ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-12-123
DATE: 20120917

BETWEEN:

JOHN HENRY SHEARD and JANE MEREDITH Applicants – and – JUDITH ANNE PEACOCK Respondent

Larry W. Douglas, Counsel for John Henry Sheard and Jane Meredith
Bonnie C. Oldham , Counsel for Judith Anne Peacock

HEARD: July 5, 2012

REASONS FOR DECISION

ellies, j.

[ 1 ] Two applications are involved in this matter. The first (the “Peacock application”) resulted in an order that was made by O’Neill, J. on July 5, 2010 (the “vesting order”), in which he ordered that the Union Trust Company Limited (“Union Trust”) and John Edward Curtis be removed from title to an island located in the Parry Sound area, known as “Round Island”, leaving title to the island in the name of Judith Anne Peacock only.

[ 2 ] The second application (the “Sheard/Meredith application”) seeks to set aside the vesting order and, instead, to substitute for Union Trust the names of John Henry Sheard and Jane Meredith as fifty percent owners of Round Island. Although not expressly, Mr. Sheard and Mrs. Meredith rely on the provisions of Rule 38.11, which provides that a person who is affected by a judgment made without notice may move to have it set aside or varied.

[ 3 ] As I will explain in these reasons, it is not possible, in my opinion, to undo what was done by the vesting order under that rule. Further, although I am prepared to treat the Sheard/Meredith application as one brought to rectify title under the Land Titles Act, the evidence falls short of establishing that title should be changed.

BACKGROUND

[ 4 ] In January of 1909, Round Island was purchased from the Crown for the sum of $22.00 by two business partners, namely Thomas Geldard Nicholson and John Edward Curtis. Title to the island was registered in their names under the Land Titles system. Ms. Peacock is Mr. Nicholson’s granddaughter. Mr. Sheard and Mrs. Meredith are Mr. Curtis’ great grandchildren.

[ 5 ] Mr. Curtis died in 1912, after making a will the year before in which he named Union Trust as executor and trustee of his estate. In the will, Mr. Curtis left his entire estate to his two daughters, Alice and Elizabeth.

[ 6 ] Nine years after Mr. Curtis’ death, in 1921, Union Trust brought an application as executor of Mr. Curtis’ estate to be registered as owner of the island under the Land Titles Act. The application was granted, although Mr. Curtis’ name was also kept on title for some reason.

[ 7 ] In 1994, Ms. Peacock obtained an order by virtue of which her name was substituted for that of her grandfather. Thus, title to Round Island was registered in the names of Ms. Peacock, Union Trust and John Edward Curtis until the Peacock application was brought in 2010.

[ 8 ] The Peacock application was dated May 18, 2010. It sought two things, namely: (1) an order that the names of Union Trust and John Edward Curtis be removed from title; and (2) that the order be made without notice to those parties. The only ground relied upon for the relief requested was Rule 14.05(3)(d) and (e), which provides that an application is the appropriate originating process for:

(a) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution; and

(b) the declaration of an interest in or charge on land, including the nature and extent of the interest or charge or the boundaries of the land, or the settling of the priority of interests or charges.

[ 9 ] No substantive, as opposed to procedural, grounds were set out on behalf of Ms. Peacock in the notice of application.

[ 10 ] Two affidavits were filed in support of the Peacock application, one sworn by Ms. Peacock and another sworn by one of her lawyers, Mr. Oldham. By virtue of these affidavits, it was established that the Canada Trust Company (“Canada Trust”) was the successor to Union Trust and that Canada Trust had no file on the matter. It was also established that efforts had been made to locate the heirs of Mr. Curtis by placing ads in the local newspaper and by having a search performed for that purpose by Northern Horizon Research Associates Inc. (“Northern Horizon”), a genealogical research service.

[ 11 ] Ms. Peacock relied upon evidence indicating that her grandfather had obtained the island as part of a division between the partners of their business assets but, for some reason, title to the island had not been changed. On the basis of these materials, the vesting order was granted. Pursuant to that order, title to the island was changed on July 12, 2010, as a result of which Ms. Peacock became the sole registered owner of Round Island.

