COURT FILE NO.: CV-20-00009510
DATE: 2022-06-24
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Michel Charbonneau and Carole Charbonneau Applicants
– and –
Adéle Gracie Respondent
COUNSEL: Daniel Sirois, for the Applicants Michael Macnamara, for the Respondent
HEARD: February 8, 2022
DECISION ON APPLICATION
K.E. Cullin, J.
Overview
[1] This application arises from the parties’ ownership of a property located at 18 South Bay Road, in Cartier, Ontario (the “Property”). The parties own the Property as tenants in common. Each has a dwelling on the Property; the applicants have historically used their dwelling recreationally, while the respondent uses her dwelling as her principal residence.
[2] Unfortunately, the parties have come into conflict with one another. The applicants wish to divest themselves of their interest in the Property. They allege that the respondent has interfered with their efforts and, as a result, they are seeking an order directing the sale of the entire property. The respondent opposes the application.
Factual Background
[3] The Property is a lakefront property located on Geneva Lake in Cartier, Ontario. It was originally purchased by the respondent in 1978. At that time, the owners of the Property were the respondent, her husband, and her parents. They owned the Property as joint tenants.
[4] In 1995, the respondent’s father died. His interest was removed from title. In 2003, the respondent’s husband was removed from title following their divorce.
[5] On March 27, 2002, the respondent’s mother transferred her interest in the Property to the respondent’s brother. He subsequently transferred his interest to himself and his fiancée. In 2009, they sold their interest to the applicants; the applicant, Carole Charbonneau, was related to the respondent’s brother by marriage.
[6] Presently, the Property is owned by the applicants and the respondent as tenants in common. The applicants jointly own a 50% interest in the Property, and the respondent owns a 50% interest in the Property.
[7] There are two dwellings on the Property. One is used by the respondent as a residence, while the other is used by the applicants as a cottage. There are several outbuildings. Although there is no written agreement between the parties regarding the use of the outbuildings, it was understood between them that the applicants had the exclusive use of a tool shed and a woodshed, the respondent had the exclusive use of another woodshed, tool shed, and a storage shed/outhouse, and they both shared the sauna. Each of the parties has access to their own dock. There is also a Bunkie on the Property which is connected to the hydro of the applicants’ dwelling; it has been used on a few occasions by the respondent.
[8] Both parties conceded in their materials and on cross-examination that, for the most part, they co-operatively and peacefully co-existed on the Property prior to 2019 when the applicants advised the respondent that they intended to sell their interest.
[9] The applicants’ first thoughts of selling their interest in the Property materialized in 2018 when they began to plan for their retirement. They felt that the Property did not fit their needs in retirement and wanted to purchase a place that was more suitable for them.
[10] The applicants eventually listed their interest in the Property through Property Guys, a private sale network. In July 2019, the applicants identified a purchaser who was prepared to buy it for $234,900.00. It is the applicants’ evidence that the purchaser withdrew from the transaction after meeting the respondent. During her cross-examination, the respondent confirmed that she was not prepared to sign a written agreement about the use of the Property as requested by the purchaser’s lawyer.
[11] In August 2019, the respondent’s niece expressed an interest in purchasing the applicants’ interest in the Property; the transaction did not proceed as she was unable to secure financing. It is the applicants’ evidence that the respondent advised her niece that she would make it difficult for the applicants to sell their interest in order to give her more time to obtain financing; the respondent denies this.
[12] Following their failed attempts to sell the Property in 2019, the applicants consulted a contractor to explore the cost of constructing an addition to their dwelling which would permit them to use it as a year-round residence. It is the applicants’ evidence that, during the contractor’s attendance, the respondent approached him to advise that the applicants could not build the addition. Thereafter, the applicants abandoned any efforts to renovate their dwelling as it was their belief that they would be unable to do so without interference from the respondent. The respondent acknowledges that a conversation took place but denies that she told the contractor that the applicants could not build an addition. On the evidence before me, I accept that the respondent advised the contractor that the applicants could build an addition, but that she advised him that the applicants could not build the addition that they wanted.
[13] In June 2020, the respondent had interactions with three prospective purchasers of the Property. In their evidence, the applicants describe all of the interactions as “hostile” and indicate that these interactions deterred the prospective purchasers from proceeding to complete a sale. The respondent denies that she was hostile.
