COURT FILE NO.: 16/16 DATE: 2016 06 22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: McLaughlin v Royal Bank of Canada et al
BEFORE: LeMay, J.
COUNSEL: J. Gilmore, for the Applicant C. Bargman, for the Respondents
ENDORSEMENT
[1] This is an application relating to the administration of the estate of the late Kenneth Drury (“Kenneth Sr.”). The Applicant, Shirley Adele Margaret McLaughlin (“Shirley” or “the Applicant”) is seeking an order granting her the right to continue to reside in the home where she lived with Kenneth Sr. for approximately sixteen years, and where she continues to live. She seeks this order on an interim basis, pending the trial of an issue.
[2] Kenneth Sr. had four siblings. Two of them, Alice Smyth and Robert Drury (“Robert”) are involved in this application. Alice predeceased Kenneth Sr. The Respondents, Robert and the Estate of Alice Smyth oppose this application. These respondents claim to own the home where Kenneth Sr. lived and further claim that they should be given vacant possession of this home. Robert intends to move into the home eventually, but his son is intending to move into the home immediately.
[3] Kenneth Sr.’s Estate is not represented on this proceeding, as an Estate Trustee with the power to address all of the issues in this case has not yet been appointed. Kenneth Sr. died intestate and there is a dispute over who should be the Trustee.
[4] For the reasons that follow, the Applicant’s application on this issue is dismissed, and she has no further right to live in the house until the trial of an issue. She is required to vacate the property by September 30th, 2016 on terms as set out below.
Background Facts
[5] Kenneth Sr. died suddenly on January 12th, 2016. He had a relationship with Shirley. He also had two adult children, Kenneth Drury (“Kenneth Jr.”) and Klent Drury (“Klent”). He did not leave a will, and he and Shirley were not married. As a result, the only beneficiaries of his estate appear to be Kenneth Jr. and Klent. Shirley, however, has a claim for dependent’s relief under the Succession Law Reform Act (“SLRA”).
[6] At the time of his death, Kenneth Sr. lived in, but did not own, a house at 65 Maple Avenue in Beeton, Ontario (“the Beeton Property”). Shirley also lived in this property. He also owned 20 percent of a property at 1184 Wilson Avenue in Toronto (“the Wilson property”), where his brother Robert lives. This property was inherited from his parents, and was shared equally between Kenneth Sr. and his four siblings.
Facts About the Properties
The Beeton Property
[7] The Beeton property was originally purchased by Kenneth Sr. and his ex-wife Barbara Drury in the 1970’s. On December 1, 1989, Barbara transferred her interest in the property to Kenneth Sr.’s name alone, for no consideration.
[8] On the same date, Kenneth Sr. transferred half of the property to Mary Joyce Clifford for the sum of $35,000.00. Mary Joyce and Kenneth Sr. held the property as joint tenants.
[9] Then, in October of 1994, Mary Joyce obtained a judgment from the Ontario Court (General Division) vesting the Beeton property solely in her name, and I understand she then evicted Kenneth Sr. from the property.
[10] As a result, Kenneth Sr.’s brother Robert purchased the Beeton property from Mary Joyce for approximately $140,000.00, and allowed Kenneth Sr. to resume living in this property. Approximately a year after Robert purchased the property, he had his counsel send Kenneth Sr. a letter. This letter, dated January 24th 1996, outlined some understandings between Kenneth Sr. and Robert, as follows:
a) Kenneth Sr. would be responsible for paying the utilities and the taxes on the Beeton property while he lived there;
b) Any monies owing as a result of Robert assisting Kenneth Sr. in redeeming the Beeton property and living in the property will be paid to Robert by Kenneth out of his share of the Wilson property;
c) The Beeton property could be transferred to Kenneth Sr. if Robert was repaid everything that he had put into the property, including any interest that he was responsible for paying or lost as a result of Robert’s money being tied up in the Beeton property.
[11] The letter to Kenneth Sr. advised that he should sign a copy and send it back if he agreed with the terms. However, there is no evidence that Kenneth Sr. actually saw this letter. Certainly, I was not provided with a copy of the letter signed by Kenneth Sr.
