1. Fiduciary Obligations and
Breach of Confidence:
Examining the High Court’s
guidance for lower courts
and relevance to consumer
information protection
Atul Kuver
2011

2. I. INTRODUCTION
The function and development of equity in commerce has been rationalised on several
grounds. Reasons include the need to raise the standards of business behaviour by requiring
businesses to act selflessly in dealings 1 and to make commercial dealings fairer. 2 Millet3
credits the development of commercial equity to the modern complexities and
professionalism of commercial life, changes from an industrial economy to a service
economy, and the broader range of remedies available in equity. The substantial rise in the
‘knowledge economy’ over the last two decades – driven primarily by the development in
information and communication technologies – may require significant changes to the law
relating to consumer protection. 4
This essay argues that it is reasonable to expect the High Court to provide appropriate sign
posts for the lower courts to indicate the likely direction of the evolution of commercial
equity. By examining the development of law within the doctrines of fiduciary obligations
and breach of confidence, this essay considers the extent and nature of the guidance provided
by the High Court. The essay then examines whether breach of confidence could be extended
to the protection of consumer information and privacy, or whether consumer protection
should come through the legislature. Overall, the essay will show that there has been
uncertainty at the lower court level with regards to these equitable doctrines and sign posting
by the High Court is an appropriate expectation.
1
Anthony Duggan, ‘The Profits of Conscience: Commercial Equity in the High Court of Australia’, (2003) 24
Australian Bar Review 150.
2
Daniel Clough, ‘Trends in the Law of Unconscionability’, (1999)18 Australian Bar Review 34.
3
P. J. Millet, ‘Equity’s Place in the Law of Commerce’, (1998) 114 The Law Quarterly Review 214.
4
See eg. Competition and Consumer Act 2010 (Cth).
1
© Atul Kuver 2011

3. II. THE DEVELOPMENT OF COMMERCIAL EQUITY AND GUIDANCE FOR
THE LOWER COURTS
This section examines circumstances where the High Court has dealt with the equitable
doctrines of fiduciary obligations and breach of confidence. The discussion will show how
the High Court provides the lower courts with clear direction in certain cases. Other cases are
not without ambiguity — in particular, the High Court’s assertion in Farah Constructions Pty
Ltd v Say-Dee Pty Ltd,5 that lower courts should not depart from the seriously considered
dicta of the High Court. Breach of confidence is then examined to establish if the doctrine
could be used to protect consumer information and privacy.
A. Fiduciary Obligations
The obligations on a fiduciary are intended to secure a loyalty that ensures that actions by the
fiduciary treat the principal’s interests as paramount. A fiduciary cannot have an interest or
inconsistent relationship with a third party where there is a real and sensible possibility of
conflict.6 A fiduciary also cannot obtain an advantage or profit from property, powers,
confidential information or opportunities offered by the principal. 7
Breen v Williams8 presented the High Court with an opportunity to reassess the law of
fiduciary obligations. The appellant’s (Ms Breen) claim was that the doctor-patient
relationship was fiduciary in nature and therefore a doctor is obliged to act in the ‘best
5
(2007) 230 CLR 89 (‘Farah’).
6
Phipps v Boardman [1967] 2 AC 46.
7
Chan v Zacharia (1984) 154 CLR 178;
8
(1996) 186 CLR 71 (‘Breen’).
2
© Atul Kuver 2011

4. interests’ of the patient. Ms Breen’s assertion was that doctors were obliged to give their
patients access to their medical information. The High Court unanimously refused to expand
fiduciary obligations to include this type of duty as has been done in Canada.
Canadian courts have imposed fiduciary obligations on doctor patient relationships. 9 In
rejecting McInerney the High Court established that the Canadian view of prescriptive
fiduciary obligations did not agree with the law of fiduciary duty as understood in Australia.
The High Court deemed the Canadian decision as having no doctrinal underpinning. 10 The
decision in Breen has entrenched the proscriptive nature of fiduciary obligations in Australia.
While the High Court may be prepared to expand or recognise fiduciary obligations in other
relationships, Australia has not followed the trend of Canadian decisions where fiduciaries
have a positive obligation to act to protect the principal’s interests or to disclose information.
The Court decided to leave this type of change to the legislature.11 It stated that the courts
would re-formulate existing law from time to time to take account of changing social
conditions, but that such steps would be taken when the change could be ‘derived logically or
analogically from other legal principles, rules and institutions.’ 12 Policy considerations will
not ‘justify abrupt or arbitrary change involving the abandonment of settled principle in
favour of a particular result which is merely perceived as desirable.’13 Justice Gummow in
Roxborough v Rothmans of Pall Mall14 emphasised the Court’s strict adherence to precedence
as the basis for judicial reasoning. His Honour stated that ‘general principle is derived from
9
Julie Brebner, ‘A Lost Opportunity or a Welcome Conservatism?’(1998) Deakin Law Review 237, citing
McInerney v McDonald (1992) 93 DLR (4th) 415 at 423 (‘McInerney’).
10
Breen, 83.
11
Ibid, 99
12
Ibid, 115.
13
Ibid, 99.
14
(2001) 208 CLR 516.
3
© Atul Kuver 2011

