2024 ONSC 207, 2024 ONSC 207

CITATION :, 2024 ONSC 207 DIVISIONAL COURT FILE NO.: 362/23 DATE: 20240111 SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT RE: IN THE MATTER OF THE GRAHAM FAMILY TRUST MICHAEL LLOYD GRAHAM, personally and in his capacity as Trustee for the Graham Family Trust AND: MICHELLE BENTON , DAVID BENTON, GEORGE H.

SMITH in his capacity as Trustee for the Graham Family Trust, RICHARD SHIELDS in his capacity as Trustee for the Graham Family Trust, HARRY GRAHAM , DALTON GRAHAM, SANDRA LEE GRAHAM , MARIE HUTCHISON , KAREN PILLON , MELISSA GRAHAM, SHANNON NEDDO, NICOLE GRAHAM, STEPHEN HUTCHISON, GRAHAM HUTCHISON, SHANE HUTCHISON, MATTHEW PILLON, SARAH BENTON, VICTORIA BENTON, DAVID BENTON, MICHAEL A. GRAHAM, ROBERT J.

GRAHAM and THE OFFICE OF THE CHILDREN’S LAWYER on behalf of the minors HADLEY MAE HUTCHISON and GWENDOLYN HUTCHISON and all unborn and unascertained beneficiaries of the GRAHAM FAMILY TRUST, Respondents / Appellants / Respondents BEFORE: D.L. Corbett, Myers and Shore JJ.

COUNSEL: David Wagner , for the Appellants Colin Brown , for the Respondents HEARD at Toronto: January 8, 2023 ENDORSEMENT The Court: [ 1 ] After an eight-day trial, followed by written submissions, the trial judge, Ferguson J., disposed of a myriad of issues raised in connection with the Graham Family Trust, as set out in her 173-paragraph decision released November 16, 2020 ( 2020 ONSC 6985 ). No appeal was taken from this trial judgment. [ 2 ] One point of conflict was addressed by the trial judge in a manner that left an issue open.

The trial judge set aside a conveyance of land from the Trust to the non-party Virginia Graham, but gave Ms Graham and her husband, the respondent Harry Graham, an option to purchase the land at the value of that land at the time of the failed conveyance. If Harry and Virginia elected to purchase the land on this basis, and the parties could not agree on the value, the trial judge was seized of that issue. [ 3 ] Harry and Virginia elected to buy, and the parties could not agree on the value.

This led to a one-day hearing on November 16, 2021, before the trial judge, following which the trial judge issued the following endorsement: I heard this trial and released reasons on November 16, 2021 (sic). I ordered that Harry pay fair market value for the piece of property he obtained (he had been doing work on the property but could not quantify the amount). Harry and Virginia’s position is that they should not pay anything. His siblings believe they (he) should pay over $200,000 which is ridiculous.

He shall pay $15,000.00 to the trust. [ 4 ] Subsequently, the trial judge released a costs endorsement (unreported) related to the one-day trial, in which she stated as follows (among other things): Harry and Virginia Graham (Virginia is a non-party) seek approximately $19,000 in substantial indemnity costs or approximately $15,000 in partial indemnity costs as a result of a motion regarding the fair market value Harry should pay for the land he acquired from the Trust property. That property is in Virginia’s name. A home has been built on it.

Harry and Virginia were successful when I ordered them to pay $15,000 to the Trust as the fair market value of the piece of property they received. Harry received the property as a result of the work that he, over the years performed on the Trust property. I accepted the evidence of Harry and Virginia’s expert as to fair market value over that of the other side….

At the trial/application, I found that Harry was unable to properly quantify the value of the work he performed on the Trust property and ordered that Harry (and Virginia) either return the property received or get an appraisal of fair market value (which they did)….

I felt that the other side’s submission that the fair market value was $200,000 was “ridiculous”. [ 5 ] The Appellants argue that the reasons below are insufficient and ask this court to set aside the payment order for $15,000 and remit the matter to the court below with directions on how to calculate the “fair market value” of the land. [ 6 ] We would dismiss the appeal. When the reasons are read in the context of the trial judgment and the record below on the valuation issue, the trial judge’s path of reasoning is clear and discloses no error. [ 7 ] The trial judge had two competing expert reports before her.

