CITATION: Alexander James Wright v. Candice Holmstrom, 2015 ONSC 1906
COURT FILE NO.: FS-13-18812
DATE: 20150324
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALEXANDER JAMES WRIGHT
Applicant
– and –
CANDICE HOLMSTROM
Respondent
Jeanie DeMarco, for the Applicant
Susan Adam Metzler, for the Respondent
HEARD: February 10, 11, 12, 13,
17, 2015
CHIAPPETTA J.
Overview
[1] The parties tell different versions of the significant moments during their 5 year relationship. The Applicant maintains that he agreed to purchase one-half of the Respondent’s home for $130,000. The Respondent maintains that the payment of $130,000 was a gift and that she remains the sole owner of her home. The Applicant maintains that he was a 50% owner in an investment property purchased with the Respondent and sold at a significant profit. The Respondent maintains that the Applicant’s ownership was limited to 23%. In their respective claims for relief, the parties are asking the Court to accept one party’s version of events over the other’s. This task is neither simple nor scientific. It requires the assessment of credibility of each witness in the context of the other evidence that has been presented. The respective credibility assessment is not general, but rather it is issue specific. Upon such assessment, as more particularly described below, I have concluded that the payment of $130,000 was a gift, such that the Respondent is the sole owner of her home and that the Applicant was a 50% owner in the investment property, such that he is entitled to 50% of the net proceeds from its sale.
The Parties
(i) Alexander James Wright
[2] The Applicant, Alexander James Wright (“Wright”), was born on October 2, 1946. He describes himself as a highly educated and sophisticated businessman, a recognized pioneer of financial planning in Canada and an offshore private banker.
[3] Wright has a Bachelor of Arts, a Master’s in Business Administration, certifications as a Registered Financial Planner, Certified Planner, and Certified Fraud Examiner and has received a Canadian Forces decoration medal for service in the Canadian Navy. He has authored a book entitled “Demons in the Financial World and How to Spot Them” and was a lecturer at both Seneca College and Centennial College. He states that he has been working on his Ph.D., but that he had to recently withdraw from the course due to what he describes as post-traumatic stress disorder suffered as a result of issues pertaining to this lawsuit.
[4] In the opening remarks to his curriculum vitae, he refers to himself as:
“Respected seasoned senior executive in marketing, financial services and education; … forensic accountant, pioneer financial planner … private banker…; expertise in strategic marketing and planning, investment counselling, taxation, wealth management, international finance, e-commerce … Accomplished … strategist”
[5] Under “Skills,” he writes
“… capable of tactical patience …”
[6] Under “Accomplishments,” he writes:
“taught trust law, administration and use to senior employees in Bahamas”
“profitably re-structured, bullet – proofed and defended clients and firms from external attacks”
“ingeniously successfully chopped client’s tax burden by 2/3”
“successfully balanced cash-flow of $60,000,000.00”
[7] Wright’s self- description is one of a man with sophisticated education, exceptional talent in the financial and banking sectors and impressive professional accomplishments. His evidence is that he owned his own home since the age of 26 and always used the real estate to generate rental income. Interestingly, while he describes himself as frugal, his evidence is that his training, accomplishments and real estate holdings have failed to translate into monetary wealth.
[8] Prior to meeting the Respondent in 2006, Wright had been married for 30 years. He has three grown children. He was living on his own in a home he owned on St. Clarens Avenue in Toronto, Ontario (“St. Clarens”). His evidence is that he took tenants into the home to generate income. He drove a 1984 Honda motorcycle as his primary mode of transportation and had a 1999 van. He testified that he had savings of under $100,000 from working in the Bahamas, which he considered his retirement fund. He further testified that this “fund” shrunk to approximately $40,000 due to market changes.
(ii) Candice Holmstrom
[9] The Respondent, Candice Holmstrom (“Holmstrom”), was born on July 9, 1959. She has a Bachelor of Arts (Fine Arts), and a Diploma in Interior Design. Holmstrom has run her own business, CH Designs Inc., for approximately 30 years. She provides interior design services in the commercial retail sector.
[10] Holmstrom has never married. She purchased a home for herself and her now 18 year old daughter in 1997, located at 87 Neville Park Blvd, Toronto (“Neville”). The home is located close to the business premises for CH Designs. The building that hosts CH Designs is owned by Holmstrom and her mother.
(iii) The Versions of Events
[11] The parties’ respective historical account of their short term relationship differs in most all respects.
[12] They agree that they began dating in 2006. They agree that Wright moved into Neville in November 2007. They agree that they purchased an investment property located at 51 Main Street in Toronto Ontario (“Main Street”) in 2008 and sold it in 2012. And they agree that the relationship terminated in 2012. The parties disagree however on almost all of the other details of their six years together.
[13] Wright’s version is as follows:
He dated Holmstrom casually in 2006. He was staying with a woman in the Bahamas in early 2007 with whom he was previously involved. It was just platonic. In early 2007, Holmstrom insisted that Wright have an exclusive relationship with her. He agreed.
In November 2007, at Holmstrom’s insistence, he sold St. Clarens and moved in with her at Neville. He paid rent to Holmstrom pending the closing of the sale of St. Clarens. Holmstrom advised him that he could continue to pay rent or purchase one-half interest in Neville. He purchased one-half interest in Neville for $130,000, using some of the proceeds from the sale of St. Clarens. He did not go on title as he did not want to impair his ability to obtain additional mortgage financing for another property.
The agreement between them was that they would each support themselves, share the basic carrying costs of Neville and Holmstrom would be responsible for the support of her daughter who was 11 years old at the time. His contributions were substantial and may well have exceeded his fair share.
In 2008, the parties purchased Main Street, a four-plex investment property, for $659,000. Main Street was purchased in the parties’ names as tenants in common. The parties agreed that Main Street would be owned 50/50.
He was out of work from May 2009 until September 2011, when he commenced employment as a principal of a school in Rapid Lake, Quebec. He was living in Rapid Lake for half of 2011 and 10 months in 2012.
The relationship was effectively over in January 2012.
In March 2012, Main Street was sold. The net proceeds after payment of the first mortgage were $741,000. Holmstrom signed all necessary documentation on his behalf as his Power of Attorney as he was in Quebec at the time of sale. The parties signed documentation on November 9, 2012 to put the funds into a joint account with the Royal Bank of Canada,
On November 14, 2012, Holmstrom purported to terminate the relationship, making false statements about his infidelity. She evicted him from Neville in November 2012, put his belongings in the garage and gave him one week to remove his possessions failing which they would be delivered by her to a disposal company.
On December 20, 2012, he attended a Royal Bank of Canada in Ottawa to transfer $180,000 of his share of the proceeds of Main Street to his name. On December 24, 2012, he attended a Royal Bank of Canada in Toronto and accessed the funds to pay off a joint line of credit of $140,000. Holmstrom exploded. She attended the Royal Bank on December 28, 2012 and removed all remaining funds ($170,000), demanded that the bank reverse his transactions and called the police to allege fraud by him or the bank. The bank reversed the transactions.
Holmstrom tried to extort a release of his entire Neville property entitlement and a portion of his Main Street entitlement by threatening to lay criminal charges for fraud or for being nude in front of her daughter. She further threatened to get him fired from his employment, alleging he was involved in a stock scam, and to bury him in legal costs, knowing that she had possession of all of his funds unless he agreed to accept a fixed amount which was about one-third of his entitlement.
His employment in Quebec was not renewed in June 2013. The amounts claimed in this proceeding are essentially his entire life savings and all of his future retirement funds. He has been forced to seek shelter from friends and has been in poverty level legion accommodations since late 2013. His Canadian Pension Plan and Old Age Pension payments were being partly withheld by Canada Revenue Agency because of his inability to pay his taxes relating to the capital gain on the sale of Main Street. Holmstrom provided $50,000 towards his ultimate entitlement in October 2013, from which he was able to pay a small fraction of his legal fees and some professional fees to a computer expert whom he had been obliged to hire to retrieve files that were temporarily lost in a computer failure while he was in Quebec.
