The Doctrine of Purchase Money Resulting Trust

The Doctrine of Purchase Money Resulting Trust - Disinherited

In Nishi v Rascal Trucking 2013 SCC 33 , the court described the doctrine of the purchase money resulting trust as follows. At paragraphs 1 – 2:

1. A purchase money resulting trust arises when a person advances funds to contribute to the purchase price of property, but does not take legal title to that property. Where the person advancing the funds is unrelated to the person taking title, the law presumes that the parties intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person’s contribution. This is called the presumption of resulting trust.

2. The presumption can be rebutted by evidence that the time of the contribution, the person making the contribution intended to make a gift to the person taking title. While rebutting the presumption requires evidence of the intention of the person who advance the funds at the time of the advance, after the fact evidence can be admitted so long as the trier of fact is careful to consider the possibility of self-serving changes in intention over time.

Ryan Fights For the Warhol of Farrah Fawcett (worth maybe 12 million)

Ryan O’Neal testifies about disputed Warhol portrait of Farrah Fawcett

Love is never having to say your sorry, and that she gave me the $12 million dollar painting that I talk to each day so I own it and not the claimant University, says Ryan O’Neill..

Ryan O’Neal told a jury that an Andy Warhol portrait of Farrah Fawcett that hangs in his home is one of his deepest connections to his long-time partner and that he does not believe he should have to hand it over to the actress’s alma mater.

The University of Texas at Austin is suing O’Neal to try to gain possession of the portrait. Fawcett left all her artwork to the school and it claims O’Neal improperly took it from her condo days after her death.

The Oscar-nominated actor took the stand for the second time in the trial to assert his ownership of the portrait and why it’s important for him to keep it.

“I talk to it,” O’Neal said. “I talk to her. It’s her presence. Her presence in my life. In her son’s life.”

The actor’s portion of the trial is drawing to a close, with jurors hearing for the past several days from some of Fawcett’s closest friends. Each has said Fawcett told them that one of the Warhol portraits belonged to her and the other one was owned by O’Neal. They also recounted the same origin story for the artwork: Fawcett told them that O’Neal arranged for two portraits to be made, and both actors picked them up from Warhol’s New York studio at the same time.

One of Fawcett’s former caretakers, Maribel Avila, testified on Tuesday that the “Charlie’s Angels” star told her that one of the Warhol portraits of her belonged to O’Neal.

Avila was allowed to testify about Fawcett’s words despite coming forward with her story just days before opening statements began on Nov. 25. Avila saw a story in the New York Post about the case and contacted O’Neal’s attorneys.

O’Neal told the same story about the portrait’s origins on Wednesday, adding that his daughter Tatum O’Neal accompanied him to the photo shoot with Warhol.

The actor does not deny that he took one of the portraits from Fawcett’s condominium in the days after her death, but said he was given permission by her estate’s trustee. The artwork was kept in both his home and Fawcett’s homes over the years.

He said he considers the portrait a family heirloom and he plans to leave it to his son with Fawcett, Redmond. Both treasure the portrait for its connection to Fawcett, O’Neal said.

“We lost her,” he said. “It would seem a crime to lose it too.”

Redmond O’Neal is expected to testify on Thursday.

Jurors will also hear from Karen McManus, a contemporary art appraisal expert who told the panel Wednesday that she estimates that O’Neal’s portrait is worth $800,000 (U.S.) to $1-million. An expert for the university testified last week that the portrait was worth up to $12-million.

The Use of Discretionary Trusts in Estate Planning


I always fell asleep during my law school trusts class. I could never have imagined then what an important role trusts would come to play in my day-to-day career as a Wills and Estates lawyer. I suspect that there are many other lawyers, notaries and estate planners who have sometimes been mystified about this area of law.

Over the years the use of trusts has grown dramatically to the point that they are now a major cornerstone of estate planning and commercial law. The purpose of this article is to attempt to explain some basic trust principles, with an emphasis on the use of discretionary trusts in estate planning.


Trusts have been with us for hundreds of years and they are playing an increasingly greater role in estate planning. Trusts are most commonly used to distribute property to family members and others under either a will or an inter vivos agreement. The trust developed through the interaction of England’s two parallel legal systems, being the common law and equity. Its origin lies in the concept of the “use”, which was simply a transfer of property by A to B, who was bound by conscience to hold the property for the use of C. While the common law did not recognize C’s rights under such a transfer, the courts of equity would intervene to enforce the moral obligations associated with the use. Thus, the trust was developed by the courts of equity to overcome the inflexibility and harshness of the common law.

