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Court approval of variation
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Court approval of variation1 If property is held on trusts arising before or after this Act came into force under a will, settlement or other disposition, the Supreme Court may, if it thinks fit, by order approve on behalf of (a) any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting, (b) any person, whether ascertained or not, who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of a specified description or a member of a specified class of persons, (c) any person unborn, or (d) any person in respect of an interest of the person that may arise by reason of a discretionary power given to anyone on the failure or determination of an existing interest that has not failed or determined, any arrangement proposed by any person, whether or not there is any other person beneficially interested who is capable of assenting to it, varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts. Benefit to parties interested2 The court must not approve an arrangement on behalf of a person coming within section 1 (a), (b) or (c) unless the carrying out of it appears to be for the benefit of that person. Public Guardian and Trustee3 If a person comes within section 1 (a) or (c), or if a person coming within section 1 (b) or (d) is a minor or is mentally disordered, notice in writing of an application under this Act together with a copy of the material filed in support of it must be served on the Public Guardian and Trustee not less than 10 days before the date of the application. Deemed trust4 (1) The Supreme Court may exercise its powers under this Act in respect of land the ownership of which is the subject of a legal life interest. (2) For the purposes of this section (a) the holder of the legal life interest is deemed to hold the land in trust for himself or herself and the holders of successive interests in the land, and (b) the beneficiaries of the trust are deemed to be incapable of consenting to the arrangement. Court appearances5 The Public Guardian and Trustee is entitled to appear and be heard on the application and is entitled to any costs that the court orders. Buschau v Rogers Communications Inc Facts: Buschau (named plaintiff) represented individual respondents of a pension plan that was a defined benefit plan funded solely by their then employer for the benefit of the old company. The trust never provided for the termination by employees. Rogers acquired the company and merged its DBP with its own pension administration scheme. Rogers then took the excess funds from their plan and used it to contribute to other, Rogers administered plans (by virtue of payment holiday). The beneficiaries wanted the trust terminated under the Vautier rule. At first instance, they won. Issue: Can the members of the plan invoke the common law rule of Vautier to terminate the trust? Can the court consent for someone who is sui juris? Ratio: Where other regulatory schemes exist and parliament intends to displace the common law rule, the Vautier rule may not be available for terminating a trust. Judicial action should not be used to overtake lack of consent from non-concurring beneficiaries Analysis: The court was extremely reticent to allow the common law to rule the day given the destructive effect its implementation would have on the current proceedings as well as others. The Pension Benefits Standard Act at the time heavily regulated and dealt with the termination of plans and distributions of assets. Furthermore, the pension trust is actually two instruments, the trust itself and the directions and plan surrounding it. Killing one or the other is not in keeping with what the common law rule stood for. This would effectively interfere with the contractual relations that existed at the time the plan was created as well as would bypass the effect of the legislation. The PBSA provided recourse for plan members (including recourse with the superintendent of financial institutions) but they chose not to use it in order to secure the funds directly for themselves. Furthermore, S&V shouldn’t be utilized as the pensioners did not have a right to the excess funds. It only materialized or crystallized down the road. As such, they were all future or contingent interests, and there were survivorship rights as well that effectively preclude all beneficiaries from consenting. The beneficiaries must possess the sum total of vested, not contingent interests in the trust corpus. Holding: No termination Bentall Corp v Canada Trust Co Facts: Bentall was applying to vary a pension plan due to the plan being overfunded by 6.7 million dollars. They proposed that the surplus be used to supplement the pension benefits by 20% via 2M utilization, a one time payout to Bentall of 3M, and the remainder would be used to fund a contribution holiday. 