ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-08-00359873
DATE: 20140728
BETWEEN:
Manuela Estrela Andrade
Plaintiff
– and –
Henrique E. Andrade and Leonardo Andrade, Estate Trustee for Luisa Cabral Andrade
Defendants
John Longo and Pamela Miehls, for the Plaintiff
Patrick Summers, for the Defendant, Leonardo Andrade, Estate Trustee for Luisa Cabral Andrade
Andrew Anthony, for the Defendant, Henrique E. Andrade
HEARD: March 31 – April 5, 2014, April 7, 9, and 10, 2014
E.M. Morgan J.
[1] The Plaintiff, Manuela Estrela Andrade (“Manuela”), seeks a declaration that she is the beneficial one-half owner of a residential property located at 510 Crawford Street, Toronto (the “Property”), and an order for partition and sale of the Property. Her late husband, Joseph Andrade (“Joseph”), and his brother, the Defendant, Henrique E. Andrade (“Henry”), were titleholders as tenants-in-common since 1979.
[2] Joseph died in March 2007. His interest has been inherited by Manuela, who is now registered as tenant-in-common of the Property in Joseph’s place.
[3] Henry consented to an Order dated September 27, 2011 assigning his interest in the Property to his mother, Luisa Cabral Andrade (“Luisa”). He takes the position that Joseph’s interest was also held in trust for their mother, and that, accordingly, Manuela’s interest as Joseph’s successor in title is only as co-trustee and not as beneficial co-owner.
[4] Luisa passed away in January 2014. The action has been continued against her youngest son, Leo Andrade (“Leo”), as her estate trustee (“Luisa’s Estate”). Leo currently resides in the Property.
I. Purchase of the Property
[5] Luisa’s husband (the father of Henry, Joseph, and the other Andrade siblings) died in 1968 when Luisa was forty years old. In 1969, she immigrated to Canada from Portugal with the eldest of her seven children, Maria Luisa Andrade (“Maria Luisa”). The rest of the children arrived from Portugal in 1972 and reunited with their mother.
[6] The evidence is that Luisa worked sporadically prior to 1972, but once her other six children arrived in Canada she never worked again. From 1972 until her death in 2014, she earned no income and was entirely supported by her children who worked. In her examination for discovery, Luisa specifically conceded that at the time the Property was purchased in 1974, she had no money of her own to put toward the purchase.
[7] Everyone who testified at trial, including Manuela, Henry, and several of the Andrade siblings, described a tight-knit family that greatly respected and continuously supported their mother, and that tended to pool resources to an unusual extent. As each child left school and began their working lives, they contributed their paycheques (or a substantial portion thereof) to their mother for her support and for support of the children still too young to work.
[8] The Property was purchased in September 1974. Luisa had not worked for several years at that point, but Henry and his second oldest sister, Maria Jesus Andrade (now Maria Jesus Melo) (“Maria Jesus”), were working. Manuela, who had already started dating Joseph, testified that Joseph was working a full-time night shift at Swiss Chalet restaurant at the time. Her family knew the Andrade family, as they hailed from the same town in the Azores, Portugal. Manuela’s brother-in-law was the head cook at Swiss Chalet, and at Luisa’s request he had arranged for Joseph to get a job there.
[9] It was Manuela’s evidence that Joseph contributed money earned at Swiss Chalet toward the purchase of the house, and that she understood that Henry had done the same. Henry testified that Joseph played no role in the purchase of the Property. Indeed, in his Statement of Defence, he pleads that at the time of the purchase Joseph “was only 13 years old and attending school.”
[10] Henry’s recollection of Joseph’s age and work status at the time the Property was purchased is faulty at best. Manuela testified that Joseph was, in fact, 15 years old, not 13. As it turns out Manuela was correct, as the record shows that Joseph was born in 1959, making him 15 years old in 1974. Moreover, Henry could not remember which school Joseph attended, and the evidence of Joseph working at Swiss Chalet at the time was corroborated by Joseph Cordero, Manuela’s nephew who worked there with Joseph in 1974.
