ONTARIO
SUPERIOR COURT OF JUSTICE
ESTATES LIST
COURT FILE NO.: CV-12-468763
DATE: 20131022
BETWEEN:
AGATA SETTECASE, by her Litigation Guardian, ADAM SETTECASE,
Applicant
– and –
AGOSTINO SETTECASE and
FABIO SETTECASE,
Respondents
Marco Drudi, Counsel for the Applicant
David Noseworthy, Counsel for the Respondents
HEARD: OCTOBER 8, 2013
ENDORSEMENT: GREER J.
[1] The Applicant, Agata Settecase (“Agata”), by her Litigation Guardian, Adam Settecase (“Adam”), asks the Court to make the following Orders:
(a) An Order that the property, municipally known as 30 Clearview Heights, Toronto, Ontario, and legally described as Part Lot 33, Plan 4390, Township of York, having Property Identification No.10495-0300 (LT) (“the Property”), be listed for sale;
(b) An Order seeking the appointment of a Receiver/Manager to administer and manage the Property pending the sale, with the powers that are set out in paragraph (c) of the Application, or in the alternative, for an Order directing a reference to a Master in Toronto for the purposes of conducting the sale of the Property;
(c) An Order requiring the Respondents, Agostino Settecase (“Agostino”) and Fabio Settecase (“Fabio”), be required to account for all revenue and expenses with respect to the Property, including but not limited to, any and all rent and cash revenues and laundry revenues from 1998 to today’s date;
(d) An Order that the net proceeds from the sale of the Property be divided equally amongst the registered owners of the Property.
Some background facts
[2] Agata is the 93-year old Mother of Agostino and the Grandmother of Fabio. Her Litigation Guardian, Adam Settecase, (“Adam”) is also her grandson, being the son of Agata’s late son Vito, who died on April 11, 2011. Agata and her late husband, Salvatore, purchased the Property in 1976. On his death, Agata and Agostino, and Vito became the owners of the Property.
[3] Fabio is said to have purchased Vito’s interest in the property. The 3 co-tenants had the Property transferred into their names on April 8, 1998. The three of them are now the co-owners of the Property, a 25 unit residential apartment building complex. Each is a tenant-in-common, owning a one-third undivided interest in the Property. The Property is unencumbered by mortgages.
[4] There has been on-going litigation by Agostino against Agata since 2009. Agostino sued her for breach of contract and/or unjust enrichment relating to the discharge of a mortgage on that Property in 2006. Agata filed a Statement of Defence and Counterclaim in that Action.
[5] Agostino then brought on a Motion to stay this proceeding pending his Action being heard, or in the alternative, that the two proceedings be consolidated or heard one after the other. I heard this Application first, followed by the Motion and dismissed the Motion for the Written Reasons delivered on October 9, 2013.
[6] Agata is concerned that Agostino, supported by Fabio, has been running, controlling and administering the Property without properly accounting to her for the receipt of rents and the receipt of the laundry machine monies. In addition, Agostino, without authority is the sole signatory on the banking documents with respect to these monies. In turn, Agostino has now hired and signed a contract with a Property Manager, Goldview Property Management Ltd. (“Goldview”), without consulting with Agata.
Agata’s concerns about the Property
[7] Agostino gives Agata the sum of approximately $1,500 per month from the net proceeds of the tenants’ rents received. He has not accounted for the cash laundry monies or given her any of that, she says. Adam, as Agata’s Litigation Guardian, and Agostino do not get along and their relationship is described as “dysfunctional”. Adam does not trust Agostino and says there is evidence of Agostino’s self-dealing.
[8] Adam says that despite Agostino’s earlier saying that he would give such an accounting, he has not done this. Agostino unilaterally listed the property for sale in 2011, without Agata’s consent. That step did not move forward. Then about January 12, 2012, Adam says that Agostino said he was no longer going to provide Agata with a cheque unless he was told to do so by a lawyer. He later agreed to write the cheques but refused to give them to Adam to deposit, and instead, dropped them into Agata’s dresser drawer in her retirement residence.
[9] In the brief accounting Agostino, did do, it is clear that he never used accountants to prepare even simple financial statements. When Adam reviewed what Agostino prepared, he became concerned about the management fees being charged to Agata’s share. Agostino also charged against the whole of the Property, over $66,000 for maintenance and repairs. He says he personally did all the work. There have never been Financial Statements, unaudited or otherwise, prepared for the operation of the apartment complex.
