COURT FILE NO.: BK-17-02197741-0031
DATE: 20120728
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF KENNETH JOSEPH JOHANSEN (FCOB AS ALL IN POOLS AND SPAS) OF THE TOWN OF STOUFFVILLE, IN THE COUNTY OF YORK IN THE PROVINCE OF ONTARIO (SALES REPRESENTATIVE)
SUMMARY ADMINISTRATION
BETWEEN:
YANACH DEY & ASSOCIATES, Licensed Insolvency Trustee
Moving Party
– and –
KENNETH JOSEPH JOHANSEN, a bankrupt and KATHERINE JOHANSEN
Respondents
Matthew R. Harris, for the Moving Party
Kenneth Johansen, in Person
HEARD: July 27, 2021
L. A. PATTILLO J.:
Introduction
[1] The Moving Party, Yanach Dey & Associates Ltd., Trustee of the estate of the respondent Kenneth Joseph Johansen, a bankrupt (the “Bankrupt”) brings this motion for an order providing for partition and sale of 341 Rupert Avenue, Stouffville, Ontario (the “Property”) and together with ancillary relief.
[2] The Bankrupt appeared in person and was not represented. His mother, the respondent Katherine Johansen, did not appear although properly served.
[3] In support of the motion, the Trustee has filed the First Report dated November 10, 2020 and a Supplementary Report dated June 16, 2021. In response, the Bankrupt has delivered a brief affidavit dated May 26, 2021 to which is attached a three-page hand document which the Bankrupt says constitutes his affidavit together with a statutory declaration dated October 18, 2018 signed by Katherine Johansen and part of a second tax installment for the Property due April 16, 2021.
Background
[4] The Property was purchased on June 28, 2012. As indicated by the title documents registered at the time, it is owned by 20% by the Bankrupt and 80% by Mrs. Johansen, as tenants in common. Both Mrs. Johansen and the Bankrupt swore the Land Transfer Tax affidavit. There are no mortgages registered on title.
[5] The Bankrupt filed a voluntary assignment in bankruptcy on December 9, 2016. His sworn statement of affairs listed no realizable assets and liabilities of $73,968 (unsecured) and $14,950 (secured). There is no mention of his interest in the Property. As of November 2020, there are proven claims of $104,171.48 and the estate has a balance of $11,322.69.
[6] In March of 2017, the Trustee learned of the Bankrupt’s interest in the Property. From April 2017 to October 2020, some three and a half years, the Trustee wrote to the Bankrupt and Mrs. Johansen and spoke to the Bankrupt a number of times to obtain information about the Bankrupt’s interest in the Property and why it had not been disclosed. Apart from denying any interest in the Property, the Bankrupt provided no information and there was no response from Mrs. Johansen.
[7] On October 16, 2020, the Trustee received a courier envelope from FedEx containing a one-page statutory declaration sworn by Mrs. Johansen on October 18, 2018. The declaration stated, in part, that the purpose of putting the 20% in the Bankrupt’s name was “to provide my said son with an interest in my Estate over and above any other entitlement in my Will.” She further stated that the 20% was a gift to be realized only upon her death.
[8] The Bankrupt’s affidavit repeats that he does not own any percentage of the Property until his mother’s death when he would receive his 20%.
The Law
[9] Section 3(1) of the Partition Act, R.S.O. 1990, c. P.4 (the “Act”) provides in part that “any person interested in land in Ontario” may bring an application for partition of such land or for the sale thereof.
[10] The law with respect to partition or sale is well established. While the presumption is for partition, a sale will be ordered where the court considers it more advantageous to the parties or where the land is not suitable for partition. See: Garfella Apartments Inc. v. Chouduri et al., 2010 ONSC 3413 (Div. Ct.) at para. 10-12.
[11] Further, while the court retains a discretion to refuse any relief for partition or sale, the onus is on the responding party to demonstrate circumstances warranting refusal of such relief. The exercise of such discretion is only appropriate, however, in circumstances of malice, oppression or vexatious intent. Significant hardship can amount to oppression: Greenbanktree Power Corp. v. Coinamatic Canada Inc., (2004) 2004 CanLII 43772 (ON CA), 75 O.R. (3d) 477, 193 OAC 204 (C.A.) at para. 2.
