The saga of Grancy Property v Gihwala: The no-conflict and no-profit rules and the fiduciary

Directors, trustees, agents and other fiduciaries are bound by the well-entrenched duty to resist the temptation to prefer their own personal interests over the interests of those whom they are bound to protect. The duty to avoid a conflict of interests undoubtedly lies at the core of the fiduciary relationship. It applies not only to directors and senior managers of companies, but generally to all fiduciaries. The no-conflict rule and no-profit rule, which underpin the fiduciary's duty of undivided loyalty to his or her beneficiary, were recently revisited by the Supreme Court of Appeal in Grancy Property Ltd v Gihwala 2025 (2) SA 76 (SCA). The duty of directors to avoid a conflict of interest, which is one of the most complex fiduciary duties, forms the focus of this article. Section 2 discusses the foundational legal principles on the no-conflict rule and the no-profit rule, and includes important pronouncements made by the Supreme Court of Appeal in Grancy. A critical analysis of the Grancy judgment is contained in section 3, but only insofar as the duty to avoid a conflict of interests is concerned. The elusive concept of a fiduciary is dealt with in the fourth section. This is followed by a discussion in section 5 of the remedy to account for profits or the disgorgement remedy, with a particular focus on its complexities and practical difficulties. The vital issue of whether the no-conflict and no-profit principles are two self-standing rules or merely one fundamental rule, is addressed in the final section. This thorny debate could be reignited by the dicta of the Supreme Court of Appeal in Grancy, with far-reaching practical consequences for directors and the companies on whose boards they serve.