In this decision, the Ontario Court of Appeal evaluated the enforceability of promises, unjust enrichment and the remedy of constructive trust. At the heart of this case is a 15-acre parcel of land (the “Property”) that was registered in the name of Mr. Zabukovec. Sr., whose intention was always to sever the Property into multiple lots and sell the individual lots to be built into homes. Despite that, Mr. Zabukovec. Sr., has allowed his son, Mr. Zabukovec. Jr., and his wife at the time, Ms. Tomek, to build a house for their family on a 1.13-acre section of the Property (the “House Lot”).

Mr. Zabukovec. Jr., and Ms. Tomek began the construction of their house. Upon partial completion of the construction work, they moved into the house in 1989, and continued with the construction while using their own funds. For Mr. Zabukovec. Sr., the house belonged to his son and daughter-in-law, so he was not involved in the construction process. In order to realize his intention, Mr. Zabukovec. Sr even applied to formally sever the House Lot from the rest of the property, though the application was withdrawn because severance was not an available option.

Mr. Zabukovec. Jr. did not pursue this matter further, as his father promised him that title would formally pass to him upon his father’s death. However, Mr. Zabukovec. Sr died intestate in 2004, and such conveyance never happened. Nonetheless, Mr. Zabukovec. Jr., and Ms. Tomek continued to reside at the property, maintain it, make any necessary improvements, and pay taxes.

In 2011, Mr. Zabukovec. Jr., and Ms. Tomek separated. The remaining issue in dispute was their ownership status of the Property. Both Mr. Zabukovec. Jr., and Ms. Tomek argued that they held a beneficial interest in the land through an unjust enrichment claim, arguing that the Estate had been unjustly enriched by their construction of the house and their continued upkeep of both the house and the 1-2 acres surrounding the house. As a result, they claimed that they were entitled to receive a proprietary interest in the land by way of constructive trust, or alternatively, compensation for their investment in the property.

The trial judge ruled in favour of Mr. Zabukovec. Jr., and Ms. Tomek, and found that they held joint beneficial ownership of 75% of the property through a constructive trust and proprietary estoppel, with the 25% owned by the Estate. The decision was appealed to the Ontario Court of Appeal, where the court examined whether or not the remedy was appropriate. In citing the Supreme Court of Canada’s decision in Cowper-Smith v Morgan, 2017 SCC 61, the court held that given the circumstances and the facts of the case, the remedy proposed by the trial judge was appropriate, resulting in a just and equitable remedy.

This is case is an important reminder to parents who intend to make conveyances to their children after making oral promises, and fail to follow through with making the proper legal arrangements.

Thank you for reading.

Margarita Grup