Twigg by her tutor Elizabeth Flintoft v Pitcher Partners Holdings Pty Ltd (No 7)

Case •

[2025] NSWSC 210

•

18 March 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Twigg by her tutor Elizabeth Flintoft v Pitcher Partners Holdings Pty Ltd (No 7) [2025] NSWSC 210
Hearing dates: 19 February 2025
Date of orders: 18 March 2025
Decision date: 18 March 2025
Jurisdiction:Equity - Commercial List
Before: Peden J
Decision:

At [157]

Catchwords:

EQUITY — Trusts and trustees — Constructive trusts — Whether bonds held on trust at the time that they were transferred — Whether admissions to that effect relevant — Whether trust is remedial or constructive on proper construction of declaration made by this Court — Where orders imposing trust ambiguous

EQUITY — Trusts and trustees — Breaches of trust — Whether transfer of bonds was breach of trust — Whether third party participant liable as knowing or voluntary recipient, knowing assistant, or for procuring breach of trust

EQUITY — Equitable remedies — Equitable compensation — Whether beneficiaries must prove loss

CONSUMER LAW — Misleading or deceptive conduct — Whether non-disclosure of transfer of bonds was misleading or deceptive or amounted to deceit

Legislation Cited:

Australian Consumer Law ss 18, 236

Civil Liability Act 2002 (NSW) pt 4, s 34A

Civil Procedure Act 2005 (NSW) s 100

Competition and Consumer Act 2010 (Cth) pt VIA, s 87CC

Limitation of Actions Act 1958 (Vic) s 21

Native Title Act 1993 (Cth)

Uniform Civil Procedure Rules 2005 (NSW) rr 6.12, 36.4

Cases Cited:

Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76

Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1

Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45

Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151

Athens v Randwick City Council (2005) 64 NSWLR 58

Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd [2015] NSWCA 225

AVS Group of Companies Pty Ltd v Commissioner of Police (2010) 78 NSWLR 302

Axis Bank Ltd v Gujarat NRE Indian Pty Ltd [2020] NSWSC 1711

Barnes v Addy (1874) LR 9 Ch App 244

Bathurst City Council v P W C Properties Pty Ltd (1998) 195 CLR 566

Black v S Freedman & Company (1910) 12 CLR 105

Blue Mirror Pty Ltd v Tan & Tan Australia Pty Ltd (in liq) [2024] NSWCA 253

Bofinger v Kingsway Group Ltd (2009) 239 CLR 269

Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35

Cureton v Blackshaw Services Pty Ltd [2002] NSWCA 187

Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317

Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732

Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296

H Lundbeck A/S v Sandoz Pty Ltd (2022) 276 CLR 170

Hagan v Waterhouse (1991) 34 NSWLR 308

Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298

Hasler v Singtel Optus Ltd (2014) 87 NSWLR 608

Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41

Johnston v Brightstars Holding Co Pty Ltd [2014] NSWCA 150

King v Fister [2022] QCA 47

Lim v Comcare [2019] FCAFC 104

Magill v Magill (2006) 226 CLR 551

Mao v Bao (2023) 113 NSWLR 26

Medical Device Technologies Pty Ltd v Health Administration Corporation [2024] NSWCA 142

Murdoch v Mudgee Dolomite & Lime Pty Ltd [2022] NSWCA 12

Muschinski v Dodds (1985) 160 CLR 583

Northern Territory v Griffiths (2019) 269 CLR 1

Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558

Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62

Ross v Lane Cove Council (2014) 86 NSWLR 34

Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405

Smith v Smith [2017] NSWSC 408

Soulos v Pagones [2023] NSWCA 243

Sze Tu v Lowe (2014) 89 NSWLR 317

Tadrous v Tadrous [2012] NSWCA 16

Twigg by her tutor Elizabeth Flintoft v Pitcher Partners Holdings Pty Ltd (No 6) [2025] NSWSC 77

Twigg v Twigg [2022] NSWCA 68

Twigg v Twigg (No 4) [2020] NSWSC 1159

Twigg v Twigg (No 5) [2020] NSWSC 1782

Twigg v Twigg (No 6) [2020] NSWSC 1856

Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669

Category:Principal judgment
Parties: Diana Twigg by her tutor Elizabeth Flintoft (First Plaintiff)
Twigg Plant Hire Pty Ltd (Second Plaintiff)
Ipswich Landfill Pty Ltd (Third Plaintiff)
Brooklyn Landfill & Waste Management Pty Ltd (Fourth Plaintiff)
Maxwell James Twigg (Fourth Defendant)
Twigg Co Pty Ltd (Fifth Defendant)
Representation:

Counsel:
M Elliott SC with D K Smith (Plaintiffs)
P Knowles SC with B Dziubinski (Fourth and Fifth Defendants)

Solicitors:
Roberts & Partners Lawyers (Plaintiffs)
O’Loughlin Westhoff (Fourth and Fifth Defendants)
File Number(s): 2022/150914
Publication restriction: Nil

JUDGMENT

  1. For many years, Diane Twigg, her daughters, Frances and Elizabeth, and her related companies have been in dispute with her son, Max Twigg, and his related companies. The plaintiffs have complained about what Max did with the sale proceeds of the family business, the Twigg Group. Without intending any disrespect, I will refer to the parties by their first names.

  2. In March 2019, Diane and three corporate plaintiffs commenced proceedings against Max and his entities, including Twigg Co Pty Ltd. Diane alleged that Max breached his fiduciary duties as a director of the corporate plaintiffs by causing those companies to transfer to him or his companies approximately $130 million of the sale proceeds of the Twigg Group.

  3. Those earlier proceedings were determined by Ball J (as his Honour then was) in Twigg v Twigg (No 4) [2020] NSWSC 1159 (Twigg (No 4)) and Twigg v Twigg (No 5) [2020] NSWSC 1782 (Twigg (No 5)). Diane and the corporate plaintiffs were successful in obtaining orders entitling them to recover approximately $120 million from Max and his entities.

  4. An appeal from Twigg (No 4), Twigg (No 5) and the associated costs judgment in Twigg v Twigg (No 6) [2020] NSWSC 1856 was dismissed: Twigg v Twigg [2022] NSWCA 68 (Twigg Appeal).

  5. On 25 May 2022, the plaintiffs commenced the present proceedings against various entities jointly known as Pitcher Partners, being the plaintiffs’ accountants and financial advisers, as well as Twigg Co and Max. The plaintiffs had recovered about $35 million of the $120 million judgment, and sought to recover further compensation from Pitcher Partners. The claim against Pitcher Partners was settled for a payment of $25 million by Pitcher Partners, plus costs. I approved the settlement in relation to Diane, who is represented by a tutor: Twigg by her tutor Elizabeth Flintoft v Pitcher Partners Holdings Pty Ltd (No 6) [2025] NSWSC 77.

  6. This is the seventh judgment in the present proceedings. It deals with the plaintiffs’ remaining claims against Max and Twigg Co.

  7. Diane and the other corporate plaintiffs claim that, after Ball J delivered his reasons in Twigg (No 4) on 31 August 2020, but before final orders were made, Max caused Twigg Co to transfer financial products in the form of bonds to himself, and that he then sold them and used or kept the sale proceeds. They submitted that the bonds were purchased using the misappropriated sale proceeds of the Twigg Group and so were always held by Twigg Co for the benefit of the plaintiffs under a constructive trust.

  8. The plaintiffs claimed that Twigg Co is liable for breach of trust, deceit, and misleading or deceptive conduct. They also claimed that Max was liable for inducing or procuring Twigg Co’s breach of trust, knowingly assisting in that breach, or in the alternative, that Max is liable for breach of trust, deceit, and misleading or deceptive conduct.

