Executive Summary: Key Legal and Evidentiary Issues

• Dispute concerns division of proceeds from the court-ordered sale of jointly owned real property under the Partition Act.
• Central procedural question is whether the reference about distribution of proceeds should be heard by an Associate Justice or an Assessment Officer under Rule 54.03.
• Terrance advances unpleaded equitable claims (unjust enrichment, constructive trust, quantum meruit, restitution) for compensation for 38 years of work on building and maintaining the property.
• The court rules that those equitable claims cannot be determined on this application because they were never formally pleaded in the originating Notice of Application.
• The judge finds Assessment Officers lack jurisdiction to conduct this kind of reference, limiting their role to assessing costs under the Courts of Justice Act.
• The reference is ordered to proceed before an Associate Justice using the existing materials, the cross-motion is dismissed, and costs are left for later determination due to divided success.

Background and factual context

Ronald and Terrance Nakeff are brothers who jointly owned real property as joint tenants. Their dispute arose over what to do with the property and how to divide its value. Ronald commenced an Application under Ontario’s Partition Act to force the sale of the co-owned property. Terrance opposed the sale because he wanted to purchase the property himself at its appraised value rather than see it listed on the open market.

At the earlier stage, Justice Dawe ordered that the property be sold on the open market and rejected Terrance’s argument that this result would be oppressive. The court held that Terrance had no right to acquire Ronald’s share at a discount and no legitimate claim of hardship if he had to pay the market price or if he was outbid, particularly since part of any sale proceeds would flow back to him as co-owner.

The property was eventually sold, but the brothers could not agree on how to distribute the net sale proceeds. This disagreement over division of proceeds set the stage for the reference process and the present motion.

Procedural history and prior order

In the earlier order, Justice Dawe directed that the mechanics of the sale and the distribution of the net proceeds be determined through a reference to an Associate Justice under Rule 54 of the Rules of Civil Procedure. That reference was to cover, among other things, the distribution of net proceeds “to the extent the parties cannot otherwise agree.”

A Notice of Appointment was issued calling for a reference before an Associate Justice. However, for reasons not clear to the parties or to the court, the matter was scheduled before an Assessment Officer instead. Initially, the brothers consented to proceed before the Assessment Officer and even set a timetable, but Terrance later became concerned that the Assessment Officer lacked jurisdiction to decide the substantive issues about division of the proceeds and his alleged contributions to the property.

This led both sides back before the Superior Court on a motion for directions and to vary the prior order. Ronald asked the court to simply vary Justice Dawe’s Order nunc pro tunc by replacing “Associate Justice” with “Assessment Officer,” so that the matter could proceed before the Assessment Officer who already had some familiarity with the file. Terrance, by contrast, brought a cross-motion seeking a mini-trial and a forum (Associate Justice or judge) that he believed could hear his equitable claims in full.

Issues on the motion

The court identified several key issues: what exactly was claimed in Ronald’s original Partition Act Application; when and how an order can be varied under Rule 59.06 of the Rules of Civil Procedure; whether an Assessment Officer has jurisdiction under Rule 54.03(1) to conduct this type of reference; whether the original Order should be varied to allow adjudication of Terrance’s equitable claims; and whether the court should order a mini-trial or convert the application into an action.

Terrance argued that he should be compensated for the fair value of his work in building and maintaining the property over a 38-year period. He framed his claim in terms of restitution, quantum meruit, unjust enrichment, and constructive trust, and sought to have these claims determined on the reference. Specifically, he claimed one-half of the labour he put into building the house, one-half of the labour to maintain the property, and related expenses for a total of $152,654. He also asked that the sale proceeds, then held in trust by the real estate lawyer, be transferred into an interest-bearing account.

Ronald took the position that Justice Dawe never intended the Associate Justice to make findings on the value of Terrance’s contribution to the property. In Ronald’s view, the matter was essentially a business venture, and because Terrance had never commenced his own claim or action for equitable relief, those remedies were not properly before the court. Ronald also characterized Terrance’s motion as a tactic that would delay final resolution of the dispute.

Court’s analysis and reasoning

On the variation issue, Ronald relied on Rule 59.06(2)(d), which allows a party to seek “other relief than that originally awarded” on a motion in the same proceeding. The court, referencing appellate authority, explained that Rule 59.06 is not limitless: it cannot simply be used to re-litigate matters already decided or to undermine the finality of judgments. At the same time, the judge accepted that Ronald’s request to have the matter proceed fairly and efficiently within the framework of the existing order could fall within the scope of that rule, in principle.

