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Common intention constructive trusts, Costs

High cost of failed argument

The common intention constructive trust is a rare beast.  When trying to make such an argument it is essential to have the facts right as demonstrated in the decision in Ridge v Parore (Common Intention Constructive Trust, or not).  The cost of getting the argument wrong in an argument that the court described as “doomed to fail” has resulted in a costs award of $73,232 plus a 50% uplift from steps taken from 1 January 2013 plus disbursements of $31,610.15.   (A bankruptcy notice has since been issued).

The plaintiff trustees declined what the court described as a number of “a number of generous offers accompanied by well-reasoned arguments as to why they should be accepted.”

Trust law is a dynamic area of law where the ground may be felt to be constantly moving.  However, the law, or the remedy sought is not in the “ether”.  The disappointing aspect of this case is that although the trustee plaintiffs clearly believed in the argument it was never able to be expressed in a fashion that met the elements of a common intention constructive trust largely in part because it was never properly articulated as to who the beneficiary was.  Without that essential element addressed, the argument was akin to a house of cards.

Common intention constructive trusts do exist.  But there existence must arise at the time of the common intention – not when wished upon after the fact.




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