COURT OF APPEAL FOR ONTARIO
Cronk, Juriansz and Brown JJ.A.
BETWEEN
John Granger
Appellant (Respondent/Counter-Applicant)
and
Katarina Granger and Helena Granger
Respondents (Applicants/Counter-Respondents)
Saba Ahmad and Michael Hackl, for the appellant
Bruce Baron and Maija Pluto, for the respondents
Heard: October 12, 2016
On appeal from the order of Justice James F. Diamond of the Superior Court of Justice, dated October 20, 2015, with reasons reported at 2015 ONSC 6238 and the application decision of March 23, 2015, with reasons reported at 2015 ONSC 1711.
INTRODUCTION
1In this appeal the appellant John Granger is pitted against his elderly mother Katarina Granger and his sister Helena Granger. The core of their dispute relates to the family home to which Helena and Katarina held joint title and in which they were all residing at the material time. John’s main appeal is from the trial judge’s dismissal of his application for a declaration that he had a beneficial interest in the family home, or alternatively for equitable damages for financial contributions and services rendered to Katarina. John also appeals from the judge’s decision on an earlier application upholding the validity of a power of attorney Helena holds for Katarina.
2For the reasons that follow, I would allow both parts of the appeal. First, though the trial judge was faced with a difficult and acrimonious family dispute in which he made few findings of fact because much of the evidence of both sides lacked credibility, he erred in his approach to unjust enrichment. Applying the proper approach to the findings the trial judge did make results in part of John’s unjust enrichment claim succeeding. Second, considering the trial judge’s ultimate findings at trial as fresh evidence, his initial ruling on the application upholding Helena’s power of attorney cannot stand.
FACTS AND PROCEDURAL HISTORY
(1) Background
3The family home in Toronto was purchased in 1981 and title was taken in Katarina’s name only. Shortly after his father deserted the family in 1984, John dropped out of school and lived with his mother in the family home for the next 30 years. Then this dispute arose.
4John’s position is that his mother wanted him to live with her to look after her and the house. He says she promised him that if he did so he would have half the house upon her death. Later, after Katarina helped Helena purchase another property, John says Katarina promised him the entire house upon her death.
5In 2012, after Helena’s marriage broke up, she moved back into the house. Helena, exercising her power of attorney, transferred title to the house to Katarina and herself as joint tenants for two dollars consideration.
(2) The proceedings below
6On September 25, 2014 Katarina and Helena commenced an application for a writ of possession to evict John and his common-law wife Margaret from the family home. John brought a counter application challenging Helena’s power of attorney, seeking the appointment of a neutral litigation guardian, and seeking a beneficial interest in the property.
7The applications came before the trial judge sitting as the application judge in March, 2015. He found that Katarina was competent and dismissed John’s allegation of undue influence as well as his request for the appointment of a litigation guardian. He granted Katarina’s and Helena’s request for an order evicting John and Margaret from the property. They moved out of the property in 2015.
8The application judge also ordered a trial of an issue as to whether Katarina and Helena held their interests in the property for John by way of constructive trust, or whether John was entitled to damages for his financial and other contributions to the property and to Katarina’s care and maintenance.
9After hearing nine days of evidence, the trial judge dismissed John’s claims by order dated October 20, 2015.
(3) None of the family members were credible
10The trial judge concluded he could not rely on the evidence any of the three family members.
a. The mother Katarina Granger
11The trial judge questioned whether Katarina had “any recollection at all of the various incidents giving rise to this dispute.” He added:
117 Katarina consistently and repeatedly offered stock answers such as "Helena handled everything", "Helena always helped me and John did nothing" and "Helena always looks out for me". These responses sounded rehearsed, and likely served as "go to answers" when Katarina either didn't understand the question, or didn't want to give the actual answer. The fact that Katarina denied signing the 2011 Will showed me the extent to which her testimony could venture in the event she felt she was giving the "wrong evidence".
118 During Katarina's testimony, Helena was seated in the back of the courtroom. On several occasions after Katarina answered the questions posed by counsel, Helena would exclaim phrases such as "no, that's not right" or "she is not understanding the question". It appeared that Helena was either expressing disappointment with her mother's evidence, or even worse, trying to remind or influence her mother to "stick to the script".
12Katarina was so entrenched in her position that she claimed Helena was responsible for certain basement renovations John claimed to have made, “even though Helena had already moved out of the property for several years and never testified as to her involvement at all with any basement renovations.”
b. The daughter Helena Granger
13The trial judge remarked that in their testimony, John and Margaret had described Helena “as an aggressive, domineering, stubborn bully”, and then observed that Helena “came as advertised, and then some”. He found Helena’s explanation of inconsistencies between her testimony at trial and her prior sworn testimony as “shocking”. Helena took irreconcilable positions and “effectively admitted that she viewed it permissible to tell a different story to John's counsel than the one she spun to the Court at trial, purportedly taking the same oath.”
