Equiticorp Industries Group Ltd (In Statutory Management) v The Crown (Judgment no 47) - [1998] 2 NZLR 481

Trusts and trustees — Constructive trust — Knowing receipt of trust property — Dishonest assistance in misappropriation of trust property — Crown selling shares to subsidiary company financially assisted in purchase by holding company — Sale grossly improvident for purchaser to knowledge of Crown agents and officials — Whether knowledge of agents and officials able to be imputed to Crown — Whether possibility of false explanation to inquiry a defence — Whether Crown knowing receiver of property in breach of trust — Whether dishonest assistance in breach of trust.

Equity — Equitable defences — Clean hands — Directors entering into illegal transactions — Company seeking to recover property transferred — Whether company party to directors' acts — Whether company coming to equity with clean hands.

Contract — Illegal contract — Tainting — Contract with foreign company — Purchase of shares illegal as purchasing company provided with financial assistance for purchase of own shares — Foreign companies providing some of finance for purchase — Subsidiary company purchasing shares in holding company — Whether property passing under contracts — Whether purchase tainted by illegality of original funding — Whether contract with foreign company illegal — Whether in pari delicto exception applying — Companies Act 1955, ss 40 and 62.

Contract — Quasi-contract — Action for money had and received — Company illegally providing financial assistance for purchase of own shares — Subsidiary company purchasing shares in holding company — Whether recipient of money paid for shares liable for money had and received.

Company law — Statutory management — Statutory trust — Company illegally providing financial assistance for purchase of own shares — Subsidiary company purchasing shares in holding company — Companies later placed in statutory management — Whether money and bank deposits “property” — Whether just and equitable that money paid be held on trust for companies — Corporations (Investigation and Management) Act 1989, s 54(1).

Equity — Unjust enrichment — Money received from illegal sale of shares — Original funders of transaction claiming return of money — Whether third party subrogated to rights of funders — Whether recovery by funders double recovery and unjust enrichment. — Funders refinanced by third party

Equity — Estoppel — Estoppel by representation — Delinquent directors entering into unlawful transactions on behalf of company — Whether representations by directors binding company — Whether reliance on representations.

Company law — Directors — Customary authority — Delinquent directors entering into illegal and grossly improvident transactions on behalf of company — Whether breach of fiduciary duty by directors — Whether transactions within directors' customary authority — Whether directors having power to commit company to illegal and grossly improvident transactions — Companies Act 1955, s 18C.

Company law — Shareholders — Ratification — Delinquent directors entering into unlawful transactions on behalf of company — No general meeting of shareholders to ratify directors' acts — Whether transactions ratified by shareholders — Whether illegal contract capable of rectification.