Robins v Incentive Dynamics Pty Ltd (in liq)

The proceeding before the Court of Appeal of New South Wales involved an appeal by the liquidator of Incentive Dynamics Pty Ltd (in liq) against the respondents, who were directors of the company. The dispute concerned allegations that the directors had breached their fiduciary duties by causing company funds to be transferred to a company in which they had an interest.

The primary legal issues before the court were whether the directors had engaged in conduct that constituted a breach of their fiduciary duties under the Corporations Law (specifically s232(6), which predated the Corporations Act 2001, s182), and whether the liquidator was entitled to pursue remedies for knowing receipt based on the principles established in *Barnes v Addy*. The court also considered the availability of personal and proprietary remedies, including the imposition of a remedial constructive trust, and whether rescission of the transactions was a necessary prerequisite for such remedies.

The Court of Appeal found that the directors had breached their fiduciary duties. Applying the principles of knowing receipt, the court determined that the directors had received company property for their own benefit in circumstances where they had knowledge of the breach of trust. The court reasoned that a remedial constructive trust was an appropriate mechanism to address the unconscionable retention of company property by the directors. The court concluded that rescission of the transactions was not a necessary prerequisite for the imposition of a remedial constructive trust in these circumstances.

The Court of Appeal made a declaration of a remedial constructive trust.