Essentially, a trust is an equitable obligation binding one person (the trustee) to deal with property over which he or she has control (the trust property) for the benefit of one or more other persons (the beneficiary or beneficiaries). The trust arises when the owner of the trust property (the settlor, in the case of an inter vivos trust, or the testator, in the case of a trust created by a will) transfers the property to the trustee on specified terms (the trusts), which the trustee accepts. The trustee may also be a beneficiary and any one of the beneficiaries may enforce the obligation. In law, a trust is not a separate legal entity (as a corporation is), except for specific purposes such as income tax. Rather, it is a relationship where one party holds and administers property for the benefit of others.


The most important characteristic of a trust is that it is a fiduciary relationship (i.e. a relationship based on confidence or trust). The fiduciary relationship exists between the trustee, who holds title to and administers the trust property, and the beneficiaries, for whose benefit the trust property is held. As a fiduciary, the trustee is subject to onerous obligations, including the obligation to act only in the best interests of the beneficiaries.

Another distinguishing characteristic of a trust is the dual nature of the ownership of the trust property as between the trustee and the beneficiaries. That is, while the trustee has the legal ownership of the property (i.e. the title and legal control), the beneficiaries are entitled to the beneficial ownership of the property (i.e. the rights to use and enjoyment).


Three criteria–commonly called “the three certainties”– must be met in order to establish a valid trust. These are:

1. Certainty of intention: It must be clear that the settlor intended that the property transferred to the trustee be held in trust, as a binding obligation. The language used by the alleged settlor must be imperative and not merely an expression of wishes.

2. Certainty of subject-matter: This “certainty” has two aspects. First, it must be possible to identify clearly the property which is to be subject to the trust. Secondly, it must also be possible to define clearly the interests in the trust property to which the beneficiaries are entitled.

3. Certainty of objects: The objects of the trust–that is, the beneficiaries or the purposes for which the trust property is held–must be clearly identified. The word “objects” is a neutral word since a trust may be created either to benefit individuals or to further a particular purpose (e.g. to support cancer research). In each case, however, the objects of the trust must be defined clearly enough that the trust can be carried out.

All three certainties must be present or the trust will fail.


Estate planning is the process whereby an individual identifies and implements steps to achieve the following:

1. the individual’s personal and family objectives for the control and enjoyment of his or her property during his or her lifetime; and

2. the orderly succession to the individual’s property following his or her death.

Estate planning steps may be implemented to take effect either during the individual’s lifetime or following his or her death. In either case, a primary concern will be to achieve the individual’s objectives with as much certainty as possible. Put another way, the goal will be to ensure that the estate plan will be as free as possible from the interference of others, including the courts. While each family and individual is different, in order to achieve estate planning certainty, the estate plan will often involve the use of trusts.

One reason why trusts are used so frequently in estate planning is that they enable an owner of property to give the benefits of the property to others, without having to relinquish ownership or control of the property.

Another reason for the increased use of trusts in estate planning is that there are generally few compliance or reporting requirements, which allows a significant degree of estate planning privacy.


In appropriate circumstances, the discretionary trust may be a particularly effective estate-planning tool. In his text, The Law of Trusts in Canada, Professor Donovan Waters defines a discretionary trust as follows:

A discretionary trust arises when property is vested in trustees and a class of beneficiaries or named persons appear as the trust objects, but the trustees have complete discretion as to the payment of the income, or the capital, or both. The trust may obligate them to distribute all the trust property among the class, but give them a discretion as to whom they make payments within the class, and as to how much they pay to each.

The essence of a discretionary trust is that the trustee cannot be compelled to pay anything to a beneficiary–that any payment of either income or capital, is completely within the discretion of the trustee. Thus, the beneficiary will have no determinable or vested interest in the assets of the trust.

A discretionary trust may be established during the lifetime of the settlor, or alternatively, through a testamentary disposition made under a will.


The flexibility of the discretionary trust as an estate-planning tool is illustrated in the following estate planning situations.

1. Supplementing Government Disability Benefits

A common use of discretionary trusts in estate planning is to provide additional benefits to a disabled person who is receiving government benefits (e.g. a guaranteed annual income) without disentitling the person to the government benefits. Careful planning is often required to avoid the reduction or cancellation of such benefits. In British Columbia, for example, if a disabled person receives an outright inheritance, the amount inherited is deducted dollar-for-dollar from the amount of the government benefits.

Since a discretionary trust gives the trustee an absolute discretion as to whether or not to pay any income or capital to the beneficiary, it can be successfully argued that the beneficiary does not have an equitable interest in the trust. Accordingly, there are certain payments that can be made for a disabled person that will not disentitle him or her to government benefits. Such payments may include medical costs, certain caregiver costs, home repairs and renovations, educational costs and the like. It may also be possible for the trust to purchase capital assets such as a house or vehicle for the use of the beneficiary, without the beneficiary losing entitlement to benefits.

2. Avoiding Wills Variation Challenges

For many British Columbia residents, estate planning must involve a careful consideration of the potential impact of the Wills Variation Act. However, since the Act contains no anti-avoidance provisions, an individual is free to arrange his or her affairs so as to avoid its provisions.

