The 'Stolen Generation' - Finding A Fiduciary Duty

• Introduction
• The Origins Of Fiduciaries
• The Nature Of Fiduciary Duty
• The Fiduciary As A Guardian
• Is The State Of Western Australia A Guardian?
• The Scope Of The State's Fiduciary Obligations As Guardian
• What Are The Obligations Of The State As A Fiduciary Guardian?
• Breaches of the Relationship
• Merits of Embarking On Such A Cause of Action
• Arguments For Such An Action
  • A Natural Extension Of An Existing Principle
  • It Is A Way To Overcome The Limitation Problem
  • An Action For The Breach Of Fiduciary Duty Delivers Natural Justice
  • Is In Accordance With The Underlying Tenets Of Equity
• Arguments Against Embarking On Such An Action
  • Such A Decision Requires A High Degree Of Judicial Activism
  • Can Be Seen To Be Based On The Issue Of A 'Political Trust' And Therefore Not Justiciable
  • If This Principle Is Extended This Far, Then There Is No Telling Where It Will Stop, i.e. parent/child fiduciary duties may be found to be justiciable
• Conclusion
• Notes
• Bibliography

Introduction

"The punishments I received at the Norseman Mission were by different people...Steve Smith...wired my penis to receive electric shocks when I wet the bed. This treatment went on for months..."[1]

"The food was bad. We had maggots in the meat. We never had any shoes. We used to jump in cow dung to keep our feet warm...We were never allowed to ask the house mother for sanitary clothing. We always had to ask the big red headed Dutchman, who had a vile temper...he loved nothing better than to watch us have a bath. He also enjoyed giving us floggings".[2]

1. The above extracts are two of many stories told by Aboriginal men and women who were taken away in their childhood from their families and made wards of the State of Western Australia. This paper discusses the merits of launching an action based on the breach of a fiduciary duty created by the State as guardian to Aboriginal children who were classified by law as the State's wards.
    
2. The fiduciary duty is a concept which arose from the courts of equity. Although the fiduciary duty has escaped a precise definition, a fiduciary duty is said to arise "where, as a result of one person's relationship to another, the former is bound to exercise rights and powers in good faith and for the benefit of the latter."[3]  
    
3. This paper addresses the nature, scope and obligation of such a fiduciary responsibility, and discusses whether there are grounds for demonstrating a breach of such a duty. Finally, the merits of launching such an action are discussed. Through legislative provisions, the State of Western Australia established itself as a guardian to Aboriginal children removed from their families during the State's era of assimilation and segregation. "Within limits, those who have suffered as children while in the hands of the State or its agents may find that the law is capable of protecting their interests".[4]

   The Origins Of Fiduciaries

4. "The fiduciary relationship emerged from the Courts of Chancery in earlier centuries. The primary aim of this equitable doctrine is to prevent those holding positions of power from abusing their authority".[5] "Because of the dependency and vulnerability that was involved in trust situations, equity imposed special duties on the trustee known as fiduciary duties".[6] Since the time of its evolution, "the law has developed case by case, largely by analogy, it being accepted that the categories of fiduciary relationships are not closed."[7]
    
5. Although most commonly applied to areas in which a trust arises, fiduciary relationships are recognised at law in a number of situations. A fiduciary relationship has been held to exist in relationships such as a bank and its clients, a lawyer and his or her clients, a doctor and a patient, a trustee and beneficiary, and a director and his or her company.

   The Nature Of Fiduciary Duty

6. The fiduciary concept has been likened to "an accordion...(it) may be expanded, or compressed, to maintain the integrity of relationships perceived to be of importance in contemporary society".[8] However, recent case law has described the nature of the fiduciary duty as going beyond its traditional boundaries.
    
   "A fiduciary relationship would arise where 'one person is obliged, or has undertaken, to act in relation to a particular matter in the interests of another and is entrusted with a power to affect those interests in a legal and practical sense', and where there is a 'special vulnerability of those whose interests are entrusted to the power of another'".[9]
   
   The underlying themes involved in a fiduciary relationship are those of vulnerability on behalf of the beneficiary and obligation on behalf of the fiduciary.
    
