Case Summary and Analysis: S.A. v. Metro Vancouver Housing Corporation
Case Summary and Analysis: S.A. v. Metro Vancouver Housing Corporation, 4 SCC 2019
On January 25, 2019, the Supreme Court of Canada (SCC) released its decision in S.A v Metro Vancouver Housing Corporation (“S.A”). The decision was significant for many persons with disabilities who are beneficiaries of a Henson trust but also rely on social assistance programming.
The significance of the S.A. decision for disability communities is twofold: (a) this case is the first opportunity for the SCC to consider and provide guidance on the nature of Henson trusts; and, (b) the SCC provides clarification on the relationship between a Henson Trust and social assistance programming.
Summary of the Facts
The appellant, S.A., is a person with disabilities and resided in one of the respondent’s, Metro Vancouver Housing Corporation’s (MVHC), housing complexes. S.A. also received rental assistance from MVHC. In accordance with an agreement between S.A. and MVHC, S.A. was responsible for providing the respondent with an income verification statement on an annual basis for the purpose of ensuring that she continued to meet their financial eligibility criteria for rental assistance.
S.A. had an interest in a Henson trust, and was assigned as co-trustee with her sister of said trust in 2012. In 2015, MVHC requested that S.A. disclose the balance of the trust, but S.A. refused on the basis that the Henson Trust was not an asset for the purposes of MVHC’s financial eligibility criteria. MVHC disagreed and refused to approve S.A.’s application without being provided with the trust balance, treating S.A.’s rental assistance application as incomplete.
The question before the SCC was whether S.A.’s interest in the Henson trust formed a part of her “assets” for the purposes of determining her eligibility for rental income assistance from MVHC.
A Note on the Nature and Purpose of a Henson Trust
The Henson trust was born out of the Ontario Divisional Court decision (affirmed by the Ontario Court of Appeal), in Ontario (Director of Income Maintenance Branch of the Ministry of Community and Social Services) v. Henson (Henson). The Court had to determine whether the interest Ms. Henson, a person with a disability, had in a discretionary trust made her ineligible for assistance pursuant to the Family Benefits Act (FBA). To reach its decision, the Court looked to two inter-related factors: first, whether Ms. Henson could compel the trustees of the will to make payments to her, and second, whether there Ms. Henson could collapse the trust. In determining that Ms. Henson could not compel the trustees to make payments to her or collapse the trust, the Court found that Ms. Henson did not have a beneficial interest in the trust and as such could not be deemed ineligible for assistance on that basis.
A Henson trust is absolutely discretionary in nature and leaves the distribution of the income and capital of the trust in the absolute discretion of the trustee. This type of trust can be of benefit to persons with disabilities because a Henson trust “allows the beneficiary to retain entitlement to government benefits, while simultaneously deriving funds from the trust, at the trustee’s discretion. The trust funds do not interfere with beneficiary’s qualification for government benefits because no interest in the trust funds vests in the beneficiary” (Stoor v Stoor at para 7).
The common law approach to Henson trusts in Ontario was widely accepted and adopted by British Columbia. But the British Columbia Court of Appeal’s (BCCA) decision in S.A. threw this accepted approach into question. The BCCA found that the MVHC was entitled to request the balance of the Henson trust and take that balance into consideration when processing S.A.’s rental assistance application (para 57), and dismissed S.A.’s appeal.
In light of this decision, the question before the SCC in S.A. was of particular importance for disability communities since it would provide guidance, and ultimately set a precedent, as to how a Henson trust would be considered within MVHC’s rental assistance framework.
The SCC Provides Guidance on Henson Trusts and Social Assistance Programming
In its decision written by Cote J., the SCC provided much needed clarification and guidance on the interpretation of an “asset” in cases of discretionary (Henson) trusts. The main issue before the Court was the characterization of S.A.’s interest in the Trust and whether that interest can be characterized as an “asset” for the purposes of determining her eligibility for rental assistance (para 24).
In its analysis, the SCC first made clear the nature of the Trust and found that S.A. had “no enforceable right to receive any of the Trust’s income or capital” but rather only a “mere hope that some or all of its property will be distributed to her at some point” [emphasis in the original] (para 39). In making this finding, the SCC provided two particular terms on which this finding hinged: first, the Trust provided the trustees absolute discretion in determining what payments, if any, should be made to S.A; and, second, the structure of the Trust prevented S.A. from terminating the Trust on her own under the rule in Saunders v Vautier.
