#constructive trusts

In a series of cases in the 1970s denning mr sought to develop what he called ‘a constructive trust of a new model’ [Eves v Eves]

No fiduciary relationship needed: instead one would be imposed ‘whenever justice and good conscience require it . . . it is an equitable remedy by which the court can enable an aggrieved party to obtain restitution’

The main areas in which the new model constructive trust has been used are in disputes over the home

There are two objections to the new model constructive trust:

To look at a constructive trust as a remedy and not as a substantive institution is wrong because, the property is trust property and therefore if the trustee becomes bankrupt the beneficiaries take priority over the trustee’s creditors. It is more than just a remedy.

The idea of imposing a constructive trust whenever justice requires leads to uncertainty. 

The new model constructive trust was firmly rejected by the Court of Appeal in Halifax Building Society v Thomas and Re Polly Peck International plc (No. 2).

The most recent leading case is Stack v Dowden where the basis of the claim was said to be a constructive trust. 

Lady Hale in Stack v Dowden: the fundamental principle is ‘the search is to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it’. 

Profits made by a fiduciary

“[A trustee] is not, unless expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict” - Lord Herschell in Bray v Ford

Receipt of bribes

Attorney General for Hong Kong v Reid - Where a person receive bribes in breach of their fiduciary duty then they become a constructive trustee of them and so here the bribes were the property of their employer in equity. thus the employer was entitled to claim the profits from the bribes when they were invested.

Joint ventures

Where X and Y agree to acquire and develop land jointly and Y acquires it in his own name with the agreement of X but then seeks to retain the land for his own benefit, the court will regard him as holding the land on trust for the joint venturers i.e. both X and Y [Pallant v Morgan]

Statute as an instrument of fraud

Usually straightforward as in Rochefoucauld v Boustead, but 

Millett (1998) = they arise ‘whenever the circumstances are such that it would be unconscionable for the owner of the legal title to assert his own beneficial interest and deny the beneficial interest of another’.