Construcutive Trust

Question 1

What is a constructive trust

Answer 1

Arises by operation of law without regard to the parties intentions.
Construed by the courts as arising from specific circumstances.
Focusses on the unconscionability of the defendants actions
Property is not received directly from the settlor but from a third party or originally belonging to the defendant

Question 2

Key features of constructive trusts

Answer 2

Unconscionability: triggered by the defendants unconscionable conduct

No formal requirements- don’t require declaration or vesting even for land- s53.2 LPA

Limited duties of trustees

Question 3

Types of constructive trusts

Answer 3

1. Institutional
2. Remedial
3. Common-intention constitutive trust

Question 4

Institutional constructive trust

Answer 4

Conventional type of constructive trust declared by the court based on the unconscionability of the defendants holding onto a property wrongly obtained
Arises in the following circumstances:
- non-fulfilment of formality for an express trust
- voluntary transactions made by mistake
- contracts for sale of land
- breach of fiduciary duty

Question 5

Non-fulfilment of formality for express trust

Answer 5

Declaration and vesting of title
- arises where a trust is valid but the settlor has failed to comply with these formalities in respect of an express trust
- unenforceable as an express trust but courts will declare it as a constructive trust to prevent the trustee from claiming absolute ownership
- rochefoucauld v boustead

Question 6

Voluntary transactions made by mistake

Answer 6

Lady hood of Avalon v mackinnon- mistaken transferee will hold it on a constructive trust for the transferor
- confirmed by UKSC in Pitt v holt

3 conditions:
- transfer must be a gift or voluntary disposition- co-operative bank pls v hayes freehold
- donor must have been mistaken
- mistake is sufficiently grave

Question 7

Contract for the sale of land

Answer 7

• once a contract is concluded but before completion, the seller is deemed to hold the land on a constructive trust for the buyer- Jerome v Kelly

Question 8

Breach of fiduciary duty

Answer 8

Fiduciary= person of trust and confidence
- applies where a fiduciary obtains profit from their breach- ag for Hong Kong v Reid