[14] Wright therefore asks the Court to grant him the following relief:
a. That he be declared the beneficial owner of 50% of Neville;
b. That Holmstrom be ordered to pay him, within 21 days, $325,000 respecting his interest in Neville, failing which Neville is to be co-listed for sale;
c. That he be entitled to the amount of $205,000 plus interest from March 2013 to the date of payment respecting his share of the proceeds from the sale of Main Street;
d. That Holmstrom pay him damages of $30,000 for breach of trust, intentional infliction of mental suffering, aggravated and punitive damages.
[15] Holmstrom’s version is as follows:
She started dating Wright in 2006. In February 2007, she learned that he was having a relationship with a woman in the Bahamas. She was devastated. She ended the relationship. Wright actively pursued her when he returned from the Bahamas. He acted remorseful, said he wanted to marry her and that he would “prove” he would never do such a thing to her again. With some reluctance, she agreed to try again with their relationship.
In November 2007, Wright talked about selling St. Clarens and staying with her while he got it ready for sale. They reached an understanding that Wright would move in and contribute to certain expenses of her home and to their living together as a couple. On the day after his father’s death, Wright gave her an engagement ring saying he would make up for his past indiscretions. A few days later, Wright gave her a bank draft for $130,000 as “proof” of all he had been saying to her about making things right forever, proving his fidelity. She accepted the gift for all the pain and hurt Wright caused her.
Equal sharing of the expenses was agreed to by the parties – those being the expenses of a couple/family living together. Wright did not pay his share. Further, he caused damage to Neville with his hoarding.
In 2008, the parties purchased Main Street, a four-plex investment property, for $659,000. The funds required on closing totalled $168,910.81. Wright breached the 50/50 understanding by failing to contribute his necessary capital. It was only after the parties waived the financing condition that Wright advised her that he was not able to contribute his share of the closing costs but could only contribute $38,910.81 for the closing. Facing a lawsuit for specific performance, she was forced to come up with the shortfall. She had to borrow $30,000 from a private lender who registered a second mortgage on Neville and $75,000 from her parents’ holding company.
Wright was out of work from May 2009 to September 2011, when he commenced employment as a principal of a school in Rapid Lake, Quebec. He was living in Rapid Lake for half of 2011 and 10 months in 2012. The work on Main Street fell entirely to her.
The relationship did not end until November 16, 2012, when she ended it after learning of Wright’s infidelity with a subordinate at the school in Rapid Lake, Quebec.
In March 2012, Main Street was sold. The parties agreed that the available net proceeds would be transferred into a locked-in investment product with the Royal Bank in her name. During the summer of 2012, they had a meeting with the Royal Bank representative during which Wright insisted that the funds be moved out of the locked-in investment and into her open e-line savings account with the Royal Bank. On November 8, 2012, a new joint account was going to be opened between her and Wright to house the net proceeds. The Royal Bank made an error when it added Wright’s name to her e-line savings account on November 9, 2012. They were supposed to have opened a new joint account.
While Wright was home during the week of October 31 to November 10, 2012, she saw inappropriate photographs of a woman and Wright on his computer. Wright acknowledged when she called him on November 11, 2012 that he was with the woman. This was the end of the relationship. She sent Wright an e-mail on November 16, 2012 advising him to immediately arrange a time for his children or someone to attend at Neville and remove his belongings, including what was in the garage. Most of Wright’s items were removed by him by November 14, 2014 and there were no threats of impending time lines or throwing things away.
Knowing that she was in Quebec for the Christmas holidays, Wright unilaterally went to two different Royal Bank branches to affect transfers out of her account. This was while the parties were negotiating their final separation accounting. After Wright transferred nearly $320,000 out of her account, he advised her of what he had done in an e-mail on December 27, 2012. She left Quebec and went to her bank to inquire. The bank froze the account, engaged in an internal investigation and advised her to notify the police. Upon investigation, the bank reversed Wright’s transactions in early January 2013.
Throughout December 2012 and January 2013, she continued her attempts to complete negotiations of their separation issues with Wright. On December 30, 2012, Wright outlined terms of payment and final release agreed upon in an e-mail to her. He instructed her to have an Ontario lawyer put the terms into a formal separation agreement. She did as she was instructed. Some changes were discussed and agreed on January 9, 2013. Both parties signed the agreement. Wright told her he would provide her with the name and co-ordinates of the TD Canada Trust individual to whom he wanted her to send the settlement funds. He never did. He advised that he was not going to honour the agreement.
Once Wright made it clear he was not going to honour the terms of their final agreement, she refused to release any funds to him. Wright’s true and actual financial situation continues to be unclear and incomplete. He often spoke to her about the wealth of capital he had from his off shore holdings and how he was leaving that money intact for his retirement.
Wright and his life-long friend Mr. Denver (“Denver”) convinced her to invest in a project Wright promised would see a return of 1-2% monthly. She invested $37,000 and lost $23,000.
Her name, home address, business and business address are referenced in a website called Techinvestor which describes Wright as one involved in illegal activities, victimizing innocent investors in a “pump and dump stock scam.” The website suggests that Wright has an ownership interest in her design business. Main Street is also mentioned.
[16] Holmstrom therefore asks the Court to grant her the following relief:
a. That Wright’s claim to entitlement to Neville be dismissed;
b. That Wright’s maximum entitlement to Main Street be limited to $152,168.24;
c. That the $152,168.24 be set off by what Wright owes her for expenditures ($68,058.72) and damages ($3,000) to Neville;
d. That there be a further set off for her loss of investment of $23,000;
e. That Wright be directed to take steps in an effort to have her name, address and business removed from the Techinvestor website;
f. That Wright be subjected to a non-harassment order as against her.
The Issues
[17] The Applicant chose not to pursue his claim for spousal support. The Respondent chose not to pursue her claim for child support for her daughter.
[18] At trial, both parties amended their pleadings on consent. The Applicant amended his application to plead entitlement to 50% of Neville as a result of proprietary estoppel, constructive trust and/or resulting trust, and to plead that the Respondent is in breach of her fiduciary duties with respect to her repudiation of the trust agreement established between the parties in November 2007 regarding the Applicant’s purchase of 50% of Neville. The Respondent amended her answer to plead that the Applicant would be unjustly enriched to the detriment of the Respondent if the he were declared to have an interest in Neville. The Applicant’s reply was amended to deny the unjust enrichment claim.
[19] The issues for the Court therefore are as follows:
Whether the Applicant is entitled to a 50% interest in Neville as a result of i) agreement to purchase, ii) proprietary estoppel, iii) constructive trust and/or, iv) resulting trust and the Respondent is therefore in breach of her fiduciary duties with respect to repudiation of the trust agreement;
If the Applicant is declared to have an interest in Neville, whether the Applicant has been unjustly enriched to the detriment of the Respondent;
Whether the Applicant owes the Respondent for expenses or damages to Neville during the time of their cohabitation;
Whether the Applicant is entitled to a 50% interest in the proceeds of sale of Main Street;
Whether the Applicant is entitled to damages for breach of trust, intentional infliction of mental suffering, aggravated and punitive damages;
Whether the Respondent is entitled to damages for loss of investment of $23,000;
Whether the Applicant should be directed to take steps in an effort to have the Respondent’s name, address and business removed from the Techin-vestor website;
Whether the Applicant should be subject to a non-harassment order as against the Respondent.
Analysis
1. Whether the Applicant is entitled to a 50% interest in Neville as a result of i) agreement to purchase, ii) proprietary estoppel, iii) constructive trust and/or, iv) resulting trust and the Respondent is therefore in breach of her fiduciary duties with respect to repudiation of the trust agreement.
i) Agreement to Purchase
[20] Was the payment of $130,000 in November 2007 by Wright to Holmstrom a purchase of equity in Neville, as submitted by Wright, or a gift, as submitted by Holmstrom? In my view, it was a gift. I find the evidence of Holmstrom on this point more credible than that of Wright’s and I accept it. I find as a fact that the payment of the $130,000 in November 2007 by Wright to Holmstrom was a gift.
