Trusts Outline

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					                                  Trusts Outline

trustee                     person w/ legal title to property
beneficiary                 cestui qui trust - holds equitable title to property
trust                       separation of the legal and equitable title of property -
                            vesting of property by one person for benefit of
settlor/creator/testator    sets up trust w/ property (express trusts)
trust instrument            document that vests prop in t'ee and describes
                            rights/obligs (terms of the trust)
bare trust                  when no duties imposed by creator left to be
                            performed except to convey prop to benef
fixed trust                 each benef's int is fixed
discretionary trust         t'ee given power to decide how income &/or capital s/b
                            distrib to class of benef (choose who & how much)
power                       auth'ty to deal w/ s/o/e's prop - in or out of a trust (eg
                            discretionary trust = in and power of attorney = out)

Rights of Owner ship
1) right of alienation      sell, mtge, lease            trustee
2) physical use             unclear - usually trustee unless otherwise specified
3) fruits of T (income)     benef

   for rt of alienation and income - benef can compel admin and sue
   for physical use                - benef can defend against a/o except BFPV


2) Fiduciar y Relationships
 t'ee always a fiduciary
 fiduciary is relationship w/ rts and oblig - when does ct find it to exist?
 20th century - expansion of traditional categories - now fid relnshp can be
  found when one pty reasonably places trust in other/dependent on other in
    signif way
 key factual components:
 one pty possesses unilateral discretionary power
 power can be exercised to affect other's int
 other pty is vulnerable, &
 (iv)reasonable reliance by other pty on first pty
 fiduciary relnshp involves legal duty of loyalty - imbalance of power that cannot
  be exploited to one pty's benefit
 duty to act (i) strictly in best int of other pty (ii) honestly, prudently (iii) no
  unauth'zd  (iv) no delegation
 modern approach to whether a fiduciary relnshp exists illustrated by:

Hodgkinson v Simms (1994) SCC
 P retained investment counselling services of D
 P indicated primary obj = min taxes and acquire stable LT invest
 invested signif amts in MURBS on advice of D
 confidence such that few Qs re: invest
 while advising, D acting for developers of MURBs - commission for each MURB
    purchased by clients
 real estate mkt crashed - MURBs worthless
issue: breach of fiduciary obligations? fiduciary relnsp exist?
   CofA - awarded dmges for breach of K (not fiduc relnshp breach as at trial)
   SCC looked at fiduciary relnshp - Wilson's minority judgment in Frame v Smith:
     framework for identifying new fiduc relnshps:
        (i) scope of exercise of discretion/power
        (ii) power c/b exercised unilaterally to effect benef's ints
        (iii) vulnerability to exercise of power
     also, given circumstances, can one pty reasonable rely on other to act in own
        best int (discretion, influence, trust)?
     mutual understndg one pty relinquished own self-int and agreed to act solely
        on behalf of other?
   here P not sophisticated businessperson - reliance/dependency
   hence, investor s/n/b expected to question investment advice
   breach of fiduc duty since acted in own self-int
   remedy - in place as if no advice from D

3) Tr ust and Ag enc y
trust                                             agent
 relnshp proprietary (trust instr)               relnshp personal btwn P and A
 t'ee holds legal title                          A dn hold legal title
 t'ee not st control by benef                    A controlled by P
 t'ee bound by trust instrument                  A can Δ terms of reln w/ P
 t'ee cannot bind benefic to liab w/3rd pties    A can bind P to liab w/ 3rd pties
 T not terminated until oblig satisfied          A and P can terminate relnshp at
                                                  will/on death
 t'ee v A distinction generally arises upon insolvency since P ranks as general
  creditor while t'ee has priority
 Lister - relnshp btwn A and P is one of debtor/creditor when A dn use P's $ to
  secure bribe - A only liable to acct for bribe (P ranks as general creditor)
 following case, ct held that even w/ bribes, when the A uses P's $ to acquire
  prop, prop held on trust for P:

AG for Hong Kong v Reid (1994) PC
 D a solicitor for HK govt
 accepted bribes, in breach of fiduc oblig, to obstruct prosecution of criminals
 purch NZ prop w/ some proceeds of bribes
 convicted - ordered to turn over value of bribes to HK govt
issue: if R breached fiduc oblig, did Lister mean HK govt only P (debtor/creditor
relnshp) or did R hold prop as t'ee for HK govt?
   held that R a t'ee for HZ govt - no P and A relnshp as in Lister

 Cda has always followed Lister but likely would follow Reid since doctrine of
  constructive trusts is expanding

5) Tr ust and D ebt
trust                                      debt
 t'ee = a fiduciary                       Dr not a fiduciary
 t'ee has benefic int in prop             Cr merely has personal right to repmt
                                           when due
 no agreement necessary for T             debt created w/ agreement
 t'ee & benefic cannot alter oblig        debt agreement can be altered by Dr/Cr
 t'ee no personal oblig to comp benef     Dr always liable to Cr until debt satisfied
if trust prop lost w/o fault
 t'ee must admin prop according to        Dr no duty to deal w/ or invest subj prop
trust oblig

 important to distinguish since (i) if prop is lost/stolen, or Dr goes insolvent, Dr
  still liable while t'ee not liable unless his negligence caused it & (ii) Cr ranks
  equally w/ others while t'ee ranks ahead
 the test: what did the pties intend - developed in following case:

Air Canada v M&L Travel Ltd (1993) SCC
 P and D entered agreement whereby all $ collected from sale of P's tickets w/b
   held on trust for P by D
 D set up trust accts but dn use
 sale proceeds deposited in general acct
 D's bank w/drew proceeds to satisfy demand loan
 D sued by P for breach of trust
issue: what was the nature of the relnshp btwn the P and D? was it debtor/creditor
whereby P w/b subordinated to the bank or t'ee/benef whereby P would rank ahead
of the bank?
   held: nature of relnshp depended on intention of pties
   intention here was to create trust relnshp (trust acct, agreement) - failure to
    use trust acct meaningless
   decision conflicts w/ Ontario Hydro v Brown (1959) Ont CA where B apptd to
    collect pmts on OH's behalf - not instructed on where to keep funds prior to
    remittance - funds stolen - OH argued B a debtor (not a t'ee) since then he w/b
    in their debt - test = intention of pties - here B treated funds as own
    (deposited in general acct, not trust acct) - thus acted as debtor so dr-cr
    relnshp found
   however, in Air Cda, M&L entered into trxn as if it was Air Cda (blank tickets) -
    hence, a trust relnshp w/b inferred by pties (whereas w/ B, he was merely
    collecting $ of OH)

 clear that t'ee has obligation to benefic even if no loss suffered by benefic (eg:
  t'ee earns commission for investing prop but also makes benefic a good return -
  acting in own self-int)
 t'ee must liab for lost opportunities even if benefic w/n/h taken the opp or ben
  successful in it if dn act in benefic best int (Guerin v R - Indian band left part
  of land "in trust" to govt based on govt's advice to lease to golf course -
  unfavourable terms - govt breached fiduc oblig)


2. P owers of Appointment ("POA")

 distinction btwn trusts and powers key b/c:
  (i) middle person - oblig of t'ee & donee of power diff
  (ii) t'ee rights more extensive
  (iii) certainty of objects req'mnt differs

power = auth'ty to deal w/ prop not owned
donor of power = owns prop & grants auth'ty to deal
donee of power = vested auth'zn to deal w/ prop
power of apptmnt = auth'ty conferred on one to select person(s) to receive prop
        exercisable under will or deed
Donor (prop owner)------------Donee (apptr of prop)---------Appt'ee (recip of prop)

instrument           donee/t'ee           benefic/app'tee
trust                duty/responsib       right
power                auth'ty (no oblig)   potential right

types of powers
administrative       enable donee to mge prop (mtge, sell, invest)
dispositive          pay income, transfer/dispose of prop

powers of apptmnt
general              appt to a/o in world including donee (themselves) unless power
                     exercisable under will
special              choice of appt'ees restricted by donor to particular class
hybrid               appt a/o except a particular class desig by donor

 power may be granted in 2 diff capacities:
  (i) lay/personal &
  (ii) fiduciary
 no oblig to perform - further obligs depend on capacity re: POA

personal capacity (bare POA):
       right: to select person(s) to enjoy prop
       no oblig to exercise power - no need to consider its exercise
       obligs: must act honestly & must appt to objects of power desig by donor
           exercise in favor of non-objects is void
       can abandon power w/ impunity but cannot pass power to s/o/e

fiduciary capacity:
        effectively a t'ee holding POA but no T
        must meet the std of a fiduc:
            act w/ honesty, due diligence, disclosure, candor, not act capriciously
            act in best int of benefic/appt'ee
            not delegate resp
            not make unauth'zd s
        can only release/abandon power w/ donor's consent or consent of ct
            but power may be passed to s/o/e since power vested in office, not
        though no oblig to exercise POA, must consider its exercise and the
            full range of the objects of the power
            approp of any distrib'n
           approp of a/o who asserts themselves as member of benef/appt'ee
        appt'ees cannot compel dist'n of prop since no legal right (unlike benefic)
        appt'ees can restrain improper exercise of power
        exercise in favor of non-objects is void

Discretionary Trusts
 blending of powers and trusts (= t'ee of a POA w/ obligation to distrib prop)
   if benefic are sui juris and absolute(ascertainable gift) then benefic can
     compel distr'n or get new t'ee at equity (Sanders v Vautier)
 def'n: T where t'ee has power/auth'ty/discretion to choose who receives prop
  (amongst the objects), in what proportion or both

3. D istinguishing Btwn Trusts and Power s of Apptmnt
trust                                                   POA
1) imperative - terms of T must be performed            discretionary - donee need
        failure to perform = breach of trust           exercise power

2) benefic have proprietary int in prop                 no proprietary int in prop
                                                        until power exercised in
                                                        favor of appt'ees

Spectrum of Power
[in order of control over transfer of property from settlor/donor's/testator's

       Fixed Trust - no t'ee rights & lots obligs (trust instrument sets out the who
                                                          and how much)

       Discretionary Trust (certain powers vested in t'ee) - "power of selection"

       POA held by t'ee

       POA held in personal capacity (if power lapses (eg death of donee) then
                                                        cannot pass to a/o/e)

 to determine whether a trust, power or gift has been created, the cts construe
  the document in Q to determine the intention of settlor/donor/giftor
 use of words "trust", "gift" power" not determinative
 gift over in default of appt creates a POA (eg to A for life, remainder to such
  children as she may appt, failing which to B creates a POA, but the following dn
  - to A for kids as she sees fit, failing which to B - here no giftover)
 the greater the degree of specificity in describ the objects, more likely cts will
  find trust:

Re Lloyd (1938) SC Ont
 testatrix died - estate to husband for life
 husband given "power to appt" remainder of her estate among 3 sisters & a
 no gift over in default of apptmnt nor disp'n of residue
 testatrix's husband predeceased her as did the sisters
issue: will create a POA in favor of husband or a discretionary trust in favor of 3
sisters and nieces? if POA, intestacy results - if discretionary trust, niece gets all
 held: ct looked at whether did L intend to divide her estate equally
 found that no gift over in default of apptmtn of POA
 intent to create a T evidenced by naming of specific heirs (sisters) to exclusion
    of other possible heirs - hence objects specifically identified (intent =
    discretionary trust)
 the more specific the terms of class, more ready cts are to find a discretionary

4. D onee Obligations

 unlike trust oblig, no oblig to perform - power is discretionary
 oblig = fiduciary oblig = (i) consider exercise of power (ii) survey possible range
  of objects (iii) consider any appl'n by person (w/in class of objects?) (iv) ensure
  approp of any apptmnt of power & (v) if exercise power, do so honestly, in
  accordance w/ terms of power and dn act capriciously
 power may be void if objects of power are uncertain

Turner v Turner (1984) Chancery Div
 settlor est'd inter vivos trust for wife, children, remoter issue & spouse of such
 father, sister-in-law, husband = t'ees
 trust doc conferred POA on t'ees
 settlor instructed t'ees how to make apptmnts - made 3 apptmnts under her
issue: were the POA apptmnts valid?
 held: in a clear case on facts, ct can set aside purported exercise of power if
    satisfied t'ees dn apply minds to exercise discretion entrusted in them
   generally cts reluctant to intervene in exercise of power that is valid on its face
   nature of a power is that discretion is used by the donee - here the discretion
    of t'ees not exercised & dn understnd the documents they signed in the
    purported exercise of power
   apptmnts made in breach of the duty to consider before apptng - hence the
    apptmnts are void

5. Appointee Rights
 objects of power own nothing (unlike benefic) unless the donee of the power
  exercises in his favor
 until power exercised, those who take on default = equitable owners w/ their int
  st defeasance in favor of the potential apptees of power
 in a discretionary trust, the benefic not entitled to any specific pt of trust
  assets until t'ee exercises in his favor, but may join together if sui juris,
  terminate the trust and demand trust property
 following case illustrates the differences btwn the rights of objects of powers
  and the rights of the benefic of a discretionary trust:

Re Weekes' Settlement (1897) Chancery Div
 testatrix bequeathed to husband a life int in real prop & the "power to dispose
    of all such prop by will amongst children"
 the will had no gift over in default of apptmnt
 husband died w/o exercising the power
issue: had a trust in favor of the children been est'bld or a mere POA that died w/
 intention is determinative
 here it appears intent was to create a POA, not a trust w/ mandatory obligs
 argument that since no gift over in default of apptmnt (presumption of POA)
    then must be a trust - the reverse to the presumption not necessarily true
 no words in will indicating intention that gift should fall to trust for kids if POA
    not exercised

 this case can be contrasted w/ Re Lloyd since in that case, the testatrix
  specifically carved out a class of persons to inherit - ct looks at general
  intention & specific intention w/in it

Certainty of Ob jects of a Power of Appointment

 whereas trusts must comply w/ a host of legal req'mnts to be valid, powers need
  only comply w/ 2:
   (i) special & hybrid POA must pass the certainty of objects test
   (ii) a power may be void if capricious (ie it is not a sensible consideration by the
   donee of the exercise of power)

certainty of objects = the description of the class of possible appt'ees is
sufficiently clear that the donee may properly perform the power if he chooses
test for certainty of objects = set out in Re Gulbenkian's Settlement Trusts =
there may be no conceptual uncertainty about whether an individual is or is not a
member of the class
         every member of the class dn need to be ascertainable
policy rationale: must be suff certain re: objects so that ct can supervise T if

Re Gulbenkian's Settlement Trusts (1970) HL
 settlement for G's lifetime
 t'ees empowered in absolute discretion to pay all/pt of income from fund for
    benefit of G, wife, children, remoter issue and "any person in whose house or in
    whose company, under whose care or by whom G might be employed or residing"
 trusts created in default of apptmnt
issue: settlement void for uncertainty of objects?
 held: must be able to say whether any given individ is or not a member of the
    class but not necessary to create exhaustive list of appt'ees (ie dn need to
    ascertain class - only if a fixed trust)
 conceptual certainty is key - if there is no clue in document as to how to
    interpret a phrase that denotes class, void for uncertainty
     eg: "to my old friends" - "old" mean elderly? past friends?
     eg2: "to John Smith" - void unless John Smith can be identified (ie testator
        knew s/o named John Smith - if knew several John Smith's then void)
 obiter - "friend" example of uncertain class
 cts generally more lenient w/ powers than trusts in determining the conceptual
    certainty of a class of objects

Problems (p136)
1. testator bequeathed prop to executors & t'ees "for distribution among such of
my friends and relatives" as t'ee selects - prop not distr'd to be sold/disposed as
pt of residue of estate
(a) trust or power created?
power since the document creates a gift over in default of the exercise of a power
(b) provision valid?
prov may be void for uncertainty of objects if it is not possible to determine
whether s/o is or is not a member of the class (Gulbenkian) - evidentiary problems
not a bar - seems conceptually uncertain b/c "friends" is ambiguous and how distant
can the relatives be?
(d) if the trust directed a distr'n btwn "A, B, C and D as t'ee sees fit" is the power
yes - class is ascertained so Gulbenkian test can be met
(e) what is the result if the will had directed the t'ees to distrib to A, B, C and D
fixed trust is created

power v trust: consider if facts are more similar to Re Lloyd or Re Weekes
 key to determine the difference btwn a trust, fiduciary power and
    bare/collateral/personal power
 intention determinative
 also consider rights and oblig:
                     trusts                       powers
rights               benefic have int in prop     no int in prop until donee exercises
                                                  power in favor of appt'ee

obligations          numerous                      none if personal power
                                                   two if fiduciary power (consider &
                                                   not capricious)


 an express trust is intentionally created - 4 req'mnts to succeed:

 Capacity:

(i) settlor -
(a) sui juris - minors cannot set up trust since Ks voidable - some statutory
exceptions (eg member of Armed Forces)
(b) mental competency - if mentally incompetent no inter vivos or testamentary
transfers permitted unless permitted by statute
(c) bankruptcy - bankrupt cannot make a valid inter vivos transfer (ability to
alienate property is limited)

(ii) trustee - a/o capable of holding prop c/b t'ee - however if no legal identity
(unincorp ass'n, pship) then cannot be a t'ee & minors cannot make valid prop
(iii) beneficiary - a/o can be benefic (minors, mentally incompetent, bankrupts,
unborn, unascertained individ) but not if no separate legal identity (unincorp ass'ns,
         can be object or purpose(s) (charitable or non-charitable purp)

3. T he Thr ee Certainties

 to render an express wish a binding obligation, each of the 3 certainties must be
  satisfied - if not, does a gift/conditional gift exist instead?
 the certainties are reflexive and interactive - thus if the subject-matter or
  objects cannot be determined, the intention to create a trust may also not exist
  - illustrated in:

Re Walker (1925) Ont CA
 testator gave wife all real & personal prop & directed that "should any portion
    of estate remain in wife's hands at her death, the remainder to be divided in
    specified portions amongst named persons"
issue: what did the testator intend? (i) absolute gift to wife w/ gift over which w/b
repugnant and thus void so initial gift prevailed? or (ii) life estate intended w/
remainder to specified objects?
 held: absolute gift (i) since testator's intent was for absolute gift and attempt
    to direct how wife should draft her will (not legally binding on wife)

 there is another possibility to the 2 identified in Walker - the testator c/h
  intended a conditional gift (eg condition subsequent/precedent)
 Re Walker c/b contrasted w/ Re Shamus - in that case, testator made will that
  indicated: all to wife to pay debts and raise family - all belongs to wife until last
  child becomes 21 - if wife marries again, wife to share equally w/ kids - if no
  remarriage, wife keeps all and must ensure each child gets a share when she
   ct held wife rec'd life int st remarriage defeasance cond'n & power to
      encroach for maintenance of kids until youngest child was 21 - remainder to
      kids equally
 difference btwn Shamus and Walker is interpretation of intent - generally
  presumption that surviving spouse should inherit enough to be comfortable w/
  remainder to kids
 generally, no clear rule when something is a (i) gift (cond'l or absolute) vs. (ii)
  trust - need to be aware of facts and arguments for each
 when considering trust v. absolute gift, look at whether certainty of subject-
  matter & objects - if so, may infer certainty of intent so trust prevails
4.  Cert ainty of Int ent
 to satisfy this certainty, ct must find = intention t'ee under imperative oblig to
  hold prop on trust for benefit of another & ultimately distrib prop to that
 certainty of intent = Q of construction inferred from manner/nature of disp'n
  as whole
 look at whole document - language need not be technical for intent to create
 intent must be more than a mere wish or moral obligation
 if certainty of intent not apparent then either a gift ("t'ee" takes) or POA (gift
  over in event of default has equitable int)
 the following case illustrates manner in which cts construe doc to determine
  whether wish in sufficiently mandatory terms to create trust:

Johnson v Farney (1913) Ont Appellate Div
 will - J left real & personal prop to wife - will contained "wish" that if wife die
    soon after that she leave the prop to his side of the family and hers in equal
 after husband (J) died, wife indicated intent to carry out his "wish"
 in her will, all prop went to her side of the family
issue: husband's will create absolute gift or a trust in favor of his and her families?
 held: J's "wish" not an oblig/duty - gift to wife absolute & no trust created
 note: codicil = p.s to will - legally binding

 this decision can be contrasted w/ Daniels v Daniels Estate (1991) Alta CA -
  here testator included residuary clause in will stating residue not disposed of
  devised to executors to distribute as see fit
   intent to create trust, gift to executors or POA?
   ct held intent to create trust evident - however the trust failed for lack of
      certainty of objects
   when the trust fails, prop goes to residue of estate - since this clause fails,
      then to intestacy (cts generally attempt to avoid intestacy)

 in LeBlanc Estate v Belliveau (1986) NBQB a testator directed that executor
  may hold certain bonds to maturity and keep in trust after to help some bright
  young boys and girls through college
   ct found intention to create trust even though language not imperative (use
      of "may") - looked at document as a whole to find intention
   generally cts attempt to make a charitable trust succeed
5.  Cert ainty of Subject-Matter

 2 components:
(i) Certainty of Subject-Matter

T has property which c/b clearly identified as its subject-matter
(ascertained/ascertainable) -capable of precise def'n
        all property capable of being subject-matter of a T
ascertained = subject-matter is fixed amt or specified prop
ascertainable = method to identify subject-matter is available in terms of T
residue = estate's assets less its liabilities (debts & legacies)

 the following case illustrates how cts determine whether certainty of subject-
  matter exists:

Re Romaniuk Estate (1986) Alta Surrogate Ct
 subject-matter for 4 family members of testatrix was "the money from the
    sale of…other property" and "personal belongings"
issue: is the will capable of certainty of subject-matter?
 held: certain phrases were uncertain as to subject-matter - 4 possible interps
    of "other property" - thus the T failed
 property passes to all family members (intestacy) and not just the objects
    identified in the will

(ii) Quantum of Subject-Matter

terms of T must define portion each benefic to receive (fixed trust)
 failure re: quantum can be cured through:
   (i) vesting the discretion to t'ee (discretionary trust) - must be done explicitly
   (ct wn infer),
   (ii) ct may divide equally (equity = equality) - not approp in all circ, or
   (iii) possibility set out in following case:

   Re Golay's Will Trusts (1965) Chancery Division
    testator directed in will that Mrs. Bridgewater was to receive a reasonable
       income from his properties during her lifetime
   issue: is the gift void for uncertainty of quantum of subject-matter?
    held: ct may determine what is reasonable (act as a t'ee since power not
       given to t'ee) - subjective determination
    may or may not be law in Cda
 if benefic predeceases testator, gift falls to residuary

6.  Cert ainty of Ob jects
general rule: class of benefic m/b described in sufficiently certain terms so that T
c/b performed

policy: reason for rule:
(i) t'ee - must know who to distrib to or may be breaching fiduc duties
(ii) settlor/creator - ensure intent is carried out (prop goes to desired persons)
(iii) benefic - assist in determining if person has proprietary int in T prop & who
others are if want to terminate trust prematurely
(iv) court - must perform in lieu of t'ee if t'ee fails to distrib

 the specific rules re: certainty of objects varies depending on the nature of the

(a) Fixed Trusts

rule: it must be possible to ascertain every object (complete list of benefic)
         this is b/c t'ee of fixed trust has no discretion to select the benefic or
           proportions - simply carries out trust instrument

note 3 (pg 154) - testatrix left $10K in equal shares to "aged" housekeepers - at
her death, housekeepers were 21, 45, 87 and 89
(i) trust fixed or discretionary? fixed - class is set (housekeepers) and so are
proportions (equal shs) - no discretion
(ii) does "aged housekeepers" pass the certainty of objects test? likely -
conceptually certain class - evidentiary problem (look at normal aged age = 65) - if
this term is certain, the T is fixed

(b) Discretionary Trusts

rule (McPhail v Doulton) - certainty of objects in a discretionary trust depends on
the ability to determine whether an individual is or is not a member of a class

 until McPhail cts drew sharp dist'n btwn the certainty requirements for objects
  for POA and discretionary trusts (all trusts were previously st the test for
  fixed Ts)
 test for COO for POA = whether it c/b determined that s/o was or was not a
  member of a class
 McPhail assimilated this test for discretionary trusts
McPhail v Doulton (1971) HL
 Baden est'd trust the subject-matter = shares of private corp'n
 fund intended to benefit past and present officers and EEs and their "relatives
    and dependants"
 clause 9 - t'ees shall apply income of fund among class of benefic - given
    discretion to choose
issue: is the trust void for uncertainty of objects?
 ct held that the arrangement was a T, not a POA as CA had determined - use of
    "shall" indicates mandatory obligation + subject matter certain
 Broadway Cottages test (must be able to ascertain all members of a class for
    COO for a DT) not correct for DT since POA and DT virtually indistinguishable
    (s/h same test for COO)
 test for COO for DT s/b Re Gulbenkian test -
 caveats:
    (i) a wider, more comprehensive inquiry demanded for T than POA to determine
    if scheme of distrib c/b enacted
    (ii) ct must be able to effect T - if class is so large that it is "administratively
    unworkable" then T void (since cost of admin would erode prop in T)
     uncertain whether must show T is admin workable or assumption admin
         workable and must disprove so T valid
 duties of t'ee not much diff re: DT & POA
 rationale w/ decision - HL felt rule under Broadway Cottages too rigid for equity
    [h/b imposed on basis that ct may be called on to admin T - need to know who all
    objects are to do this]
 Hodson (dissent) - rule re: COO must be so that ct could take over admin of DT
    - sit'ns where ct could admin T when all members not ascertained are rare

 difference btwn conceptual & evidentiary uncertainty (former causes T to be
  void - later dn)
 expressions such as "a/o in Cda" or "residents of Greater London" w/b
  considered admin unworkable

 ambiguities inherent in the test for COO re: "relatives" and "dependants"
  obvious when McPhail sent to Chancery Ct and then CA in Re Baden's Deed
   Trusts (No. 2)
 there are 5 ambiguities inherent in Wilberforce's test for COO from McPhail:
  (i) distinguishing btwn conceptual certainty and uncertainty
  (ii) the fact that there may be several categories of benefic - some pass and
  some don't - will this cause ct/t'ee to re-write document?
  (iii) sufficient to show he is not excluded or does potential benefic need to show
  he is included in a class?
   (iv) are hypothetical applicants excluded? - eg can a child not in being be
   included in class?
   (v) when can t'ees conclude a suff # of class has been determined?

Re Baden's Deed Trusts (No.2) (1972) Eng CA
issue: (see facts in McPhail) Are the classes "relatives" and "dependants"
sufficiently certain under the McPhail test for COO to be able to conclude in any
given case a person is/is not member of the class?
 the test to be applied is "can it be said w/ certainty that any given individ is or
    is not a member of a class?"
 3 views as to how Wilberforce's test applies - uncertain which will prevail in
    (i) Sachs - distinguish btwn conceptual & evid uncertainty - it is only the former
    that can prevent certainty and defeat the gift
     determine conceptual meaning by looking to the general usage of term in
         prior jurisprudence (working definition)
     here - consider meaning of terms through eyes of deceased when he set up
         gift (as a businessman seeking to advance welfare of EEs and those
         connected w/ EEs a benevolent ER would seek to help)
    (ii) Megaw - if a "substantial" # of objects c/b said to be in class, then
    certainty - dn matter that a substantial # not known [could argue that validity
    s/b based on conceptual certainty first - #s is evidentiary problem]
    (iii) Stamp - m/b able to show if s/o in class + e/o who is not in [this is just the
    old Broadway Cottages test!]
 terms "relatives" and "dependant" determined to be certain
 determining who is in class/who not = evidentiary matter - cannot defeat COO

 conceptual v evidentiary certainty: eg "Uvic law class of '85" - include transfer
  students? just those who started in '82? include those who started & took yr
  off? = conceptual uncertainty
   Megaw - as long as 90% of law class of '85 c/b determined then COO
   Stamp - whole class needs to be determined (in or out)
 evidentiary certainty must relate back to conceptual certainty
 in Cda - "Eaton's 25 Club" - testator left prop for members of Eaton's 25 Club -
  conceptually uncertain (just Cdn members? income tested?) - charitable intent
  so ct found certain (was to benefit low income members)
 in Cda probably valid if 80-90% of class c/b determined since illustrates general
  intent to benefit worthy members of a class
 t'ee has duty to take a broad survey of potential members of class - c/n carry
  out oblig if conceptual uncertainty- ability to make sensible decision
7. Constitution of Trusts

 to be valid a T must:
  (i) comply w/ 3 certainties
  (ii) be constituted, &
  (iii) satisfy the requisite formalities

constitution = declaration of T + valid conveyance of prop to t'ee
        conveyance must occur while original declarant alive (ie declaration not
        w/ testamentary disp'n, conveyance not req'd since it is automatic
        equity only recog rights once conveyance - until then, benefic = volunteer
           (equity will not assist a volunteer)

3 Methods of Constitution:
(i) direct trans of prop by T creator to t'ee - gift, assignment, sale
(ii) trans prop to t'ee via 3rd pty
(iii) declaration of self as t'ee
          once conveyance to t'ee, gift is irrevocable (**t'ee has legal title)
            Paul v Paul (1882) Chancery Ct - wife's prop settled upon husband & wife
            for life, remainder to kids - if no kids, remainder to wife or who she may
            appt by will if she predeceased husband - in default of apptmnt,
            remainder to wife's next of kin - H and W separated - W wanted to
            encroach on prop in the settlement (T) - H consented - ct held that T
            constituted and next of kin had beneficial int so no encroachment
            permitted (dn matter benefic = volunteers once constitution of T)
          conveyance must involve a Δ in the nature of the prop ownership
          if transfer under (i) fails, cannot claim constitution via (ii) or (iii) and cts
           will not complete an incomplete gift if (i) fails b/c imperfect gift

 Transfer of Property to Another

Carson v Wilson (1961) Ont CA
 W owned land w/ mtges
 in lifetime executed deeds and assignments to certain persons
 left deeds w/ solicitor w/ instruction to deliver upon death
 documents dn comply w/ formalities of wills (no T)
issue: could the grantees and assignees demand the property?
 held: no - to perfect the gift, delivery must have occurred - leaving w/ solicitor
    is not delivery
 also, no T
   ct w/n accept argument that W declared himself t'ee (held prop for own
    benefit during life = collecting rents and incomes) - attempt to gift prop means
    no intent to hold legal title of prop as t'ee

Jones v Lock (1865) Chancery Ct - J writes cheque to baby & puts in his hands w/
declaration of gift - however, dn endorse to son - J died before he could arrange
for son to have $
        gift = imperfect (no endorsement)
        ct will not consider T argument to perfect an imperfect gift (since all
           failed trxn c/b saved in this manner)
        J s/h declared himself t'ee instead

Transfer of Property to Trustees

 to vest title in t'ee, prop must be properly transferred to t'ee
test - must do all that is req'd given the nature of the property to transfer prop
and render settlement binding on transferor (Milroy v Lord):

equitable int in prop              signed, sealed & delivered
tangibles, choses in possession    delivery
jewellery, art                     reg'n
real prop                          deed/assignment (written, signed, delivered)
chose in action/intangibles        endorsement & delivery

 rule set out in Milroy v Lord (1862) UK - settlor purported to transfer shs of co
  by deed to L - co regns provided shs only transferable if share certificates
  signed - rendered gift incomplete
 this rule was explained and applied in:

Re Rose (1952) Eng CA
 deceased trans 10K shs to wife
 also trans 10K shs to wife & secretary in T for wife & son under voluntary
 transfers in form req'd by co & properly executed
 shs delivered to wife and t'ee before estate tax date, but not reg'd on cos
    books until after
issue: when was transfer valid?
 held that transfer effective before death duties cutoff
 deceased met the rule in Milroy v Lord - did all he could do to transfer shs
 wife signed covenant (accepted burdens & benefits)
   deceased paid stamp duties to transfer shs before cutoff date (how could
    Crown claim no valid transfer on date they chgd deceased taxes on the
   if divs paid btwn transfer date and date of sh reg'n, deceased w/h had to hold
    for benefit of wife (unconscionable to claim via legal title when given away
    equitable int)
   once met the rule in Milroy v Lord, transfer irrevocable
   here, the equitable title transferred before the cutoff (and the legal title
    transferred when co reg'd on books)

Transfer of Property to Trustee through 3rd Pty

 the following case illustrates that a T c/b constituted by transferring prop to
  the t'ee through a 3rd pty and the gift is irrevocable:

Re Ralli's Will Trusts (1964) Chancery Division
 testator gave residue of estate to daughters I and H
 H created a marriage settlement and will - in settlement, H covenanted any prop
    she should acquire to the t'ees of settlement
 I's husband only surviving t'ee of testator's estate and H's marriage
 H dies before she can transfer prop (residue) to t'ee (I's husband)
issue: does the fact that H failed to transfer the residue to the t'ee of the
settlement mean the residue is not properly transferred to the settlement and
thus it falls to H's estate under will?
 held that father's residue vested in settlement since t'ee of settlement had
    legal title even though H dn transfer it (since had legal title as t'ee of the
    testator's estate)
 also tenable that valid declaration that H is t'ee so prop vested in settlement as
    soon as she takes from father

