Remedial consistency and constructive trust claims

2019-04-30T15:03:35Z (GMT) by Peter Jaffey
An express trust arises when a settlor transfers property to a recipient to hold as trustee, and the trustee agrees to act as such and becomes subject to a duty to look after and manage the property and distribute it to the beneficiaries on the terms stated by the settlor. A constructive trust arises when D receives property and holds it on trust for C, not because the property was transferred to D by a settlor intending to create an express trust in favour of C, but by operation of law in response to the circumstances, to avoid or undo what the law deems to be an injustice. By contrast with the position for an express trust, D has not agreed to act as trustee and has no management responsibilities with respect to the property, and the effect of the constructive trust is simply to give C a proprietary claim against D in respect of the property. I shall discuss three types of case where the availability of a proprietary claim, by way of a constructive trust, has been controversial: the constructive trust to recover a mistaken or unauthorised payment, the constructive trust of fiduciary profits, and the constructive trust of matrimonial or quasi-matrimonial property. My aim is not to offer a detailed analysis of the case law on these topics, or to deal with all types of constructive trust, or to address all the arguments in the very large literature,2 but more specifically to consider whether what I will refer to as the requirement of “remedial consistency” can show whether a proprietary claim should in principle be available in these cases, and provide guidance on how the law should be understood and developed.