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Montagu's Settlement Trusts, Re, Duke of Manchester v National Westminster Bank Ltd
[1987] Ch 264, [1992] 4 All ER 308, [1987] 2 WLR 1192, 131 Sol Jo 411, [1987] LS Gaz R 1057
Court: Ch D
Judgment Date: circa 1987
Cases referring to this case
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Treatment | Case Name | Citations | Court | Date | Signal |
Considered | Bank of Credit and Commerce International (Overseas) Ltd (in liq) v Akindele | [2001] Ch 437, [2000] 4 All ER 221, [2000] 3 WLR 1423, [2000] NLJR 950, [2000] 26 LS Gaz R 36 | CA | 14/06/200 |
Cases considered by this case
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Treatment | Case Name | Citations | Court | Date | Signal |
Considered | Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA | [1992] 4 All ER 161, [1983] BCLC 325, [1993] 1 WLR 509n | Ch D | 25/04/198 | |
Applied | Carl-Zeiss-Stiftun | [1969] 2 Ch 276, [1969] 2 All ER 367, [1969] 2 WLR 427, [1969] FSR 40, [1969] RPC 338, 112 Sol Jo 1021 | CA | circa 1969 | |
Considered | Selangor United Rubber Estates Ltd v Cradock (a bankrupt) (No 3) | [1968] 2 All ER 1073, [1968] 1 WLR 1555, [1968] 2 Lloyd's Rep 289, 112 Sol Jo 744 | Ch D | circa 1968 | |
Applied | Carl-Zeiss-Stiftun | [1968] 2 All ER 1233, [1968] FSR 347, [1969] RPC 330, 112 Sol Jo 586 | Ch D | circa 1968 | |
Considered | Blundell, Re, Blundell v Blundell | (1888) 40 Ch D 370, 57 LJ Ch 730, 36 WR 779, [1886-90] All ER Rep 837, 58 LT 933, 4 TLR 506 | Ch D | circa 1888 |
Catchwords & Digest
EQUITY - PRINCIPLES OF EQUITABLE JURISDICTION - NOTICE - CONSTRUCTIVE NOTICE - IN GENERAL - NATURE OF DOCTRINE - DISTINCTION BETWEEN NOTICE AND KNOWLEDGE
By a clause of a family resettlement, the future tenth Duke of Manchester assigned to trustees certain chattels to which he was absolutely entitled after the death of his father, the ninth duke. The trustees were to select and make an inventory of such chattels as they considered suitable for inclusion in the settlement, and to hold the residue in trust for the future tenth duke. They failed to make any such inventory and, after his father's death, released all the chattels to the tenth duke. His solicitors knew of the settlement and had previously known of the effect of the clause. Nevertheless, he informed the duke that he could sell all the chattels released to him. The duke sold several chattels. After his death, the question arose whether he had been a constructive trustee of the property released to him: Held he had notice, both actual and imputed, of the terms of the settlement: he had a copy of it and his solicitor knew of the effect of the relevant clause. However, the tenth duke did not have 'knowledge' at any material time that the chattels received by him were subject to any trust. He believed that they had been lawfully released to him. Although the trustees were in breach of their fiduciary duty in transferring the chattels to him, he did not receive them as a constructive trustee; nothing sufficiently affected his conscience as to impose a constructive trust on him.
The court also said that it was doubtful whether there was a general doctrine of 'imputed knowledge' corresponding to 'imputed notice', for that was an inappropriate way of deciding whether a person's conscience was sufficiently affected to burden him with the obligations of trusteeship.