7. These elements have been expressed slightly differently in a Canadian Case, Frame v Smith, in which "Wilson J considered the analysis of the High Court of Australia and suggested that a fiduciary obligation possesses three general characteristics: The fiduciary has scope for the exercise of some discretion or power, the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests, and the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power".[10]
    
8. If, at its simplest level, a fiduciary situation is held to arise whenever there is a transfer of powers, what is there to stop a legally enforceable fiduciary duty from arising in all spheres of life? The answer to this issue is addressed by Fletcher Moulton LJ in Re Coomber when he states that "the nature of the fiduciary relation must be such that it justifies the interference."[11]
    
9. The nature of a fiduciary is difficult to determine in a precise form. Regardless of the classification given to the fiduciary duty, the underlying elements of such an obligation suggest that fiduciary obligations are held to exist, in their simplest form, when there is a transfer of power "encumbered by attached duties".[12]

   The Fiduciary As A Guardian

10. Most guardians are considered to be in a fiduciary position with respect to their wards.[13]
     
    "Whether the guardian's influence flows from a custodial or advisory role; it amounts to the same thing: a power to dominate the mind of another by reason of that other's inexperience, youth or impressionability".[14]

     

11. Such a position is evidenced by case law. In Williams v Minister, Aboriginal Land Rights Act 1983, Kirby P followed an earlier decision Bennett v Minister for Community Welfare in holding that in situations where the fiduciary was a guardian, the guardian was "obliged...to act in (a ward's) interest and in a way that truly provided , in a manner apt for a fiduciary, for (their) 'custody, maintenance and education'".[15]
     
12. A fiduciary relationship is held to exist when applied to the relationship of a ward and a guardian. The guardian attracts the responsibilities of the fiduciary, and subsequently becomes liable in equity for any breaches the guardian may commit.

    Is The State Of Western Australia A Guardian?

13. The State of Western Australia adopted the position of legal guardian of all Aboriginal children from as early as 1905, and arguably even as early as 1886, following the enactment of the Aborigines Protection Act. From 1905 until 1954, the "Minister was empowered to remove any Aboriginal person. As legal guardian of Aboriginal children... the Chief Protector could exercise this power in relation to Aboriginal Children". There were express provisions in The Aborigines Act 1905 which prescribed legal guardianship to the Chief Protector of "every Aboriginal and half caste child until such child attains the age of twenty one years".[16] Gradually, the State's powers of control over Aboriginal children diminished, following amendments to the original legislation through the Native Welfare Act 1954 (WA). However, the State retained general powers supervision and care through the provisions of the Child Welfare Act 1947(WA).
     
14. The fact that the State expressly declared its guardianship status gives rise to a guardian ward relationship. Bartlett states that "the panoply of extraordinary powers and the vulnerability of aborigines to their exercise is considered to be as such as to have given rise to a fiduciary obligation in the State, provided such interests are considered capable of such an obligation and it is not construed merely as a political trust".[17]

    The Scope Of The State's Fiduciary Obligations As Guardian

15. Traditionally, the courts only decided on issues of fiduciaries on the basis of economic and proprietary matters.[18] Can the fiduciary relationship of guardian ward apply to interests which are non economic or proprietary related? Comparative jurisprudence indicates that courts are increasingly willing to find instances of where fiduciaries are obliged to protect their beneficiaries' interests where these interests are non proprietary. The decisions by the Supreme Court of Canada in Guerin v The Queen, Frame v Smith and K.M v H.M clearly establish the principle that "non economic interests should also be capable of protection in equity through the imposition of a fiduciary duty".[19]
     
16. In Australia, it was held
     
    "a fiduciary obligation may be imposed on the State with respect to the non economic interests of the Aboriginal people".[20] "Fiduciary principles 'are capable of protecting not only narrow legal and economic interests, but can also serve to defend fundamental human and personal interests' ".[21]
    
     
17. On application of the case law from Canada and Australia, it is argued that there is an appropriate scope for a justiciable claim for breach of a fiduciary duty with respect to non economic claims. The principles which lie behind the notion of fiduciary relationships can be used effectively to argue such a breach of the fiduciary obligation occurred when Aboriginal children were abused while they were wards of the State of Western Australia.

    What Are The Obligations Of The State As A Fiduciary Guardian?

