Anspor Construction Limited et al. v. E. Neuberger, in her Capacity as the Named Estate Trustee of the Primary Will of C. Neuberger and in her Capacity as the Named EstateTrustee of the Secondary Will of C. Neuberger et al.

[Indexed as: Anspor Construction Ltd. v. Neuberger Estate]

Ontario Reports

Ontario Superior Court of Justice,

Pattillo J.

June 1, 2016

131 O.R. (3d) 464 | 2016 ONSC 75

Case Summary

Trusts and trustees — Creation of trust — Toronto Maple Leafs season tickets being in name of deceased partner — Surviving partner credibly [page465] testifying that tickets were offered to both partners by business contact in late 1960s or early 1970s and were put in deceased's name because contact told them that tickets could not be registered in partnership's name — Partnership at all times paying for tickets and writing off expense as business expense — Evidence establishing essential elements for both bare trust and purchase money resulting trust — Deceased's estate holding tickets in trust for partnership.

The deceased and S were business partners for decades. The applicants applied for a declaration that two Toronto Maple Leafs season tickets which were in the name of the deceased were held in trust by the deceased's estate for the partnership. S testified that the tickets were offered to both partners by a business contact in the late 1960s or early 1970s and were put in the deceased's name because the contact told them that the tickets could not be registered in the partnership's name.

Held, the application should be allowed.

S's evidence was credible. The partnership at all times paid for the tickets and wrote off the expense as a business expense. The evidence established the essential elements of both a bare trust and a purchase money resulting trust.

Cases referred to

A.M.K. Investments Ltd. (Trustee of) v. Kraus, 1996 8268 (ON SC), [1996] O.J. No. 3215, 13 O.T.C. 254, 42 C.B.R. (3d) 227, 14 E.T.R. (2d) 218, 65 A.C.W.S. (3d) 696 (Gen. Div.); Byers v. Foley (1993), 1993 5506 (ON SC), 16 O.R. (3d) 641, [1993] O.J. No. 3140, 109 D.L.R. (4th) 761, 2 E.T.R. (2d) 55, 44 A.C.W.S. (3d) 1013 (Gen. Div.)

APPLICATION for a declaration that the estate held property in trust for the partnership.

John J. Adair, for applicant Nuspor Investments Partnership.

Kris Borg-Olivier, for respondent Edie Neuberger in her capacity as estate trustee.

PATTILLO J.: —

Introduction

[1] This application involves a dispute over who owns two Toronto Maple Leafs (the "Leafs") season tickets (the "tickets").

[2] The tickets were at all material times in the name of Chaim Neuberger. Mr. Neuberger died on September 25, 2012. The tickets are now in the name of his estate. The applicant Nuspor Investments Partnership ("Nuspor") seeks a declaration that it is the beneficial owner of the tickets. Nuspor submits that although the tickets were in Mr. Neuberger's name, from the time they were first acquired, the tickets belonged to Nuspor and were paid for and controlled by it.

[3] The respondents Edie Neuberger and Myra York are the estate trustees of Mr. Neuberger's estate for both his primary and secondary wills (the "estate"). Ms. Neuberger and Mrs. York [page466] are Mr. Neuberger's daughters. They do not get along. Ms. Neuberger, on behalf of the estate, submits that the tickets, which were in Mr. Neuberger's name, belonged to him and were at all times controlled by him. As a result, they form part of the estate and should be dealt with in accordance with the terms of the wills. Mrs. York took no part in the application.

[4] For the reasons that follow, I have concluded based on the evidence which I accept that Mr. Neuberger held the tickets in trust for Nuspor. Accordingly, Nuspor is the beneficial owner of the tickets.

Background

[5] Nuspor is a partnership comprised of Anspor Construction Limited ("Anspor"), which is controlled by Harry Sporer, and Nuberg and Dale Construction Limited ("Nuberg and Dale"), which, up until his death, was controlled by Mr. Neuberger.

[6] Mr. Neuberger and Mr. Sporer both immigrated to Canada from Poland. They went into business together, first as builders and then as property managers. They operated their business interests together for decades on the basis of mutual trust and confidence. Together they were tremendously successful in the construction/real estate business, each amassing assets in the hundreds of millions of dollars.

