Accessories Flashcards
Test for Dishonest Assistance
- Breach of trust or fiduciary duty
- Defendant factually assisted in the breach
- The defendant acted dishonestly by the standards of ordinary people [objective] (Tan)
- No need for realisation
Tan v Twinsectra
Tan created fault-based liability [objective]
Twinsectra decided the defendant must have realised his act was dishonest [subjective]
Test for Knowing Receipt
El-Ajou
- breach of fiduciary duty
- beneficial receipt by D can be traced back to C
- D’s knowledge that receipt (property) is traceable to breach of FD
Agip
received for own benefit
Baden Delvaux: Shades of Knowledge
Actual Knowledge: DA + KN
1. Actual knowledge
2. shutting one’s eyes to the obvious
3. Wilfully and recklessly failing to make inquiries as an honest and reasonable person would
Constructive Knowledge: Notice
4. knowledge of circumstances which indicate facts to reasonable and honest person
5. knowledge…on inquiry
BCCI v Akindele
“unconscionable to retain benefit”
should this be a single test for knowledge like dishonesty?
Constructive Trusts Herbert Smith (No2)
English law provides no clear and all-embracing definition of a constructive trust
Constructive Trust
Classification
- A person acting in accordance with the trust or fiduciary engagement
- A person acting against the trust or fiduciary arrangement from the start
Paragon Finance (Millet LJ)
distinction between a trust and a catch-phrase
Starglade v Nash
dishonesty is not a pre-requisite for liability (knowing receipt)
Dishonest Assistance
Remedies
Ultraframe (UK)
Joint and several liability compensate for loss
Constructive Trust
Salaam (No3)
‘equitable relief’
‘fully subject to fiduciary obligation’
‘strict liability’
Notice
Arthur v Attorney General
notice is of equitable interest (competing)
Thus a proprietary claim
KR is unconscionable = equitable fraud
Thus personal liability = personal claim
Notice
Eagle Trust plc
D can have actual notice and not know it
Ought to have known
lower standard
Notice
Re Montagu’s Settlements
constructed and imputed notice is not appropriate to decide man’s conscience
Should we consider conscience?
Unjust Enrichment
- D has been enriched
- Enrichment gained at C’s expense
- D’s enrichment was unjust
- Changed bona fide position = not liable
Insolvency
Holder goes bankrupt
C has priority over creditors (proprietary claim)
Recipients
- donees who do not purchase the property
2. those with notice of breach of trust or fiduciary duty
Abu-Saleh
factual assistance as well as dishonesty
Labelling
Dishonesty and knowledge
Third Rivers DC (Hirst)
‘gradually darkening spectrum’
Weavering Capital
“incompetent best”
A.B.Douglas - Group Seven
Sham Loan
Rescission from C lead to constructive trust
Manifest Shipping
“Blind eye knowledge”
Simon Gardner
Notice and knowledge overlap (especially in commercial contexts)
Knowing Assistance and Receipt
Lord Nicholls
D = mostly persons/entities
e.g. banks who voluntarily enter agreements with trustees thus should owe a duty of care.
Knowing Assistance should not be required as there is a fiduciary duty
When D is not under a fiducial duty of care cases should be claimed in negligence
Barnes v Addy
Strangers are not to be made constructive trustees…agents of trustees in transactions…unless agents receive …property or assist with knowledge in a dishonest and fraudulent design.
Speight v Gannit
“prudent businessman”
- steps to protect themselves
Simon Gardner
Broad liability
Is this advantageous?
Solicitors and banks are essential in both committing and consent to fraudulent activity
Bink
Shadowy liability of commercial life
Mitchell and Waterson
The law regards D committing DA as constructive trustees even when they are not because the the trustee’s liability is duplicated. (attached to DA).
Seen as secondary liability to the breach of trust.
Same for KR as they are attached to the receipt.
Accessory Liability and Commercial Transactions
Akindele
Actual knowledge not constructive knowledge is required.
Suggestion there should be a single test.
Basis of the Claim:
1. dishonestly assisted in the breach of fiduciary duty
2. knowingly received funds traceable to C
Thomas
Unconscionability
Unconscionability is subjective which is dangerous for the law
Agip and Dishonesty
The line between honest and dishonest is blurred by Baden-Delvaux
Novoship
secondary profits
Trustee de son tort
Mara v Brown
trustee by his own wrong
Twinsectra and Strict liability
KR is receipt based
Types of dishonesty
Twinsectra (Millet LJ):
- defendants point of view of morality (Robin Hood)
- dishonest by ordinary decent people [objective - Tan]
- combined - realisation of dishonesty (Ghosh)
