Webber v New South Wales

[2003] NSWSC 1263

CITATION:	Kenneth Gordon Webber v State of New South Wales & Ors [2003] NSWSC 1263 revised - 03/12/2004
HEARING DATE(S):	27 November 2003
JUDGMENT DATE:	6 February 2004
JUDGMENT OF:	Dunford J
DECISION:	So much of Statement of Claim as relates to breaches of fiduciary duty struck out.
CATCHWORDS:	Equity - fiduciaries - nature of duties - guardian and ward - failure to provide adequate protection, supervision, education and medical care for ward - breaches of common law duty of care - whether constitutes breach of fiduciary duties
LEGISLATION CITED:	Child Welfare Act 1939 ss 4, 9, 10, 49, 50 Limitation Act 1969 ss 14(1)(b), 51(1), 58, 60G SCR Pt 15 r 26 Supreme Court Act 1970 s 68
CASES CITED:	Breen v Williams (1996) 186 CLR 71 Breen v Williams (1994) 35 NSWLR 522 Clay v Clay [2001] HCA 9, 202 CLR 410 Cubillo & Anor v The Commonwealth [2001] FCA 1213, 112 FCR 455 Cubillo & Anor v The Commonwealth [2000] FCA 1084, 103 FCR 1 Cubillo & Anor v The Commonwealth [1999] FCA 518, 89 FCR 528 Donoghue v Stevenson [1932] AC 562 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Johnson v Department of Community Services [1999] NSWSC 1156, (2000) A Torts R 81-540 McInerney v MacDonald [1992] 2 SCR 138, 93 DLR (4th) 415 Norberg v Wynrib [1992] 2 SCR 226 Paramasivam v Flynn (1998) 90 FCR 489, 160 ALR 203 Pilmer v Duke Group Ltd (in Liq) [2001] HCA 31, 207 CLR 165 SD v The Director General of Community Welfare Services (Victoria) and Ors [2001] NSWSC 441, 27 Fam LR 695 Williams v The Minister [2000] NSWCA 255 Williams v The Minister [1999] NSWSC 483, 25 Fam LR 86 Woodhead v Elbourne [2000] QSC 42 Wyong Shire Council v Shirt (1980) 146 CLR 40
PARTIES :	Kenneth Gordon Webber v State of New South Wales & Ors
FILE NUMBER(S):	SC 20236/99
COUNSEL:	M J Cranitch SC/G M Preston - Plaintiff P Menzies QC/T H Barrett - Defendant
SOLICITORS:	Fallon Safetly Lawyers - Plaintiff I V Knight - Crown Solicitor - Defendant

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IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

DUNFORD J

FRIDAY 6 FEBRUARY 2004

20236/99 KENNETH GORDON WEBBER v STATE OF NEW SOUTH WALES & ANOR

The plaintiff sued the State of New South Wales for common law and equitable damages for acts and omissions allegedly suffered by him whilst he was a ward of the State pursuant to s 9 of the Child Welfare Act 1939 , since repealed. The Statement of Claim was framed in trespass to the person, breach of the duty of care, breach of statutory duty and breach of fiduciary duty. The particulars relating to each cause of action were substantially similar and co-extensive.

HELD , striking out so much of the Statement of Claim as related to the claim for breach of fiduciary duty, that such duties:
a) are confined to cases where the fiduciary acts for or exercises a discretion on behalf of another,

b) concern economic or proprietorial rights only,

c) are proscriptive and not prescriptive, and

d) cannot be used as a substitute or alternative description for breaches of duty owed in contact or for arising out of the same facts or circumstances

Breen v Williams (1996) 186 CLR 71, Pilmer v Duke Group Ltd (in Liq) [2001] HCA 31, 207 CLR 165, Paramasivam v Flynn (1998) 90 FCR 489, 160 ALR 203, Cubillo & Anor v The Commonwealth [2001] FCA 1213, 112 FCR 455, followed.
Woodhead v Elbourne [2000] QSC 42, Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, Clay v Clay [2001] HCA 9, 202 CLR 410, Williams v The Minister [1999] NSWSC 483, 25 Fam LR 86, referred to.
Johnson v Department of Community Services [1999] NSWSC 1156, (2000) A Torts R 81-540, SD v The Director General of Community Welfare Services (Victoria) & Ors [2001] NSWSC 441, 27 Fam LR 695, not followed.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