[7] In addition to being business partners, Mr. Neuberger and Mr. Sporer were friends and their wives were sisters.

[8] In 1989, Mr. Sporer brought his son-in-law, Michael Lax, into the business. At some point, Mr. Neuberger brought his son-in-law Joel York into the business too. Mr. York is married to Myra York. Over time, both Mr. Lax and Mr. York took over more and more responsibility for running Nuspor's business. At the time of the application, Nuspor was run by Mr. Sporer, who is 90 years of age, Mr. Lax and Mr. York.

[9] In 2004, Mr. Neuberger effected a butterfly transaction which effectively split the assets of Nuberg and Dale between it and 159179 Ontario Inc. ("159"). The butterfly transaction was structured such that on Mr. Neuberger's death, Nuberg and Dale would pass to Mrs. York and 159 would pass to Ms. Neuberger. In 2010, Mr. Neuberger transferred ownership of the common shares in Nuberg and Dale and 159 to trusts for the benefit of his grandchildren but maintained controlling preferred shares in his own name.

The Evidence

[10] The evidence on the application consists of affidavits from Mr. Sporer, Michael Lax and Norm Jesin, who is Ms. Neuberger's [page467] husband and Mr. Neuberger's son-in-law. Both Mr. Lax and Mr. Jesin were cross-examined. Mr. Sporer was not cross-examined due to his medical condition upon which I will have more to say shortly.

a) Mr. Sporer

[11] Mr. Sporer's evidence speaks to the close personal and business relationship that he and Mr. Neuberger had from approximately 1960, shortly after he arrived in Canada, to Mr. Neuberger's death in 2012. He stated that in the late 1960s or early 1970s, he and Mr. Neuberger were offered a pair of tickets through a business contact who in turn dealt with Harold Ballard. Because they were told by the business contact from whom they got the tickets that they could not be registered in Nuspor's name, he and Mr. Neuberger agreed that the tickets should be put in Mr. Neuberger's name. Mr. Sporer said that they considered the tickets to be Nuspor's and Nuspor paid for them every year.

[12] Mr. Sporer further deposed that the tickets were used by both he and Mr. Neuberger and were also used for business purposes.

b) Mr. Lax

[13] Mr. Lax began working for Nuspor in 1989. He shared an office with Mr. Neuberger for 20 years. Mr. Lax deposed that since his involvement in Nuspor, it paid for the tickets every year and exercised complete control over them. In 1999, he and Mr. York attended at the Air Canada Centre to select the seat location for the tickets as part of the Leafs move from Maple Leaf Gardens.

[14] In 2004, Mr. Neuberger signed an account information update form from Maple Leaf Sports and Entertainment ("MLSE") updating the contact information for the tickets from him personally at his home address to Mr. Lax and Mr. York c/o Nuspor at its office address. Mr. Lax's evidence is that the tickets were used by both Anspor and Nuberg and Dale for business along with some personal use by both himself and Mr. York. Further, in each year, Nuspor claimed the cost of the tickets as a business expense.

[15] Mr. Lax produced copies of cheques from Nuspor to Maple Leaf Gardens Limited in 1994, 1995 and 1998 (signed by Mr. Neuberger) and to MLSE in 1999, 2000, 2001 and 2002 for the tickets for both the regular season and playoffs. [page468]

c) Mr. Jesin

[16] Mr. Jesin, who is a lawyer, married Ms. Neuberger in 1978. From his early days in the family, he was aware that Mr. Neuberger had the tickets which he regularly let Mr. Jesin use. He let Mr. Jesin chose ten games each season and he understood that Mr. Neuberger sold the rest of the years' games to a scalper.

[17] In around 1989-1990, Mr. Neuberger told him that the scalper was upset that he never received any of the marque games because Mr. Jesin took them. At Mr. Neuberger's request, he agreed to restrict his game selection to less popular teams. In around 1990-1991 season, Mr. Jesin obtained his own pair of Leaf season tickets and he told Mr. Neuberger that he no longer needed to use any of his tickets. Mr. Jesin has never used any of the tickets since.

[18] Mr. Jesin said that sometime in the mid-1990s, Mr. Neuberger told him he was planning to offer the tickets to Mr. York and Mr. Lax and asked if he wanted to buy any. As he had his own tickets, Mr. Jesin declined.