Next, the SCC took on the issue of how “assets” should be interpreted in the context of MVHC’s rental assistance application. The SCC found that the words in the rental application “must be given their ordinary and grammatical meaning in light of the specific context in which they were used” (para 46); and, the ordinary and grammatical meaning of “assets” in the rental assistance application, according to the SCC, could only be interpreted to mean that an applicant had property (or interest in property) that they can actually use to discharge their debts and liabilities, including monthly rental payments (para 48). Accordingly, Cote J. writes, S.A.’s contingent interest in the Trust could not possibly be understand within this interpretation of an “asset.”
A point of note here is S.A.’s title as a “co-trustee.” The SCC provided a very interesting discussion on how S.A can be a co-trustee but still have no beneficiary interest in the Trust. Despite bestowing a co-trustee title onto S.A., the terms of the Trust still satisfied the Henson trust test, namely, that S.A. could not compel payment from her co-trustee, and she was precluded from unilaterally terminating the Trust (paras 37 and 54).
However, as co-trustee, S.A. did have a few powers and responsibilities. First, she was required to reach decisions unanimously with her co-trustee, and was expected to exercise her discretion independently. This term of the Trust gave S.A. some independence and power over the actions over her co-trustee. Second, it was incumbent upon S.A. to name a new co-trustee in the event that her sister could no longer act as a co-trustee. The importance of this approach to a Henson trust lies in the fact that it maximizes the independence of S.A., as a person with a disability, by giving her at least some control over the trust without sacrificing the discretionary trust or protections afforded by Henson trusts. In short, S.A. had a say in how the money from the trust is being spent and her co-trustee could make unilateral decisions without S.A.’s agreement.
The SCC, however, tempered these powers granted to S.A. by the Trust by focusing on whether or not she could order payments out of the Trust to herself “as she may please.” In finding that she had no power to compel payment from the Trust, the SCC determined that the nature of the Trust was discretionary and in line with the definition of a Henson trust (para 37 and 54).
The SCC set aside the BCCA’s declaration and found that S.A.’s interest in the trust was an “asset” because she had no actual entitlement to the trust property. Accordingly, S.A.’s rental assistance application was complete, without disclosing the balance of her trust, and it was obligatory for MVHC to consider her eligibility for assistance. The SCC issued declaratory relief to S.A. and remitted the matter back to the Supreme Court of British Columbia to determine damages.
The Precedential Value of S.A.
There is no doubt that this is an important and positive decision for disability communities and persons with disabilities who have an interest in a Henson trust but also rely on social assistance. However, it must be emphasized that this decision is not one that sweeps across all social assistance programming. The SCC made sure to clarify this in stating “these reasons should not be taken to suggest that the interest of a person with disabilities in a properly constituted Hensontrust can never be treated as an “asset” for any purpose whatsoever” (emphasis in original) (para 55). The SCC went on to agree with the BCCA’s finding that whether or not interests in Henson trusts will be taken into account depends on the legislation and regulatory schemes governing various social assistance programming.
This means that legislature could take it up on itself, in drafting or amending legislation governing social assistance, to consider Henson trusts as an asset in determining eligibility for social assistance. For now, we can draw from the various legislation and association regulations that govern various schemes to anticipate what may come.
By way of example we can compare social assistance legislation in Ontario and in Alberta. Ontario’s ODSPA regulation scheme already contemplates how discretionary/Henson trusts should factor into eligibility requirements and clearly states that an absolute discretion trust is not considered an asset for ODSP eligibility purposes. On the other hand, Alberta’s regulation scheme for the Assured Income for the Severely Handicapped Actdoes not distinguish between interests in a Henson trust or other types of trusts. And, in fact, the associated policy gives the director of the program discretion to deem a trust (including a discretionary trust) an asset for the purposes of eligibility.
Conclusion
There are three primary takeaways from the SCC’s decision in S.A. First, the guidance the SCC has provided on the nature of Henson trusts is extremely helpful. First, the SCC has confirmed the decision in Henson and the necessary terms in a trust that must be present to characterize a trust as absolutely discretionary. Second, this decision, while positive, is confined to the particular circumstances and social assistance that was before the SCC in this case, namely MVHC’s rental assistance scheme and it is still up to legislature to determine whether each scheme will consider a Henson trust an “asset.” Third, and perhaps one of the more unexpected and interesting points made by the SCC, is reconciling S.A.’s role as a co-trustee with the absolute discretion nature of the Henson trust. The fact that S.A. has some power over the trust provides her with a degree of independence that other beneficiaries of Henson trusts may not have; this independence is bolstered by the SCC’s finding that the powers bestowed upon S.A. as a co-trustee did not alter the discretionary nature of the trust.
ARCH will monitor the judicial treatment of S.A. and report on any interesting and/or important developments.