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Three exceptions where failure of charitable purpose trust will not be saved

1. 
   Express gift over to another person in the event of the failure of the trust: trust instrument determines what happens with the property
   
   1. 
      Court won’t use cy-pres to deprive that person of the benefit they should get
      
2. 
   No exclusive dedication to charity (conditions, interest retained): not a charitable purpose trust
   
   1. 
      Not a charitable trust, private trust more likely
      
3. 
   If only income is devoted to charity, the capital cannot be applied cy-pres: only the income is the property of the charitable purpose trust
   
   1. 
      Don’t allow the capital to be infringed upon
      

• 
  A trustee cannot simply stop being a trustee once appointed, must ask for a discharge (sometimes at their own expense)
  
• 
  There can be more than one trustee, trustees may be everyone from widows to specific trust corporations to the public trustee.
  
• 
  The trustee must act in the best interests of the beneficiary, in some cases, even acting against the instruction of the settlor (Cowan v Scargill; see also Harries v Church Commissioners of England, see also Re Assaf Estate)
  
  • 
    The caveat to this is that the trustee cannot simply be a rubber stamp and do what the beneficiaries want them to do. Trustees cannot have their discretion fettered (Re Blow)
    

• 
  Trust instrument
  
• 
  The initial appointment of a trustee is typically carried out through the trust instrument, although one can unilaterally seIlf declare
  
  • 
    You cannot be forced or compelled to be a trustee…
    
  • 
    But once you are, you must follow constituting document, serves as its own mini-constitution
    
    • 
      You can accept becoming a trustee in actions or in words. Once you do any little thing that involves the administration of the estate, the duty will most likely be foisted upon you
      
  • 
    Trust instrument may overwrite the law, could disabuse fiduciary duty or even handedness
    
    • 
      A trust instrument may even include exculpatory clauses that allow a trustee to breach many of their duties owed to the beneficiary (Although this power is not absolute) (Steven Thompson Family Trust v Thompson)
      

• 
  Law of trusts (judge-made common law)
  
  • 
    Cases, instruction
    
  • 
    Prior to legislation dealing with trustees, the common law put an extremely high burden on trustees (Keech v Sanford)
    
• 
  Legislation
  
  • 
    Applicable in most cases, most case subject to a contrary intention in the trust instrument, subservient.
    

• 
  In addition to legislative provisions, judges, as supervisors of trusts, hold an inherent jurisdiction to appoint and remove trustees
  
  • 
    The famous adage “a trust shall not fail for want of a trustee” is both a reference to the fact that the courts can appoint trustees as well as to their powers.
    
  • 
    This is necessary as, prior to legislation, judges would have to appoint surrogate trustees in many instances. Now this is handled by the Trustee Act (S.31-32)
    
    • 
      Note that judges will defer to trustees who have the power of appointment (Merry Estate v Plaxton)
      
    • 
      Note also that statutory provisions are considered stop gap mechanisms contra the trust instrument. Courts only want to exercise their power in an emergency (Merry Estate v Plaxton)
      

In exercising the discretion to appoint a trustee, the court should

• 
  Consider the wishes of the settlor
  
• 
  Avoid trustees who would prefer some beneficiaries over others; and
  
• 
  Consider whether the trustee is likely to promote or impede the execution of the trust
  

• 
  Need a formal discharge in order to stop being a trustee, not absconding with unpaid liabilities, do everything required of you until that point of time
  
  • 
    This will include making all appropriate disposals of property, paying out funds that are to be paid, doing whatever investment duties are necessary, passing accounts, etc
    
• 
  Voluntary under normal circumstances
  
  • 
    If you are misbehaving, the courts may force you to pay your own costs for removing yourself as trustee.
    
  • 
    Normal retirement will often allow for the estate to pay out court costs
    

• 
  May provide for the retirement and discharge of trustees
  

• 
  Judge holds inherent jurisdiction to retire and discharge trustees
  

• 
  S.28-29 of the Trustee Act
  
  • 
    S.28(1) – 3 or more trustees, one can retire.
    
