Garan Holdings Pty Ltd v Stonepoint Capital Management Pty Ltd (in liq) (No 2) [2026] NSWSC 373 | Case summary

Garan Holdings Pty Ltd v Stonepoint Capital Management Pty Ltd (in liq) (No 2) [2026] NSWSC 373 | Case summary | Zoe

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2026-06-05

Before

Peden J

Catchwords

CONSUMER LAW – Misleading or deceptive conduct – Representations as to the nature, suitability and characteristics of investments – Where representations made were antithetical to the reality of the operation of the investment fund – Where reliance on representations caused loss and damage – Where representations misleading or deceptive despite disclaimers in an information memorandum NEGLIGENCE – Breach of duty of care – Whether duty of care owed by accountant to its client – Where accountant was a trusted adviser – Where advice and representations made about investments with intent to induce investment – Where representations about investments were misleading or deceptive – Where reliance on advice and representations caused harm – Where risk of harm was foreseeable and not insignificant – Where no precautions taken FIDUCIARY DUTIES – Breach of fiduciary duties –Circumstances where an accountant owes fiduciary duties to its client – Where client relied on accountant for investment advice – Where there was a conflict or real sensible possibility of conflict between accountant’s duty to advise the plaintiffs and their own interests in receiving financial benefits – Where no informed consent CONTRACT – Construction – Trust deed – Where contract incorporated information memorandum – Whether distribution term of contract orally amended – Whether representations made about a 7-day redemption for investments formed part of the contract – Whether plaintiff investors entitled to redeem under terms of trust deed EQUITY – Trusts and trustees – Powers conferred by trust deed and company information memorandum – Fraud on a power – Where trustee acted contrary to its obligations – Where breach of duty to exercise trustee powers honestly and in good faith – Where directors of trustee company engaged in dishonest conduct regarding the true activity of the investment fund – Where loan to corporation with same directors entered into with an improper purpose FIDUCIARY DUTIES – Third-party claims – Barnes v Addy – Whether knowing assistance in breach of trust duty – Whether breach of trust duty was induced or procured by director and his other company – Whether knowing receipt of trust money

Source

Original judgment source is linked above.

Catchwords

CONSUMER LAW – Misleading or deceptive conduct – Representations as to the nature, suitability and characteristics of investments – Where representations made were antithetical to the reality of the operation of the investment fund – Where reliance on representations caused loss and damage – Where representations misleading or deceptive despite disclaimers in an information memorandum NEGLIGENCE – Breach of duty of care – Whether duty of care owed by accountant to its client – Where accountant was a trusted adviser – Where advice and representations made about investments with intent to induce investment – Where representations about investments were misleading or deceptive – Where reliance on advice and representations caused harm – Where risk of harm was foreseeable and not insignificant – Where no precautions taken FIDUCIARY DUTIES – Breach of fiduciary duties –Circumstances where an accountant owes fiduciary duties to its client – Where client relied on accountant for investment advice – Where there was a conflict or real sensible possibility of conflict between accountant’s duty to advise the plaintiffs and their own interests in receiving financial benefits – Where no informed consent CONTRACT – Construction – Trust deed – Where contract incorporated information memorandum – Whether distribution term of contract orally amended – Whether representations made about a 7-day redemption for investments formed part of the contract – Whether plaintiff investors entitled to redeem under terms of trust deed EQUITY – Trusts and trustees – Powers conferred by trust deed and company information memorandum – Fraud on a power – Where trustee acted contrary to its obligations – Where breach of duty to exercise trustee powers honestly and in good faith – Where directors of trustee company engaged in dishonest conduct regarding the true activity of the investment fund – Where loan to corporation with same directors entered into with an improper purpose FIDUCIARY DUTIES – Third-party claims – Barnes v Addy – Whether knowing assistance in breach of trust duty – Whether breach of trust duty was induced or procured by director and his other company – Whether knowing receipt of trust money

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: Garan Holdings Pty Ltd v Stonepoint Capital Management Pty Ltd (in liq) (No 2) [2026] NSWSC 373

Hearing dates: 11-12, 19 May 2026

Date of orders: 05 June 2026

Decision date: 05 June 2026

Jurisdiction: Equity - Commercial List

Before: Peden J

Decision: Plaintiffs succeed almost completely in their claims; parties are to confer on appropriate final orders to give effect to these reasons and costs, or if no agreement can be reached, the matter be listed for directions hearing: see [238].

Catchwords: CONSUMER LAW – Misleading or deceptive conduct – Representations as to the nature, suitability and characteristics of investments – Where representations made were antithetical to the reality of the operation of the investment fund – Where reliance on representations caused loss and damage – Where representations misleading or deceptive despite disclaimers in an information memorandum
NEGLIGENCE – Breach of duty of care – Whether duty of care owed by accountant to its client – Where accountant was a trusted adviser – Where advice and representations made about investments with intent to induce investment – Where representations about investments were misleading or deceptive – Where reliance on advice and representations caused harm – Where risk of harm was foreseeable and not insignificant – Where no precautions taken
FIDUCIARY DUTIES – Breach of fiduciary duties –Circumstances where an accountant owes fiduciary duties to its client – Where client relied on accountant for investment advice – Where there was a conflict or real sensible possibility of conflict between accountant’s duty to advise the plaintiffs and their own interests in receiving financial benefits – Where no informed consent
CONTRACT – Construction – Trust deed – Where contract incorporated information memorandum – Whether distribution term of contract orally amended – Whether representations made about a 7-day redemption for investments formed part of the contract – Whether plaintiff investors entitled to redeem under terms of trust deed
EQUITY – Trusts and trustees – Powers conferred by trust deed and company information memorandum – Fraud on a power – Where trustee acted contrary to its obligations – Where breach of duty to exercise trustee powers honestly and in good faith – Where directors of trustee company engaged in dishonest conduct regarding the true activity of the investment fund – Where loan to corporation with same directors entered into with an improper purpose FIDUCIARY DUTIES – Third-party claims – Barnes v Addy – Whether knowing assistance in breach of trust duty – Whether breach of trust duty was induced or procured by director and his other company – Whether knowing receipt of trust money

Parties

Applicant/Plaintiff:

Garan Holdings Pty Ltd

Respondent/Defendant:

Stonepoint Capital Management Pty Ltd (in liq) (No 2)

Legislation Cited (8)

Cited:** Australian Securities and Investments Commission Act 2001(Cth)

Civil Liability Act 2002(NSW)

Competition and Consumer Act 2010(Cth)

Corporations Act 2001(Cth)

Trustee Act 1925(NSW)

Consumer Act 2010

Securities and Investments Commission Act 2001

Liability Act 2002

Cases Cited (37)

