JESSICA’S TRUSTS OUTLINE SPRING 2012
INTRODUCTION TO TRUSTS ...............................................................................................................................................................3
DEFINITIONS ............................................................................................................................................................................................. 3
THE TAXATION OF TRUSTS ................................................................................................................................................................4
HISTORY AND DEVELOPMENT OF EQUITY .........................................................................................................................................5
Development of the Law of Uses and Trusts .................................................................................................................................... 5
THE FORMATION OF EXPRESS TRUSTS ...............................................................................................................................................6
CAPACITY ................................................................................................................................................................................................. 6
THE THREE CERTAINTIES .............................................................................................................................................................................. 7
Certainty of Intention ....................................................................................................................................................................... 7
Certainty of Subject Matter .............................................................................................................................................................. 8
Certainty of Objects (Beneficiaries/Purposes) .................................................................................................................................. 9
CONSTITUTION OF EXPRESS TRUSTS ............................................................................................................................................................. 10
Ways of Constituting a Trust/Gratuitous Promises ........................................................................................................................ 10
Gratuitous Promises and the Constitution of Trusts ....................................................................................................................... 12
FORMALITIES ........................................................................................................................................................................................... 12
Trusts with Respect to Land............................................................................................................................................................ 12
Testamentary Trusts ....................................................................................................................................................................... 14
Secret and Semi-Secret Trusts ........................................................................................................................................................ 14
LEGALITY & PUBLIC POLICY .............................................................................................................................................................. 16
Traditional Prohibitions .................................................................................................................................................................. 16
Conditions Precedent/Subsequent/Words of Limitation ................................................................................................................ 16
Contrary to Public Policy ................................................................................................................................................................. 17
Fraud on Creditors .......................................................................................................................................................................... 17
The Rule Against Perpetuities ......................................................................................................................................................... 19
Restraints on Alienation and Spendthrift Trusts ............................................................................................................................. 21
TERMINATION AND VARIATION ...................................................................................................................................................... 21
TERMINATION ......................................................................................................................................................................................... 21
VARIATION.............................................................................................................................................................................................. 22
PURPOSE TRUSTS ............................................................................................................................................................................ 23
NON-CHARITABLE PURPOSE TRUSTS ............................................................................................................................................................ 24
Gifts to Unincorporated Associations ............................................................................................................................................. 25
CHARITABLE PURPOSE TRUSTS .................................................................................................................................................................... 26
The Legal Meaning of Charity Generally ........................................................................................................................................ 27
Public Benefit .................................................................................................................................................................................. 27
The Relief of Poverty ....................................................................................................................................................................... 27
The Advancement of Education ...................................................................................................................................................... 27
The Advancement of Religion ......................................................................................................................................................... 28
Other Purposes Beneficial to the Community ................................................................................................................................. 28
Associated Doctrines: Exclusivity .................................................................................................................................................... 28
Associated Doctrines: Political Purposes ........................................................................................................................................ 29
Associated Doctrines: Discriminatory Conditions ........................................................................................................................... 29
Administrative Schemes and the Cy-pres Doctrine ......................................................................................................................... 30
ADMINISTRATION OF EXPRESS TRUSTS ........................................................................................................................................... 31
APPOINTMENT OF TRUSTEES ...................................................................................................................................................................... 31
RETIREMENT AND DISCHARGE OF TRUSTEES .................................................................................................................................................. 34
REMOVAL OF TRUSTEES ............................................................................................................................................................................. 34
DUTIES VS. POWERS OF TRUSTEES ............................................................................................................................................................... 35
Seeking direction from the court .................................................................................................................................................... 36
GENERAL DUTIES OF TRUSTEES: DUTY OF CARE.............................................................................................................................................. 37
Exculpation Clauses ........................................................................................................................................................................ 38
GENERAL DUTIES OF TRUSTEES: DUTY NOT TO DELEGATE ................................................................................................................................ 38
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INTRODUCTION TO TRUSTS
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The trust is not easy to define because it has its roots in the Middle Ages and has grown gradually over the
centuries, adapting to the demands that the needs of society have made upon it. - Dr. Waters
Most definitions consequently suffer from the fact that they are really an attempt either to find the essence of a
trust, which all too often means emphasizing one kind of trust (i.e. too simple), or to contain within a sentence all
the facets of an institution that has grown pragmatically (too unwieldy and difficult to comprehend) - Dr. Waters
Put simply: a trust arises where one person transfers property to another person with instructions that the property
is to be used for the benefit of a third person
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Where the legal owner of property is constrained by a court of equity to deal with it as to give effect to the equitable
rights of another (Re: Astor’s Settlements)
Better definition: A trust is the relationship which arises whenever a person (called the trustee) is compelled in
equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some
persons (of whom he may be one, and who are termed beneficiaries) or for some object permitted by law, in such
a way that the real benefit of the property accrues, not to the trustees, but to the beneficiaries or other objects of
the trust. - G.W. Keeton and L.A. Sheridan
Definitions
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A settlor is a person who creates an express trust.
The trustee is the person who holds title to the trust property for the benefit of the beneficiaries.
The beneficiary/cestui que trust is the person for whose benefit the trust property is held.
The trust property/trust res/corpus is the property that the trustee holds for the benefit of the beneficiaries.
o The trustee may hold either a legal or equitable interest in trust property depending on the nature of the
title conveyed to the trustee by the settlor.
The trust instrument expresses the intention to create the trust and may describe the rights and obligations of the
parties to the trust (can be a will, deed, contract, etc). (deed of settlement, deed of trust, declaration of trust)
A bare trust/simple trust/naked trust is when a trustee has no duties with respect to the property other than
conveying it to the beneficiaries.
A discretionary trust is a trust in which the trustee is granted a discretionary power to determine either the
amount that beneficiaries receive or which beneficiaries will receive income or capital of the trust or both.
A fixed trust is a trust where the beneficiaries are specified and the amounts they are to receive are set
A testamentary trust is a trust created by a will which comes into effect when the testator dies.
An inter vivos/living trust is a trust created during the life of the settlor.
An automatic resulting trust arises when an express trust fails. There was no intent to have the property come
back to the settlor (Vanderbilt Trusts) i.e. S creates a trust giving a life interest to a person who dies, with no
remainder. The trustee now holds the property on an automatic resulting trust for S.
A presumptive resulting trust arises when property is transferred without value. Can rebut the presumption by
showing that it was a gift.
Constructive trusts are used to remedy situations that would otherwise appear to be unjust.
Implied trusts: you better ask a person what they mean by this!
o Might mean an express trust implied by the circumstances
o Might refer to resulting trusts (implied because it seems reasonable to presume that this is what S had in
mind given the circumstances)
o Might refer to all trusts by operation of law whether resulting or constructive
Legal vs. equitable title: trustees generally* have legal title, beneficiaries have equitable interest. (*B may
transfer equitable interest to another trustee for another beneficiary, legal title to shares are held by depository so
trustee really only has equitable title)
Duties are things the trustees must do
o The duty of loyalty requires that the trustees act in the best interests of the beneficiaries and that the
trustees not engage in transactions in which their personal interests conflict with the interests of the
beneficiaries. (absolute duty)
o The duty of impartiality requires that the trustees not favour one or more beneficiaries over other
beneficiaries, i.e. where there is a life interest and one or more beneficiaries with a remainder interest.
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(absolute duty)
The duty of care requires the trustee to manage the property in the way a reasonably prudent trustee
would manage the property.
o The duty not to delegate (absolute duty…modified by statute)
o Duty to make distributions to beneficiaries when required (absolute duty) (National Trustees
Company of Australia – underpaid a beneficiary)
Absolute duty: no defence for a trustee to say he acted with reasonable care
Duty to take care: taking reasonable care is a defence (duty to invest, duty to sell property, duty to manage
property, duty to retain property)
A power gives a person permission to do something. A power can be constrained or limited.
The person who grants the power is referred to as the donor of the power. The person who has the power is the
referred to as the donee of the power.
An administrative power allows the trustees to manage the trust property (i.e. power to sell trust property,
postpone the sale of trust property, lease real property, renew a lease of real property, grant an option to purchase
property, repair and make improvements to real property or other assets of the trust, insure trust property, issue
receipts, settle debts, employ agents, obtain a passing of accounts, and invest)
Dispositive powers are powers that allow for the disposition of the trust property (i.e. power of selection among a
described class of beneficiaries, to determine the amounts of income or capital beneficiaries are to receive, to
accumulate income, to apply income or capital for the maintenance or education of one or more beneficiaries, or
to make a payment out of capital in favour of a capital beneficiary before the time he is to receive the capital –
power of advancement) A fixed trust wouldn’t have dispositive powers.
Power of appointment: power to decide who gets property
o Special/limited power of appointment: the power may only be exercised in favour of someone from a
specific list or class.
o Hybrid/intermediate power of appointment: the power may be exercised in favour of anyone except
people on a specified list or class of persons.
Bare power/mere power/personal power: no obligation to exercise it or even consider the exercise of the power.
Fiduciary power: must at least reasonably consider the exercise of power.
o It is possible that persons who are appointed trustees under a trust instrument could be given a power
purely in their individual capacity, but that would be an unusual case. The normal inference made when a
power is given to a person who is in a fiduciary relationship is that the power is held in a fiduciary
capacity. (Re Gulbenkian)
Trust power: the donee must exercise the power
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THE TAXATION OF TRUSTS
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Attribution of income: A settlor who retains a power of revoke a trust or to determine who will receive income
or capital from the trust, or has a power to consent to whom distributions of the property of the trust will be made,
will be taxed on the income of the trust (s. 75(2) ITA).
o Rationale: S has not really relinquished control over the property and, in a sense, still retains a benefit
from the property (the ability to control the disposition of the property)
A trust is a conduit of income: Although a trust is not considered a separate legal entity, under the ITA it is a
separate taxpayer. However, income earned on trust property that is paid, or payable, to beneficiaries can be
deducted from the income of the trust (because it is taxed in B’s hands)
o Note: courts are left to determine the obligations of trusts by operation of law
o Bare trust – does not exist for tax purposes
o Charitable purpose trust – not subject to taxation
o Note: the trustee can designate that the tax on some income that has been paid to the beneficiary will be
paid by the trust (a provision like this would allow you to use losses)
Taxation of inter vivos trusts: The danger with inter vivos trusts is that a person can create many of them so that
income could be split between many trusts. To prevent this inter vivos trusts are taxed on income retained in the
trust at the highest rate for individual taxpayers.
Taxation of testamentary trusts: The position taken with testamentary trusts was that since it was a one-time
creation of a trust the opportunities for income splitting would not be as significant, so the tax rate for
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testamentary trusts is the same as it is for individuals (i.e. regular marginal rates).
Trusts and capital gains: Creating a trust counts as a disposition of the trust property and triggers the capital
gains tax. But, there is a provision in the ITA that gives a choice as to whether the capital gains tax will be paid at
the time of the creation of the trust or later when the beneficiary disposes of the property. (rollover)
o Alter-ego trust: must be 65; put your property in a trust, have a life interest, put the remainder interest to
someone else when you die. Since you only have a life interest, none of it goes to your estate when you
die (and you don't have to pay the estate tax) -> the capital gains tax is not triggered until you die.
Deemed disposition every 21 years: The purpose of this is to prevent the trust from not having to pay tax on its
capital gains for what the CRA considers too long of a time. There is an exception where all of the interests in the
trust are indefeasibly vested.
Trusts law and charities under the ITA: Generally, it is the FCA that decides what is a charitable purpose for a
trust. The ITA uses the trust law definition of charities. These can be trusts or corporations. Where the question is
the validity of a purpose trust, the focus is on whether the purposes of the trust are charitable. If so, a failure of
the trustees to carry out the trust for those purposes will be a breach of trust. Where the question is whether
registration as a charitable organization under the ITA should be revoked, the focus is on whether the organization
is actually carrying on charitable activities. The non-taxation of a charitable organization and its ability to provide
tax receipts is only allowed when the donated funds are actually used for charitable purposes.
HISTORY AND DEVELOPMENT OF EQUITY
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Four different meanings of equity: equity as fairness (pay equity, employment equity), equity as net worth (the
amount one retains after creditors have been paid), equity as a corrective to common law injustice, and mere
equities (the defense developed by equity known as taking “subject to the equities”)
Maitland’s definition: Equity is now that body of rules administered by our … courts of justice which, were it not
for the operation of the Judicature Acts, would be administered only by those courts which would be known as
Courts of Equity.
Administrative beginnings of Equity: Courts of equity originated with petitions to the King in the 14th century.
Complaints were made concerning injustices created by orders of the King’s courts. These complaints were
originally procedural in nature (bribed jurors, sherriff refusing to enforce order)
Development of the Law of Uses and Trusts
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The early forms of trusts were expressed as conveyances to the use of another. In other words, X would convey
property to A to the use of B. Originally used for Franciscan monks or for people leaving to fight in the Crusades.
Also used to avoid the feudal burdens of wardship and marriage, to avoid the feudal requirement of forfeiture for
treason or escheat for felony, to avoid creditors, and to effect testamentary disposition of land.
The early non-recognition of the use in courts of law gave it some of its advantages for beneficiaries. For
instance, the avoidance of creditors or feudal burdens depended on the law not recognizing the cestui que use as
having any right or title to property enforceable in a court of law (or equitable interest recognized in the Court of
Equity)
King was losing money, so he petitioned Parliament to pass the Statute of Uses in 1535, which has the effect of
executing the use so that C is the recognized owner.
Getting around the Statute of Uses:
o The use upon a use: “A to B for the use of C in trust for D” or “A unto and to the use of B in trust for C”.
With the enactment of the Statute of Uses, and before the development of the use upon a use, the use could no
longer be employed to effect a testamentary disposition of property. This led to a rebellion that resulted in the
Statute of Wills in 1540 which permitted a person make a testamentary disposition of property.
Development of Equity and Trusts After 1550: From “Conscience to Equity”
o Growing popularity of the Court of Equity and Conflict with Courts of law
 Equity had a simple procedure (initially)
 Equity would usurp the CL and this caused resentment
 Attempts by Parliament to get rid of it
o Courts of Equity Survive the Civil War and Removal of the Monarchy
 The attempts by Parliament were unsuccessful - could not agree on details
o Equity as a Body of Substantive Law
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 Chancellor was now creating important legal concepts and institutions unknown to CL
 Expansion of trustee powers
Equity and Trusts, 1700-1900
o Equity continues to develop as a body of rules
o The “simple procedure” of equity got more and more bogged down in this period (multiple parties, many
documents had to be transcribed by hand)
o In 1873, the Judicature Acts rolls the Court of Chancery and the body of rules into CL courts
Historical Development of Equity in Canada
o Atlantic Provinces
 The Governor had the “Great Seal”, and therefore the power to exercise equitable jurisdiction
 In NB and NS, the court of Chancery was transferred to the provincial supreme court by the
1850s (23 years before the Judicature Act) (this was because Chancery was seen as political)
 PEI kept a separate equity court until 1974
 NFL: equity was dealt with by the Supreme Court of the Province by 1825
o Ontario and Quebec
 Quebec: when civil law was introduced in the late 18th century, there was no separate concept of
equitable courts (only had equity briefly between the Royal Proclamation and the Quebec Act)
 Ontario: didn't start exercising equitable jurisdiction until 1837, presumably to favor creditors
o The West and North
 When these courts were created, the notion of merging courts was already well under way, and so
they did not adopt separate courts. They were separate divisions within a single court until the
beginning of the early 20th century
Fusion
o Procedural fusion: manner of pleading is identical; could go to a single court for a single procedure; court
could grant either remedy
o In 1978, HL claimed that substantively, the law is also fused (United Scientific Holdings)
o LeMesurier v Andrus (ONCA 1986) claimed that law and equity is substantively fused in Canada
o Three forms of fusion (Paul Perell)
 Areas were fusion has already occurred because the equitable rule has usurped CL
 Areas where both CL and equity have fused to create a new legal obligation (i.e. negligent
misrepresentation which comes from CL negligence and equitable fraud)
 Areas where no noticeable movement toward fusion exists but where none seems necessary
o Canson v Boughton (SCC 1991) The main factor is the policy basis of the doctrine, rather than their
origin in CL or equity. P says that equitable compensation does not have the notion of causation. Since
the action was not framed in CL, D can’t claim causation as a defense. The court dodges it by saying that
equity does have notions of causation. McL: Although the conclusion can be reached by using equitable
principles, “we will take wisdom where we find it.”
o Current status: The issue is not totally resolved, but where there is a conflict the court will resolve it by
drawing on concepts from either body of law where it makes sense to do so, presumably with broader
policy considerations in mind (Canson)
THE FORMATION OF EXPRESS TRUSTS
Capacity
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The settlor must be a legally recognized person, have an interest in property, and have the legal capacity to
dispose of that interest.