  9. The plaintiffs seek compensation in the sum of $320,163.13, together with interest and costs.

  10. The primary issues to be determined were:

  1. Whether the bonds were held on constructive trust by Twigg Co for the plaintiffs as at 1 December 2020, and if so:

  1. Was the transfer of the bonds from Twigg Co to Max a breach of trust by Twigg Co and/or Max; and

  2. Is Max liable as a third-party participant in a breach of trust?

  1. Whether Twigg Co or Max engaged in deceit or misleading or deceptive conduct that sounds in a remedy.

Factual background concerning the bonds

  1. From about 26 June 2019, to no later than 4 December 2020, Twigg Co’s asset portfolio included five unlisted Australian bonds, acquired at a total cost of $607,508.00. All of the bonds were held for Twigg Co through the National Australia Bank.

  2. On 3 June 2020, the Court made a freezing order over Twigg Co’s assets, which was extended on 18 June 2020 and 30 June 2020 “until further order”. However, the particular assets frozen did not include the bonds.

  3. As noted above, on 31 August 2020, Ball J delivered judgment in Twigg (No 4). His Honour found that in breach of fiduciary duty, Max distributed a significant proportion of the sale proceeds of the Twigg Group business to himself or his entities. Max then used that money to make a number of investments, including the acquisition of the Byron Bay Hotel: at [7], [134].

  4. Ball J held that the sale proceeds of the Twigg Group business could be traced into the sale proceeds of the Byron Bay Hotel, which could in turn be traced into various assets: at [193]-[234]. However, Ball J found that “without more it is not possible to say that any amount currently held by Twigg Co … came from the proceeds of the sale of the hotel”: at [222]. That meant that the assets held by Twigg Co were not traceable proceeds of the sale of the Twigg Group business.

  5. The judgment did not contain substantive orders, and the parties were ordered to provide to Ball J proposed short minutes giving effect to the reasons.

  6. On 3 October 2020, the plaintiffs filed a notice of motion seeking orders, inter alia, varying the 31 August 2020 judgment and the conclusion at [222]. They claimed the judgment should have recorded that certain assets held by Twigg Co were held on constructive trust for the plaintiffs, because they were traceable from the sale proceeds of the Byron Bay Hotel, which were in turn traceable from the sale proceeds of the Twigg Group business. To support this, the plaintiffs relied on admissions in an affidavit by Max and Twigg Co’s solicitor, Mr Corey Radcliff of Radcliffs Lawyers, that $5.6 million from the sale of the Byron Bay Hotel was transferred to Twigg Co’s asset portfolio.

  7. While there was no specific reference to the bonds in the motion or the submissions filed on the motion, the plaintiffs’ senior counsel at the hearing before me submitted that the “asset portfolio”, referenced in the motion and identified in the solicitor’s affidavit, necessarily included the bonds.

  8. On 18 November 2020, Radcliffs emailed Pitcher Partners enquiring about fixed interest securities held by Twigg Co (which included the bonds) being made available to Max. That email included:

So we can advise our client in relation to his rights and obligations and to comply with court orders and future orders, we request the following information. …

(b) in relation to Twigg Co, noting approximately $1.3m is invested in “fixed interest”, if Max were to instruct you to make $900,000 available what would be the impact (i.e. time to transact, likely capital gains or losses)

  1. On 19 November 2020, Radcliffs emailed Pitcher Partners enquiring about the transfer of domestic fixed interest securities (which included the bonds) from Twigg Co to Max and then the sale of those securities with the proceeds to be paid to Radcliffs’ trust account. The email stated:

I calculate (from the asset allocation statement dated 21 October 2020 (attached) that $880,000 currently held in Domestic Fixed Interest is not affected by the [freezing] order. If the asset positions have decreased since that date please let me know. If not, then as discussed, please arrange for an off-market sale of the fixed interest assets up to $880,000 to Max Twigg and then liquidate the assets and pay the proceeds to our trust account …

  1. On 20 November 2020, Ball J heard the motion concerning the variation of the 31 August 2020 judgment. It was adjourned part-heard on the basis that there would be further written submissions and that the defendants would provide the plaintiffs further records describing what had happened to certain assets.

  2. Between 23 and 25 November 2020, Pitcher Partners, Radcliffs and Max arranged for the completion of various documentation necessary for the transfer of the bonds from Twigg Co to Max.

  3. On 25 November 2020, Pitcher Partners sent correspondence to NAB to obtain values of each bond in the Twigg Co portfolio "to be able to prepare standard transfer forms from Twigg Co … to [Max]".

  4. On 27 November 2020, the plaintiffs filed and served supplementary submissions, claiming that the bonds were held on constructive trust by Twigg Co for the plaintiffs. This was the first time the plaintiffs made a claim specifically in relation to the bonds. The submissions included:

16. On 26 June 2019, the Twigg 2 Trust transferred seven bond series worth a total of $811,168 to Twigg Co: compare "Portfolio Contributions and Withdrawals" for the Twigg 2 Trust … the funds of Twigg 2 Trust reflected the proceeds of sale of the BBH …, and thus the profits made from the proceeds of sale of the Twigg business.

17. The current portfolio report [dated 20 November 2020] demonstrates that five of those bond issues are still held by Twigg Co. They are identifiable in that document by their purchase date …

18. In these circumstances, the sale proceeds can be traced into those five bonds, and they are held by Twigg Co on constructive trust for one or more plaintiff.

  1. On 30 November 2020, Max emailed Pitcher Partners signed, but undated, forms for the transfer of the bonds from Twigg Co to him.

  2. Also on 30 November 2020, the defendants filed further written submissions in respect of tracing into Twigg Investments No 2 Trust and Twigg Co. Those submissions did not explicitly contend that the bonds were not traceable sale proceeds of the Twigg Group business, but did submit that other assets were not traceable proceeds. Instead, the submissions focused on the tracing exercise as it related to money in a bank account with ANZ in the name of Twigg Co.

  3. On about 1 December 2020, Max authorised Pitcher Partners to transfer the bonds from Twigg Co to Max using the form of words apparently suggested by Pitcher Partners.

  4. On 7 December 2020, the matter returned before Ball J. No party made any reference to the bonds. On the same day, NAB advised Pitcher Partners that three of the bonds had been sold and that the "sale proceeds from your [client's] bonds will be in their linked account [on] Wednesday, and the funds for the Next DC redemptions [ie redemptions for a category of bonds held by Twigg Co] will be in their account on Thursday".

  5. There is no dispute that on the pleadings, the proceeds of sale and redemption of the bonds was $608,381.97.

  6. By 11 December 2020, the bond proceeds were paid into a solicitor’s trust account in Max’s name.

  7. On the same day, Ball J delivered judgment on the 3 October 2020 notice of motion: Twigg (No 5). The relevant parts of Ball J’s reasons as they related to the bonds are at [36]-[37]:

As the Principal Judgment records (at [221]), Twigg Co is another company controlled by Max which is used to acquire certain high yield assets. Virtually no submissions were made to the Court on the assets of Twigg Co during the final hearing. The plaintiffs apparently assumed that the position was the same as for the Twigg Investments No 2 Trust and Max did not specifically deal with it at all. There was, however, evidence before the Court in the form of an email dated 31 May 2020 from Pitcher Partners to Mr Radcliff showing the payment of $5.6 million to Twigg Co from the proceeds of sale of the Byron Bay Hotel and there was other evidence before the Court relating to sums of money paid or assets bought in the name of Twigg [Co]. Substantial additional evidence and submissions have been provided to the Court on the assets of Twigg Co in connection with this application. It is plain that the Principal Judgment proceeded on an incorrect understanding of the facts. For the reasons already given, it is therefore appropriate to reopen the judgment in relation to this aspect of the case.

