COURT FILE NO.: CV-20-00649645
COURT FILE NO.: CV-21-00655993
DATE: 20210622
ONTARIO
SUPERIOR COURT OF JUSTICE
APPLICATION under s. 3 of the Partition Act, R.S.O. 1990, c. P.4
BETWEEN:
RICARDO JORGE ESPIRITO CATITA
Applicant
- and -
MILTON EMANUEL CATITA and CELIA CATITA
Respondents
AND BETWEEN:
MILTON EMANUEL CATITA
Applicant
- and –
RICARDO JORGE ESPIRITO CATITA
Respondent
Louis Vittas for the Applicant.
Brent A. Mendiola for the Respondents.
Brent A. Mendiola for the Applicant.
Louis Vittas for the Respondent.
HEARD: June 4, 2021
PERELL, J.
REASONS FOR DECISION
A. Introduction and Overview
[1] Ricardo Jorge Espirito Catita ("Rick") and his brother Milton Emanuel Catita ("Milton") are the registered co-owners of 42 Hucknall Road, in the City of Toronto. Pursuant to the Partition Act,[^1] Rick brings an Application against Milton and their mother Celia Catita for the partition and sale of 42 Hucknall. Rick seeks:
(a) a judgment under Section 3 of the Partition Act and Rule 66 of the Rules of Civil Procedure that is the land described as, PT BLK R PL 6108 NORTH YORK AS IN TR82180; TORONTO (N YORK) , CITY OF TORONTO and municipally known as 42 HUCKNALL ROAD, TORONTO, ONTARIO, M3J 1V8 be sold and that it forthwith be listed for sale on an MLS basis at 5% commission with Royal LePage Your Community Realty for an asking price of not less than $805,000.00, conduct of the sale otherwise to be on reference to and under the direction of the Master at Toronto;
(b) an order for possession of the land and leave to issue a Writ of Possession;
(c) an order directing a reference to the Master at Toronto to make all necessary inquiries into and determine all accounts among the parties, from and after purchase of the land;
(d) an order and direction that the respective distributions from the net proceeds of sale of the land be made after adjustment for accounts among the parties and any other monetary matters as determined on the reference;
(e) his costs of this proceeding on a substantially indemnity basis against the respondents in opposition to this application; and
(f) such further and other relief as this Honourable Court may determine to be just.
[2] By Cross-Application, relying on unjust enrichment and an alleged constructive trust, Milton seeks a declaration that his ownership interest is a 77% co-ownership of 42 Hucknall Road. Celia supports Milton's claim of a 77% interest in the property.
[3] Once the nature of the ownership interests is determined, Milton and Celia do not oppose the partition and sale of the property.
[4] The purpose of Milton's Cross-Application is to settle what are the ownership interests in the property so that Milton can decide whether to bid to purchase the property in the court-ordered sale. Thus, Milton seeks:
(a) A declaration that the real property municipally known as 42 Hucknall Road, in the City of North York, in the Province of Ontario (hereinafter the "Property") is subject to a constructive trust in favour of the Applicant;
(b) A declaration that there be an unequal division in the equity of the Property with 77% interest to the Applicant and 23% interest to the Respondent;
(c) An Order that 77% of the title to the Property be transferred to the Applicant or as directed by him;
(d) An Order that the 77% interest of the Applicant be recorded in the Land Titles register for the Property;
(e) An Order granting the Applicant the right to purchase the Respondent's unequal interest in the Property;
(f) If necessary, an Order granting the Applicant leave to obtain and register a Certificate of Pending Litigation against the Property;
(g) The costs of this application on a substantial indemnity scale, plus all applicable taxes; and
(h) Such further and other relief as counsel may advise and this Honourable Court deem just.
[5] On the Application and Cross-Application there is now no dispute that an order should be made under the Partition Act for a court-ordered sale of the property. The dispute and the predominate issue to determine is whether the brothers are 50:50 or 77:23 owners as tenants-in-common of 42 Hucknall Road.
