Jankowski v. 990088 Ontario Inc.
IN THE MATTER OF an Agreement of Purchase and Sale made the
26th day of June, 1992 between Gottenu Developments Ltd. and
John Rodzik, in Trust for a new company to by incorporated
AND IN THE MATTER OF sub-rules 14.05(d)(e) and (h) of the
Rules of Civil Procedure
Tadeuz Jankowski, applicant, and
990088 Ontario Inc., Gottenu Development Inc. and Morris
 O.J. No. 2764
72 O.T.C. 375
80 A.C.W.S. (3d) 1126
Court File Nos. 95-GD-34274, 95-OC-00753 and 95-GD-34436
Ontario Court of Justice (General Division)
June 25, 1998.
Trusts -- Constructive trusts -- Creation of trust -- Brokers -- Compensation.
Application by Jankowski to be declared the legal owner of three lots of land. Jankowski was a licensed real estate agent associated with Business Ventures, a real estate brokerage service. The respondent 990088 Ontario was incorporated by the Rodziks to purchase a subdivision. The respondent Stein was a land developer and principal of Gottenu Developments. Jankowski contacted Stein about the potential sub-division site. Stein was interested on behalf of Gottenu, and financing was arranged. Stein had to give a $750,000 personal guarantee. The development proceeded through draft plan approval, and parcels of land were purchased. A project engineer prepared estimates of servicing costs which proved to be inadequate. A contractor installed considerable servicing and was not paid. Problems mounted, claims were being advanced and obligations were not being met. Stein asked Jankowski to try to sell the subdivision. Jankowski negotiated an agreement with the Rodziks and ultimately an agreement of purchase and sale was executed by Stein on behalf of Gottenu and the Rodziks. The Rodziks wanted help in seeing that the subdivision went ahead, and wanted to keep Jankowski and Stein involved. They offered to give Jankowski six lots. Jankowski agreed to take three and give three to Stein. A clause in the agreement of purchase and sale set this out. There was a separate commission clause with a line and the per cent symbol. Stein wanted the value of the lots put in the lot conveyance clause, so this was inserted as $60,000 in the final version of the executed contract. Stein alleged that the six lots were put in to increase the purchase price, and that somehow Jankowski took three of them. Stein said he saw that as the equivalent of nine per cent commission, which he felt was more than enough. A lawyer for Gottenu said the giving of the lots was in no way related to the commission. Jankowski said he wrote in the number five on the commission line before Stein signed the acceptance of the Offer. Stein alleged this was done afterwards and fraudulently. Business Ventures sent an invoice for a commission of $100,000 to Gottenu's lawyer before closing. Stein instructed the lawyer not to pay the commission, and said that three lots was enough.
HELD: Application allowed. Stein would have immediately complained that the five per cent commission figure was a forgery upon receiving the bill from Business Ventures had Jankowski inserted the figure after execution. Five per cent in this transaction was a reasonable amount. Stein was completely alone in his view that the lots represented commission. Jankowski's explanation that the intention was to use the lots to assure the future involvement of Jankowski and Stein in the project was logical and compelling. The $100,000 was commission, and the three lots were not. The vendor had full knowledge of the benefit of the three lots being derived by Jankowski in the transaction, and there was no breach of fiduciary duty. Jankowski performed his duties towards Gottenu and Stein. Jankowski's claim was in equity as the beneficiary of an implied or constructive trust. The contract created an obligation on 990088 to convey lots to Jankowski and Stein. Those obligations were enforceable in equity. There was no need to find consideration to support an obligation under a trust. A trust was created in favour of Jankowski in respect of the three lots. The Rodziks intended to confer a benefit upon Jankowski.
Statutes, Regulations and Rules Cited:
Ontario Rules of Civil Procedure, Rule 14.05(d), 14.05(e), 14.05(h).
Real Estate and Business Brokers Act, ss. 31(1), 34(2).
Raymond Colautti, for the applicant.
Roberto R. Cucci, for the respondents Gottenu and Stein.
