Proof of Trusts

Yesterday's Superior Court decision in Citizens Bank of Rhode Island v. Paramount Holdings Canada Company, 2008 CanLII 12706 (ON S.C.) provides a helpful review of trusts and specifically when a trust will be found by the Court to exist.

The Court writes:

[19] A trust, express or implied, has three essential characteristics: (1) certainty of the intention to create the trust; (2) certainty of the subject matter or trust property; and (3) certainty of the objects of the trust. If any one of these does not exist, the trust fails to come into existence.

[20] In the absence of formal trust documentation, the Court must consider the circumstances and evidence as to what the parties intended, what was actually agreed to and how the parties conducted themselves to determine if the requisite clear intention to create a trust is present.

[21] Factors the Court will consider include the content of any agreements between the parties, whether the alleged trust property is held in a separate account, whether the alleged trustee is permitted to commingle the alleged trust funds with his or her own funds or use the funds for his or her own general business purposes and, past events and conduct that may suggest that the parties treated the funds as trust funds.

[22] The presence or absence of a prohibition on the commingling of funds is not necessarily determinative. Commercial Union Life Assurance Co. of Canada v. John Ingle Insurance Group Inc., [2001] O.J. No. 3289 (S.C.J.), paras. 300-305 (affirmed [2002] O.J. No. 3200).
Constructive Trust

[23] Constructive trust is an equitable remedy that may be granted in order to prevent an unjust enrichment of a person. In order to impose a constructive trust based on unjust enrichment there must be (1) enrichment; (2) a corresponding deprivation; and (3) no juristic reason for the deprivation.

[24] A juristic reason means some underlying justification, grounded in a legal or equitable basis, for the circumstances that have arisen. The juristic reason may arise out of a relationship between the person enriched and some other person, and need not by tied to the person who asserts the unjust enrichment. Canada ( Attorney General) v. Confederation Life Insurance Co., [1995] O.J. No. 1959 (Gen. Div.) (affirmed 1997 CanLII 2801 (ON C.A.), (1997), 32 O.R. (3d) 102, paras. 176, 193-194 (C.A.)).
James Morton
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