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Halsbury's Laws of Malaysia -- Equity (Volume 11(1) (2015))/290 - Equity/(9) Fiduciaries/(1) Nature of
Fiduciary Relationship

(9)
FIDUCIARIES
(1) NATURE OF FIDUCIARY RELATIONSHIP

[290.184]

Nature of a fiduciary relationship

The fiduciary relationship is one of equity's most characteristic inventions. The courts of equity evolved it out
of the trust1 relationship, relaxing the incidents of the more intimate and exacting trust relationship and
introducing an extremely impressive flexibility capable of coping with the diverse situations in which the
fiduciary relationship has to operate. The hallmarks of the relationship may be described from the
perspective of the elements which constitute the relationship as well as the elements which determine the
nature and scope of the duties imposed on the fiduciary in question. It is now too late to insist on a singular
approach to the notion of fiduciary relationship which equiparates the relationship and the duty and which
propounds that a person stands in a fiduciary relationship towards another if he owes a fixed set of fiduciary
duties towards him, or a singular approach which focuses on the fiduciary duties assumed, in effect
discarding the necessity of labelling the relationship. However intellectually correct a singular approach may
be, the law as it has evolved distinguishes between the fiduciary relationship and fiduciary duties. The two
are not synonymous. A fiduciary relationship does not necessarily import fixed or invariant or uniform
fiduciary duties but the exact nature of the duty or duties borne by the fiduciary in the particular relationship
in which he stands in must always be determined. In other words, a fiduciary in a certain relationship, such
as a solicitor in a solicitor and client relationship, will not owe the same duties as another fiduciary in another
relationship of a different kind and may even owe varying fiduciary duties compared with another fiduciary in
the same kind of relationship, depending on the particular situation and task he has to undertake for his
principal. The notion of the relationship and the question of its existence cannot be merged with the notion of
the fiduciary duty and the question of its scope simply because certain rules are made to turn on the
existence of a fiduciary relationship while other rules turn on the existence of a particular fiduciary duty.
Certain presumptions, for instance, depend on the existence of a fiduciary relationship. The presumption of
undue influence by a person standing in a fiduciary relationship towards another is an example2. Again, the
equitable remedy of tracing requires proof of a fiduciary relationship between the claimant and the person
who first caused the property in which the claimant has an interest to be substituted with another property3.
On the other hand, for the purposes of certain other rules, the focus shifts from the relationship to the duty
undertaken. In order to determine, for instance, whether a fiduciary has placed himself in a position of conflict
of duties, it must first be ascertained what precise fiduciary duties he has undertaken towards each of his
several principals4.

1 As to trusts generally see [310] TRUSTS (2015 Reissue).

2 See [290.255] and [290.259].

3 As to tracing see [290.299] and following.

4 As to fiduciary duties see [290.206] and following.

[290.185]

Identification of a fiduciary relationship

 Page 2

A fiduciary relationship presupposes a dealing with property by someone authorised or pursuant to an

undertaking to do so by or on behalf of the owner of the property or performance of a job or task by someone
authorised or pursuant to an undertaking to do so by or on behalf of another1. In a small number of cases, it
seems that a fiduciary relationship arises because in the circumstances it would be inequitable not to
recognise that it exists2. Relationships characterised as fiduciary relationships commonly involve the
exercise of some discretion or power with consequential effects on the proprietary interests of the principal
through exercise of that discretion or power3. However, the presence of some discretion or power in relation
to a specified and authorised purpose to be accomplished in the exercise of which the principal's interests
may significantly be affected does not of itself impress the relationship between the principal and the
authorised person or person undertaking the task with a fiduciary character. There must further be an
element which would render it right and just that the person given the discretion or power and authorised or
undertaking to act should be held to standards of conduct in the exercise of the discretion or power which are
higher than ordinary contractual standards. The notion of a fiduciary relationship is very fluid. The law has
not developed a single touchstone by which to judge when and whether a fiduciary relationship is constituted
but employs a number of criteria. Moreover, it is not possible to say that the list of criteria which it recognises
forms a closed list and incremental development cannot be ruled out altogether4.

