Court File and Parties

COURT FILE NO.: 1631/20

DATE: 2022/03/31

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: John Prtenjaca and Donna Prtenjaca, Plaintiffs

AND:

Shelly Wells-Prtenjaca and Devon Charles Prtenjaca, Defendants

BEFORE: Justice A. K. Mitchell

COUNSEL: W. Fawcett, for the Plaintiffs

A. Serter, for the Defendants

HEARD: January 10, 2022 via video conference.

ENDORSEMENT

Overview

[1] The plaintiffs, John Prtenjaca (“John”) and Donna Prtenjaca (“Donna”), are the parents and parents-in-law of the defendants, Devon Charles Prtenjaca (“Devon”) and Shelly Wells-Prtenjaca (“Shelly”), respectively.

[2] All parties reside at the property known municipally as 160 Willow Ridge Road, Ilderton, Ontario (the “Property”). At the time the Property was purchased, the plaintiffs provided the down payment of $100,000. However, title to the Property was only taken in the defendants’ names.

[3] Since the purchase of the Property, the plaintiffs and the defendants have shared the cost of utilities, property insurance and property taxes. The defendants have been exclusively responsible for all mortgage payments. Additionally, the plaintiffs and the defendants have each contributed amounts to the improvement of the Property, including the installation of a pool.

[4] In this action, the plaintiffs claim a one-half interest in the Property, by way of resulting and/or constructive trust. In defence of this claim, the defendants allege that all amounts paid by the plaintiffs toward the acquisition, maintenance, and improvement of the Property were gifts and counterclaim against the plaintiffs for damages.

Motion

[5] On this motion, the plaintiffs seek summary judgment on their claim against the defendants. Specifically, the plaintiffs seek:

(a) a declaration that they hold a 50% interest in the Property;

(b) an order that the Property be listed for sale;

(c) an order that the proceeds from the sale of the Property, after payment of all encumbrances registered against title to the Property and all customary costs and disbursements associated with the sale the Property, be distributed as follows:

(i) $100,000 to the plaintiffs representing repayment of the down payment made by the plaintiffs to the purchase of the Property;

(ii) such amount to the plaintiffs sufficient to reimburse them in full for all amounts paid for improvements to the Property;

(iii) such amount to the plaintiffs equal to one half of the net increase in the value of the Property calculated as ½ x sale price minus ($489,900 purchase price + plaintiffs’ contributions to improvements + defendants’ contributions to improvements); and

(iv) the balance remaining, if any, to the defendants.

(d) an order for an accounting to determine the amounts contributed by each of the plaintiffs and the defendants toward improvements to the Property with credit given to the plaintiffs in the amount of $30,000 with a corresponding deduction in equal amount from the amounts contributed by the defendants toward the installation of the pool; and

(e) an order striking the defendants’ counterclaim pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure (the “Rules”).

[6] The defendants oppose the motion claiming there are genuine issues requiring a trial with respect to issues of credibility. They further submit that granting partial summary judgment runs the risk of inconsistent findings of fact being made at trial. In the alternative, should summary judgment be granted, the defendants seek a declaration that the plaintiffs have no legal or beneficial interest in the Property and that their entitlement is limited to their initial contribution of $130,000 together with reimbursement for amounts paid to renovate the basement.

[7] The defendants oppose any order listing and selling the Property.

Factual Context

[8] The plaintiffs are the parents of Devon who is married to Shelly. The parties currently reside at the Property, with the plaintiffs residing in the basement and the defendants, with their three children, residing on the main floor and second level of the Property.

[9] In addition to Devon, the plaintiffs have two other children.

[10] In 2014, the parties decided to sell their respective homes and purchase property together in which they could all reside. On the original agreement of purchase and sale with respect to the Property dated September 24, 2014, Devon, Shelly and Donna were identified as the buyers of the Property. John did not want his name on title due to outstanding debt obligations relating to a failed business venture.

[11] The purchase price for the Property was $489,900. The plaintiffs agreed to provide $130,000 toward a down payment on the purchase price for the Property with the balance of the purchase price satisfied by mortgage financing. Ultimately, it was determined that only $100,000 was needed as a down payment to satisfy the mortgage conditions.

