Court of Appeal for Ontario

Date: September 19, 2019

Docket: C65323

Judges: Feldman, Pepall and Miller JJ.A.

In the Matter of the Appointment of a Litigation Guardian for Eda Rubner and The Substitute Decisions Act, 1992

Between

Joseph Rubner (also known as Yossi Rubner) and Marvin Rubner, in their capacity as Joint Attorneys for property acting under a Continuing Power of Attorney for Property granted by Eda Rubner dated January 12, 2003

Applicants/Respondents

and

Alexander Bistricer, Brenda Bistricer, Eda Rubner, in her personal capacity, in her capacity as a Trustee of the Bistricer/Rubner Family Trust, and in her capacity as Bare Trustee through Eda Rubner Realty a sole proprietorship in the Lower Fourth Joint Venture, Michelle Levinson and 975273 Ontario Limited

Respondents/Appellants

Counsel

Anne Posno and Amy Sherrard, for the appellants, Alexander Bistricer and Brenda Bistricer

David Steinberg, for the respondent Brahm Rosen in his capacity as Litigation Guardian for Eda Rubner

Arieh Bloom, for the respondents Marvin Rubner and Joseph Rubner in their capacity as Joint Attorneys for Property of Eda Rubner

John Adair, for the respondent Joseph Rubner

Ian C. Matthews, for the intervenors on the appeal Mattamy (Sixth Line) Limited, Mattamy (Oak) Limited, Mattamy (Penlow) Limited, 1214850 Ontario Inc., Mattamy Realty Limited, Ruland Realty Limited, and Bratty Building

Heard

November 28, 2018

On Appeal

On appeal from the judgment of Justice Frederick L. Myers of the Superior Court of Justice, dated March 22, 2018, with reasons reported at 2018 ONSC 1934, and from the costs order, dated May 14, 2018, with reasons reported at 2018 ONSC 3038.

Feldman J.A.

Overview

[1] The issues before the court arise out of a financial dispute among adult siblings over the entitlement to part of an interest in a very valuable investment that was made by their father in the 1960's. The investment was a 10% interest in a large future residential development in Oakville, Ontario. The balance is owned by affiliates of Mattamy Homes (collectively "Mattamy Homes"). The investment was always held by the mother in trust for the three siblings, in equal shares. This reflected her clear and uncontested intention to benefit her three children equally. In recent years, the daughter, who lives in the United States, disclaimed her interest in the investment, for tax reasons.

[2] When distributions began to be made by Mattamy Homes in 2014, they were paid to the mother and deposited into two bank accounts opened for her. By that time, one of the brothers had sold his share to Mattamy. The other brother claimed that he had already received his one-third share of the investment from the mother some years earlier. The sister claimed that the mother had made an oral gift to her of the distributions from the one-third portion of the investment that reverted to the mother following the sister's disclaimer.

[3] It was not disputed that half the funds in the bank accounts belonged, beneficially, to the brother who had not sold his interest. The central issue on the appeal is whether the other half of the funds in the bank accounts belonged beneficially to the mother or to the sister. For the reasons that follow, I would hold that those funds were held by Eda Rubner, the mother, as bare trustee for the benefit of the sister, Brenda Bistricer.

Facts

[4] Marvin Rubner, Joseph Rubner, and Brenda Bistricer are siblings. Their mother, Eda Rubner, is over 90 years old and was found to lack capacity to manage her property around November 2016. Marvin and Joseph Rubner hold powers of attorney for property for Eda Rubner, and have been managing her property since August 2016. Joseph lives with and cares for his mother.

[5] Karl Rubner, Eda Rubner's late husband and the children's late father, purchased a 10% interest in the Lower Fourth Joint Venture (the "Joint Venture") in 1969. The Joint Venture owned land in Oakville that has become very valuable over time. Mattamy Homes currently owns the remaining 90% interest in the Joint Venture, plus a further 3.33% that Marvin Rubner sold to it in 2013.

[6] Eda Rubner was always the legal owner of the Rubner family's Joint Venture interest, although it was initially purchased in the name of Eda Rubner Realty Limited, a company that never existed. Eda and Karl Rubner intended each of their children to have and enjoy a one-third share of the Joint Venture interest.

[7] In 1972, Eda Rubner wrote a letter to the manager of the Joint Venture (the "1972 letter"). Though the parties could not confirm whether that letter was sent to the manager in 1972 (or ever), Marvin Rubner sent a copy of the letter to an accountant at Mattamy Homes in 2003. Karl Rubner was still alive at that time. In the letter, Eda Rubner stated "I would like to inform you that the one tenth that is in Eda Rubner Realty's name in the above mentioned venture is being held in trust for her three children, one-third for Brenda Rubner, one-third for Marvin Rubner, one-third for Joseph Rubner."

[8] Brenda Bistricer and her husband Alex Bistricer reside in the United States. After receiving tax advice, Brenda Bistricer disclaimed her entitlement to the one-third of the Joint Venture interest that her parents intended she have. The trial judge found that by 2014, she had disclaimed her interest. All family members agree that it is Eda Rubner who therefore owns that one-third of the Joint Venture interest.

[9] Up to 2009, Eda Rubner paid the cash calls from Mattamy on the entire Joint Venture interest. However, beginning in 2009, each sibling paid one-third of the cash calls on the Joint Venture. Marvin and Joseph Rubner gave evidence that they paid the cash calls on their shares because they understood themselves to be beneficial owners of their respective thirds of the interest. Brenda Bistricer gave evidence to the effect that she paid the cash calls on the other one-third on the understanding that she was acting on behalf of Eda Rubner, who she said was no longer comfortable making such large payments at her age. Brenda Bistricer was comfortable with the arrangement because she believed that she would eventually inherit the one-third interest and be gifted any proceeds of income distributions.