[19] Mr. Jesin stated that it was his understanding from the conversations he had with Mr. Neuberger about the tickets that they were his tickets and he had complete control over their use and distribution. He has no information as to how the tickets were acquired. He has no knowledge concerning who paid for the tickets and does not dispute the Nuspor cheques paying for the tickets which were produced by Mr. Lax.

[20] On the return of the application, counsel agreed on an additional piece of evidence: in the 1960s, the Toronto Maple Leafs accepted corporate season ticket holders.

Mr. Sporer's Evidence

[21] The estate submits that Mr. Sporer's evidence should be dismissed in its entirety because it is unsupported by any documents or third party evidence and he was not presented for cross-examination.

[22] Following service of the motion record containing Mr. Sporer's affidavit, Nuspor's counsel sent Ms. Neuberger's counsel a letter from Mr. Sporer's cardiologist stating that he advised Mr. Sporer against "direct participation in a Discovery" which, in his opinion, was a risk to Mr. Sporer's cardiac condition.

[23] Ms. Neuberger's counsel proposed working with Mr. Sporer and his medical team to create an environment where he could be cross-examined with minimal stress. That suggestion was [page469] turned down by Nuspor's counsel based on the condition of Mr. Sporer's health but an offer was made to take questions in writing which would be put to Mr. Sporer directly by counsel. That offer was not accepted.

[24] I am not prepared to dismiss or disregard Mr. Sporer's evidence. I do not consider that it is somehow tainted because it is not supported by other documents or third parties. There is no indication he is not capable of giving evidence. The evidence is to the contrary.

[25] With regard to the refusal to be cross-examined, Mr. Sporer's doctor's letter confirmed his medical condition would not allow the stress of cross-examination. An accommodation was offered and not accepted. While not a substitute for face-to-face cross-examination, it was a reasonable accommodation in the circumstances and would enable further information to be obtained. Accordingly, I don't consider Mr. Sporer's evidence should be disregarded or excluded. However, where it directly conflicts with other evidence I accept, I will discount it.

The Positions of the Parties

[26] Nuspor submits that Mr. Neuberger held the tickets in trust for Nuspor either by operation of a bare trust or by a purchase money resulting trust. Further, it submits that given the facts before the court, the indicia of beneficial ownership clearly favours Nuspor: Nuspor was involved in the initial decision to purchase the tickets; Nuspor paid for the tickets in every year since they were acquired; and Nuspor had the decision making authority regarding the use and distribution of the tickets.

[27] Ms. Neuberger, on behalf of the estate, submits that no trust was ever formed. The tickets belonged to Mr. Neuberger and he controlled them throughout his life and dealt with them as he saw fit. Although he rarely used the tickets himself, Mr. Neuberger never relinquished control over them. Accordingly, they belong to the estate.

[28] In the alternative, Ms. Neuberger submits that if the court is prepared to issue a declaration that the estate holds the tickets in trust for Nuspor, it should provide for 159 to receive (and pay for) 25 per cent of the tickets each year having regard to the butterfly transaction Mr. Neuberger carried out in 2004.

The Law

[29] The parties agree on the essential elements necessary to establish both a bare trust and a purchase money resulting trust.

[30] There are three requirements to establish a bare trust: certainty of intention; certainty of subject matter; and certainty [page470] of object: Byers v. Foley (1993), 1993 5506 (ON SC), 16 O.R. (3d) 641, [1993] O.J. No. 3140 (Gen. Div.), at para. 13.

[31] Byers concerned the ownership on two field-level seats in Skydome for the Blue Jays. In addressing the determination of certainty of intention, Beaulieu J. stated, in part, at para. 15:

In the absence of formal trust documentation, the court must look at the surrounding circumstances and the evidence as to what the parties intended, as to what was actually agreed and as to how the parties conducted themselves to determine whether there was "certainty of intention".

[32] A purchase money resulting trust can potentially arise when one person pays for something but title is recorded in the name of a different person. There are three requirements to establish such a trust: first, the trustee must have title to the property; second, the claimant must have supplied the whole or a part of the purchase price at the time the property was being bought; and third, the claimant must prove throughout he acted as purchaser: A.M.K. Investments Ltd. (Trustee of) v. Kraus, 1996 8268 (ON SC), [1996] O.J. No. 3215, 13 O.T.C. 254 (Gen. Div.), at para. 12.

