McMurtry v McMurtry, 2016 ONSC 2853

Court File and Parties

Court File Nos.: 12-56265/11-50312 Date: 2016/04/29 Ontario Superior Court of Justice

Between: Mildred McMurtry, Plaintiff (Court file no. 12-56265) And: John McMurtry and Mic Mac Realty (Ottawa) Ltd., Defendants

Between: John McMurtry, Plaintiff (Court file no. 11-50312) And: Jim McMurtry, Defendant

And Between: Jim McMurtry, Plaintiff by Counterclaim (Court file no. 11-50312) And: John McMurtry, Brenda McMurtry, Barry Coons, Bouris Wilson LLP and Mic Mac Realty (Ottawa) Ltd., Defendants by Counterclaim

Before: Madam Justice Sylvia Corthorn

Counsel: Mark W. Smith, for Mildred McMurtry Jeff Saikaley and Marie-Josee Ranger, for John McMurtry and Brenda McMurtry Daniel Mayo, for Jim McMurtry

Heard: September 14 - 18, 21, 22, and 25, 2015

Reasons for Judgment

CORTHORN J.

Overview

1Three members of the McMurtry family are in a dispute as to the ownership of 10 common shares (“the Shares”) in the family business – Mic Mac Realty (Ottawa) Limited (“MMR”). Two companion actions are being tried together. Pursuant to the June 2015 case management order of Master MacLeod, the action commenced in 2012 by Mildred McMurtry is to be tried first.

2The family members are the matriarch, Mildred McMurtry (“Mrs. McMurtry”), her youngest son, John McMurtry (“John”), and her eldest son, Jim McMurtry (“Jim”). John and Jim are two of Mrs. McMurtry’s children with her late husband Keith McMurtry (“Mr. McMurtry”), who died in 1998.

3Mrs. McMurtry alleges that the Shares form part of the residue of the estate of Mr. McMurtry (“the Estate”), of which she is the beneficiary. John’s defence to that allegation is that Mr. McMurtry, prior to his death, intended to make or made a gift of the Shares to John. The gift, if not completed prior to the death of Mr. McMurtry, was completed by John in his role as one of the executors of the Estate.

4MMR is said to have assets totalling several million dollars – with at least one witness estimating the value of MMR’s assets at $6,000,000. Although named as a defendant in the action commenced on behalf of Mrs. McMurtry, MMR did not defend the action.

5In her action, Mrs. McMurtry seeks declaratory relief with respect to ownership of the Shares. Assuming she is successful in that regard, she seeks oppression remedy and other relief related to John’s involvement in and historical management of MMR. The companion action was commenced by John in 2011. The defendant in that action is Jim. John seeks a declaration that he is the owner of the Shares. He also seeks oppression remedy relief as against Jim, the latter in his capacity as the owner of six out of the total of 22 common shares in MMR. By way of counterclaim, Jim also seeks oppression remedy relief. John’s wife, Brenda McMurtry (“Brenda”) is a defendant to the counterclaim.

6The parties to the actions agreed that:

• The only aspect of the claims made on behalf of Mrs. McMurtry to be determined at this stage of the trial is that for declaratory relief with respect to ownership of the Shares.
• The determination in that regard in Mrs. McMurtry’s action shall be binding on the parties to companion action.
• Following the determination as to ownership of the Shares, the parties shall attend before me to make submissions and for a determination as to the manner in which the balance of the trial of Mrs. McMurtry’s action and the trial of the companion action are to proceed.

a) The McMurtry Family

7Mrs. McMurtry was born in 1929. When she gave evidence at trial, Mrs. McMurtry was days shy of her 86th birthday. She and Mr. McMurtry were married in 1946. The couple had been together for more than 50 years when Mr. McMurtry passed away in 1998.

8The McMurtrys had six children: they are, from oldest to youngest, Donna, Linda, Debbie, James, Michael, and John. Michael died in 1983 as a result of an accident.

9John is 58 years old. Brenda is 56 years old. John and Brenda have been together as a couple since the late 1970s; were married in the late 1980s; and have a daughter, Emily.

10Jim is 62 years old.

11None of the McMurtry daughters have been involved in the family business in any way, if at all, that is relevant to this action. They did not give evidence at trial.

b) Mic Mac Realty

12Mr. McMurtry co-founded MMR with Arthur MacDonald and eventually purchased the latter’s interest in the business to become its sole owner. The business of MMR is the purchase and sale of land, ownership of warehouses, and the construction of sub-divisions and roads.

13Prior to establishing MMR, Mr. McMurtry ran Keith’s Auto Sales. He eventually turned that business over to Michael. Following Michael’s death in 1983, Jim became the sole owner of Keith’s Auto Sales.

