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The generality of these submissions was narrowed by submitting that the trust which arose in this case was a resulting trust "not of an active character": see per Viscount Haldane L. These propositions are fundamental to the law of trusts and I would have thought uncontroversial. B is entitled to enforce his equitable interest against the property in the hands of X because X is a trustee for B. Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which give rise to it: the function https://appwa.co/casino-free-movie-online/roulette-erklrung.php the court is merely Westdeutsche declare that such trust has arisen Westdeutsche check this out past. It is true that the parties were under a misapprehension that the payment was made in pursuance of a valid contract. Von Rainer Widmann. Spiele Joker Poker Kings - Video Slots Online this respect, on what circumstances give rise to a resulting trust, however, Westdeutsche please click for source still the leading case.

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Von Stefan Bürk. A holds as trustee for B. Again I think this argument is fallacious. There are many cases where B enjoys rights which, in equity, are enforceable against the legal owner, A.

Even in cases where the whole beneficial interest is vested in B and the bare legal interest is in A. A is not necessarily a trustee, e.

The Bank contended that where, under a pre-existing trust, B is entitled in an equitable interest in trust property, if the trust property comes into the hands of a third party.

X not being a purchaser for value of the legal interest without notice. B is entitled to enforce his equitable interest against the property in the hands of X because X is a trustee for B.

In my view the third party, X, is not necessarily a trustee for B: B's equitable right is enforceable against the property in just the same way as any other specifically enforceable equitable right can be enforced against a third party.

Even if the third party, X, is not aware that what he has received is trust property B is entitled to assert his title in that property.

If X has the necessary degree of knowledge, X may himself become a constructive trustee for B on the basis of knowing receipt.

But unless he has the requisite degree of knowledge he is not personally liable to account as trustee: In re Diplock [] Ch. Therefore, innocent receipt of property by X subject to an existing equitable interest does not by itself make X a trustee despite the severance of the legal and equitable titles.

Underhill and Hayton, Law of Trusts and Trustees , 15th ed. This may only be a question of semantics: on either footing, in the present case the local authority could not have become accountable for profits until it knew that the contract was void.

This is not a case where the Bank had any equitable interest which pre-dated receipt by the local authority of the upfront payment.

Therefore, in order to show that the local authority became a trustee, the Bank must demonstrate circumstances which raised a trust for the first time either at the date on which the local authority received the money or at the date on which payment into the mixed account was made.

Counsel for the Bank specifically disavowed any claim based on a constructive trust. This was plainly right because the local authority had no relevant knowledge sufficient to raise a constructive trust at any time before the monies, upon the bank account going into overdraft, became untraceable.

Once there ceased to be an identifiable trust fund, the local authority could not become a trustee: In re Goldcorp Exchange Ltd [] 1 AC Therefore, as the argument for the Bank recognised, the only possible trust which could be established was a resulting trust arising from the circumstances in which the local authority received the upfront payment.

Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties.

A resulting trust is not imposed by law against the intentions of the trustee as is a constructive trust but gives effect to his presumed intention.

Megarry J. I am not convinced that this is right. If the settlor has expressly, or by necessary implication, abandoned any beneficial interest in the trust property, there is in my view no resulting trust: the undisposed-of equitable interest vests in the Crown as bona vacantia: see In re West Sussex Constabulary's Widows, Children and Benevolent Fund Trusts [] Ch.

Applying these conventional principles of resulting trust to the present case, the Bank's claim must fail. There was no transfer of money to the local authority on express trusts: therefore a resulting trust of type B above could not arise.

As to type A above, any presumption or resulting trust is rebutted since it is demonstrated that the Bank paid, and the local authority received, the upfront payment with the intention that the monies so paid should become the absolute property of the local authority.

It is true that the parties were under a misapprehension that the payment was made in pursuance of a valid contract. But that does not alter the actual intentions of the parties at the date the payment was made or the monies were mixed in the bank account.

As the article by William Swadling supra demonstrates the presumption of resulting trust is rebutted by evidence of any intention inconsistent with such a trust, not only by evidence of an intention to make a gift.

Professor Birks, whilst accepting that the principles I have stated represent "a very conservative form" of definition of a resulting trust page , argues from restitutionary principles that the definition should be extended so as to cover a perceived gap in the law of "subtractive unjust enrichment " p.

He suggests that a resulting trust should arise wherever the money is paid under a mistake because such mistake vitiates the actual intention or when money is paid on a condition which is not subsequently satisfied.

As one would expect, the argument is tightly reasoned but I am not persuaded. The search for a perceived need to strengthen the remedies of a plaintiff claiming in restitution involves, to my mind, a distortion of trust principles.

First, the argument elides rights in property which is the only proper subject matter of a trust into rights in "the value transferred": see p.

A trust can only arise where there is defined trust property: it is therefore not consistent with trust principles to say that a person is a trustee of property which cannot be defined.

Second, Professor Birks' approach appears to assume for example in the case of a transfer of value made under a contract the consideration for which subsequently fails that the recipient will be deemed to have been a trustee from the date of his original receipt of money, i.

