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A Recent Decision on Occupation Rent in Estates Matters 

Occupation rent is an issue which often comes up in the administration and litigation of an Estate. Since it is important to be live to the legalities and court treatment, I felt it was appropriate to discuss occupation rent in the context of a recent decision coming out of the Ontario Superior Court of Justice.

This monograph will provide a brief overview of occupation rent focused on the facts in the decision of Korsch v Hildebrandt.[1] The facts in Korsch are very similar to common scenarios involving family members occupying property of a Deceased which forms an asset of the estate and as such, provides an illustrative example of court treatment.

Occupation Rent

Rent is the money that a tenant pays a landlord every month pursuant to a residential tenancy agreement. As often happens during the course of administering an estate, a party or tenant continues to occupy a property after a lease has expired, or, the owner or landlord has died. Where there is no agreement or lack of a formal landlord-tenant relationship, parties can seek occupation rent.

Occupation rent is treated as an equitable remedy. In the 2001 Ontario Superior Court of Justice decision in Higgins v Higgins[2] the Honourable Justice Quinn held that in dealing with occupation rent “courts are attempting to balance the equities when dealing with a claim for occupation rent. Thus, occupation rent is merely a tool used to achieve justice in the circumstances of each case.”[3]

Background to Korsch

The Korsch case dealt with an Application seeking an order that the Respondents vacate a property owned by the Deceased and for payment of occupation rent to her Estate.

The Deceased died on March 7, 2019, leaving behind two children, a daughter (the Applicant) and a son (the Respondent). The Deceased did not have a spouse at the time of her death. In her Will, the Deceased appointed her daughter as the Estate Trustee and named her as sole beneficiary of the estate. The Respondent was specifically excluded in the Will for reasons that included, she had already given him significant money during her lifetime.

At the time of her death, the Respondent was living with the Deceased in her Mississauga Property with his wife and daughter. The Deceased was the sole owner of this property.

On May 14, 2019, the Estate Trustee served notice on the Respondent to vacate the property so she could sell it and realize her inheritance. The Respondent refused to move and an Application was commenced. Unfortunately, the matter was adjourned on several occasions due to the COVID-19 pandemic.

The Respondent has only recently agreed to vacate the property by April 30, 2023. In the meantime, the Estate Trustee/Applicant has been paying “almost all the upkeep on the house, including paying off the secured line of credit, the property taxes, insurance, electricity, and water.”[4] As of the date of the hearing, the Applicant has provided evidence of her expenditures which exceed $47,000. She did not seek reimbursement of these funds but rather, occupation rent from the date she asked the Respondent to leave in the approximate amount of $138,000.

The Respondents’ counsel, who were retained in February of 2023, requested an adjournment for multiple reasons including that the Respondent’s daughter may be under a disability and the appointment of a litigation guardian may be necessary. The court noted that an adjournment is a discretionary remedy and exercised such discretion to find an adjournment would be inappropriate. It was noted that there was no evidence backing the claim that the daughter was under a disability, concluding that, “[s]urely, if [the daughter] has been living with such disabilities, there must have been something – a prescription, a doctor’s note or hospital admission report, or even a school report card, which could have supported this claim.”[5]

Analysis of Occupation Rent Jurisprudence

The court held that the concept of occupation rent originally developed in the commercial context, noting that “[w]hen someone occupies a property and by doing so excludes another party with an interest in the property, occupation rent is an equitable remedy that is available to the court in appropriate circumstances to achieve fairness between the parties.”[6]

In Dagarsho, Justice Karakatsanis (as she then was) stated at para. 26:

Occupation rent is an equitable remedy. The often cited general principle of occupation rent is that “if a person is in occupation without a lease, although the relationship of landlord and tenant will not exist, the law will imply a contract for payment to the landlord or a reasonable amount for the use and occupation of his land.” The principle is based upon the presumption that the parties have agreed to reasonable compensation. That presumption can be rebutted by evidence that the parties intended that the occupation be without compensation.

In that case, Justice Karakatsanis accepted the evidence of the rent that was charged for the identical unit next door. There is no indication that expert evidence was considered in the Dagarsho decision.

In the 2010 Ontario Superior Court decision in Bergmann v. Amis Estate,[7] Justice Daley held that occupation rent is an equitable remedy related to and arising in circumstances of unjust enrichment and that in order to be granted this remedy, one must show that the party occupying the property was unjustly enriched.[8]

Similarly, in the 2020 Ontario Superior Court decision in Calmusky Estate v. Calmusky,[9] the court recognized that “occupation rent is appropriate when persons continue to occupy property when not entitled to do so after the deceased’s death to the exclusion of the rightful beneficial owner.”[10]

Finally, in the 2017 Ontario Superior Court decision in Filippelli Estate v. Filippelli,[11] a situation very similar to the case at bar, it was held that a son of the deceased remained in the deceased’s home after her death, despite not being entitled to do so under her will. For more on this decision, WEL Partners’ Kim Whaley has previously written a blog which can be accessed here.

