COURT FILE NO.: FS-23-35307
DATE: 20231211
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SUSANNAH HUTTON
Applicant
– and –
KENNETH WAKELY
Respondent
Karen Lin Ballantyne, for the Applicant
Self-represented Respondent
HEARD: July 11, 2023
VELLA J.
REASONS FOR DECISION
[1] The Applicant brings this motion for a partial summary judgment granting an order for the sale of the parties' jointly owned property and ancillary relief under r. 16, s. 10(1) of the Family Law Act (FLA) and s. 2 and ss. 3(1) of the Partition Act, R.S.O. 1990, c. P.4.
[2] The Applicant also sought an order scheduling this matter for an uncontested trial.
[3] In a partial ruling, released July 11, 2023, I, inter alia, declined to schedule this matter for an uncontested trial in light of the late (eve of motion) filed responding materials, but took the balance of the motion under reserve. I also directed a case conference to be conducted with respect to the remaining issues that are not the subject of this motion.
[4] For the following reasons, I am granting the Applicant's motion for partial summary judgment for sale of the Property under the Partition Act.
ISSUES
[5] There are three main issues to decide:
(a) Does the Respondent's claim of a resulting trust raise a genuine issue requiring a trial?
(b) Is the Respondent's claim of a resulting trust barred from proceeding by operation of the Real Property Limitations Act, R.S.O. 1990, c. L. 15?
(c) Would a sale of the Property be Oppressive?
[6] The main issue to decide is whether the ownership of the family home municipally known as 778 Shaw Street, Toronto (the “Property”) raises a genuine issue requiring a trial. The Applicant asserts that she has legal joint ownership pursuant to her status as a registered title holder as a joint tenant with the Respondent. The Respondent asserts that the Applicant's status is as a trustee under a resulting trust, and that she holds her prima facie joint tenancy interest in trust for him. As such, the Respondent owns 100% of the Property and the Applicant has no standing under the Partition Act to compel its sale.
[7] For clarification, the other issues raised in the Application, including child support, are not before me on this motion.
[8] Of note, at the time that this motion was argued, the Respondent had yet to file his Answer, and the time for filing his Answer had expired. Subsequently, I granted leave, on consent, for a late filing of the Respondent's Answer and it has since been filed.
[9] For the reasons that follow, the Applicant has a prima facie right to sale of the Property under the Partition Act, and the Respondent's claim of a resulting trust interest to defeat that right is time barred having been brought more than 10 years after the date of separation. The sale will not be oppressive to the Respondent in light of the term of the order which will permit the parties to receive $50,000 each from the net sale proceeds.
ANALYSIS
[10] Under r. 16(6) of the Family Law Rules (the "Rules"), I must grant a final order in the form of summary judgment in the event that I find there is no genuine issue requiring a trial.
[11] Section 10(1) of the Family Law Act (FLA) allows for a determination of a property's ownership or possession as between "spouses" under an action or application. However, the definition of spouse, under s. 1 of the FLA, excludes common law spousal relationships and hence has no application to the issues at bar. Therefore, I will not consider this provision any further.
[12] Under s. 3(1) of the Partition Act, a person with an interest in land may bring an application for the "partition of such land or 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". Section 2 of the Act states that a joint tenant may be compelled to "make or suffer partition or sale of the land…whether the estate is legal and equitable or equitable only".
[13] Under r. 16(6) of the Family Law Rules, the court "shall make a final order" if there is no genuine issue requiring a trial of a claim or defence. Pursuant to r. 16(6.1), the court may exercise special fact-finding powers in determining whether there is a genuine issue requiring a trial unless it is in the interest of justice that these powers only be exercised at a trial. If the only genuine issue is a question of law, the court shall decide the issue and make a final order.
[14] Rule 16 is a codification of the summary judgment principles articulated by the Supreme Court of Canada in Hyrniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87 ("Hyrniak") (see also, Phillion v. Phillion, 2015 ONSC 4255 (Ont. S.C.J.) at para. 19).
[15] In Hryniak, at para. 45, the Supreme Court of Canada confirmed that summary judgment is "a significant alternative model of adjudication." The fact-finding rule provides judges the power to weigh evidence, evaluate credibility, and draw inferences, in order to resolve claims without the need to have a trial.
