Fiduciary Relationships Professor Cameron Stewart.

Fiduciary RelationshipsFiduciary Relationships

Professor Cameron StewartProfessor Cameron Stewart

Fiduciary?Fiduciary?

The word ‘fiduciary’ has its roots in the Latin The word ‘fiduciary’ has its roots in the Latin word word fiduciafiducia, which means confidence. A , which means confidence. A fiduciary relationship is thus a relationship of fiduciary relationship is thus a relationship of confidence. The person in whom confidence is confidence. The person in whom confidence is reposed within that relationship is referred to as reposed within that relationship is referred to as the fiduciary. If a fiduciary abuses his or her the fiduciary. If a fiduciary abuses his or her position to obtain an advantage or benefit at the position to obtain an advantage or benefit at the expense of the confiding party, the latter will be expense of the confiding party, the latter will be able to seek relief from a court of equity to able to seek relief from a court of equity to prevent such advantage accruing to the prevent such advantage accruing to the fiduciary. fiduciary.

Equity and fiduciariesEquity and fiduciaries

Equity intervenes ... not so much to recoup a Equity intervenes ... not so much to recoup a loss suffered by the plaintiff as to hold the loss suffered by the plaintiff as to hold the fiduciary to, and vindicate, the high duty owed to fiduciary to, and vindicate, the high duty owed to the plaintiff ... [T]hose in a fiduciary position who the plaintiff ... [T]hose in a fiduciary position who enter into transactions with those to whom they enter into transactions with those to whom they owe fiduciary duties labour under a heavy duty owe fiduciary duties labour under a heavy duty to show the righteousness of the transactions.to show the righteousness of the transactions.

Maguire v MakaronisMaguire v Makaronis (1997) 188 CLR 449 at 465 (1997) 188 CLR 449 at 465

Undivided LoyaltyUndivided Loyalty

The essence of fiduciary obligations is that The essence of fiduciary obligations is that the fiduciary is precluded from acting in the fiduciary is precluded from acting in any other way than in the interests of the any other way than in the interests of the person to whom the duty to so act is owed. person to whom the duty to so act is owed. In short, the fiduciary obligation is one of In short, the fiduciary obligation is one of ‘undivided loyalty’: ‘undivided loyalty’: Beach Petroleum NL v Beach Petroleum NL v KennedyKennedy (1999) 48 NSWLR 46–7. (1999) 48 NSWLR 46–7.

Undivided LoyaltyUndivided Loyalty

The Bell Group Ltd (in liq) v Westpac Banking Corporation The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (No 9) (2009) 70 ACSR 1 at [4552], Owen J said:(2009) 70 ACSR 1 at [4552], Owen J said:In my view the state of the law is this. Where a person has In my view the state of the law is this. Where a person has undertaken to act in the interests of another and where the undertaken to act in the interests of another and where the nature of that relationship, its surrounding circumstances and nature of that relationship, its surrounding circumstances and the obligations attaching to it so require, it will be held to be the obligations attaching to it so require, it will be held to be fiduciary. But the fact that it is categorised as fiduciary does fiduciary. But the fact that it is categorised as fiduciary does not mean that all of the obligations arising from it are not mean that all of the obligations arising from it are themselves fiduciary. Unless there are some special themselves fiduciary. Unless there are some special circumstances in the relationship, the duties that equity circumstances in the relationship, the duties that equity demands from the fiduciary will be limited to what I have demands from the fiduciary will be limited to what I have described as the core obligations: not to obtain any described as the core obligations: not to obtain any unauthorised benefit from the relationship and not to be in a unauthorised benefit from the relationship and not to be in a position of conflict. They stem from the fundamental obligation position of conflict. They stem from the fundamental obligation of loyaltyof loyalty

Strict dutiesStrict duties

The fact that there was no intent to defraud on the part of the The fact that there was no intent to defraud on the part of the fiduciary is irrelevant: fiduciary is irrelevant: Nocton v Lord AshburtonNocton v Lord Ashburton [1919] AC 492. [1919] AC 492.

The liability of the fiduciary does not depend on establishing that the The liability of the fiduciary does not depend on establishing that the person to whom fiduciary duties are owed suffered loss or injury: person to whom fiduciary duties are owed suffered loss or injury: Birtchnell v Equity Trustees, Executors and Agency Co LtdBirtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) (1929) 42 CLR 384 at 408–9, per Dixon J. 42 CLR 384 at 408–9, per Dixon J.

A fiduciary’s liability arises even if the person to whom the duty is A fiduciary’s liability arises even if the person to whom the duty is owed was unlikely or even unable to have made a profit from an owed was unlikely or even unable to have made a profit from an opportunity exploited by the fiduciary: opportunity exploited by the fiduciary: Warman International Ltd v Warman International Ltd v DwyerDwyer (1995) 182 CLR 544 at at 558; 128 ALR 201 at 209. (1995) 182 CLR 544 at at 558; 128 ALR 201 at 209.

Nor will it matter that the beneficiary would have consented to the Nor will it matter that the beneficiary would have consented to the fiduciary making a profit had the beneficiary been properly informed, fiduciary making a profit had the beneficiary been properly informed, if informed consent was never obtained: if informed consent was never obtained: Murad v Al-SarajMurad v Al-Saraj [2005] [2005] EWCA Civ 959.EWCA Civ 959.

Nocton v Lord AshburtonNocton v Lord Ashburton

Nocton was a solicitorNocton was a solicitorLord Asburton was his clientLord Asburton was his clientNocton and Baring (Ashburton’s brother) entered into a land Nocton and Baring (Ashburton’s brother) entered into a land developmentdevelopmentThey later agreed to sell the land to Douglas and Holloway They later agreed to sell the land to Douglas and Holloway but Douglas and Holloway needed a mortgagebut Douglas and Holloway needed a mortgageNocton convinced Ashburton to lend them the money, after a Nocton convinced Ashburton to lend them the money, after a valuation (even after being warned by valuation (even after being warned by Later, as the properties were developed, it became clear that Later, as the properties were developed, it became clear that there was insufficient security in the landthere was insufficient security in the landAt trial the judge treated the case as one of fraud and found At trial the judge treated the case as one of fraud and found not evidence of intentionnot evidence of intentionThe Court of Appeal, found that there was actual fraud which The Court of Appeal, found that there was actual fraud which would enable an action in deceitwould enable an action in deceit

Nocton v Lord AshburtonNocton v Lord Ashburton

Viscount Haldane was very critical of the Viscount Haldane was very critical of the proceedings but said that there was a third proceedings but said that there was a third way – breach of fiduciary dutyway – breach of fiduciary duty

That breach did not require that actual That breach did not require that actual fraud be proved in the common law sense fraud be proved in the common law sense of intentionof intention

Lord Dunedin and Lord Shaw agreedLord Dunedin and Lord Shaw agreed

Horizontal dutiesHorizontal duties

Fiduciary dutiesFiduciary duties

Partner Partner Partner Partner

Vertical dutiesVertical duties

GuardianGuardian

Fiduciary DutiesFiduciary Duties

WardWard

Negative dutiesNegative duties

Equity does not require the fiduciaries to act Equity does not require the fiduciaries to act positively in the interests of their beneficiaries: positively in the interests of their beneficiaries: Friend v BrookerFriend v Brooker (2009) 255 ALR 601 at [84] (2009) 255 ALR 601 at [84]A fiduciary’s obligation ‘does ... not impose A fiduciary’s obligation ‘does ... not impose positive legal duties on the fiduciary to act in the positive legal duties on the fiduciary to act in the interests of the person to whom the duty is owed’: interests of the person to whom the duty is owed’: Breen v WilliamsBreen v Williams (1996) 186 CLR 71 at 113; 138 (1996) 186 CLR 71 at 113; 138 ALR 259 at 289ALR 259 at 289It is said that such positive duties are better It is said that such positive duties are better regulated by contract, tort or other equitable regulated by contract, tort or other equitable doctrines: doctrines: Pilmer v Duke Group Ltd (in liq)Pilmer v Duke Group Ltd (in liq) (2001) (2001) 207 CLR 165 at 198207 CLR 165 at 198

Exception? Exception?

Duty to disclose possible conflicts of interests Duty to disclose possible conflicts of interests and seek the informed consent of the and seek the informed consent of the beneficiary of the relationshipbeneficiary of the relationship

Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566, at 576, Finkelstein J (2001) 188 ALR 566, at 576, Finkelstein J refused to describe the obligation to seek refused to describe the obligation to seek informed consent as a positive duty but informed consent as a positive duty but instead described it as a ‘means by which the instead described it as a ‘means by which the fiduciary obtains the release or forgiveness of fiduciary obtains the release or forgiveness of a negative duty.a negative duty.

Exception? Exception?

The Bell Group Ltd (in liq) v Westpac Banking Corporation The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9)(No 9)Directors had breached their duties to act in the best Directors had breached their duties to act in the best interests of their companies and to exercise their powers interests of their companies and to exercise their powers properly, when they had authorised loans which where in properly, when they had authorised loans which where in the overall interests of the corporate group, but not in the the overall interests of the corporate group, but not in the interests of some of the individual companies within that interests of some of the individual companies within that groupgroupOwen J found that the directors’duties to act in the Owen J found that the directors’duties to act in the companies’ best interests and to exercise powers properly companies’ best interests and to exercise powers properly were fiduciary duties. In so finding Owen J argued that were fiduciary duties. In so finding Owen J argued that these duties were, in substance, negative or proscriptive these duties were, in substance, negative or proscriptive duties. duties. How?How?

