The relationship between the plaintiff and the defendant
24 To succeed on this action the plaintiff must identify the acts or omissions of the defendant that establishes a particular breach of an alleged fiduciary duty if an appropriate remedy is to be granted by the Court. In a recent article by Justice Meagher and Adrian Maroya ("Crypto-Fiduciary Duties" (2003) 26(2) UNSW LJ 348) the authors said (at 351):
It is often overlooked that a fiduciary agent typically might owe the principal a number of duties, and that these several duties may be characterised in different ways. First, there are fiduciary duties stricto sensu (insofar as they are capable of adequate definition). Second, there are less-distinct duties not strictly 'fiduciary' in character, but perhaps 'equitable' duties nonetheless in that the circumstances triggering their breach might result in an incidental breach of a fiduciary duty. Third, the fiduciary's relationship might generate duties that are not 'fiduciary' in character whatsoever - duties owed, say, in tort.
Quite obviously, what emerges from this is that not every breach of duty by a fiduciary will be a breach of fiduciary, or even a merely equitable duty; that a person should occupy a position of fiduciary responsibility is not enough, of itself, to infuse all that person's actions with a 'fiduciary' flavour. Accordingly, the material facts said to give rise to a fiduciary relationship must be carefully examined, so that the quality and extent of the duties might properly be understood.
25 The plaintiff cannot succeed merely because the defendant, at some point, acted in a fiduciary capacity towards the plaintiff and, at some point, obtained a benefit. The Court can only be satisfied of a need for equitable intervention if the alleged benefit came about as a result of the relationship, such that it was obtained either out of a conflict of interest between a fiduciary and his principal or such that the benefit is properly characterised as an improper profit.
26 The basis of the plaintiff's claim is that in November 1997 the defendant acted for the plaintiff, at least in a limited capacity, as his legal adviser on the mortgage transactions. The plaintiff was entitled to expect that advice to be independent and impartial. The plaintiff was certainly entitled to receive disclosure of any benefit that the defendant would receive as a result of the transaction, or more importantly, the defendant should not have acted for a principal in circumstances where a conflict of interest could possibly arise.
27 However, I am satisfied that the particular advice offered by the defendant was confined to a mortgage over the property. The defendant signed a solicitor's certificate in respect of that advice on the mortgage. That certificate was 'FOR USE IN CERTIFICATION OF THE SOLICITOR'S EXPLANATION TO A BORROWER'. Mr Wendt signed an acknowledgment that:
before [he] signed the loan and security documents bearing my signature Mr KENNETH EDWARD NORTHWOOD (solicitor) advised me concerning the documents.
28 Thus a position of trust and confidence was created in relation to the mortgage transaction and it was undeniable that the defendant was acting as a solicitor in relation to the plaintiff's interests as mortgagor.
29 The mortgage on which the defendant acted, as a solicitor, for the plaintiff, was a mortgage between the plaintiff and Woodward, the Frasers and LV Deakin Pty Ltd although, as I noted above, all cheques were made payable to ACG. Despite some inconsistency in his evidence, I am satisfied that the plaintiff knew that this transaction was a mortgage funded by third parties for the benefit of ACG. I am also satisfied that the defendant acted as an advisor on this transaction and I believe his assertion that he was unaware, at the time of giving advice to the plaintiff on the mortgage, that the monies were going to ACG.
30 I am not, however, satisfied that a breach of any fiduciary obligation, owed by the defendant to the plaintiff, occurred as a result of their relationship which arose from their dealings in respect of this mortgage transaction.
31 Even in circumstances where a breach has occurred, in this instance, no loss is occasioned by this transaction. In my opinion the loss suffered by the plaintiff came about because he released the certificate of title to Ms Howard and allowed the property to be transferred to ACG without receiving the full purchase price. The mortgage transaction has little to do with this loss. The mortgage transaction involved the plaintiff using his property to leverage borrowing for ACG, a debt subsequently discharged by ACG on 5 June 1998, immediately prior to their registration as owners of the property. Thus, before June 1998, the plaintiff had not suffered any loss. It is only after the transfer of the property that the plaintiff could be seen to have been detrimentally affected by the option agreement and the resulting sale.
32 Despite the plaintiff's denials, I accept that he was legally represented on this option/sale transaction by Beilby Poulden Costello and that he clearly declined to follow this firm's advice in respect of that transaction.
33 There is no question that the defendant was not acting as a legal representative, and therefore a fiduciary agent, at June 1998. The real issue in this case is whether the defendant was under any fiduciary obligation to prevent the detriment to the plaintiff suffered at this time.