ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 14764/03
DATE: 2012-04-26

B E T W E E N:

Isabel Matwijow

Angelo P. Fazari and R. Brian Miller, for the Applicant

Applicant

• and -

The Corporation of the Town of Pelham and The Regional Municipality of Niagara

Terrence H. Hill and Sarah J. Draper, for the Respondent, The Corporation of the Town of Pelham

Respondents

HEARD at Welland, Ontario: November 22, 2011 and February 29, 2012

The Honourable Justice C. A. Tucker

DECISION

Issues

[ 1 ] Is the applicant entitled to be granted a building permit from the Town of Pelham?

Background and Overview

[ 2 ] Dmytro and Annie Matwijow purchased their farm, being a 50 acre parcel, in 1945. The lands (“the Lands”) were the south half of Lot No. 9 in the 11 th Concession of the Township of Pelham more particularly described in their deed registered as Instrument #15190 in the Land Registry Office for the Land Registry Division of Niagara South.

[ 3 ] Dmytro Matwijow died in 1984, leaving Annie Matwijow (“Annie”) as the sole surviving owner. They had four children, three who survive today, and one being Mike Matwijow (“Mike”), the spouse of the applicant Isabel Matwijow (“Isabel”). Isabel is the owner of Part 1 on Reference Plan 59R-4854 which is the subject matter of the application.

[ 4 ] The children of Annie, with her consent, planned to do a “testamentary devise” to avoid the provisions of the Planning Act . A reference plan was registered on the Lands on April 23, 1986, being Reference Plan 59R-4854, creating eight parts. The plan was to have Annie by her will grant ownership of these lots to her children. The legislation was changed prior to Annie’s death so that plan failed. A new plan or scheme evolved whereby deeds were registered on the parts involving various members of the family. There was no conveyance from Annie on any of these deeds to the “purchasers”. The vendors on the deeds were never registered owners of the Lands and they knew they were not owners at the time of their conveyances. The plan was to create the first good deed and root of title in a 40-year search period.

[ 5 ] A second step in the plan was to do further deeds to family members and to have the solicitors involved execute the Planning Act statements on those deeds which were correct as the “vendors” owned no adjoining land at the time of the transfer. The “deeds” had been arranged so that no adjoining lands were owned by the same person or conveyed to a person who owned an adjoining lot. By law the statements resulted in no contravention of the Planning Act for the parts so created and conveyed.

[ 6 ] Annie acquiesced in the scheme taking no action when she was informed by the Town of Pelham (“the Town”) in writing in 1998 of the transfers and informing the Town she had no “interest or quarrel with the ownership”.

[ 7 ] Isabel acquired the part that is the subject matter of this application by a deed on February 11, 2003 from her husband Mike who had acquired the part from a deed in 1998 from Emily Winnicki, his sister. In 2002 Mike had applied for a building permit for his part which the Town refused on the basis that such would be “contrary to any other applicable law” and also that there was a question as to the legality of his deed.

[ 8 ] The parts on the Reference Plan were converted to Land Titles Converted on March 29, 2004 effectively eliminating any Planning Act issues with respect to the parts, according to the applicant. The Town allowed the application to be continued in Isabel’s name once the lands were conveyed to her by Mike.

[ 9 ] The Town of Pelham cited no failure on the part of the applicant to comply with the Ontario Building Code , its zoning by-law or its building code in its refusal to grant a building permit other than as set out in its letter noted below. This letter was sent by the Director of Building Enforcement Services for the Town of Pelham on December 18, 2002 to Mike denying his building permit for the reasons set out above.

[ 10 ] In 2006 family members began to get individual tax bills from the Town for their respective lots on the Reference Plan. The Matwijow family members successfully appealed the assessments of the lots and reduced their use to agricultural.

[ 11 ] After the matter was argued before me on November 22, 2011, I raised the issue of the initial “fraudulent” act, not just fraud upon the Planning Act , but that the lots arose as a result of criminal conversion of a third party’s lands to the defrauding person’s own use. Further argument was heard on that point on February 29, 2012. Based on that argument, I find that, as a result of the execution of the deeds, there may be a legal reason to conclude that a Criminal Code offence may have occurred, but I need not consider it given my conclusions below.

