intermedllers Flashcards
what liability is it usually about
secondary liability- knowing assistance
purpose of this area of law
deter against wrongdoing
which case defined who can be liable for and how can someone be liable for dishonest assistance
Barnes v Addy
what did barnes v addy do
define who can be liable and how someone can be liable for dishonest assistance
who should be held to a higher standard and why
professionals such as bankers and solicitors because they are trained and have been working for so long that they should be able to spot dishonest behaviour
criticism of the Baden test (3)
-not a universal test
where do we put the dividing line between liability and non-liability on the scale?
-points 4 and 5 show that having the slightest bit of knowledge would make you liable
knowing assistance was changed to what and which case was this seen in
dishonest assistance- seen in Tan
Tan developed what type of liability
fault-based liability
what test was developed from Tan (2)
an objective test with the subjective element being that the D will be compared to a RP with the same personal attributes
-doesn’t require realisation
what was the test in Twinsectra
combined objective and subjective test
what was Lord Millet’s dissent in Twinsectra (2)
- knowledge is more appropriate than dishonesty as a test
- dishonesty applies to a degree of intent
critique of Twinsectra
-allows Ds tot plead that they did not know what was going on so they wouldn’t be held liable- D would use the no-realisation defence
what was set out in Three Rivers DC (3)
- it was set out to explain the difficulties in distinguishing between what is dishonesty and what is knowledge and
- when liability will arise
-difficulties in the sort of knowledge required
which test became the test for dishonest assistance
Tan
which case went back to Tan
Barlow Clowes
outcome in Barlow Clowes (2)
- went back to Tan
- In order to prevent Ds pleading non-realisation
Ivey Gentling Casinos confirmed what
confirmed that we only require objective dishonesty
what did Lord Nicholls say about the subjective element in Tan
we look at the personal attributes of the D and compare to RP
what 2 cases do we use to show the difference in personal attributes of the D
Weavering Capital- Platt did his competent best so he wasn’t objectively dishonest
where as in Barlow Clowes, Henwood was assed to a higher standard as he had much more intelligence than Platt
what does Brinks Ltd highlight
that there must be factual assistance as well as dishonesty
2 elements of knowing receipt
- Personal liability of non-trustees for losses arising to trusts
- Liability arises where the non-trustee receives trust property in the knowledge that it is in breach of trust (beneficial receipt of property)
one line describing knowing receipt
handling property for someone but knowing it came form a breach of trust
what does Akindele hold
- state of knowledge
- dishonesty
- Baden test
- The recipient’s state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt
- Dishonesty not required to establish liability for knowing receipt as a constructive trustee
- Degree of knowledge in Baden were unhelpful and a single test of unconscionability was better
what was held in Starglade Properties Ltd
- a flexible test, courts have to consider what is right
- taking into account the nature and extend of Ds knowledge and the circumstances relating to the receipt
what did Lord Millet highlight in Twinsectra about knowing receipt (2)
- Liability for knowing receipt is receipt-based. It does not depend on fault.
- The cause of action is restitutionary- depends on unjust enrichment
what is the 3 stage test for restitution
- Has the D been enriched?
- Was the enrichment engaged at the C’s expense?
- Was the D’s enrichment unjust with a special reason?