7 of the 279 pension members didn’t consent. They argued that the court had no jurisdiction to vary the plan, and even if they did, that they shouldn’t because it wasn’t a good bargain. The original trust instruments did not contemplate such a surplus Issue: Does the court have the jurisdiction? And if so, should it exercise its discretion to give effect to the proposal? Ratio: Where a right is a contingent interest and has not yet vested, the court has the jurisdiction to vary a trust as well as the ability to assent on behalf of all interested parties. Analysis: Given the fact that this was a pretty fair deal, the courts knew that any prudent person would take it. More importantly though, the surplus was also a contingent interest as opposed to a vested interest or right. It could have been the case that they never had any access to it whatsoever. The courts found that the legislation gave them the authority to consent to the variation on behalf of a contingent beneficiary, regardless of whether they also had a vested interest so long as the vested interest wasn’t affected by the variation. Here, the employees did have a vested interest in the pension contract, but the surplus was a contingent interest and the distinction was drawn here as well. The “good bargain” test was met here as a prudent adult motivated by intelligent self interest and sustained consideration of the expectancies and risks the proposal made would likely adopt it. Other arguments were made claiming true consent wasn’t obtained, but the overwhelming support spoke for itself. Holding: Variation upheld. Continental Lime Ltd v Canada Trust Co. Facts: Continental had a pension plan for its employees that contained a surplus. They intended to share the surplus currently so as to settle future ownership disputes. The 8M overrun would have split 2/3rds to the company (with 1M paying off future obligations) and 1/3rd to the members. 89/90 gave consent, Baudais was the lone hold out. Baudais was not eligible to receive the pension and was a possible future interest. Divesting the funds now would effectively strip him of any chance to access the surplus. Interestingly, the public trustee opposed the proposal on behalf of future contingent beneficiaries such as minors or persons yet unborn. Baudais further argued that the surplus belonged solely to the members and not the company. Issue: To whom does a surplus belong? Can the court override a single dissenting member of a plan? Ratio: Where the risk to future contingent interests is so theoretical or remote as to be irrelevant, courts may approve settlements. Analysis: After a prolongued time of co-contribution, the company was the sole contributor to the pension fund. As such, it was fair that they get the lions share of the surplus as well as all future surplus. The court also broached the topic of future interests by pointing out not only that they had no vested right currently, but further delay of the disposition of cash might actually not be in their best interest as they are sure to benefit down the road if the current interests receive the funds. In this way both interests are met. Note: Contractual relation was such that the company also received left over surplus should the trust be wound up. This makes sense given their sole contribution. Here there is clear judicial desire to let market and economic concerns play out properly Holding: Allow variation and settlement of surplus Re Irving Facts: Parties were seeking to vary the Eliza and David Irving trusts. Eliza’s estate was held in trust via income to her only child with the residue to whoever the daughter wants. Her daughters children also applied with the daughter for variance. The David trust also went to the daughter with her discretion to pay income to children with capital eventually to them as well. Issue: what considerations does the court take into account when varying a trust? Ratio: Whether it keeps alive the basic intention of the settlor, whether there is a benefit to infants and contingent interests and whether the benefit is such that a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks of the proposal would likely accept? Analysis: The court considered both proposals which would not only allocate capital and income but would also generate tax savings and found that the benefits from each plan were such that the court would approve them under the legislation. As this is a direct family trust with very few beneficiaries, the future contingent interests also gain value from liquidating the trust, especially as it had appreciated in value but was losing value as a recent going concern. The fact that he was given purview over how things should go against disallowing variance, especially in regards to allowing more elderly children to get immediate benefits. Court wants to be flexible, not too formalistic Holding: Varied Finnell v Schumacher Estate Facts: Testator died with a division of capital taking place 21 years after the death of his grandson (Estimated to be in 2030). The will established a charitable foundation which would hold 3/4ths of the estate with the remainder to be divided later. In the estate, 5/8ths of the capital is paid to the foundation, 1/4th to his grandson and 1/8th to his sister. A proposal was tendered as the properties were churning out royalties which were treated as income under the ITA but were treated as capital under the trust. The attempt was to try and reduce the tax burden currently, but this would lead to a loss of capital value for future beneficiaries Exact: if the properties continue to appreciate in value, significant capital gains will have to come out of accumulated royalties. Issue: Is sufficient benefit given to future contingent interests? What considerations go into varying a capital trust of this nature Ratio: The considerations to be examined when “pruning” the tree of the trust are with regards to the sufficiency of the benefit to future contingent interests and whether it preserves the intention of the settlor. Analysis: Speaking on behalf of future contingent interests, the judge points out that tax benefits by virtue of their value do not carry the day. What must be considered is the sufficient and individualized benefit that each interest must consider when making a bargain. The risk of there being little benefit in the end, as well as the clear value to current interests is not in keeping with the purposes of the act. If the contingent interests were there, they wouldn’t take the risk of a guaranteed income over the sheer capital depletion sure to happen under this proposal. Holding: rejected but not