Grade: A+ Course Prize Winner

• 
  Would the beneficiary be entitled to the bribe amount, the increase in value, or both?
  

Bribes transfer legal title to the recipient such that the recipient is the legal owner

• 
  However, equity strips them of their beneficial interest
  
  • 
    Would shock the conscience of the court for equity to allow someone to keep a bribe in breach of their fiduciary obligation
    
• 
  This results in the legal owner becoming a debtor in equity to the crown for the bribe amount
  
  • 
    The bribe is a debt in equity but a constructive trust may also be imposed to capture a value increase in the property to strip the wrongdoer of any benefit
    
• 
  This leads to two remedies: If property is available, sue for a constructive trust such that the equitably debt covers the increase of value as well as the debt. If no property: sue for the debt
  

Note: This leads to problems with unsecured creditors as the original risk analysis they conducted would be moot and the bribe taker would effectively have no equity in the bribe properties.

• 
  This wouldn’t stop them from seeking to have his other assets liquidated
  
• 
  Furthermore, secured creditors would be Gucci either way.
  
  • 
    Recent case law suggests that secured creditors would have CT’s, and it would not even matter in some instances as they might be able to levy charges or liens that rank in priority anyways
    
  • 
    Consideration: Even if a SP seizes, tracing might remove the property from their hands
    

• 
  Can a breach of confidence lead to the utilization of CT’s such that the party is vested with a property right?
  
  • 
    Especially prudent here as the property in question is worth anywhere from 800M-2B.
    
• 
  A breach of confidence can lead to a constructive trust being imposed, even if there is no fiduciary relationship
  

1. 
   Information conveyed is confidential
   
2. 
   Information was conveyed in confidence; and
   
3. 
   Information was misused by the party to whom it was communicated
   

Note: Normal business relationships are not fiduciary in nature, but the factual matrix of this case allowed for a CT to be utilized

• 
  This is a very powerful remedy. Courts would like monetary remedies instead, but the increase in the value of the land here is hard to quantify
  

Dissent: Sopinka wanted CT’s only in special circumstances viz breach of confidence, particularly because it was creating a new proprietary right where none existed before.

• 
  The court was less chuffed as they figured Corona would acquire the property eventually
  

• 
  If you murder your partner or do something horrible to them such that their property devolves to you, it is likely that a constructive trust will be held over the half share you inherited on behalf of the victims family (Re Crippen)
  
• 
  If you murder someone, its pretty likely the insurance company isn’t going to have to pay you on your life insurance policy (Brissette Estate v Westbury Life Insurance Co)
  
  • 
    It is a breach of public policy to allow a windfall to the family of the deceased
    
  • 
    Unlikely the drafters of the contract would ever anticipate this absurdity
    
    • 
      Even if they did, it may still violate public policy to allow recovery as this would create a moral hazard of titanic proportions.
      
    • 
      Better to not have equity force a payment to the wrongdoer than have equity impress the money with a constructive trust
      

Note on Brissette: Cory wanted a CT for the benefit of the victim’s estate, felt it was unfair to let the house win by pocketing the premiums.

• 
  UE is a cause of action (like a contractual or a tort action)
  
  • 
    There are a number of already established categories of recovery
    
    • 
      See Peel (Regional Municipality) v Canada
      

If you meet UE, don’t automatically get a CT. Normally get monetary damages (Peter v Beblow)

• 
  For a constructive trust to be awarded (instead of money) there must be a connection between the deprivation and the actual acquisition of the property in question
  
  • 
    Unjust enrichment lies at heart of constructive trust (although CT’s do apply without unjust enrichment)
    
• 
  Courts would prefer damages due to wanting to avoid giving proprietaryrights, but where monetary awards are insufficient, it may be appropriate (Peter v Beblow)
  
  • 
    The court can take into account the inability to pay as a reason to allow CT’s but they would still prefer not to go down the CT road too quickly (Kerr v Baranow)
    
    • 
      Awards of equitable interest are awarded proportionally to the contribution
      
      • 
        Courts wanted to avoid a kind of “Wage analysis”, but this is the natural corollary unless you’ve been married forever (Kerr)
        

