Housekeeping: Update on Resulting Trust Doctrine!

Update on Resulting Trust Doctrine!

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.

Changes to Making Property Claims under Family Law

Every once in a while the law changes. Well, last month, a Supreme Court of Canada decision came out which changed the way in which couples can raise property claims in the family law context (specifically for unmarried couples who are breaking up). As I have previously discussed, in family law matters, separating unmarried couples can raise EQUITABLE CLAIMS – such as Unjust Enrichment (which may lead to a constructive trust / resulting trust remedy) – to assert interests in property. This is a somewhat complicated area of law, but you can read my previous blog on that topic if you’re interested in knowing more about these doctrines.

Now, with the Supreme Court of Canada’s decision in Kerr v. Baranow, 2011 SCC 10, parties will NO LONGER be able to assert claims to property based on the doctrine of COMMON INTENTION RESULTING TRUST. According to that doctrine, a party can have an interest in the other spouse’s property either where:

  • one partner transfers property to the other without getting any money or other valuable item in exchange; or
  • the two parties both contribute to acquiring property, but title to the property is only in one partner’s name.

Importantly, in Canada, for a resulting trust to arise, the parties must have had a “common intention” that the non-owning partner was nonetheless entitled to a legal interest. Traditionally, the Court have tried to gleam this “common intention” from the conduct of the parties (if it is not expressly made). The Courts have looked at financial arrangements in acquiring or maintaining the property, as well as who benefited from the property (either directly or indirectly).

Well, with the Supreme Court’s decision, Courts will no longer have to be burdened by trying to figure out whether there was a common intention. The Supreme Court held that:

  • The Common Intention Resulting Trust is doctrinally unsound, and should have no continuing role in the resolution of domestic property disputes.
  • While traditional resulting trust principles may well have a role to play in the resolution of property disputes between unmarried domestic partners, parties have increasingly turned to the law of unjust enrichment and the remedial constructive trust.
  • Since the decision in Pettkus v. Becker, the law of unjust enrichment has provided a much less artificial, more comprehensive and more principled basis to address claims for the distribution of assets on the breakdown of domestic relationships.

So there you have it: NO MORE COMMON INTENTION RESULTING TRUST claims in the family law context! You can still claim unjust enrichment and constructive trust – which the Supreme Court discussed at length in that case.

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