Fiduciary Relationships
Associate Professor Cameron
Stewart
Fiduciary?
The word ‘fiduciary’ has its roots in the Latin
word fiducia, which means confidence. A
fiduciary relationship is thus a relationship of
confidence. The person in whom confidence is
reposed within that relationship is referred to as
the fiduciary. If a fiduciary abuses his or her
position to obtain an advantage or benefit at the
expense of the confiding party, the latter will be
able to seek relief from a court of equity to
prevent such advantage accruing to the
fiduciary.
Equity and fiduciaries
Equity intervenes ... not so much to recoup a
loss suffered by the plaintiff as to hold the
fiduciary to, and vindicate, the high duty owed to
the plaintiff ... [T]hose in a fiduciary position who
enter into transactions with those to whom they
owe fiduciary duties labour under a heavy duty
to show the righteousness of the transactions.
Maguire v Makaronis (1997) 188 CLR 449 at 465
Undivided Loyalty
The essence of fiduciary obligations is that
the fiduciary is precluded from acting in
any other way than in the interests of the
person to whom the duty to so act is owed.
In short, the fiduciary obligation is one of
‘undivided loyalty’: Beach Petroleum NL v
Kennedy (1999) 48 NSWLR 46–7.
Undivided Loyalty
The Bell Group Ltd (in liq) v Westpac Banking Corporation
(No 9) (2009) 70 ACSR 1 at [4552], Owen J said:
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
nature of that relationship, its surrounding circumstances and
the obligations attaching to it so require, it will be held to be
fiduciary. But the fact that it is categorised as fiduciary does
not mean that all of the obligations arising from it are
themselves fiduciary. Unless there are some special
circumstances in the relationship, the duties that equity
demands from the fiduciary will be limited to what I have
described as the core obligations: not to obtain any
unauthorised benefit from the relationship and not to be in a
position of conflict. They stem from the fundamental obligation
of loyalty
Strict duties
The fact that there was no intent to defraud on the part of the
fiduciary is irrelevant: Nocton v Lord Ashburton [1919] AC 492.
The liability of the fiduciary does not depend on establishing that the
person to whom fiduciary duties are owed suffered loss or injury:
Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929)
42 CLR 384 at 408–9, per Dixon J.
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
opportunity exploited by the fiduciary: Warman International Ltd v
Dwyer (1995) 182 CLR 544 at at 558; 128 ALR 201 at 209.
Nor will it matter that the beneficiary would have consented to the
fiduciary making a profit had the beneficiary been properly informed,
if informed consent was never obtained: Murad v Al-Saraj [2005]
EWCA Civ 959.
Horizontal duties
Fiduciary duties
Partner
Partner
Vertical duties
Guardian
Fiduciary
Ward
Duties
Negative duties
Equity does not require the fiduciaries to act
positively in the interests of their beneficiaries:
Friend v Brooker (2009) 255 ALR 601 at [84]
A fiduciary’s obligation ‘does ... not impose
positive legal duties on the fiduciary to act in the
interests of the person to whom the duty is owed’:
Breen v Williams (1996) 186 CLR 71 at 113; 138
ALR 259 at 289
It is said that such positive duties are better
regulated by contract, tort or other equitable
doctrines: Pilmer v Duke Group Ltd (in liq) (2001)
207 CLR 165 at 198
Exception?
Duty to disclose possible conflicts of
interests and seek the informed consent of
the beneficiary of the relationship
Fitzwood Pty Ltd v Unique Goal Pty Ltd (in
liq) (2001) 188 ALR 566, at 576,
Finkelstein J refused to describe the
obligation to seek informed consent as a
positive duty but instead described it as a
‘means by which the fiduciary obtains the
release or forgiveness of a negative duty.
Exception?
The Bell Group Ltd (in liq) v Westpac Banking Corporation
(No 9)
Directors had breached their duties to act in the best
interests of their companies and to exercise their powers
properly, when they had authorised loans which where in
the overall interests of the corporate group, but not in the
interests of some of the individual companies within that
group
Owen J found that the directors’duties to act in the
companies’ best interests and to exercise powers properly
were fiduciary duties. In so finding Owen J argued that
these duties were, in substance, negative or proscriptive
duties.
How?
