TRUSTS MAP

Maxims of Equity
A trust will never fail for want of a trustee.
Equity is concerned with substance, not form.
Equity will not perfect an imperfect gift.
Equity will not assist a volunteer.
Equity assumes bargains, not gifts.
Modern Forms of the Trust
Pension Trusts
Trustee invests shares, typically as custodian employing a professional
Inter vivos trust
Employer and employee pay contributions to the trustee for the use of
retiring employees
Investment Trusts
Mutual Funds

Small investors pay to a trustee (professional fund manager)

Trusts dont have shares, so you buy units

Public Offerings

Before a bond issue is made, company appoints trustee to hold its

security interest in real property on behalf of the bondholders
o Thus someone will monitor the company and enforce the
security in the event of default

Asset Securitization

Special Purchase Vehicles Public gives money to trustee, who holds it

for their use. Trustee then purchases the receivables expected by the
SPV. SPV runs off with the discounted funds, trustee remains to hold
the receivables on trust for the public as they come in. (CDO crisis
suggests this is not the best idea.)

Income Trusts

Whoever holds the income trustee or beneficiary is taxed. This is in

contrast to corporations, which are taxed at two levels.

Types of Trust
Express trusts: Testator declares intent to have property held on trust
Trusts for persons (private trusts)
Trusts for purposes (public trust)
o Charitable purpose trust
o Non-charitable purpose trust
Executed (fixed) trusts (settlor sets out beneficial interests)
Executory trusts (mere power, power of appointment)
(trustee to determine disposition as between beneficiaries)
Completely constituted trusts (property properly transferred to and
vested in trustees)
Incompletely constituted trusts (property not properly transferred
to and vested in trustees)
Revocable trusts (must be inter vivos, obviously)
Implied trusts
Largely a misnomer
o Expressions failing to use the exact words to create a trust still
give rise to an express trust
o Precatory language does not give rise to a trust
Statutory trusts
As when, in the Estates Administration Act, the decedents personal
representative is trustee over his property for the purposes of
disposal
Deemed trusts
Imposed by legislation to ensure employers do not avoid revenue and
social obligations
o Tax, vacation pay, WSIB premiums, etc.: funds are withheld from
employees on trust for the government
Bare trusts
A bare trustee holds property with no subjective decision-making
powers
Trust inter vivos: while living
Requirements in the Statute of Frauds
Trust post mortem: after death
Wills must be signed and witnessed by people all in the same room at
the same time, per the Succession Law Reform Act.
Takes effect after death
o Thus, codicils do not revoke a trust; it hasnt yet taken effect

Trusts Arising by Operation of Law

Resulting trust: trust read in to return beneficial interest to the

person who gave it, from someone that has legal title to it (trustee)
o Established when:
Express trust fails in whole or part
The law abhors a vacuum in ownership, and the
trustee was not intended to have a beneficial
interest: Oosterhoff
Often useful as land cannot be given back
without a conveyance per Statute of Frauds
Presumed resulting trust
Inter vivos transactions given without consideration
lead to the presumption that the transferor did not
intend to give it, but to retain it
o Voluntary transfer: giving ones property
to another
o Purchase money resulting trust:
buying something but directing that it should
be transferred to a third party without
consideration
o Rebutted by presumption of
advancement: husband <---> wife, parent
---> child
Constructive trust
o Usually arise from fiduciary relationships, but not necessary
o Reverses unjust enrichment

Trusts and Other Relationships

Agent v. Trustee
Agents
Agents power is contractual or based on power of attorney or office
(e.g., corporate director) vis--vis the principal
Principal can revoke agents power at any time (unless irrevocable
power of attorney).
Agency is a personal relationship that ends when one party loses life or
legal capacity.
Agents can move property from the principal to a third party
Must obey principal: Scott, The Law of Trusts, cited in Trident Holdings
Ltd. v. Danand Investments Ltd. (1988 ONCA)
Trustees
Trustees take their power from the trust, not the cestui que trust
o (Not necessarily from settlor either, can be by law)
Personal status does not affect a trustees power
o Death doesnt necessarily affect the trust
o Often legal incapacity is the reason for the trust

Trustee is legal owner of the property

Must obey terms of the trust: Scott, The Law of Trusts, cited in Trident
Holdings Ltd. v. Danand Investments Ltd. (1988 ONCA)

ONE PERSON CAN BE BOTH AGENT AND TRUSTEE FOR THE SAME PRINCIPAL
Often easier to do so: trustees establish a holding corporation and
act as agents of that corporation (directors). Much easier to divest
oneself of 30% of a corporation than of being trustee of 900
investments
IF (S)HE IS VESTED WITH THE TITLE TO THE PRINCIPALS
PROPERTY, (S)HE IS BOTH TRUSTEE AND AGENT
Where there is sufficient power of control over the trustees so
there is an agency relationship and not merely a trust, the
beneficiaries are liable as partners: Scott, The Law of Trusts, cited
in Trident Holdings Ltd. v. Danand Investments Ltd. (1988 ONCA)
BOTH HAVE FIDUCIARY DUTIES
Agents: Soulos v. Korkontzilas
Agents are not party to the transaction, but trustees are: Lloyd v.
Grace Smith & Co.
And beneficiaries are not liable for the actions of the trustees
(e.g. tort): Trident Holdings Ltd. v. Danand Investments Ltd. (1988
ONCA)
o Being both imposes both sets of responsibilities for both parties:
Scott, The Law of Trusts, cited in Trident Holdings Ltd. v. Danand
Investments Ltd. (1988 ]ONCA)
If a trustee with no decision-making powers (bare trustee) makes decisions
on behalf of the beneficiaries, it is likely that he is acting as agent
otherwise, what legal basis can there be for the decision? Trident Holdings
Ltd. v. Danand Investments Ltd. (1988 ONCA)
Thus beneficiaries can be held liable for the actions of their
trustees if there is an agency relationship also
o As a result, the Trust Beneficiaries Liability Act was passed;
trustholders in an income / real estate investment trust got
shareholder protection
But since the defendants in Danand were liable as
principals, not as beneficiaries, this is empty protection
Agents exceeding their authority cannot bind principals unless the
other party relies on their ostensible authority; trustees have legal
title to the trust property and can transfer that property,
extinguishing the beneficiaries equitable interest in that
property, despite doing so in breach of trust (though they can be
called to account or sued for conversion)
Trust v. Contract
Consent matters to contract, but not to trust.

Settlors need not be parties to the trust, and beneficiaries need not
even know they are beneficiaries

Contracts require consideration; trusts can be gratuitous

Trusts require property; contracts do not
Contract and trust often overlap
Specifically enforceable sale of land can give rise to a constructive
trust for the purchaser
Quistclose trusts can result from contracting for a loan of money to
be used for a specific purpose
Contractual rights can be held in trust: Mann v. Beaudoin (didnt
read)
o E.g. nascent life insurance benefits held in trust for others
o Performance of a contract can be held in trust as well: one
argument in Re Schebsman deceased held companys
performance of payment to widow and daughter on trust for
widow and daughter; another was company gave performance
to deceased on trust for widow and daughter but that would
require company intending trust as settlor
Courts are not willing to read trusts into contracts if there is no indication that
such was the intention of the parties: Re Schebsman
Breaching contract isnt a way out of a trust; powers of revocation need
to be clearly reserved and excercised: Du Parcq L.J. in Re Schebsman
If you want to make an overlapping contract/trust solid, make everyone a
party
Trust v. Debt
A debt is a personally-enforceable right in personam
in the event of bankruptcy it is reduced to a claim amongst creditors
Does not relate to particular assets (unless secured)
Trust property can often form the substance of debt
e.g. solicitors trust account for his client
and debt can form the substance of trust
e.g. a mortgage held in trust for ones principal
e.g. Quistclose trusts
Both can be created by consent or by operation of law
Trusts often preferable because the debtor gains a proprietary
interest in the property he is owed

Tricky part: does a third party collect a debt as agent (owes his principal
a debt) or as trustee (holds the property on behalf of the creditor on trust
until accounted for)?
If the agreement ever says on trust, its a trust relationship and all
incidents apply and are assumed no need to spell out specific
obligations: Air Canada v. M&L Travel Ltd.
If the trustee/debtor has free use of the funds prior to turning it over, it
gives rise to a presumption of debt: M.A. Hanna Co. v. Provincial Bank of
Canada
If bound to keep the money separate, you are a trustee: Henry v.
Hammond, Gore Bank v. Hodge, Bickle v. Matthewson
Debtors owe the money, whereas trustees can plead loss of it through
no lack of care (theft, etc.): Ontario Hydro-Electric Power Commission v.
Brown
Trust v. Bailment
Superficially similar B holds goods to return to A, but:
1) Trust relationship is fiduciary
2) Only goods and documents can be bailed, whereas promises and
land can be held on trust
3) Both bailor and bailee have some form of property rights to
the bailed chattel, whereas the beneficiary has only equitable title in
the trust property and settlor may have nothing remaining
4) Bailee receives only possession, where trustee acquires legal title
(though equitable rights and possession can also be held in trust)
5) If mere possession passes, it is bailment. If title, a trust.
Unless title is a mere incident of possession (e.g., title
transferred just so the bailee can collect dividends as well and
hold on to those too): Elgin Loan and Savings Co. v. National
Trust Co.
i. Might be the case that this only works if the alleged trust
appears to be a bare one
ii. Court held there was no cestui que trust unless it reads in
the loan company itself as its own beneficiary
6) Bailees responsible only for gross negligence, whereas trustees
are responsible for not taking due care.
7) Bailees can transfer authority; trustees are restricted to delegatus
non potest delegare: Wills v. Brown (didnt read)
Remember: if settlor makes himself beneficiary, he can revoke the trust
thus even if it is a trust it can work largely like a bailment with additional
fiduciary responsibilities (Elgin Loan and Savings Co. v. National Trust Co.)
Unless the trustee has mere power, in which case the beneficiary
even if its the settlor cant tell him what to do
If the bailee/trustee wont give it back, you can try suit in detinue or
conversion

Trusts v. Conditional Gifts

Gifts are typically transfers of title to the beneficiary, who is free to deal
with the asset as she pleases
A gift is of a right thus a survivorship in a joint bank account can
constitute a gift even though the donor still has an interest in that
property: Rothstein J. in Pecore v. Pecore
Trusts transfer the benefit of the property to the beneficiary and title to
the trustee, and the beneficiary can enjoy the property only within the
terms of the trust
But when trust assets are transferred to the beneficiaries, they are
received free of the trust just like ordinary gifts
Courts do their best to read conditions as giving effect to the intention of the
donor, but also to construe it as an absolute gift wherever possible.
Gifts are personal and are subject to bankruptcy conditions that trusts
avoid
Is it a gift or a trust?
Is the trustee/recipient able to benefit the necessary people with any
resources he/she likes, or must he/she benefit them with the given
property?
If there must be benefit given, and it must come from this property, its
probably a trust.
o Not the surest guide, though; courts may construe gifts as
trusts to prevent them from failing
Conditional gifts will fail for failure to fulfil
condition, but trusts survive
Remember if its a gift and the donee/trustee becomes insolvent, the
gift goes to the creditors but a trust stays intact
If the gift property must be subsequently divided by the
recipient for the benefit of others, it is presumptively a trust: Re
Frame
o Court there read on condition that as effectively on trust for
the benefit of
o Because if it was merely a condition, then that trustee/recipient
would stand to gain from non-performance (and if that
trustee/recipient was the settlors heir, then failing the condition
would cause the gift to return to him as estate, scot-free):
Stephens Commentaries, 9th ed.
What does the language say?
o Absolutely to my sister on trust to pay my widow an annuity,
widow dies, does the surplus result? No: Re Foord
Interpretive points:

my sister suggests familiarity and positive

connotation
absolutely suggests a gift rather than a trust,
especially when used in a non-technical way by a
non-lawyer: permits loose interpretation
non-income producing assets in the bequest,
suggesting it was not all to be on trust for the
widow, to whom only an annuity (pure cash) was
enunciated
The court must use common sense, giving the words their
ordinary meaning in an attempt to achieve, from the wording of
the will, the result that the testator intended. When the
testators intention cannot be ascertained from the plain
meaning of the words used in the will, the court can sit in the
testators armchair, assume the knowledge she had of the
extent of her assets, the size and makeup of her family and her
relationship to its members, so far as such things can be
ascertained by the evidence, and in this way, determine and
give effect to the testators intention. Mladen Estate v.
McGuire
If the testator seems to know how to make a trust in his will,
then it will be assumed that if he does not do so it is because he
chooses not to do so: Re Oliver

Trust v. Charge / Security Interest

Equitable charges are security interests that are neither possessory
nor titular; it is a power to get a court to appoint a receiver to sell land with
a charge on it in order to get ones share
Mortgages are similar to trusts as they are held for the benefit of the
bank, but there is no duty imposed on the mortgagee apart from not causing
unnecessary harm to the mortgagors.
Equitable charges or liens are also similar, but although the
beneficiary/creditor can secure payment of the debt, (s)he does not have
beneficial ownership of the trust assets.
Charges Attached to Conditional Gifts
When there is a gift subject to the condition that the donee pays
money to a third party, it is bound to be one of the following scenarios:
(1) Personal obligation to make the payment if donee intends to accept
and retain the gift
(2) Obligation to pay is secured by a charge on the gift
(3) Holds the gift in trust for the third person
If the gift is subject to a charge, we must ask if the obligation to pay is
limited to the value of the gift.

