Richardson, Holmes v Radford, Sutton, Gannett Pty Ltd

[1996] QCA 554

IN THE COURT OF APPEAL	[1996] QCA 554
SUPREME COURT OF QUEENSLAND

Appeal No. 115 of 1995.

Brisbane

Before Pincus J.A. Davies J.A. McPherson J.A.

[Richardson & Ors. v. Radford & Ors.]

BETWEEN:  DAVID RICHARDSON

(First Plaintiff) First Appellant

AND:  GEORGE ERNEST NEVILLE HOLMES & ORS.

(Second Plaintiffs) Second Appellants

AND:

TORRES INDUSTRIES PTY LTD (ACN 101 883 173)

(Third Plaintiff)

AND:  STEPHEN RADFORD

(First Defendant) First Respondent

AND:  PERRY SUTTON

(Second Defendant) Second Respondent

AND:	QUEENSLAND COASTAL PILOT SERVICE PTY LTD
(ACN 053 843 646)  (Third Defendant) Third Respondent
AND:	GANNETT PTY LTD

(Fourth Defendant) Fourth Respondent

REASONS FOR JUDGMENT - PINCUS J.A.

Judgment delivered 24 December 1996

The reasons of McPherson JA and those of Davies JA provide an explanation of the statutory framework in which the pilot service in issue was conducted. The central question is whether the co- operative venture (to use an expression adopted by McPherson JA) in which the pilots and secretaries

were engaged was such as to subject the secretaries to fiduciary duties in favour of the pilots. In

discussing the matter, I shall use the word "statute" as referring to the provisions, including Regulations,

analysed by McPherson JA and Davies JA.

A recent attempt to analyse what it is that gives rise to such duties is to be found in the decision

of the Full Court of the Federal Court in News Ltd v. Australian Football League Ltd (1996) 139

A.L.R. 193 at 310-314. The Court’s judgment pointed out that there are recognised categories of

persons who normally stand in a fiduciary relationship (311); but, as here, the Full Court had to

determine in that case whether a relationship outside those categories was fiduciary. The Court was of

opinion that such a relationship is more likely to exist where the relationship between the relevant parties

is "collaborative" or "horizontal", such as a partnership or joint venture; if correct, that view assists the

appellants. The Full Court also expressed the view that "an important question - if not the question" is

whether the circumstances are such "that one party is entitled to expect that the other will act in his

interests in and for the purposes of the relationship". The entitlement there spoken of must be a legal,

not merely a moral, one; I confess it is not clear to me whether this test merely restates the problem,

or suggests a means of finding a solution to it. Here, no doubt the pilots would have expected, or at

least hoped, that the secretaries would act in their interests in and for the purposes of the Service, but

the question is whether the secretaries had a legal obligation to do that, other than in the ways which the

statute required.

Shortly before the Federal Court case was decided, the High Court had considered whether
in a particular respect a doctor had duties of a fiduciary nature: Breen v. Williams (unreported, 6

September 1996). Dawson and Toohey JJ emphasised the importance of a conclusion that "a fiduciary

acts in a representative capacity in the exercise of his responsibility", but added a little later:

"No doubt the patient places trust and confidence in the doctor, but it is not because the doctor acts on behalf of the patient; it is because the patient is entitled to expect the observance of professional standards by the doctor in matters of treatment and advice and is afforded remedies in contract and tort if those standards are not observed and the patient suffers damage."

That line of reasoning, if applied to the present case, would be based on the circumstance that, at least

in general, the pilots’ reliance on the secretaries would have been based on their entitlement to expect

the secretaries to observe the standards appropriate to their calling, as well as on the pilots’ rights under

the statute.

In the same reasons their Honours used the consideration that "it is the law of negligence and

contract which governs the duty of a duty of a doctor towards a patient" as tending against the

imposition of fiduciary obligations, and that can be applied against the pilots here, for plainly the

substantial source of the obligation of the secretaries to the pilots is the statute.

It is an unusual task for a court to have to determine whether a set of facts falls within a category

whose scope appears not to have any accepted description on definition. The learned author of an

article in Vol. 24, Australian Business Law Review, p. 110, Ms R Teele, accurately sums up the

position:

"Despite numerous attempts by commentators and the judiciary, no universally accepted definition of ‘fiduciary’ has been developed, nor is there agreement as to the appropriate principles to apply when ascertaining the existence of fiduciary obligations."

The author refers to a treatment of the problem by Judge Easterbrook and Prof. Fischel in (1993) 36

Journal of Law and Economics 425, reference to which shows that the authors favour a "contractual

view" of fiduciary duties, which appears to be a view assimilating identification of fiduciary duties to

detection of implied terms in contracts. It does not appear to be necessary, or even permissible, for an

intermediate appellate court to attempt to devise a formula by which judges may determine the existence

or otherwise of fiduciary obligations; but I venture the observation that considerations akin to those

used in determining whether a term should be implied in a contract are commonly mentioned when it is

decided that a fiduciary duty exists or decided that one does not. This is demonstrated by the reasons

of the High Court in Hospital Products Limited v. United States Surgical Corporation (1984) 156

C.L.R. 41, and the implied term test receives some explicit support in the reasons of Dawson J:

"I have already explained why in my view there was no implied term such as that found by the trial judge. That goes some distance in explaining why I am unable to accept the further conclusion that the relationship between the parties was sufficiently analogous to that of a trust classified as fiduciary. The circumstances which make it inappropriate to imply the term in question form part of those circumstances which, in my view, preclude the formation of any fiduciary relationship. But there is more to it than that." (143)

Before there was reason to prepare for the termination of the relationship, the interests of the

pilots and the secretaries, so far as dealings with customers and respective customers were concerned,

substantially coincided; the two groups had no reason to compete with each other. That situation

changed once it was known that the industry was to be deregulated and the pilotage monopoly ended.

The appellants invited us to treat the secretaries as the pilots’ agents and that argument introduced a

contractual analogy. I agree with McPherson JA, for the reasons his Honour gives, that the secretaries

cannot be treated as having agreed to act on the pilots’ behalf. But if one approaches the appellant’s argument as if it were broader - as if it sought a finding of fiduciary relationship on the basis that the set

of statutory obligations should be regarded as analogous to a contract sui generis, it still seems

impossible to import a relevant fiduciary obligation. One may concede that, had the parties decided to

make an agreement about mutually competitive steps to cover the period of time leading up to

deregulation, they might simply have agreed that no such steps could be taken. But surely the

probability is otherwise; one would have expected each group to wish to be free to take some steps

to protect their own interests in anticipation of the loss of the monopoly.

Precisely what steps would have been agreed to be permissible, it is hard to say; one might

guess that the pilots would have wished that, if they could not reach a suitable arrangement with the

secretaries, they should be free to negotiate with others, before 1 July 1993, about the continuation of

the service. Whether the secretaries would have agreed to the pilots having the right to do so is another

question. Similarly, one would have expected the pilots not readily to agree that they would make no

new arrangements before 1 July 1993 for the future carrying on of the pilotage services, however

necessary the making of such arrangements might, in the circumstances then existing, appear to be.

