According to the Family Law Act in Ontario, a spouse is entitled to claim half of the increase in their spouse’s property that accumulated throughout the marriage. Oftentimes, despite registered ownership, the court can award ownership interest to a non-owner spouse by way of “constructive trust.”
A constructive trust is an equitable remedy to prevent unjust enrichment to a spouse. In 1999, the Supreme Court of Canada in Rawluk v. Rawluk established the legal test for constrictive claim after granting the wife a constructive trust of her husband’s farm and business as a result to her substantial contributions to the operations.
The court’s finding of constructive trust requires the claimant to prove three elements:
- An enrichment to the other spouse;
- A corresponding deprivation to the non-owner spouse; and
- No juristic reason for the enrichment.
The first element notes that the spouse must have benefited from the contributions brought forth by the other spouse. The second element implies that the non-owner must have endured forms of financial or social deprivation, resulting in their contributions. The third element indicates that an exception for which the court will not grant a constructive trust if such enrichment was provided in the form of a gift.
Once a constructive claim is established, the court will decide on an appropriate remedy. The starting point is monetary damages. If monetary damages are inadequate, the court will impose an interest by constructive trust on the property or business of that asset. It is important to note that the court will not impose an interest on a non-owner spouse in a business or property that the person did not participate in. For example, if the court established a constructive trust claim to a non-owner spouse with respect to their husband’s farm, they would not receive interest by constructive trust in another property owned by the husband.
The doctrine of a constructive trust claim is an important situation to consider as it may result in intended consequences to spouses pursuing separation despite ownership or shareholder agreement. A constructive trust claim can be contracted out by law by having the parties implement a valid cohabitation agreement or marriage contract.
At Blackburn Lawyers, we strive to provide efficient and effective services for every family law matter while mitigating future conflict or litigation. If you and/or a loved one has any questions regarding a constructive trust claim, please contact our family law lawyers today.
Disclaimer: This blog sets out a variety of information relating to law that is to be used for educational purposes and is not legal advice for your matter. The author does not intend for this blog to be a source of legal advice.
Written by Adriana Totera
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
