ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: C-449-10SR
DATE: 20120120

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

KATHLEEN CREPEAU Plaintiff – and – NICKOLAS JAMES CREPEAU and SARAH-JANE CREPEAU Defendants

James M. Ross, for the Plaintiff.
Pierre R. Bradley, for the Defendants.

HEARD: January 10 and 11, 2012.

gauthier, j.

Overview:

[ 1 ] The Plaintiff, Kathleen Crepeau (“Kathleen”) seeks Judgment against her son, the Defendant Nickolas Crepeau (“Nickolas”), and her daughter-in-law, Sarah-Jane Crepeau (“Sarah”), in the amount of $30,000, in connection with a cheque written by Kathleen, to Nickolas, for that sum of money, on October 18, 2008.

[ 2 ] Kathleen alleges that the funds were advanced as a loan to both Nickolas and Sarah, at their request, to assist them in the purchase of a home located at Trailside Drive, Sudbury.

[ 3 ] Nickolas and Sarah allege, in their pleadings, that the $30,000 was a gift from Kathleen, not a loan, and that they did not require the $30,000 from Kathleen given that they were pre-approved for a mortgage to purchase the property, in advance of receiving the $30,000.

Undisputed Facts:

[ 4 ] Kathleen had left the residence of her common-law spouse, Andy Racine (“Andy”), in August, 2008, and resided with Nickolas and Sarah and their family until the end of October, 2008, at which time she resumed cohabitation with Andy Racine.

[ 5 ] Both Nickolas and Sarah were employed in 2008, bringing in more than $100,000 per year to the household. Sarah took care of the family’s finances.

[ 6 ] In early October 2008, there was a discussion between Nickolas and Kathleen about Nickolas requiring $18,000 for the purchase of the Trailside property. Kathleen agreed to provide that amount to Nickolas. At some later date, before October 18, either Nickolas or Sarah asked Kathleen for $30,000, which would allow Nickolas and Sarah to provide 10% of the purchase price of the Trailside property to the bank.

[ 7 ] On October 18, 2008, Kathleen wrote a cheque in the amount of $30,000, to the order of Nickolas Crepeau. The cheque was drawn on Kathleen’s account at La Caisse Populaire, was endorsed by Nickolas, was certified on October 20, 2008, and was deposited to Nickolas and Sarah’s joint account at the Bank of Nova Scotia (“Scotiabank”) on October 22, 2008.

[ 8 ] On October 20, 2008, Scotiabank issued a Commitment letter which contained, among other things the following conditions which had to be discharged by Nickolas and Sarah in order to secure a mortgage loan in the amount of $368,910:

(a) Mortgagees to provide a copy of the unconditional, accepted agreement of purchase and sale of their existing property at 98 Renee Cres., Garson, confirming a sale price of $268,000;

(b) Mortgagees to provide verification of employment income of $90,000 yearly for Nickolas, and $24,000 yearly for Sarah;

(c) Mortgagees to pay out a total of $32,682 of existing debt before the closing date for the purchase of their new home;

(d) Mortgagees to provide a gift letter, i.e. verification of down payment in the amount of $19,995, from an immediate family member.

[ 9 ] On November 15, 2008, all three parties executed a bank document referred to as a “gift letter”. The document provides as follows:

This is to confirm that a financial gift in the amount of $30,000 has been made to Nickolas Crepeau to assist in the purchase of a home. These funds are being provided as a gift and will not ever have to be repaid.

[ 10 ] It is not disputed that, on the second page of that document, Kathleen wrote “PLS call work # 705-671-0339”. What is disputed is the reason for that inscription: was it to advise the bank that in fact the monies had been advanced as a loan, or was it to ensure that the bank did not call Kathleen’s residence, which she shared with Andy?

[ 11 ] Without the gift letter, Scotiabank would not have advanced the funds for the purchase of the Trailside property.

[ 12 ] On November 17, 2008, the date for the closing of the transaction of purchase of the Trailside Drive property, a further Commitment Letter was issued by Scotiabank, setting out the new conditions for the mortgage loan of $368,547.84. Once again verification of Sarah’s employment income of $24,000 was to be provided, as was a gift letter for $19,995. The debt payout from the sale of the Renee Crescent Property was to be in the amount of $238,460, consisting of:

(a) The mortgage payout for the Renee Cres property, in the amount of $224,734;

(b) Northridge Savings, in the amount of $7,851; and

(c) Canadian Tire Mastercard, in the amount of $5,875.

