ONTARIO
SUPERIOR COURT OF JUSTICE
**COURT FILE NOs.:**CV-14-517879; CV-15-521103
DATE: 20150902
PROCEEDING COMMENCED UNDER the Partition Act, RSO 1990, c P.4 and the Rules of Civil Procedure, RRO 1990, Reg 194, ss 14.05(3)(f), 14.05(3)(h) and 66.
BETWEEN:
Court File No. CV-14-517879
CHITRA SUNDARAMPILLAI
Applicant
– and –
SELVARAJAH PONNAMBALAM and
THAIYALNAYAKI SELVARAJAH
Respondents
Court File No. CV-15-521103
AND BETWEEN:
SUKANTHI MANISVASAGAN and SELVARAJAH PONNAMBALAM and
THAIYALNAYAKI SELVARAJAH
Applicants
– and –
CHITRA SUNDARAMPILLAI
Respondent
Lawrence Wallach and
Shaun Rotman, for the Applicant
Sukanthi Manisvasagan, Litigation Guardian for Respondents
Sukanthi Manisvasagan self-represented and acting in person and Litigation Guardian for co-Applicants
Lawrence Wallach and
Shaun Rotman, for the Respondent
HEARD: August 28, 2015
REASONS FOR DECISION
Diamond J.
Overview
[1] After several adjournments, these two applications proceeded before me on August 28, 2015. In the main application, the applicant Chitra Sundarampillai (“Chitra”) and the respondents Selvarajah Ponnambalam (“the father”) and Thaiyalnayaki Selvarajah (“the mother”) each own a 1/3 interest in the property municipally known as 38 Crittenden Square, Scarborough, Ontario (“the property”). For reasons described hereinafter, Chitra requests an order for partition and sale of the property.
[2] In the second application, the father and mother, along with their daughter and co-applicant Sukanthi Manisvasagan (“Sukanthi”) seek a declaratory order that Chitra’s 1/3 interest in the property is held in trust for Sukanthi, or in the alternative a declaratory order that Sukanthi is entitled to a constructive trust for funds which she allegedly contributed towards the purchase, upkeep and maintenance of the property.
Preliminary matters
[3] Prior to the hearing date, Sukanthi had served a Notice of Intention to Act in Person in the second application. The Notice was served upon her prior counsel Allen Gerstl, who at the time still continued to represent the father and mother in both applications.
[4] At the outset of the hearing, Mr. Gerstl provided me with sworn medical evidence from Dr. Paramanathan Thalayasingam who has been the family physician for the father and mother for several years. In Dr. Thalayasingam’s opinion, both the father and mother suffered from a mental incapacity (as that term is defined in the Substitute Decisions Act, 1992 S.O. 1992, c.30). Dr. Thalayasingam further opined that due to cognitive impairments and an inability to coherently answer questions put to them, both the father and mother were unable to provide counsel with instructions.
[5] A motion was then brought by Sukanthi seeking an order appointing her as litigation guardian for her father and mother. In response to my inquiries, Sukanthi confirmed that in the event I granted that relief, her parents’ retainer of Mr. Gerstl would be terminated and she would argue the applications on their behalf (in addition to representing herself in the second application).
[6] I heard oral testimony from Sukanthi, who stated that she agreed with Dr. Thalayasingam’s opinion. She further testified that in both applications, she held no interest which was adverse to that of her parents, and acknowledged that she may incur costs that may not be recovered from Chitra.
[7] After carefully considering Sukanthi’s evidence, and mindful of the fact that Justice Firestone’s Order of August 25, 2015 denied Mr. Gerstl’s request for another adjournment of the applications (having been adjourned at the request of his clients on several prior occasions), I concluded that the elements of Rule 7.03(10) were met and I appointed Sukanthi as litigation guardian for her parents. Mr. Gerstl’s retainer was then terminated and Sukanthi proceeded to argue both applications.
[8] I note that on June 30, 2015, Justice Glustein made an order which, inter alia, struck out the responding affidavits of the parents in the main application. As such, the only evidence before me consisted of Chitra’s affidavit, Sukanthi’s affidavit and the transcript from the cross-examination of Sukanthi upon her affidavit. There were other solicitors’ affidavits which were filed, but those affidavits related to the prosecution of these applications, and not to the merits.