Any legally recognized person can be a trustee and hold property subject to a trust obligation, even if the person
does not have legal capacity to deal with the property. (but it’s better if they do)
A beneficiary must be a legally recognized person in order to receive and hold an interest, legal or equitable, in
property. Not necessary for the beneficiary to have capacity to deal with property.
Minors
o Subject to very limited exceptions, a minor cannot make a valid will and therefore cannot create a
testamentary trust.
o Ks are non-binding on minors unless a) contract for necessaries of life, b) minor ratifies the K upon
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obtaining the age of majority, c) long-term K concerning property where the minor fails to repudiate
within a reasonable time after obtaining the age of majority
o Thus an inter vivos trust to be created by a minor pursuant to a K may be voidable by the minor. A minor
as trustee is likely to have difficulty managing the trust property since it will be difficult for the minor to
enter into binding legal Ks. Law varies from province to province.
Mental incapacity
o The question as to whether a particular mental incapacity creates a legal incapacity is whether it would
make the person incapable of understanding substantially the nature and effect of the particular
transaction.
o The settlor should appreciate the extent of the property that is being disposed of and who will be
benefitting.
o Where a person is making a will, the testator must understand the nature and effect of making a will, the
extent of the property being disposed of and must have an appreciation of the needs of his dependents.
Bankruptcy
o Subject to very limited exceptions, where a person is a bankrupt their property is held by a trustee in
bankruptcy to be dealt with according to the terms of the Bankruptcy and Insolvency Act. Bankrupt
persons have limited capacity to dispose of/deal with their property since the bankrupt’s property is held
by the trustee in bankruptcy so the bankrupt is no longer able to deal with it
An unincorporated association, a partnership, and a trust are not legally recognized persons
BC Wills Act
Wills of persons under 19 years of age
7. (1) A will made by a person who is under 19 years of age is not valid unless at the time of making the will the person
(a) is or has been married, or
(b) is a person described in section 5 (members of the Canadian Forces)
(3) A person who has made a will to which subsection (1) applies may, while under 19 years of age, revoke the will.
The Three Certainties
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If property has been transferred to another person for purposes of creating a trust but one or more of the
3 certainties have not been satisfied, then the trust will fail and the intended trustee will hold the
property on resulting trust for the settlor. If the settlor is dead, it goes into the residue of the estate. If the
residue of the estate has not been dealt with in the will, it will be intestate property and will go to the
statutory next of kin.
Case law in this area is impacted by underlying concerns such as the maximization of property use, evidence of
the owner’s intention (written, formal, informal, oral), deliberation by the owner, reasonable expectations or
reliance, unjust enrichment, enforceability and administrative cost (i.e. potential for future litigation), and
distributional equity.
There can be overlap – i.e. the same provision can be analyzed in terms of certainty of intention (Re Walker) and
certainty of subject matter (Sprange v. Barnard)
Certainty of Intention
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Refers to the intention of the settlor to create a trust. Can be express or implied from a written document or oral
words, or inferred from conduct. No formal requirements except in certain situations (i.e. testamentary trusts) No
specific words are required, and using the words “trust” doesn’t necessarily lead to a finding of a trust as equity
looks to intent, not form. However, where the words “on trust” are used it generally results in a finding of an
intention to create a trust. Precatory words are generally not sufficient to meet the certainty of intention
requirement (Johnson v. Farney).
Re Walker (ONCA 1925)
 “Should any portion of my estate still remain in the hands of my said wife at the time of her decease undisposed
of by her such remainder shall be divided…”
 Issue: is this enough for certainty of intention/does this create a trust?
 The first instance judge thought the gift over predominated and the Court of Appeal thought the gift
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predominated. It was a matter of interpretation, not the application of some strict rule.
Underlying factors: The idea of a trust is that the trustee is subject to a legal obligation. If there was no basis for
controlling spending by the wife, then she would arguably not be subject to any legal obligation. No reasonable
expectations of 3Ps because they would have to outlive the wife and there would have to be something left.
Re Shamas (ONCA 1967)
 “All will belong to my wife until the last [child] comes to the age of 21 years old ... If my wife marries again she
should have her share like the children, if not, she will keep the whole thing and see that every child gets his share
when she dies.”
 Issue: Did the husband, by the words used, intend to create a trust or just a moral obligation on the wife?
 The ONCA held that there was a trust in which the wife had a life estate and that she could encroach on the
capital of the trust until her death, subject to her remarriage. The Court of Appeal noted that in interpreting a will
the court must put itself in the testator’s armchair by interpreting the words of the whole will in light of the
circumstances the testator found himself at the time he drafted the will.
 The court inferred that the intention of the testator was to provide for the family. That was enough for both the
first instance judge and the Court of Appeal to find an intention to create a trust.
 Underlying factors: Unlike Re Walker, the court’s inference about the testator’s intention provides a basis for
imposing a legal obligation on the wife (to support the family). Arguably the expectations of the children were
greater here as well. Also, the property had greatly increased in value…court perhaps wants to share the wealth
among the wife and the children.
Johnson v. Farney (ONCA 1913)
 “I also wish if you (my wife) die soon after me that you will leave all you are possessed of, to my people and your
people equally divided between them, that is to say your mother and my mother’s families.”
 Issue: is there certainty of intention/a trust in favor of the two families?
 Held: No trust. Precatory language can lead to a trust but here it does not.
 Underlying factors: The husband did express his intention as just a “wish” and this wish was subject to the caveat
that his wife die shortly after him. Wife would probably expect that she can do what she wants with the property.
Potential for lots of future court applications - what does “families” or “soon after me” mean?
Certainty of Subject Matter
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Refers to certainty of the property that is to be held on trust and certainty of the amount or share that the
beneficiaries are to receive. It must be certain at the time the trust comes into effect (Re Beardmore)
Rationale: Want to avoid future litigation over these issues, the court may have difficulty determining whether
there has been a breach of trust or administering the trust if it is not reasonably clear, and desire for the settlor’s
intentions to be met.
Certainty of the property to be held on trust:
o This is met where there is a reference to a specific piece of property, a specific fund or a portion of a
specific fund.
o A formula for determining the property subject to a trust obligation will normally be considered sufficient
 ‘The bulk’ is not considered sufficient
o If the court can on objective standards identify the quantum of trust property that is sufficient.
 Re Golay's Will Trust: “a sufficient sum of money so as to provide a reasonable income for A”
Certainty of the amount that each beneficiary is to receive:
o The amount can be clearly set out, or a formula can be set out, or T can have discretion
o Occasionally a court can rectify a lack of certainty by assuming the property is to be distributed equally,
as long as the circumstances make such an assumption reasonable.
o Boyce v. Boyce: B1 was allowed to choose 1 of 4 houses, but died before making the choice. Court held
that the trust failed.
Sprange v. Barnard (1789)
 “This is my last will and testament at my death for my husband, Thomas Sprange, to bewill to him the sum of
£300, which is now in the joint stock annuities, for his sole use; and, at his death, the remaining part of what is left
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that he does not want for his own wants and use, to be divided among John Crapps, my sister Wickenden, and my
sister Bauden, to be equally divided between them.”
Issue: Is the requirement of certainty of subject matter me/is there a trust?
Held: Not certain enough to create a trust. This case is similar to Re Walker – shows that the issue can be looked
at either in terms of intention to create a trust or certainty of subject matter. As in Re Walker the court would have
had some difficulty figuring out how to control the expenditures or use of the property by Sprange in order to
preserve something for the remainder interests.
o Contrast with Re Shamas where the court did find a way to control the amount that could be spent by the
wife through its interpretation of the will in light of the circumstances in which it was drafted.
Not finding a trust here would be unlikely to impact on any reasonable expectations of Wickenden, etc because
the husband was allowed to use everything up.
Re Beardmore (Ont 1952)
 Marriage settlement provided that the husband was to hold 3/5 of his net estate for his wife for her life, remainder
be paid out to two daughters of the marriage over the course of twenty years, and if they died, to their issue.
 Issue: Is the requirement of certainty of subject matter met or is the trust void?
 This is an intervivos trust, so 3/5 of the net estate is not sufficiently certain – it must be sufficiently certain at the
time the trust came into effect. Your net estate is only calculated after you die.
Re Romaniuk (AB 1986)
 Confusing provisions in a will, one bank account in existence but not listed, etc. Court held that certainty of
subject matter was not met because the testatrix had four accounts and only 3 were listed. No trust was created.
Certainty of Objects (Beneficiaries/Purposes)
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Same rationale as certainty of subject matter applies
Certainty of objects in an express trust for persons requires that there be certainty as to who the beneficiaries of
the trust are. The test for certainty of beneficiaries for an express for persons is different as between a “fixed trust”
and a “discretionary trust”. An express trust for persons can be a fixed trust meaning that the trustee has no
discretion with respect to persons who are to be the beneficiaries or with respect to the amounts the beneficiaries
and these matters have been pre-determined. It that case, the trustee must be able to determine whether any given
person is a member of the class and identify every member of the class. This is known as the complete
list/ascertainable class test (Broadway Cottages). An express trust can also be a discretionary trust where the
trustee is a given a discretion with respect to either who is to be a beneficiary of either income or capital or with
respect to the amounts of either income or capital beneficiaries are to receive or with respect to both these matters.
The test for certainty of beneficiaries for a discretionary express trust for persons is from the House of Lords
decision in McPhail v. Doulton and the test is whether “it can be said with certainty that any given individual is or
is not a member of the class.” In Re Baden’s Deed Trusts it was held that it is just the concept of the class that
must be clear – one need not show that there is evidentiary certainty. McPhail v. Doulton also noted that certainty
of beneficiaries may not exist where the provision is administratively unworkable because the class is defined
way too broadly – such as “all the residents of Greater London”.
Reason for the difference: Subject to the trustee’s fiduciary duty, it is not a problem if one or more of the persons
that would fall within the class are not identified, since it is within the trustee’s not to make a distribution to any
given beneficiary. The trustee’s fiduciary duty requires that the trustee make a reasonable effort to identify
beneficiaries that fit within the class and to assess, in accordance with the discretion given, which among those
beneficiaries should receive distributions from the trust (McPhail v. Doulton)
There must only be conceptual certainty (i.e. what is a biological child) not evidential certainty. (Re Gulbenkian’s
Settlements, McPhail v. Doulton)
Note: The requirement of certainty of objects is reduced in the context of trusts for charitable purposes, where it is
only necessary that there be an intention that the property is to be held for a charitable purpose. If so, the trust will
not fail – lack of specificity dealt with through scheme-making power.
McPhail v. Doulton (HL 1971)
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“The trustees shall apply the net income ... in their absolute discretion ... to or for the benefit of any of the
officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any
such persons in such amounts at such times and on such conditions ... as they think fit”
Issue: Does this create a trust/is certainty of beneficiaries met?
The test for certainty of beneficiaries for a discretionary trust (overruling Broadway Cottages), is whether any
given person can be said to be a member of the class or not. One does not need to identify every single member of
the class. Thus, a trustee having a power and a trustee of a discretionary trust would approach the task in the same
way.
The Broadway Cottages test was based on the idea that if the court had to step in to administer the trust, they
would have to divide the property among all of the beneficiaries equally. Here, the court states that the courts do
not necessarily have to do it in this manner (hence a full list not needed). Case sent back to determine whether the
beneficiaries of the trust are conceptual certain.
Baden’s Deed Trusts (1973) (McPhail v. Doulton continued)
 Are the words “relatives” and “dependants” were sufficiently certain to allow one to determine whether any given
person was a member of the class?
 Held: Yes, certainty of beneficiaries is met (but none of the judges can agree on what it means!)
 Underlying factors: Trust had already been operating for many years, many employees probably had reasonable
expectations of receiving a benefit, was more consistent with settlor’s intention to benefit the employees.
Re Connor (1970)
 Testatrix wanted the residue of her estate divided “among my close friends in such a way and at such time as my
trustee in her discretion should determine.”
 This is before McPhail v. Doulton, and the CA found that it wouldn’t be possible to make a complete list. PostMcPhail, it would be unclear whether “close friends” would be found to be conceptually certain. It would
probably fail (i.e. what degree of intimacy is required?) The first instance judge held that it was sufficiently
certain because the settlor lived in a small town – arguably that is more about evidential certainty (the relative
easiness of proving whether a person was or was not a close friend) than conceptual certainty (what is a close
friend).
Jones v. Executive Officers of the T. Eaton Company (SCC 1973)
 Testator’s will left a legacy of $50,000 to be paid to the executive officers of the T. Eaton Company to be used by
them as a trust fund “for any needy or deserving Toronto members of the Eaton Quarter Century Club.”
 Issue: Is there a valid express trust for persons?
 Adopts McPhail in Canada. This is a valid express trust because it is conceptually certain what a “needy or
deserving member of the club” is.
Daniels v. Daniels Estate
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Testator executed a will with a residuary clause: “all the residue of my estate not hereinbefore disposed of I devise
and bequeath unto my executors to distribute as they see fit”
Held: failed for lack of certainty of the beneficiaries of the trust. In the opinion of the court, the executors were
intended to be trustees, so they could not take the property for themselves. Thus they held the property on a
resulting trust for the estate of the testator to be distributed to the intestate heirs of the estate.
Note: how does this fit with Johnson v. Farney and Re Walker, given that it was held that a trust was intended
here despite the words suggesting a gift together with general power of appointment? Normal inference where the
donee is described as an executor is that the donee receives the property on trust (Hayward v. Clowes).
Constitution of Express Trusts
Ways of Constituting a Trust/Gratuitous Promises
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Three ways of constituting a trust (Milroy v. Lord)
o S declares themselves to be a trustee for B
o S give property to T in trust for B
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S instructs a 3P to transfer certain property to the trustee
Milroy v. Lord and Re Rose held that the settlor must do all he or she can do to effect the transfer. Thus,
the trust can be constituted even if there is some step that another party has to take (Re Rose). For self-declared
trusts, there must be clear evidence of the intention to declare self as trustee or co-trustee. No technical words are
necessary. (Paul v. Constance) However, clear evidence of intent and deliberation are particularly important for
self-declared trusts. (Watt v. Watt)
Transfer of legal interest:
o Land: Deed or statutory instrument of transfer
o Chattels: Transfer of possession, via bill of lading, or via deed where SP is available
o Choses in action: via legal assignment following the requirements of s. 36 of the Law and Equity Act (in
writing, signed, notice given) or by way of an equitable assignment (no specific requirements other than
intention but must join the assignor into the suit).
o Negotiable instruments: negotiation and endorsement (you don’t take ‘subject to the equities’)
o Securities: They are bundles of rights and, under the common law, they were therefore choses in action.
