, and place a cap on the
duration for which the account was ordered (Warman, applied in Kao). Applying the
above rule, the instant case can be distinguished from Lifeplan because H did not
deprive any essential resources or confidential materials from F, but merely obtained
the Body as a winning prize through attending a dinner, thus the assessment shall not
be as strict as that in Lifeplan. However, as the Body can generate profit for H as long as
the rental service continues, this case can also be distinguished from Warman and Kao
Lee, where the advantage misappropriated would endure only for a short period (i.e. 2
years/1 year). From above, by comparing the fact of the instant case with the previous
caselaw, the strictness of assessing quantification of profit to be disgorged should be
more lenient than that in Lifeplan, but harsher than that in Kao and Warman

With respect to the quantification of profits, the court may consider it inequitable
to compel Mario to account for the whole of the profit from the production of the
briefs. However, since what Mario has misappropriated was BSL’s technology and
there is no suggestion that Mario’s production is designed to constitute a
business that would last for an indefinite period of time, this scenario can be
distinguished from that in Warman, in which the plaintiff in question
misappropriated a business. Hence, unlike the plaintiff in Warman, whose
account was limited to 2 years of profits, Mario would be subject to a stricter
assessment in the quantification of accounts

Lastly, the court would then turn to the question of quantification of the profit to be
disgorged. The applicable approach as to quantification depends on the type of profit in
question (Warman, applied in Kao). If the profits made is in form of a specific asset, the
beneficiary can ask for recovery of the whole asset.

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_

On the assumption that Wario is liable to account for all profits under the
causation test established in Murad, when assessing the issue of quantification,
the court may consider it inequitable to compel Wario to account for all his
profits from publishing his novel, merchandising and entering into other deals
over an indefinite period of time.

In the cases of Warman and Kao, Lee & Yip, the courts decided to limit the
account of profits to the initial one to two years of the business after taking into
account the fact that the businesses in question would not have endured for a
long period with the principal. Being the originator of the successful idea for a
graphic novel, Wario can be likened to the wrongdoer in Kao, who was regarded
as the “rainmaker” that did great serving the key client. Hence, while the
opportunity of publishing the novel may have endured with Mario had Wario not
breached his fiduciary duty, considering Wario’s idea was particularly popular
and attractive, it is highly possible that someone in the market would have
gravitated towards Wario and chosen to invest in his idea even if he was not in
breach of his fiduciary duty. As a result, the period that the opportunity would
have endured with Mario would be as short as that considered in Kao.

Besides, like the case of Kao, in which the court limited the account to one year
as the wrongdoer was merely given a head start by seizing the opportunity that
could have been his principal’s, here, it could be argued that by capturing the
opportunity to work with the director for Wario himself, it has only provided
Wario with a starting point to grow his graphic novel business and to establish
his fame in the industry.

Therefore, upon considering various factors, Wario should only be liable to

account for approximately one year of profits from publishing and merchandising
his novel. Regardless, allowances can be made for the expenses and overheads
incurred in relation to such profits (Kao, Lee & Yip). As for the earnings from
the later deals, it would be regarded as too remote from the opportunity that
Wario took advantage of.

The issue now is whether Wario can discharge the burden to argue that it
would be inequitable to disgorge all profits to Mario. In addition to what
was discussed in §1.4, in Warman International, the court distinguished
between cases where a fiduciary acquires a specific asset, and where the
fiduciary establishes a business to exploit an opportunity. In the latter
case, the court may well find it inappropriate for the fiduciary to account
for all profits.

With respect to the HK$500,000 from the novel, it is a specific asset

earned rather than an ongoing business. It is analogous to Murad v Al-
Saraj, where the defaulting beneficiary got a one-off gain from the hotel
deal, and the court ordered that the fiduciary must disgorge all gains.
Similarly here, Wario has to disgorge all of his gains from the novel.

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With respect to his merchandising earnings, although it involves more
extensive ongoing operations and may slide towards the business end on
the asset-business spectrum, these earnings are entirely parasitic on the
initial success of the novel. It does not seem to involve much commercial
risk, or require special skills, or contribution of his own capital, factors
cited as important in Warman International. As a result, Wario also has
to disgorge all of the earnings he made on merchandising the episodes.

With respect to the further money he earned after the graphic novel
industry had experienced a renaissance, this belongs to the business side
in the asset-business distinction. The burden is on Wario to argue that he
should not disgorge all gains. On the one hand, the Foresters
considerations, such as the beneficiary’s loss reflected the fiduciary’s
gain; that the breach was dishonest; and that the benefit received by the
fiduciary from the beneficiary would not diminish over time, are factors
not present in Wario’s case. On the other hand, the Warman
considerations are present in Wario’s case: business risk is inherently
present in any business; Wario’s original Captain Planet idea, which was
more attractive than Spawn, demonstrated his business acumen; and
subsequent profits suggest that there was capital contribution
independent from breach. Moreover, as Wario was conscientious and
acted with the best of the motives, and Mario suffered no loss (and indeed
some potential gain, as someone Wario talked to earlier approached him
willing to make Mario’s Spawn reboot a reality under a similar format).
Furthermore, taking into account the Kao, Lee & Yip’s statement that
the objective of disgorgement is not punishment but to measure the true
consequence of the breach, disgorgement of one to two deal’s profits
should suffice.