1 BROCKENSHIRE J.:-- This was the trial of issues arising from consolidated applications relating to the dealings of the parties, and others, relating to a sub-division, and the trials and tribulations of its development and eventual sale. The issues presented to me for trial were as follows:
(1) Who is the legal owner of Lots described as Parcel Plan I, s. 12 M-244, being Lots 21, 22, and 23, Land Titles Division of Essex (No. 12)?
(2) Was there a trust created in favour of Mr. Jankowski in respect of the same?
(3) Were deposit monies improperly taken by Business Ventures Inc.?
(4) Is any amount owing to Gottenu/Stein on account of commission adjustment?
2 My conclusion on these four issues are as follows:
(1) The legal owner of Lots 21, 22, & 23 is the applicant Mr. Jankowski, and he is entitled to have the Lots transferred to him and to hold the same free and clear of claims of the other parties.
(2) There was a trust created in favour of Mr. Jankowski in respect of these three Lots on the closing of the sale of the sub-division.
(3) Deposit monies were not taken improperly by Business Venture Inc., and/or Mr. Jankowski.
(4) There is nothing owing to Gottenu/Stein on account of commission adjustment.
My reasons for these conclusions are set out below.
3 The applicant, Tadeuz (Ted) Jankowski, hereinafter "Jankowski" is a duly licensed real estate agent in the City of Windsor and County of Essex. Mr. Jankowski is originally from Poland. He holds post graduate University degrees. He has held a real estate licence since 1976 and apparently has had considerable experience in commercial, industrial and residential developments. He advised that he purposely has never acquired a broker's licence, the reason being that the lack of it makes it easier for him to deal with other brokers and sales representatives.
4 Business Ventures Inc., hereinafter, "B.V.I." is a corporation providing real estate brokerage services. The person holding the broker's licence is Mr. Fred Corp, a gentlemen whom we are given to understand is some 85 years of age and terminally ill. It seemed that at the relevant times, Mr. Corp took no active part in the operations of B.V.I. Jankowski had been with B.V.I. since 1984, and may have been one of its founders. For a time he was a director of the company. Although on paper, Jankowski was a sales representative for B.V.I., in fact it seemed that he operated independently, using the B.V.I. name.
5 990088 Ontario Inc., hereinafter "990088" is an Ontario Corporation incorporated by John and Don Rodzik, for the express purpose of purchasing the sub-division. Don and John Rodzik are two well known and very successful industrial entrepreneurs in the City of Windsor. On the evidence heard, they had no previous experience in residential land development. Any issues relating to them, or to their company in this litigation had been resolved, and 990088 took no direct part in this litigation and the Rodziks did not testify.
6 Morris Stein, hereinafter "Stein" is a gentlemen now in his 60's from Toronto, that has had some 30 years experience as a land developer throughout southwestern Ontario. On his evidence, he has developed a number of residential sub-divisions, running from 30 to 520 Lots, all of which were successful except for this unfortunate venture into Windsor. His past development ventures had been to acquire a parcel of land, proceed through the difficult and lengthy process of draft sub-division plan approval, and then either sell the land to another developer, or proceed on through the next stage of satisfying the municipal and other governmental requirements by servicing the sub-division, registering the plan in whole or part, and selling off Lots to builders. Throughout the process he would hire whatever professional help was needed, by way of surveyors, engineers, planners, lawyers, realters, etc. He himself ran what he described as a "very lean machine". It seemed he had no staff whatsoever, depending on temporary secretarial and other help, and would operate from either temporary office space or his own home. He had several limited companies, and in any of the dealings relevant to this litigation, he was always acting as an officer of a limited company and not on his own personal account.
7 Gottenu Developments Inc., hereinafter "Gottenu" is and was such a limited company, of which Mr. Stein described himself as the principal. Gottenu is, according to the evidence, a subsidiary of another corporation, College Downs (Belleville) Inc., which is apparently another corporation controlled by Stein.
