Trusts & Trustees
- Constructive Trusts
- Liability of Estate Trustees - The Continuing Saga of the Paul Penna Estate
- Rose v. Rose - A Family Tragedy
- Trustee Liability & Section 35 of the Trustee Act
- Variation of Trusts
Constructive Trusts
In Hughes v Miller, the female plaintiff and the male defendant were never married but lived together in a spousal-type relationship for about 12 years. They originally lived on the defendant's boat until 1993 before moving to an island. The agreement and expectation of the parties was that they would be equal owners of the island property. While the purchase money for the island property was put up by the plaintiff and her mother, the defendant's contribution was to be in the way of material and expertise in building a permanent home on the property. However, the defendant only built a very basic cabin.
In 1995, the defendant inherited property from his aunt. The plaintiff helped pay property taxes on the inherited property. Furthermore, as the defendant became ill in 1999, he ultimately contributed less to the parties' expenses.
The plaintiff sought a declaration of a constructive trust over the inherited property based on unjust enrichment. The plaintiff claimed she supported the defendant over the course of many years and that her financial contribution to the defendant enabled him, among other things, to pay taxes on the inherited property. Alternatively, she sought monetary compensation for the defendant's enrichment.
The defining feature of the case is that the inherited property came to the defendant by way of an inheritance. As noted by the British Columbia Court of Appeal, the case was different from the majority of cases where the parties lived together and jointly built up assets over many years. If, in fact, the plaintiff was entitled to any trust claim to the inherited property, such a claim would derive from what she did after the defendant inherited it.
However, the court found that it would not be appropriate to award the plaintiff a constructive trust remedy over the inherited property, having regard to her relatively sparse direct contributions to maintaining or improving the property after the defendant inherited it. A constructive trust is the appropriate remedy for unjust enrichment only where a monetary award is insufficient and where there has been a direct contribution to the property by the party seeking such a remedy.
According to the court, spouse-like care and assistance, some personal and some financial, entitled the plaintiff to a monetary award based on unjust enrichment. In the circumstances, the court felt that an award to the plaintiff of one-third of the value of the property accruing to the defendant was fair.
Liability of Estate Trustees - The Continuing Saga of the Paul Penna Estate
This is a PDF document. Click here to view.Rose v. Rose - A Family Tragedy
Rose v. Rose is a recent Ontario case that deals with marriage breakdown, disillusioned children, and the finality of an irrevocable trust.
Brian and Janice were married and had two daughters. In 1992, Brian and Janice transferred a ski chalet and cottage into trust for the benefit of their daughters. Brian was the trustee for the trust. The trust was irrevocable. The family enjoyed the use of the chalet and cottage before and after the establishment of the trust.
Brian and Janice separated after the trust was established. Brian's relationship with his daughters also deteriorated. The daughters ultimately became frustrated with their father as trustee and commenced an application to have him removed. They also sought an order winding up the trust and distributing the capital income to them.
For his part, Brian wanted to continue to use and enjoy the chalet and cottage despite the separation from his wife. However, the court held that the trust deed, the foundation document for the trust, could not be interpreted as authorizing Brian (or Janice for that matter) to use and enjoy the two properties without the consent of his two daughters. Furthermore, the court was not prepared rectify the trust deed to provide Brian with the use and enjoyment of the properties.
Brian also hoped to transfer the two properties back to him and his former wife. The court held that once the trust had been created, no such transfer could take place as Brian had failed to retain the power to revoke the trust.
However, the court did remove Brian as trustee. The court noted there was a great deal of hostility between Brian and his daughters. According to the court, it did not matter where the fault lay. The question to be asked when removing a trustee is whether it would be difficult for the trustee to act with impartiality, not whether in fact he would or would not do so. The court held that it would be impossible for Brian to act impartially in this situation.
Finally, the court held there was no basis for the claim by the daughters that they were entitled to call for the winding-up of the trust and for the distribution to them of the property of the trust.