Most adults are familiar with the concept of “rent”: it’s the money you owe every month after signing a lease with a landlord. Related but distinct from “rent” is “occupation rent” – rent’s frequently sought, but little understood, younger cousin who can still pack a punch.
Occupation rent fills the void where there is no lease agreement or where a landlord-tenant relationship does not exist. Occupation rent can be sought in a variety of circumstances based on common law principles (including equity, contract law, and property law) or on statute (most commonly in the family law context). Examples of when occupation rent may be awarded include: when a tenant has continued occupying a property after her lease expired, or as a remedy for trespass. However, estates litigators are most likely to have encountered claims for occupation rent based on principles of equity; namely, unjust enrichment.
Such was the case in Cormpilas v Ioannidis, 2020 ONSC 4831. In that case, Gregory and Barbara owned their home as tenants in common. On Barbara’s death in 2012, she gifted her 50% interest in the home to her four grandchildren. Shortly after Barbara’s death, John moved into the home with his partner and their family to look after Gregory. On Gregory’s death in November 2017, he gifted his 50% interest in the home to John.
The grandchildren did not seek to liquidate their 50% interest in the home while Gregory was alive. However, after Gregory died, they sought to sell the house and realize on their inheritance. John refused to sell the house or move out. As a result, in February 2019, the grandchildren brought an application for partition and sale.
Before the application was heard, John moved out of the house in April 2020 and cooperated with its sale. As a result, the only issue to be determined at the hearing was the grandchildren’s claim for occupation rent from November 2017 to April 2020 – the 30 month period when John lived rent-free in the house following Gregory’s death.
In his reasons, Justice Kurz found that John had been unjustly enriched by his exclusive occupation of the property rent-free; the grandchildren suffered a corresponding deprivation by being excluded from the property (and more importantly, from being unable to sell it as they had planned); and there was no juristic reason why one co-owner should enjoy exclusive occupation of a property worth well over a million dollars to the exclusion of his co-owners.
The Court then held that occupation rent was the appropriate remedy for the unjust enrichment found in this case. However, Justice Kurz held that occupation rent was owing from February 2019 (when a demand for occupation rent was first made) and not November 2017 (when Gregory died). In explaining his reasons, the Court found that prior to February 2019, the grandchildren had provided John with explicit permission to live in the house.
The Court then looked at the two appropriate ways of calculating occupation rent: fixing the amount at market rent or pegging it at the carrying costs of the property. Justice Kurz held that market rent was the preferred calculation for occupation rent and set it at $1,500/month. Accordingly, the occupation rent owing to the grandchildren was $22,500.00.
Justice Kurz’s reasons set out a fulsome review of the law of occupation rent, beginning with its early history and ending with its current use in Ontario law. Given how frequently occupation rent is sought and how often it is misunderstood, Justice Kurz’s decision is well worth the read.