Date: Jason Neyers

From: Mon, 19 Jan 2004 09:49:37 –0500

Subject: Use of trust funds to pay lawyers

Colleagues:

If you think that decision is weird you should have a look at Re Christian Brothers of Ireland in Canada (2000), 47 O.R. (3d) 674 (C.A.) (attached) where the Ontario Court of Appeal abolished, perhaps inadvertently, the charitable purpose trust. Given that the Supreme Court of Canada has on three occasions refused leave to appeal in cases involved in the Christian Brothers litigation, it appears that the case now represents the Ontario law on the exigibility of the assets of charitable trusts.

Related cases:

Rowland v. Vancouver College Ltd. (2001), 205 D.L.R. (4th) 193 (B.C.C.A.) (determining that the assets where held on trust).

Re Christian Brothers of Ireland in Canada, [2003] O.J. No. 4249 (C.A.) (determining that the lawyers might be paid from these recovered trust assets).

Andrew Tettenborn wrote:

If I claim money in your hands is held on simple, bare trust for me, should you be allowed to use the alleged trust funds to pay your own lawyers? Logically I'd have thought the answer was no: how can a court give you permission to commit a glaring breach of trust? Yet in Brown v Rice [2003] EWHC 2155 (Ch), where this arose, a court varied an injunction against disposal and gave the defendant permission to spend £5,000 of the (£84,000) fund on her legal defence.

Am I being stupid, or is there something odd about this?

Jason Neyers
Assistant Professor of Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435

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