The history of the property
[9] Commencing in or around 2001, Sukanthi and her former husband resided next to Chitra in a prior residence. Sukanthi later separated from her husband. Sukanthi testified that due to her husband’s misuse of her credit cards, she was ultimately ruined financially and forced to declare bankruptcy in or around late 2007.
[10] Sukanthi’s parents arrived from Sri Lanka to live with her in or around late 2007, contemporaneous with her assignment into bankruptcy (from which she was discharged in June 2008). At that time, Sukanthi’s parents were receiving money from the Ontario Disability Support Program (“ODSP”) to use towards payment of rent and related incidental expenses.
[11] Neither Sukanthi nor her parents possessed the necessary credit worthiness to purchase a home. In or around 2009 Sukanthi approached Chitra with a proposal that Chitra and Sukanthi’s parents jointly purchase a property. Sukanthi, her two children and her parents could reside there and remit rental payments to cover the anticipated mortgage payments, insurance costs and property taxes.
[12] It is Chitra’s evidence that Sukanthi and her parents required Chitra’s credit worthiness, and in that consideration for the use of that credit worthiness to secure a mortgage, Chitra would be granted a 1/3 ownership interest in the new property. Chitra would be obviously exposed under a mortgage to make any outstanding monthly payments and pay off the entire mortgage should it proceed into default.
[13] It is Sukanthi’s position that she was and remains the true owner of Chitra’s 1/3 interest in the property, as it was Sukanthi who funded the down payment towards its purchase and remitted payments towards the mortgage, property taxes and maintenance since 2009.
The property is purchased
[14] The property was purchased for the sum of $260,000.00. The Agreement of Purchase and Sale listed Chitra and the parents as purchasers. The transaction closed on July 28, 2009. Title to the property was taken in the names of Chitra, the father and the mother as joint tenants (Chitra recently severed the joint tenancy and each of her, the father and mother now own the property as tenants in common).
[15] A review of the documents culled from the real estate solicitor’s file discloses:
(a) the Royal Bank of Canada (“RBC”) granted a mortgage to Chitra and the parents in the amount of $254,780.50 registered on closing. The mortgage required monthly payments of $1,071.61, and was set to mature on July 28, 2014;
(b) the real estate solicitor delivered a reporting letter dated July 28, 2009 to Chitra and the parents. In that reporting letter, there is no mention whatsoever of Sukanthi’s role, if any, in the purchase of the property; and
(c) all of the closing documents (Statement of Adjustments, Acknowledgements and Directions, Title Insurance, Undertakings, etc.) were prepared and signed by Chitra and the parents. There is no mention of or reference to Sukanthi in any of these documents.
[16] Of note, Sukanthi and her parents executed a residential tenancy agreement dated October 30, 2009 in favour of Chitra as landlord. That tenancy agreement required monthly rent in the amount of $l,132.65 commencing on August 1, 2009 and lasting until July 31, 2014. It was Sukanthi’s evidence that this residential tenancy agreement was not “official” and was signed for the purpose of substantiating her parents’ further applications for ODSP payments.
[17] For several years, Sukanthi and/or her parents remitted monthly payments to Chitra, and the mortgage was paid from Chitra’s account each month. According to Sukanthi’s evidence, that was the sole purpose for Chitra’s bank account.
The mortgage matures
[18] As stated above, the mortgage was due to mature in July 2014. Chitra testified that she did not wish to continue with the investment or renew the mortgage. Unbeknownst to Chitra, it appears that Sukanthi attempted to renew the mortgage with RBC. Sukanthi was somehow able to renew the mortgage with RBC without Chitra’s involvement as the renewal document submitted to RBC included a signature on behalf of Chitra. While Sukanthi took those steps without Chitra’s knowledge or involvement, she denies intending to mislead RBC as she simply executed the document in the wrong signature line.
