From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA>
To: ENRICHMENT@LISTS.MCGILL.CA
Date: 16/01/2021 16:20:01
Subject: Re: [RDG] Knowing Receipt

That seems right, although a full taxonomy of good faith purchase needs more detail in (at least) case (4), because sometimes the moment of acquisition of knowledge/notice is not contemporaneous with the moment of giving value and/or the moment of acquiring a legal interest. Eg: I acquire an equitable mortgage for value without notice of a prior equitable mortgage; having learned of that prior interest, I then acquire the interest of the holder of a legal mortgage; apparently, I get priority over the previously prior equitable mortgage. Anyone who wants to work out the details of this should have a cold towel handy. The cases indicate that the point turns partly on whether the later acquisition of the legal interest itself occurs via a breach of trust, which implies that the answers are different depending on whether one is dealing with security interests or beneficial interests. For one effort in the context of security interests, see English Private Law, 3d ed., ¶5.128. Where the prior equitable interest is a trust and the transfer/creation of the legal interest is a breach of trust, my reading is that to invoke the defence you must be without knowledge/notice until after the later of the times that you (a) gave value and (b) acquired a legal interest.

Lionel

 

 

From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA>
Date: Saturday, January 16, 2021 at 11:01
To: ENRICHMENT@LISTS.MCGILL.CA <ENRICHMENT@LISTS.MCGILL.CA>
Subject: Re: [RDG] Knowing Receipt

Just thinking loud since I was taught by some of you many years ago:

 

The taxonomy seems to be this:-

 

(1) If a recipient had knowledge priority to receipt: he is liable for KR.

 

(2) If a recipient had no knowledge prior to receipt, but subsequently acquired knowledge about the property being trust property (e.g. by being served legal proceedings): he is liable KR.

 

(3) If the recipient had no knowledge both before and after receipt, and then dissipated the trust property, only find out he had dissipated trust property afterwards: he is not liable for KR or for anything.

 

(4) If the recipient gave value in good faith without notice at the time of the receipt, subsequently finds out there the subject property is trust property: he is not liable for anything and in any scenario, and the "original" beneficiaries cannot come back to haunt him.

 

Any thoughts?

 


Felix Ng

Barrister-at-law
BCL(Oxon)

 

Tel. No.: 2866-8233
Mobile: 9020-5828
Fax. No.: 2866-3932

 

Gilt Chambers

The Chambers of Dr. Gerard McCoy Q.C., S.C.
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16 Harcourt Road
Admiralty
H.K.

 

 

 

On Sat, Jan 16, 2021 at 11:03 PM William Swadling <william.swadling@law.ox.ac.uk> wrote:

Rob Stevens was specifically concerned with the person who did give value in exchange in good faith and without notice of a legal right.  Surely in such a case they take free of the rights of the trust beneficiaries, even if they acquire notice later whilst still holding the right?

Bill

 

From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA> On Behalf Of Bob Klotz
Sent: 15 January 2021 19:03
To: ENRICHMENT@LISTS.MCGILL.CA
Subject: Re: [RDG] Knowing Receipt

 

Robert -- For an example of "someone who acquires trust property without giving value, who subsequently acquires knowledge of the trust" being held liable, see this Canadian case, Wilson, Re, 2019 ONSC 1278 (Ont. SCJ, Chiappetta J., Feb 25 2019), attached, perhaps not exactly what you are alluding to, but close.  A complicated set of facts, not the greatest judicial reasoning but the right result.  It helps to have four orphaned children as clients, sitting as an echelon in the front row of the courtroom, with their forlorn eyes fastened on the judge.  At some point I will write up this decision and send it in.  The case is also available on CanLII.org.

 

Regards,

 

   Bob K.

 

   ... Robert A. (Bob) Klotz

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Temporary address and contact information during the Covid shutdown:

 

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-----Original Message-----
From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA> On Behalf Of Robert Stevens
Sent: Friday, January 15, 2021 12:47 PM
To: ENRICHMENT@LISTS.MCGILL.CA
Subject: Re: [RDG] Knowing Receipt

 

Am not sure I follow. Do you mean

 

"where a third party recipient takes legal title to misdirected trust property, [*except* where they have given] value and without notice or unconscionable knowledge of the breach, but then acquires [knowledge] later while he still has legal title"

 

is potentially liable?

 

I wouldn't have thought a bona fide purchaser without notice, who only subsequently acquires knowledge of the trust should be liable. Is there authority saying that they are liable?

