What Constitutes an Unreasonable Delay in the Sale of a Deceased’s Home by an Estate Trustee?
In Hume v Windle and Laronde[1] (“Hume”), 2024 ONSC 132, the main issue addressed involved the burden required to claim occupational rent, as well as what the court may consider a reasonable time period to sell the estate property of a Deceased where a will does not specifically outline an exact date of sale.
Occupational rent:
Occupational rent is an equitable remedy, often sought through a claim of unjust enrichment.[2] It describes a remedy for the occupancy by a party of a property so as to reverse the unjust enrichment. In the decision, Young v Bank of Nova Scotia it was stated:
“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.”[3]
Also, the court in Dagarsho,[4] set out the three conditions that must be met in order to establish an entitlement to rent:
- The party in possession of the premises has been enriched;
- There has been a corresponding deprivation suffered by those entitled to the property; and,
- The absence of a juristic reason for the enrichment.
In the current decision of Hume, the court defines occupation rent as:
[18] “Occupation rent is a flexible remedy used to offset the benefit of free accommodation where fairness calls for some sort of monetary adjustment. It is based on the doctrine of unjust enrichment”.[5]
Facts:
Ms. Hume (the “Deceased”) had 6 children who were all beneficiaries of the Deceased’s estate. The Deceased appointed two of her daughters (the “Respondents”) as her Estate Trustees in 2010. One of the Respondents (“LR”) moved into the home of the Deceased (the “home”) in June of 2019, with her husband, in order to assist with the Deceased’s declining health.[6] The Deceased passed away on November 13, 2019, leaving LR to live in the home rent free until it was listed for sale in September, 2021. LR and her family spent in or around 3 months of the winter in Florida throughout 2020 and 2021. On December 10, 2021, the sale of the home closed. The Respondents paid themselves executor compensation $19,035.32 from the sale proceeds, after each of the 6 beneficiaries were paid their share of the proceeds.[7]
One of the Deceased’s children (the “Applicant’) brought an application contending[8]:
- The sale of the home was delayed given the home was not listed for sale within reasonable time;
- The Respondents resided in the home rent free from the date of the Deceased’s death in November 2019 until the closing of the sale in December, 2021.
The Applicant was of the view that he was unable to receive his share of the sale proceeds from the home due to the unreasonable delay in its sale. The Applicant also stated that the delay was attributed to the fact that the Respondents were living in the home without having to pay rent. The Applicant asserted he was owed rent for the time period that the Respondents lived in the home rent free, in the amount of $1,700 per month. This rental estimate was not supported by evidence since the Applicant stated expert evidence was not required, rather, the court may “rely upon reasonable estimates or available evidence”.[9]
The Respondents relied on the fact that the other beneficiaries’ knowledge that LR and her husband had moved into the home to assist the deceased in her care. None of the beneficiaries objected. Additionally, LR stated that she had made improvements to the home without compensation from the estate.
The court began its analysis by addressing the duties of an estate trustee:
[15] Trustees have many responsibilities which they are bound to discharge competently. They must take care not to prefer anyone’s interests at the expense of others. They must act in good faith. They owe a duty of care to other interested parties. They are required to account for their handling of money and valuables. They are usually entitled to reasonable compensation for their efforts.[10]
The court failed to identify any merit in the Applicant’s claims. The court provided an extensive analysis for why the Applicant was not owed occupation rent, stating his claims were unsubstantiated statements put forth to the court without supporting evidence.