[12] However, Kenneth Sr. continued to live in the Beeton property, and paid some of the expenses on the property. On the records that I have, it is clear that all the mortgage payments were made by Robert, and that significant other expenses were also paid by Robert. There is some dispute between the parties about what expenses were paid by Kenneth Sr.
[13] There is still a mortgage on the Beeton property. In fact, Robert has changed the financing on the Beeton property on several occasions, the most recent being in 2012. I had no evidence that Kenneth Sr. was involved in any of those changes.
[14] At the time of the most recent financing of the Beeton property, Alice Smyth (Kenneth Sr. and Robert’s sister) was given a 1% interest in the Beeton property for consideration of approximately $1,300.00. This was done in order to assist with the financing. There is a trust agreement between Robert and Alice setting these terms out, and confirming that Alice holds the property as a bare trustee.
[15] However, Alice had the power to enter the property at any time, as noted in a letter that was signed by Robert back in 1995. Kenneth Sr. was not consulted about the refinancing, the sale of 1% of the property to Alice or the power of entry that was given to Alice. As noted above, Alice predeceased Kenneth Sr.
[16] In March of this year, Robert and Alice’s Estate served notice under the Landlord and Tenant Act to terminate Shirley’s tenancy, with an end date of June 30th, 2016. However, any decision I made in Shirley’s favour under the SLRA would supersede any notice given by a party under the Landlord and Tenant Act.
The Wilson Property
[17] The Wilson property is a residential property that is located near the new Humber River Regional Hospital.
[18] All of the parties have agreed that the Wilson property is going to be listed and sold. Indeed, one of the orders that I signed at the hearing of this motion was a consent order for the appointment of an Estate Trustee during Litigation to assist in the sale of the Wilson property.
[19] There have been unsolicited offers for this property for up to $10.5 million dollars. However, it is not known when this property is going to be sold or for how much it will be sold as the zoning may need to be changed from Residential to Commercial or Industrial.
The Relationship
[20] Shirley’s Affidavit states that she has lived with Kenneth Sr. for approximately sixteen years, in a conjugal relationship. Her testimony on cross-examination confirms this fact.
[21] A number of the other parties have sworn Affidavits questioning whether Shirley was in a common-law relationship with Kenneth Sr. However, her tax returns as far back as 2004 clearly show that she was filing her taxes as if she was in a common-law relationship.
[22] For the purposes of this motion, I accept the existence of a conjugal relationship between Shirley and Kenneth Sr. I further accept that Shirley fits within the meaning of the definition of spouse under the SLRA.
[23] Shirley asserts that she is disabled from working, and that she has been totally dependent on Kenneth Sr. for the last six years. The parties acknowledge that it is likely that Shirley will be entitled to support under the SLRA. However, it is not appropriate for me to make any final findings on this issue as neither the beneficiaries nor the Estate were represented before me on the hearing of this motion.
The Litigation
[24] This litigation was started by way of an application by Shirley shortly after Kenneth Sr. passed away. This is the second court appearance in this matter. At the first appearance in April of this year, Bloom J. provided the parties with some interim interim directions.
[25] These directions included the following terms:
a) Shirley was given approximately $17,000.00 in a Life Fund held by RBC as interim support in this case;
b) Shirley was to have interim exclusive possession of the Beeton property;
c) Shirley was responsible for paying the utilities, insurance and other upkeep on the property from the interim lump sum support that she received.
[26] In addition, Bloom J. provided the parties with directions so that they could prepare for this motion, as well as for other steps in this proceeding.
[27] At this point, no Estate Trustee has yet been appointed in this matter. There is still some considerable dispute over who should be the Trustee. Kenneth Jr. and Klent (who were not represented before me on this proceeding) wish to have Kenneth Jr. appointed as the Trustee. Shirley claims that she should be appointed as the Trustee.
[28] The fact, however, is that the Estate has no representative in this matter, and it is not anticipated that one will be appointed for some time. The only exception to this is that an Estate Trustee during Litigation has been appointed for Robert’s estate, with the role of this person strictly limited to the sale of the Wilson property. Accordingly, there is no Estate Trustee with respect to the Beeton property.