14Initially, the shareholdings in MMR were as follows: Mr. McMurtry held ten shares, and each of Jim, Michael, and John held four shares (a total of 22 shares). Following Michael’s death, his four shares were transferred equally to Jim and John. The transfer of Michael’s shares to his brothers was effected through an update to the corporate minute book (“the Minute Book”) in August 1984. Mr. McMurtry, Jim, and John attended at the offices of MMR’s lawyers and executed the documents required to transfer Michael’s shares to each of Jim and John.

15Following the August 1994 transfer of Michael’s shares, the ownership structure of MMR was that Mr. McMurtry owned ten shares and each of Jim and John owned six shares. The point in time at which that ownership structure changed and the manner in which it changed are central to the outcome of Mrs. McMurtry’s and the companion action.

The Positions of the Parties

a) Mrs. McMurtry’s Position

16Mrs. McMurtry’s position is that her late husband remained the owner of the Shares at the time of his death. Mrs. McMurtry alleges that pursuant to the terms of Mr. McMurtry’s will, prepared in 1992 (“the Will”), the Shares: a) fall within the residue of the Estate, of which Mrs. McMurtry is the beneficiary; and b) are to be transferred to her.

17Mrs. McMurtry admits that in January 1999, in the months following the death of her late husband, she wrote a letter (“the Letter”) in which she confirmed that she was witness in the 1980s to: a) her husband expressing his intention to gift the Shares to John; and b) instructions being given to MMR’s accountant to put the gift into effect. Mrs. McMurtry alleges that the Letter was written under duress – specifically out of fear of backlash from John. She therefore asks the Court to disregard the Letter as evidence of the gift of the Shares upon which John relies in defence of the action.

18It is Mrs. McMurtry’s position that the relief requested with respect to ownership of the Shares is restricted to declaratory relief and, as a result, is not subject to any limitation period. Finally, Mrs. McMurtry says that the equitable doctrines of laches and estoppel do not apply to her claim of ownership of the Shares.

b) John’s Position

19In response to his mother’s claim of ownership of the Shares John raises substantive defences based on the law of gift and the law of resulting trust, limitation period defences, and the equitable defences of laches and estoppel. In summary, John’s position is as follows:

• John acknowledges the presumption in equity of ‘bargain’ – that the transfer of property is the end result of negotiation and an agreement between the transferor and transferee as to the consideration to be paid for the property. That presumption is, however, rebuttable. John says that the evidence upon which he relies is sufficient to rebut that presumption.
• John argues that the evidence supports a finding that a gift to him of the Shares was either: a) completed by Mr. McMurtry prior to his death; or b) capable of completion and completed by John, in his capacity as an executor of the Estate, subsequent to his father’s death.
• The relief that Mrs. McMurtry is seeking is both declaratory and consequential relief. As a result her claim is “not properly a claim for a declaration” and is subject to a limitation period. The applicable limitation period expired before Mildred commenced her action and the action is statute-barred.
• In the alternative, one or both of the equitable defences of estoppel and laches apply to bar Mrs. McMurtry’s claim.

The Issues

20The issues to be determined in this matter are as follows:

1. Ownership of the Shares and specifically, whether: a) By virtue of a gift from his father, completed before or after Mr. McMurtry’s death, John is the owner of the Shares; or b) Mr. McMurtry remained the owner of the Shares as of his death in 1998; and the Shares fell within the residue of the Estate.
2. Is the claim advanced by Mrs. McMurtry solely for declaratory relief or does it include a claim for consequential relief?
3. If Mrs. McMurtry’s claim includes both declaratory relief and consequential relief, is the action statute-barred by reason of the expiration of the applicable limitation period?
4. Does the doctrine of laches apply to bar Mrs. McMurtry’s claim?
5. Is Mrs. McMurtry estopped from bringing her claim?

Decision

21The outcome in this matter turns on equitable principles. I find that Mrs. McMurtry is precluded by reason of both laches and estoppel from proceeding with her claim for a declaration of ownership of the Shares.

22The letter written by Mrs. McMurtry in January 1999 is central to consideration of the equities in this matter. In the Letter, written a number of months after the death of her late husband, Mrs. McMurtry confirmed that she was witness to: a) the decision of Mr. McMurtry to transfer the Shares to John; and b) steps taken to put that decision into effect.

23On the basis of the Letter, the status quo since January 1999 is that both Mrs. McMurtry and John have been conducting themselves on the basis of the mutual assumption that John is the owner of the Shares. There is no evidence that prior to the commencement of this action – 13 years after she wrote the Letter – Mrs. McMurtry ever took any step to inform John that she is claiming ownership of the Shares as residuary beneficiary under the Will.