Rent:
The Applicant claimed that the monthly rent for the home should be in the amount of $1,700. This number was not supported by any evidence. The Applicant refers to a few cases in his claim, such as Filippelli Estate v. Filippelli,[11] which concluded that requiring expert evidence in determining rental rates is not necessary. Rather, evidence from a real estate broker “who compared rental rates for similar properties in the same general area” sufficed.[12] However, given the applicant failed to provide any evidence at all to the court regarding these rental estimates, it was determined that the burden of proof had not been met. Additionally, the Applicant failed to consider expenses for the home that was not addressed in his gross rent payment. Such expenses should have included utilities, fire insurance and taxes, which would have reduced the Applicant’s claim of $1,700. In total, the Applicant claimed that the “fair value of the rent enjoyed by LR was $35,700 ($1,700 x 21 months)”.[13]
Notable, the Applicant also contended that his claim for occupational rent was on behalf of the estate. The court disagreed, stating the Applicant does not represent the estate nor its beneficiaries and thus, has no status to make a claim for the estate.[14] This meant the Applicant would only be entitled to a one sixth share of the rent claimed. If the Applicant’s proposed rental amount was reasonable, not including the interest accrued by the 12 month delay of the Respondents, and divided by 6, the recovered amount by the Applicant would be $3,400. The court stated that such a financial loss for the Applicant is minimal, and his compensation for the rent is “excessive and unrealistic”.[15] Additionally, in his rental estimates the Applicant did not consider the effects of COVID 19 on its marketability.
Unreasonable Delay:
The court ruled that there was not an unreasonable delay in the sale of the home by the Applicant. The will of the Deceased stated that LR, as the estate trustee, was entitled to “postpone the conversion of assets to money for such length deemed appropriate”[16]. LR completed a majority of the work to the house in order to prepare it for the sale, rather than employing an outside party. Completing more than the minimum amount of work to ensure the home would get its best sale price resulted in a longer wait to list the home on the market. Additionally, the Applicant did not consider the impact of COVID 19 delays on the preparation of the home and the sale process. Although the court stated that LR had lost some time while she was in Florida, rather than preparing the house for sale, it was not deemed an unreasonable delay.
—
[1] Hume v Windle and Laronde, 2024 ONSC 132
[2] Ibid at para 21
[3] Young v. Bank of Nova Scotia, 1915 CanLII 531 (ON CA)
[4] Dagarsho Holdings Ltd. v. Bluestone, 2004 CanLII 11271 (ON SC)
[5] Ibid at para 18
[6] Ibid at para 4
[7] Ibid at para 6
[8] Ibid at para 8
[9] Ibid at para 21
[10] Ibid at para 15
[11] Filippelli Estate, 2017 ONSC 4923
[12] Ibid at para 14
[13] Ibid at para 10
[14] Ibid at para 24
[15] Ibid at para 29
[16] Ibid at para 26
Written by: Gabriella Banhara
Posted on: January 22, 2024
Categories: Commentary
In Hume v Windle and Laronde[1] (“Hume”), 2024 ONSC 132, the main issue addressed involved the burden required to claim occupational rent, as well as what the court may consider a reasonable time period to sell the estate property of a Deceased where a will does not specifically outline an exact date of sale.
Occupational rent:
Occupational rent is an equitable remedy, often sought through a claim of unjust enrichment.[2] It describes a remedy for the occupancy by a party of a property so as to reverse the unjust enrichment. In the decision, Young v Bank of Nova Scotia it was stated:
“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.”[3]
Also, the court in Dagarsho,[4] set out the three conditions that must be met in order to establish an entitlement to rent:
In the current decision of Hume, the court defines occupation rent as:
[18] “Occupation rent is a flexible remedy used to offset the benefit of free accommodation where fairness calls for some sort of monetary adjustment. It is based on the doctrine of unjust enrichment”.[5]
Facts:
Ms. Hume (the “Deceased”) had 6 children who were all beneficiaries of the Deceased’s estate. The Deceased appointed two of her daughters (the “Respondents”) as her Estate Trustees in 2010. One of the Respondents (“LR”) moved into the home of the Deceased (the “home”) in June of 2019, with her husband, in order to assist with the Deceased’s declining health.[6] The Deceased passed away on November 13, 2019, leaving LR to live in the home rent free until it was listed for sale in September, 2021. LR and her family spent in or around 3 months of the winter in Florida throughout 2020 and 2021. On December 10, 2021, the sale of the home closed. The Respondents paid themselves executor compensation $19,035.32 from the sale proceeds, after each of the 6 beneficiaries were paid their share of the proceeds.[7]
One of the Deceased’s children (the “Applicant’) brought an application contending[8]:
The Applicant was of the view that he was unable to receive his share of the sale proceeds from the home due to the unreasonable delay in its sale. The Applicant also stated that the delay was attributed to the fact that the Respondents were living in the home without having to pay rent. The Applicant asserted he was owed rent for the time period that the Respondents lived in the home rent free, in the amount of $1,700 per month. This rental estimate was not supported by evidence since the Applicant stated expert evidence was not required, rather, the court may “rely upon reasonable estimates or available evidence”.[9]
The Respondents relied on the fact that the other beneficiaries’ knowledge that LR and her husband had moved into the home to assist the deceased in her care. None of the beneficiaries objected. Additionally, LR stated that she had made improvements to the home without compensation from the estate.
