Toronto-Dominion Bank v. Minister of Revenue of Ontario, [1994] OJ No. 897

A wholly-owned subsidiary ("Realty") of the Toronto-Dominion Bank (the "Bank") was dissolved and in connection with that dissolution, Realty directed that land which it previously had owned in fee simple be conveyed to the Bank which, in turn, directed that legal title be held by Realty as bare trustee. Realty, the Bank and another wholly-owned subsidiary of the Bank ("Penlim") agreed that thereafter the legal interest in the property would be transferred from Realty to Penlim to be held by Penlim as bare trustee for the Bank. The Bank applied to the Court for direction as to whether such transfer of legal title to the Bank would trigger land transfer tax under paragraph (f) of the definition of value of consideration.

Feldman J. found that "a person who owns land in fee simple holds the entire title and is prima facie not a trustee". Accordingly, the analysis of the Minister, that when Realty held the land in fee simple it held both the equitable and legal interest in the land, represented a strained interpretation of the definition, and should not be accepted. The transfer of the legal interest in the land to Penlim would not attract land transfer tax.

In rejecting the interpretation of the Minister of the definition of "value of consideration" in the Land Transfer Tax Act (Ontario), Feldman J. applied the statement in Driedger, Construction of Statutes, 2nd Ed. that "in all statutes, whether they could be classified as penal or remedial, where there is doubt or obscurity the Courts are inclined to lean in favour of what is reasonable from the subject's point of view, on the theory or presumption that Parliament is reasonable."