Principles
327 The relationship between an employee and an employer is an accepted fiduciary relationship: Hospital Products Limited v United States Surgical Corporation and Others (1984) 156 CLR 41 ("Hospital Products v United States Surgical Corporation") at 96 per Mason J (as his Honour then was). No party attempted to argue to the contrary.
328 In Chan v Zacharia (1984) 154 CLR 178 Deane J described the obligations which a fiduciary owes to his or principal in the following terms (at 199):
… Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. …
329 Justice Deane considered whether there was one principle with two themes or two principles. His Honour said (at 199) that neither theme fully comprehended the other, and that a formulation of the principle by reference to only one of them will be incomplete (see also Mason J in Hospital Products v United Surgical Corporation at 102-104; Breen v Williams (1996) 186 CLR 71 at 113 per Gaudron and McHugh JJ).
330 In Pilmer and Others v Duke Group Ltd (In Liquidation) and Others (2001) 207 CLR 165 McHugh, Gummow, Hayne and Callinan JJ said (at 199 [78]):
In particular, the fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is "a conflict or a real or substantial possibility of a conflict" between personal interests of the fiduciary and those to whom the duty is owed. That is how the matter was put by Mason J in Hospital Products.
331 In Howard v Commissioner of Taxation [2014] HCA 21; (2014) 253 CLR 83 ("Howard") at 156 [57] Hayne and Crennan JJ made the point that even if there are two distinct obligations, "both may, and often will be, engaged by the one set of facts".
332 The circumstances in which the obligation of confidence arises in equity were identified by Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Limited [2001] HCA 63; (2001) 208 CLR 199 at 222 [30] as follows:
(1) the information is confidential;
(2) the information was originally imparted in circumstances importing an obligation of confidence; and
(3) there has been, or is threatened, an unauthorised use of the information to the detriment of the party communicating it.
333 A fiduciary may breach both fiduciary obligations and obligations of confidence by the same conduct where, for example, an employee takes confidential information of his or her employer without consent and uses it to further a scheme which is contrary to the employer's interests.
334 A third party may be liable in relation to a breach of fiduciary duty or of confidence if "they assist with knowledge in a dishonest and fraudulent design on the part of the trustees": Barnes v Addy (1874) LR 9 Ch App 244 ("Barnes v Addy") at 251-252 per Lord Selbourne LC. The requirements of the second limb in Barnes v Addy i.e., knowing assistance and indeed the first limb of knowing receipt have been the subject of a good deal of debate. The "knowledge" which will satisfy the knowing assistance limb of Barnes v Addy has now been authoritatively determined by the High Court in Farah Constructions Pty Limited v Say-Dee Pty Limited [2007] HCA 22; (2007) 230 CLR 89 (see also the decision of the Full Court of this Court in Grimaldi v Chameleon Mining NL and Another (No 2) [2012] FCAFC 6; (2010) 200 FCR 296 ("Grimaldi") at 362 [262]). The High Court said that, having regard to the earlier decision of the Court in Consul Development Pty Limited v DPC Estates Pty Limited (1975) 132 CLR 373, the following states of knowledge would satisfy the test for liability (at 163 [174]-[177]):
(1) actual knowledge;
(2) wilfully shutting one's eyes to the obvious;
(3) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; and
(4) knowledge of circumstances which would indicate the facts to an honest and reasonable man.
(see Baden and Others v Sociéte Générale pour Favoriser le Dé veloppement du Commerce et de l'Industrie en France SA Note [1993] 1 WLR 509 at 575-576, 582; [1992] 4 All ER 161 at 235, 242-243).
335 In Grimaldi, the Full Court said (at 361-362) that the state of knowledge described in (4) above was an understandable, objective, default rule designed to prevent a third party setting up his or her own moral obtuseness as a reason for not recognising an impropriety that would have been apparent to an ordinary person, and the Court went on to say that it was a surrogate of actual knowledge.
336 The common law implies various terms into employment contracts. In 1895, Lord Esher MR in Robb v Green [1895] 2 QB 315 at 317 said that there will always be an implication in contracts that an employee will act with good faith towards their employer.
337 The employee's duties to his or her employer under the contract of employment may be broadly expressed as duties of fidelity and good faith. Those duties include duties of confidence (Blyth Chemical Limited v Bushnell (1933) 49 CLR 66 at 81 per Dixon and McTiernan JJ). For reasons which will become clear, it is unnecessary for me to discuss the particular manifestations of those two broad duties as identified, for example, in paragraph 10 of the applicants' Third Further Amended Statement of Claim.
