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 13

Of Debts, Damages and

Errant Trustees
Andrew Tettenborn

Introduction
“My Lords, my clients have no merits, but they are right.” These words,
according to legal urban legend, were used many years ago by the then Kenneth
Diplock KC to open a large but delicate commercial case. They would have
been equally appropriate in the mouth of counsel for the losing claimants in
Target Holdings Ltd v Redferns' and AIB Group (UK) pic v Mark Redler & Co?
whose clients’ deserts were, to say the least, decidedly doubtful. Of course, if
undeserving clients with a technical case are indeed right, they must win. But
were they right in Target and Mark Redler? This is the subject of this chapter.
To recapitulate, Target involved a breach of trust committed by solicitors
acting for mortgage lenders and also for their borrowers, the buyers of a
Birmingham building site. Having received the loan money from the lenders
on trust to pay it to the site vendors in exchange for a valid mortgage, they
instead paid it to third parties123 and omitted to get anything at all in return for
it. However, as matters turned out the lenders actually received the necessary
mortgage paperwork a month later, thus getting the exact security they had
bargained for. But the lenders’ joy was not to last: they had all along been the
dupes of a mortgage valuation fraud, and when the borrowers collapsed they
got less than half their money back. On these facts, they sought to make their
solicitors account in equity for their total damage (that is, the total amount
of the loan, less only the sale proceeds). It was true that their claim was less
than deserving. Their solicitors’ bungle had in essence not cost them a penny
piece, since they would still have lost their money even if everything had gone
like clockwork. But this was, they said with engaging simplicity, irrelevant.
What they were seeking was the reconstitution of a trust fund (in other words,
the loan monies) admittedly disbursed in breach of trust: and whatever the
position might have been had they sought unliquidated damages at common

1 [1996] AC 421 (HL).

2 [2014] UKSC 58; [2015] AC 1503.
3 The third parties were a paper company that had simultaneously sold the property to the vendors
for a good deal less than the purchase price.

297
298 Contract in Commercial Law

law, in this kind of claim the question whether the fund might or might not have
been lost by some other means was beside the point. This argument succeeded
at first instance, and by a majority on appeal.4 But it failed in the House of
Lords, who on these assumed facts held that a nil award was appropriate. Lord
Browne-Wilkinson, giving the leading judgment, accepted the general rule that
a defaulting trustee had to restore the trust fund without reference to what
might otherwise have happened to it. But he declined to apply it there. First,
he said, the rule requiring restoration of the trust fund did not apply once the
purpose of the trust had been fulfilled and (as here) the only trust left to restore
would be a spectral bare trust existing solely to receive and pay out any monies
restored to the erstwhile beneficiaries. In such a case the proper solution was
to short-circuit the trust and order payment direct to the beneficiary, who
could recover only what he had actually lost.5 Secondly (he said), even if the
defendants’ liability was to restore the value of the trust assets wrongly paid
away, any award made could (he thought) take account of knowledge that, in
hindsight, those assets would have been lost in any case.6
Target possessed one curiosity, namely that the purpose of the trust (payment
balanced by receipt of the security documents) was ultimately fulfilled. Despite
Lord Browne-Wilkinson’s unorthodox approach to the question of loss, this
made it a case which could, just, be reconciled with equitable orthodoxy by
postulating that when the transaction was completed as expected, the trustees
could be regarded as having notionally restored to the trust fund what they had
misguidedly removed from it a few days earlier.78
The same escape, however, was not to hand in the later decision in Mark
Redler* About £3.3 million of loan monies entrusted by lenders to solicitors
in a residential remortgage were released at the right time, and in the main
to the right person. But some £270,000 that ought to have gone to discharge
a previous second mortgage was by mistake paid to the borrowers instead. As
had happened in Target, here too the security had been seriously overvalued
(whether fraudulently or not was unclear). The borrowers went bankrupt, and
the lenders lost in total some £2 million. A claim for unliquidated damages for
negligence would have yielded some £270,000, the amount of the undischarged
mortgage which owing to the solicitors’ negligence now outranked the lenders’
security. But, as in Target, the lenders sought to stand on equitable technicality by
demanding an accounting in equity of the whole sum released, less only the sale
proceeds.9 Here the escape in Target was not available, since owing to the failure
to discharge the second mortgage there was no possibility of arguing that the

4 See Target Holdings Ltd v Redferns [1994] 1 WLR 1089 (CA).

5 Target (n 1) 435—36.
6 Target (n 1) 436—41.
7 A point first made in P Millett, “Equity’s Place in The Law of Commerce” (1998) 114 LQR 214,
227. See too M Carn, “Clarifying the Law for Breach of Commercial Trusts” (2014) 4 Tru LI 226.
8 MarkRedler (n 2).
9 It having been held in the Court of Appeal (see AIB Group (UK) pic v Mark Redler & Co [2013]
EWCA Civ 45; [2013] PNLR 19), and accepted in the Supreme Court, that even though some
of the loan had been disbursed entirely properly there had been a technical breach of trust in
respect of the whole, rather than an observance of the trust in respect of that properly paid and
a breach only as regards the amount misspent.
 Ch 13 OfDebts, Damages and Errant Trustees 299

trust had been completely performed.10 The case thus directly raised the issue
of whether Lord Browne-Wilkinson had been right in Target to decide that the
trustee’s duty to account should reflect matters which would have caused the
loss of the trust property anyway. Lord Toulson, delivering the most substantial
opinion, said that this had indeed been correct. The object of ordering a trustee
who had wrongfully disbursed assets to reconstitute the trust fund was, he said,
essentially to ensure that the beneficiaries’ interests did not suffer: in so far
as those interests would have been damnified in any case, it followed that the
amount of any restitution had to be reduced.11 His Lordship also added, with
some superficial plausibility, that where what was alleged was essentially legal
malpractice it was desirable that the measure of recovery for breach of trust
should not be wildly discrepant from that available in contract or tort.12 Lord
Reed gave a separate opinion saying much the same thing, though slightly less
incisively: the other three justices simply agreed with both.

Target and Mark Redler: Two Attacks

Two specific complaints can be made about the decisions in Target and Mark
Redler. The first is that, by taking into account the fact that the lenders would
have lost their money even if all had gone well, they substituted a duty to
compensate the beneficiary in respect of loss suffered for the traditional duty
to make good the position of the trust itself.13 The second is that both involved
a failure to spot, let alone to draw, the distinction between debt and damages
in the context of equitable claims.14 As will appear below, neither complaint
is justified.

