ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-075
DATE: 20141118

B E T W E E N:

DOUGLAS FREURE

The Applicant on his own behalf

Applicant

• and -

THE CORPORATION OF
THE TOWNSHIP OF SEGUIN

Jennifer E. Biggar, for the Respondent

Respondent

HEARD: October 14, 2014

D E C I S I O N

WILCOX, J.

INTRODUCTION

[1] The Applicant Douglas Freure sought relief from the provisions of the Municipal Act with respect to the sale for tax arrears of lands in which he had an interest. For reasons that follow, his motion is dismissed.

BACKGROUND

[2] The background of this matter is set out in the Applicant’s affidavit of August 28, 2014. He alleges that he acquired the subject property, 316 Marshall Road in the Township of Seguin and District of Parry Sound, in 1987. It was vacant land. A Deed of Settlement was executed to create a family trust, the status of which as it relates to this land is not clear. He and his wife, Karen Freure, divorced, but the property does not appear to have been dealt with in the family law proceedings. Prior to the separation, he built a dwelling on the land. He registered a construction lien against the property. He also registered a notice under s. 71 of the Land Titles Act claiming an interest in the property.

[3] Documents filed by the parties show that the property was sold by the Respondent township for tax arrears on August 9, 2012. The balance of proceeds of sale after payment of the cancellation price (defined in s. 371(1) of the Municipal Act as including the taxes owing, interest, penalties and costs) was paid into court on September 25, 2012. By October 18, 2013, the township had no notice of any application claiming entitlement to the proceeds being filed within the year from the date of payment into court, and it moved for and obtained an order dated October 22, 2013 from the Superior Court of Justice for payment of the money in court to the township.

[4] The cancellation price was approximately $16,518.67. The amount paid into court was $181,833.76.

RELIEF SOUGHT

[5] The Applicant sought, in summary, payment of the proceeds of sale to him in various capacities, and associated relief. Numerous allegations are made and issues raised, about the validity of the Settlement Agreement, for example, in his documents which it is not necessary to deal with in order to dispose of this matter. In outline, the grounds alleged for relief are:

• he was not served notice of the tax sale proceedings in his capacity as a person who had registered a Notice on Title under s. 71 of the Land Titles Act; - s. 98 of the Courts of Justice Act provides for relief from forfeiture; - the proceeds of sale far exceeded the arrears of taxes, producing a “draconian” result.

[6] The Applicant was self-represented.

MUNICIPAL ACT

[7] Part XI of the Municipal Act sets out the procedure for the sale of land by municipalities for tax arrears. Once a sale has taken place, the proceeds are paid into court. S.-s. 380(4) provides that any person claiming entitlement to the money on account of having been an owner or otherwise having an interest in the land has one year from the date of payment into court to apply to the Superior Court of Justice for payment out of court of the amount to which the person is entitled. After the year has passed, the court shall determine all of the entitlements to receive payments out of court from the proceeds. There is provision for notice to be given to interested persons at successive steps in the proceedings. That one year limitation and the notice requirements figured prominently in the Applicant’s submissions.

DISCUSSION

[8] The Applicant explicitly stated in his submissions that the township had followed proper procedures for the tax sale under the Municipal Act, except that it had failed to serve notice to him in his capacity as the registrant of a Notice under s. 71 of the Land Titles Act.

[9] Dealing first with that issue, the township’s documents included a copy of the property register for the subject property as of June 9, 2011, the day after the tax arrears certificate was registered, commencing the tax sale proceedings. As of that date:

• Douglas Freure and Karen Lynn Freure were the recorded owners, in trust; - a construction lien for $139,595 was on title in favour of Douglas Freure; - a certificate relating to the construction lien (which appears to be the Certificate of Action) was on title in favour of Douglas Freure; - an unspecified notice was registered on title in favour of Douglas Freure.

[10] The township’s documents include statutory declarations under the Municipal Act listing who Notices of Registration of a Tax Arrears Certificate, of the Final Notice and of Notice of Payment Into Court were sent to. All three include:

• Douglas Freure, trustee as assessed owner; - Douglas Freure, in trust for the children of Karen Freure and Douglas Freure, as registered owner; - Douglas Freure, in trust as registered owner; - Douglas Freure, as trustees (sic) as registered owner; - Douglas Freure as registered owner; - Douglas Freure as lien claimant; - Douglas Freure as lien claimant; - Douglas Freure as lien claimant.

