What are Fiduciary Duties in Australia?

What Are Fiduciary Duties in Australia?

Fiduciary duties form a central pillar of equitable obligations in Australian law. These duties arise when one party is entrusted with power or discretion that affects the interests of another.

The party holding that responsibility—referred to as the fiduciary—is expected to exercise its powers solely for the benefit of the other, prioritising that party’s interests over its own.

This duty is not confined to avoiding harm, but also extends to preventing conflicts between personal interests and professional responsibility. A fiduciary must act loyally and not profit from their position without express permission.

They are bound to avoid situations where their interests could compromise the trust reposed in them, regardless of whether any actual damage occurs.

In essence, fiduciary relationships are grounded in trust, reliance, and vulnerability.

These relationships arise not from titles or status but from the nature of the interaction, where one party is in a position of influence or control, and the other is particularly susceptible to abuse of that position.

Whether formalised by contract or not, the equity courts recognise the ethical imperative that fiduciaries act with integrity and selflessness.  Our litigation lawyers explain in detail below.

Why Fiduciary Duties Matter in Australia

The significance of fiduciary duties extends far beyond theoretical equity. In practice, these duties play a vital role in protecting the integrity of commercial, corporate, and employment relationships.

As the complexity of modern business arrangements increases, so does the relevance of fiduciary principles in ensuring responsible and ethical conduct.

In the corporate sphere, individuals occupying leadership roles are regularly entrusted with decision-making powers that substantially affect shareholders, creditors, and the business.

The expectation that such individuals act in good faith and avoid conflicts is not merely aspirational but enforceable through equitable remedies and statutory sanctions.

Even where a director or officer genuinely believes their actions serve the business, the law scrutinises the underlying motives and any potential for personal gain.

Beyond the boardroom, fiduciary principles also play an evolving role in employment contexts. While not every employee owes fiduciary obligations, those in positions of authority or trust, such as senior executives or key personnel, may be held to higher standards.

Misusing confidential information, soliciting clients for personal advantage, or taking preparatory steps to compete while still employed are all examples of conduct that may breach fiduciary expectations.

Fiduciary law ensures that ethical conduct is not simply encouraged but legally required. It imposes a framework of responsibility that deters self-interest, secures the faithful performance of entrusted powers, and preserves the legitimate expectations of those who place their confidence in others.

As such, fiduciary duties remain indispensable to the stability and fairness of Australia’s legal and business environment.

Understanding Fiduciary Duties

Fiduciary relationships arise when one party places trust and discretion in another under circumstances of vulnerability, creating a duty of loyalty, honesty, and care.

These obligations are not defined by rigid rules but by the expectation that the fiduciary will act solely in the other party’s interests, primarily where power and reliance exist.

While traditionally recognised in roles like trustees, directors, and solicitors, fiduciary duties can also arise in informal or commercial contexts where mutual trust and reliance are present.

Courts assess the reality of the relationship beyond its formal label, and fiduciary obligations may be implied through conduct or agreement, even if they override contract terms when necessary.

These duties are preventive and enforced strictly to guard against actual and potential abuse of power.

The Nature and Scope of Fiduciary Duties

A fixed formula does not define a fiduciary relationship, but rather by the presence of a particular dynamic: one party entrusts another with discretionary power in circumstances that create vulnerability.

The fiduciary accepts this responsibility and is held to the highest standards of utmost loyalty, honesty, and care.

The essence of the relationship lies in an undertaking—express or implied—to act in the interests of another, even where such conduct may conflict with the fiduciary’s benefit.

Not every relationship involving trust or reliance will give rise to fiduciary obligations. The distinguishing feature is the expectation that one party will act exclusively for another’s benefit within a specific sphere of activity.

This may involve control over property, discretion in decision-making, or access to sensitive information.

Equity intervenes where the imbalance of power carries a risk of exploitation, ensuring that the fiduciary does not misuse their position to the detriment of the other party.

Fiduciary duties are preventative. The law is not only concerned with actual wrongdoing, but it is also equally focused on the potential for abuse.

As a result, these duties are enforced with considerable strictness. Even a well-intentioned fiduciary may be in breach if their actions result in unauthorised personal gain or place themselves in a position of divided loyalty.

Established Categories and Expanding Frontiers

Historically, fiduciary duties have been recognised in certain well-defined relationships, including those of trustees, company directors, partners, solicitors, and agents, among others.

These categories continue to form the core of fiduciary law, where obligations are clearly established and rigorously enforced.

However, the law does not confine fiduciary duties to a closed list. Courts remain open to recognising such obligations wherever the required elements are present.

In commercial settings, for example, joint ventures or informal business arrangements may involve duties of loyalty and good faith if the parties’ conduct suggests an understanding of mutual reliance and shared responsibility.

Similarly, in the context of unincorporated associations or not-for-profit entities, committee members may assume fiduciary responsibilities when entrusted with decision-making authority or control over financial resources.

The function shapes the extent of the duty and influence the individual holds, not by their title or the organisational structure.

The Role of Intention and Agreement

While some fiduciary duties arise by operation of law, others may emerge from conduct or agreement.

A fiduciary obligation can be created when one party intentionally places themselves in a role of trust, and the other relies on that trust to their detriment.

This can occur within formal contracts, but fiduciary duties operate independently of contractual terms and may override them when equity demands it.

Importantly, fiduciary duties are tailored to the specific relationship. Their content is shaped by context—what was expected, what was done, and the degree of control or reliance involved.

A fiduciary is not a guarantor of results but a custodian of integrity. Equity does not impose duties lightly, but they are enforced with uncompromising rigour once established.

Recognised Fiduciary Relationships in Law

Fiduciary duties in Australian law traditionally arise in well-established relationships, such as those between trustees and beneficiaries, directors and companies, partners, solicitors and their clients, and certain types of agents. In these roles, loyalty, honesty, and avoidance of conflict are presumed obligations deeply embedded in legal precedent and practice.

However, fiduciary duties are not limited to formal categories. Courts may impose such obligations in nontraditional contexts, such as joint ventures, unincorporated associations, and even voluntary positions, where discretion, reliance, and trust are present.

In employment settings, only specific roles that involve seniority or strategic influence carry fiduciary expectations, which operate alongside statutory and contractual duties.

Ultimately, fiduciary status is determined by substance and conduct, rather than titles or structures, ensuring that the law remains responsive to evolving commercial and social relationships.

Core Categories of Fiduciary Relationships

Australian law recognises several relationships in which fiduciary obligations arise naturally.