Reinstatement of the Trust Property, Not

Compensation of Loss
The first complaint we can deal with fairly straightforwardly. It starts from the
long-standing equitable rule that, when it came to trustees who had failed to
look after trust assets, or wrongly abstracted them from the trust estate, the
remedial scheme was nothing like that of the common law.15 The stress was
not on wrong and resulting loss, but instead on the beneficiary’s right to insist

10 The solicitors had argued that their only breach of trust had encompassed the misdirected
£270,000. But the Court of Appeal held that there had been a single breach of trust in relation to
the whole sum entrusted (see Mark Redler (n 9)), and no appeal was taken from this holding.
11 See Mark Redler (n 2) [64]—[66].
12 Mark Redler (n 2) [71],
13 P Birks, “Equity in the Modern Law: An Exercise in Taxonomy” (1996) 26 UWALR 1, 45—48;
C Mitchell, “Stewardship of Property and Liability to Account” [2014] Conv 211; Carn (n 7);
A Shaw-Mellors, “Equitable Compensation for Breach of Trust: Still Missing the Target?” [2015]
JBL 165.
14 See the articles referred to in n 32 below.
15 It might just be argued that even at common law the claimants could have recovered in full from
the solicitors had they framed their case as one brought on the basis of failure of consideration,
despite the loss they would otherwise have made: cf Wilkinson v Lloyd (1845) 7 QB 27; 115 ER
398. But that must wait for further discussion elsewhere.
300 Contract in Commercial Law

on having the trust performed, enforced by a correlative duty on the trustee to

render accounts to confirm whether this had been done. The accounting could
be either “in common form” or in respect of possible “wilful default”.16 (There
could also be a third form of account, namely an accounting for profits: but
we leave that aside.) Under the account in common form the trustee had, so
to speak, to exhibit on demand the assets entrusted to him. If he could not do
so, the beneficiary could “falsify” the account, and insist that the trustee either
restore any missing assets in specie or personally pay the trust their value. This
applied generally,17 not only where the trustee had lost an asset, but where he had
alienated it,18 sold an authorised investment and substituted an unauthorised
one,19 or retained an otherwise permitted asset longer than authorised.20 The
trustees only defence was proof that he had performed his trust: that is, that
all dealings with the trust property had been authorised, or (in the case of
loss) the asset had been lost or taken despite all reasonable care on his part.21
It followed from this that where dissipation was concerned, then not only was
there a reversal of the burden of proof, but there was no room for speculation
as to whether some other casualty might have befallen the asset in any case,22
nor yet for the kind of nuanced argument on causation or remoteness that
could be found in common law actions.23 Furthermore, the form of the order
on an accounting, which was to restore the assets or their value to the trust
and not the beneficiaries personally (for the very good reason that not all the
beneficiaries might have sued, or for that matter have been in a position to do
so)24 had perforce to shut out arguments as to the particular loss suffered, or

16 The point has been made repeatedly. Two of the clearest expositions are C Mitchell, “Equitable
Compensation for Breach of Fiduciary Duty” (2013) 66 CLP 307, 322ff and the earlier Millett
(n 7) 225-26. See too R Meagher, JD Heydon and M Leeming, Meagher, Gummow & Lehane’s
Equity: Doctrine and Remedies (4th ed, LexisNexis 2002) para 2.155; A1B Group (UK) pic v Mark
Redler & Co [2014] UKSC 58; [2014] 3 WLR 1367 [53]-[57] (Lord Toulson) and the pithy
comment of Sir Peter Millett (by then Millett NPJ) in Libertarian Investments Ltd v Hall [2013]
HKCFA 93; (2013) 16 HKCFAR 681 [ 167): “an account”, he said, “is not a remedy for a wrong”.
17 Clough v Bond (1838) 3 My 8c Cr 490; 40 ER 1016,496-97 (Lord Cottenham); Mark Redler (n 16)
[52]—[54] (Lord Toulson); Libertarian Investments (n 16) [166]—[172] (Lord Millett NPJ).
18 For example, Hewett v Foster (1843) 6 Beav 259; 49 ER 825; Shepherd v Mouls (1845) 4 Hare 500;
67 ER 746.
19 Kellaway v Johnson (1842) 5 Beav 319; 49 ER 601 324; Knott v Cottee (1852) 16 Bcav 77; 51 ER
705 79-80; Re Salmon (1889) 42 Ch D 351 (CA) 357; Re Massingberd’s Settlement (1890) 63 LT
296 (CA).
20 Wills v Trustees Executors & Agency Co Ltd (1900) 25 VLR 391; Fates v Canada Permanent Trustee
Co (1976) 70 DLR (3d) 257 (Can SC).
21 See eg Clough (n 17) (monies stolen by co-trustee: defendant trustee liable, since not without
fault).
22 *‘[W]e are not at liberty to speculate whether the same result might not have followed whether
the bank had been guilty of that default or not” - Magnus v Queensland National Bank (1888) 37
Ch D 466 (CA) (Lord Halsbury). See too Caffrey v Darby (1801) 6 Ves Jun 489; 31 ER 1159,496
(Lord Eldon); Cocker v Quayle (1830) 1 Russ 8c M 535; 39 ER 206.
23 Clough (n 17) 496-97 (Lord Cottenham); see too Re Dawson [1966] 2 NSWR 211 (foreign
currency wrongly paid away: liability to replace it, despite loss being greatly increased by
unforeseeable devaluation of home currency).
24 Target (n 1) 434 (Lord Browne-Wilkinson); sec too Australian Special Opportunity Fund LP v
Equity Trustees Wealth Services Ltd [2015] NSWCA 294 [ 155]—[ 156] (Bathurst CJ).
 Ch 13 OfDebts, Damages and Errant Trustees 301

not suffered, by the flesh-and-blood beneficiary who happened to be suing.25 It

was only in respect of an accounting on the basis of wilful default - that is, loss
involving not failure to produce items subject to the trust but rather failure to
preserve or exploit the trust property properly, or culpable omission to realise
some gain from it - was there any similarity to common law damages. Here it
was indeed up to the beneficiary to prove breach, loss to the trust estate and a
connection between the two: thus far, but only thus far, could he “surcharge”
the account and force the trustee to repair the loss.26
The difficulty with Target and Mark Redler is that the reasoning in both cases
cavalierly ignored this distinction. Both decisions took cases on the trustee’s duty
to account for wilful default, where causation was relevant, and applied them to
liability for unauthorised payment, where it was not. Both thereby arbitrarily
substituted a duty to compensate the beneficiary for the traditional duty to make
good the trust. And both failed to deal with the logical point that, because the
duty of a trustee was to restore mispaid trust funds to the trust, the question
whether the benefit of such funds would or would not have been lost to the
beneficiary had to be irrelevant. It follows that, whatever the rights and wrongs of
these decisions, neither can be said to score highly in the logic or doctrine stakes.
But, even if this is true, is the result necessarily wrong? It is respectfully
suggested that it is not. It is indeed true that the liability of a trustee who
alienates or misdisburses trust assets without authority is reconstitutive (or
“‘restorative’, as Lord Millett NPJ perceptively put it in the Hong Kong decision
in Hall v Libertarian Investments Ltd).2728 But this is only half the solution. What
do we actually mean we say the erring trustee must restore the trust estate? The
answer, it is suggested, is that in line with the beneficiary’s right to have the trust
carried out, the trustee must put the trust estate in the position that it would have
been in if the trust had been properly executed in the ordinary course of things.23
Thus viewed, the standard differences with damages for breach of contract or
tort neatly fall into place: the irrelevance of remoteness, the disregard of what
other misfortunes might have supervened, and the ignoring of the personal

