© unitec new zealand 1 excellence in equity: new developments in conflict of interest diana ayling...

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Excellence in Equity:New developments in conflict of

interest

Diana AylingPatricia Finlayson

Unitec Business School

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What is a fiduciary?

• A fiduciary is a person who undertakes to act in the interest of another person.

• Examples:

– Trustee – beneficiary

– Solicitor – client

– Employee – employer

– Director – company

– Partners

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What are the obligations of a fiduciary?

• Duty to avoid conflicts of interest.

• Duty to act in good faith in the interests of the other party.

• Duty to use powers for a proper purpose.

• Duty to act with reasonable care, diligence and skill.

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Who are the new fiduciaries?

• Government departments and employees

– S. v Attorney General, 2003

• Directors – shadow, de facto and promoters

– Thexton v Thexton, 2001

• Trustees – discretionary beneficiaries (mere power)

– Kingston v Foreman, 2004

• Trustees – newly vested beneficiaries

– Johns v Johns, 2004

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Limits to fiduciaries responsibilities

• Mediators are not fiduciaries

– Haines v Carter & Anor, (2006)

• Trustees of iwi trusts

– Fenwick v The Trustees of Nga Kaihautu O Te Arawa Executive Council and Others, (2006)

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Criminal Liability of Trustees

• S 229 Crimes Act 1961

– R v Simcock, (2004)

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New developments in conflict of interest

• Two common situations

– Failure to recognise

– Wilful ignorance

• Bristol and West Building Society v Mothew, (1996)

• Maguire v Makaronis, (1997)

• Pilmer v Duke Group Ltd (in liq), (2001)

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Remedies

• Damages

• Account for profits

• Rescission

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Implications for law teachers

• Full coverage of fiduciaries obligationsfor:

– Company directors

– Government officers

– Financial intermediaries

– trustees

• Curriculum review

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Conclusion