COURT OF APPEAL FOR ONTARIO DATE: 20220406 DOCKET: C69330
Pardu, Paciocco and Thorburn JJ.A.
BETWEEN
Homi Billimoria Plaintiff (Appellant)
and
Maharukh Mistry and Firoze Mistry Defendants (Respondents)
Counsel: Michael S. Deverett, for the appellant Ted Evangelidis and Eric Blay, for the respondents
Heard: March 23, 2022, by videoconference
On appeal from the judgment of Justice Jennifer Woollcombe of the Superior Court of Justice, dated March 24, 2021, with reasons at 2021 ONSC 1939.
REASONS FOR DECISION
OVERVIEW
[1] This appeal arises from a dispute between two owners of a residential property located at 347 Glenn Hawthorne Boulevard, Mississauga (“the property”).
[2] At the summary trial, the appellant Homi Billimoria sought a declaration that he is the sole owner of the property by virtue of ss. 4, 5, and 15 of the Real Property Limitations Act, R.S.O. 1980, c. L.15 (“RPLA”).
[3] The appellant pointed to his exclusive possession of the property for more than ten years, the fact that he paid the expenses throughout, the respondents had not inspected the property for more than ten years, and that the respondents had done nothing to protect their property interest in more than ten years. He denied that there was a verbal agreement allowing him to stay in the home in exchange for paying carrying costs, with the expectation that the property would eventually be sold. He said that this alleged verbal agreement was incomplete, missing essential terms, and unenforceable.
[4] The trial judge held that the appellant had a 65% interest in the property, the respondents had a 35% interest in it, and that it should be sold.
[5] The appellant claims the trial judge erred by holding that (i) the respondents could recover possession of the property despite ss. 4, 5, and 15 of the RPLA; and (ii) the property should be sold pursuant to the Partition Act, R.S.O. 1990, c. P.4. The appellant claims he is the sole owner of the property and that the respondents are dispossessed of their interest in the home as he has been in exclusive possession of the home for over ten years.
[6] The respondents raise a third issue for the first time on appeal, which is that title to the property was registered under the Land Titles Act, R.S.O. 1990, c. L.5 before it was purchased by the parties, and consequently their interest could not be extinguished by the appellant’s exclusive possession because his possessory interest would have been “adverse to or in derogation of the title of the registered owner”, contrary to s. 51(1) of the LTA.
[7] For the reasons that follow, the appeal is dismissed.
FACTUAL BACKGROUND
[8] The history of the parties’ involvement with the property is set out below.
[9] In the 1980s, the parties began buying properties to sell for profit. In 1988, the parties jointly purchased the property for $171,900 and paid a $30,000 deposit. At the time of purchase, the property was registered in Land Titles.
[10] The parties took title as tenants in common, with 50% owned by the appellant and 50% by the respondent Ms. Maharukh Mistry. The appellant paid half of the $15,000 deposit and the parties disagree as to who paid the other $15,000. Until 1991, the property was rented for $7,800 per annum.
[11] In 1991, when the parties were unable to rent or sell the property, they agreed that the appellant would move into it.
[12] The appellant claims he became the sole owner of the property. He claims he paid all costs to maintain it including property taxes, mortgage, insurance and repairs. The respondents claim that when the appellant moved in, they had a verbal agreement that although the appellant would live there, make mortgage and property tax payments in lieu of paying rent, he and Ms. Mistry would remain joint owners and that the property would eventually be sold. The mortgage was paid off by May 1, 2004.
[13] In January 1992, Ms. Mistry transferred her ownership interest to one of joint interest with her husband who is the other respondent, Mr. Firoze Mistry. In July 2016, the appellant’s interest in the property was transferred to Armin Mistry (unrelated to the respondents). The respondents did not know of and did not consent to the transfer. In May 2018, all the parties signed a document to restore the appellant’s and the respondents’ names on title.
[14] In September 2018, counsel for the respondents advised that, given what had transpired, they wished to sell the property. In January 2019, counsel for the appellant registered a charge against it without the respondents’ knowledge or consent.
[15] The appellant commenced an action seeking a declaration that he was the sole owner of the property because he was in exclusive possession of it for more than ten years and paid the carrying costs. The respondents brought a counterclaim asking that the property be sold pursuant to the Partition Act.
