Court File and Parties
COURT FILE NO.: 28893/22 DATE: 2023-09-18 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
HEIDI ROSINA WEISE Applicant – and – ANDREA ROSE WEISE Respondent
Counsel: Murdoch Carter, for the Applicant Brian DeLorenzi, for the Respondent
HEARD: September 15, 2023
Rasaiah J.
Reasons on Application
Overview
[1] The applicant, Heidi Rosina Weise, makes application for:
(a) An order under s. 2 of the Partition Act, R.S.O. 1990, c. P.4 (“Partition Act”), directing that the following land be sold:
LT 213 PL 7666 Korah: PT LT 212 PL 766 AS IN T38269; SAULT STE. MARIE
Property Identification Number 31581-0057 (LT), municipally known as 393 Franklin Street, Sault Ste. Marie, Ontario, P6C 4B1 (hereinafter the “Property”).
(b) An order directing a reference to inquire into and determine all issues relating to the conduct of the sale and the taking of accounts;
(c) An order under paragraph 55.06(1) of the Rules of Civil Procedure that the sale be “effected” by “private contract” by a listing given to a realtor licenced to sell real estate in Ontario, at a price recommended by the realtor;
(d) An order requiring that the Agreement of Purchase and Sale provide for the purchase price to be paid by certified cheque or money, with a minimum deposit of one thousand ($1,000) to be paid on signing, and that a closing date be no more than 60 days after the Agreement of Purchase and Sale is signed;
(e) An order authorizing the broker’s commission rate to be no more than five percent (5%), to be payable only if a sale is completed, to be payable out of sale proceeds;
(f) Costs of this application and of any reference, on a substantial indemnity scale;
(g) For an order that the respondent, Andrea Rose Weise, repay the applicant for any and all mortgage monies and interest that has been incurred by the applicant as a result of the respondent’s failure to pay same;
(h) For an order that the applicant’s solicitor have carriage of the real estate sale;
(i) An order that the applicant’s costs of this application including the notional costs for the sale of the property, be paid out of the proceeds of the sale;
(j) An order that the applicant be allowed to execute all documents necessary for the sale of the property, including all Agreement of Purchase and Sale, transfer, and the like, without the necessity of the respondent’s signature or the signature of her spouse, Tyson Weise;
(k) An order that the net sale funds, after all encumbrances and notional costs are paid, be held in trust pending further order from the court or written agreement of the parties;
(l) An order abridging time for service under subrule 3.02(1) of the Rules of Civil Procedure;
(m) Such further and other relief as this Honourable Court may deem necessary.
[2] The applicant states that:
(a) She and the respondent are joint tenants of the Property.
(b) The applicant’s brother, Tyson Weise, is married to the respondent.
(c) The respondent and Tyson Weise intended on purchasing a property together in or around May 16, 2011. However, at the time of the purchase, the respondent and Tyson Weise were not able to qualify for a mortgage on their own. Therefore, the respondent and Tyson Weise sought out the applicant’s assistance.
(d) The applicant entered into an Agreement of Purchase and Sale with the respondent to purchase the said property. The title to the land was registered in the applicant’s and respondent’s names as joint tenants.
(e) By separate agreement, (“trust agreement”) the applicant was made a Bare Trustee, and the respondent was the beneficial owner of the land. The respondent was to be responsible for all expenses incurred with respect to land including all realty taxes, insurance, heat, utilities, mortgage payments, and maintenance repairs.
(f) The applicant and the respondent are also joint mortgagors through CIBC Mortgages Inc., trading as Firstline Mortgages.
(g) The respondent and Tyson Weise resided on the property together for the duration of their marriage. On or about January 2021, the respondent and Tyson Weise separated, and Tyson Weise moved off of the property.
(h) The applicant has never resided on the property.
(i) She became aware that CIBC Mortgages Inc. was withdrawing mortgage payments from her account, alleging the respondent was failing to make the mortgage payments on time. The applicant acknowledges that the respondent has made some repayments towards these missed mortgage payments. The respondent still has outstanding payments to make to the applicant on account of mortgage monies removed from the applicant’s account.
(j) The applicant has requested on numerous occasions to have her name removed from the title and the mortgage, or to list the property for sale. The respondent has not responded to the applicant’s requests for same or has refused same.