A relationship marked by the reposing of trust and confidence on the part of a principal in another and an
expectation that that person who is trusted and confided in will act in the best interests of the principal has
been accepted as being a fiduciary relationship5. On this ground, a partnership is a fiduciary relationship, for
a partnership signifies that each partner reposes trust and confidence in the other and carries an expectation
that each will place the interests of the partnership above his own personal interests6. It has also been said
that a fiduciary relationship arises whenever a person undertakes or agrees to act for or on behalf of, or in
the interests of, another person in the exercise of a power or discretion which will affect the interests of that
other person7. On this view, it is denied that there is a need to show that the relationship involves a reposing
of trust and confidence by the principal in a confided person, since a person is a fiduciary if he has agreed to
be one. It has further been said that a fiduciary relationship exists whenever there is a relationship of
confidence such that equity imposes duties on the person in whom the confidence is reposed so as to
prevent the possible abuse of confidence8. In other words, some fiduciary relationships result from a desire
to prevent injustice of this nature; and the presence of an expectation that one person will further the
interests of the other is immaterial. There are also cases in which the relationship is characterised as being a
fiduciary relationship because some fiduciary duty has been undertaken by, or agreed upon as incumbent
on, a party to the relationship9. Under this approach, where the duty to avoid a conflict of interest and duty is
undertaken, the relationship between the parties is very likely to be characterised as fiduciary in character.
This approach assumes that there are core duties which make up a fiduciary relationship. The problem is
that what is a core or peripheral duty may vary according to the nature of the transaction between the
parties10. There may also be some circularity in determining whether a fiduciary relationship exists by
reference to whether some fiduciary duties are undertaken.

1 Reading v R [1949] 2 KC 232 at 236, sub nom Re Reading's Petition of Right [1949] 2 All ER 68 at 70, CA (Eng), per Asquith
LJ ; affd sub nom Reading v A-G [1951] AC 507, [1951] 1 All ER 617, HL . In Tengku Abdullah ibni Sultan Abu Bakar v Mohd
Latiff bin Shah Mohd [1996] 2 MLJ 265 at 268, CA , Gopal Sri Ram JCA (as he then was) stated: 'Equity has, in keeping with
the purpose of its origin, refrained from laying down any strict rules for determining whether a particular relationship is fiduciary
in nature or gives rise to fiduciary obligations, leaving the development of its jurisprudence to a case by case basis. The maxim
the categories of fiduciary relations are never closed exemplifies the approach that a court of equity adopts in this sphere of
human activity'. See also English v Dedham Vale Properties Ltd [1978] 1 All ER 382, [1978] 1 WLR 93. A company director is
recognised as having a fiduciary relationship with his company. A director is therefore subject to the fiduciary's duty of loyalty
and the duty to avoid conflicts of interest. The essence of the fiduciary duty is a duty to act bona fide in the interests of the
company and not for a collateral purpose. Although the directors are vested with powers which carry implicitly some degree of
discretion, such powers must be exercised bona fide, meaning for the purpose for which they were conferred and not arbitrarily
or at the will of the directors, but in the interests of the company: Petra Perdana Bhd v Tengku Dato' Ibrahim Petra bin Tengku
Indra Petra [2014] 11 MLJ 1. The class of fiduciary relationships is never closed (English v Dedham Vale Properties Ltd [1978]
1 All ER 382 per Slade J). As can be seen from the English cases, the English judges have never attempted to formulate a
comprehensive definition of who is a fiduciary. Certain relationships are well known to be fiduciary. 'In Snell's Equity (32nd Edn)
[2010] Thompson Reuters at pp 172-178, the learned author stated that the accepted categories in which the courts presume
the existence of a fiduciary relationship are as follows:

• (a) director vis-a-vis their companies;

• (b) solicitor-client relationships;
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• (c) agent-principal relationship; and

• (d) partnerships': Solid Investments Ltd v Alcatel-Lucent (M) Sdn Bhd (previously known as Alcatel Network
Systems (M) Sdn Bhd) [2014] 3 MLJ 785 at 799, FC .

