Chechui v. Nieman
Ontario Reports
Court of Appeal for Ontario
Strathy C.J.O., Cronk and Pepall JJ.A.
August 28, 2017
136 O.R. (3d) 705 | 2017 ONCA 669
Case Summary
Trusts and trustees — Resulting trust — Presumption — Parties purchasing house and taking title as joint tenants — Appellant subsequently using his own funds to repay $1 million joint line of credit obtained in relation to purchase of house — Application judge erring in finding that appellant was not entitled to $500,000 credit on sale of house — Parties' intention to hold title to house jointly not rebutting presumption of resulting trust in respect of appellant's repayment of respondent's debt under line of credit.
IN and V started living together in V's house in 2010. IN's mother, D, purchased a house on Austin Terrace in Toronto for IN and V's use. Title was taken by D and IN as tenants in common, with IN owning 99 per cent and D owning one per cent. In 2013, IN and V entered into an agreement to buy a house on Brookdale Avenue in Toronto, intending that D would live with them. To finance the purchase, V obtained a $1 million mortgage in the parties' joint names (later converted to a line of credit in the same amount). After obtaining independent legal advice, D executed a gift letter, required by the mortgagee, gifting $1.7 million to both IN and V. On closing, title to the Brookdale property was taken by IN and V as joint tenants. D died shortly after the closing. The Austin Terrace property was sold, and IN paid off the joint line of credit on the Brookdale property. The parties subsequently separated. V applied for an order for the partition and sale of the Brookdale property, with the proceeds to be equally divided. IN sought a declaration that V held her interests in the Brookdale property in trust for him and for other relief. The application judge found that the parties intended to hold title to the Brookdale property jointly, and that D's gift towards the purchase price was made to both IN and V. He found that no resulting trust claim could be made by IN on the funds gifted by D. He found that IN was not entitled to a credit on the sale of the Brookdale property for his repayment of the line of credit. He held that a presumption of resulting trust did not arise in IN's favour because the applicable authorities recognize a resulting trust only on the acquisition or transfer of property. He further held that any presumption of resulting trust applicable to the repayment of the line of credit would nevertheless have been rebutted by V's evidence that the parties always intended that the Brookdale property would be owned by them jointly, and in equal shares, regardless of their contributions to its purchase. He concluded that IN had gifted V the repayment of the parties' debt under the joint line of credit. IN appealed.
Held, the appeal should be allowed in part.
The application judge did not err in finding that IN was not the sole beneficial owner of the Brookdale property. He was entitled to reject IN's claim that he did not know what the term "joint tenancy" meant. There was ample evidence to support the application judge's finding that D's gift to assist in the acquisition of the Brookdale property was to both IN and V. That finding was fatal to IN's unjust enrichment claim on the Brookdale property, as the joint gift provided a juristic reason for V's enrichment of the Brookdale property.
IN's repayment of V's share of the parties' debt under the line of credit was gratuitous and directly linked to the purchase of the Brookdale property. In situations involving gratuitous transfers, as in this case, the governing consideration is the transferor's actual intention at the time of the transfer. The parties' intention to hold title to the Brookdale properly jointly did not rebut the presumption of a resulting trust in respect of IN's repayment of V's debt under the line of credit. V bore the onus to show that IN intended to gift her $500,000. There was no independent evidence of an intention by IN to do so. To the contrary, there was evidence supporting the conclusion that IN did not intend that his repayment of the line of credit constituted a gift to V. A resulting trust arose in relation to IN's repayment of V's share of the parties' joint debt under the letter of credit. The appropriate remedy was to direct that IN be credited with the amount of $500,000 on division of the proceeds of sale of the Brookdale property.
