COURT FILE NO.: FS-12-17986

DATE: 2014/04/10

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lisa Marie Maclaggan, Applicant

v.

Robert Snare, Respondent

BEFORE: Justice Moore

COUNSEL: Paul D. Slan, for the Applicant

Robert Snare, In Person, the Respondent

DATE HEARD: April 2, 3, 4 & 7, 2014

ENDORSEMENT

[1] This trial involved two separate claims, the application originally brought by Ms. Maclaggan for payment to her of money held in trust, being the proceeds of the sale of her home and a claim by Mr. Snare for work done and services rendered against three numbered companies that Ms. Maclaggan owns and operates. The two claims were tried one following the other.

[2] Ms. Maclaggan testified that she was born in Newfoundland in 1963. She completed high school there and then came to Toronto in 1997 as a dance teacher. She worked at an Arthur Murray studio located at 3054 Bloor Street West in Toronto and bought that studio in 1999 through a numbered company that she Incorporated as 1373713 Ontario Ltd. (“137”). She is the sole shareholder of that company.

[3] She estimated that the annual sales volume at the Bloor Street studio was about $300,000 in 1999. By 2004, sales increased to over $1 million and that, she said, was a big deal at the time.

[4] She met Mr. Snare on Good Friday at the end of March in 2005. At that time he was living at 71 Sunnylea Ave in Toronto. He told Ms. Maclaggan that he operated two or three businesses from which he earned $1.2 million per year and employed 70 people. He said that he had been estranged from his common-law spouse for about six months and that she lived in a cottage they owned while he lived in the house.

[5] Some weeks later they began dating and several months later they established a relationship. Around that time, Mr. Snare told Ms. Maclaggan that he had purchased a home on Poynter Drive with Dean Brigham and that they planned to live in and renovate it together.

[6] At that time, Ms. Maclaggan was not aware of who was on title on the property. She moved into the property in April of 2006. She had discussed additional renovations with Mr. Snare before she moved in. She knew that he and Dean Brigham had made some renovations and repairs, but she did not know the particulars.

[7] Mr. Snare estimated that additional repairs would cost about $60,000 and he asked Ms. Maclaggan to front the cost of those on the basis that whenever the house was sold, she would be paid for her contributions toward renovations first.

[8] Ms. Maclaggan testified in a clear, concise and balanced fashion. She demonstrated a good recollection of the circumstances that she described. I have no hesitation in accepting her evidence and credit it over that given by Mr. Snare where their evidence on particular points diverges.

[9] From title and mortgage documents in evidence at this trial, it is evident that Mr. Brigham became sole owner of the Poynter Drive property on 28 April 2005. He paid $40,449.55 by way of down payment toward a purchase price of $410,000 for the property and he then took out a first mortgage of $376,380.

[10] Before moving into the property in April of 2006, Ms. Maclaggan had discussions with both Mr. Brigham and Mr. Snare. They agreed that the fair market value of the Poynter property then was $450,000 and that a fair rent for Ms. Maclaggan's home on Glenthorn was $22,800 per year. She therefore paid Mr. Brigham $37,800 for his interest in the property, including the cost of his first year rent due on Glenthorn. She did not go on title on the property at that point, however.

[11] Ms. Maclaggan believed that she owned a one half interest in the property in April of 2006 and for the next two or three years, she contributed approximately equally with the respondent to ongoing mortgage and house maintenance expenses.

[12] Both parties contributed toward expenses for the first couple of years but at some point, the respondent stopped contributing. Thereafter, the applicant paid for the mortgage and all house expenses until the respondent was evicted from the property by court order in 2012.

[13] Renovations began in April or May of 2006 and rolled out in three stages over about three years. Each phase cost approximately $80,000 and Ms. Maclaggan testified that, in total, she spent $230,000 for the renovations; the respondent contributed nothing toward these renovations.

[14] She assembled together the records that she could find and summarized those to demonstrate that she spent $159,243.04 on the renovations but she testified that she actually spent substantially more, she just could not find supporting documents for the additional expenses of about $70,000.

