Remedies: Against Third Parties

[Flash Card 1 of 3]

• actions against strangers (not Ts or fiduciaries) / accessories: assisted T or F in breach of trust / recipients: wrongful transferee of trust property

Equitable personal actions: accessory liability

• in equity / obtain compensation from 3rd party / necessary impose constructive trusteeship on 3rd party / accessory liability, recipient liability or intermeddling
• constructive trustee / inappropriate term / D not necessarily receive any trust property / merely wrongdoers Paragon Finance v DB Thakerar & Co
• accessory liability: stranger / dishonestly assists / breach of trust or fiduciary duty (dishonest assistance) / assistance has to be positive act Brinks v Abu-Saleh
• stranger must be dishonest but breach of trust does not / dishonesty: not acting honest person would in circumstances / involves conscious impropriety (advertent conduct) / carelessness insufficient / objective standard of honesty: personal moral code irrelevant / some subjectivity: placing hypothetical honest person in D's shoes Royal Brunei Airlines v Tan
• D not need know assisting in breach / sufficient know assisting in some illegal scheme Barlow Clowes International v Eurotrust International

Equitable personal actions: intermeddling

• trustee de son tort (T of his own wrong) / does act characteristic of T / liable for misapplication of trust property or loss / as if appointed express T Mara v Browne
• constructive trustee : agent of T continued to collect rent from trust properties / after instructions ceased on death of T Lyell v Kennedy

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Remedies: Against Third Parties

[Flash Card 2 of 3]

Equitable personal actions: recipient liability

• cause of action: unconscionable receipt / constructive trusteeship: if T transferred property to stranger in breach of duty / S received property for own benefit / S requisite degree of knowledge transfer breach or later acquired knowledge / S dealt with property inconsistent with trust
• B personal claim / compensation equal to value for property misappropriated from trust / S not liable if not have requisite knowledge when dissipated property
• possibly beyond actual knowledge / constructive knowledge (knowledge of facts suggest breach to reasonable man or prompted enquiries) Baden v Société Générale / knowledge made unconscionable to retain property / wider than dishonesty BCCI v Akindele
• if company / knowledge of person who is company's directing mind & will / & commits company to transaction El Ajou v Dollar Land

Equitable proprietary claims

• if T transfers property to S in breach of duty / S may be: bona fide purchaser / constructive trustee / or innocent volunteer
• bona fide purchaser : purchaser for value / without notice property transferred in breach of trust / take free of Bs' equitable interest / no proprietary claim
• constructive trustee : knows or suspects getting property in breach of trust /proprietary claim possible / tracing rules will apply as if T
• innocent volunteer : no knowledge or notice of breach / provided no consideration / proprietary claim possible / refined tracing rules

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Remedies: Against Third Parties

[Flash Card 3 of 3]

Equitable proprietary claims: innocent volunteers

• clean substitution : straight exchange of property for another asset / claim for new asset
• purchase of an asset out of mixture of trust money & IV's own funds : equity apportion loss between B & IV / trust & IV share asset rateably in proportion to contributions to purchase price / both innocent Foskett v McKeown
• tracing rules mixed assets differ for IVs / B cannot claim lien over mixed asset instead of proportionate share (lien for loss to trust not confined to current value of asset)
• withdrawals from mixed current bank accoun t: mixture IV’s & trust / first in, first out rule applies Re Clayton's case / rule may not be used if application impractical or lead to unjust result Barlow Clowes v Vaughan
• IV defence: if show tracing & resulting proprietary claim produces inequitable result Re Diplock

Common law personal action: restitution

• if legal owner deprived of property without consent : bring claim against person now holding / grounds of unjust enrichment / restitution personal claim not proprietary (no priority on bankruptcy)
• C seek remedy of restitution: D pay sum equal to enrichment received / C must be legal owner of property
• strict liability imposed: D's state of mind or honesty irrelevant / unjust enrichment & restitution may easier to establish than equitable claim for recipient liability
• C has to prove D received property / common law tracing / common law tracing cannot identify C's money if passes through mixed fund
• change of position defence : if innocent D / changed his position / & unjust to compel him to make restitution
• spent money in an exceptional & irretrievable manner / before discovering not entitled Lipkin Gorman v Karpnale / D must have changed position in good faith / bad faith: failure to act in commercially acceptable way / short of outright dishonesty Abou-Rahmah v Abacha
• bona fide purchaser who has provided full consideration: not possible to claim restitution / not unjustly enriched

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