Fiduciary duties protect Fiduciary duties protect economic interestseconomic interests

Traditional reluctanceTraditional reluctance

New equity? New equity? Giller v ProcopetsGiller v Procopets [2008] [2008] VSCA 236VSCA 236

The existence of a fiduciary The existence of a fiduciary relationshiprelationship

Breen v WilliamsBreen v Williams at CLR 92; ALR 273, at CLR 92; ALR 273, Dawson and Toohey JJ observed that the Dawson and Toohey JJ observed that the law has not formulated ‘any precise or law has not formulated ‘any precise or comprehensive definition of the comprehensive definition of the circumstances in which a person is circumstances in which a person is constituted a fiduciary in his or her constituted a fiduciary in his or her relations with another’ relations with another’

Presumed fiduciary relationshipsPresumed fiduciary relationships

A number of commercial and professional A number of commercial and professional relationships:relationships:

Trustee and beneficiaryTrustee and beneficiary

director–companydirector–company

legal practitioner–clientlegal practitioner–client

agent–principal agent–principal

partner–partnerpartner–partner

Key features?Key features?

LoyaltyLoyalty

TrustTrust

ConfidenceConfidence

VulnerabilityVulnerability

UndertakingUndertaking

Finn – reasonable expectationsFinn – reasonable expectations

Glover – same old problemGlover – same old problem

Fiduciary Relationships outside Fiduciary Relationships outside of the presumed categoriesof the presumed categories

Factors include Factors include – the undertaking to fulfil a duty in the the undertaking to fulfil a duty in the

interests of another, interests of another, – the scope for one party to unilaterally the scope for one party to unilaterally

exercise a power or discretion that may exercise a power or discretion that may affect the rights or interests of another; affect the rights or interests of another; and and

– a dependency on the part of one party a dependency on the part of one party which causes that party to rely upon the which causes that party to rely upon the other. other.

Fiduciary Relationships outside Fiduciary Relationships outside of the presumed categoriesof the presumed categories

Economic power/free hand of marketEconomic power/free hand of market

Equity’s intervention distorts economic Equity’s intervention distorts economic activity?activity?

Should equity be reluctant to intervene?Should equity be reluctant to intervene?

United Dominions Corporation United Dominions Corporation Ltd v Brian Pty LtdLtd v Brian Pty Ltd

Joint venture agreement for the development of Joint venture agreement for the development of land between United Dominions Corporation land between United Dominions Corporation (UDC), Security Projects Ltd (SPL) and Brian (UDC), Security Projects Ltd (SPL) and Brian Pty Ltd (Brian). Pty Ltd (Brian). Land owned by SPLLand owned by SPLFinanced by UDC on security raised from SPLFinanced by UDC on security raised from SPLProfits made but UDC kept more than its share Profits made but UDC kept more than its share by using a clause in the mortgage to SPLby using a clause in the mortgage to SPLBrian didn’t know about the clause and received Brian didn’t know about the clause and received no profitno profitDid UDC owe Brian a fiduciary duty?Did UDC owe Brian a fiduciary duty?

United Dominions Corporation United Dominions Corporation Ltd v Brian Pty LtdLtd v Brian Pty Ltd

The High Court found in Brian’s favour. It held that SPL and The High Court found in Brian’s favour. It held that SPL and UDC owed fiduciary duties to Brian and that the UDC owed fiduciary duties to Brian and that the collateralisation clause in the mortgage was obtained in collateralisation clause in the mortgage was obtained in breach of such duties. Dawson J at CLR 16; ALR 750–1 breach of such duties. Dawson J at CLR 16; ALR 750–1 said:said:

[I]t is quite clear that a fiduciary relationship may arise during [I]t is quite clear that a fiduciary relationship may arise during negotiations for a partnership or, for that matter, a joint negotiations for a partnership or, for that matter, a joint venture, before any partnership or joint venture agreement venture, before any partnership or joint venture agreement has been finally concluded if the parties have acted upon the has been finally concluded if the parties have acted upon the proposed agreement as they had in this case. Whilst a proposed agreement as they had in this case. Whilst a concluded agreement may establish a relationship of concluded agreement may establish a relationship of confidence, it is nevertheless the relationship itself which confidence, it is nevertheless the relationship itself which gives rise to fiduciary obligations. That relationship may gives rise to fiduciary obligations. That relationship may arise from the circumstances leading to the final agreement arise from the circumstances leading to the final agreement as much as from the fact of the final agreement itself. as much as from the fact of the final agreement itself.

Hospital Products Ltd v United Hospital Products Ltd v United States Surgical CorporationStates Surgical Corporation

Blackman had an exclusive distributorship Blackman had an exclusive distributorship arrangement for products manufactured by arrangement for products manufactured by United States Surgical Corporation (USSC)United States Surgical Corporation (USSC)Blackman’s company, Hospital Products Ltd Blackman’s company, Hospital Products Ltd (HPL), was soon after substituted as the (HPL), was soon after substituted as the distributor. distributor. HPL, using USSC products as models, began to HPL, using USSC products as models, began to manufacture products that were essentially manufacture products that were essentially identical to those manufactured by USSC > HPL identical to those manufactured by USSC > HPL went into competition with USSCwent into competition with USSCWas HPL a fiduciary?Was HPL a fiduciary?

Hospital Products Ltd v United Hospital Products Ltd v United States Surgical CorporationStates Surgical Corporation

By a bare majority the High Court held that there By a bare majority the High Court held that there was no fiduciary relation ship between the was no fiduciary relation ship between the parties and that USSC’s right to relief rested in a parties and that USSC’s right to relief rested in a claim for damages for breach of contract. The claim for damages for breach of contract. The majority considered that because the majority considered that because the relationship between the parties was a relationship between the parties was a commercial one entered into by equal parties at commercial one entered into by equal parties at arm’s length with the intention that both parties arm’s length with the intention that both parties would gain a profit, it was inappropriate to find a would gain a profit, it was inappropriate to find a fiduciary relationship between the parties fiduciary relationship between the parties

A vexed question….A vexed question….

Why was there a fiduciary relationship in Why was there a fiduciary relationship in one and not the other?one and not the other?

Does Equity have any role in commercial Does Equity have any role in commercial bargaining?bargaining?

Are the economic costs of imposing Are the economic costs of imposing fiduciary relationships outweighed by fiduciary relationships outweighed by advantages?advantages?

Length of the Chancellor’s Foot?Length of the Chancellor’s Foot?

The fiduciary obligationThe fiduciary obligation

Aberdeen Railway Co v Blaikie BrothersAberdeen Railway Co v Blaikie Brothers [1854] 1 Macq 461 at 471[1854] 1 Macq 461 at 471

[A fiduciary will not be permitted] to enter [A fiduciary will not be permitted] to enter into engagements in which he has, or can into engagements in which he has, or can have, a personal interest conflicting, or have, a personal interest conflicting, or which possibly may conflict, with the which possibly may conflict, with the interests of those whom he is bound to interests of those whom he is bound to protect protect

The fiduciary obligationThe fiduciary obligation

The duty imposed upon a fiduciary The duty imposed upon a fiduciary operates in circumstances where there is operates in circumstances where there is a conflict between the fiduciary’s ‘duty’ and a conflict between the fiduciary’s ‘duty’ and his or her ‘interest’. his or her ‘interest’.

DutyDuty

The word ‘duty’ in this context does not The word ‘duty’ in this context does not have a technical meaning. It does not refer have a technical meaning. It does not refer to legally imposed obligations. Rather, it to legally imposed obligations. Rather, it refers to the actions undertaken by a refers to the actions undertaken by a fiduciary on behalf of another person. fiduciary on behalf of another person. These actions are not confined to those These actions are not confined to those undertaken in the performance of a undertaken in the performance of a fiduciary’s mandatory or discretionary fiduciary’s mandatory or discretionary functions. These actions also include functions. These actions also include voluntary acts.voluntary acts.

InterestInterest

The word ‘interest’, in this context, signifies the The word ‘interest’, in this context, signifies the presence of some personal concern on the part presence of some personal concern on the part of a fiduciary or of possible significant pecuniary of a fiduciary or of possible significant pecuniary value in a decision to be taken by the fiduciary. value in a decision to be taken by the fiduciary. Finn (1977) at 204 notes:Finn (1977) at 204 notes:

The pecuniary dimension of the fiduciary’s concern The pecuniary dimension of the fiduciary’s concern may take the form of an actual, prospective, or may take the form of an actual, prospective, or possible profit to be made in, or as a result of, the possible profit to be made in, or as a result of, the decision he takes or the transaction he effects. Or it decision he takes or the transaction he effects. Or it may take the form of an actual, prospective, or may take the form of an actual, prospective, or possible saving, or a diminution of a personal liability possible saving, or a diminution of a personal liability

Informed consentInformed consent

The duty imposed upon the fiduciary is The duty imposed upon the fiduciary is strict. The only way a fiduciary is able to strict. The only way a fiduciary is able to escape liability for conduct that amounts to escape liability for conduct that amounts to a breach of fiduciary duty is if the conduct a breach of fiduciary duty is if the conduct was undertaken with the fully informed was undertaken with the fully informed consent of the person to whom the consent of the person to whom the fiduciary obligations are owed. The fiduciary obligations are owed. The disclosure must be of all material facts and disclosure must be of all material facts and information that could affect the decision information that could affect the decision to give the consent to give the consent

