What is a “child” Part II – Clash of the Toronto Islanders

To most Torontonians, the Toronto Islands (the “Islands”) are known as a calm refuge away from the city,  featuring beaches and picnic areas with picturesque views of the city skyline a short ferry ride from the downtown core. Some may also be aware that the Islands are home to a small, tight knit community of artists, intellectuals, and others drawn to the attractions of island living. It therefore may come as a surprise to many that the Islands were recently the site of a divisive property dispute that escalated to litigation between a resident and the trust that governs property ownership on the Islands.¹

The court’s decision in Toronto Islands Community Trust Corporation v. Peter McLaughlin and Steven Whitfield (“Toronto Islands”)², may be of interest to some observers because it provides a glimpse into the inner workings of the insular community of Toronto Islanders. However, most pertinent for our purposes as lawyers who deal with estate and trust litigation matters, the decision is notable for the manner in which the court dealt with the issue of whether rights should be bestowed on an “adult child”.³ Specifically, the question before the court was whether it should recognize the adoption of a 58-year-old by a 90-year-old adult in circumstances where the adoption allowed him to transfer ownership of his property to his “child” under the terms of a trust that would otherwise prevent the transfer or sale of the property.

Background

Broadly speaking, the background to the dispute in Toronto Islands goes back to at least 1955, when Toronto’s city council decided to convert the Islands to parkland and demolish the dwellings there, which were more numerous than today.  This decision was met with stiff opposition, and several decades later a compromise was ultimately reached whereby people were permitted to continue living on the Islands, subject to certain rules designed to preserve the natural environment.

As a result, the Islands are now subject to a unique property ownership structure under which residents may only lease the lots on which their houses stand and transfers of their homes are subject to strict regulation administered by a statutory trust. Unlike other people living in Toronto and throughout the province, residents of the Islands may not sell their homes on the open market, nor receive market value for them.

Framework for Property Ownership on the Islands

The  Toronto Islands Residential Community Stewardship Act⁴ (the “Islands Act” or “the Act”) provides that homes on the Islands can only be transferred through a statutory trust (the “Trust”), subject to exceptions outlined below. Selling price is based on replacement value only (rather than market value), and is set by a third-party appraiser. Once the selling price is determined, homes are offered by the Trust to the first in line on a lengthy waiting list of people wanting to buy an Island house.

However, there are three exceptions to this regime. Under certain conditions, an owner can transfer a home to a spouse, a joint tenant or a child. The Act defines child to include an adopted child.

The Dispute

Peter McLaughlin and Steven Whitfield met on the Islands in 1984 and developed a close friendship over the ensuing decades, despite their thirty-one year age difference. Steven eventually moved in with his second wife and lived in their home on Ward’s island, a ten minute walk away from Peter’s home, and Peter was a regular presence at family gatherings. Steven also spent a lot of time at Peter’s home over the years, and even helped him with renovations.

The dispute arose when in February of 2020, it came to the attention of the Trust that Peter had transferred a half interest in his house to Steven. After Steven justified the transfer on the basis that Peter had adopted Steven three years earlier at age 90 (Steven was 58 at the time), the Trust took the position that the adoption and transfer were an intentional circumvention of the Act, and commenced court proceedings seeking a declaration that the adoption bestowed no legal right to Steven to obtain title to Peter’s home, a permanent injunction prohibiting Steven from obtaining title to Peter’s home, as well as fines and legal costs against Peter and Steven.

The Decision

In the court proceeding, the Trust relied heavily on the fact that Peter had not provided any evidence with respect to the purpose for which he adopted Steven. However, the court accepted that Peter was unable to give evidence as he was by that point ninety-two years old and suffering from dementia.

The Trust also asserted that although the Act defines “child” as including an “adopted child”, it does not include an adopted adult within that definition. The court did not accept this submission, noting that the dictionary definition of child includes a son or daughter of any age, and found that in any event, when the Act was passed, the law in Ontario permitted adult adoptions and therefore the legislature should be presumed to have known about the possibility of adult adoptions.

Steven argued that adult adoptions are subject to a court process whereby the adopter and adoptee have to establish that the adoption is genuine, and given that the process was followed by Peter and Steven and the adoption order was granted, the Trust’s position was a collateral attack on the adoption order.

However, the court also declined to accept Steven’s argument that the analysis should end in accepting the validity of the adoption order, as the adoption process is designed with a view to the purposes of the Child, Youth, and Family Services Act rather than the Toronto Islands Residential Community Stewardship Act.

Instead, the court focused on the nature of Peter and Steven’s relationship in interpreting the Act’s language in a manner that recognized its context, purpose and legislative history.  The court reviewed the evidence, which included photographs and other documents spanning thirty-seven years, and found there to be a genuine father-son relationship. The court found it unlikely that Peter and Steven would engage in a thirty-seven year relationship involving their immediate and extended family to engineer the transfer of Peter’s home in circumvention of the Act, and therefore held that Steven was Peter’s child for the purposes of the Act.

As such, the court dismissed the Trust’s application and awarded full indemnity costs in favour of Steven.

Takeaways

The court’s conclusion in the Toronto Islands decision might be difficult for some to accept without an appreciation of the evidence in this case. How is it possible that a 90 year-old can adopt a 58 year-old where there is such a clear financial benefit in doing so? The answer is that here, the court looked beyond the parties’ technical legal arguments and made an assessment of the true nature of Peter and Steven’s relationship based on the evidence before it, which it found to demonstrate a genuine father-son relationship. This serves as an important reminder that in most cases the evidence, rather than strict legal arguments, will underpin the court’s conception of what is just and thereby determine the outcome.