LAWS2015 EQUITY. 1. The History and Nature of Equity

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1 LAWS2015 EQUITY 1. The History and Nature of Equity The Australian legal system consists of: rules of law principles of equity requirements of statute (HC in Alando case) What is Equity? History and nature of Equity Equity i.e. the specific jurisprudential notion of equity refers to that body of cases, maxims doctrines, rules, principles and remedies, which derive ultimately from the specific jurisdiction established by the English High Court of Chancery before 1875 Equity doesn t have rules It applies maxims nuanced approach as opposed to common law rules which are black/white binary judicial officials exercise discretion Equity deals with standards rather than rules Standards change and fluctuate over time; less fixed rules The Nature of Equity 1. Origins: to alleviate the harshness of the common law 2. Operates to supplement the common law 3. Cannot be expounded as a set of rules 4. Changes in line with community values Equitable doctrines: Contract Property Succession Equitable remedies: Specific performance Declaration Injunction Rescission Rectification Exclusive and Auxiliary Jurisdictions: A. Exclusive Jurisdiction right or the claim or the property that is equitable Doctrines, which are recognised only in equity e.g. the trust, fiduciary obligations Remedies: only equity remedies available (remedies not available in common law) e.g. injunction o Equitable remedies are usually discretionary o But discretion is a constrained discretion Could only be determined by the Chancery Court B. Auxiliary Jurisdiction Equity comes to the aid of common law rights equitable remedies where its premise was a legal right In common law, most of the time the remedy is damages. If nature of the cause of action is legal then you look to damages. If damages are inadequate, you can use injunctions. But an injunction is an equitable remedy that is being used to aid a common law right. Equity ONLY operates if the common law is deficient IF damages are fine, then equity does not need to act. In contrast, rare where equity provides the cause of action. The Earl of Oxford s Case in Chancery (1615) Foundation case Land in England in 16 th /17 th century wasn t developed Owned by one of the colleges of Cambridge University and they wanted to sell it to Benedict Spinola 1

2 Problem was that there was a statute that prevented Cambridge colleges selling land ( prevented the alienation of land by Oxford and Cambridge colleges ) To get around this issue, college thought they would surrender the land to the Queen and the Queen could grant it to Spinola But thirty years later, college was regretting the sale of this land so they tried to get it back (land was worth much more then) by this time, The Earl of Oxford owned the land Lawyer came up with an idea looked at the statute again, and said that not only does it prevent selling of the land but the surrendering of the land so in fact, the land was still theirs SO to test this, they went on to the land at night with an accomplice and they leased it to him, then evicted him they wanted to create/engineer a dispute in the court (i.e. for that lessee to sue them for wrongful eviction) and get a decision that they own the land in the absence of the Earl of Oxford Earl of Oxford became a party to the proceedings eventually Issue in the common law court: proper construction of the statute did it prevent any dealings in the land? Held: correct construction of the statute - it did indeed prevent (i.e. make void) any dealings in the land it made void any purported dealings with land by Oxord/Cambridge college So College won and Earl of Oxford lost at common law Earl of Oxford goes to the Court of Chancery - Said he understood that there was final judgment given in the common law court about the construction of the statute but it wasn t fair - He wanted to be able to argue against the judgment prevent them relying on their legal rights (RELIEF IN EQUITY IS THIS PRECISELY) Question not substantive issues but whether in theory there is any argument that if successful in the court of Chancery, it could defeat an order in the common law court; is it possible for the Court of Chancery to in effect set aside a final judgment of the common law court? Lord Chancellor summoned the College but they refused to come so Lord Chancellor arrested them their representatives went back to the common law court and argued that they couldn t be legitimately locked up for refusing to answer questions. Common law court granted a writ of habeas corpus. Was this writ of habeas corpus rightfully granted? If they could be locked up that meant that the Court of Chancery could in effect set aside the final judgment of the common law court. And if the Court of Chancery could do that, then equitable principles must trump common law principles. On the other hand, if the college representatives were right to refuse to answer questions and if therefore their imprisonment was wrong, then that meant that their judgment was final, nothing in the equity court could change that and therefore, equity would NOT trump the common law. SO what wins? Law or equity? There