Dishonest assistance

A third party who dishonestly assists a trustee or fiduciary in a breach of trust or fiduciary duty is personally liable to account to the beneficiaries as if they were a constructive trustee. The assistance must be dishonest by the objective standards of ordinary decent people, taking into account what the defendant actually knew or believed about the facts. This principle protects trust property by extending liability beyond the trustee to commercial parties who facilitate breaches, ensuring that those who knowingly participate in breaches cannot shelter behind the primary wrongdoer.

Royal Brunei Airlines v Tan [1995] 2 AC 378: Established that dishonest assistance requires dishonesty by objective standards, rejecting the need to prove the trustee acted dishonestly. Critical for making the doctrine commercially workable by focusing on the assistant's conduct alone.

Twinsectra v Yardley [2002] 2 AC 164: Introduced a controversial combined test requiring both objective dishonesty and subjective awareness that conduct was dishonest by those standards. Created significant uncertainty by adding a subjective element to the test.

Barlow Clowes v Eurotrust [2006] 1 WLR 1476: Clarified that conscious impropriety suffices - the defendant need not appreciate their conduct is dishonest if they know they are transgressing ordinary standards. Partially retreated from Twinsectra's subjective requirement.

Ivey v Genting Casinos [2017] UKSC 67: Supreme Court decisively rejected Twinsectra's combined test, holding dishonesty is purely objective based on the defendant's actual knowledge or belief about the facts. Resolved decades of confusion by eliminating any requirement for subjective awareness of wrongdoing.

Courts apply a three-stage analysis: (1) Was there a trust or fiduciary relationship? (2) Did the trustee/fiduciary breach their duty? (3) Did the defendant assist that breach dishonestly? For dishonesty post-Ivey, courts first establish what the defendant actually knew or believed about the relevant facts, then ask whether ordinary decent people would consider the conduct dishonest given that knowledge. Common scenarios include banks processing suspicious transactions, lawyers facilitating dubious schemes, and directors assisting co-directors in breaching duties. The assistance need not be essential to the breach but must be more than minimal. Causation is irrelevant - the breach need not result from the assistance.

Students frequently apply the wrong dishonesty test, particularly citing Twinsectra's combined test without acknowledging Ivey's overruling of the subjective element. Another error is requiring the trustee to have acted dishonestly, missing Royal Brunei's key point that only the assistant's dishonesty matters. Many wrongly impose a causation requirement, stating the assistance must have caused the breach when mere facilitation suffices. Watch for scenarios with multiple defendants - each assistant's liability is assessed independently based on their own knowledge and conduct.