DUNFORD J

FRIDAY 6 FEBRUARY 2004

20236/99 KENNETH GORDON WEBBER v STATE OF NEW SOUTH WALES & ANOR

JUDGMENT

1 HIS HONOUR: In these proceedings the plaintiff claims common law damages (including aggravated and exemplary damages) and also equitable damages against the first defendant for acts and omissions allegedly suffered whilst he was a ward of the State pursuant to s 9 of the Child Welfare Act 1939, since repealed, (the C W Act), between 1963 and 1967. The second defendant is a solicitor consulted in 1996 in respect of the plaintiff’s alleged treatment at the hands of the first defendant and its servants, and is not relevant to the present application.

2 The proceedings were commenced in 1999 and have been the subject of a number of interlocutory applications and amendments. The present application is to strike out so much of the current (Fourth Amended) Statement of Claim as relates to allegations of breach of fiduciary duty on the part of the first defendant (or the responsible Minister) on the ground that the facts alleged in such Statement of Claim do not give rise to any cause of action or any equitable claim for breach of fiduciary duty for which damages or equitable compensation are recoverable.

BACKGROUND

3 In order to understand how the claim is alleged to arise, it is necessary to summarise in some detail the Fourth Amended Statement of Claim.

4 The plaintiff, who was born on 3 September 1953, claims that at all material times he was a ward of the State pursuant to s 9 of the C W Act, he was in the custody and control of the first defendant, its servants and/or agents, was committed to institutions established under the C W Act and that whilst in such care and custody he was sexually and physically assaulted and ill treated by the first defendant’s servants and/or agents.

5 Paragraphs 8 and 9 allege that the first defendant owed the plaintiff a non delegable duty of care to “prevent its agents and servants from causing the Plaintiff emotional, psychological and physical harm” and in the Particulars this is expressed as a duty of care “to ensure”:

a. That the plaintiff was not in danger or otherwise placed at risk, be it physical or emotional, whilst in its care.

b. That the plaintiff, whilst in any of the institutions specified would not suffer any physical or sexual assault.

c. That the plaintiff received proper and competent medical assistance.

d. That the plaintiff be provided with professional assistance to cope with psychological distress and injury.

6 I pause in passing to observe that the duty appears to be expressed as an absolute duty to “prevent” and “ensure”, rather than as a duty to “take reasonable care” - but no point is taken in this regard on this application and I make no further comment about it.

7 Paragraph 10 alleges breach of the duty of care alleged and provides 13 Particulars of such breaches, each commencing with the word “failing” are as follows:

