In Commonwealth of Australia v Kupang Resources Pty Ltd [2026] NSWCA 161, the NSW Court of Appeal (Bell CJ, Ward P and Griffiths AJA agreeing) dismissed an appeal from a judgment of McGrath J which found the Commonwealth of Australia liable as a knowing recipient of trust property under the first limb of Barnes v Addy.
The Court of Appeal’s decision is the latest chapter in Kupang’s two-decade long attempt to recover unauthorised profits made by its former de facto director, Phillip Grimaldi, in breach of his fiduciary duties to Kupang.
In 2010 and 2012, Kupang (formerly known as Chameleon Mining) obtained judgments in the Federal Court and Full Court of the Federal Court against Mr Grimaldi requiring him to account for the unauthorised profits of his dishonest breaches of duty. But those victories against Mr Grimaldi in the Federal Court proved hollow because, unbeknownst to Kupang at the time, Mr Grimaldi had used $15 million of the unauthorised profits to pay his personal tax debt to the Australian Taxation Office. Mr Grimaldi then declared bankruptcy.
Kupang subsequently sued the Commonwealth of Australia for knowing receipt of trust property. At trial, the primary judge (McGrath J) found that the ATO knew that the $15 million it received from Mr Grimaldi was the unauthorised profits of Mr Grimaldi’s breaches of duty to Kupang. The primary judge found that the Commonwealth, on behalf of the ATO, was therefore liable as a knowing recipient under the first limb of Barnes v Addy to repay this money to Kupang with compound interest.
The Court of Appeal dismissed the Commonwealth’s appeal. The Court found that the funds received by the ATO were “trust property” of Kupang for the purposes of the first limb of Barnes v Addy; that the character of the funds as “trust property” was not altered by the final orders in the Federal Court proceedings against Mr Grimaldi (which imposed a personal remedy against Mr Grimaldi to account); and that the Commonwealth was not permitted to raise a new argument about the scope of its duties that was not run below.
Kupang was represented by Christopher Withers SC, Christopher Mitchell, Damian Morris and Jessica Hudson of Banco Chambers, instructed by Amanda Banton and Elliott Smith of Banton Group.