ONTARIO
SUPERIOR COURT OF JUSTICE
Court file no. 137/13
Date: 20151102
BETWEEN:
FERDINAND FRUCK
Applicant
– and –
WALTER FRUCK
Respondent
Raymond Gemmill, for the applicant
Donna Guidolin, for the respondent
HEARD: June 9, 2015
Bale J.
Introduction
[1] There are two related applications before the court. They involve Parts 2 and 3 on a reference plan for the geographic township of Emily, in the City of Kawartha Lakes.
[2] In the first, Ferdinand Fruck applies under the Partition Act for an order dividing the properties, with the result that he would become the sole owner of Part 3, and his brother Walter Fruck would become the sole owner of Part 2.
[3] In the second, Walter Fruck applies under the Partition Act for an order dividing the same properties, but with the result that he would become the sole owner of Part 2, and the owner of a 25 per cent interest in Part 3, and that his brother Ferdinand Fruck would become the owner of a 75 per cent interest in Part 3. He then requests a sale of Part 3.
[4] Both parties requested that I make a decision based upon the affidavits and cross-examination transcripts filed, without viva voce evidence.
Background
[5] In June of 1989, Ferdinand, and his sister Elizabeth, entered into agreements of purchase and sale for the purchase of the two properties. The purchase price of each was $40,000.
[6] The purchase of Part 2 was completed on July 4, 1989, and the purchase of Part 3 was completed on July 28, 1989. In each case, title was taken in the names of Ferdinand and Elizabeth, as tenants-in-common.
[7] Part 2 included a driveway and a shed. Initially, the shed was used by Walter for storage, and family members camped on the land.
[8] Part 3 was vacant land. In 2001, with Walter’s consent, Ferdinand built a Viceroy home on Part 3, and has had exclusive use of the property since then.
[9] In March of 2013, Elizabeth transferred her interest in the two lots to Walter, with the result that the title to both is now registered in the names of Ferdinand and Walter, as tenants-in-common.
[10] The brothers agree that their respective interests should be registered on title, but disagree as to what those interests are. Their disagreement arises from a dispute as to the financing of the two lots, twenty-six years ago. In the meantime, there has been a falling out, as between the two.
[11] Ferdinand says that he paid $40,000 on the completion of the purchase of Part 2. However, Walter says that Ferdinand paid only $30,000, and that the remaining $10,000 was paid by Elizabeth. He says that in August of 1989, Elizabeth wanted out, that Ferdinand didn’t want to buy her out, and that as a result, he borrowed $10,000 from Ferdinand, and bought her out himself. He then repaid Ferdinand with a series of monthly payments, over a period of years.
[12] Ferdinand’s evidence that he paid the entire purchase price for Part 2 is a CIBC document entitled “Confirmation of Customer Transfer” which indicates that $40,600 was transferred on June 30, 1989 from an account of Gunda Fruk (their mother) in Toronto, to an account in Lindsay, with a bank draft payable to Mortlock & Cornell, to be picked up by “Liz or Fred” (Elizabeth or Ferdinand). Mortlock & Cornell were the solicitors acting for them on the purchase of the properties. The additional $600 was for the payment of closing costs.
[13] Elizabeth wants nothing to do with the dispute. Her evidence is that she never had a beneficial interest in either of the lots, but loaned $10,000 to Walter, to assist him in paying his share of the purchase price of the two properties. She says that Walter repaid her within a couple of months, and that she doesn’t recall why her name was on the title to the properties. If Elizabeth is correct, then the loan from Ferdinand to Walter was to allow Walter to pay her back, rather than to buy her out.
[14] Walter denies that he borrowed money from Elizabeth, but she was not cross-examined. He says that he didn’t need to borrow from her to complete the purchase of Part 3. His evidence consists of the closing documents related to the sale of his cottage which was completed on July 7, 1989. According to the trust statement, a sum of $47,618.38 was paid to Ferdinand from the sale proceeds. Walter says that from that amount, Ferdinand paid $40,600 to Mortlock & Cornell, upon his behalf, to complete the purchase of Lot 3.
[15] Ferdinand doesn’t seem to remember much, or at least he says he doesn’t. He says that he doesn’t recall receiving the money from Walter’s cottage sale or, if he did, what he did with it. He says that he thought the $10,000 loaned by Elizabeth to Walter went into the purchase of Part 3, but if not, he doesn’t know what Walter did with it. In any event, he doesn’t dispute that Walter paid the entire purchase price of Part. 3.
