Court File and Parties
COURT FILE NO.: CV 17-97 DATE: 20190301 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Flavie Boyer, Applicant – and – Elyzabeth Boyer, Respondent
Counsel: Stephane Perreault, for the Applicant Ross Stewart, for the Respondent
HEARD: Cornwall, February 25, 2019
Reasons for Judgment
Desormeau J.
Overview
[1] This Application was brought Ms. Flavie Boyer, for division of the net proceeds of sale from the property municipally known as 10420 Ronson Road, North Dundas, Ontario pursuant to the Partition and Sale Act, R.S.O. 1990, as amended.
[2] The Respondent, Elyzabeth Boyer, sought unequal division of the net proceeds of sale based on unjust enrichment. While she initially advanced an argument of resulting trust, this was abandoned at the hearing.
[3] At the last court date, the parties agreed to an equal division of $243,000.00, representing the 2009 appraised value of the property. This time frame was reflective of the approximate date of death of Mr. Michel Benhanida. Each party received $121,500.00. The remaining proceeds of $140,212.82 are held in trust and the subject of this application and unjust enrichment claim.
Background
[4] The Applicant and the deceased: Mr. Benhanida, were in a common law relationship, during which, in 1981, they purchased 10420 Ronson Road, North Dundas, Ontario for $73,000.00. The Applicant’s position was that she paid $36,500.00 at the time of purchase, and Mr. Benhanida was responsible for the remaining $36,500.00 owed. He obtained mortgages to satisfy his share owed. The evidence showed that on paper, the Applicant was also responsible for the mortgages.
[5] Together, the parties had a daughter: Elyzabeth Boyer, the Respondent in this proceeding.
[6] The Applicant lived at the Ontario property for approximately one year, then returned to reside in Quebec. Mr. Benhanida meanwhile resided at the property in question for a longer period of time. In December, 2009, he perished in a house fire that destroyed the home. In his holograph will, Mr. Benhanida left his entire estate to the Respondent, including his interest in the subject property. In 2009, the property had been appraised at $243,000.00.
[7] Following Mr. Benhanida’s death, the debris from the fire was cleared, and 35 acres of farm land were rendered arable. In 2015, the property was sold for $399,000.00.
[8] It is the Applicant’s position that as an equal owner, she is entitled to her half share of the net proceeds of sale. As agreed between herself and Mr. Benhanida, between 1981 and 2009, she paid for property related expenses. Additionally, from 2009 to the sale in 2015, she paid $4,475.33 for property taxes. She indicated that she made efforts to assist in clearing and selling the property expeditiously, but her efforts were rebuffed by the Respondent.
[9] The Applicant’s position regarding the unjust enrichment argument advanced by the Respondent was that at best, there was evidence of $2,400.00 paid by the Respondent for clearing of the land. Apart from that cost, there was no quantification of the Respondent’s efforts. The farming of 35 acres of the property may have resulted in the increase in value of that parcel by approximately $35,000.00. However, apart from the Respondent consenting to the land becoming tile drained, there was no evidence regarding the time involved in reaching this agreement with the farmer, or actual efforts by the Respondent to improve the land herself. The Respondent’s contributions, as opposed to the farmer’s, were not sufficiently substantial to meet the test of unjust enrichment. Further, the Applicant argued that there was no deprivation established by the Respondent. The Applicant suggested that the passage of time could have contributed to the increase of the property’s value.