[19] In September 2014, RBC learned through Chitra’s efforts that the renewal documentation was not signed by Chitra. As a result, RBC reconstructed its mortgage back into a six-month open term mortgage with new monthly payments of $1,443.73 (i.e. as if the renewal documentation had not been received by RBC in the first place).
[20] Sukanthi had previously retained Yaso Sinnadurai as her lawyer for the purpose of the renewal of the RBC mortgage. On July 2, 2014, Chitra wrote to Ms. Sinnadurai advising that she would not sign any transfer into Sukanthi’s name until Chitra’s 1/3 interest in the property was paid to her. Chitra delivered a follow-up letter dated July 19, 2014 to the parents renewing her request to purchase Chitra’s 1/3 interest in the property, and if her 1/3 interest was not purchased then Chitra would “get a lawyer to get a court order to sell the property”.
[21] At no point did Ms. Sinnadurai ever respond to Chitra’s requests that her 1/3 interest in the property be bought out.
Sukanthi and her parents cease paying rent/mortgage
[22] Commencing in September 2014, Sukanthi and her parents ceased making payments to Chitra’s account. This forced Chitra to personally make the mortgage payments for the months of September - December 2014 inclusive in order to prevent RBC from commencing enforcement proceedings.
[23] Chitra commenced the main application on December 10, 2014. Since then, Chitra has been forced to obtain court orders requiring Sukanthi and/or her parents to reimburse Chitra for the outstanding mortgage arrears.
[24] In order to avoid the consequences of the RBC mortgage maturing during the currency of these proceedings, the RBC mortgage was extended on two occasions for a further six months each. I note that even though Chitra and her parents were ordered by this court to continue to make the monthly payments to Chitra’s account, they have been late in doing so on several occasions.
Issues to be decided
[25] I have been asked to decide the following issues:
(a) Is Chitra holding her 1/3 interest in the property in trust for Sukanthi?
(b) If no such actual trust agreement exists, is Chitra holding her 1/3 interest in the property for Sukanthi by way of constructive trust?
(c) If no constructive trust exists, is this an appropriate case for an order for partition and sale of the property?
(d) Are Chitra and/or her parents entitled to a restitutionary order for any funds contributed towards the purchase, maintenance and upkeep of the property since its purchase?
Applications – Generally
[26] Before embarking upon a determination of the above issues, I begin by noting that this Court is being asked to dispose of matters advanced by way of applications. While the jurisprudence since the release of the Supreme Court of Canada’s decision in Hryniak v. Mauldin 2014 SCC 7 has expanded the Court’s fact-finding powers on a motion for summary judgment, those cases deal with motions for summary judgment brought within actions. The disposition of an application is governed by Rule 38.10 of the Rules of Civil Procedure which empowers the presiding judge to:
(a) grant the relief sought or dismiss or adjourn the application, in whole or in part and with or without terms; or
(b) order that the whole application or any issue proceed to trial and give such directions as are just.
[27] When faced with a dispute in the record about a fact(s) material to an issue essential to the resolution of a subject matter of an application, the Court must either direct a trial of an issue in respect of the fact(s) in dispute, or convert the application into an action. See: Moyle v. Palmerston Police Services Board (1995), 1995 10659 (ON SC), 25 O.R. (3d) 127 (Div.Ct.).
[28] A judge presiding on an application is entitled to finally decide the rights of the parties on the merits so long as the principles which inform and define the parameters of a properly constituted application have otherwise been met. As stated in Pereira v. Quatsch, [2013] O.J. No. 95 (S.C.J.), when determining whether it is possible to finally decide the rights of parties to an application on the merits, the Court must consider the following factors:
(a) whether there are material facts in dispute;
(b) whether there are complex issues requiring expert evidence or a weighing of that evidence;
(c) whether there is a need for the exchange of pleadings and discoveries; and
(d) the importance and impact of the application and the relief sought.
Issue #1: Is Chitra holding her 1/3 interest in the property in trust for Sukanthi?
