! EQUITY! LAWS%2015%!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1!

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1 EQUITY LAWS%2015% 1

2 TheHistryandNaturefEquity WhatisEquity?HistryandNaturefEquity Equityreferstthebdyfcases,maxims,dctrines,rules,principlesandremediesthatderive frmthespecificjurisdictinestablishedbythecurtfchancery.itremainsakeypillarfthe Australianlegalsystem,withtheHCAreferringtthenrmativecmplexityfthelegalsystem withtheinteractinbetweentherulesflaw,principlesfequity,requirementsfstatuteand betweenlegal,equitableandstatutryremedies (Bankstwn)City)Cuncil)v)Alamd)Hldings).) Histryandtheratinalefequityhldittgether. AllequitabledctrinesriginatedintheequitablejurisdictinftheLrdChancellr sittingjudiciallyinthecurtfchancery WiththeCL,yuhadtdevelpevidenceinaparticularwayandfityurfactswithinthe writsfactin Requirementsandcnstrainingnatureculdleadtunjustresults ThisiswhypeplemvedtwardstheChanceryi.e.becauseitperated ncnscience,allwedwitnessestbeheardetc Chancellrwasthe funtainfjustice whtktheplacefthe KingwhenpepleusedtpetitinttheKingfrassistance (delegatedprergativepwer) OriginallytheLrdChancellrswereecclesiasticandvertimebecamelawyersand develpedprinciples/rulesastwhenwuldexercisejurisdictinandwhatremedies theywuldfcusn(whlesystemflawbegantdevelp) Thus,asMaitland(1936)ntes,whileequitywasriginallyenfrcedbythe Curtsf Equity, nwwenlngerhavecurtswhicharemerelycurtsfequity itisabdyf rulesadministeredbyenglishcurtsfjusticewhichispartfthegenerallegalsystem The underlying principle f equity is cnscience. Equity cntrls/cnstrains CL judgments t cntrl what happens with them and if can be enfrced. The develpment f equity led t a system f principles which develped and it resulted in it lking and perating like a rival systemandcausingchancery/cltcnflict(i.e.wuldgetjudgmentincl;rushfftchancery tgetinjunctintpreventenfrcingcl). The$Earl$f$Oxfrd s$case(1615)1chrep1(21er485) Represents quasiureslutin between the tw curts between Lrd Chancellr Elsemere (Chancery)andLrdCke(CJftheKing sbench)whculdn tstandthefactthatpeplekept gettinginjunctinstpreventtheenfrcementfcljudgments. CllegewnedlandinLndn Wasthenaturefthecllegethattheyculdn tselllandtheywned Astheyculdn tditlegally,triedtgrantittthequeenandthequeencangrantt purchaserandthenpurchasercangivethemney Purchaserbuysthelandandspendscnsiderablesumsfmneyimprvingthelandand thensellsitttheearlfoxfrd TheEarldiesandthesninheritstheprperty Thecllegedecidesthatitwasamistakeandwantprpertybackbyarguingthatthe landwasntvalidlygivenaway Theypurprttgrantaleasefthelandtatenantandthentheyevictthetenantfrm theland(tenantcansuefrwrngfulevictin)andthenicurttheycansaywenever legitimatelygavethelandaway Legally,therewasntacapacitytgrantlandinthefirstplace 2

3 ButthepersnwhlsesgestChanceryttryandgetajudgmentsayingthatthisis againstgdcnscience Lrd Ellesmere: Chancery is there t crrect Mens Cnsciences fr Frauds, Breach f Trusts, Wrngs and Oppressins, f what Nature sever they be and t sften and mllifytheextremityflaw SaysthatLawandEquityaredistinctintheircurts,theirjudgesandtheirrules f justice yet they bth act t the same end which is t d right even thugh Justice/Mercydifferintheireffectsandperatins WhereajudgmentisbtainedbyOppressin,WrngandahardCnsciencethe Chancellrwillfrustrateitandsetitaside,ntfranyerrrrwrngrdefectin the judgment but fr the cnscience f the individual party that has been wrnged The$judgment$in$the$case$reveals$a$mral$jurisprudence$that$was$sphisticated,$develped$ and$cherent$by$the$year$1615,$within$a$legal$system$which$treated$cmmn$law$and$equity$ as$ tw$ separate$ bdies$ f$ law.$ it$ als$ illustrates$ a$ pattern$ f$ cntextual$ legal$ and$ mral$ reasning$which$has$persisted$in$the$angleaustralian$equitable$jurisdictin$until$this$day.$$ P L Lughlan (In Parkinsn, 103) ntes that the Aristtelian cnceptin f equity as a rectificatin f law where the law falls shrt by reasn f its universality was f great significanceinearlyequityjurisprudencebecauseneftheperceivedsurcesfinadequacy andinjusticeinthecmmnlawwasthegeneralityfthelaw srules,andthelaw sinabilityt muld its rules t fit the circumstances f the particular case. The equitable jurisdictin functinedtprevent,crrectandreversetheindividualfailuresfjusticefaruleugverned decisinumakingfrum. Tday, where the principles f CL/Equity cnflict, equitable principles prevail. This des nt meanthatequityistakingveranddisplacingthecl.equityknwstheclisthereandifthere s avalidjudgmentthiswillstayinplacebutwewilllkatyurcnsciencetdeterminewhether that s smething yu can enfrce: the cnscience f the appellant, which equity will seek t relieve is a prperly frmed and instructed cnscience. Therealtaskistdecidewhat a prperlyfrmedandinstructedcnsciencehastsay (ABC)v)Lenah)Game)Meats) TheEffectsftheJudicatureActsandthe FusinFallacy EquityandCLwerenevercmpletelydividede.g.inEnglandtheLrdChancellrhada limitedcljurisdictinandalargestatutryjurisdictin;inaustralianclniesthere werenevertwsetsfcurts(justhadthedifferentjurisdictins) EquityknewtheCL equityfllwsthelaw inthesensefitscncurrentandauxiliary jurisdictinhadlegalrightsastheirsubjectmatter Therewereareasflimitatinupnequity srecgnitinflegalrightswhichmadeit prcedurallycmplexfrpartiestlitigatin Chanceryhadnpwertdecideadisputedlegalrightrtitleasastepin prtectingitagainstinvasin BefrethejudicaturesystemChanceryhadlimitedpwerttransferasuittthe CLcurts wuldhavetstartagain(sneededtmakesureyustartedatthe rightcurtasculdbethrwnutifstartedinthewrngcurt) De$d$Reade$v$Reade(1799):beneficiaryfatrustfland;trusteehad dispsedthebeneficiary;thebeneficiarytriedtsueatclfrejectment butthiswasn tpssibleascldesntacknwledgesuchrights CurtfChancerydifferedgreatlyfrmtheCLcurtsinitsprcedures;itdidnt dispsefsuitsbytheclsystemfpleadingandralevidencefwitnesses befrejudgeandjury;itreliedheavilyupnaffidavitevidence,eschewedjuries andwasassistedbydiscveryandinterrgatries 3

