What is the test for imposing a constructive trust on a defendant in a personal injury case?

Ontario, Canada


The following excerpt is from Reichmann v. Vered, 2003 CanLII 49295 (ON SC):

In Soulos v. Korkonzilas, 1997 CanLII 346 (SCC), [1997] 2 S.C.R. 217 at paras. 34 and 36, McLachlin J. summarized the availability of a constructive trust. A constructive trust may be imposed where good conscience so requires to do justice between the parties and to maintain the integrity of institutions based on trust-like relationships. In assessing the situation, the court should consider other situations where courts have found a constructive trust. There must not be an indication that a constructive trust would have an unfair or unjust effect on the defendant or third parties. The court may impose a constructive trust in two general categories of situations. The first is where property is obtained by a wrongful act of the defendant, notably breach of fiduciary obligation or breach of duty of loyalty. The second category concerns situations where the defendant has not acted wrongfully in obtaining the property, but where he would be unjustly enriched to the plaintiff's detriment by being permitted to keep the property for himself. The two categories are not mutually exclusive. Often a wrongful acquisition of property will be associated with unjust enrichment, and vice-versa. However, either situation alone may be sufficient to justify imposition of a constructive trust.

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