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14 - Constructive Trusts on Express Trusts

Principles under Threat

from Part II - The Changing Legal Context

Published online by Cambridge University Press:  08 December 2022

Richard Nolan
Affiliation:
University of York
Hang Wu Tang
Affiliation:
Singapore Management University
Man Yip
Affiliation:
Singapore Management University
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Summary

New Zealand’s high rate of discretionary trust usage is mirrored by a significant number of attempts to penetrate the ring-fence created by trusts in order to provide some recourse for creditors, spouses and de facto partners of the settlors. This chapter considers a recent line of cases that has shown the courts’ willingness to recognise the application of a constructive trust to property already held subject to an express trust. The constructive trust is said to arise in response to the reasonable expectations of the third-party claimant of an interest in the property in return for various contributions made. This is so even despite one or more of the trustees having no knowledge of the expectations and/or the contributions. The courts have viewed themselves as departing from trust orthodoxy in these cases, saying that ‘traditional rules…must bend to the practical realities’. This paper will examine the cases and analyse whether they are in fact a departure from trust principles and whether such departure is justified. The author argues that there are two main objections to this development: one relating to the nature of the beneficial interest and the other to the remedy being awarded.

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Chapter
Information
Trusts and Private Wealth Management
Developments and Directions
, pp. 264 - 284
Publisher: Cambridge University Press
Print publication year: 2022

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