Court File and Parties
CITATION: Cranston v. Cranston, 2010 ONSC 6429
DIVISIONAL COURT FILE NO.: DC 10-194
DATE: 20101209
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Matlow, Heeney and J. Mackinnon JJ.
BETWEEN:
LILLIAN CRANSTON
Appellant
– and –
JOHN AND LISA CRANSTON
Respondents
F. Genesse, for the Appellant
C. Brandow, for the Respondents
HEARD AT HAMILTON: November 19, 2010
Reasons for Decision
J. MACKINNON J.:
[1] The appeal is allowed. The case involves a claim by a mother that she made an oral loan agreement with her son and daughter-in-law which provided that she would loan them $52,000 payable on the contingency of her reaching 65 years or retiring. The defence is that the oral transaction was a gift. There is no dispute that the funds were advanced from mother to son. The Respondents brought a motion for summary judgment which was heard on January 10, 2010. In her written endorsement of January 21, 2010, McLaren J. granted the motion and dismissed the Appellant’s action.
[2] On a motion for summary judgment, the standard of review is correctness on the question of whether the motion judge applied the appropriate test.[^1] With respect to the powers of a motion judge under r. 20.04(1)(2.1) to weigh evidence, evaluate credibility and draw inferences from the evidence, the standard of review is that for findings of fact, namely, whether there is a palpable and overriding error.[^2]
[3] The motion judge does not appear to have directed herself to r. 20.04(2.1) which states as follows:
(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[4] While she did weigh evidence and draw inferences, the motion judge did not address whether it was in the interests of justice for such powers to be exercised only at a trial. In a case where the central issue is whether an oral, undocumented transaction constituted a gift or a loan, and if a loan, whether a contingent or demand loan, thereby calling the parties’ credibility into clear focus, this consideration is particularly important. The motion judge ought to have directed herself as to whether in these circumstances a trial was necessary in the interests of justice in order to allow the credibility issues between the parties to be fairly determined.
[5] This error is compounded by the misdirection at paragraph 25 in describing the issue before her as whether this was a demand loan or a contingency loan. At paragraph 35 she states that there may be a credibility issue over whether the money was advanced as a gift or loan, but not as to whether the money, if loaned, was to be paid on a contingency basis. With respect, this is clearly wrong. The Appellant gave sworn affidavit evidence that the loan was a contingency loan. A judge could not conclude otherwise without making an adverse credibility finding against the Appellant, and rejecting her evidence on this point. We observe that her sworn evidence did not stand on its own on this issue. It is supported by the circumstantial evidence that this loan represented fully one-third of her entire life savings. A common sense inference may be drawn that she would not give such a large sum away at a time when she was approaching retirement. This is consistent with her assertion that the money was a loan, to become repayable when she attained 65 years of age, at which time she would need the money to provide for her retirement. Furthermore, the fact that the Respondents were subsidizing her accommodation costs at the house, by charging her only $450 per month when the carrying costs were $800, is circumstantial evidence supporting the existence of an ongoing debt obligation in her favour.
[6] Furthermore, the motion judge has overlooked the fact that the Respondent John Cranston’s position, sworn to in his affidavit, is that the advance was a gift. If he is not believed on that, the adverse effect upon his credibility may impact on a determination as to the nature of the loan. Indeed, the motion judge never makes any determination of the Respondents’ primary position that the advance was a gift. She only notes in paragraph 22 that while the Respondents say it is a gift, if the court disagrees, then their position is that it is a demand loan.
[7] The motion judge drew several inferences from the collateral documents available to her. She relied on these in concluding that if there was a loan, it was a demand loan. This is a significant finding because it is conceded that a demand loan would have been statute barred, but a contingent loan would not. The proper inference to draw from these documents could well turn on the overall assessment of the parties’ credibility on the central issue as to whether the transaction was a gift or loan. For example, if the Appellant is believed on that point and the Respondents disbelieved, then the fact that the Appellant did not demand payment until her 65th birthday could also be found to be consistent with her testimony that this was a loan payable at that age or on the event of her retirement. The motion judge noted that these demands were expressed without reference to the contingency. It cannot be said that the inferences properly to be drawn from these documents could not turn upon the important determination of credibility as between the parties as to whether the transaction was a loan or a gift.
[8] At paragraphs 31(c) to (g) of her Reasons, the motion judge drew adverse inferences against the Appellant by reason of a series of correspondence and a draft promissory note sent to her son, in which she did not mention the contingency of retirement or attaining the age of 65. The motion judge failed to observe that each and every one of these documents was written on or after the Appellant’s 65th birthday, when the contingency would have already been fulfilled and would no longer be relevant. The promissory note referred to at paragraph 31(c) was written on the very day that the Appellant turned 65 years of age. This can hardly be a coincidence. Rather than leading to an adverse inference against the Appellant, this supports the inference that the money became due and payable once she turned 65. From that birthday forward, she was quite entitled to refer to the loan as a demand loan. Additionally, rather than showing inconsistency on the part of the Appellant, this correspondence is equally consistent with the Appellant simply proposing various options for her son’s consideration in an effort to resolve a family dispute.
[9] In Healey v Lakeridge[^3] at paragraphs 28 to 32, Perell J. addressed the importance of considering whether the powers under r. 20.04(2.1) should, in the interests of justice, only be exercised at a trial. He suggested that this question is important to address directly because some issues “cannot be truthfully, fairly, and justly resolved without the forensic machinery of a trial.” An action that turns on credibility as much as this case does falls, in our view, into that category.
[10] Finally, the motion judge placed the burden on the Appellant to demonstrate that a trial was required. In paragraph 35, she states that the Appellant has failed to provide any evidence that convinces her that a trial is required. Similarly, in paragraph 33, she criticizes the Appellant for not delivering an affidavit from her son Ken, who was present during a discussion of the issue between the parties. However, each of the parties deposed that Ken was present when the other party made statements adverse in interest, and neither party presented any evidence from Ken. As the moving party seeking summary judgment, the ultimate onus was upon the Respondents to satisfy the judge that a trial was not required.
[11] For these reasons, we are persuaded that the motion judge’s Judgment reflects palpable and overriding error and that we are required to set it aside.
[12] Given that we were able to dispose of the appeal for the reasons already stated, it was not necessary for us to consider whether we should admit as fresh evidence the document at tab 5 of the Appeal Book and Compendium. This was a note from the Respondent, John Cranston, to the Appellant in which he acknowledged receiving the money “in order to sustain the residence” at 394 Nelson Street “in order to keep the residence available for occupancy by my mother...if so needed” and that he is currently fulfilling that agreement as “per my commitment at the time of receiving the above mentioned amount.” This document was not in the record before the motion judge and no further reference to it is made for the purpose of this appeal.
[13] The Appellant is entitled to recover costs, fixed at $5,000 all inclusive, payable within 30 days.
J. Mackinnon J.
Matlow J.
Heeney J.
Released: December 9, 2010
CITATION: Cranston v. Cranston, 2010 ONSC 6429
DIVISIONAL COURT FILE NO.: DC 10-194
DATE: 20101209
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Matlow, Heeney and J. Mackinnon JJ.
BETWEEN:
LILLIAN CRANSTON
Appellant
– and –
JOHN AND LISA CRANSTON
Respondents
REASONS FOR JUDGMENT
Matlow J.
Heeney J.
J. Mackinnon J.
Released: December 9, 2010
[^1]: D.J. Venasse Construction Ltd. V. MVD Properties Inc., [2009] O.J. No. 2545 (Div. Ct.)
[^2]: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235
[^3]: 2010 ONSC 725, [2010] O.J. No. 417 (Sup. Ct.)