Parents who helped pay for son's property can partition or sell it: Saskatchewan Court of Appeal

Parents who made financial contributions to their child’s property are allowed to partition or sell the property, the Saskatchewan Court of Appeal has ruled.

In Martin v. Martin, 2022 SKCA 79, Richard Martin purchased a property located northwest of Saskatoon and registered it in his own name. He obtained a $170,000 construction loan from the Saskatoon Credit Union for various improvements and renovations to the property. The loan was secured by a mortgage. When the Credit Union demanded payment of the mortgage, Richard’s parents, Kenneth and Martha, assumed the mortgage. The property was subsequently transferred into joint tenancy of Richard, Martha and Kenneth.

Following the transfer into joint names, Kenneth and Martha made financial contributions to the continued construction of the house and mortgage payments. Kenneth also assisted Richard with physical labour in doing the renovations to the house. Richard conceded that Kenneth’s physical labour on the renovation project amounted to some 3,000 hours.

Richard’s relationship with his parents eventually soured because of a financial dispute over a family-run towing business. Kenneth passed away in 2012 but shortly before his death, he and Martha sued Richard, alleging a “joint investment in the land and a business” in which they had made substantial payments. They sought a court order permitting them to sell the property and to divide the proceeds “according to their respective interests.” In the alternative, Kenneth and Martha requested a partition of the property.

Richard contested his parents’ allegation of having made various payments and other contributions toward the cost of renovation and upkeep of his house. He asserted that his parents’ assistance was voluntary. He also opposed their request for partition or sale, arguing that it was motivated by “malice, a desire to be vexatious, or to be oppressive.”

Joint tenancy severed

The trial judge found that Martha and Kenneth’s application for partition or sale was grounded in their reasonable desire to end their financial relationship with Richard. While the judge acknowledged that the sale of the property would cause Richard an inconvenience, he nonetheless found this reason was not sufficient basis to refuse an application for partition or sale.

The judge also found that Martha and Richard were each the owner of an undivided one-third interest in the land, noting that if a party commences legal proceedings for partition prior to death, the joint tenancy is severed. As a result, the judge ordered severance of the joint tenancy among Martha, Kenneth, and Richard.

Reliability, credibility findings on appeal

During trial, Martha tendered five handwritten ledgers documenting the various advances she and Kenneth made to Richard over the years, including mortgage payments. The trial judge found the ledgers to be unclear with regard to how much money Richard allegedly owed his parents. Richard asserted that his testimony to the effect that his parents made no direct financial contribution to the cost of renovating his house or paying for the mortgage, utilities, and taxes should have been given more weight.

The appeal court found that Richard had either misread or misinterpreted what the trial judge said. The court clarified that the trial judge concluded that he could not put any weight on Martha’s ledgers to determine quantification of the amount of money she and Kenneth had put into the property. However, this determination did not preclude the judge from finding that Martha’s evidence was sufficiently reliable that she and Kenneth had made financial contributions for the renovation of Richard’s house, said the court.

In addition, the appeal court also found that the judge did not ignore Richard’s evidence about his financial contributions. Rather, he simply did not accept Richard’s testimony about the extent of his alleged contributions in light of his annual income, which could not cover the cost of the renovations and the mortgage.

The court noted that for Richard to successfully overturn the trial judge’s findings, he must do more than simply disagree with the judge’s credibility and reliability findings – he must point to the mishandling of specific parts of the evidence that reveal a palpable error and then show how that error affected the outcome of the litigation. However, the court found that Richard had done none of that during trial.

The court concluded that Martha and Kenneth were on title as co-owners in joint tenancy, so they were entitled to apply for partition and sale, regardless of whether they had made financial or labour contributions. The court dismissed Richard’s appeal.