The more decisive question, however, was whether an Assessment Officer could legally conduct the kind of reference that Justice Dawe had directed. Rule 54.03(1) permits a reference to be directed to various decision-makers: the referring judge, another judge (with consent), a registrar or other officer of the court, or a person agreed on by the parties. Ronald argued that an Assessment Officer was an “officer of the court” and therefore a permissible reference decision-maker.

The court rejected this position. Assessment Officers, the judge noted, are created under section 90 of the Courts of Justice Act. The statute gives them jurisdiction to assess costs in a proceeding, and the court emphasized that there was no authority to extend their powers beyond that costs-assessment role. Given that the reference in this case concerned division of sale proceeds and potentially complex property and equitable rights, the judge found that an Assessment Officer lacked jurisdiction to conduct it. As a result, the court refused to vary the original order to substitute “Assessment Officer” for “Associate Justice.”

Turning to Terrance’s equitable claims, the court acknowledged that he asserted having done virtually all the work to build and maintain the house and that he grounded his claim in unjust enrichment and constructive trust principles. Terrance relied on a prior decision, Billimoria v. Mistry, where a Partition Act sale was accompanied by the imposition of a constructive trust after a full trial on a properly pleaded claim.

However, the court distinguished that case because there, a constructive trust claim was formally pleaded and adjudicated after a trial. In the Nakeff matter, the only pleading before the court was Ronald’s Notice of Application under the Partition Act. Terrance had not commenced his own proceeding or amended the pleadings to claim unjust enrichment or constructive trust. The judge stressed that granting relief that is not pleaded, on an insufficient evidentiary record, would be an error of law, and cited appellate authority confirming that courts must not award unpleaded relief.

On that basis, the judge held that Terrance’s claims for restitutionary and equitable relief were not properly before the court in this application. Justice Dawe’s original order did not contemplate adjudicating those issues at the reference stage; it was directed toward implementing the sale and distributing proceeds as between the co-owners, not conducting a broad equitable accounting of contributions going back decades.

Because the equitable claims could not be entertained on the existing pleadings, the court saw no basis to order a mini-trial or convert the application into an action. Those procedural routes are typically used to properly adjudicate issues that are actually before the court and properly framed. Here, given the absence of any formal claim by Terrance, the judge declined to take those steps.

It is important to note that there were no insurance policy terms or contractual policy clauses discussed in this decision. The dispute centered on co-ownership of real property, statutory partition and sale, and the procedural mechanics of a reference—not on interpretation of any insurance or similar policy document.

Outcome and implications

In the final orders, the court held that the matter should proceed as originally envisioned: before an Associate Justice on a reference under Rule 54. The judge directed that the reference proceed in accordance with paragraph 2 of Justice Dawe’s Order and that it be expedited before an Associate Justice. The materials already filed before the Assessment Officer were to be reused in the reference, subject to whatever further directions the Associate Justice might give.

The trial coordinator’s office was instructed to ensure the matter is placed before an Associate Justice, and the parties were told to arrange a case conference with that Associate Justice to identify any necessary steps to get the matter to a hearing. If the parties fail to resolve the division of the sale proceeds between themselves within 30 days, the court ordered that the funds presently held in trust by the closing lawyer be paid into court—specifically, to the Accountant of the Ontario Superior Court of Justice at Newmarket—to be held to the credit of these proceedings pending further order or joint direction.

The court dismissed Terrance’s cross-motion in its entirety, refusing his requests for a mini-trial, conversion of the application to an action, and adjudication of his equitable claims within this reference. At the same time, the court also refused Ronald’s request to have the reference proceed before an Assessment Officer, insisting instead on an Associate Justice. In addressing costs, the judge observed that “success has been divided” and encouraged the parties to resolve costs between themselves. If they cannot, they are to file short written costs submissions, after which the court will decide costs separately.

Overall, the result is procedurally driven and mixed. Ronald succeeds in ensuring that the reference continues and that the existing materials are not wasted, but he fails to keep the matter before the Assessment Officer. Terrance fails to have his unpleaded equitable claims heard at this stage and loses his cross-motion, although he preserves the opportunity to pursue proper proceedings in the future if he chooses. Because the decision does not finally allocate the sale proceeds, does not set damages, and expressly defers any costs award to a later ruling, there is no determinable total monetary amount ordered in favour of either party at this stage.