[12] On September 29, 2014, Greg Munroe, the mortgage broker assisting the parties, notified Devon by email advising that Donna would need to be removed from the agreement of purchase and sale in order to comply with the terms and conditions of mortgage financing imposed by the mortgage lender.

[13] In this same email, Mr. Monroe assured the parties that Donna could be added to title to the Property after the purchase transaction was closed. Devon provided a copy of this email communication to John and Shelly.

[14] On this same date, Devon, Shelly and Donna executed an amendment to the agreement of purchase and sale removing Donna as a buyer of the Property and leaving only Devon and Shelly as the buyers.

[15] To comply with the condition of financing imposed by the mortgagee, on October 23, 2014 Donna executed a gift letter in favour of the mortgage lender stipulating:

1. these funds are gifted and will not have to (sic) repaid at any time

2. no part of the gifted funds are being provided by a third party with a direct or indirect interest in the purchase/sale of the subject Property

3. the donor of the gift is an immediate relative. Immediate relative is defined as parent, grandparent, sibling, child or legal guardian.

[16] The gift letter was a preprinted form entitled “Down Payment Gift Letter” on the letterhead of the mortgage broker, Dominion Lending Centres. Both John and Donna executed the letter on the understanding it was necessary for Shelly and Devon to secure mortgage financing for the balance of the purchase price.

[17] John deposed in his affidavit that he and Donna never intended that the money they were advancing would be a gift. He understood that the parties would reevaluate their living arrangements every six months and if they agreed to sell the Property the parties would receive their initial monies and renovation costs back and then any appreciation would be split.

[18] The purchase of the Property was completed on November 17, 2014. On that day, the plaintiffs’ lawyers forwarded $100,000 from the proceeds of the sale of the plaintiffs’ home to the defendants’ lawyers to complete the transaction. The balance of the purchase price was financed by the defendants with a mortgage registered against title to the Property in the face amount of $389,900.

[19] On November 22, 2014, the balance of the proceeds from the sale of their home totaling $109,000 was received by the plaintiffs. Aside from their interest in the Property, these funds represented the plaintiffs’ remaining assets.

[20] To fulfil their promise to contribute $130,000 to the acquisition of the Property, the parties discussed how the remaining $30,000 was to be used by the defendants. By email sent to John dated September 29, 2014, Shelly proposed that the $30,000 be provided to the defendants to allow them to repay outstanding debt. The intention being that in the spring of 2015 they would use $30,000 from their line of credit toward the installation of a pool. Shelly concludes the email writing:

… at the end of all this you & Donna have contributed $130,000 towards the mortgage + cost gone into house/new appraisal with renovations.

[21] On December 2, 2014 the plaintiffs transferred $30,000 to the defendants.

[22] After purchasing the Property, John carried out renovations to the Property to make the basement a separate living space. The plaintiffs estimate they spent approximately $35,600 to renovate the basement.

[23] Similarly, the defendants claim they have spent $30,700 towards improving the Property. The parties do not dispute that they have each contributed towards the cost of installing the pool and other improvement costs. The only issue is the quantum of their respective contributions.

[24] After the Property was purchased:

(a) the defendants made all mortgage payments;

(b) from November 2014 until 2016 the plaintiffs paid 50% of the utilities and one third of the property taxes and house insurance; and

(c) starting in 2016, the plaintiffs paid $800 per month towards utilities, property taxes and house insurance.

[25] On November 27, 2019, the defendants (unbeknownst to the plaintiffs) remortgaged the Property with a new mortgage lender, Canadian Western Trust Company. In an email dated November 12, 2019 sent by the defendants’ lawyers (Chinneck Law), to Shelly is written:

Please note that there will be a number of items you will be required to provide to us in order to complete this matter timely for you as follows:

1. the account number for your existing mortgage: $323,193

2. copies of the most recent statements for the addition debt to be paid: Royal Bank Visa 557 Credit Card of approximately $13,000.00 and Bell Mobility 356 of approximately $236.00 and President’s Choice MC 628 Credit Card of approximately $1,001.00 and SYFC Lowes LCC 684 $1,469.00 and Capital One Costco 509 Credit Card of approximately $1,584.00 and Payout Royal Bank 509 Debt of $54,000.00 and John & Donna Prtenjaca Debt of $160,000 and CRA Debt of $34,101.97 and Capital One Debt 042 of $5,996.00 showing the account numbers on them as well;…(emphasis added)

[26] In addition to the outstanding mortgage balance of approximately $323,200, the balance of the defendants’ outstanding debts, excluding amounts due to the plaintiffs (based on the above summary) totaled approximately $111,388.

