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Week 5 Fiduciary Obligations (DEFENCES (Fully Informed Consent,…

- - - - In Hospital Products at 96-7 Mason J stated:
        the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that person in a legal or practical sense.
  - - - • A lack of intention to defraud on the part of the fiduciary is not relevant to establishing a breach: Nocton v Lord Ashburton [1919] AC 492;
      - • The person to whom the breach relates does not have to have suffered injury or loss: Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, 408-9;
      - • Whether the person owed the duty would have made a profit from the ‘the opportunity exploited by the fiduciary’ is irrelevant: Warman International Ltd v Dwyer (1995) 182 CLR 544; and
      - • It does not matter that the person owed the duty would have approved of the fiduciary making a profit had he or she been properly informed: Murad v Al-Saerij [2005] EWCA Civ 959.
- - - - In Hospital Products Gibbs J identified the trustee as the archetypal fiduciary. An executor of a will holding trusts powers is also a fiduciary.
    - - Consistent with the duty of loyalty directors must avoid conflicts of interest and duty: Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 (Regal (Hastings)).
      - We have already noted that fiduciary duties are strict; intention is not required to prove liability for a breach. This principle is reiterated in the excerpt from Allco Funds Management Ltd (rec and mngrs app’d) (in liq) v Trust Company (RE Services) Ltd [2014] NSWSC 1251 [114] (Hammerschlag J)
    - - A lawyer cannot act for a third party where the interests of the third party conflict with those of a client. There is an exception, that is, where all parties are aware of the situation and ‘no actual conflict arises’: Rigg v Sheridan [2008] NSWCA 79.
      - A lawyer owes a duty to a client when he or she acts for that client. As such, a legal practitioner is bound by the rules of ‘conflict of duty and interest’, and of ‘duty and duty’ and cannot ‘make unauthorised profits’, or act in a way that puts his or her own interests, or those of others, into conflict with the interests of clients: Hilton v Barker Booth [2005] 1 All ER 651. See Maguire v Makaronis (1997) 188 CLR 449
    - - ‘Agents are presumed to be fiduciaries for their principals.Examples of agency in legal relationships include ‘real estate agency, powers of attorney, and commercial agency’
        
        In Hospital Products Mason J said at 97:
        
        That contractual and fiduciary relationships may co-exist between the same parties has never been doubted......The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.
- - - - a fiduciary simultaneously acts for a principal and for himself or herself: Armstrong v Jackson [1917] 2 KB 822 9 (Armstrong). I
    - - Breach of an undertaking
        
        A fiduciary should not take a direct benefit from a transaction in which they also act for a beneficiary: Boardman v Phipps [1967] 2 AC 46.
        To demonstrate a breach of undertaking there must be:
        
        (1) a fiduciary obligation with respect to the transaction; and
        
        (2) the benefit must arise from within the scope of the obligation.
      - Misuse of position
        misuse of position rule refers to situations in which a fiduciary uses his or her position as fiduciary to obtain a benefit for him or herself
    - - ‘financial benefits beyond those that are authorised’. Tips or gratuities are a form of payment beyond agreed remuneration, though there is some qualification to this rule if the payment is small and made after the performance of services: The Parkdale [1897] P 53, 58-5.