She rejected the Appellants’ expert’s opinion as “ridiculous” but did not explain why she came to this conclusion. However, a review of the two expert reports makes it clear why the Appellants’

expert report was rejected. It appraises the value of the land as if it was a stand-alone building lot. It is not. It is a “sliver” between two lots, a “lot-line adjustment”, that adds 1.6 acres to one lot and takes that area away from the other lot. It is unsaleable except as between the owners of the two lots, and an appraisal based on it being a stand-alone building lot is based on an obviously false premise. [ 8 ] The trial judge therefore had only one credible expert report before her, which she was entitled to accept. That report contained two opinions of value, calculated on different bases.

It found that the value of the land to the Trust was $15,000. That is, if the Trust sold its holding with, or without, the sliver of land, the difference in the sale price would have been $15,000. The report found that the value of the land to the Respondents was $70,000. That is, if the Respondents sold their property with, or without, the sliver of land, the difference in the sale price would have been $70,000.

The Respondents’ expert was surprised that the difference in these amounts is as high as it is but was satisfied that such was the case – in part because the additional land represented a much larger proportion of the Respondents’ entire holding than it did for the Trust (which owns a much bigger piece of property). [ 9 ] The trial judge opted to award the value of the property to the Trust ($15,000), rather than the value of the land to the Respondents ($70,000).

When this decision is read in the context of the trial judgment and the costs endorsement, it is clear why this choice was made. [ 10 ] The property was transferred by the Trustee (the Applicant Michael Graham) to the non-party (Virginia Graham) as consideration for her husband’s (Harry’

s) work on the Trust property. Harry and Virginia relied on this agreement and the transfer and built small premises on the added land, which they could use to generate rental income. They were permitted to have this “Garden Suite” so long as it is removed when they transfer the property – as stated above, the additional land is not a self-contained building lot. [ 11 ] Harry did the work agreed between him and Michael, and as a result of the trial judgment Harry and Virginia were not entitled to retain the land they received in compensation for Harry’s work.

Further, the trial judge had uncontested evidence that Harry and Virginia would not have acquired the land at all had they been required to pay for it at the time of the transfer.

Now that they have spent funds to build the “Garden Suite” in reliance on the transfer, of course they wish to retain the land. [ 12 ] The parties and their experts agree that the value must be calculated at the time of the transfer (that is, without taking account of the subsequent “improvement” by construction of the Garden Suite). [ 13 ] This is a trust case, and it is abundantly clear why the trial judge concluded that the value of the land to the Trust was the appropriate measure of value for the purpose of its acquisition by Harry and Virginia.

The Trust will be made whole, minimizing the unfairness to Harry of his work on Trust property being uncompensated. [ 14 ] Reasons must be sufficient to permit appellate review: Diamond Auto Collision Inc. v. Economical Insurance Group , 2007 ONCA 487 , paras. 11 and 12 . Where the appellate court cannot understand the legal basis for the decision or the factual findings underpinning the decision, there is no alternative but to grant the appeal: Read Jones Christofferson Ltd. v.

Neilas Inc. , 2016 ONCA 321 , paras. 6-7 . [ 15 ] We do not accept that the Respondents were “special interest purchasers” or that the price should have been set to maximize the value of the Trust or deprive the Respondents of the value received from a breach of trust. Identifying a purchaser as a “special interest purchaser” is a highly fact-specific inquiry ( Dominion Metal & Refining Works Ltd. v. Minister of National Revenue , 1986 CarswellNat 345 (Fed. T.C.) , and the unique circumstances of this case would cry out against such a finding.

The “value to the Respondents” of $70,000 is notional and hypothetical in the circumstances of this case and is no more compelling than the Respondents’ request that the value be placed at nil because that is what they would have paid for it willingly. The Respondents were not the party who breached the trust, and so are not being asked to return “ill-gotten gains”. [ 16 ] The task of the trial judge was to do equity between the parties, given the entire context of the case. It is clear why the trial judge considered that the amount required to compensate the Trust for its loss of value was sufficient.

We are satisfied that this conclusion is clear from the record below, the initial trial judgment, the subsequent costs endorsement, and the trial judge’s disposition of the valuation issue. As reflected in this endorsement, this entire context is sufficient to enable meaningful appellate review. [ 17 ] Therefore, the appeal is dismissed, with partial indemnity costs payable by the Appellants to the Respondents fixed in the amount of $11,000, inclusive. “D.L. Corbett J.” “Myers J.” “Shore J.” Released: January 11, 2024