IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

MacMillan Estate v. Hofmann,

2011 BCSC 141

Date: 20110207

Docket: 1036770

Registry: Prince George

Between:

Peter Denton MacMillan, Executor of the Estate of

Janet Elizabeth MacMillan, Deceased

Petitioner

And

Jurgen H. Hofmann aka John Hofmann

Respondent

Before: The Honourable Mr.Justice Cole

Reasons for Judgment

Counsel for the Petitioner:

A. Reynolds

Counsel for Respondent:

C.A. Schneiderat

Place and Date of Hearing:

Prince George, B.C.

December 1, 2010

Place and Date of Judgment:

Prince George, B.C.

February 7, 2011

[1]The petitioner applies for:

1.A declaration that the document entitled Lease to Purchase dated September 8, 1999 between Bonnie Heather West and John Hofmann is null and void;

2.A declaration that Jurgen H. Hofmann also known as John Hofmann has no interest in the lands and premises situated at 574 6th Avenue, Midway, British Columbia;

3.An order that the respondent Jurgen H. Hofmann also known as John Hofmann give up vacant possession of the lands to the petitioner; and

4.Costs.

[2]The petitioner did not pursue their remedy for a declaration that the respondent give up vacant possession.

I.BACKGROUND

[3]Commencing in December 1998, the respondent Mr.Hofmann rented property owned at that time by Janet Elizabeth MacMillan and her late husband. Janet MacMillan granted her daughter Bonnie Heather West a power of attorney. According to Janet MacMillan's sons, James Richard MacMillan and Peter Denton MacMillan, their mother expressed concerns in the summer of 1999 about Bonnie West not paying their mother's bills or running her businesses, and more particularly was concerned about the 574 6th Avenue property (the "Property").

[4]On or about September 8, 1999, James MacMillan, at the request of his mother, took her to a lawyer to revoke the power of attorney that had been granted to Ms.West. Janet MacMillan also requested a new power of attorney appointing her sons James and Peter MacMillan to handle her affairs.

[5]On September 10, 1999, Janet MacMillan finalized the necessary documents revoking the power of attorney to Ms.West and appointing her sons. Peter MacMillan signed the power of attorney on September 26, 1999.

[6]Immediately upon the signing of a new power of attorney, James MacMillan, accompanied by his wife, attended at the Property and met with Mr.Hofmann. Mr.Hofmann was given the new power of attorney and was advised that Peter and James MacMillan were in charge of the rent for the house and all details relating to the Property. Mr.Hofmann appeared to be greatly concerned but he made no mention of any right to purchase the house or any agreement for sale. No documents were provided by Mr.Hofmann at that time. Mr.Hofmann called Ms.West and James MacMillan overheard the conversation between Mr.Hofmann and Ms.West. There was a great deal of screaming from both sides of the phone. During the conversation Ms.West indicated she did not want to meet with James MacMillan to discuss the revocation of her power of attorney.

[7]Mr.Hofmann's evidence, however, was that he gave a copy of a document entitled "Lease to Purchase" to James MacMillan during that first meeting. The Lease to Purchase set out as follows:

LEASE TO PURCHASE

THIS AGREEMENT made Sept. 8, 1999

Between:Bonnie Heather

For Janet Elizabeth MacMillan

508 9th Ave

Midway, B.C.

(the vendor)

AndJohn Hofmann

574 6th Ave

Midway B.C.

(the Purchaser)

WHEREAS the Purchaser and Vendor have entered into a Lease agreement dated September 8, 1999, whereby the Purchaser will rent the premises on which he presently resides until his death.

The Vendor hereby grants to the Purchaser an exclusive option to purchase, free and clear the lands and premises situated at 574 6th Ave for the sum of SIXTY THOUSAND DOLLARS ($60,000.00).

Each anniversary date (September 8th, 1999) The excessive monies left after yearly property taxes, water tolls, and house insurances are paid will be applied towards the purchase of the property and Premises.

The Option granted shall be effective so long as the terms of the Lease Agreement are adhered to by the Purchaser and in the event of any default, the Option granted shall become void and premises and land shall be sold.

This agreement shall be binding upon the parties hereto upon signature.