Kao, Lee & Yip – 1 year of profits disgorged

 liability to account is not penal in nature. The object in ordering an account of profits
is to ascertain as accurately as possible the true measure of the profit or gain made
by the defaulting fiduciary as a consequence of his breach of fiduciary duty
 The most straightforward case is perhaps where there is a specific and identifiable
gain that the fiduciary has made directly resulting from the breach of duty. For
example, a fiduciary has used money belonging to the beneficiary to invest in the
stock market and has made a gain in doing so. We are not concerned with that type
of situation in this case

 at the other end of the spectrum, where, as in the present case, a fiduciary has
taken advantage of a business opportunity  while the fiduciary who has been
found to be in breach of his fiduciary duties here must disgorge the whole of his
profits, he is only accountable for those profits properly and reasonably attributable
to the breach
 In taking an account of profits, in most cases it will be right to make allowances for
expenses, overheads and financial contribution (sometimes even a reasonable salary
for the wrongdoer) so as to reflect the ‘cost’ of the profit as it were. This is

10
 consistent with the overall object of the remedy of an account of profits, namely, to
give to the beneficiary the true extent of the profits made by the fiduciary, not to
punish him
 Consistent with this approach, it may sometimes be appropriate to put a cap on the
duration for which the account of profits is ordered
 How cap/limit is to be defined – factors:
o In some cases, there comes a point when the profits of the relevant business
are so remote from the breach of fiduciary duty that it would simply be unfair
to force the fiduciary to continue to account.
 For example, in Warman, the approach of the High Court of Australia
to this question involved looking at factors such as how long the
relevant business could have remained with the beneficiary anyway
and the input of the fiduciary into the business.
o The key is to remember at all times the critical inquiry referred to above
which emphasises to need to focus on causation and remoteness when
examining the link between the breach of duty and the gain. It is in
considering the terms of the order for an account of profits that the Court
will ensure that the fiduciary is not punished and that his liability is “not
transformed into a vehicle for the unjust enrichment of the plaintiff
 Applying these principles to the present case:
 There is no doubt that Koo enjoyed the position of immense trust and confidence
placed on him by BOC. And equally there is no doubt that he was a “rainmaker”. The
facts speak for themselves here. The work that KLY did for BOC and its Group prior to
Koo joining in 1989 was very little in comparison with the work that was carried out
for the BOC Group after Koo joined. Koo had a “grip” on BOC. After Koo left, for the
period 1 October 1993 to 31 July 1994, KLY’s billings, as far as the BOC Group was
concerned, dropped substantially.
 It would accordingly not be fair or just in the present case to order an account of
profits that Koo made in relation to BOC and BOC Group business for an
indeterminate period of time. As time passed, any profits that K & P made from
providing legal services to BOC and the BOC Group would have become increasingly
remote from the “business” opportunity that was presented to Koo in July 1993.
Some time limit should therefore be put on the period for which an account of
profits should be ordered in the present case
 Why 1 year
o This would be for how long BOC would have provided KLY with the type of
work it intended to give to the “friendly outside law firm” had Koo not
breached his fiduciary duties
o If Koo had complied with his fiduciary duties, I believe that BOC would have
given to KLY the bulk of the work they eventually gave K & P starting from 1
October 1993
o w, the period of 1 year represents the time that BOC would have given work
to KLY (that K & P in fact got) had Koo not been in breach. Even with Koo
leaving as from the 1 October 1993, it would have taken some time before
BOC would have redirected his work to K & P.
o by seizing the said business opportunity for himself and K & P, Koo gave his
firm a head start (as far as BOC business was concerned). This head start,

11
 even with Koo’s connections and ability, can, not unreasonably, be estimated
at about a year

Warman International Ltd v Dwyer (1995)

Left Company then Poached Employees, Took Opportunity for Gearbox Joint-Venture

Liable Even if Opportunity Not Likely, But Multiple Factor Analysis (Asset v. Business)

More Than Compensatory? Yes, Justified By Public Interest Effectively a Remoteness Rule?

