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HOUSE OF LORDS SESSION 2006–07 [2007] UKHL 34 on appeal from: [2005] EWCA Civ 389 OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Sempra Metals Limited (formerly Metallgesellschaft Limited) (Respondents) v. Her Majesty’s Commissioners of Inland Revenue and another (Appellants) Appellate Committee Lord Hope of Craighead Lord Nicholls of Birkenhead Lord Scott of Foscote Lord Walker of Gestingthorpe Lord Mance Counsel Appellants: Respondents: Ian Glick QC Laurence Rabinowitz QC Rupert Baldry Francis Fitzpatrick Gerry Facenna Steven Elliott (Instructed by Solicitor’s Office, HM Revenue and (Instructed by Slaughter & May) Customs ) Hearing dates: 1 and 2 November 2006 Further heard: 16 May 2007 ON WEDNESDAY 18 JULY 2007 HOUSE OF LORDS OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Sempra Metals Limited (formerly Metallgesellschaft Limited) (Respondents) v. Her Majesty’s Commissioners of Inland Revenue and another (Appellants) [2007] UKHL 34 LORD HOPE OF CRAIGHEAD My Lords, 1. This is a case about the award of interest. Questions about interest usually arise where the claim is presented as ancillary to a claim for a principal sum for which the court is asked to give judgment for the recovery of a debt or as damages. Less usually they can arise where interest is sought on a principal sum which has been paid before judgment. But in this case interest is the measure of the principal sum itself. 2. The question is how that sum should be measured. It is agreed that the calculation of interest should be the method of measurement for the sum that is to be awarded. -
Beyond Unconscionability: the Case for Using "Knowing Assent" As the Basis for Analyzing Unbargained-For Terms in Standard Form Contracts
Beyond Unconscionability: The Case for Using "Knowing Assent" as the Basis for Analyzing Unbargained-for Terms in Standard Form Contracts Edith R. Warkentinet I. INTRODUCTION People who sign standard form contracts' rarely read them.2 Coun- sel for one party (or one industry) generally prepare standard form con- tracts for repetitive use in consecutive transactions.3 The party who has t Professor of Law, Western State University College of Law, Fullerton, California. The author thanks Western State for its generous research support, Western State colleague Professor Phil Merkel for his willingness to read this on two different occasions and his terrifically helpful com- ments, Whittier Law School Professor Patricia Leary for her insightful comments, and Professor Andrea Funk for help with early drafts. 1. Friedrich Kessler, in a pioneering work on contracts of adhesion, described the origins of standard form contracts: "The development of large scale enterprise with its mass production and mass distribution made a new type of contract inevitable-the standardized mass contract. A stan- dardized contract, once its contents have been formulated by a business firm, is used in every bar- gain dealing with the same product or service .... " Friedrich Kessler, Contracts of Adhesion- Some Thoughts About Freedom of Contract, 43 COLUM. L. REV. 628, 631-32 (1943). 2. Professor Woodward offers an excellent explanation: Real assent to any given term in a form contract, including a merger clause, depends on how "rational" it is for the non-drafter (consumer and non-consumer alike) to attempt to understand what is in the form. This, in turn, is primarily a function of two observable facts: (1) the complexity and obscurity of the term in question and (2) the size of the un- derlying transaction. -
Tracing Is a Process Not a Remedy
Tracing - Scenario 1(b): Trustee Mixes Trust Money - Tracing is a process not a remedy. With His Own In His Account, subsequently - It allows us to identify a new asset as the purchases property with some money in the substitute for the old (Foskett v McKeown). account, then exhausts remaining money. - Tracing follows the value of the beneficiaries - SOLUTION: Re Oatway: We get an property, not the property itself (following). exception to the rule in Hallett’s estate: if the wrongdoer purchased assets which still exist, Distinguishing Tracing; Following & Claiming then it is presumed that he did so with the - Following is the process of following the same stolen money and the beneficiaries are asset as it moves from hand to hand. entitled to the assets. - Claiming refers to the process of recovering property, or the substitute for that property (This - Scenario 1(c): Trustee Mixes Money With His refers to the Barnes v Addy; knowing receipt, Own In His Account, and makes payment in knowing assistance doctrine - MUST and out of that account. CONSIDER THIS AFTER TRACING). - SOLUTION: Lofts v McDonald: Lowest Intermediate Balance Rule: trust cannot claim more than the lowest intermediate balance Tracing at Common Law - credited to the wrongdoer’s bank account Tracing is not unique to equity, however at CL it - If it went up from the lowest point, that is requires that the property you are tracing is not the trust’s money. identifiable, giving rise to problems with banks. - - Although you are deprived of a proprietary Equity has developed rules for identifying remedy, not personal remedies. -
