Quistclose Trust Academia edu

Masooda Noori
1 March 2017
Quistclose – resulting trust
Is it a loan?
Or is it a Quist close that may give raise to Quist close trust
The requirement for Quist close is:
The loan is for a specified + identifiable purpose
The purpose is mutually agreed (mutual agreement between the parties that this was the purpose of the loan.
The loan does not form part of the general asset of the individuals / disposition (the funds are not mingled with their own funds, they are segregated and they don't have the right to deal with that property in whatever way they want. (Sometimes it is not told that it has been put in separate bank account. (If the money is great amount, then it can be put in separate account) if it says that it is for a specified purpose then money should be put in separate bank account.

Conceptions on how Quist close trust looks:
Lord Wiberforce conceptions in Quistclose case itself
Lord Millet conception in Twinsectra case (it is obiter dicta only) it is most favorable.
Lord Wiberforce – primary trust
Party A
Party B
Party C
Lender (the person lending the money.
Borrower (the person borrowing the money)
Recipient of the money
Settlor (the person creating the trust)
Trustee (holding the money in trust
Beneficiary under primary trust
Lord Wilberforce – secondary trust
Party A
Party B
Party C
Lender (the person lending the money.
Borrower (the person borrowing the money)

Settlor (the person creating the trust)
Trustee (holding the money in trust

Beneficiary




Lord Millet
Party A
Party B
Party C
Lender (the person lending the money.
Borrower (the person borrowing the money)
Recipient of the money
Settlor (the person creating the trust)
Trustee (holding the money in trust

Beneficiary
Holder of a power (an ability to do something)

Distinction
In lord Wiberforce conception under primary trust party A is not a beneficiary. They cannot sue in equity but they can sue in contract.
However, In Lord Millet approach party A is the beneficiary and they can always sue in equity. Most of the courts are favorable lord millet approach because they can always sue in equity, they can sue in outset
In lord Wiberforce approach, we have a primary and secondary trust.
Lord Wiberforce approach in more detail
When the loan is given to an individual for a
Specified + identifiable purpose
The purpose is mutually agreed
The funds are segregate and they are not part of the general asset or disposition of the party
We have the creation of primary trust
The primary trust will come into existence up the three requirement fulfilled
Purpose
What is the purpose?
Has the purpose been fulfilled? If the purpose has been fulfilled then no need to look at secondary trust. Just stick with primary trust
For example (the purpose is fulfilled)
Party A is the bank and they gave a loan money to party B who is the owner of the company. Party A and party B's purpose is to pay the shareholders (party C). if party B does give party C then the purpose is fulfilled. So party C got their money. What if party B fails to give the party A's money back. Party A can only sue in contract. They cannot sue in equity because they are not a beneficiary under the primary trust.

However, if the purpose is failed then secondary trust must be considered.
Party A is the bank and t gave a loan money to party B who is the owner of the company. Party A and party B's purpose is to pay the shareholders (party C). However, party B bought a car from that money and party B failed to fulfil the purpose to give party C's money.
Therefore, secondary trust comes into existence. According to Lord Wiberforce secondary trust is laid out as follows:
Party A
Party B
Party C
Lender (the person lending the money.
Borrower (the person borrowing the money)

Settlor (the person creating the trust)
Trustee (holding the money in trust

Beneficiary



Party B is holding the funds under the secondary trust on trust for party A
Party C, we are not concerned with because the purpose the trust has been failed. So party C can only sue in contract. They no longer have right to sue in equity

Distinction between primary and secondary trust
Under primary trust party C is the beneficiary. When the purpose failed under secondary trust party A becomes the beneficiary.

Does it still have the possibility in future to be fulfilled.
Quist close trust question
Intro
Who are the parties
Issue I case? Normally in quistclose trust you can be identifiable because parties want their money back. (quistclose trust is a resulting trust)
Relationship
Is the relationship in a contract
Or is the relationship in equity
3 Requirement
Specified + identifiable purpose
The purpose is mutually agreed
The funds are segregate and they are not part of the general asset or disposition of the party
The composition of the trust
This is Lord wiberforces approach in trust and these are the parties
This is Lord millet approach in trust and these are the parties
Purpose
Has the purpose been fulfilled?

If the purpose fails under Lord Wiberforce's approach then go to secondary trust
If the purpose succeeds, you stop at the primary trust and that is the outcome

If not, does it still have the possibility in future to be fulfilled?
Is there any bona fide purchaser for value without a notice?