ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-13-48735
COURT FILE NO.: CV-14-507048
DATE: 20141201
BETWEEN:
GIANLUCA BRIENZA
Plaintiff
– and –
MICHELLE BRIENZA a.k.a. MICHELINA BRIENZA and RYAN AKHTARI
Defendants
AND BETWEEN
GINO BRIENZA AND NATALINA BRIENZA
Applicants
- and –
GIANLUCA BRIENZA AND
MICHELLE BRIENZA a.k.a. MICHELINA BRIENZA
Respondents
Raffaele Sparano for the Plaintiff
H. Richard Bennett for the Defendant Michelle Brienza
Enio Zeppieri for the Applicants Gino Brienza and Natalina Brienza
Respondents
HEARD: November 24, 2014
PERELL, J.
REASONS FOR DECISION
[1] In this action, the Plaintiff Gianluca Brienza (Gianluca) sues for an accounting and damages with respect to a business arrangement that he had with his sister the Defendant Michelle Brienza, who advances a substantial counterclaim. Relying on the Partition Act, R.S.O. 1990, P. 4, Gianluca brings a partial summary judgment motion for the sale of three properties with the proceeds of sale being paid into court to the credit of the action. The motion is opposed by Michelle. Her husband, the Defendant Ryan Akhtari, takes no position with respect to the motion.
[2] In a separate proceeding, the Applicants Gino and Natalina Brienza bring an Application for the sale of 16 Muskoka Ave., which is one of the three properties that Gianluca wishes sold. He supports the Application. The Application is opposed by Michelle.
[3] For the reasons that follow, I grant the motion and the Application.
[4] Gianluca and Michelle are the adult children of Gino and Natalina. Gianluca and Michelle have for some time invested together in rental investment properties.
[5] There is no written joint venture agreement. There is no written partnership agreement. There is no written co-ownership agreement. Apart from conveyancing and financing documents and income and expense documents from which inferences can be drawn, there is no documentation specifying the nature of the arrangement between the siblings, which has been oral and subjective.
[6] I say subjective because Gianluca and Michelle have very divergent views and thoughts of what was the nature of their arrangement and of what were the long term plans for the properties.
[7] For present purposes, it is not necessary to determine what is the precise nature of the legal or equitable relationship between Gianluca and Michelle, because whatever that relationship is, Gianluca seeks to end it.
[8] And Gianluca has a means to end the relationship at least with respect to three properties. He has documentary evidence that he is a co-owner with Michelle of: (1) 547 Donlands Ave.; (2) 1117 Queen St. East; and (3) 16 Muskoka Ave., all in the City of Toronto.
[9] Because Gianluca can show that he is a co-owner with Michelle, she may be compelled to suffer partition or sale of the co-owned properties under the Partition Act, unless she can provide the court with a legally sufficient reason to refuse partition and sale.
[10] Gianluca and Michelle are the co-owners of three properties: (1) 547 Donlands Ave., which was purchased on August 31, 2001 for $307,500 with Gianluca and Michelle registered as tenants in common; (2) 1117 Queen St. East, which was purchased on November 8, 2002 for $420,000 with Gianluca and Michelle registered as joint tenants; and (3) 16 Muskoka Ave., which was purchased on August 20, 2009 for $581,500 with Gino and Nataline registered as joint tenants, but in fact holding the property in trust for Gianluca and Michelle.
[11] The parents took title to 16 Muskoka Ave. to facilitate financing for the purchase, but it is not disputed that the parents are holding this property in trust for their adult children. Given the acrimony between their adult children, the parents do not want to be trustees any longer, but Gianluca and most particularly Michelle have not co-operated by taking the property off their parents’ hands.
[12] As not yet noted, there are three other properties in which Gianluca says he has an interest, although Michelle disagrees; namely: (1) 77 Murrie St., which was purchased on July 25, 2011 for $420,000 with Michelle and her husband as the registered owner; (2) 73 Murrie St., which was purchased on April 4, 2012 for $423,000 with Michelle and her husband as the registered owner; and (3) 81 Murray St. which was purchased on May 7, 2013 for $450,000 with Michelle and her husband as the registered owner.
[13] Michelle denies that her brother has an ownership interest in the Murray St. properties, and this is something that will have to be litigated. It seems that differences of opinion about the Murray St. properties are largely responsible for the parties bringing claims and counterclaims against one another. At this juncture, however, Gianluca is not seeking a sale of the Murrie St. properties, and he says that the dispute concerning these properties is irrelevant to his right as a co-owner to have 547 Donlands Ave., 117 Queen St. East, and 16 Muskoka Ave. sold. I agree that the situation with the Murray St. properties and the fact that there eventually will be an accounting is not a reason for not making an order under the Partition Act.
