Personal Liability Flashcards
Mara v Browne
Where an individual intermeddles he may become liable as a trustee for any misapplication or loss of trust property- de facto trustee
Paragon finance
Lord Millet: a person who simply acts honestly in the capacity of an agent to a trustee will not be liable
Barnes v Addy
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
Blythe v Fladgate
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
Ultraframe v Fielding
Accessory- liability is joint and several
Novoship v Nikitin
If he makes a profit he can be held liable for the profit at the discretion of the court
Royal Brunai Airlines
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
Brinks v Abu Saleh
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?
Royal Brunai Airlines
Objective standard of dishonesty- acting dishonestly means simply not acting as an honest man would in the circumstances
Carelessness is not dishonesty
AG of Zambia v Meer
Personal attributes of the D- he was a foolish and incompetent and thought he was better than he was, but wasn’t dishonest
Twinsectra
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
Barlow Clowes
The court reaffirmed the objective test in Brunai however this was merely a privy council decision
Heinl v Jsyke Bank
The test is rather subjective, it must be established that he acted with actual knowledge that a fraudulent act was being perpetrated
Agip (Africa) v Jackson
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
Finers v Mira
Agip was followed
Polly peck international v Nadir
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
Lee v Snakey
Knowing receipt- if the third party receives trust property without knowledge, but later acquires knowledge, he will only be liable from that point on
BCCI v Akindele
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
City Index v David
2 members of the COA accepted orbiter that Akindele is law
Armstrong v Winnington
Judge stated that the old Baden categories are useful in considering unconscionability- not a first instance decision
Baden v Societe General
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
Belmont finance v settlement trust
Judges thought the last two Baden categories amount to negligence / carelessness
Nourse LJ
Dishonesty is sufficient but not required
Cowan de Groot properties v Eagle trust
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
Armstrong v Winnington
After akindele, implies dishonesty is not required
Re Montagu’s settlement trust plc
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
Credit Agricola v Padamitriou
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
Re Mintagu’s
The term ‘unconscionability’ doesn’t seem to be careless, it seems to involve some greater degree of moral culpability
Belmont finance
Statement to the opposite effect of Montagu’s
Armstrong
Stephen Morris brings in likelihood
Re Claspers Group Services
Relevant factors, personal attributes, boy of 17 not very bright
Cowan de Groot and BCCI v Akindele
Commercially unacceptable conduct
Knox J and Nourse LJ seem to desire not to hamper trade, the courts take into account how business is conducted
Nourse LJ Akindele
The unconscionability test allows the courts to give common sense decisions in commercial situations
Re Montagu’s
Knowledge possessed in the past, but forgotten at the relevant time, is not sufficient for liability
Al Aljou v Dollar Land Holdings
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
Lipkin Gorman v karpnale
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
Nourse LJ Akindele (against receipt based)
The reversal of the burden of proof is commercially unworkable
Re Diplock
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
