Equity - Remedies Against 3Rd Parties

Front 1

Equitable Personal Claims

Back 1

a) Accessory liability
b) Recipient liability
c) Intermeddling

Front 2

Royal Brunei Airlines v Tan (1995)

Back 2

Dishonesty means ‘not acting as an honest person would have acted under the circumstances, taking into account the defendants experience and intelligence.

Hint 2

BLT was an express trustee holding ticket money on trust for Royal Brunei, BLT breached the trust then became insolvent; the claim was then brought against the director of BLT as he assisted the breach of trust. Held, breach of trust itself need not be dishonest, but the stranger must be dishonest.

Front 3

Barlow Clowes v Eurotrust

Back 3

It is only necessary to prove defendants knew there was some breach of fraud for accessory liability, need not know it was a breach of trust.

Front 4

BCCI v Akindele (2000)

Back 4

Akindele entered into a loan agreement under which he provided BCCI with $10mil. Agreement was a breach of fiduciary duties of BCCI directors. They later paid Akindele $16mil (interest). Held, Akindele not accountable for interest under recipient liability, he didn’t have the requisite knowledge.

Hint 4

Necessary to show that the defendant’s knowledge made it unconscionable for him to retain the property, this is wider than ‘dishonesty’

Front 5

Mara v Browne (1896)

Back 5

Where someone, who is not a trustee, does acts characteristic of a trustee, he will be liable for any misapplication of trust property or other loss caused to the trust as if he had been appointed an express trustee .

Hint 5

Solicitor advised the persons who were acting as trustees, though not yet formally appointed as such. He suggested a series improper of investments for the trust funds. The money was to be lent on speculative building, and the margin was unsatisfactory. The money was lost.

Front 6

Equitable proprietary claims

Back 6

Need to distinguish between:
a) bona fide purchaser for value without notice
b) constructive trustee
c) innocent volunteer

Different tracing rules apply etc.

Front 7

Re Diplock (1948)

Back 7

Innocent volunteers will have a defence if they can show that the tracing and resulting proprietary claim would produce an inequitable result. Not available to trustees and fiduciaries that have misappropriated property.

Hint 7

Diplock directed executors to apply residue to charities, which they did. Family challenged validity of the charitable trust, exhausted remedy against executors and claimed the rest from charities. Held, claim successful only against charities that had not dissipated the money.

Front 8

Common law restitution

Back 8

a) Claimant must be a legal owner of the property
b) Strict liability, no need to shoe dishonesty etc.
c) Proof that the Defendant received the claimant’s property, common law tracing cannot identify the claimant’s money once it has passed through a mixed fund

Defences:
a) change of position
b) bona fide purchaser

Front 9

Lipkin Gorman v Karpnale (1992)

Back 9

Where an innocent defendant has changed his position so that it would be unjust to compel him to make restitution can claim defence of ‘change of position’, only be claimed where the defendant has spent the money in an ‘exceptional way’.

Hint 9

A partner in Lipkin Gorman took £200K from separate client account to which he was trustee and lost £150K gambling at a Playboy Casino. Playboy did not know where the money came from, paid it into general funds. Lipkin sued Playboy for unjust enrichment. Held, defence partially allowed, but most money spent not in an exceptional way.

Front 10

Abou-Rahmah v Abacha (2006)

Back 10

Defence of ‘change of position’ only available where the defendant acts in good faith. +

Hint 10

Restitution claim made against a bank. Held, bank successfully defended as it had changed its position transferring money to a customer. The bank had not acted on bad faith.