Dishonest Assistance, Knowing Receipt, Tracing Structured Answer Help!
Hey all,
I will be attempting to answer an Equity and Trust exam question which will have all 3 topics in together.
I was wondering what would be the most effective structure for each one.
Also do I talk about each one seperately and then pick and choose which would be most effective in the end?
This is how I think I will structure it, not sure if its right.
Dishonest Assistance
1- Royal Brunie
2- Twinsectra
3- Barlow Clowes
4- Abou-Rahmah
Knowing Receipt
1- Agip Jackson
2- Baden v Societe General
3- Re Montegu
4- BCCI v Akindele
As for tracing I havent made my notes yet.
I will be attempting to answer an Equity and Trust exam question which will have all 3 topics in together.
I was wondering what would be the most effective structure for each one.
Also do I talk about each one seperately and then pick and choose which would be most effective in the end?
This is how I think I will structure it, not sure if its right.
Dishonest Assistance
1- Royal Brunie
2- Twinsectra
3- Barlow Clowes
4- Abou-Rahmah
Knowing Receipt
1- Agip Jackson
2- Baden v Societe General
3- Re Montegu
4- BCCI v Akindele
As for tracing I havent made my notes yet.
Scroll to see replies
When you say 'pick and choose which would be most effective', what do you mean?
Dishonest assistance is distinct from knowing receipt, the first is concerned with being an 'accessory' to a breach of fiduciary duty, the second with receiving property which is being transferred by a known breach of fiduciary duty. Tracing shouldn't have much to do with dishonest assistance since usually an 'assistant' will never have received any of the property at all, so as against him there is nothing to trace to. Tracing will be useful where there has been knowing receipt as the received trust property, or its traceable substitute, will be held on constructive trust.
Dishonest assistance is distinct from knowing receipt, the first is concerned with being an 'accessory' to a breach of fiduciary duty, the second with receiving property which is being transferred by a known breach of fiduciary duty. Tracing shouldn't have much to do with dishonest assistance since usually an 'assistant' will never have received any of the property at all, so as against him there is nothing to trace to. Tracing will be useful where there has been knowing receipt as the received trust property, or its traceable substitute, will be held on constructive trust.
(edited 12 years ago)
Original post by Forum User
When you say 'pick and choose which would be most effective', what do you mean?
Dishonest assistance is distinct from knowing receipt, the first is concerned with being an 'accessory' to a breach of fiduciary duty, the second with receiving property which is being transferred by a known breach of fiduciary duty. Tracing shouldn't have much to do with dishonest assistance since usually an 'assistant' will never have received any of the property at all, so as against him there is nothing to trace to. Tracing will be useful where there has been knowing receipt as the received trust property, or its traceable substitute, will be held on constructive trust.
Dishonest assistance is distinct from knowing receipt, the first is concerned with being an 'accessory' to a breach of fiduciary duty, the second with receiving property which is being transferred by a known breach of fiduciary duty. Tracing shouldn't have much to do with dishonest assistance since usually an 'assistant' will never have received any of the property at all, so as against him there is nothing to trace to. Tracing will be useful where there has been knowing receipt as the received trust property, or its traceable substitute, will be held on constructive trust.
Well I mean that the exam is going to contain all 3 areas in a problem question. Therefore I would have to talk about all of them in turn and apply it to the question. In the end especially when there is an overlap between Tracing and Knowing receipt, would I have to pick either one for the person I am advising to choose?
There can never be a choice between knowing receipt and tracing, they aren't the 'same type of thing'. A person has committed knowing receipt if they have received trust property with the knowledge that the property is being transferred in breach of fiduciary duty. If they *have* committed knowing receipt, then tracing allows the beneficiary to assert a constructive trust over that trust property or its 'substitute'. And of course if they have received trust property but haven't committed knowing receipt, then they are likely to be a bona fide purchaser for value against whom there is no remedy at all. (They might be neither a purchaser for value nor have committed knowing receipt, instead they might have received the trust property as a gift without knowing that there was any breach of fiduciary duty, in which case an action for unjust enrichment would lie barring defences such as change of position).
knowing receipt is a 'wrong', tracing is a technique that allows the wronged persons to identify which property they can assert proprietary rights over, and then constructive trust is the remedy that they will receive. It doesn't make sense to speak of 'choosing between them'.
