Case: Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41
Outcome: cited
In the applicants' closing written submissions some generally uncontentious propositions about fiduciary duties were advanced. It was said that a fiduciary duty will arise where there has been an undertaking to act in the interests of another party together with the power to affect that interest in a practical sense and as a consequence of that power to affect the interests of the person to whom the duty is owed. Where the person is vulnerable and the power is abused breach of duty is established. Reliance was placed upon Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64 ; (1984) 156 CLR 41 at 96-97 (Mason J). The critical feature of a fiduciary relationship was said to be the reposing of trust or confidence in the fiduciary who undertook to act for, and on behalf of, and in the interests of, vulnerable persons in the exercise of a power or discretion which would affect the interests: Breen v Williams [1995] HCA 63 ; (1996) 186 CLR 71 at 82. The obligation of the party owing the fiduciary duty to act reasonably and in good faith was referred to. 580 In Hospital Products Ltd [1984] HCA 64 ; 156 CLR 41, the High Court was concerned with a distribution agreement for hospital products between an American company and an Australian distributor. The Australian distributor acquired a large quantity of the company's demonstration products, sterilised them and sold them in competition with, or in substitution for, the company's products. He later manufactured the same products locally. While he was held in certain respects to be in breach of the distribution agreement, the High Court held by majority (Gibbs CJ, Wilson and Dawson JJ, contra Mason and Deane JJ) that there was no fiduciary relationship between the parties. 585 In Breen v Williams [1995] HCA 63 ; 186 CLR 71, the High Court decided that a doctor owes a patient no general duty to provide access to the patient's medical records. The decision did involve a consideration of whether fiduciary obligations arose out of the doctor/patient relationship. Gummow J accepted that the mere presence of a contract does not exclude the coexistence of the concurrent fiduciary duties and that it may in particular circumstances provide the occasion for their existence. His Honour relied upon what was said by Mason J in Hospital Products Ltd [1984] HCA 64 ; 156 CLR 41. Gaudron and McHugh JJ cited Mason J and also, with approval, the statement of Sopinka JA in Norberg v Wynrib (1992) 92 DLR (4 th ) 449 at 481 (at 118): Fiduciary duties should not be superimposed on ... common law duties simply to improve the nature or extent of the remedy. 586 In the Fourth Edition of Equity, Doctrines and Remedies (Meagher, Heydon and Leeming), the judgment of Mason J in Hospital Products Ltd [1984] HCA 64 ; 156 CLR 41 is cited with the added observation by the learned authors: However where there is a contract and no established category of fiduciary relationship (for example partnership or agency) applies, it must be remembered that trust and reliance may be tempered by caution and self-interest and vulnerability to abuse remedied in the particular mutual accommodation of competing interests achieved in the contract itself, so that these considerations are relevant to the decision whether the contract has wholly excluded any fiduciary relationship. Fiduciary duties are less likely to be identified in commercial transactions between parties at arms' length effective in written form: Artifakts Design Group Ltd v NP Rigg Ltd [1993] 1 NZLR 196 at 231; Auag Resources Ltd v Waihi Mines Ltd [1994] 3 NZLR 571. See generally Re Gold Corp Exchange Ltd (In Receivership) [1994] UKPC 3 ; [1995] 1 AC 74 at 98 ... And further at 5-105: ... there are not many cases outside the "accepted" categories in which courts have found fiduciary relationships to exist. And (at 5-020): "Commercial" relationships are, of course, capable of being fiduciary. A trust or an agency, for instance, is none the less fiduciary because it happens to arise in the commercial context. The more difficult question is, to what extent will courts, in a commercial context, find fiduciary relationships to exist outside the "accepted" categories. Traditionally there has been considerable reluctance to do so. 587 Courts have traditionally been reluctant to superimpose fiduciary duties upon contractual obligations outside the accepted categories of fiduciary relationships. That observation is supported not only in Meagher, Gummow and Leeming, but also in the 31 st Edition of Snell's Equity (2005, Thomson) which states (at 149): The reason fiduciary duties do not commonly arise in commercial settings is that it is normally inappropriate to expect a commercial party to subordinate its own interests to those of another commercial party. But if that expectation is not inappropriate in the circumstances of the relationship between the parties, and this will be presumed in a settled category of fiduciary relationships, then fiduciary duties will arise. See also Lehane JRF, "Fiduciaries in a Commercial Context" in Finn (ed) Essays in Equity (Law Book Co, 1985) at 104. 588 In Paul Dainty Corp Pty Ltd v National Tennis Centre Trust (1990) 22 FCR 495 the Full Court said (at 515): The authorities make it clear that equity will not impose fiduciary obligations on parties who have entered into ordinary and arm's length commercial relationships, which fully prescribe the respective powers and duties of the parties. This is particularly so when the parties involved are substantial corporations, having equal bargaining power. And in Elders Trustee and Executor Co Ltd v EG Reed Pty Ltd (1987) 78 ALR 193, Gummow J referred to the circumstances in which parties are acting in commercial transaction, at arms length and with the assistance of independent professional advice and observed: Whilst these considerations are not of themselves decisive indicia of the absence of fiduciary obligations of disclosure ... they are of significance: Keith Henry &amp; Co Pty Ltd v Stuart Walker &amp; Co Pty Ltd [1958] HCA 33 ; (1985) 100 CLR 342 at 350-1; Hospital Products Ltd v United States Surgical Corp [1984] HCA 64 ; (1984) 156 CLR 41 at 70, 119 and 146.