constructive trustee

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A person who holds title to property that it is established he holds on constructive trust for another. He is not necessarily subject to the same duties and liabilities as the trustee of an express trust. Until the court concludes that a constructive trust has arisen, the constructive trustee will probably be unaware that he is holding the property on trust for another. Once an individual's status as a constructive trustee has been established, he will be under a duty to the trust, although the extent of his liability may vary from case to case, depending upon the circumstances.

Where personal liability to account has been imposed upon a fiduciary for receiving an unauthorized profit, or upon a stranger for dishonest assistance or for receiving property in breach of trust, the courts have often referred to this personal liability as “liability to account as a constructive trustee”. This use of terminology is misleading and has been criticized (Paragon Finance v D B Thakerar & Co [1999] 1 All ER 400 (CA).

Subjects: Law.

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