Let me try and give an example. I buy a painting from T for £2,000 knowing full well that he is trustee of that painting and not entitled to dispense with it. I have committed knowing receipt. I then trade that painting for a car and £200, spending the £200 on a holiday. I then trade the car for three goats. The beneficiaries of the trust, *because I have committed knowing receipt* are entitled to trace the painting into the small herd of goats and assert proprietary rights over them. The £200 is dissipated and leads to nothing traceable. I will hold the trio of goats on constructive trust for the beneficiaries.
knowing receipt is a 'wrong', tracing is a technique that allows the wronged persons to identify which property they can assert proprietary rights over, and then constructive trust is the remedy that they will receive. It doesn't make sense to speak of 'choosing between them'.
Let me try and give an example. I buy a painting from T for £2,000 knowing full well that he is trustee of that painting and not entitled to dispense with it. I have committed knowing receipt. I then trade that painting for a car and £200, spending the £200 on a holiday. I then trade the car for three goats. The beneficiaries of the trust, *because I have committed knowing receipt* are entitled to trace the painting into the small herd of goats and assert proprietary rights over them. The £200 is dissipated and leads to nothing traceable. I will hold the trio of goats on constructive trust for the beneficiaries.
(edited 12 years ago)
You may well get a problem question that asks you to analyse claims against three different people, and perhaps each claim raises a different issue.
But do remember to use your noggin. The really important thing is to understand the difference between personal claims and proprietary claims. There is no point talking at length about dishonest assistance (personal claim) when the defendant is insolvent. There is no point talking about tracing (proprietary claim) if the property no longer exists.
But do remember to use your noggin. The really important thing is to understand the difference between personal claims and proprietary claims. There is no point talking at length about dishonest assistance (personal claim) when the defendant is insolvent. There is no point talking about tracing (proprietary claim) if the property no longer exists.
Original post by jacketpotato
You may well get a problem question that asks you to analyse claims against three different people, and perhaps each claim raises a different issue.
But do remember to use your noggin. The really important thing is to understand the difference between personal claims and proprietary claims. There is no point talking at length about dishonest assistance (personal claim) when the defendant is insolvent. There is no point talking about tracing (proprietary claim) if the property no longer exists.
But do remember to use your noggin. The really important thing is to understand the difference between personal claims and proprietary claims. There is no point talking at length about dishonest assistance (personal claim) when the defendant is insolvent. There is no point talking about tracing (proprietary claim) if the property no longer exists.
It can get quite confusing. I don't have a problem with learning/memorising facts and judgements, its just when I get into an exam and the problems are just all over the place, I begin to panic as I want to do well lol
I would like to apologize, I have not attempted this question myself. Although would appreciate advice on how to structure and answer to such a scenario.
Larry, the sole trustee of the Klondike Trust, signed a cheque for £50,000 from the Klondike Trust bank account at Money Bank, payable to himself. He deposited the cheque into his personal bank account at New Bank.
Larry withdrew £10,000 from his New Bank account and gave it to his friend Ian to help him to meet the costs of training for the 2012 Olympics. Ian was delighted to receive such a generous donation. He spent the money on a six week visit to an exclusive health spa which he had booked before receiving the donation from Larry.
Larry next withdrew £25,000 from his New Bank account and bought his father a sailing boat. His father asked him where he had got the money from and Larry replied, “if you knew that you might not get to keep the boat!”
Larry used the final £15,000 from his New Bank account to buy an expensive oriental rug for his mother. She kissed him and said, “I knew you would be successful in the end darling.”
At the suggestion of Hilary, a financial advisor to the Klondike Trust, Larry handed Hilary a £15,000 cheque drawn on the Klondike Trust bank account, payable to HIP Ltd. Larry believed Hilary when she told him that HIP Ltd was an investment management company which would invest the money wisely on behalf of the Klondike Trust. HIP Ltd was in fact owned and controlled by Gary, a con-man who specialized in defrauding trust funds. Hilary was paid a 25 per cent commission by HIP Ltd. This high level of commission is never paid by reputable investment management companies.
Larry has been declared bankrupt. The oriental rug was stolen in a burglary and the boat was sunk by vandals and cannot be recovered. Neither the rug nor the boat had been insured. HIP Ltd is insolvent with no assets and Gary is untraceable. Hilary has spent her commission.
Advise the beneficiaries of the Klondike Trust of any causes of actions and possible remedies they may have against any person.
