Court File and Parties

Citation: ter Woort v. ter Woort et al., 2017 ONSC 824 Court File No.: CV-16-564936 Date: 2017-02-02 Superior Court of Justice - Ontario

Re: Martin ter Woort And: Lisa ter Woort and Toronto Islands Residential Community Trust Corporation

Before: The Honourable Madam Justice Jasmine T. Akbarali

Counsel: Paul Dineen, for the Applicant Lisa ter Woort, Self-Represented Cory Wanless, for the Respondent, Toronto Islands Residential Community Trust Corporation

Heard: February 1, 2017

Endorsement

[1] The applicant, Martin ter Woort, is an owner in joint tenancy, along with the respondent, his daughter Lisa ter Woort, of a house and land lease of a property municipally known as 13 Channel Avenue, Toronto Islands.

[2] As I explain below, properties situate on the Toronto Islands are subject to unusual conditions of ownership. Those conditions prevent Mr. ter Woort from adding his current wife, Jane Hayes, as a joint tenant of the property. As a result, Mr. ter Woort asks this court to grant an order vesting ownership of the house and land lease in him. If the order is granted, it will extinguish Ms. ter Woort’s interest in the property and allow Mr. ter Woort to grant Ms. Hayes an interest in the property.

[3] The respondent, Toronto Islands Residential Community Trust Corporation, was created by the Toronto Islands Residential Community Stewardship Act, 1993, S.O. 1993, c. 15 to manage certain lands and buildings located on the Islands for the benefit of the public and the residential community on the Islands. The Trust manages transfers of properties on the Islands and is usually involved in mortgages of those properties. The Trust’s role on this application was to assist the court in understanding the unique legal regime for property ownership on the Islands.

[4] Houses are owned by individuals who sublease from the Trust the land on which the houses are situated. This sublease is sometimes called a land lease. A transfer of the house and land lease must be in accordance with the Act and its accompanying regulation, Ontario Regulation 817/93. Before me, the parties relied on the Act, the Regulation and the 1995 lease between the Trust on the one hand, and Mr. and Ms. ter Woort as co-owners on the other.

[5] It is common ground that the restrictions on transfer set out in s. 21 of the Act do not permit Mr. ter Woort to transfer an interest in the house and land lease to Ms. Hayes if Ms. ter Woort remains a co-owner. Mr. ter Woort cannot grant part of his interest to Ms. Hayes because the Act only permits joint tenancies.

[6] Nor does s. 21 of the Act permit Mr. and Ms. ter Woort to join in a transfer of their collective interests to themselves and Ms. Hayes because transfers are only permitted between spouses, between joint tenants, and from a parent to a child. Ms. ter Woort cannot transfer her interest to Ms. Hayes.

[7] The Act permits a sale from one joint tenant to another. Thus, Ms. ter Woort could sell her interest to Mr. ter Woort, but she does not want to.

[8] Mr. ter Woort argues that this court has the jurisdiction under s. 100 of the Courts of Justice Act, R.S.O. 1990, c. C.43 to “vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed”. He relies on Lynch v. Segal, 2006 ONCA 42240 (ONCA) to argue that I have broad discretion under s. 100 of the CJA to make a vesting order. He submits that vesting orders have their origins in the court’s equitable jurisdiction, and so the exercise of my discretion should be guided by the interests of justice.

[9] Mr. ter Woort argues that a vesting order is just in this case for two reasons. First, he argues that Ms. ter Woort did not pay for, nor does she contribute to, the property at 13 Channel Avenue.

[10] Second, he argues that Ms. ter Woort is in breach of the terms of the Act, the Regulation and the lease that require her to occupy the house. He argues that she does not live in the house, but lives elsewhere with her daughters and only visits the house. In arguing that this amounts to a breach of the Act, the Regulation and the lease, he relies on: (i) s. 20 of the Act which, among other things, requires “the owner” to use the house as her principal residence and designate the house as her principal residence for income tax purposes; (ii) s. 16.2 of the Regulation which requires that “an owner” shall occupy the house for a minimum of 220 days each calendar year; and (iii) s. 7 of the lease which also requires “the owner” to use and designate the house as the owner’s principal residence, and further requires an owner to sign a statutory declaration stating that she will occupy the house as her principal residence and has read the provisions of the lease that require the use of the house as a principal residence.