[6] The basis for Milton's claim for a 77% interest is that he paid $100,000 more than did Rick to redeem a $313,576 mortgage that was used by the brothers to purchase the property. Milton deposed that he received the $100,000 as a gift from his mother Celia. He deposed that he used the gift from this mother to redeem the mortgage. He submits that the $100,000 combined with the other mortgage payments gives him a constructive trust of 77% of the ownership of 42 Hucknall Road.
[7] Rick acknowledges that Milton did use money received from Celia to pay down the mortgage. However, Rick deposed that there was no gift but rather that his mother lent the brothers $100,000 in consideration of her living at 42 Hucknall rent-free. He says that his mother's loan is to be repaid from any sale of 42 Hucknall Road.
[8] Thus, the critical issue for the Cross-Application and for the Application is whether what Milton says was a gift was what Rick says was a loan.
[9] The secondary issues for the Application and the Cross-Application are the matter of the accounting between the co-owners for their payments for the expenses of maintaining, repairing, and improving 42 Hucknall in accordance with their respective ownership interests.
[10] The predominate issue and the secondary issues for the Application and the Cross-Application are a matter of determining the facts. Based on the record presented for the Application and the Cross-Application, I am able to determine the predominate issue.
[11] However, I am not able to determine the secondary issues associated with the accounting between the brothers. With respect to the secondary issues, if the parties cannot agree about the accounts, then it is necessary to refer this matter to a master to determine how much each brother received for rental income and how much each paid for maintaining, repairing, and improving 42 Hucknall Road. The matter of the mortgage expense payments will, however, have been decided before any reference to a master. Celia may also have a claim for reimbursement for her contributions to improvements at 42 Hucknall and this too may be determined by the Master.
[12] My findings of fact on the predominant issue, which are described below, lead me to the conclusion that Rick and Milton are 50:50 owners of the 42 Hucknall Road property and that Rick and Milton owe Celia $120,000 in repayment of her loan.
[13] In the result, I declare that Rick and Milton are 50:50 owners of 42 Hucknall Road. I order that: (a) 42 Hucknall Road be sold pursuant to the Partition Act; (b) if the parties cannot agree about the arrangements for a sale of 42 Hucknall Road, and for the payment of the proceeds of sale into court, the sale procedure shall be referred to a master of this court; (c) if the parties cannot agree about the accounts for income and expense, then there shall be a reference to a master of this court to make all necessary inquiries into and determine how much each brother paid for maintaining, repairing and improving 42 Hucknall Road; and (e) Celia Capita shall have a first charge of $120,000 on the net proceeds from the sale of the property. I make no order as to costs of the Application and the Cross-Application.
B. Evidentiary Background
[14] On October 5, 2020, pursuant to the Partition Act, Rick Catita commenced an Application for partition and sale of 42 Hucknall Road. On January 22, 2021, Milton Catita commenced a Cross-Application for a declaration that he has a 77% ownership interest in 42 Hucknall Road.
[15] Rick supported his Application with the following evidence:
• Affidavits of Rick Catita dated October 26, 2020, February 12, 2021, and April 16, 2021. He was cross-examined.
• Affidavit of Ian Hunter McNish dated February 11, 2021. He is a friend of the brothers.
• Affidavit of Jovan Stojkovic dated February 11, 2021. He is a friend of the brothers.
• Affidavit of Mohamadalrazi Saeed dated February 11, 2021. He is a friend of the brothers going back to high school days. He was cross-examined.
[16] Milton supported his Application with the following evidence:
• Affidavit of Mark Bajcar dated March 4, 2021. He is a resident of 42 Hucknall Road. He was cross-examined.
• Affidavits of Celia Catita dated January 22, 2021 and April 7, 2021. She was cross-examined.
• Affidavit of Milton Catita dated January 22, 2021. He was cross-examined.