[33] Kraus concerned the ownership of a Toronto Raptors footprint licence. In addressing the third requirement, acting throughout as a purchaser, MacPherson J. (as he then was) stated, at para. 14:

The third factor requires a somewhat more detailed analysis. What does "acted throughout as a purchaser" mean? In my view, in the context of the licence which serves as the basis for obtaining season tickets for the games of a professional sports franchise, the answer to this question depends on an analysis not only of the purchase of the licence but also the use that is made of the tickets obtained pursuant to the licence.

[34] The issues of concern on this application are certainty of intention and whether Nuspor "acted throughout as a purchaser".

Analysis

[35] I accept Mr. Sporer's evidence of how the tickets came to be acquired and how they came to be registered in Mr. Neuberger's name. There is no evidence which conflicts with that evidence. It also contains sufficient detail to support its credibility. The fact that the Leafs permitted tickets to be placed in corporate names at the time does not contradict what Mr. Sporer says he and Mr. Neuberger were told at the time by the person from whom they received the tickets about whose name the tickets could be in. That person was a business contact and not associated with the Leafs.

[36] As noted, the tickets were offered to both Mr. Neuberger and Mr. Sporer through a Nuspor business contact. Given the evidence of how the partnership between Mr. Sporer and [page471] Mr. Neuberger operated, it makes sense that the tickets would belong to Nuspor as opposed to Mr. Neuberger personally. Joint opportunities were placed in Nuspor and only became the property of one, if the other declined to participate. The offer of the tickets was to both and Mr. Sporer did not decline to participate. As a result, I find that the tickets were acquired by Nuspor and put in Mr. Neuberger's name on Nuspor's behalf.

[37] Further, I accept Mr. Sporer's evidence as confirmed by Mr. Lax from 1989 when he joined Nuspor that at all times Nuspor paid for the tickets. Mr. Sporer's evidence is consistent with Mr. Lax's that Nuspor paid for the tickets each year and wrote the expense off as a business expense. Given the length of time involved, I do not fault Nuspor for not being able to produce proof of payment in the early years. It has, however, produced proof of payment from 1994 and the early Nuspor cheques are signed by Mr. Neuberger. By contrast, there is no evidence that Mr. Neuberger paid for the tickets personally. Mr. Jesin had no information in that regard.

[38] What then of the use of the tickets which goes to both certainty of intention and acting like a purchaser? The "ticket" cases generally involve individuals. In this case, the claimant is Nuspor, who can only act through its partners, Anspor and Nuberg and Dale who, in turn, can only act through their representatives.

[39] The evidence establishes that for many years, the tickets went to Mr. Neuberger at his home address and he controlled their usage. At the same time, Mr. Sporer says that the tickets were used by he and Mr. Neuberger personally and to do deals and cement relationships with suppliers and clients. Given the way in which Nuspor acquired the tickets, I find that Mr. Neuberger's control of the tickets was not on behalf of himself personally but on behalf of Nuspor.

[40] I accept Mr. Jesin's evidence that from the time he became involved with the Neuberger family in the later 1970s, Mr. Neuberger offered him the pick of ten games each season. Even if Mr. Jesin's evidence that Mr. Neuberger sold all the remaining tickets to a scalper is correct, it does not establish that he was dealing with the tickets on his own behalf rather than Nuspor. It makes sense to sell the tickets if Nuspor could not use them. On the other hand, if the tickets belonged to Mr. Neuberger personally, I would have expected him to use them personally or distribute them to family and friends rather than sell them to a scalper.

[41] I accept Mr. Lax's evidence that by the early 1990s, control of the tickets had evolved from Mr. Neuberger to he and [page472] Mr. York on behalf of Nuspor. It has remained that way for approximately the last 25 years. In addition to the payment for and allocation of the tickets, Nuspor's control is further attested to by the fact both Mr. Lax and Mr. York attended on its behalf at the Air Canada Centre before the Leafs moved there in 1999 to pick the seat location for the tickets and in June 2004, when Mr. Neuberger signed MSLE's account contact change form changing the account contact information from him to Mr. Lax and Mr. York, c/o Nuspor.

