•    Partners

In Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) it is outlined that partners owe fiduciary duties to each other in respect of:
-    The conduct of the business;
-    The assets of the partnership;
-    Exact nature of the mutual obligations determined by the venture recorded in the written partnership agreement and final course of dealings.

United Dominions Corporation Ltd v Brian Pty Ltd
Facts: Brian Pty Ltd (Brian) and Security Projects Ltd (SPL) were joint venturers in several land development projects which were largely financed by borrowings from United Dominions Corp (UDC). There was a mortgage given to UDC by SPL which has a ‘collaterisation clause’ where the effect was the land acquired for the joint venture became security for all of SPL’s debts to UDC.
Issue: Brian argues that the clause was in breach of the Fiduciary duty owed by UDC under the joint venture.
Held: UDC and SPL obtained a collateral advantage by combining to apply the joint venture’s land to the mortgage. This is a breach of their Fiduciary duty as it was done without the consent or knowledge of Brian. The arrangements between the prospective joint venturers had passed beyond the stage of mere negotiation at the time the mortgage was executed, the participants of the joint venture were under a Fiduciary duty to refrain from pursuing, obtaining or retaining any collateral advantage in relation to the proposed project without the knowledge and informed assent of the other participants.

Chan v Zacharia (1984):
Facts: two doctors previously in partnership in suburbs of Adelaide. Partnership terminated. Carried on in different practices in different suburbs. Lease in one suburb was about to run out. The option to renew was in the name of the two doctors. Dr Chan approached landlord – without telling Dr Zacharia – and obtained the lease in his name.
Held: Deane J gave leading judgement:
1.    Fiduciary obligations may endure beyond the dissolution of the partnership.
2.     With regard to partnership assets it is not open to one to appropriate partnership assets without the informed consent of the other.

•    Employee and Employer
One of the accepted categories of fiduciary relationships: Hospital products Ltd v US Surgical Corporation.

DPC Estates Pty Ltd v Grey and Consul Development Pty Ltd
Facts: Case of manager under a service agreement in a property investment company which required him to devote himself exclusively to the business of the plaintiff and related companies, not to divulge to any other person any information concerning that business etc without the consent of the managing director. He used his position to make profits with a third party.
Held: Defendant owed a fiduciary duty to the plaintiff company.

Hivac Ltd v Park Royal Scientific Instruments Ltd
Case of skilled manual workers not being allowed to work for a rival manufacturer in spare time.
Held: Lord Greene MR outlined the employees duty of ‘fidelity’ rather than ‘fiduciary’. He saw 2 competing principles at work: one being the right of a worker to make use of his leisure for profit and the other being his duty not to do anything which would inflict harm on his employers business.

Industrial Development Consultants Ltd v Cooley
Facts: Cooley was a managing director of the plaintiff company and in that capacity entered into negotiations with a gas board with the aim of securing contracts for the design and construction of new gas depots for the board. The gas board was willing to give Cooley work in a private capacity, so Cooley falsely presented himself in poor health to release himself from his service contract and then set up his own company, which won the gas board contract.
Held: Cooley had breached his fiduciary duty to pass on to his employer the information he had received about the contracts as if was matter of industrial developments concern and because he allowed his personal interests to conflict with the duty. He held the gas board contract as constructive trustee for the plaintiff, even though it was very unlikely that it would have been awarded the contract in its own right.

There is a breach of duty of confidence if confidential information is disclosed by an employee and extends beyond the term of employment if it properly fits the description ‘confidential’, and sometimes this information may not be disclosed not just due to confidentiality but also due to breach of contract  Printers & Finishers v Holloway.
An employee bound by the duty of confidence is not necessarily a Fiduciary as well.

In Sterling Engineering Co v Patchett the principle was expressed:
“…where an employee in the course of his employment, that is, in his employer’s time and with his materials, makes an invention which it falls within his duty to make…he holds his interest in the invention and in any resulting patent as trustee for the employer.”

•    Agent and Principal

Not all agents are fiduciaries;
Their representative position will usually cast fiduciary duties when conducting affairs on behalf of the principal.

TEST - always examine:
1.    whether the agent is bound to place the interest of the principal ahead of the agent’s interest; and
2.    whether the agent is free to pursue their own interests as in US Surgical Corporation v Hospital Products Ltd and perhaps even ahead of the interests of the principal – usually unlikely on the last point.

Haywood v Roadknight [1927]
Facts: Farmer purchased land for his son who was unable to meet repayments so assigned back to his father. Father on advise from his solicitor employed agent to sell the land. Land didn’t sell at auction and farmer gave the agent the option to purchase it himself, with the farmer making a little profit. The agent exercised the option and sold the land making large profits due to a Ford Motor Company buying the site for an assembly plant.
Held: Agent was in breach of the fiduciary duty cast upon him by his role in the sale and was liable to account to the farmer for the profits he had made. The agency gave him knowledge of the value of the property and there were rumours about ford buying the land. Agent failed to make proper disclosure. The solicitor was held to be in breach of his fiduciary duty for failing to disclose that he also acted for the agent.

4.3   
Other relationships not recognised as Fiduciary

•    Broker and client

While a stockbroker is not trustee to his or her client, the relationship between the two is of a fiduciary character, though not every aspect of their dealings can be charecterised that way.

