Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3)

Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) involved a dispute over breaches of fiduciary duties by the director of a corporate trustee, Twigg Investments Pty Ltd, who used trust funds to acquire properties and distribute trust funds to himself. The case was heard in the Supreme Court of Victoria. The legal issues included whether the doctrine of trustee de son tort applied, whether the director was a knowing recipient of trust property, and whether there were alternative claims such as the director inducing or procuring a breach of trust. Additionally, the case examined whether certain defences, such as estoppel and laches, applied, and whether a just allowance or constructive trust was appropriate.

The court found that the doctrine of trustee de son tort applied because the director dealt with trust assets without the requisite authority. The court also held that the director was a knowing recipient of trust property, and the director's liability could not be attributed to the corporate entity since the only conduct giving rise to the breach of trust was that of the director. The court rejected the alternative claims, finding that the director's actions did not constitute a knowing receipt, inducement, or participation in a fraudulent design. The court held that the decision to distribute trust funds was not made honestly and in good faith, which was inconsistent with the director's liability.

The court further determined that neither promissory estoppel nor laches applied to the case. In relation to just allowance, the court held that because the profit was not derived as a consequence of the director's skill and effort, and some of the trust property was lost, a just allowance was appropriate. The court rejected the application of a proprietary remedy, finding that a constructive trust was not precluded merely because the recipient took trust assets under a particular form of transaction. The court also took a common-sense and reasonable approach to tracing the trust assets. Regarding ratification, the court held that the sole shareholder could not ratify the director's breach of duty affecting the corporate trustee's obligations towards the beneficiaries. The court also found that certain statutory defences under the Corporations Act 2001 (Cth) and Trustee Act 1958 (Vic) did not apply.

Finally, the court considered whether the claim that the directors' declaration was void because it breached the Corporations Act 2001 (Cth) was founded on a "simple contract" under the Limitation of Actions Act 1958 (Vic), s 5. The court found that s 21 of the Limitation of Actions Act 1958 (Vic) did not apply to constructive trustees and that the facts were relevant for limitation by analogy under the Corporations Act 2001 (Cth), s 1317K. The court held that the limitation period was six years from the date when the cause of action accrued.