Scott v Scott (1963-64) 109 CLR 649

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Facts

  • A trustee used trust money along with his own money to purchase property in his own.
  • The price of the property substantially substantially increased.
  • He agreed to pay the money back
  • He said he only had to pay it back – not give up the property

Issue

  • Could the trustees claim an increased sum as the value of the property has increased?

Held

  • A trustee must account for the profit on a proportionate basis.
  • It would be unjust for the trustee to retain the profit.
  • If a profit results from breach of trust, a constructive trust will arise.
  • A trustee cannot make direct or indirect profit from a fiduciary position.
  • If profit is made by the trustee, beneficiaries are entitled to a lien over property, or claim a proportionate claim to the property.

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