Richardson v. Underwood, 2020 NSSC 174

SUPREME COURT OF NOVA SCOTIA (Family Division) Citation: Richardson v. Underwood , 2020 NSSC 174 Date: 20200522 Docket: SFHPA 102057 Registry: Halifax Between: Thomas Lee Richardson, by his Power of Attorney Kelli Richardson Applicant and Michelle Underwood Respondent LIBRARY HEADING Judge: The Honourable Associate Chief Justice Lawrence I. O’Neil Hearing: January 30, March 5 and 6, 2020, in Halifax, Nova Scotia Issues:

(1) What is the market value of a home the parties owned as joint tenants?

(2) What part of a line of credit secured against a second property is a joint responsibility?

Summary: The parties disagreed as to the value of one of the properties they owned and each offered expert evidence to support their position. The Court found the best valuation of one of the properties the parties owned was $298,000, not $350,000. The Court also found the line of credit balance existing as of December 31, 2011 was a joint liability of the parties and each party was equally responsible for it. Keywords: Real estate valuation; line of credit; secured Legislation: Partition Act, R.S.N.S. c.333 Cases Considered: Richardson v. Underwood, 2018 NSSC 258

THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET . IN THE SUPREME COURT OF NOVA SCOTIA Citation: Richardson v. Underwood , 20 20 NSSC 174 Date: 20200522 Docket: SFHPA 102057 Registry: Halifax Between: Thomas Lee Richardson, by his Power of Attorney Kelli Richardson Applicant and Michelle Underwood Respondent Judge: Associate Chief Justice Lawrence I.

O’Neil Heard: January 30, March 5 & 6, 2020 Counsel: Terrance Sheppard, Counsel for Thomas Richardson John Shanks, Counsel for Michelle Underwood By the Court : Overview [ 1 ] The parties were a common-law couple engaged in real estate projects involving small residential properties. They are currently joint owners of two properties in Bedford; hereafter referred to as Lister Drive and North Street. Mr. Richardson, through his power of attorney, sought equal division of the properties and relied upon a claimed presumption of equal division and the Partition Act . Ms.

Underwood argued any presumption of equal division was rebutted, unjust enrichment of Mr. Richardson should be found and a constructive trust in her favour should be found. She argued she should be found to be the beneficial owner of 100% of North Street but agreed she and Mr. Richardson are equal owners of Lister Drive. [ 2 ] I rendered a decision in this matter reported as Richardson v. Underwood , 2018 NSSC 258 . The Court found the presumption of equal division existed; was not rebutted by Ms. Underwood and the parties are equal owners of both properties.

[ 3 ] The Court concluded further that an equalization payment may be owed by one to the other given the values of the properties and subject to any agreement between the parties to release one or both properties to the other. I ruled an accounting for debt secured against each property might be necessary. [ 4 ] The parties have been unable to agree on (1) the value of the Lister Drive property. They also disagree on (2) what percentage of an outstanding line of credit solely in the name of Ms.

Underwood but secured against the North Street property is a joint liability. [ 5 ] As a result, the necessary and anticipated accounting between the parties must now be done by the Court. Evidence of Value of Lister Drive [ 6 ] Each party offered expert evidence to establish the value of the Lister Drive property. The credentials of the experts were not disputed. [ 7 ] Mr. Dawood’s evidence was preferred by Mr. Richardson. Ms. Underwood preferred the evidence of Ms. Lisa Glennie. [ 8 ] Ms. Glennie valued the Lister Drive property as $350,000 (exhibit 2). Mr.

Dawood valued the same property as $298,000 (exhibit 7). [ 9 ] Each expert distinguishes the conclusion of the other on the basis of a number of property features they say the other over or under emphasized, incorrectly considered or omitted. [ 10 ] The Court is tasked with determining a value for the Lister Drive property when two credible experts disagree. [ 11 ] Mr. Dawood placed greater emphasis on the known market values of properties in or proximate to the neighbourhood where the Lister Drive property is located.

That is, in determining the value of the Lister Drive property, he looked to sales of comparable homes in the same area. [ 12 ] Ms. Glennie, in contrast, used as comparables the market values of properties in or proximate to the Eaglewood neighbourhood and focused on properties that had a stream behind them, a feature of the Lister Drive property. Ms. Glennie testified the Lister Drive neighbourhood did not have many comparables because of the low number of sales in that area.

She said, for this reason, she looked to sales on the other side of the highway. [ 13 ] The two neighbourhoods are separated by a highway, the Dartmouth access road that runs from the Bedford highway to meet the highway running from Lower Sackville to the Burnside Industrial Park. [ 14 ] Two of the comparables used by Ms. Glennie bordered the Eaglewood sub-division and backed onto a brook. She also said these properties also backed onto parkland. However, the referenced parkland is across the street and behind a row of houses. Ms.

Glennie was mistaken when she stated these two Eaglewood comparables bordered parkland. [ 15 ] Ms. Glennie first testified that the green space around an elementary school in the Eaglewood area was not a factor favouring a higher value for a property in that area. She seemed to suggest the presence of the school would be a negative for properties near the school. She later backed away from that opinion and conceded it could be a factor that added value to area properties. [ 16 ] Ms. Glennie was in the unfortunate position of having less than twenty-four hours to prepare to offer her evidence. As a result,

her evidence suffered. [ 17 ] She said the Lister Drive property was over sized and that added value to it as compared to other properties in the Lister Drive area. In her view this difference was not given sufficient weight by Mr. Dawood. She said most of Mr. Dawood’s comparables were of smaller lots than the subject Lister Drive property and were therefore not good comparables. [ 18 ] Mr. Dawood testified the comparables used by Ms. Glennie are unreliable because these properties are within minutes by foot to Shore Road and the Bedford Basin shoreline. Shore Road runs along the shoreline of the Bedford Basin.

