ONTARIO
SUPERIOR COURT OF JUSTICE
OSHAWA COURT FILE NO.: 54340/08
DATE: 2012-01-18
B E T W E E N:
JOSEPH FRACZ, EDWARD FRACZ, STEPHEN FRACZ, CHRISTINE CALDWELL and STANLEY FRACZ
Mr. Ted G. Reczulski, for the plaintiffs
Plaintiffs
- AND -
WALTER FRACZ Defendant
Unrepresented defendant
HEARD: November 23 and 24, 2011
REASONS FOR JUDGMENT
[ 1 ] Ludwig and Maria Fracz have six children born of their marriage. In 1967 they purchased a 12 acre parcel of vacant land that has a municipal address of 2212 Trulls Road, Courtice, Ontario. The Fracz siblings are the parties to this proceeding. The plaintiffs seek an order for sale of the property pursuant to s 3(1) of the Partition Act R.S.O. 1990 c.P.4.
[ 2 ] The names and dates of birth of the six Fracz siblings are as follows:
Walter d.o.b. September 20, 1946
Joseph d.o.b. September 29, 1948
Edward d.o.b. October 28, 1952
Stephen d.o.b. April 23, 1956
Christine (Caldwell) d.o.b. December 1, 1957
Stanley d.o.b. March 19, 1964
[ 3 ] Joseph Fracz testified that his father Ludwig bought the Trulls Road property to farm and grow a vegetable garden, and he indicated that he wanted to build a home on the land. The Agreement of Purchase and Sale dated September 5, 1967, details Ludwig Fracz as the purchaser. The purchase price was $11,400.00 with a deposit of $500.00, with a vendor take back mortgage for the balance of the purchase price. The reporting letter of Anthony Laskowsky, the purchaser’s real estate lawyer, indicates that the transaction closed on November 8, 1967 and title was placed in the names of Ludwig and Maria Fracz as joint tenants.
[ 4 ] Before the date for closing the transaction, Ludwig provided a cheque to Anthony Laskowsky in the amount of $ 3,504.79. A receipt for this cheque dated October 3, 1967 from Mr. Laskowsky to “Mr. and Mrs. Fracz”, is an exhibit at this trial. Consequently, as the reporting letter of Mr. Laskowsky dated November 22, 1967 indicates, the vendor take back mortgage was reduced to $7,400.00 on closing. Walter Fracz was not married on October 3, 1967.
[ 5 ] Joseph Fracz testified that in 1967, Ludwig did not advise him that Walter was the actual purchaser of the property. He also testified that Walter did not state in 1967 that he was the actual purchaser of the property.
[ 6 ] In 1967 Ludwig was employed in the works department of the City of Oshawa and his spouse Maria, in addition to raising six children, was also employed as a short order cook at the Genosha Hotel in Oshawa. Joseph Fracz testified that the first language of both his parents was Polish and they completely relied on their eldest child, Walter, to translate all mail and documents for them.
[ 7 ] Filed as an exhibit is a handwritten ledger which records payments on the vendor take back mortgage commencing November 30, 1967. This document records the cheque number, the date, the recipient of the cheque and the amount. The recipient of each of the cheques is named as “J. Roka” who was the mortgagee on the vendor take back mortgage. The monthly payments were either $80.00 or $100.00. Joseph Fracz testified that the handwriting on this ledger statement is that of his brother Walter Fracz. Copies of the cheques for the first 22 payments on this mortgage drawn on the Toronto Dominion Bank account of Ludwig Fracz, are filed as supporting documentation. Further monthly bank statements from the Toronto Dominion Bank relating to an account of Ludwig Fracz from September 6, 1967 to November 1971, are also filed as supporting documentation. Included in these documents are the cheque payable to Anthony Laskowsky dated October 3 1967 in the amount of $3,504.79 issued by Ludwig Fracz, and the corresponding Toronto Dominion Bank statement for the months of September, October and November, 1967 relating to Ludwig Fracz’ bank account. This monthly bank statement is relevant to the position of the defendant Walter Fracz, as the statement indicates that the following deposits were recorded on the statement “$100, $1,500, $2,005”.
[ 8 ] Ludwig Fracz died on December 25, 1996. On his death the handwritten ledger statement relating to the vendor take back mortgage was located in a box containing the personal papers of Ludwig Fracz.
Transfer of Title 1971
[ 9 ] In 1971, Ludwig and Maria Fracz entered into a separation agreement. Joseph Fracz testified that he and Walter had discussions with both of their parents, wherein his parents stated that they wanted each of the siblings to have a 1/6 share in the Trulls Road property. There were two other properties with homes that Ludwig and Maria owned and which they separately occupied pursuant to the terms of their separation agreement.
[ 10 ] Joseph Fracz testified that only he and Walter were of the age of majority in 1971 and, accordingly, by a deed dated August 31, 1971 and registered September 9, 1971, Ludwig Fracz transferred his interest in the Trulls Road property to his sons Walter and Joseph Fracz as joint tenants. Further, by a deed dated October 18, 1972 and registered October 25, 1972, Maria Fracz transferred her interest in the Trulls Road property to her sons Walter and Joseph Fracz as joint tenants.
[ 11 ] Joseph Fracz states that he and Walter commenced making equal payments on the vendor take back mortgage beginning September 3, 1971 and continued until the mortgage was paid off in 1972. Nevertheless, the intentions and instruction of his parents was that all the siblings were to have a 1/6 interest in the Trulls Road property without any adjustments.
