ContentsPreface ................................................................................................... vTable of Cases ...................................................................................... xxxiTable of Statutes ..................................................................................... clixWorks Frequently Cited ......................................................................... cxcvii

Chapter 1 Introduction ........................................................................... 1

I. THE TRUST IN PRACTICE ................................................................. 1II. THE NATURE OF THE TRUST ............................................................ 3III. THE GROWTH OF THE TRUST ........................................................... 5IV. THE CHARACTERISTICS OF THE COMMON LAW TRUST ..................... 9V. THE TRUST: CIVIL LAW AND COMMON LAW .................................... 14

Chapter 2 Types of Trust ........................................................................ 19

I. EXPRESS, IMPLIED, RESULTING, AND CONSTRUCTIVE TRUSTS ......... 19II. EXECUTED AND EXECUTORY TRUSTS ............................................. 24

A. Generally ................................................................................... 24B. Effect of the Distinction in the Context of the Rule in Shelley’s case .......... 25C. Modern-day Significance ............................................................... 27

III. COMPLETELY AND INCOMPLETELY CONSTITUTED TRUSTS ............. 28IV. LAWFUL AND UNLAWFUL TRUSTS .................................................. 28V. PRIVATE AND PUBLIC TRUSTS ........................................................ 28VI. STATUTORY TRUSTS ...................................................................... 29VII. TRUST AND GOVERNMENTAL OBLIGATION ..................................... 31VIII. BARE OR SIMPLE TRUSTS AND SPECIAL TRUSTS .............................. 33IX. OTHER TRUST TERMS ..................................................................... 35

A. Testamentary and Inter Vivos Trusts .................................................. 35B. Discretionary Trusts ...................................................................... 36C. Protective Trusts and Spendthrift Trusts ............................................. 36D. Spousal (or Common-law Partner) Trusts, Alter Ego Trusts, and Joint

Spousal (or Joint Common-law Partner) Trusts ..................................... 37E. Personal and Business Trusts ........................................................... 38

Chapter 3 Distinction Between the Trust and Other Concepts ........................ 41

I. TRUST AND FIDUCIARY RELATIONSHIP ........................................... 42A. Trustees as Fiduciaries ................................................................... 42B. Other Fiduciary Relationships ......................................................... 44C. Fiduciary Relationships Generally .................................................... 45D. Trusts and Other Fiduciary Relationships Compared .............................. 47

II. TRUST AND THE ADMINISTRATION OF DECEASEDS’ ESTATES .......... 47A. Roles of Trustees and Personal Representatives Compared ...................... 47

1. The Role of the Personal Representative ....................................... 472. Similarity to the Role of the Trustee ............................................ 483. Historical Reasons for the Similarity ........................................... 484. Both are Fiduciaries ................................................................ 495. Statute has Tended to Equate the Two .......................................... 49

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6. Remaining Differences ............................................................ 49B. Powers of Personal Representatives .................................................. 50C. Appointment as Executor and Trustee ................................................ 53D. The Present Position and Reform ...................................................... 54

III. TRUST AND AGENCY ...................................................................... 56A. Agency and Express Trusts ............................................................. 57

1. Agent Acts on Instructions; Trustee Acts According to Terms ofInstrument ............................................................................ 57

2. Trustee Vested with Title and Contracts Directly with Third Parties ..... 573. Principal/Beneficiary Action is Personal but Trust is a Mode of

Conveyance of Property ........................................................... 574. The Method of Varying the Arrangement is Different ...................... 585. Agent Free from Constraint According to Terms of Grant of Authority;

Trustee Freedom from Constraint by Virtue of Status as Title Holder ... 596. Death of Agent Terminates Agency; Death of Settlor, Trustee or

Beneficiary does not End Trust .................................................. 597. Agency Born of Consent; Trustee and Beneficiary Need not Know of

Trust ................................................................................... 59B. Agency and Trusts by Operation of Law ............................................. 59C. Agents as Express Trustees of Principal’s Property ................................ 60D. The Characterization of a Relationship as Trust or Agency ...................... 62

1. Trustee and Beneficiary ........................................................... 622. Settlor and Trustee ................................................................. 65

E. Agents for Trustees ...................................................................... 66IV. TRUST AND CONTRACT .................................................................. 66

A. Trusts of Choses in Action .............................................................. 681. Situation One: Promisee of Another’s Promise to Benefit a Third Party

as Trustee for that Third Party ................................................... 68(a) Evidence of Intention to Create an Express Trust ...................... 69(b) The Ability of A and B to Vary the Terms of the Arrangement ..... 73(c) Policy and Possible Reform ................................................ 75(d) Promisee as Constructive Trustee ......................................... 75(e) Performance Bonds, and Labour and Materials Payment Bonds .... 77

2. Situation Two: Person Promising to Act as Trustee for Third Party onReceipt of Property ................................................................. 80

3. Situation 3: Trustee as Assignee of Contractual Rights ..................... 83B. Burdening Assignee of Property Which is Subject to Contractual Rights ..... 83

V. TRUST AND BAILMENT ................................................................... 86VI. TRUST AND DEBT ........................................................................... 90VII. TRUSTS AND POWERS .................................................................... 97

A. The Various Types of Trusts and Powers ............................................ 97B. Evidence of a Power, and of a Power Followed by a Trust ..................... 102C. Certainty of Objects: Trust, Trust Powers, and Mere Powers .................. 105

VIII. TRUST AND EQUITABLE CHARGE .................................................. 108IX. TRUST, CONDITIONAL GIFT, AND PERSONAL OBLIGATION ............. 111

Chapter 4 Capacity of the Parties ........................................................... 115

I. SETTLOR ..................................................................................... 115A. Infants .................................................................................... 116

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B. Mental Incapacity ...................................................................... 119C. Married Women ........................................................................ 120D. Non-residents ............................................................................ 121

II. TRUSTEE ..................................................................................... 121A. Trustees Generally ..................................................................... 121

1. Infants .............................................................................. 1212. Mentally Incapacitated Persons ................................................ 1223. Non-residents ...................................................................... 123

B. Public Trustee ........................................................................... 123C. Trust Company .......................................................................... 125D. Judicial Trustee ......................................................................... 130E. Custodian Trustee ...................................................................... 131

III. BENEFICIARY .............................................................................. 132IV. PROTECTORS ............................................................................... 134

Chapter 5 The Three Certainties ............................................................ 139

I. INTRODUCTION ........................................................................... 140II. CERTAINTY OF INTENTION ........................................................... 141

A. “Precatory Trusts” ...................................................................... 1451. Generally ........................................................................... 145

(a) Shift in Judicial Attitude Towards Trusts Based on PrecatoryLanguage ..................................................................... 145

(b) Post Lambe v. Eames Examples ......................................... 1472. Attempts to Constrain an Apparent Absolute Gift with Subsequent

Gifts or Trust Obligations ....................................................... 1483. Gifts for Maintenance and Support ............................................ 1504. Canadian Cases Construing Trusts from Precatory Language ........... 152

B. Use of Pre-Lambe v. Eames Language ............................................. 153C. “Sham” Trust ............................................................................ 154

1. No Intention to Create a Trust .................................................. 1552. An Intention but the Trust is “Illusory” ...................................... 1553. Incidental Issues Concerning “Sham” Trusts ................................ 1564. “Sham Trusts” in Canada ....................................................... 157

III. CERTAINTY OF SUBJECT-MATTER ................................................. 159A. Relationship Between Certainty of Intention and Certainty of Subject-

matter ..................................................................................... 160B. Residuary Estates ....................................................................... 161C. Use of Formula to Determine Quantum of Subject-matter ..................... 163D. Certainty of Beneficial Shares ....................................................... 164E. Changes in the Nature of the Trust Property ...................................... 166

