COURT FILE NO.: CV-14-79-00 DATE: 20160630 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

IAN ANGUS and DEAN ROSS Applicants – and – THE CORPORATION OF THE MUNICIPALITY OF PORT HOPE Respondent

Counsel: Alan Lenczner, Q.C. and Paul-Erik Veel, for the Applicants Chris G. Paliare, Richard R. Stephenson and Lindsay Scott, for the Respondent

HEARD: February 12, 2016

Reasons for Judgment

J.R. McCARTHY J.:

Introduction

[1] On April 12, 2001, Mayor Rick Austin, of the newly amalgamated Corporation of the Municipality of Port Hope and Hope (“the Respondent Municipality”), received two cheques under cover of a letter from the Honourable Ralph Goodale, the Minister of Natural Resources for Canada. Each of the cheques was in the amount of 10 million dollars. One of the cheques was made payable to the “Royal Trust Corporation of Canada Former Hope Township Ward 2”.

[2] The nature and fate of that $10 million payment to the “Royal Trust Corporation of Canada Former Hope Township Ward 2” (“the fund”) is the subject matter of the present application. The fund was originally constituted by the payment of one of three host community grants (“grant”) contemplated in an agreement (“the Agreement”) between Her Majesty the Queen in Right of Canada (“Canada”) on the one hand and the Town of Port Hope (“Port Hope”), the Township of Hope (referred to as “Hope Township”) and the Municipality of Clarington (“Clarington”) on the other hand. Port Hope, Hope Township and Clarington are hereinafter referred to as the “host municipalities”. The Hope Township grant has been administered by the Respondent Municipality since April 12, 2001.

[3] The Applicant Ian Angus seeks a declaration that the fund is subject to a trust in favour of the ratepayers of the former Township of Hope. He seeks an accounting in respect of the fund from the Respondent Municipality. This relief is sought under paragraphs 1(a), 1(b), 1(c) and 1(i) of the Amended Notice of Application. The balance of the relief sought is withdrawn. At the outset of the hearing, the Applicant Dean Ross acknowledged that his claim was statute-barred.

[4] The application raises the following principal issues:

(a) What is the nature of the Agreement and of the fund created by Schedule 8 to that Agreement? Is it a trust or a contract? (b) If it is a trust, was it properly constituted? (c) If it is a trust, is it a charitable trust? (d) If it is a contract, what rights, if any do the beneficiaries of the contract have to seek enforcement of its terms? (e) What are the consequences which flow from a finding of a failed trust? (f) Does the trust or contract offend the rule against perpetuities? If so, can the trust or contract be maintained or saved under the remedial provisions of the Perpetuities Act, R.S.O. 1990, c. P.9? (g) Is the application barred under the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B; is the relief sought defeated by the equitable doctrines of laches and acquiescence? (h) Has the Respondent Municipality breached the trust or agreement? (i) Is the Applicant entitled to an accounting from the Respondent Municipality?

[5] For the reasons that follow, my conclusions are that the Agreement was a properly constituted trust but not a charitable trust. The trust did not fail, but it does offend one of the rules against perpetuities. Nevertheless, the trust is saved by s. 16(1) of the Perpetuities Act. The Agreement and Schedule 8 created a specific non-charitable purpose trust to which s. 16 of the Perpetuities Act applies. The trust shall continue as a special power to appoint the income and capital until April 12, 2022. The remaining question of what persons will become entitled to the unexpended income or capital of the fund on April 12, 2022 is not before the court and will require determination on or after April 12, 2022, when, by virtue of s. 16(2) of the Perpetuities Act, the unexpended income and capital of the trust must be paid out to persons who stood to benefit from an invalid trust. Further, I find that the Respondent Municipality, having failed to use the power to appoint the income in accordance with the strict terms of the trust is in breach of its obligations as trustee. I order the Respondent Municipality to account for both the income earned on the fund and for all payments made out of the fund from April 12, 2001 to the present date. Finally, I conclude that the application is neither statute-barred nor defeated by the equitable doctrines of laches or acquiescence.

Background

[6] The Applicant is a ratepayer in Ward 2 of the Respondent Municipality. Ward 2 consists of the former Hope Township. Ward 1 of the Respondent Municipality consists of the former Port Hope. On January 1, 2001, Port Hope and Hope Township were amalgamated to form the Respondent Municipality.

[7] As far back as the 1930s, the host municipalities had been home to several sites that were used for the storage of radioactive materials.

[8] In the later 1990s, the host municipalities negotiated with Canada for the storage of low-level radioactive waste (“LLRW”) in permanent facilities within their respective jurisdictions.

[9] Following the adoption of a set of principles of understanding in October 2000, the Agreement was executed by the host municipalities in December 2000 and by Canada on March 29, 2001.

[10] The Agreement called for the host municipalities to store LLRW in permanent storage facilities in their respective communities in return for Canada paying each host municipality a grant in the amount of $10 million.

[11] The parties agreed that the each individual grant would be handled in accordance with the additional terms and conditions set out in the three applicable Schedules to the Agreement. These Schedules created a Town of Port Hope Fund (Schedule 7), a Hope Township Fund (Schedule 8) and a Clarington Fund (Schedule 9).

[12] On December 19, 2000, Hope Township passed By-law 3605, authorizing it to appoint the Royal Trust Corporation to receive and hold its grant in trust for the exclusive benefit of ratepayers of Hope Township from time to time in accordance with Schedule 8 of the Agreement. [1]

[13] Schedule 8 to the Agreement provides, at para. 1, as follows:

Canada will pay the trustee (“Trustee”) appointed by Hope Township Council, a grant in the amount of Ten Million ($10,000,000.00) Dollars (hereinafter referred to as the “Opening Capital” of the “Fund”) which, subject to the following provisions, shall be held in trust for the exclusive benefit of the ratepayers from time to time of the area that comprises the geographic area of Hope Township as of the date of October 6, 2000.

[14] Schedule 7 to the Agreement, at para. 1 provides, inter alia, that, “Port Hope agrees to hold Canada’s payment of Ten Million ($10,000,000) Dollars in trust for the exclusive benefit of the ratepayers of the area that comprises the geographic area of Port Hope as of the date of October 6, 2000”.

[15] Schedule 9 to the Agreement, at para. 1, provides, inter alia, that,

Clarington agrees to hold Canada’s payment of Ten Million ($10,000,000.00) Dollars … in trust for the exclusive benefit of the ratepayers of Clarington as of the date of October 6, 2000, provided that if after the date of this Agreement, the geographic area of Clarington is reduced, the fund shall be held in trust for the exclusive benefit of the ratepayers of the remaining geographic area of Clarington.

[16] The three Schedules to the Agreement are reproduced at Appendix 1 to these reasons.

[17] Schedule 8 stipulated that the trustee was to apply an amount equal to 8 per cent of the fund in the previous calendar year to “defray the lower tier municipal taxes or levies which would otherwise be payable by the ratepayers of aforesaid geographic area of Hope Township provided that the opening capital of the Fund shall not be encroached upon by the Trustee” (at para. 3).

[18] Under Schedules 7 and 9, Port Hope and Clarington were to use income from the Town of Port Hope and Clarington funds, respectively, “from time to time in its discretion for any purpose permitted by law” (at para. 2).

[19] Upon amalgamation, reserves and reserve funds of Hope Township and Port Hope became part of the reserve funds of the Respondent Municipality subject to the special purposes to which they were dedicated. Paragraph 14.2(1) of the Order of Amalgamation, provided as follows: [2]

On January 1, 2001, the reserves and reserve funds of the former Town of Port Hope and former Township of Hope that are dedicated for special purposes become the reserves and reserve funds of the new town but shall be used only for the purpose for which they are dedicated and for the benefit of the ratepayers in the area of the former Town of Port Hope or former Township of Hope to which they are related.

