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Module 2 · Fiduciary relationships and duties

Fiduciary relationships and duties. Fiduciary obligations arise from the position of the parties. The term fiduciary is derived from the Latin word fiducia, meaning confidence, and a person found to be in breach of fiduciary obligations cannot be trusted. This module covers when one person owes another a fiduciary obligation, what that obligation forbids, and what follows from a breach. The relationship finding comes first, then the subject matter over which the obligation extends, then breach, consent and remedy.

Cases at a glance

The analytical scaffold

A problem on fiduciary duty is answered in a fixed order. Each item below compresses law stated and cited in the sections that follow.

1. Is there a fiduciary relationship? Take the established categories first. If none fits, ask whether the position of the parties shows the features the courts have identified in relationships outside those categories, and whether the defendant held out as an adviser on investments or joined a venture that had gone beyond early negotiations.
2. What is the subject matter over which the obligation extends? A person may be a fiduciary in some activities but not in others, and the duty does not attach to every aspect of the fiduciary's conduct.
3. What does the obligation forbid? No unauthorised conflict and no unauthorised profit. In Australia the duties are proscriptive, and there is no positive duty to act in the other's interests.
4. Was there a breach? Test each act against the two prohibitions. Honesty is no answer, and the majority in Boardman v Phipps found breach although the trust could not acquire more shares.
5. Was it authorised? Consent by the party to whom the obligation is owed excuses the conduct, and complete disclosure is required.
6. What remedy follows? Constructive trust, account of profits, injunction or equitable compensation, chosen by reference to the nature of the loss or harm and to whether property was acquired from the position.

Is there a fiduciary relationship

There is no scientific test that can be used to identify when fiduciary obligations arise; it is a matter of looking at the circumstances and the position of the parties. The courts have identified established categories, and there are also emerging categories.

The established categories. The archetype of a fiduciary is the trustee, and the courts recognise other classes of persons who normally stand in a fiduciary relationship to one another.

The category cases. All trustees are fiduciaries, and in Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 a leasehold interest was held under a trust, the lessor refused to renew the lease on behalf of the trust, the trustee sought to renew it in a personal capacity, and Lord King LC held that the trustee holds the renewed lease under a constructive trust in favour of the beneficiary. A legal practitioner is a fiduciary for their client, and in Maguire v Markaronis (1997) 188 CLR 149 the High Court of Australia held that a legal firm which had lent money to a client to enable the purchase of a property had breached its fiduciary obligations, there being a conflict between the firm's financial position and the needs of the client. Each partner is a fiduciary for the other partners, and in Chan v Zacharia (1984) 154 CLR 178 the High Court held that fiduciary obligations exist between partners in a partnership agreement. Not all agents are fiduciaries: depending on the nature of the agency agreement fiduciary obligations may arise, and a critical feature is whether the agent is to put the interests of their principal ahead of their own. The same approach applies to the position of sole distributors.

Application. Take a solicitor who holds a client's settlement money in the firm's trust account and moves it into a short-term investment in her own name. The solicitor and client relationship is an accepted category, so the relationship question is answered by the position of the parties. The analysis moves to whether the dealing with the client's money falls within the subject matter of the obligation and whether it placed the solicitor in conflict or produced a profit from the position.

The job-to-do error. The common error is to treat every agent, or anyone entrusted with a task, as a fiduciary because the label fits a category. It fails because not all agents are fiduciaries, the critical feature being whether the agent is to put the interests of the principal ahead of their own, and because the fact that there is a duty to be performed cannot in every case create a fiduciary obligation, as Gibbs CJ said in Hospital Products Ltd v United States Surgical Corporation.

Relationships outside the accepted categories. The difficulty is to suggest a test by which it may be determined whether a relationship not within one of the accepted categories is a fiduciary one.