TRUSTS - NATURE AND CREATION OF TRUSTS - CONSTRUCTIVE AND RESULTING TRUSTS - CONSTRUCTIVE TRUSTS - THE STRANGER AS CONSTRUCTIVE TRUSTEE - BY ACQUISITION OF TRUST PROPERTY - WITH NOTICE OF TRUST - IN GENERAL - BENEFICIARY WITH NOTICE OF TRUST - NO KNOWLEDGE OF TERMS OF TRUST
By a clause of a family resettlement, the future tenth Duke of Manchester assigned to trustees certain chattels to which he was absolutely entitled after the death of his father, the ninth duke. The trustees were to select and make an inventory of such chattels as they considered suitable for inclusion in the settlement, and to hold the residue in trust for the future tenth duke. They failed to make any such inventory and, after his father's death, released all the chattels to the tenth duke. His solicitor knew of the settlement and had previously known of the effect of the clause. Nevertheless, he informed the duke that he could sell all the chattels released to him. The duke sold several chattels. After his death, the question arose whether he had been a constructive trustee of the property released to him. Held, he had notice, both actual and imputed, of the terms of the settlement: he had a copy of it and his solicitor knew of the effect of the relevant clause. However, the tenth duke did not have 'knowledge' at any material time that the chattels received by him were subject to any trust. He believed that they had been lawfully released to him. Although the trustees were in breach of their fiduciary duty in transferring the chattels to him, he did not receive them as a constructive trustee; nothing sufficiently affected his conscience as to impose a constructive trust on him.
The court also said that it was doubtful whether there was a general doctrine of 'imputed knowledge' corresponding to 'imputed notice', for that was an inappropriate way of deciding whether a person's conscience was sufficiently affected to burden him with the obligations of trusteeship.
TRUSTS - NATURE AND CREATION OF TRUSTS - CONSTRUCTIVE AND RESULTING TRUSTS - CONSTRUCTIVE TRUSTS - THE STRANGER AS CONSTRUCTIVE TRUSTEE - INTERMEDDLING WITH TRUST - AGENT OF TRUSTEE - WHETHER CONSTRUCTIVE TRUSTEE - WHEN PARTY TO BREACH OF TRUST - BENEFICIARY
Under cl 14(B) of a settlement made in 1923 the future tenth Duke of Manchester assigned to the trustees of the settlement all chattels to which he was entitled in remainder after the death of the ninth duke, who was then still alive, to hold upon trust after the death of the ninth duke and to select and make an inventory of such of the chattels as the trustees in their absolute discretion considered suitable for inclusion in the settlement as heirlooms and to hold the residue, if any, in trust for the tenth duke absolutely. The ninth duke died in 1947 and was succeeded by the tenth duke but no selection of heirlooms or inventory was ever made by the trustees. Although the tenth duke's solicitor was aware of the effect of cl 14(B) of the settlement, all the settled chattels were treated as being the absolute property of the tenth duke and were either released to him by the trustees or with the trustees' assent were taken by him or sold by him, the proceeds being kept by him. After the tenth duke's death in 1977 the eleventh duke brought an action against the executor of the tenth duke's will and the surviving trustees of the 1923 settlement alleging, inter alia, that the trustees had acted in breach of trust in failing to make any selection and inventory of heirlooms and in releasing all the chattels to the tenth duke and claiming that the tenth duke had become a constructive trustee of the settled chattels. The judge having found that the trustees were under a fiduciary duty to select and make an inventory of heirlooms for inclusion in the settlement and that they had not carried out that duty, the question arose whether the tenth duke was a constructive trustee of the settled chattels: Held where it was alleged that a person was a constructive trustee because he had received trust property knowing it to be so, the fundamental question to be determined was whether the conscience of the recipient was bound in such a way as to justify the imposition of a trust on him. Whether a constructive trust arose depended primarily on the knowledge of the recipient and not on whether he had received actual, constructive or imputed notice that the property was trust property. The relevant knowledge which would make a recipient of trust property a constructive trustee was actual knowledge that the property was trust property, or knowledge which would have been acquired but for ignoring the obvious or wilfully and recklessly failing to make such inquiries as a reasonable and honest man would have made, since in such cases there was a want of probity which justified imposing a constructive trust. However, it was doubtful whether carelessness in making or failing to make such inquiries as a reasonable and honest man would have made amounted to a sufficient want of probity to justify the imposition of a constructive trust on the recipient, or whether knowledge could be imputed to the recipient so as to fix him with the knowledge of his solicitor. On the facts, the tenth duke did not become a constructive trustee of any of the settled chattels because at the relevant time he did not have the requisite knowledge that the transfer of all the chattels to him was a breach of trust or in any way improper and any knowledge that his solicitor had was not to be imputed to him.
