IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Graham v. Smith, |
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2008 BCSC 348 |
Date: 20080325
Docket: S101787
Registry: New Westminster
Between:
Douglas D. Graham, Administrator with Will Annexed of the
Estate of Elizabeth Carter Watters, Deceased
Appellant
And
Ian C.B. Smith, Registrar of New Westminster Land Title District
Respondent
- and -
Docket: S101788
Registry: New Westminster
Between:
Craig Lloyd Fedewa and Mari-lyn Ruth Baldwin
Executors of the Will of William Lloyd Fedewa, Deceased
Appellants
And
Ian C.B. Smith, Registrar of New Westminster Land Title District
Respondent
Before: The Honourable Madam Justice Sinclair Prowse
Reasons for Judgment
| Counsel for the Appellants: |
G.N. Taylor M. Hicken
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| Counsel for the Respondent: |
R. Janes |
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Date and Place of Hearing: |
December 17, 2007 |
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Vancouver, B.C. |
(I) NATURE OF THE PROCEEDING AND ISSUE RAISED
[1] This hearing pertains to appeals raised in two different actions. Because the material background circumstances and the grounds for the appeal are the same in both of these actions, it was appropriate that the appeals be heard together.
[2] In each of these matters, the Registrar of Land Titles for the New Westminster Land Title District (the "Registrar") refused an application to transmit title as requested. In the Fedewa action, the application was made by the executors of the estate of William Lloyd Fedewa and in the Graham action, the application was made by the Administrator with Will Annexed of the estate of Elizabeth Carter Watters.
[3] The issue in this case is whether the Registrar was correct in refusing these applications. For reasons which follow, I am satisfied that he was not correct and that the appeals should be allowed.
(II) BACKGROUND CIRCUMSTANCES
[4] To put this issue in context, prior to their deaths William Lloyd Fedewa and Elizabeth Carter Watters respectively through Deeds of Settlement irrevocably gifted real property to named beneficiaries. Included in the terms of their respective Deeds of Settlement was the creation of an Alter Ego Trust.
[5] Through this mechanism, Mr. Fedewa became the bare trustee of the real property that he irrevocably gifted to his beneficiaries, that trusteeship to continue until, at the request of the beneficiaries, the property was transferred to them. (This property will hereinafter be referred to as the "Fedewa Property".)
[6] Similarly, through an Alter Ego Trust Ms. Watters became the bare trustee of the real property that she irrevocably gifted to her beneficiary, that trusteeship to continue until, at the request of the beneficiary, the property was transferred to him. (This property will hereinafter be referred to as the "Watters Property".)
[7] After the creation of these trusts, neither Mr. Fedewa nor Ms. Watters applied to the Land Registry to change the title of the properties to reflect that they now held the properties in trust. That is, the title of the Fedewa Property was never changed from Mr. Fedewa as the sole registered owner to Mr. Fedewa in trust, nor was the title of the Watters Property ever changed from Ms. Watters as the sole registered owner to Ms. Watters in trust.
[8] At the time of their deaths, Mr. Fedewa and Ms. Watters continued to be the bare trustees of the respective properties as neither of the beneficiaries had requested that the properties be transferred to them.
[9] After Mr. Fedewa’s death, his executors applied for a Grant of Letters Probate. As required, the executors prepared a Statement of Assets, Liabilities and Distribution. Because the bare trusteeship continued after Mr. Fedewa’s death as the beneficiaries had not requested that the Fedewa Property be transferred to them, that trusteeship was included in this statement. The value given to it was "nil".
[10] Similarly, after Ms. Watters death, her administrator completed a Statement of Assets, Liabilities and Distribution as is required when applying for Letters of Administration. Because the bare trusteeship continued after her death as the beneficiary had not requested that the Watters Property be transferred to him, that trusteeship was included in this statement. Its value was given as "nil".
