Remedies Against Third Parties Flashcards
When can you claim agaisnt third parties?
If you cannot bring personal or proprietary against trustee - becuase it is dissipated and bankruptcy, then could go through third parties who become entangled in a breach of trust or fiduciary duty.
What are the 2 ways in which a third party can become entangled in the trust breach?
Recipient liability : might be possible to bring personal or proprietary claim agaisnt third party, if they are in receipt of trust property given to them
Accessory liability : might be possible to bring personal claim, if someone has ASSISTED a trustee in breach
What are the 4 third party claims for third party breaches of trust?
Intermeddling (personal actions against third parties who take it upon themselves to act as a trustee)
Knowing receipt (personal action against third party receipts)
Equitable proprietary action against third party receipients
Dishonest assistance
What is Intermeddling?
A third party who is not EXPRESSY appointed as trustee, but takes it UPON THEMSELVES to act as if they were, wll be PERSONALLY liable for any losses.
What is knowing receipt?
If a third party receives trust property, it may be possible to bring a PERSONAL claim against them, up to value of trust property.
Fault based - must know that they recieved trust property, and are entitled to treat that property as if it were their own.
What are the 3 elements of the knowing receipt claim?
Third party has recieved property in breach of duty
Third party has received propety for OWN BENEFIT
While in receipt of 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.
When is a third party NOT liable for knowing receipt?
When they only become aware that they received trust property AFER they have disposed of that property.
When can a claim in knowing receipt be successful?
The third party state of knowledge must have made it unconscionable for them to retain teh propert.
Third party must know it belongs to a trust , or,
Wilfully shuts their eyes to the obvious, or
Deliberately decides not t ask any questions notwithstanding they have suspicions.
When can an equitable proprietary claim be brought?
Where a trustee has transferred trust property to that third party, and that third party STILL HOLDS it in its original form or replacement form.
Can asset proprietary claim in order to recover.
What are the 3 categories that equitable proprietary claims must fall?
Bona fide purchaser : for value without notice. If third party paid for property and had no idea that the property belonged to a trust, then third party takes property FREE (equity’s darling)
Wrongdoing recipient : if third party is an intermeddler, or would have been guilty of knowing receipt on teh ground that thier conscience is affected, then the beneficiaries can bring a proprietary claim against them to recover the property.
Innocent volunteer : if third party has no knowledge or notice of the breach of trust, and provide no consideration for transfer of property, then a proprietary claim can still be brought, but tracing rules are KINDER.
What are the wrongdoing tracing rules for equitable proprietary claim?
Beneficiary will use same tracing rules as they would a WRONGDOING TRUSTEE.
What are the tracing rules for an innocent volunteer?
If they had no knowledge or notice that he propety belonged to the trust. They are kinder
If the third part still holds in original form, beneficiaries can asset claim.
If property is in something new, clean substitution applies
If third party has taken and mixed it with out money, beneficiary will claim proportionate share in mixed asset - in increase o decrease in value
If third party has taken trust funds and paid into own bank account, mixing it with money of their own, before making various withdrawals from that bank account, Clayton’s caes and Barlow is used.
When may the beneficiary not be able to trace money from innocent volunteer?
If they have used it to improve buildings etc. it has been dissipated, and that improvement has increased the value of the third party’s land, and cannot force innocent third party to sell property.
Re Diplock Defence.
What is accessory liability>
Dishonest assistance. If a third party assists a trustee in the commission of a breach. Personal claim. Fault based.
What are the 3 elements needed for a claim of accessory liability?
Must have been breach (although it is NOT necessary to determine if trustee has acted dishonestly)
Third party must have assisted breach
Third party must have acted dishonestly