5. judicial decisions upon particular instances, not the other way around.’ 15 It was a fairly clear
signal to the lower courts of the High Court’s approach to the development of judge made
law. This became significant in Farah.
The High Court’s judgment in Farah is significant because it was the first major
consideration of the rule in Barnes v Addy16 since Consul Development v DPC Estates Pty
Ltd.17 The High Court unanimously affirmed the approach in Consul and strongly asserted
that the NSW Court of Appeal had made a ‘grave error’18 in its decision which was ‘very
unjust’19 and had caused ‘great confusion.’20 It was ‘unjust’ because the Court of Appeal
went down a path of its own and based its decision on a restitutionary basis, which was not
argued in the court below.21 The High Court said that the Court of Appeal’s decision was
influenced by the reasoning ‘advocated by Professor Birks’22 and pointed out that the lower
court had not referred to any ‘particular book, chapter or article’ 23 by Professor Birks. It
caused ‘great confusion’ because the lower courts would encounter two lines of reasoning.
The first line of reasoning was to follow Consul. The second being the Court of Appeal’s
restitutionary approach. The High Court virtually reversed every decision by the NSW Court
of Appeal. The High Court also responded to the Court of Appeal’s claim that there was no
preceding authority on this matter.24
15
Ibid, 544.
16
(1874) LR 9 Ch App 244 (‘Barnes v Addy’), cited in Rob Chambers, ‘Knowing Receipt: Frozen in Australia’,
(2007) Journal of Equity 40, 43 (‘Chambers’). The first limb, ‘knowing receipt’ describes an event which
initiates a liability to repay the value of assets received as a result of breach of trust or breach of fiduciary duty.
The second limb is referred to as ‘knowing assistance’.
17
(1975) 132 CLR 373 (‘Consul’).
18
Farah, 149.
19
Ibid.
20
Ibid.
21
Lee Aitken, ‘Unforgiven: Some Thoughts on Farah Constructions Pty Ltd v Say-Dee Pty Ltd’ (2007) 29
Australian Bar Review 195, 199 (‘Aitken’).
22
Farah, 149.
23
Ibid.
24
Ibid.
4
© Atul Kuver 2011

6. In trying to reach a decision based on the first limb of Barnes v Addy, the Court of Appeal
reasoned that the statements made in Consul regarding the first limb were purely obiter dicta,
because Consul was decided on the second limb. The High Court pointed out that the
statements made in regards to the first limb were seriously considered by the court in Consul.
It was also emphasised that the views expressed in those statements were shared by the entire
majority, 25 and that the Court of Appeal should not have departed from the seriously
considered dicta of the High Court in Consul. In Farah, it was held that while Farah owed
fiduciary duties to Say-Dee, it had not breached that duty. The High Court then discussed
what would have happened if there were a breach of fiduciary duty. Since there was no
breach by Farah, this part of the judgment is all obiter dicta.
Obiter dicta from the High Court clearly provide good guidance to the lower courts on how
the law may develop in areas not directly considered by the court. 26 But the dicta in Farah do
not tell the lower courts how the law in this area should develop. Rather, it tells the lower
courts that they cannot disregard the dicta of the majority judgments in Consul and not to
depart from seriously considered dicta of the High Court.27 This implies that it may not be
possible for lower courts to decide not to apply dicta considered in the High Court. The
judgment in Farah seems to have blurred the distinction between ratio and dicta of the High
Court.28
25
Ibid, 150
26
Chambers, 49.
27
Ibid.
28
Aitken, 196.
5
© Atul Kuver 2011