4 Evenifyustartedattherightplace,mighthavetgtthecurtssequentially tgetafullremedyi.e.gtcltprvenuisance,chanceryfrinjunctin CmplicatedbythefactthattheCLdidntignreequitablerights/titlese.g.the QBntedthataplaintiff scpyrightwasheldntrustfratp(sims)v)marryat) Manyprincipleanddctrines,equitableinriginwerebrrwedbytheCLwith theresultthattheythereafterappliedthrughutthelegalsysteme.g.estppel byrepresentatinrcnductwastakentthecl Hweverrememberthat(a)theCLcurts,evenwhenadjudicatingn legalclaimsincntract/trtdidnthaveinherentpwertawardthe remediesfinjunctinandspandtherremediesand(b)theclcurts culdntentertainactinsbrughttrecverdamagesrtherrelieffr infringementfpurelyequitabletitlesandclaimse.g.abeneficiaryculd ntsuehisrhertrusteefrbreachftrustunlessinchancery TherewasalwaysachrnicdelayinChancery ExpenseinChanceryaswellasclerkswantedtbepaidperpage TheJudicatureActscameintfrcein1875 Wheretherehadbeencnflictsinprinciplebetweenlawandequitythelatter wuldprevailintheendbymeansfcmmninjunctin S25(11)ftheJudicature$Act$1873prvidedthatintheeventfa cnflictfrules,equityshuldalwaysprevail S25(1)U(10)hadaseriesfspecificprvisinsastwhat happenedinspecificinstancesfcnflict Thelegislaturealsmadegreatchangesinprcedurei.e.ablishedtheCLsystem fpleading,didawaywithldtribunalsandsetupnehighcurtandsughtt ensurethatasingletribunalinasingleprceedingwuldadministerthereinthe ttalityfthejurisdictinsftheldtribunals(supremecurtfjudicature) The SC f Judicature has different divisins (Chancery and CL divisin) but bth are part f the same curt and therefre bth had the jurisdictintgivealltheremediesthethernewuldhavedne ThegeneralsignificanceftheEnglishjudicaturelegislatinhasbeenputbyPrfessr Simpsn (1974): the effect f it must be sught largely in scial advantages secured thrugh prcedural simplificatin the s called fusin has never ccurred and was neverintended;thecatchphraseismstmisleading.theprinciplethatequitytrumped law had been established at least since the early 17 th century and there are nly tw senses in which fusin culd ccur had it ccurred first the develpment f settled, custmary r precedent based principles, rules and cncepts f equity came t differ nlyinsubstancefrmthecmmnlaw;secndly,befrethejudicatureactstherehad beenaschemefharmniusrelatinshipbetweenthetwsystems,neinwhichequity presuppsedthelawtwhichitwassupplementary thechiefeffectfthejudicature Actsupnthecmmnlawderivedfrmitsestablishingathreetieredstructurefcivil curts,mannedbythreedifferentcategriesfjudge. InAustraliatdaythisisexemplifiedintheSupreme$Curt$Act$1970 (NSW) s 57 and the Law$ Refrm$ (Law$ and$ Equity)$ Act$ 1972 (NSW) s 5 which hld that the SC can administercncurrentlyallrulesincludingallrulesfequity Leemingin Equity,theJudicatureActsandRestitutin (2011)suggeststhatfusintk alngtimeinaustraliaastherewereneverseparatecurtsinaustraliathatneededt bejined(i.e.justhadthetwdivisins,slesspressingasitwasinengland) Effect f the Judicature Act can be seen in the example f the NSWCA case Harrisn)v)Schipp (2002). In that case, a plaintiff, wh had lst t the defendant bth at trial and n appeal subsequentlybrughtfurtherprceedingsintheequitydivisin.theplaintiffarguedthatnew evidencehad,sincetheappealbecmeavailableandthattheplaintiffwastherefreentitledin equitytbringbillfreviewprceedingsandbegrantedanewtrialnthebasisfthefresh evidence. It was held by the CA that since the judicature legislatin, there was n equitable jurisdictin vested in a single judge f the SC t set aside judgments n the grund f fresh 4

5 evidence.thejudicaturelegislatinhadablishedthebillfreviewprcedureandreplacedit withappealstthecaandthatwasthecasewhetherrntthebillfreviewjurisdictinin equitywasregardedasriginalinnaturerappellate. Fusinfallacy TheJudicaturesystemhastwessentialandcnceptuallydistincteffects First,itfusestheprceduresftheldCL/equityjurisdictinsinthesenseabve Secnd,itembdiesinstatutry mandate the supremacy f equity ver law in casesfcnflictbetweenrules Reflectin will cnfirm that neither f these changes will give the plaintiff a cause f actinremedyradefendantadefencewhichhe/shelackedundertheldsystem Thesameresultnwbtainablebutissuedirectlyandwithut risk f passage frmnecurttanthertbringthedisputetcnclusin TheresultftheJudicatureActshasbeencalled fusinfallacies i.e.theyareexplicable neither by applicatin f law r equity but nly a prduct f a change in substantive principlesfenglishjurisprudence Such change wuld require legislatin and the clear implicatin in the fallacies is that thiswassuppliedbythetermsfthe1873act ButwherearethetermsintheActwhichsstate?Therearenne One must ask tw questins whatdesitmeant tsay asubstantive fusin ccurredandwhatsectinsfthelegislatinhadthatresult? Maitlandclaimedthatlawandequitywerentinherentlyinppsitin equitycame nttdestrytheclbuttfulfilit;whatthismeantisntentirelyclearbutreflectedthe viewftheprpnentsfthejudicaturesystemi.e.thatlawandequitynwruninthe samestreambutdntmingletheirwaters(asburner). It is stated very plainly that the main bject f the Act was t assimilate the transactin f equity business and cmmn law business by different Curts f Judicature. It has been smetimes inaccurately called the fusin f Law and Equity but it was nt any fusin, r anythingfthekind,itwasthevestinginnetribunaltheadministratinflawandequityin everycause,actin,rdisputewhichshuldcmebefrethattribunal.thatwasthemeaningf theact.then,astthatverysmallnumberfcasesinwhichthereisanactualcnflict,itwas decidedthatinallcaseswheretherulesfequityandlawwereincnflicttherulesfequity shuldprevail (Salt)v)Cper(1880)). Themvementfrmergerfequityintlawdiscuntedthepreccupatinwiththebeliefthat law and equity d nt cnflict, that equity is nting mre than a bdy f mre enlightened principles f cnduct which culd be smthly mrtised int the cmmn law there is a cnflict between them. A judgment f cmmn law creates rights in the plaintiff. A decree in equity, perating in persnam impses duties upn the defendant. Frm this fundamental difference, cnflict results law and equity cannt be blended r hmgenised fr they are antitheses.thenestrivesfrpredictabilityandtreatscasesasbelngingtageneralisedtype, thetherstrivesfrindividualjusticeandtreatscasesasbeingunique.eachhasafunctint perfrm which requires freedm t act upn the ther in 1905, Dean Pund, althugh uphlding the unified curt ntes examinatin f the current reprts will disclse fur tendencies in the amalgamated system: (1) legal rules superseding equitable rules in certain cases;equitablerulesrprtinsfthemdisappearing;equitableprinciplesbecminghardand fastandlegalintheapplicatin;(4)equitablerulesbecmingadptedinsuchwayastcnfuse insteadfsupplementthelegalrules. (Emmerglick,1945,USA).Are)these)fur)tendencies)(r) any)f)them))described)by)dean)pund)t)be)discerned)in)angleaustralian)case)law? Examplesinclude The awarding f exemplary damages in equity (Harris) v) Digital) Pulse) which ignrestheideathatequitydesntpunish 5