• Affidavit of Matthew Cleckner dated March 4, 2021. He was a former tenant of 42 Hucknall Road.
• Affidavit of Alexis Galvez dated March 4, 2021. She was a former resident of 42 Hucknall.
• Affidavit of Thomas Kasurak dated March 4, 2021. Mr. Kasurak is a resident of 42 Hucknall Road. He was cross-examined.
[17] Before setting out the factual and legal analysis necessary to decide the predominant issue about the proportions of the ownership interests in 42 Hucknall, it is necessary to address the matter of Rick's surreptitious audio recordings of conversations that he had with Milton.
[18] On November 5, 2019, Rick surreptitiously recorded a conversation that he was having with Milton, and on February 26, 2020, Rick surreptitiously recorded the conversations at a meeting among Rick, Milton, and their real estate lawyer, Edward H. Merifield.
[19] Relying on these recordings, Rick submits that Milton made admissions about the brothers' respective payments to retire the mortgage and about the ongoing expenses of maintaining, repairing, and improving 42 Hucknall. Further Rick relies on alleged admissions about the arrangements made with their mother when she came to live at 42 Hucknall and she made payments to her sons, which Milton used to pay down the mortgage indebtedness. Rick relies on these alleged admissions to make his case that there was no gift but that there was a loan made by Celia.
[20] Milton objects to the admission of these recordings on the grounds that the recordings are unreliable. Further, Milton objects to the admission of these recordings on public policy grounds associated in the main with family law cases where courts have commented unfavourably about using secret recordings to make out one's case in a family dispute.[^2]
[21] In the immediate case, it is not necessary to rule on Milton's public policy argument. Rick's recordings are either inadmissible based on their irrelevance and unreliability. If they are admissible, then the weight to be given to them as admissions is between infinitesimal to negligible.
[22] As the description of the facts below will reveal, in the immediate case, the most critical events took place around December 2013, when Celia and Michelle moved into the basement of 42 Hucknall. The recordings do not record the critical events. The recordings are after-the-fact unsworn conversations that are self-serving recollections and interpretations of the critical events that were six years old at the time of the recordings. The audio recordings are of no assistance to the court.
[23] Before setting out the factual and legal analysis necessary to decide the predominant issue about the proportions of the ownership interests in 42 Hucknall, it is also necessary to address the nature of the parties' evidence.
[24] With respect to the facts, the litigation is a serious family squabble, and the gloves came off and some quite mean things were said in the evidence. In the run up to the hearing of the Application and the Cross-Application, the brothers disclosed a great deal of information that was sensitive, private, and personal about their respective personalities, vices, virtues, employment, friends, finances, physical health, mental health, and deteriorating interpersonal relationships. For examples, there was an allegation that Rick is an alcoholic, which was denied. The mental health of Celia and of the tenants at 42 Hucknall Road was discussed.
[25] The justification for the backbiting and bad-mouthing and rudeness was that it was relevant to the court's determination of whether there should be a partition and sale of 42 Hucknall Road and, most particularly, it was said to be relevant as to the timing of any court-ordered sale. However, by the time of the hearing of the Application and Cross-Application, there was no contest that Rick is entitled to a partition and sale of 42 Hucknall Road.
[26] As noted in the Introduction section above, the critical factual issue for the Cross-Application and for the Application is whether what Milton says was a gift was what Rick says was a loan and the bad-mouthing vilifications one of the other are not relevant to that issue. Thus, save as necessary to the recounting of the facts and the application of the law that follows, I shall not dignify the indignities, most of which became irrelevant after it emerged that Milton and Celia did not oppose the sale of the property but only the timing of it.
C. Factual and Legal Analysis
[27] As noted in the Introduction, the predominant issue for the Application and the Cross-Application is a matter of determining the facts. In the discussion that follows, I shall set out my findings of fact and then apply the law to those facts. Confining myself to what is relevant to the determination of the predominant issue of the ownership interests in 42 Hucknall Road, I make the following findings of fact and law.