338 An employee may take certain preparatory steps towards new employment or a new business without breaching his or her duties to his or her existing employer. What may be done without breaching the duties of fidelity and good faith will depend very much on the particular circumstances of the case: Robb v Green [1895] 2 QB 1 per Hawkins J; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37; Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd [2007] FCA 1621; Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 2.
339 In Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693 ("Concut"), Gleeson CJ, Gaudron and Gummow JJ considered the relationship between the implied contractual duties in a contract of employment and the fiduciary duties an employee owes his or her employer. Their Honours said (at 700-701 [26]):
Contractual obligations and fiduciary duties have different conceptual origins, "the former", in the words of McLelland J, "representing express or implied common intentions manifested by the mutual assents of contracting parties, and the latter being descriptive of circumstances in which equity will regard conduct of a particular kind as unconscionable and consequently attracting equitable remedies". Formulations of the obligations of an employee in terms such as those in Pearce and Blyth Chemicals may be understood, Professor Finn has pointed out, as the re-expression of equitable obligations in terms of implied contracts. If so, the importation is well established and beneficial …
340 In University of Western Australia v Gray (2009) 179 FCR 346 at 382, the Full Court of this Court said the employee's duty of confidence to his or her employer can arise by way of implied contract or as a matter of equitable obligation and that the scope of the duty will be the same despite their "different conceptual obligations" and the Court referred to the decision in Concut.
341 At the breach stage, as distinct from the remedy stage, it is not necessary, in the circumstances of this case, to pause on distinction between the implied contractual duties and the equitable fiduciary duty with respect to confidential information.
342 The common law tort of inducing a breach of contract involves a defendant inducing another person to break a contract with the plaintiff. The tort was described by Jenkins LJ in DC Thomson & Co Ltd v Deakin [1952] Ch 646 as follows (at 694):
Direct persuasion or procurement or inducement applied by the third party to the contract breaker, with knowledge of the contract and the intention of bringing about its breach, is clearly to be regarded as a wrongful act in itself, and where this is shown a case of actionable interference in its primary form is made out.
343 In Qantas Airways Ltd v Transport Workers' Union of Australia & Ors (2011) 280 ALR 503 at [438] - [451], Moore J considered the act and the intention comprising the tort. First, as to the act, his Honour said at 559 [447] that "it is necessary to show the tortfeasor procured or induced the breach of contract". His Honour referred to Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Corke Instrument Engineering Australia Pty Ltd (2005) 223 ALR 480; [2005] FCA 799 where Finkelstein J said:
… It is, however, necessary to show that the breach of the contract has been "procured" or "induced". Sometimes the cases have noticed a distinction between "procuring" or "inducing" which is said to be unlawful, and "advice" which is said not to be unlawful. The prevailing view is that to induce a breach of contract means to create a reason for breaking it; to advise a breach of contract is to point out the reasons that already exist. The former is actionable while the latter is not. See generally South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239; D C Thomson & Co Ltd v Deakin [1952] Ch 646 at 686; [1952] 2 All ER 361 at 373.
Secondly, as to the intention, his Honour said at 597 [440] that "there is no doubt that intention is a necessary element". His Honour referred to the Full Court of the Federal Court decision in Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 at [127] where it was held:
The gravamen of the tort of inducing breach of contract is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it were a separate ingredient of the tort, it is in fact no more than an aspect of intention. The requirement that the alleged tortfeasor have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Both the intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the state of mind of the alleged tortfeasor: All State Life Insurance Co v ANZ Banking Group Ltd (1995) 58 FCR 26 at 43; 130 ALR 469 at 484.
344 Finally, in addition to the two elements of act and intention, proof of damage is required. In Zhu v Treasurer of New South Wales (2004) 218 CLR 530 at 586 [157], the High Court confirmed that "the tort is only actionable on proof of damage".
345 The applicants do not have standing to apply for declarations of contraventions of the Corporations Act (ss 1317E, 1317J; Lifeplan Australia Friendly Society Ltd v Woff [2013] FCA 613). The applicants can seek compensation under s 1317H of the Corporations Act. As I have said, the applicants allege that Mr Woff contravened one or more of ss 180, 181, 182 and 183 of the Corporations Act. I have held that Mr Woff was an officer of FPM at the relevant times and, therefore, ss 180 and 181 were engaged as far as that company is concerned. I will deal with s 180 at this stage. To my mind, it would be unrealistic to characterise Mr Woff's conduct as lacking the required degree of care and diligence because it was quite deliberate, and if it was wrongful, it should not have been carried out. It seems to me that it is unrealistic to suggest that he should have carried out the conduct with a higher degree of care and diligence.
