Responding to the financial abuse of older people - Loddon ...

appellants and the respondent, including its longevity and the dual role played by the
respondent in the transaction, provided a sufficient basis on which to find that it was
a fiduciary one’.
It was also held that ‘in circumstances in which there was no evidence that the
appellants relied on the advice of the respondent in relation to the transaction,
that they held any expectation that it would disclose information to them, or that
it assumed the role of their adviser, no special duty of disclosure owed by the
respondent to the appellants could be made out’.
The court also relied upon the decision of Branson J in Truebit Pty Ltd v Westpac Bank
(unreported, Federal Court of Australia, NG 456 of 1996, 27 November 1997), where
it was held that no fiduciary relationship arose in the circumstances of borrowing
money from the bank as the bank at no stage created an expectation that it would
provide such advice.
Despite the outcome, as with other cases in this area, it was accepted that although
the law does not recognise the relationship of banker and customer as one of the
accepted categories of fiduciary relationship, this does not mean that there will not
be circumstances where such a relationship will arise.
8.5 Conclusion on fiduciary relationship
With regard to the project at hand, legal commentary and judicial authority indicate that
the ordinary relationship of the banker and customer is one of debtor and creditor and is
not fiduciary in nature.
However, certain circumstances may give rise to a fiduciary relationship between banker
and customer and usually involve the bank advising its client with respect to lending and
potential transactions the client may be considering.
Therefore, it can be said that in the context of everyday banking, the banker and
customer relationship does not give rise to a fiduciary relationship. When issues arise as
to the age, language skills, business skills and mental capacity of the customer, claims
are usually based on misleading and deceptive conduct, unconscionable conduct or
undue influence.
8.6 Duty to question a valid mandate
The Banking and Financial Services Ombudsman (‘BFSO’) highlights the potential
conflict of duties when banks deal with its customers in that:
there is undoubtedly a tension between a bank’s obligation to make payment on its
customer’s unambiguous written order and what may, in particular circumstances,
be a duty to question an apparently valid mandate. 86
On the one hand, a bank has a duty under contract to repay the customer on the
customer’s mandate, that is, the unambiguous written order of the customer.
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