[42] Accordingly, for the above reasons, I conclude that both in the early years when Mr. Neuberger handled the distribution of the tickets and then since the early 1990s when it was taken over by Mr. Lax and Mr. York, control of the tickets has always been exercised by them on behalf of Nuspor. Further, the tickets have continued to be used by Nuspor for the most part for business purposes under the direction of Mr. Lax and Mr. York.

[43] The evidence does not support the estate's submission that Mr. Neuberger permitted Mr. Lax and Mr. York to have access to the tickets on a year-to-year basis while never intending to relinquish legal ownership.

[44] I do not agree with or accept Mr. Jesin's statement that in the mid-1990s Mr. Neuberger told him he was going to offer the use of "his tickets" to Mr. Lax and Mr. York and did Mr. Jesin want some. Nor do I accept his statement that the tickets were being used by Mr. Lax and Mr. York due to Mr. Neuberger's "generosity". It is clear from the evidence that by the mid-1990s, Mr. Lax and Mr. York were already handling the tickets on behalf of Nuspor and they were being used for Nuspor's business. I also have doubts that such a conversation ever took place. An offer of the tickets to Mr. Jesin doesn't make sense given he had his own tickets by that point and had not been receiving any of the tickets for some time.

[45] Mr. Jesin's evidence is to the effect that at no time did Mr. Neuberger suggest that the tickets did not belong to him or were not entirely within his control. I accept that is the impression he got from dealing with him and the tickets. More importantly, however, he never says Mr. Neuberger told him the tickets belonged to him. What is also not clear from his evidence is the extent to which Mr. Jesin was aware that Mr. Neuberger was acting on behalf of Nuspor as opposed to himself personally.

[46] Mr. Neuberger declined to purchase seat licences for the tickets when the opportunity arose in 2002. The estate submits that refusal indicates Mr. Neuberger did not want to change [page473] the ownership of the tickets from himself to Nuspor. In my view, the refusal is more about not wanting to pay the exorbitant licence fee MLSE was asking at the time than indicia of Mr. Neuberger's ownership.

[47] Accordingly, based on the evidence as I have found it, I find that Mr. Neuberger and subsequently the estate hold the tickets in trust for Nuspor. The evidence establishes the essential elements for both a bare trust and a purchase money resulting trust. Mr. Sporer's evidence of the initial acquisition of the tickets, the reason why the tickets were put in Mr. Neuberger's name coupled with the way in which their partnership operated together with the control of the tickets over the years, all establish, in my view, a certainty of intention to create a trust in favour of Nuspor at the time of acquisition. The evidence also establishes that from the outset, Nuspor, through both Mr. Neuberger initially and Messrs. Lax and York latterly, acted throughout as purchaser.

[48] In light of my finding that the estate holds the tickets in trust for Nuspor, Ms. Neuberger submits, in the alternative, that I should order that 159 has a quarter interest in the tickets.

[49] As I understand it, Ms. Neuberger's submission is based on the 2004 butterfly transaction her father did which effectively split half of the assets out of Nuberg and Dale and into 159. There is no evidence before me of the details of the 2004 butterfly transaction and its impact on Nuspor to enable me to determine whether 159 has any continuing interest in the tickets which I have found are beneficially owned by Nuspor. The matter is further complicated by the fact 159 is not a party to this application. Accordingly, I am not prepared to grant Ms. Neuberger's alternative request.

Conclusion

[50] For the above reasons, therefore, Nuspor's application is allowed. There will be a declaration that the estate holds the tickets in trust for Nuspor. The executors of the estate are directed to execute any documents necessary to transfer the tickets into Nuspor's name without compensation to the estate.

[51] Nuspor has asked for an order prohibiting Ms. Neuberger from interfering in any way with the transfer of the tickets from the estate to Nuspor. In my view, the evidence before me does not support such an order. I expect Ms. Neuberger to not interfere with the transfer. If there are any issues in that regard, I may be spoken to on short notice. [page474]

[52] Nuspor is entitled to its costs of the application on a partial indemnity basis. In the event the parties cannot agree, they shall file cost outlines together with brief submissions, no more than three pages in length, within 30 days of today.

Application allowed.

End of Document