[21] The parties present different reasons and context for the payment of the $130,000. In my view, the prima facie indicators, as argued by Wright, that Holmstrom may not be telling the truth are sufficiently explained and Homstrom’s explanation for the $130,000 payment is ultimately more believable considering the context of the totality of the evidence.
[22] Assessing the credibility of witnesses relative to the material issues before the Court is central to making the necessary findings of fact. This exercise is particularly challenging in the context of family trials. In Children’s Aid Society of London and Middlesex v. B. (C.D.), 2013 ONSC 5556, [2013] W.D.F.L. 5695, Harper J. explained at para. 29:
In family trials, it is often very difficult to see through the fog that is created by litigants whose own reality is mostly altered by a combination of memory challenges, perspectives, emotion and sometimes purposeful deception. Seeing through that fog is challenging but absolutely necessary when the stakes are the highest they can be.
[23] Assessing credibility does not take place in a vacuum. Rather, the credibility of a witness is determined in the context of the totality of the evidence. As confirmed by the Supreme Court of Canada in R. v. Gagnon, 2006 SCC 17, [2006] 1 S.C.R. 621, at para. 20,
Assessing credibility is not a science. It is very difficult for a trial judge to articulate with precision the complex intermingling of impressions that emerge after watching and listening to witnesses and attempting to reconcile the various versions of events.
[24] In family trials, the trial judge must be particularly alive to the interests of witnesses in the outcome of the proceedings and to take such interests into consideration as a relevant factor in assessing credibility. At the same time, the trial judge must be cautious not to place undue weight on the status of a person in the proceedings as a factor going to credibility: R. v. Laboucan, 2010 SCC 12, [2010] 1 S.C.R. 397, at para. 11.
[25] What I find most troubling about Wright’s version of the $130,000 payment is the failure to reduce such an important legal right to writing. It makes no sense to me that a sophisticated expert in real estate, financial planning, law of trust and fraud would purchase a legal right to title and fail to properly document this right. Wright testified that on November 22, 2007, he told the lawyer he retained for the sale of St. Clarens, Mr. Dashwood (“Dashwood”), that he was purchasing one-half of Holmstrom’s home and that Dashwood reached for a document to record the intended transfer of one-half of Neville into Wright’s name. However, Wright states that upon telling Dashwood of his intention to purchase an investment property, Dashwood told him that his ability to acquire financing for the investment purchase would be impaired if he went on title to Neville because of the large mortgage of Neville. Upon receiving this advice, Wright states he decided to leave title registered in Holmstrom’s name for the time being. Wright testified further that he contacted Dashwood on February 6, 2008 by telephone to discuss how to document his one-half interest in the home.
[26] This testimony strains credulity and I do not accept it. It makes no sense to me that Dashwood, the lawyer retained to close a real estate transaction on a home, would provide advice to Wright, a proclaimed expert in banking, on his own potential financing ability of a future investment property. Further, Dashwood gave evidence at this trial. He has no memory or record of the meeting of November 2007 or the telephone call of February 6, 2008. He said that the events as described by Wright could have occurred but that they did in fact occur was conjuncture. Finally, the documentary evidence offered by Wright to prove these conversations further undermines the veracity of his testimony.
[27] Wright states that he had a massive computer failure in the fall of 2011. Throughout the course of this lawsuit, he states that he has been able to restore not all but specifically chosen documents with the alleged help of a forensic computer expert, Mr. Jason Conely (“Conely”). Conely did not deliver an expert report and he was not called to give evidence at the trial, despite being listed as a witness in Wright’s list of witnesses. The restored documents presented at trial are self-serving, unsigned and, as will be referred to below, at times riddled with implausible error.
[28] To further evidence his conversations with Dashwood, Wright offered to the Court a “Declaration of Shared Ownership” (“Declaration”) that he says he created in February 2008, but that was never signed, and a directory from a computer program he calls maximizer to prove the February 6, 2008 call occurred with Dashwood. In my view, the directory proves nothing and the Declaration only serves to further challenge the truth of Wright’s evidence. Holmstrom denies ever seeing the Declaration. If the Declaration was created in February 2008, why was it not created by Dashwood? Wright said that Dashwood reached for a document to record the intended transfer back in November 2007. It makes sense that Wright would have called him to prepare the Declaration. Further, and more significantly, why was the Declaration not signed? If indeed it was prepared by Wright in February 2008, why did he and Holmstrom not sign it? It would not have affected a financing on a future investment property and, according to Wright, it reflects the parties’ intention of ownership to Neville. The only reasonable explanation as to why it was not signed in 2008 is that it was not created in 2008 but was rather created for the purposes of this lawsuit in an unsuccessful attempt to corroborate a story that is simply not believable.
[29] Finally, Wright would have the Court believe that the only reason he was not registered as an owner of Neville in November 2007 or February 2008 was because he wanted to deceive potential creditors about his liability to a mortgage on Neville, so he could qualify for a mortgage on a potential investment property. Again, Wright’s statement causes me to pause for lack of logic. Main Street was purchased in November 2008. In seeking financing for the investment property, Wright told the financial institutions that he had an interest in Neville and an obligation to the mortgage. Further, after the purchase of Main Street in November 2008, Wright did not register his legal ownership in Neville. Wright’s only reason offered to this Court for failing to register as a legal owner is not credible and I do not accept it.
[30] In my view, Wright presented this story to the Court to serve his own specific purpose of obtaining 50% interest in Neville. His ownership in Neville has been described in different ways to different parties. For example, in May 2012, Wright applied for pre-approval for a mortgage with TD Bank. He represented therein that Neville was owned by his spouse. He has asked the Court to believe that he told the bank employee about his “contingent interest” in Neville and “contingent liability” in relation to the Neville mortgage, the bank employee made notes of this and the notes went missing. He states that this is reflective by ”…” on the bank document. I cannot conclude as Wright argues that the key documents went missing and the bank employee submitted a loan application that did not include a $400,000 contingent liability mortgage. Rather, the loan document application reflects that Wright presented his ownership in Neville in a way that suited his needs at the specific time.
[31] Similarly, on his October 5, 2013 application for housing through the Royal Canadian Legion, Wright did not include an ownership interest in Neville, although he acknowledged that he owed legal fees as a result of this proceeding. He signed a Statutory Declaration at the end of the form that “all of the above statements are true to the best of my knowledge and belief.” Wright states that he did not have to include such an interest on the application. This explanation ignores the obligation of the Statutory Declaration and is unreasonable, as he was applying for subsidized housing.
[32] In my view, it is illogical that Holmstrom would not insist on a legal agreement as well if the $130,000 was given to her to purchase half an interest in Neville. Holmstrom purchased the home 10 years prior. She lived there with her daughter who was 11 years old in 2007. The father of Holmstrom’s daughter has no relationship with her and does not pay child support. Holmstrom has a responsibility to herself and to her daughter, as a single mother, to protect the asset.
[33] Wright testified that he executed a “knock off” will giving Holmstrom a life interest in his half interest in Neville, yet he does not have a copy of the will, cannot recall who witnessed it and did not follow up with a proper will prepared by a lawyer. Homstrom denies she ever saw or recevied such a will. In my view, this explanation is offered by Wright as an unsuccessful attempt to plug the obvious gap in his explanation of the $130,000 and I do not accept it.
[34] Holmstrom was incorrect in relation to her memory about ever having discussions with Wright about buying into her home at some point or being registered as a tenant in common. As testified to by his daughter, Ms. Eagan, Wright told her that he was going to purchase one-half of Neville about the time he moved in with Holmstrom as he had a lifelong adversity to paying rent as opposed to home ownership.