Statutes dealing with securities transfer often now provide that securities are negotiable instruments. They
may also involve specific statutory requirements for transfer.
 S. 51 of the Canada Business Corporations Act: only the registered holder of the shares is
entitled to exercise most of the rights associated with the shares.
 For efficiency purposes, a nominee shareholder is typically used (Canadian Depository for
Securities). Canadian Depository for Securities holds the legal title to the securities and people
trade on the equitable title. Can ask them to execute a form of endorsement for you so you can
become a registered shareholder. Most of the time, you don't need to. Since it is just the equitable
title that is transferred, you just record on paper that the transfer was done
o Test: Given the nature of the property, what does one have to do to transfer property of that sort? (then
make sure that S has done everything in their power to effect that interest)
Transfer of equitable interest
o Assignment of the equitable interest to a trustee on trust
o Declaration by that person that he or she is a trustee of the equitable interest
o An instruction to existing trustees to hold the equitable interest in favour of the new intended beneficiary
Milroy v. Lord (1862), 45 ER 1185 (Eng. Ch.)
 Settlor must do everything he can do to effect the transfer: According to Lord Justice Turner, “... the settlor must
have done everything which, according to the nature of the property comprised in the settlement was necessary to
be done in order to transfer the property and render the settlement binding upon him.”
 Modes of transfer: To create a valid trust one must do everything that was necessary to be done to transfer the
particular property. There are three modes for doing this: (i) actually transferring the property to those for whom
one intends to provide (i.e., to make a direct gift); (ii) transferring the property to another person to be held by that
person on trust; or (iii) declaring oneself to be a trustee of the property.
 Court wont substitute one mode for another: The court will not give effect to the intention by substituting a mode
of transfer other than the mode intended. To do so would have the effect of completing an otherwise incomplete
gift and this is something the court of equity would not do.
o This point in Antrobus v. Smith and Milroy v. Lord was later followed in Richards v. Delbridge where it
was said that the words “give and make over” and “grant, convey, and assign” expressed an intention to
transfer and could not be said to amount to a declaration of trust. All these cases have been adopted by
Canadian courts.
 Thomas Medley did not complete the transfer – he did not do everything necessary to complete the transfer. The
one additional thing he had to do was to give a direct instruction to Samuel Lord to act on the power of attorney
and transfer the shares. Thus the trust was not constituted.
Re Rose, [1952] Ch. 499 (Eng. C.A.)
 If the settlor does everything he can do to effect the transfer, even if the transfer may not have been effective, the
trust will nonetheless be constituted.
 Here, all documents had been submitted but the Board of Directors had to meet to approve the transfer. Even
though the Board had not met yet, the trust was deemed to be constituted because it was beyond S’s control.
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Argument: Saying that Mr. Rose was a trustee with respect to the dividends during the period before the Board
approved the transfer was effectively saying he had declared himself a trustee with respect to the dividends when
he, in fact, had intended to make a direct transfer.
Court’s response: This is different. There was an effective transfer and the court was not finding a trust to make it
effective but only finding a trust to give effect to an otherwise valid transfer. Here Mr. Rose had done all he could
do to transfer all his equitable interest in the shares.
Mr. Rose had made himself a trustee of the shares. He had the legal title but he held that title on trust. Mrs. Rose
and the company secretary therefore held an equitable interest during that interim period and it would be the
equitable interest that they held on trust during that period. If dividends were paid on the shares they would be
paid by the Leweston Estates Company to Mr. Rose because he was the registered shareholder. Mr. Rose,
however, would hold those dividends on trust for Mrs. Rose and the company secretary. Mrs. Rose and the
company secretary would be entitled to have the dividends paid over to them, at which point they could carry out
their trust duty of passing the dividends on to Mrs. Rose as the holder of the life interest.
Makes sense if you consider that the purpose of transferring property is to show evidence of intention
Paul v. Constance, [1977] 1 All ER 195 (Eng. C.A.)
 Where it is argued that there was a declaration of trust (i.e. S declares themselves to be T), clear evidence of that
intention is required
 Bank account, bingo winnings deposited, used for Christmas gifts, etc.
 Issue: Whether Mr. Constance had declared himself a trustee of the account for the benefit of himself and Mrs.
Paul?
 Held: Yes. Clear evidence via the testimony of the impartial bank manager, and the joint use of the account.
Watt v. Watt Estate (1987), 28 ETR 9 (Man. C.A.)
 S had a sailboat, let B use it.
 Issue: Did S declare himself to be a trustee of the boat for B?
 Held: Yes. There is sufficient evidence of the trust (a handwritten note and subsequent use of the boat by B)
Gratuitous Promises and the Constitution of Trusts
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Equity will not perfect an imperfect gift (gifts require intent, delivery, and acceptance) and will not assist a
volunteer by ordering the transfer of property to the trustee, thereby constituting the trust. (Re Pryce, Re Kay’s
Settlement) A promise in a deed to transfer the property to the trustee is enforceable by the trustee even though
there was no consideration for the promise, but the remedy is limited to a remedy of damages unless the trustee
could establish that damages are inadequate. If the beneficiary is a covenantee to the deed, they can sue on it, but
are again limited to damages (Canon v. Hartley) unless they can show that damages would be inadequate and
specific performance is necessary in the circumstances.
How to get around this problem: recharacterize the subject matter of the trust (Fletcher v. Fletcher)
o The deed creates a debt to be paid at a future time, thus the trustees have a chose in action and the trust is
constituted
o Fletcher not followed in Re Beardmore in Canada
Consider factors such as reliance, private autonomy to change one’s opinion, and evidence of deliberation
Promises to convey future property are not enforceable if there is no consideration (Re Ellenborough)
o Note: if the court takes the Fletcher v. Fletcher approach, could lead to a different result.
Formalities
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The common situation in which a trust must meet certain formalities in the B.C. context are contracts dealing with
interests in land that create a trust or testamentary trusts that must meet the requirements of the Wills Act to be
valid.
Trusts with Respect to Land
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Who has what:
o Modern version of the Statute of Frauds (Ont, NS, NB)
o The 1677 Statute of Frauds (AB, SK, NF, Territories)
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S. 59 of the Trustees Act (BC)
 Basically the only part of the Statute of Frauds that would still apply in BC is for Ks with respect
to land, via s. 59(3) which essentially re-enacts s.4 of the English Statute of Frauds as modified
by the doctrine of part performance and the doctrine of fraud. If the trust for land is based on a
K and the K is not enforceable then the trust is not enforceable.
The English Statute of Frauds (1677)
o Meant to address concerns about frauds based on oral evidence
o S.4 - Ks with respect to land must be evidenced by any written doc, can be signed by an agent
 Effect: one may not enforce the alleged trust obligation if requirements not met (trust continues to
be valid and past payments not affected)
o S.7 - Trusts respecting land, must have a signed doc but does not have to be signed at the time of the
creation or declaration of trust; cannot be signed by the agent of the settlor.
 Applies to both land and personal property
 Effect: Even though the section says “utterly void and of none effect” courts read this as meaning
unenforceable on the basis that to read it as void and of no effect could be too harsh on the
trustee. Thus, one may not enforce the trust obligation but the trust continues to be valid and past
payments not affected. i.e. B instructs T to hold B's interest on trust for X. If T does this, and the
order was void, T just committed breach of trust and could be sued by B for following B's
instructions. If it is unenforceable, X will have to give it back but T hasn't breached a duty.
o S. 8 - the Act does not apply to trusts by operation of law
o S.9 - Any grant or assignment of an equitable interest in a trust must be in writing signed by the party
making the grant or assignment
 Not clear if this would apply where T instructed to hold property for another B, but good idea to
put that in writing. Same goes for disclaimers of interest that increase the amount going to
another B.
 The grant or assignment must itself be in writing. The grant or assignment also cannot be signed
by an agent for the person having the equitable interest.
Unfortunately there were problems with the Statute of Frauds. It was created in a context where current laws of
evidence didn't apply and could be abused by promisors, who could get out of a promise by not complying and
pleading the Statute of Frauds, even where there had been reliance on the promise.
In response, the court created the doctrine of part performance (requiring that some act, such as a transfer of
property, be done that could only be explained on the basis of the alleged oral contract) and the doctrine of fraud
(Rochefoucauld)
o Rochefoucauld v. Boustead: R claimed the return of the property and B resisted the claim on the basis that
the alleged trust was not proved in accordance with the Statute of Frauds.
o Held: Can’t use the Statute of Frauds to commit fraud. All that is required for there to be “fraud” is that
the person retains the property knowing it was conveyed to him as trustee. In other words, one does have
to prove a fraudulent intent of the person seeking to rely on the statute. It is enough that there is clear
evidence of the oral contract such that allowing a person to rely on the statute would permit avoidance of
the oral contract.
 It is a fraud for a trustee to deny the trust and claim the property for themselves
 Notwithstanding the statute, the beneficiary may use parole evidence to show that the trustee is
trying to deny trust and evade his duties by using the statute
 Court did not rely on parole evidence, but on letters that were exchanged
Law and Equity Act, s. 59
S. 59(1) In this section, "disposition" does not include (a) the creation, assignment or renunciation of an interest under a
trust, or (b) a testamentary disposition.
(3) A contract respecting land or a disposition of land is not enforceable unless
(a) [to transfer land, must be in writing and need to have a reasonable indication of the subject matter], or
(b) [the party must have done something consistent with making the transfer – 59(4) this includes paying a
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deposit or part of the purchase price], or
(c) [the person has reasonably relied on the transfer to such a degree that it would be inequitable not to enforce it]
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The Statute of Frauds no longer applies to the creation of a trust respecting land or to the assignment or
renunciation of an equitable interest with respect to land because its replacement, s. 59 of the Law and Equity Act
does not apply to the creation, assignment or renunciation of an interest under a trust. (S.59(3))
Thus, for trusts law (where no K for land is involved), nothing has to be in writing, although it’s always a good
idea to have it in writing.
Testamentary Trusts
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Statute of Frauds 1677 required that testamentary gifts be in writing, signed by the testator or by someone on his
behalf and by his direction and that the signing by, or on behalf of, the testator be witnessed by at least three
witnesses.
B.C. Wills Act: To be valid a will must be in writing [s. 3]; be signed at its end by the testator or by some other
person on behalf of the testator, in the testator's presence and by the direction of the testator [s. 4(a)]; the testator
makes or acknowledges the signature in the presence of two or more witnesses attesting to it [s. 4(b)]; the
witnesses also sign the will [s. 4(c)].
o An unwitnessed document may be incorporated into a will if: 1) it was in existence at the time the will
was executed, 2) the document is identifiable, 3) the will speaks of the document as presently existing
Effect will not be given to writing appearing underneath the signature [s. 6(3)].
If the person signing the will as a witness is a beneficiary under the will or the husband or wife of a beneficiary
under the will then the gift, bequest or other disposition in favour of that person will be void
Future: Wills, Estates and Succession Act
o S. 36(1) Any person 16+ and who is mentally capable can make a will.
o S. 37(1) To be valid a will must be in writing; signed at its end by the maker of the will, or the signature
at the end must be acknowledged by the will-maker as his or hers, in the presence of 2+ witnesses present
at the same time; and signed by 2+ of the witnesses in the presence of the will-maker.
o S.39 would clarify matters with respect to the place of the signature of the maker of the will and s. 40
would provide that the witnesses signing the will must be 19+. S. 40 would also allow witnesses to
include persons who may receive a gift under the will (although the gift might be void under s. 43).
If the formalities required to create a valid will in accordance with the Wills Act are not met any
testamentary trusts purportedly created by the alleged will are also invalid. But courts will sometimes still
enforce the trust (i.e. secret and semi-secret trusts)
o Equity will not allow the wills legislation to be used to commit a fraud, and the idea is that by not
enforcing the secret or semi-secret trusts, the courts would be doing just that.
o Re Beardmore: where will requirements not met, could interpret as an inter vivos gift, i.e. 3/5 of net estate
held in trust until wife's death if she survives him was a covenant - it was an inter vivos transfer that was
to take effect upon the husband's death.
Secret and Semi-Secret Trusts
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These are types of constructive trusts that can be upheld even though they contravene the Wills Act
A secret trust arises where property is bequeathed to a person in a will with no indication on the will that the
person is to hold that property in trust. The testator, however, before his or her death, has communicated to that
person an intention that the property is to be held on trusts described to the person and the person has accepted the
trust or acquiesced by not indicating a refusal to accept the trust obligation.
In a semi-secret trust property is bequeathed to a person in a will and the will indicates that the person is to
receive the property in trust (i.e. the words used in the will suggest the property is to be held in trust). The objects
of the trust are, however, not set out in the will. Before the testator executes the will, the testator gives
instructions to the person who will receive the property under the will as to the nature of the trusts on which the
property is to be held.
The problem with secret and semi-secret trusts is that that the gifts to the objects of the trust are not set out in the
will and therefore the gifts do not comply with the requirements of the wills legislation because they are
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testamentary dispositions not provided for in the will itself. Courts have, however, enforced such trust obligations
if certain requirements are met: (Ottaway)
o There was an intention to create a trust
o There is communication by the donor of the trust and its terms to the donee (i.e. the person who will be
subject to the trust obligation);
o Acceptance of the trust obligation by the donee (which can include mere acquiescence by the donee); and
o The communication must be timely (semi-secret: before the will is executed, secret: any time before
death) (Blackwell, Jankowski v. Pellek)
These trusts are enforced to protect the beneficiary’s interests/prevent fraud against the beneficiaries.
The trustee must have a chance to accept or refuse the trust obligation with knowledge of what the trust obligation
is (McCormick v. Grogan)
McCormick v. Grogan (1869), LR 4 HL 82
o Testator told friend about a letter, letter not opened until after testator’s death
o Exception to the Wills Act where either:
o A person induces a testator to make a will in their favour by promising the testator that they will distribute
the property according to the instructions, then keeps the property for himself;
o A person indicates acceptance of the instructions (thus deterring the testator from making another will);
o A person acquiesces after being told the instructions (thus deterring the testator from making another
will).
o None of these applied (court found that acquiescence didn’t fit because the testator said “I shall have it no other
way”), thus friend got the property absolutely, free of any trust obligation
Boyes v. Carritt (1884), 26 Ch. D. 531
o Secret trust. The court suggested that perhaps receiving a sealed letter during the lifetime of the testator and
accepting to act according to it without seeing its contents might be enforced on the theory that if he had not
accepted to so act the will might have been revoked. Here, the done did not receive a letter until after the death
of the testator and the court therefore did not enforce a trust.
o Consequently, the done held the funds on a resulting trust for the estate of the testator.
Ottaway v. Norman, [1972] Ch. 698 (Eng. Ch. Div.)
o There must be clear evidence of intention, communication and acceptance of the trust obligation.
o A secret trust scenario may arise where one person bequeaths a property to another on the condition that that
person is to bequeath it to X, where this isn’t mentioned in the first will.
o Here there was sufficient evidence from third parties about the situation and the fact that the property was
supposed to go to X (witness statements from uninterested third parties) So, a constructive trust was found.
