UK Law and Practice Contributed by: Simon Bushell and Gareth Keillor, Seladore Legal
The Three Most Relevant Causes of Action Dishonest assistance A claim in dishonest assistance will exist where: • a breach of trust and/or fiduciary duty has occurred, causing loss (see 1.1 General Characteristics of Fraud Claims ); • the third-party defendant assisted in that breach of trust or breach of fiduciary duty; and • the third-party defendant acted dishonestly in doing so. In these circumstances, the third party will be deemed to have acted dishonestly where they have not acted in the way an honest person would have done in the circumstances. This is largely an objective question, which asks wheth - er the third party’s actions fell below the stand - ard expected of ordinary honest people, regard - less of whether or not they knew it fell below that standard. Importantly, it is not necessary for the wronged party to show that the trustee/fiduciary was also dishonest in breaching their duty. Where a claim of dishonest assistance is suc - cessful, the third party is liable to the wronged party as though they were a trustee or a fiduci - ary. This means they can be ordered to account for any profits, as well as be required to pay damages. Knowing receipt Unlike dishonest assistance, a claim for know - ing receipt focuses on a third party who actually receives misappropriated property or proceeds, knowing that they were provided in breach of trust or breach of a fiduciary duty. The third par - ty’s state of mind must make it unconscionable for them to retain the benefit of the property or proceeds (even if they have not acted dishon - estly).
As with dishonest assistance, the third party is liable to the wronged party as though they were a trustee or a fiduciary, which in a case of know - ing receipt may also include accounting for the value of misappropriated property. Conspiracy A wronged party may also have a claim in the tort of conspiracy where a number of parties conspired to injure them. This is a helpful tool to a potential claimant as it allows potential defend - ants to be grouped together (where it can be proved that they took concerted action), even where the claimant may not have a direct cause of action against all of them. There are two forms of conspiracy, as follows. • The first is “lawful means conspiracy” , whereby the claimant must show that, not - withstanding the fact that lawful means were used, the defendants’ predominant intention was to injure them. This form of conspiracy is rarely seen in practice. • The second, more common, form is “unlaw- ful means conspiracy” . The fact that the defendants may have utilised unlawful means lowers the evidential burden for the claimant. In particular, they need only show that the defendants intended to injure them, even if that was not the predominant intention. For this second form of conspiracy, “unlawful means” exist where the wronged party has an actionable claim against one or more of the defendants, or where criminal conduct is involved. To claim damages, the claimant is required to show that it has suffered loss as a result of the unlawful act. Misappropriation In addition, as noted elsewhere, in certain cir - cumstances it may be possible to argue that an asset in the hands of a third party is held on con -
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