Looking at the matter more generally, if the parties had agreed on terms designed to achieve

the result that each group’s position was protected, by prohibitions on mutually competitive steps, a

wide range of terms of that kind might have seemed to them reasonable and fair. It is impossible to say

that such an agreement would necessarily have included a term precluding either side from soliciting,

prior to 1 July 1993, contracts for pilotage services to be performed after that date. Treated as a

notional implied term, then, the suggested fiduciary duty cannot stand; although that is not the end of

the appellants’ case, on this aspect, it appears to me to go a long way toward destroying it. I have

treated the parties’ obligations, created by statute, as if they constituted an arrangement between the

parties; but where an arrangement is of a purely commercial kind and the parties have dealt at arm’s

length and on an equal footing, that has "consistently been regarded by [the High] Court as important,

if not decisive, in indicating that no fiduciary duty arose": Hospital Products Ltd v. United States

Surgical Corporation (above) at 70. Although there is no room for an implied term, of a kind suitable

to the appellants, in such a postulated arrangement, the Court is being asked to impose an obligation,

being one as to which there is no ground for confidence that it would, if suggested in a negotiation, have

been agreed to.

I concur in the view of the other members of the Court that the learned primary judge rightly

held that there was no such fiduciary obligation as that for which the appellants contended. With respect

to the other aspects of the appeal, I am in agreement with the reasons of McPherson JA.

I agree that the appeal should be dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 115 of 1995

Brisbane

Before Pincus J.A. Davies J.A. McPherson J.A.

[Richardson & Ors v. Radford & Ors]

BETWEEN:

DAVID RICHARDSON

(First Plaintiff) First Appellant

AND

GEORGE ERNEST NEVILLE HOLMES & ORS (A.C.N. 101 883 173).

(Second Plaintiffs) Second Appellants

AND

TORRES INDUSTRIES PTY. LTD.

(Third Plaintiff)

AND

STEPHEN RADFORD

(First Defendant) First Respondent

AND

PERRY SUTTON

(Second Defendant) Second Respondent

AND

QUEENSLAND COASTAL PILOT SERVICE PTY. LTD. (A.C.N. 053 843 646)

(Third Defendant) Third Respondent

AND

GANNETT PTY. LTD.

(Fourth Defendant) Fourth Respondent

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered 24 December 1996

The first and second appellants, who were plaintiffs in the court below, brought an action in the Supreme Court, in which they claimed that the first and second defendants, who are the respondents to the appeal, had acted in breach of their fiduciary duty in entering into a contract, which was to last

for 12 months, with Queensland Alumina Limited ("QAL") for the provision of pilot services from

Weipa to Gladstone. There were similar claims with respect to other contracts as well; but it is sufficient

for present purposes to focus on the QAL contract. It was dated 21 June 1993, and was entered into

between QAL and Queensland Coastal Pilot Service Pty. Ltd. ("QCPS"), a company incorporated by

the second respondent Perry Sutton. At that time in 1993 the appellants were pilots in the Queensland

Coast and Torres Strait Pilot Service, and the first and second respondents Stephen Radford and Perry

Sutton were the secretaries of the pilots.

The Service is neither an entity in law, nor an association of individuals, but simply a name for

the service, formerly provided under the authority of statutory regulations, for piloting vessels passing

through Torres Strait and the coastal waters of Queensland, or at most a collective name for those who

provided that service. Its genesis lay in the dangers of navigating the Strait, which otherwise afforded

a convenient and short northern route to and from the east coast of Australia. In the latter part of the

nineteenth century, the problems of sea passage through the Strait were greatly diminished by providing

a pilotage service using specially licensed local pilots with experience in navigating those waters. Their

history is recounted by Capt. J.C.H. Foley in his book Reef Pilots (1982), which is one of the exhibits

before us.

On the appeal we were supplied with copies of a succession of Queensland statutes and

regulations governing the provision of and payment for the services of the Torres Strait and coastal

pilots. They begin with Regulations issued under The Navigation Act of 1876, and conclude with "The

Queensland Coast and Torres Strait Pilot Service Regulations of 1970" made under The Queensland Marine Acts, 1958 to 1967. Together with a few later amendments, it is the Regulations of 1970 that

fall to be considered on this appeal.

Before turning to the Regulations, it is useful to say something about the law of pilotage and its

evolution. Originally, it was a matter of private enterprise involving a contract between the pilot and the

shipowner, who was usually represented by the master. Later on, it became common for port and other

authorities to license qualified persons as pilots and, in the exercise of statutory powers, to compel the

use of their services for navigating specified waters. Legislation fixed the rates to be paid for pilotage

services, and ordinarily provided that they should be recoverable by the authority to whom they were

payable. A contentious issue was whether the shipowner was liable for damage resulting from acts and

defaults of the pilot while the vessel was under pilotage. The rule adopted in common law countries was

that the shipowner was liable if the pilotage was voluntary, but not if it was compulsory. In consequence

of an international maritime convention in 1910, this common law defence of compulsory pilotage was

abolished in the United Kingdom by s.15(1) of the Pilotage Act 1913. In Australia that provision now

appears in substantially the same form in s.410B(2) of the Navigation Act 1912 (Cth). See Oceanic

Crest Shipping Co. v. Pilbara Harbour Services Pty. Ltd. (1986) 160 C.L.R. 626, 684-685. The

result is to make the owner or master answerable for loss or damage caused by a ship navigating under

compulsory pilotage in the same manner as if the pilotage were not compulsory. It was only

comparatively recently that pilotage in the Torres Strait became compulsory, and then it was confined

to two areas known as the Inner Route and Hydrographer's Passage.

In addition to altering the law in that particular, the Pilotage Act 1913 also established a system

of regulating and remunerating pilots, to which the statutory scheme in Queensland governing the Torres

Strait Pilot Service evidently owes some of its inspiration: cf. Halsbury, 3rd ed., vol.35, paras. 835- 851. The Queensland scheme was first adopted in Regulations made in May 1914, which, with few

alterations, were re-enacted in the Regulations of 1970 now under consideration. Those Regulations

are no longer in force, having been superseded when the field was occupied by Commonwealth

legislation on 1 July 1993. From that date the function of licensing pilots for navigation in areas adjoining

the Great Barrier Reef, including the Torres Strait and covering the Inner Route and Hydrographer's

Passage, was transferred to the Australian Maritime Safety Authority constituted by the Australian

Maritime Safety Act 1990 (Cth.). The change was part of a process of deregulation of the maritime

industry that brought an end to a monopoly over Torres Strait pilotage which the Service had previously

enjoyed under the Regulations. As that date approached, pilots in the Service were invited to engage

in a private joint venture pilotage scheme with the secretaries. Some six or so out of 44 of the pilots

elected to join QCPS, but most of them (who include the plaintiffs) preferred to join or remain with the

pilots' Association, which incorporated the appellant company Queensland Coast and Torres Strait

Pilots Association Pty. Ltd., which now competes with QCPS in providing pilotage services in those

waters. However, because the action of the respondents in entering into the QAL contract took place

before 1 July 1993, the claim of breach of fiduciary duty has to be determined under the legal regime

which prevailed when the Regulations were still in force.

