Saunders v. Gefen, 2019 ONSC 6017

COURT FILE NO.: 05-76/16

DATE: 20191017

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF YEHUDA GEFEN, deceased

AND IN THE MATTER OF THE PARTITION ACT, R.S.O. 1990, c. P4

BETWEEN:

LUCIA SAUNDERS as estate trustee of the estate of Yehuda Gefen, deceased

Applicant

– and –

HENIA GEFEN, and RONALD RUTMAN as Estate Trustee During Litigation of the Estate of Elias Gefen, deceased

Respondents

Christopher Graham, for Lucia Maria Saunders Estate Trustee of the Estate of Yehuda Gefen

Ronald Moldaver, Q.C., for Henia Gefen, in her personal capacity and as estate trustee of the estate of Elias Gefen

Lisa Filgiano for Ronald Rutman, Estate trustee during litigation (ETDL) of the Estate of Elias Gefen (appearing occasionally)

HEARD: November 13, 14, 15, 16, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30, December 3, 4, 5, 17, 18, 19, 20, 21, 2018 and February 4, 5, 6, 7, 8, March 28 and 29, 2019

KIMMEL J.

REASONS FOR DECISION – 11 TOWNSGATE APPLICATION

1The estate of Yehuda Gefen seeks a declaration of Yehuda’s right, title, and interest in the condominium property municipally known as Suite 605, 11 Townsgate Drive, Thornhill, Ontario, L4J 8G4 (the “Townsgate Property”) and for various ancillary relief. Because of the overlap between the facts underlying this application and those raised in the action under court file No. CV-13-486451/CV-14-005107-00ES (the “main action”) involving the competing claims of the two factions of the Gefen family, Harry Gefen and the Estate of Yehuda Gefen on the one side, and Henia and Harvey Gefen on the other side, this application was tried together with that action and my decisions in both are being released at the same time. Terms not otherwise defined in these reasons shall have the same meaning as ascribed to them in my Reasons for Judgment in the main action at 2019 ONSC 6015. The facts and evidence relevant to my decision in this application relating to the Townsgate Property are highlighted in these reasons but they are intended to, and should, be read together with my reasons in the main action for their full import and effect.

The Origin of Yehuda’s Interest in the Townsgate Property

2Elias and Henia Gefen sold their home so that they could move into an apartment after Elias completed his initial rehabilitation following a stroke he suffered in 2005. Elias and Henia purchased the Townsgate Property as joint tenants in December of 2006.

3By a transfer registered on October 8, 2010, Elias and Henia’s joint interest in the Townsgate Property was transferred to Elias, Henia, and Yehuda as joint tenants. Yehuda described a conversation that took place in the context of this conveyance in October of 2010 during which his parents advised him that 11 Townsgate would eventually be his.¹ From this evidence, and from the circumstances generally, it is reasonable for me to infer (and I do so infer and find) that Elias and Henia expected Yehuda to survive them and to eventually become the sole owner of the Townsgate Property as the surviving joint tenant.

4Henia testified that no interest in the Townsgate Property was ever transferred to Yehuda, except in her heart, by which I understood her to mean that she intended to, but did not actually, convey an interest to him. This is not consistent with the documentary evidence or Yehuda’s evidence, and she is clearly mistaken. However, it does confirm the sentiment that there was an intention for Yehuda to receive an interest in the Townsgate Property.

The Succession of Interests in the Townsgate Property

5When Elias died on October 26, 2011, his interest in the Townsgate Property was extinguished and the rights of the two then surviving joint tenants, Henia and Yehuda, were correspondingly enlarged and automatically vested in them, each as to a 50% interest. Elias’ interest in the Townsgate Property passed outside, and did not form part, of his estate. I consider these to be trite points of law, which might explain why the parties did not address them in their oral or written submissions. Of the many potential authoritative sources, for convenience I have identified the case of Re Cameron Estate, 2011 ONSC 6471, 108 O.R. (3d) 117, at paras. 25-30, to support this finding.

6While a survivorship application could have been registered to remove Elias’ name from the title of the Townsgate Property after he died, the extinguishment of his interest and the vesting of it in Henia and Yehuda is not dependent upon the title registry.

7The same automatic extinguishment of Yehuda’s interest in the Townsgate Property and automatic vesting of it (and a 100% interest) in Henia would have occurred when Yehuda died on May 6, 2016, but for my ruling herein that the joint tenancy between Henia and Yehuda was severed prior to Yehuda’s death.