If so, there could be a charge without personal obligation you only

have to pay out of the gift, and are not responsible for shortfalls

Main difference between the two is that beneficiaries interests involve

beneficial ownership
Trust involves risk of loss and chance of gain, since the property is
yours
Gift involves the beneficiary owing that amount regardless of
the property value
o Unless the amount is tied to the value of the gift
Also charge debtors can pay the benefit over with any funds; trustees
must keep trust values separate
Look at the language used: does the testator know how to create a trust? If
so, does he do so here? If he devises land to someone with legacies charged
on thus: he also paying thereout the following legacies, we assume he
meant charged, especially as he creates trusts properly
elsewhere: Re Oliver
Trusts v. Powers
A trustee who fails to perform trust duties can be compelled to do so or
replaced.
When powers are granted to trustees, courts cannot compel them to
exercise them in a certain way, but they can be compelled to consider
whether to exercise their powers and they must do so only for purposes
proper to the trust.
Powers
Administrative: power to manage trust assets (invest, insure, lease,
mortgage, repair)
Preserve or enhance the value of the trust
Dispositive: disposing of trust assets (as above, or to beneficiaries)
Distribute assets for the benefit of trust objects
Trustees have power to convey title
They can be held to account for improper uses, but that conveyance
cant be taken back. They have this power even when in breach of
trust
o Unlike agents, whose principals will not be bound by their
exceeding of authority unless there is a reliance interest on the
part of the other party
Transfer of title = extinguishing of beneficiaries equitable
interest in the transferred property
Power of Appointment

Power of appointment need not be a trust; one can give his wife power of
appointment to distribute his remaining assets among his children without a
trust being involved
Donor: grantor of power of appointment
Donee: recipient of power of appointment
Objects: persons to be benefited by the grant of power
Appointor: grantor of assets to appointees
Appointees: recipient of assets from donee of power
This power can be held either with or without fiduciary obligation
can impose fiduciary obligation without creating trust: Penner,
The Law of Trusts at 55.
If held with fiduciary obligation, the power cannot be ignored; the
donee must decide whether or not to exercise his/her power
o Fiduciaries cannot release themselves of the obligation
without express authorization
o Power is then held virtute officii and will not be extinguished if
the donee predeceases the testator (assuming in this case a
testamentary power)
Three kinds of appointment powers:
General: appoint to anyone you want
Specific: particular class of objects
Hybrid: anyone except a particular class of objects
Any exercise in favour of non-objects is void
called a fraud on a power, although it is not properly fraud; may
be innocent mistake: Vatcher v. Paul
Power of Appointment v. Discretionary Trust or Fixed Trust
Consider always that any of these might be construed as an outright gift
Terminology used in the trust instrument is not determinative
Is it a fixed trust, discretionary trust or a power of appointment?
Must the trustees distribute the assets, or do they merely have the
option?
o No duty to distribute? Then power, not trust
o Restricting the appointment power does not change the
fact that it is a mere power. (e.g., power to distribute to my
wife = power of appointment, not a discretionary trust, as there
is no duty to distribute)
A fixed trust dictates the proportions in which the property must be
distributed
A gift over in default of appointment strongly implies power of
appointment/ it cannot be a discretionary trust: Re Llewellyns
Settlement / Re Weekes Settlement

o
o

Note that neither successive interests (to A for life,

remainder to B) nor residuary clauses constitute gifts over
In the absence of a gift over, very hard to tell apart discretionary
trusts and powers of appointment especially when power
vested in a trustee
When there appears a general intention in favour of
a class and a particular intention in favour of
individuals in a class to be selected by another
person, and the particular intention fails, from that
selection not being made, the Court will carry into effect
the general intention Burrough v. Philcox
When there is a failed specific power of
appointment, the court reads in a discretionary
trust so that the intended class of beneficiaries
need not suffer due to the donees negligence
BUT where there is power to dispose of all such
property by will amongst the children, and that
power is not exercised, there is no trust: Re
Weekes Settlement (Ch. 1897)
And where there is power to devise, bequeath and
appoint all my estate among my three sisters, A, B,
and C, and my niece D in such amounts and in such
manner, there is a trust: Re Lloyd (Ont. H.C. 1938)
Duggan: If in the latter case a discretionary trust
had not been found, the property would have
wound up in part going to the large class of persons
the testator sought to exclude
In my opinion, the latter is a discretionary trust
because there is no language to the effect that
there shall be no bequest to any one of the class.
In the former, there is language to the effect that
power exists to dispose of the property, full stop. In
the latter, the term power seems to be the least
important part of the sentence there is an intent
to distribute amongst this class, and the power to
do so is vested in the husband. In the former, the
construction of the sentence suggests the power to
dispose of property, with the children being the
beneficiaries should he decide to do so.

Failure to Exercise Power

Failure to exercise power not a breach of trust; failure to consider
exercise of power, or to not exercise for an improper purpose is
Goes for anyone with fiduciary obligations in the power of
appointment; non-fiduciaries can ignore the power or even divest
themselves of it at will

Beneficiaries of a discretionary trust collectively hold equitable

interest in the trust property and thus have the right to insist the trustee
consider whether to distribute
Can collectively if all sui juris join together to terminate the trust
and take the assets
But beneficiaries of a (mere) power have no such standing, as they
have no equitable interest in the property
o Until the power is exercised, whoever has the equitable title will
take the property in default of an appointment but as long as
the power persists, equitable titleholders have no power to
take the assets without the objects consent
Failure to consider in a trust with power of appointment
Duties of a trustee with power of appointment Turner v. Turner (1984 Ch.)
(1) Obey the trust instrument
(2) Consider periodically whether or not to exercise the power
(3) Consider the range of objects of that power
(4) Consider the appropriateness of individual appointments
Failing to consider is a breach of fiduciary duty, and the sub-settlements
(amongst objects) can be set aside as void: Turner v. Turner
Trustees must do more than think something is a good idea; they
must appreciate the breadth of their discretion. INDEPENDENT
JUDGMENT duty
See more under DUTIES OF A TRUSTEE
Express Trusts
*** ALL THREE CERTAINTY REQUIREMENTS MUST BE VALID ***
39 Halisbury (3rd ed.) pp. 973-5 paras. 1474-5: The only principle of
construction that applies to all wills and overrides every other rule is that the
intention of the testator, taken from the whole will and alongside all
admissible evidence, determines the meaning of the will and [1475]
substance prevails over form.
Before a provision can be found to be sufficiently uncertain to defeat the
intention of the testator, the threshold should be a high one: Noik v.
Noik (Ont CA 2004)
It suffices that an agreement stipulate that something is to be held on trust;
that statement implies all obligations (e.g. keeping funds in a separate
account): Air Canada v. M&L Travel Ltd.
Provided that statement includes the three characteristics of the trust
(intent, subject-matter, object)

The word trust creates a strong presumption that the

relationship is one of trust: Qantas (1988), 13 N.S.W.L.R. 331 (Aus.
C.A.?)
o But there is also no magic in the word trust: Kinloch v.
Secretary of State for India
Though the court that cites that case goes on to say
that the word is not used in the agreement, which
suggests there is no trust (i.e., treating it magically):
Elgin Loan and Savings Co. v. National Trust Co.

THREE MANDATORY CERTAINTIES (Canadian Pacific Air Lines Ltd. v.

Canadian Imperial Bank of Commerce):
(1) Certainty of intention
a. Though if the settlor enters into arrangements that have the
effect of creating a trust, it is not necessary that he should
appreciate that they do so: Twinsectra Ltd. v. Yardley
(2) Certainty of subject-matter
(3) Certainty of object
Note that the testators use of proper language elsewhere in his will
weighs against the construction of ambiguous phrases to found a trust: Re
Oliver, Hayman v. Nicholl, Palmer v. Simmonds
Certainty of Intention
If the settlor enters into arrangements that have the effect of creating a trust,
it is not necessary that he should appreciate that they do so: Twinsectra
Ltd. v. Yardley
Precatory language: courts will not read down an absolute gift to a life
estate due to precatory language; one must enunciate a duty: Johnson v.
Farney (dear wife, wish youd split among our families equally but says all
her property (which he cant control) and duty imposed only if she died
intestate)
Authority comes from Bank of Montreal v. Bowers
If a testator knows how to establish a trust and does not do so in a
certain bequest, it is to be assumed that testator did not intend a trust:
Hayman v. Nicoll
A testator can create a trust for undisclosed purposes that are disclosed
to and acquiesced to by the trustee and parol evidence is admissible to
that effect: Blackwell v. Blackwell
But the fact of a trust must be otherwise clear
o Failed on this point in Hayman v. Nicoll (SCC 1944): no good
evidence that the trustee acquiesced to the trust, nor that
there was a trust established in the relevant codicil; it merely
said in full confidence that she will dispose of the same in
accordance with the wishes which I have expressed to her

Equal majority in Hayman thought only the disclosure, not the

acquiescence, was necessary (note that Rand and Tascherau JJ.
took this side; Duff C.J. and Kerwin J. the former)
If on the face of the will the legal interest is in the
legatee, then you can show that an oral agreement was
made by which the legatee undertook an absolute
obligation to carry out the wishes
If not, the beneficial interest is deemed not distributed
and the trust results.
In secret trusts, you will always have the problem of
enforcement; how will beneficiaries or those who would oppose the
beneficiaries prove or disprove the performance of the trustees duty?
(Rand J. in Hayman v. Nicoll)
o

Certainty of Subject-Matter
Uncertainty can void a trust outright
Although the trust was clear, the lack of clarity in the resulting
conditions voided the trust in Palmer v. Simmonds
If the trust is for a purpose and the purpose has lapsed, it is void: Re
Beardmore
Will clearly intended husband to predecease wife, which was not the
case
Wills Acts require the subject matter to be vested in the trustee for the
trust to be valid
In Re Beardmore there was a trust inter vivos that purported to
distribute net estate after funeral expenses, etc.: clearly that
property was not in the trustee and the trust as inter vivos trust failed
The bulk of my residuary estate is too unclear: Palmer v. Simmonds
Testatrix left absolutely, in confidence that if the beneficiary did not
have issue, he would provide for his wife and then leave the bulk of
the residuary estate to A, B, C, D and E.
As bulk means not the whole but the greater part whatever that
means the court could not construe the trust and the beneficiary took
absolutely and his estate, not A, B, C, D and E, retained the residue
o On a more principled point, she couldnt have said bulk and
intended the slim pickings after hed had his way with a life
interest in her estates property; unclear what she intended
in general, or that she had intended compatible ideas
Testatrix used proper trust language elsewhere; thus this gift
was intended as precisely that
The subject-matter of the will must be clear at the time the trust was
created: Re Beardmore
Breaking the net estate into quarters after testamentary fees, funeral
expenses, etc. makes sense for a testamentary trust, but this was a

trust inter vivos: no way to tell at the time the trust was created
what the trust property would be
Leaving everything to A in confidence that the residue shall be given
to others makes the subject-matter of the trust unclear at the
time of its creation Re Walker (1925 OCA)
o Walker: Pure gift
o Johnson: No intent to give to the kids; purely precatory
o Simmons: Intended trust fails for uncertainty of subject matter
o No matter what, the wife gets it all; cant give to someone
completely and add further disposition
o BUT: The repugnancy of a full gift with a gift over is
subject to the construction of the will as a whole perhaps the
full gift was intended as a life estate: Re Shamas
Interpret the instrument in context: he had eight
children and not enough to support them all to 21 as well
as making provision for the widow; it must have been a
life estate to support her in the event she did not remarry
(non-remarriage was a condition), and as she had to
provide for the children, encroachment on capital must
have been acceptable
Power of encroachment allows the trustee to use
the capital for the trust purpose, whereas a pure
gift just allows the donee to knock herself right out
Court allowed this trust despite uncertainty
of subject matter, as that certainty [of subject
matter] is less important than allowing settlors to
turn over powers of encroachment?
So how do life interests with remainders work?
o Life interest gets the profits, remainders receive the capital
Reasonable income is not void for subject-matter unclarity. Onefifth of an indeterminate estate could be anything; its actually
impossible to know. But courts and trustees determine reasonable
income all the time: Re Golays Will Trusts

Testamentary trusts need not explicitly be so; it suffices that it is clear

from the document that the instrument is intended to have effect upon the
death of the settlor Re Beardmore
Such testamentary instruments must comply with the strictures of the
Wills Acts (or Succession Law Reform Acts, as the province may
require), even non-wills, in order to be valid
Certainty of Object
If there be a clear trust, but for uncertain objects, the property that is the
subject of the trust is undisposed of and the trust property results:
Morice v. Bishop of Durham (1803-13 Ch.) Trustee/court must be able to tell
who is an appropriate object for the trust.

