2021 NLCA 30, 2021 NLCA 30

Donald Squires (appellant) v. Shirley Squires (respondent) (21/04) Indexed As: Squires v. Squires 2021 NLCA 30 6 C.A.N.L.R. 628 Court of Appeal of Newfoundland and Labrador Fry C.J.N.L., Hoegg and Goodridge JJ.A. May 28, 2021

Summary: Ms. Squires filed an interim application in the Supreme Court of Newfoundland and Labrador, Family Division, seeking exclusivepossession of matrimonial property. The property is a single lot but contains two buildings suitable for residential occupancy. Theapplications judge allowed the application and ordered the property to be sold on an “as is, where is” basis. The order also directed themethod by which the net proceeds of sale were to be divided. Mr.

Squires appealed the interim order and argued that the judge erred byconcluding that the only option was to order the sale of the property, and by ordering that the property be sold as a single lot instead ofordering subdivision of the property. Held: Appeal dismissed. Goodridge J.A. (Fry C.J.N.L. and Hoegg J.A. concurring): The applications judge did not err by stating that the only option available toher was to order the sale of the property. Mr. Squires did not raise the option of subdivision in his pleadings and, when the issue wasraised at the hearing of the application, Mr.

Squires provided only a general proposal for subdivision. The absence of proper pleadingson the issue of subdivision meant that the judge was not in a position to adjudicate the issue (paragraphs 12-17). The judge did not err in directing that the property be sold on an “as is, where is” basis. The sale of the property on the open market, onan “as is, where is” basis, would achieve a fair and just result in the circumstances (paragraphs 18-26). The judge did not err in setting the acceptable sale price at 90% of the combined value of two appraisals of the property.

While thevaluation of the appraisals, which were completed on the assumption that the property would be subdivided, may be higher than thevalue of the property as a single lot, the order included the option for the parties to disregard the requirement to accept an offer of notless than 90% of the appraised value, and accept any offer (paragraphs 27-33). Cases cited: Primm v. Primm (1996), (NL SC), 138 Nfld. & P.E.I.R. 161, 19 R.F.L. (4th) 123 (N.L.S.C. T.D.) Rohne v. Rohne, [1996] B.C.W.L.D. 289, 59 A.C.W.S. (3d) (B.C.S.C.) Primm v. Primm, (1998), (NL SC), 161 Nfld. & P.E.I.R. 215, 497 A.P.R. 215 (N.L.S.C.

T.D.) Coles v. Coles, 2014 NLCA 3, 345 Nfld. & P.E.I.R. 357. Statues considered: Family Law Act, RSNL 1990, c. F-2,

section 26(

b) Rules considered: Court of Appeal Rules, NLR 38/16, rule 37 Rules of the Supreme Court, 1986 , rule F-19. Counsel: Janet A. Tucker, for the appellant; Ernest L. Gittens, for the respondent. The appeal was heard on May 10, 2021 by Fry C.J.N.L., Hoegg and Goodridge JJ.A. The following judgment was filed on May 28, 2021 by Goodridge J.A. for the Court. ______________________________________________________________ Goodridge J.A.: [ 1 ] D. Gilbert Squires and Shirley Squires were married for 23 years and separated on September 28, 2010. The sale or other means for an equal division of property at 814/820 St.

Thomas Line, which is the subject of this appeal, is one of the long outstanding unresolved issues flowing from the marital breakdown. The parties agree that the property is a matrimonial asset that is subject to an equal division. [ 2 ] Ms. Squires filed an interim application on August 12, 2020 seeking an interim court order granting her possession and control over the property for purposes of a sale “as is, where is”, and directing the method for division of the net proceeds from sale. The application was allowed, and an interim order was granted. Mr.

Squires appeals that order, and argues that the applications judge erred in allowing the application. BACKGROUND [ 3 ] The property is a single lot, but contains two buildings suitable for residential occupancy. Both buildings share a single well. The building at 814 is a traditional design bungalow that the parties occupied as their matrimonial home; the building at 820 is a traditional design two-storey dwelling that the parties rented out as a vacation home. The two-storey dwelling is the homestead constructed by Mr. Squires’ ancestors 170 years ago. Mr.

Squires has had exclusive possession of 814 since separation, and 820 continues as a rental property. [ 4 ] In her application, Ms. Squires outlined her reasons why she sought exclusive possession and sale of the property “as is, where is”, on court dictated terms. The reasons included, inter alia : a long history of acrimony and failed settlement discussions; concern regarding the deteriorating condition of the two buildings on the property; concern that Mr. Squires had permitted the fire insurance on the two buildings to lapse (now reinstated); concern that Mr. Squires lacks the financial means to buy out Ms.

