FLK2 · Trusts

Constructive trusts

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

TR.06 — Constructive Trusts

A constructive trust arises by operation of law, imposed by the court regardless of intention to prevent unconscionable conduct or unjust enrichment. It is not an express trust (so the certainties and the s.53(1)(b) LPA 1925 writing formality do not apply — s.53(2) exempts resulting and constructive trusts).

Core categories and tests

1. Common intention constructive trusts (family home). The key SQE area. Where legal title is in one party's sole name but a non-owner claims a beneficial share:

  • Acquisition of a beneficial interest requires (a) an express common intention (a discussion, even imperfectly remembered) plus detrimental reliance, or (b) an inferred common intention drawn from the whole course of conduct — direct financial contributions to purchase/mortgage are the clearest route (Lloyds Bank v Rosset; Stack v Dowden; Jones v Kernott).
  • Quantification: where the parties' intention as to shares is unclear, the court asks what is fair on the whole course of dealing (Jones v Kernott).
  • Joint legal owners: equity follows the law — a presumption of equal beneficial shares — rebuttable only by evidence of a different common intention (Stack v Dowden).

2. Other constructive trusts:

  • Profits from breach of fiduciary duty / bribes — held on constructive trust (FHR European Ventures v Cedar Capital — bribes/secret commissions are proprietary, not merely a debt).
  • Strangers to a trust — knowing receipt (receiving trust property with knowledge) and dishonest assistance (assisting a breach; test is objective dishonesty — Royal Brunei v Tan; Ivey v Genting).
  • Secret/half-secret trusts; the rule in Pallant v Morgan; vendor under a specifically enforceable contract.

Common traps and distinctions

  • Constructive vs resulting trust: a resulting trust reflects contribution to purchase price by share; a common intention constructive trust looks at the whole course of conduct and can produce non-arithmetic shares. Stack/Jones favour the constructive trust in the domestic context — resulting-trust arithmetic dominates commercial/investment purchases.
  • No formalities: don't apply certainties or s.53(1)(b) — s.53(2) saves it.
  • Detrimental reliance is essential for the express-agreement route; an agreement alone is not enough.
  • Dishonest assistance needs no receipt; knowing receipt needs no dishonesty — keep the elements separate.
  • Improvements/renovations alone rarely found an inferred intention (cf. Rosset), though relevant to quantification.

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A woman is the treasurer of a small amateur football club. Members pay £20 each month in cash. Under the club rules she accepted on becoming treasurer, she must bank the subscriptions into the club's dedicated account within seven days. One month she receives £200 in subscriptions and spends the cash on her own gas bill that same day. She intends to replace the money from her wages before anyone notices, and pays an equivalent £200 into the club account two weeks later. Which statement best explains how section 5(3) of the Theft Act 1968 applies to the subscriptions when she pays the gas bill?

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More Trusts topics

See all topics in the FLK2 guide or the full SQE1 syllabus.

Independent SQE1 revision notes for study — not legal advice; check primary sources before relying on any point. Exam rules are set by the SRA; see the official SQE site.

Constructive trusts — SQE1 revision notes (FLK2) | Lawdojo