Real Estate Disputes

Toronto Area Real Estate Dispute Lawyer

Joint ownership of real estate can arise for many reasons:

  • Spouses purchase property as their home.
  • Two or more people buy property together as an investment opportunity.
  • Two or more people receive property as an inheritance.

No matter how individuals came to own a piece of property jointly, circumstances can change over time, interests diverge, and one co-owner may decide they want out. For example, perhaps one co-owning business partner wants to expand a building while the other intends to sell the property because they need capital for another venture. Or, co-owning spouses may be divorcing and one spouse wants to sell the property, but the other spouse wants to maintain it for future generations. Or, one sibling wants to live in the inherited home indefinitely while another sibling wants it sold.  There can be a significant conflict if the other co-owner will not agree to a sale of the property or if the parties cannot agree on the terms of a buyout. Fortunately, if you find yourself in this situation, and your efforts to negotiate are getting you nowhere, there is a remedy under Ontario law.

THE ONTARIO PARTITION ACT

If co-owners cannot agree on what to do with their real estate, they can make an application under Ontario’s Partition Act which allows for a partition of the property or a court-ordered sale of the property where the proceeds of the sale are divided among the co-owners as determined by the presiding judge.

HOW I CAN HELP

If you find yourself in a real estate dispute, you should contact me right away to discuss your situation. During this discussion, I will ask you for an overview of the situation and give you my preliminary analysis. If you want to proceed to meet with me, we can schedule an appointment. At our first meeting, we will go over the following in detail:

  • Your history with the property.
  • Any contractual obligations between you and the co-owner(s).
  • Any relevant documentation that you can provide.

At the conclusion of the meeting, I will advise you of your rights and responsibilities and will discuss any of the options that may be available. With me, you can expect dedicated and aggressive representation.

MY EXPERIENCE

I have dealt with many real estate disputes. In one recent case, a reasonable settlement could not be achieved, and so the matter proceeded to court. The trial decision is below. (All of the names and other identifying information has been changed.

Summary of Trial Decision

In Gilbert v. Perry, Patrica Gilbert and Thomas Perry jointly owned three separate properties (a fourth was sold and the proceeds settled before litigation), but a dispute arose over the disposition of the properties when their ten year personal and business relationship ended. The parties failed to enter into any written agreement defining the rights and obligation of Patricia and Thomas regarding any of the properties. The parties agreed that during their period of joint ownership Patricia provided the credit and down payments either from obtaining mortgages, her mom’s funds, or mortgages obtained from lending institutions. Thomas did not have the credit to obtain the necessary financing or funds to invest, but he performed maintenance and repairs on the properties and managed the properties used as rentals by collecting rents and paying expenses, such as taxes, utilities, mortgages, and loans.

The parties did not have a written agreement or even engage in a discussion regarding how Thomas would be reimbursed for repairs and renovations or the distribution of profits between the owners. There were other factual complications that made the calculation of these amounts even more difficult, such as the contributions of Patricia’s mother. Patricia contended that she understood her relationship to be that of an equal joint owner based on her risk in carrying the mortgages and making down payments. Thomas contended that the loans obtained by Patricia and her mother were to be paid off, but he alone was entitled to net profits. If the court decided that the net profits were to be divided, Thomas argued that he was entitled to certain offsets for money spent for specific renovations and repairs. Thomas also took the position that he was entitled to reimbursement for any shortfalls in the rent if the court decided the net profits were to be equally divided.

The court initially observed that there was no agreement between Thomas and Patricia because they did not expect their property ownership to outlast their personal and business relationships. Because the parties did not have a written or oral agreement regarding the right to net profits, the court determined the most reasonable assumption was that they intended to split the net profits. There were also many complex issues regarding potential offsets and credits.

The complete court decision is in the next section.

Trial Decision

Gilbert vs. Perry

1      This action arises out of the failed personal and business relationship of the plaintiff, Patricia Gilbert, and the defendant, Thomas Perry. Patricia is seeking the sale of the three properties that Thomas and she jointly owned.

2       Alison Gilbert is Patricia’s mother. She is under a disability with advanced dementia. Patricia is her mother’s attorney for property pursuant to a power of attorney.

3       Brenda Livingston, a mutual friend of Patricia and Thomas, was on title in name only with them to one of the properties. She was noted in default and did not appear.1

4       Patricia Gilbert is a dental hygienist. She met Thomas in 1997. Thomas was Patricia’s contractor. By 1998, they began living together in Patricia’s Westhill Court house.

5      During the ten years of their relationship, Patricia and Thomas bought four income properties. Patricia paid most of the transaction costs and provided the financing for the purchases, either from her own resources or her mother’s funds under her power of attorney, and Thomas renovated and managed the properties that were leased to tenants. Three of the four properties are in issue in this action: 5 and 12 Squareton Avenue and 60 Ravine Crescent, in Toronto.