THE JUDGMENT
[16] The trial judge held that the appellant had not established exclusive possession of the property under the RPLA because:
a. The business history suggested that the parties bought six properties together including this one and they were jointly purchased as investment properties;
b. The trial judge accepted Ms. Mistry’s evidence that the respondents paid 50% of the deposit. This was consistent with their other business arrangements and with the fact that Ms. Mistry was registered on title as a 50% owner;
c. The trial judge found that they had a “well established trusting friendship” and that in 1991, there was a verbal agreement that the appellant would live at the property without paying rent as long as he carried the major costs, and at some point, the property would be sold;
d. After the appellant moved into the property, the parties did not conduct themselves as though the respondents had been dispossessed.
[17] The trial judge also dismissed the appellant’s claim of proprietary estoppel, as there was never an express or implied representation that the appellant was to become sole owner, and there was no basis to find the respondents’ behaviour had been unconscionable.
[18] However, the trial judge found that there was a proper basis, grounded in unjust enrichment, for an unequal division of the property. The trial judge found that the agreed arrangement lasted longer than was expected and that a constructive trust should be imposed to recognize the extent of the appellant’s contribution. She ordered that the appellant should receive 65% of the value of the property because the appellant’s contribution to the property was significantly more than the value of rent a tenant would have paid, which payments enabled the property value to increase. She held that if the proceeds of the sale were shared equally, the respondents would be enriched and the appellant would suffer a corresponding deprivation.
[19] The trial judge therefore ordered that the property be partitioned and sold pursuant to the Partition Act. While she recognized that there may have been an agreement to sell the property only upon the agreement of all parties in 1991, the respondents’ decision to seek to sell the property now was reasonable in light of the appellant’s conduct from 2016 to 2018.
ANALYSIS AND CONCLUSION
Jurisdiction
[20] The appellant raises three issues on this appeal: the first is whether s. 51 of the Land Titles Act bars the appellant’s claim, the second is whether the trial judge erred in assessing the appellant’s actual possession of the property under the RPLA, and the third is whether the trial judge erred in ordering the sale of the property pursuant to the Partition Act. The issues are interconnected and the interests of justice favour joinder: Cavanaugh v. Grenville Christian College, 2013 ONCA 139, 360 D.L.R. (4th) 670, at para. 86.
[21] Although appeals from orders made under the Partition Act lie to the Divisional Court, the appeal from the final judgment determining the ownership of the property lies to this court, and this court has jurisdiction to deal with all the issues on appeal pursuant to s. 6(2) of the Courts of Justice Act.
Standard of Review
[22] The issues raised by the appellant are issues of mixed fact and law which are subject to the standard of review of palpable and overriding error, absent an extricable legal error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 262, at paras. 26-36. The trial judge’s factual findings are also subject to the standard of review of palpable and overriding error: Housen, at para. 10. A palpable and overriding error includes a finding that is clearly wrong, unreasonable or unsupported by the evidence: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at para 4.
The Land Titles Act Issue
[23] In our view, the new issue the respondents raise on appeal, that s. 51 of the Land Titles Act bars the appellant’s claim, is properly before us and is dispositive.
[24] Appellate courts will generally not entertain new issues on appeal, because of the unfairness of requiring a party to argue an issue on appeal that it had no chance to adduce evidence on at trial: Whitby (Town) v. G & G 878996 LM Ltd., 2020 ONCA 654, 5 M.P.L.R. (6th) 174, at para. 9. The burden is on the appellant to persuade the court that all the facts necessary to address the new issue are already before the court, and the decision as to whether to grant leave to allow a new argument is a discretionary decision to be guided by balancing the interests of justice: Kaiman v. Graham, 2009 ONCA 77, 75 R.P.R. (4th) 157, at para. 18.
[25] While the effect of s. 51 of the Land Titles Act was not raised at trial by different counsel for the respondents, this is a legal issue which does not depend on findings of fact, nor is there any suggestion that prior counsel failed to raise it for tactical reasons or that the interests of justice weigh in favour of not considering it. As such, and with the consent of the appellant, the respondents have satisfied their burden and we exercise our discretion to allow this issue to be raised on appeal: Kaiman.
[26] The appellant claims that he is the sole owner of the property because his long physical occupation of the property dispossessed the respondents of their interest, within the meaning of s. 5 of the RPLA, and the respondents are now statute-barred pursuant to s.4 of the RPLA, from bringing an action to recover the property. He argues that reliance on the RPLA is not a claim for “adverse possession” and is not governed by the principles of adverse possession, but instead rests on a finding that the person entitled to the property has been “dispossessed” or had “discontinued … possession” more than 10 years before attempting to make entry or distress or bringing an action. He argues that the trial judge erred in applying the principles of adverse possession. He also argues that his claim falls outside of s.51 of the Land Titles Act. We do not accept the distinction the appellant is attempting to make. In essence, his claim is for adverse possession under the RPLA. Nor do we accept his argument that his claim is not caught by s. 51 of the Land Titles Act.
