Baden v Société Générale pour Favoriser le Développment du Commerce et de l'Industrie en France SA

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Baden v Société Générale
Royal Coat of Arms of the United Kingdom.svg
Court High Court
Full case name Baden v Société Générale pour Favoriser le Developpement du Commerce et de l'Industrie en France
Citation(s) [1983] BCLC 325, [1993] 1 WLR 509
Court membership
Judge(s) sitting Peter Gibson J
Keywords
Breach of trust

Baden v Société Générale pour Favoriser le Developpement du Commerce et de l'Industrie en France [1983] BCLC 325 is an English trusts law case, concerning breach of trust and knowing receipt of trust property. It was most famous for giving rise to the "Baden scale" or the "Baden knowledge scale" following on from the judgment of Peter Gibson J as to the five different types of relevant knowledge in knowing assistance cases.[1] The use of the Baden scale has since fallen out of judicial favour in the United Kingdom.[2]

Facts[edit]

Mr George Baden, Jacques Delvaus and Ernest Lecuit were liquidators of the Luxembourg Mutual Investment Fund (FOF Proprietary Funds Ltd, along with a fund of funds, Venture Fund (International) NV, and IOS Growth Fund Ltd, all mutual 'dollar funds'). They claimed that Société Générale owed it $4,009,697.91, which it held for its customer, the Bahamas Commonwealth Bank Ltd in a trust account. On 10 May 1973, it followed BCB's instructions, in arrangement with Algemene Bank, Amsterdam, transferred the money to Banco Nacional de Panama, to a non-trust account in BCB's name. This, claimed Baden, made Société Générale a constructive trustee, and so had a duty to account. Alternatively, Société Générale was claimed to owe a duty of care, and to be liable in damages for the loss suffered.

Judgment[edit]

Peter Gibson J held that Société Générale was not liable because it had no knowledge at the time of the fraud in which it assisted. The relevant knowledge had to be knowledge of the facts. Recklessly refraining to make enquiries that a reasonable banker would have made would be enough. But otherwise a banker had a primary obligation to comply with instructions, save in exceptional circumstances, in which it came under a duty of enquiry.

See also[edit]

Notes[edit]

  1. ^ Susan Barkehall Thomas. "Knowing receipt and knowing assistance - where do we stand?" (PDF). AUSTLII. Retrieved 14 March 2017. 
  2. ^ See Royal Brunei Airlines Sdn Bhd v Tan [1995] UKPC 4 where Lord Nicholls referred to knowledge as a "gradually darkening spectrum" rather than five separate compartments (in the context of dishonest assistance).

References[edit]

External links[edit]