COURT FILE NO.: CV-88/96
DATE: 2022/11/01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Dino Lepre
Plaintiff
– and –
Marie Jean Hynds and Laurie Ann Hynds
Defendants
P. Capone, Counsel for the Plaintiff
No One appearing for the Defendant, Marie Jean Hynds, (deceased)
S. Nash for the Defendant, Laurie Ann Hynds
HEARD: August 22, 2022, Via ZOOM
REASONS FOR DECISION
Justice L. SHEARD
Overview
[1] These reasons are further to my endorsement of August 22, 2022. As noted in that endorsement, the hearing before me related to litigation respecting property consisting of two lots: Lot 28, approximately 100 acres in size, and Lot 29, approximately 74 acres, and legally described as PCL 14262 SEC NIP; LT 29, 28 CON 10 CHISHOLM; CHISOLM; DISTRICT OF NIPISSING (the “Property”).
[2] The Property was purchased on December 22, 1994, by the plaintiff, Mr. Lepre, and the two defendants, Marie Jean Hynds and her daughter, Laurie Ann Hynds (“Ms. Hynds”), as joint tenants with right of survivorship.
[3] Marie Jean Hynds died on March 26, 2018, and her interest in the Property passed by right of survivorship to Mr. Lepre and Ms. Hynds, who became equal co-owners.
[4] By Consent Order dated November 24, 2020 (the “Consent Order”), Mr. Lepre and Ms. Hynds (also referred to in these reasons as “the parties”) agreed that steps were to be taken to sever the Property so that Lot 28 could be transferred to Mr. Lepre and Lot 29 could be transferred to Ms. Hynds. To accomplish the agreed-upon transfers, Mr. Lepre arranged for a survey of the Property and obtained permission to sever the Property into the two lots. In my August 22, 2022 Endorsement, the parties were ordered to sign whatever documents were required to complete the transfers of Lots 28 and 29, and Mr. Lepre’s counsel was to complete the registration of the severed lots.
[5] On August 22, 2022, counsel made submissions concerning whether and in what amounts payments should be made between the parties for property taxes, Property-related expenses, and to compensate Ms. Hynds who received the smaller of the two lots.
Issues to be Decided
[6] The issues to be decided are set out below:
Issue 1: What amount, if anything, should Ms. Hynds reimburse Mr. Lepre for the property taxes he has paid on the Property since 1995?
NOTE: Mr. Lepre also asks for payment of interest on the taxes he has paid but submissions on that issue are to be made by the parties when they make their costs submissions.
Issue 2: What amount, if anything, should Ms. Hynds reimburse Mr. Lepre for the expenses he has incurred to complete the application for a severance of the two lots?
Issue 3: What amount should Mr. Lepre pay to Ms. Hynds for the 13 additional acres of land conveyed to Mr. Lepre following the severance of the Property?
Background
[7] This litigation began in the mid-1990’s following unsuccessful efforts to sell the Property. In 1999, the litigation was resolved by Minutes of Settlement (“the Settlement”), which required the Property to be sold. The Settlement was embodied in the Order of Lofchik, J. dated August 3, 1999 (“the Lofchik Order”). The Property was listed for sale in 1999 but was not sold. No meaningful action was taken by the Defendants to enforce the Settlement. Mr. Lepre later determined that he did not wish to sell the Property and in the early 2000’s, he made offers to buy out the Defendants’ interest in the Property.
[8] No agreement could be reached on the purchase price to be paid by Mr. Lepre. Negotiations stalled. Mr. Lepre’s initial offer to buy-out the interest of the co-owners was not accepted, and he later took the position that any future buy-out of the Property would require the Defendants to pay their share of the taxes on the Property. These taxes had been paid entirely by Mr. Lepre.
[9] Between 2007 and 2018, the Defendants did not pursue the issue further.