[29] As stated by Justice Pepall (as she then was) in Metropolitan Toronto Pension Plan (Trustee of) v. Toronto (City) (2012) 2002 49627 (ON SC), 213 D.L.R. (4th) 362 (Ont. S.C.J.), in order to create a trust there must be both a declaration of trust and a constitution of the trust. There are three characteristics (often known as “certainties”) for a declaration of trust:
(a) a certainty of intention to create the trust;
(b) the identification of the subject matter or property of the trust; and
(c) the ascertainability of the persons intended as beneficiaries.
[30] A constitution of a trust occurs where a declaration of trust is combined with a conveyance of property to trustee.
[31] It does not appear that Sukanthi ever raised this trust issue until these legal proceedings were underway. A review of the evidentiary record discloses that there is not a single document reflecting any trust agreement, or any stated intention by the parties that Chitra’s 1/3 interest in the property is held in trust for Sukanthi. I note that there were many opportunities where such a document could have been created, reviewed or signed. Sukanthi did not produce one memo, letter or e-mail since 2009 which evidenced a trust agreement or intention to create such an agreement. There are no such documents included in the files of the original real estate lawyer who acted on the purchase of the property. When the RBC mortgage was up for renewal, Ms. Sinnadurai’s files did not include any documents which evidenced the existence of a trust agreement, or the stated intention to create one.
[32] In the absence of any documents reflecting or evidencing that Chitra held her 1/3 interest in the property in trust for Sukanthi, the trust claim must also fail for violating the provisions of the Statute of Frauds R.S.O. 1990 c.S.19.
[33] The request made by Sukanthi and her parents for a declaratory order that Chitra holds her 1/3 interest in the property in trust for Sukanthi is therefore dismissed.
Issue #2: If no such actual trust agreement exists, is Chitra holding her 1/3 interest in the property for Sukanthi by way of constructive trust?
[34] In order to obtain the equitable remedy of a constructive trust, Sukanthi must prove a claim for unjust enrichment against Chitra. As set out in Aksman v. Shenderey, [2010] O.J. No. 3511 (S.C.J.), the well-known test for unjust enrichment is as follows:
(a) the moving party must show he/she conferred a benefit or enrichment on the responding party;
(b) the moving party must show there is a corresponding deprivation to them, and
(c) there must be no juristic reason for the responding party to retain that enrichment.
[35] Even where a claim for unjust enrichment is proven, the remedy of constructive trust is only available where a monetary award would be inappropriate or insufficient. Accordingly, Sukanthi must demonstrate a link or causal connection between her contributions and the acquisition, preservation, maintenance or improvement of the property so that a share of the property proportionate to the claim for unjust enrichment can be impressed with a constructive trust.
[36] There is no dispute that but for Chitra pledging her credit worthiness, and making payments towards the RBC mortgage when Sukanthi and her parents refused to do so, the property would never have been purchased or could have been lost or made subject to enforcement proceedings.
[37] Without Chitra’s assistance, Sukanthi and her parents would have continued to live in a rental property, making lease payments every month, and her parents would have never benefitted from their respective ownership interests in the property (as I understand that the value of the property has increased since 2009).
[38] Apart from potentially needing to relocate, Sukanthi was not exposed to any liability in the event the RBC mortgage went into default.
[39] Sukanthi has produced some evidence of invoices relating to the property’s maintenance and upkeep over the years, and claims to have funded payment of those invoices. While Chitra concedes that she did not use her funds to pay for any such invoices, no bank statements were produced by Sukanthi evidencing the source of the funds used to pay these invoices.
[40] Even if it was Sukanthi who was the source of all payments made to Chitra’s account, I find that Sukanthi is in no different position than any other tenant whose lease payments typically assist an owner with keeping a mortgage in good standing. The payment of rent does not create a beneficial interest in property simply due to the rent being used to fund mortgage payments.
[41] I therefore find that Chitra was not unjustly enriched, and she is not holding her 1/3 interest in the property for Sukanthi by way of constructive trust.
Issues #3: If no constructive trust exists, is this an appropriate case for an order partition and sale of the property?
[42] Pursuant to the provisions of the Partition Act, R.S.O. 1990, c. P.4, all joint tenants or 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.