Authorities Considered
Kerr v. Baranow, [2011] 1 S.C.R. 269, [2011] S.C.J. No. 10, 2011 SCC 10, 274 O.A.C. 1, 328 D.L.R. (4th) 577, 2011EXP-624, 411 N.R. 200, J.E. 2011-333, [2011] 3 W.W.R. 575, 64 E.T.R. (3d) 1, 14 B.C.L.R. (5th) 203, 300 B.C.A.C. 1, 93 R.F.L. (6th) 1, EYB 2011-186472, 199 A.C.W.S. (3d) 1214
Pecore v. Pecore, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17, 2007 SCC 17, 279 D.L.R. (4th) 513, 361 N.R. 1, J.E. 2007-874, 224 O.A.C. 330, 32 E.T.R. (3d) 1, 37 R.F.L. (6th) 237, EYB 2007-118938, 156 A.C.W.S. (3d) 502
Other Cases Referred To
Andrade v. Andrade (2016), 131 O.R. (3d) 532, [2016] O.J. No. 2553, 2016 ONCA 368, 17 E.T.R. (4th) 173, 349 O.A.C. 330, 266 A.C.W.S. (3d) 770
Nishi v. Rascal Trucking Ltd., [2013] 2 S.C.R. 438, [2013] S.C.J. No. 33, 2013 SCC 33, 336 B.C.A.C. 50, 445 N.R. 293, 2013EXP-1994, J.E. 2013-1066, EYB 2013-223112, [2013] 8 W.W.R. 419, 88 E.T.R. (3d) 1, 45 B.C.L.R. (5th) 1, 16 B.L.R. (5th) 1, 359 D.L.R. (4th) 575, 228 A.C.W.S. (3d) 276
Authorities Referred To
McInnes, Mitchell, The Canadian Law of Unjust Enrichment and Restitution (Markham, Ont.: LexisNexis, 2014)
Appeal
APPEAL from the orders of Hood J., [2016] O.J. No. 2463, 2016 ONSC 1905, 18 E.T.R. (4th) 329 (S.C.J.) and [2016] O.J. No. 3993, 2016 ONSC 4667, 18 E.T.R. (4th) 348 (S.C.J.).
Counsel:
Earl A. Cherniak, Q.C., Zohar R. Levy and Valois P. Ambrosino, for appellant.
Harold Niman and Chloe van Wirdum, for respondent.
Judgment
The judgment of the court was delivered by
CRONK J.A.
A. Background in Brief
1This property dispute arose on the breakdown of a common law relationship of approximately three and a half years' duration. The narrow issues on appeal concern the respondent's entitlement to a 50 per cent interest in the home occupied by the parties during the latter part of their cohabitation and the appellant's claim for a credit in respect of funds used by him to retire a joint debt incurred by the parties to facilitate the purchase of the home.
2The appellant, Ian Jamieson Nieman ("Ian"), and the respondent, Victoria Chechui ("Victoria"), met in October 2009. At that time, Victoria was living in Toronto in her own house. She was employed by Rogers Communications and earned approximately $160,000 per year, including bonus. Ian was an unemployed music producer. He lived with his mother, Dianne Nieman ("Dianne"), in her home in Ottawa.
3In July 2010, after dating for several months, the parties began living together at Victoria's Toronto house. However, when Dianne received a $4 million inheritance, she decided to invest part of it in a home in Toronto for Ian's and Victoria's use.
4On November 3, 2010, Dianne purchased a house on Austin Terrace in Toronto. Ian and Dianne owned the house as tenants in common, with Ian owning 99 per cent and Dianne owning 1 per cent. The purchase price was paid in full and the house was owned by Ian and Dianne free and clear of any encumbrances.
5In December 2010, Victoria sold her house and moved with Ian into the Austin Terrace property. Dianne continued to reside at her own home in Ottawa.
6Victoria used some of the proceeds from the sale of her house to pay off the mortgage on her home and a line of credit in her name. She gave some of the remaining proceeds to her parents and retained the balance in her personal bank account.
7Throughout the parties' cohabitation, Victoria earned more income than Ian. She paid the majority of the couple's living expenses, while Ian did most of the housework. In July 2011, Victoria resigned from her job due to health reasons, and received a ten-month severance package. In November 2012, she obtained new employment, at increased compensation of $190,000 per year, plus bonus.
8In the same month, November 2012, the parties separated for a brief period. However, they soon reconciled and agreed to marry. They set a wedding date of July 26, 2013.
9In December 2012, Dianne suffered a series of strokes and Ian brought her to Toronto for medical treatment. The parties agreed with Dianne that she would live with them following her discharge from rehabilitation, scheduled for April 22, 2013. As it was clear that Dianne would require the use of a wheelchair, the parties and Dianne decided to look for a new, wheelchair-accessible home in Toronto to accommodate Dianne's needs.
10On March 16, 2013, Ian and Victoria entered into an agreement of purchase and sale to buy a house on Brookdale Avenue in Toronto, for $2.6 million (the "Brookdale property").