Analysis
[16] Ferdinand’s position is that the two brothers invested equal amounts in the two properties; that he built on Part 3 because Walter preferred Part 2; and that as a result, he is entitled to Part 3, and Walter is entitled to Part 2.
[17] Walter’s position is that his investment in the properties was $50,000, and that Ferdinand’s investment was only $30,000. He attempts to reconcile Elizabeth’s evidence by saying that if, as Ferdinand and Elizabeth say, he borrowed $10,000 from Elizabeth, then the borrowed money was used to complete the purchase of Part 2. One way or the other, he argues, Ferdinand’s contribution to the purchase of the two properties was only $30,000.
[18] The facts of this case are difficult to reconcile. The bank draft payable to Mortlock & Cornell, purchased with the money transferred from Gunda Fruk’s account in Toronto to a bank account in Lindsay, was sufficient to complete the purchase of Part 2; the proceeds of sale of Walter’s cottage were sufficient to complete the purchase of Part 3.
[19] Walter suggests that Elizabeth may have paid the $10,000 directly to Ferdinand “in contemplation of [Ferdinand] getting the draft or certified cheque to give to Mr. Cornell”; however, there is no evidence to support the suggestion, and her evidence is to the contrary.
[20] If the $10,000 put up by Elizabeth went into the purchase of Part 3, or was used by Walter for some unrelated purpose, then Ferdinand paid half of the total amount paid for the two properties. If, on the other hand, the $10,000 put up by Elizabeth went into the purchase of Part 2, then Ferdinand paid only 37½ per cent of the total amount paid.
[21] Walter relies on an unsigned promissory note prepared by Mortlock & Cornell in the amount of $30,600, and payable by him to Ferdinand, as evidence that Ferdinand paid only that amount. However, there is no explanation as to why Ferdinand would require such a note, particularly when the properties were registered in his name, and not in Walter’s name.
[22] The deeds to the properties say nothing about the respective interests of the parties, except that they are tenants-in-common. Accordingly, the onus is on Walter to satisfy me that their interests are other than equal. Based upon the contradictory evidence presented, he has failed to do so.
[23] Walter’s claim for a sale of Part 3, and an unequal division of the proceeds, is based upon a pleading of resulting or constructive trust. In his factum, Ferdinand pleads sections 4 and 15(2) of the Limitations Act, 2002, in response. However, I would have thought that the limitations defence in this case, if any, would be under s. 4 of the Real Property Limitations Act: see McConnell v. Huxtable, 2014 ONCA 86, at paras. 38f. If so, one might have considered that the ten-year limitation period began to run in 2001, after Ferdinand built his house, and began to exercise exclusive possession of Part 3. However, as the Real Property Limitations Act was not pleaded, I express no opinion on the issue.
[24] I am, however, concerned about the effect of Walter’s delay in making his claim for a resulting trust. A defence of laches is available where the delay of the party claiming equitable relief constitutes acquiescence, or results in circumstances that make the prosecution of the action unreasonable: M.(K.) v. M.(H.), 1992 S.C.R. 6, at paras. 98ff. In the present case, Ferdinand would have a defence, on either part of the test.
[25] Because the two lots were separate parcels when they were purchased, and the excess contribution alleged by Walter was on the purchase of Part 2, rather than Part 3, and considering the delay since Ferdinand built his house on Part 3 (with Walter’s consent), if I had found in favour of Walter, I would not have awarded him an interest in Part 3. Rather, I would have awarded him $10,000, as equitable compensation: see the discussion of remedies in Peleshok Estate v. Peleshok, 2011 ONSC 3156, at paras. 119ff, and in Huxtable, supra, at paras. 31ff.
Disposition
[26] An order under the Partition Act is requested because the two lots now share the same registry office PIN number - 63252-0780. However, a partition of the properties should not be necessary because the lots are separate parcels, pursuant to a severance granted in 1984.
[27] In the result, there will be a declaration that Walter Fruck is the owner in fee simple of PT NW PT LT 16 CON 8 EMILY PT 2, and an order that the parcel be vested in him; and a declaration that Ferdinand Fruck is the owner in fee simple of PT NW PT LT 16 CON 8 EMILY PT 3, and an order that the parcel be vested in him.
[28] This is not a case for costs.
“Bale J.”
Released: November 2, 2015
Court file no. 137/13
Date: 20151102
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
FERDINAND FRUCK
Applicant
– and –
WALTER FRUCK
Respondent
REASONS FOR JUDGMENT
Bale J.
Released: November 2, 2015