Court File and Parties

COURT FILE NO.: CV-17-130822 CV-17-130559 DATE: 20200316

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Maria Eugenia Guevara Arias, Plaintiff – and – Milton Eduardo Sanchez Brennan, Defendant

COUNSEL: Charles Baker, for the Plaintiff Alexandra Forsyth-Sells, for the Defendant

HEARD: November 25, 26, 28, and 29, 2019

REASONS for decision

DI LUCA J.:

Background Facts and Nature of the Proceedings

[1] Ms. Arias and Mr. Sanchez were once married. Unfortunately, the marriage did not last. Following their separation, Ms. Arias wanted to buy a home for herself, though she could not do so in her name alone as she did not qualify for financing. Mr. Sanchez agreed to co-sign the mortgage documents. Ms. Arias and Mr. Sanchez took title to the home jointly.

[2] From 2006 until present, Ms. Arias has carried the home financially. It was her principal residence for several years, though it was later rented out. During these years, Mr. Sanchez was dividing his time between Ecuador and Canada and on occasions when he was in Canada, he would stay at the home, contributing to some of the costs.

[3] The disentanglement of the relationship between Ms. Arias and Mr. Sanchez was neither swift nor clear. As is often the case, the parties moved on with their separate lives but retained connections between them. One connection between the parties was the joint title of the home.

[4] Since its initial purchase, the home has greatly increased in value. It also now produces rental income.

[5] On April 4, 2017, Mr. Sanchez commenced an application seeking partition and sale of the home and seeking an accounting of rental income.

[6] On April 25, 2017, Ms. Arias commenced an action seeking a declaration that she is the sole owner of the home based on resulting trust, constructive trust and proprietary estoppel principles.

[7] By Order of Speyer J., dated September 13, 2017, the application and the action were consolidated to be heard together or one after the other.

[8] The matter was listed for hearing during the November 2019 sittings, and by agreement as between counsel, the matter proceeded to trial on the action, with an understanding that the outcome of the action would effectively determine the application.

Summary of the Relevant Evidence

[9] The plaintiff, Ms. Arias, was born in Ecuador. She married the defendant, Mr. Sanchez, in 1984 and they had two children, Hector and Alejandro. They officially moved to Canada in approximately 1998 or 1999, though they originally came as visitors in 1993. Like many newcomers to Canada, both Ms. Arias and Mr. Sanchez faced struggles as they established a new life. They worked long hours in jobs that paid beneath their level of qualification. Finances were tight but through hard work and patience, they persevered.

[10] Ms. Arias was trained in animal husbandry and worked as a farm hand. She eventually re-trained as a personal support worker and ultimately became qualified as a Registered Practical Nurse. She put herself through school while working and raising children.

[11] Mr. Sanchez is a duly qualified lawyer in Ecuador. He is now a law clerk in Canada, though he has been employed in different jobs including manual farm labour and truck driving. Mr. Sanchez split his time between Canada and Ecuador. When in Ecuador, he maintained a law practice. He also dealt with Ms. Arias’ business affairs in Ecuador. These affairs related to various properties her father owned. In 2004, Mr. Sanchez became a power of attorney over Ms. Arias’ affairs in Ecuador.

[12] Ms. Arias’ marital relationship with Mr. Sanchez was difficult as they had different beliefs and goals. Ms. Arias eventually left Canada and returned to live in Ecuador in 2003.

[13] Ms. Arias claims that she and Mr. Sanchez separated in early 2003. In support of this claim, she points to the fact that Mr. Sanchez listed the date of separation as January 1, 2003 in an affidavit filed in support of a divorce application filed in Canada. That affidavit was filed in 2010. She also points to divorce documents from Ecuador that support roughly the same separation date.

[14] According to Mr. Sanchez, the parties did not separate until seven or eight years later in 2010 when Ms. Arias asked for a divorce. While he acknowledged that he filled out the affidavit in support of the divorce which listed the separation date of January 1, 2003, he maintained that this was a mistake. He specifically denied that he decided to re-cast the date of separation to 2010, in order to bolster his claim that the house was purchased jointly and intended as a residence for both of them.

[15] Tragically, following Ms. Arias’ return to Ecuador in 2003, Hector passed away in a sporting accident. At the time, Mr. Sanchez was in Canada. Ms. Arias was alone and devasted following Hector’s death. She was suffering depression and was getting counselling. She eventually returned to Canada to be with her remaining son Alejandro. In June 2014, soon after her return, Ms. Arias and Mr. Sanchez sold their matrimonial home. According to Mr. Sanchez, this house was sold because it was a reminder of their deceased son Hector.

