Constructive Trust CT is an implied trust found by the operation of law which no formalities are required.

It is imposed when a person has knowledge of some factors that would affect his conscience such that he is prevented from asserting his own beneficial entitlement to the property. This gist is that D must have the knowledge which affect his conscience such that he is prevented from asserting his own sole beneficial entitlement to property in question.  If the state of mind of a person is not affected by the facts concerned, unconscionability is inapplicable and there would be no CT. Westdeutsche Landesbank an agreement regarding payment for interest rate swap was made between bank and local authority for a period of 10 years. However, the court held the agreement was ultra vires and thus void ab initio. The bank claimed the money paid to authority was held on CT. It was held that CT did not exist since there was nothing affecting the conscience of authority and no unconscionability existed. Browne-Wilkinson the law imposes CT by reason of his unconscionable conduct.  HKN Invest OY v Incotrade PVT Ltd Costello J the principle is that where a person who holds property in circumstances which in equity and good conscience should be held or enjoyed by another he will be compelled to hold the property in trust for another.  In other words, a purchaser for value of lega There are several circumstances where CT would be imposed.  Trustee in Breach of Trust Unauthorized gain In general, a fiduciary is liable to his principal in respect of unauthorized gains obtained by reason of his fiduciary office. Bray v Ford Lord Hershell it is an inflexible rule that a person in fiduciary position is not entitled to make a profit unless otherwise expressly stipulated. Keech v Sandford T renewed the trusted lease for his own use when landlord expressed his intention that the lease would not be renewed for infant B. It was held that T held the lease on CT for B. Lord King LC T should rather have let the lease run out, than to have had it to himself. Boardman v Phipps P was solicitor of a trust which consisted of shares of a poorly managed company. P bought shares in the company and profited when company turned better. It was held that the shares personally purchased by P was held on CT for B since the opportunity to make profit arose out of his fiduciary position. AG for Hong Kong v Reid bribes taken by prosecutor was deemed to be held as CT. In this situation the fiduciary becomes a debtor to his principal for the amount of bribe. Liability to strangers to the trust CT would also be imposed to someone who interferes with the trust and thereby assumes responsibilities of a T. Barnes v Addy trusteeship responsibilities may be extended to others who are not properly trustee but actually participating in any fraudulent conduct of trustee. Court imposes liability in the following circumstances.

Dishonest Assistance o 3rd party who dishonestly assists in BoT or misapplication is personally liable to compensate B for the loss. o Royal Brunei Airlines v Tan Travel agent sold RBA tickets and hold the money on express trust. The director of the agent applied the money to cover the expense incurred by the company. It is held that although the travel agent as trust was honest, the director as a third party is still liable for his own dishonesty and the loss. The state of mind of T was irrelevant.  Receive trust property  Specially Enforceable Contract Under specifically enforceable contract for sale, the vendor becomes T of property for purchaser. Similarly, Equity maxim equity treats that as done which ought to be done deems the purchaser the real owner of the property at the time of acquisition. Even the land is still at the hands of vendor at the time the contract is concluded, vendor is considered a T holding the land for purchaser on CT. If the vendor sold the property to another, he is deemed to hold the purchase money on trust for purchaser. Lake v Bayliss  Unfair advantage obtained by fraudulent or unconscionable conducts  Common intention of spouses This application is not necessary married or unmarried couples. It includes all persons who share ownership of a property. Where there is express declaration; Note: express declaration of trust for land/real property only effective in writing. When there is any written documentation but remained unsigned, it is possible that the documentation would shape as implied trust. Simpson v Simpson daughter claimed that her father transferred his home to a family company on trust for her favour for GBP 15,000 but there was no written declaration at the time the transfer was made in 1966 but there was sufficient evidence to show an intention to create oral trust for daughter. The transfer was to ensure that the home was beyond reach of potential creditors. In 1981 the director of the company signed a document acknowledging that property was held on trust for daughter. It was held that the trust was valid but daughter was required to pay GBP15,000 to hold the maxim he who seeks equity must do equity . When there is no express declaration of conveyance of cohabiting couple in joint names, surrounding circumstances will be taken into account. Common Intention Stack v Dowden there was no express agreement between H and W. W brought her case that both payment of acquisition and mortgage were unequal, and that they kept their affairs separately. She succeeded that the shares were not intended to be equal, and that she got 65%. In joint legal ownership it is presumed that beneficial ownership is to be divided between beneficial owners equally. o However, this presumption is not applicable in commercial basis.

Laskar v Laskar the home was purchased for the purpose of investment of rental income and capital appreciation. This is so regardless to the relationship of the two beneficiaries. o Rebutting the evidential presumption of equal ownership is to demonstrate a common intention that different proportion is intended. Financial and indirect contribution, as well as discussion among parties can be considered. Onus of proof it is for the person who asserts beneficial ownership to prove his case, that beneficial interest is otherwise arranged and divided. This may only be done by establishing the existence of a trust.  Unconscionability In the Estate of Crippen a person who has unlawfully killed another from acquiring benefit as the consequence of killing cannot retain such benefit. When agreement or promise is made between parties, the parties cannot set it aside. Bannister v Bannister one conveyed cottages to her brother in law in return of an oral promise that she would be allowed to live there for free for lifetime. However the brother in law later sought to evict her. It was held that CT was imposed even there was no written evidence. Binions v Evans according the agreement E and his wife was allowed to live rent free in cottage owned by his employer but need to maintain it in good condition. When E died his wife remained in the cottage. The cottage was sold to B at reduced price subject to the wife s life interest. Their eviction against the wife failed and it was held that CT is imposed on purchaser for the wife.