Licenses Held In Trust Proper and Binding

The recent Newfoundland Court of Appeal decision in Loder v. Citifinancial Canada Inc., 2007 NLCA 78 deals with trust agreements and fishing rights. This might seem like an area that is a local interest only but the reasoning is useful on a much broader basis.



In a nutshell, the case dealt with a trust agreement established to allow a license to fish to be beneficially held by a person who would not qualify to be the legal license holder. It was clear that the trustee was a mere place holder and the beneficial holder would exercise all rights.

The relevant legislation did not contain an express prohibition on licenses being held in trust for persons who did not qualify for them; however, the legislation did make certains conditions necessary for license holders and those conditions were not met by the beneficiary of the trust. One might assume the legislator did not want licenses functionally held by those who did not qualify to be legal holders.



Not surprisingly the trial judge held the trust agreement was merely an artifice to avoid the relevant legislation. The trial judge refused to give effect to trust.



The Court of Appeal took a different view. After an extensive case review the Court held that it was proper to hold a license in trust, largely because there was no express statutory bar against doing so.



While the decision deals with fishery license legislation the reasoning is much broader. One can imagine many places where the reasoning might apply -- taxi licenses, liquor licenses or adult entertainment licenses to name a few examples. Whether convincing legally the case may have quite a broad and useful application.