Farah Constructions Pty Ltd & Ors v Say-Dee Pty Ltd

The High Court of Australia considered an appeal from the New South Wales Court of Appeal concerning allegations of dishonest assistance and knowing receipt in relation to a property development. The appellants, Farah Constructions Pty Ltd and its directors, were accused by the respondent, Say-Dee Pty Ltd, of dishonestly assisting in a breach of trust and receiving property obtained in breach of trust. The dispute centred on the development of a property owned by a joint venture between Farah Constructions and Say-Dee, where it was alleged that Farah Constructions and its directors diverted profits and opportunities to themselves.

The primary legal issues before the High Court were whether the directors of Farah Constructions had dishonestly assisted in a breach of trust by their company, and whether they had knowingly received property transferred in breach of trust. Specifically, the court had to determine the standard of dishonesty required for accessory liability and the elements necessary to establish knowing receipt in the context of corporate directors and their actions concerning joint venture assets.

In its reasoning, the High Court affirmed that the test for dishonest assistance requires proof that the defendant acted with a degree of moral turpitude that reasonable honest people would consider dishonest. The court rejected the argument that the knowledge of the company could be imputed to the directors in a way that automatically established their personal dishonesty. Regarding knowing receipt, the court reiterated that it requires the defendant to have received trust property for their own benefit, with the requisite degree of knowledge that the property was transferred in breach of trust. The court found that the directors' knowledge and actions did not meet the high threshold for dishonest assistance or knowing receipt as established by precedent.

The High Court allowed the appeal, setting aside the orders of the New South Wales Court of Appeal. The court found that the evidence did not establish that the directors of Farah Constructions had acted dishonestly or had received property with the requisite knowledge to make them liable for dishonest assistance or knowing receipt.