Objects of benevolence and liberality too vague: Morice v. Bishop of

Durham
And not charity, thus uncertainty of object cannot be overlooked
Uncertainty Due to Number of Potential Objects
Fixed Trusts old rules for discretionary trusts
A fixed trust has this problem: is the class ascertainable? <<<LIST
CERTAINTY>>>
Without being able to determine the identity of every person in the
class (my close friends), the shares of none can be properly
ascertained: Re Connor
o $100,000 equally to all members of my family can work
because the trustee can determine the number of people and
thus the shares
o $100,000 equally among my friends is impossible
Requiring a resort to advertising is proof of too great an
uncertainty: Re Connor
A discretionary trust can be valid as long as the number of people
in the class can be ascertained; lost members can always come claim
their share: Re Gulbenkians Settlement Trusts
As courts normally dispose of discretionary trusts that are placed in its hands
by apportioning the trust property out in equal parts, it is necessary for the
trust to survive that the number of shareholders be identified: Re
Gulbenkians Settlement Trusts
( Equal distribution would be the last thing the testator would have
intended; the court need not have the entire list of persons in order to
find the trust valid: McPhail v. Doulton
Courts have been known to give what effect to unclear
classes they can, even predating Lord Eldon: Harding v. Glyn
Scott on Trusts: height of technicality if someone could
authorize his trustees to give money to his friends, but not
direct them to do so)
BUT a wider and more comprehensive range of
inquiry is called for in the case of trust powers
(discretionary trusts) than in the case of powers [of
appointment]: McPhail v. Doulton
It may be the case that a class is so wide that it cannot be given effect to
the residents of Greater London, for example but I do not think that a
discretionary trust for relatives of even a living person falls within this
category: McPhail v. Doulton
Duggan: He probably means administrative impracticality; the cost of
administering it would outweigh the value of the trust
Uncertain numerative range is now only relevant to the
administratively unworkable standard. Re Badens Deed Trusts

Toronto members of the T. Eaton Co. Quarter-Century club was sufficient

certainty for distribution, not validity it was charitable, thus valid: Jones
v. T. Eaton Co.
* Despite Toronto members being unclear and read down to members
working at the Toronto location at the same time as the testator
The trust will fail for conceptual uncertainty, not evidentiary
uncertainty: Re Badens Deed Trusts (No. 2)
The linguistic or semantic composition of the will must be certain, but
the actual constituency of the class is expected to be difficult in some
cases
(Conceptual uncertainty hypothetical in that case: persons under a
moral obligation vs. the more certain first cousins)
Trusts with Power of Appointment new rules (including discretionary trusts)
Trusts with power of appointment have this problem: can members of
the class be recognized? (Now the test for discretionary trusts as
well)
Provided there is a gift over or trust in default of appointment, a power
of appointment vis--vis a certain class is valid. Re Gulbenkians Settlement
Trusts
As long as you can say definitively that someone is within the class,
it is not necessary to know everyone that in the class <<<
CRITERION UNCERTAINTY>>>
The principle is, in my opinion, that the donor must make his
intentions sufficiently plain as to the objects of his trust and the court
cannot give effect to it by misinterpreting his intentions by dividing the
fund merely among those present Re Gulbenkians Settlement Trusts
(overruled by McPhail v. Doulton)
When power of appointment cases are brought to the courts, those courts are
under no obligation to make any appointment, and thus the trusts will not fail
for list certainty; it isnt necessary for the court to make its appointments
that it must know the identity or number of potential class members
The trust will fail for conceptual uncertainty, not evidentiary
uncertainty: Re Badens Deed Trusts (No. 2)
The linguistic or semantic composition of the will must be certain, but
the actual constituency of the class is expected to be difficult in some
cases
(Conceptual uncertainty hypothetical in that case: persons under a
moral obligation vs. the more certain first cousins)
Such other persons as the trustees may allow not too vague: Re
Denlys Trust
The test for criterion certainty is whether someone can be proven to be
within the class of persons benefited, not whether or not he can also be

proven not to be in the class, which is impossible; no class could be so

constituted: Re Badens Deed Trusts (No. 2)
Terms used to define the class will be acceptable as long as they raise
questions of fact, not law, such as the permissible dependant,
which conjures up a sufficiently distinct picture.
o Relation can be taken to mean blood relation, as the likely
intent of the testator, even if inter vivos: Stamp L.J. in Re
Badens Deed Trusts (No. 2)
Remember, the trustees are trusted to make sound and
compatible decisions as to who falls within the class to benefit
thats what theyre there for!
They must do enough surveying to fulfil their duties, but it need
not be a complete survey of all class members
a wider and more comprehensive range of inquiry is called for
in the case of trust powers (discretionary trusts) than in the
case of powers [of appointment]: McPhail v. Doulton
It may be the case that a class is so wide that it cannot be given effect to
the residents of Greater London, for example but I do not think that a
discretionary trust for relatives of even a living person falls within this
category: McPhail v. Doulton
Duggan: He probably means administrative impracticality; the cost of
administering it would outweigh the value of the trust
Uncertain numerative range is now only relevant to the
administratively unworkable standard. Re Badens Deed Trusts
(No. 2)
Toronto members of the T. Eaton Co. Quarter-Century club was sufficient
certainty for distribution, not validity it was charitable, thus valid: Jones
v. T. Eaton Co.
Despite Toronto members being unclear and read down to members
working at the Toronto location at the same time as the testator
Case also said McPhail would probably be good law here

Re Badens Deed Trusts (No. 2)

Suppose were dealing with a trust in favour of supporters of the
Toronto Maple Leafs. A goes to all the games, wears jerseys, has
bobbleheads. B is a huge Habs fan, jerseys, bobbleheads. C is a
casual watcher of hockey, sometimes watches on TV, and is more likely
to watch when the Leafs are on.
So under Sachs L.J., the trust is fine. You can say for sure that As
are entitled, and you can leave Cs out. Under Megaw L.J., its all right
because there are a lot of As compared to Cs though another judge
might disagree or need more evidence. (The test is satisfied if, as
regards at least a substantial number of objects, it can be said that
they fall within the trust; even though, as regards a substantial number

of other persons, if they ever for some fanciful reason fell to be

considered, the answer would have to be, not they are outside the
trust, but it is not proven whether they are in or out. What is a
substantial number may well be a question of common sense) And
in terms of Stamp L.J., the uncertainty around C destroys the trust,
unless supporter is more precisely defined. He would go back to the
trust to see what the settlor meant by supporters.
Non-Charitable Purpose Trusts
*** UNLESS THERE IS A HUMAN BENEFICIARY, A NON-CHARITABLE TRUST
FAILS ***
Generally:
To be valid, a trust needs to be for individuals or in the class of gifts for
public benefit that are legally recognized as charitable: Bowman v.
Secular Society Ltd.
This applies to all trusts, not just wills: Re Astors Settlement Trusts
Legal owners enjoy their property unless the equitable title is elsewhere. If
no one holds that equitable title, there is no correlative equitable duty
and the trustee has effectively taken a gift. Re Astors Settlement
Trusts
The risk is that no one will defend that equitable interest if it is
not charitable
o Settlor has no legal or equitable interest and cant
o Trustees wont sue themselves for non-performance
o Called the beneficiary principle of Re Astors Settlement Trusts
in re Denlys Trust
Confined to abstract or impersonal purposes noncharitable purpose trusts that are really indirect trusts
for persons are still ok, see below: Re Denlys Trust
The Attorney-General defends charitable trusts in his role as the
Kings counsel, whereas the King is parens patriae and therefore has
the prevailing interest in charities for the public good. AttorneyGeneral v. Brown
These trusts in the rare case they are enforceable must be certain
enough so that if the trustees were to surrender their powers to the court,
the court could ascertain whether a given payment would satisfy the noncharitable purpose: Re Astors Settlement Trusts
Weird exceptions: Trusts for the maintenance of the testators grave; care
and upkeep of horses, saying of masses in the testators memory; promotion
and furtherance of fox hunting; and reform of the English alphabet (George
Bernard Shaw)

 Need no human beneficiary, but must still be temporally

definite
But in Ontario:
Perpetuities Act
Measurement of perpetuity period
6.(1)Except as provided in section 9, subsection 13 (3) and
subsections 15 (2) and (3), the perpetuity period shall be measured in the
same way as if this Act had not been passed, but, in measuring that period
by including a life in being when the interest was created, no life
shall be included other than that of any person whose life, at the
time the interest was created, limits or is a relevant factor that
limits in some way the period within which the conditions for vesting of
the interest may occur.
Idem
(2)A life that is a relevant factor in limiting the time for vesting of any
part of a gift to a class shall be a relevant life in relation to the entire class.
Idem
(3)Where there is no life satisfying the conditions of subsection (1), the
perpetuity period is twenty-one years. R.S.O. 1990, c. P.9, s. 6.
(Perpetuities have to be restricted to a life interest +21 years. Section 6
makes that a relevant persons life.)
16.(1)A trust for a specific non-charitable purpose that creates
no enforceable equitable interest in a specific person shall be
construed as a power to appoint the income or the capital, as the case
may be, and, unless the trust is created for an illegal purpose or a purpose
contrary to public policy, the trust is valid so long as and to the extent
that it is exercised either by the original trustee or the trustees
successor, within a period of twenty-one years, despite the fact that the
limitation creating the trust manifested an intention, either expressly or by
implication, that the trust should or might continue for a period in excess of
that period, but, in the case of such a trust that is expressed to be of
perpetual duration, the court may declare the limitation to be void if the court
is of opinion that by so doing the result would more closely approximate the
intention of the creator of the trust than the period of validity provided by this
section.
Idem
(2)To the extent that the income or capital of a trust for a specific noncharitable purpose is not fully expended within a period of twenty-one
years, or within any annual or other recurring period within which the
limitation creating the trust provided for the expenditure of all or a specified
portion of the income or the capital, the person or persons, or the person
or persons successors, who would have been entitled to the property
comprised in the trust if the trust had been invalid from the time of its
creation, are entitled to such unexpended income or capital. R.S.O. 1990,
c. P.9, s. 16.

(Non-charitable purpose trusts survive for 21 years, and then the property
results.)
NOTE THAT THE PERPETUITIES ACT creates a power of appointment
in place of the non-charitable purpose trust
Rule Against Perpetuities
Inalienability
A non-charitable trust is void if it ties up the trust capital beyond the
perpetuities period: s. 6 Perpetuities Act, right up there ^: Re Astors
Settlement Trusts
Remoteness of Vesting
Dead hand control rule; applies even to charitable trusts
A gift or trust is void if it will vest or may vest in the donee after
the perpetuities period (s. 6 of the Perpetuities Act, a life-in-being
plus 21 years)
Concern that the dead will tie up the money and dictate who
gets what forever
What if its not clear that it will vest after that time? (e.g., to A for the
benefit of my teenage son, B and then to his son B1 when he turns 25?)
Then we wait and see:
o 4.(1)Every contingent interest in property that is capable of
vesting within or beyond the perpetuity period is
presumptively valid until actual events establish,
o (a) that the interest is incapable of vesting within the
perpetuity period, in which case the interest, unless validated
by the application of section 8 or 9, shall be treated as void or
declared to be void; or
o (b) that the interest is incapable of vesting beyond the
perpetuity period, in which case the interest shall be treated as
valid or declared to be valid.
o General power of appointment
o (2)A limitation conferring a general power of appointment, which
but for this section would have been void on the ground that it
might become exercisable beyond the perpetuity period, is
presumptively valid until such time, if any, as it becomes
established by actual events that the power cannot be exercised
within the perpetuity period.
o Special power of appointment, etc.
o (3)A limitation conferring any power, option or other right, other
than a general power of appointment, which but for this section
would have been void on the ground that it might be exercised

beyond the perpetuity period, is presumptively valid, and shall

be declared or treated as void for remoteness only if, and so far
as, the right is not fully exercised within the perpetuity period.
R.S.O. 1990, c. P.9, s. 4.
It could be the case that B dies at age 15; it could be the case that B1
is conceived the day B dies, and the property will not vest within the
perpetuity period of Bs life + 21. Wait and see. (Therell be another
estate interested in having it result if it does go beyond the period.)

If there is even a fanciful possibility that new beneficiaries will be

added after the perpetuities period expires, the trust is void
Weird Exceptions to the Non-Charitable Purpose Trust
Trusts for the maintenance of the testators grave (Pirbright v. Salwey); care
and upkeep of horses (Pettingall v. Pettingall, Re Dean); saying of masses in
the testators memory; promotion and furtherance of fox hunting (Re
Thompson); and reform of the English alphabet (George Bernard Shaw)
Need no human beneficiary, but must still be temporally definite
o In these cases there were always residuary beneficiaries
with an interest in seeing the instrument enforced (i.e., to be
sure it is used to promote foxhunting and not to be spent
profligately as the remainder will be theirs after 21 years;
and if there is a breach of duty they may even get it outright)
Sir Arthur Underhill: exceptions are concessions to human weakness or
sentiment
But these do not justify that the courts will recognize an equitable
obligation affecting the income of large funds in the hands of trustees
a direction to apply it in furtherance of enumerated non-charitable
purposes in a manner which no court or department can control or
enforce Re Astors Settlement Trusts
Trusts Indirectly for Persons
Non-charitable purpose trusts that can be construed as being indirectly for
persons are not invalid: Re Denlys Trust
Unlike those cases, there is a cestui que trust in these cases that can
enforce the trust
o And the lack of enforcement was really the courts concern and
justification for charitable purpose trusts (the AG will do it) in Re
Astors Settlement Trusts
REMEMBER, though: these trusts are not charitable and are subject
to the Rule against Perpetuities
Indian bands were an acceptable object for a non-charitable purpose
trust as individuals would benefit, and hav[ing] similar to that of
municipalities they would have locus standi to enforce the trust:
Keewatin Tribal Council Inc. v. Thompson (City)
o This despite being an unincorporated association

Poor reasoning; the court finds that it is indirectly for persons

and thus enforceable, but that those persons have no standing
to enforce themselves, as they are not tenants in common

Trusts for Unincorporated Associations

Remember that the Perpetuities Act s. 16 makes all non-charitable purpose
trusts powers of appointment!
Consider Keewatin, supra
Gifts to such associations are, of course, okay though if the gifts are
perpetual (e.g., gift to maintain this building forever) they fail against the
Rule against Perpetuities
Unless the donees are free to spend capital and income as they will
(Re Price, Re Macaulay)
Can be construed (Neville Estates Ltd. v. Madden)
(a) As a gift to the members of the association as joint tenants so that
each can sever their share and claim it whether or not they continue to
be members
a. Perverse to consider that was the testators will in Re Rechers
Will Trusts (anti-vivisection)
(b) As a gift to the members of the association at the date of the gift not
as members, but subject to their contractual rights and liabilities
against one another as members
a. As long as the trust objects are the associations aims, this
should be acceptable as it is not a trust for the benefit of
the associations objects, but a gift to lump in with the
associations funds (Re Lipinskis Will Trusts, Re Rechers Will
Trusts)
i. And since this is the case, why cant they take it in trust
as well, even terminating the trust for their own benefit?
(Re Lipinskis Will Trusts)
ii. But if the contractual matrix is broken, the funds
cannot go to those individuals, even if reconstituted: Re
Rechers Will Trusts
b. Since that association isnt a trust, its member funds could be
dissolved at any time like any other contract and the proceeds
divided inter se (Re Rechers Will Trusts)
i. No one would have standing to object
(c) Property is to be held in trust or applied for the purposes of the
association as a quasi-corporate entity but these will fail if noncharitable
Re Reshers Will Trusts was not for a purpose, but for an association;
Lepinsky had a purpose: buildings for the community centre
Since Lepinsky was for a purpose, it was construed as a gift (since
apparently the trustees and beneficiaries were the same people
anyway). Since no one had an interest in enforcing it, it was a nonbinding suggestion.

