Kismet Enterprises leased two acres of land in Nanaimo, BC to Rascal Trucking, which operated a topsoil processing facility on the property. The neighbours complained about Rascal's operations; in response, the city passed resolutions declaring the facility a nuisance, spent $110,679.74 cleaning it up and lodged the costs as tax arrears on the property. Rascal made no attempt to reimburse Kismet or the city for the clean-up costs, even though its lease required it to reimburse Kismet for any liabilities arising from its operations on the land. Kismet concluded that the combination of the tax arrears and its mortgage to CIBC meant there was no equity left in the property. It stopped paying off the mortgage and the bank foreclosed. Rascal attempted to buy the land during that process, but was not successful. It did, however, assist Nishi, the eventual purchaser, to the tune of $110,679.74 -- the exact amount of the tax arrears. Rascal then tried to get Nishi to grant it an interest in the property, which Nishi refused. Rascal sued, claiming a one-half interest in the property.
In the Supreme Court of Canada, Rascal argued that Canadian law should move away from the traditional doctrine of the purchase-money resulting trust, which arises when a person has made a gratuitous advance of funds but does not take legal title to the property acquired with it, in favour of a more flexible approach based on unjust enrichment and constructive trust as a remedy. The trial judge, having found there was no agreement between Rascal and Nishi to split ownership, concluded that a resulting trust did not arise because Rascal had not actually intended to have an interest in the land; it was merely paying off the tax arrears to satisfy its debt to Kismet. An alternative claim in unjust enrichment also failed: Rascal's contribution was simply intended to place Nishi and Kismet in the same position as if the nuisance and resulting tax arrears had never happened. The BC Court of Appeal reversed: there had been a gratuitous transfer and Rascal had intended it to give him an interest in the property (whatever was in Nishi's mind), giving rise to a resulting trust. Nishi was a stranger to Kismet, so Rascal's obligation to its former landlord did not rebut the presumption of a resulting trust. On further appeal, Nishi struck out. Rothstein J declined to depart from the traditional rules in favour of greater 'remedial flexibility' under principles of unjust enrichment (some people might describe the Canadian law of unjust enrichment in less positive terms). The principles underlying resulting trust do to some extent overlap with those in restitution, but that was no reason to abandon the resulting trust, which has offered certainty and predictability since at least 1788. Justice Rothstein agreed with the trial judge that the presumption that there was a resulting trust had been rebutted on the facts: Rascal's contribution had been made without any conditions attached (including getting a share of the property). Rascal had effectively parted with all beneficial interest in the money it advanced, so there could be no resulting trust over it: Nishi v Rascal Trucking Ltd, 2013 SCC 33.
As Lionel Smith (noted McGill unjust enrichment scholar) has suggested, the Rascal decision could usefully have explored the relationship between resulting and constructive trusts, and perhaps have answered the burning (or at least faintly warm) question why constructive trusts to reverse unjust enrichment are discretionary while resulting trusts that seem to do the same thing are not.