The statutory declaration regarding the Notice of Payment Into Court also listed Douglas Freure, as assessed owner, at 51-620 Thistlewood Drive, London, Ontario, N5X 0A9, the address provided by the Applicant in his email of July 26, 2012 to the township.

[11] It appears that, in addition to being served as owner, the Applicant was served as the registering party of three “liens”. One would be the construction lien, the second would be the Certificate of Action relating to the construction lien, and the third would be the Notice under s. 71 of the Land Titles Act, the address given on which matches the address given in the statutory declarations. I am satisfied that the township, in preparing the statutory declaration, identified the nature of the Applicant’s interest as “lien claimant” as a handy short form and that he received proper service under the Municipal Act, particularly s.-s. 381(1) which sets out the requirements for service and s.-s. 381(4) which states that “(n)othing in this Part requires the treasurer to ensure that a notice that is properly sent under this Part is received by the person to whom it was sent”. Furthermore, it is clear that the Applicant had actual notice of the proceedings.

[12] Therefore, I dismiss the Applicant’s argument on that ground.

[13] Turning to the Applicant’s request for equitable relief from forfeiture under s. 98 of the Courts of Justice Act, that section states that “(a) court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just”.

[14] The case of St. Louis v. The Corporation of the City of Thunder Bay, a decision of G.P. Smith J., dated September 30, 2009 was similar to the present case. In it, the Applicant, an owner of the subject property, became aware that a tax sale had occurred. Her lawyer wrote to the city advising that she intended to make a claim for the surplus proceeds, but the Applicant took no further steps in that regard. The surplus proceeds were paid into court. The Applicant applied over one year later for payment of the surplus to her. The Respondent city resisted on the grounds that it had complied with the Municipal Act’s provisions and the application was statute-barred as it was brought after the one year anniversary of the payment in court.

[15] The court found that “the limitation period set out in s. 380(4) of the Municipal Act, 2001 has been strictly construed by the courts” and that “it is generally established that s. 98 of the Courts of Justice Act does not apply to relieve against forfeiture of tax sale proceeds” (paragraphs 32 and 33).

[16] The Ontario Court of Appeal in Kozel v. Personal Insurance Co. (2014) 2014 ONCA 130, 119 O.R. (3d) 55 stated that s. 98 of the Courts of Justice Act expressed the power that the courts of equity have always had to relieve against forfeiture for breach of contract. It did not say that s. 98 extended to providing relief from statutory limitation periods. Indeed, that court had previously stated in McBride v. Comfort Living Housing Cooperative Inc. (1992) 1992 CanLII 7474 (ON CA), 7 O.R. (3d) 394 that s. 98 “apparently does not empower a court to relieve against penalties and forfeitures imposed by statute” (paragraph 27). Neither of these cases were referred to explicitly in St. Louis.

[17] Relying on Paone v. St. Joseph’s Health Centre, [2002] O.J. No. 4169, the court in St. Louis found that there was jurisdiction to set aside a statutory limitation period where five special circumstances existed:

1. there is a prima facie ground for relief; 2) the decision not to sue earlier was not deliberate; 3) the proposed defendant was at all times aware of the facts giving rise to the potential claim; 4) the defendants participated in, or contributed in some way to the decision giving rise to the delay; 5) the Plaintiff has no resources or access to lawyers, and or no understanding of the law.

The court found that the Applicant therein could not benefit from these because she should have pursued the matter within time but did not, and was “the author of her own misfortune” (paragraphs 35 to 43). The Application was dismissed.

