The Society of Legal Scholars 2014 Conference has just gone by. I presented my (first ever) paper, The Evolution of Knowing Receipt, to the Property and Trusts section.
EDIT: I have removed the paper from academia.edu because an updated version is to be published in the Journal of Business Law.
The broad argument is that, contrary to some views, ‘constructive trustee’ has indeed obscured the true nature of the action in knowing receipt of property misappropriated in a breach of trust or fiduciary duty. A knowing recipient is not like a true trustee. According to recent authority, knowing recipients (unlike true trustees) are not fiduciaries. Therefore, liability ‘as if a trustee’ cannot mean ‘just like’ a trustee. This has implications for the ingredients of the action and the remedies available.
The full abstract follows:
The theoretical basis of knowing receipt is still disputed. There are three competing theoretical models of liability, based on: (i) the underlying trust obligations and its property; (ii) the recipient’s fault; and (iii) unjust enrichment. All of these would draw that liability differently, particularly in respect of quantum. This paper argues the fault model is now the dominant one. This is due to two structural changes in equity: first, the classification of accessories (knowing recipients and dishonest assistants) as non-fiduciaries; and second, the application of limiting principles such as causation to breaches of non-fiduciary duty. Recent cases are analysed which turn out to be either consistent with or expressly in agreement with this thesis. Since a fault basis makes dishonest assistance and knowing receipt very similar, the remaining differences are analysed and found to be minor; further anomalies resulting from adherence to the property model of knowing receipt identified; and the authorities which hold them as separate actions are shown to be weak. Accordingly, it is submitted that given the changes, the two actions are better seen as one and the same.