/ Case Law

Case Brief - What happens when the co-owner of a house dies?

In Guz v Olszowka, 2019 ONSC 5308, Justice D.A. Broad considered motions related to a dispute over two properties inherited by two sisters.

The Facts

Shortly before Helen Olszowka's death in 2010, she updated her will and entered into an agreement with her two adult daughters, Michele and Sandra. The agreement left them two properties to be held as joint tenants: the Patterson Property and the Lyndhurst Property.

After Helen's death, Michele and her husband Ted managed the properties. Michele was diagnosed with cancer in July 2017. She updated her will in August, leaving everything to her husband, and agreed with her sister Sandra to sell the Lyndhurst Property.

Michele then died in October 2017. Ted and Sandra continued with the sale of the Lyndhurst Property and agreed to split the proceeds of the sale equally.

The Lynhurst Property sold for $655,000. Sandra, upon receiving independent legal advice, concluded that after the death of Michele, she fully owned the property. She then informed Ted that she would retain the proceeds of the sale and would pay Ted $30,000 for the property management and maintenance.

Sandra then caused a survivorship application to be registered on the title of the Patterson Property, positioning herself to sell it and retain all the net proceeds.

The Issues

Ted, acting as executor for Michele's estate, sued Sandra.

In Ted's view, he and Michele and their son did extensive renovations on the Patterson Property for which they were not compensated. He asserts that the facts support a resulting trust or constructive trust over both properties.

Ted sought to recover money from Sandra from the sale of the Lyndhurst property and to block her from selling the Patterson Property. Ted brought a motion:

  • For leave to issue a Certificate of Pending Litigation ("CPL") for the Patterson Property
  • For an order prohibiting Sandra from disposing of the Patterson Property, and
  • For an order that the net proceeds of the sale of the Lyndhurst Property be paid into court

Analysis

Certificate of Pending Litigation

Courts may issue a CPL where there is a triable issue as to an interest in land. This is a low threshold. If there is a triable issue, the court may look at other factors, such as whether damages would be a better remedy and any prejudicial impact on the parties (see De Luca v. Zomparelli, 2018 ONSC 3789 (CanLII)).

The decision is ultimately at the court's discretion.

Looking at the facts at hand, Justice D.A. Broad held that while there was a triable issue, damages would be a more appropriate remedy. This is especially true since Sandra was willing to pay into court one half of the proceeds of any sale of the Patterson Property.

In other words, since there would be money set aside in the event of a successful claim for half the value of the Patterson Property, there's no need for a CPL.

Payment into Court of a Specific Fund

Rule 45.02 of the Rules of Civil Procedure states:

Where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just.

This rule is reserved for exceptional circumstances where the plaintiff claims a right to a specific fund, there is a serious issue to be tried, and the balance of convenience favours granting this relief (see Sadie Moranis Realty Corp. v. 1667038, 2012 ONCA 475 (CanLII), [2012] O.J. No. 3029 (C.A.) at paras. 17-18).

The plaintiff must have "a serious prospect of ultimate success" and there must be "a real concern that the defendant would dissipate the specific fund" (Sadie Moranis, para 20).

Applying these rules and cases to the facts, Justice D.A. Broad held that Ted's claim for a resulting or constructive trust in the Lyndhurst Property did not have a serious prospect of ultimate success.

The Bottom Line

It's important to be aware of the implications of joint tenancy versus tenancy in common and to plan accordingly. Courts are reluctant to tie up the sale of particular properties if there are options, and they are reluctant to set aside specific funds without exceptional circumstances.