[16] Following the sale of the house, Ms. Arias and Alejandro returned to Ecuador for a period of time. They then returned to Canada hoping to start all over again. When they returned, they were living in a rented two-bedroom basement apartment. Mr. Sanchez was also there, though the parties lived separately. According to Ms. Arias, the parties continued to live under one roof for purely financial reasons.

[17] Ms. Arias decided that she needed to find a home for her and Alejandro. In November of 2006, she located a home at 76 Smith Street in Bradford and decided that she wanted to buy it. Ms. Arias used a real estate agent to find the home. Mr. Sanchez was not involved in finding the house.

[18] Ms. Arias applied for mortgage approvals but was declined by the banks due to her low income. She then reached out to Mr. Sanchez and asked for his help. While he came out to see the home she was interested in, he had no interest in purchasing a home and initially declined to assist. Ms. Arias begged him to help and indicated that by doing so he would also be helping their son Alejandro.

[19] In order to convince him to assist, she told him that he only needed to co-sign the mortgage documents and that she would carry all the expenses. According to Ms. Arias, the issue of ownership was discussed at this time and she told Mr. Sanchez that while the house would be in both their names, it belonged to her. She viewed Mr. Sanchez as essentially a guarantor on the mortgage. As part of the agreement, she told Mr. Sanchez that he would have no liability in relation to the home. The agreement was that once Ms. Arias became financially independent, he would transfer the home to her and she would assume full ownership. The agreement was not reduced to writing. She trusted him as he was a lawyer and the father of their remaining son.

[20] On Mr. Sanchez’s version of events, he agreed to assist her buy the house because he knew she could not buy it on her own. Mr. Sanchez claims that when they went to the lawyer’s office to discuss the purchase, he explained that title would be taken as joint tenants so that in case something happened to him, ownership would go to her and then eventually to their remaining son Alejandro. According to Mr. Sanchez, there was no other agreement in terms of ownership of the house, though the plan was that Ms. Arias would pay the mortgage and he would pay the utilities and food.

[21] On January 26, 2007, the parties purchased the home with the assistance of funds provided by the mortgagee, Maple Trust. Ms. Arias did not tell the mortgagee about the arrangement between herself and Mr. Sanchez. She also never told the lawyer who closed the deal. While she claimed to have told a representative at the Canadian Imperial Bank of Commerce (“CIBC”) about the agreement, when the CIBC representative was contacted she had no recollection of the discussion that had happened several years prior.

[22] The title documents for the property list Ms. Arias and Mr. Sanchez as joint tenants. There is no mention in the documents of either party acting as a trustee. The Land Transfer Affidavit states that both parties are beneficial owners.

[23] In order to close the deal Ms. Arias advanced an initial deposit of $5,000, followed by a down payment of approximately $15,000. Ms. Arias’ bank records show a money order made payable to Century 21 for $5,000 on November 21, 2006, and a further money order made payable to the real estate lawyers on the deal for $14,462.94 on January 18, 2007. These funds were drawn on a joint account held by the parties. According to Ms. Arias, the source of these funds was her friend and employer, Mr. Douglas Livingstone. Indeed, on November 1, 2006, Mr. Livingstone advanced an initial loan of $20,000 by way of a cheque from his business payable to Ms. Arias.

[24] According to Mr. Sanchez, he contributed $2,500 in cash towards the initial deposit of $5,000. He also claimed that, in total, he paid $10,000 towards the initial $20,000 payment on the house, though he did not produce any bank records supporting this claim. He asserted that as the money came from a joint account, he would have been a 50% contributor. He also asserted that he was working at the time and would have deposited his income into this bank account.

[25] According to Ms. Arias, as they were arranging financing for the home, Maple Trust advised her that Mr. Sanchez had outstanding debts of approximately $28,000 that needed to be cleared before financing could be approved. Ms. Arias was desperate to close on the house and decided to approach Mr. Livingstone for a further loan to cover Mr. Sanchez’s debts. He agreed and advanced a further $28,000 on November 20, 2006. According to Ms. Arias, Mr. Sanchez was not involved in the agreement with Mr. Livingstone. A document purporting to be signed by Mr. Livingstone, though prepared by Ms. Arias, sets out the repayment schedule for the loans by Mr. Livingstone.

[26] While Mr. Sanchez agreed that the bank records show his credit line of $22,000 was paid off as was a further credit line of $4,200, which he claimed was shared with Ms. Arias, he claimed to not know how these amounts were paid off. Despite not knowing how the money was paid off, he asserted that it was not paid off using money borrowed by Mr. Livingstone.