11To finance the purchase of the Brookdale property, Victoria obtained a $1 million mortgage in the parties' joint names from RBC Dominion Securities Inc. ("RBC"). The mortgage was later converted to a line of credit in the same amount. In addition, after obtaining independent legal advice, Dianne executed a gift letter, required by RBC, gifting $1.7 million to both Ian and Victoria. As I will explain, the line of credit and the gift letter are central to the issues on appeal.
12On closing, title to the Brookdale property was taken in both Ian's and Victoria's names, as joint tenants.
13The parties moved into the Brookdale property in April 2013. About one month later, on May 5, 2013, Dianne passed away. In light of her death, the parties cancelled their planned July wedding and decided to reschedule it for a later date.
14The Austin Terrace property was listed for sale after Dianne's death. It eventually sold in October 2013 for $2.325 million. Ian deposited his share of the sale proceeds in his bank account, repaid the $1 million RBC line of credit on the Brookdale property in full, and deposited $800,000 into an investment account with RBC, held jointly with Victoria. He testified before the application judge, and Victoria did not dispute, that the joint investment account was established to ensure that Victoria was taken care of financially in the event of Ian's death.
15Approximately two and a half months later, in January 2014, the parties again separated, this time permanently. Their separation precipitated a dispute regarding Victoria's entitlement to a 50 per cent interest in the Brookdale property and in the funds held in the RBC investment account.
B. Litigation
16In May 2014, Victoria applied to the Superior Court of Justice for an order for the partition and sale of the Brookdale property, with the proceeds to be equally divided, and an order that the funds in the RBC investment account also be divided equally, among other relief.
17Ian resisted Victoria's application. He sought declarations that Victoria held her interests in the Brookdale property and the RBC investment account in trust for him. He also claimed damages against Victoria for breach of trust, breach of fiduciary duty, breach of contract, unjust enrichment and conversion, as well as punitive, aggravated and exemplary damages.
18The application judge rejected Ian's evidence on the creation of the joint RBC investment account. However, he accepted the independent evidence of the involved RBC investment advisor that the purpose of establishing the account on a joint basis was to benefit Victoria if something should happen to Ian. Relying on this evidence, the application judge held that Ian did not intend to gift Victoria one-half of the investment account. He explained, at para. 66:
What Ian gifted to Victoria was a gift of the right of survivorship. While he intended her to be a joint account holder, it was only for the purpose of benefitting her upon his death, presuming they were still together. I am not satisfied on the evidence that Victoria has rebutted the presumption that she held her interest in the joint account in trust for Ian. In fact, the totality of the evidence convinces me that she did hold this in trust for Ian.
19Accordingly, the application judge dismissed Victoria's claim regarding the RBC investment account and directed that her name be removed from the account. Victoria does not challenge this ruling on this appeal.
20The application judge reached a different conclusion concerning the Brookdale property, finding that Victoria did hold a 50 per cent interest in the house.
21Specifically, notwithstanding Ian's claims to the contrary, the application judge accepted that Ian knew that title to the Brookdale property was held jointly and understood the meaning of a joint tenancy. He observed, at para. 72:
[Ian] could have sought to have the Brookdale property held differently if he wanted. He held Austin Terrace with his mother as tenants in common. He could have done the same with Victoria but he did not. He could have sought to change the title after the purchase but he failed to do so. He could have protected the [$1 million] payment through some form of security such as a mortgage if he was not making a gift. He did not do so.
22With respect to Dianne's gift of $1.7 million towards the purchase price of the Brookdale property, the application judge held, at paras. 67-69:
The Brookdale Property is different from the joint account. It was purchased with the help of the gift from [Dianne] to both Ian and Victoria. There is no doubt in my mind, based upon the gift letter and the testimony of [two lawyers consulted by Dianne for independent legal advice], that the gift of [$1.7 million from Dianne] was for both Ian and Victoria and not for Ian alone as he now argues. He did not provide the funds to purchase Brookdale. The funds came from his mother, gifted to both Victoria and him, and from RBC with mortgage security given by the two of them.
Although Ian was on the mortgage with Victoria, as title was in both their names, Victoria was the primary borrower, and . . . the mortgage loan was given on the strength of Victoria's income, not Ian's, which was negligible.
In other words, there is no resulting trust claim or any claim that can be made by Ian with respect to the [$1.7 million] gifted by his mother.
