2024 ONSC 527, 2024 ONSC 527

CITATION : 2024 ONSC 527 COURT FILE NO.: CV-22-00675994 HEARD: 20230913, 20240109 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Janet Meyer, Applicant AND: Michael Meyer, Respondent BEFORE: Associate Justice L. La Horey COUNSEL: Miranda Spence and Adam West, Counsel for the applicant Gregory M.

Sidlofsky, Counsel for the respondent HEARD: September 13, 2023, January 9, 2024 REASONS FOR DECISION OVERVIEW [ 1 ] This is a dispute between a mother, Janet Meyer (“Janet”), and her son, Michael Meyer (“Michael”), over the proceeds of the sale of cottage property. [1] [ 2 ] Janet brought this application under the Partition Act , [2] for an order for the sale of cottage property municipally known as Lot 41, Long Island Rice Lake, Otonabee-South Monaghan (“the Property”). On consent, Justice P.T.

Sugunasiri granted judgment on November 28, 2022, and ordered the sale of the Property and a reference to an associate judge. As the associate judge appointed to hear the reference, I supervised the sale of the Property. The Property was sold realizing the sum of $650,000 which is being held by the lawyers in trust. The Partition Act does not provide a methodology for dividing the proceeds of sale of a property that has been ordered sold.

The issue on this reference hearing is the division of the proceeds. [ 3 ] Janet submits that the proceeds of sale should be divided equally between the parties such that each party is entitled to $325,000. Michael submits that he is entitled to credit for the value of renovations and maintenance of $415,000 prior to division of the proceeds and that the balance of $235,000 should be divided equally. On Michael’s calculation he is entitled to $532,500 and Janet is entitled to $117,500. [ 4 ] Janet and Michael each swore multiple affidavits and have been cross-examined.

The parties agree that I should decide the dispute on the basis of the written record and that oral testimony is not required. Rule 55.01 of the Rules of Civil Procedure provides that the simplest, least expensive and most expeditious manner of conducting the reference shall be adopted. BACKGROUND AND FACTS [ 5 ] Janet and her husband Ronald Meyer (“Ronald”) purchased the Property in 1988 when Michael was 15 years old. At the time of purchase, the Property was a vacant lot. The Property is on an island with only water access. [ 6 ] Janet and Ronald retained a contractor to build a cottage on the Property.

There is no dispute that the cottage was built partly by the contractor and partly by the labours of Janet, Ronald and Michael. [ 7 ] After Ronald’s death, Janet permitted Michael to continue to use the Property with family and friends. Both Michael and Janet used the Property. Sometimes they were at the cottage together and sometimes separately. Michael performed some of the maintenance on the Property and contributed to expenses. [ 8 ] On May 31, 2007, Janet transferred the Property to herself and Michael as joint tenants. There was no valuation done of the cottage for the purposes of the transfer.

The stated consideration was $63,500. This figure is one half of the value for the Property reported on the municipal tax bill for the Property. There is no dispute that Michael did not pay Janet $63,500. [ 9 ] The parties differ in their evidence about the circumstances of the transfer and their understandings. I will address this evidence below. [ 10 ] There is no dispute that Michael undertook renovations to the Property beginning in 2007 that included an addition. However, the parties dispute the value of these improvements as well as the value of the maintenance he performed.

Michael has produced no invoices or supporting documents except for a building permit costing $600. Janet argues that the expert affidavit tendered by Michael is of no assistance in determining value. Michael says that the total cost of the renovations (including the addition) was $340,000. He submits that half of the value of his maintenance from the time he became co-owner is $75,000.

[ 11 ] The addition to the cottage increased its size from 800 square feet to about 1752 square feet. The existing cottage was also renovated, including by adding hardwood flooring and replacing windows and doors. [ 12 ] Michael and his then wife and three children used the Property as did Janet.