25 Such as arguments that if the assets had remained in the trust the beneficiary personally would
have had to pay tax on them. See Bartlett v Barclays Bank Trust Co Ltd (No 2) (1980) Ch 515
(Ch D); also Re Bell’s Indenture [ 1980] 1 WLR 1217 (Ch D).
26 On this similarity see Millett J in Bristol & West Building Society v Mothew [ 1998] Ch 1 (CA) 17
(“Although the remedy which equity makes available for breach of the equitable duty of skill and
care is equitable compensation rather than damages, this is merely the product of history and
in this context is in my opinion a distinction without a difference. Equitable compensation for
breach of the duty of skill and care resembles common law damages in that it is awarded by way
of compensation to the plaintiff for his loss. There is no reason in principle why the common
law rules of causation, remoteness of damage and measure of damages should not be applied
by analogy in such a case. It should not be confused with equitable compensation for breach
of fiduciary duty, which may be awarded in lieu of rescission or specific restitution.”); also the
instructive Singapore decision in Then Khek Koon vArjun Permanand Sanitani [2012] SGHC 17;
|2014] 1 SLR 245 [108] (Vinodh J).
27 [2013] HKCFA 94; (2013) 16HKCFAR681 (168].
28 In other words, if the transaction had proceeded to fruition as everyone expected it would,
without reference to any error by the trustee. See Canson Enterprises Ltd v Boughton & Co (1991 ]
3 SCR 534, 556 (McLachlin J); also compare Litton NPJ in Libertarian Investments (n 16) [168]
(“This approach to equitable relief treats the defendant as if he had carried out his fiduciary
duties" (emphasis added)).
302 Contract in Commercial Law

position of beneficiaries. But now return to Target and Mark Redler. It is one
thing to ignore arguments that the trust would have lost the assets concerned in
any event owing to the actions of some third party, or some other outside event.
But it is quite another to extend this disregard to the subsequent would-be
actions of the trustee himselfwhere those actions (a) would have been legitimate
and even required by the trust, and (b) would in the ordinary course of events
have been precisely what was expected to happen. In such a case it is entirely
artificial, and certainly not mandated by the authorities, to insist on ignoring
all this and taking as a comparator for the purposes of restoration the situation
that would have obtained had the trustee stopped the whole transaction in its
tracks a moment before the unjustified payment and then kept the funds locked
away in the trust. And this is exactly the point in Target and Mark Redler. In
Target the defendants, had they executed their trust as required and expected,
would have disbursed the trust monies in exchange for mortgage documents.
The obvious remedy for their default was to make them restore the position
that would have obtained had they done exactly that. So too in Mark Redler,
where part of the loan monies were misdirected to the borrower rather than the
second mortgagee. Granted that the solicitor-trustees had to make restitution
to the trust estate, the question still remains: was the position to be restored
that which would have applied if the whole of the mortgage monies had been
paid to the right people, or if no monies had been paid to anyone? The same
comment applies: the sensible comparator can only be the former.
Moreover, this is also consistent with at least two of the later leading
Commonwealth cases. One was the important Australian decision in Youyang
Pty Ltd v Minter Ellison Morris Fletcher.29 There, plaintiffs (to oversimplify
slightly) entrusted solicitors with a large investment fund and instructed them
to transfer it to an investment company against a bank CD in their favour. The
solicitors paid the money over but got no CD: later, the investment company
collapsed and the plaintiffs’ money disappeared. To an action for the amount
lost, the solicitors pleaded that after the initial transfer but before the collapse of
the investment company they had been authorised to maintain the investment
despite the lack of the CD. The New South Wales Court of Appeal30 held that
his was a good plea: this was largely on the basis of Target, but the case could
equally well have been decided on the basis that the solicitors were not bound
to restore the trust fund in so far as the monies would not have been in it even
if they had done as they were told. The case was reversed in the High Court on
the basis that in fact no later authorisation had been given:31 but no suggestion
was made that had the authorisation been made the result should have been
any different from that reached in the Court of Appeal.32

29 [2003] HCA 15; (2003) 212 CLR 484.

30 See Youyang v Minter Ellison [2001] NSWCA 198.
31 Youyang (n 29).
32 See Youyang (n 29) [35], [63]. This may well be why Simmonds J in the later Western Australian
decision in Re Rowena Nominees Pty Ltd; ex p Conlan [2006] WASC 69; (2006) 199 FLR 415
[61 ] saw no inconsistency here (though it must be admitted that Edelman J in Agricultural Land
Management Ltd v Jackson (No 2) [2014] WASC 102; (2014) 285 FLR 121 [359] was less certain
on this point, as was WMC Gummow, “Three Cases of Misapplication of a Solicitor’s Trust
Account” (2015) 41 Aust Bar Rev 5, 12).
 Ch 13 OfDebts, Damages and Errant Trustees 303

The other was the Hong Kong cases of Libertarian Investments Ltd v Hall.53
In that case, the defendant fell to be treated as though he were a trustee who
had failed to account for certain securities which he held on behalf of the
34 The securities were volatile, and had the trust been properly
claimant.33
carried out a large block of them would have been sold off at a particular point
in time — well before the action was brought. In deciding on the valuation
of these shares for the purposes of an accounting action, the Court of Final
Appeal reckoned the value of that particular block of shares as at the time at
which they should have been sold. This is, it is suggested, entirely consistent
with the thesis being put forward here: the proper way of reckoning a trustee’s
restorative liability is to assume that the trust had been properly executed, and
to order compensation accordingly.35