8 In 1986, Jankowski contacted Stein about the possibility of a development in the Windsor area. Jankowski was trying to sell a property. That, plus adjoining properties, could, if put together, constitute a parcel worth developing. Stein, through Gottenu, expressed interest and Jankowski, at least nominally as agent for the various vendors, obtained offers of purchase and sale in favour of Gottenu on all of the needed parcels of land, conditional on draft sub-division plan approval. Stein arranged financing through Financial Trust, hereinafter "F.T.". This was 100 percent financing on a 60/40 participation basis, under which F.T. had to, essentially, approve all expenditures and activity re the sub-division. The financing was all arranged in the name of Gottenu, but Stein had to give a personal guarantee for $750,000. The development proceeded through draft plan approval, the conditional offers were exercised an& the various parcels purchased, on a part cash, part vendor take back mortgage basis, F.T. placed their financing security on the property, and the project moved on towards servicing.
9 It seems that at about this stage the project started to unravel. The key to the problem, on Stein's evidence was that Jankowski had recommended Ralph Meo as a project engineer. He prepared estimates of the costs of servicing. F.T. relied on those estimates. When tenders were called, prices could not be obtained anywhere near the estimated amounts. This naturally upset F.T. Somehow, a contractor, Ropat, got onto the site, installed considerable servicing, and was not paid. Not only were problems mounting, but at the same time another developer was proceeding along with another subdivision in the immediate area, which was drawing away potential customers for this sub-division.
10 Stein negotiated a possible escape from the whole problem by a conditional transfer of his one share in Gottenu to another company - South Star, controlled by Mr. Medwid. However, this only resulted in some 14 months of inaction on the sub-division, and in the end Stein had to take it back.
11 By now, it was public knowledge that the sub-division was in real trouble. Taxes were not being paid, obligations under the sub-division agreement were not being met, claims were being advanced, and both F.T. and the original vendors of parcels were threatening proceedings under their mortgages. During all of this difficult time, on Jankowski's evidence, he was acting as if he was Stein's partner or agent in Windsor, dealing with all of the parties and claimants and keeping the project alive. On Stein's evidence, Jankowski had no authority to do anything, but kept meddling and interfering in areas that should not have concerned him. Despite the now avowed annoyance with Jankowski's alleged interference, and despite the fact that a previous exclusive listing agreement (in which strangely, B.V.I. and Jankowski were referred to as "collectively the broker") had expired, Stein, rather than turning to some other realter, asked Jankowski to help in unloading the subdivision. Stein, with the ever present risk of a call on his personal guarantee hanging over his head, managed to work out what he referred to as a real coup - he negotiated a deal with F.T., under which, for a limited time, they would accept $1.5 million on obligations to it, or through it, that were running at around $5 million. Although Jankowski maintained that be somehow had something to do with these negotiations, it is clear to me that in fact this was entirely handled by Stein.
12 Jankowski did however, attract in several offers. The best was from the Rodziks and its terms are the direct subject matter of this litigation.
13 On Jankowski's evidence, the negotiation with the Rodziks took place between he and them, and partly in front of Mr. Baksi, the lawyer for Gottenu.
14 Mr. Baksi is a lawyer with some 25 years experience in business law and land development, and had been involved with Stein, Gottenu, and this sub-division since 1987. He was fully familiar with the sub-division and its many problems. In fact one problem, to which he testified and which the others had not mentioned, was that the plan for this sub-division called for handling storm drainage with a retention pond. However, through the years the City's policy had changed, retention ponds were no longer acceptable, and as Gottenu was in breach of its sub-division agreement, that favourable condition could be removed at any time.
15 Stein was not present at the negotiations with the Rodziks but was kept advised by Jankowski and Baksi.
16 According to Jankowski, the original, verbal offer of the Rodziks was for $ 1.7 million, with Jankowski trying to get more, and with Rodziks then again verbally saying they might offer $2 million if they could be shown justification for a price of $2.5 million. Jankowski was attempting to justify a higher price by arguing about the value of the engineering, surveying and legal work, and the amount of the commission. The Rodziks left to think about it and then on June 9, John Rodzik wrote out a memo which he gave to Jankowski, who in turn gave it to Baksi and faxed it to Stein. This is now Tab 37 - B in Exhibit 2 which speaks of $2 million cash maximum, plus six serviced Lots in phase I, with all costs over $1,750,000. to be justified and detailed.