14The trial judge said that Helena attempted “to portray herself as superior to the rest of the Granger family members” by making false, unbelievable claims of higher education. He found her testimony “strained the limits of both common sense, and reality.” The trial judge concluded Helena was “a witness who essentially said or assumed anything to avoid the mere contemplation of being incorrect.”
c. The son John Granger
15The trial judge was troubled by John’s failure to produce any documents that “clearly showed a transfer of funds from himself to his mother.” The trial judge observed that he sought to resile from “specific representations to Canada Revenue Agency, and presumably on his unemployment insurance applications…”. The trial judge was troubled by John’s characterization of the property as “his mother’s” in more recent years. In cross-examination John gave rambling answers that did not specifically respond to questions posed of him. When confronted with inconsistent statements from prior cross-examination on his affidavits, he was evasive and on one occasion even answered that his previous evidence given only months earlier was “wrong”.
d. The documentary evidence
16In addition to finding the parties not credible, the trial judge found he could not rely on most documents they tendered. Because of the parties’ conflicting and confusing testimony about the documents he found it difficult to make anything of them at all.
17For example, the parties produced a series of written lease agreements listing John and Margaret as the tenant but, curiously, indicating Helena as the landlord. At trial, all parties testified the leases were “shams” but offered completely different explanations as to why the leases were prepared and signed. The trial judge found none of the explanations made any sense. Whatever the reason for the existence of these leases, the trial Judge observed the parties “have attempted to alter the truth to suit their respective needs in these proceedings.”
18Another example is the registration of a $50,000 mortgage against the title of the second property in 2002 at a time when Katarina owned it. The parties disputed who knew about the mortgage, who received the proceeds, and who made the payments on the mortgage. After reviewing the parties’ testimony, the trial judge said “[o]nce again, neither party provided a satisfactory, let alone realistic explanation for this factual issue.”
19The parties produced copies of various “rent receipts” issued to either John or Margaret. The trial judge found it curious that the receipts were signed by Helena and not by the owner of the property. Helena testified the rent receipts were issued to John to assist his applications for social assistance and unemployment insurance over the years to prove he was incurring rent obligations. John did not disagree but testified he turned his social assistance payments and most of his unemployment insurance benefits over to his mother.
(4) The decisions under appeal
20John appeals from the trial decision dated October 20, 2015. He submits the trial judge erred by not imposing a constructive trust on Katarina’s and Helena’s interests in the property. In the alternative, he submits that the trial judge erred by not ordering equitable damages for his financial and other contributions to Katarina’s care and maintenance.
21John also appeals the part of the decision on the first application refusing to revoke Helena’s power of attorney. John’s counsel did not have a formal order reflecting the decision of March 23, 2015 issued, taking the position that as long as an order was not taken out the judge was not functus and was able, at trial, to revisit the findings he had made on the application. In the notice of appeal to this court, John appeals from the trial decision of October 20, 2015 as well as the application decision of March 23, 2015.
22Rather than outline the trial judge’s reasons here, I will outline the relevant portions of his reasons under each ground of appeal.
ISSUES
23There are three main issues in this appeal:
Did the trial judge err in denying John’s claim based on proprietary estoppel?
Did the trial judge err in denying John’s claim based on unjust enrichment?
Did the trial judge err in failing to reconsider his initial decision upholding Helena’s power of attorney in light of his subsequent adverse findings of fact against Helena at trial?
ISSUE 1: PROPRIETARY ESTOPPEL
24Relying on this court’s decision in Clarke v. Johnson, 2014 ONCA 237, 371 D.L.R. (4th) 618 (C.A.), the trial judge set out the following test for a claim of proprietary estoppel:
i. the owner of the property induces, encourages or allows the claimant to believe that he/she has or will enjoy some right or benefit over the property;
ii. in reliance upon his/her belief, the claimant acts to his detriment to the knowledge of the owner; and
iii. the owner then seeks to take unconscionable advantage of the claimant by denying him/her the right or benefit which he/she expected to receive.
25The trial judge rejected John’s claim on the basis he was not promised a present interest in the property by Katarina but, rather, an interest that would not vest until Katarina’s death. He therefore held that John’s claim based on proprietary estoppel was premature.
26John’s counsel submits this proposition is wrong in law. She argues there is no requirement that the right or interest in question must be a present interest in the property and that a promise to bequeath is sufficient to ground a claim for proprietary estoppel. John’s counsel points out that in Cowderoy v. Sorkos Estate, 2014 ONCA 618, 325 O.A.C. 130, this court found a promise to bequeath was enforceable (where there had been partial performance).
27That is so, but the court in Cowderoy also found the trial judge erred by ordering the property conveyed. This court ruled the property should not have been ordered conveyed because the enforceable promise was that the property would be bequeathed and the plaintiffs would receive the promised interest upon the promisor’s death. In Cowderoy, the promisor had died. This court set aside the conveyance and substituted an order deeming the bequest to have been made in the promisor’s will. The distinction is important because the estate was facing a claim for dependent’s relief.
