Shaker – Federal Court finds that a trustee of a real estate trust does not hold any “interest in real property” that can be charged by CRA

CRA obtained an interim order to charge the interest of Mr. Shaker, as one of the trustees of a trust (the “VSI Trust”) for a Toronto property (Blue Jays Way), for a personal tax debt. In finding that such charge was not authorized under Rule 458(1)(a)(i), which referenced a judgment debtor’s “interest in real property,” i.e., in finding that the quoted words did not extend to Mr. Shaker’s legal interest in the Blue Jays Way property as trustee, and before ordering the interim charge to be discharged, Walker J stated:

Trust property is not available to the creditors of a trustee where the debt in question is the trustee’s personal debt … . [T[he Tax Debt is not a debt of the VSI Trust and the trust property, the Blue Jays Way Property, is not available to the CRA to satisfy Mr. Shaker’s debt. To conclude otherwise would improperly and adversely impact the interests of the third-party beneficiaries of the VSI Trust. …

… Canada North Group stat[ed] “[p]roperty held in trust cannot be said to belong to the trustee because ‘in equity, it belongs to another person’ (Henfrey [[1989] 2 S.C.R. 24]], at p. 31)”. It follows that a trustee cannot use trust property to satisfy a personal debt.

Neal Armstrong. Summaries of Canada (National Revenue) v. Shaker, 2022 FC 407, 2022 FC 408 under Federal Court Rule 458(1)(a)(i) and General Concepts - Ownership.