[10] Brenda Bistricer gave evidence that there was a family meeting in 2012 or 2013 when Marvin Rubner raised the issue of selling the Lower Fourth investment to Mattamy Homes. By that time, both Marvin and Joseph had each asserted their ownership of one third of the investment. Brenda had disclaimed hers. Eda Rubner suggested that she would sell Marvin's one third, pay the tax and give him the proceeds, but he wanted his one third in his name. At that time, Eda Rubner said that with respect to Brenda's share in the investment, which Brenda had disclaimed for tax reasons, Eda would gift to Brenda all future distributions, tax paid. Joseph Rubner's evidence was that there was a meeting where someone brought up the idea that Eda Rubner could declare the income from distributions and gift the proceeds but he could not remember any other details. Marvin Rubner denied that there was ever an intention to bequeath Brenda's interest or gift the distributions to her. There is no written record of what occurred at the family meeting.

[11] Following that meeting, in 2013, Marvin Rubner's interest was formally transferred to him by Eda Rubner and he then sold his interest to Mattamy Homes for $3 million.

[12] Eda Rubner executed a new will in 2014, at a second meeting with a lawyer, Joseph Rubner, and Brenda and Alex Bistricer. The application judge stated that "it is clear from email correspondence that between the two meetings the structure and contents of the new will were dictated by Joseph Rubner and the Bistricers without reference to Eda Rubner": at para. 82.

[13] In her previous 2003 will, the three children were named as residuary beneficiaries of Eda Rubner's estate in equal shares. Marvin Rubner and two neutral non-relatives were named as executors. In the March 2014 will, the three siblings were named as estate trustees. At that time they were already engaged in litigation over the siblings' respective shares in another family investment. Joseph Rubner stated in his cross-examination that he instructed the lawyer to add himself and Brenda Bistricer as estate trustees so that they could outvote Marvin Rubner in the event of disagreement.

[14] The new will contained a clause stating that Eda Rubner held legal and beneficial title to the one-third interest that was previously held in trust for Brenda Bistricer. It instructed the trustees to transfer Eda Rubner's "interest in or proceeds from" the Joint Venture to Brenda Bistricer: see Rubner v. Bistricer, 2018 ONSC 1934, at para. 85. Further, the clause stated that Joseph Rubner had previously received his one-third interest.

[15] The lawyer later prepared primary and secondary wills to replace the March 2014 will, and they were executed by Eda Rubner in September 2014.

[16] In December 2014, the Joint Venture began making income distributions, with cheques payable to Eda Rubner Realty. The first distribution was in the amount of $1,830,202.68 in December 2014 and the second was $1,200,006.00 in February 2015. As Eda Rubner Realty did not exist, steps were taken by Joseph Rubner and the Bistricers to register that business name for Eda Rubner, then two bank accounts were opened to receive the distributions – one Canadian dollar account and one US dollar account. Joseph took his mother to open the Canadian dollar account, and Brenda and Alex Bistricer took her to open the US dollar account. Joseph Rubner declared half of the proceeds as income. The other half was declared by Eda Rubner and the tax was paid out of the bank account.

[17] It was understood by all parties that half of the monies deposited into the accounts were for Joseph Rubner and half were for Brenda Bistricer. The legal basis for that understanding became the subject of this action and appeal. In his affidavit, Joseph Rubner explained that he believed he could direct his mother to make payments out of the account for him "as a result of [his] ownership of 1/3 of the Lower Fourth Joint Venture." He believed Brenda Bistricer could direct their mother regarding her half because of the 1972 trust.

[18] Eda Rubner signed a number of blank cheques for the two accounts. Those cheques were filled in by Joseph Rubner to pay amounts for himself and for Brenda Bistricer. They were also filled in by Alex and Brenda Bistricer.

[19] For example, Joseph Rubner invested in a project operated by Alex Bistricer in Maryland. On September 2, 2015, he took his mother to the bank to wire $1,000,000 (USD) on his behalf to the US law firm acting on the project and $500,000 (USD) on Brenda Bistricer's behalf. Then in November, 2015 Alex Bistricer told Joseph Rubner, and he agreed, that he wanted Joseph Rubner and Brenda Bistricer to have equal investments in the project. As a result, Alex Bistricer filled in one of the blank cheques from the US account and paid Joseph Rubner $250,000 (USD) from Brenda Bistricer's share to equalize the investments. Joseph Rubner stated that Eda Rubner never received statements or distributions from the Maryland investment, but he did, and he believes that Brenda Bistricer did.

[20] Brenda Bistricer did not keep the cheque books for the two accounts containing the funds she understood had been gifted to her. She gave evidence that she trusted her brother to keep the cheque books. She would ask him to make out a cheque and have Eda Rubner sign it when she wanted to use the funds to pay her Canadian expenses. Joseph Rubner stated that in June 2015, Alex Bistricer asked to hold the cheque books for both accounts so that he could pay an accountant for the preparation of Eda Rubner's 2014 tax returns. The cheques had been signed in blank by Eda Rubner on request of Joseph Rubner.

[21] When Alex Bistricer returned the cheque books to Joseph Rubner, Joseph Rubner's evidence was that two cheques were missing from each book. One of them was used to pay the accountant and another was the one to Joseph Rubner to equalize the Maryland investment. The other two had been filled in by Alex Bistricer in December 2016 to pay out the balances in the two accounts, $246,500 (USD) and $165,000 (CAD), to Brenda Bistricer. He did that because once Marvin and Joseph Rubner began acting as Eda Rubner's attorneys for property in August 2016, they used money from the two accounts to pay Eda Rubner's litigation guardian and their lawyer, who represents them in their capacity as attorneys for property. The application judge found that "[t]hey know that they are drawing money for their mother's use that was supposed to go to Brenda Bistricer but for her tax problems": at para. 16.

[22] No further income distributions have been delivered to Eda Rubner on the Joint Venture interest: Mattamy Homes has held them back pending determination of who is legally and beneficially entitled to the one-third of that interest that was in dispute.

[23] Joseph and Marvin Rubner, in their capacity as joint attorneys for property, applied to the court for advice and direction. They sought the opinion, advice or direction of the court on the question of who held the remaining 1/3 beneficial interest of Eda Rubner Realty's trust interest in the Lower Fourth Limited Venture and posed certain specific questions for the court, including whether that remaining interest was held in trust for Brenda Bistricer.

[24] They also sought an order requiring Brenda and Alex Bistricer to account for all proceeds withdrawn from the two TD bank accounts registered in the name Eda Rubner Realty between September 2, 2015 and December 22, 2016 and a declaration that all funds that the Bistricers withdrew from Eda Rubner's accounts are held in trust for Eda Rubner.