[29] As a result, the proceeding before me concerned two competing claims for the Beeton property. Shirley asserts, pursuant to the January 24th, 1996 letter, that this property was either held in trust by Robert for Kenneth Sr. or there was an option to purchase the Beeton property that Kenneth Sr. had that transitioned to the Estate. As a result, she asserts that I can (and should) make Orders under the SLRA permitting her to remain in the house on an interim basis, until either the Wilson property is sold or until there is a trial of an issue about the Beeton property.
[30] Robert and Alice’s Estate, on the other hand, assert that the Beeton property is theirs, and that they should be given vacant possession of it. They assert that any interest that Kenneth Sr.’s estate may have in the property is too contingent for the court to make any orders allowing the Applicant to have exclusive possession of the Beeton property.
[31] This brings me to the issues arising on this portion of the case.
Issues
[32] The following legal issues present themselves:
a) What interest does Kenneth Sr.’s Estate have in the Beeton house?
b) What jurisdiction do I have to make an order in this case?
c) What orders should be made in this case?
Issue #1 - What Interest Does Kenneth’s Estate Have?
[33] There are two possible ways that Kenneth’s estate could make a claim for an interest in the Beeton property, either a trust claim or an option to purchase. Both of these arise under the letter of January 24th, 2016.
[34] I am of the view that a trust claim likely cannot be established in this case for the following reasons:
a) Kenneth Sr. had lost any interest in the property by October of 1994 when he was evicted from the property.
b) Robert paid for the property when he purchased it in December of 1994.
c) There was a clear series of understandings contained in the letter that Robert had his counsel send Kenneth Sr. in January of 1996. These understandings do not create a trust, but may have given Kenneth Sr. an option to purchase the property. Robert clearly turned his mind to his ownership of the property, and was clear that he was not holding the property in trust for Kenneth Sr.
d) Robert treated the property as if he owned it, without any obligations as a trustee. For example, Robert behaved as an owner when he remortgaged the property, and when he transferred a 1% interest to Alice in trust.
[35] In the circumstances, it may be possible for the Estate to establish a trust claim over the property if further evidence is advanced. However, in order to establish a trust claim, it must be established that the holder of the property, Robert, did not intend to take beneficial title to the property. In this case, it will be very difficult, if not impossible, to establish the existence of a trust for two reasons:
a) Consideration was paid by Robert directly to a third party for the Beeton property.
b) There were terms under which Kenneth Sr. could repurchase the Beeton property.
[36] In my view, on the evidence I have before me, there is no basis to order a trial of an issue on the existence of a trust. This is not a final conclusion on this matter, as the Estate was not represented on this motion, may come across more information that will assist it in making a trust claim, and may wish to more fully argue the issue.
[37] This brings me to the second claim that Shirley advances. She claims that the January, 1996 letter from Mr. MacGregor created an option for Kenneth Sr. to purchase the property, and that the right to exercise the option passed to the Estate when Kenneth Sr. died.
[38] In support of this argument, counsel for Shirley points to the decision in Erie Sand and Gravel v. Tri-B Acres Inc. (2009 ONCA 709). In that case, the Court of Appeal considered the question of section 4 of the Statute of Frauds and the doctrine of part performance. Section 4 of the Statute of Frauds requires that an agreement for the sale of lands must be in writing and signed by the party to be charged if it is to be enforceable. However, the Court also clearly adopted the doctrine of part performance, which was created to prevent strict reliance on the Statute of Frauds being used as a tool to permit the unconscionable dealing that the Statute of Frauds was designed to prevent.
[39] Counsel argues that this case is on all fours with Erie Sand and Gravel. I make no findings on this issue, except to note that there is clearly an arguable case over whether there is an agreement for Robert to sell Kenneth Sr. the Beeton property on terms, and whether that agreement could be enforced by the Estate.
[40] In my view, on the evidence I have before me, there could be a triable issue over the question of whether the January 16th, 1996 letter from Mr. MacGregor provided Kenneth Sr. an option to purchase the Beeton property. There could also be a triable issue over whether that option passes to the Estate. However, it must be remembered that this is the Estate’s issue to take to trial, if it so chooses or if a Court orders it to do so. I will return to that issue below.