The Regulations of 1970 do not define The Queensland Coast and Torres Strait Pilot Service,

although they refer to both pilots and secretaries. By reg.6, the number of pilots was to be determined

by the Board (which was the Marine Board of Queensland constituted by The Queensland Marine

Acts) and was not to be increased unless there was a vacancy. The Board was authorised to license

pilots who possessed specified qualifications including experience in navigating Queensland Coastal

Waters and the Torres Strait (reg.8). So long as the complement of pilots was filled, it was open to the Board to refuse to license an applicant (reg.10). It was because of these restrictions on the Board's

power to reduce or increase the number of pilots that a virtual monopoly subsisted in favour of those

pilots who for the time being were licensed for the Service.

By reg.14, the secretaries were to be appointed by the Board, and could be required to furnish

a fidelity bond for due performance of their duties and "for the due accounting and payment of moneys

in accordance with these Regulations". The appointment of a secretary might be determined by the

Board at any time (reg.15), and the Board had power, upon complaint to it of misconduct or breach

of the Regulations, to suspend a secretary preparatory to his removal from office (reg.16).

The primary function of the secretaries was to manage the pilot service. By reg.13 it was

provided that:

"13

The management, supervision, and control of the pilot service and of the working and movements of the pilots shall, subject to appeal to the Board in the manner hereinafter provided, be vested in the secretary or secretaries of the pilots.

The Board from time to time may issue to pilots instructions in the interests of the safe navigation of ships. Any such instructions may relate to minimum under-keel clearances, communications between ships, or to any other matter, whether of a like nature or not, which the Board considers necessary or desirable in the interests of safe navigation. The Board may from time to time amend, vary or cancel any such instructions. A pilot shall comply with every such instruction issued by the Board."

Likewise, in reg.18, it was provided that it was the "duty" of the secretaries, but "subject to the

Regulations", to manage, supervise, and control the pilot service, which was to be carried out in various

ways set out in that regulation. The secretaries were required to keep a register of the pilots and to

assign to them in rotation for pilotage "vessels, the masters or owners of which have notified the ...

secretaries that they require the services of a pilot for such vessels": reg.18(c). They were to instruct pilots to proceed as passengers to any port for the purpose of piloting a vessel from that port: reg.18(d).

A master or owner was to give reasonable notice to the secretaries that the services of a pilot were

required, whereupon the secretaries were bound to "make every endeavour" to secure the services of

a pilot for the vessel in question: reg.21. For his part, the duty of a pilot was to be ready to take charge

of a vessel requiring his services: reg.22(a); to keep the secretaries fully advised of his whereabouts:

reg.22(b); to proceed to a port if so instructed by the secretaries: reg.22(b); and to ensure that the

master of the piloted vessel completed and executed a pilotage order, which was to be forwarded by

the pilot to the secretaries: reg.22(e) and (f). After completing the duty of piloting, the pilot was

required to report forthwith to the secretaries: reg.22(h). Provision was made for recuperative leave

after performing pilotage duty, and also for leave of absence, recreation leave, long service, and sick

leave: regs.23(a); 24; 26(a), 26(e); and 26(f). A pilot was not to leave Australia without first giving 7

days notice to the secretaries: reg.26(1). Thirty days notice was required of a pilot's intention to retire

from the service: reg.24.

Payment for pilotage services was closely controlled. Rates of pilotage dues were prescribed

by the regulations: reg.28(a), and were payable and to be paid to the secretaries. A form of pilotage

order was prescribed. It was form C in the Schedule to the Regulations, which was to be signed by the

master on its presentation by the pilot. For that purpose the pilot was to be provided by the secretaries

with blank forms of order, which he was required to keep with him: reg.22(d). According to form C,

the amount of the pilotage dues and other expenses was to be paid on demand "to the order of the

secretaries". The master, owner, or other person applying for the services of a pilot were made

severally liable for payment of those pilotage dues and expenses, which were recoverable by the

secretaries in a court of competent jurisdiction (reg.35). Unless otherwise instructed by the secretaries, a pilot himself was not to receive payment of the pilotage dues (reg.22, final paragraph; see also

reg.28(a)). As soon as the amount was received from the owners, the secretaries were required by

reg.28(h) to pay to each pilot 84½% of the amount of all pilotage orders excluding the amount of

reimbursable expenses: reg.18(h); but were entitled to retain 7½% excluding these expenses. The

purpose was to remunerate the secretaries for their services, and to reimburse them for their office and

management expenses in carrying out their duties under the Regulations: see reg.20. The Regulations

in that behalf were amended in 1985 to adjust the percentages payable, and, as amended, they provided

for the balance to be paid on account of pilots superannuation as prescribed in reg.18(h)(iv).

The Regulations have been examined in some detail because it is the submission of the

respondents on the appeal that they are essentially inconsistent with the existence of a fiduciary duty on

the part of the secretaries of the kind contended for by the pilots. Apart from any inspiration they may

have derived from the scheme of the Pilotage Act 1913, the immediate stimulus for their adoption in

1914 almost certainly was the series of decisions arising from the negligence of a compulsory pilot in

stranding the ship Eastern on a bank in Moreton Bay in 1911. In Eastern & Australian Steamship

Co. Ltd. v. Fowles [1913] St.R.Qd. 64, the Full Court held the Government liable for the pilot's

actions. The decision was later reversed by the Judicial Committee in Fowles v. Eastern Australian

S.S. Co. Ltd. [1916] 2 A.C. 149; but, in some of the judgments in the intermediate appeal to the High

Court in Fowles v. Eastern Australian S.S. Co. (1913) 17 C.L.R. 149, enough was said to justify

serious concerns that, in a differently formulated case, liability might be brought home to the Government

on the basis that it was engaged in conducting a commercial enterprise of providing pilotage services.