[27] Once the house deal closed, Ms. Arias moved in with Alejandro. Mr. Sanchez was dividing his time between Ecuador and Canada. When in Canada, he would stay at the home. According to Ms. Arias, Mr. Sanchez spent most of 2007 in Ecuador. Indeed, he agreed that from the date of purchase to the end of 2007, he only spent 44 days in Canada.

[28] While Mr. Sanchez was in Ecuador during 2007, he administered some of Ms. Arias’ family affairs, including her father’s estate. He was acting essentially as her lawyer and power of attorney in doing so. She paid him for these services and related expenses by transferring money via Western Union. From February to October 2007, she wired approximately $14,000 to Mr. Sanchez.

[29] According to Ms. Arias, from 2008 to 2011, Mr. Sanchez would come and visit and would stay in a spare room at the home. Mr. Sanchez had a home and other properties in Ecuador. He also operated a law practice there and provided some legal services in relation to some business and family matters that Ms. Arias had in Ecuador.

[30] According to Mr. Sanchez, he resided at the home from 2007 until 2011, though he agreed that he was in Ecuador for much of this time. He eventually moved back to Ecuador in 2011, and that is when Ms. Arias decided to rent out the basement of the home.

[31] According to Ms. Arias, she covered all the main expenses on the home. This included approximately $2,000 per month for the mortgage and the repayment of the loan to Mr. Livingstone. Ms. Arias agreed that Mr. Sanchez contributed towards utilities, though she denied that he paid property taxes or purchased food for the family. Money was very tight and Ms. Arias was working two jobs to make ends meet. She also eventually asked Alejandro to contribute to expenses and he was eventually asked to pay rent.

[32] The loan from Mr. Livingstone was repaid by 2012. A series of letters and copies of cheque duplicates and a cheque book ledger were filed supporting this repayment.

[33] According to Ms. Arias, the mortgage came up for renewal in August 2014. By that time, Maple Trust had been purchased by Scotia Bank. The mortgage was renewed without Mr. Sanchez’s involvement, though he remained on the mortgage. Mr. Sanchez explained that he received a call from the bank, but had no other role in renewing the mortgage. In his view, the mortgage was Ms. Arias’ responsibility. Apparently, Mr. Sanchez remains on the mortgage at present.

[34] Mr. Sanchez agreed that he never contributed to the mortgage. He did, however, make occasional payments for things like utilities and groceries on the occasions when he returned from Ecuador and was staying at the house. He also did some repairs and additions to the property. In his view, once the amounts paid by Alejandro towards the mortgage were accounted for, he and Ms. Arias were essentially splitting the costs of maintaining and carrying the property.

[35] According to Ms. Arias, she believed that Mr. Sanchez’s contributions were approximately $3,000. That said, a financial analysis prepared during the litigation listed Mr. Sanchez’s contribution as being approximately $8,600 from 2007 to 2011, while Ms. Arias’ contributions to the property during this same time frame were approximately $187,000. When asked about the discrepancy in contributions attributed to Mr. Sanchez, Ms. Arias explained that the initial financial analysis did not accurately reflect the bank records later obtained from Mr. Sanchez.

[36] Mr. Sanchez also advanced two payments of $10,600 in September 2009. According to Ms. Arias, these two payments related to the sale of an apartment they owned in Ecuador. The payments were sent to her and she kept one payment for herself and forwarded the second payment to Mr. Sanchez’s Canadian bank account. On her evidence, these payments were not related to the home that is the subject of these proceedings.

[37] According to Mr. Sanchez, these two payments were for expenses relating to the house. On his version of events Ms. Arias was in need of money and asked him for help, and he obliged as he wanted to make sure that the mortgage was paid. When asked where this money came from, Mr. Sanchez indicated that he had a “really good case” in his law practice in Ecuador. He denied receiving $10,000 back from Ms. Arias in his bank account in Canada. When pressed on the fact that the $10,000 cheque appeared to have been deposited in his bank account, Mr. Sanchez claimed that he had no clear recollection as “$10,000 was an amount that they gave to each other on numerous occasions”. As well, Mr. Sanchez initially claimed that he could not recall the sale of the apartment. However, when shown documents relating to that sale, he agreed that the apartment had been sold, but maintained that the money he sent to Ms. Arias was not related to the sale but rather was out of the kindness of his heart. When asked to explain how her share of the apartment proceeds were paid to her, he explained that he carried her share in cash while in transit from Ecuador to Canada.

[38] Towards the end of 2011, Ms. Arias was offered the use of a farm house on a rent-free basis through her employer. She took advantage of the opportunity and decided to rent out the home at 76 Smith Street. She contacted an agent and had the property listed for rent. The house was rented to a number of tenants. Ms. Arias handled all issues relating to renting the premise and collecting rents. She also continued to arrange and pay for upkeep of the property. She did not share any of the rental income with Mr. Sanchez.

