ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 11-28809SR
DATE: 2012-10-17

B E T W E E N:

Tracey Murray

Ms. M. Birdsell, for the Plaintiff

Plaintiff

• and -

Richard Toth

No one appearing

Defendant

HEARD: 5 September 2012, and reserved for decision

CRANE J.

Facts

[ 1 ] Tracy Murray is a 45 year-old single mother, suffering from diabetes, scoliosis and Scheuermann’s disease. She has been unable to work for the last 25 years and her income consists of Ontario Disability and Canadian Pension Plan payments.

[ 2 ] In 2003 she was injured in a motor vehicle accident. She was engaged in litigation to recover damages from that accident when through a mutual friend she met the defendant, Richard Toth. At the time Ms. Murray was living on Manitoulin Island and Mr. Toth was living in Hamilton. Mr. Toth visited often, sometimes bringing gifts for Ms. Murray’s two children. Before the litigation was complete, Mr. Toth suggested that Ms. Murray and her children live with him in Hamilton.

[ 3 ] Ms. Murray agreed to move to Hamilton; however, she initially resisted living with Mr. Toth. In July 2009, Ms. Murray and her children moved to an apartment in Hamilton. In September of 2009 Ms. Murray received approximately $70,000 in damages from the motor vehicle accident litigation. She retained a real estate agent and began looking to buy a house for herself and her children. She never did purchase a house. Toth had convinced her to move in to his house. Ms. Murray moved in on 24 September, 2009 with the expectation that she would pay for her children’s expenses and Mr. Toth would pay for all other household expenses. Ms. Murray also believed that Mr. Toth intended to gift one half of the ownership of the house to her children.

[ 4 ] In October 2009, Mr. Toth proposed marriage. Ms. Murray accepted. No date was set.

[ 5 ] As soon as Ms. Murray moved into his house, Mr. Toth began borrowing large sums of money. After she moved in she learned that Mr. Toth was several months in arrears with his bills. She lent him money to pay his outstanding bills, and continued to pay many of his bills for their shared expenses. In addition, she paid for improvements and renovations of the house, on the belief that one day her children would benefit. She paid for all the expenses in the house, up to and including replacing the kitchen sink. She paid for the purchase of motorcycles and accessories for motorcycles. Mr. Toth told Ms. Murray that he planned to make money from selling motorcycles, and that with this money he would be able to pay her back. On one occasion Mr. Toth borrowed Ms. Murray’s bank card (to make a $100 purchase). He then withdrew $1,200 from her account without her permission.

[ 6 ] During the short time they lived together Ms. Murray purchased a Ford truck and a Harley Davidson motorcycle for her own use. Ms. Murray registered these vehicles under Mr. Toth’s name, on the basis that his insurance rates were superior to her own.

[ 7 ] She also purchased a bicycle for her son and a refrigerator to store her insulin. Both of these items disappeared from the house. Mr. Toth claimed to have no knowledge of their whereabouts.

[ 8 ] On July 9, 2010, without notice to her from Mr. Toth, the police supervised the eviction of Ms. Murray and her two children from the house. Ms. Murray believed she had two and one-half hours to pack and remove all of her furniture and belongings, and leave the property. Mr. Toth was not present at the eviction, though two of his friends showed up and offered “to help” Ms. Murray. With no alternatives, Ms. Murray relied on Mr. Toth’s friends to move her furniture and store her truck (she could not drive the truck as the insurance had expired). In exchange, she sold Mr. Toth’s friend her motorcycle for $10,000. She had only recently purchased this motorcycle for $15,000 and days earlier she had rejected his identical offer.

[ 9 ] I find on all the evidence upon inference that Mr. Toth orchestrated the eviction with his friends so as to control Ms. Murray and her remaining assets.

[ 10 ] Ms. Murray’s life went steadily downhill after eviction. She felt forced, with no alternative accommodations, to move with her children into an infested apartment above a bar owned by another of Mr. Toth’s friends. During the move, much of her furniture was destroyed or failed to arrive. They had no beds, and alternated sleeping on the couch. She never saw her truck again. She was eventually paid the $10,000 for the motorcycle, but by that time she was told that she owed most of it to the bar owner for rent and bar meals.