So gifts to unincorporated associations for a purpose are

outright gifts with suggestions attached, whereas gifts not for a
purpose are simply that: Re Lipinskis Will Trusts

In order to be protected by s. 16 the purpose must be certain. (Re

Russell Estate)
Court cant read a scheme in for powers the same way it can for
charities
Like trusts for persons, the court requires criterion certainty to enforce a
non-charitable purpose trust even when it is a power under s. 16. (Re Russell
Estate)
Religious, literary and educational purposes of the society too vague
for the court to give proper directions
If the beneficiaries claim the purpose of the trust is wasteful and
clearly intended for their benefit, they can apply to the court to have the trust
property given to them absolutely: Re Lipinskis Will Trusts
Even despite mandatory language
Constitution of a Trust
*** IF THE TRUST IS NOT PROPERLY CONSTITUTED, IT FAILS ***
Equity Will Not Assist a Volunteer / Equity Will Not Perfect an Imperfect Gift
If title in a deed is not transferred properly, equity will not complete the gift
despite the testators intention: Milroy v. Lord
Look to the instrument to see if it is possible that the testator declared
himself trustee for a quick solution: Milroy v. Lord (did not do so in that
case named a trustee and did not fully transfer title)
o But did do sufficient to transfer the insurance shares, which
were awarded to plaintiffs
Also check to see if the instrument constitutes an enforceable
contract for delivery! Milroy v. Lord
o Equity doesnt recognize contracts without consideration; not
even those under seal.
DICTUM: I take the law of this court to be well settled: that in order to

render a voluntary settlement valid and effectual, the settlor must

have done everything which, according to the nature of the property
comprising the settlement is necessary to be done to transfer the
property, having regard to the type of property in question.
There are two (really three) ways to transfer property without consideration
(Richards v. Delbridge):
If one mode is intended, the court will not effect the other
(Milroy v. Lord)

 Because they demonstrate contrary intentions as to the legal

title in the property: Carson v. Wilson
BUT if a document is apt and proper to transfer the
property, then it is possible that a trust arises for the
purpose of giving effect to the transfer (Re Rose)
Think about it; if I execute a document saying you
will have equitable title in property, I must be
holding the legal title on trust at least until I can
get it to the trustee (implied in Re Rose)
Some critics say this should have just been a
constructive trust, so the court would not have to
worry about intent
And if the error suggesting conflicting modes is in
the preamble, it can be read out if the rest of the
instrument is clear: Re Wale
WAYS TO TRANSFER PROPERTY WITHOUT CONSIDERATION
(1) Do such acts as amount in law to conveyance or assignment of the
property, divesting yourself of the property and the person that
then takes it does so beneficially or on trust
a. THAT IS, A GIFT OR ON TRUST; or
(2) Declare yourself a trustee, without transfer of the legal title, and
deal with the property so as to deprive yourself of the beneficial
ownership
a. Need not say I declare myself a trustee but must use
expressions that have that meaning
i. However anxious the Court may be to carry out a mans
intention, it is not at liberty to construe words otherwise
than according to their proper meaning.
In order to be a trustee, you must use language suggesting trust, not
gift, and not retain the property
Risk of making all gratuitous gifts or half-baked instrument into
binding trusts
Also have to be sure testator was serious, and that there
was evidence he was
Remember: land always needs a proper conveyance, or to be declared in
trust and treated accordingly; and wills always need to be executed in
accordance with the Succession Law Reform Act.
CONVEYANCE OF LAND
Deed system: formal conveyance, the parties draw up and execute a deed
of conveyance that is then signed, sealed and delivered
Torrens (Land Titles): Legitimate owner is named on the register. Parties
sign an instrument of transfer, lodge it in the land titles office together with
the take-home certificates of title
TRANSFER OF GOODS

Delivery with intention to transfer title (sales subject to statute)

Owner may intend to transfer title and conceptually deliver but remain in
possession as bailee for safekeeping
TRANSFER OF SHARES
Can be either directly or indirectly held (e.g., broker)
Private
Transfer restrictions (in U.S., Article 8 of the UCC and the Securities
Transfer Act; here, the Bills of Exchange Act?)
Companys Articles of Association will dictate transfer rules (usually
directors have to approve new transferee and put his/her name in the
company register)
Public
No need for director approval, but the companys rules govern. STA
requires registration, as do some public companies according to their articles
of association. Others merely require the transfer of the share certificates.
CHEQUE
Bearer cheques require physical delivery; order cheques require endorsement
BANK BALANCE
Demonstration of intent to transfer; oral may be sufficient. Typically banks
ask for forms to be signed transferring funds from A to B.
Jones

v. Lock: the 900 for baby case

I give to baby: no trust language
No endorsement of order cheque
Ergo cry baby

Exceptions
If the testator has done everything in his power to transfer the property,
the court will give effect to the trust: Re Rose
Note that the transfer was executed by transferor and transferee under
impression of stamp; it was the company that caused delay
Promissory estoppel is available in these cases if the defendant passively
or actively encouraged the plaintiff to rely on an interest in land
Donatio mortis causa: an imperfect gift given in direct anticipation of
death intended to be reversible in the even the testator lives is perfected
upon his death. Applies when a token delivery is successful: car keys, a
balance book, certificates to shares, or title deeds to land.

Strong v. Bird, below.

Declaration of Trust
Does not require stilted lawyers language: Paul v. Constance
Consider the things said against the parties own background and in
their own circumstances
Still, must be clear intent to create a trust; an intention to dispose
of a property or fund so that someone else to the exclusion of the
disponent acquires the beneficial interest in it
This is a factual question; things that counted to find a trust for the
benefit of both settlor and beneficiary jointly:
o Saying the money is as much yours as mine on separate
occasions
o Beneficiary depositing money into the account
o Joint withdrawals for mutual benefit
In Delbridge (manure farm), it was written, I hereby give. Here the Court
did not have to thwart the plain meaning of the testators words and could
read in a trust
Assigning an Equitable Interest
Beneficiaries can inform trustees that the equitable title they hold for their
benefit is now being held in trust for another party.
A misrecital in a deed is not fatal if intention is sufficiently clear (Re Wale)
Assignment can take many forms (Re Wale):
Assignment to a third party
Direction to trustee(s)
o Need not go through the form of giving directions formally,
even to oneself if oneself is a trustee
Nemo dat quod non habet purporting to transfer a legal interest one does
not have can still constitute a valid transfer of equitable interest (Re Wale)
In Re Wale, the beneficiary / one-third trustee attempted to transfer
her 1/3 legal interest to the two other trustees in order to be held for
another group of beneficiaries she could not do so, however, as she
did not have title to the entire (or a specific third of the) property and
she failed to convey properly.
o Thus the court read this as a mere direction as beneficiary to the
trustees to hold the equitable interest for another party. The
court had to ignore the misstated preamble in order to
give effect to this and avoid the rule in Milroy v. Lord (cant give
effect to one mode of transfer by using another).
Courts are entitled to ignore faulty preambles if the
rest of the instrument is clear and correct

The other schedule of investments, however, she did have full

(equitable and legal) title in so since she said she transferred it to
the other trustees on trust but did not convey the property
properly, there was no valid trust and the executors got the money.

The Rule in Strong v. Bird

TEST
(1) Donor intended to make an immediate inter vivos gift but failed for
want of formality
a. Future gifts do not apply
(2) Intent to make that gift or mistaken belief that it had been given
must be maintained until death
a. Must not have given or willed that property to anyone else
(3) Donee must be made the testators representative (executor or
administrator) after death
(4) Subject matter must survive donors death
a. An unendorsed cheque is no good; a banks authority terminates
at the moment of death
Can completed gifts and trusts
Re Wale: Where a testator has expressed the intention of making a gift of
personal estate belonging to him to one who upon his death becomes his
executor, the intention continuing unchanged, the executor is entitled to hold
the property for his own benefit.
The vesting of the property in the executor qua executor perfects the
gift that may have been unperfected in life
An intent to give beneficial title to the future executor followed by the
actual vesting of legal title in him qua executor trumps any other
supposed beneficial interest in the property
Does not rely on debt or a single executor rather than a group
o Though the original case was about the release of a debt the
executor owed the testator. Taking control of the testators
estate, the executor was able to forgive himself his debt
and this was the testators intent right to the end. (Juridical
reason: executors cant be expected to take action against
themselves in debt)
Also applies to administrators chosen by the court, which is
suspect and a lottery for those qualified and owing the testator
money someone that was not intended to be forgiven may forgive
himself in executing the estate
If the testators intention changes ante mortem, this rule does not
apply (Re Wale)
Was argued in Re Wale as a beneficiary was made executor and tried to get
the imperfect gift (of the property in the invalid trust) perfected but
intention was found to have changed on the facts.

Formal Requirements
Trusts inter vivos require a note in writing, signed by the party
settling.
Statute of Frauds
4. No action shall be brought to charge any executor or
administrator upon any special promise to answer damages out of the
executors or administrators own estate, or to charge any person upon any
special promise to answer for the debt, default or miscarriage of any other
person, or to charge any person upon any contract or sale of lands,
tenements or hereditaments, or any interest in or concerning them, unless
the agreement upon which the action is brought, or some memorandum or
note thereof is in writing and signed by the party to be charged
therewith or some person thereunto lawfully authorized by the party.
R.S.O. 1990, c. S.19, s. 4; 1994, c. 27, s. 55.
If this is failed, contract is not void, just unenforceable. At that
point, if you wish to enforce the contract, you must expressly plead the
statute
Declarations or creations of trusts of land to be in writing
9. Subject to section 10, all declarations or creations of trusts or
confidences of any lands, tenements or hereditaments shall be manifested
and proved by a writing signed by the party who is by law enabled to
declare such trust, or by his or her last will in writing, or else they are
void and of no effect. R.S.O. 1990, c. S.19, s. 9.
If a declaration of trust, s. 11 applies
Really just means unenforceable, not non-contract in terms of
inter vivos trusts
A declares himself trustee for C but fails to pay. C sues, but
there is no written instrument. C has to show some note or
memorandum. If there is none, A can plead the statute.
A to B for the use of C. B fails to pay, C sues but no written
instrument? Trust fails on s. 9, unless B is ripping C off; then
statute of frauds is used to perpetuate a fraud, and the courts
will allow parol evidence: Rochefoucauld v. Boustead
Exception of trusts arising, transferred, or extinguished by implication of law
10. Where a conveyance is made of lands or tenements by which
a trust or confidence arises or results by implication or construction of
law, or is transferred or extinguished by act or operation of law, then and in
every such case the trust or confidence is of the like force and effect
as it would have been if this Act had not been passed. R.S.O. 1990, c. S.19,
s. 10.

Assignments of trusts to be in writing

11. All grants and assignments of a trust or confidence shall be in
writing signed by the party granting or assigning the same, or by his
or her last will or devise, or else are void and of no effect. R.S.O. 1990,
c. S.19, s. 11.
About assignment of equitable interest not just land!
Thus includes declaration of trust, as the owner (settlor) is
assigning his equitable interest in the property to the beneficiary
Debate as to whether it does; some think because it
doesnt cover declaration as specifically as s. 9, s. 11 was not
intended to cover it.
EXCEPTION: The doctrine of part performance allows the plaintiff to
prove the contract if (s)he has changed position as a result of relying on it.
The defendant then cannot rely on the statute. Deglman v. Guaranty Trust
Co. of Canada
The acts of reliance must be unequivocally referable to the alleged
contract: McNeil v. Corbett
Mere payment of money insufficient: McNeil v. Corbett
Statute of Frauds cannot be used to perpetrate a fraud
Note: this writing does not have to be contemporaneous with the contract.
Oral contract along with signing in a land titles system suffices.
Succession Law Reform Act
s. 1 will includes,
(a) a testament,
(b) a codicil,
(c) an appointment by will or by writing in the nature of a will in
exercise of a power, and
(d) any other testamentary disposition. (testament)
i.e., an instrument that relies for its vigor and effect on the
death of the disponor: Cock v. Cooke
Hence the trust being invalid in Re Beardmore Trusts: it
required the death of the testator for vigor and effect and he
was non-compliant and still alive
But if the trust is completely formed inter vivos and requires
only the testators death as a precondition to payment, it is
valid: Anderson v. Patton
The trust in that case did not require the death of the
testator in order for the trust to take effect; it required
death as a condition of the trustee transferring title he
held on trust
Power of revocation irrelevant; valid trusts often
have that
Will to be in writing
3.A will is valid only when it is in writing. R.S.O. 1990, c. S.26,

s. 3.
Execution
4.(1)Subject to sections 5 and 6, a will is not valid unless,
(a) at its end it is signed by the testator or by some other person
in his or her presence and by his or her direction;
(b) the testator makes or acknowledges the signature in the
presence of two or more attesting witnesses present at
the same time; and
(c) two or more of the attesting witnesses subscribe the will
in the presence of the testator.
Idem
(2)Where witnesses are required by this section, no form of attestation is
necessary. R.S.O. 1990, c. S.26, s. 4.
Position of signature
7.(1)In so far as the position of the signature is concerned, a will,
whether holograph or not, is valid if the signature of the testator made
either by him or her or the person signing for him or her is placed at, after,
following, under or beside or opposite to the end of the will so that it
is apparent on the face of the will that the testator intended to give effect by
the signature to the writing signed as his or her will.
Idem
(2)A will is not rendered invalid by the circumstance that,
(a) the signature does not follow or is not immediately after the end
of the will;
(b) a blank space intervenes between the concluding words of the
will and the signature;
(c) the signature,
(i) is placed among the words of a testimonium clause or of a
clause of attestation,
(ii) follows or is after or under a clause of attestation either
with or without a blank space intervening, or
(iii) follows or is after, under or beside the name of a
subscribing witness;
(d) the signature is on a side, page or other portion of the paper or
papers containing the will on which no clause, paragraph or
disposing part of the will is written above the signature; or
(e) there appears to be sufficient space on or at the bottom of the
preceding side, page or other portion of the same paper on
which the will is written to contain the signature.
Idem
(3)The generality of subsection (1) is not restricted by the
enumeration of circumstances set out in subsection (2), but a signature in
conformity with section 4, 5 or 6 or this section does not give effect to,
(a) a disposition or direction that is underneath the signature or that
follows the signature; or
(b) a disposition or direction inserted after the signature was made. R.S.O.
1990, c. S.26, s. 7.
Overlap with Insurance Plans

