ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Caterina Burgio
Applicant
- and -
Rodney Copperthwaite
Respondent
Luigi De Lisio, for the Applicant
Timothy R. Pedwell, for the Respondent
HEARD: February 3, 4, 9 & 10, 2016
The Honourable Mr. Justice P. R. Sweeny
REASONS FOR DECISION
Introduction
1The applicant Caterina Burgio (“Rina”) and the respondent Rodney Copperthwaite (“Rod”) had both previously been married. In 2008, Rina moved into the house at 2838 Effingham Road owned by Rod (“the Property”). They intended to get married. Rina had two children, Michael and Alexandra, who were then in their late teens. She wanted to have some protection for herself and for her children. She retained a lawyer to prepare a cohabitation agreement (“the Agreement”), which addressed many issues including that Rina would put $181,000.00 into the Property and become a 50% owner as tenant in common with Rod.
2The relationship did not flourish. On June 17, 2014, Rina issued a notice of application for partition and sale of the property. Rod responded by affidavit sworn August 14, 2015. Rod claimed reimbursement of expenses he is alleged to have incurred and payment for improvements he had made to the Property. The application was ordered to proceed to the trial of an action. The amended application record was the trial record.
3The Property was sold on June 30, 2015 for $370,000.00. After the deduction of the legal fees, real estate fees, $44,374.82 to the CIBC to discharge a mortgage, $19,111.08 to the Town of Pelham for taxes, and distributing $10,000.00 to each of Rina and Rod, the balance held in trust is $265,618.85. Rina claims she is entitled to receive $171,000.00 out of the proceeds ($10,000.00 having been previously received). Rod asserts that he should receive reimbursement for the expenses he incurred, the repayment of certain monies spent by Rina from a joint bank account, and that the balance should be distributed pro rata in accordance with his interpretation of the Agreement.
Cohabitation Agreement
4This case involves the interpretation of the cohabitation agreement. The Agreement was prepared by Rina’s lawyer and reviewed by her. It was provided to Rod who received independent legal advice. There were negotiations and revisions. Rina and Rod signed the Agreement on January 28, 2009 and February 3, 2009 respectively. The Agreement includes the following terms:
- FINANCIAL PROVISION
The responsibility for making financial provision for the family during cohabitation shall be assumed jointly by the parties. Each party shall split 50-50 all of the household expenses.
13 MATRIMONIAL HOME
each party acknowledges that Caterina was the owner of a home located at 22 Heritage Court, St. Catharines, Ontario, and that on June 30, 2008 Caterina sold this home;
each party acknowledges that from the sale proceeds of her residence located at 22 Heritage Court, St. Catharines, Ontario Caterina provided Rodney with the sum of $181,000.00, which funds were dispersed as follows:
$149,000.00 to pay off the indebtedness in favour of the TD Bank mortgage encumbered on the property located at 2838 Effingham Road, Pelham, Ontario;
$12,000.00 for flooring at the residence at 2838 Effingham Road, Pelham, Ontario;
$20,000.00 for stucco for the residence located at 2838 Effingham Road, Pelham, Ontario.
each party acknowledges that a new first mortgage shall be placed on the title to the residence located at 2833 Effingham Road, Pelham, Ontario in favour of Caterina. The mortgage shall bear no interest;
the parties acknowledge that the residence located at 2838 Effingham Road, Pelham Ontario shall be transferred from Rodney as the sole owner to Rodney and Caterina as tenants in common;
the parties acknowledge that if either “Caterina” or “Rodney” shall receive an inheritance or gift from a third party, and the money is subsequently used to pay down the mortgage indebtedness against the home, or to purchase another home that the parties shall receive a repayment of these funds from the sale of the property.
