Liability

Question 1

what is knowing receipt

Answer 1

when a third party receives property knowing it is being transferred in breach of trust
must receive assets for own benefit

Question 2

Consequences of knowing receipt

Answer 2

Return property
compensate for any loss
account for any profit
liable as constructive trustee / trustee de son tort

Question 3

can you be liable for knowing receipt if you receive it innocently but later become aware of breach

Answer 3

not liable when you receive it but liable when you find out about breach

Question 4

defense to knowing receipt

Answer 4

bona fide purchaser for value without notice overreaches interest. interest is transferred to proceeds of sale

Question 5

types of knowledge for knowing receipt

Answer 5

Baden:
1-3 actual knowledge for knowing receipt
4 and 5 constructive knowledge - not enough

1. actual knowledge
2. willfully closing your eyes to the obvious
3. willfully and recklessly failing to make inquiries that an honest and reasonable person would make
4. info that would indicate facts
5. info that would be out on inquiry

Question 6

time limit for claims of knowing receipt and dishonest assistance

Answer 6

no time limit

Question 7

what is dishonest assistance

Answer 7

dishonestly assists in breach of trust

Question 8

consequences of dishonest assistance

Answer 8

liable as constructive trustee regardless of whether any property passes through their hands
compensate for loss
account for profits

Question 9

meaning of dishonesty for dishonest assistance

Answer 9

Dishonest according to objective onlooker and D knew a reasonable person would think it was dishonest

Question 10

is dishonest assistance personal or propriety liability and what difference does this make

Answer 10

personal - claimant queues with all other claims against D is D dies or becomes insolvent.

Question 11

is tracing proprietary or personal remedy

Answer 11

proprietary

Question 12

what is tracing

Answer 12

substituting new assets for old

Question 13

what is following

Answer 13

follow same asset from person to person

Question 14

is tracing a remedy

Answer 14

no - use tracing to identify property then apply a remedy

Question 15

what can equitable tracing do that tracing in common law cannot do

Answer 15

trace into /through mixed funds
follow property into hands of people who don’t know about breach
take increase in value
trace through electronic transfers

Question 16

When can you use equitable tracing

Answer 16

equitable interest in property or property was transferred in breach of fiduciary duty

Question 17

honest trustee rule

Answer 17

when trust money is mixed with T’s money, equitable tracing assumes T spend there own

Question 18

rule in roscoe v winter

Answer 18

When T later puts money into same account trust money equity won’t allow tracing into that money. Cannot assume T is replacing money unless clear evidence. Can only claim lowest intermediate balance.

Question 19

rule in clayton’s case

Answer 19

equitable tracing assumes first in, first out when funds from several trusts are mixed.

Question 20

What are B’s choices when T buys an asset in breach of trust

Answer 20

decide to keep it as trust property

take a lien over it

Question 21

what is a lien

Answer 21

right to take possession of property until T pays what is owed

Question 22

what happens if property is gone e.g. bank account empty

Answer 22

no more tracing

Question 23

can you trace backwards e.g. takes mortgage, buys house, uses trust to pay off mortgage in breach. Can you trace into house?

Answer 23

only if you can show a link between acquisition and breach of trust

Question 24

what if trust property is mixed with property belonging to an innocent volunteer

Answer 24

B and the innocent third party have equal claims to it.

Question 25

what claims does B have when trust money is used to improve real property in breach

Answer 25

cannot be separated from property so no longer traceable.

Question 26

what happens when trust property is transferred in breach of trust to a bona fide purchaser for value without money

Answer 26

cannot claim against purchaser as interest is overreached. Interest transfers to proceeds of sale and can claim against these

Question 27

equitable maxim - equity regards as done what should have been done

Answer 27

where power to complete transaction is out of the hands of transferor and they’ve done all they can/should do to transfer property equity will consider it transferred.

Question 28

defense of change of position

Answer 28

D received property and on the faith of that property suffered a change in personal circumstances