[39] Mr. Sanchez claims he gave Ms. Arias permission to rent out the home, though he did not ask for any of the rental income. That said, once the property was rented, Mr. Sanchez stopped paying for utilities.

[40] By 2012, Ms. Arias’ financial position had improved as she obtained a good job as a personal support worker. She emailed Mr. Sanchez and advised him that the time had come to transfer the home. According to Ms. Arias, Mr. Sanchez indicated that he would, but he never followed through. She wanted the situation to end amicably and never pushed the issue, essentially hoping that he would eventually live up to the agreement. According to her, he always had an excuse or reason why he could not complete the transfer.

[41] By 2016, Ms. Arias was in a new relationship with Roy Pegg, a paralegal. On May 5, 2016, Mr. Pegg sent a letter to Mr. Sanchez indicating that Mr. Sanchez had failed to live up to the agreement to transfer the property to Ms. Arias, and that having failed to do so he was responsible for 50% of the ownership costs from January 2007 to January 2012. The letter demanded payment of approximately $76,000 or completion of the transfer of title.

[42] When asked about this letter in cross-examination, Ms. Arias denied instructing Mr. Pegg to send the letter on her behalf. She explained that Mr. Pegg was frustrated with Mr. Sanchez and sent the letter without her instructions. She claimed to have learned of the letter only after it was sent.

[43] Mr. Sanchez agreed he received this letter. While he disagreed with the contents, he did not respond in writing. In particular, he did not write back and ask for his share of the rental income generated by the property.

Factual Findings

[44] At its core, this is a case about the credibility of the two witnesses. Their versions of events stand in stark contrast, and the court must make factual determinations that will serve as a basis for the legal analysis.

[45] Having listened to the evidence of the witnesses, in context with the various exhibits, I am satisfied that the version of events proffered by Ms. Arias is likely or probably true. Her version of events was presented in a clear and logical fashion. It was generally corroborated by the documentary evidence filed and it was also internally consistent. Other than as discussed below, I do not find that any of the issues raised significantly detract from her credibility, especially when her evidence is viewed as a whole and in context.

[46] In terms of Mr. Sanchez, I have significant credibility concerns regarding his version of events. As I will detail below, I find that his evidence was evasive and contrived in an attempt to explain away important facts that detracted from his position. There were several instances where his evidence lacked plausibility. There were also instances where his evidence was contradicted by the documentary evidence filed.

[47] Ultimately, wherever Mr. Sanchez conflicts with Ms. Arias’ evidence, I prefer hers. In this regard, I make the following factual findings:

a. I accept that Ms. Arias and Mr. Sanchez separated in early 2003. Their marriage was not great to begin with and they suffered the loss of their son. Ms. Arias’ evidence on this point is supported by the affidavit sworn by Mr. Sanchez in the Canadian divorce proceedings, and also by the documents filed in support of the Ecuadorian divorce proceedings. It is further bolstered by the fact that the matrimonial home was sold in June 2004.

b. I reject Mr. Sanchez’s evidence that the use of the January 1, 2003 date in the sworn divorce affidavit was simply a mistake. While a mistake in a date can easily happen, the chance that the same mistake would appear in both the Canadian and Ecuadorian divorce papers seems unlikely. I do not accept that he and Ms. Arias remained a functioning couple until she asked for a divorce in November 2010. I find that Mr. Sanchez’s evidence about the date of separation is an attempt on his part to shore up his claim that he was residing in the home and that it was essentially a family home up until 2010.

c. I accept that by 2005 and into 2006, Ms. Arias had returned to Canada to “start all over again.” She needed a home to live in with her son, Alejandro, and set out to find a suitable property. I accept that she located the subject property and tried to get financing on her own. It makes sense that she did this on her own as she and Mr. Sanchez were separated at this point in time.

d. I also accept that she only approached Mr. Sanchez for help when she realized that she could not qualify for financing on her own. This was out of necessity and not out of preference. In making this finding, I appreciate that the parties had related financial interests in Ecuador, including other properties they held jointly. I also accept that despite the separation, Ms. Arias continued to trust Mr. Sanchez and paid him to conduct her legal affairs in Ecuador. That said, I am not satisfied that the purchase of the home in 2007 was simply another joint investment. The process of disentangling finances after a long marriage is neither easy nor straightforward. I accept Ms. Arias’ position that if she had been able to secure her own financing for the home, she would have done so and would not have involved Mr. Sanchez in this aspect of her life.