1. 
   An enrichment of the defendant
   
2. 
   A corresponding deprivation of the plaintiff and
   
   1. 
      Rational connection
      
3. 
   Absence of a juristic reason for the enrichment
   
   1. 
      No basis in law for defendant to have been enriched
      
      1. 
         People are allowed to be enriched/deprive via contract
         
      2. 
         Legislation – pay taxes
         

Note: Constructive trusts are not limited to property acquisition, nor are they limited to capital contribution. Contributions such as the preservation, maintenance or improvement of the property may lead to an unjust enrichment which is remedied by a CT (Sorochan v Sorochan)

• 
  While the actions don’t need to be terribly specific, they must have a clear relationship with the property in question
  

• 
  Not like normal fraud (really bad, hard to prove)
  
• 
  More relaxed fraud, attaches to more situations, lower evidentiary standard, relates to unconscionable conduct
  
• 
  As the statute of frauds no longer exists in BC, it extends through analogy into the formality requirements in other legislation (such as real estate legislation)
  
  • 
    This helps to give a bit more leeway in other instances, such as when the SoF is attempting to be used but cannot be due to its lack of inclusion (Bannister v Bannister)
    
    • 
      Court is always interested in the conscience of the situation
      

• 
  These bad boys are best avoided. Theoretically when one person dies, the other should be able to modify their will accordingly and devise as they wish. However, equity may impress a CT on assets upon the death of one partner if in doing so it would effectuate the mutual will (University of Manitoba v Sanderson Estate)
  
  • 
    This will also had special provisions that prevented revocation, would be an equitable fraud to later have the survivor change their will
    
  • 
    May be hard to justify damages in some instances, but these should suffice (will deplete your estate either way
    

• 
  Secret trusts often don’t classify as proper testamentary disposition
  
  • 
    Equity saves the secret trust, prevents person from not carrying out your instructions (equitable fraud)
    
    • 
      Will impose CT in certain circumstances
      
• 
  Requirements in relating to writing, where the will is to be signed, relaxation of the formalities for those serving on active duty
  

3 Requirements with respect to secret trusts:

1. 
   Communication by the testator to the trustee regarding the intent to create a trust
   
2. 
   Acceptance of the trust obligation by the trustee; and
   
   1. 
      Would take it as a gift if they didn’t accept, about equity’s conscience
      
3. 
   The correct timing of the communication
   
   1. 
      Fully secret trust: any point before death
      
   2. 
      Semi-secret trust: before or at the drafting of the will
      

• 
  Not the real trustee, court might impose CT on you if you act like a trustee or are involved in trustee decisions
  

1. 
   Trustee de son tort: assuming the office or function of the trustee (such as administering trust funds)
   
   1. 
      Meddler: pretending to be a trustee, not the real trustee, but will be made as such
      
2. 
   Assisting trustees in committing a breach of trust: “Knowing assistance”
   
   1. 
      Must be actual or reckless knowledge (not constructive)
      
      1. 
         Helping as lawyer, service provider, etc
         
3. 
   Receiving trust property for personal use and benefit: Knowing receipt
   
   1. 
      Constructive knowledge is sufficient
      
   2. 
      You know it is in breach of trust, will impose CT to get it back
      

Trusts Master FIRAC

1. 
   Fiduciary has scope of exercise of discretionary power
   
2. 
   Fiduciary can unilaterally exercise power to affect legal or practical interests of the beneficiary
   
3. 
   Beneficiary is vulnerable to or at the mercy of the fiduciary
   

Analysis: Great concern was voiced over the uncertainty that remedies such as the ones claimed would generate by virtue of their amorphous and unascertainable nature. In fact, allowing such actions or relationships to found such actions would lower the ability of the controlling parent to act in the best interests of the children (not only in a pecuniary sense but also in a disharmony knowledge vested in the child)

Issue: Can someone give an absolute gift yet have conditions over it?

