Académique Documents
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PRESENTING
QUESTION 2
Indeed, in consideration to the car, Tommy did pay for it and in return receive the property which is being
transferred by a known breach of fiduciary duty.
Tommy has committed knowing receipt if he have received trust property with the knowledge that the
property is being transferred in breach of fiduciary duty. Once it committed, then tracing allows the beneficiary
to assert a constructive trust over that trust property.
If Tommy have received trust property but haven't committed knowing receipt, then he is likely to be a bona
fide purchaser for value against whom there is no remedy at all.
Knowing receipt is a 'wrong', and tracing is a technique that allows Tommy to identify the car that can assert
proprietary rights over, and then constructive trust is the remedy that the beneficiary will receive.
KNOWLEDGE??
• A person who takes the trust property must have at least a constructive
notice of the breach before can be held liable as constructive trustee in
knowing receipt situation.
• This is the position in International Sales and Agencies Ltd v. Marcus and Re
Montagu’s Settlement Trust.
• However in Eagle Trust Plc v. SBC Securities the court held that inferred
knowledge was required although the third party was not required to be
duly suspicious.
• Based on this, it is argued that if Tommy have the suspicion about the car
sold undervalue and the purpose of the transfer then he would be liable as
constructive trustee in knowing receipt of the fund.
PERSONAL LIABILITY TO ACCOUNT ON THE BASIS OF
KNOWING ASSISTANCE OF TRUST PROPERTY APPLIES
TO STRANGERS WHO ASSISTED A NOMINATED TRUSTEE
IN COMMITTING A BREACH OF TRUST.
types
Knowing receipt
of dealing
No liability Trustee de son tort
Knowing
Innocent volunteer assistance
Receipt or dealing
FIRST CASE:
IN GENERAL
Barnes v Addy
a) receive and become chargeable with
some part of the trust property; or
…strangers are not to be made The said person may not be able to escape
constructive trustees merely liability for the loss attributable to him/her
because they act as agents of
trustees in transactions within their
legal powers: transactions, perhaps, b) they assist with knowledge in a dishonest
of which a ct of equity may or fraudulent design on the part of the
disapprove, unless those agent; trustee
Knowing asistance
KNOWING ASSISTANCE
• Privy Council: the money paid to BLT was on trust in favour of the airline
• Tan was liable since HE HAD ACTED DISHONESTLY in that he caused or
permitted his BLT to utilise the money in a way he knew was not authorised
by the trust.
Dishonesty on the part of the third
”DISHONEST”
party is a prerequisite for liability
• And it is easier and more objective to look into the dishonest conduct of the
stranger who assisted the nominated trustee in committing a breach of trust