common intention for constructive trusts
these do not arise due to express declaration or operation of the law (those are resulting)
common intention trusts – the law imputed an intention not merely infer. law imputes it from the situation
line between resulting and constructive is not clear
Stack v Dowden. v important. question about spouses buy property. husband contributes 35% wife the rest. they make indirect financial contributions.
was there a constructive trust? yes it was found it was even though house was registered to the husband only
court found the intention was to form a trust
first rule is merely because a title deeds say something that does NOT determine full extent of equitable interest.
quantification – how are shares divided? Stack v Dowden innovative. lots of things matter not just financial contributions including indirect contributions, childcare, purpose of the purchase, separate bank accounts.
Gissing and Gissing said it depends on financial contributions.
Baroness Hale’s judgement. on quantification
Rochefoucauld v Boustead. about LPA 53.1 B. says you cannot have a trust of land unless in writing
in this case someone used this statute for fraud. would not give property to someone because it was an oral agreement
court said it would not allow the statute to be used for fraud.
resulting trusts. 3 situations. one person buys a property convyed into the name of another person
rebuttable presumption. where one person buys something for another – the law may say the purchaser has an interest and it is a resulting trust. this presumption can be rebutted
trust arises where one person make a voluntary conveyance to another
if property is transferred to another on express trust if the trust fails – this is a resulting trust. goes back to the settlor
a purpose trust that fails becomes a resulting trust
why do these trusts arise?
two views
first one – Lord Brown Wilkinson in Westdeutsche. these trusts give effect to common intention
this blurs the line with common intention constructive trusts
a trust fails is a fudged to say it gives effect to the intention of the parties
Wadling said if a settlor was asked what would you like to happen to the property? Most would say he wants the property back
hypothetical situations.
presumed resutling trrust – get rid of property but comes back to the settlor
automatic resulting . tries to get rid of property but cannot. property comes back to the settlor
failed trusts resulting trusts. .
perfecting imperfections. you cannot perfect and imperfect gift
choithram pangrarni – self declaration of trusts. the trust was perfected. settlor was a trustee himself. he did not move the property to the trust.
unconscionability to resile from a gift then it is a valid equitable assignment of a gift
Re Rose – if you did all the steps that you needed to effect the gift then it is unconscionable to go back on it
non charitable purpose trusts. 4 cases.
re Astor. maintenance of good understanding between nations is invalid.
re Endacott. trust to parish council. invalid.
re Denley. semi fudge to beneficiary principle. land conveyed to be maintained as a purpose of a recreational sports ground mainly for employees of a company.
this disposition was valid. no identified beneficiaries. identified by class.
individuals are ascertainable.
disguised trusts appear like purpose trusts are for the benefit of specific individuals.
gifts to unincorporated associations. they have no legal owner. no legal personality.
if a gift is given to an unincorporated assoc how is it dealt with? depends on articles of the assoc. it can be dealt with under contract not trust
Leahy v attorney general from New South Wales. estate left by a man on trust for such orders of nuns of the Catholic church as someone will select.
problem was church is unincorporated assoc. not a gift to a body. might be a purpose trust. whether it is a gift to the members.
this depends on intention of settlor.
held it was a purpose trust in disguise
not a gift to the members.
no trust found.
trustee liability.
you are liable to act as a business would in his own affairs if you are a trustee.
trustee act 1925.
power to relieve trustees from personal liability. if he acts honestly and reasonably and ought to be excused from liability the court MAY relieve him wholly or partly.
a trustee can indemnify a trustee for breach of trust. this is when T commits breach with written consent of the B.
foundational principle. Keech v sandford.
trustee held a lease for the B. B was a minor. the Trustee tried to renew the lease for the B.
owner of the property says the B is a minor I do not want to renew the lease
trustee then renewed the lease for himself.