could not be a judicial answer to this so it went to King James. The controversy caused by this judgment s challenge to the power of the common law, led to James I issuing a decree of 14 July 1616 which unambiguously established the supremacy of equity over the common law The Chancellor shall not hereafter desist to give unto our subjects upon their several complaints now or hereafter to be made, such relief in equity (notwithstanding any proceedings at the common law against them) as shall stand with the merit and justice of their cause, and with the former ancient and continued practice and presidency of our chancery King James decided in favour of equity rules of equity prevails where rules of equity and common law conflict. Court of Chancery could deal with petitions addressed to the King/King s Chancellor, begging for discretionary relief from various forms of oppression or injustice, incl. harsh or unjust judgments in the common law courts Chancery attempted to deal with petitions based on harsh or unjust judgments in the common law courts by issuing common law injunctions i.e. a P who had had a legal judgment in his favour granted by a common law court was prohibited by the Lord Chancellor, form acting upon that judgment That when a judgment is obtained by oppression, wrong and a hard conscience, the Chancellor will frustrate and set it aside, not for any error or defect in the judgment but for the had conscience of the party 2

3 Note: Common law and equity are two separate bodies of law; they are separate courts The Effects of the Judicature Acts and the Fusion Fallacy Merging of the administration of equity and common law Administrative system merged for equity and common law in 1875 in England because having separate courts of common law and equity was considered to be inefficient. E.g. beneficiary can t sue for breach of trust in a common law court; common law courts couldn t award remedies of specific performance and injunctions; for breach of contract discovery is historically an equitable remedy Decided that one judge should hear and decide claims in both common law and equity Coroneo v Australian Provincial Assurance Association 1935 What is a mortgage? Mortgagor hands over title and is left with the equity of redemption (i.e. mortgagee promises to transfer title of the property back to the mortgagor if mortgagee pays back the money that s been borrowed) Mortgage is a transfer of title of property Obligation to act in good faith If you are a borrower and you are upset with your mortgagee, you have to bring an action in equity Only reason that APAA won and Coroneo lost is because they sued in the wrong court Judicature Acts are the answer to Coroneo s problems so now no one loses because they sued in the wrong court; same procedure and ALL judges have the power to deal with both common law and equitable cases and accordingly, you didn t need common law injunctions Downside of Judicature Acts become more difficult to identify equitable principles Prior to the coming into operation of the judicature system by the Judicature Act in 1875, where there had been conflicts in principle between law and equity, the latter would prevail in the end by means of the common injunction One of the objects of the judicature system was to make it prevail at the outset s 25(11) of the Judicature Acts provided that in the event of a conflict in rules, equity should always prevail Judicature system was adopted in all states of Aus. The NSW Judicature Acts embody the judicature system/english Judicature Acts in NSW: Law Reform (Law and Equity) Act 1972 (NSW) ss 5, 6, 7 Supreme Court Act 1970 (NSW) ss 22, 57, 58, 59, 60, 61, 62, 63 Supreme Court Act 1970 (NSW) s57: The Court shall administer concurrently all rules of law, including rules of equity. No longer could you lose because you sued in the wrong court or division of the Supreme Court. S 61: you shall not have any more common law injunctions Law Reform (Law & Equity) Act 1972 (NSW) s5: In all matters in which there was immediately before the commencement of this Act or is any conflict or variance between the rules of equity and the rules of common law relating to the same matter, the rules of equity shall prevail. (point decided in Earl of Oxford case that Equity prevails) Reproduces the substance of s 25(11) and resolves conflicts between rules of law and equity Where one court hears the common law offence and the equitable defence, the equitable defence can be relied upon. Result should be the same as it were prior to 1875, the principles of common law and equity HAVE NOT MERGED just means it can be applied by the same person in the same person. They remain separate rules of law. The two streams of jurisdiction (streams of equity and common law), though they run in the same channel but they do not mingle their water Ashburner s Principles of Equity on the effect of the Judicature Acts Few cases that seem to say that this is not the case BUT THIS IS WRONG 5 years after introduction of Judicature Acts Salt v Cooper (p16) Jessel MR: stated very plainly that the main object of the Act was to assimilate the transaction of Equity business and Common Law business by different Courts of Judicature. Sometimes inaccurately called the fusion of Law and Equity but it was not a fusion it was the vesting in one tribunal the administration of Law and Equity in every cause (Didn t substantially change the 3

