As one of her defences, the Appellant, Ms. Karadaras, argued that her husband held the transferred real property under "constructive trust" because she had paid the mortgage. There were many problems with Ms. Kardaras's evidence; so Justice Pizzitelli was not sympathetic to the case. Even so, he rejects, as a point of law, that a taxpayer can assert a constructive trust through the tax court. This means that non-arm's length transferees wanting to assert a "constructive trust" as a defence to a non-arm's length transferee assessment, must put their tax appeals on hold, while they make a separate application to the provincial court for a declaration of constructive trust. Most won't bother.
" The issue of constructive trust has been before this Court in numerous occasions and I refer to my own recent decision in Pliskow v The Queen, 2013 TCC 283 (CanLII), 2013 TCC 283, relied upon by the Respondent, wherein I found that this Court has no jurisdiction to determine whether a constructive trust exists so as to define the property rights between two spouses, ... as I stated in Pliskow, notwithstanding the decision of former Chief Justice Bowman in Savoie v The Queen, 93 DTC 552, relied upon by the Appellant, the issue of constructive trust requires an analyses of the entire relationship between the Appellant and her husband, what contributions the parties made to their assets or in incurring their liabilities, whether there were any agreements, marriage contracts, separation agreements or otherwise, or in general any factors the parties would utilize in arguing for the division of their property rights. These are arguments that must be made before the proper courts having jurisdiction in the province of Ontario in this instance, not this Court."
See Kardaras v. The Queen, (2014 TCC Pizzitelli)