(k) The applicant no longer wishes to remain on title of the property or be subject to the costs or liabilities associated with the mortgage. The applicant is seeking the sale of the property to ensure that there are no further costs incurred due to the respondent’s missed mortgage payments.
(l) The applicant relies upon the provisions of the Partition Act, R.S.O. 1990, c. P.4, and Rules 3.02, 54.02, and 66.01 of the Rules of Civil Procedure.
Discussion/Analysis
[3] Rule 66.01 (1) of the Rules of Civil Procedure R.R.O. 1990 Reg. 194 (“Rules”) provides that a person who is entitled [emphasis mine] to compel partition of land may commence an application under the Partition Act.
[4] 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 [emphasis mine] 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: Partition Act, s. 2.
[5] Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein [emphasis mine], 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 [emphasis mine]: Partition Act, s. 3 (1).
[6] I reject the argument of the applicant that she has all the rights, powers and obligations of a joint owner and/or that she has an interest in the Property by being named a joint owner and/or having agreed to be a joint mortgagee.
[7] It was her choice to answer the respondent and her brother’s call to assist.
[8] She agreed to be a bare trustee. The parties in their evidence agreed that a bare trust was established.
[9] The parties entered into a trust agreement dated Mary 13, 2011 that provides that the applicant is a bare trustee.
[10] The parties agree or both believe the trust agreement was fully executed but they cannot locate the executed copy. An unexecuted copy was filed.
[11] In any event, I note that a bare trust may be formed without the requirement of a written document: Practical Law Canada Commercial Real Estate, “Bare Trusts and Nominee Relationships” (Thomson Reuters Canada).
[12] The important conclusion is that the parties agree it was a bare trust and that the document filed represents the terms of the trust.
[13] Additionally, I noted that in White v Gicas, 2014 ONCA 490 (“White”), at para. 1, the Court of Appeal for Ontario confirmed the requirements to settle a trust: a) intention to create a trust; b) identification of the specific subject matter of the trust; c) an identified beneficiary of the trust; and d) a transfer of the trust property to the trustee. Based on admissions and the unexecuted trust agreement filed, the four requirements to settle a trust, as described by the Court of Appeal in White are present in this case.
[14] In Paragon Development Corporation v. Sonka Properties Inc., 2011 ONCA 30, 103 O.R. (3d) 481, at para. 6, the Court of Appeal for Ontario stated: “A bare trustee holds legal title to property on behalf of another and has no independent power, discretion or responsibility in connection with the property.”
[15] In Trident Holdings Ltd. v. Danand Investments Ltd. (1988), 64 O.R. (2d) 65, at p. 75, the Ontario Court of Appeal described a bare trust and the role of its trustee as follows, quoting from Maurice C. Cullity, “Liability of Beneficiaries — A Rejoinder” (1985-86), 7 E. & T.Q. 35 at p. 36:
... The distinguishing characteristic of the bare trust is that the trustee has no independent powers, discretions, or responsibilities. His only responsibility is to carry out the instructions of his principals — the beneficiaries. If he does not have to accept instructions, if he has any significant independent powers or responsibilities, he is not a bare trustee. [emphasis mine]
A bare trust or nominee relationship can at times be held to be an agency relationship in which the trustee is acting as an agent of the beneficial owner. This can be the case where you have a bare trustee with no discretion or decision-making power to deal with the real property except by the explicit direction of the beneficial owner [emphasis mine] and it is ultimately the beneficial owner who is liable for the debts and obligations of the bare trustee: Trident Holdings Ltd v. Danand Investments Ltd..
Undisputed Facts Based on the Evidence
[16] Based on the affidavits filed by the parties, there is no question factually in this case that:
a. The respondent married the applicant’s brother, Tyson Weise, on September 19, 2009.
b. At the time of purchase of the Property, the respondent and Tyson Weise were not able to qualify for a mortgage on their own and the applicant’s assistance was sought out.
c. The applicant agreed to be the bare trustee of the Property and that the respondent would be the beneficial owner of the Property.
d. The parties entered into a trust agreement setting out same.
e. The applicant and respondent were listed as joint tenants of the Property.
f. The parties are also joint mortgagers through CIBC Mortgages Inc., trading as Firstline Mortgages.
g. The respondent was to be responsible for all expenses incurred with respect to the land by the trust agreement.
h. The respondent and Tyson Weise separated January 2, 2021, and Tyson Weise vacated the property.
i. After payments were taken from the applicant’s personal account related to the mortgage on the Property, the applicant requested that the respondent remove her name from title and the mortgage, and also requested that the Property be listed for sale otherwise.
j. Before commencing this application, per the trust agreement terms, the applicant requested that the respondent consent to the sale of the Property, which consent was not provided.