These traditional categories serve as benchmarks for equitable expectations and continue to dominate litigation and commercial practice.

Among the most firmly established are the relationships of:

1. Trustees and beneficiaries – The trustee is bound to manage the trust property solely for the beneficiary’s benefit, without profiting or engaging in self-dealing unless expressly permitted.
2. Company directors and their companies – A director must act in the company’s interests, not in favour of shareholders, creditors, or personal alliances. Loyalty, diligence, and avoiding conflict are central to this duty.
3. Partners in a partnership – Each partner is bound to promote the firm’s interests and avoid competing interests or secret benefits. The duty extends to opportunities that arise within the scope of the business venture.
4. Solicitors and clients – Legal practitioners owe a strict duty to act in the client’s best interests, maintaining confidentiality, avoiding conflicts, and exercising independent judgment.
5. Agents and principals – While not all agents are fiduciaries, where an agent is vested with discretion or decision-making authority, they are expected to act loyally and avoid using their position for personal advantage.

These relationships are well settled, and the fiduciary obligations that attach are often presumed unless rebutted by clear evidence to the contrary.

Non-Traditional and Emerging Relationships

Equity’s flexibility allows fiduciary obligations to arise in relationships outside the traditional framework. Courts assess whether the characteristics of trust, discretion, and vulnerability are sufficiently present to justify intervention as a fiduciary.

In certain joint ventures, for example, parties that operate under a shared purpose with mutual trust may be held to fiduciary standards, particularly when one party assumes responsibility for strategic decisions or financial control.

Committee members of unincorporated associations may also owe fiduciary duties, primarily where they manage funds or act as representatives of broader membership interests. This is more pronounced when such members hold authority over organisational decisions or are entrusted with the care of pooled assets.

Even voluntary roles can attract fiduciary responsibility. Where individuals agree to perform functions for the benefit of others and are entrusted with information, funds, or decision-making power, courts have recognised duties akin to those owed by directors or trustees.

Employment Contexts and Conditional Duties

The imposition of fiduciary obligations in employment relationships is more nuanced. Not all employees are fiduciaries. The critical distinction lies in the nature of the role, not the existence of a contract.

Fiduciary duties are more likely to arise when the employee holds a senior position, exercises discretionary power, or has access to sensitive or strategic information. These individuals may be required to refrain from exploiting business opportunities, disclosing sensitive data, or acting in a manner inconsistent with the employer’s interests, even beyond the duration of their employment.

However, it is important to note that fiduciary obligations in employment do not replace the contractual or statutory duties that govern workplace conduct. Instead, they operate in tandem, adding an equitable layer of accountability in circumstances where trust and influence are significant.

Fiduciary Status Is Defined by Substance, Not Labels

Ultimately, determining whether a fiduciary relationship exists depends on the practical realities of the interaction, not titles, formal agreements, or organisational charts. Courts focus on how the parties behaved, what expectations were created, and whether the elements of control, reliance, and vulnerability are present.

This contextual approach ensures that fiduciary law remains adaptable. Whether in commercial ventures, professional services, community organisations, or corporate leadership, the law is equipped to impose fiduciary standards where conscience and fairness demand it.

Core Fiduciary Duties

Strict standards of loyalty, integrity, and purpose define fiduciary duties. At their core is the obligation to act solely in the principal’s interest, avoiding both actual and potential conflicts.

The no-conflict rule prohibits situations in which personal interests may compromise one’s duty.

In contrast, the no-profit rule forbids fiduciaries from making unauthorised gains from their position, even if no loss is caused.

Confidentiality is another essential duty, requiring fiduciaries to safeguard sensitive information during and after the relationship.

Additionally, all fiduciary powers must be exercised for their proper purpose, not for personal motives or indirect manipulation.

While these duties apply consistently across relationships, courts adapt their application based on context, expectations, and the specific role undertaken, yet consistently enforce them with uncompromising strictness.

Loyalty and Undivided Commitment

At the heart of every fiduciary relationship lies the fundamental obligation of loyalty. A fiduciary must serve their principal’s interests without distraction, dilution, or deviation.

This duty demands more than avoiding intentional misconduct—it prohibits the fiduciary from placing themselves in a position where their interests may diverge from those of the party to whom they owe the duty.

This concept is not limited to actual conflicts. Equity is equally concerned with potential or foreseeable conflicts.

The law acts in anticipation of harm, intervening before the integrity of the relationship is compromised.

The mere risk that personal considerations may influence a fiduciary’s decision-making is enough to constitute a breach, regardless of whether harm eventuates or benefit is obtained.

No Conflict Rule

Fiduciaries are required to avoid any situation where personal interest competes with duty or where multiple duties owed to different parties might conflict.

This includes formal engagements and any arrangement, understanding, or conduct that may divide loyalty or generate conflicting obligations.

The no-conflict rule extends to all areas where the fiduciary’s discretion or influence may be exercised.

For example, if a company director has a personal stake in a transaction the board is considering, they must not participate unless full disclosure and appropriate authorisation are obtained.

Similarly, an employee in a fiduciary role may not exploit their position to set up a competing venture or divert business opportunities.

Importantly, the test is objective. What matters is whether there is a real and sensible possibility of conflict, not whether the fiduciary subjectively intended to act improperly.

No Profit Rule

In addition to avoiding conflicts, a fiduciary must not derive any unauthorised benefit from their position.

This includes profits, commissions, business advantages, or other gains that arise from their role, even if the principal suffers no loss and even if the principal could not have taken advantage of the opportunity.

The rationale is simple: once a person undertakes to act in another’s interest, they must not use that position for self-enrichment. Any advantage gained is held on the principal’s behalf and may be subject to account, restitution, or other equitable remedies.

This duty applies broadly. It captures direct profits and indirect benefits, such as advantages secured through third parties, family members, or associated entities.

The rule may even apply after the relationship has formally ended if the benefit was obtained through information or connections acquired during the fiduciary engagement.

Duty of Confidentiality

A fiduciary is strictly obligated to keep confidential information acquired through the relationship. This duty persists even after the formal association ends and applies regardless of whether the information was specifically labeled as confidential.

Disclosure of such information—whether to gain a personal advantage, harm the principal, or assist a third party—undermines the trust that forms the foundation of the fiduciary duty.

The scope of this obligation includes not only trade secrets and business plans but also internal strategies, client lists, and sensitive communications.

In commercial and employment contexts, breaches of this duty are among the most litigated forms of fiduciary misconduct, often overlapping with obligations under intellectual property, privacy, and corporations legislation.

