CITATION: Simonin v. Simonin, 2010 ONCA 900
DATE: 20101224
DOCKET: C49732
COURT OF APPEAL FOR ONTARIO
Sharpe, Watt and Karakatsanis JJ.A.
BETWEEN
Mary Simonin, in her Personal Capacity and as Estate Trustee for the Estate of Franco Simonin, deceased
Plaintiff (Appellant)
and
Matilda Simonin, also known as Matilde Simonin
Defendant (Respondent)
David S. Steinberg and Jonathan L. Rosenstein, for the appellant
Ronald Lachmansingh, for the respondent
Heard: December 13, 2010
On appeal from the judgment of the Honourable Justice P.A. Daley of the Superior Court of Justice, dated November 10, 2008.
By the Court:
[1] Mary Simonin (Mary) appeals a judgment dismissing her unjust enrichment claim, asserted on her own behalf and on behalf of the estate of Mary’s deceased husband Franco, against Franco’s mother Matilda Simonin (Matilda). Mary claims that Matilda was unjustly enriched as the result of improvements made by Franco to a farm which Matilda owned, but on which Mary, Franco and their children lived from 1996 until shortly after Franco’s death in 2003.
FACTS
[2] Luigi Simonin, Matilda’s husband and Franco’s father, bought the farm with a business partner who was also his brother-in-law. After Luigi’s death, Matilda acquired the partner’s interest and became the sole registered owner.
[3] Franco and Mary were married in 1996 and from that time lived on the farm, initially in a trailer and then in the farmhouse.
[4] From 1996 until his accidental death in 2003, Franco and his family lived rent-free in the farmhouse, farmed the land and retained the profits. Matilda paid the property taxes. Franco paid the other expenses and did extensive renovations to the farm house and farm property. A will that Matilda executed in 1983 provided that if she survived her husband, her estate would be divided equally between her children, Franco and Luisa. Matilda testified that she never advised Franco that the property would be left to him, nor did she tell him that he could stay on the property indefinitely. She did, however, state that she intended to permit Franco and his family to live on the farm as long as they wanted during her lifetime.
[5] Six months after Franco’s death, Mary and her children moved from the farm. Shortly thereafter, Matilda sold the farm for $880,000. She gave $200,000 to Franco’s sister Luisa, and kept the remainder, refusing to give Mary any of the proceeds. Matilda testified that she would not have sold the farm had Mary and the children wished to remain there after Franco’s untimely death.
[6] Mary asserts an unjust enrichment claim for the value of Franco’s improvements to the farm, found by the trial judge to amount to $230,000.
THE TRIAL JUDGMENT
[7] The trial judge gave extensive reasons for judgment dismissing the claim for unjust enrichment on the ground that Mary failed to meet all three elements of the test for unjust enrichment.
[8] First, while Matilda was enriched on account of the renovations, the trial judge found that those improvements were done not by Franco or Mary but by Franco’s company, Spancrest Construction Limited (Spancrest). Accordingly, whether in her personal capacity or as Franco’s estate trustee, Mary had no claim to be reimbursed for the enrichment to Matilda.
[9] Second, the trial judge found that Franco and Mary had received benefits, including living rent-free on the property and deriving profits from the operation of the farm, totalling $610,920.52. As the benefits they had received significantly exceeded the value of the improvements, the trial judge found that Mary had not established that she and Franco suffered a deprivation corresponding to the enrichment conferred on Matilda.
[10] Third, the trial judge held that Mary had not made out a prima facie case that there was no juristic reason for the enrichment of the defendant. He found that Franco had done the improvements to the property voluntarily and in his own self interest and that this amounted to a recognized juristic reason to permit Matilda to retain the benefit conferred. He also found that as between Franco and Matilda, there was no reasonable expectation that Franco would be compensated for the cost of the improvements. He found that Matilda never asked Franco to make any improvements to the property, that Franco never asked for permission to carry out renovations on the property and that there was no agreement, understanding or reasonable expectation as between Franco and Matilda that she would repay Franco for the costs of the improvements made to the property upon its sale or otherwise.
