CONSTRUCTIVE TRUSTS

Constructive Trusts



Constructive Trusts

Introduction

Constructive trusts are a very difficult area of law, and this can be seen to operate at all levels of their consideration. Indeed, they are not to be found easily defined anywhere, and many works in the area as well as the law itself point to the conclusion that they are not susceptible to easy definition and illumination. On a positive note, such uncertainties can be recast as constituting flexibility, and in this manner may even be seen to represent their strength. What is beyond dispute in academic writings and in case law alike is that the constructive trust is a very flexible and indeed adaptable instrument. There are many accounts of this adaptability and capability to meet a variety of situations-even ones which are ever changing in our society.

As indicated, constructive trusts cannot easily be defined. This is clear from the case Carl Zeiss Stiftung v Herbert Smith (No. 2) [1969] 2 Ch 276, where (at p. 300) in the words of Edmund Davies LJ 'English law provides no clear and all-embracing definition of a constructive trust. Its boundaries have been left perhaps deliberately vague, so as not to restrict the court by technicalities in deciding what the justice of a particular case may demand'. Rather, they have traditionally been found to exist in a series of disparate and changing situations. This passage from Edmund Davies LJ's judgment also ties into the notions of flexibility and adaptability which were considered at the outset, as does the later case Sen v Hedley [1991] Ch 425 where (at p. 40) Nourse LJ commented that the constructive trust had been a 'ready means of developing our property law in modern times'.

Issues of Intention, and the Courts' “Imposition” of a Constructive Trust

Remember that the constructive trust, although capable of arising in numerous and diverse circumstances, has as its fundamental basis an imposition by the courts which operates irrespective of the intention of the owner (of what becomes the “trust property”).

Consequences where a Constructive Trust Arises

Immediately below, and by way of an introduction to a more extensive and detailed consideration of constructive trusts (along with resulting trusts) in subsequent chapters, examples will be given of situations in which constructive trusts arise.

This does not actually by itself spell out the effect of the court determining that a constructive trust has arisen. For example, it will become clear that strong arguments have been advanced advocating the differences between the constructive trust and the doctrine of proprietary estoppel (as well as more recent ones highlighting their commonality).

Existence of Constructive Trusts

Again like the resulting trust, constructive trusts have come to be applied to numerous and diverse factual situations from which a number of illustrative examples can be drawn.

Constructive Trusts and Analysis of Constructive and Resulting Trusts

Imposition of a constructive trust (a) Cohabitation of the family home In the case study which appears later, it will become clear that the constructive trust has become an important element of the “battleground” of difficulties created in circumstances where ...