COURT OF APPEAL FOR ONTARIO

CITATION: Junker v. Hughes, 2016 ONCA 81

DATE: 20160128

DOCKET: C60137

Gillese, MacFarland and van Rensburg JJ.A.

BETWEEN

Michael Lorne Junker

Applicant/Respondent

and

Lisa Ann Hughes

Respondent/Appellant

Michelle Kropp (agent for Tony Sferruzzi, lawyer on record) and Kenneth Peacocke, for the appellant

Joseph A. Irvine, for the respondent

Heard: January 20, 2016

On appeal from the judgment of Justice Alissa K. Mitchell of the Superior Court of Justice, dated February 13, 2015.

ENDORSEMENT

[1] The parties, who never married, separated in November 2007 after a relationship of seven years. The action proceeded to trial in 2015 on two claims that remained to be resolved: the respondent’s constructive trust claim against the proceeds of sale of the appellant’s property (a house they lived in together during the relationship), and the appellant’s claim for child support (which included the determination of the respondent’s income, s. 7 expenses and a claim for retroactive child support).

[2] Two issues were raised on appeal.

(1) Retroactive Child Support Claim

[3] The first issue concerns the trial judge’s determination that the respondent had overpaid child support by $8,211, and her consequent dismissal of the appellant’s claim for retroactive support. The appellant asserts that the trial judge erred in her findings, in particular with respect to the amount of the overpayment. She says that there are entries in the bank records produced by the respondent that correspond to payments made in respect of his other children’s expenses. The trial judge ought not to have credited those expenses as support for their child.

[4] It emerged during oral argument on the appeal that the appellant’s real concern here is that the respondent might take steps to recover the overpayment from her, or to credit such amount against his future child support obligations.

[5] The respondent did not pursue any such claim at trial. The trial judge observed that the respondent did not ask for repayment of amounts overpaid, and she stated that “no such order will be made”. From this, we conclude that the issue of the overpayment, as well as its possible effect, are res judicata. The respondent is not entitled to claim any relief, whether by credit or otherwise, in respect of such overpayment. The respondent’s counsel did not attempt to argue otherwise.

[6] In these circumstances, the appellant’s counsel advised that she would not proceed with this ground of appeal.

(2) Constructive Trust Claim

[7] The remaining issue is whether the trial judge erred in awarding the respondent damages for a constructive trust claim against the appellant’s property.

[8] The property in question is the house where the couple (and their son after his birth in 2001) lived together until their separation in 2007. The house was purchased in 2000 by the appellant for $272,000. The appellant made the down payment of $147,000, and title was taken in her name. The respondent did not contribute to the down payment. The balance of the purchase price was financed by the appellant with a mortgage in the sum of $125,000, with monthly payments of $1,604.45, maturing in July 2007. The house was sold in 2010 for $445,000. There was no evidence of the value of the house at the time of separation.

[9] The respondent, who is a contractor, asserted that he made improvements to the property, including finishing the basement area and installing a patio. He did not have any documents to support his claim, and did not provide a breakdown of the cost of the work. It is not disputed, however, that he did the work. The respondent also contended that he made financial contributions, including cash payments, payments for household bills, and contributions to the payment of the mortgage. He estimated the total value of his contributions at $86,500.[^1]

[10] The appellant testified at trial as to the parties’ intentions regarding the house and their finances. She was to be sole owner of the house. The respondent agreed to pay rent of $550 per month, but only started paying this amount in 2005, after he had paid back some $55,000 in loans the appellant made to him from her line of credit to meet his various personal obligations. She asserted that any contribution the respondent made, whether financial or in services provided, was in lieu of rent. The appellant also testified that the parties agreed they would not assert a claim against each other’s property after separation, including their respective business interests.

[11] The trial judge concluded that the respondent had proven his claim for unjust enrichment. She found enrichment of the appellant by the increase in value of the property during the period the parties lived together. She observed that, during this period, the mortgage was repaid and the value of the property significantly increased in part as a result of the contributions of the respondent, including the improvements he made to the property. She further found that, based on information in the parties’ financial statements, neither party earned sufficient income on their own which would have permitted early repayment of the mortgage.

[12] The trial judge found a corresponding deprivation, accepting that the respondent made the contributions without compensation and with the expectation he was doing so for the maintenance, preservation and improvement of the property for the collective benefit of the family. She concluded that there was no juristic reason for the deprivation. She specifically rejected the appellant’s characterization of the respondent as a renter, especially after their child arrived, and the appellant’s contention that they agreed to retain ownership of their respective property. This was belied by the fact that the respondent gave each of the appellant and the child an interest in his holding company. The trial judge concluded that there was a nexus between the efforts of the parties and the accumulation of equity in the property.

[13] As for remedy, the trial judge noted that a monetary restitutionary award was impossible to quantify based on the evidentiary record. After considering various aspects of the evidence (which she listed at para. 36 of her reasons), she found that the parties were involved in a joint family enterprise, a “common venture in which they expected to share the benefits flowing from the wealth that they jointly created”. She awarded the respondent the lesser of (i) one-half the net proceeds of sale of the property, less repayment to the appellant of $147,000 (the amount of her down payment), and (ii) $86,500, the amount claimed by the respondent.

