Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (Trial Judgment) [2024] FCA 766

FEDERAL COURT OF AUSTRALIA

Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (Trial Judgment) [2024] FCA 766 File number: NSD 32 of 2022

Judgment of: JACKMAN J

Date of judgment: 15 July 2024

Catchwords: TRUSTS AND TRUSTEES – breach of trust – where plaintiffs invested in secured income mortgage fund for purpose of obtaining a significant investor visa – where fund's constitution required loans to be secured by a mortgage – where fund issued unsecured loans – where loans procured a third party's involvement in a project in which the defendants had a financial interest – whether loans unauthorised – whether loans imprudent – whether loans issued for an improper purpose TRUSTS AND TRUSTEES – breach of trust – misappropriation – clear accounts rule EQUITY – accessorial liability – where defendants involved in management or administration of fund – whether defendants knowingly induced or procured breach of trust – whether a director "acting as such" is capable of procuring or inducing a breach of trust by the director's company – whether defendants knowingly assisted in a dishonest and fraudulent design – equitable compensation awarded CORPORATIONS – whether fund an unregistered managed investment scheme – whether joint investment by two retail investors should be treated as an investment of the full amount by each CORPORATIONS – misleading or deceptive conduct – whether plaintiffs had a reasonable expectation of disclosure – causation of loss CORPORATIONS – breach of director's duties – duty of reasonable care and diligence CORPORATIONS – derivative action – where plaintiffs as beneficiaries already have a direct cause of action LIMITATION OF ACTIONS – whether damage suffered when repayment became impossible or when it was ascertainable that plaintiffs had suffered an overall loss on investment LIMITATION OF ACTIONS – application for extension of time pursuant to Corporations Act s 1322(4)(d) – whether power of extension applicable to limitation period – whether extension would cause substantial injustice