If a common-law partner or business associate sues an Ontario estate claiming they deserve half the house due to unjust enrichment, the executor must actively defend this constructive trust claim at the Superior Court of Justice. Ignoring the lawsuit can lead to personal liability, and executors should expect initial legal defence retainers to range between $5,000 and $10,000 CAD, paid from the estate.
Being an executor (or Estate Trustee) in Ontario is a heavy responsibility, but it becomes infinitely more complicated when a surprise lawsuit is filed against the estate. One of the most common and challenging lawsuits is a claim for a “constructive trust” based on “unjust enrichment.” This typically happens when a common-law partner, a stepchild, or a business associate claims they poured years of free labour, money, or renovations into the deceased’s property, but their name was never put on the official real estate title.
Under Ontario law, common-law spouses do not have the same automatic property rights as legally married couples. If a common-law partner is left out of the Will, they cannot simply demand a standard property equalization. Instead, they must sue the estate, arguing that the deceased was “unjustly enriched” by their contributions and that it would be terribly unfair for the estate to keep 100% of the property’s value. As the executor, it is your legal duty to defend the Will and protect the assets for the rightful beneficiaries. This guide will outline exactly how to navigate and defend against these complex claims. 🔍
Step-by-Step Process in Ontario
Constructive trust claims are handled in the Superior Court of Justice. Whether you are administering an estate in Hamilton, London, or downtown Toronto, the rules of civil litigation require a swift and strategic response. If you mishandle the defence, you could be held personally liable for the estate’s losses. 📝
Step 1: Halt All Estate Distributions Immediately
The moment you receive a Notice of Application or a formal demand letter outlining a constructive trust claim, you must freeze all payouts. You cannot distribute money or property to the beneficiaries named in the Will while a pending lawsuit threatens those very assets.
If you distribute the estate funds and the court later rules in favour of the common-law partner, the money will be gone. The judge could then order you, the executor, to pay the settlement out of your own personal savings. Most applicants in this province immediately place all estate funds into a secure trust account and notify the beneficiaries that the process is paused. 🔒
Step 2: Review the Notice of Application
You must carefully review the lawsuit with your local estate litigation lawyer. A successful unjust enrichment claim requires the plaintiff to prove three things: they provided a benefit to the deceased (like paying for a new roof), the deceased suffered a corresponding deprivation (they got the roof for free), and there was no legal reason for the benefit (like a formal employment contract).
Your lawyer will assess whether the plaintiff is asking for a financial payout (a monetary award) or an actual ownership stake in the real estate (a constructive trust). Understanding their core demand will dictate your defence strategy. 💵
Step 3: Investigate and Gather Counter-Evidence
As the executor, you must step into the shoes of the deceased and investigate the truth. Did the common-law partner actually pay for the home renovations, or did the deceased reimburse them? Did the partner live rent-free for ten years, offsetting the value of any free labour they provided?
You need to scour the deceased’s bank records, CRA tax returns, emails, and receipts. If the plaintiff claims they contributed $50,000 to the mortgage, you must demand a paper trail. In many cases, the defence involves showing the court that the plaintiff already received significant benefits during the relationship, nullifying any claim of “unjust” enrichment. 📍
Step 4: Participate in Mandatory Mediation
In many Ontario jurisdictions, including Toronto, Ottawa, and Windsor, estate litigation is subject to mandatory mediation. Before you can proceed to a full trial, you must sit down with the plaintiff and a neutral mediator to attempt a settlement.
Mediation is highly recommended even if it is not mandatory in your specific city. Trials are incredibly expensive, and settling a constructive trust claim out of court can save the estate tens of thousands of dollars. If an agreement is reached, it will be drafted into a legally binding Minutes of Settlement. 📝
Step 5: Proceed to Trial at the Superior Court
If mediation fails and the plaintiff refuses to back down, the matter will proceed to a formal trial. Your lawyer will present your gathered evidence, cross-examine the plaintiff’s witnesses, and argue that the strict legal test for a constructive trust has not been met.
If the judge agrees with your defence, the claim is dismissed, and you can finally distribute the estate according to the Will. The judge may also order the losing plaintiff to pay a portion of the estate’s legal costs. ⏱
How Much Does it Cost in Ontario?
Defending a constructive trust claim is complex civil litigation, and the costs reflect that reality. While executors are generally entitled to have their legal fees covered by the estate, these expenses will drastically reduce the final inheritances. Here are the typical costs in Canadian dollars:
| Initial Legal Retainer | Most estate litigation lawyers require an upfront retainer of $5,000 to $10,000 CAD to begin reviewing the file and drafting a response. |
| Mandatory Mediation | Hiring a private mediator typically costs between $2,000 and $5,000 CAD for a full day, usually split between the parties. |
| Full Trial Defence | Taking a constructive trust claim all the way through a Superior Court trial can easily cost the estate $30,000 to $75,000+ CAD in legal fees. |
| Cost Awards | If the estate loses, the judge may order the estate to pay the plaintiffs legal costs, doubling the financial damage. |
How Long Does the Process Take?
Litigation is never a fast process. From the moment the Notice of Application is filed, securing a mediation date typically takes 6 to 9 months.
If mediation is unsuccessful and the case requires a full trial with witness testimonies and expert valuations, you are at the mercy of the court schedule. In Ontario, an unresolved constructive trust claim can completely stall an estate administration for 1.5 to 3 years. 📅
Frequently Asked Questions (FAQ)
What is the difference between unjust enrichment and constructive trust?
Unjust enrichment is the legal theory that someone unfairly benefited at anothers expense. A constructive trust is a specific type of remedy the court grants for unjust enrichment, essentially forcing the estate to hold a percentage of the property in trust for the plaintiff.
Do common-law partners have any automatic inheritance rights in Ontario?
No. Unlike legally married spouses, common-law partners in Ontario do not have an automatic right to equalize property or inherit if there is no Will. This lack of protection is exactly why they often resort to filing unjust enrichment claims.
Can the executor be sued personally if they lose?
Generally, no. As long as the executor acted reasonably, followed legal advice, and did not distribute the assets prematurely, the estate pays the settlement, not the executor personally.
What if the plaintiff actually has receipts for building a garage?
If they have hard evidence of financial contributions that were never repaid, their claim is strong. In these scenarios, a good executor will work with their lawyer to negotiate a fair financial buyout rather than wasting estate money fighting a losing battle in court.
Are the legal defence fees tax-deductible for the estate?
Usually not. Legal fees incurred to defend the ownership of a capital asset or to fight a Will dispute are generally considered personal expenses of the estate and cannot be deducted against the deceaseds final CRA income tax return.
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