e. In terms of the actual mechanics of the deal, I find that Ms. Arias knew, despite her evidence to the contrary, that Mr. Sanchez would be on title. In other words, she knew that he would co-own the property “on paper” along with her. Indeed, her evidence on the whole is that he agreed to be on title and co-sign the mortgage documents on the understanding that he was to transfer the property to her name once she was able to get her own financing. More specifically, her evidence was that he later failed to live up to the “deal”, which implicitly suggests knowledge on her part that he was on title.

f. I accept Ms. Arias’ evidence that she borrowed the money needed to make the initial deposit of $5,000 and the down payment of approximately $14,500. In short, if she had access to this money either on her own or in combination with Mr. Sanchez, there would have been no need to borrow it from Mr. Livingstone. I reject as incredible Mr. Sanchez’s evidence that he paid $2,500 in cash as his half of the initial deposit, and further that the $14,500 was half his as it was drawn on a joint account where he had been depositing pay cheques. The timing of the $20,000 cheque from Mr. Livingstone to Ms. Arias confirms her version of events in this regard and contradicts his. The cheque is also endorsed for deposit at the Royal Bank of Canada (“RBC”), which is the bank wherefrom the bank drafts were ultimately drawn. On this basis, I find that the money advanced by Mr. Livingstone was deposited into the joint account that the parties had at RBC, and was then used to pay the initial deposit and subsequent down payment.

g. I further accept that once Ms. Arias discovered that Maple Trust required Mr. Sanchez’s debts to be cleared prior to advancing funds on the mortgage, she took steps to arrange for a further loan from Mr. Livingstone. I find that the cheque from Mr. Livingstone dated November 20, 2006 for $28,000, was used for the specific purpose of paying off Mr. Sanchez’s debt. His evidence on this issue was entirely lacking in credibility. In short, while he acknowledged that he had two credit lines with over $26,000 in debt and acknowledged that the debt was paid off, he could not recall how it was paid off. I find that this evidence was contrived to avoid making an obvious admission that Mr. Livingstone’s loan was used to pay off Mr. Sanchez’s debt. In context, the parties lived a very modest, financially strained existence. Mr. Sanchez, a trained lawyer, was working in Canada as a truck driver and farm hand. It is difficult to accept that Mr. Sanchez would simply be unable to recall how his debts were paid off in one fell swoop. This is an example of Mr. Sanchez offering entirely implausible evidence to support his position.

h. I find that once the house deal closed, the house became Ms. Arias’ principal residence. She and her son Alejandro lived there. Mr. Sanchez did not. Indeed, during 2007, he was only in Canada for approximately 44 days. I accept that in some of the years that followed Mr. Sanchez stayed at the residence, but in my view his stays were more akin to visits, albeit at times lengthy visits. Mr. Sanchez was essentially working and living in Ecuador and, at best, splitting his time between Canada and Ecuador.

i. I find that the financial contributions to the house best exemplifies the parties’ intentions regarding its use. Ms. Arias paid for the mortgage. She repaid the loans that had been provided by Mr. Livingstone. She paid for the life insurance required for the mortgage, as well as for the property insurance and property tax. On Mr. Sanchez’s evidence, he paid nothing towards the house in 2007 (apart from his claim to have paid half the initial funds which I have already rejected). He paid nothing in 2008. In 2009, he paid approximately $500 in utilities (apart from the two claimed payments of $10,000 USD, which I will deal with below). In 2010, he paid roughly $3,000 in utilities, life insurance and grocery bills. In 2011, he paid roughly $1,700 towards utilities, life insurance and grocery bills. He has paid nothing towards the house since 2012. The evidence of what he paid towards to house stands in stark contrast to his sworn assertion that he and Ms. Arias essentially split costs jointly.

j. In relation to 2010 and 2011, while I accept that Mr. Sanchez paid utilities in relation to the house, I am unable to accept that the life insurance premiums he paid related to the home. He was unable to provide a clear explanation of these expenses and provided no proof that they were related to the house. On the issue of the groceries, while I accept that he might have contributed some groceries during the time period when he was staying at the home, it is hard to see how these modest amounts relate to maintaining and supporting the property. As well, his evidence on this point appeared contrived. As he was reviewing his bank records, he essentially claimed to recall that all amounts paid to grocery stores were actually expenses relating to the home. Lastly, I note that Mr. Sanchez initially claimed that he paid approximately $2,700 in property taxes in 2012. However, in cross- examination, he admitted that this was a mistake and that it had been paid by Ms. Arias.