Asset Tracing in the British Virgin Islands
Article Asset Tracing in the British Virgin Islands In this article, we will discuss some of the tools available to a party in the British Virgin Islands to seek to recover property, or proceeds of property, which have been misappropriated. It is not surprising that in some cases, the identity of the wrongdoer or the whereabouts of the misappropriated property is unknown. Against that background, it is worth noting that while a BVI, and whether there has been any past judgment which company incorporated in the BVI is required to maintain may shed light on assets held by the company. In addition, certain records at the office of its registered agent (such as upon application the BVI Land Registry can provide certain its memorandum and articles of association, register of details regarding the owner of BVI land or real estate. directors, register of members, minutes of members’ and However, this requires the applicant to first be able to directors’ meetings and copies of resolutions), there is no identify the location or owner of the land. A party may also right for the public to inspect such records. Indeed, obtain certain information regarding vessels registered under confidentiality of corporate documents and information is a BVI flag from the BVI Ship Registry. one of the key attractions of incorporating a company in the BVI. BVI companies are not generally required to maintain or What is “tracing”? file statutory accounts, or meet any particular set of international accounting standards. Under section 98 of the Tracing consists of a series of rules developed by equity to BVI Business Companies Act 2004, all that a company is deal with situations where assets have been required to maintain are records “sufficient to show and misappropriated and the wrongdoer is not in a position to explain the company’s transactions” and which “will, at any compensate, or money compensation is not adequate. -
Asset Tracing and Recovery Reassessed
Asset tracing and recovery reassessed Nicole Sandells QC Miles Harris 4 New Square Professional Liability & Regulatory Conference 4 February 2020 This material was provided for the 4 New Square Professional Liability & Regulatory Conference on 4 February 2020. It was not intended for use and must not be relied upon in relation to any particular matter and does not constitute legal advice. It has now been provided without responsibility by its authors. 4 NEW SQUARE T: +44 (0) 207 822 2000 LINCOLN’S INN F: +44 (0) 207 822 2001 LONDON WC2A 3RJ DX: LDE 1041 WWW.4NEWSQUARE.COM E: [email protected] Nicole Sandells QC Call: 1994 Silk: 2018 Nicole's practice in recent years has focused heavily on financial and property law, civil fraud, restitution, trusts, probate and equitable remedies alongside Chambers' mainstream professional indemnity work. She has significant experience of unjust enrichment, subrogation, breach of trust and fiduciary duty claims. She is never happier than when finding novel answers to tricky problems. Nicole is described as ‘a mega-brain, with encyclopaedic legal knowledge and the ability to cut through complex legal issues with ease’ and 'a master tactician who is exceptionally bright and has a fantastic ability to condense significant evidential information' (Legal 500). Apparently, she is also “exceptionally bright and a ferocious advocate. She gives tactical advice and is a pleasure to work with. Clients speak extremely highly of her.” “If you want someone to think outside of the box and really come up with an innovative position, then she’s an excellent choice.” – Chambers & Partners, 2020 Professional Negligence. -
Thomas, Et Al. V. Othman, Et
IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO RICHARD THOMAS, : APPEAL NO. C-160827 TRIAL NO. A-1601001 and : GAIL THOMAS, : O P I N I O N. Plaintiffs-Appellants, : vs. : AKRAM OTHMAN, : and : MARK WOEHLER, : Defendants-Appellees. : Civil Appeal From: Hamilton County Court of Common Pleas Judgment Appealed from is: Affirmed Date of Judgment Entry on Appeal: November 8, 2017 William Flax, for Plaintiffs-Appellants, James R. Hartke, for Defendant-Appellee Akram Othman, George M. Parker, for Defendant-Appellee Mark Woehler. OHIO FIRST DISTRICT COURT OF APPEALS CUNNINGHAM, Presiding Judge. {¶1} Plaintiffs-appellants Richard and Gail Thomas appeal from the judgment of the Hamilton County Court of Common Pleas granting the motion of defendants-appellees Akram Othman and Mark Woehler to dismiss the amended complaint for failure to state a claim upon which relief could be granted, pursuant to Civ.R. 12(B)(6). For the reasons that follow, we affirm. I. Background Facts and Procedure {¶2} This appeal arises from the Thomases’ efforts to recover from Othman and Woehler a portion of the retirement funds the Thomases lost after investing them in a Ponzi scheme operated by Glen Galemmo. According to the allegations in the amended complaint, Galemmo was convicted of securities fraud in the case United States v. Galemmo, Case No. 1:13-CR-00141, for operating a “complex,” multi-year “Ponzi scheme.” The Thomases, Othman, and Woehler were all investors in the scheme, and are all members of the plaintiff class of “Net Losers” investors— investors who lost more than their principal investment—in several civil class-action lawsuits which were referenced in the Thomases’ complaint. -
