Stranger Liability: A Question of Conscience Property or Standards?

Abstract

The purpose of the paper is twofold. Firstly to "capture" in one place and examine the varying concepts that both the academics2 and courts use to explain why equity imposes a liability on strangers for participatory breach; and secondly to examine the consequences of preferring one concept over another. It is never far from mind that the equitable liability imposed is one allocated to the emerging "law" of constructive trusts. The major submission which this paper makes is that if proprietary considerations prevail as the basis for treating strangers differently in respect of knowing receipt of property than for knowing assistance, then the currently accepted categories for liability as set out in Part Three of this paper should be redefined in the manner suggested by Charles Harpum as: 1. beneficial receipt; and 2. all others which include knowing assistance and inconsistent dealing with trust property after acquiring notice of the breach of trust or fiduciary duty. Liability in this category is generally accepted to rest on the concept of a want of probity or dishonesty. This paper is not an analysis of agency liability4 nor does it seek to restate the ground or reexamine old cases so well covered by others.5 My focus in this paper is on the general principles.