6      There is no dispute about the amount of monies loaned by Alison to finance the purchases, or that Thomas could not qualify for mortgage financing without Patricia being on title to the properties and the institutional mortgages. Patricia and Thomas also agreed that Thomas would carry out whatever repairs or renovations were required to each property to make them suitable for tenants and that Thomas would manage the properties, collecting rents and paying all property expenses, such as the payment of taxes, utilities, loans and mortgages.

7      Patricia and Thomas did not discuss whether or how Thomas would be reimbursed for the repairs and renovations to the properties, when the properties would be sold, and how any profits from the sales of the properties would be distributed between them. They agreed that Patricia and her mother would be repaid their loans.

8      After their personal relationship ended, in August 2008, Thomas moved out of Patricia’s Westhill Court house and into one of the rental units at 5 Squareton Avenue, although he left behind some of his personal belongings and renovation materials.

Issues:

9      Patricia commenced this action in March 2009 to obtain an order requiring the sale of the three properties, payment of the monies owing under Patricia’s and Alison’s loans and other expenses, and an equal distribution of any net profits, after payment to Thomas of a reasonable amount for the repairs and renovations that he carried out to the properties. In the course of this litigation, 60 Ravine Crescent was sold on the consent of the parties and the net profits from the sale are being held in trust.

10      Thomas resists the sale of 5 and 12 Squareton Avenue and maintains that Patricia and her mother can be fully paid out from the net profits of 60 Ravine Crescent. He also maintains that he alone is entitled to any profits from the properties.

11      In the alternative, Thomas claims that, if this Court determines that the net profits from the properties are to be divided equally between Patricia and him, he is entitled to be reimbursed for any shortfall in the rents from the properties.

12      Thomas takes no issue with the principal amount of the loans from Alison but disputes the total amount of the construction advances from Patricia and interest claimed on the loans, arguing that interest on the loans should have terminated when 60 Ravine Crescent was sold in October 2009. He does not dispute the 6% annual interest rate claimed by Alison.

13       Thomas also disputes the following amounts that Patricia and Alison are claiming should be paid out of the profits from the sale of the properties:

i. Patricia contends that her mother lent $800.00 to Thomas. Thomas denies the loan, asserting that it was payment for work that he carried out to Alison’s house.

ii. Patricia claims payment from Thomas of the cost of $2,500.00 related to the removal of Thomas belongings and leftover building materials from Westhill Court and her mother’s house. Thomas says that he had removed most of his belongings and disputes that all of the building materials belong to him.

Analysis:

i. Division of profits:

14      As is often the case with business dealings between family members or spouses, very little between Patricia and Ron Thomas was reduced to writing: there was no partnership, loan or other agreement setting out the terms of their business relationship with respect to the properties purchased. Thomas submitted no invoices to Patricia and kept no dockets for the renovations or repairs carried out to the properties or for any services provided to Patricia or her mother.

15      There is no imbalance of bargaining power in this case. Both Patricia and Thomas are well educated and articulate: Patricia is qualified as a dental hygienist and has a dental hygienist position; and Thomas is an insurance salesman who has successfully operated a renovation and construction business for over fifteen years.

16       Patricia has produced copies of duplicate cheques, bank statements and a contemporaneously prepared spreadsheet of her payments to Thomas; however, those documents contain a description of the purpose for some but not all of the payments that Patricia made.

17       Patricia and Thomas admit that they had no discussions concerning the sale of the properties and the division of any profits.

18      Patricia testified that her expectation was that she would received an equal share of any profits because of her role in financing the purchases and in bearing the risk of the mortgages on the properties. According to Patricia, if Thomas had proposed that she not receive an equal share, she would never have agreed to finance the properties and bear the risk of the mortgages.

19       Thomas assumed that he would keep all of the profits and that Patricia was an owner only in name. He claimed that the basis for his assumption must have been from discussions with Patricia; however, he was unable to give any particulars of any such discussions, which were denied by Patricia.

20      Absent written documentation or solid recollections of oral agreements, of which there is none, I find that the parties did not agree or discuss how the net profits from the sales of the properties would be divided between them. The most logical and reasonable expectation of the parties must therefore have been that they would share equally the net profits from the sales of the properties, after deducting the loans, upon which the parties had reached an understanding, and reasonable repair and renovation costs, to which Patricia agrees.

21      This conclusion is in keeping with the evidence of the parties. At the time that Patricia and Thomas entered into these transactions, neither thought that their personal relationship would end before the properties were sold. As a result, they simply did not turn their minds to those eventualities.

