Constructive trusts are a legal remedy used to address unjust enrichment. This remedy is imposed on property owned by a party who has gained an unfair benefit at the expense of another party. In cases where the court finds that one party has been unjustly enriched, a constructive trust may be imposed to remedy the situation.
Constructive trusts were initially used in cases involving fiduciary relationships, such as those between trustees and beneficiaries. However, in the last quarter of the 20th century, constructive trusts began to be used as a remedy for unjust enrichment in non-fiduciary settings. In Pettkus v. Becker (“Pettkus”), constructive trusts were established as a remedy for unjust enrichment in the context of cohabitation outside of marriage.
In Pettkus, Rosa Becker sued Lothar Pettkus for property they acquired while cohabiting. Pettkus’s initial promise to Becker not to share title in any property he bought was evidence. The Court ruled that over a 20-year partnership, the couple had worked hard to build several bee farms from nothing. The Court found Pettkus’s title in the assets unjustly enriched Becker’s donations. There was no “juristic justification” to leave the defendant’s legal ownership to all the accumulated assets unaffected by the plaintiff’s considerable donations, thus to do so would have been an unfair enrichment. The Court granted the plaintiff a constructive trust in a half share of all assets to recognize the plaintiff’s equitable stake in the property, to which the defendant alone possessed legal title.
To establish a constructive trust, the plaintiff must show that the defendant has been unjustly enriched, that the plaintiff has been deprived, and that there is no justifiable reason for the defendant’s enrichment. The plaintiff must also demonstrate a causal connection between the defendant’s property gain and the plaintiff’s deprivation. In addition, the plaintiff must show a direct link between their contributions and the property over which the constructive trust is sought.
Constructive trusts are a results-oriented remedy, primarily used when monetary recompense is not adequate to remedy the situation. If the court finds that a constructive trust is an appropriate remedy, the plaintiff may receive a personal restitutionary award (i.e., a restitutionary proprietary award). The plaintiff may also receive a portion of the joint family endeavour in money or be granted additional rights that result from the recognition of property rights.
Constructive trusts are a useful remedy in cases of unjust enrichment outside of fiduciary relationships. Recent cases, for example, demonstrate how constructive trusts can be used to address unjust enrichment in various circumstances. Although the principle of unjust enrichment does not define constructive trusts, they provide a useful remedy in cases where one party has been unjustly enriched at the expense of another.