[10] In April 2018, shortly after her mother’s death, Ms. Hynds retained new counsel, through whom she offered to sell her interest in the Property to Mr. Lepre. In this round of negotiations, Mr. Lepre disclosed that he had built a home on the Property, in which he was then living.
[11] Again, the parties could not agree a purchase price. To address the disagreement, Mr. Lepre suggested retaining an appraiser to provide an opinion as to order the found and the value on the lots on an unimproved basis, i.e., without consideration to any increase in value attributable to the house and garage built by Mr. Lepre. That approach was not acceptable to Ms. Hynds who, instead, sought to enforce the Settlement.
Initial Hearing, February 20, 2019
[12] This matter first came before me on February 20, 2019, when Ms. Hynds moved, in part, for an order that Mr. Lepre be found in contempt of the Lofchik Order and Ms. Hynds be given control of the sale of the Property (“the Contempt Motion”). Mr. Lepre brought his own motion returnable on that date, seeking an order that the Property be partitioned or, alternatively, that the Property be sold, and the net proceeds divided, after accounting to Mr. Lepre for the monies he had spent on the Property.
[13] As per my Endorsement of March 14, 2019 (2019 ONSC 1373), the Contempt Motion was not granted and, instead, the alternate relief agreed to by the parties was granted, allowing Mr. Lepre’s motion to proceed as if it had been brought by way of an application for the partition and sale of the Property under the Partition Act, R.S.O. 1990, c. P.4.
Telephone Conferences, May and June, 2019
[14] By Endorsement dated May 3, 2019, made following a judicial telephone conference, the (now) partition application was adjourned to allow Ms. Hynds to retain an expert to value or appraise the land value of the Property - without considering any improvements - and to provide valuations assuming a) each of the two lots comprising the Property was sold separately; and/or b) the Property was sold as one parcel. Ms. Hynds was to provide her expert report by June 2019 and Mr. Lepre was to deliver his responding valuation report, if any, by August 9, 2019.
[15] A further telephone conference took place before me on August 6, 2019, followed by my Endorsement of September 24, 2019. In that Endorsement, I noted that Ms. Hynds had not obtained an appraisal of the two lots because a land survey was required and she was unwilling to incur the cost of a survey, estimated to be $5,000. I ordered that Ms. Hynds’ appraiser be permitted to make assumptions as to the location of the lot lines of Lots 28 and 29, without requiring a survey.
Consent Order, November 20, 2020
[16] The Consent Order directed Mr. Lepre to take steps to sever Lots 28 and 29, following which, title to Lot 28 - the larger of the two lots - was to be transferred to Mr. Lepre, and title to Lot 29 was to be transferred to Ms. Hynds. The Consent Order provided that Mr. Lepre was to compensate Ms. Hynds for the uneven division of the Property, in an amount as agreed, or, failing agreement, in an amount to be determined by the Court. In addition, Mr. Lepre was to fund the expenses associated with the severance, without prejudice to his making a claim for reimbursement of those costs. Any and all issues between the parties that could not otherwise be resolved, were to be determined by me.
Hearing, August 22, 2022
[17] This matter was next before me on August 22, 2022. By that date, the parties had obtained appraisals of the Property as well as records of taxes paid on the Property. There is no dispute that any taxes were paid by Mr. Lepre alone.
[18] As noted below, the tax records lack any explanation for the increase in the assessed value of the Property. Ms. Hynds asserts that the only reasonable explanation for the jump in the Property’s assessed value is that it reflects the value of the buildings constructed by Mr. Lepre. While Mr. Lepre acknowledges that such an assumption may appear reasonable, he argues that there is no definitive evidence to establish that the Township’s increase in the assessed value of the Property is exclusively explained by the house and garage he built on Lot 28.
[19] The parties do agree that Lot 29, to be transferred to Ms. Hynds, is 26 acres smaller than Lot 28, which is to be transferred to Mr. Lepre. Mr. Lepre agrees that he must compensate Ms. Hynds for her 50% interest in the 26 acres. The accounting between the parties respecting property taxes and severance costs will also include a payment to Ms. Hynds for “her” 13 acres transferred to Mr. Lepre. The parties do not agree on a per acre value of those 13 acres.
