Quistclose Trust Essay
“the greatest and most distinctive achievement performed by Englishmen in the field of jurisprudence”.2
Despite being a Commonwealth country and having common law influences, the major source of the Maltese Civil Code was the Code Napoleon, and Malta has retained the Roman civil law system3. Therefore, the scenario in Malta is that we have incorporated an institution synonymous with common law countries into a civil law jurisdiction. In fact, despite …show more content…
vs. Yardley4 was a highly disputed landmark English judgement which tackled the issue of third party liability in assisting in the breach of a Quistclose Trust. This case gave authoritative rulings on two particular aspects of the trust relationship – the notion of a quistclose trust and the notion of dishonest assistance. This work will evaluate the facts of the case, examine the impact of this judgement on these two notions, and apply such findings to the Maltese …show more content…
Upon spending the money on the specific purpose, a creditor-debtor relationship exists between the two. However, if B becomes insolvent before spending the money for the specified purpose, the loan money is recoverable by A. Nonetheless, the legal mechnanism which allows A to recover the money has proven to be controversial. This is evident by two judgements of the House of Lords which have tackled the situation in completely different manners.
The term “Quistclose trust” takes its name from the decision in “Barclays Bank vs. Quistclose”,8 where Lord Wilberforce suggested that a Quistclose trust arises as a resulting trust by means of a primary/secondary trust structure.
In this case, Rolls Razor Ltd. had debt with Barclays Bank and loaned money from Quistclose.The loan money was held in a share dividend bank account separate from all other money. The loan contract stipulated that the money was to be used for the sole purpose of paying dividends to the preferred shareholders. However, it went insolvent before the dividend was paid. The plaintiff said that it was entitled to the money loaned by