Squires’ interest in the property; and concern that Mr. Squires will do everything in his power to prevent a sale. [ 5 ] In his October 27, 2020 response, Mr. Squires outlined his reasons why he sought exclusive possession of the property, and his reasons for opposing the interim application for sale “as is, where is”. The reasons for opposing the sale included, inter alia : the property holds much sentimental value to Mr. Squires, he hoped to pass the property on to his children, and he expects to have the financial means to buy out Ms. Squires’ interest in the property if he can sell vacant land at 850/856 St.

Thomas Line. This vacant land is also in dispute, and will be addressed separately with other issues that are still before the Supreme Court Family Division. Ms. Squires’ position is that it is a matrimonial asset that the parties had jointly used and farmed during the marriage. [ 6 ] When the interim application was first called on October 30, 2020 the applications judge ordered that property appraisals be obtained, encouraged the parties to continue efforts toward a negotiated resolution, and scheduled a return date for hearing on December 8, 2020. On that return date, Mr.

Squires sought a postponement so he could reconsider his position in light of the property appraisals. A brief postponement (nine days) was granted, with a clear message from the judge that a further postponement was unlikely and that this would be the last opportunity for the parties to attempt a negotiated resolution. There was no negotiated resolution and the hearing proceeded on December 17, 2020. [ 7 ] At the hearing, Mr.

Squires repeated some of the points raised in his response and added that a sale of the property “as is, where is” would be unreasonable because there was the better option of subdividing the property into two lots of equal value, each containing a single residential building. This ‘better’ option was not raised in Mr. Squires’ response, but it was the subject of discussion and argument before the applications judge, and there was evidence received from the municipal authority (December 10, 2020 letter) confirming approval in principle for a subdivision into two lots. [ 8 ] Ms.

Squires reminded the court that her interim application was for sale of the property “as is, where is”, and suggested that the court did not have authority to direct improvements to the property that would be necessary to allow the subdivision. In her view, this

new option raised by Mr. Squires was uncertain and costly, and was not properly before the court. [9] It is not contentious that a subdivision would entail costs and delays associated with arranging surveys, improving the propertyby constructing an artesian well to service 820, and pursuing the formal application to the municipal authority for final approval. [10] As noted above, the judge allowed Ms.

Squires’ application by granting her exclusive possession of the property, setting out theterms for the property sale “as is, where is”, and setting out terms for retention of the net proceeds from the sale in trust pending furthercourt order, or agreement. GROUNDS OF APPEAL [11] Two issues raised in Mr. Squires’ factum, as grounds of appeal, are: • Did the judge err by stating that her only option was to order that the property be sold? • Did the judge err by ordering that the property be sold rather than subdivided?

ANALYSIS Only option was to order sale [12] The judge indicated during the hearing that her only option, failing a negotiated resolution, would be to order a sale of theproperty: For now, all I can do is put the property [up] for sale …because that is what is before me in the application. The question is when.(Transcript December 17, 2020 at page 29.) [13] Mr. Squires says that applications judge erred in making this comment because there were other options. Those other optionsincluded: (1) dismissal of the application to allow him time to sell other vacant land and secure funds to buy out Ms.

Squires, or (2)ordering a partition of the property under s. 26(

b) of the Family Law Act, R.S.N.L. 1990, c. F-2. [14] This above comment by the applications judge, and similar comments made by the judge at other points during the hearing, arein the context of a rejection of Mr. Squires’ suggested alternatives. The judge’s rejection of the other options related to her reluctance toorder improvements to the property (construction of a new well) and her uncertainty surrounding ownership of the vacant land that Mr.Squires hoped to sell. The ownership was uncertain because Ms.

Squires claimed an interest in that vacant land, as a matrimonial asset.This context, from the perspective of the applications judge, is evident from the remarks she made during exchanges with counsel andthe parties at the hearing: I can't make anybody get a well. I don't know if people have the money to get a well [and] to divide the property.

I don't know if thevacant land will sell… I can only go with what is before me. (Transcript December 17, 2020 at page 28.) … And, given the history that has been outlined to me [a court ordered sale] is the only choice I have. (Transcript December 17, 2020 atpages 41 - 42) [15] I acknowledge that s. 26(

b) of the Family Law Act provides the option for a court to order partition of the property: “In anapplication made under

section 21 [division of matrimonial property], the court may order … the partition or sale of a property”. Thepartition would allow the judge to order subdivision of the property. [16] Mr. Squires did not raise the partition option in his pleadings, and even when raised at the hearing, he provided only a generalproposal. There were no particulars, such as the proposed boundary lines, to which Ms. Squires could fairly respond. The absence ofproper pleadings on the issue, and the absence of particulars, meant that the judge was not in a position to adjudicate the issue.

In thecircumstance, as the above comments from the judge indicate, the partition option was considered, and rejected. [17] The applications judge made no error when she stated that the only option, as in the only remaining practical option, was to orderthat the property be listed for sale. Ordering sale rather than subdivision [18] On this ground of appeal, Mr.