[11] In fact, none of the siblings that testified had a clear memory of Joseph’s comings and goings in the early to mid-1970’s, although all of them observed that Joseph had barely ever gone to school. Even Henry conceded under cross-examination that Joseph often worked at night when he was supposedly at school during the day. Joseph’s siblings related a number of stories about the authorities reporting his chronic truancy to Luisa during the early 1970’s.
[12] Manuela’s description of Joseph working and contributing to the family expenses at a young age fits the traditional pattern established by the Andrade family. With the exception of the youngest son, Leo, all of the children joined the workforce early in their lives and handed their paycheques over to their mother to help maintain the household.
[13] Maria Jesus testified that she came to Canada at 16 years old and started working instead of going to school; indeed, she had spent her last several years in Portugal out of school and tending to the family in her mother’s absence. Manuel Andrade (“Manny”), the third oldest son, testified that he left school to work full time at the beginning of grade 9. The youngest sister, Maria Ludevina Andrade (now Maria Ludevina Furtado) (“Maria Ludevina”), testified that she left school at the end of grade 8. Henry, who took the position that Joseph could not have been working in 1974 when he was only 15, testified that he himself started working full-time in a factory in Portugal at the tender age of 10 years old.
[14] The Property was initially purchased in the names of Henry and Maria Jesus, as co-tenants. Both of them testified that the reason title was taken in their names was that, with the exception of Maria Luisa who was already married, they were the only two family members of age who had sufficient income to potentially qualify for a mortgage. The small deposit of $1,000 required with the purchase was provided by funds borrowed from a family friend, John Tobeka. The balance of the purchase was mortgage financed, with a first mortgage from Avco Financial Services and a second, private mortgage from other family acquaintances, Mr. and Mrs. Senra.
[15] The mortgage payments were covered by a combination of rental income earned from tenants to whom part of the Property was occasionally rented, and the paycheques of the working children. At the time of the purchase, this included Henry, Maria Jesus, and Joseph.
[16] While there is some debate among the siblings as to which among Henry, Maria Jesus, and Joseph contributed more or less to the purchase, there is one thing on which all of the witnesses are unanimous: Luisa put no money of her own toward the purchase of the Property. She had not worked for a number of years prior to 1974, and had no income to contribute to the purchase or financing of the Property. As indicated above, Luisa deposed to this herself at an earlier stage in this proceeding.
[17] Maria Jesus testified that although the Property was initially registered in her name as co-tenant, it was her understanding that, in effect, Luisa was to have a life interest. In her words, “The house was for my mom to raise her children.” That evidence also concords with Henry’s position at an earlier stage of the action, although he has changed his view during the course of the litigation.
[18] At one point at trial, Henry testified that, “My position has always been that Crawford Street was my mother’s.” At another point, however, he testified that he didn’t even know the concept of a trust, or that real estate could be held in trust, until this litigation began. Both of these positions were different than the view he expressed in a proposed amended pleading he submitted earlier in the proceedings, the contents of which were sworn to be true in an affidavit of June 22, 2011. At paragraph 34 of his proposed Fresh As Amended Statement of Defence and Counterclaim, Henry contended that what Luisa owned amounted to a life estate, and not beneficial ownership:
Henry and Maria, and later Henry and Joseph, always understood that although the Property was being held in trust for the benefit and use of Luisa during her lifetime, upon Luisa’s death the Property would be sold and each of the children who contributed toward the Property would receive an equitable share of the proceeds of its sale and remaining equity. [emphasis added]
[19] Maria Jesus attended at the office of Albert Miller (“Miller”), the lawyer who represented her and Henry on the purchase of the Property in 1974, but has only a scanty memory of the meeting. She testified that they never discussed the issue of creating a trust for her mother’s benefit, and that she does not know whether Luisa ever talked to Miller about this or not. In fact, Maria Jesus was uncertain as to whether Luisa ever met with Miller at all. As far as she can recall, the issue of a trust never came up.
[20] Miller was called by Henry’s counsel as a witness. Miller could not locate his old file, but seemed to recall that Luisa “was apparently advancing whatever funds were needed”. He also stated with some degree of confidence that, “The question of a trust would have been gone over with them. I believe they understood the notion of it…” He confirmed that he never met with Luisa, but his memory of the clients that he did meet with was surprisingly specific. He recalled that Maria Jesus and Henry “had just finished school”.
