CITATION: Lyons v. Lyons as Estate Trustee, 2026 ONSC 4697
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DENIS PATRICK LYONS
Dawood N., for the Applicant
Applicant
- and -
MICHAEL CHOU-LENG LOOI LYONS in his capacity as Estate Trustee for the ESTATE OF GEORGE HENRY DENIS LYONS
Bennett. J. H., for the Respondent
Defendant
HEARD: June 4, 2026
REASONS FOR JUDGEMENT
STEWART, J (Orally).
[1] These are the oral reasons on the long application which was argued on May 11th. I will order the transcript from the court reporter and upload these oral reasons to CaseCenter in due course, and in addition at the end of the day, I will provide you with a short endorsement summarizing any orders made.
Background
[2] The applicant, Dennis Lyons, had a brother named George Lyons. George died in 2020 and the respondent in this application is George's estate as represented by the estate trustee, Michael Lyons, who is George's son and Dennis's nephew. Because all three men share the same last name, I will refer to them by first name in these oral reasons.
[3] Dennis purchased a house known municipally as 700 Paisley Road, Unit 45 in Guelph. Dennis purchased the property in late 2005 but found that he was unable to obtain a mortgage unless George went on title with him. George agreed to do this. The brothers went on title of that Paisley Road property as 50 percent tenants in common.
[4] Sometime after purchasing the property, Dennis defaulted on the mortgage payments. George paid off the mortgage and Dennis's debt obligations were transferred to George. Dennis paid George $500 from each of his paychecks. The debt was paid in full by April 30, 2024.
[5] Dennis asked the estate to transfer the title of the Paisley property to him on the basis that the brothers had agreed that George never had any beneficial interest in the property. The estate refuses to transfer title unless Dennis provides an indemnity for any capital gains that may be owing by the estate to CRA arising from the transfer of the property.
Issues
[6] There are three issues in this application for the court to decide:
A. First, what did the agreement between the brothers provide for?
B. Second, is Dennis the beneficial owner of the estate's interest?
C. Third, should Dennis be required to indemnify the estate in the event that the Canada Revenue Agency, CRA, determines that the estate must pay capital gains tax?
Issue 1: What Did the Agreement Provide For?
[7] The agreement between Dennis and George about the property was oral. Dennis says that the intention was always that he would have the sole beneficial interest and that the brothers also intended that George would be removed from title when Dennis refinanced. But the refinancing did not, in fact, happen. As noted earlier, when Dennis defaulted on the mortgage, George paid the mortgage and the debt was assigned to George.
[8] Dennis recalls that at some point in 2015, his brother said that since Dennis had been paying the loan to George for so long, they might as well keep going. George becoming the mortgage holder is significant and demonstrates the nature of the deal between the brothers. Dennis's reply affidavit states that George never asked for an indemnity.
[9] The practical reality is that there was no written agreement between the parties. The estate alleges that Dennis's evidence is self-serving, but the estate chose not to cross-examine Dennis on his evidence. Further, the estate chose not to provide potentially relevant evidence to the court regarding the agreement between the brothers.
[10] Until late 2025, the estate was represented by Joseph Pellizzari, the lawyer who acted for both Dennis and George on the original purchase. Mr. Pellizzari also had some knowledge of the payments made by Dennis over the years, as evidenced by a discharge statement for the loan generated in 2024. Despite Mr. Pellizzari's direct involvement in the issues in this litigation, the estate elected not to produce that lawyer's file.
[11] Having chosen not to cross-examine Dennis and having chosen not to produce Mr. Pellizzari's file, the estate cannot argue that the agreement was anything other than demonstrated by Dennis. The court finds that the brothers intended for George to transfer title to his brother and that George did not ask for an indemnity.
Issue Two: Beneficial Ownership
[12] The court finds that Dennis is the beneficial owner of the entire property. During oral argument, the estate conceded this point. The concession provided clarity as it was not obvious from the respondent's record and/or the respondent's factum that the estate was taking the position. To be clear, even if the estate had not conceded beneficial ownership, the court would have arrived at that conclusion.
[13] The evidence leading to this conclusion includes:
A. At all times, Dennis had exclusive possession of the property.
B. At no time did George occupy the property.
C. Dennis had rented rooms in the property over the years and collected rent.
D. George had no entitlement to any of the rental income.
E. Dennis was also solely responsible for all of the maintenance, repair and renovations conducted over the years.
Issue Three: Estate’s Request for Indemnity
[14] The estate asks that the court order Dennis to provide an indemnity to pay the estate in the event that the Canada Revenue Agency assesses any capital gains tax against the estate arising from the property transfer.
