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Constructive and Resulting Trusts

The concepts of constructive and resulting trusts play crucial roles in disputes over property rights after relationship breakdowns. These trusts serve as potent legal mechanisms ensuring fairness and justice. This blog post will delve into the details of constructive and resulting trusts, underscore their fundamental differences, and explore pivotal court cases that have shaped these areas of law.


1. Constructive Trust


A constructive trust is a legal remedy a court can impose when one party unjustly benefits from another's contributions. This type of trust arises when one party has made substantial and direct contributions that have led to property acquisition, preservation, improvement, or maintenance.


There is no requirement for a formal intention to create a Constructive Trust. To prevent unjust enrichment, the Court can declare a constructive trust, even if there was no express intention to establish such a trust.


The Supreme Court of Canada outlined a three-part test to determine unjust enrichment in Holloway v. Devinish:


1. The defendant received a benefit.

2. The claimant suffered a loss.

3. There is no juristic reason for the defendant to retain the benefit.


The Court evaluates factors such as the nature, duration, and substance of the claimant's contributions. They assess whether these contributions were substantial and surpassed routine maintenance or minor improvements.


In Peter v. Beblow, the Court maintained that the legitimate expectations of the parties play a significant role in determining the presence or absence of a juristic reason for the enrichment. It further clarified that a common-law spouse usually has no contractual obligation to perform work or services for their partner.


Upon successfully proving a case of unjust enrichment, an expert appraisal may be necessary to determine the home's value, considering factors like inflation and the domestic labor provided. Depending on the extent of the claimant's contribution, this could result in a constructive trust over the property.


2. Resulting Trust


A resulting trust is usually applied in situations where property is legally vested in one person, but evidence suggests that both parties intended to share beneficial interests. This often occurs in scenarios involving homes, where the concept of "common intention" plays a crucial role. The Court may consider both direct and indirect contributions if evidence of a common intention to share the beneficial interest exists.


The doctrine of "common intention," introduced in Murdoch v. Murdoch, is pivotal for resulting trusts. The Court looks for evidence suggesting that both parties intended to share the beneficial interest in a property, even if the property is legally vested in one person.


Final Thoughts


Constructive and Resulting Trusts serve as potent legal instruments for addressing inequities and enforcing rights. Their application hinges on various factors and legal precedents, underscoring the importance of expert legal advice. Each situation is unique, and legal principles are applied based on the specific circumstances involved.



DISCLAIMER: The blog sets out a variety of materials relating to the law to be used for educational and non-commercial purposes only; the author(s) of the blog do not intend the blog to be a source of legal advice. Please retain and seek the advice of a lawyer before choosing to act on any information included in the blog.

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