The facts relating to Twigg Co are these:

1. On 26 June 2019, the Twigg Investments No 2 Trust transferred seven bond series worth a total of $811,168 to [Twigg Co]. Those bonds were acquired by the trust before the sale of Harkaway. Accordingly, those bonds were acquired from the proceeds of the sale of the Twigg Group business. Five of those bond issues are still held by Twigg Co …

  1. However, Ball J made those findings about the five categories of bonds being held by Twigg Co assuming that was true at the time, as there was no evidence or submission that, by the time of the judgment, the bonds had been transferred into Max’s name on 1 December 2020 and sold or redeemed by 10 December 2020, at the latest.

  2. On 11 December 2020, his Honour made the following relevant orders:

3. Paragraphs 221 to 222 and 272 of the reasons for decision dated 31 August 2020 be varied to find that the assets of Twigg Co comprise traceable proceeds save for [certain investment products not including the bonds].

  1. By order 4, his Honour directed the parties to provide draft orders to give effect to the 11 December 2020 judgment.

  2. On 18 December 2020, Ball J made final orders in relation to the dispute. Declarations were made that parts of the Twigg Group business sale proceeds were distributed in breach of trust and without a valid resolution, and that Max breached his fiduciary obligations to the corporate plaintiffs by causing them to act in breach of trust. Further, the following orders were made:

6. Declaration that the proceeds of the sale of the Twigg Group business on 2 April 2007 that were paid to [Max and his corporate entities] were held on trust for the first, second and third plaintiffs in the following proportions:

a. 48% as to the first plaintiff;

b. 28% as to the second plaintiff, and

c. 24% as to the third plaintiff. …

16. Declaration that the fifteenth defendant, Twigg Co, holds all its assets save for [various assets not including the bonds] on trust for the first, second and third plaintiffs in the … proportions … [first plaintiff: 24.86%; second plaintiff: 40.46%; third plaintiff: 34.68%] …

  1. The defendants admitted that on about 16 February 2021, on instructions from Max, $600,000 was transferred from Radcliffs' trust account to Max’s Commonwealth Bank account no. 318110331361 (namely, the Viridian Line of Credit), in circumstances where:

  1. $345,050 of the $600,000 comprised bond proceeds; and

  2. At the time, Max’s bank account was overdrawn in the amount of $513,215.50.

  1. On 19 April 2021, the plaintiffs discovered the sale and redemption of the bonds and on 21 April 2021 brought a notice of motion seeking orders consequent to the disposal of the bonds.

  2. Of significance to the determination of this matter, on 8 July 2021, Ball J made the following orders in respect of that motion:

1. The Court declares that the [bonds] held by Twigg Co Pty Ltd and transferred into the name of Maxwell Twigg on or about 1 December 2020, and the subsequent proceeds of sale of those assets, were (and to the extent they still exist, remain) assets of Twigg Co Pty Ltd the subject of order 16 made on 18 December 2020 …

3. The Court declares that the Sale Proceeds [of the bonds] are held on trust by the defendants for the plaintiffs.

Were the bonds held on constructive trust by Twigg Co as at 1 December 2020?

  1. The real issue in dispute is whether, as at 1 December 2020, the bonds were held by Twigg Co on trust, when they were transferred to Max.

  2. I accept the bonds were so held for various reasons explained below.

Admissions

  1. First, the plaintiffs contended that on 7 July 2021, during the course of hearing before Ball J, Max and Twigg Co’s senior counsel admitted that the bonds were held on trust and that there had been a breach of that trust on at least two occasions. The plaintiffs submitted that Max and Twigg Co ought to be held to those admissions.

  2. The plaintiffs also noted that their pleaded case was that “[at] all material times, the Bonds were held on trust for the Plaintiffs by reason of the findings and declarations made by Ball J on 11 December 2020, 18 December 2020 and 8 July 2021”. Max and Twigg Co formally admitted that allegation. However, Max and Twigg Co submitted that this admission did not “extend to an admission that the Bonds were held on trust prior to the findings and declarations made by Ball J” later in December 2020.

  1. Although Max and Twigg Co indicated that they would seek leave at the hearing to withdraw this admission, no such application was made. Therefore, I consider it open on a simple reading of the pleading that “at all material times” (that referenced dates from 18 November 2020) included 1 December 2020, when the bonds were transferred to Max.

  2. Consequently, I consider it open to conclude that Max and Twigg Co ought to be bound by their admission that the bonds were held on trust as at 1 December 2020. However, I accept there is some uncertainty as to whether an admission as to a question of law, such as whether property is trust property, is effective: see eg Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at [68], Gummow J (Gleeson CJ, McHugh and Heydon JJ agreeing on this point); cf Johnston v Brightstars Holding Co Pty Ltd [2014] NSWCA 150 at [121] (Basten JA, Gleeson JA agreeing).

  3. Because there may be some doubt, I also consider the other arguments.

Effect of Ball J’s 31 August 2020 judgment

  1. Rule 36.4 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides:

(1) A judgment or order takes effect--

(a) as of the date on which it is given or made, or

(b) if the court orders that it not take effect until it is entered, as of the date on which it is entered …

(3) Despite subrules (1) …, the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules.

  1. In Twigg (No 4), Ball J concluded that various property “is held on trust for the plaintiffs in proceeding 2019/71329”: at [272]. Although his Honour directed the parties to take various steps to arrive at “short minutes of order intended to give effect to [the] reasons” (at [274]), Ball J did not make any order specifying that the judgment was “not [to] take effect until it [was] entered”: UCPR r 36.4(1)(b). Nor did his Honour make any order that the judgment was to “take effect as of a date … later” than 31 August 2020: UCPR r 36.4(3).

  2. Consequently, I consider that Ball J’s judgment in Twigg (No 4), including his Honour’s conclusion at [272] that various property “is held on trust for the plaintiffs”, took effect from the date that judgment was given, being 31 August 2020: UCPR r 36.4(1)(a). The orders subsequently made by his Honour only formalised that position.

  3. However, this does not settle the question of whether the bonds were held on trust as at 1 December 2020. A complicating factor is that the list of property that Ball J found was held on trust in Twigg (No 4) at [272] did not include Twigg Co’s assets: see also at [222]. It was not until 11 December 2020, that Ball J made orders varying several paragraphs of his earlier reasons, including paragraphs [221]-[222] and [272], so as to find that “the assets of Twigg Co [save for certain products] comprise traceable proceeds” and were therefore held on trust.

  4. The declarations made by Ball J on 18 December 2020 and 8 July 2021 confirmed that the bonds, as assets of Twigg Co, were held on trust.

  5. Twigg Co and Max’s senior counsel made the following submission:

Had the August judgment said [that Twigg Co’s assets] are traceable assets, Twigg Co's assets are traceable assets, on 31 August, there would be no doubt that this case would be very different. We wouldn't be having this case because, in my submission, even the remedial constructive trust would arise at that time, 31 August.

My point is that the remedial constructive trust can't arise [on 31 August 2020] because his Honour had not given reasons expressing that [Twigg Co’s assets were] trust property or held on trust and that that only came to life on [8 December 2020] and confirmed by the orders of [11 December 2020]. That is the short point.

If you want to put that as my clients get the benefit of an error, that's a characterisation. I would say my clients are, and for that matter Mr Elliott's clients, subject to the findings imposed by the Court and those findings include a remedial constructive trust imposed by the Court and that trust is imposed at a particular date.

  1. I do not accept this submission. Instead, I consider that on their proper construction, the variation orders made by Ball J on 11 December 2020 can only be sensibly understood as having retrospective effect. The consequence is that paragraphs [221]-[222] and [272] of his Honour’s judgment in Twigg (No 4) should be read as if Twigg Co’s assets were in the list of property that was “held on trust for the plaintiffs in proceeding 2019/71329” as at 31 August 2020, when the judgment was given. Since the bonds formed part of those assets, it follows that they were held on trust from 31 August 2020 onwards. Therefore, the bonds continued to be held on trust as at 1 December 2020, when they were transferred to Max.

