Fiduciary duty and members of parliament.

• Author: Aagaard, Lindsay

There is no job description for a member of parliament. Political scientists, civil servants and politicians themselves have long struggled to define the complex combination of moral and ethical obligations that make up the relationship between constituents and elected politicians. This article examines the concept of responsibility or "duty" as it is owed by members of the House of Commons to constituents. It outlines the concept of a fiduciary relationship and fiduciary duty, and provides a brief summary of how, in law, fiduciary relationships have expanded beyond the original application to trustees and beneficiaries. It also reviews the obligations attached to our elected representatives, and then outlines the case for extending fiduciary duty to elected members of parliament. Finally, it examines the consequences of the application of fiduciary duty, referring specifically to the advantages and disadvantages of such a change. This approach provides an opportunity to probe deeper into the relationship that exists between a member of parliament and a citizen, to look at the foundation of this relationship, and to find--through the concept of fiduciary duty--a minimum, legal threshold of accountability to which all members of parliament must rise.

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Fiduciary duty is a concept that evolved from Equity, an area of the law that was once distinct from, but is now combined with the Common Law. Equitable principles and remedies were administered by the old Court of Chancery, and fiduciary duty first appeared in the 1689 English judgment Walley v. Walley. As the equitable maxim goes, "equity is equality" and the underlying values of equity are considered to be simple good conscience, reason and good faith. Equity was used to supplement the common law, where the strict application of the existing law would in fact do more injustice than justice. In the words of Lord Denning, "equity was introduced to mitigate the rigour of the law". This conception of equity is one which Chief Justice Beverley McLachlin has stated that Canada has embraced with enthusiasm. (1)

Definition

In its origins, the word "fiduciary" means "trust-like." "Fiduciary duty" is the duty of loyalty that is owed by the powerful party to the vulnerable party when the two are in a fiduciary relationship. The fiduciary relationship can also be characterized as a vehicle used to impose duties on individuals who hold power over the interests of others. As Leonard Rotman writes, "beneficiaries are vulnerable to the misuse or non use of power, and fiduciaries [ought to] act with honesty, selflessness, integrity, fidelity and in the utmost good faith (uberrima fides) in the interest of the beneficiary" (2) Fiduciary obligation has been described as a "blunt tool for the control" of discretion and is viewed by many scholars as the way in which social norms or mores are captured within the law, and the way by which "law transmits its ethical resolve to the spectrum of human interaction." (3) The result of fiduciary law is that obligations, in the form of a standard of conduct, are imposed to regulate the way in which the opportunities that often arise from being in a position of power can be utilized (4).

The Frame Indicia for Fiduciary Relationships

Though the concept of fiduciary duty, stemming from a fiduciary relationship, is one with which courts still struggle, and though it has been described as having an "innate resistance to definition" and an inherent malleability, a guide has been developed through jurisprudence to aid in the determination of at least the institutional category of fiduciary relationships. (5) In Frame v. Smith Justice Wilson outlined a "rough and ready" test which captures basic characteristics of the fiduciary relationship. First, the fiduciary must have "scope for the exercise of discretion or power". Second, the fiduciary must be able to unilaterally exercise "that power or discretion so as to affect the beneficiary's legal or practical interests". Third and finally, the beneficiary in a fiduciary relationship must be "peculiarly vulnerable or at the mercy of the fiduciary holding the discretion or power". (6)

This test has been accepted and acknowledged in several important cases that have followed, including Hodgkinson v. Simms. In Hodgkinson the court acknowledged that the test is most useful when seeking to develop a whole new class of fiduciary relationship. Furthermore, the court clarified that the test consists of important indicia that help us identify the presence of a fiduciary relationship, and should not be taken as spelling out a list of essential ingredients (7).

Once a fiduciary relationship has been found, "equity will then supervise the relationship by holding [the fiduciary] to the fiduciary's strict standard of conduct." (8) This standard of conduct gives substance to the "conceptualization of loyalty" found in the fiduciary doctrine, and demands at least that the fiduciary not act where there is a conflict between the duty to the beneficiary and the interest of the fiduciary, and prohibits the fiduciary from making a profit as a result of being in a fiduciary position. A breach of fiduciary duty is found where there has been "unauthorized conflict or benefit," where fiduciaries privilege their own interests over those of the people they are obligated to serve. (9)

The Application of Fiduciary Duty to Members of Parliament

How could it be argued that a member of parliament is in a fiduciary relationship with his or her constituents? The expansion of "institutional" fiduciary relationships to realms beyond the primary fiduciary relationship of trustee-beneficiary has happened over the course of many years in the Canadian courts. For instance, fiduciary duty was extended by statute to company directors, requiring them to act in good faith and in the best interest of the company, and parents have been found to have a fiduciary obligation to their children in certain respects.

The first question is to whom is the loyalty of a member of parliament owed? There are countless completely expected and unavoidable obligations owed by a member of parliament. Obligations are owed to the riding association, to the party, to supporters, to the country as a whole. For instance, every member of parliament, in becoming a nominee for that party at the beginning of the electoral process, makes a pledge--sometimes implicitly and sometimes explicitly--to follow party rules. Though the appropriate degree of party discipline is a matter of continual debate, the concept of team play and the various "debts" that accompany an elected member to Ottawa are a natural part of our political scene. However, these obligations--large and looming in the day-to-day reality of the lives of members of parliament--are only in addition to at least three other seminal duties at the heart of our democratic system: the duty to the Crown, to the rule of law and to constituents.

To the Crown

Canada's status as a constitutional monarchy is evident in the oath of office sworn by members of parliament at the beginning of every term. As the Queen is the Head of State, parliamentary actions are carried out in her name. However, as Eugene Forsey points out, the authority for those actions flows from the citizens--the constituents--as we will discuss shortly. The oath, contained in the Fifth Schedule of the Constitution, requires that the member "be faithful and bear true allegiance" to the Sovereign, and was implemented in order to guarantee the supremacy of the British Sovereign over anything else. (10) The oath of office is a formal, and essentially mandatory, manifestation of an obligation central to our system of government: the obligation to be faithful to the Sovereign. The presence of the Sovereign in the oath does not mean that loyalty is required to the Queen personally, but rather serves to evoke the Queen as "the symbol of personification of the country, its constitution and traditions, including concepts such as democracy." As James Robertson writes, elected members are assuming positions of public trust and with the oath of office they promise to conduct themselves "patriotically, and in the best...