- SALE OF MATRIMONIAL HOME (BREAKDOWN OF RELATIONSHIP)
If “Rodney” and “Caterina” decide to sell the home upon the breakdown of the parties relationship, the parties agree that the proceeds will be divided as follows:
to pay any real estate commission owing;
to pay legal fees and disbursements incurred with respect to the sale;
to pay off any mortgage indebtedness owed to a third party;
to repay to either party any monies which have been used to pay off the indebtedness or used to improve the matrimonial home from either an inheritance or a gift, or payment made by “Rodney” or “Caterina” to improve the property;
“Caterina” shall be repaid $181,000.00. This money was advanced by “Caterina” from the sale of her home at 22 Heritage Court, St. Catharines, Ontario to pay down “Rodney’s” indebtedness on the home located at 2838 Effingham Road, Pelham, Ontario. The funds were secured by a first mortgage registered against the title to the property at 2838 Effingham Road, Pelham, Ontario in favour of “Caterina”. The mortgage shall bare no interest.
“Rodney” shall be repaid $139,000.00.
From the balance of the sale proceeds remaining:
“Rodney” shall receive ½ of the net sale proceeds;
“Caterina” shall receive ½ of the net sale proceeds.
Either “Rodney” or “Caterina shall have the option to purchase the other person’s interest in the home, at fair market value, less 3% for real estate commission.
The parties agree that the fair market value of the home shall be established by an accredited appraiser jointly selected by the parties, or in the alternative, each will select their own appraiser and the fair market value will be the average of the two appraisals.
- SALE OF MATRIMONIAL HOME TO PURCHASE ANOTHER RESIDENCE
Each party acknowledges that prior to June 30, 2008 that the family residence was owned by “Rodney”, and that the title to the family home was transferred into the names of “Rodney” and “Caterina” jointly. In the event that the property is sold, or the equity is transferred into another property, “Caterina” shall be repaid $181,000.00.
- FINANCIAL DISCLOSURE
Each party:
- has fully and completely disclosed to the other the nature, extent and probable value of all of his or her significant assets and all his or her significant debts or other liabilities existing at the date of this contract, and in addition to this disclosure;
Issues
5There are three main issues to be determined:
(1) Is Rina entitled to the payment of $171,000.00 off the top?
(2) How much, if any, does Rina owe to Rod for household expenses?
(3) Is Rina liable to repay funds taken from the joint CIBC bank account?
Is Rina Entitled to $171,000.00 off the Top?
6The Agreement was prepared at the insistence of Rina. She wanted to protect herself and her children. She was investing a significant sum of money into the Property. The Agreement contemplated a first mortgage being placed on the property in favour of Rina, and it was. Paragraph 14 of the Agreement specifically provides the proceeds would be divided as follows and lists a series of bullet points. Rod says the bullet points are not relevant. However, the order of the bullet points do, to a large extent, mirror the appropriate priorities: real estate commission, legal fees and disbursements, any mortgage to a third party, repay any monies used to improve the property, Caterina is to be repaid $181,000.00 and Rod is to be repaid $139,000.00.
7While the parties did not contemplate the Property being sold for less than the amount to cover the full indebtedness, that is what happened. I note paragraph 15 of the Agreement states that Rina shall be repaid $181,000.00 if the Property was sold to buy another. Rod gets nothing. Rina invested a discrete sum of money. The amount Rod was to recover is simply based on an estimated value of the Property. It would not be reasonable for Rina to agree to only recover pro rata if there was a shortfall. Therefore, I find that, based on the Agreement, Rina is entitled to receive $171,000.00 out of the $265,618.85.
Is Rina Obligated to Repay Rod for Expenses Incurred?
8Rod claims reimbursement of 50 percent of the household expenses he paid. These include gas, hydro, property taxes, and insurance. Rina’s position is that the parties had an oral agreement that Rina would pay for the groceries and all expenses related to furnishing and running the home, and Rod would be responsible for the heat, hydro, taxes and insurance. Rod says there was never any agreement. He repeatedly asked Rina to contribute to each of the bills. She refused. In his evidence, one of the arguments she is said to have used is that she saved him the interest he was paying on the previous mortgage. This does seem a reasonable rationale for the alleged agreement. She paid off a $149,860.70 mortgage which Rod was obligated to pay.