Blackwell v. Blackwell, [1929] AC 318 (H.L.)
o Semi-secret trust; one of the trustees was given the details of testator’s plans and the others knew of the general
scheme.
o Semi-trusts are enforced for the same reason as fully secret trusts, that otherwise there would be a fraud. The
fraud is that if the trust obligation had not been accepted the testator might have revoked the will and perhaps
written another.
o For a semi-secret trust the communication must be made prior to or contemporaneously with the making of the
will. Here there was no problem with that, so the trust was enforced.
o A testator cannot reserve the power to make future unwitnessed dispositions by merely naming the trustee and
leaving the purposes for later, nor can a trustee accept something that was never communicated to him in the
testator's lifetime
o Basically, communicating the purpose to the trustee, and their acquiescence, removes it from the Wills Act and
into the law of trusts [the court is saying that an inter vivos trust will make it unnecessary to comply with the
Wills Act. Since the trustees knew of the trust during the testator's lifetime (it was communicated to them), it
stands.
Jankowski v. Pelek Estate (1995) 107 Man. R. (2d) 167, 131
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o
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o
o
The will instructed the executor to sell a property and divide the proceeds among three named nephews and then
left the residue “to my said Executor to deal with as he may in his discretion decide upon.” When she gave
instructions for the drafting of the will, the testatrix had indicated to the executor that she intended to benefit three
other persons but she did not say who these three other persons were.
After the will was drafted and signed, the testatrix indicated the names of three other nephews.
Husband argued this was a semi-secret trust b/c of presumption that a bequest to an executor is a trust obligation
(and thus the provision would be a trust provision in the will, making it a semi-secret trust) The trust would then
fail because of the timing of the communication.
The majority of the Man CA read the clause as setting out a gift to the executor, thus making it a secret trust, and
making it valid. Factors: a) the testatrix clearly didn’t intend an intestacy, b) the executor was a longtime friend,
and c) the testatrix clearly did not want to benefit the husband. Also, there was a clause saying that the executor
could decide what to do with the residue. Therefore, the provision re: giving the property to the executor would
have been superfluous if it would have been read as simply giving it to the executor in his capacity as executor
(b/c it would have gone to him as executor anyway if she had just left that provision out)
LEGALITY & PUBLIC POLICY
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A trust may not be valid if it is created for an illegal purpose or if it is contrary to public policy
Traditional Prohibitions
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This rule encompasses trusts that are contrary to the Criminal Code and trusts that would amount to fraud (not
necessarily fraud as listed in the CC)
Consequences:
o If illegal purpose carried out, S cannot get the property back, the trust is unenforceable, T can keep
the property (Re Great Berlin Steamboat)
 Re Great Berlin Steamboat: Fund deposited in the company’s bank account for the purpose of
have a creditable balance in case of inquiries from Berlin bankers, but not for the general purpose
of the company. Even though the bankers didn’t invest, the purpose was held to have been carried
out because the company had an ongoing fictitious balance.
o If not carried out, S can get the property back (Symes, Krys v. Krys)
 But note that the English position has changed and that even if not carried into effect, an illegal
purpose prevents the settlor from recovering the property.
o Forfeiture under the proceeds of crime legislation (462.3 to 462.5 of the Criminal Code)
Conditions Precedent/Subsequent/Words of Limitation
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A condition precedent is a condition that must occur before the gift intended by the trust is effective.
Where there is a condition subsequent a gift will no longer be effective if the condition occurs.
o When a condition subsequent is fulfilled it divests a gift which has already vested in possession. An
interest subject to a condition subsequent is also known as a defeasible interest.
o Words such as “on condition that”, “but if”, “provided that” or “if it happens that” are normally treated as
indicating a CS as opposed to a determinable interest.
Words of limitation are when a gift is limited in time and is a determinable interest. (“while”, “during”, “so long
as” and “until” tend to be taken to mean a determinable interest)
SEE CHART
In interpreting provision, the cases involve strained analysis which suggests the court is trying to achieve a
particular outcome that the court considers fair. This suggests that some underlying concerns or factors are
affecting the result: reliance, unjust enrichment, reasonable expectations, reluctance to defeat the settlor’s clear
intentions.
For conditions that are impossible:
o If at the time the gift is made, the condition couldn't possibly be fulfilled, the gift is complete.
o If the condition became impossible after the gift was made, and for reasons beyond the control of the
settlor, then the gift fails
o Policy: Presumes the settlor intended the gift would not occur if it was impossible for the condition to be
performed after he made the gift
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Contrary to Public Policy
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What is considered contrary to public policy varies over time
Restraints on Marriage/Lifetime Celibacy
o Re McBain (1915), 8 O.W.N. 330 (Ont. H.C.), the will provided a gift to two daughters but said that gifts
over should take place if either of the daughters were to marry. This was held to be a condition
subsequent but it was not found to be contrary to public policy since it was intended to just provide from
the daughters until they were married. Contrast with…
o Re Cutter (1916), 37 O.L.R. 42, 31 D.L.R. 382 (Ont. C.A.) A gift of the residue of the estate to the
testator’s sister for life but with a gift over “in the event of the remarriage of my sister” was considered a
condition subsequent that was intended to impose a restraint on marriage and the condition was therefore
void as being contrary to public policy and thus the gift took effect without the condition.
o Trusts to provide for a spouse during that spouse’s unmarried life were considered acceptable.
o Partial restraints such as those requiring marriage within a specific faith have also been held to be
acceptable.
Interference with Marital Relationships
o Re Hurshman (1956), 6 D.L.R. (2d) 615 (B.C.S.C.) A gift of personal property was made on condition
that the daughter not be married to a Jewish person was struck down since the daughter was married to a
Jewish person. Treated as a CP.
o Re Nurse (1921), 20 O.W.N. 248 the testator left property (real and personal) to his daughter but added
that if the daughter should live with or support her husband, the fund should accumulate. The daughter
and her husband were separated at the time. The court found the condition to be a CS and held it to be
void so that the gift took effect without the condition.
o Re Blanchard (sub nom Eastern Trust Co. v. McTague) (1963), 39 D.L.R. (2d) 743 (P.E.I. C.A.) The
testator made a gift of real property to his housekeeper “if she is still living away from her husband” and
made a gift of personal property saying, “if she at any time returns to her husband all allowance and
shares in my Estate are to cease.” Both conditions were void conditions subsequent and were struck to
that the gifts took effect without being subject to the conditions.
Interference with Discharge of Parental Duties
o Clarke v. Darraugh (1884), 5 O.R. 140 a gift was made to an infant on condition that the gift would be
lost if the child lived with his father at any time before the child reached the age of majority. The
condition was held to be a void condition subsequent.
o Re Thorne (1922), 22 O.W.N. 28 a gift of $800 to a minor who was living with her uncle. The gift was,
however, followed by the words, “this, however, is in case she does not go to live with her mother.” The
condition was held to be a void condition subsequent.
Discriminatory Conditions
o Leonard Foundation (1990) (Ont. C.A.) A trust that provided scholarships found to be contrary to public
policy where it only allowed scholarships to white AngloSaxon protestant students and restricted
scholarships for female students.
*Restraints on Alienation/Interference with Enjoyment of Property/Absolute gift with gift over
o A restriction on the sale of property to a person outside of the family is likely to be considered an invalid
restraint on alienation.
o Conditions that interfere with or restrict the enjoyment of the property are also invalid. For instance,
where a beneficiary is sui juris and is the sole beneficiary he or she can terminate the trust and call for the
property. A condition that prevents such a sole beneficiary from doing this is invalid. (i.e. if the trust tries
to overrule Saunders)
o Trusts that interfere with the devolution of estates are also invalid. For example, a gift to a son with a gift
over to two grandsons if the son died before being released from a mental institution was held to be
invalid. In other words, there was an absolute gift then an attempt to restrict to whom the property would
go if the son was not released from the mental institution before his death.
o It is a question of degree whether or not the clause will be held to be invalid!
*Adherence to a Particular Religion (not struck down for public policy, rather uncertainty)
Fraud on Creditors
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A transfer of property to a trust may be void where it is made to hinder or delay creditors contrary to the
Fraudulent Conveyances Act, or prefers creditors contrary to the Fraudulent Preferences Act, or is contrary to the
Bankruptcy and Insolvency Act. The effect of the legislation in the trust context is that transfers to trustees caught
by the legislation are void and the property reverts to the settlor making it available to the settlor’s creditors (the
trust is unwound). Where a settlor declares himself to be a trustee of property he owns, the equitable so conveyed
reverts to the settlor if that transaction is caught by the legislation. For the purposes of the statutes, mala fides isn't
required. The transfer must simply have the effect of hindering.
Fraudulent Preferences Act
**Requires showing that, at the time of the transaction, the debtor is insolvent or on the eve of insolvency. Thus, it is the
fraudulent conveyance legislation which is primarily relied upon to vitiate fraudulent transfers that are intended to defraud
all creditors**
S. 3: A disposition of property by a person at a time when he is in insolvent circumstances (i.e., unable to pay liabilities as
they come due), is unable to pay his debts in full (i.e., the value of the person’s assets is less than the amount of his
liabilities), or knows that he is on the eve of insolvency, is void as against an injured creditor, if made: (a) with intent to
defeat, hinder, delay or prejudice creditors or some of them; and (b) to or for a creditor with intent to give the creditor
preference over other creditors or some of them.
Subsection 6(1): Nothing in s. 3 applies if the money paid, or the property disposed of bears a fair and reasonable relative
value to the consideration, to a sale in good faith, to a payment made in the ordinary course of business to innocent
persons, to a payment to a creditor, or to a disposition in good faith of property of any kind made (a) in consideration of a
present actual payment in good faith in money; (b) by way of security for a present actual advance of money in good faith;
or in consideration of a present actual disposition in good faith of any property
Bankruptcy and Insolvency Act
Property of bankrupt trustee
67. (1) The property of a bankrupt divisible among his creditors shall not comprise (a) property held by the bankrupt in
trust for any other person, (b) any property that as against the bankrupt is exempt from execution or seizure under any
laws applicable in the province within which the property is situated and within which the bankrupt resides.
S.95 A transfer is void against the trustee in bankruptcy if it is: (i) made in favour of a creditor dealing at arm’s length or
in trust for that creditor; (ii) the transfer was made with a view to giving that creditor a preference; and (iii) the transfer
was made within 3 months prior to the bankruptcy event.
A transfer is also void if it is made in favour of a creditor who is not dealing at arm’s length with the insolvent person, or
in favour of a person in trust for that creditor, if it has the effect of giving that creditor a preference over another creditor
and is made within one year prior to the date of the initial bankruptcy event.
S.96(1)(a) An arm’s length transfer is void against the TIB if the TIB can show that: (i) that the transfer was at
undervalue; (ii) the transfer occurred within 1 year prior to the date of the initial bankruptcy event; (iii) the debtor was
insolvent at the time of the transfer or was rendered insolvent by the transfer; and (iii) the debtor intended to defraud,
defeat or delay a creditor.
S. 96(1)(b) A non-arm’s length transfer is void against the TIB where the TIB shows that the transfer was at undervalue
and either: (i) that the transfer occurred within one year prior to the date of the initial bankruptcy event; or (ii) that (a) the
transfer occurred within five years prior to the date of the initial bankruptcy event; and (b) the debtor was either insolvent
at the time of the transfer (or was rendered insolvent by it), or intended to defraud, defeat or delay a creditor.
S.96(2) provides that the TIB shall state what, in the trustee’s opinion, was the fair market value of the property or
services and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor.
These values are to be presumed by the court to be the values in the absence of evidence to the contrary. The court may
order that a party to the transfer, or any other person who is privy to the transfer, or all of those persons, pay to the estate
of the bankrupt debtor the difference between the value of the consideration received by the bankrupt debtor and the value
of the consideration given by the bankrupt debtor.
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S. 96(3) provides that a “person who is privy” means a person who is not dealing at arm’s length with a party to a transfer
and by reason of the transfer, directly or indirectly, receives a benefit or causes a benefit to be received by another person.
Date of initial bankruptcy event (s.2): an assignment filed with an official receiver appointed under the Act, a proposal,
a notice of intention by the insolvent person to make a proposal, or the first application for a bankruptcy order
Transfer at undervalue (s.2): a disposition of property or provision of services for which no consideration is received by
the debtor or for which the consideration received by the debtor is conspicuously less than the fair market value of the
consideration given by the debtor.
S. 4(5) For the purposes of s. 95 and s. 96 persons are, in the absence of evidence to the contrary, deemed not to be at
arm’s length where they are related to each other.
S. 4(4) It is a question of fact whether persons who are not related to one another were, at a particular time, dealing with
each other at arm’s length.
Fraudulent Conveyance Act
S.1: a disposition of property made to delay, hinder or defraud creditors is void against creditors (or their personal
representatives or assignees) whose rights are delayed, hindered or defrauded by collusion, guile, malice, or fraudulent
devices and practices is void.
S.4: S. 1 does not apply to a disposition of property for good consideration and in good faith to a person not having any
notice or knowledge of the collusion or fraud.
The Rule Against Perpetuities
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Promotes alienability of property; strikes a balance between the degree to which one gives autonomy to the an
owner of property to control the use of the property in the future (the dead hand control) and the degree to which
future owners of the property are free to deal with the property.
“An interest is valid if it must vest, if at all, within a period calculated by taking the lives in being, at the date the
instrument takes effect, plus 21 years.”
The rule applies to contingent interests (when something may or may not happen, i.e. birth). It does not apply to
vested interests, whether they vested in interest or possession.
o Even a slim possibility that the interest will vest outside of the perpetuity period makes the gift void
(LePage - probate)
o If the trustee has discretion to choose amounts that beneficiaries will get, this discretion must vest within
the rule. (Robinson v. Adair)
Andrews v. Partington (1791) created a class closing rule. If a settlor or testator directs that a fund is to be
divided among members of a class at a time when there could still be an increase in the members of the class, the
class closes as long as at the time when distribution is to occur there is at least one member of the class who is
entitled to call for a distribution of his share.
Lives in being: If it is too difficult to determine all the lives being referred to, there will be uncertainty as to
whether the remoteness of vesting rule has been complied with. (i.e. a Royal Lives clause unlikely to be valid
since Re Leverhulme 1943)
Steps:
o Where are the interests located?
 RAP no longer exists in Manitoba and Sask
 AB, BC, and the Territories all have wait and see legislation
 NS has pure CL
o Consider all the gifts. If any are contingent on something other than the life of a particular person, there is
a potential application of the remoteness of vesting rule/legislation.
o What are the relevant lives in being referred to in the instrument? Is there a possibility that the interest
will vest outside the perpetuity period?
o If so, apply the legislation, depending on which province you are in.
The rule in Whitby v. Mitchell invalidates a gift that involves a life interest to an unborn person followed by a
remainder to the issue of the unborn person with the life interest. (Repealed in BC by the Perpetuity Act – but
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would still apply to instruments that took effect before Dec 31, 1979)
The Perpetuity Act
o Addresses many of the pitfalls of the common law remoteness of vesting rule
o Applies to instruments that take effect after December 31, 1978
o Section 14 of the Perpetuity Act sets out a presumption that a female cannot have a child after she is over
the age of fifty-five For a male it allows evidence to be advanced to show that he is no longer able to
have children.
o Section 8 provides that a mere possibility that a contingent interest will vest beyond the perpetuity period
will not make a gift void. It provides that one is to wait and see whether the gift will vest within the
perpetuity period.
o Section 9 provides that the contingent gift remains valid until actual events establish that it cannot take
effect within the perpetuity period. If it does not vest in the perpetuity period, or if it becomes clear that it
cannot vest in the perpetuity period, one moves on to consider other saving provisions.
o Section 11 provides that if a gift is to be made on a person reaching an age greater than twenty-one years
old and if that would render the gift void then the court can reduce the age at which the gift is to take
effect to age twenty-one.
o Section 12 provides that if a gift vests in some members of a class within the perpetuity period but does
not vest in other members of the class within the perpetuity period, then those who might vest outside the
perpetuity period are cut off.
o The last saving provision is that when all the other saving provisions have failed to save the gift from
being void under the common law rule, the court is given the power to vary the gift to make it fit within
the perpetuity rule in a way that fits the general intention of the donor.
o Section 7 of the Act also allows for an express 80 period to be used. If it is clear that the all the property
under the trust is required to vest no later than 80 years from the date the trust is created then it does not
violate the rule against perpetuities, even if it otherwise would violate the rule.