Damages and Debt

We are left with the second, and more radical, complaint. This is that the real
difficulty with Target and Mark Redler was the Law Lords’ failure in the context
of equity to understand, let alone to draw, a distinction fundamental to English
law: namely, that between a claim in debt and one for damages. Lionel Smith
put forward this argument most elegantly in 2010.36 Whatever the position
in respect of compensation where an accounting was taken on the basis of
wilful default, where (as in Target and Mark Redler) simple mispayments
were involved neither wrongdoing nor compensation came into the equation
at all. Proceedings following an account in common form, under which the
beneficiary got the right to surcharge the account for assets unaccounted for,
involved, on this argument, the enforcement of a primary duty in the trustee
to maintain, and where necessary reconstitute, the trust fund. Claims of this
kind had been categorised in the 19th century, with prescience and accuracy,
as involving “equitable debts”:37 the point being that the analogy lay not with
damages but with claims in debt at common law for the price of goods or
services, in which issues relating to loss were necessarily beside the point.38
True, enforcing the trustee’s duty to pay money to the trust might indirectly result
in the making good of a loss suffered by a beneficiary; but this was essentially a

33 Libertarian Investments (n 16).

34 In fact he had been entrusted with funds to buy these securities, but had not bought them at all.
Instead he had stolen the monies and then falsely told his principals that he had purchased the
securities on their behalf. But nothing turns on this.
35 Libertarian Investments (n 16) [155] (Litton NPJ).
36 L Smith,“The Measurement of Compensation Claims against Trustees and Fiduciaries” in E Bant
and M Harding (eds), Exploring Private Law (CUP 2013) ch 16. See too Mitchell, “Stewardship of
Property and Liability to Account” (n 13) 223.
37 See Re Collie, ex p Adamson (1878) 8 Ch D 807 (CA) 819 (James LJ); Re Smith Fleming & Co,
ex p Kelly & Co (1879) 11 Ch D 306 (CA) 311 (James LJ).
38 Another common law analogy, not drawn by Prof Smith but arguably even closer to the trustee
example, is a customer’s complaint against a bank which has debited his account on the basis of
a forged cheque. Such a claim is not for compensation but simply a plea for payment on the basis
that the bank’s original obligation (debt) to the customer has not been discharged and therefore
remains: see Richmond J’s pithy exposition in National Bank of New Zealand Ltd v Walpole &
Patterson Ltd [ 1975] 2 NZLR 7, 12.
304 Contract in Commercial Law

by-product of the trustee’s liability, rather than the gist of the action. It followed
the attempt by the House of Lords in Target and the Supreme Court in Mark
Redler to limit the claimants’ recovery by reference to the amount by which they
were worse off, or to talk in terms of causal relations between breach of trust
and loss suffered, were logically misconceived.
This is a formidable argument, though (as will appear below) it is suggested
that it is ultimately unsound. Before saying why this is, however, it is as well to
make clear what is meant by the common law debt-damages distinction. For
the purposes of this chapter, the divide will be regarded as equivalent to that
between liquidated and unliquidated pecuniary liabilities, with debt placed in
the former category and damages in the latter. Admittedly the correspondence
and usage varies.·10 Nevertheless it will suffice for the purposes
is not exact,3940
of argument. Unliquidated liabilities, of which damages are a subset, include
cases where the amount of the plaintiff’s entitlement is not a matter of simple
calculation at the time it becomes payable, but involves either substantial
discretion or the application of some more or less complex legal principle by
the court, for example (in the damages context) the rules as to quantification
and as to what counts as recoverable loss.41 They cover, as well as damages,
non-wrong-based compensation liabilities42 and claims for fees whose amount
is explicitly subject to court control,43 not to mention a few other specialised
claims.44 Liquidated liabilities, typified by debt claims, comprise by contrast
obligations to pay sums immediately calculable, albeit possibly with some little
complexity. They include stipulated contractual payments (the agreed price
of goods or services,45 or the amount of an abstract payment obligation);46
contractual duties to pay a reasonable sum (plus possibly quantum meruit

39 Thus liquidated claims such as demurrage can share features with unliquidated claims, for
example the unavailability of common law interest (at least in England): see President of India
v Lips Maritime Corp [1988] AC 395 (HL). And occasionally “debt” has been extended to cover
unliquidated claims: see eg Morse v Tucker (1846) 5 Hare 79; 67 ER 835 and Bisset v Burgess
(1856) 23 Beav 278; 53 ER 109 (provision in a will for payment of “debts” out of particular
property). But these mismatches are relatively minor.
40 Indeed, Lloyd LJ in Phillips & Co v Bath Housing Co-operative Ltd [2012] EWCA Civ 1591; [2013]
1 WLR 1479 pertinently observed [39]—[41 ] that what counted as a liquidated claim was not
always a term of art and might well vary according to the (especially legislative) context. See
too Halsbury’s Laws of England, vol 29 (Re-issue 2014) para 306; also generally N Andrews and
others, Contractual Duties: Performance, Breach, Termination and Remedies (Sweet & Maxwell
2012) ch 19.
41 “The phrase ‘liquidated claim’ connotes a claim for a specific sum or, alternatively, for a sum
which can be readily and precisely ascertained. ... A claim for damages in tort is by definition
not a liquidated claim. The assessment of damages in tort involves the application of a set of
common law rules to the particular circumstances of the case. The application of those rules may
be relatively straightforward in some instances, but that does not make the claim a liquidated
one.” (Jackson J in Dwr Cymru Cyf v Carmarthenshire County Council [2004] EWHC 2991
(TCC) [49]).
42 Dwr Cymru (n 41) [54]); Khan v Tyne & Wear Passenger Transport Executive [2015] UKUT 43
(LG).
43 As with a lawyer’s untaxed bill of costs: Truex v Toll [2009] EWHC 396 (Ch); [2009] 1 WLR 2121.
44 Such as salvage and general average: The Potoi Chau [ 1984] AC 226 (PC) 237 (Lord Diplock).
45 H Beale, Chitty on Contracts (31st ed, Sweet & Maxwell 2013), vol 1, para 26.008.
46 Standard Chartered Bank v Dorchester LNG (2) Ltd [2014] EWCA Civ 1382; [2015] 1 Lloyd’s Rep
97 [38] (Moore-Bick LJ).
 Ch 13 Of Debts, Damages and Errant Trustees 305

claims);47 duties to account, for instance where a defendant wrongly filches

money belonging to the plaintiff;48 and assorted miscellaneous obligations
denominated in money, such as judgment debts, or taxes.49 (The status of
restitutionary claims in this connection is unclear. Logically they should be
unliquidated;50 but on the authorities the matter remains open.)51
The distinction matters for numerous reasons. Some are technical: for
example, set-off (more generous for liquidated than for unliquidated cross­
claims);52 assignment (liquidated claims being assignable absolutely53 but
unliquidated ones only sub modo);54 limitation (acknowledgment restarts the
limitation clock, but only in respect of a “debt or other liquidated pecuniary
claim”);55 and personal insolvency (while most claims are now provable, only
claims embodying a “liquidated sum” allow the initial institution of insolvency
proceedings).56 But the important point here is that because a liquidated
claim is by definition one whose amount is calculable without reference to
the individual circumstances of plaintiff or defendant, it follows that it is not
subject to reduction due merely to a failure by the plaintiff to prove loss57 or