 Succession Law Reform Act ss. 50-54 protect insurance plans that
appear to be insufficiently witnessed testamentary instruments:
Macinnis v. Macinnis
50.In this Part,
participant means a person who is entitled to designate another person
to receive a benefit payable under a plan on the participants death;
(participant)
plan means,
(a) a pension, retirement, welfare or profit-sharing fund, trust,
scheme, contract or arrangement or a fund, trust, scheme,
contract or arrangement for other benefits for employees,
former employees, directors, former directors, agents or former
agents of an employer or their dependants or beneficiaries,
(b) a fund, trust, scheme, contract or arrangement for the payment
of a periodic sum for life or for a fixed or variable term, or
(c) a fund, trust, scheme, contract or arrangement of a class that is
prescribed for the purposes of this Part by a regulation made
under section 53.1,
and includes a retirement savings plan, a retirement income fund and a
home ownership savings plan as defined in the Income Tax Act
(Canada) and an Ontario home ownership savings plan under the
Ontario Home Ownership Savings Plan Act. (rgime) R.S.O. 1990,
c. S.26, s. 50; 1994, c. 27, s. 63 (4).
Designation of beneficiaries
51.(1)A participant may designate a person to receive a benefit
payable under a plan on the participants death,
(a) by an instrument signed by him or her or signed on his or her
behalf by another person in his or her presence and by his or
her direction; or
(b) by will,
and may revoke the designation by either of those methods.
Idem
(2)A designation in a will is effective only if it relates expressly to a
plan, either generally or specifically. R.S.O. 1990, c. S.26, s. 51.
Revocation and validity of designation
Revocation of designation
52.(1)A revocation in a will is effective to revoke a designation made
by instrument only if the revocation relates expressly to the designation,
either generally or specifically.
Idem

(2)Despite section 15, a later designation revokes an earlier

designation, to the extent of any inconsistency.
Idem
(3)Revocation of a will revokes a designation in the will.
Where will invalid
(4)A designation or revocation contained in an instrument purporting
to be a will is not invalid by reason only of the fact that the instrument is
invalid as a will.
Idem
(5)A designation in an instrument that purports to be but is not a valid
will is revoked by an event that would have the effect of revoking the
instrument if it had been a valid will.
Earlier designations not revived
(6)Revocation of a designation does not revive an earlier designation.
Effective date
(7)Despite section 22, a designation or revocation in a will is effective
from the time when the will is signed. R.S.O. 1990, c. S.26, s. 52.
Payment and enforcement
53.Where a participant in a plan has designated a person to receive a
benefit under the plan on the death of the participant,
(a) the person administering the plan is discharged on paying the
benefit to the person designated under the latest designation
made in accordance with the terms of the plan, in the absence
of actual notice of a subsequent designation or revocation made
under section 51 but not in accordance with the terms of the
plan; and
(b) the person designated may enforce payment of the benefit
payable to him under the plan but the person administering the
plan may set up any defence that he could have set up against
the participant or his or her personal representative. R.S.O.
1990, c. S.26, s. 53.
Regulations, Part III
53.1The Lieutenant Governor in Council may make regulations
prescribing classes of funds, trusts, schemes, contracts or arrangements for
the purposes of this Part. 1994, c. 27, s. 63 (5).
Application of Part to plan
54.(1)Where this Part is inconsistent with a plan, this Part applies,
unless the inconsistency relates to a designation made or proposed to be
made after the making of a benefit payment where the benefit payment
would have been different if the designation had been made before the
benefit payment, in which case the plan applies.
Exception

(2)This Part does not apply to a contract or to a designation of a beneficiary

to which the Insurance Act applies. R.S.O. 1990, c. S.26, s. 54.
Insurance Act
Succession Law Reform Act ss. 50-54 protect insurance plans that
appear to be insufficiently witnessed testamentary instruments:
Macinnis v. Macinnis
171(1): declaration means an instrument signed by the insured,
(a) with respect to which an endorsement is made on the policy,
(b) that identifies the contract, or
(c) that describes the insurance or insurance fund or a part thereof,
in which the insured designates, or alters or revokes the designation of, the
insureds personal representative or a beneficiary as one to whom or for
whose benefit insurance money is to be payable; (dclaration)
192. (1) A designation in an instrument purporting to be a will is not
ineffective by reason only of the fact that the instrument is invalid as a will or
that the designation is invalid as a bequest under the will.
Priorities
(2) Despite the Succession Law Reform Act, a designation in a will is
of no effect against a designation made later than the making of the will.
Revocation
(3) Where a designation is contained in a will, if subsequently the will
is revoked by operation of law or otherwise, the designation is thereby
revoked.
Idem
(4) Where a designation is contained in an instrument that purports to be a
will, if subsequently the instrument if valid as a will would be revoked by
operation of law or otherwise, the designation is thereby revoked. R.S.O.
1990, c. I.8, s. 192.
Charitable Trusts
Definition of Charity
Four divisions of charity (Commissioners for Special Purposes of the Income
Tax v. Pemsel):
(1)Trust for the relief of poverty
(2)Trust for the advancement of education
(3)Trust for the advancement of religion
(4)Trust for other purposes beneficial to the community, e.g. in
modern times:
a. The relief of the old and disabled

b.

c.

d.

e.

f.
g.
h.
i.

j.

k.

i. e.g., building and selling self-contained dwellings for the

elderly: Joseph Rowntree Memorial Trust Housing
Association Ltd. v. AG (UK)
The care of young persons
i. e.g., orphans homes, trusts to enable deserving girls to
marry, trust enabling persons to emigrate (Re Sahals Will
Trusts)
Public works
i. e.g. free internet access analogous to lanes of
communication in the Statute of Elizabeth: Vancouver
Regional FreeNet Assn. v. MNR (FCA 1996)
Benefit of a locality or the country
i. e.g., in relief of the national debt (Newland v. AG (UK)),
television and radio of particular relevance to First Nations
(Native Communications Society of BC v. MNR)
Preservation of public order and the administration of
justice
i. e.g., public law reporting services (Incorporated Council of
Law Reporting for England and Wales v. AG)
Relief of prisoners
Resettlement and rehabilitation
Promotion of economic activity
i. i.e., promotes it on behalf of and for the benefit of the
community
Trusts for animals
i. i.e., not a persons animals, but in furtherance of
domestication or to benefit ecology and feelings of
humanity
ii. Though in National Anti-Vivisection Society v. Inland
Revenue Commissioners some purposes are mocked; In
re Wedgwood was for a wildlife sanctuary that clearly
went too far. The emphasis of the actual decision
however was that the moral benefit to mankind consisted
in promoting feelings of kindness towards animals and
thus promoting feelings of humanity and morality
generally; the limitation of the doctrine to animals useful
to man which was prominent in the earlier of the animal
cases, London University v. Yarrow, was lost sight of
The trust in [In re Grove-Grady] did not protect the
weaker animals from the cruelty of the stronger and more
savage, because the idea of the testatrix was to provide a
sanctuary in which animals might be free from the danger
of being shot or trapped or otherwise maltreated by
human beings, though left at liberty to indulge their
natural instincts of inherent cruelty against each other.
Health and medicine
i. Provided not a for-profit hospital (Re Reschs Will Trusts)
ii. Sick need not be poor, as need for the private hospital
was clear to supplement the public one: ibid.
Social and recreational purposes

i. i.e., on behalf of the whole community playgrounds,

parks, bingo halls
l. Sports
i. Denied after Amateur Youth Soccer Association v.
Canada Revenue Agency
Any of these apart from #1 must also be beneficial to the
community or of an appreciably important class of the community [in
a way the law regards as charitable: circular per Pemsel], as the
ending of 4 is read into 1-3. (Oppenheim v. Tobacco Securities Trust
Co.)
But public benefit alone does not equal charity: Vancouver
Society of Immigrant & Visible Minority Women v. Minister of
National Revenue
Referring to the purposes of the Statute of Elizabeth is
better than nothing at all: Amateur Youth
Finding causes with beneficial by-products to be charitable would
greatly expand the classification of charities at common law: Amateur
Youth Soccer Association v. Canada Revenue Agency
And that cost would be enormous, says Rothstein J., as he
does in every other case ever (consider Halpern)
But doesnt this effectively give the feds power over
charities, which is a provincial purpose, if the MNR
decides what a charity is?
Organization in substance must have as its main objective a
purpose and activities that the common law will recognize as
charitable
Note that were moving away from the strict adherence to the
Statute of Elizabeth and towards a public-utility model.
Immunities and Exemptions
Exempt from the risks of perpetuity and uncertainty, and occasionally
tax (municipal and income)
UNCERTAINTY
o Human requirement of the beneficiary rule in Morris v. Bishop
of Durham waived as the AG steps in
o Certainty of objects waived as long as the object is charitable
o Delegation of will-making power waived
o Inalienability waived
o Remoteness of vesting not waived
TAX
o Individuals can get a tax credit up to 20% against income with a
tax receipt
o Ontario Assessment Act exempts the following from municipal
tax:
Places of worship, churchyards and burial grounds in use
or designated by the Minister
Universities and schools

Seminaries for philanthropic or religious learning

Public hospitals
Registered institutions relieving the poor
Canadian Red Cross
St Johns Ambulance and similar societies
Public libraries and literary and scientific institutions
Agricultural and horticultural societies

But still susceptible to:

The remoteness of vesting element of the Rule against Perpetuities: Re
Mander
A gift or trust is generally void if it will vest or may vest in the donee
after the perpetuities period (s. 6 of the Perpetuities Act, a life-in-being
plus 21 years)
o More relaxed for charitable purpose trusts
Rule applies to charities in four ways:
o Future gift to charity: Courts may uphold the gift and use the
property initially for other charitable purposes or at cy-prs but
must determine whether the future gift is contingent on a
future and uncertain event, in which case it will fail
Chamberlayne v. Brockett: Use for charity and as soon
as land in municipality X becomes available, build alms
houses and support the inmates. acceptable; only
question is mode of charity
Re Mander: Use to pay for training of person from
neighbourhood that goes into seminary unacceptable;
may never be such a person
Gift over from non-charity to charity: If future event triggering gift
over too remote, trust is void
Gift over from charity to non-charity: If gift over occurs after
the perpetuities period, trust is void. If the triggering event is a
condition subsequent, the gift over is struck down and the charitable
gift made absolute. If the event is described in the form of a
determinable interest, however, the whole gift is struck down and the
court finds a general charitable intent, applying cy-prs.
o Money in trust, income paid to a priest as long as the pews were
to be occupied free of charge; if they ever charged, money to
result (which would happen anyway). Court found no general
charitable intent and thus did not apply cy-prs.
But since the result is what would happen anyway, not
void for perpetuity the estate it would vest in after the
perpetuities period is the person the court would give it to
for failing on perpetuities anyhow! Re Randell
o But a trust to continue two schools forever, unless the
government established public education, in which case back
into the estate, was general charitable intent (it intended to
carry on forever charitably if necessary), and vesting in the
residuary estate after the perpetuities period failed on the

perpetuities rule. Thus it was a charitable trust perpetually: Re

Bowen
Gift over from charity to charity: Even in the event of an uncertain
future event, it is clear the testator intended the money to be for the
public benefit forever, and thus the rule against perpetuities
never applies.
Reversion: Property can revert on condition as long as it is within the
statutory time limit (life +21 years, in this particular case in Ontario to a
maximum of 40 years (s. 15)); e.g., to the church unless the priest shaves
his beard, then back into the estate is OK for 40 years
After that time period, the charitys interest becomes absolute.
Problem: Giving to XYZ Trust Co. provided it uses the money to
maintain my familys church makes this an absolute gift after 40
years. Other statutes change the purpose to cy-prs (BC, Yukon,
Alberta)
o Obviously, if the gift had been straight to the church for that
purpose it would have been perpetual. Needs amendment.
Claims in tort: An organization is liable for wrongs committed by it or under
its auspices: Re Christian Brothers of Ireland in Canada
But assets held by a charity upon a special purpose charitable trust
are immune unless the wrongs in question were committed in the
context of the special purpose trust
o Oosterhoff calls bullshit you cant take the assets that a trustee
holds in trust in order to pay off the trustees own liabilities,
even if the trustee is just another branch of itself
Registration of a Charity
The ITA provides for the registration of charities with the MNR.
Registered charity: charitable organization, private foundation or
public foundation resident in Canada or a branch [thereof] that
receives donations on its own behalf registered with MNR. ITA s.
248(1)
o Charitable organizations are those that apply all donations to
carrying out charitable activities: s. 149.1(1)
Can be trusts, corporations, or unincorporated
associations
What are charitable activities? See definition above.
Organization in substance must have as its main
objective a purpose and activities that the common law
will recognize as charitable: Amateur Youth Soccer
Association v. Canada Revenue Agency
Consider the effect that finding a charity would
have on the tax base: Amateur Youth Soccer
Association v. Canada Revenue Agency

Note: This was Rothstein J., who is always

concerned about this. Consider Halpern.
Charitable foundations are charities whose objects are to
disburse funds to operating charities: s. 149.1(1)
Can be trusts or corporations
o

