CITATION: 2022 ONSC 4365
DIVISIONAL COURT FILE NO.: DC-01/21
DATE: 2022 07 27
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Emery, Nieckarz JJ.
BETWEEN:
James Pushie
Appellant
– and –
Carmela Guidarelli
Respondent
Sam A. Presvelos, for the Appellant
Patrice A.J. Cote, for the Respondent
Heard at Hamilton: June 7, 2022, by video-conference
REASONS FOR DECISION
EMERY J.
[1] This is an appeal from the judgment of Skarica J. dated June 21, 2021, dismissing the application of James Pushie under the Partition Act, RSO, 1990, c.P.4 (the “Act”).
[2] The application was brought by Mr. Pushie to list and sell a property registered solely in the name of the respondent, Carmella Guidarelli. Mr. Pushie claimed he held an unregistered interest in that property. The underlying issue for the court to determine was whether funds both parties admit he advanced to purchase the property were an investment, or a loan. A finding that they were an investment would support a resulting trust claim, entitling him to an interest in the property.
[3] Mr. Pushie also made a constructive trust claim based on the mortgage payments he made, and certain work he had performed to improve the property.
[4] The characterization of the ownership interests in the property was also important because Mr. Pushie is claiming not just repayment of funds, but a share in the appreciation of the market value of the property to be shared on its sale.
[5] The application judge found that the funds advanced by Mr. Pushie on closing were a loan and not an investment. As Mr. Pushie had not made out a case for an interest in land, he had no standing under the Partition Act to seek partition and sale.
[6] For the following reasons, the appeal is allowed.
Background facts
[7] Mr. Pushie and Ms. Guidarelli had been romantically involved for a number of years by 2013. During their relationship, they discussed acquiring a property in which they and Mr. Pushie’s children would live together.
[8] In May 2013, through a real estate agent that Mr. Pushie claims he knew, Ms. Guidarelli purchased the property at 54 Gertrude Street in Hamilton (“the Property”). The purchase price for the Property was $100,000, which she paid by arranging a mortgage for the principal amount of $92,000. The balance of about $11,000 for the down payment and closing expenses came from the account of Mr. Pushie’s own business and from a business account of Pusherelli Corporation, a business owned jointly by the parties. The application judge concluded that these funds represented 96% of the amount needed to close the transaction.
[9] Title to the Property was taken in Ms. Guidarelli’s name alone. The parties disagree as to why that was done.
[10] The parties lived in the home together with Mr. Pushie’s children from about the time of the purchase until about May 2016, for a total of three years. They agree that Mr. Pushie made monthly payments to Ms. Guidarelli which she applied to the mortgage.
[11] After purchasing the Property, both Mr. Pushie and Ms. Guidarelli contributed towards renovations to the Property and its improvement. However, they disagree on the legal rights arising from the improvements to the Property made by Mr. Pushie.
[12] After the parties separated in 2016, Ms. Guidarelli excluded Mr. Pushie from the Property.
The judgment below
[13] The application judge gave oral reasons for judgment after hearing the submissions of counsel on the merits. He concluded that the funds advanced by Mr. Pushie to Ms. Guidarelli were a loan. The application judge characterized these funds as “down payment expenses.” He reached that conclusion on the evidentiary record consisting of the affidavits filed by each party, and the transcripts of their respective cross-examinations.
[14] The application judge found that Mr. Pushie’s evidence on his cross-examination was “neither credible [n]or reliable.” Conversely, he accepted Ms. Guidarelli to be a credible witness when cross-examined.
[15] In view of Mr. Pushie’s inability to recall details when cross-examined, the application judge found the claim for unjust enrichment failed because Mr. Pushie had not suffered a detriment for loaning the $11,000. The court also made a finding that Mr. Pushie had received a substantial benefit from the loan and his labour on the property in the form of inexpensive accommodation for himself and his children for several years.
[16] The determination that the funds provided by Mr. Pushie to Ms. Guidarelli were a loan meant that they were not in the nature of an investment giving him an interest in land. No trust interest arose by virtue of this loan. As a result of this finding, the application judge concluded a “just determination would be for her to repay the loan.”