k. On the whole, when one examines the nature of the contributions, it is clear that it was Ms. Arias who contributed the lion’s share of the money – in excess of 95% of the costs, and likely closer to 97% or 98%. While Ms. Arias’ contribution may have been offset by amounts paid by her son Alejandro, the reality remains that Mr. Sanchez’s contributions pale by any measure. In my view, they can be, at best, equated with the modest contributions expected of a long-term house guest.

l. In terms of the two $10,000 USD transfers, there is no issue that Ms. Arias received two transfers for just over $10,000 CDN from Mr. Sanchez. I accept Ms. Arias’ evidence that this money came from the sale of an apartment they jointly owned in Ecuador, and that the agreement was that she was to keep half for herself and forward half to Mr. Sanchez. I further accept that she then transferred one of the $10,000 USD amounts to Mr. Sanchez’s Canadian bank account using a cheque. The cheque was negotiated, according to Ms. Arias’ bank records. I have the counterfoil to the cheque which suggests that it was made payable to Mr. Sanchez. To be clear, the evidence on this issue is not perfect. There appears to have been two cheques in sequence (#66 and #67) made out to Mr. Sanchez for this amount, but only one was cashed. The actual cheque as negotiated was not produced. As well, the cheque number and date appear to conflict with the cheque numbers and dates for the cheques used to repay Mr. Livingstone. On this latter issue, there was no cross-examination of Ms. Arias on this apparent discrepancy, and therefore I am not in a position to determine whether there might be some explanation. In any event, I am satisfied that what Ms. Arias says about this money is probably true. I find support for this conclusion in Mr. Sanchez’s evidence. When asked about this issue, Mr. Sanchez claimed that in 2009, some two years after the home was purchased, Ms. Arias was asking him for help because she could not make ends meet. As a result, he advanced two $10,000 USD payments to her, essentially as a matter of kindness and obligation. When pressed on where the money came from, Mr. Sanchez denied it came from the sale of a property and insisted that he had been paid on a “big case” in his law practice in Ecuador. When confronted with documents relating to the sale of the property in Ecuador during this very time period, he claimed that he provided Ms. Arias’ share of the proceeds to her in cash which he carried on the plane during a return trip. In terms of the cheque from Ms. Arias back to him for $10,600, Mr. Sanchez claimed to have no recollection of the cheque and explained that $10,000 was an amount they often exchanged. When I consider Mr. Sanchez’s evidence on this issue in context, I find that it is nonsensical and contrived. I do not accept that he was paid $20,000 USD on a “big case” and then sent this money to Ms. Arias. That is a convenient answer, unsupported by any evidence, and obviously geared towards having some plausible source for a large amount of money apart from the sale of the apartment. Further, his explanation for why he does not recall getting the $10,600 cheque from her in Canada also rings hollow. This is not an instance where the deposit of a $10,600 cheque would be routine, or could occur without being noticed.

m. In terms of the letter from Mr. Pegg to Mr. Sanchez, I do not read that letter as somehow being an acknowledgement that the parties agreed to jointly own the property. Rather, I see the letter as simply a demand for a share of expenses based on Mr. Sanchez’s failure to honour the deal to transfer title to Ms. Arias. I pause to note that Mr. Pegg was not a witness in these proceedings. Ms. Arias denied instructing him to send this letter, and further denied knowing of its contents before it was sent. Her evidence on this issue is concerning. The obvious inference is that the letter was sent on her behalf by her “legal representative” Mr. Pegg. In any event, I see nothing in the letter as an admission by Ms. Arias and the letter does not cause me any concern in relation to my findings.

Legal Analysis

[48] Against the backdrop of these factual findings, I turn next to assessing the legal issues. Ms. Arias argues that this is a straightforward resulting or constructive trust case, wherein Ms. Arias was the actual owner of the property and Mr. Sanchez held his half in trust for her. Ms. Arias further argues that the doctrine of proprietary estoppel bars Mr. Sanchez from now claiming that he is actually a half owner of the property.

[49] The defendant argues that neither a resulting nor a constructive trust are warranted in this case. In short, the defendant argues that he and Ms. Arias jointly owned the property, shared expenses, and he is entitled to have the house sold and the expenses and income related to the property accounted for. In addition, the defendant argues that the Statute of Frauds applies to prevent enforceability of the oral agreement, assuming one is found to exist, in relation to the ownership of the property.

[50] A resulting trust arises when title to property is in one person’s name but that person is under an obligation to return it to the original title owner, either because he or she is a fiduciary or because he or she gave no value for the property; see Andrade v. Andrade, 2016 ONCA 368, at para. 57. A purchase money resulting trust can occur where a person advances a contribution to the purchase price of a property without taking legal title; see Andrade at para. 58 and Nishi v. Rascal Trucking Ltd., 2013 SCC 33, at para. 21.