IV. CERTAINTY OF OBJECTS ............................................................... 166A. Persons ................................................................................... 167

1. Reason for Certainty of Objects ............................................... 1682. Examples ........................................................................... 1693. Community or Commercial Settings – Re Bethel (Jones v. T. Eaton

Co.) .................................................................................. 1704. Practical Implications ............................................................ 172

B. Purposes .................................................................................. 173

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Chapter 6 Constituting or Setting up the Trust ......................................... 177

I. INTRODUCTION ........................................................................... 178II. VALUABLE CONSIDERATION ........................................................ 180

A. Generally ................................................................................. 180B. Consideration of Marriage ............................................................ 181C. Specific Performance and the Constitution of the Trust ......................... 182

III. VOLUNTEERS ............................................................................... 182IV. DISPOSING OF PROPERTY IN FAVOUR OF ANOTHER ....................... 183

A. Mode of Transfer ....................................................................... 183B. Declaration of Trust .................................................................... 184C. Equitable Interests ...................................................................... 185D. Volunteers and the Importance of a Complete Transfer ......................... 186

V. IMPORTANCE OF THE DISTINCTION BETWEEN TRANSFER ANDDECLARATION OF TRUST ............................................................. 186

VI. GIFTS BY TRANSFER .................................................................... 187A. Gifts Inter Vivos and Donatio Mortis Causa ...................................... 187

1. Gifts Inter Vivos .................................................................. 1872. Donatio Mortis Causa ........................................................... 188

B. Choses in Possession (Chattels), and Land ........................................ 1891. Actual or Constructive Delivery ............................................... 1892. Deed as Alternative to Delivery ............................................... 189

C. Choses in Action ........................................................................ 1901. Use of Mode of Transfer Appropriate to the Chose in Action ........... 1912. Donor has Done All that the Donor Can Do ................................. 1913. Contracts for the Benefit of Third Parties as a Chose in Action ......... 1934. Promise by Deed to Transfer Property to Trustees ......................... 194

(a) “Equity Will Not Assist the Volunteer” ................................ 196(b) If A Covenants with B, Who is a Trustee for C, What is the

Property of Which B is Trustee? ......................................... 197(c) The Present State of the Law ............................................. 201

VII. GIFTS BY DECLARATION OF TRUST ............................................... 204A. The Applicable Principles ............................................................ 204B. The Evidentiary Difficulties .......................................................... 204

1. Examples of Sufficient Evidence .............................................. 2052. Examples of Insufficient Evidence ............................................ 206

VIII. THE SETTLEMENT MUST BE BINDING ............................................ 207A. Must a Trust Involving a Voluntary Transfer or Declaration of Trust be

Irrevocable ............................................................................... 207B. Position of Canadian Courts .......................................................... 208C. Is the Canadian Position on Irrevocability Correct? ............................. 209D. A Matter of Construction ............................................................. 212

IX. EVALUATION OF DISTINCTION: GIFTS BY TRANSFER ANDDECLARATION OF TRUST ............................................................. 213A. The Difficulty with the Distinction .................................................. 213B. Problems with the Formalistic Apposition of Imperfect Gift and

Declaration of Trust .................................................................... 214C. Is the Constitution of the Trust Concerned with the Intention of the

Donor to Give? .......................................................................... 217

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X. WHEN IS AN INTER VIVOS TRUST TESTAMENTARY? ........................ 218A. Requirements for Testamentary Dispositions ..................................... 219B. Does a Power of Revocation in an Inter Vivos Trust Make the Trust

Testamentary? ........................................................................... 220C. Does the Inter Vivos Trust Take “Immediate Effect”? .......................... 221D. Re Pfrimmer ............................................................................. 222E. Modern Trends .......................................................................... 224

XI. EXCEPTIONAL MODES WHEREBY THE TRUST BECOMES COMPLETELYCONSTITUTED ............................................................................. 226A. The Rule in Strong v. Bird ............................................................ 226

1. The Historical Basis of the Rule ............................................... 2262. What the Donee Must Show .................................................... 227

(a) Intention to Give During Lifetime ....................................... 227(b) Subject-matter Must be Specific ......................................... 230(c) Donee Must be Appointed Executor .................................... 231

B. Donatio Mortis Causa ................................................................. 2351. The Distinction Between Gifts Mortis Causa and Inter Vivos ........... 2362. Importance of the Distinction .................................................. 2373. Gifts Mortis Causa and Testamentary Dispositions Under the Wills

Acts .................................................................................. 238C. Promise to Give: Reliance to Detriment ............................................ 240

1. The Dillwyn v. Llewellyn Principle ............................................ 2412. Canadian Courts and the Dillwyn v. Llewellyn Principle .................. 244

Chapter 7 Proving the Trust ................................................................. 251

I. INTRODUCTION ........................................................................... 252II. THE STATUTE OF FRAUDS IN CANADA ........................................... 253

A. Contracts to Create a Trust of Land ................................................. 2551. Contract Unenforceable Not Void ............................................. 2552. Meaning of “Contract or Sale of Land . . . or . . . Any Interest in or

Concerning Them” ............................................................... 256(a) Generally ..................................................................... 256(b) Agreements Concerning Proceeds of Sale ............................. 257

3. Evidenced in Writing ............................................................ 258B. Declarations or Creations of Trusts of Land ....................................... 259

1. Application of the Section ...................................................... 2602. Interpretation of Section 7 ...................................................... 2603. Effect of No Writing ............................................................. 261

C. Grants and Assignments of the Equitable Interest ................................ 2621. Meaning of “Grants and Assignments” ....................................... 2642. Interpretation of Section 9 of the Statute ..................................... 264

(a) Effect of Oral Disposition Confirmed by Subsequent WrittenInstrument .................................................................... 265

(b) Constructive Trust in Favour of Purchaser ............................. 267(c) Direction to a Bare Trustee to Transfer Property to a Third

Party ........................................................................... 268(d) Declaration of Trust by Trustee with the Consent of the Equitable

Beneficiary ................................................................... 270(e) Summary ..................................................................... 270

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III. THE STATUTE OF FRAUDS AS INSTRUMENT OF FRAUD .................... 272A. Use of the Statute to Avoid Contract and Trust Obligations ................... 272B. Contract Avoidance and the Doctrine of Part Performance .................... 272C. Avoidance of Trust Obligations and the Doctrine of Fraud .................... 272D. Comparison of the Doctrine of Fraud and the Doctrine of Part

Performance ............................................................................. 275E. Meaning of Fraud in this Context ................................................... 276F. What Type of Trust is It? ............................................................. 278

1. Express Trust or Constructive Trust .......................................... 2782. Resulting Trust Situations ....................................................... 2783. Express Trust vs. Trust by Operation of Law ............................... 279

G. Summary on the Statute of Frauds as an Instrument of Fraud ................. 282H. Law Reform ............................................................................. 284

IV. SECRET TRUSTS ........................................................................... 286A. Generally ................................................................................. 286

1. Wills Acts ........................................................................... 2862. Devisee, Legatee or Interstate Successor as Trustee ....................... 2873. The Principles: Communication and Acceptance ........................... 2884. The Half-Secret Trust ............................................................ 2885. Questions Raised ................................................................. 289

B. Fully-Secret Trusts ..................................................................... 2891. Intention to Create a Trust ...................................................... 2892. Independent Proof of Communication and Acceptance of Trust

Objects Required ................................................................. 2913. Both Trusteeship and Objects Must be Communicated and