[43] Chitra has expressed her intention to no longer be tied up in this property with the parents. There is prima facie right to the partition and sale of land held between tenants in common. The court may only exercise its discretion to refuse partition or sale in limited circumstances, namely where there is demonstrated malice, oppression or vexatious intent. As stated by Madam Justice Brown in Constantino v. Constantino et al. 2015 ONSC 2694 (S.C.J.), while oppression can include hardship, the hardship to the co-tenant resisting partition or sale must be of such a nature as to amount to oppression.
[44] As I have already determined that Sukanthi does not hold any interest in the property by way of trust or constructive trust, the only “hardship” would be the ultimate relocation of Sukanthi and her parents to a new residence once the property is sold.
[45] In my view, I do not consider such “hardship” to amount to oppression. Chitra had previously offered to sell her 1/3 interest in the property at fair market value, and those efforts did not elicit any response. I see no reason to deny Chitra her prima facie right to the relief set out in the Partition Act.
[46] I therefore find that Chitra is entitled to an order for partition and sale of this property.
Issue #4: Are Chitra and/or her parents entitled to a restitutionary order for any funds contributed towards the purchase, maintenance and upkeep of the property since its purchase?
[47] As previously stated, it is unclear on the evidentiary record filed to date whether Sukanthi or her parents have any claims for reimbursement of payments made since 2009 towards the property. Sukanthi claims to have made additional payments over and above rent towards the maintenance and upkeep of the property, together with property tax payments.
[48] To the extent that any payments towards the property’s maintenance, upkeep or property taxes came from Sukanthi’s parents, they would be entitled to seek reimbursement of 1/3 of those expenses from Chitra. I find that the claims for reimbursement by Sukanthi and her parents would be best determined by directing a reference to a Master for the conduct of the sale of the property. Specifically, the Master shall be empowered to oversee and decide issues material to the sale including:
(a) all matters involving the appointment of a real estate agent/brokerage to market, list and sell the property;
(b) all matters involving the appointment of a real estate lawyer for the closing of the sale of the property;
(c) all timing issues with respect to listing agreements, closing dates and any orders for vacant possession if necessary;
(d) all accounting issues raised above once the net sale proceeds (exclusive of legal fees, real estate commissions and other proper expenses incurred or due in the ordinary course of the sale of the property) are paid into court to the credit of the main application; and
(e) any other matter necessary for the finalization of the sale of the property.
Costs
[49] I am prepared to deal with the costs of the applications incurred to date. I leave any claims to costs of the reference to be decided by the presiding Master.
[50] I would urge the parties to resolve the costs of these applications. If such efforts prove unsuccessful, Chitra may serve and file her written costs submissions totaling no more than 4 pages (including a costs outline) within 10 business days of the release of this decision.
[51] Sukanthi and her parents shall thereafter serve and file their responding costs submissions, also totaling no more than 4 pages (including a costs outline) within 10 business days of the receipt of Chitra’s costs submissions.
Diamond J.
Released: September 2, 2015
COURT FILE NOs.: CV-14-517879; CV-15-521103
DATE: 20150902
ONTARIO
SUPERIOR COURT OF JUSTICE
PROCEEDING COMMENCED UNDER the Partition Act, RSO 1990, c P.4 and the Rules of Civil Procedure, RRO 1990, Reg 194, ss 14.05(3)(f), 14.05(3)(h) and 66.
Court File No. CV-14-517879
BETWEEN:
CHITRA SUNDARAMPILLAI
Applicant
– and –
SELVARAJAH PONNAMBALAM and
THAIYALNAYAKI SELVARAJAH
Respondents
Court File No. CV-15-521103
PROCEEDING COMMENCED UNDER the Rules of Civil Procedure, RRO 1990, Reg 194, ss 14.05(3)(e) and (h).
AND BETWEEN:
SUKANTHI MANISVASAGAN and
SELVARAJAH PONNAMBALAM and
THAIYALNAYAKI SELVARAJAH
Applicants
– and –
CHITRA SUNDARAMPILLAI
Respondent
REASONS FOR DECISION
Diamond J.
Released: September 2, 2015