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Discussion group members might be interested in LeClair v LeClair (1998) 159 DLR (4th) 638 (BC CA). A testator had owned a block of flats, which he sold. He went to hospital with terminal lung cancer. His wife had wanted to use the sale proceeds ($610K) to buy a condominium, but he refused. She used a power of attorney to withdraw $300K from the sale proceeds (in a lawyer's trust account) to complete the purchase for herself and to withdraw $10K for other purposes. The testator died 3 weeks later. The wife was the executrix of the testator's estate, which was to be distributed equally between the wife and his son (by a previous marriage). 90% of the estate consisted of the proceeds of sale of the block of flats. After his death, the wife withdrew more money from the trust fund for her own use. In total, she received $152,500 more than the 50% of the estate to which she was entitled under the will.

The son sued the wife for conversion, negligence, fraud, and breach of trust, and filed a lis pendens against the title to her condominium. The son and wife agreed (a) that the wife's use of the power of attorney was improper and (b) that the wife had been beneficially entitled to 50% of the value of the block of flats by way of contructive trust. The wife argued that, since she was beneficially entitled 50% of the sale proceeds by way of constructive trust, and 50% of the remainder as the beneficiary of the will, the son had suffered no loss through her actions.

The testator had been aware of the wife's claim to a constructive trust (she had registered a charge against the block of flats under the Land (Wife Protection) Act RSBC 1979, c 223) and the trial judge found that the testator had divided his estate equally between his wife and his son for the purpose of satisfying her claim. If the testator had been aware that the wife was entitled to 50% of the sale proceeds independently of the will, it is likely that he would have made a different testamentary disposition.

The BC CA decided that, although a constructive trust is deemed to arise when the event giving rise to that trust occurs (Rawluk v Rawluk (1990) 65 DLR (4th) 161), it is a "remedy" and, relying on Soulos v Korkontzilas (1995) 126 DLR (4th) 637, decided "that a constructive trust is to be given to satisfy 'good conscience', and that it ought not to be granted where it would harm an innocent third party, such as" the son. Therefore, it did not arise since "the unjust enrichment was remedied by the Will" (159 DLR (4th) 638, 651).

Assuming, as the BC CA did, that the constructive trust of the block of flats was a response to unjust enrichment (and not raised to perfect a detrimentally relied upon expectation), would it not be better to say that the constructive trust did arise when the unjust enrichment occurred and that it was determined when the testator fulfilled his obligation to make restitution through a testamentary disposition in his wife's favour? In other words, is this an example of consent-based restitution: see P Birks, "Misnomer" in WR Cornish et at, Restitution Past, Present & Future (Oxford, 1998) 1, 19?

As a final note, the BC CA did not explain the nature of the son's right to the wife's condominium, but merely said that it "involved a tracing of monies taken by the [wife] from [the testator's] estate and used to purchase her condominium" (159 DLR (4th) 638, 654). It looks like a resulting trust to me: see LD Smith, The Law of Tracing (Oxford, 1997) pp 294-295, 357-358.

Robert Chambers
University of Melbourne Law School
Parkville, Victoria, Australia, 3052
+61-3-9344-6196 (telephone)
+61-3-9347-2392 (fax)