DATE: 2022-01-07
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lynn Smith, Applicant
AND:
Darrin Smith, Respondent
BEFORE: Madam Justice D. Piccoli
COUNSEL: Justine Lyons, Counsel for the Applicant
Cyrus Muller / Walter Drescher, Counsel for the Respondent
HEARD: December 6, 2021
ENDORSEMENT
[1] This motion was brought by the Respondent who seeks an order vesting ownership of real property municipally known as 517A St. Andrew Street, Port Dover, Ontario, (“the Property”) in the Applicant and requiring her to register the requisite documents on title to give effect to the vesting order.
[2] The Respondent states that without a vesting order, “the outside world” has no notice of the Applicant’s interest in the Property and as a result, the Applicant is insulated from financial liability and is judgment-proof. The Respondent asserts that the vesting order is necessary to protect his interests and to permit the Applicant’s beneficial ownership of the Property to be available to his and the Applicant’s joint creditor. In addition, the Respondent posits that fairness and equity, as well as avoidance of a multiplicity of proceedings and preservation of judicial resources, require that his relief be granted.
[3] The Respondent relies upon s. 9(1) of the Estate Administration Act, R.S.O. 1990, c. E.22, s. 9 of the Family Law Act, R.S.O. 1990, c. F.3 and s. 100 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
[4] The Applicant states that the Property is subject to a mortgage and that she has attempted to have the Property transferred into her name. The Applicant states that because the Respondent has failed to pay her the court-ordered child and spousal support, her income is nominal and she has not been approved to assume the mortgage.
[5] The Applicant requests that the Respondent’s motion be dismissed as he failed to seek leave to bring this motion, as required by the trial management judge and the judge who commenced the hearing of the trial. In addition, she submits that the Respondent does not have legal standing to seek the relief sought in his motion nor does the court have jurisdiction to order the relief sought.
[6] Neither party provided the court with any caselaw and this decision was reserved. At the conclusion of the hearing, the parties were directed to file a statement of argument, with reference to caselaw. The Applicant was ordered to provide the Respondent with a copy of the Last Will and Testament of Sandra Gail Robinson (the “Will”).
[7] Statements of argument and caselaw were filed by both parties and on December 30, 2021, the court received a copy of the Will.
[8] For reasons that follow, the Respondent’s motion is dismissed with costs fixed in the amount of $1,000.00, payable to the Applicant.
Brief Background
[9] On June 20, 2016, the Applicant and Respondent signed a promissory note with Bunbury Canada Inc. (“the Promissory Note”) agreeing to be personally liable for a loan of $651,740.19, at an interest rate of 12% per annum (“the Loan”).
[10] The Parties separated in late October of 2016, according to the Respondent, or May 4, 2017, according to the Applicant.
[11] At present, according to the Respondent, the amount owing on the Loan and secured by the Promissory Note, exceeds $1,000,000.00. According to the Applicant, the Promissory Note is unenforceable, as the limitation period has expired.
[12] On July 29, 2017, the Applicant’s mother, Sandra Gail Robinson, died (the “Deceased”).
[13] The Applicant is the Executrix and sole beneficiary of the Deceased’s estate (the “Estate”). Its principal asset is the Property, which is subject to a mortgage.
[14] The Applicant has yet to administer the Estate and the Property remains in the name of the Deceased.
[15] According to the Respondent, in or around October 2020, representatives of Bunbury Canada Inc. demanded repayment of the Loan and threatened to commence legal proceedings if adequate repayment was not arranged. The Respondent does not provide proof of the demand.
[16] The Respondent states that in or around December 2020, he made a $20,000.00 payment towards the Loan and has since made monthly payments of $10,000.00 towards the Loan. He does not provide proof of payments made.
[17] The Applicant states she has been unable to transfer the Property into her name as she has been unable to qualify for a mortgage. She states she has made numerous inquiries of the mortgagee, the CIBC, but she does not qualify to assume the mortgage. The Applicant states that if she were receiving the court-ordered support from the Respondent, she would have been able to qualify to assume the mortgage and to transfer the Property into her name. The Applicant has provided no evidence of her attempts to qualify for a mortgage.
[18] Effective July 2021, the Applicant started to rent the Property and she receives rental income of $2,400.00 per month. Prior to that she was living at the Property.
