Ombac v. George, 2015 ONSC 1938
CITATION: Ombac v. George, 2015 ONSC 1938
COURT FILE NO.: FS-09-16227
DATE: 20150326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
EVA OMBAC Applicant
– and –
ARTHUR GEORGE Respondent
Veena Pohani, for the Applicant
Gaetano Matteazzi, for the Respondent
HEARD: February 23, 24, 25, 26, 27 March 2, 4 and 5, 2015
CHIAPPETTA J.
[1] The parties never married. They resided as a common law couple in the same home for almost 24 years, from October 1983 to March 2007. The Respondent is the only legal owner of the family residence. The parties have two daughters who are now adults and live independently. There are two principal issues between the parties: ownership interest of the family residence and the Applicant’s entitlement to occupation rent. For reasons set out below, I have concluded that the Applicant is entitled to a 50% beneficial interest in the family residence and that she is not entitled to occupation rent.
Background
[2] The Respondent, Arthur George (“George”), is 61 years old. The Applicant, Eva Ombac (“Ombac”), is 59 years old. They lived together in a common law relationship for almost 24 years. There are two daughters of the relationship, both of whom are adults and independent. There are no issues of custody or child support.
[3] The parties met in April 1982 when they were working in the computer department for Sears. George was not yet divorced from his wife. By October 1982, Ombac was pregnant with the parties’ first daughter. Their first daughter was born in the Philippines in June 1983 as Ombac had been there since April of that year to care for her dying mother. Before leaving for the Philippines, in the fall of 1982, Ombac attended with George to view a house for sale located at 1 King Edward Avenue in Toronto (“the family residence”).
[4] George states that he had been saving for a long time to purchase a home and had located the family residence earlier that year. He signed the agreement of purchase and sale on October 31, 1982, before he learned that Ombac was pregnant. George was listed as the only purchaser, agreeing to purchase the family residence for $78,000. George put $5,000 down as a deposit with the agreement of purchase and sale. The transaction did not close until April 30, 1983. Ombac was in the Philippines at the time of closing. At closing, George paid a further $23,000, leaving a mortgage of approximately $50,000. Legal title was registered in George’s name as the sole owner of the family residence.
[5] George testified that he paid the entire deposit of $28,000 from his own funds saved from 2 years prior when he first began looking for a home. Ombac believes that part of the $28,000 included a $12,000 loan from George’s parents, which she helped to repay. Ms. Colleen George, George’s mother, testified. She confirmed that the $12,000 was a loan but that it was given to assist George to pay the mortgage he assumed from the vendor, not to assist him with the down payment. While she was unsure of the timing of the payment and stated it was in April 1983, she did not waver in her evidence that the purpose of the loan was to assist with the mortgage and not the down payment. Ombac was not in the country at the time George asked his parents for a loan or at the time of closing. Her belief with respect to the purpose of the loan carries little weight against that of Ms. George, who actually advanced the funds with her husband. I therefore accept as a fact that the $28,000 down payment did not include the $12,000 loan borrowed by George from his parents. I find that George alone made the down payment of $28,000 and that it came from his own funds.
[6] Ombac returned from the Philippines in October 1983. She moved into the family residence and began to contribute equally to the expenses, including the mortgage and the loan from George’s parents. The parties pooled their finances and sacrificed discretionary spending to pay off their mortgage and the loan in five years, by 1988. After the mortgage and the loan were paid in full, the parties continued to comingle their finances and to jointly pay all of the expenses pertaining to the family residence.
[7] The family was not without its share of stressful life moments.
[8] From 1980 to 1983 and again in 1985, George was involved in litigation with respect to the dissolution of his marriage and with respect to his child support obligations for the two children of his marriage.
[9] From 1993 to 2005, George was involved in a further legal proceeding with his ex-mother-in –law. His ex-wife had passed away. Her mother sought ongoing and arrears in child support from George for the two children of his marriage. She was successful in her efforts and child support was provided by George for the two children of his marriage. Ombac contributed to the legal costs and the child support payments, as both payments were made from the parties’ joint bank account.
[10] In 1993, in order to prevent George’s ex-mother-in-law from accessing the family residence in her efforts to recover child support payments in arrears, the parties attended a lawyer to have legal title to the family residence transferred from George to Ombac. Although documents to affect this transfer were duly executed by the parties, they were never filed and legal title was never transferred. When both parties searched title to the family residence in 2009 further to this proceeding, they were equally surprised to learn that Ombac was not registered as the legal title owner of the family residence, consistent with their intention in 1993.