with prejudice to future arrangements. Important as other set-ups could come forth that might satisfy the needs appropriately Re Kovish Facts: Kovish died and her will set up two trusts. One for 10k for grandchildren’s education to be distributed when the last child reaches 21 and the other a trust for the income of the residue, paying 100 bucks a month to her daughter with a gift over to the kids and their kids. This creates two classes of beneficiaries, the children and the unborn children. The daughter attempted to windup the estate such that the children could get their money right away. The children had a family business and the funds were to be used for furthering the business. The public trustee was concerned in the event that a child predeceased the mother, their children would be stripped of their benefit. Issue: what benefit must accrue to contingent interests such that their needs are met? Ratio: In a variation, all parties need not be better off financially. Non-pecuniary benefits such as familiar harmony are important, and the balancing between benefit and detriments is one that a reasonable adult would approve of. Analysis: the word “benefit” in the Variation of Trust Act, is sufficiently broad and liberally interpreted that benefits need not be substantial or financial. Here the benefit is such that although the unborn children risk losing everything, they also could be the beneficiaries of a successful business that is run by a happy family. There was no extraordinary risk in the proposed business venture and it was a prudent decision to allow the fund to be so utilized in the face of a risk that might not materialize as well as one that could be offset through life insurance Holding: Variation allowed Smith v Royal Trust Corporation (Smith Estate) Facts: Seeking to vary trust set out by father and add wife as a beneficiary Issue: can the wife be added as beneficiary and does the arrangement constitute a benefit? Ratio: The court has the ability to add new beneficiaries under a variation so long as the benefit is clear to all parties Analysis: It was clear that it was unlikely that future contingent interests would have any real chance of losing out on large portions of their estate, and the provision was being made by virtue of not only family love and affection, but also to make provision for the wife in order to make sure she is taken care of (which she otherwise might not be). Some of the children wrote in in order to voice their support for the proposal and making sure the grandmother was taken care of with an independent source of income. Here the possible financial detriment is offset by other benefits (with the judge even stating that the residual beneficiaries would be happy for grandma based on this) Note: there were potential fiscal negatives, such as losing preferential tax status (by virtue of adding in the extra 800k from the proposed variation with the added beneficiary) as well as US tax liability. Holding: Variation allowed Purpose Trusts Non Charitable Purpose Trusts General Rule Against Validity Re Astor’s Settlement Trusts Facts: The trust stated that the trustees should “pay or apply the income of the trust” towards the establishment, maintenance and improvement of good understanding, sympathy and cooperation between nations, especially English speaking countries, the preservation of newspapers, the promotion of journalism and integrity of the press, the independence of editors and the establishment of any trusts or schemes in association with these goals. It is clear that they are not charitable trusts. Issue: Does the trust fail? Ratio: Other than in specific and/or rare historical circumstances, trusts for purposes are by default void As there is no beneficiary to compel performance. Otherwise, the trust is also too uncertain to the point where the court has no purview on how to administer it. Analysis: Courts want easy to administer trusts as they need to not only be able to administer it expediently based on preserving scarce judicial resources, but they also need to make sure they are not left open to suit should something go awry. Trusts administered by the court are administered under equitable principles, and the court clearly doesn’t want to promote a kind of trust which has no beneficiary with which to enforce the trust purpose. Quote: A court of equity does not recognize as valid a trust which it cannot both enforce and control Holding: Invalid trust Re Thompson Facts: The trust here related to the furtherance of fox-hunting with a remainder interest to the university. Issue: Sufficient? Ratio: Historical anomaly Analysis: The courts widely regard this decision as anomalous and more in keeping with elite society and the judges that were a part of it. The lawyer here claimed that the trust was sufficiently clear and the judge allowed it, especially because Trinity Hall had the ability to compel the trustee to enforce the trust both viz fox-hunting and their remainder interest. Holding: Ok trust Morice v Bishop of Durham Facts: Cracherode left his sister a sizeable fortune. His friend, the Bishop of Durham strong armed her into writing a new will which made him the sole executor with wide sweeping powers. Approximately 30k poiunds was left over to spend on “such objects of benevolence and liberality as the trustee in his own discretion shall approve of”. The cousins sued to overturn the will. Issue: is the will clear enough to allow for this kind of disposition Ratio: There must be someone in whose favour the court can decree performance. Lack of beneficiaries renders a purpose trust void Analysis: Lord Eldon LC decided that even though large bequests were made for libraries and other noble pursuits, there was no sense of charity attached to