Fiduciary duties protect
economic interests
Traditional reluctance
New equity? Giller v Procopets [2008]
VSCA 236
The existence of a fiduciary
relationship
Breen v Williams at CLR 92; ALR 273,
Dawson and Toohey JJ observed that the
law has not formulated ‘any precise or
comprehensive definition of the
circumstances in which a person is
constituted a fiduciary in his or her
relations with another’
Presumed fiduciary relationships
A number of commercial and professional
relationships:
Trustee and beneficiary
director–company
legal practitioner–client
agent–principal
partner–partner
Key features?
Loyalty
Trust
Confidence
Vulnerability
Undertaking
Finn – reasonable expectations
Glover – same old problem
Fiduciary Relationships outside
of the presumed categories
Factors include
– the undertaking to fulfil a duty in the
interests of another,
– the scope for one party to unilaterally
exercise a power or discretion that may
affect the rights or interests of another;
and
– a dependency on the part of one party
which causes that party to rely upon the
other.
Fiduciary Relationships outside
of the presumed categories
Economic power/free hand of market
Equity’s intervention distorts economic
activity?
Should equity be reluctant to intervene?
United Dominions Corporation
Ltd v Brian Pty Ltd
Joint venture agreement for the development of
land between United Dominions Corporation
(UDC), Security Projects Ltd (SPL) and Brian
Pty Ltd (Brian).
Land owned by SPL
Financed by UDC on security raised from SPL
Profits made but UDC kept more than its share
by using a clause in the mortgage to SPL
Brian didn’t know about the clause and received
no profit
Did UDC owe Brian a fiduciary duty?
United Dominions Corporation
Ltd v Brian Pty Ltd
The High Court found in Brian’s favour. It held that SPL
and UDC owed fiduciary duties to Brian and that the
collateralisation clause in the mortgage was obtained in
breach of such duties. Dawson J at CLR 16; ALR 750–1
said:
[I]t is quite clear that a fiduciary relationship may arise
during negotiations for a partnership or, for that matter, a
joint venture, before any partnership or joint venture
agreement has been finally concluded if the parties have
acted upon the proposed agreement as they had in this
case. Whilst a concluded agreement may establish a
relationship of confidence, it is nevertheless the
relationship itself which gives rise to fiduciary obligations.
That relationship may arise from the circumstances
leading to the final agreement as much as from the fact
of the final agreement itself.
Hospital Products Ltd v United
States Surgical Corporation
Blackman had an exclusive distributorship
arrangement for products manufactured by
United States Surgical Corporation (USSC)
Blackman’s company, Hospital Products Ltd
(HPL), was soon after substituted as the
distributor.
HPL, using USSC products as models, began to
manufacture products that were essentially
identical to those manufactured by USSC > HPL
went into competition with USSC
Was HPL a fiduciary?
Hospital Products Ltd v United
States Surgical Corporation
By a bare majority the High Court held that there
was no fiduciary relation ship between the
parties and that USSC’s right to relief rested in a
claim for damages for breach of contract. The
majority considered that because the
relationship between the parties was a
commercial one entered into by equal parties at
arm’s length with the intention that both parties
would gain a profit, it was inappropriate to find a
fiduciary relationship between the parties
A vexed question….
Why was there a fiduciary relationship in
one and not the other?
Does Equity have any role in commercial
bargaining?
Are the economic costs of imposing
fiduciary relationships outweighed by
advantages?
Length of the Chancellor’s Foot?
The fiduciary obligation
Aberdeen Railway Co v Blaikie Brothers
[1854] 1 Macq 461 at 471
[A fiduciary will not be permitted] to enter
into engagements in which he has, or can
have, a personal interest conflicting, or
which possibly may conflict, with the
interests of those whom he is bound to
protect
The fiduciary obligation
The duty imposed upon a fiduciary
operates in circumstances where there is
a conflict between the fiduciary’s ‘duty’ and
his or her ‘interest’.
Duty
The word ‘duty’ in this context does not
have a technical meaning. It does not refer
to legally imposed obligations. Rather, it
refers to the actions undertaken by a
fiduciary on behalf of another person.
These actions are not confined to those
undertaken in the performance of a
fiduciary’s mandatory or discretionary
functions. These actions also include
voluntary acts.
Interest
The word ‘interest’, in this context, signifies the
presence of some personal concern on the part
of a fiduciary or of possible significant pecuniary
value in a decision to be taken by the fiduciary.
