4 UNSW Law Journal Volume 40(1)
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DIVERTING FIDUCIARY GAINS TO COMPANIES
JAMIE GLISTER
I INTRODUCTION
It is clear that wrongdoing fiduciaries must disgorge profits that they personally make in breach of fiduciary duty. That proposition is ‘integral to the formulation of the fiduciary principle itself’.1 It is also clear that third parties, including companies, can be liable to account on Barnes v Addy2 grounds for profits they make through participating in a fiduciary breach. In cases where third parties receive money or other property, they may be liable in knowing receipt.3 If a corporate opportunity is misdirected instead,4 a third party who exploits that opportunity can be liable as a knowing assistant. Where the relevant third parties are companies under the control of the wrongdoing fiduciary, it will be a straightforward task to impute the fiduciary’s knowledge of his or her misconduct to the company, 5 and so satisfy the knowledge requirements for Barnes v Addy liability. This is all orthodox, but the important point is that the fiduciaries and third party companies are still treated as discrete actors. In the context of gain-based relief, this means that each is only liable for their own gains. Any gain made by the third party company is only recoverable from the fiduciary to the extent that it reflects loss suffered by the fiduciary’s principal, and can therefore be claimed from the fiduciary as equitable compensation. In cases where no loss is suffered,