[16] The focus in a summary judgment motion is not on what further evidence could be adduced at trial, but rather, on whether a trial is required based on the existing evidentiary record. A trial will not be required when the summary judgment process "(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result": Hryniak, at para. 49.
[17] The determination of a motion for summary judgment involves a two-step approach: the judge should first determine whether there is a genuine issue requiring a trial based only on the evidence before her, without using the fact-finding powers. If there is no genuine issue requiring a trial, summary judgment must be granted. Second, if there appears to be a genuine issue requiring a trial, the judge should then determine whether "the need for a trial can be avoided" by using the fact-finding powers to weigh evidence, evaluate credibility, and draw inferences: Hryniak, at paras. 66-68.
[18] On a motion for summary judgment, the moving party must establish a prima facie case that there is no genuine issue requiring a trial. Only then does the onus shift to the responding party. However, it is not sufficient for the responding party to simply rely on allegations in their pleadings. The responding party must set out, in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial. The responding party must put their best foot forward and the court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial.
Background Facts
[19] The following facts are either not disputed or are clear on the evidence, if disputed.
[20] The Applicant and Responding began cohabiting in or around May 1, 2007.
[21] They are not married.
[22] They have one child, K.H.W., who was born on November 3, 2007. He recently turned 16 years old. He currently lives primarily with the Applicant Mother. Before that, he spent approximately equal time with each of the parents.
[23] The Respondent is not currently paying any child support.
[24] The parties bought the house municipally known as 778 Shaw Street in Toronto (the "Property").
[25] The Property was bought when the Applicant was pregnant with K.H.W.
[26] The Property was bought with the Respondent's inheritance for $566,000. The sale was closed on May 16, 2007. Since 2007 the value of the Property has increased significantly.
[27] The Property was purchased in the names of the Applicant and Respondent as joint tenants.
[28] The Applicant separated on August 17, 2012 but lived separate and apart at the Property until March 1, 2013 when the Applicant moved out.
[29] Since the Applicant moved out, the Respondent has had boarders who pay rent to the Respondent.
[30] The Applicant believed that the rents received by the Respondent were covering the expenses associated with the Property including a line of credit, property taxes and utilities. The line of credit is for $150,000.
[31] The Applicant is also liable for the line of credit, which is secured by the Property, as well as utilities, and property taxes.
[32] The Applicant was contacted by the Bank of Montreal ("BMO") on April 24, 2023 advising that the credit line was overdue and demanding payment. The Respondent has not paid the arrears. The Respondent indicated that he does not believe the accounting statement from the BMO is accurate and he is not in arrears.
[33] By email dated May 25, 2023, BMO advised that the credit line was still in default and, if not remedied, it would take further action.
[34] On June 20, 2023, the Applicant received a letter from the BMO’s lawyers advising that if payment in the amount of $3,103.90 was not made in 7 days, then further steps would be taken. One of those steps was a power of sale over the Property.
[35] The Applicant paid $3,000 to satisfy this demand to buy some time.
[36] In addition, the property taxes and utilities for the Property are in arrears from at least 2021. The total arrears are approximately $20,686 plus interest and costs.
[37] Both the Applicant's and the Respondent's respective credit ratings have been adversely affected by the arrears associated with the Property.
[38] The Application is dated March 21, 2023.
[39] While the Respondent has now filed an Answer, he has yet to file a Form 31.1 Financial Statement or any form of financial disclosure to date.
Legal Analysis
Issue 1: Does the Respondent's Claim of Resulting Trust raise a genuine issue requiring a trial?
[40] A joint tenant has a prima facie right to partition or sale of land. An exception is where the applicant has acted maliciously, oppressively or with a vexatious intent towards the respondent relating to the partition and sale issue itself (Silva v. Silva, (1990) 1990 CanLII 6718 (ON CA), 1 O.R. (3d) 436 (C.A.), at p. 441).
[41] The Applicant has proven that she is registered on title as a joint tenant. The Respondent does not deny this.
[42] Furthermore, there is no evidence that supports a finding that the Applicant has acted maliciously, oppressively or with a vexatious intent towards the Respondent as relates to the proposed partition and sale of the Property.