"Bonnie West"

"John Hofmann"

[8]On September 27, 1999, Peter MacMillan met with Mr.Hofmann and presented him with a copy of the power of attorney and directed Mr.Hofmann to make all further rental payments to him or his brother. According to Peter MacMillan it was only at that point in time that Mr.Hofmann presented him with a document entitled Lease to Purchase, made between Mr.Hofmann and Bonnie West. According to Peter MacMillan he stated that "Immediately after Mr.Hofmann presented me with the Lease to Purchase, I challenged the validity of the Lease to Purchase."That statement was not denied by Mr.Hofmann.

[9]When the rents were not received in October 1999, Peter MacMillan sent to Mr.Hofmann a detailed letter dated October 7, 1999, setting out in detail the fact that Janet MacMillan had revoked the power of attorney granted to Bonnie West, confirming that James MacMillan and his wife attended at the Property and presented Mr.Hofmann with the documents revoking the power of attorney to Ms.West, and informing Mr.Hofmann that James and Peter MacMillan were handling their mother's affairs. The letter also confirms that:

[O]ur mother Janet MacMillan expressed no knowledge of any intent to sell her house. So that there is no confusion on this point, our mother has never, either before this time or after this time made any statement that suggested that she is aware of your intent to purchase the house.

[10]The letter also reminded Mr.Hofmann that if any rent monies were paid over to Ms.West, that would be considered a gift to Ms.West. The letter made it clear that unless the matters of rent and access to the buildings were not resolved within five days, then eviction of Mr.Hofmann would follow.

[11]On November 19, 1999, Mr.Mellett, solicitor for Janet MacMillan, wrote Mr.Hofmann confirming the appointment of James and Peter MacMillan as her attorneys to act on her behalf, confirming the revocation of the form of power of attorney to Ms.West and advising him:

With respect to the matter of paying rent, should you pay that to anyone other than Mrs.Janet MacMillan, or those authorized to collect for her, you do so at the peril of having to pay twice. Payment to either Attorney or to Darlene MacMillan, and their receipt to you for such payment will constitute a valid rent payment.

[12]In January of 2000, since no rent had been paid, the petitioner applied to the Residential Tenancy Board for an order of possession. On February 18, 2000, Mr.Hofmann sent a letter to the Residential Tenancy Office saying that he had paid rent to Ms.West and after receipt of Mr.MacMillan's letter was told to make deposits to Janet MacMillan's CIBC account which he claims he deposited in November of 1999 but since that time had received information from Ms.West's legal counsel that the power of attorney given to the MacMillan brothers was not valid. In December 1999 he claims that CIBC would not accept the rent and he continued to pay Ms.West.

[13]On March 6, 2000, S.A. Carter, the arbitrator appointed under theResidential Tenancy Act, R.S.B.C. 1996, c.406as amended, determined that because of the outstanding issue of the Lease to Purchase agreement that she did not have jurisdiction to hear the matter.

[14]Mr.Hofmann has paid rent to Ms.West, on occasions he had paid rent to the estate of Janet MacMillan and more recently he is paying one third of the rent to Ms.West. He claims that the balance of the funds he is keeping in his bank account upon determination of the outstanding issues.

II.THE POSITION OF MR.HOFMANN

[15]Mr.Hofmann takes the position that the Lease to Purchase document is in fact an agreement for sale because he was of the view that he was building up equity in the Property under the terms of the Lease to Purchase. Furthermore, Mr.Hofmann says that the petitioners are estopped from denying the agreement for sale because Mr.Hofmann has told the petitioners, and it was his understanding with Ms.West that he was building up equity in the Property and the petitioners accepted rental payments and they are therefore now estopped from denying the validity of the agreement for sale.

[16]InRana v. Maduck,2000 SKQB 318, the Court at para.61 quotes with approval from Di Castri (looseleaf; updated Rel. 2, (February 1990)):

As stated by Di Castri at 11, p.1-8:

The distinction between an option to purchase and an agreement of sale and purchase is that the latter creates a mutual obligation, on one party to sell and the other to purchase,whereas an option merely gives the right to purchase within a limited time without imposing any obligation to purchase. [Emphasis in original.]