Additional Relevant Facts
[17] The respondent commenced renting the Property in 2006. She was familiar with the Property as it backed onto her childhood home. She rented from Mr. and Mr. DeSumma.
[18] The respondent met Tyson Weise in or about May of 2007. He moved into the Property with the respondent in or about October 2007.
[19] In 2011, Mr. and Mrs. DeSumma decided that they wished to sell the Property.
[20] The respondent and Tyson Weise sought out mortgage funding to purchase the Property but were not jointly approved as a result of credit standing at the time. At the recommendation of the lender, Tyson Weise asked his sister, the applicant, if she would consider assisting.
[21] The respondent understood that the applicant’s role would be merely a guarantor for the mortgage.
[22] Tyson Weise and the respondent jointly used Mr. Angelo Aiello as their solicitor for the purchase. At page 3 of the purchase reporting package, Mr. Aiello advises “Since Heidi Weise is a mere guarantor and not a trust owner other than for the purposes of the lender, we prepared a simple trust agreement between the parties to reflect this.” This wording helps the court appreciate that the respondent’s assertion that it was never intended for the applicant to have any beneficial ownership of the Property and that her involvement was related to securing financing for the purchase of same is supported. Further, the applicant was named a joint tenant at the request of the lender. As such, I accept that there was a reason why she was named joint tenant, and further, that it was done to protect the applicant but that same was not intended to give her any rights for conveyance.
[23] The respondent sates that the declaration of a bare trustee in 2011 was the last involvement the applicant had until her separation. She and Tyson Weise opened a joint TD Canada Trust account that the mortgage payments came directly out of during their marriage. The applicant made no financial contribution, either directly or indirectly, to the subject Property. She had no other dealings or involvement with the Property during the respondent’s marriage of any kind.
[24] After the separation, after Tyson Weise vacated the Property, the respondent remained responsible for the household maintenance and cost. The mortgage payments continued to be made from the bank account directly.
[25] In June of 2021, the respondent paid Tyson Weise the sum of $25,000 directly to finalize the division of assets and equalization as a result of their separation. They did not seek the assistance of legal representation and there was no formal separation agreement signed.
[26] The respondent states that thereafter she spoke to the mortgage company about the required steps necessary to remove the applicant’s name from the mortgage and title. They advised her, which she understands to be a standard procedure, that the mortgage company requires a separation agreement to be drafted before such refinancing can be considered. As a result, the respondent retained a lawyer, Ms. Jasmine Gassi Harnden to draft same.
[27] In her affidavit sworn August 9, 2022:
a. The respondent states that she and Tyson Weise are at the beginning of the negotiation process with respect to determining equalization and division of assets.
b. The respondent acknowledges that there has been three times in which her account did not have enough funds to satisfy the bi-weekly mortgage payment. This occurred she explained as a result of (a) the mortgage being moved to an open mortgage (she was not aware of the new payment amount) and (b) she was in the process of setting up new bank accounts after separation. When the mortgage payment did not clear from her account, it was taken from the applicant’s account. The applicant contacted the respondent, and the respondent sent the applicant payments via e-transfer to pay her back.
c. The respondent attached screenshots of the e-transfer payments.
d. The respondent denies that there remains an outstanding balance owed to the applicant related to the Property.
[28] The respondent’s position stated in her August 9, 2022-affidavit is that she has taken all of the necessary steps to remove the applicant’s name from the home. She requires a signed separation agreement. She is unable to simply consent to the sale of the Property. Further, as she and Tyson Weise are married, she requires his spousal consent in order to sell the home.
[29] The respondent in her August 9, 2022-affidavit states that:
(a) While she appreciates that the applicant wishes for her name to be removed from title and mortgage of the Property, there is currently no prejudice to her by having it remain as is while negotiations with respect to the separation are finalized.