[27] Adverse possession is established where that claimant had actual “open, notorious, constant, continuous, [and] peaceful” possession for the statutory period of ten years in accordance with s. 4 of the RPLA, as well as an intention to exclude the true owner from possession, and effective exclusion of the true owner for the entire ten-year statutory period: Vivekanandan v. Terzian, 2020 ONCA 110, 443 D.L.R. (4th) 678, at para. 21.
[28] However, land that is registered in Land Titles cannot be obtained by adverse possession unless the ten-year exclusion period ran before the land was registered: Sipsas v. 1299781 Ontario Inc., 2017 ONCA 265, 85 R.P.R. (5th) 24, at para. 18. Section 51(1) is worded broadly and clearly embraces the claim the appellant is making. It provides, in relevant part:
“ Despite any provision of … the Real Property Limitations Act … no title to and no right or interest in registered lands under this Act that is adverse to or in derogation of the title of the registered owner shall be acquired hereafter or deemed to have been acquired heretofore by any length of possession or by prescription ” (emphasis added).
[29] In this case, the property was already registered in Land Titles at the time it was purchased by the parties, and thus, the appellant could not have obtained title to it by adverse possession. The appellant cannot make out a claim of adverse possession regardless of how long the appellant actually occupied the home.
[30] This alone is sufficient ground to dismiss the appeal.
The RPLA Issue
[31] Second, even if a limitation claim under the RPLA had been available, we see no error in the trial judge’s conclusion that the appellant had not established actual possession of the property for the requisite ten-year period under the RPLA.
[32] She correctly articulated the law in respect of adverse possession as set out by this court in Vivekanandan.
[33] She then provided comprehensive reasons for finding that the appellant had never established actual possession sufficient to dispossess the respondents. In particular, she noted that the appellant was occupying the property pursuant to a verbal agreement with the respondents. Given her finding that that the respondent co-owners permitted his occupation, the “adversity” element of adverse possession could not have been made out: Teis v. Ancaster (Town) (1997), 35 O.R. (3d) 216 (C.A.), at p. 221.
[34] She cited the fact that the property was an investment property, the informality of their relationship due to their friendship, the joint deposit on the property, the agreement that the appellant should live at the property rent-free in exchange for paying carrying costs with the idea that one day the property would be sold, the mortgage, insurance and tax documents which were sent to the respondents, two mortgage payments which were paid by the respondents and other ownership obligations which were assumed by the respondents.
[35] She also noted that the appellant had never told the respondents that the property was his alone. In fact, as recently as 2018, the parties jointly retained counsel to rectify the title issues to reflect the fact that they were all registered owners as tenants in common. She concluded that this evidence is inconsistent with the appellant’s intention to exclude the respondents from possession of the property.
[36] For all these reasons, the trial judge held that as a factual matter, the respondents never lost possession of the property, either by dispossession or discontinuance of possession. She held that the appellant therefore failed to meet his burden of showing that he had successfully dispossessed the respondents of their interest in the property or that the respondents had discontinued their possessory interest in the property such that their rights in the property were extinguished.
[37] We see no error in the trial judge’s conclusion that the appellant had failed to establish his claim under the RPLA.
The Partition Act Issue
[38] Section 2 of the Partition Act provides that a joint tenant or tenant in common may be compelled to make partition or sale. The onus is on the party resisting sale to demonstrate reasons why it ought not to be sold. There must be malicious, vexatious or oppressive conduct to justify the refusal to sell: Brienza v. Brienza, 2014 ONSC 6942, at paras 24-27.
[39] The appellant claims the trial judge erred in ordering the sale of the property having found that there was an agreement that the appellant could continue to live in the property on condition that he pay the carrying costs.
[40] We disagree. While the trial judge accepted that there was an agreement among the parties in 1991, she also accepted that, “there was an expectation on the [respondents’] part that the [appellant] would move into the property for a much shorter period than ended up happening. There was an expectation that the property would be sold much earlier.” Moreover, there was evidence that the agreement changed when the respondents discovered that they had been removed from title without being told, and steps had to be taken to rectify this. She found that there was no evidence that the respondents’ actions were malicious, oppressive or vexatious.
[41] For these reasons and given the deference accorded to the trial judge’s exercise of discretion in ordering sale under the Partition Act, we see no error in the trial judge’s decision to allow the sale of the property.
[42] The appeal is therefore dismissed. Costs of this appeal are awarded to the respondents in the amount of $25,000 as agreed by the parties.
“G. Pardu J.A.”
“David M. Paciocco J.A.”
“J.A. Thorburn J.A.”