Examples of informed consentExamples of informed consent

In In Phipps v BoardmanPhipps v Boardman [1967] 2 AC 46; [1966] 3 [1967] 2 AC 46; [1966] 3 All ER 721 the House of Lords made comments All ER 721 the House of Lords made comments on the question of consent to a transaction on the question of consent to a transaction involving a solicitor who owes fiduciary duties to involving a solicitor who owes fiduciary duties to clients who are trustees of a trust. In such cases clients who are trustees of a trust. In such cases there is no doubt that the unanimous consent of there is no doubt that the unanimous consent of the trustees is necessary:the trustees is necessary: Phipps v Boardman Phipps v Boardman at at AC 128; All ER 759, per Lord Upjohn. However, AC 128; All ER 759, per Lord Upjohn. However, in that case, Viscount Dilhorne at AC 93; All ER in that case, Viscount Dilhorne at AC 93; All ER 737 and Lord Cohen at AC 104; All ER 744 737 and Lord Cohen at AC 104; All ER 744 suggested that the consent of the beneficiaries suggested that the consent of the beneficiaries to the trust is also necessary to the trust is also necessary

Examples of informed consentExamples of informed consent

Director–company relationship, the House of Director–company relationship, the House of Lords in Lords in Regal (Hastings) Ltd v GulliverRegal (Hastings) Ltd v Gulliver [1967] 2 [1967] 2 AC 134; [1942] 1 All ER 378 held that, for a AC 134; [1942] 1 All ER 378 held that, for a director to escape liability for breach of fiduciary director to escape liability for breach of fiduciary duties, the consent of the company through a duties, the consent of the company through a resolution of shareholders at a general meeting resolution of shareholders at a general meeting of the company was required of the company was required Queensland Mines Ltd v HudsonQueensland Mines Ltd v Hudson (1978) 18 ALR (1978) 18 ALR 1, the Privy Council upheld the validity of the 1, the Privy Council upheld the validity of the consent of a company given by its board of consent of a company given by its board of directors directors

Unauthorised remunerationUnauthorised remuneration

Reading v RReading v R [1951] AC 507 [1951] AC 507

Reading was a sergeant in the English army Reading was a sergeant in the English army stationed in Egypt. He accompanied civilian stationed in Egypt. He accompanied civilian trucks through security checkpoints in order to trucks through security checkpoints in order to assist them in transporting contraband goods. In assist them in transporting contraband goods. In return he was paid for his assistance. The court return he was paid for his assistance. The court ruled that Reading owed fiduciary duties to the ruled that Reading owed fiduciary duties to the Crown and the amount recoverable by the Crown and the amount recoverable by the Crown was the full amount that Reading had Crown was the full amount that Reading had received for his services.received for his services.

Assuming a double characterAssuming a double character

In In Armstrong v JacksonArmstrong v Jackson [1917] 2 KB 822, [1917] 2 KB 822, Armstrong instructed Jackson, a stockbroker, to Armstrong instructed Jackson, a stockbroker, to buy shares in a certain company. Jackson buy shares in a certain company. Jackson transferred his own shares in that company to transferred his own shares in that company to Armstrong. The court ruled that Jackson had Armstrong. The court ruled that Jackson had breached his fiduciary duties to Armstrong breached his fiduciary duties to Armstrong

A broker who is employed to buy shares cannot sell A broker who is employed to buy shares cannot sell his own shares unless he makes a full disclosure of his own shares unless he makes a full disclosure of the fact to his principal, and the principal, with a full the fact to his principal, and the principal, with a full knowledge, gives his assent to the changed position knowledge, gives his assent to the changed position of the broker ... [A] broker who secretly sells his own of the broker ... [A] broker who secretly sells his own shares is in a wholly false position shares is in a wholly false position

Benefits derived by fiduciary to Benefits derived by fiduciary to the exclusion of anotherthe exclusion of another

Cases in this category involve a fiduciary, Cases in this category involve a fiduciary, acting within the scope of his or her acting within the scope of his or her undertaking, deriving a profit or benefit undertaking, deriving a profit or benefit that should have gone to the person to that should have gone to the person to whom the fiduciary duties were owed whom the fiduciary duties were owed


Chan v ZachariaChan v Zacharia (1984) 154 CLR 178 at 199; Deane J (1984) 154 CLR 178 at 199; Deane J said:said:Stated comprehensively in terms of the liability to Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is account, the principle of equity is that a person who is under a fiduciary obligation must account to the person under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances which has been obtained or received in circumstances where a conflict or significant possibility of conflict where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of use or by reason of his fiduciary position or of opportunity or knowledge resulting from it.opportunity or knowledge resulting from it.


Two sub-rules, namely:Two sub-rules, namely:

1.1. cases in which a fiduciary is not to derive a cases in which a fiduciary is not to derive a profit or benefit that should have gone to the profit or benefit that should have gone to the person to whom fiduciary duties are owed (the person to whom fiduciary duties are owed (the breach of undertaking sub-rule); andbreach of undertaking sub-rule); and

2.2. cases in which a fiduciary is not to gain a cases in which a fiduciary is not to gain a profit or benefit through the misuse of his or her profit or benefit through the misuse of his or her position as a fiduciary (the misuse of position position as a fiduciary (the misuse of position sub-rule).sub-rule).

The breach of undertaking sub-The breach of undertaking sub-rulerule

The purpose of this sub-rule is to prevent a The purpose of this sub-rule is to prevent a fiduciary acting for his or her own benefit in a fiduciary acting for his or her own benefit in a transaction undertaken for the benefit of the transaction undertaken for the benefit of the person to whom he or she stands in a fiduciary person to whom he or she stands in a fiduciary relationship. relationship. Critical to determining if there has been a breach Critical to determining if there has been a breach of fiduciary duties is the determination of the of fiduciary duties is the determination of the scope of the fiduciary’s undertaking. The scope of the fiduciary’s undertaking. The relationship between the parties must be relationship between the parties must be examined to ascertain the scope of the examined to ascertain the scope of the fiduciary’s duties before any question of fiduciary’s duties before any question of breaches of fiduciary duties can be entertained breaches of fiduciary duties can be entertained


In In Clark Boyce v MouatClark Boyce v Mouat [1994] 1 AC 428; [1994] 4 All ER [1994] 1 AC 428; [1994] 4 All ER 268, solicitors acted for a woman who mortgaged her 268, solicitors acted for a woman who mortgaged her property to cover her son’s debt to a finance company. property to cover her son’s debt to a finance company. The same solicitors acted for the son. The solicitors had The same solicitors acted for the son. The solicitors had disclosed the potential conflict between their respective disclosed the potential conflict between their respective duties to the woman and her son on a number of duties to the woman and her son on a number of occasions. The solicitors’ advice to the woman that she occasions. The solicitors’ advice to the woman that she obtain independent legal advice was never acted upon by obtain independent legal advice was never acted upon by the woman. The woman claimed a breach of fiduciary the woman. The woman claimed a breach of fiduciary duties by the solicitors, arguing that they should have duties by the solicitors, arguing that they should have advised her on the wisdom of the transaction and advised her on the wisdom of the transaction and investigated the son’s financial position before she investigated the son’s financial position before she executed the mortgage. In the circumstances, the Privy executed the mortgage. In the circumstances, the Privy Council rejected the woman’s claim on the ground that Council rejected the woman’s claim on the ground that the solicitors’ undertaking to the woman extended only to the solicitors’ undertaking to the woman extended only to giving giving legallegal advice. advice.


Phipps v BoardmanPhipps v Boardman [1967] 2 AC 46[1967] 2 AC 46Boardman acted as a solicitor for a trust. He attended the Boardman acted as a solicitor for a trust. He attended the annual general meeting of Lester & Harris Ltd, a company annual general meeting of Lester & Harris Ltd, a company in which the trust had a substantial shareholding. Boardman in which the trust had a substantial shareholding. Boardman and Tom Phipps, one of the beneficiaries under the trust, and Tom Phipps, one of the beneficiaries under the trust, were unhappy with the state of the company. were unhappy with the state of the company. Together they planned to acquire shares in the company to Together they planned to acquire shares in the company to take over the company. Boardman was able to assess the take over the company. Boardman was able to assess the viability of the takeover because of information about the viability of the takeover because of information about the company he gained whilst acting as solicitor for the trust. company he gained whilst acting as solicitor for the trust. Boardman advised the beneficiaries of the trust of these Boardman advised the beneficiaries of the trust of these plans and no objection was made by any of them. He also plans and no objection was made by any of them. He also had the consent of two of the three trustees, the third, being had the consent of two of the three trustees, the third, being senile, was not advised of these plans. senile, was not advised of these plans.


The takeover was successful and resulted in The takeover was successful and resulted in profits to the trust in relation to its shareholding profits to the trust in relation to its shareholding in the company as well as for Boardman and in the company as well as for Boardman and Tom Phipps in relation to the shares they had Tom Phipps in relation to the shares they had personally acquired. John Phipps, one of the personally acquired. John Phipps, one of the beneficiaries under the trust, sought an account beneficiaries under the trust, sought an account of the profits made by Boardman and Tom of the profits made by Boardman and Tom Phipps on the grounds of breach of fiduciary Phipps on the grounds of breach of fiduciary duties.duties.By a bare majority the House of Lords held in By a bare majority the House of Lords held in favour of John Phipps.favour of John Phipps.