A trust document that purports to divest an estate can only be effective upon death as the estate is not known until that time

What standard or tools should be used in determining conceptual certainty

(Dissent) – Practicality and evidence dictated that the group was discernable and thus the trust is not voided

Analysis: Connor lived in Barrons for essentially her entire life, teaching school for 42 years there. While the dissenting judge found on the evidence that there were only a few people who could fit into the group, the majority found the task of identifying the beneficiaries too fraught. Using the definition of close as it modified friends was not enough, and the thought of advertising so as to locate the beneficiaries showed an inability for the trustees to make the determination themselves. Even if you could find friends, determining whether they were “close” friends or not is too difficult to do (given no other indication from the settlor who the friends were or could be)
Holding: Trust fails, residue to estate.
Daniels v Daniels Estate

Fact: The will in question was otherwise valid, but had a clause stating “all the residue of my estate [not previously] disposed of I [give] to my executors to distribute as they see fit.” The executor’s thustly claimed there was no trust impressed upon the funds and wanted to give the money to themselves.

Ratio: Beneficiaries should sue only in consideration of when they might suffer a personal loss.

Issue: Can the statute of frauds permit a fraud?

Analysis: On the facts it was clear that neither party was above the board in their actions, but even though B didn’t commit a “capital F” fraud, the evidence showed a trust to be in existence and thus he was not meeting the high standard of fiduciary conduct necessary.

(a) the creation, assignment or renunciation of an interest under a trust, or

(b) a testamentary disposition.

(2) This section does not apply to

(a) a contract to grant a lease of land for a term of 3 years or less,

(b) a grant of a lease of land for a term of 3 years or less, or

(c) a guarantee or indemnity arising by operation of law or imposed by statute.

(3) A contract respecting land or a disposition of land is not enforceable unless

(a) there is, in a writing signed by the party to be charged or by that party's agent, both an indication that it has been made and a reasonable indication of the subject matter,

(b) the party to be charged has done an act, or acquiesced in an act of the party alleging the contract or disposition, that indicates that a contract or disposition not inconsistent with that alleged has been made, or

(c) the person alleging the contract or disposition has, in reasonable reliance on it, so changed the person's position that an inequitable result, having regard to both parties' interests, can be avoided only by enforcing the contract or disposition.

(4) For the purposes of subsection (3) (b), an act of a party alleging a contract or disposition includes a payment or acceptance by that party or on that party's behalf of a deposit or part payment of a purchase price.

(5) If a court decides that an alleged gift or contract cannot be enforced, it may order either or both of

(a) restitution of a benefit received, and

(b) compensation for money spent in reliance on the gift or contract.

(6) A guarantee or indemnity is not enforceable unless

(a) it is evidenced by writing signed by, or by the agent of, the guarantor or indemnitor, or

(b) the alleged guarantor or indemnitor has done an act indicating that a guarantee or indemnity consistent with that alleged has been made.

(7) A writing can be sufficient for the purpose of this section even though a term is left out or is wrongly stated.
Note: Cases indicate that 59(3) applies to all trusts in relation to land, even though writing is not required for trusts as BC works under a pre-statute of frauds regime
Testamentary Trusts
Wills Estates an Succession Act – S.36-40
Who can make a will

36  (1) A person who is 16 years of age or older and who is mentally capable of doing so may make a will.

(2) A will made by a person under 16 years of age is not valid.

How to make a valid will

37  (1) To be valid, a will must be

(a) in writing,

(b) signed at its end by the will-maker, or the signature at the end must be acknowledged by the will-maker as his or hers, in the presence of 2 or more witnesses present at the same time, and

(c) signed by 2 or more of the witnesses in the presence of the will-maker.

(2) A will that does not comply with subsection (1) is invalid unless

(a) the court orders it to be effective as a will under section 58 [court order curing deficiencies],

(b) it is a will recognized as valid under section 80 [validity of wills made in accordance with other laws], or

(c) it is valid under another provision of this Act.

38  (1) A member of the Canadian Forces while placed on active service under the National Defence Act (Canada), or a member of the naval, land or air force of any member of the British Commonwealth of Nations or any ally of Canada while on active service may, regardless of his or her age, make a gift of property by will in writing, signed by the will-maker at its end or by some other person in the presence of and by the direction of the will-maker.

(2) If the will is signed by the will-maker, there is no need for a witness to be present to witness or to sign the will as a witness.

