Assisting fraud

Those who assist in a breach of trust can be sued by victims of the breach of trust, as constructive trustees. The term "constructive trustees" means that the court considers them as trustees although they never agreed to be such.

What about those who assist inadvertently? The test seems to be that the person knowingly assists in the breach of trust. Lawyers like to make things complicated, and here, the question of knowledge is decided objectively (but again, there is some controversy on this point). An objective approach means that we consider what the reasonable man in such a situation would think. The personal view of the person being sued would therefore be irrelevant.

An interesting example of knowing assistance in a breach of trust is the case from Brunei - Royan Brunei Airways v Tan. In this Privy Council case, Tan was the managing director of a travel agency which sold tickets on board Royal Brunei Airways (RBA) flights. Under IATA (International Air Transport Association) rules which the agency promised to follows, all monies from such ticket sales were supposed to be banked into a separate trust account. These monies were not to be used for any purpose other than to pay RBA. Tan used the monies to pay the travel agency's expenses.

The lower court found that Tan all along intended to replenish the money but his business later collapsed. As it was pointless to sue the travel agency, RBA sued Tan personally for the missing ticket monies. The Privy Council in England held that Tan's personal intention to repay the monies was irrelevant. He knowingly used trust monies for unauthorised purposes and was therefore liable for the lost funds.