The court began its analysis by addressing the duties of an estate trustee:
[15] Trustees have many responsibilities which they are bound to discharge competently. They must take care not to prefer anyone’s interests at the expense of others. They must act in good faith. They owe a duty of care to other interested parties. They are required to account for their handling of money and valuables. They are usually entitled to reasonable compensation for their efforts.[10]
The court failed to identify any merit in the Applicant’s claims. The court provided an extensive analysis for why the Applicant was not owed occupation rent, stating his claims were unsubstantiated statements put forth to the court without supporting evidence.
Rent:
The Applicant claimed that the monthly rent for the home should be in the amount of $1,700. This number was not supported by any evidence. The Applicant refers to a few cases in his claim, such as Filippelli Estate v. Filippelli,[11] which concluded that requiring expert evidence in determining rental rates is not necessary. Rather, evidence from a real estate broker “who compared rental rates for similar properties in the same general area” sufficed.[12] However, given the applicant failed to provide any evidence at all to the court regarding these rental estimates, it was determined that the burden of proof had not been met. Additionally, the Applicant failed to consider expenses for the home that was not addressed in his gross rent payment. Such expenses should have included utilities, fire insurance and taxes, which would have reduced the Applicant’s claim of $1,700. In total, the Applicant claimed that the “fair value of the rent enjoyed by LR was $35,700 ($1,700 x 21 months)”.[13]
Notable, the Applicant also contended that his claim for occupational rent was on behalf of the estate. The court disagreed, stating the Applicant does not represent the estate nor its beneficiaries and thus, has no status to make a claim for the estate.[14] This meant the Applicant would only be entitled to a one sixth share of the rent claimed. If the Applicant’s proposed rental amount was reasonable, not including the interest accrued by the 12 month delay of the Respondents, and divided by 6, the recovered amount by the Applicant would be $3,400. The court stated that such a financial loss for the Applicant is minimal, and his compensation for the rent is “excessive and unrealistic”.[15] Additionally, in his rental estimates the Applicant did not consider the effects of COVID 19 on its marketability.
Unreasonable Delay:
The court ruled that there was not an unreasonable delay in the sale of the home by the Applicant. The will of the Deceased stated that LR, as the estate trustee, was entitled to “postpone the conversion of assets to money for such length deemed appropriate”[16]. LR completed a majority of the work to the house in order to prepare it for the sale, rather than employing an outside party. Completing more than the minimum amount of work to ensure the home would get its best sale price resulted in a longer wait to list the home on the market. Additionally, the Applicant did not consider the impact of COVID 19 delays on the preparation of the home and the sale process. Although the court stated that LR had lost some time while she was in Florida, rather than preparing the house for sale, it was not deemed an unreasonable delay.
—
[1] Hume v Windle and Laronde, 2024 ONSC 132
[2] Ibid at para 21
[3] Young v. Bank of Nova Scotia, 1915 CanLII 531 (ON CA)
[4] Dagarsho Holdings Ltd. v. Bluestone, 2004 CanLII 11271 (ON SC)
[5] Ibid at para 18
[6] Ibid at para 4
[7] Ibid at para 6
[8] Ibid at para 8
[9] Ibid at para 21
[10] Ibid at para 15
[11] Filippelli Estate, 2017 ONSC 4923
[12] Ibid at para 14
[13] Ibid at para 10
[14] Ibid at para 24
[15] Ibid at para 29
[16] Ibid at para 26
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