Soton Equity and Trusts - alastairhudson.com

(ii)
Cases looking to the characteristics of the defendant:
Royal Brunei Airlines v Tan [1995] 2 A.C. 378, at 391B, per
“...when called upon to decide whether a person was acting honestly, a court will
look at all the circumstances known to the third party at the time. The court will also
have regard to personal attributes of the third party such as his experience and
intelligence, and the reason why he acted as he did.”
**Starglade v Nash [2010] EWCA Civ 1314, Morritt C:
‘[25] There is a single standard of honesty objectively determined by the court. That
standard is applied to specific conduct of a specific individual possessing the
knowledge and qualities he actually enjoyed. …
[28] There is no suggestion in any of the speeches in Twinsectra Ltd v Yardley that
the standard of dishonesty is flexible or determined by any one other than by the
court on an objective basis having regard to the ingredients of the combined test
explained by Lord Hutton. …
[29] The relevant standard, described variously in the statements I have quoted, is
the ordinary standard of honest behaviour. Just as the subjective understanding of
the person concerned as to whether his conduct is dishonest is irrelevant so also is
it irrelevant that there may be a body of opinion which regards the ordinary standard
of honest behaviour as being set too high. Ultimately, in civil proceedings, it is for
the court to determine what that standard is and to apply it to the facts of the case.’
Fiona Trust & Holding Corporation v Privalov [2010] EWHC 3199 (Comm), at [1437], per
Andrew Smith J.
f).
Dishonesty and investment risk
**Royal Brunei Airlines v. Tan [1995] 2 AC 378, 387, per Lord Nicholls
“All investment involves risk. Imprudence is not dishonesty, although imprudence
may be carried recklessly to lengths which calls into question the honesty of the
person making the decision. This is especially so if the transaction serves another
purpose in which that person has an interest of his own.”
g).
Summary of the principles
Aerostar Maintenance v International Ltd v Wilson [2010] EWHC 2032 (Ch) (defendant
acknowledged in emails he was “doing the dirty” on someone else), at [184], Morgan J:
‘The test as to dishonesty, distilled from the above authorities, is as follows.
Dishonesty is synonymous with a lack of probity. It means not acting as an honest
person would in the circumstances. The standard is an objective one. The
application of the standard requires one to put oneself in the shoes of the defendant
to the extent that his conduct is to be assessed in the light of what he knew at the
relevant time, as distinct from what a reasonable person would have known or
appreciated. For the most part dishonesty is to be equated with conscious
impropriety. But a person is not free to set his own standard of honesty. This is what
is meant by saying that the standard is objective. If by ordinary objective standards,
the defendant's mental state would be judged to be dishonest, it is irrelevant that the
defendant has adopted a different standard or can see nothing wrong in his
behaviour.’
3. Unconscionable Receipt
Reading: Hudson, section 20.3
a).
The basis of liability for “knowing receipt”
Re Diplock [1948] Ch 465, 478-479
*Re Montagu’s Settlements [1987] Ch 264
*Agip v. Jackson [1990] Ch 265, 286, per Millett J.; CA [1991] Ch 547
*El Ajou v. Dollar Land Holdings [1994] 2 All ER 685
Meridian Global Funds v. Securities Commission [1995] 3 All ER 918
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