Accessory Liability for Breach of Trust

In Royal Brunei Airlines v Tan,' the Privy Council introduced a new test, replacing Lord Selborne's formulation in Barnes v Addy,2 of the liability of an accessory to a breach of trust, that is, a person other than a co-trustee who assists trustees to commit a breach of trust, but without himself receiving any of the trust's assets.3 The implications of Royal Brunei Airlines extend beyond the ordinary family settlement. For example, the case is relevant to dealings by unit trusts and pension funds4 and, it is suggested, to a case in which a senior officer of a bank is dealing on a scale which it is obvious to his transaction counterparties is wholly inconsistent with his fiduciary duties. Although the judgment has been widely welcomed,5 this Comment will argue that its basis in previous case law is unsound, that the judgment contains inconsistencies on the key issue of whether knowledge of the breach of trust is a necessary condition of an accessory's liability, and that the Privy Council's preservation of a separate head of equitable liability for assisting a breach of trust is illogical and anomalous. Far from being a 'welcome development of the law of obligations,'6 the decision has blocked the formation of a unified system of liability for interference with legal rights and has unnecessarily aggravated the private international law problems where an accessory to a breach of trust is domiciled abroad.