[17]I am satisfied that the Lease to Purchase document does not place any obligation on Mr.Hofmann to purchase the Property and therefore is not an agreement for sale. In my view, the language is clear when it says "The Vendor hereby grants to the Purchaser an exclusive option to purchase, free and clear the lands and premises situated at 574 6th Ave for the sum of SIXTY THOUSAND DOLLARS ($60,000.00)."This document, I am satisfied, is an option to purchase, but it is not valid because it is neither under seal nor is there any consideration. InMark 7 Development Ltd. v. Peace Holdings Ltd.(1991), 53 B.C.L.R. (2d) 101 (C.A.), Hinds J.A. quotes with approval Taylor J.'s decision inBlack Gavin & Co. v. Cheung(1980),1980 CanLII 616 (BC SC), 20 B.C.L.R. 21 (S.C.), "I would add that, while the transaction may have the appearance of an option, it cannot be a true option if given neither under seal nor for consideration."I am therefore satisfied that the Lease to Purchase is null and void.

III.THE ESTOPPEL ARGUMENT

[18]Mr.Hofmann sets out in his affidavit his understanding of the agreement. Starting at paragraphs 6-7 he states:

I understood that the payments would be applied to expenses for the Property, such as taxes, insurance and any utility fees and any balance would be applied towards the purchase price of $60,000.00 when/if I decided I would/could buy the Property.

At the time it was discussed with Ms.West that this was a good arrangement for all concerned as I would have a residence to which I could be paying towards and gaining equity as I maintained it and as her mother was becoming ill and they couldn't maintain it or pay the costs, it would benefit them.

[19]The respondent relies uponN.M. v. A.T.A.,2003 BCCA 297;Dunn v. Vicars,2009 BCCA 477;Erickson v. Jones,2008 BCCA 379.

[20]In theDunncase, the Court of Appeal quotes with approval at para.60Crabb v. Arun District Council, [1975] 3 All E.R. 865 at 871 (C.A.) as setting out the basis for proprietary estoppel:

The basis of this proprietary estoppel - as indeed of promissory estoppel - is the interposition of equity. Equity comes in, true to form, to mitigate the rigours of strict law. The early cases did not speak of it as "estoppel". They spoke of it as "raising an equity". If I may expand that, Lord Cairns said in Hughes v. Metropolitan Railway Co [(1877) 2 App Cas 439 at 448, [1874-1880] All E.R. Rep 187 at 191]: "...it is the first principle upon which all Courts of Equity proceed..." that it will prevent a person from insisting on his strict legal rights - whether arising under a contract, or on his title deeds, or by statute - when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties. What then are the dealings which will preclude him from insisting on his strict legal rights? ... Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights - knowing or intending that the other will act on that belief - and he does so act, that again will raise an equity in favour of the other, and it is for a court of equity to say in what way the equity may be satisfied. The cases show that this equity does not depend on agreement but on words or conduct. ...

[21]I am satisfied that immediately upon the petitioners being granted the power of attorney for their mother, Mr.Hofmann was notified of the cancellation of Ms.West's power of attorney and the granting to them of the new power of attorney on September 10, 1999, two days after the execution of the Lease to Purchase document. I am also satisfied that on September 27, 1999, Peter MacMillan challenged the validity of the Lease to Purchase and followed that up with a notice to evict. On two occasions the petitioners attempted to have Mr.Hofmann evicted under theResidential Tenancy Actand throughout Mr.Hofmann, when he made payments, categorized those payments as rent. I am satisfied that the conduct of the petitioners is consistent with the fact that there were no words or conduct by the petitioners to lead Mr.Hofmann to believe that he had equity in the Property or that the payments that were received would go towards the building up of his equity in the Property.

[22]I am satisfied that the Lease to Purchase is also clear that any equity in the Property would only be built up or crystallized once Mr.Hofmann had agreed to exercise his option to purchase. I am satisfied also that Mr.Hofmann's sworn testimony is consistent with this interpretation of the Lease to Purchase when he says "and any balance would be applied towards the purchase price of $60,000.00 when/if I decide I would/could buy the Property."

[23]I am satisfied based on all the evidence that estoppel does not apply in these circumstances. I am satisfied the Lease to Purchase agreement is null and void and I grant the petitioners' relief as set out in paragraphs 1, 2 and 4 of their petition.

The Honourable Mr.Justice F.W. Cole

Q. What are the decisions made till now?

Q. What are the outcome of the case and the rationale followed by the judge for his decision along with whether you agree or disagree with the outcome