Quantum of Occupation Rent in Korsch

The court in Korsch concluded that the Respondents were unjustly enriched in their occupation of the property. They had no right to live there and did not pay any property taxes, insurance, or even many of the utilities. Part and parcel to this, the Applicant was denied use of said property to either rent for income or sell to invest the proceeds. The court found no juristic reason for the Respondents’ occupation and held that the appropriate remedy is the payment of occupation rent.

The Applicant, in support of her claim, served and filed the affidavit of a real estate agent. His affidavit provided his opinion of the monthly rental value for the property from 2019 to 2022 based on listings for similar properties in the applicable years and rent paid.

While the court did agree with the Respondents that the affidavit of the realtor is not an expert opinion as contemplated by r. 53.03 of the Rules of Civil Proceudure,[12] it felt that the realtor’s evidence provided actual data of what similar houses rented for in the applicable years. As a result, it was held that “[n]ot unsimilar to what was done by Justice Karakatsanis in Dagarsho, I may consider the market rent for a similar property and make my own finding as to the value of the occupation rent.”[13]

The court therefore held that:

[32]       I have reviewed the listings and paid particular attention to the homes that are the closest to the Property and with a similar number of bedrooms, bathrooms, and other attributes. After reviewing this information, I accept that for 2019, a similar property could rent for $2,650. For 2020, it could rent for $2,800. In 2021, it could rent for $2,500, and in 2022, it could rent for $2,600.

The court did not believe that occupation rent should be paid until after the first year following the death of the Deceased.[14] The court also noted that at times, because of the pandemic, the matters were at a standstill. Importantly, it was noted that the Respondents’ lawyer was discharged in October 2020 and the Applicant heard nothing further from the Respondents. The court recognized that there was little evidence of efforts to have the Respondents move out between October 2020 and October 2022, despite the courts being reopened for remote proceedings in the fall of 2020. The court questioned why the Application couldn’t be brought sooner and commented that “Equity cannot allow someone to profit from their failure to act.”[15]

The Court held that the Respondents owed a total of $67,300.00 and provided a breakdown of the occupation rent payable to the estate for all relevant periods of the occupation.

Disposition

The Applicant was awarded costs in the sum of $25,160. The court also ordered, amongst other things, that the Respondents shall deliver up vacant possession of the property on or before April 30, 2023; the Applicant is granted leave to have a Writ of Possession issued if the Respondents fail to deliver up vacant possession by said date; and that the Respondents shall deliver all furnishings, household contents, and other chattel property belonging to the Deceased.

Concluding Thoughts

This decision provides yet another reminder of the importance of sound planning. While it is a commendable gesture to provide family with a place to live, there should be at the very least some sort of plan or agreement in place which contemplates the living arrangement and the potential plan in the event of the death of the owner. Notwithstanding this, sometimes parties for whatever reason, simply refuse to leave. That appears to be the case in Korsch. Where this occurs, the occupants are often unjustly enriched at the detriment to the estate. When such a circumstance occurs, the decision in Korsch provides helpful guidance in determining the quantum of occupation rent that can be claimed and the type of evidence the court will accept to make such a determination.

[1] 2023 ONSC 2513 [Korsch].

[2] 2001 CanLII 28223 (ON SC) [Higgins].

[3] Ibid., at para. 54.

[4] Korsch, supra note 2 at para. 5.

[5] Ibid., at para. 19.

[6] Ibid., at para. 22 where the court cites the decisions of Dagarsho Holdings Ltd. v. Bluestone (2004), 2004 CanLII 11271 (ONSC), aff’d (2005) 37 R.P.R (4th) 53 (Ont. C.A.); Dosu v. Dosu, 2022 ONSC 5053, at para. 162.

[7] 2010 ONSC 993.

[8] Korsch, supra note 2 at para. 25.

[9] 2020 ONSC 1506, at para. 73.

[10] Ibid., at para. 26.

[11] 2017 ONSC 4923.

[12] This rule deals with expert witnesses and the requirements for experts’ reports and filing deadlines.

[13] Korsch, supra note 2 at para. 31.

[14] It was explained in the decision at para. 33 that “It is not unusual for an executor to have up to a year to collect the assets of the estate and have them ready for disbursement.”

[15] Ibid., at para. 35.

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