[20] Set out below are the issues to be determined in these Reasons.
Issue #1: Taxes paid by the applicant on the Property
[21] While there is no dispute that Mr. Lepre paid all the property taxes on the Property, the records are not perfect. Based on the evidence before me, I find that:
Between 1995 and 2005, the assessed value of the Property was between $34,500 and $41,000. Mr. Lepre paid taxes for those years totalling: $6,572.06.
In 2006, the assessed value of the Property increased from $34,500 to $130,000, an increase of $95,500.
There is no evidence from the Municipality explaining why it increased the assessed value of the Property between 2005 and 2006.
Between 2006 and 2020, the annual taxes on the Property ranged from a low of $1,895.40 to a high of $3,066.80. The evidence before me does not explain why the taxes fluctuated rather than following a steady pattern of increase year over year.
[22] Mr. Lepre states that he has paid a total of $42,574.47 in property taxes from 1995 to 2020. He seeks reimbursement of 50% of that amount from Ms. Hynds.
[23] Ms. Hynds asserts that she is not liable to pay 50% of the taxes because until her mother’s death in 2018, the tax burden should have been shared equally among the three owners. Ms. Hynds asserts that Mr. Lepre could have asserted a claim against the estate of the late Marie Jean Hynds seeking payment of one-third of the taxes paid to Marie Jean Hynds’ death. As Mr. Lepre did not bring that claim within two years of death, his claim against the estate is now statute-barred.
[24] Ms. Hynds also asserts that the reason for the significant increase in the assessed value and the associated property taxes is that Mr. Lepre built himself a home on Lot 28. As a result, Mr. Lepre should be solely responsible to pay the increased property taxes that are reasonably attributable to the increased assessment resulting from the improvement - the house - built by Mr. Lepre.
[25] Mr. Lepre responds that there is no definitive evidence to show that the assessed value and corresponding increase in property taxes were attributable to the home he constructed on the lands. Mr. Lepre did concede that it would be reasonable to infer that the house and garage caused some increase in the assessed value of the Property.
Analysis: Issue #1
[26] The evidence is undisputed that Mr. Lepre built a house on Lot 28. In his affidavit of November 9, 2018, Mr. Lepre states that it is a 4,000 sq. ft. house. He states that he obtained a construction permit for the home in 2008, which, he says, was still unfinished in November 2018. Mr. Lepre states that he also built three roads on the Property. The evidence is undisputed that Mr. Lepre was the only owner to use the Property or to take steps to maintain it as a “Bush Lot”, as required by the Ministry of Natural Resources and Forestry, which required Mr. Lepre to clear dead wood and to hire arborists to plant new trees and to remove damaged or unhealthy trees. Mr. Lepre does not seek reimbursement of those expenses.
[27] Ms. Hynds hired a local Bailiff to take photographs of the Property. The photographs are attached to Ms. Hynds’ affidavit of September 19, 2018. Some show two stone pillars at the entrance of a road on the Property, that appears to lead to a house and a garage.
[28] Ms. Hynds also produced correspondence she obtained from the Township of Chisholm that includes, among other things, a letter to Mr. Lepre dated August 31, 2011, referencing a building permit obtained by Mr. Lepre in 2004. The 2004 building permit relates to the construction of an 1872 sq. ft. home and pre-dates the building permit that Mr. Lepre stated he obtained in 2008 to build a 4000 sq. ft. home. In the letter, the Township asserts that the home built by Mr. Lepre was much larger than permitted, and that he also built a garage, for which no permit had been issued (Second Supp. M. R., p. 15).
