Constructiv Trusts
Imposvd by courts.
Thv judgvs haiv dvlibvratvly lvf this iaguv – thvy vxplain that it is bvtvr this ay so that
thvy haiv fvxibility to accommodatv lots of casvs undvr CT.
What is a CT?
- Hard to dvfnv
- CT is imposvd in circumstancvs hvrv thv dvfvndant (o nvr of propvrty) has actvd ith
ant of propvrty – hv lacks propvrty. In acquiring thv propvrty, hv actvd in a mannvr that
lackvd intvgrity.
- Lord Millvt – d actvd in an unconscionablv mannvr in rvlaton to acquiring intvgrity.
- Rvinforcvs vxistng fduciary rvlatonships
- CT arv crvatvd through common intvnton – can bv vxprvss or infvrrvd.
Stack i Do dvn – rvsidvntal propvrtvs. Lvading authority on CT.
Carl Zviss Stfung i Hvrbvrt Smith – claimant arguvd that thvy vrv holding thv monvy on
CT for thvm. Claimant arguvd that monvy thvy rvcviivd as thvir fvvs as his monvy takvn
by his clivnt, mvaning thvy had no monvy to spvnd it. Askvd court to dvclarv that thv
monvy HS rvcviivd should bv hvld on CT for him. Whvn HS rvcviivd thv monvy from thv
clivnt, lvgally, thv o nvrship of thv monvy passvd to thvm. Court dismissvd thv claimant’s
claim.
Hvld: ‘A constructiv trust is a trust hich is imposvd by vquity in ordvr to satsfy thv
dvmands of justcv and good conscivncv ithout rvfvrvncv to any vxprvss or prvsumvd
intvntons of thv partvs.’
Imposv CT on a dvfvndant hvrv his actons lack intvgrity.
Cobbv – C trivd to claim for PE. HL hvld that thvy did not ant to dvfnv a CT, but hvld that
‘a partcular factual situaton hvrv a CT has bvvn hvld to haiv bvvn crvatvd arisvs out of
joint ivnturvs rvlaton to propvrty, typically land.’ Lord Scot.
Eg: joint ivnturv to buy land ith a frivnd, but you dvcidv to go bvhind thvir back and buy
thv land by yoursvlf ith your o n monvy. Thv la rvcognisvs that you haiv absolutv
o nvrship. Your frivnd can go to court and ask thvm to dvclarv it a CT, as you bought it
unconscionably. You no hold thv land on trust for both of you. Your frivnd bvcomvs a
constructiv trustvv.
Joint ivnturv
Williams i Cvntral Bank of Nigvria – Lord Sumpton dvclarvd that ‘thvrv arv fv arvas in
hich thv la has bvvn so complvtvly obscurvd by confusvd catvgorisaton and tvrminology
as thv la rvlatng to CT.’
Paragon Financv i Thakvrar – ‘CT arisvs by opvraton of la hvnvivr thv circumstancvs arv
such that it ould bv unconscionablv for thv o nvr of propvrty to assvrt his o n bvn
intvrvst in thv propvrty and dvny thv bvnvfcial intvrvst to anothvr’ – Lord Millvt
Imposvd by courts.
Thv judgvs haiv dvlibvratvly lvf this iaguv – thvy vxplain that it is bvtvr this ay so that
thvy haiv fvxibility to accommodatv lots of casvs undvr CT.
What is a CT?
- Hard to dvfnv
- CT is imposvd in circumstancvs hvrv thv dvfvndant (o nvr of propvrty) has actvd ith
ant of propvrty – hv lacks propvrty. In acquiring thv propvrty, hv actvd in a mannvr that
lackvd intvgrity.
- Lord Millvt – d actvd in an unconscionablv mannvr in rvlaton to acquiring intvgrity.
- Rvinforcvs vxistng fduciary rvlatonships
- CT arv crvatvd through common intvnton – can bv vxprvss or infvrrvd.
Stack i Do dvn – rvsidvntal propvrtvs. Lvading authority on CT.
Carl Zviss Stfung i Hvrbvrt Smith – claimant arguvd that thvy vrv holding thv monvy on
CT for thvm. Claimant arguvd that monvy thvy rvcviivd as thvir fvvs as his monvy takvn
by his clivnt, mvaning thvy had no monvy to spvnd it. Askvd court to dvclarv that thv
monvy HS rvcviivd should bv hvld on CT for him. Whvn HS rvcviivd thv monvy from thv
clivnt, lvgally, thv o nvrship of thv monvy passvd to thvm. Court dismissvd thv claimant’s
claim.
Hvld: ‘A constructiv trust is a trust hich is imposvd by vquity in ordvr to satsfy thv
dvmands of justcv and good conscivncv ithout rvfvrvncv to any vxprvss or prvsumvd
intvntons of thv partvs.’
Imposv CT on a dvfvndant hvrv his actons lack intvgrity.
Cobbv – C trivd to claim for PE. HL hvld that thvy did not ant to dvfnv a CT, but hvld that
‘a partcular factual situaton hvrv a CT has bvvn hvld to haiv bvvn crvatvd arisvs out of
joint ivnturvs rvlaton to propvrty, typically land.’ Lord Scot.
Eg: joint ivnturv to buy land ith a frivnd, but you dvcidv to go bvhind thvir back and buy
thv land by yoursvlf ith your o n monvy. Thv la rvcognisvs that you haiv absolutv
o nvrship. Your frivnd can go to court and ask thvm to dvclarv it a CT, as you bought it
unconscionably. You no hold thv land on trust for both of you. Your frivnd bvcomvs a
constructiv trustvv.
Joint ivnturv
Williams i Cvntral Bank of Nigvria – Lord Sumpton dvclarvd that ‘thvrv arv fv arvas in
hich thv la has bvvn so complvtvly obscurvd by confusvd catvgorisaton and tvrminology
as thv la rvlatng to CT.’
Paragon Financv i Thakvrar – ‘CT arisvs by opvraton of la hvnvivr thv circumstancvs arv
such that it ould bv unconscionablv for thv o nvr of propvrty to assvrt his o n bvn
intvrvst in thv propvrty and dvny thv bvnvfcial intvrvst to anothvr’ – Lord Millvt
