Although there is no clear test to determine whether a fiduciary relationship exists we can find evidence in common law to assist us. A fiduciary relationship is one that entails a level of confidence and trust between parties, ‘often arising out of an imbalance in strength or vulnerability. ‘The distinguishing obligation of a fiduciary is the obligation of loyalty’ . There are certain positions which have been determined by the Courts that give rise to fiduciary obligations. In the case of Guinness plc v Saunders it was established that it was not necessary to prove that there was an existence of fiduciary duty because the simple fact of being in the position of a director meant that there was a presumed existence of a fiduciary relationship. Another example is the case of trustees, in that they owe certain fiduciary obligations to the beneficiaries of the trust, this principle was established within the case of Keech v Sandford. The concept of fiduciary relationships was developed further in 1896 within the case of Bray v Ford where it was found that:
A person in a fiduciary position…is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict.
It follows that currently today the general rule of equity is still that:
Anyone who has duties of a fiduciary nature to perform may never enter into engagements in which the fiduciary can have a personal interest conflicting with the interests of those whom the fiduciary is bound to protect.
The case of Regal (Hastings) Ltd v Gulliver shows the extent of the burden that the obligations entail in that even if the person who owes the fiduciary duty has acted lawfully and in good faith, they may still be stripped of their profits if it is found that they have personally benefited by virtue of their position as a fiduciary. The fiduciary must uphold the duty they have to the beneficiary (or principal) at the forefront of their minds at all times, foresaking their own interests, this was considered by Millet J in Mothew v Bristol ; West Building Society where he discussed that:
The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal.
These statements above show that the obligations binding the individuals holding these positions can not merely be an afterthought and that they are in fact extremely onerous.
The basis on which the SC found the existence of the fiduciary relationship.
The case of Proprietors of Wakatu v Attorney-General discussed the failure of the Crown to fulfil the Spain award, which included reserving 15,100 acres for the Maori customary land owners as compensation for extinguishing the native title. However only 5,100 acres of the Nelson Tenths were allocated and the remaining land was never reserved. When the case reached the Supreme Court it was held by Elias CJ that the Crown owed a fiduciary duty to the native title holders to reserve the land and that their ancestors claim to the Court was not time-barred due to the lapse in time since the 1840’s. The basis on which this finding was held is that the Crown was the only entity which could fulfill the terms of the agreement with the Maori customary land owners, therefore it’s acceptance established an assumption that the Crown would act in the interests of Maori whose interests were surrendered with the extinguishment of their title of the land.