The majority Law Lords (Lords Cohen at AC The majority Law Lords (Lords Cohen at AC 100–3; All ER 741–3; Hodson at AC 109–11; All 100–3; All ER 741–3; Hodson at AC 109–11; All ER 747–8; Guest at AC 114–17; All ER 750–2) ER 747–8; Guest at AC 114–17; All ER 750–2) all held that the information obtained by all held that the information obtained by Boardman was trust property and that it was Boardman was trust property and that it was irrelevant that the trustees of the trust were in no irrelevant that the trustees of the trust were in no position to acquire the shares in the company for position to acquire the shares in the company for the trust. Because there was a conflict, or at the trust. Because there was a conflict, or at least a possibility of a conflict, between least a possibility of a conflict, between Boardman’s duty and interest, the informed Boardman’s duty and interest, the informed consent of the trustees was needed consent of the trustees was needed

Misuse of fiduciary position Misuse of fiduciary position sub-rulesub-rule

The purpose of this sub-rule is to The purpose of this sub-rule is to prevent a fiduciary using his or her prevent a fiduciary using his or her position to secure or assist in position to secure or assist in exploiting a profit-making opportunity. exploiting a profit-making opportunity. If a fiduciary acts in such a way he or If a fiduciary acts in such a way he or she must account for any profit or she must account for any profit or benefit derived as a result benefit derived as a result


Regal (Hastings) Ltd v GulliverRegal (Hastings) Ltd v Gulliver [1967] 2 AC 134 [1967] 2 AC 134The directors of Regal formed a subsidiary The directors of Regal formed a subsidiary company with the intention that Regal own all the company with the intention that Regal own all the shares in the subsidiary company. The directors shares in the subsidiary company. The directors sought a lease of two cinemas for the subsidiary sought a lease of two cinemas for the subsidiary company. However, the landlord was not prepared company. However, the landlord was not prepared to grant the lease unless the subsidiary company to grant the lease unless the subsidiary company had a paid-up capital of £5000. Because Regal did had a paid-up capital of £5000. Because Regal did not have the necessary capital to invest £5000 in not have the necessary capital to invest £5000 in the subsidiary, the directors decided that Regal the subsidiary, the directors decided that Regal would invest £2000 and that they would invest the would invest £2000 and that they would invest the balance themselves. From the shares issued to balance themselves. From the shares issued to them in the subsidiary, the directors made a profit.them in the subsidiary, the directors made a profit.


The House of Lords unanimously ruled that The House of Lords unanimously ruled that irrespective of whether or not Regal could have irrespective of whether or not Regal could have purchased the shares, the directors were liable to purchased the shares, the directors were liable to Regal for the profit they made:Regal for the profit they made:

The point was not whether the directors had a The point was not whether the directors had a duty to acquire the shares in question for the duty to acquire the shares in question for the company and failed in that duty. They had no such company and failed in that duty. They had no such duty. We must take it that they entered into the duty. We must take it that they entered into the transaction lawfully, in good faith and indeed transaction lawfully, in good faith and indeed avowedly in the interests of the company. avowedly in the interests of the company. However, that does not absolve them for However, that does not absolve them for accountability for any profit which they made, if it accountability for any profit which they made, if it was by reason and in virtue of their fiduciary office was by reason and in virtue of their fiduciary office as directors that they entered into the transaction as directors that they entered into the transaction


Victoria University of Technology v WilsonVictoria University of Technology v Wilson [2004] [2004] VSC 33, academics working at a university, VSC 33, academics working at a university, exploited for themselves an opportunity to exploited for themselves an opportunity to develop certain computer programs in develop certain computer programs in circumstances where they were approached, by circumstances where they were approached, by a former student of the university, for help with a former student of the university, for help with such a project whilst employed by the university. such a project whilst employed by the university. The court held that the academics breached The court held that the academics breached fiduciary obligations owed to the university in fiduciary obligations owed to the university in that they should not have exploited the that they should not have exploited the opportunity for themselves as the opportunity opportunity for themselves as the opportunity was one presented to the university which the was one presented to the university which the university would have exploited for itself.university would have exploited for itself.

Presumed Relationships that Carry Presumed Relationships that Carry Fiduciary DutiesFiduciary Duties

Trustee-beneficiaryTrustee-beneficiaryYouyang Pty Ltd v Minter Ellison Morris Fletcher – Y was discretionary trustMoney was deposited in Minters’ trust account as part of a subscription agreement for shares – later the investment went badIt was argued that the breach of trust did not cause any damageHC: Monies were paid in breach of trust when the solicitors did not obtain a deposit certificate on the purchase of the sharesOther events which contributed to the loss were not relevant if there was a sufficient connection between the breach and the damages

Presumed Relationships that Carry Presumed Relationships that Carry Fiduciary DutiesFiduciary Duties

Director–companyDirector–companyEquity and statutory rules: Equity and statutory rules: Corporations Act 2001 Corporations Act 2001 (Cth)(Cth)English courts have found that directors must English courts have found that directors must disclose past wrongdoing to their companies, even disclose past wrongdoing to their companies, even where that wrongdoing had no negative effect on where that wrongdoing had no negative effect on the company’s position: the company’s position: Item Software (UK) Ltd v Item Software (UK) Ltd v Fassihi Fassihi [2004] EWCA 1244. This argument was [2004] EWCA 1244. This argument was rejected in Australia in rejected in Australia in P & V Industries v PortoP & V Industries v Porto [2006] VSC 131, by Hollingworth J, who found that [2006] VSC 131, by Hollingworth J, who found that such a duty was prescriptive and outside fiduciary such a duty was prescriptive and outside fiduciary principles.principles.

Directors and Shareholders?Directors and Shareholders?

Directors do not ordinarily owe fiduciary duties to Directors do not ordinarily owe fiduciary duties to shareholders: shareholders: Joinery Products Pty Ltd v Imlach Joinery Products Pty Ltd v Imlach (2008) 67 ACSR 520. (2008) 67 ACSR 520. However, if ‘a special factual relationship between the However, if ‘a special factual relationship between the directors and the shareholders’ exists, the directors directors and the shareholders’ exists, the directors may also owe fiduciary duties to shareholders: may also owe fiduciary duties to shareholders: Peskin Peskin v Andersonv Anderson [2001] 1 BCLC 372 at [33]; [2001] 1 BCLC 372 at [33]; St George St George Soccer Football Association Inc v Soccer NSW Ltd Soccer Football Association Inc v Soccer NSW Ltd [2005] NSWSC 1288. [2005] NSWSC 1288. Thus, where directors conduct negotiations for a Thus, where directors conduct negotiations for a takeover or an acquisition of the company’s business, takeover or an acquisition of the company’s business, they are obliged to loyally promote the interests of all they are obliged to loyally promote the interests of all shareholders: shareholders: Brunninghausen v GlavanicsBrunninghausen v Glavanics (1999) 46 (1999) 46 NSWLR 538; NSWLR 538; Silversides Superfunds Pty Limited v Silversides Superfunds Pty Limited v Silverstate Developments Pty Limited Silverstate Developments Pty Limited [2008] NSWSC [2008] NSWSC 904.904.

Directors and Shareholders?Directors and Shareholders?

Directors owe a fiduciary duty to shareholders to Directors owe a fiduciary duty to shareholders to advise them fully and frankly of relevant advise them fully and frankly of relevant information necessary to make an informed information necessary to make an informed decision at a general meeting: decision at a general meeting: Chequepoint Chequepoint Securities Ltd v Claremont Petroleum NLSecurities Ltd v Claremont Petroleum NL (1986) (1986) 11 ACLR 94. 11 ACLR 94. This obligation to make full and fair disclosure This obligation to make full and fair disclosure does not oblige the directors to give shareholders does not oblige the directors to give shareholders every piece of information that might conceivably every piece of information that might conceivably affect their voting. The adequacy of the affect their voting. The adequacy of the information must be assessed in a practical, information must be assessed in a practical, realistic way having regard to the complexity of the realistic way having regard to the complexity of the proposal: proposal: ENT Pty Ltd v Sunraysia Television LtdENT Pty Ltd v Sunraysia Television Ltd [2007] NSWSC 270.[2007] NSWSC 270.

Directors to creditors?Directors to creditors?

No - there do not appear to be general fiduciary No - there do not appear to be general fiduciary obligations owed by directors to creditors: obligations owed by directors to creditors: R v R v SpiesSpies (2000) 201 CLR 603; 173 ALR 529. (2000) 201 CLR 603; 173 ALR 529. Fiduciary obligations may arise in cases where the Fiduciary obligations may arise in cases where the company has become insolvent, as the interests company has become insolvent, as the interests of the creditors begin to take over the interests of of the creditors begin to take over the interests of the shareholders, as the assets of the company the shareholders, as the assets of the company effectively become the assets of the creditors as effectively become the assets of the creditors as the company lurches into liquidation: the company lurches into liquidation: Angas Law Angas Law Services Pty Ltd (in liq) v CarabelasServices Pty Ltd (in liq) v Carabelas (2005) 226 (2005) 226 CLR 507; 215 ALR 110; CLR 507; 215 ALR 110; The Bell Group Ltd (in liq) The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) v Westpac Banking Corporation (No 9) at [4418], at [4418], [4439].[4439].

Legal practitioner- clientLegal practitioner- client

unauthorised profitsunauthorised profitsConflicts with other client Conflicts with other client Hilton v Barker Booth Hilton v Barker Booth [2005] 1 All [2005] 1 All ER 561. ER 561. This rule forbids the lawyer from entering into dealings with This rule forbids the lawyer from entering into dealings with their clients, without the clients’ fully informed consent: their clients, without the clients’ fully informed consent: Maguire v MakaronisMaguire v Makaronis. . It also prevents the lawyer from acting for third parties, when It also prevents the lawyer from acting for third parties, when the interests of those third parties conflict with the clients’. the interests of those third parties conflict with the clients’. This is refered to as a conflict between duty and duty. Such This is refered to as a conflict between duty and duty. Such conflicts can be avoided as long as all parties know that the conflicts can be avoided as long as all parties know that the same practitioner is acting for different parties to the same practitioner is acting for different parties to the transaction and no actual conflict of interest arises: transaction and no actual conflict of interest arises: Rigg v Rigg v SheridanSheridan [2008] NSWCA 79. [2008] NSWCA 79.What about after the retainer?What about after the retainer?Victorian cases: Victorian cases: Spincode Pty Ltd v Look Software Pty LtdSpincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501(2001) 4 VR 501

Maguire v Makaronis Maguire v Makaronis (1997) (1997) 188 CLR 449188 CLR 449

A husband and wife executed a mortgage in favour of their solicitors to secure bridging finance for the purchase of a poultry farm.