[20] As of the date of amalgamation, Canada had not yet executed the Agreement; no payment of the grants had been made. The grants under Schedules 7 and 8 were ultimately received by the Respondent Municipality under cover of letter dated April 12, 2001. The Hope Township fund was placed on deposit with Royal Trust.

[21] Beginning in December 2000, Hope Township Council and Royal Trust had endeavoured to arrive at an agreement under which Royal Trust would administer the Schedule 8 grant. Following amalgamation, the Respondent Municipality pursued a similar effort with Canada Trust Company. The efforts did not result in an acceptable arrangement. Nonetheless, for a time the fund remained on deposit with Royal Trust.

[22] The Agreement contains a section dealing with Amendments. Article 1, s. 1.12 reads as follows:

Except as otherwise expressly provided for in this Agreement, no amendment, variation or waiver of the provisions of this Agreement shall be effective unless made in writing and signed by each of the Parties hereto, either individually by counterpart or collectively. Any amendment, variation or waiver shall take effect on the date specified in the amendment, variation or waiver or, if not so specified, on the date on which the last Party executes and delivers the amendment, variation or waiver.

[23] Schedule 8 was amended in 2003 to permit the fund to be administered by either a trust company or an investment counsellor appointed by the Respondent Municipality council in accordance with its investment policy. At or about this time, the Respondent Municipality transferred the fund to a private management company for investment.

[24] The fund appears in the notes attached to the Respondent Municipality’s financial statements for the year ending December 31, 2005. It is referred to under “Deferred Revenue – other”. The notes to the statements contain the following entry:

The agreement sets out a requirement for investment of these funds as well as certain conditions for potential repayment. The Municipality agrees to hold the funds in trust with income earned on the funds available for the Municipality’s general use.

[25] A similar entry appears in subsequent annual financial statements. No similar type of entry appears in the annual financial statements prior to 2005. Since 2001, the fund has been commingled with the Port Hope host community grant paid to the Respondent Municipality under Schedule 7.

[26] Since 2003, the fund has been invested and managed according to the Respondent Municipality’s investment policy. At times, the income earned on the fund has been used to offset the levy for ratepayers; at other times, the income has been used towards the Respondent Municipality’s capital fund, operating expenses or building and equipment reserves. The Respondent Municipality has not used the income from the fund exclusively to defray the lower-tier municipal taxes of Ward 2 ratepayers (former residents of Hope Township) as per Schedule 8.

[27] The regulatory approval from the Canadian Nuclear Safety Commission (CNSC) for the operation of the LLRW management facilities was obtained on October 16, 2009. Each of the three Schedules provided that in the event the necessary regulatory approval was not obtained from the CNSC, the grants would be repaid to Canada. Additionally, each of the three Schedules indicated that if the CNSC licence was approved to construct waste management facilities, the host municipalities’ obligations in favour of Canada regarding the use and investment of the respective grants would terminate.

The Applicants’ Position

[28] The Applicant asserts that the fund is subject to a trust for the exclusive benefit of the ratepayers from time to time of the area that comprised the geographic area of the Hope Township as of the date of October 6, 2000.

[29] He submits that the fund is clearly a trust because it contains the three certainties required in order to constitute a valid trust: certainty of intention, subject matter and objects. As such, the fund must be managed and paid out in accordance with the terms of Schedule 8.

[30] He submits that the trust is not invalidated by the rule against perpetuities, a rule against late vesting. It is either valid because it is a charitable trust and is thereby exempt from the rule, or because it is a true trust that has vested within the perpetuity period in which case the rule does not apply.

[31] In the alternative, the Applicant submits that if the trust provides for the possibility of vesting beyond the perpetuity period, the trust remains presumptively valid under s. 4 of the Perpetuities Act, the so-called “wait and see” provision. In the further alternative, the trust is a non-charitable purpose trust; section 16 of the Perpetuities Act serves to convert the trust into a power to appoint the income and capital for a period of twenty-one years.

[32] In the event that the court finds the Agreement and Schedule 8 to be a contract, the Applicant submits that he is, nevertheless, a non-party beneficiary to the Agreement. Under an emerging body of case law that recognizes a principled exception to the doctrine of privity of contract with respect to non-party beneficiaries, the Applicant argues that he has standing to seek relief; i.e., to enforce the contract notwithstanding his lack of privity. (See Fraser River Pile & Dredge v. Can-Div Services Ltd., [1999] 3 S.C.R. 108).

[33] Further, the Applicant says that his claim is neither barred under the Limitations Act nor defeated by the doctrine of laches. The Applicant contends that he first gained knowledge of the alleged misuse of the fund by the Respondent Municipality early in 2013, and, therefore, he could not reasonably have been expected to have discovered the claim before that date. The launching of the application in September 2014 was well within the two-year limitation period.

[34] Finally, the Applicant submits that he is entitled to a remedy in light of the Respondent Municipality’s breach of trust or breach of contract. That remedy should include a declaration of a trust, a finding of a breach of trust or breach of contract on the part of the Respondent Municipality together with a mandatory order for an accounting in respect of the handling of the fund.

The Respondent Municipality’s Position

[35] The Respondent Municipality asserts that the Agreement (including Schedule 8) was a contract between Canada and the Respondent Municipality and, therefore, neither the Applicant nor any ratepayer of Ward 2 has any standing to sue or to seek declaratory and injunctive relief under that contract.

[36] The Respondent Municipality argues that, at its highest, the Agreement contemplated that the host municipalities would receive the grants in order to settle them on trust, as settlors. In the end, no such trust was settled by the former Hope Township, the Respondent Municipality or anybody else. In any event, the Agreement was expressly amended in 2003 to remove any requirement that the Respondent Municipality settle a trust of the fund for its ratepayers.

[37] In the alternative, the Respondent Municipality submits that even without the amendment, the Agreement created no trust and trust law does not apply.

[38] In the further alternative, if a trust was created, the Respondent Municipality contends that the trust offends the rule against perpetuities and is void. Further, the Respondent Municipality argues that the Applicant’s assertion that the fund created a charitable trust of the kind that would circumvent the rule against perpetuities cannot be supported on the facts; nor can the trust be saved under s. 16 of the Perpetuities Act as a specific non-charitable purpose trust.

[39] In any case, the Respondent Municipality argues that the remedy sought by the Applicant is not appropriate in the circumstances because under the doctrines of laches and acquiescence, the Applicant has affirmed that the Respondent Municipality has handled the fund in an appropriate manner. Moreover, it would be impossible and unfair at this time to undo the allocations of income already made over more than a decade. The Respondent Municipality pleads that declaratory relief is unnecessary and inequitable because the fund has been used for the overall benefit of the Respondent Municipality and thus the ratepayers of Ward 2 have benefitted in the manner intended by the parties to the Agreement.

[40] Finally, the Respondent Municipality submits that the Applicant’s claim is barred by operation of the Limitations Act. The municipality argues that it is clear that the Applicant knew or ought to have known of the facts giving rise to a cause of action as early as 2001 and, at the latest, by 2010. Documents detailing how the fund has been utilized had been part of the public record for at least ten years before the issue date of the application; therefore, section 4 of the Limitations Act bars the Applicant from seeking any relief.

The Law

The Statutory Framework

[41] The following sections of legislation are relevant to the issues before the court.

[42] Sections 4, 11 and 16 of the Perpetuities Act:

Presumption of validity and “Wait and See”

4. (1) Every contingent interest in property that is capable of vesting within or beyond the perpetuity period is presumptively valid until actual events establish,

(a) that the interest is incapable of vesting within the perpetuity period, in which case the interest, unless validated by the application of section 8 or 9, shall be treated as void or declared to be void; or (b) that the interest is incapable of vesting beyond the perpetuity period, in which case the interest shall be treated as valid or declared to be valid.

Powers of appointment

11. (1) For the purpose of the rule against perpetuities, a power of appointment shall be treated as a special power unless,

(a) in the instrument creating the power it is expressed to be exercisable by one person only; and (b) it could, at all times during its currency when that person is of full age and capacity, be exercised by the person so as immediately to transfer to the person the whole of the interest governed by the power without the consent of any other person or compliance with any other condition, not being a formal condition relating only to the mode of exercise of the power.