[28] Rick Catita, the older brother, and Milton Catita the younger brother, along with their younger sister Michelle are the children of Celia and Joaquim Catita. At the present time, Rick lives in his own home with his wife Irene Magharian. At the present time, Milton, Celia, Michelle, and two tenants live at 42 Hucknall Road. Celia and Joaquim are estranged and living separate and apart.
[29] Celia is and has been self-employed. She has been a personal care worker and a house cleaner operating her own business. Before moving in to reside at 42 Hucknall Road, Celia and Michelle resided with Joaquim at 17 Penticton Court in Richmond Hill, which was Celia and Joaquim's family home.
[30] On September 18, 2009, Rick and Milton purchased 42 Hucknall Road for $320,000. The purchase was financed with a $313,576 mortgage from MCAP Service Corporation. The brothers combined to pay the balance of the purchase price and for closing costs. Title was taken as joint tenants each with a 50% interest. The joint tenancy was subsequently severed, and the brothers now are tenants-in-common.
[31] At the time of the purchase, the brothers were unmarried in their mid-twenties, and they moved into 42 Hucknall Road. The house is a semi-detached bungalow with three bedrooms and a two-bedroom basement apartment with its own entrance. The brothers agreed to share expenses. Their plan was to eventually sell the property and use the proceeds to purchase homes of their own.
[32] Although both brothers were to fund the payments equally, Milton managed or administered the payments for the mortgage and for the utilities, internet, insurance, realty taxes, repairs, and other expenses of maintaining the property. There is a dispute between the parties about how much each paid for each of the expense items. There is a dispute between the parties about who paid and how much they paid for various repairs or improvements to the property.
[33] The payments to the mortgagee were made from Milton's bank account. Rick would pay his share by pre-authorized transfers from his bank account to Milton's bank account.
[34] In a random and haphazard way, the brothers would rent rooms out at 42 Hucknall. The collection of rents was largely Milton's responsibility, but Rick was also involved. As mentioned above, there is a dispute between the parties about whether there has been a true accounting of all the rental income.
[35] From time to time, Rick would fall behind in making transfer payments and then he would reimburse Milton.
[36] I find as a fact that by the time the mortgage was discharged in January 2016, Milton had paid $290,661.65 on account of the mortgage and Rick had paid $85,770.95. Thus, $376,432.60 was paid principal and interest to discharge the $313,576 mortgage.
[37] Rick's contributions to repaying the mortgage indebtedness equates to 23%.
[38] As will be described below, Milton's mortgage payments included $120,000 that he received from his mother Celia. Milton's contributions to the mortgage payments equates to 77% of the mortgage payments. It equates to 45% if Celia's money is excluded. As noted above, Milton claims a constructive trust of 77% as his ownership interest in 42 Hucknall based on his mortgage payments.
[39] In the fall of 2011, Rick began dating Irene Magharian.
[40] In September 2011, Joaquim, who suffers from mental illness, in a violent manic episode, destroyed the Penticton Court home. With the destruction of the Penticton Court home, Celia and Michelle moved out and took residence with one of Celia's personal care clients.
[41] After the destruction of the Penticton Court home, Rick quit work and approximately for six months, he worked at restoring the Penticton Court property. Milton from time to time helped. Both brothers contributed to paying for the renovations to restore the family home in Richmond Hill so that it could be put up for sale.
[42] After the repairs and renovations of the Penticton Court property were completed, Rick returned to work and for a time was self-employed at a construction company that he owned.
[43] In November 2012, the Penticton Court property was sold. When the transaction closed on January 31, 2013, Celia gave directions to the lawyer to pay Rick $40,159.27 from the proceeds in payment to reimburse him and Milton for his labour and renovation expenses. Rick then paid Milton $41,627,34 for outstanding arrears of Rick's share of the mortgage and expense payments.