[11] After the Fedewa executors received the Grant of Letters Probate and the Watters administrator received the Letters of Administration with Will Annexed, they each applied to the Registrar to have the titles of the respective properties transmitted to them, as the executors and the administrator respectively. (That is, as the executors of Mr. Fedewa’s Estate and as the administrator of Ms. Watters' Estate, they each applied to act as the bare trustees of the Fedewa Property and the Watters Property respectively until the beneficiaries requested that the title be transferred.)
[12] Although it is not of any legal relevance in these appeals, the Fedewa executors and the Fedewa beneficiaries are the same people, and the Watters administrator and the Watters beneficiary is the same person.
[13] In any event, as required by the Land Title Act, R.S.B.C. 1996, c. 250, with their application to the Registrar, the Fedewa executors and the Watters administrator filed all of the Probate and Letters of Administration documentation (including the Statement of Assets, Liabilities and Distribution which described the value of the bare interests held by Mr. Fedewa and Ms. Watters respectively as being nil).
[14] The applications themselves included a description of the market value of the properties, this market value being defined on the face of the documents as the actual value as assessed by the B.C. Assessment Authority for the year in which the person holding title died. On the respective applications, the market value of the Fedewa Property was described as $655,000, while the market value of the Watters Property was described as $688,300.
[15] The Registrar refused both of these applications.
[16] As far as the reasons for the refusals are concerned, initially the Registrar advised that his refusal was based on the fact that these properties had been held in trust and the title first had to be changed to reflect that trust. Subsequently, he further explained his reasons in letters that he wrote to the Fedewa executors and the Watters administrator. Both of these letters were dated September 25, 2006, and both provided the same reasons for declining the applications and the steps needed to rectify the situation. Specifically, the letters provided that:
1. He could not accept the properties being shown as a "nil" value on the Statement of Assets, Liabilities and Distribution because they were being held in trust. Property held by a trustee does not form part of the trustee's estate and should not be shown as such. Property held by a trustee must be distributed in accordance with the trust instrument and the Trustee Act, R.S.B.C. 1996, c. 464.
2. In order for the properties to be dealt with he required registration of the titles in the names of William Lloyd Fedewa in trust and Elizabeth Carter Watters in trust respectively.
3. He was unable to register title to the properties in the name of William Lloyd Fedewa in trust and Elizabeth Carter Watters in trust as his only authority for so doing was section 180(9) of the Land Title Act. Mr. Fedewa was not a trustee at the time he took title in his Alter Ego Trust and Ms. Watters was not a trustee at the time she took title in her Alter Ego Trust.
4. As no one was in a position to transfer the properties into the name of Fedewa in trust or Watters in trust, he required a Court order to vest the properties in their names in trust.
5. After registration of the properties by Court order in Fedewa in trust, or in Watters in trust, the transmissions of title to the personal representatives could take place so that they could appoint the new trustees. In support of the transmission to the executors, he required the original Alter Ego Trust and certified copies of probate in support for filing.
6. The properties had to be deleted from the respective Statements of Assets, Liabilities and Distribution for the reasons above.
7. Title would issue after the transmission to the personal representatives as being IN TRUST.
8. He confirmed that he had retained the Alter Ego Trust documentation that had been filed with the respective applications.
(III) ANALYSIS AND DECISION
[17] In determining whether to grant an application to transmit the title of a property, the Registrar is governed by s. 260 of the Land Title Act. Pursuant to this provision, before the Registrar can grant the application to transmit the title, he must be satisfied that the applicant has established a good safe holding and marketable title to the property.
[18] As was set out in his correspondence to the Fedewa executors and to the Watters administrator, the Registrar was not satisfied that they had established this title. Specifically, he concluded that there was not a good safe holding and marketable title to the property because the title had not been changed (that is, title had not been transmitted) upon the creation of the Alter Ego Trusts to show that the title was now being held by Mr. Fedewa and Ms. Watters respectively in trust.
