In Holman v. Holman, 2026 BCSC 378, the Supreme Court of British Columbia determined an action commenced by Alexander H. (“Alexander”), against his father, Lyle H. (“Lyle”), concerning allocations from a discretionary family trust and profits from a subsequent real estate venture.

Background:

On March 2, 2000, the Holman Family Trust (the “Trust”) was settled with Lyle as trustee and family members, including Alexander, as discretionary beneficiaries.

The Trust’s only assets originated from the proceeds of sale from a property located on Edwards Street in Mission, British Columbia (the “Edwards Property”). The sale proceeds were received in two instalments in 2017 totalling approximately $4.7 million. On August 8, 2017, T3 slips were issued to Alexander, allocating a total of $1,257,535 of trust income for 2012–2016.[1]

Alexander allegedly claimed that he would defer receiving his share of the proceeds from the Edwards Property, leaving it in the Trust for tax benefits. He further alleged that the allocated funds could be used to purchase another investment property with Lyle.[2]

In 2017, the parties agreed that Alexander would purchase a property on Cherry Street in Mission, British Columbia (the “Cherry Property”), using funds that Lyle ultimately acknowledged came from the Trust. On January 25, 2018, Alexander purchased the Cherry Property and title was placed in Alexander’s name for tax purposes. Alexander and Lyle agreed that they would split the profit from the proceeds of sale of the Cherry Property once it sold.[3]

In October of 2021, the Cherry Property sold for $3,650,000 and the net sale proceeds totalled $2,976,644. Alexander and Lyle split the profit as they previously agreed from which Alexander received $510,000 and Lyle received $616,833. Lyle also received $1,500,000 as repayment of his contribution and expense to the Cherry Property.[4]

The Action:

On November 22, 2023, Alexander commenced an action against Lyle, asserting the following:

1. Lyle owed him approximately $628,000 from his Trust allocation; and
2. The Cherry Property profits were to be split equally, with Alexander’s Trust allocation to be paid separately after the sale. [5]

Alexander asserted that Lyle informed him of an allocation of approximately $628,000 from the Trust. They agreed that he would defer taking that money to contribute to purchasing the Cherry Property, with his Trust allocation to be paid after the sale.[6]

On the other hand, Lyle asserted that there was no agreement to pay $628,000 from the Trust. Lyle maintained that the parties only agreed to a 50/50 split on the profit of the Cherry Property, with Lyle funding the purchase and expenses. [7]

Agreement Regarding Cherry Property Profits

The Court rejected Alexander’s assertion that there was a specific agreement that he would be paid approximately $628,000 from the Trust before or after the Cherry Property sale. The Court found inconsistencies in Alexander’s evidence, including his admission during discovery that he derived the $628,000 figure from “doing the math” on his returns, undermining the claim that Lyle had promised that amount. Further, the T3s showed his capital gains allocations totalled $1,257,535, making it unlikely Lyle would have volunteered the specific $628,000 figure.[8]

The “Order to Pay” from the Cherry Property sale also identified $616,833 as payable to Lyle as profit, contradicting Alexander’s attempt to equate that amount to his supposed Trust entitlement.[9] On this basis, the Court determined that no agreement existed providing that Alexander would be paid $628,000 from the Trust, either before or after the Cherry Property sale.[10]

The Alleged Agreement to Pay $628,000 from the Trust

The Court found the parties did agree to share Cherry Property profits equally, with Lyle funding the purchase and expenses. Profits were divided accordingly, and Lyle’s $1,500,000 represented reimbursement for his contributions. However, the court found that there was no agreement or legal basis to link the profit split to satisfy Alexander’s Trust allocation. On this basis, the Court rejected any link between splitting the Cherry Property profits and an obligation to pay Alexander’s Trust allocation from the sale proceeds.[11]

Independent Liability on the Trust Allocation

The Court determined that Alexander’s Trust allocation of approximately $628,767 remained outstanding, as there was no agreement that the Cherry Property sale profits would satisfy this obligation as noted above. Lyle’s argument that these profits extinguished the Trust liability was unsuccessful because the Court found no evidence of such an agreement. The Court concluded that Alexander’s entitlement to the funds arose directly from the Trust allocation, independent of any arrangements related to the Cherry Property purchase, and this allocation was not fulfilled by his involvement in the Cherry Property venture. [12]

Concluding Remarks

The court in Holman v. Holman underscores the importance of clear agreements and documentation in trust and property transactions, highlighting that trust allocations must be honoured independently of other financial arrangements.

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[1] Ibid at para 10

[2] Ibid at para 9

[3] Ibid at para 45

[4] Ibid at para 21

[5] Ibid at para 26

[6] Ibid at para 11

[7] Ibid at para 12

[8] Ibid at para 48

[9] Ibid at para 22

[10] Ibid at para 61

[11] Ibid at para 63

[12] Ibid at para 73