Swindle v Harrison

Last updated

Swindle v Harrison
CourtCourt of Appeal
Citation(s)[1997] 4 All ER 705
Keywords
Breach of trust, causation

Swindle v Harrison [1997] 4 All ER 705 is an English trusts law case, concerning remedies for breach of trust.

Contents

Facts

Mr Swindle, from a financial advice firm, passed on a bridging loan to Ms Harrison to buy a second home. She already had a mortgage on her own home. He failed to disclose to her that Ms Harrison’s son would be unable to get a loan to help with the purchase, and that Mr Swindle would profit from making the loan. Afterwards, the value of the property dropped. She sued Mr Swindle, and other members of the firm, for the loss of value of the home’s equity, which resulted from the purchase, arguing that following Brickenden v London Loan & Savings Co [1934] 3 DLR 465, Mr Swindle was liable to restore her to the position she was in when the breach occurred, regardless of whether she would still have made the purchase if full disclosure had been made.

Judgment

The Court of Appeal held that the stringent test of causation in Brickenden did not apply to equitable breaches of duty, unless it amounted to fraud. Otherwise it was a "but for" test, like in Mothew . There was no fraud and Ms Harrison would have taken the loan even if all facts had been fully disclosed. She could not recover the drop in house price from the solicitors. Evans LJ said that where a defendant commits a fraudulent breach of duty, the beneficiary can recover damages to be in the position before the breach, in the ‘restitutionary’ measure (misleading!), rather than following the ‘stringent test for causation’. This was not in the position as if a breach had not occurred. Mummery LJ and Hobhouse LJ, held that Target Holdings applies to all breaches of trust, whatever the nature of the duty breached or the manner of its breach, so limiting claims for compensation or restitution when the loss or gain is caused by the breach.

See also

Notes

    Related Research Articles

    <span class="mw-page-title-main">English tort law</span> Branch of English law concerning civil wrongs

    English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.

    In English law, remoteness between a cause of action and the loss or damage sustained as a result is addressed through a set of rules in both tort and contract, which limit the amount of compensatory damages available for a wrong.

    <span class="mw-page-title-main">English trust law</span> Creation and protection of asset funds

    English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the Commonwealth and the United States. Trusts developed when claimants in property disputes were dissatisfied with the common law courts and petitioned the King for a just and equitable result. On the King's behalf, the Lord Chancellor developed a parallel justice system in the Court of Chancery, commonly referred as equity. Historically, trusts have mostly been used where people have left money in a will, or created family settlements, charities, or some types of business venture. After the Judicature Act 1873, England's courts of equity and common law were merged, and equitable principles took precedence. Today, trusts play an important role in financial investment, especially in unit trusts and in pension trusts. Although people are generally free to set the terms of trusts in any way they like, there is a growing body of legislation to protect beneficiaries or regulate the trust relationship, including the Trustee Act 1925, Trustee Investments Act 1961, Recognition of Trusts Act 1987, Financial Services and Markets Act 2000, Trustee Act 2000, Pensions Act 1995, Pensions Act 2004 and Charities Act 2011.

    <span class="mw-page-title-main">English contract law</span> Law of contracts in England and Wales

    English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.

    Bristol and West Building Society v Mothew [1996] EWCA Civ 533 is a leading English fiduciary law and professional negligence case, concerning a solicitor's duty of care and skill, and the nature of fiduciary duties. The case is globally cited for its definition of a fiduciary and the circumstances in which a fiduciary relationship arises.

    <i>Keech v Sandford</i> English trusts law case

    Keech v Sandford[1726] EWHC J76 is a foundational case, deriving from English trusts law, on the fiduciary duty of loyalty. It concerns the law of trusts and has affected much of the thinking on directors' duties in company law. It holds that a trustee owes a strict duty of loyalty so that there can never be a possibility of any conflict of interest.

    Bolitho v. City and Hackney Health Authority [1996] 4 All ER 771 is an important English tort law case, on the standard of care required by medical specialists. It follows the Bolam test for professional negligence, and addresses the interaction with the concept of causation.

