ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 331/11 (Walkerton)
DATE: 2015-11-25

B E T W E E N:

The Corporation of the Municipality of Northern Bruce Peninsula

Robert A. Leck, for the Applicant

Applicant

-and-

Doris A. Kerry and Floyd J. Kerry

Not Appearing

Respondents

HEARD: July 8, 2015,
at Walkerton, Ontario

Price J.

Reasons For Order

NATURE OF MOTION

[1] This motion concerns what occurs when a municipality causes a property to be sold for property tax arrears and the sale generates greater proceeds than the tax that is owed. The applicable legislation provides that after the money is paid into court, the property owners have one year from the date notice is given to them to apply to the court for payment of the surplus to them. If no application is made, the municipality may apply for payment of the surplus to it. The issue that arises in the present motion concerns the evidence the court requires before making such an order.

[2] In the present case, the applicant municipality moved without notice for an order dispensing with service of the motion on the former property owners and for an order that the surplus generated by the tax sale, which had been paid into court in 2011, plus accrued interest, be paid out of court to the municipality. In an endorsement released on August 29, 2012, the court ordered the municipality to serve its motion on the former property owners. On July 8, 2015, the municipality filed a supplementary motion record, asking that service of the motion on the former property owners be dispensed with and that the money in court be paid out to the municipality. These reasons are in response to that request.

BACKGROUND FACTS

[3] The background facts were set out in my endorsement dated August 29, 2012, but because that decision was not entered into the data base, I will repeat the facts here.

[4] On August 28, 2012, The Corporation of the Municipality of Northern Bruce Peninsula (“the Municipality”) applied, without notice, for payment of $16,345.09 (being $15,879.25 which it had previously paid into court following a tax sale of property described as PIN 33107-0429 (LT), Lot 222 Plan 433 Except Part 1, 3R4872, Northern Bruce Peninsula, plus accrued interest of $474.84), to the Municipality.

[5] The Municipality claimed the funds as forfeit pursuant to s. 380(6) of the Municipal Act, 2001 because, according to the Municipality, the owners were given notice of the payment of the funds into Court and did not, although apparently entitled to the funds, apply for them within the ensuing year.

[6] The motion was one of six that the Municipality brought the same day, for amounts ranging from $5,818.07 to $34,552.73. In my endorsement dated August 28, 2012, I stated that it was astonishing to me that persons who formerly owned land sold by tax sale would not want to receive the surplus that was generated by the sale, if indeed they received notice and understood that they were entitled to the funds.

[7] The Municipality filed, in support of its motion, an affidavit of its solicitor’s law clerk, Carola Munroe, based on information from the solicitor, Robert A. Leck. Ms. Munroe stated, based on Mr. Leck’s information, that the procedures for obtaining payment out of court of the proceeds of a tax sale are governed by s. 380 of the Municipal Act, 2001, S.O. 2001, c.25, and that s. 380(8) of the Act states that the court may rely on the statement of the treasurer, outlining the facts under which the payment into court was made, in determining whether the amount paid into court is forfeited to the municipality.

[8] Ms. Carola attached to her affidavit a “Statement of Facts” (Form 5, pursuant to the Municipal Act, 2001), addressed to the Registrar of the Court. It is signed by Mary Lynn Standen, who describes her title as “Clerk.” Following the word Clerk appear the words “Treasurer or Authorized Officer or Employee of the Municipality or Board”, and the further words, “I have authority to bind the corporation.” There is no evidence that Ms. Standen was, in fact, authorized by the Treasurer to sign the Statement.

[9] The Statement of Facts sets out the following facts:

a) The land described above was sold on October 18, 2010. The owners of the land were Doris A. Kerry and Floyd J. Kerry on the date the tax arrears certificate was registered.

b) The amount paid of $15,879.25 was paid into court.

c) Under s. 380 of the Municipal Act, 2001, any person claiming entitlement to any of the proceeds of sale may apply to the Superior Court of Justice, within one year of payment into court, for payment out of court of the amount to which the person is entitled.

d) The court shall, after one year has passed from the day payment is made into court, determine all of the entitlements to receive payments out of the proceeds of sale.