 Conflicts of laws:
o Even in Manitoba and Saskatchewan where the RAP have been repealed by statute the rules are relevant.
When the grantor grants the contingent interest the law that governs the grant is the law of the jurisdiction
in which the property is located.
o With chattels the applicable law is generally the law of the jurisdiction where the chattel is located. With
a chose in action such as a debt it is normally the jurisdiction of the debtor.
 RAP does not apply to charitable purpose trusts except if it is a contingent remainder interest for the
charity : Charitable purpose trusts can last for indefinitely long periods of time. The problem the remoteness of
vesting rule addresses, the problem that the property becomes inalienable and gets tied up in a particular use, is
dealt with in the context of charitable purpose trusts with an application of a cy pres principle under which a court
can redirect the use of the property to some other use that is reasonably close to the settlor’s original intended
purpose
Rule Against Perpetual Duration
 A trust may be contrary to public policy as a violating the rule against perpetuities known as the rule

against perpetual duration – this would be the case if it is not a charitable purpose trust (because the rule
against perpetual duration does not apply to charitable purpose trusts) and if s. 24 of the Perpetuity Act
did not apply to “save” the trust.
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Accumulations
 Old rule: if you accumulate beyond the perpetuity period, and the gift could not be distributed until after the end
of the period, then the gift was void.
 English legislation was received in Canada (passed in 1800) that made the accumulation period less than the
perpetuity period – The Accumulations Act (designed to prevent nouveau riche from hording up wealth) Ontario is
the only province left where this still applies.
o s.1(3) – the Act has retroactive effect
o s.1(6) – accumulations contrary to the Act are null and void
 S.1 of the Accumulations Act sets out six possible periods that can be chosen under the trust:
o End of the life of the grantor
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o
o
o
o
o
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21 years from the date of making an inter vivos disposition
Duration of minorities of persons living or conceived at making of the inter vivos disposition
21 years from the death of the grantor/settlor/testator
Duration of minorities who would, if of age of majority, be entitled to the income to be accumulated
Duration of the minorities of any persons living or conceived but not born at the death of the grantor,
settlor or testator
A direction to accumulate beyond the specified periods is “null and void” and the income that was to be
accumulated beyond the permitted periods is to go to the person who would have been entitled to the income if
there had been no such provision in the trust for accumulation of income beyond the permitted period.
National Trust v. McIntyre (1997) applies the Ontario legislation. If the court, in looking at the will, thinks that
the testator thought they were distributing all of their property (even though it doesn’t turn out this way because
the will is contrary to the legislation) then there will be an intestacy for the extra accumulated amount and it will
go to the statutory next of kin (not the residue). If there was a direct statement that contravened the Accumulations
Act, that would make the gift void, and it would fall into the residue. Here there was no attempt to deal with the
residue – the testator thought they were getting rid of everything.
This legislation adds a further complication – even if it meets the RAP, you have to deal with what to do with the
excess accumulation
S. 25 of the BC Perpetuity Act repealed the application of the English Accumulation Act and replaced it with the
pre-legislative common law rule against perpetuities, as modified by the Perpetuities Act.
Spendthrift Trusts
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The “spendthrift” trust in the United States is one in which the trustee is prohibited from distributing an amount to
any person other than the particular beneficiary (and B cannot therefore assign their interest to anyone). These are
widely accepted in the US.
In Canada, we do not embrace the spendthrift trust in its entirety. More limited restraints are, however, accepted.
o In Brandon v. Robinson it was suggested that a trust in which the beneficiary interest comes to an end if
the beneficiary becomes bankrupt or subject to a charge by a creditor is not an invalid restraint on
alienation.
A common approach to providing for the spendthrift beneficiary in Canada is to create a discretionary trust where
there are several potential beneficiaries and the trustee has a fairly broad discretion (usually accompanied by a
letter of wishes). This permits a trustee to direct payments to someone other than the spendthrift beneficiary who
becomes bankrupt or subject to a charge by a creditor. It also makes assignment unlikely since the assignee will
know that payments are not likely to be made to him.
TERMINATION AND VARIATION
Termination
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A trust can be terminated before its full implementation under the terms of the trust instrument (i.e. a power of
revocation, or a provision providing for termination via a vote of the trustees) or under the rule in Saunders v.
Vautier.
If the settlor wants to be able to revoke the trust, the right to do so must be expressly reserved in the trust
instrument.
o This is rarely done in Canada because under s.75(2) of the Income Tax Act a right of revocation results in
the income on the property being taxed in the hands of the settlor. S rarely wants to have someone else
enjoy the benefits of the property while continuing to be liable to pay tax on any income on that property.
Rule in Saunders v. Vautier: One or more beneficiaries, all of full legal capacity, and who is, or are
collectively, entitled to all the beneficial interest in the trust may apply to have the trust terminated and the
assets transferred even though the trust instrument calls for final payment to be delayed.
o Useful where there are relatively few beneficiaries remaining and the trust is no longer serving their
interests because the fees for the trustees are outstripping the returns to the constrained trust portfolio.
o Can operate w/o an application to court but in practice the trustees will apply to court to ensure that they
are not subject to a breach of trust action by beneficiaries. Courts supervise the application of the rule in
Saunders v. Vautier watching out for contingent interests that might not be before the court.
o Applies to discretionary trusts, successive interests, multiple beneficiaries, postponement to a future date
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(not age)**, where there is a class of beneficiaries and all can be ascertained, where a beneficiary has a
life interest and a general power of appointment (i.e. could appoint themselves) but only if the power can
be exercised during B’s life (if B can only appoint by will, the problem is that the power of appointment
may never be exercised in which case it would revert to the estate and go to someone else. Canadian cases
are inconsistent; some have allowed the operation of Saunders v. Vautier while others have not.)
 **Can perhaps get around it via interpretation: i.e. A testamentary trust that provides for a life
interest to a surviving spouse with a remainder to be divided among the testator’s children five
years after the death of the surviving spouse could be interpreted so that Saunders applies
(children have a vested interest, just not vested in possession) or so that it doesn’t apply (i.e. that
the interest of the children is contingent on one or more children surviving for five years past the
death of the testator’s spouse)
Ways to avoid Saunders: have a beneficiary who is unborn or a minor (can’t consent), or who are difficult to
ascertain (though you still have to satisfy certainty of objects), give a contingent interest to someone who will not
consent
In the U.S. the intention of the settlor predominates (do not like Saunders v. Vautier)
Alberta (1973) and Manitoba (1983) have given courts a discretion not to apply the rule even where all the
beneficiaries are represented and are of full legal capacity if not of justifiable character. (must be more than just
contrary to S’s intentions)
Variation
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The trust can be varied by application to a court for the variation of the trust pursuant to a power given to a court
(via legislation)
o A charitable trust can also be varied by the operation of the doctrine of cy près.
Legislation allows the court to consent to a variation on behalf of beneficiaries who are not adults, do not have
legal capacity or who are unborn or (unascertained) contingent interests
o Motivated by changes in tax legislation, which can make it necessary to change a trust
Trusts and Settlements Variation Act
Court approval of variation
1. The Supreme Court may, if it thinks fit, by order approve on behalf of
(a) any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by
reason of infancy or other incapacity is incapable of assenting, (bankrupts, mentally ill)
(b) any person, whether ascertained or not, who may become entitled, directly or indirectly, to an interest under
the trusts as being at a future date or on the happening of a future event a person of a specified description or a
member of a specified class of persons, (“to Adam and his then wife”, “Denise for life, remainder to such persons
as D may by will appoint among my brothers and sisters or their issue.” – future event is the appointment, can
consent for unborn issue, can consent for people who may not be readily traceable at the time of the application)
(c) any person unborn, or
(d) any person in respect of an interest of the person that may arise by reason of a discretionary power given to
anyone on the failure or determination of an existing interest that has not failed or determined, (“in trust for P
on P attaining age 21 but if not then the trustee is to make a gift among one or more of A, B, C or D” – can
consent on the part of A, B, C, or D) **Note that s.2 doesn’t apply to this particular subsection**
any arrangement proposed by any person, whether or not there is any other person beneficially interested who is capable
of assenting to it, varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or
administering any of the property subject to the trusts.
Benefit to parties interested
2 The court must not approve an arrangement on behalf of a person coming within section 1 (a), (b) or (c) unless the
carrying out of it appears to be for the benefit of that person. (would a rational person presented with a variation
providing such a benefit would consent to it? Includes financial and non-financial benefits. Is the benefit obtained on
behalf of those for whom the court is acting such that a prudent adult motivated by intelligent self-interest and
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sustained consideration of the expectancies and risks and the proposal made, would be likely to accept? Re Irving)
Public Guardian and Trustee
3 If a person comes within section 1 (a) or (c), or if a person coming within section 1 (b) or (d) is a minor or is mentally
disordered, notice in writing of an application under this Act together with a copy of the material filed in support of it
must be served on the Public Guardian and Trustee not less than 10 days before the date of the application.
Finnell v. Schumacher Estate (1990), 74 OR (2d) 583 (CA)
 Note: trust law has a presumption whereby mineral extraction from a mining property is considered capital if not
rebutted. In other words, the income from extraction of minerals cannot be paid out to income beneficiaries but
must be added to the capital of the trust and held for capital beneficiaries
 Because tax law treats mining revenue differently, taxes were eating up a lot of the value of the property, and the
income beneficiaries weren’t getting much. Therefore, trustees proposed arrangement would treat revenues as
income to be distributed to beneficiaries and taxed in their hands at their individual rates. In other words, the trust
would be varied so that the presumption that profits from mineral extraction be treated as capital would be
expressly overridden.
 The Public Guardian opposed this on behalf of unborn capital beneficiaries.
 The benefit must be for every member of the class as an individual (not just a group benefit). (Overrule in BC in
Kovish) The benefit was not guaranteed, and it was not clear that what would obtained for the unborn/minor
beneficiaries represented a fair bargain. Variation refused.
Re Kovish (1985), 18 ETR 133 (BCSC)
 One does not have to show that each individual beneficiary on whose behalf the court is being asked to consent is
bound to be better off. One just has to show that the bargain being made is a reasonable one that an adult would
be prepared to make. Further, the word “benefit” is to be liberally interpreted and is not confined to financial
benefits. Applying this the court noted that if the business was successful there would be a benefit for the four
grandchildren
Smith v. Smith Estate, 2003 BCSC 1606
 Son wants to vary the trust that father set up for him in his will (wants to add his wife as a beneficiary) There are
contingent beneficiaries (some are unborn and some are not at the age of the majority)
 The jurisprudence provides that it is the nature of the benefit created by the variation, rather than other factors
such as the intention of the testator creating the trust, which must be determined . Must have regard to all the
circumstances
 Notes that the three-part test in Re Irving was dismissed by the BCCA in Re Sandwell
 Sole test to be applied in determining whether an arrangement is for the benefit of those on whose behalf the
consent may consent is: Is the benefit to be obtained on behalf of those for whom the court is acting such that
a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and
risk and the proposal made, would be likely to accept?”
 The court can add a beneficiary if this test is met.
 The family members are concerned that son's wife will not be well cared for unless she is included in the trust –
other than the infant grandchildren, it serves everyone else's benefit. While not quantifiable, there is a reasonable
benefit in providing security for one member of the family. Also, there is a financial benefit, as some money will
be transferred out of another trust and into this one which will increase the income to the unborn beneficiaries
 The test for court approval does not require a complete elimination of risk but a balancing.
PURPOSE TRUSTS
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A charitable purpose trust is a trust for a purpose that falls within the legally accepted heads of charity, namely,
the relief of poverty, the advancement of religion, the advancement of education or other purposes beneficial to
the community.
o Certainty of objects requires that there be an exclusive charitable intent.
A non-charitable purpose trust is a purpose trust that does not fall within the legally accepted heads of charity.
o Certainty of objects requires that the purposes must be sufficiently certain that one can assess whether any
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given act of the trustee is consistent with that purpose. (Re Russel)
Non-Charitable Purpose Trusts
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General rule is that they are invalid (Morice v. Bishop of Durham) The main reason for the general rule is that
there is no beneficiary in whose favor the trust can be enforced. The limited exceptions (“concessions to upper
class life”) include trusts for the maintenance of a gravesite, monument at a gravesite, care of specified
animals. a possible forth exception noted in Re Astor’s Settlement Trusts was a so-called negative
enforcement exception where there is a trust for a purpose for a limited period of time with a gift over to
another person at the end of the limited period of time. The person with the gift over would have an
incentive to prevent the trustee from using the trust funds for any purpose other than the intended
purpose but would have no incentive to make the trustee actually use the funds for the intended purpose
(indeed, the person with gift over would be quite happy that the trustee did not spend the funds for the
intended purpose since that would leave more for the gift over)
Other reasons given for the general rule: too conceptually uncertain, violate the rule against perpetuities, involve
excessive delegation of testamentary power
How to avoid the failure of a non-charitable purpose trust:
o Argue it is a charitable purpose trust
o Argue it is a valid non-charitable purpose trust (i.e. case law)
o Construe it as a trust for persons
 Re: Denley’s Trusts: trust to create a recreation or sports ground for the benefit of company’s
employees. Interpreted as a trust for persons, thus OK.
 Re Denley might be said to stand for the much broader proposition that a purpose trust is a legally
valid trust as long as there is some person who can be given standing to enforce the trust. This
has been rejected in other jurisdictions but in Canada we seem to be following this approach (see
Keewatin and Peace Hills). Note: you’d still have to have certainty of beneficiaries.
o Approve the trust if someone can be given standing to enforce
 A broader interpretation of Re Denley has been adopted in the Canadian cases of Keewatin
and Peace Hills. In the Peace Hills case it was said that, contrary to Re Asters, there was no
general rule against the validity of a trust for non-charitable purposes and the court in
Peace Hills case adopted the approach taken in Keewatin where it was said that a trust for a
non-charitable purpose would not be invalid where there are persons the court might give
standing to and who would have an interest in enforcing the trust.
 Keewatin Tribal Council: trust to provide housing for Abo students. Held valid because certain
individuals could be given standing to enforce (i.e. Chiefs, students)
 Peace Hills: Trust to acquire land for First Nations. Held valid because “non-charitable purpose
trusts can be created in Canada” (i.e. when someone can be given standing)
 These cases suggest that the position that is developing in Canada is that there is no general rule
against the validity of non-charitable purpose trusts!
o Read it as a power under s.24 of the Perpetuities Act:
 Perpetuities statutes in Ontario, Alberta, British Columbia and territories deal with the problem of
the non-enforceability of non-charitable purpose trusts by treating them as powers and limiting
the power to a period of 21 years
 At the end of the 21 years, it goes to the person who would otherwise be entitled to it (thus, there
is a person who can enforce the trust obligation, at least negatively)
 There are four different interpretations of when this provision might apply:
 (i) it applies only where there is a perpetuity problem – i.e. where the trust has no

time limit. This interpretation would allow s. 24 to be used to address both the
potential non-validity and the perpetuity problem.