28As the trial judge stressed, in this case, John never claimed a present interest in the property but asserted he was promised he would receive an interest upon his mother’s death. Applying the approach of Cowderoy, the trial judge noted “perhaps John’s complaints will resurface in potential estate litigation at some point in the future. However, at this point, John’s claim for a beneficial interest in the property based upon proprietary estoppel fails.”
29The added wrinkle in this case is that Katerina has disposed of the allegedly promised asset and can no longer bequeath it to John. But even characterizing John’s claim as one for damages for the breach of the promise, his right to damages would arise on Katarina’s death.
30I therefore reject this ground of appeal. The trial judge made no error in holding it would be premature to assess whether John might have a claim based on proprietary estoppel against Katarina’s estate.
ISSUE 2: UNJUST ENRICHMENT
(1) Allocation of burden of proof in the trial judge’s reasons
a. Overview
31John’s counsel submits that the trial judge erred in his application of the test for unjust enrichment by failing to properly allocate the burden of proof in a case that involved the mutual conferral of benefits. In the first step of the proper analysis, the burden is on John to establish merely that he conferred a benefit on Katarina. Instead, the trial judge immediately took into account the benefits Katarina conferred on John by considering at the first step whether John conferred a “net benefit” on Katerina.
32I agree the trial judge did not properly allocate the burden of proof. The proper allocation leads to a different result. In a case such as this, in which the trial judge finds all the party witnesses entirely lacking in credibility, onus is usually dispositive.
b. The trial judge’s approach
33In this case, the trial judge recognized the importance of the burden of proof. Early in his reasons, he stressed that “a moving party has the onus of factual proof of the evidence necessary to satisfy its legal burden”. And he said “for a party to seek to discharge its legal onus of proof, the court must first be satisfied with the credibility and reliability of the evidence in order to be in a position to make the relevant findings of fact.”
34In his unjust enrichment analysis, the trial judge placed the onus on John, as the claimant, to prove he conferred a “net benefit” on Katarina. He said “… I must determine whether John conferred a net benefit to Katarina as the legal owner of the property…” (emphasis in original).
35In considering the exchange of mutual benefits, the trial judge began by finding as a fact the accommodation John and Margaret enjoyed in Katarina’s house over the years had a value of $250,000 – $350,000. This was one of the few clear findings of fact he made.
36Next, he held that whatever financial contributions John and Margaret made over the years, they did not surpass the $250,000 - $350,000 they would have necessarily incurred in rental payments. Similarly, he held that although domestic services are capable of supporting an unjust enrichment claim, any services John provided could not satisfy the first element of the unjust enrichment test “on a net analysis”. He came to these conclusions without making any specific factual findings about the amount of financial contributions made or the value of the services provided, though he found that some contributions were made and some services were provided.
37As the trial judge emphasized, the burden of establishing the conferral of an enrichment, a corresponding deprivation, and the absence of an established juristic reason for the enrichment all lie upon the claimant. However, he failed to recognize that where the defendant claims a set-off because of the mutual exchange of benefits, the allocation of the burden of proof is more nuanced.
c. The correct approach: Kerr v. Baranow
38The more nuanced allocation is explained by the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269. Cromwell J., writing for a unanimous court, focused directly on mutual benefit conferral and explained at what point in the analysis it should be considered. He stated that, generally, mutual benefit conferral is to be considered at the defence or remedy stage. In limited cases it “can be taken into account at the juristic reason stage of the analysis, but only to the extent that it provides relevant evidence of the existence of a juristic reason for the enrichment”: para. 109.
39Cromwell J. explained the reason for this approach. He explained, at para. 110, that not addressing mutual benefits at the benefit/detriment stage of the analysis “is consistent with the quantum meruit origins of the fee-for-services approach and, as well, with the straightforward economic approach to the benefit/detriment analysis which has been consistently followed by this Court”. At para. 112, he added that “refusing to take mutual benefits into account at the benefit/detriment stage is also supported by a straightforward economic approach to the benefit/detriment analysis which the Court has consistently followed.”
40Cromwell J. stressed that this approach should be used where the alleged enrichment consists of services. He said at para. 113: “Provided that they confer a tangible benefit on the defendant, the services will generally constitute an enrichment and a corresponding deprivation. Whether the deprivation was counterbalanced by benefits flowing to the claimant from the defendant should not be addressed at the first two steps of the analysis” (emphasis added).
