SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Andrianie Karistinos v. Evaggelos Karistinos
BEFORE: MASTER R. A. MUIR
COUNSEL: Evan L. Tingley for the Applicant Jack Copelovici for the respondent
REASONS FOR DECISION
1These reasons for decision are delivered in connection with a reference hearing held over a period of two days on March 29 and March 30, 2016.
2This proceeding involves the partition and sale of a residential condominium property and a resulting accounting dispute. The applicant and respondent are mother and son.
3On September 24, 1992, the parties purchased a residential condominium property located at 1900 Sheppard Avenue East, Suite 1601, Toronto (the “Property”). Title to the Property was taken by the parties as joint tenants. The purchase price was $128,000.00. The applicant never lived at the Property. The respondent lived at the Property from September 1992 until sometime in 2011 or 2012. The Property was rented to an arms’ length tenant between June 2012 and August 2015. The Property was sold on October 5, 2015 resulting in net proceeds of $277,587.96. The net proceeds are being held in trust pending the outcome of this proceeding.
4The purpose of this reference hearing is to determine the outstanding accounting issues between the parties.
BACKGROUND TO THE REFERENCE
5On January 30, 2015, the Honourable Justice Faieta granted judgment directing a sale of the Property and a reference to a master at Toronto for the taking of accounts. On April 23, 2015 Master McAfee made an order appointing me as reference master for the purposes of carrying out Justice Faieta’s order. A hearing for directions was held before me on December 3, 2015 at which time I directed that the hearing of this reference take place on March 29 and March 30, 2016. The evidentiary portion of the hearing was completed on March 30, 2016. The parties’ written submissions were filed by April 22, 2016.
ISSUES
6A number of the accounting issues have been resolved or are not in dispute. The applicant does not challenge the respondent’s claims in respect of payments made for condominium fees ($129,826.11), property taxes ($26,431.96), repairs and renovations ($31,504.90) and insurance ($3,986.46). With respect to insurance, the applicant does point out that the insurance coverage likely included an element of personal benefit to the respondent insofar as his personal property was covered by the policy of insurance but the applicant does not appear to take issue with this credit.
7The applicant does take issue with the respondent’s claim that it was always intended that the respondent would be the sole owner of the Property and that the Property was put in the name of both parties for “estate planning purposes” only. The applicant also disputes the assertion by the respondent that his father (the applicant’s former husband) has some form of interest in the Property arising from financial contributions he made to the Property that should somehow be credited to the respondent in accordance with his father’s wishes.
8The applicant also takes issue with the respondent’s claim for so-called “sweat equity”. The respondent claims he should be entitled to a credit for the labour he personally supplied in connection with the installation of wood flooring and kitchen cabinets and miscellaneous related work at the Property. The respondent values this work at $8,433.38.
9Finally, the applicant takes issue with the respondent’s claim for a management fee credit. The respondent is advancing this claim based on his work managing the Property in terms of dealing with tenants, the payment of condominium fees and taxes and arranging for various maintenance work. The respondent has valued this claim at $24,188.00 based on a customary percentage of estimated and actual market rent.
10The respondent takes issue with the applicant’s claim for occupation rent. The applicant takes the position that the respondent lived at the Property for approximately 20 years rent free. The applicant argued that she should receive a credit for reasonable market value rent for that period of occupation by the respondent.
ANALYSIS AND FINDINGS
11I am satisfied, on the balance of the evidence, that the Property is jointly owned by the applicant and the respondent on a 50/50 basis. I come to this conclusion for several reasons.
12First, all of the documentary evidence supports this finding. The parties were represented by a lawyer at the time of the purchase. None of the title documents suggest the Property was to be held by the applicant in trust for the respondent or for her former husband. The lawyer’s reporting letter makes no reference to the Property being held in trust or in any way suggests that the applicant did not have a beneficial interest in the Property. A very simple trust agreement would have confirmed that the applicant held title in trust and not as beneficial owner. No such document was prepared or executed despite the parties’ legal representation.
13Second, the evidence of Dimitrios Karistinos is that the $50,000.00 deposit for the purchase of the Property came from a deposit with the National Bank of Greece held in the name of Dimitrios, the applicant and the respondent. In my view, it does not matter where the money in the deposit originally came from. It was a joint deposit owned by all three regardless of who deposited the funds to the account.
14Third, the applicant’s affidavit evidence, marked as an exhibit at the reference hearing, is that she made a financial contribution to the purchase of the Property.
15Fourth, the respondent’s evidence is that the Property was put in the names of both parties because that is what his father wanted. The respondent’s statements and actions after the applicant first made a demand for the sale of the Property is also consistent with the applicant having a 50% interest in the Property. The Respondent offered to pay the applicant $90,000.00 for her share of the Property. The respondent included this offer as an exhibit to his affidavit delivered in connection with the application before Justice Faieta. That affidavit also refers to the applicant’s “interest in the property” and stated that the respondent did not want the Property sold as he was confident he could pay any amounts that may be owing to the applicant. This evidence is simply inconsistent with the respondent’s submission that he is the sole beneficial owner of the Property.
16Finally, no claim has been made by Dimitrios Karistinos seeking an interest in the Property. His evidence was that he made the mortgage payments and otherwise contributed to the Property from a financial perspective but he has not made a claim to be re-paid for any of those contributions. He has never made a demand for re-payment. He took no steps to document his contributions. He has not secured his alleged interest in the property in any fashion. He could have very easily made a claim as part of this proceeding. He chose not to. Dimitrios Karistinos’ actions are not consistent with the respondent’s submission that his father has an interest in the Property.
17I am therefore satisfied, on balance, that the Property is jointly owned by the applicant and the respondent on an equal basis.