(ii) s. 24 deals with a situation in which there is a problem with the enforcement
of the obligation - so it would not apply if the Keewatin or Peace Hills approach
was taken and might be said to apply as long as it was not enforced as a noncharitable purpose trust under Keewatin/Peace Hills. The problem is that if it is
held to valid under the Keewatin/Peace Hills approach and s. 24 does not apply
24
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then the trust is invalid on the basis that it violates the rule against perpetual
duration
 (iii) A third interpretation is that s. 24 applies to any purpose trust that creates no
enforceable equitable obligation in a specific person, such as a right to income or
capital or a contingent right to income or capital. Thus the section could apply
even if Keewatin or Peace Hills says the trust is valid and enforceable. This
interpretation of an equivalent Alberta provision was taken in Re Russell. This
interpretation would allow the trust to be valid under the Keewatin/Peace Hills
approach and would allow s. 24 to deal with the perpetuity problem.
 (iv) A fourth interpretation is that the section applies to all non-charitable purpose
trusts whether or not there is a perpetuity problem and whether or not they are
recognized anomalies to the non-validity of non-charitable purpose trusts. This
interpretation would also allow the trust to be held valid under either the
Keewatin/ Peace Hills approach or under s. 24 and would also deal with the
perpetuity problem.
S. 24 requires that the purpose be a “specific non-charitable purpose”. According to Re
Russell the test for this is the equivalent of the McPhail test but expressed in terms of
certainty of purposes – i.e. Must be able to say whether any given use of the funds would
qualify as a proper use of the funds under the purposes set out in the trust instrument.
 So if you have a series of unclear words, s.24 won’t apply to save the trust by
transforming it into a power.
24 (1) A trust for a specific noncharitable purpose (see test from Re Russel) that creates no enforceable equitable
interest in a specific person must be construed as a power to appoint the income or the capital, as the case may be.
(2) Unless a trust described in subsection (1) is created for an illegal purpose or a purpose contrary to public policy, the
trust is valid so long as and to the extent that it is exercised either by the original trustee or the original trustee's successor
within a period of 21 years, even if the disposition creating the trust showed an intention, either expressly or by
implication, that the trust should or might continue for a period longer than that period.
(3) Despite subsection (2), if the trust is expressed to be of perpetual duration, the court may declare the disposition to be
void if the court is of the opinion that by doing so the result would be closer to the intention of the creator of the trust than
the period of validity provided by this section.
(4) To the extent that the income or capital of a trust for a specific noncharitable purpose is not fully expended within a
period of 21 years, or within any annual or other recurring period within which the disposition creating the trust provided
for the expenditure of all or a specified portion of the income or the capital, the person who would have been entitled to
the property comprised in the trust, if the trust had determined at the expiration of the 21 year period, is entitled
to that unexpended income or capital. (i.e. the person entitled to the residue, if it was a regular bequest, or the next
of kin if it was a gift of the residue)
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Update: Manitoba Law Reform Commission recommended the appointment of an enforcer to enforce a noncharitable purpose trust. In BC, recommendation was that the court have a general supervisory power to order
enforcement at the request of the settlor, or his personal representative, or the attorney general or the trustee.
Re Russell (1977), 1 ETR 285 (Alta. SC)
 A will left a legacy to the Theosophical Society on trust for its “religious, literary and educational purposes.”
 “Specific non-charitable purpose” in the Perpetuities Act means that one must be able to say whether any given
use would qualify as a proper use of the trust funds.
 Here, it was not clear whether any given use would qualify especially given the conjunctive use of “religious,
literary and educational purposes.” Thus, the trust was not valid as a non-charitable purpose trust.
Gifts to Unincorporated Associations
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Unincorporated associations are not legal persons (can’t own property, thus can’t make a gift to them)
How to save the gift:
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o
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o
The gift could be saved if interpreted as a gift directly to the members of the association as JTs. Argue
that the name of the association was used merely as a short-hand way of referring to the members of the
association. Only works if the members could sever their shares and take them to themselves whether or
not they continued to be a member of the association.
 If the gift is made in a will and membership changes over time, this will be a tough sell
 RAP would apply if it’s a gift to present and future members of the association and association
can last indefinitely…
The gift can be saved if it is to be used for the purposes of the association but the members can wind
up the association and distribute the association’s property among them.
 If the members can wind up the association at any time and distribute the property amongst
themselves, then they arguably have a vested interest in the property and the perpetuity rule
against remoteness of vesting would not be violated
 BUT if constitution does not provide for distribution upon winding up (eg if instead property
would go to another association upon winding up) might violate rule since title to ppty may not
vest in anyone w/i perpetuity period.
 If the members cannot wind up the association and distribute the property to themselves and the
association can go on indefinitely without a distribution of the property to any person or persons,
then the gift violates the RAP.
May be able to save the gift on the basis that the members hold the property on trust for persons by
arguing that the purposes of the association benefit a conceptually certain class of persons. Ex: the
association exists solely to serve its members otherwise more difficult to identify a conceptually certain
class. Perpetuity problems may arise here as well if the unincorporated association can continue
indefinitely.
If it is a gift for a specific purpose (not the general purposes of the association) then the gift will likely be
invalid unless the gift is exclusively for charitable purposes or if saved by s. 47 of the Law and Equity
Act. Although note that courts may work really hard to find that the gift is valid (Re Lipinski)
Use s.24 of the Perpetuities Act and read it as a power **unclear provision**
Use cy-pres
Re Lipinski’s Will Trusts, [1976] Ch. 235 (Eng. Ch. Div.)
 Gift to club to be used solely in the work of constructing the new buildings for the Association and/or
improvements to the said buildings.
 This was not a gift to the members themselves, and it was for a specific purpose not the general purposes of the
association where the members could wind up and take their share.
 Underlying factors: in line with settlor’s intentions, association provided benefits to the community, members of
the association could potentially be given standing to enforce
 This case shows that in gifts to unincorporated associations there may be a strong tendency to uphold such gifts
even if the logic in terms of legal theory may be somewhat strained.
 The gift was held to be valid with the following possibilities:
o Could be valid as a for person trust
o Beneficiaries could be the members who could be given standing to enforce (i.e. like Re Denley)
o Could be a gift to members who could modify the constitution and take for themselves
 Simply a non-binding direction to the members to use it for a building
Charitable Purpose Trusts
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If the trust is a purpose trust the problem of potential non-validity of a non-charitable purpose trust can
be avoided. There are three requirements to a valid charitable trust: (i) an exclusive dedication of
property; (ii) to a charitable purpose; (iii) for a public benefit. A trust is not valid as a charitable purpose
trust if it is for a political purpose. The lack of a beneficiary issue is dealt with by having the Attorney General
enforce charitable purpose trusts or delegating that task to the Public Trustee (however, in practice this rarely
happens). Can be of indefinite duration and can restrain alienability – if these issues become problematic, the
problems are addressed via the court’s scheme-making and cy pres powers
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In Morice v. The Bishop of Durham the court said that to determine whether a purpose is a “charitable
purpose” one should look to the preamble to the Statute of Charitable Uses, 1601. In 1891 Lord
McNaghten in Pemsel summarized “charity” in that preamble as coming under four heads: (i) relief of
poverty; (ii) advancement of religion; (iii) advancement of education; and (iv) other purposes beneficial
to the community. These four heads of charitable purpose were adopted by the Supreme Court of
Canada in the Vancouver Society case.
NOTE: If the settler decides to put property in trust for a charitable purpose for a time but on the happening of a
particular event (or condition subsequent) the property is to go to some person (i.e. an individual or a corporation)
then the RAP applies and the event must happen within 21 years of the lives in being.
The Legal Meaning of Charity Generally
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PUT PREAMBLE IN
Public benefit because public dollars used to enforce (now, more likely due to the fact that charitable purpose
trusts don’t pay taxes)
Public Benefit
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Benefit: something of practical utility, a “material or tangible benefit.” (Gilmour v. Coates) A benefit is
presumed for the first three categories but it is a rebuttable presumption (Re Pinion)
Public: the number of potential beneficiaries must not be “numerically negligible”, and the quality that
distinguishes the beneficiaries from other members of the community must not depend on their relationship to a
particular person. (Oppenheim – relationship to employer)
o Courts have made exceptions to the public benefit requirement for trusts for the relief of poverty (Eaton
Company)
The Relief of Poverty
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Concept varies over time
Allows for more than just the basic necessities of life (Re Brown, Re Hart)
There is an exception from the “public benefit” requirement for “poor relations” and “poor employees”!
Re Scarisbrick, [1951] Ch. 623 (CA)
 A trust for “such relations” as “shall be in needy circumstances” was found to have a public benefit, although this
was because the case was pre-McPhail and so today this case would more like be decided as a trust for persons.
The Advancement of Education
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Vancouver Society took a fairly broad view of advancement of education saying it was not limited to structured
systemic instruction or traditional academic subjects, and it fit advancement of education as long as it was geared
at training of the mind, in a structured manner, to advance the knowledge and abilities of the student, and not
solely to promote a particular point of view. Mere provision of information does not count as charitable (Law
Reporting, Vancouver Society)
Includes: educational institutions, scholarships and prizes, private, non-profit schools, libraries, learned societies,
adult learning institutes, research conducted at a university, private research when the research results are
published (Law Reporting – questionable…), aesthetic appreciation
Applies not just to professions, but also to trades and vocations (Re Seafarers Institute)
Includes a summer camp for children where there are educational activities (Societa Unita v. Gravenhurst)
A trust for the purpose of encouraging chess playing among boys was held to be charitable with the judgement
noting that the game “encourages foresight, concentration, memory and ingenuity” and that it is “essentially a
game of skill into which elements of chance enter, if at all, only to a negligible extent.” (Re Dupree)
o A game of chance, however, might be said to provide an education too in the sense that it would provide
an understanding of probabilities.
Vancouver Society of Immigrant and Visible Minority Women v. Minister of National Revenue, [1999] 1 SCR 10
 Advancement of education includes more “informal training initiatives, aimed at teaching necessary life skills or
providing information toward a practical end, so long as these are truly geared at the training of the mind and not
27
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just the promotion of a particular point of view.”
Not limited to traditional academic subjects.
So long as information or training is geared at the training of the mind, is provided in a structured manner
and for a genuinely educational purpose – that is, to advance the knowledge or abilities of the recipients – and
not solely to promote a particular point of view or political orientation, it may properly be viewed as falling
within the advancement of education.
Can be theoretical or practical, speculative or technical, scientific or moral.
Simply providing an opportunity for people to educate themselves, such as by making available materials with
which this might be accomplished but need not be, is not enough.
Re Pinion, [1964] 1 All ER 890 (CA)
 Potential charitable trust for the advancement of education. However, the presumption of public benefit was
rebutted (no charitable trust). The testator’s purpose was not to educate anyone, but was to perpetuate his own
name and the repute of his family. His art collection was useless.
The Advancement of Religion
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This comes from “repair of churches” in the preamble
Includes trusts for publishing, teaching and propagation of religious belief, the building and maintenance of
churches and burial grounds, the work of churches and ministers of religion
Very tolerant of different religions (Thornton v. Howe – woman was a kook, Versani – Hinduism)
Traditional view is that “religion” requires faith in and the worship of a God (Re South Place Ethical Society)
o may not hold up under freedom of religion protection in s. 2 of the Charter
o In Australia, in Church of the New Faith, the court held that belief in a supernatural thing, belief, or
principle was sufficient.
There must be a public benefit, and this is presumed (Gilmour)
o The private practice of religion or a religious rite would not provide a public benefit (Gilmour – nuns),
but a public practice of a religious rite could provide a public benefit.
Public access may be sufficient (Re Hetherington – gift for mass for relatives)
Can be in a private home, doesn’t have to be advertised (Fennel v. Stuart – faith healing)
Other Purposes Beneficial to the Community
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Vancouver Society held that the approach to determining what falls in the fourth head is to look to the preamble to
the 1601 Statute of Charitable Uses, see if an analogy can be made to one of the purposes in the preamble, and
whether an analogy can be made to an analogy by analyzing the cases that have been decided Morice v. Bishop
of Durham in 1805 (when the approach of looking to the preamble was adopted). This is because the
benefit to the community must be one that the law regards as charitable. If all that was required was that the
purposes were beneficial to the community the other three heads of charitable purpose would be unnecessary.
(Vancouver Society)
Case law has established that trusts in this category include trusts to help the old, the young or the disabled, to
care for the sick, the provision of hospitals, to provide for health care or advance medicine, to provide for disaster
relief, to care for veterans, to provide aid to prisoners, trusts to provide for public works or amenities such as
parks, cemeteries and cremation societies, trusts for animal welfare.
Trusts for sports have not been considered charitable purpose trusts unless it also falls within another area (Re
Nottage, AYSA)
o May be valid in Ontario given the Charities Accounting Act
Must be traceable back to the 1601 Statute of Charitable Uses (i.e. mentioned there, analogous to something
mentioned, or analogous to a previous analogy) (AYSA)
England has taken a “spirit and intendment approach” (Law Reporting) which was also used by the FCA in
Native Communications Society, but was NOT adopted by the SCC in Vancouver Society
The FCA itself kept to the traditional approach in Vancouver Regional Freenet Association, where, instead of
using the spirit and intendment approach, it made the “information highway” analogy
Associated Doctrines: Exclusivity
28
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The trust property must be devoted exclusively to charitable purposes
Rationale: if the trustee would have a discretion to use the funds for either charitable or non-charitable purposes, it
would be hard to enforce the use of trust property for the charitable purposes
Five ways of avoiding having a trust declared invalid on the basis of nonexclusivity:
o Interpret the intention apparently expressed as an intention to devote the trust property to both
charitable and non-charitable purposes as really being an intention to have all the property devoted
to charitable purposes;
 Eaton Company: “needy or deserving” = deserving really means needy
o Read the non-charitable part as charitable based on who the donee is;
 I.e. trustee is a bishop, likely to only engage in charitable activities (Blais v. Touchet)
o Sever the non-charitable portion;
 Court will only do this if it would not render the trust substantially different than the trust the
settlor intended to create
 If proportions have been set out, the non-charitable portion would revert to the estate
 If trustee has discretion to set proportion but hasn’t exercised it, court will likely split amount
equally
 If trustee has exercised, the portion to non-charitable will revert back to S
o Find the non-charitable purpose to be merely ancillary to the charitable purposes; or
 Guarantee Trusts: mostly for the advancement of medicine, with additional activities such as
luncheons and dinners being ancillary
 i.e. a provision that provides that costs of administering the trust will be paid
o Apply a statutory provision (such as s. 47 of the B.C. Law and Equity Act) to sever the noncharitable portion (Re Russel)
 S.47 A person must (i) give, devise or bequeath property (ii) in trust (iii) for a charitable purpose
(iv) that is linked conjunctively or disjunctively in the instrument by which the trust is created
with a non-charitable purpose; and (v) the gift, devise or bequest is would be void for uncertainty
or remoteness.
 If S.47 applies, the trust operates exclusively for the charitable purposes
 The third element here requires that there be some part of the words used that can be interpreted
as a charitable purpose. The fourth element requires that the words be used in an “instrument”
suggesting that the provision only applies to trusts expressed in writing. It also requires that that
there be a conjunctive or disjunctive link (need an “and” or an “or”). It therefore does not deal
with phrases such as “such worthy object as my trustees shall select,” “the general benefit of the
children of the Northwood Orphanage” or “such benevolent purposes as my trustees choose.” The
other problem is that the word you want to sever might not be uncertain. And how does the
Perpetuities Act apply to the remoteness reference in (v)?