41Cromwell J. went on to state that mutual benefit conferral may in some cases be considered at the juristic stage of the analysis but only to shed light on the parties’ reasonable expectations. He explained at para. 115: “given that the purpose of the juristic reason step in the analysis is to determine whether the enrichment was just, not its extent, mutual benefit conferral should only be considered at the juristic reason stage for that limited purpose.”
d. The Kerr approach applies here
42Counsel for the respondent urged in oral argument that Cromwell J.’s comments in Kerr regarding the appropriate analytical approach to mutual benefit conferral applied only to the particular context of a joint family venture. I do not agree. While Kerr and its companion case Vanasse v. Seguin did involve joint family ventures, Cromwell J.’s comments at paras. 109-115 are intended to be of more general application. I say this for five reasons.
43First, the structure of Kerr itself confirms this view. At paras. 80-100, Cromwell J. outlines the proper approach to a claim for monetary relief based on unjust enrichment in a joint family venture. Where a joint family venture has led to wealth generation, the remedy should be calculated based on the share of those assets proportionate to the claimant’s contributions. Then, at paras. 101-108, Cromwell J. addresses the difference between that situation and one where relief must be calculated on a “fee for services” basis. Both may involve mutual benefit conferral. In the joint family venture context, the analysis takes mutual benefit conferral into account in assessing relative contribution to the joint assets. By contrast, in the fee for services approach, mutual benefit conferral is taken into account in the manner outlined at paras. 109-115 – namely, it is taken into account as a “set off”, typically at the defence stage of an unjust enrichment analysis.
44Second, Cromwell J. explicitly draws on non-family case law in explaining why mutual benefits should not be taken into account at the “benefit/detriment” stage of the analysis. At para. 112, Cromwell J. holds as follows: “[r]efusing to take mutual benefits into account at the benefit/detriment stage is also supported by a straightforward economic approach to the benefit/detriment analysis which the Court has consistently followed. Garland is a good example” (emphasis added). At para. 113, he goes on to state that although Garland dealt with payment of money, the same approach should apply where the alleged enrichment consists of services. These references to Garland v. Consumers’ Gas Co., 1998 CanLII 766 (SCC), [1998] 3 S.C.R. 112 and the court’s “straightforward economic approach” make it clear that Cromwell J. viewed his comments regarding the appropriate point at which to consider off-setting benefits as having a more general application outside of the family context.
45Third, scholarly commentary suggests that Cromwell J.’s comments regarding the appropriate stage of the analysis to consider off-setting benefits apply outside the family context. In P.D. Maddaugh and J.D. McCamus, The Law of Restitution (loose-leaf), Vol. II (Toronto: Thomson Reuters, 2016), the authors point to “housekeeper” cases as an example of where Cromwell J.’s comments would apply, at 34:700. They explain as follows:
Where, in the typical case, a housekeeper is persuaded by an elderly gentleman to provide him with housekeeping services until his death on the basis of an unenforceable promise that he will leave his home by will to the housekeeper, housekeepers have been allowed to bring successful quantum meruit claims for the reasonable value of the services rendered in the expectation of compensation. In such a case, it might be argued that the free room and board, if any, provided by the deceased could constitute a mutual benefit that ought to be taken into account in reducing the award. The correct analysis of such a problem, in our view, would turn on whether the room and board provided to the housekeeper was understood by the parties to constitute partial compensation for the services rendered. If the parties did indeed have such an understanding, it seems inescapable that the value of that benefit should be deducted from the ultimate fee-for-services award. If, on the other hand, the parties’ understanding was that the room and board was being provided gratuitously and that the only compensation for the services rendered would be the home, no deduction would be appropriate, in cases where the facts concerning the parties’ intentions on this point were less than clear, the Court would be confronted with a difficult factual determination …
In Kerr, the discussion of the mutual benefit issue in a fee-for-services context is quite focused on the juristic reason test from the Garland calculus and the perceived problem of determining precisely where the mutual benefits would be taken into account in the Garland calculus. For Cromwell J., the correct approach in this context would be not to consider the mutual benefits provided by the defendant at the “benefit/detriment” phase of the Garland analysis. One would simply ask whether a benefit was conferred and, if so, whether there was a corresponding deprivation suffered by the plaintiff. Mutual benefits provided by the defendant might be relevant, in the Court’s view, in the juristic reason stage of the analysis. The fact that parties had agreed to exchange benefits might be relevant in establishing what the “reasonable expectations” of the parties are, a factor which, as noted above, might be relevant in that context. [Emphasis added].
46Fourth, provincial appellate courts have applied Kerr outside the family context on many occasions: see, for example Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2011 ONCA 418, 278 O.A.C. 216, at paras. 44-57; Aviva Insurance Company of Canada v. Lombard General Insurance Company of Canada, 2013 ONCA 416, 116 O.R. (3d) 161, at paras. 47-60; Clarke v. Johnson, 2014 ONCA 237, 318 O.A.C. 186, at paras. 62-72; Haigh v. Kent, 2013 BCCA 380, 364 D.L.R. (4th) 544, at paras. 31-48; Economical Mutual Insurance Company v. The Bank of Nova Scotia et al., 2015 NLCA 29, 367 Nfld. & P.E.I.R. 297, at paras. 27-41.
