J. Q.B. A.D. 2000 No. 83 J.C. Y. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF YORKTON BETWEEN: BRUCE ALLAN ZALYS, of St. Albert, Alberta, as Litigation Guardian of CHELSEA ZALYS, STACEY ZALYS, DANA ZALYS and ADELLE ZALYS, all of St. Albert, Alberta and BRENDA ZALYS DEFENDANT Cheryl A. Cuelenaere for the plaintiffs David K. Rusnak for the defendant JUDGMENT MATHESON J. June 28, 2000 [1] The plaintiff, as litigation guardian of his four daughters, has alleged that the defendant has wrongfully, in breach of a trust, retained the sum of $20,000.00 to which his daughters are entitled. BASIS OF CLAIM [2] Mabel Zalys was the mother of the plaintiff and the defendant. There were two other children: Brian and Wanda Paulmark. [3] Bruce and Brian reside in Edmonton. Wanda resides in Scarborough and Brenda resides near Yorkton, where the parents also resided. [4] In 1992 Mabel placed $17,500.00 in bank account in the name of Brenda. Mabel added $8,000.00 to the account few years later. The sum of $500.00 from the account was given to Brenda. Thus, the principal amount in the account was $25,000.00. [5] Brenda has testified that Mabel told Brenda that she was to receive the interest earned on the bank account. Brenda reported the interest as income in her income tax returns each year. [6] In 1995, Wanda’s name was added to the account as joint owner. Brenda stated that Mabel was concerned that Brenda, who does great deal of driving in connection with her employment, might be killed in an accident. [7] Mabel was diagnosed with cancer in late 1997. It was terminal. She died on March 24, 1998, at which time there was still $25,000.00 in the bank account in the joint names of Brenda and Wanda. [8] Brenda testified that Mabel had told her that the money in the bank account was to be held for payment of debts of Mabel’s estate, with the balance to be divided between Mabel’s four children. In furtherance of that purpose Mabel requested, in 1992, that Brenda endorse three cheques, in blank, which could be given to Bruce, Brian and Wanda if anything happened to Brenda. [9] On January 26, 1998, Mabel, who had been hospitalized, wrote series of instructions on several pieces of paper, including the following: ... Brenda all p. signed cheques by you, in the amount of $5000. each. These will be given to Sharon and she’ll fill in the names of the four granddaughters and their account nos. Then deposit them. The remainder $5000. is for Jonathon. [10] Sharon is the plaintiff’s wife, and the mother of the four granddaughters. Jonathon is the grandson of Mabel. [11] The instructions were given to Brenda. She apparently took them home with her. She stated that after she had read the notes Mabel did not at any time instruct her orally to provide the cheques to the granddaughters. [12] The plaintiff testified that on February 7, he visited Mabel in the hospital. Mabel informed the plaintiff of the instructions, written on January 26, which had been delivered to Brenda. [13] The following day Mabel requested the plaintiff, according to the plaintiff’s testimony, to write out her directions, which the plaintiff did: Chelsea, Stacey, Daina and Ardelle each to receive $5,000.00 each for education. After Parents are gone, house at 90-4th North to be sold and divided ways. Brian, Bruce, Brenda, Wanda. Brenda to mail checks this week from mom. Mom’s name removed from house title, Dad’s added. Brenda, Bruce added. Bruce’s name added to mom and dad’s at acre. My wishes “Mabel Zalys” [14] Brenda never saw the foregoing document during Mabel’s lifetime. Consequently, the plaintiff must rely on the January 26, 1998 instructions written entirely by Mabel. [15] Brenda testified that subsequent to receiving the January 26, 1998 handwritten instructions, Mabel told Brenda to hold the money for Mabel’s benefit in the event that she got better and needed it, or if she needed special attention while still ill. Brenda further testified that on March 8, 1998, Mabel told Brenda, while watching telemiracle on television, to give the money to charity. However, on March or 10, according to Brenda, Mabel told Brenda not to give the money away as she would not have any other funds. [16] Brenda never did provide the four $5,000.00 cheque to the granddaughters. After Mabel’s death Brenda transferred the bank account to credit union account. Some of the money was spent for Mabel’s funeral and other expenses. But there is still over $20,000.00 in the account. ALLEGED TRUST [17] The plaintiff has submitted that the written instructions by Mabel to Brenda to prepare four cheques of $5,000.00 to each of the granddaughters constituted the establishment of a trust, and that Brenda thereupon became the trustee, for the benefit of the four granddaughters, of the sum of $20,000.00. [18] An