[27] Upon refinancing, the existing mortgage was repaid and a new mortgage in the face amount of $470,000 was registered against title to the Property. No portion of the mortgage funds received by the defendants on the mortgage refinancing were paid to the plaintiffs.

[28] The relationship between the parties broke down and in or about May 2018, the defendants asked the plaintiffs to move out of the Property and offered to repay $160,000 for amounts contributed by them for the acquisition of and improvements made to the Property.[^1]

[29] The plaintiffs did not accept the defendants’ offer and commenced this action on October 14, 2020.

[30] The plaintiffs continue to reside in the basement of the Property.

Analysis

Law on Summary Judgment

[31] Rule 20.04(2)(a) of the Rules requires the court to grant summary judgment where there is no genuine issue with respect to a claim or defence requiring a trial.

[32] With respect to the Court’s powers on a motion for summary judgment, rule 20.04(2.1) provides as follows:

(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence.

[33] These enhanced powers came into effect in 2010. The Supreme Court of Canada’s decision in Hyrniak v. Mauldin[^2] is the leading case on how these enhanced powers are to be utilized.

[34] Karakatsanis J. writing for the court made the following comments regarding the role of rule 20 as part of a necessary culture shift. She writes[^3]:

There is growing support for alternative adjudication of disputes and a developing consensus that the traditional balance struck by extensive pre-trial processes and the conventional trial no longer reflects the modern reality and needs to be re-adjusted. A proper balance requires simplified and proportionate procedures for adjudication, and impacts the role of counsel and judges. This balance must recognize that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.

This requires a shift in culture. The principal goal remains the same: a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found. However, that process is illusory unless it is also accessible – proportionate, timely and affordable. The proportionality principle means that the best forum for resolving a dispute is not always that with the most painstaking procedure.

[35] The enhanced powers permit the motions judge to use the summary motion rules as a legitimate alternative means for adjudicating and resolving legal disputes. No longer are the summary judgment rules a highly restrictive tool to weed out only those claims and defences which are clearly unmeritorious.[^4]

[36] It is presumed that the judge will use these powers unless it is in the interest of justice for them to be exercised only at a trial. Whether or not a trial is required in the interests of justice will be driven by the underlying objective of the rule which is to promote access to justice by ensuring the process is proportional to the dispute.

[37] Hyrniak does not alter the well-developed principle that the parties are presumed to have placed before the court all of the evidence relevant to the material issues that would be available at trial.[^5] The Court may presume that no further and better evidence is available and the record is complete. Summary judgment motions are decided by evidence of the facts and by inferences drawn from those facts but not by speculation about those facts.[^6]

[38] Hyrniak developed the following approach as summarized by Corbett J. in Sweda Farms Ltd. v. Egg Farmers of Ontario[^7]:

(1) The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;

(2) On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;

(3) If the court cannot grant judgment on the motion, the court should:

(a) decide those issues that can be decided in accordance with the principles described in (2), above;

(b) identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;

(c) in the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.

[39] I will now apply that approach to the case at hand.

[40] Examinations for discovery of the defendants have been conducted. Cross-examination on the affidavit filed by Shelly was conducted. Devon did not file an affidavit in response to this motion. It does not appear that the defendants conducted examinations for discovery of the plaintiffs nor cross-examined the plaintiffs on their affidavits filed in support of this motion. The decision not to challenge the evidence of the plaintiffs through examination/cross-examination was made at their own peril and the defendants cannot now argue that, in the absence of such evidence, a trial is necessary.

[41] Plaintiffs’ counsel takes the position that credibility is not a significant issue requiring a trial in this case because the plaintiffs’ claims may be proven without relying on the testimony of the plaintiffs. From my review of the evidence (or lack thereof as the case may be), and bearing in mind the presumption of resulting trust (discussed in detail below) and the burden resting on the defendants to rebut this presumption, I find the issues in this proceeding to be ideally suited for summary disposition and do not require a trial.