Accepted ........................................................................... 2924. No Communication after Deceased’s Death ................................. 2935. Instructions Given in Sealed Envelope During Lifetime .................. 2946. Property Left to Two or More Persons Subject to Trust Obligations ... 294

C. Half-Secret Trusts ...................................................................... 2951. Communication and Acceptance Prior to or at the Time of the

Making of the Will ............................................................... 296(a) In the English Courts ....................................................... 296(b) In Canadian Courts ......................................................... 297

2. Admission of Parol Evidence to Determine the Objects of the Trust ... 302D. The Nature of Secret Trusts .......................................................... 308

1. Express Trust or Constructive Trust .......................................... 3082. Testamentary or Inter Vivos .................................................... 3093. Remaining Problematic Issues ................................................. 312

Chapter 8 Limitations on the Settlor’s Power of Disposition ........................ 315

I. INTRODUCTION ........................................................................... 316II. TRUSTS CONTRARY TO PUBLIC POLICY ........................................ 317

A. Public Policy and the Courts ......................................................... 317B. Trusts for Illegitimate Children Not Born Within Traditional Marriage ..... 319

1. Rule of Interpretation of “Child” or “Children” ............................ 3192. Historical Reason for the Rule ................................................. 3203. Application of the Rule .......................................................... 3214. Public Policy Consideration .................................................... 321

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5. Children Born Between Date of Will and Testator’s Death .............. 3226. Response of Courts to Changes in Public Policy Concerning Children

Not Born of Marital Relationships ............................................ 322C. Dispositions of Property Subject to Conditions ................................... 328

1. Generally ........................................................................... 328(a) Conditions Contrary to Public Policy ................................... 328(b) Conditions Precedent and Subsequent .................................. 329(c) Effect of a Void Condition Precedent vs. a Void Condition

Subsequent ................................................................... 330(d) Condition vs. Determinable Interest .................................... 330(e) Failure of Condition for Uncertainty .................................... 331

2. Conditions in Restraint of Marriage ........................................... 334(a) Question of Intention ...................................................... 334

(i) Condition Subsequent or Determinable Gift ..................... 334(ii) Purpose of Compelling Celibacy or to Provide for Person

During Unmarried Life .............................................. 335(b) Partial Restraint – Restraint on Class of Persons Donee can

Marry ......................................................................... 336(c) Constraint on Remarriage of Widow or Widower .................... 336

3. Conditions Interfering with Marital Relationship .......................... 338(a) Historically .................................................................. 338(b) Effect of Family Law Reform ............................................ 338(c) Question of Intention to Interfere ........................................ 339(d) Modern Society: Restraints on Marriage, and Interference in

Family Life .................................................................. 3404. Conditions Interfering with the Discharge of Parental Duties ............ 3415. Conditions in Restraint of Religious Behaviour ............................ 343

(a) The General Position ....................................................... 343(b) Gifts to Minors .............................................................. 343(c) Interference in Marital Relations ........................................ 344

6. Conditions Intended or Tending to Discriminate Racially ................ 347D. Reform of the Law Concerning Public Policy in Property Law ............... 348

III. TRUSTS TO DEFRAUD CREDITORS AND CLAIMANTS INBANKRUPTCY .............................................................................. 351A. The Statutory Provisions .............................................................. 351

1. English Legislative Background ............................................... 3512. Statutory Provisions in Canada ................................................ 352

(a) Reception of English Fraudulent Conveyances Acts of 1571and 1585 ...................................................................... 352

(b) Conflict Between Fraudulent Preferences Acts and FraudulentConveyances Acts ........................................................... 353

(c) Constitutional Validity of the Provincial Legislation ................ 354B. Trusts and the Statutory Provisions ................................................. 354

1. Fraudulent Conveyances Acts (1571 (13 Eliz. 1), c. 5; orprovincial) ......................................................................... 355

2. Fraudulent Preferences Acts (provincial) .................................... 3553. Bankruptcy and Insolvency Act (federal) ..................................... 356

C. Interpretation of the Fraudulent Conveyances Acts (British Columbia,Manitoba, Ontario, and Newfoundland) ........................................... 3571. General ............................................................................. 357

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2. The Intent to Defeat, Hinder, Delay or Defraud ............................ 3603. Who Can Bring Action to Have the Settlement Set Aside? ............... 3644. Position of Beneficiaries ........................................................ 367

D. Interpretation of the Fraudulent Preferences Acts (provincial) ................ 368E. Interpretation of the Bankruptcy and Insolvency Act ............................ 368F. Intention to Defraud Creditors and the Right to Restitution .................... 371

IV. TRUSTS CONTRAVENING RULES OF LAW RESTRICTING CERTAINMODES OF DISPOSITION ............................................................... 373A. Perpetuity and Perpetual Duration or Inalienability .............................. 373B. The Perpetuity Rule .................................................................... 375C. The Rule Against Perpetual Duration ............................................... 380

Chapter 9 Revocation: Setting the Trust Aside .......................................... 383

I. REVOCATION ............................................................................... 383II. SETTING THE TRUST ASIDE .......................................................... 386

A. Mistake by the Settlor, or Duress, Fraud or Undue Influence Upon theSettlor ..................................................................................... 386

B. Fraud by the Settlor .................................................................... 388C. Trusts Based on Mistaken Assumptions ........................................... 389

Chapter 10 The Resulting Trust .............................................................. 393

I. THE TERM “RESULTING TRUST” .................................................... 394II. THE RESULTING TRUST SITUATIONS ............................................. 397

A. Essential Characteristics of Resulting Trusts ...................................... 398B. Purchase in the Name of Another, or in the Names of the Purchaser

and Another .............................................................................. 4011. Purchase or Loan ................................................................. 4012. Multiple Contributors ............................................................ 403

C. Voluntary Transfer into the Name of Another, or into the Joint Namesof the Transferor and Another ........................................................ 4051. Introduction ........................................................................ 4052. Rebutting the Presumption ...................................................... 409

D. Presumption of Advancement ........................................................ 4121. Introduction ........................................................................ 4122. Husband and Wife ................................................................ 413

(a) Common Law ............................................................... 413(b) Statutory Abolitions ........................................................ 415(c) The Exceptional Retention of Advancement in the Matrimonial

Property Legislation ........................................................ 4163. Parent and Child .................................................................. 4184. Legal Effect of the Presumptions .............................................. 4205. Rebutting the Presumption of Advancement ................................ 421

(a) Generally ..................................................................... 421(b) Rebutting the Presumption – Illegality and Fraud .................... 423

(i) Inability to Rebut the Presumption in Support of IllegalPurpose ................................................................. 423

(ii) Scheuerman v. Scheuerman ......................................... 424(iii) Goodfriend v. Goodfriend ........................................... 426

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(iv) Presumption of Resulting Trust Instead of Presumption ofAdvancement .......................................................... 428

(v) Conclusion and Synthesis ........................................... 432E. Joint Bank Accounts; Legal Title and Beneficial Interests ..................... 435

1. Legal Analysis of Joint Accounts .............................................. 4362. Resulting Trust of Legal Interest in Joint Account ......................... 437

(a) Which Presumption Applies? ............................................ 437(b) Time Periods ................................................................ 439

3. Evidence and the Presumptions ................................................ 441(a) Proof of Contributions ..................................................... 441(b) Banking Agreements ....................................................... 441(c) Other Evidence .............................................................. 442

4. Nature of Gift of Survivorship ................................................. 4435. Conclusion ......................................................................... 446

F. Exhaustion or Failure of Express Trust Objects .................................. 4461. Failure of Settlor to Dispose of the Whole Equitable Interest ............ 448

(a) The Importance of Interpretation ........................................ 448(b) The Effect of Failure to Dispose ......................................... 451

