Court of Appeal for Ontario

Date: 20210719 Docket: C68527

Tulloch, Nordheimer and Jamal JJ.A.

BETWEEN

Ronald James MacIntyre Applicant (Respondent)

and

Igor Alexander Winter Respondent (Appellant)

Counsel: Carol Craig and Ira Marcovitch, for the appellant Michele D. Blais, for the respondent

Heard: May 31, 2021 by videoconference

On appeal from the judgment of Justice Mark P. Shelston of the Superior Court of Justice dated June 8, 2020 with reasons reported at 2020 ONSC 4376.

Nordheimer J.A.:

[1] Igor Alexander Winter (“Alex”) appeals from the judgment of the trial judge in which he determined various issues arising from the breakup of the relationship between Alex and the respondent, Ronald James MacIntyre (“Ron”). Those issues included claims for spousal support and claims arising out of the jointly owned home. Alex appeals only from the trial judge’s determination that there should be an equal division of the net proceeds of the sale of the home.

Background

[2] Alex and Ron began a relationship in 1994. They separated on February 5, 2017. The parties never married and have no children.

[3] At the time of trial, Ron was 57 years of age and had been under the care of a psychiatrist since April 2009. He stopped working in June 2010 due to mental health issues. Ron is in receipt of long-term disability benefits through the Canada Pension Plan and Manulife Financial.

[4] At the time of trial, Alex was 54 years of age. He had also been under the care of a psychiatrist since May 2009. Alex was employed as a staff psychiatrist at the Royal Ottawa Hospital and had private patients.

[5] About a year after their relationship began, the parties moved to Ottawa. Initially, they resided in Ron’s apartment there. While residing together, the parties considered buying a home. Alex’s mother provided $100,000 towards the purchase of the home. Alex and Ron were pre-approved for a mortgage.

[6] On January 14, 1999, the parties purchased their first home, as joint tenants. There was a joint mortgage secured against the property. The parties agreed that Ron would be responsible for the mortgage payments and Alex would be responsible for all of the other expenses associated with the home. Alex provided the deposit of $5,000 and $99,081.92 as the down payment to purchase the home.

[7] Some six years later, on December 12, 2005, the parties purchased a new, more expensive, home in Arnprior, Ontario. A joint mortgage and line of credit were secured against the property. The purchase of the residence was financed through the mortgage, the proceeds of sale of the first home, and additional monies contributed by Alex, as I shall explain below.

[8] Unfortunately, after moving into their new home, the parties experienced harassment from other residents in the area because they were a same-sex couple. This harassment was serious enough that it involved the local police. The harassment caused significant damage to the mental health of both Alex and Ron. It also placed a great deal of strain on their relationship.

[9] In September 2016, Alex told Ron that he wanted to separate. After discussing the issue, the parties did not separate but, by January 2017, the relationship had deteriorated. On February 5, 2017, Ron told Alex the relationship was over. Alex was very upset and asked Ron to reconsider. Ron left the home, rented a room, and never reconciled with Alex.

[10] The Arnprior property was appraised in October 2016 at $1,400,000. Alex’s claim was for an order that he receive the first $480,248.82 of the net proceeds of the sale of the property, representing his initial contributions, and that the balance be divided equally between him and Ron. Alex’s position was that the presumption against gifts applied to his contribution of the down payment towards the property and that his intent was always that the down payment monies would be returned to him if the property was ever sold.

The Decision Below

[11] Ron commenced an application in which he sought indefinite spousal support on a compensatory and non-compensatory basis. The trial judge found that Ron did not have an entitlement to spousal support on a compensatory basis. However, the trial judge did find that Ron had an entitlement to spousal support on a non-compensatory basis. The trial judge ordered Alex to pay Ron spousal support of $269 per month on an indefinite basis, subject to variation in the event of a material change in circumstances. The trial judge further ordered that Alex designate Ron as the irrevocable beneficiary of a life insurance policy with a minimum amount of $50,000 for so long as Alex has an obligation to pay spousal support to Ron.

[12] Lastly, on the issue of spousal support, the trial judge ordered Ron to pay Alex the sum of $72,558 for the overpayment of spousal support from February 1, 2018 up to and including June 2020. The trial judge further ordered that this amount was to be deducted from Ron's share of the net proceeds of sale of the home after he rendered his decision on the costs of the proceeding.

[13] The final issue was the division of the net proceeds of sale of the Arnprior home. Ron sought an equal division. Alex sought payment of the first $480,248.82 of the net proceeds of sale of the Arnprior home based on the fact that he had contributed the deposit and down payment, totalling $104,081.92 on the purchase of the first home, and then contributed additional amounts, totalling $514,333.20, to the purchase of the second home.

