Dear Colleagues;

What at first looks like a taxation decision in Howard v Commissioner of Taxation [2014] HCA 21 (11 June 2014) http://www.austlii.edu.au/au/cases/cth/HCA/2014/21.html turns out to have some interesting private law aspects. The High Court discusses the nature of the fiduciary obligations owed by a company director in a case where the director had tried to argue that equitable compensation he had received in prior proceedings was not his “income” because it was held on constructive trust for his company. His argument was rejected. The tenor of the Court’s decision is summed up nicely in para [3] per French CJ & Keane J:

3. The appellant's argument that his fiduciary obligation to Disctronics extended to his involvement in the joint venture had nothing to do with the protective purposes for which such obligations exist in equity. That argument, advanced in his own interest, fell under the shadow of the cautionary observation of Deane J in Chan v Zacharia:

"There is 'no better mode of undermining the sound doctrines of equity than to make unreasonable and inequitable applications of them'".

Regards

Neil