[14] Michelle objects to the sale of the three properties and resists Gianluca’s partial summary judgment motion on four grounds.
[15] First, Michelle submits that a sale is “completely anathema to the investment arrangement,” which is to hold and manage the properties until Gianluca and Michelle retire.
[16] Second, Michelle submits that is a substantial debt owing by Gianluca to her for all of the properties, including the three Murrie St. properties, and Michelle is claiming a setoff and counterclaim in the range of approximately $700,000. She says that this mean that Gianluca would receive nothing from the proceeds of the sale of the property and therefore the properties should not be sold. Here, it may be noted that Gianluca denies owing anything to Michelle, and he claims that she owes him approximately $600,000.
[17] Third, Michelle submits that the sale of the properties would cause her undue hardship and oppression.
[18] Fourth, Michelle submits that Gianluca is not coming to court with “clean hands” given his threats and attempts to ruin Michelle’s livelihood.
[19] As evidence that Gianluca is acting maliciously and oppressively and that he does not have clean hands, Michelle relies on a string of threatening and vulgar text messages that Gianluca sent while pretending to be outside the offices of the Financial Services Commission of Ontario threatening to expose supposed wrongdoings by Michelle as a mortgage broker. Here, it may be noted that Gianluca, in response to Michelle’s allegations, unaware that there is some wisdom in the notion that that two wrongs do not make a right, says that he was provoked, that he was just venting his frustration, that he never carried out any his threats, and besides Michelle made similar vulgar threats of her own against him.
[20] In any event, Michelle argues that Gianluca’s conduct has been malicious, oppressive, and vindictive and that a sale of the 547 Donlands Ave., 117 Queen St. East, and 16 Muskoka Ave. and would destroy the plans for the properties. She says that because of changed conditions about the availability of mortgage financing, it would not be possible to find similarly attractive and advantageous investments.
[21] The issue on the motion then is whether Michelle has provided a reason not to order partition and sale of the three properties owned by the siblings.
[22] Section 2 of the Partition Act states that a joint tenant or tenant in common may be compelled to make or suffer partition or sale. The general principles to determine when partition and sale should be granted were laid down in Davis v. Davis, 1953 148 (ON CA), [1954] O.R. 23 (C.A.), where the Court of Appeal stated:
There continues to be a prima facie right of a joint tenant to partition of sale of lands. There is a corresponding obligation on a joint tenant to permit partition or sale, and finally the Court should compel such partition or sale if no sufficient reason appears why such an order should not be made.
[23] The onus is on the party resisting partition or sale to demonstrate sufficient reasons for refusal: Davis v. Davis, supra; Silva v. Bettencourt, [2002] O.J. No. 1878 (S.C.J.).
[24] In cases after Davis, the Act has been interpreted to mean that the court has a very limited discretion to refuse an application for partition or sale: Silva v. Silva, 1990 6718 (ON CA), [1990] O.J. No. 2183, supra; Hay v. Gooderham (1979), 1979 1690 (ON SC), 24 O.R. (2d) 701 (Div. Ct.); Garfella Apartments Inc. v. Chouduri 2010 ONSC 3413, [2010] O.J. No. 2900 (Div. Ct.).
[25] Only in exceptional circumstances will a joint tenant or tenant in common be denied his or her request that the property be partitioned or sold. The court's discretion to refuse partition and sale is narrow, and there must be malicious, vexatious or oppressive conduct to justify the refusal to grant partition and sale: Silva v. Silva, supra; Osborne v. Myette, [2004] O.J. No. 3383 (S.C.J.); Latcham v. Latcham, 2002 44960 (ON CA), [2002] O.J. No. 2126 (C.A.), affg. [2001] O.J. No. 5291 (Div. Ct.); Fellows v. Lunkenheimer (1998), 21 R.P.R. (3d) 142 (Ont. Gen. Div.); Kalita v. Freskiw Estate, [1998] O.J. No. 5180 (Gen. Div.); Jakubiszyn v. Tekielak, [1991] O.J. No. 2362 (Gen. Div.); Garfella Apartments Inc. v. Chouduri, supra.