22      Further, Patricia and Thomas were equal owners of all of the properties that they purchased. Although Thomas relied on the fact that Brenda Livingston was on title as a co-owner of 5 Squareton Avenue as evidence against the presumption of equal ownership, the 5 Squareton Avenue transaction supports Patricia’s position that Thomas and she were equal owners.

23       Brenda Livingston was put on the title to the property in an attempt to avoid the subdivision control effects stipulated under section 50(3)(b) of the Planning Act2 , which prohibit conveyances or certain other dealings with property when the abutting property is owned by the same person. Of particular importance is that Ms. Livingston signed a Declaration of Trust, which was prepared by the lawyer acting for Patricia and Thomas, attesting that she held her interest in 5 Squareton Avenue in trust “in equal shares” for Patricia and Thomas and that Patricia and Thomas are the beneficial owners “in equal shares” of Ms. Ms. Livingston’s interest in 5 Squareton Avenue.

24      If the ownership interests between Patricia and him were not equal, Thomas should have given different instructions to his real estate lawyer at the time that 5 Squareton Avenue was purchased. In the same way, he should have raised this issue at the time of the purchase of the three other properties.

25       Patricia’s assumption that she owned the properties equally with Thomas was therefore understandable and reasonable and was the basis on which she provided financing and became responsible under the mortgages. Thomas admits that he did not qualify for financing or have the funds to close the transactions. Had Patricia known that the ownership was not equal, she would not have entered into the transactions. It is therefore too late for Thomas to contest Patricia’s reasonable presumption of equal ownership.

26       Thomas argues that, if profits were to be distributed equally, then Patricia must also be equally responsible for any shortfall of property expenses not covered by the rents received from the tenants of the properties.

27      The difficulty with Thomas position is that there is no dispute that the parties had expressly agreed that Thomas would manage the properties, collect rents, pay expenses, including interest on the mortgages and loans, and keep any surplus or be responsible for any shortfall. This arrangement was performed. Thomas entered into all tenancies and declared all rental income under his name alone and, presumably, solely received any tax benefit from the deduction of any expenses.

28      If Thomas had wanted to make this arrangement concerning the properties contingent on his keeping any profits from their sale, then he should and could have required that term to be part of the parties’ agreement with respect to the management of the property. It is too late for him to introduce a new condition into the agreement at this point in time.

29      I therefore find that Thomas is solely responsible for any shortfall from the property and that Patricia is not required to make any payment to Thomas for any shortfall out of the profits from the sales of the properties.

ii. Calculation of net profits:

a) Repayment of loans:

Alison’s loans:

30      As already noted, Thomas does not dispute3 that the amount of $120,000.004 from Alison’s funds was loaned at a 6% annual interest rate to pay for transaction and closing costs and financing of the 5 and 12 Squareton Avenue properties, and agrees that those monies must be repaid.

31       Patricia submits that an additional amount of $800.00 drawn from Alison’s funds on February 15, 2008, was loaned directly to Thomas and that he should reimburse Alison for that loan from his share of the profits.

32       Thomas asserts that he does not owe Alison $800.00 as a loan but that the amount was payment for work done to Alison’s house. I agree with Thomas’s position.

33      There is insufficient evidence concerning the nature of the $800.00 payment. While Patricia claims that the $800.00 was one of a series of small cash flow loans to Thomas, she produced no evidence of any of the other payments. She claims that she used her mother’s account because she did not have extra cash flow at that time, notwithstanding that she still had her BMO personal line of credit, which she used to make other similar payments to Thomas.

34      Further, at the time that the $800.00 advance was made from Alison’s funds, there is no question that it was Patricia and not Alison who had advanced the funds to Thomas. Based on the amounts charged for similar work by Thomas, the $800.00 is more consistent with it being payment for work done by Thomas than a loan. If it were a loan, it would have been more logical for Patricia to have paid Thomas from her personal line of credit and describe it as such, like she did for other loans of a similar nature, which are reflected on her spreadsheet and duplicate cheques.

Patricia’s loans:

35       Thomas does not dispute that Patricia lent $11,200.00 at the time of the closing of 12 Squareton Avenue. He takes no position concerning the amount of $23,300.005 paid by Patricia at the time of the closing of 60 Ravine Crescent and $3,000.00 paid by Patricia at the time of the closing of 5 Squareton Avenue.

36       Patricia has produced proof of the payment of those amounts by way of duplicate cheques drawn on and the statements from her personal line of credit with the Bank of Montréal, the closing documents from their real estate lawyer on the closings, and the spreadsheet of the payments that she prepared at the relevant time, and is entitled to be reimbursed for those loans made to pay the down payment and closing costs.

37       Patricia claims that she also loaned to Thomas the amount of $85,600.00 in construction advances for 60 Ravine Crescent and has produced copies of duplicate cheques drawn on her personal line of credit made payable to Thomas, which total that amount.

