Court of Appeal for Ontario

Date: October 23, 2018 Docket: C64367

Judges: Strathy C.J.O., Nordheimer J.A. and McKinnon J. (ad hoc)

Between

Aliki Effie Milionis Applicant

and

Donald Xavier Rivas Respondent (Respondent)

and

Taxiarchis Milionis and Tsambica Milionis Appellants (Added Parties)

Counsel

Patrick Di Monte, for the appellants

Paul Slan, for the respondent

Heard: October 18, 2018

On Appeal

On appeal from the order of Justice Mario D. Faieta of the Superior Court of Justice, dated August 25, 2017 with reasons reported at 2017 ONSC 5001.

Reasons for Decision

Background

[1] The appellants appeal from the summary judgment granted by the motion judge in favour of the respondent in which the motion judge found that there were no monies due and owing under a mortgage.

[2] This issue arises in the context of a family law proceeding between the applicant wife and the respondent husband. The appellants are the parents of the wife and were added as parties to the proceeding because of the existence of a mortgage on the matrimonial home in which the respondent and his wife were the mortgagors and the appellants were the mortgagees. The respondent sought to have the mortgage removed from the Net Family Property calculations because it was "invalid".

[3] The central issue is whether the mortgage secures loans made by the appellants to the respondent and his wife or whether the monies advanced by the appellants were, in fact, gifts. The motion judge concluded the latter and that, consequently, there were no advances made under, or secured by, the mortgage.

Facts

[4] For the purposes of this appeal, it is not necessary to delve deeply into the facts. They are set out in detail in the motion judge's reasons. The applicant wife is the sole child of the appellants. She and the respondent have five children. In the course of their marriage, they purchased a sequence of family homes over a period of five years, all with the financial assistance of the appellants.

[5] The current matrimonial home was purchased in 2000. There was a conventional mortgage given as part of the purchase. In May 2004, the respondent changed employment with a consequent reduction in his income. This development placed the respondent and his wife in a tight financial situation. The respondent's wife brought this situation to the attention of her parents who provided some initial financial assistance. Eventually, the appellants agreed to provide further financial assistance to their daughter and the respondent by agreeing to pay off the existing mortgage. While the appellants agree that they did this, they say that the funds they provided to pay off the mortgage were made by way of a loan and not as a gift.

[6] The discussions about paying-off the existing conventional mortgage began in mid-2004 as a consequence of the financial problems that the respondent and his wife were experiencing. That mortgage was actually paid off in February 2005. In July 2005, the mortgage in question was registered on title.

[7] The appellants say that the mortgage was registered on title to secure the loans that they had made to their daughter and the respondent that permitted them to pay off the existing mortgage. The delay in registering the mortgage, according to the appellants, arose from the fact that they left the country after the conventional mortgage was paid off and they did not have time to deal with lawyers about getting the mortgage registered until they returned.

[8] The respondent says that there was never any discussion of a mortgage at the time. Rather, and out of the blue, the respondent says that his wife told him in July 2005 that her father wanted a mortgage on the home. The respondent says that he was baffled by this request and immediately approached the appellant father about it. A tense exchange occurred between the two in the course of which the respondent told the father that he could have the whole house if he wanted and the appellant father responded by saying that he wanted a mortgage for an even greater amount than he had originally asked for.

[9] The respondent and his wife did provide the mortgage and they did so after receiving independent legal advice. In addition, they signed an acknowledgement that they "had already received the total proceeds of the mortgage". The respondent says that he signed the mortgage, and related documents, in order to keep his wife happy. The respondent says that they were, at that time, in love and they had five young children. The respondent says that he was concerned that if he refused to sign the mortgage, the appellant father would be upset and that this would cause problems for the whole family relationship. The respondent also says that his wife continually assured him that the mortgage was just a mechanism to make her father feel better and that the house would always be theirs. There was apparently no further discussion about the mortgage until some 10 years later when the respondent and his wife separated.[1]

Legal Analysis

Presumption of Resulting Trust

[10] The central issue before the motion judge was whether the monies provided by the appellants to pay off the conventional mortgage were a gift or a loan. The motion judge correctly set out the law in question including the basic principle that there is a presumption of a resulting trust in a situation where there is a transfer of property from a parent to an adult child: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 at para. 40. That presumption can, of course, be rebutted.

Motion Judge's Fact-Finding Powers

[11] In reaching his conclusion, the motion judge said, at para. 56:

Having considered the evidence submitted by the parties, I am satisfied that I cannot fairly resolve the matter on the contested record alone and that it is fair and appropriate to use the expanded fact-finding powers rather than requiring a trial or mini-trial on the issue of whether the transfers were intended to be loans or gifts.

[12] In making this statement, we take it that the motion judge was satisfied that it was fair for him to go beyond the written record to weigh the evidence, evaluate credibility and draw inferences from the cross-examinations, to make the factual findings that he did. This was not a case where there was any viva voce evidence heard through a mini-trial or the like.

[13] While other judges might have chosen to hear directly from the parties before making the factual findings that the motion judge did here, we cannot say that the failure to do so in this case represents an error in principle that would warrant interference by this court.

Factual Findings

[14] Having resorted to these fact-finding powers, the motion judge said, at para. 58:

I do not accept Tasos' [the appellant father] evidence that the many transfers of money were loans. He stated that each of the transfers constituted a loan however, as noted earlier, there was no evidence that the Parents at the very least told Aliki and Xavier that those transfers were loans or that he communicated the loan terms of each transfer to Aliki and Xavier. I accept Xavier's evidence that the Parents never suggested to him until June or July 2005 that the transfers made from 2000 to 2005 were loans.

[15] It was open to the motion judge to make those findings of fact, and this court ought not to interfere with them unless the appellants can establish that they represent palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 10. The appellants have failed to do so.

Supporting Circumstances

[16] The motion judge set out his reasons for reaching these findings of fact. In that regard, the history of the dealings between the appellants, their daughter and the respondent, prior to the mortgage, strongly suggest that all of the financial assistance provided by the appellants was intended to be by way of gifts and not loans. For example, there was never any request for any form of security documentation with respect to any of this financial assistance. There is also the salient fact that, after the conventional mortgage was paid off, the appellants, their daughter, and the respondent, all went out for a celebration of the fact that the daughter and the respondent were "mortgage free". This event is inconsistent with the appellants' position that the respondent and their daughter had simply replaced one mortgage for another, even if the latter mortgage was much more favourable in its terms.

Conclusion

[17] The appeal is dismissed. The appellants will pay to the respondent his costs of the appeal fixed in the agreed amount of $10,000.

"G.R. Strathy C.J.O."

"I.V.B. Nordheimer J.A."

"Colin McKinnon J."

Footnote

[1] It should be noted that the mortgage provided to the appellants did not require any payments of interest or principal to be made until the mortgage matured.