Squires says that the applications judge erred on two bases: (1) a sale on the open market, “as is,where is”, does not achieve a fair and just result, and (2) a sale based on unreliable appraisals will result in the property sitting on theopen market indefinitely. Fair and just result [19] In arguing that the applications judge erred by making an order that does not achieve a fair and just result, Mr. Squires reliesupon Primm v. Primm (1996), (NL SC), 138 Nfld. & P.E.I.R. 161, 19 R.F.L. (4th) 123 (N.L.S.C. T.D.), and Rohne v.Rohne, [1996] B.C.W.L.D. 289, 59 A.C.W.S. (3d) (B.C.S.C.). In Mr.

Squires’ view, the subdivision option, resulting in two lots ofequal value, with him retaining the lot containing the historic family homestead, is the obvious choice in achieving a fair and just result. [20] In Primm, the husband applied to court for a partition and sale of the matrimonial home. The wife, who had been occupying thehome post separation, argued that the “fair and just thing to do is to refuse the application for partition and declare [me] sole owner ofthe matrimonial home” (para. 11). Barry J. declined to declare the wife the sole owner.

Instead, he ordered a stay of the partition and saleto allow the wife time to apply for a lump sum spousal support payment, and in that way allow the wife time to buy out the husband’s

interest in the home. At paragraph 16, Barry J. stated: “… justice and fairness require that [the wife] be given an opportunity to establishentitlement to lump sum support, which, if she is successful, may be used by her towards purchase of [her husband’s] interest in theproperty”. The stay ended when the wife’s application for lump sum support was dismissed (see Primm v. Primm, (1998) (NL SC), 161 Nfld. & P.E.I.R. 215, 497 A.P.R. 215 (N.L.S.C.T.D.)). [21] In the current matter, a further delay by dismissing Ms. Squires’ application, or ordering a stay to allow Mr. Squires more time tosecure funds to buy out Ms.

Squires’ interest in the property, would not be fair or just. Mr. Squires has already had ample time – it is now10 years post separation – to secure funds for the purchase of Ms. Squires’ interest in the property, or to negotiate other arrangementssuch as the subdivision. The applications judge weighed these and other factors to arrive at a just and fair result. [22] The judge also ensured a just and fair result by preserving the parties’ option to negotiate and agree to an alternativearrangement. Paragraph 6 of the interim order preserved that alternate option, as follows: “814/820 St.

Thomas Line shall be sold as is,where is, however the parties can mutually agree to divide the property without returning to court”. [23] In Rohne, the husband asked the court to order subdivision of the family home property, allow use of a $20,000.00 term deposit(shared 50/50) to cover the associated costs for subdivision, and then grant each party an equal interest in the property after subdivision.This is similar to what Mr.

Squires was seeking; however, there was no evidence that he had funds available to cover the associated costsfor subdivision (survey fees, well construction costs, and application fees to municipal authority). In Rohne the wife opposed theproposed subdivision and asked the court to award her sole ownership of the property. The judge ordered a subdivision. There were otherfactors in play in Rohne (and not present in the current matter) that made subdivision the just and fair result.

Most importantly, thesubdivision would allow sale of part of the land, or refinancing, to permit a cash injection into the family business. That business was theparties’ sole source of income, and it was in jeopardy of failure without a cash injection.

At paragraphs 38 and 53, Prowse J. stated: 38 Given the limited financial resources of both of the parties; the fact that [the business] is the single most probable source of futureincome for the parties; the fact that … the only source of capital for this re-tooling and modernizing [of the business] is from the family'shome property; and the fact that the highest and best use of that property is to subdivide it, I have concluded that in fairness this propertyshould be subdivided. … 53 If for some reason the subdivision cannot proceed, the interests of the parties will remain at 60% to Mrs. Rohne and 40% toMr.

Rohne. [24] There were many factors within Rohne that explain why subdivision was the just and fair result. The parties had just separatedthe prior year; the subdivision proposal was set out in the pleadings; there were funds available to finance the subdivision proposal;expert witnesses for both parties testified that the highest and best use of the property was subdivision; and the family business was indesperate need of cash that could only be generated from the sale or refinancing of the subdivided property.

All of these factors were inthe mix of achieving a just and fair result in Rohne, and none of these factors were in play in the current matter. [25] I agree with the comments of Prowse J. at paragraph 37 of Rohne, that a governing principle with respect to the division offamily assets is fairness and justice, and I am satisfied that the applications judge respected that principle when exercising her discretionand granting the interim order. A sale on the open market “as is, where is” and the subsequent division of the net proceeds, will achievea fair and just result for Mr. and Ms.

Squires based on the facts and circumstances here. [26] There was no error made by the applications judge in directing the property be listed for sale as a single lot, “as is, where is”. Sale based on unreliable appraisals [27] Mr. Squires argues that the judge erred by including terms in the order that were tied to unreliable appraisals.