Effect of Ball J’s 18 December 2020 and 8 July 2021 orders

  1. On the contingency that the above analysis is erroneous, I proceed to consider whether the final orders Ball J made on 18 December 2020 and 8 July 2021 had the effect of determining that the bonds were held on trust from 1 December 2020.

  2. Max and Twigg Co submitted that the 18 December 2020 orders should not be read as retrospectively imposing a constructive trust, because they operated on the facts as at that date and were framed in the present tense: that “Twigg Co, holds all its assets save for the following on trust” (emphasis added). They also submitted that the 8 July 2021 declaration that the bonds “were (and to the extent they still exist, remain) assets of Twigg Co” had the effect of clarifying that the bonds were the subject of the 18 December 2020 declaration, but said nothing about whether the constructive trust operated before 18 December 2020.

  3. I do not accept that these linguistic considerations point conclusively one way or another. The use of “holds” in the 18 December 2020 declaration makes clear that as at that date, Twigg Co’s assets were trust assets, but does not foreclose the possibility that they became trust assets before 18 December 2020. Equally, the 8 July 2021 declaration that the bonds “were” the assets of Twigg Co does not clarify the relevant date that they were such.

  4. Instead, I consider that the 18 December 2020 and 8 July 2021 orders are ambiguous as to when Twigg Co began to hold the bonds on constructive trust for the plaintiffs.

  5. At least where there is ambiguity, a court can have regard to extrinsic evidence including the reasons for judgment to construe court orders: see eg Ross v Lane Cove Council (2014) 86 NSWLR 34 at [30] (Leeming JA, Meagher JA and Tobias AJA agreeing); Lim v Comcare [2019] FCAFC 104 at [40]-[41] (McKerracher, Markovic and Snaden JJ).

  6. Therefore, it is appropriate to have regard to Ball J’s reasons to resolve the ambiguity, as “the judgment is the source of the order” and “[t]he order must therefore conform to the judgment”: Athens v Randwick City Council (2005) 64 NSWLR 58 at [129] (Santow JA, Tobias JA agreeing).

Was the constructive trust remedial or institutional?

  1. Ball J held that “entities controlled by Max which received any part of the sale proceeds were equally liable to account to the Corporate Plaintiffs or Mrs Twigg as trustees of those proceeds”: Twigg (No 4) at [138]. The basis for this finding was the alter ego principle recognised in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 (Grimaldi) at [243], where Finn, Stone and Perram JJ held:

[One basis for third party liability for participation in a breach of fiduciary duty is] where the third party is the corporate creature, vehicle, or alter ego of wrongdoing fiduciaries who use it to secure the profits of, or to inflict the losses by, their breach of fiduciary duty … In these cases the corporate vehicle is fully liable for the profits made from, and the losses inflicted by, the fiduciary’s wrong. The liability itself is explained commonly on the basis that “company had full knowledge of all of the facts” … it is the alter ego of the fiduciary with a “transmitted fiduciary obligation” … or that it “jointly participated” in the breach … Liability does not turn on the need to show “dishonesty”, although it often provides the reason for the interposition of the company. Proof of a breach of fiduciary duty will suffice … [I]t is “rather artificial” to use Barnes v Addy to explain this liability.

  1. I note that there is some debate in the authorities about the alter ego principle: see eg discussion in Murdoch v Mudgee Dolomite & Lime Pty Ltd [2022] NSWCA 12 at [26]-[28] (Leeming JA, Macfarlan and Gleeson JJA agreeing).

  2. In the current proceedings, the plaintiffs sought to characterise Twigg Co’s liability to account as an institutional constructive trustee, on the basis that Twigg Co stole sale proceeds, and therefore held them under an institutional constructive trust which arose as soon as the property was acquired: see Sze Tu v Lowe (2014) 89 NSWLR 317 (Sze Tu) at [141]-[162] (Gleeson JA, Meagher and Barrett JJA agreeing). This was said to follow from the reasoning in Black v S Freedman & Company (1910) 12 CLR 105 at 110, where O’Connor J held that “[w]here money has been stolen, it is trust money in the hands of the thief, and he cannot divest it of that character”. That proposition is accepted in Australia: Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732 at [36]-[47] (Leeming JA, Bathurst CJ and Sackville AJA agreeing).

  3. Depending on the preferred view on the debate about the alter ego principle, the plaintiffs’ explanation may be a more doctrinally secure explanation for Twigg Co’s liability to account as a constructive trustee. But I cannot now alter the finding that Twigg Co’s liability to account as a constructive trustee arose by virtue of the alter ego principle, that being an issue which was finally determined by Ball J in Twigg (No 4). An appeal from that decision was dismissed: Twigg Appeal.

  4. A key issue in dispute was whether the constructive trust in question was remedial or institutional. The existence of that “dichotomy” has been doubted: see eg Muschinski v Dodds (1985) 160 CLR 583 at 612-5 (Deane J). However, intermediate appellate courts have recognised the distinction: see eg King v Fister [2022] QCA 47 (Fister) at [24] (Davis J, Sofronoff P and Mazza AJA agreeing); Soulos v Pagones [2023] NSWCA 243 (Soulos) at [470] (Ward P, Meagher and Mitchelmore JJA agreeing). In those circumstances, I consider that the 18 December 2020 orders imposed a remedial constructive trust for the following reasons.

  5. In Twigg (No 4), Ball J held that “it may well be that the Court would impose a remedial constructive trust in respect of the profits Twigg Landfill earned on [the sale of the trust assets of the Corporate Plaintiffs]”: at [131]. His Honour referred to Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 (Hospital Products) at 107-8, where Mason J held that “the fiduciary cannot be permitted to retain a profit or benefit which he has obtained by reason of his breach of fiduciary duty … and in equity the appropriate remedy is by means of a constructive trust”. Ball J also noted at [137]:

Max did not explain why the Court would not impose a remedial constructive trust on the sale proceeds paid from the Twigg Plant Hire cheque account in accordance with the principles stated by Mason J in Hospital Products.

  1. Relying on the alter ego principle, Ball J subsequently held that “[t]he position is no different if the amounts held by Twigg Plant Hire were paid directly to entities controlled by Max rather than to Max himself”: at [138] (emphasis added). This must mean that any sale proceeds paid to Max’s entities were also held on remedial constructive trust.

  2. This construction is consistent with the findings in the Twigg Appeal, where Brereton JA held that s 21(2) Limitation of Actions Act 1958 (Vic) did not apply “as the liability of Max and the Max companies was not as a trustee (of an institutional trust) within the meaning of [the provision], but remedial only”: at [199], [252] (emphasis added). Bell CJ and Payne JA agreed with Brereton JA’s conclusion that the provision did not apply because “that provision has no application where a remedial constructive trust is imposed by the Court as a result of a particular transaction”: at [6]. These passages do not doubt that Ball J’s 18 December 2020 orders imposed a remedial constructive trust.

  3. For these reasons, Twigg Co’s liability to account was as a remedial constructive trustee, as found by Ball J, and the orders must be construed consistently with that finding.

When did the trust come into existence?

  1. Twigg Co and Max contended that the bonds were only held on trust from 18 December 2020 onwards, from the day when Ball J made orders imposing the remedial constructive trust.

  2. Twigg Co and Max relied on Bathurst City Council v P W C Properties Pty Ltd (1998) 195 CLR 566 at [40]-[41], Sze Tu at [149]-[157], Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [48], and Grimaldi at [504] to support their contention that the remedial constructive trust must have only taken effect from the date that Ball J’s final orders in Twigg (No 4) were entered. However, the decisions cited by Twigg Co and Max do not support this contention. At their highest, those authorities taken together suggest that when imposing a remedial constructive trust, the Court has a discretion to specify that the trust only operates prospectively from the date that the remedy was ordered.

