Accessory liability

Question 1

What is an accessory liability?

Answer 1

A personal claim against a person who dishonestly assisted or procured breach the breach of trust - described as ‘dishonest assistance’
* dishonest assistance is a fault-based claim so D is only liable if their assistance was dishonest
- are not limited to misapplication of trust property but can apply to breaches of fiduciary duties by a trustee (e.g., person who dishonestly bribes a trustee to invest in particular investment is liable as a dishonest assistant)

Question 2

What are the requirements to find a person liable for dishonest assistance?

Answer 2

• there was a trust in existence at material time
• trustee committed breach of that trust
• D assisted trustee to commit that breach of trust
• D’s assistance was dishonest

= same principles apply to breaches of fiduciary duty

Question 3

What does assistance mean?

Answer 3

D must assist trustee or fiduciary in connection with breach - sufficient if assistance is to plan, cover up or commit breach
* assistance must be more than minimal and must make commission (or concealment) of breach easier that it would otherwise have been

= sufficient if D procures or instigates breach of duty

cannot avoid liability by D proving trustee or fiduciary would have committed breach even if D has not assistance - RULE is = if D assists, they are liable

Question 4

What is dishonesty?

Answer 4

Not only must D has assisted to commit breach, they are only liable if they act dishonestly
* acting dishonestly means not acting as an honest person would in the circumstances
- ascertain actual state of individual’s knowledge or belief as to the facts
- and whether conduct was honest to the standard of ordinary decent people

need not to know whether trust had arisen only that a breach was caused

Question 5

What remedies are available under this liability?

Answer 5

• D is liable for loss occasioned by breach which they assisted
• C is not required to show direct link between assistance and loss - what needs to be shown is that D assisted breach and but for breach, loss would not have occured
• D is also potentially liable for profits they acquire by reason of their participation in breach but C must prove that participation was the ‘real’ or ‘effective’ cause of profits - so simple but for test is not sufficient
• C does not have automatic right to D’s profits - courts has discretion to grant or withhold remedy (where it would be disproportionate in relation to form and extent of D’s assistance)