[10] Adam says that Goldview refuses to co-operate with him, on Agata’s behalf. It will not give him any information because the contract is solely in Agostino’s name. They refused to give Adam financial data, and said that any future accounting would only be provided by way of access in a lawyer’s office. Agostino is now charging Agata $5,000 per year for managing her interest in the Property yet he charges Fabio nothing against Fabio’s interest.
[11] Agostino maintains that he is “the majority” person and therefore can unilaterally make all decisions respecting the property.
Agostino’s and Fabio’s positions
[12] The only Affidavit filed in this Application by the Respondents is that of Agostino, sworn March 25, 2013. Fabio took no part in the Motion and filed no Affidavit in support of it. I released my Endorsement dismissing the Agostino’s Motion to stay, on October 9, 2013. Fabio filed no Affidavit in this proceeding either.
[13] Agostino says that Agata was never actively involved in the management of the apartment complex. He claims his parents, while his Father was alive, were content that he manage the Property. He does say that Vito, before his death, did some management but had to sell his interest in the property, as he was going through a divorce and required funds.
[14] Agostino says that he has or still owns three other properties that he manages, with “quite a bit of expertise.” Agostino goes on, at some length, about matters which do not relate to this Application, which is for an Order for the sale of the property. He claims that he consulted with Agata and Adam in advance to the listing of the property in 2011. He says that, “Unfortunately, no suitable offers were forthcoming.”
[15] Adam, openly showing his card, says in para. 28 of his affidavit, “I believe Adam’s interest in forcing a sale of 30 Clearview is to ensure that I am not able to enforce my stake in it upon my mother’s demise.” His main concern seems to be that his Mother had allegedly “rewritten her Will” and he now intends to amend his pleadings in the 9 year-old action to “include claims of tortuous interference with my inheritance rights by Vito and Adam.”
Analysis
[16] An Order shall go directing the sale of the Property on the terms set out herein. Agata, as a one-third co-owner of the Property, has a right under the Partition Act, 1990, R.S.O. 1990 c.P.4. (“the Act”) to ask that the Property be sold. S. 2 of the Act says that tenants in common may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.
[17] Under S.3(1) of the Act, any person interested in the land may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.
[18] Agata therefore has a prima facie right to ask for the sale of the Property. In para. 2 of Tzembelicos v. Tzembelicos (2000), 118 A.C.W.S. (3d) 917 (Ont. S.C.J.), a decision of Mr. Justice Ground, he says:
Co-tenants should only be deprived of this statutory right in the limited circumstances described above, with this caveat. In our view, “oppression” properly includes hardship and that a judge can refuse partition and sale because hardship to the co-tenant resisting the application would be of such a nature as to amount to oppression.
He also noted, earlier in the Endorsement, that there are two other circumstances, in addition to oppression, which the Court looks to see if they are present. Those are malice and vexatious intent. If none of these are found by the Court to be the moving force of an Application for Partition and Sale, the sale will proceed.
[19] The onus is on the Respondent to prove that there has been oppression, malice or vexatious intent. See: Greenbanktree Power Corporation v. Coinamatic Canada Inc., 2004 48652 (ON CA), [2004] O.J. No. 5158 (C.A.). There the Court says that oppression properly includes hardship, if the litigant opposing partition and sale can prove hardship. In the case before me, neither Agostino nor Fabio have proven this. The hardship has been that of Agata never having received a proper accounting of her interest in the income from the Property.
[20] I find on the facts before me that there is no oppression, malice or vexatious intent on Agata’s part in asking the Court to make an Order for partition and sale of the Property. Given her age and the lack of transparency in the operation of the apartment complex by Agostino, it is important to her to have the sale take place. Agostino, himself, has said that he owns other properties he manages, so he is not being deprived of his source of income. He can readily re-invest his share of the proceeds in a new venture with Fabio, if Fabio wishes to do so.
[21] This does not mean that Agostino cannot put in an Offer to purchase the Property at its fair market value. The fair market value, however, has to be determined by a real estate appraiser familiar with sales of multi-unit rental buildings.
[22] In addition, Agata has asked the Court to appoint a Receiver to operate the building until the sale takes place or until further Court Order. Section 101 of the Courts of Justice Act provides that the Court may appoint a receiver by interlocutory order where it appears to a judge of the court to be just or convenient to do so. See: Anderson v. Hunking ONSC 4008 (S.C.J.) at para. 15. There, the Court sets out a number of factors it can look at when making such an appointment, including the nature of the property and rights and interests of all parties in relation thereto.