Unconscionability As a Sword: the Case for an Affirmative Cause of Action
Unconscionability as a Sword: The Case for an Affirmative Cause of Action Brady Williams* Consumers are drowning in a sea of one-sided fine print. To combat contractual overreach, consumers need an arsenal of effective remedies. To that end, the doctrine of unconscionability provides a crucial defense against the inequities of rigid contract enforcement. However, the prevailing view that unconscionability operates merely as a “shield” and not a “sword” leaves countless victims of oppressive contracts unable to assert the doctrine as an affirmative claim. This crippling interpretation betrays unconscionability’s equitable roots and absolves merchants who have already obtained their ill-gotten gains. But this need not be so. Using California consumer credit law as a backdrop, this Note argues that the doctrine of unconscionability must be recrafted into an offensive sword that provides affirmative relief to victims of unconscionable contracts. While some consumers may already assert unconscionability under California’s Consumers Legal Remedies Act, courts have narrowly construed the Act to exempt many forms of consumer credit. As a result, thousands of debtors have remained powerless to challenge their credit terms as unconscionable unless first sued by a creditor. However, this Note explains how a recent landmark ruling by the California Supreme Court has confirmed a novel legal theory that broadly empowers consumers—including debtors—to assert unconscionability under the State’s Unfair Competition Law. Finally, this Note argues that unconscionability’s historical roots in courts of equity—as well as its treatment by the DOI: https://doi.org/10.15779/Z382B8VC3W Copyright © 2019 California Law Review, Inc. California Law Review, Inc. -
Claims Against Third-Party Recipients of Trust Property
Cambridge Law Journal, 76(2), July 2017, pp. 399–429 © Cambridge Law Journal and Contributors 2017. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike licence (http:// creativecommons.org/licenses/by-nc-sa/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the same Creative Commons licence is included and the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use. doi:10.1017/S0008197317000423 CLAIMS AGAINST THIRD-PARTY RECIPIENTS OF TRUST PROPERTY DAVID SALMONS* ABSTRACT. This article argues that claims to recover trust property from third parties arise in response to a trustee’s duty to preserve identifiable property, and that unjust enrichment is incompatible with such claims. First, unjust enrichment can only assist with the recovery of abstract wealth and so it does not assist in the recovery of specific property. Second, it is difficult to identify a convincing justification for introducing unjust enrich- ment. Third, it will work to the detriment of innocent recipients. The article goes on to show how Re Diplock supports this analysis, by demonstrating that no duty of preservation had been breached and that a proprietary claim should not have been available in that case. The simple conclusion is that claims to recover specific property and claims for unjust enrichment should be seen as mutually exclusive. KEYWORDS: trusts, third parties, proprietary claims, knowing receipt, res- titution, unjust enrichment, Re Diplock. I. INTRODUCTION According to orthodox trust principles, where property is transferred in breach of trust, a beneficiary can either bring a proprietary claim to recover the property or a personal claim against a knowing recipient of the trust property (hereinafter, the combination of these two claims will be referred to as the “equitable regime”). -
Landmark Cases in Tracing – a Pitch
Landmark Cases in Tracing – A Pitch Landmark Cases in Tracing A pitch for an edited collection of in-depth case analyses Dr Derek Whayman, Newcastle University. [email protected] Prof Katy Barnett, University of Melbourne. [email protected] Theme and Justification Tracing is a process and claim used for recovering misappropriated property, mainly that originally held on trust or by a corporation. It allows claimants to recover not only the original misappropriated property, but also its substitute – what the property was exchanged for in a subsequent transaction. Since this claim is a right of property, it brings the claimant the advantage of priority over other creditors in insolvency and access to any increase in value, either in the property itself or from the substitute. If the property is passed to or from another person or, say, a shell company, the right to claim follows that property and is not left on the person. From this, it is no wonder it is popular with claimants. However, tracing is still under-researched and under-theorised. There is little agreement as to how this claim can be justified theoretically, what its limits are and how they vary in accordance with the multitude of different facts the courts have seen and will see in the future. Academics and judges are still feeling their way around its fundamental questions. Yet not only are the answers to these theoretical questions controverted, they go to the heart of what every litigant wants to know: what may or may not be claimed? These questions are of fundamental importance on a practical basis too. -