Sometimes the parties were all together, sometimes they visited the cottage separately. [ 13 ] The relationship between Michael and Janet soured in about 2015 and the parties stopped going to the Property at the same time except for opening weekend and closing weekend. [ 14 ] The parties divided the time at the Property and their usage was about equal. [ 15 ] During the time that Michael was on title, the parties roughly shared the out-of-pocket expenses for the cottage, including hydro and property tax. [ 16 ] On July 28, 2019, Janet approached Michael with a suggestion that he buy out her interest in the Property or list it for sale as she needed the money for a special assessment at her condominium.

Michael did not agree and Janet retained counsel. This was not the first suggestion that the Property be sold.

Michael, who is a real estate agent, had suggested selling the cottage three months earlier following a testy exchange of texts with Janet about cottage usage and payment of expenses saying that the cottage was “no longer a positive experience for me” and he would list the cottage for sale. [ 17 ] Janet severed the joint tenancy on September 10, 2020, such that Janet and Michael became tenants in common. [ 18 ] Janet brought the application for partition and sale in January 2022 and judgment was obtained on consent in November 2022. [ 19 ] The sale of the Property closed on or about August 21, 2023.

The sale realized $650,000. The law firms representing the parties are each holding 50% of that amount. [ 20 ] Janet submits that under the agreement between the parties she is entitled to 50% of the proceeds. In the alternative, she argues that the presumption that co-owners share equally in the proceeds should apply and that Michael has not established a claim for unjust enrichment displacing that presumption. [ 21 ] Michael seeks an unequal distribution of the sale proceeds of the Property that accounts for the value of the improvements he made to the Property by way of unjust enrichment.

He also submits that he is entitled to compensation for maintenance of the Property. ANALYSIS Was there an agreement regarding the transfer of title? If so, what was it? [ 22 ] Janet’s position is that she is entitled to 50% of the proceeds because of the agreement between the parties. She says that she agreed that Michael would be a co-owner of the Property in exchange for his carrying out the renovations at his own expense. [ 23 ] Janet’s evidence is that Michael approached her in or about June 2006 for a loan for funds which would be used for the cottage, including an addition, and for other purposes.

Janet applied for a line of credit with the bank secured by the Property with the intention that Michael and his first wife Valerie could request funds as needed. Janet would then use the line of credit to obtain the funds which would be advanced to Michael and Valerie. Michael and Valerie executed a grid promissory note on July 24, 2006 for the advances. They also agreed to pay interest charged by the bank on the line of credit. Michael borrowed the first advance of $25,000 on June 22, 2006. Part of this advance was used to buy a boat for the cottage. In June 2007, $60,000 was advanced.

The money was used for the cottage renovations and for construction being done on Michael and Valerie’s Toronto home. The $85,000 loan and interest on it was repaid by Michael in November 2009. It appears that the renovations to the Property were completed by 2010. [ 24 ] In her second affidavit, Janet says: 30. In the beginning of 2007, after I had already taken out the loan for the renovation, Michael told me that he wanted me to transfer 50% of the Cottage property to him before he undertook the renovation.

He explained to me that he did not want me to sell the Cottage without his input if he was going to put any time and money into a renovation. I explained to him that I did not have the money to fund any renovations, or any additional maintenance costs not previously agreed to. 31. We agreed that I would transfer 50% of the Cottage to Michael, and he would be responsible for the renovations and half of the annual expenses, such as the property taxes, hydro and phone bills, insurance, dock placement and grass cutting.

His agreement to be responsible for the renovations was the consideration I received for transferring half of the Cottage property to him. [ 25 ] Michael’s explanation of the reason for the transfer of the Property differs from Janet’s. In his second affidavit, he says: 22. In or around May of 2007, Janet wanted to simplify her life and did not want to deal with any maintenance or construction issues with the Original Cottage. As a result, Janet and I discussed transferring the Original Cottage to me. 23.

Ultimately, it was agreed that a joint tenancy was the best option, with the intention that my mother’s interest would then transfer to me on her passing by right of survivorship (the “Agreement ”). [ 26 ] In cross-examination, Michael conceded that his desire for a larger cottage to accommodate his growing family was at least part of the impetus for him being put on title. [ 27 ] Michael also says that it was his “expectation” that on Janet’s death he would inherit the entire Property.