For example, an individual may concerned about a substance-addicted or spendthrift child or spouse challenging his or her will. The individual might use a discretionary trust to provide adequately for the addicted or spendthrift beneficiary, so that any challenge brought by that beneficiary under the Wills Variation Act might fail. The trustee, in his or her discretion, could provide for the beneficiary so that he or she is adequately maintained, but not able to have access to the capital and spend it unwisely.

Furthermore, the Wills Variation Act applies only to those assets that form part of a testator’s estate. If an inter vivos trust is established by a settlor prior to his or her death, and assets are transferred by the settlor to the trustee before the settlor’s death, those assets will not form part of the settlor’s estate. Since the assets are not part of the estate, those assets will not be subject to claims under the Wills Variation Act.

3. Protecting Assets

Almost every individual who undertakes to plan his or her estate will seek a plan that protects his or her assets from the claims of general creditors. In appropriate situations, a discretionary trust may be used to achieve that objective.

If an individual establishes a trust primarily for the purpose of protecting his or her assets from the claims of his or her creditors, and if the individual voluntarily transfers of assets to the trust without consideration, then the trust may be voidable under the Fraudulent Conveyances Act.

On the other hand, if the primary reason for creating the trust is estate planning, then achieving protection against the claims of creditors is simply an ancillary benefit flowing from the creation of the trust. Since the primary purpose for its creation is not to avoid creditors, then the trust should be valid and enforceable. The principal goal is to remove assets from the individual’s estate, before creditor problems arise, so that the assets cannot be attacked by creditors that the individual may subsquently acquire. If placed in a discretionary trust, the assets may be used for the benefit of the individual’s family but may also be protected from the individual’s creditors.

4. Avoiding Claims of Spouses Under the Family Relations Act

With careful drafting, a discretionary trust can be a valuable estate planning tool to enable an individual to enjoy the beneficial use of and interest in property while at the same time protecting the property from claims of his or her spouse under the Family Relations Act.

Consider, for example, an individual who is embarking on a second marriage and wishes to shelter certain property from potential claims of his or her intended spouse under the Family Relations Act. The individual could transfer the property to an irrevocable inter vivos trust under which the individual and his or her children from a previous marriage would constitute the class of beneficiaries. The trust could provide for a discretionary distribution of income and capital during the individual’s lifetime and for an equal distribution of the remaining trust property to the children on the individual’s death. The existence of the trust should effectively prevent the trust property from any subsequent claim by the new spouse under the Family Relations Act.


The discretionary trust is a powerful and flexible legal tool that can be used for estate planning in many different situations and .for many different purposes. Discretionary trusts are increasingly being used to address unique needs and to achieve specific goals that require a flexible vehicle to suit personal estate planning objectives.

Rebutting the Presumption of a Resulting Trust

Dhaliwal v Ollek 2012 BCCA 86 discusses rebutting of the presumption of a resulting trust, and upholds that the recipient done bears the onus of proof, on the balance of probabilities, to rebut the presumption of a trust and to attempt to prove a gift.

Madam Justice Fenlon’s decision in Demir v. Peyman, 2009 BCSC 445, 68 R.F.L. (6th) 319, sets out a useful statement of the legal principles governing the ownership of property. The case arose from the breakdown of the marriage between James Peyman and Seylan Demir. The mother of Mr. Peyman, Elizabeth Peyman, had contributed a large sum of money to Mr. Peyman and Ms. Demir for the purchase of a residential property. Ms. Demir viewed her mother-in-law’s contribution as a gift, but Mrs. Peyman and her son James testified that the mother’s money had been advanced to enable the young couple to purchase a home containing a guest suite to house Mrs. Peyman.

[6] If Mrs. Peyman’s contribution was not a gift, then she would own about 80% of the property and the married couple would own about 20% based on their respective contributions to the purchase price. In the course of her reasons, Fenlon J. said:

[9] I turn first to a preliminary matter, which is the burden of proof in these proceedings. James Peyman and Seylan Demir are registered as the owners of the property and, under the Land We Act, R.S.B.C. 1996, c. 250, s. 23(2), such title is conclusive at law and in equity that the person named in the title as registered owner is indefeasibly entitled to an estate in fee simple to the land described in the title. In short, the law begins with the presumption that if your name is on the title in the Land Title Office, you own that property. That statutory presumption is, however, subject to equitable principles, one of which is the enforcement of an agreement between the parties in order to prevent unjust enrichment if the face of the title is upheld.

[10] In a case such as this where property is purchased with funds provided by a third party without consideration the law presumes that the person receiving the funds holds the property in trust. This is known as a resulting trust. As stated by the Supreme Court of Canada in Pecore v. Pecore, [2007] 1 S.C.R. 795, the presumption of a resulting trust is rebuttable. The effect of the presumption, though, is to alter the general rule that in a civil case the person who wants to challenge the names on title in the Land Title Office bears the legal burden of proof.