[19] As there is no dispute that prior to the creation of the trusts, Mr. Fedewa and Ms. Watters as sole owners had a good safe holding and marketable title to their respective properties, the issue is whether the Registrar was correct in his decision that in order to maintain a good safe holding and marketable title, it was necessary upon the creation of the trusts for Mr. Fedewa to transmit the title of his property from himself to himself in trust and for Ms. Watters to transmit the title of her property from herself to herself in trust.
[20] For the reasons which follow, I have concluded that the Registrar’s decision was not correct. Moreover, I am satisfied that it is unnecessary for the title to indicate that the executors and the administrator hold the property in trust.
[21] With respect to my conclusion that it was unnecessary for Mr. Fedewa and Ms. Watters to transfer their respective properties to themselves in trust upon the creation of their Alter Ego trusts, neither the Land Title Act nor the underlying principles of trust law require such a transmission.
[22] Specifically, s. 180(1) of the Land Title Act provides that: "If land vests in a personal representative or trustee, that person's title may be registered…"[emphasis added]. In other words, this provision permitted Mr. Fedewa and Mrs. Watters to maintain the title as it had been before they became trustees. They were not required to register the change from themselves as sole owners to themselves as trustees.
[23] The provision is in keeping with the general legal principles governing trusts. Legal title to trust properties vests in the trustee. Although the beneficiaries have greater or lesser rights to enjoy the property (depending on the terms of the trust), legal title to the property does not vest in them: H.A.J. Ford et al., Principles of the Law of Trusts, 3d ed., looseleaf (Sydney: Thomson Lawbook, 1996) at p. 1-53; Donovan Waters et al., Waters' Law of Trusts in Canada, 3d ed (Toronto: Thomson Carswell, 2005) at p. 3.
[24] Applying these principles to the facts of this case, the creation of the Alter Ego Trusts did not change the person in whom legal title to the property was vested. Throughout, legal title remained with Mr. Fedewa and Ms. Watters respectively. Legal title will change when the Fedewa beneficiaries or the Watters beneficiary elect to have the properties transferred to them.
[25] Although the Registrar argues that these principles do not govern a "bare trust", the authorities do not support that argument. Rather, a bare trust has been defined as "a trust wherein the trustee or trustees hold property without any duty to perform except to convey it to the beneficiary or beneficiaries upon demand. Waters' Law of Trusts in Canada at p. 32. The fact that it is a bare trust does not alter the fact that the legal title to the property vests in the trustee.
[26] The Registrar contends that the decision in Whistler Village Land Co. v. British Columbia (Assessor Area North Shore-Squamish Valley Area (1981), 121 D.L.R. (3d) 284, 15 M.P.L.R. 192 (B.C.S.C.), stands for the proposition that in a bare trust the property is vested in and held by the beneficiaries and that, consequently, the bare trustee does not have a good safe holding and marketable title. However, a review of the decision does not support this contention.
[27] Rather, the issue in Whistler Village Land Co. was: In whom is the right to use the property vested? If the right was vested in the municipality (which was the beneficiary of the trust), the property would qualify for a tax exemption. If, on the other hand, the right to use the property was vested in the company (which was the bare trustee), it would not qualify for this tax exemption. The Court decided the case in accordance with the trust principles set out earlier in this Judgment. The Court held that the use or enjoyment (the beneficial interest) of the property vested in the municipality as the beneficiary whereas the legal title vested in the company as the bare trustee. In other words, the interests of the beneficiary in the property did not extend to the holding of legal title.
[28] Given that the Land Title Act does not require that a trust be registered, it is contrary to the statute itself to conclude (as the Registrar did) that the failure to register a trust results in the loss of a good safe holding and marketable title.
[29] Moreover, applying the legal principles governing trusts, the legal title of the properties remained vested in Mr. Fedewa and Ms. Watters respectively after they became trustees. The creation of the trust did not change the person in whom legal title to the property was vested.