Declaration of Self as Trustee

 difficulty in this area is proving that creator of T intended to become t'ee
 case below illustrates that the intention to declare self as t'ee must be
  manifest, no technical words need be used and no T will be fnd by the ct where
  a gift was intended:

Paul v Constance (1977) Eng CA
 deceased rec'd $ from ER as dmges for injury
 deceased and P deposited $ in acct in deceased's name only
   deceased told P and many occasions the $ was as much hers as his and she could
    draw on it any time
 further deposits and w/drawal sh'd by P and deceased
issue: $ in bank acct held in express T for P and deceased?
 ct held intent to create T clear (words "$ as much hers and his" - repeated
    many times) - deceased appt'd himself t'ee
 no need for technical language

[see class notes on 1/27/99 for review points]


 T normally ends when prop dist'd by t'ee
 T may also end prematurely if (i) settlor revokes T (requires explicit right of
  revocation) (ii) benefic call for prop early (rule in Sanders v Vautier) and (iii) ct
  may set T aside (exceptional cases only)
 testamentary gift (will) - can be revoked anytime prior to death of creator since
  the T is constituted on death
 with inter vivos gifts, may terminate the arrangement anytime prior to the T
  being constituted (unless the declaration of T made for valuable consid)

2. Revoc ation by the Settlor

 may terminate a revocable T - leads to 3 problems:

    (i) intention problems: when settlor retains power to revoke, may indicate no
    intention to pass equitable title (t'ee holds prop as agent) - nature of revocation
    suggests intent to give prop is ambiguous

    (ii) testamentary/inter vivos dilemma: where power of revocation m/b exercised
    until settlor's death - Q whether T is intervivos T taking effect immediately
    but not performed until after settlor's death b/c of power of revocation or a
    testamentary T dependant on settlor's death to take effect?
     key distinction since testamentary Ts must comply w/ the formalities req'd
         of wills while inter vivos Ts dn need to
     test: is T dependant on settlor's death for its vigour and effect?
          consider 2 factors: (i) intention of settlor (ii) time prop vests in t'ee
         Re Beardmore Trusts - T held to be testamentary - settlor agreed to trans
         3/5 of net estate to Ts to benefit ex-wife during her life until remarriage,
     then to kids - T specified prop to go to benefic only after B's death - dn
     comply w/ reqmnts of wills so failed
    key: title not transferred to t'ee until B's death so not constituted during
     his life

   (iii) tax problems: power of revocation means settlor considered not to have
   alienated prop for tax purposes so income and capital remain in hands of settlor
    consider settlor being t'ee w/ no power of revocation

3. S etting the Trust Aside

 the cts may set aside the T even after constitution if the T was made by fraud,
  undue influence, duress, mistake or misrepresentation

4. T ermination by the B eneficiar y
The Rule in Sanders v Vautier ("SvV") - benefic may terminate T prematurely w/o
assistance of ct if:
(i) benefic are sui juris (not minors or mentally incompetent) &
(ii) benefic absolutely entitled to prop (all benefic ascertained & together their int
acct for all int in the T prop)

Sanders v. Vautier (1814) UK
 great-nephew left w/ stock under will
 by will's terms, gift was to vest at age 25
 ct permitted g-n to take gift at age 21 (age of majority)
 benefic has right to require t'ee to make prop dist'n terminating T prematurely
   if test above met
 policy: owners of prop s/n/b restrict in their use of it

 the rule in SvV dn permit benefic to direct t'ee in admin of T prop once rule
  met - must terminate the T

Preventing the Rule in SvV from Applying

1 benefic            (i) make int vested but st divestiture (condition subsequent)
                     (ii) make int in prop contingent (cond'n precedent)
                     (iii) insert a gift-over

1+ benefic           choose unascertained benefic or benefic = minors
eg: gift left to daughter w/ term that prop only to be given "if and only if daughter
reaches age 30)
 argue appl'n of SvV - term m/b condition subsequent - if so, SvV applies if
    daughter legal age (prop vests st divestiture) or argue it is a cond'n precedent
    (rule of SvV dna since not entitled to prop until age 30) - note cts have a
    preference for early vesting and no gift-over here so likely SvV applies

 the rule in SvV was applied in the following case:

Re McCrossan (1961) BCSC
 settlement in favor of husband for life, then herself for life, remainder as she
    should appt in her will
 husband died & she sought to terminate the T
 she h/n exercised the power of apptmnt
issue: wife absolutely entitled to gift? or contingent int created under a T in favor
of others?
 POA dn remove absolute entitlement since could appt self but POA arises under
    will which is not effective until her death
 ct indicates if she releases her POA, then possibility of remainder int
    eliminated and she is absolutely entitled under the rule in SvV
 generally, T that expires has prop revert to settlor

5. Var iation of the Trust

At Common Law
 at CL limited power to vary terms of T:

Chapman v Chapman (1954) HL
 wealthy individ set up T for grandchildren w/ right of capital encroachment for
 problem was the right of encroachment meant w/h to pay estate duty
 hence wanted to transfer T funds to new T w/ same terms except
    encroachment rights
issue: could the cts vary the original T?
 held no - cts role is to protect minor benefic and potential benefic (ie unborn,
 even when benefic are sui generis cts w/n vary terms even when minor benefic
    clearly benefited
 only jurisdiction to vary T in:
    (i) conversion - convert minor's prop from realty to personalty & vice-versa as
    long as minor will benefit
   (ii) compromise - only arises when a lawsuit requires resol'n
   (iii) emergencies - sit'ns unforeseen by settlor, not provided for or threaten
   existence of T
   (iv) maintenance of minors - where income being accumulated to pay debts &
   minor benefic need $ in this respect (maintenance, education) but not entitled

By the Trustee
 t'ee can vary terms of T where granted the discretionary power
 this is question of construction - cts look for intention on part of creator to
   grant this power

By Statute
 statutes now grant cts wider powers to vary the T
 Variation of Trusts Act (in BC - same as Ont):
   1(1) where property held on T arising under will, settlement or other disp'n, ct
   may approve on behalf of,
       (a) minors or incapacity - int c/b vested or contingent
       (b) any person ascertained or not w/ potential future int - any specified
       (c) unborn persons
       (d) gift-overee - a/o who may take at occurrence of determinable event
   any arrangement
   (2) ct only exercises discretion to vary under (1) if it is to benefit of person

 purpose of allowing variations of Ts is to permit t'ee to cope w/ Δng tax and
  investment environments
 role of ct = guardian of those who cannot speak for themselves (minors,
  unascertained, charities)
 cts not concerned w/ how adult benefic w/b affected but how minors affected

Re Irving (1975) SC Ont
 Edith and David created T for only daughter E to receive income during lifetime
 under Edith's T, E could appt remainder by will - failure to do so meant
    remainder passed equally to her surviving kids
 upon E's death, surviving kids only entitled to capital if age 35+
 David's T same except E not given POA re: remainder
 upon ct appl'n, E was 59 w/ two kids in late 20s
issue: will ct vary T according to arrangement brought by E and kids?
 held - no variance - ct's role is to protect (i) infants now alive who may take (ii)
    unborn who may take (iii) persons who may be members of specified class in
    future & (iv) persons who may benefit by reason of exercise of discretionary
    power by t'ee
   must be a positive benefit to these benefic/potential benefit for ct to approve
   test to vary: does the proposed arrangement:
    (i) keep testator's original intention alive?
    (ii) benefit minors?
    (iii) is this a benefit a prudent, intelligent adult would take?
   E proposing 2 separate funds (i) issue of E (remainder as E appts) 10K (worth 2K
    now) (ii) value if no appt = 0.1 (offer $1,000) - definite value to remainders
   argue that likelihood of D+C (E's kids) taking before other potential benefic is
    very high (27 & 28 now)
   ct hold not a good bargain since if either D or C predeceases E, surviving kid
    may get all prop so minors may miss out
   since so much uncertainty re: benefit for minors, ct will not vary
   cannot argue this case under SvV since reaching age 35 means D+C not
    absolutely entitled to gift (argue cond'n subseq & pref for early vesting?)

 the test in Re Irving for "benefit" in respect of minor benefic = a benefit a
  prudent, intelligent adult would take
 the test for "benefit" m/b lessened by the following case
 test = affected pties aware of arrangement & no one benefic given advantage
  over another, ct may vary:

Teichman v Teichman Estate (1996) Man CA
 testator equally to D and E
 D took immediately but E's sh held in T until 10yrs after t's death
 probable reason for E's T was she suffered from depression - but evidence E
    capable of mnging own affairs
issue: can E take gift now?
 ct can vary if affected pties aware of arrangement & no one benefic given
    advantage over another

 not a precedent in BC since Man decision & Man stat has abolished rule of SvV

termination of T     (i) revocation by creator
                             (a) express power of revocation
                             (b) before constitution (before death if will)
                     (ii) revocation by benefic - rule of SvV [sui juris &
                     absol. entitled]

variation of T              (i) provided in deed/will (discretionary powers)
                     (ii) statute - ct will approve arrangement if benefic. to
                     benefic ct protect (minors, unborn, mentally

problems (p280)
1. PP est'd for EEs of ABC Ltd - broad powers of amendment - T est'd to hold ER &
EE cont'ns to fund PP benefits - corpus of fund > necessary to pay future benefits
        can T be amended so surplus reverts to ER?
        maybe if power to amend incl power to decide who gets surplus
        no otherwise since both EE & ER cont'd so both entitled to surplus

2. B died leaving following in test. T:
(i) $ in bnk acct to M until 30, int t/b held on T
 argue SvV for gift now? (i) M s/b sui juris & (ii) absol entitled - age prevent
     this? does if cond'n precedent (no vesting), dn if cond'n subseq (vesting w/
     divest possib) - cts prefer early vesting
(ii) 2 cottages to C for life, remainder to C's daughter D
 C dn have absolute int so cannot argue SvV unless D is of age - then can agree to
     terminate T
(iii) $5K bond to E at 21, otherwise to X - same as in (i) - interpret will to determine


 "resulting T" - legal tool to recover legal title when beneficial int dn pass
** generally, the rT arises automatically, as soon as prop is transferred

distinction btwn rT & cT
 cT m/b imposed contrary express intent, automatic rT arise due to failure to
    transfer benefic int (regardless of intent), but presumed rT depends on intent
    of transferor
 cT rooted in concept of unjust enrichment (rT rooted in restitution?)

3. Failure of Expr ess Trusts
 2 types:

(i) Automatic Resulting Trusts
express T but benefic int not effectively disposed of - prop results back in settlor
Situations Causing Automatic Resulting Trust

(i)     Fraud, mistake, undue influence, misrep'n - express T lacks requisite intent
(ii)    Contrary to public policy/illegal
(iii)   Failure to declare T:
                  where settlor intends T but fails to state terms & terms not
                   ascertainable by other evidence (either inter vivos or
                   testamentary gifts)

(iv)    Failure to fully dispose of beneficial interest:

        to extent gift fails, goes to residue of estate and whoever takes under
        residue clause takes failed gift

eg: drafter fails to provide for possible contingencies

Re Vandervell's Trusts (1974) Eng CA
 V gifted shs in Vco to Royal College of Surgeons in return for option to buy back
   shs (to transfer option to Children's Settlement)
 T document failed to specify which T would hold shs when option exercised (ie
   no benefic named)
 hence, failure to transfer beneficial int in shs to CS - automatic resulting T and
   shs held by V

Re Barrett (1914) Ont CA
 testator provided to daughter S "whatever $ in bank for purpose of meeting
    immediate current expenses of housekeeping"
 at time of will only small amt in bank - at death, considerable sum
issue: S entitled to all $ as absolute gift or s/b limited to amts necessary for
immediate housekeeping exp (excess to residue via rT)?
 quantum of funds dn matter - intention for absolute gift clear (ie no failure to
    transfer beneficial int so no rT)
 clear words of gift not cut down by purpose of gift

Re Trusts of Abbott Fund (1900) Chancery Ct
 fund for 2 deaf mute children through subscription from friends and neighbours
 surplus remaining at their death
 subscribers all known
issue: surplus to go to estate of deaf mute kids or result back to donors?
 intent never that kids get for other than stated purposes (assist in living)
 surplus to go back to subscribers
 this is not the normal result - general rule state in:

Re Sanderson's Trust (1857) Excheq Ct.
 where gross sum given & purpose attached, regard purpose merely as motive and
   gift as absolute (reasoning in Re Barrett)

(v)    Failure to comply with formalities, uncertainty of objects, lapse (object dies
       before testator or disclaims), failure due to rule against perpetuities

              eg: total failure of T: A gives $50K to t'ees for son S - if S disclaims,
              T fails and gift results back to her estate

              eg2: partial failure of T: A gives prop to S for life, remainder to S's
              kids - S disclaims
              does gift (i) go to kids right away (remainder accelerates), or (ii)
              revert to estate (rT) until remainder takes effect? - depends on
              when testator intended kids to take gift
               general rule = accelerated remainder unless remainder depends on
                 contingent int.
               can avoid failure and rT by specifying who is to take in event of
                 lapse, lack of COO, etc..

(vi)   Purpose of T is frustrated/impossible

Re Ames' Settlement (1946) Chancery Ct
 T created by husband's father as pt of marriage settlement (to husband for
   life, remainder to kids)
 marriage not consummated - wife annuls marriage
 annulment means marriage never existed
 hence gift results back to estate of husband's father since no basis for gift

(vii) Subscription Cases
 problems may arise when $ collected for purpose & satisfied - what happens to
 diff approaches outlined in Re Abbott (purpose fulfilled, then rT) and Re
     Sanderson (absolute gift, no rT) - cases where subscribers known
 what happens when subscribers not known/partially known? generally 2 options:
     (i) return to subscribers who c/b ascertained, or
     (ii) surplus is bona vacantia

Re Gillingham Bus Disaster Fund (1958) Chancery Ct.
   marines killed & injured by runaway bus
   3 mayors called on citizens to pay $ for assistance fund to defray funeral exp &
    assist injured cadets and thereafter to be used for "such worthy causes in
    memory of cadets as mayors may determine"
 $ collected mainly from anonymous donors (eg street drives, football matches)
 $ applied for stated purposes - surplus
issue: surplus to be paid back to donors (rT) or to State (in bona vacantia) if
absolute gift?
 held not an absolute gift b/c of stated purposes & not a charitable T
 hence gift fails and reverts to donors via rT
 for the donors who are known, to pay & rest in rT until t'ee can determine who
    other contributors are (eventually likely to be paid into ct then to state)
 problem w/ decision is that different intentions c/b fnd for various donors:
    (i) no intent that $ revert back - Ktual relnshp (pay $ for service such as bingo
    or football match) - hence s/b absolute gift
    (ii) intent that $ revert if gift failed (ie cond'n subsequent- divestiture) if purp
    of fund fails (result of case here)

Re   West Sussex Constabulary's Widows Fund Trusts (1971) Chancery Div
    fund for dependants of cops
    surplus when wound up & certain subscribers c/n/b determined
    ct held that intent of anonymous donors to collection boxes was absolute gift so
     surplus to be pd bona vacantia

(i) to determine what to do w/ surplus, ct looks at intent of subscribers
(ii) intent inferred from circumstances:

        (a) Ktual relnshp? (ie donor receives service/good for cont'n - eg benefit
        concert)? (West Sussex) - absolute gift - no rT

        (b) donation w/ nothing in return - generally not absolute gift so return
        surplus (rT imposed) (Gillingham Bus) but look at circumstances (West
        Sussex) such as collection box donations

(2) Presumed Resulting Trusts
(i) person voluntarily conveys prop to another &
(ii)purch prop in another's name (legal title w/ another) but no intention that person
takes beneficially
 equity presumes resulting T [equity presumes bargains not gifts]
 transferee w/h to prove gift intended
 be careful w/ presumption of advancement (gifts to kids) - here onus on
  transferor to prove not a gift
 arises in sit'ns of joint accts

Unincorporated Associations

 not legally persons -cannot hold prop
 must hold prop via a t'ee
 Q arises - what happens to prop when ass'n dissolved?

