England's dreaming equity, trust and conscience - alastairhudson.com

The more interesting observation is that there are a number of cases which could onlybe resolved satisfactorily by constructive trusts, and which could not have beenresolved at all by unjust enrichment. Here follows a brief outline of some of them.Recovery of property in Att-Gen Hong Kong v ReidIt is a feature of restitution of unjust enrichment thinking that the enrichment musthave been made at the plaintiff’s expense. In Reid, however, the defendant’senrichment came directly from criminals who bribed him, whereas the plaintiff wasthe Attorney-General acting on behalf of the people of Hong Kong. There was nodirect enrichment at the plaintiff’s expense. The only sense in which there was anenrichment was in a moral sense. And morality is usefully the root of the constructivetrust which Lord Templeman imposed by reference to the equitable doctrine that“equity looks upon as done that which ought to have been done”.Unjust enrichment has nothing to add here.Tax avoidance in Jerome v KellyRestitution thinking does not help with the conceptualisation of the fiduciary dutywhich arises “sub modo” in relation to tax avoidance schemes like that in Jerome vKelly. The equitable interest does not necessarily pass where the fiduciary has a rightto deal on her own account in relation to the property which is to be passed under thecontract. It would therefore be unclear how unjust enrichment would explain at whattime title would pass in that property.Westdeutsche Landesbank insolvencyOne the reasons why the theory of restitution of unjust enrichment was rejected byLord Browne-Wilkinson in Westdeutsche Landesbank v Islington was that it providedno workable understanding of how a restitutionary resulting trust, imposed by thecourt, would not generate injustice in insolvency proceedings if the trust came intoexistence after the insolvency, whereas the traditional equitable notion of aconstructive trust takes the creation of the trust from the date of the defendantknowing that there was some unconscionable activity in relation to the use ofproperty.Dishonest assistanceLiability to account as a constructive trustee for dishonest assistance in a breach oftrust is based on the compensation for any loss caused to the beneficiaries by a breachof trust. The defendant will not have received the trust property at any stage. Thedefendant need not have been enriched for the claim to lie.Knowing receipt – mostlyWhile Prof Birks has claimed that knowing receipt can be restitutionary, what is clearis that the claim does not have to be based on the presence on an unjust enrichmentand that the remedy is not restitutionary. The remedy is to recover the loss suffered bythe beneficiaries as a result of a breach of trust. That is a compensatory and not arestitutionary remedy in that it compensates loss as opposed to subtracting anenrichment from the defendant. The defendant is not required to have made someenrichment, although it might be possible for some enrichment to have been earned.13www.alastairhudson.com | © professor alastair hudson