[43] However, the Respondent asserts that placing the Applicant on title was gratuitous and therefore presumptively gives rise to a resulting trust in his favour. He relies on Pecore v. Pecore, 2007 SCC 17.
[44] A resulting trust arises when title to a property is in one party's name, but that party is either a fiduciary holding it in trust for the transferor or gave no consideration for that property (Pecore, at para. 20). If either situation is established, then it gives rise to a rebuttable presumption of a resulting trust (Pecore, at para. 22). As explained in Pecore, at paras 24- 25, a rebuttable presumption of a resulting trust places the onus on the recipient or transferee to prove, on a balance of probabilities, that a gift was intended.
[45] However, there is an exception to this general presumption of a resulting trust called a presumption of advancement. A presumption of advancement arises in two situations, one of which is a transfer between a husband and a wife (Pecore, at paras. 28). The Respondent argues that since he and the Applicant were not married, therefore, this presumption of advancement does not apply.
[46] I agree with the Respondent. The Legislature had codified this presumption of advancement and did not include unmarried couples in s. 14 of the FLA[^1]. This is in keeping with the exclusion of unmarried couples from the equalization and matrimonial home regimes under Parts I and II of the FLA. It also codified the presumption of resulting trust in other situations under the same provision.
[47] While it may seem to some that in today's society there should no longer be such a distinction between married and unmarried spouses for equalization or matrimonial home purposes, this is a matter for the Legislature.
[48] The result is that the onus is placed on the Applicant to rebut this statutory presumption, on a balance of probabilities, and demonstrate that the transfer was a intended by the Respondent to be a gift.
[49] The evidence is undisputed that the Property was purchased in or around April 2007 (with a closing date of May 16, 2007) from the proceeds from an inheritance received by the Respondent.
[50] However, the Property was bought when the Applicant was pregnant with K.H.W. The Property was purchased in the names of the parties as joint tenants after they looked at other properties together. It is a reasonable inference that the Property was bought with a view to it being the family home.
[51] Indeed, the evidence is uncontroverted about the fact that the Property was inhabited by the Applicant and Respondent, and K.H.W., as the family home, throughout their period of cohabitation from May 2007 to August 17, 2012 (the undisputed date of separation).
[52] Furthermore, while the Respondent deposed that the Applicant did not contribute financially to the significant costs of the operational costs of the Property (a fact contested by the Applicant), he also deposed that over the course of their cohabitation, they co-applied for 3 lines of credit, secured against the Property with the purpose of supporting the family. This suggests that the Applicant did meaningfully contribute to the costs of the Property, and she remains liable today for the outstanding line of credit and property taxes which are in default.
[53] With respect to his assertion of a resulting trust, the Respondent deposed that "Although I did include Sue [the Applicant"] in the title to the property I did not intend for this gratuitous transfer to constitute a gift to Sue". However, he did not offer any particulars in the evidence in support of this bald assertion, including an explanation as to why he agreed that the Property would be bought in both names as joint tenants if his intention was that the Applicant was to be a trustee only. He also does not provide any evidence as to why he did not document anywhere, including post separation over 10 years ago, that the Applicant was a trustee only and he expected that her share would be transferred to him. In short, he did not provide any facts to support this assertion in his affidavit.
[54] However, the evidence put forward by the Applicant is also sparse, though a little more detailed that the Respondent's record. However, this is not surprising since the first time the Respondent raised a resulting trust was in his responding motion materials[^2]. The Answer, filed after the hearing, also raises the resulting trust claim.
[55] A determination of this issue will require a finding of whether or not the Respondent intended to make a gift or intended to maintain the beneficiary interest in the Property. In the absence of documentation confirming intention, this determination will be heavily dependent on an assessment of the respective credibility of the Applicant and the Respondent, as well as a consideration of the surrounding circumstances to establish intention.
[56] The evidentiary record is incomplete, on both sides, on this issue.
[57] The Applicant has not persuaded me that there is no genuine issue for trial on this particular issue of the Respondent's assertion of a resulting trust, particularly in light of the statutory rebuttable presumption in favour of a resulting trust.
