Dr Ros Kidd
Historian - Consultant - Writer
The Revolutionary Potential
Like Australia, the United States and Canada are former
colonies of Britain. All expressed similar doctrine regarding the
standing of their Indigenous peoples. They take the view that they, as
a more civilised nation, have an obligation to protect the interests of
native races deemed primitive and vulnerable. All of these countries
implemented pervasive controls and employed similar interventions:
alienation from land, ascribed definitions of status, segregation onto
state-managed reserves, personal and community disempowerment,
restricted employment and commercial opportunities, social
marginalisation. Yet there was a crucial difference. Canada and the
United States recognised the independent status of Indian tribes and
struck treaties to define the extent and management of reserve
territories. The prior occupation rights of Indigenous Australians were
Indigenous peoples were hostage to the extraordinary discretionary
powers of their colonisers. Until 1972, every Indigenous Queenslander
was vulnerable to the extinction of their rights and freedoms as
individuals in the general community, on the reserves and as workers and
wage earners. The Queensland government controlled child/parent and
marital relationships, locality and conditions of living, nature and
earnings of labour, availability and security of private savings.
Thousands of Indigenous under government control during the twentieth
century could not sell their labour nor access their savings except by
Government records reveal that despite countless warnings
the government failed to remedy systemic defects, including continuing
failure to pay pocket money during the work period, chronic problems
with thumb printing and signatures on withdrawal forms, long-term
knowledge that the earnings of hundreds of illiterate account holders
remained vulnerable to fraud, and officially disputed dealings on trust
funds. Like wage earners, mothers and pensioners struggled to survive
in desperate poverty knowing nothing of monies withheld and monies
lost. In 1966 people were finally allotted bank passbooks which showed
nothing of previous dealings on their savings. Even today, people still
have no idea what happened to their ‘stolen wages’, administered at the
This vulnerability, those discretionary powers, are the meat of legal
argument regarding an enforceable fiduciary duty owed by governments to
those whose lives and property they controlled.
Actions against government
The former colonies of Canada, Australia and the United States inherited
a legal doctrine premised on the supposed impossibility of the Crown
committing an illegal act. This derived from the maxim that ‘the King
can do no wrong’, an immunity that endured in common law as, over time,
the King’s officer became the public officer. A citizen could only sue
the government if the government gave permission. In mid-19th century
England, the doctrine had been practically abandoned with permission to
sue routinely granted. But in the colonies such action was deemed
interference in government powers.
In his State of the Union message in 1861, President Lincoln had urged
courts, rather than Congress, be the final arbiters in actions against
the government for money damages saying: ‘it is as much the duty of
government to render prompt justice against itself, in favour of
citizens, as it is to administer the same between private
individuals.’ Congress adopted the recommendation.
A few years later this unjust anomaly was the subject of a successful
private member’s Bill in Queensland’s fledgling parliament. The
colonial government had already withheld consent twice when William
Henry Walsh argued in 1865 there was no reason to assume a government
would act justly when its own interests were challenged. Citizens
should be able to pursue legal action against the government without
seeking consent. And they should have ‘as nearly as possible’ the same
rights to remedy as would pertain ‘in any ordinary case’ between two
persons or entities at law or in equity. Walsh’s law1
was revolutionary. It rescinded the Crown’s previous immunity making
governments financially liable for damages.
Constitutional authorities debating Australia’s federation in 1901
agreed with Walsh: ‘There is no earthly reason why the Crown should not
be sued, wherever the subject may be … for the simple reason that there
is no earthly reason that I can see why Government officials should be
able to do wrong and a private person have no rights against him.’2
They argued the Queen’s officers can do wrong and individuals should
have the right to seek legal remedy. In 1903 the new Australian
Commonwealth also passed legislation to allow its citizens redress
against government malpractice.3
Although Walsh’s law provides the dominant model in Australian Crown
proceedings legislation today its potential has not been realised.4
Our courts have maintained a reluctance to pass judgment on governments
in the exercise of their discretionary powers, a reluctance long
discarded by their counterparts in Canada and the United States. As a
historian who has worked for fifteen years uncovering primary evidence
relating to the Queensland government’s control of Indigenous lives,
labour and finances, I wanted to understand why, given the wealth of
evidence in Queensland of entrenched mismanagement of Indigenous
finances, this government would not be held to the same standards of
accountability as governments in the United States and Canada. How can
the Queensland government not be in an enforceable trust relationship
when it called itself a trustee for Indigenous money, both private and
bulk trust accounts, and acted as a trustee in controlling income,
interest, access and expenditure of Indigenous money. So began my
education in trust and fiduciary obligations.