6 AnequitablecausefactinwithCLremedy(Redgrave)v)Heard) Prcedural*fusin?* TheReprtftheJudicatureCmmissinessentiallysaidthatwewantthiscurttbea nemstpshp,yugtthecurtandtheycanprvideyuwiththeremedyatcl/equity asisnecessaryaccrdingtyurfacts.therefreessentiallyachievethesameutcmes, butjustchangetheprceduretgettthseutcmes. Berry$v$Berry[1929]2KB316 Cupleweremarriedbutseparated Enteredintadeedfseparatinandagreedthathewuldpaymaintenancetherin theamuntf216pundsperyear 8yearslatertheyagreedthalvethatamunt Thiswasmadebycntractandsupprtedbyvaluablecnsideratin CLrulefevidenceprirttheJudicatureAct variatinfacvenantin adeedhadtbecntainedinadeedtherwiseineffective Equityfcusednsubstance,ntfrmandtheagreementinsubstance wastvarythecvenantinthedeedtequitygavethateffect AftertheJudicatureAct wherethecnflictbetweenequity/clrulesfequityprevail(s 25ftheJudicatureAct);thusnlyneededtpay108pundsperannum ThesameresultwuldhavebeenachievedbefretheJAs shesuesatcl,prvesthe deed,hecan tprvethevariatininclcurt,shegetsacljudgmentbutthenhegest Chanceryfraninjunctin;ntenfrcedbecauseitisuncnscinable Zaccardi$v$Caunt[2008]NSWCA202 IfyuhadatimestipulatinatCL,equitywuldnlytreatthisas ftheessence nlyif thishasbeenstipulatedbythepartiesandthatisclear S25(7)ftheJudicatureActsaysapplytheequitablerule WipedawaytheCLrule ReasnfrdingthiswasbecausenwthattheCurtwasne,theCurtwuldneedt knwpreciselywhen time wuldstart Thishassmetimesbeendescribedas substantivefusin becauseitchangestherule andthis isspecifiedinthecaseat[87]u[100].hwever,ifit ssubstantivefusinitwuldbeminorasthe utcmeisntdifferentandprethejudicatureacts. Substantive*fusin?* Thestatutewasdesignedtachieveprceduralfusini.e.LrdDiplckheldinUnited)Scientific) Hldingsthatitwasnlyafusinfadministratin(andntsubstantivefusin).Butdesitals achievesubstantivefusin? I.e. fllwing the Judicature Acts, if there has been substantive fusin, if yur claim is purely equitable yu may get damages and nt just equitable cmpensatin? Or the mdificatin f principlesinnebranchfthejurisdictinbycnceptswhichareimprtedfrmthether?the fallacy hwever is cmmitted explicitly, cvertly and n ccasin with apparent inadvertence(meagher,gummwandlehane,2002). Clearthatpers25(11)ntintendedtsubstantivelyfuselaw/equity Intermsfsubstantivelaw,thepurpseftheJudicatureActswastleaveinplacethe settlementsthatwerealreadythere Statutesweremerelystreamlininghwyugttjudgmentattheend 6

7 MCC$Prceeds$Inc$v$Lehman$Brs$Internatinal$(Eurpe)[1998] Plaintiffbeneficiaryfatrustfshares Underthetrustthebeneficiaryentitledthaveallsharesdeliveredtit Ratherthandingthatthetrusteewrngfullypledgedthesharecertificatetdefendant ThedefendantwasaBFPFVWNfthelegalestateinthesharesfrmthetrusteewithut nticefanybreachftrustrclaimbytheplaintiff Theclaimculdntmaintainanactinincnversinagainstthedefendant EquitablewnercanntsueincnversinwhereTPhasequitablerights Mummery LJ maintained that the judicature Acts intended t achieve prcedural imprvements in the administratin f law and equity in all curts nt t transfrm equitableinterestsintlegalinterestsrchangetheeffectfthecl Walsh$v$Lnsdale(1882)21ChD,9CB Caseinvlvedagreementtleaseaweavingshedfr7years Inwriting,nfrmalleasegrantedbydeed(thereisjusttheagreementtleasethatis supprtedbycnsideratin) Thetenantwasallwedintpssessinandstartedpaymentfrentinarrears 3yearsafterthatlandlrdservedanticedemandingayear srentbepaidinadvance Thatdemandwaspermittedunderthecntract Thetenantdidn tpaytherentfrtwdaysandthelandlrdsughttdestrainfrnnu paymentfrent(destraintisaprcesswheretakethetenant schattelsandhldthem untiltherenthasbeenpaid)thrughthecmmnlaw Hwevertherewasnlegalleasehereasntcreatedbydeed TheCLhweversaidpreUJudicatureActs,ifyuwereinpssessinandpaying renttheclwuldimplyaleasefrmyearutuyear,hadtpayrentquarterlyand thebligatintpayrentwasnlyinarrears InequitypreUJudicatureActswuldtreatitasaseparateleasebecausefthe availabilityfspecificperfrmancewuldtreatitasexistingalready Jesselsaidcanrestrainfrrenthereeventhughequitablelease ThisisacnsequenceftheJudicatureActs Lkslikeafusinfallacy equitablelease,butapplyingtheclrules Apersnwhentersintpssessinflandunderaspecifically enfrceablecntractfraleaseisregardedbyacurthavingjurisdictin tenfrcethecntractasbeinginthesamepsitinasbetweenitself andthetherpartytthecntract,asiftheleasehadbeengranted Hwcanthecasebeunderstdinrthdxterms?Withutthefusinfallacyidea? Chan$v$Cresdn$Pty$Ltd(1989)168CLR242 CresdnagreedinwritingtleaselandtSbutthiswasneverregistered(neverlegal) SdefaultedandCresdntkactinagainstChanasaguarantr underthislease Thiswasunsuccessfulastherewasnregisteredlease,hencenenfrceableguarantee ThealternativeclaimfequitableleaseinlinewithWvLalsunsuccessfulasWvLnly givesanequitableleaseandthuswuldntbeagreement underthislease SmefusinfallaciesinthebksfrmNZ: Day$v$Mead[1987]2NZLR443 Cncernedbreachffiduciaryduty equitableclaimfrequitablecmpensatin 7

8 CAreducedthecmpensatinawardnbasisfcntributryfault ThisisapplyingaCLcncepttanequitableremedyinawaythatwuldn thave ccurredbefrethejudicatureacts Aquaculture$Crp$v$New$Zealand$Green$Mussel$C$Ltd$[190]3NZLR299 Awardfexemplarydamages(CLremedy)frbreachfcnfidence CkJsaystwdctrinesaremergedandthefullrangefremediesshuldbeavailable Frallpurpsesnwmaterial,equityandcmmnlawaremingledrmerged.Thepracticality fthematteristhatinthecircumstancesfthedealingsbetweenthepartiesthelawimpsesa dutyfcnfidence.fritsbreachafullrangefremediesshuldbeavailableasapprpriate,n matterwhethertheyriginatedincmmnlaw,equityrstatute. HweverlkagainattheNSWviewM Harris$v$Digital$Pulse$Pty$Ltd[2003]NSWCA10 Breachffiduciaryduty Canyugetexemplarydamagesfrbreachffiduciaryduty?InNSWn: WhattheNZCAcntemplatedintheAquaculture)Crpratincasewasafrm perhapsamild frm butafrmnnetheless ffusin.itwasfusininthesensefselectingaremedyfrm the cmmn law range f remedies which a curt f equity administering the law relating t equitablewrngsbefretheintrductinfajudicaturesystemwuldnthaveadministered whatevernecallstheprcess,itmustberecgnisedasaprcesshavinginvlvedadeliberate judiciallyuengineeredchangeinthelaw. Fusin*by*cnvergence*ver*time?* AndrewBurrws(2002)advancedthisargumentthatperhapsvertimetheCL principles/equitableprinciplesmightdevelptthepintyugetfusinbycnvergence IfthishappensitisntbywayftheJudicature)Acts(astheActssayifthereisacnflict betweenlawandequitythenequityprevailsswhywuldtheycnverge? JudicatureActsachieveprcedural,ntsubstantivefusin InHarris)v)Digital)PulseHeydnJacknwledgedthelawcandevelpvertime,buthe thughtthatequityhasntdevelpedsincethe19 th century ButMcGhee(2010)states tsubsumeequityintalargerschemefprivatelaw bligatinsandprpertyrightswuldrisklsinganexplicitethicalelementthathas stimulatedthedevelpmentfdctrinesinthepastandthatcanusefullycntinuetd sinthefuture Dn tlsesightfcnscienceubasedreasningthatunderpinsequity Frexampleprpertymeansdifferentthingsindifferentcntexts Remember:equitableprinciplespresuppsetheexistencefCLrights/remedies(cantakethe equitable dctrine away and CL makes sense but nt vice versa). Equity is intersticial it appearsintheintersteces(gaps),fitsinandarundthecmmnlawandmakesitmrejust. TheMaximsfEquity Nhardandfastdctrinerethemaxims,they guidethepsts abuthwequityperatess can ttakeitandsaythisgivesmetheanswerineverysinglecase. Maxims themselves can cnflict with eachther and if they d, the curt has t reslve the cnflictandfigureutwhattdasmustbethecasethatneisappliednly. 8