[11] In the case at bar Ms. Peyman challenges the legal title to the property on the basis that she made a gratuitous transfer of funds to her son and daughter-in-law so that they could purchase the property. A resulting trust is presumed with respect to the portion of the property paid for with those funds. It follows that Ms. Demir bears the burden of rebutting that presumption, that is. she bears the burden of proving that the money was a gift.

[Emphasis added.]

In the case of Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, the Supreme Court of Canada established that, as a general rule, ownership will be determined having regard to the intentions of a party at the time the transfer of property occurs:

56 The traditional rule is that evidence adduced to show the intention of the
transferor at the time of the transfer “ought to be contemporaneous, or nearly so”, to the
transaction: see Clemens v. Clemens Estate, [1956] S.C.R. 286, at p. 294, citing Jeans
v. Cooke (1857), 24 Beav. 513, 53 E.R. 456. Whether evidence subsequent to a
transfer is admissible has often been a question of whether it complies with the Viscount
Simonds’ rule in Shephard v. Cartwright, [1955] A.C. 431 (H.L.), at p. 445, citing Snell’s
Principles of Equity (24th ed. 1954), at p. 153:

The acts and declarations of the parties before or at the time of the purchase, [or of the transfer] or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration ….But subsequent declarations are admissible as evidence only against the party who made them….

The reason that subsequent acts and declarations have been viewed with mistrust by courts is because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts. As noted by Huband J.A. in Dreger, at para. 33: “Self-serving statements after the event are too easily fabricated in order to bring about a desired result.”

57 Some courts, however, have departed from the restrictive — and somewhat
abstruse — rule in Shephard v. Cartwright. In Neazorv. Hoyle (1962), 32 D.L.R. (2d)
131 (Alta. S.C., App. Div.), for example, a brother transferred land to his sister eight
years before he died and the trial judge considered the conduct of the parties during the
years after the transfer to see whether they treated the land as belonging beneficially to
the brother or the sister.

59 Similarly, I am of the view that the evidence of intention that arises subsequent to a transfer should not automatically be excluded if it does not comply with the Shephard v. Cartright rule. Such evidence, however, must be relevant to the intention of the transferor at the time of the transfer: Taylor v. Wallbridge (1879), 2 S.C.R. 616. The trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention.

[40] In the recent case of Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, Cromwell J. writing for the Court, noted that it is the intention of a transferor (or donor of funds) that is significant and that the concept of a joint intention trust is discredited.

Sham Trusts and the Three Certainies

Sham Trusts

The three certainties: certainty of intention and the issue of sham trusts

In order to be valid, trusts must comply with the three certainties at the time of settlement:

It is of course trite law that for a valid trust to come into existence, the three certainties -certainty of intention, objects and subject matter – must be met…. If the first requirement is not met — i.e., a transfer of property is construed as not intended to have been subject to a trust obligation – the transferee takes the property beneficially … If the first test 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. Union of B.C. Performers, (1996) 18 B.C.L.R. (3d) 382 at para. 21 (C.A.) [Lewis]).

To meet the first certainty, there must be an intention on the part of the settlor to impose enforceable trust obligations on the trustee. The language used by the settlor is critical and must show a clear intention that the recipient of the trust property holds that property on trust: Lewis at para. 22.

The issue of sham trusts is treated in different ways by different authors. WJ. Mowbray et al, Lewin on Trusts, 17th ed. (London: Sweet & Maxwell, 2000) at paras. 4 -19 to 4 – 28 [Lewin] considers that whether a trust is invalid as a sham depends primarily on the intention of the settlor at the time the trust is created (citations omitted):
The sham concept…would appear to involve a finding of fact akin to, but nevertheless falling short of, actual fraud. In the trust context, a finding will be necessary that, whilst an apparent settlor did not in fact intend to part with the beneficial interest in the trust property, nevertheless he executed documentation with the apparent effect of so parting (Lewin at paras. 4-21).

If at the [time of execution] the settlor genuinely intends the documentation to take effect according to its terms, and those terms are such as to create a trust, then nothing the settlor or trustees do thereafter can render a valid trust a sham (Lew/77 at paras. 4 – 22).

Mere examination of the deed itself will, of course, be incapable of revealing its sham nature (Lewin at paras. 4-22).
[Courts have] distinguished between the class of case where parties entered into a written agreement which was “a sham intended to mask their true agreement”, and the distinct class of case where, without any question of sham, there “has been held to be some objective criterion in law by which the courts can test whether the agreement the parties have made does or does not fall into the legal category in which the parties have sought to place their agreement {Lewin at paras. 4-24).
The difference [between a sham and merely an improperly constituted trust] is that between an apparent settlor who has no relevant intention to create a trust, but executes documentation by which he pretends to have such an intention; and the quite distinct settlor who fully intends his documentation to take effect according to its terms, but, as a matter of proper legal analysis, fails to create a trust (Lewin at paras. 4 – 25, emphasis in original).
[A] finding of sham makes it unnecessary for the court to consider the requirement of certainty of intention at all, because it has evidence before it that the settlor’s documentation has been crafted to mislead {Lewin at paras. 4-27).

