Baxter Global v Marco [2020] NSWSC 1293

"I'll repay the funds you invested. Trust me?!"

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Two Ps invested money with D1. D1 didn’t repay it.

The Ps said D1 held the funds on trust.

The Ds didn’t go to the hearing but the Court found it was OK to go ahead in their absence: [12]

D1 made representations about an investment being “100% safe and secure”: [24]

The Ps then made a number of investments with D1. As they did, D1 would send a document titled “Declaration of Trust” for the relevant P to sign: [27], [31]

The Ps invested around $2.4m in this way: [35]

In considering whether a trust arose the Court had to consider whether there was certainty of intention, subject matter and object: [40]

The test of certainty of subject matter (the money) and object (investing with the hope of a return) were comfortably met: [41]

But did the parties intend that the money be held on trust?

Yes.

The Court found: (i) the documents referred to the sums being held “in trust”; (ii) the use of the word “trust” was purposeful; (iii) the surrounding circumstances suggest a trust purpose; and (iv) even if the relationship was debtor/creditor, that does not exclude the obligations of a trust arising: [47] - [51]

The Court declared D1 held the sums on trust. Costs followed the event: [59]