Toksoz v Westpac Banking Corporation

(2012) 289 ALR 577; [2012] NSWCA 199

NSW Court of Appeal

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Interrogate

Catchwords

1. Equity
2. › Tracing
3. › Tracing proceeds of fraud
4. › Tracing by exhaustion
5. › Whether inability to connect each link in chain of accounts prevents tracing
6. › Whether commonsense inference available where no honest source of funds explained
1. Equity
2. › Constructive trusts
3. › Knowing receipt
4. › First limb of Barnes v Addy
5. › Whether actual knowledge of fraud could be inferred from circumstantial evidence
6. › Whether failure to give evidence strengthened inference of knowledge
1. Equity
2. › Volunteers
3. › Receipt of stolen funds by volunteer
4. › Whether volunteer recipient holds funds on resulting trust for defrauded party
1. Evidence
2. › Inferences
3. › Drawing of inferences in civil fraud cases
4. › Failure of party to give evidence
5. › Whether unexplained failure to give evidence strengthens prima facie case

Quick Take

In civil fraud cases, tracing of stolen funds does not require proof of every link in the chain of accounts. Where the recipient of large unexplained deposits has no legitimate income source, is closely connected to the thief, and fails to give evidence or explain the source of funds, the court may infer that the funds are the proceeds of fraud. The same circumstantial evidence may support an inference of actual knowledge for the purposes of knowing receipt under the first limb of Barnes v Addy.