23The application judge also addressed Ian's repayment of the $1 million line of credit relating to the Brookdale property. He concluded that a presumption of resulting trust did not arise in Ian's favour regarding this repayment because, in his view, the applicable authorities recognize a resulting trust only on the acquisition or transfer of property. He further held that any presumption of resulting trust applicable to the repayment of the line of credit would nevertheless have been rebutted by Victoria's evidence that the parties always intended that the Brookdale property would be owned by them jointly and in equal shares, regardless of their contributions to its purchase.
24In the result, unlike his ruling regarding the RBC investment account, the application judge concluded that Ian had gifted to Victoria the repayment of the parties' debt under the joint line of credit.
25The application judge therefore rejected Ian's trust-based claims concerning the Brookdale property, as well as his various damages claims, and granted an order that the Brookdale property be listed for sale and the net proceeds of sale be divided equally between the parties. He awarded Victoria her costs of the application, fixed in the amount of $180,000.
C. Issues and Relief Sought
26Ian appeals from the application judge's ruling in favour of Victoria concerning the Brookdale property. He contends that the parties intended throughout that he should beneficially own the entirety of the Brookdale property, and that Victoria was named on title only for the purpose of obtaining short-term financing to acquire the Brookdale property.
27Ian submits, generally, that the application judge erred by (i) excluding Ian's evidence of the parties' intent regarding ownership of the Brookdale property; (ii) rejecting Ian's trust-based claims concerning the Brookdale property; and (iii) finding that Ian intended to gift to Victoria his $1 million repayment of the joint line of credit used to facilitate the acquisition of the Brookdale property.
28He therefore seeks an order dismissing Victoria's application and permitting him to retain 100 per cent ownership of the Brookdale property. In the alternative, he requests an order crediting him, on the division of the proceeds from the sale of the Brookdale property, for his $1 million repayment of the RBC line of credit.
D. Analysis
(1) Victoria's Interest in the Brookdale Property
29Ian argues that the application judge erred by failing to find that he is the sole beneficial owner of the Brookdale property.
30I disagree. Three considerations persuade me that Victoria is entitled to a 50 per cent legal and beneficial interest in the Brookdale property, thus justifying the application judge's order that it be listed for sale and the net sale proceeds be divided equally between the parties.
31First, and most obviously, title to the Brookdale property was taken in the parties' joint names. In addition, the Brookdale agreement of purchase and sale was in both Ian's and Victoria's names.
32The application judge expressly rejected Ian's claims that he did not know what the term "joint tenancy" meant, that he did not direct that title to the Brookdale property be put in joint names, and that he did not read the real estate closing documents when he signed them. The application judge stated, at para. 72:
I do not believe Ian when he says he did not understand what joint tenancy meant or he did not read the direction when he signed, or did not see the reference to joint tenancy when he signed, or did not understand what he was signing or that it was not explained to him.
33These findings were open to the application judge on the evidentiary record. His assessment of the credibility of Ian's evidence on these issues attracts considerable deference from this court.
34Moreover, the application judge's finding that Ian understood the meaning and implications of a joint tenancy for the Brookdale property was supported by the evidence of the involved real estate agent, who testified that Ian knew the Brookdale agreement of purchase and sale named both parties as purchasers. It was also supported by the testimony of the involved real estate solicitor, who said that Ian understood the Brookdale closing documentation, which provided for joint tenancy of the property with Victoria, and that it had been explained to him and detailed in a follow-up reporting letter.
35Notably, as the application judge observed, title to the Austin Terrace property had been held by Ian and his mother as tenants in common. While Ian was clearly aware of this alternate mode of holding title, there was no evidence that he sought a similar title arrangement for the Brookdale property.
36Second, there is the significant factor of Dianne's $1.7 million gift to both Ian and Victoria to assist in the acquisition of the Brookdale property. There was ample evidence before the application judge to support his conclusion that this gift, to Ian's knowledge, was to both Ian and Victoria, and not to Ian alone, as Ian argued.
37For example, Ann Harvey, an RBC mortgage specialist, testified before the application judge as one of Ian's own witnesses. She confirmed that RBC required all persons who were going to be on title to the Brookdale property to be named as mortgagors on the mortgage security. She also explained that RBC required that a gift letter be signed by Dianne in respect of the funds she intended to advance, and that Dianne receive independent legal advice regarding the gift and the gift letter. As detailed below, this advice was provided to Dianne.