[30] For these reasons, I am satisfied that neither Mr. Fedewa nor Ms. Watters were required to transmit their properties to themselves in trust after the creation of their Alter Ego Trusts. As a consequence, I am satisfied that the good safe holding and marketable title that they held to their properties prior to the creation of these trusts was maintained after their creation.
[31] With respect to the applications of the Fedewa executors and the Watters administrator to have the properties transmitted to them as executors and administrator, through the operation of various statutory provisions, the interests of Mr. Fedewa and of Ms. Watters in their respective properties (namely, the bare trusteeships) vest with their personal representatives upon their deaths.
[32] The transmissions of title requested in the respective applications to the Registrar by the Fedewa executors and the Watters administrator simply document that vesting.
[33] Specifically, s. 264(a) of the Land Title Act provides that: "If an applicant becomes registered as a personal representative of a deceased owner, in the case of land, the applicant is invested with all the title of the deceased owner in it … and the title of the applicant relates back to and takes effect as and from the date of the death of the deceased."
[34] As both Mr. Fedewa and Ms. Watters held a good safe holding and marketable title to their respective properties when they died, that good safe holding and marketable title vested with their personal representatives (namely, the Fedewa executors and the Watters administrator) upon their deaths. There is no legal basis that was identified requiring the executors and the administrator to register title any differently than had been required of Mr. Fedewa or Ms. Watters.
[35] The provisions of the Estate Administration Act, R.S.B.C. 1996, c. 122, and the Trustee Act are in keeping with this provision of the Land Title Act. Section 77(1) of the Estate Administration Act provides that "if real estate is vested in a person without a right in any other person to take by survivorship, on the person's death it devolves to and becomes vested in the person’s personal representatives as if it were a chattel real vesting in them." Section 78(1) of that Act further provides that “the personal representatives of a deceased person must hold the real estate as trustee for the persons by law beneficially entitled to it.”
[36] Section 71(1) of the Trustee Act provides that: "If an estate … is vested on a trust … in a person solely, then on the person’s death and despite any testamentary disposition, it devolves to and becomes vested in the person’s personal representative as if it were a chattel real vesting in the personal representative."
[37] All of these statutory provisions are mandatory.
[38] The primary argument of the Registrar pertains to the nature of the interest held by Mr. Fedewa and Ms. Watters and therefore the nature of the interest held by their personal representatives after their deaths. Although the Registrar argues that the interest did not extend to the title of the land being vested in them, for the reasons set out previously I do not accept that argument.
[39] The Registrar augments his argument by contending that the above provisions of the Estate Administration Act and the Trustee Act support the conclusion that real property does not vest with a trustee or a personal representative because the statutes provide that it "becomes vested in the person's personal representatives as if it were a chattel real vesting in them”. The Registrar argues that as "chattel real" pertains to an interest that is less than a freehold interest, real property cannot vest in a deceased's personal representatives.
[40] This contention of the Registrar is not supported by the wording of the statutes. In particular, the Estate Administration Act specifically refers to real property.
[41] In my view, the description in the statutes of the nature of the vesting of the deceased’s property in his/her personal representatives as comparable to the vesting of a chattel real simply recognizes that the vesting by its nature is time limited. That is, the vesting of a deceased’s estate in his/her personal representatives lasts until it transferred to the beneficiaries. (In the present case, the length of the vesting is until the beneficiaries elect to have the properties transferred to them.)
[42] In any event, pursuant to the provisions of the Land Title Act itself, as of the date of the deaths of Mr. Fedewa and Ms. Watters, the legal title that they each held to their properties as trustees became vested in their personal representatives – namely, in Mr. Fedewa’s executors and in Ms. Watters’ administrator. As was touched upon previously, the applications of the Fedewa executors and Watters administrator simply register the change in the titles that have already occurred by operation of the statute upon the deaths of Mr. Fedewa and Ms. Watters.
[43] Lastly, the Registrar contends that to transmit title, the Statements of Assets, Liabilities and Distribution filed by the Fedewa executors and the Watters administrator upon their respective applications for Probate and Letters of Administration must be amended, and the properties must be deleted from the Statements as the trusts do not, in the view of the Registrar, form part of the deceased’s estate.