Finn (1977) at 204 notes:
The pecuniary dimension of the fiduciary’s concern
may take the form of an actual, prospective, or
possible profit to be made in, or as a result of, the
decision he takes or the transaction he effects. Or it
may take the form of an actual, prospective, or
possible saving, or a diminution of a personal liability
Informed consent
The duty imposed upon the fiduciary is
strict. The only way a fiduciary is able to
escape liability for conduct that amounts to
a breach of fiduciary duty is if the conduct
was undertaken with the fully informed
consent of the person to whom the
fiduciary obligations are owed. The
disclosure must be of all material facts and
information that could affect the decision
to give the consent
Examples of informed consent
In Phipps v Boardman [1967] 2 AC 46; [1966] 3
All ER 721 the House of Lords made comments
on the question of consent to a transaction
involving a solicitor who owes fiduciary duties to
clients who are trustees of a trust. In such cases
there is no doubt that the unanimous consent of
the trustees is necessary: Phipps v Boardman at
AC 128; All ER 759, per Lord Upjohn. However,
in that case, Viscount Dilhorne at AC 93; All ER
737 and Lord Cohen at AC 104; All ER 744
suggested that the consent of the beneficiaries
to the trust is also necessary
Examples of informed consent
Director–company relationship, the House of
Lords in Regal (Hastings) Ltd v Gulliver [1967] 2
AC 134; [1942] 1 All ER 378 held that, for a
director to escape liability for breach of fiduciary
duties, the consent of the company through a
resolution of shareholders at a general meeting
of the company was required
Queensland Mines Ltd v Hudson (1978) 18 ALR
1, the Privy Council upheld the validity of the
consent of a company given by its board of
directors
Unauthorised remuneration
Reading v R [1951] AC 507
Reading was a sergeant in the English army
stationed in Egypt. He accompanied civilian
trucks through security checkpoints in order to
assist them in transporting contraband goods. In
return he was paid for his assistance. The court
ruled that Reading owed fiduciary duties to the
Crown and the amount recoverable by the
Crown was the full amount that Reading had
received for his services.
Assuming a double character
In Armstrong v Jackson [1917] 2 KB 822,
Armstrong instructed Jackson, a stockbroker, to
buy shares in a certain company. Jackson
transferred his own shares in that company to
Armstrong. The court ruled that Jackson had
breached his fiduciary duties to Armstrong
A broker who is employed to buy shares cannot sell
his own shares unless he makes a full disclosure of
the fact to his principal, and the principal, with a full
knowledge, gives his assent to the changed position
of the broker ... [A] broker who secretly sells his own
shares is in a wholly false position
Benefits derived by fiduciary to
the exclusion of another
Cases in this category involve a fiduciary,
acting within the scope of his or her
undertaking, deriving a profit or benefit
that should have gone to the person to
whom the fiduciary duties were owed
Benefits derived by fiduciary to
the exclusion of another
Chan v Zacharia (1984) 154 CLR 178 at 199; Deane J
said:
Stated comprehensively in terms of the liability to
account, the principle of equity is that a person who is
under a fiduciary obligation must account to the person
to whom the obligation is owed for any benefit or gain (i)
which has been obtained or received in circumstances
where a conflict or significant possibility of conflict
existed between his fiduciary duty and his personal
interest in the pursuit or possible receipt of such a
benefit or gain or (ii) which was obtained or received by
use or by reason of his fiduciary position or of
opportunity or knowledge resulting from it.
Benefits derived by fiduciary to
the exclusion of another
Two sub-rules, namely:
1. cases in which a fiduciary is not to derive a
profit or benefit that should have gone to the
person to whom fiduciary duties are owed (the
breach of undertaking sub-rule); and
2. cases in which a fiduciary is not to gain a
profit or benefit through the misuse of his or her
position as a fiduciary (the misuse of position
sub-rule).
The breach of undertaking subrule
The purpose of this sub-rule is to prevent a
fiduciary acting for his or her own benefit in a
transaction undertaken for the benefit of the
person to whom he or she stands in a fiduciary
relationship.
Critical to determining if there has been a breach
of fiduciary duties is the determination of the
scope of the fiduciary’s undertaking. The
relationship between the parties must be
examined to ascertain the scope of the
fiduciary’s duties before any question of
breaches of fiduciary duties can be entertained
The breach of undertaking subrule
In Clark Boyce v Mouat [1994] 1 AC 428; [1994] 4 All ER
268, solicitors acted for a woman who mortgaged her
property to cover her son’s debt to a finance company.