Duty to Act for a Proper Purpose

Fiduciaries must exercise their powers for the purposes for which they were conferred. This means they cannot act to achieve an ulterior motive, even if the outcome might superficially align with the principal’s interests. The intention behind the action is as important as the action itself.

For instance, a director’s decision to issue shares cannot be used to manipulate voting power or entrench control, even if the company remains financially stable.

In equity’s eyes, motive matters—an act carried out for an improper reason or with a hidden agenda will be treated as a breach regardless of its external legitimacy.

Fiduciary Duties Are Moulded by Context

Although the core rules—no conflict, no profit, confidentiality, and proper purpose—are consistent across fiduciary relationships, their application is sensitive to context. Courts examine the facts of each case, the nature of the relationship, the expectations between parties, and the functions entrusted to the fiduciary.

What constitutes a breach in one scenario may be acceptable in another, particularly where the parties have clearly defined their roles and expectations or have expressly narrowed or excluded specific fiduciary duties through informed agreement. Nonetheless, where the duty exists, it is enforced strictly and with little tolerance for deviation.

Directors and Officers – Fiduciary Duties in Corporations

Company directors and officers bear significant fiduciary responsibilities, requiring them to act honestly, loyally, and in the best interests of the company, and not to cause the company to become insolvent.

These duties apply regardless of whether a specific group appoints a director or serves voluntarily, as the law focuses on the power and discretion accepted, not on payment or titles.

Key obligations include acting in good faith, avoiding conflicts of interest, disclosing personal interests, and refraining from using their position or confidential information for personal gain.

Directors must also exercise active care, diligence, and informed judgment; passive or uninformed participation may be a breach.

Consequences for failing to uphold these duties range from civil penalties and compensation orders to disqualification and, in severe cases, criminal prosecution.

Foundational Expectations of Company Leadership

Directors and officers occupy a uniquely entrusted role within a corporation. They are charged with overseeing the organisation’s strategic direction, financial integrity, and legal compliance, and have a responsibility not to breach their directors’ duties.

In doing so, they assume fiduciary obligations that require them to act with unwavering commitment to the company’s interests.

The duties imposed are not merely aspirational. They are legal obligations, enforceable through equitable remedies and statutory enforcement mechanisms.

At the centre of these duties is the expectation that directors will exercise their authority honestly, reasonably, and in good faith, and avoid personal interests that conflict with their official responsibilities.

These duties are owed to the company, not individual shareholders, creditors, or other stakeholders.

Even where directors (even shadow or de facto directors) are appointed by or aligned with specific interest groups, their fiduciary allegiance must remain with the corporate entity as a singular whole.

Good Faith and the Company’s Best Interests

A director must act in good faith and for a proper purpose. This means decisions must be made genuinely to advance the company’s interests, not to serve personal motives or factional objectives.

Whether dealing with capital allocation, business opportunities, or operational control, directors must approach their role with an impartial and honest mindset.

The question of what is in the company’s best interest will depend on the circumstances, but the law does not permit self-serving interpretations.

If a director’s decision-making is tainted by personal gain, retribution, or improper influence, they may be held accountable, regardless of the outcome.

Duty to Avoid Conflicts and Disclose Interests

One of the most critical aspects of directorship is the obligation to avoid conflicts between personal interests and fiduciary responsibilities.

A director must not participate in decisions where their loyalty is divided or where they stand to benefit personally, unless full disclosure is made and appropriate authorisation is given.

This obligation includes both actual and potential conflicts of interest. The mere presence of circumstances that could reasonably give rise to divided loyalty is sufficient to require disclosure and abstention.

If a director holds an interest—whether financial, relational, or otherwise—in a contract or transaction under consideration by the board, they must declare that interest and, where appropriate, recuse themselves from decision-making.

Use of Position and Information

Directors are strictly prohibited from using their position, or information obtained in their role, to secure an advantage for themselves or others, or to cause detriment to the company.

This includes insider dealings, misappropriation of corporate opportunities, or any misuse of confidential knowledge gained through their role.

Even if the company does not suffer a measurable loss, and even if the advantage seems minor or indirect, any improper use of position or information may constitute a serious breach of fiduciary duty.

Diligence, Skill, and Care

While traditionally considered a separate duty grounded in common law and statute, the expectation that directors act with care and diligence is closely related to fiduciary standards.

Directors must take reasonable steps to be properly informed, participate actively in board decisions, and ensure their judgments are grounded in sound business reasoning.

Passive acceptance or rubber-stamping of decisions can itself be a breach. Directors are expected to monitor the company’s affairs with vigilance and challenge management where appropriate. Ignorance or inattention is no defence when diligence is required.

Consequences of Breach

When directors breach their fiduciary duties, they may face a range of consequences depending on the nature and severity of the misconduct. These include:

1. Equitable remedies include an account of profits, compensation, or constructive trusts.
2. Statutory penalties, including civil fines and compensation orders.
3. Disqualification from managing corporations, particularly where misconduct reveals a lack of fitness for leadership roles.

In severe cases, criminal sanctions, including imprisonment, may be imposed where dishonesty or recklessness is involved.

The law applies these outcomes to deter misconduct, uphold the integrity of corporate governance, and restore public confidence in commercial leadership.

No Exception for Informality or Volunteerism

It is a common misconception that directors who serve voluntarily or without pay are held to a lower standard. This is not the case.

Fiduciary obligations apply regardless of remuneration. The key consideration is not how a person is compensated, but whether they have accepted responsibility and discretion in a position of trust.

Fiduciary Duties in Employment Relationships

Fiduciary duties do not apply to all employees, but they may arise when an individual holds a position of trust, discretion, or authority, typically in senior, strategic, or autonomous roles.

In such cases, the employee is expected to act in good faith, avoid conflicts of interest, maintain confidentiality, and not profit from their position at the employer’s expense.

Common breaches in the workplace include diverting opportunities, soliciting clients, and misusing confidential information—actions which may attract stricter remedies than standard contractual violations.

These duties may continue after employment, particularly those involving sensitive information or unfair competitive advantage.

Whether fiduciary duties exist depends on factors such as the level of trust, access to information, and decision-making authority.

Courts may enforce these obligations even when employment contracts are silent.

Remedies include compensation, account of profits, and injunctions to protect the employer’s interests and preserve the integrity of trust-based relationships.

When Employment Becomes a Fiduciary Relationship

Not every employment relationship gives rise to fiduciary obligations. The typical employee, performing defined tasks under supervision, is bound by contractual and statutory duties—but not necessarily fiduciary ones.

