In Boston-Cloutier v Boston (unreported 28 July 2017), Justice Gareau of the Ontario Superior Court of Justice made clear that an interest in land based on constructive trust cannot be registered on title.

Background

The underlying facts involve the estate of Anne Marie Boston, which has been subject to prolonged litigation. The parties to that litigation, Cynthia Louise Boston-Cloutier and Terence Roy Boston are Anne Marie Boston's children.

On July 6, Justice Gareau ordered Paul Cassan, who had been appointed counsel for Anne Marie Boston, to accept an offer to purchase a cottage property she owned. The transaction was scheduled to close on July 27, 2016.

On July 21, 2017, Thomas Andrew Boston, another of Anne Marie Boston's children, but who is not a party to the guardianship litigation, commenced an action against his mother seeking a monetary judgment based on an alleged constructive trust in the cottage property.

In conjunction with that action, on July 26, 2017, Thomas Andrew Boston registered on title a "notice of unregistered estate, right, interest or equity" pursuant to section 71 of the Land Titles Act (the "Act").

A motion was brought on behalf of Anne Marie Boston to delete the notice on title so that the sale could proceed. All parties to the estate litigation consented to the relief sought.

Donald Orazetti, counsel for Thomas Andrew Boston, appeared to oppose the motion and requested a one-week adjournment to file material.

The Decision

Justice Gareau refused to grant the adjournment finding there was nothing Mr. Orazetti could file with the court that would assist in clarifying his client's position. Justice Gareau reasoned "[t]he facts are clear. The law is clear, and in my view the result is obvious".

Thomas Andrew Boston's interest in the property was solely based on the constructive trust alleged in his claim. Accordingly, Justice Gareau found that section 62 of the Act expressly prohibited registration of the notice. That section reads:

A notice of an express, implied or constructive trust shall not be entered on the register or received for registration.

In granting the motion and ordering the deletion of the notice Justice Gareau explained:

The claim of Thomas Andre [sic] Boston is not a claim for an interest in property as contemplated in the registration provisions of s. 71 of the [Act]. Following the reasoning by Barnes, J. in McLeod v. Spencer 2015 ONSC 5984, the registration on title of the notice was unauthorized.

There is no prejudice to Thomas Andrew Boston in granting the order as his claim is for judgement [sic] for money and not an interest in the subject property and can proceed regardless of the sale of the property.

Analysis

Justice Gareau's decision clarifies that an interest based solely on a constructive trust cannot be registered on title. A claim for monetary judgment based on such a trust does not create a distinct registrable interest. Further, a claim against the proceeds of the transaction does not crystallize into an interest in the property before the sale.

Section 62 of the Act prohibits registration of notices of trust claims such that beneficiaries can no longer claim against purchasers with notice of the trusts. In other words, it addresses the mischief that would otherwise arise under the equitable doctrine that a purchaser with notice that their vendor is a trustee must satisfy themselves that the purchase is authorized by the trust instrument.

The key take-away from Justice Gareau's decision is that trusts are not prohibited by the Land Titles Act, only registration of notice thereof on title.

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