2123201 Ontario Inc. v. The Estate of Harold Israel, 2015 ONSC 538
COURT FILE NO.: C-840-13
DATE: 2015-01-23
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2123201 Ontario Inc.
Randell K. Thomson, Counsel for the
Applicant
Applicant
- and -
The Estate of Harold Israel,
by his Estate Trustee, Ken Israel
Respondent
Steven W. Pettipiere, Counsel for the
Respondent
HEARD:
THE HONOURABLE MR. JUSTICE P.J. FLYNN
REASONS FOR JUDGMENT
[1] This application concerns land in Woolwich Township which was transferred by Harold Israel to Messrs. Bowman and Martin in February 1931, solely “to acquire the gravel, sand and stone, etc.”.
[2] The original parties had entered into an Agreement in January 1931 reflecting their mutual intent.
[3] Since June 11, 2009, the Applicant has been the registered owner of the lands and operates a licensed gravel pit there.
[4] The Agreement, which the Applicant calls “The Option Agreement”, was registered on February 20, 1931 as Instrument No. 15979, on the same day that the Deed between the original parties was registered.
[5] The Applicant seeks an order:
(i) declaring the Option Agreement void and unenforceable;
(ii) directing the Director of Land Titles to delete and remove the Instrument containing the Agreement (15979) from the parcel register; and
(iii) declaring the Applicant to be the sole legal and beneficial owner of the property.
[6] The Respondent is the estate of the original vendor of the land, Harold Israel.
[7] The Agreement provided that Messrs. Bowman and Martin (Parties of the First Part) gave to Harold Israel, “the first option to purchase the lands at the sum of One Dollar which option is exercisable when the gravel, sand and stone, etc., are removed from the said lands. It is at the discretion and within the authority of the Parties of the First Part to state the time that the gravel, sand, and stone, etc., are removed and the said option exercisable.”.
[8] The Agreement also, interestingly, provides that “all trees, timber, wood and fence on the said land are the property of the party of the Second Part (Israel) … but … if they or any of them obstruct the Parties of the First Part in removing gravel, sand and stone, etc., the said Parties of the First Part may dispose of them and remove them … as the said Parties see fit without consulting the Party of the Second Part.”
[9] Moreover, “the Party of the Second Part (Israel) is to have all the gravel in its natural state in the pit, which he requires from time to time for his own farm … free of cost.”
[10] The Agreement makes clear that the then purchasers (Bowman and Martin) “… may remove the gravel, sand and stone, etc., at their own pleasure and there is no stated or agreed time within which the said gravel, sand and stone, etc., must be removed.” But Messrs. Bowman and Martin also agreed to leave the surface of the property reasonably level when the gravel, sand and stone, etc. have been removed and “that no excavation … of the said lands will be at a lower level than the travelled surface of the roadway of highway at its lowest point adjoining the property.”
[11] I did not have the benefit of seeing a copy of the original Deed of Transfer between the parties and so have assumed that that Instrument manifested an unadorned and unqualified Transfer in fee simple of the lands.
[12] In June 1950, part of the land was transferred by Deed to the County of Waterloo Public School Board. That Deed acknowledged that Harold Israel “has certain rights in the lands … under an option registered … as Instrument Number 15979”.
[13] When the property was next transferred in 1965, the Deed(s) made no reference to Mr. Israel’s rights.
[14] Harold Israel died in March 1987.
[15] His estate registered a Notice of Claim under s.106(2) of the Registry Act on March 11, 1987, with specific reference to its rights under Instrument 15979 (the Agreement).
[16] Then, in March 1997 a further Notice of Claim was registered by the Estate of Harold Israel.
[17] In September 2002 the title to the property was moved into the Land Titles system.
[18] All the gravel, sand and stone has not been excavated from the property nor has the Respondent stated that it has been.
[19] No doubt the parties to this application come to court on the basis that the Applicant is the successor on title to the 1931 Grantees, Bowman and Martin, and that the parties herein are both successors to any rights remaining on account of the Agreement.
[20] However, by Deed dated May 31, 1965, registered as Instrument No. 302173, William Sittler transferred the property to Robert Alexander Sutherland as trustee. Mr. Sutherland, in turn, on February 4, 2004, by Transfer No. WR18016 transferred the land to 3239501 Canada (mine) Limited as “Bare Trustee to Beneficial Owner”.
