Ramy Yared v. Rody Yared, 2019 SCC 62

SUPREME COURT OF CANADA Citation: Yared v. Karam, 2019 SCC 62, [2019] 4 S.C.R. 498 Appeal Heard: March 19, 2019 Judgment Rendered: December 12, 2019 Docket: 38089 Between: Ramy Yared and Rody Yared Appellants and Roger Karam Respondent Coram: Wagner C.J. and Abella, Karakatsanis, Côté, Brown, Rowe and Martin JJ. Reasons for Judgment: (paras. 1 to 72) Dissenting Reasons: (paras. 73 to 142) Rowe J. (Wagner C.J. and Abella, Brown and Martin JJ. concurring) Côté J. (Karakatsanis J. concurring) yared v. karam Ramy Yared and Rody Yared Appellants v.

Roger Karam Respondent Indexed as: Yared v. Karam 2019 SCC 62 File No.: 38089. 2019: March 19; 2019: December 12. Present: Wagner C.J. and Abella, Karakatsanis, Côté, Brown, Rowe and Martin JJ. on appeal from the court of appeal for quebec Family law — Family patrimony — Trusts — Partition of family patrimony — Family residence held under trust — Whether residence of family held in trust or rights which confer use of it included in family patrimony — Civil Code of Québec, art. 415 . In 2011, K set up a trust to protect his family’s assets for the benefit of his and his wife T’s four children.

In 2012, the trust acquired a residence with funds transferred by the spouses to the trust patrimony and the family moved in. The house was a residence of the family within the meaning of art. 415 C.C.Q. , which sets out that the family patrimony includes the residences of the family or the rights which confer use of them. T filed for divorce in 2014 and passed away in 2015. The liquidators of her succession filed for a declaration that the value of the residence held by the trust should be included in the division of the family patrimony, half of which would therefore go to the estate of T.

The trial judge decided that the value of the residence ought to be included in the family patrimony despite the fact that it was held under a trust and not owned directly by one of the spouses. The Court of Appeal allowed K’s appeal and declared that no value from the residence ought to be included in the family patrimony. Held (Karakatsanis and Côté JJ. dissenting) : The appeal should be allowed. Per Wagner C.J. and Abella, Brown, Rowe and Martin JJ.: Family residences held in trust are not, in principle, outside the scope of the composition of the family patrimony set out at art. 415 C.C.Q.

By referring to the “rights which confer use” of a family residence at art. 415 C.C.Q. , the legislator intended to include in the family patrimony the type of living arrangements where spouses, without being owners in title, nonetheless are in control of the family residence. Wide discretion should be accorded to the trier of fact when making the determination of what may or may not constitute a right which confers use.

In this case, absent an overriding and palpable error in the trial judge’s determination that K held “rights which confer use” within the meaning of art. 415 C.C.Q. , it was not open to the Court of Appeal to overturn his decision on appeal. His decision should be restored. When applying art. 415 C.C.Q. to a family residence not directly owned by the spouses, the question is whether the record supports a finding of rights which confer use of the residence.

What may or may not constitute a right which confers use within the meaning of art. 415 C.C.Q. is dependent on the circumstances and will generally be determined in relation to the level of control exercised by either spouse with respect to the residence. Simple occupation of a property not owned by the spouses will not automatically give rise to “rights which confer use” within the meaning of art. 415 C.C.Q. However, these rights are not limited to rights of use within the meaning of art. 1172 C.C.Q. or other real rights listed at art. 1119 C.C.Q.

If the trial judge is satisfied, based on the evidence before him or her, that the spouses are in control of the residence, not merely by way of exercising control over the entitlement to the value of the assets but by controlling whom may benefit from the use of the property, it is open to him or her to include the value of the residence in the family patrimony based on art. 415 C.C.Q. , even when such residence was acquired directly by a trust or a corporation.

Prior ownership and occupation of a family residence can be relevant to show that the spouses hold a right which confers use within the meaning of art. 415 C.C.Q. ; however, it is not, as a matter of law, a necessary condition. When the constitution of a trust conflicts with the operation of the family patrimony, a court should resolve the matter by relying on the rules pertaining to both of these institutions rather than by lifting the trust veil by analogy with art. 317 C.C.Q. In Quebec law, trusts are not legal persons endowed with juridical personality.

Contrary to a corporation, there is in the case of a trust no veil to lift nor any mastermind hiding behind a distinct juridical personality. In the case of a family residence, issues arising from indirect ownership or de facto control of the property can be resolved with the notion of “rights which confer use” set out in art. 415 C.C.Q. For this category of property, there is therefore no need to rely on art. 317 C.C.Q. by analogy so as to order an equitable partition of the family patrimony.

Furthermore, more generally when property listed in art. 415 C.C.Q. is held in trust, arts. 421 and 422 C.C.Q. may allow the court to correct a potential inequity created by the operation of the trust. Again, it is not necessary to rely on an analogy with art. 317 C.C.Q. to reach an equitable result in these circumstances. As a remedial set of rules that aims to foster economic equality between spouses, rules relating to family patrimony should be given a generous and liberal

interpretation to favour the inclusion of property in the value to be partitioned between the spouses. This principle should guide the

interpretation of art. 415 C.C.Q. and its application, even if the record does not demonstrate that one of the spouses was in a position of economic vulnerability. Care should be taken not to adopt an

interpretation of the rules governing the family patrimony that would create a breach in the protection guaranteed by the law to vulnerable spouses. Furthermore, the fact that the spouses were pursuing a legitimate objective in organizing their affairs the way they did is not a bar to inclusion of a residence not directly owned by them in the partition of the family patrimony. In so far as the intention to use a property as a residence of the family has been established, art. 415 C.C.Q. does not require any further demonstration of intention to avoid the rules of the family patrimony.

These rules are protective public order rules, in that they are imposed by the legislature to safeguard the interests of vulnerable parties and to insure a certain equity within the institution of marriage. Accordingly, the operation of these rules will not depend on the behaviour, intention or good faith of the parties during their contractual relationship. This does not mean that the intention of the spouses is never relevant when applying art. 415 C.C.Q. to a family residence. The intention of the spouses is essential to characterize a property as a residence of the family within the meaning of art. 415 C.C.Q.

The public order character of the rules governing the family patrimony does not eliminate the freedom of spouses to acquire,

sell or choose never to own the property included in the family patrimony per art. 415 C.C.Q. Neither the constitution of the familypatrimony nor its partition alters the rights of ownership held by each spouse in relation to their property. Spouses generally remain freeto manage and dispose of their property included in the family patrimony, although certain specific rules will nonetheless limit theirfreedom to do so. Spouses also need not acquire property falling under the family patrimony provisions, and neither spouse is obligatedto own the property enumerated in s. 415 C.C.Q.

Per Karakatsanis and Côté JJ. (dissenting): The appeal should be dismissed. While family patrimony provisions are intendedto protect economically disadvantaged spouses, spouses are free to acquire and dispose of property as they wish, even if this means thatthey do not acquire property falling within the family patrimony. Included in the spouses’ freedom to choose how they arrange theiraffairs is the option to live in a residence held by a trust.

Where spouses opt for the various advantages and disadvantages associated withthe legal institution of the trust, it may be that they will not acquire property that is subject to the family patrimony. Where spouses reside in a property owned by a trust, there may be situations in which this arrangement gives rise to “rightswhich confer use” of the property under art. 415 C.C.Q. When such questions arise, the situation must be analyzed on the basis of thelegislative provisions governing both the institutions of the trust and the family patrimony.

There is agreement with the majority’srejection of the reliance on an analogy with the lifting of the corporate veil under art. 317 C.C.Q. To determine whether a right whichconfers use exists where a residence is owned by a trust, courts must consider the circumstances surrounding the establishment of thetrust, its intended purpose, and the rights and obligations of the trustees and beneficiaries under the terms of the trust deed. There is disagreement with the majority, which would hold that the level of control attributed to a trustee will determinewhether there is a right which confers use.

As a general rule, though the powers with which the trustee is charged under the Civil Code ofQuébec are significant, they do not constitute a right which confers use. The trustee has the control and exclusive administration of thetrust patrimony but such a role imposes duties and obligations. These powers must be exercised in the best interest of the beneficiariesand in keeping with the purpose of the trust. Powers must not be conflated with rights. It is rather the interests of the beneficiary that aremore likely to give rise to a right which confers use under art. 415 C.C.Q.

