Knowing assistance and equitable compensation

Abstract

Should the equitable compensation payable by a knowing assistant be assessed by reference to the loss flowing from the assistance itself, or the loss flowing from the underlying fiduciary breach? In Michael Wilson & Partners Ltd v Nicholls, the High Court confirmed that liability to account as a constructive trustee is imposed directly upon a person who knowingly assists in a breach of fiduciary duty. This can be read as indicating that a knowing assistant’s compensatory liability is limited to the consequences of the assistance. This is not the traditional position, and it is not the current position in England and Wales. The article argues that the point is still open in Australia, and that it would be consistent with the Michael Wilson & Partners Ltd v Nicholls case to make a knowing assistant liable for the consequences of the underlying fiduciary breach.