[58] Therefore, the issue of whether the joint tenancy interest in the Property titled to the Applicant is the subject of a resulting trust raises a genuine issue requiring a trial. In my view, it is in the interests of justice that the additional fact-finding powers under r. 16(6.1) are exercised only at trial where the trial judge will have the benefit of assessing credibility on the basis of viva voce evidence and a more complete evidentiary basis to determine whether the rebuttable statutory presumption of a resulting trust is defeated.
[59] However, this does not end the analysis.
Issue 2: Is the Resulting Trust Claim barred by Operation of the Limitation Period:
[60] The Applicant relies on the ten-year limitation period under s. 4 of the Real Property Limitations Act, and submits that, as more than ten years has expired since the date of separation, the Respondent's claim of a resulting trust is statute-barred.
[61] Section 4 of the Real Property Limitations Act states, in material part:
No person shall …bring an action to recover any land…within ten years next after the time at which the right…to bring such action, first accrued to the person…bringing it.
[62] Ironically, the Respondent also claimed that the Applicant's claim over the Property was time barred as being brought more than ten years after the date of separation. Unfortunately, the Respondent misunderstood the fact that the Applicant's claim is not for recovery of land, but rather to sell land based on her existing status as a legal title holder (joint tenant) of the Property. The Partition Act provides her with a statutory right to request a partition and sale as a joint tenant. On the other hand, the Respondent is seeking recovery of (legal title to) Property from the Applicant based on a claim of a resulting trust.
[63] The Applicant deposed that the date of separation was August 17, 2012. This is the same date as is reflected in the Family History section of the Application. In the Respondent's Answer, he does not dispute the date of separation and states that the Family History as set out in the Application is correct. He does not assert a claim that the Applicant is a trustee holding the joint interest in trust for him until he filed his factum for this motion. Furthermore, in an email from the Respondent to the Applicant's lawyer dated June 5, 2023 (in the context of the Applicant's lawyer seeking to have the Respondent file an Answer and provide financial disclosure), the Respondent accuses the Applicant of waiting "over 10 years to bring forward her legal action".
[64] In McConnell v. Huxtable, 2014 ONCA 86, the court held that s. 4 of the Real Property Limitations Act applies to claims based in unjust enrichment seeking to impose a remedial constructive trust over real property within the context of a family law dispute. By the same rationale, the same limitation period applies to claims seeking a resulting trust over real property within a family law dispute (or a civil dispute for that matter) (see McConnell, at para. 29, quoting from Hartman Estate v. Hartman Holdings Ltd. (2006), 2006 CanLII 266 (ON CA), 263 D.L.R. (4th) 640 (Ont. C.A.)).
[65] In McConnell at paras. 54 and 52, the Court of Appeal stated, albeit in the context of an constructive trust case, that "ordinarily the claim should be taken not to have been discovered until the parties have separated and there is no prospect of resumption of cohabitation" because "[i]n the family law context, this [discovery of the claim] may typically occur on the date of separation, when shared assets, including real property, are divided and the possibility therefore arises of one party holding onto more than a fair share".
[66] The key issue is what is the triggering date for the commencement of the ten-year limitation period. Both parties have operated under the assumption that the triggering date is the date of separation.
[67] I agree with this conclusion. As at the date of separation, the Respondent knew that the Applicant was a joint tenant of the Property with him and could exercise a right to request a partition and sale as part of a request for division of assets. It is uncontested that he had the facts that gave rise to his claim of resulting trust as at that date.
[68] The limitation period commenced on the date of separation in the circumstances of this case, since that is the date upon which the family property is to be divided, and the possibility therefore arose that the Applicant would assert ownership over the Property. The date of separation is when the Respondent’s right to bring a proceeding first accrued, consistent with McConnell.
[69] The date of separation is August 17, 2012. The Respondent’s factum (reflecting first notice of the claim) is undated but was delivered just prior to the return of the motion. His Answer, pleading a resulting trust, is dated July 31, 2023. More than ten years have passed since the agreed upon date of separation.
[70] As more than ten years since the date at which his right to bring a proceeding accrued has lapsed prior to the Respondent bringing his proceeding claiming a resulting trust in his Answer, this claim is, in any event, barred from proceeding under s. 4 of the Real Property Limitations Act. As a result, there is no genuine issue requiring a trial as relates to the resulting trust claim.