The Hospital Products split. In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 the United States Surgical Corporation, which manufactured surgical staples, agreed that Blackman would become the exclusive Australian distributor of its products, and while in that capacity Blackman engineered his own surgical staples and presented them to the marketplace as superior to those of the corporation. Gibbs CJ held that an actual relation of confidence is neither necessary for nor conclusive of a fiduciary relationship, that inequality of bargaining power alone is not enough, and that a purely commercial arrangement between parties dealing at arm's length and on an equal footing has consistently been regarded by the High Court as important, if not decisive, in indicating that no fiduciary duty arose. He concluded that HPI did not stand in a fiduciary relation to USSC and that the only relief was damages for breach of contract, and Wilson J and Dawson J likewise held that no fiduciary relationship arose. Mason J held that HPI was a fiduciary in relation to the activities of protecting and promoting USSC's product goodwill in Australia, though it carried on the distributorship generally for its own benefit, and Deane J, while not persuaded that a fiduciary relationship existed in respect of that goodwill, agreed with Mason J's orders, holding HPI liable to account as constructive trustee as equitable relief appropriate to the circumstances. In Breen v Williams (1996) 186 CLR 71 Dawson and Toohey JJ said that Mason J did not intend his description to isolate those features from other relationships of trust and confidence which do not impose fiduciary obligations, and that it is of significance that a fiduciary acts in a representative character. Gaudron and McHugh JJ in the same case said that Australian courts have consciously refrained from providing a general test, and listed circumstances that point towards, but do not determine, a fiduciary relationship: a relation of confidence; inequality of bargaining power; an undertaking by one party to perform a task or fulfil a duty in the interests of another; the scope for one party to unilaterally exercise a discretion or power which may affect the rights or interests of another; and a dependency or vulnerability on the part of one party that causes that party to rely on another.

Application. Take a manufacturer that appoints a sole distributor under an ordinary commercial contract negotiated at arm's length, leaving the distributor free to make business decisions in its own interest. Ask whether the distributor undertook to act for or on behalf of the manufacturer in the exercise of a power affecting the manufacturer's interests, and whether the manufacturer was thereby left vulnerable. On the reasoning of Gibbs CJ, Wilson J and Dawson J the arm's length commercial character of the arrangement points against any fiduciary duty, and the answer lies in contract. On Mason J's approach the question is whether some defined activity, such as the custody of the manufacturer's goodwill, was undertaken in the manufacturer's interests.

The misplaced trust error. The common error is to find a fiduciary relationship because one party in fact trusted the other and was let down. It fails because a fiduciary relationship exists where one party is in a position of reliance because of the nature of the relationship and not because of a wrong assessment of character, as Dawson J said in Hospital Products, and because Gibbs CJ held that subjective trust is neither necessary for nor conclusive of the relationship.

Holding out as an adviser. Whenever a stockbroker or other person who holds himself out as having expertise in advising on investments is approached for advice on investments and undertakes to give it, in giving that advice the adviser stands in a fiduciary relationship to the person whom he advises. The adviser cannot assume a position where his self-interest might conflict with the honest and impartial giving of advice. A fiduciary relationship in respect of a transaction may arise though there has been no anterior relationship between the parties.

Daly v Sydney Stock Exchange. In Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 Dr Daly, a medical practitioner with little experience in investments, sought advice from the stockbrokers Patrick Partners on investing money; their employee Mr Toltz advised that it was not a good time to buy shares, that Dr Daly should put his money on deposit with the firm until the time was right, and that Patrick Partners were as safe as a bank. The firm was in a precarious financial situation, and in July 1975 it ceased trading, insolvent and unable to repay the amounts advanced. Gibbs CJ in the High Court of Australia held that the firm, which held itself out as an adviser on matters of investment, undertook to advise Dr Daly, that he relied on the advice, and that the firm therefore owed and breached a fiduciary duty to disclose the information in its possession which would have revealed that the transaction was likely to be a most disadvantageous one from his point of view. Brennan J described the duty of an investment adviser who proposes an investment in which the adviser has a financial interest as a heavy one: to furnish the client with all the relevant knowledge the adviser possesses, to give the best advice the adviser could give if a third party rather than the adviser had the interest, to reveal fully the adviser's financial interest, and to obtain for the client the best terms a third party would give. Patrick Partners obtained the loans without performing that duty, and their conduct amounted to equitable fraud.

Application. Take a financial adviser who is approached by a client for advice on investing an inheritance and recommends a fund in which the adviser holds a financial interest, without saying so. The adviser held herself out as having expertise, was approached for advice and undertook to give it, so in giving that advice she stood in a fiduciary relationship to the client. The undisclosed interest is a position where self-interest might conflict with the honest and impartial giving of advice. The duty was to reveal the interest fully before advising.

The trustee-of-the-money error. The common error is to treat the holding out as making the adviser a trustee of the money the client hands over. It fails because in Daly v Sydney Stock Exchange Ltd the firm owed and breached a fiduciary duty in advising, yet the money was lent, so the firm was a debtor and the money became its own to use as it wished.