17 Jankowski explained that the idea of the six Lots was that they were not serviced at the time, and would be worth only some $10,000. each. However, if fully serviced, their value would rise to $60,000. each. The Rodziks wanted help in seeing that the servicing did in fact happen, and happen promptly, and to do that wanted to keep Jankowski and Stein involved. In fact, Jankowski's evidence was that originally the Rodziks were suggesting giving six Lots to Jankowski, but Jankowski volunteered to have three of the six Lots go to Stein, with the Rodziks saying that if Jankowski wanted to play Santa Claus, to go ahead. I gather the understood rationale was that if Jankowski and Stein stayed involved in the sub-division, they, knowing all of the players and all of the problems, could be very helpful in seeing its development proceed quickly and smoothly. If they stood to make a real economic gain, they would be much more likely to exercise their best efforts on behalf of the sub-division. Baksi said he spoke to Stein on the phone about this memo and faxed him a copy. On Baksi's evidence, this memo came as no great surprise because the general topic of the Lots had been talked of before. The date on the memo is June 9th.
18 The actual Agreement of Purchase and Sale was, on my understanding, drafted by Baksi, with input on its terms from Jankowski and Stein. I heard nothing of any input from any legal advisor on behalf of the Rodziks.
19 The Agreement was prepared in draft form, and then revised. The two areas of concern in this law suit are paragraph 9 and the Commission Clause at the end. The first draft, Exhibit 5, has a paragraph 9.01, but no paragraph 9.02. The 9.01 in the draft called for the buyer agreeing, before disposing of any Lots in the sub-division to convey to the vendor six fully serviced Lots with the vendor irrevocably authorizing and directing title to three of the Lots to go to Ted Jankowski and the three other Lots to Morris Stein. The Commission Clause called for paying a commission of _______%, which could be deducted from the deposit monies.
20 This document was, on Baksi's evidence, circulated to Jankowski and Stein. Jankowski testified that in the Commission Clause, he noted it did not call for G.S.T., and asked that G.S.T. be added on the next draft. Jankowski said that Stein specifically wanted a value put in for the Lots, and said he understood from Stein that would help him with his bank. Baksi said that after the first draft was circulated, Stein raised a concern that the value of the Lots be shown. Baksi told both Stein and Jankowski to get tax advice and was to told to insert the $60,000. value which showed up in paragraph 9.02 of the final version of the Offer. Baksi further recalled that Don Rodzik has originally raised the idea of putting in the giving of Lots to get Jankowski committed to the project. There was no discussion at that time of Lots going to Stein and when Jankowski told him later that Stein was to get three Lots, he simply assumed this was a private arrangement between them. Baksi said at no point was the giving of Lots related in any way to the commission, in any of the discussions that he had. He understood it as simply a way for the buyer to secure future cooperation from Jankowski and for the seller to give some consideration to Jankowski for services above and beyond any services as a realtor. Stein's evidence was that after the first draft, he felt the $2 million price was not high enough and would not cover Gottenu's expenses and so the adding in of six Lots, which in effect would raise the price to $2.36 million, was negotiated. Stein said that Jankowski then somehow took three of the Lots -- and the best three -- with Stein looking at that as the equivalent of 9% commission which he felt was more than enough.
21 In the final draft, paragraph 9.01 was amended to refer to the Lots as being in addition to the purchase price, and paragraph 9.02 was added, putting a value of $60,000. on each of the Lots and providing an entitlement to register a Notice of the conveyance Agreement against the Lots. The Commission Clause was amended to add the words "applicable G.S.T.".
