Yeshiva Properties No 1 Pty Limited & 6 ORS v JOAN MARSHALL

[2005] NSWCA 23

NSW Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Constructive trusts
3. › Accessory liability
4. › Dishonest assistance
5. › Knowledge requirement
6. › Whether facts known to third party lender would to a reasonable person tell of fraud or breach of fiduciary duty
7. › Second limb of Barnes v Addy
1. Equity
2. › Constructive trusts
3. › Accessory liability
4. › Breach of fiduciary duty by directors
5. › Whether breach of duty established
6. › Payment of loan proceeds to company controlled by directors
1. Trusts
2. › Charitable trusts
3. › Charitable Trusts Act 1993 (NSW)
4. › Whether proceedings were charitable trust proceedings requiring authorisation
5. › Charitable Trusts Act 1993 (NSW), ss 5, 6
1. Appeal
2. › Findings of fact
3. › Whether trial judge failed to make critical findings
4. › Whether findings reasonably available on the evidence

Quick Take

The Stephen J test from Consul Development v DPC Estates (knowledge of facts which would to a reasonable person tell of fraud or breach of trust) remains the applicable standard for accessory liability in NSW, notwithstanding the English restatement in Royal Brunei Airlines v Tan. A lender advancing funds on a short-term caveat loan at high interest rates does not incur accessory liability merely because the transaction is conducted with urgency, the identity of borrowers changes, and loan proceeds are directed to a company controlled by the borrowers' directors, where those circumstances are consistent with a rushed but legitimate commercial transaction. The Court left open whether an equitable remedy against an accessory should be available where the plaintiff has released the principal wrongdoer.