[14] The trial judge ordered an equal division of the proceeds of sale of the Arnprior home. He found that there never was an intention that Alex was to be repaid the deposit and down payment. Rather, the trial judge found that Alex intended to gift the deposit and down payment to Ron as part of their financial arrangements for the purchase and use of the homes.

Analysis

[15] On Alex’s appeal from the finding that there should be an equal division of the proceeds of sale of the home, he raises the following issues:

1. The trial judge unevenly scrutinized the evidence in relation to each party’s credibility.
2. The trial judge misapprehended the evidence used to assess each party’s credibility.
3. The trial judge erred by failing to consider that, by placing the properties in joint tenancy, Alex only intended to gift a right of survivorship.
4. The trial judge misapprehended the evidence in relation to the source of the funds for the down payments on the two homes.
5. The trial judge erred in finding that Alex gifted the down payments.

[16] In my view, the central issue to be determined is the fifth issue, that is, the finding of gift. If that issue is determined in Alex’s favour, the other issues become irrelevant. Indeed, that was the approach that counsel took in argument before us. That said, these issues overlap to some extent such that the analysis of the fifth issue will necessarily engage comment on some of the other issues.

[17] The leading decision on the subject of gifting is Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. In that decision, Rothstein J. confirmed that two presumptions, that is, the presumption of a resulting trust and the presumption of advancement, continue to have a role to play in disputes over gratuitous transfers. He said that the presumptions “provide a guide for courts in resolving disputes over transfers where evidence as to the transferor's intent in making the transfer is unavailable or unpersuasive”: at para. 23.

[18] The presumption of advancement does not apply in this case. Neither party suggests that it does. Rather, it is the presumption of a resulting trust that is in play. With respect to that presumption, Rothstein J. said, at para. 24:

The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended. This is so because equity presumes bargains, not gifts. [Citations omitted.]

[19] The trial judge referred to Pecore towards the beginning of his analysis. He then correctly stated: “Ron has the burden of proof to prove, on a balance of probabilities, that Alex intended to gift Ron the monies used to purchase both the Ottawa and Arnprior properties.”

[20] Unfortunately, the trial judge does not appear to have employed this approach in his analysis of the issue. Rather, in his analysis, the trial judge became focussed on a lengthy consideration of many credibility issues. While the trial judge ultimately found that there were problems with both Ron’s and Alex’s evidence, he favoured Ron’s evidence. However, for reasons that I shall explain, given the nature of the issue to be determined, credibility was not the central concern.

[21] On the issue of the status of the monies contributed by Alex to the purchase of both homes, there were two different stories. Alex’s evidence was:

Q. I was just asking if you and Ron had any other discussions about the down payment? A. Yeah. Because the money, I had always referred to it as – as my mum’s money because it was money that she had given me not my dad and it was meant for me down the road to just to provide me with some security. So, I would’ve wanted to ensure that that money [would have] been safe. So, whatever property we were putting it into we’d have to make sure that it was a – a good investment, and that I would be receiving the monies back in the event that the house would – or property, at that point, would sell. Q. Okay. And so, were you quite clear on that condition? A. Yes, I was.

[22] Ron’s evidence was different. His evidence on the subject was:

Q. And was there an agreement – oral or written to the effect that if you separated, the amount of Alex’s contribution to the down payment would be returned to him? A. No. Q. Did you ever talk about it? A. No.

[23] The trial judge did not directly address the divergence in the evidence on this point. However, it seems implicit in the findings that the trial judge did make that he rejected Alex’s evidence that there was an express discussion respecting his intention.

[24] Accepting that is the case, one must examine the balance of the evidence to determine what the intention was with respect to the monies that Alex contributed to the purchase of the two homes. In considering that issue, the trial judge failed to address the central point that arises from the presumption, that is, the intention of the transferor, namely, Alex. Contrary to the respondent’s submission, it is not the intention of both parties that is relevant. This central point was made clear in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, where Cromwell J. said, at para. 18:

The Court's most recent decision in relation to resulting trusts is consistent with the view that, in these gratuitous transfer situations, the actual intention of the grantor is the governing consideration: Pecore v. Pecore, 2007 SCC 17, at paras. 43-44. As Rothstein J. noted at para. 44 of Pecore, where a gratuitous transfer is being challenged, "[t]he trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor's actual intention ". [Emphasis in original.]

