CONSTRUCTIVE TRUSTS

CONSTRUCTIVE TRUSTS

1. Arise by operation of law, irrespective of parties express or presumed intentions

   • Court decides when property should be held for benefit of someone whom equity and good conscience demand it to be held for!
   • HUSSEY V PALMER Paid money, moved into SIL's house, extension not built
     • CT imposed wherever justice and good conscience require it!

2. No formal written requirements excluded from s53(1)(b) & (c) does not have to be evidenced in writing

3. PROFITS BY PERSON IN FIDUCIARY RELATIONSHIP

   • BRAY v FORD
     • Person as a FR is not allowed or entitled to make a profit unless expressly provided for
       • Cannot put himself in position where interests and duty conflict
         • TITO v WARDELL
           • Tree analogy While fruit is on the tree, have a FR, once fruit on ground FR is gone.
   • READING v AG - FR exists when one person entrusts another with a job to perform
     • Sergeant helping to move contraband
       • He'd been entrusted to perform a job, the contraband was not part of that job, bribe money recovered
   • FID liable in 3 circumstances
     • 1) receiving remuneration to which he is not entitled
       • ie making unauthorised payments to himself - SUGDEN v CROSSLAND £75 inducement to retire
         • 2) Entering into transaction on own behalf instead of principals
           • KEECH v SANDFORD - market lease for minor, trustee could not keep lease for himself.
             • C/F RE BISS Widow applying for lease, refused so son took it on, could keep as not a trustee, no FR just one of the next of kin
             • 3) Using confidential information for own ends
               • KEECH v SANDFORD takeover assisted by confidential information gained whilst working for the trust
                 • IDC v COOLEY C was MD, left job saying ill but really to perform other contract, had to pay back money
                   • C/F QUEENSLAND MINES v HUDSON QM interested in mining operation. H obtained the licences for QM to do job
                     • QM couldn't afford to proceed, H resigned as MD& with QM's knowledge undertook the work. Did not have to pay the profit back.
                       • BRIBES
                         • LISTER & CO v STUBBS
                           • AC held that when fiduciary accepts a bribe, not held as CT
                             • Overturned in AG of HK v REID public prosecutor taking bribes, bought property in NZ with money. Right in rem imposed could claim all the property
                               • followed in CROWN RESOURCES AG v VINOGRADSKY
                                 • BUT - SINCLAIR INVESTMENTS UK v VERSAILLES TRADE FINANCE said that AC should follow own decisions unless 'per incuriam or of doubtful reliability
                                   • Beneficiary cannot claim proprietary relief unless:
                                     • Asset or money was or had been beneficially property of beneficiary
                                       • OR, trustee had acquired the asset by taking advantage of opportunity or right which was the beneficiaries
                                         • So, personally liable in equity but no proprietary interest!!
   • Existence of FR question of fact not law from ENGLISH v DEDHAM VALE PROPERTIES LTD

4. Only arises when a FID uses trust property to make an unauthorised profit

   • No need to prove fraud
   • Distinction between
     • Being held personally liable/in personam
     • Held as CT - right in rem so rights over property