Remedial Constructive Trusts.

Essay by cheatinUniversity, Bachelor's September 2005

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"There is a great fear in our law that recognising a remedial constructive trust will give rise to an indiscriminate or unjustified variation of existing property rights." Graham Moffat: Trusts Law Text and Materials (1999) Discuss.

A constructive trust is not the usual kind of trust encountered in Equity. It is a trust which is different from other trusts in that is imposed by a court of law and it cannot be created by an individual. It is considered to be a mean for the courts to reallocate property, which rightfully belongs to one party but is held by another. It is used in cases where a party uses a trust in order to benefit at the expense of another party. Edmund Davies L.J. in Carl Zeiss Stiftung v Herbert Smith & Co. described a constructive trust as "a trust which is imposed by equity to satisfy the demands of justice and good conscience without reference to any express or presumed intention of the parties."

Constructive trusts in the United Kingdom Law differ from those of other jurisdictions such as those of the USA and Canada. United Kingdom courts will accept constructive trusts as a substantive institution and a remedy for a breach of expressed trusts or fiduciary duties. A different approach to constructive trusts is that of remedial constructive trusts, an approach that has been accepted in the USA, Canada, New Zealand and Australia. The remedial constructive trust functions as a remedy to the theory of unjust enrichment, but is yet to be accepted in the English legal system. An institutional constructive trust is one that is recognised by the court after a specific range of events have occurred. It is not up to the discretion of the court to impose this type of trust but merely to recognise...