Constructive Trusts show the conscience of Equity at work Essay

Constructive Trusts show the conscience of Equity at work - Essay Example It is submitted at the outset that the wide applicability of constructive trust renders it necessary to undertake a contextual approach focusing on particular areas. As such, this paper will consider the statement in context of constructive trust applicability in equitable tracing and fiduciary duties and the financial consequences of relationship breakdown. From a historical perspective, equity developed as a result of inflexibility of common law and â€Å"wiped away the tears of the common law†3. In common law, the doctrine of tracing enables a claimant to trace the path of their misappropriated property, identify the proceeds of the property along with persons who have handled the property. Moreover, the common law remedy of tracing enables an applicant to make a claim against the property itself4 However, tracing money at common law is inherently fraught with difficulties, especially where monies have passed through bank or similar accounts and in practice claimants often rely on the equitable doctrine of tracing5. The fundamental problem in common law tracing is the identity requirement, perpetuated by the common reality of funds being mixed. For example, the case of Taylor v Plummer6 affirmed that in order to succeed in a claim for tracing at common law, the property had to be identifiable and distinguishable from other property. Conversely, the Court of Appeal in Agip Africa v Jackson 7 asserted that equity will however allow tracing through mixed bank accounts through the imposition of fiduciary duty and constructive trust, which lends itself to support the assertion that constructive trusts act as the conscience of equity. A prime example of the broader scope of equitable tracing in contrast to legal tracing is the Privy Council decision in AG for Hong Kong v Reid.8 The dispute in the case centred on whether the solicitor general’s subsequent