[2018] FCAFC 25

[2024] FCA 766

Cases Cited: Alati v Kruger (1955) 94 CLR 216
Armitage v Nurse [1998] Ch 241
Australian Securities and Investments Commission v La Trobe Financial Asset Management Ltd (2021) 158 ACSR 363
Baba v Sheehan (2021) 151 ACSR 462
Baden v Société Générale pour Favouriser le Développment du Commerce et de l’Industrie en France SA [1993] 1 WLR 509
Barnes v Addy (1874) LR 9 Ch App 244
Browne v Dunn (1893) 6 R 67
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Chowder Bay Pty Ltd v Paganin [2018] FCAFC 25
Chu v Lin [2024] FCA 766
Clark Equipment Australia Ltd v Covcat Pty Ltd (1987) 71 ALR 367
Crossman v Sheahan [2016] NSWCA 200
Curwen v Vanbreck Pty Ltd (as trustee for W S and N R Harvey Family Trust) (2009) 26 VR 335
Daly v Sydney Stock Exchange Ltd (1985) 160 CLR 371
Donhad Pty Ltd v Asbury [2025] NSWSC 1024
Eclairs Group Ltd v JKX Oil & Gas plc [2016] 3 All ER 641
Fitter v Public Trustee [2007] NSWSC 1487
Gerrald Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232
Goldus Pty Ltd (Subject to A Deed of Co Arrangement) v Cummins (No 4) (2021) 157 ACSR 118
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296
Hancock v Rinehart (2015) 106 ACSR 207
Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542
Hasler v SingTel Optus Pty Ltd (2014) 87 NSWLR 609
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
Herrod v Johnston [2012] QCA 360
Hitchcock v Pratt Group Holdings Pty Ltd as trustee for the Pratt Family Holdings Trust [2024] NSWSC 1292
Intagro v ANZ Banking Group (2004) 50 ACSR 224
Jones v Dunkel (1959) 101 CLR 298
Lin v Chu (2025) 312 FCR 1
Mbakwe v Sarkis [2009] NSWCA 330
Mills v Walsh [2022] NSWCA 255
Mutual Life and Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556
National Nominees Limited v Agora Asset Management Pty Ltd (No 2) [2011] VSC 425
Peden v Lake Macquarie City Council [2024] NSWLEC 87
Perpetual Trustees Victoria Ltd v Burns [2015] WASC 234
Pilmer v Duke Group Ltd (2001) 207 CLR 165
Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62
R and N Hunter Pty Ltd ATF The Hunter Family Superannuation Fund v Count Financial Limited [2025] FCA 544
Re Optimisation Australia Pty Ltd (2018) 362 ALR 374
Re-Engine Pty Ltd v Fergusson [2007] VSC 57
RnD Funding Pty Ltd v Roncane Pty Ltd (2023) 297 FCR 91
Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186
Sze Tu v Lowe (2014) 89 NSWLR 317
Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund v Property Mentors Australia Pty Ltd (No 3) [2024] FCA 1381
Trust Co of Australia Ltd v Perpetual Trustee WA Ltd (No 2) (1995) 36 NSWLR 654
Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102
Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484

Garan Holdings Pty Limited (Garan) is the parent company of a group of companies (the Group) that operates a successful business developing properties in NSW. The Group includes all plaintiffs except for the third plaintiff, Mr Charles McIntosh, and the second plaintiff, B&C Family Investments Pty Ltd.
Mr McIntosh is a builder and has been the sole director of most of the Group's companies. He is also one of two directors of B&C, the other being his former partner, Ms Natalie Robson. B&C is the trustee of Mr McIntosh’s family's self-managed superannuation fund.
The Group’s practice when undertaking a development is to establish a special purpose vehicle, owned by Garan, to hold the development. The fourth plaintiff, ACN 647, is such an entity; it was created for a development site in Dee Why, NSW. The profits from the Group's developments are returned from the special purpose vehicles to Garan and wholly or partly reinvested in new developments.
The other Group companies are either dormant or asset holding companies. 20WAD Pty Ltd and Australis Investment Corporation Pty Ltd (Australis) are plaintiffs and asset holding companies. 20WAD owned a mortgaged boarding house at Dee Why. Australis entered into a contract to buy an aircraft.
The first to third plaintiffs invested $17,935,061 in the Stonepoint Capital Fund (Fund), which was an unregistered managed investment scheme operating as a unit trust; the Fund’s trustee is Stonepoint Capital Management Pty Ltd (Stonepoint), now in liquidation. From August 2021, Stonepoint’s directors were Mr Hunt and Mr Schade. They were also two of Stonepoint’s ultimate shareholders through their corporate vehicles, Pashd Pty Ltd and Rass Qld Pty Ltd (Rass). The third ultimate shareholder was Mr Paris, through his corporation, Safe Harbour Pty Ltd. Mr Paris was not a director of Stonepoint and is not a party to the litigation.
Mr Hunt accepted that he was a director of Stonepoint, but submitted he was not one of the “effective controlling minds”. I reject that submission; more than one director can co-exist as the “controlling” or directing mind and will of a company: see eg Re Optimisation Australia Pty Ltd (2018) 362 ALR 374 at [155] (Brereton J).
Mr Hunt is a chartered accountant and financial adviser. He was also the sole director and shareholder of the third defendant, Hunt Wealth Partners Pty Ltd (which has carried on his accounting practice business under the name Hunt & Company Accountants, Tax Advisors and Auditors, or Hunt & Co). He was also the sole director and shareholder of the second defendant, Hunt Prosperity Pty Ltd. Hunt Prosperity held an Australian Financial Services Licence (AFSL) permitting it to, inter alia, provide financial product advice and deal in financial products, on certain conditions. It provided financial planning services for a range of clients. Under the AFSL, Mr Hunt and Stonepoint were authorised representatives, and Mr Hunt was the “key person”.
Stonepoint, Hunt & Co, Hunt Prosperity and the seventh defendant, Fortico Associates Pty Ltd (Fortico), are now all in liquidation and have each filed submitting appearances. They therefore cannot contest the plaintiffs’ claims or take any other step in the proceedings. This includes foregoing entitlement to either prior notice of, or subsequent objection to, final orders: Fitter v Public Trustee [2007] NSWSC 1487 at [20] (Palmer J). A plaintiff met with submitting appearances is generally entitled to judgment without formal proof of its claim: see eg Trust Co of Australia Ltd v Perpetual Trustee WA Ltd (No 2*)* (1995) 36 NSWLR 654 at 659-661 (Young J) (Trust Co). However, the Court retains a discretion to require the applicant to prove the facts grounding their entitlement to relief: Trust Co at 660. This is particularly so when the final relief sought is declaratory: see eg Peden v Lake Macquarie City Council [2024] NSWLEC 87 at [4] (Pepper J); Donhad Pty Ltd v Asbury [2025] NSWSC 1024 at [15] (Griffiths AJ).
The plaintiffs relied on the evidence of Mr McIntosh, Mr Simon Perrein and an expert accountant, Ms Julie Planinic. Mr Hunt did not cross-examine them. Mr Hunt did not read any evidence he had served, but relied upon a few documents in making submissions. I accept the plaintiffs’ submission that inferences should be drawn that Mr Hunt’s evidence would not have assisted him: Jones v Dunkel (1959) 101 CLR 298 (Jones v Dunkel).

