The Assessment Principles—With Little Past at their Back[771]

This subject can be dealt with only summarily in this chapter. The Australian law principles^[772] governing the award of relief (by way of restitution or otherwise) for misuse or misappropriation of ‘trust property'^[773] are well developed and well understood.

Simply to ask what types of damage are recoverable is to invite controversy. Even in the heartland of the compensatory jurisdiction—fiduciary law—it exposes marked national divergences on three rather basic questions: What is a fiduciary relationship? What are fiduciary duties? What interests does this body of law pro­tect? The gulf, for example, between Canada and Australia is marked. In Australia fiduciary duties are circumscribed—they proscribe conflicts of duty and interest (and duty and duty) and misuse of fiduciary position. For the present at least, and in my view erroneously, they are limited to protecting economic interests.^[775] Fiduciary relationships in consequence are narrowly contrived.^[776] In Canada, the fiduciary principle has found its place, for example, in parent and child and doctor and patient relationships in cases raising issues of sexual abuse, assault and sexual exploitation.^[777] The interest protected, and compensated for invasion in such cases belongs to realms not countenanced in Australia.

In breach of confidence cases, in contrast, Australia has accepted the inevitable and journeyed beyond economic interests.

As a prelude to what will next be said, it should be emphasised that issues of causation can have a quite circumscribed role in assessing compensation for loss and this because of the requirements of particular equitable doctrines themselves. So it is that in cases of rescission, there is no issue of causation where money is to be paid to return the parties to their original position.^[779] Nor is it usually an issue in cases where a trustee—or a ‘fiduciary custodian'—of trust property misuses or misappropriates it. The defaulting trustee or fiduciary must make good the trust property. As was said in Commonwealth Bank of Australia v Smith:

The obligation to make restitution which courts of equity have from early times imposed on defaulting trustees and other fiduciaries is of a more absolute nature than the common law obligation to pay damages for tort or breach of contract... [That] obligation. was not necessarily limited by common law concepts of foreseeability and remoteness.^[780]

Yet, in relation to a quite different doctrine, Millet LJ proposed in Bristol and West Building Society v Mothew :

Equitable compensation for breach of [an equitable] duty of care and skill resembles common law damages in that it is awarded by way of compensation to the plaintiff for his loss. There is no reason in principle why the common law rules of causation, remoteness of damage and measure of damage should not be applied by analogy in such a case. It should not be confused with equitable compensation for breach of fiduciary duty.^[781]

This has been followed in New Zealand.^[782] In Australia, though, the High Court has been reluctant to acquiesce in Millet LJ's view, seemingly because it would involve an unacceptable convergence of an equitable remedy with common law compensatory damages.^[783]

It nonetheless is the case, though, that scarcely concealed in any consideration of equitable compensation (outside of misuse of ‘trust property') is the possible rela­tionship of compensation to compensatory damages awarded at common law by available analogues.

It was observed recently in a New Zealand text on equity, when canvassing ‘equitable damages' in a number of common law jurisdictions: few areas have caused as many problems in the re-invention of equitable damages as issues of causation and remoteness.^[785] These arise on the fault-line between equity and the common law (especially in compensation cases).^[786] What the debate does ulti­mately focus upon—or at least should do so—is not with whether ‘the unique foundation and goals of equity' ^[787] as such necessitate a permanent isolation of the equitable remedy from influences from the common law. Rather, it is whether the policy and purpose of each equitable doctrine needs to be reflected in the compensatory award itself in a way that differentiates it from any common law analogue, if that policy and purpose are to be vindicated. Even if this be so, there is still the question whether such differentiation ought be outweighed by other countervailing considerations, among which simplicity and coherence can make their legitimate demands.

In Canada, for example, in fiduciary duty cases not involving misuse of trust property, two quite distinct views have been taken in Supreme Court cases. The one, accentuating the distinctiveness of fiduciary law and hence of its method of assessment and quantification of compensation, was favoured by McLachlin J. The remedy was to restore to the beneficiary what was lost by breach of duty.^[788] The other, favouring the common law and only parting from it where there is a cogent reason for doing so, was that of La Forest J.^[789] The dispute here has not altogether been stilled.

The approach in Australia has accentuated the distinctive policies and pur­poses of trust and fiduciary law—perhaps understandably given equity's history in Australian jurisprudence.^[790] Nonetheless, a claim for compensation for breach of fiduciary duty does require a causal link between breach and loss.

The uncertainty in this is made the more so by a Privy Council decision, Brickenden v London Loan and Savings Company.^[793] It held that a fiduciary who failed to disclose material facts which his beneficiary was entitled to know in con­nection with a transaction, was precluded from maintaining that disclosure would not have altered the decision to proceed with the transaction because the ben­eficiary’s action would be determined solely by some other reason or factor. As became apparent from a New Zealand case in the 1980s, whereas a negligence case would fail on proof that a beneficiary would have so acted, the breach of fiduciary duty case on like facts could not because of Brickenden.^[794] There has, needless to say, been some retreat, albeit varying, from the severity of Brickenden in Commonwealth countries.^[795]

In Australia, the High Court has provided no authoritative guidance on the matter, but has given at least some warning that we should not too readily relax that policy in the law manifest in the ‘treatment of disloyalty by non-trustee fidu­ciaries’. In the plurality’s view, ‘it is not self-evident that the response [to the appar­ent rigour of Brickenden ] should rest in a general denial of the applicability of [its] reasoning. to delinquent fiduciaries, particularly solicitors and other profes­sional advisors’.^[796] This said, Australian courts seem now to assume what was said in Brickenden cannot be taken ‘literally’,^[797] when the claim made is for compensa­tion for loss. The loss, though, must have been sustained by the fiduciary having acted in breach of duty.^[798]

What is apparent with the remedy more generally is that with the emphasis so often being upon fiduciary wrongdoing, little has been said explicitly about assessment of compensation in other areas of equitable doctrine.^[799] In relation to compensation and equitable estoppel the controversy has been between a remedy designed to reverse a plaintiff’s detriment and one that makes good a plaintiff’s expectation (save where the expectation is of less value than the detriment).

Now to other matters. Equitable compensation is, in general, assessed at the date of determination of the proceedings according to the circumstances then obtaining and with the full benefit of hindsight.^[807] Nonetheless, in appropriate circumstances, the justice of the case may require the assessment to be made at some other time.

Unlike in Canada and New Zealand, Australia has to date rejected puni­tive awards (‘exemplary damages') being awarded when calculating equitable compensation.^[808] It is similarly the case that contributory negligence cannot be invoked in Australia as a justification for reducing a compensatory award, but can in New Zealand and Canada. It has been acknowledged, though, in those two countries, that a beneficiary's trust and reliance in a fiduciary case can tell against invoking contribution or apportionment especially in advisor cases where self­reliance may not reasonably be expected.^[809]

VIII.