[25] Among the grounds listed for the Application in respect of the accounting for the bank accounts were:

z) The TD Bank Accounts US5099 and 6555 are accounts held in the name of Eda Rubner Realty and were opened by Eda to receive distributions from the Lower Fourth Venture;

aa) approximately $165,000 (CDN) and $996,500 (USD) has been withdrawn from 6555 and US5099 by Brenda and/or Alex for their benefit.

[26] Brenda Bistricer brought a cross-application seeking the following relief:

• A declaration that all funds that were held in the two TD bank accounts were the property of Brenda Bistricer;

• An order requiring her brothers to account for all proceeds withdrawn from the accounts from August 1, 2016 onwards; and

• A declaration that all funds withdrawn from the accounts by her brothers are held in trust for Brenda Bistricer.

[27] She also brought an application against Brahm Rosen in his capacity as Eda Rubner's litigation guardian seeking an order requiring Mr. Rosen to account for any funds that Marvin and Joseph Rubner paid to him that were drawn from Eda Rubner's accounts.

[28] The application and cross-application were heard together with a summary judgment motion brought by Alex Bistricer in a separate action that was commenced by parties representing the Rubner 6.67% interest in the Joint Venture against Mattamy Homes. The summary judgment motion sought to dismiss the significant counterclaim in that action by Mattamy Homes.

The Application Judge's Findings

[29] The application judge found that the 1972 letter, whether or not it was ever sent or delivered, created a valid trust. It is clear that Eda Rubner intended to hold undivided one-third interests in the family's 10% Joint Venture investment in trust for each child: at para. 115. Eda Rubner's declaration of trust was sufficient to constitute the trust – because she was both the settlor and trustee, she did not have to send the letter: at paras. 117-18. Because the 1972 letter contained no powers of revocation, the settlor, Eda Rubner, did not have the power to revoke or alter the declared terms of the trust: at para. 126. Brenda Bistricer therefore retained her beneficial interest until she renounced or disclaimed it.

[30] The application judge found that Brenda Bistricer renounced or disclaimed her interest in the Joint Venture by no later than March 2014, through her planning, expressed intentions, and deliberate conduct: at paras. 38, 135-37. Her beneficial interest resulted back to Eda Rubner.

[31] With respect to the funds in the two bank accounts from the Joint Venture distributions, the application judge made a number of significant findings:

1. By signing and delivering cheques that were cashed, Eda Rubner made valid, one-off gifts from the income distribution funds that she held in the two bank accounts before she was declared legally incapable.

2. There was "insufficient evidence to make a conclusion that Eda Rubner lacked the capacity to manage her own affairs" prior to her being declared legally incapable in 2016: at para. 15.

3. There was "no evidence supporting any doubt that Eda Rubner always intended Brenda Bistricer to have [the funds from the two bank accounts that were wired and paid to her by cheque prior to November 2016]": at para. 39.

4. There is "no doubting that Eda Rubner always intended the final one-third interest to belong to Brenda Bistricer. It is only Brenda Bistricer's disclaimer and renunciation that is impairing the fulfilment of Eda Rubner's intention that Brenda Bistricer own the capital interest and the income that it generates": at para. 161.

[32] However, the application judge rejected Brenda Bistricer's claim to the funds in the accounts based on a gift by her mother of all future distributions from the Joint Venture. He held that Eda Rubner's alleged gift of all future income distributions could not succeed in law, and that the giving or taking of signed blank cheques did not, without more, amount to a valid gift: at paras. 40, 147-48, 154-56. Because an effective gift requires delivery, a promise to give a gift in future is not an effective gift and is not binding. Furthermore, cheques are not effective gifts until cashed; at the time a cheque is cashed, the donor account holder must still intend the funds to be gifted: at para. 177.

[33] With respect to the two cheques that the Bistricers made out and cashed in December, 2016, the application judge found that on December 22, 2016, Eda Rubner did not have capacity to direct her bank to give the funds in the two accounts to Brenda Bistricer. He concluded on that basis that Brenda Bistricer was not entitled to the funds that Alex Bistricer had withdrawn from the two accounts in December 2016, and that she was not entitled to any future income distributions paid on the one-third interest that she had disclaimed or renounced.

[34] The application judge also concluded that Brenda Bistricer could not rely on the doctrine of equitable estoppel to ground a right to the income distributions. Brenda Bistricer argued that Eda Rubner was estopped from denying the one-time gift of all future income because she (Brenda Bistricer) relied on the gift in making withdrawals to pay expenses. The application judge determined there was no evidence to support an estoppel against Eda Rubner because Brenda Bistricer was "entitled to use funds actually given to her as each cheque was cashed or each wire sent": at para. 158. Her use of funds was therefore "not unequivocally referable to there being a one-time promise that future distributions would belong to her even if she were to disclaim her interest in the interim": at para 158.

[35] The application judge also rejected Brenda Bistricer's argument that the 2014 wills could be relied upon to corroborate Eda Rubner's intention to bequeath the remaining one-third interest and to gift to her the income distributions referable to that interest. Because he concluded that the contents of the will were dictated by Joseph Rubner and the Bistricers, the application judge was not prepared to rely on them as representing independent evidence of corroboration of Eda Rubner's intent: at para. 168.

[36] As a result of these legal and factual findings, the application judge made the following consequential dispositions:

1. Eda Rubner is the legal, beneficial, and sole owner of the remaining one-third interest in the Joint Venture

2. Brenda and Alex Bistricer are obliged to account for the funds they removed from the two accounts on December 22, 2016 and repay them to Eda Rubner.

3. Alex Bistricer is liable as a trustee de son tort or for conversion of the funds he improperly took in concert with Brenda Bistricer: at para. 178.

4. The income distribution funds held back by Mattamy Homes are due to Eda Rubner, represented by Marvin and Joseph Rubner under powers of attorney: at para. 179.

