Court File and Parties
Court File No.: CV-23-82700 Date: 2024-03-14 Ontario Superior Court of Justice
Between: John Walker, by his Litigation Guardian, The Public Guardian and Trustee, Applicant – and – Bethany Walker and Matthew Colling, Respondents
Counsel: S. Nash and S. Jackson, for the Applicant A. Hicks, for the Respondents
Heard: March 6, 2024
M. Bordin, J.
Reasons for Decision
Overview
[1] The applicant, John Walker (“John”), seeks an Order under the Partition Act, R.S.O. 1990, c. P.4 directing the sale of 8193 Michael Street, Niagara Falls, Ontario (the “Property”). He also seeks directions respecting the conduct of the sale.
[2] The Public Guardian and Trustee (“PGT”) has been John’s statutory guardian since September 2021. John is 30 years old. He has neurodevelopmental conditions, as well as mental health and substance abuse issues.
[3] The respondent, Bethany Walker (“Bethany”) is John’s younger sister. She is 26 years old. Bethany has been diagnosed with Asperger’s and Attention Deficit Hyperactivity Disorder and receives support through the Ontario Disability Support Program (“ODSP”). Bethany was also found to be incapable of managing her affairs on the same day as John in September 2021 and was also under the guardianship of the PGT. However, she was assessed to be capable in June 2022.
[4] The respondent, Matthew Colling (“Matthew”), is Bethany’s common law spouse. He has also been diagnosed with ADHD and is on ODSP. Matthew lives at the Property.
[5] In response to the application, but not by way of a formal notice of application or cross motion, the respondents seek a stay of the application until an estate trustee is appointed for the estate of John and Bethany’s father (the “Estate”) and a Henson trust is set up for Bethany pursuant to their father’s Will. The respondents also seek an order restraining John from dissipating, disposing of or encumbering the Property until the Estate has been administered.
Facts
[6] John and Bethany’s father passed away in April 2020. John and Bethany are equal beneficiaries under his Will. The Will appointed John as the Estate trustee. Pursuant to the Will, a Henson trust was to be set up for Bethany for her one-half of the Estate. John was to be the trustee of the Henson trust. The Will appoints an alternate trustee for the Estate. No alternate trustee is appointed for the Henson trust.
[7] The Estate was comprised of the home where John, Bethany, and their father lived until his death (the “Home”), the Property, two bank accounts with minimal funds, and the proceeds of life insurance. The assets currently remaining in the Estate total approximately $409,000.
[8] John obtained a Certificate of Appointment and served as the Estate trustee until he was found incapable in September 2021 and was placed under the guardianship of the PGT.
[9] As trustee of the Estate, John sold the Home and he and Bethany moved into the Property in or around December 2020. As trustee of the Estate, John transferred the Property to himself and Bethany as equal tenants-in-common on January 28, 2021. John did not establish the Henson trust.
[10] Despite the passage of two and a half years since John was found incapable, a replacement trustee for the Estate and a trustee for the Henson trust have not been appointed.
[11] In September 2022, Bethany wanted to sell the Property. The PGT was cooperative and willing to work with Bethany to sell the Property. Some communications regarding the sale of the Property took place in the early fall of 2022 and then briefly in about May 2023. However, Bethany no longer wants to sell the Property because, as she deposes in her affidavit, she believed that:
[I]t is in our best interest to retain the property. It would be advantageous for us to negotiate an agreement regarding sharing the living expenses from our ODSP and request the trustee of my Henson Trust to allocate a portion of the funds to clean and maintain the house. This approach seems more prudent than selling the property below its fair market value and depleting our inheritance by paying rent.
[12] Bethany also takes issue with vacating the Property before its sale.
[13] Bethany has not contributed, directly or indirectly, to utilities, taxes, or household expenses related to the Property since June 2022. She says she thought John was paying them, or perhaps the PGT, or the Estate, or the Henson trust. As a result, John has been paying the costs of the Property. The PGT has paid $11,193.63 for utilities and household expenses, $735.63 for real estate expenses, $1,701.18 for property taxes, and $3,886.92 for property insurance. As of November 2023, there was approximately $8,565.83 owing in municipal tax arrears on the Property. The PGT will no longer pay property taxes for the respondents.