[42] The plaintiffs characterized the relief sought on this motion as “partial” summary judgment. However, if the motion is successful, all substantive issues will be disposed of leaving only the issue of quantum of the parties’ contributions toward the improvement of the Property to be decided on a reference. Rule 20.04(3) of the Rules clearly provides authority to grant summary judgment in these circumstances.

[43] Last, the trial in this matter is scheduled for late 2022. Given the escalation of the conflict between the parties, and the fact the parties share the same home, it is necessary to resolve this matter in the expeditious, timely and cost effective manner afforded by rule 20.

Resulting Trust or Gift

[44] It is undisputed that the parties agreed the plaintiffs would provide $130,000 to the defendants to acquire the Property. In furtherance of that agreement, the plaintiffs paid $100,000 by way of down payment for the purchase of the Property and a further $30,000 to the defendants to allow them to reduce their outstanding debt and free-up room on a line of credit. This line of credit was then used to finance the installation of a pool the following spring.

[45] The central issue for determination on this motion is whether payment of $100,000 by the plaintiffs to the defendants at the time the Property was purchased was intended to be a gift or was advanced for the purpose of acquiring an interest in the Property.

[46] Unlike the presumption of gift arising in the case of a gratuitous transfer to a minor child, when a parent makes a gratuitous transfer to an adult child, there is a presumption of resulting trust. A party alleging that such a transfer is a gift bears the burden of proving that the transfer was a gift. It is the intention of the transferor at the time of transfer that is determinative of whether or not a transfer is a gift. The intention of the transferee is irrelevant.[^8]

[47] The Supreme Court of Canada in Nishi v. Rascal Trucking Ltd.[^9] succinctly summarized the law as:

A purchase money resulting trust arises when a person advances funds to contribute to the purchase price of a property, but does not take legal title to that property. Where the person advancing funds is unrelated to the person taking title, the law presumes that the parties intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person’s contribution. This is called the presumption of resulting trust.

The presumption can be rebutted by evidence that at the time of the contribution, the person making the contribution intended to make a gift to the person taking title. While rebutting the presumption requires evidence of the intention of the person who advanced the funds at the time of the advance, after-the-fact evidence can be admitted so long as the trier of fact is careful to consider the possibility of self-serving changes in intention over time.

[48] Here, the defendants, as transferees, bear the burden of rebutting the presumption of resulting trust and proving, on a balance of probabilities, that the transfer of $100,000 by the plaintiffs to them was intended as a gift. It is the intention of the plaintiffs, not the defendants, that is relevant to the determination of intention.

[49] In their statement of defence, the defendants make no mention of a “family arrangement” nor any obligation to repay amounts received from the plaintiffs, rather they allege a gift of the initial $100,000 and deny any further contribution of any kind by the plaintiffs towards rent or capital improvements to the Property. However, the position taken by the defendants on this motion is materially different. I note the defendants have not filed a motion, nor indicated any intention, to amend their pleading.

[50] Despite pleading only “gift”, the defendants have placed a number of different versions of events before the court in these proceedings. Some examples are:

(a) consistent with the pleadings, Shelly testified on examination for discovery that $130,000 paid by the plaintiffs was a gift that the defendants could use as they wanted;

(b) on examination for discovery, both defendants testified that the plaintiffs paid the defendants $130,000 in exchange for living rent-free in the Property;

(c) Shelly testified at discovery that $130,000 plus renovation costs did not need to be repaid to the plaintiffs;

(d) Shelly deposed in her affidavit filed in response to this motion that if the plaintiffs moved out of the Property $130,000 plus renovation costs were to be repaid;

(e) on cross-examination on her affidavit, Shelly testified that if the plaintiffs moved out of the Property $130,000 plus renovation costs were to be repaid plus the value that the basement renovations had contributed to the Property was to be paid to the plaintiffs;

(f) Devon testified on examination for discovery that if the plaintiffs moved out of the Property the amount the plaintiffs had put into the Property plus 1/3 of the profit was to be paid to them; and

(g) during redirect examination at examination for discovery, Devon corrected his earlier evidence and stated that if the plaintiffs moved out of the Property the amount the plaintiffs had put into the Property plus +1/3 of the profit of their basement upgrade was to be paid to them. (emphasis added)

[51] The inconsistencies, both external and internal, in the defendants’ evidence seriously undermine their credibility. To the extent their evidence is contradicted by or not supported by independent or documentary evidence, I do not accept such evidence.