ISSUES
[11] It is common ground that to make out a claim for unjust enrichment, a plaintiff must show:
a) that the defendant has been enriched;
b) that the plaintiff has suffered a corresponding deprivation; and
c) that there is no juristic reason for the defendant to retain the enrichment.
See Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, at para. 3; Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at paras. 38-41.
[12] Mary submits that the trial judge erred with respect to all three elements of the test for unjust enrichment and that her claim should be allowed or a new trial ordered.
ANALYSIS
[13] Before turning to the specific issues raised by the appellant, we note that the trial judge gave detailed and carefully considered reasons for judgment rejecting the claim for unjust enrichment. The trial judge’s findings of fact are entitled to deference on appeal. Moreover, this case involves a claim for equitable relief in an area that calls for a careful weighing of a variety of general factors arising from the conduct of the parties. Plainly, the judge who conducted this two week trial and who heard and saw the parties was best placed to make that assessment. In the absence of an error in principle or a palpable and overriding error of fact, it is his assessment, not ours, that must govern the outcome.
1. Was the respondent enriched?
[14] It is clear that Matilda was enriched by the improvements. The trial judge’s finding that all the improvements to the farm were made or paid for by Franco’s company, Spancrest, is uncontested. While the trial judge dealt with that fact under the first branch of the test, in our opinion it can best be considered under the second branch, to which we now turn.
2. Did the appellant suffer a corresponding deprivation?
[15] In our view, there is evidence to support the trial judge’s determination that Mary, whether in her personal capacity, or in her capacity as estate trustee, did not suffer a corresponding deprivation.
[16] The first ground arises from the fact that the improvements were paid for by Spancrest. Franco appears to have treated Spancrest and its assets as being his own personal assets. While he was not paid a salary, the company paid many of his personal expenses. Significantly, the trial judge accepted the evidence of Franco’s sister, Luisa, who worked for Spancrest, that invoices for between 30% and 50% of the cost of the improvements were billed to other jobs and paid by Spancrest’s clients. In other words, Franco used Spancrest to cause third parties to bear a significant extent of the cost of the improvements that are said to ground the claim for unjust enrichment.
[17] We do not accept the appellant’s submission that on this evidence, the trial judge made an artificial distinction between Franco and Spancrest. Franco took the benefits of the corporate form and he used his corporation to funnel payments from third parties to pay for a substantial portion of the improvements for which an unjust enrichment claim is now asserted. In our view, it was open to the trial judge to find on this record that while Matilda was enriched, that enrichment was not one for which Franco’s estate had a valid claim.
[18] The trial judge relied upon a further ground for finding that the appellant failed to establish a corresponding deprivation. He found that Mary and Franco received benefits from Matilda that more than off-set the value of the improvements.
[19] The appellant argues that the trial judge erred by off-setting benefits received by Franco from Matilda against the expenditures made by Franco to improve the farm. The appellant submits that the trial judge should have found the right to live rent-free and to profit from the operation of the farm to be outright gifts that preceded and that were unrelated to the improvements.
[20] We disagree. In our view, the trial judge’s treatment of the off-setting benefits is supported by the record. Matilda’s evidence was that while she intended to permit Franco and his family to live on the farm as long as they wanted to do so during her lifetime, she did not promise or advise Franco that he could stay on the property indefinitely. On that evidence, it was open to the trial judge to reject Mary’s submission that the right to live rent-free and to profit from the farm should be regarded as immediate and unconditional gifts unconnected to the improvements. See Toth v. de Frias (1996), 78 B.C.A.C. 34, at para. 4: “… the learned trial judge examined the evidence with care and decided that the plaintiff roughly gained as much as she lost in her relationship with the defendant. That is a fact-based determination which cannot be overturned unless it is shown to be plainly wrong.”
[21] The appellant also submits that this evidence should have been dealt with as part of the third branch of the test relating to juristic benefit. We need not decide that point as it is our view that wherever considered, the off-setting benefits defeat the claim of unjust enrichment.
