Dishonesty & Bad Faith Cases

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  • Created on: 25-04-14 13:58
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  • Dishonesty and Bad Faith
    • Scottish Equitable v Derby 2001
      • Facts: The defendant was overpaid on his pension as he had already partly cashed in on his policy. He had used some of this money to pay off his mortgage and the rest to improve his standard of living.
      • Principle: Change of position was not available for the money spent on the mortgage as this could be remortgaged, however it could be used for the money used for the modest changes to lifestyle as it would have otherwise caused loss that would not have happened but for the receipt.
      • Outcome: He had to repay the money used for his mortgage.
    • Cressman v Coys of Kensington 2004
      • Facts: Auctioneers sold a car but were instructed not to sell the number plate, however it accidentally became included (even though the sale agreement said it wasn't), and the buyer refused to return it and gave it as a gift to a friend.
      • Principle: To prove unjust enrichment, it must be asked whether the defendant benefitted or has been enriched; was this at the expense of the claimant; was it unjust; is there any specific defence available? (Banque Financiere v Parc). If realise the mistake then pass on the property, you cannot rely on change of position.
      • Outcome: He had to pay the cost of the registration.
    • Bristol and West Building Society v Mothew 1998
      • Facts: A solicitor working for both parties told the builiding society there was no second charge on the house when there was. Therefore the building society agreed to a mortgage.
      • Principle: For negligent misstatement, damages are due for the loss attributable to the inaccuracy of information. To breach a fiduciary duty, it need  not be dishonest but must be intentional.
      • Outcome: Not every breach of duty is a breach of fiduciary duty and causation must be proved - here the building society broke the chain of causation and Mothew was not liable.
    • Foskett v McKeown 2000
      • Facts: Money held on trust for a property development scheme was used instead for life insurance premiums. On collection, the purchasers wanted their share of the payouts.
      • Principle: The value here can be traced clearly into the proceeds and therefore the purchasers were entitled to a proportionate share in the policy proceeds. If the other beneficiaries had been bona fide purchasers for value without notice then the amount would not have been traceable.
      • Outcome: they received a proportionate share of the insurance policy proceeds.


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