[35] Holmstrom also did not remember speaking to her lawyer over lunch about this in 2007, as reflected in Ms. Huddart’s (“Huddart”) notes. Huddart was Holmstrom’s lawyer in connection with a draft will she prepared in 2007. Holmstrom allowed production of Huddart’s file shortly after the commencement of the trial. It was unnecessary for Huddart to appear in person and her file was introduced on consent. Huddart’s notes reflect on June 12, 2007: “Will to be in contemplation of marriage; He doesn’t need her money, he has his own; He’ll buy into her home and they’ll hold as tenants in common,” and on October 31, 2007: “Alec will be buying half my home in the next few months. So that is why you are seeing the clause regarding the 5 year max on the sell should anything happen to me. It will be tenants in common.”
[36] Holmstrom’s failure to recall these discussions in 2007, however, is not definitive of credibility. I accept as justifiable Holmstrom’s error in remembering her discussions with Wright and her counsel in the context of other matters in 2007, including Wright’s infidelity, his moving into Neville, the engagement and the gift of $130,000.
[37] Huddart’s notes do reflect however a true concern by Holmstrom to ensure that should Wright buy into Neville, her home would not be at risk if anything happened to Wright. It defies logic in my view that Holmstrom would have agreed to let Wright acquire an interest in Neville without formal legal arrangements, particularly in light of the interest of her daughter. While she discussed the issue with Huddart, her failure to return to secure the necessary paperwork leads me to reasonably infer that no further discussions with Wright about a purchase occurred after October 2007 and no purchase was made. Wright’s daughter was as well unable to advise the Court if in fact the purchase ever occurred.
[38] Holmstrom testified that the payment was a gift, a symbol of Wright’s commitment having recently proposed to her after being unfaithful to her in February 2007. Wright denies that he was unfaithful. I accept that he was. Holmstrom’s heartbreak from February 2007 is reflected in her November 20, 2012 e-mail to Wright wherein she writes “A long time ago February 28, 2007 was one of the saddest days of my life that is when I learned that you were not true to me. I was devastated because I was so in love with you.”
[39] I accept the submission of Holmstrom that it is probable that Wright used money and a promise to marriage to “secure” Holmstrom in a relationship that he perceived would be financially beneficial to him. Wright commented numerous times during his evidence about the wealth of Holmstrom’s parents and his belief that they provided Holmstrom with financial gifts. This would explain why he would use approximately two-thirds of the equity realized on St. Clarens to secure the relationship. Although Holmstrom accepted the engagement 6 days earlier, I accept that Wright professed to prove his commitment by using the money and giving it to Holmstrom.
[40] I agree with Wright’s counsel that the sum of $130,000 is an odd amount to provide by way of a gift. Wright first took the position that he purchased the interest in Neville for $135,000 based on a precise formula; $700,000, less mortgage, transaction fees and line of credit, for a net number of $270,000. Wright changed the figure of $135,000, having been so precisely calculated, to $130,000 only after seeing a copy of the $130,000 bank draft produced by Holmstrom as part of these proceedings. In my view, it is a reasonable inference that the $130,000, although an odd amount, was the greatest amount Wright could give from the proceeds of the sale of St. Clarens without compromising his ability to purchase an investment property.
[41] Holmstrom could not consistently recall the exact circumstances, place, time, and words, when she received the $130,000 from Wright, and states she did not tell any relatives or friends about it. Holmstrom refused to provide Wright with the names or contact information of her close friends. It is submitted by Wright that a negative inference must be drawn by the absence of any corroborating evidence and her refusal to provide contact information of potentially relevant witnesses. I disagree.
[42] I accept the evidence of Holmstrom that she did not tell her family and friends because she was embarrassed; embarrassed by the infidelity in February 2007, embarrassed that she forgave Wright for it and accepted his proposal, embarrassed that he paid her a large sum of money as an apology and a symbol of commitment. I also accept the submissions of Holmstrom’s counsel that if Holmstrom was going to make up a story that the $130,000 was a gift she would also have made up the details surrounding her receipt of the money.
[43] Wright’s evidence is that after the payment of the $130,000, he wrote one cheque each month for $1,000.00 for mortgage payments, and for the first months, he specifically wrote “mortgage” on the cheques. He also provided monthly cheques for $500.00 for utilities and other expenses.
[44] Holmstrom’s 2010 income tax return does not mention any rents. I accept however that Holmstrom never asked Wright to pay rent in relation to Neville. Wright was to contribute to expenses related to the home as two people engaged to be married. These expenses included a contribution by Wright to the mortgage and realty taxes. He paid an extra amount while he took over the entire garage as he was the only one using it. He also performed small chores around Neville and participated in opposing an undesirable building application of an adjacent property, as a member of the contemplated family living in the home. Wright wrote mortgage on three cheques he gave to Holmstrom: November and December, 2007 and February 2008. I accept that Holmstrom asked him to stop writing that on cheques because the mortgage was hers, not his, and he was just contributing to expenses. Wright stopped writing “mortgage” on cheques.
[45] Wright relies heavily on Holmstrom’s written comments respecting Wright’s inventory of assets, which she provided on November 19, 2012 when the parties were negotiating the end of their relationship. Wright submits that while Holmstrom made comments throughout the inventory clearly expressing her disagreement on certain items as listed by Wright, she failed to correct his written assertion of entitlement to 50% of Neville. This, Wright concludes, represents Holmstrom’s acknowledgment of Wright’s 50% ownership in Neville as of November 19, 2012.
[46] I disagree. Holmstrom testified that Wright told her that Neville had to be included in the separation of inventory he prepared because, as a matter of family law, he would be considered a half owner in Neville, the parties having lived together for 5 years. Wright admits that he possibly made such a statement. I find as a fact that the statement was made and I accept Holmstrom’s evidence that she believed Wright, given his stated knowledge and her ignorance in the area of family law. I also accept that it is for this reason she did not take issue with Wright’s assertion of entitlement to 50% of Neville when she made written comments respecting Wright’s inventory of assets provided on November 19, 2012.
[47] Wright made the assertion of his entitlement to 50% of Neville prior to obtaining legal advice. Holmstrom accepted this assertion prior to obtaining legal advice. It is reasonable to infer that at the time of his assertion Wright believed as a matter of family law, he would be considered a half owner in Neville as he and Holmstrom had lived together in Neville for 5 years; that he was unaware that Part I and Part II of the Family Law Act, R.S.O. 1990, c. F.3 do not apply to common law partners and, as such, he was not entitled by statute to a division of Neville as net family property. It is noteworthy that for a period of time after his consultation with legal counsel, Wright was prepared to settle all issues with Holmstrom for an amount that did not include a valued interest in Neville and after she obtained legal advice Holmstrom was opposed to Wright’s entitlement to any interest in Neville.
[48] For reasons set out above, considering the totality of the evidence on this issue, I have concluded that the payment of $130,000 by Wright to Holmstrom on November 22, 2007 was a gift and that there was no agreement between the parties that Wright would purchase a 50% interest in Neville.
ii) Proprietary estoppel
[49] Wright submits that this situation is one wherein the doctrine of proprietary estoppel could be evoked to provide an equitable one-half interest.
[50] Proprietary estoppel is a form of promissory estoppel. It is an exception to the general rule that estoppel is a shield, rather than a sword and cannot give rise to a cause of action: Crabb v. Arun District Council (1975), 1 Ch. 179 (Eng. C.A.), at pp. 187-188. In Eberts v. Carleton Condominium No. 396 et al., 2000 CanLII 16889 (ON CA), [2000] O.J. No. 3773, at para. 23, the Court of Appeal for Ontario summarized the essential elements of proprietary interest as follows:
The basic tenets of proprietary estoppel are described in McGee, Snell’s Equity, 13 ed (2000) at pp. 727-28:
Without attempting to provide a precise or comprehensive definition, it is possible to summarize the essential elements of proprietary estoppel as follows:
(i) An equity arises where:
(a) the owner of land (O) induces, encourages or allows the claimant (C) to believe that he has or will enjoy some right or benefit over O’s property;
(b) in reliance upon this belief, C acts to his detriment to the knowledge of O; and
(c) O then seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive.
(iv) The relief which the court may give may be either negative, in the form of an order restraining O from asserting his legal rights, or positive, by ordering O to either grant or convey to C some estate, right or interest in or over his land, to pay C appropriate compensation, or to act in some other way.