4 law) A fusion fallacy is an outcome of a case that is only understandable on the basis that the principles of law and equity have been fused/merged, as well as the administration. One example of this is Day v Mead. where outcomes are not the same as it was before the implementation of the Judicature Acts and the courts sat separately for example, methods or remedies available in one path are utilised in the other part It is called a fallacy because many have said that it is wrong to conclude that the rules of common law and equity have been amalgamated, it is only their administration which has been unified Day v Mead (NZ) (P322) used contributory negligence to reduce an amount of money awarded against a solicitor Day bought shares on the advice of his solicitor, Mead Shares turned out to be not worth very much (client loses money) Client finds out that solicitor was a director of that company Day sued Mead for the losses made on that purchase What was important was that Mead was Day s solicitor o Solicitor-client is a fiduciary relationship and ANY fiduciary is not allowed to put themselves into conflict between self-interest and the interest of the client So solicitor breached fiduciary obligation Equity would give that a remedy In response, Mead argued that even if I breached my fiduciary duty in giving you poor advice, you are an adult who is capable of looking after your own interests So Mead tried to reduce the award by taking into account contributory negligence Mead was successful court found that the client wasn t very prudent, e.g. he did not seek any outside advice Why is this judgment wrong? THIS IS a fusion fallacy i.e. a case that would have been decided differently after the Judicature Acts to before Contributory negligence is a common law defence However, the cause of action of breach of fiduciary duty is EQUITABLE You can t apply the common law defence of contributory negligence to the equitable claim of breach of fiduciary duty breach of fiduciary duty is within equity s EXCLUSIVE JURISDICTION * FLAW: The whole point of fiduciary duty is that the person to whom the duties are owed CANNOT look after their own interests; if you CAN look after your interests, you are by definition, not in a fiduciary relationship. Could have argued that he was not acting under fiduciary duty and argue in common law that Mead was not relevantly acting as the solicitor ** The statute that abrogates the absolute defence given to Ds is something which is designed to help P (who would otherwise lose) So, here judge is taking the statute which is designed to help a common law plaintiff and using it to hurt an equitable plaintiff, who would otherwise be entitled to a full remedy in equity using the judicature legislation to change the law substantially Also, Redgrave v Herd Re damages for misrepresentation that induces party to enter into contract At common law, you can only get damages of misrepresentation for two reasons: o If misrepresentation is fraudulent, OR o If misrepresentation is included as a term in the contract Equity however you could get rescission (NOT DAMAGES) for INNOCENT misrepresentation TJ: awarded damages (common law remedy) for INNOCENT misrepresentation (equitable claim) fusion fallacy Harris v Digital Pulse Pty Ltd [2003] not a fusion fallacy Employee (Harris) decided to set up his own company and getting profits from that business Employee owes fiduciary obligations to the company There was an egregious breach of these fiduciary obligation 4

5 Held: Adverse findings for the employee $5000 award in damages Successful P was put into a situation where he may end up paying for D s costs because there was a new statute which said if action brought in wrong court, P may be forced to pay So, P s counsel requested exemplary damages so that they wouldn t be caught by the new statute re costs Common law can award punitive damages e.g. exemplary damages Issue: There was an egregious breach of fiduciary duty could you get punitive equitable compensation? SC of NSW said you could. Harris appealed and said you can t get exemplary damages for breach of fiduciary duty This was reversed in the Court of Appeal by majority. Okay, so Chancery Court COULD NOT have awarded damages nor exemplary damages for breach of fiduciary duty BUT there s no fusion fallacy here because The law has merely changed the TJ had merely created new law: there should be a time where it is appropriate for equity to award a penal monetary remedy Walsh v Lonsdale (1882) p27 Landlord granted a 7 year lease to a tenant Lease did not satisfy legal formalities and therefore ineffective at law Tenant still took possession of the property - and paid rent. At common law, this meant that he was treated as a tenant from year to year, with an obligation to pay rent quarterly in arrears, not in advance. He paid rent on arrears. Landlord demanded the rent pursuant to the agreement which was a year s rent in advance o Tenant refused to pay on the grounds that the agreement was ineffective at law