Shore Road properties were described by both witnesses as sought-after real estate. In Mr. Dawood’s view, proximity to Shore Road distorted the comparison made by Ms. Glennie and she failed to discount the Lister Drive property on the basis that it is significantly more distant from Shore Road.

In his view, this largely explains their different conclusions as to the value of the Lister Drive property. [ 19 ] He explained the distance the Lister Drive property is from the water and the existence of the highway separating the neighbourhoods caused him to focus his attention on properties in the same area as the subject property when identifying comparable sales and assessing the value of the subject property. [ 20 ] He said he did consider the positive features of the Lister Drive property. Mr. Dawood said he adjusted the value of the Lister Drive property upward given the presence of the brook behind it.

He also said his research confirmed there is no difference in the value of properties in the Lister Drive area because a lot is bigger or smaller than another. As a result he said he could not justify adding value to Lister Drive by virtue of the fact the lot was larger than some other lots in the area. Line of Credit [ 21 ] As stated, the Court must also decide what portion of the debt in the form of a line of credit, solely in the name of Ms. Underwood but secured against the North Street property is a joint responsibility of the parties. [ 22 ] Mr. Lee Richardson, Ms. Kelli Richardson and Ms.

Michelle Underwood each offered evidence to assist the Court in its determination of the level of the indebtedness attributable to the parties. A mortgage on the property also exists. As the mortgage was paid down over the years, the line of credit could be increased, and this is what occurred. The total credit limit, however has remained $368,000. [ 23 ] Exhibit 4 (in the first hearing at tab

A) shows the line of credit balance to have been $149,686 to January 11, 2012. The previous monthly balance, i.e. for December 2011 was $145,625.66. The credit limit is shown as $368,000. [ 24 ] By March 11, 2018, the balance on the line of credit was $281,160.83 (exhibit 3-tab G, first hearing). The balance of a connected (mortgage) account was $86,055.29. The available credit was therefore $783.88 on this date. [ 25 ] In early 2020, the balance on the line of credit was approximately $299,887 and the mortgage balance was approximately $49,613. - Mr. Thomas Richardson [ 26 ] Mr. Richardson testified.

I am satisfied his evidence can not be relied upon. As was the case when he testified in the first part of this hearing, his evidence remains unreliable. All of my observations of him as a witness then continue to be true. - Ms. Underwood and Ms. Kelli Richardson [ 27 ] The parties offered the additional evidence of Ms. Underwood and Ms. Kelli Richardson. I have considered their evidence in coming to the following conclusions.

Conclusion [ 28 ] I am satisfied on a balance of probabilities the value for the Lister Drive property is more accurately provided in the assessment of Mr. Dawood. For the reasons offered by Mr. Dawood I am satisfied the value assigned to it by Ms. Glennie is an over valuation. Principal among those reasons is the proximity of the comparables used by her to Shore Drive and the water. The Lister Drive property is not proximate to the waterfront as are the properties on Golf Links Drive referenced by Ms. Glennie.

I am also satisfied the comparables in the Lister Drive neighbourhood more accurately reflect the value of the subject property. The two neighbourhoods are separated by a highway and this is a significant differentiating feature. I therefore value the Lister Drive property at $298,000. [ 29 ] Ms. Underwood moved to Florida in 2011 but returned to Halifax later that year and lived with Mr. Richardson for a short time. The parties then separated and have not reconciled. Ms.

Underwood moved into the North Street property for a number of months before returning to live in Florida where she continues to reside. [ 30 ] Regrettably the court is unable to rely on the evidence of Mr. Richardson or Ms. Underwood to determine whether there was a benefit or not to him or whether he agreed to the increases in the line of credit. [ 31 ] Ms. Underwood’s evidence does not have an air of reality to it given the lifestyle decisions she and Mr. Richardson made after December 2011. After that date she lived a life independent of Mr.

Richardson and he was essentially living a life without her and her draws on the line of credit were overwhelmingly for her sole benefit. It cannot be inferred that Mr. Richardson was benefiting from these expenditures nor that the parties were partners in their personal lives. [ 32 ] I am satisfied the level of debt against the North Street property existing as of December 31, 2011 is the debt they were equally required to pay. Increases in the line of credit after that date are solely the responsibility of Ms. Underwood and were for her sole benefit.

I am unable to conclude increases after December 2011 were attributable to funding shared ambitions or reflective of an ongoing and mutually supportive relationship. I am satisfied that until the end of December 2011 the subject debt was one they jointly accepted in the context of their being a couple making decisions for their mutual benefit, regardless of those benefits being apparent. [ 33 ] The expenditures on the line of credit after December 2011 cannot be objectively interpreted as conferring a direct or indirect benefit on Mr. Richardson and should therefore be the sole responsibility of Ms. Underwood.

Nor can the court conclude they were in the nature of a gift to Ms. Underwood. They are therefore her sole responsibility. [ 34 ] Ms. Underwood was the beneficiary of the revenue generated by North Street and Mr. Richardson benefited from his occupation of a home, in which Ms. Underwood had a half interest. The court is not being asked to account for these benefits at his time. The court reserves jurisdiction to address unresolved peripheral issues for which a level of confidence was expressed that counsel could resolve after the court ruled on the two issues the subject of this decision. ACJ