   (i) charitable ass'n: prop dist'd to similar charitable org'ns

   (ii) non-charitable ass'n:
   (a) return to members - problem if donations from non-members or
   (b) Crown - in bona vacantia

traditional approach - property results to contributing members (cts held that
sometimes just existing members take from rT & sometimes past & present
members take)

modern approach - Ktually based:

(i) if ass'n exists to provide benefit, right to benefits is Ktual & if benefit enjoyed
by member, no claim to prop through a rT
          if all members dead or only 1, no rT (prop bona vacantia)

(ii) relnshp btwn members & ass'n Ktual so rules of ass'n may determine how to
distrib prop or if no rules, prop distrib among members on dissol'n (not bona
vacantia unless all dead or 1)
          normal rule is to divide equally

Re West Sussex (see above) - ct held prop bona vacantia since members had rec'd
what K'td for

** rule: all property is that of ass'n & st its rules - thus avail to members unless
failed express T (then rT in favor of contrib)

Problem #2 (pg 379) Unincorp ass'n set up for purp of providing cheap funerals and
"to eat drink & be merry" - disbanded and $50K left in T - $ comes from
membership fees ($5/mth per family member) and fund raisers (bazaars, bingo) -
non-members were present at these functions - out of 40 original members, 12 left
 who gets surplus held in T?
 generally, modern approach is that K governs surplus where something received
   in return (eg the bingos) - Gillingham Bus Disaster
    thus - no rT claim (K governs)
 but for membership $, a record of contributors exist - hence t'ee has oblig'n to
   make reasonable survey for potential benefic before prop dist'd
 after survey, pay out $ but keep some in ct in case more members of class come
 this is not charitable T so no oblig to pay surplus to similar charities
 in respect of donations made from time-to-time - as long as record of donor,
   they get surplus in proportion to cont'n
Pension Trusts

   whether the PP is st trust or K law depends on wording of PP document
   if Ktual, relnshp governed by pension agreement
   generally PP are trusts and thus must be admin in best int of benefic (EEs)
   ER can take surplus from pension trust only if right of revocation reserved
   generally 3 sit'ns possible:

         nature of PP cont'n by?    legal consequences
    (i) trust         ER&EE         -most common sit'n
                                    -rT applies for surplus (prorata based on
                                    -ER must retain revocation right to receive
                                    entire surplus

    (ii) trust       ER             -ER generally reserves power of revocation but
                                    would receive surplus via rT

    (iii) trust      EE             -ER has no claim to surplus
                                    -automatic resulting T in favor of EEs (like
                                    NHLPA T surplus)

Destination of Property Under a Resulting Trust

 generally excess goes back to contributor (voluntary transfer)
 not if transfer is for consideration:

    A to B for C     transfer voluntary, C disclaims     prop reverts to A

    A to B for C     B gives A consid, C disclaims       prop reverts to B
       [not unconscionable for B to hold prop in equity since consid pd - equity
       presumes bargains not gifts]
 the consideration given to t'ee dn include normal fees for undertaking the trxn
  (eg Canada Trust as t'ee)
 if >1 person giving consid, prop results in proportion of consid given

   Rule of Lassence v Tierney - Exception to Resulting Trust Rule
   [the cases in this area are not all that clear]
    where an absolute gift but a T added to gift and T fails, absolute gift
      eg: A to B for C in trust. If C should predecease A then to D

    sometimes unclear whether an alternate disp'n exists
    rule in Lassence v. Tierney is rule of construction that if an absolute gift to
     a legatee and add'l trust engrafted on first gift and the T fails, the first
     absolute gift is saved (rT dn occur b/c of failed T)
    rule restated in Hancock v Watson (1902) HL - testator gave residue of
     estate to T for wife for life, corpus in 5 pts incl. X - also provided that X's
     portion to be held for her life, remainder to others - ct fnd remainder void
     for remoteness but applied Tierney rule so that failed trust (the engrafted
     T) failed, but the first absolute gift held - X rec'd share of residue

    this rule applied in:

[don't understand the following case:]

   Re Goodhue Trusts (1920) SC Ont
    G settled $ on trust for daughter H, for life when she married, remainder to
       her issue as she should deed/will [POA] & in default of apptmnt, to her kids
       equally in T at age 21 or marriage, whichever was first
    on her death, H dealt w/ property as though she had absolute int (and not
       life int) dividing father's settlement after debts into 5 pts [4 to her kids
       and 1 to grandkid since parent deceased] being only pt of estate into 5 pts
    residue to 4 living kids equally
   issue does gift of father's settlement fail since violates rule against perp & H
   dealt w/ prop as if hers (POA exercised?)

[get s/o to explain this case to me]

 rule in Tierney applies also if the T is not exhaustive:

   Watson v Holland (1985) UK
    settlement for 2 sons
      corpus t/b held on T until 25, then for life, w/ certain POA
      in default of apptmnt, T t/b held for child's kids to attain 18 or marry
       before 18
      T dn provide for possibility that child would die before 25 w/o issue or that
       children w/n have kids to reach age 18
      referential T w/ certain cond'ns - this T not exhaustive
      child died before 25
      ct held that first pt of gift unequivocal gift - so no rT

4. Purc hase Money and Volunt ary Transfer Resulting Tr usts
**equity assumes bargains, not gifts
 hence if put property in name of stranger, gift not presumed - payor presumed
   to own prop still
 onus on stranger to prove gift
 "stranger" = a/o but spouse or child of transferor
presumption of advancement - reverse is true if transfer prop to kids - onus on
transferor to prove no gift
 2 types of resulting Ts may be imposed:

B. (i) Common Intention Resulting Trust
 traditionally applied in marital & cohabitation disputes
 where one pty held title & other had cont'd $/effort then a rT is imposed for
    the non-titled spouse/cohabitee in proportion to con'tn
 reason = cts infer a common intention that the asset is joint
 concept mainly ousted in spousal disputes b/c leg'n applies, but still applies in
    co-habitation disputes
 Cdn ct invented concept

C. (ii) Purchase $ Resulting Trusts
 where P enters agreement to purch realty/personalty from V & P pays purch
     price but prop in V's name
 presumption = rT in favor of P
 presumption m/b challenged if:
(i) purch $ was loaned to V by P
(ii) purch $ was gifted to V by P

Dewar v Dewar (1975) UK - D purch house for 4,250 - title in D's name - mtge for
3,250 - intention that mother & brother should live in house - each cont'd 500 -
mother died
issue - were the amts advanced by mother & brother gift & loan respectively based
on presumption of advancement?
held - mother's cont'n presumed t/b gift (rT imposed) but no evidence that
brother intended loan (ie no presumption of advancement btwn siblings)
 thus brother owned 500/4250 of house (rT imposed)

  where A buys prop in his name and B proves $ for PP was a loan to him, A is held
   t/b agent for B & holds prop on rT
 contrast w/ sit'n where A buys prop in own name & agreement w/ B that will
   transfer prop to him once B pays PP - sit'n governed by K, not equity
MacLeod v MacLeod (1983) NS SC
 P & wife own 2 props - go bankrupt
 brother of P agreed to buy homes & let P/wife live in them
 P agreed to repay brother w/in a yr & take title back
 eventually P does pay but brother w/n convey prop to him (argues pmts in nature
   of rent)
 P c/n argue express T (since oral agreement concerning realty) but argues rT
held: ct finds intention that brother hold in P's name (loan) and that property to be
reconveyed once pmts on loan made
 thus brother holds on rT
 ct finds sit'n analogous to where A advances PP (here P through loan from
   brother) and B takes prop in his name (brother here)

D. Voluntary Transfer Resulting Trusts
 with PMrT (above) clear that where V transfers to A for $ and title taken in B's
    name, B holds on rT for A
 not clear what is result where A transfers prop to B for no consideration (title
    in B's name) - here B furnishes no value for an int in the prop
 for personal prop, if A transfers to B for no consid and B is stranger, B holds
    prop on rT for A (gift not presumed)

Neazor v Hoyle (1962) Alta SC
 transfer by N to sister of real prop to avoid estranged wife (H) from getting on
    his death
 N dies - H claims that sister held prop on rT for N's estate (no presumption of
    advancement since N dn give value and a stranger at law)
issue did rT arise in respect of voluntary transfer?
held - no - sister gave value (pd taxes) & N got benefit from transfer (fond of
sister, house remains in family)
 so N intended gift (presumption of rT rebutted) & no rT arises

E. Presumption of Advancement
    generally a gift is not presumed in equity unless the presumption of
     advancement arises (mainly kids (blood/marriage/adopted- may apply to
     cohabitees) so that consideration implied
 today the presumption is weak btwn husband & wife (dealt w/ in statute)
      used in rare sit'ns (eg no evidence to rebut presumption) - Mehta - neither
         pty alive to give evidence - ct held presumption strong here but weak where
         both pties avail for evidence
 presumption is still strong btwn parent & child
importance of advancement today:
(i) where evidence is evenly balance, the presumption governs
(ii) if donor transferred prop for fraudulent purp (eg to avoid creditors) cannot
rely on presumption in transferor's favor
(iii) strong presumption re: parent & child
 presumption of advancement is viewed as an advance on the donnees eventual
     estate (share not large as proportion of entire estate)
     Pahara v Pahara (1946) SCC - husband acquired assets w/ wife's assistance -
     put in her name - understood prop t/b for benefit of kids of both husband &
     wife - wife left to her kids only in her will (predeceased husband)
      normally presumption of advancement would work in her favor but strong
         evidence gift of entire estate not intended - only intended to advance a
         share of property to her kids

Lindenblatt v Lindenblatt (1975) SC Ont
 husband & wife buy 2 lots as JTs in London w/ husband's $
 husband built homes on lot w/ wife's assistance - sold in '67
 proceeds kept in his name - acquired land in Kingston in '65 & built home (in his
 part of Ktown home financed w/ London $
issue: rT impressed on Ktown home in favor of wife?
held: wife had beneficial int in London prop - rT argument not necessary since
evidence that he gifted 1/2 int in prop to her - hence he held 1/2 proceeds of home
sale in rT for her (her int in the title to the prop)
 no common intention that Ktown prop s/b held 1/2 in wife's name but proceeds
    from London sale used to finance this home so wife has 1/2 int in Ktown on rT

   note 4 (pg 345) - father bought sweepstake ticket in daughter's name - she won
    - minor so $ paid into ct - father's argument that $ needed to maintain family
    (education, etc..) unsuccessful - ct held that presumption of advancement
    applies since transfer of prop to child so daughter holds absolutely

F. Rebutting the Presumption
   evidence needed to rebut presumption of advancement is strongest when
    contemporaneous w/ gift unless subsequent acts that are contrary to interests
    of transferor

    F.1 Illegal Purposes

       where A voluntarily transfers prop to B to put beyond reach of creditors or
        some other fraudulent purpose

(i) actual creditors - where immediate creditors that A trying to prevent from
getting access to his prop = fraudulent conveyance (prevented by leg'n)

(ii) anticipated future creditors - where A enters risky venture & wishes to avoid
future creditors from seizing property
 result depends on whether transferee enjoys presumption of advancement or is
     st a rT (a stranger)
     1. anticipated creditors - presumption of advancement applies
      transferor must prove no gift intended
      difficult since cannot refer to evidence of fraudulent intent
      problems arise when relnshp breaks down since transferee can claim prop as
         own due to presumption of advancement - result:
         (i) illegal purpose carried out - ct allows title to remain in hands of
         transferee under presumption of advancement
         (ii) illegal purpose not carried out - ct may restore title to transferor on
         basis that transferor has repented (clean hands) - as long as central
         evidence is not that of illegal intent

        Scheuerman v Scheuerman (1915) SCC - husband purch matrimonial home -
        title in wife's name - creditors pressing for pmt at that time - creditor paid
        later & w/n/h had access to home under statutory exemption at that time
         held that husbands intention to defraud creditors suffic to prevent
         husband failed to prove that fraudulent purpose h/n/b carried out

        Krys v Krys (1929) SCC - father conveyed home to son to prevent his own
        wife from accessing it
         ct permitted recovery here - no evidence that any creditor defrauded or
           prevented recovery by the transfer
         hence guilty intent but not carried out
      Goodfriend v Goodfriend (1972) SCC - farm in name of husband -
      transferred to wife on her persuasion b/c of threat of lawsuit from her
       husband given prop back - illegal intent not carried out (no creditors
          prevented from recovery here)
       fraudulent intent alone not suff to bar recovery (Scheuerman seems to
          suggest this)

      Tinker v Tinker (1970) Eng CA - husband transferred prop to wife to avoid
      future creditors re: garage business - none materialized and husband wanted
      prop back
       ct denied recovery - cannot intend to hold prop 2 ways (re: wife - he
         owns; re: creditors - wife owns)
       conveyance to wife was absolute gift - presumption of advancement -
         cannot rebut w/ evidence of illegal intent

       SCC turned down leave to appeal on this issue in following case:
      Maysels v Maysels (1974) SC Ont
       husband & wife buy matrimonial home w/ equal sh of $
       title in wife's name to protect from future creditors
       wife declared prop held on T for husband - not binding since made under
       husband trying to recover prop after separation
      held: wife keeps prop - distinguished Goodfriend - cannot use illegal intent to
      disprove gift

G. Joint Accts
 where joint acct opened & A only contribs $, cts apply concepts of presumption
    of advancement & rT
 bank looks at both A & B as entitled to acces acct (if A dies, B continues to
    access the acct)
 equity looks at the relnshp of A & B to each other - where B is a volunteer,
    result m/b:
    (i) B has no beneficial int - hold prop on rT for A
    (ii) B holds int only during life of A
    (iii) B acquires int only at A's death
    (iv) B holds int during A's life and after
    test: intention of A - evidence at opening of acct

Edwards v Bradley (1956) SC Ont
 E opened joint acct in her and B (daughter)'s names
 E was sole depositor and w/drawer
   evidence E wanted balance of acct to go to B at death - failed since dn comly w/
    formalities of testamentary gifts (will left acct to all children)
issue: (bear in mind that presumption of advancement dn arise at this time btwn
daughter and mother - only son and father) did B hold on rT for E's estate or was
there a gift to B of joint acct?
held: look at intention of E - presumption of rT rebutted by evidence of gift - since
B holds legal title already, evidence that mother wanted benefic int to pass is
suffic to pass gift to B
 SCC overturned this decision on basis that E's intent was not to gift acct to B,
    but to all kids equally as evidenced by will - hence intent of absolute gift is
    overridden by will

Problem 1 (pg 378) testatrix A gave power to appt residuary by will to X - gift-over
to Y in event X predeceases testatrix - X apparently exercised POA in will by giving
prop in T (to B) to Z - Z predeceases X (T fails)
issue: who takes legal title?
 could argue B (absolute gift or bare legal title) - could argue rule in Tierney - T
    to Z fails so gift to B (who holds legal title) succeeds
 could argue X - T to Z fails so prop results to X's estate - probable result if
    valid exercise of the POA - if not valid exercise of POA, then the gift to X fails
    and prop results to testatrix (not Y since X dn die w/o making will)
 most likely result is that X gets prop - POA exercised and had will


 imposed by ct - cTee forced to convey prop to A
 imposed to remedy breach of fiduc oblig (eg fraud, bribes)
 here cts recognizing a proprietary int A has in the prop the cTee holds
  eg: X buys prop w/ funds misapprop from Y - cT imposed for Y so X's legal title
  subverted to Y's equitable int
 as cTee, X's only duty is to convey prop

 the key case in this area is:
Keech v Sandford (1726) Chancery Ct - D was t'ee - held a lease of  on Romford
Mkt for minor benefic - when lease expired t'ee sought to renew for T but not
permitted - so renewed in own name - P brought action to force assignment of lease
to T
held: cT imposed re: lease - ***fundamental oblig of t'ee is not to benefit in any
manner from position as t'ee
 here, even though benefic c/n lease, t'ee w/n/h known about the lease if not for
   his position as t'ee
4. Nature of Constructive Trust
 cT have nothing to do w/ intention - imposed by operation of law
 cT = remedy - invoked when recovery of prop is more desirable than
   dmges/acctng for s (eg prop misapprop but losses have resulted) - also if get
   accting for  then rank behind secured creditors
 2 categories of cTs:

   (i) traditional/substantive cT (UK) - the Keech v Sandford cT - imposed where
   benefic has proprietary int in prop