[7]he mere retention of wide beneficial powers and interests by the settlor does not of itself make the trust a sham, so long as the trustee genuinely has control over the assets and exercises his own independent discretions in respect of those matters where the terms of the trust require him to do so (Lewin at paras. 4 – 28).

Simply put, Lewin distinguishes between a settlor with devious intent and a settlor who signs
a document that does not have the legal effect he or she thought it would have. The discussion in Donovan Waters et al., Waters’ Law of Trusts in Canada, 3rd ed. (Toronto: Thomson Carswell, 2005) at 145-149 [Waters] is consistent with the Lewin approach.

A transaction is no sham merely because it is carried out with a particular purpose or object. If what is done is genuinely done, it does not remain undone merely because there was an ulterior purpose in doing it (Lewin at paras. 4-26 citing Miles v. Bull, [1969] 1 Q.B. 258 at 264 [Miles v. Bull]).

Certainty of Subject Matter In Trusts

One of the three requirements of a valid trust is the “certainty of the subject matter”,

There are two elements to certainty of subject matter:

  • First, the property which is subject to the trust must be clear.
  • Second, the nature of the interest due to each beneficiary must be clear.

To satisfy the first of the two elements, the subject matter must be described with “sufficient exactness to permit that such matter be ascertained at the time the trust was created”: Re Beardmore Trusts, [1952] 1 D.L.R. 41 at 46 (Ont. H.C.) [Beardmore].

Clearly, the subject matter must also be certain on future dates when the trustees are required to deal with the trust property. However, the trust property need not be fixed in quantity or nature; property can be added later, and the nature of existing property may be changed by the trustees exercising their power of investment. If the initial trust property is certain, and the property which may be added is certain, then the subject matter is certain because at any point the current trust property can be determined by tracing the original property to its current form: Waters at 155 -156.

The second element of certainty of subject matter requires that it be clear what beneficial share each beneficiary will receive in the trust property: Boyce v. Boyce (1949), 60 E.R. 959 (C.A.).

Trustees Must Not Co-Mingle or Misuse Estate Funds For Their Own Purpose

trustess not co mingleTrustees must not co mingle or misuse estate funds or assets  for their own purposes.

It is trite law that trustees are fiduciaries and must not personally use, profit from, or co-mingle estate funds with their own.

If a trustee has mixed his/her own funds with the funds being held
for another, all of the property must be taken to be the other’s property until the trustee is able to prove what part of it is his/her own: Widdifleld on Executors and Trustees, above, at p. 13-2; Norman, Re, [1951] O.R. 752, [19521 1 D.L.R. 174 (Ont. C.A.) at p. 5; Cook v. Addison (1869), L.R. 7 Eq. 466 (Eng. Ch. Div

It is an “inflexible rule of the Court of Equity” that a fiduciary must not make a profit or to
put himself/herself in a position where his/her interests and his/her duty conflict unless the trust
instrument expressly so provides: Simone v. Cheifetz, [1998] O.J. No. 3267, 74 O.T.C. 18 (Ont.
Gen. Div.) at para. 47, citing Bray v. Ford (1895), [1896] A.C. 44 (U.K. H.L.); Bikur Cholim

Jewish Volunteer Services v. Langston, [2007] O.J. No. 3667,160 A.C.W.S. (3d) 921 (Ont. S.C.J.), at paras. 30 and 31. As a fiduciary, an attorney for property is not entitled to exercise that power for his or her own benefit unless expressly authorized to do so: Howlader v. Alamgir, [2006] O.J. No. 2575,149 A.C.W.S. (3d) 275 (Ont. S.C.J.)

The trustee, not the beneficiaries, bears the onus of establishing that the management and disbursement of funds is consistent with the terms of the trust: Maintemp Heating & Air Conditioning Inc. v. Momat Developments Inc. (2002), 59 O.R. (3d) 270, [2002] O.J. No. 2722 (Ont. S.C.J.).

A trustee who improperly enjoys the benefit of trust assets without authority and allows non-beneficiaries (e.g. the trustee’s family) to also benefit is liable to the trust for the amounts or the value of the benefits received: Waters’ Law of Trusts in Canada, above, at p. 877; Bikur Cholim Jewish Volunteer Services v. Langston, above, at paras. 13 to 16 and 38, affd (2008), 90 O.R 3d) 673, [2008] O.J. No. 1582 (Ont.