9 Equity regards as dne what ught t be dne Equity fllws thelaw He wh seeks equity must d equity He wh cmes t equity must cme with cleanhands Where the equities are equal the first intimeprevails Delay defeats equity Equity lks t intentin rather than frm Equity presumes equality Equity acts in persnam Walsh) v) Lnsdale: parties had agreed t grant a lease but nt yet actually dnethat,andbecausespecificperfrmancewasavailable,equitycnsiders yuthavednewhatyuughtthavedne(createalease). Equitydesn tdenythelegalpsitin itadptsitandsaysthisiswhatwill bedneinrespectfthelegalpsitin. Ifyuaskacurtfequityfrrelief,yumustyurselfbepreparedtd whatcnsciencerequiredfyu(frwardulking if yu want a remedy, actcnscinablyfrthereliefyuwant) Plaintiffinequityjurisdictinmustactcnscinablythemselves(mreabut whatyuhavedneinthepast).butthecnductwhichdisentitlesyuhast beseries,ntentirelyactinginbreachfapplicatin. Geltch)v)MacDnald[2007]NSWSC amerebreachfcntractisnt enughtdisentitleyutrelief Black) Uhlans) Inc) v) NSW) Crime) Cmmissin) [2002] NSWSC the uncnscinablecnductmustrelatetthereliefyu reseeking Cncernedamtrcycleclubwhichhadputmneytwards buyingaclubuhuse,bughtinthenamefneman Latertheclubarguedthatthehusewasheldbythewner ntrustfrclub Astheclubhadputupthepurchasemney;heldn resultingtrustfrclub,ntlegalwnerbeneficially NSWCrimeCmmissinsaidyucan targuefranequitable remedy(heldnresultingtrust)becauseyuhaveengagedin criminalcnductandthusyudnthavecleanhands Thisargumentwasrejectedbythecurt;andequitablerelief wasgrantedbecausethemisdemeanursdidntrelateinany waytwnershipftheclubhuse Camewithsufficientlycleanhandsinrespecttrelief Ifyuhavetwpartieswithintereststhefirstintimeprevails;butifthereis pstpning cnduct frm a prir wner the equities are nt equal and the subsequentwnerwillprevail. If yu dn t d anything abut yur equitable rights, equity may refuse t giveyuassistanceakintstatutrylimitatinrules. TheDctrinefLacheshldsifyuhaverightswhichhavebeenbreached andyuacquiesceinthebreachbydingnthingabutit,maybesufficient tmakeitunjustinthecircumstancesthatyugetrelief. I.e.ifyuaredeclaringatrustyudn tactuallyhavetusethewrd trust lkatyurintentintsetupthearrangement(paul)v)cnstance).nteas stated in Crin)v)Pattn, if a dnr has dne all that he can d (especially whentheinstrumentftransferisdeliveredtthednee)equitywillgive effectttheinstrumentratherthaninsistingnstrictcmpliance. Twpeplewithaninterestandcan tfigureutwhatthequantumis yu fallbackandequitywillpresumeequality. Waikat)Reginal)Airprt)Ltd)v)AttrneyEGeneral)f)NZ[2003]cnfirmsequity is a fall back prvisin when yu can t figure ut any ther way t d smething (i.e. if evidence is clear that there shuld be a 1/3 and 2/3 divisin,yushuldgiveeffecttthat). Cntinuesthaveimprtanceinrealcasesnwdays. Mareva injunctins/rders if I m suing yu, yu have assets I m wrried 9

10 Equity will nt assist a vlunteer yu may dissipate befre I get my judgment, it is an rder frm the curt freezingyurassets(untilthecaseisdispsedf).thisisevenifyu rein AustraliaandyuhaveassetsintheCayman;asthisisaninpersnamactin whichactsntheindividualandnttheassetsandsmakesmarevasmre pwerfulandcanapplywrldwide. If yu have given value s that yu re nt a vlunteer equity will nt nrmallystepintassistyu.equitydesntdestryyurpsitininthis instance,butitdesntaddanythingtyurrights. Crin$v$Pattn(1990)169CLR540 Reequityassistingavlunteer: Ofcurseitwuldbeamistaketsettmuchstrebythe maxim.likethermaximsfequity,itisntaspecificrulerprincipleflaw.itisasummary statementfabradthemewhichunderliesequitablecnceptsandprinciples. Shwsthatclearthatntaprecisestatementinallcircumstances QuestinwhethertenancyhadbeenseveredbefrePattndied MrsPattntriedttransferhersharetMrCrin hadthatseveredthejinttenancy betweenthepattns? ExecutedthememftransferinfavurfCrinandgiventhedcumentsther slicitrandntcrin s Shehadtldherslicitrtregisterbuthehadn tdneityet ButCrinwasavlunteertryingtgetprpertythrughgift,ntsale Friend$v$Brker[2009]HCA21 F&Benteredintajintventure Diditthrughcrpratevehicle ratherthanrunningitthemselves,theysetupa cmpanytrunbusinessandtheywerewnersfthecmpany TfundtheventureBrkerhimselfbrrwed$350KfrmSMK(TP)atahighratef interestf19.5% Hethenlentittthejintventurecmpany ThelanfrmSMKwassecuredbyamrtgageverMrBrker shmeandheals guaranteeditpersnally Bythetimefthetrialtheinteresthadrackedupandthedebtwedwasnt$1.35mill BrkersughtcntributinfrmFriendtpayhalffit TheHCArejectedthisandsaidthatBdidnthavetpayhalffthelan Appliedequitablemaxims: Equityfllwsthelaw desn tdenythelegalpsitin BwedmneytSMK;SMKcansueBrker,evenifinequityrderMr Friendtpaysmefitthat sk;ifhegetsanythingutffriendit sa cntributinthim;hestillwesmneytsmk Equity presumes equality between the parties s was there a right f cntributinneededfrmmrfriend? Because Mr Friend had nt brrwed the mney he did nt we a cmmn bligatin by Mr Brker; wned by Mr B alne as he had brrwed it himself and lent it t the jint venture s B was slely bligedtpayitbackatlawandeveninequitynbasisfrrequiringhim tcntributetthatamunt B culd sue the cmpany and say yu we me mney, but the cmpanyhadnmneyshedidn tsuethem Remembermaximsarentstrict:theyareflexible,theycnflict,andthecurtgestthe netheythinkwillachievethebestjustice/cnsciencembasedresultinthecase. 10