[26] In Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2005), 2004 48652 (ON CA), 75 O.R. (3d) 478 (C.A.), affg. (2004), 2003 37762 (ON SCDC), 69 O.R. (3d) 784 (Div. Ct.); affg. (2002), 2002 49477 (ON SC), 59 O.R. (3d) 449 (S.C.J.), a co-owner with only a small percentage ownership was held to be entitled to partition and sale despite the objections of the majority owner, who would be harmed by having to incur expenses and land transfer tax to re-acquire the property. The majority owner was unsuccessful in resisting the application because it could not show that the minority owner had acted vexatiously, oppressively or with malice. The Court of Appeal confirmed that the court's discretion to refuse to grant partition or sale is limited to circumstances of malice, oppression, and vexatious intent. The court stated that a narrow interpretation of the discretion makes commercial sense by enhancing predictability. However, the court added that hardship might rise to oppression.
[27] The case law shows that malicious, vexatious, or oppressive conduct that would bar a remedy is more than unreasonably refusing to accommodate the wishes of the other co-owner: Peters v. Peters, [2000] O.J. No. 1849 (S.C.J.); or subjecting the other owner to the tax consequences of a sale of the property: Glick v. Carr, [1991] O.J. No. 1588 (Gen. Div.); Cogan v. Cogan, (2003), 11 R.P.R. (4th) 235 (Ont. S.C.J.). In Wilson v. Brown, [2000] O.J. No. 1121 (S.C.J.), the court held that the circumstance where one co-owner wants to buy out another is not in itself ground to prevent the prima facie right of an owner of an interest in land to partition or sale.
[28] The court’s discretion to refuse an order for partition or sale was explored in Gartree Investments Ltd. v. Cartree Enterprises Ltd. [2000] O.J. No. 2078 (S.C.J.), affd. [2001] O.J. No. 1184 (Div. Ct.) (Gartree No. 1) and in Gartree Investments Ltd. v. Cartree Enterprises Ltd. (2002) 2002 49640 (ON SC), 22 B.L.R. (3d) 143 (Ont. S.C.J.) (Gartree No. 2).
[29] In Gartree No. 1, the corporations of three sisters each had an undivided one-third interest in a portfolio of commercial properties. One of the sisters wished the properties sold so that she could disengage herself from a business relationship with her sisters. The remaining sisters did not wish the properties sold because a sale would expose them to significant tax liabilities. They proposed to buy out their sister by paying a premium over the appraised value of the properties. The sister, however, was not comfortable with an appraisal, and she insisted on a sale of the property. She brought an application under the Partition Act. In a judgment that was upheld by the Divisional Court, Justice Nordheimer held that the sister was entitled to a sale of the property under the Act. Her request could not be regarded as unfair, vexatious, or oppressive, and, therefore, she was entitled to make her siblings suffer partition or sale of the properties. The outcome, however, was different in Gartree No. 2, which involved different properties but the same sisters and similar circumstances. Justice Cameron agreed with Justice Nordheimer’s statement of the law, but he found that the sister’s position was vexatious and malicious and abusive of the prima facie right to a sale under the Partition Act. He concluded that the sister’s motives were sufficient to warrant the exercise of the court’s discretion to refuse a sale.
[30] In the case at bar, I do not overlook or condone Gianluca’s conduct, but in my opinion, his conduct and his pursuit of a sale of 547 Donlands Ave., 117 Queen St. East, and 16 Muskoka Ave. cannot be regarded as oppressive or as imposing a hardship on Michelle that would preclude the court granting his motion. Similarly, Gianluca’s bad conduct, if it can be called having unclean hands, does not preclude the court granting the statutory remedy of partition and sale. In other words, the doctrine of unclean hands, which is usually associated with the court’s discretion to refuse an equitable remedy, does not add anything or change the law established by the Court of Appeal about the court’s limited discretion to refuse partition and sale.
[31] Gianluca is not pursuing a sale of the three properties capriciously and without any reason for doing so, and he is not pursuing a sale simply out of spite. He is pursuing a sale mainly because the properties were purchased for some sort of commercial or investment scheme and the parties to that scheme have had a falling out about the scheme and generally.
[32] It is apparent that whatever the legal relationship Gianluca has with his sister, it is a dysfunctional relationship and both of them are at fault. Gianluca did not unilaterally make their arrangement dysfunctional, that was a mutual effort, and he is within his legal rights to ask the court for a remedy to dissolve the dysfunctional relationship. Seeking partition and sale does not become oppressive and vexatious simply because it disappoints the other co-owner and makes him or her lament the loss of the property.
