Will Challenge Litigation – Part 12 – Hull on Estate and Succession Planning #137
Listen to Will Challenge Litigation – Part 12
This week on Hull on Estate and Succession Planning, Ian and Suzana clarify the distinction between claims of resulting trust and claims of constructive trust.
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Will Challenge Litigation Part 12 – Hull on Estate and Succession Planning – Podcast #137
Posted on November 7, 2008 by Hull & Hull LLP
Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, here are Ian and Suzana.
Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to episode 137 of our podcast on Tuesday, November 4th, 2008.
Ian Hull: Hi Suzana.
Suzana Popovic-Montag: Hi there Ian, how are you today?
Ian Hull: Just great.
Suzana Popovic-Montag: That’s good.
Ian Hull: Remember, of course, we’ve got our call-in, 206-457-1985.
Suzana Popovic-Montag: And please feel free to continue with the feedback at firstname.lastname@example.org.
Ian Hull: And speaking of feedback, we got an interesting comment on our last podcast and thought we might touch on it today as we were working through additional issues beyond the Will challenge, but in the context of a Will challenge. And the comment was that they didn’t understand when we referred to a Supreme Court of Canada case, the Picori decision, how it sort of was relevant. So it was a timely question and one that we are going to deal with today actually because we want to talk a little bit about what those two claims are and how they fit into a global Will challenge piece of litigation. They can be separated from Will challenge litigation but they also can be part and parcel of the Will challenge. So why don’t we spend a little bit of time talking about them. First of all, the concept of resulting trust is again and what constructive trust is again, and then we’ll talk a little bit about how we’re using them in our day-to-day practice.
Suzana Popovic-Montag: That’s great Ian. And we know basically that a resulting trust is a trust that arises at law by virtue of the fact that Courts are looking for ways to make sure that people are treated equitably. And so if someone is left in a situation where they ought to be able to make some kind of claim against a certain pool of funds, for instance, or some other type of asset, that this remedy is something that is available to them.
Ian Hull: And the constructive trust, really the concept comes from this idea of unjust enrichment that we talked about and that someone’s done work and not been paid for it. It’s as simple as that. With the constructive trust world and where it developed, and it certainly developed very intensely out of the United Kingdom and the in Canada. In Canada, there was sort of a trilogy of cases that developed. But what happened was, the cases that started if off and why its sort of helpful is that it gives us an idea of how its being used today, is that the Courts sat back and said, in this case, the Murdoch and Murdoch decision and the following decisions that came from that, the Court sort of said look, there was an unequitable treatment of a husband and wife. This was pre-family law equalization times. And the Court said, well the wife has demonstrated that she participated equally in the marriage but on death, I mean not on death, in this case on marriage breakdown, the assets were being split up based on legal title. And the Court said that’s not fair. So they stepped in and said if you’re going to participate, you are constructively holding, you’re actually participating in the growth and the build up of assets, then you’re entitled to be replenished from your work. And whether you have legal title, whether the farm is in your name or its not, the Courts have said that doesn’t really matter. What matters is, what did you do? And it comes back to our similar way that we looked at quantum meruit as well.
Suzana Popovic-Montag: And in fact unjust enrichment is very, very similar to constructive trust except whereas you’re looking for payment of money in the cases of unjust enrichment, with constructive trust you’re usually looking to have some kind of claim to an asset itself, some interest in, you know, because these cases seem to have arisen in a family law context, an interest in the family home or some other property that is owned by one of the two people in a relationship.
Ian Hull: So that’s developed and in the estates law, the constructive trust claim is prevalent, certainly easily identified in a Will challenge scenario when you might have someone who is excluded from the Will. And say doesn’t get any of the family farm, and let’s say it’s the son. But that son has been working the farm for many, many years. And instead of looking to get paid for work and services as we did in quantum meruit or instead of trying to create a claim of proprietary estoppel which we talked about in a prior podcast, there is the claim that that asset is being held in trust by virtue of the work and services performed, and that you’re entitled to a portion of it. Not maybe more than you’d get paid on a quantum meruit, maybe less than you’d get on a proprietary estoppel.
Suzana Popovic-Montag: And just by virtue of a claim, of course, Ian, there has to be a real relationship between the work that was done for the property and the property itself. So that’s what takes this sort of, I think, outside of the box of being entitled to just a money payment for services rendered, that there’s actually a correlation between what you did and the property that you were doing it for.
Ian Hull: Absolutely. So I think its just one of those things that if we can consider, looking at both resulting trust and constructive trust. We’ve talked a little bit about the distinction. Sometimes on the facts it’s a distinction without any difference because you’re sometimes looking at trying to oppose a constructive trust or a resulting trust over a joint bank account. You can sometimes impose it over land or specific items. So, you know, we’ve tried to get into the distinction a little bit today but as long as we remember, and we try to remind our clients, you know, it’s an option. And it is part of the various approaches that we may or may not want to take when we’re dealing with a Will challenge-like scenario where we have been excluded or we are excluded and on what basis. And I think really from our perspective anyway, it is one of the more difficult claims to pursue. So we typically don’t want to pursue it unless we think we’ve got some decent hold on it because it’s a bit of a flaky claim, to use a term of art and the Courts are not going to use it unless you’ve got the rights facts. And where the Courts have historically imposed these kinds of trusts is when you’ve got obvious unjust deeds being done here, where someone has been unjustly treated at a level that there is no other way to solve it but by imposing these principles of equity on top of the facts and ultimately then coming to the Court, coming to say look, now I have a legal reason to say why that farm should go to Johnny and actually I only need 25% of the farm to go to Johnny because that represents the efforts that Johnny put into the farm property.
Suzana Popovic-Montag: That’s a really good point, Ian, because the truth is, these kinds of cases are hard to demonstrate factually because of the requirement for corroboration, because of the fact that so much of the evidence that would traditionally be led is more or less viewed by the Court as self-serving evidenced. And so to be able to find third party evidence of these situations is not necessarily that easy, but when it is, then strictly these claims are ones that we do pursue and as best as we can in the circumstances, knowing of course that there’s no guarantees even with that at the end of the day.
Ian Hull: Absolutely. Alright, well before we turn to our next topic, one of the things that we’re trying to work through with our video podcasts is we’re going to, from time to time as well, we wanted to let everyone know that we’re going to try to do from time to time an audio and a video blog where we run into an issue that demonstrates a really interesting point that in and of itself doesn’t justify a whole podcast or a video podcast, but might be worthwhile having a couple of minutes. So you’ll see us, from time to time, putting our little short snippets in, hopefully they’re helpful. And we have a couple of ideas and really we’re going to try to do is just grab them from our practice. And it may not happen once a week, it may not happen once a month, but every once and a while you’ll see that. So we look forward to that new little twist in our day-to-day social media efforts.
So thank you very much. That winds up, I think, our discussions for today’s podcast. We’ll continue with our Will challenge series and please feel free to send us an e-mail at email@example.com.
Suzana Popovic-Montag: Or, of course, call us and leave us a video comment at 206-457-1985. Thanks very much, Ian.
Ian Hull: Thanks Suzana.
You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
To listen to other Hull On podcasts, or to leave any questions or comments, please visit our website at hullestatemediation.com.