[11] Mr. ter Woort argues that a vesting order is a just remedy to address Ms. ter Woort’s breach of the terms of the Act, Regulation and lease. Although there is nothing in the Act, Regulation or lease that explicitly provides an owner with a right to force a co-owner to comply with the Act, Regulation or lease, he argues that a co-owner’s breach is a problem for which he must have some remedy. He argues that due to Ms. ter Woort’s breach of the occupancy requirements, the Trust would not cooperate if he sought, for example, to mortgage the property.

[12] Mr. ter Woort asks that I make the vesting order he seeks without ordering compensation to Ms. ter Woort, but argues that if I conclude compensation is a necessary and just condition of the vesting order, s. 100 of the CJA gives me the authority to order it.

[13] Ms. ter Woort argues that she has contributed to the property by landscaping and renovating it.

[14] She also argues that she is not in breach of any term of the Act, Regulation or lease. She argues that she satisfies the principal residence requirement as that term is understood under the Income Tax Act, R.S.C. 1985, c.1 (5thSupp), and as a result is not in breach of any term of the lease or the Act. She further argues that she is not in breach of the Regulation because it only requires that “an owner” occupy the property for 220 days each year, not that all owners, or every owner, does. This interpretation is, she submits, consistent with the purpose of the occupancy requirement as explained by the Trust - to ensure that the Island properties are not used as vacation homes or cottages, and that no one would receive a windfall profit through the use or sale of the underlying lands, which are a public asset.

[15] Ms. ter Woort further argues that if she is in breach of any occupancy requirement, it is due to the actions of Mr. ter Woort who has prevented her from accessing the property. She deposes she would occupy the property full time but she has deferred to Mr. ter Woort. She deposes that the house is not big enough for Mr. ter Woort, Ms. Hayes, Ms. ter Woort and Ms. ter Woort’s daughters. However, Ms. ter Woort maintains a room at the house and, until recently, has regularly spent time at the property. Ms. ter Woort deposes to her ties to the house and the community on the Island. She wants to live out her days in the property.

[16] Finally, Ms. ter Woort argues that the lease provides only the Trust with the ability to take steps to enforce compliance with its terms. Were the Trust asserting a breach, Ms. ter Woort would have rights under the lease, including the right to cure the default, and she should have the same rights if her co-owner is asserting the breach, especially where, as she alleges, her co-owner is preventing her from complying with the relevant conditions.

[17] The Trust takes no position on the factual issues in the application. However, it argues that Ms. ter Woort’s interpretation of the Act, the Regulation and the lease is incorrect. It argues that the Regulation requires all owners to occupy the property for at least 220 days each year. It argues that the definition of “principal residence” in the Act and lease is not restricted by the ITA because the Act and lease are concerned with more than mere designation for tax purposes; they also refer to the owner’s “use” of the property as a principal residence.

[18] The Trust does not seek any relief on this motion and is not attempting to exercise any rights it has under the lease to compel Ms. ter Woort’s compliance with the terms of the Act, Regulation or lease. However, the Trust’s representative explained that in practice, the Trust will not co-operate with owners who seek to mortgage or otherwise deal with the property in a way that requires the Trust’s involvement if the owner is in breach of the Act, Regulation or lease.

[19] As noted above, there is nothing in the Act, Regulation or lease that speaks to an owner’s ability to enforce compliance with the Act, Regulation or lease against a co-owner. Assuming that s. 100 of the CJA gives me the authority to grant a remedy to an owner for a co-owner’s breach, it remains a discretionary remedy to be exercised in a manner that is just in all the circumstances.

[20] For the purposes of this motion, I will assume, without deciding, that Ms. ter Woort is in breach of the lease, the Act and the Regulation because she does not use the property as her principal residence and she does not occupy it 220 days in each calendar year. The question is whether, in those circumstances, and keeping in mind all the other evidence before me, it is just to grant an order vesting the property in Mr. ter Woort.

[21] I conclude that a vesting order is not just in these circumstances.