[33] Michelle’s disappointment in her ruined plans for the three properties is not a hardship. The risk that Gianluca might have different plans for the properties was a risk she ran from the outset by entering into an undocumented commercial arrangement with her brother. At this juncture, the only certainty about their arrangement is that they agreed to be co-owners, and co-owners run the risk of partition and sale of the co-owned property.
[34] Michelle could have protected herself. Contractual arrangements between the co-owners will take precedence over the right for partition or sale under the Partition Act: Sylvester v. Feldman (2001), 39 R.P.R. (3d) 25 (S.C.J.); 997897 Ontario Inc. v. 926260 Ontario Ltd., [2001] O.J. No. 3960 (S.C.J.); Shabinsky v. Cohen, [1983] O.J. No. 1096 (Div. Ct.). Thus, co-owners may not resort to the Partition Act, if they agree to waive the right to do so: Cogan v. Cogan supra. In Capannelli v. Muroff, [2000] O.J. No. 5040 (S.C.J), affd. on this point [2002] O.J. No. 191 (C.A.), the court held that partition under the Partition Act would not be ordered where joint venturers had contracted in their joint venture agreement for a right of purchase when one joint venturer no longer wished to own the property. The agreement was designed to maintain the joint venture when one party wanted out. In the immediate case, however, there are no contractual arrangements to preclude partition and sale, only Michelle’s subjective feelings that the properties should not be sold.
[35] Michelle’s argument that she is entitled to all of the proceeds of the sale because of her claims and counterclaims against Gianluca is just an unproven argument. At this juncture, her unproven argument is no stronger than Gianluca’s unproven argument that he will recover all of the proceeds because of his claim for an accounting from his sister.
[36] Gianluca is a co-owner of the three properties, and the onus is on Michelle, the party resisting partition or sale, to demonstrate sufficient reasons for the court not to order partition and sale, and she had failed to do so. If anything she has demonstrated that she might have been the one to seek partition and sale had her brother not done so.
[37] The court does not have the jurisdiction to compel one co-owner to sell to the other, although the co-owners may participate in the court-ordered sale of the property in the open market; Osborne v. Myette, [2004] O.J. No. 3383 (S.C.J.); Legg v. Draper-Legg, [2004] O.J. No. 606 (S.C.J.); Greenbanktree Power Corp. v. Coinamatic Canada Inc., supra.
[38] The court does not have the jurisdiction under the Partition Act to grant a right of first refusal to either co-owner: Dibattista v. Menecola (1990), 1990 6888 (ON CA), 75 O.R. (2d) 443 (C.A.). In Silva, supra, the court noted that where a sale is ordered, the respondent may bid in the sale. See also: Glick v. Carr, [1991] O.J. No. 1588 (Gen. Div.).
[39] Rule 55.06 (5) of the Rules of Civil Procedure provides:
55.06 (5) All parties may bid except the party having carriage of the sale and any trustee or agent for the party or other person in a fiduciary relationship to the party.
[40] For the above reasons, I grant Gianluca’s motion, which also has the consequence of granting his parent’s application to have 16 Muskoka Avenue sold. If the parties cannot agree about the arrangements for a sale of the three properties and for the payment of the proceeds into court, the sale procedure shall be referred to a master of this court.
[41] Gianluca also requested an order that a property manager be appointed to manage the properties pending their sale. I see no need or purpose to be served by such an order, which would just increase the expense of this litigation. Michelle has been managing the properties to date and she will have to account for her management in due course.
A. CONCLUSION
[42] If the parties cannot agree about costs, which save for the costs of Gino and Natalina, I am inclined not to order, they may make submissions in writing beginning with Gino and Natalinas’ and Gianluca’s submissions within 20 days of the release of these Reasons for Decision followed by Michelle’s submissions within a further 20 days.
Perell, J.
Released: December 1, 2014
COURT FILE NO.: CV-13-48735
COURT FILE NO.: CV-14-507048
DATE: 20141201
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GIANLUCA BRIENZA
Plaintiff
– and –
MICHELLE BRIENZA a.k.a. MICHELINA BRIENZA and RYAN AKHTARI
Defendants
AND BETWEEN
GINO BRIENZA AND NATALINA BRIENZA
Applicants
– and –
GIANLUCA BRIENZA AND
MICHELLE BRIENZA a.k.a. MICHELINA BRIENZA
Respondents
REASONS FOR DECISION
PERELL J.
Released: December 1, 2014