He says he would not have spent time and money renovating the Property if he had known that Janet was going to force a sale, rather than let it revert to him on her death.

[ 28 ] Although Michael refers to an “Agreement” in his affidavit, Mr. Sidlofsky in oral argument clarified that Michael’s claim to an unequal distribution of the proceeds of sale is based on unjust enrichment not on contract. Given his position that Janet’s contract claim is precluded by the Statute of Frauds , this is not surprising. His submission is that Michael had a reasonable expectation that the joint tenancy would not be severed as part of his unjust enrichment argument. Mr. Sidlofsky properly conceded that no document precluded Janet (or Michael) from severing the joint tenancy.

He also agreed that there was no evidence that either party turned their mind as to whether they could sever the joint tenancy. [ 29 ] In her second affidavit, Janet says: We went to William (Bill) McLeod's office in Oakville to sign the documents to complete the transfer on May 31, 2007. At the end of the meeting, Bill asked us whether our interests should be held as joint tenants or tenants in common. I said I didn't know, and we could do whatever Michael wanted. Michael asked that the property be held as joint tenants. [ 30 ] Michael did not refute this evidence in his reply affidavit.

The parties agree that they jointly retained Mr. McLeod. Neither side put forward any evidence from him. [ 31 ] Michael submits that Janet’s assertion that she transferred the Property to him because he agreed to be responsible for renovations is raised for the first time in her June 30, 2023 affidavit, conflicts with her first affidavit sworn January 19, 2022, and thus her later affidavit should be disbelieved.

I do not agree that Janet’s first affidavit (submitted in connection with her request for partition and sale) is inconsistent with her later affidavit (submitted in response to Michael’s affidavits asserting an unequal division of proceeds). Janet’s first affidavit states that Michael asked that Janet convey a 50% interest in the Property to him before he renovated the Property.

The details are spelled out in the Janet’s later affidavit. [ 32 ] Michael also argues that Janet’s assertion of an agreement that Michael had to pay for the renovations in exchange for receiving an interest in the Property is not credible, because if there was such an agreement, Janet would have recorded the agreement in writing. He notes that she asked Michael and Valerie to sign a promissory note and she tracked the loan amounts. I do not agree that documenting this loan implies that she would have necessarily documented an agreement that Michael was to be responsible for the renovations.

Janet was responsible for the bank loan. There is no suggestion that Janet was going to be liable for any renovation costs to any third party. Similarly, Janet’s tracking of the parties’ contributions to out-of-pocket expenses is not surprising, and also relates to the parties’ liability for bills for the cottage. I also do not see Janet’s acknowledgement in cross-examination that she was careful to record agreements as fatal. Indeed, if any party could be expected to have required that all the parties’ understandings be recorded in writing, it would be Michael.

Michael has a Bachelor’s degree in commerce and is a realtor. [ 33 ] The agreement posited by Janet, that she would put Michael on title to the Property in exchange for Michael renovating the Property, makes sense from Michael’s point of view – he would not put significant time and money into renovating the Property without being on title.

This is Michael’s evidence as well, except that he says he would not have renovated the Property without being assured that he would ultimately inherit the whole Property. [ 34 ] At the time of the transfer, the parties had already being sharing the Property and both had been contributing to the costs.

The parties’ continued 50/50 usage of the Property and 50/50 sharing of out-of-pocket expenses aligns with an agreement to transfer a 50% interest ownership interest in the Property, not a 100% ownership in the Property, in exchange for the renovations and additions. [ 35 ] If Michael’s version of the events were to be accepted, there was no consideration for the transfer of the Property, other than Michael’s dealing with any maintenance or construction issues. It is not disputed that Michael was already contributing to the expenses of the Property before the transfer.

