© Unitec New Zealand 1 Excellence in Equity: New developments in conflict of interest Diana Ayling Patricia Finlayson Unitec Business School

© Unitec New Zealand 2 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

© Unitec New Zealand 3 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.

© Unitec New Zealand 4 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

© Unitec New Zealand 5 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)

© Unitec New Zealand 6 Criminal Liability of Trustees S 229 Crimes Act 1961 –R v Simcock, (2004)

© Unitec New Zealand 7 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)

© Unitec New Zealand 8 Remedies Damages Account for profits Rescission

© Unitec New Zealand 9 Implications for law teachers Full coverage of fiduciaries obligations for: –Company directors –Government officers –Financial intermediaries –trustees Curriculum review

© Unitec New Zealand 10 Conclusion