[ 13 ] Kathleen told Andy in mid-November that she had loaned $30,000 to Nickolas. Andy did not approve of Kathleen providing those monies to Nickolas.

[ 14 ] On November 17, 2008, Kathleen indicated to a Scotiabank employee that the funds advanced to Nickolas were by way of loan and she expected to be repaid by Nickolas.

[ 15 ] The transaction of purchase of the Trailside property by Nickolas and Sarah was completed on November 17, 2008.

[ 16 ] On February 5, 2009, Nickolas and Sarah called police to complain about Andy. The allegation was that they were receiving unwanted calls from Andy about money owing. Nickolas and Sarah requested that police direct Andy to cease calling or to show up at their place of work. Police did so.

[ 17 ] Kathleen wrote a demand letter to Nickolas in May 2009. In addition to requesting repayment of the $30,000, Kathleen’s letter refers to her grandson Kyle and how she wishes to see him.

[ 18 ] Sarah responded to Kathleen’s letter. The letter includes references to discussions between Kathleen and Nickolas. I reproduce some of those references and will refer to them later in these reasons.

What you and Nick had discussed back in the fall, will be followed through. Although his word should have been enough for you, you needed to created [sic] a mess and drag Andy into it, you needed to attack me for no reason.

To the NEXT, you were insulted that we sent that paper to you in the mail, well calling me, not Nick, for that paper was an insult to your son. Why would you need that paper, Nick’s word wasn’t enough.....Nick promised you and will keep that promise, there was no need to involve Andy like you did, like he has the almighty power.

Back to the agreement. It has nothing to do with the decision about the baby and therefore never gave you a reason to doubt our word, but you did.

You know exactly what involves Kyle and it certainly isn’t that agreement.

[ 19 ] On May 31, 2009, Kathleen called police to complain about Nickolas leaving harassing messages on her telephone. Kathleen and Andy told police they had loaned $30,000 to Nickolas for a down payment on his home and Nick was refusing to pay back the debt, despite requests for payment. Kathleen and Andy mentioned to police the letter, from Sarah, that Nickolas had dropped off at their residence on May 21, 2009.

[ 20 ] Police subsequently spoke with Nickolas who advised that he had been laid off and had no money to pay Kathleen back.

[ 21 ] On October 2, 2009, Kathleen once more contacted police to complain about Nickolas making threatening phone calls to her residence. Kathleen and Andy referred to the $30,000. There was also mention of the difficulties in arranging the transport of Kathleen’s deceased daughter’s remains from Calgary to Ontario.

[ 22 ] Police spoke with Nickolas and were satisfied that there was no basis for criminal charges.

[ 23 ] Between February 2009, and the fall of 2009, Nickolas left a number of telephone messages on Kathleen and Andy’s answering machine. I reproduce certain excerpts from those messages, and will have more to say about them later in these reasons.

Mom it’s Nick, I got your letter in the mail and ah, your [sic] gonna get your money whenever I feel like giving it to you, so just ah leave us alone ok like I don’t know what the fuck you, you don’t understand so I don’t know what to tell you ok Love you bye bye.

I’m just calling to say that ah...whatever you want to do, do what you got to do Andy cause you know what, your threats don’t fucking scare me one bit and ah, and ah I’m not dropping fuck all off, my mother already knows when I have to pay her back so it’s as simple as that...

[ 24 ] Kathleen retained counsel and a formal demand letter was sent to Nickolas and Sarah. Nickolas responded to counsel, indicating that he would not be repaying the $30,000 as it was a gift and not a loan.

[ 25 ] The Statement of Claim in this matter was issued on January 8, 2010. The Statement of Defence was delivered on January 25, 2010.

Disputed Facts:

[ 26 ] Kathleen testified that during the first discussion about her providing money to Nickolas, she told him that it would have to be a loan. Nickolas disputes this. His evidence is that Kathleen said words to the effect that he need not worry about repaying her.

[ 27 ] Kathleen testified that it was Sarah who approached her some time later to advise that the bank wanted Nickolas and Sarah to provide a larger amount of money as a down payment, and that they required $30,000 from Kathleen, and not $18,000.