In Fowles, the pilot, who was operating in an area of compulsory pilotage, was licensed by a Government department; he was employed and paid as a public servant; and the pilotage dues were paid into consolidated revenue (Oceanic 160 C.L.R. 626, 635). The Torres Strait pilots never

occupied a position like that; but, if one thing is clear about the scheme for the Torres Strait Pilot

Service introduced by the Regulations in 1914, it is that its primary purpose was to remove the

Queensland Government as far as possible from all liability for pilot error in the Service by eliminating

any suggestion that it controlled the pilots. In establishing the scheme continued by the Regulations of

1970, the plain object was to ensure that a pilot in the Service would, to use Earl Loreburn's subsequent

description in Fowles v. Eastern & Australian S.S. Co. Ltd. [1916] 2 A.C. 556, 562, be regarded

"as an independent professional man in discharging his skilled duties". The decision in that case has been

followed on many subsequent occasions. See Oceanic Crest Shipping Co. v. Pilbara Harbour

Services Pty. Ltd. (1986) 160 C.L.R. 626, which, in turn, was recently applied by the House of Lords

in Esso Petroleum Ltd. v. Hall Russell & Co. [1989] 1 A.C. 643. In explaining the basis for the

general rule of immunity attaching to government or port authorities for the acts of pilots, Lord Jauncey

said ([1989] 1 A.C. 643, 691) that one rationale for it is that "the pilot is an independent professional

man who navigates the ship as a principal and not as a servant of his general employer". That case was,

again, one involving compulsory pilotage; but, because of the way in which, from 1914, pilots of the

Torres Strait Service were employed and remunerated under the Regulations, their independence is

even more clearly apparent. As such, it justifies the opinion of Geen, Law of Pilotage, at 81, that

under the regime imposed by the Regulations "the pilots of the Torres Strait Service are independent

contractors".

Approaching the pilots of that Service as independent contractors to the masters or owners who

engage them affords only a partial answer to the question raised by this appeal. The critical issue here

is their relationship to the secretaries. The case for the appellants is based wholly or in part on the proposition that there was an implied duty, owed by the secretaries to "the Service", to: (i) act honestly

and in good faith; and (ii) not to solicit or entice for their own benefit the clients of "the Service". That

is the allegation in para.15.1 of the amended statement of claim in the action. Particulars furnished by

the appellants are that the material facts giving rise to the duty are: (a) that the first and second

defendants or respondents Radford and Sutton were secretaries of the Service; and (b) that they were

in a position of confidence or influence in relation to the Service and the members of the Service. The

duty is said to have arisen when each of them commenced employment with the previous secretaries

of the Service.

There is an element of ambiguity in the expression "the Service" as used in those allegations.

As noted, the Service is not a legal entity. The impression gained from reading the Regulations as a

whole is that the drafter of the legislation regarded the Service as consisting of both pilots and

secretaries, and not simply the pilots alone. That use or sense of the expression is perhaps not

consistent throughout the Regulations but, to read the Regulations in that way accords with the original

purpose of thoroughly distancing the Government from the scene. According to the second defendant

Sutton, who is an accountant, the secretaries have always been appointed from among the members or

employees of the firm of Banks Bros. & Street, shipbrokers of Sydney. No doubt their association with

the shipping industry fitted in conveniently with their functions as secretaries for the Service. If the

operations of the Service had been a purely private operation not subject to the detailed statutory

specifications imposed by the Regulations, it might have been possible to regard the pilots and

secretaries as conducting a pilotage business in partnership. In that event, their relation to each other

would have attracted reciprocal duties of a fiduciary character similar to those arising under the general

law and the provisions of the Partnership Act 1891 (Qld.) Between partners there is a relationship of mutual trust and confidence (Birtchnell v. Equity Trustees, Executors & Agency Co. (1929) 42

C.L.R. 384, 407), which precludes one partner from competing with the other in a matter within the

scope of the partnership business, or, more broadly, from placing himself in a position where his

personal interest conflicts with his duty to the firm: cf. Trimble v. Goldberg [1906] A.C. 494. If the

pilots and secretaries had been in business together in the Torres Strait Service, it could, with some

confidence, be said that the secretaries would not have been entitled or permitted to appropriate for

themselves, to the exclusion of the pilots, the benefit of the contract with QAL or other similar and

lucrative opportunities.

Plainly, however, the secretaries and the pilots were not engaged in conducting a pilotage

business in partnership. The overlay of statutory regulation prevented any such relationship from arising.

Nor could they be considered to be in the relation of employer and employee. A servant has been held

to owe a duty of fidelity to his master, comparable to that alleged in para.15.1, which prevents him from

competing with his employer, or working, even in his spare time, for a rival in the same line of business:

Hivac Ltd. v. Park Royal Scientific Instruments Ltd. [1946] Ch.169, 174; cf., however,

McPherson's Ltd. v. Tate (1993), a decision of Byrne J. in the Supreme Court of Victoria (which so

far appears to have been reported only in vol. 35 A.I.L. Rev. §225) concerning the extent of that duty

on the eve of its termination. But the secretaries were not employees of the pilots or vice versa. The

pilots were, as is shown by the decisions referred to, independent professional men performing skilled

duties. The secretaries had no say over the way in which the duty of piloting was performed, and would

assuredly not have attempted to control its performance. Equally, the pilots could not control or

supervise the manner in which the secretaries' duties were carried out. The functions of the secretaries

were prescribed by statute, and were not of a character that readily lent themselves to supervision or control. If the parties had wished to alter those duties or other incidents of their relationship, it would

have been necessary to arrange for the legislation to be amended. Apart from that possibility, the

avenue of redress available to the pilots was to appeal under reg.37 to the Board against a decision of

the secretaries.

For the appellants, Mr Chesterman Q.C. contended that the relationship was that of principal

and agent. The secretaries were, he submitted, the agents of the pilots, and, as such, owed the ordinary

fiduciary duty of an agent to his principal. He began by pointing out that, in receiving the pilotage dues,

the secretaries must be considered to be trustees who took and apportioned money between the pilots

and themselves in the percentages specified in reg.18(h). It is by no means certain that such a result

follows from the legislation. By reg.18(f), the secretaries were required to collect payment of pilotage

orders, but were not bound to institute legal proceedings to recover them. That does not precisely

accord with the duties of a trustee in similar circumstances. By reg.18(g) they were required to keep

proper accounts of all moneys received by them and of the expenses allowed under regs.18(h) and 20;

but the legislation nowhere directed that moneys received should be paid into a trust account, or banked

separately from other money belonging to the secretaries. Originally receipts of money representing

pilotage dues were in fact not banked separately but were paid into the bank account of Banks Bros.

& Street. The system was changed only in or after 1989, when two bank accounts were opened in the

name of the Queensland Coastal and Torres Strait Pilots Service, an action that is said to have been

undertaken because of unresolved questions concerning the rights of partners in that firm. According

to Sutton, when he took over from his predecessor he allowed pilots to draw against their individual

credits even before invoices for related accommodation, travelling, and other expenses incurred by the

pilots had been received and debited. As a result, the pilots collectively were from time to time often indebted to the secretaries for amounts of more than $50,000. Although not decisive, this suggests that

the relationship was one of debtor and creditor rather than trustee and beneficiary. In some ways it

resembled the relationship between grower or supplier and produce agent considered in Walker v.

Corboy (1990) 19 N.S.W.L.R. 382, which was held not to give rise to a trust in favour of the individual

grower or supplier in respect of the proceeds of produce sold by the agent.

