Remedies against third parties Flashcards
What are two ways in which third parties may become entangled in a breach of trust or fiduciary duty?
- Recipient liability - in receipt of trust property given to them in breach of trust / fiduciary duty
- Accessory liability - assisted with breach of trust / fiduciary duty
What is “intermeddling”?
Equitable personal actions against third parties who take it upon themselves to act as a trustee
If a third party is found to have been “intermeddling”, what is the outcome?
They will be personally liable for any losses caused by their actions as if they were an expressly appointed trustee
What third party claims are possible for when a third party has received property in breach of trust / fiduciary duty, is financially solvent, and own property of value or interest?
Personal + proprietary recipient claims
What third party claims are possible for when a third party has received property in breach of trust / fiduciary duty, is financially solvent, but does NOT own property of value or interest?
Personal recipient claims
What third party claims are possible for when a third party has received property in breach of trust / fiduciary duty, and own property of value or interest, but is NOT financially solvent?
Proprietary recipient claims
What are the three elements for a claim of “knowing receipt”?
- Third party has received property in breach of trust / fiduciary duty
- Third party has received that property for their own benefit, and
- While in receipt of the property, third party has such knowledge that makes it unconscionable for them to retain or deal with the property as if it were their own
Regarding the requirement for knowing receipt that the third party’s state of knowledge “must be such as to make it unconscionable for him to retain the property”, in what 3 examples could this be applicable?
- The third party knows the property belongs to a trust
- The third party wilfully shuts their eyes to the obvious
- The third party deliberately decides not to ask any questions notwithstanding they have their suspicions about the origins of the property
What are the three relevant categories which a third party could fall into, in relation to the bringing of a proprietary claim by a beneficiary?
- Bona fide purchaser for value without notice
- Wrongdoing recipient
- Innocent volunteer
If a third party who receives trust property is a bona fide purchaser for value without notice, can a beneficiary bring a personal or proprietary claim against them?
No - they are Equity’s Darling therefore take the property free from any equitable interests
If a third party who receives trust property is a wrongdoing recipient, can a beneficiary bring a proprietary claim against them?
Yes - and the harsher tracing rules relevant to a trustee also apply
E.g. Re Hallett and Re Oatway can be applied
If a third party who receives trust property is an innocent volunteer, can a beneficiary bring a proprietary claim against them?
Yes - but the tracing rules are kinder
E.g. rules from Clayton’s Case and Barlow Clowes v Vaughan can be applied
If an innocent third party receives trust money and uses that money to improve buildings they already own, is a beneficiary able to trace any interest into that improvement? And why?
No - either
- Improvement has not increased value of third party’s land therefore has dissipated, or
- Improvement has increased third party’s land, but it would be inequitable to force them to sell their property to realise beneficiary’s proprietary interest (the Re Diplock defence)
In what events does the Re Diplock defence not apply?
- Against wrongdoing recipients
- In relation to mixed assets
If a third party assists a trustee in the commission of a breach of trust or fiduciary duty, what possible claim can a beneficiary bring?
A personal claim up to the value of any loss their assistance has cause (plus interest)