[10] The Respondent, who was also the Estate Trustee to Mr. Benhanida’s estate, advanced that it was only due to her money, time and effort that the property increased in value from 2009 to 2015. The Respondent was responsible for two significant events, which were to enter into an agreement with a farmer to clear the property, and for the farmer to render 35 acres of land arable. Tile drained land has greater value than otherwise, and thus, due to her actions, the value of the land increased substantially. Her evidence was that despite repeated requests from the Respondent, the Applicant displayed no interest and exerted no effort toward the goal of increasing the value of the property, in fact, the Applicant wanted to sell the property 2010. The Respondent relied on the argument of unjust enrichment to seek an unequal division of the remaining net proceeds of sale. She argued it would be inequitable and unconscionable to divide the remaining proceeds of sale equally between the parties, particularly due to her own substantial contributions in increasing the value of the property. Based on equity, fairness, and unjust enrichment, the Respondent requested that rather than award the Applicant a half share of $140,212.82 ($70,106.41), that the Applicant receive one quarter of the remainder, being $35,053.20. Ultimately, if successful, the Applicant would recognize gross profits of $156,553.20 for the property, while the Respondent would receive $226,659.61.
The Law
[11] For clarity, when reviewing the law, I reference the Applicant as the party advancing the claim, and the Respondent as that answering the claim, which is the opposite of the fact scenario in the case at bar but reflective of the judicial analysis in the authorities.
[12] Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 is the leading case by Supreme Court of Canada dealing with unjust enrichment (“Kerr”).
[13] To demonstrate the existence of an unjust enrichment, the party making the claim must show that there has been:
(a) An enrichment; (b) A corresponding deprivation; and (c) The absence of a juristic reason for the deprivation. (See Kerr, at para. 3) (Pettkus v. Becker, (1980) 2 S.C.R. 834, at para 38)
[14] In assessing the first two steps in the unjust enrichment claim, the court takes a straightforward economic approach. The enrichment requirement must be shown as something that the Respondent received and retained, though it is not necessary to show that it was retained permanently. The benefit must be tangible, and may be positive or negative, such as saving an expense that would have been otherwise undertaken. (See Kerr, at para. 38). Further, regarding the corresponding deprivation, the Applicant must establish not simply that the Respondent has been enriched, but also that the enrichment corresponds to a deprivation which the Applicant has suffered: Kerr, at para. 39.
[15] As for the third requirement, absence of a juristic reason, the Applicant must show that there is no reason in law or justice for the Respondent’s retention of the benefit conferred by the Applicant, making its retention unjust: Kerr, at para. 40. The third stage of the analysis provides for due consideration of the autonomy of the parties, including factors such as the legitimate expectation of the parties, the right of parties to order their affairs by contract: Kerr, at para. 41, citing Peel, at p. 803. Further, as set out in Clarkson v. McCrossen Estate, 1995 CarswellBC 39, (B.C.C.A.), at para. 58, the court concluded that "'absence of juristic reason' should be interpreted to mean, in brief form, "under no obligation"; and in its extended form, "under no obligation, contractual, statutory or otherwise to enrich the other party".
[16] In Kerr, Justice Cromwell reviewed Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.CR. 629, where the court set out a two-step analysis for the absence of juristic reason:
It is important to remember that what prompted this development was to ensure that the juristic reason analysis was not “purely subjective”, thereby building into the unjust enrichment analysis an unacceptable “immeasurable judicial discretion” that would permit “case by case ‘palm tree’ justice”: Garland, at para. 40. The first step of the juristic reason analysis applies the established categories of juristic reasons; in their absence, the second step permits consideration of the reasonable expectations of the parties and public policy considerations to assess whether recovery should be denied:
First, the plaintiff must show that no juristic reason from an established category exists to deny recovery [...] The established categories that can constitute juristic reasons include a contract (Pettkus v. Becker, [1980] 2 S.C.R. 834), a disposition of law (Pettkus, supra), a donative intent (Peter v. Beblow, [1993] 1 S.C.R. 980), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.
The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery.