 Re Russel: gift “for the religious, literary and educational purposes” – religious and literary struck
out
Associated Doctrines: Political Purposes
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The rule is that trusts for “political purposes” are invalid even where they are for otherwise charitable purposes
o Include the promotion of a political party, a particular candidate in an election, or political ideas, any
attempt to influence the legislative or executive process, or to influence government policy, or even to
improve international relations, influence foreign government decisions or foreign country laws.
(McGovern)
o “political activities” is not limited to the range of things referred to in McGovern (Human Life
International – photo of fetus sent to politicians)
Rationale: the court has no means of judging whether a proposed change in the law will or will not be for the
public benefit and thus cannot say whether the purpose is a charitable purpose. (Bowman)
o Counter-arguments: courts decide what is a public benefit whenever there is an appeal under the ITA for
charitable status, and that in itself is a political question, there is a public benefit in simply encouraging
debate and pluralism, incidental political activities are allowed, religion is allowed and many of those
groups exercise political power, and allowing religion itself is a political choice.
Associated Doctrines: Discriminatory Conditions
29
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A charitable trust can be struck down on the grounds that it is contrary to public policy (discriminatory) However,
the court may remove the discriminatory condition under the scheme-making power, or strike it down on other
grounds (uncertainty)
Leonard Foundation: The court said one has to analyse the context, purpose and effect of the restriction to see
whether it promotes equality or whether it is discriminatory
Re Ramsden Estate: A trust for Protestants was not in violation of public policy, court noted that the Leonard
Foundation case was held to violate public policy was that it was based on “blatant religious supremacy and
racism.” (but is that really the reason why it was invalid in Leonard Foundation? Or was it because it was against
public policy to discriminate unless the discrimination was directed to ameliorating existing inequality as
permitted by the Human Rights Code?)
Administrative Schemes and the Cy-pres Doctrine
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If is clear that the settlor has a charitable intent but the settlor has not made the intended charitable purpose
sufficiently clear then the court can impose a scheme for the distribution of the income of the trust.
Schemes have been approved to clarify what is to be done to meet the intended charitable purpose, to deal with
excess income the trust property has generated, to appoint new trustees where the trustees are neglecting their
office or have engaged in a breach of trust, to substitute trustees (Ramsden) or to remove a discriminatory
condition, to vary a trustee’s investment powers.
The cy-près power is said to be a particular type of scheme-making power used by the court where a charitable
purpose trust becomes impossible or impracticable to carry out.
o Rationale: Charitable purpose trusts can be perpetual and thus can potentially become obsolete. If there
were no cy-près power then the funds would remain unused.
o Note: cy-pres won’t apply if there is no exclusive charitable intent, where there is a gift over if the
property can’t be used for charity, or where it’s simply that the trustees have a better idea for the use of
the money
Examples of impossibility/impracticability: no one who can benefit – intention of the donor has been overtaken
by events (i.e. slide rule, Shneckenberger – church built in nearby town), surplus from a fundraising campaign (or
not enough raised such that the money must go to some other use), where a charitable purpose trust violates
public policy, organization ceases to exist or never existed.
Impracticability has been held not to mean that there is, in the view of the trustees, a better use that could be made
of the funds. Impracticability involves a situation, such as that in Re Schneckenburger, in which it is unlikely that
funds would ever be used for the originally intended purpose.
o Rector, Wardens: Trust with half to go to repair, half to building of new church. The fact that the existing
rector and wardens had no intention to build a new church did not mean that later rector and wardens
would not want to. The availability of insurance also did not necessarily cover for loss of existing
building because the policy might be found to be void for some reason or might not be renewed (perhaps
through inadvertence). There is no right to a cy-près order simply on the basis that the applicant argues,
even quite persuasively, that there is a better of the funds.
If the impossibility or impracticality arose after the trust was constituted then the cy-près operates automatically.
o Rationale is that since charitable purpose trusts can last indefinitely, the problem might arise many, many
years after the trust was created and there could be significant practical difficulties with returning the
property to the estate and finding either the residuary legatees or intestate heirs.
If, however, the impossibility or impracticality occurs before the trust is constituted, the court looks to whether
there was a general charitable intent.
o The idea of a general charitable intent is that if the specific use the settlor had in mind could not be
carried out, the settlor would have directed the property to some other charitable purpose, so directing the
property to some alternative use would not defeat the settlor’s intention.
o Look for factors that indicate that if the settlor could not carry out the specific purpose he identified he
would have directed the use of the property to some other charitable purpose.
o Test for general charitable intent is one of construction of the trust doc. But, certain facts tend to produce
consistent results
 Where beneficiary institution never existedintention was to benefit purpose for which the
mythical institution was deemed to exist and thus find general charitable intent
 Where institution once existed but ceased tointention was to benefit that particular institution
30
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or specific purpose only. Gift will be saved if institution simply changed name or amalgamated
 not cy-pres, construing intention of donor to one favouring currently named institution
 Consider whether creator of trust has named other, similar charitable objects in the instrument
o Gift over in event of failure indicates that there was no general charitable intent
o Hospital for Sick Children: Absolute gift to two institutions that did not exist. General charitable intent
found to benefit crippled children.
o Re Ramsden Estate: Scholarship fund set up to benefit Protestants. A cy-près order was made to modify
the gift to one in which management of the fund would not be done by the University (because not
allowed under statute)
Scope of scheme making power: Investments
o Re Killam: Scheme-making power broad enough to allow the total income method of investment
proposed by trustees, even though this was clearly against the instructions of the testator. Contrast with…
o Re Stillman: The trustees applied for a court-ordered scheme allowing them to use the total income
approach and giving them a power to encroach on capital for that purpose, even though it was clearly
against the instructions in the trust. The court held that the scheme-making power did not extend to
altering the settlor’s clearly expressed intention just because the trustees or the court felt there was a
better, or more efficient, way of doing things. BUT the matter could be dealt with under the cy-près
power since there was an intervening impracticality (the change in the investment environment) that made
it impractical (or impossible) to meet the disbursement quota (i.e. to meet the settlor’s charitable intent).
o Thus, where the settlor’s intent is clear as to the mode or means of achieving the charitable purpose, one
has to find some intervening impossibility or impracticality in achieving the settlor’s intent in order to
intervene, and this will be done via cy pres (Stillman)
ADMINISTRATION OF EXPRESS TRUSTS
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The law dealing with the administration of trusts comes from 3 sources: the trust instrument, the common law of
trusts, and the applicable legislation
The general rule is that the trustee is not to take instructions from the settlor, beneficiaries or third parties. If the
trustee does so it could constitute a breach of trust. Once the trust is created the trustee’s obligation is to act in the
best interests of the beneficiaries.
o This can be varied in the trust instrument. But if S retains input, potential tax consequences
The letter of wishes sets out what the settlor has in mind in terms of how the trustee’s discretion is to be exercised.
It is separate from the trust instrument and not intended to be part of the terms of the trust. It is non-binding. If the
trustee exercises her discretion by following the directions in the letter of wishes in a situation where the interests
of the beneficiaries would suggest the discretion should be exercised in a different way, the trustee is likely to be
found to have breached the trust.
The settlor can also appoint a protector/guardian/management committee. Protectors often have the discretion to
appoint among beneficiaries or determine the amounts of distributions they are to receive, the power to vary the
terms of the trust, the power to change the choice of law that is to govern the trust, or to remove trustees and
appoint new trustees. It depends on the terms of the trust.
o Originated in the context of off-shore trusts.
o If S is really calling the shots through the protector, potential negative tax consequences
Appointment of Trustees
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A person cannot be compelled to act as trustee and this is so even where the person indicated in advance his
willingness to be a trustee. A person is subject to an obligation to serve as trustee if the person has accepted an
appointment as trustee. The acceptance can be express (signing a document) or implied (carrying out minor tasks
of a trustee, attending a meeting)
Once the appointment has been accepted, the person can no longer disclaim the appointment and must seek a
formal discharge
If the trust is an inter vivos trust and the named trustee refuses to act, the trust will not be constituted and the
settlor can arrange for another person to be trustee.
If the trust is testamentary the trust comes into existence when the will has been administered and is said to be
constituted even if the named trustee refuses to act. The court will find a replacement trustee or administer the
trust itself if necessary.
31
BC Trustees Act
Power of court to appoint new trustees
31. If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the
assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an
existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.
Power of trustees to appoint new trustees
27 (1) If a trustee, either original or substituted and whether appointed by any court or otherwise, is dead, remains out of
British Columbia for more than 12 months, wishes to be discharged from all or any of the trusts or powers reposed in or
conferred on him or her, refuses or is unfit to act in them, or is incapable of acting in them, then the person nominated for
the purpose of appointing new trustees by any instrument creating the trust, or if there is no such person or no such person
able and willing to act, then the surviving or continuing trustees for the time being, or the personal representatives of the
last surviving or continuing trustee, may by writing appoint another person or persons to be a trustee or trustees in the
place of the trustee who is dead, remains out of British Columbia, wishes to be discharged, refuses or is unfit or incapable.
(2) On the appointment of a new trustee for all or part of trust property,
(a) the number of trustees may be increased,
(b) a separate set of trustees may be appointed for a part of the trust property held on trusts distinct from those
relating to any other part of the trust property, even though no new trustees are to be appointed for other parts of
the trust property, and an existing trustee may be appointed or remain one of the separate set of trustees, or if only
one trustee was originally appointed, then one separate trustee may be so appointed for the part of the trust
property held on trusts distinct from those relating to any other part of the trust property,
(c) it is not obligatory to appoint more than one new trustee if only one trustee was originally appointed, or to fill
up the original number of trustees if more than 2 trustees were originally appointed but, except in a case in which
only one trustee was originally appointed, a trustee must not be discharged under this section from his or her trust
unless there will be at least 2 trustees to perform the trust, and
(d) the assurances or things required for vesting the trust property or any part of it jointly in the persons who are
the trustees must be executed or done.
(3) A new trustee appointed under this section, as well before as after all the trust property becomes by law, by assurance
or otherwise vested in the trustee, has the same powers, authorities and discretions, and may in all respects act as if he or
she had been originally appointed a trustee by any instrument creating the trust.
(4) The provisions of this section relate to
(a) a trustee who is dead including the case of a person who is nominated a trustee in a will but who dies before
the testator, and
(b) a continuing trustee includes a refusing or retiring trustee, if willing to act in the execution of the provisions of
this section.
(5) This section applies only if and as far as a contrary intention is not expressed in any instrument creating the trust, and
has effect subject to the terms of that instrument.
Vesting of trust property in trustees
29 (1) If a deed by which a new trustee is appointed to perform a trust contains a declaration by the appointor to the effect
that an estate or interest in land subject to the trust, or in a chattel subject to the trust, or the right to recover and receive a
debt or other thing in action subject to the trust, vests in the persons who by virtue of the deed become and are the trustees
for performing the trust, that declaration operates, without a conveyance or assignment, to vest in those persons, as joint
tenants, and for the purposes of the trust, that estate, interest or right.
(2) If a deed by which a retiring trustee is discharged under this Act contains a declaration referred to in this section by the
retiring and continuing trustees, and by any other person, if any, empowered to appoint trustees, that declaration operates,
without a conveyance or assignment, to vest in the continuing trustees alone, as joint tenants, and for the purposes of the
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trust, the estate, interest or right to which the declaration relates.
(3) This section does not extend to land conveyed by way of mortgage for securing money subject to the trust, or to a
share, stock, annuity or property that is only transferable in books kept by a company or other body, or in a manner
directed by or under any Act of the Legislature. (for these things, you have to take additional steps)
(4) For the purposes of registration of the deed in a land title office, the persons making the declaration are deemed to be
the conveying parties, and the conveyance is deemed to be made by them under a power conferred by this Act.
(5) This section applies only to deeds executed after July 1, 1905.
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Since the vesting of property in the new trustee requires a deed, it makes sense to make one doc that both appoints
the new trustee and vests the property in them.
Courts are said to have an inherent jurisdiction to appoint trustees. This inherent jurisdiction is, however, seldom
exercised because courts now rely on the statutory power given to them to appoint trustees.
Power of court to appoint new trustees
31 If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the
assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an
existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.
Rights and powers of new trustees
32 The persons who, on the making of an order under section 31, are trustees have the same rights and powers as they
would have had if appointed by a decree or judgment in a proceeding.
Power of court to vest land in new trustees
33 The court, on making an order appointing a new trustee, may, by that order or a subsequent order, direct that land
subject to the trust vests in the person or persons who on the appointment are trustees for the estate that the court directs
and the order has the same effect as if the persons who before the order were the trustees, if any, had duly executed all
proper conveyances of the land for the estate.
Power of new trustees to transfer stock or chose in action
34 The court, on making an order appointing a new trustee, may, by that order or a subsequent order, vest the right to call
for a transfer of a stock subject to the trust, or to receive the dividends or income of it, or to sue for or recover a chose in
action subject to the trust, or any interest in respect of it, in the person or persons who on the appointment are trustees.
New trustees in place of persons convicted of indictable offence
35 (1) If a person is jointly or solely seised or possessed of land, or entitled to stock on a trust, and the person has been or
is convicted of an indictable offence, the court may, on proof of the conviction, appoint a person to be a trustee in the
place of the convict, and make an order for vesting the land, or the right to transfer the stock, and to receive the dividends
or income of it, in the person appointed.
(2) An order made under subsection (1) has the same effect with respect to land as if the convict trustee had been free
from any disability, and had duly executed a conveyance or assignment of his or her estate and interest in it.
Persons who may apply for orders
36 (1) An order under any of the above provisions for the appointment of a new trustee, or concerning land, stock or a
chose in action subject to a trust, may be made on the application of any person beneficially interested in the land, stock or
chose in action, whether under disability or not, or on the application of a person duly appointed as a trustee of it.
(2) An order under any of the above provisions concerning land, stock or a chose in action subject to a mortgage may be
made on the application of any person beneficially interested in the equity of redemption, whether under disability or not,
or of any person interested in the money secured by the mortgage.
Old trustees not discharged from liability
37 The appointment by the court of new trustees, and any conveyance, assignment or transfer mentioned above, operates
no further or otherwise as a discharge to a former or continuing trustee than an appointment of new trustees under a power
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for that purpose contained in an instrument would have done.
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In appointing trustees, the court should consider (i) the wishes of the settlor (i.e. not appoint someone that the
settlor would not have wanted as trustee); (ii) avoid conflicts of interest; and (iii) ask whether the appointment of
the particular person will promote or impede the execution of the trust. (In Re Tempest)
o Note: the trust instrument itself can appoint someone who has a conflict of interest and that’s OK
Retirement and Discharge of Trustees
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Courts have an inherent jurisdiction to permit a trustee to retire and to give a discharge.
There is also an applicable statutory provision in the Trustee Act
Retirement of trustee
28 (1) If there are more than 2 trustees and one of them by deed declares that he or she wishes to be discharged from the
trust, and if the co-trustees and any other person empowered to appoint trustees by deed consent to the discharge, and to
the vesting in the co-trustees alone of the trust property, then the trustee who wishes to be discharged is deemed to have
retired from the trust, and is, by the deed, discharged from the trust under this Act, without a new trustee being appointed
in his or her place.
(2) The assurances or things required for vesting the trust property in the continuing trustees alone must be executed or
done.
(3) This section applies only if and as far as a contrary intention is not expressed in any instrument creating the trust, and
has effect subject to the terms of that instrument.
Inheritance if person holds in trust or by mortgage (if there is only one trustee and they die, per s.27 the personal reps
can appoint a new one. This section applies in the interim…)
71 (1) If an estate or interest of inheritance, or limited to the heir as special occupant in any tenements or hereditaments,
corporeal or incorporeal, is vested on a trust or by way of mortgage in a person solely, then on the person's death and
despite any testamentary disposition, it devolves to and becomes vested in the person's personal representative as if it were
a chattel real vesting in the personal representative.