38The terms of the gift letter itself clearly describe the purpose and joint nature of Dianne's gift. Ian, Victoria and Dianne all executed the gift letter. It identifies both Ian and Victoria as the "recipients" or persons receiving a financial gift of $1.7 million from Dianne, to be used "as all or part of the down payment for the purchase of the [Brookdale property]".
39Importantly, Ian acknowledged on cross-examination that he knew, prior to executing the gift letter, that Dianne's $1.7 million gift was to both him and Victoria jointly.
40There was also evidence before the application judge indicating that Rachel Blumenfeld, a wills and estates lawyer consulted by Dianne for independent legal advice regarding her intended gift, had confirmed with Dianne that Victoria would be entitled to one-half of the gifted money. It was Ms. Blumenfeld's evidence that, in accordance with her usual practice in such circumstances, she had advised Dianne to obtain a mortgage from the parties in respect of the gifted money. This did not occur.
41In addition, Lawrence Fine, the lawyer who eventually provided independent legal advice to Dianne regarding the gift letter, testified that, based on his private discussions with Dianne, he was satisfied that she understood the gift letter and the gift itself, that she knew it was not a loan, and that she did not want control over the money once it was gifted.
42Thus, both the unambiguous language of the gift letter and the evidence of the circumstances surrounding its execution compelled the conclusion that the funds gifted by Dianne, to Ian's knowledge at the time, were intended as an unconditional joint gift to Ian and Victoria.
43Ian argues that the application judge erred in his treatment of the evidence regarding the gift letter by admitting Victoria's evidence of Dianne's intention concerning the $1.7 million gift, but declining to admit Ian's proffered evidence on the same issue. This unequal treatment of the evidence, Ian says, resulted in an incomplete record regarding the purpose and effect of Dianne's gift.
44I would not accede to this argument. In making his findings concerning the joint nature of the gift, the application judge did not rely on any evidence by Victoria concerning Dianne's intention about the gift. To the contrary, his finding that Dianne gifted $1.7 million to Ian and Victoria jointly was based on (i) the terms of the gift letter itself; (ii) Ms. Blumenfeld's, Mr. Fine's and Ms. Harvey's evidence, described above; and (iii) his rejection of Ian's testimony that Dianne's gift was to him alone. I see no error in the application judge's approach to or assessment of the whole of the evidence on this issue.
45Third, Ian's argument that Victoria was unjustly enriched when she received an interest in the Brookdale property was considered and properly dismissed by the application judge. Ian's submission that the application judge erred in failing to consider this claim must be rejected.
46As Victoria's counsel stresses, Ian's case in response to Victoria's application was not framed in unjust enrichment. Rather, it focused on claims of resulting trust in respect of the Brookdale property and the RBC investment account. While Ian mentioned unjust enrichment in his answer, he failed to plead it with any specificity. And when Ian was given an opportunity by a case conference judge to address deficiencies in his pleading by submitting an amended answer, he added only a claim for breach of fiduciary duty. He did not plead any further facts in support of an unjust enrichment claim.
47Nevertheless, contrary to Ian's contention, the application judge did consider unjust enrichment as a possible foundation for Ian's claim to sole ownership of the Brookdale property. At para. 78 of his reasons, he stated:
Nor can there be a claim of unjust enrichment with respect to Brookdale. $1,700,000 was clearly gifted by [Dianne] to both Ian and Victoria. It was always the mutual intention of both Ian and Victoria that they would own Brookdale jointly and equally regardless of their contributions to the purchase.
48The application judge's factual finding that Dianne gifted $1.7 million to Ian and Victoria jointly is fatal to Ian's unjust enrichment claim regarding the Brookdale property. The fact of this joint gift furnishes a juristic reason for Victoria's enrichment in respect of the Brookdale property. The absence of a juristic reason for the enrichment in question is a necessary prerequisite to any finding of unjust enrichment: see, for example, Kerr v. Baranow, [2011] 1 S.C.R. 269, [2011] S.C.J. No. 10, 2011 SCC 10; Mitchell McInnes, The Canadian Law of Unjust Enrichment and Restitution (Markham, Ont.: LexisNexis, 2014), at p. 4. On the application judge's factual findings, this pre-requisite was not satisfied in this case.