PARTICULARS
a. Failing to have in place a system of supervision where by its servants and/or agents would have been prevented from inflicting physical and/or sexual assaults on the Plaintiff;
b. Failing to ensure that the Plaintiff was not exposed to paedophilic and violent misconduct by its servants and/or agents;
c. Failing to provide counselling and/or pastoral care to the Plaintiff such that the assaults inflicted upon the Plaintiff would have been prevented or caused to have been discontinued;
d. Failing to exercise adequate control over its servants and/or agents so as to prevent the assaults committed on the Plaintiff;
e. Failing to have in place a system whereby its servants and/or agents were educated and warned against behavioural misconduct affecting children in its care and in particular the Plaintiff;
f. Failing to implement adequate controls so as to detect the existence of paedophilic and violent misconduct by its agents and/or servants and/or other person it permits to supervise, educate, counsel or in anyway exercise any actual care and control over the Plaintiff;
g. Failing to warn children in its care, and in particular the Plaintiff, that if they were assaulted, they should complain about it;
h. Failing to provide a proper avenue by which in the event of children in its care, and in particular the Plaintiff, being assaulted, the child could express a complaint and the misconduct be stopped;
i. Failing to act on complaints of children in its care of assaults, verbal abuse, intimidation, or other misconduct of its servants and/or agents so to ensure such persons were not in a position thereafter to commit further such acts against the Plaintiff;
j. Failing to provide adequate counselling by which, in the event of children in its care, and in particular the Plaintiff, being mistreated, the child could receive rehabilitation and treatment;
k. Failing to ensure its servants and/or agents followed its guidelines in documenting complaints of children in its care, and in particular the Plaintiff, and reporting such complaints to their supervisors so that appropriate investigations could be conducted and appropriate action taken to protect and assist the Plaintiff;
l. Failing to implement proper guidelines and procedures in preventing and responding to complaints of sexual abuse by children in its care, thereby causing its servants and/or agents who engaged in misconduct against the Plaintiff to continue with the confidence that their behaviour would go undetected;
m. Failing to properly address the physical, psychological, and psychiatric difficulties experience by the Plaintiff as a result of paedophilia and other violence inflicted on the Plaintiff by its servants and/or agents and others entrusted to care for the Plaintiff.

8 By paragraph 11 the plaintiff alleges that the first defendant is vicariously liable for assaults on, and ill treatment of, the plaintiff by its servants and agents and is expressed in terms wide enough to cover deliberate trespasses to the person such as sexual and other deliberate physical assaults as well as breaches of the duty to take care referred to in paragraph 10.

9 Paragraph 12 alleges that, by reason of the C W Act, particularly s 9, the first defendant owed a statutory duty to the plaintiff to act as his guardian and provide for his custody, maintenance and education in accordance with the Act, whilst paragraph 14 alleges breaches of such statutory duty. Particulars of the breaches of statutory duty repeat the particulars of breach of the duty of care set out in paragraph 10 and add the following:

i. Failing to properly assess the Plaintiff’s intellectual capabilities.
ii. Failing to adequately monitor and supervise the Plaintiff.
iii. Failing to provide the Plaintiff a basic education.
iv. Failing to provide the Plaintiff with basic skills in obtaining employment.
v. Placing the Plaintiff in institutions which were unsuitable as he was too young.
vi. Failing to ensure that its servants and/or agents were persons who were fit to be entrusted with the care, custody of or access to the Plaintiff in relation to his education and general welfare.
vii. Failing to provide proper or obtain competent medical attention for the Plaintiff on a regular basis.
viii. Failing to provide proper or obtain competent medical attention for the Plaintiff in relation to his problems in controlling his bowels.
ix. Failing to take any or any adequate measures to ensure the Plaintiff’s good health, safety and general well being.
x. Failing to properly document the Plaintiff’s medical complaints and treatment.

10 Once again, I note that all commenced with the word “failing” except “v” and in that regard I see from paragraphs 19 to 26 that all the placements, except the last, were by the Children’s Court and not by the Minister.

11 Paragraphs 15, 16 and 17 deal with the alleged breaches fiduciary duties and are as follows:

15. Further and/or in the alternative, the first defendant owed to the plaintiff fiduciary duties by reason of the relationship between them of guardian and ward.

16. The duty of care referred to in paragraph 15 above was not delegable.

PARTICULARS
a. The Plaintiff repeats the particulars in paragraphs 9 and 12 above.
b. In addition the First Defendant was in a position of trust and stood in loco parentis vis-à-vis the Plaintiff and had a duty to ensure the Plaintiff was in an environment whish was suitable for his emotional, spiritual and intellectual development.

17. The First Defendant breached the fiduciary obligations it owed to the Plaintiff:

PARTICULARS

a. The plaintiff repeats the particulars in paras 10 and 14 above
b. In addition the First Defendant:
i. failed to safeguard and promote the welfare of the Plaintiff;
ii. failed to place the Plaintiff’s interests above its own;
iii. failed to provide the Plaintiff with a safe environment;
iv. failed to assess and meet the educational and development needs of the Plaintiff;
v. placed the Plaintiff in institutions which were detrimental to his emotional, psychological and emotional well being.

