Twinsectra Ltd v Yardley and Others: HL 21 Mar 2002

Solicitors acted in a loan, giving an undertaking as to its application. In breach of that undertaking they released it to the borrower. The appellants appealed a finding of liability as contributors to the breach.
Held: ‘Money in a solicitor’s client account is held on trust. The only question is the terms of that trust.’ A power was sufficiently clear to be enforceable, if it could be seen whether particular circumstances satisfied it. Here that could be seen, and the condition in the undertaking was not void. A trust had been created. To be liable under the principle in Royal Brunei, by dishonest assistance, the person sought to be made liable must himself be party to the dishonesty. The requirement was beyond that, consciousness that one was transgressing ordinary standards of honest behaviour, as well as the fact of the breach of trust. The lack of enquiry by the solicitor fell short of having shut his eyes to the truth. It may have been wrong or misguided, but he believed the money was for the free use by the client. Dishonesty in the context of assistance in a breach of trust has both objective and subjective elements. A person cannot set his own standards of honesty, but in order for him to be held liable on the grounds of dishonesty it is necessary to show not only that his conduct fell short of ordinary standards of honesty, but that he was aware of that fact. Appeal allowed in part.
Lord Millett: ‘Liability for ‘knowing receipt’ is receipt-based. It does not depend on fault. The cause of action is restitutionary and is available only where the defendant received or applied the money in breach of trust for his own use and benefit . . .’
Lord Hutton: ‘ . . . dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people although he should not escape a finding of dishonesty because he sets his own standards of dishonesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct.’

Lord Slynn of Hadley, Lord Steyn, Lord Hoffmann, Lord Hutton and Lord Millett
Times 25-Mar-2002, Gazette 10-May-2002, [2002] UKHL 12, [2002] 2 AC 164, [2002] 38 EGCS 204, [2002] PNLR 30, [2002] 2 All ER 377, [2002] NPC 47, [2002] 2 WLR 802, [2002] WTLR 423
House of Lords, Bailii
England and Wales
CitedMcPhail v Doulton (on appeal from In re Baden’s Deed Trusts) HL 6-May-1970
The settlor asked whether the test for validity, in point of certainty of objects, is the same for trusts and powers, or whether the test for trusts is more demanding.
Held: The test is the same. The context was a provision, held to be a . .
CitedRoyal 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 . .
Appeal fromTwinsectra Limited v Yardley, and similar CA 30-Apr-1998
. .
CitedGromax Plasticulture Ltd v Don and Low Nonwovens Ltd PatC 12-Jun-1998
The court set out tests of bad faith for applications for the registration of trade marks: ‘I shall not attempt to define bad faith in this context. Plainly it includes dishonesty and, as I would hold, includes also some dealings which fall short of . .
CitedRegina v Ghosh CACD 5-Apr-1982
The defendant surgeon was said to have made false claims for payment for operations, and was charged under the 1968 Act. He claimed to have been entitled to the sums claimed, and denied that he had been dishonest. The court considered the meaning of . .