[51] In Clarke v. Johnson, 2014 ONCA 237, [2014] O.J. No. 1481, the Court of Appeal for Ontario confirmed that proprietary estoppel may form the basis of a cause of action and affirmed the three-part test for proving proprietary interest.
[52] In my view, Wright has failed to establish the three elements of proprietary estoppel. There is no evidence that Holmstrom induced, encouraged or allowed Wright to believe he had a one-half interest in Neville. The evidence that I have accepted above is that the parties discussed the option in October 2007 and not again thereafter, and the parties lived together in Neville with an agreement to contribute equally to the expenses. There is no evidence that Wright relied on a belief of ownership to his detriment. Rather, the evidence is that he contributed as he could to the Neville expenses as a member of the future family unit. Finally, Wright has failed to establish an unconscionable advantage. He lived in Neville for almost 5 years, including a period from May 2010 to September 2011 when he was unemployed. I accept the evidence of Holmstrom that she paid for the majority of groceries and shared entertainment and that Wright did little in terms of maintenance or renovation given his back issues, as also testified to by his daughter.
[53] I have concluded therefore that this is not a situation wherein the doctrine of proprietary estoppel applies.
iii) Constructive Trust
[54] Wright submits that this situation is one wherein the doctrine of constructive trust could be evoked to provide an equitable one-half interest.
[55] Constructive trust is a possible remedy for unjust enrichment. It may be used to confer a proprietary remedy if the court finds that 1) there is an unjust enrichment, 2) a corresponding deprivation, and 3) no juristic justification for the enrichment. However, a propriety interest does not arise automatically upon proof that the tests for constructive trust have been satisfied. Rather, the court must consider other remedies that make the declaration of a constructive trust unnecessary or inappropriate: Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70, at para. 81; and Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] 2 S.C.R. 834, at pp. 847-48. In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 40, Cromwell J. described the absence of juristic reason as “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.”
[56] In this case, Wright has failed prove the three elements justifying a discretionary remedy of constructive trust. More particularly, there is no evidence of unjust enrichment. Rather, as explained above, the $130,000 was a gift to Holmstrom offered to her by Wright himself as proof of his fidelity and commitment to her and their intended future. Wright contributed to some of the expenses of Neville over 5 years as consideration for living there. It cannot be said that Homstrom was unjustly enriched by this contribution. Holmstrom made the down payment on Neville and paid all of its expenses for approximately 10 years prior to Wright moving in. During the 5 years Wright lived at Neville, Holmstrom alone paid for the renovations that increased the value to Neville. Holmstrom has continued to pay for all of the expenses related to the home since November 2012, when the relationship terminated.
[57] I have concluded therefore that this is not a situation wherein the doctrine of constructive trust applies.
iv) Resulting Trust
[58] Wright submits that this situation is one wherein the doctrine of resulting trust could be evoked to provide an equitable one-half interest.
[59] In common law, a resulting trust arises when title to property is in one party’s name, but that party is under an obligation to return it to the original title owner because he or she is a fiduciary or gave no value for the property. The trustee usually has legal title, but sometimes he or she also has equitable title. It is presumed that the transferor intended to transfer the legal title, but not the beneficial title: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 20-21.
[60] In Pecore v. Pecore, at paras. 24-25, the Supreme Court made the following observation with respect to the presumption of resulting trust and the transferee’s onus to rebut that presumption:
The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.
The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging the transfer in these cases) bears the legal burden in a civil case. Rather, the onus is on the transferee to rebut the presumption of a resulting trust.
[61] The presumption of resulting trust is the general rule for gratuitous transfers. It has no application to the facts of this case. There is no evidence that Holmstrom gave Wright an interest in Neville without consideration. Wright does not argue that the transfer was gratuitous. Rather he argues that he paid Holmstrom $130,000 in return for a 50% beneficial interest in Neville. For reasons set out above, I have concluded that the $130,000 was a gift given to her by Wright to prove his commitment to her and their relationship.
[62] I have concluded therefore that this is not a situation wherein the doctrine of resulting trust applies.
2. If the Applicant is declared to have an interest in Neville, whether the Applicant has been unjustly enriched to the detriment of the Respondent.
[63] Given my conclusion that Wright holds no interest in Neville, I need not address this issue.
3. Whether the Applicant owes the Respondent for expenses or damages to Neville during the time of their cohabitation.
[64] Wright admits that he caused damage to Neville. The estimated cost of the repair is $3,000. Wright has always agreed to be responsible for this and agreed at trial to pay Holmstrom this amount.
[65] Holmstrom submits that Wright owes her $68,058.72 for his share of expenses he did not pay while cohabitating with her at Neville. Holmstrom prepared a detailed chart documenting her expense calculations for the time period between November 2007 and November 2012, with supporting documentation.
[66] Wright as well provided a calculation of expenses without supporting documentation but testifying to the considerable time and effort he took to demonstrate that he far exceeded his one-half share of carrying costs to Neville and that he made significant contributions to all of the other discretionary expenditures made by Holmstrom.
[67] The parties agree that Wright was to pay a share of the expenses associated with their co-habitation in Neville, but they disagree as to what expenses were to be shared or not to be shared.
[68] There is no written agreement in terms of how expenses of Neville were to be shared. The parties made no attempt to track their contributions during the relationship but rather were content to keep their finances co-mingled in a joint account from which the household expenses were paid. I accept that Holmstrom paid some expenses from her own resources, including groceries and shared entertainment, but there is no evidence to suggest that she was anything but content to do so at the time, with no expectation of future accounting and reimbursement. In my view, it is not appropriate for the Court to now undo the acquiescence of Holmstrom as a woman living with her fiancé and voluntarily contributing to their respective lifestyle, particularly when, as in this case, there is no evidence of egregious unfairness or a clear agreement between the parties.
[69] I have concluded therefore that Wright shall pay Holmstrom $3,000 for damage he caused to Neville, as agreed, and that Holmstrom’s claim for expenses in relation to Neville shall be dismissed.
4. Whether the Applicant is entitled to a 50% interest in the proceeds of sale of Main Street.
[70] Main Street is a residential four-plex that the parties purchased in November 1998 as a joint investment property and the parties sold in March 2012 for a significant profit. Wright submits that he is entitled to 50% of the net proceeds of sale. Holmstrom submits that he is entitled to only 27% percent as he failed to contribute 50% of the capital. The documentary evidence however demonstrates that the parties owned Main Street as tenants in common. There was no suggestion by Holmstrom, until she filed her answer in August 2013, that Wright’s capital contribution affected his percentage of ownership. Rather, the conduct of the parties clearly indicates an intention to share equally in the proceeds of Main St. In my view, Wright is entitled to a 50% interest in the net proceeds of the sale of Main Street.
[71] The purchase price of Main Street was $659,000. The bank was willing to loan the parties the entire amount but for $168,910.81. The $168,910.81 was collected as follows:
a. $30,000 loan from a private lender who registered a second mortgage on Neville;
b. $75,000 loan from Holmstrom’s parents through their company Harcanlyn;
c. $38,910.81 from Wright;
d. $25,000 from Holmstrom.
[72] Holmstrom submits that she provided $130,000 to close the transaction as the $30,000 loan was registered against her home and the $75,000 loan was made only to her from her parents’ holding company and not to her and Wright.
[73] Holmstrom’s father, Mr. Hart Holmstrom, gave evidence at the trial of this matter, under subpoena by Wright. I found Mr. Holmstrom to be a credible witness. He answered questions directly, without hesitation or push back. I accept his evidence. Although counsel for Wright questioned Mr. Holmstrom on his compliance with the subpoena, the subpoena was never entered into evidence. Mr. Holmstrom confirmed that the $75,000 loan was made only to his daughter and provided a cancelled cheque payable to Holmstrom
[74] Wright testified that the $75,000 was loaned to him and Holmstrom. To this end, he submitted recovered documents he delivered to Holmstrom in July 2014 that he states he sent to Mr. Holmstrom, including a November 2, 2008 fax saying “thanks for the gift of $75.000” and a March 5, 2009 fax saying “attached please find the document discussed re: Loan.” On January 19, 2015, his sworn evidence is that he just located a third document called “confirmation of loan.” These documents are self-serving and not credible. Mr. Holmstrom confirmed that he had never received nor seen the documents delivered in these proceedings in July 2014 or January 19, 2015.