7. B. Breach of confidence, consumer information and the protection of privacy
The near ubiquitous link between people, the internet, and the mobile telecommunications
network is a driver for protection of consumer information and consumers’ ability to access
this information. Consumer information is routinely collected. Some information may be
consumer generated, where the individual is responsible for providing personal information
to the business. In other situations, information is gathered surreptitiously. This includes the
use of loyalty cards,29 identification through mobile phone links, and internet use. Consumers
are relatively powerless to prevent data gathering in a society where these processes are
essential. Many consumers remain unaware of the large volumes of data that is collected by
supermarkets and social networking sites. 30
Information can be categorised into personal, 31 business32 and governmental information.33
The rationale for the protection is different for each category. 34 The enquiry here is limited to
the protection of personal and business (‘the consumer’) information. The adequacy of breach
of confidence as a cause of action for the protection of consumer information is examined.
The statement by Megarry J in Coco v AN Clark (Engineers) Ltd35 outlines the following
three requirements in a breach of confidence claim: first, that the information has the
29
To identify the consumer purchasing patterns. See eg,
http://www.buseco.monash.edu.au/centres/acrs/research/whitepapers/hidden-side-of-loyalty.pdf,
http://www.unley.sa.gov.au/webdata/resources/files/USLT_Item_21_Att1.pdf.
30
The Age, ‘Max’s privacy war beings Facebook to heel’, (2011)
http://www.theage.com.au/technology/technology-news/maxs-privacy-war-brings-facebook-to-heel-20111027-
1mksg.html.
31
Jeremy Birch, ‘Breach of Confidence: Dividing the Cause of Action Along Proprietary Lines’, (2007) 81
Australian Law Journal 338, 339 citing Prince Albert v Strange (1849) 64 ER 293 (‘Birch’)
32
Ibid, citing Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, 46.
33
Ibid, citing Commonwealth v John Fairfax & Sons Ltd 147 CLR 39.
34
Birch.
35
[1969] RPC 41, 47-48, cited in Graeme S Clarke, ‘Confidential Information and Trade Secrets: When is a
Trade Secret in the Public Domain? (2009) 83 Australian Law Journal 242.
6
© Atul Kuver 2011

8. necessary quality of confidence; secondly, that the information was communicated to the
defendant in conditions importing an obligation of confidence; and thirdly, the information
was used by the defendant without the authority of the plaintiff and to the plaintiff’s
detriment.
In ABC v Lenah Game Meats, 36 a case involving the secret filming of the treatment of
animals in a processing factory, Gleeson CJ stated that ‘[i]f the activities filmed were private,
then the law of breach of confidence is adequate to cover the case.’ 37 This implies that if
information is gathered surreptitiously, then that information has the necessary quality of
confidence and can be treated as being communicated such that it creates an obligation of
confidence. If the information is then used without authority and to the detriment of the
individual, breach of confidence will suffice. However, there may be many cases where the
consumer would not want their information used, even when the consumer does not suffer
any detriment. Without detriment, the consumer’s desire for privacy may not be protected.
Did the judgment in Lenah indicate that there may be a civil cause of action to protect
privacy?
The extension of the doctrine of breach of confidence for the general protection of privacy
has been the subject of much academic discussion.38 After the decision in Lenah, the lower
courts have declared protection against ‘breach of privacy’ on occasions. In Grosse v Purvis39
and Doe v ABC40 the plaintiff was granted relief for the invasion of privacy. But in Giller v
36
(2001) 208 CLR 199 (‘Lenah’).
37
Ibid 225.
38
See eg, N A Moreham, 'Breach of confidence and misuse of private information: how do the two actions work
together?', (2010) 15 Media and Arts Law Review 265; Sir Anthony Mason, ‘Legislative and Judicial Law-
Making: Can We Locate an Identifiable Boundary?’(2003) 24 Adelaide Law Review 15, 35 (‘Mason’).
39
Grosse v Purvis [2003] QDC 151.
40
Doe v ABC & Ors [2007] VCC 281, 54 [164].
7
© Atul Kuver 2011

9. Procopets,41 Gillard J concluded that a cause of action based on breach of privacy42 was not
recognised in Australian law. These contrasting decisions reflect the uncertainty of law in the
area of invasion of privacy. Whether the lower courts interpreted the High Court’s reasoning
in Lenah as an avenue to extend breach of confidence to an action for breach of privacy is
unclear. The lack of any decisions in favour of a breach of privacy doctrine since Doe v ABC
probably indicates the reluctance in current lower courts to continue recognising a general
right to privacy.
On whether breach of confidence would be extended to protect privacy, the Honourable Sir
Anthony Mason has said that ‘for the courts to take this step would be to take a step too
far.’43 Sir Mason gave the following reasons: 44
 the proposition that the law does not give recognition to a general right of privacy has
not been qualified by the courts;
 the law has not taken many incremental steps towards the recognition of a general
right to privacy;
 a general right to privacy is a significant political question with many stakeholders;
and
 substantial consultation and inquiry would be necessary to qualify stakeholder views
and exceptions to the general rule.
41
Giller v Procopets [2004] VSC 113.
42
Ibid 76 [187].
43
Mason, 35.
44
Ibid.
8
© Atul Kuver 2011