[25] On this point, the nature of the onus or burden that rests on Ron, in terms of rebutting the presumption, is the civil standard of a balance of probabilities. In other words, Ron must establish, on a balance of probabilities, that it was Alex’s intention to gift these monies: Pecore, at para. 43. The standard of proof on a balance of probabilities requires “clear, convincing and cogent” evidence: F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 46.

[26] The trial judge did not commence his analysis with these principles in mind, which constitutes an error of law. Indeed, the trial judge does not appear to have ever focussed solely on Alex’s intention.

[27] The trial judge cited eleven factors to support his conclusion that Alex intended to gift the monies to Ron. However, some of those factors are just variations on the same factor. When those variations are eliminated, the eleven factors reduce to six: the length of time Alex and Ron lived together; their agreement on who would be responsible for which expenses associated with the home; the lack of a document evidencing Ron’s obligation to repay the monies advanced by Alex; their decision to register the home as joint tenants and that the home would go to the surviving partner if either of them predeceased the other; the absence of any reference to repayment in Ron’s will; and their decision to deposit the sale proceeds of the first home in a joint bank account.

[28] In considering these six factors, half of them do not relate to the issue of Alex’s intention at the time of the transfer of the funds. For example, the length of time that the two had been living together; their agreement on who would be responsible for which expenses associated with the ongoing ownership of the home; and the absence of any reference to repayment in Ron’s will, do not go to the issue of Alex’s intention at the time that the monies were contributed, and that is the time that is relevant: Pecore, at para. 5.

[29] I then turn to the remaining three factors. First, the trial judge found that it was not credible that Alex would, on the one hand, not require Ron to repay the down payment and deposit if Alex died, but that he would insist upon payment if there was no death. There is nothing inherently incredible about that position and the trial judge does not point to any evidence, other than his own view, that would support his conclusion.

[30] What the evidence of both Alex and Ron did establish was that the home was put in joint tenancy to ensure that, if either Alex or Ron predeceased the other, the home would go to the surviving partner. Both parties wanted to ensure that there would not be any issue over that happening. They were a same sex-couple that had already experienced negative reactions to their relationship. They clearly did not want to create a situation where third parties could attempt to interfere with the survivor’s right to the home. On this point, it is important to remember that Alex had been involved in extensive litigation with his siblings over his mother’s estate, that also involved his joint interest in a property.

[31] In fact, the trial judge expressly found that this was the purpose behind having the homes put into joint tenancy. He said, “I accept Ron's evidence that Ron and Alex decide[d] to register the properties as joint tenants because they were joint owners as well as to avoid any litigation in the event of the death of one of them”.

[32] However, the trial judge does not appear to have recognized that survivorship can be separated from the intent to gift. It was possible to accept both Alex’s assertion that his intent at the time of the purchase of the home was to receive back the funds he deposited if the house was ever sold, and, at the same time, to accept that Alex intended Ron to have survivorship benefits if he predeceased Ron.

[33] The trial judge erred in extrapolating from the fact of joint tenancy, entered into with the intention of Ron taking a right of survivorship in the homes, to a finding of an intention to gift Ron the funds contributed by Alex for the acquisition of the homes. The point that a right of survivorship alone is not sufficient to rebut the presumption of a resulting trust that operates during the parties’ joint lives is clearly made in Mark Gillen, Lionel Smith & Donovan W.M. Waters, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada, 2012), at § 10.II.B.2 (WL):

If A supplies the purchase money and conveyance is taken in the joint names of A and B, B during the joint lives will hold his interest for A; B will also hold his right of survivorship—again by way of a resulting trust—for A's estate, because that right is merely one aspect of B's interest. In other words, the starting point is that B holds all of his interest on resulting trust for A, or A's estate. However, evidence may show that, while A intended B to hold his interest for A during the joint lives, it was also A's intention that, should he (A) predecease, B should take the benefit of the property. The presumption of resulting trust would then be partially rebutted, in relation to the situation that has arisen, so that B would not hold his interest (now a sole interest and not a joint tenancy) on resulting trust. He would hold it for his own benefit. [Footnote omitted.] [Emphasis added.]

[34] To assert an “immediate gift” of the “beneficial ownership” of the funds contributed by Alex, Ron “must, in Rothstein J.’s words, ‘rebut the presumption of resulting trust by bringing evidence to support [his] claim’”: Bergen v. Bergen, 2013 BCCA 492, 52 B.C.L.R. (5th) 258, at para. 42, citing Pecore, at para. 41; see also Christopher v. Freitas, 2019 ONCA 84, at para. 5. The trial judge erred by ignoring this requirement.