This result is incompatible with the basic premise on which all trust law is built, viz. Unless and until the trustee is aware of the factors which give rise to the supposed trust, there is nothing which can affect his conscience.

Thus neither in the case of a subsequent failure of consideration nor in the case of a payment under a contract subsequently found to be void for mistake or failure of condition will there be circumstances, at the date of receipt, which can impinge on the conscience of the recipient, thereby making him a trustee.

Thirdly, Professor Birks has to impose on his wider view an arbitrary and admittedly unprincipled modification so as to ensure that a resulting trust does not arise when there has only been a failure to perform a contract, as opposed to total failure of consideration: see pp.

Such arbitrary exclusion is designed to preserve the rights of creditors in the insolvency of the recipient. The fact that it is necessary to exclude artificially one type of case which would logically fall within the wider concept casts doubt on the validity of the concept.

If adopted, Professor Birks' wider concepts would give rise to all the practical consequences and injustices to which I have referred.

I do not think it right to make an unprincipled alteration to the law of property i. Three cases were principally relied upon in direct support of the proposition that a resulting trust arises where a payment is made under a void contract.

The case concerned the distribution of the assets of the Birkbeck Building Society, an unincorporated body which was insolvent.

The Society had for many years been carrying on business as a bank which, it was held, was ultra vires its objects. The bank had accepted deposits in the course of its ultra vires banking business and it was held that the debts owed to such depositors were themselves void as being ultra vires.

In addition to the banking depositors, there were ordinary trade creditors. The Society had two classes of members, the A shareholders who were entitled to repayment of their investment on maturity and the B shareholders whose shares were permanent.

By agreement, the claims of the ordinary trade creditors and of the A shareholders had been settled.

Therefore the only claimants to the assets of the Society before the Court were the ultra vires depositors and the B shareholders, the latter of which could take no greater interest than the Society itself.

The issues for decision arose on a summons taken out by the liquidator for directions as to how he should distribute the assets in the liquidation.

In the judgments, it is not always clear whether this House was laying down general propositions of law or merely giving directions as to the proper mode in which the assets in that liquidation should be distributed.

The depositors claimed, first, in quasi contract for money had and received. They claimed secondly, as the result of an argument suggested for the first time in the course of argument in the House of Lords at p.

The House of Lords was unanimous in rejecting the claim by the ultra vires depositors to recover in quasi-contract on the basis of monies had and received.

In their view, the claim in quasi-contract was based on an implied contract. To imply a contract to repay would be to imply a contract to exactly the same effect as the express ultra vires contract of loan.

Any such implied contract would itself be void as being ultra vires. Subsequent developments in the law of restitution demonstrate that this reasoning is no longer sound.

In my judgment, Your Lordships should now unequivocally and finally reject the concept that the claim for monies had and received is based on an implied contract.

I would overrule Sinclair v Brougham on this point. It follows that in Sinclair v Brougham the depositors should have had a personal claim to recover the monies at law based on a total failure or consideration.

The failure of consideration was not partial: the depositors had paid over their money in consideration of a promise to repay.

That promise was ultra vires and void: therefore the consideration for the payment of the money wholly failed.

So in the present swaps case though the point is not one under appeal I think the Court of Appeal were right to hold that the swap monies were paid on a consideration that wholly failed.

The essence of the swap agreement is that, over the whole term of the agreement, each party thinks he will come out best: the consideration for one party making a payment is an obligation on the other party to make counter-payments over the whole term of the agreement.

If in Sinclair v Brougham the depositors had been held entitled to recover at law, their personal claim would have ranked part passu with other ordinary unsecured creditors, in priority to the members of the Society who could take nothing in the liquidation until all creditors had been paid.

The House of Lords held that, the ordinary trade creditors having been paid in full by agreement, the assets remaining were to be divided between the ultra vires depositors and the members of the Society pro rata according to their respective payments to the Society.

As has been pointed out frequently over the 80 years since it was decided, Sinclair v Brougham is a bewildering authority: no single ratio decidendi can be detected: all the reasoning is open to serious objection: it was only intended to deal with cases where there were no trade creditors in competition and the reasoning is incapable of application where there are such creditors.

In my view the decision as to rights in rem in Sinclair v Brougham should also be overruled. Although the case is one where property rights are involved, such overruling should not in practice disturb long-settled titles.

However, Your Lordships should not be taken to be casting any doubt on the principles of tracing as established in In re Diplock.

If Sinclair v Brougham , in both its aspects, is overruled the law can be established in accordance with principle and commercial common sense: a claimant for restitution of monies paid under an ultra vires, and therefore void, contract has a personal action at law to recover the monies paid as on a total failure of consideration ; he will not have an equitable proprietary claim which gives him either rights against third parties or priority in an insolvency; nor will he have a personal claim in equity, since the recipient is not a trustee.

In that case Chase Manhattan, a New York bank, had by mistake paid the same sum twice to the credit of the defendant, a London bank.

Shortly thereafter, the defendant bank went into insolvent liquidation. The question was whether Chase Manhattan had a claim in rem against the assets of the defendant bank to recover the second payment.

