A. Reasons for a Trust 8

1

Introduction 8

A. Reasons for a Trust 8

B. Definition of Trust 8

Nature of Equitable Interests 8

A. Definition of equitable interests 8

B. How equitable interests arise 9

C. Nature of Equitable Interests 9

D. Competing Legal and Equitable Interests 9

E. Summary 9

Completion of Trusts 9

A. The Concept of Vesting and Formalities for Transfer 10

Milroy v Lord (1882) - Strict Requirements for Transfer of Trust Property → everything must be done 10

Re Rose (1952) E.CA - Once Settlor has done everything necessary, the transfer is complete / the trust is constituted 10

Glynn v Commissioner of Taxation (1964) Aust. HCt. 11

Carson v Wilson (1960) Ont. CA - Testamentary dispositions are not valid trusts 11

Strong v Bird (1874) Eng. - Gift can be perfected on death if giftee becomes legal owner 11

Express Trust 11

A. Definition and Elements of an Express Trust 11

B. Origins of the Trust 12

C. The Three Certainties 12

D. Certainty of Subject Matter 12

B. Certainty of Words 12

Hayman v Nicholl (1944) SCC - must be clear intent 13

B. Certainty of Objects → beneficiary 13

Types of Naming 13

Trusts and Powers Distinguished 13

Is it a discretionary trust? or is it a power? 14

Classifications of Power 14

Nature of Power & Contrast with a Discretionary Trust 14

Why use a power ? 14

McPhail v. Doulton (Re Baden 1) – test of validity for mere power and trust power can be assimilated as "is/not" 15

Baden 2 (part 1) 15

Baden 2 (part 2) 15

Re Manisty 15

Re Hay’s Settlement 16

IRC v Broadway Cottages Trust - list certainty trust applies to bare and fixed trusts 16

Conceptual Uncertainty and Evidential Uncertainty in Fixed Trusts 16

Test for certainty of objects for Discretionary Trusts 16

Test of certainty of objects for a trust power / discretionary trust 16

Effect of conceptual uncertainty 16

Effect of evidential uncertainty 17

Effect of administratively unworkable 17

The approach to ascertaining a power or a discretionary trust 17

Formalities for Transfer of Equitable Interest 17

Wills 17

A. Fully Secret Trust 18

Requirements of FSTs 18

Ottaway v Norman (1972) - elements of FST 18

Re Boyes (1884) - can’t use indefinite trust as unattested codicil 18

B. Half Secret Trust 18

Requirements of HSTs 18

Blackwell v Blackwell (1929) - can’t use secret trust as a way to circumvent Wills Act 19

In re Keen (1937) - parol evidence can be used 19

B. Reasons for Enforcing Secret Trusts 19

In re Rees (1950) - intention, lawyer’s involvement 19

B. Rectification of a Will - Effect on Secret Trusts 19

C. Vesting in Secret Trusts - Re Gardner 19

Re Gardner - time of vesting of the beneficial interests 20

Revocation by Settlor of the Express Trust 20

Bill v Cuerton (1835) - settlor can’t revoke trust unless trust allows for it 20

Resulting Trusts 20

Automatic RTs 20

Presumed Intention RTs 20

A. Automatic Resulting Trusts 20

Transfer of legal title to Ts in a trust turns out to be void 21

Transfer of legal title to T without disposing fully of all the equitable interest 21

Re West (1900) - Ts do not get beneficial interest unless granted 21

Schmidt v Air Products Canada (1994) 21

Transfer of property to another subject to a specific limitation or condition precedent which ha not occurred or been achieved 21

Barclays Bank Ltd v Quistclost (1970) 22

Surplus of funds after trust purpose has been achieved 22

Re Gillingham Bus Disaster Fund (1958) 22

Re West Sussex Constabulary Fund (1971) 22

Re Bucks Constabulary Fund No. 2 (1979) 22

Re British Red Cross Balkan Fund (1914) 22

B. Presumed Intention Resulting Trusts (PIRT) 23

Scope of Evidence in Rebutting the Presumptions 23

Evidential matters 23

Onus of rebuttable presumption 23

Joint Bank Accounts 23

Standing v Bowring (1885) - normally a PRT but specific facts here make it a gift (evidential issue) 23

Niles v Lake (1947) - joint bank account does not rebut PIRT (joint bank account) 23

Russell v Scott (1936) - look at true intention, future interests vest now, legal interests vest later 24

Young v Sealey (1949) - skepticism with notion of no Wills Act Violation 24

B. Presumption of Advancement 24

Shepherd v Shepherd (1954) - intention at time, father to child transfer 24

Mehta Estate v Mehta Estate (1993)Man. CA court looks at traditional vs. contemporary lifestyles, husband to wife 24