[14] The parties are unable to care for and maintain the Property. Virtually the entire floor space in every room in the house is covered in garbage and debris, as are most surfaces. There is garbage all around the furnace and in the garage.
[15] John moved out of the Property as of October 30, 2023.
Legal Principles
[16] The parties agree on the basic legal principles that apply. The Partition Act grants tenants in common a prima facie right to compel partition or sale: Inniss v. Blackett, 2022 ONCA 166, at para. 23; Partition Act, s. 2. The presumption is in favour of partition, rather than sale. However, a sale will be ordered if the court considers it to be more advantageous to the parties: Garfella Apartments Inc. v. Chouduri, 2010 ONSC 3413, 102 O.R. (3d) 624 (Div. Ct.), at para. 11.
[17] The onus is on the party resisting the sale to demonstrate that the property should not be sold. The court retains a discretion to refuse any relief, but the discretion is limited. To exercise its discretion not to approve a sale, a court must be satisfied that the party seeking the sale is acting in a malicious, vexatious or oppressive fashion: Inniss, at para. 23; Garfella Apartments, at para. 13; Brienza v. Brienza, 2014 ONSC 6942, at para. 25.
[18] A court can refuse partition and sale because hardship to the co-tenant resisting the application would be of such a nature as to amount to oppression: Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2004), 75 O.R. (3d) 478 (C.A.), at para. 2.
[19] Mere inconvenience and adverse financial consequences will not be sufficient to discharge the onus of showing oppression. Similarly, the court will not refuse a sale on the basis that the timing is not good: Garfella Apartments, at para 33. Courts have found hardship where a sale would require the relocation of a person with disabilities who would have trouble finding alternative accommodations: Stothers v. Kazeks, 2023 ONSC 5021 at para. 47.
[20] Malicious, vexatious, or oppressive conduct that would bar a remedy is more than unreasonably refusing to accommodate the wishes of the other co-owner. Partition and sale does not become oppressive and vexatious simply because it disappoints the other co-owner and makes him or her lament the loss of the property: Brienza, at para. 32.
[21] The court considers a number of factors in the exercise of its discretion. Factors may include: a. The relationship of the parties and when it arose; b. The intentions of the parties; c. Reasonable expectations of the parties; d. How long a party has lived at the property; e. Who has maintained the property; f. The personal circumstances of the parties; g. The impact of a sale on the party resisting the sale; and h. The conduct of the parties. (Strothers v. Kazeks, at para. 48; Garfella Apartments, at para. 49)
[22] The court is to take a contextual approach, rather than looking at the allegedly oppressive conduct in isolation: Garfella Apartments, at para. 50.
[23] The weight a factor may have will depend upon the circumstances of how, when, and why the property was purchased, the relationship of the parties or their predecessors in title at the time the property was purchased, and the circumstances which have resulted directly from the relationship of the parties which existed at the time: Garfella Apartments, at para. 36.
Position of the Parties
[24] John’s position is that he requires the equity from the Property so his current and future care needs can be met. This was not disputed by the respondents. He says that he has a prima facie right to seek partition and sale of the Property. John acknowledges there is no immediate urgency other than the concern that the condition of the Property will deteriorate and dimmish its value. John says that Bethany cannot meet her burden to establish that the Property should not be sold.
[25] The respondents have led no evidence of, and do not allege malice or vexatious conduct on John’s part. The respondents’ position is that the sale of the Property will cause the respondents hardship amounting to oppression. The respondents also say that the application should be stayed until a new Estate trustee is appointed and the Henson trust established.
Analysis
[26] Bethany bears the onus of establishing that the Property should not be sold. She asserts numerous grounds which she says amount to oppression. I will consider those grounds, the facts, and apply the legal principles set out above.
