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Trusts - Generally. Corvello v. Colucci
In Corvello v. Colucci (Ont CA, 2022) the Court of Appeal cited the basic test for finding a trust and evidence applicable thereto:[7] It is well established that the creation of a valid trust requires “three essential characteristics” or three certainties: certainty of intention to create a trust; certainty of subject matter; and certainty of objects: Byers v. Foley (1993), 1993 CanLII 5506 (ON SC), 16 O.R. (3d) 641 (Gen. Div.), at para. 13, citing D.M.W. Waters, Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984), at p. 107.
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[11] We disagree that the focus of the trial judge’s inquiry should have been on Arthur’s subjective intentions. Rather, she was required to apply an objective standard to ascertain the certainty of intention not just from Arthur’s own acts, but also from the acts of the other parties: Ontario (Training, Colleges and Universities) v. Two Feathers Forest Products LP, 2013 ONCA 598, 368 D.L.R. (4th) 714, at para. 24. Nor did she misapprehend the evidence. The trial judge was not limited to considering Arthur’s denials, but was entitled to consider the “evidence as a whole” from which she could infer Arthur’s intention and the common intention of the parties to hold the permit in trust for himself and the respondents: Byers, at para. 26. . Canada v. Canada North Group Inc.
In Canada v. Canada North Group Inc. (SCC, 2021) the Supreme Court of Canada distinguishes common law trusts from statutory tax deemed trusts at paras 32-57.
. White v. Gicas
In White v. Gicas (Ont CA, 2014) the Court of Appeal stated as follows respecting the essential elements required for the creation of an intentional trust:[1] Two ingredients combine to create a trust. The first – declaration of a trust – requires three certainties: certainty of intention; certainty of subject-matter; and certainty of objects. The second – constitution of the trust – requires transfer of title to the trust property to the trustee.
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[48] On its face, the Memorandum of Agreement satisfies the three certainties required for a valid declaration of a trust.
[49] As to certainty of intention, the preamble of the document entitled “Constantine Gicas Family Trust” records the prior establishment of the Trust and the agreement of the parties, the settlor and trustees, “to confirm and clarify the terms and conditions of the Trust”. The intention of the settlor to create the Trust, as well of the trustees to administer it, could scarcely be plainer.
[50] Second, the Memorandum of Agreement discloses certainty of subject-matter. The assets of the Trust – shares in various companies – are specifically described in article 1 of the Memorandum. The article expressly permits expansion of the assets to include “any further sums which they [the trustees] shall receive from time to time and any accretions or additions thereto”.
[51] Third, the Memorandum of Agreement satisfies the certainty of objects required as it identifies the objects of the Trust. The primary beneficiaries are Constantine Gicas and anyone who is a child, grandchild or other issue of Constantine Gicas. The secondary beneficiaries are John Gicas, Cynthia Floros and their children, grandchildren or other issue, or a registered charity. That the subject-matter of the Trust does not have to be distributed in equal portions, rather is left to the discretion of the trustees, is of no moment.
[52] Likewise, on its face, the Memorandum of Agreement establishes constitution of the Trust. The trustees acknowledge that they have received and are currently holding as assets of the Trust the assets listed in article 1 of the Memorandum. They also acknowledge that any future sums they receive and any accretions or additions are assets of the Trust and constitute the Trust Fund. . Rubner v. Bistricer
In Rubner v. Bistricer (Ont CA, 2019) the Court of Appeal stated the basics of trust law:(a) Applicable trust principles
[49] There are four requirements for establishing a valid express trust. The relevant parties to the trust must have capacity; there must be certainty of intention to create a trust, certainty of subject-matter, and certainty of objects; the trust must be constituted, meaning the trustees must hold legal title to the trust property; and the required formalities must be met: A.H. Oosterhoff, Robert Chambers & Mitchell McInnes, Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed., (Toronto: Carswell, 2014), at p. 189. The three certainties are reflexive in the sense that, although they are considered one at a time, “consideration of the certainty of subject matter and certainty of objects may inform (reflect back on) the matter of certainty of intention”: Angus v. Port Hope (Municipality), 2017 ONCA 566 (CanLII), 28 E.T.R. (4th) 169, at para. 95, leave to appeal ref’d [2017] S.C.C.A. No. 382.
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i. Certainty of intention and constitution in the context of a self-declared trust
[52] The court must be satisfied that the settlor intended to create a trust, that is, intended that the trustee be required to hold the trust property for the benefit of the beneficiary. A trust will only exist where the trustee is obliged to deal with the property on the beneficiary’s behalf. If the purported trustee is permitted, but not required, to deal with the property for the benefit of the beneficiary, then a trust relationship does not exist: Oosterhoff, at p. 193; Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law Inc., 2014), at p. 42.
