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Constructive Trust Claims and Vesting

When does a constructive trust claim arise and when does an interest in property subject of a constructive trust vest? By first principles, one would say that the claim arises on the satisfaction of the requisite elements of the substantive claim and an interest vest on the order of the Court. How about where the claim is made on unjust enrichment and the claimant was discharged from bankruptcy - can the defendant later say that any interest that might have arose has passed to the trustee in bankruptcy and an action is now barred?

In Elkaim v. Markina, 2010 ONSC 874 (Ont Sup Ct), the parties separated after a common law relationship. A claim was made by one partner seeking a proprietary remedy against specific properties owned by the other - the claim in unjust enrichment based on contribution of ‘money, labour, and management’. The claimant, however, had made an assignment in bankruptcy and was later discharged. Was the claim barred where the contributions were made both before and after the discharge from bankruptcy? Perrel J held that they were not - the reason that it might be appropriate to order that the enrichment be given up was the separation which took place after the discharge from bankruptcy.

What can we take away from the case? A constructive trust may be a proprietary remedy but is not a proprietary interest before its judicial creation. Where the substantive claim is a chose in action, it is the nature of the action and its elements itself that dictate whether it is property (a chose in action) and when it might vest.

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