2. Total or Partial Failure of the Trust to Take Effect ......................... 453(a) Vitiated Intention to Create Trust ........................................ 453(b) Uncertainty of Objects ..................................................... 454(c) Impossibililty of Objects .................................................. 454(d) Improvidence ................................................................ 457(e) Non-Compliance with Rules of Law .................................... 457(f) Conclusion ................................................................... 458

3. The Rule in Hancock v. Watson ............................................... 458G. The Disposition of Matrimonial and Cohabitational Property Disputes ...... 461

1. Introduction ........................................................................ 4612. Scope of Legislation ............................................................. 4613. The Role of Resulting Trusts in Matrimonial and Cohabitational

Property Disputes ................................................................. 4644. Historical Perspective; the Heyday and the Eclipse of the Resulting

Trust ................................................................................. 466(a) England ....................................................................... 467(b) Canada ........................................................................ 468

(i) Before 1980 ............................................................ 468(ii) Becker v. Pettkus ...................................................... 470(iii) Subsequent developments ........................................... 471

5. The Resulting Trust and “Common Intention” .............................. 472III. CONCLUSION ............................................................................... 475

Chapter 11 The Constructive Trust .......................................................... 477

I. NATURE OF THE TRUST ................................................................ 478A. Historical Background ................................................................. 479B. The Twentieth Century ................................................................ 484C. Developments in the Law of Unjust Enrichment ................................. 489D. Tests for the Imposition of the Constructive Trust ............................... 494

1. Unjust Enrichment ............................................................... 4942. Wrongful Gains ................................................................... 4963. Synthesis ........................................................................... 499

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E. The Way Forward ...................................................................... 5001. Differentiation between Constructive Trusts and Other Equitable

Remedies ........................................................................... 5012. Unity and Disunity ............................................................... 5043. Reasons for Seeking a Constructive Trust ................................... 5064. The Role and Future of Discretion in Constructive Trusts ................ 507

II. SITUATIONS IN WHICH TRUSTEESHIP HAS BEEN IMPOSED ............. 513A. Strangers Intermeddling in the Trust: Personal Liabilities ...................... 513

1. Trustees de son tort or de facto Trustees ..................................... 5142. Personal Liability for Involvement in a Breach of Trust or Fiduciary

Obligation .......................................................................... 516(a) Knowing Assistance ....................................................... 516(b) Knowing Receipt ........................................................... 518(c) Liability Without an Express Trust ...................................... 523(d) The Position of Banks ..................................................... 523

B. The Profiteering Fiduciary ............................................................ 525C. Gains from Breach of Confidence ................................................... 529D. Gains from Other Wrongs ............................................................ 530E. Unjust Enrichment ..................................................................... 534F. Acquisition Through an Agreement to Hold for Others ......................... 540

1. Oral Agreements Concerning Land ........................................... 5412. Secret Trusts ....................................................................... 5423. Joint and Mutual Wills .......................................................... 542

(a) Whether There is an Agreement ......................................... 544(b) What Kind of Trust Arises? .............................................. 547(c) When Does the Trust Arise? .............................................. 549(d) The Property Subject to the Trust ....................................... 552(e) The Role of the Trust Which Enforces the Agreement .............. 554

3. Avoiding this Constructive Trust .............................................. 557G. Other Instances of Constructive Trusts ............................................. 558

1. Estate Contracts ................................................................... 5582. Restrictions on Use ............................................................... 5603. Mortgages .......................................................................... 5614. Indemnity Insurers ............................................................... 5625. Other Obligations ................................................................. 562

Chapter 12 Uses of the Trust Device ......................................................... 565

I. INTRODUCTION ........................................................................... 566II. PERSONAL TRUSTS ...................................................................... 567

A. Tax Considerations ..................................................................... 5671. Income Splitting .................................................................. 5672. Tax Deferral ....................................................................... 568

B. Insurance Trusts ........................................................................ 568C. Testamentary Trusts .................................................................... 569D. Discretionary Trusts .................................................................... 571E. Disabled Person (or Henson) Trusts ................................................ 572F. Marriage Settlements .................................................................. 573G. Separation or Divorce Trusts ......................................................... 573H. Cemetery or Perpetual Care Trusts .................................................. 574

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I. Prepaid Funeral Arrangements Trusts .............................................. 574J. Charitable Purpose Trusts ............................................................. 575K. Charitable Remainder Trusts ......................................................... 575L. Blind or Frozen Trusts ................................................................. 576M. Asset Protection Trusts ................................................................ 577

III. BUSINESS TRUSTS ........................................................................ 578A. Business Trusts in Furtherance of Personal Purposes ............................ 579

1. Pension Trusts ..................................................................... 5792. Profit-Sharing Trusts ............................................................. 5823. Registered Retirement Savings Plan Trusts .................................. 5824. Pooled Investment Trusts ....................................................... 5835. Employer as Trustee for Employees .......................................... 584

(a) C.P.P. and E.I. Contributions ............................................. 584(b) Union Dues, Charitable Donations or Vacation Pay ................. 584

6. Health and Welfare Benefits .................................................... 5857. Condominium Insurance Trusts ................................................ 585

B. Business Trusts in Furtherance of Personal Business or Small BusinessArrangements ........................................................................... 5861. Partnership Buy-Sell Agreement .............................................. 5862. Stock Purchase Agreement ..................................................... 5863. Stock Voting Trust ............................................................... 5864. Business Sale Trusts ............................................................. 588

C. Business Trusts in Furtherance of Commerce at Large .......................... 5881. Trusts Employed as an Alternative for Incorporation – the “Business

Trust” ............................................................................... 588(a) Advantages .................................................................. 588(b) Uses ........................................................................... 589

(i) Real Estate Investment .............................................. 589(ii) Mutual Funds .......................................................... 590(iii) Real Estate Investment Trusts ...................................... 591(iv) Oil and Gas Royalty Trusts ......................................... 592(v) Business Income Trusts ............................................. 594

2. Trusts as a Vehicle for Pre-incorporation Financial Holding ............. 5963. Trusts as a Security Device ..................................................... 596

(a) Debenture Trusts ............................................................ 596(b) Mortgage Trusts ............................................................ 598(c) Construction Lien Trusts .................................................. 599(d) Stock Escrow Trusts ....................................................... 600(e) Trusts for Payment on Sale of Goods ................................... 600(f) Equipment Trusts ........................................................... 600(g) Quistclose Trusts ........................................................... 601(h) Securitization – the Trust as the “Special Purpose Vehicle” ....... 601

IV. ENVIRONMENTAL TRUSTS ........................................................... 602A. The American Public Trust Doctrine ............................................... 602B. Statutory Environmental Trust ....................................................... 604C. Trusteed Environmental Fund ........................................................ 604

V. INTERNATIONAL TRUSTS ............................................................. 606

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Chapter 13 Trusts and Tax Planning ........................................................ 609

I. THE EMERGENCE OF TAXATION ................................................... 610A. Modification or Revocation of Terms of Existing Trusts ....................... 612B. Modifications in the Form of New Trusts .......................................... 613C. Estate Planning to Minimize Tax .................................................... 614

II. THE CONTEMPORARY CANADIAN SCHEME OF TAXATION .............. 614A. Income Tax (Including Capital Gains Tax) ........................................ 615

1. Taxation and the Law of Trusts ................................................ 6152. The Extent to Which a “Trust” is Recognized as a Legal Persona

for Tax Purposes .................................................................. 6183. The Recognition of Beneficial Interests ...................................... 6224. Non-resident Trusts .............................................................. 6255. Transfer of Beneficial Interest by a Beneficiary ............................ 6286. The Use of Trusts as an Income-Splitting Device and the Attribution

