Circumstances in Which a Constructive Trust May Be Imposed upon a Trustee

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Constructive trusts arise by operation of common law principles and are by and largely implied by circumstances and facts particularly in respect of the conduct, statements, and intention of the relevant parties where applicable. The most common circumstance in which a constructive trust may arise is when a party makes some contribution toward the intrinsic value of the property with the understanding that he will acquire some interest in that property. These kinds of circumstances usually arise in and over the respective interests of co-habitants of a dwelling house. In these types of scenarios, a constructive trust may be imposed upon a trustee.Lord Diplock defined the circumstances in which a constructive trust will be imposed. He maintained that there is no real distinction between the concept of resulting, implied, and constructive trusts. Trusts of this nature are:…created by a transaction between the trustee and the cestui que trust in connection with the acquisition by the trustee of a legal estate in land, whenever the trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired. And he will be held to have so conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land.2In this case, Gissing v Gissing offers a comprehensive understanding of the nature of constructive trust and the manner in which it will arise in equity. The facts and circumstances of this case lend itself to the development of the law regarding intention and the interpretation of the intention.Gissing v Gissing was a case where the legal title to the matrimonial home was held in the husband’s name only. The court had to determine whether or not the husband held the legal title as trustee for both himself and his wife. And if the court was satisfied with the facts that the husband was a trustee, how should the beneficial interest in that property, to be divided.