49In my opinion, for all these reasons, Ian's challenge to Victoria's entitlement to a 50 per cent interest in the Brookdale property must fail.
(2) Ian's Repayment of the Joint Line of Credit
50That, however, does not end the matter. Ian argues, in the alternative, that he should receive credit on the sale of the Brookdale property for his repayment of the $1 million joint line of credit obtained in respect of the property.
51It is unnecessary to address all the arguments advanced by Ian in aid of this argument. At heart, his arguments take aim at the application judge's pivotal finding, at paras. 71 and 78, that Ian "gifted the payment of [$1 million] to pay off the line of credit". In my view, on this record, this finding is tainted by palpable and overriding error.
52There is no dispute that the debt incurred under the line of credit was joint. Thus, Ian was responsible for payment of at least 50 per cent of the funds owed under the line of credit. This defeats Ian's claim for a credit for the repayment of the full $1 million debt under the joint line of credit.
53The issue, therefore, is whether, on the future division of the proceeds of sale from the disposition of the Brookdale property, Ian is entitled to credit for his repayment of Victoria's $500,000 share of the parties' joint debt under the line of credit.
54There appears to have been no affirmative evidence that Ian intended to gift Victoria the equivalent of $500,000 by reason of his repayment of her share of the indebtedness under the line of credit. The application judge's ruling on this issue rests on Victoria's evidence, described at para. 71 of his reasons, that the parties always intended to own the Brookdale property "jointly and equally regardless of their contributions to the purchase". In the application judge's view, set out at para. 71, this evidence "applies equally to the payment of [$1 million] by Ian. He gifted this amount."
55With respect, the application judge's analysis of this issue conflates the parties' intention regarding ownership of the Brookdale property with Ian's intention when he paid off the line of credit in full. It is not axiomatic that because the parties intended to own the Brookdale property jointly, Ian intended to forego any claim for a credit in respect of his repayment of the line of credit on an equal division of the Brookdale property, by "gifting" Victoria the repayment of her share of the parties' joint debt. Put somewhat differently, I do not agree that the parties' intention to hold title to the Brookdale property jointly necessarily rebuts the presumption of a resulting trust in respect of Ian's repayment of Victoria's debt under the line of credit.
56To the contrary, there was evidence supporting the conclusion that Ian did not intend that his repayment of the line of credit constitute a gift to Victoria. Victoria herself essentially said so. She acknowledged on cross-examination that, in paying down the line of credit, Ian did not intend to gift her 50 per cent of the $1 million repayment. As she put it: "I, I don't think it's a gift, no." Rather, she testified that "[Ian] was paying down our debt", and the line of credit "was an obligation for us both to fulfill". The application judge made no reference to these important concessions by Victoria.
57Further, at the application hearing, Ian advanced a resulting trust claim concerning his repayment of Victoria's indebtedness under the joint line of credit. As I have already mentioned, the application judge concluded that a presumption of resulting trust did not arise in Ian's favour because, in his view, a presumption of resulting trust can apply only on the purchase or transfer of property, and not to a post-purchase reduction of liabilities associated with the purchase or transfer of property.
58As I see it, there are several difficulties with the application judge's analysis of this issue.
59First, Ian's repayment of the $1 million line of credit, established to facilitate the purchase of the Brookdale property, was gratuitous and directly linked to the acquisition of the house. The Supreme Court emphasized in Kerr, at paras. 18 and 19, citing its earlier decision in Pecore v. Pecore, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17, 2007 SCC 17, at paras. 43-44 and 24, that in situations involving gratuitous transfers, as in this case, the governing consideration is the transferor's actual intention. The intention of the transferor alone counts, as "[t]he point of the resulting trust is that the claimant is asking for his or her own property back": Kerr, at para. 25. As Rothstein J. explained in Pecore, at para. 44, in such cases,
The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor's actual intention.
(Emphasis added)
See, also, Andrade v. Andrade (2016), 131 O.R. (3d) 532, [2016] O.J. No. 2553, 2016 ONCA 368, at paras. 62 and 67. Further, it is the transferor's actual intention at the time of transfer that is the critical consideration: Nishi v. Rascal Trucking Ltd., [2013] 2 S.C.R. 438, [2013] S.C.J. No. 33, 2013 SCC 33, at paras. 2, 30 and 41.