Analysis
[12] I find, based on the title to the Property that the Bankrupt owned a 20% interest in it at the date of his bankruptcy and accordingly, that 20% interest vested in the Trustee pursuant to s. 71 of the BIA.
[13] I do not accept Mrs. Johansen’s statement in her statutory declaration to the effect that the Bankrupt has no interest in the Property and the 20% was a gift and only passes to him on her death. Apart from my concern of the bona fides of the declaration given it was signed some two years after the bankruptcy, when the Trustee’s interest in the Property was well known, and was not produced for a further two years despite repeated requests for information from the Trustee, my main concern is with her characterization of the Bankrupt’s interest in light of the evidence concerning the property they owned before the Property, which Mrs. Johansen does not mention.
[14] On January 30, 2007, Mrs. Johansen, together with the Bankrupt and his then wife, Colleen Johansen purchased 334 Lori Avenue in Stouffville. All three were listed on title as the purchasers. On January 30, 2007, they obtained a mortgage from the TD Bank which was discharged on February 21, 2007. On October 17, 2008, as a result of a marital split, Colleen was removed from title leaving just Mrs. Johansen and the Bankrupt. The Bankrupt admitted that Colleen was paid for her interest in Lori Avenue. On June 28, 2012, they sold Lori Avenue for $567,000, and the same day purchased the Property for $450,000.
[15] What is not clear from the title searches is the nature of the interest each of Mrs. Johansen, the Bankrupt or his ex-wife had in Lori Avenue. What is clear, however, is that they each had an interest in it. Accordingly, when Mrs. Johansen and the Bankrupt bought the Property, it is a reasonable inference, in my view, to conclude that the Bankrupt’s interest was 20%. It was not an interest intended to pass on Mrs. Johansen’s death.
[16] For the above reasons, I also do not accept the Bankrupt’s evidence that he has no interest in the Property and had no knowledge that he was on title. Given the history and the fact that he signed the affidavit of Land Transfer Tax at the time of purchase, I find that he was aware he had an interest in the Property.
[17] As the Trustee is a person with an interest in the Property, it is entitled to bring the application for partition or sale of the Property.
[18] There is no evidence of malice, oppression or vexatious intent on the part of the Trustee. In fact, I consider that the Trustee has been more than fair with both the Bankrupt and Mrs. Johansen. The bankruptcy has existed for almost five years. The Trustee wishes to finish administering the estate. The Trustee has attempted without success to resolve this matter for five years. Considering the refusal of the Bankrupt and Mrs. Johansen to deal with it, the Trustee has had no choice but to bring this motion.
[19] I recognize that Mrs. Johansen is 90 years of age and does not wish to sell her home. Given the evidence, however, I do not consider that to be of sufficient hardship to amount to the type of oppression required to refuse the remedy requested.
Conclusion
[20] For the above reasons, therefore, an order shall issue permitting the Trustee to list and sell the Property as legally described in the Notice of Motion. The Property is not suitable for partition. Also, as requested, a reference is directed to determine all issues relating to the conduct of the sale and the taking of accounts in connection therewith.
[21] At the conclusion of the hearing, I urged the Bankrupt and through him his mother, to get some advice to enable them to resolve this matter with the Trustee before the sale process begins. In that regard, and with no objection from the Trustee, my order will be stayed for three months to allow that to occur. In the absence of a resolution within that time, my order will take effect.
[22] The Trustee was successful on the motion and in the circumstances is entitled to its costs on a partial indemnity basis which I fix at $5,000, payable from the estate. In my view, given the issues, that amount is both fair and reasonable.
L. A. Pattillo J.
Released: July 28, 2021
COURT FILE NO.: BK-17-02197741-0031
DATE: 20120728
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF KENNETH JOSEPH JOHANSEN (FCOB AS ALL IN POOLS AND SPAS) OF THE TOWN OF STOUFFVILLE, IN THE COUNTY OF YORK IN THE PROVINCE OF ONTARIO (SALES REPRESENTATIVE)
SUMMARY ADMINISTRATION
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
BETWEEN:
YANACH DEY & ASSOCIATES, Licensed Insolvency Trustee
Moving Party
– and –
KENNETH JOSEPH JOHANSEN, a bankrupt and KATHERINE JOHANSEN
Respondents
REASONS FOR JUDGMENT
PATTILLO J.
Released: July 28, 2021