The Equitable Claim
28 Macready AsJ set out the background history of the proceedings and summarised the Statement of Claim by characterising the proceedings as equitable compensation for breach of fiduciary duty. His Honour referred to the then recent judgment of Dunford J in Webber v New South Wales [2003] NSWSC 1263; (2003) 31 Fam LR 425. Macready AsJ referred to the close analogy between the facts of that case and the facts of this case.
29 His Honour specifically set out Dunford J's summary of the relevant case law, where his Honour said:
"[47] In the light of the foregoing, I am satisfied that even if one person stands in a fiduciary relationship to another, such as guardian and ward, the fiduciary duties which arise from such relationship and breach of which gives rise to a right to equitable compensation:
a) are confined to cases where the fiduciary acts for, or exercises a discretion on behalf of, the other party;
b) concern economic or proprietorial rights only, including possibly confidential information (which is itself really a form of property);
c) are proscriptive and not prescriptive; and
d) are not a substitute or alternative description for breaches of duty owed in tort or contract arising out of the same facts or circumstances."
30 Macready AsJ said that he agreed with Dunford J's analysis of the authorities and, in any event, he was obliged to follow the judgment unless he thought it was wrong, which his Honour did not.
31 I note that the appellant did not contend that the loss or damage he suffered could be characterised as economic or proprietory.
32 The submissions of the appellant invited the Court to adopt the approach of the Canadian Supreme Court with respect to the identification of fiduciary duties on the award of equitable compensation for breach of such duties. I repeat my own remarks in this regard in Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; (2003) 56 NSWLR 298:
"[31] … Canadian equity jurisprudence, perhaps under the influence of United States law, has developed in a quite different way to that of Australia. (See, for example, Breen v Williams (1996) 186 CLR 71 especially at 83, 94-95, 112-113, 137; Pilmer v Duke Corp ( at 194); Bodney v Westralia Airports Corporation Pty Ltd (2000) 109 FCR 178 at 200-205; Sir Anthony Mason, "The Place of Equity and Equitable Remedies in the Contemporary Common Law World" (1994) 110 Law Quarterly Review 238 at 246-248; S Dorsett, "Comparing Apples and Oranges: The Fiduciary Principle in Australia and Canada after Breen v Williams " (1986) 8 Bond Law Review 158 passim ; P Parkinson, "Fiduciary Law and Access to Medical Records: Breen v Williams " (1995) 17 Sydney Law Review 433 especially at 439-443.)
[32] In many respects Canadian fiduciary law has developed as an addition to the law of tort. This has not happened in Australia. Canadian authorities on equity must be treated with considerable caution. (The distinctiveness of Canadian equity jurisprudence is highlighted by D W M Waters, "The Reception of Equity in the Supreme Court of Canada (1875-2000)" (2001) 80 Canadian Bar Review 620; J Berryman, "Recent Developments in the Law of Equitable Remedies: What Canada Can Do For You" (2002) 33 Victoria University of Wellington Law Review 51.)"
33 Nothing has changed since that judgment to lead me to the conclusion that Australian law on fiduciary duties has developed in such a way as to make the Canadian authorities applicable here. (See, for example, G Dempsey and A Greinke "Proscriptive Duties in Australia" (2004) 25 Australian Bar Review 1.)
34 I do not find it necessary to consider the full range of Australian authority which supports the reasoning of Dunford J and Macready AsJ. It is sufficient to refer to the joint judgment of the Full Court in Paramasivam v Flynn (1998) 90 FCR 489, which applied the authoritative approach to fiduciary duty of the High Court in Breen v Williams (1996) 186 CLR 71 to a factual situation closely analogous to the present case.
35 In Paramasivam the existence of a fiduciary duty fell to be determined in a case of alleged sexual assault by a guardian of a girl. The assaults were said to have commenced when the girl was 11 and to have continued for some years.
36 Paramasivam was an appeal from a judgment dismissing an application for an extension of time to sue and granting leave to the respondent to enter summary judgment. The consideration of the strength of the fiduciary claim was not, however, directed, in terms, to the issue of summary judgment. It was considered in the context of assessing the strength of the plaintiff's case for purposes of the application to extend time. The test applied was whether the court was satisfied that the plaintiff "had real prospects of success". (See at 504 C-O, 508 D-C.) This does differ from the strike out test, which requires the court to be satisfied that there was no real prospect of success.
37 In a joint judgment of the Full Federal Court, of which one member was the late Justice Lehane, one of Australia's foremost equity scholars, their Honours said at 504-505:
"In Anglo-Australian law, the interests which the equitable doctrines invoked by the appellant, and related doctrines, have hitherto protected are economic interests. If property is transferred or a transaction entered into as a result of undue influence, then the transaction may be set aside or, no doubt, the appellant may be compensated for loss resulting from the transaction; similarly if a transaction is induced by unconscionable conduct; so, in cases usually classified as involving fiduciary obligations not to allow interest to conflict with duty, the interests protected have been economic. If a fiduciary, within the scope of the fiduciary obligation, makes an unauthorised profit or takes for himself or herself an unauthorised commercial advantage, then the person to whom the duty is owed has a remedy."
38 Their Honours also said at 505:
"Of course, conduct such as that alleged against the respondent in this case can readily be described in terms of abuse of a position of trust or confidence, or even in terms of the undertaking of a role which may in some respects be representative and, within the scope of that role, allowing personal interest (in the form of self gratification) to displace a duty to protect the appellant's interests. But it should not be concluded, simply because the allegations can be described in those terms, that the appellant should succeed in an action for breach of fiduciary duty if the allegations are made good. What the apparent applicability of the descriptions illustrates is not only the incompleteness but also the imperfection of all the individual formulae which have at various times been suggested as encapsulating fiduciary relationship or duty. The principles can be understood only in the context of the way in which the courts have applied them. In that context the success of the appellant's fiduciary claims, in this case, would indeed be a novelty.
To say of a claim that it is a novelty is not necessarily to condemn it or to require the conclusion that it cannot succeed. It is sufficient to demonstrate this point merely to refer to the gradual extension, during this century, of the kinds of loss for which damages are recoverable in tort - particularly in negligence. But an advance must be justifiable in principle. Here, the conduct complained of is in within the purview of the law of tort, which has worked out and elaborated principles according to which various kinds of loss and damage, resulting from intentional or negligent wrongful conduct, are to be compensated. That is not a field on which there is any obvious need for equity to enter and there is no obvious advantage to be gained from equity's entry upon it. And such an extension would, in our view, involve a leap not easily to be justified in terms of conventional legal reasoning."
39 After recitation of authority their Honours said at 507-508:
"All those considerations lead us firmly to the conclusion that a fiduciary claim, such as that made by the plaintiff in this case, is most unlikely to be upheld by Australian courts. Equity, through the principles it has developed about fiduciary duty, protects particular interests which differ from those protected by the law of contract and tort, and protects those interests from a standpoint which is peculiar to those principles. The truth of that is not at all undermined by the undoubted fact that fiduciary duties may arise within a relationship governed by contract or that liability in equity may co-exist with liability in tort. To say, truly, that categories are not closed does not justify so radical a departure from underlying principle. Those propositions, in our view, lie at the heart of the High Court authorities to which we have referred, particularly, perhaps, Breen ."
40 In my opinion, this analysis is applicable, without amendment, to the claim in the present case. As noted above, the issue before the Court involved a test with different emphasis to that applicable in the present case. However, the reasoning I have set out is compelling and is expressed in such a way as to be equally applicable to a strike out application. This Court should follow it.
41 As I have noted, there was no suggestion in this case that the interest to be protected was economic or proprietory. The appeal should be dismissed.