  • 
    S.28(2) – Must vest property exclusively in trustees
    
  • 
    S.28(3) – Subject to contrary intention
    
  • 
    S.29(2) – Retiring pursuant to a trust instrument, deemed to vest automatically in trustees
    

• 
  May provide for removal of trustees or confer a power of removal on a person
  
  • 
    Settlor might have nuclear power to remove people
    
  • 
    Otherwise might be majority votes
    
  • 
    Issues often arise where the instrument does not take into account someone retiring or giving the trustee to appoint a new trustee, may lead to strife between departing trustee and beneficiaries (Finnell v Schumacher Estate)
    

• 
  Judge holds inherent jurisdiction to remove trustees
  
  • 
    Judges will not remove trustees where disagreement is occurring. There must be some sort of fraud, misconduct or unfairness in order for judges to exercise their jurisdiction (Conroy v Stokes)
    
    • 
      The guiding principle is that trustees should be removed if it would help the welfare of the beneficiaries
      
  • 
    Judges can remove a trustee, even without providing a replacement (even leaving a trust with no trustees) if the court provides an order for the administration of the trust (Gonder v Gonder Estate)
    
    • 
      This will be rare and is only done where administration is effectively impossible without such an order. Here no trustee was appointed as the estate couldn’t afford such an appointment
      

• 
  S.30-31 of the Trustee Act
  
  • 
    S.30 – Court can remove court appointed trustees and any beneficiaries who are majority in interest in number can remove trustees.
    
    • 
      Discretionary from the court – making a majority application might not succeed, not automatic
      
    • 
      Court will give more serious look if you do meet the criteria (lower threshold)
      
  • 
    S.31 – Can appoint a trustee seemingly at will, as long as not impractical to do so.
    
    • 
      Expediency test is high, need impracticable circumstances for utilization
      

Note: Misconduct on the part of a trustee is not required for removal (Re Bartel Estate). Where trustees are not able to work together, it may be for the best interests of the beneficiary and the estate administration to remove all trustees, not just the ones who don’t agree with one another.

• 
  Trustee must do their duties, no excuses at common law.
  
  • 
    Ex: pay money per month, liquidate assets, etc
    
  • 
    Different than “powers” which is more like an authorization
    
• 
  Duties arise from three sources of law
  
  • 
    Imposed by the trust instrument
    
    • 
      Instruction manual from settlor
      
  • 
    trust law (Equity)
    
  • 
    or legislation
    
    • 
      Such as passing accounts (accounting summary, have judge approve), vesting property
      
• 
  A breach of a trustee’s duty is a breach of trust, which is actionable in law
  

• 
  Trustee cannot put himself in a situation where her interest could conflict with that of the beneficiary (Keech v Sandord)
  
• 
  Trustee cannot take secret profits
  
  • 
    Must be fully disclosed, they must authorize your compensation/profits
    
    • 
      Even authorization is fraught as one can claim intimidation, forcing, etc
      
• 
  Trustee must act at all times solely for the best interest of the beneficiary
  
  • 
    May even require you to deprive yourself in order to avoid conflict of interests
    
    • 
      You may be the only person in the entire world not entitled to a property (Keech v Sandord)
      
• 
  Remedies include stripping profits from the trustee even if the beneficiary suffered no loss (constructive trust) via disgorgement (As was done in Keech)
  

• 
  The person of ordinary prudence applies to laypeople and professional companies alike (Fales v Canada Permanent Trust Co)
  
  • 
    This particularly includes, from time to time, turning your mind as trustee to the risks and dangers surrounding the trust or your administration of it (Fales)
    
• 
  However, while trustees need not execute every task themselves (Speight v Gaunt), they must turn their mind to their powers and duties and must also keep in mind the particular sensitivities of the trust
  
  • 
    As it pertains to investing, the trustee must act as the reasonably prudent businessman. This is a higher standard that may force the trustee to receive additional training to meet their obligation (Learoyd v Whiteley)
    