[10] Ms. Munroe states that the Treasurer complied with the notice requirements outlined in sub-sections 379(1) and 380(3) of the Act. She does not set out the details of such compliance. Instead, she attaches copies of two registered mail envelopes, one addressed to Doris A. Kerry, and the other addressed to Floyd J. Kerry, both showing addresses of 1709 Fenton Road, Flint, Michigan, USA 48507, and 1 East First Street, Flint, Michigan, 48502-1944. The envelopes are date-stamped May 19, 2011. They are preceded, in the Motion Record, by the following:

a) A copy of the Requisition to the Registrar of the Court, date stamped March 28, 2011, requiring the sum of $15,879.25 to be paid into court pursuant to the provisions of the Municipal Act, 2001.

b) A statement of Account of the Accountant of the Court, setting out the interest accrued on the deposit from April 11, 2011, to April 30, 2012;

[11] The envelopes are followed, in the Motion Record, with the following:

a) A Certificate of filing with the Land Registrar of the property, dated June 5, 2009, regarding the sale of the property by the Municipality to the buyer, which does not set out the amount paid, other than the Statutory Registration Fee.

b) Two Declarations of the Treasurer of the Municipality, dated August 10, 2009, and July 23, 2010, regarding the sending, on July 23, 2009, of notice of registration of the tax arrears certificate to Doris A. Kerry and Floyd J. Kerry at the addresses of 1709 Fenton Road and 1 East First Street in Flint Michigan.

c) An excerpt of section 380 of the Municipal Act, 2001.

[12] As I noted in my endorsement dated August 28, 2012, the court is not required to order the payment into court to be forfeited to the municipality. Section 380 of The Municipal Act, 2001, provides, in part:

380(2) The treasurer shall pay the proceeds of sale, minus the cancellation price, into the Superior Court of Justice together with a statement outlining the facts under which the payment into court is made including,

(b) The date that payment is being made into court; and

(c) A notice that a person claiming entitlement to the proceeds of sale must apply to the Superior Court of Justice within one year of the payment into court. [Emphasis added]

(6) If no person makes an application under subsection (4) within the one-year period referred to in that subsection, the amount paid into court under subsection (2) shall be deemed to be forfeited,

(a) to the Public Guardian and Trustee if, at the time of the registration of the tax arrears certificate, the land was vested in the Crown because of an escheat or forfeiture under the Business Corporations Act or the Corporations Act; or

(b) in any other case, to the municipality.

(8) In the absence of evidence to the contrary, the Superior Court of Justice may rely on the statement of the treasurer under subsection (2) in determining whether the amount paid into court under that subsection is forfeited to the Public Guardian and Trustee or the municipality under subsection (6). [Emphasis added]

[13] The Municipality asserted, in its initial motions, that the funds, in each case, were deemed forfeited to the Municipality if the owner had not applied within a year for the funds.

[14] I noted in my endorsement dated August 28, 2012, that the Treasurer had not indicated what efforts, if any, were made to ascertain whether the addresses on the tax assessment roll were ones where the owners still lived, or whether the registered letters were signed for or returned, or whether any other efforts were made to locate the persons entitled to the funds. This was not, in my view, adequate evidence that notice was, in fact, given.

[15] Based on the foregoing, I made the following order:

1. The Applicant Municipality shall serve notice of its motion, together with a copy of this endorsement, on the former owner of the property. If personal service cannot be effected, an Application shall be made for substituted service, supported by evidence as to what efforts were made to effect service.

2. The Ministry of Transportation, in the event that the Municipality applies for a driver record search for the purpose of locating the former owner by using the last known address, shall provide such information to the Municipality and the Order shall be deemed to be an authorization pursuant to the Access to Information and Protection of Privacy Act.