5. Brenda Bistricer has no claim against Brahm Rosen, the litigation guardian, for an accounting: at para. 180

[37] In the Mattamy Homes action, the motion by Alex Bistricer for summary judgment was dismissed and some ancillary orders in that action were subsequently made. One order found a number of facts were not in dispute, including: "Brenda Bistricer renounced or disclaimed her interest in [the Joint Venture] by no later than March 2014." The order finding facts not in dispute was not appealed.

[38] In subsequent reasons, the application judge awarded costs of the application and cross-application as follows: substantial indemnity costs payable by Brenda and Alex Bistricer to Marvin and Joseph Rubner as attorneys for property of Eda Rubner in the amount of $180,000; and partial indemnity costs payable by Brenda Bistricer to Brahm Rosen in the amount of $82,708.54.

Issues

[39] The appellants appealed the decision denying Brenda Bistricer any interest in the distributions from the Joint Venture on a number of legal and factual bases, described in the Notice of Appeal, the Supplementary Notice of Appeal and their factum on appeal. They also sought leave to appeal the award of costs.

[40] However, at the opening of oral argument, counsel for the appellants narrowed the basis for the substantive appeal to one ground: whether the application judge erred by failing to find that Eda Rubner held one half of the distributions from the Joint Venture that had been deposited into the two bank accounts, as well as all future distributions, as bare trustee for Brenda Bistricer.

[41] Counsel also argued that the application judge erred in making certain findings about the 2014 will on the basis of a paper record when there was significant evidence in dispute. The consequence, counsel stated, is that those findings may be treated as res judicata in any prospective will litigation that may be brought in the future.

[42] As a result, the issues on appeal are:

1. Did Eda Rubner hold one half of the distributions from Lower Fourth in the two bank accounts as bare trustee for Brenda Bistricer and what impact, if any, did this have on Alex Bistricer's liability for conversion or as trustee de son tort in respect of the two December 2016 cheques from the accounts to Brenda Bistricer?

2. Does Eda Rubner also hold one half of the future distributions from Lower Fourth as bare trustee for Brenda Bistricer?

3. Are the appellants entitled to advance the bare trust argument on appeal?

4. Is it appropriate or necessary for the court to make any order respecting any findings made by the application judge in respect of the 2014 will?

5. The costs appeal.

Analysis

Issue #1: Did Eda Rubner hold one half of the distributions from the Joint Venture in the two bank accounts as bare trustee for Brenda Bistricer?

[43] For the following reasons, I conclude that on the facts a bare trust was established over the funds held in the bank accounts.

[44] There is no issue that Brenda Bistricer originally held the beneficial interest in a one-third share in the Joint Venture interest, the same as her two brothers. But, apparently for tax reasons, she disclaimed that interest. Throughout these proceedings, she took the position that she did not have any proprietary interest in the Joint Venture, the trial judge so held, and there has been no appeal from that holding. However, she never took the position that she had disclaimed any amounts that would come to her from her mother after her disclaimed interest resulted back to her mother. It is those distributions that she claimed were hers, as a gift from her mother. Brenda Bistricer's main position on the application was that having disclaimed entitlement to the one-third interest in the Joint Venture that was designated and held in trust for her by her mother, and that interest having become her mother's beneficially, her mother then told her that she would give her the distributions on what had been her interest, after paying the tax on them, and that she would leave her interest to Brenda Bistricer in her will.

[45] And that is exactly what happened: the distributions were deposited into the Eda Rubner Realty bank accounts that Joseph Rubner and Brenda Bistricer opened with their mother for that purpose; Eda Rubner paid the tax on Brenda Bistricer's half, while Joseph Rubner paid the tax on his half; Eda Rubner signed blank cheques to be filled in to make any payments requested by Joseph Rubner or Brenda Bistricer out of their respective halves; and Eda Rubner executed a new will which stated that Joseph Rubner had received his share of the Joint Venture investment and that Eda Rubner bequeathed her interest in the Joint Venture to her daughter, Brenda Bistricer.

[46] However, Brenda Bistricer's claim to one half of the contents of the bank accounts and to future distributions based on an oral gift from her mother could not succeed in law, and the trial judge so held. Unfortunately, regardless of intention, a promise to give a future gift does not create an effective gift at law. An effective gift requires delivery. While delivery does not have to be co-incident with the statement of intent to give, it must occur to make the gift complete: Bruce Ziff, Principles of Property Law, 6th ed. (Toronto: Carswell, 2014), at pp.15960-62; Teixeira v. Markgraf Estate, 2017 ONCA 819, at paras. 38, 40-44.

[47] In this case, once Eda Rubner became mentally incapable of handling her own affairs, she could no longer complete a gift. The application judge concluded that the cheques that were cashed and cleared before Eda Rubner was found to be incapable were valid "one-off" gifts. But, Brenda Bistricer was not entitled to the future distributions on the basis of the gift theory advanced by counsel for the appellants on the application. However, this does not preclude the possibility of a bare trust over the contents of the bank accounts. Indeed, although no substantive argument ensued, the application judge noted that he raised this issue with counsel at the hearing.

[48] I will subsequently address whether the appellants are, as the respondents contend, precluded from arguing this trust issue on appeal, but first I will address whether there is any merit to the appellants' trust argument.

(a) Applicable trust principles

[49] There are four requirements for establishing a valid express trust. The relevant parties to the trust must have capacity; there must be certainty of intention to create a trust, certainty of subject-matter, and certainty of objects; the trust must be constituted, meaning the trustees must hold legal title to the trust property; and the required formalities must be met: A.H. Oosterhoff, Robert Chambers & Mitchell McInnes, Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed., (Toronto: Carswell, 2014), at p. 189. The three certainties are reflexive in the sense that, although they are considered one at a time, "consideration of the certainty of subject matter and certainty of objects may inform (reflect back on) the matter of certainty of intention": Angus v. Port Hope (Municipality), 2017 ONCA 566, at para. 95, leave to appeal ref'd [2017] S.C.C.A. No. 382.

[50] There are no issues relating to capacity in respect of the alleged trust. The bank accounts were opened and the distributions deposited into them in 2015, before there was any issue with respect to Eda Rubner's capacity to manage her affairs. The application judge found that Eda Rubner made valid gifts of funds that were in the two accounts after they were opened. He specifically stated that there was "no proof that she lacked capacity in August 2015" when the $1.5 million (USD) payment was made out of those bank accounts: at para. 161. Neither the appellants nor the respondents challenged that capacity finding on appeal.