  • 
    The trustee must also not take risks that a normally prudent businessman might take if in doing so they substantially risk the corpus of the trust (Whiteley; see also Fales; see also Miles v Vince)
    
• 
  Where trustees have a power of postponement, the courts will eventually force you to use your discretion if the discretion is ancillary to the execution of the duty (Fales)
  

Note: S.98 of the Trustee Act provides a statutory defence for breach of trust where the trustee has acted honestly and reasonably “and ought to fairly be excused for the breach of the trust.” This is a discretionary remedy and will take into account whether the trustee was paid (adopting in a roundabout way the higher standard given to paid trustees in the UK viz Bartlett v Barclays Bank Trust Co), whether the breach was minor, major or technical, general economic conditions surrounding the trust, market, etc and whether the conduct was reasonable (Fales)

• 
  Note: As always, the trust instrument may allow the hiring of professionals such as bankers, lawyers, investment advisors etc
  
• 
  It was not until Speight v Gaunt that the standard was relaxed such that “trustees are not bound to transact personally but according to the usual mode for conducing business”
  
  • 
    This means as long as the trustee acts prudently, they will not be held liable for someone they ostensibly hire as their agent (assuming normal business customs)
    
  • 
    Were this not the case, there would be an insane burden on every legitimate transaction that does not involve a rogue. Having a higher standard would slow down commerce needlessly and would essentially force you to do due diligence before you blew your nose in the morning.
    
    • 
      Lord Blackburne - All tasks must be done with the confidence of others, always some risk that normal men of business will court
      

• 
  When trustees invariably do begin to quibble (or simply are obstinate to the point that the trust cannot be administered – Mailing v Conrad), the court may clarify what needs to be done, remove or replace a trustee or cast the deciding vote.
  
  • 
    Note: Courts are loathe to cast the deciding vote as they do not want to take away from the discretion of the trustees. Will sometimes simply give them advice rather than casting the deciding vote (Cowan v Scargill; see also Re Wright)
    
  • 
    Note also that even if the settlors intention is clear to include a certain trustee, the court will override this intention in order to maintain the proper execution of the trust (Mailing v Conrad)
    

• 
  Trustee will often have a duty to invest the property of the trust so as to supply the life interest with a suitable income and to maintain the value of the capital as well as appreciate it for the benefit of remaindermen
  
  • 
    The Instrument may dictate with explicit instructions on how to invest which can be modified if the investment is not suitable to meet the purposes of the trust (Re Stillman Estate)
    
  • 
    Arise by implication: Presumed for testamentary trust with successive interests
    
    • 
      Successive interests require you to have an even hand – impartial as a trustee amongst beneficiaries, duty to accommodate through life interest/remainder
      
    • 
      Personal property is received as ‘unauthorized investments’
      
      • 
        An unauthorized investment is one which does not fairly balance between the interests. It needs to be liquidated in order to use the capital to invest in something else (unless it is real estate)
        
• 
  Detailed rules can be set out by the trust instrument
  
  • 
    Sections on how to invest property of the trust
    
    • 
      X in mutual funds, y in bonds, etc
      
    • 
      Classes of investments
      
    • 
      Power to hire investment manager
      
  • 
    Happens predominantly in pension trusts / large trusts
    
  • 
    Trustee must carry out with some exceptions
    
• 
  Legislation also establishes investment rules
  
  • 
    Most likely to apply to smaller trusts where you have a duty to invest (wherein it is not explained – the contour)
    

Key: The standard of conduct of a trustee in making investments is subject to the ordinary prudence of a businessman standard except in relation to the scope of the investments. The trustee can only take low to moderate risk in investing (Learoyd v Whiteley)

• 
  Even when the trustee consults with someone with investing expertise, they must still show independent judgment as to whether to invest, otherwise this may lead to a breach of trust (Learoyd)
  

Current: Move away from this, don’t focus on a particular investment, look at the whole portfolio.

