Term
| Attorney-General for Hong Kong v Reid |
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Definition
| This is the leading case. Reid was convicted of taking bribes while acting as director of public prosecutions in HK. His assets included three NZ properties that arguably had been purchased with bribe money. The A-G sought to renew caveats against the title on these properties to prevent R from selling, and argued that a constructive trust for the Crown existed. The PC allowed the caveats to be renewed, holding that Reid, as an employee and agent was in a fiduciary relationship with the HK Govt and that when a bribe is accepted by a fiduciary the bribe money is held on trust for to whom the duty is owed. Equity considers as done that which ought to be done and, as soon as a bribe is received, it is held on a constructive trust for the person injured. In arriving at this decision the PC overruled the English CA decision of Lister & Co v Stubbs. |
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Term
| Avondale Printers & Stationers Ltd v Haggie |
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Definition
| Court imposed a constructive trust on the defendants on the grounds that their denial of an earlier oral agreement with the plaintiff amounted to fraudulent conduct. Under the agreement the plaintiff abandoned their rights to purchase the property in issue subject to the defendant investing in its development and granting the plaintiff the option to purchase at the end of 2 years. Mahon J said: �The key to this type of inquiry in my opinion lies in the question whether the transferor would have parted with his property but for the oral undertaking of the transferee. If that question is answered in the negative, then renunciation of the promise or disavowal of the common intention will operate in equity as fraud on the transferor and entitle him to the appropriate remedy� The circumstances must chow that reliance upon the legal title in that particular situation amounts to a fraud upon the plaintiff.� |
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Term
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Definition
| A constructive trust was imposed to prevent the statutory formalities for the conveyance of land from being used as an instrument of fraud. The defendant sold the plaintiff two cottages on the basis of an oral undertaking by the plaintiff that the defendant would be allowed to live in one of the cottages for as long as she desired. This oral undertaking was not included in the formal conveyance and, subsequently, the plaintiff gave the defendant notice to quit and brought an action claiming possession of the cottage relying on the absence of writing (which was required by statute) in respect of the defendant's interest. The CA held, however, that the plaintiff's conduct was fraudulent and imposed a constructive trust. |
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Term
| Bateman Television Ltd (in liq) v Bateman� |
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Definition
| Company purchased two cars and were put in the names of the directors. Liquidators claimed they were held on resulting constructive trust for the company. Held The CA stated that if the company had provided cogent evidence� that the interest in the cars had been sold might have rebutted the presumption. However the evidence provided was nowhere near enough to rebut the existence of a resulting trust in favour of the company. If you have a gift or a loan there can be no resulting trust. There is a movement of the burden of proof. First if A shows that s/he has paid the purchase price for property in Bs name then you have a presumption of resulting trust. The burden of proof then shifts to B who must adduce evidence to rebut the presumption of a resulting trust by showing that B was intended to take the property beneficially. Here the strength of the presumption may be different in different types of cases. E.g. if you provide the money and put your solicitor on the title it�s very unlikely that that would be a gift but if it were your friend on the title the presumption would be different |
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Term
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Definition
| The CoA pointed out that the type of constructive trust arising out of a contract to sell land rests on the equitable doctrine of conversion, which considers �that as done which ought to be done.� This case involved the sale of a farm that had a paper road running through it. The vendor, B, was given the opportunity to purchase this road at a time when he was the occupier of the farm. He was only given this opportunity because he had decided to resile from the contract of sale to S and resist the claim for validation of the contract by the Land Valuation Tribunal. It was highlighted that although B was a constructive trustee, he was subject to fiduciary obligations to account for benefits acquired by virtue of his position. The purchasers had sufficient interest in the land to impose fiduciary obligations on the vendor continuing in possession. Therefore the vendor was required to transfer the paper road to the purchaser. |
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Term
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Definition
| trustees in a family trust who held a minority shareholding in a company that was not efficiently managed and was in danger of failing. One of the trustees and the trust solicitor decided that it would be better if the trust increased its shareholding so that they could gain control and improve performance. The trust did not however have sufficient money to buy the shares. They decided to acquire the shares themselves so they could affect their plan. This involved the outlay of a considerable amount of money and also to risk that their plan could go wrong and they could lose their money (it was risky but turned out successfully) performance was improved enormously and was subsequently sold for large profit for the trust the solicitor and the trustee. Despite this, the other son, who was saved from almost certain loss had the plan not been undertaken, brought an action claiming that Boardman held the shares as constructive trustee on the trust�s behalf. A majority of the HL agreed. It was held that Mr Boardman had obtained confidential information by virtue of his fiduciary relationship with the trust and that he had profited from the use of that information. The information amounted to trust property and Boardman has used that trust property to his eventual advantage. Although Boardman has act with complete integrity, his liability to account for the profit he has made did not depend on the presence or absence of good faith. |
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Term
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Definition