[51] Additionally, because the alleged trust is over two bank accounts and not over land or an interest in land, there are no formal requirements that the trust be evidenced in writing: Statute of Frauds, R.S.O. 1990, c. S.19, ss. 4, 9 - 11; see also In the Estate of Jean Elliott (2008), 45 E.T.R. (3d) 84 (Ont. S.C.), at para. 42. There is therefore no issue as to formalities.

i. Certainty of intention and constitution in the context of a self-declared trust

[52] The court must be satisfied that the settlor intended to create a trust, that is, intended that the trustee be required to hold the trust property for the benefit of the beneficiary. A trust will only exist where the trustee is obliged to deal with the property on the beneficiary's behalf. If the purported trustee is permitted, but not required, to deal with the property for the benefit of the beneficiary, then a trust relationship does not exist: Oosterhoff, at p. 193; Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law Inc., 2014), at p. 42.

[53] Whether certainty of intention to create a trust exists is a question of fact: Elliott, at para. 29. Certainty of intention can be express or implied, can arise from words or acts, and does not require that the settlor use the technical language of trust – there is no "magic" in the word "trust": Oosterhoff, at 193; Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters' Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012) at pp. 141-44; see also Commercial Union Life Assurance Co. of Canada v. John Ingle Insurance Group Inc. (2002), 61 O.R. (3d) 296 (C.A), at paras. 58-63; Belokon v. Kyrgyz Republic, 2016 ONCA 981, 136 O.R. (3d) 39, at para. 49, leave to appeal ref'd [2017] S.C.C.A. Nos. 74, 75 ("[C]ertainty of intention can be established by words or conduct other than explicit trust language, provided the words or conduct convey the requisite intention."); Elliott, at paras. 26-31.

[54] A settlor need not fully understand the legal concept of trust in order to hold the requisite certainty: Oosterhoff, at p. 193. In Paul v. Constance, [1977] 1. W.L.R. 527 (C.A.), at p. 530, the English Court of Appeal did not require the settlor to have used "stilted lawyers' language" to find that the settlor intended to create a trust. Scarman L.J., for the court, determined that the court must instead consider what was "said and done by the plaintiff and the deceased during their time together against their own background and in their own circumstances": p. 530. This echoes Prof. Oosterhoff's assertion that certainty of intention is a question of construction: Oosterhoff, at p. 193; see also Gillese, at p. 42.

[55] Where the settlor of a trust intends to act as a trustee, no transfer of property is required to constitute the trust: the property is already vested in the trustee. The settlor must identify the property and self-declare a trust over it: Oosterhoff, at p. 245. The trust exists as soon as the declaration occurs, since the settlor/trustee has parted with equitable title to the property in favour of the beneficiary: at p. 255; Waters, at pp. 184-85. It is important to reiterate that equity focuses on substance – the settlor does not have to speak or think in the terms of a trust: Oosterhoff, at p. 257. Where a person intends to transfer the beneficial ownership in some property to another person, they may create a trust "regardless of legal acumen": Oosterhoff, at p. 257 (citing Paul v. Constance).

[56] A bare trust is generally accepted to be a trust where the trustee holds property without any active duties to perform other than to convey the trust property to the beneficiaries on demand: Waters, at p. 33. The hallmarks of a bare trust are: (1) the beneficiaries must be able to call for the property when they please, and (2) the trustee must not have (or must no longer have) active duties in respect of the trust property: Waters, at p. 34. The duty to guard the property prior to conveyance is considered passive: Waters, at p. 34.

ii. Certainty of subject-matter

[57] A valid trust will feature property that is identifiable: Oosterhoff, at p. 199; Waters, at p. 159; Angus, at para. 112. In addition to the trust property being identifiable, there must also be sufficient certainty respecting the quantum of the trust property to which a beneficiary is entitled: Oosterhoff, at p. 212; Waters, at p. 159.

[58] Any type of property can be the subject-matter of a trust, save for "future property", that is, property that the settlor does not yet own. However, a right (e.g. contractual) to receive property in the future can be held in trust, as can a vested interest in property that has not yet been possessed by the settlor. The property must be ascertained or ascertainable. The test for certainty of subject-matter applies at the moment that the trust is purportedly created: Oosterhoff, at p. 199-201.

iii. Certainty of objects

[59] Finally, the certainty of objects requirement provides that the beneficiaries of the trust must be sufficiently described to allow for trust performance: Oosterhoff, at p. 216; Waters, at pp. 167-68.

(b) Application to the facts

i. Certainty of intention/constitution

[60] On appeal, the appellants argue that the conduct of Eda Rubner (as settlor and trustee), and Brenda Bistricer and Joseph Rubner (as beneficiaries) evinces a clear intention on the part of Eda Rubner to hold the two Eda Rubner Realty accounts in bare trust for Brenda Bistricer and Joseph Rubner, in equal shares. They rely on Elliott for the proposition that a trust can be established by conduct that displays a clear intention to hold an asset in trust for someone else.

[61] As Lauwers J. (as he then was) reasoned in the Elliott case, where there is no formal trust documentation, the court is entitled to look at the actions of the parties, how they conducted themselves and what they said at the time in order to determine whether there was an intention by the settlor to create a trust.

[62] Eda Rubner never said she was creating a trust over the monies that were deposited into the bank accounts. According to Brenda Bistricer, her mother had gifted the distributions to her and was leaving the balance of the 1/3 interest to her in her will.

[63] While the application judge was unable to find a valid gift in law (or the required corroboration), he did not consider the evidence of what occurred when the distributions came to Eda Rubner on the basis that it demonstrated an intention to create a trust. He only looked at it from the point of view of whether there was a completed gift of all or part of the monies in the accounts, and came to the conclusion that each cheque that Eda Rubner wrote and that Brenda Bistricer cashed before Eda Rubner was declared incapable was a completed gift. This approach reflected the main thrust of the appellants' argument that a gift was engaged. However, as the application judge himself noted, and as I will explain, what occurred here could also be characterized as the creation of a trust.