Trusts and fiduciary obligations
A trust creates a legally binding obligation under which those who
control the trust (trustees) hold the trust property for the benefit of
another (beneficiary) and not for themselves in their role as trustees.
An enforceable trust depends on a property interest. The key component
of a fiduciary relationship is power. A fiduciary relationship arises
when there is a material discrepancy between the power of one person and
the vulnerability of the other; when there is scope for one party to
exercise power or discretion over another; where there is the
possibility of unilaterally exercising that power or discretion to
affect the beneficiary’s legal or practical interests; and the fact that
the beneficiary is vulnerable or at the mercy of the abuse of that
While trust law is well defined, fiduciary law remains a developing and
disputed arena: the categories identified as fiduciary remain fluid.
Fiduciary relationships and fiduciary obligations depend on the demands
of the particular circumstances. Not all the obligations existing
between the parties to a fiduciary relationship are themselves fiduciary
The courts do not always intervene. When discretionary power is wielded
by governments, English courts historically argued a distinction between
the ‘true trusts’ of commercial law, and trusts in the political sense.
Echoing ‘the King can do no wrong’, the courts in the United Kingdom and
its former colonies frequently declined to intervene in relationships
they describe as political trusts. These, they said, are expressions of
governmental powers and obligations assumed for particular purposes and
therefore outside the scope of equity’s attention.7
The courts have held this position, even in relation to trusts created
by statute and expressed in language that would appear to impose an
obligation on government. Unless the obligation on the part of the Crown
or its servants or agents is expressed in clear words, the relationship
will not be treated as a ‘true trust’. Rather, the courts will
characterise it ‘as a governmental or political obligation’.8
the House of Lords declined to judge whether the Secretary of State for
India, as an agent for the Crown, held an enforceable obligation to
distribute war booty held by him under Royal Warrant ‘in trust for the
use of’ soldiers in the Indian mutiny campaign. It was held that the
words ‘in trust for’ might include higher matters between the Crown and
the public officers who discharged its duties and functions. In 188710
the Canadian Supreme Court put it thus: the relationship between the
Crown and Indigenous peoples was a ‘sacred political obligation, in the
execution of which the state must be free from judicial control’.
Trust doctrine in the USA is said to commence with two cases brought by
the Cherokee nation in the early 1830s11
where the Supreme Court recognised the independent status of the
Cherokee but declared the nation subject to the ultimate power of the
federal government. In the early 20th century12
courts in Canada similarly upheld the doctrine of political trust. The
Exchequer Court agreed that proceeds of land sales had been held ‘in
trust’ by the Crown for the Mississaugas of Ontario but said this did
not mean that the Court had jurisdiction to enforce the trust nor to
pass judgment on the rights of interested parties.
It was not until 1935 that courts in both Canada and the USA asserted a
right to adjudicate government obligations in fiduciary relationships.
In Dreaver v The King,13
the Exchequer Court said that the Canadian government’s powers under
the Indian Act 1906 to manage trust funds were subordinate to the
explicitly worded terms of the deed of surrender of the Mistawasis band
from Saskatchewan. It upheld their claim that the Department of Indian
Affairs had misspent income from land sales on supplies and services
promised free of charge under treaty; the band was awarded relief of
more than $18,300 with interest. In United States v Creek Nation,14
the Supreme Court acknowledged the government’s right to control and
manage Indian property and affairs in its role as guardian to a
‘dependent Indian community’ but held this executive power was subject
to the specific authority of the Court of Claims. The court awarded
damages at current market value plus interest for land wrongfully sold
in 1891 after incorrect land surveys.