[ 28 ] Both Nickolas and Sarah maintain that both discussions about Kathleen providing funds to them were between Kathleen and Nickolas only; Sarah was not involved in these discussions.

[ 29 ] Kathleen testified that one day between October 18 and November 17, 2008, she, Nickolas, and Sarah went downstairs in the Garson residence and Sarah prepared an agreement on the computer, which all three of them signed. The agreement reflected that Kathleen had loaned them $30,000 and that the amount would be repaid in two instalments: $15,000 in January, 2009, and $15,000 in July, 2009. It was Sarah who suggested repayment in two instalments.

[ 30 ] Kathleen testified about Nickolas and Sarah assuring her that they had the means to repay the money, given their combined incomes. They suggested that they would take out a line of credit, if required, to repay the $30,000. Sarah went so far as to say that she’d take a second job if necessary. These discussions are denied by Nickolas and Sarah whose position is that they did not have the means to repay Kathleen in two instalments of $15,000 as Kathleen testified to.

[ 31 ] Kathleen did not request a copy of the agreement until sometime after January 2009. She never received a copy of the agreement.

[ 32 ] Both Nickolas and Sarah deny that there ever was any such agreement.

[ 33 ] Kathleen testified that Nickolas attended at her work on November 15, 2008, with his son Kyle, and told Kathleen that if she didn’t sign the gift letter, he and Sarah would not be given the mortgage for the Trailside property. Kathleen said Nickolas pressured her to sign that document and that it was unfair of him to bring her grandson, whom she had not seen in some time, with him to her work place.

[ 34 ] Nickolas testified that he simply explained to Kathleen that the bank required the form to show where the $30,000 was coming from, that it was not “bad money”. Interestingly, Sarah described the gift letter in a similar fashion, that it was required to show that the $30,000 was not “dirty money”.

[ 35 ] Kathleen testified that Nickolas attended at her work in January 2009, and advised her that he would not make the payment of $15,000 because he had been laid off.

Issues:

[ 36 ] There are two main issues in this matter:

I. Was the $30,000 cheque payable to Nickolas Crepeau a gift or a loan?

II. If there was a loan and not a gift, is Sarah Crepeau liable for the debt?

[ 37 ] The Plaintiff’s position is that the transfer of $30,000 was always intended to be a loan, the Plaintiff at all times intended the loan to be repaid, and the Defendants understood that it was to be repaid.

[ 38 ] The Defendants’ position is that, at the time of the transfer of the funds, i.e. October 18 to 22, 2008, the Plaintiff intended a gift. She changed her mind subsequently, likely on or around November, 2009, after she had resumed cohabitation with her common law spouse.

Analysis:

[ 39 ] Equity presumes bargain not gift. In asserting gift, a Defendant must overcome this presumption.

[ 40 ] It is agreed that, although in the ordinary course, the Plaintiff has the onus of proof, on a balance of probabilities, the Defendants will have the onus of disproving the presumption that, where a gift is alleged, the law presumes a resulting trust. In order to successfully defend the Plaintiff’s claim, the Defendants must rebut the presumption on a balance of probabilities: see Pecore v. Pecore , 2007 SCC 17.

[ 41 ] In this case, where characterization of the transfer is in issue, the credibility of the parties is critically important to the court’s determination of the issue. The court in Fornasier v. Grills , 2009 CarswellOnt 9679 (Ont. S.C.J.) , said this, at para. 91:

The preponderance of the facts must be such as to leave no reasonable room for doubt as to the donor’s intention. It should be inconsistent with any other purpose. If it falls short of going that far, then the intention of gift fails.

[ 42 ] It is also agreed that in order to prove gift, the Defendants must establish three elements:

(a) The intention of the Donor;

(b) Acceptance of the gift; and

(c) Delivery of the gift.

[ 43 ] It is only (a) which is in issue in this case.

[ 44 ] It is the intent of the donor at the time of the transfer which is relevant. Traditionally, evidence to show such intent “ought to be contemporaneous, or nearly so” to the transaction: see Clemens v. Clemens Estate , [1956] S.C.R. 286, at p. 294, citing Jeans v. Cooke (1857), 24 Beav. 513, 53 E.R. 456 (Eng. Ch.).

