SCC says trust is not disqualifying asset for rental assistance application

The Supreme Court of Canada has ruled that a Henson trust, which is commonly used to set money aside for people with disabilities, should not be considered an “asset” when determining eligibility for rental assistance.

SCC says trust is not disqualifying asset for rental assistance application
Michael Feder represented the appellant who has a disability but was denied rental assistance because of a trust her family had set up for her.

The Supreme Court of Canada has ruled that a Henson trust, which is commonly used to set money aside for people with disabilities, should not be considered an “asset” when determining eligibility for rental assistance.

“My client is relieved,” says Michael Feder, who represented the appellant S.A., who has a disability, at the Supreme Court. “This has been a difficult problem for her in the sense that the trust at issue was set up to avoid exactly the thing that occurred, which was a denial of social assistance benefits that she needs.”

The appellant S.A. had lived in a housing complex run by the respondent, Metro Vancouver Housing Corporation, since 1992 and received rental assistance from MVHC every year until 2015. S.A. also has an interest in a trust that was set up by her family in 2012. The structure of the Henson trust means that S.A cannot compel the trustees to make any payments to her and that she cannot unilaterally collapse the trust.

In 2015, MVHC requested that S.A. disclose the balance of the trust. When S.A. refused, MVHC denied her application for rental assistance, saying her trust was an asset and its value was required to determine her eligibility.

Both S.A. and MVHC filed petitions in the Supreme Court of British Columbia. The chambers judge held that the meaning of the word “assets” as used in the tenancy agreement was broad enough to encompass S.A.’s interest in the trust and, therefore, MVHC was entitled to require S.A. disclose its value. The Court of Appeal dismissed S.A.’s appeal.

The SCC's decision in S.A. v. Metro Vancouver Housing Corp. hinged on an analysis of the nature of Henson trusts. “Because she is unable to compel the Trustees to make any distributions to her or for her benefit, and is prevented from unilaterally collapsing the Trust under the rule in Saunders v. Vautier, S.A.’s interest in the Trust is entirely contingent upon the exercise of the Trustees’ discretion,” wrote Justice Suzanne Côté, with Chief Justice Richard Wagner and justices Abella, Moldaver, Karakatsanis, Gascon and Martin concurring.

“Given that the Trust only provides her with what is essentially akin to a mere hope of receiving some or all of the property at some point in the future,” Côté wrote, “the Chambers Judge’s conclusion that S.A.’s interest in the Trust is ‘more than a mere possibility’ — such that it falls within the meaning of the word ‘assets’ as used in the Assistance Application — cannot stand.”

Feder, who is a lawyer with McCarthy Tétrault LLP in Vancouver, says the decision is noteworthy because the SCC rarely deals with trust law. It is also the court's “first time ever addressing Henson trust, which are in widespread use by families and friends of persons with disabilities. . . .  While I don't think this decision breaks any radical new ground, it is a definitive treatment of them in terms of their essential attributes and casts away any confusion that might have been created by the BC Court's decision.”

The majority agreed with the appellant that she was entitled to declaratory relief, writing that “I would declare that S.A. has a right to have her application for a rent subsidy considered by MVHC in accordance with the terms of the [rental assistance] application, and that her interest in the Trust is not an ‘asset' for the purpose of such a determination.”

In a dissenting judgment by Justice Rowe, with Justice Brown concurring, the two judges agreed that the appeal should be allowed but disagreed with the majority on the remedy of declaratory relief.

“To grant relief in such circumstances, including declaratory relief, would expand the boundaries of what is justiciable to include discretionary decisions taken by charitable and other voluntary organizations, which would be unwise. I know of no basis in law to do so,” Rowe wrote.

Ewa Krajewska, who represented the interveners — Income Security Advocacy Centre and HIV & AIDS Legal Clinic Ontario — says she and her clients were overall very pleased with the decision.

“It's a very good decision because it affirms and clarifies how Henson trusts can be used as a planning tool for persons with disabilities.”

Counsel for the respondent could not be reached by press time.

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