|JONATHAN HAYWARD FOR THE TORONTO STAR|
|Loretta and Bernard Cunningham can stay on their farm near Mallorytown, Ont. after they fought in court to keep it. It was nearly sold over back taxes.|
Oct. 13, 2004
The bad news is, Loretta Cunningham, the family bookkeeper, has been in a spot of trouble ever since her husband, Bernard, learned the local municipality was selling their 81-hectare beef cattle operation to recover $13,833.34 in unpaid property taxes.
Cunningham had been hiding notices about the tax arrears and a pending tax sale for more than a year in the kitchen cupboard because she was concerned about the effect it might have on her husband's high blood pressure and poor health, and because she didn't want him to know she had been overspending.
Eventually, Bernard Cunningham did find out — when a neighbour showed him a newspaper ad listing the Brockville-area property for sale in May, 2003. Although he pulled together enough to cover the unpaid taxes, the municipality refused to accept it, unleashing a legal battle that worked its way to Ontario's highest court.
In a unanimous decision yesterday, however, the Ontario Court of Appeal put a stop to the prospect that the Cunninghams might lose almost everything.
A three-judge panel dismissed an appeal from the eastern Ontario township of Front of Yonge, which would have seen the Cunningham property sold to the neighbours for a paltry $61,055.43. The farm has an assessed value of about $188,000 but is worth $350,000, according to Cunningham.
"Thank God it's over," she said in an interview yesterday. "It wasn't just our house. It was our livelihood." Although her husband has resumed speaking to her, "it's taken a long time," she said. "It was almost divorce. Murder."
Cunningham received the first notice in November, 2001, when the taxes owed were $4,879.06. It advised that the property would be listed for sale as of Jan. 1, 2002, if the tax wasn't paid.
At least eight notices of the pending sale were sent between then and April 28, 2003. They were eventually discovered in the kitchen cupboard by the Cunninghams' teenage son, Chris.
In May, 2003, Cunningham said, they noticed people slowing down as they drove past, and thought they were admiring their Belgian horses. Later, they learned their neighbours, brothers Leonard and Casey Roth, bought the property from the township for $80,000. The Cunninghams' farm, which they had owned since 1983 and paid off in 1996, had been listed in the paper four consecutive Saturdays.
When the Roths failed to come up with the full purchase price, the property was sold to two other Roth siblings, Corey and Elisabeth Roth, and their sister and brother-in-law, Johanna and Robert Mallette, for $61,055.43.
Meanwhile, Bernard Cunningham contacted a lawyer and borrowed $20,000, which he arranged to pay to the municipality on June 17, 2003. But it was too late. The township, based in the village of Mallorytown, west of Brockville, took the position that once tenders were opened, treasurer Sherry Reed had no discretion to cancel the tax sale.
Writing for the appeal court yesterday, however, Mr. Justice Robert Blair said the Municipal Tax Sales Act does give local treasurers the option of cancelling a sale until a deed is registered. In this case, the process was "fatally flawed" because Reed failed to exercise her discretion, he said.
The decision upholds a ruling last October by Mr. Justice Michael Quigley of the Superior Court of Justice.
Yesterday's decision, coupled with an earlier appeal court ruling from 1998, establishes "that a municipality has no obligation in law to complete a tax sale," said Toronto lawyer Sean Foran, who represented the Cunninghams.
Although Reed maintained cancelling the sale would undermine the integrity of the sale and bidding process, Quigley called that a "reconstructive and after-the-fact" justification for how the township handled the affair.
Blair, writing for Justices Karen Weiler and Marc Rosenberg, said he wasn't convinced the number of potential bidders would drop off substantially simply because the law allows for the possibility that a sale could be cancelled. Bidders "know the rules" and enter the process "because they hope to acquire a property at an acceptably low price."
The municipality and four bidders have been ordered to pay the Cunninghams about $65,000 in legal costs.
The municipality still refuses to accept their cheque for the arrears, Loretta Cunningham said. She and her husband are no longer on speaking terms with the Roths, she added.
Cunningham said that when she got the first arrears notice, she was confused because she had "just paid the township $6,000" in taxes. "It started, originally, at $4,600, then it escalated."
At the time, Cunningham said, they were trying to help one of four sons get his own farm started and another son cover university costs. When everything blew up, a lawyer asked her husband if he was going to leave her, Cunningham said. She considered moving into a nearby apartment they own.
Elaine Covey, clerk of Front of Yonge Township said the municipality was waiting
for councillors to approve a news release.