Court of Appeal for Ontario
Date: 2024-05-27 Docket: COA-23-CV-0815
Judges: van Rensburg, Sossin and Dawe JJ.A.
In the Matter of
The Estate of Violet Manoushag Hougassian, deceased
Parties
BETWEEN: Solina (Solinee) Bradshaw personally and in her capacity as named Estate Trustee of the Estate of Violet Manoushag Hougassian, deceased Plaintiff (Respondent)
AND: Jack Hougassian*, Sona Shea and JDJ Management Inc.* Defendants (Appellants*)
Counsel: Jarvis K. Postnikoff, for the appellants Lionel Tupman and Devin McMurtry, for the respondent
Heard: May 9, 2024
On Appeal From: The judgment of Justice Andrew A. Sanfilippo of the Superior Court of Justice, dated June 26, 2023, reported at 2023 ONSC 3266.
Reasons for Judgment
Dawe J.A.:
[1] For ease of reference, I will refer to the parties by their first names. I mean no disrespect by this.
[1] The appellants appeal from a judgment finding that the respondent estate has a beneficial interest of 26% of the value of a house owned by the appellant, JDJ Management Inc., which is a corporation controlled by the appellant Jack Hougassian.
[2] Mr. Hougassian and the respondent, Solina Bradshaw, are both children of the late Violet Hougassian. Ms. Bradshaw is the executor of their mother’s estate.
[3] In 1980, Jack purchased a house in Cambridge, Ontario for $38,500. He and Violet both signed the agreement of purchase and sale, but only Jack went on title as the legal owner of the property. At the time, Jack was a 22-year-old university student, but he had money saved from summer jobs, and he contributed $8,000 of the purchase price. Violet contributed $10,000, and the remaining $20,500 was financed through a mortgage in Jack’s name, which Violet signed as a guarantor.
[4] A few months later, Violet left her husband and moved with her children to the newly-purchased house, where she lived for the rest of her life. For a time, her children resided with her, but from 1992 until her death in 2018, Violet lived alone in the house. She paid the mortgage payments and utility bills for the first year, after which Jack took over making the payments, eventually paying off the mortgage in full.
[5] Jack became a successful businessman and it was undisputed that he provided generous financial support to his mother during her lifetime. Violet excluded him from her will, but the parties agreed, and the trial judge found, that this was not “because of any disaffection with Jack, but rather because of Violet’s recognition that Jack was well-accomplished financially and his sisters were not.”
[6] The central disputed question at trial was whether the $10,000 that Violet contributed to the down payment had been a loan to Jack, or whether she intended the payment to give her an equity share in the house. Jack maintained that this money was a loan, and that he repaid it to his mother within one year. However, the trial judge rejected Jack’s evidence on this issue. Applying the doctrine of purchase money resulting trust, he found that Violet’s estate had a 26% share of the value of the property, based on her having contributed 26% of the original purchase price.
[7] The appellants’ first ground of appeal is that the trial judge erred in law by failing to properly consider and apply what they say are the legal requirements for finding a purchase money resulting trust.
[8] A purchase money resulting trust can arise “when a person advances funds to contribute to the purchase price of property, but does not take legal title to that property”: Nishi v. Rascal Trucking Ltd., 2013 SCC 33, [2013] 2 S.C.R. 438, at para. 1. There is a rebuttable presumption that the parties to the purchase “intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person’s contribution”: Nishi, at para. 1. This presumption now applies to transactions involving parents and adult children: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 36.
[9] The appellants rely on a line of authority that adopts Professor D.M.W. Waters’s statement that a person claiming a resulting trust “must also prove that he or she acted throughout as a purchaser”: D.M.W. Waters, M. Gillen and L.D. Smith, Waters’ Law of Trusts in Canada, 5th ed. (Thomson Reuters, 2021), at p. 421. See e.g., A.M.K. Investments Ltd. (Trustee of) v. Kraus, at para. 11; Krates Keswick Inc. v. Crate, 2017 ONSC 6195, at para. 56; Hornstein v. Kats, 2020 ONSC 870, at para. 204.
[10] According to the appellants, this means that it was the respondent’s burden to establish that Violet had acted in a manner consistent with having an ownership interest in the property throughout the time that she lived there. They argue that the trial judge erred by ignoring this supposed precondition for finding a purchase money resulting trust.
[11] The appellants’ argument reflects two misunderstandings of the applicable legal principles. First, the doctrine of purchase money resulting trust focuses on the parties’ intentions at the time the purchase money is advanced: see Nishi, at paras. 2, 30, 41; Pecore, at para. 59; Andrade v. Andrade, 2016 ONCA 368, 131 O.R. (3d) 532, at para. 63. Accordingly, to the extent that there can be said to be any requirement that the claimant have “acted … as a purchaser”, this requirement only applies at the point that the purchase money is advanced. Evidence about how a claimant conducts themselves afterwards may be relevant, but only to the degree that it sheds light on what they intended when they advanced the purchase money: Nishi, at para. 2. Professor Waters’s statement that the claimant must act as a purchaser “throughout” should accordingly be understood as referring only to the time of the transaction itself.