12 Paragraph 18 alleges that as a result of the negligence of the First Defendant, its breaches of its statutory and fiduciary duties and its vicarious liability for the assaults committed on the Plaintiff by its servants and agents etc, the Plaintiff sustained injuries and suffered and will continue to suffer loss and damage as particularised later in the Statement of Claim.

13 The Statement of Claim then sets out particulars of the various periods of incarceration of the Plaintiff (paragraphs 19 to 26), particulars of the alleged sexual assaults (paragraphs 27 to 33) and of the alleged violence and abuse of a non-sexual nature (paragraphs 34 to 49). Paragraphs 50 to 63 relate to the case against the second defendant and Part VII (so described) following paragraph 63 and including paragraphs 64 and 65 set out Particulars of the damages claimed against the First Defendant and then follow similar Particulars in relation to the Second Defendant.

14 In paragraph 69 the plaintiff claims an extension of the limitation period pursuant to ss 58 and 60G of the Limitation Act 1969, whilst paragraph 70 sets out the claim for relief namely:

a. Damages, including aggravated and exemplary damages
b. Equitable damages
c. Interest pursuant to s 94 of the Supreme Court Act 1970
d. Costs on an indemnity basis

15 The first defendant has not yet pleaded to the Fourth Amended Statement of Claim but in its pleading to earlier versions thereof, apart from various denials and non admissions, has pleaded that the claims for damages in negligence and breach of statutory duty are barred by ss 14(1)(b) and 51(1) of the Limitation Act 1969, that the claims for equitable relief are barred by analogy with the Limitation Act 1969 and also by the plaintiff’s laches and delay in bringing the proceedings.

16 On 19 March 2002, Master Malpass ordered that the application to extend the limitation period be stood over to the final hearing of the proceedings and this decision was affirmed by Campbell J on 19 June 2002.

17 On 2 October 2002 the first defendant filed a Notice of Motion seeking orders in relation to the claims for breach of statutory duty and breach of fiduciary duty and alternatively, that the then current Statement of Claim be struck out pursuant to SCR Pt 15 r 26. It was this Motion that ultimately came before me on 27 November last, but in the meantime the Fourth Amended Statement of Claim had been filed pursuant to leave granted by Bergin J on 13 August 2003.

18 At the outset I raised with counsel the question whether the application had any practical utility as the evidence in support of the claims for breach of statutory duty and breach of fiduciary duty would be the same as that in support of the claim for breach of the common law duty of care and the legal issues could be better dealt with after the evidence had been taken. After an adjournment to consider their position, counsel returned and asked me to determine only the question of whether the facts alleged could give rise for any remedy for breach of fiduciary duty.

19 I rather doubt that even the determination of this limited issue is of any value at this stage, but responsible Senior Counsel assure me that it has practical utility, and accordingly I proceed to determine it. I can only surmise that the parties take the view that if the Plaintiff fails to have the limitation period extended, and the claims for common law negligence and breach of statutory duty consequently fail, the Plaintiff may still hope to succeed on the claim for equitable damages for breach of fiduciary duty, as in equity the Limitation Act is only generally, and not necessarily, applied by analogy, subject of course to the further defence that has been raised of laches.

20 I have referred so far to “equitable damages” as that is the term used in the Fourth Amended Statement of Claim and its predecessors, but strictly speaking the remedy, if any, for breach of fiduciary duty is “equitable compensation”, the term “equitable damages” being properly limited to damages which come within the Supreme Court Act 1970 s 68: see Meagher, Gummow and Lehane: Equity, Doctrines and Remedies 3rd ed at [2304], Covell and Lupton: Principles of Remedies (1995) at 214. I shall hereafter refer to the remedy claimed as “equitable compensation” rather than as “equitable damages”.

LEGISLATION

21 Section 9 (1) of the C W Act provided that notwithstanding any other law relating to the guardian or custody of children, the Minister was to be and became the guardian of every child or young person who became a ward to the exclusion of the parent or other guardian, and should continue to be such guardian until the child or young person ceased to be a ward.