Joint venturers. Emerging categories of relationships include partners to a joint venture, even if no final agreement is formed, medical practitioners and their patients, professional advisors and their clients, and Indigenous Australians and the Australian Government. New emerging categories are constantly being identified, but it is the position of the parties which is critical. Dawson J at 16 in United Dominions Corporation Ltd v Brian Pty Ltd noted that a fiduciary relationship may arise from circumstances leading to the final agreement as much as from the fact of the final agreement itself.

United Dominions Corporation Ltd v Brian Pty Ltd. In United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 United Dominion Corporation Ltd, Security Projects Ltd and Brian Ltd entered into a joint venture agreement to develop a block of land; a substantial profit was made, but United Dominion Corporation Ltd refused to distribute the proceeds to Brian Ltd because of a collateralisation clause, entered into between United Dominion Ltd and Security Projects Ltd before the joint venture agreement including Brian Ltd was concluded, under which the land had been security for all debts owed to Security Projects Ltd by United Dominion Ltd. The High Court held that fiduciary obligations existed between the parties and that United Dominion Corporation Ltd should have disclosed the nature of the clause to Brian Ltd; the joint venturers had gone beyond early negotiations, and fiduciary obligations arose with respect to knowledge of the project. In Hospital Products the majority of the High Court focused on the nature of a commercial relationship as a basis upon which to indicate that fiduciary obligations did not arise, whereas in United Dominions Corporation Ltd v Brian Pty Ltd the High Court was more prepared to accept fiduciary obligations arising in such circumstances. In LAC Minerals v International Corona Resources (1989) 61 DLR (4th) 14 International Corona Resources Ltd disclosed the mineral value of its land during negotiations with LAC Minerals about forming a joint venture, and LAC Minerals later acquired mining rights to the land. The majority of the Supreme Court of Canada, Sopinka, Lamer and McIntyre JJ, held that no fiduciary obligations arose, the information having been provided only to assess the prospect of entering the joint venture, and treated the case as one of confidential information; La Forest J in dissent held that fiduciary obligations were involved and emphasised vulnerability as a critical component.

The unsigned deed error. The common error is to hold that no fiduciary obligation can exist between venturers until the joint venture agreement is signed. It fails because in United Dominions Corporation Ltd v Brian Pty Ltd fiduciary obligations arose once the venturers had gone beyond early negotiations, and Dawson J said the relationship may arise from the circumstances leading to the final agreement as much as from the final agreement itself.

Medical practitioners and professional advisers. The relationship between medical practitioner and patient is very close, but the doctor-patient relationship is not an accepted fiduciary relationship in the sense that trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company and partners are recognised as fiduciary relationships. Whilst duties of a fiduciary nature may be imposed upon a doctor, they are confined and do not cover the entire doctor-patient relationship. In a commercial context financial advice is sought and relied on to make particular decisions, and there is potential for such a relationship to embody fiduciary obligations.

Breen v Williams and Pilmer. In Breen v Williams (1996) 186 CLR 71 the appellant, who had silicone breast implants and had been treated by the respondent plastic surgeon, sought access to the medical records he kept about her, in order to decide whether to opt in to a settlement in United States class action litigation against the manufacturer of the implants. The High Court unanimously dismissed the appeal. Brennan CJ held that fiduciary duties arise from either of two sources, agency or a relationship of ascendancy or influence by one party over another or dependence or trust on the part of that other, and that there was no relevant subject matter over which the respondent's fiduciary duty extended. Dawson and Toohey JJ held that a doctor treating and advising a patient acts not as a representative of the patient but simply in the exercise of professional responsibilities, and could find no basis in the law of this country for a fiduciary relationship carrying a right of access to records. Gummow J held that the relationship between medical practitioner and patient who seeks skilled and confidential advice and treatment is a fiduciary one, but that the subject matter is the provision of medical treatment, and Dr Williams had derived no gain beyond the agreed fee and had not put himself in a position of conflict. In Pilmer v Duke Group Ltd (in liq.) (2001) 207 CLR 165 a financial report for use in a proposed corporate takeover was negligently prepared, and the majority of the High Court, McHugh, Gummow, Hayne and Callinan JJ, held that no fiduciary obligations arose in the particular circumstances, emphasising the role of contract and torts to provide relief while noting that the position of the parties has the potential to be fiduciary.

Application. Take a surgeon who advises a patient to have treatment at a private hospital in which the surgeon holds an undisclosed financial interest. On Gummow J's approach the relationship attracts fiduciary analysis and the subject matter is the treatment and advice. The undisclosed interest places the surgeon's interest in conflict with duty within that subject matter, which is the situation Gummow J instanced. A claim that the same surgeon operated carelessly is a different claim, governed by negligence and contract.