Trust For Care of Deceased’s Cats Held Valid

Deceased’s Cats

In Zinn v Bergen 2012 SKQB 214, the deceased left a five page typewritten will dated July 7, 2003 wherein he made several specific bequests, and asked to convert the rest and residue of the estate into cash for the purpose of initially maintaining feeding and caring for his pet animals (but not their offspring), until their death, which presently consisted of four cats. Upon the death of the cats than the residue was to be distributed to two charities.

The deceased subsequently signed a handwritten codicil, which was mostly almost illegible, but dated June April 19, 2011. The first two sentences of the codicil were significant in that they stated :

“This is a supplement to my will that made on July 7, 2003. The main part of the 2003 seventh of July remained the same.

My cats come first– after my expenses are paid been plenty of money for the cats”

The codicil did not purport to revoke any portion of the will, and accordingly the court admitted both documents into probate. Following the decision of Oh v Robinson 2011 SKQB 374,which held “the fact that some of the portions of the will may be in illegible or incomprehensible does not disqualify or prohibit the remaining portions of the will from satisfying the legal requirements for probate.”


The Law


The Court found that the testator gives clear expression of an intention to provide for his four cats following his death. He did so by purportedly creating a trust from the
residue “for the purpose of maintaining, feeding and caring for my pet animals,
(but not any off-spring thereof) until their death”, to “find a good home” forthem, and to “pay whatever reasonable amounts may be necessary and advisable from time to time to provide for the maintenance and care of my pets.”

The Codicil reinforces this predominant motivation with the statement “my cats come first”. He goes on “After my expenses are paid then plenty of money for the cats, including medical service and if deemed necessary declawing expenses.”… “The house will likely be used to pay for the cats home and the expenses. … The (house) must not be sold until after the cats are comfortable.”
This purported trust raises obvious questions about its validity (A. J.
Oakley, Parker and Mellows: The Modern Law of Trusts, 9th ed., (London: Sweet & Maxwell, 2008) at pps. 82 and 83 offer these insights:

3-102 Gifts for the maintenance of animals in general are charitable. However, gifts for the maintenance of one or more particular animals are not; … Re Dean is an explicit authority — not all the early cases in this area of the law are particularly explicit — that a non-charitable purpose trust for the upkeep of a given animal may be valid notwithstanding the fact that by its nature it is not enforceable by the beneficiary.

Relying upon these authorities, I find the trust valid. The executors are directed to retain the sum of $10,000.00 dedicated to the exclusive purpose of care, maintenance and health needs of the testator’s cats. Upon the death of the last of the four cats, the balance of this fund shall be disbursed as residue.

The Requirements of a Valid Inter Vivos Transfer to a Trust

The Requirements of a Valid Inter Vivos Transfer to a Trust


The decision Mordo v Nitting 2006 BCSC 1761 is a primary source on many aspects relating to trusts. Morodo was suing to set aside an alter ego trust settled by his mother in favour of his sister, and utilized just about every legal argument on the subject that could have been made, including this one.


[263] To form a valid inter vivos trust, there must be a valid act of transfer to a clearly identified trustee.

[264] It is clear from the Trust Indenture that Mr. Wilson was to be the original Trustee. Further, a Form A transferring the Warehouse to Mr. Wilson “as Trustee” was executed by Eida on September 5, 2000. Accordingly, in this case, the identity of the Trustee was clear.

[265] However, the creation of a valid inter vivos trust requires a valid act of transfer to that clearly

identified trustee. In this case, was it enough for Eida to complete the Form A and hand it to Mr. Wilson, or was it also necessary to register the Form A before the Trust came into existence? As noted, Mr. Wilson did not register the Form A until after Eida’s death for property tax reasons.

Legal authorities concerning the requirements for a valid transfer

[266] The rule as to the formation of a valid trust was stated in Milroy v. Lord (1862), 45 E.R. 1184 (C.A.) [Milroy]:

[l]n order to render a voluntary settlement valid and effectual, the settler 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 (Milroy at 1189).

[267] In Milroy, the trustee was given share certificates and a power of attorney under which he

could transfer the shares into his name. The shares were such that legal title did not pass until the new owner’s name was entered in the share register; that was not done until after the settlor’s death. The court concluded it was not sufficient that the trustee was capable of transferring the shares. The transaction was incomplete without the actual transfer having occurred. The court would not compel the agent of the settlor to complete the transfer because it could not compel the settlor to complete the transfer:

Equity could not, I think, decree the agent of the settlor to make the transfer, unless it could decree the settlor himself to do so, and it is plain that no such decree could have been made against the settlor (Milroy at 1190).

[268] The court in Milroy refused to hold that the settlor held the legal title on trust for the trustee:

[T]here does not appear to me to be any sufficient ground to warrant us in holding that the settlor himself became a trustee of these bank shares for the purposes of this settlement (Milroy at 1190).