18. "The content of a fiduciary obligation...will be tailored by the circumstances of the specific relationship from which it arises".[22] Traditionally, the obligations of the fiduciary were concerned with upholding two duties: "one concerning the misuse of the fiduciary position, the other with conflicts of duty and interest in virtue of that position".[23] "Together these amount to a standard of complete loyalty requiring the subordination of the fiduciary's own interests."[24]
     
19. Applied to the fiduciary relationship of a guardian and a ward, the obligations of the guardian /fiduciary are to "refrain from harming the ward, (they) must protect the ward from harm and must provide for their education".[25]

    Breaches of the Relationship

20. "A fiduciary will be in breach of (their) fiduciary obligations if an act or decision cannot reasonably be said to be in the best interests of their beneficiary".[26] However, "it is one thing to restrict a fiduciary's freedom of action, it is quite another to require a fiduciary to act as to advance the beneficiary's interests".[27]Any sustainable allegations of breaches of fiduciary obligations made by indigenous people for acts committed by guardians must be those in which there was "exposure of children to physical, sexual or emotional abuse and deprivation from family and cultural heritage".[28]Such acts are positive breaches which can be readily identified as clearly in violation of the traditional fiduciary obligations.
     
21. The National Inquiry Into The Separation Of Aboriginal And Torres Strait Islander Children From Their Families identifies "three ways in which Protectors or Boards failed in their guardianship duties to Indigenous wards or children to whom they had statutory responsibilities".[29]These breaches are failure to provide wards with contemporary standards of care; failure to protect from harm and failure to involve indigenous parents in decision making about their own children.[30] All three breaches are considered to be in contravention of the State's statutory duty to adopt the role of guardian.

    Merits of Embarking On Such A Cause of Action  
    
     

22. In light of the above parameters which define fiduciary relationships, the merits of establishing an action based on a breach of the guardian ward relationship must be addressed. Below is an outline of arguments and counter arguments which exist with respect to the alleged breaches of fiduciary duty on the part of the State as the legal guardian to the Aboriginal children removed from their families.

    Arguments For Such An Action

    A Natural Extension Of An Existing Principle   
    
     

23. In many ways, pursuing an action for the breach of fiduciary duty by the State is a natural extension of an existing principle. The fiduciary principle originated from a concept
     
    "originally reserved for relationships in which an extremely high degree of loyalty was exacted. The archetypal fiduciaries were therefore persons such as trustees, solicitors and directors, whose professional position of itself gave rise to fiduciary responsibilities".[31]
    
     
24. In Mabo No. 2 the classification of fiduciaries was tentatively expanded to accommodate a notion of a fiduciary obligation with respect to native title. Toohey J concluded that
     
    "a fiduciary obligation existed with respect to native title land because of the State's power to extinguish native title... and (the) corresponding vulnerability (which) gave rise to a fiduciary obligation on part of the State'".[32]
    
      Toohey J then extended that argument by suggesting that a fiduciary relationship may arise with "respect to non proprietary interests of Aboriginal people".[33] Justice Owen comments that
     
    "it may be that the line of reasoning that has, at least to this time, concentrated on the relationship between the State and indigenous people could be extended to other sections of the community. An example is the mentally ill".[34]

     

25. The categories of fiduciary relationships are not closed".[35] The law is an evolving, system. The argument above indicates that there is a logical basis for raising an action on the alleged breaches fiduciary duty owed by the State. Therefore, an action against the State for the breach of a fiduciary duty should not be prevented on the ground that it is a novel or recent concept.

    It Is A Way To Overcome The Limitation Problem
     

26. As held in KM v HM, and applied in Williams, "the Limitations Act does not apply to equitable action such as an action for the compensation for breach of fiduciary duty".[36] Buti states that
     
    "bringing an action for the breach of fiduciary duty may overcome the non discretionary six year limitation period for bringing an action that otherwise would apply under section [38](1) of the Limitation Act 1935 (WA)".[37]
    
      The Limitations Act is deemed not to apply when commencing an action in equity, "because it is worded so as to apply only to some specifically mentioned actions based in equity".[38] Although this is a technical argument and yet to be tested in Western Australia, it is important that those who have suffered have the ability to seek some type of compensation.