[ 11 ] For the five weeks, while Ms. Murray and her children lived in deplorable conditions, Mr. Toth refused to forward her CPP and Disability payments. As a result she and her children incurred a large debt with the bar owner, buying the majority of their meals from his kitchen on credit. When Ms. Murray received payment for the motorcycle the bar owner claimed an excessive portion of it for rent and food.

[ 12 ] To make matters worse, the lives of Ms. Murray’s children were threatened by Mr. Toth’s friends. She sent them to live with her mother in Manitoulin Island and then soon followed. Ms. Murray was humiliated, shocked and drained by this ordeal.

Default Judgment

[ 13 ] Mr. Toth did not defend the action and was noted in default. Default proceeding are governed by Rule 19 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194. Under Rule 19.02 a defendant who has been noted in default is deemed to admit the truth of the allegations of fact made in the statement of claim. Under Rule 19.06 if the facts alleged establish that the plaintiff is entitled to judgment, the plaintiff will succeeded. Admissions of fact will not necessarily be sufficient to entitle a plaintiff to judgment on a motion for judgment or at trial. It is for the court to conduct an investigation of whether the evidence is sufficient to entitle the plaintiff to judgment. (See for instance, Nikore v. Jarmain Investment Management Inc. , 2009 46655 (ON SC) ).

Repayment of Loan

[ 14 ] In the Statement of Claim, the plaintiff claims $17,800 for repayment of loans (claimed under breach of contract). At the time of trial, Ms. Murray had recalculated the loans to $14,182. The specifics of the expenses are set out at Tabs 7 and 8 in the plaintiff’s Document Brief. Ms. Murray testified that she and Mr. Toth agreed that he would repay the money when she asked. Prior to commencing this action Ms. Murray requested the loan be repaid. Mr. Toth refused.

[ 15 ] The facts are uncontested. There is no dispute that between September 2009 and July 2010, Ms. Murray provided cheques, cash and gifts totalling $14,182 to her then boyfriend, Mr. Toth. When the relationship broke down upon the eviction of Ms. Murray, she demanded repayment of the loan; Mr. Toth refused. The question is whether the transfer of money constituted loans or gifts of money.

[ 16 ] Where one person transfers money to another in circumstances where the person paying the money is not in debt to the person receiving the money, or where there is no presumption of advancement, then the burden falls on the person receiving the money to demonstrate that the money was a gift and not a loan. There is no presumption of advancement in this case. [1] Therefore, Mr. Toth must demonstrate that the money was a gift, not a loan. In order to do so, he must demonstrate:

1. An intention to donate;

2. A sufficient act of delivery; and

3. Acceptance of the gift.

[ 17 ] The standard of proof for intention to donate is high ( Johnstone v. Johnstone (1913), 1913 613 (ON CA) , 12 D.L.R. 537 ). As Mr. Toth did not present evidence, only the second requirement has been established – the actual delivery of the money to Mr. Toth. Mr. Toth has therefore failed to discharge his burden of proving that the money transferred to him constituted a gift. Moreover, the evidence provided by Ms. Murray supports that she had no intention to donate the money to him. Mr. Toth had told her that he was working to make money, and upon receiving payment he would reimburse her. In addition, on one occasion he took money from Ms. Murray without her knowledge or consent. There is no intention to donate present in such a transaction.

[ 18 ] As Riche D.C.J. warned in Simmons v. Clarke , (1983), 40 Nfld. & P.E.I.R. 446 (Nfld. Dist. Ct.) at para. 15 and as cited at para. 71 of Colangelo v. Amore , 2010 ONSC 5657 :

Persons who obtain substantial sums of money from friends should be careful to ensure that if there is no intention to repay the money that this is evidenced satisfactorily so that there can be no doubt. Public policy demands that such casual passing of monies should be repayable unless there is satisfactory evidence to show that it was not intended by both parties to be repaid.