[64] An isolated gift construct was not supported by the record. In my view, that finding of gifts by cheques written on the accounts is not consistent with the way the parties conducted themselves and the way they operated the accounts. Nor does it explain how the funds in the accounts were being treated in respect of Joseph Rubner's half, which, by this time, he owned beneficially. Joseph's interest was therefore no longer being held by Eda Rubner under the original (1972) trust.

[65] The only legal mechanism that is consistent with what actually occurred is that when the Mattamy Homes distributions made out to Eda Rubner Realty were deposited into the accounts, Eda Rubner intended to hold them in trust, half for Joseph and half for Brenda Bistricer, to be paid out to them with cheques signed in blank by Eda Rubner on their direction. The parties' subsequent conduct is, as in Elliott, evidence of this intention.

[66] When the first distribution came in, Joseph and Brenda each took their mother to the bank to open the bank accounts to deposit the distributions. Because Eda Rubner Realty was the named owner of the remaining 6.67% interest in the Joint Venture on Mattamy Homes's books (Marvin Rubner having sold his 3.33% share to Mattamy Homes in 2013), the distributions were paid to Eda Rubner Realty. That necessitated obtaining a registered business name for Eda Rubner in order to open the accounts and deposit the cheques. Brenda Bistricer lived in the United States but came to Toronto often to see her mother. Joseph Rubner lived with his mother and cared for her.

[67] At the time the bank accounts were opened, Eda Rubner owned the one-third that had previously been designated for Brenda Bistricer. In 2013, Eda Rubner had given Marvin Rubner his one third, so that he could sell it to Mattamy Homes. Eda Rubner also transferred to Joseph Rubner his one third interest, although the documentation for that transfer was not produced in the record. The fact that it occurred was recited in the March 10, 2014 will of Eda Rubner, for which Joseph Rubner gave instructions. Joseph Rubner also testified that because he had received his one-third interest from Eda Rubner before the first distribution came from Mattamy Homes, he took his half of the amount received into his income and paid the taxes on it. Eda Rubner paid the taxes on the other half out of the funds in the bank accounts.

[68] It was understood by Eda Rubner, Joseph Rubner and Brenda and Alex Bistricer that the monies in the bank accounts belonged half to Joseph and half to Brenda Bistricer. Eda Rubner signed blank cheques that were filled in by Joseph Rubner, and also by Alex Bistricer when he had the cheque books, for expenses as directed by Brenda Bistricer and by Joseph Rubner. There is no suggestion in the evidence that Eda Rubner ever personally spent any of the money in the accounts. The application judge found that when Marvin and Joseph Rubner began to use the funds in the accounts to pay the litigation expenses in August 2016, they knew that money "was supposed to go to Brenda Bistricer": at para. 16.

[69] Clear evidence of the parties' understanding is contained in an email from Joseph Rubner to Alex Bistricer dated September 29, 2015. In that email, Joseph Rubner asks Alex Bistricer to confirm the amount owing to him from the "Undivided Lower 4th Distributions". He lists four amounts totalling $3,234,163.17, which is then divided by two to equal $1,617,081.59. Next, he lists two amounts of $500,000 (USD) referable to his investment in the Maryland project, and then those amounts are apparently converted into Canadian dollars for a total of $1,294,950. He subtracts the second amount from the first leaving $322,131.59. That is the amount he asks Alex Bistricer to confirm "and the amount will be transferred to me, by cheque."

[70] This is but one example of the parties' conduct which demonstrates that the funds in the bank accounts were understood by all to be held in trust for Joseph Rubner and Brenda Bistricer, in equal shares. I am satisfied on all of the evidence that Eda Rubner intended to hold the contents of the bank accounts as bare trustee, and that certainty of intention is therefore met.

[71] Nor do I consider the fact that the amount held for Brenda Bistricer was taken into income by Eda Rubner and the tax paid out of the bank account derogates from this conclusion. The history of how this investment was handled by the family members contains many inconsistencies and informalities. Before 2009, there were a number of cash calls made by Mattamy Homes which were paid by Eda Rubner even though she held the investment as bare trustee. The original trust document was a 1972 letter, possibly never delivered, and found years later in a file. Brenda Bistricer's disclaimer of her interest was not done in a documented, formal manner, but by oral statements made on a number of occasions. Because it was always understood by everyone that the Joint Venture investment was to be split equally among the three children, the formalities, as among the family, were not a focus by this family.

[72] Eda Rubner, as bare trustee, acted in accordance with each beneficiary's wishes with respect to declaring the distributions as income. Joseph Rubner gave evidence that he asked his mother to give him the distributions as they came in, and that he would take them into income and declare them himself. By contrast, Brenda Bistricer elected to have her mother declare the distributions, and take the net proceeds. In my view, the mere fact that Eda Rubner declared Brenda Bistricer's share of the distributions as income, apparently in accordance with a suggestion made by Alex Bistricer, does not detract from her intention to hold the funds in trust for Brenda Bistricer. That intention is clear from the parties' conduct.

ii. Certainty of subject matter

[73] The actions of the parties with respect to the distributions that were deposited into the bank accounts defined clearly the subject matter of the trust over the contents of those accounts. As discussed above, it was understood among the parties, the settlor, Eda Rubner, and the two beneficiaries, Brenda Bistricer (and her husband Alex) and Joseph Rubner that those monies were being held in the account for their benefit on a 50/50 basis.

iii. Certainty of objects

[74] There is no issue as to the certainty of objects of the Eda Rubner Realty accounts trust. As alleged by the appellants, the trust over the bank accounts is for the benefit of Brenda Bistricer and Joseph Rubner, in equal shares. The objects of the trust are clearly ascertainable and there is no issue as to the administration of the trust.

(c) Conclusion on the bare trust over the contents of the bank accounts

[75] In my view, the only characterization of the legal relationship regarding the funds deposited into the Eda Rubner Realty bank accounts opened in 2015 that reflects the actual conduct and stated understanding of all of the parties, in particular Eda Rubner, is a bare trust held by Eda Rubner for her two children, Brenda Bistricer and Joseph Rubner, in equal shares. The three certainties are clearly met, the trust was duly constituted, and there is no issue as to formalities.