[44] In December 2013, Celia and Michelle moved into the basement apartment at 42 Hucknall. It was Milton's evidence that he and Rick agreed that Celia would live rent free. It was Milton's evidence that the brothers insisted that Celia use her savings to support Michelle's university education.
[45] Rick's evidence, however, was that he simply agreed that his mother and sister could live at 42 Hucknall rent free.
[46] Celia's evidence was that that the funds that she paid to her children had nothing to do with her staying rent free at 42 Hucknall. Her intention in December 2013 was that her stay was to be temporary to "regroup" and then she would move out and on in her life. Her chief concern at the time, which unfortunately continues until today, is that she would be harmed by her dangerous husband.
[47] Around the time that Celia and Michelle moved into 42 Hucknall, Celia paid $120,000 ($55,000 + $65,000) to Milton. Celia's evidence was that this was a gift to Milton to be used at his sole discretion. However, she also testified that she made her payments from the sale proceeds from Penticton Court to both of her children. Rick's evidence was that there was no $120,000 gift to Milton but that Celia paid Milton $20,000 to reimburse him for his contribution to the renovation of the Penticton Court property and that she lent the brothers $100,000 so that they could pay down the mortgage.
[48] I find as a fact that: (a) Celia lent her two sons together $120,000 and not $100,000; (b) the loan was not made in consideration of the brothers not extracting rent from their mother; and (c) Milton used the $120,000 to pay down the mortgage on the property.
[49] Celia's and Milton's evidence about the $100,000 being a gift is not reliable and has been slanted by the circumstances that they do not wish to move from 42 Hucknall Road. They wish to find a means to purchase the property in the court-ordered sale of the property and are slightly reconstructing their recollections of what happened in or around the time that Celia planned a temporary stay at 42 Hucknall. However, at the time when Celia paid the $120,000, Rick and Milton were both living at 42 Hucknall Road and it would have been a joint decision to provide a safe harbour for their mother and sister without charging her rent. At that time, there was no reason for Celia to favour Milton over Rick with respect to the $120,000 payment. If it was a gift or a loan, it was to both of her sons.
[50] I find as a fact that there was no gift. Celia made a $120,000 loan without security. At that time, Rick and Milton together made a common decision as joint owners to take Celia and Michelle into their home. Celia needed a home, and it was a natural maternal gesture for her to help her children pay down the mortgage, and it was a natural gesture for the brothers to not charge their mother rent.
[51] Thus, with some qualifications, I prefer Rick's account of what happened when Celia provided $120,000 to the brothers. My findings of fact on the predominant issue lead me to the conclusions that Rick and Milton are 50:50 owners of the 42 Hucknall Road property and that Rick and Milton owe Celia $120,000 in repayment of her loan.[^3]
[52] Based on my finding of fact that there was a $120,000 loan not a $100,000 or $120,000 gift by Celia to Milton, it is not necessary to comment or make any findings of fact or findings of law about the parties' submissions and case law about: (a) gifts;[^4] (b) unjust enrichment and constructive trusts;[^5] and (c) joint family ventures.[^6]
[53] The above findings of fact and law are sufficient to resolve the predominant issue of the Application and the Cross-Application.
[54] The subsequent unfortunate disintegration of interpersonal relations between the family members is, at most, an explanation as to why the parties have turned to the court to resolve the secondary issues, which I am unable to decide and which will be decided, if necessary, on a reference to the master. I shall, therefore, be very brief in describing the family history of what happened after Celia and Michelle moved in and Rick moved out of 42 Hucknall to live with Irene. That sad history is as follows.
[55] In late 2016 and 2017, Rick began to manifest the symptoms for what was later diagnosed as multiple sclerosis. Irene, who is employed as a business analyst at Investco Canada, began managing Rick's finances and began to question Milton about his collection of rents and payment of expenses. The relationship between the brothers began to be strained.
[56] In May 2017, Rick moved out of the property and lived with Irene.
