COURT FILE NO.: C-896/10
DATE: 20120730
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Donald Clarke
Plaintiff
– and –
Martha Johnson, Victoria Johnson and Westley Clarke.
Defendants
Richard Guy, for the Plaintiff
D. Peter Best, for the Defendant Martha Johnson.
HEARD: June 12, 13 and 14, 2012
REASONS FOR JUDGMENT
R.D. Gordon, J.:
Overview
[1] Martha Johnson is a one third owner of an island on Lake Panage not far from Sudbury. Donald Clarke was once married to Mrs. Johnson’s daughter Victoria and while married they built a camp on the island. Following Mr. Clarke’s separation from Victoria some 20 years ago, he and their children enjoyed the exclusive use of the camp.
[2] Recently, Mrs. Johnson took steps to prevent Mr. Clarke from using the camp. These court proceedings ensued to determine the legal rights of the parties. The claims against Victoria Johnson and Westley Clarke were dismissed on consent at an earlier date.
Background Facts
[3] William Johnson was an astute and successful Sudbury businessman. In 1971 he began negotiating the purchase of an island on Lake Panage. He and his wife Martha, the Defendant in these proceedings, eventually acquired the property in their name that year. Notwithstanding that it was taken in their names, it is clear that Mr. Johnson’s siblings (Allan Johnson and Laila Rintamaki) were also involved in the purchase. In 1979, the property was transferred such that William and Martha Johnson retained a one third interest in the property, with one third held by Allan and Evelyn Johnson and the final third held by Onnie and Laila Rintamaki.
[4] When acquired, the island had but one building on it – an older, somewhat dilapidated log structure that would be known as the main lodge. All three couples shared its use. As their families grew the owners began to contemplate building their own camps on the island. Eventually, an informal agreement was reached whereby the island was divided into five sections. One section, the northeast corner of the island where the main lodge stands, was reserved as a common use property. A section of the island lying south of the main lodge was to be used by William and Martha Johnson along with another section of the island lying at its western end. The land in the middle of the island was divided in two with one section occupied by Allan and Evelyn, and the other by Laila and Onni. By virtue of this agreement, each couple shared in the use of the main lodge and had occupation of about one third of the remainder of the island.
[5] Although there are documents which purport to reflect the understanding of the parties, there is no written agreement signed by them all. I heard evidence from Martha Johnson and Allan Johnson and from various children of the original owners which satisfies me that the agreement between them was basically as follows: Although all three couples retained a one third interest in the entire island, each was to enjoy control of the one third allocated to them provided they were considerate of the other owners and acted reasonably in the use of their section. It was also agreed that ownership in the island would not pass to other than blood relatives of the Johnson family.
[6] The first to build on the island were Donald and Victoria Clarke. With the blessing of Victoria’s parents, William and Martha Johnson, they first built an A-Frame structure at the western end of the island. Subsequently, in the winter of 1988, they had a prefabricated cottage delivered to the island.
[7] This prefabricated cottage was purchased from Maple Leaf Homes & Cottages for $15,471.46. Mr. Clarke testified that the cottage was purchased and constructed with funds from two sources. First, he said that he contributed some $5,700 from Registered Retirement Savings Plans he had accumulated. Second, William Johnson advanced loans totalling $17,000. It is perhaps appropriate to point out that William Johnson was an owner of Copper Cliff Dairy where Donald Clarke worked. In addition to having married his daughter, Mr. Clarke and Mr. Johnson were good friends. It was also alleged by Victoria that Martha Johnson advanced them a further loan of $5,000 cash in 1989, however, there was no documentation to reflect any such loan, and Mr. Clarke did not recall it. Martha Johnson made no mention of the loan in her testimony. In the circumstances, the evidence is not sufficient to establish that this further loan was made.
[8] Donald Clarke and Victoria Johnson had two children together, Misty, who was born in 1976, and Westley, who was born 1977. Together the family attended the camp throughout the summer months and often in the winter as well.
[9] Unfortunately, Donald and Victoria’s marriage did not last. They separated in 1991 and have never reconciled. At least initially, the children were left in the care of Mr. Clarke and he assumed sole responsibility for their support. The issues arising out of their separation were resolved by way of agreement, however, no copy was provided to the court. Both testified, however, that although the agreement dealt with their property issues, the camp was not included. Mr. Clarke’s evidence was that Victoria washed her hands of the camp saying that it was his to use with the children and that she wanted no part of it. Victoria’s evidence was that the camp was not theirs to deal with but that she was content to leave its use to Donald and the children provided he maintained it.
