Fiduciary Law and the Constructive Trust: Perfecting the Fiduciary Undertaking

Two recent unanimous decisions from the Supreme Court of Canada in Galambos v Perez and Alberta v Elder Advocates of Alberta Society have narrowed and refreshed the requirements for recognizing fiduciary relationships and obligations. All fiduciary obligations must be founded by an undertaking, either express or implied, on the part of the fiduciary to act in the best interest of the beneficiary. At the heart of the fiduciary obligation, the undertaking of a fiduciary may also serve as a foundation for the goals of fiduciary accountability. The developing “Galambos approach” remains incomplete in its application in this regard. In the spirit of Galambos and Elder Advocates, I propose that the undertaking of the fiduciary can provide principled guidance in the availability of gain-based relief for breach of fiduciary duty. Particularly, I suggest that the imposition of a constructive trust as proprietary gain-based relief may be rationalized under the objective of perfecting or enforcing the fiduciary undertaking. To demonstrate my proposal, I investigate three example undertakings and breaches of fiduciary duty in which the fiduciary acquires property through the breach of duty. By grounding this overall discussion towards a conceptual remedial goal of enforcing the fiduciary’s undertaking, Galambos may spark the development of a principled approach to understanding both the making and the breach of fiduciary obligations.