Administration of a Charity
Courts will construct a scheme for the dissemination of charitable
funds if need be
Distinct from cy-prs, in which a scheme is concocted because the
charitable purposes intended are impossible
Public Benefit v. Private Benefit
A trust for the provision of television and radio of particular relevance to First
Nations was upheld as for public benefit in Native Communications Society
of BC v. MNR.
Any of the four charitable purposes apart from #1 (relief of
poverty) must also be beneficial to the community or of an
appreciably important class of the community [in a way the law regards as
charitable: circular per Pemsel], as the ending of 4 is read into 1-3.
(Oppenheim v. Tobacco Securities Trust Co.)
Section of the community test prior to Pemsel: Oppenheim v.
Tobacco Securities Trust Co. (UKHL 1951)
(1)Possible beneficiaries must not be numerically negligible
(2)Quality distinguishing those individuals from other members
of the community must not be relationship to a
particular individual
a. It would seem the Crown and God are not particular
individuals under this test; Royal coal miners can
have a trust but private ones cant
b. HL majority dismissed this concern out of hand, which
resulted in the
Dissent of Lord MacDermott would reject the essentially
impersonal or essentially personal test if poor members of a
small parish is public, why not members of a company, and
whats more personal than, say, blindness?
Prefers a contextual test, wants a new statute (gets one
53 years later!)
But public benefit alone does not equal charity: Vancouver Society
of Immigrant & Visible Minority Women v. Minister of National Revenue
Relief of poverty has followed its own line in this matter,
permitting charitable trusts in favour of poor relations
Oppenheim v. Tobacco Securities Trust Co.
Does not follow any principle except a long line of authority
finding that alleviating the poverty of blood relations is a
charitable object: Re Scarisbrick

o
o

Even poor relations of a company: Jones v. T. Eaton

Co.
Unaffected by the trust being one with mere power; a needy
person is a needy person any person making that call is
making a relativistic one
Must be a gift to a class; not just specific needy persons,
otherwise its a trust rather than a charitable trust (tax results)
Public element satisfied by making the class relations
not next-of-kin. Wide enough to prevent it from being a
class nominatim. (Re Scarisbrick affd in Canada in
Keshen v. Ferguson)
Even though the money was to be distributed
immediately upon settlement, and everyone knew
who it was going to
AG v. Northumberland (Duke)s dictum that a gift which is not a
gift to the poor, that is, the actually poor, is not a charity is not
the law; it is a relativistic test any person shown to be a
relation and to be in needy circumstances would become eligible
as an object of the power Re Scarisbrick
Thus, a trust for distressed gentlefolk counted: Re
Young, as well as a trust to provide luxuries to inmates
of a poor house: Brown v. Brown
But employed people ARE NOT POOR: Re Saunders Will
Trusts
Even low-income workers cant have a holiday fund in
relief of the poor: Re Drummond

Public Benefit, Not Public By-Product

Finding causes with beneficial public by-products to be charitable would
greatly expand the classification of charities at common law: Amateur Youth
Soccer Association v. Canada Revenue Agency
And that cost would be enormous, says Rothstein J., as he does in
every other case ever (consider Halpern)
Public Benefit vs. Public Thing
Is the trust for the public benefit?
Test cannot be subjective or all kinds of fantastic (though not
unlawful) objects might be affirmed, for example training of poodles
to dance: In Re Hummeltenberg, affd in National Anti-Vivisection
Society v. Inland Revenue Commissioners
Expert evidence can be evinced to determine if the thing is of any
public use: see awful, self-important art museum in Re Pinion
Political Purposes
Bowman v. Secular Society, Ld.: Equity has always refused to recognize such
[political] objects as charitable.

Gifts to such members are, of course, valid, but trusts for the
attainment of political ends never fly
Any purpose of influencing legislation is a political purpose in
this connexion on the clear authorities: National Anti-Vivisection
Society v. Inland Revenue Commissioners
o Porter L.J. in dissent: Some groups can only achieve their end
through legislative reform. Others, like this one, can do so by
appealing to moral sensibility though they may be inclined to
go the surer legislative route
But in Bowman v. Secular Society, there is no way to tell
what amount of the trust the court will be
authorizing for political uses; it matters not how much
of the trust appears to be charitable equity will not
assist political ends
Thus, a putative charitable trust educating the public
about the harms of pornography failed for its advocacy
for political change: Positive Action Against Pornography
v. MNR
o Further, he found that since protection of animals had been
charitable in the past it was not for the court to go further and
weigh this particular groups social costs and benefits

ITA 149.1(6.1) holds that charities must devote substantially all

(90%) of its resources to charity. 10% for politicking is OK, as long
as it is not for or against a particular party or candidate.
Tyssen on Charitable Bequests: The law could not stultify itself by holding
that it was for the public benefit that the law be changed each court must
decide on the principle that the law is right as it stands.
Political parties and campaigns for changes in foreign governments are
also improper trust objects: McGovern v. Attorney-General (Amnesty
International)
Relief of Poverty
Relief of poverty has followed its own line in terms of requiring a
demonstration of public benefit, permitting charitable trusts in favour of
poor relations Oppenheim v. Tobacco Securities Trust Co.
Does not follow any principle except a long line of authority finding
that alleviating the poverty of blood relations is a charitable object: Re
Scarisbrick
Even poor relations of a company are acceptable objects: Jones
v. T. Eaton Co.
o Unaffected by the trust being one with mere power; a needy
person is a needy person any person making that call is
making a relativistic one
o Must be a gift to a class; not just specific needy persons,
otherwise its a trust rather than a charitable trust (tax results)

Public element satisfied by making the class relations

not next-of-kin. Wide enough to prevent it from being a
class nominatim. (Re Scarisbrick affd in Canada in
Keshen v. Ferguson)
Even though the money was to be distributed
immediately upon settlement, and everyone knew
who it was going to
AG v. Northumberland (Duke)s dictum that a gift which is not a
gift to the poor, that is, the actually poor, is not a charity is not
the law; it is a relativistic test any person shown to be a
relation and to be in needy circumstances would become eligible
as an object of the power Re Scarisbrick
Thus, a trust for distressed gentlefolk counted: Re
Young, as well as a trust to provide luxuries to inmates
of a poor house: Brown v. Brown
But employed people ARE NOT POOR: Re Saunders Will
Trusts
Even low-income workers cant have a holiday fund in
relief of the poor: Re Drummond

Does not refer to the aged or the handicapped, which are heading #4.
Confusing, be sure to cite Oosterhoff, p. 402; its his fault!
Hybrid classes: (elderly poor, low-income children) courts often dont
bother assigning a head, but it could matter if there is a question of
public benefit: test lower for poverty
Helping the poor must be the main purpose of the organization
Family planning doesnt count though it may benefit the poor: Re
Planned Parenthood of Toronto and City of Toronto
Canadian Mental Health Assn. v. Ontario Property Assessment Corp.:
access based on mental health status, not financial status thus not
for relief of poverty
Advancement of Religion
To advance religion means to promote it, to spread its message ever wider
among mankind; to take some positive steps to sustain and increase religious
beliefs; and these things are done in a variety of ways which may be
comprehensibly described as pastoral and missionary. (United Grand Lodge
of Ancient Free & Accepted Masons of England v. Holborn Borough Council)
(The Lodge promoted a high standard of behaviour and ethics, but
failed to show they promoted religion)
Trusts for ministers (Re Mountain Estate), the repair of churches (Re
McConville Estate), and church missions (Re Long Estate) are kosher.
Gifts to individual clergy or religious corporations are usually absolute
private gifts, unless it is given to them virtute officii which can be done as

long as that persons duties or that corporations objects are

exclusively charitable.
Polytheism fails in England: Yeap Cheah Neo v. Ong Cheng Neo
Humanism fails in England: Re South Place Ethical Society
Religion is mans relation with God; ethics mans relation with man
(1980 UK)
In Canada the CCRA held against the Humanist Association of
Toronto as it did not pray to a deity or supreme being, but
settled out of court on #4, other public benefit
But cults are awesomesauce: Thornton v. Howe
Court didnt prefer any Christian sect to any other, even one claiming a
middle-aged Joanna Southcote had the Second Messiah by the Holy
Ghost
Religion satisfies the public interest test by default.
Advancement of Education
Meaning of Education
Teachers instructing pupils in a classroom will generally do it,
whether the school benefits the rich or poor.
Scholarships and prizes count: Re Spencer Estate, Re Fitzgibbon Estate
Ancestral language training: Societa Unita v. Gravenhurst (Town)
Vocational training as long as it is not just a private benefit to a small
group: Co-op College of Canada v. Saskatchewan (HRC)
A gift for education that does not specify method (i.e., very broad objects) will
have a scheme read in: Whicker v. Hume
Schools are charitable even if they charge tuition (as long as they are
non-profit)
But paying tuition for private school is not a charitable gift but
consideration for the education received, paid as condition of contract.:
Department of National Revenue, Information Circular No. 75-23.
Sports are generally not charitable (though amateur may be in Ontario: Re
Laidlaw Foundation)
But if for a schools sporting or athletic facilities, its all good: Re
Mariette
Mens sane in corpore sane: Inland Revenue Commission v. McMullen
(1981 UKHL)
Research is charitable: Re Hopkins Will Trusts, Naish v. Francis Bacon
Society, Inc.

Education must be used in a wide sense, certainly extending

beyond teaching, and that the requirement is that, in order to be
charitable, research must either be of educational value to the
researcher or must be so direted as to lead to something which will
pass into the store of educational material, or so as to improve the sum
of communicable knowledge

Disguised political purposes are not acceptable: Re Shaw

Arts count, even concerts they instruct the listener: Royal Choral Society v.
Commissioners of Inland Revenue
Professional education has always been charitable: gifts to inns of court
(Re Kerr) or the promotion and encouraging of the practice of surgery (Royal
College of Surgeons of England v. National Provincial Bank Ltd.), mechanical
engineering (Institution of Civil Engineers v. Commissioners of Inland
Revenue), but not gifts to the societies themselves, as their aim is not
to educate but to benefit their members: General Nursing Council for
England and Wales v. St. Marylebone Borough Council
Includes ancillary non-profit efforts like law reporting: Incorporated
Council of Law Reporting for England & Wales v. AG
o Although the pupils earn fees, the education is necessary in
order to do so. As the doctor requires medical research, the
lawyer requires case reports: do not confuse the results of
the achievement of a purpose with the purpose itself
o Buckley L.J.: Lawyers and judges are lifelong students of
the law
Informal training is acceptable, so long as information or training is
provided in a structured manner and for a genuinely educational purpose
that is, to advance the knowledge or abilities of the recipients and not solely
to promote a particular point of view or political orientation, it may properly
be viewed as falling within the advancement of education. Iacobucci J.,
Vancouver Society of Immigrant and Visible Minority Woman v. MNR
The Society did ancillary work that was non-charitable, such as
maintaining a job skills directory, and thus was held not to be
charitable. The minority would have found it was, and that the other
stuff was ancillary
(But how ancillary? It was pretty broad all things conducive to their
ends)
o The minority is right; does the CDO eliminate the nature of the
law school as an educational institution?
Especially since ancillary purposes that are not charitable
do not cause gifts to fail for the exclusivity rule! Why
should such ancillary functions of the society cause failure
when ancillary functions of the instrument do not?
Other Purposes Beneficial to the Community

(1)Trust for other purposes beneficial to the community, e.g. in

modern times:
a. The relief of the old and disabled
i. e.g., building and selling self-contained dwellings for the
elderly: Joseph Rowntree Memorial Trust Housing
Association Ltd. v. AG (UK)
b. The care of young persons
i. e.g., orphans homes, trusts to enable deserving girls to
marry, trust enabling persons to emigrate (Re Sahals Will
Trusts)
c. Public works
i. e.g. free internet access analogous to lanes of
communication in the Statute of Elizabeth: Vancouver
Regional FreeNet Assn. v. MNR (FCA 1996)
d. Benefit of a locality or the country
i. e.g., in relief of the national debt (Newland v. AG (UK)),
television and radio of particular relevance to First Nations
(Native Communications Society of BC v. MNR)
e. Preservation of public order and the administration of
justice
i. e.g., public law reporting services (Incorporated Council of
Law Reporting for England and Wales v. AG)
f. Relief of prisoners
g. Resettlement and rehabilitation
i. Returning soldiers yes (Verge v. Somerville), immigrant
women no (Vancouver Society of Immigrant & Visible
Minority Women v. Minister of National Revenue) note,
rejected for non-educational reasons under 2 nd head, not
clear why not under 4th
h. Promotion of economic activity
i. i.e., promotes it on behalf of and for the benefit of the
community
i. Trusts for animals
i. i.e., not a persons animals, but in furtherance of
domestication or to benefit ecology and feelings of
humanity
ii. Though in National Anti-Vivisection Society v. Inland
Revenue Commissioners some purposes are mocked; In
re Wedgwood was for a wildlife sanctuary that clearly
went too far. The emphasis of the actual decision
however was that the moral benefit to mankind consisted
in promoting feelings of kindness towards animals and
thus promoting feelings of humanity and morality
generally; the limitation of the doctrine to animals useful
to man which was prominent in the earlier of the animal
cases, London University v. Yarrow, was lost sight of
The trust in [In re Grove-Grady] did not protect the
weaker animals from the cruelty of the stronger and more
savage, because the idea of the testatrix was to provide a
sanctuary in which animals might be free from the danger

of being shot or trapped or otherwise maltreated by

human beings, though left at liberty to indulge their
natural instincts of inherent cruelty against each other.
j. Health and medicine
i. Provided not a for-profit hospital (Re Reschs Will Trusts)
ii. Sick need not be poor, as need for the private hospital
was clear to supplement the public one: ibid.
k. Social and recreational purposes
i. i.e., on behalf of the whole community playgrounds,
parks, bingo halls
l. Sports
i. Denied after Amateur Youth Soccer Association v.
Canada Revenue Agency
Imperfect Charitable Trusts
Exclusivity Rule
Charitable purpose trusts must be entirely devoted to charitable causes
Liberality as a possible class of recipients was rejected as
insufficiently charitable, in Morice v. Bishop of Durham
Charitable, religious, educational or philanthropic causes rejected in
Brewer v. McCauley at SCC; possible it could all go to philanthropic
causes
o Conjunctive/disjunctive matters: such charitable institution
or institutions or other charitable or benevolent object or
objects is no good for conjunctivity; could all go to benevolent
(patriotic? liberal?) causes: Chichester Diocesan Fund & Board of
Finance Inc. v. Simpson (1944 UKHL)
o Fixed by Uniform Wills Act in England adopted in MB, BC,
AB, NB: sever the non-charitable part and find the rest valid
Exceptions to the Exclusivity Rule
(1) If the charitable part can be severed from the non-charitable, it can be
valid
a. Must be clear: one-half to the church, one-half to other
awesome causes
(2) If the main purpose is charitable, ancillary non-charitable purposes will
not cause the gift to fail
a. Amateur athletic associations have purposes other than the
promotion of amateur sport, but they did not invalidate the main
one: Re Laidlaw Foundation, ditto fellowship among U of T
medical alumni in Towle Estate v. MNR.
b. But overly broad ancillary efforts can cause the trust to fail:
Vancouver Society of Immigrant & Visible Minority Women v.
MNR
c. ITA 149.1(6.1) holds that charities must devote
substantially all (90%) of its resources to charity. 10%

