Constructive Trust: An Equitable Claim

A constructive trust is an equitable remedy that courts impose to prevent unjust enrichment or remedy wrongful acts. The remedy is discretionary and not limited to any specific relationship; it may be applied in commercial, family, or estate contexts.

In Ontario litigation (especially estates, family/property disputes, and fiduciary cases), constructive trust claims often determine who truly owns a home, investment account, insurance proceeds, or other assets—regardless of whose name is on the paperwork.

Key Test for Constructive Trusts

Applying a constructive trust in estate litigation is typically a remedy for a claim of unjust enrichment.

To prove unjust enrichment, a claimant must establish:

1. an enrichment of the defendant;
2. a corresponding deprivation of the claimant; and
3. an absence of juristic reason for the enrichment

Enrichment

An enrichment is any tangible or economic benefit, for example:

• receiving money
• having a mortgage paid
• getting renovations or improvements to property
• retaining property that increased in value due to someone else’s efforts
• receiving unpaid labour, services, or caregiving that freed them to earn or accumulate assets

Ontario courts interpret “enrichment” broadly. They will ask, did the respondent end up better off?

Depravation

A corresponding deprivation means the claimant:

• paid money, OR
• gave up property, OR
• performed services or labour without proper compensation, OR
• forewent career opportunities or income in a way that materially benefited the defendant

The deprivation does not need to be dollar-for-dollar, but it must be real and measurable.

Lack of Juristic Reason

Claimants must then show that there is no juristic reason falling within any of the established categories, such as whether the benefit was a gift or pursuant to a legal obligation.  It is then open to the respondent to show that a different juristic reason for the enrichment should be recognized, having regard to the parties’ reasonable expectations and public policy considerations.

Remedy

 The object of the remedy for unjust enrichment is to require the defendant to reverse the unjustified enrichment and may attract either a “personal restitutionary award” (money) or a “restitutionary proprietary award” (ownership of property).

In 2011, the SCC in Kerr v. Baranow clarified when a proprietary remedy (constructive trust) is available versus a monetary award. Ontario courts take seriously that a constructive trust is property-based relief, not simply “damages with a label.”

Kerr emphasizes that a constructive trust generally requires:

• a link between the claimant’s contributions and the property claimed; and
• that a monetary award is inadequate in the circumstances.

Not just:
“I made them wealthier.”

But:
“My contributions helped acquire, preserve, maintain, or improve this asset.”

Ontario courts reserve constructive trusts for situations where money is not enough, for example:

• the property is unique (family home, business, inherited land)
• tracing money is impossible
• the defendant is insolvent or money would be illusory
• the claimant’s interest is inherently proprietary, not just financial

Cases to Review

• Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] 2 SCR 834
• Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 SCR 269
• Sorochan v. Sorochan, 1986 CanLII 23 (SCC).
• Bell v. Bailey, 2001 CanLII 11608 (ON CA).
• Perilli v. Foley Estate, 2006 CanLII 3285 (ON SC).
• Dale v. Salvo, 2005 CanLII 25893 (ON SC).
• Sun v. Quan, 2022 ONSC 7024 (CanLII).