[21] Frankly, the most noteworthy thing about Miller’s recollections is that they are objectively wrong at virtually every turn. Not only had Maria Jesus and Henry not just finished school, neither one of them had gone to school for at least the past five years since their mother had left Portugal in 1969. Furthermore, Luisa, as noted above, had no funds of her own and did not advance anything in respect of the purchase of the Property.
[22] Likewise, Maria Jesus and Henry both testified that, contrary to Miller’s supposed recollection, no one ever discussed forming a trust for their mother’s benefit. As indicated, Henry testified that he did not even know the term “trust” until this litigation began. Indeed, it does not seem logical that a lawyer would turn his mind to discussing whether a trust was needed with Maria Jesus and Henry as the potential trustees of the Property, without ever discussing it, or even meeting with, Luisa as the potential beneficiary.
[23] It is clear to me that no one ever discussed or turned their minds to forming a trust for Luisa’s benefit at the time the Property was purchased in 1972. Although Luisa was meant to live in and make use of the house for herself and the other children, she never contributed any money of her own to the purchase.
[24] The funds for purchasing the Property were borrowed and the loans were serviced by Luisa’s unmarried working children – Maria Jesus, Henry, and Joseph. The evidence is that the mortgage payments for the most part were paid from Luisa’s bank account, but that the funds were supplied by the children. Title was taken in the names of Maria Jesus and Henry as the two contributors who were old enough to go on title.
II. The transfer to Joseph
[25] In 1979, Maria Jesus and Henry as co-tenants transferred the Property to Henry and Joseph as tenants-in-common. Miller handled this transfer as well, but again cannot locate his file.
[26] On the witness stand, Miller could not recall why the owners changed from co-tenants to tenants-in-common. In cross-examination it was put to him that co-trustees would logically hold title as co-tenants, and that the fact that Henry and Joseph were registered as tenants-in-common suggested that they were each beneficial owners rather than trustees. Miller’s response was cryptic: “I can’t agree with you and I can’t disagree with you.”
[27] Once again, Miller asserted that in 1979 he met with Joseph, Maria Jesus, and Henry and discussed forming a trust for their mother. His recollection of this transfer was again contradictory and unreliable. At one point in his testimony he stated that, as in 1974, he never met Luisa, and at another point he stated with confidence that Luisa did not speak much English.
[28] Miller also explained with confidence that the reason for the 1979 transfer was that Maria Jesus was getting married, and that with Maria Jesus having a spouse on the horizon Joseph would be a more suitable co-titleholder. Miller’s confidence, however, was again misplaced. In fact, Maria Jesus had by that time already been married for three years, since 1976.
[29] Contrary to Miller’s testimony, neither Maria Jesus nor Henry recalled ever discussing a trust with him at the time of the 1979 transfer. As in 1974, Miller himself conceded that he never discussed any trust (or, for that matter, anything else) with Luisa, the supposed beneficiary. Needless to say, no trust document was ever drafted for the Andrade family by Miller and no formal trust was put in place for the Property.
[30] The transfer to Joseph appears to have had far more to do with Joseph’s coming of age and his financial responsibility for the Property than with Maria Jesus’ marriage three years previously. Maria Jesus testified that upon getting married in 1976, she had ceased handing her paycheques over to her mother. Likewise, Henry had gotten married in 1978, and he too testified that upon marriage he ceased supporting his mother and kept his paycheques for himself.
[31] The younger sister, Maria Ludevina, had started working sometime in 1976 or 1977, and the next oldest child, Manny, did not start working until 1980. In 1979, Joseph was the senior working sibling, and was providing funds for the entire household. By the time Maria Jesus transferred the one-half interest in the Property to Joseph, the mortgage and all other expenses on his own rested largely on Joseph’s shoulders, although there was some rental income generated by part of the Property as well.
[32] It was Maria Jesus’ evidence that the titleholders to the Property from time to time were nominees of Luisa’s. She described them as, effectively, fungible, in that Luisa wanted title to the Property passed to each of the successive siblings as the previous ones got married. That explanation, however, was contradicted by the youngest brother, Leo, who said that he never recalled any such conversation or arrangement.