[ 19 ] There is no evidence to show that the $14,182.00 was intended to be a donation and therefore it is more likely that the money was exchanged with the intention that it would be repaid. Further, if the money was given as a gift between two individuals intending to be married, then the gift must be returned because the recipient of the gift, Mr. Toth, was the one to break the engagement. [2]

[ 20 ] I grant the plaintiff judgment in the sum of $14,182.00 as claimed.

Conversion

[ 21 ] The plaintiff claims $18,000.00 for relief from the conversion of her truck. The tort of conversion has been explained by the Supreme Court:

The tort of conversion involves a wrongful interference with the goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner’s right of possession. The tort is one of strict liability, and accordingly, it is no defence that the wrongful act was committed in all innocence. ( Boma Manufacturing Limited v. Canadian Imperial Bank of Commerce , 1996 149 (SCC) , [1996] 3 S.C.R. 727 ).

[ 22 ] The essential elements for the tort of conversion are:

1. The plaintiff has a possessory interest in personal property;

2. The personal property is identifiable or specific; and

3. The defendant intentionally committed a wrongful act in respect of the property inconsistent with the plaintiff’s right of possession. ( 2934752 Canada Inc. (c.o.b. Highland Transport) v. W. Pickett & Bros. Custom Brokers Inc. [1999] O.J. No. 5435 (S.C.J.) .)

Did the plaintiff have a possessory interest in the truck?

[ 23 ] The plaintiff testified that she purchased the Ford truck for her personal use. She acknowledged that the truck’s registration and insurance was put in Mr. Toth’s name. She explained that they agreed to do this because Mr. Toth had a better insurance rate and she trusted him. She testified that she had possession of the truck’s keys, and that she drove the truck. As further evidence, Mr. Toth had attempted to sell the motorcycle (also purchased by Ms. Murray and registered to Mr. Toth) to his friend Donny. Ms. Murray had intervened to prevent the sale.

[ 24 ] Ms. Murray testified that on 24 December she requested that Mr. Toth acknowledge her ownership of the truck and the motorcycle. The resulting document (Tab 3, Document Brief) was signed by Mr. Toth and witnessed by one of Mr. Toth’s friends on December 24, 2009.

[ 25 ] The document does not in fact establish that Ms. Murray had ownership of the truck or the motorcycle. Instead the document states that Ms. Murray purchased the vehicle and then it was “placed into my [Mr. Toth’s] name”. At the bottom of the document, below the signatures, is a floating sentence “FOR INSURANCE PURPOSES”. While this document is certainly consistent with Ms. Murray’s testimony that she purchased the vehicle it does not establish ownership. However, in order to meet this element for conversion, Ms. Murray need only demonstrate that she had a possessory interest in the truck, which she has done.

Was the personal property specific?

[ 26 ] This element is satisfied. The document dated December 24, 2009 sets out the vehicle “VIN” number.

Did the defendant intentionally commit a wrongful act in respect of the property inconsistent with the plaintiff’s right of possession?

[ 27 ] The plaintiff testified that on the day she was evicted from Mr. Toth’s home, Mr. Toth’s friend volunteered to help her move the truck. She left the truck with him and has never seen it again. Ms. Murray’s evidence is that Mr. Toth owed money to his “friends” and was under pressure to repay them. Her evidence is that it was on the weekend of her eviction that she learned that Mr. Toth was involved with a motorcycle gang.

[ 28 ] The measure of damages for conversion where the defendant is unable to deliver the chattel to the plaintiff is the value to the owner of the goods converted at the date of conversion ( Tridont Leasing (Canada) Ltd. v. Saskatoon Market Mall Ltd. (1995), 1995 6257 (MB CA) , [1995] 5 W.W.R. 641 (Sask. C.A.) ).

[ 29 ] I grant the plaintiff judgment in conversion for the reasonable value of the truck fixed at $15,000.00. It was purchased on 5 October, 2009 for $18,500.00 and converted on 9 July, 2010.

