DATE: 20020206
DOCKET: C35932
COURT OF APPEAL FOR ONTARIO
RE:
DAVID GRANT MARTIN (Appellant) – and – ROBERT F. BANTING, BARBARA ANN MARTIN, KENNETH MICHAEL MARTIN, THOMAS JAMES WEISZ, CIBC WOOD GUNDY SECURITIES INC. and the FREEBURNE BANTING FOUNDATION AND FENWOOD DEVELOPMENTS LIMITED (Respondents)
BEFORE:
CARTHY, ABELLA, SHARPE JJ.A.
COUNSEL:
Timothy Youdan and Brian Smith for the appellant
Sean F. Dunphy and Chris Cosgriffe for the respondents Robert F. Banting and Freeburne Banting Foundation and Fenwood Developments Limited
Hank Keesmatt for the respondent Barbara Ann Martin
HEARD:
December 17, 2001
On appeal from the Judgment of Justice Wailan Low dated February 14, 2001 dismissing the appellant’s claims.
E N D O R S E M E N T
1These appeals arise from the distribution of the proceeds of two estate-freeze trusts. The plaintiff was named as one of the potential beneficiaries in both trusts. The terms of both trusts conferred on the settlor/trustee broad discretion to divide the proceeds among the named beneficiaries. Both trustees exercised their discretion when distributing the proceeds of the trust to deny the appellant any benefit.
2In the case of both trusts, it is clear from the record that there has been a serious falling out between the respondent settlor/trustees and the appellant. In view of the terms of the trusts and the broad discretion they confer upon the trustees, we agree with the motions court judge that there was no triable issue that the respondents had committed a breach of trust in denying the appellant any benefits from the trusts.
3With respect to the Robert Banting Trust, the appellant submits that there is a triable issue that the trustee committed a fraud on a power by exercising his discretion as trustee so as to confer benefits upon himself and another non-beneficiary, namely the Freeburne Banting Foundation. It is argued that it would be open to a trial judge to draw this inference from the fact that on the same day Barbara Martin received her distribution, she immediately gave a portion of the proceeds to the trustee and another portion to the Freeburne Banting Foundation. This argument was pressed with considerable force before us. However, the underlying facts are not clearly pleaded in the statement of claim and the point was not pressed to the same degree before the motions court judge. We reject it for the following reasons.
4Assuming (without deciding) that there is a triable issue that the distribution of the proceeds of the trust should be set aside on grounds of fraud on a trust power, it does not follow that the appellant has an arguable claim. The terms of the instrument exercising the power clearly state that the termination of the trust is to take effect following the distribution of all of the assets of the trust. If, as the appellant submits, the distribution of the trust assets is void, and if, as a consequence, it were to be set aside, the termination of the trust would also be set aside and the trustee would retain the discretion to distribute the trust proceeds as he deems fit. In view of the unequivocal position taken by the trustee throughout, there is simply no prospect that the appellant would stand to gain.
5Given the nature and objects of the trust, there is no serious prospect that a trial judge might accept the appellant's request for the appointment of a replacement trustee who might exercise the trustee's discretion in favour of the appellant.
6The appellant relies on the default distribution that is to take place on the "vesting day" as defined by Article VIII (1)(2) of the Trust Deed. However, we are unable to accept the submission that the actions of the trustee have brought about the "vesting day" that would result in the default distribution to the appellant. The trustee's termination resolution made no reference to the vesting day. We also note that Trust Deed clearly stipulates that that the "vesting day" cannot occur earlier than 21 years after its execution which is December 9, 1996. The termination resolution was made on November 24, 1995. While we see nothing in the Trust Deed that authorizes the trustee to terminate the trust, we are unable to accept the appellant's contention that the purported termination had the effect of invoking the "vesting day" given these explicit terms of the Trust Deed.
7It follows, in our view, that the even if we were to accept the appellant's submission that the distribution of the proceeds of the trust should be set aside, the appellant cannot escape the discretion of the trustee who has made it clear that he will not exercise his discretion in favour of the appellant.
8Accordingly, we would dismiss both appeals with costs.
“J.J. Carthy J.A.”
“R.S. Abella J.A.”
“Robert J. Sharpe J.A.”