





CITATION:
Duca
Financial Services Credit Union
          Ltd. v.
Bozzo
, 2011 ONCA 455



DATE: 20110615



DOCKET: C52323



COURT OF APPEAL FOR ONTARIO



Winkler C.J.O., Simmons and Armstrong JJ.A.



BETWEEN



Duca Financial Services Credit Union Ltd.



Plaintiff (Appellant)



and



Albert Bozzo and Maria Louisa Bozzo



Defendants (Respondents)



Anthony E.
Bak
(appearing for Robert
          J. van
Kessel
) and Edwin G. Upenieks, for the
          appellant



Duncan C. Boswell and Mark Crane, for the respondents



Heard and released orally: June 2, 2011



On appeal from the judgment of Justice Peter A. Cumming of the
          Superior Court of Justice dated May 27, 2010.



ENDORSEMENT



[1]

The trial judge dismissed the
    appellants action to declare a trust declaration void either as a sham or as a
    fraudulent conveyance.

[2]

Concerning the validity of the trust
    declaration, at paras. 41-2 of his reasons, the trial judge correctly set out
    the requirements for a valid trust and referred to some of the circumstances in
    which a trust may be found to be a sham and therefore void:

To
    establish a valid trust, there must be three certainties: the certainty of
    intention, the certainty of subject matter and the certainty of objects.
    [Citations omitted.]

A
    purported trust may be held to be a sham and void where a trust instrument sets
    out the persons who are to benefit but does not represent the settlers true
    intent which is simply to create the appearance of a disposition of assets
    through the purported trust. The actual intent, in such cases, is to retain
    control of the assets purportedly held in trust. In such an instance, there is
    no true intention to create a trust and one of the three certainties is
    missing; hence, the purported trust is void.

[3]

At
    paras. 45 and 46 of his reasons the trial judge explained his conclusion that,
    in making the trust declaration, the respondent, Mr.
Bozzo
,
    intended to separate himself from the beneficial interest in the shares of the
    Abbas Group:

While
    [the respondent, Mr.
Bozzo
]
maintained operational control of Abbas Group as an employee thereof,
    his intent was to separate himself from the beneficial interest of the shares
    in the Abbas Group
.



While
    there are suspicious circumstances, I find on a consideration of all the
    evidence, that there was a true intent on the part of [the respondent] to establish
    the trust in issue through the January 29, 1988 trust declaration. [Emphasis
    added.]

[4]

However,
    in our view, in reaching this conclusion the trial judge erred because he
    failed to consider the following evidence effectively volunteered by Mr.
Bozzo
:

Q.        You had voting control of Abbas as of
    January 26, 1988?

A.        Yes sir, I had voting control even after
    that. Even after the Trust Declaration.

Q.        Thats what you believe?

A.        Yes.

Q.
So,
    again, youre saying in your mind the control of the company didnt change
    either before the Trust Declaration or after the Trust Declaration
?

A.
No
    sir
. [Emphasis added.]

[5]

In
    our view, this evidence conclusively demonstrates that the respondent, Mr.
Bozzo
, considered himself to have retained control of the
    assets purportedly held in trust. In his own mind, he had not separated himself
    from the beneficial interest in the shares. Accordingly, there was no intention
    to create a valid trust as one of the three certainties was missing and the
    trust is therefore void.

[6]

In the circumstances, the appeal is
    allowed, the judgment below is set aside and judgment is granted in the form
    requested by the appellant.

[7]

The
    cross-appeal is dismissed.

[8]

Costs
    of the appeal are to the appellants fixed at $25,000 for the appeal and $5,000
    for the cross-appeal, as agreed upon by the parties, both sums inclusive of
    disbursements and applicable taxes. The issue of the costs of the proceeding
    below is remitted to the trial judge.


Signed:           Winkler
    C.J.O.

Janet Simmons J.A.

Robert P. Armstrong J.A.