11 TheCnsciencefEquity FiduciaryObligatins Theterms uncnscientius and uncnscinable are usedacrssabradrangeftheequity jurisdictin. They describe in their varius applicatins the frmatin and instructin f cnsciencebyreferencetwelludevelpedprinciples.thus,itmaybesaidthatbreachesftrust and abuses f fiduciary psitin manifest uncnscientius cnduct, but whether a particular caseamuntstabreachftrustrabuseffiduciarydutyisdeterminedbyreferencetwellu develped principles, bth specific and flexible in character. It is t thse principles that the curt has first regard rather than entering int the case at that higher level f abstractin invlvedinntinsfuncnscientiuscnductinsmelsesensewhereallprinciplesareat large (Tanwar)Enterprises)Pty)Ltd)v)Cauchi[2003]). Weneedtlkatwhatequitabledctrinesrequireffiduciaries Whwesfiduciaryduties?Whatisafiduciaryrelatinship? A fiduciary relatinship is ne where ne party repses cnfidence in anther whisexpectedtactintheinterestsfthefrmerpartyratherthanthelatter This may in a given case require clse examinatin f a disputed fact (Hspital)Prducts)Ltd)v)United)States)Surgical)Crp) Overridingdutynttbedislyal;ntadutyflyalty(Stevens)v)Premium)Real) Estate)Ltd[2009]NZSC15) Keepinmindthatsmerelatinshipswhichwuldappeartinvlvecnfidencertrust inannutechnicalsensearentfiduciarye.g.parentandchild,husbandandwife Further,ntallfiduciarydutiesarisesimplyfrmtherepsingfcnfidencebyAinBin apersnalsensei.e.thusthepwerfdirectrstissuesharesisrepsedinthemby cmpanylegislatinandthearticlesfassciatinfthecmpanyinquestin,althugh equity has then treated the exercise f that pwer as subject t fiduciary cnstraints (Whitehuse)v)Carltn)Htel)Pty)Ltd) Mstfthefiduciary sbligatinsarecuchedinnegativefrmi.e. Thefiduciary sinterestanddutymustntbeplacedincnflict Thefiduciarymustntdfrtheirwnbenefitwhatughtthavebeendne,if atallfrtheprincipal(hspital)prducts)case The duty f a fiduciary is a negative ne i.e. t avid certain cnduct, nt a psitivedutytactinaparticularway TrusteeHbeneficiary Thearchetypefafiduciaryisfcursethetrustee (Hspital)Prducts)Ltd)v)US)Surgical)Crp) Keech$v$Sandfrd(1726)SelCastKing61 Trustwherebythetrusteeheldaleasefamarket Leasefthemarket(generatesprfitfrmthestallhlders)heldntrustfraninfant Theleasewascmingtanend Trustee apprached the landlrd f the market lease and asked fr a renewal fr the benefitftheinfant(i.e.thebenefitfthetrust) Thelandlrdsaidn Saidthatthelandlrdrefusedbecauseinfantbeneficiarywasincapablef signingthenecessarycvenant Ntclear trusteeculdhavesignedthelease? Trusteegtarenewalftheleasefrhiswnbenefit ThiswasabreachfafiduciarydutyvisUàUvisthebeneficiaries 11

12 When we talk abut trustees as fiduciaries, nrmally talking abut express trusts (which are intentinallycreated).becarefulwhenyutalkabutthertypesftrusts(suchascnstructive trusts)asitisntclearthatcnstructivetrustsnecessarilyinvlvefiduciaryduties yuculd becnstructivetrusteefprpertywithutknwingit(i.e.transferredtyuasagiftbutitis ntrust;yuarehldingtrustprpertybutmayntrealise).ifyudntrealiseitisextremely unlikelyfiduciarydutieswillbeappliedtyuinfullrigur.butifsmenecameandtldyu and yu used this t then benefit yurself yu may find yu d have enugh knwledge fr fiduciarydutiestapplytyu. AgentHprincipal Agentexpectedtactnbehalfftheprincipalandntfrtheirwnbenefit Agents may hld prperty fr their principal and if they re ding this they may be a trusteefthatprpertyaswell Butagencydesntnecessarilyinvlveprperty,i.e.permitmetgintthewrldand enterintcntractsthatbindme De$Bussche$v$Alt(1878)8ChD286 PlaintiffwnedashipandwantedtsellintheOrient PlaintiffwnednanislandinBritainanddidn twanttgtorient Engagedtheagenttselltheship(Clmbine)ntheirbehalf Theagentinstructedtsell;expressinstructinsdntsellfrlessthan$90,000 KnewaJapaneseprincewhwantedtbuyitfr$160K Theagentslditthimselfknwinghewuldmakemney sthimselffr $90Kandthenreslditttheprince Breachffiduciaryduty afiduciaryisntpermittedtprfitfrmtherelatinship; agentexpectedtactintheinterestsftheprincipalandntfrthemselves;shuld haveslditfr$160ktjapaneseprinceandgiveallthemneyttheplaintiffs Wasfrcedthandverallmneyhemadenittplaintiffs Directr cmpany Cmpany cntrls wn assets but the directrs cntrl them in a way akin t the trusteescntrllingprperty Becauseacmpanyhasnexistenceinreality,itcannlyperatethrughitsdirectrs andagentswhichiswhythesepeplewefiduciarydutiestthecmpany(nttthe sharehlders,ascfthecmpany)being)itself)a)legal)persn) Regal$(Hastings)$Ltd$v$Gulliver[1967]2AC134n Regalwantedtbuy2cinemasinHastings(whencmpanyissldattractshigherprice) Tdthisthecmpanyfrmedasubsidiarycmpany(Amalgamated)fRegal Regaldidnthaveenughmneytbuyallthesharesinsubsidiary(neededthismney tbeabletbuythecinemas) Amalgamatedculdaffrdtbuy40%fthesharesinRegal,whiledirectrsbughtthe ther60%fsharesinamalgamated,allwingamalgamatedtbuythecinemas ThedirectrsthensldtheirsharesinAmalgamatedtmakeaprfit WhiletheyweredirectrsfRegal,nthinghappened;butwithnewmanagementthey suedthefrmerdirectrsfrbreachffiduciarydutysayingyuprfitedutfyur fiduciarypsitinbecauseyuusedittacquirethesesharesandmakeprfit SubsequentlytheyhadtdischargetheprfitsfthecmpanybacktRegal Brunninghausen$v$Glavanics(1999)46NSWLR538 12

13 Incertaincircumstanceshavedirectfiduciarydutiestsharehldersbutthatisunusual Getachainfrelatinships Sharehlderswnthecmpanyandentitledtanythingthatcmesutfit Dn tneeddutieswedtthemastheygetdutiesindirectlybecauseif thecmpanyisgdtheyreceivethisindirectbenefit ThisiscnfirmedinFriend)v)Brker) Samepintariseswithrespectttrusts Trusteehldsprpertyfrbeneficiaries andifthetrusteesaysitisagdtime tsellthetrust,anybenefitfrmitisheldntrustfrbeneficiaries Dn tsquareitffandsaydirectlygestthebeneficiaries SlicitrHclient Byactingnbehalfftheirclientstheywefiduciarydutiesttheirclients Farringtn$v$Rwe$Mcbride$&$Partners[1985]1NZLR83 RWPactedfrplaintiffinpersnalinjurysuitandhewn Hethensaidwheretinvestmneytgetmneytslicitrs InvestedinacmpanycalledPineerLand Theslicitrsdidntrevealthattheywereadvisingthatthercmpanyfwhich PineerLandwasamemberasttheirfinancesandadministratin Slicitrsactedinbreachffiduciaryduty Didnttakebenefitfrthemselvesbutwerefiduciaryandallweddutiesthey wedtfarringtntcnflictwithdutiesttherclient NB:Maguire$v$Makarnis;Blkiah$v$KPMG PartnerHpartner Partnerwesafiduciaryrelatinshipttherpartnersastheyareexpectedtactfr thebenefitfthepartnershipandntjustfrthemselves Ifapartnertakesutabenefitfrthemselvespersnallyfrmbusinessthatwaswithin thescpefthepartnership sbusiness,thathastbegiventthepartnershipasught thavebeendnefrthebenefitfthepartnershipinthefirstplace Similarly,ifpartnermakesbenefitfrmprpertyrinfrmatinpartnermustgivethat benefittthepartnershipasawhle Chan$v$Zacharia(1984)154CLR178 ChanandZachariahadperatedamedicalpracticeinpartnership Theyhadrmsandwrkedfrmapracticepremiseswhichtheyleased Leaseranfrthreeyearswitharightfrenewalfrafurthertwyears AfteracuplefyearsChangaventicethathewasterminatingthepartnership Theleasewasvaluableinitswnrightbecausefthewaytheyhadrunpractice Hadgdwillattachedtitwiththelcalcmmunityasavenuewheremedical practiceswererun Secndly,therewasascarcityfsimilarvenuesintheareafrmwhichyuculd runamedicalpractice ZachariasaidIknwyu veterminatedthepartnershipbutcanyurenewthelease withmesicancntinuetrunthebusiness/cntinuethegdwillfthepremises Chandidntdthisbutwentandgtanewleasefthepremiseshimself HCAheldthiswasabreachffiduciaryduty 13