Cited by:
CitedNIRU Battery Manufacturing Company and Another v Milestone Trading Ltd and others ComC 8-May-2003
There was a contract for the sale of lead ingots. The sale was supported by letters of credit but inaccurate certificates were issued to release payment. The parties sought now to amend the contributions in the light of the Royal Brompton Hospital . .
CitedThe Secretary of State for Trade and Industry v Michael Hamilton Amiss, Jonathan Andrew Chapman, Roger Rex Ingles ChD 20-Mar-2003
The Secretary sought disqualification orders, under section 8 which left the court with a discretion as to whether an order should be made.
Held: It was not necessary to establish dishonesty to a Twinsectra standard to justify an order. The . .
CitedNiru Battery Manufacturing Company, Bank Sepah Iran v Milestone Trading Limited CA 23-Oct-2003
The claimant had contracted to purchase lead from some of the defendants. There were delays in payment but when funds were made available they should have been repaid. An incorrect bill of lading was presented. The bill certified that the goods had . .
CitedCrown Dilmun, Dilmun Investments Limited v Nicholas Sutton, Fulham River Projects Limited ChD 23-Jan-2004
There was a contract for the sale of Craven Cottage football stadium, conditional upon the grant of non-onerous planning permissions. It was claimed that the contract had been obtained by the defendant employee in breach of his fiduciary duties to . .
CitedIS Innovative Software Ltd v Howes CA 19-Feb-2004
It was alleged that the defendant had backdated contracts of employment to a time when he had been employed by the claimant, and had induced staff to leave. The company appealed dismissal of its claim.
Held: The advantage of the court . .
CitedSir Graham Stanley Latimer and others – Trustees for the Crown Forestry Rental Trust v The Commissioner of Inland Revenue PC 25-Feb-2004
PC (New Zealand) The Crown created a charitable trust for certain Maori people. Upon exhaustion of the purpose, the fund was to revert to the Crown. The trustees appealed a finding of liability to income tax.
CitedHarrison v Teton Valley Trading Co; Harrison’s Trade Mark Application (CHINAWHITE) CA 27-Jul-2004
The applicant had been an employee of the objector at their nightclub ‘Chinawhite’ and whose principal attraction was a cocktail of the same name. Employees signed a confidentiality agreement as to the recipe. Having left the employment, the . .
CitedUltraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
CitedBarlow Clowes International Ltd and Another v Eurotrust International Ltd and others PC 10-Oct-2005
(Court of Appeal of the Isle of Man) Defendants appealed a finding of dishonest assistance in the activities of Barlow Clowes.
Held: The judge had been able to reach the conclusions on the basis of the evidence. The appeal of the deemster . .
CitedAbouRahmah and Another v Abacha and others QBD 28-Nov-2005
Claims were made as to an alleged fraud by some of the respondents. . .
CitedConstantinides v The Law Society Admn 7-Apr-2006
The appplicant appealed against a decision to strike him from the roll of solicitors for dishonesty which he denied. He had drawn documents under which his client invested substantial sums abroad, and lost. She had claimed in negligence. The . .
CitedSingleton v The Law Society QBD 11-Nov-2005
The claimant appealed his striking off the roll of solicitors. He said he had not been dishonest. He was said to have made entries to show receipts into client account to support payments out when such receipts had not occurred. He denied this was . .
AppliedBaxendale-Walker v The Law Society Admn 30-Mar-2006
The solicitor appealed being struck off. He had given a character reference in circumstances where he did not have justification for the assessment.
Held: ‘The appellant knew that Barclays Bank trusted him to provide a truthful reference. . .
CitedCharter Plc and Another v City Index Ltd and others ChD 12-Oct-2006
An employee of the claimant had fraudulently spent several million pounds of the claimant’s money on personal bets through the defendant company. The claimant said that the defendants knew the origin of the funds and were liable to repay them. . .
CitedJules Rimet Cup Ltd v The Football Association Ltd. ChD 18-Oct-2007
The parties disputed on preliminary issues the ownership of the rights in the trade mark ‘World Cup Willie’. The claimant had set out to register the mark, and the defendant gave notice of its intention to oppose. The claimant now alleged threat and . .
CitedIrwin Mitchell v Revenue and Customs Prosecutions Office and Allad CACD 30-Jul-2008
The solicitors had been paid funds on account of their fees in defending the client. By the time a freezing order was made under the 2002 Act in respect of his assets, the firm’s fees exceeded the amount held. The court was asked what was to happen . .
CitedJeremy D Stone Consultants Ltd and Another v National Westminster Bank Plc and Another ChD 11-Feb-2013
The claimants asserted an equitable claim against funds held by the defendant bank in the name of a company owned by another defendant who they said defrauded them through a Ponzi investment scheme.
Held: The claim failed. On the evidence, the . .
CitedWyatt v Vince SC 11-Mar-2015
Long delayed ancillary relief application proceeds
The parties had divorced some 22 years before, but no ancillary relief order had been made to satisfy the application outlined in the petition. The parties when together had lived in relative poverty, but H had subsequently become wealthy. W applied . .
CitedIvey v Genting Casinos (UK) Ltd (T/A Crockfords) SC 25-Oct-2017
The claimant gambler sought payment of his winnings. The casino said that he had operated a system called edge-sorting to achieve the winnings, and that this was a form of cheating so as to excuse their payment. The system exploited tiny variances . .

Lists of cited by and citing cases may be incomplete.

Legal Professions, Trusts, Torts – Other

Leading Case

Updated: 01 November 2021; Ref: scu.168070