Estate Planning

The All-Powerful Constructive Trust

By Hull & Hull LLP

In Langston v. Landen, a recent decision of the Ontario Court of Appeal, one of three co-executors of an estate having a value of some $24 million (in the words of the Court) "managed to shunt the other two executors to the sidelines.  He started to loot the estate."  Among Landen's transgressions was his use of estate assets to purchase a home in Forest Hill which he had put in his wife's name.  On a motion for summary judgment, Justice Greer had imposed a constructive trust on the house for the benefit of the estate.

Landen's wife appealed.  However, the Court easily concluded that the fact that legal title was in her name was irrelevant in circumstances in which the entire purchase proceeds came from the estate.  Adopting a quote from the Reasons for Decision of Justice Greer, the Court stated: "Since the money came from Landen in his capacity as a fiduciary, the constructive trust or express trust flows from him and the money can be traced from him to the house purchase and renovation." 

So too, for the same reasons, the wife's entitlement to any share of the property as the "matrimonial home" was negated.  Of passing interest to the profession was the Court's additional conclusion that Justice Greer was well within her jurisdiction by imposing a vesting order on the house for the benefit of the estate in the absence of a motion seeking such relief. 

David M. Smith

Full post as published by Toronto Estate Law Blog on September 12, 2008 (boomark / email).