24Mrs. McMurtry was fully aware of the purpose to be served by the Letter – to permit the Minute Book for MMR to be re-created, identifying John as the owner of the Shares. Mrs. McMurtry was also, in 1999, fully aware that John would rely on the Letter for that purpose. It is undisputed that John and Brenda have, for three decades, including since the Letter was written, devoted their working lives and, at times, personal financial resources to the operation and management of MMR. Mrs. McMurtry acknowledges the extent of the work done by John and Brenda in the operation and management of MMR.

25It would be unjust and unreasonable to disturb the status quo more than 17 years after Mrs. McMurtry wrote the Letter. As a result a constructive trust is imposed and Mrs. McMurtry holds the Shares for the benefit of John.

26Absent consideration of the equities, my determination of the first three issues listed above is:

1. There has been no completed gift of the Shares to John and the Shares form part of the residue of the Estate of which Mrs. McMurtry is the beneficiary;
2. The relief which Mrs. McMurtry seeks is restricted to declaratory relief only; and
3. Mrs. McMurtry’s claim for declaratory relief is not subject to any limitation period and is therefore not statute-barred.

27In the companion action commenced by John, he seeks a declaration that he is the owner of the Shares. Based on the evidence heard to date, the only determination I am in a position to make is that, based on equitable principles, a constructive trust is to be imposed in his favour.

28The end result of the imposition of the constructive trust requires a determination of issues that were not before the Court at this stage of the proceeding. Whether John is entitled to a vesting order – with the ownership of some or all of the Shares ultimately being transferred to him – remains to be determined. The oppression remedy claims advanced by John as the plaintiff and by Jim as the plaintiff by counterclaim, both in the companion action, also remain to be determined.

29The equities with respect to these remaining matters do not begin and end with John and Mrs. McMurtry. The equities are much broader and require consideration of the position over time of each of the parties to the companion actions.

30Evidence is required with respect to the value of the Shares, the financial circumstances of MMR, payments made by MMR over the years to or for the benefit of each of the parties to the companion actions, the circumstances under which a home owned by Mr. and Mrs. McMurtry was transferred by the latter to John following Mr. McMurtry’s death, and the consideration, if any, paid for that transfer. As of this stage, the Court has heard minimal evidence with respect to these matters.

31Pending a determination of the remaining issues in the companion actions, the Shares are to remain an asset of the Estate and the executors of the Estate are prohibited from transferring the Shares to Mrs. McMurtry or to anyone else.

The Credibility and/or Reliability of the Witnesses

32In assessing the credibility and reliability of the witnesses, I rely on the governing principles succinctly stated by Watt J. at paragraph 41 of his decision in R. v. H.C., 2009 ONCA 56:

Credibility and reliability are different. Credibility has to do with a witness’s veracity, reliability with the accuracy of the witness’s testimony. Accuracy engages consideration of the witness’s ability to accurately:

i. observe; ii. recall; and iii. recount

events in issue. Any witness whose evidence on an issue is not credible cannot give reliable evidence on the same point. Credibility, on the other hand, is not a proxy for reliability; a credible witness may give unreliable evidence: R. v. Morrissey (1995), 22 O.R. (3d) 514, at 526 (C.A.).

33The lack of credible or reliable evidence from either of Mrs. McMurtry and John was more than striking.

34Given her age, Mrs. McMurtry’s testimony was limited in terms of the number of hours per day over which she testified. She was not pressed by counsel or the Court to give evidence during any period of time in which she was in any way hindered.

35Mrs. McMurtry gave evidence with respect to the operation generally of MMR and the company of which she is the sole owner (“Landco”). On matters unrelated to ownership of the Shares per se, Mrs. McMurtry’s evidence appeared to be sharp and was for the most part consistent with the evidence of the other witnesses – including as to the extent to which John and Brenda have devoted their working lives to MMR.

36A significant portion of Mrs. McMurtry’s testimony was with respect to the Letter, which is the only documentary evidence with respect to the alleged gift of the Shares. Mrs. McMurtry does not dispute that she wrote the Letter.

37In her evidence Mrs. McMurtry addressed the request made of her to write the Letter and the circumstances under which she wrote it. She also gave evidence as to her understanding of the significance – in particular to John – of the substance of the Letter. Mrs. McMurtry’s evidence with respect to these subjects is replete with contradictions and reversals.

38By way of example, Mrs. McMurtry’s answers to questions related to why the Letter was written included the following:

• “I remember writing it but I’ve forgotten what it’s about.” – when first presented with a copy of the Letter during examination-in-chief (“in chief”).
• She does not know when John asked her to write the Letter – “in chief”.
• Mrs. McMurtry does not recall where she was when she wrote the Letter – “in chief”.
• Mrs. McMurtry was in Florida when she wrote the letter – “in chief”.
• She was asked by John if the Minute Book for MMR was in Florida – “in chief”.
• “I don’t recall any of that.” – When asked during cross-examination about John calling her to look for the Minute Book.
• Mrs. McMurtry acknowledged that she looked for the Minute Book, did not have it, and told John so in the Letter – on cross-examination.