  3. In Fister at [24], Davis J (Sofronoff P and Mazza AJA agreeing) held that a remedial constructive trust is “imposed by the court and arises at the time of the making of the order”. Additionally, in Soulos at [470], Ward P (Meagher and Mitchelmore JJA agreeing) referred to examples of where “a remedial constructive trust [has been recognised as] coming into existence at the time it is so declared by the court”. However, these remarks do not determine the date of operation of a remedial constructive trust.

  4. This flexibility was accepted at the hearing by Twigg Co and Max’s senior counsel, who adopted a revised position:

PEDEN J: … So do you say it is not possible to read what you call a remedial constructive trust as retrospective back to the date of judgment, on the reasons in August [2020]?

KNOWLES: I don't wish to say it's not possible. I don't and can't shackle either equity or Ball J. Equity's flexible. The nature of the relief is, I accept, also flexible. But the authorities that draw a distinction between the remedial and institutional constructive trust do so on the basis that ordinarily ‑ and there will be exceptions ‑ ordinarily the remedial constructive trust will arise upon recognition and declaration by the Court. But I don't put it as highly as your Honour put it to me that it is not possible.

  1. It is unnecessary to consider whether it is correct to say that “ordinarily” a remedial constructive trust operates from the date of the court’s orders. However, Twigg Co and Max’s senior counsel correctly conceded that a remedial constructive trust can operate retrospectively. As Lord Browne-Wilkinson observed in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714-5 (emphasis added):

Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which give rise to it: the function of the court is merely to declare that such trust has arisen in the past … A remedial constructive trust, as I understand it, is different. It is a judicial remedy giving rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of third parties lies in the discretion of the court.

  1. This passage was cited without discussion, but with apparent approval, by Ward P (Meagher and Mitchelmore JJA agreeing) in Soulos at [470].

  2. The issue here is whether, on their proper construction, the orders of Ball J imposed a remedial constructive trust that operated from the date of the orders, the date of judgment, the date on which Twigg Co acquired the bonds, or from some other date. Those are all possibilities, given how a remedial constructive trust may operate retrospectively from the date of the relevant orders.

  3. I have already concluded that Ball J’s orders are ambiguous as to when the trust commenced. The Court can have regard to “the reasons, the pleadings, and if necessary, the evidence and how the case was conducted” to resolve that ambiguity: Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 at [27] (Allsop J), quoted with apparent approval in AVS Group of Companies Pty Ltd v Commissioner of Police (2010) 78 NSWLR 302 at [104] (Campbell JA, Handley AJA agreeing).

  4. The proceedings in Twigg (No 4) were conducted on the basis that, after judgment was handed down on 31 August 2020, the parties would confer as to an appropriate form of short minutes of order to give effect to Ball J’s reasons. In my view, Ball J’s declaration on 18 December 2020 that Twigg Co “holds all its assets save for [certain assets] on trust” should not be construed in a manner that would allow Twigg Co and Max to use time between the reasons and the final orders for an ulterior purpose: to take advantage of the Court’s erroneous finding that Twigg Co’s assets were not traceable proceeds (which was later corrected on 11 December 2020) by transferring the bonds.

  5. Instead, I consider that the 18 December 2020 orders had the effect of retrospectively imposing a remedial constructive trust over the assets of Twigg Co, including the bonds, which took effect at least from when judgment in Twigg (No 4) was handed down on 31 August 2020. Therefore, as at 1 December 2020, the bonds were held on trust.

Was the transfer of the bonds to Max a breach of trust by Twigg Co and/or Max?

  1. Twigg Co and Max’s senior counsel “accept[ed] that if there was a trust as at the date of the transfer [of the bonds], the transfer would have been in breach of trust”. I agree. As I have concluded above, Twigg Co held the bonds on trust for the plaintiffs as at 1 December 2020. By transferring them to Max on that date without authority, Twigg Co committed a breach of trust.

  2. However, the plaintiffs submitted that Max is also liable for the breach of trust for the reason Max and Twigg Co are one and the same. In oral submissions, the plaintiffs’ senior counsel stated:

[T]he reality is there are direct claims for breach of trust against Max Twigg. He is not sued simply as an accessory to Twigg Co's breaches. Max Twigg and Twigg Co are relevantly indistinguishable. Max Twigg received the bonds and then received the sale proceeds. There is a fair and square allegation made in paragraph 201 and 202 of the pleading that by doing so he committed a breach of trust. He held the bonds and the sale proceeds on trust for precisely the same reasons that have been advanced in relation to Twigg Co. He breached the trust by using the bonds and the sale proceeds as he did. He is not sued principally as accessory. He is sued on the straightforward basis that he has committed breaches of trust in relation to the bonds and the sale proceeds held by him.

  1. The plaintiffs pleaded that “Max Twigg was the alter ego of Twigg Co, such that the receipt of the Bonds by him is to be treated in the same way as if the Bonds were still held by Twigg Co”. However, this pleading was contained in a section of the amended commercial list statement said to apply “in the event the constructive trust in respect of the Bonds only arose on 11 December 2020, or alternatively 18 December 2020, as a consequence of the orders of this Court made on those dates”. However, I have found that the constructive trust arose at least from 31 August 2020.

  2. Putting aside the pleading issue, I have already noted the mixed treatment of the alter ego principle in the authorities. But there are two additional problems with the plaintiffs’ attempt to rely on that principle to render Max liable for Twigg Co’s breach of trust.

  1. First, the alter ego principle attaches liability to a company, which is the “corporate creature” of the errant fiduciary: Grimaldi at [243]. The plaintiffs sought to invert the operation of the principle so as to render an individual, Max, liable for the actions of an entity that he controls, Twigg Co. I was not provided with any authority which implemented the alter ego principle in this way.

  2. Secondly, even if the alter ego principle is engaged, it does not render Max primarily liable for the breach of trust; rather, Max would be liable as a third-party participant: Grimaldi at [243].

  3. For these reasons, I do not consider that Max is primarily liable for breach of trust.

Is Max liable as a third-party participant in a breach of trust?

  1. The plaintiffs also claimed equitable compensation from Max on various grounds, considered below.

Knowing receipt

  1. While not pleaded, the plaintiffs submitted that Max was liable as a knowing recipient of the bonds under the first limb of Barnes v Addy (1874) LR 9 Ch App 244 (Barnes v Addy).

  2. The relevant test for liability was set out by Gleeson JA (Beazley P and Barrett JA agreeing) in Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 (Simmons) at [88]:

(1) the existence of a trust, or a fiduciary duty, with respect to property (trust property);

(2) the misapplication of trust property by the trustee or fiduciary;

(3) the receipt of trust property by the third party;

(4) knowledge by the third party, at the time he or she received the relevant property, that it was trust property and that it was being misapplied or, in the case of breach by a fiduciary, that the trust property was transferred pursuant to a breach of fiduciary duty.

  1. For the plaintiffs to succeed, they must have established that Max had, at the very least, knowledge of “circumstances which to an honest and reasonable person would have indicated” that the bond proceeds were trust property when received by Max and were transferred to him in breach of trust: Blue Mirror Pty Ltd v Tan & Tan Australia Pty Ltd (in liq) [2024] NSWCA 253 at [30] (Leeming JA, Ward P and Mitchelmore JA agreeing); Simmons at [88]-[92].

