Construtive Trusts

  • Created by: Edward
  • Created on: 10-02-17 10:39
Carl Zeiss Stiftung v Herbert Smith & Co (No 2) (1967)
Edmund Davies LJ: “a CT is a trust which is imposed by equity in order to satisfy the demands of justice and good conscience without reference to any express or presumed intention of the parties”
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Westdeutsche Landesbank Girozentrale v Islington LBC (1996)
Lord Browne-Wilkinson: general principles of CTs
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William v Barton (1927)
A secret profit
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A-G for Hong Kong v Reid (1994)
A bribe or secret commission
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Boardman v Phipps (1967)
The use of confidential information to make an unauthorised profit
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A-G for Hong Kong v Reid (1994)
Here, a fiduciary accepted bribes during course of employment by Crown; Crown able to recover property acquired by proceeds of bribes (three houses) even though houses were of higher value than bribes received; this was a proprietary claim against th
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Sinclair Investments (UK) v Versailles Trade Finance (2011)
Lord Neuberger MR wrongly concluded that Reid was unsound; claimant could not assert a proprietary interest in an asset purchased by a defaulting fiduciary with funds that were not beneficially owned by the claimant or arose from opportunities benefi
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FHR European Ventures LLP v Cedar Capital Partners LLC (2014)
FHR purchased Monte Carlo Grand Hotel; purchase price €211.5million; CCP provided consultancy services and acted as claimant’s agent in negotiating price; CCP also entered into agreement with vendor, which provided secret commission of €10million fee
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FHR European Ventures LLP v Cedar Capital Partners LLC (2014)
Overruled Sinclair; Lord Neuberger favoured FHR argument; rejected any notion that a proprietary claim could not be brought against a bribe or secret commission received by an agent; bribery was an evil practice and secret commissions were objectiona
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Barnes v Addy (1874)
Concerns where a person meddles or interferes with the trust so that he assumes the responsibilities of a trustee and faces consequent liability on that basis; known as trusteeship de son tort
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Dubai Aluminium Co v Salaam (2002)), Lord Millett
more modern: a de facto trustee
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Royal Brunei Airlines v Tan (1995)
• Where 3rd party dishonestly assists in misapplication of trust property, may be held personally liable in equity to restore the trust fund or compensate the beneficiary for the loss occasioned to the trust fund
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Twinsectra Ltd v Yardley (2002)
Old law: re meaning of “dishonesty”, HL favoured blend of subjective and objective meaning; 3rd party must be judged by standards of honest and reasonable people and must be aware that by those standards he was acting dishonestly
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Barlow Clowes International Ltd (In Liquidation) v Eurotrust International (2002)
Modern stance: objective element
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Starglade v Nash (2010)
CA: the deliberate removal (by its director) of the assets of an insolvent company was not dishonest in accordance with the honest standard of commercial behaviour; Sir Andrew Morritt: “the subjective understanding of the person concerned as to wheth
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El Ajou v Dollar Land Holdings (1994)
Hoffman J: requirements for liability: disposal ; receipt ; Knowledge
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In the Estate of Crippen (1911)
Forfeiture rule: a rule of public policy that precludes a person who has unlawfully killed another from acquiring a benefit as a conseq of the killing
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Dunbar v Plant (1998)
Here, survivor of suicide pact allowed to claim her inheritance on basis that, in light of all circum’s, justice demanded relaxation of forfeiture rule
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Bannister v Bannister (1948)
Here, a widow conveyed legal title to two cottages to brother-in-law for less than market price; was promised orally she could reside in one of them rent free for remainder of her life; no mention of this contained in conveyance; held: not open to ar
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Yeoman’s Row Property Management Ltd v Cobbe (2008)
CT has also been invoked re land contracts where formalities in s 2 of LP(MP)A 1989 are not complied with
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Ashburn Ansalt v Arnold (1989)
Provided that his conscience is affected, a CT can arise to bind the purchaser of property who agrees to take subject to a pre-existing interest
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Binions v Evans (1972)
Mr E permitted to live rent free in cottage owned by employer; Mr E died, left wife aged 73; 3 years later employer entered agreement with Mrs E; she could continue to live there for remainder of life as tenant at will, rent free; in return, she agre
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Binions v Evans (1972)
Held: attempt by B to evict Mrs E failed; B took property subject to CT in favour of Mrs E
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Loyd v Dugdale (2001)
payment of lower price was crucial as it acts as evidence of a newly formed obligation to give effect to a prior interest
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Pallant v Morgan (1952)
Neighbour allowed fellow neighbour to bid for parcel of adjoining land uncontested on understanding that, should land be successfully acquired, he would transfer part of the land to the neighbour; purchase made, neighbour sought to renege on agreemen
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Banner Homes Group v Luff Developments (No 1) (2000)
CA, necessary ingredients of liability: pre-acquisition understanding; advantage ;unconscionable
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Lysaght v Edwards (1876)
E.g. once a contract for sale of land has been made, the beneficial ownership of the property passes to the purchaser and the vendor is deemed to hold the legal estate on a CT for him
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Central Trust & Safe Deposit Co v Snider (1916)
if vendor proceeds to sell to 3rd party, he is deemed to hold the purchase money on trust for the original purchaser; the trust is discharged once specific performance ceases to be available
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Re Haggar (1930)
On date of death of first testator, a CT comes into effect and it is no longer open to the surviving party to leave that property to an alternative beneficiary (e.g. to a new wife)
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Goodchild v Goodchild (1996)
Thus, equity intervenes in order to prevent fraud that would arise if the survivor were able to take the benefit of the agreement without performing his obligations
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Charles v Fraser (2010)