   (ii) remedial cT (US) - cts create a proprietary int in prop as a remedy
    focus is remedy for unjust enrichment where dmges w/n/b suffic
    elements:
        (i) unjust enrichment
        (ii) deprivation
        (iii) no lawful reason to permit unjust enrichment (eg spouse working in
        business - marital break down - claim for 1/2 business - juristic reason to
        prevent her claim is that she received salary - other spouse not really
        unjustly enriched here)
  starting point for remedial cTs is:
 Pettkus v Becker (1980) SCC
  man (P) & woman (B)(cohabiting) work bee farm together
  land in P's name - breakdown in relnshp
 issue: who owns the bee farm?
 held: c/n apply Maysels since no intention that B should have an int in land (so
 common intent rT dna) - turn to cT (no intent needed)
  is there unjust enrichment here so cT imposed?
  test: (i) unjust enrichment (ii) deprivation (iii) no juristic reason to permit
      unjust enrichment)
  here, B exerted efforts to further business & causal connection btwn her
      efforts and property - test passed (unjust enrichment of P here)
  cT awarded for her 1/2 int in bee farm

 Cda position on cTs is a hybrid of the US and UK positions

contrast/benefit of cT v. dmges
      (i) legal remedies (proprietary & personal)
       restitution = giving back what was lost (specific prop = proprietary
           remedy) or value that is lost (dmges = personal remedy)
         eg: AG HongKong - wanted remedy = proprietary int in prop purch from
         misapprop prop rather than dgmes (since would rank behind other
        personal remedies
         (a) accounting   where increase in value of prop misapprop
                          conduct of t'ee adopted in breach

          (b) dmges          where losses from misapprop
                             restitution - conduct of t'ee not adopted
       (ii) equitable remedies - trust imposed - where value of prop is insuffic to
       remedy a wrong
        equity follows the law - if legal remedy suffic, then no equitable remedy
            w/b imposed

Soulos v Korkontzilas (1997) SCC
 real estate broker (K) agent for S in deal to buy commercial prop
 K made offer on behalf of S - vendor told K price he would accept
 K dn tell S - arranged to have wife buy for him
 S sued for recovery of prop in breach of fiduc oblig
 prop had declined in value by time of trial (hence dmge award not suffic to
   remedy breach)
 S had non-monetary int in prop = ethnic value to community for ownership of
[hence case for cT made out (i) dmges insuffic since prop declined in value & (ii)
personal non-monetary int in specific performance via a cT]

issue: is unjust enrichment necessary for remedy of cT? no unjust enrichment here
since property declined in value (no corresp deprivation)
held: confusion in lower cts whether could award cT where no unjust enrichment (ie
was the UK concept of cT still alive in Cda or just US concept?)
 SCC held that both US & UK concepts alive in Cda
 cT m/b imposed where no unjust enrichment - to condemn a wrongful act and
    maintain integrity of fiduciary relnshps
 when a cT will be imposed:
    (i) where good conscience requires (eg wrongful act)
    (ii) to maintain integrity of fiduc relnshps
    (iii) unjust enrichment/ unfair effect on pties/3rd pties - Keech v Sandford
          where fiduc gains by his position
 here S gets prop but must indemnify K for costs

 breach of fiduc oblig - remedies:
  (i) personal = dmges (restitution), acctng for s, or
  (ii) proprietary = cT (recognizes existing prop right or creates one (remedial

2.   Gains by Fiduciaries
    cT arises most often when t'ee gains from position
    general rule (Keech v Sandford) - a fiduc m/n  from his position
    2 categories of fiduc:
     (i) traditional categories = client-solicitor, doctor-patient, t'ee-benefic (most
     intense fiduc relnshp)
     (ii) fiduc by circumstances = eg: incest, sexual abuse, investment advice
     (Hodgkinson v Simms)

when a fiduciary relnshp exists:
 stng pt is Frame v Smith - Wilson's criteria:
   (i) fiduc has ability to exercise power/discretion
   (ii) this power c/b exercised unilaterally
   (iii) benefic/fiduc is particularly vulnerable to this exercise of power
 in Hodgkinson LaForest indicated that these criteria are not hard & fast
    in this case client not particularly vulnerable since not forced to invest (dn
        have to follow advice)
    here it was the failure to disclose the fiduc's self-int (ie commissions from
        MURB sale) that led to breach
    thus, nature of trxn is important in determining whether fiduc oblig exists
    generally, where sophisticated persons, m/n/b scope to find fiduc relnshp
        exists (vulnerability criteria not binding)
    but here Simms w/h expected H to be acting in S's best int by virtue of
   **for majority, fiduc relnshp exists if a relnshp of trust & confidence exists
   and P relied on D
    minority stressed vulnerability aspect of Wilson's test - indispensable to
        fiduc relnshp
 K rights not binding on pties in fiduciary sense - cannot K out of these oblig
 remedies - intended to remove temptation for fiduc for acting in own self-int

Restricted Actions Once Fiduciary Relnshp Found
 once find fiduc oblig exists, prevented from doing the following:
   (i)  from position
   (ii) no conflict of int - client first
         conflict readily found in real life - eg: t'ee & director of co whose shs
            held by T - t'ee has fiduc oblig to co and T (may conflict - distributing
          dividend m/b in best int of life tenant but not co) - to solve conflict: (a)
          T instrument gives express power for t'ee to become co director, or (b)
          apply to ct to have t'ee replaced

Purchase of Trust Property
   general rule of "self-dealing": where A purch prop from B in arm's length trxn &
   A has special knowledge that B dn have, so that he purch the prop at a bargain,
   no cause of action for B (valid trxn)
    however, where A stnds in a fiduciary relnshp w/ B, A precluded at equity
       from taking advantage of special knowledge & accntable to B
    trxn is voidable & prop held in cT for B
    rule applies where A mges prop and/or engaged to perform sevices (eg real
       estate broker, solicitors) for B
       (i) fiduciaries to sell - real estate broker
       (ii) fiduciaries to mge - t'ees
       (iii) advisory fiduciary - solicitor
       (iv) overseer fiduc - t'ees in bankruptcy
       (v) agents & EEs of fiduc
    rule codified in many diff statutes

   exceptions to the rule of self-dealing:
    only applies to prop in respect of which fiduc relnshp exists - dna if purch in
      non-fiduc capacity (eg solicitor purch truck from client)
    rule dna where express powers to conflict given to fiduciaries under the T

      Ballard Estate v Ballard Estate (1991) Ont CA
       estate controlled a business
       3 of t'ees of estate involved in business - given express power to make
          binding decisions re: business even though the t'ee may be self-dealing
       also permitted t'ees to purch any estate assets w/o ct approval as long
          as at FMV as long as the t'ees, other than purch t'ee considered it fair &
       one t'ee proposed loan to estate to enable it to take full control of
       one other t'ee approved & one rejected loan
      held: ct not needed since T instrument permitted self-dealing w/ estate
      assets as long as 2 of t'ees agreed

      Holder v Holder (1968) Chancery Ct
       testator owned 2 farms - leased one to son V and another & worked
         other w/ V
    will directed sale of farms & division of proceeds among widow & kids
    V one of executors - renounced after had acted in capacity as executor
    V purch one farm at auction for FMV - brother claimed a conflict of in
   held: at trial - breach & hold on cT w/ acctng for  (classic result of general
   rule of self-dealing)
    on appeal, ct applied policy of rule - recognized no conflict here - brother
       acquiesced in trxn & V dn hold knowledge of prop as result of office as
       executor, but via working/leasing farms - never hid intention to purch
       farm, so benefic not looking to him for protection & ct had no sympathy
       for brother
    shows that equitable remedies discretionary -this decision only applies on

 whether trxn fair, honest or not, 3 exceptions:

   (i) subsequent fiduciary: fiduc oblig'n assumed after the agreement to purch
   entered into, &

   Crocker & Croquip Ltd v Tornroos (1957) SCC
    C, D & T equal owners via shs in co
    under articles, s/h held prorata a pre-emptive right to shs another owner
       should want to sell
    T died in 1940 - apptd widow, C & D as executors - oblig to sell T assets
       but could hold shs as long as wished
    D died 3 mths later
    D's widow sold shs to C in 1945
    C retired from T's trust in 1948
    T's widow sued C on basis that he s/h exercised pre-emptive right to
       purch D shs for T's trust as fiduc - breached fiduc oblign by taking up
       shs himself
   issue: did C breach his fiduc oblig to T's trust by purchasing the shs?
   held: no - several reasons:
           (i) T's trust c/n/h bought since not auth'zd - speculative investment
           (ii) T had no oblig to apply to ct to vary will so that T's trust c/h
           purch speculative investments - variation is rewriting of will & limited
           power ("salvage") where T in jeopardy - not here
           (iii) general rule of self-dealing dna here since no conflict of int -
           t'ees of T's trust c/n/h bought shs & **C's right to purch shs
           predated fiduc oblig'n re: T
            T knew conflict c/h arisen when drafted will & dn attempt to avoid
                in T instrument, so implied consent to C purch shs
       (ii) fully informed consent: benefic consents to trxn after full disclosure of
       all material facts by fiduc & pmt of full FMV

              Crighton v Roman (1960) SCC
               R, C & F entered into JV
               R, mgng director of JV, acquired prop for JV (mining claims) for
                 10K - R 1/2 purch price and C & F 1/4 each
               R sold claims to North Denison Mining for 15K & all shs of that co
               dist'd the $ to JVs according to cont'ns but retained shs in own
               C sought for proportionate amt of shs be transferred since R
                 breached fiduc oblig
              held: R breached fiduc oblig'n - t'ee may only purch beneficial int in T
              prop where:
                     (i) no fraud/concealment
                     (ii) benefic had indep advice
                     (iii) adequate consideration paid
               here R failed to meet this onus

       (iii) judicial consent: ct may consent in certain circ even when (a) not all
       benefic agree to the sale or (b) benefic are not all sui juris
        ct will grant this exception only rarely!

    benefic can avoid trxn (since prop belongs to him)
       if fiduc holds prop, cT imposed
       if fiduc holds proceeds (sale of prop to 3rd pty), proceeds held on cT or
         fiduc acctble for proceeds

3. Breach of Confidence
 as illustrated above, where fiduc acquires confidential info in course of fiduc
   relnshp & uses it for personal , made to disgorge the 
 breach of confidence is a suffic basis for action alone in equity - will be made to
   disgorge  if use confidential info for own benefit where disclosed in
   confidence, even if no fiduc relnshp exists
"confidential info": (i) info = secret (not known to general public)
                     (ii) info dn need to be new discovery (i.e. patentable)
                     (iii) ordinary skills of life/employment not confidential
                     (iv) illegal info or the protection of info where it is contrary to
                     public policy is not confidential
 diff btwn breach of confidence in fiduc v non-fiduc capacity is that where non-
   fiduc has acted honestly, likely only liab for dmges - fiduc m/b made to acct
 leading case on breach of confidence is:

LAC Minerals v International Corona (1989) SCC
ratio - breach of confidence exists (whether breach of fiduciary relnshp exists is
not as clear - self-dealing rules apply)
  however, ct split on whether a fiduciary relnshp exists (LaF = yes; Sopinka = no)
     and what elements of fiduc relshp are
  fiduciary relnshp tends to exist where relnshp is connection btwn actors (not
     info) - there is a pre-existing duty
  non-fiduc relnshp usually where only connection is through info (no pre-existing
 where breach of non-fiduc relnshp, remedy = acct for  (cT rare even though
    imposed in this case)
 where breach of fiduc relshp, remedy = acct for  & possibly cT
 rationale for breach of confidence action is that info of secret character has
    been disclosed of understanding it would remain protected - unfair advantage
    taken w/ info
 "confidential info" = (i) secret info - not generally public & (ii) dn have to be new
    discovery & (iii) policy - public would protect non-disclosure

 C has claim in Hemlo (N. Ont) - inadequate capital to develop
 C's geologist suspects large claim in adjacent prop (William's prop)
 mentions this to LAC as part of discussions to get a pship to develop the Hemlo
   prop - this info not public, though some info re: Hemlo claim was
 LAC put in offer on William's prop that was better than C's - accepted & began
   to develop
 C claimed breach of confidence - want dmges & cT on William's prop - LAC
   claimed info not disclosed in confidence
 C claimed that w/o breach of confidence, they w/h got prop & developed
 LAC claimed that w/o breach, JV w/h gone ahead btwn LAC & C (so dmges s/b
   limited to 50% of lost  and no cT so that LAC cut out of deal)
A. breach of confidence (unanimous) - 3 requirements:
   (i) info m/b confidential
   (ii) info disclosed in circumstances of confidence &
   (iii) info used in unauthorized manner to detriment of pty disclosing it
 here, test met:
   (i) info (direction of gold veins into William's prop) given to LAC in course of
   negotiations w/n publicly avail
  (ii) in mining industry, when seeking JVs re: claim, generally understood that info
  is confidential during negotiations
  (iii) misuse of info = usurping C in buying W's prop
 question re: breach of confidence is not what LAC is entitled to do w/ info, but
  what it is prohibited from doing
   confidee s/n/b allowed to  from confidential info in any manner

B. does fiduciary relnshp exist (obiter)?
(i) LaForest: finds a breach of fiduciary relnshp - **when does fiduciary relnshp
 starting pt is Wilson's reasoning in Frame v Smith:
         (i) fiduc has discretionary power,
         (ii) fiduc can unilaterally exercise power to affect int of benefic
         **(iii) benefic particularly vulnerable to exercise of discretionary power
 vulnerability reqmnt not stringent in every fiduc relnshp so can find fiduc
     relnshp btwn corps
 here C is susceptible to actions of LAC so fiduc relnshp exists
 remedy: for breach of confidence = flexible - injunctions common, acctng for 
      remedies for breach of confidence & fiduc relnshp breach dn differ
      here, C w/h prop if confidence not breached so awarding cT approp re: W
         prop - approp reward due to uniqueness of prop (cannot be replaced w $)
      measure LAC's gain against C's loss - lost opp to purch prop
(ii) Sopinka - vulnerability aspect of whether fiduc relnshp exists is key
 generally no fiduc relnshp where sophisticated corp'ns involved
 breach of confidence - dmges suffic to remedy (restitution - C in position as if
     no breach of confidence) - would award 50% lost  since believes relnshp w/ LAC
     w/h continued if no breach
 generally breach of confidence c/b mended w/ dmges (cT rare)

4.   Stranger as Constructive Trustee
    strangers to an express trust may become liable
    may be agent to T (dn receive T prop) or receives and deals w/ T prop
    stranger may intend to defraud T or act innocently
    the key component to the liability of the stranger is knowledge - what level is
     suffic to make stranger liab?

