Fiduciary duties arise in a variety of commercial contexts. One of the most common of these is the duty owed by a director to a company. In certain circumstances the liability of defaulting fiduciaries can also extend to those who ‘assisted’ the breach. The fiduciary liability of defaulting directors, accessorial liability and the appropriate remedies are all issues that were examined during the High Court’s grant of special leave to appeal in the long-running Bell Resources case, Westpac v The Bell Group Ltd. The High Court’s ultimate decision will likely have significant ramifications for banks and others who may be joined to proceedings under “knowing assistance” claims.
One of the key issues to be considered in the appeal is remedies: whether they are limited to equitable compensation (which focuses on the loss suffered by the principal) or whether an account of profits is available (which involves an assessment of the profits made by the defaulting fiduciary as a result of their breach). In appropriate cases the Court may order that the defaulting fiduciary give an account of profits – that is, disgorgement of their illgotten gains. The difference in outcomes between equitable compensation and an account of profits can be quite stark.
The case promises to define more precisely when claims of “knowing assistance” will be made out, and to what extent it is necessary to prove a “fraudulent and dishonest design” in order for an accessory to be found liable. In particular the proceedings raise the issue of whether the “Briginshaw” standard should be applied to knowing assistance claims – that is, that given the seriousness of the allegations, the decision-maker should be required to be “comfortably satisfied” of the truth of the facts in issue rather than simply be satisfied on the balance of probabilities.