  2. There was no evidence from Max as to his knowledge.

  3. In evidence were communications between Pitcher Partners and NAB. It appeared that at all times, Max was relying upon the advice from Pitcher Partners about the possibility of Twigg Co selling the bonds and receiving the benefit of the proceeds. Pitcher Partners appeared satisfied that the transaction would not be a breach of the existing court orders, stating in their 25 November 2020 email to Max that “we are satisfied that the requested transfers of $880,000 will not, if paid, be a breach of the 3 June 2020 orders or the 20 November 2020 orders”.

  4. Pitcher Partners sought to ensure that the sale of the bonds occurred somewhat urgently in late November and early December 2020, and practically before Ball J had an opportunity to determine whether to vary paragraph [222] of Twigg(No 4). This appears consistent with a belief that the bonds were not trust property, unless and until they were expressly so declared. It is unlikely that Max held any belief or knowledge separate to that of Pitcher Partners.

  5. Merely because the belief was incorrect as exposed in these reasons does not mean that it can be concluded that at the time Max received the sale proceeds of the bonds, he had knowledge that they were trust property (or the traceable proceeds of trust property) and had been transferred to him in breach of trust or fiduciary duty.

  6. Therefore, the knowing receipt claim must fail.

Voluntary receipt

  1. The plaintiffs also submitted (but had not pleaded) that Max was liable “as a volunteer recipient” of the bonds, which were transferred to him in breach of trust.

  2. A volunteer recipient of trust property transferred to him in breach of trust is bound in conscience to account for such property which remains in his hands from the point at which he acquires notice of the trust, whether that be at the time of receipt or subsequently. This is a form of liability which is separate and distinct from knowing receipt: Fistar at [29]-[31], [43]-[47]; Sze Tu at [142]-[145].

  3. The plaintiffs did not plead, nor make any oral or written submissions about when Max acquired notice of the trust, or the amount of bond proceeds which remained in his hands at that time.

  4. Therefore, the voluntary receipt claim must fail.

Knowing assistance

  1. The plaintiffs also brought a claim against Max for knowing assistance under the second limb of Barnes v Addy.

  2. To succeed, the plaintiffs must have established that there was a “dishonest and fraudulent breach of fiduciary duty” or trust on the part of Twigg Co, Max assisted in that breach, and Max had “sufficient knowledge of the breach”: Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151 at [243] (Gleeson, Leeming and White JJA); Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62 (Pittmore) at [152] (Leeming JA, Bell P and Brereton JA agreeing); Simmons at [111]-[115].

  3. “Sufficient knowledge” is, at the very least, “knowledge of circumstances which would indicate the facts to an honest and reasonable man”: Simmons at [113].

  4. A “dishonest and fraudulent” breach of fiduciary duty or trust is one that amounts to “a transgression of ordinary standards of honest behaviour”: Hasler v Singtel Optus Ltd (2014) 87 NSWLR 608 at [122]-[124] (Leeming JA, Gleeson JA agreeing).

  5. For the same reasons as above, I consider that the plaintiffs have not established that Max possessed the requisite knowledge of breach of trust or fiduciary duty.

  6. Consequently, the plaintiffs’ knowing assistance claim fails.

Procuring breach of trust

  1. The plaintiffs’ pleaded case was that Max induced or procured Twigg Co to commit the breach of trust occasioned by the transfer of the bonds to Max.

  2. Knowingly inducing or procuring a breach of trust or fiduciary duty is a form of third-party liability in equity: Grimaldi at [245]. The relevant principles were discussed in Pittmore at [152]-[196] by Leeming JA (Bell P and Brereton JA agreeing). The plaintiffs must prove that Max engaged in “intentional conduct which cause[d], and [was] intended to cause, the breach of trust or fiduciary duty”, and that he “knew that he … was bringing about a breach of trust or fiduciary duty”: at [186].

  3. Max and Twigg Co contended that the plaintiffs did not plead, nor seek to prove, that Max had knowledge he was bringing about a breach of trust. They submitted that even if the plaintiffs established that “Max Twigg devised the scheme for the sale and redemption of the Bonds” (as detailed in the plaintiffs’ particulars), it would not establish that he knew that he was bringing about a breach of trust.

  4. I accept that submission. Further, I have already concluded above that the plaintiffs have not proved that Max possessed the requisite knowledge of a breach of trust or fiduciary duty. The plaintiffs’ claim against Max for inducing or procuring a breach of trust must therefore fail.

Equitable compensation

Liability for breach of trust

  1. I have found that Twigg Co engaged in a breach of trust by transferring the bonds to Max on 1 December 2020 without authority.

  2. The proceeds of sale of the bonds totalled $608,381.97. The plaintiffs have since recovered some of that amount from Max, and therefore the plaintiffs only seek equitable compensation for the unrecovered balance of $320,163.13.

  3. Twigg Co and Max submitted that the settlement between the plaintiffs and Pitcher Partners must have included the plaintiffs’ claim in knowing assistance against Pitcher Partners. They submitted that the terms of settlement are silent as to the proportion of the $25 million sum which has been apportioned to that claim, with the consequence that the plaintiffs have failed to prove their loss in their claim against Twigg Co.

  4. I reject that submission. The plaintiffs’ claim in knowing assistance against Pitcher Partners has no relevant bearing on whether the plaintiffs have proved their loss in their breach of trust claim against Twigg Co. The claims are different, and parties alleged to be liable are different.

  5. In any event, for the following reasons, I consider that the plaintiffs did not need to prove any loss beyond the fact of the unauthorised bond transfer in order to succeed in their breach of trust claim, because the claim is for substitutive compensation. In other words, the plaintiffs have brought a claim for the “substituted value of the asset dissipated [by the trustee] without authority”, where proof of loss is not required in order to succeed: Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1 (Jackson) at [334]-[349] (Edelman J); Mao v Bao (2023) 113 NSWLR 26 (Mao) at [159], [172] (Ward ACJ, Mitchelmore JA agreeing) and [235]-[236] (White JA).

  6. A claim for substitutive compensation is different to a claim for reparative compensation, where the “losses made good … will be those which, on a commonsense view of causation, were caused by the breach of fiduciary duty”: Mao at [159], [172] (Ward ACJ, Mitchelmore JA agreeing). That is a claim for “reparation for the loss suffered by breach of duty”, and proof of loss is required: Jackson at [349].

  7. That a claim for substitutive compensation does not require proof of loss sits uneasily with the proposition that “so far as a claim is based on a breach of trust, it is necessary to prove that the breach caused the loss” in a “but for” sense: Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd [2015] NSWCA 225 at [160] (Bathurst CJ, Macfarlan and Emmett JJA agreeing). However, this tension can be reconciled by reasoning that “but for” the trustee’s unauthorised dissipation, the “loss” of the amount transferred away in breach of trust would not have occurred: Jackson at [345]-[346].

  8. Here, the plaintiffs submitted (and I have found) that Twigg Co transferred the bonds to Max in breach of trust. They essentially sought that the value of those bonds (not yet restored) to be restored to the trust (albeit by paying the amount directly to the plaintiffs, who are entitled to it since they have a vested beneficial interest in the trust property).

  9. I accept that the plaintiffs are entitled to that relief. Given the close proximity between the transfer of the bonds to Max on 1 December 2020 and their sale between 4 and 10 December 2020, I find that the sum of $608,381.97 derived from the sale reflects the value of bonds as at 1 December 2020, when they were disbursed in breach of trust. I consequently consider that Twigg Co is liable to pay the $320,163.13 not yet restored to the trust in substitutive compensation.

Accessorial liability

  1. I concluded above that the plaintiffs have not established that Max is liable in knowing receipt, voluntary receipt, knowing assistance, or for procuring or inducing a breach of trust.