[11] In March 1998, George suffered renal failure. He could not walk. He had been living with type 1 Diabetes since childhood. He was hospitalized from August to November 1998 and discharged to dialysis 3 times a week for 4 hours from November 1998 to August 2001. In August 2002, George had a kidney transplant. Ombac stayed with him in the evenings while he was hospitalized, drove him to dialysis and stayed with him for four hours. George was unable to work during this time. He received CPP and disability payments, but it was Ombac who carried the financial burden of the family. George did not return to work full time until 5 years later in 2003 when he returned to his employment with EDS as a computer programmer.
[12] In April 1998, Ombac left her employment to begin working as an independent computer consultant. She incorporated a company called Acetex Systems Inc. (“Acetex”) as a business vehicle for the operation of her consulting business. Ombac and George are listed on the Articles of Incorporation as equal common shareholders while Ombac, George and their two children are listed as preferred shareholders. Ombac is the only director. Acetex operated as a service company. Its only source of income was the work Ombac did for her clients. Acetex would invoice Ombac’s clients and then pay her a salary and/or director’s fee in proportion to the income the invoices generated. If Ombac did not work the company would be without funds. Acetex still exists as a company. There is just under $147,000 in its bank account. After separation from George, Ombac stopped using Acetex as her business vehicle for her consulting work and incorporated a new consulting company, 7163983 Canada (“716”), through which she continued her consulting work. George is not a shareholder of 716.
[13] In August 2006, Ombac states that she learned that George was having an affair with a woman he knew from his work. George denies the affair, stating that the woman was simply a good friend. While attempts were made to resolve their relationship, the parties agree that it continued to deteriorate. Ombac ultimately left the family residence in March 2007.
[14] Ombac states that after she left the family residence George changed the locks and removed her from the insurance on their family vehicle. George admits he changed the locks, but states that he changed them back again at the request of Ombac. Ombac agrees that she continued to attend the family residence from March 2007 to January 2009 as the parties were attending counselling with a view to reconciliation.
[15] In August 2008, while the parties were attending counselling and making efforts at reconciliation, Ombac purchased her own home.
[16] On January 31, 2009, Ombac attended the family residence. She states that she learned that George was still communicating with “the other woman.” She slapped him and was charged with assault. She was also charged with the theft of a teddy bear. The theft charges were dropped when she returned the teddy bear. She agreed to an 18-month peace bond with respect to the assault charges.
[17] On August 6, 2009, Ombac commenced this application seeking, amongst other relief, a 50% beneficial ownership in the family residence. George denied her entitlement to 50% ownership in the family residence and sought, amongst other relief, spousal support from Ombac.
[18] In April 2012, George was hospitalized with renal failure and pneumonia. He has been unable to work and receiving CPP and disability payments since October 2012. Presently he is in stage 4 renal failure and has only 25% function in his one remaining kidney. He also suffers from severe anemia.
On Consent
[19] The parties consent to the following Orders:
i) The Respondent shall be entitled, by set-off of any amounts owed to the Applicant, to $48,000 representing his share of loans made by the Applicant to her various family members;
ii) Acetex’s bank account shall be unfrozen within 5 days, the proceeds therein shall be used to pay outstanding third party fees within 30 days, and the remaining proceeds shall be distributed equally amongst the Applicant, the Respondent and their two children within 60 days. The Applicant shall provide an accounting of the third party fee payments to the Respondent with his share of the remaining proceeds;
iii) The Certificate of Pending Litigation registered by the Applicant against the family residence is vacated;
iv) All other claims for relief as set out respectively in the parties’ pleadings and/or opening statements are withdrawn on consent. For greater certainty, the parties’ claims are restricted to the family residence as more particularly described below under issues. All other claims for relief made by the parties were withdrawn on consent prior to the Court receiving closing submission, with the exception of the Respondent’s claim for spousal support, which was withdrawn by the Respondent after the Applicant’s closing submissions.