[18] In the present case, the township began the tax sale proceedings in June 2011, including sending the required notices. The Applicant admitted that he was aware of these proceedings. He contacted the township by telephone on June 15, 2012 with respect to them. From then to August 7, 2012, there was correspondence between him and the township and its lawyer. Then, nothing more was heard from him until August 9, 2013. However, the township’s lawyer was contacted on August 1, 2012 by telephone and email by Paula Downs, a lawyer acting for the Applicant in the matter, and replied the same day. Among other things, he indicated that this was the second time that the township had had to take tax arrears proceedings against this property. Indeed, the Applicant states in his affidavit that he paid the taxes to prevent the loss of the property in 2006, after his marital separation. He clearly had some familiarity and experience with such proceedings prior to the present case. On August 13, 2012 the township’s counsel again wrote to Ms. Downs confirming that the tax deed for the property had been registered, the remaining funds would be paid into court and then notice would be sent to the Applicant, at the new address that he had provided. That was done on October 18, 2012.

[19] On August 9, 2013, the Applicant emailed the township’s counsel indicating that he was engaging a solicitor, inquiring about whether the funds were still held in court, and referring to the one year anniversary date. This indicates knowledge about the procedures and the one year limitation on applying to court for the funds. The township’s counsel wrote back on August 13, 2013 confirming that the funds were paid into court on September 25, 2012 and that there was one year from that date to apply for them, and providing other helpful information. This left no doubt about when the Applicant’s application must be made by.

[20] The Applicant’s materials include a copy of a letter of September 24, 2013 from him to the Superior Court of Justice in Parry Sound stating that he intended to apply to court “shortly” for the funds held in court. He did not, and the Order was made on October 22, 2013 that the funds be paid out of court to the township. The Applicant next brought a Notice of Motion returnable April 14, 2014 to have the funds paid to him. It was adjourned and subsequently amended into the present Notice of Motion. The present Notice of Motion states that he did not become aware of the Order of October 22, 2013 for payment of the funds to the township until he received the township’s Responding Party’s Motion Record. There is no explanation of why, having written in September 2013 that he would be applying “shortly”, there was delay of about seven months in his application. Nor is it an example of appropriate diligence that he did not contact the court office, the township or the township’s counsel during that time and learn of the October 22, 2013 Order sooner.

[21] The Applicant alleges that neither he nor his counsel received notice of certain steps during the tax sale proceedings such as of the township’s filing of its Application For Payment Out of Court of the funds. However, I find no requirement for such in the Municipal Act. As previously indicated, the township followed the requirements of that Act.

[22] He alleges that he was not able to take the required steps due to health and financial reasons, but no specifics are provided of that, nor of the undue hardship that he claims would be caused by denying him the funds.

[23] He also alleges that he is not a solicitor and was not fully aware of the provisions and requirements of the Municipal Act. However, as previously noted, he had some knowledge of and experience in such proceedings, he was provided by the township’s lawyer directly or through counsel with pertinent information, and he had for some time the assistance of counsel.

[24] In court, the Applicant stated that he had been in jail from August 25, 2012 to May 1, 2013. However, he did not communicate with the township’s lawyer until August 9, 2013, over three months following his release.

[25] In view of the above, I find that the special circumstances set out in the St. Louis case are not made out in the present case. So, there is no justification for the court to disregard the statutory limitation period.

[26] The Applicant argued that the finding of the trial judge in St. Louis, that s. 98 does not apply to tax sales under the Municipal Act was “preliminary”. By that, I take it, he meant that, as he said in submissions, it is not a decision of the Court of Appeal. With respect, this shows a misunderstanding of the value of the St. Louis case as a precedent in deciding a similar case.

[27] Finally, as for the argument that, as the proceeds of sale far outweigh the amount owed to the township, allowing the township to keep the funds produces a “draconian” result, I would make two points. First, the dollar figures, or reasonable approximations thereof, would have been known to or ascertainable by the Applicant early on. For example, in a letter to him dated June 19, 2012, the township advised that the cancellation price was $16,518.67. He could not reasonably have failed to appreciate the value of the property, which he had bought and built on. Be that as it may, the document sent to him at his then current address by the township on October 18, 2012 showed that $181,833.76 had been paid into court. Either way, that there could be the result that he refers to as “draconian” was known to him when he still had plenty of time to deal with the matter within the limitation period, yet he did not. He, like the Applicant in St. Louis, is the author of his own misfortune.

[28] The motion is dismissed.

[29] The township has 15 days to serve and file submissions as to costs, limited to three double-spaced pages, together with a costs outline. The Applicant has 10 days after receiving service to serve and file any response.

Justice James A. S. Wilcox

Released: November 18, 2014