Equitable Remedies Against Third Parties

How is liability determined?

Whether someone is an accessory, recipient or “meddler”

Williams v Central Bank of Nigeria (2014)

Only intermeddlers are constructive trustees

Brinks Ltd v Abu-Saleh (No. 3) (1995)

Assistance is an action which actively helps the breach (no liability here as she didn’t know)

Barlow Clowes International v Eurotrust International (2006) and Group Seven v Notable Services LLP (2019)

The defendant must only know they are doing something illegal

Royal Brunei Airlines v Tan (1995)

Lord Nicholls said that dishonesty means “conscious impropriety”, there must be a level of intuition involved

Is the standard of honesty objective or subjective?

Objective, Ivey test for dishonesty also applies for accessory liability civil cases

Bank of Credit and Commerce International and Anor v Akindele (2000)

Knowledge must be unconscionable for liability as a recipient, unclear if “unconscionable” means constructive knowledge or constructive notice

Armstrong v Winnington (2013)

More likely that it involves constructive knowledge

Intermeddling

If someone acts and causes loss like a trustee, they will be held liable like a trustee (Mara v Browne (1896)), “trustee de son tort” (Lyell v Kennedy (1889))

Equitable proprietary claims against bona fide purchaser

The property is taken free from equitable interests, no proprietary claim possible

Equitable proprietary claims against wrongdoers

• Proprietary claim possible here

• Works as if they were a trustee

Clean substitution

Easily done, exchanging one stolen property for whatever was improperly gained

Mixed substitution

Ownership will be proportionate to money used between innocent purchaser and trust

Withdrawals from a mixed bank account

• Clayton’s case applies (“first in, first out”)

• That was a banking case, support for the view that it should not be used if it produces an inequitable result

Lindsay Jim Russell-Cooke Trust Co v Prentis (2002)

Clayton’s case ratio should be the “exception” rather than the rule

Defence: inequitable result

Never an option to trustees as fiduciaries

Re Diplock (1948)

Tracing is also applied to innocent volunteer mixed money, untraceable in this case