Idem

(2) A power that satisfies the conditions of clauses (1) (a) and (b) shall, for the purpose of the rule against perpetuities, be treated as a general power.

Idem

(3) For the purpose of determining whether an appointment made under a power of appointment exercisable by will only is void for remoteness, the power shall be treated as a general power where it would have been so treated if exercisable by deed. R.S.O. 1990, c. P.9, s. 11.

Specific non-charitable trusts

16. (1) A trust for a specific non-charitable purpose that creates no enforceable equitable interest in a specific person shall be construed as a power to appoint the income or the capital, as the case may be, and, unless the trust is created for an illegal purpose or a purpose contrary to public policy, the trust is valid so long as and to the extent that it is exercised either by the original trustee or the trustee’s successor, within a period of twenty-one years, despite the fact that the limitation creating the trust manifested an intention, either expressly or by implication, that the trust should or might continue for a period in excess of that period, but, in the case of such a trust that is expressed to be of perpetual duration, the court may declare the limitation to be void if the court is of opinion that by so doing the result would more closely approximate the intention of the creator of the trust than the period of validity provided by this section.

Idem

(2) To the extent that the income or capital of a trust for a specific non-charitable purpose is not fully expended within a period of twenty-one years, or within any annual or other recurring period within which the limitation creating the trust provided for the expenditure of all or a specified portion of the income or the capital, the person or persons, or the person or person’s successors, who would have been entitled to the property comprised in the trust if the trust had been invalid from the time of its creation, are entitled to such unexpended income or capital.

[43] Sections 4 and 5 of the Limitations Act:

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Discovery

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew, (i) that the injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to by an act or omission, (iii) that the act or omission was that of the person against whom the claim is made, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and (b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

Trusts and Contracts

The Creation of a Trust

[44] For a trust to come into existence, three certainties must be present: certainty of intention, certainty of subject matter and certainty of objects. The three essential elements of a trust are elaborated upon in A.H. Oosterhoff, Robert Chambers & Mitchell McInnes, Oosterhoff on Trusts: text, commentary and materials, 8th ed. (Toronto: Carswell, 2014), at p. 192:

(i) certainty of intention – the settlor must have intended to create a trust, (ii) certainty of subject matter – the trust property must be sufficiently ascertained or ascertainable, and it must be sufficiently certain as to how that property will be divided amongst the beneficiaries, and (iii) certainty of objects – the beneficiaries of the trust must be sufficiently identified.

[45] In addition, the trust must be constituted. That is, the trust property must be conveyed or transferred to the trustee to be held for specific beneficiaries in accordance with the terms of the trust (Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014), at p. 39).

[46] According to Professor Donovan Waters, in Waters, Gillen & Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012), at p. 28, an incompletely constituted trust may arise,

[W]hen every trust element is clear and precise but the settlor has not transferred the trust property to the trustees. If neither the trustees nor the trust beneficiaries are able to compel the settlor or his representative to transfer the property, the trust must fail since there is nothing for its terms to operate upon. A trust which is completely constituted not only has clarity and precision of language, property and objects, but the property vests in the trustees, and the trust is therefore operative.

Contracts

[47] In contrast to a trust, a contract is a legally binding agreement between parties. A contract must be supported by consideration. In interpreting contracts, the court must strive to give effect to the intention of the parties as expressed in a written agreement and where that intention is plainly expressed in the language of the agreement, the court should not stray beyond the four corners of the agreement (see Commercial Alcohols Inc. v. Bruce Power, L.P., 2006 ONSC 2183, at para. 32, citing Venture Capital USA Inc. v. Yorkton Securities Inc., 2005 ONCA 15708, 75 O.R. (3d) 325, at para. 26).

[48] The common law privity of contract rule prevents any person who is not a party to the contract from suing to enforce it (Gillese, The Law of Trusts, at p. 13). The doctrine of privity was summarized by the Supreme Court of Canada in London Drugs Ltd. v. Kuehne & Nagel International Inc., [1992] 3 S.C.R. 299, at pp. 415-416: “a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it”.

[49] A non-party to a contract may not seek declaratory relief in respect of that contract. A proper case for a declaratory judgment generally requires some privity in law between the parties concerned, an existent right and an interference or dispute concerning that right (Lazar Sarna, The Law of Declaratory Judgments, 4th ed. (Toronto: Thomson Reuters, 2016), at p. 40).

Analysis

The Three Certainties

Intention

[50] I find that the Agreement and Schedule 8, when read together, reveal a certainty of intention on the part of the settlor of the trust. The use of trust language in Schedule 8 is prominent, at para. 1:

Canada will pay to the trustee (“Trustee”) appointed by Hope Township Council, a grant in the amount of Ten Million ($10,000,000.00) Dollars…which, subject to the following provisions, shall be held in trust for the exclusive benefit of the ratepayers from time to time of the area that comprises the geographic area of Hope Township as of the date of October 6, 2000.

[51] Further on in Schedule 8, the trustee is directed to invest the grant with a view to growing the fund. Hope Township is granted the right to terminate the appointment of the trustee and appoint a new trustee, but not to terminate the trust itself.

[52] The intention to create the trust is also apparent at para. 3 of Schedule 8, which both defines and expands the purpose to which the fund is to be put:

[T]he Trustee shall apply an amount equal to up to eight (8%) per cent of the Fund in the previous calendar year to defray the lower tier municipal taxes or levies which otherwise would be payable by the ratepayers of aforesaid geographic area of Hope Township provided that the opening capital of the Fund shall not be encroached upon by the Trustee.

[53] The intention to create a trust is manifestly apparent from the Agreement and Schedule 8. Canada, as settlor, clearly expressed the intention to transfer property to a trustee to hold or administer property for the benefit of an identified group and for a specific purpose. That intention is clear from the wording of the document. My finding is reinforced by a review of the principles of understanding entered into prior to the execution of the agreement and by the conduct of the parties subsequently. Those principles clearly anticipated the advancement of the funds into a trust arrangement. Hope Township appointed Royal Trust to receive the funds and Canada did in fact pay the $10 million to Royal Trust as trustee.

Subject Matter

[54] There is no doubt that the subject matter of the trust is the $10 million host community grant plus the income derived from that grant. The $10 million grant is clearly identified in Schedule 8; the Agreement goes on to add any income from the investment of the grant into the capital of the fund.

[55] Although the Agreement does not set out an allocation formula for ratepayers, there is no requirement in law that a trust agreement be so precise that it illustrates how the benefit is to be allocated amongst beneficiaries. The ratepayers generally are to benefit from up to 8% of the fund being used to defray municipal taxes. The principle of even-handedness requires that where the terms of the trust do not confer disproportionate interests to the beneficiaries, the trustee must treat all beneficiaries of a trust equally (Waters, Waters’ Law of Trusts in Canada, at p. 1023).

[56] I conclude that the certainty of subject matter is established within the Agreement and Schedule 8.

Objects

[57] Certainty of objects requires that the beneficiaries for whom a trust was established be sufficiently identifiable and that it is possible to determine whether a person is a member of the class.

[58] The class of beneficiaries is defined based upon discernible geographic, historical and temporal criteria that are easy to apply. The geographical boundaries of Hope Township on October 6, 2000 are ascertainable. The ratepayers, from time to time, of the former Hope Township are entirely capable of determination, given the former township’s present incarnation as Ward 2 of the Respondent Municipality and the existence of tax rolls. Indeed, Schedule 8, at para. 7, goes on to provide greater clarity on the meaning of lower tier municipal taxes or levies.

[59] I find that the object and purpose of the fund are both certain.