(i) knowing assistance in breach of trust
 stranger assist t'ee in breach of T w/ knowledge of dishonest/fraudulent
     designs (in equitable, not CL terms)
 liability re: knowledge can occur in several ways:
     (i) actual knowledge of the trust, or
     (ii) constructive knowledge -
       (a) stranger negligent in failing to make req'd inquiries, or
       (b) stranger wilfully shuts his eyes to t'ees dishonesty (subjective) or
       wilfully/recklessly fails to make inquiries an honest & reasonable person
       would make (objective)

  Air Canada v M&L Travel (1997) SCC
   M & V owned M&L - both were officers of co
   in 1979 M&L entered a passenger sales agreement w/ Air Cda - funds
      collected for ticket sales were held in trust for AC
   T accts set up but never used - funds deposited in M&L's general operating
   financial problems - bank drew out all funds in operating acct to satisfy bank
   AC claimed $ against M & V personally
  issue: when can directors of co be held personally liable for breach of T by
  held: M&L's act'ies in breach of trust
   whether M&V personally responsible depends on whether their conscience is
      sufficiently affected to justify imposition of personal liab ["knowing
   this is determined by looking at:
      (i) degree of knowledge of stranger - actual knowledge or
      recklessness/wilful blindness is sufficient
       constructive knowledge is insufficient to bind stranger's conscious
       if stranger rec'd a benefit by breach, inference that stranger m/h
           known of breach
      (ii) nature of breach of trust - 2 lines of reasoning:
              (a) UK cases - Barnes v. Addy - requires participation by stranger in
              (b) Cdn cases - person who controls/directs corp'n c/b liable for a
              negligent or innocent breach of T if the person knowingly assisted in
              the breach - proof of dishonesty/fraud not req'd
 in present case, M&L was dishonest/fraudulent in placing T $ in general op acct
  where it was subject to demand of the bank
 knowledge hurdle not difficult to overcome in closely held corp'ns - directors
  usually have knowledge of all the act'ies of the co in small/closely held co
 the breach was benefic to directors since their personal liab w/ the bank was
  reduced - knowledge component fulfilled

(ii) knowing receipt of trust property
 stranger who receives T prop transferred in breach of T purports to act for
  himself, not benefic - hence T property received in personal capacity [w/
  knowing assistance, prop not received in personal capacity]
 m/b a cTee of prop unless bona fide purchaser for value - if notice of T, then
  liable (actual & constructive knowledge)

Citadel General Assurance v. Lloyds Bank Canada (1997) SCC
 CGA underwrote insurance sold by Drive On ("DO") to auto dealers
 auto dealers collected premiums and remitted to DO who remitted to CGA net
    of commissions
 DO wholly-owned by International Warranty ("IW") - DO and IW used Lloyds as
    its bank
 bank (senior officers) knew DO deposited insurance premiums
 DO got into fin'l difficulties - IW instructed trans of $ to cover premiums
 eventually bank trans $ from DO's acct to cover loan IW had w/ them
 DO cannot pay premiums to CGA - judgment against this co, but no assets - CGA
    claims against bank in breach of cT
issue: can Lloyds be held liable to CGA as cTee?
held: yes - officers s/h known $ was T prop (liability on basis of "knowing receipt")
 test is grounded in actual or constructive knowledge - 2 categories:
    (i) "knowing dealing" - receive T prop lawfully as stranger and not for own
    benefit (usually agents)
    (ii) "knowing receipt" - strangers receive T prop for own benefit & w/ knowledge
    that transfer breaches T
 the present case involves the second category - 2 main issues for liability in
    knowing receipt cases:

(a) receipt requirement - T prop rec'd or apply T prop for own benefit - rec'd in
personal capacity and not as T agents
 here the bank rec'd T funds and applied to own benefit (reduce loan w/ IW)

(b) knowledge requirement - degree of knowledge bank had in relation to breach of
T - 2 lines of authority for this:
        (i) actual knowledge - actual knowledge, not constructive knowledge is req'd
         hence knowledge requirement for "knowing assistance" and "knowing
             receipt" is identical
         in Air Canada, the concern with knowing assistance was in personal
             liability of stranger - degree of personal fault w/ dishonest act
             benefiting stranger
         knowing receipt is not about fraud - based on fact that stranger acquired
             the T prop (proprietary remedy needed to restore prop to benefic)
      (ii) constructive knowledge - threshold of knowledge is lower than for first
      line of cases
       test for constructive knowledge: stranger liable as cTee in
           dishonest/fraudulent design where there is knowledge of the
           circumstances which would indicate to an honest, reasonable man that
           such design was being committed/put on notice that stranger failed to
           follow up re: breach [Selangor]
       in the current case the bank knew the operating acct of DO consisted
           only of premiums - constituted constructive notice that T existed
       breach here is, once on notice, failure to inquire re: T when IW
           requested a funds transfer
       key test is to focus on the stranger's state of mind

      Gold v. Rosenberg (1997) SCC
       heard at same time as Citadel - decision not unanimous
       testator died naming son R and grandson G as executors and equal
          benefic of residue
       residue consisted of real estate - R actively involved in mging - G gave R
          POA to operate cos
       R operated own cos - single acct mgr of TD oversaw T prop and R's prop
       R caused T prop to be used to guarantee loan re: his prop - law firm
          provided opinion letter that guarantee valid
       loan advanced before G signed director's resolution effecting guarantee
       G revoked POA but not before all T prop gone (guarantee called)
      issue: case of knowing receipt or knowing assistance?
      held: at trial treated as knowing assistance - R fraudulent in breach and
      bank had actual knowledge - bank liab and cT imposed for G's 50%
       at appeal, found R not fraudulent since G signed director's resolution re:
       at SCC        majority (4) held a knowing receipt case
                     minority (3) held a knowing assistance case
       guarantee was not T prop - appeal dismissed - no discussion of degree of
       hence: Citadel is the law

Summary of Constructive Trusts
[see notes to ensure that points covered in outline]


key rule: a T w/n fail for want of t'ee
 no hiatus permitted - ct will appt

2. Appointment of Trustees
 t'ees appt when T created
 will/deed (document creating T) appts the t'ees

sit'ns where possible hiatus:
(i) named t'ee renounces
(ii) t'ee unable to act
(iii) t'ee predeceases testator or dies during tenure as t'ee
(iv) t'ee retires
 T may also need additional t'ees for best functioning of T

Apptmnt other than by Ct:

substitute t'ees - **T instrument governs (T'ee Act = default provisions) -
otherwise look at leg'n (T'ee Act) and if leg'n dna, look at inherent jurisdiction of

s3(1)[BC s27] Ontario Trustee Act - where:
(1) t'ee remains out of province > 12 mths;
(2) desires to be discharged from all/some T powers;
(3) refuses to act;
(4) is unfit/incapable to act;
(5) has been convicted of indictable offence or is bankrupt/insolvent
 generally the remaining/continuing t'ee will appt new t'ee (in Ont this is
    facilitated by fact that minimum of 2 t'ees at all times - in BC m/b only 1)
3(2) personal rep of sole t'ee or where 2 or more t'ees, the personal rep of last
surviving t'ee, has power of last surviving t'ee
4 - subject to T instrument, last surviving/continuing t'ee may appt another t'ee by
will [if last surviving t'ee becomes incompetent then inherent juris of ct evoked]
 generally the leg'n codifies the inherent juris of ct (so pties can avoid always
    coming to ct)

Re Brockbank v Bates (1948) Chancery Ct
 testator left estate residue to widow for life & remainder to kids
 t'ees = EEW & AB - EEW wished to retire & kids and widow wanted Lloyds Bank
    to be appt'd replacement t'ees
 AB dn concur
issue: can benefic appt new t'ee?
held: no - power to appt new t'ee is discretionary power personal to current t'ee
 this power m/b exercised w/o assistance of others
 if benefic dn like this, can always windup T (power under SvV)
 benefic dn have any role in mgmt of T

additional trustees:
 no statutory auth'ty to appt additional t'ees - inherent power of ct
 may create this power through T instrument
 otherwise must apply to ct

court appointed trustees:
 court has inherent juris to appt & dismiss t'ees (mainly codified in leg'n)
 this includes power to appt substitute & add'l t'ees
criteria for add'l/substitute t'ee: (i) suitability of t'ee (similar qualifications to
existing t'ee if substituting) & (ii) circumstances warrant an  in # of t'ees?
      ct w/n substitute a corp t'ee for a private t'ee unless the duties are
      problem w/ ng # t'ees is that unanimity is more diff to achieve (5 t'ees is
         usually the max)
principles for apptng t'ees (Re Tempest): ct looks to:
(i) wishes/intent of testator construed from T document
(ii) ct w/n appt person as t'ee if this opposes wishes of testator or the interests of
(iii) ct will consider whether the person will promote or impede the execution of the
 purp of appt is to better carry out the T

s5(1) Ont T'ee Act - Ont Ct may order apptmnt of new t'ee(s) either in
substitution or in add'n to existing t'ees even where no existing t'ees

16(1) - order for new t'ee may be made to ct by beneficiaries or t'ees

 the difference btwn a non-judicial power to appt t'ee (T instrument/leg'n) and
  that given to cts is that ct may appt new t'ee in substitution against wishes of
  existing t'ee:

   Re Moorhouse (1946) Ont HC
    M an exec/t'ee w/ Premier Trust- applied to cts t/b discharged and her
       lawyer appt'd in her place
   issue: can t'ee determine who her replacement is?
   held: no - ct will allow M to retire unconditionally, but not determine
   replacement when continuing t'ee
     replacement to be determined by the continuing t'ee or ct (under s5(1) of
      T'ee Act
     also possible conflict of int if solicitor is new t'ee since he is agent for life
      tenant and must also look out for remainders if t'ee

number of t'ees

maximum: no max at CL - however T m/b unworkable if too many since decisions of
t'ees m/b unanimous (t'ees act jointly)
 s10 of T'ee Act (Ont) makes 4 t'ees the max

minimum: in Ont = 2 (in BC = 1 under 27(c))
 not obliged to appt > 1 t'ee where only one originally appt'd (ie not mandatory
   that # of t'ees be d)

**these limits affect only the statutory and ct powers to appt/substitute t'ees (T
instrument not bound)

3. Retirement of Trustees

   T instrument governs conditions surrounding retirement of t'ees
   statute = default = retirement w/ consent of all other t'ees via deed
   personal representatives (executors) can only retire by ct order
   if retire, free from obligations associated w/ t'ee position from that date
    forward (not free of liab re: breaches while a t'ee)

Re McLean (1982) Ont HC
- illustrates the distinction btwn retirement of t'ee & removal of
executor/personal rep
 testator appt'd 3 persons as execs & t'ees
 1 resigned and was replaced & ct added 2 more
 ct varied min # t'ees to 3 & max to 5
 B resigned as t'ee w/ consent & continued as executor
 became incapable of continuing as exec - estate applied to ct to have B removed
    as exec
issue: is it necessary to have ct order to remove as exec or is proper resignation
from position as t'ee suffic?
held: yes - leg'n distinguishes btwn roles of exec & t'ee
 exec/personal rep - no role in mgng prop
    role = determining assets after paying debts and expenses & distrib these
    assets (thus no need for will)
 t'ee = separate role = mgng property left under will
 hence, if apply for removal as executor, also removed as t'ee, but if retire as
  t'ee, must ask ct t/b removed as exec
 rare that two diff people play these roles (usually t'ee also exec)

4. Removal of Trustees

 T instrument governs the removal of the t'ees
 in absence of T power, t'ee c/b removed via:
  (i) statute (through substitution -see previous s3 & 4), or
  (ii) inherent jurisdiction of ct - through power of removal when apptng
  replacement (dn need to name a replacement though)

when a t'ee w/b removed : ct will remove t'ee when:
**(i) his continuance jeopardizes the T assets, or
**(ii) welfare of benefic put at risk, or
(iii) t'ee is preventing T from being properly executed
 hence, t'ees m/b removed if they:
     (a) guilty of misconduct,
     (b) guilty of lack of bona fides,
     (c) unable/unwilling to carry out the terms of the T
     (d) are incapacitated,
     (e) are personally benefiting from the trust,
     (f) acting to detriment of benefic
     (g) or any other ground that shows t'ees not fit to control another's property
 however, something more than friction btwn the t'ees and benefic is req'd for

Conroy v Stokes (1952) BCCA
 C apptd 2 t'ees in will - 2 of 5 benefic under will applied to have t'ees removed
    since dissatisfied w/ their admin of the T
issue: will ct remove t'ees when friction btwn t'ees and benefic?
held: no - T prop not jeopardized - friction alone not basis for removal (here
stepmom = t'ee & dn get along w/ kids = benefic)
 no req'mnt that the t'ee consult the benefic re: mgmt of T prop - as fiduc, role
    is to mge in best int of prop & here the t'ee had properly mged the T prop

Problem 1 (pg 619) N, T and wife (W) apptd as executors - W life tenant and kids
were remaindermen - 92% of estate assets = shs of private co in which estate held
majority/controlling int - testator was president and N became pres on his death -
N caused co to pay substantial divs - co also did very well - advantageous offer for
co - N and T wished to accept, but W dn - all other capacitated benefic opposed
 consider removing W since conflict of int as t'ee & life tenant - so possibly
  jeopardizing T prop
 if benefic oppose, could collapse T under rule of S v V
 case is similar to Re Smith (see later in outline)
 what t'ee should do here depends on will - if primary duty to sell T prop then
  w/h to accept offer - this duty is based on the construction of the will
 may also be that construction of will leads to duty to retain or power to sell or
 ct gets involved where believes T prop m/b in jeopardy

Question 3 (pg 618) - PTOEQ
In following sit'ns, ought the t'ee be removed (give reasons):

[test = remove if (i) actions of t'ee jeopardize T prop, or (ii) actions of t'ee harm
welfare of benefic]

(a) bankruptcy/liquidation of t'ee - governed by Bankruptcy Act - removed as t'ee
since unable to deal w/ prop effectively
(b) t'ee convicted of crime - remove if crime of nature that capacity to act as t'ee
affected (eg fraud) or T prop put in jeopardy
(c) t'ee has taken up residency permanently outside of BC - if out of BC for > 1 yr
then grounds for removal (s 3(1) Ont T'ee Act
(d) attempt to purch asset of benefic by t'ee - OK if fully informed
(j) same as (a)


 duties are onerous - outlined in (i) T instrument & (ii) leg'n & (iii) role as
duties as a "fiduciary" - must act selflessly & prudently
 t'ee = highest form of fiduciary since legal title to T prop - thus can control
   prop to detriment of benefic (relnshp of dependency)
 t'ee has "duty of loyalty" to benefic - includes
   (i) duty to be impartial
   (ii) duty to perform personally
   (iii) duty to invest T assets
   (iv) duty to account and provide information to benefic
   (v) duty avoid sit'ns of conflict of int

initial duties of t'ee
(i) acquainting: acquaint themselves w/ terms of the T and the state of the T prop
(ii) investing: to invest the T prop in accordance w/ terms of the T instrument -
m/b in accordance w/ terms of T (duty to sell?retain?)
(iii) prior breach - new t'ee: if apptmnt of new t'ee, duty to ensure no prior
breaches of T
 failure to perform these duties = breach of T

trustees must act jointly: unless T instrument provides otherwise (eg majority
suffices) , t'ees must be unanimous in decisions
 applies to every decision, whether the exercise of a power or duty
 "deadlock" = one t'ee fails to agree

seeking court's advice: s60 (86 of BC T'ee Act)
 may be used to resolve deadlocks
 ct's role limited b/c ct decides legal issues - not a mgr:
    w/n interfere in exercise of discretion
    will clarify t'ees duties by interpreting the will
 will cannot purport to exclude ct in area of seeking advice - ct has inherent
   jurisdiction to give advice on Q of law

s60(1) (Ont T'ee Act) - t'ee…may apply to ct for opinion, advice, direction on any
Q re: mgmt or admin of T prop, even when no action involved

 the following cases illustrates the principles the ct uses to resolve deadlocks:

Re Wright (1976) Ont HC
 Cda Permanent one t'ee of W estate - wished to sell shs - other t'ees opposed
 shs = Crown Life (52% of estate = $35M)
 income for life tenants only = 2% of value of shs & high exposure to estate since
    so much of value comprised of shs of one co (basic rule of exercising investment
    obligs as t'ee = diversification/safety)
 hence CP wants to sell shs (diversify & more income to life tenants) - accord w/
    rule of even-handedness/impartiality btwn benefic
 t'ees unanimously decided to sell shs earlier, but opposed now since mkt overall
    is depressed (though offer fair given current mkt)
issue: will ct break deadlock?
held: role of ct is limited - here role is to construe will to declare the duty of the
t'ees in respect of T prop here
 several possibs:
    (i) duty to retain
    (ii) duty to convert/sell
    (iii) power to sell or retain
   here there c/n/b a duty to sell or t'ees in breach(shs h/b held for 25 yrs)
   ct finds power to sell or retain
   no deadlock since all t'ees agreed to sell shs earlier
   not duty of ct to tell t'ees whether to accept the current offer on the shs
   ct will also determine whether there has been a breach of duty by t'ees

 if duty to convert/retain must carry out this act'y or breach
 if power to convert or retain, no breach unless put T prop in jeopardy or actions
  detrimental to int of benefic

3. Std of Care

std of care of t'ee: in admin T is that of person of ordinary prudence in managing
own affairs
 is the std higher for professional t'ees than for lay t'ees?
 in following case, the ct ruled that the std of care was not diff - however their
   treatment of corp t'ee v. lay t'ee on s95 issue (see later in outline) had effect
   of demanding higher std of care from corp t'ee

Fales v Canada Permanent Trust (1977) SCC

ratio: std of care for professional t'ee same as for lay t'ee
 t'ee = widow of testator & CP
 most estate = shs of Boyles Bros Drilling
 proposal for merger w/ Inspiration (owned by Power Corp)
 CP recommended merger as BB shs w/b more liquid - exchange made
 Inspiration went bankrupt - CP had not forwarded correspondence to widow re:
    riskiness of venture - had had ample warning of demise of Inspiration ( in sh
    value over several yrs, but t'ees had not sold)
issues: (i) exchange of BB shs for Inspiration auth'zd under will?
        (ii) breach of T by t'ees? reasonable enquiry and exercise of skill re: T
        (iii) breach of duty in failing to sell Inspiration shs before bankruptcy?
held: (i) yes - power to convert under will as temporary measure
        (ii) & (iii) - CP breached std of care - failed to sell shs in timely manner
 also failure by CP to keep widow informed of details of investments (lack of
    diligence) since she was other t'ee - duty to inform b/c risky nature of assets &
    fact comprised majority of estate
 even though widow refused to sell shs, ct held CP h/n informed her of risks
    associated w/ investment (T assets in jeopardy)
 hence heavy burden on CP since retained high risk investments when s/h sold
[doesn't widow have to inform herself re: investment as t'ee? why not request
more info from CT]
 not necessary to decide if professional t'ee has higher std of care than lay t'ee
   since CP breached any std

