In Javid v Watson, the court was asked to exercise its jurisdiction and invalidate a trust. The highpoints from the detailed facts are that the deceased died leaving a will that provided for the equal division of the residue to her three adult daughters, one of whom was a recipient of ODSP. Instead of assisting the estate trustee to distribute the residue equally, the estate trustee’s administration lawyer, among other things, prepared documentation establishing a trust for the ODSP sister, appointed his professional corporation as trustee of the trust, and transferred real property from the estate to the trust.

The estate trustee brought an application seeking to invalidate the trust and for the re-conveyance of the asset from the trust to the estate. The Court granted the relief sought. In so doing, Justice Dietrich reviewed the law on the creation of a valid express trust, and cited the applicable caselaw (at para 52), which sets out the following requirements:

1.      the person creating the trust (the settlor) and the trustee must have capacity;

2.      the three certainties must be met:

a.                  certainty of intention to create a trust;

b.                  certainty of subject matter; and

c.                  certainty of objects;

3.      the trust must be constituted, that is, the trust property must be transferred to the trustee; and

4.      any necessary formal requirements must be met.

Her Honour concluded that the three certainties were not present given that (1) if the applicant signed the trust documentation, she likely did so while signing other documents regarding the administration and did not get advice on the matter (no certainty of intention), (2) there is no documentary evidence that the applicant authorized or directed the transfer of any estate assets to the trust (no certainty of subject matter), and (3) the trust document conflicts regarding the beneficiary, in that it names the sister as a beneficiary, but also includes a provision that appears to give the settlor the power to appoint the residual beneficiary of the trust (no certainty of objects).

In addition, the Court found that the purported trustee, a professional corporation in the business of providing legal services, did not have capacity to act as trustee. A trustee must be an individual who accepts personal responsibility and liability, subject to the exception for certain registered trust corporations, and subject to exceptions for nominee corporations acting as bare trustees, generally.

With the above findings made, the trust was declared void and the real property transferred to the trust declared to be held on a resulting trust for the estate. Corollary orders, including for the discharge of the mortgage and reconveyance of the property to the estate trustee, were made.  

Though the purpose for the trust was arguably well-meaning, to allow the sister to receive her entitlement under the Will as well as her ODSP benefits, with no authority in the will to create the trust, and thus with it not being able to satisfy the requirements of the ODSPA, I can appreciate why the Court was not prepared to sanction the trust.

Thanks for reading and have a great day,

Natalia Angelini