14 Partnershipwasbeingwunddwn,sntclearwhat sgingnintermsf relatinshipbutcurtsaidthatwithinthewindingdwnallftheprpertythat waspartnershipprpertyneedstberealisedfrtheirjintbenefit FrChantrefusetrenewtheleasetenableittbedealtwith prfitablywasabreachffiduciarydutywhenhethenwentandmadea prfitfrhimself(actedinhiswninterests,ntthsefpartnership) EmplyeeHcmpany Wrman$Internatinal$v$Dwyer(seebelw) Categriesntclsed Thecategriesffiduciaryrelatinshipsarentclsedandcanariseinindividualsettingseven ifthecategryisntalwaysseenasfiduciary(english)v)dedham)vale)prperties)ltd). Crwn*servants* *Crwn** Reading$v$AttrneyEGeneral[1951]AC507 SergeantReadinginArmyCrps;basedinEgypt Tkbribesin20,000pundsandtkbribesinreturnfrescrtinglrryladsfelicit whiskythrughcheckpintsincair TheHLheldthatreading sfficialpsitininarmywasfiduciary ExpectedtusepsitinfrthebenefitfthearmyandCrwn,ntfrhimself HehadactedfrhimselfandshadthandthebribesverttheCrwn AttrneyEGeneral$fr$HK$v$Reid[1994] HighlevelprsecutrwrkingfrHKgvt Tk12.5millinfrmHKcriminalswhwasprsecutingtslwdwntheir prsecutins/delayandbstructasmuchasculd ThePCheldthatlikeSergeantReading,MrReid spsitinwiththehkgvtmeanthe wedfiduciarydutiestthehkgvt,andthenlyreadingreidgtbribeswasbecause fhisfiduciarypsitinasasenirprsecutr Crwn* *indigenus*peples* TheserelatinshipshavebeenexplredintheUS/Canada: Guerin$v$R[1984]2SCR335 CanadianIndianssurrenderedlandtCrwntleasethatlandlatertaglfclub TheCrwnleasedlandtglfclubnlessfavurabletermsthancrwnagreedwith Indiansthatwuldleasetheland SCCanadafundactedinbreachffiduciaryduty ButeveninCanadantasstraightfrwardasthat ThemerefacttherewasaCrwnUIndigenuspeplesrelatinshipwasntitself enughfrtheretbeafiduciaryrelatinship(desn tapplygenerally) Reasnitarseinthecasewasbecausetherewasastatute;whichsaid thatthebandfindiansingeneralculdn tdealwithlandexceptby surrenderingittthecrwn(tstptheindiansfrmbeingexplited) StheIndiansculdn tdirectlydealwithglfclubhere Crwnakintagent,trustee Actualdecisinfindigenusfiduciaryrelatinshipnteasy 14

15 Mab$v$Queensland$(N$2)$(1992)175CLR1 SmesupprtinthecasethattheCrwnwesfiduciarydutiestindigenusAustralian inthey sjudgmentinparticular(dawsn sjudgmentwaswhllyagainstthis) TheyJsaidindigenusculdn talienatetheirrelatinshiptherthanbytransferringit tthecrwn(likeguerin);andthusthemerefactthatthecrwnculdtakeland exercisingradicaltitlegeneratedafiduciaryrelatinship RelevancefthisfrmulatinraisesthepssibilityfarguingthatwheretheCrwndes takelandfrmindigenusitwesafiduciaryrelatinshiptthemandthuscannlydeal withlandttheirbenefit Wik$Peples$v$Queensland(1996)187CLR1 Brennanaddressedtheindigenuspeple sargument Saidwhyshuldtheabilityttakesmethingffsmenemeanyucannlyditin theirinterestsinthislimitedfiduciaryway?desn tmakesense Bdney$v$Westralia$Airprts$Crp$Pty$Ltd[2000]FCA1609: Thefregingdiscussinleads t tw cnclusins. One is that the authrities frm ther jurisdictins d nt prvide a firm basisfrtheassertinfafiduciarydutyfthekindfrwhichthesecndapplicantscntend. ThetheristhatthetendencyfauthrityintheHCA including,significantlybreen)v)williams isagainsttheexistencefsuchaduty.that,fcursedesntmeanthatcircumstanceswill nt arise in which the Crwn has fiduciary duties, wed t particular indigenus peple, in relatintthealienatinflandverwhichtheyhldnativetitle.nrdesitmeanthatwhere, in particular circumstances a duty f that kind is breached (r a breach is threatened) a cnstructivetrustmightntapprpriatelybeimpsed. ThusngeneralfiduciaryrelatinshipbetweentheCrwnandindigenuspeples Tacceptthatinindividualcircumstancesafiduciaryrelatinshipmighthavebeen generatedbysmethingelseisfundamentallyacnstitutinalquestin,standsalne Theparticularcircumstancesdtherelatinshipmightleadtanadhcrelatinship? Adhcfiduciaryrelatinships Theauthrities prvidencmprehensivestatementfthecriteriabyreferencetwhichthe existencefafiduciaryrelatinshipmaybeestablished (Hspital)Prducts)v)US)Surgical)Crp) Australian curts have cnsciusly refrained frm attempting t prvide a general test fr determining when persns r classes f persns stand in a fiduciary relatinship with ne anther (Breen)v)Williams) Whatmustberememberedwhenlkingatadhcrelatinshipshweveristhat thecritical featureftheserelatinshipsisthatthefiduciaryundertakesragreestactfrrnbehalff rintheinterestsfantherpersnintheexercisefapwerrdiscretinwhichwillaffectthe interestsfthattherpersninalegalrpracticalsense (Hspital)Prducts)v)US)Surgical)Crp). thisstatementf undertakesragreestact meansundertakingtactnbehalffsmene elsefrtheirbenefit(ntjusthldingprpertyetc)(bristl)&)west)building)sciety)v)mthew) Fiduciaryexpectatin: Apersnwillbeafiduciaryinhisrelatinshipwithantherwhenand insfarasthattherisentitledtexpectthathewillactinthatther sinterestsr(asina partnership)intheirjintinterests,ttheexclusinfhiswnseveralinterest (Finn,1992) This statement is heavily influenced by Finn: As t wh is a fiduciary while there is n generallyagreedandunexceptinabledefinitin,thefllwingdescriptinsufficiesfrpresent 15