the US Supreme Court held that the government had
‘charged itself with moral obligations of the highest responsibility and
trust’ through its self-imposed policies and numerous acts of
Congress, a trust duty which should ‘be
judged by the most exacting fiduciary standards’. In 194416
the Court said it would adjudicate government dealings
‘the same principles of law as would be
applied to an ordinary fiduciary’ because it was ‘settled doctrine’ that
the USA was a trustee in its dealings with Indian property. In depleting
interest-bearing accounts before accessing non-interest-bearing funds
the government had breached these trust obligations. In 197317
the Court affirmed that, as trustee, the government’s conduct
would be measured ‘by the same standards applicable to private
trustees’: the trust must be administered solely on behalf of the
beneficiary, the trustee must be accountable for any profit arising out
of the administration of the trust, and the trustee had a duty to make
trust property productive.
US courts declared the pervasive system of government controls over
tribal property was sufficient in itself to trigger a fiduciary
obligation to affected tribes. The act of taking ‘control or supervision
of tribal monies or properties’ imported ‘a normal fiduciary
relationship’ even in the absence of an authorising or underlying
statute about a trust fund or a trust or fiduciary connection. In 198319
the Court said a fiduciary relationship necessarily arises ‘when the
government assumes such elaborate control over forests and property
belonging to Indians’. The following year20
in Canada the Supreme Court said it was precisely the Crown’s
discretionary powers that transformed the relationship between
government and Indian tribe into a fiduciary obligation. An enforceable
trust arose because Indian land was inalienable except through surrender
to the Crown. At which point equity would hold the fiduciary to the
strict standard of conduct of a trustee.
Elouise Cobell and four co-plaintiffs filed a class-action lawsuit
against the US departments of Interior and Treasury on behalf of half a
million past and present Native Americans, charging the government
failed to keep proper records and failed to account to beneficiaries for
their money. They said the government had ignored all pleas to
accurately account for the trust funds and they had no way of knowing
the true state of their accounts unless the court compelled the
defendants to institute appropriate trust practices and restore funds
that had been lost or misused. In 199922
the District Court judge described the breaches as ‘far more inexcusable
than garden-variety trust mismanagement’ of typical trusts, because
people did not voluntarily choose to have their lands taken from them
nor did they voluntarily relinquish their money. Legislation had
effectively trapped them in a state of coerced dependency that rendered
them the poorest people in the nation and helplessly reliant on the
trustee for their welfare and livelihood.
The judge said the plaintiffs had a statutory right to a full historical
accounting of their funds and acknowledged that they only sought to
recover what was rightfully theirs. This was subsequently confirmed by
the Appeals Court which held the legal breach of that trust was the
failure to provide a full accounting; such accounting, they confirmed,
applied to all funds irrespective of when they were deposited in the
trust. In a Memorandum Opinion in 2003 the judge held an accounting was
due on all individual Indian assets held in trust since 1887 and in
accordance with the highest fiduciary standards.
Australian case law
In Australia, meanwhile, not a single case relating to Indigenous claims
against governments has upheld an enforceable fiduciary duty, but each
of the handful of cases has discussed the possibilities. Following
Brennan J in Mabo (No 2),23
the fact of surrender of land, if it were in expectation of specific
tenure, might be sufficient to attract a fiduciary obligation because
those who surrender their title would be critically vulnerable to abuse
by government of its discretionary powers to alienate their interests in
the land. Vulnerability to abuse of discretionary powers might similarly
invoke a fiduciary obligation if, as Brennan J speculated in Northern
Land Council (No 2),24
the government acted as conduit for Indigenous money, for instance as
distributor of royalties to the Land Council. Clearly, in both
scenarios, the Indigenous concerned would hold a valid expectation the
government would act in their interests.