The same solicitors acted for the son. The solicitors had
disclosed the potential conflict between their respective
duties to the woman and her son on a number of
occasions. The solicitors’ advice to the woman that she
obtain independent legal advice was never acted upon
by the woman. The woman claimed a breach of fiduciary
duties by the solicitors, arguing that they should have
advised her on the wisdom of the transaction and
investigated the son’s financial position before she
executed the mortgage. In the circumstances, the Privy
Council rejected the woman’s claim on the ground that
the solicitors’ undertaking to the woman extended only to
giving legal advice.
The breach of undertaking subrule
Phipps v Boardman [1967] 2 AC 46
Boardman acted as a solicitor for a trust. He attended
the annual general meeting of Lester & Harris Ltd, a
company in which the trust had a substantial
shareholding. Boardman and Tom Phipps, one of the
beneficiaries under the trust, were unhappy with the
state of the company.
Together they planned to acquire shares in the company
to take over the company. Boardman was able to assess
the viability of the takeover because of information about
the company he gained whilst acting as solicitor for the
trust.
Boardman advised the beneficiaries of the trust of these
plans and no objection was made by any of them. He
also had the consent of two of the three trustees, the
third, being senile, was not advised of these plans.
The breach of undertaking subrule
The takeover was successful and resulted in
profits to the trust in relation to its shareholding
in the company as well as for Boardman and
Tom Phipps in relation to the shares they had
personally acquired. John Phipps, one of the
beneficiaries under the trust, sought an account
of the profits made by Boardman and Tom
Phipps on the grounds of breach of fiduciary
duties.
By a bare majority the House of Lords held in
favour of John Phipps.
The breach of undertaking subrule
The majority Law Lords (Lords Cohen at AC
100–3; All ER 741–3; Hodson at AC 109–11; All
ER 747–8; Guest at AC 114–17; All ER 750–2)
all held that the information obtained by
Boardman was trust property and that it was
irrelevant that the trustees of the trust were in no
position to acquire the shares in the company for
the trust. Because there was a conflict, or at
least a possibility of a conflict, between
Boardman’s duty and interest, the informed
consent of the trustees was needed
Misuse of fiduciary position
sub-rule
The purpose of this sub-rule is to
prevent a fiduciary using his or her
position to secure or assist in
exploiting a profit-making opportunity.
If a fiduciary acts in such a way he or
she must account for any profit or
benefit derived as a result
Misuse of fiduciary position
sub-rule
Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134
The directors of Regal formed a subsidiary
company with the intention that Regal own all
the shares in the subsidiary company. The
directors sought a lease of two cinemas for the
subsidiary company. However, the landlord was
not prepared to grant the lease unless the
subsidiary company had a paid-up capital of
£5000. Because Regal did not have the
necessary capital to invest £5000 in the
subsidiary, the directors decided that Regal
would invest £2000 and that they would invest
the balance themselves. From the shares issued
to them in the subsidiary, the directors made a
profit.
Misuse of fiduciary position
sub-rule
The House of Lords unanimously ruled that
irrespective of whether or not Regal could have
purchased the shares, the directors were liable
to Regal for the profit they made:
The point was not whether the directors had a
duty to acquire the shares in question for the
company and failed in that duty. They had no
such duty. We must take it that they entered
into the transaction lawfully, in good faith and
indeed avowedly in the interests of the
company. However, that does not absolve
them for accountability for any profit which
they made, if it was by reason and in virtue of
their fiduciary office as directors that they
entered into the transaction
Misuse of fiduciary position
sub-rule
Victoria University of Technology v Wilson [2004]
VSC 33, academics working at a university,
exploited for themselves an opportunity to
develop certain computer programs in
circumstances where they were approached, by
a former student of the university, for help with
such a project whilst employed by the university.
The court held that the academics breached
fiduciary obligations owed to the university in
that they should not have exploited the
opportunity for themselves as the opportunity
was one presented to the university which the
university would have exploited for itself.
Presumed Relationships that Carry
Fiduciary Duties
Trustee-beneficiary
Presumed Relationships that Carry
Fiduciary Duties
Director–company
Equity and statutory rules: Corporations Act 2001
(Cth)
English courts have found that directors must
disclose past wrongdoing to their companies, even
where that wrongdoing had no negative effect on
the company’s position: Item Software (UK) Ltd v
Fassihi [2004] EWCA 1244. This argument was
rejected in Australia in P & V Industries v Porto
[2006] VSC 131, by Hollingworth J, who found that
such a duty was prescriptive and outside fiduciary
principles.