The investing plaintiffs redeemed $7,575,000 of their investments, but sought various forms of relief in relation to the unredeemed units totalling $10,645,734.27. The other plaintiffs claimed they suffered consequential losses, because the unredeemed investments could not be deployed for other Group purposes.
It is necessary for me to resolve the following claims:
Misleading or deceptive conduct against Mr Hunt, Hunt & Co, Hunt Prosperity and Stonepoint;
Negligence against Mr Hunt and Hunt & Co;
Breach of fiduciary duty against Mr Hunt and Hunt & Co;
Fraud on a power/breach of trust/breach of contract against Stonepoint; and
Third-party claims under Barnes v Addy (1874) LR 9 Ch App 244 (Barnes v Addy) and related liability, and the recovery of traceable trust property, against Mr Hunt, Hunt Prosperity and Fortico.
While the causes of action against the defendants are various, they all require a determination of central issues:
What written and oral representations were made to the investing plaintiffs and were they misleading or deceptive; and
The proper construction of Stonepoint’s Trust Deed and Information Memorandum (IM), in particular, the powers the trustee possessed and whether Stonepoint acted in breach of its trust power and duties in loaning money to Fortico for forex trading and dealing with the Fund money the way it did.
Mr Hunt used Artificial Intelligence to assist him with his written submissions. Parts went beyond his pleaded case, including hallucinations about authorities. The submissions were generally difficult to understand. In his closing oral submissions, Mr Hunt identified his key propositions, which were mostly based on his construction of Stonepoint’s documentation, which he submitted provided a complete defence to the plaintiffs’ claims against him.
For the reasons that follow, I consider the plaintiffs have mostly been successful.
It is convenient to approach the factual matters in a relatively chronological order. Mr Hunt did not challenge any of the plaintiffs’ evidence, or lead any contradictory evidence; I have accepted the plaintiffs’ evidence, from which the following findings are made.

The documentary evidence establishes that Mr Hunt and Mr Schade were both equal participants in setting up the Stonepoint Fund and later the scheme of loaning all invested funds to Fortico, of which they were the only directors.
Before the establishment of Stonepoint, Mr Schade had engaged in foreign exchange trading, and had an established relationship with a trading platform, Pepperstone Group Limited.
Mr Schade also had a relationship with Mr Cody Burgat, who was based in Arizona, USA, and carried out foreign exchange trading using automated algorithms.
From April 2021, Messers Schade, Hunt and Paris discussed how investors could set up a self-managed superannuation fund and invest in Stonepoint, which in turn would operate a Pepperstone “MT4 forex account”.
They thought that this would make 15% per month profit. The provider of the automated service, Mr Burgat, would be given 30% of the profits. They discussed investors being given a 2% per month return, and Mr Schade, Mr Hunt and Mr Paris sharing the remaining 8% profit per month.
Mr Hunt provided Mr Schade and Mr Paris his opinion on how the fund would work using an example investment spreadsheet, which was consistent with the above. He anticipated that the three of them would make about $13 million by June 2022.
Shortly thereafter, Mr Hunt contemplated setting up a distinct borrowing entity, which became Fortico, which would borrow funds from the Fund, and repay the loan and interest from its anticipated forex trading returns. Mr Burgat provided the algorithms for Fortico’s Pepperstone trading. Mr Hunt characterised the structure as a “lockdown of internal loan files” in his submissions and as “a protective gate”, without explaining it. The loan agreement between Stonepoint and Fortico for a principal sum of $30,000,000 was not signed by Mr Hunt and Mr Schade until 1 and 30 September 2021 respectively. That agreement provided that the principal sum was repayable “at the end of the loan term”; however, the agreement did not give any definition of the “loan term”.
On 19 July 2021, Mr Hunt applied for an ABN for a fixed unit trust associated with Stonepoint as the Trustee for the Stone Point Capital Fund. On 26 July 2021, Mr Schade applied to open Fortico’s Pepperstone account. By 24 August 2021, an Information Memorandum for investors had been finalised. Originally, the IM was to include the phrase that Stonepoint “invests funds to receive superior returns”; by the final IM, this had changed to “uses borrowed funds to receive superior returns” (emphasis added).
Over time, Mr Schade introduced several investors to Mr Hunt for assistance in setting up self-managed superannuation funds to invest in Stonepoint’s Fund.

In early 2019, Mr McIntosh met Mr Hunt. This was after his former accountant, Mr Paul Siderovski, had given him investment advice that resulted in some significant financial losses. Mr Hunt provided Mr McIntosh with some assistance with that fallout.
Mr McIntosh told Mr Hunt about his relationship with Mr Siderovski and the trust and reliance he had previously placed in him, because, while Mr McIntosh was a successful builder, he was inexperienced and lacked expertise regarding other types of investment. Further, he had only completed high school to year 10 and relied on the expertise of his advisers, which included his accountant, for their advice and recommendations. Mr McIntosh also told Mr Hunt he would need to be able to access any invested funds quickly when new development opportunities arose for the Group.
Mr McIntosh told Mr Hunt that he was wary of engaging a new accountant given his past bad experience. In response, Mr Hunt told Mr McIntosh that he was a very experienced financial advisor and he was not in the business of recommending bad investments to his clients. He also said he was not like Mr Sidervoski and Mr McIntosh could trust him. Mr Hunt reassured Mr McIntosh that he “[a]lways ha[s] your best interests in mind”. He also told Mr McIntosh he had “hundreds of happy and very successful clients who [he had] advised for many years and [there were] no news articles anywhere about [him] ripping off clients”.
In about May 2019, Mr McIntosh (and his former partner Ms Robson) engaged Mr Hunt and Hunt & Co as their personal accountant and the accountant for the Group. Mr McIntosh gave Mr Hunt complete visibility over his and the Group’s bank accounts and financial records and assets.
From time to time, Mr McIntosh discussed investment opportunities with Mr Hunt and sought his view on them. Documents show that as early as July 2019, Mr McIntosh sought financial planning advice for his superannuation, including by copying him into communications related to various investments and proposed investments, such as Integrated Green Energy, Energy Vault, AXP, Panalitix, and Fremont Petroleum.
In about December 2021, Mr Hunt recommended that B&C invest in the Fund when B&C had approximately $559,015 to invest.
Mr McIntosh told Mr Hunt that he was particularly concerned about the security of the investment, return of the investment, ability to quickly access investment funds, and the trustworthiness and experience of any person managing the investment.
Mr Hunt made oral representations to Mr McIntosh about the Fund and its suitability as an investment from December 2021 to March 2022, including:
The Fund was a suitable investment for B&C and the Group.
The Fund lent out money and returned 2% per month to investors (it is also evident that other investors were told the Fund returned 2%).
Stonepoint only lends to clients of Hunt & Co, and Stonepoint is therefore familiar with the borrowers’ financial situations.
Investments in the Fund were very secure and safe investments (Mr Hunt also repeated this representation via text message). Stonepoint ensures it takes more than adequate security for the funds loaned. Similarly, Stonepoint holds first ranking security real property mortgages and general security agreements over trading businesses that borrowed Fund money.
The Fund would give Mr Hunt’s current clients their funds back on 7 days’ notice; the Group could withdraw its investments on 7 days’ notice. Mr Hunt also emailed Mr McIntosh that the ability to withdraw funds on 7 days’ notice was a “special consideration” for Mr Hunt’s existing clients.
On 16 December 2021, before any Group company invested, Mr Hunt gave Mr McIntosh the Stonepoint IM, which contained a series of further representations, including:
The Fund’s lending policy was “to provide [l]oans to third party [b]orrowers with short term cash flow requirements”, in particular short- and medium-term loans in the Australian market of between 1 to 24 months;
Portfolio diversification would be achieved across location, asset type, seniority, loan size, borrower concentration, serviceability, and loan to value ratio;
The Fund “focuses on capital preservation and capital protection and conducts a robust assessment of each [b]orrower, the purpose of the loan and the underlying security to determine whether a [b]orrower can repay the principal and interest for the duration of the [l]oan”;
The Fund lends at parameters that match the underlying risk of the property; the property class and the borrower’s credit-worthiness, and that loan applications deemed too risky would be rejected;
All loans would be secured and borrowers must have sufficient business assets or real property assets to secure any loan advanced;
The Investment Manager, being Stonepoint, would ensure a “clear and reasonable exit strategy for each [l]oan”.
After receiving the IM, Mr McIntosh noticed a difference between Mr Hunt’s representations to him and the IM: only a 1% (not 2%) per month return was specified, and the IM did not provide that funds could be withdrawn on a 7-day call.
Mr Hunt responded to Mr McIntosh’s request for clarification:

Above, I have made findings about representations made in writing in the IM, and by Mr Hunt orally and through email and text message (together, the “representations”).
The plaintiffs sought damages from Mr Hunt, Hunt & Co, Hunt Prosperity and Stonepoint for false, misleading or deceptive conduct by way of Mr Hunt’s representations and those in the IM identified above, pursuant to:
Sections 18 and 29 Australian Consumer Law (ACL) (sch 2 Competition and Consumer Act 2010 (Cth));
Sections 1041H and 1041E Corporations Act 2001 (Cth) (Corporations Act); and
Sections 12DA and 12DB Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
Because none of the remaining defendants raised an apportionment defence, to a large extent, it does not make a difference whether the provisions of the ACL, Corporations Act or ASIC Act are applied. The misleading or deceptive conduct provisions under the Corporations Act and ASIC Act deal with financial products or services specifically, whereas the elements of s 18 ACL deal with misleading or deceptive conduct more broadly. I therefore address the elements of s 18 ACL below. However, the plaintiffs also rely on certain sections of the Corporations Act, also detailed below.
In Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186 at [80], Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ stated that in determining a contravention of s 18 ACL (or equivalent) there are four steps:
Identifying with precision the conduct alleged;
Considering if the conduct was in trade or commerce;
Considering what meaning the conduct conveyed to its intended audience; and
Determining whether the conduct had the tendency to lead into error.
Their Honours explained that the third and fourth steps require the Court to objectively characterise the conduct by reference to its context “on the state of mind of the relevant person or class of persons”, including words in the document or other communication and the manner in which those words are conveyed (ie immediate context), as well as the relevant surrounding facts and circumstances (ie broader context).

For the reasons that follow, I accept that the representations were misleading or deceptive; they were fundamentally at odds with the reality of the operation of the Fund, both as planned and as already implemented by the time the first representations were made in December 2021.
Dealing first with the representations in the IM:
The Fund's lending policy was “to provide Loans to third party Borrowers with short term cash flow requirements”, in particular “short- and medium-term loans to third party company borrowers in the Australian market of between 1 to 24 months”. Instead, it lent, and planned from the outset to lend, its funds (or over 98% of them) to a single borrower, Fortico, in a loan of indefinite term.
For the same reason, the Fund did not have, or ever aim for, “portfolio diversification across location, asset type, loan size, borrower concentration, serviceability, and loan to value ratio”.
There were not “two categories” with respect to LVR: “up to 67% and up to 75% of the value of the real property”, because there was only one borrower, Fortico. It was lent money at 100% LVR, and quickly found itself at greater than 100% LVR, because its net assets fell rapidly into the negative, when its liabilities exceeded its assets.
The Fund did not “focus[] on capital preservation and capital protection”, instead lending the money to Fortico with the intention that Fortico would use the money, or substantial parts of it, in unsecured, leveraged trading in foreign currencies, which was an inherently high-risk endeavour.
The Fund did not “conduct[] a robust assessment of each Borrower, the purpose of the loan and the underlying security to determine whether a Borrower can repay the principal and interest for the duration of the Loan”. There is no evidence of any such assessment, and it is inherently unlikely that one occurred given the plan from the outset was simply to advance the money to the “borrowing entity”, Fortico. The only evidence of the Fund’s lending policies were created after the litigation commenced and were ostensibly created by Artificial Intelligence.
The Fund did not “lend[] at appropriate lending parameters that match the underlying risk of the property, the property class and the Borrower's credit-worthiness”, nor was it the case that “[a]ny Loan application that is deemed to be too risky and does not meet the Fund’s strict lending criteria will be rejected”. There is no evidence of any lending criteria or parameters.
While the loan to Fortico was notionally “secured” by a General Security Deed, there was no “lending policy” requiring all borrowers to “have sufficient business assets or real property assets to secure any Loan advanced to ensure investors are protected in the case of an adverse outcome”. Fortico had no assets.
Stonepoint, as Investment Manager, did not, and never planned to, “[e]nsure that there [was] a clear and reasonable exit strategy for each Loan”. This was evident as the plaintiffs were prevented from redeeming their investments.
Other representations made by Mr Hunt (orally, by text message and by email as discussed above) were also false.
The representations that the Fund was a suitable and safe investment for the plaintiffs, that there was adequate security, and that there could be redemptions in 7 days, were false. As a matter of fact, the Fund was never a secure and safe investment which could reliably be expected to return investors' capital at short notice (or at all). The Fund lent, and at all relevant times intended to lend, all its money to a single borrower, which carried out high risk trading in the manner outlined above, without any real security, and where it paid away parts of the capital in distributions to Mr Hunt's, Mr Schade's and Mr Paris's corporate vehicles.
Further, another representation was that “the model was very secure, because Mr Hunt was involved in running Stonepoint, and Stonepoint only lends to clients of Hunt & Co, and Stonepoint is therefore familiar with the borrowers' financial situations”. However, that was not correct, merely because Mr Hunt did the accounts of Fortico. Mr Hunt was aware of Fortico’s financial situation and its lack of assets to provide security, which was contrary to it being a secure investment.
Finally, the representation that Fortico would pay 2% per month was false. The high risk of loss through Fortico's intended forex trading meant that returns of 2% per month on investors' capital were not consistently achieved or ever reasonably foreseeable. Distributions were originally made at 2%, but ceased when Fortico lost money.
If the representations were not ones of present fact, and instead were representations of opinion, they carried an implied representation that there was a reasonable basis for the opinion. Further, any representation of opinion by Mr Hunt, the plaintiffs' accountant and financial adviser, about the qualities of an investment in a fund of whose trustee and manager he was a director, carried such an implied representation: Chowder Bay Pty Ltd v Paganin [2018] FCAFC 25 at [31] (Besanko, Markovic and Lee JJ).
There were no reasonable grounds for the opinions, for substantially the same reasons above. In fact, Mr Hunt ought to have been aware that the risk of capital loss was high from:
Warnings of likely loss of capital with forex trading, including by using algorithms, that were available online at Pepperstone and ASIC websites; and
Warnings of risk of loss of investment in the emails Pepperstone sent to Mr Schade, which Mr Schade forwarded to Mr Hunt, prior to December 2021.
Mr Hunt did not give any evidence, and I infer that had he given evidence it would not have assisted him: Jones v Dunkel. I reject Mr Hunt’s submission that he carried out due diligence because of an email in evidence dated July 2022 from Mr Burgat to Mr Hunt that included assertions that Mr Burgat had made a lot of money trading using his algorithms; there is no basis to conclude the assertions were true, and in any event, Mr Hunt received that document after most of the Fund’s money had been lost, not before investments commenced as part of any due diligence.
To the extent any representations were with respect to future matters, they were false on a similar basis and noting none of Mr Hunt, Hunt & Co, Hunt Prosperity and Stonepoint attempted to discharge the statutory onus applicable to such representations.
I note that Mr Hunt submitted that the “borrower requirements established within the IM are strictly risk-based … Eligibility under the mandate is explicitly governed by core credit factors – comprising … serviceability metrics and physical asset backing”. This seems to be an acceptance that the Fund was meant to invest only where those “eligibility” features existed. Those features did not exist with the Fortico loan.