However, where an employee occupies a position of trust, discretion, or influence, the law may impose additional equitable responsibilities.

The distinction lies in the role. An employee who exercises decision-making power, manages sensitive information, or represents the employer in strategic matters may be deemed a fiduciary.

This is particularly true for senior executives, managers, or employees in roles involving high levels of independence and authority.

In such cases, the fiduciary duties imposed resemble those in corporate directorships: the obligation to act in good faith, avoid conflicts of interest, refrain from profiting at the employer’s expense, and maintain confidentiality.

Typical Breaches in the Workplace

The modern employment environment provides fertile ground for fiduciary breaches, particularly in knowledge-based or relationship-driven industries. Common breaches include:

1. Diverting business opportunities for personal gain while still employed.
2. Setting up or planning a competing business during the employment period.
3. Soliciting clients, suppliers, or staff for future personal ventures.
4. Misusing confidential information, such as client lists, pricing strategies, or proprietary data.
5. Failing to disclose material conflicts of interest, especially where personal relationships or financial interests may influence business dealings.

These actions may also breach contractual obligations, but where fiduciary duties apply, the standards—and the remedies—are stricter.

A breach may be found even where the employer suffers no loss or where the benefit obtained by the employee is modest or indirect.

Duties May Continue Post-Employment

In some instances, fiduciary duties may extend beyond the termination of employment, particularly in relation to confidential information and trade secrets.

An employee who attempts to exploit privileged knowledge acquired during their employment, such as client databases, pricing models, or strategic plans, may still be bound by fiduciary obligations even after leaving the business.

This continuing duty helps prevent a departing employee from capitalising on unfair advantages gained through a position of trust, especially where those advantages are not replicable through ordinary market competition.

Determining Whether a Duty Exists

There is no automatic formula for identifying fiduciary employees. Courts assess each case individually, considering factors such as:

1. The degree of autonomy in the employee’s role.
2. Whether the employee had access to commercially sensitive information.
3. Whether they were involved in strategic decision-making.
4. The level of trust and reliance placed on them by the employer.
5. Whether they held themselves out as acting in the employer’s interests.

An employee may disclaim fiduciary obligations in writing, or the parties may explicitly define the limits of such duties in their employment contract.

However, where conduct gives rise to the hallmarks of a fiduciary relationship—trust, discretion, and vulnerability—the law may override contractual silence or omission.

Legal Remedies for Breach

Where a fiduciary breach is established, employers may seek equitable compensation, an account of profits, or injunctive relief to restrain further misuse of information or client connections.

In severe cases, courts may impose orders restraining former employees from working with specific clients or engaging in competitive conduct for a defined period.

Importantly, the focus is not just on loss to the employer but on the unjust enrichment of the employee or the undermining of trust.

The law intervenes to restore the ethical standard that governs fiduciary relationships, even if traditional contractual remedies would suffice.

Commercial Applications and Complexities

Fiduciary duties may arise in commercial relationships beyond traditional roles, especially when trust, discretion, and vulnerability are present.

Joint ventures, agency arrangements, franchises, and informal associations can all trigger fiduciary obligations when one party exercises control or influence over another’s interests.

Courts examine actual conduct, expectations, and power dynamics—not formal titles—to determine whether such duties apply.

Even where parties seek to exclude fiduciary obligations through contract, the law may override those terms if the relationship shows the hallmarks of a fiduciary arrangement.

Hybrid roles, where individuals act in multiple capacities (e.g., consultant and director), add further complexity and require clear boundaries and disclosure to manage risk.

Ultimately, fiduciary standards may be imposed wherever equity demands accountability, ethical conduct, and protection against misuse of trust.

Fiduciary Duties in Business Relationships

Commercial dealings frequently involve dynamics of trust, discretion, and influence—qualities that may trigger fiduciary obligations, even outside formal structures like companies or trusts.

Equity does not limit fiduciary law to labelled roles; it responds to the realities of conduct and the vulnerabilities created by the relationship.

In practice, fiduciary duties can emerge in joint ventures, agency arrangements, franchises, and collaborative business partnerships, particularly where one party assumes decision-making control or represents the interests of another.

The existence of fiduciary obligations in these settings depends on the level of confidence reposed, the expectations of loyalty, and whether one party is exposed to harm due to reliance on the other’s integrity.

These relationships are assessed contextually. Courts examine whether the parties’ conduct created an expectation of loyalty and whether one party had the power to affect the other’s interests significantly.

Where this occurs, fiduciary standards may be imposed to ensure integrity and fairness in the execution of those powers.

Joint Ventures and Strategic Alliances

Joint ventures, particularly those involving unequal knowledge, funding, or operational control, are a common breeding ground for fiduciary questions.

Suppose one joint venturer takes responsibility for the administration or strategic direction of the project. In that case, fiduciary duties may arise, especially where the other party lacks oversight or relies on honest reporting.

Joint ventures are more fluid than formal partnerships, which generally trigger automatic fiduciary duties.

The imposition of fiduciary obligations depends on the relationship dynamics, including whether parties shared confidential information, entrusted assets, or deferred to each other in material decision-making processes.

Breach in these contexts can involve misappropriating shared business opportunities, competing with others, or failing to disclose material developments that affect the venture.

Commercial Agents and Representatives

Agents entrusted with authority to negotiate, manage contracts, or handle assets on behalf of another party are frequently bound by fiduciary obligations. Even where the agent is remunerated or operating under a commercial agreement, fiduciary standards may still apply if they are expected to act independently and in the principal’s interests.

Common breaches include undisclosed commissions, diverting business to affiliated entities, or exploiting inside information for personal gain.

The duty is breached not by acting unlawfully, but by breaching the moral and ethical commitment that fiduciary law enforces.

Franchises, Associations, and Informal Partnerships

Franchise agreements and informal business associations may also give rise to fiduciary duties in specific circumstances.

For example, where a franchisor exercises control over the strategic direction of a franchisee’s business, and that control is relied upon for critical decisions, the franchisor may owe duties to act honestly, disclose conflicts, and not exercise power oppressively.

Unincorporated groups, such as syndicates, clubs, or associations, may also involve fiduciary-like roles.

Committee members who manage funds, oversee operations, or represent group interests can be held to fiduciary standards, even if no formal incorporation or trust exists.

In each case, the law focuses not on structure but function and influence.

Contractual Clauses and Fiduciary Exclusion

In commercial arrangements, parties often attempt to define or exclude fiduciary duties through contractual clauses.