[52] I will now turn to the main issue – i.e., whether the defendants have proven, on balance of probabilities, that the plaintiffs intended that the $130,000 advanced by them was intended as a gift.

[53] At first blush, the statements of Donna and John contained in the gift letter appear to satisfy the burden of proof. However, courts have often disregarded a gift letter given to facilitate mortgage financing as indicative of intent.[^10] The evidence clearly establishes that the plaintiffs executed the gift letter for the sole purpose of permitting the defendants to obtain mortgage financing to satisfy the balance of the purchase price. The gift letter was a condition of financing imposed by the mortgage lender. The gift letter was not requested by the defendants nor offered by the plaintiffs prior to its request by of the lender. In her affidavit, Shelly does not dispute the basis for the plaintiffs providing the letter.

[54] Aside from the gift letter, the defendants can point to no evidence establishing the $100,000 was a gratuitous transfer intended as a gift. Moreover, aside from a bald assertion that they did not understand the implications of Donna’s name on the original agreement of purchase and sale, the defendants have not meaningfully challenged the plaintiffs’ evidence that they intended that Donna would acquire an interest in the Property.

[55] Although not bearing the burden of proof, the plaintiffs have established they did not intend the $100,000 and other amounts paid to the defendants as gifts. The most compelling piece of evidence in this regard is the original agreement of purchase and sale listing Donna, together with Devon and Shelly, as purchasers of the Property.

[56] Additionally, both plaintiffs testified they did not intend the $100,000 advance to be a gift but rather was made to acquire an interest in the Property. Their testimony is supported by the following evidence:

(a) Donna was originally a party to the agreement of purchase and sale for the Property and was removed only to facilitate mortgage financing;

(b) the mortgage broker advised the parties that Donna could be added to title to the Property once the transaction closed which is consistent with the intention of the parties’ that Donna was to hold an interest in the Property;

(c) after closing, the plaintiffs invested approximately $35,000 renovating the basement of the Property which in an opinion of value commissioned by the defendants it was confirmed these renovations materially enhanced the value of the Property;

(d) the plaintiffs contributed an additional $30,000 toward the installation of a pool to fulfil their promise of advancing $130,000 to acquire the Property; and

(e) the parties agreed at the time the Property was acquired that the plaintiffs would contribute toward the utilities, house insurance and property taxes.

[57] It is important to consider the issue in the context of all of the circumstances of the transfer. The evidence makes clear that but for the plaintiffs’ contributions towards the purchase price, the defendants did not have the financial means to acquire the property themselves. Of note, is that on closing the plaintiffs contributed $100,000 and the defendants contributed $8,874.91 of their own money. On a percentage basis, of the cash paid on closing, the plaintiffs paid 92% and the defendants paid 8%. Further, Devon estimated that he and Shelly received approximately $15,000 on the sale of their home after payment of outstanding debts as compared to the $209,000 received by the plaintiffs on the sale of their home. Last, the defendants’ mortgage lender was not prepared to finance the defendants’ purchase of the Property in circumstances where the defendants were unable to make payment of the down payment from their own funds.

[58] Although not pleaded, for the sake of completeness of my analysis, I will address the suggestion that the advance of $130,000 was part of a family arrangement. The plaintiffs’ contribution to the costs of the pool installation and renovating the Property and contribution towards utilities, property taxes and property insurance, contradicts Shelly’s evidence that in exchange for a lump sum of $130,000 the plaintiffs would live rent-free in the Property’s basement suite. There is no independent evidence in the form of communications exchanged between the parties at the time of the transfer to suggest a family arrangement.

[59] Considering the whole of the evidence, a finding of resulting trust is amply supported. It would be illogical to conclude that the plaintiffs at age 68 years of age, would gift $165,000 of their $209,000 net worth to only one of their three adult children. Based on the context in which the plaintiffs signed the gift letter and the original agreement of purchase and sale identifying Donnas as one of the buyers, I find that not only have the defendants failed to rebut the presumption of a resulting trust, but the plaintiffs have established they did not intend to gift any of the amounts transferred to the defendants and, specifically, the $100,000 at the time the Property was acquired.

