2000 BCCA 6

Citation:	Henderson v. Henderson	Date: 20000110
	2000 BCCA 6	Docket: CA024222
Registry: Vancouver
COURT OF APPEAL FOR BRITISH COLUMBIA
BETWEEN:
MARGARET ROSE HENDERSON
PLAINTIFF (RESPONDENT)
AND:
ARDELLE DOROTHY HENDERSON
DEFENDANT (APPELLANT)

Before:	The Honourable Madam Justice Southin
	The Honourable Madam Justice Newbury
	The Honourable Mr. Justice Mackenzie

Joseph P. McStravick		Counsel for the Appellant
Richard P. Hamilton		Counsel for the Respondent
Place and Date of Hearing:	Vancouver, British Columbia
30th November, 1999
Place and Date of Judgment:	Vancouver, British Columbia
10th January, 2000

Written Reasons by:
The Honourable Madam Justice Southin

Concurred in by:
The Honourable Madam Justice Newbury
The Honourable Mr. Justice Mackenzie

Reasons for Judgment of the Honourable Madam Justice Southin:

[1] In this appeal from a judgment in an unhappy dispute between an ex-mother-in-law, here the appellant, and her ex-daughter-in-law, here the respondent, who is the mother of the two grandchildren of the former, there can be no answer which will satisfy either's sense of fairness. There cannot be because each has an understandable sense of grievance which, I suspect, neither would have had had there been no divorce in the family.

[2] The parties are the owners, as tenants in common, of lands in Peachland very near to the Lake, upon which there is a one bedroom house.

[3] From what counsel told us, the property, the assessed value of which, in 1997, was $177,700.00, is a little gem.

[4] By the judgment below pronounced 16th January, 1998:

THIS COURT ORDERS that the Plaintiff be entitled to an interest of 40% of the one-half interest of the Defendant in the subject property, more particularly described as follows:

Parcel Identifier: 008-0245-975

Lot 2, District Lot 490,

Osoyoos Division Yale District Plan 18435

Municipality of Peachland

THIS COURT FURTHER ORDERS that the Defendant hold 40% of her interest in the subject property on a constructive trust for the Plaintiff;

THIS COURT FURTHER ORDERS that the Plaintiff pay to the Defendant the sum of $657.82 plus interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79 for the period August 25th, 1992 to January 16, 1998;

THIS COURT FURTHER ORDERS that the Plaintiff be awarded costs at Scale 3.

[5] Although counsel for the appellant seeks in his factum an order that the action be dismissed, I did not understand from the course of the appeal that he is attacking the third paragraph of the judgment.

[6] What is in issue is the constructive trust provisions, the effect of which is that the respondent has now a 70% interest and the appellant a 30% interest.

[7] The respondent's 70% interest, however, is subject to an order made in matrimonial proceedings between her and the appellant's son, under which he has a one-half interest in her interest in the property.

[8] In late 1982, when the respondent, then 38 and who had been married, presumably happily, since 1970 to the appellant's son, and her mother-in-law, then 67, agreed to purchase and did purchase the property in joint tenancy. The idea was that the appellant would live there in her retirement and, in the fullness of time, the property would accrue to the respondent by survivorship, who might have the property in her own retirement. Both parties have family connections to Peachland.

[9] In January 1983, they entered into this agreement:

WHEREAS the said parties hereto have purchased as joint tenants in the Municipality of Peachland the property known and described as:

[Here the description of the land followed.]

NOW THIS INDENTURE WITNESSETH that each of the said parties hereto covenants and agrees with the other of them as follows:

1. THAT the property was purchased for the price of seventy thousand ($70,000.00) dollars. (See Interim Agreement, Exhibit 'B' attached.)

2. THAT upon purchase of the property, forty-five thousand ($45,000.00) dollars was paid by ARDELLE DOROTHY HENDERSON and twenty-five thousand ($25,000.00) dollars was paid by MARGARET ROSE HENDERSON. All expenses connected with the purchase were paid equally.

3. THAT MARGARET ROSE HENDERSON owes ARDELLE DOROTHY HENDERSON the amount of ten thousand ($10,000.00) dollars.

4. THAT ARDELLE DOROTHY HENDERSON has exclusive use of the said property for the period of ten (10) years in lieu of interest charged on the ten thousand ($10,000.00) dollars owed to her.