Rules ................................................................................ 6297. “Stop Loss Rules” ................................................................ 6308. “Alter Ego Trusts” and “Joint Spousal or Common-law Partner

Trusts” .............................................................................. 632(a) Alter Ego Trusts ............................................................ 633(b) Joint Spousal or Common-law Partner Trust .......................... 634

9. “Self-Benefit” Trusts and Qualifying Dispositions to a Trust ............ 635(a) “Self-Benefit” Trust ........................................................ 635(b) Qualifying Dispositions to a Trust ....................................... 636

10. General Observations on the Policy of the Act ............................. 636B. Succession Duty ........................................................................ 640C. Gift Tax .................................................................................. 642

III. ESTATE PLANNING ....................................................................... 642A. Tools of Estate Planning .............................................................. 644B. Estate Planning Other Than by Way of a “Freeze” .............................. 646

1. Revocable Trusts ................................................................. 6472. Irrevocable Trusts ................................................................ 648

(a) Spousal or Common-law Partner Trusts ................................ 648(b) Uses of Alter Ego, or Joint Spousal or Common-law Partner

Trusts ......................................................................... 649(c) Discretionary Trusts ........................................................ 650(d) Accumulation Trusts ....................................................... 652

C. Succession Duty and Gift Tax ....................................................... 652D. Estate Freezing .......................................................................... 653E. Application of the Private Law of Trusts .......................................... 656

Chapter 14 Charitable Trusts ................................................................. 661

I. INTRODUCTION ........................................................................... 663II. NON-CHARITABLE PURPOSE TRUSTS ............................................ 665

A. The General Invalidity of Non-Charitable Purpose Trusts ...................... 665B. Limited Exceptions ..................................................................... 667C. Legislative Treatment of Non-Charitable Purpose Trusts as Powers ......... 668D. Construing the Gift as a Trust for Persons ......................................... 670E. Status of Non-Charitable Purpose Trusts in Canada ............................. 672F. Gifts to Unincorporated Associations ............................................... 674

TABLE OF CONTENTS xix

III. THE ADVANTAGES ATTACHING TO A CHARITABLE TRUST ............ 680A. Certainty of Objects .................................................................... 680

1. Exclusive Charitable Intent is Sufficient ..................................... 6802. Inherent Jurisdiction of Courts to Supply a Scheme that Provides

Specificity to Charitable Purposes, or Special Purposes .................. 6813. The Differences Between an Administrative Scheme and a Cy-Pres

Scheme ............................................................................. 6824. Is a Minimum Degree of Certainty Required? .............................. 683

B. Perpetuity ................................................................................ 6841. Two Elements ..................................................................... 685

(a) Remoteness of Vesting .................................................... 685(b) Rule Against Inalienability ............................................... 686

2. Charitable Trusts Exemption from the Rule Against Inalienability ..... 6873. The Application of Remoteness of Vesting to Charitable Purpose

Trusts ............................................................................... 689(a) Exception for Conditional Gift to Charity with Gift Over to Another

Charity ........................................................................ 690(b) Cessation of a Charitable Purpose ....................................... 691(c) Legislative Anomalies ..................................................... 692(d) Condition Precedent ........................................................ 692(e) Use of the Perpetuity Rule as a Means of Controlling Charitable

Gifts ........................................................................... 6964. The Rule Against Accumulations ............................................. 697

C. The Relationship Between the Rule Against Inalienability and the RuleAgainst Accumulation ................................................................. 699

D. Taxation .................................................................................. 7011. Introduction ........................................................................ 701

(a) Background .................................................................. 701(b) Overview of the Tax Treatment of Charities and Charitable

Donations .................................................................... 7022. The Tax Treatment of Charities Themselves ................................ 705

(a) Income Tax .................................................................. 705(b) Municipal Real Property Taxation ...................................... 713

3. Tax Relief on Donations to Charity ........................................... 716(a) Income Tax .................................................................. 718

IV. LEGAL MEANING OF CHARITY ...................................................... 721A. Subject-Matter and Public Benefit .................................................. 722

1. The Relief of Poverty ............................................................ 722(a) Nature of Poverty ........................................................... 722

(i) What Forms of Need ................................................. 723(ii) Required Degree of Financial Need ............................... 725

(b) Public Benefit ............................................................... 7302. The Advancement of Education ............................................... 736

(a) Nature of Education ........................................................ 736(i) Attempts to Describe What is Included in Advancement of

Education ............................................................... 736(ii) Education Institutions ................................................ 738(iii) Education Outside Schools, Colleges and Formal Centres of

Learning ................................................................ 739(iv) Professional Training ................................................ 740

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(v) The Quality of Education Required for Public Benefit ...... 741(vi) Education and Political Purposes ................................ 742

(b) Public Benefit ............................................................... 7433. The Advancement of Religion ................................................. 746

(a) Nature of Religious Activity .............................................. 746(i) Development from the Repair of Churches .................... 746(ii) Upkeep of Burial Places and Grave Sites ....................... 748(iii) Support of Ministers of Religion, Active and Retired ........ 749(iv) Missions .............................................................. 750(v) Training of Ministers of Religion and Religious Instruction

of the Young ......................................................... 751(vi) Gifts to a Minister of Religion in the Name of the Minister .....

751(vii) Private Masses or Other Private Religious Practices ......... 754(viii) Closed Religious Orders ........................................... 757(ix) Limits of the Scope of Religion .................................. 757

(b) Public Benefit ............................................................... 760(c) Presumption of Public Benefit ........................................... 762

4. Other Purposes Beneficial to the Community ............................... 764(a) Relief of Distress and Suffering ......................................... 765(b) The Support and Care of Ex-Service Personnel ...................... 767(c) Social and Recreational Purposes ....................................... 768(d) The Promotion of Sport ................................................... 769(e) The Benefit of the Community at Large ................................ 773(f) The General Approach to Determining What Falls Under Other

Purposes Beneficial to the Community ................................. 776B. Conclusion ............................................................................... 781

V. LIMITS ON CHARITABILITY .......................................................... 789A. Trusts for, or Involving, Political Purposes ........................................ 789B. Severance: Where Trust Not Restricted to Legally Charitable Purposes ..... 796

1. Situations in Which Mixed Charitable and Non-Charitable PurposesMay Arise .......................................................................... 796

2. Severing Charitable from Non-Charitable Purposes ....................... 798(a) Gifts on Trust for Purposes ............................................... 798(b) Gifts on Trust for Institutions ............................................ 800(c) The Uncertain State of the Law on Severance and Legislative

Responses .................................................................... 8003. The Canadian Reform Jurisdictions: The Perpetuity Legislation ........ 805

VI. “THE SCHEME MAKING POWER”: ADMINISTRATIVE AND CY-PRESSCHEMES ..................................................................................... 807A. Administrative Schemes ............................................................... 807B. Cy-Pres Schemes ....................................................................... 811

1. Remedy Without Need of Cy-Pres ............................................ 8112. Cy-Pres Itself ...................................................................... 8143. Initial Impracticability or Impossibility ...................................... 8194. Supervening Impracticability or Impossibility .............................. 827

VII. ADMINISTRATION OF CHARITIES .................................................. 835VIII. THE EXIGIBILITY OF OTHER PURPOSE TRUST FUNDS TO SATISFY

CREDITORS .................................................................................. 845

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Chapter 15 The Appointment of Trustees .................................................. 849

I. APPOINTMENT BY THE SETTLOR .................................................. 850II. APPOINTMENT UNDER AN EXPRESS POWER .................................. 852

A. A Matter of Construction ............................................................. 852B. Case Examples .......................................................................... 852