[12] Indeed, Myers J. expressly recognized this in Krates Keswick, citing Pecore, and noting that “[a]ll evidence of subsequent events … must be assessed only as it relates to the existence of non-existence of the intention to own or to gift the property at the time of its purchase”: Krates Keswick, at paras. 59-60.
[13] Second, the requirement that the claimant have “acted … as a purchaser” means nothing more than that they must not have meant the money they advanced to be either a gift or a loan. This point is made clear by the full passage in Waters’ Law of Trusts in Canada, at p. 421, which states:
Though the claimant can establish that he or she owned and paid over the purchase money, he or she must also prove that he or she acted throughout as a purchaser. It is not only the intention to make a gift that will prevent the finding of a resulting trust. If the claimant who advanced the money was doing so simply in order to lend money to the transferee who acquired title to the property, then the claimant’s relationship with the transferee is that of a creditor with a debtor, and no trust arises. [Emphasis added.]
[14] In the case at bar, the trial judge properly focused on what everyone understood was the key disputed issue, namely: whether the money Violet had contributed to the down payment was meant to be a loan to Jack, as he maintained, or whether she had meant to acquire an ownership interest in the property. On all the evidence, the trial judge concluded “that Jack did not establish that Violet made a loan to him of $10,000.00”. Having made this finding, there was no need for him to consider whether Violet had “acted … as a purchaser” in any other sense.
[15] However, Professor Waters’s formulation of the legal test raises a further question: is it the claimant’s burden to “prove” that the money advanced was not a loan, or does the presumption of resulting trust place the onus on the opposing party to prove that the money advanced was either a loan or a gift? Framed another way, is the presumption of resulting trust merely a presumption that purchase money was not meant as a gift, or is there equally a presumption that the money advanced was not a loan?
[16] The trial judge considered this issue and, following the conclusion reached by M.T. Doi J. in Caroti v. Vuletic, 2022 ONSC 4695, at paras. 603-04, determined “that the presumption of resulting trust arises once a transferor shows that they made a monetary contribution to the purchase price of the property, without any additional requirement to prove that they acted in the character of a purchaser”.
[17] As the trial judge noted, there are some conflicting decisions on this issue from courts in other provinces. However, this question has now been laid to rest by the Supreme Court of Canada in Nishi v. Rascal Trucking Ltd., which unambiguously states that the presumption of resulting trust is a presumption “that the parties intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person’s contribution”: Nishi, at para. 1.
[18] Rothstein J. stated further that “[t]he presumption can be rebutted by evidence that at the time of the contribution, the person making the contribution intended to make a gift to the person taking title”: Nishi, at para. 2. However, he went on to explain that the term “gift” in this context is synonymous with an intention on the part of the contributor not to acquire a beneficial interest in the property, stating at para. 37:
In Canada, our jurisprudence is that there is no difference between the intention to make a gift and the intention that the transferor not hold a beneficial interest. In other words, in the case of a gratuitous transfer, there is a gift at law when the evidence demonstrates that, at the time of the transfer, the transferor intended the transferee to hold the beneficial interest in the property being purchased.
[19] After Nishi, it is no longer necessary to distinguish loans from gifts in the resulting trust analysis. The presumption of resulting trust will be defeated if it is established that the person who contributed the purchase money did not intend to acquire a beneficial interest in the property. This can be established by demonstrating that the money advanced by the contributor was meant as either a loan or as a gift.
[20] In Singh v. Kaler, 2017 ABCA 275, the Alberta Court of Appeal considered this issue and concluded, at paras. 26-27:
[P]re- Rascal Trucking and Pecore case law has been overtaken and it is no longer appropriate to require the person advancing the funds to prove he or she was “acting throughout as purchaser”. Once the claimant proves the “basis fact” …, that is, they made a contribution to the purchase price, the legal presumption of resulting trust applies.
This is not to suggest that when a true lender advances funds to assist in the purchase, a resulting trust arises. There are significant differences between a lender and an investor or purchaser. However, when the presumption applies, the onus is on the title holder to rebut the characterization of investor by proving the purchaser was, in fact, a lender.
[21] The trial judge followed Singh, as it was adopted in Caroti. Applying the presumption of resulting trust, he put the onus on Jack to establish that the money Violet had contributed to the house purchase was a loan. This was the correct approach.
[22] I also see no reversible error in the trial judge’s conclusion that Jack had not met his onus on this issue. The trial judge properly considered all of the evidence, including the evidence that Jack had covered most of the expenses associated with the property for most of the years that Violet lived there, and the evidence that she had not included the property among her assets when she filed for bankruptcy in 2006. This evidence was all potentially relevant to the question of what Violet’s intentions had been when she paid the $10,000 down payment in 1980, but none of it was determinative.
