Breach of s232(6) of the Corporations Law (now s182 of the Corporations Act 2001) is assessed by an objective test of impropriety and does not require proof of dishonest or conscious improper intent. Where company funds are diverted to a related entity controlled by common directors in breach of statutory and fiduciary duties, the recipient entity may be liable as a constructive trustee under the first limb of Barnes v Addy, and a remedial constructive trust over property acquired with the misapplied funds may be imposed in preference to a personal money judgment, particularly where the defaulting officers would otherwise be unjustly enriched. The form of the transaction (gift, loan or purchase) does not preclude proprietary relief. Mason P and Stein JA held rescission is necessary for voidable transactions but was effectively achieved on the facts; Giles JA held rescission was unnecessary where the proprietary claim was based on money being 'provided' rather than lent.
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