(3) If the will is signed by another person, the signature of that other person must be witnessed by the signature of at least one person, who must sign the will in the presence of the will-maker and of that other person.

Clarification of doubt about signature placement

39  (1) A will is conclusively deemed to be signed at its end if the will-maker's signature is placed so that it is apparent on the face of the will that the will-maker intended to give effect to the will, including in, but not limited to, the following circumstances:

(a) the will-maker's signature is placed

(i)   at or after the end of the will, or

(ii)   following, under or beside the end of the will;

(b) the will-maker's signature does not immediately follow the end of the will;

(c) a blank space intervenes between the concluding words of the will and the will-maker's signature;

(d) the will-maker's signature

(i)   is placed among the words of a testimonium clause or of an attestation clause,

(ii)   follows or is after or under an attestation clause either with or without a blank space intervening, or

(iii)   follows or is after, under or beside the name of a witness who signed the will;

(e) the will-maker's signature is on a side or page or other portion of the will on which no disposing part of the will is written above the will-maker's signature;

(f) there appears to be sufficient space to contain the will-maker's signature on or at the bottom of the side or page or other portion of the same paper on which the will is written and preceding that on which the will-maker's signature appears.

(2) A will-maker's signature that conforms to this section does not give effect to

(a) a gift or direction in the will that follows the will-maker's signature, or

(b) a gift or direction inserted in the will after the will-maker signed the will.

Witnesses to wills

40  (1) Signing witnesses to a will-maker's signature must be 19 years of age or older.

(2) A person may witness a will even though he or she may receive a gift under it, but the gift may be void under section 43 [gifts to witnesses].

(3) A will is not invalid only because a witness was, at the time the will was signed by the will-maker, or afterwards became, legally incapable of proving the will, unless the witness was not 19 years of age or older at the time the will was signed by the will-maker.

Holding: Don’t worry, be happy.

Was the transfer a proof of advancement?

Preferences

95 (1) A transfer of property made, a provision of services made, a charge on property made, a payment made, an obligation incurred or a judicial proceeding taken or suffered by an insolvent person

(a) in favour of a creditor who is dealing at arm’s length with the insolvent person, or a person in trust for that creditor, with a view to giving that creditor a preference over another creditor is void as against — or, in Quebec, may not be set up against — the trustee if it is made, incurred, taken or suffered, as the case may be, during the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date of the bankruptcy; and

(b) in favour of a creditor who is not dealing at arm’s length with the insolvent person, or a person in trust for that creditor, that has the effect of giving that creditor a preference over another creditor is void as against — or, in Quebec, may not be set up against — the trustee if it is made, incurred, taken or suffered, as the case may be, during the period beginning on the day that is 12 months before the date of the initial bankruptcy event and ending on the date of the bankruptcy.

(2) If the transfer, charge, payment, obligation or judicial proceeding referred to in paragraph (1)(a) has the effect of giving the creditor a preference, it is, in the absence of evidence to the contrary, presumed to have been made, incurred, taken or suffered with a view to giving the creditor the preference — even if it was made, incurred, taken or suffered, as the case may be, under pressure — and evidence of pressure is not admissible to support the transaction.

Transfer at undervalue

96 (1) On application by the trustee, a court may declare that a transfer at undervalue is void as against, or, in Quebec, may not be set up against, the trustee — or order that a party to the transfer or any other person who is privy to the transfer, or all of those persons, pay to the estate the difference between the value of the consideration received by the debtor and the value of the consideration given by the debtor — if

(a) the party was dealing at arm’s length with the debtor and

(i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy,

(ii) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, and

(iii) the debtor intended to defraud, defeat or delay a creditor; or

(b) the party was not dealing at arm’s length with the debtor and

(i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy, or

(ii) the transfer occurred during the period that begins on the day that is five years before the date of the initial bankruptcy event and ends on the day before the day on which the period referred to in subparagraph (i) begins and

(A) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, or

(B) the debtor intended to defraud, defeat or delay a creditor.

(2) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor, and the values on which the court makes any finding under this section are, in the absence of evidence to the contrary, the values stated by the trustee.