9Rina also points out that at no time during the course of the relationship prior to filing the affidavit in reply did Rod make any demand in writing for reimbursement of the expenses that he had incurred. Rod did say that he consulted a lawyer but there was no evidence of anything being done by that lawyer. In his evidence, Rod stated that each time he paid a bill he would ask Rina for reimbursement and she would not pay. As I stated, one of the explanations was that she had saved him the interest on his mortgage. In addition, she says that the bills were all in his name. The failure of Rod to assert a claim is support for Rina’s position that there was an agreement that she would furnish the home and pay for groceries, and he would pay the heat, hydro, taxes, and insurance. Alternatively, Rina asserts that if there was no agreement, Rod is precluded by the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B from claiming any expenses more than two years prior to the issue being raised in these proceedings. That is, no expenses could be claimed prior to August 14, 2012, two years prior to the date the affidavit in reply was filed. Rina also asserts that she incurred expenses for food and to run the home for which she is entitled to be reimbursed.
10The evidence of Rod and Rina appeared to be in direct conflict. Rina spoke of the agreement they had reached, and Rod denied there was any such agreement. Rod’s evidence was that he requested payment every time a bill was to be paid. Rina denied that there was any request for payment. It is clear the parties had different perceptions of the relationship. Rod’s evidence was that they started living separate and apart in the latter part of 2011. Rina asserted they were in a continuing relationship up until 2014. On cross-examination, Rod acknowledged that they had continued to be intimate and went out with others presenting themselves as a couple into 2014.
11If there was no agreement, I am satisfied that Rod is precluded from making any claim for expenses that were incurred prior to August 14, 2012. On his own evidence he made a request each time a bill was to be paid and Rina refused. Therefore, a claim would arise each time she denied the contribution. The Limitations Act, 2002, ss. 4 and 5, reads as follows:
Basic limitation period
- Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4.
Discovery
- (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).
Presumption
(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. 2002, c. 24, Sched. B, s. 5 (2).
Demand obligations
(3) For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made. 2008, c. 19, Sched. L, s. 1.
Same
(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004. 2008, c. 19, Sched. L, s. 1.
12I find, based on the evidence, that the limitation runs from the date each bill was rendered.
13It is necessary to determine the amounts paid by Rod from August 14, 2012 for heat, hydro, taxes, and insurance. Rod set out at exhibit 3, details of the payments that he made for the various items. I will review each.
Heat
14I find, based on exhibit 3, that the total amount paid to Enbridge Gas for heat from August 14, 2012 to be $5,852.86.
Hydro
15I find, based on exhibit 3, the amount paid for hydro from August 14, 2012 to be $5,368.99.
Taxes
16Rod did not pay the taxes on a regular basis. At the time of the sale of the property, taxes were in arrears in the total amount of $19,111.08. The tax bill was approximately $2,500.00 per year. I find, based on exhibit 3, that the amount paid for taxes from August 2012 to be $10,250.00
Insurance
17I find, based on exhibit 3, the total amount paid from August 14, 2012 for insurance to be $2,951.64.
18Therefore, the total amount paid by Rod is $24,423.49.
19During the period from 2012 to 2014, Rina made payments for household expenses and groceries. Rina should be entitled to be reimbursed for one half of the expenses she incurred. In order to pursue his claim, Rod was able to obtain past accounts from the utilities to determine the amounts that had been paid. He has evidence of insurance and taxes paid. Rina is at a disadvantage because many of her purchases were made in cash and she did not keep the receipts. Rina received significant amounts of cash in tips from her hairstyling customers. As Rina stated, she did not keep the receipts because she did not anticipate she would need them.
20After the pretrial was held in this matter, Rina collected receipts for her expenses from March 4th to June 10th. These are used as illustrations of the expenses that she would have incurred during the course of the relationship. These receipts total $2,297.32 for approximately three months. This gives some indication of the amounts which would be reasonable. This works out to $764.00 per month for groceries and household related items. Using the figure of $750.00 per month, which I find to be reasonable, for 24 months, would mean $18,000.00 was spent by Rina for the two-year period prior to August 2014. There is no evidence that Rod reimbursed her for expenses that she had incurred.
21Rod incurred total expenses of $24,423.49. Rina incurred a total of expenses of $18,000.00. The difference between them is $6,423.29. Rina would be responsible for one-half of this difference, or $3,211.74. I note this is a fairly modest amount. It certainly provides support for Rina’s assertion that there was an agreement. However, while Rina may have understood the agreement in one way, it is not clear that Rod also perceived the agreement in that manner. Accordingly, I find it appropriate for Rina to be liable to pay Rod $3,211.74 as a contribution towards the household expenses.
