quistclose trust Flashcards
Chambers
the essential feature of every QCT is that money is paid by one person to another with a condition attached to its use
Barclays Bank v Quistclose Investments
company borrowed money from Q to pay shareholder dividends, specifically agreed loan would be used for this purpose only, money put into seperate bank account in BB who the company was in debt to, company went into liquidation prior to paying dividends, Q sought return of moeny, BB sought to take some against overdraft, HOL held money was paid into a separate account for specific purpose, purpose was not fulfilled, money held on RT for Q
Lord Wilberforce
held mutual intention of R and the company was the sum advanced should not become part of the assets of the company, a necessary consequence of this is that the money was to be returned to R
Re EVTR
held QT is effectively where a RT in favour of the provider of the money arises when money is provided for a particular purpose only and the purpose fails
Re McKeown
once it is made clear that the funds being provided are to be applied to a particular purpose it is not necessary that the word trust be used
Twinsectra v Yardley
monies paid into solicitors account for the purchase of property, solicitor went bankrupt, T took proceedings against solicitor & others who used money on grounds they dishonestly breached trust, held money was held on QT for lender
Lord Millet
when money is advanced, the lender acquires a right, enforceable in equity, to prevent its application for any other purpose, emphasised a QT will not arise merely because money is lent for a particular purpose, what is required is a mutual intention money will be used for the sole purpose only
Harlequin Property
no QT as while funds had been paid over for a project, it could not be established that there was a mutual intention that the funds would be used for no other purpose
Bieber v Tethers
P sought to recover monies which they invested where company went insolvent, argued company held their investment on QT, held the purpose must be sufficiently clear so that at the time of the application of the money it is possible to know definitely whether the purposes have been achieved
Smyth
the key element is in the contractual agreement and the intention of the parties @ time contract was entered into, this will be assessed by an objective test, the subjective intentions of the parties being irrelevant in deciding whether there is a QT
Bellis v Challenor
held the transferor must have intended to enter into arrangements which viewed objectively have the effect in law of creating a trust, a person created a trust by his words, not by his innermost thoughts
Harlequin Property
QT denied where payments made by P for the purposes of developing a hotel resort were not limited to a specific purpose and no other purpose