47Of particular note on this point is the decision in Watson v. Bank of America, 2015 BCCA 362, 79 B.C.L.R. (5th) 1. Watson was a class action certification case. Merchants proposed to certify a class to sue credit card companies for costs imposed by their credit card infrastructure. They advanced various causes of action, including unjust enrichment. One of the defence arguments against certification was that the plaintiffs would not be able to demonstrate a “net” harm to the merchants because of various off-setting economic effects: paras. 162-165.
48The court analysed the significance of this argument with respect to the unjust enrichment claim at paras. 175-181. Interestingly, the defendants attempted to use Kerr to support their off-set argument. They relied on Cromwell J.’s comment, at para. 104, that mutual enrichments may be considered at the juristic reason stage “to the extent that the provision of reciprocal benefits constitutes relevant evidence of the existence (or non-existence) of juristic reason for the enrichment”. The court rejected this argument. The court noted that the defendants “overstate the import” of the comments made in Kerr, a family case. But it nevertheless held, relying on Garland, that the appropriate stage to consider off-setting benefits is at the second stage of the analysis, where the defendants would bear the onus of proof.
49Fifth, and finally, applying the same approach in family venture and non-family venture cases promotes the overall doctrinal coherence of the law of unjust enrichment. Cromwell J.’s decision in Kerr was itself an attempt to harmonize various strains of the unjust enrichment jurisprudence. As he noted at para. 33, “there is and should be no separate line of authority for ‘family’ cases developed within the law of unjust enrichment.” Rather, the rights and remedies for unjust enrichment should be the same for all cases.
50For all these reasons, the principle in both family and non-family cases of mutual benefit conferral is that any alleged off-setting benefits should be considered at the defence/remedy stage of the analysis where the defendant bears the onus of proof.
e. Conclusion regarding the analytical approach
51In this case, the trial judge asked himself the wrong initial question by immediately considering whether John had conferred a “net benefit” on Katarina. Instead, at the first step of the analysis, the trial judge should have considered whether John conferred a benefit on Katarina. I turn to that question now.
(2) Did John confer a benefit on Katarina? If so, to what extent?
52As I have mentioned, John claimed that he and Margaret had conferred two primary benefits on Katarina: (i) monetary payments and (ii) John’s personal domestic services. I conclude John discharged his onus of proving the conferral of a benefit of his personal services, but not of monetary payments.
a. The monetary contributions
53First, John and Margaret claim to have paid his mother a varying sum of cash each month contributing to the payment of the property taxes, utility bills, food and other expenses. Katarina and Helena denied that these payments were ever made.
54The trial judge found that any financial contributions would have to have come from Margaret, given, inter alia, that John was unemployed for 11 of the last 22 years, while Margaret was always consistently employed, earning between $35,000 and $45,000 per year. Margaret’s evidence was consistent with this view: Margaret testified she gave money to John, who gave it to his mother, and occasionally when John was not around she gave money directly to Katarina.
55The trial judge resisted crediting John with any of these alleged financial contributions. The trial judge repeatedly observed that Margaret had not sought any beneficial interest in the property herself. He said that if John and Margaret viewed any payments they made to be joint, then they should have advanced a joint claim for a beneficial interest in the property.
56This, in my view, was an error. The trial judge should have recognized John and Margaret as a spousal unit and considered payments made by Margaret as made on behalf of John. At the very least, Margaret gifted the money to John who then gave it to Katarina.
57In any event, the trial judge was “prepared to accept that John and Margaret did make some financial contributions over the years”: para. 153, though he expressed skepticism about the extent of those payments. He noted that “any evidence of the alleged payments … is significantly lacking”. He concluded that they “do not come close” to surpassing the $250,000 - $350,000 benchmark the trial judge set. Because he reached this conclusion, the trial judge did not attempt to quantify the payments he accepted were made.
58The lack of a definitive finding leaves this court in a difficult position. John’s counsel argued strenuously that the trial judge made a palpable and overriding error in not inferring John and Margaret must have been giving money to Katarina. The household expenses estimated in the record exceeded the ordinary ongoing household income, at least in the years after Katarina no longer had paying tenants. Counsel points out that Katarina did not work and had a minimal income. A straightforward comparison of her income and expenditures for the years for which evidence was tendered demonstrates that, to make ends meet, she must have obtained financial help from someone else. In 2011, for example, Katarina’s annual expenditures outpaced her annual income by almost $10,000. Helena, in her testimony, expressly denied providing financial support to Katarina. John’s counsel submits the trial judge should have inferred that, for at least a number of years, John and Margaret were making up the difference.
59Though I recognize the force of this argument, I am not persuaded the trial judge committed reversible error by finding John and Margaret did not adduce sufficient evidence to permit him to quantify any payments they made. As the trial judge observed, the onus was on John to prove not only that it was more likely than not that he had made payments, but also to prove the probable amount of those payments, at least in approximate terms. The trial judge was entitled to find the evidence John had adduced did not allow him to determine with any confidence how frequently he had made payments or in what amounts.