4. Delegation of Duties

general rule: t'ee cannot delegate any powers or duties
 m/b permitted where:
   (i) T instrument allows delegation
   (ii) delegation auth'zd by statute
   (iii) duties not req'd t/b performed personally
   (iv) no other practicable way for t'ee to perform
   (v) it is common business practice to delegate that particular power/duty
 duty to properly select & supervise agent or liable for losses caused by agent

 15 & 24 of BC T'ee Act require investment in auth'zd investments (e.g safe
  investments = Cdn gov't bonds, T-bills, GICs, first mtges, corp bonds) - but
  investment m/b reasonable & proper (even if enumerated in T'ee Act)

6. Impartiality

rule: t'ees must act impartially btwn benefic - preferential treatment only where
auth'zd by T instrument
 failure to treat impartially is breach of T
 where life tenant & remaindermen, tension exists - life tenant wants to
    maximize income while remainder wants to max capital
 concept of even-handedness means investment rules h/b developed so that int
    of life tenant/remainder are evenly balanced
 breach of T not to act even-handedly if T instrument dn permit favouratism:

Re Smith (1971) Ont HC
 wealthy testator left wife small annual income & son capital of estate
    (comprised mainly of Imperial Oil shs)
 request in will that son take care of mother w/ income from ¼ of shs
 son (P) voluntarily transferred ¼ of his shs to T for mom (to return to him on
    mother's death)
    [to prevent the problem that follows, T s/h had a duty to retain the Imperial Oil
 mother not happy w/ income from shs and wants to sell
issue: can she sell the shs?
held: yes - duty of t'ee to maintain even-hand btwn life tenant & remainder
 here, dividends only 2 ½% of value of shs
 indication that widow not receiving reasonable income = fact that cost of
  borrowing $ to live exceeds income return from Imperial Oil shs
 high std of living means widow must sell shs to maintain herself
 settor has no say in whether shs sold or not [current t'ees consulted P re: sh
  sale - ct replaced them]

Apportionment between Income and Capital

i. general:

 to maintain duty to be even-handed, t'ees usually invest in auth'zd assets - pay
  income to life tenant & capital to remainder
 often the T contains unauth'zd assets - must then determine the apportionment
  btwn income and capital to achieve even-handedness
 T instrument can specify any definition of "income" or "capital" in apportioning
 however, where not specified, need to determine approp apportionment:

Lottman v Stanford (1980) SCC
 for residue, testator left income to widow, remainder to kids - T instrument dn
    specify how income & capital t/b apportioned
 most assets in residue = real prop (unauth'zd)
 widow wanted sale of the real property and declaration she was retroactively
    entitled to income at 6% of assets
issue: how should the assets be apportioned to maintain even-handedness?
held: rule in Howe v. Lord Dartmouth dna to real prop (only personalty) since would
wreak havoc on current wills
 rule = where residue = personal prop and there is a succession of int, duty to
    convert wasting (e.g. gold mine), future or reversionary prop or unauth'zd
    sec'ties into prop of permanent income-bearing character
     attempt to achieve even-handedness - typically testator dn consider
        contents of residue since difficult to determine until dead & all debts
 ct w/n grant notional income since will not vary will (testator w/h considered
    income issues since most assets = real prop + widow can apply under Wills
    Variations Act)
 if there was a duty to convert, notional income awarded on the balance of
    unconverted prop while not sold (Re Lauer & Stekl)

ii. corporate distributions:
 problem of determining whether dist'n = income or capital arises when t'ee h/n
  made prudent investment choices (ie need to eat up capital to maintain approp
  level of income)
 testator can specify who receives dist'n of corp or give power to t'ees to
  choose who
 if neither, cts have developed rules to determine entitlement:
  (i) dividends/other $ pmts = income - life tenants
  (ii) capitalized  = capital - remaindermen (stock divs, bonus shs, right to purch

Re Waters (1956) SCC
 estate held int in co w/ large undis'td surplus - to pass to s/h, co pd 15% tax &
    capitalized surplus by issuing redeemable PSHs
 allowed proceeds t/b rec'd tax-free under ITA
issue: was dist'n capital or income?
held: if not specified in T instrument, co determines character of dist'n
 thus, if distrib div - income; if capitalize , then capital
[possib conflict of int if t'ee also director of co - fiduc for s/h & benefic]
 testator knew big asset in estate was co w/ large undist'd surplus - c/h put
    def'n of income/capital dist'n in will but dn - hence left up to discretion of co
 hence ct unwilling to give def'n to income that is not the normal one unless
    specified in T instrument


1. Scope
"breach of trust" = violation of any duty req'd of t'ee by:

(i) trust instrument - key obligations set out (generally softens statutory
(ii) statute - default obligations, and
(iii) general rules of equity - administered by cts

 t'ees are jointly & severally liable for breaches of co-t'ees (but may seek
  indemnification or exoneration from liability under s95 as in Fales)

 breach of T means benefic have certain actions avail to remedy:

2. Personal Remedies:
these remedies are elective
(i) compensation for losses - where breach & losses - compensatory in nature
(restore loss to benefic) - loss may be more than value of prop at that time (e.g
also amt of lost  if invested in auth'zd investment instead)
      actions of t'ee are condemned - losses either from:
       (i) misappropriation of T prop, or
       (ii) mismgmt of T prop, or
       (iii) b/c  w/h/b made if not for breach (e.g. speculative investments
       retained instead of auth'zd investments)
      when action for acctng is unavail or inconvenient

   presumptions in calculating loss: loss calc'd w/ many presumptions in favor of
   (i) sec'ty w/h/b sold at highest price obtainable;
   (ii) T funds w/h/b put to most able use;
   (iii) when 2 interps possib, inferences drawn in favor of benefic
   (iv) causation and foreseeability have no relevance to calc compensation (like
   they do w/ dmges)
   (v) losses calc at time of trial, not at time of breach

    t'ee not liable for all losses (e.g. losses resulting from actions of 3rd

   Canson Enterprises v Boughton (1991) SCC
    B and Treit proposed real estate trxn w/ "flip" of prop and secret 
    Sun-Mark purch land for $410K
    Treit suggested Canson form JV w/ Sun-Mark and Peregrine (principal in
       law firm of Boughton)
    JV purch land for $525K - no disclosure of previous purch by Sun-Mark
    law firm (B) represented Canson and Sun-Mark - no disclosure to C re:
       secret  or conflict of int
    JV to develop land by building warehouse - negligence of soil engineers
       caused warehouse to collapse
    settled w/ engineers but still substantial losses unsatisfied
   issue: is law firm liable to C for breach of T? (pt conceded) - since breach, is
   B liable for losses of 3rd pty (engineers)?
    this question raises the role of equity wrt to awarding remedies - how do
       equity & CL interact?
   held: breach of fiduciary duty was failure to tell Canson about conflict of
   interest in also acting for other venturer (Sun-Mark)
    the ct was split on their view of the role of equitable remedies in light of
       CL remedies
       as a result of the breach, B is resp only for direct losses, not for losses
          from 3rd pties
      [limitations at CL re: dgmes = foreseeability; limitations at equity = fairness
      & justice]
       equity follows CL - if CL insuffic to restore loss to benefic, equity applies
       the leading case in the area of remedies (equity follows CL) is Nocton -
          can only claim equitable remedy when t'ee personally benefits from
          breach - in current case, B dn benefit - SCC w/n limit application of
          equitable remedies in this manner
       contraversial pt: remedies from either CL or equity since they have
          virtually merged
       remedy here = restore pty to sit'n where no breach (dn include 3rd pty
           unclear if LaForest is saying that dn matter whether remedy
              grounded in CL or equity or that CL remedy suffic to restore benefic
              here (equity not needed)
           his judgment focuses not on K breach, but on breach of equitable
              duties (inconsistent?)

   McLachlin (minority):
    cannot make analogy btwn CL and equity here since fiduc = dependent pty
        whereas in tort/K the harmed pty is independent and then lose presumptions
        in equity that favor fiduc in equity
    key pt: though action grounded in equity, liability is not unlimited - liab must
        flow from the breach
   (ii) accounting for s - where breach &  results - restitutionary in nature
         actions of t'ee are adopted -  may result from:
            (i) investing in unauth'zd investments, or
            (ii) convert T prop for own use

 normally, a benefic wants an acctng for  when t'ee has made a  in dealing w/
  the prop
 even if , may want compensation if tracing is too costly/tough or if cannot
  prove the 
 may want acctng for  even if loss if prop value expected to increase
 personal remedies are available when the trust still has the T prop

 all t'ees treated same way - express, remedial and constructive t'ees (all are
 t'ee committing breach must:
  (i) disgorge , or
  (ii) restore losses
    liab of t'ee is personal - also joint & several w/ co-t'ees

Accounting for Profits
 duty to acct when T prop misapprop &  made
 avail even when investment is unauth'zd (so T c/n/h made  itself)
 often difficult to determine extent of  due to breach of T (thus seek
 if  in breach of trust attributable soley to the skill of t'ee, t'ee not liab for 
 cal'n of  accts for reasonable expenses:

MacMilan Bloedel v Binstead (1983) BCSC
 B an EE of MacBloe - job to sell surplus logs
 set up business on side to purch logs (Anderson-MacKinnon Log Sales)
 also incorp AMCO Forest Industries, sawmilling op'n and held int in Delta Cedar
    and Delta Chip
 AMLS did well - large s
 MacBloe sued for breach of T (B as agent) - wanted accounting for 
 MacBloe dn actually suffer a loss - crux of acct for  action
issue: MacBloe entitled to shs of all cos in cT and acctng for  - how to calc ?
held:  = gross revs - reasonable expenses (ie salaries not reasonable, no expenses
that arose after litigation commenced)
 intention of remedy is to restore loss to MacBloe, not to punish B - thus acctng
    diff than dmges since dmges intended to punish
 remedy of acctng = disgorge of s
 "s" include a ded'n for reasonable exp

 liab for breach of T = loss + interest - adequately compensates benefic
 int awarded = presumed  (dn include gains made due to t'ees particular skills)
 award of int is discretionary (when cts award is not clear)
 compounded int at ct's discretion - rare
 int not awarded for acctng action - only for compensation
 int awarded on prejudgment basis

 personal remedies dn give the benefic priority to other creditors in respect of
  the funds of the t'ee

3. Proprietary Remedies (restitutionary):

(i) constructive trust - rare - show that legal remedies w/n suffice & can trace the
(ii) equitable lien - tracing necessary

   electing btwn the two - no hard and fast rule - cts are creative w/ little
    sympathy for the dishonest t'ee

 proprietary remedies awarded when T prop in hands of t'ee or stranger
 possible to get both personal & proprietary remedy if personal remedy
   insufficient to restore breach (eg Keech v Sandford - cT on lease & acctng for
   net rents)
**purpose of equitable remedies - to restore the beneficiaries, not punish the t'ees
        liab of t'ee arises whether innocent (e.g. misinterpret T instrument) or

 often breach leads to a diminishing of T prop - problem is how to ascertain who
  gets the diminished $ (rules of tracing):

Mixed Trust Property

 personal remedy against t'ee for dmges is not effective if t'ee insolvent
 may want action "in rem" - propretary int in prop
 several sit'ns require diff rules:

(a) claim against trustee - mixed fund other than in bank acct (single trust)
 where funds (e.g. investments, real property) of T & t'ee are mixed
 2 remedies available as proprietary remedies (priority):

    (i) equitable lien - over whole fund or prop purch w/ mixed funds = amt of loss
    from breach
     choose when value of prop has 

    (ii) constructive trust - adopt conduct of t'ee - given proportionate share of
    mixed fund
     choose where value of prop 

 where benefic has one of these remedies avail, ranks ahead of creditors
  (priority claim to T mixed funds)
 but - if all T funds dissipated and only $ left = t'ees then personal remedy all
  that is available - benefic rank amongst the creditors


A. separate funds - no breach
trust = $10K
t'ee = $3K [own funds - separate acct)
t'ee = personal debt = $20K
 here the creditors can only claim 3K (t'ees funds)

B. separate funds - breach - T$ dissipated
trust = $10K - all $10K dissipated by t'ee in breach of T
t'ee = $3K
t'ee - personal debts of $20K
 here the benefic dn get more than their proportinate share of the t'ee's $3K
    since all T$ gone (lowest intermediate balance rule - see below)
 hence:       t'ee =        10K/(10+20)K * 3K
               creditors = 20K/30K * 3K

C. separate funds - breach - property purch w/ T$ (tracing possible)
trust = $10K - all $10K spent by t'ee in breach of T to purch land
t'ee = $0K
t'ee - personal debts of $20K
 $10K spent on property - benefic can claim equitable lien or cT on land since it
    c/b traced from original proceeds
reason: t'ee only had $3K - hence presumption that 10K to buy land from trust $
(t'ee dissipated own $3K)
 claim "in rem" means benefic rank ahead of creditors - benefic usually favoured
    ahead of creditors
 also, any  in value of land goes to benefic

(b) claims against trustee - mixing in bank accounts
 same principles apply as above (remedy = lien or cT) but no need to claim
    proportionate shares since $ c/b divided easily

eg A. mixed bank acct - no breach (other than mixing)
acct = 13K (10K of T$ + 3K of t'ee's $)
 remedy = equitable lien for $10K (cannot get whole here - only pt that c/b
   traced to T prop)

   lien has priority to creditors

(i) rule in Hallet's case - t'ee assumed to disperse own $ from mixed bank acct
before that of t'ee is spent

eg B. mixed bank acct - $ dissipated
$13K mixed bank acct - $11K dissipated
   applying Hallett's rule means that t'ee's $3K is first spent - next 8K comes
    from benefic (so 2K left is T$)

(ii) lowest intermediate balance rule - limits the claim the benefic can make on
mixed acct
rule: can only claim lowest balance traceable to T funds - benefic have lien = lowest
balance after T$ are deposited
 if t'ee puts own $ back into mixed acct, presumption this remains his $ unless it
     c/b shown the t'ee intended to replenish the T $ (Roscoe v Winder)
      intention said to remedy the breach

Date          T'ee Deposits         T$ Deposits     W/drawals           Balance
1             $100                                                      $100
2                                   $400                                $500
3                                                  (450)                $50
4             $200                                                      $250

   benefic can only claim $50 unless intention to replace c/b argued
   reason for rule is fairness to creditors
   even where no creditors, rule is fair since the benefic can go after the t'ee
    personally (compensation claim)

(iii) principle in Re Oatway - the rule in Hallett's case w/n/b applied where it would
be unfair to the benefic to do so
 in this case, t'ee mixed T$ and own $ - first spent part of $ on shares and then
     dissipated the rest
 to apply Hallet's rule meant the benefic got very little (personal claim against
     t'ee - rank w/ other creditors) while t'ee got shares that had d in value

eg: mixed funds used to purchase property
T$ = 500 + t'ee $ = $1000
 land worth $1,500 purch by t'ee
 remedy for benefic? - lien = $500 on land

increase in value: problem is how to treat  in value of land:
    (i) benefic get proportionate sh? - cts favor this approach
    (ii) benefic get the whole value of the land - windfall - m/b awarded on basis
    that t'ee not to  in any way from a breach
    (iii) benefic gets only $500 (none of increase) - few cases decide this way (see
    reasoning in (ii) - t'ee w/b rewarded)

decrease in value: how to treat a  in value of prop bought w/ mixed funds?
       (i) lien = value of lost T$ (even if exceed value of bought prop), or
       (ii) proportionate share
        note> cts will generally not award remedy that is to the detriment of
            other innocent 3rd pties (consider whether lien sol'n has this effect)

(c) claims of 2 or more trusts to mixed fund (not bank acct)
 generally a t'ee w/ several T funds under control m/n mix funds unless auth'zd
    by T instruments or statute
general rule: if cannot recover from t'ee personally (personal remedy) may engage
proprietary remedy by tracing into mixed fund in proportion to T's cont'n
 subject to following rule:
rule in Clayton's case - FIFO - first funds in are first w/drawn
 rule is arbitrary = criticism
 eg1:         trust A =     1,000
               trust B =     500
               w/drawn =     (1,200) - funds dissipated
               balance =     300 - attributable soley to trust B

   eg2:      as above, but funds are not dissipated - prop bought instead
              trust A - proportionate claim = 1,000/1,200 * value prop
              trust B - proportionate claim = 200/1,200 * value prop

