Essay
Trust Law Essay - Constructive Trust Doctrine
- Module
- Institution
Trust Law Essay - Constructive Trust Doctrine and CPS v Aquila
[Show more]
Seller
Follow
legalwarrior1
Reviews received
Content preview
QUESTIONIn Crown Prosecution Service v Aquila Advisory Ltd [2021] UKSC 49, the court has taken the
constructive trust doctrine one step too far.
Discuss.
ANSWER
This essay argues contrary to the notion that the court in Crown Prosecution Service v Aquila
Advisory Ltd [2021] (hereinafter CPS v Aquila) has taken the constructive trust doctrine one step too
far. Rather, as Aquila was not deemed to have profited illegally from the proceeds of crime, this case
was decided correctly in accordance with the previous precedents of Bilta (UK) Ltd v. Nazir [2015]
(hereinafter Bilta) and FHR European Ventures LLP v Cedar Capital Partners [2014] (hereinafter
FHR).
This essay will first define the constructive trust doctrine, particularly in relation to breach of
fiduciary duties, before exploring the preceding case law relied upon in the CPS v Aquila judgement.
Then this essay will examine the court’s interpretation of the constructive trust doctrine in CPS v
Aquila for the grounds of appeal outlining the points of contention and evaluating how the
judgement was made. Lastly, this essay will determine whether the court has taken the constructive
doctrine one step too far.
What is the constructive trust doctrine?
A court may impose constructive trusts as an equitable remedy to provide relief to a party who has
been unjustly deprived of their rights. This type of trust is an implied residuary category that can
apply in situations where someone has acquired or is holding a legal property right through unjust
enrichment or interference. Another circumstance in which constructive trusts may be imposed is
when there is a breach of fiduciary duty, which typically arises in situations where a fiduciary owes a
duty of trust and confidence to the principal and fails to fulfill their fiduciary obligations. It has long
, been established that if an agent violates their fiduciary obligation to their principal by earning
undisclosed profits, such profits are deemed to be held in constructive trust (Keech v Sandford
[1726]) with company directors also having been found to create a constructive trust in Guinness v
Saunders [1990] as were secret commissions and bribes in FHR.
CPS v Aquila
Facts
In CPS v Aquila, Mr Faichney and Mr Perrin, the former directors of VTL, were found to have
committed fraud by orchestrating an illegal tax avoidance scheme, earning £4.55 million which they
were ordered to forfeit as part of a confiscation order following their criminal conviction.
Meanwhile, VTL went into administration, and the company's administrators assigned its rights to
Aquila Advisory Ltd, including any rights to the Directors' secret profits under a constructive trust, to
repay the company's creditors. However, this arose a legal dispute between Aquila and the CPS over
the recovery of the remaining £4.55 million from the Directors. Ultimately, the Court of Appeal ruled
in favour of Aquila, stating that the Directors had breached their fiduciary duty to the company, thus
holding the proceeds of the crime on constructive trust for the company. Therefore, the CPS
appealed to the Supreme Court.
Issue
The Supreme Court were tasked with addressing whether the imposition of a constructive trust was
an appropriate remedy despite criminal conduct and whether it could be asserted ‘in the face of’
confiscation orders, with academics questioning whether they expanded the doctrine too far in its
application. The Supreme Court considered whether the company, acting as the principal, had a
legitimate claim to the profits held in constructive trust, or whether the actions of the directors
should be attributed to the company, thereby preventing it from recovering the profits based on
illegality.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller legalwarrior1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £4.10. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67474 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now