Keech v Sandford (1726) Sel Cas King 61

A trustee held a lease of a market for the benefit of a child. As the lease approached expiry, the trustee sought renewal for the child, but the landlord refused. The trustee then obtained a new lease in his own name and for his own benefit. The child could not have secured the renewal on the terms available, and fraud was not alleged as the basis of the claim. The dispute nevertheless raised whether a trustee could take personally an opportunity connected with trust property after failing to obtain it for the beneficiary.

Could a trustee retain a renewed lease personally because the landlord had refused to renew it for the child whose interests the trustee represented?

Lord King LC required the trustee to assign the renewed lease to the child and account for the profits. The landlord's refusal to renew for the beneficiary did not authorise the trustee to take the opportunity personally. The rule was deliberately strict because permitting that practice would create a temptation to allow trust renewals to fail and then acquire them privately. The court expressly did not depend on a finding of fraud. It also provided for the trustee to be indemnified against the lease covenants. The correct lesson is that the trustee should have allowed the lease to expire rather than take it personally, not that he was required to obtain an impossible renewal.

A trustee cannot retain for personal benefit an opportunity arising from trust property merely because it was unavailable to the beneficiary. The no-profit rule can require transfer of the asset and an account without proof of fraud or loss to the trust.

Keech is a foundational example of equity's strict protection against unauthorised fiduciary gain. The apparent harshness is part of the reasoning: removing the temptation protects beneficiaries even where wrongdoing is difficult to prove. Boardman later applies comparable strictness to an honestly pursued investment, and FHR treats the resulting proprietary protection as part of the wider fiduciary framework. None of these cases makes an ordinary person a fiduciary merely because another could benefit from an opportunity.