Does Section 12 of the Limitation Act Apply to Remedial Constructive Trust Claims? The Law in British Columbia Remains Unsettled

One of the more interesting limitation issues currently developing in British Columbia is whether the special discovery provisions in s. 12 of the Limitation Act apply to claims for remedial constructive trusts.

The answer can have significant practical consequences. If s. 12 applies, the limitation period will not begin to run until the claimant has actual knowledge of conduct inconsistent with the alleged trust. If it does not apply, a claimant seeking a constructive trust will be subject to the ordinary discovery rules under s. 8 of the Limitation Act.

Recent BC Supreme Court decisions have reached different conclusions on this issue, leaving litigants with competing authorities and considerable room for argument until the Court of Appeal provides further guidance.

Section 12 of the Limitation Act

Section 12 establishes a special discoverability regime for certain "fraud and trust claims" as defined in the Act.

Unlike the general discoverability provisions in s. 8 of the Limitation Act, which deem a claim discovered when a claimant knew, or reasonably ought to have known, the material facts underlying the claim, s. 12 delays the commencement of the limitation period until the beneficiary becomes fully aware of:

1. the loss;
2. the conduct giving rise to the claim;
3. the identity of the person responsible; and
4. that a court proceeding is an appropriate means to seek a remedy.

As the Court of Appeal recently confirmed in Wilkinson v. Chartier, 2025 BCCA 53, s. 12 requires actual, not constructive, knowledge before the limitation period begins to run. Where it applies, s. 12 can therefore significantly postpone the commencement of the ordinary two-year limitation period imposed by the Limitation Act.

Conflicting Case Law

The authorities addressing whether s. 12 applies to remedial constructive trust claims are divided:

• In Harding v. Harding, 2024 BCSC 185, the BC Supreme Court held that s. 12 of the Limitation Act applies to claims seeking remedial constructive trusts.
• The Court of Appeal subsequently considered s. 12 in Wilkinson v. Chartier, 2025 BCCA 53, but did not conclusively determine whether remedial constructive trusts fall within the provision.
• Most recently, in Del Puppo v. Del Puppo, 2026 BCSC 1453, the BC Supreme Court reached the opposite conclusion from Harding, holding that s. 12 does not apply to claims seeking a remedial constructive trust because such a trust does not exist until it is imposed by the court.

These decisions leave the law in British Columbia unsettled pending further guidance from the Court of Appeal.

Harding: Section 12 Applies to Remedial Trust Claims

In Harding v. Harding, 2024 BCSC 185, the plaintiffs, who were the parents of one of the defendants, claimed beneficial ownership of two jointly registered properties and alleged that the defendants had improperly diminished their interests by borrowing against the properties and using the equity for their own benefit. The plaintiffs sought title to the properties and compensation for their financial contributions, while the defendants disputed the plaintiffs' ownership claims and argued that many of those claims were statute-barred.

While acknowledging that the question had not previously been considered by a court in British Columbia, Justice Watchuk concluded that the plaintiffs' claims for both resulting trusts and remedial constructive trusts fell within s. 12 of the Limitation Act.

In reaching that conclusion, the Court relied heavily on the Court of Appeal's reasoning in Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2008 BCCA 278 at para. 91, leave to appeal to SCC refused, which held that trust limitation provisions under the former Limitation Act extended to constructive trusts. Unlike the current Limitation Act, the former legislation contained a definition of "trust" that expressly included constructive trusts. However, Justice Watchuk reasoned that the removal of the statutory definition of "trust" in the current Limitation Act did not signal a legislative intent to exclude constructive trusts from s. 12.

Notably, however, the limitation issue was ultimately not determinative in Harding. The Court found that the limitation defence had not been properly pleaded and, in any event, that the claims had been discovered within the applicable limitation period. As a result, the Court did not actually dismiss or allow any claim based on the application of s. 12.

This leaves open the argument that the Court's discussion of whether remedial constructive trusts fall within s. 12 may be obiter rather than binding authority.

Wilkinson Left the Door Open

The issue was also not definitively resolved by the Court of Appeal in Wilkinson v. Chartier, 2025 BCCA 53, the leading case on the application of s. 12.

In Wilkinson, the majority observed that s. 12 applies in circumstances where the law imposes a trust obligation, such as where a transfer is void because of lack of capacity or undue influence. However, the Court stopped short of addressing whether s. 12 extends to all forms of trusts imposed by law, including remedial constructive trusts.

Accordingly, Wilkinson provided some guidance but left substantial uncertainty regarding the treatment of constructive trusts that arise only as a remedy granted by the court.

Del Puppo: Section 12 Does Not Apply to Remedial Constructive Trust Claims

While Wilkinson left open the possibility that s. 12 may apply to certain trusts imposed by law, Justice Morley's decision in Del Puppo v. Del Puppo, 2026 BCSC 1453, drew a clear distinction between existing trust relationships and remedial constructive trusts.

In that case, the plaintiff claimed a beneficial interest in a house built with corporate funds on property owned by the defendant and sought either a trust interest in the house or compensation for the construction costs. Although the Court found that the plaintiff had paid approximately $175,000 toward construction and had long treated the house as a corporate asset, it concluded that the defendant was the legal and beneficial owner of both the land and the house, and that any unjust enrichment claim was barred by the limitation period.

The plaintiffs argued that the discovery rules for fraud or trust claims under s. 12 of the Limitation Act applied not only to their express and resulting trust claims, but also to their unjust enrichment claim because they sought the remedy of a constructive trust, which they argued qualified as a "fraud or trust claim" under s. 12.

Justice Morley rejected that argument:

"[93] I disagree. A claim for a constructive trust is not a 'fraud or trust claim'.... A remedial constructive trust, unlike an express or resulting trust, arises as a result of the court order creating it."

The Court distinguished remedial constructive trusts from express and resulting trusts based on its interpretation of s. 12, finding that a trust relationship must already exist when the claim arises in order for s. 12 to apply. A remedial constructive trust, by contrast, does not exist until imposed by the court. Justice Morley therefore concluded that a claim seeking a constructive trust remedy is not a "trust claim" for limitation purposes.

The Court further held that, even if s. 12 applied, the claim would still have been out of time because the plaintiffs had actual knowledge of the defendant's adverse ownership position by August 2022 and knew that litigation was an appropriate means of seeking a remedy.

Where Does This Leave Litigants?

There is now an apparent tension in the BC Supreme Court authorities regarding the proper scope of s. 12 of the Limitation Act.

On one hand, Harding suggests that claims for remedial constructive trusts can fall within s. 12 because constructive trusts are a recognized category of trust and because earlier appellate authority interpreted trust limitation provisions broadly. On the other hand, Del Puppo draws a distinction between claims based on pre-existing trust relationships, such as express or resulting trusts, and claims that merely seek the remedy of a constructive trust. Under Justice Morley's analysis, only the former engage s. 12.

The distinction is significant. Many unjust enrichment claims seek constructive trust remedies. If Del Puppo is correct, parties cannot avoid the ordinary discovery rules under s. 8 of the Limitation Act simply by pleading a constructive trust as a requested remedy.

Until the Court of Appeal squarely addresses the application of s. 12 to remedial constructive trusts, the issue remains alive. Counsel advancing or defending trust-based claims should carefully consider both lines of authority and be prepared to argue whether the claim arises from an existing trust relationship or merely seeks the remedial imposition of one.

In the meantime, parties should not assume that pleading a constructive trust will shield an otherwise stale claim from being statute-barred.

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