Introduction

- A fiduciary is in position of trust and confidence. He has rights and power which must
be exercised for the benefit of the beneficiary.
- Bristol & West Building Society: A fiduciary is someone who undertaken to act on
behalf of another in a particular matter in circumstances which give rise to a
relationship of trust and confidence
- Arklow Investments Ltd v McLean: The concept encaptures a situation where one
person is in a relationship with another which gives rise to legitimate expectation
which equity will recognise that the fiduciary will not utilise his or her position in
such a way which is adverse to the interests of the principal.

(Nature of Fiduciary, no need fulfil all)

(a) A relationship based on trust and confidence in another
Reading v The King
Facts: The plaintiff was A sergeant in the medical corps, he participated in a
smuggling operation, wearing his uniform to help the smugglers get through army
check-points.

Held: a fiduciary relationship exists (a) whenever the plaintiff entrusts to the
defendant property ... and relies on the defendant to deal with such property for the
benefit of the plaintiff or purposes authorised by him, and not to do otherwise, and (b)
whenever the plaintiff entrusts to the defendant a job to be performed ... and relies on
the defendant to procure for the plaintiff the best terms available

(b) Relationship exhibiting disadvantages, vulnerability and unequal bargaining power

Hospital Products Ltd v United States Surgical Corp
Held: the notion underlying all the cases of fiduciary obligation is that inherent in the
nature of the relationship itself is the position of disadvantage or vulnerability on the
 part of one of the parties which causes him to place reliance upon the other and
requires the protection of equity in acting upon the conscience of that other

(c) Relationship where one person undertakes to act in interests of another

Frame v. Smith set out the following elements of a fiduciary relationship:

1. The fiduciary has the ability to exercise discretion or power.

2. The fiduciary can unilaterally exercise that power or discretion so as to affect the
beneficiary's legal or practical interests.
3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the
discretion or power.

Norberg v Wynrib

1. The essence of a fiduciary relationship, by contrast, is that one party exercises power on
behalf of another and pledges himself or herself to act in the best interests of the other.

3 categories of fiduciary relationship

1. Presumed Fiduciary Relationship
The law already presumed the fiduciary relationship, no need to prove its existence
Exp: Solicitor and client
Datuk Jagindar, Latchumi Arumugam

Exp: Trustee and beneficiary

Keech v Sandford, Boardman v Phipps

F : A landlord refused to renew a lease to a trustee for the benefit of a

minor. The trustee then took a new lease for his own benefit. The new
lease had not formed part of the original trust property; the minor
could not have acquired the new lease from the landlord; and the
trustee acted innocently, believing that he committed no breach of
trust and that the new lease did not belong in equity to his cestui que
trust.
H : Ordered the lessor to grant the lease to the infant because it was unjust
to let the trustee to renew the lease for himself.
 Exp: Director and Company

2. Factual Fiduciary Relationship

Need to prove any 3 of the nature. *In ans need to say which nature is fulfilled
Exp: State and aborigines
Sagong Tasi

Exp: Promoter
Tengku Abdullah
Depends on the particular circumstances.
They want to build clubhouse. The As is given mandate to negotiate with one
company. At the same time, the As is the director of the company. Conflict of interest.
All those 3 natures established.
Whether a particular set of circumstances ought to attract a fiduciary duty
is a question of judicial policy. It depends upon the standard of commercial
morality that the courts of a particular jurisdiction may choose to impose
upon parties to a transaction, having regard to the cultural background and
circumstances of the society in which they function.

3. Anomalous cases
The court impose FR although the nature not fulfilled, for remedial purposes
Chase Manhattan v Israel British Bank
Pf pay double, want to get back. Bt Df went into liquidation. Pf contended the extra
pay cnt be considered as asset. Impose Constructive trust, so the money should be
separated from the pool of asset.

What is the duties?

Cnt have conflict of interest (Tengku Abdullah
Duty to act in loyalty and for the best interest of beneficiary (Bray v Ford)
Cnt make personal profit (Bordman v Phipps)
He attended the General Meeting as the solicitor of beneficiary, use the position to
make profit, unauthorised profits
Remedies
(a) Damages(example)
(b) Account for profits wrongfully obtained
Hospital Products Ltd v United Stated Surgical Corporation (dissenting judgement of
Mason J)
Facts: USSC manufactured surgical stapling products. Blackman realised that USSC’s
products were not patented in Australia and offered to become its distributor. He
obtained exclusive distribution rights in Australia and then established his own
company, Hospital Products, which competed with USSC by repackaging USSC’s
products and selling them as its own and by reverse engineering USSC’s products to
enable competing products to be developed. This was so successful that Hospital
Products began competing with USSC in the USA as well. USSC terminated the
contract with Blackman and sued him and Hospital Products for breach of contract
and breach of fiduciary obligation.

Held: The principle is that the fiduciary cannot be permitted to retain a profit or
benefit which he has obtained by reason of his breach of fiduciary duty. A fiduciary is
liable to account for a profit or benefit if it was obtained (1) in circumstances where
there was a conflict, or possible conflict of interest and duty, or (2) by reason of the
fiduciary position or by reason of the fiduciary taking advantage of opportunity or
knowledge which he denied in consequence of his occupation of the fiduciary
position.