22 The Agreement was duly executed by Don Rodzik and Stein, and witnessed by Jankowski. Stein, before signing, added in a further hand written provision on p. 6 about the acceptance being subject to getting documents from the mortgage lenders. It is not disputed that no number was inserted in the Commission Agreement on the copies of the Offer provided to Rodzik and to Stein. The evidence of Jankowski is that he wrote in the number "5" before Stein signed the acceptance of the Offer and before Jankowski witnessed it. The evidence of Stein is that no number was inserted on any of the copies before signing, with Stein asserting that Jankowski added the number "5" afterwards, and that that addition constituted fraud or forgery.
23 Jankowski's explanation was that he only put the "5" in the copy of the Agreement that would go back to B.V.I. for its files. He agreed he should have put it in the other copes, but said he did not because in part, in addition to commission, he wanted to get paid back on a personal loan to Stein out of the sale proceeds, also in part he wanted to leave Stein with flexibility in both explaining the total expenditures re the sub-division to the Rodziks and explaining what the net proceeds of the sale were to his creditors. He could foresee Stein perhaps wanting to understate the commissioned amount to the Rodziks, and also, and perhaps simultaneously, wanting to overstate the commission to other creditors.
24 That explanation seems thin and weak in the cold light of a courtroom many years later. In the situation prevailing, when this Agreement was signed, the explanation seems more plausible. Mr. Baksi had testified that the sub-division was in a "melt down" stage. In other words, both Stein and Jankowski could lose everything at any moment. The Rodzik deal was the one chance of rescuing their investment of time and money, and it would seem essential that nothing happened which could upset Mr. Rodzik.
25 What is perfectly clear, and most helpful, is that B.V.I. sent an invoice for its commission, of $100,000. plus $7,000. G.S.T., to Baksi before closing; that Baksi showed this to Stein before closing, and Stein instructed Baksi not to pay any commission. Baksi told Stein to get independent legal advice on that. The only explanation given by Stein to Baksi was that "three Lots were enough".
26 I would have thought, if the 5%, on which B.V.I. obviously based its bill, was a forgery added afterwards; Stein would have immediately complained of it to his lawyer. On his lawyer's evidence, he did not. In fact on Stein's own evidence, as to what he was telling Baksi his reasons for disputing the commission, seemed to be based on the amount of the total remuneration -- he saw the three Lots as representing 9%, which plus 5% came to 14% which he felt was ridiculous.
27 I observe that the person who alleges fraudulent acts is generally treated as having the onus of establishing it. Apart from such onus, I conclude, on the balance of probabilities, having observed both witnesses and heard their explanations as to what was happening at the time of signing, that on the balance of probabilities Jankowski inserted the number "5" in the Commission paragraph on the copy of the Agreement intended for B.V.I., before Stein signed it.
28 I further conclude that, without regard to any argument over additional or other compensation, 5% in this transaction would be a reasonable amount, both based upon the work performed as a realtor, and based upon the previous dealings with the parties, evidenced by the previous listing Agreement which called for 5% except in the case of Sale to Builders.
29 Mr. Stein was completely alone on his view that the Lots represent commission. Although the Rodziks did not testify, the initial note from them, and the Agreement itself, does not in any way identify these Lots as commission but instead identifies them as something over and above the purchase price, and as things that were to be transferred after servicing. The explanation given by Jankowski, and independently by Baksi, that the intention was to use the Lots to assure the future involvement of at least Jankowski in the project seems to me to be both logical and compelling. I fail to see any sense or logic in Mr. Stein's argument that the transfer of the Lots could be in some way taken as compensation to Jankowski, or even more distantly to B.V.I., for having procured the offer from Rodzik.
30 The defence positions advanced by Mr. Cucci, was that even if the findings of fact were in favour of Jankowski and B.V.I. on the details of their dealings, nevertheless they could not succeed. The defence arguments are grouped generally as alleged breaches of duty under the Real Estate and Business Brokers Act and deficiencies in Law and Equity in the claim by Jankowski to entitlement to the Lots.