[15] However, she also testified and I accept that she sat down frequently with Mr. Snare as renovations were ongoing and went over the renovations and the cost of renovations with him so that each of them knew the costs incurred throughout the process.

[16] As she invested more and more money in the renovations, she became more and more concerned that her contributions were growing to more than the equity remaining in the property. She wanted to be on title and this wish was fueled by her noticing in the months following her coming to live on the property that the utility bills were addressed only to Dean Brigham and not to the respondent.

[17] Mr. Snare told Ms. Maclaggan that he was not on title because he was trying to protect his assets from claims he anticipated receiving from his previous common-law spouse. He undertook however to have his name added to the title through a slow process that he did not describe but that would somehow avoid paying maximum land transfer tax.

[18] Then, at one point, Dean Brigham's former girlfriend sued him and his equity in the house became potentially in peril. This, Ms. Maclaggan described as being a huge deal to her because she had so much money invested in the renovations at that point. So, she demanded that she wanted the entire house to be transferred into her name and the respondent agreed. He met with Dean Brigham to arrange for that transfer and ultimately Ms. Maclaggan contacted Mr. Paladino, her real estate lawyer, and met with him at his office in April of 2010 to arrange for the transfer.

[19] The respondent made no mention at that time of Ms. Maclaggan holding any interest in trust for the respondent going forward. There was no discussion about that at all, she testified. Mr. Snare offered no evidence to the contrary.

[20] Thereafter, Ms. Maclaggan increased the mortgage on the property to $425,000 because she had spent all of her reserve funds at the Bloor Street studio and needed money in order to open another studio in Yorkville at that time. By increasing the mortgage, she recovered a net of $97,295.44 which she spent to reduce her outstanding debts and to support the cost of opening the Yorkville studio, she testified.

[21] Then about six months later, she increased the mortgage again to $490,000 in October of 2010. At that time she testified that she was in extreme financial pressure and needed money for the Yorkville studio. From this increase in mortgage debt, she obtained almost $60,000 net of fees.

[22] The parties separated in November of 2011 and the house on Poynter Drive was sold several months later. In the interval, Ms. Maclaggan paid for the ongoing mortgage obligations and all utilities and other expenses.

[23] Ms. Maclaggan testified that she spent $25,000 to remediate the property for resale. She assembled together the invoices and receipts that she could find. Those confirmed payments of $14,162.49 in that regard.

[24] The property sold in October of 2012. In that transaction, Mr. Tomas represented the applicant. He holds $172,783.24 in trust from the proceeds of the sale. In addition, he has recovered $5167.75 by way of a refund of the real estate commission against which he will charge a fee of $350 plus HST.

[25] Mr. Snare agreed that the applicant became the legal owner of the Poynter Drive property in April of 2010 and that he was aware of the transfer of ownership at that time and he agreed that he never entered into a written trust agreement with the applicant with respect to that property.

[26] At no time did Mr. Snare appear on title on the Poynter Drive property. He testified that he and Mr. Brigham bought it together as equal partners but he offered no documentation to support that assertion. He offered no evidence that he and Ms. Maclaggan co-owned the property or that the title is held in trust for him.

[27] In the result, Mr. Snare’s opposition to Ms. Maclaggan’s application for a declaration of entitlement to the money that Mr. Tomas holds in trust fails. The trust funds shall be paid out solely therefore to Ms. Maclaggan.

[28] I turn now to the second claim in this matter, one that proceeded as a counterclaim for money that Mr. Snare claimed is owing to him by Ms. Maclaggan’s numbered companies. Although all three companies were named as parties, Mr. Snare testified that the oral contract that he relies upon is one that he made with Ms. Maclaggan in her capacity of president of 137. He offered no evidence to support a claim against the other two companies and his claim against those companies therefore fails.

[29] Mr. Snare testified that 137 operated the Arthur Murray dance studio on Bloor Street in west Toronto. He was hired to perform IT and administrative functions at that studio.