[33] The pass-along-title theory espoused by Maria Jesus is also contradicted by the obvious fact that the title was never transferred again after Joseph and Henry became tenants-in-common in 1979. Henry was already married by that time, and Joseph got married in 1980 but remained on title until his death in 2007.
[34] Luisa never demanded any change in titleholders, and there is no evidence other than the bald assertion by Maria Jesus that she had the power to do so. Maria Ludevina and Manny both testified that they thought formal title to the Property might pass to them at some point, but neither of them ever spoke with their mother about it or thought that they had any legal right to the Property. There was, in fact, no change in titleholders after the one change from Maria Jesus and Henry to Joseph and Henry in 1979.
[35] The fact that Henry and Joseph were the actual owners, and they were not simply fungible with any of their other siblings, is borne out by subsequent dealings with the house. As an example, in mid-1981 Henry and Joseph entered into two agreements of purchase and sale, one to sell the Property and another to buy a new property on Gilbert Avenue. The purchase agreement for the Gilbert Avenue house is dated July 27, 1981, and it names Henry and Joseph as purchasers.
[36] The documentation for the purchase of the house on Gilbert Avenue makes no mention of Henry and Joseph being trustees; likewise, there was no suggestion from any of the witnesses that the family members, including Luisa, engaged in any discussion or gave any thought to making one of the other siblings the titleholder of the Gilbert property. By all appearances – and there is nothing substantial that contradicts these appearances – Henry and Joseph were selling one house they owned and were buying another. Luisa may have moved into the Gilbert Avenue house had the deal not fallen through, but she did not evidence any authority as beneficial owner in either the proposed sale of the Property or the proposed purchase of a replacement property.
[37] The brief dealings with the Gilbert Avenue house are reflective of the long history of dealings with the Property at 510 Crawford Avenue. Luisa is treated as the resident of the home, but not as the actual owner.
III. Tax filings in respect of the Property
[38] The record contains all of the available income tax returns for Joseph, Henry, and Luisa. Henry’s returns have been produced since the mid-1990’s, while Joseph’s and Luisa’s returns are available dating back to the mid-1980’s. They paint a consistent picture of the Property, and there is no reason to doubt that the position that was taken in the 1980’s onward was not the same as that taken in the 1970’s as well.
[39] In short, in each year’s federal tax return Henry and Joseph declared the rental income from the Property as their own income. Likewise, they took the expenses incurred in repairs and upkeep of the Property as deductions. As a corollary, in each year’s tax return Luisa took an Ontario tax credit for rent paid to Henry and Joseph as landlords of the Property.
[40] Henry’s evidence, with which Manuela agrees, is that he instructed his and Joseph’s tax accountant, Ted Ward (“Ward”), as to the figures to use for these annual filings. Ward would take the figures provided by Henry and divide them in two so that the rental income and the expenses were shared equally by Henry and Joseph as the two co-owners.
[41] As for Luisa, it was Maria Ludevina’s evidence that Luisa never had a professional tax accountant prepare her returns. Rather, in the earlier years she would for some reason go to a local travel agent to have her returns filled out, and in the later years Maria Ludevina herself would do this task for her mother. Maria Ludevina testified that the travel agent had started the pattern years before of claiming rental credits on Luisa’s tax return, and when she took over the job she simply followed the format set by the travel agent.
[42] Henry’s explanation for the tax filings was that he and Joseph were trying to help their mother by taking the income earned from non-family member tenants for themselves. He also testified that in 1998 he was called to a meeting with the Canada Revenue Agency (“CRA”), and was told that his since his mother was living at the Property she also had to pay rent.
[43] Henry’s explanation raises more questions than it answers. In the first place, it is likely that any tax accountant would have explained that if Luisa is the beneficial recipient of rental income from third party tenants, then Luisa should declare it as her own and Henry and Joseph could pay her tax if they wanted to help her out. That would not only be the correct way to go about their annual filings, but would also be more tax efficient since Luisa had no other income. She would doubtless be in a lower bracket than Henry and Joseph, who had employment and/or business income of their own.
