Remedies against third parties

Question 1

Intermeddling

Answer 1

A third party who is not expressly appointed as a trustee, but takes it upon themselves to act as if they were, will be held personally liable for any losses caused by their actions as if they were an expressly appointed trustee.

Question 2

Equitable personal recipient liability (knowing receipt)

Answer 2

If a third party receives trust property, it may be possible to bring a personal claim against them up to the value of the trust property they received (plus interest from the date of receipt).

Elements of this claim are as follows:
(a) the third party has received property in breach of trust or fiduciary duty;
(b) the third party has received that property for their own benefit; and
(c) 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.
Can’t turn a blind eye.

Third party will not be liable where they only become aware that they received trust property after they have disposed of that property.

Question 3

Equitable proprietary claims

Answer 3

Where a trustee has transferred trust property to a third party, and that third party still holds that property (in its original or replacement form), the beneficiaries may be able to assert
a proprietary claim in order to recover that property.

3 categories of third party:
(a) Bona fide purchaser for value without notice.
No proprietary claim can be sustained against the third party.
(b) Wrongdoing recipient.
If the third party is an intermeddler or would have been guilty of knowing receipt on the grounds that their conscience is affected, then the beneficiaries can bring a proprietary claim against them to recover the property.
(c) Innocent volunteer.
If the third party has no knowledge or notice of the breach of trust and provided no consideration for the transfer of property, then a proprietary claim can still be brought, but the tracing rules are the kinder rules that are applied against innocent parties.

Question 4

Equitable personal accessory liability (dishonest assistance)

Answer 4

If a third party assists a trustee in the commission of a breach of trust or fiduciary duty, it
may be possible to bring a personal claim against them up to the value of any loss their assistance has caused (plus interest).

Elements:
(a) there must have been a breach of trust or fiduciary duty.
Not necessary to establish that the trustee has acted dishonestly or intentionally in breaching the trust.
(b) the third party must have positively assisted in that breach; and
(c) the third party must have acted dishonestly.
Objective test.