[53] Whether certainty of intention to create a trust exists is a question of fact: Elliott, at para. 29. Certainty of intention can be express or implied, can arise from words or acts, and does not require that the settlor use the technical language of trust – there is no “magic” in the word “trust”: Oosterhoff, at 193; Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012) at pp. 141-44; see also Commercial Union Life Assurance Co. of Canada v. John Ingle Insurance Group Inc. (2002), 2002 CanLII 45028 (ON CA), 61 O.R. (3d) 296 (C.A), at paras. 58-63; Belokon v. Kyrgyz Republic, 2016 ONCA 981 (CanLII), 136 O.R. (3d) 39, at para. 49, leave to appeal ref’d [2017] S.C.C.A. Nos. 74, 75 (“[C]ertainty of intention can be established by words or conduct other than explicit trust language, provided the words or conduct convey the requisite intention.”); Elliott, at paras. 26-31.
[54] A settlor need not fully understand the legal concept of trust in order to hold the requisite certainty: Oosterhoff, at p. 193. In Paul v. Constance, [1977] 1. W.L.R. 527 (C.A.), at p. 530, the English Court of Appeal did not require the settlor to have used “stilted lawyers’ language” to find that the settlor intended to create a trust. Scarman L.J., for the court, determined that the court must instead consider what was “said and done by the plaintiff and the deceased during their time together against their own background and in their own circumstances”: p. 530. This echoes Prof. Oosterhoff’s assertion that certainty of intention is a question of construction: Oosterhoff, at p. 193; see also Gillese, at p. 42.
[55] Where the settlor of a trust intends to act as a trustee, no transfer of property is required to constitute the trust: the property is already vested in the trustee. The settlor must identify the property and self-declare a trust over it: Oosterhoff, at p. 245. The trust exists as soon as the declaration occurs, since the settlor/trustee has parted with equitable title to the property in favour of the beneficiary: at p. 255; Waters, at pp. 184-85. It is important to reiterate that equity focuses on substance – the settlor does not have to speak or think in the terms of a trust: Oosterhoff, at p. 257. Where a person intends to transfer the beneficial ownership in some property to another person, they may create a trust “regardless of legal acumen”: Oosterhoff, at p. 257 (citing Paul v. Constance).
[56] A bare trust is generally accepted to be a trust where the trustee holds property without any active duties to perform other than to convey the trust property to the beneficiaries on demand: Waters, at p. 33. The hallmarks of a bare trust are: (1) the beneficiaries must be able to call for the property when they please, and (2) the trustee must not have (or must no longer have) active duties in respect of the trust property: Waters, at p. 34. The duty to guard the property prior to conveyance is considered passive: Waters, at p. 34.
ii. Certainty of subject-matter
[57] A valid trust will feature property that is identifiable: Oosterhoff, at p. 199; Waters, at p. 159; Angus, at para. 112. In addition to the trust property being identifiable, there must also be sufficient certainty respecting the quantum of the trust property to which a beneficiary is entitled: Oosterhoff, at p. 212; Waters, at p. 159.
[58] Any type of property can be the subject-matter of a trust, save for “future property”, that is, property that the settlor does not yet own. However, a right (e.g. contractual) to receive property in the future can be held in trust, as can a vested interest in property that has not yet been possessed by the settlor. The property must be ascertained or ascertainable. The test for certainty of subject-matter applies at the moment that the trust is purportedly created: Oosterhoff, at p. 199-201.
iii. Certainty of objects
[59] Finally, the certainty of objects requirement provides that the beneficiaries of the trust must be sufficiently described to allow for trust performance: Oosterhoff, at p. 216; Waters, at pp. 167-68. . Firepower Debt GP Inc. v. TheRedPin, Inc.
In Firepower Debt GP Inc. v. TheRedPin, Inc. (Ont CA, 2019) the Court of Appeal accepted these comments on the trust requirement of 'certainty of intention':[11] The appellants do not dispute the legal test the motion judge articulated at paras. 15-16 of his reasons:Certainty of intent requires that it be clear that the donor or settlor intended to create a trust; i.e., that the settlor intended for the property in question to be held for the benefit of another. No formal document evidencing the creation of a trust is required. Nor is it necessary that the settler use any specific language - even the use of the word “trust” is not necessarily dispositive one way or the other. The question is one of substance - did the settlor evidence an intention that the property be held by one person for another person’s benefit? This intention may be express or implied and may be determined from words or acts.
Where a trust is to be implied, however, effect must be given to inferences as to the intention of the parties which a reasonable person would draw from the words or conduct of the parties and not to any subjective or other intention which was not made manifest at the time. Certainty of intention cannot solely derive from a “moral obligation as to what is to be done with the property,” Bank of Nova Scotia v. Atcon Group Inc. 2012 NBCA 57 (CanLII), at para. 18 and Waters’ Law of Trusts in Canada (4th ed.) at para. 5.1.
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