[44] As is set out in the following paragraphs, I have concluded that the documents do not need to be changed. The contents of the documents needed in an application for Probate or Letters of Administration are not the concern or within the jurisdiction of the Registrar. In any event, I am of the view that the Statements of Assets, Liabilities and Distribution are not inconsistent with the applications for transmission of title.
[45] To put this issue in context, pursuant to s. 266(5) of the Land Title Act, before the Registrar can deal with an application to transfer the land, there must be filed in the land title office a certified copy of the grant of letters probate or letters of administration issued by the Court and an office copy of that portion of the declaration and disclosure document required by s. 111 of the Estate Administration Act that describe the land affected.
[46] Section 111(1)(b) of the Estate Administration Act, in turn, requires that applicants for probate or letters of administration must disclose "the assets of the deceased, irrespective of their nature, location or value, which pass to the deceased’s personal representative on the deceased’s death."
[47] As was set out earlier in these Reasons, both the Fedewa executors and the Watters administrator included the trusts in their respective Statements of Assets, Liabilities and Distribution. Given that each of the properties had been irrevocably gifted to their respective beneficiaries and the interests of Mr. Fedewa and Ms. Watters in their properties were those of bare trustees, the Fedewa executors and the Watters administrator evaluated these trust interests as being “nil”. In other words, on the Statements of Assets, Liabilities and Distribution, it was the trust interests and not the properties that were being valued.
[48] On the other hand, the application for transmission of title requires a valuation of the property at the time of death of the person in whom the title is vested. Those values were included as required. The valuation on this documentation did not pertain to the value of the trust interests. Rather, it pertained to the values of the properties themselves.
[49] As the valuations in the Statements of Assets, Liabilities and Distribution and in the applications for transmission of title were for different things, there is no inconsistency.
[50] In any event, as was touched upon earlier, the adequacy of the documentation needed for probate or for letters of administration does not fall within the jurisdiction of the Registrar. The documentation required for the applications for transmission of title (including the documentation with respect to probate and letters of administration) was in proper order, and the Registrar was incorrect in his decision that changes needed to be made to it.
[51] Having reached all of these conclusions, the appeals are allowed.
[52] Specifically, there will be:
(a) a declaration that all right, title, and interest of William Lloyd Fedewa, Deceased, in and to the following parcel of real property, namely:
Parcel Identifier: 007-348-878
Lot 87 Except: Part Subdivided by Plan 74448, District Lot 132
Group 1 New Westminster District Plan 1493
(the "Fedewa Property")
is vested in Craig Lloyd Fedewa and Mari-Lyn Baldwin, executors of the will of William Lloyd Fedewa, deceased, such that they have good safe holding and marketable title thereto;
(b) a direction to the Registrar of Land Titles to register indefeasible title to the Fedewa Property in the name of Craig Lloyd Fedewa and Mari-Lyn Ruth Baldwin, executors of the will of William Lloyd Fedewa, deceased;
(c) a declaration that all right, title, and interest of Elizabeth Carter Watters, Deceased, in and to the following parcel of real property, namely:
Parcel Identifier: 011-117-435
Re-Amended Lot B (See 64227K and 27649L) of Lot 27 Block 4 District Lot 320 Plan 5565
(the "Watters Property")
is vested in Douglas D. Graham, as administrator with will annexed of the Estate of Elizabeth Carter Watters, such that he has good safe holding and marketable title thereto; and
(b) a direction to the Registrar of Land Titles to register indefeasible title to the Watters Property in the name of Douglas D. Graham as administrator with will annexed of the Estate of Elizabeth Carter Watters, Deceased.
(IV) COSTS
[53] At the request of the parties, costs were not addressed at this hearing. If the parties are not able to reach an agreement, they may set the matter down for hearing, at any mutually convenient time.
“Sinclair Prowse, J.”