ABSTRACT
The Bicentenary of the Supreme Court of New South Wales is an opportunity for reflection and celebration of 200 years of the continuity of the rule of law in New South Wales. In service to that ongoing commitment, this paper examines the equitable doctrine of fraud on a power, increasingly referred to as the proper purpose rule. The rule performs a basic rule of law commitment to prevent law’s abuse by requiring public and private powerholders’ intentional adherence with the terms according to which power is held.
Yet, there is much that is uncertain about the proper purpose rule. Cases have expressed a variety of views on whether the rule operates upon a powerholder’s purpose or motive; imposes an objective or subjective standard; has the effect of voidness or voidability; is a duty or implied term; is part of or separate from good faith; unique to fiduciary powerholders; or part of the excessive execution rule – just to name a few.
This paper aims to resolve some of these uncertainties by examining the rule’s operation across a range of different powerholding arrangements, private and public. This paper’s broader approach facilitates a coherent understanding of the proper purpose rule as being a consistent response to the same basic problem arising throughout a legal system, which is the intentional abuse of legal power. While the rule has the same role across the Australian legal system, its operation and effect differ depending on the type of power and the relational or institutional context. The paper goes on to explain that apparent inconsistency and uncertainty as to the rule’s operation and effect can be made sense of according to the specific relational or institutional context, the type of power and way in which power is devolved.
Hudson, Jessica, The Proper Purpose Rule: Preventing Law’s Intentional Abuse (August 31, 2024). This paper was given at the 2024 Supreme Court of New South Wales Annual Conference, 31 August 2024 and is forthcoming in the Australian Law Journal.
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