Failure to Seek Leave
[19] The Trial Scheduling Endorsement Form (“TSEF”) dated January 29, 2020, signed by the parties and Justice Broad, prohibits the parties from bringing further motions without leave of the court. There is a further TSEF signed by Justice Sweeny on July 14, 2021. The box prohibiting further motions is not checked. Justice Sweeny’s order does not replace Justice Broad’s order.
[20] After six days of trial, Justice Breithaupt Smith ordered that the trial be discontinued. She granted the Applicant leave to bring a motion under Rule 20.3 of the Family Law Rules, O. Reg. 114/99. She also granted leave to the Applicant to revive the outstanding motion regarding disclosure from the Respondent. She did not make any orders in reference to the motions which could or could not be brought by the Respondent.
[21] Although the Respondent did not seek leave to bring this motion, in order to preserve judicial resources, rather than to dismiss the motion for a procedural failing, these reasons address it on its merits.
Does the Court have jurisdiction to grant the relief sought by the Respondent?
(A) Section 9(1) of the [Estate Administration Act, R.S.O. 1990 c. E. 22](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e22/latest/rso-1990-c-e22.html)
[22] The Respondent relies on section 9(1) of the Estate Administration Act, which states:
Vesting of real estate not disposed of within 3 years
9 (1) Real property not disposed of, conveyed to, divided or distributed among the persons beneficially entitled thereto under section 17 by the personal representative within three years after the death of the deceased is ... thenceforth vested in the persons beneficially entitled thereto under the will ... unless such personal representative, if any, has signed and registered, in the proper land registry office, a caution in Form 1 ... [emphasis added]
[23] The Court of Appeal for Ontario in Di Michele v. Di Michele, 2014 ONCA 261, makes it clear at para. 98 that:
First, s. 9 of the Estates Administration Act does not apply in the circumstances of this case. Section 9 (and its predecessors) was not enacted to limit the powers given to an estate trustee under a will. Rather, it was intended to give estate trustees additional powers, but only to the extent that the additional powers do not conflict with the provisions of the will. The intention of the deceased, as expressed in his or her will, is always paramount: Leblanc, Re (1978), 1978 CanLII 1589 (ON CA), 18 O.R. (2d) 507 (Ont. C.A.), at pp. 513-15.
[24] At para. 100, the Di Michele Court states:
The paramountcy of the testator's intention is confirmed in the jurisprudence. Where a will gives the estate trustee a power to sell property at such times and in such manner as the estate trustee sees fit, s. 9 of the Estates Administration Act will not limit the scope of that power by requiring that the property vest after a specific period of time: Proudfoot Estate, Re (1994), 3 E.T.R. (2d) 283 (Ont. Gen. Div.), at paras. 8 and 11-12, var'd on other grounds (1997), 19 E.T.R. (2d) 150 (Ont. C.A.). See also Leblanc, Re, at p. 515.
[25] Paragraph 3(b) of the Will instructs, “to give the residue of my Estate then remaining to my daughter, LYNN MICHELLE SMITH, absolutely.”
[26] Paragraph 4 of the Will states:
- TO CARRY out the provisions of my Will, I give my trustee the following powers to be used in her sole discretion at anytime:
a) to use her discretion in the realization of my Estate, with power to my trustee to sell, call in and convert into money all my Estate not consisting of money at such time or times, in such manner and upon such terms and either for cash or credit or for part cash and part credit as my said trustee may in her discretion decides upon, with power and discretion to postpone such conversion of my said Estate or any part or parts thereof for such length of time as she may think best, and I hereby declare that my trustee may retain any portion of my Estate in the form in which it may be at my death, notwithstanding that it may not be in the form of any investment in which trustees are authorized to invest trust funds and whether or not there is a liability attached to any such portion of my Estate, for such length of time as my trustee in her discretion deems advisable and I also declare that my trustee when making any investments for my Estate shall not be limited to investments authorized by law for trustees but may make any investment which in her discretion considers advisable and my trustee shall not be held responsible for any loss that may happen to my Estate by reason of so doing;
[27] The language in the Will is almost identical to the language the Court of Appeal in Di Michele relies on to determine that the entitlement under the Will does not amount to an interest in the Property. The result is the same in this case. The Applicant does not have an interest in the Property, but a beneficial interest in the residue of the Estate. This does not give rise to a property interest in any specific asset of the Estate (see paras. 102-104 of Di Michele).