38      In support of her claim, Patricia also produced at trial a printed copy of the running spreadsheet that she had prepared and kept updated at the relevant time with respect to the deposits to and draws from her personal line of credit. On that spreadsheet, she described the nature of each deposit and disbursement, in particular, each cheque to Thomas for renovations with respect to 60 Ravine Crescent, which she described as loans for 60 Ravine Crescent.

39       Thomas does not dispute that Patricia made construction advances to enable him to carry out the renovations to 60 Ravine Crescent. He disputes that the entire amount of $85,600.00 was advanced, although he acknowledged that the majority of that amount was paid as construction advances for 60 Ravine Crescent, for which Patricia should be reimbursed.

40      Although Thomas claims that some of the monies were paid to him for work that he had completed at Patricia’s Westhill Court house, he did not produce any invoices or other documents with respect to that work, as he had not rendered any to Patricia, nor could he provide concrete details as to when the work was carried out to Patricia’s house, the total amount charged for the work completed, or even match Patricia’s cheques from her personal line of credit to particular work projects.

41      In particular, Thomas testified that he carried out waterproofing at Patricia’s Westhill Court house “around the time of the Ravine construction”; he built a back breezeway in the “fall, summer or spring of 2005 or 2006”, spending “probably at least a week”, at an hourly rate that “could have been” $50 per hour6 , charging “well over $10,000.00”; “at the same time”, “during the warm summer months”, he carried out work on Patricia’s garage, using two other workers7 , which took him several weeks in 2005 or 2006; and he painted her living room, dining room and hallway in the “spring, summer or fall of 2005 or 2006″.

42      At the same time that Thomas said he was carrying out work at Patricia’s Westhill Court house, he testified that he was spending ten or twelve hours a day working on 60 Ravine Crescent. He acknowledged that he was spending huge amounts of time at 60 Ravine Crescent supervising his general laborers, Simon DeVares and Lucas Burrows. He would leave at 7:00 in the morning and come back at 7:00 at night. He also had other jobs at that time. It seems unlikely that Thomas would have had the time to carry out the rather intensive projects at Patricia’s house which he described.

43       Patricia testified that the renovations described by Thomas had been carried out in the previous decade before the purchase of 60 Ravine Crescent. Patricia’s evidence is supported by her duplicate cheques, statements and spreadsheet. On her spreadsheet, there were entries about payments made to Thomas for the work that he had completed at her Westhill Court house, such as the entries for her kitchen, stairs, eavestrough, and bathroom in 1998, 1999, 2000. Those payments were separate from the $74,400.00 in construction advances made to Thomas for 60 Ravine Crescent over the period August 2005 to December 2007.

44      Further, most of the Ravine cheques were written to Thomas during the period that most of the renovations were carried out to 60 Ravine Crescent. The only payment for which there is no description either on the duplicate cheque or Patricia’s spreadsheet is number 46 dated December 15, 2007, in the amount of $2,000.00. If it had been for work completed at her house, it is more probable than not that Patricia would have noted such a description. Thomas admitted that he was still carrying out work at 60 Ravine Crescent during that time period and did not claim that the $2,000.00 payment was a gift from Patricia. As such, it was a loan that has to be repaid.

45      I do not accept Thomas unsupported allegation that Patricia may have altered the description of each of the cheques. The duplicate cheques amount to 85,600.00 and could not have been altered because they are the carbon copies of cheques sent to Thomas; and some of them contain the description of the loan for construction to 60 Ravine Crescent. With the exception of cheque number 46, the remaining duplicate cheques, which do not contain the loan description for 60 Ravine Crescent, are described as being for 60 Ravine Crescent in Patricia’s spreadsheet, and well exceed the estimates given by Thomas at trial for the work allegedly carried out at Patricia’s house.

46      Further, Thomas has admitted that he required the construction advances from Patricia to carry out the renovations at 60 Ravine Crescent. He testified that he was way over his credit limit and could not obtain any bank financing. He claims renovation costs for 60 Ravine Crescent of $97,300.00. It is therefore logical that most of the monies to fund the renovations must have come from Patricia.

47      I therefore conclude that Patricia has proven that she lent the amount of $85,600.00 to Thomas as construction advances for 60 Ravine Crescent, which must be repaid to her before any distribution of profit.

Interest payable on the loans:

48      With respect to the interest claimed on the loans, I do not agree with Thomas submission that interest should have stopped on the sale of 60 Ravine Crescent. While interest has been accruing in the trust account, it is not sufficient to cover the interest payable on those loans in accordance with the parties’ agreement.