[10] Mr. Clarke testified that following his separation William Johnson would often drop by his home to visit his grandchildren. On one such visit Mr. Clarke was lamenting his difficult financial situation and wondered aloud how he would be able to repay the $17,000 owing on the loan. He says that Mr. Johnson told him not to worry about payment, that it was not expected. No further payment was made and Mr. Johnson made no subsequent demand for payment.
[11] Victoria has not attended at the camp since separation. Mr. Clarke has paid the bills relative to it, has made improvements to it from time to time, and has enjoyed exclusive possession of it for some 20 years. Problems began to arise when Donald and Victoria’s son Westley returned from western Canada and began to show a renewed interest in the camp. He has been living out west for about 10 years during which he had never returned to Sudbury. In 2009 he determined that he would move back and indicated to his father a desire to use the camp. According to Mr. Clarke, he had no difficulty with Westley using the camp from time to time provided it did not conflict with plans he had already made for its use. They apparently could not come to terms and their relationship became strained. It is such now that Mr. Clarke refuses to allow Westley the use of the camp.
[12] William Johnson passed away in February 2009 and Martha is now the sole owner of their one third interest in the island. In her view, Mr. Clarke’s use of the camp was premised on his willingness to share its use with his children. Once he refused to make it available to Westley, she determined that his use should also terminate and she issued a trespass notice to him.
[13] It is against this background the parties seek adjudication of their respective rights.
The Position of the Plaintiff
[14] Mr. Clarke acknowledges that he is not an owner of the island, but asserts that he is owner of the camp. He contends that Mrs. Johnson, as a one third owner of the island, lacks the ability to terminate his occupation of the island when the remaining owners of the island have not joined in. In the alternative, he argues that he has an equitable right to continue in occupation of the camp and property based on principles of unjust enrichment or proprietary estoppel.
The Position of the Defendant
[15] Mrs. Johnson takes the position that the camp is a fixture, not a chattel, and as such its ownership rests with the ownership of the island. Given that she has control over that portion of the island used by Mr. Clarke, she feels she has the right to prohibit his use. Her position is that the equitable remedies of unjust enrichment and proprietary estoppel have no application on the facts of this case.
Analysis
Who Owns the Clarke Camp?
[16] Much argument was directed to the issue of whether the camp is a chattel, owned by Mr. Clarke, or has been made part of the island, thereby falling under the ownership of the owners of the realty.
[17] This issue generally arises in the context of whether a structure on land is included in a conveyance of the land. In that context, the issue rests on a consideration of such things as whether the building is affixed to the property, the means by which it has been affixed and whether it can be moved without damage. Were that the issue before me I would have little difficulty finding that as between a vendor and purchaser of the island, the camp is a fixture which would pass to the purchaser.
[18] The issue before me, however, is somewhat different. The issue here is whether Mr. Clarke, having built the camp upon the island with the consent of its owners, retains ownership in the camp structure vis-a-vis those same owners. In my view, the determination of this issue rests upon the intention of the parties. That is, as between them, was it intended that Mr. Clarke would remain the owner of the camp, or was it to have become part of the realty, subject to whatever legal rights and obligations existed between the parties?
[19] In my view, the camp, when constructed, was to become part of the realty.
[20] The evidence at trial was clear that the island would be used by the owners and such of their families as might be invited. The camp built by the Clarkes was to be used exclusively by them and their children. The intention was that when Donald and Victoria died, use would pass to their children who, presumably, would also eventually receive a legal interest in the realty as direct descendants of Martha and William Johnson.
[21] The notion that the camp forms part of the realty is bolstered by the nature of the building itself. Although it was transported to the island as a prefabricated unit, it has now been assembled and the interior finished. To move it would require that it be cut into sections and transported over the lake when frozen in the winter. Although there was no expert evidence called on this issue, and varying views of whether it could even be done, it is reasonably clear to me that it would be a massive and expensive undertaking with substantial risk of significant damage to the structure. It would be fair to say that no one contemplated that the camp would be moved once it was put in place.
[22] The actions of the parties also support this view of the camp. The camp was not constructed in a manner that would lend to its being moved. It was not placed in a specific location on the island that might make its future transportation easier. It was maintained and improved by Mr. Clarke as though it was a permanent structure.