1. Saunders v. Bradley .............................................................. 8522. Re Robertson ...................................................................... 853

C. The Relationship Between a Valid Exercise of an Express Power and theUse of the Statutory Power to Replace Trustees .................................. 854

D. Power of Appointment: a Personal Power or a Power Attached to theOffice of Trustee ........................................................................ 855

III. APPOINTMENT UNDER STATUTORY POWER .................................. 855A. New (or Substitute) Trustees ......................................................... 856

1. When the Section can be Exercised ........................................... 8572. Who can Exercise the Power ................................................... 859

(a) Meaning of “Surviving or Continuing Trustees or Trustee” ........ 859(b) Personal Representative of Last Surviving or Continuing

Trustee ........................................................................ 860(c) Express Power of Appointment vs. Statutory Power of

Appointment ................................................................. 863(d) Trustees of an Unconstituted Trust ...................................... 863

3. The Mode of Appointment ...................................................... 864B. The Appointment of Additional Trustees .......................................... 865C. Revocation of an Appointment ...................................................... 866

IV. APPOINTMENT BY THE COURT ...................................................... 868A. Under Inherent Jurisdiction ........................................................... 868B. Under Statutory Jurisdiction .......................................................... 869

V. NUMBER OF TRUSTEES ................................................................. 875VI. VESTING OF TRUST PROPERTY IN THE TRUSTEES .......................... 877

A. Rules of Common Law and Equity ................................................. 878B. Statutory Declaration of Vesting .................................................... 878C. Form of Declaration .................................................................... 879D. Words Sufficient to Constitute a Declaration ..................................... 879E. Assets Excepted from the Statutory Declaration .................................. 880F. Summary as to Vesting of Assets .................................................... 882

VII. ACCEPTANCE AND REFUSAL OF THE OFFICE OF TRUSTEE .............. 883

Chapter 16 Death, Retirement, and Removal of Trustees .............................. 887

I. DEATH OF TRUSTEE ..................................................................... 887A. Trustee Power to Appoint or Personal Power? .................................... 887B. Death of Sole or Last Surviving Trustee ........................................... 889

II. RETIREMENT OF TRUSTEE ............................................................ 890A. The Legislative Provisions ............................................................ 890B. Issues Arising in the Context of Retirement ....................................... 893

III. REMOVAL OF TRUSTEE ................................................................ 895A. Statutory Powers of Replacement ................................................... 896B. Circumstances Justifying Removal .................................................. 897

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Chapter 17 Distinction Between the Powers and Duties of Trustees ................ 905

I. POWERS AND DUTIES ................................................................... 905II. ADMINISTRATIVE POWERS AND DUTIES ....................................... 906III. DISPOSITIVE POWERS AND DUTIES ............................................... 907

Chapter 18 Duties Underlying the Office of Trustee .................................... 911

I. DELEGATION BY TRUSTEE ........................................................... 912A. Introduction .............................................................................. 912B. Delegation Between Trustees ........................................................ 918C. Delegation of Ministerial Acts ....................................................... 919

1. Background to the Legislation ................................................. 9192. Legislative Intervention ......................................................... 9213. Liability of Delegating Trustee ................................................ 925

D. Delegation of Investment Powers ................................................... 928E. Conclusion ............................................................................... 930

II. CONFLICT OF INTEREST AND DUTY .............................................. 930A. Introduction .............................................................................. 930B. Who is a Fiduciary? .................................................................... 934C. Disapplication of the Rule by Beneficiary or Settlor ............................ 941D. Circumstances in Which the Rule has been Invoked ............................ 942

1. A Trustee Must Act Gratuitously .............................................. 9422. Purchase of the Trust Property ................................................. 945

(a) Introduction .................................................................. 945(b) Transactional Structures ................................................... 946(c) Protection of Third Parties ................................................ 947

3. Trustee Selling or Loaning his Own Assets to the Trust .................. 9504. Trustee Borrowing from Trust ................................................. 9525. Trustee Purchasing from Beneficiary ......................................... 9546. Acquisition of Benefits from the Trust Office .............................. 957

(a) Acquisition of Profits Through Use of Trust Property or theFiduciary’s Office .......................................................... 958

(b) Acquisition of Gain Through Exploitation of OpportunityArising Out of the Trust Office .......................................... 960(i) Different Approaches ................................................ 960(ii) Examples of Gain ..................................................... 960(iii) Leading Cases ......................................................... 963

E. Conclusion: The Nature and Scope of the Rule ................................... 9681. When Does a Conflict Exist? ................................................... 9682. Is the Fiduciary Always Forbidden from being in a Conflict? ........... 971

III. THE STANDARD OF CARE ............................................................. 974A. The General Law ....................................................................... 974B. Indemnity or Exculpatory Clauses .................................................. 981

IV. LIABILITY OF TRUSTEES IN THE EXERCISE OR NON-EXERCISE OFDISCRETION ................................................................................ 985

Chapter 19 Conduct of the Day-to-Day Business of the Trust ........................ 993

I. DUTIES OF TRUSTEE UPON ACCEPTANCE ...................................... 994II. INVESTMENT OF TRUST FUNDS ..................................................... 996

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A. Introduction .............................................................................. 996B. History of Trust Investments ......................................................... 997

1. In England ......................................................................... 9982. In Canada ......................................................................... 10033. The Prudent Investor Rule ..................................................... 1006

C. What Is an “Investment”? ............................................................ 10091. Land for Occupation By a Beneficiary ...................................... 10092. Unsecured Loans ................................................................ 10103. Going Concerns .................................................................. 1011

D. Express Powers of Investment ...................................................... 10121. Mandatory Directions as to Investment ..................................... 10122. The Property Subject to an Express Investment Clause .................. 10133. Investments Subject to Consents ............................................. 1014

E. Standard of Care Required of the Trustee ......................................... 1015F. The Principles Governing Good Trustee Investment Practice ................ 1019

III. DUTY TO ACT IMPARTIALLY BETWEEN BENEFICIARIES ................ 1023A. Principle of Holding an Even Hand ................................................ 1023B. Enjoyment of the Trust Property by Successive Beneficiaries ................ 1027

1. The Handling of Original Assets ............................................. 1029(a) The Duty to Convert ...................................................... 1029

(i) Rationale and Scope of the Rule .................................. 1029(ii) Application of the Rule ............................................. 1031(iii) Relation to Investment Power ..................................... 1033(iv) What are Successive Interests? .................................... 1035(v) To What Property Does the Rule Apply? ....................... 1036

(b) The Duty to Apportion Receipts Pending Conversion, or theProceeds upon Conversion ............................................... 1041(i) Relationship to the First Branch of the Rule in Howe v. Lord

Dartmouth ............................................................. 1042(ii) Examples of the Operation of the Second Branch ............. 1044(iii) Exclusion of the Duty to Apportion .............................. 1048(iv) To What Property Does the Duty to Apportion Apply? ...... 1052

(c) The Manner of Conversion and Apportionment ..................... 1054(d) The Howe v. Lord Dartmouth Rules Today .......................... 1057

(i) Now Commonly Excluded by the Instrument .................. 1057(ii) Effect of Widening of Authorized Investments ................ 1059

2. The Choice of Investments .................................................... 10613. Depreciation Reserves, and Income Tax Allowances ..................... 1066

(a) Depreciation Reserves .................................................... 1066(b) Capital Cost and Depletion Allowances ............................... 1073

4. Benefits Issuing from Corporations to Their Shareholders .............. 1075(a) Income or Capital? ........................................................ 1075

(i) The Form Test ........................................................ 1075(ii) Later Experience ..................................................... 1078(iii) Summary .............................................................. 1081

