Constructive Trusts Reviv

Question 1

What is a constructive trust?

Answer 1

A trust that arises by operation of law and is imposed by the court in response to conduct, rather than by the intention of the parties.

Question 2

How do constructive trusts differ from express and resulting trusts?

Answer 2

Constructive trusts do not depend on intention but are imposed to prevent unconscionable retention of property.

Question 3

What is the key exception to the non-intentional nature of constructive trusts?

Answer 3

The common intention constructive trust in relation to the family home

Question 4

Is there a single unifying principle underlying all constructive trusts?

Answer 4

No. There is no clear overarching principle that binds all constructive trusts together.

Question 5

What did Edmund Davies LJ say about the definition of constructive trusts?

Answer 5

“English law provides no clear and all embracing definition of a constructive trust.”
— Carl-Zeiss Stiftung v Herbert Smith (No 2) (1969)

Question 6

Why are the boundaries of constructive trusts deliberately vague?

Answer 6

To allow courts flexibility to achieve justice without being restricted by technicalities.

Question 7

How did Deane J describe the constructive trust in Muschinski v Dodds?

Answer 7

“A remedial institution which equity imposes regardless of actual or presumed agreement or intention.”
— Muschinski v Dodds (1985)

Question 8

How did Lord Millett define constructive trusts in Paragon Finance?

Answer 8

“Arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of the property to assert his own beneficial interest.”
— Paragon Finance v Thakerar (1999)

Question 9

What concept lies at the heart of constructive trusts according to Lord Millett?

Answer 9

Unconscionability.

Question 10

In what five situations will courts impose a constructive trust?

Answer 10

Breach of fiduciary duty

Disposition of trust property in breach of trust

Fraudulent or unconscionable conduct

Re Rose situations

The Pallant v Morgan equity

Question 11

What is an institutional constructive trust?

Answer 11

A trust that arises automatically when certain events occur, independent of any court order.

Question 12

What is a remedial constructive trust?

Answer 12

A trust created by court order as a remedy where no trust existed beforehand.

Question 13

Who articulated the distinction between institutional and remedial constructive trusts?

Answer 13

Tipping J in Fortex Group Ltd v MacIntosh (1998).

Question 14

What did Tipping J say about institutional constructive trusts?

Answer 14

They arise upon the happening of the events that bring them into being and are merely declared by the court.

Question 15

Why is the remedial constructive trust described as “creative”?

Answer 15

Because it depends entirely on a court order for its existence.

Question 16

How do US jurisdictions generally view constructive trusts?

Answer 16

As restitutionary devices imposed to remedy unjust enrichment.

Question 17

What is the restitutionary rationale behind remedial constructive trusts?

Answer 17

To strip the defendant of gains unjustly obtained rather than compensate the claimant’s loss.

Question 18

Why is this approach controversial in English law?

Answer 18

It may elevate personal claims into proprietary rights, disrupting insolvency priorities.

Question 19

Which case shows that English law does not recognise remedial constructive trusts?

Answer 19

Halifax Building Society v Thomas [1996].

Question 20

Why was a constructive trust rejected in Halifax v Thomas?

Answer 20

Because English constructive trusts are institutional, not remedial.

Question 21

What role did unjust enrichment play in Halifax v Thomas?

Answer 21

The court declined to impose a trust merely to prevent unjust enrichment.

Question 22

How did Westdeutsche Landesbank v Islington LBC engage with remedial constructive trusts?

Answer 22

Lord Browne-Wilkinson suggested they might be useful, but did not apply them.

Question 23

Why was no constructive trust imposed in Westdeutsche?

Answer 23

Because the defendant’s conscience was not affected at the time of receipt.

Question 24

What is required before a constructive trust will be imposed in English law?

Answer 24

An independent cause of action, such as breach of fiduciary duty or unconscionable conduct.

Question 25

What principle limits the imposition of constructive trusts in commercial cases?

Answer 25

Reluctance to introduce equitable proprietary remedies without wrongdoing.

Question 26

What equitable maxim underpins many constructive trust cases?

Answer 26

Equity will not allow a statute to be used as an instrument of fraud.

Question 27

Which case exemplifies this principle?

Answer 27

Rouchefoucauld v Boustead [1897].

Question 28

What happened in Rouchefoucauld v Boustead?

Answer 28

A transferee attempted to rely on lack of formality to claim absolute ownership.

Question 29

Why did the court impose a constructive trust in Rouchefoucauld?

Answer 29

To prevent the defendant using statutory formalities to commit fraud.

Question 30

Which statutory provision was at issue in Rouchefoucauld?

Answer 30

Section 7 of the Statute of Frauds 1677.

Question 31

What modern provision corresponds to that statute?

Answer 31

Section 53(1)(b) Law of Property Act 1925.

Question 32

How did Bannister v Bannister apply similar principles?

Answer 32

A purchaser was prevented from denying a promised right of occupation.

Question 33

Why was a constructive trust imposed in Bannister v Bannister?

Answer 33

Because it would have been fraudulent to rely on lack of written formality.

Question 34

How did Binions v Evans extend this reasoning?

Answer 34

By enforcing rights promised to a third party through a constructive trust.

Question 35

What justified the constructive trust in Binions v Evans?

Answer 35

Unconscionable conduct by purchasers who had bought at a reduced price.

Question 36

How does Yaxley v Gotts link proprietary estoppel and constructive trusts?

Answer 36

Unconscionable reliance on an oral agreement gave rise to a constructive trust.

Question 37

Which statute was unsuccessfully relied upon in Yaxley v Gotts?

Answer 37

Section 2 Law of Property (Miscellaneous Provisions) Act 1989.

Question 38

Why did the court reject reliance on that statute?

Answer 38

Because it would have allowed the defendant to perpetrate fraud.

Question 39

What important limit on equity is illustrated by Midland Bank v Green?

Answer 39

Not all sharp practice amounts to fraud.

Question 40

Why was no constructive trust imposed in Midland Bank v Green?

Answer 40

Because failure to register an interest, though harsh, was not fraudulent.

Question 41

What principle did the House of Lords affirm in Midland Bank v Green?

Answer 41

Statutory schemes governing property rights must be respected.

Question 42

Why was bona fides irrelevant in Midland Bank v Green?

Answer 42

Because the Land Charges Act operated strictly regardless of notice.

Question 43

Which case contrasts with Midland Bank v Green?

Answer 43

Lyus v Prowsa Developments [1982].

Question 44

Why is Lyus v Prowsa Developments significant?

Answer 44

It shows that equity may intervene where there is a clear undertaking.

Question 45

What overarching theme emerges from constructive trust jurisprudence?

Answer 45

Equity intervenes to prevent unconscionable conduct, but respects statutory boundaries.