Reading v Attorney General

Facts: An army sargeant took a bribe and was used in a smuggling operation

Held: It was held, by doing this, he breached his fiduciary duty to the Crown. So the Crown could
recover payments paid to him as a bribe → this certainly looks like a proprietary remedy was
granted over the bribes (although this isn’t strictly speaking a constructive trust as the money
had been seized by the Crown on the soldier’s conviction)

(c) Injunction (example?)

 (d) Tracing into the hands of the fiduciary
Sinclair v Brougham
Facts: A building society took money from its members and leant it to other members to
buy houses. They began lending ultra vires (i.e. outside their powers), making the loan
contracts void for illegality.
Held: When the building society went into liquidation it was held the money could be
traced in equity by the creditors (despositors)

Introduction – discuss the case

Body –
1. How to determine fiduciary relationship
2. Fiduciaries duty
3. Relief

Expansion of fiduciary concept in Malaysia

Protection of non-contractual relationship
Soon Seng Palm Oil (Gemas) Sdn Bhd v Jang Kim Luang
Facts: D was director of P’s company. She was actively involved in invention of shredderthat
can shred fibre, but she misappropriated the invention & used it for her use.

Held: Employee of company was under fiduciary obligation to

1. Act in good faith in best interest of company
2. Exercise powers to achieve corporate purposes, not collateral purpose
3. Not place himself in position of con/ict of interest

Protection of fundamental rights of people

Iskandar bin Gayo v Datuk Joseph Pairin Kitigan

Sagong Tasi v Gov of Selangor
Held: the Selangor State government was a fiduciary to aborigines. Government had ‘a duty
to protect the welfare of the aborigines including their land rights, and not to act in a manner
inconsistent with those rights, and further to provide remedies where an infringement occurs.
Gopal Sri Ram JCA held that the Selangor State government should have gazetted a certain
land area as Aboriginal land. The failure to gazette amounted to a breach of fiduciary duty on
the state government’s part and ‘it hardly now lies in their mouths to say that no
compensation is payable because of non-gazettation which is their fault in the first place.
*Gov has the knowledge on land matter but fails to take action

Mohd Nohing v Pejabat Tanah Galian N. Pahang

The fiduciary principle was also recently applied in this case
Facts: Semenai tribe asked for judicial review of the state’s alienation of some land for state
activities, some of which included the aborigine’s land – aborigine’s lands were taken away
and later made into Malay reserved land. They claimed authority had illegally encroached
their customary land
-Issue: is there a fd between the state authority and the aborigines?

Bato Bagi v Kerajaan Negeri Sarawak

Facts: the appellants brought separate representative actions contending that the
extinguishment of their respective NCRs pursuant to s 5(3) of the
Sarawak LandCode (‘SLC’) was void as it violated, amongst others,their
constitutional rights to life (art 5), equality (art 8)and property (art 13), and privileged status
as natives of Sarawak (art 153). In this regard, they sought a declarationthat ss 5(3) and (4) of
the SLC, enabling extinguishmentof NCR and providing for redress in such cases,
were void for unconstitutionality. Alternatively, they claimedadequate compensation for loss
of lands having regardto their inextricable link to customary lands.

Issue: Is such a fiduciary duty (Sagong Tasi) also present in the context of the Sarawak State
government and her native peoples, bearing in mind that the Aboriginal Peoples Act 1954
applies only in Peninsular Malaysia?

Held: Richard Malanjum Chief Judge (Sabah and Sarawak) accepted the proposition set out
in Sagong bin Tasi that the government stands in a fiduciary position to protect the interests
of the natives
Sangka bin Chuka v Pentadbir Tanah
Eddy Salim v Iskandar Regional Development Authority

Conclusion
Guerin v. The Queen [1984] 2 S.C.R. 335 involved a lawsuit brought by the
Musqueam against the federal government who made an agreement to lease their
lands in 1958. These lands were 162 acres of superb green space, much of it
waterfront, near UBC. The government rented these lands for 75 years to
Shaughnessy Golf & Country Club in a sweetheart deal with a rent of merely
$29,000. More troublesome yet was the lack of rent escalation for 15 years. Even
then the escalation was capped at a maximum of 15 per cent per annum.

The Supreme Court of Canada found that this was an exploitative barga in which
was “unconscionable” and a breach of the Crown’s fiduciary duty to the
Musqueam nation whose affairs the Crown was managing. The court thus
awarded damages of $ 10 million to the Musqueam.

Doctor-Patient Fiduciary Relationship

Norberg v Wynrib ( 1992) 92 DLR (4th) 449, at 499. McLachlin J. declared that
“fiduciary relationships are capable of protecting not only narrow legal and
economic interests, but can also serve to defend fundamental human and
personal interests”.

In this case Ms. Norberg was a young woman addicted to painkiller medication.
She was obtaining these drugs from an elderly doctor, who suggested that he
would supply drugs in return for her giving him sexual favours . This casual
arrangement of “sex for drugs” continued for some time. When Ms. Norberg asked
Dr. Wynrib for help getting off drugs, he advised her simply “to quit”. He
continued supplying drugs to Ms. Norberg until she decided, on her own, to go to
a rehabilitation centre to get help with her drug addiction.

When the case reached the Supreme Court of Canada, two of the justices found
that a fiduciary relationship existed. They found the doctor to be a fiduciary
because he was in a relationship of trust and confidence who had the power to
exercise a discretion over his patient. This discretion made her particularly
vulnerable to any abuse by him and they ruled that the doctor had breached his
fiduciary duties to his patient and awarded damages on that basis.