5. THAT the said sum of ten thousand ($10,000.00) dollars shall be paid out to ARDELLE DOROTHY HENDERSON by MARGARET ROSE HENDERSON in monthly installments beginning upon the completion of the payments due to the Bank of Montreal re demand loan re purchase.

6. THAT the property taxes and insurance on the said property shall be shared equally each year by the parties.

7. THAT shall either party wish to sell her one-half share of the said property the other party shall have RIGHT OF FIRST REFUSAL to purchase the said one half share at one half the original purchase price of seventy thousand ($70,000.00) dollars, or, thirty-five thousand ($35,000.00) dollars.

8. THAT upon the death of MARGARET ROSE HENDERSON the LAST WILL AND TESTAMENT of ARDELLE DOROTHY HENDERSON shall give the said property to her grandchildren JESSICA LEE HENDERSON and LEONARD JAY HENDERSON in equal shares.

9. THAT upon the death of ARDELLE DOROTHY HENDERSON the property shall pass to MARGARET ROSE HENDERSON as the surviving tenant and one-half the purchase price, being the amount of thirty-five thousand ($35,000.00) dollars shall be paid to the estate of ARDELLE DOROTHY HENDERSON within one year from the date of her death.

10. THAT neither party shall place any encumbrances upon the said property.

11. THAT this AGREEMENT may be extended or re-negotiated at the end of ten years from the above date or on the first day of January, one thousand nine hundred and ninety three.

[10] During the term of the agreement, the appellant and the respondent observed paragraph 6 and the appellant paid the necessary outgoings for maintenance and improvements.

[11] The learned judge noted that although it was reasonable for the respondent to assume that the property would remain in joint tenancy until one of the parties died, the agreement does not say that, nor does it provide that the appellant would have free rent in return for the respondent's right of survivorship, nor did it provide that the ten year term related only to the use of the property by the appellant. Thus, the learned judge found that the agreement was spent.

[12] On 12th June, 1992, the appellant, at the instigation of her son, executed an instrument severing the joint tenancy. She testified that she did not understand what the instrument was but there is no evidence of her offering to restore the joint tenancy.

[13] Although from late 1992 to May 1996, when this action was commenced, the parties made some effort to resolve their differences, those efforts ended without result and, on 17th May, 1996, the respondent brought this action alleging, inter alia:

12. Since February 1, 1993, the Defendant has refused admittance to the Plaintiff or to potential tenants of the Plaintiff's to the Property and has occupied the Property to the exclusion of the Plaintiff.

13. Since January 1, 1993, the Defendant has refused to discuss the Property or the Agreement with the Plaintiff.

14. Since January 1993, the plaintiff has requested the Defendant to pay rent to the Plaintiff for the Plaintiff's interest in the Property and the Defendant has refused.

15. The Plaintiff's sole purpose in locating and purchasing the Property was to provide a home for her retirement and to assist the Defendant in a stressful time of the Defendant's life. The Defendant at all times was aware of such purposes and is in breach of a fundamental term of the Agreement, and that an implied term of the Agreement was that it was the use of the Property only which was subject to renegotiation at the end of 10 years and not the subsequent ownership of the Property.

16. The Defendant has been unjustly enriched and holds her interest in the Property in trust for the Plaintiff or the Plaintiff's children.

[14] The plaintiff then claimed:

(a) An Order for specific performance of the terms of the Agreement dated the 14th day of January, 1983 with respect to the current and subsequent ownership of the lands and premises located at 5712 Beach Avenue, Peachland, B.C. and legally described as Parcel Identifier: 008-245-975, Lot 2, District Lot 490, Osoyoos Division Yale District, Plan 18435, subject to the Defendant's right to occupation;

(b) A declaration that the Defendant holds the lands and premises located at 5712 Beach Avenue, Peachland, B.C. and legally described as Parcel Identifier: 008-245-975, Lot 2, District Lot 490, Osoyoos Division Yale District, Plan 18435 on a constructive or alternatively on a resulting trust for the Plaintiff and alternatively for the Plaintiff's children.

(c) An Order that the Defendant pay to the Plaintiff occupational rent for the loss by the Plaintiff of the use and occupancy of the lands and premises located at 5712 Beach Avenue, Peachland, B.C. and legally described as Parcel Identifier: 008-245-975, Lot 2, District Lot 490, Osoyoos Division Yale District, Plan 18435 from January 1, 1993 to date of trial;

[15] By her statement of defence and counterclaim, the appellant asserted:

8. In further response to Paragraph 12 of the Statement of Claim, the Defendant says that at no time did the Defendant oust or prohibit the Plaintiff from exercising her right to enjoy or use the Property. In fact, the Defendant had requested the Plaintiff move into the Property with her.