[44] More than that, Henry’s explanation of the meeting with CRA suggests that he did not think of Luisa as owner of the Property at all. Henry’s testimony certainly suggests that he never thought to advise CRA of the position that he has taken in this litigation – i.e. that he and Joseph as titleholders of the Property were bare trustees for Luisa. The simple answer to CRA supposedly telling him that Luisa had to pay rent for the house in which she lived would have been to tell CRA that Luisa was the beneficial owner who would thereby be paying rent to herself.
[45] Henry’s explanation is also belied by the documentary evidence. Luisa’s tax returns show beyond doubt that she was taking a tax credit for rental payments to Henry and Joseph at least a decade before the supposed 1998 CRA meeting. Moreover, Henry’s own 1997 tax return, the earliest year for which there are copies in the record and one year prior to the supposed 1998 CRA meeting, he took one-half of Luisa’s rental payments as income that year. Likewise, Joseph included one-half of Luisa’s rental payments as income in 1997, as he had done for every year since the 1980’s as shown in his earliest available tax returns.
[46] In short, Henry’s description of the discussions at the 1998 CRA meeting is difficult, if not impossible, to fathom. It is not a viable explanation of the rental income and deductions taken by the parties. Ward, who was called by Henry to testify, confirmed that the CRA explanation put forward by Henry makes no tax sense.
[47] I note that on March 16, 2009, Ward wrote a letter to Henry asserting that Henry and Joseph had always stated that the Property “occupied by their mother was hers until her death…” Ward never asked Luisa about this, and so did not know precisely what interest she had in the Property. However, he did confirm under cross-examination that Luisa’s tax returns contradicted Henry’s and her position that she was the beneficial owner of the Property:
Q: From a tax perspective, an owner of a house can’t pay rent to themselves?
A: Correct
[48] Ward went on in his 2009 letter to state that the Property “was put in their [i.e. Henry’s and Joseph’s] names at the death of their father to protect her from losing the home – as they were told by their father’s lawyer.” It is apparent that in 2009 Ward must have been asked by Henry to play a role in this drama, but that he did not quite get his lines right.
[49] Luisa’s husband died in Portugal before the family emigrated to Canada and some six years before the purchase of the Property in Toronto. Ward’s letter simply makes no sense. As a tax professional, Ward’s evidence is valuable in that it confirms that Luisa was not filing taxes as the owner of the Property; however, as a supposedly first hand witness to the parties’ intentions with respect to the Property, Ward’s evidence has no value at all.
[50] Regardless of what story Henry tries to tell and Ward tries to support, the income tax returns show Henry and Joseph – not Luisa – to be the beneficial owners of the Property. Unless Luisa is taken to have intentionally fabricated her rental payments and corresponding tax credits, there is no other way to read them.
[51] Similarly, there is no reason to believe that Henry and Joseph gratuitously declared income from either the non-family member tenants or from Luisa herself. If she were the beneficial owner of the Property, they did not have to declare that income. It is one thing to imagine that the annual filings represent some kind of dodge to reduce tax; it is another thing to imagine that Henry and Joseph would have concocted an arrangement that actually increased their tax.
[52] Everything about the parties’ tax filings supports the view that Joseph and Henry were not nominee or trustee titleholders, but rather were the real, beneficial owners of the Property. The tax returns of Luisa, Henry, and Joseph run counter to Henry’s and Luisa’s Estate’s view of Luisa as the beneficial owner of the Property.
IV. Repairs to the Property
[53] Henry’s and Joseph’s tax returns reflect a significant amount of work and investment on renovations to the Property done by the two of them. In Manuela’s testimony, much of which is corroborated by Henry, she described the two oldest brothers as having been in the construction business for much of their working lives, and as having over the years installed a new kitchen and bathroom in the basement, a new kitchen on the third floor for tenants, and making numerous roof, garage, front porch, and miscellaneous drywall and flooring repairs, etc.
[54] In his own examination for discovery, Henry went so far as to state that the value of the house was a direct result of his and Joseph’s efforts:
I have to stress that over the years that if we didn’t do the work to be done on the property, that property would not be worth what it’s worth today. It would probably be worth a half of what it’s worth today, because it would have fallen apart.