It is important to look both to the trust deed and to the CivilCode of Québec in order to gain a full picture of the protections afforded to the beneficiaries. The

interpretation of the trust deed pursuantto the rules of contractual

interpretation must include an analysis of the parties’ objectives in establishing the trust, along with thetrustee’s obligations and the rights of beneficiaries under the terms of the deed. While a deed may entrust a trustee with significantpowers, these are circumscribed by the trust provisions of the Civil Code of Québec. For instance, a trustee must perform his or herduties in keeping with the purpose of the trust and cannot do so for his or her own benefit or in an arbitrary manner.

There is also disagreement with the majority that the intention of the spouses in setting up a trust should have no bearing onthe determination of whether there are any rights which confer use. The intention in establishing a trust will be relevant insofar as itinforms the purpose of the trust. Where a trust has no legitimate purpose beyond evading the family patrimony rules, the powers actuallyexercised by the trustee might exceptionally be construed, on the facts of that case, as a right which confers use.

For instance, where aresidence owned by a trust previously belonged to one of the spouses and there has been no change in circumstances in the interveningyears apart from the transfer to the trust, a right which confers use may exist under art. 415 C.C.Q. Such a situation may indicate that thetransfer to the trust had the purpose of evading the family patrimony provisions. However, where the trust has a valid purpose andacquires the residence directly, a closer analysis of the terms of the trust deed and the surrounding circumstances will be necessary.

The arrangement in the instant case is anything but artificial as the record discloses no intention to evade the familypatrimony provisions and there is unchallenged evidence that the trust was established for the long-term benefit of the children. The trialjudge was content with a literal reading of the trust deed and conflated powers with rights. As such, the trial judge erred in finding that Kalone held a right which conferred use. If such a right existed, it was held only by T as beneficiary of the trust or was jointly held by bothspouses as a result of a tacit agreement between them and the trust.

Cases Cited By Rowe J. Referred to: G.B. v. Si.B., 2015 QCCA 1223; Miller (Succession de), 2013 QCCS 5184; Droit de la famille — 977, (QC CA), [1991] R.J.Q. 904; M.T. v. J.-Y.T., 2008 SCC 50, [2008] 2 S.C.R. 781; Droit de la famille — 112948, 2011QCCA 1744, [2011] R.J.Q. 1729; Droit de la famille — 172765, 2017 QCCA 1844; Droit de la famille — 1463, (QCCA), [1991] R.J.Q. 2514; Droit de la famille — 121301, 2012 QCCA 1018, aff’g Droit de la famille — 112467, 2011 QCCS 4229; Droitde la famille — 162780, 2016 QCCS 5562; D.L. v.

L.G., 2006 QCCA 1125; Droit de la famille — 142245, 2014 QCCA 1660, aff’g Droitde la famille — 133443, 2013 QCCS 6099; Droit de la famille — 1931, [1994] R.J.Q. 378, aff’d [1996] R.D.F. 6; Droit de la famille —10174, 2010 QCCS 312, aff’d Droit de la famille — 102269, 2010 QCCA 1586; Droit de la famille — 071938, 2007 QCCS 3792, [2007]R.D.F. 711; Droit de la famille — 10977, 2010 QCCA 892; Droit de la famille — 3511, [2000] R.D.F. 93, aff’d ; Droitde la famille — 2225, [1995] R.D.F. 465; J.-Y.H. v.

C.B., ; Droit de la famille — 171064, 2017 QCCS 2076; Droit dela famille — 2420, [1996] R.D.F. 363; Droit de la famille — 13681, 2013 QCCA 501; Garcia Transport Ltée v. Royal Trust Co., (SCC), [1992] 2 S.C.R. 499; Droit de la famille — 19582, 2019 QCCA 647; Droit de la famille — 131166, 2013 QCCS 2194,aff’d Droit de la famille — 1487, 2014 QCCA 123; Droit de la famille — 121905, 2012 QCCS 3977; L.G. v. D.L., ; J.(Y.) v. B. (M.), , aff’d ; Poulin v. Dumas, 2014 QCCA 676. By Côté J. (dissenting) Droit de la famille — 071938, 2007 QCCS 3792, [2007] R.D.F. 711; Trust général du Canada v.

Service alimentaireexclusif inc., [1984] C.A. 145; Québec (Curateur public) v. A.N. (Succession de), 2014 QCCS 616; Miller (Succession de), 2013 QCCS5184; Droit de la famille — 3511, [2000] R.D.F. 93; D.L. v. L.G., 2006 QCCA 1125; Droit de la famille — 2225, [1995] R.D.F. 465;Droit de la famille — 1646, [1992] R.D.F. 463; N.R. v. R.P., [2003] R.D.F. 831; Droit de la famille — 13681, 2013 QCCA 501; Housenv. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Van de Perre v. Edwards, 2001 SCC 60, [2001] 2 S.C.R. 1014. Statutes and Regulations Cited

Civil Code of Lower Canada , art. 981 e . Civil Code of Québec , S.Q. 1980, c. 39 , arts. 454, 462.2. Civil Code of Québec , arts. 9, 317, 391, 404, 405, 406, 414, 415, 416, 421, 422, 423, 516, 911, 912, 1119, 1121, 1172, 1260, 1261, 1262, 1265, 1278, 1282 para. 1, 1283, 1284, 1294, 1295, 1306, 1307, 1310, 1425, 1426. Authors Cited Beaulne, Jacques. Droit des fiducies , 3 e éd. mise à jour par André J. Barette. Montréal: Wilson & Lafleur, 2015. Brierley, John E. C. “Powers of Appointment in Quebec Civil Law” (1992), 95 R. du N. 131. Bruneau, Diane. “La fiducie et le droit civil” (1996), 18 R.P.F.S. 755.

Cantin Cumyn, Madeleine. Les droits des bénéficiaires d’un usufruit, d’une substitution et d’une fiducie . Montréal: Wilson & Lafleur, 1980. Côté, Pierre-André, in collaboration with Stéphane Beaulac and Mathieu Devinat. The

Interpretation of Legislation in Canada , 4th ed. Toronto: Carswell, 2011. Dubreuil, Christianne, et Brigitte Lefebvre. “L’ordre public et les rapports patrimoniaux dans les relations de couple” (1999), 40 C. de D. 345. Karim, Vincent. Les obligations , vol. 1, 4 e éd. Montréal: Wilson & Lafleur, 2015. Labonté, Christian. “Le patrimoine familial”, mise à jour par Christiane Lalonde, dans Droit de la famille québécois , vol. 3, par Jean-Pierre Senécal, dir. Farnham, Que.: Éditions FM, 1985 (feuilles mobiles mises à jour mai 2019, envoi n o 454). Lamontagne, Denys-Claude. Biens et propriété , 8 e éd.

Cowansville , Que.: Yvon Blais, 2018. Lefebvre, Brigitte. “Les droits qui confèrent l’usage des résidences familiales: quelques difficultés lors de la liquidation du patrimoine familial” (2014), 116 R. du N. 389. Loranger, Julie. “Le fiduciaire: entre le tyran et le serviteur”, dans Service de la formation continue — Barreau du Québec, vol. 324, Développements récents en successions et fiducies . Cowansville, Que.: Yvon Blais, 2010, 69. Normand, Sylvio. Introduction au droit des biens , 2 e éd. Montréal: Wilson & Lafleur, 2014.

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APPEAL from a judgment of the Quebec Court of Appeal (St-Pierre, Mainville and Gagné JJ.A.), 2018 QCCA 320 , [2018] J.Q. n o 1465 (QL), 2018 CarswellQue 1400 (WL Can.), setting aside a decision of Gaudet J., 2016 QCCS 5581 , [2016] J.Q. n o 16001 (QL), 2016 CarswellQue 10844 (WL Can.). Appeal allowed, Côté and Karakatsanis JJ. dissenting. Stewart Litvack and Louis Dessureault , for the appellants. Antoine Aylwin and Michael Adams , for the respondent. The judgment of Wagner C.J. and Abella, Brown, Rowe and Martin JJ. was delivered by [ 1 ] Rowe J. — The appellants, Mr.

Ramy and Rody Yared, are the liquidators of the succession of their sister, Ms. Taky Yared, who passed away in April 2015. In July 2016, they sought a declaration in Superior Court that the value of the family residence should be included in the division of the family patrimony. At the time of Ms. Yared’s death, this residence was held under a trust controlled by her husband, the respondent Mr.

Roger Karam. [ 2 ] The question raised by this case concerns the proper interaction between these two institutions of Quebec civil law: the family patrimony created by art. 414 of the Civil Code of Québec (‟ C.C.Q. or Civil Code ”) and the trust under art. 1260 C.C.Q . In substance, this Court must decide if the value of a family residence held under a trust controlled by one of the spouses is included in the family patrimony, even in the absence of fraud or bad faith.