60Kerr also instructs that, when a gratuitous transfer is made, the transferee bears the onus of demonstrating that a gift was intended. Failing such a demonstration, the transferred property is deemed to be held in trust by the transferee for the transferor, as beneficial owner.
61The problem in this case is that, contrary to the approach set out in Pecore and Kerr, the application judge did not proceed on the basis that the presumption of a resulting trust was implicated in respect of Ian's repayment of the line of credit. Instead, at the outset, he concluded that the presumption was inapplicable. He then went on to find that even if the presumption did apply to the line of credit, it would have been rebutted by the evidence of the parties' common intention concerning ownership of the Brookdale property.
62By proceeding in this fashion, the application judge essentially asked himself the wrong question. The repayment of the line of credit was integrally bound up with the purchase of the Brookdale property. Victoria did not dispute that the parties had agreed that Ian would repay the mortgage -- later converted to the line of credit -- shortly after the Brookdale closing.
63In these circumstances, the relevant question was what Ian intended at the time of repaying the line of credit -- not what the parties commonly intended concerning ownership of the Brookdale property. By focusing on the latter question, rather than the former, the application judge erred.
64As the Supreme Court notes in Pecore, at para. 44, where the presumption of resulting trust is engaged, it will determine the result if there is no evidence to rebut it. This is such a case. To repeat, Ian's repayment of Victoria's share of the parties' debt under the line of credit was gratuitous, and directly linked to the purchase of the Brookdale property. Victoria bore the onus to establish that Ian intended to gift her the sum of $500,000, that is, the repayment of her share of the parties' joint indebtedness under the line of credit. There was no independent evidence of such an intention by Ian. Further, as I have already explained, Victoria's own evidence undercut such a conclusion. It follows that Victoria failed to meet her burden to prove that Ian intended to gift the repayment of the line of credit to her, in whole or in part.
65This conclusion is reinforced by the evidence of Ian's use of the proceeds of sale from the Austin Terrace property. As I have said, Ian owned 99 per cent of that property. When it was sold, he used $1 million to repay the line of credit used to purchase the Brookdale property and deposited $800,000 in the RBC investment account. The application judge accepted that Ian did not intend to give half the funds in the RBC investment account to Victoria. In contrast, he held, in effect, that Ian had a different intent when he applied the Austin Terrace sale proceeds to the line of credit. I agree with Ian's submission that there was no evidentiary foundation to support the conclusion that his intent regarding repayment of the line of credit was any different from his intent concerning the RBC investment account.
66A resulting trust therefore arises in relation to Ian's repayment of Victoria's share of the parties' joint debt under the line of credit. In my view, the appropriate remedy is to direct that Ian be credited with the amount of $500,000 on division of the proceeds of sale of the Brookdale property, and I would so order.
67In reaching this conclusion, I am mindful of Victoria's argument that Ian did not plead or seek such a credit before the application judge and that, as a result, the evidence regarding the repayment of the line of credit was "thin".
68While this may be true, these factors do not preclude the remedy that Ian now seeks. The question of the legal consequences of Ian's repayment of the line of credit was a live issue before the application judge. The proper treatment of Ian's repayment of the line of credit fell within the boundaries of his resulting trust claim concerning the Brookdale property.
69I note that, in light of my conclusion that a resulting trust applies in this case in respect of Ian's repayment of Victoria's debt under the joint line of credit, it is unnecessary to consider Ian's additional argument that a constructive trust should have been imposed concerning that repayment.
E. Disposition
70I would allow the appeal in part, in accordance with these reasons. To summarize, I see no basis on which to disturb the application judge's finding that Victoria is entitled to a 50 per cent interest in the Brookdale property. However, I would direct that, on division of the proceeds of sale of the Brookdale property, Ian is entitled to a $500,000 credit for his repayment of Victoria's share of the parties' debt under the joint line of credit associated with the Brookdale property.
71Ian has been partially successful on this appeal. I would therefore award him part of his agreed costs of the appeal, fixed in the total amount of $12,500, inclusive of disbursements and all applicable taxes.
72At the appeal hearing, the parties did not address the costs awarded by the application judge in Victoria's favour. In light of the disposition of this appeal that I propose, I would direct that Ian deliver his brief written submissions regarding the costs below to the registrar of this court within 30 days from the date of these reasons and that Victoria deliver her brief responding written submissions to the registrar within 30 days thereafter.
Appeal allowed in part.
End of Document
