Knowing Receipt

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Dwill be personally liable if he

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beneficially receives funds paid in breachof trust or fiduciary duty with a state of mind such that the receipt is unconscionable. Not applying to equity’s darling If you beneficially receive the funds

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Williamsv Central Bank of Nigeria’s

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per Lord Sumption JSC: “The essence of aliability to account on the footing of knowing receipt is that the defendanthas accepted trust assets knowing that they were transferred to him in breachof trust and that he had no right to receive them.

-> liability of constructive trustee

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Fault requirement

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1. requisitemental element No dishonest requirement

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BelmontFinance Corp v Williams Furniture Ltd (No 2)

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Belmont a wholly owned subsidiary company of the seconddefendant which was a wholly owned subsidiary company of the first defendant.All three companies shared a chairman. Maximum (company) agreement that thecompany will sell all shares to Belmont finance for 1 million and in returnwill buy she capital of Belmont. Misapplication of Belmont finances funds.Shares maximum purchased were only worth 60 grand. Chairman of all three companies genuinely believed thatbuying the capital of maximum was good for Belmont – Bonafide (claim forassistance failed)Receipt worked – they knew the money was misapplied fromtrust on9

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Polly Peck v Nadir (No 2)

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Liability in receipt case requires no fraud but did therecipient have knowledge

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BCCI (Overseas) Ltd v Akindele ma$Ӈ9

unconscionability

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Therecipient’s state of knowledge must be such as to make it unconscionable forhim to retain the benefit of the receipt.

· Attempt to shift from technical categorisations · Was the state of knowledge such that itsunconscionable for there not to be liability

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Brown v Bennett on&Շ9

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Receipt must be the direct consequence of thebreach:mi%-9

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remedies

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These depend on the unanswered question ofwhether recipient liability is primary or secondary

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Concurrentliability?DubaiAluminium Co Ltd v Salaam l9

unjust enrich

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Dishonestreceipt gives rise to concurrent liability, since the claim can be based in onD’s dishonesty, treating the receipt itself as incidental, being merely theparticular form taken by D’s participation in the breach of fiduciary duty; butit can also be based simply on the receipt, treating it as a restitutionaryclaim independent of any wrongdoingmso-f,ˇ9

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Farah v Say-Dee y>"9

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rejected unjust enrichment

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Lipkin Gorman v Karpnale n'ԇ9

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Solicitor money from client account and gambles it atdefendant’s casino. Court held the defendant was liable to repay regardless oflack of knowledge. Solicitor took the money and became its legal owner, butclient retained sufficient legal interest in it to be able to trace and couldchase after it into the hands of the defendant. Could show unjust enrichment attheir expense. - Dubious- But recognition of unjust enrichment claim

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Re Diplock )և9

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Equity already recognises strictliability. Someone’s estate administered. Certain people were paid from theestate improperly. No wrong doing, but strictly liability to repay the funds tothose entitled. -size:=%9

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Primlake Ltd (in liq) v Matthews Assocs

could also be seen as an example of

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equity moving in the direction of acknowledging strict liability for knowing receipt

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Equity is moving in the direction which...

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could acknowledge strict liability for the receipt of trust property as something you can bring a claim for in the future