Equity and Trusts: Barnes V Addy Second Limb
This paper examines the development and scope of accessory liability under the second limb of Barnes v Addy as it stands in both England and Australia. As to the law in England, the focus will be on the rearticulation of the principle of accessory liability under the second limb as stated in Royal Brunei Airlines Sdn Bhd v Tan. In particular, it will consider the extent to which the decision has reconciled inconsistencies in earlier authority and remedied those issues propounded to be inherent in the traditional formulation of the principle. At this stage, this traditional principle remains good law in Australia. However, as suggested in Farah Constructions Pty Ltd v Say-Dee Pty Ltd, there is potential for the …show more content…
The development of the second limb of Barnes v Addy in England-
While in Australia the courts are returning to an orthodox approach towards accessory liability, in England, the courts are grappling with a reformulation of the principles under the second limb of Barnes v Addy following the decision in Royal Brunei. In this case, the Privy Council refocussed the relevant inquiry in cases concerning liability under the second limb of Barnes v Addy away from the third party’s knowledge of the trustee’s dishonesty, to the dishonesty of the accessory themselves. Consequently, the dishonesty (or lack thereof) of the trustee or fiduciary is irrelevant as it is the dishonesty on the part of the accessory that attracts liability.
There is nothing new about the application of a dishonesty-based in inquiry into the liability of accessories to a breach of fiduciary duty, with Lord Nicholls suggesting that before the inquiry “donned its Barnes v Addy strait-jacket” judges hadn’t regarded themselves as confined to inquiries into the levels of knowledge of the accessory. It may even be said that the dishonesty-based inquiry had retained its place in