[ 45 ] Donors are not permitted to retract gifts. Evidence of intention which arises subsequent to the transfer is not automatically excluded, however. The reliability of the evidence must be examined and a determination must be made as to the weight to be assigned to that evidence, while guarding against evidence that is self-serving or which tends to show a change in intention: see Pecore , at para. 59 .

Testimony of Sarah Crepeau

[ 46 ] In applying the above concepts to the evidence before me, I begin by addressing the evidence of Sarah Crepeau. At its highest, if I accept that she was not involved in any discussions with Kathleen about the money in October of 2008, then her testimony about the characterization of the $30,000 is hearsay. The only information about the nature of the advance comes from what Nickolas Crepeau told her, that is, “My Mom is helping us out”. That evidence does not assist in rebutting the presumption of gift.

[ 47 ] Overall, Sarah Crepeau’s testimony is of little assistance to the Defendants’ case. Her version of the events is not credible, in my view. I will outline certain portions of her evidence which are suspect.

[ 48 ] Firstly, notwithstanding that she is the one who takes care of the family’s finances, she indicated that, after Nickolas returned from hunting, he advised her that Kathleen was going to provide $30,000 and not $18,000 as originally contemplated. She said she had no information about how Nickolas came to this figure of $30,000. I find this unlikely.

[ 49 ] Sarah Crepeau testified that the letter she wrote to Kathleen in May 2009 had nothing to do with the $30,000. She said that, although the letter was in response to Kathleen’s letter, it was “generated by another unrelated event which has nothing to do with this.” She implied that it was related to things Kathleen had written about her, and about restrictions on any access to Kyle by Kathleen.

[ 50 ] I do not accept Sarah Crepeau’s explanation for the letter. The words “You know exactly what involves Kyle and it certainly isn’t that agreement” belie Sarah Crepeau’s explanation about the contents of the letter.

[ 51 ] Sarah Crepeau’s testimony that the reference to “what you and Nick had discussed back in the fall will be followed through” relates to the agreement for Kathleen to have access to Kyle, makes no sense in the context of what follows in the letter. I am referring to the following:

[T]here is no way no how you will ever see Kyle on your terms with or with out[sic]Nick’s approval. I will own this decision all on my own and there is nothing you can do about it.

[ 52 ] Finally, the words, “Back to the agreement. It had nothing to do with the decision about the baby and therefore never gave you a reason to doubt our word, but you did” only make sense in the context of the repayment agreement. Sarah Crepeau failed to provide any satisfactory information to support her position that her letter to Kathleen had nothing to do with the money. She was vague and evasive when referring to the other unrelated matter that generated her letter. I reject her evidence as it relates to this letter.

[ 53 ] Overall, there is nothing in Sarah Crepeau’s evidence that rebuts the presumption of bargain.

Testimony of Nickolas Crepeau

[ 54 ] I turn now to the testimony of Nickolas Crepeau. This Defendant did nothing whatsoever to advance the defence of gift.

[ 55 ] The transcript of the telephone messages indicates an acknowledgement by Nickolas Crepeau that he owed Kathleen money, and an acknowledgement that he would have to repay her. In his testimony, he conceded that he meant to give the impression that he would repay the money.

[ 56 ] When asked if he could explain the words “My mother already knows when I have to pay her back”, in the context of a gift, he offered the following: “No comment”.

[ 57 ] He also testified that when Kathleen gave him the cheque he said to her “we’ll work something out”. No explanation was proffered for those words, which make little sense, if the monies were a gift as opposed to a loan.

[ 58 ] His evidence that $20,000 of the $30,000 was to be applied toward the purchase of the Trailside property while the balance of $10,000 was to be used to construct an apartment for Kathleen in the new home, contradicts Sarah’s testimony that she could not say what the $10,000 was used for except that it was all put toward the purchase price. She made no mention of projected renovation costs for the new home.

[ 59 ] Nickolas Crepeau could not explain why he did not return the $10,000 to Kathleen when it was clear that he was not going to do any renovations to accommodate her.

[ 60 ] Overall, Nickolas Crepeau was evasive and uncooperative during cross-examination. The “No comment” is an example of his attitude toward his duty to tell the truth.

