Liability of Strangers Flashcards
Independent Trustee Services Ltd v GP Noble Trustees Ltd
Ratio: If the recipient dissipates property or its proceeds without the requisite knowledge, their proprietary liability to return the property ceases.
Baden v Society Generale
Ratio: Established the Baden scale of knowledge - 1. Actual knowledge. 2. Wilfully shutting one’s eyes to the obvious. 3. Wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make. 4. Knowledge of circumstances which would indicate the facts to an honest and reasonable man. 5. Knowledge of circumstances with would put an honest and reasonable man on inquiry.
Agip v Jackson
Ratio: An individual with knowledge on 4 or 5 of the Baden scale will not be dishonest.
Royal Brunei Airlines v Tan
Ratio: Dishonesty = not acting as a reasonably honest person would. Carelessness is not dishonesty. Account should be taken of the personal attributes of the accessory, such as their experience and intelligence.
Twinsectra v Yardley
Ratio: Seemed to suggest that a combined objective and subjective test should be applied.
Facts: Twinsectra loaned Yardley £1m, paying it to his solicitor who gave a written undertaking to Twinsectra’s solicitors that the money was to be used solely for acquiring property for Yardley. Sims transferred the money to Yardley’s other solicitor, Leach who knew of the undertaking. Leach then used the money on Yardley’s instructions for purposes other than those for which it was loaned. Leach knew of Sims’ obligation but thought it was simply a contractual one. Court held that the money was held on trust, only to be used for property and that since Leach did not subjectively believe he was being dishonest, he was not guilty. Lord Millett, in opposition to the majority, applied an objective test which concluded that Leach should have been liable.
Barlow Clowes International v Eurotrust
Ratio: Held Twinsectra had been misinterpreted - objective standard of dishonesty should be used.
Abou-Ramah v Abacha
Ratio: The test for dishonesty is primarily objective - did the defendant’s knowledge of the transaction render his participation contrary to normal standards of honest conduct?
Starglade v Nash
Ratio: 1. Relevant standard of behaviour for determining honesty is that of the ordinary honest person, not the most scrupulous or the lowest common denominator. 2. Standard for dishonesty in knowing receipt is lower than for dishonest assistance 4 on the Baden scale is sufficient.
Facts: A company director agreed to hold half the proceeds of a successful litigation on trust for Starglade. In breach of trust, the director used the money to pay some creditors of the company when it went into administration and kept some for himself. If he had enquired further he would have known that this was not acceptable. Held to be dishonest assistance and knowing receipt.
Grupo Torras SA v Al-Sabah (No 5)
Ratio: No need for a direct link between the defendant’s actions and the claimant’s loss for a dishonest assistance claim to succeed.
Casio Computer Ltd v Sayo
Ratio: No need for a direct link between the defendant’s actions and the claimant’s loss for a dishonest assistance claim to succeed.
Balfron Trustees Ltd v Peterson
Ratio: It is not a defence to a claim for dishonest assistance to state that the acts would have occurred anyway even if the defendant had not taken part.
Ultraframe (UK) v Fielding
Ratio: Defendant does not need to know the precise nature of the breach, just that they are helping someone who is up to no good. Assistance includes planning the breach, participating in the breach and covering up the breach. If the defendant’s actions only take place after the breach and subsequent cover up they cannot be liable. Accessory is only liable for any profit which they personally made.
Novoship Ltd v Nikitin
Ratio: The assistant is only liable for any profit they personally made. Unless they were acting in a joint venture with the fiduciary.
El Ajou v Dollar Land Holdings.
Ratio: Elements of a knowing receipt claim: 1. A disposal in breach of trust or fiduciary duty. 2. The beneficial receipt by the defendant of assets which are traceable to the claimant. 3. Knowledge on the part of the defendant that the assets are traceable to a breach of trust or fiduciary duty.
BCCI v Akindele
Ratio: 1. 1-4 on the Baden scale = sufficient knowledge for knowing receipt. 2. Test for knowledge = ‘is the defendant’s knowledge such that it would be unconscionable for him to retain the benefit of the receipt?’