| M went and saw a lawyer in CB her son needed some money and she agreed to mortgage her home to provide it for him. The son had another solicitor who for some reason declined to act in the transaction when M went to CB they agreed to act but told her she should get separate independent advice, she refused, and signed to make this clear. The son went bankrupt and ended up owing his mother 100K she couldn�t service the mortgage and sued CB. It was argued for M that the solicitors should not have acted for both sides as there was a conflict of interest and avoiding such conflicts is one of the FDs that a lawyer owes their client. It was rejected at first instance as the solicitor had done all they needed to. The CA however said they the solicitor had been in breach, he should have insisted that M get independent legal advice and should have spelled out in more detail and force that the arrangement was not in her interest. In the PC the solicitors finally prevailed as there was no duty on the solicitors to act for M once she knew what she was doing and the consequences of her guarantee. |
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Term
| Commonwealth Reserves 1 v Chodar |
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Definition
| The facts were that the defendants had entered into a fraudulent contract and judgment against them had been obtained in the US. The only assets were a yacht and a house in NZ. In NZ, the plaintiffs sought to realise the judgement against a company controlled by the Cs. The plaintiffs claimed that the defendant�s assets were held on trust for the plaintiff by virtue of knowing receipt. Glazebrook J refused an institutional constructive trust on the basis that it has not been shown that the money received by the defendants from which the boat and house had been purchased was trust money or that there was a fiduciary relationship between the defendants and the plaintiffs, or that anything else existed to indicate that the plaintiffs retained an equitable title in the money when it was paid. However, her Honour allowed the claim for a remedial constructive trust on the basis that all of the defendants had been unjustly enriched at the expense of the plaintiffs. The defendants had not been shown to be insolvent so no third party interest would be affected and the alternative remedy of a forced sale under s60 PLA 1952 would not realise less than the vale the plaintiffs would acquire by way of constructive trust. |
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Term
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Definition
| The defendant undertook to provide Cook with investment advice, to hind her a suitable property and then to manage it for her. The impression was given that those services would be provided in an impartial manner, Fisher J held that, when Cook agreed to purchase the two flats in November 1983, the defendants has a duty to make full disclosure of any matters within their knowledge that might influence her decision to purchase. The defendants has a personal interest in the transaction, but Cook was not told of this nor was she told that the defendants had purchased the property for substantially less only six days previously. That failure to disclose was a breach of the fiduciary duties owed to Cook. |
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Term
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Definition
| Parties married, then divorced, married other people and divorced again. The plaintiff received a $666,660 Lotto win. Then they entered into a de facto relationship with each other, which ended in a final separation. When the parties were living in the de facto relationship a property was purchased in their joint names but the entire funds came from the plaintiff�s Lotto winnings. During the next 14 months there were no improvements or direct or indirect contributions to the property by either partner and arguably there was little in the way of net benefits to the plaintiff. Held Fisher J stated that he saw �no reason why the presumption of a resulting trust should not be the starting point in this case.�Any express or implied intentions will be paramount. Subject to the modern test for reasonable expectations. Despite having found no evidence of intention such that the presumption of resulting trust prima facie applied, the presumption could be displaced by a contrary expectation reasonably held by the defendant. Reasonable grounds for expectation arose, on the facts, from the inclusion of the defendant�s name on the title, and her detrimental reliance consisting of the termination of her part-time job, the disruption of the move into the property, the subsequent provision of domestic services in the home, and the ultimate sale of a home unit belonging to the defendant. Fisher J awarded the defendant 15% interest in the property and in a van that had been purchased in joint names. |
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Term
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Definition
| A society had been formed to provide annuities for the widows of deceased members. By the times of the litigation all the members and their partners had died. Q was whether it would go to the personal representatives of the last surviving members on a resulting trust. The Eng HC held that it should, CA reversed that decision reasoning that each member had given away his money in return for the protection given to his widow if one was left; except for this protection they had given up the money forever. As such it went to the crown as bona vacantia |
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Term
| DFC New Zealand Ltd v Goddard� |
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Definition
| In this case the appellant received funds from the respondent in the ordinary course of business. Contrary to the respondent�s instructions the appellant capitalised the interest on the money invested and reinvested it on maturity. The trustee claimed that the bank had intermeddled with the trust�s affairs, thereby becoming a constructive trustee. Held However the court held: �The funds when initially invested � became the property of the appellant subject to the contractual obligations. There is no evidence that thereafter the appellant came into possession or control of the trust property. There was nothing to which a trust could attach.� In the absence of knowing assistance in fraudulent conduct of trustees a person will not be charged with the obligation of a trustee de son tort unless the property was in their control. |
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Term
| El Ajou v Dollar Land Holdings plc |
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Definition
| The plaintiff�s agent had been bribed to purchase worthless shares. The money was passed through several accounts in different countries before some of it was invested in land owned by the defendant. Millet J considered the question of the plaintiff�s right to trace or follow the money in equity and was of the opinion that the misappropriation of his money gave rise to a resulting trust. The court considered the position of the other victims of the defendant�s fraud, who had paid their money under a fraudulently induced mistake and could not rely on an agent�s breach of fiduciary duty. Millet J found that if they could it would be biased, having been induced to purchase the shares by false misrepresentation, because they are entitled to rescind the transaction and re-vest the equitable title to the purchase money in themselves � this would be a resulting trust. |
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Term
| Elders Pastoral Co v BNZ� |
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Definition
