Ratio Decidendi
A defendant who dishonestly assists a trustee to commit a breach of trust is personally liable to the beneficiaries as an accessory, even if the trustee was not dishonest. The critical requirement for accessory liability is the dishonesty of the assisting third party, not the dishonesty of the trustee. Dishonesty is assessed objectively: the question is whether the defendant's conduct was dishonest by the standards of ordinary honest people, judged against the defendant's actual knowledge of the circumstances. A person who deliberately closes their eyes to obvious facts or who assists with reckless indifference is dishonest.
Fakty
Royal Brunei Airlines appointed BLT (a company of which Tan was managing director and principal shareholder) as its general travel agent in Brunei. Under the agency agreement, moneys received by BLT as agent for the airline were to be held on trust and paid to the airline each month. Instead, BLT used the money in its own business with Tan's knowledge and authority, paying it into the company's current account and using it for working capital. When BLT became insolvent, the airline sued Tan personally for dishonest assistance in BLT's breach of trust. The trial judge and the Brunei Court of Appeal held Tan was not personally liable, on the ground that the breach of trust was not a dishonest or fraudulent act by the trustee (BLT). The airline appealed to the Privy Council.
Podsumowanie orzeczenia
The Privy Council allowed the appeal, holding Tan personally liable. Lord Nicholls of Birkenhead, delivering the advice of the Board, conducted a comprehensive review of the law of accessory liability in equity and rejected the view that the dishonesty of the trustee was a precondition to accessory liability. The relevant question was whether the accessory, Tan, had behaved dishonestly. Lord Nicholls articulated a new, objective standard of dishonesty: not acting as an honest person would in the circumstances. He rejected subjective tests based on the defendant's own moral standards or deliberate blindness to dishonesty. He held that fault must be assessed by reference to ordinary standards of honest commercial behaviour, taking into account all the circumstances known to the defendant. On the facts, Tan knew the money was held on trust, knew the company was applying it contrary to the terms of the trust, and had directed it to be done: he had acted dishonestly.
Kluczowe cytaty
"Acting dishonestly, or with a lack of probity, which is synonymous, means simply not acting as an honest person would in the circumstances. This is an objective standard."
— Lord Nicholls at 389
"Whether the defendant honestly believed that the transaction he assisted would not prove to be fraudulent would be relevant to an assessment of honesty but could not, in the court's view, provide a complete defence in all circumstances."
— Lord Nicholls at 391
"Whatever may be the position in some criminal or other contexts, in the context of the accessory liability principle acting in reckless disregard of others' rights or possible rights can be a tell-tale sign of dishonesty."
— Lord Nicholls at 391
Późniejsze zastosowanie
The leading Privy Council authority on dishonest assistance in English equity. Consistently applied in English courts as stating the law.
Refined in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, where Lord Hoffmann clarified that a defendant need not appreciate that their conduct is dishonest by normal standards — it suffices that they have knowledge of the facts making the conduct dishonest.
Applied in Abou-Rahmah v Abacha [2006] EWCA Civ 1492 and Starglade Properties Ltd v Nash [2010] EWCA Civ 1314, confirming that the objective dishonesty standard from Royal Brunei v Tan is the governing test, as further confirmed by Ivey v Genting Casinos [2017] UKSC 67.
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