CITATION: Hartstein v. Ricottone, 2016 ONSC 1102
COURT FILE NO.: 15-030-0000
DATE: 2016-02-17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Michael Hartstein Plaintiff
Frederick E. Leitch, Q.C., Counsel for the Plaintiff
- and -
Dino Ricottone, Danny Ricottone and Christina Tanya Gulka as Estate Trustees of the Estate of Anna Ricottone Defendants
Michael W. Fowler, Counsel for the Defendants
HEARD: October 26-28, 2015
THE HONOURABLE MR. JUSTICE P.J. FLYNN
REASONS FOR JUDGMENT
[1] The Defendants are the children of Anna Ricottone (Anna), deceased.
[2] During her lifetime, Anna was in a long term relationship with the Plaintiff (Mike).
[3] Mike testified that it was a “European relationship”. He explained that term by saying “even though we fought, we trusted each other”.
[4] In the end, however, Mike sued Anna for a declaration that he remains the beneficial owner of two cottages on Lakeshore Road in Selkirk, Ontario, one of which became their matrimonial home (370).
[5] Mike and Anna began a relationship in 1993. They both had adult children from previous relationships. Anna worked for two chiropractors. Mike was self-employed in the swine industry. He had a substantial income and significant assets. One of those assets was his home in Caistor Centre.
[6] They decided to live together in the Caistor Centre home.
[7] So Mike had his lawyer prepare a Cohabitation Agreement which was executed by the two of them in July 1993. And then they moved in together.
[8] That Agreement recited that both parties were financially self-sufficient.
[9] Neither party attacks the Agreement. In fact both rely on it.
[10] The purpose of the Agreement is set out in Article 3:
- PURPOSE OF THE CONTRACT
Each party intends by this Contract to:
(a) avoid any rights and obligations relating to property which arise or which may in the future arise at law or in equity from their cohabitation;
(b) except as specifically provided by this contract, to elect and affirm that none of the property of either party will be divided between them except as according to ownership and this Contract;
(c) to provide for their respective rights and obligations in connection with their cohabitation or upon the termination of their cohabitation or upon the death of either party; and,
(d) if there should be a breakdown of the parties cohabitation, or upon the death of either or both parties, to make specific provisions for the entitlement to an equalization payment pursuant to the Family Law Act which is that neither party shall seek an equalization payment and that each releases, waives or discharges any entitlement to an equalization payment;
[11] The Agreement makes it clear that no property owned by either or both of them be included in either’s net family property and that “if the right to or interest in property is not conferred on the other by this Contract, it is not intended to be conferred on the party under any circumstances”.
[12] The Agreement dealt specifically with the matrimonial home in Article 10:
- FAMILY RESIDENCE/MATRIMONIAL HOME
(a) The parties acknowledge that the family residence located at R. R. #2, Caistor Centre, Ontario has been purchased solely from monies provided by Mike. The parties agree that the family residence or its substitute shall be owned by Mike, registered in the name of Mike and shall remain the exclusive property of Mike at all times.
[13] Then the Agreement contains in Article 12 mutual waivers of all rights under Part I of the Family Law Act and stipulates that “rights of ownership govern the division of property between them …”.
[14] The Agreement then sets out the deemed ownership rules and abolishes any presumption of resulting or constructive trust in questions of ownership between the parties:
- DEEMED OWNERSHIP
Subject to what may be otherwise specifically provided in an appropriate instrument in writing, the rule of law applying a presumption of resulting or constructive trust will not apply in questions or ownership of property between the parties and:
(a) property transferred from one party to the other party will be deemed to be owned by the party to whom the property is transferred;
(b) property held in the name of one party will be deemed to be owned by that party;
(c) property held in the name of both parties as joint tenants or tenants in common will be deemed to be owned by both parties as joint tenants or tenants in common, as the case may be; and,
(d) money on deposit in the name of both parties as joint tenants or tenants in common will be deemed to be owned by both parties as joint tenants or tenants in common, as the case may be.
[15] Mike had several financial and legal difficulties. The bank foreclosed on the Caistor Centre home. So the couple moved together to 370 Lakeshore Road, Selkirk (370), one of the two cottages Mike owned there. The other cottage (378) had a tenant. It is not really part of this fight.
[16] But the bank and other creditors were not finished with Mike. In fact there is still ongoing litigation between Mike and Earle Baxter, a former business associate.