Unjust Enrichment

[ 30 ] The plaintiff also claims $2,000.00 for unjust enrichment to compensate her for the money she spent on renovations to Mr. Toth’s home. To establish unjust enrichment a plaintiff must show the following:

1. A valuable contribution (benefit);

2. A corresponding deprivation;

3. No juridical right to retain the benefit. ( Becker v. Pettkus (1980), 1980 22 (SCC) , [1980] 2 S.C.R. 834 (S.C.C.) )

[ 31 ] The Statement of Claim is taken as fact under Rule 19, accordingly the first two elements have been met. Ms. Murray paid $2,000.00 for improvements to Mr. Toth’s home and she therefore was deprived and he was benefited. As to the third element, the usual type of “juridical” reasons to justify the defendant keeping the benefit includes bestowing a gift and giving due to the terms of a contract.

[ 32 ] In this case there is no contract requiring that the money be transferred for a particular reason. Ms. Murray may well have made the home improvement in contemplation of her married life in that home and for the future benefit by partial property transfer to her children. However, should this have been the arrangement, Mr. Toth failed to honour it. The evidence is that Ms. Murray did not pay rent for herself or her children. Ms. Murray lived with Mr. Toth for approximately 10 months and the $2,000.00 could be considered a contribution to pay for herself and her two children. (See Eisener v. Baker, (2007) 2007 CarswellBC 83 (B.C.S.C.) ). However, no evidence to that effect was put forward, indeed the evidence from Ms. Murray is that she was invited to share Mr. Toth’s house rent free.

[ 33 ] Moreover, in Eisener v. Baker , Ms. Eisener lived in Mr. Baker’s house without contributing to the bills and her only contribution was a “share of the household chores” (at para. 59). The court in that decision concluded that Ms. Eisener “does not appear to have been deprived by doing so” (at para. 59). In Ms. Murray’s case she was greatly deprived by the months she spent living with Mr. Toth. Unlike Ms. Eisener, Ms. Murray contributed to groceries and bills (which she did not claim in damages in this case).

[ 34 ] I grant the plaintiff her claim in the sum of $2,000.00.

Intentional Infliction of Mental Suffering

[ 35 ] The plaintiff claimed that she suffered profound depression and emotional and nervous shock and that the defendant intended that his actions would cause nervous shock to the plaintiff. The plaintiff also claimed that the defendant conspired with his friends to ensure that she was in such dire circumstances that she would have to accept the offer to sell her motorcycle for $5,000 less than she had paid, shortly before. The plaintiff claims for $25,000 general damages for intentional infliction of nervous shock and mental suffering.

[ 36 ] To make out this cause of action Ms. Murray must establish that the defendant calculated to cause or otherwise intentionally caused harm to the plaintiff:

It is sufficient if the defendant has recklessly disregarded whether or not harm will ensue. The communication of a knowingly false statement may give rise to the presumption that the harm was intentionally caused. ( Wilkinson v. Downton (1897) 2 Q.B. 57 (Eng. Q.B.) ; Correia v. Canac Kitchens , 2009 CarswellOnt 3712 (Ont. C.A.) ).

[ 37 ] The harm must be the natural and probable result of the defendant’s actions and the plaintiff’s suffering must be more than “mere anguish and fright”. Emotional harm need not amount to a psychiatric condition before it can be compensable ( Tran v. Financial Debt Recovery Ltd . (2000), 2000 22621 (ON SC) , 2 C.C.L.T. (3d) 270 (Ont. S.C.J.) reversed on other grounds (2001), CarswellOnt 8246 (Ont. Div. Ct.) ).

[ 38 ] This cause of action, as are the others, is undefended on the facts. However, relief is granted only under the law.