Issues
The only remaining issues between the parties are as follows:
What is the percentage of beneficial interest in the family residence properly attributed to the Applicant and the proper date to value the family residence for this purpose; and
Whether the Applicant is entitled to occupation rent from March 2007, the date of separation, to March 2015 and, if so, whether the expenses for the family residence during that period should be set off from any award for occupation rent.
Analysis
1. Beneficial Interest in the Family Residence
[20] Ombac submits that she is entitled to a 50% beneficial interest in the family residence. George agrees that Ombac is entitled to a beneficial interest in the home, but submits that her beneficial interest is limited to 33.3%.
[21] George admits that the mortgage and the expenses for the family residence were paid equally by him and Ombac through their joint banking account. He concedes that Ombac is entitled to a constructive trust over the value of the family residence. He submits, however, that the trust interest is not 50% but rather is limited to one third, as Ombac did not contribute to the $28,000 in down payment and closing fees in 1983. The $28,000 represents approximately one-third of the purchase price of the mortgage. George submits therefore that as Ombac contributed equally to paying two-thirds of the purchase price, she is entitled to one third of the value of the family residence and he is entitled to two thirds.
[22] I disagree. The relevant facts are not contentious. Ombac contributed to the payment of the mortgage and the loan to George from his parents for the vendor’s mortgage he assumed. George intended for Ombac to take sole legal title to the family residence in 1993 and the parties both believed she was the legal titleholder until learning otherwise in 2009. The parties lived together in the family residence for almost 24 years. They raised their two children together there and co-mingled their finances to pay for all expenses associated with the family residence. It is further agreed that from 1998 to 2003, Ombac carried most of these expenses on her own while George was ill and on disability.
[23] In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, the Supreme Court canvassed the law of unjust enrichment in the context of common law relationships and elaborated on the three essential elements of unjust enrichment, a corresponding deprivation, and the absence of a juristic reason. Particularly, the Court affirmed the “straightforward economic approach” that Canadian courts have taken with respect to the elements of enrichment and corresponding deprivation, thus excluding considerations such as moral or policy questions at the initial stages of the analysis. With respect to the first element, enrichment, the Court explained that the applicant must show that she conferred a tangible benefit that the respondent received and retained. To demonstrate a deprivation, the applicant must establish that the respondent was not only enriched, but that his enrichment corresponds to a deprivation which she suffered. Finally, the enrichment and deprivation must have occurred without a juristic reason; there must be no reason in law or justice – no contract, intention to make a gift, or disposition of law – for the respondent’s retention of the benefit conferred by the applicant. This third stage of the analysis requires consideration of the autonomy of the parties and their legitimate expectations: at paras. 37-41.
[24] The Court in Kerr v. Baranow further emphasized that while unjust enrichment does not mandate a presumption of equal sharing, the appropriate remedy must respond to the nature of domestic relationships as joint ventures to which the parties jointly contribute. The court must assess the circumstances of each relationship, including factors such as mutual effort, economic integration, actual intent, and priority of the family. Specifically, at paras. 90 and 92, the Court emphasized that
Indicators such as the pooling of effort and team work, the decision to have and raise children together, and the length of the relationship may all point towards the extent, if any, to which the parties have formed a true partnership and jointly worked towards important mutual goals.
The more extensive the integration of the couple’s finances, economic interests and economic well‑being, the more likely it is that they have engaged in a joint family venture. The actual intentions of the parties, either express or inferred from their conduct, must be given considerable weight.
[25] George made the down payment on the family residence from his own funds. Ombac worked with George to sacrifice discretionary spending and pay the mortgage in in full in five years. She worked with him to create a home for their daughters. All family expenses were paid from the joint account where finances were co-mingled. Ombac took care of George and the family, financially and emotionally, while George was ill and unable to work for 5 years. She contributed to his legal costs and child support payments from his marriage. She deprived her own wants and needs to enrich those of the family. This family was met with many stresses in their life. Ombac’s contributions to surviving those stresses were critical. The facts of this case substantiate a joint family venture and a tangible benefit George and the family received and retained from Ombac’s devoted efforts that cannot be negated by a down payment made by George 25 years prior to separation. The circumstances reflect the teamwork of the parties to advance the best interests of their family and a demonstrated intention of the parties over the 24 years to share equally in the costs of the family residence and, by extension, its ownership.