| EP were the stock agents of a farmer named Gunn. Gunn entered into an arrangement with BNZ whereby the bank would advance him some money which would be secured by an instrument by way of security over his stock. Under this instrument, Gunn agreed not to sell any of his stock without the prior written consent of the BNZ, unless it was in the ordinary course of business. EP subsequently conducted sale of 3081 lambs on behalf of Gunn in the ordinary course of his business. From the proceeds of the sale, Ep deducted not only their commission, but also the amount which Gunn currently owned them. Only a small balance was deposited in Gunn�s account with the BNZ. BNZ brought proceedings to recover the amount of money which EP applied in reduction of Gunn�s debt to them. Held The case was a novel one and Cooke P quoted a passage from Gough and Jones: �the receiving of money which consistently with conscience cannot be retained is, in equity, sufficient to raise a trust in favour of the party for whom or in whose account it was received.� The constructive trust has come to be used as a device for imposing a liability to account on persons who cannot in good conscience retain a benefit in breach of their legal or equitable obligations. The fact that a transaction is of a commercial nature is not decisive against imposing a fiduciary duty. Thus, in this case it was held that in all the circumstances EP should be treated as being clearly bound by the obligations of the chattel security. They had actual notice of its existence, and had received the proceeds of sale as the grant for Gunn. As the proceeds of sale in the hands of Gunn must have been for the bank, so they must be held for the bank by EP. |
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Term
| Fortex Group Ltd (in rec & liq) v MacIntosh� |
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Definition
| A number of Fortex employees were members of a superannuation scheme. Their contributions were supplemented by Fortex, as both participating employer and trustee of the fund. Contributions were deducted from their wages. Fortex was supposed to pay those contributions, plus its own supplements, to the scheme manager on a monthly basis. They happened to usually do it on an annual basis. While Fortex intended to make its payment for the 1993/4 year, receivers were appointed before this was done. At all times Fortex�s bank accounts were overdrawn and no separate fund had been set up in respect of the unpaid contributions, and therefore they had �disappeared� into Fortex�s overdraft. Their third cause of action was a declaration that Fortex held the contributions on an express or constructive trust, or that the employees were entitled to a remedial constructive trust. Held In the HC the claims based on the express and institutional constructive trusts were rejected, but the remedial constructive trust was upheld. The decision was appealed to the CoA. CA Tipping J agreed with the High Court that there was no express or institutional constructive trust in this case. The primary difficulty was the non-existence of any subject-matter for the trust. On the question of a remedial constructive trust, Tipping J noted that before the Court could contemplate declaring any such remedial trust, there must be some principled basis for doing so. In general, equity will intervene to protect from unconscionable enforcing of rights at law. The question in this case was whose conscience should be affected so as to prevent them from exercising their legal rights. Here it must be the debenture holders and secured creditors whose conscience was at issue, not Fortex. If they exercised their rights under their securities, the employees would be left with nothing. The evidence was that there was nothing shown which meant the secured creditors should be deprived of their contractual rights to realise their security for their own benefit. The employee�s appeal was dismissed. |
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Term
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Definition
| The two parties bought a house together in D�s name. The house was sold and a new property purchased by the D in her name alone. The house and grounds required substantial amount of work. The plaintiff contributed to this as did the father and brother of the defendant and the defendant herself. A comparatively short time later the relationship ended. The defendant retained the house property and the plaintiff initiated proceedings. He claims a 40% share in the net equity of the second property or judgement for $20,000. The claim was based on an express or implied agreement or a constructive trust. Held the judge did not find any express or implied agreement but found that a constructive trust on the basis of unjust enrichment and warded the plaintiff $10,000 being approximately half of the capital gain in respect of the first property. the defendant appealed. The appeal was allowed on the basis that the defendant had, at all times, made it clear to the plaintiff that she was asserting that the house was hers and hers alone. One cannot say that a reasonable person in his shoes would have understood that he was acquiring an interest. Therefore no constructive trust could arise. Cooke P noted that it makes no practical difference whether one talks of constructive trust, unjust enrichment, imputed common intention or estopple. In deciding whether any of these are established it is necessary to take into account the same factors: The degree of sacrifice by the claimant; The value of the contributions of the claimant compared to the value of the benefits received; and Any property arrangements the parties may have made themselves. Whatever the claim, reasonable expectations in light of the conduct of the parties are at the heart of the matter. Richardson J preferred to apply a two-part test to such cases: Has there been a direct or indirect contribution by the claimant in respect to the property in circumstances such that it should be inferred that the claimant should have understood that the efforts would naturally result in an interest in the property? Do the settled principles of estopple preclude the legal owner from denying the existence of an equitable interest in the property? |
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Term
| Jones v AMP Perpetual Trustee Company NZ Ltd� |
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Definition
| The plaintiffs were once employees of the defendant, AMP. They were members of the company�s super-an fund. AMP was the sole trustee. In 1979 the company was purchased by the Australian Mutual Provident Society and became a wholly owned subsidiary of the society. The bulk of the assets of the fund comprised an office building. The surplus in the fund, however, was invested in a unitised investment linked fund managed by AMP. Then, in 1985, the office building was sold and the net proceeds were also invested in the A unit. The market crashed and the fund devalued. The plaintiffs claimed that they suffered a loss, alleging that the investment was not authorised by the trust deed which represented an improper delegation of the trustee�s powers of investment to AMP, the fund manager. Held In this case it was found that Perpetual had discharged its duties as required by the �prudent person� test throughout the period under consideration. Trustees cannot be held liable in negligence for a mere error in judgement, and the trustee�s performance was not to be judged by hindsight but by the facts in existence at the time of the occurrence. |