Joint Bank Accounts 25

Warm v Warm (1969) - small amount = presumption of advancement, large amount = PIRT 25

Spouses, Parents, Children 25

B. PIRT/PA and Illegality 25

David v Szoke (1973) BCSC - PIRT, no illegal purpose, no PA 25

Gorog v Kriss (1977) Ont. CA - PIRT, DEF cannot bring up illegal purpose 25

Tinsley v Milligan (1994) HL - PIRT, can still recover if can be proved without evidencing illegality 26

Foster v Foster (1978) BCSC - PA, can’t use illegal purpose to rebut presumption 26

Goodfriend v Goodfriend (1972) SCC - PIRT, no illegal purpose, PA rebutted because it was wife’s idea 26

Nelson v Nelson (1995) Aust. HC 26

B. Common Intention 26

Pettkus v Becker (1980) SCC 27

The Beneficiary 27

A. Nature of Interest 27

General Nature of Property Interests 27

Legal title and trusts 27

Beneficial Title 27

Nature of Beneficial Title 28

Schalit v Nadler (1933) KB 28

Baker v Archer-Shee (1927) HL 28

In Re Bagot’s Settlement (1894) Ch.D 28

Nature and Scope of the Beneficial Title - Summary 29

B. Transfers of the Equitable Title to the B - Formalities under the Law and Equity Act 29

s 36 Law and Equity Act 29

Romer LJ - Timpson’s Executors v Yerbury (1936) KB 29

B. Priority Among Assignees 30

In re Wasdale (1899) Ch.D - priorities between assignees 30

B. Restraints on Alienation 30

C. Termination of the Trust 30

Saunder v Vautier (1841) 30

Rule in Saunders v Vautier 30

Re Lysiak (1975) 31

Re Smith (trustee) v Aspinall (1928) Ch.D 31

Re Chodak (1975) Ont. HC 31

Lloyds Bank v Duker (1987) Ch.D 31

B. Variations of Trusts 32

Trust and Settlement Variation Act 32

Re Burns (1970) BCSC - tax avoidance is a valid reason to vary a trust 32

Re Westin - contrasted with Re Burns, must look at more than financial benefits 33

Re Remnant’s Settlement Trusts (1970) - family harmony is a valid reason to vary a trust 33

Re Harris (1974) - if variation will grant benefit to one B but will reduce the benefit to another, not valid 33

Re Steed’s Will Trust (1960) - trust won’t be varied if it is contrary to Settlor’s intention 33

Russ v Public Trustee (1994) BCCA - court to be “prudent advisor” 33

Bentall Corp v Canada Trust Co (1996) BCSC - good bargain test 33

The Trustee 34

A. Appointment of New Trustees 34

Appointment of New Trustees by Others and Vesting 34

Vesting of Assets in New Trustees 34

Appointment of New Trustees by the Court 34

In re Tempest (1866) Ch. - guiding principles for appointment of new T by court 35

Appointment of Trustees- Other Matters 35

Retirement of Trustees 35

B. Removal of Trustees 35

Conroy v Stokes (1952) BCCA - removal requires endangerment of trust property 35

Re Consiglio Trusts (1973) Ont. CA - misconduct not a prerequisite 36

B. Trustees Rights, Responsibilities and Powers 36

C. Trustees Duties and Powers 36

Trustees’ Duties 36

The Duty of Investment 36

Speight v Gaunt (1883) 36

Duty of Investment - s 15.1 37

Duty of Investment - Standard of Care 37

Fales v Canada Permanent Trust (1974) SCC 37

s 96 37

Duty of Investment Summary 38

Cowan v Scargill (1985) - moral concerns are generally not valid reason not to invest 38

B. Ousting Court Jurisdiction 38

In Re Wynn (1952) Ch - can’t oust the jurisdiction of the court 38

Re Tuck’s Settlement (1978) CA 38

In Boe v Alexander (1987) BCCA - possible to put a lot of decisions into the hand of Ts, but there are limits 39

F. Exculpatory Clauses 39

In Re Poche (1984) Alta. QB 39

B. Delegation 39

Speight v Gaunt (1893) HL - T won’t be liable if delegate power to approved person 39

Re Wilson (1977) Ont. CA - power to delegate is limited 40

B. Duty of Loyalty 40

No Conflict Rule - General Principles 40

Keech v Sandford (1726) 40

Boardman v Phibbs (1967) 40

Peso Silver Mines Ltd v Cropper (1966) SCC 41

Canadian Aero Services (Canaero) v O’Malley (1974) 41

No Conflict Rule - Purchase of Trust Property 42

Molchan v Omega Oil & Gas Ltd (1988) SCC 42

The Self Dealing Rule 42

Holder v Holder (1968) Ch 42

Purchase of the Beneficial Interest - Fair Dealing Rule 42

Crighton v Roman (1960) SCC 42

B. Duty to Be Impartial 43

Asset Types 43

General Mechanisms 43

Rule in Howe v Dartmouth 43

Wasting Assets & Reversionary Interests 43

Apportionment 44

Apportionment for period Pending Sale 44

Apportionment under Earl of Chesterfield 44

Duty of Impartiality and Apportionment under Express Trusts 44

Lottman v Stanford (1980) SCC 44

In Re Oliver (1908) CH 45

Re Lauer and Stekl (1974) BCCA 45

Duty of Impartiality for Express Trusts for Sale with Power to Postpone or Retain 45