In Mabo Toohey J sourced a fiduciary duty in the ‘extraordinary’
power of the government to destroy or impair Indigenous interests, even
if that power were not exercised. The fact of the power, and the
consequent vulnerability of Indigenous people to abuse of that power
would, he argued, be sufficient to attract the intervention of equity to
ensure the position was not abused. Toohey J identified separate
grounds for a fiduciary obligation in the comprehensive legislative
framework and practices of Queensland’s protection and preservation
In the subsequent Wik case25
Brennan J qualified Toohey J’s opinions. Vulnerability to extinguishment
of title by the Crown was not sufficient, Brennan J argued, because it
would be self-contradictory for a government to hold legislative powers
to alienate Indigenous land while at the same time being subject to a
fiduciary obligation to protect Indigenous interests in it. To attract a
fiduciary obligation in such circumstances there would need to be an
action or function by which government undertook to protect Indigenous
land interests or through which the people held a reasonable belief that
the government would do so. It was that undertaking or belief that was
vulnerable to abuse and triggered the fiduciary obligation, not just the
power to impair or alienate Indigenous interests.
The New South Wales Supreme Court made a similar point in 1999:26
the fiduciary obligation had to be found in statute, with their being
clear evidence of an intent or implication to do so. This was reiterated
equity would only intervene if the obligation to act in another’s
interest was clearly expressed in the statutes. In line with Brennan J
in Wik, O’Loughlin J held there can be no contradiction. A
fiduciary obligation could not forbid what the legislation permitted.
Australian courts have recognised several principles from cases from
other jurisdictions which have also upheld fiduciary obligations.28
These include the inequality of bargaining power, the undertaking to
fulfil a duty on behalf of another, the capacity of one party to
unilaterally exercise a discretion or power to affect the rights or
interests of another, the consequent dependency or vulnerability of the
other, and above all, the common requirement of loyalty to the person
they serve. In 1999 the New South Wales Court of Appeal29
said it is immaterial whether people did or did not expect the
government to act in their interests, but whether such an expectation is
‘judicially prescribed’ by a law which establishes that entitlement.
Thus the question is not whether there is an expectation in fact, but
whether the vulnerable party is ‘entitled to expect’ a particular
standard of conduct. Professor Finn [says] … ‘the expectation may be a
judicially prescribed one because the law itself ordains it to be that
other’s entitlement. This may be so … because that party should, given
the actual circumstances of the relationship, be accorded that
entitlement irrespective of whether he has adverted to that matter.30
Protection laws in Queensland
There is no doubt the protection laws in Queensland did prescribe such
an entitlement. The codified supervisory policies and practices of the
twentieth century were the actions and functions by which the government
undertook to protect Indigenous financial interests. Under this
protection regime, Indigenous workers involuntarily ‘surrendered’ to the
government their labour and finances but retained a beneficial interest
in their earnings and entitlements that the government had a
responsibility to protect. Clearly the government undertook to ‘look
after’ those interests and Indigenous account holders of necessity
‘relaxed their self-interested vigilance or independent judgment’31
in the reasonable belief the government would deal honestly and
competently with their finances. Following Brennan J in Wik,
this should attract an enforceable fiduciary obligation. And unlike
native title, there is nothing self-contradictory in the government
holding legislative power to control Indigenous money while at the same
time being subject to a fiduciary obligation to protect Indigenous
interests in it.
Following Brennan J in Northern Land Council, in acting as
conduit for intercepted earnings and entitlements the Queensland
government held a fiduciary duty to protect the interests of contracted
workers, endowees and pensioners. Yet the evidence suggests that, in
its fiduciary position as guardian for Indigenous wards, the government
used its control of wages and welfare entitlements, and its position as
banker, to its own profit or benefit. It is not the legislation
relating to financial controls which adversely affected the interests of
Indigenous account holders, but the policies and practices implemented
by the Queensland government under cover of that mandate, many of which
were maintained despite official warnings to desist and in full
knowledge of consequent impairment.
The power that Queensland governments wielded over Indigenous lives and
finances was certainly as ‘manifestly awesome, perhaps unlimited’32
as congressional power in the early 20th century over Indian interests.
Like the US government, the Queensland government ‘charged itself with
moral obligations of the highest responsibility and trust’ through its
self-imposed policies and numerous Acts of parliament and should equally
be judged ‘by the most exacting fiduciary standards’.