[76] Joseph Rubner has received his entire share of the trust property. Brenda received part of her share, but part was used by Marvin and Joseph Rubner acting as trustees for property of Eda Rubner to pay expenses of this litigation. Those monies must be accounted for and returned.

[77] I make no comment on the tax implications, if any, that the relevant tax authorities may determine flow from the conclusion that Eda holds one half of the contents of the bank accounts as bare trustee for Brenda Bistricer.

(d) Should Alex Bistricer be held liable as a trustee de son tort or for conversion?

[78] It follows from this analysis that the application judge's conclusion that Alex Bistricer was liable as trustee de son tort or for conversion cannot stand and that the funds paid out of the accounts on December 22, 2016 belonged beneficially to Brenda Bistricer. There is no dispute that Joseph Rubner had already taken his share of the funds from the accounts before Alex Bistricer wrote the two cheques for the balance of the funds remaining in them (and before Joseph and Marvin Rubner, in their capacity as Eda Rubner's attorneys for property, began paying expenses from the accounts). Under the bare trust, the trustee was obliged to deliver the trust property on demand – Brenda Bistricer was entitled to receive those funds when she asked for them. I accept that Alex Bistricer effectively took it upon himself to act as a trustee and to possess and administer trust property, but he did not commit a breach of trust in so doing because he did not act inconsistently with the terms of the trust: Air Canada v. M&L Travel Ltd., [1993] 3 S.C.R. 787, at pp. 808-09; Royal Bank v. Fogler (1991), 5 O.R. (3d) 734 (C.A.), at p. 743. The purpose of the bare trust over the accounts was for Eda Rubner to hold the funds until Brenda Bistricer and Joseph Rubner wanted them transferred into their possession. Alex Bistricer's act of filling out the pre-signed cheques in favour of Brenda Bistricer and depositing the funds into Brenda Bistricer's account fulfilled the terms of the trust.

[79] Even if it could be said that Alex Bistricer dealt with the trust property in breach of trust, Brenda Bistricer acquiesced to the manner in which he dealt with the property to which she was beneficially entitled: see Fogler, at pp. 743-46; Waters, at pp. 1302-06. There is no issue that Brenda Bistricer knew and approved of Alex Bistricer's actions, given her view that the funds already belonged to her: see Rubner, at para. 178.

[80] Further, were the court to find Alex Bistricer liable as a trustee de son tort, the proper remedy would likely be a constructive trust over the funds in favour of Brenda Bistricer: Oosterhoff, at pp. 1128-29; Waters, at pp. 1340-41. The funds are already in her possession.

[81] The application judge's finding of conversion also cannot stand, as Alex Bistricer's actions do not meet the test for conversion as set out in 373409 Alberta Ltd. (Receiver of) v. Bank of Montreal, 2002 SCC 81, [2002] 4 S.C.R. 312, at paras. 8-10. The tort of conversion "involves a wrongful interference with the goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner's right of possession": at para. 8.

[82] Because Alex Bistricer dealt with the funds in a manner that was consistent both with the purpose of the trust and with Brenda Bistricer's beneficial interest in the trust property, and because the taking of the funds was done "in concert with Brenda Bistricer", it is difficult to see his actions as a wrongful taking: Rubner, at para. 178. In the end result, Brenda Bistricer is entitled to the funds.

[83] I would therefore set aside the finding of liability against Alex Bistricer.

Issue #2: Does Eda Rubner also hold one half of the future distributions from the Joint Venture as bare trustee for Brenda Bistricer?

[84] This question must be answered in the negative. As discussed above, future property cannot be the subject matter of a trust. While a trust could legally have been declared by Eda Rubner over any chose in action she may have held to future distributions from Mattamy Homes, she did not do so.

[85] The actions of the parties that establish the three certainties of a trust over the distributions that were deposited into the bank accounts do not relate to any amounts not yet deposited. Primarily, there is no action that relates to an intention to create a trust over any funds not yet deposited or over Eda Rubner's interest in the Joint Venture.

Issue #3: Are the appellants entitled to advance the bare trust argument on appeal?

[86] The respondents submit that the appellants are precluded from arguing on appeal that there was no "gift" of the future distributions, but rather the contents of the bank accounts were held by Eda Rubner as bare trustee, 50% each for the benefit of Brenda Bistricer and Joseph Rubner. They submit that this argument was not advanced before the application judge.

[87] Counsel for the respondents also submits that had he known there were two potential trusts being alleged, one over the bank accounts, he would have cross-examined Brenda Bistricer about her statements that she had no beneficial interest in the Joint Venture.

[88] I am satisfied that the respondents suffered no prejudice on this account. Counsel asked Ms. Bistricer regarding her disclaimer of any interest in the Joint Venture many times during the cross-examination and her position was clear. Her position was that she was not disclaiming the distributions from the Joint Venture that were deposited into the Eda Rubner Realty bank accounts and tax paid. Indeed, on at least one occasion, counsel for Brenda Bistricer interjected to clarify her objection to certain questions being put to Brenda by counsel for the intervenors which conflated the asset (the Joint Venture interest) and the income (the distributions).

[89] I would reject the respondent's objection to considering the trust issue on the appeal for the following reasons. When the relief sought and grounds listed in both the Application for advice and directions commenced by Joseph and Marvin Rubner and the Application commenced by Brenda Bistricer are considered together, it is clear that the ownership of the monies in the two bank accounts is in issue. The brothers relied on both rule 14.05 (3)(a)-(d) and s. 60 of the Trustee Act in support of their request for advice and directions. In Hunter Estate v. Holton (1992), 7 O.R. (3d) 372 (Gen. Div.) the applicants relied on these provisions in seeking advice and directions as to whether it was lawful for the executors and trustee to transfer assets to two newly created trusts. Steele J. noted, at p. 376, that in a proper case the court should not limit its opinion narrowly when all of the issues are before it. Similarly, in this case, the court should not limit its advice and directions to the gift issue when the larger question of whether the funds in the bank accounts were the property of Brenda Bistricer is before the court.