While the law generally upholds freedom of contract, it does not allow parties to contract out of fiduciary obligations where the circumstances independently give rise to such duties.

A clause that expressly denies fiduciary obligations will not always prevent the court from finding that one existed. The court will ask: Was there reliance?

Was there vulnerability? Was discretion exercised over another’s interests? If so, equity may intervene, even if the language of the agreement suggests otherwise.

That said, a clear, informed, and mutual agreement can shape or narrow the scope of fiduciary duties, particularly when the parties operate on an equal footing and are well-advised.

Complexity in Hybrid Relationships

In many modern business arrangements, roles are multifaceted. A party may simultaneously act as a contractor, shareholder, consultant, or agent.

These hybrid roles make it more challenging to determine when fiduciary duties begin and end, as well as which actions they apply to.

For example, a consultant who serves on a board or has access to sensitive information may owe fiduciary duties in one capacity but not another.

Where roles overlap, courts will assess which function was operative during the conduct.

These complexities require commercial actors to clearly define expectations, manage risks through appropriate disclosures, and avoid conduct that is construed as double-dealing or self-dealing.

Breach of Fiduciary Duty

A breach of fiduciary duty occurs when a fiduciary fails to uphold its obligations of loyalty, honesty, or proper purpose—often by acting in their self-interest, misusing confidential information, or failing to disclose a conflict of interest.

The law assesses such breaches objectively, focusing on whether the conduct compromised trust, regardless of the fiduciary’s intentions or whether harm was intended.

Common breaches include diverting opportunities, self-dealing, and misusing sensitive information, especially in corporate and senior employment contexts.

To prove a breach, the claimant must show the existence of the fiduciary relationship, the duty owed, the breach itself, and any resulting harm or unjust gain.

Once proven, courts presume the fiduciary is accountable for any benefit unless informed consent is shown.

Such breaches may overlap with statutory obligations, leading to equitable remedies and regulatory penalties.

What Constitutes a Breach?

A breach of fiduciary duty occurs when a fiduciary fails to act in accordance with the strict obligations of loyalty, honesty, and proper purpose. This may involve pursuing personal gain, engaging in self-dealing, concealing material information, or acting in a way inconsistent with the principal’s best interests.

Unlike breaches of contract, which typically focus on performance failures or loss, fiduciary breaches are evaluated by reference to ethical and equitable standards.

The central concern is whether the fiduciary placed themselves in a position of divided loyalty, or gained an unauthorised advantage through the relationship.

The breach does not require an intention to cause harm. Even well-intentioned conduct may breach fiduciary duty if it involves a conflict of interest, failure to disclose a material benefit, or deviation from the expected loyalty and integrity.

Common Examples of Breach

Fiduciary breaches occur in a wide range of professional and commercial contexts. Some recurring examples include:

1. Failing to act in good faith when making decisions on behalf of another.
2. Using confidential information obtained in a fiduciary capacity for personal or third-party benefit.
3. Entering transactions for improper purposes, including to entrench control or defeat the legitimate expectations of others.
4. Diverting business opportunities to oneself or related entities without consent.
5. Failing to disclose material interests that could affect impartiality.
6. Misleading conduct while purporting to act on another’s behalf.
7. Profiting from the fiduciary position without authorisation, even where the profit does not cause direct harm.

In the employment context, breaches often involve senior staff soliciting clients or staff or setting up a competing business while still under contract. In the corporate sphere, directors may breach their duty by approving decisions that serve their interests or those of associates.

Objective Standard of Behaviour

Fiduciary obligations are judged according to an objective standard. The test is not whether the fiduciary believed their actions were justified, but whether their conduct was consistent with what equity demands of a person in that position of trust.

This principle means that subjective honesty or good intentions offer little defence. The question is not merely what was done, but whether the fiduciary should have known that their actions could compromise loyalty or misappropriate benefits.

Proving a Breach

To establish a breach of fiduciary duty, the claimant must demonstrate four essential elements:

1. Existence of a fiduciary relationship between the parties.
2. Scope of duty owed by the fiduciary within that relationship.
3. Breach of that duty, either through action or omission.
4. Resulting harm or unjust gain, where appropriate.

While loss is not always necessary, particularly when the fiduciary has gained a benefit, courts often examine the extent to which the principal has been financially disadvantaged or had their trust undermined.

Presumption of Accountability

Where a breach is established, the law assumes the fiduciary is accountable for any benefit derived. The burden then shifts to the fiduciary to prove that the gain was made with informed consent or outside the scope of the relationship.

This reflects equity’s concern with protecting vulnerable parties and deterring even subtle abuses of power. The presumption is strict and favours transparency, making fiduciary breaches severe in commercial and professional settings.

Overlap with Statutory Duties

In some cases, the same conduct may constitute a breach of both fiduciary duties and statutory obligations, particularly in corporate governance. For example, a director who acts dishonestly or for an improper purpose may face both equitable remedies and penalties under corporate legislation.

This dual liability underscores the protective role of fiduciary law and its alignment with public expectations of fairness and integrity in leadership and professional roles.

Legal Remedies and Penalties

Remedies for breach of fiduciary duty go beyond simple compensation. They are designed to restore trust, prevent unjust enrichment, and uphold the integrity of the fiduciary relationship. Depending on the nature and consequences of the breach, courts may order an account of profits, equitable compensation, constructive trusts, or injunctions.

Where statutory duties are also breached, civil penalties such as fines, compensation orders, and disqualification from corporate management may apply. In severe cases of dishonesty or fraud, criminal liability can result in imprisonment and long-term damage to one’s professional reputation.

Regulatory bodies may also intervene in the public interest, particularly in highly regulated sectors.

Overall, these remedies serve both a corrective and deterrent purpose, ensuring fiduciaries are held to uncompromising standards of ethical conduct.

Equitable Remedies: Restoring the Balance

When a fiduciary breaches their obligations, the law does not simply aim to compensate for loss—it seeks to restore integrity and eliminate unjust enrichment.

As a result, the remedies available in equity differ from those in contract law or tort law.

They are designed to repair damage and uphold the ethical standards that underpin fiduciary responsibility.

