Constructive Trusts

Question 1

What is a constructive trust?

Answer 1

It’s based on the parties’ intent.

It is an equitable remedy to prevent unjust enrichment of the legal holder in title by turning that person into a trustee, rather than a beneficiary.

Question 2

Is a constructive trust a trust?

Answer 2

No, it’s a remedy, so a person must plead for it in court.

Question 3

Do trustees of a constructive trust have administrative duties to the settlor or beneficiaries?

Answer 3

No because it’s not a real trust. The Trustee must simply convey property to the beneficiaries

Question 4

The claimant can show that the defendant (in receipt of trust property) wronged the claimant and holds assets that could be used to satisfy the claim against them. Is this sufficient to form a constructive trust in favour of the claimant?

Answer 4

No, you need trust property.

Question 5

In which 3 circumstances may a constructive trust be imposed?

Answer 5

Fraud (even against innocent heirs of a will)

Abuse of confidential relationship by trustee

Secret trust