The trial judge declared that the value of the residence was to be included in the family patrimony, relying on an analogy with the lifting of the corporate veil at art. 317 C.C.Q. and on the “rights which confer use” of art. 415 C.C.Q. The Court of Appeal reversed that decision and declared that no value from the family residence ought to be included in the family patrimony. [ 3 ] The trial judge did not err in his conclusion.

Although I would not rely on art. 317 C.C.Q. by analogy, in my view the “rights which confer use” of the family residence at art. 415 C.C.Q. provided a sound basis for him to declare that the value of the

residence ought to be included in the family patrimony. Absent an overriding and palpable error in his determination that Mr. Karam held“rights which confer use” within the meaning of art. 415 C.C.Q., it was not open to the Court of Appeal to overturn this decision onappeal. I would therefore set aside the decision of the Court of Appeal and reinstate the declaratory relief granted by the trial judge. I. Facts [4] The respondent, Mr. Karam and Ms. Yared were married in 1998. They had four children, born between 2001 and2010.

In August 2011, the Karam family moved to Montreal following the announcement of tragic news. Ms. Yared was diagnosed withan incurable cancer and her days were numbered. In light of this, Mr. Karam set up a trust to protect the family assets for the benefit ofthe four children. It is not contested that at the time, Mr. Karam acted in good faith and had no intention to avoid the rules of familypatrimony. [5] The [translation] “Taki Family Trust” (“the trust”) was constituted before a notary on October 4, 2011 (Exhibit A-1,A.R., vol. II, at p. 110). The settlor is Ms.

Tammie Dion, the wife of one of the appellants and sister-in-law of Mr. Karam. The trusteesare Mr. Karam himself and his mother, Ms. Amal Hanache-Karam. The trust deed also conferred extensive powers of “Appointer” onMr. Karam, providing for him inter alia to name new beneficiaries, including himself. The initial beneficiaries were Ms. Yared and thefour children. [6] Upon the constitution of the trust, the settlor transferred a silver ingot valued at $45 to the trust patrimony.

In June2012, the trust acquired a residence on Docteur-Penfield Avenue in Montreal for $2,350,000 with funds transferred by the spouses to thetrust patrimony. Mr. Karam stated that his intention was to acquire a house that would serve both as the family residence and as aninvestment protected under the trust for the benefit of his children. The family moved in and it is not contested that at the relevant times,this house was a residence of the family within the meaning of art. 415 C.C.Q.

Indeed, regardless of the potential investment value of theproperty, if either of the spouses had been owner in title there would be no dispute that the house would be part of the family patrimony.In fact, Mr. Karam conceded that the furniture in the residence was included in the family patrimony as movable property furnishing ordecorating the family residence. [7] Two years later, in June 2014, Ms. Yared left the residence and filed for divorce. In August of the same year, shedivided her estate by notarial will by way of four trusts established for the benefit of each of the four children. In April 2015, Ms.

Yareddied without having obtained a divorce. [8] Following Ms. Yared’s death, Mr. Karam commenced proceedings to contest the validity of her will. A few monthslater, he unilaterally renounced his powers to elect new beneficiaries under art. 4.2 of the trust deed in a notarized document, the[translation] “Act of Renunciation and Cancellation by the Appointer Concerning the ‘Taki Family Trust’”. According to his testimony,Mr. Karam proceeded to this renunciation after the appellants expressed some concerns about the children’s interest in the trust.

In July2016, the appellants filed for a declaration that the value of the residence held by the trust should be included in the division of thefamily patrimony, half of which would therefore go to the estate of Ms. Yared. If the appellants do not obtain such a declaration, theestate of Ms. Yared will be of little value. II. Decisions Below A. Superior Court of Quebec (Gaudet J., 2016 QCCS 5581) [9] The trial judge decided that the value of the residence ought to be included in the family patrimony despite the factthat it was held under a trust and not owned directly by one of the spouses.

In his view, this follows from the fact that spouses cannotcontract out of the public order rules regarding the family patrimony, regardless of their intentions (para. 55 ). If one of them haseffective control of a family residence even where that is through a trust or a corporation, its value must be divided as part of thepatrimony upon dissolution of the marriage (paras. 52-53). [10] The trial judge relied on two provisions of the Civil Code to arrive at this conclusion.

First, he considered that thelifting of the corporate veil codified at art. 317 C.C.Q. could be applied by analogy when the constitution of a trust would have the effectof trumping or displacing the rules of the family patrimony (paras. 30-36). Second, he relied on the wording of art. 415 C.C.Q., whichprovides that “the residences of the family or the rights which confer use of them” are included in the family patrimony.

In his view,these rights are not strictly limited to the rights of use defined by art. 1172 C.C.Q. and can include any arrangement by which the spousescan occupy a residence as if they are the owners (paras. 39-41). [11] Critical to his conclusion was the trial judge’s factual finding that Mr. Karam had effective, almost complete controlof the family residence as the trustee and appointer of the trust under which it was held (para. 51). This finding was based on thefollowing discretionary powers granted to Mr.

Karam under the trust deed: (1) the power to appoint new beneficiaries, including himself;(2) the power to destitute any beneficiaries; and (3) the power to decide to which beneficiaries and in what proportion the revenues andcapital of the trust would be paid (paras. 44-47). In this regard, the trial judge further held that Mr.

Karam’s subsequent renunciation ofhis power to elect new beneficiaries under art. 4.2 of the trust deed was immaterial as this was invalid per art. 1294 C.C.Q., as well asbecause it had been done after the dissolution of the marriage and, in any case, it left unaffected the other important powers granted toMr. Karam (paras. 58-60). B. Court of Appeal of Quebec (2018 QCCA 320) [12] Writing for a unanimous court, St-Pierre J.A. allowed the appeal and declared that no value from the residence onDocteur-Penfield Avenue ought to be included in the family patrimony of Ms. Yared and Mr. Karam.

In her view, in the absence of anintention to avoid the rules of the family patrimony, the contractual freedom of spouses who decide to reside in a property held in a trustfor investment purposes ought to be respected (paras. 51-59 ). [13] In this regard, St-Pierre J.A. concluded that the trial judge committed various reviewable errors (para. 50). In herreasons, she focused on three issues: (1) the analogy with art. 317 C.C.Q.; (2) the application of existing rules governing both the family

patrimony and the trust, including “rights which confer use” per art. 415 C.C.Q.; and (3) the determination that the value of these rightswas equal to the value of the house. [14] With regards to the “lifting of the trust veil” based on art. 317 C.C.Q., St-Pierre J.A. expressed the view that thisanalogy was [translation] “problematic, unsound and inappropriate” (at para. 74) and that the concept ought to be rejected from the outset(para. 75).

In her view, the fact that a trust is not endowed with juridical personality and that it involves a relationship between differentparties — the settlor, trustee and beneficiary — is a bar to the application, by analogy, of art. 317 C.C.Q. to a trust (paras. 71-73). [15] Rather than relying on this analogy, St-Pierre J.A. held that the trial judge was required to apply existing rulesgoverning the family patrimony and trusts.

In her view, the value of a family residence held under a trust that is legally constitutedshould not be included in the family patrimony, unless it belonged to one of the spouses prior to the constitution of the trust. In this case,it is possible that the “rights which confer use” of the residence may be included in the family patrimony per art. 415 C.C.Q. whenconstitution of the trust had no impact on the living arrangements of the family (paras. 90-91).

Furthermore, St-Pierre J.A. noted thatarts. 421 and 422 C.C.Q. already allowed for corrective measures in the division of the family patrimony where there has beenmisappropriation or some other injustice (para. 92). [16] On this basis, St-Pierre J.A. determined that the record did not provide a basis for the trial judge to conclude thatMr. Karam held “rights which confer use” of the residence, let alone that he was the sole holder of these rights (paras. 103-4).

Althoughit was not necessary to dispose of the appeal, St-Pierre J.A. further held that the trial judge ruled beyond the conclusions sought in theapplication when he determined that the value of the rights of use was equal to the full value of the residence (para. 108). III. Analysis A. The Trust in Quebec Civil Law [17] The Civil Code defines a trust as a patrimony by appropriation, autonomous and distinct from that of the settlor,trustee or beneficiary and in which none of them has any real right (art. 1261 C.C.Q.).

The concept of a patrimony without a holder wasintroduced in Quebec law following the adoption of the Civil Code, in an effort to adapt the common law trust to the framework of civillaw (see S. Normand, Introduction au droit des biens (2nd ed. 2014) at pp. 26-28). In short, contrary to a common law trust, the trust inQuebec civil law does not result from the division of ownership but rather from the transfer of property in a patrimony created for aparticular purpose and not held by anyone.

