Forfeiture of Agents' Remuneration

Abstract

The notion that Equity sanctions forfeiture of remuneration as a remedy for breach of fiduciary duty is an invasive weed within its territory. Seeing the damage it can do , some judges have attempted to check it. It would be much better to root it out. Only one principle, or perhaps set of principles, is needed. If, as a result of the agent’s defaults, the basis for the agent’s remuneration has failed then remuneration has not been earned. Many serious breaches of fiduciary duty will coincide with a failure to perform that which the agent was being paid for. There can be little harm in such circumstances in Equity following the law, and not requiring the claimant to rely on common law pleadings within the law of contract in order to deny the agent his or her remuneration. Relatedly, a breach of fiduciary duty might sometimes permit the principal to rescind or cancel either the contract of agency or the contract with the third party on which the agent had been working, thereby also removing the basis for the agent’s remuneration. Even then, work that has produced value for the principal before the cancellation might need to be recompensed as part of the unravelling of the relevant contract. On this approach, forfeiture is not a stand-alone remedy, but a simple by-product of general principle. Nothing in the argument made here attempts to erode the strictness of Equity’s fiduciary principles, notwithstanding the commercial context. But a rule of automatic forfeiture, as the Imageview decision promotes, is not only not called for by fiduciary principle, it results in outcomes that could fairly be characterised as uncommercial.