what was held in Lipman Gorman
- D was enriched
- The enrichment was engaged at C’s expense
- D’s enrichment was unjust with a special reason
outcome in Lipman Gorman
what did Lord Goff say
- The defence of change of position was recognised in this case and succeeded as a partial defence in this case
- Lord Goff: “where an innocent Ds position is so changed that he will suffer injustice if called upon to repay, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution.” “Bona fide change of position should of itself be a good defence”
what did Akindele doubt what did they it say about unjust enrichment
- Known receipt still stands, unjust enrichment is limited to particular cases
- Doubted whether we should mix strict liability couples with a change of position and fault-based liability
3 forms of personal claims
- knowing receipt
- dishonest assistance
- unjust enrichment
what is the defence to a personal claim
bona fide purchaser for value without notice of the breach
what does Eagle Trust Plc say about notice
-where is notice used
-where the facts don’t support the inference of knowledge
if a person used the notice defence for personal claim, what claim may they instead be liable for
Proprietary claim, not knowing receipt because you just need to prove that the D knows less
notice is … to prove than knowledge
easier to prove
when will there be no liability in a proprietary claim
- if they have notice
- if they are an innocent party and did not know where property came from
Re Montagu’s ST outcome
- solicitor had notice, and his notice is imputed to his client
- claim was in knowing receipt
- in this case case ‘knowledge’ was more appropriate than ‘notice’
3 part test to showing when someone will be liable in knowing receipt
- A disposal of Cs assets in breach of FD
- The beneficial receipt by the D of assets which are traceable as representing the assets of the C
- Knowledge on part of the D that the assets he received are traceable to a breach of trust or FD
(El Ajou)
what 2 things did Lord Nicholls say about knowing receipt
- receiving property from another after being unjustly enriched at the expense of another
- should be strict-liability to overstep the hurdle of how much knowledge is needed (Birds agreed)
the recipient of trust property is subject to what?
- subject to the equitable proprietary claim- so he has a proprietary liability in respect of the property received or its traceable proceeds
- it is a restitutionary claim
what is the function of a proprietary claim being restitutionary
-The function is to reverse the transfer of trust property because it was vitiated, and it arises against the recipient from the fact of receipt, and irrespective of knowledge
recipients of trust property corresponds with what type of trustee
express trustee
which case showed the problem of calling people who are dishonest assistants and knowing receipts constructive trustees
Williams v Central Bank of Nigeria
what did Williams v Central Bank of Nigeria say about calling people constructive trustees
that the law is completely obscured by confused categorisation and terminology in the law of constructive trustees
what did Charter v City Index highlight
that constructive trust can be used to define the remedies for different causes of action, including breach of trust, and different types of relied
what does Slim v Croucher argue about the term constructive trustee
-The D is called a trustee, but the word is merely to designate the person who took part in the transaction
what are the 2 types of constructive trustee and which case highlights this
- act in accordance
- act contrary to trust from the outset
seen in Williams v Central Bank of Nigeria
what type of constructive trustees are dishonest assistants and knowing receipts
type 2- acting in contrary to the trust from the outset
when can u sue dishonest assistants and knowing receipts
within 6 years
what are trustees de son tort
-Similar to dishonest assistants and knowing receipts but they take it upon themselves to act characteristic of the office of trustee- behaving like proper trustees
Blyth v Fladgate outcome
- Fladgate was liable because they took it upon themselves to act as the trustee even though they were not the trustee- they were made trustees of their own wrong
- This case shows the difference between the 2 classes
what does Lord Millet say in Dubai Aluminium about trustees do son Tort (3)
- They are treated as if they have been duly appointed
- They are true trustees and are fully subject to fiduciary obligations
- Their liability is strict- does not depend on dishonesty
what is the remedy for dishonest assistance (3)
- liability?
- remedy much larger for what?
- amount?
- Joint and several liability to compensate for loss
- Remedy is much larger because the mental state for dishonest assistance is much higher, and much stricter than knowing assistance
- Amount will be less than knowing receipt
case for the remedy for dishonest assistance
Ultraframe (UK)
remedy for knowing receipt
- what is it limited to
- liability
- amount
- Seems to be limited to the property received
- they are liable jointly and severally with everyone else to compensate for the amount lost because of the underlying wrong
- if many people involved each person can pay for the amount they received
case for remedy for knowing receipt
-Kasikornbank
what is the same remedy for dishonest assistance and knowing receipt (2)
- account of secondary profits- profits made by underlying wrong
- profits can be disgorged by the account of the secondary profits, as long as it was effectively caused by the underlying wrong of the dishonest assistance or knowing receipt
case for the same remedy for DA and KR
Novoship (UK)
remedy for unjust enrichment
restitution- returning back what is transferred (minus anything dissipated in bona fide change of position)