Larry, the sole trustee of the Klondike Trust, signed a cheque for £50,000 from the Klondike Trust bank account at Money Bank, payable to himself. He deposited the cheque into his personal bank account at New Bank.
Larry withdrew £10,000 from his New Bank account and gave it to his friend Ian to help him to meet the costs of training for the 2012 Olympics. Ian was delighted to receive such a generous donation. He spent the money on a six week visit to an exclusive health spa which he had booked before receiving the donation from Larry.
Larry next withdrew £25,000 from his New Bank account and bought his father a sailing boat. His father asked him where he had got the money from and Larry replied, “if you knew that you might not get to keep the boat!”
Larry used the final £15,000 from his New Bank account to buy an expensive oriental rug for his mother. She kissed him and said, “I knew you would be successful in the end darling.”
At the suggestion of Hilary, a financial advisor to the Klondike Trust, Larry handed Hilary a £15,000 cheque drawn on the Klondike Trust bank account, payable to HIP Ltd. Larry believed Hilary when she told him that HIP Ltd was an investment management company which would invest the money wisely on behalf of the Klondike Trust. HIP Ltd was in fact owned and controlled by Gary, a con-man who specialized in defrauding trust funds. Hilary was paid a 25 per cent commission by HIP Ltd. This high level of commission is never paid by reputable investment management companies.
Larry has been declared bankrupt. The oriental rug was stolen in a burglary and the boat was sunk by vandals and cannot be recovered. Neither the rug nor the boat had been insured. HIP Ltd is insolvent with no assets and Gary is untraceable. Hilary has spent her commission.
Advise the beneficiaries of the Klondike Trust of any causes of actions and possible remedies they may have against any person.
Okay well I'll start you off, you need to go through each individual who has got involved in some way and identify whether they have committed a wrong, and if so what type, then whether the available remedies are proprietary or personal, then whether on the facts those remedies are of any use to the beneficiaries.
As regards Ian, he doesn't seem to know anything about the breach of trust at all, but he has not given any consideration for the £10,000. Therefore he is a .... ? What action might lie against him ? What defence will he try to raise ? Why, on the facts given, does it not appear that this defence applies? So what will be the likely result? On to the next character... etc.
As regards Ian, he doesn't seem to know anything about the breach of trust at all, but he has not given any consideration for the £10,000. Therefore he is a .... ? What action might lie against him ? What defence will he try to raise ? Why, on the facts given, does it not appear that this defence applies? So what will be the likely result? On to the next character... etc.
(edited 12 years ago)
Original post by Forum User
Okay well I'll start you off, you need to go through each individual who has got involved in some way and identify whether they have committed a wrong, and if so what type, then whether the available remedies are proprietary or personal, then whether on the facts those remedies are of any use to the beneficiaries.
As regards Ian, he doesn't seem to know anything about the breach of trust at all, but he has not given any consideration for the £10,000. Therefore he is a .... ? What action might lie against him ? What defence will he try to raise ? Why, on the facts given, does it not appear that this defence applies? So what will be the likely result? On to the next character... etc.
As regards Ian, he doesn't seem to know anything about the breach of trust at all, but he has not given any consideration for the £10,000. Therefore he is a .... ? What action might lie against him ? What defence will he try to raise ? Why, on the facts given, does it not appear that this defence applies? So what will be the likely result? On to the next character... etc.
Oh god im going to look stupid
Ian is a bona fide purchaser for value without notice? Well tracing wouldn't be an option since he spent all the money... I would say the result would be that the beneficiaries would not be able to get anything from him. Although maybe because he is an Olympic athelete he would have lots of money, but that doesn't mean anything
I don't know how I got into 3rd year! I need to do some revision lol
(edited 12 years ago)
Original post by llb_ant
Oh god im going to look stupid
Ian is a bona fide purchaser for value without notice? Well tracing wouldn't be an option since he spent all the money... I would say the result would be that the beneficiaries would not be able to get anything from him. Although maybe because he is an Olympic athelete he would have lots of money, but that doesn't mean anything
I don't know how I got into 3rd year! I need to do some revision lol
Ian is a bona fide purchaser for value without notice? Well tracing wouldn't be an option since he spent all the money... I would say the result would be that the beneficiaries would not be able to get anything from him. Although maybe because he is an Olympic athelete he would have lots of money, but that doesn't mean anything
I don't know how I got into 3rd year! I need to do some revision lol
No, he isn't a bona fide purchaser for value. He didn't give anything at all for the £10,000, he just got it given to him. Are you familiar with the case Lipkin Gorman v Karpnale?
