COURT OF APPEAL FOR ONTARIO
MacPherson, Sharpe and Jamal JJ.A.
BETWEEN
Stacey Kraemer
Applicant (Respondent)
and
Lawrence Kraemer
Respondent (Appellant)
and
Gus Stahlmann
Respondent (Respondent)
Patrick J. Kraemer, for the appellant
Terrah Smith, for the respondent Gus Stahlmann
Stacey Kraemer, acting in person
Heard: February 4, 2020
On appeal from the judgment of Justice Nancy M. Mossip of the Superior Court of Justice, dated July 8, 2019.
REASONS FOR DECISION
1Larry and Stacey Kraemer were married in 2001. They separated in 2015 and are involved in matrimonial proceedings.
2Larry and Stacey jointly own a home in Elora. In 2007, Stacey’s parents, Gus and Jan Stahlmann, paid just over $216,000 for improvements to the property, including the construction of a ‘granny suite’ where they came to live. Jan died in 2013 and Gus continued to live in the granny suite.
3After Gus and Jan moved into the home, the parties entered into a Licence Agreement with the assistance of legal counsel (the “Agreement”). The Agreement provides:
WHEREAS:
Lawrence and Stacey (hereinafter collectively referred to as the “Licensors”) are the registered owners of the premises municipally known as 7577 Sixth Line, RR #2, Elora … and are spouses of one another;
Gus and Janice (hereinafter collectively referred to as the “Licensees”) are the biological parents of Stacey and are spouses of one another;
In consideration of the sum of ONE HUNDRED SIXTY-FIVE THOUSAND DOLLARS ($165,000.00), which sum is secured by a demand mortgage agreement attached hereto as Schedule “B” … the Licensors wish to grant to the Licensees a licence to occupy a portion of the Primary Residence … together with two (2) outdoor parking spaces. …
Licensee Covenants
The Licensees covenant
(e) not to register the Mortgage Agreement on title to the Primary Residence unless the Licensee has provided 14 business days’ notice of demand for payment thereunder and the Licensor has failed to pay the amount so demanded on or before the expiration of such 14 business days.
4After Larry’s and Stacey’s marriage collapsed, Gus sought, unsuccessfully, to register the mortgage. Both Gus and Stacey commenced legal proceedings. Gus withdrew his and joined Stacey’s proceedings. The matter came before Mossip J., with all three parties agreeing that a summary judgment motion was the appropriate route for resolution. The effect of the potential resolution was, as explained by the motion judge:
If Gus is entitled to the mortgage, or other relief which recognizes that the parties owe Gus the amount set out in the Agreement and the mortgage, that amount will be included in the Net Family Property calculation of the parties as a debt owed equally by them to Gus.
5At the motion hearing, the core of Larry’s submission was that the $165,000 secured by the Agreement was a gift. The motion judge rejected this submission:
I am satisfied based on the jurisprudence applied to the evidence in this case, that there was a clear demonstration that the money advanced to complete the granny flat, secured by a demand mortgage, was a loan and not a gift. There was no evidence that the money advanced was a gift, except Larry’s personal belief that it was.
6The motion judge concluded that “there is a valid and enforceable Agreement and demand mortgage” and “Gus is legally entitled to register the demand mortgage for $165,000. He can make demand on this mortgage for the principal amount owing, pursuant to the Agreement.”
7Larry raises three issues on this appeal.
8First, Larry submits that the motion judge erred in determining that the Agreement is a valid licence. According to Larry, the Agreement is a lease of property, not a licence.
9We do not accept this submission. The parties were represented by lawyers as they worked together to draw up the Agreement. The entire Agreement, starting with the title and continuing through its provisions, is a licence, not a lease. Accordingly, it is not surprising that the motion judge’s conclusion on this issue, with which we agree, was expressed in relatively blunt language:
The submission that the Agreement is really a lease, is simply put forward as a proposition by Larry without any legal basis to do so.
Accordingly, I am satisfied that the Agreement was in fact exactly what it said it was, and what the parties intended it to be. It was an agreement for Larry and Stacey to license a certain part of their home to Gus, in consideration of the sum of $165,000, which was secured by a demand mortgage agreement.
10In light of this conclusion, it is not necessary to consider the second component of Larry’s argument on this issue, namely, that if the Agreement is a lease, it is invalid because it does not contain some of the key features of a lease (e.g. a rent provision).
11Second, Larry contends that the motion judge erred by determining that the money paid for the construction of the granny suite was not a gift.
12We disagree. We start with an obvious point. If Gus and Jan, Stacey’s parents, intended to give $165,000 to Stacey and Larry, they hardly needed to engage separate lawyers to negotiate and ultimately finalize a 12-page, 12 section formal document with the title “Licence Agreement” and a Schedule titled “Mortgage Agreement”. There is nothing in these documents to even remotely suggest that Gus and Jan were making a $165,000 gift to Stacey and Larry. We agree with the motion judge: “If the advance was a gift, the drafting and execution of the Agreement makes no sense.”
13Third, and in the alternative, if the Agreement is a licence/demand mortgage, Larry asserts that the face value of the mortgage, $165,000, should be discounted by the portion of time that Gus has lived in the granny suite. The discount Larry proposes is that portion of the 21-year duration of the licence in which Gus has lived there (i.e., $165,000 – ($165,000 x 12 ½/21 years) = $66,785.70).
14We are not persuaded by this submission. It ignores s. 4 of the Agreement whereby Gus waives any interest on the $165,000 while he lives in the granny suite. We agree with the motion judge:
Given … the clear language in the Agreement, there is no legal basis to make this submission. There is no basis to discount the principal amount secured by the mortgage.
Such an assertion creates a term in the Agreement that is simply not there. There is no evidence that the parties intended such a discount to be applied.
15The appeal is dismissed. Gus and Stacey are entitled to their costs of the appeal fixed at $15,000 and $6,000 respectively, inclusive of disbursements and HST.
“J.C. MacPherson J.A.”
“Robert J. Sharpe J.A.”
“M. Jamal J.A.”