49      As admitted by Thomas during his cross-examination and as evidenced by the correspondence between the parties’ solicitors produced at trial, he had instructed his solicitor at that time not to agree to pay any of the monies from the sale of 60 Ravine Crescent to the plaintiffs on account of their loans and that, without his authorization, no payment could be made to the plaintiffs.

50      The loans to Patricia and her mother having remained unpaid, there is no reason why interest should not continue to accrue.

51      With respect to the amount of interest to be applied, it is agreed that the interest rate for Alison’s loans is 6%, which has accrued unpaid since March 1, 2009.

52      There is insufficient evidence concerning the interest rate to be applied to Patricia’s loans from March 1, 2009. According to their agreement, Thomas had agreed to pay and paid interest to Patricia in accordance with the rate of interest charged to her on her personal line of credit from which she had drawn the funds lent to Thomas as construction advances. Patricia closed that line of credit and did not provide any evidence of that rate since March 1, 2009, the date from which Patricia claims interest.

53      As a result, pursuant to section 128 of the Courts of Justice Act, the prejudgment interest rate of 4.5%, as at March 28, 2009, when the action was commenced, shall be used to calculate the interest owing from March 28, 2009 on the $85,600.00 of advances made by Patricia.

54       Patricia agrees that from the total of 85,600.00 and accrued interest should be deducted the amount of $126.00 that Patricia overcharged Thomas for interest, using her mortgage interest rate, rather than the lower variable interest rate of her line of credit.

b) Thomas’s renovation costs and disbursements:

55      I turn next to the amount of $210,000.00 in renovation costs claimed by Thomas with respect to the three properties: $83,000.00 for 5 Squareton Avenue; $59,000.00 for 12 Squareton Avenue; and $92,000.00 for 60 Ravine Crescent.

56      Patricia has no complaint with the work performed by Thomas. As noted above, Patricia agrees that Thomas should be paid a reasonable amount for the renovation and repair work and expenses but contests the amount claimed by Thomas as excessive.

57      In support of her position, Patricia called the expert evidence of Mr. Oliver Pratt, President of his own company, Pratt Construction and Design Co. Mr. Pratt is an experienced general contractor who has been in the residential renovation business for over forty years.

58       Mr. Pratt testified that Thomas’s work was excellent. His criticisms related only to the costs, namely, that some but not all of the hours expended, materials costs, and the hourly rates charged by Thomas and others on the properties were too high for the kind of work performed at the relevant times.

59      For the particular reasons set out in his report and his evidence at trial, Mr. Pratt was of the view that the reasonable amount that should be allowed for Thomas’s renovation work and expenses is as follows:

  • 5 Squareton Avenue: $41,826.73
  • 12 Squareton Avenue: $23,547.62
  • 60 Ravine Crescent: $57,468.55

Total: $122,842.90

60      I do not accept Mr. Pratt’s opinion in its entirety for the following reasons:

i. Mr. Pratt failed to take into account the particular condition of the houses that resulted in more time being required to complete certain tasks.

For example, Mr. Pratt was unaware that 5 and 12 Squareton Avenue do not have basements; he admitted in cross-examination that, without basements, more time would be needed to go under the houses to complete the electrical work.

Further, Thomas explained that additional hours were spent on flooring and framing because the floors and walls of the houses were crooked and because apartment units were created out of nothing; and that demolition of 60 Ravine took longer because of extensive termite damage, which meant that the shell of the house had to be reinforced before the interior was taken apart.

I agree with Thomas that Mr. Pratt did not allow for adequate time for the considerable renovations of the properties, including 5 Squareton and 60 Ravine that were completely gutted, and for new interior construction, all new plumbing and electricity, and the installation of separate apartment units.

ii. Mr. Pratt opined on matters that were not within his expertise, such as landscaping. Further, Mr. Pratt admitted that he “wasn’t big in electrical” and that he did not take on “massive” electrical or plumbing work, just bathrooms or kitchens.

iii. Mr. Pratt admitted that the rates that he was using in his report were not always current: for 12 Squareton Avenue, he used 2002 rates, although the repairs and renovations to the property were carried out in 2004 to 2009; for 60 Ravine and 5 Squareton, he used rates for the period 2004 to 2005, admitting that the rates for 2007, when part of the work was completed on 60 Ravine (renovations were carried out from 2005 to 2008 and most of the work on 5 Squareton was carried out, would be three to four per cent higher.

iv. Mr. Pratt’s hourly rates seemed unusually low for certain tasks. For example, while he testified that a $40.00 hourly rate for an electrician was “outrageous”, he failed to consider the invoice from the electrical contractor engaged by Thomas who charged for its services at a $55.00 hourly rate for the work completed at 12 Squareton Avenue.

v. Mr. Pratt took issue with the amounts paid to others (for example, electricians, plumbers, and general laborers), and for building materials and other products, which should not be discounted but treated as disbursements.

vi. Mr. Pratt also disputed certain design decisions that were beyond the scope of his opinion. The principal example of this is Mr. Pratt’s criticism of Thomas’s installation of a hot water heating system at 60 Ravine Crescent, rather than a forced air heating system. Mr. Pratt preferred the latter simply because of its less expensive cost, regardless of its quality as a heating system and the greater amount of space that it would occupy.