It is not disputed that Michael did not pay Janet the consideration of $63,500 stated in the transfer. On Janet’s version, this makes sense because the consideration for the transfer was that Michael would undertake the renovations, not the payment of $63,500. [ 36 ] As noted, the figure of $63,500 is one half of the value as stated in a municipal tax bill.

This is indicative of an agreement that Michael receive 50% of the Property in exchange for undertaking and paying for the renovations. [ 37 ] On cross-examination, Michael explained the $63,500 by saying that it put a value on what his sister should receive from his mother instead of an interest in the Property. According to Michael, he was expecting to receive 100% of the Property on his mother’s death. He was “essentially receiving his sister’s half” of the Property on the transfer in 2007 and he would be entitled to 100% of the Property because of the renovations that he was carrying out. Janet denies this.

Further, the transfer of the Property was not part of or contemporaneous with any gift to Michael’s sister or with any estate planning by Janet. [ 38 ] Michael in his affidavit provides reasons why his sister did not receive an interest in the Property which includes the following statement: I agreed to build a new addition and renovate the existing cottage at my own expense , which my mother was going to be able to use; [ 39 ] This statement in Michael’s affidavit is consistent with an agreement in which he would be put on title in exchange for undertaking the renovations at his own expense . [ 40 ] Michael also said in his affidavit that it was agreed that he would share in the annual expenses of the cottage (including hydro, insurance and property tax) 50/50 with Janet and share the use of the original cottage with Janet. [ 41 ] Ms.

Spence submits that Janet’s evidence is more credible than Michael’s evidence. She points out that he overstates matters, for example in his first affidavit he said he maintained the Property on his own but later admitted in cross-examination that was not the case. Further Michael’s evidence is inconsistent, particularly with respect to the valuation of his contributions towards maintenance. I agree.

I find that Janet’s version of events is more credible and more consistent with the evidence and events. [ 42 ] Having reviewed the affidavits tendered by the parties and having reviewed the cross-examination transcripts in their entirety,

I find that there was an agreement under which Janet would put Michael on title to the Property as a joint tenant in exchange for Michaelbeing responsible for the renovations at his own expense. Both parties were to contribute to the maintenance of the Property and share inthe usage of the Property. There was no agreement or understanding that the parties would be precluded from severing the joint tenancy. Does the Statute of Frauds preclude enforcement? [43]

Section 4 of the Statute of Frauds[3] provides that contracts for the sale of land must be in writing in order to be enforceable.Michael argues that even if I find an agreement, it was not enforceable because it was not reduced to writing. In my opinion, the Statuteof Frauds does not apply because of the doctrine of part performance. [44] The applicable test for part performance was reviewed by Winkler C.J.O. in Mountain v. TD Canada Trust Company:[4] [80] In Erie Sand and Gravel Ltd. v. Seres' Farms Ltd. (2009), 97 O.R. (3d) 241, [2009] O.J.

No. 4179, 2009 ONCA 709, Gillese J.A.clarified the legal principles that apply when determining whether there is an oral agreement respecting land and, if so, whether there aresufficient acts of part performance to take the oral agreement outside s. 4 of the Statute of Frauds. As explained in Erie Sand, at para. 49,the doctrine of part performance is a creation of equity. The doctrine was created . . . to prevent the Statute of Frauds from being used as a variant of the unconscionable dealing which it was designed to remedy: see Hillv. Nova Scotia (Attorney General), (SCC), [1997] 1 S.C.R. 69, at para. 10.

The requirements in s. 4 of the Statute ofFrauds must give way in the face of part performance because the acts of part performance fulfill the very purpose of the writtendocument -- that is, they diminish the opportunity for fraudulent dealings with land based on perjured evidence. [81] Gillese J.A. made it clear, at para. 75, that the doctrine of part performance is not limited to a consideration of the acts of theplaintiff: In sum, it appears to me that given the decision of the Supreme Court in Hill, it is now settled law in Canada that the acts of both partiesto an alleged oral agreement may be considered when a court is called on to determine if sufficient acts of part performance take analleged agreement outside the operation of the Statute of Frauds. [82] Gillese J.A. also made it clear that the acts of part performance need not be "referable only to the contract alleged".