[51] Where parties who are spouses purchase property and hold title jointly, the ordinary presumption of a resulting trust has been statutorily modified by s. 14 of the Family Law Act. In these instances, the law presumes that where parties hold title as joint tenants, they intend to do so absent evidence to the contrary. In other words, the presumption of a resulting trust does not apply where spouses hold title to property jointly; see Saylor v. Brooks, 2005 ONCA 39857, at paras. 13-17.

[52] In the absence of a presumption of resulting trust, it falls to Ms. Arias to satisfy the court that at the time she advanced the funds for the purchase of the property, her intention was that Mr. Sanchez would hold his half in trust for her.

[53] On this issue, I am readily satisfied that at the time when the property was purchased, Ms. Arias did not intend for Mr. Sanchez to own half the property. Her intent was clearly to purchase her own home following the death of her son Hector and the dissolution of her marriage. I accept that the only reason she approached Mr. Sanchez was because she could not qualify for the mortgage on her own. For years she acted as the sole owner of the home, essentially paying the vast majority of the expenses, including the mortgage, and latterly arranging for the home to be rented out to tenants. Her conduct supports a clear and strong inference that she was the beneficial owner of his half interest in the home, see Miranda v. Mendonca, 2017 ONSC 526, at paras. 67-71.

[54] I would go one step further and find that Mr. Sanchez also intended that the house would be hers. He advanced no funds towards the closing of the real estate deal. He paid nothing towards the initial loan obtained from Mr. Livingstone for this purpose. He signed onto the mortgage but never paid a dime towards it. His financial contributions to the house were minimal, even when he was staying there for periods of time. Until he commenced his application in 2017, he never asked for his share of the rental income from the property. He also had his credit line cleared in the process, again with money borrowed by Ms. Arias from Mr. Livingstone, and again without ever paying back the money borrowed for this purpose.

[55] On this evidence, the most obvious conclusion is that Mr. Sanchez held his portion of the title as a trustee for Ms. Arias. As such, I am satisfied that Ms. Arias should have ownership of the entire house by operation of a resulting trust.

[56] In the event that I am wrong about the resulting trust, I will now briefly assess the claim for a constructive trust along with the doctrine of proprietary estoppel.

[57] A constructive trust is an equitable remedy that arises to address instances of unjust enrichment by one spouse against another. The requirements for a constructive trust are: (1) the spouse confers a benefit or enrichment on another spouse; (2) the spouse suffers a corresponding deprivation as a result of the contribution which he/she had made; and (3) there is no juristic reason to permit the enrichment, see Moore v. Sweet, 2018 SCC 52, at paras. 35-38.

[58] A related concept is the doctrine of proprietary estoppel. A claim for proprietary estoppel requires proof of three elements: (1) the owner of land induces, encourages or allows the claimant to believe that he or she has or will enjoy some right or benefit over the property; (2) in reliance on his or her belief, the claimant acts to his or her detriment to the knowledge of the owner; and, (3) the owner then seeks to take unconscionable advantage of the claimant by denying him/her the right or benefit which he or she expected to receive; see Schwark v. Cutting, 2010 ONCA 61 at para. 34 and Clarke v. Johnson, 2014 ONCA 237 at paras. 26, 41 and 52.

[59] In this case, I find that the plaintiff, Ms. Arias, conferred a benefit on Mr. Sanchez in relation to the property. She paid off his loans that were outstanding when the financing was being arranged. She also then paid for virtually all of the expenses in relation to the home, including the mortgage. As well, given the state of the real estate market, Mr. Sanchez would receive the benefit of the increased value of the home.

[60] I find that Ms. Arias suffered a corresponding deprivation as a result of carrying these expenses. While the extent of her deprivation is attenuated by the fact that she occupied the home initially and then solely enjoyed the rental income, I am not prepared to find that she suffered no deprivation as a result. Mr. Sanchez used the home for periods of time when he was in Canada and did so by minimally contributing to carrying costs. Mr. Sanchez also stands to reap the benefit of the increase in real estate values, despite having done essentially nothing to support and maintain the home.

[61] In terms of juristic reasons for permitting the enrichment, I appreciate that Mr. Sanchez assumed financial risk by signing on to the mortgage. However, I am not satisfied that this assumption of risk alone amounts to a juristic reason to permit the enrichment in this case. Ultimately, it was Ms. Arias who stood to lose her home if she was unable to carry the mortgage. As well, Mr. Sanchez had his debts paid for in exchange for assuming this risk.