[30] 137 operated the Bloor Street studio for about nine years before Mr. Snare was hired. He alleged that it had not been running smoothly during those years but because of his talent and retail experience, he came on board and updated systems, procedures and provided administrative oversight to increase efficiencies.

[31] He explained, for example, that he implemented a software system that had been purchased but had not yet been made operational. He also computerized the studio from front to back. He purchased computers and set up a network and loaded the unused software upon it.

[32] He computerized song selection capabilities to assist the teachers in selecting songs for dance purposes. He also initiated a reporting system to Arthur Murray International for royalty purposes.

[33] He then set about cleaning up the studio. He installed speakers, changed the phone system, addressed insurance issues and set up health and dental coverage for employees. He also set up a retail shoes operation within the studio.

[34] All of this took place over the first approximately 1 1/2 years. He testified that the applicant wanted the Bloor Street studio to be set up and operating as a flagship studio. She also wanted to grow the business and set up additional studios and so he assisted by looking for space and that led to his involvement in the build-out and setup of the Yorkville studio.

[35] He explained that after the Yorkville studio was operational, he also assisted in setting up a franchise for a studio at Rean Drive. That franchise was ultimately assumed by a former employee from Bloor Street.

[36] He also had some involvement in setting up systems in the Woodbridge studio which he described as a release territory operation. And he oversaw renovations work done at the Bloor Street studio.

[37] That Mr. Snare performed the services he described is not contested but very much at issue is the matter of whether Ms. Maclaggan agreed on behalf of 137 to pay for all of those services.

[38] Mr. Snare acknowledged that by the spring of 2010 the Bloor Street studio was struggling financially and he agreed to no longer draw out his monthly fee of $5,000. He testified that he agreed to defer taking out money but did not agree to abandon his claim to that money.

[39] He seeks payment of $90,000, being the monthly amount calculated over the 18 months following May of 2010 until he parted company with 137 and Ms. Maclaggan in the Fall of 2011.

[40] Ms. Maclaggan testified, and I accept, that there was more to the agreement between 137 and Mr. Snare than the monthly fee for services. She agreed to pay $5,000 per month on condition that the Bloor Street studio revenues would increase to $1.5 million per year. Revenues were hovering near $1.3 million when the agreement was made in 2007; they never did rise to the target specified.

[41] In late 2009, Ms. Maclaggan told Mr. Snare that 137 could no longer afford to pay him $5000 per month. He replied that he realized that the studio no longer needed him. At that time he was only working part-time at the Bloor Street studio. He said that he would begin looking for alternate income and employment. The original, oral agreement was amended and ended through this subsequent oral agreement.

[42] In 2010, Mr. Snare volunteered to oversee the build-out for the Yorkville studio while he continued to seek alternate employment or other sources of income. Ms. Maclaggan testified to how Mr. Snare made extensive proposals to Arthur Murray International regarding services that he might offer for the opening of new studios. He made proposals to the developer of the Dance Pro software program used in the Arthur Murray studios. He told Ms. Maclaggan that he had contacted friends in the advertising business for work. He told Ms. Maclaggan that he had lined up something with Dean Brigham relating to managing a new business that Mr. Brigham and a partner were opening but he later advised her that that opportunity did not work out.

[43] After the end of 2009, pursuant to the amended agreement, 137 ceased paying the monthly stipend that it had paid consistently from January of 2008. Whatever services Mr. Snare provided for 137 in 2010 and 2011 were provided on a gratuitous basis.

[44] Mr. Snare has not established a contractual or other basis to support his claim against 137; the claim is therefore dismissed.

[45] Costs shall follow the event. Ms. Maclaggan has been entirely successful in this action both personally and on behalf of her companies. She and the companies are therefore entitled to recover costs, if demanded, in amounts to be agreed upon or fixed by me.

[46] If the parties cannot agree on costs, they may, within thirty days, each submit written position papers of no more than three pages to the trial coordinator, who direct them to my attention.

Moore J.

DATE: 10 April 2010