[60] Having found that the plaintiffs hold a beneficial interest in the Property by way of a resulting trust, it is unnecessary for me to consider the plaintiffs’ entitlement to a beneficial interest in the Property by applying principles of unjust enrichment and constructive trust.

[61] Now I must determine the percentage interest held by the plaintiffs in the Property. The plaintiffs submit that on a strict interpretation of the case law based on their cash contribution at the time the Property was acquired, they are entitled to a 92% interest in the Property. However, based on principles of equity, the plaintiffs have agreed to limit their claim to a 50% interest in the Property. The evidence on the percentage split is scant. Donna recalls the parties agreeing that any equity or appreciation in value of the Property would be split 50-50. John recalls only that the parties would “split” any equity in the Property once sold. He cannot recall that any particular percentage was discussed.

[62] The defendants submit that should the court be inclined to award the plaintiffs a beneficial interest in the Property, such interest should be limited to 33% not 50%. The defendants point to the parties’ agreement that the plaintiffs were responsible for only one-third of the Property taxes and house insurance relating to the Property, not one-half.

[63] Both John and Donna recall a discussion with the defendants where the parties agreed that upon a sale of the Property and any appreciation in value would be “split”. Kathy McBain a long time family friend of John and Donna deposed an affidavit in support of the plaintiffs’ position on the motion. She testified:

11. When I pressed [Devon] further, I specifically recall that Devon said his parents would get back anything that they put towards the house in money or renovations and a share of any increase in value of the home. I am very certain of this. I do not recall if there was any discussion that evening of what specific percentages would be used to split the increase in value of the home.

[64] Both John and Ms. McBain do not recall a specific percentage being discussed by the parties. Donna recalls the parties discussing an equal split of any appreciation in value. For the reasons already expressed, I do not accept the evidence of Devon and Shelly denying the parties’ agreement to split the appreciation. I find that a reasonable interpretation of the word “split” is that the appreciation in value would be divided equally between the parties. If a different percentage split was intended, surely the parties would have expressly stated such percentage at the time they were discussing a “split” of the appreciation. Therefore, I infer from this evidence that the parties intended the plaintiffs would hold a 50% interest in the Property.

[65] The current living situation is untenable. Since their relationship broke down, the parties have struggled to maintain civility in the home. The police have attended at the Property to deal with ongoing conflict between the parties. Most of the plaintiffs’ life savings are invested in the Property. It is, therefore, necessary to order a sale of the Property to allow the plaintiffs to purchase a home and move out of the Property. Furthermore and as mentioned above, the defendants do not appear to be financially capable of repaying amounts paid by the plaintiffs to acquire, renovate and otherwise improve the Property as well as acquire the plaintiffs’ interest in the Property, without selling the Property.

[66] Accordingly, the Property shall be sold and the proceeds of sale distributed between the parties in accordance with their agreement. However, apportionment of the proceeds is complicated by the mortgage refinancing undertaken by the defendants in November 2019.

[67] I find that the plaintiffs are entitled to receive from the distribution of sale proceeds one- half of the additional mortgage proceeds received by the defendants after the balance of the original mortgage was repaid. On the date of refinancing, the mortgage balance was $323,193. The face value of the new mortgage registered against title to the Property on November 27, 2019 was $470,000. Therefore, the defendants received approximately $146,800, representing equity in the Property. By virtue of their equal interest, the plaintiffs are entitled to 50% of this amount.

Striking the Counterclaim

[68] The plaintiffs seek to strike the counterclaim on the basis it discloses no reasonable cause of action.

[69] On a motion to strike a pleading under rule 21.01(1)(b), no evidence is admissible. The allegations and the claim are taken as being proven, unless they are patently ridiculous or incapable of proof.[^11]

[70] The defendants’ counterclaim against the plaintiffs for damages in the amount of $200,000. The damages have been particularized as relating to “pain, stress and loss of enjoyment of their home”. The defendants allege they have sustained “mental anguish, anxiety, emotional trauma, headaches, sleep disturbance and stress.” The defendants further allege they have sustained “loss of enjoyment of life, inability to participate in social and/or recreational activities in the Property, and loss of amenities”.