The careless treatment error. The common error is to plead careless treatment or advice as a breach of fiduciary duty. It fails because the concern of the law in a fiduciary relationship is not negligence or breach of contract, as Dawson and Toohey JJ said in Breen v Williams, and because, as Gaudron and McHugh JJ there quoted Sopinka J of the Supreme Court of Canada in Norberg v Wynrib, fiduciary duties should not be superimposed on common law duties simply to improve the nature or extent of the remedy.

The content of the obligation

Fiduciary obligations involve two principles: the fiduciary must avoid any conflict of interest, and any property that is acquired by the fiduciary from that position is held under a constructive trust in favour of the party to whom fiduciary obligations are owed. Essentially, fiduciary obligations involve 'no conflict' and 'no profit'.

The proscriptive obligation. A proscriptive obligation tells the fiduciary what not to do; a prescriptive obligation would impose a positive duty to act, and Australian courts only recognise proscriptive fiduciary duties.

The authorities on content. In Keech v Sandford the trustee who renewed the trust's lease in a personal capacity held the renewed lease under a constructive trust in favour of the beneficiary. In Breen v Williams (1996) 186 CLR 71 Gaudron and McHugh JJ said that Canadian cases reveal a tendency to view fiduciary obligations as both proscriptive and prescriptive, whereas Australian courts only recognise proscriptive fiduciary duties, and that if there were a general fiduciary duty to act in the best interests of the patient a doctor would have a duty to inform the patient of his own breach of contract or negligence, which is not the law of this country. Dawson and Toohey JJ said that what the law exacts in a fiduciary relationship is loyalty, often of an uncompromising kind, but no more than that. Gummow J said that it would stand established principle on its head to reason that because equity considers the defendant to be a fiduciary, the defendant has a legal obligation to act in the interests of the plaintiff so that failure to fulfil that positive obligation is a breach of fiduciary duty.

Application. Take a trustee who invests trust money carelessly and loses it, without any personal gain and without any interest of her own in the investment. The loss is a question of the trustee's duty of care in investing, which is a separate duty. It is not a breach of the proscriptive fiduciary obligation, since no unauthorised benefit was obtained and no position of conflict arose. The fiduciary analysis begins only where a conflict or a profit is identified.

The best interests error. The common error is to frame a claim as a failure to act in the plaintiff's best interests and call it a breach of fiduciary duty. It fails because Australian courts recognise only proscriptive fiduciary duties: the fiduciary must not obtain an unauthorised benefit and must not be in a position of conflict, and no positive duty to act in the other's interests is imposed, as Gaudron and McHugh JJ held in Breen v Williams.

The strictness of the rules. The equitable rules are exceedingly strict, and a fiduciary can defeat a claim to account for profits acquired by reason of his fiduciary position and the opportunity resulting from it only on the ground that the profits were made with the knowledge and assent of the person to whom the obligation was owed.

Mason J on the profit rule. Mason J in Hospital Products, in the minority on the outcome, said that the rule that a fiduciary is not entitled to make a profit without informed consent is not limited to profits arising from use of the fiduciary position or of the opportunity or knowledge gained from it, for it is said that the basis of the rule is that the fiduciary may not place himself where duty and interest conflict; noting that this view has been severely criticised, he restated the duty as an obligation not to promote a personal interest by making or pursuing a gain where there is a conflict or a real or substantial possibility of a conflict, a formulation which excludes any inquiry into the actual motives of the fiduciary.

Regal and Boardman. In Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 the directors of Regal Hastings Ltd formed a subsidiary to acquire the lease of two cinemas; the prospective landlord refused to grant the lease unless the company had a paid-up capital of £5000, Regal Hastings Ltd contributed part of the funds and the directors contributed the balance, and two weeks after the lease was obtained both companies were sold and the directors made a profit on the shares issued to them in the subsidiary. The House of Lords was unanimous in holding the former directors liable to account for the profit: Lord Russell at 144 noted that they had breached their obligations in the absence of fraud because they had acquired a profit from their position, and Lord Macmillan at 153 that they had 'utilised the position and knowledge … in virtue of their office as directors'. In Boardman v Phipps [1967] 2 AC 46 Boardman, the solicitor appointed to assist in administering the Phipps estate, and Tom Phipps, a beneficiary, considered that a company in which the estate held shares was undervalued and acquired the remaining shares in their own names, Boardman having told everyone during negotiations that he was acting on behalf of the estate. The majority of the House of Lords held that both were fiduciaries and that breach had occurred because a potential conflict could arise between their own interests and those of the trust, and although they had attempted to disclose their actions to the executors, insufficient information had been provided. Viscount Dilhorne in the minority held that no breach had occurred because the trust could not acquire any more shares, a view the majority did not take, and Lord Upjohn held that Boardman and Tom Phipps were only agents of the trust and not fiduciaries.

