Fan v Tang

In the matter of Fan v Tang, the Federal Court of Australia was presented with a dispute concerning the fiduciary duties of trustees and the resulting liabilities arising from their breaches. The plaintiff, Fan, brought proceedings against Tang and others, the defendants, who were trustees of a trust. The crux of the dispute involved allegations that the trustees had improperly used trust property for personal benefit, leading to financial loss for the plaintiff.

The legal issues that the court was required to address included the determination of whether the trustees had breached their fiduciary duties by dealing with trust property for personal gain. Another issue was whether the plaintiff was entitled to compensation for the losses caused by the trustees' breaches, and if so, to what extent each trustee was liable for the losses. Additionally, the court had to consider whether the acquisition of the property by the trustees complied with the Foreign Acquisitions and Takeovers Act 1975 (Cth) and whether it was subject to any exemptions.

The court's reasoning established that the second and third defendants held interests in the property on a resulting trust for the trust, as there was no evidence that they intended to vest a beneficial interest in the nominal purchaser. The trustees had encumbered the trust property without receiving any corresponding benefits, thereby breaching their duty as trustees not to deal with trust property for personal benefit. The court found that the third defendant also breached the fiduciary duty he owed the plaintiff by obtaining an unauthorised benefit from his position as a fiduciary. The court held that where breaches by several persons contribute to the beneficiary's loss, each is liable to pay compensation measured by the amount of loss attributable to their breach. The court ordered equitable compensation to be paid to the plaintiff for the losses attributable to the trustees' breaches.