Toksoz v Westpac Banking Corporation

The appeal concerned a dispute between Ms Toksoz and Westpac Banking Corporation, heard in the Court of Appeal of New South Wales. Ms Toksoz's husband had defrauded the bank of over $1 million, and the bank sought to recover these proceeds from Ms Toksoz, alleging she had received them. The primary judge had found in favour of the bank, ordering Ms Toksoz to pay a significant sum.

The central legal issues before the Court of Appeal were whether Ms Toksoz had received the proceeds of her husband's fraud and, if so, whether she had the requisite knowledge to be liable for knowing receipt. This involved determining whether the unexplained large sums deposited into her bank accounts, given her sole income was a single parent pension, could be inferred to be the proceeds of the fraud, and whether evidence, including matching telephone records and the use of her address in fraudulent activities, established her actual knowledge of the dishonest conduct.

The Court of Appeal reasoned that while the primary judge had correctly identified the legal principles of tracing and knowing receipt, there were errors in the calculation of the amounts for which Ms Toksoz was liable. The court applied the principles of constructive trusts and knowing receipt, inferring from the circumstances, including the lack of any legitimate source for the substantial funds in her accounts and her involvement in the fraudulent scheme, that she had received the proceeds of the fraud with the necessary knowledge. The court allowed the appeal in part, varying the amounts ordered to be paid by Ms Toksoz, but otherwise dismissed the appeal and ordered her to pay the respondent's costs. The court also made directions regarding the forwarding of the judgment to relevant government bodies and the prohibition of publication that might identify bank customers.