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Strangers (Recipient Liability)
Strangers (Recipient Liability)
Strangers (Recipient Liability)
Whether or not the individual has any prior knowledge becomes irrelevant
when an unrelated party acquires possession of an asset through innocent
means and subsequently retains it under constructive trust. The protection of
the beneficiary's equitable interest follows. The beneficiary is bestowed with the
entitlement to retrieve the asset and any identifiable profits linked to it. In the
case of Westdeutsche Bank versus Islington LBC, Lord Browne-Wilkinson
made an observation that the beneficiary is capable of asserting their title in
trust property even if the third party receiver is unaware that what they have
received is trust property.
The distinction between the proprietary and personal remedies that can be
pursued against individuals who are not known to the plaintiff is effectively
explicated by the situation of a volunteer who has received trust property
without any knowledge of wrongdoing.
The Court of Appeals COA made a decision in the matter of Re Diploc, where it
was established that a charitable organization would be held accountable for
receiving funds from an estate, despite their belief that the donation was
intended for them and this decision was sanctioned by the House of Lords.
The imposition of strict liability upon the recipients has been rejected in several
other cases, including BCCI v Akindele, Re Montagu's Settlement Trusts,
Lipkin Gorman versus Karpnale Ltd, and Eagle Trust PLC versus SBC
Securities Ltd. Box versus Barclays is another instance of a subsequent legal
case that declined to uphold strict liability. As per Lord Millet's statement in
the Twinsectra case, the recipient cannot be held personally accountable for
the mistake. The House of Lords and the Court of Appeal attempted to provide
clarification on the matter through their respective leading dicta. However, this
proved to be a challenging task due to the presence of dissenting judgements,
obiter statements, and cases such as Re Diplock, which only served to further
complicate the issue at hand.
The issue of determining the necessary degree of fault for establishing personal
liability is a highly argumentative subject. The distinction between the degree
of fault and the evidence demonstrating that the recipient acquired the
property innocently and without any equitable rights must be apparent. In the
case of Re Montagu's Settlement, Megarry V-C cited that it is important to
recognise that the doctrines of purchaser without notice and constructive trust
pertain to situations that vary significantly from one another. The primary
concern pertains to the acquisition of property that may either be encumbered
by an equity or unencumbered. The latter pertains to the imposition of
trusteeship obligations on an individual either voluntarily and involuntarily.
According to Millet J's ruling in the El Ajou versus Dollar Land Holdings case,
the purchaser may be deemed responsible for any negligence on their part.
Similar viewpoints were expressed in the cases of International Sales Ltd.
versus Marcus and Agip (Africa) Ltd. versus Jackson.
According to the Court of Appeal's ruling in the case of Carl Zeiss Stiffung
versus Herbert Smith & Co, the most suitable criterion is dishonesty. In the
case of Baden versus Sachs, LJ explicitly limited the degree of culpability to the
first three stages of knowledge. Likewise, Megarry Jadrry employed an
analogous approach in the case of Re Montagu's Settlement Trusts. According
to Loed Browne Wilkinson's statement in Westdeutsche, the notion of
restricting oneself to the initial three states of Baden was accurate. Aikens J. in
the case of Bank of America versus Arnel employed the criterion of dishonesty,
which was derived from the position taken by Potter LJ in the case of
Twinsectra.
All in all Lord Nicholls's legal writing has made the problem worse because it
has added to the confusion that was already there. He said that responsibility
applies no matter who is at fault, but that it can be disputed using the defence
of change of position. In the current situation, there is a lot of
misunderstanding, so the House of Lords needs to come up with a clear and
straightforward answer to clear up any uncertainty about the problem in
question.
“IT IS IMPORTANT TO NOTE THAT QUESTIONS COULD COME FROM
A VARIETY OF ANGLES IN THE EXAM SO THESE ESSAYS DO NOT
GURRANTEE YOUR MARKS. IN ORDER TO ANSWER THE
QUESTIONS IN THE PAPER AND RESPOND TO NEW ANGLES,
PLEASE STUDY THE ENTIRE CHAPTER AND UNDERTAKE
PREPARATORY RESEARCH.”