Even if it is assumed that, in receiving payment of pilotage dues, the secretaries were trustees

or fiduciaries, it does not follow that in performing all of their other duties, they partook of that

character. It is not legitimate, on finding that someone is a trustee or fiduciary for one purpose, to

ascribe that character to every other function performed by the same person. To do so would be to

treat the errand boy, who, in the example given by Fletcher Moulton L.J. in Re Coomber [1911] 1 Ch.

723, 728, "is bound to bring me back my change", as a trustee for his employer in everything else he

did. It is well settled that a person may be a fiduciary in some activities but not in others: Hospital

Products Ltd. v. United States Surgical Corporation (1984) 156 C.L.R. 41, 98. The question to

be determined here is not whether the secretary received the pilotage dues as trustees, but whether in

procuring pilotage orders they were acting as agents either for the pilots alone, or for "the Service" as

a whole including themselves.

If the Regulations were to be approached as if they constituted terms of a contract between the

parties, it is possible that such a relationship could be spelled out. On one view, however, it would

seem to involve the consequence that it was the secretaries who were the principals and the pilots the

agents. Requests for pilotage services were to be made to the secretaries (reg.21); but the order in

form C, or promise to pay for the services rendered, contemplated payment to the secretaries, who

were the only persons authorised to collect, receive or sue for payment of pilotage dues (reg.21; reg.35). What is more significant, the functions of management, supervision, and control of the pilot

service were vested in the secretaries: regs.13, 18(a). A manager may be a servant or agent; but, at

least as often, he is the principal of the enterprise. What is clear from those regulations is that it was not

the pilots who controlled the service "and the working and movements of the pilots", but the secretaries.

Within the limits of those functions, it was not for the pilots to countermand the instructions of the

secretaries. If they were aggrieved by an order or decision of the secretaries controlling the Service,

the remedy given to them by reg.37 of the Regulations was to appeal against it to the Board, whose

decision was final and conclusive on all parties.

There is no more compelling reason to view the secretaries as agents for the pilots than to

regard the pilots as agents for the secretaries. The truth seems to be that the parties on both sides were

in a relation to each other resembling that of independent contractors. The secretaries accepted orders

from masters or owners for pilotage services and passed them on to the pilots, who, having performed

their skilled task, then procured from the master or owner a written undertaking to pay the secretaries.

On receiving a request for pilotage, the duty of the secretaries was to "make every endeavour" to

secure the services of a pilot for the vessel in question: reg.21; and, after the service was completed,

to "use ... their best endeavours to collect payment" of what was due: reg.18(f). A comparison is

suggested with shipping agents or freight forwarders, who do not undertake to carry either by

themselves or by their servants or agents, but simply "to get somebody to do the work": see C.A. Pisani

& Co. v. Brown Jenkinson & Co. (1939) 64 Ll. L.R. 340, 343. In relationships like that, where,

commercially speaking, the parties are at "arms length", the courts have been traditionally reluctant to

discover a fiduciary duty: cf. J. Glover: Commercial Equity - Fiduciary Relationships §§ 3.43-3.37 (1995), who condemns some of the judicial language in this area as "vacuous". In Keith Henry & Co.

Pty. Ltd. v. Stuart Walker & Co. Pty. Ltd. (1958) 100 C.L.R. 342, which bears some resemblance

to the present case, the plaintiff importing agent procured orders from Irish exporters to sell hog casings

to the defendant in Australia. The importation was facilitated by the use of the plaintiff's import licences,

the plaintiff being remunerated by a commission the amount of which was incorporated in the export sale

price of the casings. In competition with the plaintiff, the defendant applied to and was awarded

renewal licences for importation of the casings that were issued by the relevant Federal Department.

The High Court (Dixon C.J.,McTiernan, Fullagar JJ.) held that the defendant was not a fiduciary for

the plaintiff and did not hold the licences issued to it on trust for the plaintiff. The position, said their

Honours (100 C.L.R. 342, 351) "is simply that business men ... were engaged in ordinary commercial

transactions with each other, dealing with each other, as the saying goes, at arms' length". See, also

Hospital Products Ltd. v. United States Surgical Corporation (1984) 156 C.L.R. 1, 70, 119.

On one view, the relationship of the pilots and secretaries here was considerably more intimate

than that of the businessmen considered in Keith Henry & Co. v. Stuart Walker & Co. They were,

at least to some extent, engaged in a co-operative venture and not as competitors in the market. But

their rights, duties and functions were governed and defined by statutory regulation. While it is not

impossible to conceive of general fiduciary obligations that are not inconsistent with express legislative

provisions supplementing duties imposed under a statutory framework, it is decidedly more difficult to

arrive at such a conclusion where the relationship itself is constituted and minutely regulated by statute.

In Hospital Products Ltd. v. United States Surgical Corporation (1984) 156 C.L.R. 1, 96-97,

Mason J. said that the critical feature of a fiduciary relationship is "that the fiduciary undertakes or agrees

to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense". In Hospital Products

it was the existence of a distribution contract that seems in the end to have proved fatal to finding that

there was a fiduciary relationship in that instance, where the contract expressly required the dealer to

"use best efforts" to promote the sale of the manufacturer's products. In the present instance, the

problem is to identify anything resembling the critical feature singled out by Mason J. On receiving a

request for a pilot the secretaries were required to "make every endeavour" to secure the services of

a pilot: reg.21; but neither the secretaries nor the pilots undertook or agreed to act on behalf of, or in

the interests of each other. Their duties, functions and powers were laid upon them by the Regulations,

and were prescribed in such detail as to leave little room for implication of further duties derived from

the general law: cf. Tito v. Waddell (No. 2) [1977] Ch.106, 230. The powers invested in and

exercisable by them were conferred for the essentially public purpose of securing safety in navigating

waters notorious for their marine perils. To superimpose upon the performance of their specified

functions under the statutory regime additional fiduciary obligations appropriate to relationships arising

under the general law would be to place at some risk the public purposes or functions they were

intended to discharge. It would, or at least might in some cases, tend to compromise the due

performance of their statutory duties by promoting tension between the purposes prescribed by the

Regulations and the broader and differing standard imposed by the general law: cf. Swain v. The Law

Society [1983] A.C. 498, 612-613. The secretaries would or on some occasions might be confronted

by the dilemma of choosing between their fiduciary obligation to the pilots, and their statutory function

of maintaining an efficient service in the interests of public safety. This was one of the reasons which led

the primary judge to dismiss the appellants' claim on this point. It is not easy to find fault with it.

A possible response to it is, of course, that the area of fiduciary obligation contended for here

fell outside the ambit of the secretaries' public or statutory duties and functions as prescribed by the

Regulations, with the consequence that, to that extent, ordinary principles of equity should be allowed

in to govern it. There is more than one possible answer to such an argument. The most prominent is that

procuring pilotage contracts was a function of the secretaries acting in discharge of their statutory duty

under regs.13 and 18(a) of managing, supervising and controlling the pilotage scheme. On that footing,

their decision to enter into the QAL contract for their own benefit, rather than that of the pilots or the

Service as a whole, was one that under reg.37 was susceptible to an appeal to the Board at the instance

of any pilot aggrieved by it. The scope of the review provided under that provision is wide, and extends

to "any order, decision or determination of the secretaries". On its face, it would have been available

in the case of the QAL contract because the power of managing the pilot service conferred by reg.13

is expressly made "subject to appeal to the Board".

