3P claims Flashcards
What can beneficiaries do against a person who dishonestly assisted or procured a breach of trust?
Make a personal claim
This includes claims for breaches of fiduciary duties by a trustee.
What are the requirements for a claim of dishonest assistance as set out in Group Seven Ltd v Nasir [2019]?
- There was a trust in existence at the material time
- The trustee committed a breach of trust
- The defendant assisted the trustee to commit that breach of trust
- The defendant’s assistance was dishonest
What constitutes sufficient assistance in a dishonest assistance claim?
Assisting the fiduciary to plan, commit, or cover up the breach
Assistance must be more than minimal and make the breach easier.
Can a defendant avoid liability in a dishonest assistance claim by proving the fiduciary would have committed the breach anyway?
No
How is dishonesty defined in the context of dishonest assistance?
Ivey v Genting
- What was D’s knowledge belief as to the facts?
- Given that knowledge and those beliefs, were they dishonest by the standards of objective ordinary people?
What are the remedies for a dishonest assistant?
- Liable for the loss occasioned by the breach
- No requirement to show direct link between assistance and loss
- Potentially liable for profits acquired due to participation
What must C demonstrate to hold a dishonest assistant liable for profits that they gained?
Their participation was the real or effective cause of the profits
What is recipient liability?
A personal claim against a recipient of misapplied trust property or its traceable proceeds
What are the requirements for a knowing receipt claim?
- Misapplication of trust proeprty
- Beneficial receipt by the defendant of the misapplied trust property or its traceable proceeds
- Persistance of the claimant’s equitable proprietary interest in the property received by D
- Knowledge on the part of D that the property they received was misapplied trust property or its traceable proceeds
What is meant by misapplication in the context of knowing receipt?
The trust property was not used for its authorised purpose
What is meant by beneficial receipt in the context of knowing receipt?
- Receipt is for D’s own benefit or in his own right
- D establishes their own title to the property
Does putting money into an overdrawn acount count as beneficial receipt?
Yes - the bank benefits
Is payment of money into an account in credit beneficial receipt?
No.
What is meant by the persistance of euqitable proprietary interest in the context of knowing receipt?
The claimant’s right to the property continues
- This will be defeated if e.g trustees misapply land by selling it to two trustees for money (overreaching)
What is meant by knowledge in the context of knowing receipt?
The recipient must have the requisited knowledge
- if they dispose of the property before acquiring the relevant knowledge, there is no personal liability
What are the 5 types of knowledge?
- Actual knowledge
- Wilfully shutting one’s eyes to the obvious
- Wilfully and recklessly failing to make such enquiries as an honest and reasonable man would make
- Knowledge of circumstances which would indicate the facts to an honest and reaosnable man (objective)
- Knowledge of circumstances which would put an honest and reasonable man on enquiry
Baden scale
What is the remedy for a successful claim of knowing receipt?
Remedy is generally limited to the value that has been beneficially received by the 3P.
What types of knowledge render receipt of trust property unconscionable?
Types 1-3 of knowledge render receipt of trust property unconscionable.
- Actual knowledge
- Wilfully shutting one’s eyes to the obvious
- Wilfully and recklessly failing to make such inquiries as an honest and reasonable man would take.
What types of knowledge only render receipt unconscionable under certain conditions?
Types 4 and 5 only render receipt unconscionable if a reasonable person would have appreciated that the transfer was probably in breach of trust or would have made inquiries or sought advice revealing the probability of breach of trust.