I consider that the risk of harm to the plaintiffs as a result of their reliance on the advice and representations made by Mr Hunt was foreseeable, and that Mr Hunt and Hunt & Co knew or ought to have known of this risk: s 5B(1)(a) CLA.
First, I consider Mr Hunt and Hunt & Co had the requisite knowledge of Mr McIntosh’s reliance on their advice and representations.
An analogous case is Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund v Property Mentors Australia Pty Ltd (No 3) [2024] FCA 1381, in which Neskovcin J found that a duty of care was owed in respect of statements made in an information memorandum. The statements made concerned the expected timeframe and return on investment in the unit trust, and his Honour at [201] found that the respondent company “must have realised” that the applicant unitholders trusted the company in providing the information memorandum which invited them to invest in the development and acquire units in the trust. His Honour also opined that it was reasonable for the applicants to accept and rely on the information memorandum: at [201].
Similarly, here, I accept that it was reasonable for Mr McIntosh to rely on the advice and representations made by Mr Hunt. I accept Mr McIntosh’s evidence outlined above in terms of his lack of investment expertise, reliance on Mr Hunt’s advice as an expert, emotional vulnerability at the time, and his negative past experience with an accountant.
Further, Mr Hunt was aware, or ought to have been aware, of Mr McIntosh’s reliance on his advice and representations, and that the advice and representations were made so that the plaintiffs would engage in certain investments as advised by Mr Hunt and Hunt & Co.
Secondly, Mr Hunt and Hunt & Co knew, or ought to have known, that the advice and representations relied on by the plaintiffs would cause harm if it was negligent. For the reasons outlined above, I find that the written and oral representations were fundamentally antithetical to the reality of the operation of the Fund. In the circumstances outlined above, it was foreseeable that if the representations and advice were negligently made, then harm would eventuate.

Mr Hunt and Hunt & Co failed to take precautions against the risk of harm; I consider that there were precautions available and that a reasonable person in the position of Mr Hunt and Hunt & Co would have taken them.
First, I do not consider that Mr Hunt and Hunt & Co exercised reasonable care in the provision of its advice to the plaintiffs as to investments, or representations they made about the nature, suitability and characteristics of any proposed investment. Mr Hunt and Hunt & Co were aware of the plaintiffs’ circumstances, including its financial affairs and business, and Mr McIntosh’s vulnerabilities and lack of investment expertise as discussed above. Mr Hunt and Hunt & Co were aware of the plaintiffs’ reliance on the representations and advice they gave. It was therefore probable that serious harm would have been caused if the advice and representations were made negligently: see s 5B(2)(a), (b) CLA.
Secondly, Mr Hunt and Hunt & Co made no attempt to correct the representations prior to the plaintiffs further investing in the Fund. I consider that a reasonable person in the position of Mr Hunt and Hunt & Co would have corrected those representations before any investments were made: see s 5B(2)(c) CLA.
Thirdly, I do not accept Mr Hunt’s submission that he “proactively sought, obtained, and systematically relied upon the elite professional legal guidance of Thomson Geer Lawyers”. The invoices from the firm were for a few thousand dollars and indicate the work done was “review of IM and drafting trust deed”. However, Mr Hunt gave no evidence about the instructions given to the firm, what advice was in fact given, and whether he or any of the defendants relied upon it and implemented it. I also do not accept it has been demonstrated that the firm gave any advice on the operation of the General Security Agreement given by Fortico, including for example, whether Stonepoint could agree to the loan on those terms and simultaneously comply with the terms of the IM and Trust Deed.
Fourthly, there is no apparent social utility in making misleading or deceptive representations, or providing false advice, about investments to a client who has little experience in those types of investments: see s 5B(2)(d) CLA. Mr Hunt and Hunt & Co did not plead nor submit any social utility in failing to take those precautions.

The plaintiffs pleaded that Mr Hunt and Hunt & Co owed duties to the plaintiffs not to place themselves in a position where there was conflict, or alternatively a real sensible possibility of conflict, between:
Their fiduciary duties to the plaintiffs and their personal interest; and
Their fiduciary duties to the plaintiffs and their fiduciary duties to their other accounting clients.
The alleged conflict between the interests of the plaintiffs and other clients was not explained. I find that Mr Hunt and Hunt & Co breached their fiduciary duties owed to the plaintiffs for the following reasons.
Mr Hunt had an ultimate shareholding in, and was a director of, both Stonepoint and Fortico. Fortico received most of the monies invested in the Fund. Mr Hunt was also the sole director and shareholder of Hunt Prosperity, which received fees and distributions derived from unitholders' contributions to the Fund, after those funds were transferred to Fortico.
As fiduciaries, Mr Hunt and Hunt & Co could not place themselves in a position where there was a conflict or a real sensible possibility of conflict between their duty to advise the plaintiffs and their own interests: see Gerrald Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq*) (No 2)* [2024] NSWCA 232 at [40] (Stern JA, Kirk JA agreeing).
The onus lay with Mr Hunt and Hunt & Co to plead a defence to the alleged breach of fiduciary duty: see eg Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542 at [46]-[47] (Gleeson JA, Basten and McCallum JJA agreeing). They did not plead any defence, nor was any evidence led against the plaintiffs’ claim.
In submissions, Mr Hunt relied on Pilmer v Duke Group Ltd (2001) 207 CLR 165 (Pilmer). He submitted that a fiduciary is “entirely permitted to operate within a conflict or related-party layout if the trust constitution contractually permits it.” I reject that submission. It is not clear what a “related-party layout” is, nor to which “constitution” reference was being made. In any event, the constitution of the Trust Deed does not permit Stonepoint to act in a way which conflicts with its obligations as a trustee. However, the claim of breach of fiduciary duties owed to the plaintiffs was against Mr Hunt and Hunt & Co and therefore the Trust Deed was irrelevant in this context.
Further, in Pilmer at [78], McHugh, Gummow, Hayne and Callinan JJ stated that a fiduciary cannot promote their personal interests in circumstances where there is a conflict or real risk of conflict, without informed consent. Mr Hunt and Hunt & Co did not disclose their interests to the plaintiffs prior to Mr Hunt giving advice and making the representations about the Fund; those interests ought to have been disclosed so that the plaintiffs could have made an informed decision prior to investing their funds relying on Mr Hunt’s advice and representations.

