RnD Funding Pty Ltd v Roncane Pty Ltd

The Court of Appeal in RnD Funding Pty Ltd v Roncane Pty Ltd considered an appeal from a decision of the primary judge concerning claims by RnD Funding Pty Ltd, a commercial lender, that it was entitled to trace its security interest in funds held by ATG, a mining company, into shares purchased by Roncane. The underlying dispute involved complex financial arrangements and a security interest granted by ATG to RnD. The Court of Appeal identified that the primary judge's decision was complicated by RnD's unclear claims, particularly regarding the nature of the proprietary interest it sought to trace.

The legal issues central to the appeal involved the conditions under which RnD could trace its security interest into the shares acquired by Roncane. Specifically, the Court had to determine if RnD's claim was based on a legal or equitable interest in the funds and whether the occurrence of a Control Event, which triggered a "locked box" provision, was sufficient to invoke the right to trace. Additionally, the Court considered whether an antecedent breach of fiduciary duty was necessary for a right to trace to arise and if Grimaldi v Chameleon Mining NL (No 2) required such a breach.

The Court of Appeal held that the right to trace is indeed an incident of an underlying property right, and a foundational property claim is necessary for any tracing claim to succeed. The Court distinguished between a common law property right and equitable interests, noting that the nature of the foundational property interest determines the outcome of any tracing claim. The Court concluded that RnD's security interest was sufficient to support a tracing claim. The Court allowed the appeal and declared that the shares in Goldus Pty Ltd held by Roncane Pty Ltd were subject to the security interest of RnD Funding Pty Ltd. The Court also ordered Roncane to pay RnD's costs of the appeal and granted leave for further submissions regarding the costs of the hearing before the primary judge.