Constructive Trusts I

Question 1

What is meant by a constructive trust?

Answer 1

One that is said to arise by operation of the law, not based on the intention of the parties to create a trust

Question 2

What is the first type of constructive trust that can arise from Lysaght v Edwards?

Answer 2

Vendor-purchase constructive trust, where there is a sale of land by contract a trust arises to maintain the land

Question 3

What equitable maxim justifies the vendor purchaser constructive trust?

Answer 3

‘Equity looks on as done that which ought to be done’
Used as a basis in Walsh v Lonsdale

Question 4

What does the case of Scott v Southern Pacific Mortgages tell us?

Answer 4

A purchaser of land does not have sufficient interest in property to confer an equitable proprietary right before completion of sale

Question 5

What is the second way in which a constructive trust can arise under Chase Manhattan Bank v Israel-British Bank?

Answer 5

Mistaken payment, payer of the money is said to retain equitable property in the money and the recipient therefore has a fiduciary duty to respect this right

Question 6

How has the decision of Chase Manhattan Bank v Israel-British Bank been justified?

Answer 6

Westdeutsche Landesbank v Islington LBC, Lord Browne-Wilkinson said the decision might be right where the recipients conscience is concerned and they become aware of the mistaken payment, meaning it would then be unconscionable for them to retain the money

Question 7

Which case shows a constructive trust arising due to the rights of another?

Answer 7

Binions v Evans, the defendants by allowing the claimant to remain in their home for a discount had created a constructive trust and it would be unconscionable for the court to allow the claimant to be evicted

Question 8

What is the duty of the trustee in a vendor purchaser constructive trust?

Answer 8

Extent of the duty to the purchaser is to maintain the trust property and no more
Englewood Properties Ltd v Patel