[27] The Property was inherited. There is no evidence that either John or Bethany contributed to its acquisition. Bethany understood that her interest in the Property was part of her distribution of the Estate.
[28] Bethany points to the fact that she and John are siblings and that he moved into the Property with her to suggest that this creates an expectation on her part that John would stay there with her, and she would be able to stay at the Property. Bethany could not advise, based on her “reasonable expectations” as put forward by her, when John could expect the Property should be sold so he could receive his interest; she was unable to provide a timeline. The implication is that John might never be able to realize on his asset and inheritance as a result of her “reasonable expectations”.
[29] No evidence was drawn to my attention to support Bethany’s alleged expectation other than the fact that they both used to live at the Home when their father was alive and until they moved into the Property about eight months after his death. Bethany requested the Property be sold in September 2022, contradicting her alleged expectation.
[30] Nine months after they moved into the Property, John was found to be incapable. It should go without saying that John is not obligated to live at the Property with his sister. Without evidence of an agreement that John would live with Bethany indefinitely, or that she could remain indefinitely at the Property, not pay her share of expenses, and that her brother could not seek to sell the Property, Bethany’s alleged expectation cannot be said to be reasonable.
[31] Bethany says she expected her share of the maintenance costs for the Property to come from the Henson trust. Little evidence has been provided about the payment of the Property expenses from the time that Bethany and John moved in until the PGT was appointed their statutory guardian. Bethany says she understood the PGT was paying the expenses on her behalf during that time. However, she received notice to pay her half of the utilities as early as July 2023, a year after she was declared capable.
[32] Bethany says that she expected the Property would not be sold abruptly. She offers no evidence as to the basis of her belief. Again, Bethany initially requested the Property be sold in September 2022, contradicting her alleged expectation. Further, Bethany was advised by the PGT in July 2023 that the Property might have to be sold. The application was started in September 2023, and Bethany’s affidavit in response is dated September 24, 2023. That is over five months ago. The Property has not yet been sold. At the time of hearing, Bethany had lived in the Property for just over three years. It has been almost four years since her father died. The application seeking the sale was not “abrupt”.
[33] Bethany asserts that she lacks the financial means to cover the costs associated with relocation. She says that selling the house without a secure place to live would place her in a financially vulnerable position possibly leading to homelessness.
[34] Bethany asserts that she cannot access her share of the funds in the Estate until a trustee is appointed and says this creates uncertainty about her ability to cover essential expenses. She acknowledges the Henson trust to be established is discretionary. While it is true that she is not yet receiving funds from the Henson trust, Bethany acknowledged in submissions that the income from the trust would either be limited to $10,000 per year so as not to jeopardize her ODSP, or in the discretion of the trustee, it could be a greater amount, but then she would likely no longer receive ODSP. In other words, it is of limited impact.
[35] Further, but for the transfer of the Property to John and Bethany, the Property would have been incorporated into the Henson trust in some manner and the asset would be out of Bethany’s reach and subject to the exercise of discretion of the trustee of the Henson trust. One-half of the Property is now owned by Bethany. The sale of the Property would provide her with funds to acquire a property or to use as she sees fit for her accommodations. There has been no appraisal of the Property. However, the record discloses that in June 2023 realtors believed the Property would likely sell for approximately $515,000. The parties agree there is no mortgage on the Property.
[36] Bethany deposed that her only source of income is a monthly income of $1,232.95 from ODSP. She attached her September 2023 bank statement to her affidavit. However, Bethany has admitted under oath that her ODSP income, Matthew’s ODSP income, and Matthew’s Doordash income are all deposited into her chequing account. At her cross-examination, Bethany was asked to produce the statements from her chequing account for the past three years. She took the question under advisement. To date, Bethany has only produced additional statements and records for October 31, 2023 through January 17, 2024. The statement for January is a printout of transactions, rather than a formal bank statement. Requests have been made by Bethany’s lawyer of the bank to produce the statements. No evidence was tendered explaining why Bethany has not been able to produce more statements herself when she was able to produce the September statement attached to her affidavit as well as the November and December statements and the January printout.
