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Dishonest Assistance - Bank Manager/bank

The trust has claims against the bank manager and bank for dishonest assistance in allowing a withdrawal from the trust account even though the manager was suspicious. To prove dishonest assistance, it must be shown that: (1) a fiduciary relationship existed between the trustee and beneficiaries; (2) the trustee breached trust by withdrawing funds; (3) the bank manager and bank assisted the breach; and (4) their assistance was dishonest as they had clear suspicions about the transaction. The trust also has a claim against X as a knowing recipient, if X received trust funds knowing they were obtained through a breach of trust.

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51 views2 pages

Dishonest Assistance - Bank Manager/bank

The trust has claims against the bank manager and bank for dishonest assistance in allowing a withdrawal from the trust account even though the manager was suspicious. To prove dishonest assistance, it must be shown that: (1) a fiduciary relationship existed between the trustee and beneficiaries; (2) the trustee breached trust by withdrawing funds; (3) the bank manager and bank assisted the breach; and (4) their assistance was dishonest as they had clear suspicions about the transaction. The trust also has a claim against X as a knowing recipient, if X received trust funds knowing they were obtained through a breach of trust.

Uploaded by

Phenyl Ethene
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Dishonest assistance – Bank manager/bank

The trust may have a personal claim for dishonest assistance against X the bank manager
who (allowed T to withdraw cash from his bank account) even when he was suspicious of
the transaction, and against the bank itself. In order to make its claim for dishonest
assistance, the following four elements has to be established (Ho Ko Shing v Ho Chee):

First, there is a clearly fiduciary relationship between the the beneficiaries and the primary
wrongdoer, T the trustee.

Second, by withdrawing the trust fund and putting it in his personal account, T has clearly
committed a breach of trust.

Third, the breach has been procured, induced or assisted the bank manager and the bank.
Since….(they have facilitated the transfer of fund from the trust account to T’s personal
account) they have clearly assisted in the breach of trust.

Fourth, the assistance by the bank manager and the bank was dishonest. Dishonestly would
be established if the assistor’s knowledge of the transaction is such as to render his
participation contrary to normally acceptable standards of honest conduct. (Barlow Clowes)
The test for dishonesty is an objective test but when considering whether whether an
ordinary honest man would consider what the defendant did was dishonest the court may
take note of the circumstances in which the defendant acted as he did and his personal
attributes. Bs need not prove that the bank manager had actual knowledge of the breach of
trust, ‘clear suspicions’ that the transaction was a breach of trust would be sufficient.
(Barlow Clowes). Further, X’s knowledge about the suspicious transfer could also be
imputed to the bank, as X was acting as the bank’s agent. The render X’s and the bank’s
actions dishonest.

X and the bank are therefore personally liable to compensate the full loss caused by T’s
breach.

Knowing Recipient
X had also received trust money from T, this may make him liable as a knowing recipient if
he has knowledge about the breach of trust. In order to be liable for knowing receipt, the
following four elements has to be established (Ho Ko Shing v Ho Chee):

First, the $.....used by T to pay X are assets clearly held under a trust.
Second, the transfer of those trust money was in breach of trust.
Third, X has received that money beneficially.
Fourth, it has to be established that X’s knowledge of the particulars of the transfer is such
that it would make it unconscionable for X to retain those assets, ie. that X knows about the
breach of trust. On the facts, ………..X actually knew that those money comes from the trust
fund…..X’s knowledge that the money came from the trust fund would made it
unconscionable for him to retain the property. (BCCI v Akindele, adopted in HK in Akai
Holdings)
Since Z’s conscience has been affected by the knowledge of the breach of trust, he will hold
the trust money (or its substitutions) on constructive trust. A proprietary action may be
taken to recover the sum of $..........

[If Z has disposed of the trust property so that the property or its substitutions cannot be
traced, then a personal action may be taken against him and Z may be made to pay
equitable compensation to the trust.]

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