[269] In the case of Re Rose, [1952] Ch. 499, [1952] 1 All E.R. 1217 (C.A.) [Re Rose] the English

Court of Appeal distinguished Milroy and found a valid trust. In Re Rose, the registration of the shares could not be completed until the board of directors approved the transfer. The court concluded that the settlor had done all that he could by completing the documentation and forwarding it to the board for approval, and accordingly held that legal title passed before registration, when the settlor gave up possession of the documents.

[270] In Fenton v. Whittier (1977), 26 N.S.R. (2d) 662 at paras. 86 to 96; 40 A.P.R. 662 (S.C.)

[Fenton], the Nova Scotia Supreme Court, considering Re Rose, concluded there was no inter vivos gift of shares. Although the donor had completed the share transfer forms, she kept them in a safety deposit box until her death because she wanted the benefit of the dividends during her lifetime. The court concluded that the donor intended the gift to take effect only upon her death.

[271] In Pennington v. Waine, [2002] 1 W.L.R. 2075, [2002] EWCA Civ 1587 an aunt intended to

make a gift of shares to her nephew. However, the share register was not updated with the name of the new owner and the donor kept the completed share transfer forms rather than handing them to her nephew. On a strict application of the principle in Re Rose, there was no valid inter vivos gift. However, the English Court of Appeal held that it would have been unconscionable for the executors of the giftor to refuse to hand over the share certificates, and found that the gift was valid. In so concluding, the court relaxed the rule in Milroy and imposed a trust on the settlor such that she held the legal title to the shares in trust for the trustee until the transfer of ownership was completed.

[272] In Bank Leu AG v. Gaming Lottery Corp. (2003), 231 D.L.R. (4th) 251 at para. 56 (Ont.

C.A.) Weiler J.A. (for the court), referring to Pennington, affirmed the principle in Re Rose that a transfer may be valid notwithstanding that the transferee must perform further acts to complete the transfer.

[273] The foregoing cases deal with the transfer of shares. As noted in Milroy, what constitutes “everything necessary” to achieve an effective transfer depends on the nature of the property being settled. In the case of real property, what is “everything necessary” to effect a transfer?

[274] In Mascall v. Mascall (1989), 50 P. & C.R. 119 (C.A.) the plaintiff father applied for a

declaration that a transfer of real property to his son, the defendant, was invalid. The plaintiff had completed the land transfer forms and handed them to the defendant, anticipating that any further steps concerning the forms would be taken by the defendant. At the time of the plaintiffs death, the defendant had not yet registered the forms. The English Court of Appeal, applying Re Rose, found that the plaintiff had done all that he could to complete the transfer and therefore the transfer was complete. In the result, the son was the holder of legal title despite registration having not yet taken place.

[275] The acts necessary to affect a valid transfer of land is more a question of the legislation governing land transfers than a matter of trust law: The Australian Law Journal, [1968] A.L.J. Vol. 42 at 227. Section 20 of the Land Title Act, R.S.B.C. 1996, c. 250 [Land Title Acf\ deals with the transfer of land in British Columbia:

20. Except as against the person making it, an instrument purporting to transfer, charge, deal with or affect land or an estate or interest in land does not operate to pass an estate or interest, either at law or in equity, in the land unless the instrument is registered in compliance with this Act.

[Emphasis added]

[276] In Davidson v. Davidson, [1946] 2 D.L.R. 289 (S.C.C), affg [1945] 2 W.W.R. 576 (B.C.C.A),

the Supreme Court of Canada, considering language of the Land Title Act almost identical to that now contained in s. 20, held that an unregistered transfer of land took effect on the day the transfer was executed and not on the day it was registered. More recently, in Chung Estate v. Chan (1995), 4 B.C.LR. (3d) 370 (S.C.) [Chung], affd (1995), 13 B.C.LR. (3d) 157 (C.A.) the court held that if the transferor has properly completed a freehold transfer form, the opening words of s. 20 – “except as against the person making it” – apply such that the form may be registered after the transferor’s death to effect a transfer of the property.

[277] Chung was distinguished in the case of Kovacs v. Tuteckyj (2000), 147 Man. R. (2d) 161,

2000 MBQB 104 [Kovacs]. In Kovacs, the transferor had executed the transfer form and given it to another, but instructed that it not be registered until after he had consulted with his solicitor. The court held that the intention of the transferor at the time he handed over the transfer form was relevant. The court drew the inference from the circumstances that the transferor had not done everything necessary to complete the transfer and, as such, the transfer was not complete.

