59 Enforceability Of Contracts

CASE LAW

LTA Presumption of Indefeasibility Rebutted

In Sojka v. Sojka, 2023 BCSC 52, affirmed 2023 BCCA 446, the plaintiff son of the deceased sued another brother to enforce what he argued was a legally enforceable verbal agreement between him and that brother that they were equal beneficial owners of inherited real property, notwithstanding its legal ownership.

The plaintiff (“RJ”) asserted that he and that brother (the defendant “GS”) had orally agreed that they would be equal owners and that after selling the home and paying their three other siblings an agreed-upon $575,000, they would share the sale proceeds equally.

In 1998, the deceased had indicated to these two brothers that she intended to transfer title to her home into joint tenancy with them. However, what occurred was the transfer of an undivided one-half interest to RJ and GS, so that after the deceased died in 2008, the estate became owner of an undivided one-half interest in the property. At the time of the deceased’s death, RJ and GS believed they became the joint owners of the home; GS did not discover otherwise until 2011.

The deceased left her entire estate to GS. The siblings brought an action seeking a declaration that RJ and GS held the property in trust for the estate (the “will action”). GS, as executor of the deceased’s estate, opposed the will action; RJ supported GS’s position despite legal advice he should not. The parties in the will action entered into a settlement agreement in 2012 under which RJ and GS agreed, jointly and severally, to pay their siblings $575,000. Payment did not occur, and the siblings obtained an enforcement order; in that proceeding, RJ and GS maintained the settlement was unenforceable. That same year, the house was damaged in a fire. The house was not insured. RJ and GS sued the insurance broker, the action was settled, and RJ and GS split the settlement proceeds.

In the present action, the defendant denied the existence of the agreement asserted by the plaintiff.

Held, for plaintiff. A party to a verbal agreement respecting land is prevented from using a lack of written agreement as a defence when they themselves have acted as though there were a binding contract, or the other party has detrimentally relied on the verbal agreement: s. 59(3) of the Law and Equity Act. Here, RJ rebutted the presumption of indefeasibility of title under s. 23(2) of the Land Title Act. Despite knowing by 2011 the estate owned an undivided one-half interest in the property, GS failed to advise RJ that he no longer considered himself bound by their verbal agreement. Rather, he continued to behave as if the verbal agreement were binding. He allowed RJ to take positions that supported GS in the will action; he split the insurance proceeds with RJ; and, of particular significance, he allowed RJ to be jointly and severally liable for the $575,000 settlement, which RJ would logically not have agreed to if he did not believe he was an equal owner.