[ 12 ] It is the applicant’s position that her application for a building permit is in compliance with the Building Code and the Planning Act and, as such, the building permit must be issued. She argues that the first deed in this chain was the first deed within the 40-year period, thus creating a good root of title for each of the parts on the Reference Plan. She submits that my decision will not “open the floodgates” because most of the land in Ontario has now been converted to Land Titles which would prevent a similar “scheme” being employed for most Ontario lands. She did not provide me with any evidence to that effect, nor do I have any idea how many similar schemes may have been hatched prior to conversion and are simply waiting an opportunity to obtain after the fact validation of their acts. All other members of the Matwijow family who have also received lots will no doubt also seek building permits if I grant the application.

[ 13 ] The argument is that Annie’s children were acting as “powers of attorney” for their mother in creating the “deeds”. I find, however, they were doing an act she was not legally entitled to do without Planning Act compliance nor did the children have any ownership of the lands they purported to convey. The applicant also argues that there is no “fraud” upon the Planning Act and that even if there was, it is not a reason to refuse a building permit which otherwise complies with the legislation. It is her position that the Town could have taken other remedies when it first discovered the “fraud” and instead chose to refuse the permit on what she alleges are invalid grounds. She also points out that any breach of the Planning Act has been cured by the Planning Act statements completed by the solicitors and the conversion of the property into Land Titles so that the lots should be considered now as valid parts complying with all applicable legislation.

[ 14 ] The Regional Municipality of Niagara is no longer a party to this action. It is the position of the Town that the permit could and should be denied at the time the permit was refused for failing to comply with other “applicable law” as defined under the Building Code Act (“BCA”) at the time in question in 2002. Pursuant to the relevant sections of the BCA, the chief building official must issue a permit unless the proposed building, construction or demolition will contravene the BCA, the building code, or any other applicable law. “Applicable law” was then defined as any general or special Act, and all regulations and by-laws enacted there under, “which prohibit the proposed construction or demolition of the building unless the Act, regulation or by-law is complied with”.

[ 15 ] It is further the Town’s position that both the Planning Act and the Official Plan are “other applicable law”, albeit while recognizing that there is conflicting case law as to an Official Plan being other applicable law. The Official Plan designates the lands in question to be “good general agricultural areas” and the Policy 6.A.8 advises that “non-agricultural” uses should not be located in agricultural areas, although it goes on to state such applications may be received and considered using a site review criteria as set out in Policy 6.A.8, page 42. Finally, the respondent argues that the purported transferees had knowledge that they had no legal claim to the property owned by Annie. Accordingly, it is its position that the deeds were in contravention of the Registry Act and therefore invalid. As such, the subsequent transfers of the property are also invalid. In addition, the transfers are also invalid, the Town argues, because the deeds were dated and signed prior to the party making the subsequent conveyance having any interest in the land. The subject properties were not within a registered plan of subdivision and there was no consent to convey. Accordingly, the deeds are contrary to the Planning Act , and in a dispute between the Planning Act and the Registry Act (or any other Act), the Planning Act prevails.

[ 16 ] The Town also argued that the subsequent transfers, which were allegedly done according to the applicant as a result of family members changing their minds as to which lots they wanted, were in fact done in a “conspiratorial attempt to deceive the public administration or the court by concocting transactions which were not in truth and substance what they purported to be”. Accordingly, pursuant to the re Certain Titles to Land in Ontario Court of Appeal decision, the scheme is invalid and contrary to the Planning Act . Therefore, the Town argues the deeds were invalid and for all these reasons the application should be dismissed.

[ 17 ] Further, the Town questions the validity of the power of sale of one of the lots and the fact that the applicant was not a purchaser for value without notice and, as such, cannot rely on s.112(1). This lot is not the subject matter of this application and I make no comment upon it.

[ 18 ] On consent, counsel have agreed that if I grant the application the order shall read as follows: “Insofar as this objection is concerned the building permit may issue. Any other requirements of the Town of Pelham or other authority having jurisdiction over the granting of such permits must be complied with prior to the granting of the permit.”