No appeal under reg.37 was instituted by any of the pilots. Doubtless the reason was that, at

the time the secretaries made their decision to enter into the QAL contract, the Service as constituted

under the Regulations was moving towards its end; at the time the contract with QAL took effect, the

Regulations, in consequence of s.109 of the Constitution, had ceased to operate. But the peculiarity

of the case is that it was not until the Regulations came to an end, or at least were known to be coming

to an end, that it became feasible or even legally permissible for the secretaries to compete with the

pilots or vice versa. Until 1 July 1993, the pilots enjoyed a monopoly under the Regulations that the

secretaries were powerless to defeat. The Board fixed a limited number of pilots for the Service, and

under the Regulations the secretaries could not lawfully engage others, or refer shipowners seeking

pilotage services to pilots who were not part of the Service. It was only when that restriction or monopoly was doomed to extinction, that it became possible for the first time for the secretaries to enter

into competition with the pilots in the Service. That may be small consolation for the pilots, who

naturally tend to view the transaction with QAL as one by which the secretaries, in the closing stages

of the statutory regime, snatched from under their noses a valuable contract for pilotage services in the

future. It may be no answer to say that the pilots, if they had been swifter or more adept, might

themselves have succeeded in excluding the secretaries from the field; there is at least some suggestion

in the evidence that they tried but failed to do so. On one view they too may have been subject to a

reciprocal duty not to compete with the secretaries.

What this serves to emphasise is that, until the Service and the monopoly it established drew

to a close, there could be no question of a fiduciary duty on the part of either branch of the Service not

to compete with the other in offering pilotage services to owners and masters. By law, it was only the

pilots and the secretaries who were authorised to provide those services. In these circumstances it is

impossible to say that, by accepting appointment as secretaries and from the moment of their doing so,

the first and second respondents undertook or agreed, in the matter of soliciting pilotage contracts, to

act for and on behalf of, or in the interests of, the pilots in the Service and of no one else. When, upon

their appointment, the secretaries became subject to the duties imposed on them by the Regulations,

there was no one outside the Service for whom they could lawfully have procured pilotage contracts.

For that reason, they cannot be regarded as having, at the time of their appointment undertaken or

agreed to act on behalf of the pilots. The Regulations gave them no choice in the matter. Nothing that

happened after their appointment can be found which amounted to an undertaking or agreement on the

part of the secretaries to act for or on behalf of, or in the interests of, the pilots, or to refrain from

competing with them.

It may be added that it was not sought to rest the liability of secretaries on the basis that, in the

course of their duties in acting for the Service, they had acquired any confidential knowledge of QAL

or its particular requirements, or of those of other shipowners, which was later used in procuring

contracts for themselves. The case against them was, as Mr Chesterman Q.C. acknowledged, founded

squarely on the presence of a fiduciary duty on the part of an agent not to compete with his principal

in a matter giving rise to a conflict with his personal interest. So understood, this part of the appellants'

claim must, in my opinion, fail in this Court, as it did before the learned trial judge.

The remaining cause of action pursued by the appellants in the action concerns the use by the

secretaries, or the company they incorporated in order to provide the pilotage services now being

supplied, of the cable and telex numbers formerly used by the Service. The importance of the telex

numbers is that requests for pilot services are usually made from the ship some days before her arrival

at the pilotage station. While the statutory regime still prevailed, such requests were communicated to

the secretaries either by cable or, more commonly in recent times, in most instances by telex addressed

to the cable or telex number at the office of the secretaries. The cable addresses were 4B Torres,

which was Brisbane; 4M Torres (Mackay); and 2S Torres (Sydney), while the telex addresses were

AA120269 and AA140222. The telex service was said to be provided by Overseas

Telecommunications Corporation which designated the numbers to be used. The service was paid for

by the secretaries, or their company Gannet Pty. Ltd. (which is the fourth defendant and respondent),

as part of the expenses met from their 7½% share of pilotage dues.

The telex numbers were used exclusively in connection with the Service, and it is submitted that,

in consequence, a customer goodwill attached to the numbers as the venue at which pilotage services

could be arranged. It is not difficult to appreciate how the numbers themselves would, in the course of time, have come to be identified in the minds of users with the Torres Strait and Queensland Coast Pilot

Service. Since the date when that statutory service came to an end, the respondents have continued

to use those numbers in connection with the pilotage service now operated by QCPS. The appellants

contend that this involves a passing off by the respondents which is causing damage that should be

restrained by injunction.

In order to establish their right to the relief sought, it is for the appellants to establish a title to

the customer goodwill subsisting in them, and then to show that the respondents are misappropriating

it for themselves. It was essentially because of difficulties associated with these two issues that Dowsett

J. in the court below refused relief. His Honour said that "the problem is not that the defendants'

business may be thought to be the plaintiffs' business or a business conducted by the pilots' company,

but rather that all businesses may be thought to be associated with the former regime".

The concept of a goodwill arising from an activity established and conducted as a monopoly

sanctioned by statute is not without some difficulties of its own. For present purposes, however, it may

be accepted that, before deregulation in mid-1993, an element of goodwill attached to the Service and

the associated cable and telex numbers by means of which access to the Service was gained by

customers. The first problem confronting the appellants' claim for passing off is establishing that the

goodwill of the Service belonged exclusively to them. As to that, the proposition advanced is that each

of the pilots carried on an individual business of his own, doing so in association with the other pilots in

such a way that together they were exclusively entitled to the goodwill identified with The Queensland

Coast and Torres Strait Pilot Service. On that footing, it was submitted that all the pilots together (or

so many of them as are not now engaged in working for QCPS) are, on the principle applied in J. Bollinger v. Costa Brava Wine Co. Ltd. [1960] Ch. 262 (the Champagne case), entitled to relief

against passing off by QCPS.

There are, in my view, several reasons for rejecting this submission. The first is that it assumes

that "the Service", as it may be called, consisted only of the pilots, and not the secretaries as well. It is

true that pilotage services as such were supplied only by the pilots, but, without having the benefit of the

secretaries' activities, it could not have functioned either in the manner prescribed by the Regulations or

at all. Not only did the secretaries provide the essential administrative framework in which the Service

functioned, but in doing so they also constituted the direct link between the customers and the pilots who

supplied the navigational assistance requested or required. It is not possible to segregate one aspect

of the Service goodwill from the other. If there was a goodwill attaching to the Service, it belonged to

the secretaries in common with the pilots, with the consequence that, on the approach adopted in

Bollinger v. Costa Brava Wine Co., all and each of those persons was entitled to lay claim to it.