In assuming the responsibility to manage finances generated by
Indigenous endeavour, both directly as savings and entitlements and
indirectly as trust fund holdings, the government stood as supervising
parent, ostensibly to conserve resources on their behalves. Indigenous
Queenslanders did not enter relationships with the government
voluntarily. They did not knowingly consent to this interference. They
were certainly not free to terminate these relationships during 70 years
of mandatory management.
Accountability in law?
These pervasive controls, the judicially prescribed entitlement to full
protection of their interests and the valid expectation by both
Indigenous wards and the wider community that the government would not
abuse these discretionary powers, suggest a fiduciary relationship
enforceable under national and international case law. As Richard
Bartlett asserted, ‘the exercise of discretion of power over property,
above and beyond that to which people are usually subject, leads to
accountability at law’33
such that equity can control ‘unregulated discretions’ and ‘curb abuses
Nevertheless in general Australia courts still hold a conservative
line. In 1999,35
noting Canada’s ‘greater willingness’ to extend fiduciary doctrine into
new relationships, Abadee J observed this was not shared by Australia or
New Zealand, and the United Kingdom’s reluctance was ‘even more
marked.’ In rejecting the Canadian precedent he said: ‘[i]f the
common law [in Australia] does not impose a duty of care for a variety
of reasons … it is difficult to see why equity should intervene.’ He
observed that two recent Australian cases36
which found an enforceable fiduciary obligation in a guardian/ward
relationship had both involved the protection of an economic interest.
In the event Abadee J rejected claims of a fiduciary duty in the case at
hand ‘even if equity law is not viewed in terms of protecting only
O’Loughlin J held to this convention. He noted that in two further
the High Court had declined to extend equity’s supervision where
contract or tort law already applied, and where economic interests were
not at stake. In the latter case the Full Court observed that in
Anglo-Australian law, the interests ‘which the equitable doctrines …
have hitherto protected are economic interests’. Citing also the most
O’Loughlin J argued it would be inappropriate for a judge to expand the
range of fiduciary relationships to conflicts of interest which did not
include an economic aspect.
In 2001, Kirby J observed40
that authorities in Canada and the United States were to some extent
‘reshaping the law of [fiduciary] obligations’, blurring distinctions
still maintained in the United Kingdom and Australia. Noting the
‘general disinclination’ of our courts ‘to expand fiduciary obligations
beyond what might be called proprietary interests into the more nebulous
field of personal rights’ he urged Australian courts to stick to the
‘accepted doctrine’ that fiduciary duties adhere to the protection of
If it is ‘accepted doctrine’ that fiduciary duties adhere to the
protection of economic interests then it should hold that an enforceable
fiduciary duty should adhere to the economic interests of Indigenous
people around Australia, whose wages, savings, inheritances
and welfare entitlements were intercepted and controlled by governments
in the states and territories. Each of these governments had a
‘judicially prescribed’ duty to protect the finances of thousands of the
‘poorest people in our nation’ who did not voluntarily choose to
relinquish their labour potential or their money. In standing between
people and their savings and entitlements, governments were a conduit
for private finances. Not only Indigenous wards, but the parliament and
the wider public had a valid expectation that governments would wield
their extraordinary powers to the benefit of Indigenous interests. A
fiduciary obligation to do so is clearly expressed in the statutes and
It is my belief that it is within ‘accepted doctrine’ to adjudicate
government dealings on private Indigenous finances under the same
principles of law as would be applied to an ordinary fiduciary, to
determine whether a trust was administered solely on behalf of the
beneficiaries and to grant beneficiaries the fundamental right to a full
historical accounting of their funds. In their control and supervision
of private Indigenous monies Australian governments should not escape
accountability by claiming a ‘political obligation’ outside equity’s
attention. It is now 140 years since William Walsh averred ‘it is as
much the duty of government to render prompt justice against itself, in
favour of citizens, as it is to administer the same between private
individuals’ and the Queensland parliament voted to allow individuals
‘as nearly as possible’ the same rights to remedy in claims against the
government as would pertain ‘in any ordinary case’ between two persons
or entities at law or in equity. It is time Indigenous Queenslanders
were accorded this right.
