Brown v. State of New South Wales [2008] NSWCA 287 (6 November 2008)
In Brief
The Department of Community Services does not owe a minor under their control a fiduciary duty the breach of which would otherwise entitle the minor to equitable compensation. (Note: This does not necessarily preclude the availability of common law remedies in appropriate circumstances.)
Background
Brown alleged that he was sexually abused by employees of DOCS at a training school where he was detained after being convicted of criminal offences. He commenced proceedings in the Equity Division of the Supreme Court seeking equitable compensation for breach of fiduciary duty. He alleged that DOCS owed him a fiduciary duty, that this duty had been breached by the sexual abuse by employees of DOCS and that he was thereby entitled to compensation.
The plaintiff had also commenced common law proceedings in the District Court which were statute barred and in respect of which he had been refused leave to proceed out of time. (This aspect of the case is not dealt with in this case note other than to note that the plaintiff's appeal against this decision was dismissed). McCready AsJ, at first instance, had rejected the claim by the plaintiff for equitable compensation for breach of fiduciary duty.
On Appeal
The court referred to and approved the Supreme Court single judge decision of Webber v. New South Wales [2003] NSWSC 1263 and the decision of the Full Court of the Federal Court of Australia in Paramasibam v. Flynn [1998] 90 FCR 489.
In Paramasibam the court found that no fiduciary duty existed in a case of alleged sexual assault by a guardian of a young girl. In Webber the facts had a close analogy to the facts in the present proceedings.
In Webber the relationship was that of guardian and ward. The court stated that the fiduciary duty which arises from such relationship and breach of which gives rise to a right to equitable compensation:
- are confined to cases where the fiduciary acts for, or exercises a discretion on behalf of, the other party;
- concern economic or proprietary rights only, including possibly confidential information (which is itself really a form of property); and
- are not a substitute or alternative description for breaches of duty owed in tort or contract arising out of the same facts or circumstances.
In Paramasibam the court had said that the concept of fiduciary duty was intended to protect economic interests so that if a fiduciary makes an unauthorised profit or takes an unauthorised commercial advantage of the relationship, then the person to whom the duty is owed has an equitable remedy for compensation.
Conduct such as that alleged against the respondent can be described in terms of breach of position of trust or confidence and allowing personal interest (in the form of self gratification) to displace a duty to protect the appellant's interests. However, to describe a breach of duty in these terms does not constitute a breach of fiduciary duty. To apply an entitlement in such circumstances would require, and does not justify, "so radical a departure from underlying principle".
The court concluded that the defendant did not owe the plaintiff a fiduciary duty, the breach of which would otherwise have entitled the plaintiff to equitable compensation.
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