Burden on Defendant to Show Special Skill Compensation

But Can Include Risk/Skill/Own Capital

Ancient Order v Lifeplan (fiduciary took advantage of what was essential/crux of

principal’s business)
loss by Foresters VS what did Lifeplan gain
 an election
 loss → not that much, minimal
 altho Lifeplan is new entity, it gained a lot, substantial
 so if you were Forester, you would elect to recover profits made by Lifeplan, not loss
suffered by yourself
 you cannot claim both (no double compensation)

so account of profits much more attractive to Forester

An examination of the facts of the case shows that Foresters knowingly took advantage of
Messrs Woff and Corby's dishonest and fraudulent design, which involved breaches of
fiduciary duty, in order to enhance its business by appropriating the business connections of
its competitors. It succeeded in doing so. In such a case, equity requires that Foresters
account for the full value of the enhancement

the present case is readily distinguishable from Warman International Ltd v Dwyer, where
the profits awarded were limited to the first two years' exploitation of the business
opportunity appropriated by the defendants. In that case, the evidence showed that the
advantage misappropriated was apt to endure only for a short period, and, even during that
period, was of diminishing value. The present case can similarly be distinguished from Kao
Lee & Yip v Koo Hoi Yan, where Ma J followed Warman, finding that the relevant business
would have been lost to the principal after a year so that after that time the profits were too
remote from the breach of fiduciary duty”
 in all these cases, argued so that allowed quantification to be much smaller, but
didn’t do it here
___________________________________________________________________________

Equitable allowance for skill/energy

12
 always have equitable allowance
 if you think following the rules get you too harsh an outcome, always one way out
 personal characteristics about M relevant about what he brings to table, just like
Boardman
 also went out to get angel investor
 and also spent his own time

**about identifying the relevant facts

Then, the burden is shifted to the fiduciary to show that it would be inequitable to
require him to account for the profits in full (Lifeplan). For example, the court may grant
equitable allowance for the fiduciary’s efforts and skills (Lifeplan). In instant case, it is
possible for H to be granted some equitable allowance would be granted, taking into
account of possibilities including but not limited to: (i) H may had devoted efforts
during the administration of the rental service of the Body; (ii) H may have exercised
skills in communicating with the parties who want to borrow the Body; (iii) H may have
devoted effort in promoting the bodies to enforce the public notoriety, which may bring
more business to H as people would be curious in seeing the Body

Boardman
 money you made exercising your particular relationship
 doing it in a way which violates duty
 equitable allowance comes in
 if feel acted in good faith, may allow you to keep some money
 judge determined that here lawyer did have best interest of trust in mind
 since lawyer puts in time/special expertise, will let you keep some of that
 what percentage? all of it? no; none of it? no
 issue = is equitable allowance applicable

in Murad, bad behavior (Bought Hotel Together, Didn’t Disclose Profit from Discharging
Debt, Commission) so didn’t get equitable allowance

Regardless, Mario can still claim an equitable allowance by proving that he has
input the skill, efforts, and resources in the generation of profits. Considering his
expertise in the self-cleaning organic technology, it is arguable that he has
contributed his own skills and effort in the production of self-cleaning briefs that
generated millions within a short time. However, in contrast with the plaintiff in
Warman, who has also introduced capital and contributed a significant amount
of effort in setting up the competing business, Mario has only input his own
skillsets as an inventor, while the capital for the production was provided by the
investor whom he met through his BSL tenure. Therefore, the equitable
allowance granted in the present case should be less substantial as that in
Warman’s case

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no dishonesty

but wouldn’t have come up with his connections if haven’t gone about helping out Mario 
good outcome for principal

large argument for equitable allowance

The burden is on Wario to argue that he should not disgorge all gains. On
the one hand, the Foresters considerations, such as the beneficiary’s
loss reflected the fiduciary’s gain; that the breach was dishonest; and that
the benefit received by the fiduciary from the beneficiary would not
diminish over time, are factors not present in Wario’s case. On the other
hand, the Warman considerations are present in Wario’s case: business
risk is inherently present in any business; Wario’s original Captain Planet
idea, which was more attractive than Spawn, demonstrated his business
acumen; and subsequent profits suggest that there was capital
contribution independent from breach. Moreover, as Wario was
conscientious and acted with the best of the motives, and Mario suffered
no loss (and indeed some potential gain, as someone Wario talked to
earlier approached him willing to make Mario’s Spawn reboot a reality
under a similar format). Furthermore, taking into account the Kao, Lee &
Yip’s statement that the objective of disgorgement is not punishment but
to measure the true consequence of the breach, disgorgement of one to
two deal’s profits should suffice.

Wario can also claim an equitable allowance by proving that he has input the
skill, efforts, and resources in the generation of profits. Wario can submit that he
has contributed his own skills and effort in creating the idea behind the novel,
promoting the episodes and winning deals in the industry. Similar to the plaintiff
in Warman, Wario has also borne his own risks by producing and merchandising
his novels. Overall, Wario should be able to claim an equitable allowance that is
comparable with that in Warman

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