Restitution
front page

What's new?

Archive front page

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2007

2006

2008

2009

Hello all

Notwithstanding Prof Birks' reports of its demise, the remedial constructive trust is, it seems, alive and well and living in the Irish High Court. Further to the thread on Judge Judy, Seinfeld, interceptive subtraction and disappointed beneficiaries, yesterday's Irish Times brings news of a remedial constructive trust imposed to reverse the unjust enrichment of a recipient (a beneficiary under a will, enriched by interceptive subtraction) at the expense of an intended but disappointed beneficiary.

The case is In re Cahill. Kelly v. Cahill, Irish Times Law Report, 26 March 2001 (High Court, Barr J., 18 January 2001; on Bailii as [2001] IEHC 2 at http://www.bailii.org/ie/cases/ IEHC/2001/2.html with a link to this via Steve Hedley's restitution page at <http://www.law.cam.ac.uk/ restitution/irel.htm>).

The deceased's will, dated 23 October 1969, left his property jointly to his wife and brother for life, with remainder in trust for his nephew. However, in January 1994, the deceased instructed his solicitor that he no longer wished to benefit his nephew, and instead wished to leave all of his property to his wife. To avoid probate tax, the solicitor advised the deceased not to alter his will but instead to transfer his lands from his sole name into the joint names of himself and his wife, as joint tenants The solicitor drew up a deed of transfer which was duly executed by the deceased and his wife. All parties believed that it referred to all of the deceased's property, but in fact, through the inadvertence of the solicitor and unknown to the testator and his wife, much of the testator's land was not in fact included in the deed of transfer contrary to the express intentions of the testator. When the deceased died, those lands passed under the will ultimately for the benefit of the nephew.

Barr J held that the kernel of the question which he had to determine was "whether the evidence establishes a clear, positive intention on the part of the testator that his wife should inherit all of his property on his death; that he took appropriate steps to bring that about and that he could not reasonably have known that through his solicitor's error the Deed of Transfer, which he and his wife duly executed, did not include all of his lands and that his stated intention to benefit his wife exclusively on his death was defeated in part" and held that it did. That having been established, it followed that "'justice and good conscience' require[d] that the [nephew] should not be allowed to inherit the testator's property or any part of it on the death of his widow and that his interest in remainder under the will should be deemed to be a constructive trust in favour of the widow. In my opinion a 'New Model' constructive trust of that nature the purpose of which is to prevent unjust enrichment is an equitable concept which deserves recognition in Irish law."

For the law upon which this holding is based Barr J adopted "with respect" the assessment of "'New Model' constructive trusts" by The Hon Mr Justice Ronan Keane [now the Chief Justice] in _Equity and the Law of Trusts in the Republic of Ireland_ (Butterworths, London, 1988) pp 196-197: "In recent years, there has been much discussion in other jurisdictions as to whether a constructive trust can be said to arise in any circumstances where permitting the defendant to retain the property would result in his being 'unjustly enriched'. This, it has been said, effectively means treating the constructive trust as a form of remedy intended to restore property to a person to whom in justice it should belong rather than as an institution analogous to the express or resulting trust. The constructive trust, in its additional form, arises because of equity's refusal to countenance any form of fraud: in this wider modern guise it is imposed by law 'whenever justice and good conscience require it' … Broadly speaking, it may be said that the application of the principle of unjust enrichment requires the restoration by the defendant to the plaintiff of a benefit which it would be unjust for him to retain. Sometimes this can be done by a simple award of money, e.g., the refund of money paid under a mistake of fact. But sometimes the restoration of the benefit can only be achieved by giving the plaintiff an interest in property. Thus, the constructive trust is imposed by the Court as an equitable remedy intended to restore to the plaintiff the benefit of which he has been deprived. In the words of Cardozo J 'a constructive trust is the formula through which the conscience of equity finds expression'" (discussing Hussey v Palmer [1972] 3All ER 744, 747 per Lord Denning MR; Beatley v Guggenheim Exploration Co. 225 NY 380, 386; to the authorities discussed by Keane J, Barr J added HKN Invest OY and Anor. v Incotrade PVT Limited (In liquidation) and Ors . [1993] 3 IR 152, 162 per Costello J.).

Discussion of this case will be incorporated into my piece on "Restitution, Rectification and Mitigation: Negligent Solicitors and Wills, Again" (mentioned in an earlier message; electronic copies available to anyone who asks).

Best

 Eoin.

EOIN O'DELL BCL(NUI) BCL(Oxon)
Editor, Dublin University Law Journal.
Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland.
(353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m)
(All opinions are personal. No legal responsibility whatsoever is accepted.)