COURT OF APPEAL FOR ONTARIO
Cronk, Epstein and Benotto JJ.A.
BETWEEN
Laurie Kavanagh
Plaintiff (Respondent)
and
Mark Lajoie
Defendant (Appellant)
Claude-Alain Burdet, for the appellant
J. Alden Christian, for the respondent
Heard: March 4, 2014
On appeal from the decision of Justice Paul B. Kane of the Superior Court of Justice, dated January 15, 2013.
1This dispute is over the extent of the appellant’s ownership interest in residential property on Oakdale Avenue in Ottawa (“Oakdale”). The appellant and respondent are brother and sister. Prior to 2005 the parties’ father, Donald Lajoie, owned Oakdale and two other residences. In that year, Mr. Lajoie gave one family-owned residence to the respondent and advised the appellant that he intended to give him the Oakdale property. To this end, Mr. Lajoie arranged, through the services of his long-time solicitor Eric Honey, for the title to Oakdale to be transferred to him and the appellant as joint tenants.
2Mr. Lajoie’s health began to deteriorate in 2006. He moved in with the respondent and her family, in Ottawa.
3In 2007, the appellant and his wife moved to Saskatchewan. After the move, the appellant attempted to persuade Mr. Lajoie to rent or sell Oakdale so that funds would be available to assist him and his wife to purchase a home.
4In July of 2009, the appellant and his family visited Mr. Lajoie. During the visit Mr. Lajoie, the appellant and the respondent discussed various ways the appellant could access money from Oakdale. No agreement was reached.
5Within hours of the appellant’s departure from Ottawa to return home, Mr. Lajoie met with Mr. Honey at his office to change the ownership of Oakdale. In accordance with Mr. Lajoie’s instructions, Mr. Honey prepared and registered documents to transfer Oakdale to Mr. Lajoie, thereby severing the joint tenancy and creating a tenancy-in-common with the appellant. As Mr. Lajoie had instructed, Mr. Honey then transferred Mr. Lajoie’s half-interest in Oakdale to the respondent.
6Mr. Lajoie died on June 4, 2010. It was only then that the appellant learned of the 2009 transactions that left him sharing ownership of Oakdale with the respondent, as a tenant-in-common.
7In July 2011, the respondent brought an application for partition and sale of Oakdale. That application was dismissed. However, on consent, Oakdale was sold and the proceeds were paid into court pending the trial judge’s decision regarding the appellant’s entitlement to an order setting aside the 2009 transactions.
8At trial, the appellant advanced two arguments in support of his position that the 2009 transactions should be set aside. First, he submitted that Mr. Lajoie gifted Oakdale to him in 2005 and the gift was not defeated by severing the joint tenancy. Second, even if severing the joint tenancy could have defeated the gift, the transaction should be set aside on the basis that it was a result of the respondent’s undue influence on Mr. Lajoie.
9The trial judge rejected both arguments. He concluded that Mr. Lajoie’s promise to the appellant in 2005 and the creation of the joint tenancy did not, in law, create an inter vivos gift. Second, the trial judge held that the appellant had not satisfied the onus of establishing that the 2009 transactions were the result of undue influence.
10The appellant renews both arguments on appeal.
11We see no error in the trial judge’s findings. Therefore, the appeal must be dismissed.
ANALYSIS
(1) Did Mr. Lajoie’s promise to the appellant and the subsequent creation and registration of a joint tenancy create an irrevocable inter vivos gift of Oakdale to the appellant?
12We disagree with the appellant’s submission that Mr. Lajoie’s promise to give him Oakdale, followed by the creation of the joint tenancy, established an irrevocable inter vivos gift.
13For a gift to be valid and enforceable it must be perfected. In other words, the donor must have done everything necessary and in his power to effect the transfer of the property. An incomplete gift is nothing more than an intention to gift. The donor is free to change his mind. See Bergen v. Bergen [2013] B.C.J. No. 2552.
14The appellant pointed to no legal authority in support of his proposition that creation of the joint tenancy completed Mr. Lajoie’s promise of Oakdale to the appellant. In fact, by putting title of Oakdale into joint tenancy – with the attendant right to deprive the appellant of half of the property through severance – Mr. Lajoie defeated any finding that an irrevocable inter vivos gift was created.
15In any event, the appellant’s argument cannot succeed as it would be contrary to the Statute of Frauds, R.S.O. 1990, c. S. 19, as amended S.O. 1994, c. 27.
(2) Did the trial judge err in refusing to set aside the 2009 transactions on the basis of undue influence?