The trial judge found that the solicitors did not draw the clients' attention to the fact that the solicitors were to be the mortgagees or tell them that they should obtain independent legal advice.

The clients defaulted on the loan secured by the mortgage and the solicitors claimed possession of the mortgaged property. The clients sought by counter-claim a declaration that the mortgage was void.

Breach of fiduciary duty – however The mortgage could not be set aside without conditioning relief upon repayment by the mortgagors of principal and interest. Otherwise the mortgagors would be left with the fruits of the transaction of which they complained.

Prince Jefri Bolkiah v Prince Jefri Bolkiah v KPMGKPMG[1999] 2 AC 222[1999] 2 AC 222

KPMG audited the Brunei Investment KPMG audited the Brunei Investment Agency (BIA) when it was chaired by B.Agency (BIA) when it was chaired by B.

B was later removed from his positionB was later removed from his position

B had also retained KPMG personally wih B had also retained KPMG personally wih other litigation which gave them access to other litigation which gave them access to his personal financial informationhis personal financial information

Later KPMG was asked by BIA to do further Later KPMG was asked by BIA to do further work. KPMG accepted and set up a work. KPMG accepted and set up a Chinese wallChinese wall


HofL finds that KPMG should be injunctedHofL finds that KPMG should be injuncted

There was no absolute rule that a solicitor could not act in There was no absolute rule that a solicitor could not act in litigation against a former client, but that the solicitor might be litigation against a former client, but that the solicitor might be prevented from doing so if it were necessary to avoid a prevented from doing so if it were necessary to avoid a significant risk of disclosure or misuse of the confidential significant risk of disclosure or misuse of the confidential information of a former client. information of a former client.

KPMG accepted that an accountant who rendered litigation KPMG accepted that an accountant who rendered litigation support services of the type provided to B fell to be treated in support services of the type provided to B fell to be treated in the same way as a solicitor. the same way as a solicitor.

The court's jurisdiction to intervene on behalf of a former client The court's jurisdiction to intervene on behalf of a former client was based on the protection of confidential information and was based on the protection of confidential information and the duty was to keep the information confidential, not simply to the duty was to keep the information confidential, not simply to take reasonable steps to do sotake reasonable steps to do so


Historical footnote:Historical footnote:

The Brunei government charged Jefri with embezzling $14.8b.The Brunei government charged Jefri with embezzling $14.8b.

Wikipedia reports:Wikipedia reports:

He denies the charges but in 2000 agreed to turn over his He denies the charges but in 2000 agreed to turn over his personal holdings to the government, in return for avoiding personal holdings to the government, in return for avoiding criminal prosecution and being allowed to keep a personal criminal prosecution and being allowed to keep a personal residence in Brunei. After numerous legal disputes and residence in Brunei. After numerous legal disputes and appeals, in 2007 Britain's Privy Council ruled that this appeals, in 2007 Britain's Privy Council ruled that this agreement is enforceable. His various legal issues with the agreement is enforceable. His various legal issues with the Bruneian state have become the most expensive legal case in Bruneian state have become the most expensive legal case in British legal historyBritish legal history

The House of Lords upheld the agreement in The House of Lords upheld the agreement in Bolkiah v Brunei Bolkiah v Brunei Darussalam Darussalam [2007] UKPC 63[2007] UKPC 63

Agent - principalAgent - principal

McKenzie v McDonaldMcKenzie v McDonald [1927] VLR 134 [1927] VLR 134

Pedersen v LarcombePedersen v Larcombe [2008] NSWSC [2008] NSWSC 13621362

Beach Petroleum NL v Abbott Tout Beach Petroleum NL v Abbott Tout Russell KennedyRussell Kennedy (1999) 33 ACSR 1 (1999) 33 ACSR 1

PartnersPartners

Re Agriculturist Cattle Insurance Co Re Agriculturist Cattle Insurance Co (1870) LR 5 Ch (1870) LR 5 Ch App 725, at 733, James LJ said:App 725, at 733, James LJ said:Ordinary partnerships are by the law assumed and Ordinary partnerships are by the law assumed and presumed to be based on the mutual trust and presumed to be based on the mutual trust and confidence of each partner in the skill, knowledge confidence of each partner in the skill, knowledge and integrity of the every other partner. As and integrity of the every other partner. As between the partners and the outside world between the partners and the outside world (whatever may be their private arrangements (whatever may be their private arrangements between themselves), each partner is the between themselves), each partner is the unlimited agent of every other in every manner unlimited agent of every other in every manner connected with the partnership business, and not connected with the partnership business, and not being in its nature beyond the scope of the being in its nature beyond the scope of the partnership.partnership.

PartnersPartners

After dissolved? After dissolved? Chan v Zacharia Chan v Zacharia (1984) (1984) 154 CLR 178 – partner dissolved 154 CLR 178 – partner dissolved partnership and then exercised option for partnership and then exercised option for elase on the old business – constructive elase on the old business – constructive trustee of leasetrustee of lease

Friend v BrookerFriend v Brooker (2009) 255 ALR 601 – (2009) 255 ALR 601 – move from partnership to company move from partnership to company structurestructure

Employers - EmployeesEmployers - Employees

Warman International v DwyerWarman International v Dwyer (1995) 182 CLR 544 – (1995) 182 CLR 544 – Bonfiglioli made gear boxes in Italy and used Warman as its Bonfiglioli made gear boxes in Italy and used Warman as its agent to sell them in Australia agent to sell them in Australia Warman was aked to enter into a joint venture to make the Warman was aked to enter into a joint venture to make the gearboxes I Australia but declinedgearboxes I Australia but declinedDwyer was a manager at Warman which ran the agancy side Dwyer was a manager at Warman which ran the agancy side of the business. He was thinking of leaving and Warman of the business. He was thinking of leaving and Warman offered to sell him the agency. He declinedoffered to sell him the agency. He declinedBefore leaving he undermined Warman’s relationship with Before leaving he undermined Warman’s relationship with Bonfiglioli , set up a new business, and took up the joint Bonfiglioli , set up a new business, and took up the joint venture with Bonfiglioli, which then took over the agency venture with Bonfiglioli, which then took over the agency businessbusinessTrial judge – breach of fiduciary duty Trial judge – breach of fiduciary duty


Mason C.J., Brennan , Deane , Dawson and Gaudron JJ.Mason C.J., Brennan , Deane , Dawson and Gaudron JJ. There is no doubt that, before leaving the employment of Warman, There is no doubt that, before leaving the employment of Warman, Dwyer had made at least a preliminary agreement to set up a joint Dwyer had made at least a preliminary agreement to set up a joint venture with Bonfiglioli, thus supplanting Warman. Instead of venture with Bonfiglioli, thus supplanting Warman. Instead of attempting to enhance the relationship between Bonfiglioli and his attempting to enhance the relationship between Bonfiglioli and his employer, Dwyer actively sought to reduce Bonfiglioli's confidence employer, Dwyer actively sought to reduce Bonfiglioli's confidence in Warman. So much is plain from the correspondence and from the in Warman. So much is plain from the correspondence and from the fact that Dwyer caused B.T.A. and E.T.A. to be incorporated months fact that Dwyer caused B.T.A. and E.T.A. to be incorporated months before he resigned in 1988. It is also plain that Dwyer made before he resigned in 1988. It is also plain that Dwyer made arrangements with the other staff of Warman's Queensland branch arrangements with the other staff of Warman's Queensland branch to the effect that they would leave Warman and become the staff of to the effect that they would leave Warman and become the staff of the new distributing agent if and when his plans came to fruition. the new distributing agent if and when his plans came to fruition. Hence, this is a clear case of a fiduciary breaching his obligations.Hence, this is a clear case of a fiduciary breaching his obligations.