[ 12 ] By notice of motion dated December 9, 2010, Mr. Sheard sought to have the vesting order set aside. The motion was heard on February 14, 2011 by Gauthier, R.S.J. who refused to grant the request, but ordered that there be no dealings with the island property until further order of this court.

[ 13 ] The Sheard/Meredith application was then brought, returnable for the first time on April 16, 2012. Like the Peacock application, the only grounds relied upon in support of the request that the applicants be registered on title as fifty percent owners are procedural, rather than substantive. Rule 14.05(3)(d) and, I believe, (e) (there appears to be a typographic error, by virtue of which clause (c) is mistakenly referred to) are the only grounds relied upon. The application was argued before me on July 5, 2012, exactly two years after the original vesting order was made.

ISSUES

[ 14 ] Mr. Sheard and Mrs. Meredith argue that they ought to have received notice of the Peacock application. They argue that the Statute of Frauds precluded Ms. Peacock from obtaining the vesting order. Therefore, they submit, the vesting order ought to be set aside under Rule 38.11. They also argue that they are the rightful owners of Mr. Curtis’ fifty percent share of Round Island.

[ 15 ] Both sides argue that the other ought to have served Canada Trust with their application.

ANALYSIS

Setting Aside the Vesting Order

[ 16 ] Although no substantive grounds were set out in the Peacock application, the only two upon which the vesting order could be made and to which I have been referred are found under the Courts of Justice Act and the Land Titles Act. Under section 100 of the former Act , a court may vest an interest in any real property “that the court has authority to order be disposed of, encumbered or conveyed”. The effect of an order under this section was considered by the Ontario Court of Appeal in Re. Regal Constellation Hotel Ltd. (2004), 2004 206 (ON CA) , 71 O.R. (3d) 355. In that case, Regal sought to set aside a vesting order on the basis of a failure to disclose certain information at the time that it was made. The vesting order had already been registered on title. The Court of Appeal dismissed the appeal as being moot. On behalf of the court, Blair, J.A. wrote (at paragraph 33):

A vesting order, then, has a dual character. It is on the one hand a court order (“allowing the court to effect the change of title directly”), and on the other hand a conveyance of title (vesting “an interest in real or personal property” in the party entitled thereto under the order). This duality has important ramifications for an appeal of the original court decision granting the vesting order because, in my view, once the vesting order has been registered on title its attributes as a conveyance prevail and its attributes as an order are spent; the change of title has been effected. Any appeal from it is therefore moot.

[ 17 ] Counsel in the present application argue that this court may set aside the vesting order despite the decision in Regal Constellation on the basis that Regal Constellation involved an appeal and the present case involves a motion to set the order aside as having been made without notice. I am unable to agree. In my view, once the vesting order is spent, it is spent for all purposes. It matters not whether it is attacked on appeal or under Rule 38.11. This is because its attributes as an order have ceased to exist. Title has changed. Therefore, it is not possible to set the vesting order aside under that rule.

[ 18 ] However, that does not end the matter.

Rectifying Title under the Land Titles Act

[ 19 ] As Blair, J.A. pointed out in Regal Constellation (at paragraph 43), an order that has been registered on title under the Land Titles Act is not completely immune from attack, but the attack must be made under that Act. Sections 159 and 160 of the Act provide:

159. Subject to any estates or rights acquired by registration under this Act where a court of competent jurisdiction has decided that a person is entitled to an estate, right or interest in or to registered land or a charge and as a consequence of the decision the court is of opinion ( sic ) that a rectification of the register is required, the court may make an order directing the register to be rectified in such manner as is considered just.

160. Subject to any estates or rights acquired by registration under this Act , if a person is aggrieved by an order made, or by the omission of an entry from the register, or if default is made or unnecessary delay takes place in making an entry in the register, the person aggrieved by the entry, omission, default or delay may apply to the court for an order that the register be rectified, and the court may either refuse the application with or without costs to be paid by the applicant or may, if satisfied of the justice of the case, make an order for the rectification of the register.