(3) In this section, a person who is privy means a person who is not dealing at arm’s length with a party to a transfer and, by reason of the transfer, directly or indirectly, receives a benefit or causes a benefit to be received by another person.
Royal Bank of Canada v North American Life Assurance Co
Facts: Ramgotra transferred his RRSP funds into an RRIF managed by the insurance company. He went bankrupt 2 years later. His RRIF survived the absolute discharge of his bankruptcy based on it constituting a life insurance annuity (which is exempt under the BIA). The trustees attempted to claim it was a void settlement of funds by virtue of s.91(2) of the BIA.
Issue: Was the transaction a settlement under s.91 of the BIA and if so, whether it was void against the trustee under 91(2), and if so, whether the funds in the RRIF were allowable to satisfy creditor claims.
Ratio: Where a settlement is voided by the BIA, it may still be saved by provincial legislation
Analysis: Here it was helpful that he had no intention to defraud anyone (as the 5 year bankruptcy provision and most other provisions in the BIA require the attempt to delay or hinder creditors), but even though the transaction was done in contravention of the BIA provisions which might thereby create a resulting trust, provincial legislation immunized it regardless.
Holding: He’s a-ok
Fraudulent Conveyance Act

Fraudulent conveyance to avoid debt or duty of others

1  If made to delay, hinder or defraud creditors and others of their just and lawful remedies

(a) a disposition of property, by writing or otherwise,

(b) a bond,

(c) a proceeding, or

(d) an order

is void and of no effect against a person or the person's assignee or personal representative whose rights and obligations are or might be disturbed, hindered, delayed or defrauded, despite a pretence or other matter to the contrary.

Application of Act

2  This Act does not apply to a disposition of property for good consideration and in good faith lawfully transferred to a person who, at the time of the transfer, has no notice or knowledge of collusion or fraud.
Perpetuities Act

Presumption of validity

9  (1) Every contingent interest in property that is capable of vesting within or beyond the perpetuity period is presumed to be valid until actual events establish that the interest is incapable of vesting within the perpetuity period, in which case the interest, unless validated by the application of section 11, 12 or 13, becomes void.

(2) A disposition conferring a general power of appointment, which but for this section would have been void on the ground that it might become exercisable beyond the perpetuity period, is presumed to be valid until the time, if any, it becomes established by actual events that the power cannot be exercised within the perpetuity period.

(3) A disposition conferring a power other than a general power of appointment, which but for this section would have been void on the ground that it might be exercised beyond the perpetuity period, is presumed to be valid and becomes void for remoteness only if, and so far as, the power is not fully exercised within the perpetuity period.

Saving provision and acceleration of expectant interests

17  (1) A disposition that, if it stood alone, would be valid under the rule against perpetuities is not invalidated only because it is preceded by one or more dispositions that are invalid under the rule against perpetuities, whether or not the disposition expressly or by implication takes effect after, or is subject to, or is ulterior to and dependent on, the invalid disposition.

(2) If a prior interest is invalid under the rule against perpetuities, a subsequent interest that, if it stood alone, would be valid is not prevented from being accelerated only because of the invalidity of the prior interest.

Possibilities of reverter and conditions subsequent

23  (1) In the case of

(a) a possibility of reverter on the determination of a determinable fee simple, or

(b) a possibility of a resulting trust on the determination of any determinable interest in property,

the rule against perpetuities as modified by this Act applies in relation to the provision causing the interest to be determinable as it would apply if that provision were expressed in the form of a condition subsequent giving rise on its breach to a right of re-entry or an equivalent right in the case of personal property.

(2) For subsection (1), if the event that determines the determinable interest does not occur within the perpetuity period, the provision must be treated as void for remoteness and the determinable interest becomes an absolute interest.

(3) Subsections (1) and (2) do not apply if the event which determines the prior interest, or on which the prior interest could be determined, is the cessation of a charitable purpose, but in that case if the cessation of the charitable purpose takes place after the expiration of the perpetuity period the property must be treated as if it were the subject of a charitable trust to which section 13 applies.

(4) This section does not apply to a gift over from one charity to another.

(5) The rule against perpetuities does not apply to a gift over from one charity to another.

Lucas v Hamm – Lawyer not negligent, standard of care is low as most people don’t understand it.


Accumulations Act (RSO)

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