The transferred property is administered by the trustee for this purpose, yet neither thetrustee, the beneficiary nor the settlor own what has been transferred into the trust patrimony. [18] Upon the trust’s creation, the trustee has control and exclusive administration of the patrimony (art. 1278 para. 1C.C.Q.). He or she is charged with the full administration of the property held in the trust (art. 1278 para. 2 C.C.Q.).

By virtue of this, thetrustee is vested with extensive powers that he is required to use to secure appropriation of the patrimony, as defined by the trust deed(arts. 1260, 1278 and 1306 C.C.Q.). He may inter alia sell the property, charge it with a real right or change its destination in order toperform his obligations as administrator of the trust (art. 1307 C.C.Q.).

Hence, although the trustee is not the owner of the property, hiscontrol over the trust patrimony is similar to ownership, as the Minister of Justice explained upon the adoption of art. 1261 C.C.Q.: [translation] Moreover, the property making up the trust patrimony is not property without an owner that can be appropriated by simpleoccupation, since the trustee has control and detention of it. Nor is the property liable to be paralyzed as a result of having no owner.

Thebroad powers of the trustee, acting in that capacity, will in fact allow the trustee to ensure not only the preservation of the property, butalso its free movement, as if he or she were its owner. These powers will also allow the trustee to perform any kind of act relating to themanaged property, including exercising the rights attached to it. (Ministère de la Justice, Commentaires du ministre de la Justice, vol.

I, Le Code civil du Québec — Un mouvement de société (1993), atp. 750) [19] If provided by the trust deed, the trustee may also have the power to appoint beneficiaries and determine what theyreceive from the trust (art. 1282 para. 1 C.C.Q.). This power of appointment is exercised as the trustee (or settlor) sees fits; however, hemay not do so in a completely arbitrary manner or in a way that runs counter to purpose or stipulations of the trust deed (J. Beaulne,Droit des fiducies (3rd ed. 2015), at p. 229; G.B. v. Si.B., 2015 QCCA 1223, at para. 53 ).

Furthermore, art. 1283 C.C.Q.provides that the person having the power to appoint the beneficiaries or determine their shares cannot exercise this power for his or herown benefit, which would normally preclude him from electing himself as a beneficiary (Miller (Succession de), 2013 QCCS 5184, atpara. 88 ). Authors are of the view that this limitation at art. 1283 C.C.Q. can however be set aside when a trustee having thepower to appoint is himself a beneficiary under the trust deed (Beaulne, at pp. 229-30; D. Bruneau, “La fiducie et le droit civil” (1996),18 R.P.F.S. 755, at p. 776; J. E. C.

Brierley, “Powers of Appointment in Quebec Civil Law” (1992), 95 R. du N. 131, at p. 161-62). B. The Family Patrimony [20] Per art. 414 C.C.Q., marriage results in the establishment of a family patrimony, which consists of property describedin art. 415 C.C.Q. and owned by one or the other spouses. Upon dissolution of marriage, the value of this family patrimony is divided inequal shares between the spouses (art. 416 C.C.Q.), unless the court exercises the remedial power provided by art. 422 C.C.Q. to orderunequal partition.

As Baudouin J.A. explained in Droit de la famille — 977, (QC CA), [1991] R.J.Q. 904, at p. 909,we must bear in mind that the family patrimony entails the creation, upon dissolution of marriage, of a personal claim against the otherspouse rather than a competing right of ownership. [21]

Article 415 C.C.Q. provides that residences of the family owned by one of the spouses or the rights which confer useof them are included in the value of the family patrimony. As explained in the above section, neither a beneficiary nor a trustee owns theproperty held under a trust. In my view, the question before this Court is in what circumstances a family residence held under a trust cannonetheless be included in the value of the family patrimony on the basis of the “rights which confer use” within the meaning of art. 415

C.C.Q. Before turning to this matter, I find it necessary to restate two core principles of law on the family patrimony. [22] The first relates to the approach that a court should take when interpreting and applying the rules relating to thefamily patrimony in ambiguous cases. As LeBel J. wrote for a unanimous court in M.T. v. J.-Y.T., 2008 SCC 50, [2008] 2 S.C.R. 781, atpara. 16, the introduction of the family patrimony in Quebec family law is “consistent with a general trend in Canada to protectvulnerable spouses”. As a remedial set of rules that aims to foster economic equality between spouses, it should therefore be given agenerous and liberal

interpretation to favour the inclusion of property in the value to be partitioned between the spouses (Droit de lafamille — 112948, 2011 QCCA 1744, [2011] R.J.Q. 1729, at para. 60; Droit de la famille — 977, at p. 909; Droit de la famille —172765, 2017 QCCA 1844, at paras. 102-13 ). [23] This principle should guide our

interpretation of art. 415 C.C.Q. and its application in this and similar cases, even ifthe record does not demonstrate that one of the spouses was in a position of economic vulnerability. Contrary to what counsel forMr. Karam suggested in his oral submissions (transcript, at pp. 55-58), the fact that this case does not raise issues of inequality betweenspouses is immaterial for the resolution of the larger question raised by the appeal.

Indeed, we should be careful not to adopt aninterpretation of the rules governing the family patrimony that would create a breach in the protection guaranteed by the law tovulnerable spouses. [24] The second principle relates to the public order character of the rules governing the family patrimony. The Civil Codeis clear: spouses cannot contract out of these rules.

Article 391 C.C.Q. provides that spouses cannot derogate from the provisions ofchapter IV on the effect of marriage, which includes the provisions on the family patrimony.

Article 423 C.C.Q. further specifies thatspouses may not renounce in advance, by contract of marriage or otherwise, their rights in the family patrimony, while allowing them todo so in certain circumstances, notably upon the dissolution of marriage, and under stringent conditions.

On this basis, Quebec courtshave consistently held that the rules of the family patrimony are of public order and cannot be avoided by spouses through various kindsof contractual arrangements (see, for example, Droit de la famille — 977, at p. 908; Droit de la famille — 1463, (QCCA), [1991] R.J.Q. 2514 (C.A.), at pp. 2516-17; Droit de la famille — 121301, 2012 QCCA 1018, at para. 46 ; Droit de lafamille — 162780, 2016 QCCS 5562, at paras. 54-55 ). This well-settled principle is not disputed by the parties.

Rather, it is thescope and the effect of these public order rules that is at the heart of the debate. [25] Mr. Karam correctly points out that the public order character of the rules governing the family patrimony does noteliminate the freedom of spouses to acquire, sell or choose never to own the property included in the family patrimony per art. 415C.C.Q. (R.F., at paras. 23-29). Indeed, neither the constitution of the family patrimony nor its partition alters the rights of ownership heldby each spouse in relation to their property.

It follows that spouses generally remain free to manage and dispose of their propertyincluded in the family patrimony, keeping in mind that certain specific rules will nonetheless limit their freedom to do so (Droit de lafamille — 977, at p. 908). [26] As pointed out by Justice Côté, spouses are free to arrange their personal affairs as they see fit; they need not acquireproperty falling under the family patrimony provisions. Thus, as St-Pierre J.A. remarked, neither spouse is obligated to own the propertyenumerated in art. 415 C.C.Q. (para. 58).

A married couple can lease rather than own their family residence or their car. It is trite thatsuch living arrangements do not per se offend the public order rules of family patrimony. The question raised by this appeal is whetherthis logic extends to a family residence acquired by way of a trust controlled by one or both spouses.

Because the legislator included the“rights which confer use” of a family residence in addition to direct ownership, in my view it does not. [27] Before discussing the “rights which confer use” per art. 415 C.C.Q., I wish to make a few comments on the “lifting ofthe trust veil” by analogy with art. 317 C.C.Q., since the trial judge and the Court of Appeal disagreed on the applicability of this notion.First, I agree with St-Pierre J.A. that the analogy with art. 317 C.C.Q. is, on its face, tenuous (para. 74).

As she explains, this provision[translation] “is intended to prevent a person from making improper use of a legal person, of which he or she is in fact the directing mind,in such a way as to interpose the existence of that legal person as a defence to try to avoid personal liability” (para. 69). But in Quebeclaw, trusts are not legal persons endowed with juridical personality. Rather, they are the result of a relationship among three actors — thesettlor, trustee and beneficiary — who gravitate around a distinct and autonomous patrimony.

It follows that, contrary to a corporation,there is in the case of a trust no veil to lift nor any mastermind hiding behind a distinct juridical personality.

In this regard, I agree withthe general proposition set out by St-Pierre J.A. that when the constitution of a trust conflicts with the operation of the family patrimony,the court should resolve the matter by relying on the rules pertaining to both of these institutions rather than by analogy with art. 317C.C.Q. (paras. 50, 76 and 87). [28] In the case of a family residence, issues arising from indirect ownership or de facto control of the property can, as Iwill explain in the

section below, be resolved with the notion of “rights which confer use” set out in art. 415 C.C.Q. For this category ofproperty, there is therefore no need to rely on art. 317 C.C.Q. by analogy so as to order an equitable partition of the family patrimony. [29] Also, more generally when property listed in art. 415 C.C.Q. is held in trust, arts. 421 and 422 C.C.Q. may allow thecourt to correct a potential inequity created by the operation of the trust.