2 See Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105, [1979] 3 All ER 1025. See also
Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, [1996] 2 All ER 961, HL ; Geh
Cheng Hooi v Equipment Dynamics Sdn Bhd [1991] 1 MLJ 293, SC . See further [290.202].

3 Frame v Smith (1987) 42 DLR (4th) 81 at 99. It would be unnecessary to characterise a relationship involving ministerial tasks
as a fiduciary one since any breach of the ministerial obligations would simply be a breach of contract. As to relationships
recognised as fiduciary see [290.191] and following.

4 See Geh Cheng Hooi v Equipment Dynamics Sdn Bhd [1991] 1 MLJ 293, SC , which concerned the commercial arrangement
between concessionaires which sell through department stores. The payments were made to the store cashiers in all cases.
The Supreme Court held that notwithstanding there were no agreements imposing any trust, the stores must hold the sale
proceeds for the concessionaires. In this case, the concessionaires were able to trace the funds in liquidation of the stores. Cf
Hinckley Singapore Trading Pte Ltd v SOGO Department Stores (S) Pte Ltd (under Judicial Management) [2001] 4 SLR 154
(where the Singapore Court of Appeal declined to follow Geh Cheng Hooi v Equipment Dynamics Sdn Bhd (above) citing
distinguishing features between both cases). See also ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2005] 2
MLJ 422, CA ; Kartika Ratna Thahir v PT Pertambangan Minyak dan Gas Bumi Negara (Pertamina) [1994] 3 SLR 257, CA
(Sing) ; Friis v Casetech Trading Pte Ltd [2000] 3 SLR 590, CA (Sing) . See also Tai Kim San v Lim Cher Kia [2001] 1 SLR 607
at [28]-[29], where Amarjeet Singh JC reaffirmed the importance of the facts in each case; Hospital Products Ltd v United States
Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587.

5 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, 35 ALR 273, 3 ALJR 236; Law Society of
Singapore v Khushvinder Singh Chopra [1999] 4 SLR 775; Law Society of Singapore v Devadas Naidu [2001] 2 SLR 112; Friis
v Casetech Trading Pte Ltd [2000] 3 SLR 590 at [29], CA (Sing), per L P Thean JA , quoting Hospital Products Ltd v United
States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587.

6 R v Lee Siong Kiat [1935] MLJ 53; Haw Par Brothers International Ltd v Chiarapurk Jack [1991] 2 MLJ 428, [1991] SLR 626;
revsd on appeal sub nom Chiarapurk Jack v Haw Par Brothers International Ltd [1993] 3 SLR 285, CA (Sing) , without
challenging the principle; Miller Freeman Exhibitions Pte Ltd v Singapore Industrial Automation Association [2000] 4 SLR 137,
CA (Sing) (no partnership found but principle accepted); Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42
CLR 384, 35 ALR 273, 3 ALJR 236.

7 Re Coomber, Coomber v Coomber [1911] 1 Ch 723 at 728-729, CA (Eng), per Cozens-Hardy MR . See also Hospital
Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587; ERA Realty Network Pte Ltd v
Puspha Rajaram Lakhiani [1999] 1 SLR 190 (estate agent).

8 Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 at 94, NZ CA, per McMullin J ; Cheong Kim Hock v Lin Securities
(Pte) (in liquidation) [1992] 2 SLR 349, CA (Sing) (director selling at undervalue but note use of term 'undue influence'); Haw
Par Brothers International Ltd v Chiarapurk Jack [1991] 2 MLJ 428 at 433, [1991] SLR 626 at 634; revsd on appeal sub nom
Chiarapurk Jack v Haw Par Brothers International Ltd [1993] 3 SLR 285, CA (Sing) , without challenging the principle; Ohm
Pacific Sdn Bhd v Ng Hwee Cheng Doreen [1994] 2 SLR 576, CA (Sing) .