60I would not interfere with the trial judge's conclusion that John failed to discharge his onus to establish he conferred a benefit on Katarina by giving her money over the years.
b. John’s personal services
61As mentioned, the trial judge accepted that John provided some domestic services to Katarina and “there may be value in John overseeing some of the work which he described in his testimony” but the value of these did not amount to a “net benefit” in light of the value of the accommodation in Katarina’s home. Again, because the trial judge immediately considered the mutual conferral of benefits he did not attempt to quantify the value of the services he accepted John provided. This Court is therefore left with task of attempting to ascertain the value of the personal services that the trial judge accepted John provided to Katarina.
62John’s evidence was that he provided various domestic services to his mother (shovelling snow, cutting grass, maintenance and repairs, minor renovations, purchasing groceries, housekeeping, meal preparation, errands, etc.). He estimated his time commitment in respect of these services on an average annual basis: two hours per day from 1982 to 1989; three hours per day from 1990 to 2007; 6 hours per day from 2008 to 2013. The increases are attributable to his mother’s increasing needs over time, resulting from her mounting frailty and dependence.
63For their parts, Katarina and Helena flatly denied that John provided any valuable domestic services to Katarina.
64There is no doubt that Katarina required substantial domestic assistance. The evidence is clear that Katarina spoke hardly any English and did not drive. She was not able to effectively deal on her own with anyone outside the home. From the early 1980s onwards, Katarina never worked after experiencing a work-related accident. She has been confined in a wheelchair for some time.
65Further, throughout his reasons, the trial judge seems to accept that John performed a variety of home repair and maintenance services. For example, he states that there is little reason to dispute that John completed a renovation of the basement of the house around 1985. He also states that it “[appears] that John took a lead role” in addressing a boundary dispute with Katarina’s neighbours. He notes that John produced photographs in support of work he claims to have done on the garage before hiring a third party contractor to complete the job, though he states that “it is unclear what value John is claiming for his work” on that project.
66On the other hand, the trial judge does not appear to have been impressed by Katarina’s and Helena’s approach of baldly denying each and every statement John made about his contributions on these subjects. The trial judge noted that Katarina was “so entrenched in her position that she claimed Helena was responsible for the basement renovations, even though Helena had already moved out of the property for several years”.1
67In sum, reading the trial judge’s reasons as a whole, he seems to have implicitly accepted that John performed a variety of domestic services for Katarina over the years.
68That said, the trial judge does not seem to have placed much value on John’s services. The trial judge said that “some of the acts undertaken by John and Margaret would be those of a dutiful son and daughter-in-law.” In my view, this observation led the trial judge into error. These services had value and were a benefit to Katarina. John was under no legal obligation to act as a “dutiful son” and perform these services.
69In any event, to the extent that it is relevant at all, whether John’s actions were simply those of a “dutiful son” ought to have been considered at a later stage of the analysis. Specifically, that issue might have been considered in the context of a “reasonable expectations” analysis, where the defendant bears the onus of proof (a subject I discuss a few paragraphs below).
70Further, there was uncontradicted evidence before the trial judge regarding the value of John’s services. The parties agreed that various expert reports could be entered into evidence at trial without testimony. The agreement of the parties was that the court could accept or reject the opinion evidence depending on the court finding the foundational facts to substantiate any assumptions made in arriving at these opinions. One such report was that of valuation consultant Gordon Krofchick. Mr. Krofchick’s report was the only evidence that expressed an opinion of the value of John’s services. He concluded, using average rates for unskilled labour and based on the hourly estimates John gave on a per annum basis, adjusting for inflation, that John contributed $438,113 in domestic services from 1982 to 2013. Mr. Krofchick was not cross-examined. Katarina did not obtain a contradictory report.
71The trial judge did not accept Helena’s and Katarina’s blanket denial that John made any contributions. Thus, we are left with John’s evidence regarding his estimated hourly work, which the trial judge did not reject in his reasons. Those estimates provide the necessary foundational facts to validate the assumptions underlying the Krofchick report.
72Applying the trial judge’s meagre findings to the evidence, I conclude that John contributed $438,113 in domestic services to Katarina and enriched her in that amount.
73I am mindful that this conclusion is in tension with the trial judge’s finding that John’s and Margaret’s services and contributions did not “come close” to his threshold for net value of $250,000 - $350,000. As I have already stated, the trial judge seems to have attributed little to no value to John’s domestic services because of his observation that those services were those of a “dutiful son”. That error infected his assessment of the uncontroverted evidence regarding the value of John’s services. The evidence establishes the monetary value of the services the trial judge implicitly found that John performed.
(3) Was there a corresponding deprivation to John?