39The first answer listed above is problematic given that Mrs. McMurtry clearly understood what her action is about and subsequently admitted that she understood the significance of the Letter when it was written. The first answer is an example of another feature of Mrs. McMurtry’s evidence on subject matters that were clearly material to a determination as to the ownership of the Shares. Her evidence on such matters frequently started with a blanket denial or lack of any memory followed by a series of specific answers, with the answers sometimes including reversals and contradictions.

40For the reasons set out above, I find that Mrs. McMurtry is an unreliable witness generally and that she lacks credibility.

41I find that John’s evidence also lacks the veracity of a credible witness. John’s conduct with respect to the Shares, both before and after the Letter was written and given to him, is such that it calls into question his credibility. I discuss in greater detail below a number of occasions on which John certified or swore to the truth of documents which he knew, when signing them, were not true. John’s failure to take seriously the certification or swearing of a document is indicative of a wilful carelessness with the truth. I find that his wilful carelessness with the truth continued throughout his evidence, in particular as relates to the ownership of the Shares.

42Four other individuals gave evidence at trial. Jim was called as a witness as part of Mrs. McMurtry’s case. The majority of Jim’s evidence was not material to a determination of the ownership of the Shares. Jim admits that he did not until 2009 give much of his attention to the operation of MMR or to the Estate. However, for those matters on which Jim’s evidence is relevant and material, consideration must be given to his overall credibility.

43Jim’s conduct in relation to a mortgage registered on the title to his property, causes me concern as to his overall credibility. Jim admitted that in the 1990s a mortgage/charge in the amount of $175,000, from him to his mother, was registered on the title to his property. That step was taken with no money actually changing hands and specifically so as to protect Jim’s ownership of the property in case he found himself in financial difficulty. The mortgage/charge was eventually discharged in 2012 without any money changing hands.

44That Jim was willingly a party to such a ‘transaction’ in an effort to protect his assets from potentially legitimate creditors leads me to question the overall credibility of Jim’s evidence.

45Brenda was called to give evidence as part of John’s case. The manner in which she testified was respectful of the members of the McMurtry family, including Mr. McMurtry. Her evidence demonstrates that she holds no ill will towards her in-laws. Brenda was visibly distressed by the impact which the litigation has had on her relationship with her mother-in-law. Brenda became emotional and tearful in discussing Mrs. McMurtry and the latter’s well-being.

46I find that the evidence which Brenda gave was logical in terms of the chronology of events which she described. The explanations which Brenda gave for steps taken over time in the operation and management of MMR – including with respect to the Shares – are entirely plausible.

47I find Brenda to be a credible witness. Where her evidence conflicts with that of others (including John and Mrs. McMurtry), unless otherwise stated, I accept Brenda’s evidence.

48The two other individuals who gave evidence at trial are MMR’s former accountant, Barry Coons (“Mr. Coons”) and the company’s former bookkeeper, Christine Evraire (“Ms. Evraire). Mr. Coons was professional in his approach to the evidence. He relied on the contents of documents which he or others in his office prepared. He did not try to embellish his evidence through recollection independent of the documents. I find that there is no basis upon which to question the overall credibility of his testimony.

49Ms. Evraire’s evidence was such that it is clear she enjoyed her working relationship with Mr. McMurtry and that she never developed the same level of comfort with John as he took on more responsibility over time in MMR. That said, I do not find that Ms. Evraire’s discomfort with John as her employer caused her to in any way attempt to favour Mrs. McMurtry over John.

ISSUE NO. 1 - Ownership of the Shares

a) The Law of ‘Gift’

50In defence of his mother’s claims, John relies on two alternative positions with respect to a gift of the Shares. First, John says that his father completed a legally valid gift to him of the Shares. In advancing that defence John must address the equitable presumption of bargain; and rebut that presumption to establish that a gift was made of the Shares.

51John’s position is that his late father completed a valid inter vivos gift, intended to take effect when his father was still alive. The essential elements of such a gift are well-settled: “There must be (1) an intention to make a gift on the part of the donor without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee, and (3) a sufficient act of delivery or transfer of the property to complete the transaction [Footnote omitted]”: see McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 24 [McNamee].

52In a circumstance such as this, where a parent is alleged to have gratuitously transferred property to an adult child, the analysis required is as follows:

1. Begin with the presumption that the child holds the property on a resulting trust for the parent: see Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R 795, at para. 36 [Pecore].
2. The adult child to whom the property was transferred has the onus of proving, on a balance of probabilities that the parent’s intentions were to transfer the property as a gift: see Foley v. McIntyre, 2015 ONCA 382, 125 O.R (3d) 721 (C.A.), at para. 26 [Foley].
3. All of the evidence must be weighed in an effort to determine the actual intention of the parent at the time of the transfer: see Pecore, at para. 44; and Foley, at para. 26.