• 
  The legislation confirmed that the trustee must exercise the care, skill, diligence and judgment of a prudent investor (S.15.1(1) & 15.2)
  
  • 
    This may lead to more training being required in order for a layman to meet the standard
    
• 
  The legislation also confirms that a trustee will not be liable if they have conformed to a prudent plan or strategy (under the portfolio theory) (15.3)(15.4)
  
  • 
    Historically trustees could sue for any stock or investment going down even if on the whole the estate appreciated in value.
    
• 
  The legislation also allows you to hire someone who has investment expertise, but will not avoid liability unless the trustee sets out investment objectives or strategies and demonstrates prudence in selecting an agent, establishing the terms and limits of the authority delegated to said agent, acquaints the agent with the investment objectives and monitors the performance of the agent to ensure compliance with the terms set out.
  

Consideration – S.17.1 forbids corporations to invest money in their own securities unless it is part of a larger mutual fund as per 15.1(3).

• 
  Trustees are given the power to invest (subject to contrary intention)
  
• 
  Trustees must turn their mind to investing trust property and do what is in the best interest of the beneficiary
  
• 
  For large trusts, common to see (SIP&P) – “statement of investment policies and procedures”
  
  • 
    Set out investment strategy, what investments can be made, etc
    
  • 
    Updated every year as part of due diligence
    

• 
  The current standard for trust investors is the portfolio approach wherein the appropriate level of risk is determined based on investment strategies and goals and the court, when called upon, can look to the entire portfolio of investments to determine if the appropriate level of risk is being courted
  
  • 
    This does not mean a loss will never occur, but it is to say that so long as material deterioration of the trust is not accruing (in which case it would be wise to get some advice), everything should be groovy.
    
    • 
      Whether something is a “material deterioration” will no doubt depend on the size of the estate, the intention of the settlor, etc
      

• 
  Under normal circumstances, trustees must set aside their own personal views and may be required to act dishonourably (but legally) if it is in the best interests of the beneficiary (Cowan v Scargill)
  
• 
  It is possible in normal circumstances to occlude a certain investment if an alternative investment would give an equal return (Cowan)
  
  • 
    Note that companies are allowed to take moral concerns into consideration and may even ban certain industries from being invested in (Harries v Church Commissioners for England)
    

• 
  The exception may lie where the group is extremely uniform and tightly constrained such that it would be preferable for them to make less money in lieu of violating their moral precepts
  

• 
  Should this be the case, the trustee will have a high burden to prove that moral trade-off is worth it for the financial one
  
  • 
    Where moral benefits are too speculative or remote or where moral investing would exclude too large of a portion of a potential market/prevent diversification, it will be unlikely to be an acceptable courts of action (Cowan)
    

• 
  Also known as the duty of even-handedness
  
• 
  Trustees must treat all beneficiaries equally and without favour
  
  • 
    Receive no greater advantage or burden than any other beneficiary (Miles v Vince)
    
  • 
    Trust instrument may differentiate, trustees discretion may not
    
• 
  Conflict may arise between a life interest and a remainder interest with respect to trust property
  
  • 
    Life interest wants income
    
    • 
      Trustee should invest to generate maximum income (more risky)
      
  • 
    Remainder interest wants capital
    
    • 
      Capital maintenance (more prudent investing)
      
• 
  Goal is to find a balance between these interests when converting and investing trust assets
  
  • 
    Difficult position to be in with a trustee, may invariably be breaches of prudent investor standard if one interest is preferred over another (Miles)
    

• 
  Receive properties, convert them into cash, invest the cash
  
  • 
    Income from hard asset properties most likely to be low (Car, house, land, etc)
    
  • 
    Liquidation allows the purchase of authorized investments.
    