No fraud. this was not allowed. #he got the opportunity as a result of being a trustee.
no complex. breach of fiduciary duty.
you cannot get profits from the trust
phipps v boardman
trustees wanted to invest in something. thinking they could further B’s investments. B did not consent
T did it anyway. they made a profit for the trust fund and for themselves
B sued for profits. court held the T liable to account for all profits because he got the opportunity through being a trustee
does not matter that he did it in his own capacity.
assume in trusts there has been no breach
liability to account is strict.
armitage v nurse
exemption clauses and exclusions
said that no trustee will be liable for loss or damage to the claimants unless caused by fraud
can you reduce fiduciary duties this much?
you owe a duty of prudence
answer is you can reduce fiduciary duties. the clause was operative. it was not repugnant
can an exemption clause exclude liability for gross negligence. this is probably No.
irreducible core of trustee duties
this contains gross negligence.
care, prudence and diligence are owed
distinction between negligence and gross negligence is unclear
law commission said it is unclear
a useless fiduciary is still a fiduciary. Mothew v Bristol West Henning
tells you when a fiduciary relationship arises
armitage v nurse. yes you may exclude liability for negligence
good man theory of trusts – assume no breach
at all times the trustee is liable to account to the B
redferns case. target holdings. AIB v Redler
a purchaser tells solicitor to buy property. purchaser says do not hand over the money until the vendor pays off a mortgages on the property. vendor says he will pay but give me the money first
Redferns
solicitor hands over the money to the vendor in breach of trust. conveyance goes ahead.
conveyance happens. it turns out that the vendor had fraudulently inflated the price of the house
drop in house prices.
purchaser left out of pocket
if solicitor had not handed over the money the situation would not have arisen
the fraud was unrelated to the breach of trust and so was the drop in house prices
court said adjust the rule. apply the causation to breach of trust
As B you cannot go through chain of agents to find breach.
AIB case. v similar
Giambrone
knowing assistance.
when you are not T but help a T do something he should not
If someone helps a T in stealing money from the trust then you are liable for dishonest assistance
royal brunei. defendant was director and shareholder in audio leisure travel. held money on trust fro an airline
Mr. Tan paid money into its own bank account and went insolvent
did creditors get the money or did the airline. the creditors got it.
Mr. Tan – he was dishonest assistant and not a trustee. known for saying we do not need to prove the details of his state of mind. nor the state of mind of others. objective standard of dishonesty. if you are dishonest then you are liable.
tracing.
rule in clayton’s case. first in first out . money going into a mixed account
how do you know which money is spent on what?
this is for accounting purposes
Hallet. where a T squanders money in a mixed account there is a presumption that he squanders his own money first
what if T uses trust money for a good investment and some money he wastes . then T has to give the good investment to the trust.
B can choose between Hallet and Oatway.
Oatway rule – if money remains in the account is later dissipated the investment that the T bought with the first bit of money goes to the B.
in investment could be good for B to claim the investment. depends on whether
the investment goes up in value. B can claim
B might see that investment that T wrongly bought. B can choose not to take the investment and keep the money stll in trust account.
lowest intermediate balance. how much money is in the trust fund and is recoverable.
tracing is the idea where you move – the value of one thing is the value of another. does not work if values are not the same
10 K of B’s money in the bank. money goes down to 5 K due to trustee squander
T then re constitutes 2 K . is the whole 7 K the B ;s money?
The 5 K is identifiable as the B’s money. that is lowest intermediate balance.
equity and trusts based on conscience.
trusts occur where conscience is bound.
trusts funds for rich families. they are trusts with B.
backwards tracing – tracing into debt or overdrawn bank account
Trustee has the asset. money from B is used to pay off a debt
strict application of lowest intermediate balance rule tells you the money is lost
balance of debt is less then zero.
if you use B;s money to pay off a debt is impossible
Bishopsgate case
recent case. Brazil v Durant. doubts the previous case. when chain of transactions and a move money from account to another it does not matter if one account is overdrawn as long as chain of transaction is valid.
foskett v . proprietary interests relating to tracing
money paid by someone about to die paid to life insurance policy. paid 3/5ths of money and stole 2/5ths of it from B
he died. could B whose money had been stolen. could they claim 2/5ths of the insurance premium of the insurance pay out? they had a proprietary interest in it so they got the premium which was millions.
if balance is zero lowest intermediate balance then B’s money is zero
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