74The corresponding deprivation to John is evident and follows necessarily from proof of the enrichment. In a case involving the provision of personal services such as this one, the party providing personal services suffers a corresponding deprivation of their own time and effort. This deprivation mirrors the enrichment in nature and extent. John suffered a corresponding deprivation of $438,113.
(4) Was there a juristic reason for the enrichment?
75At the final stage of the prima facie case of enrichment analysis, the plaintiff must show that the enrichment did not occur pursuant to an established category of juristic reason. These categories include contract, disposition of law, donative intent, and other valid, common law, equitable or statutory obligations. If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis: Kerr, at para. 43. The de facto burden of proof then switches to the defendant to show there is a reason why the enrichment should be retained because in all the circumstances there is another reason to deny recovery even though the case falls outside the existing categories of juristic reason: Kerr, at para. 44. Cromwell J. at para. 114 stressed that the analysis of juristic reason at this stage is not to determine the value of the enrichment or whether reciprocal benefits should be set off against the enrichment. At this stage, the limited role of considering reasonable expectations is to reveal whether there is a reason for the defendant to retain the enrichment. Generally, reciprocal benefits are to be considered at the defence/remedy stage, as I discuss below.
76John testified that his reason for providing the personal services was his mother’s promise that, if he did so, he would receive half of the house upon her death. This falls outside the established categories of juristic reason to permit Katerina to retain the benefit.
77As noted in Kerr, once the plaintiff has demonstrated that there is no categorical juristic reason, the defendant may still argue that there is a juristic reason outside of the established categories. The reasonable expectations of the parties may be relevant to this inquiry insofar as they show a juristic reason for enrichment. In addition, the defendant may seek to demonstrate, at the defence and remedy stage, that the plaintiff did not reasonably expect compensation.
78Counsel for Helena and Katarina did not seriously advance an argument there was a juristic reason outside the established categories based on reasonable expectations. He merely argued that Katarina and Helena baldly denied the services were provided (which the trial judge rejected) and that John received rent-free accommodation (which I have noted should be considered at the next stage).
79To the extent reasonable expectations may be considered at this stage, it seems to me that there was ample evidence that John reasonably expected to be compensated for his contributions to Katarina’s maintenance and care. In oral argument, counsel for Katarina was asked why John believed he was entitled to half of the value of the home, and he candidly admitted that Katarina “probably told him that”. I recognize, as mentioned above, that the trial judge suggested that John’s contributions were simply those of a “dutiful son”. That suggestion, however, was not made in the context of analysing a reasonable expectations argument, either at the juristic reason stage or at the defence and remedy stage where the defendant bears the onus of proof. The evidence before the trial judge and counsel’s admission suggest that John reasonably expected some compensation. It is clear Katarina and Helena did not discharge the onus on them to point to a juristic reason outside the established categories that would entitle Katarina to retain the benefit conferred by John, without compensation.
(5) Prima facie case of enrichment
80I conclude accordingly that John has discharged his onus to establish a prima facie case of enrichment.
(6) Did Katarina confer off-setting benefits on John?
81According to the framework Cromwell J. set out in Kerr, John having established a prima facie case of enrichment, Katarina bore the onus of establishing a valid defence, or a valid reason to limit the requested remedy. It is at this stage that the alleged offsetting benefit of rent-free accommodation ought to have been considered.
82The trial judge was entitled to conclude on the evidence before him that the market value of the accommodation in which Margaret and John lived was between $250,000 and $350,000.
83That said, the trial judge’s error was to implicitly treat proof of the accommodation value as proof of an offsetting benefit. That approach was wrong in law. The onus remained on Katarina, who was claiming an offsetting mutual benefit, to prove rent-free accommodation was provided. By initially considering whether John provided a “net benefit” to Katarina, the trial judge in effect placed the onus on John to prove he paid rent. In the proper analysis, in which the offsetting mutual benefit is considered as a defence, the onus was on Katarina to prove John did not pay rent. She did not meet this onus for several reasons.
84First, Katarina testified that she never expected to receive rent from John. This admission presents great difficulty for her in discharging the onus of proving a valid set-off. As noted by Maddaugh & McCamus, quoted above, if the expectation of the parties was that one party would provide personal services and the other would deduct from the value of those services the cost of room and board, then a valid set-off may be made out. But if the “parties’ understanding was that the room and board was being provided gratuitously”, then no deduction is appropriate.
85Second, even if the parties had an expectation that John would pay rent, the trial judge did not make a finding that John did not pay rent. There was considerable dispute regarding the explanation for the various “rent receipts” and leases produced at trial. The trial judge did not resolve the dispute, and after reviewing the deeply contradictory evidence of the witnesses, concluded at para. 67:
I do not accept any of the explanations offered by the parties for the existence of these leases. There must have been a reason why the parties signed so many leases over a number of years. However, they have attempted to alter the truth to suit their respective needs in these proceedings.