 

The recipient party who is not "equity's darling" hasn't acquired a "clear" legal title that is not potentially subject subsequently to being imposed with a trust.

 

I can see that, say, someone who acquires trust property without giving value, who subsequently acquires knowledge of the trust, is potentially liable. The knowledge doesn't have to be contemporaneous with the receipt. But I'll forgive Fancourt J for not mentioning that.

 

R

 

-----Original Message-----

From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA> On Behalf Of Mitchell, Charles

Sent: 15 January 2021 16:51

To: ENRICHMENT@LISTS.MCGILL.CA

Subject: Re: [RDG] Knowing Receipt

 

There's a problem with Fancourt J's analysis, though, namely that he hasn't thought about the situation where a third party recipient takes legal title to misdirected trust property for value and without notice or unconscionable knowledge of the breach, but then acquires unconscionable knowledge later on while he still has legal title. In such cases personal liability for KR will be incurred at the later date notwithstanding the fact that the recipient has had clear legal title in the period between receipt and acquisition of knowledge - and this is inconsistent with Fancourt J's assertion that there can be no KR liability unless the beneficiaries have always had an equitable interest in the relevant property. See e.g. [46]: 'liability in knowing receipt should not arise where the recipient is, as a consequence of the transfer or otherwise, entitled to the assets. If the primary duty of the knowing recipient is to restore the trust property, with a secondary obligation to account for any profits received and losses suffered by the trust, it is not obvious how such duties can exist if the recipient is entitled to retain the assets for himself.' C

 

 

 

 

 

 

 

 

________________________________________

From: Enrichment - Restitution & Unjust Enrichment Legal Issues <ENRICHMENT@LISTS.MCGILL.CA> on behalf of S.E. Worthington <sew1003@CAM.AC.UK>

Sent: 15 January 2021 16:04

To: ENRICHMENT@LISTS.MCGILL.CA

Subject: Re: [RDG] Knowing Receipt

 

Hear, hear!

Sarah

 

From: Andrew Tettenborn <a.m.tettenborn@swansea.ac.uk>

Sent: 15 January 2021 15:55

To: Robert Stevens <robert.stevens@law.ox.ac.uk>; ENRICHMENT@LISTS.MCGILL.CA

Cc: obligations@uwo.ca

Subject: Re: Knowing Receipt

 

 

Correct. A

On 15/01/2021 15:46, Robert Stevens wrote:

Good (ie I agree with it) decision on knowing receipt with some conflicts thrown in, from Fancourt J.

 

https://www.bailii.org/ew/cases/EWHC/Ch/2021/60.html<https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.bailii.org%2Few%2Fcases%2FEWHC%2FCh%2F2021%2F60.html&data=04%7C01%7C%7C14473e9bac2745fdba5908d8b970f5fd%7C1faf88fea9984c5b93c9210a11d9a5c2%7C0%7C0%7C637463242105327344%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=9ks1hCUHYRmUjZb7fjIP2aPBUYw%2Fgf5JzRUUtd%2Bn%2BAA%3D&reserved=0>

 

[110]

 

"The knowing recipient's liability depends on his knowledge that the property he receives is trust property and is to be dealt with in that way. His receipt is not wrongful in the sense that he has acted dishonestly or culpably (unless he has also dishonestly assisted in the breach of trust), but his liability to deal with the property as if he were a trustee arises at the moment of receipt because of his knowledge that the property is trust property. If the transferee then deals with the property otherwise than as a trustee should (whether by failing to restore it to the trust or by dealing with it as his own) he is at fault and will be liable for the consequences. In those circumstances, a personal claim against the transferee can properly be said to be fault-based, but the reason for liability is that the transferee has knowingly dealt with (or retained) property that belongs to the trust inconsistently with his duty. If the property is not trust property, there cannot be liability of that kind."

 

R

--

br>

--

 

 

 

 

 

 

Andrew Tettenborn

Professor of Commercial Law, Swansea University

 

Institute for International Shipping and Trade Law School of Law, University of Swansea Richard Price Building Singleton Park SWANSEA SA2 8PP Phone 01792-602724 / (int) +44-1792-602724 Cellphone 07472-708527 / (int) +44-7472-708527 Fax 01792-295855 / (int) +44-1792-295855 Andrew Tettenborn Athro yn y Gyfraith Fasnachol, Prifysgol Abertawe

 

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