Again, it is not necessary to rely on an analogy with art. 317C.C.Q. to reach an equitable result in these circumstances. [30] If property listed at art. 415 C.C.Q. is transferred to a trust, the court can order a compensatory payment based onart. 421 C.C.Q., provided that the transfer occurred within a year of various reference points (institution of proceedings for eitherdivorce, separation from bed and board or annulment of marriage, or death) or earlier in the case of fraud or bad faith.

This is the casebecause, as we have seen, property transferred to a trust is removed from the patrimony of the original owner and held in a distinct andautonomous patrimony. The property is therefore alienated within the meaning of art. 421 C.C.Q. and is thus subject to a compensatorypayment. This would apply to furniture and family vehicles (as well as residences of the family) transferred to a trust. [31] If such property is not transferred but rather acquired directly through a trust, the court cannot order a compensatorypayment based on art. 421 C.C.Q. since there is strictly speaking no alienation.

In such cases, art. 422 C.C.Q. would nonetheless allowthe court to order an unequal partition in order to compensate for the loss of value in the family patrimony, provided that the operationamounts to an economic fault (M.T. v. J.-Y.T., at para. 28). As I will explain below, what is often the most valuable items listed at

art. 415 C.C.Q. — the residence(

s) of the family — can be included in the family patrimony whether the residence is transferred into oracquired directly by the trust. Thus, in such cases, there will be sufficient value in the patrimony for an unequal partition to constitute ameaningful remedy when furniture or family vehicles are acquired directly by a trust. [32] As indicated above, the idea of a “lifting of the trust veil” as envisioned by analogy to art. 317 C.C.Q. ought to berejected by this Court.

However, this is not to say that the existence of a trust is a bar to the operation of the three remedies listed above— the rights which confer use, the compensatory payment and the unequal partition — in the context of property held in trust. In allthree situations, the effects of the trust will be effectively “lifted” to enable the operation of the remedy. However, given that the analogyto art. 317 C.C.Q. is faulty, the Court should refrain from referring to the operation of theses remedies as a “lifting of the trust veil”.

Thelegal basis for considering the value of such property in an equitable partition of the family patrimony is not art. 317 C.C.Q. but ratherthe relevant provisions relating to the family patrimony. C. The Rights Which Confer Use per

Article 415 C.C.Q. [33] By referring to the “rights which confer use” of a family residence at art. 415 C.C.Q., the legislator intended toinclude in the family patrimony the type of living arrangement where spouses, without being owners in title, nonetheless are in control ofthe family residence.

Although the legislative debates leading to the adoption of art. 462.2 of the Civil Code of Québec (C.C.Q. (1980))(which became art. 415 C.C.Q.) do not discuss the notion of rights which confer use, the context in which this provision was adoptedsuggests that the intention was to cover a broad range of situations beyond ownership. Indeed, the notion of rights which confer use of afamily residence was debated on the same day in relation to another provision, art. 454 C.C.Q. (1980) (which became art. 406 C.C.Q.),which limits the faculty to alienate a family residence owned by one of the spouses.

At the time, legislators were concerned by the factthat corporations were sometimes used to avoid these restrictions on the sale of a family residence. To counter this practice, the referenceto the notion of “rights which confer use” was added to art. 454 C.C.Q. (1980) (now art. 406 C.C.Q.) to protect family residencesindirectly owned through a corporation (as to the foregoing, see B. Lefebvre, “Les droits qui confèrent l’usage des résidences familiales:quelques difficultés lors de la liquidation du patrimoine familial” (2014), 116 R. du N. 389, at pp. 392-94; J.-P.

Senécal, Le partage dupatrimoine familial et les autres réformes du Projet de loi 146 (1989), at p. 38). [34] Since the adoption of art. 462.2 C.C.Q (1980) (now 415 C.C.Q.), Quebec courts have often relied on the “rightswhich confer use” to partition the value of family residences held through corporations controlled by one of the spouses. For example, inD.L. v. L.G., 2006 QCCA 1125, at paras. 22-29 , the Quebec Court of Appeal ruled that the value of a family farm that had beentransferred to a corporation for fiscal reasons ought to be included in the partition of the family patrimony based on the rights of use.

Seealso Droit de la famille — 142245, 2014 QCCA 1660, at paras. 13-14 ; Droit de la famille — 1931, [1994] R.J.Q. 378 (Sup. Ct.),at p. 381, aff’d [1996] R.D.F. 6 (C.A.); Droit de la famille — 10174, 2010 QCCS 312, at para. 48-52 , aff’d Droit de la famille— 102269, 2010 QCCA 1586 . [35] Quebec courts have applied the same logic in the case of family residences held in trust.

In Droit de la famille —071938, 2007 QCCS 3792, [2007] R.D.F. 711, the Superior Court relied on the “rights which confer use” of art. 415 C.C.Q. to concludethat a family residence transferred to a trust controlled by both spouses was included in the family patrimony. In this case, the court ruledthat as trustees, the spouses had conferred upon themselves an implicit and non-written right of use of the residence within the meaningof art. 415 C.C.Q. (paras. 71, 81 and 100). See also Droit de la famille — 10977, 2010 QCCA 892, at para. 16 ; Droit de lafamille — 3511, [2000] R.D.F. 93 (Sup.

Ct.), at p. 97, aff’d on this point, (C.A.). [36] In other instances, courts have determined that certain rights to use a residence were not captured by arts. 415 or 406C.C.Q. This was so for a residence provided by an employer through an employment contract, even where the employee was a minorityshareholder of the employer (Droit de la famille — 2225, [1995] R.D.F. 465 (Sup. Ct.); J.-Y.H. v. C.B., (Que.Sup. Ct.), at para. 25).

Similarly, courts usually do not include rights conferred by a lease agreement within art. 415 C.C.Q., although theissue has been debated in doctrine and jurisprudence (Droit de la famille — 171064, 2017 QCCS 2076, at para. 176; Droit de la famille— 2420, [1996] R.D.F. 363 (Sup. Ct.)).

In these cases, while the spouses had a right to use the family residence, they did not control it inany meaningful way. [37] What may or may not constitute a “right which confers use” within the meaning of art. 415 C.C.Q. is thereforedependent on the circumstances and will generally be determined in relation to the level of control exercised by either spouse withrespect to the residence. As such, I agree with my colleague that simple occupation of a property not owned by the spouses will notautomatically give rise to “rights which confer use” within the meaning of art. 415 C.C.Q.

However, given the purpose of the familypatrimony and the rationale for including the “rights which confer use” in the text of art. 415 C.C.Q., it is preferable to accord widediscretion to the trier of fact when making such a determination. Rather than providing a formal definition of the “rights which conferuse”, I would make the following remarks in relation to the arguments raised in the present case.

(1) Rights Which Confer Use Are Not Limited to Real Rights [38] Mr. Karam argues that given the particular characteristics of patrimonies by appropriation, the rights which confer useunder art. 415 C.C.Q. cannot be relied on to partition the value of a family residence held under a trust. In his view, art. 415 C.C.Q. refersto the right of use within the meaning of art. 1172 C.C.Q., that is a dismemberment of the right of ownership by which one cantemporarily use the property of another and take its fruits and revenues, to the extent of one’s needs.

Since art. 1261 C.C.Q. clearlyestablishes that neither the trustee, nor the settlor, nor the beneficiaries have any real right in the trust patrimony, it follows that a familyresidence held under a trust cannot fall within the scope of art. 415 C.C.Q. on the basis of the “rights which confer use” (R.F., atparas. 46 and 51-52).With respect, this narrow

interpretation of art. 415 C.C.Q. cannot be accepted. [39] First, it runs contrary to the approach the court should take in interpreting the rules of the family patrimony. Ratherthan fostering a broad application of the regime, requiring a proof of rights of use within the meaning of art. 1172 C.C.Q. (or any otherdismemberments of the right of ownership) would significantly restrict the ability of a trial judge to order an equitable partition of thefamily patrimony in cases where one spouse, while not the owner in title of a residence, has the authority to exercise control over theother spouse’s use of the residence. Moreover, such an

interpretation of “rights which confer use” would have the effect of legitimizing

the trust as a vehicle to avoid the application of art. 415 C.C.Q. to family residences, which is precisely the type of result the legislaturesought to avoid with similar wording in art. 406 C.C.Q. [40] Second, when read alongside art. 406 C.C.Q., it is clear that the rights which confer use referred to in art. 415 C.C.Q.are not limited to dismemberments of the right of ownership. In art. 406 C.C.Q., the first paragraph provides that holders of real rights ofusufruct, emphyteusis or use are subject to arts. 404 and 405 C.C.Q., which protect the family residence.