As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. [Garland, ] paras. 44-46 (See Kerr, at para. 43)
[17] Accordingly, as stated in Kerr, at the juristic reason stage, the court first considers existing categories, failing which, it may take into account the legitimate expectations of the parties, and moral and policy-based arguments about whether the enrichment is unjust. The test for juristic reason is flexible. (See Kerr, supra, at para. 44) Regarding policy arguments, as stated by McLauchlin J. in Peter v. Beblow, [1993] 1 S.C.R. 980 at p.994: “It is precisely where an injustice arises without a legal remedy that equity finds a role.” (See Kerr, at para. 45)
[18] As set out in Wright Estate v. Johnston, 2011 CarswellOnt 960 at para. 213:
If enrichment has been established, is the nature of the enrichment substantial enough to meet the threshold of "unjust"? There must be a balance of the benefits conferred and received by the parties to determine whether the claimant's contribution is sufficient to entitle her to compensation. The Court must assess the value received by the Respondent. Thus, when determining whether the enrichment is unjust, a consideration of the expectations of the parties is warranted. The provider of the benefits must have a reasonable expectation of compensation and the recipient must have known or ought to have known of that reasonable expectation. See Garland at para. 51.
[19] Justice McLachlin, as she then was, in Peter v. Beblow, supra, at para. 4 stated:
There is a tendency on the part of some to view the action for unjust enrichment as a device for doing whatever may seem fair between the parties. In the rush to substantive justice, the principles are sometimes forgotten. Policy issues often assume a large role, infusing such straightforward discussions as whether there was a "benefit" to the defendant or a "detriment" to the plaintiff. On the remedies side, the requirements of the special proprietary remedy of constructive trust are sometimes minimized.
Occasionally the remedial notion of constructive trust is even conflated with unjust enrichment itself, as though where one is found the other must follow.
[20] The authorities are clear that if one element is not established, the court does not go on to analyze the other elements of unjust enrichment.
[21] As noted in Kerr, the first remedy is always a monetary award: Peter v. Beblow, supra. (See Kerr, at para. 47)
[22] Meschishnick J. in Porterfield v. Pirot, 2017 CarswellSask 253 at para. 34 stated the following:
In the first step then if the party defending an unjust enrichment claim can show a "disposition at law" which permits what might otherwise be an inequitable result there will be a juristic reason to deny a claim. In the second step it is available to the party defending the claim, when reasonable expectations and public policy are considered, to establish that a juristic reason exists to deny the claim. This opens the door to consider the manner in which the parties organized their relationship and whether an injustice has arisen that without equity cannot be remedied.
[23] Further, at para. 24 of Porterfield, when determining when equity would make adjustments, and what is just and equitable, depends on the circumstances of the case. The court stated that “if one tenant has made improvements which have increased the selling value of the property, the other tenant cannot take the advantage of increased price without submitting to an allowance for the improvements: Leigh v. Dickeson, 15 Q.B.D. 60, per Cotton, L.J., at p. 67; 21 Hals., p. 851, para. 1595. And when one tenant has paid more than his share of encumbrances, he is entitled to an allowance for such surplus: Re Curry, Curry v. Curry (1898), 25 A.R. (Ont.) 267; 33 Corp. Jur., p. 909”. (See Porterfield v. Pirot, supra, at para. 24).
[24] However, the court indicated in Porterfield: “… valid legislation can provide a juristic reason which bars recovery in restitution.” The court stated: “At the core of the rule set out in these authorities is the notion that if the result in a case is governed by a valid statute unjust enrichment cannot be employed to change the result.” In that case, the Partition Act in force in Saskatchewan did not allow the equitable principles of unjust enrichment and constructive trust to operate to create a proprietary interest. (See Porterfield v. Pirot, supra, at paras. 36 and 37) Ultimately, in that case, the court determined that the remedy was monetary, not proprietary, ordered the sale of the property and that sufficient proceeds be held in trust pending a trial or agreement of the parties regarding the claim for payment of maintenance and improvement advanced by one party. In the case at bar, the property has already been sold, and what is left to determine is if the net proceeds of sale should be divided equally or otherwise.
[25] There is a presumption at law that the interests of joint tenants are held equally, however, this is a rebuttable presumption. The court will apply the principles of unjust enrichment to determine if a joint tenant can rebut the presumption of equal division: Edison Estate v. Lewis, 2012 CarswellNfld 172, at para. 17. I am satisfied that the principles of unjust enrichment are equally applicable to the claims advanced by tenants in common in determining the valuation of each parties’ share of the real property.