22 “Ward” was defined in s 4(1) to include any child or young person who had been admitted to state control or committed to an institution. Under s 10, the Minister was to have the care of all wards except during such periods as they were inmates of an institution or boarded out and placed as adopted boarders with foster parents etc. “Care” was defined in s 4 as including custody and control.

23 The Governor was empowered by s 49 to establish and constitute institutions for the reception, detention, maintenance, discipline, education and training of children and young persons committed to such institutions and every such institution were to be controlled by the Minister (s 50).

PRINCIPLES

24 Fiduciary duties arise from either of two sources that frequently overlap, namely agency or a relationship of ascendency or influence by one party over another and dependence or trust on the part of that other; but whatever be the source of the duty, it is necessary to identify the subject matter over which the fiduciary obligations extend, and it is erroneous to regard the duty owed by a fiduciary to his beneficiary as attaching to every aspect of the fiduciary’s conduct however irrelevant the conduct may be to the agency or relationship that is the source of the duty: Breen v Williams (1996) 186 CLR 71 at 82 per Brennan CJ.

25 In the same case at 92 Dawson and Toohey JJ observed that the law has not as yet been able to formulate any precise or comprehensive definition of the circumstances in which a person is constituted a fiduciary in his or her relations, with another, although there are accepted fiduciary relationships such as trustee and beneficiary, agent and principal, solicitor and client, etc which may be characterised as relations of trust and confidence. Their Honours quoted what Mason J (as he then was) said in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96 – 7:

“The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf or in the interest of another person in the exercise of a power or discretion which will affect the interest of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions “for”, “on behalf of”, and “in the interests of” signify that the fiduciary act in a representative character in the exercise of his responsibility”.

26 Gaudron and McHugh JJ in the same case at 107 identified various circumstances which point towards, but do not determine, the existence of a fiduciary relationship, including a relationship of confidence, inequality of bargaining power, an undertaking by one party of perform a task or fulfil a duty in the interests of another, the scope for one party to unilaterally exercise a discretion or power which may affect the rights or interests of another and a dependency or vulnerability on the part of one party that causes that party to rely upon the other.

27 Consequently, any gifts or transactions involving a person in a fiduciary position to another e.g. trustee and beneficiary, agent and principal, doctor and patient, solicitor and client, etc will be the subject of scrutiny to ensure that the fiduciary has not obtained a benefit as a result of the fiduciary relationship; and this is consistent with the manner in which fiduciary duties and their breach are dealt with in the standard equity textbooks such as Meagher, Gummow and Lehane: Equity Doctrines and Remedies, 3rd ed chapter 5 [501] – [555], Parkinson: Principles of Equity (2003) at 339-392. Jordan: Chapters in Equity at 112-129.

28 As Mason J pointed out in the passage quoted above from the Hospital Products case, the critical feature is, that the fiduciary act for, or on behalf of, or in the interests of, another person in the exercise of a power or discretion affecting the interests of that other person in a legal or practical sense.

29 Although the relationship of guardian and ward is a fiduciary relationship: Clay v Clay [2001] HCA 9, 202 CLR 410, that does not define the extent of the fiduciary’s duties. The authorities indicate that such duties are duties not to be in a position of conflict, and not to obtain any unauthorised benefit from the relationship, or from the dependence of one upon the other. A parent or guardian does not act on behalf of, or exercise a power or discretion affecting the interests of, a child or ward in a legal or practical sense, except when he or she deals with assets or property on behalf of such person, and in particular, he or she does not exercise a power or discretion affecting the interests of that other person when failing to provide proper care, nurture or supervision of the child or ward.