346 The applicants do not allege that Mr Corby contravened one or more of those sections and they do not plead, in the Third Further Amended Statement of Claim, that Mr Corby was involved in Mr Woff's contraventions within s 79 of the Corporations Act.
347 As far as Foresters is concerned, the applicants allege that it was involved in Mr Woff's contraventions of ss 181, 182 and 183 within s 79 of the Corporations Act.
348 Sections 181 to 183 of the Corporations Act provide a statutory formulation of the existing common law and equitable duties. These provisions replaced the former s 232 of the Corporations Act. In Forkserve Pty Ltd v Pacchiarotta and Anor (2000) 50 IPR 74, Young J of the New South Wales Supreme Court said (at 79):
[28] As I said in Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779, the general coverage of the obligations under s 232 are not to any major extent wider than the duties under the general rules of equity…
[29] Thus it follows that as there is no breach under the general rules of equity, there is no breach under s 232.
349 Section 181(1) of the Corporations Act provides as follows:
A director or other officer of a corporation must exercise their powers and discharge their duties:
(a) in good faith in the best interests of the corporation; and
(b) for a proper purpose.
In Lipton P, Herzberg A and Welsh M, Understanding Company Law, (16th ed, Thomson Reuters/Lawbook, 2012) at [13.0.25], the authors point out that this section is also "essentially the same as the fiduciary duty".
350 Section 182(1) of the Corporations Act provides as follows:
A director, secretary, other officer or employee of a corporation must not improperly use their position to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
351 Section 183(1) of the Corporations Act provides as follows:
A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
352 In SBA Music Pty Ltd v Hall (No 3) [2015] FCA 1079 at [28], Wigney J said:
Each of ss 182 and 183 of the Corporations Act effectively reflects a fiduciary obligation under the general law: Manildra at [131]; Landmark Underwriting Agency Pty Ltd v Kilborn [2006] NSWSC 1108 at [71], referring to Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 and Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979 at [28]. It follows that if a breach of a general law fiduciary duty is made out, it is likely that there will also be a contravention of ss 182 and/or 183 of the Corporations Act: Manildra at [133].
353 The standards imposed by these statutory provisions are therefore essentially the same as those imposed by the common law and equity.
354 Sections 181 to 183 of the Corporations Act extend the liability imposed by those sections to third parties who are "involved in a contravention" of the sections.
355 Section 79 of the Corporations Act explains the meaning of "involved in a contravention". It states:
A person is involved in a contravention if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced, whether by threats or promises or otherwise, the contravention; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d) has conspired with others to effect the contravention.
356 The relevant legal principles concerning accessorial liability are set out in Yorke v Lucas (1985) 158 CLR 661 (see also Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) (2015) 105 ACSR 116 ("ASIC v ActiveSuper") at [397]-[410] per White J). The principles are summarised in Austin RP and Ramsay IM, Ford, Austin & Ramsay's Principles of Corporation Law (LexisNexis Butterworths) at [9.284] as follows:
• for a person to be knowingly concerned in a statutory contravention, that person must have been an intentional participant, with knowledge of the essential elements constituting the contravention;
• it is not, however, necessary that the person also know that those elements amount to a contravention;
• actual knowledge of the essential elements constituting the contravention is required - imputed or constructive knowledge is insufficient;
• proof that a person had actual knowledge of each of the essential elements making up the contravention may be derived from direct evidence but more commonly will be a matter of inference from all the circumstances found to be proved. In some cases, actual knowledge can be inferred from the combination of a defendant's knowledge of suspicious circumstances and the decision by the defendant not to make inquiries to remove those suspicions; and
• the requisite actual knowledge must be present at the time of the contravention. A later acquisition of knowledge of the essential matters is not sufficient.
White J in ASIC v ActiveSuper also identified the following further principles at [406]-[410]:
A company may be knowingly concerned in a statutory contravention. The intention and knowledge of the directing or governing mind and will of a company may be imputed to the company for this purpose;
A person cannot become involved in an act made unlawful by mere knowledge or inaction on his part - some act or conduct on his part is necessary; and
There must be a practical connection between the alleged accessory and the offence.
357 The three elements of the tort of passing off, sometimes referred to as the "classical trinity", were described by Lord Oliver in Reckitt & Colman Products Pty Ltd v Borden Inc and Others [1990] UKHL 12; (1990) 17 IPR 1 ("Reckitt") (at [7]) in the following terms:
.... First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying get-up (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff.
(see also TGI Friday's Australia Pty Ltd and Another v TGI Fridays Inc and Another (1999) 45 IPR 43; [1999] FCA 304 ("TGI Friday's")).
358 The applicants referred to Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 ("Erven Warnink") at 742, where Lord Diplock identified the following five characteristics which must be present in order to make out the tort:
(1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.