9 See eg Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 436.

10 Re Coomber, Coomber v Coomber [1911] 1 Ch 723 at 728-729, CA (Eng), per Cozens-Hardy MR ; ERA Realty Network Pte
Ltd v Puspha Rajaram Lakhiani [1999] 1 SLR 190 (estate agent). See also Hospital Products Ltd v United States Surgical Corp
(1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587; Tengku Abdullah ibni Sultan Abu Bakar v Mohd Latiff bin Shah Mohd [1996] 2
MLJ 265, CA ; GT Rajan v Lee Yoke Lay [1994] 2 MLJ 315; Vije & Co Co-operative Central Bank Ltd [1991] 3 MLJ 432.

[290.186]

Trust and confidence

Where a principal directs or authorises another to deal with property or perform a job or task and reposes
trust and confidence in him that he is capable of acting and will act in the principal's best interests, the
relationship between them is fiduciary in character1. The principal need not have expressed that he has trust
and confidence in the confided person's abilities nor have communicated to the confided person that he
expects his interests to be regarded by him as first and foremost before a fiduciary relationship can arise2.
The wide nature of the discretion or power given to the confided person, the nature of the job or task to be
done, the importance of the job or task to be performed, the extent to which the job or task to be performed
may be delegated in turn by the confided person, and the fact that the principal does not possess the special
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skill suitable to the job or task to be performed are material factors which may indicate that in all the
circumstances the principal has trusted to the confided person the accomplishment of the job or task to be
performed and that the relationship between them is a fiduciary one. For this reason, the mutual trust and
confidence placed in one another by partners or joint venturers explains why the partnership or the joint
venture in which trust and confidence reposed is fiduciary in character3. It is not clear, when a fiduciary
relationship is said to arise from the reposing of trust and confidence, whether the person trusted in must
know that trust and confidence is reposed in him and whether the fact of reposing trust and confidence alone
is sufficient to support a fiduciary relationship4 or whether it must also be shown that the person in whom
trust and confidence is reposed is expected to act in the best interests of the confiding party. As has been
said, the reposing of trust and confidence is not a necessary element of all fiduciary relationships5; and there
are fiduciary relationships in which no trust and confidence is reposed, at least at the onset of the
relationship.

1 Law Society of Singapore v Khushvinder Singh Chopra [1999] 4 SLR 775; Law Society of Singapore v Devadas Naidu [2001]
2 SLR 112; Friis v Casetech Trading Pte Ltd [2000] 3 SLR 590 at [29], CA (Sing), per L P Thean JA , quoting Hospital Products
Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALJ 417, 58 ALJR 587. See [290.191] and following.

2 'A duty to take care needs not be limited to cases of fiduciary relationship in the narrow sense of relationships which had been
recognised by the Court of Chancery as being of a fiduciary character. other special relationships, all those relationships where
it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the
circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when
he knew or ought to have known that the enquirer was relying on him: per Lord Haldane's statement of his view in Robinson v
National Bank of Scotland (1916) SC (HL) 154 as cited in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] UKHL 4 at 5.

3 Haw Par Brothers International Ltd v Chiarapurk Jack [1991] 2 MLJ 428 at 433, [1991] SLR 626 at 634; revsd on appeal sub
nom Chiarapurk Jack v Haw Par Brothers International Ltd [1993] 3 SLR 285, CA (Sing) , without challenging the principle;
Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, 35 ALR 273, 3 ALJR 236; United Dominions
Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 12 per Mason, Brennan and Deane JJ and at 16 per Dawson J . See generally
[160] PARTNERSHIPS (2011 Reissue). However, note that case law shows that the courts are quite reluctant to find a fiduciary
relationship between businessmen who enter into commercial dealings: Solid Investments Ltd v Alcatel-Lucent (M) Sdn Bhd
(previously known as Alcatel Network Systems (M) Sdn Bhd) [2014] 3 MLJ 785 at 800, FC .

4 See Friis v Casetech Trading Pte Ltd [2000] 3 SLR 590 at [29], CA (Sing), per L P Thean JA , quoting Hospital Products Ltd v
United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587 ('In ordinary business affairs persons who have
dealings with one another frequently have confidence in each other and sometimes that confidence is misplaced. That does not
make the relationship a fiduciary one').

5 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587.

