Words and Phrases - "interest in real property"

CRA had registered with the Court a certificate against the applicant (Mr. Shaker) claiming a tax debt in the amount of over $4.7 million pursuant to s. 223 of the Income Tax Act, and had obtained an interim order to charge his interest as one of the trustees of a trust (the “VSI Trust”) for a Toronto property (Blue Jays Way). After Mr. Shaker brought a motion for a discharge, the Crown in argument effectively appeared to concede that the reference in Rule 458(1)(a)(i) to a judgment debtor’s “interest in real property” did not extend to Mr. Shaker’s legal interest in the Blue Jays Way Property as trustee, so that he had no personal (and monetary) property right to that property to which the a charge for his personal tax debt could be applied.

In finding this to be a correct statement, and before ordering the interim charge to be discharged (and rejecting the Crown’s request that it nonetheless be permitted to cross-examine Mr. Shaker), Walker J stated (at para. 30):

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. …

The common law recognizes a distinction between legal and beneficial ownership. A person having beneficial ownership in property can enforce their beneficial ownership rights against the holder of legal title. …

Justice Brown … observed that a trustee holds trust property solely for the beneficiaries’ enjoyment and cannot profit personally from their dealings with the trust property or with the beneficiaries of the trust [2018 SCC 8] at para 17). Justice Côté echoed these principles … in Canada North Group stating “[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.