16 purpses: a persn will be in a fiduciary relatinship with anther when and insfar as that persnhasundertakensuchrespnsibilityt,antheraswuldtherebyreasnablyentitlethat thertexpectthathershewillactinthatther sinterestttheexclusinfhisrherwnr athirdparty sinterest (Grimaldi)v)Chamelen)Mining)NK)(N)2)[2012]FCAFC6] JintVentures Ifpartiesenterintjintventurestherearedifferentwayststructurethem Onewayisacrpratejintventure(Friend)v)Brker) Antherisafrmalpartnershiparrangement(establishedcategry) Canenterintaventuresimplythrughcntractaswell Desthiscreateafiduciaryrelatinship? Ntapersecategryasthemerefactthatweareinajintventuredes ntmeanwearefiduciariesteachther IntheUSthiswuldbethecase Need t g thrugh and say yes this is an ad hc relatinship, wulditbelegitimatersensibleinthecircumstances Hspital)Prducts and United)Dminins)Crp cases bth use jint ventures which in Australia arentrecgnisedasasettledcategry.fallbacknfiduciaryexpectatintseeifadhc.the casesreachppsitecnclusinsntheirfacts(udcwasfiduciary;hsnfiduciary). Hspital$Prducts$Ltd$v$United$States$Surgical$Crp(1984)156CLR41,CB11.5C MakesurgicalstaplersintheUS BlackmanwasUSSC snycdealer HewrkedutthatsurgicalstaplersntpatentedinAustralia AcquiredHPIinAustraliawhichdistributesUSSC sprductsinaustralia NwBlackmanhasaccesstUSSC sprductsinaustraliaandcanreverseu engineerthem(i.e.gbackwardsandmakethemfrmthebeginning) Onceyu vednethis,yucancreateprductyurself Startedmaking/sellingsurgicalinstrumentsinAustraliaandstpstakingrdersfrm USSCintheUS ArrangementbetweenHPI/USSCwasajintventureagreementbutBlackmanhadnt prmisedtactfrtheircmmnbenefitintheagreement HPIculdactinawaythatsuiteditsbusinessmdel BlackmandidntundertakeNOTtseelcmpetingprducts;allthecntractbetween Blackman/HPIsaidwasthatBlackmanhadtusedhisbestendeavurstprmteHPI prductsandhpiwasinbreachfthatcntract(asstppedbuyingtheusscprduct) USSCalsarguedtherewasbreachffiduciaryduty,buttheylstthisargument ThiswasacmmercialrelatinshipwhereUSSCifitwantedtculdhaveputa terminthecntracttsayyumustntcmpetewithurprducts(ntdne) WithutsmethinglikethatthecurtthughtnbasistexpectHPI slelyactintheinterestsfusscandhpi Cntractntsetupinawaythatmadefiduciaryrelatinship legitimate nfiduciaryrelatinshipsnfiduciaryduty Thefactthatyumisplaceyurtrustinsmenedesn titselfgeneratea fiduciaryrelatinshipinthecircumstances Masn sdissentwasthattherewasalimitedfiduciaryrelatinshipwhenhpiwas dealinginawaywhereitwuldaffectussc sgdwill(hadtactintheinterestsf USSCandntfHPI) WhydidtheycareabutfiduciarydutywhentheyculdwinclaimbasednbreachfK?With breachfkcangetdamages;butbreachffiduciarydutyisstrippingthecmpanyftheprfits theyhadmade(whichismrefaremedy). 16

17 United$Dminins$Crpratin$v$Brian(1985)157CLR1,CB11.13C Partiesnegtiatingtcreateapartnership(settledcategryffiduciaryrelatinship) Eventsthatmatterhappenedbefrethepartnershipfrmallyenteredint still negtiatingtheterms Intendedpartners SPL,UDCandBrian Jintventurearrangement gingtbuyland/develpit UDCwuldprvidefinance SPLwentandbughtlandpursuanttthepartnership(incnsequencethattheywere gingtdthat)usingmneyudchaslentandrunsmrtgageverthatlandtudc Centralprblem clauseinmrtgagewhichpermittedudcttreatthemrtgageas securityntjustfrthedebtsthejintventurewnedbutanydebtssplwedtudc Brianunawarefclauseinmrtgage LandSPLbughtwasdevelpedandsldataprfit Becausefclauseinmrtgage,UDCkeptalltheprfittaccuntframuntlent tjintventureandthermneysplhadwedit TheHCAheldduringthenegtiatinstwardsthepartnershipagreement,fiduciary relatinshiparseatthatstageevenbefrefrmallyenteredintpartnershipbecause alreadystartedperfrmingtheintendeddealbefrefrmallycreatedpartnershipanda partnershipisaclearcategryfafiduciaryrelatinship Thismadeiteasiertfigureutitwasafiduciaryrelatinshipwhereasin Hspital)Prductsitwasnt: Thefactthatthearrangementbetweenthepartieswasfapurely cmmercialkindandthattheyhaddealtatarm slengthandnanequal ftinghascnsistentlybeenregardedbythiscurtasimprtant,ifnt decisiveinindicatingnfiduciarydutyarse (Hspital)Prducts) ThisdesntmeancmmercialrelatinshipsCANNOTbe fiduciary;butthereasnwhythequteistrueisbecausein cmmercialrelatinshipsitisunderstdthatthepartiesare actingintheirwninterests Thecmmercialexpectatinthatcmesutfthe circumstancesiskeytdecidingwhethertherelatinship betweenthetwisfiduciaryrnt Rememberthatmanysettledcategriesexistin cmmercialsituatins,sdn tdiscardthem Re$Gldcrp$Exchange[1995]1AC74 Givesamrenuancedviewfcmmercialrelatinships: ThefactthatnepersnisplacedinaparticularpsitinvisUàUvisantherthrughthemedium facntractdesntnecessarilymeanthathedesntalswefiduciarydutiestthatther byvirtuefbeinginthatpsitin. $ Jhn$Alexander s$clubs$v$white$city$tennis$club[2010]hca19 AnptintpurchasepartflandatWhiteCitytennisgrundsfrmNSWtennis JACexercisedrightsfrhimself Breachffiduciaryduty? Heldtbeacmmercialtransactin,generallynfiduciaryduty Badcntract,badluck Lkatthespecificpsitinthatyu redealingwith. 17

18 Recap: Startwiththesettledcategries:ifthesearefulfilled;persnisafiduciary(dn tneedt thinkabutthefiduciaryexpectatin) Ifit sntinasettledcategry,thinkffiduciaryexpectatin Ifit slegitimateinthecircumstances fiduciaryrelatinship Ifit sntlegitimate nfiduciaryrelatinship Ifit sntfiduciary,maybethedctrinesfestppelandcnfidenceinfluenceit Whatdfiduciarydutiesrequire? Tsaythatamanisafiduciarynlybeginsanalysis,itgivesdirectintfurtherinquiry.T whmisheafiduciary?whatbligatinsdesheweasafiduciary?inwhatrespecthas he failedtdischargethesebligatins?andwhatarethecnsequencesfhisdeviatinfrmduty? (Securities)and)Exchange)Cmmissin)v)Chenery)Crp(1943)) Thedistinguishingbligatinfafiduciaryisthebligatinflyalty (Bristl)&)West)Building) Sciety)v)Mthew[1998]).Thishasnwbeenacceptedwidelyinthecaselaw(ASIC)v)Citigrup) Glbal)Markets)Australia)Pty)Ltd[2007]FCA963). Thisisaverybrad,generalstatement One thing it des emphasise is nt all f the duties that a fiduciary wes are necessarilyfiduciaryduties Theycanwedutieswhicharefiduciarybuttherdutiesatthesametime Thenaturefthebligatindeterminesthenaturefthebreach.Thevariusbligatinsfa fiduciary merely reflect different aspects f his cre duties f lyalty and fidelity. Breach f fiduciary bligatin, therefre cnntes dislyalty r infidelity. Mere incmpetence is nt enugh.aservantwhlyallydeshisincmpetentbestfrhismasterisntunfaithfulandis ntguiltyfabreachffiduciaryduty (Bristl)&)West)Building)Sciety)v)Mthew[1998]). Fiduciarydutiesareprscriptive,$nt$prescriptive: Breen$v$Williams(1996)186CLR71 Breenputinbreastimplants,whichcausedprblemsfrher Wentbacktthedctrfrhelpbuthedidn tremedytheprblem Oneptintsuethedctri.e.frnegligenceetc ShewantedtjinaclassactinintheUSsuingimplantmanufacturers Inrdertjintheclassactinsheneededthedctrsrecrdsi.e.whatthe dctrhaddneandntdne Therecrdsfthedctrbelngedtthedctr,ntther Thedctrsaidhewuldreleasetherecrdsifshegaveanundertakingnttsuehim butshewasn tpreparedtdthat ShewantedttrygetherremedyinUSbutkeeppenthepssibilityfsuing himinaustralia Heinturnsaidnttherecrds Prblemfrher can tjintheclassactin Suesthedctrtgetaccesstthedcuments/recrdsandrananumberfarguments incntract,negligenceetc Shearguedthatthedctrwasafiduciaryandtherefrewedafiduciarydutytactin herbestinterests fherjiningtheusactin stgivehertherecrdstdthat ThatargumentwrkedinCanadainMcInerney)v)Macdnald[1992] fiduciarydutyt handvertherecrds(bestinterestsfpatient) ButtheHCAdidntaccepttheargument 18