[15] The estate submits, relying on the affidavit of Michael, that it was always willing to transfer the properties promptly upon receipt of the indemnity from Dennis. The estate's demand for an indemnity is denied by the court for the following four reasons:
A. The agreement did not provide for an indemnity. The estate argues that the brothers should have agreed to an indemnity. Perhaps so, but the practical reality is that they did not. The standard for applying a term into a contract is very high. Courts will not rewrite contracts to reflect changed circumstances or more equitable results. And that is a proposition that comes from the 2008 Court of Appeal case of Adamson v. Steed. The citation is 2008 ONCA 375 at paragraph 4.
B. In the absence of an indemnification agreement, the courts have cautioned against expanding a contract to provide for indemnification not previously agreed to. That proposition comes from Dalewood Economy Limited v. Black Estate, 2010, ONSC 824 at paragraph 5.
C. There is no basis to imply an indemnity in this case. An implied right to an indemnity may arise in two ways. First, there may be an implied contract between the party seeking indemnification and the indemnifier. Or where one person is compelled to pay damages that ought to have been paid by the real wrongdoer, those damages may be recovered from the wrongdoer. Those categories come from the recent case that was cited by both parties in argument, which is Wekerle v. Arbour, 2025 ONSC 1456 at paragraph 51. I find that neither of the Wekerle circumstances is present in this case. There is no evidence of any implied contract. And there is no evidence that the estate has any liability to pay capital gains tax to CRA, which liability would be analogous to the damages scenario that I previously mentioned.
D. The estate's actions mean that capital gains tax, are a theoretical possibility. The court therefore finds that the estate's request for indemnity is premature. That prematurity is entirely the results of the estate's actions.
[16] The estate's responding application record contains an affidavit from the estate trustee, Mr. Michael Lyons, which was sworn October 22, 2024. At that time, the estate asked the court to delay deciding this case until the estate obtained a ruling from CRA. Mr. Michael Lyons included in his affidavit the fact that on September 24, 2024, the estate's lawyer, then Mr. Pellizzari, retained a tax lawyer, Mr. Wrong, to obtain a CRA ruling on the estate's exposure to any capital gains tax.
[17] The estate failed to provide any evidence of any steps taken after that retainer in September 2024. There is no evidence that a CRA ruling was obtained. There is no evidence that the estate obtained an accounting opinion or a legal opinion about the exposure of the estate to capital gains tax.
[18] The estate's failure to determine whether there is, in fact, any capital gains tax liability means that the estate's claim in this application is purely theoretical.
Orders Made
[19] The court makes the following orders:
A. The court declares that Dennis Lyons is the sole registered and beneficial owner of the property.
B. The court orders that the legal title is to be conveyed to Dennis by vesting order to be drafted by the parties.
C. The land registrar as part of that order will be ordered to remove George Lyons as a registered owner of the property.
D. If George's mortgage is still registered on title, it shall be discharged.
E. The estate's claim for capital gains tax to be paid by Dennis is dismissed for prematurity. And without prejudice to the estate, bringing a further proceeding against Dennis in the event that the CRA rules that capital gains tax is in fact owing.
[20] For extra clarity, this is not a family law proceeding. Dennis's spouse was not represented. It was not clear to me on questioning whether Dennis's spouse continues to reside in that house, nor is it clear to the court whether the state of Dennis's relationship with his wife.
[21] All of which to say is nothing in the court orders in this application impacts the rights of Dennis's spouse.
[22] The parties can send me the draft order through the Guelph trial coordinator.
Costs
[23] Costs were argued orally at the conclusion of this hearing and reserved.
___________________________
Stewart J.
Released: June 4, 2026
CITATION: Lyons v. Lyons as Estate Trustee, 2026 ONSC 4697
COURT FILE NO.: CV-23-00000199-0000
DATE: 2026 06 04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DENIS PATRICK LYONS
Applicant
- and –
MICHAEL CHOU-LENG LOOI LYONS in his capacity as Estate Trustee for the ESTATE OF GEORGE HENRY DENIS LYONS
Defendant
REASONS FOR JUDGMENT
Stewart J.
Released: June 4, 2026