[62] In assessing the applicability of the equitable remedy of a constructive trust, I consider also the application of the doctrine of proprietary estoppel. In this regard, I find that Mr. Sanchez led Ms. Arias to believe that he would transfer title to her name once she was able to carry the property on her own. Based on this promise, Ms. Arias carried the property for a number of years, essentially on her own. Mr. Sanchez made minimal contributions and then stopped paying entirely in 2011. When she asked him to “make good” on his promise, he refused. She then asked him to pay for his share of the expenses and he refused again. Instead, he brought an application under the Partition Act seeking a sale of the home and an accounting of monies she received by way of the rents charged to tenants. The home was purchased in 2007. When the application under the Partition Act was commenced in 2017, real estate values had increased greatly. In my view, to allow Mr. Sanchez to now avail himself of his half interest in the home would be unconscionable in these circumstances.

[63] As such, I am satisfied that Ms. Arias’ claim should also succeed based on constructive trust and proprietary estoppel principles.

[64] I turn lastly to addressing an argument relating to the Statute of Frauds. On this issue, the defendant argues that s. 1(1) of the Act requires that the agreement in this case had to be written in order to be enforceable. Further, the defendant notes that s. 4 of the Act prohibits a claim based on certain types of oral agreements. In my view, this is not a case like Abdollahpour v. Banifatemi, 2015 ONCA 834, where the claim was based on a purported oral agreement to relinquish a proprietary gift following a failed marriage. Here the claim is based on the recognition of a resulting or constructive trust. While s. 9 of the Statute of Frauds bars the creation of a trust by way of an oral agreement, s. 10 of Statute of Frauds creates an exception to s. 9 and permits the recognition of a trust that arises by implication or construction of law. As such, where a trust is created through the legal doctrines of resulting trust or constructive trust, s. 9 of the Act does not operate so as to bar enforceability in the absence of an agreement in writing.

[65] In any event, it has also been determined that the strict applicability of the Statute of Frauds may not be required in instances of part performance. As Lederman J. states in Steinberg v. Marlow, 2011 ONSC 3042, at para. 17:

The doctrine of part performance is an extension of the court’s equitable powers and authority. This has emerged to prevent abuse of situations where a party enters into an oral contract with another party, reaps the benefits of the other party’s partial or full performance of the terms of the contract, and then seeks to have the contract declared unenforceable because it is oral. To avoid such unfairness and fraud, such part performance can be taken as evidence of the existence of an enforceable contract, sufficient to avoid the application of section 4 of the Statute of Frauds, and to permit an action against a party to the contract.

[66] In view of my factual findings in this case, it would be unfair to permit Mr. Sanchez to rely on the provisions of the Statute of Frauds when he was more than content to let Ms. Arias pay for the house for years. It was only when she sought to hold him to the deal that he commenced his application seeking to rely exclusively on the fact that title was held jointly.

Remedy

[67] In terms of remedy, I am satisfied that a monetary award of damages is not appropriate in the circumstances of this case. Even assuming that an award of damages could be enforced, it would deny Ms. Arias the very thing that I have found she worked so hard to obtain, namely, ownership of her own home. In my view, for the reasons I have given in applying the law, a just remedy requires recognition of Ms. Arias’ de facto ownership of the home. As such, I order the following:

a. A declaration that the plaintiff, Ms. Arias, is the sole owner of the home purchased jointly by the parties and municipally known as 76 Smith Street, Bradford, Ontario, and legally known as PT LT 138 PL 51M704, designated as PT 3 51R30844, S/T Easement as in LT523801; Bradford-WGW, free from any right, title or interest of the defendant;

b. In addition, an Order pursuant to the Partition Act severing joint title to the home described in (a) above, and vesting any/all interest of Mr. Sanchez solely in the name of the plaintiff, Ms. Arias.

[68] In view of the outcome of the action, the application for partition is moot and it is dismissed.

[69] The parties are invited to make costs submissions in writing. The submissions are to be no longer than three pages excluding attachments. The plaintiff’s costs submissions shall be served and filed within two weeks through my assistant, Diane Massey, at diane.massey@ontario.ca. The defendant’s submissions shall be served and filed in the same manner within seven days of the plaintiff’s submissions. As always, the parties are urged to agree upon costs. In this regard, if no submissions are received within the above-noted time frames, the court will assume that the parties, acting responsibly, have settled the issue of costs and no order shall be made.

Justice J. Di Luca

Released: March 16, 2020

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Maria Eugenia Guevara Arias, Plaintiff – and – Milton Eduardo Sanchez Brennan, Defendant REASONS FOR decision Justice J. Di Luca

Released: March 16, 2020