[55] In an odd dynamic that developed at trial, the other siblings seemed to do their best to downplay the contributions of the two oldest brothers and to show that they, too, had contributed time and effort. Manny indicated that he had helped out now and then with various chores, and that he sometimes brought supplies to the house that he had taken from his workplace. Maria Ludevina indicated that she spent a great deal of time assisting her mother with cooking, cleaning, preparing her tax returns, etc., while Maria Jesus indicated that she frequently helped with babysitting for Luisa’s various grandchildren. For his part, Leo testified that he could not really recall Joseph or Henry doing any special amount of work around the house.
[56] I am convinced that the Andrade siblings were all dutiful sons and daughters. Just as each of them handed their paycheques to their mother when they worked in the years before they were married, no doubt each spent a generous amount of time and effort helping their mother. None of this, however, is relevant to the issue at hand.
[57] A family member does not gain a legal interest in the family home by outdoing his or her siblings in household chores; and, indeed, none of the other Andrade siblings are claiming any ownership interest in the Property. Joseph and Henry appear to have invested more than the others in maintaining the Property, but all of them thought of it as the place where their mother lived and they were generous in helping out their mother.
[58] Joseph and Henry were entitled to take their repair and renovation expenses as deductions on their tax returns because they were the registered owners who declared the rental payments as income. No one else fit that category. Otherwise, the motivation for all of the Andrade siblings’ contributions to the household had more to do with family loyalty than with property rights.
V. Nature of the alleged trust
[59] Since there is no express or documented trust for the Property, the two alternatives put forward by Henry and Luisa’s Estate are: a) resulting trust, or b) constructive trust.
[60] Turning first to resulting trust, this can arise where a real beneficial owner transfers the asset away without consideration. See Pecore v Pecore, 2007 SCC 17, [2007] 1 SCR 795. Cromwell J. pointed out in Kerr v Baranow, 2011 SCC 10, [2011] 1 SCR 269, at para 25 that “[t]he point of the resulting trust is that the claimant is asking for his or her own property back, or for the recognition of his or her proportionate interest in the asset which the other has acquired with that property.”
[61] The present case is not one where, as in Nicholson v Nocholson Estate, 1994 CarswellOnt 664 (SCJ), the parent claims to be beneficial owner because she remains in control of a property after transferring it to a child. Neither is this a case where, as in Bacic v Thomas, 2010 BCSC 728, the child acted as agent for the parent in purchasing the house. Here, Luisa’s Estate claims to be the beneficial owner of the Property, but Luisa never owned it and never paid for it in the first place. Luisa’s Estate is not trying to recover something that Luisa once had or to compel Manuela “to return [the Property] to the original title owner.” Pecore, at para 20.
[62] The remedy of resulting trust is based on establishing not only a return of the property to an original owner, but on the notion that the party alleged to be trustee will otherwise be unjustly enriched. “At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain… for recovery, something must have been given by the plaintiff and received and retained by the defendant without juristic reason.” Kerr, at para 25.
[63] This is the same principle on which the remedy of constructive trust is also premised. Generally speaking, “[t]he equitable principle on which the remedy of constructive trust rests is broad and general; its purpose is to prevent unjust enrichment in whatever circumstances it occurs.” Pettkus v Becker, 1980 22 (SCC), [1980] 2 SCR 834, at 850-851. As Justice Cromwell put it in Kerr, at para 50, where a claimant “can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour.”
[64] Henry and Luisa’s Estate take the position that Luisa always made the mortgage payments on the Property. They therefore claim that having Joseph on title unjustly deprived her of an asset that should rightfully have bee hers. They contend, in effect, that this is a case where “property is purchased with the money of one person but the conveyance is taken in the name of another, although there is no written evidence of the trust.” Stanciu v Stanciu, 2004 CarswellOnt 1060, at para 25 (SCJ), quoting Anger and Honsberger, Real Property, 2nd ed, vol 1, at 637, section 1209.
[65] That, however, is not what the evidence shows. Luisa may have paid the mortgages on the Property in the sense that the mortgage payments went to the mortgagees from her bank account. But she made those payments with her children’s money, not her own; she had no money of her own. The fact that Joseph and his siblings (except, apparently, for Leo) handed their paycheques to their mother did not give Luisa a legal right to their paycheques. It was Luisa’s children who worked and earned the money, and it was Luisa’s children (along with the rental income that the Property generated) who over time paid the mortgages.
