COURT OF APPEAL FOR ONTARIO

CITATION: Hartstein v. Ricottone, 2016 ONCA 913

DATE: 20161201

DOCKET: C61819

Simmons, Pepall and Huscroft JJ.A.

BETWEEN

Michael Hartstein

Appellant (Plaintiff)

and

Dino Ricottone, Danny Ricottone and Christina Tanya Gulka

as Estate Trustees of the Estate of Anna Ricottone

Respondents (Defendants)

Frederick E. Leitch, Q.C., for the appellant

Michael W. Fowler, for the respondents

Heard: November 16, 2016

On appeal from the judgment of Justice Patrick J. Flynn of the Superior Court of Justice dated February 17, 2016, with reasons reported at 2016 ONSC 1102.

ENDORSEMENT

[1] Following the hearing of this appeal, we dismissed the appeal for reasons to follow. These are our reasons.

[2] The trial judge dismissed the appellant's action claiming ownership of two cottage properties and found that the two properties, which were once owned by the appellant, are owned by the estate trustees of the appellant's former common law spouse. The appellant appeals from that decision.

A. Background

[3] At a time when he was experiencing financial difficulties, and after obtaining advice from a lawyer, the appellant transferred the two cottage properties to a friend and to his sister and brother-in-law, respectively, subject to a right of repurchase.

[4] As part of resolving his financial difficulties, the appellant sold the house where he and his common law spouse, Anna Ricottone, were living and they moved to one of the cottage properties. When the appellant later repurchased the two cottage properties, he directed that title be taken in the name of his former common law spouse.

[5] The appellant and his former common law spouse subsequently separated.

[6] The appellant sued his former common law spouse, claiming that she held the two cottage properties in trust for him.

[7] The appellant's former common law spouse died before the action came to trial.

[8] At trial, the appellant relied on discussions he alleged had occurred when the cottage properties were transferred, on subsequent statements by his former common law spouse and on an unsigned trust declaration regarding one of the cottage properties that had been prepared in 2013. He also relied on paragraph 10 of a cohabitation agreement he and his common law spouse had entered into when they began living together, which specified that the parties’ original "family residence or its substitute shall be owned by [the appellant], registered in the name of [the appellant] and shall remain the exclusive property of [the appellant] at all times.”

[9] In response, the estate trustees disputed the existence of a trust and also relied on the cohabitation agreement as a whole, including paragraphs 12, 13, and 14, which excluded the operation of presumptions of resulting or constructive trust, subject to an exception for trusts established in writing; specified that property held in the name of one party would be deemed to be owned by that party; and set out mutual releases for, among other things, claims arising from a transfer of property without consideration.

[10] In dismissing the appellant's action, the trial judge found that there was no written trust declaration for the cottage properties; that the evidence fell short of establishing an express oral trust; that a claim based on an express oral trust would, in any event, be barred by s. 9 of the Statute of Frauds, R.S.O. 1990, c. S.19; and that there was no fraud on the part of the appellant's former common law spouse. He construed the cohabitation agreement as a whole and determined that the appellant's claim was barred by its provisions.

B. Discussion

[11] The appellant raises two main issues on appeal.

[12] First, he argues that the trial judge erred in his interpretation of the cohabitation agreement by favouring general terms of the cohabitation agreement over the more specific terms. Further, he submits that this error constitutes an extricable error of law subject to review on a correctness standard.

[13] We do not accept this argument. The argument focuses on paragraph 10 of the cohabitation agreement dealing with the family residence. However, even that paragraph makes it clear, that to protect a substitute residence, the substitute residence was to be registered in the appellant's name. Read as a whole, the cohabitation agreement makes it clear that, subject to a written variation of the cohabitation agreement or other written instruments, ownership rights are governed by title. Paragraph 10 of the cohabitation agreement is consistent with this requirement. The trial judge’s interpretation did not favour general provisions of the cohabitation over the more specific.

[14] In any event, absent extricable legal error – of which none has been demonstrated – the trial judge's interpretation of the cohabitation agreement is entitled to deference: Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633.

[15] Second, the appellant argues that the trial judge erred in failing to find that a trust was created when the properties were transferred to the appellant's former common law spouse.

[16] We cannot accept this argument. The trial judge did not accept the appellant's version of the events surrounding the transfer of the properties and concluded the evidence was not satisfactory to create an express oral trust. Further, the trial judge concluded, correctly in our view, that there was no written trust agreement. In any event, even if the trial judge had found an express oral trust, the cohabitation agreement makes it clear that, in the absence of a written agreement, property is owned by the party in whose name it is registered.

C. Disposition

[17] Based on the foregoing reasons, the appeal is dismissed with costs to the respondents on a partial indemnity scale in the agreed upon amount of $10,000 plus disbursements.

“Janet Simmons J.A.”

“S.E. Pepall J.A.”

“Grant Huscroft J.A.”