Similarly, he had no idea how much a store like Home Depot or Rona would charge for the installation of a kitchen. He admitted that he had never installed kitchens on that basis and that he has never assembled kitchens.

61      It is also important to note that Patricia had used Thomas’s repair and renovation services since 1997 without complaint about the cost until the commencement of this action. His hourly rate and his work were well known to her during the period that he was carrying out the renovations to the properties that they had purchased. Having agreed that Thomas would carry out the renovations, knowing his work and the hourly rate that he charged, it is difficult for Patricia now to complain that Thomas’s hourly rate for work appropriate to his abilities was too high or that he paid too much for the contractors who assisted him.

62      Nevertheless, as Thomas is claiming for the value of his work, rather than on a time and expenses basis because he did not keep track of his time, it is relevant to consider whether Thomas spent too much of his own time at his full hourly rate for work that could have reasonably been undertaken by others at a lower rate.

63      It appears that Thomas may have charged too much for certain tasks. For example, he charged $40 or $45 per hour for unskilled tasks such as the removal of dirt, disposal of rubbish, picking up and delivering materials to the building sites, and other menial tasks. I agree with Mr. Pratt that all of those tasks should have been charged at a general laborer’s rate of $20 per hour.

64      The evidence also establishes that Thomas charged too much of his time in supervising other laborers because they were not competent to carry out the assigned work without his assistance.

65       Thomas testified that he charged his hourly rate of $40 or $45 for supervising $20 per hour laborers who required a lot of instruction and could not do the work properly without his supervision, because he could not obtain better workers. In particular, Thomas admitted that he was at the property “virtually all the time Simon DeVares was there” because he needed direction and was not skilled enough to complete the work alone.

66       Mr. Pratt testified that he would come around to check on jobs on a daily basis but that he could trust his carpenters and other laborers to work on their own.

67      If Thomas could not obtain more qualified or able assistance, either he should have done the work himself or should have charged a lower hourly rate while supervising others. While Thomas was entitled to charge his usual hourly rate when he was designing interiors, managing the project, or performing skilled labor such as carpentry, electrical and plumbing work, it was not reasonable for Thomas to charge effectively $60 or $65 for work that a $20 laborer should have been able to complete independently without Thomas’s constant supervision and assistance.

68      Finally, Thomas admitted that the estimates of his time given to Mr. Pratt were only estimates because he did not keep track of his time spent on the properties or any books of account with respect to the renovations.

69      As a result, I conclude that Thomas is entitled to be paid all disbursements including GST incurred with respect to the properties, which are detailed at Tabs 2, 4 and 6 of Exhibit 1, and the monies paid to the laborers who assisted him with the repairs and renovations, which are set out in the documents that were marked as Exhibits 3, 5 and 6. Prejudgment interest at 4.5% is also payable on those amounts.

70      I also find that, for his own work, Thomas is entitled to be paid the additional total amount of $61,000.00 for the renovations and repairs carried out to the properties, as follows:

  • 5 Squareton Avenue: $27,000.00
  • 12 Squareton Avenue: $12,000.00
  • 60 Ravine Crescent: $22,000.00

c) Removal costs:

71      With respect to the 2,500.00 claimed by Patricia for the removal of Thomas’s belongings from 31 Westhill Court and 5 Canon Boulevard, the evidence does not establish that both invoices were for that purpose.

72      The $450.50 October 8, 2008 invoice records that “metal wood dressers, etc.” were removed from her mother’s house at 5 Canon Boulevard. Wendy testified that the description on the invoice must have been an error because she did not recall there being any dressers. Thomas suggested that there may be commas missing between the words, but also stated that he did not leave behind any dressers or any other materials at 25 King’s Park Boulevard. In my view, Patricia has failed to demonstrate that the materials removed belonged to Thomas.

73      The other invoice dated November 14, 2008 for $1,190.00 records removal of “Building Material, Tiles, Garage” from 31 Westhill Court, which Patricia testified belonged to Thomas. Thomas admitted leaving some materials behind. I conclude that Thomas is responsible for payment of the amount of $1,190.00. This amount shall be deducted from the amount otherwise payable to Thomas for the renovation and repair costs.

d) Interim distribution:

74      Following the sale of 60 Ravine, the parties agreed upon and received a $12,000.00 interim distribution from the proceeds of sale.