[28] There is no reference in the Will to a specific bequest of real property.
[29] I find that s. 9 of the Estates Administration Act does not operate to vest the Property in the Applicant. Rather, under the Will and s. 16 of the Estate Administration Act, the Applicant has discretion to determine how the Estate will be administered, subject to her obligation to satisfy the debts of the Estate. The Loan is not a debt of the Estate.
(B) [Section 100 of the Courts of Justice Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-c43/latest/rso-1990-c-c43.html) and [section 9 of the Family Law Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-f3/latest/rso-1990-c-f3.html)
[30] Section 100 of the Courts of Justice Act states:
Vesting orders
- A court may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed. R.S.O. 1990, c. C.43, s. 100.
[31] The Respondent relies on s. 9 of the Family Law Act to grant the court this authority. Section 9(1)(d) of the Family Law Act, provides that a Vesting Order can be granted by the court on an application under s. 7 (the authority for the court to determine an entitlement to equalization) of the Family Law Act, if it is appropriate to satisfy an obligation imposed by an Order.
[32] Section 9 is simply an enforcement provision and does not grant substantive rights. It gives the court the powers necessary to enforce a substantive order for an equalization payment: see Maguire v. Maguire, 2003 CanLII 64334 (ON SC), [2003] O.J. No. 3060 (S.C.J.). Section 9(1) clothes the court with authority to grant remedies in the context of an equalization of net family property under section 7: see Thibodeau v. Thibodeau, 2011 ONCA 110, 104 O.R. (3d) 161.
[33] Lynch v. Segal, 2006 CanLII 42240 (ON CA), 82 O.R. (3d) 641 (C.A.), considered the purpose of vesting orders and the power of the court to vest a property under s. 100 of the Courts of Justice Act, in a family law context. Section 9(1)(d) of the Family Law Act allows the court to exercise its flexible and discretionary power to make such an order on an application for equalization (para. 32). The Court stated that a vesting order in the family law context is essentially an equitable remedy designed to work as an enforcement mechanism (at para. 56).
[34] The spouse seeking the order has to have already established a payment liability and needs to persuade the court that the vesting order is necessary to ensure compliance with the obligation. Furthermore, the court needs to be satisfied that the previous conduct of the person obliged to pay, and his or her reasonably anticipated future behaviour, indicate that the payment order will not likely be complied with in the absence of more intrusive provisions. There has to be a reasonable relationship between the asset transferred and the amount of the targeted spouse’s liability: Lynch, at paras. 32 and 33.
[35] In this case, there is no existing order, and therefore no obligation, whereby the Applicant owes the Respondent any payment. The Respondent is not a creditor of the Applicant in relation to the Loan, nor is he an agent of any creditor. Furthermore, there is no order for equalization nor any other order or binding decision which establishes a payment liability on the part of the Applicant. As a result, neither the Family Law Act nor the Courts of Justice Act provides this court with jurisdiction to grant the relief sought by the Respondent.
Should the Respondent be granted the relief based on equity?
[36] The Respondent asserts that he is attempting to “avoid the multiplicity of proceedings”. The Applicant states in her written statement of argument that the Respondent has a Small Claims Court action against her, seeking recovery of the two alleged payments he made to Bunbury Canada Inc. (Bunbury is not a party). The Applicant further asserts that the Respondent claimed the entire amount of the Loan under his debts and liabilities in his sworn financial statement and sworn net family property statement. Neither of the statements made by the Applicant are in evidence before me on this motion and are not relied upon in reaching my decision on this motion.
[37] The Respondent does not come to this motion with “clean hands”. As of September 10, 2021, he owed the Applicant $53,486.84 in child and spousal support arrears. The Applicant states that the Respondent also failed to provide the disclosure he undertook to provide, and he failed to provide relevant financial disclosure on at least three separate occasions, which prompted the discontinuance of the trial.
[38] Furthermore, it is difficult to understand how fairness at this stage would dictate the Applicant to make payment on a loan from assets she inherited following the parties’ separation.
[39] There is no basis in equity to grant the relief sought.
Conclusion
[40] I therefore dismiss the Respondent’s motion. On consent, the Respondent shall pay to the Applicant $1,000.00 in costs.
D. Piccoli, J.
DATE: January 7, 2022