Wickstead v Browne

Wickstead v Browne (1992) 30 NSWLR 1

The NSW Court of Appeal (Kirby P, Handley JA, Cripps JA) held that an employee of a corporate Trustee may be liable in equity if the employee participates, with knowledge, in breaches of trust and fiduciary duty by the Trustee employer.

At pp 15 the Court of Appeal stated:

“The relevant principles of equity were sufficiently stated by Lord Selbourne LC in Barnes v Addy (1874) LR 9 CH App 244 at 251-252 where he said:

“…Those who create a trust clothe the trustee with a legal power and control over the trust property, impose on him a corresponding responsibility. That responsibility may no doubt be extended in equity who are not properly trustees, if they are¬† found… actually participating in an fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of the trustees in transactions with their legal powers…unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees”

The respondent was a senior executive of the corporate Trustee and as such its “agent“. A court of equity would view the conduct of the corporate Trustee in converting the appellant’s funds to its own use as fraudulent. The statement of claim therefore pleads facts which if proved at the trial would establish that the respondent “participated in” this fraudulent conduct or “assisted in a dishonest and fraudulent design.”

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