Course of Dealings and Acts of Henia and Yehuda between October of 2011 and May of 2016

8Henia signed an acknowledgment and direction dated July 28, 2014, and she testified (through discovery read-ins also affirmed in her trial testimony) that she instructed Nestor Wolicki, a lawyer acting for at the time, to sever her joint tenancy with Yehuda at 605-11 Townsgate. This document was prepared and witnessed by Wolicki, but it was never registered on title. Wolicki testified that it was “parked” in his file and could not be registered without Yehuda’s signature, which he never sought. No further explanation was provided by Wolicki or Henia as to why her clear intention and instruction to sever the joint tenancy in 2014 was not formalized. Wolicki was unable to explain why Henia’s signed acknowledgment and direction to sever the joint tenancy was not in his files that were ordered to be produced at trial, or how it came to be produced by Harvey Gefen in the course of the related proceedings, but it is not disputed that she authorized and signed it in 2014.

9Yehuda sought an order for temporary dependent’s support that was granted by Mesbur J. on December 3, 2015, following a hearing on November 23, 2015 (see Gefen v. Gefen, 2015 ONSC 7577, CarswellOnt 21008). At that hearing, a concern was raised on behalf of Henia about the risk that the application judge, who would have the full evidentiary record, might come to a different conclusion about whether Yehuda was a dependent, or order lower support than what was ordered on a temporary basis, leaving Henia with no recourse against Yehuda to recover what had been paid. To address that concern and potential prejudice to Henia, Mesbur J. authorized that Yehuda’s interest in the Townsgate Property could be charged with and stand as security for any potential obligation to repay the interim support he received, if his entitlement was not ultimately established.² This order was not objected to or appealed by either Henia or Yehuda.

Henia’s 2016 Survivorship Application

10After Yehuda died and his estate had asserted his interest in the Townsgate Property through counsel, either or both of Henia or Harvey on Henia’s behalf instructed Wolicki to register a survivorship application that purported to delete both Elias’ and Yehuda’s names from the title to the Townsgate Property. This was registered by Wolicki on October 31, 2016 on the basis that Henia was the sole surviving joint tenant, Elias and Yehuda having both died. The validity of this registration is challenged by Yehuda’s estate on the grounds that the joint tenancy in the Townsgate Property had been severed prior to Yehuda’s death.

Analysis – Was the Joint Tenancy Severed Prior to Yehuda’s Death?

11To succeed in its claim for a declaration of a 50% (or any) interest in the Townsgate Property, Yehuda’s estate must establish that the joint tenancy between Henia and Yehuda in the Townsgate Property that vested in them upon Elias’ death was severed and became a tenancy in common before Yehuda died in May of 2016. No party suggests that there was any severance of the joint tenancy interests prior to Elias’ death in October of 2011.

12The Court of Appeal has affirmed the three ways in which a joint tenancy can be severed in Hansen Estate v. Hansen, 2012 ONCA 112, 288 O.A.C. 116, at para. 34:

a. Rule 1: by one of the joint tenants unilaterally acting on their own share, such as by selling or encumbering it;

b. Rule 2: by mutual agreement between co-owners to sever it; and

c. Rule 3: by any course of dealing sufficient to intimate that their interests were mutually treated as constituting a tenancy in common.

13Rule 3 has been described by the Court of Appeal (see Hansen Estate at para. 35) as a means by which equity estops a party, because of their conduct, from asserting a right of survivorship. The required knowledge of each other’s position can be inferred from communications or conduct.

14Yehuda’s estate concedes that, as the party asserting the severance, it has the onus of proving it on a balance of probabilities. See McKee v. National Trust Co. Ltd. et al (1975), 1975 CanLII 442 (ON CA), 7 O.R. (2d) 614 (C.A.), at para.9.

15Yehuda’s estate contends that the joint tenancy of Henia and Yehuda was severed by:

a. each of them acting unilaterally in respect of their respective shares: Henia by instructing her lawyer to sever their interests in 2014 and signing an acknowledgment and direction to that effect, without consultation with Yehuda, and Yehuda by allowing his interest to stand as security for any potential obligation to repay the interim dependent’s support awarded to him in 2015; and

b. each of them treating their interests as a tenancy in common by their course of dealings and acquiescence in the terms of the order of Mesbur J. that authorized the encumbrance of Yehuda’s interest in the Townsgate Property. It can be inferred from the decision of Mesbur J. that they were each aware of the other’s acceptance of this encumbrance, which necessarily would require their interests to be held as tenants in common since an encumbrance of Henia’s own interest in the Townsgate Property would clearly not address the potential prejudice that she was seeking security for.