[66] Joseph was working and contributing to the payments on the Property in 1979 when he acquired his one-half interest. Title to the Property never got transferred to anyone else, and no one has made a claim to the Property except for Luisa (and now Luisa’s Estate). There is, to repeat the key phrase in Kerr, “a link or causal connection” between Joseph’s contributions “and the acquisition, preservation, maintenance or improvement” of the Property. By contrast, since Luisa had no money of her own, there is no parallel causal connection between Luisa and the acquisition, maintenance, improvement, etc. of the Property. Having made no financial or other legally cognizable contribution of her own, there is no equity in favour of Luisa.
[67] I do not mean to denigrate Luisa’s overwhelming commitment to the Andrade household and family; by all accounts she devoted herself to her children’s upbringing and to managing the family home as a single mother. I admire her lifetime of accomplishments in this regard. However, the children paid for the Property and looked after the repairs and renovations of the Property over time. Being a good mother and having a legal interest in property are simply two different things.
[68] Moreover, I can find no real evidence of a commonly shared intention to purchase and hold the Property in trust for Luisa. Even Henry, who now says that his own one-half interest is in trust for his mother, has not always taken that position. As already indicated, at an earlier stage in this action he described Luisa as having what amounts to a life interest in the Property, not sole beneficial ownership.
[69] I surmise that all of the Andrade siblings expected their mother to live in the Property for the rest of her life, which she did. But I find that any expectation on their part went no further than that. There is therefore no reason in “good conscience” to impose a trust, or to fashion a constructive trust “to do justice between the parties”. Soulos v Korkontzilas, 1997 346 (SCC), [1997] 2 SCR 217, at para 34. No injustice was ever done to Luisa, who lived out the balance of her life in the Property.
[70] Moreover, the tax filings by Luisa, Henry, and Joseph are directly contrary to any intention that the Property was held in trust for Luisa. For decades, Luisa reported to CRA that she was tenant and the two oldest sons reported that they were not just registered or nominee titleholders, but beneficial owners.
[71] In Rosenthal v Rosenthal, 1986 CarswellOnt 288 (HCJ), it was held that an individual cannot take a position to obtain a tax benefit, and then deny that position to obtain a different benefit. At para 51 of Rosenthal, the court noted that “it is being argued that for the purpose of the Income Tax Act in 1969, the transfer of shares was not a gift, but for the purpose of the Family Law Act in 1986, the transfer of shares was a gift. Such a result should not be condoned by the court on the grounds of public policy alone.”
[72] The same logic applies to the positions taken by Luisa and Luisa’s Estate. For as far back as there are records available, and for at least three decades, she received tax benefits by claiming to be a tenant and not an owner of the Property. As the court found in Rosenthal, there are cogent public policy reasons for not giving credence to Luisa’s (prior to her death in early 2014) and Luisa’s Estate’s attempt to claim ownership of the Property.
[73] Not only is there insufficient evidence that a trust for Luisa’s benefit was intended; for public policy reasons this is not an appropriate case in which to impose any trust which would make Luisa’s Estate the beneficial owner of the Property.
VI. Disposition
[74] Manuela shall have a Declaration that she is the beneficial owner of a one-half interest in the Property, as tenant-in-common with Luisa’s Estate (since Henry assigned his one-half interest to Luisa earlier in the litigation).
[75] The parties are ordered to sell the Property at fair market value, with the net proceeds of sale to be divided evenly between Manuela and Luisa’s Estate.
[76] The counterclaims by Luisa’s Estate and by Henry are dismissed.
[77] Counsel for all three parties may make written submissions as to costs, to be sent directly to me. I would ask that counsel for Manuela send theirs to me within two weeks of today, and counsel for Henry and for Luisa’s Estate within a week thereafter.
Morgan J.
Released: July 28, 2014
COURT FILE NO.: CV-08-00359873
DATE: 20140728
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Manuela Estrela Andrade
Plaintiff
– and –
Henrique E. Andrade and Leonardo Andrade, Estate Trustee for Luisa Cabral Andrade
Defendants
REASONS FOR JUDGMENT
E.M. Morgan J.
Released: July 28, 2014