In early October 2006 Queensland Public Interest Law Clearing House (QPILCH)
is coordinating a visit to Brisbane, Cairns, Sydney and Melbourne of
Elouise Cobell, lead plaintiff in the US class action. Legal forums and
community meetings will be held at each location. PILCH New South Wales
and PILCH VIC are organising seminars in those states. For information,
Claims Against the
Government Act (1866).
2 Sir John
Downer, Official Record of the Debates of the Australasian
Federal Convention, 3rd session, 5 1898, 1661, 1663.
4 P D Finn,
Essays On Law And Government, (1996) 25. Similar legislation to
limit the immunity of the Crown to legal challenge did not occur
internationally until 1910 (New Zealand), 1946 (USA), 1947 (UK),
and variously from 1951 to 1974 in the Canadian provinces.
5 Norberg v
Wynrib,  4 WWR 557.
6 Wewaykum Indian
Band v Canada (2002) 4 SCR 245.
7 P Hogg and P
Monahan, Liability of the Crown (2000) 258.
8 The Accident
Compensation Tribunal, Registrar of Victoria v Federal Commr of
Taxation (1993) 117 ALR 27.
Kinloch v Secretary of State for India
(1882) 7 App Cas 619.
10 St Catherine’s
Milling and Lumber Company v The Queen (1887) 13 SCR 577.
Nation v Georgia 30 US (5 Pet) 1 (1831); Worcester v Georgia 31
US 515 (1832).
12 Henry v The
King (1905) 9 ExCR 417.
14 United States
v Creek Nation 295 US 103 (1935).
Seminole Nation v United States 316 US 286 (1942).
Menominee Tribe v United States 101 Ct Cl 10 (1944).
Manchester Band of Pomo Indians v United States 363 F Supp 1238
18 Navajo Tribe
v United States 624 F 2d (1980).
19 United States
v Mitchell II 463 US 206 (1983).
20 Guerin v The
Queen (1984) 13 DLR (4th) 321.
22 Cobell v
Babbit 91 F Supp 2d (D.D.C. 1999).
23 Mabo and Ors
v Queensland (No 2) (1992) 175 CLR 1.
24 Northern Land
Council v The Commonwealth (No 2) (1987) 61 ALJR 616.
25 The Wik
People v the State of Queensland and others (1996) 187 CLR 1.
26 Williams v
The Minister, Aboriginal Land Rights Act 1983 (1999) NSWSC 843.
27 Cubillo v The
Commonwealth of Australia (2001) 112 FCR 455.
28 Justice Kirby
in Pilmer v The Duke Group Ltd (in liq)  HCA 31, citing
Breen v Williams (1996) 186 CLR 71.
Brunninghausen v Glavanics (1999) 46 NSWLR 538.
30 Ibid 
citing P D Finn, Equity, Fiduciaries and Trusts (1989) 47.
31 P D Finn,
‘Contract and the Fiduciary Principle’, UNSW Law Journal vol
12, 1989 94.
32 Reid Peyton
Chambers, ‘Judicial Enforcement of the Federal Trust
Responsibility to Indians’, Stanford Law Review, May 1975 1226.
33 Cited by Lisa
di Marco, ‘A Critique and Analysis of the Fiduciary Concept in
Mabo v Queensland’, 1994 MULR 19 876.
34 John Glover,
Commercial Equity, Fiduciary Relationships, 1995 98.
35 Williams v
The Minister, Aboriginal Land Rights Act 1983.
v Minister of Community Welfare (1992) 176 CLR 408;
Brunninghausen v Glavanics.
37 Cubillo v The
Commonwealth of Australia (2000) 103 FCR 1.
38 Breen v
Williams; Paramasivan v Flynn (1998) 160 ALR 203.
39 Clay v Clay
(1999) 20 WAR 427.
40 Pilmer v The
Duke Group Ltd (in liq).