Remedy? Account –Remedy? Account –

In the case of a business it may well be inappropriate and inequitable to compel the In the case of a business it may well be inappropriate and inequitable to compel the errant fiduciary to account for the whole of the profit of his conduct of the business errant fiduciary to account for the whole of the profit of his conduct of the business or his exploitation of the principal's goodwill over an indefinite period of time. In or his exploitation of the principal's goodwill over an indefinite period of time. In such a case, it may be appropriate to allow the fiduciary a proportion of the profits, such a case, it may be appropriate to allow the fiduciary a proportion of the profits, depending upon the particular circumstances. That may well be the case when it depending upon the particular circumstances. That may well be the case when it appears that a significant proportion of an increase in profits has been generated appears that a significant proportion of an increase in profits has been generated by the skill, efforts, property and resources of the fiduciary, the capital which he has by the skill, efforts, property and resources of the fiduciary, the capital which he has introduced and the risks he has taken, so long as they are not risks to which the introduced and the risks he has taken, so long as they are not risks to which the principal's property has been exposed. Then it may be said that the relevant principal's property has been exposed. Then it may be said that the relevant proportion of the increased profits is not the product or consequence of the proportion of the increased profits is not the product or consequence of the plaintiff's property but the product of the fiduciary's skill, efforts, property and plaintiff's property but the product of the fiduciary's skill, efforts, property and resources. This is not to say that the liability of a fiduciary to account should be resources. This is not to say that the liability of a fiduciary to account should be governed by the doctrine of unjust enrichment, though that doctrine may well have governed by the doctrine of unjust enrichment, though that doctrine may well have a useful part to play; it is simply to say that the stringent rule requiring a fiduciary to a useful part to play; it is simply to say that the stringent rule requiring a fiduciary to account for profits can be carried to extremes and that in cases outside the realm of account for profits can be carried to extremes and that in cases outside the realm of specific assets, the liability of the fiduciary should not be transformed into a vehicle specific assets, the liability of the fiduciary should not be transformed into a vehicle for the unjust enrichment of the plaintifffor the unjust enrichment of the plaintiff


ResultResult

Warman Warman was entitled to an account of profits made by the new company in its first two years of operation on the basis of the net profits of the business before tax less an appropriate allowance for the expenses, skill, expertise, effort and resources contributed by the defendants

Financial adviser–client Financial and investment advisers may owe fiduciary duties: Calvo v Sweeney [2009] NSWSC 719 at [219]Daly v Sydney Stock Exchange (1986) 160 CLR 371:The duty of an investment adviser who is approached by a client for advice and undertakes to give it, and who proposes to offer the client an investment in which the adviser has a financial interest, is a heavy one. His duty is to furnish the client with all the relevant knowledge which the adviser possesses, concealing nothing that might reasonably be regarded as relevant to the making of the investment decision including the identity of the buyer or seller of the investment when that identity is relevant, to give the best advice which the adviser could give if he did not have but a third party did have a financial interest in the investment to be offered, to reveal fully the adviser’s financial interest, and to obtain for the client the best terms which the client would obtain from a third party if the adviser were to exercise due diligence on behalf of his client in such a transaction.

Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 165

Kia Ora Gold Corp Ltd was taking over Western United LtdMany Kia Ora directors had an interest in Westerna report by ‘independent qualified persons’ for the information of shareholders whose approval was ultimately required at a general meetingThe firm of chartered accountants (Nelson Wheeler) engaged by Kia Ora had, in fact, a long history of dealing with both that company and Western United Ltd. The report asserted that the price to be paid for the shares in Western United was fair and reasonable.


This was not the case, with Kia Ora paying out around $26m for $6m worth of shareholdings and thus enabling huge personal profits to be made by the Kia Ora directors who held shares in Western United. Kia Ora subsequently brought an action against the partners of the accountancy firm seeking to recover for its loss.


High Court: The accountants owed no relevant fiduciary duty to K There was no prior or concurrent engagement or undertaking by any member of the accounting firm which presented an actual conflict or a real or substantial possibility of conflict in the acceptance and performance of the retainer by the provision of the report

Guardians and wardsGuardians and wards

Trevorrow v State of South Australia (No Trevorrow v State of South Australia (No 5)5) (2007) 98 SASR 136 (2007) 98 SASR 136

Bennett v Minister of Community WelfareBennett v Minister of Community Welfare (1992) 176 CLR 408(1992) 176 CLR 408

Countess of Bective v Federal Countess of Bective v Federal Commissioner of TaxationCommissioner of Taxation (1932) 47 CLR (1932) 47 CLR 417417

Parents/Guardians and Children in Parents/Guardians and Children in situations of abuse?situations of abuse?

M(K) v M(H)M(K) v M(H) (1992) 96 DLR (4th) 289 – incest by (1992) 96 DLR (4th) 289 – incest by fatherfatherThe Supreme Court held that the relationship of The Supreme Court held that the relationship of parent and child was fiduciary, giving rise to a parent and child was fiduciary, giving rise to a fiduciary duty to protect the child's well-being fiduciary duty to protect the child's well-being and health; and that incest was a breach of that and health; and that incest was a breach of that duty. duty. La Forest JLa Forest JIndeed, the essence of the parental obligation in Indeed, the essence of the parental obligation in the present case is simply to refrain from the present case is simply to refrain from inflicting personal injury upon one's child inflicting personal injury upon one's child


What is the content of the fiduciary duty of What is the content of the fiduciary duty of those in loco parentis?those in loco parentis?To do what is in the child’s best interests?To do what is in the child’s best interests?To act loyally?To act loyally?Can the government be liable for the breach Can the government be liable for the breach of duty by the parents?of duty by the parents?KLB v British Columbia KLB v British Columbia [2003] 2 S.C.R. 403[2003] 2 S.C.R. 403


McLaughlin CJ: I have said that concern for the best McLaughlin CJ: I have said that concern for the best interests of the child informs the parental [**52] interests of the child informs the parental [**52] fiduciary relationship, as La Forest J. noted in M. (K.) v. fiduciary relationship, as La Forest J. noted in M. (K.) v. M. (H.), supra, at p. 65. But the duty imposed is to act M. (H.), supra, at p. 65. But the duty imposed is to act loyally, and not to put one's own or others' interests loyally, and not to put one's own or others' interests ahead of the child's in a manner that abuses the child's ahead of the child's in a manner that abuses the child's trust. This explains the cases referred to above. The trust. This explains the cases referred to above. The parent who exercises undue influence over the child in parent who exercises undue influence over the child in economic matters for his own gain has put his own economic matters for his own gain has put his own interests ahead of the child's, in a manner that abuses interests ahead of the child's, in a manner that abuses the child's trust in him. The same may be said of the the child's trust in him. The same may be said of the parent who uses a child for his sexual gratification or a parent who uses a child for his sexual gratification or a parent who, wanting to avoid trouble for herself and parent who, wanting to avoid trouble for herself and her household, turns a blind eye to the abuse of a child her household, turns a blind eye to the abuse of a child by her spouse. by her spouse.


The parent need not, as the Court of Appeal The parent need not, as the Court of Appeal suggested in the case at bar, be consciously suggested in the case at bar, be consciously motivated by a desire for profit or personal motivated by a desire for profit or personal advantage; nor does it have to be her own interests, advantage; nor does it have to be her own interests, rather than those of a third party, that she puts ahead rather than those of a third party, that she puts ahead of the child's. It is rather a question of disloyalty -- of of the child's. It is rather a question of disloyalty -- of putting someone's interests ahead of the child's in a putting someone's interests ahead of the child's in a manner that abuses the child's trust. Negligence, manner that abuses the child's trust. Negligence, even aggravated negligence, will not ground parental even aggravated negligence, will not ground parental fiduciary liability unless [**53] it is associated with fiduciary liability unless [**53] it is associated with breach of trust in this sense…. Returning to the facts breach of trust in this sense…. Returning to the facts of this case, there is no evidence that the government of this case, there is no evidence that the government put its own interests ahead of those of the children or put its own interests ahead of those of the children or committed acts that harmed the children in a way that committed acts that harmed the children in a way that amounted to betrayal of trust or disloyalty.amounted to betrayal of trust or disloyalty.


Paramasivam v FlynnParamasivam v Flynn Guardian who had sexually assaulted a Guardian who had sexually assaulted a child under his care and controlchild under his care and control from Fiji from FijiApplicant out of time by 10 ½ yearsApplicant out of time by 10 ½ years


In Anglo-Australian law, the interests which the In Anglo-Australian law, the interests which the equitable doctrines invoked by the appellant, and equitable doctrines invoked by the appellant, and related doctrines, have hitherto protected are economic related doctrines, have hitherto protected are economic interests. If property is transferred or a transaction interests. If property is transferred or a transaction entered into as a result of undue influence, then the entered into as a result of undue influence, then the transaction may be set aside or, no doubt, the appellant transaction may be set aside or, no doubt, the appellant may be compensated for loss resulting from the may be compensated for loss resulting from the transaction; similarly if a transaction is induced by transaction; similarly if a transaction is induced by unconscionable conduct; so, in cases usually classified unconscionable conduct; so, in cases usually classified as involving fiduciary obligations not to allow interest as involving fiduciary obligations not to allow interest to conflict with duty, the interests protected have been to conflict with duty, the interests protected have been economic. If a fiduciary, within the scope of the economic. If a fiduciary, within the scope of the fiduciary obligation, makes an unauthorised profit or fiduciary obligation, makes an unauthorised profit or takes for himself or herself an unauthorised takes for himself or herself an unauthorised commercial advantage, then the person to whom the commercial advantage, then the person to whom the duty is owed has a remedy duty is owed has a remedy


All those considerations lead us firmly to the All those considerations lead us firmly to the conclusion that fiduciary claim, such as that made conclusion that fiduciary claim, such as that made by the plaintiff in this case, is most unlikely to be by the plaintiff in this case, is most unlikely to be upheld by Australian courts. Equity, through the upheld by Australian courts. Equity, through the principles it has developed about fiduciary duty, principles it has developed about fiduciary duty, protects particular interests which differ from protects particular interests which differ from those protected by the law of contract and tort, those protected by the law of contract and tort, and protects those interests from a standpoint and protects those interests from a standpoint which is peculiar to those principles. The truth of which is peculiar to those principles. The truth of that is not at all undermined by the undoubted that is not at all undermined by the undoubted fact that fiduciary duties may arise within the fact that fiduciary duties may arise within the relationship governed by contract or that liability relationship governed by contract or that liability in equity may coexist with liability in tort. in equity may coexist with liability in tort.


