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Banner Homes certainly seems to be based on the "detrimental reliance" form of constructive trust (this ties in with the analogy to proprietary estoppel Edwin Simpson mentions, as it is this type of constructive trust which may overlap with PE). My sense is that in any event, constructive trusts which perfect an intention (such as Re Rose) deal with exceptional instances - Re Rose itself is fairly confined, another eg is a constructive trust arising from a donatio mortis causa of land - the exceptional circumstance of an impending death. If I can also join the shameless plug camp, I consider these (and the detrimental reliance trust) in my book on Informal Acquisition of Rights in Land (2000) Sweet & Maxwell.

In terms of a detrimental reliance constructive trust, I still have some difficulty extending these where there is no "net loss" by the claimant (even accepting the broad nature the detriment may take following Gillett v Holt). Banner Homes had not really lost anything, but they had instead failed to make a gain: their position was the same as it would be if they had not relied on D's words / actions. All that they could claim to have lost is a purely speculative chance to look for other means of bidding for the land.

The analogy between the Banner Homes principle and proprietary estoppel begs the same question as regards detriment.

Many thanks to all who responded to my initial query - I'll be kept busy reading for some time!

Nick Hopkins

On Mon, 15 Jan 2001 14:25:12 -0500 Lionel Smith wrote:

Many congratulations to Edwin on the new edition of Lewin. I await the next boat from London carrying books ... meanwhile, with the arrival of the last one, we can also say congratulations to Peter Birks on the magnificent achievement of English Private Law (OUP 2000).

I would also join Edwin in the shameless plug camp to say that Banner Homes is treated briefly in Kit Barker and Lionel Smith, "Unjust Enrichment", ch 21 in David Hayton ed Law's Future(s) (Hart 2000), 428, 431, in which a large number of people try, under 22 headings, to make predictions about where the law is going.

My own reaction upon reading Banner Homes was mild astonishment that it was decided without noticing the direction in Australian law towards protecting reliance. To be fair, proprietary estoppel is mentioned as having something to do with something. We should fear "Pallant v Morgan equity" because whenever we name something by a case we are admitting intellectual defeat. I think in Banner Homes there is no discussion of breach of fiduciary duty and so the holding cannot be so explained.

Is there authority (in English law, in particular) for a constructive trust based on advantage to the trustee, rather than detriment by the beneficiary?

I would have thought no trust could be based on that alone, as generally we allow people to derive advantages. But if we ask whether there are constructive trusts without detriment in the subtractive sense, ie the plaintiff's loss of the property now the subject of the trust (which is the sense in which there was no detriment in Banner Homes), then I think there are a lot. Even if we put aside constructive trusts based on wrongdoing, like Meinhard v. Salmon, AG Hong Kong v. Reid, and Soulos v. Korkontzilas, there are still a lot, namely every constructive trust which perfects an intention or which is activated by detrimental reliance. Into the former (perfecting intention) goes Re Rose. Into one or the other of perfection or detrimental reliance might go mutual wills, every secret trust if they are not express, and every trust which arises when I promise to transfer or declare a trust of specified property and value has been given for the promise (excepting a promise to transfer ownership of goods). See generally R Chambers, "Constructive Trusts in Canada" (1999) 37 Alta L Rev 173.

Peter Birks might fit Banner Homes into subtractive unjust enrichment by saying that it is a case of interceptive subtraction. The general difficulty with this angle is that if the plaintiff was entitled to the asset in question, interceptive subtraction seems unnecessary (as Peter points out in "At the Expense of the Claimant: Direct and Indirect Enrichment in English Law" (2000) Oxford U Comparative L Forum 1 at ouclf.iuscomp.org, at note 45, Re Rose can be understood just in this way, as making an equitable entitlement out of an opportunity based on transferor's intention, so making interceptive subtraction unnecessary). On the other hand, if the plaintiff was not entitled, unjust enrichment/interceptive subtraction cannot make him so without making a logical circle. The entitlement must be justified independently.

Detrimental reliance seems to be a good candidate in Banner Homes; the discussion of "advantage" to the defendant seems to be nothing more than another way of talking about detrimental reliance, ie the plaintiff's position now, as measured against what it would be if the plaintiff had not relied on the defendant's words or actions:

"It is necessary that, in reliance on the arrangement or understanding, the non-acquiring party should do (or omit to do) something which confers an advantage on the acquiring party in relation to the acquisition of the property; or is detrimental to the ability of the non-acquiring party to acquire the property on equal terms. It is the existence of the advantage to the one, or detriment to the other, gained or suffered as a consequence of the arrangement or understanding, which leads to the conclusion that it would be inequitable or unconscionable to allow the acquiring party to retain the property for himself, in a manner inconsistent with the arrangement or understanding which enabled him to acquire it."

"There was evidence, to which I have referred, that the existence of the arrangement led Banner to regard the site as 'out of play'; that is to say, the existence of the arrangement made it unnecessary, and inappropriate, for Banner to consider the site as a potential acquisition for its own commercial portfolio. But, as the judge himself recognised, one of the reasons why Luff wanted Banner kept 'on board' -- and so did not disclose its own doubts as to the future of the joint venture -- was that, 'if dropped, Banner might emerge as a rival for the site'. In other words, Luff saw it as an advantage that Banner's belief that the site was out of play should be maintained. Luff wanted to keep Banner out of the market."

Lionel

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