Court File and Parties

COURT FILE NO.: CV-19-00615193 DATE: 20190410 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DONALD WILLIAM SAMPSON, Applicant – and – THE ESTATE OF BRUCE ORLEY SAMPSON, Respondent – and – TORONTO ISLANDS RESIDENTIAL COMMUNITY TRUST CORPORATION, Respondent

BEFORE: E.M. Morgan J.

COUNSEL: Paul Dineen, for the Applicant Kiel Ardal, for the Respondent, Toronto Island Residential Community Trust Corporation

HEARD: April 10, 2019

Reasons for Judgment

[1] The Applicant and his brother, Bruce Sampson (“Bruce”), deceased, inherited from their parents the rights to a land lease at 8 Omaha Avenue, Algonquin Island, Toronto Islands (the “Property”). In 1994, they received an offer from the Toronto Islands Residential Community Trust Corporation (the “Trust”) to purchase the land lease for just over $47,000. They required financing for the purchase, but only Bruce could qualify for a mortgage. The Applicant was apparently a poor credit risk.

[2] The purchase of the land lease was completed in February 1996, at which time the Applicant transferred his interest as joint tenant in the land lease to Bruce. The two brothers continued to live in the Property thereafter and to share the expenses and upkeep of the Property.

[3] Bruce died on May 22, 2017. The Applicant now seeks an Order under section 78 of the Toronto Islands Residential Community Stewardship Act, 1993, SO 1993, ch. 15 (the “Act), determining his ownership of the Property. This court has previously described the ownership structure of properties on the Toronto Islands as follows:

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.

ter Woort v ter Woort, 2017 ONSC 824, at para 13.

[4] Under the Act and applicable Regulation, owners of an interest in a house or land lease on the Islands can transfer their interest only to the Trust, a child, a spouse, or to a joint tenant. All other transfers are prohibited and void: ss. 21(1) – (6). Owners must reside in the house as their principal residence, s. 20.5, and co-owners of a house or land lease must hold their interests as joint tenants: s. 8(6). On the death of one joint tenant, that person’s interest accrues to the surviving joint tenant(s): Royal & Sun Alliance Insurance Co. v Muir, 2011 ONSC 2273, at paras 22-23.

[5] An owner of a house or land lease is permitted to devise his or her interest on death, but the devise must otherwise comply with the restrictions on transfer contained in the Act. Thus, only a devise to a spouse or child is permitted, ss. 21(2), (4), failing which the Trust would sell the property to an authorized purchaser: s. 27(3).

[6] The Applicant seeks a declaration that he is the beneficial owner of the house and land lease in respect of the Property by virtue of a resulting trust. This result would typically obtain where there is a transfer of an interest in a property for no consideration. Pecore v Pecore, 2007 SCC 17, [2007] 1 SCR 795, at para 24. Where there is a gratuitous transfer the onus is on the transferee to prove that a gift was intended. Further, the Supreme Court has made it clear that a presumption of advancement, or gift, applies primarily between spouses and between parents and dependent children: Ibid., at para 36. Here neither of those situations apply, and so no such presumption of advancement should apply.

[7] As indicated, both brothers lived in the Property and shared the expenses of the Property. Both considered themselves co-owners who had been gifted the Property by their parents. Bruce’s estate has only two beneficiaries, the Applicant and a sister, Patricia Horanyi. Ms. Horanyi has sent a letter for the attention of the court, which is included in the Application Record, stating that she renounces any claim that she may have to an interest in the Property.

[8] Counsel for the Trust has pointed out that under s. 26 of the Act, the Trust is required to maintain a register of the owners of the Island properties (i.e. the land leases and/or houses). Thus, although the Trust takes no particular position against the Applicant, it is generally not in favour of a finding of resulting trust since that has the effect of creating an unregistered joint tenancy interest. The Trust’s counsel submits that such a finding could undermine the integrity of the register of Island properties and would inject an element of uncertainty into the Island property regime.

[9] The Trust takes the position that one way of protecting the Applicant’s position without injecting this element of uncertainty is for the Applicant to argue non est factum – i.e. that he did not understand what he was doing when he signed his interest in the land lease over to Bruce in 1996. This would effectively make a determination that he retains rights in the Property a far more sui generis determination rather than one that applies broadly to prospective beneficial interest holders.

[10] While I agree with counsel for the Trust that a finding of non est factum would be of some practical benefit to those charge with maintaining a written record of Island residents, I am not inclined to see the 1996 transaction between Bruce and the Applicant in that way. Although it is a clever legal argument (and I do admire clever legal arguments), in reality there is no evidence in the record to suggest that the Applicant did not know what he was doing when he transferred his interest in the joint tenancy to his brother. He has never taken that position himself and has not deposed to that effect in the present Application. It would be artificial and contrived to come to that finding on the state of the record before me.

[11] The fact is that the 1996 transfer from the Applicant to Bruce was done as an administrative convenience for the bank that gave them the mortgage, and was not intended to be an outright gift. Both parties intended to continue to be joint residents and owners of the house and land lease, and both acted on this intention from that time until Bruce’s death. Resulting trust is the law of equity’s mechanism for giving effect to this common intention: Pettkus v Becker, [1980] 2 SCR 834, 843-44.

[12] There shall be a Declaration that the Applicant is the beneficial owner of the house and land lease for the Property, and that Bruce was a trustee holding title to the Property for himself and the Applicant as joint tenants. There shall be a further Order directing the Trust and the Land Registrar to make the necessary changes to their respective Registers.

[13] There shall be no costs of this Application. I likewise would not think it appropriate for the Trust to seek to recover the legal costs of this proceeding from the Applicant under the land lease or otherwise.

Date: April 10, 2019 Morgan J.