Taking a Second Look at Mixed Trust Property

    where a t'ee has mixed T prop in breach of fiduc duty, cts seek a remedy that
     is equitable
 2 situations may arise in mixing:
     (i) T prop is lost
     (ii) T prop m/h yielded a benefit
(1) claiming against t'ee re: fund (mixed T prop not bank acct)
 may involve any prop but bank acct purchased w/ T $ in violation of fiduc
 available remedies:
(i) equitable lien - against whole fund, or
(ii) proprietary int in fund - cT imposed on benefic's proportionate sh of prop
(iii) personal remedies - against t'ee for compensation
** btwn (i) and (ii), value of fund will determine which remedy is sought
 if value has  or is likely to , seek cT (LAC Minerals)
 cts only grant cT when other remedies insufficient (e.g. special property that $
     cannot replace)
(2) claiming against t'ee re: bank acct (mixed $)
   benefic has to trace lost T prop to some current illegal use by t'ee in breach of
    T obligations
(a) starting pt = rule in Hallett's case = first $ out of mixed acct = t'ee's $
 assumes t'ee honest
(b) many problems arise under this rule:
        (i) T $ has been depleted below original level
         problem engages the lowest intermediate balance rule
              this rule means benefic can claim only the lowest available balance in
                 the mixed acct attributable to T$ - cal'n rules:
                 (1) rule in Hallett's case applies - t'ee draws on his own funds until his
                 $ is gone - T$ remains untouched in mixed fund
                 (2) once t'ee has spent own $, T$ spent next
                 (3) T $ deposits replenish/increase the T$ balance
                 (4) t'ee deposits do not increase T$ (crux of lowest intermediate
                 balance rule)
        (ii) T$ depleted below original level but T'ee Deposits Own $
         lowest intermediate balance rule means T$ not restored
         Roscoe v Winder - T$ restored if intention of t'ee is to restore the T$
        (iii) First $ Spent from Mixed Acct Buys Prop, Remainder Spent
         applying rule in Hallett's case results in an injustice to benefic where the
             first $ spent is employed in profitable property and the remaining mixed
             acct is wasted by the t'ee
         Re Oatway ruled that the rule in Hallett's case w/n/b applied or would be
             modified where its appl'n renders an injustice to the benefic in the
(c) a personal remedy is always available against the t'ee - problems w/ this:
        (i) t'ee probably has no personal assets if he is using T $ in breach of his
        obligations as t'ee
        (ii) probably other creditors who seek $ in excess of t'ee's assets
         even where an award is granted, benefic rank amongst other unsecured
             creditors (ahead if proprietary remedy)
(d) several trust $ mixed together
 rule in Clayton's case is applied - FIFO
(e) several trust $ mixed together w/ $ of t'ee
 rule in Clayton's case traditionally applied
 however, recent SCC decision looked at appropriateness of the FIFO rule in
    seeking a remedy for the benefic of several trusts who had their $ mixed
    together in breach of trust:
Ont Securities Commission v Greymac Credit Corp (1986) SCC
(i) is it appropriate to apply Clayton's rule when dealing with several innocent
(ii) are the Cdn cts bound by UK authorities in the area of seeking a remedy for the
benefic of several Ts whose property has been mixed?
(i) no
(ii) no
facts: Greymac held mtge which it syndicated amongst several investors
("participants") - mtge held on trust for participants - land sold and all proceeds
but $1.03M distributed - the $1.03M deposited into G's general acct (breach of
trust) - prior to deposit, acct held $4.683M owned beneficially by Greymac Trust,
Crown Trust and several other companies (the "companies") - Greymac w/drew
funds and dissipated $ - $5.5M claimed by benefics w/ only $4.3M available
analysis: applying the rule in Clayton's case meant that participants w/b favoured
at expense of "companies" - hence biggest investors = biggest losers
 hence applying rule = arbitrary result
 appl'n of rule not appropriate here b/c (i) arbitrary (ii) unfair
 maximum equity = equal treatment of harmed innocent pty
 Clayton's rule is useful in allocating losses in banking but s/n/b used to trace
     funds - hence the rule is limited
**equitable remedies s/b fair and just, not arbitrary

Defences of Trustee

   t'ee m/n/b liable to benefic for breach of T if valid defence or /b excused
    from liability
   defences:
    (1) defendant was not a trustee - t'ee only liable for his own acts/omissions as
     not normally liable for breach of T committed before becoming a t'ee
     w/b liable if just stand by & allow another t'ee to breach T
     liable if learns of breach before t'ee and fails to correct it once become a
     t'ee also liable where resign t'eeship w/ knowledge of successors or co-t'ees
        intend to commit a breach

    (2) beneficiaries consented & participated in the breach
     if benefic consented to or instigated breach, cannot bring action against
        t'ee (innocent benefic can)
     defence is limited - must show 4 things to prove (Re Pauling's Settlement):
        (i) participating benefic had capacity (c/b legally bound by own actions)
        (ii) consent based on full knowledge of what concurring to and what rights in
        situation were (full disclosure of proposed breach)
        (iii) benefic had knowledge of all material facts leading to breach
      (iv) benefic's will was not overborne by t'ee/no undue influence or duress

      Re Pauling's Settlement (1964) Chancery Ct
      ratio: see 4 points above re: defence of t'ee
      facts: marriage settlement in favor of Mrs. Younghusband for life and
      remainder to kids - clause 11 permitted the t'ee (defendant bank) to raise
      up to ½ of the presumptive or vested share of child and pay to child for his
      benefit/apply for his use, with written consent of life tenant -
      Younghusbands a close family but lived beyond means - t'ee bank made many
      advances to kids on request of life tenant parents apparently w/ "consent" -
      kids sometimes rec'd indep advice - advances made after kids were age of
      issues: (i) did the t'ee breach the trust in making several advances?
      (ii) if so, did the benfic consent to the breach - defence avail to t'ee?
      held: (see 4 pts above)
       advances breached the trust since power to advance was to be made only
           where pmt benefitted child & applied for specified purpose
       only a valid defence if consent obtained by child - where advance that
           benefits life tenant/parent, presumption of undue influence
       presumption only rebutted if child knew all rights & applied event to
           adult children
       written consent and application of pmts to purpose that benefitted kid
           only is evidence to rebut presumptions

impounding the beneficiary's interest
 if benefic consented to breach or instigated & t'ee found liable for breach,
   benefic interest m/b impounded
 "impounding" means prop of consenting/instigating benefic is applied to
   indemnify the t'ee (e.g. income from securities goes to t'ee & not benefic)
 ct has inherent jurisdiction to impound when benefic instigated/consented to
 impounding can last as long as life tenant lives

Protection of the Trustee
 t'ee has onerous obligations w/ strict liab - certain need for protections
 several protections:
   (i) exculpation by trust's creator - trust instrument may have indemnity
   clauses purporting to excuse various breaches/liab
    generally only operate to exonerate t'ee from minor breaches & from
       breaches he did not participate in
    unlikely clause w/b effective if major breach:
Re Poche (1983) Alta Surrogate Ct
ratio: exculpatory clauses cannot exonerate t'ees from major breaches of
trust (i.e. where grossly negligent)
issue: can trust instrument exonerate t'ee of major breaches of trust?
held: no - cannot K out of major breaches
facts: testator died in 1979 - sister (Pihera) named executor - residue given in
trust to wife for life & remainder to daughter - P failed to deal w/ debts b/c
w/h involved selling home where benefic living - will contained a duty to
convert/sell property (poor drafting - m/h/b OK if duty to retain) - P also failed
to keep proper acctng records ($7K went missing) - benefic sued for breach of
T - clause 8 of will stated that t'ee not liable for losses not attrib to her (a)
dishonesty or (b) wilfull commission of an act in breach of T - P claimed
exculpatory clause in will exonerated her from liab
analysis: t'ee grossly negligent in act'ies - failed to find out her duties as t'ee,
to acct, to sell the prop & call the debts
 exculpatory clause not effective to excuse gross negligence of t'ee
(ii) exculpation of the guilty t'ee by courts - statute permits t'ee found liable
for breach of trust to be excused
 power exercised under s95/96 of BC Tee Act - conditions:
     (1) t'ee acted honestly - relates to acting w/ intention of best int of trust in
     (2) t'ee acted reasonably - std of care - care of prudent business person in
     his affairs?
     (3) t'ee ought fairly to be excused - directed at technical nature of breach
     (e.g. t'ee inexperienced?)
      if conditions fulfilled, ct may excuse all/pt of liab of t'ee

   Fales v Canada Permanent Trust (1977) SCC
   ratio: corp t'ee not held to higher std than lay t'ee (however they are
   through the appl'n of s95)
   facts: co-t'ees sought to be excused from liab from breach of trust under
   s95 of T'ee Act - t'ee had failed to sell speculative investments & estate
   suffered large losses
   issue: can CP be exonerated under s95 for the breach? can Mrs. Wohlleben?
   held: CP cannot be, W can be
    CP dn act reasonably (std of care of prudent business person)
    ct also considered that (i) CP had been paid for services (backdoor -
       higher std of care for professional t'ee through s95) (ii) was the breach
       technical in nature or minor error in judgment? (std of care concerns) &
       (iii) was the loss to the trust due to t'ees action/inaction or due to
       general eco factors (std of care)?
          t'ees in breach are bound jointly & severally in liab
          no indemnification to co-t'ee where s95 exercised to excuse t'ee
          here, W excused under s95 b/c (i) she acted honestly (ii) she acted
           reasonably - not sophisticated (minimal investment experience) & co-tee,
           CP failed to keep her informed of state of investments so incapable of
           informed action - hence ought fairly to be excused

Non-Charitable Purpose Trusts

   benefits of charitable trusts are (i) tax relief (ii) dn have to satisfy the COO
    criteria - ct will create a purpose or apply $ to similar charity & (iii) not
    affected by the rule against perpetuities

"charity" - legally defined = (i) relief of poverty, (ii) advancement of education or
(iii) religion or (iv) other purposes beneficial to community

"objects" = people or purposes
 trust for people sets out the people/class of people who enjoy the T prop
 trust for purposes sets out the tasks the creator of the trust wishes the
   trustee to perform through the use of trust property

  is it possible to have a valid trust set up for a non-charitable purpose?
    traditionally no (position of cts in Re Astor's Settlement Trust)
    trend towards validity - Re Denley's Trust Deed
A. traditional position
 4 bases for denying validity to non-charitable purpose trusts ("NCPT"):
   (i) enforceability - who would enforce the trust if no people as beneficiaries?
    no one the ct can step in & act on their behalf
    for charitable purpose trusts, the public benefits, so the AG will step in to
        enforce trust
    strongest objection
   (ii) execution - terms of NCPT are not sufficiently certain to permit t'ee/ct to
   carry out terms (e.g. what is meant by maintenance of a grave/horse?)
    terms of the trust are broad/ambiguous
    c/b viewed 2 ways (i) positively - person to enforce T or (ii) negatively - a/o
        to challenge the t'ee's actions?
    not really a big problem since this is a question of precise drafting
   X (iii) delegation of will-making authority - not valid object anymore (what
   about POA? - much broader delegations of testamentary power)
    (iv) violation of rule against perpetuities - often NCPT violate the rule
   against perpetuities - not problem since limit term of trust to avoid violationg
Re Astor's Settlement Trust (1952) Chancery Ct
ratio: NCPT are not valid - void on several grounds
facts: testator settled trust to pay income for various purposes (e.g. preservation
of integrity of newspapers)
issue: is this NCPT valid?
held: no
analysis: several grounds trust not valid
(i) violates rule against perpetuities
(ii) not enforceable - no objects (for purposes not people) or objects
(iii) execution - ambiguous purposes
 ct noted that there were some rigid exceptions to the general rule that NCPT
     are void where horses, dogs, foxes or graves are the objects and their
     maintenance is the purpose of the trust (concessions to human weakness for
 here there are also residuary legatees to challenge t'ee/in whose name the
     trust can be operated
 in current case, dn fall into exceptions & also fails on grounds listed above

   the trust in Re Shaw for the development and promotion of a 40 letter alphabet
    was found invalid - a NCPT not a CPT since object not advancement of education
    (general knowledge, not specific provisions for teaching), but a political purpose
    (controversial matter)

B. Modern Approach
 rigid rule resiled from in following case - here ct found individuals w/
   sufficiently direct interest in due admin of T to get standing to enforce
 trend started in following case most pronounced in Cda in area of pension trusts
   - Schmidt v. Air Products - ownership of pension surplus addressed (ER wanted
   T to be found void b/c for purposes, not benefic, under traditional approach
   since then surplus reverts to settlor) - SCC found pension trusts to be express
   trusts for persons

Re Denley's Trust Deed (1969) Chancery Ct
ratio: where a trust for non-charitable purpose is directly/indirectly for the
benefit of individual(s), traditional rule dna
facts: real prop conveyed to t'ee for purposes of maintaining as a sports ground
for EEs (not charitable trust since not a community benefit) - t'ee given powers to
allow others access & make rules governing use of land - unless 75% of EEs use
sporting ground, then T fails & prop to go to hospital (residuary legatee) - t'ees
wanted to sell part of land to make improvements to rest (hospital trying to prevent
sale b/c want all the land)
held: rule formed in Re Astor's Settlement Trust not always applicable to NCPT
 where a trust for non-charitable purpose is directly/indirectly for the benefit
   of individual(s), traditional rule dna
 the argument that the trust is invalid b/c it does not meet the COO criteria re:
   use of the land by "others" fails b/c the t'ee given broad power to regulate land
   use (they can decide rules & who may use land) - defining "others" not a trust
 trust not invalid on grounds that ct c/n administer it if need be b/c ct can (i)
   execute trust negatively by restraining improper disposition of T prop and (ii)
   positively by ordering the t'ees to allow EEs and other people to use land
   (according to rules developed by t'ees)
 this case dn overrule Re Astor b/c this case about purpose trusts involving
   people receiving an indirect/direct benefit, whereas Re Astor is about purposes
   trusts where people dn receive a benefit

C. Legislative Position

24 BC Perpetuities Act - validates certain NPCT - trust for a specific non-
charitable purpose that creates no enforceable equitable int in a specific person
shall be construed as a power to appt the income/capital and the trust is valid
(1) as long as original t'ee or successor exercises the duties w/in 21 yr period &
(2) T not for an illegal purpose/contrary to public purpose
 since the NCPT is construed as a power, the benefic dn have rights until the
    power is exercised & the duties of the donnee of the power are minimal

Wood v R. (1977) Alta SC
facts: testator gave estate to Edmonton Theosophical Society on trust for
literary, religious and educational purposes
issue: is gift saved under Perpetuities Act where it creates a NCPT?
held: NCPT deemed to be a power - requirements for validity minimal
 fact that no beneficiary = person not a problem since residuary legatees who
    take if power not exercised are available to ensure execution
 however, the gift fails b/c its purposes are too uncertain (cannot execute - poor
 hence Perpetuities Act may save a gift re: the enforceability problem for NCPT,
    but trust still must be capable of execution (& w/in 21 yrs)

Unincorporated Associations
 cannot hold property themselves
 UA = group of people together for common purpose(s)
 Q: if trust set up for the benefit of a UA, is it valid?
 Wood v R indicated that 4 possible ways of interpreting gift to UA:
    (i) gift to members of UA at time of gift - valid as absolute gift
    (ii) gift to members of UA, past, present & future - invalid gift b/c infringes
    the rule against perpetuities
    (iii) gift to members as an accretion to funds subject to Ktual obligations - valid
    under K law
    **(iv) gift to directors of UA to be used for its purposes (Re Denley) - valid of
    Re Denley interpretation possible (direct/indirect benefit to people) -
    otherwise invalid
   following case illustrates the variety of possible constructions open to ct in
    determining intention and how purported gift to UA m/b found to be valid:

Re Lipinski's Will Trusts (1977) Chancery Ct
facts: testator gave ½ residue of estate in trust for Hull Judeans Association to be
used to construct & improve new buildings for the HJA - founded as a cricket club -
since then, provided social, cultural & sporting activities for young Jewish people
(objects along these lines) - fnd not to be a charitable organization - argument that
gift was too broad since to entire Jewish community (cannot execute)
held: gift is enforceable since for the benefit of people (as in Re Denley) and can
be executed b/c the HJA can be wound up and its property distributed to its
members (hence members will ensure T enforced since have possib of receiving
property if HJA were wound up)
 directors can enforce trust on behalf of the UA = HJA