By Nancy E. Claridge

In a decision dated February 25, 2025, involving the Estate of Qasem Hasan Mahmud, the Superior Court of Justice in Ontario addressed the complexities of charitable trust creation, focusing on a condominium once owned by Mr. Mahmud. The core issue was whether Mr. Mahmud had held the property in trust for the Arabic and Islamic Education Foundation of Ottawa (the “Foundation”).

The Foundation argued that Mr. Mahmud had declared the property to be held "in trust" for the Islamic School of Ottawa (later renamed the Foundation). However, there was no formal declaration of trust regarding the Foundation, and the legal documents surrounding the property were insufficiently clear. A declaration made by Mr. Mahmud in 1988 stated he would hold the property for the School, but the trust failed to meet the necessary legal requirements. Specifically, Mr. Mahmud had not owned the property at the time of the declaration, and the beneficiary (the Foundation or its predecessor) was not adequately identified in the documents.

The case highlights a crucial point for charities: the importance of formal, well-documented agreements when creating trusts. A casual reference to "trust" in documents, such as tax notices or mortgage agreements, does not establish a valid legal trust without the proper formalities. The court found that while Mr. Mahmud may have intended to hold the property in trust, the lack of clarity and formal documentation meant that the Foundation had no legal claim to the property.

Furthermore, the case delves into the concept of a purchase money resulting trust, which can arise when someone contributes to the purchase price of a property but does not hold legal title. The court determined that the Foundation’s sporadic mortgage payments over the years did not constitute a valid resulting trust because these payments occurred after the property was purchased and did not directly contribute to the property's initial acquisition.

The ruling underscores a fundamental lesson for charities involved in property or trust matters: clear, formal documentation is essential. Without a properly executed declaration of trust, and with unclear evidence of financial contributions, even well-intentioned trust arrangements can fall short in court. This case serves as a warning to charities to ensure all trusts are fully documented to avoid legal uncertainties and potential disputes in the future.

​Read the March 2025 Charity & NFP Law Update