[26] As stated in Edison Estate v. Lewis, supra, at para. 22, citing Morrison v. Barclay-Morrison, [2008] O.J. No. 4663, S.C.J.:
“The court's discretion to divide property unequally is restrained to circumstances meeting the very high threshold of unconscionability, a power that is used rarely: MacDonald v. MacDonald (1997), 109 O.A.C. 19 (Ont. C.A.); von Czieslik v. Ayuso (2007), 2007 ONCA 305, 86 O.R. (3d) 88 (Ont. C.A.).
In Merklinger v. Merklinger (1992), 11 O.R. (3d) 233 (Ont. Gen. Div.), Jennings J., at para. 54, found that a result that would be "outrageous" would satisfy the threshold for unconscionability.
Analysis
[27] The parties own the property as tenants in common with unspecified ownership interest. They are, in this case, each presumptively entitled to half of the remaining net proceeds of sale. This presumption is a rebuttable one, as set out in Porterfield v. Pirot, supra. The burden of rebutting the presumption is on the Respondent, who must persuade the court that it would be unconscionable to divide the net proceeds equally.
[28] To establish an unjust enrichment claim as sought by the Respondent, the onus is on her to demonstrate: (a) an enrichment; (b) a corresponding deprivation; and (c) the absence of a juristic reason for the enrichment and the deprivation. All three elements must be established on a balance of probabilities.
[29] In order to analyze the claim, the court must first identify what is the benefit received by the Applicant. If a benefit is found, then it is appropriate to proceed to the second stage of the unjust enrichment analysis. Further, the identification and definition of the detriment corresponding to the enrichment is essential at the second stage: Wright Estate v. Johnston, supra, at paras. 203 and 206.
[30] The Respondent alleged that Applicant benefited from the increase in value of the property due to her efforts, leading to an unjust enrichment. Because of the contradictory nature of the evidence, I am unable to determine who refused whose efforts regarding the property. Suffice it to say that the parties were not ad idem with respect to the plans for the property, nor the timelines in disposing of same.
[31] The evidence supports that the value of the property increased by $156,000.00 from 2009 to 2015. I am satisfied on the evidence as a whole that enrichment has been established to the benefit of the Applicant. I note, given the equal ownership of the property, the enrichment is also to the Respondent’s benefit. I now turn to the question of detriment.
[32] To establish the detriment to her, the Respondent relied upon Exhibit A to Kelly Rathwell’s Affidavit of November 21, 2018, which was a list of “Expenses Performed by the Executor Testament”. This included funeral expenses, payment of credit cards and an accounting for $4,000.00 for clearing and disposing of the property. While the summary claimed $3,500.00 was paid out, the invoice for the land clearing was $2,520.00, whereas the receipt was for $2,400.00.
[33] As for her non-monetary contributions, the Respondent did not substantiate her time or rate of compensation, but asserted that she put in significant effort. The evidence established that the Respondent contracted with a farmer, who, in exchange for rent-free use of the property, agreed to clear the debris from the burnt down home, and agreed to render a portion of the land arable. There was however insufficient evidence to assign any time or value to these efforts. I question whether the time required to achieve the agreement took 30 minutes, 30 days, or 300 days of negotiations. Further, these efforts may have been accounted for in the above referenced Exhibit A, noted as “Procedure for sale – Research, making appointments, talks” for which she claimed $500.00 as compensation.
[34] The onus to prove the claim is on the Respondent. However, on a balance, I find that she failed to provide sufficient evidence that her efforts were responsible for the increase in value of the property from 2009 to 2015. While there may be a correlation between the farmer clearing and tiling the land and the increase in value of the property, the Respondent’s contribution to this was negotiating, creating and signing two rental agreements. Further, given that the property increased in value from $73,000.00 in 1981 to $243,000.00 in 2009, representing an increase of $170,000.00, passage of time in and of itself may have been a significant factor for the increase in the value of the property.