[17] So Mike got legal advice, and at the end of December 2006 he transferred 378 to Gabor and Elizabeth Abonyi for $100,000 and he transferred 370 to Robert Harsanyi, also for $100,000, both deals including a convoluted side bet allowing that Mike could repurchase the properties after a time.
[18] Mike paid out the bank’s mortgages on the Lakeshore properties and in November 2010 repurchased both properties. At that time, he directed that title to both be put in the name of Anna as transferee.
[19] And that becomes the rub!
[20] The couple lived in 370 as a family residence until sometime in 2011 and Anna continued to reside there after that until she died in 2015. From 2011 to 2013, while Anna lived in 370, Mike lived in Stratford and occasionally visited her at 370.
[21] Then he went to 370 at Christmastime in 2013 and found that the locks had been changed and that Anna had excluded him from the property. Apparently their European relationship had come to an end.
[22] Mike’s position is that Anna held both of the properties in trust for him. He testified that Anna told him she would give him a “Trust Agreement” when they were together at Mr. Vandeyar’s office in November 2010. Of course, that’s disputed between the parties.
[23] Mr. Vandeyar is the solicitor who acted on the sales and purchases of the cottages, for all sides of the transactions.
[24] Mike testified that at Christmas 2013, when he was excluded from the property, Anna told him that the cottages were in her name and that she would sign the Trust Agreement when she was good and ready.
[25] So in February 2014, Michael sued Anna. Then Anna died in 2015.
[26] The Defendants called no evidence, except for filing a brief excerpt of Anna’s examination for discovery.
[27] There is no written Declaration of Trust.
[28] For the Plaintiff, Mike testified. He was not a good witness. Not only did he have significant hearing problems, he also had significant memory gaps.
[29] M.G. Vandeyar testified as well. He was the solicitor who prepared the purchase and sale documents for the cottage properties. He claimed the protection of s.9(2) of the Ontario Evidence Act. He acted for Mike for several years, including the buying, selling and rebuying of the cottage properties. He had also prepared Mike’s Will, executed October 19, 2007, which gave Anna both properties, with their contents. Of course the properties were then legally his to give.
[30] While Mr. Vandeyar drafted a further Will for Mike in March 2013, it was never signed. That draft would have given Anna 370. There is no mention of 378. But by March 2013 both properties were registered in Anna’s name and 370 was not legally Mike’s to give.
[31] Mr. Vandeyar testified in chief that in 2010 he had discussions about a Declaration of Trust with Mike in his office, when Anna was there. He said that Mike told him that you can get that from Anna, but Mr. Vandeyar told Mike that Anna was not his client and that he couldn’t take her instructions.
[32] However, in cross-examination, Mr. Vandeyar said that on November 12, 2010 when Anna was present there was no mention of the Trust Declaration. As far as Mr. Vandeyar was concerned, nothing happened until 2013 when he took Mike’s new Will instructions and prepared a Trust Declaration on Mike’s instruction. He testified that he last spoke to Anna on May 13, 2013 about Mike’s Will and the Trust Declaration (by telephone). But nothing ever happened because of those conversations and neither the Trust Declaration nor the Will was ever signed.
[33] In all of Mr. Vandeyar’s documents and notes, except for the 2013 draft, there is no mention anywhere of a Trust Declaration.
[34] It is interesting to note that Mr. Vandeyar testified that he first saw the parties’ Cohabitation Agreement only a few days before he testified and that he knew nothing of it.
[35] Not only did Mike’s memory make him an unreliable witness, but some of his evidence is directly contradicted by the evidence of Mr. Vandeyar. Where there are differences between the evidence of the two, I prefer the evidence of the solicitor Vandeyar.
[36] While Mike instructed his solicitor to prepare a Declaration of Trust in May 2013, it was only for 370, it was never signed and there is no evidence that Anna ever agreed.
[37] Of course, her agreement would not have been essential but she would have had to sign the Declaration of Trust. She didn’t. And on Mike’s instruction the transactions in 2010 went ahead in spite of whatever may have been said or discussed about the Declaration of Trust.
[38] According to Anna’s evidence contained in the transcript of her oral examination for discovery on the 14th of August 2014, Mike first discussed the transfer of 370 and 378 into her name around the beginning of November 2010 when he asked her to meet him at Vandeyar’s office.
[39] At that time Mr. Vandeyar went over the transfer papers with them and had a discussion with Mike about a Declaration of Trust. Indeed, Anna concedes that she heard Mike say that he wanted one. Her evidence is completely at odds with Mike’s about whether Mike said to Mr. Vandeyar and her “you two look after it”. Mr. Vandeyar also testified that that didn’t happen.