Directors and Shareholders?
Directors do not ordinarily owe fiduciary duties to
shareholders: Joinery Products Pty Ltd v Imlach
(2008) 67 ACSR 520.
However, if ‘a special factual relationship between the
directors and the shareholders’ exists, the directors
may also owe fiduciary duties to shareholders: Peskin
v Anderson [2001] 1 BCLC 372 at [33]; St George
Soccer Football Association Inc v Soccer NSW Ltd
[2005] NSWSC 1288.
Thus, where directors conduct negotiations for a
takeover or an acquisition of the company’s business,
they are obliged to loyally promote the interests of all
shareholders: Brunninghausen v Glavanics (1999) 46
NSWLR 538; Silversides Superfunds Pty Limited v
Silverstate Developments Pty Limited [2008] NSWSC
904.
Directors and Shareholders?
Directors owe a fiduciary duty to shareholders to
advise them fully and frankly of relevant
information necessary to make an informed
decision at a general meeting: Chequepoint
Securities Ltd v Claremont Petroleum NL (1986)
11 ACLR 94.
This obligation to make full and fair disclosure
does not oblige the directors to give shareholders
every piece of information that might conceivably
affect their voting. The adequacy of the
information must be assessed in a practical,
realistic way having regard to the complexity of the
proposal: ENT Pty Ltd v Sunraysia Television Ltd
[2007] NSWSC 270.
Directors to creditors?
No - there do not appear to be general fiduciary
obligations owed by directors to creditors: R v
Spies (2000) 201 CLR 603; 173 ALR 529.
Fiduciary obligations may arise in cases where the
company has become insolvent, as the interests of
the creditors begin to take over the interests of the
shareholders, as the assets of the company
effectively become the assets of the creditors as
the company lurches into liquidation: Angas Law
Services Pty Ltd (in liq) v Carabelas (2005) 226
CLR 507; 215 ALR 110; The Bell Group Ltd (in liq)
v Westpac Banking Corporation (No 9) at [4418],
[4439].
Legal practitioner- client
unauthorised profits
Conflicts with other client Hilton v Barker Booth [2005] 1 All
ER 561.
This rule forbids the lawyer from entering into dealings with
their clients, without the clients’ fully informed consent:
Maguire v Makaronis.
It also prevents the lawyer from acting for third parties, when
the interests of those third parties conflict with the clients’.
This is refered to as a conflict between duty and duty. Such
conflicts can be avoided as long as all parties know that the
same practitioner is acting for different parties to the
transaction and no actual conflict of interest arises: Rigg v
Sheridan [2008] NSWCA 79.
What about after the retainer?
Victorian cases: Spincode Pty Ltd v Look Software Pty Ltd
(2001) 4 VR 501
Agent - principal
McKenzie v McDonald [1927] VLR 134
Pedersen v Larcombe [2008] NSWSC
1362
Beach Petroleum NL v Abbott Tout
Russell Kennedy (1999) 33 ACSR 1
Partners
Re Agriculturist Cattle Insurance Co (1870) LR 5 Ch
App 725, at 733, James LJ said:
Ordinary partnerships are by the law assumed and
presumed to be based on the mutual trust and
confidence of each partner in the skill, knowledge
and integrity of the every other partner. As
between the partners and the outside world
(whatever may be their private arrangements
between themselves), each partner is the
unlimited agent of every other in every manner
connected with the partnership business, and not
being in its nature beyond the scope of the
partnership.
Partners
After dissolved? Chan v Zacharia
Friend v Brooker (2009) 255 ALR 601 –
move from partnership to company
structure
Guardians and wards
Trevorrow v State of South Australia (No
5) (2007) 98 SASR 136
Bennett v Minister of Community Welfare
(1992) 176 CLR 408
Countess of Bective v Federal
Commissioner of Taxation (1932) 47 CLR
417
Parents/Guardians and Children in
situations of abuse?
M(K) v M(H) (1992) 96 DLR (4th) 289 –
incest by father
The Supreme Court held that the relationship
of parent and child was fiduciary, giving rise
to a fiduciary duty to protect the child's wellbeing and health; and that incest was a
breach of that duty.
La Forest J
Indeed, the essence of the parental obligation
in the present case is simply to refrain from
inflicting personal injury upon one's child
Parents/Guardians and Children in
situations of abuse?
What is the content of the fiduciary duty of
those in loco parentis?
To do what is in the child’s best interests?
