A stranger to a trust can be liable in equity for assisting in a breach of trust, even though he received no trust property.
Lord Selborne said: ‘Now in this case we have to deal with certain persons who are trustees, and with certain other persons who are not trustees. That is a distinction to be borne in mind throughout the case. Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees. Those are the principles, as it seems to me, which we must bear in mind in dealing with the facts of this case.’
Judges:
Lord Selborne
Citations:
[1874] 9 ChA 244, [1874] UKLawRpCh 20, (1873-1874) LR 9 Ch App 244
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Brown and Another v Bennett and Others CA 1-Dec-1998
Morritt LJ discussed the ‘corporate opportunitycases’: ‘Those are cases in which a beneficial commercial opportunity comes the company’s way and forms knowledge owned or possessed by the directors as agents for the company. Those directors then seek . .
Cited – Dubai Aluminium Company Limited v Salaam and Others HL 5-Dec-2002
Partners Liable for Dishonest Act of Solicitor
A solicitor had been alleged to have acted dishonestly, having assisted in a fraudulent breach of trust by drafting certain documents. Contributions to the damages were sought from his partners.
Held: The acts complained of were so close to . .
Cited – Royal Brunei Airlines SDN BHD v Tan PC 24-May-1995
(Brunei) The defendants were a one-man company, BLT, and the one man, Mr Tan. A dishonest third party to a breach of trust was liable to make good a resulting loss even though he had received no trust property. The test of knowledge was an objective . .
Cited – Williams v Central Bank of Nigeria SC 19-Feb-2014
Bank not liable for fraud of customer
The appellant sought to make the bank liable for a fraud committed by the Bank’s customer, the appellant saying that the Bank knew or ought to have known of the fraud. The court was asked whether a party liable only as a dishonest assistant was a . .
Lists of cited by and citing cases may be incomplete.
Trusts, Equity
Leading Case
Updated: 27 November 2022; Ref: scu.189985