  2. Further, I note that the plaintiffs did not make any submissions about the precise quantum of Max’s liability as a third-party participant in a breach of trust. For example, the plaintiffs did not address the question of whether Twigg Co (which was found to be liable for breach of trust) and Max, if he were liable, were jointly and severally liable, or only severally liable: see eg Grimaldi at [553]-[559].

Alternative claims if the constructive trust took effect from 11 December 2020 or 18 December 2020

  1. The plaintiffs pleaded various alternative claims said to apply “in the event the constructive trust in respect of the Bonds only arose on 11 December 2020, or alternatively 18 December 2020”.

  2. I have concluded that the constructive trust arose at least from 31 August 2020, so these alternative claims are not engaged. In any event, I note that those claims were not the subject of specific submissions by the plaintiffs. For that reason, I assume that they were abandoned.

Is Twigg Co or Max liable for deceit or misleading or deceptive conduct?

Representation that the bonds would continue to be held by Twigg Co?

  1. The plaintiffs pleaded that Max and Twigg Co made a “bond representation”, which was:

…the production of the [financial documents on 25 November 2020 about Twigg Co’s asset portfolio as at 20 November 2020] contained a representation that the Bonds were held by Twigg Co by reason that the documents recorded that Twigg Co held the Bonds.

  1. It was then pleaded that “[u]pon the transfer of the Bonds to Max Twigg on 1 December 2020, the Bond Representation became false”.

  2. The representation pleaded was not false, because it tied Twigg Co’s ownership of the bonds to the date 20 November 2020, at a time when it did own the bonds. That was not false or misleading.

  3. Strictly speaking, on the basis of the pleaded case, the plaintiffs ought to fail.

Non-disclosure of the bond transfer

  1. However, the plaintiffs’ submissions went further than the pleaded case and listed multiple “misrepresentations”. Further, the pleading outlined a “failure to disclose” the sale of the bonds, alleging that there was “an obligation to do so” by Max and Twigg Co, said to arise from various circumstances made up by the chronology of the court proceedings heard by of Ball J. The circumstances identified culminated in the 2 February 2021 order made by Payne JA in the Twigg Appeal proceedings requiring Max and Twigg Co to:

instruct Pitcher Partners to prepare documentation of the kind which it customarily prepares for reporting to the appellants the value, status and movements of the assets held by [Twigg Co] and the Twigg Investment Trust No 2 in such a way as to distinguish between the assets which were found by Ball J to be held on trust for the respondents and the remaining assets.

  1. Later, on 12 April 2021, Payne JA directed Max and his entities to provide to the plaintiffs various financial documents, including reports about Twigg Co’s cash transactions, contributions and withdrawals, and portfolio valuation.

  2. The plaintiffs further pleaded that they relied upon the bond representation from 25 November 2020 until about 19 April 2021, when they finally became aware of the sale of the bonds. The plaintiffs pleaded that, had the representation been corrected by 16 February 2021, the plaintiffs would have taken steps to obtain orders preventing the use of the bond proceeds to discharge Max’s indebtedness to his bank.

  3. Twigg Co and Max resisted the misleading or deceptive conduct case, but admitted the bond representation was made “in trade or commerce”.

  4. Whether Twigg Co and Max’s non-disclosure of the bond transfer was misleading or deceptive is determined by asking whether the plaintiffs held a reasonable expectation that the bond transfer would be disclosed: see eg H Lundbeck A/S v Sandoz Pty Ltd (2022) 276 CLR 170 at [69] (Kiefel CJ, Gageler, Steward and Gleeson JJ).

  5. Whether a reasonable expectation of disclosure arises depends on all the circumstances. Relevant factors may include the relationship between the parties, their state of knowledge and level of sophistication, whether there a duty of disclosure at law or in equity, whether there was a half-truth conveyed or a representation with continuing effect that later became incorrect, and whether the representor has a duty to advise: Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76 at [482]-[483] (White and Gilmour JJ); Axis Bank Ltd v Gujarat NRE Indian Pty Ltd [2020] NSWSC 1711 at [269] (Sackar J).

  6. Although Payne JA only ordered the disclosure of Twigg Co’s financial position from 20 November 2020 onwards on 12 April 2021, for the following reasons, I consider that the circumstances preceding 1 December 2020 gave rise to a reasonable expectation of disclosure of the bond transfer as at that date.

  7. On 30 June 2020, Ball J made orders requiring the defendants in the earlier proceedings to provide the plaintiffs the bank account statements of Max, Twigg Co, and other entities on an ongoing basis. This disclosure regime remained in place and became all the more significant after Ball J found in Twigg (No 4) that various assets held by Max and his entities were traceable proceeds. Although the disclosure regime did not of itself require Max or Twigg Co to divulge any transfer of the bonds, it indicated that a degree of candour was expected of Max and Twigg Co when dealing with assets held in their name in circumstances where it was alleged, and later found in Twigg (No 4), that they held various assets on trust for the plaintiffs.

  8. Max and Twigg Co subsequently provided the plaintiffs with the 20 November 2020 portfolio documents when the 3 October 2020 motion was in train. That motion was brought to determine whether the judgment in Twigg (No 4) ought to be varied to recognise that Twigg Co’s assets (including the bonds) were traceable proceeds.

  9. Max and Twigg Co did not alert the plaintiffs to the fact that the bonds might be sold before any judgment that determined the variation motion. Further, Max and Twigg Co did not make any submission that the bonds were not traceable assets when the Court was hearing the motion. In these circumstances, and where the question of whether Twigg Co’s assets were held on trust for the plaintiffs was pending determination, the plaintiffs were entitled to expect that the intervening dissipation of the bonds (as assets of Twigg Co) would be disclosed.

  10. Ball J indicated this view on 7 July 2021 when hearing the plaintiffs’ notice of motion that sought declarations that the bonds and their proceeds were and are held on trust for the plaintiffs. The parties ultimately consented to the substantive orders made on 8 July 2021. However, in the course of hearing the extant issue of costs for the motion, Ball J said:

BALL J: … It seems to me that it is clear that the Court and the plaintiffs were misled by what happened prior to my second judgment [in Twigg (No 5) (ie the transfer of the bonds from Twigg Co to Max)], because it is quite clear that I proceeded on a basis which your client must have appreciated it was a wrong basis. So that's the first point.

The second point is it is quite clear from my second judgment [in Twigg (No 5)] that the amounts in question, according to the orders that I had made, were held on trust for one or other of the plaintiffs and in those circumstances why wasn’t it incumbent on your clients to take positive and active steps to correct any misunderstanding on the part of the Court and to undo any breach of trust that occurred prior to the plaintiff[s] formulating precisely what orders they wanted on their motion; and your client’s failure to do those things really has meant that this motion has taken on the life that it has. And why isn’t that conduct which really justifies an order for indemnity costs?

EVANS: … I can accept everything that your Honour said and I don’t disagree with it, save for the final proposition [about costs] …

…

BALL J: … I am inviting you to make submissions about … why in those circumstances it wasn’t the obligation of the defendant to do those things? They had misled the Court and they had committed what were, plainly on the Court’s orders, breaches of trust and they took no steps to undo any of those things. That’s the position, isn’t it? You accept that’s the position?

EVANS: … We do not accept that the actions of the 1st of December constituted a breach of trust by the defendants, but we do accept the plain reading of the orders made on 18 December and we understand that they were intended to apply to the bonds which had been transferred out on 1 December.

  1. With respect, I agree with Ball J’s observations that Twigg Co and Max had misled the Court and the plaintiffs. Max had been found to be dishonest and to have wrongfully dissipated the Twigg Group business sale proceeds and Twigg Co and Max did not contend that the bonds were not traceable assets in their submissions for the variation motion. I consider that the failure to disclose the sale of the bonds on 1 December 2020 was misleading or deceptive conduct.