the will but there was a trust. As such, the trust failed as a purpose trust due to having no beneficiaries. Holding: Fails, cousins are richhhhh Characterization: Construing as a Trust for Persons Re Denley’s Trusts Facts: By trust deed, land was given to the trustees to create a recreation or sports ground for the benefits of the companies employees. Provision was made such that if the grounds ceased to be used or required by the employees, the land would be conveyed to the Cheltenham General Hospital. The trustees wanted to sell part of the land for improvements on the rest. The hospital claimed that the employees did not use the land (75% participation) such that the land would default to them, the company itself claimed that the trust was void as a purpose trust in order for the land to fail and revert back to the settlor (which was the company) Issue: Was the trust for being a purpose trust? Ratio: Where a class of beneficiaries exist such that they can enforce the terms of the trust, there need not necessarily be any individual beneficiary. Analysis: The class of beneficiaries here (employees) could all be direct beneficiaries of the park as per the original terms of the trust. It wasn’t so impersonal or abstract that they couldn’t figure out who the beneficiares were now or in the future. Rather than characterize the trust as a trust for purposes and have it be void, it can be constructed as a trust for persons which can be upheld. Holding: Trust not voided. Keewatin Tribal Council Inc. v City of Thompson Facts: The Keewatin Tribal Council was a corporation that owned realty in Thompson that it used to house native students attending high school in the city. A trust was executed making the KTC trustee and this in effect exempted the land from taxes. The town refused the exemption claiming there were no beneficiaries and that the first nations bands were not legal persons capable of holding property in their own right. Issue: Are the students beneficiaries such that the trust is upheld? Ratio: Where the Non-Charitable Purpose trust can be enforced by even indirect beneficiaries, it may be upheld. Quote: “The real question is one of enforceability and nothing else” – lack of care for formal requirements, want to see equity done. Analysis: Here, there was not much stock placed in the fact that certain groups weren’t traditional legal entities or beneficiaries. A multitude of bands, chiefs, and even the students were the indirect but ultimate beneficiaries and, as they had come to rely on the arrangement, had the ability to compel performance of the trust. Holding: Trust upheld Peace Hills Trust Co v Canada Deposit Insurance Corp Facts: Canada entered into a framework agreement through which it would honour its treaty obligations with the result being that the Canadian and SK governments would hit the bands up with some serious cash (>21M). The trust agreement was such that the band was both settlor and beneficiary with five trustees. The primary issue was with insurance: The band wants each member to be insured whereas the insurance company wants it to be held as a purpose trust with a maximum 100k coverage limit. The trust was primary designed to buy land and the band was not seen originally as the beneficiary of the trust. Issue: Can a valid purpose trust be established under Canadian Law? Ratio: Non-charitable purpose trusts may be created in Canada but cannot contravene the rule against perpetuities and there must be someone with standing who can enforce the trust Analysis: Clearly there is no direct beneficiary as the land is just sitting inert in someone’s account, but the court here is no doubt not quick to find, especially in the aboriginal context, that no trust exists especially after months and even years of negotiation. The bands and chiefs respectively could enforce the trust in regards to getting their fair share of the proceeds. Holding: everything groovy baby, seemingly tacit appreciation that old formulaic notion of purpose trusts as being permanently void isn’t the rule. Unincorporated Associations Re Lipinski’s Will Trusts Facts: One half of the residuary estate was to be held for the jewish association for the sole work of constructing new buildings and improving old ones. The club was designed to provide social, cultural and sporting activities for jewish youth and was thereby not charitable. The club was not incorporated and it could obviously not be construed as an absolute gift due to the multitude of conditions attached. Issue: Is the trust valid? Are there beneficiaries? Ratio: Where a trust property can be distributed among beneficiaries, a non-charitable purpose trust will not fail regardless of the entity controlling it Analysis: Via constitutional amendment, the members of the group could divide the associations assets amongst themselves as they weren’t beholden to normal corporate law principles in that regard. Furthermore, cases were brought ot the courts attention where the beneficiaries overrode the purpose of a particular bequeathment. The testator saying “solely” bore no legal force given the fact that the members of the association could vary the trust as they saw fit and could seek enforcement as well. Holding: Variance allowed Statutory Reform Perpetuity Act – S.24 Directory: wp-content -> uploads -> gravity forms -> 1-7d6c8355b7f07846e8789d85deabdb60 -> 2016 gravity forms -> Earl E. Klein Jr gravity forms -> Narrative of how the entry meets the award criteria – July 28, 2016 gravity forms -> Revonda M. Baldwin gravity forms -> Air Atlanta Icelandic November 2006 – Current 2016 -> Ip master Guide 1-7d6c8355b7f07846e8789d85deabdb60 -> Insurance Law can Download 0.79 Mb. Share with your friends:
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