[35] Ultimately, I find that there was a financial investment by the Respondent of $2,900.00. While I note that the non-monetary contributions of the Respondent need not be measured with mathematical precisions, I find that she has failed to provide sufficient evidence to persuade the court that these efforts were anything but negligible. In paraphrasing Lovsin v. Hodgins Estate, 2008 ONCA 371 at para. 5, I find that Respondent’s contributions were not sufficiently substantial to reach even a minimal threshold capable of supporting a finding of unjust enrichment.
[36] I have considered the words of Cory J. in Peter v. Beblow, supra, who provided additional reasons to the majority decision, and stated at para. 79: “I would have thought that if there is enrichment, that it would almost invariably follow that there is a corresponding deprivation suffered by the person who provided the enrichment. There is ample support for the proposition that once enrichment has been found, the conclusion that the plaintiff has suffered a corresponding deprivation is virtually automatic.” However, in the case at bar, contrary to Peter v. Beblow, the parties were not a common couple, but actually a mother and daughter, who were tenants in common on title to the property in question. In these circumstances, the onus being on the Respondent, I do not find that the Respondent has demonstrated a corresponding deprivation.
[37] For completeness, I now address the question of juristic reason, and whether there was an obligation, contractual, statutory or otherwise for the Respondent to perform any work or assist in the sale of the property without some reasonable expectation of compensation. In this case, the Respondent was the Estate Trustee and a co-owner of the property. The evidence of her efforts were enumerated her “Expenses Performed by the Executor Testament”. By applying for probate under her father’s will, she undertook the obligations to perform most of the work and services listed therein. As for the property related efforts, which I quantified at $2,900.00, the Respondent was an owner to the property, and therefore there was a juristic reason for her efforts.
[38] With regard to the legitimate expectations of the parties, while the Respondent’s expectation was that she would receive a greater share of the value of the property, the evidence does not establish a timely disclosure of this expectation to the Applicant. A review of the materials demonstrate the Respondent unilaterally negotiated a 3.5 year agreement with the farmer in June, 2010 and another agreement in June 2011. The agreement does not appear to be disclosed, at least based on the materials filed, until attached to the Respondent’s January 17, 2019 affidavit. Meanwhile, the Applicant conveyed her wish to dispose of the property in October 2010, and her expectation to receive half of the net proceeds from sale.
[39] Further, while the Respondent’s financial contributions were $2,900.00, the Applicant’s financial contributions to the property were payment of the property taxes from 2010 to 2015, which totaled $4,475.33.
[40] When assessing both parties’ contributions, I find that the benefits received by each were not unjust, but rather two owners of a property tending to different but mutual responsibilities. Having considered the authorities and the evidence as a whole, I am not persuaded that the Respondent has established unjust enrichment. I find it is not against public policy, and I do not find it to be inequitable or unconscionable to order the remaining net proceeds of sale to be divided equally by the parties.
[41] Ultimately, I am not persuaded that the Respondent has met her onus to establish unjust enrichment. Her claims for unjust enrichment and unequal division are therefore dismissed.
[42] I find that the Applicant is a 50 percent owner to the property and thus entitled to 50 percent of the net proceeds of sale.
Disposition
[43] The Respondent’s claims for unjust enrichment and unequal division of the remaining net proceeds of sale are hereby dismissed.
[44] The net proceeds of sale shall be distributed equally between the parties.
[45] Each party shall be responsible for their respective capital gains and, if applicable, H.S.T. on their portion.
[46] If the parties are unable to settle the issue of costs between them, they may provide written submissions to me. Submissions shall not exceed 3 pages, excluding bills of costs, offers to settle and case law. The Applicants’ shall be delivered within 30 days, and Respondents’ shall be delivered within 15 days thereafter, with ten days thereafter for the Applicant to reply.