[29] I draw no adverse inference against Mr. Lepre from any complaints levelled by the Township and reference this evidence only as it supports the position taken by Ms. Hynds that it is reasonable to conclude that the significant jump in the assessed value of the Property between 2005 and 2006 is attributable to the buildings (improvements) erected on the Property by Mr. Lepre.
[30] It bears repeating that the value of any improvements to the Property are not included in determining the fair value of the 13 acres for which Mr. Lepre is to pay Ms. Hynds. In other words, while Mr. Lepre paid for the improvements - which, I understand, were mainly, if not entirely, effected to Lot 28 - he alone did, and will continue to, benefit from the improvements.
[31] Based on the record before me, some of which is referenced above, I find that the jump in the assessed value of the Property is, in fact, attributable to the improvements made by Mr. Lepre: the roads, house, and garage. As such, I find that he alone should be required to pay the property taxes that are reasonably attributable to the improvements.
[32] I do not accept the arguments advanced by Ms. Hynds that she would be responsible, at best, for only one third of the property taxes. Property taxes are a debt that run with the land. I am of the view that the interest in the Property that passed to Ms. Hynds and Mr. Lepre as surviving joint owners, came with an embedded or implicit obligation to pay property taxes. Had those taxes not been paid, the Property could have been sold by the municipality for unpaid taxes. In paying the property taxes, Mr. Lepre preserved the Property not just for his benefit but also for the benefit of its co-owners. To allow Ms. Hynds to retain the Property without having to contribute her share of the property taxes would be a windfall to her, unjustly enriching her, to the deprivation of Mr. Lepre.
Disposition: Issue #1
[33] I find that, regardless of any statutory limitation period that might otherwise apply, Mr. Lepre is entitled to an equitable set-off of his claim for property taxes as against any amount he might be found owing to Ms. Hynds. Therefore, I find that, subject to an adjustment in the property taxes attributable to the improvements made and enjoyed by Mr. Lepre on the Property, the surviving co-owners of the Property are equally responsible to pay the property taxes on it.
[34] In the absence of a detailed breakdown of how the Property was assessed by the Township, I have used the following approach to allocate each party’s shares of the taxes paid, exclusive of any pre-judgment interest on these amounts that may be claimed and awarded:
(a) Taxes paid between 1995 and 2005 totalling: $6,572.06 are to be divided equally. Ms. Hynds to reimburse Mr. Lepre $3,286.03 ($6,572.06 x 50%);
(b) As noted at paragraph 21.2, above, in 2006, the assessed valued of the Property was increased by $95,5000 - from $34,500 to $130,000. (Note: This conclusion is also supported by the appraisals obtained by Lepre attached at Exhibits “F” and “G” of his affidavit sworn November 9, 2018, that valued the Property with the house at $220,000 and without the house at $100,000). I find that the increase in the assessment of the Property as of 2006 is solely attributable to the improvements.
As a result, I find that Mr. Lepre is liable to pay 86.7% of the property taxes as of and from 2006. I have arrived at this percentage based on Mr. Lepre’s obligation to pay:
i. 50% of $34,500 (being the assessed value of the lands prior to improvements); and
ii. 100% of $95,5000 (being the amount of the assessment attributable to the improvements).
(c) From and after 2006, Ms. Hynds is liable to pay 13.3% of the property taxes.
[35] Using the formula set out at paragraph 34, above, I leave it to the parties to calculate the amount Ms. Hynds is required to pay to Mr. Lepre to reimburse him for the property taxes he paid from and after 2006 and 2020. That payment shall be in addition to the $3,286.03 payable by Ms. Hynds to Mr. Lepre for taxes he paid between 1995 and 2005.
[36] In oral submissions, counsel for Mr. Lepre undertook to submit written submissions on how his client calculates his claim for prejudgment interest on the property taxes paid. Those calculations are to be based on the amounts determined to be payable as per paragraph 35, above.
