THE ADVOCATE 501
VOL. 80 PART 4 JULY 2022
TRUSTS
But even if one could track down a specific asset and the current owner, I
do not believe that the concept of a constructive trust would apply. To
understand why, it is necessary to say something about the concept of a
constructive trust.
Apart from express trusts, the law recognizes three kinds of trusts: a substantive
(institutional) constructive trust, a remedial constructive trust and
a resulting trust.
Constructive Trusts
There is no exact definition of a constructive trust,3 nor is there an exact test
for when such a trust exists or should be imposed.4 The dividing line
between constructive trusts and resulting trusts is itself not clear.5
It has been said that “a constructive trust is imposed by operation of
law where, according to established equitable principle, it would be unconscientious
for the holder of title to property to deny the claimant a beneficial
interest in that property, or for a defendant to deny that he is liable to
account to the claimant as if he were an express trustee”.6 Accordingly,
“the term ‘constructive trust’ is usually used to indicate proprietary consequences,
being consequences imposed by operation of law rather than
by force of the party’s intentions. The term indicates that A holds a specific
asset on trust (on constructive trust) for B: A holds the legal title, B the
equitable.”7
There are two types of constructive trusts: substantive and remedial.
Substantive constructive trusts
The concept of a constructive substantive trust comes from the verb “to construe”,
as in “to interpret”.8 A court will “construe” the facts to determine if
a trust exists.
The substantive constructive trust is equity’s response to an eclectic mix
of different scenarios where justice and fairness require the legal owner to
hold property for another person’s benefit, although the other person did
not create an express trust. A constructive trust arises commonly where it
would be unconscionable for the owner of property to assert their own beneficial
ownership in the property and deny the beneficial interest of
another.9
There is no common principle underlying all the scenarios in which a
court will declare that a substantive constructive trust has arisen, except
that (1) it must be unconscionable (in an equitable sense) for the legal title
holder to use the property for their own benefit, and (2) neither a remedial
constructive trust nor a resulting trust is appropriate. In Soulos v. Korkontzilas,
the Supreme Court of Canada said: