FIDUCIARY DUTIES
1. Parties
2. Preliminary Issues
a. Identify in advance the possible breaches
i. At the preliminary stage, [X] may have breached their fiduciary duty to [Y] by (the acts).
3. Fiduciary Relationship (the parties)
-a relationship that is established by the courts to have trust and confidence
a. Established category
-does the relationship fall in one of the established categories?
List the different fiduciary relationships/duties that apply:
1. Trustee/Beneficiary – Keech v Sandford
2. Agents or Brokers/Principle – McKenzie v McDonald; Kelly v Cooper
3. Stockbroker/Client - Hodgkinson v Simms
4. Partner/Partner - Chan v Zacharia; Fraser Edmiston Pty Ltd v AGT
5. Corporate Partners, Directors or Officers/Company and Stockholders - Regal (Hastings) v Gulliver;
Glavanics v Brunninghausen
6. Solicitor/Client - Farrington v Rowe McBride and Partners
7. Employee/Employer – Warman International v Dwyer
Note: discuss all potential categories and rule out the ones that do not apply.
Even if it does fall under one of the established categories always mention the fact based side.
OR
b. Novel category
i. Although they do not fall into a status-based fiduciary category, [X] and [Y] may be in a
fiduciary relationship, based on their particular circumstances.
1. Trust and Confidence: Where one party has undertaken to act for another, and
the other party reposes trust and confidence in the alleged fiduciary, they may
be bound by fiduciary duties Hospital Products.
2. Vulnerability:The vulnerability of the alleged principal in the circumstances will not
be conclusive of a fiduciary relationship, but will be a powerful indication that
one exists Hodgkinson v Simms .
3. Expectation to act in Principle’s best interest: look to the facts and use the exact
phrasing of the conversations/facts. Was there an expectation that X would act
only in the interests of Y and not in his own? Hodgkinson; Pilmer v Duke
4. [X] has power/discretion to affect [Y] interests: again look to the facts (discretion
of money is evidence) Hospital Products
ii. In novel categories, can contract out of Fiduciary Obligations
1. ASIC v Citigroup Global Markets Australia Pty Ltd
4. Scope
a. The obligations of a fiduciary may precede the start of, and continue after the end of, of the formal
relationship between the parties Fraser Edmiston; Chan v Zacharia
b. The Fiduciary Duty only arises from the part of the alleged agreement that [X] agreed to do.
i. Here, [X] as the agent/fiduciary, agreed to do (act) for [Y].
ii. [X]’s fiduciary obligations only exist during the course of that duty. Breen v Williams
c. The scope of the relationship is relevant to determining whether a breach has occurred: Kelly v
Cooper
d. The scope of the fiduciary relationship is dependent upon the agreement between the parties.
Here it appears that the scope of fiduciary obligations between X and Y are broad/narrow in that
they include...
5. Duties
a. Fiduciaries owe two duties:
i. to not obtain a personal benefit or profit from their position as fiduciary Chan v Zacharia
ii. not to place themselves in a position where their personal interests conflict with those of the
principal Aberdeen Railway v Blaikie
b. Don’t necessarily have to act IN their interests, as long as you don’t act AGAINST their interests
Breen v Williams
i. Prescriptive agreement: X has to do this.. (not valid in equity)
ii. Proscriptive agreement: X must not do this.. (what would breach a fiduciary relationship)
6. Breach
There are 2 ways in which a fiduciary may breach their duty to a principal. In this case, the breach involved [either
a or b or both]:
a. Personal Profit
i. [X] will breach their Fiduciary Duty by obtaining an undisclosed profit while acting in their
capacity as a fiduciary (includes knowledge and opportunities).
ii. AG v Reid – bribe paid whilst acting as fiduciary
iii. [X] cannot use information obtained as a fiduciary to make a direct pecuniary profit for
themselves.
iv. It does not matter if it is impossible for [Y] to enter into the deal, it is a breach of Fiduciary
Duty if [X] uses information obtained as a fiduciary. Keech v Sanford
v. It does not matter that a principal could not have taken up an opportunity for itself:
Boardman, Regal Hastings
b. Conflict of Interest
i. [X] can breach their Fiduciary Duty through actual or potential conflicts of interest Boardman
v Phipps
7. Defences
a. Fully Informed Consent
i. A fiduciary has a defence to a breach of duty if the principal has given their full and informed
consent to the breach QLD Mines v Hudson; ASIC v Citigroup Global Markets
Australia. In effect this imposes an obligation on a fiduciary to make full disclosure to the
principal in order to proceed without liability.
ii. Look at the possibility of implied consent if [Y] knew but did nothing to prevent [X] from
carrying on with (the act)
b. Contributory Negligence
i. Day v Mead: NZ Court of Appeal stated that there is no reason why a beneficiary may not be
contributory negligent in extreme cases – partial split in damages
ii. In Australia Pilmer v Duke – unlikely that CN will be used, because the principle should be
able to rely on the agent.
iii. Contributory Negligence would probably not apply in Australia as a remedy because of
conceptual difficulties in applying CN.
8. Remedies
All remedies under equity are discretionary and are dependent on the consequences of the breach.
a. Account of Profits
i. A of P is a personal remedy – it is against the person and not the property, and as such,
does not pass with the property once transferred to a third party.