From Disability to Duty: from Constructive Fraud to Equitable Wrongs

This thesis concerns the changing nature of the law’s regulation of two particular types of interpersonal power abuse: acting in conflict of interest and exercising undue influence. In the 18th Century, both types of behaviour were covered by Equity’s jurisdiction over “constructive fraud”. However, in the 19th Century, two more specific doctrines arose to govern them. The law of fiduciaries applied to actions in conflict of interest; the law of undue influence covered the misuse of influence. When they first emerged, both these areas of law were underpinned by the “good man” theory of Equity. Those whose conduct they regulated were thought of as disabled, as against those over whom they held their power, from asserting rights acquired as a result of abusing their position. This idea had powerful and idiosyncratic remedial implications described in this thesis. As time moved on, for various reasons (both internal and external to each doctrine), the courts began to perceive that the remedial regimes the two entailed were in some way deficient. They therefore began to take steps to amend them. This thesis identifies cases where the only way of accounting for both the language used by the judges and the remedy granted is on the basis that those in fiduciary positions/positions of influence were subject to a duty, as against those over whom they held their position, not to abuse it. Consequently, as a matter of fact, both areas of law are currently in theoretically hybrid states. Some (often older) authorities support the idea that those in positions of power are merely subject to a disability, while others – which are necessarily newer – reject it. As this thesis demonstrates, this inconsistency is currently giving rise to several practical uncertainties relating both to remedies and procedure (including limitation periods)