Landlord ceased/distrained the tenant s goods o Distress/distrained = seize someone s property in order to obtain payment of rent or other money owed Tenant sues Landlord for wrongful distress of goods Distress of goods was only wrongful if there was no underlying debt that it could secure; there would no underlying debt if the rent was not owed, and the rent was not owed if the lease was ineffective at common law; o so, the distress would be legal if it was pursuant to a debt, there would be debt if there was rent owing under a lease if that lease was enforceable Reasoning: is there a legal lease? No, it is ineffective at common law due to lack of formality If there is no legal, is there a debt due under that lease? NO. If there is no debt due under that lease, is the distress of goods lawful? No. If the distress of goods is not lawful, should a claim for wrongful distress succeed? Yes. Note: the landlord could have applied for rectification of the lease so that it becomes a legal lease Currently, there was only an equitable lease, and debt due under the lease was not enforceable Problem judge short-circuited this procedure Fusion fallacy by judge: Instead of accepting that the Landlord had an equitable lease and had the ability to rectify it into a legal lease, judge seemed to assume that the status of an equitable lease is the same as the status of a legal lease However, recognising that someone has the ability to get a legal lease is not the same as saying someone has a legal lease. A tenant holding under an agreement for lease of which specific performance would be decreed (equitable lease), stands in the same position as to liability as if the lease had been executed. He is not since the Judicature Act a tenant from year to year, he holds under the agreement, and every branch of the Court must now give him the same rights... There is only one Court, and the equity rules prevail in it. - Jessel MR How would this have worked before the Judicature Acts? o the tenant could have gone to the common law courts and said the landlord has wrongfully ceased my goods tenant would have been given his goods back o shortly after, landlord would have gone to the equity courts and applied for a rectification of the lease o this chronology of events should have been kept the same Jessel MR: 5

6 One interpretation Because of the Judicature Act, there are not TWO estates as there were formerly Common law estate: possession and paying rent (even if there was no deed; Deed = legal lease) Equitable estate estate in equity under the agreement: if a person promised to give you a 7 year lease and both parties began doing their part of the bargain, equity would protect you because of the existence of the promise to give you a legal lease Because of the Judicature Act, there s been a conflation THIS IS WRONG as per HC because Promise to give you a lease is not the same as a legal lease Chan v Cresdon (1989) p33 Essentially the same as Walsh v Lonsdale re equitable leases Tenant in shopping centre but company that they run their business through doesn t have too many assets So Lessor demands a guarantee Tenant (Chan) sign the document as the company and as independent entity (so they can be personally liable) The company goes under and can t pay Landlord couldn t find a replacement, so they try to make the tenants personally liable under the guarantee Landlord had not registered so no LEGAL LEASE But there s not doubt that there was a PROMISE by the landlord to put the business in possession so there was an equitable lease Issue: whether the guarantee of obligations under this lease, also applied to make the guarantor liable for obligations under the lease A matter of construction what did under this lease mean under that contract of guarantee? Joint judgment of the majority of HC (modern authority in Aus): GUARANTORS DID NOT have to pay under this lease did not include obligations under the equitable lease Two reasons Under this lease as a matter of contractual construction was held to be under the legal lease Not true that there s now only one estate as per Jessel MR in Walsh v Lonsdale there remains a separate equitable and legal lease there is necessarily a difference between an equitable lease and a legal lease ; there are TWO SEPARATE legal relations The Maxims of Equity A maxim is not a statement or principle of law, it s a summary statement of a broad theme which underlies equitable concepts and principles. Equitable relief is more nuanced and discretionary so judges use maxims to mould the exercise of discretion. Some maxims: He who seeks equity must do equity o Example Nelson v Nelson: if you are going to the court of equity seeking relief on the basis that your kids are holding property on trust for you, you are seeking equity to declare a trust in your favour in that case, court of equity will only declare the trust in your favour if YOU were prepared to do your fair share and pay back the benefits you received wrongly He who comes to equity must come with clean hands o You can t seek relief from the court of equity if you have been similarly dishonest Where the equities are equal the law prevails Where the equities are equal the first in time prevails Delay defeats equity most Limitation Acts also apply to breach of trusts Equity looks to intention rather than form e.g. Corin v Patton o If I m transferring shares to X, I need to sign the transfer what if something goes wrong in the middle If all that I do is I ask my solicitor to get the transfer form and I die, clearly X will not get anything If I get the transfer, sign all the details and then I die, probably X will not get the shares But if I ve done that and I had given it to the solicitor so that he could deliver it to X o Equities doesn t strictly look to legal formalities Equity presumes equality o If I m silent on it Equity regards as done that which ought to be done Equity acts in persona o Are equitable rights proprietary or personal? 6