Jonathan Gaunt QC, features of mutual wills (9 points)
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Laskar v Laskar (2008)
Presumption does not operate if the legal title is not in joint names or when the purchase was made in a non-domestic setting
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Stack v Dowden (2007)
Here, Mrs D able to rebut presumption by identifying no of features indicating a common intention that beneficial interests were unequal; she had contributed far more to the acquisition of the property and repayment of the mortgage than her partner h
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Jones v Kernott (2011)
Ms K able to est 90% share in family home as the parties’ intentions had changed after their separation (some 15 years before litigation commenced); from that time, Mr K contributed nothing to family home and cashed in a life joint assurance policy t
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Lloyds Bank v Rosset (1990), Lord Bridge
Here, there are two blends of CT: the express bargain CT; and the implied bargain CT
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Burns v Burns (1984)
If no discussion occurs, there is no scope for a CT under this head
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Curran v Collins (2015)
Here, it was impossible to argue that Ms C could reasonably have been led to believe that she would acquire an interest in the property because Mr C had repeatedly emphasised that the property was his alone
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Curran v Collins (2015)
Arden LJ: “that was sufficient to negate any reasonable belief in any common intention”
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Grant v Edwards (1986)
G informed partner L that only reason property was conveyed into his sole name was that her on-going divorce might be prejudiced if she was to be a joint legal owner; it was not genuine desire of G that L become a beneficial owner; nevertheless, L le
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Grant v Edwards (1986)
Held: a CT imposed to ensure she received half-share in house that G led her to believe she would have
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Grant v Edwards (1986)
The mere giving of a reason why someone is not on title deeds does not inevitably lead to any inference that there was an agreement to share beneficial ownership; although case is fact-sensitive
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Curran v Collins (2015)
E.g. Ms C was told she could not be on deeds as it was too expensive; however, unlike Grant v Edwards, the property was not intended to be a family home and no positive assertion was made to Ms C that the property would have otherwise been bought in
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Grant v Edwards (1986)
E.g. here, the claimant contributed to household expenses so that the def could meet the mortgage repayments
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Eves v Eves (1975)
Here, C did not make any financial contribution, but did carry out substantial physical labour re internal and external decorating, gardening and general maintenance; she also performed role of mother and housewife
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Curran v Collins (2015)
E.g. the fact that Ms C did not in any way act to her detriment further undermined her claim
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Clough v Killey (1996)
E.g. here, there was an express bargain that beneficial interest to be shared on 50:50 basis; Mrs K argued a CT arose which, due to express agreement, gave her 50% interest; subsequent to this arrangement, Mrs K undeniably acted to her detriment by m
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Clough v Killey (1996)
Peter Gibson LJ: it is only common sense that where the parties form a common intention re specific shares they are to take, those shares prima facie are the shares to which the court will give effect
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Gallarotti v Sebastianelli (2012)
However, here, the shares awarded did not correspond with the pre-acquisition agreement between the parties; because, the events anticipated by the parties when they entered into the agreement never materialised
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Gallarotti v Sebastianelli (2012)
Arden LJ: the agreement did not apply in the events which unfolded. It only covered the case where there was a slight imbalance in contributions; it did not in my judgement mean that they gave up any chance of substantial equality at the end of the d
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Drake v Whipp (1996)
Here, court felt it nec to look at all circum’s, including contributions to running of the home and family, to determine what constituted a fair share
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Lightfoot v Lightfoot-Brown (2005)
In absence of such common intention, no common intention CT will arise
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Oxley v Hiscock (2004)
Finding common intention simplified; Chadwick LJ: direct contributions to purchase price will be conduct from which such common intention can readily be inferred
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Gissing v Gissing (1971)
Old law: change of position localised only to direct financial contribution made to the initial and/or ongoing purchase of the property
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Stack v Dowden (2007)
However, focus on direct financial contributions was criticised as too restrictive, arbitrary and a source of injustice
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Stack v Dowden (2007)
Lord Walker: Whether or not Lord Bridge’s observation was justified in 1990, the law has moved on
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Stack v Dowden (2007)
Baroness Hale: many more factors than financial contributions might be relevant to divining the parties’ true intentions
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Fowler v Barron (2008)
Arden LJ: a holistic approach now had to be taken towards divining the intentions of the parties; post-Stack, contributions should no longer be limited to financial contributions
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Midland Bank v Cooke (1995)
Here, court undertook a survey of whole course of dealing between the parties relevant to their ownership and occupation of the property and their sharing of its burdens and adv’s
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Oxley v Hiscock (2004)
Contemporary approach: court to adopt a broad-brush approach to the calculation of shares under the implied bargain
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Law Commission’s recommendations (Law Com No 307)
o Promoted an optional scheme to redistribute family assets which was to apply to eligible cohabitants, usually with children
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Other cards in this set

Card 2


Lord Browne-Wilkinson: general principles of CTs


Westdeutsche Landesbank Girozentrale v Islington LBC (1996)

Card 3


A secret profit


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Card 4


A bribe or secret commission


Preview of the back of card 4

Card 5


The use of confidential information to make an unauthorised profit


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