• 
  Conversion requirements will arise by implication in a testamentary trust if there are successive interests AND the property is not properly balanced (Howe v Lord Dartmouth)
  
• 
  When there is a conversion of property after the original vesting, money received must be apportioned between the capital and income interests (Re Earl of Chesterfields Trust)
  
  • 
    Obviously it is unfair to make them wait without giving them the time value of the money they have lost, hence the 4% year over year calculation that serves to vest them with more of the sale proceeds the longer the asset is unsold for
    
• 
  The rule in Howe v Lord Dartmouth does not apply when dealing with real estate, only personal property (Lottman v Stanford)
  
  • 
    England disagrees, but they are a bunch of cucks
    
• 
  Mortgages are separate from land and must be converted (Joseph v Joseph Estate)
  

Cannot hold these investments (after properties converted)

1. 
   Property that doesn’t produce any income and it deteriorates in value (ex: car)
   
   1. 
      Doesn’t help life or remainder interest
      
2. 
   Property that produces very little income but increases in capital value (ex: land)
   
   1. 
      Miles v Vince – wherein trust funds were apportioned to a land deal which tanked, also created a conflict of interests.
      
      1. 
         Investing in a single illiquid asset may not be a good idea regardless of conversion concerns
         
3. 
   Property that produces much income but capital at risk (ex: high risk speculative shares)
   

Don’t always have to convert (unless trust instrument forces you to) or by impliation

1. 
   Balance the reasonableness of the request;
   
   1. 
      Is it frivolous, for health reasons, due to changing ircumstances
      
2. 
   Against the magnitude or the size of the trust;
   
   1. 
      Will it strip away substantial amounts of capital?
      
3. 
   In accordance with the intention of the settlor
   
   1. 
      Instruments will often include health maintenance provisions, courts will find these to be reasonable (Re Floyd)
      

• 
  If you hold shares in a trust, if the company pays a dividend, it generates income
  
  • 
    Normally goes to life interest
    
  • 
    Shares would go to remainder person
    
• 
  What happens when corporations pay out non-normal distributions
  
  • 
    Depending on which allocation occurs, one party will get most or all of the funds/capital
    

• 
  When bonus shares are received, trustees may be well advised to treat it as capital (assuming this is how it is treated under corporate and/or tax legislation) (Waters v Toronto General Trusts Corp)
  
• 
  It is more advisable to look at the substance of the transaction in addition to the interest of the testator to determine how to treat the funds (Re Welsh)
  
  • 
    Here, treating as capital would result in a windfall clearly not considered prior
    

• 
  While tax planning is important for trust purposes, the duty of impartiality and even-handedness also applies to the treatment of taxation and any preferential tax treatment the trust may receive
  

Note in Zive: The trustee was utilizing CCA deductions to shelter the life interests income. This served to doubly penalize the remaindermen as they would one day have to pay back any clawbacks from the benefits and thereby lose their capital to support the income beneficiary.

• 
  CCA deductions are no longer applicable against other interest sources in the case of real estate, so this is no longer a live issue
  
• 
  Here it would have been wise to hold a reserve fund aside to avoid potential recapture, however, this fund would serve to disadvantage the life interest as there may never be a potential recapture, thereby vesting the remaindermen with another windfall, clearly the tax planning is not easy
  
  • 
    Using a professional and your own judgment is recommended
    

• 
  Unless the instrument says otherwise, trustees do not have a positive obligation to provide beneficiaries with information
  
  • 
    To hold otherwise might be to invite more strife or to diminish the estate with excessive agency and reporting costs.
    
• 
  Statutory rules require information in certain circumstances
  
  • 
    Trustee Act, S.99
    
    • 
      (1) Passing of Trustee’s Accounts: Showing all of the inputs and outputs with regards to the trust property within 2 years of probate/appointment (bring to judge, approve the accounts)
      
      • 
        Doesn’t seem to apply to inter vivos trusts
        
      • 
        Rule doesn’t apply if beneficiaries consent in writing that rule doesn’t apply (or court ruling)
        
    • 
      (2) If petitioned by beneficiary, must pass accounts annually
      
    • 
      (3) Failure to pass accounts – may be forced to go to court to show why you haven’t passed accounts. If you don’t pass may get removed as trustee
      
  • 
    Pension Benefits Standards Act, S.37
    
    • 
      Regulation as to what must be provided for free
      
    • 
      (1) Must give info to basically everyone who should have it
      

• 
  Legal privilege does not attach to communications between the trustee and their solicitor (Ontario (AG) v Ballard Estate)
  
  • 
    Any documents or property are essentially the property of the estate and the trustee is merely the conduit through which the benefits of any advice flow
    
    • 
      Furthermore, the beneficiary is the real client, and they have the ability to waive privilege at any time
      
• 
  Even if one is only a potential beneficiary (via future or contingent interest) they still have a right to such communications in order to ensure the proper administration of the estate (Ballard)
  
  • 
    If there were ever any true concerns with the legitimacy of a beneficiary, the court could always control their own processes and deny such relief (Schmidt).
    