[ 39 ] The case authority submitted by the plaintiff’s counsel was in the employment law context and is not helpful for establishing this tort in personal relationships. (Though the case does helpfully set out that it is not necessary to bring a medical expert in order to establish a “visible and provable illness” Prinzo v. Baycrest Centre for Geriatric Care , 2002 45005 (ON CA) , [2002] 60 O.R. (3d) 474 , O.J. No. 2712 (O.C.A.).)

[ 40 ] Generally, damages are not awarded under this head of damage in family law disputes ( Frame v. Smith (1987), 1987 74 (SCC) , 42, C.C.L.T. 1 (S.C.C.) ). Justice Wilson, in dissent, discussed the tort of intentional infliction of mental suffering in the family law context at paragraph 47:

...the tort of intentional infliction of mental suffering would be relatively ineffective in encouraging conduct conducive to the maintenance and development of a relationship between both parents and their children. It is obvious also that such a cause of action, if it were made available throughout the family law context, would have the same potential for petty and spiteful litigation and perhaps worse, for extortionate and vindictive behaviour as the tort of conspiracy. [...] It is not for this Court to fashion an ideal weapon for spouses whose initial, although hopefully short-lived objective, is to injure one another, especially when this will almost inevitably have a detrimental effect on the children.

[ 41 ] This reasoning was adopted in the majority judgment at paragraph 8. The Superior Court has recently relied on Justice Wilson’s reasoning to confirm that the tort should not be extended to the family law context, even if no children will be harmed in the particular circumstances (Lo v. Lo, [2009] 70 R.F.L. (6 th ) 309 )). It is my conclusion that this cause of action does not here lie in law.

[ 42 ] However, Courts have awarded damages under this head (when not invoking the prescient injunction of Wilson, J.); ( MacKay v. Buelow (1995) 22 C.C.L.T. (2d) 184 (Ont. Gen. Div.) ; K.(A.) v. Kennedy , 2002 CarswellOnt 345 ; Rota v. Bartzis , 1997, CarswellAtla 592; Tzeng v. Tzeng 2007, CarswellOnt 3098 , (but refusing the action when citing the invocation), Lo v. Lo , 2009 CarswellOnt 2979 ; Dryden v. Dryden , 2011 CarswellOnt 13740 .

These findings lead to the last of the substantive claims, namely punitive and aggravating damages. The Statement of Claim claims for $20,000 in aggravated and punitive damages.

Aggravated Damages

[ 43 ] Aggravated damages are distinct from punitive damages, and both aggravated and punitive may be awarded if the facts support each. Aggravated damages are to compensate; punitive damages are to punish and to deter.

[ 44 ] Because aggravated damages are compensatory in nature, they may only be awarded if the acts alleged set out an independently actionable complaint. ( Netzel v. Zurich Indemnity Co. Of Canada (1994), 1994 16664 (MB KB) , [1994] 9 W.W.R. 268 (Man. Q.B.) ). Ms. Murray is being compensated for conversion and unjust enrichment. The plaintiff must then identify a separate, independent actionable wrong in order to succeed in her claim for aggravated damages.

[ 45 ] In sexual assault cases there has been a distinction made between general damages for pain and suffering and aggravated damages for the humiliation, degradation and fear of repetition ( T. (J.M.) v. D.(A.F.) , 1995 CarswellSask 58 .)

Punitive Damages

[ 46 ] Punitive damages may be awarded where the defendant’s conduct is harsh, vindictive, reprehensible and malicious or where the actions are high-handed, arrogant, and displays reckless disregard for the plaintiff’s rights resulting in damages to the plaintiff’s pride, self-respect and reputation. ( Whiten v. Pilot Insurance , (2002), 2002 SCC 18 , 2002 CarswellOnt 537 (S.C.C.) ; Malette v. Shulman (1987), 1987 4096 (ON SC) , 43 C.C.L.T. 62 (Ont. H.C.) affirmed (1990), 1990 6868 (ON CA) , 2 C.C.L.T. (2d) 1 (Ont. C.A.) . Punitive damages may also be awarded for the tort of conversion ( Ozmond v. Young (1980), 1980 1757 (ON SC) , 109 D.L.R. (3d) 304 (Ont. Div. Ct.) ).