[21] But by Instrument No. WR466925, on June 11, 2009, 3239501 Ontario (mine) Limited purported to transfer the land to Sittler Excavating Limited, which on the same day then transferred it to the Applicant.
[22] So, while this may have been some sort of clerical error on the part of solicitors, a fact which is not before me, it is not certain to me that the Applicant is the legal owner of the land.
[23] Indeed, title may still rest with 3239501 Canada Limited, if there be such an entity.
[24] That may be reason enough to dismiss the application.
[25] In any event, it also seems to me that such an application must be said to be premature, as the successors Bowman and Martin have not exercised their discretion and authority “to state the time that the gravel, sand and stone, etc., are removed and the said option exercisable”.
[26] Finally, let me deal with the real issue in this case.
[27] Is the Agreement an option to purchase, unenforceable because of the operation of the Rule against Perpetuities, or a contractual right of first refusal upon which the Rule against Perpetuities has no operative effect?
[28] A rose is a rose is a rose.
[29] It is evident on the face of the Agreement that the parties understood Harold Israel to have some “rights”. For example, the Agreement says that the trees on the land “are the property of the Party of the Second Part” and “the pasturage, if any, on the said lands belongs to the Party of the Second Part.
[30] But as I earlier wrote, it seems that his Deed to Bowman and Martin did not reserve any of those rights.
[31] While the Agreement clearly sets out that Harold Israel is being given “the first option to purchase the said lands …”, for One Dollar, after the gravel, etc. has been removed and the surface of the property has been made reasonably level, is this Agreement really an option to purchase which creates an interest in the property?
[32] In my view, it is not.
[33] An option to purchase land is specifically enforceable and gives the option holder an equitable interest in the land, contingent upon his election to exercise the option: Metropolitan Homes Ltd. v. Politzer, 1975 CanLII 208 (SCC), [1976] 1 S.C.R. 363.
[34] The essence of the option to purchase is that, forthwith upon the granting of the option, the option holder, upon the occurrence of certain events solely within his control can compel a conveyance of the property to him: Irving Industries (Irving Wire Products Division) v. Canadian Long Island Petroleums Ltd., [1974] S.C.R. 122.
[35] Here there is no specifically enforceable right at the time the Agreement was executed. The exercise of the so-called option is totally dependent upon “the discretion and within the authority of the Parties of the First Part”.
[36] The Agreement did not provide Harold Israel any mechanism to enforce the Transfer until the Parties of the First Part stated that the gravel, etc., had been removed. Or when the excavation reached a certain depth. The Parties of the First Part have never stated this and nor has the depth set out been reached.
[37] I must therefore conclude, as argued by the Respondent, that this “rose” is not really an option agreement.
[38] It must therefore be something akin to a right of first refusal – which does not create any interest in land. The right here can only be a personal right.
[39] Accordingly, the Rule against Perpetuities has no application.
[40] The Applicant was fully aware of the Agreement when (if) it took ownership of the land.
[41] If and when the successors on title to Messrs. Bowman and Martin state the time that the gravel, etc. has been removed, the contract should be enforceable against the Applicant (or the proper owner of the lands).
[42] Accordingly, the application must be dismissed.
Costs
[43] I will fix costs after receiving and reviewing the parties’ costs submissions in accordance with the following directions:
(i) on or before February 20, 2015 the Respondent shall serve and deliver to me at my Kitchener chambers its costs submissions consisting of
(a) its Costs Outline augmented by no more than two double-spaced pages;
(b) its Bill of Costs; and
(c) any relevant Offer(s) to Settle.
(ii) on or before March 13, 2015 the Applicant shall do the same, with the same limitations.
P.J. Flynn J.
Released: January 23, 2015
CITATION: 2123201 Ontario Inc. v. The Estate of Harold Israel, 2015 ONSC 538
COURT FILE NO.: C-840-13
DATE: 2015-01-23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2123201 Ontario Inc.
Applicants
– and –
The Estate of Harold Israel,
by his Estate Trustee, Ken Israel
Respondent
REASONS FOR judgment
P.J. Flynn J.
Released: January 23, 2015
/lr