Resulting and Constructive Trusts

May 13, 2023

The topic of trusts is generally discussed below. The story of a famous sportsperson has been used as reference, however we consider the legal topic under English law. Any mention of persons/people in this article is used for reporting purposes, the author and Alignthebar cannot verify the details of the persons’ private life, financial assets and/or alleged divorce proceedings.

It has been reported that Hiba Abouk may not be able to claim the $8.5 million that she was predicted to have received from her divorce proceedings against Achraf Hakimi, having requested half of Hakimi’s assets. It is alleged that Achraf Hakimi, a footballer for Paris Saint Germain, kept only 20% of his $1 million per month earnings, with the rest of his wages deposited in his mother’s bank account after transferring the entirety of his assets to his mother amidst his divorce proceedings. While these reports have not yet been confirmed, this would make Hakimi’s mother the beneficiary of his income and wealth, which could prevent Abouk from claiming Hakimi’s assets as part of their divorce settlement. 

This raises the issue of ownership of property and how the courts will distinguish a person simply holding the legal title of an asset from full ownership of the asset. This issue typically concerns the courts in the area of Trusts Law, Inheritance, and Probate. As property can be owned by more than one person, a property may be registered in the name of one person while another actually derives the benefit from the property. This arrangement characteristically involves creating the trust on which the property will be held while the original owner is alive. If the arrangement is set up, or takes effect, after death, the arrangement will be called a testamentary transfer and will likely involve a will. If a property is to transfer when the settlor is still alive, section 53 Law of Property Act 1925 requirements should be satisfied (inter vivos). The trust must be in writing, signed by all persons involved. Alternatively, trust can be effective on the death of the settlor applying section 9 of the Wills Act 1837. The will must be signed by the testator and witnessed by two witnesses.

In Abouk and Hakimi’s divorce proceedings, the court must determine whether Hakimi’s mother is merely holding the legal title to Hakimi’s assets, making Hakimi the beneficiary under a constructive or resulting trust, or whether the property transferred to Hakimi’s mother wholly belongs to her. 

If the court determines that Hakimi’s mother holds both the legal title and receives the benefit from the property, she will entirely own the property and it cannot be subject to any claims in the divorce proceedings. 

Alternatively, if Hakimi’s mother holds the legal title only, Hakimi will retain the beneficial interest in the property. If the courts conclude that this is the case, the courts may declare that his mother merely holds the property on constructive trust for him. This would mean Abouk may be able to claim for the property in the trust to be subject to the allocation of assets in the divorce proceedings. This is because, as a core principle of equity (under English law), a court will impose a constructive trust where a person has acted unconscionably.

This was outlined by Millet LJ in Paragon Finance v DB Thakerar & Co [1998], who stated that a constructive trust will arise “whenever the circumstances are such that it would be unconscionable for the owner of the property to assert his own beneficial interest in the property and deny the beneficial interest of another”. If a constructive trust does arise, the beneficiary of the trust will have an interest in the trust assets and will obtain the associated rights and duties relevant to the constructive trust agreement. 

Whether a certain course of conduct will be unconscionable is determined in the context of the situation, with the court evaluating the circumstances as a whole to determine whether a person has acted to such an extent of unfairness; only where the court determines that the conduct was so unfair as to be unconscionable, will a constructive trust be imposed. The key factors considered will primarily be any actions suggestive of unconscionable conduct, as well as representations or other conduct inducing another to rely on it to their detriment. However, depending on the exact facts of a situation, there may be further factors that the court should take into account.

If you would like to discuss constructive trusts, the equity and trusts topic more generally, or support in understanding another area of the law, please contact Alignthebar for personalised one-to-one tutoring to support you with your studies.


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