Re Polly Peck (No 2) [1998] 3 All ER 812

• This was a case in which Plaintiffs claimed that a property was being held for them on remedial constructive trust, their claim of an institutional constructive trust having been struck out.

• CA rejected this idea, saying that to give Plaintiffs an interest in property under such a device would create a proprietary interest in those assets and as such, would operate to exclude those assets from pari passu distribution by the administrators among the unsecured creditors of the company.

• Therefore CA rejected the existence of such trusts in English law. 

Nourse LJ

Where, as here, there would be not simply a variation of proprietary rights but a variation of the manner in which the administrators are directed to deal with PPI's assets by the Insolvency Act 1986 it is not seriously arguable, even at the highest level, that a remedial constructive trust would be imposed.

For myself, I would go further and hold that it would not be seriously arguable even if PPI was solvent. It is not that you need an Act of Parliament to prohibit a variation of proprietary rights. You need one to permit it: see the Variation of Trusts Act 1958 and the Matrimonial Causes Act 1973.