30 Moreover, the duties imposed on a fiduciary are proscriptive (ie negative – not to do certain things) and are not prescriptive (requiring positive action). As Gaudron and McHugh JJ said in Breen v Williams at 113:

“In this country, fiduciary obligations arise because the person has come under an obligation to act in another’s interest. As a result, equity imposes on the fiduciary proscriptive obligations - not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. If these obligations are breached, the fiduciary must account for any profits and make good any loses arising from the breach. But the law of this country does not otherwise impose positive legal duties on the fiduciary to act in the interess of the person to whom the duty is owed”.

31 The judgment of Dawson and Toohey JJ at 93 is to the same effect, although expressed in different terms.

32 In that case the Court rejected the Canadian decision in McInerney v MacDonald [1992] 2 SCR 138, 93 DLR (4th) 415 where it had been held that the relationship of doctor and patient was a fiduciary one which imposed on the doctor the positive duty of granting the patient access to the doctor’s notes relating to the patient. This principle that fiduciary duties are proscriptive and not prescriptive was affirmed in Pilmer v Duke Group Ltd (in Liq) [2001] HCA 31, 207 CLR 165 at [74], [127], Kirby J conceding that his views to the contrary expressed when sitting on the Court of Appeal in Breen v Williams (1994) 35 NSWLR 522 had been effectively overruled by the High Court in that case.

33 In Pilmer’s case the High Court also draw attention to the need to distinguish between contractual and tortious duties on the one hand, and liability as a fiduciary on the other hand; and held that liability under the former did not constitute liability as a fiduciary, the majority at [71] quoting what had been said by McLachlin J, (as she then was) and Sopinka J of the Supreme Court of Canada in Norberg v Wynrib [1992] 2 SCR 226 at 272 and 312 respectively.

34 In the present case there is no allegation of conflict of interest between the Minister and the plaintiff nor the making of any profit by the Minister as a result of the alleged fiduciary relationship. What is alleged is simply a failure to take reasonable care by the Minister for the Plaintiff. That duty of care arose, not because the Minister was a fiduciary, but because, on account of their relationship of guardian and ward, the Plaintiff was a “neighbour” and in a position of proximity to the defendant, being a person whom it was reasonably in contemplation was liable to suffer harm if reasonable care was not taken for him. This gave rise to the common law duty to take care, breach of which constitutes the tort of negligence: Donoghue v Stevenson [1932] AC 562 at 580, Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47. It is not a breach of fiduciary duty and should not be erroneously labelled at such.

35 It is significant that the alleged breaches of fiduciary duty are for the most part repetitions of the alleged breaches of the duty of care. In addition they are all framed in terms of a failure on the part of the first defendant to do something. In other words, what is alleged are all prescriptive and not proscriptive, breaches. There is one exception, namely that alleged in paragraphs 14 b v and 17 b v, which may appropriately be equally expressed as a failure to place the plaintiff in appropriate institutions.

RECENT ANALOGOUS CASES

36 There have been a number of recent cases involving claims by plaintiffs alleging physical and/or sexual assaults, lack of care, ill treatment, lack of education, etc when they were in state or similar institutions as children. Generally they have alleged trespass to the person, breach of the duty of care and breach of fiduciary duty, and they have generally commenced proceedings well outside the time prescribed by the relevant Limitation Acts.

37 In Williams v The Minister [1999] NSWSC 483, 25 Fam LR 86 at [695] to [746] Abadee J conducted an extensive review of the authorities in relation to the existence or nature of fiduciary duties in situations similar to the present, and without ultimately deciding whether a fiduciary relationship existed, concluded that in that case there had been no breach of any such duty. I respectfully agree with the substance of his Honour’s analysis of the relevant authorities and particularly with his comments at [745], after noting that there was in that case no allegation in terms of good faith, omission, no loyalty question or issue of conflict between duty and interest and no economic interests at state, that in such circumstances, he did not see why a fiduciary duty should be found to convert an unsustainable claim at common law, based on the same facts, into a sustainable one in equity.

38 The plaintiff appealed but her appeal was unsuccessful: Williams v The Minister [2000] NSWCA 255. On appeal the claim for breach of fiduciary duty was not pressed or discussed.

