Court High Court | ||
Full case name Baden v Societe Generale pour Favoriser le Developpement du Commerce et de l'Industrie en France Citation(s) [1983] BCLC 325, [1993] 1 WLR 509 | ||
Baden v Societe Generale 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.
Contents
Facts
Mr George Baden, Jacques Delvaus and Ernest Lecuit were liquidators of the Luxembourg Mutual Investment Fund. They claimed (FOF Proprietary Funds Ltd, along with a fund of funds, Venture Fund (International) NV, and IOS Growth Fund Ltd, all mutual 'dollar funds') that Societe Generale 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 Societe Generale a constructive trustee, and so had a duty to account. Alternatively, Societe Generale was claimed to owe a duty of care, and to be liable in damages for the loss suffered.
Judgment
Peter Gibson J held that Societe Generale 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.