Can a breach of fiduciary duty give rise to a remedial constructive trust?

British Columbia, Canada


The following excerpt is from Li v Piao, 2019 BCSC 488 (CanLII):

A breach of fiduciary duty may traditionally give rise to a remedial constructive trust. Four conditions in the determination of remedial constructive trust were identified in Soulos v. Korkontzilas, 1997 CanLII 346 (SCC), [1997] 2 S.C.R. 217 at para. 45: (1) The defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced, in relation to the activities giving rise to the assets in his hands; (2) The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant in breach of his equitable obligation to the plaintiff; (3) The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure that others like the defendant remain faithful to their duties and; (4) There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case; e.g., the interests of intervening creditors must be protected.

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