CIBC Mortgage
22Rod had a line of credit (“LOC”) which was converted into a mortgage on the Property. Rina’s evidence is the LOC pre-existed their relationship and included items that were not related to the matrimonial home. Rod’s evidence was that the LOC was started after they moved in together. The evidence on this matter was not clear. There was no application for the LOC produced by Rod. Rina was not involved in Rod’s finances and had little understanding of Rod’s finances.This liability was not disclosed in accordance with the requirements of para. 23 of the cohabitation agreement, although it clearly predated the Agreement. Rod also did not disclose a houseboat he owned in Temagami and the 31-foot boat he had purchased in 2007 in list of sole property in Schedule A to the Agreement.
23The LOC was converted to a mortgage on the Property. Rina signed the mortgage. She says she had no knowledge with respect to what the LOC or the mortgage funds were used for. She says Rod was solely responsible for the mortgage and agreed to make all the payments. He assured her it would be paid off in three to four years. Rod says that she knew what it was used for and she agreed to the mortgage. Rod claims the mortgage payments at $446.86 per month. With respect to the mortgage payments, the same limitation period argument applies. Rod’s evidence was that he requested reimbursement, and no reimbursement was forthcoming. Accordingly, Rod’s claim for reimbursement of the mortgage expenses is limited to $446.86 for 30 months, from August 2012 to June 2015, for a total of $15,193.24.
24I find the mortgage is not a household expense as contemplated by para. 8 of the Agreement. It is a separate expense related to, by Rod’s evidence, improvements made to the home. Therefore, it is reasonable that the payments associated with the mortgage be deducted as monies used to improve the matrimonial home. Accordingly, they should, under paragraph 14 of the Agreement, be deducted from the proceeds before Rina’s reimbursement of $171,000.00.
Improvements made to the Property
25Rod asserts that he made improvements to the property in addition to the mortgage proceeds of $55,000.00. When the LOC was converted to the mortgage in September 2009, the proceeds were deposited into the joint CIBC account. $15,000.00 was paid out to Rod’s CIBC account for which he provided no details. In the circumstances, and in the absence of any supporting documents from Rod, I find that he is not entitled to claim any additional expenses related to the home improvement. They are included as part of the mortgage which has been paid out of the proceeds of the sale.
26Rod asserted payment for a fireplace but there was no receipt or evidence to support his claim. In any event, the claims for expenses used to improve the matrimonial home would be deducted, in accordance with the agreement, before the reimbursement of $171,000.00 to Rina.
The Joint Bank Account
27Rod has claimed the sum of $6,973.84 representing the amount that was spent from the joint bank account by Rina. She did not contribute to the joint account. When Rod discovered in December 2010 that she had not contributed to the account and that she had spent money, he cut up her card and she no longer used the account after December 2012. I find this claim is barred by the Limitations Act, 2002. Regardless of whether Rina was to contribute to the account, Rod knew more than four years before the issue was raised that she had spent the money and he had a potential claim which he did not pursue. Therefore, there is no claim against Rina for the joint bank account.
Final Reconciliation
28The final Reconciliation is as follows:
Net amount held in trust: $265,618.85
Payment to Rod for the CIBC Mortgage payments $15,193.24
Payment to Rina ($171,000.00 minus $3,211.24) $167,788.26
Payment to Rod $82,637.35
These payments are not to be distributed until the issue of costs has been determined.
COSTS
29If the parties are unable to agree on costs, submissions may be made in writing addressed to me at my chambers in Welland. Submissions are limited to three pages, plus Bills of Costs and any offers to settle. Rina’s submissions should be submitted within 10 days, Rod has 10 days to respond, and Rina has a further five days to reply, if necessary.
Sweeny J.
Released: February 24, 2016
CITATION: Burgio v. Copperthwaite, 2016 ONSC 1366
COURT FILE NO.: 9252/14
DATE: 2016/02/24
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Caterina Burgio
Applicant
- and –
Rodney Copperthwaite
Respondent
REASONS FOR DECISION
Sweeny J.
Released: February 24, 2016