The most applied equitable remedies include:

1. Account of Profits – The fiduciary must surrender any unauthorised gain made from the breach. It is irrelevant whether the gain came at the principal’s expense or whether the fiduciary acted with good intentions. The aim is to strip any advantage gained through the misuse of trust.
2. Equitable Compensation – If the breach has caused measurable financial loss, the court may order the fiduciary to compensate the principal. This remedy considers the loss suffered as a consequence of the breach, whether direct or consequential.
3. Constructive Trusts – Where a fiduciary has used trust property or position to acquire assets, the court may declare those assets to be held in trust for the principal. This remedy prevents the fiduciary from enjoying the benefit of their misconduct, even if the assets are mixed with personal property.
4. Injunctions – To prevent further harm or misuse of confidential information, courts may issue orders restraining the fiduciary from certain conduct, including working with clients or competitors, or disclosing sensitive material.

These remedies are flexible and can be applied in combination, depending on the nature of the breach and the parties’ relationship.

Civil Penalties and Disqualification

Where fiduciary duties intersect with statutory obligations, particularly in corporate contexts, the breach may also give rise to civil penalties under regulatory legislation. Individuals found to have contravened their duties may be subject to:

1. Pecuniary penalties, often substantial, are imposed especially where the breach has materially prejudiced the company or its stakeholders.
2. Orders for compensation, which regulators or aggrieved parties may seek.
3. Disqualification from managing corporations, temporarily or permanently, where the breach reflects a severe failure of ethical leadership or governance.

The threshold for civil contraventions is lower than for criminal offences, but the consequences can still be severe, especially where systemic misconduct or disregard for proper purpose is found.

Criminal Liability in Serious Cases

The law may impose criminal sanctions in cases involving intentional dishonesty, recklessness, or fraudulent abuse of position.

These typically apply to corporate officers who misuse their roles for personal gain or knowingly breach their duties.

Criminal penalties may include:

1. Fines extending into hundreds of thousands of dollars.
2. Imprisonment, with maximum terms ranging from several years to over a decade, depending on the nature and consequences of the breach.
3. Reputation consequences, including permanent damage to professional standing and eligibility for future leadership roles.

To attract criminal liability, courts require evidence that the fiduciary acted dishonestly by ordinary people’s standards, not merely that they made poor decisions or failed to meet expected standards of care.

Regulatory Enforcement and Public Interest

In regulated sectors, such as financial services, superannuation, and publicly listed companies, fiduciary duty breaches often trigger intervention by regulatory bodies.

These agencies may initiate enforcement proceedings, seek disqualification orders, or pursue litigation in the public interest.

Even outside litigation, the mere finding of a breach can result in reputational damage, compliance reviews, and changes to internal governance.

For organisations, this often prompts a broader reassessment of risk management, delegation of duties, and board-level oversight.

The Deterrent Role of Remedy

Equity’s approach to remedy is not solely compensatory—it is designed to deter future misconduct by ensuring that fiduciaries do not profit from disloyalty.

Unlike contractual disputes, where a breach may be rationalised as an economic calculation, fiduciary breaches are met with strict remedies to reinforce the non-negotiable nature of trust.

The message is clear: those who accept a position of power over others’ interests must do so without reservation, self-interest, or secrecy.

Where that trust is broken, the law will intervene—firmly, and without hesitation.

Causation and Loss in Fiduciary Claims

Fiduciary law adopts a unique approach to causation, focusing not on direct loss but on whether a breach represented a misuse of trust or loyalty.

Courts often presume detriment or gain once a breach is established, and equitable relief may be granted even in the absence of measurable harm, particularly where unjust enrichment has occurred.

While loss is not required for remedies like an account of profits, equitable compensation may still be awarded if the fiduciary’s conduct contributed materially to the loss.

Courts apply broader standards than those used in tort or contract law, prioritising fairness over precision. Doctrines like contributory negligence or mitigation carry less weight, as fiduciaries are held to a strict standard of conduct.

In complex cases, courts exercise discretion to tailor remedies that reflect the ethical breach rather than rigid causation tests.

Distinctive Nature of Causation in Fiduciary Law

Unlike tort or contract claims, where causation is usually analysed through a “but for” lens of factual and legal causality, fiduciary law takes a markedly different approach.

The primary concern is not whether the breach directly caused loss, but whether it occurred in circumstances that equity views as a misuse of trust or loyalty, regardless of material outcome.

Courts often adopt a presumption of detriment or gain in fiduciary claims once a breach is established.

The focus shifts from the usual causation analysis to questions of remedial fairness—how to restore the integrity of the fiduciary relationship or remove the advantage gained.

This distinction becomes particularly important in cases where benefits were obtained without corresponding losses to the principal.

The law recognises that harm can exist in lost opportunities, compromised trust, or an undermined fiduciary structure, even if the principal’s position is not measurably worse off.

Loss is Not Always Required

In claims for an account of profits, the presence of gain to the fiduciary is sufficient to ground relief, even in the absence of any provable loss to the beneficiary.

Courts will typically require the fiduciary to surrender any profits obtained because of their position, regardless of whether the principal could have made those profits.

This reflects the protective purpose of the fiduciary doctrine: to ensure that persons entrusted with discretionary power do not benefit personally unless they give express consent.

The strictness of this approach was highlighted in case law, such as Chan v Zacharia (1984) 154 CLR 178, where the High Court held that even incidental benefits acquired through a fiduciary position must be disclosed and accounted for.

In that case, a former partner had negotiated a lease renewal for his benefit during the wind-up of a partnership, which was deemed to breach his fiduciary obligations, even though the partnership had technically ceased trading.

Causation Where Compensation Is Sought

Where equitable compensation is pursued—typically in cases involving loss rather than gain—the claimant must still show a link between the breach and the loss suffered.

However, courts do not apply the common law’s narrow tests of remoteness or foreseeability. Instead, the inquiry centres on whether the loss resulted from the fiduciary’s disloyalty or failure to act in the principal’s interest.

Importantly, equity does not require the principal to prove that the fiduciary’s conduct was the sole or primary cause of the loss.

Compensation may be awarded when the fiduciary’s conduct created the opportunity for harm or materially contributed to the circumstances in which the loss occurred.

In Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, the Full Federal Court reiterated that where a fiduciary obtains a benefit through a conflict or breach, causation is not judged in the ordinary legal sense, but through the lens of whether the fiduciary abused their position.

In that case, corporate officers were required to account for secret commissions and benefits gained through improper influence in related-party transactions, even though the company’s financial loss was indirect.

Causation and Dishonest Assistance

In cases where third parties are alleged to have assisted in a breach of fiduciary duty, courts apply a distinct test.

The third party must have known about the breach and rendered assistance in a manner that contributed to the fiduciary’s wrongdoing.

This doctrine imposes secondary liability, but does not excuse the principal wrongdoer from primary accountability.