53The evidence required to rebut the presumption of resulting trust depends on the facts of each case: Pecore, at para. 55. Regardless, the common law requires corroborating evidence to rebut the presumption. The corroborating evidence can be direct or circumstantial. It can consist of a single piece of evidence. Or, several pieces of evidence can be considered cumulatively: see Burns Estate v. Mellon (2000), 48 O.R. (3d) 641 (C.A.), at para. 29; and Foley, at para. 29.

54Consideration can be given to the transferor parent’s post-transfer conduct, as long as it is relevant to the parent’s intention at the time of the transfer. The reliability of evidence as to post-transfer conduct must be assessed and a determination made as to the weight to be given to that evidence. A trial judge is to guard against such evidence that is self-serving or that tends to reflect a change in intention: Pecore, at para. 59.

55Second, John’s position is that if his late father did not complete the intended gift of the Shares prior to his death in 1998:

a) As of 1998 Mr. McMurtry’s intention remained that the Shares would be transferred to John as a gift; b) As one of the executors of Mr. McMurtry’s estate, John had the authority to complete the gift; and c) With the execution, in December 1999, of a Declaration of Transmission with respect to the Shares the gift was completed.

Analysis

56The three essential elements of a gift which John must establish on a balance of probabilities are:

• An intention on the part of Mr. McMurtry to make a gift of the Shares without consideration or expectation of remuneration;
• An acceptance by John of the gift of the Shares; and
• A sufficient act of delivery or transfer of the Shares to complete the transaction.

i) Intention to Make a Gift

57The evidence with respect to Mr. McMurtry’s intention to make a gift to John of the Shares is limited to: a) John’s evidence as to what transpired at two meetings that he attended with one or both of his parents in the 1980s; and b) Mrs. McMurtry’s evidence as to what transpired at the second of the two meetings. The latter includes both her viva voce testimony and the contents of the Letter.

58John’s evidence is that in the early to mid-1980s Jim and Mr. McMurtry were at odds because Mr. McMurtry wanted Jim to become more involved in MMR and Jim did not have any interest in doing so. As a result, there were arguments over land purchases and building repairs. It is one of those arguments which, according to John, led to his father deciding to gift the Shares to John.

59John testified that in the mid-1980s MMR received an offer of approximately $600,000 to purchase property, owned by MMR, on Mac Street. The three shareholders – Mr. McMurtry, Jim, and John met to discuss the offer. The meeting occurred at the trailer out of which MMR was operating at the time (“Meeting No. 1”). Mr. McMurtry and Jim differed as to how to respond to the offer; with the former not wanting and the latter wanting to accept the offer. John described a heated argument occurring between Mr. McMurtry and Jim, during which Jim said some “very rude things” and following which Jim stormed out of the trailer.

60On cross-examination, John was unable to recall whether Meeting No. 1 took place before or after the meeting in August 29, 1984 at the office of the lawyers for MMR to effect the transfer of Michael’s shares to Jim and John equally.

61It is John’s evidence that following Meeting No. 1 he and his father had a discussion about a transfer of the Shares to John.

62John testified that a second meeting was held, at which the transfer of the Shares was addressed (“Meeting No. 2”). When cross-examined as to when Meeting No. 2 took place, John gave two answers. At first he said it took place in 1984. He then changed his answer to the “mid-1980s”. John does not recall where Meeting No. 2 took place.

63In attendance at the Meeting No. 2 were John and his parents. John does not recall whether the company’s accountant and lawyer were also in attendance. According to John, it was at this meeting that his father made the decision to gift the Shares to John. The end result was that John “assumed” the Shares; with the physical transfer of the Shares done at the MMR office and recorded in the MMR Minute Book. When cross-examined on that point, John gave contradictory evidence – saying that he could not recall if documents related to the transfer to him of the Shares were recorded in the Minute Book.

64Under cross-examination, John testified that he believes he was present when the Shares were actually transferred to him by Mr. McMurtry. John does not recall if his father signed a share certificate or any document consenting to the transfer. John does not have any such documents in his possession. John does not remember any money changing hands at the time of the transfer of the Shares.

65I pause here to address the quality of John’s evidence with respect to what had to have been a significant event in his personal and working life – the alleged gift to him by his father of the Shares; making John the majority shareholder in the business: a) that his father had built from the ground up; and b) in which he had been working for a number of years with his father. The inconsistencies from one answer to the next as to how the Shares were physically transferred to John are striking. I find John’s evidence as to what transpired at both meetings to be unreliable.