359 Foresters also appeared to accept in their written submissions that these five elements are required for the tort to be made out.
360 However, since Erven Warnink, the return to the "classical trinity" of reputation or goodwill, misrepresentation and damage has been confirmed by the Privy Council in Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd (1980) 2 NSWLR 851; (1980) 32 ALR 387 and the House of Lords in Reckitt referred to above (cited by the Full Court of this Court in TGI Friday's).
361 Gummow J sitting as a judge of this Court in Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 356 said that the "classical trinity" served to emphasis the three core concepts in this area of law and I followed this approach in Coca-Cola Company v PepsiCo Inc (No 2) [2014] FCA 1287.
362 The applicants allege that Foresters is vicariously liable for the wrongful conduct of Mr Woff on and after 4 January 2011, and the wrongful conduct of Mr Corby on and after 26 November 2010 (the day after his last day with Lifeplan) or 6 December 2010 (his first day with Foresters) according to his employment contract. The wrongful conduct is not conduct which is wrongful because it is in breach of the contractual duties Mr Woff and Mr Corby each owed to the applicants or Mr Woff's alleged contraventions of the Corporations Act. In other words, the applicants do not assert that Foresters is vicariously liable for breaches of contract or contraventions of the Corporations Act. They assert that Foresters is vicariously liable for the equitable wrongdoing of Mr Woff and Mr Corby. In terms of timing, that relates to conduct on and after 26 November 2010 or 6 December 2010, and 4 January 2011.
363 As I understand it, in respect of at least two aspects of the applicants' case - Matgraphics and the pre-paid funeral contract pads, and Melbourne Mailing and the applicants' list of funeral directors - the applicants accept that they cannot succeed against Foresters unless they can establish that it is vicariously liable for the wrongful conduct of Mr Woff and Mr Corby. The applicants submitted that the wrongful conduct of Mr Woff and Mr Corby occurred in the course of their employment by Foresters in the sense that Foresters received and used the benefit of the contract pads and the funeral directors' mailing list, and that it was part of the funeral fund business, and that Foresters should be held vicariously liable for the equitable wrongdoing in the same way as it would be held liable for torts committed by Mr Woff and Mr Corby in the course of their employment.
364 The applicants referred to the decision of the House of Lords in Dubai Aluminium Co Ltd v Salaam and Others [2003] 2 AC 366. In that case, a partner in a firm of solicitors, A, was held liable for knowing assistance in a fraudulent scheme. The innocent parties of the firm made a payment to the victims of the scheme and then sought contribution from the architects of the scheme. To recover contribution they needed to show that they were liable to the victims of the scheme and they could do that if they were responsible for partner A's wrongful act. The innocent partners relied on s 10 of the Partnership Act 1890 (UK) which was in the following terms:
10 Liability of the firm for wrongs
Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefore to the same extent as the partner so acting or omitting to act.
365 The question before the House was whether "any wrongful act or omission" was limited to common law torts or extended to an equitable wrong, in that case, knowing assistance. The House of Lords held that the equitable wrong of knowing assistance was within the section. Lord Nicholls of Birkenhead held that an equitable wrong of knowing assistance was no different from, for example, fraudulent misrepresentation as in both cases the liability of the wrongdoing partner arose from dishonesty and there was no rational basis in terms of the description of a "wrongful act" for distinguishing one case from the other (at 375 [11]). Lord Millett took a similar approach saying that s 10 was concerned only with fault-based liability, but there was nothing to indicate that the liability must arise at common law (at 394 [103]). Lord Millett considered the rationale for vicarious liability (at 395 [107]):
Vicarious liability is a loss distribution device based on grounds of social and economic policy. Its rationale limits the employer's liability to conduct occurring in the course of the employee's employment. "The master ought to be liable for all those torts which can fairly be regarded as reasonably incidental risks to the type of business he carries on": see Atiyah, Vicarious Liability (1967), p 171; Lister v Hesley Hall Ltd [2002] 1 AC 215. The American Law Institute, Restatement of the Law, Agency, 2d (1958), section 229 is to the same effect: "the ultimate question is whether or not it is just that the loss resulting from the servant's acts should be considered as one of the normal risks to be borne by the business in which the servant is employed." Since this is the underlying rationale of the doctrine there is no rational ground for restricting the liability to torts, or for excluding liability in equity, particularly when equitable liability often has its counterpart at common law. Why should a firm be vicariously liable if a partner procures or induces a breach of contract but not if he procures or participates in a breach of trust or fiduciary duty? If the risk of wrongdoing is one which can fairly be said to be reasonably incidental to the employer's business, why should it matter that the liability arises in equity and not at common law or by statute?