[41] This brings me to the question of what jurisdiction I have to make Orders in this case.
Issue #2 - The Jurisdiction to Make Orders
[42] Shirley is not a beneficiary of the Estate. As a result, the only basis under which Shirley can make a claim against the Estate is through the SLRA. There is a clear argument that Shirley is a dependent within the meaning of section 58 of the SLRA. This would permit the court to make an order for the Estate of Kenneth to provide support to Shirley. In my view, there is enough evidence before the Court to justify an interim Order, and one has been made. Interim lump sum support in the amount of approximately $17,000.00 has been provided to Shirley.
[43] I then turn to section 63 and 64 of the SLRA. The relevant portions of those sections state:
- (1) In any order making provision for support of a dependent, the court may impose such conditions and restrictions as the court considers appropriate. R.S.O. 1990, c.S.26, s. 63(1).
Contents of Order
(2) Provision may be made out of income or capital or both and an order may provide for one or more of the following, as the court considers appropriate,
(c) any specified property to be transferred or assigned to or in trust for the benefit of the dependent, whether absolutely, for life or for a term of years;
(d) the possession or use of any specified property by the dependent for life or such period as the court considers appropriate.
Interim Order
- Where an application is made under this Part and the applicant is in need of and entitled to support but any or all of the matters referred to in section 62 or 63 have not been ascertained by the court, the court may make such interim order under section 63 as it considers appropriate. R.S.O. 1990, c. S.26, s.64.
[44] It is clear that, if the Estate owns property, then I have the jurisdiction to make orders respecting that property, including an interim order for Shirley to have exclusive possession of the property.
[45] However, in this case, the Estate does not have a vested interest in the Beeton property. Starting with the trust claim, there are two reasons why this claim is not a vested interest in the property. First, on the evidence I have before me, there is simply not enough to establish even a prima facie trust claim in this case. Second, even if there were a trust claim, title still rests with Robert until a Court issues an Order that Robert holds the property in trust for Kenneth Sr.’s Estate.
[46] The other way the Estate might obtain an interest in the property is by exercising an option to purchase the property on terms assuming that such an option actually exists. This option would be based on the letter of January 16th, 1996.
[47] However, this right is at most an option and nothing more. It is not an ownership interest in the property. The Estate must first provide consideration to Robert before it can claim the property. As a result, at this time the Estate has no interest in the Beeton property that can be the subject of an Order under sections 63 and 64.
[48] There is also a question about whether there needs to be a trial of an issue. Part of Shirley’s argument was that she was entitled to an interim order pending a trial of an issue so that the Estate could enforce its potential rights. My problem with that submission is that it is not clear to me that a trial of an issue will be either necessary or appropriate in this case.
[49] The Estate of Kenneth Sr. will have some decisions to make about the Beeton property. It may very well have an option to purchase the property. It does not appear to have a trust claim over the property. Certainly, Robert will resist any claim made by the Estate over this property.
[50] Estate Trustees are legally obligated to maximize the value of an Estate. As a result, the Trustee (or Trustees) appointed in this case will have to consider whether the monies that would have to be paid to Robert to purchase the Beeton property are worth spending, given the value of the Beeton property. The Estate Trustee will also have to consider the potential costs and risks in pursuing these claims. There is also the potential that the Estate would lose at a trial, if it takes place, and the resulting costs order could significantly diminish the value of the Estate. I have no evidence on this point, and this is not a decision that can yet be made by either the Court or by the Estate Trustee. Indeed, there is no Estate Trustee in this case.
[51] In essence, what Shirley is asking the Court to do is to allow her to continue to live in a property that is currently owned by Robert on favourable terms until the Estate determines whether it is going to pursue an interest in this property. The Estate does not actually have a vested interest in the property, however. In my view, therefore, the Court cannot make an Order under the SLRA, as the Beeton property is not the Estate’s property. The SLRA’s dependent relief provisions cannot be used to force a third party to provide relief to the dependent of an Estate.
[52] As a result, it is premature to order a trial of an issue in this case.
Issue #3 - What Should be Done in This Case?