66In support of his allegation that the Shares were gifted to him by his father, John relies on the Letter, which reads in its entirety as follows:

I have searched for minute boo k, on a long shot that it might be here. However I have been unable to locate i t.

The last time I saw it, was in the mid 1980s, at a meeting in the trailer on Mac ST. As far as contents go, your dad and I discussed his shares in Mic-Mac, and at that time the accountant was instructed to transfer his shares to you (John). I know that this happened and took place at this time, however if we could find the minute book, it would make it a bit easier. I attended meeting and witnessed that Keith instructed that this be done. (Underlining as per original.)

67The Letter is signed, “Mildred McMurtry”.

68The Letter was introduced through Mrs. McMurtry during examination-in-chief. There was no objection on behalf of John to the admission of the Letter as an exhibit. The lack of such an objection is not surprising given the position that John takes with respect to the contents of the Letter. The hearsay evidence included in the Letter is critical to John’s position and the evidentiary burden he must meet rebutting presumptions in the context of the law of gift and the law of resulting trust.

69John is the only person who testified at trial and gave evidence that the Shares were gifted to him by Mr. McMurtry. At no point in her testimony did Mrs. McMurtry refer to the Shares as having been “gifted” to John. In the Letter, Mrs. McMurtry refers to the Shares being “transferred”, not given as a gift, to John.

70Mrs. McMurtry testified that she understood the Letter would be relied on for the purpose of re-creation of the Minute Book.

71Mrs. McMurtry’s evidence, including the Letter and her evidence with respect to it, when considered in its totality simply does not corroborate John’s evidence that Mr. McMurtry gave or intended to give the Shares to John.

i. The Alleged Duress

72Mrs. McMurtry testified that she wrote the Letter because she always did what John asked her to do. It is her position that the letter was written under duress – out of a fear of “backlash” from John. Mrs. McMurtry was asked on two occasions what she meant by “backlash”. On both occasions she described an incident in which John took away from her the van she was driving. According to Mrs. McMurtry, John did so because she had not taken care of John’s dog. Mrs. McMurtry is unable to recall when this incident occurred. John denies that such an incident occurred.

73On cross-examination, Mrs. McMurtry initially testified that John was very controlling and she always did what he asked her to do. She then acknowledged that John never threatened her in any way. She was asked on two occasions to confirm that John never forced her to write the Letter. Her initial response was, “I don’t understand.” She was taken to the transcript from her examination for discovery and her evidence, at that time, that she signed the Letter voluntarily. When asked if her answer on examination for discovery was true, she responded with “I guess so.”

74Mrs. McMurtry’s inability to recall when the single incident upon which she relies as evidence of potential “backlash” is an example of the lack of credible or reliable evidence from her. Regardless of whether or not the single event described occurred, the event does not support a finding that Mrs. McMurtry was under duress when she wrote the Letter. I find that Mrs. McMurtry voluntarily wrote the Letter.

ii. Alleged Rationale for the Gift

75John’s stated belief as to the rationale behind Mr. McMurtry’s decision to make a gift to him of the Shares is that Mr. McMurtry was fed up with disagreements with Jim in relation to decisions regarding the business of MMR. By gifting the Shares to John, Mr. McMurtry would no longer have to be involved in resolving disputes with Jim. Even if I were to find that Mr. McMurtry was sufficiently fed up with disputes with Jim to want to extricate himself from situations, such as shareholder meetings, in which such disputes occurred, there were any number of solutions short of gifting the Shares to John that were available to Mr. McMurtry. Those options included:

• Mr. McMurtry voting ‘with’ John to the extent possible so as to carry the day with their collective 16 out of 22 shares;
• Mr. McMurtry giving John his proxy for voting purposes, eliminating the need for Mr. McMurtry to participate in the shareholder meetings at all; and
• A transfer by Mr. McMurtry of the Shares to John in trust. There was precedent for shares in MMR to be held in trust. The Minutes of the 1984 meeting at Mr. Clark’s office (with respect to the transfer of Michael’s shares) reflect that each of Mr. Clark and Mrs. McMurtry held one of Mr. McMurtry’s shares in trust.

76In summary, I find that Mr. McMurtry did not intend to either make a gift of the Shares to John or to transfer the Shares to John on the basis of a resulting trust.

77Even if I am incorrect in that regard the two remaining elements of a gift must be considered.

ii) Acceptance of Gift

78Both John and Brenda gave evidence as to the extent to which they have, over the years, each devoted time and energy and made significant personal financial contributions to the operation and management of MMR. Their evidence in that regard is uncontradicted. For example, from time-to-time John personally guaranteed the indebtedness of MMR. The proceeds from the sale of Brenda and John’s home - approximately $300,000 - were invested in MMR.