In paragraph 1 ofthe order, the court directed sale of the property at 90% of the appraised value: Any offers equal to or greater than 90% of the full appraised value of the property shall be accepted, and any offers less than 90% of theappraised value shall not be accepted, unless otherwise agreed by the parties. [28] The potential for unreliability of the appraisals arises from the fact that the appraised value was the sum of two separateappraisals. The parties had instructed the appraiser to prepare two separate appraisals, one for 814 and one for 820, on the assumptionthat the property would be subdivided.

There was no subdivision of the property and there was an added concern relating to theinsecurity of a water supply. On the latter issue, the appraiser had wrongly assumed security of water supply. The water supply is notsecure and a second well to service 820 is required. The quote for drilling a well at 820 was at $15,997.65.

Arising from the lack ofsubdivision approval, and the lack of a well at 820, the value based on the current appraisals may be unreliable if the property is offered“as is, where is”. [29] To assist his argument that the applications judge erred by tying sale price to the sum of these two appraisals, Mr. Squiresapplied under rule 37 of the Court of Appeal Rules, N.L.R. 38/16, to submit additional evidence.

The additional evidence included aJanuary 12, 2021 opinion letter from a surveyor regarding the cost of the survey and proposed subdivision, a January 13, 2021 emailfrom the municipal authority confirming that outstanding taxes will not hinder subdivision approval, and a January 14, 2021 opinionletter from a real-estate agent regarding sale of the property. This evidence, according to Mr.

Squires, would reveal: (1) the property haslimited marketability if offered “as is, where is”; (2) the property has low prospect of sale at 90% of appraisals if offered “as is, whereis”; (3) the subdivision application to the municipal authority is likely to be approved; and (4) the costs and boundaries for a subdivisionsurvey. [30] Generally, four criteria must be met before additional evidence will be received on appeal: (1) it could not, with due diligence,have been adduced at trial; (2) it must be relevant in the sense that it bears upon a decisive or potentially decisive issue at trial; (3) it mustbe credible in the sense that it is reasonably capable of belief; and (4) it must be such that, if believed, it could reasonably, when taken

with the other evidence adduced at trial, be expected to have affected the result, see Coles v. Coles , 2014 NLCA 3 , 345 Nfld. & P.E.I.R. 357 at para. 4 , and rule 37(3) of the Court of Appeal Rules . [ 31 ] The content of the January 13, 2021 email from the municipal authority had been read into the record, without objection, at the earlier hearing in this Court when Mr. Squires sought a stay of enforcement. Accordingly, it was already before the Court. Mr.

Squires’ application to tender the other two letters as additional evidence was dismissed at the appeal hearing because of a failure to meet the first, second and fourth criteria. This same evidence could have been adduced before the applications judge, and the relevance of the evidence is low.

It can be accepted that improvements to the property, such as by adding infrastructure (artesian well for water supply) and obtaining approval for subdivision, are likely to enhance the prospects for sale at a higher price. [ 32 ] I agree that the combined valuation from the two appraisals (where subdivision was assumed) may be higher than the valuation of the property as a single lot “as is, where is”. I do not agree that the judge erred by including terms in the interim order tied to the combined value of the two appraisals.

The order included the option (reproduced above) for the parties to disregard the requirement for 90% of the full-appraised value, and accept any offer. If the listing of the property at the appraised values fails to achieve a sale, then the parties can agree on a lower price. In addition, either party may make an application (under rule F-19 of the Supreme Court Family Rules ) to vary the interim order, such as by adding at the end of paragraph 1 of the order, “or otherwise approved by the court”.

If there is an offer made that is less than 90% of the appraisal, then the option is available for either party to make an application to permit acceptance of the lower offer through a variation of the interim order. [ 33 ] In the circumstances, there was no error by the applications judge in setting the acceptable sale price at 90% of the combined value of the two appraisals. CONCLUSION [ 34 ] I would dismiss the appeal. [ 35 ] The dates for vacant possession and listing of the property for sale, as set out in the interim order under appeal, were stayed by a January 26, 2021 order of this Court.

The stay ends with the disposition of this appeal and accordingly, there should be consequential changes to the order. [ 36 ] Paragraph 1 of the order should be revised by changing the listing date to “on or before July 15, 2021”. [ 37 ] Paragraph 5 of the order should be revised by changing the date for exclusive possession to June 30, 2021 (Mr. Squires is required to remove all of his personal belongings and vacate the property no later than June 30, 2021). [ 38 ] In all other respects, the December 17, 2020 interim order of the applications judge should be affirmed.

COSTS [ 39 ] Party and party costs for the proceedings in this Court, based on column 3, should be paid by Mr. Squires to Ms. Squires. Appeal dismissed.