Rather, the testas established by the majority judgment of Cartwright J. in Deglman v. Brunet Estate, (SCC), [1954] S.C.R. 725, [1954]S.C.J. No. 47, at p. 733 S.C.R., is that it is sufficient if the acts are "unequivocally referable in their own nature to some dealing with theland". [45] The transfer of an interest in the Property and Michael’s undertaking of the renovations in 2007 after the May 31, 2007conveyance are acts of part performance. The actions of both parties are unequivocally referable to dealings with the Property inquestion.

Michael himself is clear that he would not have undertaken the renovations without receiving an interest in the Property. [46] I conclude that the Statute of Frauds is not a bar to the enforceability of the agreement.

Is a 50/50 division of proceeds unjust? [47] If I am wrong, and there is no enforceable agreement, I will consider whether Michael is entitled to more than a 50/50 shareof the proceeds of sale of the Property under the doctrine of unjust enrichment. [48] It is common ground that when parties hold title to a property in common, there is a rebuttable presumption that the proceedsof sale of the property will be divided 50/50.

However, this presumption may be rebutted if an equal division would result in an unjustenrichment.[5] [49] Janet contends that she is entitled to 50% of the proceeds because of the presumption. Michael argues that Janet would beunjustly enriched if she received half the proceeds. [50] To demonstrate the existence of an unjust enrichment the party making the claim must show that there has been:[6]

i) an enrichment; ii) a corresponding deprivation; and, iii) the absence of a juristic reason for the enrichment. [51] Janet accepts that she was enriched because the renovations increased her enjoyment of the Property and its value. She alsoconcedes that the second prong of the test is satisfied although she disputes the value that Michael puts on the renovations. She notes thatMichael and his guests also benefited from these renovations. [52] The parties disagree as to whether there was a juristic reason for the enrichment.

The absence of a juristic reason means that“there is no reason in law or justice” for the recipient’s retention of the benefit, making its retention “unjust” in the circumstances of thecase.[7] [53] The Supreme Court of Canada has set out a two-step analysis to the juristic reason part of the test. In Kerr v Baranow,[8]Justice Cromwell reviewed this approach, established in Garland v Consumers Gas Co.,[9] as follows: In Garland, the Court set out a two-step analysis for the absence of juristic reason.

It is important to remember that what prompted thisdevelopment was to ensure that the juristic reason analysis was not "purely subjective", thereby building into the unjust enrichment

analysis an unacceptable "immeasurable judicial discretion" that would permit "case by case 'palm tree' justice": Garland , at para. 40 . The first step of the juristic reason analysis applies the established categories of juristic reasons; in their absence, the second step permits consideration of the reasonable expectations of the parties and public policy considerations to assess whether recovery should be denied: First, the plaintiff must show that no juristic reason from an established category exists to deny recovery... .

The established categories that can constitute juristic reasons include a contract ( Pettkus , supra) , a disposition of law ( Pettkus , supra ), a donative intent ( Peter, supra ), and other valid common law, equitable or statutory obligations ( Peter , supra ). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis. The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery.

As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery.

As part of the defendant's attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. [ 54 ] In this case, the parties’ agreement is a juristic reason for the enrichment. [ 55 ] In the event that I am wrong and there is no enforceable agreement, I will consider the second step of the juristic reason analysis.

In my view, the reasonable expectations of the parties’ leads to the conclusion that there is a juristic reason and so it is not unjust for Janet to receive an equal division of the proceeds. [ 56 ] Michael’s evidence is that he was not going to renovate the Property at his own expense without being on title. This is also Janet’s evidence.