[290.187]

Undertaking to act on behalf of another

The courts have found fiduciary relationships to exist in situations in which no trust and confidence is
reposed but where in relation to a particular matter a person has undertaken to act in the best interests of a
principal and implicitly to put those interests above his own. In such relationships, the fiduciary character
stems from the undertaking alone. Communication of the undertaking is not essential. The principal may at
the time of the undertaking be ignorant of it so that there is neither a reposing of trust and confidence in the
person making the undertaking nor an expectation that the principal's interests will be advanced in
preference to any other interests; but this will not preclude the relationship from being fiduciary in nature1.
Where a fiduciary relationship arises out of an undertaking to advance another's interests, it is a matter of
indifference whether the undertaking is voluntary or the result of a bargain or is imposed by law2. The
fiduciary character of a partnership is also established upon this basis of an undertaking by the partners to
act in the best interests of the partnership3. In the case of a joint venture, an undertaking to act in the best
interests of the joint venture is commonly confined to some aspects of the relationship or venture, and the
parties may be entitled to prefer their own interests in relation to other aspects of the relationship4. There is
no rule that every aspect of a fiduciary relationship must acquire its fiduciary character from the same basis
and it is accordingly possible that some other aspects are impressed with a fiduciary character for a different
reason than an undertaking by the joint venturers to act in the best interests of the joint venture.
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1 Goh Swee Fang v Tiah Juah Kim [1994] 3 SLR 881 at 892-893, CA (Sing), per L P Thean JA . Cf the Singapore case of Koh
Keow Neo v Chee Johnny [2004] 3 SLR 385, where the court refused to impose fiduciary duties on a gratuitous agent and held
that a gratuitous agent would be liable to his principal if, in carrying out the work, he failed to exercise the degree of care which
might be reasonably expected of him. In the instant case the defendants' duty as gratuitous agents was to select competent
lawyers to act for the estate in the privatisation exercise and they had discharged this duty. It would be unduly onerous to
saddle them with other fiduciary duties as they were laymen volunteering their services for the common good.

2 Haw Par Brothers International Ltd v Chiarapurk Jack [1991] 2 MLJ 428 at 433, [1991] SLR 626 at 634; revsd sub nom
Chiarapurk Jack v Haw Par Brothers International Ltd [1993] 3 SLR 285, CA (Sing) , without challenging the principle.

3 See generally [160] PARTNERSHIPS (2011 Reissue).

4 Aw Yong Wai Choo v Arief Trading Sdn Bhd [1992] 1 MLJ 166, Ohm Pacific Sdn Bhd v Ng Hwee Cheng Doreen [1994] 2 SLR
576 at 584, CA (Sing), per L P Thean JA . See also CIMB Bank Bhd v Maybank Trustees Bhd [2014] MLJU 117, FC ; Petra
Perdana Bhd v Tengku Dato' Ibrahim Petra bin Tengku Indra Petra [2014] 11 MLJ 1, FC ; Aseambankers Malaysia Bhd v
Shencourt Sdn Bhd [2014] 4 MLJ 619, CA .

[290.188]

