fiduciary duty

REMEDIES FOR BREACH OF FIDUCIARY DUTY

Account of profits; warman v dwyer comensation for loss; nocton v lord ashburton

modern case News Ltd v Australian Rugby Football League Ltd

• ARL tried to stop players joining super league. The ARL argued that the clubs owed them a fiduciary duty and the contract with the players constituted property (chose in action). The ARL argued this was property that was held on trust for it. • But it was held that the arrangement between the clubs demonstrated that the clubs were entitled to act self interestedly.

CONTENT OF THE DUTIES Kelly v Cooper

• Engaged a real estate agent to sell their home who was also selling a home in the same street. Not considered a conflict because there is an implied term that an agent can sell competing properties as long as they kept dealings separate from each other.

when will a party breach a fiduciary duty

BREACH OF FIDUCIARY OBLIGATIONS CONFLICT RULE PROFIT RULE CONTENT OF THE DUTIES

contributory negligence?

Day v Mead - New Zealand- not this case has been highly criticised in australia • Acted on advice from his solicitor and invested in a private company the solicitor was a director of. The trial judge found that there was a breach of fiduciary obligations but reduced the sum recovered on the basis it would have been prudent to obtain independent advise before investing. The plaintiff appealed the reduced sum. • Held that there was no compelling reason for denying the obviously just course of considering fairness, hardship, laches and acquiescence in assessing the recoverable sum. In this situation it would be "unjust and unfair to impose total liability on Mr Mead, when the degree of want of care when beyond reliance and approached acquiescence". Norberg v Wynrib (1992) - Canada • The goal of equity is to return the plaintiff as fully as possible to their position had the equitable breach not occurred. "The fiduciary being the person with the advantage of power, assumes full responsibility and cannot be heard to complain that the victim of his or her abuse cooperated in his or her defalcation or failed to take reasonable care for his or her own interests".

DEFENCES TO A BREACH OF DUTY

Informed Consent: Where the alleged breach was known and consented to by the party. This requires full disclosure Contributory Negligence: Day v Mead - New Zealand

UDC v brian

Fiduciary obligations exist between prospective partners who have begun the business of the partnership even though the formal requirements have not been met.

qld mines v hutton

Informed Consent: Where the alleged breach was known and consented to by the party. This requires full disclosure Queensland Mines v Hudson (1978) • Board of the plaintiff company had consented to a managing director making profit from the knowledge he gained in his employ. Boardman v Phipps • One of the beneficiaries had Alzheimer's and was therefore unable to provide unanimous informed consent to the trustee's gaining profit.

Prince Jefri Bolkiah v KPMG [1999]

KPMG assisted a client in litigation and had acted for a previous client in a support role, and the other party in another capacity that was potentially detrimental to the former. it was held that there may have been but there may have been protections such as a chinese wall

boardman v phipps 1967

Lord Hodson: Breaching the duty even without intent to harm stands as a breach. It is an inflexible position in the court that a person in a fiduciary position... is not allowed to put himself in a position where his interests and duty may conflict.

LAC Minerals (1989) - Canadian

SOPINKA J: Fiduciary obligations "must be reserved for situations that are truly in need of the special protection that equity affo rds. The parties had not advanced passed the negotiation stage. Indeed they had not defined precisely what their relationship should be". • The defendant lacked the requisite 'power' and the plaintiff lacked the requisite 'vulnerability' in the relationship to warrant fiduciary obligations. However, there is a duty of confidentiality.

Warman International v Dwyer (1995)

W is offered an import business, he refuses, then D resigns and takes up the tender in his own capacity. It was held that he was under a fiducairy duty, and that he needed to account for profits, but that there was to be an allowance for care and skill put in. Principle; the court will make sure that the claimant will not unduly profit from the situation

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fiduciary duties

CONFLICT RULE Clark Boyce v Mouat (1994)

no conflict because of the limited nature of the advice given by the lawyer Privy council decided there was no conflict because of the limited nature of the advice given to her. Further, she refused to get independent advice when it was offered to her. Further, there is no general rule that a solicitor cannot act for both parties provided there is informed consent from both - this mean "knows of the potential conflict leading to a solicitor being unable to disclose to each party his full knowledge of the transaction"

Hospital Products (1984)

gibbs- majoirty held that it was not a breach of the fiduciary duty as the parties were dealing at arms length mason- dissenting, held there was a breach, however determined that there is a different standard for parties dealing commercially and those that are trustees. he commented on the fact that it was not an established category so shed some wisdom on what this would involve is important to ascertain the characteristics, which identify a fiduciary relationship (the categories of fiduciary relationships are not closed). The critical feature is, "the fiduciary undertakes or agrees to act for another person in the exercise of a power or discretion which will affect the interests of that other person" redefined the 'possibility of conflict' to a real sensible possibility of conflict

the general trend for the future of fiduciary duties?

proscriptive, not prescriptive, See Breen v Williams, 1993 demonstrates how a doctor was not in breach of a fiducairy duty by withholding access to records. It is not a compelling duty, but one which cannot be conflicted with Brennan CJ: The doctor's fiduciary duty does not extend to a duty to give access to records. "There is simply no fiduciary relationship which gives rise to a duty to give access to or permit the copying of the respondent's records". • Dawson and Toohey JJ: In general the doctor patient relationship is governed by tort and contract. But, "it is conceivable that a doctor could place himself that a doctor could place himself in a position with a potential for a conflict of interest - e.g. a financial interest in a hospital or pathology lab. • Gaudron and McHugh JJ: Patient records are not property, so no trust relationship can exist. "Australian courts have conscientiously refrained from attempting to provide a general for determining when persons or classes of persons stand in a fiduciary relationship with one another". o Australian courts only recognise proscriptive fiduciary duties. I.e. there CANNOT be a conflict of interest or a profit. o While Gummow J found that doctors were fiduciary's, the scope of their fiduciary duties did not cover tort/contract duties but rather on whether the doctor had a conflict of interest (interest at a hospital) or made unauthorised profits (from patient tissue). This is also a proscriptive approach.  The danger with a prescriptive approach, such as that used in Canada, is that it blurs the boundaries between fiduciary obligations and those derived from contract and tort.

Commonwealth Bank of Australia v Smith (1991)

the bank was a financial adviser to the family for 24 years, they encoraged the family to purchase a property but it was significantly undervalued. It was at issue whether a fiducairy duty existed Not only did the manager take an active role as adviser, but it was reasonable for the Smith's to assume their interests would align with the banks. In these circumstances in addition to any contractual rights there may also be common law duty of care and a fiduciary duty. yes a fiduciary duty because of specific circumstnaces

Green v Clara bestobel

there was a person in vic, he found a tender in WA. It was held that a fiduciary relationship did exist (status based on employee gaining knowledge from employment), which he clearly breached by deriving a benefit from placing himself in a position where his interests and his duty conflicted. o It was of no consequence that he had resigned, or that Bestobell wouldn't have succeeded anyway. Green was required to account for all profits.

PROFIT RULE Boardman v Phipps

there were the fiduciaries who purchased extra shares in the company because of knowledge the beneficiaires argued that it was a breach of their duty, and that the profits should be held on constructive trust.

keech v sandford 1726

this case demonstrated another strict applicaiton of teh no conflict rule, where despite not having profited the fiduciary was in breach.