16The appellant argues that the trial judge erred by failing to conclude that Mr. Lajoie’s decision to sever the joint tenancy and transfer his half interest in Oakdale to the respondent was the result of undue influence by the respondent and must therefore be set aside. He argues that the trial judge misapprehended the evidence and placed improper weight on the respondent’s testimony.
17We see no reason to interfere.
18Equity will intervene and set aside arrangements such as the impugned transactions if it can be demonstrated that they were obtained through undue influence.
19Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, and Bank of Montreal v. Duguid (2000), 2000 CanLII 5710 (ON CA), 47 O.R. (3d) 737 (C.A.) are two of the leading cases on the doctrine of undue influence and its evidentiary companion, the presumption of undue influence. The concept of undue influence focuses on a person’s dominance over another person’s will by exercising a pervasive influence on him or her, whether through manipulation, coercion, or outright abuse of power. The onus is on the party claiming undue influence to prove affirmatively that such influence was, in fact, exerted by the other party expressly for the purpose of securing some advantage.
20The trial judge rejected the appellant’s argument that the respondent obtained her one-half interest in Oakdale through the use of undue influence over Mr. Lajoie and concluded that the 2009 transactions were the result of Mr. Lajoie’s free mind, through the following analysis.
21The trial judge recognized that the potential existed for the respondent to dominate or unduly influence Mr. Lajoie given the nature of their relationship and Mr. Lajoie’s dependence on the respondent during the last few years of his life.
22Having found the potential for domination, the trial judge turned his mind to whether the respondent had actually abused her relationship with Mr. Lajoie to secure part of Oakdale. The trial judge acknowledged that while the respondent was interested in gaining half of Oakdale at the appellant’s expense, this motivation, even given the opportunity the respondent had to unduly influence her father, would not give rise to a finding of undue influence. There was an abundance of evidence that demonstrated that Mr. Lajoie was an independent man known to freely exercise his own will.
23The trial judge focused, then, on the actual circumstances surrounding the transactions and made the following findings. While the respondent drove her father to Mr. Honey’s office, Mr. Lajoie and Mr. Honey met alone to discuss Mr. Lajioe’s decision to sever the joint tenancy and transfer his interest in Oakdale to the respondent. Mr. Honey was sensitive to the family dynamics and accepted Mr. Lajoie’s explanation that he had lost patience with the appellant’s repeated requests to access the equity in Oakdale. Mr. Honey also understood that Mr. Lajoie wanted to show his appreciation for the support the respondent and her husband had given him since 2006.
24The trial judge also accepted Mr. Honey’s testimony that he had no concerns about Mr. Lajoie’s ability to instruct him – either with respect to his mental competency or his ability to freely make the decisions reflected in the instructions.
25On these findings, the trial judge concluded that the appellant had not demonstrated that the 2009 transactions had come about as a result of the respondent’s undue influence over Mr. Lajoie.
26The trial judge’s findings of fact are amply supported by the evidence. We see no reason to interfere with the trial judge’s rejection of the appellant’s argument that the 2009 transactions should be set aside based on undue influence.
27While the appellant takes issue with Mr. Honey’s involvement and the legal services he provided, we do not see how any of these concerns assist the appellant’s arguments in this matter.
28Given the family history and the timing and lack of communication surrounding the 2009 transactions, we understand the appellant’s difficulty accepting the consequences of Mr. Lajoie’s change of heart regarding the ownership of Oakdale. However, there is no evidence to support a finding that this change came about by the respondent’s undue influence over Mr. Lajoie. And once Mr. Lajoie independently decided to give half of Oakdale to the respondent, nothing in law prevented him from severing the joint tenancy and transferring his interest.
29As a result, as the trial judge held, the appellant is only entitled to one half of the proceeds of the sale of the property.
30Finally, we see no error in the trial judge’s decision that the issues raised in the appellant’s counterclaim be dealt with in the reference over the division of the proceeds of the sale of Oakdale that are currently held in court.
31We note that leave to appeal the trial judge’s costs award was not sought. In any event, we see no error in principle in the trial judge’s costs award. Nor, in our view, is his costs award plainly wrong.
DISPOSITION
32For these reasons, the appeal is dismissed. The respondent is entitled to her costs of the appeal fixed in the amount of $15,000, including disbursements and applicable taxes.
Released: Mar. 11, 2014 “E.A. Cronk J.A.”
“EAC” “Gloria Epstein J.A.”
“M.L. Benotto J.A.”