She said that Michael told her that unless he was put on title to the Property, he would buy another cottage. [ 57 ] Michael also says: In 2007, following the Agreement with Janet, and based on the promise that the Original Cottage would transfer to me 100% by right of survivorship, I commenced renovation work on the Original Cottage. I undertook this work at significant cost and effort relying on the Agreement I had with Janet that the Property would ultimately be mine alone. [ 58 ] As noted above, Michael does not rely on a contract as the reason he is entitled to an unequal distribution of proceeds.

He relies only on unjust enrichment. He submits in his factum that “he had a reasonable expectation that he would inherit the Property.” [ 59 ] At Michael’s request, he received an interest as a joint tenant, rather than as a tenant in common, when the lawyer asked how title to was to be taken. Because of this, he had an expectation at the time of transfer that he would inherit the Property on Janet’s death.

However, in my mind, the key question is whether he had a reasonable expectation that Janet would never sever the joint tenancy such that on the sale of the Property he would receive an unequal distribution of the proceeds, or a reasonable expectation that the Property would never be sold during Janet’s lifetime. In my view there was no such reasonable expectation. As noted above, there is no evidence that either party turned their attention to whether either of them could sever the joint tenancy. Neither party bound themselves not to sever the joint tenancy.

The transfer of the Property was not part of any estate planning by Janet. [ 60 ] If the parties’ understanding and expectation was that Michael was to inherit the Property on Janet’s death and that this was unalterable, then this understanding could have been given effect to by Janet transferring the Property to Michael, keeping only a life interest. Under the transfer that took place, Janet retained an ownership interest with all of the rights attaching to that interest. [ 61 ] The impetus for the renovations came from Michael. He wanted a bigger cottage for his expanding family.

The renovations more than doubled the size of the cottage. The addition included the construction of a bedroom for Michael that was for his exclusive use. Although Janet does not dispute that she benefited from the renovations, including the construction of the lounge area, some of the renovations benefitted only Michael.

Michael had the benefit of these renovations for more than 15 years, together with the ownership interest granted to him by Janet for which he made no up-front payment. [ 62 ] Prior to 2020 Michael never told Janet that he expected to be compensated for the renovations beyond his mother making him a co-owner of the Property. Furthermore, Michael’s evidence is that he did not undertake the renovations to make a profit. [ 63 ] Both parties benefited from their arrangements in respect of the Property. Michael received an ownership interest from his mother in the cottage.

Michael enlarged the cottage for use with his wife and children, rather than having to buy a cottage himself. He and his family benefited from the renovations he undertook as did Janet. Michael’s position is that he performed more of the maintenance tasks, including tasks that Janet was not physically up to, like tree removal.

However, Janet also contributed including by bringing the food and doing the cooking and laundry. [ 64 ] In Kerr , the Supreme Court held that mutual benefit conferral may be considered at the juristic reason stage of the analysis “to the extent that the provision of reciprocal benefits constitutes relevant evidence of the existence (or non-existence) of juristic reason for the enrichment.” [10] In this case, the conferral of reciprocal benefits is evidence of the juristic reason for the enrichment. [ 65 ] Having considered the authorities and having reviewed the evidence, I find that an equal division of the proceeds of sale is not unjust.

Value of the renovations and maintenance [ 66 ] Because of conclusion that I have come to that the parties should each receive 50% of the net proceeds of the sale, I do not have to address Janet’s argument that Michael has provided no reliable evidence of the cost of the renovations or his contributions to maintenance. Nor do I have to value the renovations and maintenance.

DISPOSITION [ 67 ] Janet and Michael are each entitled to a 50% share of the net proceeds of the sale, plus any accrued interest. [ 68 ] I encourage the parties to agree on costs. If they cannot, they may file written cost submissions not to exceed three pages (double-spaced) excluding cost outlines. Janet may shall deliver her costs submissions by February 14, 2024 and Michael shall deliver his costs submissions by February 28, 2024. [ 69 ] The parties shall prepare a form of report in accordance with these reasons under Rule 54.06.

If they cannot agree on the form and content of the report, they may arrange a teleconference to settle the report through my Assistant Trial Coordinator. L. La Horey, A.J. Date: January 23, 2024