COURT OF APPEAL FOR ONTARIO
CITATION: Holtby v. Draper, 2018 ONCA 231
DATE: 20180309
DOCKET: C61476
Weiler*, van Rensburg and Huscroft JJ.A.
BETWEEN
Kenneth Holtby
Applicant/Respondent
and
Cheryl Draper and Knapton Farms Ltd.
Respondents/Appellant
Aaron M. Franks and Michael Zalev, for the appellant
William R. Clayton, for the respondent
Heard: By written submissions
REASONS FOR DECISION
[1] Cheryl Draper and Ken Holtby were married and co-owned property. The appellant, Cheryl Draper, appealed the trial judge’s decisions on property ownership. This court’s decision on the appeal was released on December 1, 2017: Holtby v. Draper, 2017 ONCA 932.
[2] These supplementary reasons concern only one of the properties, namely a 50 acre parcel, referred to as “Lot 8”. At the date of separation, Ms. Draper was the sole registered owner of Lot 8. The trial judge determined that, by way of resulting trust, Mr. Holtby was the beneficial owner of the entirety of Lot 8.
[3] On appeal, this court concluded instead that the parties were joint beneficial owners of the property. It followed from this, as reasonable and appropriate, that Ms. Draper was entitled to occupation rent for her half of the property during the lengthy period of time that Mr. Holtby had sole use of the property in its entirety (and Ms. Draper made mortgage and property tax payments). Given the finding of joint beneficial ownership and entitlement to occupation rent, we also set aside the trial judge’s award reimbursing Ms. Draper for the payments she made toward the property in its entirety, while noting that Ms. Draper “may be entitled to reimbursement from Mr. Holtby for certain payments she made”.
[4] The parties were invited to make further submissions, in the absence of agreement, on the following:
(1) the adjusted equalization payment owing to reflect Ms. Draper’s joint beneficial interest in Lot 8, as well as the adjusted value of Mr. Holtby’s company, Knapton (a calculation error that both parties conceded on appeal);
(2) prejudgment interest on the equalization payment and occupation rent;
(3) payments, if any, owing to Ms. Draper in respect of Lot 8;
(4) trial costs; and
(5) costs of the appeal.
[5] The parties resolved the first two issues. On consent, Mr. Holtby shall pay Ms. Draper an equalization payment of $121,729.43 as well as prejudgment interest of $14,081.93 on the equalization payment and $4,663.53 on the occupation rent.
[6] We turn to the remaining issues in dispute, as well as one other issue raised by Ms. Draper – that she should receive an additional amount for occupation rent on Lot 8 for the post-trial period of 2016 to 2017.
Payments on Lot 8
[7] Ms. Draper made all mortgage and property tax payments on Lot 8 from May 1996 to December 2015. She claims $30,788.51, which is one-half of the total amount she paid. The basis for the claim is that Mr. Holtby was unjustly enriched by Ms. Draper’s payment of his share of the mortgage and property tax payments on his one-half interest in the property.
[8] Mr. Holtby resists the claim on the basis that he incurred all of the input costs and did all of the work, or paid for the work, to generate income from Lot 8. He says there is no unjust enrichment as Ms. Draper will benefit from receiving 50% of the net proceeds from the eventual sale of Lot 8, the value of which has appreciated considerably since its acquisition in 1999.
[9] We disagree with Mr. Holtby’s position on this issue. Because we have found that the basis for Ms. Draper’s entitlement to half of Lot 8 is not by way of constructive trust but rather a resulting trust interest, her entitlement to 50% of the proceeds of its sale does not compensate her for the payments she made towards Mr. Holtby’s share of the property. The law of unjust enrichment entitles Ms. Draper to recovery provided she can establish that Mr. Holtby was enriched by these payments to her detriment in the absence of a juristic reason: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 at para. 32.
[10] As the trial judge found at para. 110, Ms. Draper was under no obligation to make out-of-pocket payments towards the mortgage and property taxes for Mr. Holtby’s property. To allow him to retain such payments would unjustly enrich Mr. Holtby at Ms. Draper’s expense. Given our conclusion that Ms. Draper was already entitled to half of the property as a joint owner, it follows from the trial judge’s findings – absent extenuating circumstances – that she is now entitled to reimbursement for the payments she made in relation only to Mr. Holtby’s half-interest. Mr. Holtby has raised no such extenuating circumstances.
[11] Mr. Holtby shall therefore pay Ms. Draper the sum of $30,788.51 plus pre-judgment interest for the amounts she paid in relation to Mr. Holtby’s half of Lot 8.
Trial Costs
[12] Ms. Draper was ordered by the trial judge to pay Mr. Holtby all-inclusive costs of $100,000. The trial judge characterized Mr. Holtby as “much more successful” in the litigation. He reduced the quantum of costs below the $185,000 sought by Mr. Holtby, on account of Mr. Holtby’s conduct in the litigation and less reasonable settlement efforts.
[13] Ms. Draper submits that, since she was successful on the ownership of Lot 8 issue, that, plus the trial judge’s reasons to significantly reduce Mr. Holtby’s costs, mean that she should receive $100,000 in costs from him. She claims that the case was ultimately about the money she would receive, and that in concluding that she was a joint beneficial owner of Lot 8, this court’s decision increased the money she will receive by more than $200,000.
[14] Mr. Holtby argues that the trial judge’s costs decision should stand, asserting that he was more successful because he recovered the bulk of the farm assets held in Knapton without having to pay Ms. Draper. He also contends that Ms. Draper’s offers to settle were problematic.
[15] Mr. Holtby was successful at trial and on appeal on the issue of ownership of Knapton. Ms. Draper gained joint beneficial ownership of Lot 8 on appeal. By comparison, the other issues at trial were minor, or depended on these determinations of ownership. (This was also the view of the trial judge who observed that “the trial’s raison d’être was whether Ms. Draper was a real owner of Knapton and/or [Lot 8]”: Holtby v. Draper, 2016 ONSC 5050, [2016] O.J. No. 4595.) The relative success of the parties, after appeal, was evenly balanced. In the circumstances, the parties should bear their own costs of the proceedings in the court below, and we so order.
Costs of the Appeal
[16] Ms. Draper claims partial indemnity costs of $42,000. Mr. Holtby claims $16,811.58 in costs. Both claim to be the successful party on appeal. The two main issues on appeal were the ownership of Lot 8 and Knapton. Success was divided. In the circumstances there will be no order as to costs on the appeal, including the costs of the additional submissions made by the parties.
Additional Claim for Occupation Rent
[17] Ms. Draper claims an additional $7,125 in occupation rent for the years 2016 to 2017 (post-trial). While he does not contest the amount of the claim, Mr. Holtby responds that these years were not before the court, and that no such award should be made.
[18] It is this court’s well-established practice not to entertain issues raised for the first time on appeal where the parties have not had an opportunity, in such circumstances, to focus on and prepare a record in that context: Rosenberg v. Gold, 2016 ONCA 565 at para. 26.
[19] At the same time, the late timing of this claim would not necessarily foreclose recovery since, given the nature of the claim for beneficial ownership in Lot 8, Mr. Holtby could be presumed to have been on notice of a claim for ongoing occupation rent: see Frick v. Frick, 2016 ONCA 799 at paras. 34-40.
[20] Here, Mr. Holtby was on notice since trial that Ms. Draper was claiming occupation rent in the event that she was found to be a part-beneficial owner. Accordingly, we award Ms. Draper the additional amount of $7,125 in occupation rent.
“K. van Rensburg J.A.”
“Grant Huscroft J.A.”
- Weiler J.A. took no part in this decision.