1/6/2023 0 Comments Gta london 1996![]() Lord Browne-Wilkinson explained the differences between institutional and remedial constructive trusts: ‘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. Moneys stolen from a bank account can be traced in equity: Bankers Trust Co. Thus, an infant who has obtained property by fraud is bound in equity to restore it: Stocks v. 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. But the proprietary interest which equity is enforcing in such circumstances arises under a constructive, not a resulting, trust. I agree that the stolen moneys are traceable in equity. ![]() Unless this is the law, there will be no right to recover the assets representing the stolen moneys once the moneys have become mixed. Therefore, it is said, a resulting trust must arise either at the time of the theft or when the moneys are subsequently mixed. the coins were stolen trust moneys) or such interest arises under a resulting trust at the time of the theft or the mixing of the moneys. if either before the theft there was an equitable proprietary interest (e.g. 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? Moneys can only be traced in equity if there has been at some stage a breach of fiduciary duty, i.e. 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. No genetic engineering is required, only that the warm sun of judicial creativity should exercise its benign influence rather than remain hidden behind the dark clouds of legal history.’ Lord Browne-Wilkinson said (obiter): ‘The argument for a resulting trust was said to be supported by the case of a thief who steals a bag of coins. That growth should now be permitted to spread naturally elsewhere within this newly recognised branch of the law. The seed is there, but the growth has hitherto been confined within a small area. In my opinion the jurisdiction should now be made available, as justice requires, in cases of restitution, to ensure that full justice can be done. I am glad not to be forced to hold that English law is so inadequate as to be incapable of achieving such a result. It would be strange indeed if the courts lacked jurisdiction in such a case to ensure that justice could be fully achieved by means of an award of compound interest, where it is appropriate to make such an award, despite the fact that the jurisdiction to award such interest is itself said to rest upon the demands of justice. said that the gist of the action for money had and received is that ‘the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money’. Long ago, in Moses v Macferlan (1760) 2 Burr. HL Lord Goff said: ‘Claims in restitution are founded upon a principle of justice, being designed to prevent the unjust enrichment of the defendant: see Lipkin Gorman v Karpnale Ltd. ‘Although it is difficult to find clear authority for the proposition, when property has been obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity.’ An innocent recipient of property wrongfully obtained does not become a constructive trustee of it until receipt of knowledge of the claim in equity of the true owner. Parliament had made its intentions clear and it was not for the courts to create new situations in which compound interest would be awarded. Accordingly simple interest only was payable. A finding to that effect would create equitable interests with uncertain consequences for others. The failure of the swap agreement did not place the authority under any fiduciary duty to the claimants. Held: Simple interest only was payable on a debt payable for an interest rate swap agreement which had been avoided as ultra vires the council’s powers. It was clear law that the court had power to do so in the case of a breach of trust. The question was whether, in addition to ordering the repayment of the money to the bank on unjust enrichment principles, the court could also award compound interest. The bank had paid money to the local authority under a contract which turned out to be ultra vires and void. ![]() ![]() Simple interest only on rate swap damages
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