From: Katy Barnett <>
Date: 24/02/2022 22:51:24 UTC
Subject: New case on constructive trusts, knowing receipt, indefeasibility etc

Dear all,

My colleague Matthew Bell has brought the following decision to my attention, an interesting new decision involving constructive trusts, indefeasibility, knowing receipt and equitable compensation: Turner v O’Bryan-Turner [2022] NSWCA 23 The work of several members of this list is mentioned.

The testator (John) had been married twice, and had two children from his first marriage (Nick and Sara) and two from his second (David and Karl). He was suffering from dementia, and his second wife Wendy (who was dying of lung cancer) wanted to transfer his substantial landholdings to herself and her sons, so that they could apply the assets to looking after their father, and so that she could defeat any claims by Nick. She was the executor of John’s will. She sought legal advice regarding testator family maintenance claims. None of the lawyers who advised her noted that she was not empowered under the power of attorney to make a transfer of assets to herself and her sons of this nature. 

The transfer was made (the parties held the properties as joint tenants for some properties, and others as tenants in common). The NSWCA found that it was in breach of fiduciary duty, and that a constructive trust in relation to Wendy’s share arose over the properties ([70] - [73]). Wendy then died (after legal proceedings had been commenced). John remains alive but has severe dementia. Nick sued on his behalf.

Insofar as the property was held on joint tenancy, Wendy’s interest (and the constructive trust over it) simply disappeared upon her death [73]. Insofar as the property was held on tenancy in common, her estate’s interests were subject to constructive trusts [73].

Her estate was also liable to pay equitable compensation for the breach of fiduciary duty [74] (although it is probable that little or no money would be left given the size of her estate [88]). It pleased me that White JA distinguished between compensation and accounts of profit at [76].

There was also a question of whether there was knowing assistance or knowing receipt according to Barnes v Addy, and what relief flowed from that. 

In order to make out knowing assistance in Australia, after Farah v Saydee, the NSWCA confirmed that it is necessary to show that the fiduciary had a dishonest and fraudulent design [106]. With some hesitation ([134]), it found that Wendy did not have a dishonest and fraudulent design (she genuinely believed she was carrying out John’s wishes, and sought legal advice to check she could make the transfers). In any case, David and Karl did not have the requisite knowledge to be liable [146] - [149]. The court did say that, in the event that proprietary liability for knowing assistance had been established, a proprietary claim in knowing assistance could be an “in personam” claim against indefeasible title [101] - [109].

David and Karl also did not have the requisite knowledge to be knowing recipients [146] - [149]. The court said knowing receipt did not give rise to an “in personam” claim against indefeasible title [92] - [103].

Hoping this may be of interest to some of you.

All the best, Katy

Katy Barnett | Professor

Melbourne Law School

Level 7, 185 Pelham Street, Carlton

The University of Melbourne, Victoria 3010 Australia

T: +61 3 9035 4699 E:

SSRN | Twitter @drkatybarnett | Blog:

Barnett and Harder, Remedies in Australian Private Law (Cambridge University Press, 2018)

Out now! Barnett and Gans, Guilty Pigs: the weird and wonderful history of animal law (Latrobe University Press, 2022)

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