[14] One of the interactions was videotaped by the applicants, and that videotape was filed as an exhibit. Upon reviewing the videotape, I observed that the respondent was extremely blunt and shared information which served no purpose other than to undermine a potential sale. In fairness to the respondent, it appears to me from reviewing all of the evidence that her bluntness may be her manner of communicating with everyone, as opposed to a calculated effort to thwart a sale. Nevertheless, I have no difficulty accepting that prospective purchasers would have been deterred after such an interaction.
[15] The parties have considered alternatives to the relief sought by the applicants. It is the respondent’s evidence that, given the dimensions of the Property, partition is not an option pursuant to the provisions of the Planning Act, R.S.O. 1990, c.P.13. Each party has made an offer to purchase the interest of the other, but neither has been satisfied with the proposed purchase price. The applicants have also offered to purchase the respondent’s interest and grant her a life tenancy; she has declined this proposal as well.
[16] The applicants have not re-listed the Property since June 2020. They issued this application on November 23, 2020.
The Law
[17] Section 3(1) of the Partition Act, R.S.O. 1990, c.P.4 provides:
Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.
[18] The interests in land subject to partition or sale are identified in section 2 of the Act as follows:
All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.
[19] In an application for partition and sale, there is a presumption in favour of partition. This presumption can be rebutted when partition is not available as an option, or when it can be demonstrated that a sale is more advantageous to the parties (Garfella Apartments Inc. v. Chouduri, 2010 ONSC 3413 (Div. Crt.), affg. [2008] O.J. No. 4454 (SCJ), para.11).
[20] In Brienza v Brienza, 2014 ONSC 6942, Perell, J. provided an instructive summary of the law with respect to partition and sale applications at paras. 22-25:
[22] Section 2 of the Partition Act states that a joint tenant or tenant in common may be compelled to make or suffer partition or sale. The general principles to determine when partition and sale should be granted were laid down in Davis v. Davis, 1953 CanLII 148 (ON CA), [1954] O.R. 23 (C.A.), where the Court of Appeal stated:
There continues to be a prima facie right of a joint tenant to partition or sale of lands. There is a corresponding obligation on a joint tenant to permit partition or sale, and finally the Court should compel such partition or sale if no sufficient reason appears why such an order should not be made.
[23] The onus is on the party resisting partition or sale to demonstrate sufficient reasons for refusal: Davis v. Davis, supra; Silva v. Bettencourt, [2002] O.J. No. 1878 (S.C.J.).
[24] In cases after Davis, the Act has been interpreted to mean that the court has a very limited discretion to refuse an application for partition or sale: Silva v. Silva, 1990 CanLII 6718 (ON CA), [1990] O.J. No. 2183, supra; Hay v. Gooderham (1979), 1979 CanLII 1690 (ON SC), 24 O.R. (2d) 701 (Div. Ct.); Garfella Apartments Inc. v. Chouduri 2010 ONSC 3413, [2010] O.J. No. 2900 (Div. Ct.).
[25] Only in exceptional circumstances will a joint tenant or tenant in common be denied his or her request that the property be partitioned or sold. The court's discretion to refuse partition and sale is narrow, and there must be malicious, vexatious or oppressive conduct to justify the refusal to grant partition and sale: Silva v. Silva, supra; Osborne v. Myette, [2004] O.J. No. 3383 (S.C.J.); Latcham v. Latcham, 2002 CanLII 44960 (ON CA), [2002] O.J. No. 2126 (C.A.), affg. [2001] O.J. No. 5291 (Div. Ct.); Fellows v. Lunkenheimer (1998), 21 R.P.R. (3d) 142 (Ont. Gen. Div.); Kalita v. Freskiw Estate, [1998] O.J. No. 5180 (Gen. Div.); Jakubiszyn v. Tekielak, [1991] O.J. No. 2362 (Gen. Div.); Garfella Apartments Inc. v. Chouduri, supra.
[21] In determining whether a party has engaged in malicious, vexatious, or oppressive conduct, the court is limited to a review of conduct related to the application for partition and sale. As noted by Ferrier, J. in Akman v. Burshtein, 2009 CanLII 16574 (ON SC) at para. 38:
Any allegation of malicious, vexatious, or oppressive conduct should relate to the partition and sale issue itself. Specifically, it is necessary to look at the reasonableness of the positions taken by the parties as it relates to the application for partition and sale.
