Chapter 13/14 Flashcards
What types of claims can a trust bring against third parties involved in a breach of trust?
A trust can bring a personal claim for dishonest assistance or a proprietary claim for knowing receipt of trust property.
What is a personal claim for dishonest assistance?
A personal claim can be brought against third parties who assist in the commission of a breach of trust. The third party must have provided positive assistance, acted dishonestly, and known or should have known they were aiding an illegal act.
How is dishonest assistance proven in trust law?
To prove dishonest assistance, the trust must show:
- A breach of trust occurred,
- The third party provided positive assistance,
- The third party acted dishonestly, and
- The ordinary honest person would have acted differently.
Do third parties need to know they are assisting in a breach of trust?
No, third parties do not need to know they are assisting in a breach of trust, but they must have acted dishonestly and unreasonably if they suspected the breach.
What is a personal claim for knowing receipt of trust property?
A personal claim for knowing receipt can be brought if a third party receives trust property in breach of trust. The third party must have knowledge that the property belongs to the trust, and it would be unconscionable for them to retain or deal with it.
What tracing rules might be used in a personal claim for knowing receipt?
Tracing rules, such as those discussed in previous videos, may be used to track trust property and establish that the third party received trust property rather than funds belonging to the trustee.
What is a proprietary claim in trust law?
A proprietary claim is made to recover trust property that is still in the possession of a third party. The claim seeks to return the property to the trust.
What is the difference between a bona fide purchaser and a wrongdoing recipient in a proprietary claim?
Bona Fide Purchaser for Value Without Notice: No proprietary claim can be made against them (Equity’s Darling).
Wrongdoing Recipient: A proprietary claim can be brought, and tracing rules similar to those used against trustees can be applied.
Can a proprietary claim be made against an innocent volunteer?
Yes, a proprietary claim can be made against an innocent volunteer, but only using specific tracing rules like Clayton’s case and Bollo Clough.
How do tracing rules help in trust property claims?
Tracing rules help establish the ownership of trust property when it is transferred to a third party, determining whether the property can be recovered by the trust.
What is the Diplock Defence in trust law?
The Diplock Defence is available to innocent volunteers to defend against proprietary claims when they unknowingly receive trust property.
Why is financial solvency important when bringing claims against a third party?
If the third party is financially solvent, a personal claim for the receipt of trust property may be pursued. If the third party still holds the property, a proprietary claim can be made to recover it.
