Dear colleagues,

Negligence

Following Lionel's point, the tortfeasor's duty of care is owed to the

trustee, not beneficiary. Thus, the tortfeasor ought to compensate the

trustee (not beneficiary) for the trustee's (not beneficiary's) loss, though

the trustee has to account to the beneficiary for the recovery.

Joining the trustee to the action allows the process to be shortcircuited.

But that is just the process; it might change the party who is paid. It

shouldn't change the amount that the tortfeasor has to fork out. What he

pays the trustee/beneficiary should be the loss suffered by the trustee (for

which the trustee accounts to the beneficiary); not the (greater) loss

suffered by the beneficiary.  

Conversion

Prof Andrew Tettenborn has a piece ((1996) 55 CLJ 36) questioning a

beneficiary's right to sue in conversion (cited by the CA in MCC Proceeds v

Lehman Bros [1998] 4 All ER 675). MCC Proceeds referred to The Aliakmon

[1986] AC 785 as authority denying a beneficiary's right to sue in

negligence, and that was regarded as one of the factors for denying a

beneficiary's right to sue in conversion. Does it now mean that

beneficiaries should be allowed to sue in conversion too?

Happy holidays!

Kelry.

(Mr) Kelry C.F. Loi

Asst Prof, Faculty of Law

University of Hong Kong.

-----Original Message-----

From: Lionel Smith, Prof. [mailto:lionel.smith@mcgill.ca]

Sent: Thursday, April 01, 2010 6:18 AM

To: Jason Neyers; Colin Liew

Cc: ODG

Subject: Re: Beneficial owners can sue for negligently-caused economic loss

to property

Jason's two points are intimately linked.

The rights against rights theory says that the beneficiary's right is a

right in or against the trustee's ownership of the asset. The beneficiary

does not have any direct right against the tortfeasor, who owes a duty of

care to the trustee.

If however the trustee is joined as a party, then it becomes possible to

adjudicate his right against the tortfeasor, and also his obligation to the

beneficiary to account for the recovery to the beneficiary. If all parties

are joined, then a court can make an order that short circuits the two

claims.

Lionel

On 31-03-10 15:32 , "Jason Neyers" <jneyers@uwo.ca> wrote:

Dear Colleagues:

I was wondering if anyone had any thoughts about this case. I suppose one's

view might depend ultimately on how one views the rights enjoyed by the

equitable owner. If they are simply "rights against rights" as I have heard

argued at the various Obligations conferences, then the decision appears

wrongly decided.

I was also a little surprised with the ease that the Court of Appeal

side-stepped The Aliakmon:  what difference in justice is made when the

legal owner is joined?

Jason Neyers

Associate Professor of Law

Faculty of Law

University of Western Ontario

N6A 3K7

(519) 661-2111 x. 88435

Colin Liew wrote:

Dear all,

The English Court of Appeal in Shell UK Ltd & Ors v Total UK Ltd & Ors

[2010] EWCA Civ 180 <http://www.bailii.org/ew/cases/EWCA/Civ/2010/180.html>

has decided (at [142]) that a duty of care is owed to a beneficial owner of

property by a defendant who can reasonably foresee that his negligent

actions will damage that property. If, therefore, such property is, in

breach of duty, damaged by the defendant, that defendant will be liable not

merely for the physical loss of that property but also for the foreseeable

consequences of that loss, such as the extra expenditure to which the

beneficial owner is put or the loss of profit which he incurs. Provided that

the beneficial owner can join the legal owner in the proceedings, it does

not matter that the beneficial owner is not himself in possession of the

property.

The appeal arose out of the 2005 Buncefield fire where, due to the

negligence of Total (as found by David Steel J in March 2009), substantial

damage was caused to the Hertfordshire Oil Storage Terminal. At issue in

this appeal, however, was whether Shell could claim damages against Total in

respect of economic losses caused to it as beneficial owner of land and

facilities at Buncefield.

Regards,

Colin