Meaning
Secondary liability attaches to a person who helps a trustee or fiduciary commit a breach of trust with a lack of integrity. This dishonest assistance does not require the defendant to have received any of the trust property. Liability is personal and makes the assistant liable to compensate the trust for the resulting loss.
Conduct Standard
The test for liability involves an assessment of the actions of the defendant against the standard of an honest person. While the assistant must have some knowledge of the facts, the court looks at whether their participation in the scheme was objectively dishonest. Proving dishonest assistance involves showing the party knew their actions were helping a breach.
Accessory Liability
Financial institutions and professional advisors often face claims when they process transactions that facilitate a fraud. If a bank ignores obvious signs of misappropriation to assist a client, a claim for dishonest assistance may follow. The focus remains on the state of mind and the level of help provided during the breach.
Joint Liability
The assistant and the defaulting fiduciary are held responsible for the same loss. A claimant can recover the full amount from the person who provided the dishonest assistance if the primary trustee has no funds. This protection is vital when the main wrongdoer is insolvent or has disappeared..
