Australia's Federal Court Rejects Client's Untraceable Deposit Claim

With no direct claim on trust assets, he ranks only as an ordinary creditor The Federal Court dismissed a client's claim to funds a collapsed advisory firm held on trust because receivers could not trace his deposits. The court delivered its decision in Australian Securities and Investments Commission v Brite Advisors Pty Ltd (Receivers and Managers Appointed) (in liq) (No 5) [2026] FCA 1282 on 1 September 2026. Receivers had been appointed over property the firm held on trust for clients. One client, allowed to file an application without becoming a formal party, challenged their refusal to pay part of his claim. He sought GBP 575,380.92 and USD 352,623.37 from a pool of client money so mixed together that individual entitlements could not be traced. He traced the claim to a mid-2021 arrangement, the "Swap Agreement," under which he transferred his stake in a Hong Kong pension plan to the firm, and the firm, on 21 October 2021, deposited matching sums into a new investment account on his behalf. The receivers accepted his entitlement to two other sets of deposits but rejected this one on 17 October 2025. They found that he had not contributed the amounts himself and that their staff could not match the deposits to the firm's bank statements. The court accepted the receivers' position, finding that what set the disputed deposits apart from the accepted ones was their inability to match them to the firm's bank account statements. The firm's records were in such a state that a complete picture could not always be built, and the receivers found no deposit by the client that confirmed the disputed sums. The receivers argued that even if the arrangement was a binding contract, any money placed on the client's behalf had come either from misappropriated cash or from a loan drawn against assets held on trust for other clients, who might then have a claim against him. The client also argued that he was entitled to relief because he had relied on the firm's assurances that the invested money was his. The court held that any such claim would, at best, rank him as an ordinary unsecured creditor of the firm, with no direct claim on the trust assets. With no evidence that allowed the receivers trace the disputed deposits, the court dismissed the application. Subscribe to our FREE newsletter service and we’ll keep you up-to-date with the latest breaking news, cutting edge opinion, and expert analysis affecting both your business and the industry as whole. Please enter your email address below and click on Sign Up for daily newsletters from Australasian Lawyer.