[ 20 ] Although neither of these sections is referred to in the Sheard/Meredith application, nor are any more general grounds set out (i.e. “such further and other grounds as counsel may advise...”), I did canvass certain sections of the Land Titles Act with counsel for Ms. Peacock during argument. Moreover, given my conclusion in this matter, it can hardly be argued that Ms. Peacock is prejudiced by my consideration of these provisions. Therefore, I will consider the Sheard/Meredith application as an application under the Land Titles Act to rectify the register.

Whether Canada Trust should have notice of the Sheard/Meredith Application

[ 21 ] In my view, while Canada Trust ought to have been served with the Peacock application, the same is not true with respect to the Sheard/Meredith application. The Peacock application sought to divest Canada Trust, the successor to Union Trust, of ownership of the island. The Sheard/Meredith application does not seek to do that.

[ 22 ] There is no limitation period applicable for rectification under the Land Titles Act . Canada Trust may bring an application at any time. Although it would have been preferable to deal once and for all with the issue of ownership as amongst these parties, there has been substantial delay in these proceedings since the vesting order was made. As well, in light of the fact that Canada Trust appears to have no information or evidence beyond that introduced by the present parties, the result of its involvement in the present proceedings would likely not change the outcome.

The Statue of Frauds

[ 23 ] The Statue of Frauds was first enacted in England in 1677: see Anne Warner La Forest, Anger & Honsberger, Law of Real Property , 3 rd ed, looseleaf, (Aurora: Canada Law Book), at paragraph 21:20.10. An Ontario version was in existence at the time that Round Island was purchased, in 1909: see, for example, Dalton v. Botts, Tay. 281; [1826] O.J. No. 7 (U.C.C.K.B.) . Section 4 of that act has remained substantially the same since then. It requires that agreements for the purchase and sale of land be in writing in order to be enforced.

[ 24 ] No evidence was adduced in support of the Peacock application of any memorandum, note or other written instrument by which Mr. Curtis purported to transfer his interest in the island to Mr. Nicholson. Therefore, argue Mr. Sheard and Mrs. Meredith, vesting order ought not to have been made and the register should be rectified to name them as part owners of the property.

[ 25 ] However, section 4 of the Statute of Frauds does not invalidate an oral agreement: Anger & Honsberger, supra. A party can obtain relief in equity from application of the section if they can establish sufficient part performance to take the case out of the statute (: ibid ). In order to exclude the operation of the statute, the acts of part performance must:

1. Be unequivocally and in their own nature referable to the contract asserted, which must be one that, if properly evidenced by a writing, would be specifically enforceable;

2. Demonstrably, unmistakenly and exclusively point to this contract as affecting the ownership or the tenure of the land in question; and

3. Be such that to deny its recognition would be to permit the statue to be made an instrument of fraud by permitting the defendant to escape from the equities with which the acts of part performance have charged him.

Victor Di Castri, The Law of Vendor and Purchaser , 3 rd . Ed (Toronto: Carswell, 1988), at paragraph 141.

[ 26 ] While adverse possession of property is not sufficient to acquire title under the Land Titles Act (see section 51), such possession, coupled with improvements and expenditures to the property, will be sufficient part performance to escape the effect of the Statute of Frauds. Thus, in Taylor v. Rawana (1990), 1990 6916 (ON SC) , 74 O.R. (2d) 357, Clarke, J. of the Ontario High Court found that the conduct of a plaintiff who had moved into a house and renovated the same was sufficient part performance of an unproduced written agreement so as to avoid the operation of the Statue of Frauds. His decision to award judgment to the plaintiff was upheld by the Court of Appeal.

[ 27 ] In Neighbours of Cornwall Inc. v. 1440106 Ontario Inc., [2003] O.J. No. 2919 , Spiegel, J. of this court pointed out (at paragraph 59) that the authorities require that a party seeking to avoid operation of the Statute of Frauds must first prove the acts of part performance relied upon to take them out of the operation of the Act before evidence can be led as to the existence of an oral agreement. There is ample evidence in this application of acts of part performance by those through whom Ms. Peacock acquired her original fifty percent interest in Round Island. Her uncle, Thomas Frederick Nicholson, the son of Thomas Geldard Nicholson, swore a statutory declaration on September 11, 1985 in which he deposed that his father built a cottage on the island in 1930, which cottage stood until 1985, when it burned. He also deposed that his family had always paid the property taxes on the island and attached copies of tax bills for the years 1956 and 1966. Although only a copy of the statutory declaration is appended as an exhibit to the first affidavit sworn by Ms. Peacock and the tax bills are not included, I am prepared to accept the statutory declaration as though it was an original and to rely upon it.

