Belmont later claimed City was liable to account as a constructive trustee.
[1] The Court of Appeal held that City Industrial Finance was liable to account.
Buckley LJ noted Barnes v Addy to mean that a stranger who receives some of the trust or assists with knowledge of facts in a dishonest design will be liable.
He becomes a constructive trustee for the company of the misapplied funds.Goff LJ concurred.
What Belmont has to show is that the payment of the £500,000 was a misfeasance, which for this purpose is equivalent to breach of trust, that City received all or part of this money, and that it did so knowing, or in circumstances in which it ought to know, that it was a breach of trust.... ...'The long arm of equity’ is long enough to catch this sort of transaction.Waller LJ concurred.