(b) She has taken all the necessary steps within her control to ensure that the transfer can occur as soon as possible.
(c) She has attempted to explain this to the applicant.
[30] The respondent also states that it is her opinion that the applicant’s actions in attempting to force the sale of the Property have been both malicious and vexatious. The respondent believes that the applicant is upset about the separation and is using the joint tenancy legal title to cause her harm both emotionally and physically. I do not accept this. The evidence reflects that the applicant is legitimately concerned about the payment of the mortgage in my view and having herself removed from title and the encumbrance.
[31] The respondent states that she has a connection to the Property and wishes to retain it. She already paid Tyson Weise a “buy-out” for all joint property and has sought financing to ensure the home can be transferred into her name. She has not moved with delay or been unreasonable.
[32] At this date, the respondent has not advised the applicant of the status of the separation agreement and/or any actions/applications she has or will commence to address the issue. No interim separation agreement as far as the applicant knows has been drawn up either. The applicant submits that she has been attempting to be reasonable and provide time for the respondent to take care of this matter outside of court. She commenced the within application in March of 2022 and waited until now to proceed.
[33] The last update from the respondent was her affidavit filed in August of 2022 essentially stating that she is working on it and doing what she can.
[34] The applicant emphasizes that it has been one year. Applicant’s counsel has acknowledged that sometimes it takes longer than one year to finalize by way of agreement or otherwise, issues arising from the breakdown of a marriage.
[35] The respondent never explicitly provided the applicant with any agency responsibilities with respect to the Property to date. The respondent has not provided consent to convey the property.
[36] The respondent continues to be in default of the mortgage and the amount of $3,329.37 apparently is outstanding. The applicant however has not been called upon at this time to pay this amount, and no monies as of this date are owed to her on account of the Property. The applicant is updated regularly by the Mortgagee. The applicant simply wants her obligation to be over and be removed from title and the encumbrance.
Trust Agreement
[37] The evidence supports that the parties sought the applicant’s assistance for the sole purpose of securing financing. They executed a trust agreement on the basis that the land was to be registered in both the applicant and respondent’s names as joint tenants, and to establish that the applicant was simply a bare trustee. One of the preambles of the trust agreement reads “AND WHEREAS the title to the land is to be registered in the names of Andrea and Heidi as joint tenants.”.
[38] I do not agree with the applicant’s submission that the general trust law principles regarding bare trustees articulated in Paragon and Trident do not apply. The trust agreement explicitly provides that the applicant will be a bare trustee [emphasis mine].
[39] The trust agreement gives no independent powers, discretion, or responsibilities to the applicant.
[40] The respondent is to be responsible for all expenses with respect to the Property.
[41] One of the trust agreement terms provides that the applicant “shall not, without the written consent of the respondent convey or encumber her interest in the Property in any manner whatsoever.”. This is another specific limitation articulated that communicates the bare trustee arrangement and putting complete control of the property with the respondent.
[42] The agreement provides that the respondent is the beneficial owner of the land at all times. The applicant would have no entitlement to possession, immediate or otherwise and/or any of the proceeds of disposition with respect to the Property.
[43] The trust agreement is clear that the applicant is holding title in capacity as a bare trustee.
[44] The applicant engaged in no active management duties concerning the Property. The applicant was not involved with the Property other than, on a few occasions, after the respondent’s separation, after July of 2021. After July of 2021, three mortgage payments were taken from the applicant’s personal account by the lender. She did not physically take steps to pay the debts. Further, this involvement was not as a result of explicit instructions from the respondent.
[45] The trust agreement provides that the only duties of the applicant are, at the request of the respondent, to execute any deeds, mortgages or other documents pertaining to the said land.
[46] The trust agreement provides clearly and explicitly, that the applicant’s relief from claims, demands, actions and/suits arising from or with respect to the Property is indemnification from and to be saved harmless by the respondent only. There is no term that permits her to seek partition and/or sale of the Property.
