Westpac Banking Corporation v Earthwise International Limited

Westpac Banking Corporation sued Earthwise International Limited for breaches of trust concerning the management of investor funds. The dispute arose from Earthwise's handling of trust accounts, where funds from multiple investors were intermingled in various accounts, leading to a shortfall in the trust funds. The Federal Court was tasked with determining the appropriate method for distributing the remaining trust funds among the beneficiaries.

The primary legal issue before the court was the principle to apply in distributing trust funds when they had been intermingled and diminished. The court had to determine whether the distribution should follow a pro-rata approach or another equitable method. The court examined the principles of trust law and the equitable maxim that "equity regards as done that which ought to be done," in the context of commingled funds.

In its judgment, the court held that the pro-rata distribution method was the most appropriate in this case. This approach ensures that each beneficiary receives a proportion of their original investment, reflecting the equitable principle of fairness in the distribution of intermingled funds. The court found that this method best balanced the interests of all parties involved. Consequently, the court ordered Earthwise to distribute the remaining trust funds among the beneficiaries on a pro-rata basis, reflecting each beneficiary's original investment.