Constructive trusts Flashcards
Explanation for constructive trusts
Positive -
a) Unconscionability where D has acquired property in circumstances where it would be inequitable to allow him to treat it as his own (Re Goldcorp, Westdeutsche)
b) Unjust enrichment
Negative - imposed against intentions of trustee, doesn’t regard it (Chambers)
No justification, inappropriate label - Swadling
Types of constructive trusts
a) institutional - rising by operation of law, just to be recognised
b) remedial - judge’s own discretion
c) as proprietary remedy (Foskett v McKeown)
d) liability to account (3rd party liability)
e) common intention constructive trust (Shared homes)
Status of remedial constructive trusts
Not recognised by teh courts (Westdeutsche, Re Polly Peck, FHR European Ventures, Re D&D Wines)
Limited judicial support: London Allied Holding v Lees (Etherton J)
Constructive trusts for failure to constitute express trusts
Completely constituted trusts
a) Transfer of property (formality rules)
b) Self-declaration (Jones v Lock, Paul v Constance)
Unsuccessful transfers are not self-declarations
Equity will not perfect an imperfect gift/assist a volunteer (Milroy v Lord, Re Fry)
Donor has the right to change his mind at any time until time of creation (Re McArdle)
Genuine self-declaration
No clear intention because he could not give to foundation, TCP made himself a trustee (T Choithram International v Pagarani)
A settlor can both promise to transfer existing and future property to T to hold on trust and declare that existing property held by the settlor is immediately subject to planned trust (Re Ralli’s Will Trusts)
Exception to the rule that unsuccessful transfers are not self-declarations
Settlor has done everything in her power to transfer title, making it complete in equity
Milroy v Lord
Re Rose v Rose (settlor did everything in power, equity regards transfer as complete, such that the beneficiary has an immediate beneficial interest)
+ Re Rose v IRC (affirms earlier approach where the shares were registered earlier, so no estate tax)
Applied in Mascall v Mascall (father-son), Corin v Patton
Problems with the Re Rose rule
a) Lack of certainty (formalities’ role undermined)
b) Dependent on a particular transaction being effective to transfer donor’s equitable interest in property, but not legal interest (misleading to split legal and equitable title and time attained)
Justifications for Re Rose Rule
a) If donee has done everything, no assistance from equity required and the gift is complete
b) Where the donor has done everything, it would be unconscionable to attempt to rescind the gift
Difficulty - why the mere fact that the donor tried to make a gift makes it unconscionable for donor to change her mind (no duty to make it)
Incompletely constituted trusts
Can apply Re Rose principles if it would be unconscionable
Pennington v Waine
- Benevolent construction by Arden LJ; transfer effective when in agent’s hands
- Nephew was assured, to be director
- Documents not delivered until after aunt’s death
- Clarke LJ even more generous - transfer effective at signing
Curtis v Pulbrook
- Cautious approach, treats Pv W like proprietary estoppel
Rouchefoucauld v Boustead doctrine
Where there has been a promise by a recipient of a property to hold it on trust (new obligation to beneficiary), it would be unconscionable for trustee to renege
Facts: coffee plantation
Core requirement: promise made, reneged on (like estoppel)
Nature of a Rouchefoucauld v Boustead doctrine
Express trust (Rouchefoucauld v Boustead) - both parties intended to create trust from beginning - Supported by Swadling
Constructive trust (Bannister v Bannister) - unconscionability triggers constructive trust - Supported by YK Liew
Application of Rouchefoucauld v Boustead in 3 party cases: A transfers land to B subject to oral agreement that B holds on trust for C
Resulting trust for A (Feltham, Scott)
Constructive trust for C (Youdan)
Pallant v Morgan (joint venture constructive trusts)
Facts: Agents of neighbouring land owners bidding
Doctrine: If A and B agree that A will acquire some specific property for the joint benefit of A and B on terms yet to be agreed, and B in reliance on A’s is induced to refrain from attempting to acquire property, equity ought not to permit A when he acquires the property to insist on retaining the whole benefit for himself, excluding B
Nature of Pallant v Morgan trust
Constructive (Pallant v Morgan) - agreement pre-dates acquisition, and trust arises despite no attempt to create trust
Banner Homes (joint venture to purchase the site for development) - broad interpretation
a) timing of arrangement - not strict
b) type of arrangement - not strict
c) arrangement must be about acquiring the relevant property and the other would attain some interest
d) non acquiring party must confer advantage on the acquiring party that the acquiring party would be unconscionable to retain
e) equity intervenes when it’s too late for a party to go back to its position – no need for detrimental reliance, unlike proprietary estoppel