Daly v Sydney Stock Exchange Ltd (1986)
Facts: Doctor wanted to invest some money on the stock exchange and sought the advise of stockbrokers who were in financial difficulty at the time. It wasn’t a good time to buy so they suggested that Daly placed money on a deposit with the firm until it was the right time to buy. Daly placed two parcels of money with the firm as loans with a high interest rate and later assigned his interest in these funds to his wife. The firm ceased trading.
A claim for the money against the stock exchange fund failed. It was argues that a Fiduciary duty was owed to Daly and was breached when they failed to advise of their financial position.
Held: There was a Fiduciary duty, however the relationship as far as the money was concerned was one of debtor and creditor. The money had not been ‘entrusted’ to the firm. Even though there is a fiduciary duty owed, that alone is not enough to hold that any money received by the firm thereafter on behalf of the client was impressed with a constructive trust.

•    Commercial Transactions

Courts are usually reluctant to imply a fiduciary relationship in one where parties have negotiated at arm’s length as in commercial transactions.
That does not mean that they cannot arise in commercial relationships e.g. joint Ventures and Agencies where they owe fiduciary obligations to each other.

In Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) the HC held that the relationship between the parties was that of business firms engaged in ordinary commercial transactions, dealing at arm’s length. There was no ground for saying that the advandage enjoyed by one of the parties had been gained by any misuse of its position vis-à-vis the other party.

News Limited v Australian Rugby Football League Limited (1996)
Facts: The ARL, NSWRL and clubs competing in the national rugby league premiership competition were engaged in a joint venture giving rise t fiduciary obligations, and that some clubs had breached those obligations by participating in the rival superleague competition established by news limited.
Held: Court found there was no fiduciary relationship because the individual clubs were entitled to act in accordance with their own interest in situations which might involve a conflict with the interests of other participants in the alleged venture.
Further the clubs were also competing against each other in being in a competition as well as for sponsors and ticket sales.

Hospital Products Ltd v United States Surgical Corporation (1984)
It was held that while there was an implied term in the contract between USSC and HPI that the letter would use its ‘best efforts’ to promote the sale of USSC products in Australia, there was no scope to imply a further term that HPI would not, during the distributorship, do anything to manage or destroy USSC’s market in Australia. In those circumstances the relationship the parties was not a fiduciary one because:
1.    the arrangement was a commercial one entered into by the parties at arm’s length and on an equal footing; and,
2.    as it was intended that both USSC and HPI would profit from the distributorship arrangement, it could not be said that HPI was under an obligation not to profit from its position.

LAC Minerals v International Corona Resources Ltd (1989)
Facts: ICR had exploration leases in Canada and found an ore body. Approached LAC – a mining company, proposing a joint venture to exploit find. LAC checked out the find and learnt the ore body drifted outside the lease. Said no to JV. LAC went back to Toronto and took out leases to the southeast and south of the IRC lease. ICR sued, claiming amongst other things it was a breach of fiduciary duty, since LAC owed fiduciary duty to ICR arising out of the meetings onsite and information provided by ICR. ICR also claimed there had been a breach of confidence.
Held: There was no fiduciary duty but there had been breach confidence. ICR had obviously provided confidential information.
Information had only been provided for limited use. Gaining other leases was therefore an unauthorised use.

•    Banker and Customer

Normally the relationship between banker and customer will be that of debtor and creditor, and not subject to fiduciary duties. If a fiduciary relationship is alleged, it will be necessary to show that special circumstances exist which demonstrate that the bank has assumed a fiduciary responsibility towards a customer.

Commonwealth Bank v Smith (1991)
Facts: Bank acted as financial adviser for the Smith’s who wanted to buy a licensed leasehold over a hotel. Bank told them it was a ‘good buy’ but also informed them that they also acted for the vendor of the hotel and was limited in the information which it could provide. He did not suggest that they seek independent advise and actually discouraged that they see an accountant or hotel broker. Bank also failed to disclose the mortgagee valuation which was lower than what the Smiths were willing to pay and failed to disclose that the vendor company’s account was overdrawn.
Held: Bank owed fiduciary duty as financial adviser. The info given to the Smith’s was not sufficient to amount to fully informed consent. The crucial factor in the relationship was the conflict between the interests of the two sets of customers. Bank was held liable to compensate the Smiths to pay them the difference between what they had paid and what the lease was actually worth. Smiths had employed an independent solicitor but did not rely on him for financial advise.

•    Other and Special Relationships

There is no rule which sets any limit on the relationship in which fiduciary obligations can be owed by one party to another. If the facts establish a reliance by one party upon another, it is no defence to argue that the case does not fall into a recognised field.

Breen v Williams
Facts: A patient sought access to her doctor’s records, arguing, amongst other things, that the doctor owed fiduciary duties which extended to giving full disclosure of his patient records concerning Mrs Breen.
Held: Argument rejected. “Equity requires that a person under a fiduciary obligation should not out himself or herself in a position where interest and duty conflict or, if conflict is unavoidable, should resolve it in favour of duty and, except by special arrangement, should not make a profit out of the position.” The application of that requirement is quite inappropriate in the treatment of a patient by a doctor or in the giving of associated advice.

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