[278] As the foregoing case law indicates, the intention of the transferor is crucial. If the transferor intends to transfer the property, the transfer will be complete when the transferor has relinquished control of the property and put the transferee in a position to complete the transfer. The importance of control was discussed in Re Evans, Royal Trust Co. v. Lloyd’s Bank Ltd. (1956), 7 D.L.R. (2d) 445 (B.C.S.C.) [Re Evans]. The Court, citing Austin W. Scott, The Law of Trusts, 1st ed. (Boston: Little, Brown and Company, 1939) at 225 [Scott] said the following:

A conveyance, whether absolute or in trust, is ineffective if the transferor does not

surrender control of the property…. A conveyance in trust is incomplete unless the settlor has passed the title to the property to the trustee by delivery of the subject matter of the trust or of an instrument of transfer. On the other hand, if the conveyance in trust is completed by such delivery, the trust is not incomplete merely because the settlor reserves power to revoke or to alter the trust. There is a sufficient surrender of control over the property if the settlor transfers the title to it to the trustee, even though he reserves power to undo what he had done. The surrender of control is sufficient even though the settlor reserves power to reassume the control (Re Evans at 451 – 452).

[279] Alex argued that Eida did not effectively transfer the property, or relinquish control of it,

because Mr. Wilson did not register the transfer form. As such, said Alex, Eida had the unrestricted right to deal with the property. In particular, Alex relied on the following words from Re Pfrimmer Estate [1936], 2 D.L.R. 460 at para. 10 (Man C.A.) [Re Pfrimmer Estate] citing Malim v. Keighley (1794), 30 E.R.659at660:

I will lay down the rule as broad as this; wherever any person gives property, and points out the object, the property, and the way in which it shall go, that does create a trust, unless he shews clearly, that his desire expressed is to be controlled by the party; and that he shall have an option to defeat it.

– See more at:

Claim To Set Aside Alter Ego Trust Dismissed

Alter Ego Trustsalter ego

Usher v Larabee 2010 BCSC 1608 discusses the general principles of inter vivos gifts and an alter ego trust set up by a mother, that was attacked by two sons in litigation.


The mother’s assets consisted of property in the stock portfolio with a total value of $650,000.


Her three children were placed in care of the provincial government when she had a nervous breakdown in 1963.


In 2000, the mother decided that she would not include one son as a beneficiary in her will as result of his criminal activity, his failure to repay loans, and his constant lying about her.


That son as well as another stated to her that they would contest her will and threaten to put a lien against her home.


In 2003, the mother established an alter ego trust, with the trust and will making provisions for her daughter during her life, and upon her death, to her daughter’s children.


The sons brought action for a declaration that the mother held the estate in trust for them, that the mother transfer of the portion of the estate to them, or alternatively damages for breach of contract that the trust be set aside.


The action was dismissed.


The court found that the evidence of the mother was straightforward, and she claimed that she did not estate to her son’s that they would have an interest in her property, and that there was no agreement to pay the money through her estate or in any other manner.


The court found that the alleged promises made by the mother to the sons had no context and were bald assertions, and the sons accordingly failed to meet the onus of proof on them to prove the verbal agreement with their mother.


The evidence given by the sons was vague and contradictory.


Certain verbal agreements could be enforced and result in express trust, however the evidence in this case did not establish such an agreement. The evidence in fact lacked specificity, time and place and some was simply unbelievable.


Since there was neither evidence of agreement, nor consideration for such agreement, the mother was free to set up the trust to benefit her daughter and defeat any future claims by her sons.


It is not disputed that alter ego trusts are standard estate planning tools used to achieve estate planning objectives: Mordo v. Nitting, 2006 BCSC 1761(B.C. S.C.).


42 A person is entitled to arrange their affairs as they choose, including dealing with potential claims of adult children such as the Wills Variation Act, R.S.B.C. 1996, c. 490: Hossay v. Newman, [1998] B.C.J. No. 3289(B.C. S.C. [In Chambers]).


43 In Antrobus v Antrobus, May 9, 2007, Vancouver Registry S066312, Mr. Justice Powers rejected the existence of the parents’ promises, who, in their 40s at the time, agreeing that the plaintiff would be the sole beneficiary of the estate was not sufficient to support an express trust. He concluded that the real nature of the plaintiff’s claim may be that of a constructive trust. However, in Antrobus, Mr. Justice Powers concluded that before proceeding with the summary trial pursuant to Rule 18A there ought to be examinations for discovery.


44 In order for the Court to make an order for constructive trust of an asset, or for that matter an order of compensation, there must be: an enrichment by one party, in this case Mrs. Larabee; there must be a corresponding deprivation by the other parties, Michael and Patrick who have not been compensated, and there must be an absence of any juristic reason for the enrichment.


45 An oral agreement is capable of enforcement: Hall v. McLaughlin Estate(2006), 25 E.T.R. (3d) 198(Ont. S.C.J.).


46 In order to have an enforceable secret trust, three certainties in an express trust must exist. These three certainties of an express trust are:


1) the intention to the primary donee of an obligation to a secondary donee;


2) the communication is made to the primary donee; and


3) the acceptance of that obligation has been made to the primary donee.


Chinn v. Hanrieder, 2009 BCSC 635(B.C. S.C.).