(b) Apportionment Between Income and Capital Accounts ............ 1085(c) The Trustees as Majority Shareholders or Corporate Directors ... 1087

C. Responsibility as Between Successive Beneficiaries for Financial BurdensImposed upon the Trust Property ................................................... 10891. Introduction ....................................................................... 1089

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2. Debts, Administrative Expenses, Taxes and Duties ....................... 1091(a) The Rule in Allhusen v. Whittell ........................................ 1091(b) Criticism of the Rule in Allhusen v. Whittell ......................... 1096

3. Annuities .......................................................................... 10994. Losses on Secured Investments, and in Business Endeavours .......... 11025. Amortization of Premiums and Discounts on Bond Purchases ......... 11036. Insurance .......................................................................... 11047. Repairs ............................................................................. 11078. Taxes ............................................................................... 1108

D. Conclusion: The Drafter and The Even Hand Rule ............................. 11091. Power of Encroachment upon Capital ....................................... 11102. Discretionary Allocation Power .............................................. 11113. The Unitrust (or Percentage Trust) ........................................... 1115

IV. DUTY TO DISCLOSE: ACCOUNTS AND INFORMATION .................... 1119A. Duty to Account ....................................................................... 1120B. Duty to Provide Information ........................................................ 1125

1. The Existence and Terms of a Trust ......................................... 11262. The Trust Accounts ............................................................. 11263. Other Information ............................................................... 1127

C. What Course Should Trustees Now Follow? ..................................... 11311. Information Concerning a Corporation Owned Wholly or In Part by

the Trust ........................................................................... 11332. The Trust Instrument Instructs or Authorizes the Withholding of

Information ....................................................................... 1134

Chapter 20 Administrative Powers and Discretions of Trustees .................... 1135

I. SCHEME OF SUCH POWERS .......................................................... 1135A. Express Powers ........................................................................ 1137B. Statutory Powers ....................................................................... 1139

II. DESCRIPTION OF STATUTORY POWERS ........................................ 1142A. To Sell ................................................................................... 1143B. To Postpone Sale or Conversion of Any Property ............................... 1148C. To Lease Land ......................................................................... 1148D. To Grant Options to Purchase or Renew Leases of Trust Land ............... 1149E. To Repair and Make Improvements to Real Estate ............................. 1149F. To Insure Buildings or Other Insurable Property ................................ 1149G. To Dedicate Land for Highway Purposes ......................................... 1150H. To Issue Discharging Receipts ...................................................... 1150I. To Compound Liabilities and Compromise Claims ............................. 1150J. To Employ Agents .................................................................... 1151K. To Delegate During Absence ........................................................ 1151L. To Obtain the Passing of Their Accounts ......................................... 1152M. To Pay into Court ...................................................................... 1153N. To Seek the Opinion, Advice or Direction of the Court ........................ 1154

1. Application Under the Trustee Act ........................................... 11552. Application Under Rules of Court ............................................ 1164

III. ROLE OF THE COURT ................................................................... 1165

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Chapter 21 Dispositive Powers and Discretions of Trustees .......................... 1171

I. INTRODUCTION .......................................................................... 1171II. POWER OF MAINTENANCE ........................................................... 1175

A. Inherent Jurisdiction of the Court .................................................. 1175B. Express Power of Maintenance ..................................................... 1180C. Statutory Powers of Maintenance .................................................. 1183

1. In England ........................................................................ 11832. In Canada ......................................................................... 1187

III. POWER OF ADVANCEMENT ......................................................... 1190A. Inherent Jurisdiction of the Court .................................................. 1193B. Express Power of Advancement .................................................... 1193C. Statutory Power of Advancement .................................................. 1197

1. In England ........................................................................ 11972. In Canada ......................................................................... 1198

IV. POWERS OF APPOINTMENT .......................................................... 1199V. RESETTLEMENT UNDER A POWER ................................................ 1200VI. DISCRETIONARY TRUSTS ............................................................ 1201

Chapter 22 Indemnification and Remuneration of Trustees ......................... 1207

I. INDEMNIFICATION ...................................................................... 1207A. Principle of Indemnification ......................................................... 1207

1. Generally .......................................................................... 12072. Legal Costs ....................................................................... 1213

B. Lien on the Trust Property ........................................................... 1215C. Indemnification by the Beneficiaries .............................................. 1216

II. REMUNERATION ......................................................................... 1220A. Principle of Remuneration ........................................................... 1220B. Trustee Remuneration in Canada ................................................... 1221

1. Calculation of the Statutory Compensation ................................. 12262. Provision by the Trust Instrument for Remuneration ..................... 12293. Judicial Trustees ................................................................. 12314. Public Trustee .................................................................... 1232

Chapter 23 Termination of the Trust ....................................................... 1233

I. INTRODUCTION .......................................................................... 1233II. THE RULE IN SAUNDERS v. VAUTIER .............................................. 1235

A. Introduction ............................................................................. 1235B. Postponement to a Certain Age ..................................................... 1240C. Postponement to a Date .............................................................. 1243D. Disclaimer or Surrender of a Prior Interest ....................................... 1244E. Instalment Gifts ........................................................................ 1246F. Discretionary Trusts and Powers ................................................... 1247G. The Barford v. Street Principle ...................................................... 1249H. Charities ................................................................................. 1252

III. TRUST TERMINATION IN THE UNITED STATES .............................. 1256IV. TRUST TERMINATION IN ALBERTA AND MANITOBA ..................... 1258

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Chapter 24 Rights of Intervention in the Administration of the Trust ............. 1263

Chapter 25 Breach of Trust: Remedy of the Beneficiary Against the TrusteePersonally .......................................................................... 1269

I. GENERAL PRINCIPLES OF TRUSTEE LIABILITY .............................. 1270A. “Technical” Breach ................................................................... 1270B. Liability to Account ................................................................... 1273C. Liability is Personal ................................................................... 1275D. Liability of Trustee of Trust Arising by Operation of Law .................... 1276E. Liability of Non-Trustees ............................................................ 1277F. Discretionary Equitable Remedies ................................................. 1278

II. THE MEASURE OF THE BENEFICIARY’S CLAIM ............................. 1279A. The Principle of Compensation ..................................................... 1279B. The Limits of the Principle .......................................................... 1280

1. Special Rules for Breach of Trust ............................................ 12812. Non-Application of Special Rules ............................................ 12843. Reinvigoration and Refinement of the Special Rules ..................... 12854. Conclusion ........................................................................ 1288

C. Punitive Damages ..................................................................... 1290D. Beneficiaries May Adopt or Reject Unauthorized Transactions .............. 1291E. Interest Payments on Money Owed to the Trust, and on Uninvested

Property ................................................................................. 12931. Introduction ....................................................................... 12932. Rate of Interest ................................................................... 1294

F. Election Between Interest and Actual Trustee Gain ............................ 1295III. LIABILITY OF TRUSTEES AMONG THEMSELVES ............................ 1298

A. To the Trust Beneficiaries ........................................................... 1298B. To Each Other .......................................................................... 1300

IV. PROTECTION FROM LIABILITY AVAILABLE TO THE TRUSTEE ........ 1302A. Consent or Acquiescence of Trust Beneficiary .................................. 1303B. Impounding the Beneficiary’s Interest ............................................ 1306C. Limitation ............................................................................... 1309

1. Introduction ....................................................................... 13092. History ............................................................................. 13103. The Inconclusiveness of More Modern Law ............................... 13134. Reform ............................................................................. 13185. The Unreformed Jurisdictions ................................................. 1320

D. Laches ................................................................................... 1321E. Statutory Power of the Court to Excuse the Trustee ............................ 1324

