This chapter has been wholly revised by Professor Michael Bryan. Highlights include:

[22.080] The duties of a constructive trustee

The definition of “trust” and “trustee” in State and Territory
legislation includes constructive trusts and constructive trustees. It follows
that the various statutory rights, powers and liabilities enacted in the
trustee legislation apply to constructive trusts and constructive trustees
unless the context indicates that the application would be inappropriate: Goldie v Getley (No 3) [2011] WASC 132
at [275].

[22.660] Institutional and remedial constructive trusts

In some decisions it has been said that Australian law, in
contrast to English law, has embraced the concept of the remedial constructive
trust. For this purpose the remedial constructive trust has been counterposed
with the institutional constructive trust. A threshold difficulty is to
determine what is meant by “institutional” and “remedial” in the context of the
law of constructive trusts.

[22.4280] The limits of the common intention principle

The common intention
must relate to a property, or properties, to which the defendant holds title

The common intention must relate to a property to which the
defendant holds title, or to which he acquires title after the plaintiff has
acted to his or her detriment: DPP v Ali
(No 2) [2010] VSC 503 at [75]. It must not relate to a property to which a
third party holds title.

[22.7320] Introduction

A general principle applicable to all cases in which a
constructive trust is imposed for breach of
fiduciary obligation is that, the court must be satisfied that the
property over which the constructive trust will be imposed, is causally linked
to the breach of fiduciary duty: Chameleon
Mining NL v Murchison Metals Ltd [2010] FCA 1129 at [979]–[1010].

[22.10140] Elements of cause of action for knowing assistance

In most cases it will be sufficient for the court to ask the
question: would the breach of fiduciary obligation have occurred but for the
assistance provided by the defendant? However, there may be cases where the
breach of duty would have occurred in any event, but the assister has enabled
the fiduciary to realise his gains, or to cause loss to the principal, more
easily or sooner than would have occurred without the assistance. It is
submitted that in these cases the causal connection between the breach of
fiduciary duty and the assistance will have been established.

[22.10460] The elements of liability for knowing receipt

If a fiduciary, acting in breach of fiduciary obligation,
applies the principal’s money in discharge of a debt owed by the third party
recipient, the latter will have beneficially received the money. Where the
money has been applied in the discharge of a mortgage over the recipient’s
property, a charge over the property may be imposed to secure repayment of the
amount so applied; the principal will be subrogated to the claim of the
mortgagee whose mortgage was discharged by the payment: Fodare Pty Ltd v Shearn [2011] NSWSC 479 at [69].

[22.10600] Burden of persuasion as to recipient's knowledge

An allegation that the defendant was a knowing participant
in a dishonest and fraudulent design is a serious matter which must be pleaded
and particularised. While the ordinary civil burden of proof applies, the
allegation must be strictly proved: Briginshaw
v Briginshaw (1934) 60 CLR 336; [1938] HCA 34, applied in Chameleon Mining NL v Murchison Metals Ltd [2010]
FCA 1129 at [126].