18I am not prepared to credit the respondent with any amount for so-called “sweat equity”. I accept that the respondent did the work he claims in connection with the flooring and the kitchen cabinets. However, I am not satisfied with the evidence tendered in support of the value of this claim. The evidence consists of a valuation made by the respondent on the basis of consulting the websites of the Ontario Contractors Association and Home Depot. I appreciate that the sweat equity claim is a small amount and expert evidence would be cost prohibitive. However, it is my view that something more than an internet search by the respondent is necessary to prove this claim. For example, an estimate from an independent contractor could have easily been obtained at little cost. I am therefore not prepared to consider this claim on the sole basis of the respondent’s own estimate of value.
19I also note that an important part of the role of the referee on a reference hearing of this nature is to “make all just allowances” and “give such directions as will do complete equity between the parties”. See Rule 55.04(1)(e) of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”) and Greenbanktree Power Corporation v. Coinamatic Canada Inc., 2006 CanLII 32621 (ON SC) at paragraph 12. The respondent lived rent free for approximately 20 years. Given my findings on the issue of occupation rent below, it is my view that there is nothing inequitable about the respondent not being given credit for every hour of time devoted to the upkeep and improvement of the Property. A little unpaid labour is just in exchange for 20 years of rent free living.
20I am also not prepared to credit the respondent with any amount for management fees. There is no evidence of any form of agreement between the parties establishing the respondent’s entitlement to management fees. At no time prior to the commencement of this proceeding did the respondent request a contribution from the applicant toward management fees. The work done by the respondent in terms of “management” would appear to be extremely minor in any event and limited to paying condominium fees, arranging for periodic maintenance and renovations and dealing with the arms’ length tenants between 2012 and 2015. I also repeat the same comments regarding the prevailing equities of this situation referred to above. The respondent lived rent free for 20 years. There is nothing inequitable about denying him a credit for management fees in these circumstances.
21The final matter in issue is the applicant’s claim for a credit for occupation rent to cover the 20 year period the respondent lived at the Property rent free. I am not prepared to allow this credit.
22First, there is simply no evidence of an agreement between the parties that would require the respondent to pay rent. No rent was ever demanded or paid. In fact, there was no express claim for rent of any kind until it was referred to by the applicant’s lawyer at the commencement of the hearing of this reference on March 29, 2016.
23I agree with the applicant that a presumption of an entitlement to occupation rent should obtain in certain circumstances. See Dagarsho Holdings Limited v. Bluestone, 2004 CanLII 11271 (ON SC) at paragraph 26. However, the decision in Dagarsho also makes it clear that this presumption can be rebutted by evidence that the parties intended the occupation to be without compensation. See Dagarsho also at paragraph 26.
24In my view, any presumed entitlement to occupation rent has been rebutted by the evidence tendered in this action. Three facts are particularly important. The first is that the applicant (and Dimitrios Karistinos) permitted the respondent to live rent free for 20 years without a single demand for the payment of rent or even a request that he assume responsibility for the mortgage payments. The second is that the Property was purchased to assist the respondent when the respondent was a student without significant income so he could have a place to live and study. The third is that Dimitrios Karistinos paid the condominium fees and property taxes for a number of years when the Property was first purchased. In my view, this evidence rebuts any presumption of occupation rent in the circumstances of this family dispute.
25Second, in my view, it is not sufficient in the circumstances of this proceeding for the applicant to simply rely on the general reference to occupation rent in Rule 55.04(1)(c) without specifically putting the respondent on notice of the applicant’s intention to make such a claim. Such an approach is inconsistent with the overall objective of the Rules. Timely notice and full disclosure are two of the most important guiding principles under the Rules. Those principles are important tools in promoting the just, most expeditious and least expensive determination of civil disputes as set out in Rule 1.04(1). Trial by surprise is to be discouraged. If the applicant had a claim to make she should have done so explicitly on appropriate evidence and allowed the respondent a fair opportunity to respond. In the absence of such an express claim on notice to the respondent, it is my view that the applicant’s request for occupation rent must fail.
26As a final accounting matter, there appears to be no dispute that the respondent paid a total of $1,158.61 for outstanding condominium fees and property taxes on closing. He should receive a 50% credit for those payments.
CONCLUSION
27For the reasons set out above, the net proceeds of sale are to be divided between the parties based on a 50/50 interest in the Property.
28No credits will be allowed in respect of sweat equity, management fees and occupation rent.
29The respondent shall receive the following credits on a 50% basis:
(a) $129,826.11 for condominium fees paid;
(b) $26,431.96 for property taxes paid;
(c) $31,504.90 for repair and renovation expenses;
(d) $3,986.46 for insurance costs; and,
(e) $1,158.61 for closing costs.
30The applicant shall receive the following credit on a 50% basis:
(a) $59,325.00 for rent received by the respondent between 2012 and 2015.
31As a result, the net credit to the respondent is 50% of $133,583.04 being $66,791.52, which amount shall be deducted from the applicant’s 50% share of the net proceeds and paid to the respondent.
32The applicant is therefore entitled to $72,002.46 from the net proceeds of sale. The respondent is entitled to $205,585.50. In the interest of justice and equity, any interest earned on the net proceeds of sale since October 5, 2015 shall be paid to the parties based on their respective percentage entitlement to the principal amount, being 26% to the applicant and 74% to the respondent.
33These amounts shall not be paid to the parties until the issue of costs has been determined, except with the consent of the parties.
COSTS AND REPORT
34If the parties are unable to agree on the issue of the costs of the application and this reference, they shall provide the court with brief submission in writing by no later than July 15, 2016.
35Once the issue of costs has been determined, the parties shall prepare a formal report for my approval and signature.
Master R.A. Muir
DATE: June 8, 2016