(2) The personal representative referred to in subsection (1) has all the similar powers for one only of several joint
personal representatives, for a single personal representative, and for all the personal representatives together, to dispose
and otherwise deal with the estate or interest referred to in that subsection, with all the similar incidents, but subject to all
the similar rights, equities and obligations, as if the estate or interest were a chattel real vesting in the representative.
(3) For the purpose of this section, the personal representative of the deceased is deemed in law to be the heir and assign
within the meaning of all trusts and powers.
(4) This section applies only in cases of deaths after April 17, 1896.
What this says: The real and personal ppty held on trust by a deceased sole or last surviving trustee become vested
in that trustee’s personal reps and they are allowed to exercise the trust powers.
Removal of Trustees
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The court has an inherent jurisdiction to remove a trustee. The inherent power to remove a trustee is the one that
is relied on since most trustee acts do not provide the court with a broad statutory power of removal.
The British Columbia Trustee Act has a very limited statutory power of removal in s. 30.
Removal of trustees on application
30 A trustee or receiver appointed by any court may be removed and a trustee, trustees or receiver substituted in place of
him or her, at any time on application to the court by any trust beneficiary who is not under legal disability, with the
consent and approval of a majority in interest and number of the trust beneficiaries who are also not under legal
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disability.
Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.)
 Court noted that Letterstedt v. Broers suggests instances of misconduct that may justify removal of a trustee. One
is that the acts of the trustee are endangering the trust property. Another is that the trustee lacks proper capacity to
carry out the trust. A third is that the trustee may also be removed where the trustee has acted dishonestly or has
shown a lack of reasonable fidelity. The main guide must be the welfare of the beneficiaries.
 Friction or hostility between trustees and the immediate possessor of the trust estate is not of itself a reason for the
removal of trustees
Re Consiglio Trusts (No. 1) (1973), 36 D.L.R. (3d) 658 (Ont. C.A.)
 Misconduct is not a necessary requirement for the removal of a trustee. Only some instances of misconduct will
justify removal (see Conroy)
 The court can remove trustees where the continued administration of the trust in the interests of the beneficiaries
has become impossible or improbable.
 Evidence in this case was such that the dissension would make it virtually impossible for the trustees to agree on
policies for the efficient management of the trust. Removal of trustees granted.
Duties vs. Powers of Trustees
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Duties and powers often overlap.
Where a trustee is given a power, the presumption, unless the trust instrument or the circumstances indicate
otherwise, is that the trustee holds the power in his fiduciary capacity as a trustee. Where a power is held in a
fiduciary capacity, the person with the power has duty to at least consider the exercise of the power.
Where a trustee has a power but has no duty to exercise the power, the power is often referred to as a “mere
power.”
If the trustee may have a duty to exercise a particular power it is typically referred to as a “trust power.”
Classification depends upon the interpretation of the trust instrument and/or the circumstances
Courts will not intervene to force the exercise of a power where trustees have been given a pure discretion to
exercise the power or not (Tempest) but the court will prevent trustees from exercising a power improperly.
Where there is a duty to exercise a power, the courts will require that it be carried out and that it be carried out in
a proper manner and in a reasonable time. (Tempest)
 Powers can be implied or express
 In determining the powers of the trustees one should, therefore, look first to the trust instrument. One
should then look to the applicable trustee act for powers that may not be expressly set out in the trust
instrument. These default statutory powers may apply unless the trust instrument indicates otherwise.
The case law might also reveal powers implied from the circumstances of similar types of trusts.
 The general rule is that trustees, whether they are exercising a power or carrying out a duty, must act
unanimously. (Gibb v. McMahon)
Investment Power
 If there is no express investment power a courts is likely to infer a power to invest.
 The question is then what the scope of that investment power is
 Historically, there was a prudent investor approach. Then, we moved toward the legal list approach. Since 2003
we are back to the prudent investor approach.
 The new default investment power provisions, such as sections 15.1 to 17.1 of the Trustee Act, no longer restrict
the types of property that trustees can invest in. There is no longer a list of permitted types of investments that
would limit the range of investments trustees can make.
 The one restriction that remains in section 17.1 is that a corporate trustee cannot investment funds held by it in
trust in its own securities.
 Section 15.1(2) provides that the terms of the trust instrument can restrict the types of investments the trustees can
make.
 Standard of care: Section 15.2 of the B.C. Trustee Act provides that “in investing trust property, a trustee must
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exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.”
B.C. Trustee Act does not contain a list of factors trustees are to consider in making trust investments.
It also does not expressly require diversification but diversification would likely be considered prudent
The focus is now on the overall risk of the portfolio, not individual investments
o S.15.3: if a particular investment was made as a result of a prudent portfolio investment strategy a trustee
is not liable for a loss on that particular investment
o S.15.4: an assessment of loss on a particular investment may take into account gains on other investments
Delegation: s.15.5 expressly permits delegation of the investment duties.
o Section 15.2(3) says that a trustee who delegates this authority must exercise prudence in selecting the
agent, establishing the terms of the authority delegated, and monitoring the performance of the agent to
ensure compliance with the terms of the delegation.
o Section 15.5 provides that if the trustee exercises prudence in selecting the agent, establishing the terms of
authority and monitoring the agent, the trustee will not be liable to the beneficiaries or the trust for the
decisions or action of the agent.
o Section 15.1(1) of the B.C. Trustee Act expressly permits an investment in a mutual fund
o S. 15.5(7) An investment in a mutual fund is not considered a delegation.
 Trustees still, however, have the underlying duty to make a prudent mutual fund investment.
Section 15.1(3) of the B.C. Trustee Act allows a trust company to invest property it holds on any given trust in a
common trust fund managed by a trust company.
Seeking direction from the court
Application for directions
86 (1) A trustee, executor or administrator may, without commencing any other proceeding, apply by petition to the court,
or by summons on a written statement to a Supreme Court judge in chambers, for the opinion, advice or direction of the
court on a question respecting the management or administration of the trust property or the assets of a testator or
intestate.
(2) The application under subsection (1) must be served on, or the hearing attended by all persons interested in the
application, or by those that the court thinks expedient.
(3) The costs of an application under subsection (1) are in the discretion of the court.
Effect and exception
87 (1) The trustee, executor or administrator, acting on the opinion, advice or direction given by the court, is deemed, so
far as regards his or her own responsibility, to have discharged his or her duty as trustee, executor or administrator in the
subject matter of the application.
(2) This Act does not extend to indemnify a trustee, executor or administrator in respect of an act done in accordance with
the opinion, advice or direction referred to in subsection (1) if the trustee, executor or administrator has been guilty of
fraud, willful concealment or misrepresentation in obtaining the opinion, advice or direction
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BCSC Rule 10 also provides a procedure for trustees to apply to the court for an opinion or directions. The
provisions under the trustee acts and the rules of court operate separately and it is common to apply under both.
Cannot be used to have a court make all the trustee’s decisions for him
There must be a genuine question as to the proper interpretation of the terms of the trust
Disagreement among the trustees is not normally a basis for intervention by the court unless there would be
manifest prejudice to the beneficiaries or the settlor’s intentions would be frustrated (Kordyban)
When will the court intervene (for :
o Interfere where there is mala fides - but this is something less than fraud or lack of honesty (Gisborne,
Fox Estate, Re Blow)
 Re Blow: The Gisbourne principle only arises where the trustees have exercised their discretion.
If the trustees have improperly allowed a letter of wishes to fetter their discretion, the court will
intervene. This arguably gives the court a very broad basis for intervention…
o Interfere if the trustees take into account considerations they should not have taken into account
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o
o
(Fox v. Fox Estate – arguably per all three C.A. judges)
Interfere if the trustees fail to take into account things they should have taken into account (per
Galigan in Fox Estate)
 In England, this rule was often used by trustees who want to have their own exercises of
discretion set aside. But, in Pitt v. Holt, the Eng CA found that where the trustees have acted
within the scope of their power but have in some other way breached their fiduciary duties in
respect of the exercise of the power, only a beneficiary will be able to seek an order that the
exercise of the power is voidable. A failure of the trustees to take into account relevant matters
that ought to be taken into account is a breach of their fiduciary duty. There is no breach if the
trustee relied on advice given to them that was materially wrong.
 Re Wright: The court will not exercise a trustee power for the trustees, they must exercise the
power for themselves. Issue was whether or not to sell the trust property at a certain price.
The court has a statutory and inherent jurisdiction to break a deadlock between trustees where necessary
to carry out the terms of the trust in the interests of the beneficiaries. Where trustees fail to exercise a
discretionary power and do not act one way or the other the question is whether the failure is consistent
with or frustrates the testator’s (settlor’s) intentions. If the failure to act frustrates testator’s intentions, the
court must determine on whose side to intervene considering the interests of the beneficiaries. Overall a
deadlock is to be resolved in in way that is just and equitable. (Kordyban)
General Duties of Trustees: Duty of Care
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Core duties include: the duty to carry out the terms of the trust, the duty not to delegate, the duty of care, the duty
of impartiality, the duty of loyalty, and the duty to provide information
All of the duties can be modified, but there must be an “irreducible” core, although the court didn’t say what it is
(must be some legal obligation in order to create the trust)
These generally apply even if not specified – they were developed on the basis that they were duties the settlor
would have imposed on the trustees had the settlor turned his mind to it
The standard of care is that of a person of ordinary prudence in managing his or her own affairs (Learoyd, Fales)
The case law indicates that the standard is the same regardless of whether you are a commercial trust company or
a friend of the settlor.
o However, when it comes to relief of liability under s.96, expertise and payment are considered
General rule is that each trustee is responsible for the administration of the trust and is liable for a breach of trust
whether the trustee is active or passive in the admin of the trust (Fales) BUT, possibility of relief under s. 96
Trustee Act.
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Jurisdiction of court to relieve trustee of breach of trust
96 If it appears to the court that a trustee, however appointed, is or may be personally liable for a breach of trust,
whenever the transaction alleged to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly
to be excused for the breach of trust and for omitting to obtain the directions of the court in the matter in which the trustee
committed the breach, then the court may relieve the trustee either wholly or partly from that personal liability.
Factors to consider (Fales): (i) whether the trustee was paid for its services; (ii) whether the breach was merely
technical in nature or a minor error in judgment; (iii) whether a decline in value of securities was attributable to general
economic conditions; (iv) whether the trustee is someone who accepted a single trust to oblige a friend or is a company
organized for the purpose of administering estates and presumably chosen in the expectation that it will have specialized
departments and experienced officials; and (v) above all, whether the conduct of the trustee was reasonable.
Fales v. Canada Permanent Trust Co., [1977] 2 SCR 302
 Issue: whether the trustees had exercised the requisite care in monitoring the changes in the fortunes of Inspiration
Ltd. and in determining the proper time to sell the Inspiration Ltd. Investments
 The trustees had a duty to sell but with a power to delay. The delay was unreasonable.
 Here it was not necessary to decide the question of whether paid trustees owe a higher standard of care because
the SCC found that Canada Permanent failed to meet the standard of care by any test.
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Relief not granted to Canada Permanent under s.96 of the Trustee Act, but relief granted to wife.
Not explicitly said, but this case suggests that an expert trustee has a higher standard of care
Subsequent English case (Bartlett) found that expert trustees do owe a higher standard of care.
Exculpation Clauses
Chapter 6, pp. 342-351
Re Poche (1984), 6 DLR (4th) 40 (Alta. Q.B.)
Armitage v. Nurse, [1997] 2 All E.R. 705 (C.A.)
General Duties of Trustees: Duty Not to Delegate
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Trustees have a duty not to delegate the tasks required to execute the trust they have accepted. A person
appointed as trustee is normally appointed on the basis that the settlor, or a person exercising a power to appoint
trustees, trusts that person to properly carry out the terms of the trust.
 Even where the trust instrument is silent on whether delegation is permitted, there may be situations in which the
court will not follow the normal default rule of non-delegation. The situations are those in which it is either
necessary that the trustee delegate or it is reasonable to infer that the settlor would have wanted the trustee to have
an authority to delegate.
 Trustees may delegate a task where persons acting with reasonable care for their own purposes would, in the
particular circumstances, delegate the task (i.e. where it is normal in such transactions to engage an agent).
(Speight v. Gaunt)
 A trustee delegating a trust task to an agent must do so prudently. Where a trustee delegates, the trustee is
required to: (i) select the agent; (ii) the matter the agent is selected to deal with must be within the agent’s area of
expertise; and (iii) the agent’s activity must be supervised with reasonable care.
 Most jurisdictions have a provision that says that trustees are not liable for the acts of agents or other trustees
unless the loss occurs as a result of the trustee’s own wilful default.
Power to authorize receipt of money
7 (1) A trustee may appoint a solicitor to be the trustee's agent to receive and give a discharge for money, or valuable
consideration or property receivable by the trustee under the trust, and a trustee is not chargeable with breach of trust
merely for having made or concurred in making that appointment.
(2) A trustee may appoint a banker or solicitor to be the trustee's agent to receive and give a discharge for money payable
to the trustee under or because of a policy of assurance, by permitting the banker or solicitor to have the custody of and to
produce the policy of assurance with a receipt signed by the trustee, and a trustee is not chargeable with a breach of trust
merely for having made or concurred in making that appointment.
(3) This section does not exempt a trustee from any liability the trustee would have incurred if this Act had not been
enacted, if the trustee permits the money, valuable consideration or property to remain in the hands or under the control of
the banker or solicitor for a period longer than is reasonably necessary to enable the banker or solicitor to pay or transfer it
to the trustee.
(4) This section applies only if the money or valuable consideration or property is received after July 1, 1905.
(5) This section does not authorize a trustee to do anything the trustee is in express terms forbidden to do, or to omit
anything the trustee is in express terms directed to do, by the instrument creating the trust.
 S.14: A military officer/trustee can create a power of attorney for someone when they leave Canada for more than
a month, and they are liable for the acts of the person who has the power of attorney
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Implied indemnity of trustees (i.e. where an agent is selected)
95 A trustee, without prejudice to the provisions of any instrument creating the trust, is chargeable only for money and
securities actually received by the trustee even though the trustee signed a receipt for the sake of conformity, and is
answerable and accountable only for the trustee's own acts, receipts, neglects or defaults, and not for those of other
trustees or a banker, broker or other person with whom trust money or securities may be deposited, nor for the
insufficiency or deficiency of securities or any other loss, unless it happens through the trustee's own willful default, and
may reimburse himself or herself, or pay or discharge out of the trust premises, all expenses incurred in or about the
execution of his or her trusts or powers.
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Re Brier (Eng. C.A. 1884) it was said that this provision “does not substantially alter the law” (i.e. use the threepart test above)
Underwood v. Stevens: “willful default” includes ordinary negligence.
Re Vickery: “willful default” means a trustee is protected from liability for ordinary negligence and a higher
degree of negligence (recklessness) is required to impose liability on a trustee. This has not been accepted in
Canada
Re Wilson (Eng. C.A. 1937) **Do not rely on this case**
 The beneficiaries claimed there was a breach of trust on the basis that the trustee, the trust company, had
delegated the exercise of discretion to the general manager of the trust company.
 It was held that the trust company could not delegate the decision to the manager. There was no by-law or other
provision that allowed for the delegation of such authority on the manager.
 This holding in this case seems doubtful – Fales noted that this is not the law in BC!
o Delegation in these circumstances seems reasonable and is arguably what the settlor would have intended
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