Original post by Forum User
No, he isn't a bona fide purchaser for value. He didn't give anything at all for the £10,000, he just got it given to him. Are you familiar with the case Lipkin Gorman v Karpnale?
I haven't to be fair, although just had a glimse of it. That would mean Ian is unjustly enriched. Ian does not have a defence since he was not a bona fide purchaser. Therefore the beneficiary has the power to impose a duty on Ian to repay the money?
However he spent the money, therefore it is not traceable
(edited 12 years ago)
Original post by llb_ant
I haven't to be fair, although just had a glimse of it. That would mean Ian is unjustly enriched. Ian does not have a defence since he was not a bona fide purchaser. Therefore the beneficiary has the power to impose a duty on Ian to repay the money?
I think I agree with this. Ian is a 'donee' - someone who has given nothing of value for the trust property. He has therefore been unjustly enriched (as where the defendants in Lipkin Gorman and Karpnale - they won the money in their casino but at the time wagers were not valid contracts at all so from a legal perspective they were volunteers). At this point the beneficiaries can trace their £10,000 to the £10,000 in Ian's hands. This would be relevant if, say, Ian had invested that £10,000 and turned it into £25,000 - see Trustee of the property of FC Jones v Jones. However once he spends it on a spa break, there is nothing to trace to. The beneficiaries only remedy will therefore be a personal one (I think the technical term is 'money had and received to the defendant's use').
His only likely defence to this is 'change of position' - he will claim that he spent the £10,000 on a spa break without knowing it belonged to the trust, the £10,000 is gone, and that he shouldn't have to repay anything. However, he hasn't really changed his position at all, since he had already booked the break and was therefore presumably going to pay for it with his own money in any case. As such he will likely have to repay the £10,000 out of his own funds. I suppose the leading case for change of position is also Lipkin Gorman v Karpnale.
Note that, of course, instead of pursuing Ian for money had and received, the beneficiaries could force Larry to account for the £10,000. They can't recover £10,000 from both Ian and Larry though, that would result in them gaining £10,000 overall. (There is nothing to stop them bringing an action against Larry and Ian as co-defendants and seeing who is solvent). We are told that Larry is bankrupt so that won't help them here, of course.
(edited 12 years ago)
Original post by llb_ant
I haven't to be fair, although just had a glimse of it. That would mean Ian is unjustly enriched. Ian does not have a defence since he was not a bona fide purchaser. Therefore the beneficiary has the power to impose a duty on Ian to repay the money?
However he spent the money, therefore it is not traceable
However he spent the money, therefore it is not traceable
Ian may have the defence of change of position if he's unjustly enriched. Consider Virgo's suggestion that Lipkin Gorman was wrongly reasoned - while unjust enrichment exists in the law, was Lipkin Gorman actually an example of it?
Original post by Forum User
I think I agree with this. Ian is a 'donee' - someone who has given nothing of value for the trust property. He has therefore been unjustly enriched (as where the defendants in Lipkin Gorman and Karpnale - they won the money in their casino but at the time wagers were not valid contracts at all so from a legal perspective they were volunteers). At this point the beneficiaries can trace their £10,000 to the £10,000 in Ian's hands. This would be relevant if, say, Ian had invested that £10,000 and turned it into £25,000 - see Trustee of the property of FC Jones v Jones. However once he spends it on a spa break, there is nothing to trace to. The beneficiaries only remedy will therefore be a personal one (I think the technical term is 'money had and received to the defendant's use').
His only likely defence to this is 'change of position' - he will claim that he spent the £10,000 on a spa break without knowing it belonged to the trust, the £10,000 is gone, and that he shouldn't have to repay anything. However, he hasn't really changed his position at all, since he had already booked the break and was therefore presumably going to pay for it with his own money in any case. As such he will likely have to repay the £10,000 out of his own funds.
His only likely defence to this is 'change of position' - he will claim that he spent the £10,000 on a spa break without knowing it belonged to the trust, the £10,000 is gone, and that he shouldn't have to repay anything. However, he hasn't really changed his position at all, since he had already booked the break and was therefore presumably going to pay for it with his own money in any case. As such he will likely have to repay the £10,000 out of his own funds.
