ABSTRACT
A person who is neither a trustee nor a beneficiary will be personally liable to account to the trust for any loss suffered in a situation in which she dishonestly assists in a breach of trust, without receiving any proprietary right in that trust property herself. 1
The test for ‘dishonesty’ in this context extends beyond straightforward deceit and fraud into reckless risk-taking with trust property and other unconscionable behaviour demonstrating a ‘lack of probity’. 2 The test for dishonesty is an objective test which requires that the court consider what an honest person would have done in the circumstances and then asks whether or not that is how the defendant acted. 3 The liability is predicated on an equitable wrong and imposes liability to account to the beneficiaries as though a constructive trustee. 4 Recent authority has suggested that the test for dishonesty is not purely objective but rather also requires that the defendant realised that objectively honest people would have considered her behaviour to have been dishonest. 5 This development has been doubted and ought not be followed in future.