• 
  The disclosure of trust documents to beneficiares is not itself a proprietary right but is in fact part of the courts inherent jurisdiction (Schmidt v Rosewood Trust [Isle of Man])
  
  • 
    This stems from the courts inherent supervisory role
    
  • 
    Note also: Someone who could benefit, even under a mere power, may be entitled to information
    
• 
  The court may characterize beneficiaries who act as administrators into “different hats” and may give them certain pieces of information pertaining to the trusts accordingly (Schmidt)
  
• 
  A Trustee must always have accounts ready and must facilitate the inspection and examination of beneficiaries when requested. This duty however, is governed by what is reasonable as per the circumstances (Sanford v Porter)
  
• 
  Provisions in a trust that remove the courts supervisory role may be held void for public policy reasons (due to an attempt to oust the jurisdiction of the judiciary) (Jones v Shipping Federation of BC)
  

• 
  Powers may stem from the trust instrument, common law (equity) or applicable legislation
  

• 
  If the power is a mere power, courts will not interfere in the decision of its exercise (or lack thereof) unless the exercise is being affected by bad faith, unfairness, conflict of interest, etc (Tempest v Lord Camoys; see also Gisborne v Gisborne)
  

• 
  Since the trustee must do their job with the proper standard of care, it stands to reason that they cannot exercise their duty without considering or giving shrift to the power.
  
• 
  Courts may even compel the use of a power in certain circumstances within a reasonable time to ensure the fulfillment of the duty (Tempest v Lord Camoys)
  

Note: While calling an activity a power or duty is indicative, it is not determinative. It will often be a question of construction as to whether something is a power or a duty

• 
  The trustees must determine when the conditions for exercising a power are appropriate (Re Floyd)
  
• 
  The trustees must inform themselves about the scope and breadth of their powers and duties and must periodically consider them in order to make sure that the beneficiary can receive the entire benefit of the trust (Turner v Turner)
  
  • 
    Trustees cannot be a rubber stamp (Turner)
    
• 
  In the event that in the exercise of a trustees power there are both proper and improper motivations, improper motivations may be allowed so long as the proper motivations are the dominant sentiment of the exercise (Fox v Fox Estate)
  
  • 
    Trustees cannot use the property as if it is their own (Fox)
    
  • 
    Public policy concerns may come into play in the utilization of a trustees discretion (Fox)
    

Note on Fox: 3 JA’s focused on three different elements

1. 
   Galligan: Public policy concerns regarding discriminatory use of trustees power
   
2. 
   Mckinlay: Treating the Property as one’s own (also preference concerns)
   
3. 
   Catzman: A reading of the trust instrument did not allow the breadth of capital encroachment that occurred
   

Note on Pitt v Holt (UK): Overturned the old rule that allowed a court to void transactions that were not for the benefit of the beneficiary. Is not appropriate to use the court as a judicial backstop. The court will only set aside a decision or transaction where there has been wrongdoing by the trustee.

• 
  If a trustee seeks advice from a competent advisor and follows it, there is no breach of fiduciary duty and the court will not set aside the decision
  

Note on Mixed Purposes (Edell v Sitzer): Where a trustee invariably punishes a beneficiary but does so in an ancillary fashion with the dominant intention of his act for a proper use of his discretion, the courts will defer to their judgment.

• 
  This is a seeming agreement of Catzman JA in Fox who had no problem with mixed purposes
  
• 
  The factual matrix was such in this case that the trustee had gone to insane lengths to accommodate, beneficiary was not coming to equity with clean hands by any stretch
  

• 
  The court only gives advice on legal matters, not advice with respect to the judgment of trustees (Re Wright)
  
  • 
    Courts will only interfere where there is bad faith or a refusal to discharge duties such that the administration of the estate is endangered.
    