47 See eg Amantilia Ltd v Telefusion pic (1987) 9 Con LR 139.

48 See eg Re Vassis, ex p Leung (1986) 9 FCR 518, 526-527. In Hope v Premierspace (Europe) Ltd
11999] BPIR 695 (unliquidated) a claim for the return of stolen money was held unliquidated,
but it seems that this is best interpreted as involving a tort claim: see Webster v Mackay [2013]
EWHC 2571 (Ch); [2013] All ER (D) 193 [22].
49 Commissioner of Stamps (WA) v West Australian Trustee, Executor & Agency Co Ltd (1925) 36
CLR 98 (HCA); Re McGreavy [1950] Ch 269 (CA).
50 Since the measure of recovery is not a matters of simple calculation, but involves a process
of evaluation analogous to that applying in damages: namely, looking to the situation of the
individual parties and applying specific legal rules, such as what counts as a relevant gain, or the
relevance of matters such as officiousness or change of position.
51 Unliquidated: see Hope (n 48) (money had and received claim for the return of filched
funds is unliquidated, and thus incapable of supporting bankruptcy petition) (accepted by
Patten LJ in McGuinness v Norwich & Peterborough Building Society [2011] EWCA Civ 1286;
[2012] 2 All ER (Comm) 265 [40]); also Sutherland v Jatkar [2014] FCA 532; (2014) 222 FCR 601
(contribution claim between tortfeasors, although not for damages, regarded as unliquidated).
Liquidated: Chalkc v Inland Revenue Commissioners [2009] EWHC 952 (Ch); [2009] 3 CMLR
14 [157] (claim for recovery of mistaken payments); Re Vassis (n 48) 527-28 (stolen monies);
Biggerstaff v Rowatt’s Wharf Ltd [1896] 2 Ch 93 (CA) 105 (total failure of consideration).
And see too the assumption by Glidewell LJ in Woolwich Equitable Building Society v Inland
Revenue Commissioners [ 1991 ] 3 WLR 790 (CA) 835 (power to award damages in judicial review
proceedings does not encompass award of restitution, the former being unliquidated and the
latter liquidated).
52 Halsbury’s Laws of England (n 40) paras 652ff.
53 Fitzroy vCave [ 1905] 2 KB 364 (CA);see too Norglen Ltd (In Liquidation) vReeds Rains Prudential
Ltd [1999] 2 AC 1 (HL).
54 Trendtex Trading Corp v Crédit Suisse AG [ 1982] AC 679 (HL).
55 Limitation Act 1980 (UK) s 29(5)(a). Modern Australian legislation does not draw this distinction,
however: eg Limitation Act 1969 (NSW) s 54.
56 Insolvency Act 1986 (UK) s 267(2)(b) (equivalent to Bankruptcy Act 1966 (Cth) s 44(l)(b)(ii)
(referring to a “liquidated sum due at law or in equity”)).
57 “The plaintiff who claims payment of a debt need not prove anything beyond the occurrence of
the event or condition on the occurrence of which the debt became due. He need prove no loss;
the rules as to remoteness of damage and mitigation of loss are irrelevant ...”- Jervis v Harris
[ 1996] Ch 195 (CA) 202 (Millett LJ). See too McGuinness (n 51); E Bant and M Harding (eds).
Exploring Private Law (CUP 2010) 369-73.
306 Contract in Commercial Law

causation,58 or because allowing the victim of a wrong to recover in debt would

over-compensate him.59
At this point we can return to the decisions in Target and Mark Redler and the
argument that the liability there ought to have been regarded as a liability for an
“equitable debt”, meaning thereby a liquidated equitable claim analogous to a debt
at common law. The first difficulty here is that the application of the common
law liquidated-unliquidated distinction to equity is not straightforward. It is true
that in some contexts it has been carried over. Thus the rule in limitation cases that
only liquidated claims can be revived by acknowledgment extends to equitable
liabilities to which the Limitation Act 1980 (UK) applies directly or by analogy;60
in bankruptcy equitable liabilities, like legal obligations, can found a petition only
if liquidated;61 and in assignment law unliquidated equitable claims are subject
to the same restrictions as legal ones.62 Nevertheless, it has to be said that apart
from these specialised areas equity lawyers have largely ignored the common law
position. True, judicial references to “equitable debts” are plentiful from the 19th
century onwards. But they have little to do with the common law divide between
debts and damages, or liquidated and unliquidated liabilities.63 Instead use of the
term was overwhelmingly for unconnected reasons, such as making clear that a
given duty to pay was not enforceable at common law but only in chancery,64 that
a claim was not proprietary but personal,65 or that the claim concerned did not

58 MSC Mediterranean Shipping Co SA v Cottonex Anstalt [2015] EWHC 283 (Comm); [2015] 1 Lloyd’s
Rep 359. Similarly with mitigation: see White & Carter (Councils) Ltd vMcGregor [ 1962] AC 413 (HL)
and Abrahams v Performing Right Society Ltd [1995] ICR 1028 (CA) 1037 (Hutchinson LJ).
59 For instance, by allowing a claim for an agreed deposit: see Dewar v Mintoft [ 1912] 2 KB 373
(KBD) and Firodi Shipping Ltd v Griffon Shipping LLC (“The mv Griffon") [2013] EWCA Civ
1567; [2014] 1 CLC 1.
60 For recent examples see Manning vEnglish [2010] EWHC 153 (Ch); [2010] Bus LR D89 (partnership
account claim unliquidated and not subject to rule) and Barnett v Creggy [2014] EWHC 3080 (Ch);
[2015] PNLR 13 (claim for mispayment of trust funds liquidated and subject to it).
61 See eg Darjan Estate Co pic v Hurley /2012] EWHC 189 (Ch); [2012] 1 WLR 1782 (rent under
equitable lease liquidated and capable of founding bankruptcy petition). Similarly with claims in
equity for filched funds, though whether these are liquidated for these purposes is controversial:
compare Re Vassis (n 48) 526-27 (liquidated) with Hope (n 48) (unliquidated).
62 Implicit in Re Buick Sales Ltd [1926] NZLR 24 (SC) (discussing the assignability of equitable
claims against a company director).
63 Indeed, in Re Blencowe (1866) LR 1 Ch App 393 (CA) 394, the term “equitable debt” was used,
with no hint of incongruity, to refer to a claim for compensation for wilful default (in the context
of bankruptcy law).
64 See eg Re Blencowe (n 63) (equitable claim outside the then bankruptcy legislation, which was
limited to legal debts); Re Adams (1878) 9 Ch D 307 (CA) and Foster v Reeves [1892] 2 QB
255 (CA) (rent under a mere equitable lease); Dick v Swinton (1813) 1 V & B 371; 35 ER 145,
Bosanquet v Wray (1815) 6 Taunt 597; 128 ER 1167, Thompson v Norris (1852) 5 De G & Sm
686; 64 ER 1299 (intra-partnership claims); Terrell v Hutton (1854) 4 HLC 1091; 10 ER 790; Re
Athenatum Life Assurance Society (1858) 4 K & J 549; 70 ER 229 (claims by shareholders based on
a company constitution before the enactment of what is now the Companies Act 2006 (UK) s 33).
65 Notably in connection with claims to secret profits before FHR European Ventures LLP v Cedar
Capital Partners LLC [2014] UKSC 45; [2015] AC 250: see Metropolitan Bank v Heiron (1880) 5
Ex D 319 (CA) Lister & Co v Stubbs (1890) 45 Ch D 1 (CA) Clarkson v Davies [ 1923] AC 100 (PC)
Reading vR [1949] 2 KB 232 (CA) John v James [ 1991 ] FSR 397 (Ch D) 439; Ardlethan Options Ltd
v Easdown (1915) 20 CLR285(HCA) 292, Suzlon Energy Ltd v Bangad [2014] FCA 1105 [75]. But
there were other examples too: eg Re Rowena Nominees Pty Ltd (n 32) [59] (personal claim against
trustees of investment scheme not entitling plaintiff to interest in trust property).
 Ch 13 Of Debts, Damages and Errant Trustees 307