75      The interim distributions must be deducted from the loans otherwise payable to Patricia and the renovation costs otherwise payable to Thomas.

iii. Sale of 5 and 12 Squareton Avenue:

76      The last issue is whether 5 and 12 Squareton Avenue should be sold.

77      It is well established that, under the Partition Act8 , a co-owner has a right to compel the partition or sale of properties and should only be deprived of this statutory right in circumstances of malice, oppression and vexatious intent. A judge can refuse partition and sale because hardship to the co-owner resisting the application would be of such a nature as to amount to oppression.9

78       Thomas does not allege that Patricia has acted maliciously, oppressively or with vexatious intent and acknowledges that it is reasonable that she should want to be paid her monies from the properties.

79       Thomas asserts that the sale of the properties would cause him undue financial hardship. In particular, Thomas testified that if the properties are sold, he will be “taking a very great hit financially” because of the loss of future profits from the redevelopment of 5 and 12 Squareton.

80       Thomas testified that he has no present plans to sell 5 and 12 Squareton Avenue because, as acknowledged by Patricia, his ultimate goal in purchasing the adjoining properties was to demolish them and build new houses on the properties. Thomas admitted that he does not at present have the financial resources to realize his development dream for the Squareton Avenue properties.

81       Thomas’s future plans to redevelop and sell the Squareton Avenue properties are also uncertain: he testified that he may not develop the properties but retain them as income properties to provide him with retirement income. He is at present 55 years old and working full time in his renovation and construction business.

82      The only hardship that Thomas said he would suffer is financial: Thomas has been living at 5 Squareton Avenue without paying rent since 2008; and he admitted that he could afford to rent other premises.

83      In response to Patricia’s prima facie statutory right to sell the properties, Thomas has the burden of showing that their sale would cause him undue hardship.10 He has failed to do so. The alleged financial hardship of potential loss of future profits or income is vague and speculative and does not amount to oppression or even a hardship: Thomas will not become homeless or destitute; and he will be paid the value of his renovation work on the properties plus a share in the profits.

84      It is not fair that Patricia has to wait for an uncertain period of time to recover her money. As acknowledged by Ron Thomas, Patricia and he are no longer on speaking terms and cannot agree on the appropriate management of the property, or anything else.

85      This is precisely the kind of problem that section 3(1) of the Partition Act is designed to remedy, for partition or sale is the law’s answer when joint owners can no longer get along.11

86      Moreover, the plaintiffs’ investment may be increasingly at risk. According to the expert evidence filed by the plaintiffs on May 13, 2012, there is a real risk that the value of the properties is deteriorating in a softening real estate market. Indeed, the fact that he may not realize a good price for the remaining properties is one of the reasons that Thomas gave during his testimony at trial to resist their sale. Further, according to Thomas, the rents from the properties are not covering their expenses, which is partly due to the fact that the unit occupied by Thomas is not producing rental income.

87      In lieu of a sale, Thomas asks that he be permitted to pay out Patricia and her mother from his own or borrowed resources. Thomas asserts that he has about $295,000.00 in RRSP savings and can easily within a few weeks obtain the requisite funds once the determination of any monies owing has been made by the Court. He argues that he should be permitted to pay Patricia and her mother rather than be forced to sell (5 and 12 Squareton Avenue.

88      The plaintiffs’ prime objective is to recoup the monies owing to them, including Patricia’s share of the profits, as well as the discharge of Patricia’s obligations under the remaining mortgages on 5 and 12 Squareton Avenue. The plaintiffs are not adverse to Thomas’s suggestion that they be paid out their monies from the 60 Ravine Crescent monies in trust and that Thomas pay whatever balance is owing to them from his own or borrowed resources, provided that there is no further delay.

89      To determine the gross equity of 5 and 12 Squareton before deductions, further to my May 13, 2012 Order, 5 and 12 Squareton shall be valued as at May 13, 2012. The May 13, 2012 appraised value shall be added to the monies in trust from 60 Ravine Crescent, from which total shall be deducted the various amounts stipulated in this Judgment, namely, the bank mortgages, loans, interest, and renovations, to arrive at the net profit figure. Patricia and Thomas are each entitled to half of the net profit figure.

90      With respect to the appraisal, by Order dated May 20, 2012, I had appointed Noah Jones to conduct the appraisal of 5 and 12 Squareton Avenue. As noted in my Endorsement, I had chosen Mr. Jones as he represented that he was immediately available. Although he inspected the properties, Mr. Jones has inexplicably failed to provide his report. Mr. Eisner has made numerous attempts to follow up with Mr. Jones, but Mr. Jones has failed to deliver his report or respond to any of Mr. Eisner’s inquiries.