Constitution of the Trust

[60] I find that the trust was properly constituted. The trust came into existence upon the transfer of the $10 million host community grant by the settlor to Royal Trust on April 12, 2001. This was an appropriate delivery of the funds. The transfer of those funds was complete and unambiguous. The trust was constituted: no further steps needed to be taken. I find that the requirement for the CNSC licence was not a condition precedent for the constitution of the trust. The language of Schedule 8 explicitly directs how the fund is to be administered, regardless of the CNSC license. Canada could and would do no more to settle the trust than it had already done. The fact that a future identified event might lead to the return of the original grant does not, in my view, detract from the constitution of the trust which was complete upon the delivery of the funds by Canada.

[61] In light of my findings in respect of the three certainties and the constitution of the trust, I have concluded that the fund in question is a prima facie trust in favour of the ratepayers from time to time of Ward 2 of the Respondent Municipality.

The Effect of the Return of the Funds from Royal Trust

[62] I am unable to find that the trust was improperly constituted or failed because of the return of the trust funds by Royal Trust after a passage of time. The inability of the Respondent Municipality to find an acceptable arrangement for the management of the fund by a third party did not compromise the constituted trust. It could hardly be argued that while in possession of the fund, Royal Trust was not bound to exercise the basic duties of trustee. Canada, as settlor, transferred the trust property to the original identified trustee in keeping with Schedule 8. The existence of the trust, however unintended the course of events that were to follow, was an established fact; its integrity was unaffected by the failure of the Respondent Municipality and Royal Trust to arrive at an agreement on the precise terms of management of the fund.

[63] I am also unable to find that the Agreement or Schedule 8 served as merely an agreement or intention to create a trust with the Respondent Municipality as settlor. First, the Agreement does not call upon anybody to settle a trust. Rather, Canada settled the trust by signing the Agreement and providing the grant. The only inference that can be drawn from the surrounding circumstances of the transfer of funds on April 12, 2001, is that there was a collective assumption that Royal Trust was going to continue to act as the trustee contemplated in Schedule 8; i.e. the trustee appointed by Hope Township Council. That is precisely why the opening grant was made payable to that entity.

[64] Second, the efforts of both Hope Township and the Respondent Municipality to craft an agreement for the administration of the fund with the trust companies serve as evidence that both entities were very much alive to the fact that the fund was a trust.

[65] Third, the application of some of the income from the fund to the very purpose expressed in Schedule 8 serves as further evidence that the Respondent Municipality understood that the trust obligation remained and that the intention expressed in the trust document could be and should be respected. That the Respondent Municipality chose to follow the direction set out in Schedule 8 irregularly and imperfectly should not serve as proof that a trust was never created, had failed or was never properly constituted.

[66] In light of the above finding, there is no need for me to embark on a consideration of whether this is one of the cases in which non-party or third party beneficiaries may be entitled to seek relief in contract law. The law of trusts governs the Agreement and the fund in question.

The Respondent Municipality as Trustee *de son tort* or *de facto* Trustee

[67] A person who was not appointed a trustee, but who takes it upon herself to possess and administer trust property for the beneficiaries will be treated as a trustee by imposition of law. She is treated as if she were a properly appointed trustee from the moment she starts to possess and administer that property, knowing actually or constructively that it is trust property. She becomes liable if she acts in a way which would be a breach of trust in a properly appointed trustee. A trustee de son tort is a de facto trustee (Waters, Waters’ Law of Trusts in Canada, at pp. 514-515).

[68] The Respondent Municipality, having taken possession of the fund previously held on deposit by Royal Trust, and having full knowledge of the terms upon which the trust was settled in the first place, evolved into a de facto trustee. Having failed to find a suitable replacement for Royal Trust and/or having failed to come to an agreement with a suitable trustee for the management of the fund, the Respondent Municipality found itself, unwittingly but undeniably, in the stead of an institutional trustee; nonetheless, as de facto trustee, the Respondent Municipality was just as much bound by the Agreement, the duties of a trustee and the law of trusts generally as any institutional trustee might have been.

The Amendment of 2003

[69] It is a cardinal rule of trust law that a settlor can only revoke his or her trust when the settlor has expressly reserved the power to do so. Without an explicit provision in the trust document providing for the termination of a trust, a trust cannot be invalidated. This is because once a trust is constituted, and the property transferred to the trustee, the settlor has disposed of the property (Waters, Waters’ Law of Trusts in Canada, at p. 383).

[70] In Schmidt v. Air Products Canada Ltd., [1994] 2 S.C.R. 611, at p. 643, the Supreme Court of Canada considered the significance of a settlor reserving to itself the right to amend the trust:

The settlor of a trust can reserve any power to itself that it wishes provided the reservation is made at the same time the trust is created. A settlor may choose to maintain the right to appoint trustees, to change the beneficiaries of the trust, or to withdraw the trust property. Generally, however, the transfer of the trust property to the trustee is absolute. Any power of control of that property will be lost unless the transfer is expressly made subject to it.

[71] The amendment made to Schedule 8 in 2003 did not revoke the trust. The amendment has to be viewed in the factual context in which it took place. Clearly, the amendment was designed to address the unexpected problem of there being no willing entity to assume the mantle of trustee from the de facto trustee, the Respondent Municipality. The amendment simply afforded the Respondent Municipality the option of selecting an investment counsellor to help it to administer the fund.

[72] I am not prepared to read into the amendment, or the process surrounding its enactment, an intention to compromise the integrity of the trust. The intent for which the fund was to be used was entirely undisturbed. The purpose “for the exclusive benefit of the ratepayers from time to time of the area that comprises the geographic area of Hope Township as of the date of October 6, 2000” remained operative and unchanged. The intention, subject matter and the objects of the trust thus survived the amendment in question.

[73] Moreover, the power to amend should not be confused with the power to revoke the trust property. Such a power would have had to be reserved to the settlor or conferred upon a party in plain and unequivocal language. It is clear from paras. 8 and 9 of Schedule 8 that the creators of the trust turned their minds to the right of reversion of the property to Canada in the event of certain events occurring. Those paragraphs will be discussed in greater detail below. Aside from that, there is nothing in Schedule 8 that reserves any right to terminate the trust; certainly, that right is not reserved to the trustee or its successors. The power to terminate the trustee which is found in para. 6 of Schedule 8 cannot, by any stretch of rational thinking, be interpreted so as to have afforded the Respondent Municipality the power to terminate the actual trust. The power to amend in s. 1.12 of the Agreement should be viewed as nothing more than a practical tool included in the trust document to respond to unforeseen developments or circumstances.

[74] Finally, neither the contemporaneous discussions engaged in by council for the Respondent Municipality nor its ex post facto interpretations of what it intended to achieve in 2003 can serve to undermine the integrity of the constituted trust.

[75] Placing the funds into the hands of an investment counsellor was very much in accordance with the intention of the trust, which was to realize a yield from the funds on an annual basis that would serve to maintain the corpus of the trust while its objects could be satisfied. Placing the funds in this way was no doubt consistent with municipal policy and practice; such discretionary handling of the funds for the purpose of protecting the asset and producing the required income, however, did not serve to erode the existence of the trust itself nor diminish the trustee’s obligation to respect the plainly expressed and undisturbed purpose of the trust.

The Rule Against Perpetuities

[76] At common law, a gift is void if its terms preclude the alienation of the capital of the fund for a period which may last longer than the perpetuity period (twenty-one years). I refer to this as the alienation rule. As well, the rule against perpetuities acts so as to void interests that may vest outside of the applicable perpetuities period. I refer to this as the vesting rule.

The Alienation Rule

[77] I find that the trust does not offend the alienation rule. Undoubtedly, the opening paragraphs of Schedule 8 preclude the trustee from encroaching upon the capital. At para. 3, the trustee is directed to apply an amount of up to 8% of the fund to defray lower tier municipal taxes, “provided that the opening capital of the Fund shall not be encroached upon by the Trustee.” At para. 4, the direction to the trustee is repeated and clarified: “Provided that the Trustee shall not pay out any amount to defray lower tier municipal taxes or levies that will reduce the net value of the Fund below the amount of Ten Million ($10,000,000.00) Dollars.”