Issue #2: Expenses incurred by Mr. Lepre to complete the application for a severance of Lots 28 and 29
[37] Mr. Lepre states that he incurred total costs of $6,370.18 to obtain the Committee of Adjustments’ approval for severance of the two lots which included an application fee of $610.56, and a surveying fee of $5,759.62. He seeks reimbursement from Ms. Hynds of one-half of that amount: $3,125.00
[38] Ms. Hynds submits that she should not have to contribute toward those costs because in his affidavit of December 6, 2018, Mr. Lepre stated that he was prepared to cover the cost of the application for the partition to the Township of Chisholm and the cost of conveying Lots 28 and 29, so that Ms. Hynds was not disadvantaged in any way by the partition of the Property.
[39] Mr. Lepre asserts that the final word on the issue is found in the Consent Order, which provides that Mr. Lepre finance the severance application “without prejudice” to his being entitled to make a “claim for reimbursement” in the proceeding.
Analysis: Issue #2
[40] I accept the position taken by Mr. Lepre that the Consent Order superseded his earlier affidavit in which he appeared to offer to pay the costs of the severance without recourse and must consider whether Ms. Hynds should be required to contribute to those costs.
[41] The record before me shows that early efforts made to sell the Property were unsuccessful. That outcome had been desired by all three initial litigants: had there been a buyer for the Property, it would have been sold and the proceeds divided. The record also clearly shows that for close to a decade, little was done by Ms. Hynds or her late mother to enforce the Lofchik Order or to otherwise pursue the sale of the Property. Neither of those owners paid any taxes on the Property nor, for the most part, did they take any interest at all in the Property. Notwithstanding that apparent lack of interest, neither was prepared to sell their interest in the Property to the only known interested buyer: Mr. Lepre.
[42] Ms. Hynds acknowledges that between 2007 and 2018, she took no steps “to pursue the issue further”, explaining that she did not have the financial wherewithal to retain a lawyer. It was only after the death of her mother, the effect of which was that she and Mr. Lepre became joint owners, that Ms. Hynds took a renewed interest in this litigation.
[43] There is nothing in the record before me to suggest that, aside from Mr. Lepre, who made his home on this somewhat remote piece of property, there was ever any known potential buyer for the Property. As noted above, but for Mr. Lepre paying the property taxes, it is likely that the Property would have been sold on a tax sale. Similarly, without Mr. Lepre’s efforts to obtain a severance of the two lots, Ms. Hynds would likely find herself in the same position that has existed for over two decades: as a co-owner of a remote piece of land on which expenses had to be paid and for which there was no known buyer.
[44] Because of the steps taken by Mr. Lepre, Ms. Hynds is now in a position to deal with Lot 29 and, in effect, has been able to “sell” 13 acres of land for which she has not had to find a buyer.
[45] In consideration of all the circumstances, including the benefit to Ms. Hynds of the severance, I conclude that it would be both fair for Ms. Hynds to pay 50% of the severance costs and unfair to require Mr. Lepre to pay those costs himself.
Disposition: Issue #2
[46] For the reasons set out, I determine that Ms. Hynds is to reimburse Mr. Lepre $3,125.00, representing 50% of the severance costs incurred and claimed by him.
Issue #3: What amount should Mr. Lepre pay to Ms. Hynds for the 13 acres additional acres of land conveyed to Mr. Lepre who received the larger of the two lots as his divided share of the Property?
Analysis: Issue #3
[47] As noted above, the parties also agree that Mr. Lepre should pay Ms. Hynds an amount equal to the fair market value of 13 acres of land to compensate her for taking the smaller lot. However, they do not agree on the price per acre to be paid.
[48] Ms. Hynds submits that she should be paid $800 per acre based on the appraisal she obtained. Mr. Lepre submits that he should be required to pay $718 per acre based on the appraisal he obtained.
[49] If Ms. Hynds’ per acre value is used, then Mr. Lepre would be liable to pay her $10,440 (13 x $718). If Mr. Lepre’s per acre value is used, then he would be required to pay Ms. Hynds $9,334 (13 x $800). The difference between the two valuations is: $1,166.
