Type: Research
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Constructive trust Arise in several instances whereby one person would want to benefit from another person unfairly and in unjust manner. The court can use the Constructive trust to overhaul the situation in order to deliver justice. Establishment of constructive trust on a common has been the latest decision highlighted in the House of Lords. Basically the case targets couples in marriage. The case cited was concerning Lloyds Bank V Rosset (eBay Inc. v. MercExchange, LLc, Supreme Court 2006). In the case, whereby the husband owned a house through a serviced by the loans from the Swiss banks, Mrs Rosset claimed to own a share of the house though she had no evidence of ownership. The case was unconditionally awarded to mr. Rosset. The house of lord therefore expounded the horizon of the common intentions in the constructive trust. The common intention however needs the willingness of the two parties to cooperate (Lewallen v. Green Tree Servicing, LLC, 487 F. 3d 1085 – Court of Appeals, 8th ).

Express of common intention was established for a situation whereby the two partners were at a will to share property. In that case, several challenges came along on whether the conditions should be conditional or just the case may be resolved later if the conflicts arise. In the case of Stack versus Dowden, the two had a joint property ownership. They owner contained a declaration signed on the disposal of and sharing stake from the sale. The deal however was declared by the Court of Appeal did not owner the deal because it was disputed not to reflect the property trust. In the case of Lloyds Bank V Rosset, the court declared that the situation was complex even though the two parties had already shown the interest of sharing the property, their intentions was countered by the evidence provided in the court by the husband. The case therefore court required the two parties to agree before showing any evidence otherwise the court was acting according to the evidence.

Inferred common intention is commonly used whenever the express of common interest lacks. Lack of the constructive trust cannot prevent the court from deciding on the intention by one party to lock out the other. A wife can claim a share of property from her husband even when the name bares the husbands only (Nechis v. Oxford Health Plans, Inc., 421 F. 3d 96 – Court of Appeals, 2nd Circuit 2005). The case witnessed was between Mildland Bank and Cooke the two parties made none of the constructive trust whoever the court ruled that the wife have a share in the matrimonial thus the share of the property should go to her. The court based its ruling on the partners conduct. In order for the verdict to be complete, the complainant should be in a position to give evidence on the property ownership and convince the court that the complainant has substance on the intended constructive trust. The court based the conduct of the partners on whether there was a direct contribution of the claimant in the acquisition of the property. The contribution can either be mortgage or direct cash. In a situation whereby a partner makes a direct contribution to the property, the conduct amounts to constructive trust.

Constructive trust is doctrine created by law and which seeks to do justices. It is usually applicable where good conscience and justice necessitate for it. This usually happens without consideration of implied or express intentions of the parties involved as illustrated in the case Hussy v. Palmer 1972 1 WLR [1286] AT 1289-90 and Baden Delvaux and Lecuit v. Societe General [1983]. For the doctrine of constructive trust to be in operational it is vital that all the parties involved are a wear of unconscionability of their dealings or omissions in relation to the material goods to which the constructive trust is being imposed

Constructive trust is doctrine that helps in advocating for equality where it prevents parties involved to benefit from fraud, misrepresentation and unconscionable conduct, thus it is an extension of the general principles of equity this show case in ruling by Lord Ellesmere in the ruling in the case of Earl of Oxford where his ruling was based on equity so to articulate for the right correct men’s consciences this advocated in the ruling inWestdeutsche Landesbank Girozentrade v Islington LBC [1996] AC 669 in this case involved some interest swaps where the plentiful was expected to honor to the local authority of the defendant. Where the plaintiff sought to recover interest on funds paid in void contract taking constructive trust as a remedial reference. The House of Lords ruled that, since there was no evidence to show that the authorities had knowledge about contract being void, thus there was anything that necessitated them to hold the money. When they had already spent the money they held nothing in trust for the bank, therefore bank cannot claim interest on the money since there was no funds that was being held in trust for them by the authorities.

On profits obtained from bribery the constructive doctrine treats a fiduciary who receive money from the unlawful ventures, such where a tax officer breach her duty and takes a bribe to hold the money in the trust of such an institution, thus the fiduciary is deemed to hold the property on constructive trust, this is clearly outlined in the case Reading v Attorney-General. In this e case an army officer in Britain received money in payment of riding in Lorries carrying contraband so that there are not stopped in Army check points. This was breach of terms of employment to the crown and it was held that all the money that he had received from the unlawful he held it in trust of the crown.

Constructive trust is very essential in advocacy for equity. First constructive trust creates impartial proprietary interest. For some to seek remedy in reference to constructive trust there must have been interest by the defendant on the property. This portrayed in the case Westdeutsche Landesbank Girozentrade v Islington LBC [1996] AC 669 and also this case points out that so as to rely on this doctrine one there must a well defined property which the defendant is in possession.

Constructive trust is of very high significant in creation equitable trust. Constructive trust creates impartial proprietary interest in order to benefit particular beneficiaries who have interest on properties. However the doctrine in creation of trust it must originate from areal property but an abstract property. This ability of this trust to spawn proprietary interest is much significant to a number of land owners. Since it offers an avenue in which one can share benefits arising from ownership even if there no formal declaration made before. Apart from creation of equitable interest constructive trust, protects interest of equitable arising from a trust that already existed. However, if the a property ownership pass to a third party who acquires the property in good faith and for a consideration then the third doest not hold the property in trust of the beneficiary but if the party knowledge of a trust that existed or had not paid in consideration while acquiring the property then the preexisting trust is still in force.

Constructive trust has become increasingly popular where properties have been misappropriated from their real owners. Even if a misappropriated property was not under a trust they can be deemed to be under constructive trust if a person acting in fiduciary rapport to the real owner misappropriates the propertyas illustrated Agip (Africa) v. Jackson [1991] Ch 547, or in the circumstance there was circumstance that outlined the relationship between the owner and the recipient that generated a fiduciary relationshipas outlined in the case Chase Manhattan Bank N A v Israeli-British Bank (London) Ltd [1981] Ch105.

Constructive trust as discussed above is concept of good conscience and justice but a question on liability of person to account on a constructive trust. The English law also embraced the doctrine of constructive trust and imposed a liability to fiduciary who received money on breach of his fiduciary to account for it, also a third party to a trust who had full knowledge of a constructive trust but deliberately ignores this and acquires the trust property and lastly a third party who had full knowledge of existence of such trust but knowingly assist in the breach of the constructive trust. The English held these parties liable but in reference to the case Paragon Finance v DB Thakerra & CO where Millett argued that the doctrine of constructive was inappropriately used in delineating the liability to a party. He argued constructive trust can be categorized in to two, first those held property in trust even though they had not been explicitly selected to assume such responsibility of a trustee. While the second category where defendant holds the property in trust which he acquired through fraud. And thus referring to the case Selangor united rubber ltd v craddock (No 3) he concluded that constructive trustee is not a proprietary remedy but “nothing more than a formula for equitable relief.”


The cases referring to the constructive trust are complex thus it requires willingness and substance to prove contribution to ownership. Constructive trust ensures equity among the partners in the mention therefore it is essentially the basis of ruling in equity related cases.

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