Severance of a Lot in 1977
[ 12 ] In the summer of 1977, Walter Fracz approached his brother Joseph and some of the other siblings and advised that he wanted to sever a 3/4 acre lot and build a home on the Trulls Road property. Joseph Fracz testified that his parents were aware of Walter’s intention to build a house. Accordingly, it was agreed that Walter and Joseph would have an agreement prepared by the lawyer Anthony Laskowsky, which would detail their parents’ intentions and which also would provide for the severance of the 3/4 acre on mutually acceptable terms. This agreement is dated August 31, 1977, and it is executed by Walter and Joseph Fracz.
(a) the legal description of the Trulls Road property;
(b) that Walter Fracz and Joseph Fracz are holding the land in trust for themselves and each of the remaining four siblings “each as to an undivided one-sixth interest”;
(c) that Walter Fracz wishes to build a residential building on the land and therefore “it is necessary to enter into this Agreement to define the rights and obligations of all the parties involved”;
(d) that Walter Fracz may construct a single family dwelling on the lands “at his sole expense” and all the parties consent;
(e) that Walter Fracz will be responsible for municipal taxes, fire insurance, maintenance and repairs as they relate to the building only;
(f) that all the “beneficial owners” of the property would be responsible for their pro-rated share of the municipal taxes as they relate to the land only;
(g) that the right to sell the land shall rest in Walter Fracz and Joseph Fracz “by the unanimous consent of Walter Fracz and Joseph Fracz only”;
(h) that upon the sale of the lands and buildings “there shall be an evaluation of the lands and buildings separately. From the net proceeds of such sale Walter Fracz shall receive the amount of the valuation of the buildings for his sole and only use, and the balance is to be divided equally among all the beneficial owners.”
[ 13 ] Walter Fracz built his home on the severed lot in 1977 and 1978.
[ 14 ] A deed transferring the severed lot to Walter Fracz was executed by Walter and Joseph and registered on title on October 16, 1987. In 1989, Walter Fracz transferred title to the home and ¾ acre lot to Deborah Foren. Joseph Fracz and the other siblings do not make a claim for an interest in this home and ¾ severed lot.
[ 15 ] On January 31 1997 Deborah Foren sold the home on the severed ¾ acre for $178,000.
Construction of a Second Dwelling Unit on the Trulls Road Property
[ 16 ] In 1997, Stephen Fracz observed a new culvert being constructed on the Trulls Road property. After inquiries it was learned Walter Fracz had applied to build a second home. The siblings later agreed Walter could build the home provided it did not negatively affect the value of the land.
[ 17 ] At the 1997 meeting Walter did not assert ownership of the property.
[ 18 ] Walter later paid municipal taxes and told Joseph he received a Farm Tax Credit.
Commencement of Legal Proceedings
[ 19 ] The five siblings commenced legal proceedings on February 5, 2003 for a declaration of their 1/6 interests and vesting title.
[ 20 ] A judgment dated May 16, 2005 declared that all six siblings held undivided 1/6 interests as tenants in common.
[ 21 ] Walter later demanded their names be removed from title.
Relief Sought by the Plaintiffs
[ 22 ] The plaintiffs seek a court‑ordered sale under s.3 of the Partition Act.
Position of the Defendant
[ 23 ] Walter Fracz ultimately proceeded unrepresented at trial.
[ 24 ] In his defence he claimed he intended to gift proceeds to family but retain control of the property.
[ 25 ] He alleged he was the equitable owner through a resulting trust.
[ 26 ] Alternatively he sought compensation for contributions if the property were sold.
[ 27 ] Walter testified that he made the mortgage payments.
[ 28 ] He relied on a credit union loan disclosure document.
[ 29 ] The court found no nexus between that loan and the purchase funds.
[ 30 ] Additional documentary evidence did not support his claim.
[ 31 ] Walter stated he did not object to sale provided he was compensated for the second house.
Analysis
[ 32 ] Walter Fracz was not a credible witness. Documentary evidence and testimony confirmed the property was held for all siblings equally.
[ 33 ] Expert appraiser Murray Visser valued the 11.28 acres at approximately $900,000 for future residential development.
[ 34 ] The second dwelling added nominal or no value to the property.
[ 35 ] The defendant called no appraisal evidence.
[ 36 ] The dwelling is currently occupied by the defendant’s daughter.
[ 37 ] The court finds the only way all owners can benefit from the property is through sale.
[ 38 ] There will be no compensation to the defendant for the dwelling.
[ 39 ] The defendant had already benefited from the earlier severed parcel sold for $178,000.
Order
[ 40 ] Therefore based on the findings of fact, this court makes the following Order:
(1) That the subject property be listed for sale with a real estate agent at a list price as agreed upon by a majority of the property owners.
(2) That an Offer to Purchase shall be deemed to be accepted if a majority of the owners accept the offer.
(3) That the proceeds from the sale of the property shall pay the real estate commissions, the legal fees and disbursements, including H.S.T. related to the real estate transaction. The balance of the proceeds shall be divided into six (6) equal shares. Each Plaintiff is to receive one share.
(4) Out of the remaining one share owed to the Defendant shall be deducted any outstanding municipal taxes, interest or penalties, and any amount that may be required to be paid in relation to any municipal work order or fine relating to the subject property to the date of closing. The balance of the amount due and owing to the Defendant shall be retained in the real estate lawyer’s trust account pending an assessment of the costs related to this proceeding /or subject to further order of this Court.
[ 41 ] The Counterclaim is dismissed.
[ 42 ] Counsel for the Plaintiffs and Walter Fracz may contact the trial coordinator at Oshawa to arrange an appointment to speak to the issue of costs.
Justice J. Bryan Shaughnessy
Dated: January 18, 2012
Released: January 18, 2012
Justice J. Bryan Shaughnessy