Definition of Constructive Trust
A constructive trust is a remedial trust that arises not from intention of a person attempting to create a trust, but which is imposed by operation of law (usually by the courts, sometimes by statute) to prevent injustice.
Historically, constructive trusts have been imposed by courts in a variety of scenarios. In the family law context, courts began imposing constructive trusts to remedy the injustices caused by the fact that the Family Law Act does not apply to cohabiting spouses with respect to property.
In Kerr v Berenow and Vanasse v Seguin, the Supreme Court of Canada (SCC) held that entitlement to a constructive trust pertains to surplus wealth created through joint efforts. Four requirements must be met: 1) the nature of the relationship must be a joint family venture; 2) there must be a link between claimant’s contributions and jointly created wealth; 3) the contribution may be in services, including domestic services; and 4) the claimant must establish the proportion of wealth created attributable to his or her efforts. Whether there is a joint family venture may be assessed having regard to all the relevant circumstances, including but not limited to factors relating to (a) mutual effort, (b) economic integration, (c) actual intent, and (d) priority of the family. There must be a link between the aggrieved spouse’s efforts and the disproportionate accumulation of wealth.
In order to establish that an unjust enrichment has occurred, the claimant must establish that 1) their cohabiting spouse has been enriched in some form (i.e. One spouse was allowed to work long hours outside the home and make a good income because the other spouse stayed home with the children and did all the domestic work); 2) that there has been a corresponding deprivation to the claimant (i.e. The claimant was not able to enter the workforce and make their own income); and 3) there must not be a juristic reason for the enrichment (a juristic reason may arise where the claimant has a contractual obligation to perform services or where a gift was intended). In determining whether a juristic reason exists, the court will examine the reasonable expectations of the parties as well as public policy considerations.
Provided that the elements of an unjust enrichment claim are made out, it will be possible for the claimant to get a monetary award. In order to get a proprietary award (to be awarded the property itself, i.e. the matrimonial home), the claimant must establish that a monetary award would be insufficient in the circumstances.