Goulding J. He held that, where money was paid under a mistake, the receipt of such money without more constituted the recipient a trustee: he said that the payer "retains an equitable property in it and the conscience of [the recipient] is subjected to a fiduciary duty to respect his proprietary right": p.

It will be apparent from what I have already said that I cannot agree with this reasoning. First, it is based on a concept of retaining an equitable property in money where, prior to the payment to the recipient bank, there was no existing equitable interest.

Further, I cannot understand how the recipient's "conscience" can be affected at a time when he is not aware of any mistake. Finally, the Judge found that the law of England and that of New York were in substance the same.

In the present context, that distinction is of fundamental importance. Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which give rise to it: the function of the court is merely to declare that such trust has arisen in the past.

The consequences that flow from such trust having arisen including the possibly unfair consequences to third parties who in the interim have received the trust property are also determined by rules of law, not under a discretion.

A remedial constructive trust , as I understand it, is different. It is a judicial remedy giving rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of third parties lies in the discretion of the court.

Thus for the law of New York to hold that there is a remedial constructive trust where a payment has been made under a void contract gives rise to different consequences from holding that an institutional constructive trust arises in English law.

However, although I do not accept the reasoning of Goulding J. The defendant bank knew of the mistake made by the paying bank within two days of the receipt of the monies: see at p.

The judge treated this fact as irrelevant p. Although the mere receipt of the monies, in ignorance of the mistake, gives rise to no trust, the retention of the monies after the recipient bank learned of the mistake may well have given rise to a constructive trust: see Snell's Equity p.

The argument for a resulting trust was said to be supported by the case of a thief who steals a bag of coins.

At law those coins remain traceable only so long as they are kept separate: as soon as they are mixed with other coins or paid into a mixed bank account they cease to be traceable at law.

Can it really be the case, it is asked, that in such circumstances the thief cannot be required to disgorge the property which, in equity, represents the stolen coins?

Monies can only be traced in equity if there has been at some stage a breach of fiduciary duty , i.

Therefore, it is said, a resulting trust must arise either at the time or the theft or when the monies are subsequently mixed.

Unless this is me law, there will be no right to recover the assets representing the stolen monies once the monies have become mixed.

I agree that the stolen monies are traceable in equity. But the proprietary interest which equity is enforcing in such circumstances arises under a constructive, not a resulting, trust.

Although it is difficult to find clear authority for the proposition, when property is obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity.

Those concerned with developing the law of restitution are anxious to ensure that, in certain circumstances, the plaintiff should have the right to recover property which he has unjustly lost.

For that purpose they have sought to develop the law of resulting trusts so as to give the plaintiff a proprietary interest.

For the reasons that I have given in my view such development is not based on sound principle and in the name of unjust enrichment is capable of producing most unjust results.

The law of resulting trusts would confer on the plaintiff a right to recover property from, or at the expense of, those who have not been unjustly enriched at his expense at all, e.

Although the resulting trust is an unsuitable basis for developing proprietary restitutionary remedies, the remedial constructive trust, if introduced into English law, may provide a more satisfactory road forward.

The court by way of remedy might impose a constructive trust on a defendant who knowingly retains property of which the plaintiff has been unjustly deprived.

Since the remedy can be tailored to the circumstances of the particular case, innocent third parties would not be prejudiced and restitutionary defences, such as change of position, are capable of being given effect.

However, whether English law should follow the United States and Canada by adopting the remedial constructive trust will have to be decided in some future case when the point is directly in issue.

Although, for the reasons I have given, I do not think the Court should award compound interest in this case.

I can see no reason why interest should not start to run as from the date of payment of the upfront payment. I agree with the judgment of Leggatt L.

Lord Slynn gave a short opinion concurring with Lord Browne-Wilkinson. Lord Woolf concurred with Lord Goff.

Lord Lloyd concurred with Lord-Browne-Wilkinson. Westdeutsche has on its facts been superseded by Sempra Metals Ltd v Inland Revenue Commissioners , [1] where the House of Lords held that the courts could award compound interest in a restitutionary claim at common law.

In Westdeutsche it was conceded that compound interest could not be awarded at common law, and the case was argued to fall within resulting trust principles.

However, the bank's claim could now have succeeded without recourse to establishing a resulting trust. In this respect, on what circumstances give rise to a resulting trust, however, Westdeutsche is still the leading case.

However, while remaining the leading case on the circumstances under which a resulting trust will arise, and thus a proprietary remedy is available, Westdeutsche has been subjected to wide-ranging criticism, particularly from academic circles focused on unjust enrichment.

This view, represented by Peter Birks and Robert Chambers, suggests that Lord-Browne Wilkinson was wrong to regard resulting trusts as responding to conscience, rather than the absence of any intention to benefit another person.

Birks argued that a proprietary remedy need not necessarily follow, although Chambers regards it as possible.

From Wikipedia, the free encyclopedia. See also: Unjust enrichment , English property law , and Resulting trusts.

Law of Property Act ss 53 1 c and 60 3. Namespaces Article Talk. Views Read Edit View history.

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