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Vesting Orders and Gifts of Real Property under a Will: Nobrega and Elder v. Trustees of the Estate of M. Gasparovich

Nobrega and Elder v. Trustees of the Estate of M. Gasparovich, 2018 ONSC 2901, (CanLII), http://canlii.ca/t/hrzd6 

 The opening sentence of this case is: “Twenty years ago a mistake was made when settling the estate of Matthew Gasparovich”.  This case is an example of how one small mistake can lead to litigation and administrative issues years later when dealing with real property in estate planning.

The applicants, in this case, sought the division of three adjoining properties that had been merged into one at the time of purchase.  The properties had been passed on to them by their late father as part of his estate.  They made an application to the City of Toronto seeking the division, which was denied.  They then brought this application to review the City’s decision and obtain a Vesting Order from the Court.

The Court dismissed the application without prejudice to the applicants to bring a new application, on Notice to the City of Toronto, and with further information regarding the relief sought.

Background:

The testator, (the applicants’ father) died in 1990.  At the time of his death, he had three children, all of whom were named Estate Executors.

Many years prior to his death the testator had purchased three adjoining residential properties.  While each property had a separate legal description, the titles for the subject properties were merged into one property under his name.

When the Estate was distributed the children wanted to separate the properties, but they were advised that the division was not permitted by the Planning Act.[1] The amendment to the Planning Act which would have prevented the division came into effect four months after the testator’s death and as such would not have been applicable to his estate.

Based on the advice received, the properties were transferred to two of the siblings as tenants in common with a 33.75% and 66.43% interest respectively.  The two siblings maintained the properties separately.

Having now reached a stage at which they were beginning their own estate planning, the siblings decided to apply for separation of the properties.

An application was made to the City of Toronto for a technical severance of the three properties.  The application was denied as it did not satisfy certain requirements of the Planning Act.

The siblings then brought an application to the Court seeking a Vesting Order.  The application before the Court did not include the written submissions made to the City, nor was the City put on notice of the application to the Court.

Analysis:

Citing Chippewas of Sarnia Band v. Canada (Attorney General), [2000] O.J. No. 4804 (C.A.), at para. 281, the Court notes that the power to grant a Vesting Order is both equitable and discretionary.

Importantly, in cases, such as this, where a Vesting Order might contravene the Planning Act, the Courts must use their discretion cautiously.

In light of the insufficient information available and the absence of a full understanding of the City’s concerns, the Court was not prepared to grant the Order sought. The Application was therefore dismissed without prejudice to the applicants to bring a new application with further information and notice to the City.

Takeaways:

While Justice McArthur noted that the request of the applicants “to vest the properties in their names, in order to rectify the mistake made so many years ago, seems reasonable”, Her Honour had insufficient evidence to exercise her discretion in this case.

Real property is often one of the gifts passed down to the next generation and legal advice ought to be obtained when real property forms part of an estate plan, especially if the intention is to leave the property to more than one beneficiary. In this case, one error regarding the interpretation of the Planning Act led the beneficiaries into administrative and legal proceedings several years later.  .

[1] Planning Act, R.S.O. 1990, c. P.13

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