Tuesday, 2 October 2012

Claims for "Knowing Assistance in Breach of Trust" or "Knowing Receipt of Trust Property" Are Sufficient to Establish Jurisdiction

After a brief hiatus, spent traveling and litigating, we are back!

The Court Jurisdiction and Proceedings Transfer Act is an complete code of jurisdiction simpliciter (now called "territorial competence") and forum non convenience rules applicable in B.C.  Generally, a B.C. court has territorial competence over a party in a proceeding if that party is ordinarily resident in B.C. or if there is a real and substantial connection between B.C. and the facts on which a proceeding is based.  In particular, section 10 sets out a list of situations where real and substantial connection is presumed, including in actions for breach of trust where the trust has a proprietary or administrative connection to B.C.:

10  ... a real and substantial connection between British Columbia and those facts is presumed to exist if the proceeding

(d) is brought against a trustee in relation to the carrying out of a trust in any of the following circumstances:

(i)  the trust assets include property in British Columbia that is immovable or movable property and the relief claimed is only as to that property;
(ii)  that trustee is ordinarily resident in British Columbia;
(iii)  the administration of the trust is principally carried on in British Columbia;
(iv)  by the express terms of a trust document, the trust is governed by the law of British Columbia,

Although s. 10(d) appears to only apply to actions “against a trustee”, in Right Business Limited v. Affluent Public Limited, 2012 BCCA 375, the Court of Appeal agreed that this presumption extends to actions against non-trustees for knowing assistance in breach of trust or knowing receipt of trust property.  The Court provided two grounds for this conclusion:

1)      the statement of Groberman J.A. in Olney v. Rainville, 2009 BCCA 380 at para. 27, Groberman J.A, that the words of s. 10 “real and substantial connection” should be construed broadly and not in an overly technical manner, which would bring claims “for knowing assistance or knowing receipt” under the trust claims in s. 10(d); and

2)      the principle that “a non-trustee [who] who knowingly assists in a breach of trust or knowingly receives trust property or benefit by reason of breach of trust …  may be construed as a constructive trustee and could be held jointly or severally liable to the wronged beneficiary as if he were the trustee who participated in the breach of trust”, as expressed in Bikur Cholim Jewish Volunteer Services v. Langston 2009 ONCA 196 and Halsbury’s Laws of Canada – Trusts (Hoffstein), “Administration of Trusts – Breach of Trust” (Online, LexisNexis Canada Inc.: 2011) at HTR160).

Foreign breach of trust conspirators beware!