Vulnerability as an element in establishing a fiduciary relationship

It is sometimes stated that the vulnerability of a person in a relationship with another is sufficient to constitute
the relationship as being a fiduciary one1. This implies that the reposing of trust and confidence by the
vulnerable party is not a universal element of all fiduciary relationships, but that equity considers the
relationship between a vulnerable principal and his agent a fiduciary one in order to protect the vulnerable
party. It seems, however, that before the party is to be held a party to a fiduciary relationship, he must at
least know or should have known that the principal is in a vulnerable position and the nature of his
vulnerability. The courts have sometimes attempted to single out vulnerability as the essential element of all
fiduciary relationships, explaining that the fact of vulnerability underlies the requirement of the reposing of
trust and confidence in or the requirement of an undertaking to act in the best interests of the principal. It
has, for instance, been said that where a fiduciary undertakes to act for or on behalf of, or in the interests of,
another person, the relationship is 'one which gives the fiduciary a special opportunity to exercise the power
or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of
his position'2. A similar explanation is that the objective of preventing the misuse of delegated power where
the principal is at the mercy of the fiduciary leads to the imposition of the fiduciary's duties3. The difficulty
with the proposition that vulnerability alone is the distinguishing element of a fiduciary relationship is that
there is sufficient authority to show that the mere undertaking to act in the best interest of another without a
further demonstration of vulnerability suffices to establish a fiduciary relationship4. It has been said that
where a party in a position of disadvantage or vulnerability relies on a stronger party for the accomplishment
of a job or task to be performed, equity acting upon the conscience of the stronger party binds him to act in
the best interests of the principal; in this way, vulnerability coupled with reliance are seen to be the
distinguishing elements underlying and inherent in all fiduciary relationships5. Again, the difficulty is that
where the principal is able to point to acts of reliance, there is little interest in the fact, if any, that the cause
for reliance is the principal's vulnerability6. The absence of vulnerability can certainly indicate that a fiduciary
relationship does not exist7, but it would be wrong to suppose that parties on an equal footing can never
enter into a fiduciary relationship for mutual advantage8 or that a fiduciary relationship can never arise where
one party relies, to the knowledge and with the acquiescence of the other, on the other to act in the best
interests of the relying party.

1 Vulnerability by itself cannot be sufficient to impose a fiduciary relationship between the parties. Otherwise, a fiduciary
relationship would be imposed on all lenders and defaulting borrowers negotiating a settlement. Where the parties were dealing
with each other at arm's length that relationship should not be labelled as fiduciary and cannot give rise to a fiduciary
relationship ie it was simply a banker customer relationship and nothing else: Aseambankers Malaysia Bhd v Shencourt Sdn
Bhd [2014] 4 MLJ 619 at [115]-[116], CA .

2 Kumagai-Zenecon Construction Pte Ltd v Low Hua Kin [2000] 2 SLR 501 at [15] per G P Selvam J ; upheld on appeal sub
nom Low Hua Kin v Kumagai-Zenecon Construction Pte Ltd (in liquidation) [2000] 3 SLR 529, CA (Sing) , quoting Hospital
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Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587.

3 See Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587; Kumagai-Zenecon
Construction Pte Ltd v Low Hua Kin [2000] 2 SLR 501 at [14] per G P Selvam J ; upheld on appeal sub nom Low Hua Kin v
Kumagai-Zenecon Construction Pte Ltd (in liquidation) [2000] 3 SLR 529, CA (Sing) . See also Guerin v R (1984) 13 DLR (4th)
321 at 340, SC (Can), per Dickson J .

4 See Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587; Kumagai-Zenecon
Construction Pte Ltd v Low Hua Kin [2000] 2 SLR 501 at [13]-[15] per G P Selvam J ; upheld on appeal sub nom Low Hua Kin v
Kumagai-Zenecon Construction Pte Ltd (in liquidation) [2000] 3 SLR 529, CA (Sing) .

5 Khushvinder Singh Chopra v Mookka Pillai Rajagopal [1996] 2 SLR 379 at 396-397 per Lim Teong Qwee J (quoting Tate v
Williamson (1866) 2 Ch App 55 at 60-61 per Lord Chelmsford LC ); revsd on appeal without challenging the principle sub nom
Mookka Pillai Rajagopal v Khushvinder Singh Chopra [1996] 3 SLR 457, CA (Sing) ; Friis v Casetech Trading Pte Ltd [2000] 3
SLR 590 at [29]-[30], CA (Sing), per L P Thean JA ; Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55
ALR 417, 58 ALJR 587 (the requirement that a person under a fiduciary obligation will not put himself in a position where his
interest and duty conflict or, if conflict is unavoidable, will resolve it in favour of duty and will not, except by special arrangement,
make a profit out of his position). The existence of a situation of dependency or vulnerability has also been claimed to be a
feature which is considered to be indispensable to the existence of a fiduciary relationship: Lac Minerals Ltd v International
Corona Resources Ltd (1989) 61 DLR (4th) 14 at 63, SC (Can), per Sopinka J . The issue of trust or confidence is another
element which indicates the relationship is one involving a fiduciary and beneficiary. A fiduciary relationship may be found
where the lender exercises control over the borrower whenever the borrower has trust and confidence in the lender and where
the borrower is in a position of dependence, inequality or lack of knowledge: Shencourt Sdn Bhd v Aseambankers Malaysia Bhd
[2011] 6 MLJ 236 at 269.