To say, truly, that categories are not closed To say, truly, that categories are not closed does not justify so radical a departure from does not justify so radical a departure from underlying principle. Those propositions, in underlying principle. Those propositions, in our view, lie at the heart of the High Court our view, lie at the heart of the High Court authorities to which we have referred, authorities to which we have referred, particularly perhaps, particularly perhaps, Breen.Breen. It follows that It follows that Gallop J was justified in concluding that he Gallop J was justified in concluding that he was not persuaded that the appellant’s was not persuaded that the appellant’s claim based on breaches of fiduciary owed claim based on breaches of fiduciary owed by the respondent to the appellant had real by the respondent to the appellant had real prospects of successprospects of success


Williams v Minister, Aboriginal Land Rights Act Williams v Minister, Aboriginal Land Rights Act 19831983 (2000) Aust Tort Reports 81-578 (2000) Aust Tort Reports 81-578 The appellant, in seeking an application for an The appellant, in seeking an application for an extension of time to bring an action against the extension of time to bring an action against the Aboriginal Welfare Board, claimed damages in Aboriginal Welfare Board, claimed damages in tort as well as claiming equitable relief. tort as well as claiming equitable relief. On the basis of her wardship, the Plaintiff On the basis of her wardship, the Plaintiff argued that the Board owed her a fiduciary duty argued that the Board owed her a fiduciary duty as to her custody, maintenance and education. as to her custody, maintenance and education. This claim was rejected at first instance, but was This claim was rejected at first instance, but was allowed on appealallowed on appeal


Kirby P - The Board was, in my view, arguably Kirby P - The Board was, in my view, arguably obliged to Ms Williams to act in her interest and in a obliged to Ms Williams to act in her interest and in a way that truly provided, in a manner apt for a way that truly provided, in a manner apt for a fiduciary, for her ‘custody, maintenance and fiduciary, for her ‘custody, maintenance and education’. I consider that it is distinctly arguable education’. I consider that it is distinctly arguable that a person who suffers as a result of a want of that a person who suffers as a result of a want of proper care on the part of the fiduciary, may recover proper care on the part of the fiduciary, may recover equitable compensation from the fiduciary for the equitable compensation from the fiduciary for the losses occasioned by the want of proper care; losses occasioned by the want of proper care; cf cf Norberg v WynribNorberg v Wynrib [1992] 4 WWR 577 at 606; (1992) [1992] 4 WWR 577 at 606; (1992) 92 DLR (4th) 499. In other jurisdictions, 92 DLR (4th) 499. In other jurisdictions, compensation for breach of fiduciary duty has been compensation for breach of fiduciary duty has been held to include recompense for the injury suffered to held to include recompense for the injury suffered to the plaintiff’s feelings: see, eg, the plaintiff’s feelings: see, eg, Szafer v Chodos Szafer v Chodos (1986) 27 DLR (4th) 388; (1986) 27 DLR (4th) 388; McKaskell v BensemanMcKaskell v Benseman [1989] 3 NZLR 75.[1989] 3 NZLR 75.


Cubillo v CommonwealthCubillo v Commonwealth - stolen - stolen generationgenerationOn appeal the Full Federal Court On appeal the Full Federal Court (Sackville, Weinberg and Hely JJ) (Sackville, Weinberg and Hely JJ) concluded, after having considered concluded, after having considered the appellant’s statutory claims, that the appellant’s statutory claims, that the claim based in breaches of the claim based in breaches of fiduciary duties “faced fiduciary duties “faced insurmountable obstacles.”insurmountable obstacles.”


The second obstacle is that, in any event, the The second obstacle is that, in any event, the appellant’s claims are, to the use the appellant’s claims are, to the use the language of language of Paramasivam v FlynnParamasivam v Flynn, within the , within the purview of the law of torts. As the High Court purview of the law of torts. As the High Court has held, there is no room for the has held, there is no room for the superimposition of fiduciary duties on superimposition of fiduciary duties on common law duties simply to improve the common law duties simply to improve the nature and extent of the remedies available to nature and extent of the remedies available to an aggrieved party. If it had been the case an aggrieved party. If it had been the case that the removal and detention of the that the removal and detention of the appellants were not authorised by the appellants were not authorised by the Ordinances (or otherwise justified by law), Ordinances (or otherwise justified by law), those who caused the removal or detention those who caused the removal or detention would be guilty of tortious conduct and liable would be guilty of tortious conduct and liable at common law. There would be no occasion at common law. There would be no occasion to invoke fiduciary principlesto invoke fiduciary principles


Webber v State of New South WalesWebber v State of New South Wales [2003] [2003] NSWSC 1263 NSWSC 1263 Ward of the state Ward of the state sexually and physically sexually and physically assaulted assaulted Any breach of fiduciary duties which might Any breach of fiduciary duties which might give rise to equitable compensation would be give rise to equitable compensation would be confined to instances where the fiduciary acts confined to instances where the fiduciary acts for, or exercises a discretion on behalf of for, or exercises a discretion on behalf of another party; where the fiduciary is another party; where the fiduciary is concerned with economic or proprietorial concerned with economic or proprietorial rights; where the fiduciary‘s duties are rights; where the fiduciary‘s duties are proscriptive rather than prescriptive and where proscriptive rather than prescriptive and where the breaches of duty are not an alternative to the breaches of duty are not an alternative to those arising out of tort, contract or common those arising out of tort, contract or common lawlaw


Tusyn v TasmaniaTusyn v Tasmania [2004] TASSC 50 [2004] TASSC 50 - - sexual abuse in foster caresexual abuse in foster care

Blow J found that a fiduciary relationship Blow J found that a fiduciary relationship existed between a guardian and ward existed between a guardian and ward but that “ … it does not necessarily follow but that “ … it does not necessarily follow that the guardian owes the ward a that the guardian owes the ward a fiduciary duty to take reasonable care of fiduciary duty to take reasonable care of the ward’s physical safety”the ward’s physical safety”


SB v State of New South Wales [2004] VSC SB v State of New South Wales [2004] VSC 514 514 The Plaintiff, who had been placed as an infant The Plaintiff, who had been placed as an infant with a foster family, was sexually abused by with a foster family, was sexually abused by her foster father for some years. When this her foster father for some years. When this was discovered, the Plaintiff, then just sixteen was discovered, the Plaintiff, then just sixteen years of age, was sent by the Department to years of age, was sent by the Department to live with her father whom she barely knew. live with her father whom she barely knew. She was then sexually abused and isolated by She was then sexually abused and isolated by her father over a period in excess of ten years. her father over a period in excess of ten years. As a result of the incestuous relationship the As a result of the incestuous relationship the Plaintiff gave birth to two children.Plaintiff gave birth to two children.


Why the repeated failure of equity to Why the repeated failure of equity to become involved?become involved?Aren’t the doctrinal reasons for not Aren’t the doctrinal reasons for not expanding equitable roles the same expanding equitable roles the same arguments that failed in 1980s when equity arguments that failed in 1980s when equity expanded into commercial relationshipsexpanded into commercial relationshipsWhat of equity’s much vaunted maxims of What of equity’s much vaunted maxims of never letting a wrong lie without a remedy? never letting a wrong lie without a remedy? Equity acting personally?Equity acting personally?None of the economic arguments applyNone of the economic arguments apply

Commercial relationshipsCommercial relationships

Hospital Products Ltd v United States Hospital Products Ltd v United States Surgical CorporationSurgical Corporation

United Dominions Corporation v BrianUnited Dominions Corporation v Brian

John Alexander’s Clubs Pty Limited v White City Tennis Club Limited (2010)

241 CLR 1 This case concerned an option to purchase part of the land at the famous White City tennis grounds from NSW Tennis Association (NSW Tennis).

NSW Tennis wished to sell the land after alternative facilities had been built for the Sydney Olympics. Various parties ran tennis activities on the land, including the White City Tennis Club (The Club). John Alexander’s Clubs Pty Ltd (JACS) was interested in purchasing the land and entered into an agreement with the Club called a ‘memorandum of understanding (MOU)’ which formalized their intention to work together to create a new tennis club. The MOU noted that JACS promised that it would seek to obtain an option to purchase the land (or part of it) from Tennis NSW. Later, the land ownership changed hands. The new owners granted JACS an option to purchase which allows JACS or another nominate entity the right to exercise the option (the Third White City Agreement).

The Club was a party to this agreement and agreed to JACS’ option being unconditional. Soon after, disputes arose between JACS and the Club. JACS sought to terminate the MOU on the grounds that the Club had repudiated it. JACS nominated a company called Poplar Holdings Pty Ltd (Poplar) to exercise the option and it became the owner of the land.

The Club argued that JACS had breached its fiduciary obligation to the Club and that Poplar held the land on constructive trust for the Club

Commercial relationshipsCommercial relationshipsHC – no fiduciary dutyHC – no fiduciary duty

Here the contracts to which JACS and the Club were parties are important in assessing whether JACS was bound by a fiduciary duty in relation to its exercise of the cl 8 option. The MOU obliged JACS to obtain an option, and exercise it in a certain way and on certain conditions. Before the First White City Agreement, JACS had not been able to obtain an option to buy part of the White City Land. By that agreement, and the Second and Third White City Agreements, it obtained an option, and the Club obtained an additional option after the JACS option expired. The Club, as party to the Third White City Agreement, consented to the unconditional nature of JACS’s option. The Club could have bargained for more precision in cl 8, using its ability to refuse to agree to surrender the lease. It apparently did not. The Club was not relying on representations by JACS. It was not overborne by some greater strength possessed by JACS. It was not depending on JACS to carry out dealings of which the Club was necessarily ignorant. It was not trusting JACS to do anything. What JACS and the Club did in relation to the Third White City Agreement and the exercise of JACS’s option under cl 8(a), they did consulting their own interests, with knowledge of what the other was doing.

