THE ADVOCATE 503
VOL. 80 PART 4 JULY 2022
Mhinder further refers to the venerable concept of a substantive constructive
trust (as opposed to a remedial one), recently resuscitated (at
least as a valid pleading) by the Court of Appeal in BNSF Railway v. Teck
Metals Ltd., 2016 BCCA 350. A remedial constructive trust, as discussed
above, is a judicial remedy constructed by the court and imposed to
enforce an equity obligation arising from two categories: breach of fiduciary
duty or (in our case) unjust enrichment. A substantive constructive
trust, on the other hand, arises by operation of law as from the date of the
circumstances that give rise to it, and may arise outside of the two categories
that pertain to remedial constructive trusts. The court’s function is
merely to declare that it has arisen in the past; see BNSF Railway at paras
3-4. The court may declare that either type of constructive trust operates
retrospectively.17
Remedial constructive trusts
A remedial constructive trust is a remedy imposed by a court when the facts
do not call for a substantive constructive trust, yet the legal title holder has
committed some wrong against the claimant in respect of a specific property
such that the title holder should in equity hold the property in trust for the
claimant or there has been unjust enrichment in favour of the title holder.
A remedial constructive trust is proprietary in nature, in that it confers a
beneficial interest in the property on the claimant.18
Unlike a substantive constructive trust, a remedial constructive trust is
not retroactive inherently; it exists only when and because a court declares
it to be so.
However, a court may declare a remedial constructive trust to have
arisen prior to the date of the declaration.19
While Australia recognizes remedial constructive trusts, the United Kingdom
does not.
There were, until recently, some doubts as to whether Canadian law continued
to recognize a substantive constructive trust after Soulos. In Professional
Institute of the Public Service of Canada v. Canada (Attorney General)
(“PIPSC”), the Supreme Court of Canada said:
In Soulos, McLachlin J. (as she then was) held that a constructive trust
“may be imposed where good conscience so requires” (para. 34). In her
view, good conscience might require the imposition of such a trust in two
situations: (1) where property is obtained wrongfully by the defendant
(such as by breach of fiduciary duty or breach of loyalty), or (2) where the
defendant has been unjustly enriched.20
As Weintraub and Storey note, in BNSF Railway Company v. Teck Metals
Ltd. (“BNSF”),21 the B.C. Court of Appeal held that the decision in Soulos did
not abolish substantive constructive trusts or subsume them within remedial
constructive trusts22 or limit constructive trusts to the two categories of
situations mentioned in PIPSC. The court in BNSF held that Canadian law