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Term
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Definition
| A trustee of a lease for the benefit of a minor applied for a renewal. When the lessor refused to renew because the minor was the equitable owner of the lease, the trustee took a renewal for their own benefit. The small child eventually brought an action to have the lease assigned to him and for the trustee to account to him for the profits. Lord King LC held that the trustee has held the lease as a constructive trustee for the child. The Lord Chancellor held that were not the case, the consequence would be that very few trustees would renew the lease on behalf of their beneficiaries. Accordingly, the trustee still held the lease on the child�s behalf and has to account to him for the profits gained since the renewal. |
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Term
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Definition
| L and R were in a de facto relationships for 10 years at the end of which L was far better off and R was slightly better off. During the relationship R contributed significantly to L�s increase in worth and accordingly claimed an interest in some of the property he held. Held In the HC Elias J imposed a constructive trust on their house and certain other chattels. The CoA did not reject the de facto constructive trust found to have existed in the HC. Tipping J with whom McKay J agreed, thought that the de facto claimant must show: Contributions, direct or indirect, to the property in question; The expectation of an interest therein; That such expectation is a reasonable one; and That the defendant should reasonably expect to yield the claimant an interest. If the claimant can fulfil each of these requirements, then the Court will not allow the defendants to assert his or her strict legal rights. A constructive trust will be imposed. Tipping J expanded on the nature of contributions. He states that although direct financial contributions to the acquisition of property will certainly quality, indirect contributions qualify as well. There might be difficulties with proof and assessment but once they are established such contributions are as real as direct contributions. The court of Appeal as a whole agreed that Elias J had been correct in finding a constructive trust and that Rose was entitled to a half-share in her former home and in the shared chattels. |
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Term
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Definition
| Lister & Co made textiles and employed Mr. Stubbs as a foreman. Stubbs regularly dealt with another company, from whom he ordered large quantities of dye, and from whom he received large sums by way of commission which Lister & Co knew nothing of. Stubbs had invested a large portion of the money he had received. When the company discovered the secret commissions, they sought to recover them from Stubbs. In the process of doing so., they sought an interlocutory injunction to retain Stubbs from dealing with the land and any other investments that he had made with the money. The CoA held that the company could not follow the money in the way which they sought. Stubbs had acted wrongly but that Court was not prepared to hold the money which Stubbs has obtained by way of bribes was held by Stubbs as a trustee for Lester & Co. The relationship was one of debtor and creditor. The company was therefore not entitled to their interlocutory injunction. |
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Term
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Definition
| A land agent employed to act on behalf of the owner continued to collect rent for 12 years after the owner�s death, before the identity of the heir was ascertained. The agent then claimed the property and funds as his own. The heir�s assignee sued to recover possession of the land and an account of the rents. The HL ruled that, as to the land, the agent could not dispossess the heir; as to the rents, that the agent had made himself a trustee and was liable to account to the heir. |
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Term
| MacLean v Arklow Investments Ltd� |
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Definition
| The plaintiffs intended to buy an island for forestry and property development. They approached the defendant merchant bank to assist in finding other investors. The defendants agreed to protect the confidentiality of the plaintiffs' information, however, a month later the defendants informed the plaintiffs that they would no longer act for them and a few months thereafter the island was sold to parties introduced by the defendants. The plaintiffs sued the defendants for breach of fiduciary duty and misuse of confidential information.�Held The defendants did not owe the plaintiffs a fiduciary duty of loyalty because they were not retained by the plaintiffs and only undertook to protect confidentiality or, if there was such a duty, it ended when the defendants refused to act for the plaintiffs. However, the defendants owed a fiduciary duty of confidentiality because they undertook to receive the plaintiffs' information in confidence and not to disclose it without the plaintiffs' authority or use it for any purpose other than for which it was disclosed. On the facts the appellants(defendants) did not misuse that information. |
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Term
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Definition
| In this case it was argued that Clark had contributed to H�s overall asset position, not by increasing it, but by diminishing the need to spend. In total it was argued that Clark had spent about $70,000 from her own resources largely on living and general expenses, and to the cottage and business. It was argued that if H was obliged to spend more himself, he would necessarily have been worse off. As stated by Tipping J, the claim amounted to the proposition that she should be compensated retrospectively for having contributed more than half the money consumed during the relationship on general living and partnership expenses. Held Tipping J stated that he did not have such a situation in mind when he wrote the judgement for Lankow v Rose. The starting point is to identify the assets owned by the defendant, and then consider the plaintiff�s direct and indirect contributions. The issue in this case was whether the judges concept of �maintenance� of property could cover circumstances where one partner has supported the other, enabling the other to keep assets intact. Tipping J stated that it was not possible in such circumstance to say that the contribution of one partner directly maintained the asset of the other, there was indirect contribution, but that contribution was passive rather than active. On the facts of the case, it was found that Clark spent $15000 above her share of general living and partnership expenses. There was no evidence that Clark had an expectation that she would be compensated for this by being awarded a share in H�s general assets at the end of the relationship. In addition, on the balance of probabilities it was impossible to find that any work or money contributed by Cark increased the value of H�s assets, except for the $3,000 increase in the value of the cottage. |
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Term
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Definition
| Paula Pecore was 1 of 3 children who was the closest to her father and the least well off as she cared for her disabled husband. Her father, over a period of time, transferred the majority of his assets into her name jointly with himself with a right of survivorship. He made it clear to the institutions holding the money that it was not gifted to his daughter. His will left specific gifts to Paula, Michael and her children, but did not mention the joint accounts. The residue of the estate was to be divided equally between Paula and Michael. Paula and Michael later divorced and a dispute arose. The Supreme Court of Canada noted that the presumption of a resulting trust applies to gratuitous transfers; that is, where a transfer is made for no consideration the onus is on the transferee to show a gift was intended, as equity presumes bargains, not gifts. However, in the case of certain relationships between transferor and transferee, the presumption of advancement in the case of a transferor would apply instead. The SCC found that the right of survivorship, both legal and equitable, vested when the joint account was opened. The resulting trust presumption did, however, mean that the onus was on the survivor to show that the right of survivorship was intended to apply to the assets remaining in the joint account. On the facts, particularly Paula�s reliance on her father and her father�s concern for providing for Paula, the SCC found that the intention to gift a right of survivorship at the time the accounts were set up. The assets were not intended to form part of the father�s estate. Michael�s claim to the joint assets as a beneficiary under Paula�s father�s will was dismissed. |
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Term
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Definition
| The two plaintiffs and their mother, Mrs Powell, owned a dwelling as tenants in common in equal shares. Mrs Powell systematically embezzled the sum of $289,482 from the defendant. When the defendant learned of the theft he required Mrs Powell to make full repayment. She repaid $145,453.29 and agreed to transfer the dwelling to the defendant in partial satisfaction of the balance owing. She agreed to sell him the dwelling for $100,000 on the basis that $27,292.12 would be used to discharge a mortgage over the property and the balance of $72,700.88 would be paid to the defendant. Settlement took place on 1 September 1987 when the defendant's solicitor paid two bank cheques for $72,700.88 and $27,292.12 respectively to Mrs Powell's solicitor and received a bank cheque for $72,700.88 in return. Following settlement Mrs P and one of the plaintiffs remained on the property, the plaintiffs under the assumption that they were still paying off the mortgage as they had no idea about the sale. In June 1988 the plaintiffs discovered the true position and immediately saw a lawyer who placed a caveat on the title on 1 July. The plaintiffs claimed two-thirds of the money which the defendant had been paid by their mother on the basis that he was aware of the salient facts, that he unjustly enriched himself and thus became a constructive trustee of the money which he received.HELD 1)A third party to a trust may be liable as constructive trustee: (a) if he or she receives trust property knowing of the trust or, being in receipt of the trust property, deals with it in a manner contrary to the trust (the "knowing receipt" class of case) or (b) if he or she knowingly assists the trustee in committing a breach of trust (the "knowing assistance" class). The underlying basis of the defendant's liability in the knowing receipt case is the unjust enrichment of the defendant at the expense of the plaintiff. The basis of liability in the knowing assistance case is the unconscionable conduct of the defendant in participating in a breach of trust�2) The knowledge which is required before holding a person liable to account in "knowing receipt" cases is actual or constructive knowledge of the trust attaching to the property received by the defendant in circumstances where he or she asserts a right to the property contrary to the interests of the beneficiary or otherwise acts in a way which is inconsistent with the trust. 3) Dishonesty, want of probity or "cognisance" are not required. It is enough that the circumstances are such that a reasonable person would be put upon inquiry. 4) In the "knowing assistance" case the requisite knowledge is not confined to actual knowledge but may include constructive knowledge. Mere knowledge in the sense of notice of the trust will seldom if ever suffice. In all cases, the question will be whether, in all the circumstances, the third party's conduct was unconscionable and justifies the imposition of the obligation of the trust upon him or her. |
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Term
| Re Bucks Constabulary Fund (No 2) |
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Definition
| A fund for deceased police officer�s widows and orphans was in need of distribution, again following the amalgamation of police districts. The court held that the fund should be divided equally among members alive at the date of dissolution. The Crown would be entitled to the property bona vacantia only if there were no surviving members. The court stated that the right of fund members to receive benefits was a contractual right and the members ceased to have interest in the fund if and when they had received all the benefits to which they were contractually entitled. Walton J criticised West Sussex, pointing out that the members could have altered the rules before dissolution and put the assets into their own pockets. This clearly demonstrated that they always retained the ownership of the money. |
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Term
| Re Earl of Stamford; Payne v Stamford |
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Definition
| A power to appoint new trustees was given to the tenant for life if a trustee should �be abroad�. One of the trustees went to live in France but regularly visited England to attend to trust business. The tenant for life appointed a new trustee in place of the trustee �abroad� and the appointment was upheld. The express power was held to be wider than that given by the relevant legislation. |
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Term
| Re Gillingham Bus Disaster Fund |
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Definition
