Families often fall into patterns and routines; they are comfortable, stable, and predictable. They can also give rise to legal rights over land. The extent and enforceability of those rights is often put to the test following death or divorce. Such was the case in Tomek v Zabukovec, 2020 ONSC 2930.
History of the Property
Joseph Sr. (the “Deceased”) and his wife Mary had two sons, Joseph Jr. (the “Husband”) and Edward. In August 1988, the Deceased bought a 15-acre parcel of land in Caledon for $160,000. The Deceased hoped to be able to sever the land into lots, build houses, then sell it.
In September of 1988, the Deceased told his eldest son, the Husband, to take a section of the property for himself and build a family home for his wife, Judith (the “Wife”) and their growing family. Construction began soon after and the family moved in in the fall of 1989. Over the years, the Husband and Wife continued to upgrade their house. They also maintained the entire property, including managing the forest, and paid the property taxes and insurance.
Unfortunately, the Deceased’s application to formally sever a 1.13-acre parcel where the Husband was building his house was denied – in March 1989, they learned that the lot had already been severed to the maximum amount allowed and no further severance would be permitted. The Deceased reassured the Husband by saying that the property would all be his one day.
In July 2004, the Deceased died without a will. At that time, his family assumed all of the Deceased’s assets passed to his wife, Mary, and that she would leave the property to the Husband and Wife. Accordingly, no further steps were taken at that time. .
In 2011, the Husband and Wife separated. As part of their divorce proceedings, they learned that the property remained in the Deceased’s name and did not automatically pass to Mary. As a result, they put forward a claim for a beneficial interest in the property either through unjust enrichment or proprietary estoppel. The Deceased’s estate trustee denied their claim to an interest in the land.
Justice Fowler Byrne set out a thorough and clear summary of the law which can serve as a resource for all litigators.
Unjust Enrichment – Showing Deprivation
As readers may recall, in order to prove unjust enrichment, the claimant must show (i) an enrichment to the Estate; (ii) a corresponding deprivation to the Wife and Husband; and (iii) absence of juristic reason for the enrichment.
Two real estate experts called at trial agreed that the value of the property had been enhanced through the building of the single family home. Furthermore, the Husband and Wife had built the home on the property at their own expense. They also paid for the insurance and property tax on the entire property, not just their home.
The estate trustee pushed back on the Husband and Wife’s argument that they had suffered a loss by claiming that there was actually a net benefit to the Husband and Wife: the Husband and Wife did not pay the Deceased any rent.
The court did not accept the estate trustee’s argument. The court held:
“… at this stage of the analysis, the focus is not on whether the Husband and Wife were able to save more money by not paying rent, or even if [the Deceased] could have made more money by charging rent, but whether the fruits of the Husband and Wife’s labours – the construction of the house and the maintenance of the grounds, which they performed and paid for out of their own pocket – benefited the Estate.
… even if there was a mutual conferral of benefits between the Husband and Wife on one hand and the Estate on the other, it is not to be considered at this stage of the analysis. It is considered at the defence or remedy stage.”
Remedy – Money or Land?
Having made out their claim for unjust enrichment, the court turned its attention to the appropriate remedy. In the circumstances, the court held that only an interest in the land would provide the Husband and Wife with an appropriate remedy:
“… the Husband and Wife’s contributions are difficult to quantify. While a useful Cost/Benefit analysis was submitted by the Estate, it does not take into consideration all the expenses incurred by the Husband and Wife (which was their obligation to provide). It also does not take into consideration the value of their “sweat equity” expended in the 30 years that at least one of them has resided there. Also, it is difficult to quantify the contributions of the Husband and Wife to the House separate from the contributions to the Acreage.”
In conclusion, the court found that 75% of the value of the property was the result of the Husband and Wife’s contributions and the remaining 25% would pass to the estate. The Husband and Wife, being most familiar with the property, were authorized to oversee its sale, with full transparency to the estate.