almost identical situation was revealed in McIntyre v. Royal Trust Company, 1946 CanLII 249 (MB CA), [1946] W.W.R. 210 at 212 (Man. C.A.). [19] Royal Trust had in its possession all of the share certificates of Pennefather, who presented the following instructions in writing: To the Royal Trust Co. Please sell the above stocks at the market price and pay the proceeds to the Dom. Govt. for application on Annuity Contract #69534 in the name of Mrs. Daisy McIntyre. “[Sgnd.] F. R. Pennefather.” [20] Royal Trust Company sold the stocks. The proceeds of sale were credited to Pennefather on Friday. The following Sunday, Pennefather died, before Royal Trust Company had completed the instructions by transferring the funds to the credit of the annuity contract of Daisy McIntyre. [21] Daisy McIntyre submitted that Pennefather had divested himself of any interest in the stocks and that Royal Trust Company was trustee for Daisy McIntyre. However, it was noted, at p. 213, that Daisy McIntyre was “volunteer”, not having given any consideration to either Pennefather or Royal Trust Company which would create an equity in her favour. [22] Reference was made to Hanbury’s Modern Equity, ch. III, entitled “Equity will not Assist Volunteer” where, at p. 156, it was stated that: trust is not validly created where there is mere intention of creating trust, or voluntary agreement to do so, and the settlor himself contemplates some further act for the purpose of giving it completion.... [E]quity will not interfere to perfect an imperfect gift [23] In McPherson v. L’Hirondelle, 1927 CanLII 48 (SCC), [1927] S.C.R. 429, Newcombe J. for the court stated at p. 435-36: ... [A]n incomplete voluntary transfer will not be construed as a declaration of trust unless it appear that there is an intention to declare a trust, and not merely to make a transfer. [24] Newcombe J. also endorsed, at p. 436, the following statement of Jessel M.R. in Richards v. Delbridge (1874), L.R. 18 Eq. 11 at 15: If it (a settlement) is intended to take effect by transfer, the court will not hold the intended transfer to operate as declaration of trust, for then every imperfect instrument could be made effectual by being converted into perfect trust. CONCLUSION [25] The written instructions of Mabel do not contain any words which could possibly be construed as a declaration of trust. Mabel quite clearly, at the time of writing the instructions, wanted Brenda to prepare four cheques in the amount of $5,000.00 each for the benefit of the four granddaughters. Mabel intended, by her written instructions, to make monetary gifts to her four granddaughters. The fact that Brenda did not take the necessary steps to complete the intended gifts during Mabel’s lifetime does not result in that intention being converted into a declaration of trust. [26] The plaintiff alleged that Brenda “committed fraud upon the infant plaintiffs”. The allegation was never withdrawn nor proved. [27] Asserting an unfounded allegation of fraud justifies, without more, special order as to costs: Wong v. Schienbein et al. (1986), 1986 CanLII 3370 (SK QB), 49 Sask. R. 86 (Q.B.). [28] The claim of the plaintiff is dismissed, with costs to the defendant, to be taxed on the basis of double column 2.
Plaintiff, as litigation guardian for his four daughters, alleged that the defendant, in breach of a trust, wrongfully retained $20,000 to which his daughters are entitled. Mabel, mother of the plaintiff and the defendant, set aside $20,000 in a bank account. Prior to her death, Mabel gave written instructions to the defendant to give $5,000 to each granddaughter. The defendant claimed that the money was to be held to pay the estate's expenses and then be divided among Mabel's children. The money was never issued to the granddaughters. The plaintiff claims that the written instructions to the defendant constituted the establishment of a trust and that the defendant is the trustee of the money for the benefit of the granddaughters. HELD: Plaintiff's claim dismissed with costs to the defendant to be taxed at double column 2. An incomplete voluntary transfer will not be construed as a declaration of trust unless it appears that there is an intention to declare a trust, and not merely make a transfer. Mabel's written instructions do not contain any words that could possibly be construed as a declaration of trust. She intended to make monetary gifts. The fact that the defendant did not take the necessary steps to complete the intended gifts during Mabel's lifetime does not result in that intention being converted into a declaration of trust. As to costs, the plaintiff alleged that the defendant committed fraud and this was never withdrawn nor proven. Asserting an unfounded allegation of fraud justifies a special order as to costs.