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Barnes v Addy

Bird v Bird (No 4) [2012] NSWSC 648. Rein J. 5.6.12. 

92 The requirements for establishing liability under the first limb of Barnes v Addy are summarised in Young, Croft and Smith, On Equity (2009) Thomson Reuters at [6.890], namely that: 

(1) trust property, or property acquired through breach of fiduciary duty, has been received by the defendant;

 (2) knowledge of the defendant that such property was received in breach of trust or fiduciary duty.

93 The learned authors note that there is no requirement under the first limb that the defendant's conduct is dishonest - acting with notice that property was received through breach of trust or fiduciary duty will suffice: see Consul Development Pty Ltd v DPC Estates Pty Ltd and Tara Shire Council v Garner [2002] QCA 232; [2003] 1 Qd R 556. The knowledge must be: 

(1) actual knowledge; 

(2) wilfully shutting one's eyes to the obvious; 

(3) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; or 

(4) knowledge of circumstances which would indicate the facts to an honest and reasonable man.

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