[22] In Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2005), 2004 CanLII 48652 (ON CA), affg. (2004), 2003 CanLII 37762 (ON SCDC), affg. (2002), 2002 CanLII 49477 (ON SC), the Court of Appeal confirmed that the scope of the court’s discretion to refuse an applicant’s request for a remedy pursuant to the Act was limited to circumstances of, “malice, oppression and vexatious intent” (para. 1) but went on to express the following caveat (at para. 2):
In our view, "oppression" properly includes hardship, and a judge can refuse partition and sale because hardship to the co-tenant resisting the application would be of such a nature as to amount to oppression.
[23] The issue of hardship amounting to oppression was considered by the court in Garfella Apartments Inc., both at the trial and appeal levels. In that case, the parties were tenants in common of an apartment building which had been divided into 147 percentage interests. The applicant acquired 124 of those interests and brought an application for the sale of the building after it unsuccessfully attempted to acquire the remaining interests. The lower court’s decision to deny the application was upheld by the Divisional Court, which found the following at para. 61:
…it is relevant to consider the relative hardship between the parties, as was done by the application judge. Although for Garfella this is a purely commercial transaction, it is not that for many of the respondents. This is their home, and losing it will cause considerable hardship. Garfella was fully aware of the interests of these respondents when it purchased its interest in the building…That does not mean that determining the degree of relative hardship between the parties is sufficient to satisfy the Greenbanktree test for oppression; there must be actual hardship to the respondent amounting to oppression to warrant refusing a remedy. However, relative hardship is nevertheless a relevant factor in considering unfairness as a component of oppression.
[24] The weight to be given to relative hardship in the court’s exercise of discretion was also considered in Re Yale and MacMaster, 1974 CanLII 636 (ON SC). In that case, the court considered an application by a trustee in bankruptcy seeking partition and sale of a residence jointly owned and occupied by the bankrupt’s former wife and children. In exercising his discretion to deny the trustee’s application, Galligan J. noted:
Having come to the conclusion that a consideration of relative hardship is a relevant consideration in determining how a Court ought to exercise the discretion conferred upon it by the Partition Act, I feel obliged to consider it in this case…I think the weight that such a factor may have in each case will depend upon the circumstances of how, when and why the property was purchased, the relationship of the parties or their predecessors in title at the time the property was purchased and the circumstances which have resulted directly from the relationship of the parties which existed at that time…
[25] The mere act of bringing an application for partition and sale does not amount to bad faith, nor does it constitute oppressive or vexatious conduct. Likewise, mere disappointment does not rise to the level of hardship; the party seeking to oppose the sale must provide the court with objective evidence that hardship would arise if the sale were permitted to proceed. (Brienza, paras. 31-33; 1312733 Ontario Inc. v. Simone, 2019 ONSC 4420, para. 46; Re MacDonald and MacDonald, 1976 CanLII 845 (ON SC, Div. Ct.))
Analysis
[26] I will say at the outset that this has not been an easy application to adjudicate. Both parties present before the court with compelling arguments in favour of their respective positions.
[27] This case is unlike those which were referred to me by counsel. It does not involve warring spouses (or siblings) who are asking the court to extricate them from a disintegrated relationship. It does not involve competing corporations who are asking the court to resolve a commercial dispute. It does not involve a battle between a corporation’s commercial interests and the interests of individual property owners. This case involves the interests of individuals, tenuously related to one another, who find themselves in the unusual position of owning land together.
[28] If there were ever a case in which a co-tenancy agreement was necessary, it is this case. It is unfortunate that no-one had the foresight, as the transactions leading to the current arrangement unfolded, to guide the parties in that direction (or if they did that the parties disregarded that advice). An agreement would have saved the parties the expense, aggravation, and heartache that will inevitably follow a court-ordered resolution of this dispute.
[29] Unfortunately, I have no authority to compel the parties to enter into a co-tenancy agreement, to sell their interests in the Property to one another, or to grant one another a right of first refusal in the event that they receive third party offer to purchase. The only options before me are to order the sale of the Property, or not.
[30] I would begin by making the observation that the stage for the current conflict was most likely set in 2003 when the respondent’s mother transferred her interest in the Property to the respondent’s brother. With every successive transfer, the ownership of the Property has diverged further from the family enclave that was envisioned by the respondent and her parents when they purchased it in 1978.