Positions of the parties
[17] Mr. Pushie takes the position that the application judge erred in three ways:
He failed to consider key evidence, and he failed to explain why he did not consider that evidence;
He assessed the credibility of each party on the paper record when there were serious questions of credibility that could only be fairly determined at a trial; and
He made errors offact and law when he concluded Mr. Pushie’s contribution was a loan and not an investment.
[18] Ms. Guidarelli responds to each ground by submitting that:
The application judge considered all evidence before him, including text messages between the parties and comments posted online. A decision should not be disturbed simply because the court below did not articulate the reasons for decision clearly;
It was open for the application judge to accept the evidence of Ms. Guidarelli over the evidence of Mr. Pushie. He did not have to convert the application to an action to hear viva voce evidence in order to assess the credibility of each party as Mr. Pushie suggests. Ms. Guidarelli submits that Mr. Pushie is simply seeking another chance to have his claim heard by the court so that he has the opportunity to make a better case; and
Ms. Guidarelli did not respond directly to the argument that the application judge made errors of fact and law when he found that Mr. Pushie acquired no interest in the property. However, she submits that evidence supports the findings of the application judge that she was not unjustly enriched, and that the funds Mr Pushie advanced were nothing more than a loan. The court’s determination that no trust interest arose through unjust enrichment or otherwise is therefore sustainable.
Analysis
[19] The Order under appeal dismissed Mr. Pushie’s claim for partition and sale under the Act. Any appeal of a claim for partition lies to the Divisional Court under s. 7 of the Act.
[20] The standard of appellate review for this court to apply is set out in Housen v. Nikolaison, 2002 SCC 33. Where the appeal involves a question of law, the standard of review is one of correctness. On questions of fact, the standard is whether there is a palpable and overriding error. On questions of mixed fact and law, the standard lies on a spectrum between correctness and palpable and overriding error, depending on whether the question is more legal in nature or factual. Where the question involves the application of correct legal principles to the evidence, the standard is generally one of palpable and overriding error.
[21] The appeal can be decided on the basis of the second ground for appeal, namely that the application judge made assessments of credibility on the paper record. In the words of the application judge, the dispute between the parties on the nature of the funds provided by Mr. Pushie was a “credibility contest.” The requirement to assess credibility by hearing witnesses is pronounced when the credibility of each witness on a material issue will enable the court to make findings of fact pivotal to the outcome of the case.
[22] The application judge expressed a view that he did not have the authority to convert the application to an action under Rule 38.10 of the Rules of Civil Procedure in the absence of a request for that relief in Mr. Pushie’s motion record. There is no requirement for a party to ask for that relief in their materials under Rule 38.10, or under the authorities for a judge to make that order.
[23] In Yoo v. Kang, [2002] O.J. No. 4041, Paisley J. held he had the discretion to make an order for the trial of an issue. He stated that “it is not open to a judge on an application, where affidavits and examinations in transcript form are the only evidence before the court to decide the credibility of the witnesses other than in the clearest of cases”: at para. 24. In Newcastle Recycling Ltd. v. Clarington (Municipality), 2005 46384 (ON CA), [2005] O.J. No. 5344, the Court of Appeal for Ontario held that in such circumstances it is beyond the role of an application judge to determine credibility to resolve material facts, and that a trial of an issue should be directed: at paras. 11-12. See also Keewatin v. Minister of Natural Resources, 2003 43991 (ON SCDC), [2003] O.J. No. 2937 (Div. Crt.).
[24] This view can be reconciled with the cases that Ms. Guidarelli relies upon.
[25] In Fort William Indian Band v. Canada (Attorney General), (2005), 2005 28533 (ON SC), 76 O.R. (3d) 228, Smith J. stated that a factual dispute in and of itself is not sufficient reason for the court to convert an application to an action. An order for that conversion should only be made where there are facts in dispute that are material to the case: at para. 31.