To act loyally?
Can the government be liable for the breach
of duty by the parents?
KLB v British Columbia [2003] 2 S.C.R. 403
Parents/Guardians and Children in
situations of abuse?
McLaughlin CJ: I have said that concern for the best
interests of the child informs the parental [**52]
fiduciary relationship, as La Forest J. noted in M. (K.)
v. M. (H.), supra, at p. 65. But the duty imposed is to
act loyally, and not to put one's own or others'
interests ahead of the child's in a manner that
abuses the child's trust. This explains the cases
referred to above. The parent who exercises undue
influence over the child in economic matters for his
own gain has put his own interests ahead of the
child's, in a manner that abuses 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,
wanting to avoid trouble for herself and her
household, turns a blind eye to the abuse of a child
by her spouse.
Parents/Guardians and Children in
situations of abuse?
The parent need not, as the Court of Appeal
suggested in the case at bar, be consciously
motivated by a desire for profit or personal
advantage; nor does it have to be her own interests,
rather than those of a third party, that she puts
ahead of the child's. It is rather a question of
disloyalty -- of putting someone's interests ahead of
the child's in a manner that abuses the child's trust.
Negligence, even aggravated negligence, will not
ground parental fiduciary liability unless [**53] it is
associated with breach of trust in this sense….
Returning to the facts of this case, there is no
evidence that the government put its own interests
ahead of those of the children or committed acts that
harmed the children in a way that amounted to
betrayal of trust or disloyalty.
Parents/Guardians and Children in
situations of abuse?
Paramasivam v Flynn
Guardian who had sexually assaulted a
child under his care and control from Fiji
Applicant out of time by 10 ½ years
Parents/Guardians and Children in
situations of abuse?
In Anglo-Australian law, the interests which the
equitable doctrines invoked by the appellant, and
related doctrines, have hitherto protected are
economic interests. If property is transferred or a
transaction entered into as a result of undue
influence, then the transaction may be set aside or,
no doubt, the appellant may be compensated for
loss resulting from the transaction; similarly if a
transaction is induced by unconscionable conduct;
so, in cases usually classified as involving fiduciary
obligations not to allow interest to conflict with duty,
the interests protected have been economic. If a
fiduciary, within the scope of the fiduciary
obligation, makes an unauthorised profit or takes for
himself or herself an unauthorised commercial
advantage, then the person to whom the duty is
owed has a remedy
Parents/Guardians and Children in
situations of abuse?
All those considerations lead us firmly to the
conclusion that fiduciary claim, such as that
made by the plaintiff in this case, is most
unlikely to be upheld by Australian courts.
Equity, through the principles it has developed
about fiduciary duty, protects particular
interests which differ from those protected by
the law of contract and tort, and protects those
interests from a standpoint which is peculiar to
those principles. The truth of that is not at all
undermined by the undoubted fact that
fiduciary duties may arise within the
relationship governed by contract or that
liability in equity may coexist with liability in
tort.
Parents/Guardians and Children in
situations of abuse?
To say, truly, that categories are not
closed does not justify so radical a
departure from underlying principle.
Those propositions, in our view, lie at the
heart of the High Court authorities to which
we have referred, particularly perhaps,
Breen. It follows that Gallop J was
justified in concluding that he was not
persuaded that the appellant’s claim
based on breaches of fiduciary owed by
the respondent to the appellant had real
prospects of success
Parents/Guardians and Children in
situations of abuse?
Williams v Minister, Aboriginal Land Rights Act
1983 (2000) Aust Tort Reports 81-578
The appellant, in seeking an application for an
extension of time to bring an action against the
Aboriginal Welfare Board, claimed damages in
tort as well as claiming equitable relief.
On the basis of her wardship, the Plaintiff
argued that the Board owed her a fiduciary duty
as to her custody, maintenance and education.
This claim was rejected at first instance, but was
allowed on appeal
Parents/Guardians and Children in
situations of abuse?
Kirby P - The Board was, in my view, arguably
obliged to Ms Williams to act in her interest and
in a way that truly provided, in a manner apt for
a fiduciary, for her ‘custody, maintenance and
education’. I consider that it is distinctly
arguable that a person who suffers as a result
of a want of proper care on the part of the
fiduciary, may recover equitable compensation
from the fiduciary for the losses occasioned by
the want of proper care; cf Norberg v Wynrib
[1992] 4 WWR 577 at 606; (1992) 92 DLR (4th)
499. In other jurisdictions, compensation for
breach of fiduciary duty has been held to
include recompense for the injury suffered to
the plaintiff’s feelings: see, eg, Szafer v Chodos
(1986) 27 DLR (4th) 388; McKaskell v Benseman
[1989] 3 NZLR 75.