The second reason for rejecting the appellants' claim is that "the Service", with which the

goodwill is assumed to have been associated, has now ceased to exist. It came to an end on 1 July

1993 when the Regulations and the Service structure which they established were superseded by the

federal legislation. The Service, as previously constituted, no longer carries on any business of providing

pilotage services. The opening which that event produced has now been filled by two competing

enterprises, which are QCPS managed by the secretaries, and the Queensland Coast and Torres Strait

Pilots Association Pty. Ltd. controlled by a majority of the former Service pilots. Even if the statutory

Service excluded the secretaries, and consisted only of the pilots, it does not follow that the goodwill

associated with it or with the pilots devolved on their company Queensland Coast and Torres Strait

Pilots Association Pty. Ltd. That company did not in 1993 acquire the existing business of the statutory Service; and if the Service consisted only of the individual pilots, to whom the goodwill attached, it is

not shown that each or all of them assigned the goodwill to that company. Accepting that goodwill is

capable of being disposed of separately from the business, persons, or premises with which it is

connected, there is nothing here to establish that the appellant company has acquired the goodwill

formerly associated with the statutory Service.

This, in my respectful opinion, is what was meant by the learned trial judge when, in the passage

quoted earlier from his reasons, he said that "all businesses may be thought to be associated with the

former regime". Those businesses now lay claim to a connection with the former statutory Service or,

at any rate, are reluctant to disclaim such a connection. That Service, together with the business and

goodwill or customer connection it possessed, no longer exists. If it was the pilots as individuals who

were formerly and exclusively entitled to that business and goodwill, they as individuals no longer carry

on that business. The only existing pilotage business in which they are interested is now conducted by

the appellant company Queensland Coast and Torres Strait Pilots Association Pty. Ltd. It owns the

business which competes with the respondent company QCPS, and is therefore the only one in a

position to complain that its business is being damaged by any passing off by QCPS. Without

establishing that the business and goodwill associated with the former Service was transferred to the

appellant company, neither that company nor the pilots themselves are entitled to complain that the cable

and telex numbers have been or are being used by any of the respondents to the detriment of their

goodwill. In the absence of proof of that element, they cannot succeed in the action or appeal.

The claim with respect to the logo must follow the same fate. If the logo was formerly distinctive

of the business of the statutory Service, or of the pilots who claim to have comprised it, it is not proved

to have been transferred to, or to have become distinctive of, the pilotage business conducted since 1 July 1993 by the appellant company, so as to give rise to a claim for passing off based on alleged

confusion by former customers between the business of QCPS and the appellant company. For that

reason the claim founded on the Trade Practices Act 1974 must also fail.

In my opinion the appeal should be dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 115 of 1995

Brisbane

[Richardson & Ors. v. Radford & Ors.]

BETWEEN:

DAVID RICHARDSON

(First Plaintiff) First Appellant

AND

GEORGE ERNEST NEVILLE HOLMES & ORS (A.C.N. 101 883 173)

(Second Plaintiffs) Second Appellants

AND

TORRES INDUSTRIES PTY. LTD.

(Third Plaintiff)

AND

STEPHEN RADFORD

(First Defendant) First Respondent

AND

PERRY SUTTON

(Second Defendant) Second Respondent

AND

QUEENSLAND COASTAL PILOT SERVICE PTY. LTD. (A.C.N. 053 843 646)

(Third Defendant) Third Respondent

AND

GANNETT PTY. LTD.

(Fourth Defendant) Fourth Respondent

Pincus J.A. Davies J.A. McPherson J.A.

Judgment delivered 24 December 1996

Separate reasons for judgment of each member of the Court; all concurring as to the order made.

APPEAL DISMISSED WITH COSTS.

CATCHWORDS:	FIDUCIARY DUTIES - Statutory scheme - Pilotage - Whether fiduciary relationship exists - Agency -Regulated monopoly - Passing Off - Misleading and deceptive conduct.
Counsel:	Mr R.N. Chesterman Q.C. for the appellant Mr S. Doyle for the respondent
Solicitors:	R.G. Watters & Co. for the appellants Kenny & Co. for the respondents
Hearing Date:	4 March 1996
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No.115 of 1995

Brisbane

Before Pincus J.A. Davies J.A. McPherson J.A.

[Richardson & Ors. v. Radford & Ors.]

BETWEEN:  DAVID RICHARDSON

(First Plaintiff) First Appellant

AND:  GEORGE ERNEST NEVILLE HOLMES & ORS.

(Second Plaintiffs) Second Appellants

AND:  TORRES INDUSTRIES PTY. LTD. (ACN 101 883 173)

(Third Plaintiff)

AND:  STEPHEN RADFORD

(First Defendant) First Respondent

AND:  PERRY SUTTON

(Second Defendant) Second Respondent

AND:	QUEENSLAND COASTAL PILOT SERVICE PTY. LTD.
(ACN 053 843 646)  (Third Defendant) Third Respondent
AND:	GANNETT PTY. LTD.

(Fourth Defendant) Fourth Respondent

REASONS FOR JUDGMENT - DAVIES J.A.

Judgment delivered 24 December 1996

This appeal concerns a dispute, involving several issues, between parties who may, for present

purposes, be conveniently, though not completely accurately, described as former pilots (the appellants)

and former secretaries (the respondents) under a regulatory scheme which operated in Queensland until

1 July 1993 under the Queensland Marine Act 1958 and regulations thereunder. When the scheme

ceased to operate on that date the former pilots and former secretaries competed for business for the

pilotage service formerly provided pursuant to the scheme.

The scheme, to the provisions of which reference will be made below, was one which provided

for and regulated a pilot service, described as the Queensland Coast and Torres Strait Pilot Service,

in Queensland coastal waters, Torres Strait and the area between Booby Island and Bramble Cay.

Reference was made during the course of argument to the history of a pilot service in those general

areas prior to the coming into force of the scheme. Whilst that history was of some interest it is not, in

my view, of any assistance in construing the scheme or in any other way in resolving the questions before

this Court.

The main issue between the parties involves an allegation by the appellants that the respondents

were in breach of a fiduciary duty owed to the appellants. Even prior to 1 July 1993 both the appellants

and the respondents, in anticipation of the scheme coming to an end, were soliciting orders for pilot

services after that date. The appellants' submission was that the respondents were in a fiduciary

relationship to them and consequently were prohibited from doing this for themselves without first obtaining the informed consent of the appellants. One such breach relied on was the making of a

contract by the respondents with Queensland Alumina Limited before 1 July.

The second issue involved a claim by the appellants that the respondents, shortly before and

after 1 July 1993, passed off their business as that of the appellants. The third issue involved a claim

by the appellants that the respondents were engaged in misleading and deceptive conduct and followed

similar lines to and relied on a similar foundation as the passing off claim. There were also claims made

by the appellants against the respondents in respect of communication addresses, a logo and goodwill

alleged to be associated with the appellants' business.