[75] Mr. Holmstrom further confirmed that quite disturbingly, with respect to the November 2, 2008 document Wright represented he sent to Mr. Holmstrom, the fax number and telephone number listed therein had not been his since 2003 and he had never had an e-mail address as stated therein. Similarly, with respect to the March 5, 2009 document, while the fax number listed therein is correct, the same problems exist with the phone number and the e-mail address.
[76] It is without hesitation that I find that the loan by Harcanlyn of $75,000 was made to Holmstrom and not to both Holmstrom and Wright.
[77] The loan from Harcanlyn was just to Holmstrom. It was a loan and not an equity contribution. All of the loans (bank’s, Harcanlyn’s, private lender’s) were treated similarly by the parties; interest was paid monthly from the joint earnings generated from Main Street. $60,000 of the loan from Harcanlyn and the $30,000 loan from the private lender were repaid in June 2010, when the parties obtained a joint line of credit for Main Street. The remaining $40,000 owed to Harcanlyn (a further $25,000 was borrowed by Holmstrom for renovations to Main Street) was paid from the joint proceeds of the sale from Main Street in April 2012.
[78] The parties have acknowledged that it is no longer possible to complete a precise accounting of the funds in relation to Main Street or determine how the income from Main Street was used by the parties on a personal basis. It is clear that there were borrowings and financings related to the property, as well as adjustments for respective personal credit cards or lines of credit. Holmstrom submits that the only way to complete an accounting for Main Street at this stage is to go back to the original proceeds of sale in March 2012 and credit the proper percentages for the initial capital contributions.
[79] In my view, in these circumstances, the more reasonable approach is to distribute the net proceeds of sale based on the parties’ consistently demonstrated intended ownership interest. Throughout the ownership of Main Street the parties governed themselves as equal owners and filed documents with government agencies consistent with their conduct. The loans Holmstrom seeks to rely upon were not equity contributions but rather loans that were jointly repaid. They have little influence on the demonstrated or documented intention of the parties to share equally in the ownership of Main Street.
[80] The parties took title as tenants in common. Dashwood, the lawyer who facilitated the closing, has no indications in his file of any discussions other than 50% equal ownership. During each year of ownership, the parties reported 50% of the rental revenues and showed an ownership interest of 50% on Main Street on their respective income tax returns. Post separation, in April 2013, when preparing her 2012 income tax return, Holmstrom showed herself as a 50% owner in Main Street and reported 50% of the income and capital gain. In my view, taken together, the demonstrated conduct and the documentary evidence is determinative of the parties’ ownership interest of 50%.
[81] I have therefore concluded that Wright is entitled to 50% of the net proceeds of the sale of Main Street; or $255,000, as agreed to by the parties. Wright has been paid $50,000 by Holmstrom, the remaining liability therefore is $205,000.00.
5. Whether the Applicant is entitled to damages for breach of trust, intentional infliction of mental suffering, aggravated and punitive damages.
[82] Wright is seeking $30,000 in damages for breach of trust, intentional infliction of mental suffering, aggravated and punitive damages.
[83] Wright submitted that he is so entitled because of the following narrative:
a. Upon ending the relationship in November 2012, Wright prepared an inventory of assets and debts and forwarded it to Holmstrom by e-mail on November 19, 2012. Based upon Wright’s estimated valuation at that time of Neville at $900,000.00, his stated share of Neville and Main Street amounted to between $500,000.00 and $600,000.00. Further discussions relating to this list occurred by telephone thereafter. In the interim, Wright found a property he wished to purchase.
b. On December 20, 2012, Wright attended at a Royal Bank branch in Ottawa to transfer $180,000.00 of his share of the proceeds of Main Street. In Toronto, on December 24, 2012, he paid off the parties’ joint line of credit of $140,000.00. He had calculated that the amount of $180,000.00 was well below his ultimate entitlement, although Holmstrom had not yet provided an accounting. He e-mailed Holmstrom on December 27, 2012 to advise her of the transfers. Holmstrom immediately drove from Quebec, where she was vacationing, and attended her Royal Bank branch in Toronto on December 28, 2012 to remove the $170,000.00 of remaining funds that were left in the joint account and then demanded that the bank reverse the transfer to Wright and payment of the joint line of credit. She then called the police to allege fraud or theft by Wright. The bank reversed the transactions and she then immediately drew out the entire $140,000.00 on the joint line of credit, thus stripping Wright of all access to his capital, all of his credit, and intimidating him by laying a serious police complaint against him.
c. In telephone discussions over the next two days, Holmstrom attempted to extort a favourable financial settlement from Wright by adding additional threats of a further police complaint based on his nudity in their home, by threatening to “bury” him in legal fees unless he accepted $200,000.00 as final settlement of all claims, and advising she would not release any funds to him until a final agreement on all issues was reached between them.
d. Wright felt he had no choice but to accept, and conditionally accepted by e-mail on December 30, 2012. Recognizing that this so-called agreement was wholly unfair and extracted by Holmstrom’s coercive tactics, he reconsidered the agreement shortly afterwards. He commenced this proceeding in July 2013 upon his return to Toronto from Rapid Lake, Quebec after making further attempts to reach a fair settlement through his lawyer in March 2013.
e. After almost a year of litigation, in April 2014, Holmstrom provided her first “accounting” of the $741,000.00 from the sale of Main Street. From that schedule, Wright was able to calculate that he was owed $256,250.64 as a fifty percent. Holmstrom finally agreed to release $50,000.00 of the proceeds in October 2013 after the first case conference in this matter. Wright was seeking a release of $180,000.00 so he could purchase a home. The $50,000.00 Wright received was primarily used for legal fees, computer assistance, and was not even enough to pay his taxes arising from the sale of Main Street. As a result, Canada Revenue Agency withheld a portion of Wright’s Canada Pension Plan and Old Age Security Pension payments. In the meantime, Holmstrom had helped herself to $110,000.00 of the Main Street proceeds in February 2013 that were mostly paid into an RRSP to almost eliminate her capital gain payable on the sale of Main Street.
[84] Holmstrom disagrees with Wright’s description of the events between November 2012 and March 2013. Her narrative is as follows:
a. On November 9, 2012, Wright attended at the Royal Bank in an effort to have his name added to Holmstrom’s savings account. The parties had agreed to open a new joint account. Holmstrom had executed the necessary paperwork, but the Royal Bank made an error by adding Wright’s name to Holmstrom’s e-line savings account.
b. Knowing that Holmstrom was in Quebec for the holidays, Wright attended at multiple Royal Bank branches to effect transfers out of her account, using a document he created that purported to be “a summary to progress the settlement.” On December 27, 2012, after transferring nearly $320,000,00 out of Holmstrom’s account, Wright advised Holmstrom via email of the transfers. He attached the same document to that email.
c. While Wright maintains that he was intimated and bullied by Holmstrom, his conduct – engaging in inflammatory and self-help remedies during the progression of their separation settlement – suggests otherwise.
d. Upset by Wright’s conduct, Holmstrom left Quebec without reading the attached document and attended at her bank branch in Toronto, where she was advised to notify the police about the unauthorized access to her file for the purposes of the bank’s insurance. The bank froze Holmstrom’s account to conduct an internal investigation.
e. Following the investigation, the Bank reversed the transactions in early January 2013 and corrected the records that erroneously included Wright’s name on Holmstrom’s account.
f. Holmstrom remained willing to complete the negotiations with Wright despite his unilateral conduct in transferring the funds from her account. On December 30, 2012, in an email sent to Wright, she outlined the terms of payment and final release agreed upon. Pursuant to those terms, Wright would keep the $180,000,00 that he removed from Holmstrom’s account and would receive an additional $20,000.00.