[22] First, even assuming that Ms. ter Woort’s contribution to the property was negligible, that does not justify an order extinguishing her interest in it. Mr. ter Woort chose to make Ms. ter Woort a co-owner of the house and land lease. His evidence is that he did so because there was “confusion regarding the rights to leave the properties [on the Islands] to one’s children”. He intended to make a gift of the interest in the property to her. There is no evidence before me to suggest that the gift was dependent on her past or future contribution to the property.

[23] Second, Mr. ter Woort’s argument that Ms. ter Woort’s breach interferes with his ability to deal with the property might have force if he were seeking to, as in his example, mortgage it in good faith. But he is not. The manner in which he wants to deal with the property is part of the circumstances I must consider when determining if a vesting order is just. Mr. ter Woort wants to force Ms. ter Woort to give her interest in the property back to him so he can give it to Ms. Hayes.

[24] Mr. ter Woort’s counsel suggested that if the vesting order was not granted, it would be as if, by making Ms. ter Woort a joint tenant to the house and land lease, Mr. ter Woort made an irrevocable will devising the property to Ms. ter Woort. That is not quite accurate. Mr. ter Woort made an inter vivos gift to Ms. ter Woort. He is not entitled, over twenty years later, to demand that she give it back because he now wants someone else to have it instead.

[25] Third, Ms. ter Woort deposes that she would occupy the property but she has deferred to Mr. ter Woort. She deposes that Mr. ter Woort has prevented her from occupying the property at least since the summer of 2016. In the summer of 2016, Ms. ter Woort’s daughters stayed at the property with their grandfather, but Ms. ter Woort was forced to pitch a tent on a neighbour’s property because Mr. ter Woort would not permit her access to the house. I accept Ms. ter Woort’s evidence. It is supported by an email from Mr. ter Woort to Ms. ter Woort in which Mr. ter Woort says that any attempt by Ms. ter Woort to “use [his] home” will “meet with strong resistance”, and in which he denies her ownership interest.

[26] Given that the lease terms allow an owner in default to cure the default, I place no weight on Mr. ter Woort’s argument that Ms. ter Woort’s breach pre-dated his excluding her from the property. The issue is not any past breach, but the owner’s willingness to remediate the breach when asked to do so by the Trust. If the Trust, which has explicit rights to enforce the terms of the lease, could not take action without first allowing Ms. ter Woort an opportunity to remedy the default, Mr. ter Woort can hardly prevent Ms. ter Woort from occupying the property and then point to her breach of the occupancy condition as justification to extinguish her interest in the property.

[27] Finally, even assuming s. 100 of the CJA gives me the jurisdiction to order compensation to Ms. ter Woort as a term of the vesting order, Mr. ter Woort’s reluctant offer of compensation does not make a vesting order just. In effect, such a vesting order would be a forced sale of Ms. ter Woort’s interest to Mr. ter Woort. But Ms. ter Woort does not want to sell her interest; she wants the right to live in the property that comes with ownership. Mr. ter Woort gave her that right when he made her a co-owner under the lease and of the house in 1995. It is not his to take back.

[28] Accordingly, I find that it is not just to vest the property in Mr. ter Woort. His application is dismissed.

[29] Ms. ter Woort seeks costs of this application in the amount of $8,374.17. Mr. ter Woort argues the costs are high, and takes particular issue with the time and hourly rate of a research consultant Ms. ter Woort hired, and by Ms. ter Woort’s estimate of her own time. Mr. ter Woort argues that if costs were ordered in Ms. ter Woort’s favour, an award of $2,000 - $3,000 would be more appropriate.

[30] I see no reason to depart from the general rule that costs follow the event. However, I agree with Mr. ter Woort’s concerns about the quantum Ms. ter Woort claims. In the circumstances, costs in the amount of $2,500 inclusive of disbursements and HST, are fair and reasonable. Mr. ter Woort shall pay this amount to Ms. ter Woort. I make no order as to costs with respect to the Trust.

[31] Ms ter Woort also brought a counter-application, which was not properly issued, seeking relief including an order directing the parties to binding arbitration or some other alternative dispute process. She was unable to direct me to any jurisdiction under which I could grant such an order. Accordingly, I dismiss her counter-application.

Madam Justice J.T. Akbarali

Date: February 2, 2017