Issue 3: Will a Sale of the Property Be Oppressive?
[71] The Respondent asserts that if the motion is granted, he will effectively become homeless and that this is oppressive conduct. A judge can refuse partition and sale where the resulting hardship on the co-tenant resisting the application would constitute oppression.
[72] I am mindful of the Court of Appeal's observation, expressed in Silva, that the Partition Act and the FLA are not incompatible, but that a proceeding under s. 2 of the Partition Act should not proceed where it would prejudice the rights of either spouse under the FLA. However, as stated, the equalization and matrimonial home provisions of the FLA do not apply since the Applicant and Respondent were not "spouses" as defined by the FLA. However, the Applicant’s right to receive child support under the FLA (not restricted to “spouses”), may be prejudiced if the Property is sold under power of sale.
[73] Unfortunately, the Respondent had yet to serve his sworn Financial Statement nor provide any financial disclosure as at the date of the hearing. Accordingly, he has not been transparent with respect to his financial circumstances. He recently was called to the bar of Ontario as a lawyer. He is working and earning some income. However, he states that his cumulative debts, including prominently those attached to the Property, is more than he can feasibly manage on his existing income. He is apparently disputing the amount owing on the line of credit (secured by the Property) with the Bank of Montreal (BMO). However other debts, such as the arrears of property taxes, have been accruing since in or around 2021. The total amount owing to the City of Toronto for property taxes and utilities is now $20,686.00. The Applicant, as joint tenant, is liable for these debts as well.
[74] In addition, the Applicant has received notices from BMO regarding the Homeowner Readiline account stating that the line of credit is in arrears, and this is now long standing. The amount demanded is approximately $49,680.99 plus interest and costs.
[75] As the Respondent declined to do so, the Applicant was required to pay $3,000 to BMO in response to a demand letter by its lawyers, in order to temporarily delay further the legal action threatened by BMO as a result of being in arrears of the line of credit. The Respondent is unwilling to cure the arrears and would rather fight BMO as to the accuracy of its claimed amount. However, he has not started any legal proceedings against BMO.
[76] In my view, any potential prejudice to the Respondent resulting from an order compelling the sale of the Property will be mitigated by requiring the proceeds to be held in trust, subject to a payment of $50,000 to each of the parties, as suggested by the Applicant. This will ensure the Respondent has funds (aside from his employment income) to secure alternative accommodation pending a determination of the remaining issues. This is balanced against the fact that the Applicant continues to be liable for debts secured by the Property over which she has no control, and the fact that the Property is currently vulnerable to foreclosure proceedings, which would inevitably result in the Property being sold under fair market value to the detriment of both parties. There will be sufficient funds remaining in trust to deal with a claim for division of assets, and the Applicant's claim for child support on a retroactive and prospective basis. The child support claim is particularly compelling given the fact that K.H.W. apparently has special needs.
[77] The Court has discretion to make any order it deems appropriate in directing a sale of real property under the Partition Act. The court is to give complete equity to the parties. Rule 1(7.2) of the Family Law Rules also directs the court to make procedural orders that will promote the primary objective of the rules which, as set out in r. 2(2) and 2(3), is to enable the court to deal with cases justly. The ancillary powers that the court may exercise upon ordering a sale include the following:
(a) One party may be authorized to enter into a listing agreement;
(b) The other party's consent, approval or signing of any document relating to the listing and completion of a sale may be dispensed with;
(c) A party may be ordered to vacate the property; and
(d) Directions may be provided regarding the distribution of the net sale proceeds.
Broadbear v. Prothero, 2011 ONSC 3656, para 131
[78] A complicating factor in this matter is the fact that the Respondent has rented some of the rooms to tenants. There is no evidence before the court about the terms of those tenancies or the number of tenants.
[79] Accordingly, I am ordering that the Respondent disclose to the Applicant a list of current tenants, the types of tenancies (month to month, fixed term lease), the terms of each tenancy (including termination provisions), the amount of rent received, and any written documents evidencing the terms of the current tenants, within two weeks from the release of these Reasons.