[40] Anna denies taking part in any discussion about a Declaration of Trust.
[41] While both parties argue over the meaning to be given to the Cohabitation Agreement, I agree with the proposition put by Plaintiffs’ counsel derived from MacDougall v. MacDougall 2005 CanLII 44676 (ON.C.A.) at para. 21, where Lang J.A. quotes the Supreme Court decision of BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 CanLII 145 (SCC), [1993] 1 SCR 12 at pp. 23-24:
It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of the intentions of the parties as evident from the contract as a whole.
[42] But that context includes the fact that Mike was businessman of substance who instructed his solicitors to prepare the Cohabitation Agreement so as to isolate his property rights for the benefit of his children from any claim by Anna whilst their family residence was in Caistor Centre.
[43] The Agreement was executed some 17 years before the transfers of 370 and 378 in Anna’s name. When Mike was originally trying to shield his assets from creditors, he first transferred those two properties to Harsanyi and Abonyi, not to Anna, after he had legal advice from Mr. Oldfield to put them into the name(s) of someone he trusted.
[44] Only after the bank’s claims were resolved did Mike “buy” the properties back and direct his lawyer to put them in Anna’s name.
[45] While Mike and his lawyer might have spoken of a Trust Declaration for one or the other of the cottages, nothing happened and Anna was neither consulted nor consented to being a Trustee.
[46] It was only 2 ½ years after the transfers that Mr. Vandeyar prepared a Trust Declaration for 370 on Mike’s instructions. But this was never signed by Anna.
[47] The Plaintiff says that a clear express trust was created in respect of both properties because of what Mike said. But in my view the evidence is far from satisfactory to establish that.
[48] There are differences between the evidence of Mike and Vandeyar and Vandeyar’s draft Declaration only deals with one of the properties.
[49] In any event, to achieve the result he wants, Mike must rely on parole evidence. The evidence doesn’t satisfy me that there was any fraud on Anna’s part which would allow Mike to overcome Anna’s reliance on the Statute of Frauds.
[50] As was said by the court in Gallacher v. Friesen, [2014] O.J. No. 2359 (C.A.):
[35] Read as a whole the contract is plain and unambiguous … The parties contracted for a separate property regime. They agreed to keep their properties separate and free from any claim by the other.
[51] And while 370 is clearly the “substitute” for the Caistor Centre family residence, contemplated by Article 10 of the Agreement, by Mike’s own direction it was no longer registered in his name.
[52] It is clear that in respect of the Cohabitation Agreement, ownership of property was to rule. Article 12 shouts that out.
[53] Mike chose to transfer both properties to Anna without receiving a Declaration of Trust from her, even though he seemed to have legal advice that he should require one.
[54] Anna’s estate is quite proper in relying on the Statute of Frauds. I do too. And as I indicated earlier, the conflicts and the evidence between Mike’s version and Vandeyar’s version must be resolved in favour of Vandeyar’s evidence. For example, Mike denied that he instructed Vandeyar to draft a Declaration of Trust, but Vandeyar insists he did so instruct and in fact prepared one, but only for 370.
[55] I must conclude that Mike has failed to prove his claim on the balance of probabilities.
[56] I find that both 370 and 378 are owned by the Defendants, free from any claim by Mike. Action dismissed.
Costs
[57] I will fix costs after I have received and reviewed the parties’ Costs Submissions in accordance with the following:
(i) on or before March 11, 2016, the Defendants shall serve and file with me in my Kitchener chambers their Costs Submissions, consisting of:
(a) their Costs Outline not augmented by more than two double-spaced pages;
(b) their Bill of Costs; and
(c) any relevant Offer(s); and
(ii) on or before March 31, 2016, the Plaintiff shall likewise serve and file his Costs Submissions consisting of:
(a) his Costs Outline, not augmented by more than two double-spaced pages;
(b) his Bill of Costs; and
(c) any relevant Offer(s).
P.J. Flynn J.
Released: February 17, 2016
CITATION: Hartstein v. Ricottone, 2016 ONSC 1102
COURT FILE NO.: 15-030-0000
DATE: 2016-02-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Michael Hartstein Plaintiffs
– and –
Dino Ricottone, Danny Ricottone and Christina Tanya Gulka as Estate Trustees of the Estate of Anna Riccotone Defendants
REASONS FOR JUDGMENT
P.J. Flynn J.
Released: February 17, 2016
/lr