Bird v Bird

The appeal concerned the liability of executors for a devastavit and the liability of third parties for knowing receipt of trust property. The dispute arose from the sale of the deceased's properties by his wife, acting under powers of attorney, who paid the proceeds into her personal bank account. The executors, who were also beneficiaries, failed to investigate the whereabouts of these proceeds.

The court was required to determine whether the executors were liable for devastavit for failing to call in and collect the assets of the deceased, and if so, how the loss to the estate should be calculated. Additionally, the court had to consider whether third parties had received trust property with knowledge of a breach of trust, specifically whether they knew the attorney lacked the power to deposit the proceeds into her own account and that payments to them were from those proceeds. The limitation period for the devastavit claim was also a key issue, with the court needing to ascertain whether time ran from the executors' initial failure to recover the loss or from the expiry of the limitation period for the estate's claim against the attorney.

The Court of Appeal allowed the appeal in part, setting aside certain earlier orders. It found the executors liable for devastavit, ordering judgment against them for a specific sum plus interest. The court reasoned that the executors ought to have enquired about the properties and the proceeds of sale, and their failure to do so constituted a breach of their duty. The court also remitted cross-claims against third parties for determination, indicating that the principles of knowing receipt under the first limb of *Barnes v Addy* were relevant, requiring actual knowledge of the breach of trust. The court also addressed the limitation period, implying that the claim against the executors was not statute-barred.

The court made detailed orders regarding the calculation of the judgment sum, including interest, and the allocation of costs. It also directed the parties to submit draft orders and submissions for the final determination of the judgment amount, or to agree on the terms themselves, to avoid further oral hearings.