amount to an action in tort.66 Indeed, it is probably most accurate to say that the
term “equitable debt” was not used as a term of art at all.67 All this means that,
while Professor Charles Mitchell is correct to state that “[ t]he courts have said
that substitutive performance claims resemble claims for ‘an equitable debt’”,68
the significance of this may well be rather limited. Of the two statements cited in
support of the “equitable debt” analysis, that in Exp Adamson69 was in the context
of a polite fiction aimed at allowing fraud claims to be proved in bankruptcy
in the teeth of the restrictive rules in the then bankruptcy code,70 while that in
Re Smith Fleming & Co71 was making the simple point that, in the absence of
traceable trust property, the only claim against an errant trustee had to be an in
personam one. Neither had anything to do with the difference with liquidated and
unliquidated claims.
But let us put this point to one side. The phrase “we do this at common law
but that in equity” is not of itself a respectable argument;72 and it is perfectly
possible that the common law distinction between liquidated and unliquidated
claims, even though not in fact used by equity lawyers with any consistency, is

66 More important than it might first seem, in the late nineteenth century. At a time of unregulated
markets characterised by rampant fraud, the then bankruptcy laws denied proof of claims “in
the nature of unliquidated damages arising otherwise than by reason of a contract or promise”:
Bankruptcy Act 1869 (32 & 33 Viet, cap 71) (UK) s 31 (since repealed). To circumvent this, a series
of decisions allowed victims to prove against bankrupt fraudsters by somewhat implausibly
characterising breach of trust as an equitable (or even contractual) debt. See eg ex p Adamson
(n 37) referred to below; Flitcroft’s Case (1882) 21 Ch D 519 (CA) 527 (Bacon V-C); Re Smith
Fleming (n 37) 311 (James LJ). Note, too, the shady company promotion case of Emma Silver
Mining Co v Grant (1880) 17 Ch D 122 (Ch D) 130 (Jessel MR).
67 Other representative examples of liabilities which have at one time or another been called
“equitable debts” include the following: claims for income due from trust funds (Horsley v Cox
(1868-69) LR 4 Ch App 92 (CA); Webb v Stenton (1883) 11 QBD 518 (CA)); a life tenant’s duty
to make good waste (Micklethwait v Micklethwait (1857) 1 De G & J 504; 44 ER 818); claims
by and against estates in general (eg Stones v Cooke (1834) 7 Sim 22; 58 ER 745, Taylor v Taylor
(1875) LR 20 Eq 155: also Wentworth v Rogers [2003] NSWSC 472); claims for compensation
for breach of trust or breach of fiduciary duty (Obee v Bishop (1859) 1 De G, F & J 137; 45 ER
311, 142; Re Blencowe (n 63); Huggons v Tweed (1879) 10 Ch D 359 (CA); Wickstead v Browne
(1992) 30 NSWLR 1, 15 (Handley JA)); claims arising by subrogation or some similar doctrine
(eg Reversion Fund & Insurance Co Ltd v Maison Cosway Ltd [1913] 1 KB 364 (CA)); claims
depending on equitable assignments (Re London & Birmingham Flint Glass & Alkali Co Ltd
(1859) 1 De G, F & J 257; 45 ER 357; Tony Lee Motors Ltd vM S Macdonald & Son (1974) Ltd
[1981] 2 NZLR 281, 286); promises to settle property (ex p Campbell) (1809) 16 Ves Jun 244;
33 ER 977; Thompson v Thompson (1821) 9 Price 464; 147 ER 152); a surety’s right to be pre­
indemnified (Ferguson v Gibson (1872) LR 14 Eq 379); not to mention insurance contribution
claims (QBE Insurance (Australia) LtdvSLE Worldwide Australia Pty [2005] NSWSC 776; [ 10] 13
ANZ Ins Cas 61-654). It is hard not to sympathise with Jessel MR’s dismissive characterisation
of the whole thing as an “inaccurate phrase” — Re Jones (1881) 18ChD 109 (CA) 120.
68 See Mitchell, “Stewardship of Property and Liability to Account” (n 13) 223.
69 Exp Adamson (n 37) 819.
70 See n 66 above. Adamson’s case does not seem to have involved any abstraction of property held
on trust: it was a simple financing fraud. See too the more modern decision of the Federal Court
of Australia in Re Vassis (n 48) 526-27, holding a claim for defalcations by a solicitor-trustee to
be a debt and hence liquidated so as to be able to found a petition under s 44 of the Bankruptcy
Act 1966 (Cth).
71 Re Smith Fleming (n 37) 311 (James LJ).
72 See A Burrows, “We Do this at Common Law but that in Equity” (2002) 22 OJLS 1 (admittedly
in another context).
308 Contract in Commercial Law