To establish dishonest assistance, the claimant doesn’t need to trace the precise loss arising from the third party’s involvement. It is enough that the assistance facilitated the breach, even if the third party did not benefit directly.

Mitigation and Contributory Factors

Equity is less concerned with doctrines like mitigation or contributory negligence when addressing breaches of fiduciary duty.

Once disloyalty is proven, the court identifies an appropriate remedy, not apportioning responsibility or examining the principal’s conduct.

This is consistent with the underlying rationale of fiduciary law: those who accept a fiduciary role are expected to meet uncompromising standards.

They are not permitted to argue that the principal failed to protect their interests, nor can they offset their wrongdoing by pointing to procedural lapses or inaction on the part of the beneficiary.

Remedial Flexibility in Response to Causal Complexity

In situations where the loss involves multiple contributing causes, courts may adopt flexible remedial strategies, such as partial compensation or discretionary adjustments to profit-based remedies.

The objective is not mathematical precision, but the just and equitable vindication of trust.

This ensures that fiduciary law can address complex factual scenarios, particularly in modern commercial environments where relationships are layered and harm may manifest in intangible or delayed forms.

Practical Insights and Risk Management

Effectively managing fiduciary risk requires more than compliance—it demands a culture of integrity, clear governance structures, and proactive communication.

Organisations should clearly define roles, establish robust disclosure processes, and implement safeguards for handling conflicts of interest, especially in complex or overlapping roles.

Confidentiality protocols, clear employment policies, and director-level oversight are essential tools to prevent breaches.

Early response and transparency are critical when breaches occur. Regular training, decision-making documentation, and whistleblower channels further strengthen fiduciary accountability.

Ultimately, treating fiduciary duties as a core leadership value—not a legal formality—supports trust, resilience, and sustainable success across all organisational settings.

Proactive Governance and Ethical Culture

A proactive and transparent governance framework is essential in any organisation with fiduciary duties. The best defence against breaches is not simply legal compliance but cultivating a culture that values integrity, accountability, and ethical leadership.

Boards, executives, and managers should be encouraged to think beyond the minimum requirements and embrace the spirit of fiduciary responsibility.

This includes fostering open communication, clear delegation of duties, and mechanisms for identifying and managing conflicts of interest.

Where fiduciary roles are informal or evolving, such as in advisory positions, committees, or hybrid employment roles, it is crucial to clarify the scope of authority and expectations early in the relationship.

Disclosure and Conflict Management Protocols

Managing conflicts of interest is not merely a matter of avoiding them. Conflicts are often unavoidable in commercial and professional settings, especially when individuals wear multiple hats or work across different sectors.

What matters is how those conflicts are handled.

Best practice demands that organisations:

1. Implement written policies requiring the timely disclosure of personal or financial interests.
2. Maintain registers of declared conflicts.
3. Establish procedures for board or executive review of any conflicted matter.
4. Exclude individuals with conflicts of interest from decision-making processes, where appropriate.
5. Document the rationale for all approvals involving interested parties.

These measures are not just about legal defensibility—they serve as safeguards to preserve stakeholder confidence and ensure unimpeachable fairness in decisions.

Confidentiality and Information Control

Fiduciaries often handle sensitive or commercially valuable information. Whether it relates to clients, strategy, pricing, or internal governance, misusing confidential information is a breach of fiduciary duty.

Organisations should:

1. Restrict access to sensitive data on a need-to-know basis.
2. Use non-disclosure agreements where appropriate.
3. Provide training on what constitutes confidential information and how it may be inadvertently misused.
4. Implement exit protocols for departing employees or directors, including obligations to return or delete proprietary materials.

Fiduciary obligations in this area continue even after the relationship ends, so ongoing awareness and control are essential.

Role Clarity in Employment and Advisory Settings

In employment relationships, especially with senior staff, consultants, or advisors, it is crucial to define whether the individual is expected to act exclusively in the organisation’s interest or whether other business engagements are permitted.

Ambiguity in role expectations can lead to misunderstandings that result in accidental breaches or complex disputes.

To minimise risk:

1. Employment contracts should expressly define whether fiduciary obligations are expected.
2. Outside business activity should be subject to approval or declaration.
3. Clear policies should guide conduct in areas such as client relationships, post-employment competition, and the handling of intellectual property.

Board-Level Risk Oversight

Directors carry some of the most significant fiduciary responsibilities and must exercise constant vigilance to uphold those duties. Boards should regularly review:

1. Delegation practices ensure authority is exercised correctly.
2. Decision-making processes for transparency and documentation.
3. Director education programs on fiduciary responsibilities.
4. Whistleblower mechanisms to surface concerns before they escalate.

Strong governance structures help detect early signs of misalignment, such as unexplained decision-making, information asymmetries, or opportunistic behaviour.

Responding to Suspected Breach

Early legal advice and internal action are essential when a fiduciary breach is suspected.

Delays in responding may exacerbate harm and expose the organisation to claims of failure in oversight.

Key steps may include:

1. Conducting internal investigations with legal support.
2. Preserving documentation and correspondence.
3. Notifying regulators or insurers where required.
4. Seeking interim injunctive relief to prevent further misuse of information or assets.
5. Assessing remedial options, including compensation, account of profits, or contractual remedies.

Transparency in the aftermath of a breach can help restore confidence and prevent systemic damage to relationships or reputation.

Building a Resilient Framework

Fiduciary risks cannot be eliminated, but they can be mitigated and managed through a disciplined approach to ethics, oversight, and effective communication.

Whether operating in a commercial, employment, or not-for-profit setting, organisations should treat fiduciary duties not as legal burdens, but as central to building trust, driving performance, and achieving long-term value.

The most successful institutions recognise that fiduciary standards are not obstacles—they are competitive advantages, providing structure and accountability in environments where discretion and influence are unavoidable.

Fiduciary Duties – Key Takeaways

Fiduciary duties occupy a singular space in Australian law. They reflect both legal obligations and a moral framework that governs how power, discretion, and trust are exercised in complex human relationships.

From boardrooms to executive offices, partnerships to employment contracts, the law demands a standard of conduct that transcends technical compliance: it insists on loyalty, selflessness, and good faith.

The strictness of fiduciary principles—particularly the rules against conflict, personal profit, and misuse of position—ensures that those entrusted with authority cannot wield it for their ends.

These obligations are enforced not because they reflect bad outcomes, but because they safeguard the expectation of integrity that underpins all fiduciary roles.

These principles play a critical regulatory function in the commercial environment. Directors, officers, agents, and senior employees carry responsibilities that directly impact financial health, corporate governance, and public confidence.

