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Cameron Stewart
Definition
A constructive trust is a trust imposed by
law. Because a constructive trust arises by
operation of law, it is often said that the
intention of the parties subject to a
constructive trust is irrelevant to its
application
Definition
However, as shall become clear below, it
is wrong to state that the intention of the
parties to a relationship is completely
irrelevant to constructive trusts as there
are forms of constructive trust that arise by
way of common intention and agreement.
In that sense it is preferable to say that
intention is not a necessary element of the
constructive trust, as it is for both express
and resulting trusts.
Remedy or institution?
Property institution: This means that the
express and the resulting trust reflect
defined relationships between parties that
come into existence at a time determined
by the conduct of those parties. Once in
existence, the relationships are governed
by the institution of trust, meaning that
rights, powers and duties of trust should
be exercised and honoured between the
parties.
Remedy or institution?
A remedy differs from a property institution
in the time of its availability and its
discretionary nature
If the constructive trust is an equitable
remedy it will exist from the time that an
order is made by the court: Re Polly Peck
International plc (in administration) v
MacIntosh [1998] 3 All ER 812 at 825
Remedy or institution?
Similarly, if constructive trusts are treated
as an equitable remedy, they will be
discretionary in nature. A judge could
refuse to order a constructive trust if it was
a remedy, whereas if the trust was an
institution it would exist independently of
the judges exercise of discretion
Remedy or institution?
Muschinski v Dodds (1985) 160 CLR 583 at 6124 ,
Deane J:
At times, disputing factions have tended to polarise
the discussion by reference to competing rallying
points of remedy and institution. The perceived
dichotomy between those two catchwords has,
however, largely been the consequence of lack of
definition. In a broad sense, the constructive trust is
both an institution and a remedy of the law of equity.
As a remedy, it can only properly be understood in
the context of the history and the persisting
distinctness of the principles of equity that enlighten
and control the common law.
Remedy or institution?
The use or trust of equity, like equity itself, was
essentially remedial in its origins Like express
and implied trusts, the constructive trust developed
as a remedial relationship superimposed upon
common law rights by order of the Chancery Court.
It differs from those other forms of trust, however, in
that it arises regardless of intention. For that reason,
it was not as well suited to development as a
conveyancing device or as an instrument of property
law. Indeed, whereas the rationale of the institutions
of express and implied trust is now usually identified
by reference to intention, the rationale of the
constructive trust must still be found essentially in its
remedial function which it has predominantly
retained
Remedy or institution?