nevertheless one that ought to be applied by them to throw light on the liability
of a trustee who fails to deal properly with trust property. The question then
is this: is it right to argue that the liquidated-unliquidated distinction reflects
the difference between the common form and wilful default forms of account
claims against a trustee, with the common form account corresponding to a
liquidated claim and a wilful default claim to an unliquidated one? Put another
way, can it be said that because the trustees liability is not dependent on the
loss suffered by the beneficiary, does not require proof of wrongdoing and
is based on the reconstitution of an ongoing trust fund, it must therefore be
regarded as a liquidated or debt liability artificially fixed at the value of the
assets unaccounted for? It is respectfully suggested that the answer is No.
First, we can deal with the fact that the amount of personal loss to the
beneficiary suing, or for that matter the entire lack of any loss to him, does not
represent the measure of the trustee’s liability. This is true;73 but it has to be
seen in context. It reflects the fact that a suit seeking reinstatement of the trust
property is brought for the benefit of all beneficiaries, not necessarily those
suing.74 It does not mean that a claim for reinstatement of the trust fund is not
a claim for loss, but rather that the beneficiary’s claim to surcharge the trustee
is essentially one brought in respect of third party losses, in this case the loss
suffered by a notional “trust estate”.75 Such third-party loss claims are nothing
very unusual in the context of the law of obligations as a whole,76 and there
is certainly no reason to regard them as being anything other than ordinary
unliquidated claims, albeit of a special type.
Secondly, what of the “no wrong” argument? This is the argument that
inlike (say) a liability in tort, or a liability in a trustee for wilful default
n failing to preserve the trust property, a trustee’s liability to make up the
value of assets found missing on the taking of accounts does not require the
claimant to plead or prove any breach of duty on the trustee’s part.77 It is this
factor which, the argument goes, shows that what we have here is in essence a
debt or liquidated liability. But this contention also, it is suggested, collapses
under stress. To begin with, while the fact that a liability does not depend
on a breach of duty by the defendant may prevent it being styled a liability
in damages,78 this does not mean that it must therefore be an unliquidated
obligation in the nature of a debt. On the contrary: there are plenty of examples
of such liabilities which are nevertheless unliquidated - for instance, a duty

73 Witness Bartlett (n 25) and Re Bell’s Indenture (n 25), holding that any tax saved by the beneficiary
is out of account.
74 Target (n 1) 434 (Lord Browne-Wilkinson); see too Mark Redler (n 16) [100] (Lord Reed) and
Australian Special Opportunity (n 24) [ 155]—[ 156] (Bathurst CJ); see also n 17 above.
75 Norton v Lord Ashburton (1914] AC 932 (HL) 952, 958 (Viscount Haldane); Target (n 1) 434
(Lord Browne-Wilkinson).
76 For example, bailees suing for bailors’ losses (eg The Winkfield (1902] P 42 (CA) and The Jag
Shakti [1986] AC 337 (PC)), or personal representatives suing negligent solicitors for prejudice
to legatees (see Chappel v Somers & Blake (2003] EWHC 1644 (Ch); (2004] Ch 19).
77 Mitchell, “Stewardship of Property and Liability to Account” (n 13) 223-24, citing Bacon v Clark
(1837) 3 My & C 294; 40 ER 938,298-99 and Angullia v Estate & Trust Agencies (1927) Ltd (1938]
AC 624 (PC).
78 Cf The Trident (1939] 1 KB 748 (CA) 756 (Mackinnon LJ) (statutory liability to compensate for
damage independent of breach of duty).
 Ch 13 Of Debts, Damages and Errant Trustees 309

to pay compensation for compulsory disturbance,79 and probably also certain

restitutionary liabilities.80 But in any case, the contention that the trustee’s
liability is not based on breach of duty is itself dubious. True, the beneficiary
need not prove a breach of trust. All he has to do is call on the trustee to
account for the assets entrusted to him, with it then being up to the trustee
to produce them or face presumptive liability if he cannot.81 But the liability
remains presumptive only. The trustee can still escape by showing that even
though a given asset is not to hand, its loss or alienation was not his fault or
was otherwise trust-compliant - in plain English, by proving that he was not
guilty of a breach of his obligations as a trustee. In other words, it is suggested
that this is simply an instance where liability does depend on wrongdoing,
but subject to a reverse burden of proof, of exactly the same kind as applies
(for example) to a bailee who no longer has the goods bailed to him and
cannot prove lack of breach of duty on his part.82 Nobody argues that his
liability is for this reason one in debt and not damages: and there is no reason
to treat a trustee any differently.
Thirdly, what of the contention that the nature of the trustee’s duty to carry
out the trust in specie, on which the duty to account is based, makes the latter
equivalent to the common law idea of a liquidated claim? The answer here is
simple: it does not. Return for a moment to the definition referred to above:
a liquidated claim is an abstract obligation to pay a fixed or calculable sum in
money. Now take a trust of a non-cash asset: for example, a block of shares. It is
quite true that the duty of the trustee is tied strictly to that asset. Thus a trustee
of 1000 shares in BHP Billiton pic must apply those shares for the benefit of the
beneficiary.83 There is no cash alternative; if, with engaging eccentricity, he takes
the dividends himself and tells his broker to credit the trust with an identical
income from his own resources, this is a breach of trust.84 To the extent that this
obligation is also enforceable in specie (for example, where the trustee still has
the shares but refuses to treat them as trust property), it is also correct to say
that questions of loss are indeed beside the point. It is exactly like a specifically-
enforceable contractual obligation to convey a house or pay a pension. Just as

79 Khan (n 42). For that matter, it never seems to have been seriously suggested that the claim in
Bunnah Oil Company (Burma Trading) Ltd v Lord Advocate [1965] AC 75 (HL) was a claim in
debt (though the issue of classification never in fact arose).
80 See Chalke (n 51) [157]; Re Vassis (n 48) 527-28; Biggerstaff (n 51) 105 (same re money paid
where failure of consideration). But these are possibly controversial: see above.
81 This was the point being made by Lord Cottenham in Bacon (n 77) 298-99 and Lord Romer in
Angullia (n 77) 637 (see note above).
82 This is true whether the bailor sues in detinue (see Reeve v Palmer (1858) 5 CB (NS) 84; 141 ER
33, 93 and Ballet v Mingay [1943] KB 281 (CA); N Palmer, Bailment (3rd ed, Sweet & Maxwell
2009) para 10.30ff) or for breach of bailment (Port Swettenham Authority v TW Wu & Co Sdn
Bhd [1979] AC 580 (PC)).
83 True, it was held in Hunter v Moss [1994] 1 WLR 452 (CA) that there could be a declaration of
trust of fungibles which left the interests of trustee and beneficiary interchangeable (and see too
White v Shortall [2006] NSWSC 1379). But that is a special case, and it does not alter the point
in the text.
84 Admittedly, this will normally be a harmless breach. But not necessarily so. It may matter if, for
example, the trustee invests the dividends wrongly taken in an appreciating asset. The beneficiary
in such a case will get the gain.
310 Contract in Commercial Law