[37] The November 2023 statement indicates that $7,315.29 was deposited into Bethany’s chequing account. On the December 2023 statement the amount deposited was $11,000.22. Many of the deposits are transfers into the chequing account from another account. No evidence was tendered by Bethany as to the ownership of that account. In submissions Bethany said that it is her savings account. There is no evidence as to the amount of funds available in the savings account. In submissions, Bethany argued that money flows from the savings account into her chequing account and then some is transferred back into her savings account. She argued that in fact, in the month of November only a net of $4,010.56 was transferred into her savings account after netting out the transfers to her savings account from her chequing account.
[38] I have reviewed the November and December statements. In the November statement, there is approximately $2,107 in transfers from the chequing account to the savings account which do not relate to the transfer to savings of the ODSP income. Further, there is a transaction in which a $451.98 point of sale purchase is immediately refunded. This does not represent a true deposit into the account. The rest of the deposits are from ODSP, the Government of Canada, Doordash, transfers from the savings account, or other deposits. This suggests that net deposits into the chequing account which are not sourced from Bethany’s own funds total $4,755.73 for the month of November. The deposits do not appear to include Matthew’s ODSP. The same calculation for December yields a net deposit figure of $7,258.
[39] If I accept the submission that the other account from which, and to which, funds are transferred belongs to Bethany, then there is another account available to her, but she has not disclosed the amount of funds available to her in that account.
[40] It bears repeating that Bethany bears the burden of establishing hardship amounting to oppression. She bears the burden of producing the documents necessary to establish that her income is not as suggested by the bank statements.
[41] I also note that, based on the bank statements, John calculates that during November and December 2023 Bethany spent $2,120 at fast food establishments. This was not disputed by Bethany.
[42] I recognize that the calculations set out above may not be precise given the limited evidentiary record available to me. However, the bank records suggest that Bethany’s income, combined with Matthew’s income or source of funds, is significantly more than she sets out in her affidavit and that it is sufficient to enable Bethany and Matthew, who live together at the Property, to find other accommodations.
[43] In her factum, Bethany asserts that requiring her to move could have detrimental effects on her overall well-being, potentially exacerbating the challenges associated with her neurodevelopmental conditions and could negatively impact her mental and emotional well-being. However, there is little to no evidence to support such a conclusion.
[44] In her factum she also speculates that the current market conditions, condition of the Property, and potential delays may not yield fair market value for the Property. Finally, she speculates that the proceeds might not be enough for her to purchase another property. However, no evidence is tendered to support this. No evidence has been tendered of the availability or cost of replacement properties, owned or rented.
[45] Bethany has stopped contributing to the costs of the Property. The Property is in a deplorable state. It is clear from the current condition of the Property that the parties are unable to care for and maintain the Property. This will, over time, in all likelihood devalue the Property, including the value of John’s one-half interest.
[46] The Property taxes are in significant arrears and a municipal tax sale may be implemented.
[47] John requires the proceeds from the Property to meet his needs. This was not disputed by Bethany. The PGT plans to budget and invest John’s portion of the sale funds so that he can be provided for the rest of his life as it is unlikely that he will ever be able to obtain and maintain gainful employment. If the current situation continues, John’s limited funds, which he requires to sustain him for the rest of his life, will be depleted at a faster rate.
[48] Bethany says that the Property is not an isolated asset, it is part of the Estate. It is not; that ship sailed when the Property was transferred to Bethany and John.
[49] Bethany asserts there appears to be approximately $80,000 not accounted for from the Estate funds and that John’s application should be stayed until a trustee is appointed for the Estate, the Henson trust is established, and John provides an accounting. However, the respondents acknowledge that although Bethany was declared capable over 20 months ago, she has not sought an order for John to pass accounts for the time he was trustee of the Estate, nor has she sought to appoint a new trustee for the Estate. Bethany says this is because the alternate trustee has been saying for over two years that he would seek an appointment. The PGT relies on this as well to explain why the PGT has taken no steps to see that a new trustee is appointed for the Estate.