| In Gillian, Kent a bus ran into a column of Royal Marine cadets marching along the roadside. 24 were killed and a number injured. Fund established for the victims and solicited donations. The victims, however, had common law rights against the bus company. Full compensation was paid to the injured cadets and the estate of the casualties. This left �2000 pounds and no cause to put it to. The court had to consider who the money would go back to. Harman J rejected the argument that the trust was for a charity , considering that the real issue was whether the surplus should be paid to the Crown as bona vacantia, or be held on a resulting trust in favour of the subscribers. In general the money would be held on a resulting trust in favour of the donor. The Crown had to show that the principle would not apply to the present case. It was claimed that the difficulty of tracing the donors to the fund made a resulting trust impossible. Harman J did not think that the fact it would be difficult to trace the donors defeated the resulting trust argument. If those people could be found by inquiry the resulting trust could be executed in their favour. If they could not, then the Judge was unable to see how the money could suddenly change and become bona vacantia. It would merely be money held upon trust for which no beneficiary could be found. The Judge ordered that the money be held on resulting trust, and that there should be an inquiry to discover who the donors were. |
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Term
| Re Goldcorp Exchange Ltd (in receivership) |
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Definition
| People invested in gold which was supposedly held for them in Goldcorp�s vaults. There was not as much gold as there was meant to be and it was unallocated (ie couldn�t identify which bullions belonged to which investor). The claimants fell into three categories; the largest being the non-allocated claimants, however, all the company�s funds were going to be swallowed up by the secured creditors. They argued that they had a proprietary right to small amount of bullion that were held by Goldcorp, which would allow them to trace to recover the sums that they had lost. It would mean that any assets they had a proprietary interest in would no longer be considered the company�s property and would not be distributed to the creditors. Held Thorp J rejected the claim of the non-allocated claimants in the HC. The CoA reversed this decision by a majority. Cooke P and Gault J found in favor of the non-allocated claimants and went n to hold that the entire amount of the purchase moneys could be traced into the general assets of the company. PC. In relation to an attempt to raise a claim of a proprietary nature, it was argued that Goldcorp was a fiduciary to the claimants. This was argued on the basis Goldcorp held itself out as willing to vest bullion in the customers and to hold it in safe custody on their behalf. It was argued that the customers were wholly dependent on Goldcorp and trusted it to do what it promised. It was argued that this created an equity, and that this equity should be recognized by treating the customers as entitled to a proprietary interest in the stock. The PC noted that to describe someone as a fiduciary, without more, is meaningless. It considered that no fiduciary duties had been suggested beyond those which the company assumed under the contract. The essence of a fiduciary relationship is, however, that it creates an obligation of a different character from those deriving from a contract. The Privy Council considered the concept of remedial constructive trusts. Lord Mustill referred to a �remedial restitutionary right� created by the court after the event, which was �superior to the security created by the charge� and commented that while restitutionary rights may in the future prove to be a valuable instrument of justice they could not be brought to bear in the present case. Although the conduct of GC was wrongful as a breach of contract, it did not involve any injurious dealing with the subject-matter of the alleged trust. The company did not unjustly enrich itself, and did not act wrongfully in acquiring, maintaining and using its own stock of bullion. |
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Term
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Definition
| A grandfather had expressed in his will that his grandson should settle the family farm on the eldest son, with the intention that the farm be kept in the family for at least five generations. The testator dies shortly after becoming entitled to the farm, leaving no son and three daughters. The trustees sought orders varying the trust to allow sale of the farm. Tipping J was convinced that sale of the farm was desirable and would be to the advantage of those persons whose interests he was required to consider. |
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Term
| Re Hoburn Aero Components Ltd�s Air Raid Distress Fund |
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Definition
| A fund was established during the second world war for employees of a company who were in service or who sustained loss in air raids. Voluntary subscriptions from the employees of the company comprised the fund. After the war a residual fund remained. It was held that each contributor, past or present, had an interest in it by way of resulting trust in proportion to his or her contributions, but subject to reduction for any benefit received by them from it. |
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Term
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Definition
| A testator has deposited money with a company for investment. Two accounts were opened in the names of a niece and a nephew, who were children living with their parents. There was no evidence of any intention to benefit the children. The court held that there was a presumption of a resulting trust in favour of the deceased. |
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Term
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Definition
| A farmer established by will a trust for his widow for life with the remainder to be divided between his 10 nephews and nieces. The trustees were a professional trustee company and the testator�s widow. The testator died in 1949 and in 1965, after the farm was sold and the gift paid to the widow, the balance of the trust fund stood at approximately $108,000. From 1965 to 1990 the trust capital was placed In fixed interest investments. AS a consequence the widow enjoyed a good income. She died in 1990 leaving an estate of $686,000 to her relatives. The trust capital, however, amounted to 102,000. Held The obligation of a trustee is to act fairly in making investment decisions that may have different consequences for different classes of beneficiaries. Trustees are permitted to take into account a close relationship between a tenant for life and a testator as opposed to a more remote relationship between the testator and the persons entitled to a remainder. However, in this case it was found that the trustees had not acted impartially but rather has consistently favoured the interests of the widow. |
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Term
| Re Polly Peck International (No2) |
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Definition
| In this case an insolvent company was subject to an administration order. The administrators were bound to distribute the assets of the company among the creditors on the basis of insolvency legislation. Held There was no case for the court granting a remedial constructive trust in which case because the effect of the statutory scheme applicable on an insolvency was to shut out a remedy which would, if available, have the effect of conferring a priority not accorded by the provisions of the statutory insolvency scheme. The court cannot legitimately change what Parliament has put in place. In this case the court stated that legislation would be necessary before a remedial constructive trust could change proprietary rights. |
