Liability of strangers to the trust-remedies against third parties- FS Flashcards
(8 cards)
What are the two types of equitable liability for third parties (strangers) to a trust?
- Recipient Liability – Where a third party has received trust property.
- Accessory Liability – Where a third party has assisted in a breach of trust or fiduciary duty without receiving the property.
what is Recipient Liability
Recipient liability arises when a third party knowingly receives trust property that has been misapplied or transferred in breach of trust or fiduciary duty
what is Accessory Liability
Accessory liability applies to a third party who assists in the breach of trust or fiduciary duty by a trustee, even if they did not receive trust property.
What types of remedies are available against third parties in breach of trust situations?
- Personal remedy: A monetary claim against the third party.
- Proprietary remedy: A claim to recover specific trust property or its traceable proceeds.
- Both may be available if the third party is solvent and holds the property.
Under what circumstances are claims more likely to be brought against third parties instead of trustees?
- Trustee is bankrupt
- Trustee no longer holds trust property
- Third party has greater assets or insurance
- Trustee is untraceable
Do third parties owe the same fiduciary or trustee duties as actual trustees?
No, third parties only have to account for the trust property they received or were involved in. They are not subject to the full range of fiduciary duties.
What are the conditions under which a proprietary claim can be made against a third party?
- The third party is in possession of the trust property.
- The third party need not be financially solvent for a proprietary claim
Who can bring equitable claims for breach of fiduciary duty beyond traditional trusts?
- Beneficiaries of a trust
- Companies in a fiduciary relationship
- Clients (e.g., of solicitors)
- Any party to a fiduciary relationship