366 The High Court referred to the rationale for vicarious liability in State of New South Wales v Lepore and Another (2003) 212 CLR 511, a case in which alleged victims of sexual abuse by teachers sued the State of New South Wales for negligence. Gleeson CJ referred to the well-known decision in Lloyd v Grace, Smith & Co [1912] AC 716 and then said (at 537 [45]):
The Earl of Halsbury explained the rationale of vicarious responsibility in such a case by quoting Holt CJ who had said: "for seeing somebody must be a loser by … deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser than a stranger". Lord Macnaghten said that the employer, having put the employee in the place of the employer to do a certain class of acts, must be answerable for the manner in which that agent has conducted himself in doing the business of the employer.
(Citations omitted).
367 I also refer to the detailed discussion by Gummow and Hayne JJ at 580-582 [197]-[201] and by Kirby J at 612-614 [301]-[306].
368 One thing may be noticed immediately and that is that if the rationale for vicarious liability is loss distribution, that rationale would not support an extension of the doctrine to equitable wrongdoing where the particular relief claimed is an account of profits.
369 The applicants referred to two Canadian authorities where (on the applicants' argument) the Court held that there was vicarious liability for equitable wrongdoing.
370 In 57134 Manitoba Ltd v Palmer [1989] BCJ No 810, the British Columbia Court of Appeal upheld an award of damages (the primary judge having held that it was impractical to make an award on the basis of an accounting) against the subsequent employer of a defaulting fiduciary. Esson JA (with whom Hinkson and Macdonald JJA agreed) said at [24]:
The employer's lack of knowledge of the conduct of Palmer, and of its illegal nature, does not relieve it from liability. It is clear that Smith got the benefit of those activities. The obtaining of such a benefit has generally been considered as militating in favour of the imposition of vicarious liability. The absence of knowledge of the illegality of the acts does not militate against such liability.
371 This decision was followed by Burnyeat J in Clayburn Industries Ltd v Piper [1998] BCJ No 2831.
372 The only Australian authority to which I was referred where a court or a member of the court has held that an employer was vicariously liable for the equitable wrongdoing of its employee is Coulthard and Others v State of South Australia (1995) 63 SASR 531 ("Coulthard"). That case involved a claim for damages for, among other things, breach of confidence. The significance of the case for present purposes is that King CJ said that the State could be vicariously liable for breach of confidence, although his Honour ultimately found that vicarious liability was not established on the facts. The Chief Justice said (at 535):
No authority has come to my attention which establishes that vicarious liability of an employer can exist under the equitable doctrine of breach of confidence. Nevertheless a breach of the equitable obligation of confidence is analogous to a common law tort. It is to be expected that equity would follow the law in such circumstances and that the common law doctrine of the vicarious liability in tort of an employer for the acts of employees in the course of their employment would apply in equity to breaches of confidence. It is to be expected that equity would act upon the conscience of the employer by requiring the employer to accept responsibility for the employee's breach of confidence.
373 Perry and Debelle JJ seemed to have assumed that the State could be vicariously liable for a breach of confidence by one of its employees, but decided on the facts that vicarious liability was not made out (at 538-540 per Perry J; at 552-554 per Debelle J). Their Honours did not discuss the issue suggesting that it was not raised or but faintly raised.
374 I am not prepared to hold that Foresters is vicariously liable for the equitable wrongdoing of Mr Woff and Mr Corby for the following reasons. First, at least in the general run of cases, vicarious liability is concerned with loss to a third party, rather than any gains made by the defaulting fiduciaries or their employer. Secondly, there is no authority in Australia, other than Coulthard, to the effect that vicarious liability applies in the case of equitable wrongs. The authority of Coulthard is limited because the point does not appear to have been raised, or at least it does not appear to have been raised, in a major way. Thirdly, vicarious liability would make significant inroads on the carefully constructed rules of third party liability (where the third party is a new employer) discussed in Barnes v Addy and the long line of cases which have followed Barnes v Addy.
375 I should add that, even if I am wrong and vicarious liability applies and can lead to an account of profits, there is a good deal of force, at least on the face of it, in Foresters' submission that the account relates to the profits made by the defaulting fiduciary rather than profits made by the new employer. I do not need to decide this point.
376 I turn now to consider whether Mr Woff and Mr Corby acted in breach of duty and whether Foresters knowingly assisted such breaches or induced breaches of contract by Mr Woff and Mr Corby or were involved in contraventions of the Corporations Act by Mr Woff. I will do so by reference to the 11 aspects of breach identified at the beginning of these reasons.