Damn that is a very well structured way of answering it. I haven't learnt the defences for third parties yet, but shall be making notes on change of position.
Original post by gethsemane342
Ian may have the defence of change of position if he's unjustly enriched. Consider Virgo's suggestion that Lipkin Gorman was wrongly reasoned - while unjust enrichment exists in the law, was Lipkin Gorman actually an example of it?
I don't understand what you mean when you say was Lipkin Gorman actually an example of it.
To be honest I haven't started my Tracing notes, will be doing them tomorrow.
As for the Sailing Boat giving to his father. It is traceable? Once again his father is not a bona fide purchaser.
Also Knowing Receipt? when the father asked Larry where he got the money from and left it at that it could mean following Baden v Societe General, the father: Wilfully shutting one’s eyes to the obvious or Wilfully and recklessly failing to make inquiries which an honest person would have made.
Also Knowing Receipt? when the father asked Larry where he got the money from and left it at that it could mean following Baden v Societe General, the father: Wilfully shutting one’s eyes to the obvious or Wilfully and recklessly failing to make inquiries which an honest person would have made.
Original post by llb_ant
I don't understand what you mean when you say was Lipkin Gorman actually an example of it.
To be honest I haven't started my Tracing notes, will be doing them tomorrow.
To be honest I haven't started my Tracing notes, will be doing them tomorrow.
Lipkin Gorman is the case which recognised unjust enrichment at the highest level. However, Virgo argues that the case itself is NOT one of unjust enrichment. The RESULT is correct. The reasoning is wrong. I can't quite recall why but check his book on restitution.
Original post by gethsemane342
Consider Virgo's suggestion that Lipkin Gorman was wrongly reasoned - while unjust enrichment exists in the law, was Lipkin Gorman actually an example of it?
Might this not be going too far in a third year equity problem question? You could write an entire book on the differences in opinion between say Virgo, Burrows, Birks, etc! I have to admit I haven't read Virgo's book, what's his take on this case? Burrows is happy enough that this is a true unjust enrichment in 'The Law of Restitution'.
Are you taught by Virgo (you are at Cambridge, right?) It must be great fun to be taught by academics at the cutting edge of fields like this, unfortunately don't get anything like that at BPP
(edited 12 years ago)
Original post by gethsemane342
Lipkin Gorman is the case which recognised unjust enrichment at the highest level. However, Virgo argues that the case itself is NOT one of unjust enrichment. The RESULT is correct. The reasoning is wrong. I can't quite recall why but check his book on restitution.
Thanks will do!
Original post by llb_ant
As for the Sailing Boat giving to his father. It is traceable? Once again his father is not a bona fide purchaser.
Also Knowing Receipt? when the father asked Larry where he got the money from and left it at that it could mean following Baden v Societe General, the father: Wilfully shutting one’s eyes to the obvious or Wilfully and recklessly failing to make inquiries which an honest person would have made.
Also Knowing Receipt? when the father asked Larry where he got the money from and left it at that it could mean following Baden v Societe General, the father: Wilfully shutting one’s eyes to the obvious or Wilfully and recklessly failing to make inquiries which an honest person would have made.
Right, you need to consider what the standard of knowledge is for 'knowing receipt'. You have all the appropriate cases for that in your OP.
Whether the father has committed knowing receipt or is a mere donee, the boat is the traceable proceeds of the £25,000. However, if he is a mere donee then he has the defence of change of position - the boat sank, he has nothing left of it, and he wouldn't have bought a boat 'anyway', so in that case there will be no remedy. If he has committed knowing receipt then the beneficiaries can abandon their worthless proprietary claim on the boat and bring a personal claim instead.
And unfortunately now I am doubting that my answer to the 'Ian' problem can be correct since Burrows says "Equity - knowing receipt: The unique feature of the restitutionary regime here is that the indirect recipient will only be held personally liable if it had knowledge of that the benefit received was being transferred in breach of fiduciary duty", i.e. if X takes C's property and transfers it to D, there is a distinction between situations where X is a trustee (no *personal* liability even if D is a donee) and situations where X is an outright thief (personal liability subject to change of position defence). i.e. there was only a personal claim for unjust enrichment in Lipkin Gorman v Karpnale because X stole the money, if he had been a trustee, there wouldn't be. That to me seems like a meaningless distinction (as Burrows points out later).
You might need to check the textbooks your own course uses and see what they make of that problem...
(edited 12 years ago)
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