19 Australian curts nly recgnise prscriptive fiduciary duties In this cuntry, fiduciary bligatinsarisebecauseapersnahscmeunderanbligatintactinanther sinterests.as a result, equity impses n the fiduciary prscriptive bligatins nt t btain any unauthrised benefit frm the relatinship and nt t be in a psitin f cnflict. if these bligatinsarebreached,thefiduciarymustaccuntfranyprfitsandmakegdanylsses arising frm the breach. But the law f this cuntry des nt therwise impse psitive legal dutiesnthefiduciarytactintheinterestsfthepersntwhmthedutyiswed. Itwuldbetstandestablishedprinciplenitsheadtreasnthatbecauseequitycnsiders the defendant t be a fiduciary, therefre the defendant has a legal bligatin t act in the interests f the plaintiff s that failure t fulfil that psitive bligatin represents a breach f fiduciaryduty. Thisviewffiduciarydutiesasprscriptive,ntprescriptiveisaffirmedinPilmer$v$Duke$ Grup$Ltd[2001]HCS31. Theprscriptivecnceptflyaltyinvlvestwthemesfliability: 1. Nttakingunauthrisedprfits; 2. Ntactingwithprfit Thisisutlined(abitdifferently)inChan)v)Zacharia: Stated cmprehensively the principle f equity is that a persn wh is under a fiduciary bligatinmustaccunttthepersntwhmthebligatiniswedfranybenefitrgain(i) whichhasbeenbtainedrreceivedincircumstanceswhereacnflictrsignificantpssibility fcnflictexistedbetweenhisfiduciarydutyandhispersnalinterestinthepursuitrpssible receiptfsuchabenefitrgainr(ii)whichwasbtainedrreceivedbyuserbyreasnfhis fiduciarypsitinrfpprtunityrknwledgeresultingfrmit (Chan)v)Zacaria) ThenUcnflictandnUprfitrulesencmpassthewhlecntentffiduciarybligatinsand thedutyflyaltyimpsednafiduciaryisprmtedbyprhibitingdislyaltyratherthanby prescribingsmepsitiveduty (P&)V)Industries)Pty)Ltd)v)Prt[2006]VSC) SO: in a fiduciary relatinship, yu can have fiduciary duties and ther duties. Out f thsefiduciaryduties theyareprscriptive. Hwdthedifferenttypesfdutiesinteractwithneanther? SeenelementfthiswithHspital)Prducts dutytprmteussc sprducts; butnttactslelywithintheirinterests Geltch$v$MacDnald[2007]NSWSC1000 Partnershipcase Geltch&MacDnaldwerepartnersinlcalbusiness Pkermachinesinhtelpub;pubperatrhadlicencetrunthem;andthelicencewas valuableasthesewerevaluableassets Gwantedtsellthelicensingagreements Mdidntwanttsellthetherentitlementsbecausetheyviewedthatwhenthelease terminated the pker machine entitlements wuld g t the landlrd (which was M); thuswhentheleasefinishedtheywuldgetlicencefrthemselves Lkslikeabreachffiduciaryduty(asM,beingapartneristakingbenefitthimself individuallyutfthepartnership) Butitwasheldthatthiswasntabreachffiduciaryduty(BreretnJ) Anther clause in cntract said tenants had bligatin t maintain pker machine entitlements, effectively making them attach t the land s that they 19

20 wuldpasstthelandlrdwhentheleaseends(butinthemeantimetheywuld haveanbligatintmaintainthem) Upshtisthatpartnersarentactuallyallwedtselltheentitlementsandtherefreit isntabreachffiduciarydutyfmtrefusetsellthembecausecmplyingwiththe underlyingarrangementthatg/mhadenteringintthelease Theleaseeffectedcntentffiduciaryduties(assettledcategry Cntract meant culd nt be bund by fiduciary relatinship because this wuld be incnsistentwithcntract Thisissummarisedin theprecisescpeffiduciarydutiesmustbemuldedaccrdingtthe natureftherelatinship (New)Zealand)Netherlands)Sciety) Oranje )Inc)v)Kuys[1973]) ASIC$v$Citigrup$Glbal$Markets$Australia$Pty$Ltd[2007]FCA CitigrupwasadvisingTllwhenTllcnsideringtakeverbidfrPatrickCrpratin Atthesametime,theremplyeesinCitigrupwerebuyingsharesinPatricktmake mneyfrcitigrup Tlldidn treallycareabutthis,nrdidpatrickbutasicdidandasicsuedcitigrup Argument that Citigrup in a fiduciary relatinship with Tll because were advising themandifitwasafiduciaryrelatinshipculdn tallwcnflicttarise(i.e.advising TllhwtbuyPatricketcandmakingmneyutfadvicegiving) Thatargumentfailed agreementwithcitigrup/tllwasntafiduciaryrelatinship Ifyu veagreedinyuradviceretainerthatthisisntafiduciaryrelatinship, thenhavingthatexpectatindesn tmakesense ThecntentfnnUfiduciarydutieshwevercanaffectfiduciaryanalyses i.e.fiduciaryrelatinshipsaremuldedaccrdingtnnufiduciaryrelps Evenwheresmethingwuldcnstituteabreachfafiduciaryduty(i.e.slicitrispermittedt buyaclient shuse)thiscanbepermittedbytheparties.hweverfrthispermissintbe given,thecnsentmustbefullyinfrmed.ifthereisncnsentthatisfullyinfrmed,thenthis cnsentwillbeuseless(chan)v)zacharia). McPhersn$v$Watt(1877)3AppCas254 Trusteesheldtrustprpertywhichincluded4husestsell WenttMrWatt(slicitr) askedfrhisadvicehwmuchthehusesshuldbesld frandaskedhimtfindpurchaserfrhuses WattcmesbacktthemandsaysIsuggestyusellthemtmybrtherhewillpaythis priceandthat sgd Thetrusteesagreetdthatandtheyknwthatpurchaserisslicitr sbrther Whattheslicitrdidntreveal ncehisbrtherbught4huses,hesaidwuld directlybuy2husesfrmbrther(i.e.swassalefrmthetwtgether) Theydn tknwthat,thinktheydealwith2tgether Slicitrpurchasingfrmclientisabreachffiduciaryduty Meanstransactinisvidableastherehadntbeenfulldisclsurefallmaterialfacts Theykeyfactwasthattheslicitrhimselfpurchasingtwfthehuses Equitylksatsubstancenttfrm that swhatmatterstequity, breachffiduciaryduty Assume,ifyupleasethatineveryrespect,astprice,andastalltherthingscnnectedwith thesale,thiswasasalewhichmighthavebeensupprtedhadthe[trustees]beentldthat[the slicitr]wathepurchaser,inmypininitcanntbesupprtedfrmthecircumstancethat thatfactwasntdisclsedtthem. 20