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Term
| Re Printers & Transformers Amalgamated Trades Protection Soc |
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Definition
| No provision had been made in the rules for the distribution of the society�s funds on its dissolution. It was held that there was a resulting trust in favour of those who had subscribed to the fund, and that the society�s funds were divisible among the existing members at the time of the dissolution, in proportion to the amount contributed by each member. |
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Term
| Re Stanford, University of Cambridge v AG� |
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Definition
| The testator left a sum of money to Cambridge University so that his dictionary could be completed and published. The sum that was left was to be held by the university on a resulting trust for the testator�s estate. |
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Term
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Definition
| A grandmother transferred assets into the joint names of herself and her granddaughter. It was held that the granddaughter held the assets subject to a resulting trust for her grandmother�s estate. |
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Term
| Re West Sussex Constabulary�s Trust |
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Definition
| The West Sussex Constabulary initiated a fund for the purpose of granting allowances to widows and dependants of deceased members of the Police Force. There were a range of sources of the trust monies. On 1 January the Constabulary was amalgamated with other police forces. The members of the fund held a meeting and agreed to wind up the fund and distribute the assets according to an agreed scheme. This plan was challenged and the trustees asked the Court to determine whether they held the funds and income on trust, and could use the fund in accordance with their resolution or whether they held the money for the Crown bona vacantia. Held The Judge divided money raised from external sources into three different categories: first, the proceeds of entertainment, raffles and sweepstake; secondly, the proceeds of the collecting boxes; and thirdly, the donations and legacies. There could be no resulting trust arising from the proceeds of the entertainment and raffles. The relationship between donor and recipient was one of contract and secondly there was no direct contribution to the fund at all. The second category also failed because the Judge considered that the contributors must have parted with their money completely. The third category, however, was held to be a resulting trust. the reasoning was that the donor who gives both money and name in such circumstances intends to give their property for the particular purpose for which the donation has been solicited, and none other. If that purpose fails, then there will be a resulting trust in their favour. |
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Term
| Royal Brunei Airlines v Tan� |
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Definition
| Leading case on dishonest assistance. The facts of the cases were that an insolvent travel company owed money to an airline. The company paid all its moneys received for sales on behalf of the airline into an account used for the conduct of its business, out of which payments were made for salaries, overheads and other expenses and to reduce the company's bank overdraft. The airline later terminated the agreement when the company was in arrears with payments, and when the company proved to be insolvent it brought an action against Mr Tan to recover the unpaid money, alleging that he was liable as a constructive trustee because he had knowingly assisted in a fraudulent and dishonest design on the part of the company as trustee for the airline. Held At first instance, MR Tan was held liable as a constructive trustee, on the ground that he had knowingly assisted in the breach of trust by BLT one of the issues to arise was whether it was necessary that both BLT and Mr Tan acted fraudulently or dishonestly for Mr Tan�s liability to be established. Lord Nicholls considered that the trustee�s state of mind was essentially irrelevant to the question of whether a third party was liable to beneficiaries for knowingly assisting a breach of trust, however the state of mind of the third party is important. if liability of the third party is fault-based, the nature of the nature of their fault is what matters, not that of the trustee. The PC thought that a test of dishonesty was applicable in assessing liability and held that it was an objective standard and expected an individual to attain the standard an honest person placed in their circumstances would observe. |
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Term
| Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co Ltd |
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Definition
| In this case it was held that beneficiaries could not claim trust money lawfully deposited by a bank trustee with itself as banker in priority to other depositors and unsecured creditors. Lord Templeton considered the position that would arise if a bank trustee unlawfully borrowed trust money and concluded that in this case: �Equity allows the beneficiaries, or new trustee appointed in place of an insolvent bank trustee to protect the interests of the beneficiaries, to trace the trust money to all the assets of the bank and to recover the trust money by the exercise of an equitable charge over all the assets of the bank.� |
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Term
| Taitapu Gold Estates Ltd v Prouse |
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Definition
| The plaintiffs agreed in writing to sell to the defendant certain land, reserving the right to the minerals below the surface of the land. this reservation was inadvertently omitted from the registered memorandum of transfer of the land. the defendants refused to rectify. The court held that the defendants �cannot equitably claim to hold something which by the agreements, on the basis of which their transfer was registered, was excepted from the sale which the transfer was to carry out�. A constructive trust arose upon the intention of the parties. |
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Term
| Taylor v Schofield Peterson |
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Definition
| There was no absolute rule that a fiduciary, such as a lawyer, could not act for two clients but where there was a conflict of interest, in order to act the lawyer had to prove that both parties had agreed on the terms of the transaction and had given informed consent to the dual representation. To establish informed consent, the lawyer must have recognised the conflict of interest; have explained what that conflict was to the client; explained the ramifications of that conflict; ensured that the client understood those ramifications; and obtained the informed consent of the client in writing. |
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Term
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Definition
