Personal Liability

Question 1

Mara v Browne

Answer 1

Where an individual intermeddles he may become liable as a trustee for any misapplication or loss of trust property- de facto trustee

Question 2

Paragon finance

Answer 2

Lord Millet: a person who simply acts honestly in the capacity of an agent to a trustee will not be liable

Question 3

Barnes v Addy

Answer 3

T funds misapplied by a sole trustee- the D (a solicitor) had advised against the sole trusteeship but had prepared the necessary documents- he had acted honestly and within the scope of his authority and so was not liable

Question 4

Blythe v Fladgate

Answer 4

Intermeddling
T gave trust property to a firm of solicitors, after T’s death the solicitors took it upon themselves to change the Investments- held liable for Bs loss caused

Question 5

Ultraframe v Fielding

Answer 5

Accessory- liability is joint and several

Question 6

Novoship v Nikitin

Answer 6

If he makes a profit he can be held liable for the profit at the discretion of the court

Question 7

Royal Brunai Airlines

Answer 7

The justification for accessory liability: lord Nichols in Royal Brunai:
B’s are entitled to expect no deliberate intervention from third parties, and that third parties will refrain from intentionally intruding in the trust-beneficiary relationship

Question 8

Brinks v Abu Saleh

Answer 8

Argued D assisted in transporting approx £3m of proceeds from the Brinks-May Robert by accompanying her husband when he drove on a number of occasions to Zurich with money in his car. held not liable, she merely acted as a spouse providing her husband with company
Questions: does assistance require a positive act?

Question 9

Royal Brunai Airlines

Answer 9

Objective standard of dishonesty- acting dishonestly means simply not acting as an honest man would in the circumstances
Carelessness is not dishonesty

Question 10

AG of Zambia v Meer

Answer 10

Personal attributes of the D- he was a foolish and incompetent and thought he was better than he was, but wasn’t dishonest

Question 11

Twinsectra

Answer 11

Suggested a higher standard of conduct expected from certain categories of defendant

The combined test: that Ds conduct was dishonest by the ordinary standards of reasonable and honest people, and that he himself realised that by this standard his conduct was dishonest

Question 12

Barlow Clowes

Answer 12

The court reaffirmed the objective test in Brunai however this was merely a privy council decision

Question 13

Heinl v Jsyke Bank

Answer 13

The test is rather subjective, it must be established that he acted with actual knowledge that a fraudulent act was being perpetrated

Question 14

Agip (Africa) v Jackson

Answer 14

Evidence that the D might have believed that they were assisting in a scheme, not to defraud the company, but to avoid currency exchange controls in Tunisia- Millet J: it is no answer for a man charged with knowingly assisting in a fraudulent and dishonest scheme to say that he thought it was only a breach of exchange- it is not necessary that he be aware of the precise nature of the fraud or even the identity of the victim
Cannot close ones eyes

Question 15

Finers v Mira

Answer 15

Agip was followed

Question 16

Polly peck international v Nadir

Answer 16

For the bank to be sued, it was not necessary to show that the bank knew of the fraud, but rather that it knew the funds were trust funds and that they were being misappropriated

Question 17

Lee v Snakey

Answer 17

Knowing receipt- if the third party receives trust property without knowledge, but later acquires knowledge, he will only be liable from that point on

Question 18

BCCI v Akindele

Answer 18

The recipients state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt

Note: the court failed to determine whether BCCI was bound by the Investment agreement, if so then no knowing receipt arose which certainly weakens the authority of the case, but probably stuck with it until UKSC revisits

Question 19

City Index v David

Answer 19

2 members of the COA accepted orbiter that Akindele is law

Question 20

Armstrong v Winnington

Answer 20

Judge stated that the old Baden categories are useful in considering unconscionability- not a first instance decision

Question 21

Baden v Societe General

Answer 21

Actual knowledge
Wilfully shutting eyes to the obvious
Wilfully and recklessly failing to make such enquiries an honest and reasonable person would make in the circumstances
Knowledge of the circumstances which would indicate the facts to an honest and reasonable man

Question 22

Belmont finance v settlement trust

Answer 22

Judges thought the last two Baden categories amount to negligence / carelessness

Question 23

Nourse LJ

Answer 23

Dishonesty is sufficient but not required

Question 24

Cowan de Groot properties v Eagle trust

Answer 24

Dishonesty is required at least in commercial cases

Sold property at a low price as part of a fraudulent scheme, no liability- under a duty to purchase cheaply and seems the sellers just wanted a quick sale

Question 25

Armstrong v Winnington

Answer 25

After akindele, implies dishonesty is not required

Question 26

Re Montagu’s settlement trust plc

Answer 26

Megarry VC: the cold calculus of constructive and imputed notice does not seem to me to be an appropriate instrument for deciding whether a persons conscious is sufficiently affected for it to be right to bind him by the obligations of a constructive trustee

Question 27

Credit Agricola v Padamitriou

Answer 27

Lord Sumpton: there must be something which the D actually knows or would actually know if he had a reasonable appreciation of the information in his hands, which calls for inquiry
Note: the last part is not the same as constructive notice under land which requires no knowledge at all

Question 28

Re Mintagu’s

Answer 28

The term ‘unconscionability’ doesn’t seem to be careless, it seems to involve some greater degree of moral culpability

Question 29

Belmont finance

Answer 29

Statement to the opposite effect of Montagu’s

Question 30

Armstrong

Answer 30

Stephen Morris brings in likelihood

Question 31

Re Claspers Group Services

Answer 31

Relevant factors, personal attributes, boy of 17 not very bright

Question 32

Cowan de Groot and BCCI v Akindele

Answer 32

Commercially unacceptable conduct

Knox J and Nourse LJ seem to desire not to hamper trade, the courts take into account how business is conducted

Question 33

Nourse LJ Akindele

Answer 33

The unconscionability test allows the courts to give common sense decisions in commercial situations

Question 34

Re Montagu’s

Answer 34

Knowledge possessed in the past, but forgotten at the relevant time, is not sufficient for liability

Question 35

Al Aljou v Dollar Land Holdings

Answer 35

Millet J: knowing receipt is the counterpart in equity of the common law action for money had and received- both can be classified as receipt based restitutionary claims

Question 36

Lipkin Gorman v karpnale

Answer 36

Change of position defence: available to an innocent party acting in good faith (with no knowledge) who has changed his position in such a way that it would be inequitable to require him to make restitution- degree of knowledge is by a case-by-case basis but seems to require extraordinary expenditure

Question 37

Nourse LJ Akindele (against receipt based)

Answer 37

The reversal of the burden of proof is commercially unworkable

Question 38

Re Diplock

Answer 38

If I’m the administration of an estate, a payment has been wrongfully made, any unpaid or underpaid creditor, legatee or next of kin can recover the payment from the recipient