[80] I am directing the parties to attempt to work out a plan for the sale of the Property. The plan must include an agreed upon realtor. If one cannot be agreed upon by December 22, 2023, then each may choose a realtor and provide their choice to me, together with the qualifications of the proposed realtors, and their objections with respect to the opposing party's choice, and I will choose one.
[81] This plan must also include the timely delivery of such notices of termination as may be required to the boarders/tenants currently residing in the Property.
[82] Once chosen, the parties will agree to follow the realtor's recommendation with respect to the listing agreement, including what the asking price will be. Once one or more offers are received, the parties agree to follow the realtor's recommendation in terms of negotiating, acceptance or rejection of the offer.
[83] The Property will be listed for sale by no later than January 31, 2024.
[84] The parties will also choose a lawyer who handles residential real estate transactions and will jointly retain that lawyer. The lawyer must also be retained by December 22, 2023. If a lawyer cannot be agreed upon, then the same process will be followed as set out in paragraph 80.
[85] The net sale proceeds from the sale of the Property (after all encumbrances, taxes, and fees are discharged) will be held in trust by the jointly retained real estate lawyer. The real estate lawyer will release $50,000 to each of the Applicant and Respondent pursuant to this judgment. The balance will be held in trust pending further mutual agreement, in writing, by the parties or further order of this court.
[86] The Respondent is directed to cooperate with respect to the sale of this Property, including accommodating open houses and showings by the real estate agent, and signing any documentation required to list and sell the Property. If the Respondent does not cooperate, then this court will consider an order requiring him to vacate the premises. However, this should not be necessary.
[87] If there are any procedural matters that have not been addressed arising from this order to sell the Property, the parties may seek a case conference before me. If I am not available in a timely manner, then either party can bring a motion, on short notice, to resolve any outstanding issues relating to the sale of the Property, before another judge.
Partial Summary Judgment Test
[88] Motions granting partial summary judgment will be rare. They are reserved for issues that can be readily bifurcated from the remaining issues in the application and that can be dealt with in an expeditious and cost-effective manner (Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, 2017 ONCA 783; Phillion).
[89] I find that this is one of those rare cases. The issue of sale of the Property is severable from the remaining issues, with the exception of the disposition of the remaining net proceeds which will be determined at trial. This latter concern can be safeguarded by requiring the funds (beyond the release of $50,000 to each party) to be held in trust, pending agreement of the parties or further order of this court.
[90] There is another compelling reason to consider this motion, which is the established, and admitted; the Property is at real risk of foreclosure proceedings at the suit of the BMO which alleges that the line of credit secured by the house is in default, and the property taxes and certain utilities are also in arrears.
[91] This issue can be dealt with expeditiously and justly on the basis of the evidentiary record and will be cost effective as it will shorten trial by eliminating the extricable issue of a resulting trust, ownership of the Property and sale of the Property.
DISPOSITION AND COSTS
[92] The Applicant's motion for partial summary judgment is granted.
[93] An order is granted directing the sale of the Property pursuant to the terms stated in these Reasons, under the provisions of the Partition Act.
[94] An order directing the Respondent to make disclosure regarding his existing tenants pursuant to the terms stated in these Reasons, to the Applicant within 2 weeks from the release of these Reasons.
[95] If the parties cannot agree on costs, the Applicant will have 5 business days to deliver her costs outline and written submissions. The Respondent will have 5 business days from receipt of the Applicant's submissions, to deliver his costs outline and written submissions. The written submissions shall not exceed 3 double spaced pages each. The documents should be uploaded to Caselines and delivered through the JSO Portal to my attention.
Justice S. Vella
Date: December 11, 2023
COURT FILE NO.: FS-23-35307
DATE: 20231211
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SUSANNAH HUTTON
Applicant
– and –
KENNETH WAKELY
Respondent
REASONS FOR DECISION
Vella J.
Released: December 11, 2023
[^1]: The presumption in s. 14(a) of the FLA that, where the property is held in the names of spouses as joint tenants, it is prima facie proof that the parties intended to own the property as joint tenants, also does not apply to the case at bar for the same reason.
[^2]: The Applicant, when asked, declined to adjourn the hearing to specifically respond to the resulting trust allegation.