A key task during estate administration is identifying and collecting the deceased’s assets. While this is often a straight-forward task, it becomes more complex when a third party claims that property owned by the deceased was not truly theirs, but instead, was held by them in trust.
The success of such claims, particularly when land is involved, may turn on whether the claimant can produce sufficient documentary evidence to establish the existence of a trust, as demonstrated by the court’s decision in May v Alsousi et al., 2025 ONSC 795.
The asset at issue in this case was a condominium that the deceased, Mr. Mahmud, purchased in 1988. After his death, the Arabic and Islamic Education Foundation of Ottawa claimed that he held the condo in trust for the Foundation through an express trust, or, in the alternative, a purchase money resulting trust. Due to the Foundation’s claim, the estate trustee of Mr. Mahmud’s estate applied to the court for direction.
Express Trust Not Established
The Foundation’s first argument was that an express trust had been created based on a declaration that Mr. Mahmud signed in 1988, a few weeks before purchasing the condo, which stated that he would be holding the condominium in trust for the Foundation’s predecessor, the Islamic School of Ottawa.
Justice Flaherty rejected this argument. Because Mr. Mahmud signed the declaration before he owned the condominium, an express trust could not be recognized. Citing Rubner v Bistricer, 2019 ONCA 733,Justice Flaherty explained that a settlor cannot declare a trust over future property, being property they do not yet own. As noted by the Court, “[b]ecause the written declaration of trust was signed before Mr. Mahmud had ownership of the Property, he was not legally enabled to declare a trust … when he signed the declaration.”
In response, the Foundation argued that Mr. Mahmud likely did not appreciate this legal deficiency since he was a lay-person, and that over the years, he had effectively self-declared the trust by signing various documents which indicated that the property was being held “in trust.” The documents that the Foundation relied on included a mortgage renewal agreement, tax reminder notices, and property tax bills.
The court was not persuaded. Justice Flaherty noted that a self-declaration of trust is only available where the essential requirements of an express trust are otherwise satisfied, and that the documents in this case fell short. The documents failed to clearly identify the Foundation as the beneficiary of the trust, and also did not provide sufficient certainty as to the object of the trust.
Moreover, because the alleged trust property was land, section 9 of the Statute of Frauds was also engaged, which requires a declaration of trust over land to be in writing and signed by a person legally capable of declaring the trust. Since these formalities were not satisfied, there was no trust, regardless of Mr. Mahmud’s intention.
Purchase Money Resulting Trust Also Not Established
In the alternative, the Foundation argued that a purchase money resulting trust arose due to substantial financial contributions that the Foundation made toward the property over the years. It was able to prove that it made one mortgage payment on the condo in 1991, and further payments from 1995 to 2007.
However, this claim was also dismissed by the court. A purchase money resulting trust arises when a person advances funds toward the acquisition of property at the time of purchase, but does not take legal title. The timing is critical. In this case, there was no evidence that the Foundation contributed to the down payment for the condo in 1988, or to any portion of the purchase price. There was also no evidence of it making any mortgage payments prior to 1991. Because the payments that the Foundation could prove it made occurred years after the property had been purchased, they could not be used to establish a purchase money resulting trust.
Justice Flaherty also observed that the Foundation had use and occupation of the condo for much of the period from 1995 to 2007, raising further doubt as to whether those payments were truly contributions toward the purchase of the property.
The Result
The court ultimately concluded that the condominium belonged to Mr. Mahmud’s estate. Because the Foundation failed to establish either a valid express trust or a purchase money resulting trust, there was no basis to find that the Foundation held a beneficial interest in the property.
This case serves as a stark illustration of the importance of presenting proper documentary evidence when claiming a trust over land. Proof of intention to establish a trust will not be enough, nor will long-standing beliefs that the property was held in trust, if those intentions and beliefs are not reflected in proper documentation of the trust. Even financial contributions to the property may not be enough to establish a trust if the claimant does not have documentation proving that they contributed when the property was first acquired.
Thank you for reading, and have a great week!
Ian.