Recently, the Superior Court agreed that a partition and sale with joint tenants cannot go ahead under the Partition and Sale Act because the applicant was only a bare trustee and nothing more.
In Weise v. Weise, 2023 ONSC 5227, the applicant and the respondent were joint tenants of the property. The applicant's brother was married to the respondent. At the time of the purchase, the respondent and the applicant's brother were not able to qualify for a mortgage on their own. Therefore, the respondent and the applicant's brother sought out the applicant's assistance. The three of them entered into an agreement of purchase and sale.
The parties also entered into a separate agreement where the applicant was made a Bare Trustee and the respondent was the beneficial owner of the land and the respondent was responsible for all expenses including reality taxes, insurance, heat, utilities, mortgage payments and maintenance repairs.
The respondent and the applicant's brother resided on the property for the duration of their marriage. In January 2021, the respondent and the applicant's brother separated and that gentleman moved off the property. The applicant never stayed on the property. The applicant moved for a sale of the property under the partition and sale act.
The court rejected the argument of the applicant that she has all the rights, powers and obligations of a joint owner or that she has an interest in the property by being named a joint owner. The rationale of the court was that it was her choice to answer the respondent and her brother's call to assist and that she agreed to be a "bare trustee."
The court quoted cases from the Court of Appeal on the requirements of a Bare Trustee saying that such a trustee holds legal title to property on behalf of another and has no independent power, discretion or responsibility in connection with the property.
One of the main tests in opposing a partition and sale of a property is that such a sale could be considered as vexatious and malicious and as being oppressive in the circumstances. These are high bars to fulfill.
Nevertheless, the judge noted that if the applicant was entitled to seek such partition and sale, the court would find that it would be unfair and oppressive under the circumstances and that the court would decline to make such an order. The reasons for this are that the applicant was not entitled to any of the proceeds of the sale of the house simply being a bare trustee that was just there to help in the mortgage process. The court also said that it takes time to resolve disputes arising from the breakdown of a marriage and that the lender had been allowing default payments to accumulate and has been keeping the applicant abreast of the developments. So, the court said these are good reasons to decline making an order for partition and sale.
Analysis:
In many cases when two parties are unable to get a mortgage they then include a third-party sometimes being one of the parents to help with the mortgage process. In this case these parties did exactly that and included the applicant in the process but went one step ahead and created an agreement for the applicant to be a Bare trustee. As this case shows, one has to be careful in asking for such a partition and sale especially when considering a complex issue such as a trustee and the implications on the partition and safe.
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