79The conduct of John and Brenda, if considered in isolation, supports a conclusion that John believes that Mr. McMurtry transferred the Shares to John by way of gift.

80However, the balance of John’s conduct – specifically in relation to the ownership structure of MMR over time – is contradictory to a belief on his part that he was given the Shares. When John’s conduct in its entirety is considered, it does not support a finding that John accepted a gift of the Shares.

i. John’s Conduct before Mr. McMurtry’s Death

81In 1997 Mr. Coons became the accountant for MMR. Included in the 1997 return is a page (exhibit 18) which identifies Mr. McMurtry as owner of 45 per cent and each of Jim and John as owners of 27 per cent of the shares in MMR. John acknowledged that he signed the tax returns for MMR and signed the 1997 return.

82The only documentary evidence in which there is any reference to Mr. McMurtry transferring the Shares to John is exhibit 20: an undated document, introduced through Mr. Coons, titled “Mic Mac Share Capital”. The accountant’s note with respect to the Shares is: “Per John: transferred to himself in 1996.”

83Even though exhibit 20 appears to support John’s position with respect to the alleged gift, John’s evidence was that he does not recall telling Mr. Coons that the Shares were “transferred” to him. John’s testimony in that regard is indicative of the inconsistencies in and overall lack of reliability of his evidence as it relates to the alleged gift and the manner in which the gift is said by John to have been completed by his late father.

84With Mr. Coons having taken over as the accountant for MMR, it is reasonable that he would have conversations with John with respect to the corporate tax return as it was being prepared. I prefer the evidence of Mr. Coons over that of John with respect to the preparation and contents of the MMR tax returns. Ultimately, the information reflected in the tax return is that the ownership structure of MMR in 1997 was the same as it was in August 1984 immediately following the transfer of Michael’s shares.

85John’s explanation as to why he signed the 1997 return which listed the ownership in MMR as set out above is that when at the accountant’s office he would sign documents without reading them.

86Regardless of whether or not he read the tax returns before he signed them, I find that by 1997 John was, by virtue of his experience over the years signing not only the MMR returns but also his personal tax returns, aware of the significance of his signature on the document – including that he was certifying that the information in the return was “true, correct, and complete”.

87There is no evidence that John ever asked the accountant to change the manner in which the ownership structure was reflected in the 1997 tax return. I find that John’s conduct with respect to the 1997 tax return: a) runs contrary to his position that he had by 1997 accepted a gift of the Shares from Mr. McMurtry; and b) supports a finding that as of 1997 John knew that Mr. McMurtry, who was still alive, had not gifted the Shares to him.

ii. Mr. McMurtry’s Will

88In his will, prepared in 1992, Mr. McMurtry named each of Mrs. McMurtry, Jim and John as his executors. The Will does not state that they are jointly and severally appointed. A copy of the Will was, as part of the plaintiff’s case, made an exhibit at trial. The Will makes no mention of the Shares. Mrs. McMurtry is named as the residuary beneficiary.

89Mrs. McMurtry’s evidence with respect to her state of knowledge as to the contents of the Will was inconsistent and is inherently unreliable. Mrs. McMurtry vacillated from admitting to denying knowledge prior to Mr. McMurtry’s death: a) of the contents of the Will; and b) that she was appointed as an executor of the Estate. Mrs. McMurtry admitted, however, that in 1992 she and her husband had their wills prepared together. Under cross-examination, she testified that she understood from 1992 to 1998 that she was one of the executors of the Estate and that she was the beneficiary of the residue of the Estate.

90Jim’s evidence is that he was not aware until approximately 2010 that he was an executor of the Estate.

91Exhibit 6 consists of copies of a letter and proof of loss form submitted to an insurance company in follow-up to a small ($12,500) property damage claim which arose prior to Mr. McMurtry’s death. The documents were submitted to the insurer in November 2008 (i.e. subsequent to the death of Mr. McMurtry). Both the letter and the proof of loss form are signed by each of Mrs. McMurtry, John, and Jim. They are each identified in the letter and on the proof of loss form as an executor of the Estate. When giving evidence, they acknowledged their respective signatures on the documents.

92Taking into consideration the contents of exhibit 6 and my findings generally as to the credibility of each of Mrs. McMurtry and Jim, I find that they were both aware no later than November 1998 that they are executors of the Estate.

iii. John’s Conduct after Mr. McMurtry’s Death

93Mr. Coons testified that in August 1999 he was informed by John that in 1996 Mr. McMurtry transferred the Shares equally to Jim and John. In his letter dated August 1999 (exhibit 17), prepared at John’s request to facilitate the re-creation of the Minute Book, Mr. Coons says, “[p]er John McMurtry, the 10 commons shares of his father were transferred equally to James and John in 1996. (I have no idea how this was done and neither does he.)” John does not recall having a discussion with Mr. Coons to this effect. For the reasons set out above, I accept Mr. Coons’ evidence that such a discussion took place.