[47] When one reads all of the clauses as a whole and considers the evidence of the parties, it is clear to me that the applicant has in fact been a bare trustee, and has no independent power, discretion, or responsibility in connection with the Property, to deal with the Property except by the explicit direction/consent of the beneficial owner and no such explicit directions/consents have ever been given. As to relief related to her role and the issues raised, by the agreement, it is ultimately the beneficial owner who is liable for the debts and obligations of the bare trustee. If and when the issue of indemnification arises after this date, by the trust agreement, the applicant can bring a claim against the respondent for indemnification.
[48] Accordingly, I conclude that at this date, the applicant is not entitled to compel partition and/or sale of the Property or to any of the other relief claimed except indemnification, which may be sought in a court of competent jurisdiction, including an order that the respondent, repay the applicant for any and all outstanding debts which may include interest, debts that have been incurred by the applicant as a result of the respondent not paying all debts/liabilities related to the Property when that arises.
Vexatious and Malicious Conduct
[49] I am satisfied for reasons articulated and facts found on the evidence that the respondent is taking steps to resolve the issues arising from the breakdown of her marriage, and there is nothing establishing otherwise in the evidence.
[50] I am not concerned that a year has gone by since the respondent last informed that she is negotiating a separation agreement. Applicant’s counsel concedes that in some cases, that the formation of a separation agreement to resolve issues arising from a breakdown of the marriage may take time, and no evidence has been provided to indicate that the time taken to date is unreasonable in the respondent’s circumstances. As such, any assumption would be speculative regarding judging the time it is taking. The applicant and Tyson Weise separated in January of 2021. The evidence suggests that the applicant attempted to resolve with Tyson Weise without the assistance of counsel after their separation for a period before retaining counsel. I see nothing wrong with that. Her negotiations with Tyson Weise started on or around August of 2022.
[51] I am further not satisfied that the record establishes that a temporary separation agreement would be satisfactory to the lender and/or that there has been opportunity to prepare one. Again, on the evidence, this argument is speculative and a bald suggestion. No cross-examinations on the affidavits were conducted that I was made aware of.
[52] I am further not persuaded that after one year, after taking steps to retain counsel to resolve out of court, without knowing more, that the respondent ought to be expected to commence a court application with respect to the breakdown of her marriage just because of the within application.
[53] Finally, I noted that the applicant has acknowledged repayments to her when payments were taken from her account and that there is no money owed to her to date. At this date, while mortgage payments on the Property are outstanding, the applicant has yet to be called upon to pay same. While I can appreciate that she is tired of waiting and maybe these phone calls from the bank, I cannot ignore the foregoing.
[54] If I am wrong and the applicant is entitled to seek partition and sale, I find it would be unfair and oppressive relief in the circumstances. I would decline to make the order. The applicant is not entitled to any of the proceeds of the sale of the home. The respondent wants to keep the home as set out above. The respondent has lived in the home since 2007. She bought it in 2011. It is now 2023, 12 years later. She has invested in this home, at the very least, by way of payments towards the property and to Tyson Weise, the sum of $25,000. She is legitimately going through a breakdown of her marriage. She is working on a separation agreement. She has a lawyer working on that for her. Once she has a separation agreement, the lender has advised that she will be able to remove the respondent from title and the encumbrance. It takes time to resolve disputes arising from the breakdown of a marriage. The respondent is currently owed no money, nor has the lender indicated that they are going to take the mortgage payments from her. In fact, instead of doing so, like they did at first instance, the lender has been allowing defaulted payments to accumulate and have simply been keeping the applicant abreast of same based on the evidence before me. In my view, these are all good reasons to decline making an order for partition and sale. I do not consider a sale to be more advantageous to the parties who are interested.
[55] On a side note, I do agree with the comment that given the specific facts of this case, this application presents as the applicant putting the cart before the horse, to potentially satisfy a judgement that does not exist. No claims for indemnification exist at this date. No other incurred/anticipated harm exists at this date on the evidence on the record before me.
Conclusion/Order
[56] For reasons articulated, other than the issue of costs, the application is dismissed in its entirety, as all the relief claimed flows from an order being made for partition and sale, which this court is declining to order.
[57] If any party is seeking costs of this motion and the parties cannot agree on the disposition of costs, they may make brief written submissions to me of no more than 3 pages, plus a costs outline, through the trial coordinator as follows: the respondent shall deliver their costs submissions by October 16, 2023; and the applicant shall deliver their costs submissions by October 30, 2023.
Rasaiah J.