[ 47 ] The case at bar is not of a mutually loving relationship having soured and one partner seeks to air their troubles before the court. On the evidence it appears that Mr. Toth did not enter into a relationship with Ms. Murray with the intention of sharing a life with her. His proposal of marriage was, in probability, a sham. Mr. Toth knowingly engaged in a financially exploitative relationship intent on taking advantage of the windfall Ms. Murray would gain from a litigation settlement. He had every intention of benefitting from the relationship and of leaving her with nothing, relying on her generosity, trust and love. When her money was exhausted he unceremoniously removed her from his house, leaving her with no choice but to sell her motorcycle to obtain cash. This callous exploitation is reprehensible and harmful. Ms. Murray was financially and mentally devastated, she was under the impression that she was in a loving relationship. She was hurt and humiliated to learn that Mr. Toth had used the relationship for different purposes.

[ 48 ] Mr. Toth’s behaviour went beyond direct financial harm. His actions demonstrate that he assisted others as well. He had no proper reason to deny Ms. Murray her CPP and Disability payments after she had been evicted. Had he forwarded these cheques to Ms. Murray when requested, she could have avoided weeks of living with her children in squalor above a bar. His orchestrated, callous method of eviction could only be calculated to so crush the plaintiff as to take her from her independent judgment and will. On the uncontested evidence of Ms. Murray I find that Mr. Toth intended the actual consequences of his actions, as per Wilkinson , supra.

[ 49 ] This is a case where the defendant’s conduct should be deterred. He used the guise of a loving relationship to take money from a trusting, (though perhaps gullible) woman, abusing that trust not only of Ms. Murray but significantly, her children, with whom, he had established a gift giving relationship.

[ 50 ] The defendant by deceit “borrowed” money from the plaintiff in the knowledge that lacked the means and the intention to repay. He used the plaintiff’s affection for him to induce a belief that the money could and would be repaid. He arranged the eviction of the plaintiff with his co-conspirators in a manner so as to put the plaintiff, her children, and her remaining property (the truck and motorcycle) under the control of his co-conspirators. The result was that the truck was converted and the motorcycle sold at a distress price with the proceeds largely going to a co-conspirator.

[ 51 ] On the conduct of the plaintiff as found, I award a sum as punishment and deterrent in the amount of $15,000.00. Hill v. Church of Scientology of Toronto , 1995 59 (SCC) , [1995] 2 S.C.R. 1130 at 1208 .

Prejudgment Interest and Costs

[ 52 ] The plaintiff will have prejudgment interest in accordance with the Courts of Justice Act , commencing the 10 th day of July, 2010 on the judgment sum of $46,182.00 ($14,182.00 + $15,000.00 + $2,000.00 + $15,000.00).

[ 53 ] A Bill of Costs has been filed. The time and rates are reasonable and the services required. I fix costs as claimed, rounded down to $4,500.00 all inclusive.

CRANE J.

Released: October 17, 2012

COURT FILE NO.: 11-28809SR
DATE: 2012-10-17

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Tracy Murray Plaintiff - and – Richard Toth Defendant REASONS FOR JUDGMENT CRANE J. DSC:mg

Released: October 17, 2012

[^1]: There is a presumption of advancement between spouses, but this does not apply to common-law spouses or individuals who are engaged to be married. (Herviex v. Anderson (1984), 1984 2636 (SK KB) , 39 R.F.L. (2d) 315 (Sask. Q.B.) affirmed (1985), 46 R.Fl.L. (2d) 320 and cited in Veitch (Trustee of) v. Rankin, [1997] O.J. No. 4642 , 41 O.T.C. 14 .

[^2]: In the case of gifts made in contemplation of marriage, if the giver breaks the engagement then the recipient of the property may retain the gift, but if the donee breaks the engagement, the gift must be returned: Iliopoulos v. Gettas (1981) 1981 1703 (ON SC) , 32 O.R. (2d) 636 (Ont. Co. Ct.) .