    An Action For The Breach Of Fiduciary Duty Delivers Natural Justice   
    
     

27. The Aboriginal children who allegedly suffered at the hands of their guardians were innocent victims. The law is limited in the ways in which it is capable of providing compensation in this situation, and a breach of fiduciary duty is a bona fide ground of relief. As argued by Sweeney, "The law of fiduciary relationships may both be the means to provide immediate redress for broken promises, and the catalyst for further change and appropriate reparation in the longer term".[39]

    Is In Accordance With The Underlying Tenets Of Equity
     

28. Equity is a system of law which is designed to be flexible and in line with contemporary standards. It was designed to redress wrongs rather than enforce specific rules of law. Acknowledging such a fiduciary duty would mean that equity still has a relevant place in our system in this respect.
     
    "The courts of equity have striven to protect the vulnerable from abuse by persons with power over them, and the potential for such abuse by persons with power over them, and the potential for such abuse is one of the hallmarks of a fiduciary relationship. Accordingly, the law of fiduciary relationships may well be the most appropriate means by which to analyse such State - Aboriginal relationships".[40]
    
     
29. Overall, there are compelling arguments to be made for establishing a cause of action based upon the State's breach of fiduciary duty to Aboriginal children who suffered abuse in the hands of their guardian. The arguments lie in the fundamental concepts of natural justice and equitable principles.

    Arguments Against Embarking On Such An Action

    Such A Decision Requires A High Degree Of Judicial Activism  
    
     

30. Di Marco argues that in extending the fiduciary breach to the State over the indigenous peoples, there may exist the presence "of excessive judicial activism - the declaration of new principles of law based on political considerations which should properly be left to the political process".[41] Judicial activism is inherently dangerous for the fact that there is no public mandate which lends credence to the judicial decisions which may be seen to be active in the law rather than reactive as a response to the Parliament.   
    
     
31. However, Di Marco also points out that "'judicial activism' is an inherent part of Equity jurisprudence. Equity has jurisdiction ...to recognise new interests and remedies in response to social needs".[42]

    Can Be Seen To Be Based On The Issue Of A 'Political Trust' And Therefore Not Justiciable   
    
     

32. State "accountability for non proprietary interests ...raises the question of whether a 'political trust' rather than a 'legal trust' has been created".[43] As applied in the Federal Court of Appeal in Guerin, the court found that the "extent to which the Government assumes an administrative or management responsibility for the reserves ...is a matter of governmental discretion, not legal or equitable obligation".[44] This decision was overturned in the Supreme Court of Canada. However, the argument can be made that the government's discretion in this area was in the "public law context"[45] , and that its guardianship actions were not subject to legal or equitable obligation. The legislation which conferred power upon the State to act as guardians for Aboriginal children was "drafted in vague loose terms".[46] As a consequence, the actions undertaken by the State government may be seen as not justiciable.
     
33. The political trust argument can be defeated in the context that, as discussed above, the Courts are increasingly prepared to find a fiduciary relationship where there is no proprietary interest which is affected. Such a stance adopted by the courts means that the legal as opposed to political trust notions are not necessarily applicable in assessing a fiduciary relationship on a guardian ward level.

    If This Principle Is Extended This Far, Then There Is No Telling Where It Will Stop, i.e. parent/child fiduciary duties may be found to be justiciable   
    
     

34. Rosemary Teele argues that "the fiduciary principle is increasingly manipulated to serve a number of gods other than the exaction of a high standard or conduct".[47] Using the fiduciary principle "as a means of intervention where no other doctrine is appropriate...results in confusion and uncertainty".[48]    
    
     
35. If the court finds that the fiduciary relationship exists between the State and the Aboriginal wards, where will it stop? As Batley states, does this "analysis suggest that parents may be made liable to their children for failing to provide them with an appropriately nurturing upbringing?"[49]   
    
     
36. There are two reasons why this situation should not arise. The first is that while the classification of fiduciaries is not closed, "the nature of the fiduciary must be as such that it justifies the interference".[50] Second, the difference between the parent-child relationship and the guardian-ward relationship with respect to the State is that "the governmental authorities supervise themselves. The vulnerability and dependence of the State is, in that sense, absolute".[51]
     
37. There exist valid arguments for why an action for the breach of fiduciary duty by the State as a guardian should not be pursued. However, there also exists counter arguments which strongly indicate that such an breach is actionable. Despite the arguments which criticise this line of action, the best place to decide whether such a method of action is appropriate is in the courts. Matters potentially justiciable should not be quashed before they have been reasoned.

