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What is a constructive trust?

A constructive trust is ordered in cases where one party has been taken advantage of, abused or abandoned financially.

According to the book Law of Trusts on Canada, “a constructive trust comes into existence, regardless of any party’s intent, when the law imposes upon a party an obligation to holds specific property for another. The person obligated becomes by force of law a constructive trustee towards the person to whom he owes performance of the obligation.”

In other words, constructive trusts are created when one party legally owes a specific property to another party and is forced to hold it in trust for them.

Most often constructive trusts are used in family law situations when it comes to common law couples, especially in provinces and territories that do not recognize common law couples as married with the property rights attached to spouses, such as the valuation of the marital property home.

Constructive trust remedies are also used in cases of wills and estates when it comes to inheritance. For example, if a child or children have been left out of the will and instead the property has gone to strangers and the children feel they should have received the property or part of the property.

Constructive trust and unjust enrichment

In many cases where a person doesn’t have a legal right to property but has a claim to share a part of the property the person can make a unjust enrichment claim.

To find unjust enrichment the person making the claim has to prove that:

  • The defendant spouse has been enriched by the spouse making the claim;
  • The claiming spouse has suffered a corresponding deprivation; and
  • There is no juristic reason for the enrichment.

However, just because the court finds there has been unjust enrichment, that doesn’t mean that a constructive trust results. If the court makes a monetary award then no trust is created.

Often a court will give claimants an ownership interest in the property due to an unjust enrichment claim and that is when the constructive trust is created. However, a constructive trust where property is awarded in trust because of unjust enrichments is often considered a remedial constructive trust.

What is a remedial constructive trust?

A remedial constructive trust differs a bit from a constructive trust in that it has to be court-ordered. Remember for a constructive trust to arise it’s enough for a legal obligation to exist to hold a specific property in trust for another. In fact, if in unjust enrichment cases the court orders a trust to be created, because one party has done another party wrong, then it’s considered a remedial constructive trust.

However, a causal connection has to exist between the unjust enrichment claim and the specific property.

If you feel you have a (remedial) constructive trust claim consult a lawyer.

Read more:

Definition of Constructive Trust

Unjust Enrichment and Constructive Trusts