[53] Shirley also argues that she should remain in the house because she cannot afford to go elsewhere. If the property were owned by the Estate, this would be a very strong argument. However, the property is not owned by the Estate; it is owned by Robert.
[54] Robert also has interests in the property. He has made it clear that he intends to have his adult son move into the property as soon as possible. He has been less consistent on whether he wants to move into this property himself, and on what timetable. His notice under the Landlord and Tenant Act suggests that he wants to move in at the end of June this year. However, his testimony on cross examination suggests that he is unlikely to move to Beeton until after the Wilson property is sold.
[55] Robert continues to be responsible for paying the mortgage on the Beeton property. Under the interim Order, Shirley was only required to pay the insurance, utilities, and routine upkeep and maintenance on the Beeton property. She has offered to pay the taxes as well if she remains. As a result, there is the possibility that, if Shirley remains in the Beeton property on favourable terms, and the Estate either does not have any rights or chooses not to exercise any rights it may have to the property, she will owe Robert money.
[56] Robert claims that, given the fact that Shirley has no assets, she will not be able to compensate him for his losses if she remains in the house wrongly. As a result, he claims that he may suffer irredeemable prejudice if Shirley is allowed to remain in the property.
[57] Both of these competing claims have merit. However, the fundamental issue in this case is the question of whether the Court can provide any relief under the SLRA at this time. I am of the view that it cannot, and I decline to make any Orders for exclusive possession in favour of Shirley.
[58] However, this home has been Shirley’s residence for a considerable period of time. It seems to me that I do have the jurisdiction to stay the removal of Shirley from the property for a period of time. I am of the view that Shirley should not be required to move out of the Beeton property until approximately three (3) months from the date that these reasons are released. I view this as an appropriate amount of time for two reasons:
a) It provides her with reasonable notice that her tenancy is being terminated, and provides her with an opportunity to find alternate lodging.
b) It gives the parties an opportunity to sell the Wilson property. Once that property is sold, there will be a source of funds for ongoing dependent’s relief for Shirley. In addition, the sale will likely bring much needed clarity to the issues between the various parties in this case.
[59] I should briefly address the notice under the Landlord and Tenant Act, seeking vacant possession of the house as of June 30th, 2016. That decision was made while proceedings before this Court were pending. Indeed, Bloom J. issued his Orders less than two weeks later.
[60] As a result, I am of the view that this notice not have been enforceable, given the interim interim directions of Bloom J. that Shirley was to have interim exclusive possession of the Beeton property. Further, Bloom J.’s Order continues until varied by a further Order of this Court, which I have done with this decision.
[61] In the result, Shirley is directed to vacate the Beeton property by September 30th, 2016. Until that time, all of the interim Orders made by Bloom J. relating to the Beeton property continue in force.
[62] Robert, when he takes possession of the Beeton property, is directed to preserve at his expense, all Estate property in or on the Beeton property.
Disposition
[63] Accordingly, I make the following Orders:
a) No trials of any issues relating to the claims over the Beeton property are to be Ordered until a Trustee (or Trustees) are appointed for the administration of Kenneth Sr.’s Estate and a further motion is brought
b) Shirley is to vacate the Beeton property by September 30th, 2016.
c) The interim interim directions relating to the Beeton property issued by Bloom J. are to remain in effect until September 30th, 2016.
d) When Robert takes possession of the Beeton property, he is to preserve at his own expense all Estate property on the Beeton property until given further directions by either the Estate Trustee for Kenneth Sr.’s Estate, or by the Court.
[64] Given the financial circumstances of both parties and the pending sale of the Wilson property, it seems to me that there is an argument that costs should not be payable until the conclusion of the action. However, if the parties cannot agree on costs, I will receive costs submissions of no more than three (3) double-spaced pages exclusive of bills of costs, offers to settle and case law from counsel for Robert and Alice’s Estate by no later than July 8th, 2016.
[65] Responding submissions will be received from the Applicant by no later than July 22nd, 2016. Again, these submissions are to be no more than three (3) double-spaced pages exclusive of bills of costs, offers to settle and case law.
[66] There are to be no reply submissions on costs without leave of the Court.
LeMay, J.