[50] Mr. Lepre submitted that Ms. Hynds’ appraisal ought not to be admitted in evidence because the appraiser did not comply with rule 39.01 of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194, in that the appraiser did not submit an affidavit and the appraisal report was attached to an affidavit sworn by an assistant to counsel for Ms. Hynds. Mr. Lepre submitted that, in part, the rationale for the rule is that, unless the expert submitted an affidavit, the expert could not be cross-examined.
[51] I do not accept Mr. Lepre’s submission that the court ought not to consider the appraisal submitted by Ms. Hynds. In the face of the flexibility given to the parties in this proceeding including, allowing Mr. Lepre’s motion to be treated as if he had brought an application under the Partition Act, it hardly lies in his mouth to demand strict compliance with a technical aspect of a rule. Particularly when the basis for the rule – to ensure that the expert can be cross-examined – has no application here: Mr. Lepre never sought to cross-examine Ms. Hynds’ appraiser. I conclude that the appraisal put forth by Ms. Hynds may be considered by this court, notwithstanding any apparent lack of compliance with r. 39.01.
[52] It is trite to observe that the appraisals are opinions, or qualified guesses, as to the fair market value of these lands. It is similarly trite to observe that the true fair market value of anything can only be determined when it is sold in a free and open market. In other words, both opinions are educated guesses and either may be wrong.
[53] Given the modest difference between the two valuations, and in the absence of any principled basis to prefer one over the other, I find a reasonable approach to value is simply to split the difference between the two opinions ($1,166 ÷ 2 = $583). Using that simple calculation would result in a valuation of the 13 acres of $9,917; an amount $583 more than Mr. Lepre agreed he should pay and $583 less than Ms. Hynds sought to be paid.
Disposition: Issue #3
[54] On issue #3, I conclude that Mr. Lepre is to pay Ms. Hynds $9,917 for the additional 13 acres that he has received for having taken the larger of the two lots as a result of the severance of the Property.
Timing of Payments
[55] As noted above, I have not calculated the amount in property taxes owing by Ms. Hynds for the “post-improvement” period. Also, I have yet to receive Mr. Lepre’s calculations of pre-judgment interest and to determine what amount should be paid under that claim. Therefore, although these Reasons have determined what amounts are payable between the parties, I make no order for payment of those amounts; payment is to be deferred until all financial issues between the parties have been resolved and/or determined by the court.
Final Submissions
[56] The parties are encouraged to resolve the issue of prejudgement interest and costs. However, if they are unable to do so, then each may make written submissions via email through the Cayuga Trial Coordinator as follows:
A. Submissions on pre-judgment interest on taxes
(1) Within 21 days of the release of these Reasons, Mr. Lepre may serve and file written submissions respecting prejudgment interest (“PJI”) on the property taxes to be paid by Ms. Hynds. These submissions are not to exceed 2 pages;
(2) Within 14 days of the service on her of Mr. Lepre’s submissions on PJI on the property taxes, Ms. Hynds may serve and file responding written submissions respecting the PJI claimed on the property taxes. These responding submissions are not to exceed 2 pages;
(3) Mr. Lepre is not permitted to deliver reply submissions;
B. Submissions on costs
(4) Within 21 days of the release of these Reasons, Mr. Lepre and Ms. Hynds are each permitted to serve and file written submissions respecting costs. These submissions are not to exceed 4 pages excluding any offers to settle, Bills of Costs and dockets; and
(5) Within 14 days of the service of the parties’ costs submissions, each party may serve and file responding written submissions respecting costs.
Justice L. Sheard
Released: November 1, 2022
COURT FILE NO.: CV-88/96
DATE: 2022/11/01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Dino Lepre
-and-
Marie Jean Hynds and Laurie Ann Hynds
REASONS FOR DECISION
L. Sheard J.
Released: November 1, 2022