Constructive Trusts Flashcards
What is a constructive trust?
A trust imposed by operation of law.
What issues are there with the categorisation of constructive trusts?
Some constructive trusts still give effect to the parties’ intentions.
Automatic resulting trusts appear to be better classified as constructive trusts.
What is the unjust enrichment argument for constructive trusts and why is this bad?
An argument that constructive trusts exist to reverse unjust enrichment.
But there is not always an injustice when a constructive trust arises.
What is the unconscionability argument for constructive trusts? Why doesn’t it work?
Constructive trusts arise where somebody behaved unconscionably.
Unconscionability doesn’t justify the creation of a constructive trust.
Is there a unifying principle of constructive trusts?
No.
What are the rules for specifically enforceable duties to confer assets?
When a person contracts to transfer property, the contract will be specifically enforceable.
Meaning that the house will be held on constructive trust.
If the house is sold to someone else, you have a claim against the third party.
What is the Rule in Re Rose?
The exception to the rule that equity won’t perfect an imperfect gift - Jones v Lock.
It refers to share transfers - a share transfer form must be executed for legal title to shares to be passed.
A trust arises in favour of the receiver when the share purchase form is transferred - the donor must do everything in their trust.
What did Pennington v Waine do to the rule in Re Rose?
The share transfer form was sent to the auditor for a company rather than the company itself.
On a reading of Re Rose she would not have done all that was in her power.
Arden LJ found that a constructive trust arose because it would have been unconscionable for A to have changed her mind.
This makes the content of the rule unclear - Jones v Lock might be caught under it now.
Why would it have been unconscionable for A to change her mind?
What are secret trusts?
Trusts to be created on your death which don’t follow the formalities of the Wills Act.
They look a lot like express trusts as they give rise to the will of the settlor.
What is the law on oral trusts of land?
Land conveyed to T without following statutory formalities.
The law gives effect to the trust to avoid the trustee from gaining the trust property.
What is the rule on mistaken payments?
Chase Manhattan v Israel-British Bank - a constructive trust arose.
Browne-Wilkinson in Westdeutsche said that there will be a constructive trust for mistaken payment when the receiver learns of the payment.
What is the rule on theft and why is it strange?
Browne-Wilkinson in Westdeutsche - a thief holds stolen property on trust for the proper owner.
But the thief does not deprive the owner of his legal title, but this legal title will be lost if money is paid into a bank account.
What is the rule for trusts arising from profits made by the fiduciary?
Any profit made by the fiduciary is held on trust for the beneficiary.
Rather than a personal claim which strictly allows the trustee to keep their profit.
- Money owned at the outset by the beneficiary.
- Intervening to take money by yourself which would have become another’s.
- Bribes.
What did Lister v Stubbs say? When did it change?
The only claim for money obtained by breach of fiduciary duty (bribe) was personal.
This was rejected in AG for Hong Kong v Reid.
Why is Reid deemed to have been badly described?
A personal claim could cover the value of the bribe - there is no need for a proprietary claim.
A personal claim would not have a negative impact on the defendant’s other creditors in the event of insolvency.
