Creation of Trust – Certainty of Intention
It is surprising how often courts have to address very basic principles of trust law, such as the requirements for creating a valid trust. These include the certainties of intention, subject matter, and objects; constitution of the trust; and observance of any formalities. It happened again in Corvello v Colucci.[1]
The brothers, Arthur and Gino Colucci, and Tony Corvello, Arthur’s brother-in-law, obtained a permit from the Ontario government in 1974 that allowed the holders to build on and occupy property on Lac Seul in the District of Kenora for recreational purposes. But the permit did not confer any rights of ownership over the land or any interest in it. The permit was issued in Arthur’s name only because at the time of issuance the government would not allow a permit to be put in more than one name.
Since 1974, the three men and their families enjoyed the use of the recreational property in harmony. They testified that it was a place ‘where their families gathered to build, work, relax and enjoy each other’s company’. However, in 2016 Arthur took the view that the permit belonged to him alone and he locked out the other two and their families. They sued.
In an unreported judgment, the trial judge meticulously reviewed the evidence, and concluded based on the evidence, the surrounding circumstances, and how the parties conducted themselves, that the parties had entered into an undocumented trust agreement under which all enjoyed the benefit of the permit and the use of the property.
Arthur appealed on the single issue that the trial judge erred in law and in fact in holding that there was an undocumented trust.
Such informal arrangements are quite common it seems, and the parties happily abide by them until disagreements arise. The court had to address a similar dispute in Byers v Foley.[2] the parties in that case were members of a neighbourhood softball team and they obtained two seasons tickets to major league baseball games each year. The tickets were acquired by the defendants, who divided the cost among all the participants. The participants agreed on the allocation of the use of the tickets before each baseball season. After five years the defendants informed the other participants that, as the subscribers of record, they claimed the sole right to the tickets and they terminated the arrangement. The others sued for a declaration that the plaintiffs and defendants jointly owned the seasons tickets. The court had regard to the surrounding circumstances and the evidence and found that the three certainties for an oral trust existed. Thus, it granted the declaration sought by the plaintiffs.
On the appeal in Corvello, the court referred to Byers, but did not discuss it. Arthur argued that there was no certainty of intention to create a trust and that, in the absence of a documented trust and the fact that the permit was in his name alone, the trial judge should have accepted his evidence that he never intended to create a trust.
The Court of Appeal disagreed. It was open to the trial judge to accept some, all, or none of the evidence of any of the witnesses. Thus, the subjective intention of Arthur was not determinative. Rather, she had to apply an objective standard to determine certainty of intention from the acts of all the parties. Further, he absence of a formal trust agreement and the fact that the permit was issued in Arthur’s name alone were not determinative. Rather, the court had to look at all the surrounding circumstances and the evidence to ascertain what the parties intended, what they agreed, and how they conducted themselves. That is what she did, and it led her to accept Gino and Tony’s evidence. Her findings supported the existence of a trust. The court held that the trial judge did not make any error in her findings and analysis.
The trust was clearly constituted by the funds contributed by all of the parties to the construction of the facilities on the property, but the court did not address is the statutory formalities imposed by the Statute of Frauds.[3] However, those formalities only concern trusts of land,[4] and the permit did not confer any rights of ownership over the land or an interest in it. Thus, the permit consisted of personal property and to create a trust of personal property no writing is required.
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[1] 2022 ONCA 159.
[2] 1993 CarswellOnt 558, 2 ETR 2d 55 (Gen Div).
[3] RSO 1990, c 442.
[4] Ibid., s 4 (contracts for the sale of land or any interest in it), and s 9 (creation of an inter vivos trust of land), both of which must be evidenced by a writing signed by the party to be charged under the contract, or who is entitled to declare the trust.
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Written by: Albert Oosterhoff
Posted on: July 20, 2022
Categories: Commentary
It is surprising how often courts have to address very basic principles of trust law, such as the requirements for creating a valid trust. These include the certainties of intention, subject matter, and objects; constitution of the trust; and observance of any formalities. It happened again in Corvello v Colucci.[1]
The brothers, Arthur and Gino Colucci, and Tony Corvello, Arthur’s brother-in-law, obtained a permit from the Ontario government in 1974 that allowed the holders to build on and occupy property on Lac Seul in the District of Kenora for recreational purposes. But the permit did not confer any rights of ownership over the land or any interest in it. The permit was issued in Arthur’s name only because at the time of issuance the government would not allow a permit to be put in more than one name.
Since 1974, the three men and their families enjoyed the use of the recreational property in harmony. They testified that it was a place ‘where their families gathered to build, work, relax and enjoy each other’s company’. However, in 2016 Arthur took the view that the permit belonged to him alone and he locked out the other two and their families. They sued.
In an unreported judgment, the trial judge meticulously reviewed the evidence, and concluded based on the evidence, the surrounding circumstances, and how the parties conducted themselves, that the parties had entered into an undocumented trust agreement under which all enjoyed the benefit of the permit and the use of the property.
Arthur appealed on the single issue that the trial judge erred in law and in fact in holding that there was an undocumented trust.
Such informal arrangements are quite common it seems, and the parties happily abide by them until disagreements arise. The court had to address a similar dispute in Byers v Foley.[2] the parties in that case were members of a neighbourhood softball team and they obtained two seasons tickets to major league baseball games each year. The tickets were acquired by the defendants, who divided the cost among all the participants. The participants agreed on the allocation of the use of the tickets before each baseball season. After five years the defendants informed the other participants that, as the subscribers of record, they claimed the sole right to the tickets and they terminated the arrangement. The others sued for a declaration that the plaintiffs and defendants jointly owned the seasons tickets. The court had regard to the surrounding circumstances and the evidence and found that the three certainties for an oral trust existed. Thus, it granted the declaration sought by the plaintiffs.
On the appeal in Corvello, the court referred to Byers, but did not discuss it. Arthur argued that there was no certainty of intention to create a trust and that, in the absence of a documented trust and the fact that the permit was in his name alone, the trial judge should have accepted his evidence that he never intended to create a trust.
The Court of Appeal disagreed. It was open to the trial judge to accept some, all, or none of the evidence of any of the witnesses. Thus, the subjective intention of Arthur was not determinative. Rather, she had to apply an objective standard to determine certainty of intention from the acts of all the parties. Further, he absence of a formal trust agreement and the fact that the permit was issued in Arthur’s name alone were not determinative. Rather, the court had to look at all the surrounding circumstances and the evidence to ascertain what the parties intended, what they agreed, and how they conducted themselves. That is what she did, and it led her to accept Gino and Tony’s evidence. Her findings supported the existence of a trust. The court held that the trial judge did not make any error in her findings and analysis.
The trust was clearly constituted by the funds contributed by all of the parties to the construction of the facilities on the property, but the court did not address is the statutory formalities imposed by the Statute of Frauds.[3] However, those formalities only concern trusts of land,[4] and the permit did not confer any rights of ownership over the land or an interest in it. Thus, the permit consisted of personal property and to create a trust of personal property no writing is required.
—
[1] 2022 ONCA 159.
[2] 1993 CarswellOnt 558, 2 ETR 2d 55 (Gen Div).
[3] RSO 1990, c 442.
[4] Ibid., s 4 (contracts for the sale of land or any interest in it), and s 9 (creation of an inter vivos trust of land), both of which must be evidenced by a writing signed by the party to be charged under the contract, or who is entitled to declare the trust.
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