(C) ABUSE OF FIDUCIARY RELATIONSHIPS OF CONFIDENCE WITHIN THE LAW OF RESTITUTION

The place of the doctrine of abuse of fiduciary relationships of confidence within the law of restitution itself remains unclear. The better view is that, where the fiduciary has abused his or her relationship of confidence, this constitutes an equitable wrong on the part of the defendant, so the restitutionary claim will be founded on the wrong rather than the unjust enrichment principle. Therefore, this principle is fully considered in the context of restitution for equitable wrongs.^[1] Whether a particular restitutionary claim is founded on unjust enrichment or wrongdoing will be important, since where the claim is based on wrongdoing the remedies are not necessarily restitutionary¹⁶⁶ and the operation of the defences may differ.

That the doctrine of abuse of fiduciary relationships of confidence is better treated as founded on wrongdoing rather than the reversal of the defendant’s unjust enrichment is illustrated by O’Sullivan v Management Agency and Music Ltd,¹⁶⁷ where the claimant had entered into an exclusive management agreement with the defendant. Although the defendant had conceded that the agreement was voidable because the relationship between the parties was such that undue influence was presumed, the approach adopted by the Court of Appeal suggests that the case is better regarded as one where the restitutionary action was founded on the defendant’s wrongdoing, namely breach of fiduciary duty. The Court recognized that the relationship between the parties was a fiduciary relationship and, if the defendant had not conceded that undue influence could be presumed, the existence of this fiduciary relationship would have meant that the transaction could have been presumed to be unfair. The burden would then have been on the defendant to prove that the agreement was fair and reasonable.¹⁶⁸ The defendant would not have been able to show this, because the terms of the agreement were such that the defendant was not in fact obliged to do any work for the claimant and because the defendant had not advised the claimant to obtain independent advice.

• [1] 167 [1985] QB 428. 168 This was in fact recognized by Dunn LJ, ibid, 463.