Constructive trusts are legal remedies that can be used to impose a trust relationship over property or assets. Unlike express trusts, which are created intentionally by the owner of the property, constructive trusts are imposed by the courts.
In Ontario, constructive trusts are recognized as a way of remedying unjust enrichment or wrongful conduct related to property or assets. For example, if someone is unfairly enriched by the actions of another person, a constructive trust may be imposed to require them to hold the property or assets in trust for the benefit of the disadvantaged person. Similarly, if someone is wrongfully deprived of property or assets, a constructive trust may be imposed to restore their interest in the property or assets.
Overall, constructive trusts provide an important tool for addressing situations in which the law recognizes that property or assets have been acquired or lost unjustly, and are an integral part of the legal system in Ontario.
What are Constructive Trust Claims?
Constructive Trusts
A constructive trust is a legal remedy that is imposed by the courts to ensure that assets or property are held in trust by the person who has been unjustly enriched or wrongfully deprived. Constructive trusts are often created when there is no express agreement between the parties involved.
How Constructive Trusts Differ From Express Trusts
An express trust is one that is intentionally created by the owner of the property or assets. The terms of an express trust are set out in a written trust document, and the trustee is responsible for managing the trust property or assets for the benefit of the beneficiaries. In contrast, constructive trusts are imposed by the courts and do not require the consent of the owner of the property or assets.
How Constructive Trusts are Imposed by the Courts
Constructive trusts can be imposed by courts in various scenarios, such as when a person has been unjustly enriched or deprived of an interest in a property. Should such circumstances arise, courts may declare the existence of a constructive trust and apply a trust relationship to the assets or property in question. Establishing a constructive trust entails several prerequisites, including the existence of a confidential or fiduciary relationship between the parties involved, unjust enrichment, and a linkage between the enrichment and a specific asset or property that can be traced and deemed fair. In sum, constructive trusts serve as an important legal tool for remedying situations in which assets and property have been lost or unjustly obtained and promoting fairness and equity in the legal system.
When Can You Make a Constructive Trust Claim in Ontario
Circumstances Under Which Constructive Trusts May Be Applied
Constructive trusts may be applied in a variety of situations, including but not limited to:
- Where a trust relationship is likely to have been created, but was not properly documented
- Where one party has been unjustly enriched at the expense of the other
- Where there has been a breach of fiduciary duty or trust by one party
- Where property or assets have been acquired through fraud, misrepresentation or undue influence
Examples of Situations in Which a Claim Might Be Made
Some examples of situations in which a constructive trust claim might be made include:
- A couple buys a house together, but only one partner’s name is on the title. If the couple separates, the partner who is not on the title may be able to make a constructive trust claim on the basis that they contributed to the purchase of the home and should have a beneficial interest in the property.
- A business partner wrongfully takes advantage of a confidential relationship by siphoning off funds from the business for personal use. The other partner may be able to make a claim for a constructive trust over the misappropriated funds.
- A person invests money in a friend’s business based on a misrepresentation about the business’s financial health. If the business fails, the investor may be able to make a constructive trust claim for the return of their investment on the basis that they relied on the misrepresentation.
Requirements for a Successful Claim
To successfully make a constructive trust claim, several requirements must generally be met, including:
- The establishment of a trust relationship or other legal ground for a claim
- Evidence of unjust enrichment or some other wrongful act
- The identification of specific property or assets that are subject to the claim
- Tracing of the enrichment to the property or assets in question
- A legitimate interest in the property or assets on the part of the claimant.
- Calculating the Value of a Constructive Trust Claim
To provide a suitable remedy, the court needs to assess the worth of a constructive trust claim that has been successful. Various approaches can be adopted by the court to calculate the value, which may include tracking the property or assets’ value in question, assessing the gain earned through unjust enrichment or compensating for the claimant’s missed opportunities or investments. As soon as the court establishes the fitting value of the claim, it will direct that the disputed assets or property is assigned to the claimant or subjected to a trust relationship.
Factors That Are Taken Into Consideration
When determining the appropriate value of a constructive trust claim, the court will consider a variety of factors, including:
- The nature and extent of the claimant’s interest in the property or assets
- The degree of unjust enrichment or wrongful conduct by the defendant
- Any relationship between the parties that may influence the court’s decision
- The practicality of enforcing the constructive trust remedy
Comparison to Other Kinds of Damage Claims That May Be Made in Similar Situations
There are instances where it might be plausible to initiate different types of damage claims alongside a constructive trust claim. In such cases, a breach of contract or breach of fiduciary duty claim could be opted for, either along with or in lieu of a constructive trust claim. Nonetheless, constructive trusts may be a more suitable choice in specific situations as they present a direct and efficient means to guarantee that assets or property are rightfully returned or entrusted. Additionally, they are widely acknowledged as a critical approach to maintain justice and impartiality under Ontario law.
Conclusion:
- Constructive trusts are a legal remedy that may be imposed by the courts to enforce equitable principles in situations where property or assets have been unjustly acquired or lost.
- Constructive trusts are imposed by the courts and differ from express trusts, which are intentionally created by the owner of the property or assets.
- To make a successful constructive trust claim in Ontario, several elements must typically be present, including a fiduciary or confidential relationship between the parties, unjust enrichment, and a legitimate interest in the property or assets.
- When a constructive trust claim is successful, the court will determine the appropriate value of the claim and order a transfer of the property or assets in question to the claimant or a trust relationship.
- Constructive trusts may be preferable to other kinds of damage claims in certain situations because they provide a direct remedy for addressing injustices related to property or assets.
Advice on Seeking Legal Counsel
If you believe you may have a claim for constructive trust, it is important to seek the advice of a lawyer who is experienced in this area of law. A lawyer can help you to determine whether a constructive trust claim is appropriate in your case, and can assist you in gathering evidence, preparing your case, and presenting your claim in court. Consulting with a lawyer can help to ensure that your rights and interests are protected and that you receive the best possible legal representation.
We have divorce lawyers who can help you successfully present the facts in a constructive trust so that your assets will be distributed according to the terms of a legal agreement. We highly discourage anyone from seeking out legal advice through this article alone – if you have any further questions regarding wills, estates and constructive trust claims, please contact us to book a free initial consultation at 905-366-0202 or through our website here.