[ 28 ] In my opinion, therefore, Ms. Peacock has adduced sufficient evidence of part performance to allow her to lead evidence of an oral agreement for the transfer of Round Island to her grandfather. The evidence in that respect is also found in the statutory declaration of Mr. Nicholson, Jr., who deposed that he first began to visit the island in 1919, that possession by the Nicholson family was open, obvious and undisputed, that he never heard or saw any member of the Curtis family or anyone else claim an interest in the island, and that his father “purchased the interest of Mr. Curtis in the business and believed that the island had been acquired fully by him”.

[ 29 ] As an employee of Canada Trust pointed out in an e-mail attached as an exhibit to Mr. Oldham’s affidavit, there is an apparent conflict in the evidence as to when Mr. Nicholson, Sr. agreed to purchase the interest of Mr. Curtis in the business. Mr. Nicholson, Jr. seems to say in his declaration that the purchase took place prior to Mr. Curtis’ death. However, although no specific reference to the island is made by Mr. Curtis in his will, he does refer to his partnership interest in Nicholson and Curtis. This reference makes it unlikely that Mr. Curtis sold his interest to Mr. Nicholson prior to June 14, 1911, the date of the will.

[ 30 ] It is also unlikely that the interest of Mr. Curtis in the partnership was transferred prior to 1921. That is the year in which Union Trust sought and obtained an order registering it on title. In an affidavit filed in support of the application, Daniel Webster Lang, a trust officer with Union Trust, swore that the island formed part of the partnership business of Nicholson and Curtis. It is unlikely that Mr. Lang would have unaware of the purchase of Mr. Curtis’ interests by Mr. Nicholson prior to that date.

[ 31 ] However, I find that this evidence simply makes it more likely that Mr. Nicholson, Sr. purchased Mr. Curtis’ interest after he died, and not before. Firstly, it is quite possible that Union Trust sought the order it did in 1921 to effect a sale of that interest after that date. Although we do not know exactly when Mr. Nicholson, Sr., died, we know it was after 1930, the year in which he built the cottage referred to by Mr. Nicholson, Jr. Secondly, the fact that Mr. Nicholson, Sr. waited until after 1921 to build the cottage would be consistent with his purchase of the island only after that date. Lastly, the fact that Canada Trust has no record of the Curtis estate is more consistent with that estate having been fully administered at some point in time after 1921 and the file purged or destroyed than it is with the notion that the business or assets of Union Trust were acquired by another trust company who failed to maintain records concerning the management of an ongoing estate.

[ 32 ] Nor, does the evidence adduced by Mr. Sheard and Mrs. Meredith undermine the evidence of an agreement by Mr. Nicholson to purchase the interest of Mr. Curtis in the partnership. At its highest, the evidence in support of the Sheard/Meredith application establishes that if the island formed part of the estate of their mother, it would have devolved to them. For the reasons expressed above, I find that the island did not form part of the estate of Alice Gertrude Sheard.

CONCLUSION

[ 33 ] For the foregoing reasons, the Sheard/Meredith application is dismissed.

[ 34 ] As to the matter of costs, which were canvassed with counsel during the hearing of the application, I am persuaded that Ms. Peacock’s failure to give notice to Mr. Sheard and Mrs. Meredith of her 2010 application when Northern Horizon’s report contained their names and contact information should be taken into account. Costs were incurred by those applicants in bringing the motion to set aside the vesting order, for which no costs order was made by Gauthier, R.J.S. Costs were also incurred in dealing with the issue of failure to give notice in both the motion and the subsequent application, as opposed to simply addressing the merits of the original Peacock application.

[ 35 ] For this reason, I believe that each side should bear its own costs.

Ellies, J.

Released: 20120917

ONTARIO SUPERIOR COURT OF JUSTICE JOHN HENRY SHEARD and JANE MEREDITH – and – JUDITH ANNE PEACOCK reasons for decision Ellies, J.

Released: 20120917