[50] The status of the Estate is not tied to the ownership of the Property. Except to the extent that it might contribute to hardship, the status of the Estate is not a relevant factor. Either John or Bethany could have taken steps to have a new Trustee appointed. Given Bethany’s position that the sale should be delayed pending the appointment of an Estate trustee and creation of the Henson trust, she has had ample time to commence appropriate proceedings. Finally, there is no impediment to Bethany seeking an accounting from John.
[51] On the facts before me, and for the reasons set out above, I find that the respondents have not met their burden and have not established that the sale of the Property would cause hardship amounting to oppression. John is entitled to have the Property sold.
[52] This court has the authority to make any appropriate order in the exercise of the wide discretion afforded to it under the Partition Act, including the power to make all allowances and give such directions that will give complete equity to the parties: Broadbear v. Prothero, 2011 ONSC 3656, at para. 131. The court may also order vacant possession: Auciello v. Yao, 2022 ONSC 2374, at para. 26.
Order
[53] I order that the Property be listed for sale and sold on the following terms: a. The respondents shall vacate the Property by June 30, 2024; b. The applicant shall retain a qualified real estate brokerage firm as the listing agent to market and sell the Property; c. The respondents shall provide reasonable access to the Property to the realtor to allow them to view the Property and recommend a listing price; d. The listing price for the Property shall be determined by the applicant on the advice of the real estate agent retained by the applicant; e. The Property shall be listed for sale no earlier than May 31, 2024; f. The listing for the Property shall confirm that the Property is being sold 'as is'; g. The listing period of the listing agreement shall be 120 days, unless the applicant and the realtor agree that a shorter or longer listing period is required to achieve the best value for the Property; h. The requirement for the respondent Bethany Walker's consent and signature with respect to all documents required to list, sell, and close the sale of the Property and transfer title of the Property is dispensed with; i. The applicant may change the locks on the Property as of July 1, 2024; j. The respondents shall return all keys for the Property to the applicant on the date they vacate the Property; k. The respondents shall remove all personal property from the Property when they vacate the Property. Any personal property left behind by the respondents after the date they have been ordered to vacate the Property shall be deemed to be abandoned by them and the applicant is authorized to remove the applicant’s property and dispose of it or store it at the respondents’ expense; l. The applicant is granted leave of this court to issue a Writ of Possession (Form 60C) for the Property in the applicant's favour, but the applicant shall not enforce the Writ of Possession with the Sheriff unless the respondents fail to deliver vacant possession in accordance with the terms of the within Order; m. If the Property is not sold within the initial listing period, the applicant shall have the option to terminate the listing agreement and appoint another listing agent. If a second realtor is retained, the Property shall be listed again for sale immediately and on the same terms as above; n. The net proceeds realized from the sale, after the payment of all ordinary fees and disbursements related to the sale of the Property, shall be held in trust by the lawyers for the applicant pending agreement of the parties, or further Order of the court. o. In the event that one of the parties fails to honour any of the terms of the within Order, the other party or parties may seek further direction from the court.
[54] I order that the balance of this Application, including the issue of the division of the net proceeds of sale, shall be adjourned sine die returnable on 14 days' notice.
[55] The parties are encouraged to resolve the issue of costs. If they are unable to do so, they may submit a bill of costs and make written submissions consisting of not more than two double-spaced pages in length, together with any relevant offers to settle and excerpts of any legal authorities referenced, according to the following timetable: a. The plaintiff shall serve its costs submissions, if any, by no later than April 5, 2024; b. The defendants shall serve their costs submissions, if any, by no later than April 19, 2024.
[56] All submissions are to be filed with the court, with a copy to the judicial assistants at: St.Catharines.SCJJA@ontario.ca, by end of day April 19, 2024. If no submissions or written consent to a reasonable extension are received by the court by end of day April 19, 2024, the matter of costs will be deemed to have been settled.
M. Bordin, J. Released: March 14, 2024