The Law

[ 19 ] The BCA subsection 8(2)(a) requires the chief building official to issue a permit unless the proposed building construction or demolition will contravene the BCA; the building code or any other applicable law. As noted above, “applicable law” in 2002 was defined as “any general or special Act, and all regulations and by-laws enacted thereunder which prohibit the proposed construction or demolition of the building unless the Act, regulation or by-law is complied with.”

[ 20 ] I find that the Planning Act is other applicable law. The law is in conflict as to whether the “Official Plan” is applicable law, but for the reasons I note below I do not have to decide that issue. The original deeds to the parts on the Reference Plan in issue here did not contravene s.50(3) of the Planning Act because the grantor did not retain the fee in adjoining land. This was however because the “grantor” was never the owner and the true owner Annie did retain the fee in abutting lands. In re Certain Titles to Land in Ontario, 1973 609 (ON CA) , [1973] 2 O.R. 613 (C.A.) , the Court discussed what would be considered a fraud upon the Planning Act as compared to a plan to utilize a legal device to circumvent the Planning Act . The Court concluded that if a transaction would be a fraud upon the Planning Act the transaction would be invalid and provided certain examples of situations which it found to be such fraud. At pages 18 and 19, the Court held:

It is difficult to draw the line between a non-censurable evasion of a statute and an avoidance of a statute which will not be countenanced by the Courts. Such an evasion of a statute as amounts to what Lord Eldon described in Fox v. Bishop of Chester (1829), 1 Dow. & Cl. 416 at p.429, 6 E.R. 581 (H.L.) , “as a ‘fraud on the law’ or an insult to an Act of Parliament” will not be tolerated. In Ramsden v. Lupton, supra, Lord Coleridge, C.J., stated at p.24 “the expression ‘a fraud upon an act’ is used with reference to a transaction which no court would give effect to, because it had no legal foundation from the beginning ”. [Emphasis added.]

[ 21 ] In describing another type of plan used to avoid the Planning Act the Court in the same case at pp. 19 and 20 commented, “This is the type of transaction which constitutes a deceit upon the public administration, a fraud upon the Planning Act, and the transaction would be held invalid.” [Emphasis added.]

Analysis and Decision

[ 22 ] I find the central difference in this scheme to avoid the Planning Act is that it required an act of civil fraud to begin the process. Although Annie acquiesced in the transaction, it could also be carried out against the owner without his knowledge or consent by persons acting fraudulently against the owner. The same plan could be used by the owner paying parties to take title to parts of land he owns to carry out the same scheme. Checkerboarding and inheritance plans were clever inventions which avoided the provisions of the Planning Act by using legal loopholes which allowed the transfers to occur. I find the actions taken by the parties involved here were not clever. They were deceitful and fraudulent to the knowledge of the applicant. The “deeds” here were not “in truth and substance” what they were purported to be, a transfer of title from a registered owner to a bona fide purchaser.

[ 23 ] Accordingly, I find the deeds did not convey title because the vendors were not owners of the land. The first deeds registered on the land were not in compliance with the Registry Act which would require the most recently registered conveyance to be searched before the conveyance in the deed to establish a good and sufficient chain of title. The subsequent deeds, I find, cannot validate deeds in which both the transferor and transferee had actual knowledge that its vendor of the lands or its immediate predecessor in title had no title to the land.

[ 24 ] The applicant urges me to deal only with the application of the building permit submitting that notwithstanding the original “deceit” done, the provisions of the “40-year” rule, the Planning Act statements and subsequent conversion to Land Title have cured all of that and, as such, the permit should issue. I find to the contrary. This application for a building permit is “fruit from the poisoned tree”. I find that a court should not condone such acts by granting the building permit. Although the respondent further argues that the actions taken are in contravention of the Official Plan and other legislation, given my finding on the Planning Act I will not make any decision on those issues.

[ 25 ] Accordingly, the application is dismissed. If the parties are unable to agree upon costs, I may be spoken to.

Tucker, J.

Released: April 26, 2012

COURT FILE NO.: 14764/03
DATE: 2012-04-26

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Isabel Matwijow Applicant - and – The Corporation of the Town of Pelham and The Regional Municipality of Niagara Respondents DECISION Tucker, J.

Released: April 26, 2012