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The Western Australian Supreme Court (Anderson J) today decided _The Hancock Family Memorial Foundation Ltd v Porteous_ [1999] WASC 55 (10 June 1999)

<http://www.austlii.edu.au/au/cases/wa/WASC/1999/ 55.html>.

The case has achieved some notoriety in Australia -- it is a colourful tale of a dispute between the (second) wife and daughter of the late Lang Hancock (a mining magnate) about assets that were acquired in the name of Hancock's second wife (and companies associated with her) with the money of Hancock's private companies (now controlled by Hancock's daughter).

Little of the colour of the case (as reported in the newspapers) appears in the judgment. Nonetheless, list members may be interested in the discussion of tracing, resulting trusts and recipient and accessory liability following breach of fiduciary duty.

Tracing: Anderson J approached tracing as "a separate head of claim" requiring an initial fiduciary relationship and a breach of the duties arising under it.

Accessory liability: Anderson J approved Royal Brunei v Tan (insofar as it decides that the accessory must be dishonest to be liable) but appears to have retained the requirement that the breach of duty be fraudulent, at least 'in the sense in which the word "fraud" is used in equity'.

Recipient liability: Perhaps one day we will have an authoritative statement of what is required for accessory liability in Australia. (List members may recall that the High Court of Australia declined to take up this question when it refused special leave to appeal in Sixty Fourth Throne Pty Ltd v Macquarie Bank Ltd M101/1997 on 19 May 1998: see the transcript at

<http://www.austlii.edu.au/au/other/hca/transcripts/1997/ M101/1.html>.)

In this case Anderson J simply said:

"As to recipient liability, there is less certainty about what must be proved to sheet home liability to the non-trustee but I adopt, with respect, the reasoning and conclusions of Hansen J in Koorootang Nominees Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] 3 VR 16 on the question. In the first place, it is not necessary to establish that a recipient of trust property acted dishonestly or with want of probity. Recipient liability may be established if the defendant had actual or constructive knowledge at the time he received the relevant property that (a) it was trust property and (b) it was being misapplied. The defendant will be taken to have constructive knowledge if it is proved that he wilfully shut his eyes to the obvious; that he wilfully and recklessly failed to make such inquiries as an honest and reasonable man would make in the circumstances; and that he knew of circumstances which would indicate the true facts to an honest and reasonable man. If all that is proved is that the defendant had knowledge of circumstances which would put an honest and reasonable man on inquiry, that is not enough: see Koorootang at 85 and 105."

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Simon Evans
Faculty of Law
University of Melbourne