THE REAL ESTATE AND BUSINESS BROKERS ACT:
31 This Act was clearly passed to regulate real estate and business brokers, and to protect the public. Clearly, as was said in W.H. Bosley & Co. Ltd. v. 353500 Ontario Ltd. (1980) 15 R.P.R. 27 (Ont.H.Ct.), if a person wants to succeed on a claim for commission he has to establish that first, he is entitled to commission at common law, and second, that this entitlement is not taken away by the provision of the Act. Clearly, there are a number of provisions in the Act which could be construed as taking away entitlement to commission. However, it must be remembered here that my finding is that the $100,000 plus G.S.T. is the commission and that the three Lots are not commission. The argument that for instance a real estate person cannot obtain compensation other than from his or her broker applies to commissions, and clearly in the case the deposit went to the broker and any payment to the salesperson of a portion of that commission would come from the broker. Section 34(2) of the Act for instance, requires that all commission or other remuneration in respect of a trade in real estate shall be "upon an agreed amount or percentage of the sale price ...". Clearly if three Lots, of a vague present value are being treated as commission, there would be clear problems with the Statute. But as I say, I found that the three Lots have nothing to do with remuneration for the particular trade. Problems about vagueness in identifying Jankowski as a salesperson would in my view be regulatory in nature, and while subject to review by the Registrar, would have nothing to do with the propriety of the commission of $100,000. plus G.S.T., payable to B.V.I.
32 It is clear that a real estate salesperson is in a fiduciary relationship, and his or her general duties are enforced and perhaps in some cases added to by the specific provisions of the Statute. One clear duty is to reveal any personal benefit being derived from the transaction. The Statute codifies and perhaps extends that duty under s. 31(1) by requiring the delivery to the vendor of a written statement if the salesperson is going to acquire any interest in the real estate involved. The industry has developed specific forms for this disclosure and such a form was not used here. However in this case, the intent to acquire three Lots was clearly spelled out in the Agreement of Purchase of Sale itself, and that Notice was not only received by, but was expanded through amendments asked for by the vendor. There is no doubt that the vendor had full and complete knowledge of this proposal.
33 The agent has a general fiduciary obligation to make full disclosure to his or her principal and not to take any secret profit. Here the evidence is that the Rodziks wanted Jankowski to take six Lots. He immediately made full disclosure to Stein and had the provision drawn up so that Stein would get three of those six Lots. I do not see any breach of his obligation and think there is much to be said for the argument of Jankowski's counsel that one cannot approbate and reprobate at the same time. Mr. Stein clearly intends to claim his three Lots.
34 The governing principles relating to the fiduciary obligations of real estate agents was laid down in Wood v. St. Jules (1976) 12 O.R. (2nd) 529 (C.A.). After stating the general principles, the court said at p. 531:
It is in the interest of equity that persons upon whom members of the public rely for advice, knowledge and trust must act with the best good faith and if any dispute arises must be able to demonstrate unequivocally that they did so act. Any doubt must be resolved in favour of the person who relied upon them.
I find that Mr. Jankowski did perform his duties towards his principal, Gottenu, and its principal, Stein. There is no doubt to be resolved in their favour.
THE TRUST ARGUMENT:
35 Mr. Cucci, for the defence, advanced a number of reasons why "you can't get there from here".
36 It is obvious that the contract was between Rodzik, in trust for a new company and Gottenu. Jankowski was not a party to that contract, although he witnessed the execution of the contract documents. As a non-party, Jankowski cannot sue upon the contract. His claim has to be in equity - as the beneficiary an implied or constructive trust.
37 The contract provisions, stripped of extra verbiage are that "... the purchaser shall convey to the vendor ... six fully serviced ... lots ... The vendor hereby irrevocably authorizes and directs that title to the Lots numbered 1, 2, and 3 ... be conveyed to Ted Jankowski as transferee ...".
38 I heard argument that there was uncertainty as to the words, the subject, and the object. To me it is absolutely clear that the words are certain; The Lots referred to are certain, both from the paragraph and from the schedule showing the Lots on the sub-division plan; and The object, that is that Jankowski become the owner in fee simple, is certain.