I accept the plaintiffs’ submissions.
Sections 14 and 14A require consideration of the express terms and powers expressed in the Trust Deed, read in the context of the IM. They require Stonepoint, whose business included acting as trustee or investing money on behalf of other persons, to exercise the care, diligence and skill that a prudent person would managing the affairs of other persons. The IM also expressly stated that Stonepoint intended to exercise “prudent care and skill to minimise the risks to the Trust”. “Prudent care” and “care, diligence and skill” may not satisfy as a trustee’s “irreducible duty” on its own: see eg Armitage v Nurse [1998] Ch 241 at 253 (Millet LJ) (Armitage).
However, Stonepoint also owed the investing plaintiffs an irreducible duty as a trustee “to perform the trusts honestly and in good faith for the benefit of the beneficiaries”: see Armitage at 253. In addition, Stonepoint also owed an irreducible duty to adhere to the terms of the Trust Deed: see eg Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at [32] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).
I do not accept that these duties were negated by express terms in the Trust Deed: see eg Crossman v Sheahan [2016] NSWCA 200 at [309]-[310] (Ward P), and at [332] where the President distinguished a provision in a Trust Deed that had the effect that there can be no breach of trust, and a provision that exonerates the trustee from liability for a breach of trust.
Clause 13.2 outlines the specific powers of the trustee, including to carry on any trade or business, create security interests, create different classes of units, invest, share risk and returns, vary, replace or deal with assets, buy-back units, fetter future discretions, exercise voting rights, and give guarantees and/or indemnities. Relevantly, cl 13.2(b) provides that Stonepoint may “advance and lend moneys to … any … corporations … whether or not with security or interest as the Trustee sees fit …”.
However, I accept both parties’ submission that the Trust Deed must be read with the IM: see Hitchcock v Pratt Group Holdings Pty Ltd as trustee for the Pratt Family Holdings Trust [2024] NSWSC 1292 at [172] (Meek J). The two documents were developed together, with the IM designed to solicit investment in the Fund, which was governed by the Trust Deed; the IM and Trust Deed each refer to each other.
The IM included various statements outlined above, including that the invested funds would be used to “provide Loans to third party Borrowers with short term cash flow requirements”, in particular “short- and medium-term loans to third party company borrowers in the Australian market of between 1 to 24 months” with “a clear and reasonable exist strategy” and adequate security.
I therefore reject Mr Hunt’s submission that cl 13 empowered Stonepoint to advance and lend trust funds as it saw fit and that there were no restrictions limiting Stonepoint’s “credit layouts to speciﬁc calendar intervals”, or restrictions or prohibitions on “transaction terms that are repayable on demand, subject to extensions, or structured around localized property exit events such as reﬁnancing or de-risked asset realization milestones.”
In exercising its power under the Trust Deed, Stonepoint was required to do so in accordance with express terms of the Trust Deed, the IM and its irreducible trustee duties. The IM was more than “guidelines” as Mr Hunt submitted.
Stonepoint did not act in accordance with its powers when it loaned the Fund’s money to Fortico, as outlined above. Stonepoint, through Mr Hunt, lied to the plaintiffs about, and did not disclose to the plaintiffs, the true activity of the Fund, evidenced by the following conduct:
Stonepoint made false representations in the IM.
Stonepoint made false statements to the plaintiffs’ solicitor and B&C’s superannuation fund auditor. For example, in March 2022, Mr Hunt represented to Mr McIntosh’s solicitor that Stonepoint’s borrowers comprised both “Personal Clients” and “Business Clients”; that client industries included dairy, beef stud, and childcare short and long day; and that the loan currently had 5 borrowers with “a good spread between each to achieve 2% per month and preserve capital”. At the time, there was only the loan to Fortico.
Stonepoint delayed or deflected responses to redemption requests by Mr McIntosh and his solicitor.
Stonepoint deliberately failed to disclose the Fund’s catastrophic losses, and even soliciting further investment from the investing plaintiffs after such losses; Mr McIntosh gave unchallenged evidence that this occurred in October 2022.
Stonepoint misspent Fund money. In November 2022, at a time some months after the Fund had lost millions of dollars in funds due to the Pepperstone trading, Mr Hunt and Mr Schade spent fund money on lavish travel to Las Vegas on the way to visit Mr Burgat. For example, on 7 November 2022 alone, they spent $6,996.32 on restaurants, bars, casinos and other entertainment. Mr Hunt submitted that the Las Vegas expenses "are less than 1% of what the directors of Fortico made and contributed into Stonepoint" and interpreted the plaintiffs' submissions on these expenses as a "personal attack based on materiality", which he found "extremely disappointing". I reject that submission.
Similarly, in around December 2022, approximately $4.25 million of fund money was also spent on an undocumented transaction to a David and Nichola Driver purportedly to acquire shares which were never received.
Stonepoint concealed or fabricated documents to mislead. Further, in April 2023, Mr Hunt sent Mr Tom Nolan (who was the auditor of a number of SMSFs that invested in the Fund, including B&C) a balance sheet as at 30 June 2022 that included a fabricated $13 million asset to conceal the losses made in Pepperstone; that asset was said to be in Aurora Australasia Investment Fund pursuant to an agreement in June 2022 where Fortico would provide trading services. The true position at that time was that the $13 million was funnelled into Fortico. Mr Hunt submitted orally that the relevant email exchange only concerned Hunt Prosperity (and not Stonepoint). While I accept that one part of an email from Mr Nolan concerned Hunt Prosperity, Mr Hunt ignored other requests to provide information about Fortico's ability to repay loans. I otherwise reject Mr Hunt’s submission that he was somehow protecting the “fund safety” or was prevented by obligations of confidentiality from disclosing the true situation.
I accept the plaintiffs’ submission that this conduct supports the finding that the Fortico loan was made with dishonest intent, breaching the duty of a trustee to exercise its powers honestly and in good faith.
I reject Mr Hunt’s oral submission that the bank statements somehow demonstrate that Mr Hunt was acting in good faith by Fortico “paying out money almost immediately”.
Had Stonepoint wished to engage in forex trading for a proper purpose within the operation of the Trust Deed and the IM, it would have been expected that it did so responsibility with at least a properly executed loan agreement, an end date and adequate security.
Therefore, I do not consider Stonepoint’s conduct in the scheme:
Was honest and in good faith;
Demonstrated the exercise the care, diligence and skill that a prudent person would managing the affairs of other persons;
Was consistent with making investments in accordance with the terms of the IM.
I accept that Stonepoint acted contrary to its obligations as trustee.