  • 
    Should this occur, the court may elect to “make trustees act unanimously” such that they discharge their duties accordingly
    
• 
  The court is not to be asked for business advice, but it can be asked for advice on the decision made by a trustee who has exercised his own discretion (McKay Estate v Love)
  
  • 
    The court will still not go into a long winded analysis of the prudence of the decision, will only be concerned that it was arrived at fairly and in good faith (process)
    
• 
  In the event that two powers directly contradict one another, the trustees must exercise one or the other (Re Haasz) – One of the powers essentially will morph into a duty.
  
• 
  When a trustee seeks advice, they cannot simply abdicate their duty and rely wholly on the advice or advisor. They must still give thought to their decision and must arrive at their decision fairly (Re Blow)
  
  • 
    Trustees must also not let anything fetter their discretion other than the general intent of the settlor (Re Blow)
    

Note: Canada does not adopt the Re Beddoe construction of giving advice or directions on whether to litigate. Trustees can be indemnified if the costs were properly incurred in the course of the administration, but it’s up to them to decide whether it is proper or not. (Re Kaptyn Estate)

• 
  Although the same courts may take in evidence, there will be a lack of record, affidavits, viva voce or other evidence, etc. The courts may unintentionally allow spurious suits to be brought or may lower the veil of impartiality by blessing an action.
  

1. 
   Equity: trustees are not paid for their work as it would place them in a conflict of interest (though courts holds rarely exercised power to compensate trustees)
   
   1. 
      Would be disloyal to take money from trust – acting solely for the beneficiaries interests – more money you take from trust, more you take from beneficiaries
      
2. 
   Legislation: Trustee Act, S.88-91; authorizes compensation
   
   1. 
      May take on going compensation along with lump sum at end
      
   2. 
      S.88(1) – Fair and reasonable allowance not exceeding 5% of gross aggregate value of the estate
      
      1. 
         Likely to go below due to taxation, disbursements
         
   3. 
      S.88(2) – orders from time to time
      
      1. 
         Normally trust stuff paid out at the end, can never exceed cumulative 5%
         
   4. 
      S.88(3) – Care and management fees not exceeding .4%
      
   5. 
      S.90 – Instrument takes priority
      
   6. 
      S.91 – Registrar can set limits (after judge says they can do so)
      
3. 
   Trust instrument: may provide for compensation (if it does, ousts the trustee act)
   
   1. 
      Corporate trustees will always need this authorization to get professional fees
      

Note on Equity: Equity – prevents payment, much litigation on how much to be paid, takes funds from the estate in order to find out how much to get paid, best avoided in trust instrument.

• 
  Customary percentages and calculations can be useful but are not determinative
  

1. 
   Magnitude of the trust
   
2. 
   Care and responsibility necessary to administer it
   
3. 
   Time taken by the trustee in performing duties
   
4. 
   Skill and ability displayed
   
5. 
   Success of the administration
   

• 
  Courts have the discretion to refuse compensation for a trustee, but may elect to either give it or to modify it based on the factual matrix surrounding their performance (Re Assaf Estate)
  
• 
  A failure to do your duties under the trust may result in you receiving no compensation, being disgorged of any benefit you may have received and even suffering a penalty (Zimmerman v McMichael Estate)
  

Note: Lawyers cannot simply bill the trust and take funds as such. There must be a standing authorization to act in this way, otherwise would be found in breach of trust. The better way to do it is to offer your services to the trustee and have the trustee pay you out from the trust accordingly

1. 
   Equity: trustees are entitled to reasonably incurred expenses from the trust
   
   1. 
      Hiring investment advisors, lawyers etc
      
   2. 
      And from a sole adult beneficiary if the beneficiary is absolutely entitled to the property
      
      1. 
         Make the claim against person directly
         
   3. 
      Most likely this way due to no compensation at equity
      
2. 
   Legislation: Trustee Act: S.95
   
   1. 
      All expenses incurred in or about the execution of his or her trusts or powers
      
3. 
   Trust instrument: may supply its own rules relating to expenses incurred in or about the administration of the trust
   