16The contentions made on behalf of Henia are tied to positions that Yehuda’s estate has taken, said to be inconsistent with the severance position now advance, that:

a. Yehuda’s estate was originally claiming a 100% interest in the Townsgate Property in reliance upon on a letter written by Ian Hull in December of 2011 in which he said that the Townsgate Property had been gifted to Yehuda;

b. Yehuda’s estate originally disavowed the 2014 severance document when it was produced in 2016 by Harvey, and it is inconsistent for the estate to rely on that document in support of a claim now based on that severance;

c. The 2014 severance document signed by Henia was severing her 2/3 interest from Yehuda’s 1/3 interest; and

d. Yehuda’s estate has persisted in claiming a 1/3 interest (including before Mesbur J.), not a 1/2 interest, so that should be the best-case scenario.

17The relief sought by Yehuda earlier in these proceedings is a reflection of an information void and does not operate as an estoppel against his estate. The determination of the interests of Yehuda’s estate in the Townsgate Property should be made based on the fullness of the evidentiary record before me at trial, and the legal consequences that flow from the facts as I find them based on that record, and not based on litigation positions taken without the benefit of full information. The positions can be explained as follows:

a. The claim for a 50% interest was pleaded in this application in the alternative from the outset. Yehuda’s estate changed its position from seeking a constructive trust for a 100% interest to seeking a 50% interest after Mr. Hull was eventually ordered to produce his file and testify at trial and it was established that what he said in his December 2011 letter was not an admission or position that he had been instructed or authorized by Henia to take;

b. The claim now for 50% is based on a severance that was not formally effected by the 2014 acknowledgment and direction signed by Henia, but rather upon the fact that she unilaterally signed and instructed her counsel to sever the joint tenancy;

c. The severance document signed by Henia in 2014 does not specify the relative interests being severed – it purports to sever their interests, whatever they were at the time; and

d. As indicated earlier in these reasons, the issue of precisely what the relative interests of Henia and Yehuda were in the Townsgate Property was not squarely before Mesbur J. The positions of the parties at that time are more fairly characterized as having been dependent upon a determination that Yehuda had some interest in the Townsgate Property.

18In contrast, I find that Henia’s conduct, both in her unilateral execution of the acknowledgment and direction in 2014 to sever the joint tenancy and in the concern she raised about potential prejudice that she sought to protect against and that was addressed in the security granted by the order made by Mesbur J., is the very type of conduct that equity raises an estoppel against to prevent Henia from now taking the position that the joint tenancy was not severed and from asserting a right of survivorship to take advantage of the fact that Yehuda, unexpectedly, predeceased her.

19In reaching this conclusion, I do not attribute any mala fides to Henia. She has been pulled in a number of different directions over the course of this litigation and at the trial she did not even recall that legal steps had been taken and documents had been signed to convey any interest in the Townsgate Property to Yehuda (she testified that she had only given him an interest in her heart). However, there was no suggestion that the documents that the lawyers prepared for Henia to sign and here instructions reflected in them were not authorized and understood by her at the time.

Findings and Disposition

20Having considered the complete record, I find that:

a. Elias’ interest in the Townsgate Property was extinguished and automatically vested to enhance the joint tenancy interests of Henia and Yehuda, each as to 50%, in October of 2011 when Elias died;

b. The requirements of both Rule 1 and Rule 3 from Hansen Estate have been met and the joint tenancy between Henia and Yehuda was severed by their unilateral acts (Henia in authorizing and directing a severance of the joint tenancy in 2014 and Yehuda in permitting his interest to be encumbered as security for any repayment obligation he may have in the future), and by their mutual course of dealings in connection with the order of Mesbur J. in 2015 which treated their interests as constituting a tenancy in common that neither of them challenged on appeal; and

c. Henia and Yehuda beneficially owned the Townsgate Property as tenants in common, each as to 50%, at the time of Yehuda’s death in May of 2016.

21This constitutes grounds for me to declare the 2016 survivorship application that was later registered in Henia’s name to be void. A fraudulent instrument can be declared void, despite registration, pursuant to s. 155 of the Land Titles Act, R.S.O. 1990, c. L.5. This remedy is available to a person wrongfully deprived of an interest in land by a fraudulent registration. Yehuda’s estate, as the wrongfully deprived party, contends that the survivorship application registered by Wolicki on Henia’s behalf is a fraudulent instrument because it was prepared and registered without regard to the severance of the joint tenancy that had previously occurred. I agree.