[23] In all, as between the Clarkes and the Johnsons, I have no difficulty finding that the parties intended that the camp be a permanent structure that was part of the realty. The parties directed argument to the issue of the interest, if any, Victoria Johnson would now have in the camp. Given my finding that ownership of the camp rests with the owners of the island, the answer is that she has no ownership interest in it.
Can Martha Johnson Maintain An Action in Trespass Against Mr. Clarke?
[24] Mr. Clarke argued that because not all owners of the island joined in the allegation of trespass, Mrs. Johnson may maintain her trespass action only to the extent of her one third interest. In support of that position, I was provided with case law dating back to the 19th century, namely Barnier v. Barnier [1892] O.J. No. 96, Lyster v. Kirkpatrick [1866] O.J. No. 42 and Lyster v. Ramage [1866] O.J. No. 43. Counsel were unable to locate any more recent cases on subject.
[25] Counsel for Mrs. Johnson argued that the agreement among co-owners providing for virtually exclusive control over distinct sections of the island distinguishes the case before me from those cited. I agree.
[26] Each of the owners has accepted control of specific property and has allowed the construction of a camp or camps thereon. Those camps are not considered shared use structures among the owners. There has been no suggestion that occupiers of one section of the island have any control over who occupies another section of the island provided such occupation does not interfere with the use and enjoyment of other owners.
[27] The agreement between the owners gave each of them the right to grant the use of their section to others. That right must also include the ability to terminate such use. Mr. Clarke began occupying the island at the instance of Mr. and Mrs. Johnson, on land controlled by them. His occupation of the island is now at the instance of Mrs. Johnson and may be terminated by her unless there is an equitable remedy available to him.
Mr. Clarke’s Claim for Unjust Enrichment
[28] It is well settled law that a successful claim for unjust enrichment requires proof of three elements:
(1) That a party has been enriched;
(2) That another party has suffered a corresponding deprivation; and
(3) The absence of any juristic reason for the enrichment [Peter v. Beblow 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980].
[29] Currently, the owners of the island have ownership of the camp in question. Although Mrs. Johnson controls the island where the camp is located, she does not occupy it. In the event Mr. Clarke is denied occupation, Mrs. Johnson would gain physical control of the camp and the ability to occupy it herself, rent it out, or provide for vacant possession in the event she was to convey her interest in the island. She would gain these rights notwithstanding that she has never made any contribution towards the camp’s construction, improvement or maintenance. In the circumstances, I have no difficulty finding that this would constitute enrichment.
[30] Mr. Clarke was instrumental in the actual construction of the camp. I am satisfied, based upon his evidence, that he contributed funds to its original construction. In addition, he has paid the expenses related to it for over twenty years. He has physically maintained the camp and contributed not insignificantly to its improvement. There can be no question that there would exist a corresponding deprivation. That he has had use of the camp since its construction is not sufficient to displace this deprivation, particularly in view of the reasonable expectation that his use would continue until his death.
[31] It is necessary to address the issue of the loan made to Donald and Victoria by William Johnson. It was argued that because the $17,000 loan was forgiven, or at least not collected, Mr. Clarke’s deprivation has been considerably lessened and perhaps even eliminated. Similarly, the argument would follow that Ms. Johnson has not been unjustly enriched because the camp was largely paid for with funds borrowed from her and her husband that have never been repaid. In my view, those arguments cannot succeed. Whether one accepts that the loan was forgiven, or that collection is now unavailable by virtue of an expired limitation period, the fact is, Mrs. Johnson has no right to a remedy arising from that debt. Having either forgiven the debt or chosen not to pursue collection, it seems to me inappropriate and unfair that Ms. Johnson now be able to rely upon it to defeat Mr. Clarke’s claim. In any event and although I was provided no current appraisal for the camp, I have little doubt that Mrs. Johnson’s enrichment, and Mr. Clarke’s deprivation, far exceed the amount loaned so as to exist notwithstanding the loan issue.
[32] There was no suggestion of any other juristic reason for the enrichment of Mrs. Johnson.
[33] It follows that Mr. Clarke has established his claim for unjust enrichment.