[23] Agostino also points to Greenbanktree, supra, para.15, where the Court says that the appointment of a receiver is a very intrusive step and that it should be used sparingly, with the consideration for the effect on the parties as well as consideration of the conduct of the parties. He referred to Al-Ghabra v. Al-Ali, 2010 CarswellOnt 196 (S.C.J. Div. Ct.). In my view, this case has no applicability to the one before me. There the Court looked at whether there actually was a co-tenancy and what had actually been paid for the building in question. That is not the case before me.
[24] In Gartree Investments Ltd. v. Cartree Enterprises Ltd., 2002 CarswellOnt 733 (S.C.J.), the Court examined what factors and definitions of vexatious conduct should be looked at. There the Court found that the Applicant was using her right to obtain an Order for partition and sale to thwart the legitimate concerns of the majority of co-owners. That is not the case before me, given the facts I have outlined about Agostino’s behaviour.
[25] The test for the appointment of a receiver is the same as the test for interlocutory injunctive relief as set out in RJR-Macdonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311 at paras. 47-48, as cited in Anderson, supra. In my view, there is a serious issue to be tried in the Application to sell the Property in question and there will be irreparable harm to Agata in not being able to realize on her asset, where she receives no proper accounting of rents and laundry monies as well as monies said to be spent on the up-keep and repairs. The balance of convenience favours Agata. Agostino refuses to accept that all three co-owners have equal rights attached to their individual ownership. Fabio is a silent owner, taking no real part in this proceeding.
[26] In my view, there are two separate steps to be taken in the sale of the Property. Firstly, Agata shall, within 30 days of the date of this Order for partition and sale, obtain a valuation of the Property for sale purposes. Once the valuation has been done, relying to some extent on what Goldview says are the rents and laundry receipts, the Property shall be listed for sale, Agostino and/or Fabio shall have 15 days within which to come up with an Offer to Purchase Agata’s interest at its fair market value.
[27] If any such Offer is proferred to Agata and is not acceptable to her Attorney, Adam, then the second step shall take place.
[28] The second step is the appointment of a receiver/manager to operate the Property until it is sold. Agata, through Adam, shall provide the Court with the names of two persons who have experience as receiver/managers and who are prepared to act. Their curriculum vitae shall be filed as well. These names shall be presented to the Court on Motion, with notice to Agostino and Fabio. The Court shall make the Order appointing one of them. Once that person is in place, the Receiver/Manager shall manage the Property and market the sale of the Property until it is sold.
Orders
[29] The following Orders shall issue:
An Order shall go that the Property be listed for sale as set out herein, with Agata obtaining a valuation of the fair market value of the property, within 30 days of this Order.
Agostino and Fabio shall have 15 days to make an Offer to purchase Agata’s interest in the Property. If the Offer price is acceptable to Agata, then the sale shall take place on the terms agreed to by the parties.
If the sale does not take place, a Receiver/Manager shall be appointed by the Court after Agata provides the Court with two names of persons who have experience as Receivers and would be willing to take on that position. The Receiver/Manager will continue to administer the Property until an arm’s length purchaser makes an Offer to buy it. The Offer, if acceptable to the Receiver, shall go ahead with the sale and provide an accounting to the Court when the sale is completed.
On any such sale, the net proceeds of the sale shall be divided equally among the 3 co-owners.
Costs
[30] If the parties cannot otherwise agree on Costs, I will receive brief written submissions by the parties, no longer than 3 pages in length plus a Bill of Costs and time dockets within 30 days of this Order. The Applicant shall serve her submissions on the Respondents first and they shall have 10 days within which to respond. The Applicant shall have 5 days after that to respond, if necessary. These submissions shall be sent to me to Judges’ Administration, 1st floor, 361 University Ave., Toronto.
Greer J.
Released: October 22, 2013
COURT FILE NO.: CV-12-468763
DATE: 20131022
ONTARIO
SUPERIOR COURT OF JUSTICE
ESTATES LIST
BETWEEN:
AGATA SETTECASE, by her Litigation Guardian, ADAM SETTECASE,
Applicant
– and –
AGOSTINO SETTECASE and
FABIO SETTECASE,
Respondents
ENDORSEMENT
Greer J.
Released: October 22, 2013