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Constructive trust and Charitable trust

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Constructive trust and Charitable trust                                                                                                                                         Word count 3629

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  1. Constructive trusts arise by operation of law. In general terms, a proprietary constructive trust will be imposed on a person who knows that her actions in respect of specific property are unconscionable. All constructive trusts can be understood as arising on the basis of this central principle, even though there are many different subspecies of constructive trust.’

A Hudson, Equity and Trusts (10th edn, Routledge 2022) 491

Critically analyse this statement by providing examples of the different types of constructive trust, using case law to support your answer.

2. The requirement of public benefit has proved especially significant when determining whether trusts for the advancement of education are charitable, and will be even more so now that benefit can no longer be presumed’.

G Virgo, The Principles of Equity and Trusts (5th edn, OUP 2023) 184

Critically evaluate this quotation in relation to current charity law, using case law and statutory provisions to support your answer.

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1.0 Constructive trust
1.1 Introduction
Under English law, constructive trust is a concept which has developed through judicial activism where a transaction creates an equitable obligation to hold the property for the benefit of another party. This kind of obligation may be created in instances where it doesn’t appear as transferor intended to depose the beneficial interest to the transferee, and it is not created by express or implied act of the settlor, but deemed by operation of law. By recognizing a transaction by which one party is wrongfully deprived his legal rights while the other party is holding that property right which they should not possess, as a constructive trust, unjust entrenchment can be avoided. So, this is a kind of implied trust.
They can be divided as institutional constructive trust and remedial constructive trust. Also, there are few key subspecies of constructive trust based on the way they arise, some of them are, resulting trust, constructive trust imposed by law, Property Estoppel.
1.2 Operation of Law
Unlike in express trust, constructive trusts are not subjected to any formality requirements, such as mandatory written notarial executed document or such other evidentiary documents. Instead, the trust is created impliedly by the intention of the parties; settlor and the trustee.
And, constructive trust is different from resulting trust because constructive trust does not give effect to the presumed or impugned intention, while resulting trust do so.
In the case of Stake V Dowden, House of lords held that the determination of the beneficial interest of the parties can be displaced by the common intention of the parties.
Jones V Kernott, is a case where a couple purchased a land jointly where there is a disagreement regarding the financial contribution and intention for the title of land. As there was no any expressed agreement the court considered the common intention at the time of properties acquisition. This is a flexible approach for constructive trusts.
There are mainly two types of constructive trusts in English law, as institutional constructive trusts and remedial constructive trusts. Unjust enrichment and breach of fiduciary duty can be identified as main two institutional constructive trusts, which are arising at the moment of the conduct. Remedial constructive trust is arising as a remedy awarded by a court as a decision for a case filed by the plaintiff.

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