[26] Since a constructive trust is restitutionary in nature, it must accurately reflect the extent of George’s enrichment and Ombac’s corresponding deprivation. In my view, a 33% interest in the family residence does not properly address the extent of Ombac’s financial and non-pecuniary contributions to the joint family venture from the beginning of the parties’ cohabitation until their separation. Ombac and George lived together for 24 years. During this period, they pooled their efforts and resources, raised their children together, shared mutual goals, and formed a partnership. Ombac undertook significant if not sole responsibility for the economic well-being of the family while George was ill and hospitalized. The extent of the parties’ economic and financial integration is evident by Ombac’s contribution to the mortgage payments, the loan George borrowed from his parents, and George’s child support obligations. Both parties intended and indeed believed that title to the family residence was transferred to Ombac in 1993. In light of this common intention and the direct nexus between Ombac’s contribution and the acquisition and maintenance of the family residence, I find that her expectation that she would be entitled to a 50% beneficial interest in the family residence is reasonable.
[27] It is without hesitation that I conclude that Ombac is entitled to a 50% beneficial interest in the family residence and not a beneficial interest of 33%. To conclude otherwise would be contrary to the principles of constructive trust and unjust enrichment and the very reasons the law in this area has developed to grant common law partners a remedy upon separation when they jointly agree to pool their finances to pay the mortgage, taxes, utilities, repairs and maintenance of a family residence and a family life for 24 years.
[28] George submits that the applicable value of the family residence is that from March 2007, the date of separation. It is agreed by the parties that the family residence was valued at $335,000 in March 2007. Ombac submits that the applicable value is the current value. It is agreed by the parties that the current value of the family residence is $537,500.
[29] Ombac contributed nothing to the expenses of the family residence since leaving in March 2007. This will be dealt with below. George testified that he made renovations to the family residence in the summer of 2014, valued at approximately $18,000. No documentary evidence was filed with the Court however to substantiate that renovations were done or the costs of same, no before or after pictures, no names of contractors used, or invoices for time or material. George testified that he paid his contractors with a credit card where possible or with cheques. No credit card statements were provided to the Court and no cancelled cheques were filed as evidence of such renovations. There is no evidence therefore to establish that George spent his own monies to renovate the house and that this expenditure increased the value of the family residence after March 2007.
[30] Rather, it appears that the value increased strictly as a result of the passage of 8 years and the natural increases organic to the real estate market. Had George recognized Ombac’s rightful beneficial entitlement to the family residence at the time of separation, his payment to her today would be significantly less. He chose however to deny her rightful entitlement for 8 years and must now pay Ombac her 50% beneficial ownership interest based on the current value of the residence at $537,500 or $268,750.
2. Occupation Rent
[31] As a beneficial owner of 50% of the family residence, Ombac seeks occupation rent from George from March 2007 through to the present day. In terms of the amount of occupation rent, Ombac has provided comparable market listings of properties rented in the neighbourhood of the family residence demonstrating rental properties between $1,450 and $2,500/month. Ombac seeks $1,000/month as the average monthly rental rate of the neighbouring properties or $96,000 minus taxes and insurance as occupation rent.
[32] George takes no issue with the quantum of occupation rent but submits that Ombac is not entitled to occupation rent. I agree.
[33] When one spouse has had exclusive possession and use of the matrimonial home as a joint owner, the other is entitled to compensation. The equitable approach is to allow the non-occupying spouse one-half of the rent that the premises would attract, less one-half of the taxes and insurance for the period of possession: Irrsack v. Irrsack and two other actions (1978), 1978 CanLII 2158 (ON SC), 22 O.R. (2d) 245 (H.C.J.), aff’d 22 O.R. (2d) 245 (Ont. C.A.). However, a claim for occupation rent by one spouse against the other will be granted only in the exceptional case. In order to succeed in a claim for occupation rent, the non-occupying spouse must show that “the remedies to gain possession of the property, to receive payments from the spouse in possession or support from him or her ... are either not available or insufficient to render justice between the parties”: Foffano v. Foffano, [1996] O.J. No. 3284 (Gen. Div.), at paras. 24 and 25; and McColl v. McColl (1995), 1995 CanLII 7343 (ON SC), 13 R.F.L. (4th) 449 (Gen. Div.).