In the second paragraph, thelegislature specified that similar protection applies to other rights which confer use of the family residence, i.e. not the real rights listed inthe previous paragraph: 406. The usufructuary, the emphyteuta and the user are subject to the rules of articles 404 and 405. Neither spouse may, without the consent of the other, dispose of rights held by another title conferring use of the family residence. [41] The

interpretation of the “rights which confer use” at art. 415 C.C.Q. based on the text of art. 406 C.C.Q. is supportedby doctrine and jurisprudence (see Senécal, at pp. 38-39; C. Labonté, “Le patrimoine familial” , in Droit de la famille québécois(loose-leaf), vol. 3, by J.-P. Senécal, at pp. 3/2282 to 3/2286; Droit de la famille — 3511 (Sup. Ct.), at p. 96). I would add that it isconsistent with the presumption that the same expression within a statute conveys the same meaning (P.-A. Côté, in collaboration with S.Beaulac and M. Devinat, The

Interpretation of Legislation in Canada (4th ed. 2011), at pp. 353-54). [42] The “rights which confer use” under art. 415 C.C.Q. are therefore not limited to rights of use within the meaning ofart. 1172 C.C.Q. or other real rights listed at art. 1119 C.C.Q. It follows that family residences held in trust are not, in principle, outsidethe scope of art. 415 C.C.Q.

(2) Whether the Residence Is Acquired Directly or Transferred to a Trust Is Not Determinative [43] While my colleague and St-Pierre J.A. share the view that the “rights which confer use” at art. 415 C.C.Q. can applyto a residence held in trust by one of the spouses, their reasons suggest that this would be the case only when the residence is transferredto the trust, rather than acquired directly by it (C.A. reasons, at para. 91).

Such an approach gives rise to the question: Why should theconsequences of acquiring a family residence through a trust in order to avoid undesirable tax treatment be any different than transferringthe property from the spouse’s estate for the same purpose? With respect, I see no meaningful difference between these two situations. [44] In most cases cited by the appellants on this particular issue, the family residence had been the property of the spousesprior to its transfer to either a trust or a corporation (D.L.; Droit de la famille — 10174; Droit de la famille — 13681, 2013 QCCA 501).

InD.L., the Court of Appeal insisted on the occupation of the residence prior to its transfer to show that, despite the lack of formalarrangement with the corporation that owned the residence, the couple enjoyed “rights which confer use” within the meaning of art. 415C.C.Q. (paras. 23-26). [45] I agree that prior ownership and occupation of a family residence can be relevant to show that the spouses hold a rightwhich confers use within the meaning of art. 415 C.C.Q.

This will be the case when, as in D.L., the record shows that the transfer of theproperty to either a trust or a corporation had no impact on the living arrangements of the spouses, who continue to occupy the residenceas if they were still the owners. However, prior ownership is not, as a matter of law, a necessary condition for a finding of “rights whichconfer use” within the meaning of art. 415 C.C.Q.

If the trial judge is satisfied, based on the evidence before him or her, that the spousesare in control of the residence, not merely by way of exercising control over the entitlement to the value of the assets but by controllingwhom may benefit from the use of the property, it is open to him or her to include the value of the residence in the family patrimonybased on art. 415 C.C.Q., even when such residence was acquired directly by a trust or a corporation.

(3) The Absence of Intention to Avoid the Family Patrimony Is Irrelevant With Respect to the “Rights Which Confer Use” atArticle 415 C.C.Q. [46] Central to Mr. Karam’s submissions is the fact that the trust was set up for a legitimate objective and that at no timewas he acting with the intention of avoiding the rules of the family patrimony. According to him, to include the value of the residence inthe family patrimony in the absence of bad faith or fraudulent intention would be to transform unduly a rule of protective public orderinto a rule of directive public order (R.F., at para. 36).

In my view, this reasoning is based on a misunderstanding of the differencebetween protective and directive public order rules and on the operation of such mandatory rules more generally. [47] I would agree with Mr. Karam that the rules of the family patrimony are protective public order rules, in that they areimposed by the legislature to safeguard the interests of vulnerable parties and to insure a certain equity within the institution of marriage(C. Dubreuil and B. Lefebvre, “L’ordre public et les rapports patrimoniaux dans les relations de couple” (1999), 40 C. de D. 345, atp. 351).

However, it does not follow from this characterization that the operation of these rules will depend on the behavior, intention orgood faith of the parties during their contractual relationship, as Mr. Karam suggests (R.F., at para. 32). [48] In Garcia Transport Ltée v. Royal Trust Co., (SCC), [1992] 2 S.C.R. 499, at pp. 528-30, JusticeL’Heureux-Dubé explained that the difference between protective and directive public order rules arises from the possibility, in the caseof protective public order rules, to renounce the protection offered by the law once the right is acquired.

This is consistent with art. 423C.C.Q., which provides that spouses can renounce their rights in the family patrimony only upon the death of the other spouse, thejudgment of divorce, separation from bed and board or nullity of marriage. As the Court of Appeal recently stated, [translation] “[t]hecourts recognize that ‘any renunciation made otherwise than in the form prescribed by

article 423 C.C.Q. is prohibited and contrary topublic order’. Such a renunciation ‘must be clear, precise and explicit’. Moreover, a spouse may withdraw his or her renunciation as longas the court has not recorded it” (Droit de la famille — 19582, 2019 QCCA 647, at para. 24 (footnotes omitted); see also Droitde la famille — 131166, 2013 QCCS 2194, at paras. 70-76, aff’d Droit de la famille — 1487, 2014 QCCA 123, at paras. 60-62 ;Droit de la famille — 112467, 2011 QCCS 4229, at paras. 45-48 , aff’d Droit de la famille — 121301, at paras. 44-48 ).

[49] It does not follow, as Mr. Karam suggests, that spouses are free to organize their affairs in a way that displaces themandatory rules imposed by the legislature, provided that they did not intend to avoid these rules or did not act in bad faith. If we were toinclude this subjective element as a requirement for the operation of mandatory rules, it would necessarily put the burden on the partyclaiming the protection of the law to demonstrate that the co-contracting party knew about this rule and was trying to evade it. Thiswould run contrary to the purpose of protective public order rules.

I am not aware of any authority, jurisprudential or doctrinal,suggesting that mandatory rules are triggered only by one’s intention to evade them. [50] I therefore share the view of the trial judge when he writes that the [translation] “question is thus not so much whatthe Defendant’s objective was in creating the trust, but rather whether the interposition of the trust patrimony would here have theconsequence of avoiding the imperative family patrimony rules” (para. 55 (emphasis in original)).

Having regard to the contrary opinion,this is also how we should understand the comment made by the Court of Appeal in Droit de la famille — 13681, at para. 31 ,where Fournier J.A. writes that [translation] “[t]he creation of a trust must not have the consequence of avoiding the application of publicorder provisions, such as those pertaining to the family patrimony”.

In this case, the spouses had transferred all their assets to two trustsconstituted based on the advice of their accountant and their tax lawyer in an effort to protect their assets and minimize their taxes (seeDroit de la famille — 121905, 2012 QCCS 3977, at paras. 48, 54 and 71 ).

The remark of Fournier J.A. was made in that contextand is not limited, as St-Pierre J.A. suggests, to spouses who deliberately attempt to avoid the rules of the family patrimony (C.A.reasons, at para. 81). [51] In fact, in other cases where the courts have included in the family patrimony the value of a residence not directlyowned by the spouses, the record did not show an intention to avoid these mandatory rules.

In D.L., the family residence had beentransferred to a corporation controlled by the spouses for purely fiscal reasons and at no point did the Court of Appeal or the trial judgesuggest that there was an attempt to avoid the operation of the family patrimony (paras. 23-26; L.G. v. D.L., (Que.Sup. Ct.), at paras. 22-24 and 47). The same is true in Droit de la famille — 133443, 2013 QCCS 6099, where the trial judge applied D.L.to partition the value of a family residence held by a farmers’ association.

In this case, the record was clear that the association wascreated for fiscal purposes and to facilitate a transfer of property from a father to his son (paras. 28-31 , aff’d Droit de la famille— 142245, at paras. 13-14). Again, at no point was intention, behavior or good faith relevant for the application of art. 415 C.C.Q. [52] When applying art. 415 C.C.Q. to a family residence not directly owned by the spouses, the question is thereforerelatively simple: Does the record support a finding of rights which confer use of the residence?

