C – Constructive trust
26/7/18
CMOC SALES & MARKETING LTD v PERSONS UNKNOWN [2018] EWHC 2230 (Comm)
Considers the proof required in fraud claims where the defendants do not engage in the litigation process or appear at trial and service has been effected by alternative means including by Facebook Messenger and WhatsApp. A thief of stolen funds is to be treated as a fiduciary holding the funds on constructive trust [76]. Summarises requirements for claims of dishonest assistance [89] and unlawful means conspiracy [92]. Knowledge required to establish dishonest assistance and conspiracy does not require it to be shown that the defendant intended to injure an identified victim. It is sufficient if the defendant knows that there is a victim [117]. Also summarises requirements for claims of knowing receipt [128] and unjust enrichment [140]. Where there are direct and indirect recipients, there is only one true recipient for the purpose of an unjust enrichment claim and the claimant can elect which to pursue. Compound interest is available for proprietary claims and knowing receipt but not for dishonest assistance. Costs incurred in pursuing orders from courts abroad can be claimed as damages [172].
13/7/15
GHAZANI v ROWSHAN [2015] EWHC 1922 (Ch)
In circumstances where an agreement had been made to exchange a property in Leeds with one in Tehran, the defendant who had failed to complete the agreement, held his property on a constructive trust and/or there was a proprietary estoppel in favour of the claimant.
CREDIT AGRICOLE CORPRATION & INVESTMENT BANK v PAPADIMITRIOU [2015] UKPC 13
The true owner of goods claimed to trace their proceeds of sale through companies in Panama and Lichtenstein to the bank. The bank’s defence was that it was a bona fide purchaser for value of the proceeds which had been deposited with the bank and subsequently dissipated. The issue was whether the bank had constructive notice of the claimant’s proprietary rights because it failed to make inquiries which would have revealed their existence. Mere notice of a claim is not sufficient. But a bank must make inquiries if there is a serious possibility of a third party having a proprietary right or if the facts known to the bank would give a reasonable banker in the position of the particular banker serious cause to question the propriety of the transaction. If unexplained features of a transaction are indicative of wrongdoing, an explanation must be sought. If the bank had given adequate consideration to the commercial purpose of the transaction, it would have concluded that the inter-position of companies in Panama and Lichtenstein had been to conceal the origin of the funds and for the improper purpose of money laundering. The bank was therefore fixed with notice.
16/7/14
FHR EUROPEAN VENTURES LLP v CEDAR CAPITAL PARTNERS LLC [2014] UKSC 45, [2015] AC 250
The Court of Appeal had been right to hold that where an agent receives a secret commission in breach of the fiduciary duty owed to his principal, the agent held the money on trust for his principal, so the principal had a proprietary claim to it. Cases suggesting that there is no trust are wrong.
29/1/13
FHR EUROPEAN VENTURES LLP v MANKARIOUS [2013] EWCA Civ 17
A secret commission paid by the seller of an hotel to the buyer’s agent was held on constructive trust for the buyer. It could not be traced into the agent’s hands, because when the seller paid the purchase price it had intended the buyer to obtain legal and beneficial title to the money. But the agent had been a fiduciary and had taken advantage of an opportunity belonging to the buyer, because the buyer might have delayed contracting if it had known that the commission was to be paid to the agent from the purchase money, or the buyer might have negotiated down the fee it paid to the agent thereby reducing the overall cost of the transaction to the buyer.
26/11/12
GROVEHOLT LTD v HUGHES [2012] EWHC 3351 (Ch)
A purchaser of registered land who took with notice of the claimant’s right to have the land transferred to him did not hold the land on constructive trust for the claimant because the purchaser had not agreed to give effect to the claimant’s prior interest and the claimant had not protected his rights by any entry on the register.
1/6/12
GOLDSPAN v PATEL [2012] EWHC 1447 (Ch)
A recipient of funds from a director did not hold the funds on constructive trust for the company where he had not known the funds belonged to the company.
25/4/12
E-CLEAR (UK) PLC V ELIA [2012] EWHC 1256 (Ch)
A company’s equitable interest in a property purchased by a director using the company’s funds took priority to an equitable interest of an alleged purchaser from the director whose interest had not been registered and was only equitable.