Mr. Clarke’s Claim of Proprietary Estoppel
[34] In the recent case of Schwark Estate v. Cutting 2010 ONCA 61, [2010] O.J. No. 288, the Ontario Court of Appeal had occasion to set out the elements necessary to establish a claim of proprietary estoppel as follows:
(1) The owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property;
(2) In reliance upon this belief, the claimant acts to his detriment to the knowledge of the owner;
(3) The owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.
[35] Mr. Clarke testified that when the camp was built he assumed he would own the cottage in the sense that he was building it for his family, that his family would use it until he died, and at that time would be inherited by his children. The question is whether William and Martha Johnson induced, encouraged or allowed Mr. Clarke to believe he would enjoy such a benefit in the camp. Based upon the actions of William and Martha Johnson, I have little difficulty in finding they did. To begin with, they gave permission to build and loaned Donald and Victoria money to be used in the purchase and construction of the camp. Secondly, Mr. Clarke was given occupation of the camp, first with Victoria and subsequently without her, and such occupation appears never to have been questioned until the events giving rise to these proceedings. Further, Mr. and Mrs. Johnson acquiesced in Mr. Clarke’s regular and long term maintenance and improvement of the camp.
[36] In reliance upon the belief that he would be entitled to occupy the cottage during his lifetime, Mr. Clarke contributed significantly to its construction, maintenance and improvement. All of this was done with the knowledge and consent of the Johnsons.
[37] Mrs. Johnson now seeks to deny him the use of the camp which he expected to receive. The result is that she would have possession and use of the cottage, the right to rent it out, or the right to provide vacant possession should the island or her interest in it be sold.
[38] The attachment between a person and his or her camp is unique and not easily described. Over time there comes to be an emotional attachment borne of the surrounding beauty, the investment of sweat equity, and the memories of times spent with family and friends. When one has been allowed to develop that attachment over the course of decades, and has directed personal and financial resources to the property in the reasonable belief that it would continue, it is unconscionable to deny that benefit.
[39] In my view, Mr. Clarke has also made out a claim for proprietary estoppel.
Remedy
[40] As held in Peter v. Beblow, the fundamental concern of equitable remedies is the legitimate expectation of the parties. The remedy of constructive trust arises where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the remedy is claimed. In the case before me, I am satisfied that monetary damages are inadequate given the very real and significant emotional attachment that exists between Mr. Clarke and the camp. I am also satisfied of the required link between the contributions made by Mr. Clarke and the camp. In my view an appropriate remedy is the imposition of a constructive trust to reflect Mr. Clarke’s interest in the camp property. That remedy coincides with the remedy appropriate to the finding of proprietary estoppel and reflects the legitimate expectations of the parties.
[41] In determining the expectations of the parties, I am fortunate to have some twenty years of history to examine. Over that period of time, Mr. Clarke has had uninterrupted use of the camp. He has also had sole responsibility for its maintenance and improvement. As the children became adults and moved away from Sudbury Mr. Clarke continued to have uninterrupted use of the camp but welcomed visits from the children. No doubt, Mrs. Johnson regarded Mr. Clarke’s ongoing maintenance and improvement of the camp as something that would eventually benefit the children. I also do not doubt that Mr. Clarke and Mrs. Johnson both expected and intended that both Westley and Misty would always be welcome to share in the use of the camp. The question arises, however, of who sets the terms of their use. In my view, given the long and uninterrupted use of the camp by Mr. Clarke, and his sole responsibility for its maintenance, the children’s use of the camp should properly be regulated by him.
[42] Accordingly, Mr. Clarke is to have a licence to occupy the camp until he dies or is no longer physically able to attend there. The licence to occupy is personal to him and his invitees and may not be assigned or conveyed in any fashion. It is a condition of the licence that he maintain the camp in a state of good repair and that he pay the taxes and utility costs associated with it. It is also a condition of the licence that he take no steps to materially alter the nature or quality of the camp during the licence period.
Costs
[43] If the parties are unable to agree on costs, they may make written submission to me, not to exceed five pages in length each, within 45 days of release of this decision.
Mr. Justice R.D. Gordon
Released: July 30, 2012
COURT FILE NO.: C-896/10
DATE: 20120730
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Donald Clarke
Plaintiff
– and –
Martha Johnson, Victoria Johnson and Westley Clarke. Claims previously dismissed as against Victoria Johnson and Westley Clarke
Defendants
REASONS FOR JUDGMENT
R.D. Gordon J.
Released: July 30, 2012