[31] I have no doubt that the respondent purchased the Property with her parents in good faith and with the best of intentions. I also have no doubt that it has been both threatening and distressing for her to feel her interest in the Property being encroached upon as it has drifted further from the ownership arrangements that she originally had with her parents.
[32] During her cross-examination, the respondent acknowledged that there was discord between herself and her brother when he owned the Property. Clearly, on the evidence before me, there is discord between the applicants and the respondent. It is difficult to imagine that discord will not eventually develop between the respondent and any unrelated co-owner who purchases the applicants’ interest. While this is not determinative of the application, it certainly does give one pause for thought.
[33] As partition is not an option for the Property, the applicants have a prima facie right to request its sale. The onus of demonstrating that a sale should not be ordered due to, “malice, oppression, and vexatious intent” falls upon the respondent, who opposes the application.
[34] Dealing first with the issues of malice and vexatious intent, the evidence discloses that the applicants have made multiple efforts to disentangle themselves from the Property short of bringing this application. Unfortunately, none of those efforts were successful.
[35] It would be easy to blame the respondent for the applicants’ lack of success. As I have noted, I have no doubt that her bluntness has deterred some potential purchasers from the Property. In my view, however, the absence of a pre-existing co-tenancy agreement was also a likely culprit. The unusual ownership arrangement would have reduced the pool of potential purchasers as it would have limited the availability of financing. The applicants’ decision to act on their own, without the assistance of an experienced real estate agent, and at a time when they were at odds with the respondent, was also an invitation to mischief.
[36] Although there are things that, with the benefit of hindsight, could have been done differently, it is nonetheless clear that the applicants made efforts to consider the interests of the respondent as they attempted to deal with their own interest in the Property. On the evidence before me, there is no basis upon which to find that the applicants have acted with malice or vexatious intent.
[37] In the absence of malice or vexatious intent, the sole issue to be determined in this application is whether the applicants’ request for the sale of the Property rises to the level of oppressive conduct that justifies the denial of their prima facie right to request that sale. In addressing this issue, the respondent has placed particular emphasis on the hardship that she will experience if she is required to sell her interest in the Property.
[38] The respondent is a 74-year-old retired nurse. She lives alone and is self-supporting. As noted above, she has owned an interest the Property since 1978. It has been her principal residence since 2003. She contributed to establishing road access to the Property, and she has undertaken extensive renovations to the residence that she occupies.
[39] The respondent has a significant sentimental attachment to the Property. She initially purchased it with her parents. Her mother, who is 102 years of age, continues to visit. The respondent’s daughter is deceased, and her ashes are spread there. She plans to live at the Property for as long as she is physically able, and she intends to leave her interest in the Property to her surviving children.
[40] It is the respondent’s evidence that she will not be able to replace what she has in the event that the Property is sold. During the cross-examination on her affidavit, however, she candidly acknowledged that she has not investigated the availability of alternate accommodations. There is no evidence before the court about the respondent’s financial circumstances, assets, or income that would allow me to assess whether she would experience financial hardship in the event of a sale. I did note from the evidence that the Property was unencumbered which, when coupled with the lack of evidence regarding financial hardship, led to me to infer that the respondent’s hardship was more likely to be emotional. In other words, a sale would leave the respondent heartbroken, but not homeless.
[41] The respondent argues that the court ought to consider the reasonable expectations of the parties as a component of the oppression analysis. She submits that the applicants were well aware that they were entering into a co-tenancy with a party who had no intention of either vacating or selling her interest in the Property. She further submits that the applicants were commercially sophisticated business owners who were aware that the interest that they were purchasing was unique and that it may be challenging to identify purchasers for it if they ever wished to sell.
[42] What the respondent fails to acknowledge in her submissions, however, is the very compelling evidence that the applicants went to great lengths to accommodate the reasonable expectations of the parties prior to seeking relief from the court. They offered to sell their interest to the respondent for less than market value; she was unable to secure financing due to the ownership structure of the Property. They offered to purchase the respondent’s interest and to grant her a life tenancy; she declined their offer. They consulted a builder regarding renovations to their cottage to suit their needs; the respondent advised the builder that they could not build the addition that they wanted. They received a written offer to purchase the Property; the respondent declined to enter into a co-tenancy agreement with the prospective purchaser. They brought other prospective purchasers to the Property; the respondent’s actions interactions with those prospective purchasers were less than positive.