86In effect, the trial judge found himself unable to determine whether the evidence showed that rental payments had been made. As he placed the burden of proof on John, he was not satisfied that rent had been paid. However, at this stage, the burden should properly have been placed on Katarina. The trial judge rejected Katarina’s and Helena’s explanations for these rent receipts and leases as well.
87I am satisfied, on the findings of the trial judge, Katarina did not satisfy the burden on her to prove she provided rent-free accommodation to John.
(7) Conclusions on Unjust Enrichment
88For those reasons, John’s claim for unjust enrichment is made out. John established a prima facie case for enrichment, conferring a $438,113 benefit on Katarina in the form of personal services. Katarina did not establish a valid set-off due to her failure to prove that John and Margaret did not pay rent. Consequently, I conclude that John is entitled to equitable damages in the amount of $438,113.
89I would therefore set aside the trial judge’s dismissal of John’s application insofar as it claimed equitable damages and replace it with an order granting John’s claim in the amount of $438,113 to be recovered from the proceeds of the sale of the house held in trust by the real estate solicitor to the credit of this litigation.
ISSUE 3: THE POWER OF ATTORNEY
90John’s counsel advances two arguments seeking to set aside the judge’s decision dismissing his application to revoke Helena’s power of attorney and order Helena to account for her management of Katarina’s funds.
91First, John’s counsel argues the trial judge should have revisited his findings made in his March 23, 2015 ruling in light of the evidence and his findings made at trial. John’s counsel had refused to take out a formal order reflecting the March 23, 2015 decision so that the trial judge would not be functus and would have jurisdiction to revisit his earlier findings. While I agree that the trial judge was not functus and had the jurisdiction to revisit his earlier findings, I am satisfied that it was within his discretion to refuse to do so.
92Second, in the alternative, John appeals from the judge’s March 23, 2015 ruling and seeks to admit Katarina’s and Helena’s viva voce testimony at trial as fresh evidence on the appeal.
93Counsel for Katarina and Helena resists the fresh evidence application. He submits that John, by exercising due diligence, could have obtained and tendered Katarina’s and Helena’s viva voce testimony on the return of the application. He points out that r. 39.03(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 permits a party to seek to examine a person as a witness at the hearing of a motion or application in the same manner as at trial, and John did not seek to do so. I would not give effect to this argument. Given established practice, I am satisfied John would not have been granted leave to call viva voce evidence on the return of the application.
94I would admit Katarina’s and Helena’s testimony at trial as new evidence. It is potentially decisive and may be reasonably expected to affect the result.
95Turning to the substantive issue, it is evident that some of the trial judge’s findings made after the trial are inconsistent with the findings in his March 23, 2015 reasons.
96Take, for example, the trial judge’s emphatic findings at trial about Helena’s domineering and bullying nature and her influence over Katarina, along with his observation of Helena sitting in the back of the courtroom trying to influence her mother’s testimony. He said he had “little to no doubt that Helena has orchestrated all of the events giving rise to the transfer of the property to herself and Katarina in joint tenancy and the execution of new Wills.” He observed that Katarina did not “even appear aware” of Helena’s transferring title to the property. He had “no difficulty in concluding that this transfer was not the subject of any alleged trust relationship, and was carried out for the purpose of Helena acquiring the right of survivorship by reason of ownership of the property in joint tenancy.” These can be contrasted with his earlier findings that there was no evidence Helena exerted undue influence on Katarina and that the evidence did not establish mismanagement or financial abuse of Katarina by Helena.
97While the limited evidence before the trial judge on the application may not have demonstrated undue influence, it is obvious from his trial reasons he considered it abundantly clear that Helena exerted undue influence over Katarina.
98Accepting those trial findings as fresh evidence I would conclude that Helena exercised undue influence over Katarina. It follows that I would set aside the judge’s dismissal of John’s application and replace it with an order granting John’s application, revoking Helena’s power of attorney and requiring Helena to account for her management of Katarina’s property.
CONCLUSION
99I would allow the appeal and order that John is entitled to equitable damages in the amount of $438,113 to be recovered from the proceeds of the sale of the house held in trust by the real estate solicitor to the credit of this litigation. Further, I would order that Helena’s continuing power of attorney over Katarina’s property be revoked and Helena be required to account for her management of Katarina’s property.
100Counsel may make written submissions as to costs of the appeal and the proceedings below. Such submissions are to be no longer than five pages in length and filed within 15 days of the release of this decision.
Released: December 15, 2016 (EAC)
“R.G. Juriansz J.A.”
“I agree. E.A. Cronk J.A.”
“I agree. David Brown J.A.”
Footnotes
- I note parenthetically that some of Katarina and Helena’s blanket denials are extremely implausible. Many are on subjects about which they are highly unlikely to have had direct knowledge. For instance, Helena denied that John had paid for materials purchased in support of repairs to the front and rear porches. She did so notwithstanding John’s production of receipts for those materials, and without testifying that she was there to witness someone else having paid for them.