Relief

  1. Doing the best I can with the very limited submissions on the issue, I consider what relief the plaintiffs are entitled to for Max and Twigg Co’s contravention of s 18 Australian Consumer Law (ACL).

  2. The plaintiffs suffered loss of $320,163.13, being the proportion of the bond proceeds (or value of the bonds) that they have not recouped following the bond transfer.

  3. I accept the plaintiffs’ submission that “had the true position been disclosed”, the plaintiffs would have sought (and obtained) an injunction prohibiting Twigg Co from dealing with the bonds or their proceeds.

  4. Consequently, I consider that Max and Twigg Co’s non-disclosure “materially contributed” to the plaintiffs’ loss, such that the plaintiffs are entitled to compensation in the order of $320,163.13 pursuant to s 236 ACL: see eg Medical Device Technologies Pty Ltd v Health Administration Corporation [2024] NSWCA 142 at [136]-[137] (Payne, Stern and Harrison JJA).

  5. No submissions were made about whether the claim for damages under s 236 was an “apportionable claim”, such that Max and Twigg Co’s liabilities are subject to a statutory proportionate liability regime: see eg Part VIA Competition and Consumer Act 2010 (Cth) (CCA); Part 4 Civil Liability Act 2002 (NSW) (CLA). However, even if proportionate liability applies, it may be that Twigg Co and Max are “excluded concurrent wrongdoers” because they “intended to cause the economic loss … that is the subject of the claim”: CCA s 87CC(1)(a); CLA s 34A(1)(a).

  6. Therefore, I find that Max and Twigg are jointly and severally liable to pay compensation under s 236 ACL to the plaintiffs.

Deceit

  1. The plaintiffs’ claim based on Twigg Co and Max’s deceit was referenced in the parties’ submissions concerning misleading and deceptive conduct.

  2. The elements of a tortious deceit claim required the plaintiffs to prove:

  1. The defendants made a false representation;

  2. That representation was made with knowledge of its falsity, or with recklessness or carelessness as to its falsity;

  3. The representation was made with the intention that it would be relied upon by the plaintiffs;

  4. The plaintiffs relied on the false representation; and

  5. The plaintiffs suffered damage caused by such reliance: Magill v Magill (2006) 226 CLR 551 at [114] (Gummow, Kirby and Crennan JJ).

  1. Non-disclosure or silence “where doing so creates a false or deceptive meaning to what has already been uttered” may be considered a false representation that leads to liability in deceit: Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35 at [123]-[125] (Bell CJ, Stern JA and Basten AJA).

  2. The plaintiffs have not established that by failing to disclose the bond transfer, Twigg Co and Max intended the plaintiffs to rely upon the false premise that Twigg Co continued to hold the bonds. The evidence suggested that Max relied on the advice in Pitcher Partners’ correspondence that the bond transfers would not breach existing court orders, as noted above. Therefore, I consider it likely that Max did not turn his mind to whether the transfer needed to be disclosed. I do not accept that the plaintiffs have proved that Max’s non-disclosure of the bond transfer was coupled with an intention that the plaintiffs would rely on the false impression that the bonds remained part of Twigg Co’s investment portfolio.

  3. The plaintiffs’ deceit claim must therefore fail.

Interest on compensation

  1. The plaintiffs sought in their amended commercial list summons interest on any compensation calculated on the compound basis, whether “pursuant to s 100 Civil Procedure Act 2005 (NSW) or otherwise”.

  2. Twigg Co did not make any submissions resisting compound interest.

  3. No party made submissions about whether s 100 Civil Procedure Act allows for the award of compound interest: see eg Smith v Smith [2017] NSWSC 408 at [485] (Lindsay J). However, compound interest may be awarded where a trustee has misapplied trust funds: Northern Territory v Griffiths (2019) 269 CLR 1 (Griffiths) at [113], [122], [125] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ); see also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at [300]-[305] (Heydon JA, Spigelman CJ generally agreeing); Cureton v Blackshaw Services Pty Ltd [2002] NSWCA 187 at [100]-[109] (Sheller JA, Meagher and Beazley JJA agreeing).

  4. For the breach of trust claim against Twigg Co, in circumstances where Twigg Co misapplied trust assets, I consider that it is appropriate to order Twigg Co to pay compound interest between 1 December 2020 (the date of the breach of trust) and 18 March 2025 (the date of judgment).

  5. In respect of the misleading or deceptive conduct claims against Twigg Co and Max, I was not directed to any authority suggesting that compound interest can be awarded in equity for an award of statutory compensation. To the contrary, in Griffiths at [113]-[138], Kiefel CJ, Bell, Keane, Nettle and Gordon JJ held that the Ngaliwurru and Nungali Peoples in that case had no entitlement to compound interest for compensation awarded under the Native Title Act 1993 (Cth). Their Honours’ reasoning was that the award of statutory compensation did not fall into any of the recognised categories where equity allowed for an award of compound interest. Those categories identified were “suits for recovery of money obtained by fraud or withheld or applied in breach of fiduciary duty”. Further, compound interest may be awarded in claims for “restitution of a defendant’s unlawful enrichment”: at [113]; see also [122], [125].

  6. I was not provided with any submission to the effect that it would be appropriate to award compound interest by analogy with common law damages for loss of use of money either. In Griffiths, the majority did not consider the analogy appropriate, because there was “sparse evidence” that the Indigenous peoples “would have invested the [statutory] compensation at a profit and no suggestion that [they] incurred costs that could have been avoided with the aid of an earlier payment of the compensation”: at [133].

  7. Here, the plaintiffs’ claim for compensation under s 236 ACL does not fall under any of the categories of case where equity would award compound interest. Nor was there evidence that the plaintiffs would have invested the compensation at a profit or had incurred costs they could have avoided with an earlier payment of compensation, such that compound interest might be awarded by analogy to common law damages for loss of use of money.

  8. Consequently, I am not satisfied that the plaintiffs ought receive compound interest on the compensation for their misleading or deceptive conduct claim. Rather, I consider that they are confined to simple interest under s 100 Civil Procedure Act between 1 December 2020 (the date of non-disclosure) and 18 March 2025 (the date of judgment).

  9. As for the appropriate interest rate, no submissions were made about whether a trustee rate or mercantile rate would be appropriate: see eg Hagan v Waterhouse (1991) 34 NSWLR 308 at 391-3 (Kearney J), approved in Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45 at 47 (Handley JA, Gleeson CJ and Sheller JA agreeing).

  10. I adopt the rate of pre-judgment interest specified in paragraph 5 of Practice Note SC Gen 16 and r 6.12(8) Uniform Civil Procedure Rules 2005 (NSW): Tadrous v Tadrous [2012] NSWCA 16 at [58] (Meagher JA, Young JA and Handley AJA agreeing).

Orders

  1. I direct that:

  1. On or before 4pm on 24 March 2025, the plaintiffs serve on the fourth and fifth defendants short minutes of order intended to give effect to these reasons for judgment together with the orders they propose in relation to costs and any necessary explanation;

  2. On or before 4pm on 28 March 2025, the fourth and fifth defendants:

  1. if they agree with the plaintiffs’ short minutes of order, notify the plaintiffs and my Associate of their agreement, in which case the orders will be considered in chambers;

  2. if they do not agree with the plaintiffs’ short minutes of order, serve on the plaintiffs a document (which may include alternative short minutes of order) setting out the matters on which they disagree and provide copies of the plaintiffs’ short minutes of order and their document to my Associate, in which case the matter will be listed, initially for directions, at 9:30 am on 2 April 2025, or such other date as is agreed with my Associate, to deal with all outstanding issues.

**********

Decision last updated: 18 March 2025

Most Recent Citation
Cases Cited

44

Statutory Material Cited

7

Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102
Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102
Lewis v Nortex Pty Ltd (in liq) [2006] NSWSC 480