    Conclusion
     

38. One must place the fiduciary obligation within the context of what equity involves. "The law of fiduciary relationships may both be the means to provide immediate redress for broken promises, and the catalyst for further change within the system".[52] Successful action in this area of the law ultimately means the delivery of justice to those who have experienced harm and distress at the hands of the State. "At a fundamental level, the State government has a moral obligation to redress the wrongs of the past and, in particular, facilitate the hearing of any actions on their substantive merits".[53] It is submitted that, on evaluation of the merits of an action based on alleged breaches of fiduciary duty, such an action should be recommended as a viable avenue for justice.

Notes

[1] Brian, born 1921, 'taken away' aged 3 to 4 years. Cited from After The Removal, (Western Australia : Aboriginal Legal Service of Western Australia (Inc), 1996), Prepared by T. Buti, 33.

[2] Marilyn, born 1945, taken away, aged six years. Cited from Telling Our Story - A Report By The Aboriginal Legal Service Of WA (Inc) On The Removal Of Aboriginal Children From Their Families In Western Australia, (Western Australia : Aboriginal Legal Service of Western Australia (Inc), 1995), 4.

[3] Beherendt, J, "Fiduciary Obligations and Native Title" (1993) 63 Aboriginal Law Bulletin, 7.

[4] Batley, P, "The States Fiduciary Duty to Stolen Children" (1996) 2 (2) Australian Journal of Human Rights.

[5] Hon Mr Justice Owen, "The State as a Fiduciary", (1996) Law Society Of WA (Inc) Seminar On The Recent Developments In The Law Of Fiduciary Obligations, Law Society of Western Australia (Inc), Perth, 1.

[6] Gautreau, JRM, "Demystifying the Fiduciary Mystique" (1989) 68 Canadian Bar Review, 1.

[7] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, at 96 per Mason J. cf English v Dedham Vale Properties Ltd. [1978] 1 WLR 93, at 110. Cited in Batley, above, note 4 (footnote 35).

[8] Tan, D, "The Fiduciary as an Accordion Term: Can The State Play a Different Tune?" (1995) 69 Australian Law Journal, 440.

[9] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, cited in Bartlett, R, "A Fiduciary obligation respecting the delivery of services to the Aboriginal communities", Australiasian Law Teacher's Association, Cross Currents: Internationalism, National Identity And The Law, 1995 (footnote 1).

[10] [1987] 2 SCR 790, cited in Bartlett, above, note 9 (footnote 2).

[11] [1911] 1 Ch 723, cited in Gautreau, above, note 6, at 16.

[12] Shepherd, JC, "Towards a Unified Concept of Fiduciary Relationships" [1981] Law Quarterly Review, 79.

[13] Shepherd, JC, The Law of Fidcuciaries (Toronto:Carswel Co Ltd, 1981), 29.

[14] Id, at 109.

[15] Williams v Minister, Aboriginal Land Rights Act 1983. (1994) 35 NSWLR at 511.

[16] Aborigines Act 1905, s 12.

[17] Bartlett, above, note 9 (in between footnote 7 & 8).

[18] M(K) v M(H), (1993) 96 DLR (4th) 289, La Forest J at 325.

[19] Per Wilson J in Frame v Smith, cited in M(K) v H(K), above, note 19, per La Forest J at 325.

[20] Williams v Minister, Aboriginal Land Rights Act 1983, cited in Bartlett, above, note 9, (after footnote 63).

[21] Mason, A, "The Place of Equity and Equitable Remedies in the Contemporary Common Law World" (1994) 110 Law Quarterly Review, 247 Mason J cites Norberg v Wynrib (1992) 92 DLR (4th) 449.

[22] Per Toohey J in Mabo, (1992) 175 CLR 1, Cited Tan, above, note 8 , 447.

[23] Id, 448.

[24] Teele, R, "The Search for a Fiduciary Principle: A Rescue Operation" (1996), 24 Australian Business Law Review, 112.

[25] "Bringing Them Home" National Inquiry into the Separation of Aboriginal and Torres Strait Islander Children from Their Families, Human Rights and Equal Opportunity Commission (1997), 259.