1. Introduction ....................................................................... 13242. Elements ........................................................................... 1326

(a) Honestly and Reasonably ................................................ 1326(b) Ought Fairly to be Excused .............................................. 1329

Chapter 26 Breach of Trust: The Remedies of the Beneficiary for Recoveringthe Trust Property ............................................................... 1333

I. INTRODUCTION .......................................................................... 1334A. Proprietary Remedies ................................................................. 1334B. Tracing, Following and Claiming .................................................. 1334

TABLE OF CONTENTS xxvii

C. Motivations for Proprietary Claims ................................................ 1337II. CLAIMS AVAILABLE AT LAW AND IN EQUITY ............................... 1338

A. Common Law Claims ................................................................. 13381. Claims to Original Assets ...................................................... 13382. Claims to Traceable Proceeds ................................................. 1339

B. Equitable Claims ....................................................................... 13401. Claims to Original Trust Property ............................................ 13402. Claims to Traceable Proceeds ................................................. 1341

(a) Trust or Equitable Lien ................................................... 1341(b) Subrogation ................................................................. 1342

C. Requirements for Proprietary Claims .............................................. 13421. Credit Risk Not Taken: Trust and Debt ..................................... 1342

(a) Original Asset was a Personal Claim: The UnintendedRecipient .................................................................... 1343

(b) Avoidance of a Contract .................................................. 1344(c) Promise to Create a Trust was Never Fulfilled ....................... 1344(d) Original Asset was a Security Interest ................................. 1345

2. Fiduciary Obligation: Is it Necessary for Tracing? ........................ 1346III. THE PRINCIPLES OF TRACING ...................................................... 1347

A. Mixtures of Value ..................................................................... 13471. The Interests of a Wrongdoer are Subordinated ........................... 13472. The Subordination of the Wrongdoer’s Interest Must be Consistent

with the Evidence ................................................................ 13493. Innocent Contributors to a Mixture are Treated Equally ................. 1350

B. The End of Tracing ................................................................... 13521. Improvements .................................................................... 13522. Bona Fide Purchase ............................................................. 13533. Tracing into the Payment of a Debt .......................................... 1354

Chapter 27 Variation of Trusts .............................................................. 1357

I. THE BACKGROUND TO THE VARIATION OF TRUSTSLEGISLATION .............................................................................. 1358

II. THE INHERENT JURISDICTION OF THE COURT .............................. 1363A. Salvage and Emergency Jurisdiction ............................................... 1365B. Maintenance Jurisdiction ............................................................. 1366C. Compromise Jurisdiction ............................................................. 1367D. Release of Capital Not Needed to Secure Annuities ............................ 1368

III. STATUTORY POWERS OF THE COURT TO VARY TRUSTS OTHERTHAN UNDER THE VARIATION OF TRUSTS LEGISLATION .............. 1369A. Enlarging the Management or Administrative Powers of Trustees .......... 1369B. Variation of Marriage Settlements ................................................. 1372C. Variation of Wills Legislation ....................................................... 1373

IV. VARIATION OF TRUSTS LEGISLATION .......................................... 1373A. Introduction ............................................................................. 1373B. Persons Who May Apply Under this Legislation ................................ 1378C. Persons on Whose Behalf the Court Can Approve an Arrangement ......... 1380

1. Introduction ....................................................................... 13802. Infants and Mentally Incompetent Persons ................................. 13803. Persons Whose Interest is Uncertain ......................................... 1381

xxviii TABLE OF CONTENTS

4. Can the Court Consent on Behalf of Fully CapacitatedBeneficiaries? .................................................................... 1383

5. Unborn and Untraceable Persons ............................................. 13866. Objects of a Discretion ......................................................... 13877. Purpose Trusts ................................................................... 1388

D. Proposals (Arrangements) Within the Court’s Jurisdiction .................... 1389E. Criteria to be Satisfied by the Arrangement ...................................... 1395

1. Benefit ............................................................................. 1395(a) Introduction ................................................................. 1395(b) Non-Financial Benefit .................................................... 1397(c) Summary .................................................................... 1398

2. Overall Satisfactory Character of the Arrangement ....................... 1400(a) Generally .................................................................... 1400(b) Intention of Settlor or Testator .......................................... 1402(c) Exercise or Release of a Power to Benefit Oneself .................. 1403

V. CONCLUSION .............................................................................. 1404

Chapter 28 The Trust in Quebec ............................................................ 1409

I. THE TRUST IN A CIVIL LAW SETTING ........................................... 1409A. Historical Background ................................................................ 1409B. The Trust and the Modern Civil Law Tradition ................................. 1414

1. Theoretical Difficulties ......................................................... 14142. Some Civilian Solutions ........................................................ 1418

II. DEVICES AVAILABLE IN QUEBEC OTHER THAN THE TRUST .......... 1422A. The Usufruct ............................................................................ 1422B. Substitution ............................................................................. 1424C. Foundation .............................................................................. 1427

III. THE QUEBEC TRUST .................................................................... 1427A. Conceptual Structure .................................................................. 1428B. Types of Trusts ........................................................................ 1431C. Creation of the Trust .................................................................. 1432

1. Constitution ....................................................................... 14322. Requirements of Form and Publicity ......................................... 14333. Trusts Arising by Operation of Law ......................................... 1435

D. Administration of the Trust .......................................................... 14361. Trustees ............................................................................ 14362. Powers and Obligations of Trustees .......................................... 14363. Rights of Beneficiaries and Settlor ........................................... 1438

E. Variation and Termination ........................................................... 1440F. Conflict of Laws ....................................................................... 1442

IV. THE TRUST IN PRACTICE ............................................................. 1442

Chapter 29 Trusts and the Conflict of Laws .............................................. 1445

I. FOREIGN ELEMENTS AND THE TRUST .......................................... 1445A. Context and Analytical Structure ................................................... 1445B. The Development of Choice of Law Rules for Trusts .......................... 1449C. Validity Issues and Administration Issues ........................................ 1456

1. The Distinction between Validity and Administration ................... 14562. Different Governing Laws? .................................................... 1458

TABLE OF CONTENTS xxix

D. Preliminary Issues ..................................................................... 1459II. CHOICE OF LAW RULES FOR TRUSTS ............................................ 1460

A. Choice of Law for Validity Issues .................................................. 14601. Capacity ........................................................................... 14602. Formal Validity .................................................................. 14613. Essential Validity ................................................................ 1462

(a) Common Law Rules ...................................................... 1462(b) The Convention and the Statutes ....................................... 1464

B. Choice of Law for the Administration of Trusts ................................. 14691. Common Law Rules ............................................................ 1469

(a) Generally .................................................................... 1469(b) Variation of Trusts ........................................................ 1470

2. The Convention and the Statutes ............................................. 1473III. CONSTRUCTIVE AND RESULTING TRUSTS, EQUITABLE WRONGS

AND TRACING ............................................................................. 1473A. Constructive and Resulting Trusts .................................................. 1473B. Equitable Wrongs ..................................................................... 1475C. Tracing .................................................................................. 1476

IV. CONCLUSION .............................................................................. 1479

Chapter 30 The Future of the Trust ........................................................ 1481

Appendices ......................................................................................... 1485

Appendix A: Statutory Provisions Regarding Trustee Investment Powers in theCommon Law Provinces and the Territories ................................. 1487

Appendix B: Statutory Powers of Trustees in the Common Law Provinces and theTerritories ........................................................................... 1489

Appendix C: Statutory Powers of the Courts in the Common Law Provincesand the Territories ................................................................. 1491

Appendix D: The Hague Convention on the Law Applicable to Trusts andon their Recognition .............................................................. 1495

Index ................................................................................................... 1505