[35] Second, the trial judge relied on the fact that the proceeds of the sale of the first home were paid into the parties’ joint bank account to conclude that Alex did not intend to be repaid the monies he had advanced. Such a conclusion ignores the salient fact that the two were in the process of buying a new home. The purchase of that new home was being financed, in part, by the proceeds of sale from the first home. If Alex had asked for his monies back at that time, the purchase of the new home would not have been completed, which would have been fundamentally inconsistent with the parties’ intention to buy a new home. The trial judge’s reasoning on this point amounts to a non sequitur.

[36] Third, the trial judge found that that it was not “credible that Alex would invest approximately $100,000 into a property and not secure the repayment with a document in writing”. Alex said that he did not ask for a document, at the time, because that is not how his parents had dealt with such matters and, also, because he trusted Ron. The trial judge rejected the former reason and did not address the latter.

[37] In rejecting the former reason, the trial judge failed to reconcile his conclusion regarding the likelihood of Alex’s actions, with the fact that, after the end of the relationship, Alex provided a $250,000 loan to a person, with whom he had become involved, and who was purchasing the home. There was no documentation for this loan either but, in this situation, the trial judge fully accepted that Alex had advanced the monies as a loan. Indeed, the trial judge imputed interest income from that loan in determining Alex’s income for spousal support purposes.

[38] Our courts are strewn with cases where people in a relationship wound up in litigation because they did not take a commercial approach to their domestic arrangements from the outset. This is just another of those cases. While it may be regrettable, it does not change the fact that it is a very frequent reality. Although the absence of contemporaneous documentation is a relevant consideration (see Chao v. Chao, 2017 ONCA 701, at para. 54), the absence of such documentation by itself is not necessarily sufficient to conclude that a gift was intended. The most that the evidence establishes, even taken entirely from Ron’s point of view, is that the issue was simply not discussed – an understandable result in a domestic relationship. It is precisely in such situations, where the evidence is insufficient, that the presumption of a resulting trust “determine[s] the result”: Pecore, at paras. 22, 44. The trial judge erred by losing sight of this principle.

[39] On a final point, the trial judge also found that there was “no document corroborating either party’s version.” It is unclear to me what that is a reference to. If the trial judge meant that there was no document establishing a gift from Alex to Ron, that is certainly correct. However, if the trial judge meant that there was no document evidencing the source of the funds, that is incorrect. Alex produced a bank statement for a personal account that he held, and from which the down payment of about $100,000 for the first home was obtained. Regardless of the circumstances in which that bank statement was ultimately produced, its existence would appear to negate any suggestion that the $100,000 did not come from Alex’s funds. Ron ultimately seems to acknowledge that reality, but then contends that the ultimate source of these funds was Alex’s mother who, he says, intended to gift the monies to both of them. There is no evidence to support that contention. Ron did not have any discussions with Alex’s mother about any such gift, nor could he point to any other independent evidence that would establish that Alex’s mother intended to make a gift to the two of them rather than to Alex alone.

[40] In order to establish a gift, Ron had to satisfy three conditions: there must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration; (2) an acceptance of the gift by the donee; and (3) a sufficient act of delivery or transfer of the property to complete the transaction: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 24.

[41] Mindful of the need to guard against self-serving evidence or evidence that reflects a change of intent, the only direct evidence of Alex’s intention is from Alex himself. He said that he intended to receive back the down payment monies if the house was ever sold. The evidence that a significant portion of these monies came from Alex’s mother as gifts to him alone and that Alex subsequently loaned a significant amount of money to another individual, also without documentation, supports his stated intent. In the absence of clear, convincing, and cogent evidence to the contrary, Ron, who bears the burden of rebutting the presumption of a resulting trust, cannot succeed. The trial judge’s findings, insofar as they relate to this specific issue, are insufficient to discharge that burden.

Conclusion

[42] I would allow the appeal, set aside paragraph 11 of the order below, and in its place make an order that Alex is to be paid the sum of $480,248.82, together with accrued interest, from the proceeds of sale of the property located at 421 Gillies Grove Road, Arnprior, Ontario. The remaining balance is to be split equally between the parties, subject to Ron repaying the amount due for the overpayment of spousal support.

[43] The appellant is entitled to his costs of the appeal fixed in the amount of $25,000 inclusive of disbursements and HST. In terms of the costs of the trial, I would set aside the costs award at trial and make no order as to costs, given the divided success at that level.

Released: July 19, 2021 “M.T.” “I.V.B. Nordheimer J.A.” “I agree. M. Tulloch J.A.” “I agree. M. Jamal J.A.”