[ 61 ] In addition, his testimony differed considerably from, and in certain instances, contradicted the answers he gave in his Examination for Discovery. The very first question on Discovery related to the use to which the $30,000 was put. Nickolas Crepeau denied that the funds were used for a down payment on the Trailside property and said he couldn’t recall what the funds were used for.

[ 62 ] When asked in cross-examination to explain the discrepancy between those answers and his evidence at trial regarding the purpose of the money, he said: “No comment”.

[ 63 ] During the examination for discovery, Nickolas Crepeau indicated he never received the letter Kathleen wrote to him. At trial, he acknowledged receipt of it, offering that his wife’s testimony relating to the letter refreshed his memory. I am skeptical about this explanation given that Sarah Crepeau prepared a response to that letter almost immediately, and both Sarah and Nickolas dropped the response off in Kathleen’s mailbox.

[ 64 ] I reject his evidence that Kathleen’s advance of the $30,000 was a gift.

Testimony of Kathleen Crepeau

[ 65 ] I accept Kathleen Crepeau’s evidence that Nickolas approached her for a loan of $18,000, and that when he did, she told him that she would provide the money, but that it would be a loan.

[ 66 ] I further accept that a couple of weeks later, either Nickolas or Sarah approached Kathleen, indicating that they now required $30,000, and not $18,000.

[ 67 ] I further accept Kathleen’s evidence that she did, at the time she transferred the funds to Nickolas, intend the money as a loan and not as a gift.

[ 68 ] I find as well that, although Kathleen signed the gift letter, she only did so to facilitate Nickolas and Sarah’s obtaining of the mortgage required to purchase the Trailside property. Without the letter, Scotiabank would not advance the funds to close the deal.

[ 69 ] The finding that the gift letter does not evidence the intention to gift the sum of $30,000 is further supported by the fact of Kathleen writing her telephone number on the back of the letter, and then telling a Scotiabank employee, within two days of signing the letter, that she had loaned, not gifted the money.

[ 70 ] I therefore find that Kathleen did not have the intention to gift the sum of $30,000.

The Defendant’s liability

[ 71 ] I turn now to the issue of each Defendant’s liability for the $30,000. The cheque for $30,000 was made out to Nickolas alone. The gift letter refers to a gift to Nickolas alone. Many of the references to the loan by Kathleen, to police and during the trial, mention only Nickolas. Kathleen intended Nickolas to benefit from the monies and he did. As there is no juristic reason for Nickolas not to repay the monies, I find he must repay the loan to Kathleen.

[ 72 ] Those factors do not determine the issue of Sarah’s responsibility for the $30,000. Sarah did benefit, along with Nickolas, from those funds. The funds were deposited in the couple’s joint account and used to complete their purchase of the Trailside property.

[ 73 ] There is no juristic reason, unless there was a gift, for Sarah to benefit from the monies and for Kathleen to be out of pocket. Put another way, Sarah received the benefit of $30,000, Kathleen was deprived of the $30,000, and unless Kathleen intended to gift those funds to Sarah, there is no juristic reason for the unjust enrichment by Sarah.

[ 74 ] The concept of absence of juristic reason for enrichment was explained this way in Kerr v. Baranow , 2011 SCC 10, at paras. 40 and 41 :

40. The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case. [Citations omitted.]

41. Juristic reasons to deny recovery may be the intention to make a gift (referred to as “donative intent”)...

[ 75 ] Neither Nickolas nor Sarah has been able to rebut the presumption of a loan. The defence of gift has not been made out, by either Defendant. Thus, both Defendants are liable to the Plaintiff.

Conclusion:

[ 76 ] The Plaintiff is entitled to Judgment in the amount of $30,000 against both Defendants.

[ 77 ] If the parties are unable to agree on costs, they are to communicate with the Trial Coordinator, within thirty (30) days of today’s date, to secure a date and time to argue costs, failing which they will be taken to have agreed on costs and no order shall be made.

Madam Justice L. L. Gauthier

Released: January 20, 2012

COURT FILE NO.: C-449-10SR
DATE: 20120120

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:
KATHLEEN CREPEAU Plaintiff – and – NICKOLAS JAMES CREPEAU and SARAH-JANE CREPEAU Defendants

REASONS FOR JUDGMENT
GAUTHIER, J.

Released: January 20, 2012