3. The costs of the searches and the service shall be recoverable from the funds in court upon evidence being filed at the return of this motion.

4. This motion is adjourned, pending notice, to a date to be set by the trial co-ordinator at 10:00 a.m.

[16] Three years later, the Municipality filed a supplementary Motion Record containing the affidavit of Kendall Reid, a law clerk for the Municipality’s solicitor. He states, in part, the following:

a) Section 381 of the Municipal Act, 2001, provides in subsection 2 that “Any notice required to be sent to any person under this Part may be given by personal delivery or be sent by certified or registered mail, (a) in the case of the assessed owner, to the address of the person as shown on the last returned assessment roll of the municipality.” This, apparently, permits notice to be given, as it was in at least one of the applications made by the municipality, by sending it to the property that was sold for tax arrears, from which the “assessed owners” were evicted. This was clearly intended to refer to the notice of impending sale, and not to the notice sent after the sale, indicating that a surplus has been paid into court.

b) Subsection 381(2) provides that “A statutory declaration made under 374(3) or made under clause 379(2)(a) is proof in the absence of evidence to the contrary that the notices required to be sent were sent to the persons named in the statutory declaration and received by them.”

[17] Mr. Reid states that the statutory declaration is found at Exhibit “F” of his initial affidavit that was filed confirming the required service of the notices occurred. Exhibit “F” to the affidavit of Carola Munroe, which he refers to, consists of the Statement contained in the Tax Arrears Certificate, attached to the application to the Land Registrar. That Statement attests to the fact that notice of the registration of a tax arrears certificate was sent to the owners. It states that on June 2, 2009, the Treasurer verified that all or part of the tax arrears of $2,308.55 were owing on the 31st day of December, 2008, and that at least part of such amount, plus any additional real property taxes and costs still owing to the municipality and that the land described would be sold by public sale if the cancellation price was not paid within one year following the date of registration of the certificate.

[18] The Notice referred to does not inform the owners that a surplus was generated by the sale, or that the surplus was paid into court, or that the owners have one year to claim the funds. It also provides no information to them as to how to apply to the court for payment of the funds to them.

ISSUES

[19] The issue raised by this motion is whether the Municipality, which sold this property to satisfy property tax arrears owed to it, should be given the surplus generated by the sale, without making reasonable efforts to ensure that the former owners were notified that the sale generated a surplus and were given a fair opportunity to claim the surplus.

PARTIES’ POSITIONS

[20] The Municipality sets out its position in the supplementary affidavit of Mr. Reid. He states:

13. Subsection 381(4) provides that “Nothing 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.” The required notices were sent by registered mail, as evidenced by my initial affidavit that was filed.

14. We submit that all statutory obligations have been complied with in this process that is governed solely by the procedures and rules outlined in the Municipal Act, 2001, and we request that the requested order be granted.

[21] The position of the former owners of the property is not before the court. I infer from the evidence that this is because they did not receive notice that there was a surplus generated by the sale, and that they are entitled to the money, if only they apply for it. The only other reasonable explanation is that they received notice but, having no means of applying for payment of the funds to them without incurring costs equal to the amount in court, they decided not to bother.

ANALYSIS AND LAW

[22] There is no satisfactory evidence before me stating that the Treasurer notified the owners of the property that the surplus funds were paid into court and that the owners have one year within which they may apply to the court for payment of the funds to them. I am not satisfied by the evidence of the municipality’s lawyers’ law clerk, based on the information from the lawyer, that the requirements of the Act were complied with.

[23] Evidence of compliance would consist of the following:

a) An affidavit from the Treasurer, or at least based on information from the Treasurer, that the “Statement of Facts”, which should be clearly identified and attached to the affidavit, was sent to the former property owners by registered mail, proof of which should be identified and attached.

b) The Notice sent to the former owners should provide a blank Application, much as a blank Answer must be sent with an Application in a family law proceeding or, at the very least, should provide clear instructions as to how the application must be made, with reference to the Rules of Civil Procedure. Fairness requires this, especially having regard to the fact that the owners of the property apparently reside in the United States.

