Hospital Products in UK Law

It is therefore necessary to be satisfied not merely that the money when paid was not at the free disposal of the payee but that, objectively examined, the contractual or other arrangements properly construed were intended to provide for the preservation of the payor's rights and the control of the use of the money through the medium of a trust.

Each case will turn on its own facts, but if the relationship is regulated by a contract, then the terms of that contract will be of primary importance, and wider duties will not lightly be implied, in particular in commercial contracts negotiated at arms' length between parties with comparable bargaining power, and all the more so where the contract in question sets out in detail the extent, for example, of a party's disclosure obligations : see more generally Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, at 97, where Mason J said this:

The employee must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third party without the informed consent of his employer.

In Hospital Products Ltd. v US Surgical Corporation Ltd. (1984) 58 ALJR 587 at p. 620 Deane J indicated that he regarded the question as deserving of reconsideration; and in Jaggard v Sawyer [1995] 1 WLR 269 at p. 281 Sir Thomas Bingham MR expressed the view that the judgments in Surrey County Council v Bredero Homes (1993) 1 WLR 1361 (in which the Court refused to countenance the possibility of awarding restitutionary damages for breach of contract) might "not be the last word on the subject."

As Bowstead and Reynolds say, if the principal knows this, he cannot object on the ground that he did not know the precise particulars of the amount paid. He can, of course, always ask and if he does not like the answer, he can take his business elsewhere. Bowstead does add that where no trade usage is involved (and no usage was alleged in the present case), the principal's knowledge may require to be “more specific”.

But this statement of principle does not absolve the court from deciding the scope of the fiduciary's obligations. If, in fact, the agent has, in the light of the facts of the case, no obligation to disclose the actual amount of commission he is paid when his principal knows he is being paid by the third party to the transaction, it does not advance the matter to say that, because he is a fiduciary, he must disclose the actual amount he is being paid.

Where there is a contractual retainer and where it provides expressly or by implication obligations of a fiduciary nature, such obligations must clearly prevail, or "mould" or "inform" the fiduciary nature of the contractual relationship.