22An order shall issue directing the registrar to correct the registry to reflect that the Townsgate Property is owned by Henia Gefen and the estate of Yehuda Gefen as tenants in common, each as to a 50% interest, pursuant to s. 159 of the Land Titles Act, and title to the Townsgate Property shall be rectified, accordingly. I was not made aware of any third-party interests in or encumbrances over the Townsgate Property since the 2016 survivorship application was registered. Certain security interests granted in favour of Harvey before then (over all of Henia’s assets) have been declared void by me in the main action and he would not be considered a third-party without notice of the interests claimed by Yehuda’s estate in any event. My order on this application is not intended to change the position of any bona fide third-party who may have received an interest from Henia in the whole of the Townsgate Property for valuable consideration since the registration of the 2016 survivorship application. Such interests, if any, would have to be addressed through a proceeding on notice to them.

23The question remains whether an order should be made for the partition and sale of the Townsgate Property so that Yehuda’s estate can realize upon its interest, as has been requested in the relief sought on this application. In my view, it was never the agreement or intention of the parties that Henia could be forced to sell and move out of the Townsgate Property. Since Yehuda has died, there can be no suggestion that he needs a place to live or that he needs to liquidate his interest to meet his needs of daily living. Unless and until Henia is ready to move, it would be premature to consider an order for the partition and sale of the Townsgate Property. The 50% interest that Yehuda’s estate has in that property is to be liquidated only after Henia has moved out.

Costs

24Each side has asked to be awarded their costs of this application. Yehuda’s estate has been successful on the main issue, having established an interest in the Townsgate Property that was not extinguished upon Yehuda’s death. However, the 100% interest originally sought was not awarded and some of the ancillary relief for partition and sale also was not granted.

25There are other costs to be addressed in the broader context of these Gefen family proceedings. Allowance has been made in my Reasons for Judgment in the main action for a chambers appointment to be convened to discuss an appropriate schedule and procedure for the exchange of submissions as to costs. The costs of this Townsgate application will be addressed as part of that process.

Kimmel J.

Footnotes

1. 1This can be found in Yehuda’s pre-trial evidence in the context of another related proceeding for dependent’s support, under court file No. 05-107/14 (the record of which formed part of the material before me on this application).
2. 2The December 3, 2015 endorsement of Mesbur J. assumes that Yehuda held at that time a 1/3 interest in the Townsgate Property, upon the supposition that Elias’ 1/3 interest had passed to Henia on his death, leaving Henia with 2/3 and Yehuda with 1/3. However, it was noted in her reasons for decision to be unclear whether that transmission of Elias’ 1/3 interest to Henia had occurred by right of survivorship or under the Elias’ primary 2007 will. Justice Mesbur recognized (at para. 62) that on any motion for temporary support, the court is generally dealing with an imperfect evidentiary record. With the benefit now of a complete evidentiary record, there is no basis on which I could find that Elias’ 1/3 interest in the Townsgate Property passed to Henia under his 2007 wills, and it is contrary to my basic understanding of the rules of survivorship and vesting of joint tenancies that Elias’ 1/3 interest would automatically pass only to Henia upon his death. A determination of the relative interests of Henia and Yehuda was not critical to the issue Mesbur J. was deciding. All that she needed to be satisfied about was that Yehuda had a claim to some interest in the Townsgate Property that could stand as security for repayment of the interim support that he was being awarded, and I take her decision to reflect a conclusion that he held at least a 1/3 interest in that property. The nature and extent of Yehuda’s interest in the Townsgate Property immediately prior to the order of Mesbur J. is at issue in this application that I am now deciding. Thus, I can expect that the parties have given me the complete evidence on this point. I do not consider myself to be bound by any “finding” by Mesbur J. that Yehuda took none of Elias’ interest in the Townsgate Property by survivorship and that it all went to Henia, as this conclusion does not comport with the evidence before me or the law. If I am wrong and there was a disproportionate transmission of Elias’ 1/3 interest entirely to Henia when Elias died, according to the authorities provided by Yehuda’s estate, that would have resulted in a severance of the joint tenancy interests back in 2011. According to A.J. McClean, “Severance of Joint Tenancies” (1979) 57:1 The Can Bar Rev 1 at p. 5: “If one joint tenant acquires a greater interest than his fellow joint tenants then the unity of interest is destroyed and a tenancy in common is created.” I do not find that to be the case, but if it were the case, the effect would be to reduce the interest of Yehuda’s estate in the Townsgate Property to 1/3 rather than 1/2 as I have found it to be.```