g. On January 4, 2013, Holmstrom followed Wright’s earlier instruction to have an Ontario lawyer put together the terms of the separation agreement. She retained an Ontario lawyer to prepare a formal settlement. The settlement was sent to Wright, who signed it and instructed his lawyer, Jean De Marco, to release it to Holmstrom for execution. De Marco did not release the agreement to Holmstrom, said her “client could be walking away from millions,” and advised Holmstrom to provide financial disclosure.
h. From January 4 to 9 2013, the parties were in communication and Wright informed Holmstrom that he wished to proceed with the settlement regardless of his lawyer’s statements. The parties discussed and made some changes to the settlement agreement on January 9. Wright faxed the signed witnessed agreement and the signed waiver for independent legal advice to Holmstrom’s office.
i. Holmstrom signed the agreement and sent it back to Wright on January 16, 2013. Wright had told Holmstrom that he would provide her with the coordinates of the TD individual to whom he wanted Holmstrom to send the settlement funds of $223,500.00. Instead of honouring the agreement, however, he had his lawyer contact Holmstrom on March 13, 2013 to indicate that there was no agreement.
j. In response, Holmstrom refused to forward the agreed amount of the settlement. She believed that Wright would move offshore with the money, use their joint of line of credit, and refuse to pay her the amounts that he owed her.
k. Following repeated threats, Wright commenced litigation in July 2013. Holmstrom put the $223,500.00 into her lawyer’s trust, where it remains, less the $50,000 voluntarily given to Wright by Holmstrom in October 2013.
[85] Wright seeks damages for breach of trust, intentional infliction of mental suffering, aggravated and punitive damages.
i) Breach of Trust
[86] To establish breach of trust, Wright must demonstrate that there was a trust and that the trustee, Holmstrom, failed to fulfil her obligations with respect to the administration of the trust or, alternatively, failed to properly dispose of the trust property. Liability for breach of trust arises regardless of whether the breach is innocent, negligent or fraudulent. The purpose of liability is not to punish the trustee but to restore the beneficiary to the position he would have been had the breach not occurred: Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law Inc., 2014), at p.178.
[87] Holmstrom held a Power of Attorney in favour of Wright with respect to the proceeds of Main Street. The transaction closed in March of 2012. Prior to November 2012, Holmstrom managed the sale proceeds in accordance with Wright’s instruction and agreement. There is no evidence that Homstrom failed to properly handle the net proceeds from the sale of Main St in a way contrary to that as agreed to by Wright.
[88] It was the Royal Bank who made an error when it added Wright’s name to Holmstrom’s e-line savings account in November, 2012. It was Wright who transferred nearly $320,000 out of Holmstrom’s personal account when he knew she was out of province on vacation. It is not unexpected that Holmstrom would attend her bank immediately upon learning of Wright’s withdrawals to determine how this could have happened. It matters not that Wright felt he was entitled to these funds. He unilaterally transferred funds out of Holmstrom’s personal account, without her consent. In my view, Holmstrom’s reaction thereafter was reasonable and does not amount to a failure to fulfil her obligations to Wright as trustee over the net proceeds.
[89] Holmstrom attended her bank to inquire about the third party withdrawal from her personal account. I accept that when she did so, she did as the bank advised her to do, including notifying the police. There is no evidence from anyone at the bank to discredit Holmstrom’s evidence in this regard and Wright was not at the bank at the time in question.
[90] Nor is there any evidence of that Wright lost an investment opportunity because of Holmstrom’s actions. Other than a bald statement, Wright provided no evidence in terms of a potential replacement property he was forced to forgo or that he was considering in either November 2012 or October 2013.
[91] I have therefore concluded that Wright has failed to establish entitlement to damages for breach of trust.
ii) Intentional infliction of mental suffering
[92] To establish intentional infliction of mental suffering, Wright must prove that Holmstrom engaged in flagrant and outrageous conduct that was calculated to produce harm and that resulted in a visible and provable injury: Rahemtulla v. Vanfed Credit Union (1984), 1984 CanLII 689 (BC SC), 29 C.C.L.T. 78 (B.C.S.C.), at paras. 52-56; and Piresferreira v. Ayotte, 2010 ONCA 384, [2010] O.J. No. 2224, at paras. 65-71. Examples of the first requirement of “flagrant and outrageous” conduct include glaring and notorious false communications: Piresferreira v. Ayotte, at para. 70. With respect to the second element of the tort, “for the conduct to be calculated to produce harm, either the actor must desire to produce the consequences that follow, or the consequences must be known by the actor to be substantially certain to follow:” Prinzo v. Baycrest Centre for Geriatric Care, 2002 CanLII 45005 (ON CA), [2002] O.J. No. 2712 (Ont. C.A.), at para. 61. Finally, Wright must demonstrate that his injuries were caused by Holmstrom’s conduct. In Guay v. Sun Publishing Co., 1953 CanLII 39 (SCC), [1953] 2 S.C.R. 216, at p. 238, Estey J. elaborated on the requirement of a visible and provable injury as follows:
Moreover, it is important to keep in mind what must be proved in order that damages may be recovered, as stated in Pollock on Torts, 15th ed., at p. 37, as follows:
A state of mind such as fear or acute grief is not in itself capable of assessment as measurable temporal damage. But visible and provable illness may be the natural consequence of violent emotion, and may furnish a ground of action against a person whose wrongful act or want of due care produced that emotion. ... In every case the question is whether the shock and the illness were in fact natural or direct consequences of the wrongful act or default; if they were, the illness, not the shock, furnishes the measurable damage, and there is no more difficulty in assessing it than in assessing damages for bodily injuries of any kind.
[93] Wright states that he is suffering from post-traumatic stress disorder as a result of the events relevant to this proceeding. No opinion evidence of Wright’s stated diagnosis or the cause of it was presented at the trial of the matter. Even if I were to accept the medical condition as alleged without opinion evidence, which I do not, there is no evidence demonstrating that Holmstrom caused the condition by conduct calculated to produce harm.
[94] Holmstrom denies that she ever threatened to bury Wright in legal fees unless he accepted $200,000 as final settlement for all claims. I accept that she did not make such a threat as it would be inconsistent with her conduct during December 2012 and January 2013. It was Wright who instructed Holmstrom to get an Ontario lawyer to put the terms into a formal agreement. She did as she was instructed. Holmstrom did not discourage Wright from seeking legal counsel. It was Wright who wanted to proceed with settlement irrespective of his counsel’s advice. There is no evidence of Holmstrom pressuring him to do so.
[95] The other conduct that Wright points to establish liability for intentional infliction of mental suffering is also not sufficient to attach liability to Holmstrom. Holmstrom refused to release the agreed upon settlement funds after Wright resiled from his signature on their final agreement. She originally answered Wright’s application by relying on the signed settlement agreement. Holmstrom paid the amounts in question, however, into her lawyers’ trust account where they remain today. This conduct was neither flagrant nor outrageous. At most, it was a strategic decision made during the course of contested litigation.
[96] Finally, I do not accept that Holmstrom’s actions amount to extortion as submitted by Wright. There is no basis for this claim in the evidence. Holmstrom laid a complaint with the police, as directed by the bank. Holmstrom’s actions are contrary to Wright’s assertions that she threatened to bury him in legal fees and withhold all of his money until he agreed to her terms. Rather, she did as she was instructed, having their negotiated terms put into a legal agreement and forwarding the agreement to Wright to obtain legal advice. Surely she would have insisted against his obtaining legal advice if she wished to extort him into a settlement. It was Wright who decided to proceed with a settlement contrary to the advice of his legal counsel, not Holmstrom who demanded that he do so.
