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Soulos v Korkontzilas, [1997] 2 SCR 217 (Link)

Facts:

Offer for property was made to Soulos through Korkontzilas, the real estate agent. Soulos makes counter-offer, but counter offer was not communicated to the other party. Korkontzilas gets his wife to buy the property.

Property value then goes down, so Soulos can’t show loss. All he can say is that the agent didn’t have the right to take the benefit for himself. There was a fiduciary relationship (agent/principal), and Korkontzilas breached his duty of loyalty in taking the opportunity for himself.

Issue(s):

Can a constructive trust (CT) be imposed in the absence of enrichment of the defendant and a corresponding deprivation of the plaintiff?

Ratio:

Breach of fiduciary duty of loyalty may lead to the imposition of a constructive trust; based on the following factors:
** 1. Defendant must have been under equitable obligations regarding activities connected to acquiring property in question
** 2. Assets acquired through breach of obligations
** 3. Plaintiff has legitimate reason for seeking proprietary remedy (personal and/or societal)
** 4. No factors rendering imposition of CT unjust

Analysis:

** Unjust enrichment isn’t complete here (property value went down)
?
** Good conscience
*** Need to do justice between parties
*** Need to protect the integrity of important relationships (for society as a whole, to hold people to standards)

Discretionary decision -- Factors to be considered:
** 1. Defendant must have been under equitable obligations regarding activities connected to acquiring property in question
** 2. Assets acquired through breach of obligations
** 3. Plaintiff has legitimate reason for seeking proprietary remedy (personal and/or societal)
** 4. No factors rendering imposition of CT unjust
** Also (not in case) 5. Must be property to apply CT to

Holding:

Yes, a constructive trust should be imposed.


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