[78] A consideration of Schedule 8, however, must take into account the impact of paras. 8 and 9 on the alienation of the capital. The creators of the trust clearly turned their minds to the possibility of the licence not being granted by the CNSC. Paragraph 8 was designed to serve as a condition subsequent to the host community grant: on the latest date of either the licence being refused or the removal and clearing of the waste management facility, the original capital of the fund was to be returned to Canada. This made eminent good sense. If the LLRW facilities were no longer operating within the host municipalities, then the rationale behind providing an ongoing benefit to the ratepayers would disappear.

[79] Paragraph 9 of Schedule 8 reads as follows:

If a license to construct the New Hope Township Waste Management is granted by the Canadian Nuclear Safety Commission, on the date of the issuance of the licence the Trustee’s obligation in favour of Canada regarding the use and investment of the Fund shall terminate.

[80] The CNSC granted the license in question October 16, 2009. I read para. 9 of Schedule 8 as serving to extinguish any right of reversion in the fund still enjoyed by Canada upon the happening of that event. Moreover, the granting of the license served to terminate the trustee’s obligation in favour of Canada regarding the use and investment of the fund. The fund was to be used for the purpose of defraying taxes of ratepayers subject to the stipulation that the original capital be preserved until the date the CNSC licence was granted. After that date, without any reversionary interest remaining in Canada, the trustee or in this case the de facto trustee was within its rights to use the opening capital towards the purposes of the trust, within the scope of the powers conferred on it. The spectre of the inalienability of capital, which might have served to offend the rule against perpetuities, was resolved by the happening of actual events that were contemplated in the Agreement.

[81] The question then arises whether this termination of the obligation in favour of Canada could serve to relieve the trustee from its obligation to discharge the trust in accordance with the intentions expressed in the Agreement. I find that it does not. Nowhere in para. 9 or elsewhere in Schedule 8 or in the Agreement itself does it provide for the trust to be terminated or for its objects and purpose to be altered, suspended or ignored. Indeed, the very event contemplated in para. 9 would result in the permanent presence of the LLRW in Ward 2 of the Respondent Municipality. It would be an absurd result if the licencing of the waste management facility, which ensured the presence of LLRW in the midst of the ratepayers of Ward 2 for an indefinite period of time, would nevertheless lead to those ratepayers being deprived of the benefit intended for them as contemplated in the Agreement. It was, after all, the anticipated hosting of the LLRW in permanent storage facilities which inspired the principles of understanding and the Agreement that followed.

[82] Finally, the trustee’s obligation “in favour of Canada” should not be confused with its obligation to adhere to the purpose of the trust. In the absence of express language terminating the trust or relieving the trustee of its duties towards the beneficiaries, I read the termination of the obligation in favour of Canada as limited to those restrictions imposed on the trustee designed to preserve the opening capital of the fund in the event that the events contemplated in para. 8 of Schedule 8 occurred.

The Vesting Rule

[83] I find, however, that the trust violates the rule against remoteness of vesting; it provides benefits to an unclosed class for an indeterminate period that extends beyond the perpetuity period. The use of the language “the ratepayers from time to time” results in an unavoidable perpetuities problem. The trust creates an endowment that could last forever.

[84] The reference in Schedule 8 to a discernable geographical area that existed on October 6, 2000 does not resolve the problem. While October 2000 is a reference point in the past, the wording “from time to time” is entirely forward looking. That language compels the trustee to use the trust property to defray the taxes of ratepayers ad infinitum. Absent an act of God, a nuclear holocaust, a natural disaster or a seismic change in the way taxes are levied at the municipal level, there will always be some ratepayers residing on lands which once comprised Hope Township. Membership in that class of beneficiaries will inevitably change as there will be different ratepayers “from time to time”. This is a classic affront to the rule against perpetuities.

[85] The difficulty is further illustrated by comparing the wording in Schedule 8 to the wording in its companion schedules. The words “from time to time” are notably absent from both Schedules 7 and 9. Thus, the trusts in these cases can vest immediately in a discernible and inherently limited class of beneficiaries, and the perpetuities problem does not arise. The same cannot be said for Schedule 8: the perpetuities problem is manifest and inescapable.

Charitable Purpose Trusts

[86] At common law, the rule against perpetuities does not apply to charitable trusts. These trusts are exempt from the rule, since they are for the public benefit and are to be encouraged to continue forever. Moreover, the state has an inherent responsibility to ensure that the trust is administered for its charitable purposes (Gillese, The Law of Trusts, at p. 64).

[87] Charitable purpose trusts are also an exception to the historical rule that purpose trusts are void. Gillese J.A., in The Law of Trusts, at p. 61, describes charitable trusts as,

[T]rusts set up by individuals to accomplish public purposes that the courts have accepted as warranting certain advantages. A charitable trust does not benefit persons directly. Instead, the public, or a segment of the public, derives a benefit from the trust indirectly. A charitable trust is a purpose trust – one that has as its paramount obligation the fulfillment of a task that the creator of the trust wishes the trustee to perform through the use of the trust property.

[88] Of the four recognized charitable purposes—relief of poverty, advancement of education, advancement of religion and other purposes beneficial to the community—only the last of these might apply to the case at bar.

[89] I find, however, that it does not. I am not persuaded that tax abatements to a class of individuals would qualify as charitable in these circumstances. One must view the trust in question in context. In return for an agreement to host LLRW in its community, Hope Township was able to offer its ratepayers an indirect benefit: the entitlement to have the fund applied so as to defray their taxes. Whether the host community grant was designed to acknowledge the inconvenience and risk associated with living near LLRW or to compensate for the diminution in property values caused by the proximity of the waste sites hardly matters. A business deal was struck between Canada and a local municipality: there was no charitable intent considered, no charitable context involved and no charitable purpose established. This is not a charitable trust.

The Saving Provisions of the Perpetuities Act

[90] The strictness of the rule against perpetuities has been mollified in Ontario by the Perpetuities Act which contains two saving provisions set out above. The first is s. 4(1), the “wait and see” provision, which essentially provides that a gift is considered valid until actual events establish that it will not vest within the period.

[91] I am unable to find that the “wait and see” provision in s. 4 of the Act is a recourse through which the trust can be deemed valid until a future date. There is no possibility that all of the interests will vest by the year 2022 or, for that matter, within any life in being plus twenty-one years. It is inevitable that the individual ratepayers will change over time. Persons who are incapable of being identified, indeed some who are not even born as of today, will stand to benefit, albeit indirectly, from the trust. It cannot be said that their interests have vested now or will vest within the twenty-one-year period.

[92] Accordingly, s. 4 of the Perpetuities Act cannot assist the trust in question: there exist indirect contingent interests of unknown persons who will become ratepayers of the lands in the former Hope Township. These interests are not capable of vesting within the perpetuity period. As noted above, this trust is destined to continue beyond the perpetuity period. That fact is a virtual certainty; the “wait and see” saving provision is, therefore, unavailable to save the trust.

Non-Charitable Purpose Trusts

[93] The second saving provision is s. 16 of the Perpetuities Act. This section serves to validate a specific non-charitable trust by construing it as a power to appoint the income or capital for a period of twenty-one years, after which date the unexpended capital and income in the trust should go to those persons who would have been entitled to receive the trust property had the trust been invalid from the start.

[94] In Schmidt v. Air Products Canada Ltd., [1994] 2 S.C.R. 611, at p. 640, the Supreme Court of Canada described the purpose trust as a “rare species”. The court agreed with the comments of the Pension Commission of Ontario in Arrowhead Metals Ltd. v. Royal Trust Co., (March 26, 1992), at pp.13-15, cited in Bathgate v. National Hockey League Pension Society, 11 O.R. (3d) 449 (Gen. Div.), at p. 510:

Purpose trusts are trusts for which there is no beneficiary; that is, they are trusts where no person has an equitable entitlement to the trust funds. Funds are deposited in trust in order to see that a particular purpose is filled; people may benefit, but only indirectly.