Application. Take a company director who learns of a business opportunity through the board and takes it up personally, honestly believing that the company could not afford it. The profit was acquired from the position and by use of knowledge gained in the office. Honesty is no answer, and the director must account unless the company gave its knowledge and assent.

The honesty error. The common error is to treat the fiduciary's honesty, or the principal's inability to take the opportunity itself, as a defence to the profit rule. It fails because the directors in Regal (Hastings) Ltd v Gulliver had to account for a profit acquired from their position in the absence of fraud, and the majority in Boardman v Phipps held Boardman and Tom Phipps in breach although the executors could not acquire further shares.

Consent after complete disclosure. No breach has occurred if the party to whom such obligations are owed has given consent or permission to the fiduciary, and complete disclosure is required. One answer to what otherwise would be breach of duty is the presence of informed consent, and a court of equity has inherent power to authorise, at least in some cases, entry into transactions which otherwise would be in breach of duty. In Boardman v Phipps the attempted disclosure to the executors was no defence, since insufficient information had been provided.

Application. Take a solicitor who tells a client that he has an interest in a property the client is buying, without saying that he is the vendor's mortgagee or what he stands to gain from the sale. Any consent the client then gives is not consent after complete disclosure. The defence fails, as the attempted disclosure in Boardman v Phipps failed.

The partial disclosure error. The common error is to treat any mention of the fiduciary's interest as authorising the conflict or the profit. It fails because complete disclosure is required, and in Boardman v Phipps a disclosure that left the executors with insufficient information was no defence.

The scope of the obligation. It is well settled that a person may be a fiduciary in some activities but not in others. The scope of fiduciary obligations will vary depending on the circumstances, and it may be that what has occurred does not breach fiduciary obligations. Whichever be the source of the duty, it is necessary to identify the subject matter over which the fiduciary obligations extend, and it is erroneous to regard the duty as attaching to every aspect of the fiduciary's conduct, however irrelevant that conduct may be to the relationship that is the source of the duty.

Scope in Hospital Products and Breen. Mason J held that HPI's capacity to make decisions in some matters by reference to its own interests was inconsistent with a general fiduciary relationship, but did not exclude a more limited one. He held that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case, and that the rigorous standards appropriate to a trustee will not apply to a fiduciary who is permitted by contract to pursue his own interests in some respects. Contractual and fiduciary relationships may co-exist between the same parties, but the fiduciary relationship must accommodate itself to the terms of the contract and cannot be superimposed upon the contract so as to alter the operation the contract was intended to have. In Breen v Williams Gaudron and McHugh JJ held that any fiduciary duties owed by Dr Williams could attach only in respect of matters relating to diagnosis, advice and treatment.

Application. Take a partner in an accounting firm who also runs an unrelated retail business in her own time. The partnership's fiduciary obligations extend to the subject matter of the partnership venture. Profits of the retail business fall outside that subject matter unless they were made by use of the partnership's opportunity or knowledge, and the answer turns on what the partners undertook and how they in fact dealt.

The every-dealing error. The common error is to reason that because the defendant is a fiduciary, every dealing with the plaintiff is a fiduciary matter. It fails because a person may be a fiduciary in some activities but not in others, and the subject matter over which the obligation extends must be identified first, as Brennan CJ said in Breen v Williams.

Remedies in outline

The range of remedies available for a breach of fiduciary obligation includes the imposition of a constructive trust, an order for an account of profits, an injunction and an order for equitable compensation. In determining what is appropriate, attention should be directed to the nature of the loss or harm. The imposition of fiduciary duties often gives rise to proprietary remedies that affect the distribution of assets in bankruptcies and insolvencies.

The remedies. An account of profits measures the true profits obtained by a party in breach of their obligations, a constructive trust holds property acquired by the fiduciary from that position in favour of the party to whom fiduciary obligations are owed, and equitable compensation is the money award permitted for a purely equitable wrong.