Parents/Guardians and Children in
situations of abuse?
Cubillo v Commonwealth - stolen
generation
On appeal the Full Federal Court
(Sackville, Weinberg and Hely JJ)
concluded, after having considered
the appellant’s statutory claims, that
the claim based in breaches of
fiduciary duties “faced
insurmountable obstacles.”
Parents/Guardians and Children in
situations of abuse?
The second obstacle is that, in any event,
the appellant’s claims are, to the use the
language of Paramasivam v Flynn, within
the purview of the law of torts. As the High
Court has held, there is no room for the
superimposition of fiduciary duties on
common law duties simply to improve the
nature and extent of the remedies available
to an aggrieved party. If it had been the
case that the removal and detention of the
appellants were not authorised by the
Ordinances (or otherwise justified by law),
those who caused the removal or detention
would be guilty of tortious conduct and
liable at common law. There would be no
occasion to invoke fiduciary principles
Parents/Guardians and Children in
situations of abuse?
Webber v State of New South Wales [2003]
NSWSC 1263
Ward of the state sexually and physically
assaulted
Any breach of fiduciary duties which might
give rise to equitable compensation would be
confined to instances where the fiduciary
acts for, or exercises a discretion on behalf of
another party; where the fiduciary is
concerned with economic or proprietorial
rights; where the fiduciary‘s duties are
proscriptive rather than prescriptive and
where the breaches of duty are not an
alternative to those arising out of tort,
contract or common law
Parents/Guardians and Children in
situations of abuse?
Tusyn v Tasmania [2004] TASSC 50
- sexual abuse in foster care
Blow J found that a fiduciary
relationship existed between a
guardian and ward but that “ … it
does not necessarily follow that the
guardian owes the ward a fiduciary
duty to take reasonable care of the
ward’s physical safety”
Parents/Guardians and Children in
situations of abuse?
SB v State of New South Wales [2004] VSC
514
The Plaintiff, who had been placed as an
infant with a foster family, was sexually
abused by her foster father for some years.
When this was discovered, the Plaintiff, then
just sixteen years of age, was sent by the
Department to live with her father whom she
barely knew. She was then sexually abused
and isolated by her father over a period in
excess of ten years. As a result of the
incestuous relationship the Plaintiff gave
birth to two children.
Parents/Guardians and Children in
situations of abuse?
Why the repeated failure of equity to
become involved?
Aren’t the doctrinal reasons for not
expanding equitable roles the same
arguments that failed in 1980s when equity
expanded into commercial relationships
What of equity’s much vaunted maxims of
never letting a wrong lie without a remedy?
Equity acting personally?
None of the economic arguments apply
Commercial relationships
Hospital Products Ltd v United States
Surgical Corporation
United Dominions Corporation v Brian
Employment: C & K A Flanagan
Salimakers Pty Ltd v Walker [2002]
NSWSC 1125; Victoria University of
Technology v Wilson [2004] VSC 33
Commercial relationships
Financial advisors: Daly v Sydney Stock
Exchange (1986) 160 CLR 371
Aequitas Ltd v AEFC Ltd [2001] NSWSC
14
Pilmer v Duke Group Ltd (in liq) (2001)
207 CLR 165
Banks- customers?
Doctors and patients
Breen v Williams (1996) 186 CLR 71 at
108; 138 ALR 259 at 285.
Does a doctor owed his patient a fiduciary
duty to disclose a patient's medical
records to her?
Moore v Regents of the University of
California 793 P 2d 479 (1990) - profits
Doctors and patients
The High Court held that it was
impossible to establish any conflict of
interest and duty, unauthorised profit or
loss in relation to a doctor denying a
patient access to the doctor’s medical
records. Accordingly, the court held the
doctor’s refusal to give such access did
not amount to breach of any fiduciary
obligation.