[95] Gillese J.A. distinguishes between a trust for persons which sets out the individuals, by name or class, who are to enjoy the trust property and a trust for purposes which sets out the task that the creator of the trust wishes the trustee to perform through the use of the property. She goes on to acknowledge the difficulty in distinguishing trusts for persons from trusts for purposes (Gillese, The Law of Trusts, at p. 59).

[96] Historically, one of the objections to non-charitable purpose trusts was that there was no beneficiary in place to enforce the obligation upon the trustee. A purpose does not have legal standing before the courts to do so. The problem was elaborated upon by Gillese J.A., at p. 60:

This is known as the “beneficiary principle,” or the “enforceability objection.” It is based on the fact that the essence of a trust is that a trustee is obliged to perform the trust. There can be no obligation on a trustee to perform unless there is a correlative right in someone else to enforce the obligation. And, since the beneficiary is a purpose and not an individual, there is no one who can bring an action to compel the trustee to perform. This objection does not apply to charitable trusts, since public officials are charged with the duty of enforcing such trusts.

[97] Gillese J.A. goes on to note, however, how the modern day trend is for courts to be more flexible when deciding whether non-charitable purpose trusts are valid. This is to be welcomed because our system of law accepts that people should be able to dispose of their property as they wish, so long as the disposition is legal and complies with the rules on public policy and with legal requirements, at pp. 72-73:

The new view appears to be that, instead of prohibiting non-charitable purpose trusts, the legal rules must ensure that the intention of the creator of the trust is carried out and that the trustee is able to perform in compliance with that intention. Naturally, non-charitable purpose trusts must comply with the legal limits of legality, public policy, perpetuities, formalities, and the like.

[98] I find that the Agreement and Schedule 8 created a specific non-charitable purpose trust to which s. 16 of the Perpetuities Act applies. The use to which the allowable percentage of the fund is to be put is clear and paramount: “to defray the lower tier municipal taxes or levies which otherwise would be payable by the ratepayers of aforesaid geographic area of Hope Township provided that the opening capital of the Fund shall not be encroached upon by the Trustee” (Schedule 8, at para. 3).

[99] The rationale behind the purpose enunciated in Schedule 8 is found in the Agreement at Article 7, s. 7.1:

Canada agrees, in order that the Municipalities will be enabled to address, as they see fit impacts of the presence of long-term waste management Facilities within their communities, to make the following payments….

[100] The concern with the impact of LLRW on the communities is also found in the Introduction of the Agreement, at p. 2:

Canada is prepared to mitigate the effects on the Municipalities and the property owners within the Municipalities of the work to be undertaken within each community.

[101] Clearly, Hope Township saw fit to address that impact by providing tax reductions for its present and future ratepayers. Canada, as a party to the principles of understanding, the Agreement and Schedule 8, gave its assent. The passages cited from the body of the Agreement, read together with paras. 1, 3 and 7 of Schedule 8, sketch out the clear purpose of the trust: to mitigate the effects of the presence of long-term waste management facilities in Hope Township by a reduction of taxes for property owners.

[102] I find that the trust does not create an enforceable equitable interest in a specific person such as to prevent it from qualifying as a trust governed by s. 16 of the Perpetuities Act. While the Applicant himself is an individual person, he is incapable of claiming any specific, personal enforceable equitable interest in the fund. There can be and will be no declaration of a trust in favour of the Applicant. This is not an action for damages for breach of trust, for recovery of property or for unjust enrichment. Whatever the outcome of the application, the remedy cannot be personal to the Applicant either at law or in equity.

[103] While ratepayers include persons who can readily be identified, nowhere in Schedule 8 are the ratepayers of the former Hope Township differentiated according to their respective or individual interests in the fund. Specifically, the language does not require any method of application other than across the board. There is no formula for the pro rata distribution of the annual allocation from the fund. The purpose is clear; the resulting specific benefit to the individual members of the targeted class less so. The benefit received by the ratepayer is not only indirect but also impersonal and imprecise. That this purpose trust benefits an identified class of individuals only is clear. There is nothing, however, to preclude a purpose trust from benefitting people, if only indirectly. It would be a rare purpose trust indeed that did not bestow some kind of a benefit or advantage on a particular group even if that group is a fluid one. Gillese J.A. acknowledges this when providing examples of valid non-charitable purpose trusts; these have included the provision of a trophy for an annual club tournament and the provision of sports and recreation facilities (Gillese, The Law of Trusts, at p. 60). The members of the group may change; the purpose of the trust will not.

[104] It is in that light that the instructive case of Re Denley’s Trust Deed, [1968] 3 All E.R. 65, should be considered and applied. In that case, a person wished to establish a recreation ground for employees and ex-employees of a corporation. The court upheld the trust on the basis that there were individuals who could be ascertained and who had a sufficient interest in the proper administration of the trust that they could be given standing to apply to the courts to enforce it. While no one employee could claim to be a direct beneficiary with an equitable ownership in the trust property, this did not prevent the court from seeing that the employees’ interest could otherwise create a viable situation.

[105] Indeed, Gillese J.A., writing as an academic, noted in her text that Re Denley’s Trust Deed has been followed and must be given the credit for creating a flexible approach to the enforceability problem (Gillese, The Law of Trusts, at p. 73). I would apply the reasoning and approach in Re Denley’s Trust Deed to the present case.

[106] I do not accept that a trust having beneficiaries with locus standi before the court is, therefore, only capable of being construed as a true trust. While it is undoubtedly so that a legitimate charitable trust is almost inevitably a purpose trust, the converse is not true: a purpose trust does not have to be a charitable trust. The question of whether Canadian law permits purpose trusts has been answered in the affirmative in Keewatin Tribal Council Inc. v. City of Thompson (1989), 61 Man. R. (2d) 241 (Q.B.), and in Peace Hills Trust Company v. Canada Deposit Insurance Corporation, 2007 ABQB 364, 436 A.R. 295. Both cases stand for the proposition a non-charitable purpose trust should be validated when there are any number of persons with standing to enforce it.

[107] In Ontario, s. 16 or the Perpetuities Act both affirms the legality of specific non-charitable purpose trusts and provides a mechanism by which that variety of trust can be made to comply with the rule against perpetuities. The section directs that such a trust be construed as a power to appoint the income or the capital within the period of twenty-one years. By virtue of s. 16(2) of the Perpetuities Act, the unexpended income and capital of a non-charitable purpose trust devolves to “the person or persons, or the person or person’s successors, who would have been entitled to the property comprised in the trust if the trust had been invalid from the time of its creation”. In my view, this indicates that the Legislature contemplated that a specific non-charitable purpose trust could be validated, but validated in a limited way so that the specific purpose of the trust may be respected but only during a time period beyond which the rule against perpetuities would be offended.

[108] The power to appoint income or capital, as conferred by s. 16, does not empower a trustee to act as he or she wishes in appointing the income. First, by virtue of s. 11 of the Perpetuities Act, a power of appointment shall be treated as a special power unless the two criteria set out in that section apply, which they do not. Whereas a general power of appointment authorizes the donee to give the donor’s property to any person with no restrictions on the power whatsoever, a special appointment restricts the class by listing those who are potential appointees by describing their traits (Gillese, The Law of Trusts, at pp. 24-26). Schedule 8 clearly describes the traits of the appointees of the trust property.

[109] Second, there is nothing in s. 16 of the Perpetuities Act which serves to relieve a trustee from adhering to the document under which he or she holds the trust property. The non-charitable purpose trust is to be “construed” as a power to appoint. The word “construe” means to be interpreted in a particular way. I do not read the section to mean that there should be any derogation from the principles of trust law.