[23] The trial judge ultimately concluded that it would not have made sense for Violet to have loaned money to Jack in 1980, given their respective financial and life circumstances at the time. He stated:
I cannot accept that paramount in Violet’s planning at that moment was to loan money to her 22-year-old son who, by his evidence, had already amassed tens of thousands of dollars through part-time and summer employment. On Jack’s evidence, in 1980 Violet had limited money, limited prospects and the overwhelming need to become independent while Jack had enough money to purchase the Property outright, yet Violet decided to loan all her money to Jack in furtherance of the completion of an Agreement of Purchase and Sale that they had entered jointly. I do not accept this evidence because it is not credible or plausible.
This was a finding the trial judge was entitled to make on the evidence before him.
[24] I would accordingly not give effect to the appellants’ first ground of appeal.
[25] The appellants’ second ground of appeal is that the trial judge erred by finding that the corroboration requirement in s. 13 of the Evidence Act, R.S.O. 1990, c. E.23, applied to Jack’s evidence. Section 13 provides:
- In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.
[26] Relying on this court’s decision in Brisco Estate v. Canadian Premier Life Insurance Company (2012), 2012 ONCA 854, 113 O.R. (3d) 161 (C.A.), the appellants argue that because Jack was not an heir under Violet’s will, and was being sued on the basis that he controlled the corporation that was the disputed property’s legal owner, rather than in his capacity as one of the “heirs, next of kin, executors, administrators or assigns” of his late mother, s. 13 had no application to him.
[27] This argument is based on a misreading of s. 13, which applies to actions by or against persons who fall into the listed categories. While it is true that Jack was not being sued in his capacity as a person listed in s. 13, his sister was suing him in her capacity as the executor of Violet’s estate. This made Jack “an opposite or interested party” to whom the s. 13 corroboration requirement applied.
[28] In contrast, Brisco Estate involved litigation between the children of the deceased and an insurance company, in which the children were asserting contractual rights under the insurance policy. Although they were also the deceased’s heirs, they were not suing the insurance company in this capacity, nor was the defendant insurer a person listed in s. 13 of the Evidence Act. In these circumstances, s. 13 had no application.
[29] The appellants argue further that even if the s. 13 corroboration requirement did apply to Jack, the trial judge erred by not treating the evidence that Violet had not listed the property among her assets when she filed for bankruptcy in 2006 as corroborative of Jack’s evidence that the $10,000 she contributed to the house down payment was a loan.
[30] In Brisco Estate, at para. 65, this court adopted the observations of Watt J. (as he then was) in Sands Estate v. Sonnwald, [1986] O.J. No. 478 (H.C.), where he held that "corroboration should be such as to enhance the probability of truth of the suspect witness' evidence upon a substantive part of the case raised by the pleadings".
[31] I do not find it necessary to decide whether the evidence of Violet’s 2006 bankruptcy filings could properly be viewed as corroborating Jack’s evidence that her 1980 contribution to the purchase price was a loan. I come to this conclusion because the trial judge ultimately did not decide this case by applying the s. 13 Evidence Act corroboration requirement to Jack’s evidence.
[32] Section 13 bars a court from ruling in favour of an “opposite or interested party” based on that party’s uncorroborated evidence “in respect of any matter occurring before the death of the deceased person”. However, the trial judge’s reasons make it clear that he did not accept Jack’s evidence that his mother had loaned him $10,000 in 1980, not merely because it was uncorroborated, but because he found it implausible that Violet would have loaned Jack money when he already had enough to cover the down payment, and she needed the money for herself. In the passage from his reasons quoted above, the trial judge rejected Jack’s explanation for the loan as “not credible or plausible”, in view of Violet’s personal circumstances at the time.
[33] In short, this was not a situation where the trial judge would have found in the appellants’ favour but for the corroboration requirement in s. 13 of the Evidence Act. In this context, even if the trial judge should have treated the bankruptcy evidence as potentially corroborative of Jack’s testimony, his failure to do so had no discernible impact on the result.
[34] Finally, the appellants urge us to revisit the trial judge’s decision not to order the estate to reimburse Jack for the money that he spent to pay for his mother’s funeral, on the basis that Violet had provided in her will that her funeral expenses were to be paid out of her estate. The trial judge did not grant this relief to Jack for two different reasons. First, Jack had not properly pleaded it or advanced it in his materials. Second, the trial judge held that even if Jack had properly raised this claim, he would have still denied this relief based on “Jack’s admission that he paid this expense gratuitously, without holding the Estate to reimbursement.” I see no basis on which this court can interfere with this aspect of the trial judge’s decision.
[35] The appellants did not appeal the trial judge’s order that Jack pay the respondent estate $10,000 as damages for his removing Violet’s personal property from the house after her death, and their appeal of the trial judge’s costs award was contingent on their succeeding on one of their other grounds of appeal.
[36] I would dismiss the appeal, with costs payable by the appellants to the respondent. The parties have agreed to costs fixed at $25,000 all inclusive, payable from the proceeds of sale of the property.
Released: May 27, 2024 “K.M.v.R.” “J. Dawe J.A.” “I agree. K. van Rensburg J.A.” “I agree. Sossin J.A.”