7 o Pennsylvania v Lord Baltimore: re ownership of land in US; agreement between two parties to divide land in a certain way; one party argued that the other had breached the agreement; occurred in England but in concerned land in US; English court can t determine who owns land in another jurisdiction but what it can do is order a party that is in front of it to go and change the ownership of land in the foreign jurisdiction i.e. the English court had power over the DEFEDANT, to order D to change the rights of land ownership Equity will not assist a volunteer o Equity will not assist a party that has not provided consideration in a transaction. Exception: the assistance provided by equity for beneficiaries of trusts, who are usually volunteers. o Conflicts with equity looks to intention rather than form: Corin v Patton (1990) 169 CLR 540 sometimes equity will step in before legal formalities have been met RE-CAP ON IPCL Does a beneficiary have a proprietary right that can be exercised against the world, or merely a personal right that can be exercised against the trustee (i.e. beneficiary has the right to compel performance by the trustee)? It s both and neither. Baker v Archer-Shee Lady A-S s right as beneficiary of a trust under a will was a property right that can be enforced against third parties. So if the trustee wrongly paid the money to a third party, you have the right to sue the trustee (a weak, unsecured personal right for compensation for breach of trust) as well as a proprietary right in the bank account against third parties to claim the money back. On the other hand, remember that if A (third party) does not know that a property is held on trust then A as a recipient of that property can ignore the trust. The thing to understand here is that the beneficiary s equitable proprietary interest under a trust will bind the trustee, it will also bind third parties who take the property from the trustee unless legal title passes through those purchasers who are bona fide purchasers for value without notice o so if a trust property is transferred to a voluntary recipient (somebody who doesn t pay for it) then the trust interest still binds the property o if a trust interest is transferred to someone who knows about the trust, that purchaser doesn t take free of the trust but in the vast majority of cases, third party purchasers aren t aware of the trust How maxims form a necessary function in equity maxims moulding the exercise of discretion: Nelson v Nelson Mrs Nelson and her son v the daughter Mrs Nelson is a war widow and entitled to benefits incl. subsidised housing Entitled to subsidised housing only if widow didn t own housing But Mrs Nelson did, so she was in breach So she transferred property to her son and daughter Then applied for the regime, so she gets subsidised housing Who was the owner of the original property of the widow? Daughter argued that it was hers. Resulting trust if you have property and you put it in the name of someone else, and if there s no other evidence, that person is a trustee of the property for you Presumption of advancement: no trust because it was given from parents to child Mum and son argued there was a trust Daughter that mum gave her the land Everyone was party to the fraud Judgment split 3:2 One possible argument: widow was guilty of fraud, so widow doesn t get it Another possibility: equity doesn t assist volunteers, daughter was a volunteer so she doesn t win Third possibility/decision: mother was 80k better off because she defrauded the Cth Whole point of daughter s defence depends on the illegality So pay back the 80k then you can have the house 7

8 Application of these maxims: He who seeks equity must do equity He who comes to equity must come with clean hands Second way maxims operate high appellate courts using maxims to shape legal principles Corin v Patton (1990) (HCA): [A maxim] is not a specific rule or principle of law. It is a summary statement of a broad theme which underlies equitable concepts and principles. - Mason CJ and McHugh J P156-7: Mason CJ and McHugh J endorse maxims from Anning v Anning (A) Breach of Confidence 2. Applications of the Conscience of Equity Usually occurs in respect of breach of confidence terms in contracts and default remedy is damages for breach of contract but quite often claimant doesn t want damages. We are more concerned with the equitable breach of confidence where the cause of action is in equity (in equity s exclusive jurisdiction). These are situations where even though there s no express contract between parties i.e. they haven t promised to keep something secret, equity will recognise a duty of confidence. Remedies for equitable breach of confidence is not limited to damages. Seager v Copydex (1967): [Someone] who has received information in confidence shall not take unfair advantage of it. Lord Denning MR Coco v AN Clark Ltd (1969): In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself... must have the necessary quality of confidence about it. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it. Megarry J Standard statement of principle of equitable confidence BUT THIS IS WRONG. In the exam, don t refer to this as the test but mention the five things not true about it: 1 The test to apply is: Optus Networks Pty Ltd v Telstra Corporation (2010) Full Federal Court unanimous decision Four elements to establish an equitable breach of confidence (when there s no contract) (a) information identified with specificity (O Brien v Kmoesaroff) (b) necessary quality of confidence (c) received in circumstances importing an obligation of confidence (d) actual or threatened misuse without consent relief even for threatened misuse i.e. the quire timet relief Half of telecommunication infrastructure in Aus owned by Telstra and other half by Optus What this meant was that if you are Telstra and you owned infrastructure in a particular area, you know the usage habits of everyone on that infrastructure even if they are contracted with another company Optus and Telstra promised each other in a contract that they would not spy on each other s customers on their infrastructure the contract also provided for what would happen if this did occur Telstra spied on Optus customers on Telstra infrastructure and sent them Telstra ads and recruited Optus sued However, Optus did not want to rely upon the loss- based remedy in the contract because it was difficult to show that Optus was losing more money because of Telstra s breach of confidence because it was losing money anyway Optus wanted to rely upon the account of profits (the profits made by Telstra by breaching the confidence) rather lossbased compensation Issue: could they sue in Equity even though they had an action in contract in common law? Parties can consensually exclude equitable remedies in a contract this is part of equity following the law So this was Telstra s defence that Optus is confined to remedies in contract Question: whether the contract ousted the equitable duty of confidence 8

9 Held: It didn t. Court found that nothing in this contract detracts from rights in equity because of this, the case became the leading authority on equitable breach of confidence doesn t establish principle just decided the case on the facts Example of why even where there is a contract that appears to define the relationship, equitable confidence may be a possibility Optus was awarded a remedy on the basis of account of profits O Brien v Kmoesaroff Principle on first element (a) information identified with specificity Case on pure equitable breach of confidence Insurance salesman and a solicitor came up with and marketed a tax-minimisation plan (mainly solicitor s idea) Relationship fell apart Insurance salesman kept selling the plans even though the intellectual core of it what the solicitor s work Solicitor sued salesman for breach of confidence, that salesman was divulging this plan which was actually the solicitor s information Solicitor (won on other grounds) lost on breach of confidence ground couldn t point to any particular information/passages in the trust deed that was confidential and should be protected o He argued that the whole trust deed was confidential but it included the standard things that are found in any trust deed Case failed in HC because P partner couldn t identify with particularity what was confidential can t get an injunction if you can t formulate what you want the injunction order to say and if your order is vague, you can t enforce it P545 bottom P546 P547 *How to enforce a non-monetary judgment? Hold them in contempt (possible penalty is imprisonment); prove beyond reasonable doubt that they breached the order Second element Principle on (b) necessary quality of confidence Equity will not protect it if you can t show that it s a secret. The information can t be publicly available E.g. Price of patenting is that it becomes public and you have statutory rights, you lose equitable rights This can sometimes mean that an injunction on the grounds of breach of confidence can be refused even if it is the D who has published the information e.g. Spycatchers even if the D has caused the information to be public, P will not get an injunction Johns v Aus Securities Commission HC split 2:2:1 no ratio on what is public domain Rogue called Mr Johns had been examined by ASC about Trico (a dodgy financing company that collapsed) Vic royal commission that got hold of the private questions and answers that had been asked by ASC Incriminating answers were tendered in Royal Commission i.e. in open court Johns wanted to stop this that this should not have been made available so he sought an injunction to the