The remedy cases. In Warman International v Dwyer (1995) 182 CLR 544 the High Court of Australia emphasised that mathematical accuracy is not required for an account of profits, only an approximation to measure the true profits obtained by a party in breach of their obligations, that the resources of the fiduciary may be taken into account, and that it is for the defendant to establish that it is inappropriate to order an account of the entire profits. The House of Lords in Regal (Hastings) Ltd v Gulliver ordered an account of profits. In Chan v Zacharia (1984) 154 CLR 178 Dr Chan and Dr Zacharia, partners in a medical practice, held a three-year lease with an option to renew for a further two years; the partnership was dissolved before the first term ended and one of them renewed the lease in his own name. The High Court held that, the lease having been an asset of the partnership, the new lease should be held under a constructive trust in favour of all former partners. In Daly v Sydney Stock Exchange Ltd the money Dr Daly advanced was a loan; a borrower does not, in the absence of special stipulation, receive the money lent for or on behalf of the lender or as a trustee, and since there was no constructive trust the money became the firm's money to use as it wished, so that the failure to repay was not a defalcation within the fidelity fund provisions. Brennan J likewise held that something more than the mere failure of a debtor to pay his creditors is needed to constitute a defalcation.

Application. Take an adviser who breaches the duty by borrowing from a client without disclosing the adviser's financial position, and who then becomes insolvent. The client has a personal claim for the loss by way of equitable compensation. Unless the money was received for or on behalf of the client or as trustee, no constructive trust arises and the client ranks as a creditor, which is the position in Daly v Sydney Stock Exchange Ltd. Where instead the fiduciary acquired property from the position, as the trustee did in Keech v Sandford and the partner did in Chan v Zacharia, that property is held on constructive trust.

The automatic constructive trust error. The common error is to assume that every breach of fiduciary duty raises a constructive trust over whatever the fiduciary received. It fails because in Daly v Sydney Stock Exchange Ltd the firm owed and breached a fiduciary duty, yet the money it borrowed became its own and no constructive trust arose, so the only relevant relationship was that of debtor and creditor.

Established category or ad hoc

The one distinction the module turns on is how the relationship is shown. The table sets the established categories against relationships outside them, using the law stated above.

Run the established categories first. Reach for the circumstances only when no category fits, and then argue from the features the judges have named rather than from a formula.

How the examiners test this

Fiduciary questions rarely stand alone. The relationship finding opens the conflict and profit analysis, the constructive trust over property acquired from the position, and the third party and tracing questions later in the subject, so the finding is the foundation of a longer answer.

The recurring errors are the ones named above. Students often argue the features of undertaking and vulnerability for a defendant who is plainly a trustee, solicitor or director, when the position of the parties has already answered the question. Students often frame a claim as a failure to act in the plaintiff's best interests, when Australian fiduciary duties are proscriptive and forbid only the unauthorised conflict and the unauthorised profit. Students often plead careless treatment or advice as a fiduciary wrong, when the concern of the law in a fiduciary relationship is not negligence or breach of contract. Students often treat honesty, or the principal's inability to take the opportunity, as a defence, when Regal (Hastings) Ltd v Gulliver and Boardman v Phipps say otherwise. Students often stop at breach, when the remedy and its character decide what the plaintiff recovers and whether the claim survives the defendant's insolvency, as Daly v Sydney Stock Exchange Ltd shows.

A top answer names the category or the circumstances, fixes the subject matter of the obligation, tests each act against the two prohibitions, asks whether consent followed complete disclosure, and closes with the remedy that fits the gain or the loss.

The Crown and Indigenous Australians. Toohey J in the High Court in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 199–205 noted the idea that the Crown has fiduciary obligations to Indigenous Australians, but he was alone in holding that such obligations existed, and he noted that they did not preclude the Crown from legislating to extinguish native title rights. Brennan CJ in the High Court in Wik Peoples v Queensland (1996) 187 CLR 1 at 83–4 commented that the Crown's power to legislate with respect to Indigenous people does not of itself give rise to fiduciary obligations, and that where such a power exists it must only be used for their benefit, and Dawson J and McHugh J agreed. The idea of fiduciary obligations existing between Indigenous Australians and the Crown has received very little judicial attention. This is essay material, argued from the judgments, and it is not converted into hypothetical problem facts.

Take it to the practice bank

This module is drilled in the Equity and Trusts practice bank. Every problem there carries a realistic Pass answer, an H1 model answer, and an examiner's comment explaining the decisive fact and where the marks are lost.