All trusts must satisfy the three certainties: (i) intention, (ii) subject matter, and (iii) objects. More often than not, uncertainty may arise over the object of the Trust: who (or for what purpose) is the trust intended to benefit?

When we think of purpose trusts, we typically think of charitable purposes. But the law allows for non-charitable purpose trusts as well, as long as they: (i) meet the three certainties, (ii) don’t offend the rule against perpetuities, and (iii) empower a person with standing to enforce the trust.

As Justice Penny noted in the recent decision in Fletcher’s Fields Limited v. The Ontario Rugger Union, “In Ontario, a non-charitable purpose trust is saved from the rule against perpetuities by s. 16 of the Perpetuities Act, provided that it is a “specific non-charitable purpose that creates no enforceable equitable interest in a specific person. [my emphasis]”

Fletcher’s Fields is a great illustration of the subtle distinction raised by s. 16 of the Perpetuities Act. In that case, a rugby club owned six sports fields in Markham and registered a declaration of trust on title, stating that it owned the fields “for the primary purpose of playing and promoting rugby in the Toronto area.”

Of course, people who play rugby get enjoyment that comes with participating in a team sport. For legal purposes, however, the fact that they “benefit” from playing the sport is simply collateral. They are not the beneficiaries of the trust. If they were, it could offend the rule against perpetuities. In finding that the rule was not offended, Justice Penny states: “The mere fact that individual persons benefit indirectly from the operation of a trust does not automatically make them the intended object of the trust….The Clubs are merely the means for individuals, acting together, to promote and play the sport of rugby.”

A last point is similarly interesting: typically it is the beneficiaries who make demand upon the trustee to account or otherwise perform their obligations. However, in the case of a non-charitable purpose trust, who has standing in the absence of a beneficiary? In Fletcher’s Fields, Justice Penny accepted that the shareholders of the rugby club had a sufficient interest to assert standing to enforce the objects of the Trust.

Thanks for reading,

David Morgan Smith