Remedies Against Third Parties

Question 1

Explain what constitutes intermeddling.

Answer 1

A third party who is not expressly appointed as a trustee, but acts as if they were open their own accord.

If they do so, they will be held liable for losses caused by their actions, as if they were an expressly appointed trustee.

Question 2

List the situations where it is likely a third party will be found to have the requisite knowledge to be liable under an equitable personal recipient claim.

Answer 2

1) Third party knows that property belongs to a trust;

2) Third party wilfully shuts their eyes to the obvious;

3) Third party deliberately doesn’t ask questions despite having suspicions as to the origins of the property.

Question 3

Explain the requirements for equitable personal recipient liability.

Answer 3

1) Third party receives property in breach of trust or fiduciary duty;

2) Third party has received that property for their own benefit; and

3) while in receipt of the property, the third party has such knowledge that makes it unconscionable for them to retain or deal with the property as if it were their own.

Question 4

Explain when a third party will not be liable for a equitable personal recipient claim.

Answer 4

Where they only become aware that they received the trust property after they have disposed of that property.

Question 4

Explain the requisite degree of knowledge required for a claim against a third party for equitable personal recipient liability to succeed.

Answer 4

Third party will be liable if:

1) they receive trust property, knowing it was transferred to them in breach of trust;or

2) receive trust property without providing consideration and without any knowledge that it belongs to someone else, but gain that knowledge whilst in receipt of the property before they spend it.