1.                    The claim for breach of fiduciary duty

The relationship which, it was submitted, gave rise to that duty was one of agency;

that the secretaries were agents of the pilots. There can be no doubt that, during the

relevant period, the relationship between the pilots and the secretaries depended, at least

substantially, on the terms of the scheme to which I now turn.

Section 179 of the Act provided for the licensing of pilots and s.180 empowered the

making of regulations prescribing the duties and liabilities of Queensland coastal pilots and

providing for the proper conduct of the pilot service in which they were to be engaged

including, in the following numbered paragraphs:

(ii)	providing for the appointment of secretaries to the Queensland Coast and
Torres Strait Pilot Service and prescribing their duties and remuneration;
(iv)	providing for the proper conduct of Queensland coastal pilots and of any pilot
services, including the prescribing of duties, and the provision for the holding
of inquiries as to such conduct;
(vii)	providing for the remuneration of Queensland coastal pilots.

The Queensland Coast and Torres Strait Pilot Service is not defined either in the Act or

regulations but it appears from s.180, read as a whole, to be the pilot service referred to

earlier in that section in which the pilots, and as it appears later in the section, also the

secretaries, were to be engaged pursuant to the scheme which it was envisaged the

regulations would provide. Regulations 10, 13, 18(a), 24 and 36 are consistent with that

meaning. This conclusion is of critical importance to the fate of this appeal, for an

assumption upon which much of the appellants' case was based was that the service was,

in effect, a business of the pilots, or of a voluntary association of which they were members,

not a service provided by pilots and secretaries pursuant to the regulatory scheme. The

conclusion is not affected by the fact that there had been a pilot service, operating under

a different regime, before the commencement of this scheme.

The scheme provided for in the regulations was as follows. The management,

supervision and control of the pilot service and of the working and movement of the pilots

was, subject to appeal to the Marine Board, vested in the secretaries (reg.13) and any pilot

aggrieved by any order, decision or determination of the secretaries could appeal to the

Board whose decision would be final and conclusive on all parties (reg.37); and there were

detailed provisions setting out the duties of the secretaries, the remuneration of the

secretaries, the duties of pilots and their remuneration.

The scheme, in short, was one providing for an orderly, skilled, efficient and

exclusive pilot service in the areas to which I have referred; it was to be managed and

controlled by secretaries to whom requests for a pilot service had to be directed and who

were obliged to allot work in turn to the pilots, to collect payment for services and, as nearly

as possible, to equalize the annual earnings of the pilots; and the pilotage work was to be

performed by skilled pilots who were obliged to accept the directions of the secretaries to

pilot vessels. The service was one plainly considered by the legislature to be necessary for public purposes, in particular public safety but perhaps also protection of the

environment, in which pilots and secretaries were to play parts specifically designated by

regulation.

It may be accepted that the existence of a statutory scheme is not necessarily

inconsistent with the existence of an independent fiduciary duty owed by some to others

involved in the scheme. However the more detailed and specific are the statutory functions

the more diminished is the scope for the imposition of any such duty[1]. Here the functions of

[1]            The observation by Gibbs C.J. in Hospital Products Ltd. v. United States Surgical

both pilots and secretaries were stated in considerable detail and with considerable specificity. The regulatory scheme is inconsistent with the appellants' principal argument that the secretaries

were the pilots' agents; in particular regs.13 and 37, and reg.36 which prevented the pilots instituting

any internal rules for the smooth running of the service without the approval of the secretaries. More

important, in my view, is the fact that, in order to establish an independent fiduciary duty owed by the

secretaries to the pilots, whether pursuant to an agency or some other relationship, the appellants had

to show that such a duty was undertaken by or imposed on the secretaries in or for the pilots' interests.[2]

[2]          Hospital Products Ltd. supra. at 68, 69, 72 per Gibbs C.J.; 96-7 per Mason J.

No doubt the scheme and its proper administration benefitted the pilots as it also benefitted the

secretaries. It was an exclusive scheme pursuant to which they derived remuneration. But that was

plainly not its purpose and the obligations which the regulations imposed on the secretaries were not

imposed or undertaken in the pilots' interests; nor were those duties imposed on the pilots imposed or

undertaken in the secretaries' interests. They were imposed in each case, for the efficient and competent

administration of the service which the legislature considered necessary to provide in the public interest;

and they were undertaken because the secretaries and pilots chose to and were appointed to

participate in the provision of that service.

It is true that, immediately prior to 1 July 1993 the pilots were vulnerable to the kind of action

which the secretaries then took, a vulnerability which was reciprocal. But vulnerability, though often an
indicium of a fiduciary relationship, does not prove it.[3]

[3]          News Limited v. Australian Rugby Football League Ltd. (1996) 139 A.L.R. 193 at 314.

The learned trial Judge held that, in receiving pilotage dues, as it was envisaged they would by

reg.28, the secretaries became fiduciaries for the pilots in respect of those monies. Whether that is

correct or whether that and other regulations such as reg.20 exhaustively define the relationship between

the secretaries and the pilots in that respect, it seems to me, is of no relevance to the question with which

this Court is concerned, namely whether, in obtaining work for the pilots, the secretaries were acting

in a fiduciary capacity. As the trial Judge pointed out, and as has been pointed out on many occasions,

it is well established that a person can be a fiduciary in some activities but not in others. No relevant

duty was identified which the secretaries either undertook or had imposed on them during the period

in which the statutory scheme was in operation, other than those imposed by the regulations; and the

duties imposed by the regulations were imposed, as I have said, in the public interest.

I would therefore reject the argument that the secretaries owed any relevant fiduciary duty to

the pilots, for the reasons given which, in substance, were those given to the learned trial Judge.

2.                    Passing off

This action was based on one of two false premises. Either it assumed that the

service being conducted by the pilots and the secretaries pursuant to the regulatory

scheme was the pilots' business; or it assumed that the business being conducted by the

secretaries after 1 July 1993 was being passed off as the business being conducted by

the pilots after 1 July 1993. That the first of these is false appears from my discussion of the claim based on alleged breach of fiduciary duty. The second is factually false. Each

of the pilots and the secretaries after 1 July 1993 no doubt asserted a link between the

business which they were carrying on and the service being provided pursuant to the

regulatory scheme. But neither was asserting that their business after 1 July 1993 was the

business being conducted by the other after that date.

3.                    Misleading and deceptive conduct

The appellants' argument here was similar to their argument about passing off. The

conduct was said to be misleading because it might lead people dealing with the

secretaries to believe that their service was that of the pilots. But all that they asserted, as

did the pilots, was an association with the earlier regulatory service.

4.                    The claim in respect of goodwill, logo and communication addresses

This was also based on the false assumption that, prior to 1 July 1993, these

belonged to the pilots because the service was their business. Once that assumption is

rejected this claim fails.

The appeal should be dismissed with costs.

Corporation (1984) 156 C.L.R. 41 at 71 with respect to contractual provisions would apply at least equally to statutory provisions.