[14] On appeal, the appellant says that there was no evidence of deprivation by the respondent as a result of his contributions to the house, as he contributed no more than his share of joint expenses. She also contends that the trial judge’s finding that there was a joint family venture was not supported by the evidence, and that the evidence was in fact all to the contrary. The appellant further asserts that the evidence did not support the damages award, as the respondent could not prove that he contributed the amount he claimed.

[15] All of these arguments seek to challenge the trial judge’s findings of fact.

[16] As a preliminary matter, we note that the parties were self-represented at trial. The record was less than ideal. However, the trial judge, who was in the best position to do so, concluded that the trial should proceed notwithstanding certain deficiencies in financial disclosure.

[17] While it would have been desirable for the parties to have supplied documentary evidence relating to their financial affairs and the house in particular (for example, there were no records respecting repayment of the mortgage, and only some bank records were produced), the trial judge was entitled to assess the respondent’s claim based on the parties’ testimony and the limited records that were available. In our view, the conclusions she reached in her unjust enrichment analysis and in finding a joint family venture were supported by the evidence.

[18] The trial judge accepted the respondent’s evidence about the contributions he had made. On the question of deprivation, she concluded that the respondent made the contributions without compensation and with the expectation he was contributing to the property for the collective benefit of the family. This finding was open to her on the evidence, particularly after she rejected the contention that the respondent’s contributions were in lieu of rent.

[19] On the question of joint family venture, the trial judge considered how the parties had conducted themselves during their cohabitation. She considered, among other things, the improvements to the property without expectation of compensation, the granting of minority interests in the respondent’s company to the appellant and their son when it was incorporated in 2004, the fact that the appellant wrote cheques on the respondent’s bank account for his share of household expenses, and the fact that both parties worked full-time and contributed their earnings to the joint expenses of the household, including the cost of childcare. While the trial judge did not expressly consider the evidence under the various headings in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 100 (mutual effort, economic integration, actual intent and priority of the family), she clearly considered all of these factors. The finding that there was a joint family venture in this case was open to the trial judge on the evidence.

[20] Further, we do not accept the appellant’s submission that the evidence was that the only payments the respondent made, other than loan repayments, were in the final two years of the relationship. Bank statements were only available for that period, and the trial judge accepted the respondent’s testimony that he had contributed to household expenses throughout the relationship, including some payments in cash. Further, having regard to the parties’ incomes, the only way the mortgage could have been paid down early was if both had contributed.

[21] Finally, the appellant contends that the finding of joint family venture did not remove or lessen the burden on the respondent to quantify and prove his contributions. She says that there was no evidence to support the award of damages by the trial judge, and that after finding that there was a joint family enterprise, she simply awarded the respondent the lesser of one half of the net proceeds from the sale of the property after repayment to the appellant of $147,000, and $86,500 (the amount of his claim). She ought to have determined the respondent’s proportionate contribution before making the order she did.

[22] We do not find reversible error here. The appropriate remedy in a joint family venture case is “a share of the wealth accumulated through the parties’ joint efforts proportionate to the claimant’s contributions”: Kerr, at para. 102. Contrary to the appellant’s submissions, that would not entail a detailed review of the respondent’s contributions (akin to a quantum meruit approach); indeed, as the court stated in Kerr, also at para. 102, “[w]hile determining the proportionate contributions of the parties is not an exact science, it generally does not call for a minute examination of the give and take of daily life. It calls, rather, for the reasoned exercise of judgment in light of all of the evidence.”

[23] It would have been preferable for the trial judge, after concluding that there was a joint family venture, to have specifically addressed the proportionate contribution of the respondent to the increase in value of the house. That said, implicit in her decision is the finding that the parties had contributed equally to the increase in value of the house during their cohabitation. In any event, the sum of $86,500 (which was the amount ultimately awarded to the respondent) may be regarded as 29% of the net proceeds of the house, after crediting the appellant for her down payment. In all of the circumstances of the case, an award of damages reflecting such a contribution by the respondent is justified on the evidence.

[24] In the course of her argument respecting the evidence, the appellant’s counsel referred to the fact that the trial judge used the value of the house when it was sold in 2010, rather than at the time of separation. As already noted, the record in this case was not ideal, and neither party tendered evidence of the value of the house at the time of separation. The trial judge’s use of the sale price in 2010 in the circumstances of this case is not a reversible error.

[25] The appeal is accordingly dismissed. Costs to the respondent fixed at $10,000, inclusive of disbursements and applicable taxes.

“E.E. Gillese J.A.”

“J. MacFarland J.A.”

“K. van Rensburg J.A.”

[^1]: This amount happens to correspond to one half of the difference between the purchase price of the property ($272,000) and its sale price ($445,000), although this fact is not mentioned in the reasons for judgment, and did not form part of the parties’ arguments on appeal.