Doctors and patientsDoctors and patients

Breen v WilliamsBreen v Williams (1996) 186 CLR 71 at (1996) 186 CLR 71 at 108; 138 ALR 259 at 285. 108; 138 ALR 259 at 285.

Does a doctor owed his patient a fiduciary Does a doctor owed his patient a fiduciary duty to disclose a patient's medical duty to disclose a patient's medical records to her?records to her?

Moore v Regents of the University of Moore v Regents of the University of CaliforniaCalifornia 793 P 2d 479 (1990) - profits 793 P 2d 479 (1990) - profits


The High Court held that it was The High Court held that it was impossible to establish any conflict of impossible to establish any conflict of interest and duty, unauthorised profit or interest and duty, unauthorised profit or loss in relation to a doctor denying a loss in relation to a doctor denying a patient access to the doctor’s medical patient access to the doctor’s medical records. Accordingly, the court held the records. Accordingly, the court held the doctor’s refusal to give such access did doctor’s refusal to give such access did not amount to breach of any fiduciary not amount to breach of any fiduciary obligation.obligation.


Dawson and Toohey JJ said: Dawson and Toohey JJ said:

"... "... it is the law of negligence and contract which it is the law of negligence and contract which governs the duty of a doctor towards a patient. This governs the duty of a doctor towards a patient. This leaves no need, or even room, for the imposition of leaves no need, or even room, for the imposition of fiduciary obligations. Of course, fiduciary duties may fiduciary obligations. Of course, fiduciary duties may be superimposed upon contractual obligations and it be superimposed upon contractual obligations and it is conceivable that a doctor may place himself in a is conceivable that a doctor may place himself in a position with potential for a conflict of interest - if, position with potential for a conflict of interest - if, for example, the doctor has a financial interest in a for example, the doctor has a financial interest in a hospital or a pathology laboratory - so as to give rise hospital or a pathology laboratory - so as to give rise to fiduciary obligations ... . But that is not this caseto fiduciary obligations ... . But that is not this case

Crown and Indigenous PeoplesCrown and Indigenous Peoples

Courts in a number of jurisdictions have Courts in a number of jurisdictions have discussed the existence of fiduciary duties owed discussed the existence of fiduciary duties owed by the Crown to aboriginal peoples. The by the Crown to aboriginal peoples. The existence of such fiduciary duties stems from the existence of such fiduciary duties stems from the recognition that aboriginal peoples, as the recognition that aboriginal peoples, as the original occupiers of land, have special rights original occupiers of land, have special rights that are protected by the imposition of fiduciary that are protected by the imposition of fiduciary duties upon the Crown in the way government duties upon the Crown in the way government power affecting the interests of aboriginal power affecting the interests of aboriginal peoples is exercised. The notion of the Crown’s peoples is exercised. The notion of the Crown’s fiduciary duties to its aboriginal peoples is most fiduciary duties to its aboriginal peoples is most developed in Canada.developed in Canada.


s 35(1) of the Constitution Act, 1982 which s 35(1) of the Constitution Act, 1982 which stipulates:stipulates:

The existing aboriginal and treaty rights of The existing aboriginal and treaty rights of the aboriginal peoples of Canada are the aboriginal peoples of Canada are hereby recognized and affirmed.hereby recognized and affirmed.


Guerin v RGuerin v R (1984) 13 DLR (4th) 321 at 334 (1984) 13 DLR (4th) 321 at 334 The conclusion that the Crown is a fiduciary The conclusion that the Crown is a fiduciary depends upon the further proposition that the depends upon the further proposition that the Indian interest in the land is inalienable except Indian interest in the land is inalienable except upon surrender to the Crown. An Indian band is upon surrender to the Crown. An Indian band is prohibited from directly transferring its interest to prohibited from directly transferring its interest to a third party. Any sale or lease of land can only a third party. Any sale or lease of land can only be carried out after a surrender has taken place, be carried out after a surrender has taken place, with the Crown acting on behalf of the band’s with the Crown acting on behalf of the band’s behalf. ... The surrender requirement, and the behalf. ... The surrender requirement, and the responsibility it entails, are the source of a distinct responsibility it entails, are the source of a distinct fiduciary obligation owed by the Crown to the fiduciary obligation owed by the Crown to the IndiansIndians..


Wewaykum Indian Band v CanadaWewaykum Indian Band v Canada [2002] 4 SCR [2002] 4 SCR 245 – two bands of the Laich-kwil-tach First 245 – two bands of the Laich-kwil-tach First Nation claimed Indian reserves granted by Nation claimed Indian reserves granted by Crown under an ActCrown under an ActThe nature and importance of the appellant The nature and importance of the appellant bands' interest in these lands prior to 1938, bands' interest in these lands prior to 1938, and the Crown's intervention as the exclusive and the Crown's intervention as the exclusive intermediary to deal with others, including the intermediary to deal with others, including the province, on their behalf, imposed a fiduciary province, on their behalf, imposed a fiduciary duty on the Crown but there is no persuasive duty on the Crown but there is no persuasive reason to conclude that the obligations of reason to conclude that the obligations of loyalty, good faith and disclosure of relevant loyalty, good faith and disclosure of relevant information were not fulfilledinformation were not fulfilled


R R v Sparrowv Sparrow (1990) 70 DLR (4th) 385 (1990) 70 DLR (4th) 385 Delgamuukw v British ColumbiaDelgamuukw v British Columbia (1997) 153 DLR (1997) 153 DLR

(4th) 193 (4th) 193 R v MarshallR v Marshall (1999) 177 DLR (4th) 513 (1999) 177 DLR (4th) 513

Mabo v Queensland (No 2)Mabo v Queensland (No 2) (1992) 175 CLR 1 (1992) 175 CLR 1 Toohey J, at 199–205 Toohey J, at 199–205

Wik Peoples v QueenslandWik Peoples v Queensland (1996) 187 CLR 1 (1996) 187 CLR 1 .Brennan CJ, in dissent, found that the .Brennan CJ, in dissent, found that the Crown’s power to extinguish native title did Crown’s power to extinguish native title did not, by itself, give rise to fiduciary dutiesnot, by itself, give rise to fiduciary duties


Thorpe v Commonwealth (No 2)Thorpe v Commonwealth (No 2) (1997) 144 (1997) 144 ALR 677 ALR 677 The result is that whether a fiduciary duty The result is that whether a fiduciary duty is owed by the Crown to the indigenous is owed by the Crown to the indigenous peoples of Australia remains an open peoples of Australia remains an open question. This Court has simply not question. This Court has simply not determined it. Certainly, it has not determined it. Certainly, it has not determined it adversely to the proposition. determined it adversely to the proposition. On the other hand, there is no holding On the other hand, there is no holding endorsing such a endorsing such a fiduciaryfiduciary duty, still less duty, still less for the generality of the claim asserted in for the generality of the claim asserted in the first declaration in Mr Thorpe's writ.the first declaration in Mr Thorpe's writ.


Bodney v Westralia Airports Corporation Pty Bodney v Westralia Airports Corporation Pty LtdLtd (2000) 180 ALR 91 – Lehane J (2000) 180 ALR 91 – Lehane JIn my view, the foregoing discussion leads In my view, the foregoing discussion leads to two conclusions. One is that the to two conclusions. One is that the authorities from other jurisdictions do not authorities from other jurisdictions do not provide a firm basis for the assertion of a provide a firm basis for the assertion of a fiduciaryfiduciary duty of the kind for which the duty of the kind for which the second applicants contend. The other is second applicants contend. The other is that the tendency of authority in the High that the tendency of authority in the High Court - including, significantly, Court - including, significantly, BreenBreen - is - is against the existence of such a duty. against the existence of such a duty.


That, of course, does not mean that circumstances will That, of course, does not mean that circumstances will not arise in which the Crown has not arise in which the Crown has fiduciaryfiduciary duties, duties, owed to particular indigenous people, in relation to the owed to particular indigenous people, in relation to the alienation of land over which they hold native title. Nor alienation of land over which they hold native title. Nor does it mean that where, in particular circumstances, a does it mean that where, in particular circumstances, a duty of that kind is breached (or a breach is threatened) duty of that kind is breached (or a breach is threatened) a constructive trust might not appropriately be a constructive trust might not appropriately be imposed. But the second applicants' pleading does not, imposed. But the second applicants' pleading does not, in my view, allege facts which would establish a in my view, allege facts which would establish a fiduciaryfiduciary duty, on the part either of the State or of the duty, on the part either of the State or of the Commonwealth, requiring either the State or the Commonwealth, requiring either the State or the Commonwealth not to participate as they did (or in the Commonwealth not to participate as they did (or in the manner in which they did) in the transactions as a result manner in which they did) in the transactions as a result of which the Commonwealth obtained title to the land of which the Commonwealth obtained title to the land incorporating the claim area.incorporating the claim area.

When do the duties end?When do the duties end?

Generally they will cease when the Generally they will cease when the relationship has been terminated. relationship has been terminated. However, in certain situations fiduciary However, in certain situations fiduciary obligations are owed after the relationship obligations are owed after the relationship has ended. Thus, in has ended. Thus, in Chan v ZachariaChan v Zacharia (1984) 154 CLR 178; 53 ALR 417, (1984) 154 CLR 178; 53 ALR 417, although a partnership had been although a partnership had been dissolved, the partners still owed fiduciary dissolved, the partners still owed fiduciary obligations to each other until the obligations to each other until the partnership had been formally wound up. partnership had been formally wound up.

Fiduciary Relationships Professor Cameron Stewart.

Documents