9. In further answer to Paragraph 13 of the Statement of Claim, the Defendant was at all material times, ready and willing to discuss the Property or the Agreement with the Plaintiff including the Defendant purchasing the Plaintiff's interest in the Property. The Plaintiff has refused to discuss the Property, the Agreement or the potential sale of the Plaintiff's interest to the Defendant.

10. The Defendant further says that on or about April 5, 1993 she offered to purchase the Plaintiff's one-half interest in the Property for one-half the appraised value, namely $89,000.00, but the Plaintiff refused to discuss or even negotiate the terms of the sale.

[16] By the counterclaim, the appellant sought:

(b) An Order, pursuant to the Partition of Property Act, R.S.B.C. 1979, c. 311, that the Defendant be allowed to purchase the Plaintiff's interest in the Property;

[17] The appellant concedes that this relief was never open to her. See Lougheed Enterprises Ltd. v. Armbruster (1992), 73 B.C.L.R. (2d) 353 (C.A.), adopting the judgment of Catliff J. in Hersog v. Hersog (1978), 5 B.C.L.R. 354 (S.C.).

[18] For her part, the respondent did not claim an order for partition and sale of the property.

[19] In her reasons for judgment, the learned judge found that the defendant had breached the agreement by severing the joint tenancy and by failing to provide in her Will that her grandchildren would receive the property on her death. As the learned judge put it, at para. 35:

Since neither of the parties died within the term of the agreement, the question arises whether these breaches have any legal consequence. The plaintiff in effect argues that these breaches are relevant to her claim that the defendant has been unjustly enriched.

[20] The learned judge concluded that the appellant was being unjustly enriched in these words:

[37] As matters stand, the defendant has had and continues to have exclusive occupation of the property, without payment of rent and without any obligation to account to the plaintiff for her contributions to or her interest in the property, either before or on the defendant's death. In my view, the three elements of an action for unjust enrichment are satisfied: (1) the defendant has been enriched; (2) the plaintiff has suffered a corresponding deprivation; and (3) there is no juristic reason for the enrichment (see Peter at p. 987).

[38] The defendant has been enriched by her exclusive occupation of the property without payment of rent since the agreement expired in January 1993 and by her breaches of the agreement which brought the joint tenancy and thus the plaintiff's right of survivorship to an end.

[39] The plaintiff has been correspondingly deprived of the use of the property and of any compensation for the defendant's exclusive use and severance of the joint tenancy.

[21] The learned judge then considered whether the proper remedy was a proprietary interest in the defendant's interest in the property based upon a constructive trust or a monetary award based on the quantum meruit. Having referred to the assessed value of the property, the learned judge went on:

[47] In this case, the plaintiff submits that she should have a significant interest in the defendant's interest in the property, based on her calculation of occupational rent owing over the 15 years of co-ownership. I have already expressed my view that the agreement provided for no rent to be paid by the defendant for its 10-year term. If the defendant was liable to pay occupational rent at the appraised rental value of $362.30 per month for the five-year period since the agreement expired, the amount owing would be $21,750.

* * *

[49] If the plaintiff were to be awarded a proprietary interest proportionate to the rent she could have earned had she been able to rent the property or if the defendant had paid rent over the period of five years since the agreement expired, she would receive a one-quarter interest in the defendant's interest.

[50] This approach to determining the extent of the constructive trust is the "value received" approach, which McLachlin J. found to be inappropriate. I too find it to be inappropriate, both in principle and in its application. The plaintiff's proprietary interest should reflect the continuing benefit to the defendant and detriment to the plaintiff of the defendant's exclusive rent-free occupation of the property and the plaintiff's loss of the right of survivorship. That is, the extent of the constructive trust should reflect the value to both parties of the property that survives and continues to benefit from the plaintiff's contributions.

* * *

[52] In this case, I must determine the extent of the contribution made by the plaintiff to the parties' property. Her contributions include finding the property, handling the purchase details, preparing the agreement of January 14, 1983 and contributing equally to the property taxes and insurance over the entire period of ownership. The plaintiff's contributions must be balanced by those of the defendant who, while in exclusive occupation of the property, has paid one-half of the property taxes and insurance, maintained it and paid all expenses for maintenance, repairs and improvements.