When fiduciary duties are honoured, businesses operate more transparently, mitigate risks, and prevent disputes more easily.

The scope of fiduciary law continues to evolve. As commercial structures become more intricate and the line between formal and informal influence blurs, courts remain vigilant to situations where trust is assumed and vulnerability arises.

In these cases, labels matter less than substance. Conduct, context, and consequence determine whether fiduciary accountability will be imposed.

Legal advisers, executives, and board members should not view fiduciary law as a distant or academic concept. It is practical, enforceable, and directly relevant to day-to-day decision-making. Understanding its contours—and applying its lessons—can reduce exposure to litigation, strengthen ethical foundations, and promote resilient relationships across every level of operation.

At its core, fiduciary law is not punitive. It is corrective, protective, and deeply principled. It reflects a view of society where power must be exercised lawfully and honourably.

That is why, in Australian law, fiduciary duties remain one of the most enduring and powerful tools in pursuing justice, fairness, and trust.

Fiduciary Duties Frequently Asked Questions (FAQs)

The following Frequently Asked Questions provide clear, practical answers to common queries about fiduciary duties in Australia.

Whether you’re a legal professional, director, or employee, these insights help demystify key principles and clarify your responsibilities under fiduciary law.

What are fiduciary duties?

A fiduciary duty is a legal obligation imposed on a person who holds power or authority over another’s interests, requiring them to act with loyalty, honesty, and integrity. The fiduciary must prioritise the interests of the other party above their own. These duties typically arise in relationships of trust, such as between a director and a company or a trustee and beneficiary. Breach of fiduciary duty can attract serious legal consequences.

Who can owe fiduciary duties?

Fiduciary duties can be owed by individuals in positions of trust or discretion, including company directors, partners, trustees, solicitors, agents, and some senior employees. The key factor is whether one party has placed trust and reliance in the other to act in their best interest. A formal title is not essential—duties may arise from the substance of the relationship.

Are all employees fiduciaries?

No, most employees are not fiduciaries. However, fiduciary obligations may apply to senior staff or executives who have access to confidential information or decision-making power. These individuals may owe higher standards of loyalty, particularly if their conduct can materially affect the employer’s interests.

What is the “no conflict” rule?

The no-conflict rule prohibits fiduciaries from placing themselves in a position where their personal interests may conflict with their duty to another party. It applies even if the fiduciary acts honestly or believes the principal is not disadvantaged. The purpose is to prevent the possibility of divided loyalties or compromised judgment.

Can a contract modify fiduciary duties?

Yes, in some cases, parties can modify or limit fiduciary obligations through clear and informed contractual terms. However, equity may still impose duties where trust, discretion, and vulnerability exist, even if the contract attempts to exclude them. Courts focus on substance over form.

What is a breach of fiduciary duties?

A breach occurs when the fiduciary acts against the interests of the party they serve, benefits personally without authorisation, or fails to disclose conflicts. It includes misusing confidential information, diverting opportunities, or failing to act in good faith. Remedies are typically strict and focus on restoring trust or stripping gains.

What remedies are available for breach?

Remedies include account of profits, equitable compensation, constructive trusts, and injunctions. Courts may also order disqualification from directorships or impose penalties under statutory law. In some cases, criminal charges may apply where dishonesty or fraud is involved.

How do courts determine if someone is a fiduciary?

Courts examine whether the relationship involved trust, reliance, discretion, and vulnerability. The existence of control or influence over another’s interests is often key. Labels like “employee” or “advisor” are not determinative—conduct and context are paramount.

Can fiduciary duties survive after a relationship ends?

Yes, certain obligations—especially confidentiality—may continue even after the formal relationship ends. A former director, partner, or employee may still be bound not to misuse information or advantages obtained during their fiduciary role.

What is the difference between fiduciary duties and contractual duties?

Contractual duties are based on the terms agreed between the parties and are enforced through common law. Fiduciary duties arise from equitable principles and exist to protect relationships of trust. A person may owe both types of duties simultaneously.

Can fiduciary breaches be unintentional?

Yes. Breach does not require dishonest intent—fiduciary duties are strict. Even acting in good faith, a fiduciary may breach their duty if they profit from the role or act in a way that creates a conflict of interest.

What role does consent play in fiduciary duties?

A fiduciary may avoid liability if the principal gives fully informed consent to a conflict or benefit. This consent must be genuine, clear, and made with knowledge of all relevant facts. Consent given under pressure or without full disclosure may not be valid.

Do directors owe fiduciary duties to shareholders?

Directors owe their fiduciary duties to the company as a whole, not directly to individual shareholders. However, in some exceptional cases, duties may extend to specific shareholders if a special relationship exists. Generally, shareholder interests are aligned with the company’s long-term welfare.

Can fiduciary breaches lead to imprisonment?

Yes, where a breach involves dishonesty, fraud, or reckless misuse of position, criminal penalties including imprisonment may apply. The maximum terms can be substantial, especially under corporations legislation.

Is personal benefit always required for breach of fiduciary duties?

No. A breach may exist even if the fiduciary gained no personal benefit. The mere fact that they failed to act loyally, placed themselves in a conflicted position, or exercised power improperly can constitute a breach.

What is an account of profits?

This is a remedy requiring a fiduciary to hand over any profits made from a breach of duty. It applies even if the principal suffered no loss. The purpose is to remove the incentive to act disloyally and uphold trust in fiduciary roles.

Are fiduciary duties relevant in joint ventures?

Yes, fiduciary duties may arise in joint ventures where one party has control or discretion over shared assets or decisions. If one party relies on the other to act in mutual interest, equitable obligations may be imposed.

Can third parties be liable for fiduciary breaches?

Yes. A third party who knowingly assists a fiduciary in breaching their duty may be liable for dishonest assistance. They don’t need to benefit directly—facilitating the breach is enough.

Do charities and not-for-profits have fiduciaries?

Yes. Directors and committee members of not-for-profits may owe fiduciary duties, especially where they manage funds or make decisions on behalf of the organisation. Their obligations are equivalent to those in commercial enterprises.

Can fiduciary duties arise informally?

Yes. A fiduciary relationship may exist even without formal agreement or legal structure. Courts look to whether trust and reliance were present, and whether one party exercised influence over another’s interests.

Glossary of Legal Terms

Understanding fiduciary law requires familiarity with key legal concepts and terminology.

This glossary offers concise definitions of the most important terms used throughout the article, making it easier to navigate complex legal ideas.