Trusts - Strangers intermeddling

Question 0

Eagle Trust plc v SBC Securities Ltd

Answer 0

Vinelott J - In a “knowing receipt” case it is only necessary to show that D knew that the monies paid to him were trust monies and the payment was a misapplication of them. It is not necessary to show D was in any sense a participator in a fraud”.

Question 1

Barnes v Addy

Answer 1

Lord Selbourne - Strangers are to be made constructive trustees if receive and become chargeable with some part of the trust property or assist with knowledge in a dishonest and fradulent design on the part of the trustees

Question 2

El Ajou v Dollar Land Holdings

Answer 2

Hoffman LJ - it is necessary to show

• a disposal of assets in breach of trust of fiduciary duty
• the receipt of assets by D of assets which are traceable as representing assets of C AND
• knowledge on the part of D that the assets he received are traceable to a breach of fiduciary duty.

Question 3

Carl-Zeiss Stiftung v Herbert Smith

Answer 3

Did not know the fund was trust money - liability not established

Knowledge that the property is in dispute is NOT the same as knowledge that the property was that of a trust.

Question 4

Baden Delvaux

Answer 4

Gibson J - five categories of knowledge

• actual knowledge
• wilfully shutting one’s eyes to the obvious (Nelsonian knowledge)
• wilfully and recklessly failing to make such inquiries as a reasonable and honest man would make
• knowledge of circumstances which would indicate the facts to an honest and reasonable man
• knowledge of circumstances which would put an honest and reasonable man on inquiry.

Question 5

Re Montagu’s Settlement Trusts

Answer 5

Duke - solicitor had knowledge - no constructive trust as duke did not have actual knowledge

• Lack of good faith requires ACTUAL knowledge at the time of release “affect conscience to such extent it is right to bind you with obligations of a constructive trustee”
• Knowledge is not notice
• Knowledge cannot be imputed as to affect conscience
• Forgotten knowledge will not suffice

Question 6

Akindele

Answer 6

Dishonesty is not a prerequisite to laiability under Recipient Liability.
D’s knowledge was not such as to make it unconscionable for him to enter the agreement so no constructive trust

Nourse LJ - no need for Baden categories. “All that is necessary is that the recipient’s state of knowledge should be such as to make it unconscionable for him to retain the benefit of the receipt”

Allows for flexibility in commercial situations

Question 7

Twinsectra

Answer 7

Millett LJ - what level of knowledge or whether any knowledge at all is required continues to exercise the minds of judges.