Quistclose Trusts Flashcards
What is meant by a Quistclose trust?
Where A pays money to B for a specific purpose, this money does not become part of their assets but exists as a primary trust to be used for that purpose. If this primary purpose fails, a secondary trust arises where B holds the money on trust for A
Where does the Quistclose trust come from and what are the facts?
Barclays Bank v Quistclose Investments
Rolls Razor borrowed money from D to pay off dividends owed to C. A loan was given on the condition it be used to pay the dividends. However, before it could be paid Rolls Razor went into liquidation and Barclays sought to use the money to pay off an overdraft RR had with them previously. This was denied in favour of a trust for Quistclose
What is Lord Hoffmans judgement about the Quistclose trust?
Twinsectra v Yardley
Did not believe there was a primary or secondary trust, but one single trust that was continuing through out and this is a completely orthodox resulting trust
What is the main issue with the Quistclose trust?
Unclear under which traditional heading of trusts they fit (i.e. express, resulting or constructive) arguments could be made for all. Leading judgement is Lord Millett
What was said in the case of Prickly Bay Waterside v British American Insurance Company?
Lady Arden said a Quistclose trust can take many forms, in one case it may be resulting and in the next is express, but such is the ‘flexibility of equity’