[90] Second, although no substantive argument was made, the application judge was obviously alive to the trust issue and expressly asked "whether Eda Rubner's statements might have amounted to an oral declaration by Eda Rubner that she holds income distributions after tax in trust for Brenda Bistricer": at para. 150.

[91] Third, the facts and circumstances of what occurred are clear in the evidentiary record. It is only the legal characterization that is in issue. As this court stated in Kaiman v. Graham, 2009 ONCA 77, 45 E.T.R. (3d) 163, at para. 18:

The general rule is that appellate courts will not entertain entirely new issues on appeal. The rationale for the rule is that it is unfair to spring a new argument upon a party at the hearing of an appeal in circumstances in which evidence might have been led at trial if it had been known that the matter would be an issue on appeal: 767269 Ontario Ltd. v. Ontario Energy Savings L.P., 2008 ONCA 350 (Ont. C.A.), at para. 3. The burden is on the appellant to persuade the appellate court that "all the facts necessary to address the point are before the court as fully as if the issue had been raised at trial": Ross v. Ross (1999), 1999 NSCA 162, 181 N.S.R. (2d) 22 (N.S. C.A.), at para. 34, per Cromwell J.A.; Ontario Energy Savings L.P. at para. 3. This burden may be more easily discharged where the issue sought to be raised involves a question of pure law: see e.g. R. v. Vidulich (1989), 37 B.C.L.R. (2d) 391 (B.C. C.A.); R. v. Brown, [1993] 2 S.C.R. 918 (S.C.C.), per L'Heureux-Dubé J., dissenting. In the end, however, the decision of whether to grant leave to allow a new argument is a discretionary decision to be guided by the balancing of the interests of justice as they affect all parties: R. v. Warsing, [1998] 3 S.C.R. 579 (S.C.C.), per L'Heureux-Dubé J., dissenting; R. v. S. (K.) (2000), 50 O.R. (3d) 321 (Ont. C.A.); Vidulich at pp. 398-99.

See also National Money Mart Company v. 24 Gold Group Ltd., 2018 ONCA 812, at paras. 37-41.

[92] Here, the general rule is not engaged. The entire history of the Joint Venture investment shows that the family acted in a consistently informal manner with respect to its ownership. As non-lawyers, their characterization of the legal relationship was also informal and imprecise. As the application judge perceived, it was possible that the circumstances amounted to a bare trust in law. Indeed, he appears to have been satisfied that the evidentiary record was sufficient to address the issue himself, on submissions by counsel: see para. 150. I am satisfied that this court is well-placed, based on the evidentiary record before it, to respond to the request for advice and directions and to determine the correct legal characterization of Brenda Bistricer's interest, if any, in the Joint Venture distributions attributable to her original one-third interest. It is therefore in the interests of justice to address it now on appeal.

Issue #4: Is it appropriate or necessary for the court to make any order regarding any findings made by the application judge in respect of the 2014 will?

[93] The appellants submit that the application judge erred in making certain findings regarding the 2014 will based on the paper record before him on the application in the face of significant evidence that conflicted with his findings. In particular, counsel referred to paras. 86, 168, 171 and 172 of the reasons. The practical concern that counsel raised is that those findings may be treated as res judicata in any future litigation that may be brought seeking to challenge or uphold the will.

[94] I agree with the appellants, that the application judge was not deciding whether the 2014 wills should be admitted to probate. He was only considering whether the wills could amount to corroboration of Eda Rubner's intent to gift to Brenda her one-third of the Joint Venture investment. He found that he was not prepared to treat the wills as corroborative of Eda Rubner's independent intent. see para. 173. In the context of the gift issue that was before him on the application, he was entitled to make that determination.

[95] The issue raised regarding whether a finding in one proceeding will be treated as res judicata in another proceeding is to be answered by the judge hearing the possible will challenge litigation, the other proceeding. This court may only be called upon to address the issue on an appeal from a finding that it either is or is not res judicata.

Issue #5: Costs

[96] As part of the costs awarded on the application, cross-application and summary judgment motion, the application judge awarded substantial indemnity costs in the amount of $180,000.00 in favour of Joseph and Marvin Rubner as joint attorneys for property of Eda Rubner, payable by Brenda and Alex Bistricer, and partial indemnity costs in the amount of $82,708.54 in favour of Mr. Rosen, the litigation guardian of Eda Rubner, payable by Brenda Bistricer.

[97] In his reasons, the application judge accepted the respondents' submission that the appellants engaged in litigation misconduct that warranted an elevated costs award. He awarded costs in favour of the litigation guardian on two bases: first, because he had successfully asserted Eda Rubner's position and therefore Eda Rubner was entitled to recover costs from Brenda Bistricer, and second, because Brenda was unsuccessful in asking the litigation guardian to return funds paid to him by the attorneys for property out of the disputed bank accounts.

[98] As I would allow the appeal in part with respect to the funds in the bank accounts, the mix of success has now changed. There will be no judgment against Alex Bistricer; the trustees for property will repay to the appellants all funds from the bank accounts that they removed; and Brenda and Alex Bistricer do not have to pay the funds removed in December 2016 to Eda Rubner.

[99] In those circumstances, the issue of the costs of the application and cross-application must be reconsidered. If the parties are unable to agree, counsel may provide written submissions to a maximum of 4 pages regarding the costs of the application and of the appeal, given the mixed success. The court should be advised whether the parties have agreed within three weeks of release of these reasons.

Conclusion

[100] I would allow the appeal and find that Eda Rubner held the bank accounts opened in the name of Eda Rubner Realty in 2015 as bare trustee for the benefit of Brenda Bistricer and Joseph Rubner, in equal shares. The monies withdrawn from that account by Marvin and Joseph Rubner must accordingly be accounted for. I would also set aside the findings of liability against Alex Bistricer.

Released: September 19, 2019

"K. Feldman J.A."

"I Agree. S.E. Pepall J.A."

"I Agree. B.W. Miller J.A."

Footnotes

[1] These parties were granted intervenor status on the appeal by order dated November 9, 2018.

[2] Eda Rubner was trustee until she became legally incapable, and then her personal representatives became trustees under s. 3(2) of the Trustee Act, R.S.O. 1990, c. T.23.