[57] In October 2017, Rick was diagnosed with multiple sclerosis.
[58] In April 2019, Rick advised his brother and his mother of his wish to sell his interest in the Hucknall Road property and begged them to buy him out which they refused to do. The relationship between the brothers deteriorated further.
[59] In June 2019, Rick and Irene purchased their own home.
[60] On October 12, 2019, Rick and Irene were married. Although he was invited to be the best man, Milton did not attend the wedding. The brothers are now bitterly estranged.
[61] On October 5, 2020, Rick commenced his Application for partition and sale of 42 Hucknall Road and a few months later on January 22, 2021, Milton Catita commenced a Cross-Application for a declaration that he has a 77% ownership interest in 42 Hucknall Road.
D. Conclusion
[62] For the above reasons, I declare that Rick and Milton are 50:50 owners of 42 Hucknall Road. I order that: (a) 42 Hucknall Road be sold pursuant to the Partition Act; (b) if the parties cannot agree about the arrangements for a sale of 42 Hucknall Road, and for the payment of the proceeds of sale into court, the sale procedure shall be referred to a master of this court; (c) if the parties cannot agree about the accounts for income and expense, then there shall be a reference to a master of this court to make all necessary inquiries into and determine how much each brother paid for maintaining, repairing and improving 42 Hucknall Road; and (d) Celia Catita shall have a first charge of $120,000 on the net proceeds from the sale of the property. I make no order as to costs of the Application and the Cross-Application.
Perell, J.
Released: June 22, 2021
COURT FILE NO.: CV-20-00649645
COURT FILE NO.: CV-21-00655993
DATE: 20210622
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RICARDO JORGE ESPIRITO CATITA
Applicant
- and -
MILTON EMANUEL CATITA and CELIA CATITA
Respondents
AND BETWEEN:
MILTON EMANUEL CATITA
Applicant
- and –
RICARDO JORGE ESPIRITO CATITA
Respondent
REASONS FOR DECISION
PERELL J.
Released: June 22, 2021
[^1]: R.S.O. 1990 c. P.4. [^2]: See: Liu v Xie, 2021 ONSC 222; Ukiri v. Erskine, 2020 ONSC 4294; M.Y. v. B.G., 2019 ONSC 4907; Nalli v. Nalli, 2015 ONSC 3921; Sordi v Sordi, 2011 ONCA 665; Rawlek v Rawlek, 2003 BCSC 1466; F. (J.) v C. (V.) (2000), 2000 22521 (ON SC), 8 R.F.L. (5th) 45 (Ont. S.C.J.); Tatarchenko v. Tatarchenko, 1998 14087 (ON SC), [1998] O.J. No. 4685 (Gen. Div.); Seddon v. Seddon, [1994] B.C.J. No. 1729 (S.C.). [^3]: It is arguable that Celia has an equitable mortgage against 42 Hucknall Road, but I need not decide the point which was not argued. See Bank of Montreal v. Georgakopoulos, 2021 ONCA 60; Elias Markets Ltd. (Re), 2006 31904 (ON CA), [2006] O.J. No. 3689 (C.A.); Scherer v. Price Waterhouse, [1985] O.J. No. 881 (H.C.J.). [^4]: Steele v. Doucet, 2020 ONSC 3386; McNamee v. McNamee, 2011 ONCA 533. [^5]: Dhillon v. Brar, 2019 ONSC 4066; Moore v. Sweet, 2018 SCC 52; Ajayi v. Oziegbe, 2017 ONSC 2732; Sundarampillai v. Ponnambalam, 2015 ONSC 5466; 306440 Ontario Ltd. v. 782127 Ontario Ltd, 2014 ONCA 548; Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980; International Corona Resources Ltd. v. LAC Minerals Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574. [^6]: Gonsalves v. Serymgeour, 2017 ONCA 630; Kerr v. Baranow, 2011 SCC 10.