Account of Profits: An Exemplar of Fiduciary Doctrine?

Abstract

The strict obligations governing the conduct of fiduciaries is intended to discourage temptation and encourage fidelity. These objectives potentially lose their force if the remedy has a different emphasis. An account of profits serves a crucial function in disgorging illicit gains. The determination of accountable gains and the amount that must ultimately be disgorged is a phased exercise which does not necessarily reflect the rigour of the duty it enforces. The implications are explored with reference to causation and allowances. The former is consistent with strict fiduciary standards to the extent that unauthorised gains are readily imputed to the breach. The latter is a nuanced exercise in which the relationship between duty and remedy is more tenuous. It is concluded that this is not necessarily inconsistent with the objectives of equity and that each can be explained on a principled basis.

This article was first published by Thomson Reuters in the New Zealand Universities Law Review and should be cited as (2023) 30 NZULR 549. For all subscription inquiries please phone, from New Zealand: 0800 10 60 60, from Overseas: [phone] or see online at www.thomsonreuters.co.nz.

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Keywords: Obligations, Account of profits, Remedies, Causation, Fiduciary duties