Royal Trust v Crawford (1955) SCC 45

In Re Smith - express powers to sell and retain 46

Impartiality in the case of Settled Shares in a Company 46

Waters v Toronto General Trust Co (1956) SCC 46

Re Welsh (1980) Ont. HC 47

Duty of Impartiality in the case of Disbursements 47

Allhusen v Whittel (1867) 47

Duty of Impartiality with respect to investments 47

Nestle v National Westminster Bank (1993) CA 47

Cowan v Scargill (1985) Ch - need for diversified portfolio 48

Trustees Duty of Impartiality with respect to information 48

Re Londonderry’s Settlements (1965) Ch 48

Duty of Impartiality with respect to accounting 48

Sanford v Porter (1889) Ont. CA 48

Control of Trustees by Beneficiaries and the Court 48

A. Control of Ts by Bs 49

In re Brockbank (1948) - B’s control of discretionary power 49

Butt v Kelsen (1952) CA 49

B. Control of Ts by the Court 49

In re Wright (1976) Ont. HC 49

In Re Lohn (1991) BCSC 50

In Re Blow (1977) Ont. HC 50

In Re Billes (1983) Ont. HC 50

Schipper v Guaranty Trust Co of Canada (1989) Ont. CA 51

In Re Fleming (1973) Ont. HC - court affirmed the principles of not relieving Ts from duty to exercise discretion 51

B. Indemnity of a T 51

Re Reind v Yorkshire and Canadian Trust (1970) BCCA 51

Stingman v Dubois (1993) Alta. CA 52

B. Remuneration of Trustee 52

Re Sproule (1979) Alta. CA - guidelines to help set remuneration 52

Re Pedlar (1852) BCSC 52

Fiduciary Relationship and the Institutional and Constructive Trust 52

Pettkus v Becker 53

A. The Institutional / Discrete / Substantive CT 53

What is an “unjust enrichment”? 53

Substantive or Institutional CT 53

B. Constructive Trust - The basis as Remedy 54

C. CT - Fiduciary Relationship 54

Who is a fiduciary? 54

Frame v Smith (1987) SCC 54

The Fiduciary Relationship 54

Guerin v The Queen (1984) SCC 54

Lac Minerals 55

Hodgkinson v Simms 56

M v M 57

B. Conclusion 57

Charitable Trusts 57

Registered Charity - Income Tax Act 58

Law and Equity Act 58

A. Benefits of Charitable Status 58

B. Cy-pres Doctrine 58

B. General Principles 59

Dingle v Turner (1972) HL 59

Re Coulthurst’s Will Trust (1951) Eng. CA - relief of poverty 59

IRC v Baddely - dissenting 59

Thornton v Howe (1862) MR - advancement of religion 59

In Re Southplace Ethical Society 59

Oppenheim v Tobacco Securities Trust (1951) HL 59

In Re Pinion (1965) Eng CA. - advancement of education 60

McGarth v Coen - advancement of education 60

Re Hopkin’s Will Trusts (1965) 60

National Antivivisection Society v. I.R.C. (1948) HL – changing laws doesn't fall under "benefit to community" 60

Everywoman’s Health Clinic v MNR (1992) 60

B. Reverters, Gift-overs & Cy-pres 60

Native Communications Society of BC v MNR (1986) 60

Non-Charitable Trusts 60

Failure of Purpose Trust 61

Enforceability 61

Re Denley’s Trust Deed (1968) 61

Execution 61

Excessive delegation of testamentary power 61

Infringement of the perpetuities rule 61

Quistclose Trust 62

Re Westar Mining Ltd (2001) BCJ 62

Del Grande v McCleery (2000) 62

Ernst & Young v Central Guaranty Trust Co (2004) 62

Keewatin Tribal Council v Thompson 62

Re Astor’s Settlement Trust 63

B. Exceptional Cases 63

In Re Endacott (1960) 63

C. Mixed or Imperfect Trusts 63

Rule of Against Perpetuities 63

A. Perpetuities Act 63

B. Condition Precedent 64

C. Condition Subsequent 64

D. Initial Vesting 64

Jewish Home for the Aged v. Toronto General Trusts Corp (1961) SCC 64

Unincorporated Associations 64