Similarly, the plaintiffs also submitted that the proper purpose of the broadly worded powers of investment in the Trust Deed, including and in particular the power to lend money, was to operate the Fund and make investments in accordance with the IM. The plaintiffs submitted that Stonepoint’s loan to Fortico was not done in accordance with this power and was done for an improper purpose: Hancock v Rinehart (2015) 106 ACSR 207 at [61] (Brereton J) (Hancock).
The doctrine of fraud on a power, also referred to as the proper purpose rule, “operates to avoid the exercise of power where it has been exercised for a purpose, or with an intention, beyond the scope of, or not justified by, the instrument creating the power”: Baba v Sheehan (2021) 151 ACSR 462 at [6] (Brereton JA) (Baba).
In Eclairs Group Ltd v JKX Oil & Gas plc [2016] 3 All ER 641, Lord Sumption at 649 explained that “… the rule is not concerned with the excess of power by doing an act which is beyond the scope of the instrument creating it as a matter of construction or implication” but “concerned with abuse of power, by doing acts which are within its scope but done for an improper reason”.
The Court undertakes a “subjective inquiry” of the trustee’s intention, which is determined by an objective assessment of the evidence and is informed by the surrounding circumstances: see Jessica Hudson, “The Proper Purpose Rule: Preventing Law’s Intentional Abuse” (Paper, Supreme Court of NSW Annual Conference, 2024) at 16; Hancock at [60]; see also Curwen v Vanbreck Pty Ltd (as trustee for W S and N R Harvey Family Trust) (2009) 26 VR 335 at [48] (Redlich, Bongiorno JJA and Hansen AJA).
Stonepoint agreed to the Fortico loan for an improper purpose, namely, not to benefit the Fund’s investors as promised in the IM, but rather to act in an inconsistent way that would also achieve enrichment of its founders through high performance fees, as well as lavish spending once the trust funds had been received.
As Stonepoint executed the Fortico loan for that purpose and not for the “intention of benefiting someone who is not an object of the power”, I find the loan was “exercised for a foreign purpose”: Baba at [49].

I accept the plaintiffs’ submission that Mr Hunt and Fortico knowingly assisted in Stonepoint’s breaches of trust.
First, I am satisfied that the breach of trust amounts to a fraudulent or dishonest design by Stonepoint. Dishonesty requires a “transgression of ordinary standards of honest behaviour” by the person owing the duties: see Hasler v SingTel Optus Pty Ltd (2014) 87 NSWLR 609 at [124]-[125] (Leeming JA) (Hasler*)*. It is not necessary to demonstrate that the fiduciary actually considered those standards: Hasler at [124]. It is clear from Mr Hunt’s conduct that Stonepoint was not acting consistently with the representations and promises that had been made. This was also known to Fortico through Mr Hunt.
Secondly, I am satisfied that Mr Hunt and Fortico assisted or participated in Stonepoint’s breach of trust. Assistance requires action that will “make a difference” or essentially “advance” the breach of duty in some way: see eg Re-Engine Pty Ltd v Fergusson [2007] VSC 57 at [120] (Dodds-Streeton J) (*Re-*Engine). As discussed above, Mr Hunt, together with Mr Schade, established Stonepoint and Fortico. Fortico was one half of the dual entity structure conceived by Mr Hunt for the Fund and clearly assisted in Stonepoint’s breaches; it procured investors and received unitholders’ funds from Stonepoint and used those funds primarily to conduct forex trading. Mr Hunt (and Mr Schade) also established Stonepoint and Fortico’s bank accounts, which made payments. Mr Hunt gave advice and made representations about the Fund, and caused investments to be made as discussed above: see eg Re-Engine at [119].
Thirdly, Mr Hunt and Fortico (through Mr Hunt) had the requisite knowledge, being actual knowledge, or at least wilfully shut their eyes to the obvious breach: see eg Baden v Société Générale pour Favouriser le Développment du Commerce et de l’Industrie en France SA [1993] 1 WLR 509 at [250] (Gibson J) (Baden); Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [261], [265] (Finn, Stone and Perram JJ) (Grimaldi).
This is demonstrated by Mr Hunt’s attempts to conceal from Mr McIntosh the losses arising out of the Group’s investments in Stonepoint, including as discussed above, and I consider that this is evidence that Mr Hunt knew that Stonepoint was acting contrary to its obligations as trustee.

The plaintiffs further submitted that Mr Hunt and Fortico knowingly induced or procured Stonepoint’s breach of trust, which makes them liable for the breach. In circumstances where this appears to be a further and alternative claim to the knowing assistance claim, and where I have already found that Mr Hunt and Fortico are liable as knowing assistants, I do not consider it necessary to determine whether Mr Hunt and Fortico knowingly procured or induced Stonepoint’s breach.
In any event, I do not consider that the plaintiffs’ submissions fully addressed the elements necessary to establish inducement or procurement. Inducement or procurement involves conduct that intentionally causes, or intends to cause, the breach of trust; this usually requires knowledge of the essential matters which constitute a breach of trust: see eg Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62 at [186], [192]-[194] (Leeming JA, Bell P and Brereton JA agreeing) (Pittmore). However, it is not settled law that a person is liable for inducing or procuring a breach of fiduciary duty by mere virtue of the acts it has undertaken as director of the fiduciary: see eg Pittmore at [162]-[170] (Leeming JA, Bell P and Brereton JA agreeing).
The plaintiffs relied on Lin v Chu (2025) 312 FCR 1 (Lin), where O’Bray and Vandongen JJ, at [322] and [384] respectively, noted that a director of a fiduciary can be liable for inducing or procuring the company fiduciary’s breach of trust. Conversely, O’Callaghan J opined that to find inducement or procurement, a director must also be acting contrary to the interests of the company: see Lin at [186], [208] (and cases cited therein).
Here, the plaintiffs submitted that Mr Hunt was wearing “multiple hats” when he executed the loan agreement, for example, as a director of Fortico. The plaintiffs submitted that it is not necessary for me to be satisfied that Mr Hunt was acting contrary to the duties he owed to Stonepoint and that I need only be satisfied that the relevant intentional procurement or inducement occurred. However, the plaintiffs did not develop their submissions on this point, and I do not consider it necessary to decide in circumstances where I am satisfied that Mr Hunt and Hunt Prosperity were knowing assistants.