    <i>Royscot Trust Ltd v Rogerson</i>

    Royscot Trust Ltd v Rogerson[1991] EWCA Civ 12 is an English contract law case on misrepresentation. It examines the Misrepresentation Act 1967 and addresses the extent of damages available under s 2(1) for negligent misrepresentation.

    <i>Carter v Boehm</i>

    Carter v Boehm (1766) 3 Burr 1905 is a landmark English contract law case, in which Lord Mansfield established the duty of utmost good faith or uberrimae fidei in insurance contracts.

    <i>Liverpool City Council v Irwin</i>

    Liverpool City Council v Irwin [1976] UKHL 1 is a leading English contract law case, concerning the basis on which courts may imply terms into contracts; in particular in relation to all types of tenancies, a term may be implied if required for a particular relationship, such as for the landlord to keep the stairwells clear in a tower block. The tenants also had a duty of reasonable care which some among them had been repeatedly breached and led to a continuing breach in matters of damage about which they complained so they were not entitled to withhold rent on the facts.

    <i>Bailey v Ministry of Defence</i>

    Bailey v Ministry of Defence [2008] EWCA Civ 883 is an English tort law case. It concerns the problematic question of factual causation, and the interplay of the "but for" test and its relaxation through a "material contribution" test.

    <i>Moore Stephens v Stone Rolls Ltd (in liq)</i>

    Stone & Rolls Ltd v Moore Stephens[2009] UKHL 39 is a leading case relevant for UK company law and the law on fraud and ex turpi causa non oritur actio. The House of Lords decided by a majority of three to two that where the director and sole shareholder of a closely held private company deceived the auditors with fraud carried out on all creditors, subsequently the creditors of the insolvent company would be barred from suing the auditors for negligence from the shoes of the company. The Lords reasoned that where the company was only identifiable with one person, the fraud of that person would be attributable to the company, and the "company" could not rely on its own illegal fraud when bringing a claim for negligence against any auditors. It was the last case to be argued before the House of Lords.

    Dishonest assistance, or knowing assistance, is a type of third party liability under English trust law. It is usually seen as one of two liabilities established in Barnes v Addy, the other one being knowing receipt. To be liable for dishonest assistance, there must be a breach of trust or fiduciary duty by someone other than the defendant, the defendant must have helped that person in the breach, and the defendant must have a dishonest state of mind. The liability itself is well established, but the mental element of dishonesty is subject to considerable controversy which sprang from the House of Lords case Twinsectra Ltd v Yardley.

    <i>Twinsectra Ltd v Yardley</i>

    Twinsectra Ltd v Yardley[2002] UKHL 12 is a leading case in English trusts law. It provides authoritative rulings in the areas of Quistclose trusts and dishonest assistance.

    Directors' duties in the United Kingdom bind anybody who is formally appointed to the board of directors of a UK company.

    <i>French v Barclays Bank plc</i>

    French v Barclays Bank plc [1998] EWCA Civ 1092 is a UK labour law case concerning the contract of employment. It held that changing a staff manual can breach the term of mutual trust and confidence that is implied into every individual contract of employment, and a unilateral change to a workplace practice can breach that contract.

    <i>Target Holdings Ltd v Redferns</i>

    Target Holdings Ltd v Redferns[1995] UKHL 10 is an English trusts law case, concerning the test for causation and the extent of compensation for breaches of trust.

    <i>Murad v Al-Saraj</i>

    Murad v Al-Saraj[2005] EWCA Civ 959 is an English trusts law case, concerning remedies for breach of trust for a conflict of interest. It exemplifies a restitution claim.

    <i>FHR European Ventures LLP v Cedar Capital Partners LLC</i>

    FHR European Ventures LLP v Cedar Capital Partners LLC[2014] UKSC 45 is a landmark decision of the United Kingdom Supreme Court which holds that a bribe or secret commission accepted by an agent is held on trust for his principal. In so ruling, the Court partially overruled Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd in favour of The Attorney General for Hong Kong v Reid (UKPC), a ruling from the Judicial Committee of the Privy Council on appeal from New Zealand.

    <i>AIB Group (UK) plc v Mark Redler & Co Solicitors</i>

    AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] UKSC 58 is an English trust law case, concerning the applicable principles of causation for a breach of trust. It held that a "but for" test of causation applies for equitable compensation.

    References