Equity and Trusts

Third-Party Liability-Accessory Liability CT

Reading
 Graham Virgo, The Principles of Equity & Trusts (5th edn OUP 2023)
 Jamie Glister and James Lee Hanbury & Martin Modern Equity (21st edn Sweet and
Maxwell)
 Smith, “Constructive Trusts and Constructive Trustees” (1999) 58 CLJ 294
 Robert Chambers, “The End of Knowing Receipt” (2016) 2 CJCCL 1
 Steven Elliott and Charles Mitchell, “Remedies for Dishonest Assistance” (2004) 67
MLR 16
 Pauline Ridge, “Justifying the Remedies for Dishonest Assistance” (2008) 2014 LQR 445
 Peter Devonshire, “Account of Profits for Dishonest Assistance” (2015) 74 CLJ 222

Cases
 Bristol and West B.S. v Mothew [1998] Ch. 1
 Bray v Ford [1896] AC 44
 Attorney General of Hong Kong v Reid [1994] 1 A.C. 324
 Agip (Africa) v Jackson [1990] 1 Ch 365
 Uzinterimpex JSC v Standard Bank plc [2008] Lloyd’s Rep 456
 Re Montagu`s S.[1987] Ch. 264
 Bank of Credit and Commerce International (BCCI) v Akindele [2001] Ch. 437
 Criterion Properties plc v Stratford UK Properties LLC [2004] 1 WLR 1846
 Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (2010) HKCFAR
479
 Target Holdings Ltd v Redferns [1996] 1 AC 421
 Paragon Finance plc v D.B. Thakerar & Co [1999] 1 All ER 400
 Royal Brunei Airlines Sdn Bhd v. Tan [1995] 2 AC 378,
 Arthur v Attorney General of the Turks and Caicos Islands [2012] UKPC 30
 Brinks Ltd v. Abu-Saleh (No. 3) (1999) CLC 133.
 Baden Delvaux v. Societe Generale pour Favoriser le Developpement du Commerce et de
l`Industrie en France SA (1983) BCLC 325
 Selangor United Rubber Estates Ltd v. Cradock (No 3) [1968] 1 WLR 1555
 Twinsectra v Yardley [2002] 2 AC 164
 Barlow Clowes International v Eurotrust International [2005] UKPC 37
 Starglade Properties Ltd v Nash [2010] EWCA Civ 1314
 Ivey v Genting Casinos (UK) Ltd (trading as Crockfords Club) [2017] UKSC 67
 Group Seven Ltd v Nassir [2019] EWCA Civ 614; [2020] Ch 129


1. For a claim in (i) knowing receipt and (ii) knowing or dishonest assistance, what are
the conditions for a claim and what sort of remedy is available?

2. In what sense is the dishonesty test for knowing or dishonest assistance “objective”?

1
 3. Read Twinsectra Ltd v Yardley [2002] 2 AC 164.
There are two issues in the case, one concerning the requirements for accessory
liability and the other concerning the nature of Quistclose trusts. Concentrate on those
passages dealing with accessory liability.
Explain the ‘combined test’ for dishonesty stated by Lord Hutton and preferred by the
majority of the House and the objective test of Lord Millett in dissent.
Would it be better to return to the nomenclature of ‘knowing’ rather than ‘dishonest
assistance’?

4. Should liability for the recipient liability be strict? Why or why not? If not, what
should the test for liability be?

5. Mr Jones was in partnership with Mr Smith in a firm of solicitors. Business has been
bad due to the recession. Mr Jones suffered heavy personal losses on the stock
market. Mr Jones decided to create an investment scheme and persuade his clients to
invest in it so that he could get hold of their money to pay his debts.

Mr Jones created the investment trust using the services of his accountant, Alice, to do
so. He explained to Alice that some of his clients were wealthy and would like to
invest in the investment trust. He assured her that he could use his knowledge of the
stock market to select the shares carefully. Alice did the necessary paperwork without
asking any questions. She commonly carried out accountancy work for Mr Jones’s
legal practice. However, he paid for this work out of his own money rather than using
the firm’s money. Alice had never previously acted for Mr Jones in his personal
capacity. She had heard rumours that Mr Jones was in financial difficulty.

Shortly after the investment trust was created, Mr Jones told one of his clients, called
Clifford, that he was the trustee of an investment trust which paid an income of 15%
per year to investors. He persuaded Clifford to invest $50,000 in the trust. Clifford
made out a cheque for $50,000 and sent it by post to Mr Jones. Mr Jones then paid the
cheque into his personal current account at NBB Bank, which had been $20,000
overdrawn. Mr Jones transferred the rest of Clifford’s money ($30,000) to a new
bank account also at NBB Bank, which he had set up for the investment trust.
However, over the next few weeks, he spent the money on drink and gambling.

Discuss whether Mr Jones, Alice and the NBB Bank are personally liable in equity to
Clifford in relation to his loss of $50,000.

Would your answer be different if Alice admitted that she assumed that the trust was
being established in order to evade paying taxes?