Further, I accept the plaintiffs’ submission that they suffered consequential loss because they were kept out of their funds.
The plaintiffs engaged an expert accountant, Ms Planinic, who provided a report setting out the loss suffered by the investing plaintiffs and other plaintiffs associated with their unredeemed Fund investments. Mr Hunt attempted to make submissions challenging components of the expert report (including various figures and assumptions) without having cross-examined Ms Planinic or having led competing expert evidence. Mr Hunt did not suggest he was an expert in the proceedings. In those circumstances it would be procedurally unfair to consider Mr Hunt’s submissions that Ms Planinic’s report was defective, where the report is otherwise objectively coherent and persuasive: see Browne v Dunn (1893) 6 R 67. I accept Ms Planinic’s expert opinion evidence.
I accept Ms Planinic’s quantification of the consequential loss at $4,725,105, made up of:
$4,417,958 for costs associated with the delays and additional debt on the Group’s Avon Road property development caused by the plaintiffs’ inability to redeem the $10,645,734.27; and
$307,147.74 for diminished profits associated with the Avon Road development.
For the reasons below, I consider the plaintiffs are entitled to that consequential loss.
In 2021, Group company ACN 647 acquired a property on Avon Road for $9.95 million, and on 19 April 2023, it obtained a development consent. The plaintiffs submitted that they would have used the redemptions requested on 17 March 2023, in the sum of approximately $10 million, to fund the development, together with debt finance.
Ms Planinic’s report explained that because the $10,645,734.27 was not received when requested, the development was conducted with a greater portion of debt finance. Further, the commencement of the development was delayed from June 2023 to June 2024 (whilst preliminary works and demolition occurred earlier, formal construction of the project did not commence until June 2024). This is because the plaintiffs were required to seek an increased loan facility, which contained additional conditions:
A minimum of $15.75 million (excl GST) of qualifying pre-sales be achieved on the project; that was not achieved until February 2024.
A minimum of $400,000 additional equity contributions be provided to fund construction costs of the project; that sum was not utilised until April 2024.
Ms Planinic employed a discounted cash flow methodology, and calculated losses consequential to these delays and additional debts as totalling $4,417,958, including additional holding costs, additional interest on debt, additional facility fees for the debt, and the present value effects of completing the development later.
Secondly, Ms Planinic opined that the equity from the development profit returned to Garan in about March 2024 from the Avon Road development would have totalled $31.6 million (before tax). Ms Planinic calculated these diminished profits as totalling $307,147.74. Ms Planinic explains that this would have discharged Mr McIntosh’s personal obligations pursuant to Family Law proceeding consent orders to discharge two mortgages of about $1.29 million and pay $5.5 million, and the Group’s obligations generally so as to avoid the need for further finance which was taken out to pay costs (eg taxation payments) with another lender of, on Ms Planinic’s figures, $1.585 million.

In relation to Hunt Prosperity, the plaintiffs sought a declaration that the funds it received from Fortico totalling $2,210,722.89 (as identified in the bank accounts in evidence), or their traceable proceeds, are held on trust for the Fund.
The investing plaintiffs submitted that, as unitholders, they have at least an equity to compel due administration of the Fund; this is said to give rise to a "right to trace" into assets that have been wrongfully distributed in order to reconstitute the Fund, including any traceable proceeds of the funds paid to Fortico and Hunt Prosperity: see eg RnD Funding Pty Ltd v Roncane Pty Ltd (2023) 297 FCR 91 at [102]-[103] (Derrington J, Beach and Halley JJ agreeing).
The plaintiffs sought specific restitution of the trust monies (or its traceable proceeds) to its “true owner”, being Stonepoint: see Grimaldi at [251] (Finn, Stone and Perram JJ) (Grimaldi). To that extent, I consider that Stonepoint possesses the requisite right to trace. Regardless of whether the trustee exercises that right to trace, it has been accepted that beneficiaries may have a right to seek that trust property be traced: see eg Grimaldi at [562]; see also Goldus Pty Ltd (Subject to A Deed of Co Arrangement) v Cummins (No 4) (2021) 157 ACSR 118 at [284]-[292] (Colvin J).
I consider that the investing plaintiffs are entitled to ensure Stonepoint has the benefit of the tracing of trust funds in the hands of Hunt Prosperity and Fortico, in circumstances where I have found they were knowing recipients of trust monies (including by virtue of Mr Hunt being a director of both Foritco and Hunt Prosperity), and where those monies were paid from the Fund in breach of Stonepoint’s duty of trust.
Orders were made on 30 April 2026, as agreed between Stonepoint’s liquidator and the plaintiffs before the commencement of the trial. The plaintiffs accepted any traced funds ought to be paid into Court for further consideration of how such funds ought to be distributed.
Further, the plaintiffs concede that they have not been able to attribute the payments into and out of Fortico’s bank account to the unitholders, nor is there any evidence before me as to whether those monies still exist. I therefore consider that the plaintiffs are entitled to a declaration as sought.

Garan Holdings Pty Ltd v Stonepoint Capital Management Pty Ltd (in liq) (No 2)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment

Parties

Legislation Cited (8)

Cases Cited (37)

JUDGMENT

The parties

Issues to be determined

Creation of Stonepoint and the investment scheme

Plaintiffs’ investments in Stonepoint Fund

Loss of Fund’s money

Plaintiffs’ requests for redemption and subsequent claims

Were the representations misleading or deceptive conduct?

A person engages in conduct

Conduct was in trade or commerce

Conduct was misleading or deceptive

Did Mr McIntosh rely on the representations?

Operation of disclaimers?

Did Mr Hunt and Hunt & Co give advice negligently?

Duty of care owed?

Breach of duty of care?

Foreseeable risk of harm

Risk of harm was not insignificant

Precautions taken?

Did Mr Hunt and Hunt & Co breach fiduciary duties owed to the plaintiffs?

Fiduciary duties owed?

Breach of fiduciary duties?

Did Stonepoint breach its contract with the investing plaintiffs?

What is the distribution term?

Redemption term?

Breach of trust by Stonepoint?

Powers conferred by Trust Deed

Fraud on a power

Third-party claims

Mr Hunt and Fortico knowingly assisted in Stonepoint’s breach of trust

Mr Hunt and Fortico induced or procured Stonepoint’s breach of trust

Fortico and Hunt Prosperity’s knowing receipt of trust funds

Conclusion

Rescission of the Fortico loan?

Appropriate forms of relief

Relief for Stonepoint’s breach of trust

Unredeemed investments

Consequential loss

Compound interest for Stonepoint’s breach of trust?

Relief for breach of contract

Relief for misleading or deceptive conduct

Negligent advice/breach of fiduciary duties claims against Mr Hunt and Hunt & Co

Additional relief for third-party claims

Tracing

Claim for an account

Is Stonepoint entitled to be indemnified from the Fund?

Is Mr Hunt liable under s 197 Corporations Act?

Is a declaration premature?

Conclusion

Amendments

05 June 2026