The British Columbia Court of Appeal held that the test for the imposition of a good conscience trust, as articulated in Soulos v. Korkontzilas, requires a direct proprietary nexus between the contributions said to give rise to the trust and the property over which the trust is claimed. Madam Justice Garson held that while Soulos may be authority for the imposition of a good conscience trust irrespective of a finding of unjust enrichment, this does not mean that the imposition of a good conscience trust no longer requires a proprietary connection.
The respondent wished to claim a constructive trust over life insurance proceeds payable to her deceased husband’s estate. The Court of Appeal found that the conditions required for the imposition of the good conscience trust, as articulated in Soulos, had not been met. According to Justice Garson, Soulos is authority for the proposition that a finding of unjust enrichment is not essential for the imposition of a constructive trust. However, a connection between the defendant’s duty-breaching activities and the property to which a trust is claimed is required. The trial judge found that the life insurance policies that the respondent claimed a constructive trust over were not the ones contemplated by the separation agreement. Accordingly, the necessary proprietary connection between the wrongful act and the insurance policies was not present.
Finally, Roberts v. Martindale was considered as allowing for a possible relaxation of the Soulos conditions. The court chose to distinguish Roberts on the basis that unlike in Roberts, Mr. Ladner’s estate was not receiving property to which it was not entitled, and accordingly was not being unjustly enriched. Further, Roberts is a case where a clear proprietary nexus was present.
September 8, 2011
Link to Decision
Steve Holinski & Kelly Ng
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