[43] A common theme in the case law exploring the issues of oppression and hardship is the importance of a result that reflects fairness and equity. This does not mean that all parties will leave the proceeding happy with its result. What it means is the parties receive a decision that considers and weighs, among other things, the relative hardship to them of different outcomes.
[44] While there can be no doubt that the sale of the Property will result in disappointment and a sense of loss to the respondent, there is no evidence before me that it will result in objective hardship to her. The Property is unencumbered, and the respondent will share in proceeds of sale which will allow her to re-situate herself, albeit not where she wants or hopes to be. As noted by Perell, J. in Brienza at para. 32:
Seeking partition and sale does not become oppressive and vexatious simply because it disappoints the other co-owner and makes him or her lament the loss of the property.
[45] The applicants, on the other hand, have been attempting to divest themselves of their interest in the Property since 2018. They have attempted to accommodate the needs of the respondent. While it is true that the applicants were aware that they were purchasing a property with a unique ownership structure and in the absence of a co-tenancy agreement, these are not the underlying reasons that the applicants have been unable to divest themselves. The applicants have found willing purchasers; it is the lack of co-operation or compromise by the respondent that has acted as a barrier to any sale.
[46] Having found no evidence of oppression or hardship, there is no basis upon which to require the applicants to remain in an interminable holding pattern with the respondent. In the absence of a remedy under the Partition Act, the applicants will be forced to own a property that is no longer suitable for them with an individual with whom they are in conflict. As difficult and unpleasant as the sale will be for the respondent, in my view the greater inequity would be to permit her to hold the applicants’ interest hostage with her obstinance. This impasse must come to an end, and the sale of the Property is the only means to make that happen.
[47] I did note from the evidence that there is disagreement between the parties about how the costs of their repairs and improvements to the Property should be allocated in the event that the Property is sold. I am cognizant of the fact that the respondent may require all or some of her net proceeds of sale to establish a new residence, and that this issue will impact the division of those net proceeds. I will therefore be directing that prior to listing the Property for sale, the parties must address that allocation.
Orders
[48] For the reasons given above, I hereby make the following orders:
This court orders and directs the sale of the property which is registered as PIN 73334-0042LT bearing legal description PCL 16686 SEC SWS; PT BROKEN LT 10 CON 3 HESS BEING SUMMER RESORT LOCATION J.D.D. 461 AS IN WP8054; DISTRICT OF SUDBURY (the “Property”);
This court orders and directs a reference with respect to the conduct of the sale of the Property, on the following terms:
a. The reference is made in accordance with Rule 54 (and specifically Rules 54.02(2)(b) and 54.03) of the Rules of Civil Procedure;
b. The reference is made to an individual who shall be referred to as the “Designated Party” and who shall be either: a Registrar of the Ontario Superior Court of Justice; another officer of the Court as may be directed or requested by the Registrar; or such other person as may be agreed between the parties;
c. The Designated Party, in their discretion, will determine issues relating to the listing agent, the listing price, an accounting of the net proceeds, the disbursement of net proceeds and any other issue to be determined concerning the sale of the property;
d. The parties shall provide sufficient information, including any appraisals of the Property, to facilitate the Designated Party’s determination of the issues concerning the sale; and,
e. The applicants shall have carriage of the reference.
This court orders that paragraphs (1) and (2) of this order shall not be implemented until the parties have received a ruling from the court regarding the allocation of the costs of the parties’ repairs and improvements to the Property. The parties shall, within 30 days of this decision, submit a consent timetable for the exchange of materials and obtain a date for argument before me from the Trial Co-Ordinator or, failing consent, shall obtain a date from the Trial Co-Ordinator for case conference before me to set a timetable.
The parties may make written submissions regarding the costs of this proceeding within (30) days of the date of this decision. Costs submissions shall not exceed (4) pages, double-spaced, not including any Bill of Costs.
K.E. Cullin, J.
Released: June 24, 2022
COURT FILE NO.: CV-20-00009510
DATE: 2022-06-24
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Michel Charbonneau and Carole Charbonneau Applicants
– and –
Adéle Gracie Respondent
DECISION ON APPLICATION
K.E. Cullin, J.
Released: June 24, 2022