[97] I have concluded therefore that Wright has failed to establish entitlement for intentional infliction of mental suffering.
iii) Aggravated and Punitive damages
[98] Aggravated damages are intended to be compensatory for intangible loss such as mental distress and shock, while punitive damage are intended to punish the wrongdoer for high handed or malicious conduct, as opposed to the particular loss or injury suffered. Aggravated damages are awarded where a defendant’s conduct has been high-handed or oppressive, thus causing additional distress or humiliation: Norberg v. Wynrib, 1992 CanLII 65 (SCC), [1992] 2 S.C.R. 226, at para. 59; Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, at paras. 191, 193. Punitive damages may be awarded where the defendant’s misconduct is “so malicious, oppressive, and high-handed that it offends the court’s sense of decency:” Hill v. Church of Scientology of Toronto, at para. 199. They are awarded only in exceptional cases, where the total of general and aggravated damages are insufficient to denounce, deter and punish the wrongdoer: Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 36; and Hill v. Church of Scientology of Toronto.
[99] The party claiming aggravated and punitive damages bears the burden of proof.
[100] Wright submits that he is entitled to aggravated and punitive damages as Holmstrom threatened to throw away his possessions if they were not collected in a week. The e-mails from Holmstrom, however, do not support this assertion. Holmstrom’s e-mail of November 16, 2012 tells Wright that he must immediately arrange for the removal of his personal items but made no threat of disposal. Holmstrom’s e-mail of November 18, 2012 to Wright’s children again requests the removal of Wright’s possessions without threat of disposal. Further, Wright agrees that most of his things were removed from Neville by November 14, 2012 as he was living in Quebec.
[101] Wright submits further that he is entitled to aggravated and punitive damages as Holmstrom was responsible for the loss of Wright’s employment with Rapid Lake. Again, there is no evidence to support this assertion and no evidence that Holmstrom defamed Wright to his family and friends, as he alleges. Ms. Eagan, Wright’s daughter, recalled one call with Holmstrom initiated by her, but made no mention of anything said by Holmstrom that was disparaging or defamatory to Wright.
[102] Finally, Wright submits that he is entitled to aggravated and punitive damages as Holmstrom was responsible for a letter sent to the legion housing where Wright was living seeking to have him evicted for fraud. Again, there is no evidence linking Holmstrom to this letter.
[103] I have concluded therefore that Wright is not entitled to an award for punitive and/or aggravated damages.
6. Whether the Respondent is entitled to damages for loss of investment of $23,000.
[104] Holmstrom argues that Wright and his life-long friend Denver convinced her to invest in a project that Wright and Denver were involved in and that they promised she would see a return of 1-2% monthly. Holmstrom invested $37,000 from her RRSP’s and ultimately lost $23,000. She seeks this amount as damages from Wright.
[105] Denver testified at the trial of this matter on behalf of Wright. He was not a credible witness. His responses were aggressive and combative. He presented as a clear advocate for Wright.
[106] Having said that, any issue with the investment Holmstrom made with Denver is between her and Denver. I am not persuaded that Wright’s influence on her to make the investment was such to establish a duty of care or cause of action against him.
[107] I have concluded therefore that Holmstrom is not entitled to damages for loss of investment.
7. Whether the Applicant should be directed to take steps in an effort to have the Respondent’s name, address and business removed from the Techinvestor website.
[108] In early 2013, Holmstrom discovered that there is a website called Techinvestor wherein serious allegations of illegal activity are made against Wright. Holmstrom’s name, home address, business and business address are as well reflected on the website. Main Street is also mentioned on the website. Holmstrom consulted the police in 2013 and was told that there was nothing that could be done to delete the website. Holmstrom asks the Court to direct Wright to take steps to have her information removed from the site.
[109] The website is damaging in its description of Wright’s role in overseas financial fraud. Wright testified that he contacted a high ranking security official with respect to having the site deleted and he too was told there was nothing that could be done.
[110] Manuel Santos (“Santos”) was called as a witness by Wright. He attended under subpoena. He testified that the website, or a predecessor version, has been in existence for many years and is updated from time to time.
[111] The website is damaging to Wright’s reputation and character. In my view, if there was something he could do to have it removed or revised, he would. I am therefore not inclined to direct him to make the efforts as requested by Holmstrom.
8. Whether the Applicant should be subject to a non-harassment order as against the Respondent.
[112] Section 46 of the Family Law Act gives the court jurisdiction to make interim or final restraining orders on application by a party. It provides:
(1) On application, the court may make an interim or final restraining order against a person described in subsection (2) if the applicant has reasonable grounds to fear for his or her own safety or for the safety of any child in his or her lawful custody
(2) …
(a) a spouse or former spouse of the applicant; or
(b) a person other than a spouse or former spouse of the applicant, if the person is cohabiting with the applicant or has cohabited with the applicant for any period of time.
[113] The test for determining whether a restraining or non-harassment order should be granted is whether the moving party “has reasonable grounds to fear for his or her own safety or for the safety of any child in his or her lawful custody:” Fuda v. Fuda, 2011 ONSC 154, [2011] O.J. No. 138, at para 31. In Khara v. McManus, 2007 ONCJ 223, [2007] O.J. No. 1968. P.W. Dunn J. considered this test and, at para. 33, elaborated on the requirement of the reasonableness of the applicant’s fear as follows:
When a court grants a restraining order in an applicant’s favour, the respondent is restrained from molesting, harassing or annoying the applicant. It is not necessary for a respondent to have actually committed an act, gesture or words of harassment, to justify a restraining order. It is enough if an applicant has a legitimate fear of such acts being committed. An applicant does not have to have an overwhelming fear that could be understood by almost everyone; the standard for granting an order is not that elevated. However, an applicant’s fear of harassment must not be entirely subjective, comprehended only by the applicant. A restraining order cannot be issued to forestall every perceived fear of insult or possible harm, without compelling facts. There can be fears of a personal or subjective nature, but they must be related to a respondent's actions or words. A court must be able to connect or associate a respondent's actions or words with an applicant's fears.
[114] In 2013, Wright attended at the gas station where Holmstrom’s daughter had a part time job 1 km from Neville. Holmstrom’s daughter felt afraid and called the police. Acknowledging this event, the evidence remains deficient for the purposes of granting a non-harassment order. No events were put before the Court as evidence of Wright’s unwanted attendance or
communications with Holmstrom. There is nothing before the Court to connect Wright’s actions to Holmstrom’s stated fears.
[115] It is trite to say that the parties’ relationship has been broken beyond repair. There is no evidence however warranting a non-harassment order as requested by Holmstrom.
Disposition
[116] For reasons set out above, the following orders are directed:
The Applicant’s claim to a 50% interest in Neville is dismissed.
The Respondent’s claim for expenses to Neville during the time of their cohabitation is dismissed.
The Applicant shall pay the Respondent within 30 days $3,000 for damages to Neville during the time of their cohabitation.
The Applicant is entitled to a 50% interest in the proceeds of sale of Main Street. The Respondent shall pay the Applicant within 30 days $205,000 plus interest at the rate of 1.3% from March 1, 2013.
The Applicant’s claim for damages for breach of trust, intentional infliction of mental suffering, aggravated and punitive damages is dismissed.
The Respondent’s claim for damages for loss of investment of $23,000 is dismissed.
The Respondent’s claim to have the Applicant directed to take steps in an effort to have the Respondent’s name, address and business removed from the Techinvestor website is dismissed.
The Respondent’s claim to have the Applicant be subject to a non-harassment order as against the Respondent is dismissed.
Costs
[117] The parties are encouraged to agree to an appropriate award of costs for this proceeding. Should they not be able to agree within 30 days, I shall receive written submissions of not more than 2 pages, bills of costs and relevant offers to settle, from each of the parties by noon on June 4, 2015, with any reply by noon on June 8, 2015.
CHIAPPETTA J.
Released: March 24, 2015
CITATION: Alexander James Wright v. Candice Holmstrom, 2015 ONSC 1906
COURT FILE NO.: FS-13-18812
DATE: 20150324
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALEXANDER JAMES WRIGHT
Applicant
- and -
CANDICE HOLMSTROM
Respondent
REASONS FOR JUDGMENT
CHIAPPETTA J.
Released: March 24, 2015