If so, the fact that the spouses werepursuing a legitimate objective in organizing their affairs the way that they did is not a bar to inclusion of the residence in the partition ofthe family patrimony. [53] This is not to say that the intention of the spouses is never relevant when applying art. 415 C.C.Q. to a familyresidence. In fact, the intention of the spouses is essential to characterize a property as a “residence of the family” within the meaning ofart. 415 C.C.Q. (see, for example, J. (Y.) v. B. (M.), (Que. Sup. Ct.), at paras. 32-39, aff’d (C.A.), at paras 17-19).

But in so far as the intention to use a property as a residence of the family has been established, art. 415 C.C.Q.does not require any further demonstration of intention. D. Application to This Case [54] Applying the principles stated above to the facts of this case, I find that the trial decision did not contain a reviewableerror that justified the intervention of the Court of Appeal.

While I agree with St-Pierre J.A. that the application of art. 317 C.C.Q. byanalogy is not appropriate to dispose of the matter, the trial judge also anchored his decision in the “rights which confer use” of art. 415C.C.Q. (paras. 39-40). Thus, insofar as the reference to art. 317 C.C.Q. was an error of law, this was of no consequence for the result. [55] Furthermore, it was open to the trial judge to consider whether or not the circumstances of the case, and in particularthe content of the trust deed, supported a finding of rights which conferred use of the family residence.

As explained above, that theresidence on Docteur-Penfield Avenue was acquired directly by the trust and partly for investment purposes is not a bar to a finding ofrights which confer use. The main question remaining is whether the trial judge erred in his determination that Mr. Karam was the soleholder of rights which confer use of a family residence within the meaning of art. 415 C.C.Q. Absent a finding of palpable and overridingerror in this determination, the Court of Appeal could not intervene and substitute its own view.

(1) The Finding of Rights Which Confer Use [56] In my view, the factual determinations of the trial judge were amply supported by the evidence. The trial judge basedhis conclusions on the

interpretation of the trust deed, and in particular the clauses relating to the power of Mr. Karam as a trustee and“appointer” of the trust. In his view, [translation] “it is clear that the entire Trust Deed is structured so as to give the Defendant almosttotal control over the Trust and the property held by it. This emerges clearly from all of its provisions” (para. 51). More specifically, thetrial judge relied on paras. 4.2 and 4.3 of the trust deed, which granted the following discretionary powers to Mr. Karam (paras. 45-47;A.R., vol.

II, at pp. 117-19): • Appoint new beneficiaries, including himself. • Destitute any beneficiaries, including his children and wife. • Determine how the revenues and capital of the trust would be distributed. [57] The trial judge referred to other stipulations that reinforced his view that Mr. Karam was in full control of the trust,and by extension of the house acquired through it (paras. 49-50). He noted, inter alia, that para. 2.4 indicated the intention of the settlorto see the decisions of the appointer (Mr. Karam) respected by the beneficiaries and the other trustee, his mother.

Furthermore, while mycolleague is of the view that the sole purpose of the trust was to invest in the property for the benefit of the four children, it is clear thatthe family promptly moved in and used the property as a family residence, and that the trust gave Mr. Karam extensive powers over theproperty. I concede that certain stipulations of the trust deed listed by the trial judge are of questionable validity, more specifically art. 6,by which the trustee is under no obligation to maintain or increase the capital of the trust, or art. 8.10 by which the trustee can continue to

perform his duty despite a conflict of interest. The validity of these stipulations was, however, not challenged before any court; they areimmaterial, given the other aspects of the trust deed analyzed by the trial judge. It is not for this Court to speculate whether Mr. Karam’spowers as drafted would have sustained the scrutiny of the trial judge’s review had this issue been litigated. I see no basis to concludethat the trial judge committed a palpable and overriding error in determining that Mr.

Karam possessed “rights which confer use” withinthe meaning of art. 415 C.C.Q. and was in full control of the residence, not only as to its use, but also as to entitlement to the value of theproperty. [58] St-Pierre J.A.’s understanding of the record is diametrically opposed to this. In her view, there was no evidence on therecord to prove either the existence of rights which conferred use or that Mr. Karam was the sole holder of these rights.

In her view, theevidence before the trial judge regarding the relationship between the trust and the spouses was limited to the following elements(para. 98): • The trust was constituted by both spouses for a common purpose to which they had freely consented. • The trust deed reflected the intention of the spouses who had received professional advice on the matter. • The property on Docteur-Penfield Avenue was acquired by the trust as an investment. • This property was eventually occupied by the spouses and their children, but the record says no more on this. [59] If we set aside the

interpretation of the trust deed for a moment, the view by St-Pierre J.A. that the record did notcontain any proof of rights which confer use is somewhat surprising. Who else, if not Mr. Karam and his family, would have had a rightto use this property? The reality is that the occupation of the residence on Docteur-Penfield Avenue by Mr. Karam and his family wasneither illegal, nor based on the tolerance of a third party nor precarious in any other way.

The record is clear, and the trial judge sofound, that their occupation of the house was legitimate and firmly grounded in the rights that resulted from a trust that Mr. Karamcontrolled entirely. In fact, according to Mr. Karam himself, the acquisition of a residence for the family was precisely what theyintended when they constituted the trust (A.R., vol. II, at pp. 66 and 82-84). In this context, it was entirely reasonable for the trial judgeto infer that the trust controlled by Mr.

Karam granted rights which conferred use of the residence within the meaning of art. 415 C.C.Q. [60] In short, it was in fact their residence and they could stay there as long as Mr. Karam, who was in full control of thetrust, saw this arrangement as a good way to manage the assets of the family. Therefore, I cannot subscribe to the views ofSt-Pierre J.C.A. when she writes that [translation] “[t]he evidence adduced provides no basis for affirming the existence of such ‘rightswhich confer use of [it]’ on a balance of probabilities” (para. 104).

The record as a whole amply supports the trial judge’s findings andconclusion. [61] As for the determination of the trial judge that Mr. Karam was the sole holder of these rights, this resulted from hisinterpretation of the trust deed and more specifically of the extended powers of appointer granted to Mr. Karam. Again, I see noreviewable error. The fact that Ms. Yared and her children were beneficiaries of the trust does not change this as there was no assurance,under the trust deed, that they would receive anything at all or even remain beneficiaries of the trust. The status of the beneficiaries wasprecarious.

Once again, it depended on the exercise of Mr. Karam’s discretionary powers. While my colleague seems assured that therights of Ms. Yared and her children would have been protected had Mr. Karam decided to remove them and/or name himself asbeneficiary, this was not part of the pleadings before us nor before the courts below. I will refrain from speculating as to what might havebeen.

(2) Mr. Karam’s Renunciation to His Powers as Appointer [62] According to the Court of Appeal, the trial judge erred by failing to consider that Mr. Karam never used his powers ofappointer to the beneficiaries’ detriment and later renounced those powers (para. 100). Without discussing the arguments raised by thetrial judge in relation to Mr. Karam’s renunciation, St-Pierre J.A. then proceeded in her conclusions to confirm this modification of thetrust deed (para. 111).

At the hearing in this Court, both parties agreed that at no point had the Court of Appeal been asked to confirm thevalidity of the [translation] “Act of Renunciation” of July 12, 2016 (transcript, at pp. 20-21 and 81). [63] As the trial judge noted, the renunciation by Mr. Karam of his powers as appointer amounted to a modification of theconstituting act of the trust.

According to art. 1294 and 1295 C.C.Q., this can be done only by a court after notice is given to theinterested parties, including the settlor, the trustees and the beneficiaries, except in certain narrow circumstances that do not apply here(para. 58). In my view, it was not open to the Court of Appeal to modify the trust deed according to the [translation] “Act ofRenunciation”, given that neither party had asked the courts below to do so and given that the conditions provided in art. 1295 C.C.Q.were not met. Thus, the trial judge did not err when he attached no significance to Mr.

Karam’s renunciation of his powers as appointerin his

interpretation of the trust deed.

(3) The Valuation of the Rights Which Confer Use [64] The Court of Appeal also held that the trial judge could not declare that the value of the rights which confer use wasequal to the full value of the residence, since this question was not before him (paras. 108-9). On this, I am persuaded by the appellantsthat given the nature of the problem before him, it was well within the jurisdiction of the trial judge to slightly modify the declarationsought in the application in order to properly dispose of the issue (A.F., at paras. 131-34).