[24] In my endorsement dated August 28, 2012, I noted that while there is some case law suggesting that the Court has no jurisdiction to relieve against the forfeiture (for example, the decision of the Court of Appeal for Ontario in McBride v. Comfort Living Housing Co-Operative Inc., in 1992,[^1] and the decision of the Divisional Court in Webb v. Box, in 1909,[^2] Justice Henderson, in Lorfida – Clerk of the Corporation of the City of Niagara Falls v. Diodati, in 2011, noted, in paragraph 22, that “the analysis of the issue in those cases is equivocal at best.”[^3]

[25] I agreed with Justice Henderson. Section 98 of the Courts of Justice Act gives this Court a wide discretion to grant relief from forfeiture in order to bring fairness and justice to the parties. See, for example, Thomas v. Fort Erie (Town), in 1995, a decision of Justice Gravely,[^4] and Sandy St. Louis v. The Corporation of the City of Thunder Bay, in 2005, a decision of Justice G.P. Smith,[^5] both of whom found that the court possess such jurisdiction and granted relief from forfeiture or ordered that entitlement to the funds be determined at a hearing pursuant to the Fines and Forfeitures Act.[^6]

[26] Mr. Reid, in his supplementary affidavit, states that an Ontario Driver’s Record Search Report dated November 12, 2013, a copy of which he attaches to his 2015 affidavit, verifies that the address of record for Floyd J. Kerry driver’s license is the same address to which he was sent the required Notices during the property tax sale process.

[27] What is not clear from Mr. Reid’s affidavit is whether a Notice was sent to Mr. and Ms. Kerry notifying them that the surplus had been paid into court, and that they were entitled to apply for payment of the funds to them. What is also not clear is why the Municipality did not comply with my order dated August 29, 2012, which required it to serve notice of its motion, together with a copy of my endorsement, on Mr. and Ms. Kerry and which further required the Municipality, if personal service could not be effected, to apply for an order permitting substituted service, supported by evidence as to what efforts it had made to effect service.

CONCLUSION AND ORDER

[28] Based on the foregoing, it is ordered that:

a) The Treasurer of the Municipality shall forthwith send to Mr. and Ms. Kerry, by registered mail, at the addresses 1709 Fenton Road, Flint, Michigan, USA 48507, and 1 East First Street, Flint, Michigan, 48502-1944, a letter in the form attached as Schedule “A” to this order.

b) The Notice accompanying the letter to Mr. and Ms. Kerry shall be in the form attached as Schedule “B” to this order.

c) The Municipality shall file, forthwith upon mailing the letters and Notices, proof of mailing, with a copy of the Letter, the Notice, and the stamped Registered Mail envelope.

d) In the event the Local Registrar of the Court at Walkerton receives the completed Notice from Mr. and Ms. Kerry, with a photocopy of their government-issued photo identification and wiring instructions within 35 days following the date that appears on the Registered Mail stamp, the Local Registrar shall forward the Notice and attachments, together with this Order, to the Accountant of the Superior Court, 595 Bay Street, Suite 800, Toronto, Ontario M5G 2M6, who shall wire the funds to Mr. and Ms. Kerry pursuant to the wire instructions they have provided, and the Local Registrar shall notify the Municipality’s counsel that she has done so.

e) In the event the Municipality does not receive notification from the Local Registrar of the Court at Walkerton, within 45 days of the date that appears on the Registered Mail stamp on the envelope mailed to Mr. and Ms. Kerry, that the Registrar received the completed Notice from Mr. and Ms. Kerry, it may forthwith file a motion in Form 14B, with these reasons and an affidavit from the Treasurer of the Municipality confirming that it has not received the required notice from the Local Registrar, and a draft order, for my signature, directing payment of the funds in court to the Municipality.

Price J.

Released: November 25, 2015