chapter  8
78 Pages

Constructive trusts I

ByMohamed Ramjohn

A constructive trust is an aspect of the creative jurisdiction of equity. It is an implied trust created by the courts when it is unconscionable for a defendant with the legal title to property to claim that property beneficially to the prejudice of the claimant. The interest of a beneficiary under a constructive trust is proprietary in nature. In other words, the beneficiary's interest exists 'in rem', and in the event of the bankruptcy of the trustee the beneficiary's interest prevails over the trustee in bankruptcy and the claimant will take priority over the claims of his general creditors. English law has not followed other jurisdictions where the constructive trust has become a remedy for unjust enrichment. A constructive trust is created by an order from the court and is based on circumstances in which equity considers it unconscionable for the holder of property to deny the claimant an interest in the same.