Fiduciary Obligations in Administrative Law The private law of fiduciary obligations requires persons entrusted with powers for another's benefit to observe a general equitable obligation, when exercising such powers, to act honestly in what they consider to be the interests of the other. In this category we will find company directors, trustees, liquidators, executors, trustees in bankruptcy and others. The repositories of such powers are subjected, by reason of their equitable obligations, to judicial review of their actions. And as Paul Finn has said:
Perhaps not surprisingly, given the close resemblance which the fiduciary officer bears to the public official, this system of review reflects in a very large measure that described by the late Professor De Smith in Judicial Review of Administrative Action.76
A distinction has been drawn between the concept of a trust enforceable in equity and the public trust applicable to the discharge by public officers of duties or functions belonging to the prerogative and authority of the Crown.77 This has been said not to be a conventional but a 'higher' sense of the word.78 The distinction was relied upon by the Privy Council in 1902 in a case involving the allotment to a Maori Chief in 1870 of certain land over which native title had been extinguished. The land was to be held in trust by the Chief '… in the manner provided or hereafter to be provided by the General Assembly for native lands held under trust'. Notwithstanding the use of the term 'trust' it was held that the allottee had taken absolutely and beneficially and that there was no trust in favour of the traditional owners of the land.79
There is no presumption or general rule that the imposition or assumption of a statutory duty to perform certain functions gives rise to fiduciary obligations notwithstanding that the word 'trust' may be used.80 Nevertheless the existence of an unenforceable political trust is not inconsistent with the existence of particular duties imposed on public authorities which have a fiduciary character and are enforceable at law. The duty of local authorities in England has already been referred to as bearing similarities to that of the trustees or managers of the property of others.81 It was designated as 'fiduciary' in Bromley London Borough Council v Greater London Council.82 The analogy was supported in Gummow J's comparison between Wednesbury unreasonableness and abuse of fiduciary powers. The duty may operate as a mandatory relevant consideration which informs the exercise of discretionary powers involving expenditure or levying of charges and is an element to which the court will have regard in deciding whether a decision is unreasonable in the Wednesbury sense.83 It may simply be an analogy which helps to identify limits on power defined by the proper purposes of its exercise.
Whether or not the term fiduciary is properly applied to the relationship between the repositories of public power and those affected by its exercise, it is right to say that the classical fiduciary relationship between trustee and beneficiary '… is one particularly apt to illuminate the relationship between the government and the people'.84