[110] Third, I note that ss. 16(1) and (2) refer to the specific non-charitable trust as a “trust” immediately following and in spite of the direction to construe such an arrangement as a “power to appoint”. In the present case, had the Respondent Municipality been uncertain about its role under such an arrangement or about the manner in which it was to appoint the income, it would have been entirely justified in applying to the court for directions on the subject in the manner of any similarly placed trustee.

[111] I find that the trust is saved by s. 16(1) of the Perpetuities Act. The powers within it have been exercised by the trustee within twenty-one years of its constitution. I interpret the term “exercise” to mean that it has been acted upon: that some aspect of the trust has been carried out or followed. As well, the trust was not created for an illegal purpose; its purpose is not contrary to public policy.

[112] The Respondent Municipality, as de facto trustee, is charged with a power to appoint the income and capital of the trust in accordance with the direction in Schedule 8. The power to appoint shall therefore terminate on April 12, 2022, at which time the Respondent Municipality, or whoever shall be acting in the capacity of trustee on that date, may seek further direction from the court. Until that date, the Respondent Municipality must appoint the income and capital of the trust exclusively towards the purpose described: the defrayal of the lower tier taxes of ratepayers from time to time of the area that comprised the geographic area of Hope Township as of the date of October 6, 2000.

[113] The special power to appoint income or capital may be exercised by the Respondent Municipality without regard to any obligation in favour of Canada to preserve the opening capital grant. The reversionary interest of Canada in that opening grant has been extinguished. The direction found in para. 3 of Schedule 8 nevertheless remains the operative instruction: up to 8% of the fund in the previous calendar year is to be appointed by the trustee to defray the lower tier municipal taxes or levies which otherwise would be payable by the ratepayers of Ward 2.

[114] The one remaining question is what persons will become entitled to the unexpended income or capital of the fund on April 12, 2022. That question was not before the court in the present application; nor can it be said with any confidence that persons entitled to receive the unexpended income and capital have been put on notice in respect of that unexplored issue. That question will require determination on or after April 12, 2022, when, by virtue of s. 16(2), the unexpended income and capital of the trust must be paid out to persons who stood to benefit from an invalid trust. An application to determine that issue will necessarily have to be brought on notice to any persons who might reasonably have an interest in the unexpended income or capital of the fund.

Limitation Period

[115] The Notice of Application was issued on September 8, 2014.

[116] I find that the Applicant is not statute-barred from seeking declaratory relief. While it is clear that the Applicant was intimately involved in the negotiation of the Agreement and indeed signed it in his then capacity as reeve of Hope Township, there is no direct evidence that the Applicant became aware after that date (and prior to September 8, 2012) that the fund was not being used for the exclusive benefit of the ratepayers of Ward 2. I am not prepared to speculate that it should have been obvious to the Applicant from his property tax statement or other document that ratepayers were not benefitting from the defrayal of levies called for in Schedule 8.

[117] Moreover, had the Applicant thought to make inquiries of the Respondent Municipality on the subject, he might have discovered that, in fact, some of the income earned on the fund was being directly applied to the levies of Ward 2 beginning in 2003 and for several years thereafter.

[118] There is no evidence that the Applicant received the kind of explanation given to former Applicant Dean Ross in a letter dated September 14, 2010. This letter provided both a summary of transactions for the Hope Township account and a clarification that the fund was being assigned to the reserves, and towards the purchase of equipment and upgrades to the Respondent Municipality’s facilities. I am not satisfied that the alleged inquiries made by the Applicant’s friend in April 2012, or the Applicant’s involvement in the Respondent Municipality’s Area Rating Committee would have provided him with a definitive answer as to whether the Respondent Municipality was using the fund in compliance with Schedule 8.

[119] The un-contradicted evidence of the Applicant is that he learned of the position being taken by the Respondent Municipality vis-à-vis the fund after reviewing a copy of a letter provided to him by counsel for the Respondent Municipality dated January 17, 2013. Referring to the fund in question, counsel wrote, “it is our opinion that the obligations in the Agreement regarding the use of such monies has also terminated thereby giving the current municipality the ability to use both grants as it sees fit, whether on a ward by ward basis or not.” I am satisfied that the Applicant first learned of the potential misuse of the trust funds after receiving a copy of that letter.

[120] I am not persuaded that a reasonable person with the abilities and in the circumstances of the Applicant ought to have known about any act or omission on the part of the trustee or any cause of action relating to the fund prior to September 8, 2012. In order to have become so informed, the Applicant would have had to seek out information similar to that provided to Mr. Ross, made himself familiar with the Respondent Municipality’s budget meeting minutes or taken to reading the notes in the annual audited financial statements. There is no evidence that he did any of these things prior to being drawn to the issue in early 2013. I am unable to find that a reasonable person should be expected to make such inquiries or slog through such documents in search of a cause of action.

[121] I find that the Applicant first discovered that he had a claim on or after January 17, 2013. The application was, therefore, issued within two years of the cause of action or claim being discovered. It is not barred by the Limitations Act.

Laches, Acquiescence and Equity

[122] I am unable to find that the doctrines of laches or acquiescence apply to bar the claim for equitable relief. The Respondent Municipality has not pointed to any evidence that it would be unduly prejudiced in the application due to delay. It is evident from the financial statements that the income from the host community grants has been consistently identified and accounted for. I heard no evidence from any accountant or expert that it would prove a difficult task to establish what share of income from any commingled account or investment would properly belong to the fund. The Respondent Municipality has managed to provide a summary of the use to which that income was put. The tax rolls would surely indicate the levies charged to the Ward 2 ratepayers for the period following the constitution of the trust. Nor would I find that there has been any acquiescence by the Applicant to the misuse of the income from the fund by the Respondent Municipality. My findings in respect of the limitation period apply here.

[123] Finally, the equities here lie in favour of the ratepayers of Ward 2 of the Respondent Municipality. It was the elected officials of Hope Township who, acting on behalf of their constituents, entered into the principles of understanding and Agreement, thereby accepting LLRW into the local community in return for a benefit for the present and future ratepayers of Hope Township as it existed at the time. It bears repeating the acknowledgment found in the Introduction section of the Agreement, at p. 2:

Canada is prepared to mitigate the effect on the Municipalities and the property owners within the Municipalities of the work to be undertaken within each community. [Emphasis added.]

[124] In my view, it would serve as an affront not only to the law of trusts but also to the principles of equity to ignore the purpose enunciated in the trust and to deprive the ratepayers of Ward 2 of the benefit intended for them when the parties entered into the Agreement.

Indirect Benefits to the Ward 2 Ratepayers

[125] I am unable to agree with the argument put forth by the Respondent Municipality that its use of the income from the fund, although not strictly in accordance with Schedule 8, has nevertheless served to benefit the ratepayers of Ward 2.

[126] First, this is a highly complacent assertion, one that fails to recognize that the constituted trust evolved out of clearly articulated principles of understanding and the acceptance by the Hope Township, on behalf of its residents, of LLRW to be stored in its community in return for the benefits of a government grant.

[127] Second, I am not satisfied that there is any objective basis upon which a net benefit analysis could be undertaken. There is no way of determining on the record before me whether the administration of the fund by the Respondent Municipality has advanced the objects of the purpose trust to the same extent those objects would have been advanced by strict adherence to the direction found in Schedule 8.

[128] Third, a trustee is under the obligation to adhere to the terms of a trust and cannot depart from them in the absence of legal authority to do so. In Merrill Petroleums Ltd. v. Seaboard Oil Co. (1957), 22 W.W.R. 529 (Alta. S.C.), at p. 557, aff’d (1958), 25 W.W.R. 236 (Alta C.A.), Egbert J. put it thus, “except for those general duties imposed by law on all trustees, the terms of a trust are to be found within the four corners of the trust instrument.”

Disposition

[129] The application is therefore allowed in part. The court declares that Schedule 8 to the Agreement, as amended, is a specific non-charitable purpose trust with a power to appoint the income and capital in accordance with the terms set out there in until April 12, 2022. The Respondent Municipality, as de facto trustee, is ordered to do so.