6 See note 2 above.

7 Friis v Casetech Trading Pte Ltd [2000] 3 SLR 590 at [29]-[30], CA (Sing), per L P Thean JA .

8 As in the case of a managing agent and custodian trustee contracting to establish a unit trust.

[290.189]

Inequality of bargaining power

However, it is true to say that the courts are reluctant to characterise a relationship as fiduciary in character
by reason only that the principal who authorises another to undertake a job or task stands in a position of
unequal power with the authorised person1. It would be extremely difficult to define what is a sufficient
degree of inequality of bargaining power2 in order to constitute a fiduciary relationship. If inequality of
bargaining power in a relationship could lead to the imposition of a fiduciary relationship, it would also put
certainty of commercial arrangements in jeopardy.

1 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 58 ALJR 587. See Saad Marwi v Chan
Hwan Hua [2001] 2 AMR 2010, CA , the first case in Malaysia in which the court applied the doctrine of inequality of bargaining
power independently of the well-established doctrine of undue influence. See also American International Assurance Co Ltd v
Koh Yen Bee (f) [2002] 4 MLJ 301, CA ; Polygram Records Sdn Bhd v The Search [1994] 3 MLJ 127.

2 ' there are similarities between these two equitable doctrines: undue influence and unconscionable bargain. Indeed, the
doctrine of undue influence may be subsumed by the broader doctrine of unconscionability. A narrower scope of the doctrine of
unconscionability is the concept of inequality of bargaining power. Lord Denning MR in Lloyds Bank Ltd v Bundy [1975] QB 326,
had this to say about the concept of inequality of bargaining power (see p 339): By virtue of it, the English law gives relief to one
who, without independent advice, enters into a contract upon terms which are very unfair or transfers property for a
consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or
desires, or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the
benefit of the other: AEH Capital Sdn Bhd v AM-EL Holdings Sdn Bhd [2008] 4 MLJ 487 at 542, CA .

[290.190]

Significance of commercial arrangements

Arrangements between the parties of a purely commercial kind involving dealings at arm's length and on an
 Page 7

equal footing are consistently seen by the courts as involving no fiduciary duty1. This does not mean,
however, that fiduciary obligations cannot arise in a commercial relationship, although more than trust and
reliance will be required2. The disadvantages of introducing equitable doctrines into the field of commerce
must be balanced against the need, in appropriate cases, to do justice by making available relief through the
constructive trust, the fiduciary relationship being a means to that end3.

1 See eg Canadian Pacific (Bermuda) Ltd v Nederkoorn Pte Ltd [1999] 2 SLR 18, CA (Sing) ; Friis v Casetech Trading Pte Ltd
[2000] 3 SLR 590, CA (Sing) . See also Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417,
55 ALR 417, 58 ALJR 587. A similar view was taken in Canada in Jirna Ltd v Mister Donut of Canada Ltd (1971) 22 DLR (3d)
639, CA (Ontario); affd (1973) 40 DLR (3d) 303, SC (Can) .

2 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 55 ALR 417, 55 ALR 417, 58 ALJR 587; Friis v
Casetech Trading Pte Ltd [2000] 3 SLR 590 at [28], CA (Sing), per L P Thean JA .

3 See eg Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, [1968] 3 All ER 651, HL ; Swiss Bank Corp v Lloyds
Bank Ltd [1982] AC 584, [1981] 2 All ER 449, HL . See also Ching Mun Fong (Executrix of the estate of Tan Geok Tee (decd)) v
Liu Cho Chit [2000] 1 SLR 517, CA (Sing) . Cf the case of Borneo Housing Mortgage Finance Bhd v Bank Bumiputra Malaysia
Bhd [1991] 2 MLJ at 265, where the court held that: 'The courts are inclined to observe the principles of equity in the protection
of the little individual, that is, the purchaser, as against the big institutions or financiers which are perceived as being able to
withstand the loss, if any'.