Intermediated Securities: Who Owns Your Shares? a Scoping Paper
6~~mission Reforming the law Intermediated securities: who owns your shares? A Scoping Paper 11 November 2020 © Crown copyright 2020 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.lawcom.gov.uk. Any enquiries regarding this publication should be sent to [email protected]. The Law Commission The Law Commission was set up by the Law Commissions Act 1965 for the purpose of promoting the reform of the law. The Law Commissioners are: The Right Honourable Lord Justice Green, Chairman Professor Sarah Green Professor Nicholas Hopkins Professor Penney Lewis Nicholas Paines QC The Chief Executive of the Law Commission is Phil Golding. The Law Commission is located at 1st Floor, Tower, 52 Queen Anne's Gate, London SW1H 9AG. The terms of this scoping paper were agreed on 30 September 2020. The text of this scoping paper is available on the Law Commission's website at http://www.lawcom.gov.uk. i Contents Page GLOSSARY VII LIST OF ABBREVIATIONS XIV REFERENCES TO LAW COMMISSION PUBLICATIONS XVI CHAPTER 1: INTRODUCTION 1 Background to this paper 1 Terms of reference and consultation 3 Intermediated securities: at a glance 4 The Law Commission’s view on intermediation 8 A range of possible solutions 8 Costs and benefits -
Claims Against Third-Party Recipients of Trust Property
Cambridge Law Journal, 76(2), July 2017, pp. 399–429 © Cambridge Law Journal and Contributors 2017. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike licence (http:// creativecommons.org/licenses/by-nc-sa/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the same Creative Commons licence is included and the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use. doi:10.1017/S0008197317000423 CLAIMS AGAINST THIRD-PARTY RECIPIENTS OF TRUST PROPERTY DAVID SALMONS* ABSTRACT. This article argues that claims to recover trust property from third parties arise in response to a trustee’s duty to preserve identifiable property, and that unjust enrichment is incompatible with such claims. First, unjust enrichment can only assist with the recovery of abstract wealth and so it does not assist in the recovery of specific property. Second, it is difficult to identify a convincing justification for introducing unjust enrich- ment. Third, it will work to the detriment of innocent recipients. The article goes on to show how Re Diplock supports this analysis, by demonstrating that no duty of preservation had been breached and that a proprietary claim should not have been available in that case. The simple conclusion is that claims to recover specific property and claims for unjust enrichment should be seen as mutually exclusive. KEYWORDS: trusts, third parties, proprietary claims, knowing receipt, res- titution, unjust enrichment, Re Diplock. I. INTRODUCTION According to orthodox trust principles, where property is transferred in breach of trust, a beneficiary can either bring a proprietary claim to recover the property or a personal claim against a knowing recipient of the trust property (hereinafter, the combination of these two claims will be referred to as the “equitable regime”). -
Remodelling Knowing Receipt As a Gains-Based Wrong
Whayman D. Remodelling Knowing Receipt as a Gains-Based Wrong. Journal of Business Law 2016, 7, 565-588. Copyright: This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of Business Law following peer review. The definitive published version is available online on Westlaw UK or from Thomson Reuters DocDel service. Date deposited: 12/09/2016 Embargo release date: 01 September 2017 This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License Newcastle University ePrints - eprint.ncl.ac.uk Remodelling Knowing Receipt as a Gains-Based Wrong Derek Whayman* [email protected] Newcastle Law School Newcastle University 21–24 Windsor Terrace Newcastle upon Tyne NE1 7RU Abstract This article analyses the nature of knowing receipt. It finds its previous characterisations as a form of unjust enrichment or trustee-like liability wanting in the face of newer authority and complex commercial situations. It argues that knowing receipt is a gains-based profit- disgorging wrong and this best describes its remedies. 1. Introduction The action in knowing receipt is an invaluable tool in the armoury of the claimant who wants to recover misapplied trust or company property from a stranger to the trust or fiduciary relation. It might be that the trustee or fiduciary is a man of straw or has disappeared or simply that the recipient is easier to sue. Then, provided the claimant can show that the recipient beneficially received property traceable to a breach of trust of fiduciary duty with cognisance of that breach, a personal claim exists.1 However, the precise nature of knowing receipt and particularly how this translates into the remedy available – namely quantum – is contested.