39 Paramasivam v Flynn (1998) 90 FCR 489, 160 ALR 203 concerned allegation of assaults by a person appointed as the appellant’s guardian. The plaintiff sued both in tort and for breach of fiduciary duty, but the claim in tort was statute-barred. On an appeal by the plaintiff against an order for summary judgment the Full Court of the Federal Court dismissed his appeal, holding that in Anglo-Australian law the interests protected by fiduciary duties are economic interests. At 505 the Court said:

“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 an 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 the duty to protect the appellant’s interest. But it should not be concluded, simply because the allegation 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…
Here, the conduct complained of is 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, is 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 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”.

40 In Cubillo & anor v The Commonwealth the plaintiffs relied on four causes of actions namely:

i) wrongful imprisonment and deprivation of liberty
ii) breach of statutory duty
iii) breach of the duty of care
iv) breach of fiduciary duty

41 An application to strike out the Statements of Claim or parts thereof, including the claims for breach of fiduciary duty was refused by O’Loughlin J: [1999] FCA 518, 89 FCR 528.

42 The proceedings went to trial and were dismissed: [2000] FCA 1084, 103 FCR 1, the trial judge holding that none of the plaintiffs’ causes of action had been established, and furthermore he refused to grant an extension of time under the relevant Limitation Acts in respect of the common law causes of action (wrongful imprisonment and breach of duty). In relation to the claims for breach of fiduciary duty, he held that the relationships of guardian and ward created a fiduciary relationship, but that the claims failed because they lacked an “economic aspect”.

43 The plaintiffs appealed but their appeals were dismissed: [2001] FCA 1213, 112 FCR 455, the Court holding that the trial judge had not erred in rejecting the claim for false imprisonment on the facts, and also correct in refusing the extension for time for instituting the proceedings so that, independently of his rejection of the plaintiffs’ substantive claims, he was entitled to hold that the common law causes of action had to fail.

44 In relation to the claim for breach of fiduciary duty the Full Court held that, even if the Commonwealth did owe fiduciary duties to the plaintiffs, that those duties did not encompass the matters alleged by the plaintiff which because fiduciary duties are proscriptive and not prescriptive, and the matters alleged to constitute the alleged fiduciary duties and breaches thereof were largely co-extensive with the alleged breaches of the Commonwealth’s duty of care, and it was not permissible to superimpose fiduciary duties on common law duties simply to improve the nature and extent of the remedies available to an aggrieved party.

45 In Woodhead v Elbourne [2000] QSC 42 the plaintiff alleged that the defendant who was a friend of her adoptive parents assaulted her in a number of occasions when she was a child and she sought damages for what she alleged was the psychiatric and subsequently economic consequences of those result. White J granted an extension of time in respect of the causes of action framed in tort but, after a review of the authorities, concluded that the claim made by the plaintiff against the defendant insofar as it was based on breach of fiduciary duty should be struck out.

46 In Johnson v Department of Community Services [1999] NSWSC 1156, (2000) A Torts R 81-540 Rolfe J, and in SD v The Director General of Community Welfare Services (Victoria) and Ors [2001] NSWSC 441, 27 Fam LR 695 Master Harrison, refused to strike out claims for breach of fiduciary duty, but those decisions were delivered before the later cases to which I have referred, and in my respectful opinion, should not now be followed.

CONCLUSIONS

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.

48 The matters alleged and claims made in the Fourth Amended Statement of Claim satisfy none of these criteria, and accordingly are not capable of giving rise to a claim for equitable compensation for breach of fiduciary duty.

49 Accordingly, I order that paragraphs 15, 16,and 17 of the Fourth Amended Statement of Claim be struck out and also the words “and fiduciary” be struck from paragraph 18 thereof and the words “equitable damages” from paragraph 70.

50 Although the defendant has succeeded on the present application, I am still to be convinced that what was in effect the separate determination of the question at this stage has any practical utility in the expeditious determination of the proceedings and, subject to hearing further submissions from counsel if desired, I propose to reserve the question of the costs of this application to the final determination of the proceedings.

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Last Modified: 12/24/2004