A Non-Titled Spouse Does Not Have Standing To Advance A Trust Claim On Behalf Of The Other Spouse For Equalization Purposes

Take a coffee break with Melanie Larock and read a weekly blog post about family law decisions released by the Court of Appeal for Ontario.

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The Ontario Court of Appeal in Karatzouglou v. Commisso, 2023 ONCA 738 (released November 8, 2023, please click here for full decision) held that a non-titled spouse cannot assert a trust claim against a third party on behalf of a spouse for equalization purposes.

The lower court granted partial summary judgment and dismissed the wife’s claims against her mother-in-law (added as a party to the divorce proceeding). The wife had claimed that the mother-in-law held two properties in trust for the husband that should be included in his net family property and thus subject to equalization. The Court of Appeal upheld that decision for two reasons:

• (1) There was no evidence of a trust of any description with respect to the properties (express, resulting or constructive trust); and
• (2) the wife lacked standing to advance trust claims against the mother-in-law.

With respect to the first reason, there was no contribution, financial or otherwise, made by either spouse to the properties that would give rise to a beneficial interest.

With respect to the lack of standing, the Court of Appeal cited at length Justice McGee’s decision in Morris v. Noicolaidis, 2021 ONSC 2957. A claim for a constructive trust is a privately held claim such that “one cannot sue upon an interest that one does not have.” A claim for an equalization payment does not confer standing to make a trust claim on behalf of a spouse.

The Court of Appeal adopted Justice McGee’s reasoning and in doing so, cited a portion of her decision which referenced a future hypothetical scenario. That being where, unlike in this case there was no financial contribution, a case where there is a legitimate trust claim which is not made by the spouse who may have a beneficial interest. Although the other spouse cannot advance the trust claim on behalf of that spouse, that spouse could advance a Section 5(6) claim.

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About Melanie Larock

Melanie Larock is a family law litigator and a partner in Thomson Rogers’ Family Law group. Melanie’s focus is on all areas of family law with a particular emphasis on complex financial issues and high conflict parenting disputes. Melanie was trained by an illustrious litigator, and she is a self-proclaimed evidence law nerd.