[130] I find as well that the Respondent Municipality, having failed to use the special power to appoint the income in accordance with the strict terms of the trust document, is in breach of its duties as trustee. I order that the Respondent Municipality shall account for both the income earned on the fund and for all payments made out of the fund from April 12, 2001 to the present date within 120 days of this order. That accounting shall be served on the Applicant. A copy of that accounting shall be made available to any interested person who applies to the Respondent Municipality for a copy in writing after the accounting is served on the Applicant.

[131] In the event that the parties are unable to agree on the issue of costs, on the time limits or procedures to be followed under this order or on the form and content of an order arising from these reasons, the parties shall arrange for a re-attendance before me at Newmarket on a date to be arranged through the trial coordinator.

J.R. McCarthy J.

Released: June 30, 2016

COURT FILE NO.: CV-14-79 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: IAN ANGUS and DEAN ROSS Applicants – and – THE CORPORATION OF THE MUNICIPALITY OF PORT HOPE Respondent REASONS FOR JUDGMENT The Honourable Mr. Justice J.R. McCarthy

Released: June 30, 2016

Appendix 1

SCHEDULE 7

TOWN OF PORT HOPE FUND

1. Subject to the following provisions, Port Hope agrees to hold Canada’s payment of Ten Million ($10,000,000.00) Dollars in trust for the exclusive benefit of the ratepayers of that area that comprises the geographic area of Port Hope as of the date of October 6, 2000.

2. The principal of the Fund may be invested by Port Hope in its discretion in any investment permitted by law. Any income earned from investing the Fund may be expended by Port Hope from time to time in its discretion for any purpose permitted by law.

3. Port Hope shall pay Canada an amount equal to the opening capital of the Fund, Ten Million ($10,000,000.00) Dollars, on the last to occur of both:

(1) the day on which a licence is refused by the Canadian Nuclear Safety Commission to construct the New Port Hope Waste Management Facility as contemplated by this Agreement; and, (2) the first day after the Historic Low-Level Radioactive Waste and the Cameco Decommissioning Waste which are identified in Schedule 1 as wastes to be accommodated in the New Port Hope Waste Management Facility have been cleaned up in accordance with the intent of this Agreement and removed from the Town of Port Hope and Hope.

4. If a licence to construct the New Port Hope Waste Management Facility is granted by the Canadian Nuclear Safety Commission, on the date of the issuance of the licence Port Hope’s obligations in favour of Canada regarding the investment and use of the fund shall terminate.

SCHEDULE 8

TOWNSHIP OF HOPE FUND

1. Canada will pay to the trustee (“Trustee”) appointed by Hope Township Council, a grant in the amount of Ten Million ($10,000,000.00) Dollars (hereinafter referred to as the “Opening Capital” or the “Fund”) which, subject to the following provisions, shall be held in trust for the exclusive benefit of the ratepayers from time to time of the area that comprises the geographic area of Hope Township as of the date of October 6, 2000.

2. The principal of the Fund shall be invested by the Trustee in any investment permitted by law that the Trustee in its discretion considers likely will produce an increase in the net value of the Fund comprising a blend of capital appreciation and income of at least ten (10%) per cent in each calendar year (“Growth”).

3. After first deducting and appropriating to the Trustee’s use from the income earned from the investment of the Fund the amount required to indemnify the Trustee against the Trustee’s reasonable costs incurred in administering and investing the Fund, the Trustee shall apply an amount equal to up to eight (8%) per cent of the Fund in the previous calendar year to defray the lower tier municipal taxes or levies which otherwise would be payable by the ratepayers of aforesaid geographic area of Hope Township provided that the opening capital of the Fund shall not be encroached upon by the Trustee.

4. If any portion of the growth in the Fund in any calendar year is not required to be expended to discharge the aforesaid lower tier municipal taxes or levies, the portion shall be invested as aforesaid, and the other provisions of the Schedule shall apply with all necessary changes being considered to have been made in order to give effect to the intent of sections 2 and 3 above. Provided that the Trustee shall not pay out any amount to defray lower tier municipal taxes or levies that will reduce the net value of the Fund below the amount of Ten Million ($10,000,000.00) Dollars.

5. The Trustee appoint by Hope Township Council to administer the Fund in accordance with the above sections, shall have at least fifty (50) times the amount of the Fund under administration during the period in which he will act as Trustee of the Fund.

6. Hope Township Council from time to time may terminate the appointment of the Trustee on terms considered to be appropriate by the Council in its discretion and thereupon shall appoint another Trustee who is qualified as aforesaid to act as Trustee of the Fund during the period of the appointment. The Trustee so appointed from time to time shall be deemed to be the Trustee for the purposes of this Agreement. Except in appointing and terminating the Trustee of the Fund from time to time, Hope Township Council shall have no authority over the investment decisions made by the Trustee.

7. For greater clarity, “lower tier municipal taxes or levies” are the annual taxes or levies imposed by Hope Township or by its successor on ratepayers who own assessed property within the geographic area of Hope Township as it exists as of the date that the Township of Hope signed this Agreement. The term “lower tier municipal taxes or levies” does not include general county or upper tier taxes or levies, special county or upper tier taxes or levies, and education taxes or levies.

8. The Trustee shall pay Canada an amount equal to the opening capital of the Fund being Ten Million ($10,000,000.00) Dollars on the last to occur of both:

(1) the day on which a licence is refused by the Canadian Nuclear Safety Commission to construct the New Hope Township Waste Management Facility as contemplated by this Agreement; and, (2) the first day after the Cameco Waste – Welcome has been removed from the Township of Hope and the site of the Welcome Waste Management Facility has been cleaned up in accordance with the intent of this Agreement including, without limitation, Schedule 2.

9. If a licence to construct the New Hope Waste Management Facility is granted by the Canadian Nuclear Safety Commission, on the date of the issuance of the licence the Trustee’s obligation in favour of Canada regarding the use and investment of the Fund shall terminate.

SCHEDULE 9

CLARINGTON FUND

1. Subject to the following provisions, Clarington agrees to hold Canada’s payment of Ten Million ($10,000,000.00) Dollars, hereinafter referred to as the “Fund”, in trust for the exclusive benefit of the ratepayers of that area that comprises the geographic area of Clarington as of the date of October 6, 2000, provided that if after the date of this Agreement, the geographic area of Clarington is reduced, the fund shall be held in trust for the exclusive benefit of the ratepayers of the remaining geographic area of Clarington.

2. The principal of the Fund may be invested by Clarington in its discretion in any investment permitted by law. Any income earned from investing the Fund may be expended by Clarington from time to time in its discretion for any purpose permitted by law.

3. Clarington shall pay Canada an amount equal to the opening capital of the Fund, Ten Million ($10,000,000.00) Dollars, on the last to occur of both:

(1) the day on which a licence is refused by the Canadian Nuclear Safety Commission to construct the New Clarington Waste Management Facility as contemplated by this Agreement; and, (2) the first day after the Cameco Waste – Port Granby has been removed from Clarington and the site of the Port Granby Waste Management Facility has been cleaned up in accordance with the intent of this Agreement including, without limitation, Schedule 2.

4. If a licence to construct the New Port Granby Waste Management Facility is granted by the Canadian Nuclear Safety Commission, on the date of the issuance of the licence Clarington’s obligations in favour of Canada regarding the investment and use of the fund shall terminate.

[1] Township of Hope, By-law 3605, Being A By-Law To Authorize The Execution Of All Documentation To Appoint A Trustee In Accordance With The Agreement With Natural Resources Canada, (19 December 2000).

[2] Ontario, Minister of Municipal Affairs and Housing, Order Made Under The Municipal Act, R.S.O. 1990, Chapter M. 45 County Of Northumberland Town Of Port Hope, Township Of Hope, Municipality Of Campbellford/Seymour, Township Of Percy And Village Of Hastings (March 28, 2000).