[71] A specific cause of action is not pleaded. Rather, the defendants plead:

21. As a result of the Plaintiffs’ Claim and the Plaintiffs’ actions and/or conduct as against the Defendants related to issues raised in the Plaintiffs’ Claim, the defendants suffered damages.

[72] It appears that the defendants’ counterclaim is framed either as the tort of intentional infliction of mental suffering or the tort of trespass to land. To sustain a claim of intentional infliction of mental suffering, a party must establish conduct that is: (i) flagrant and outrageous; (ii) calculated to produce harm; and (iii) which results in visible and provable illness.[^12]

[73] In their defence, the defendants allege that: (i) the defendants are the owners of the Property (ii) the plaintiffs have resided in the basement of the Property without paying rent since 2014; (iii) the plaintiffs gifted the defendants $100,000 for the purchase of the Property; (iv) the plaintiffs signed a gift letter with respect to the payment; and (v) the defendants carried out renovations and paid the mortgage payments, maintenance costs and utilities of the Property.

[74] These facts are not “flagrant and outrageous”. The facts, as pleaded, do not establish that the plaintiffs intended to cause the defendants’ harm and cannot sustain a claim for intentional infliction of mental suffering.

[75] With respect to the tort of trespass to land, tacit consent given by a landowner to another for being on the land may amount to leave and license that will negate liability for trespass. Consent may be implied by the landowner’s acquiescence or may be inferred from the circumstances.[^13]

[76] The defendants’ counterclaim was not advanced until May, 2021, long after the plaintiffs’ claim was advanced seeking a beneficial interest in the Property (October 2020). The timing of the counterclaim is evidence that the plaintiffs resided at the Property with the tacit consent of the defendants.

[77] I find the counterclaim discloses no reasonable cause of action and should be struck.

Disposition

[78] Summary judgment is hereby granted. Order to issue as follows:

1. it is hereby declared that the plaintiffs hold a 50% undivided interest in the Property which is formally described as Lot 20, Plan 33M–431, Middlesex Centre Twp;

2. the Property shall be sold pursuant to s. 2 of the Partition Act, subject to the following terms:

(a) the Property shall be listed for sale on the multiple listing service through a real estate agent of the plaintiffs’ choosing, at a commercially reasonable listing price as determined by the listing agent;

(b) the Property shall be listed for sale for a period of five days, or for such other period of time and on such other terms as in the listing agent’s professional discretion are deemed reasonable, during which time only sealed unconditional offers to purchase the Property shall be accepted by the listing agent;

(c) on expiration of the listing period, any unconditional offers received shall be opened in the presence of the plaintiffs and the defendants, or their designate, and the highest offer shall be accepted;

(d) in the event there are no unconditional offers received during the listing period, the Property shall be relisted for sale on the multiple listing service, and the plaintiffs shall be at liberty to accept any offer they determine, acting reasonably, represents fair market value; and

(e) the defendants shall execute any and all documents necessary to complete the sale of the Property in accordance with the terms of this Order including the listing agreement, failing which the necessity of their signatures is hereby dispensed with.

3. Upon completion of the sale transaction, the net sale proceeds after payment of all real estate commissions, property taxes, lawyers fees incurred in connection with the sale of the Property and all encumbrances registered against title to the Property (the “Net Proceeds”), shall be held in trust by the lawyers for the plaintiffs pending distribution to the parties in accordance with this Order.

4. Unless contributions are otherwise agreed by the parties, a reference is hereby directed to determine the respective contributions of the parties to the capital improvement of the Property (“Capital Improvement Credits”). For purposes of the reference, the capital improvement of the Property shall not include the costs associated with the installation of the pool.

5. It is hereby declared that credit for the costs associated with the pool installation shall be allocated $37,225[^14] to the plaintiffs with the balance of the total costs of the pool installation ($58,186.62[^15]) totaling $20,961.62 to the defendants (“Pool Installation Credits”).