Doctors and patients
Dawson and Toohey JJ said:
"... it is the law of negligence and contract which
governs the duty of a doctor towards a patient. This
leaves no need, or even room, for the imposition of
fiduciary obligations. Of course, fiduciary duties may
be superimposed upon contractual obligations and it
is conceivable that a doctor may place himself in a
position with potential for a conflict of interest - if,
for example, the doctor has a financial interest in a
hospital or a pathology laboratory - so as to give rise
to fiduciary obligations ... . But that is not this case
Crown and Indigenous Peoples
Courts in a number of jurisdictions have
discussed the existence of fiduciary duties owed
by the Crown to aboriginal peoples. The
existence of such fiduciary duties stems from the
recognition that aboriginal peoples, as the
original occupiers of land, have special rights
that are protected by the imposition of fiduciary
duties upon the Crown in the way government
power affecting the interests of aboriginal
peoples is exercised. The notion of the Crown’s
fiduciary duties to its aboriginal peoples is most
developed in Canada.
Crown and Indigenous Peoples
s 35(1) of the Constitution Act, 1982 which
stipulates:
The existing aboriginal and treaty rights of
the aboriginal peoples of Canada are
hereby recognized and affirmed.
Crown and Indigenous Peoples
Guerin v R (1984) 13 DLR (4th) 321 at 334
The conclusion that the Crown is a fiduciary
depends upon the further proposition that the
Indian interest in the land is inalienable except
upon surrender to the Crown. An Indian band is
prohibited from directly transferring its interest to
a third party. Any sale or lease of land can only
be carried out after a surrender has taken place,
with the Crown acting on behalf of the band’s
behalf. ... The surrender requirement, and the
responsibility it entails, are the source of a distinct
fiduciary obligation owed by the Crown to the
Indians.
Crown and Indigenous Peoples
Wewaykum Indian Band v Canada [2002] 4
SCR 245 – two bands of the Laich-kwiltach First Nation claimed Indian reserves
granted by Crown under an Act
The nature and importance of the appellant
bands' interest in these lands prior to
1938, and the Crown's intervention as the
exclusive intermediary to deal with others,
including the province, on their behalf,
imposed a fiduciary duty on the Crown but
there is no persuasive reason to conclude
that the obligations of loyalty, good faith
and disclosure of relevant information
were not fulfilled
Crown and Indigenous Peoples
R v Sparrow (1990) 70 DLR (4th) 385
Delgamuukw v British Columbia (1997) 153
DLR (4th) 193
R v Marshall (1999) 177 DLR (4th) 513
Mabo v Queensland (No 2) (1992) 175 CLR 1
Toohey J, at 199–205
Wik Peoples v Queensland (1996) 187 CLR 1
.Brennan CJ, in dissent, found that the
Crown’s power to extinguish native title
did not, by itself, give rise to fiduciary
duties
Crown and Indigenous Peoples
Thorpe v Commonwealth (No 2) (1997) 144
ALR 677
The result is that whether a fiduciary duty
is owed by the Crown to the indigenous
peoples of Australia remains an open
question. This Court has simply not
determined it. Certainly, it has not
determined it adversely to the proposition.
On the other hand, there is no holding
endorsing such a fiduciary duty, still less
for the generality of the claim asserted in
the first declaration in Mr Thorpe's writ.
Crown and Indigenous Peoples
Bodney v Westralia Airports Corporation Pty
Ltd (2000) 180 ALR 91 – Lehane J
In my view, the foregoing discussion leads
to two conclusions. One is that the
authorities from other jurisdictions do not
provide a firm basis for the assertion of a
fiduciary duty of the kind for which the
second applicants contend. The other is
that the tendency of authority in the High
Court - including, significantly, Breen - is
against the existence of such a duty.
Crown and Indigenous Peoples
That, of course, does not mean that circumstances
will not arise in which the Crown has fiduciary
duties, owed to particular indigenous people, in
relation to the alienation of land over which they
hold native title. Nor does it mean that where, in
particular circumstances, a duty of that kind is
breached (or a breach is threatened) a constructive
trust might not appropriately be imposed. But the
second applicants' pleading does not, in my view,
allege facts which would establish a fiduciary duty,
on the part either of the State or of the
Commonwealth, requiring either the State or the
Commonwealth not to participate as they did (or in
the manner in which they did) in the transactions as
a result of which the Commonwealth obtained title
to the land incorporating the claim area.
When do the duties end?
Generally they will cease when the
relationship has been terminated.
However, in certain situations fiduciary
obligations are owed after the relationship
has ended. Thus, in Chan v Zacharia
(1984) 154 CLR 178; 53 ALR 417,
although a partnership had been
dissolved, the partners still owed fiduciary
obligations to each other until the
partnership had been formally wound up.