Bank of New Zealand & Anor v Spedley Securities Limited (In Liquidation)

The parties before the High Court of Australia were Bank of New Zealand and BNZ Securities Australia Limited (the applicants) and Spedley Securities Limited (in liquidation) (the first respondent), along with other respondents. The dispute concerned the applicants' application for special leave to appeal a decision, with the core of the matter revolving around the availability of section 52 of the Trade Practices Act 1974 (Cth) as a defence, specifically in the context of an equitable set-off or a defence based on the principle of "clean hands."

The legal issues before the Court included whether section 52 could operate as a defence to the existence of a constructive trust, particularly when the applicants accepted they had constructive knowledge of facts giving rise to such a trust. The applicants contended that the appeal involved a consideration of competing equities or estoppels, arising from their constructive knowledge of a breach of fiduciary duty by a third party, which allegedly rendered funds subject to a constructive trust at the time of payment to the applicants. The appeal was specifically concerned with the concept of constructive knowledge, rather than actual knowledge or deliberate avoidance of inquiry.

The applicants' submission was that, by reason of their constructive knowledge, they might be estopped from denying the existence of a constructive trust. This position was necessitated by the pleadings, which compelled them to accept constructive knowledge of facts upon which the existence of a constructive trust was contended. The applicants sought to demonstrate that the payment by Spedley to BNZ was made due to a breach of fiduciary duties, and that the applicants received these funds with constructive knowledge of this breach.