Society of Trust and Estate Practitioners The Interface between Equitable Principles and Public Law

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The Public Trust in History
There is a long history which attaches the characterisation of a public trusteeship to the holders of public office. Professor Paul Finn, now a Judge of the Federal Court, wrote of the body of civil and criminal law which applied to public officers in the eighteenth and nineteenth centuries because of their capacity as public officials. In the language of the eighteenth-century case R v Bembridge30 they were regarded as holding offices of 'trust and confidence concerning the public'.31 This reflected what his Honour called the 'circuitous route by which English judges brought public officials into a fiduciary relationship with the public'. The idea that public officers occupy a trust-like or fiduciary obligation was applied to Members of Parliament in the 1920s by the High Court in Horner v Barber32 and in R v Boston.33 In the latter case, Isaacs and Rich JJ held Members of Parliament to be 'public officers' and invoked the definition of 'office' in the Oxford Dictionary of the day which included 'a position of trust, authority, or service under constituted authority'. Higgins J made a comparison with private trusteeship when he said of cases concerning bribery of members of parliament and the criminal liability attaching thereto:

All the relevant cases rest on the violation of a public trust. 'The nature of the office is immaterial as long as it is for the public good' [R v Lancaster (1890) 16 Cox CC, 737, at p 739]. An agreement between a trustee and an estate agent to share commission on a sale is void and the trustee has to account to the beneficiaries for his share. But it is not an indictable matter, as it is not a public trust – a trust 'concerning the public' [R v Bembridge (1783) 3 Doug (KB), at p 332].34

And further:

He is a member of Parliament, holding a fiduciary relation towards the public, and that is enough.35

The importance of the public trust idea was diminished with the rise of mechanisms for oversight and accountability such as responsible cabinet government, statutory regulation of the public service, parliamentary scrutiny of official action, the political accountability of ministers and the employment arrangements of officials. However, a loss of faith in these mechanisms in the late‑twentieth century was, as Justice Finn has observed, 'one of the principal stimuli to renewed interest in the 'public trust' and in its implications both for officials and for our system of government itself.' He gave as examples provisions of the Independent Commission Against Corruption Act 1988 (NSW) and the Criminal Justice Act 1989 (Qld) which referred to 'breaches of public trust'. He also pointed to the central role that the trust or fiduciary concept was given in codes of conduct for public officials at all levels.

The 'public trust' concept does not attach to property rights and interests. Public property is generally not regarded as held in trust for the people. Such a proposition would no doubt depend upon a considerable development of constitutional concepts of popular sovereignty underpinning legislative and executive authority. Nevertheless, public officials or authorities dealing with public funds, in particular cases, may be trustees according to ordinary principles and have obligations enforceable in equity. There is a history of such cases dating back to the early nineteenth century.

An example of the application of trust law to official acts affecting public funds arose in Attorney-General v Dublin Corporation.36 The question before the House of Lords was whether the Chancery Court had jurisdiction to require the Dublin Corporation to account for alleged misapplication of funds for the supply of water works and for replacement of misapplied funds. The Corporation denied that it was a trustee of the money which was raised by rates. Lord Redesdale asked the question whether the jurisdiction that protected charities was applicable to public institutions. He said:

It is expedient, in such cases, that there should be a remedy and, highly important that persons in the receipt of public money should know that they are liable to account, in a Court of Equity, as well for the misapplication of, as for withholding the funds.37

In an article in the Modern Law Review in 2006, which comprehensively discussed the history of enforceable public trusts, John Barratt characterised the imposition of or recognition of enforceable 'public trusts' in this way as a separate application of a permanent equitable jurisdiction which had long been applied to protect charitable funds.38

The foreshadowing of wider administrative justice concepts in this context may be discerned in Lord Cottenham LC's statement in Frewin v Lewis39 that if public functionaries exceeded their powers the court would treat them merely as persons dealing with property without legal authority, whether they be corporation or individuals.40 What Lord Cottenham said in 1843 was referred to by Jessell MR in Attorney‑General v Wandsworth District Board of Works.41 That case involved a contention that the Board had wrongly charged highway costs to local ratepayers. The Master of the Rolls said:

This case only shews that new cases require, not the application of new law, but the application of old principles of law in a new way; … The Board of Works … holds the funds really as a trustee for the ratepayers of the district, and to be laid out in accordance with the terms of the Act of Parliament.42

The development of local authority audit surcharges and the availability of legal and equitable remedies pursuant to the Judicature Acts lessened the need for a public trust doctrine. Equitable remedies could be applied for in the Queen's Bench Division without the need to base them explicitly on public trust status.43 The enforceable public trust has been invoked in the twentieth century from time to time although perhaps more in the United Kingdom than in Australia.

The public trust concept can be seen as continuing in the so‑called 'local authority fiduciary duty to ratepayers' referred to in cases such as Roberts v Hopwood44, Prescott v Birmingham Corporation45 and Bromley LBC v GLC.

A relatively recent revisitation of the notion in relation to the exercise of statutory powers occurred in the decision of the House of Lords in Porter v Magill.46 The Conservative Party had retained control of a city council with a reduced majority in local government elections in May 1986. The leader and deputy leader of the council, believing that homeowners were more likely than council tenants to vote Conservative, established a policy under which the council would sell, in the exercise of its statutory powers, 250 council properties a year in eight marginal wards. After legal advice that targeted sales would be unlawful, the policy was revised to extend the sales to 500 across the city while maintaining the target of 250 sales in marginal wards. The council approved the relevant policy in July 1987. Opposition councillors gave notice of objection to the council auditor under the Local Government Finance Act 1982. He found that the council had adopted the policy with a view to achieving electoral advantage for the majority party and that the leader and deputy leader were party to its adoption and implementation in the knowledge that it was unlawful and that the policy so promoted and implemented had caused financial loss to the council. The auditor certified that those responsible for the policy, including the leader and deputy leader, had caused the council to lose approximately £31 million. The certification was upheld subject to a variation in the amount of the loss by the Divisional Court, but overturned by the Court of Appeal on the basis that the leader and deputy leader had acted on legal advice. In the event, the decision of the Court of Appeal was reversed on appeal by the House of Lords.

Lord Bingham set out the underlying legal principles. He relied upon a statement by Lord Bridge reproduced in the eighth edition of Wade and Forsyth's Administrative Law in terms which Lord Bingham described as 'a general principle of public law':

Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely – that is to say, it can validly be used only in the right and proper way which Parliament when conferring it is presumed to have intended.47

Importantly he added:

It follows from the proposition that public powers are conferred as if upon trust that those who exercise powers in a manner inconsistent with the public purpose for which the powers were conferred betray that trust and so misconduct themselves. This is an old and very important principle.48

I refer to this case not to comment on the merits of the propositions contained in the judgment to which I have referred, but to illustrate the potential for the analogical application of equitable doctrine to the exercise of official power.

That having been said, explicit recognition of equitable principles in the context of public law in the twentieth century seems to have been slow in coming.

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