| Two women who were joint owners of a house agreed to put a house into the name of one of them in order to facilitate fraudulent claims to housing benefits by the other. Both were parties to the fraud that was carried out for several years, but which was no longer continuing. Eventually, the plaintiff, in whose name the house was registered, tried to evict the other. It was held that there was a resulting trust in the defendants favour. The court, without any emphasis on the presumptions, held that the test was whether the public conscience would be affronted by the grant of relief. Here it would not, as to deny the defendant�s claim would be a disproportionate penalty for her fraud, which had been confessed to the authorities. |
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Term
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Definition
| A father transferred shares in a family company to his son for illusory consideration, in order to hide and safeguard the father�s assets from his landlord, to whom he was potentially liable for the cost of substantial works to the leased premises. In the end, the issue of the repairs was resolved without resort to any deception. The son subsequently claimed to be absolutely entitled to the shares by virtue of the presumption of advancement. The court held that, since the father�s illegal purpose had not in any way been carried out; he could introduce evidence of it in order to rebut the presumption of advancement. |
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Term
| US International Marketing Ltd v National Bank of New Zealand. |
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Definition
| In this case the Court considered accessory liability in the context of a bank refusing to comply with the demand of a customer when it thought payment could constitute a breach of trust to a third party. Held Applying the "reasonable banker" test to the facts of the case, the CA was unanimous in allowing the appeal. The bank acted in breach of its contract with US International when, if not earlier, it received Mr Singh's fax and did not immediately allow its customer access to its funds. Tipping and Anderson JJ said that the HC was wrong in considering whether the manager had been reasonable and honest, instead the question should simply be whether he was dishonest, the Court declined to clarify Twinsectra. |
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Term
| Westdeutsche Landesbank Girozentrale v Islington London Borough Council� |
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Definition
| Westdeutsche brought proceedings against the council to recover approximately �1.1 m, together with compound interest (the outstanding balance of a void interest rate swap transaction; there had been no consideration given). At first instance it had been held that the bank could recover on two grounds. First was a common law claim for money had and received leading to a restitutionary remedy. The second was equitable. CoA held that Westdeutsche had an equitable proprietary claim to the money and the council was trustee of the money for the bank. It was established in law that compound interest was only payable if there was a relationship of trustee and fiduciary, or where there had been fraud. HL held that the bank�s claim was not founded on a relationship of trustee and fiduciary, therefore the compound interest was not payable. The payment was not subject to any trust when it was paid, and the Council did not hold it on a constructive trust. None of the established grounds for finding that there was a resulting trust could be made out. Accordingly there was no resulting trust, no equitable proprietary right, and therefore no ability to claim compound interest. |
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Term
| Westpac Banking Corporation v Savin� |
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Definition
| The company was in the business of selling boats. It was having financial difficulties and was under pressure from Westpac to decrease borrowing. The company sold two boats belonging to the respondents and put the money into its overdrawn trading account. The respondents never got paid and the company went into liquidation; the respondents sued Westpac. Held The Court said the company had received the money from the respondents as trustees, and by paying this sum into its trading account had committed a breach of trust. Westpac knew what the company was doing, and so in the circumstances the bank was liable as a constructive trustee for knowing receipt of recipient liability. As the bank had actual knowledge it was not necessary to consider the question; however, it was stated that any of the five categories would suffice. Came to the conclusion that just as there is now a single test for knowing assistance, so there ought to be a single test for knowing receipt. The recipient�s state of knowledge must be as to make it unconscionable for them to retain the benefit of the receipt. The essential question was what did it mean to �know� about a trust. In the present circumstances the knowledge the bank about A�s state of affairs was such that it must have willfully shut its eyes to the obvious or, at least, it willfully and recklessly failed to ascertain and satisfy itself that the receipts were not in respect of on behalf sales. As a result of this imputed knowledge, Westpac became a constructive trustee of the funds and was liable to account for them. |
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Term
| Westpac New Zealand Ltd v Map & Associates Ltd |
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Definition
| MAP and Associates Ltd opened an account with Westpac New Zealand Ltd in its own name but on behalf of the shareholders of a Bolivian bank who were selling their shareholdings to a Venezuelan bank. MAP gave instructions for the distribution of funds but Westpac declined to act on them and invited MAP to apply to the High Court. The High Court not only ordered Westpac to comply with the instructions but also ordered Westpac to pay interest and costs. Westpac unsuccessfully appealed to the Court of Appeal against the latter orders, arguing that it had had good grounds to suspect that if it disbursed the funds it would be guilty of dishonestly assisting in a breach of trust. Westpac then appealed to the Supreme Court. Held Equity would provide a defense and restrain enforcement of a cause of action at law for breach of mandate by a banker, but only if performance of the mandate would actually, rather than potentially, have rendered the bank liable for dishonest assistance. There was no basis for intervention on any lesser threshold. Banks would be liable only if they actually knew a breach of trust was intended or if they were willfully blind to that intention. Westpac could not show that any breach of trust would actually have occurred had it followed MAP�s instructions and therefore had no defense to MAP�s claim for breach of mandate. �Willful blindness� requires a sufficiently strong suspicion of a breach of trust, coupled with a deliberate decision not to make inquiry lest the inquiry result in actual knowledge. It is necessary that the strength of the suspicion that a breach of trust is intended makes it dishonest to decide not to make inquiry |
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