Liability of Strangers Flashcards
who are strangers?
Third parties who are not part of the trustee beneficiary relationship and who have somehow become involved with the wrongly applied trust property.
What type of claims are stranger claims?
Personal one s so conscience must be affected in some way.
Who cannot be claimed against?
Equity’s darling who has dissipated the property
(Independent Trustee Services Ltd v GP Noble Trustees Ltd).
When will strangers be pursued?
Only when proprietary and personal claims against trustee or fiduciary have been exhausted.
What is recipient liability?
Property received in breach fo trust, with actual or constructive knowledge that it comes form the breach. Includes knowledge gained after receipt of the property.
What are the requirements for recipient liability?
El Ajou v Dollar Land Holdings plc.
Disposal of C’s assets in breach of trust or fiduciary duty;
Beneficial receipt by D of assets which are traceable as representing the C’s assets
Knowledge on D’s part that the assets received are traceable to a breach of trust or fiduciary duty.
What is the test for recipient liability?
BCCI v Akindele is, “is the knowledge such that it would be unconscionable for him to retain benefit of the receipt?”
How has unconscionable been interpreted in the context recipient liability?
Starglade v Nash = actual knowledge putting a reasonable man on enquiry.
Armstrong v Winnington = making enquiries and not following through. Indicated Baden scale is useful in determining whether the knowledge of the defendant is unconscionable.
What is the Baden scale?
Actual knowledge
Wilfully shutting one’s eyes to the obvious
Wilfully and recklessly FAILING TO MAKE SUCH INQUIRIES as an honest and reasonable man would make (objective test).
Constructive knowledge
Knowledge of circumstances which would INDICATE THE FACTS to an honest and reasonable man
Knowledge of circumstances which would put an honest and reasonable man ON INQUIRY
What did Armstrong v Winnington suggest about the Baden types?
Types 1-3 will always make the defendant unconscionable
Types 4-5 may make D unconscionable but depends on whether the facts known to D, a reasonable person would have appreciated the transfer was in breach or would have made enquiries which would have revealed this.
For dishonest assistance, what can assistance mean?
Ultraframe v Fielding
Planning breach
covering it up
carrying it out.
What is the current test for dishonesty in dishonest assistance?
RBA v Tan
“not acting as an honest person would in the circumstances”,
this is an objective test but has a subjective element,
“taking into account the experience and characteristics of the stranger”.
Give a timeline of the changes in the test for dishonesty in dishonest assistance?
Tan –> Twinsectre –> Barlow Clowes v Eurotrust –> Abou-Rama v Abacha confirming Tan
What did the House of Lords decide in Twinsectre?
changed the dishonesty test to a combined criminal test similar to R v Ghosh - stranger had to realise his actions were dishonest by ordinary standards.
What was held in Barlow Clowes v Eurotrust?
Pray council confirmed that Twinsectre was merely confirming the test in Tan - objective test no need for defendant to have realised his conduct was dishonest by normal standards.
