Equity and Trusts: Royal Brunei Airlines Sdn Bhd v Tan - Coursework Example

The plaintiff then sought to press for the compulsion of the insolvent company’s official to carry the burden of fiduciary responsibility, or to have him held individually responsible for aiding and or abetting the company in violations of fiduciary duties or trusts. Borneo Leisure Travel’s was insolvent travel agent firm that owed finances to the Royal Brunei Airlines. As a result, the airline sought compensations from Mr. Tan, the travel agent's key executive and shareholder4. The case arose from the precedent set by the maxim of Lord Selborne L.C., issued in 1874 by the Court of Appeal in Chancery, in Barnes v.

Addy [1874] L.R. 9 Ch. App. 244, 251-252. I strongly believe that the case heard by the Court of Appeal of Brunei Darussalam, is safe in legal and public policy terms, since protection of trustees from damages or losses is mandatory in a contract5. Facts in the case Royal Brunei Airlines enlisted the services of Borneo Leisure Travel Sdn Bhd to help it with the agency role of booking passenger travel and transport of freight in Sabah and Sarawak’s environs6. Mr Tan served as Borneo Leisure Travel’s chief executive officer and main investor7. . As a result, Royal Brunei Airlines, sought to retrieve the money back from the agency by suing Mr. Tan. The Decision The Court of Appeal of Brunei Darussalam decided that Mr Tan was responsible as a trustee to Royal Brunei, by virtue of his working for the organization10.

The court noted that the organization and any of its key officials (Mr Tan) was not culpable of scam. Lord Nicholls noted that what mattered was the fraudulent assistant’s attitude, arguing that knowledge is influenced by a series of fraudulent motives11. In light of this, the threshold for being culpable in assisting violation of trust must be based on objective dishonesty12. This implies that the main trustee’s attitude does not count, provided the assistant has been proven dishonest in some way13.

Nonetheless, Mr Tan was culpable for violation of trust14. This came despite his intention being right in the sense that he hoped his company would get money to give the airline before the expiry of the 30-day period within which all payments were usually collected for submission to the airline15. Analysis of the decision The court referred to existing law to make the appropriate ruling, noting that money paid to Borneo Leisure Travel Sdn Bhd (BLT) on the sale of passenger tickets for the airline was held by the former party upon trust for the latter16.

This trust gave no authority to BLT to use the finances to settle the financial constraints during the 30-day period allowed by the airline. By upholding that BLT breached the trust by channelling the funds to its own coffers instead of only subtracting its commission and keeping the rest of the money intact for the airline, the court followed the English Trusts Law to the letter. The law and previous rulings