A trust arises where one party (the trustee) holds the title to property for the benefit of another (the beneficiary). An express trust is a trust that has been intentionally created by the settlor.
A bare trustee simply holds legal title to an asset, with all the risks and rewards remaining with the beneficial owner: Scoretz v. Kensam Enterprises Inc., 2017 BCSC 1356 at para. 41 [Scoretz BCSC], rev’d on other grounds 2018 BCCA 66 [Scoretz BCCA].
A bare trustee owes a fiduciary duty to the trust’s beneficiary: 0731431 B.C. Ltd. v. Panorama Parkview Homes Ltd., 2021 BCSC 607 at paras. 243–246. The bare trustee is obligated to deliver the trust property to the beneficiary upon demand and to take whatever steps are required to do so: Scoretz BCCA at para. 23. This obligation was summarized in Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 5th ed. (Toronto: Thomson Reuters Canada, 2021) at 2.VIII:
The usually accepted meaning of the term “bare”, “naked” or “simple” trust is a trust where the trustee or trustees hold property without any duty to perform except to convey it to the beneficiary or beneficiaries upon demand. It is true, of course, that so long as a trustee holds property on trust he or she has the duty to account for the property, keeping it secure and unharmed. The trustee cannot divest him- or herself of this duty, and, if that is the trustee’s sole duty, he or she must transfer that property to the beneficiary on demand.
For a bare trust to be valid, the law requires that it comply with three certainties at the time of settlement:
a) certainty of intention,
b) certainty of objects, and
c) certainty of subject matter.
See: Forsyth (Re), 2010 BCSC 1720 at para. 6; Sanchez v. Canada (National Revenue), 2022 BCSC 1963 at paras. 11–13.
The three certainties are explained in Waters’ Law of Trusts in Canada at 5.I:
This means that the alleged settlor, whether giving the property on the terms of a trust or transferring property on trust in exchange for consideration, must employ language which clearly shows his or her intention that the recipient should hold on trust.
No trust exists if the recipient is to take absolutely, but he or she is merely put under a moral obligation as to what is to be done with the property.
If such imperative language exists, it must, second, be shown that the settlor has so clearly described the property which is to be subject to the trust that it can be definitely ascertained. Third, the objects of the trust must be equally and clearly delineated.
There must be no uncertainty as to whether a person is, in fact, a beneficiary.
If any one of these three certainties does not exist, the trust fails to come into existence or, to put it differently, is void.
If the first requirement is not met, i.e., the transfer of property was not intended to have been subject to a trust obligation, the transferee takes the property beneficially.
If the first requirement is met but the intended trust fails due to uncertainty of subject matter or objects, then the property is held on a resulting trust in favour of the settlor: Lewis v. Alliance of Canadian Cinema Television and Radio Artists, 1996 CanLII 661 at para. 21, 18 B.C.L.R. (3d) 382 (C.A.).