for politicking is OK, as long as it is not for or against a particular

party or candidate.
(3) If the trust is not charitable but the trustee prima facie is, it will be held
charitable
a. Giving your estate to your Bishop for his works and such works
as would benefit French Canadians in his diocese is acceptable;
although the work is split it can safely be assumed via the
trustee that it is a promotion of religion gift: Blais v. Touchet
Justice Cullity says pay attention only to objects, not activities
Ask if the activities are a reasonable and prudent method of achieving
the object. If not, the trustees are liable but the trust does not fail
Looks like you get to disagree with him as usual
Cy-Prs
Cy-prs is not an administrative scheme such as is set up for broad,
vague gifts though the court does have jurisdiction to take steps to assure
the effective operation of the trust.
Also pure administration when the name of the object is unclear
Courts take a lot of leeway in construction to give effect to
charitable trusts: Re Connolly Estate (multifaceted interpretation of
multiply conjunctive/disjunctive poor, children, Catholic, Irish, or sons
of Irish fathers)
Two kinds of cy-prs:
Prerogative cy-prs: Property is given to charity without a trust
imposed: to charity, to Canada. This is the Crowns power,
exercised by the courts with the assent of the Attorney General.
Judicial cy-prs: Money given upon charitable trust but purposes
impossible or impracticable to carry out
Judicial cy-prs arises only when the object is impossible or
impracticable to carry out.
o Devotes property to charitable purposes as near as possible
to the original intent
o Two situations of impossibility:
Initial: Must show testator had a general charitable
intention, otherwise the court has no jurisdiction to apply
cy-prs
Supervening: Intent is irrelevant; the known object has
been frustrated
TO PERMIT CY-PRS:
(1) Impossible or impracticable to carry out the object or mode of
attainment (as of the time the instrument takes effect: time of
deed for inter vivos, testators death for testamentary trusts this is so
even if the charitable purpose vests later, e.g. after a life interest)

a. IMPRACTICABILITY: no longer a need for the purposes

intended (e.g., relief of slaves after emancipation: Ironmongers
Co. v. AG)
b. IMPOSSIBILITY: often institutions no longer exist or never did
(Re Roberts), or the state now funds the object, etc.
c. Just because current beneficiaries dont want to carry out
the object or do not think it foreseeable does not result in
impossibility or impracticability (note impracticality not the test):
Christ Church v. Canada Permanent Trust Co.
i. It is the testators wishes that are to be carried out, not
those of others who would that his express wishes were
otherwise
1. But does any testator wish his gift to be useless?
ii. Specificity of the testators will may be relevant
iii. Note that in this case the court mentions a non sequitur
or improbable of performance at para. 26
(2)Donor had a general or overriding charitable intent
a. i.e., intended to be charitable, not to specifically build that
building
b. The more specific the donor is about the purpose, the less
likely the general intent will be found
i. Two institutions not enough in Re Spences Will Trusts
(Home for the Blind and Old Folks Home)
1. larger numbers are likely to assist in conveying to
the court a sufficient conviction both of the genus
and of the generality of the charitable intention
2. But one can work: soup kitchen and hospital for
the parish of Shoreditch general charitable intent
for the poor and sick in that locality: Re Wilson
c. Where the impossibility stems from no such institution, that
intent will be likely found
i. The Crippled Childrens Hospital if there has never been
such a thing suggests an intent generally to help crippled
children
ii. But if no such institution and no general intent, the
gift lapses
d. Charity by association or kindred objects doctrine:
i. If residue left to a whole spread of charities, the general
intent is clear. If to one specific charity, court is loath to
find intent to be charitable generally
Supervening Impossibility
If a trust is devoted to charity and the property has vested when the
purpose becomes impossible or impracticable, that property cannot
revert; it is for charity forever. Generally intent no longer matters: Re
Fitzpatrick
Two exceptions:
o No exclusive dedication to charity (i.e., gift over back to noncharity)

Donor can take back, provided its within the perpetuity

period
o Charity not vested with capital, but only with income
Charity has no right to the capital; if the purpose for which
income is given is foiled, the capital and income result
Some cases permit cy-prs in such times.
Oosterhoff: This is incorrect.
Intent is also irrelevant in public appeal cases, as the money has
vested in charity; cy-prs is always applicable.

Application of Cy-prs
Combine the virtues of proximity, usefulness, and practicability,
mindful of the testators intention: Re Fitzpatrick
Can always order more study and submissions on possible schemes:
Re Fitzpatrick
Discriminatory Trusts
Impossibility of law is just as relevant as impossibility of fact in terms of
voiding charities; if a trust is inimical to the public interest, but it has already
vested, cy-prs may apply: Canada Trust Co. v. Ontario HRC
Formerly practicable trusts can grow impracticable as attitudes change
Cy-prs can be used to sever offending portions of discriminatory trusts: Re
Dominion Students Hall Trust (colour bar in hostel)
Royal College of Surgeons named trustee for medical scholarships
excluding Jews and Catholics. When they refuse to administer it, cyprs amends the trust. It was impossible to perform as the College
was the only possible trustee, and this was the nearest fix.
The Leonard Scholarship trust document was infused with the offending
subject matter such that none of it was severable. Canada Trust Co. v.
Ontario HRC
Having operated for 25 years post mortem, the court found the
scholarships had taken on a public character and could be challenged
on public policy grounds
Resulting Trusts
Three kinds:
(1) Express trust fails
(2) Surplus trust funds
(3) Apparent gifts
a. If given not for value and intent is questionable, resulting trust
occurs: Hodgson v. Marks (retired colonel con man)
i. That presumption is rebuttable if intent to confer a
gratuitous benefit is made out: Standing v. Bowring

Normally an express trust results by default when it fails

If title has not passed to trustees no need to result; title still in the
settlor
If title has passed to trustees they hold the property on resulting
trust for the settlor
o Settlor did not intend the property to be vested in them
absolutely
Rebuttable; settlor may have intended that as a fallback
When dealing with a surplus of express trust assets:
(1)Who is the settlor?
a. Consider who, if anyone, provided consideration for the
establishment of the trust. If X pays A to give property to B on
trust for C, when C disclaims the property, it results to X, not A.
b. If more than one person provides consideration, it returns to
them in pro rated shares
c. If a settlor cannot be found to result to, the Court should take it
though in matters of public appeal it may be more practical for
the Crown to do so (though it is wrong in law):
i. Me: Its as close to abandoned goods as you can get at
that point; its fair to leave it to the discretion of parens
patriae
(2)Did the express trust fail?
a. Did settlor make a fundamental mistake; sign by fraud,
misrepresentation, undue influence or duress; make an
improvident trust; break statutory rules, the law, public policy or
the rule against perpetuities or accumulations; was the trusts
purpose impossible; or did the trust never exist at all due to
uncertainty of intent or uncertainty of subject matter?
i. Undue influence claims fail unless the beneficial interest
passes: Hodgson v. Marks
ii. Apparent gift that fails for lack of intent gives rise to
resulting trust: Hodgson v. Marks
b. Was there a valid gift over? In that case, the gift will
accelerate: Re Coulson
c. The court will try to save it, usually construing it as a gift
if it is possible to construe conditions as motives rather than
restrictions: Re Barrett (to daughter for household expenses = to
daughter)
(3) Did the settlor intend the overage to be left to the trustees?
a. General principle is no; the settlors did not part with their money
generally but sub modo: Re Gillingham Bus Disaster
b. Consideration provided by trustees is suggestive of bargain:
Moffitt v. Moffitt
c. Construction of terms like sister and absolutely can
suggest trustee is to end up with the beneficial interest in the
overage: Re Foord
d. Overage in public solicitations for funds for a particular
purpose are not intended for the trustees (or, occasionally,

beneficiaries beyond a particular purpose) to keep: Re Abbott

Fund Trusts
i. Consider: would the trustees have been accountable for
the funds in bankruptcy? If not, its probably not for
them!
Quistclose trusts: Money loaned for a specific purpose
properly results to the lender if the purpose of the loan
becomes impossible: Barclays Bank Ltd. v. Quistclose
Investments Ltd.
Lender (settlor) has no intent to make trustee (Rolls
Razor, not the bank) owner of the beneficial interest in
the property; rather, trustee holds the property on trust to
satisfy the purpose
Lender has an equitable right to see it applied for
the designated purpose; when that purpose has been
carried out, lender has its action in debt to recover from
borrower/trustee
Third party requires notice of the purpose, which in
this case it had. Separate account is not enough
purpose must be clear in order to give rise to a trust

A claim of undue influence fails if only the legal title passes; if the
beneficial ownership did not and was not intended to pass, undue influence is
not at issue: Hodgson v. Marks
Public Appeals
Was the trust perfected and charitable? If so, cy-prs may apply.
Overage in public solicitations for funds for a particular purpose are not
intended for the trustees (or, occasionally, beneficiaries beyond a particular
purpose) to keep: Re Abbott Fund Trusts
Consider: would the trustees or beneficiaries have been accountable
for the funds in bankruptcy? If not, its probably not for them!
Bona vacantia applies when individuals part with their money for a
contractual benefit and none have an expectation that it will be returned
after exhaustion of a certain purpose: Cunnack v. Edwards
But where there is no contract, the money is held on resulting trust:
Re Gillingham Bus Disaster Fund
Nova Scotia Trustee Act
52 (1) In this Section, "fund" includes money and property other than real
property and tangible personal property.
(2) Where any funds are held by, or are under the control of, one or more
persons and the funds have been paid, transferred or contributed by
members of the public or by any public officer, body or authority, with or
apparently with the intention that the funds will be used or applied for the

benefit of a class of persons in respect of whom an appeal for funds has been
made, the person or persons who receive and hold the funds shall be
trustees thereof and there shall be a trust to which this Act applies.
Pension Trusts
Whether or not the fund is a trust will depend on the instrument; plans
created since 1981 must make provision for distribution of surplus
on termination: Schmidt v. Air Products of Canada Ltd.
Trusts will exist where there has been express or implied
declaration of trust and the alienation of trust property to trustees for
specified beneficiaries
If not a trust, resolve via contract law. If a trust, it is a classic nonpurpose trust and equity prevails over plan provisions but an
employer may limit the operation of the trust so that it does not
apply to surplus
Pension trusts are for individuals, not purposes: Schmidt
Employers cant have access to surplus in a pension trust unless they are
themselves beneficiaries or if they have powers of revocation; they are the
settlors: Schmidt
As pension trusts are established with consideration on the part of
employees, it is inequitable to read broad powers of amendment
on the employers part as power of revocation
Employer cannot claim reversion at all if there was intent to
part with the trust property entirely
o A non-reversion clause suffices to show an intent not to have
the trust result: Schmidt
In the absence of language to the contrary, employers and employees should
get their contributions back in proportion to their contributions as original
settlors: Schmidt
All objects must be satisfied before the trust results: Schmidt
McLachlin J. (as she then was): Employers are on the hook for defined
benefits, so since the risk is theirs the benefit of surplus is theirs as well.
Once the benefit is paid, the employee is no longer a beneficiary. How can
we gauge what one employee is owed vs. another in the result?
Quistclose trusts
Normally, money on loan becomes property of the borrower, subject to an
action in debt by the lender: Twinsectra Ltd. v. Yardley
Did the parties intend the money to be at the free disposal of
the recipient?

But money loaned for a specific purpose properly results to the lender if
the purpose of the loan becomes impossible: Barclays Bank Ltd. v. Quistclose
Investments Ltd.
Lender (settlor) has no intent to make trustee (Rolls Razor, not the
bank) owner of the beneficial interest in the property; rather, trustee
holds the property on trust to satisfy the purpose
o Equitable title remains in the settlor until the purpose is
effected: Twinsectra Ltd. v. Yardley
Lender has an equitable right to see it applied for the
designated purpose; when that purpose has been carried out, lender
has its action in debt to recover from borrower/trustee: Quistclose
Investments Ltd.
Third party requires notice of the purpose, which in this case it
had. Separate account is not enough purpose must be clear in order
to give rise to a trust
o Because the legal title passes to the trustee so a third party
can claim bona fide purchaser for value if it mistakenly
contracts for the trust property
Anyone offered money on a condition can refuse it or accept it subject
to a fiduciary duty to use it on that condition: Twinsectra Ltd. v. Yardley
Duggan: Twinsectra dispenses funds to Sims for its own benefit subject to
a power of appointment in favour of the stated purpose.
Must be a clear indication of intent to create a trust: separate account,
purpose articulated are good signs
Trust resolves when purpose is achieved; there is no more trust after
purpose complete
Provincial PPSAs exist to disclose such security interests to prevent
unknowing parties from acquiring an interest in goods or monies on trust
can discover the existence of competing claims before going into business
with the debtor
It is common for solicitors to require a charge be put on property
purchased with trust funds on loan for the purpose of buying that
property: Twinsectra Ltd. v. Yardley
Cases like these can give rise to equitable action for dishonestly assisting
breach of trust: Twinsectra v. Yardley
Canada hasnt chosen between Twinsectra and Quistclose, as they would
have come to the same result in our leading case, Re Cliffs Over Maple Bay.
All advances to Cliffs Over by Century were to be held by Cliffs Overs
solicitor for the purpose of completing the development. When the
development failed, Cliffs Over went bankrupt and the court found that
those loaned funds were held on resulting trust for Century

DIFFERENCE BETWEEN QUISTCLOSE AND TWINSECTRA: Hard to say.

