(1) Dismiss the motion filed on 17 February 2021 for leave to amend the notice of appeal.
(2) Dismiss the appeal.
(3) Allow the cross-appeal in part.
(4) Order that the appellants pay the respondents’ costs of the appeal and cross-appeal.
(5) Direct that the respondents bring in short minutes to give effect to this judgment, including with respect to any additional relief sought on the basis of the outcome of the cross-appeal.
Catchwords:
EQUITY – Fiduciary duties – Breach – Where director of corporate trustee caused trust funds to be distributed to himself – Whether written resolutions effecting valid distribution were adopted by relevant date – Whether director had been delegated authority to make distributions alone – Whether trust monies held on constructive trust
EQUITY – Trusts and Trustees – Constructive Trusts – Whether director liable for breach of trust as trustee de son tort – Pre-requisite that one must assume the trust by purporting to act as trustee – Finding that acting in capacity as director of corporate trustee, even without authority and in breach of fiduciary duties, does not alone constitute assumption of the trust – Holding that director not liable as trustee de son tort
EQUITY – Trusts and Trustees – Whether director acted “dishonestly” in the context of postponement of the statutory limitation period or equitable equivalent – Where director of corporate trustee was entrusted by other director to manage most company affairs alone – Whether director held honest belief that he was entitled to deal with trust proceeds as he did – Finding that director deliberately withheld information from other director that may have caused her to object to his decisions regarding trust assets – Finding that director’s conduct involved dishonesty in the form of conscious wrongdoing and active concealment
EQUITY – Defences – Laches – Knowledge of ability to bring claim – Whether means of knowledge is as good as knowledge – Requirement of knowledge of the relevant facts, although not necessarily of the rights to which they give rise
EQUITY – Tracing – Whether property and its commercial proceeds were traceable – Extent to which property was purchased with proceeds of sale of trust assets in breach of trust – Where trust monies were loaned by constructive trustee to purchaser of property and repaid before property was purchased – Where purchaser was alter ego of constructive trustee – Finding that property was effectively purchased by constructive trustee and was therefore traceable property, along with its proceeds
LIMITATION OF ACTIONS – Equity – Application of Limitation of Actions Act 1958 (Vic) – Section 21(2) does not apply to actions for breach of fiduciary duty in respect of remedial constructive trusts imposed by Court – Section 5…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Twigg v Twigg [2022] NSWCA 68
Case
[2022] NSWCA 68
Decision Date
CaseChat Overview and Summary
The case of *Twigg v Twigg* concerned a dispute where the director of a corporate trustee allegedly caused trust funds to be distributed to himself. The central questions before the Court of Appeal of Victoria were whether written resolutions authorising these distributions were validly adopted by the relevant date, whether the director had been delegated the authority to make distributions unilaterally, and whether the trust monies were held on a constructive trust.
The court was required to determine several legal issues, including whether the director was liable for breach of trust as a trustee de son tort, and if so, whether the director had acted "dishonestly" for the purposes of postponing any applicable statutory limitation period or its equitable equivalent. Further issues involved the application of the defence of laches, the traceability of property purchased with the proceeds of trust assets, and the applicability of the *Limitation of Actions Act 1958* (Vic) to claims for breach of fiduciary duty and proprietary relief.
The court reasoned that acting as a director of a corporate trustee, even without proper authority and in breach of fiduciary duties, did not alone constitute an assumption of the trust for the purpose of making the director liable as a trustee de son tort. However, the court found that the director's conduct involved dishonesty, not in the sense of a lack of honest belief in entitlement, but in the form of conscious wrongdoing and active concealment of information from the other director, which prevented the postponement of limitation periods. The court also found that property effectively purchased by the director, even if through an alter ego, was traceable, along with its proceeds. While section 21(2) of the *Limitation of Actions Act 1958* (Vic) was held not to apply to remedial constructive trusts, claims for proprietary relief and equitable compensation were determined to be within the analogy of section 5 of the Act, attracting an equivalent equitable limitation period.
The Court of Appeal dismissed the motion for leave to amend the notice of appeal and dismissed the appeal itself. However, it allowed the cross-appeal in part, ordering that the appellants pay the respondents’ costs of the appeal and cross-appeal, and directed that short minutes be brought in to give effect to the judgment, including any additional relief arising from the cross-appeal.
Orders
Orders of the court
(1) Dismiss the motion filed on 17 February 2021 for leave to amend the notice of appeal.
(2) Dismiss the appeal.
(3) Allow the cross-appeal in part.
(4) Order that the appellants pay the respondents’ costs of the appeal and cross-appeal.
(5) Direct that the respondents bring in short minutes to give effect to this judgment, including with respect to any additional relief sought on the basis of the outcome of the cross-appeal.