The requirement that bad conduct have an 'immediate and necessary relation to the equity sued for' in the unclean hands defence is not to be given a narrow or technical construction; it is a principle guiding the exercise of discretion. Where a party's dishonest conduct established practices conducive to the wrong complained of and provided essential evidentiary material supporting the claim, the defence may be invoked but conditional relief may be granted. A liquidator of a trustee company should adopt a neutral stance in disputes between unitholders/beneficiaries and is not entitled to recover costs from company assets for actively defending accounting practices where an aggressive contradictor already supports the liquidator's position. The protection afforded by a s 128 certificate under the Evidence Act does not preclude the court from exercising its discretion to refuse or condition equitable relief based on the conduct revealed by that evidence.
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