Summary Quistclose Trusts Tutorial Notes

Tutorial 5
Quistclose trusts – ESSAY Q IN EXAM!!!!

Essential reading

Virgo ch 8.4 (NB this is only one section of chapter 8)

Barclays Bank Ltd v Quistclose Ltd [1970] AC 567 (HL)

Twinsectra v Yardley [2002] 2 AC 164 (HL) (paras 2, 12-17, 71-103)


B D Chan, ‘The Enigma of the Quistclose Trust’, (2013) 2 UCL Journal of Law and
Jurisprudence 1-39 (available on Learning Central).
(Note that this is written by a Masters student at UCL. It is very readable and should
assist your understanding of this subject).

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Recommended Extended Reading

E Hudson, ‘A Normative Approach to the Quistclose Trust’, (2017) 80 (5) Modern
Law Review 775-811 (available on Learning Central).

A Hudson, ‘What is a Quistclose trust and why is it so difficult to tell?’ in Great
Debates in Equity and Trusts (pp144-151) (available on Learning Central).

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Task
In pairs, discuss how Quistclose trusts do or do not accord with one of the following theories
(to be allocated by your tutor) and why:
 1. Quistclose trusts as express trusts
 Lord Hoffman in Twinsectra – possibly.
 It could be argued that money is held on express trust moment contract is formed.
 The express trust set up in lender’s favour.
 Borrower is trustee for lender.
 Borrower has limited power to use property for specified purpose.
 Accepted in Australia – Re The Australian Elizabethan Theatre Trust 1991

 2. Quistclose trusts as constructive trusts
Carreas Rothmans Ltd – Peter Gibson J: unconscionable for borrower to retain
beneficial interest in property. N.B. Not backed up with authority or opinion.

 3. Quistclose trusts as resulting trusts

Secondary – lender retains equitable interest. Meant to be an automatic resulting
trust.
Lord Wilberforce though says – common law and equity coming together. Not a
resulting trust.