the question whether the plaintiff has suffered any loss is an irrelevance there,85
so also here: the trustee must treat a trust asset as trust property, period. But
the duty to account if assets are found to be missing or unavailable is different.
True, where this liability takes the form of a money obligation it looks at first
sight a bit like a debt, being a pecuniary obligation, fairly readily calculable
in amount by reference to the value of the trust asset unaccounted for,86 and
independent of the specific circumstances of either beneficiary87 or trustee.88 But
the resemblance is deceptive. For one thing, save where the missing trust assets
are still under the trustee’s control,89 it is impossible in the nature of things to
compel him to perform the trust. All the law can do is impose a duty on him to
do the next-best thing: namely, to transfer into the trust a cash sum equivalent
to the asset unaccounted for. Even if the trust assets lost were themselves cash
assets, moreover, the same follows: replacing lost cash is not carrying out the
trust but providing a substitutive remedy to restore the trust funds.90
For another, assuming that we are talking about making the trustee pay a
cash sum into the trust, the amount of that sum depends on court assessment.
Hence even though it differs from a liability to make good an open-ended
loss (giving rise to the eminently sensible suggestion to style it “substitutive
compensation” as opposed to “reparative compensation”),91 it remains at
bottom an unliquidated liability to make compensation.92 The most helpful
analogy, it is suggested, is the liability in detinue93 of a bailee who loses goods.

85 The pension example was, of course, deliberately chosen: see Beswick v Beswick [1968 J AC 58
(HL), where exactly this point was in issue.
86 And does not, it has been said, include further consequential loss. As Burchett J put it in Re
Vassis (n 48) 526-27, there is a clear distinction between the nature of claims for the actual trust
moneys misappropriated and other consequential claims for damages which may arise from
a breach of trust. See too C Rickctt, “Understanding Remedies for Breach of Trust” (2008) 11
Otago LR 603,606-07; J Glister, “Breach of Trust and Consequential Loss” (2014) 8 J Eq 235. But
this is not certain: see note below.
87 For example, liability is unaffected by the fact that the asset would have been taxable in the
beneficiary’s (equitable) hands: Bartlett (n 25).
88 Thus the fact that the ultimate loss to the trust fund is entirely unforeseeable - for instance,
owing to a sudden subsequent appreciation in the value of the asset removed - is beside the
point: Re Dawson (n 23).
89 And even here the remedy of a specific order of restitution is not available as of right, with the
court retaining a jurisdiction to make a money award instead. See the South Australian decision
in Pickering v Smoothpool Nominees Pty Ltd (2001) 81 SASR 175 (Full Ct) (trust property
consisting of unique fishing permit unobtainable in the market: money payment nevertheless
ordered). Conversely, the defendant cannot it seems insist on making restitution in specie where
the plaintiff would prefer cash: see Nant-y-Glo & Blaina Ironworks Co v Grave (1878) 12 Ch D 738
(Ch D) and Re Dawson (n 23) 214-16.
90 Compare the situation with conversion. If I steal a $100 bill of yours I must pay you $100: but
this is still a substitutive remedy in damages for conversion. Sec D Fox, Property Rights in Money
(OUP 2008) para 9.08.
91 Terms originating in J Edelman and S Elliott, “Money Remedies against Trustees” (2004) 18 Tru
LI 116: see too Rickett (n 86) 606; Agricultural Land Management (n 32) [349] (Edelman J).
92 See Dwr Cymru Cyf (n 41) [49] (Jackson LJ). To this extent care must be taken with Lord
Millett NPJ’s statement in Hall (n 27) [168] that such liability “is not compensation for loss but
restitutionary or restorative”.
93 In England, unlike Australia, this is now a liability in conversion, following the statutory
suppression of detinue by the Torts (Interference with Goods) Act 1977 (UK) s 2. But the basis of
liability remains unaffected.
 Ch 13 Of Debts, Damages and Errant Trustees 311

The theory of this latter liability is, indeed, an almost exact common-law
doppelganger to that of the trustee. The bailee must return the goods entrusted
to him, or prove their loss was due to some cause exonerating him: if he
cannot, then he is precluded from denying that he still has them and must pay
the bailor their value.94 Yet this is a liability which, albeit based on a simple
valuation exercise, is beyond doubt neither liquidated nor a claim in debt.95
Moreover, there is a further point of dissimilarity with a debt or liquidated sum
worth noting. Such a claim is by definition fixed or calculable without reference
to the individual circumstances of particular parties. But the sum payable by
a trustee where property is unaccounted for may vary according to the loss
suffered by the trust.96 Hence while normally the award is of the value of the
misdirected property plus a standard rate of interest, if the trust would have
made a particular amount of gain from the assets concerned, then the liability
on an accounting may include this sum.9798

Conclusion
The conclusion to this chapter can be expressed in short order. First, it must be
admitted that the reasoning by which the courts in Target93 and Mark Redler99
reached their result will not do. In particular, both cases clearly misread the old
authorities on the taking of accounts against trustees, and wrongly started from
an overriding assumption that recovery for breach of trust should be treated
almost as if it were a branch of the law of damages for breach of contract or tort.
Secondly, however, there is no reason to regard the actual outcome in either case
as either unjust or wrong, or to say that the court should have disregarded the
fact that the claimants would have lost their money even if there had been no
breach of trust. Properly interpreted, the principle that a beneficiary is entitled
to have the trust fund reconstituted is entirely consistent with a decision to
have regard to what the trustee would legitimately have done with the trust
funds had everything gone according to plan. Nor is there any reason to regard
a trustee’s duty to reconstitute the trust fund as a form of debt or liquidated
liability. On the contrary: even on a strict interpretation of the old authorities,
this liability of the trustee’s falls to be regarded as compensatory in nature and
not as a fixed liability enforceable come what may whatever loss the trust may
or may not have suffered. In short, the claimants not only had no merits: in this
particular case they were not right, either.

94 Palmer (n 82) paras [ 1.072]—(1.073]; Reeve (n 82) 93; Jottcs v Dowle (1841) 9 M & W 19; 152 ER 9.
95 See Blue Sky One Ltd v Balli Group pic [2010] EWHC 631 (Comm); 2010 WL 902909 [ 118]
(Beatson J). See too Dwr Cymru Cyf (n 41) [49]—(51 ] (Jackson J); McGuinness (n 51) [36]
(Aldous LJ) (both stating that all claims in tort are by definition unliquidated).
96 Note, the loss suffered by the trust, not individual beneficiaries: see Bartlett (n 25).
97 See the careful discussion by Hamilton J in Lewis v Kation Pty Ltd [2006] NSWSC 480 [9]-[ 13],
approved by Allsop J on appeal (Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145; (2009) 257
ALR 336 [ 111 ]). To this extent the statement in Rickett (n 86) 606-07, referred to in n 86 above,
that consequential loss does not fall to be considered at all in such cases, has to be taken with a
pinch of salt.
98 Target (n 1).
99 Mark Redler (n 2).