[34] In Griffiths v. Zambosco, 2001 CanLII 24097 (ON CA), [2001] O.J. No. 2096, at para. 49, the Court of Appeal identified the relevant factors to be considered in determining whether to award occupation rent. These factors include the timing of the claim for occupation rent, the duration of the occupancy, the inability of the non-resident spouse to realize on her equity in the property, any reasonable credits to be set off against occupation rent, and any other competing claims in the litigation. The Court further noted that the weight to be given to these and other relevant factors is a matter for the trial judge to determine: at para. 50. See also Stetco v. Stetco, 2013 ONSC 3103, [2013] O.J. No. 2455.
[35] In Higgins v. Higgins, 2001 CanLII 28223 (ON SC), [2001] O.J. No. 3011 (S.C.J.), at para. 53, Quinn J. expanded the list of factors that the Court may consider in awarding occupation rent. Specifically, he found that the following factors are relevant:
a) the conduct of the non-occupying spouse, including the failure to pay support;
b) the conduct of the occupying spouse, including the failure to pay support;
c) whether the non-occupying spouse moved for the sale of the home and, if not, why not;
d) whether the occupying spouse paid the mortgage and other carrying charges of the home;
e) whether children resided with the occupying spouse and, if so, whether the non-occupying spouse paid, or was able to pay, child support; and
f) whether the occupying spouse has increased the selling value of the property.
[36] Considering the principles of law set out above, in my view, Ombac is not entitled to occupation rent. I make this conclusion for the following reasons, taken together:
a. Ombac left the home in March 2007 voluntarily. There was no ouster. She believed George was having an affair. She admitted on cross-examination that she never caught George in a sexual relationship with anyone and that it was possible that he was just friends with the alleged adulterous partner;
b. Although George changed the locks after she left, he changed them back and gave Ombac a key to the family residence. She used the key to access the family residence through to the end of January 2009. During this time the parties attended counselling and made attempts at reconciliation;
c. Ombac commenced her application in April 2009 after being charged with assault while at the family residence in January 2009;
d. Ombac amended her application to include a claim for occupation rent in November 2014, 5 years after the commencement of her application and 7 years after she left the home. The trial was originally scheduled to proceed in December 2014;
e. While Ombac admitted to having a temper and punching the walls in the family residence and slapping George, there was no evidence that George had ever physically or emotionally harmed Ombac;
f. Ombac left the family residence on her own accord in March 2007, continued to return to the family residence for almost two years thereafter at her pleasure and chose to purchase her own home in August 2008, during the time that the parties were attempting to reconcile.
[37] Ombac made no financial contribution to the family residence since leaving in March 2007. Given my conclusion with respect to occupation rent, however, there is no need for me to consider George’s request for a set off for all utilities and taxes and insurance paid on the property since the date of separation.
Disposition
[38] For reasons set out above, the following Orders are directed:
The Respondent shall pay the Applicant the sum of $268,750 representing 50% of the present value of 1 King Edward Avenue, Toronto, Ontario. Set off from the $268,750 owning to the Applicant from the Respondent is the amount of $48,000 representing his share of loans made to her family. Within 60 days, therefore, the Respondent shall pay the Applicant $220,750;
Acetex’s bank account shall be unfrozen within 5 days, the proceeds therein shall be used to pay outstanding third party fees within 30 days, and the remaining proceeds shall be distributed equally amongst the Applicant, the Respondent and their two children within 60 days. The Applicant shall provide an accounting of the third party fee payments to the Respondent with his share of the remaining proceeds;
The Certificate of Pending Litigation registered by the Applicant against the 1 King Edward Ave, Toronto, Ontario is vacated;
The Applicant’s claim for occupation rent is dismissed;
All other claims for relief as set out respectively in the parties’ pleadings and/or opening statements are withdrawn on consent.
Costs
[39] The parties are encouraged to agree to an appropriate costs award for this matter. If the parties are unable to agree, I will receive written submissions of not more than 2 pages, costs outlines and relevant offers to settle, first by the Applicant within 60 days and then by the Respondent within 30 days.
CHIAPPETTA J.
Released: March 26, 2015
CITATION: Eva Ombac v. Arthur George, 2015 ONSC 1938
COURT FILE NO.: FS-09-16227
DATE: 20150326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
EVA OMBAC Applicant
and –
ARTHUR GEORGE Respondent
REASONS FOR JUDGMENT
CHIAPPETTA J.
Released: March 26, 2015