10. III. CONCLUSION
This essay has considered to what extent the Australian High Court provides appropriate sign
posts for the lower courts that indicate the likely direction of development of commercial
equity. Examining in particular, the doctrines of fiduciary obligations and breach of
confidence, it was shown that the High Court is prepared to extend general principles, but
only through strict adherence to precedence as the basis for its judicial reasoning. The
evidence presented here shows that the High Court has consistently declared this approach
and reasoning. However, not all guidance was well-defined —the requirement for the lower
courts not to depart from seriously considered dicta of the High Court may create confusion
in the lower courts with regard to what constitutes seriously considered dicta.
The essay has also examined the reasons why the development of breach of confidence may
be inadequate for the protection of consumer information and privacy. The gradual approach
of the High Court in the development of law, and the policy considerations means that the
law in the area of consumer information protection and privacy would need to be
implemented through the legislature.
9
© Atul Kuver 2011

11. IV. BIBLIOGRAPHY
A. Articles/Book/Reports
Aitken, Lee ‘Unforgiven: Some Thoughts on Farah Constructions Pty Ltd v Say-Dee Pty Ltd’
(2007) 29 Australian Bar Review 195
Birch, Jeremy, ‘Breach of Confidence: Dividing the Cause of Action Along Proprietary
Lines’, (2007) 81 Australian Law Journal 338
Brebner, Julie, ‘A Lost Opportunity or a Welcome Conservatism?’, (1998) Deakin Law
Review 237
Chambers, Rob, ‘Knowing Receipt: Frozen in Australia’, (2007) Journal of Equity 40
Clarke, Graeme, S, ‘Confidential Information and Trade Secrets: When is a Trade Secret in
the Public Domain?, (2009) 83 Australian Law Journal 242
Clough, Daniel, ‘Trends in the Law of Unconscionability’, (1999)18 Australian Bar Review
34
Commonwealth of Australia, ‘The Nature and Application of Unconscionable Conduct
Regulation’, (2009) Issues Paper
Dean, Robert, ‘A Right to Privacy’, (2004) 78 Australian Law Journal 114
10
© Atul Kuver 2011

12. Dempsey, Gillian, and Andrew Greinke, ‘Proscriptive Fiduciary Duties in Australia’, (2004)
Australian Bar Review 1
Duggan, Anthony, ‘The Profits of Conscience: Commercial Equity in the High Court of
Australia’, (2003) 24 Australian Bar Review 150
Edelman, James and Simone Degeling, ‘Fusion: The Interaction of Common Law and
Equity’, (2004) 25 Australian Bar Review 195
Griggs, Lynden, ‘The Unconscionability Provisions of the Trade Practices Act 1974:
Contrasting Judicial Developments’, (2002) 9 Competition & Consumer Law Journal 241
Hayne, K. M., ‘Address to Commercial Law Conference’, (2002) 23 Australian Bar Review
24
Johnston, Mark, 'Should Australia force the square peg of privacy into the round hole of
confidence or look to a new tort?' (2007) 12 Media and Arts Law Review 441
Mason, Anthony, ‘Legislative and Judicial Law-Making: Can We Locate an Identifiable
Boundary?’, (2003) 24 Adelaide Law Review 15
Millet, P. J, ‘Equity’s Place in the Law of Commerce’, (1998) 114 The Law Quarterly Review
214
11
© Atul Kuver 2011

13. Moreham, N.A, 'Breach of confidence and misuse of private information: how do the two
actions work together?' (2010) 15 Media and Arts Law Review 265
Wishart, David, ‘Does the High Court Understand Corporations Law?’, (1996) 6 Australian
Journal of Corporations Law 424
B. Cases
ABC v Lenah Game Meats (2001) 208 CLR 199
Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37
Barnes v Addy (1874) LR 9 Ch App 244
Breen v Williams (1996) 186 CLR 71
Chan v Zacharia (1984) 154 CLR 178
Coco v AN Clark (Engineers) Ltd [1969] RPC 41
Commonwealth v John Fairfax & Sons Ltd 147 CLR 39
Consul Development v DPC Estates Pty Ltd (1975) 132 CLR 373
Doe v ABC & Ors [2007] VCC 281
12
© Atul Kuver 2011

14. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Giller v Procopets [2004] VSC 113
Grosse v Purvis [2003] QDC 151
Hospital Products Pty Ltd v United States Surgical Corporation (1984) 156 CLR 41;
McInerney v McDonald (1992) 93 DLR (4th)
Phipps v Boardman [1967] 2 AC 46
Prince Albert v Strange (1849) 64 ER 293
Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516
C. Legislation
Competition and Consumer Act 2010 (Cth)
13
© Atul Kuver 2011