Cossman+and+Hoffstein

Notes, Torts: Cossman, Hoffstein: Disputes Involving Trusts: The Canadian Experience

- By the end of the 19th century, there was legislation that aimed to combine the administration of the two courts. //Trust//: a device for property holding and administration; one person has an obligation to deal with property over which he/she has control for the benefit of others. Not a legal entity, but a relationship between trustees and beneficiaries. [ Intense fiduciary relationship ]. //Settlor//: Person who creates trust. //Beneficiaries//: have no rights or powers over trustees; can insist trust is executed according to trust instrument. Trusts can be **express** or **remedial**. __EXPRESS TRUSTS__: To be valid, trusts must be such that: a. the so-called 3 certainties can be found in trust deed or will and b. the formality for the transfer of property has been undertaken to transfer title from the settler to the trustee. A. intention to create trust: language must be certain B. certainty of subject matter [what property, what proportions] C. certainty of objects [beneficiary must be identified; if not by name, by class.] //Fiduciary Duties:// //Remedial Trusts//: - Today, the constructive trust is employed in a fiduciary context. - This case stands for idea that trustees and other fiduciaries //profiting// are constructive trustees of the profit. A. fiduciary has scope to exercise some discretionary power B. fiduciary can unilaterally exercise power of discretion to beneficiary’s interest C. Beneficiary is vulnerable or at mercy of fiduciary. //Remedial Constructive Trust//: imposed by court to prevent injustice and unjust enrichment. LAC Minerals Ltd. vs. International Corona Ltd.: -Supreme Court imposed remedy of constructive trust to prevent any unjust enrichment to LAC. LaForest: “But for LAC’s breaches, Corona would have acquired [land]…” Another important case: Canada Arrow Services LTD. v. O’Malley: - 2 senior employees of plaintiff company worked in Guyana to develop project. Intended to ask for bids. Prior, two employees resigned and so were successful in their bids. Court extended concept of fiduciary duty to ex-employees even after they resigned; they were thus disqualified from pursuing business opportunity with company. 1. fiduciaries based on loyalty 2. influence-based fiduciaries: - those who possess power, superior information. For instance, in Hodgkinson v. Simms: H= 30 year old stockbroker with serious increase in income in 1 year. Simms= a chartered accountant providing tax planning service. H obtained personal advice from Simms about investments. Unknown to H, Simms was paid a bonus to recommend this tip to his clients [to invest in a particular company]. H lost $350,000 of this investment because of drop in market.
 * To understand issues surrounding trusts, we must understand the origins of the trust concept. **Trust** originates in distinction between jurisdiction of the common law courts and the courts of equity.
 * CML courts confirmed rights while courts of equity imposed obligations.
 * CML courts recognized ownership of property; people held property for others, but this obligation was not understood by law. Here there arose the notion of **dual ownership**.
 * CVL law has other means by which to achieve a similar result—namely usufruct, fiduciary. The Hague Convention on the Law Applicable to Trusts and their Recognition was a significant breakthrough—allowed CVL jurisdictions to recognize CML trust.
 * The 3 certainties are:
 * 1) Duty of Care: CML standard of care is what a reasonable and prudent business person would do in conducting his/her own affairs. Is a higher standard of care owed by a professional trustee rather than a non-professional? Courts have held professionals to higher standards in the past.
 * 2) Duty to Act Personally: trustee cannot delegate decision-making power. If appointing agents, must supervise work. Courts have distinguished between administrative and executive tasks.
 * 3) Duty to avoid Conflicts of Interest, Act for Benefit of Beneficiaries: Duty of Loyalty. Very Important.
 * 4) Duty to be Impartial amongst Beneficiaries: “Even-hand” rule. Competing interests of one beneficiary have implications for other trustees.
 * Resulting Trust:** imposed in certain situations to return property to a person entitled to it beneficially from a person who is the legal title holder. For instance: A. settler when a beneficial interest under an express trust fails for some reason. [Express trust might fail for uncertainty]. B. where equity chooses to presume that a trust was created and puts the burden on the defendant titleholder to prove that there was no trust. [When one person voluntarily conveys property to another, but person does not intend that other should take it beneficially.]
 * Constructive Trust**: fast-growing, controversial. Considered to be a substantive institution. Imposed to prevent fraud and undue influence. Applied as a deterrent in a fiduciary capacity.
 * Historical basis for this comes from English decision, Keech v. Sandford: here, defendant trustee held a lease of the profits of Romford Market in trust for the plaintiff, a minor. When term of lease expired, trustee wished to renew it but lessor refused. Trustee obtained renewal in his personal capacity. Brought proceedings to have lease assigned to him and an accounting of profits after renewal of lease. Plaintiff was successful.
 * Categories of fiduciary relationships are constantly expanding.
 * Courts have not established criteria to determine what relationships they will hold as ‘fiduciary’. Some influential characteristics, however, are:
 * Two companies explored property for a mining claim. Corona owned mining rights on some lands, was drilling holes. LAC approached Corona about a joint venture. Corona revealed to LAC that adjacent property probably had gold. Corona was trying to develop this land, but LAC was making successful bids and had developed a gold-mine. Corona sued LAC: breach of confidence, fiduciary duty.
 * Landlord-tenant relationship has also been considered fiduciary in the past.
 * Common elements of those relationships in which a constructive trust can be found:
 * In this case, SCC found that a fiduciary relationship existed between H and S. They found a breach and found S to be a constructive trustee of H. This shows that there are fiduciary relationships in the commercial context.