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[1998] 1 SCR 27 - the words of an Act are to be read in their entire context and in their
grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act,
and the intention of Parliament.
To determine what, if any, consequences flow from a failure to comply with s 42 of the
Trustee Act it is necessary to consider where on a spectrum the statutory breach is situated. This
necessarily involves a consideration of the context, the purpose, and the objectives of s 42 of the
Trustee Act.
In Alberta, the requirement for Court approval of trust variation arrangements was first
introduced in 1973 through a Bill to amend to the Trustee Act. As Waters notes at 1344, the
objects of the legislation may best be seen in the words accompanying the Alberta Bill:
The amendment will replace the rule to the extent of giving the court power to
decide whether to permit termination or variation of the trust so that cognizance
may be taken of the donor’s intent, ignored in the application of the rule, and also
of the interest of the donee.
The rule referred to in this passage and which the Legislature sought to replace was the
rule in Saunders v Vautier, which comes from the English case of Saunders v Vautier (1841), 4
Beav 115, 49 ER 282 (Eng Rolls Ct); aff’d (1841), 1 Cr & Ph 240, 41 ER 482 (Eng Ch Div).
This common law rule permitted the beneficiaries of a trust, who were adults of full mental
capacity and whose beneficial interest accounted for the whole of the trust property, to call on
the trustees to make an immediate distribution and to terminate the trust prematurely without any
court assistance. The rule in Saunders v Vautier was criticized because it failed to give sufficient
weight to the wishes of the settlor by, for example, permitting the termination of trusts in
situation where enjoyment of trust property was postponed to a particular age or a future date:
Eileen E Gillese, The Law of Trusts, 3rd ed (Toronto: Irwin Law, 2014) at 85-86 (Gillese).
Therefore the 1973 amendment to the Trustee Act effectively eliminated the rule in
Saunders v Vautier in Alberta. The Legislation replaced this common law rule with a specific
mechanism for the variation of trusts that contained a number of mandatory requirements. The
first requirement is that the applicant, before submitting the application, must have the consent in
writing of all persons beneficially interested in the trust who are capable of consenting to it. The
second requirement is that the Court must consider the variation arrangement and, if appropriate,
provide consent on behalf of those beneficiaries who are not capable of consenting. The third
requirement is that the Court must conclude that the arrangement is of “justifiable character” and
if it is the Court may approve the variation arrangement.
It is significant that both the rule in Saunders v Vautier and s 42 of the Trustee Act
require the unanimous consent of all of the beneficiaries. However, whereas under the common
law no court approval was required for the termination of a trust where all of the beneficiaries
consented, under the statute, the Court is required to assess whether the arrangement is of
“justifiable character” before granting approval. This assessment is done not only for the benefit
of those persons on whose behalf the Court is asked to consent to the arrangement but also on
behalf of those adult beneficiaries who have provided their written consent: Kinnee v Alberta
(Public Trustee) (1977), 3 Alta LR (2nd) 59 (Sup Ct).
The intention and object of the Legislature is very clear. The integrity of trusts must be
maintained and variation arrangements are only permitted where all beneficiaries have consented