My guess: Who has the equitable title? Twinsectra maintained the equitable
title in its loan, and if Sims hadnt exercised his power of appointment to the
purchase of property as intended, the trust would dissolve; in Quistclose, it
may have been that it was a trust for the shareholders in consideration of the
debt Rolls Razor would owe, with a gift over to Quistclose in the event of the
impossibility of delivery. In that case, Duggan makes a point of saying its not
clear why the shareholders could not have been paid --- is it because he
thinks they have equitable title? Remember: Twinsectra had an unknown
class of objects in that matter; who knows what property he would buy?
Quistclose had a known class of beneficiaries: the shareholders.
Apparent Gifts
The presumption of advancement applies to (Pecore v. Pecore):
(1)Spouse spouse
a. Clear intent to give gift inter vivos and evidence suggesting
strong distaste for spouse enough to abundantly satisfy the
onus in rebutting the presumption of advancement: Neazor v.
Hoyle
b. Family Law Act (Ontario), s. 14
c. 14. The rule of law applying a presumption of a resulting
trust shall be applied in questions of the ownership of property
between spouses, as if they were not married, except that,
i. (a) the fact that property is held in the name of
spouses as joint tenants is proof, in the absence of
evidence to the contrary, that the spouses are intended to
own the property as joint tenants; and
ii. (b) money on deposit in the name of both spouses
shall be deemed to be in the name of the spouses as
joint tenants for the purposes of clause (a). R.S.O. 1990,
c. F.3, s. 14; 2005, c. 5, s. 27 (3).
d. Property vested in one spouses name does not establish
equitable interest in the others. You cant go after a house the
wifes name any more than the husband could go after it in a
divorce: Clark Drummie & Co. v. Ryan
(2)Parent dependent minor child
a. Abella J. in dissent: love and affection are justifications for the
presumption in favour of children generally; the parental
obligation to support is just another such justification and not
the conclusive one
i. The natural affection parents are presumed to have for
their adult children when both were younger, should not
be deemed to atrophy with age
All rebuttable on the balance of probabilities
Joint accounts with only one payor constitute inter vivos gifts effective
from the time the account is opened: Pecore v. Pecore
For children only, otherwise resulting trust: Standing v. Bowring

But in that case intent to give gift was made out, rebutting the
presumption of resulting trust
The fact that it is a gift is unaffected by the fact that the donor can
drain the account before his death; it the nature of a bank account that
the balance will fluctuate: Rothstein J. in Pecore
Concern for supporting a child is consistent with intent in gifting a right
of survivorship in the bank account: Rothstein J.
o

Evidence Regarding Advancement

(Clemens v. Clemens Estate)
1. Evidence of As acts or statements at the time of the transfer is
admissible to rebut the presumption of advancement
2. As own evidence of his later acts or statements is inadmissible. (Its
intention at the time of transfer that counts.) In Pecore, the Supreme
Court held that there should be a discretion to hear this evidence if the
court thinks it would be valid
3. B can lead evidence to fortify its position on the presumption of
advancement.
4. B can lead evidence of As later acts or statements against him.
a. Clause 7 of the will acknowledged that he had purchased these
shares in the past on behalf of his son
5. Bs later acts or statements may be relevant as circumstantial
evidence of what A intended.
a. Failure to demand the shares or accounting for profits were
circumstantial evidence of what A intended. The court found
that this evidence was admissible but insufficient.
Purchase Money Resulting Trusts
If one party pays for the entire mortgage, it is difficult to attack a finding of
the other partys ownership being held in trust for the paying party: Calverly
v. Green (Aus. HC)
Equity presumes a trust in favour of the person contributing
the purchase price
But there is an old law of resulting trust under which, where two
parties have provided the purchase money to buy a property
which is conveyed into the name of one of them alone, the latter is
presumed to hold the property on a resulting trust for both parties
in shares proportionate to their contributions to the purchase
price: Tinsley v. Milligan
Note that the purchase price includes obligations to the
mortgaging bank; because the plaintiff girlfriend was party to the
bank loan, she contributed to the purchase price of the home and there
is no presumptive trust in the males favour
o Which gives rise to the equitable presumption of joint
beneficial ownership, no matter whose name the property is
in
Not married? No presumption of advancement

Shares of equitable interest can be determined with

reference to the evidence of what was actually said and
done before, at the time of, or so nearly after the
transaction that it may be said to constitute a part of it
Unilateral payment of mortgage only one
factor
Apply the presumption of dividing equitable
title in shares proportionate to contribution
to the purchase price
o Trial courts will figure that one out for you
o Mortgage payments might help sort out
beneficial interest in investment property,
but not a house to live in
o If unilateral payor did not wish other party to
have the benefit of the mortgage payments,
he can apply for contribution from the
plaintiff for her share of the payments and an
equitable charge to secure the making of her
contribution

A gift given is a gift received; if donor intends a gift and donee accepts it,
it is no defence to say it was accepted as a loan unless the donor then agreed
to transfer the property on that basis. (Dewar v. Dewar)
If a gift is given gratuitously to purchase property, it gives rise to a
resulting trust that will ultimately require a share in the beneficial
interest in the property to result to the beneficiary. If it was a loan,
then the borrower would not be a trustee and would be free to merely
pay back the principal of the loan
Illegality
The history of the jurisprudence has divided into four camps of solution:
(1) The hands-off approach of Lord Eldon
a. Courts will not intervene once finding out about an illegal
purpose. Presumption of advancement applies, wont hear your
illegal-basis rebuttal
i. Muckleston v. Brown (if both are guilty, possession rules),
Curtis v. Perry
(2) Reliance on wrong
a. Court wont hear the case of someone raising illegality to ground
their rights, whether they are the ones involved in the illegality
or not
b. Tinsley v. Milligan, Maysels v. Maysels
i. Problem: the relationship governs in this case if shes
my wife, she keeps it because I cant raise illegality to
fight the presumption; if shes my sister, I get it because
she cant raise my illegality to fight the presumption of
resulting trust

ii. Also, if the transfer is made to avoid creditors, the

transferor must have divested himself of all
interest: Maysels v. Maysels
iii. Equitable or legal title doesnt matter; as long as you
dont have to rely on illegality to ground your claim, you
can recover property on contract or equitable claims to
property: Tinsley v. Milligan
1. Lord Goff in dissent would apply a straight leave-itwhere-it-lies approach, though the House agreed
with him in rejecting the public conscience test,
which called for a weighing of consequences of
granting or refusing equitable relief
(3) Unfulfilled purpose (locus poenitentiae)
a. Goodfriend v. Goodfriend
(4) Public policy
a. Nelson v. Nelson (not followed in Canada)
i. Presumptions may be rebutted even where transfers were
for illegal purposes unless the circumstances of the
transfer are so injurious to the public interest that public
policy requires otherwise
A conveyance of property for the purposes of avoiding a creditor is voidable
on the Fraudulent Conveyances Act.
Both donor and donee are guilty or at least complicit, so either voiding
or upholding the transfer unfairly punishes one and rewards the other
Party seeking to avoid loss on a judgment and transferring property to his
wife for nominal consideration was found to remain the beneficial owner in
Goodfriend v. Goodfriend.
Laskin: He was motivated by his wife, so equity comes down on the
side of the lesser of two evils
Spence: He never actually performed any fraud, so he should get credit
for repentance. Fraudulent intent insufficient.
England: Denning is a hardliner, conveyance for fraudulent purposes is
still conveyance. You made your bed, lie in it: Tinker v. Tinker
Softer approach recently man gives company shares to son and is
able to rebut presumption of advancement by showing fraudulent
intent that never came to pass: Tribe v. Tribe
Constructive Trusts
Characteristics of a constructive trust:
(1) Trustee holds property
(2) Trustee owes certain obligations with respect to that property
(3) Obligations have effect on third parties
(4) Obligations were not voluntarily undertaken

 The duty to hold property for the benefit of another person, howsoever
arising, gives rise to a trust. If it is voluntary, it is express. If not,
constructive.
Constructive trusts are defined by the event that gives rise to them:
- unjust enrichment
- disgorgement of gain by wrongful act against plaintiff
- perfect intention of person transferring property
- detrimental reliance
- breach of fiduciary duty
Unless already subject to one, constructive trustees owe no fiduciary
duties: Restatement, Restition 160, comment a (U.S.), Lonhro plc v. Fayed
(No. 2) (U.K.)
Merely a duty of conveyance
Critical similarity with express trusts: superseding interest in bankruptcy
Americans: Its Remedial
When the holder of legal title cannot in good conscience retain the property,
equity converts him into a trustee: Beatty v. Guggenheim Exploration Co.
(Cardozo J.)
The remedial device through which preference of self is made
subordinate to loyalty to others (Meinhard v. Salmon)
Judges have a discretion to find or enforce them
They exist when a judge constructs them
nonsensical other than as a legal fiction
Britons: Its Institutional
Like an express trust, ones obligations under constructive trust are not
discretionary
They exist when the duty underlying it first arises
nonsensical if courts will occasionally not construe them
Canada follows this: Chase Manhattan Bank N.A. v. Israel-British
Bank (London) Ltd., trust arose with the receipt of the accidental
duplicate payment; Re Sharpe, trust arose when lender of funds moved
in with debtor as consideration for her loan when bankruptcy
occurred, there was a constructive trust consisting of her license to
occupy
Property interest under constructive trust arises not when the
trust is declared but when the unjust enrichment first arose:
Rawluk v. Rawluk (SCC)
McLachlin in dissent thought the trust was remedial but
that courts could define the vesting at an earlier point

Not just ideology the question is, when does the property
constructive trustee holds vest in plaintiff?

Duties of the Trustee

Fiduciary Duty

Avoid conflicts of interest or duty

Surrender any profits acquired in breach of duty
Account for assets received and disbursed

Duties under Discretionary Trust

(1) Make the distribution
(2) Consider circumstances as to how to make that distribution
a. Presumably with independent judgment: Turner v. Turner
Duties under Power of Appointment
Per Turner v. Turner (1984 Ch.)
(5) Obey the trust instrument
(6) Consider periodically whether or not to exercise the power
(7) Consider the range of objects of that power
(8) Consider the appropriateness of individual appointments
Failing to consider is a breach of fiduciary duty, and the sub-settlements
(amongst objects) can be set aside as void: Turner v. Turner
Trustees must do more than think something is a good idea; they
must appreciate the breadth of their discretion. INDEPENDENT
JUDGMENT duty
Trustee Act
23.1 (1) A trustee who is of the opinion that an expense would be
properly incurred in carrying out the trust may,
(a) pay the expense directly from the trust property; or
(b) pay the expense personally and recover a corresponding amount
from the trust property. 2001, c. 9, Sched. B, s. 13 (1).
Later disallowance by court
(2) The Superior Court of Justice may afterwards disallow the payment
or recovery if it is of the opinion that the expense was not properly incurred in
carrying out the trust. 2001, c. 9, Sched. B, s. 13 (1).
27. (1) In investing trust property, a trustee must exercise the care,
skill, diligence and judgment that a prudent investor would exercise in

making investments. 1998, c. 18, Sched. B, s. 16 (1).

Authorized investments
(2) A trustee may invest trust property in any form of property in
which a prudent investor might invest. 1998, c. 18, Sched. B, s. 16 (1).
Mutual, pooled and segregated funds
(3) Any rule of law that prohibits a trustee from delegating powers or
duties does not prevent the trustee from investing in mutual funds, pooled
funds or segregated funds under variable insurance contracts, and sections
27.1 and 27.2 do not apply to the purchase of such funds. 2001, c. 9, Sched.
B, s. 13 (2).
Common trust funds
(4) If trust property is held by co-trustees and one of the co-trustees
is a trust corporation as defined in the Loan and Trust Corporations Act, any
rule of law that prohibits a trustee from delegating powers or duties does not
prevent the co-trustees from investing in a common trust fund, as defined in
that Act, that is maintained by the trust corporation and sections 27.1 and
27.2 do not apply. 1998, c. 18, Sched. B, s. 16 (1); 2001, c. 9, Sched. B,
s. 13 (3).
Criteria
(5) A trustee must consider the following criteria in planning the
investment of trust property, in addition to any others that are relevant to the
circumstances:
1. General economic conditions.
2. The possible effect of inflation or deflation.
3. The expected tax consequences of investment decisions or
strategies.
4. The role that each investment or course of action plays within the
overall trust portfolio.
5. The expected total return from income and the appreciation of
capital.
6. Needs for liquidity, regularity of income and preservation or
appreciation of capital.
7. An assets special relationship or special value, if any, to the
purposes of the trust or to one or more of the beneficiaries.
1998, c. 18, Sched. B, s. 16 (1).
Diversification
(6) A trustee must diversify the investment of trust property to an
extent that is appropriate to,
(a) the requirements of the trust; and
(b) general economic and investment market conditions. 1998, c. 18,
Sched. B, s. 16 (1).

Investment advice
(7) A trustee may obtain advice in relation to the investment of trust
property. 1998, c. 18, Sched. B, s. 16 (1).
Reliance on advice
(8) It is not a breach of trust for a trustee to rely on advice obtained
under subsection (7) if a prudent investor would rely on the advice under
comparable circumstances. 1998, c. 18, Sched. B, s. 16 (1).
Terms of trust
(9) This section and section 27.1 do not authorize or require a trustee
to act in a manner that is inconsistent with the terms of the trust. 2001, c. 9,
Sched. B, s. 13 (4).
Same
(10) For the purposes of subsection (9), the constating documents of a
corporation that is deemed to be a trustee under subsection 1 (2) of the
Charities Accounting Act form part of the terms of the trust. 2001, c. 9,
Sched. B, s. 13 (4).
Relief of trustees committing technical breach of trust
35. (1) If in any proceeding affecting a trustee or trust property it
appears to the court that a trustee, or that any person who may be held to be
fiduciarily responsible as a trustee, is or may be personally liable for any
breach of trust whenever the transaction alleged or found to be a breach of
trust occurred, but has acted honestly and reasonably, and ought fairly to be
excused for the breach of trust, and for omitting to obtain the directions of
the court in the matter in which the trustee committed the breach, the court
may relieve the trustee either wholly or partly from personal liability for the
same. R.S.O. 1990, c. T.23, s. 35.
Exception, investment loss
(2) Subsection (1) does not apply to liability for a loss to the trust arising from
the investment of trust property. 1998, c. 18, Sched. B, s. 16 (2).