This blog was written by Ruth Paul, student-at-law

The recent decision in May v. Alsousi et al., 2025 ONSC 795 (CanLII) reiterates that when establishing a trust, attention should be paid to the legal requirements of that particular trust, as failure to do so risks denying a beneficiary access to the trust.

Qasem Mahmud (the “Deceased”) died in June 2017 without a Will. In September 1988, the Deceased signed a declaration of trust (the “Declaration”) stating that he was holding a condo unit (the “Property”) in trust for the Islamic School of Ottawa (the “School”). In 2007, the School changed its name to the Arabic and Islamic Education Foundation of Ottawa (“Foundation”).

At the time he signed the Declaration, the Deceased was not the legal owner of the Property. The Deceased did not purchase the Property until October 1988 – after the Declaration was already signed.

Following the Deceased’s passing, the Foundation continued to occupy and use the Property until one of the Deceased’s children “walked in and decided to put the place [up] for sale.”

The estate trustee (the “Applicant”) commenced an application to determine whether the Property was held by the Deceased in trust for the Foundation.

The Foundation claimed the declaration constituted an express inter vivos trust in their favour. To find an express in vivos trust, the Court must be satisfied that:

1. The parties are capable;
2. Three certainties exist: certainty of intention to create a trust, certainty of the subject matter of the trust, and certainty of the object or persons intended to be the beneficiaries;
3. The trust is constituted; and
4. The requisite formalities are present.

The Applicant claimed there was no express trust because:

1. Since the Deceased did not legally own the Property when he signed the Declaration, the conditions for a construction of a trust were not met;
2. Since the Foundation did not exist until 2007, there was no certainty as to the object or beneficiary of the trust; and
3. The requisite formalities did not satisfy 9 of the Statute of Frauds.

In response to the Applicant’s first argument, the Foundation claimed that the Deceased was a layperson and did not know that the Declaration was insufficient to create a trust. As the Deceased continued to execute multiple documents referring to the Property being held in trust, the Foundation claimed that he intended to hold the Property in trust in their favour. The Foundation relied on Elliott Estate (Re), where the Court held that the declaration of self as a trustee without technical or legal language may be sufficient in establishing a trust.

However, the Court clarified that Elliott Estate (Re) did not intend for self-declaration alone to establish a trust and that all other requirements of an express trust must still be met. Furthermore, unlike Elliott Estate (Re), this case involved land and engaged the formality requirements under the Statute of Frauds. Specifically, s. 9 of the Statute requires that a declaration of trusts involving land be “proved by a writing signed by the party who is by law enabled to declare such trust.”

While the documents executed by the Deceased may demonstrate that he intended to hold the Property in trust, the documents did not fulfill the other necessary requirements to establish an express trust. In particular, the documents did not identify the beneficiary or provide any certainty that the Foundation or School was the object of the trust.

The Foundation alternatively claimed a resulting trust based on the Foundation’s contributions in purchasing the Property. The presumption of a resulting trust arises when a party (the “contributing party”) unrelated to the person taking title contributes to the purchase of a property. The law presumes that the parties intended for the contributing party to have a beneficial interest in the property in proportion to their contribution. This presumption can be rebutted if the title recipient proves, on a balance of probabilities, that the contributing party intended for their contribution to be a gift at the time the funds were advanced.

The Foundation provided evidence that they made mortgage payments in December 1991 and again from February 1995 until the mortgage was discharged in September 2007. However, the Court held that these funds did not give rise to a resulting trust. The presumption of a resulting trust applies only if contributions were made at the time of purchase. There was no evidence that the Foundation contributed any funds at the time the Property was purchased, but rather, the payments were only made after the Deceased had already acquired the Property.

There was also insufficient evidence to prove that the Foundation intended to contribute to the purchase of the Property through their mortgage payments. Since the Foundation occupied and used the Property, the payments did not necessarily correlate to a beneficial interest through a resulting trust.

Takeaway

This case demonstrates that establishing a trust requires clear, comprehensive and complete documentation that follows the specific legal requirements of that particular type of trust. If a trust involves land, particular attention should be given to ensure the declaration adheres to the Statute of Frauds.  It also highlights the importance of updating trust documentation, especially when benefitting an organization, to ensure that the formalities are correct and that beneficiaries are ascertained.