interviews from the public domain HC held: No, it s ridiculous it s true that it was wrong to release this doc but because it was already out in the public domain, they could no longer be considered confidential 1. Brennan CJ: it was too late, information was in the public domain 2. Gaudron/McHugh JJ: some relief could be given to Johns; therefore, as far as equity is concerned, the information was still confidential So although he sought an injunction, he only got a declaration What does it actually mean for information to be in the public domain? Does the information have the necessary quality of confidence? Question depends on who can get hold of it? Two examples on when something is or isn t inherently confidential (p548) A. Are the pictures confidential? Yes, confidential. Closely controlled. Couple had right to review pictures before it being published B. Prince Charles letters - he circulated letters to close friends, journalist got hold of them. They sought an injunction to suppress this. Held sufficiently confidential. So it s relative confidentiality 9

10 *look to facts which point to or not point to confidentiality (factual inquiry) how closely guarded in the information; how valuable is the information; how widespread is the information Test to apply is ABC v Lenah Game Meats (2001) (HCA): Certain kinds of information about a person, such as information relating to health, personal relationships, or finances, may be easy to identify as private; as may certain kinds of activity, which a reasonable person, applying contemporary standards of morals and behaviour, would understand to be meant to be unobserved. The requirement that disclosure or observation of information or conduct would be highly offensive to a reasonable person of ordinary sensibilities is in many circumstances a useful practical test of what is private. per Gleeson CJ For example sexual activities, private journals, medical information have the necessary quality of confidence But what about trade secrets? Narrow distinction between confidential information owned by the employer or know-how developed by the employee throughout employment governed by a number of factors Wright v Gasweld (1991) (NSWCA): o How much skill and effort was expended to acquire the information? o Has the employer zealously guarded the information? o Was the employee made aware of the confidential nature of the information? o Is there an industry practice to keep this sort of information secret? o Has access to the information been controlled? - Kirby P Del Casale v Artedomus (NSWCA) (2007): However, where the confidential information is something that is ascertainable by enquiry or experiment, albeit perhaps substantial enquiry or experiment, and the know- how which the ex-employee is clearly entitled to use extends to knowledge of the question which the confidential information answers, it becomes artificial to treat the confidential information as severable and distinguishable from that know-how; and in that kind of case, courts have tended not to grant relief. Hodgson JA Re professional advisers in this context: Prince Jefri Bolkiah v KPMG (1999)(HL) Kallinicos v Hunt (2005) These cases arise out of the same issue against client s prior solicitor/accountant Applying to stop the accountant or law firm from acting against them Have to distinguish between current clients and former clients Current clients fiduciary duty Former clients no longer a fiduciary relationship; in these cases, the answer is breach of confidence if you can show that your former solicitor/accountant has confidential relationship and you can show that there is a possibility of that confidential information being misused, you can stop that solicitor/accountant from using that information Prince Jefri Bolkiah v KPMG (1999)(HL) KPMG had acted for Prince in the past and from that, they had confidential info about the financial affairs of Prince Was Prince able to stop KPMG from working for a new client who s interests were in conflict with Prince Jefri s? Note: when KPMG was working for Prince, there had fiduciary duties so could not work for another client with conflicting interests BUT KPMG had stopped working for him and just because they worked for him in the past, they are not prohibited simply on that basis from working for anybody else because he was a former client, they didn t owe any fiduciary duty to him at all EXCEPT the duty to keep information confidential usually fulfilled by setting up appropriate information barriers Nevertheless, Prince Jefri asked the court to stop KPMG taking on this new client The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence... Whether founded on contract or equity, the duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so....[t]he court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial. - per Lord Millett So KPMG was prevented from acting for their new clients because of risk of breach of confidence Government secrets? Commonwealth v John Fairfax & Sons Ltd (1980): Govt failed to protect information on the ground of breach of confidence in this case This is not to say that equity will not protect information in the hands of the government, but it is to say that when 10