[53] In all of the circumstances, I find that the plaintiff is entitled to an interest of 40% of the one-half interest of the defendant in the property and declare that the defendant holds 40% of her interest on a constructive trust for the plaintiff. The plaintiff's beneficial interest in the property is thus 70% (subject to the interest of Mr. Henderson under the consent court order of June 15, 1990) and the defendant's, 30%.

[22] What the appellant says about the judgment below is this:

46. The Appellant Ardelle submits that there was a juristic reason for the enrichment. If this learned Court finds that the Appellant Ardelle was enriched and the Respondent Margaret suffered a corresponding deprivation, the Appellant Ardelle submits that both the enrichment and the deprivation occurred as a result of the Respondent Margaret's own actions or lack thereof who voluntarily chose not to occupy the property due to the fact that she was currently working in Vancouver, B.C. and residing in Delta, B.C. with her two children.

47. Furthermore, it was a legitimate expectation of both the Appellant Ardelle and the Respondent Margaret, at the time the property was purchased jointly by the parties and when the January 14, 1983 agreement was entered into by both parties, that the Appellant Ardelle reside at the property from the date of her retirement until her death.

48. The Appellant Ardelle, therefore, had a right, and the Respondent Margaret had a corresponding obligation to permit the Appellant Ardelle to make use of and occupy the property.

49. Based on the respective ages of the parties, both now and at the time they purchased the property, the understanding of both parties that the Appellant Ardelle continue to reside at the property until her death, and the fact that the Appellant Ardelle never ousted the Respondent Margaret, it would be unjust and unconscionable for a claim of unjust enrichment to succeed.

50. Public policy would also not support a claim for unjust enrichment in circumstances such as these.

[23] It is trite law that mere occupation of property by one of several tenants in common, if unaccompanied by exclusion of the other tenant, does not make her liable to the other tenant for rent. The underlying theory is that each tenant in common is entitled to enter upon the whole of the property. See Anger and Honsberger, Canadian Law of Real Property, (Toronto: Canada Law Book, 1959) at pp. 194-95. There has been no statutory intrusion upon that well known principle of law.

[24] But it is a principle of law, and not I think necessarily a principle of modern equity.

[25] As I understand the authorities, once there has been found to be an unjust enrichment, it is for the court to fashion the appropriate remedy.

[26] The judgment below is not a felicitous solution for either party:

1. The appellant has no right of occupation beyond that of any tenant in common. Her continuing exclusive occupation is dependent on the will of the respondent.

2. The respondent, if the appellant lives, as one hopes she does, for many more years, will have nothing for those many years, as there is nothing in the judgment providing for an accretion to the 40%. Of course, if the property rises in value, the respondent will benefit.

[27] By bringing proceedings under the Partition of Property Act, the respondent could force the appellant out, but she is probably reluctant to take such a step which she herself and her own children might think unkind, but although she may be reluctant, her legal right may be unsettling for the appellant.

[28] Judicial creativity is, on the whole, a bad thing, but this is, I think, the rare case where a little judicial creativity has a place to play. I cannot compel what I think is the right solution because of the interest which Mr. Henderson has in the respondent's legal interest, and he is not a party to these proceedings. But a better solution is to fix the respondent's interest in the appellant's one-half as of the date of judgment below at $25,000.00 and to order that from the date of judgment below that interest will increase at the rate of $362.50 per month so long as the appellant occupies the property, which she may do without let or hindrance from the respondent, so long as she, the appellant, pays the insurance, property taxes and necessary maintenance.

[29] There remains to be addressed the question of whether the charge of the respondent upon the property should bear interest.

[30] I have given some consideration to the question of whether the respondent's interest in the property should also be increased by an annual notional amount of interest, either on the original $25,000.00 or on the subsequent notional rental payments or both. As to that, there is no ideal solution. My tentative view is that interest should accrue to the $25,000.00 interest according to the Registrar's rates so long as the appellant occupies the property. If counsel wish to make submissions that some other order would be appropriate in that respect, they may do so within two weeks of the pronouncement of these reasons. I leave it to counsel to arrange the order of submissions.

"THE HONOURABLE MADAM JUSTICE SOUTHIN"

I AGREE: "THE HONOURABLE MADAM JUSTICE NEWBURY"

I AGREE: "THE HONOURABLE MR. JUSTICE MACKENZIE"