3. Absence of a juristic reason for the defendant to retain the benefit
[22] The trial judge cited and applied Garland v. Consumers’ Gas Co. and Campbell v. Campbell (1999), 1999 2294 (ON CA), 43 O.R. (3d) 783 (C.A.) with respect to the final branch of the test, namely, whether the plaintiff demonstrated that there is an absence of a juristic reason for the enrichment of the defendant.
[23] Garland holds, at para. 44, that “[f]irst, the plaintiff must show that no juristic reason from an established category exists to deny recovery”. Campbell identifies the situation where the plaintiff conferred a benefit while acting voluntarily in his own self interest as an established category to deny recovery. There was evidence, including the cross-examination of the appellant, to support the trial judge’s finding that any benefit conferred to the respondent by Franco and Mary as a result of the renovations arose from Franco and Mary acting voluntarily and in their own self interest, and that, therefore, there was a juristic reason for the respondent to retain the benefit received by her.
[24] Campbell also holds, at para. 31, that “what is at the heart of the third requirement is the reasonable expectation of the parties, and whether it would be just and fair to the parties considering all of the relevant circumstances, to permit the recipient of the benefit to retain it without compensation to those who provided it.” The appellant submits that Matilda acquiesced in making the improvements. The trial judge carefully reviewed the evidence and concluded that Franco and Mary never indicated to Matilda any expectation of compensation for the improvements and he accepted Matilda’s evidence that she did not know of any agreement, obligation or understanding that she would compensate them.
[25] While the facts of this case are not on all fours with Campbell, the passage at para. 41 from the judgment of Borins J.A. is apposite to this appeal:
At most, the only reasonable expectation the respondents could have had of receiving some benefit in return for financing the improvements to the farm was the continued use of the farm, together with its buildings, equipment and herd, in running the dairy operation. The appellant never deprived the respondents of this use and did not intend to do so in the future. This reasonable expectation was defeated only as a result of the respondents’ own actions in deciding to sell the milk quota, which effectively brought the dairy operation to an end. In my view, the respondents did not arrive at this decision with the expectation that they would obtain some share in the farm in return for the improvements.
[26] Here, the reasonable expectation that Mary could continue to live on the farm following Franco’s death was defeated, not by anything done by Matilda, but by Mary’s own decision to leave the farm. She did not thereby become entitled to obtain a share of the proceeds from the farm in return for the improvements she and Franco had made.
[27] Nor are we persuaded that the trial judge erred by failing to find a reasonable expectation on the basis of the following exchange from Matilda’s cross-examination:
Q. And you knew that Franco was investing whatever money he had, or the majority of it, into the farm because he wanted to live there with his family possibly for the rest of his life?
A. I was happy for him to stay there as much as he wanted. And then once I, I [sic] was gone, then it was up to him and Luisa [his sister, who along with Franco was to inherit Matilda’s estate] to settle their things.
Q. Did you understand that Franco was going to compensate Luisa for the renovations he put into the house at the farm?
A. This I cannot answer. I don’t know that.
Q. Did you think it would have been fair to give Luisa half of the value of the improvements to the farm that you knew that your son was paying for?
A. I don’t – I, I [sic] don’t think so because they always got along very well and they would have got to some agreement without having to argue over things.
[28] We agree with the respondent that this passage does not show that Matilda conceded that it would be unfair if she did not compensate Franco for the improvements. The question posed to Matilda in cross-examination was clearly based upon the premise that the full value of the farm, including the improvements, was hers to give. Matilda’s answer indicates that she regarded the question of any consideration for the improvements to be not her obligation or duty, that she fully retained the right to dispose of her property as she saw fit, and that at best, she thought that after her own death, her daughter Luisa might see fit to make some allowance for the improvements made by Franco.
CONCLUSION
[29] For these reasons, the appeal is dismissed. Costs to the respondent fixed at $30,000 inclusive of disbursements and applicable taxes.
“Robert J. Sharpe J.A.”
“David Watt J.A.”
“Karakatsanis J.A.”
RELEASED: December 24, 2010