[26] In a similar fashion, the Court of Appeal for Ontario in Champion v. Guibord, 2007 ONCA 161, upheld the decision of an application judge to reject the evidence of a party without directing a trial because the case was not one where “the determination of material facts require the choice between conflicting versions testified to by different witnesses”: at para. 6.
[27] In the case at bar, unlike in Fort William and Champion, the application judge refused to convert the application to a trial when the facts in dispute were material to the case and the objective evidence (words used in blogs and text messages) arguably supported Mr. Pushie’s evidence about what happened as much as they did from Ms. Guidarelli’s perspective.
[28] Ms. Guidarelli argues that the application judge in this case properly rejected Mr. Pushie’s evidence because of vagueness, contradictions and conflicting evidence where the totality of the evidence points the other way.
[29] I disagree. The evidence given by Mr. Pushie about how the purchase of the Property came about, the context in which the Property was purchased, and the reason Mr. Pushie was providing the substantial share of the down payment were material facts in dispute on the application. So were the questions about the intention behind the words used in blogs and text messages. These were not questions the court could resolve on a record consisting of affidavits and transcripts.
[30] It is evident that the application judge made findings against Mr. Pushie in his oral reasons that Mr. Pushie could not be believed. He wholly adopted the examples of contradictory evidence set out in paras. 20 to 34 of Ms. Guidarelli’s factum, along with her conclusion in para. 35.
[31] In contrast, the application judge accepted Ms. Guidarelli’s evidence about the nature of the advance as credible without hearing testimony on how the funds should be considered a loan without any reference to its terms or repayment. Nor was there evidence given to refute any claim that Mr. Pushie was entitled to a constructive trust by unjust enrichment, or to a claim in resulting trust. The courts have held that in certain circumstances where a trust claim is made, the actual intention of the transferor is the governing consideration: Kerr v. Baranow, 2011 SCC 10 and Korman v. Korman, 2015 ONCA 578.
[32] It is significant to read further in the Fort William case where Smith J. wrote that where there are credibility issues involved or when viva voce evidence is required, a matter should proceed as an action [emphasis provided].
[33] An application is suitable for use where authorized by statute or where the issues in the case fall under one or more of the subparagraphs in Rule 14.05(3). Those circumstances include subparagraph (h) in respect of any matter where it is unlikely that there will be any material facts in dispute.
[34] That was not the case before the application judge. He assessed the credibility of the parties on facts material to the issues in dispute by relying on a paper record. The evidence of the witnesses about material facts were diametrically opposed. The findings of the application judge involving the assessment of credibility between witnesses were made despite the conflicting evidence of the parties as to those facts, and even though the objective evidence did not clearly support one party’s version of the facts over that of another party.
[35] In the result, the failure of the application judge to direct a trial of an issue for a judge to see and hear them testify in order to assess their credibility was an error of law.
Conclusion
[36] The judgment dated June 21, 2021 is set aside, including the costs order made.
[37] A trial of the whole application is ordered on the following terms:
a. The trial shall be heard by a different judge;
b. The affidavits considered on the application shall be treated as the pleadings for the trial. The two affidavits ruled inadmissible by the application judge shall not form part of the pleadings;
c. The cross-examinations conducted for the application shall be treated as examinations for discovery; and
d. Each party shall serve an affidavit of documents by August 31, 2022 along with a copy of all documents listed in Schedule A.
[38] The parties have agreed to $7,000 as a fair and reasonable amount for the costs of the appeal. The appellant James Pushie is awarded costs in that amount as the successful party.
______________________ Emery J.
Sachs J.
Nieckarz J.
Released: July 27, 2022
CITATION: 2022 ONSC 4365
DIVISIONAL COURT FILE NO.: 101/21
DATE: 2022 07 27
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Emery, Nieckarz JJ.
BETWEEN:
JAMES PUSHIE
Appellant
– and –
CARMELA GUIDARELLI
Respondent
REASONS FOR DECISION (ON APPEAL)
Released: July 27, 2022