39 Argument is presented that on the reading of the Agreement, the property would have to be transferred by the buyer 990088, to Gottenu, before any obligation to Jankowski could arise, and that transfer to Gottenu never happened. On my reading of the Clause, the wording calling for a transfer to Gottenu, which would be supported by the consideration of closing of the transaction, would have been inserted simply to support in turn the irrevocable direction to in fact make the conveyance to Jankowski (and to Stein) and quibbling over the lack of a conveyance back to Gottenu is in my view completely answered by the equitable maxim that "equity looks on that as done which ought to be done". In my view, the true construction of the clause was to create an obligation on the buyer, 990088, to convey Lots to both Jankowski and Stein, which obligations were intended to be enforceable under the contract by Gottenu, and which would also be enforceable in equity by Jankowski and/or Stein. There was an argument raised that there was no consideration from Jankowski to support the irrevocable direction. To my mind this is confusing the trust and contract concepts. Although the evidence clearly indicates that the Rodziks saw good sound business reasons to convey Lots to Jankowski, the value of which would only increase if the develop proceeded, there is no need to find consideration to support an obligation under a trust. On the other hand there is clearly consideration under the agreement for 990088 to bind itself to carry out the conveyances as directed by Gottenu. This is not a case like Family Trust Corp. v. Morra (1987) 60 O.R. (2d) 30 where there was already an obligation under a listing agreement, with then an additional obligation purportedly imposed without any consideration therefore. The whole of paragraph 9.01 is supported by the consideration of the conveyance of the sub-division.
40 An argument was raised that case law indicates that applying equitable principles to the Real Estate and Business Brokers Act is now discredited. That may well be, but my finding is that the transfer of these Lots has nothing to do with obligations or liabilities under that Statute. I previously found that Jankowski had fulfilled, beyond doubt, his fiduciary obligations, so any suggestion of a "taint", by which I assume is meant the application of the clean hands maxim, is not applicable.
41 I accept that the law regarding findings of the existence of trusts is accurately stated in Law of Trusts in Canada, Second Edition by D.W.M. Waters, (Carswell, 1984) pp. 31 and 32 where the learned author stated that:
One of the clearest statements of the principle now followed is to be found in Re Schebsman, a decision of the English Court of Appeal. There du Parcq L.J. said:
Unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention.
This decision was endorsed by Disbery J. in Tobin Tractor (1957) Ltd. v. Western Surety Co. where, in an exhaustive discussion of the English and Canadian authorities, the learned judge commented:
The interpretation of either facts or documents must not be warped, distorted or given undue emphasis in order to find the existence of a constructive trust, where a reasonable and impartial interpretation would reveal that such a trust was neither intended nor created; and this must prevail no matter how one might sympathize with the third-party beneficiary and wish to help him in the light of the circumstances.
He agreed with Lord Greene M.R. in Re Schebsman that one must not "disregard the dividing line between the case of a trust and the simple case of a contract made between two persons for the benefit of a third party".
42 Having given full credit and due attention to those learned warnings, nevertheless, I find here that the evidence, both internal in the document and external as to the intentions of the parties, supports the creation of a trust. Clearly, the evidence shows an intention by the Rodziks to confer a benefit upon Jankowski, for reasons directly relating to the transfer of this subdivision to them and the necessity of further development. The hope of benefiting from the future involvement of Jankowski would support an obligation in equity on the Rodziks and their company to fulfil their intention to transfer these Lots. The irrevocable direction, built into the Agreement, supports the acceptance by the Rodziks of the obligation to convey and also imports an acceptance of the authority of a court of equity to enforce such a direction. The contemporaneous actions, when in fact a direction to carry out the conveyances was executed by Gottenu and delivered, further supports that conclusion.
43 For these reasons I have reached the four decisions set out at the commencement.
44 If counsel are unable to agree, they may make submissions to me in writing on the question of costs within 30 days.