6. The Net Proceeds shall be distributed as follows:

(a) $100,000 to the plaintiffs and the amount that is $66,707[^16] + (the amount that is $470,000[^17] less the balance of the mortgage on the date the Property is sold) to the defendants, representing their respective contributions to the purchase price of the Property;

(b) $73,400 to the plaintiffs, representing one half of the mortgage proceeds received by the defendants on November 29, 2019 from the mortgage refinancing[^18];

(c) the amounts set forth in paragraph 5 of this Order to the parties on account of the Pool Installation Credits;

(d) amounts determined on the reference, or by agreement, to the parties on account of the Capital Improvement Credits; and

(e) the balance, if any, to be divided equally between the parties.

7. Should the Net Proceeds be insufficient to satisfy the amounts in subparagraphs 6(c) and/or (d) of this Order in full, the parties shall be paid their proportionate share of such amounts from the balance of Net Proceeds remaining.

8. the defendants’ counterclaim is hereby struck with leave granted to the defendants to pursue their damage claims against the plaintiffs by issuance of a statement of claim in a fresh proceeding.

Costs

[79] The plaintiffs were successful on this motion and are presumptively entitled to their reasonable costs of the action including the motion on a partial indemnity basis.

[80] At the conclusion of argument of the motion I reserved my decision and directed the parties to file costs outlines as required by rule 57.01(6) of the Rules. The plaintiffs served and filed a costs outline with respect to both the action and the motion and appended supporting dockets. The defendants filed formal cost submissions appending a bill of costs and offers to settle.

[81] In granting summary judgment (subject only to a reference being conducted to determine the parties’ respective contributions toward improvements to the Property), all issues in this action have been determined and these proceedings are effectively disposed of. In the circumstances, further submissions on costs, whether in replacement of or supplemental to the costs submissions previously submitted, are appropriate and shall be served and filed in accordance with the following timetable:

(a) the plaintiffs shall serve and file their costs submissions not exceeding three pages in length excluding any bill of costs, case law and dockets within 15 days;

(b) the defendants shall serve and file their responding submissions not exceeding three pages in length, excluding any bill of costs, case law and dockets within 15 days thereafter; and

(c) the plaintiffs shall serve and file any reply submissions not exceeding two pages in length within five days thereafter.

[82] The costs of the reference are expressly reserved to the judge or other judicial officer conducting the reference.

“Justice A.K. Mitchell”

Justice A. K. Mitchell

Date: March 31, 2022

[^1]: The defendants do not explain how they intended to finance the repayment to the plaintiffs had their offer been accepted. [^2]: 2014 SCC 7 (“Hyrniak”). [^3]: Ibid, at paras. 27 and 28. [^4]: Ibid, at para. 36. [^5]: See Nguyen v. SSQ Life Insurance Co., 2014 CarswellOnt 15513 (S.C.J.) at para 32. [^6]: Chernet v. RBC Insurance Co., 2017 ONCA 337 at para. 12. [^7]: 2014 ONSC 1200 at para. 33. [^8]: Pecore v. Pecore, 2007 SCC 17 at paras. 36, 40 and 59. [^9]: 2013 SCC 33 at paras. 1-2. [^10]: See Bostrom v. Bigford, 2019 BCSC 79; Crepeau v. Crepeau et al., 2012 ONSC 418; Sheppard v. Carvalho, 2015 ONSC 3266; and Dhaliwall v. Ollek, 2012 BCCA 86. [^11]: Rule 21.01(2)(b) of the Rules; and McCreight v. Canada (Attorney General), 2013 ONCA 483 at para. 29. [^12]: Merrifield v. Canada (Attorney General), 2019 ONCA 205 at para. 44. [^13]: Montréal Trust Co. v. Herc Oil Corp., 2004 SKCA 116 at paras. 23–25. [^14]: $30,000 advanced to the plaintiffs to repay debt in December 2014 together with $7,225 paid at the time of the pool installation. [^15]: See paragraph 44 and Exhibit “N” to the Affidavit of Shelly Wells-Prtenjaca sworn September 27, 2021. [^16]: The amount calculated as the face value of the mortgage on November 17, 2014 ($389,900) less the balance of the mortgage on November 27, 2019 ($323,193). [^17]: The face value of the mortgage on refinancing on November 27, 2019. [^18]: See comments in paragraph 67.