91      As there may be a reasonable explanation for Mr. Jones’s silence, I shall allow him ten days to deliver his report from service by mail of this Judgment. If he fails to deliver his report, he will forfeit any right to fees and Mr. Eisner may immediately make arrangements with Mr. Gerald Brown, the other appraiser proposed by the plaintiffs, to carry out the appraisal and deliver a report to Patricia and Thomas.

92      The costs of the appraisal report shall be borne equally by Patricia and Thomas and deducted from the net profits before distribution to them.

93      Once the appraisal is completed, the parties shall follow these steps:

i. Mr. Eisner shall prepare and deliver to Thomas within fifteen days of receipt of the appraisal report a calculation of the monies payable to the parties in accordance with the terms of this Endorsement.

ii. Thomas shall have fifteen days in which to deliver to Mr. Eisner his written agreement with or any written objections to Mr. Eisner’s calculation. If Thomas fails to do so, he shall be deemed to accept the calculation and Mr. Eisner shall deliver his calculation for approval by me through Judges’ Reception at 361 University Avenue.

iii. If Thomas objects to the calculation and if the parties cannot resolve any objections within fifteen days, they shall deliver to me through Judges’ Reception their respective calculations and objections, as the case may be, and I shall make a final determination of this issue.

iv. If the 60 Ravine Crescent trust monies are not sufficient to satisfy the amounts owing to the plaintiffs, Thomas shall pay the plaintiffs the balance of all amounts owing to the plaintiffs, including Patricia’s share of the profits from the properties, within thirty days of the earlier of his agreement, deemed or otherwise, with Mr. Eisner’s calculation and my determination of the appropriate calculation of net profits.

v. Thomas also shall arrange new financing or otherwise assume the bank mortgages on the Squareton Avenue properties within thirty days of the earlier of his agreement, deemed or otherwise, with Mr. Eisner’s calculation and my determination of the appropriate calculation of net profits.

vi. If Thomas fails to make the requisite payment and refinancing or assumption of the bank mortgages within the time limit stipulated in subparagraphs iv. and v., Patricia may take immediate steps to sell the 5 and 12 Squareton Avenue properties and then distribute the monies from 60 Ravine Crescent, and 5 and 12 Squareton Avenue, in accordance with the terms of this Judgment.

iv. Costs:

94      If the parties cannot agree on the disposition of costs, they may make brief written submissions to me through Judges’ Reception at 361 University Avenue of no more than two pages, plus a costs outline, as follows: the plaintiffs shall deliver their costs submissions by February 9, 2013; and the defendant shall deliver his costs submissions by February 23, 2013.

v. Draft form of judgment:

95      Once the calculation of the net profits and the disposition of costs have been determined, Mr. Eisner shall prepare and deliver to me for my approval and signature a draft form of judgment with proof of its service on Thomas.

96      As I shall be ensuring the accuracy of the draft judgment, I dispense with the necessity of Thomas approval of the draft judgment. As noted above, Thomas’s review of Mr. Eisner’s calculation shall proceed in accordance with the timetable set out in paragraph 93 of this Judgment.

Order accordingly.

Footnotes
1

Other than requiring the sale of 5 Squareton Avenue, the plaintiff is not seeking any other relief against Ms. Livingston.

2

R.S.O. 1990, Ch. P.13

3

With respect to Alison’s loans, Thomas’s only dispute, which is dealt with later in these Reasons, is that interest should not be paid past October 2009 when 60 Ravine Crescent was sold.

4

$59,000.00 for 12 Squareton Avenue; and $61,000.00 for 5 Squareton Avenue.

5

The evidence establishes that Thomas)used most of those funds to pay the down payment and closing costs for 60 Ravine Crescent in the amount of $22,405.73. Patricia agrees that Thomas should receive credit for payment of those amounts.

6

This is contrary to Thomas’s advice to Mr. Pratt, which Mr. Pratt and Thomas confirmed at trial, that Thomas’s rate for Patricia at that time was $45 per hour.

7

It is significant that Thomas did not name the workers who assisted him at Patricia’s house, nor did he produce any cheques or receipts evidencing payment to them for their work, notwithstanding that he was able to produce the cheques and receipts for the workers who helped him at the three properties.

8

R.S.O. 1990, c. P.4

9

Greenbanktree Power Corp. v. Coinamatic Canada Inc., 2004 CarswellOnt 5407, 193 O.A.C. 204, 75 O.R. (3d) 478 (Ont. C.A.), at paras. 1-2

10

Ibid.

11

Greenbanktree Power Corp. v. Coinamatic Canada Inc., 2002 CarswellOnt 1486, 59 O.R. (3d) 449, 5 R.P.R. (4th) 1 (Ont. S.C.J.), at para. 31, aff’d, supra.