Liability of Strangers Flashcards
Independent Trustee Services v GP Noble Trustees
Recipient must have knowledge of circumstances to be personally liable to account to trust
If dissipated/transferred prior to awareness, liability ceases
Barnes v Addy
Strangers will not be made constructive trustees unless they knowingly receive or dishonestly assist
El Ajou v Dollar Land Holdings
Test for knowing receipt:
1) Disposal of C’s asset in breach of trust/fiduciary duty
2) Beneficial receipt by D of C’s assets which are traceable as representing C’s assets
3) Knowledge on D’s part that the assets received are traceable to a breach of trust/fiduciary duty
Can only be liable for knowing receipt if beneficial rather than ministerial
Baden Delvaux v Societe Generale
Depends on degree of knowledge
1) Actual knowledge
2) Nelsonian knowledge
3) Wilfully/recklessly failing to make reasonable enquiries
4) Knowledge of circumstances which would indicate the facts to an honest/reasonable person
5) Knowledge of circumstances that would put the reasonable man on enquiry
Re Montagu
Need Baden 1-3 to be personally liable
Belmont v Williams
Can be liable for knowing receipt with constructive knowledge, would depend on facts
BCCI v Akindele
Removed Baden scale from El Ajou test and replaced it with test of unconscionability - is the level of knowledge such that it would be unconscionable for D to keep the property (subjective test)
Armstrong v Winnington
Unconscionability = making enquiries and not following through
Baden classification still helpful in determining what is unconscionable
Royal Brunei Airlines v Tan
Test for dishonesty:
Would a reasonable man consider the defendant’s actions to be dishonest (objective)
Can consider age, experience, profession etc (subjective elements)
Duke of Norfolk v Hibbert
Failure to act does not count as dishonesty
Statek v Alford
Accepting an illogical explanation is dishonest
Group Torras v Al-Sabah
Must be a causative link between breach dishonestly assisted and C’s loss
Caslo Computer v Sayo
Not necessary to show link between assistance and loss
Balfron Trustees v Peterson
No defence to say that the loss would have occurred anyway even if D had not assisted
Ultraframe v Fielding
Assistance = helping with the breach, planning or cover up
D does not need to know precise nature of breach, just that he is up to no good
Cannot be liable if actions have only taken place after the cover-up has been fully implemented