   1. 
      Agreements that constitute the trust may also have provisions that provide indemnity (Ceepeear School District No 3069 v Security Trust Co)
      

Note: Along with liability clauses, large corporate trustees are likely to guarantee the presence of a clear indemnity clause that sets out exactly what they will be reimbursed for and what costs (most likely for their own errors) will be covered by the trustee in the event the error occurs (read: all costs)

• 
  No vicarious liability of trustees
  
  • 
    Not that strong in reality considering unanimity is required
    
• 
  When making collective decisions, all trustees will be liable
  
• 
  Failure to take action when required is the fault of all trustees who do not take action
  
  • 
    Fales v Canada Permanent Trust Co
    
  • 
    But can be relieved by the court under S.96 of the trustee act (otherwise not immunized)
    
    • 
      Here she was held in the dark, couldn’t take action if she wanted to
      
• 
  Joint and several liability of trustees: can collect full avoid against any trustee who can seek contributions from the others
  
  • 
    Likely to do this when some trustees have more funds than others
    
  • 
    Liability of one is liability of all, even if they are not liable, they can collect from other trustees – shifts burden
    

• 
  In order to avoid concerns regarding liability, trustees can revoke the authorization of other trustees to solely collect rents, income, dividends etc (Re Gray and Giant Yellowknife Mines Ltd)
  
  • 
    Whether the trustee is also a beneficiary is irrelevant. Were the adverse true, trustees could continue to act negligently or fraudulently, seemingly upon the authorization of the trustees. This would expose them to claims due to a unanimous decision being made for the original authorization
    
• 
  Retiring trustees must carry out all of the duties necessary to pass the trust along to the replacement trustee (Head v Gould)
  
• 
  The retiring trustee will only be liable for a breach of trust where said trustee must have known that a fraud would occur or the trustee set a course for the breach to be occasioned by the new trustee (guilty before the fact) (Head v Gould)
  
• 
  While not advisable in practice, there is no blanket ban about trustees mixing their personal property with trust assets (McLaughlin Estate v Mclaughlin)
  
• 
  A beneficiary cannot claim for breach of trust if he assented to it, had involvement in it, or later ratified the act or released the trustee from liability (McLaughlin)
  
  • 
    Here the trustee replaced his brother as trustee and included a provision in his will that effectuated a settlement on behalf of all beneficiaries.
    

• 
  In determining whether to utilize laches, the court must examine:
  
  • 
    1: Whether the plaintiffs behaviour showed acquiescence or acceptance of the status quo; and
    
  • 
    2: Whether this delay causes prejudice to the status quo, either in the inability of the defendant to defend themselves or in attempting to move assets where they no longer should go (inexcusable delay)
    

• 
  Equitable doctrine of laches is a question of justice between the parties and is discretionary
  
• 
  Two branches (must be proved by defendant – knowledge is relevant)
  
  • 
    Plaintiff acquiesced in the conduct
    
    • 
      You knew, sat on your hands
      
  • 
    Plaintiff caused prejudice to the defendant
    
    • 
      If you disturb the affairs of the defendant, would be unjustice
      
    • 
      Might not have full evidence, records, defendant might not be able to defend themselves
      
    • 
      Considering the justice of the whole situation
      
• 
  Plaintiff in this case is additionally barred from bringing her claim under both branches of laches
  

The limitation act occupies the field where Laches does not operate (S.5 mimics laches)

(a) a rule of equity that refuses relief, on the ground of acquiescence, to a person whose right to commence a court proceeding in respect of a claim is not barred by this Act;

(b) a rule of equity that refuses relief, on the ground of inexcusable delay, to a person

(i)   who claims equitable relief in aid of a legal right, and

(ii)   whose right to commence a court proceeding in respect of a claim is not barred by this Act.