In the context of an application for declaratoryjudgement, this does not amount to ruling ultra petita (Poulin v. Dumas, 2014 QCCA 676, at para. 3 ). Of course, this reasoningdoes not apply to the question raised in the above

section on Mr. Karam’s renunciation. The exercise of the power granted by art. 1294C.C.Q. to modify

an act constituting a trust is beyond the authority of a court if it is not expressly asked to do so by one of the parties. [65] We should also remember that the parties are waiting for a definitive answer on the current issue in order to decidehow they will conduct a parallel litigation on the validity of Ms. Yared’s will. If the trial judge had failed to declare how the value ofthese rights which confer use was to be determined, the value of Ms. Yared’s estate would remain impossible to estimate and the partieswould perhaps have had to seek another declaratory judgement on this narrow issue. Since the trial judge had all the evidence he needed

to determine how the rights which confer use ought to be valued, it was justified for him to make a declaration to this effect. Based on the jurisprudence on this issue and on the circumstances of this case, it was also open to the trial judge to conclude that the rights which confer use were equal to the full value of the residence ( Droit de la famille — 142245 , at paras. 13-14 ; Droit de la famille — 10174 , at para. 52 ). I see no basis for appellate intervention on this question.

(4) The Fairness of the Result for Mr. Karam [ 66 ] As a final point, I wish to address the issue of fairness that was raised by the respondent and by the Court of Appeal. As they both point out, if we determine that the full value of the residence is to be included in the family patrimony, it could follow that the children of Mr. Karam, theoretically, could inherit half of that value while remaining the sole beneficiaries of the trust (C.A. reasons, at para. 101; R.F., at paras. 119-20). In such a way, they could claim 150 percent of the value of the residence, while Mr.

Karam would end up with nothing other than a large debt. That result would indeed be unfair for Mr. Karam. [ 67 ] This eventuality, however, is premised on the assumption that Mr. Karam would be unable to exercise his powers as trustee and appointer to dispose of the property in order to pay the debt that would result from the partition of the family patrimony and recuperate the other half of that value. This was briefly discussed during the hearing, but I would note that the validity of the trust deed, the powers of Mr. Karam or his faculty to exercise those powers was not addressed fully before any court.

In the end, I am of the view that, should Mr. Karam and his children find themselves unable to reach a common solution that is equitable and respectful of the rights of each other, the courts will be able to avoid the unfair result noted above, notably by using the power granted by art. 1294 C.C.Q. , to modify the trust deed. [ 68 ] My colleague, in her reasons at paras. 132-38, has taken issue with the foregoing. In my colleague’s view, art. 1294 C.C.Q. cannot be relied on by Mr. Karam to avoid the possibility of being obliged to transfer half the value of the property to Ms.

Yared’s estate, while also being liable to the beneficiaries for the property. In the end, this is a matter for the Superior Court to deal with should Mr. Karam bring an application before it. I leave it to that court to dispose of it properly under the Civil Code . [ 69 ] What is relevant to a proper disposition of the matter before this Court is that the point made by my colleague focuses on what is an ancillary question. The issue in this appeal is whether Ms. Yared (or her estate) is entitled to a half interest in the property by virtue of the division of the family patrimony.

That does not depend on the operation of art. 1294 C.C.Q . Rather it turns on art. 415 C.C.Q. , which is a rule of public order under the Civil Code . A rule of public order cannot be undermined or denied based on a point of the nature made by my colleague. [ 70 ] Taken to its logical conclusion, my colleague’s reasoning at para. 137 would seem to suggest that because it is awkward for Mr. Karam to unwind the arrangement by which Ms. Yared would be cut out of the family patrimony, one should therefore give effect to the arrangement that would cut out Ms.

Yared (in this instance her estate) from her share of the family patrimony. That is not how my colleague puts it, but that is the implication of her position. [ 71 ] I would recall the wording of art. 9 C.C.Q. : “In the exercise of civil rights, derogations may be made from those rules of this Code which supplement intention, but not from those of public order .” What is at issue here is whether such derogation is to be given effect. I would say no. In my view Ms.

Yared’s right to a share of the family patrimony cannot be denied by the use of a trust, essentially for the same reasons that it could not be denied by the interposition of a corporation. Neither of these devices should be allowed to circumvent a rule of public order, in this case the division of the family patrimony between husband and wife. IV. Conclusion [ 72 ] For these reasons, I would allow the appeal, set aside the judgment of the Court of Appeal and restore the judgment of the Superior Court with costs to the appellants throughout.

The reasons of Côté and Karakatsanis JJ. were delivered by Côté J. (dissenting) — I. Overview [ 73 ] This appeal concerns the interaction between the provisions of the Civil Code of Québec (“ C.C.Q. ”) governing the institution of the family patrimony and those governing the institution that is the civil law trust.

This Court is asked to determine whether the family patrimony can include a family residence or the “rights which confer use” of it under art. 415 C.C.Q. when the residence is owned by a discretionary trust controlled by one of the spouses . [ 74 ] In 2011, Roger Karam and Taky Yared, a married couple, established the Fiducie famille Taki (Taki Family Trust) (“Trust”). The purpose of the Trust was to provide for the couple’s four children in light of Ms.

Yared’s recent terminal cancer diagnosis: [ translation ] “. . . for the benefit and welfare of the Beneficiaries, the whole shielded from the vagaries of life” (A.R., vol. II, at p. 110). Mr. Karam was named both as co-trustee of the Trust, along with his elderly mother, and as the sole “ Électeur ”, or appointer, under the Trust, while Ms. Yared and the four children were named as beneficiaries. Although Mr.

Karam had the power to appoint and remove beneficiaries under the Trust Deed, at no point did he exercise that power during the relevant period. [ 75 ] In 2012, the Trust purchased a mixed-purpose property allowing for both residential and commercial uses (“Residence”), in which the family resided from the time of purchase and for the remainder of the spouses’ cohabitation. In June 2014, Ms. Yared left the Residence and shortly thereafter served divorce proceedings on Mr. Karam. In August 2014, she executed a last will and testament bequeathing the entirety of her estate to the four children. [1] Ms.

Yared died on April 6, 2015. [ 76 ] On July 19, 2016, the appellants, in their capacity as liquidators of Ms. Yared’s estate, served an application for a declaratory judgment to have the Residence declared part of the family patrimony under the Civil Code of Québec . The trial judge concluded that the value of the Residence formed part of the family patrimony, relying on an analogy with the lifting of the corporate

veil under art. 317 C.C.Q. and on the notion of “rights which confer use” at art. 415 C.C.Q. ( 2016 QCCS 5581 ). The Court of Appeal overturned that decision and declared that neither the Residence nor any rights which conferred use of it formed part of the family patrimony ( 2018 QCCA 320 ). [ 77 ] I would dismiss the appeal.

I share in my colleague’s rejection of the trial judge’s reliance on the “lifting of the corporate veil”, and would agree that questions arising from a conflict between the establishment of a trust and the operation of the family patrimony provisions should be resolved by referring to the rules pertaining to both of those institutions (reasons of Rowe J., para. 27). However, I disagree with my colleague’s

interpretation of those rules and his conclusion that Mr. Karam held rights which conferred use of the Residence pursuant to art. 415 C.C.Q. [ 78 ] To determine whether a right which confers use exists where a residence is owned by a trust, courts must consider the circumstances surrounding the establishment of the trust, its intended purpose, and the rights and obligations of the trustees and beneficiaries under the terms of the trust deed.

While it is important to keep in mind that the family patrimony provisions are intended to protect economically disadvantaged spouses, courts must not overlook the fact that spouses are free to acquire and dispose of property as they wish, even if this means that they do not acquire property falling within the family patrimony. [ 79 ] In the instant case, the trial judge committed a reversible error by focusing solely on Mr. Karam’s powers under the Trust Deed, conflating those powers with rights, and failing to consider the purpose of the Trust and the rights of its beneficiaries.

Consequently, he erred in finding that Mr. Karam held rights which conferred use of the Residence, in failing to find that if such rights conferring use of the Residence existed, they were held either by Ms. Yared or jointly by both spouses, and in assigning to those rights a value equal to the value of the Residence. II. Analysis A. Family Patrimony Provisions [ 80 ] The provision that is primarily at issue in this case is art. 415 C.C.Q. , which provides as follows: 415.

The family patrimony is composed of the following property owned by one or the other of the spouses: the residences of the family or the rights which confer use of them , the movable property with which they are furnished or decorated and which serves for the use of the household, the motor vehicles used for family travel and the benefits accrued during the marriage under a retirement plan.

The payment of contributions into a pension plan entails an accrual of benefits under the pension plan; so does the accumulation of service recognized for the purposes of a pension plan. [ 81 ] Under the Civil Code of Québec , the family patrimony includes, namely, the residence owned by one or the other of the spouses or a right which confers use of it at the time of separation from bed and board or of the dissolution or nullity of the marriage (arts. 415 and 416 C.

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