The Supreme Court of Canada’s recent decision in Moore v Sweet provided meaningful clarification on the Canadian law of unjust enrichment and, in particular, the juristic reason analysis.
As it made a finding of unjust enrichment, it was not necessary for the Court to consider the second issue before it, being whether, in the absence of unjust enrichment, a constructive trust could nevertheless be imposed in the circumstances on the basis of “good conscience”.
In 1997, the Supreme Court released its decision in Soulos v Korkontzilas. That case considered situations that may give rise to a constructive trust remedy. In referring to the categories in which a constructive trust may be appropriate, which were noted to historically include where it was otherwise required by good conscience, Justice McLachlin (as she then was) stated as follows:
I conclude that in Canada, under the broad umbrella of good conscience, constructive trusts are recognized both for wrongful acts like fraud and breach of duty of loyalty, as well as to remedy unjust enrichment and corresponding deprivation…Within these two broad categories, there is room for the law of constructive trust to develop and for greater precision to be attained, as time and experience may dictate.
Since 1997, Soulos and the above excerpt have been interpreted inconsistently by scholars and courts of appeal throughout Canada. Some consider Soulos to restrict the availability of constructive trust remedies to only situations where there has been a finding of unjust enrichment or wrongful conduct, while others favour a more liberal interpretation.
The appellant in Moore v Sweet sought, in the alternative to a remedy on the basis of unjust enrichment, a remedial constructive trust with respect to the proceeds of the life insurance policy on the basis of good conscience. In choosing not to address this issue, Justice Côté (writing for the Majority) stated as follows:
This disposition of the appeal renders it unnecessary to determine whether this Court’s decision in Soulos should be interpreted as precluding the availability of a remedial constructive trust beyond cases involving unjust enrichment or wrongful acts like breach of fiduciary duty. Similarly, the extent to which this Court’s decision in Soulos may have incorporated the “traditional English institutional trusts” into the remedial constructive trust framework is beyond the scope of this appeal. While recognizing that these remain open questions, I am of the view that they are best left for another day.
It will be interesting to see if and when the Supreme Court ultimately chooses to determine “the open questions” regarding the availability of the remedial constructive trust. Until then, it appears that some debate regarding the circumstances in which it may be imposed will remain.
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With the unfortunate increase in fake news stories circulating the internet, one particular fabricated story nonetheless raises important estate planning considerations.
True: Mr. Antonino Fernandez died in August 2016. Mr. Fernandez was the owner of Corona beer, and chairman of Grupo Modelo, which also exports Modelo, and other Mexican beers. Mr. Fernandez was a philanthropist who set up establishments to encourage rural development in his birth area, as well as charitable foundations in both Mexico and Spain to ensure employment opportunities for disabled individuals.
False: In his will, Mr. Fernandez left every resident in his birth village, Cerezales del Condado in Spain, 2.5 million dollars.
A recent news hoax about the late Mr. Fernandez leaving a generous gift to each of the residents in his birth village raises the question whether such a testamentary disposition would have been valid.
Who Would Get a Distribution?
According to the fabricated story, Mr. Fernandez gave each resident of his village 2.5 million dollars upon his death pursuant to a clause in his testamentary document that apparently stated “for the benefit of the village`s inhabitants“. His village had 77 residents.
In Mr. Fernandez’s purported will, he left his fortune to his 13 siblings and extended family. Each villager did not directly get a distribution. If the disposition to the villagers did exist, would the siblings be obligated to distribute the estate based on the foregoing provision?
Would the Will Be Void for Uncertainty?
While each villager would have been informed that they were to receive a distribution from Mr. Fernandez, due to the drafting of the will, it is unclear if they would have received a distribution.
To prevent the villagers from recovering their distribution, the siblings would want to argue that the term in the will benefiting the villagers was void for uncertainty. As such a will would be ambiguous, the parties may need to look to a Judge to help interpret the will.
Pursuant to the decision of the Ontario Court of Appeal in Re Burke  OJ No 706, the judge must study the whole contents of the will, and after full consideration of all the provisions and language used therein, try to find what the intention was in the mind of the testator. When an opinion has been formed as to the intention of the testator, the court should strive to give effect to it.
As established in Montreal Trust Co. v Sinclair (1958 CarswellMan 39) “one of the commonest forms of uncertainty in this respect is where the gift provides for selection from a number of persons or bodies and does not state who is to make the selection or how it is to be made.“ In the false case of Mr. Fernandez, it may be argued that while he left a gift to the inhabitants of his village in his will, he did not specifically state how a villager was to be defined.
Furthermore, the Supreme Court of Canada in Brewer v McCauley  SCR 645 established that “a testator must, by the terms of his will, himself dispose of the property with which the will proposes to deal. He may not depute that duty to his executors or trustees“ In this case, the siblings of Mr. Fernandez could also attempt to argue that Mr. Fernandez left an unclear condition on the gift to them, and that leaving the distribution of the gift to the villagers to his siblings was an improper delegation of testamentary authority.
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