3P liability

Question 1

Trustee de son tort

Answer 1

Mara v Browne - liable as a contrastive trustee

Question 2

UE concurrent liability for KR? (pro)

Answer 2

Twinsectra, Relfa (obiter)

Lord Nicholls and Lord Birks (obiter)

Canada say the essence of KR is D is unjustly enriched

Question 3

UE concurrent liability for KR? (cons)

Answer 3

Akindele, Farah v Say Dee, Charter v City Index = NO

Nourse LJ - it is for the SC tor recognise it because all case law is inconsistent with the idea of UE since Barnes v Addy

Question 4

Three pieces of evidence for concurrent liability for KR in UE

Answer 4

1) UE for people receiving property under will be accident (Ministry of Health v Simpson)
2) UE for directors misappropriating property irrespective of fault (Criterion Properties v Stratford UK prop)
3) Suborgation to reverse UE

Question 5

El-Ajou v Dollar Land Holdings

Answer 5

how to show KR:
1) C must show disposal of his assets in breach of fiduciary duty or trust

2) D beneficially received assets traceable as representing C’s property
3) With a state of mind rendering recipes unconscionable

Question 6

Reflo v Varsini

Answer 6

Money credited to D’s bank account in singapore = traceable proceeds of money debited from C’s bank in England

Question 7

Baden, Delvaux

Answer 7

Peter Gibson lists 5-fold classifications of knowledge:

1) Actual knowledge
2) Nelsonion knowledge (wilfully shutting ones eyes)
3) Naughty knowledge (recklessly failing to inquire like an honest man)
4) Reasonable man known
5) Reasonable man inquiry

Question 8

Belmont Finance, Houhton v Fayers

Answer 8

1-5 can make 3P liable (Baden scale KR)

Question 9

Royal Brunei v Tan

Answer 9

PC held Baden = obscure and over theorised so knowledge cannot be assessed this way for breach

Question 10

BCCI (overseas) v Akindele

Answer 10

CA said same thing as Royal Brunei about Baden

Nourse LJ - dishonest will suffice but is not required

RULE: D is liable if state of knowledge makes it unconscionable to retain receipt
(slight modification of El-Ajou)

• uncertain test
• would also mean definitely not claim in UE without departing from cases requiring proof of fault for KR

Question 11

Ultraframe (DA profits)

Answer 11

DA is not liable for T’s profits (not full secondary liability then)

Question 12

Novoship (UK) v Nikitin

Answer 12

DA must disgorge profits from own wrongdoing (nb. in this case, DA didn’t have to because profits was not relatively caused by wrongdoing)

Question 13

How to show DA?

Answer 13

1) a BREACH of trust/fiduciary duty
2) Assisted by D
3) with a dishonest state of mind

Question 14

Royal Brunei (assisted by DA)

Answer 14

DA can be the primary instigator

D caused company he was majority shareholder and director of to misdirect funds held on trust for C

Question 15

Fyffe’s Group v Templeman

Answer 15

DA could have bribed fiduciary

Question 16

Dishonesty? (history)

Answer 16

at first - D liable if she was honest but negligent

then - Baden, Delvaux - D liable even if not dishonest (as long as one of the 5 types of knowledge)

then - Aquip (Africa) v Jackson - D must be DISHONEST to incur liability

Question 17

Royal Brunei v Tan

Answer 17

OBJECTIVE TEST

• Honesty is not an optional scale
• D must have acted dishonestly
• only some of D’s attributes considered (e.g. intelligence, experience)

Question 18

Twinsectra v Yardley

Answer 18

PC said what seems like a subjective test

• Hutton: dishonesty requires knowledge by D that he was doing something regarded dishonest by a reasonable and honest man
  (D has to realise he is not acting as an honest person would)

Question 19

Barlow Clowes v Eurotrust

Answer 19

interpreted Twinsectra to mean OBJECTIVE (???)

Hoffman said neither he nor hutton said D doesn’t have to consider normally acceptable standards

Said Twinsectra doesn’t add anything

TEST IS OBJECTIVE

Question 20

Abou-Rahman v Abacha

Answer 20

followed Eurotrust

- dishonesty = objective (following Nicholls in Royal Brunei, and Hoffman in Eurotrust)

Question 21

Knowledge in DA

Answer 21

NOT a defining ingredient

• but DA must at least know T is not entitled to do what he does (Ultraframe)
• DA doesn’t need to know details, just broad terms (liability doesn’t extend to unforeseen actions)
• Doesn’t matter if DA didn’t know it was a breach but knew it was a wrongful transaction - DA cannot hide behind transactions that are themselves disreputable (Aquip (Africa) v Jackson)

Question 22

Causal Link between DA and B’s loss (general)

Answer 22

Ultraframe - covering up

Royal Brunei - instigate

Question 23

DA - causation NOT but for

Answer 23

Group Torras v Al Sabab (Affirmed in Casio Computer v Sayo)

Question 24

Brown v Bennett

Answer 24

DA - causation (if NO difference at all then no causation)