[26] Telling Our Story, above, note 2, 182.

[27] Batley, above, note 4 (footnote 62).

[28] Id (in between 81 and 82).

[29] Bringing Them Home, above, note 25, 260.

[30] Id.

[31] Teele, above, note 24, 111.

[32] Bartlett, above, note 9, ( footnote 60-61).

[33] Id.

[34] Owen J, above, note 5, 23.

[35] Hospital Products Ltd (1984) 156 CLR 41, cited in Batley, note 4.

[36] Buti, T, "They Took the Children Away" (1995) 20 Alternative Law Journal 35 at 36.

[37] Id

[38] Id

[39] Sweeney, D "Broken Promises: Crown's Fiduciary Duty to Aboriginal Peoples" (1995) 3 Aboriginal Law Bulletin, 4 at 7

[40] Id

[41] Di Marco, L, "A Critique and Analysis of the Fiduciary Concept in Mabo v Queensland" (1994) 19 Melbourne University Law Review, 868 at 891

[42] Ibid, 892

[43] Bartlett, above, note 9, (inbetween footnotes 8 and 9)

[44] Id

[45] Id

[46] Godfrey, K, "The Lost Kooris" (1995) 20 Alternative Law Journal, 26 at 27

[47] Teele, above, note 24, 110

[48] Ibid, 112 & 110

[49] Batley, above, note 4, at footnote 84/85

[50] Per Fletcher Moulton LJ, in Re Coomber, cited in Gautreau, above, note 6, 16

[51] Bartlett, above, note 9 at footnote 92

[52] Sweeney, above, note 40, 7

[53] Telling Our Story, above, note 2, 184

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Buti, T, "They Took the Children Away" (1995) 20 Alternative Law Journal 35

Cope, M (ed) Equity, Issues and Trusts (Annandale: The Federation Press, 1995) Ch 5.

Dorsett, S. "Apsassin v The Queen in Right of Canada" (1996) 3, 78 Aboriginal Law Bulletin, 7.

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Gautreau, JRM, "Demystifying the Fiduciary Mystique" (1989) 68 Canadian Bar Review.

Godfrey, K, "The Lost Kooris" (1995) 20 Alternative Law Journal, 26.

Haebich, A "For Their Own Good - Aboriginals and the Government in the South West of Western Australia 1900-1940" (Nedlands : University of Western Australia Press, 1992).

Malbon, J. "The Fiduciary Duty: The Next Step For Aboriginal Rights?" (1994) 19, 2 Alternative Law Journal, 92.

Mason, A, "The Place of Equity and Equitable Remedies in the Contemporary Common Law World" (1994) 110 Law Quarterly Review, 247.

Merkel, R, "Government Culpability - For the Forced Removal of Aboriginal Children From Their Families" (1990) 2, 47 Aboriginal Law Bulletin, 4.

Merkel, R, "The Long Road Home - The Going Home Confererence 1994" Extract of speech made to the conference, 12.

McHugh, PG "The Role of Law in Maori Claims" (1990) New Zealand Law Journal, 16.

Owen, Hon J, "The State as a Fiduciary", (1996) Law Society Of WA (Inc) Seminar On The Recent Developments In The Law Of Fiduciary Obligations, Law Society of Western Australia (Inc), Perth, 1.

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Shepherd, JC, "Towards a Unified Concept of Fiduciary Relationships" (1981) 97, Law Quarterly Review, 51.

Sweeney, D "Broken Promises: Crown's Fiduciary Duty to Aboriginal Peoples" (1995) 3 Aboriginal Law Bulletin, 4.

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Teele, R, "The Search for a Fiduciary Principle: A Rescue Operation" (1996), 24 Australian Business Law Review, 112.

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Company, 1989).

Legislation and Cases.

Aborigines Act 1897 (WA).

Aborigines Act 1905 (WA).

Native Welfare Act 1954 (WA).

Child Welfare Act 1947 (WA).

Bennett v Minister of Community Welfare, (1992) 176 CLR 408.

M(K) v M(H), (1993) 96 DLR (4th) 289.

Williams v Minister, Aboriginal Land Rights Act 1983. (1994) 35 NSWLR at 511.