94In December 1999, John swore to the truth of another scenario with respect to the change in ownership of the Shares – that he was the beneficiary of the Shares under the Will. John executed a Declaration of Transmission with respect to the Shares (exhibit 26 and “the Declaration”). He did so in his capacity as an executor of Mr. McMurtry’s Estate. There is no evidence of either Mrs. McMurtry or Jim having renounced or having resigned as an executor and trustee as of December 1999.

95John did not provide an explanation as to why he alone executed the Declaration. The manner in which this document is executed is to be contrasted with the manner in which the letter and proof of loss form were executed in November 1998. There is no evidence that John was, as of December 1999, in a position to take steps on behalf of the Estate without the involvement of the other two executors of the Estate.

96The Declaration says:

IN THE MATTER OF THE ESTATE OF Keith McMurtry, late of Ottawa, Deceased. I/we (the “Personal Representative(s)”), do so solemnly declare that:

1. There are registered in the name of the Deceased on the books of Mic Mac Realty (Ottawa) Limited 10 Common Shares of its capital.
2. The Deceased and Keith McMurtry named in the certificates was one and the same person.
3. All the aforementioned certificates were physically situate[d] in the Province of Ontario at the death of the Deceased.
4. By virtue of the foregoing the shares have devolved upon and become vested in us, being all the personal Representatives, who desire to have the same recorded in the names of the Personal Representatives upon the books of the Company and immediately thereafter transferred to the beneficiaries properly entitled by law to receive the shares, namely: John McMurtry.

And I make this solemn Declaration conscientiously believing it to be true, and knowing that it is of the same force and effect as if made under oath and by virtue of the Canada Evidence Act, R.S.C. 1985, c. C-5.

97It is striking that in the document John is described as “the beneficiar[y] properly entitled by law to receive the shares”. On cross-examination, John acknowledged that he is not the beneficiary of the Shares pursuant to the Will.

98There can, in my view, be no question but that the Declaration is intended to identify John as the beneficiary of the Shares pursuant to the Will and not the owner of the Shares by virtue of an inter vivos gift. When cross-examined John acknowledged that he understood that when he signed the Declaration he was swearing to tell the truth. When asked if he told the truth when signing the document he gave three answers. First, he said, “I signed several documents”. Second, he responded with, “I don’t understand the question.” His final answer was that he told the truth in the document.

99Also during cross-examination, John said there were two reasons why he signed the Declaration: a) to administer his father’s estate; and b) partially for another reason. When pursued as to the other reason, John changed his answer to say that there was only one reason why he signed the Declaration.

100In cross-examination it was drawn to John’s attention that the Declaration refers to 10 Common Shares being registered in the Minute Book in Mr. McMurtry’s name. In cross-examination John said, “They may have been on the books. It did not mean that they existed. They may have never been taken off. I don’t know. I signed a lot of documents in 1999 … pages and pages.”

101John does not specifically recall why the Declaration with respect to Mr. McMurtry’s shares was prepared in 1999 – even though, as he acknowledged, he was the president, leader, and driving force of the company. The execution of the Declaration in December 1999 is consistent with John’s efforts, commencing no later than January 1999 (the date of the Letter) and continuing as of August 1999 (the date of the accountant’s letter to MMR’s lawyer), to re-create the Minute Book. I find that in his efforts John was attempting to re-create the Minute Book with the ownership structure of MMR reflecting him as the owner of 16 shares (i.e. including the Shares) and Jim owning six shares.

102In cross-examination and with respect to the Declaration, John was asked “What can we believe?” His response was, “I took my father’s shares in the 1980s” and they could still have been on the books even though they were transferred to him by his father in the 1980s. This evidence as to what may still have been “on the books” is inconsistent with the alleged trip to the trailer and transfer of the shares reflected in the Minute Book as per John’s evidence with respect to Meeting No. 2.

103John’s evidence with respect to the Declaration is another example of his approach to giving evidence. He responded in an impulsive manner - without giving thought to the document or, it appears, to the question. He made no apparent effort to remember his answer from one question to the next. The inconsistencies in his evidence are numerous and close together in time.

104I find that John was aware of the contents of the Will and swore a document which he knew to be untrue. His explanation for doing so is a complete non sequitor. First, John said, “I signed several documents”. Second, he said that he did not understand the question. His third answer was that he told the truth in the document. His fourth and final answer with respect to the Declaration was, “I looked at dozens of documents” and “I obviously didn’t look at this one before I signed it.” Collectively, these four answers are consistent with John’s cavalier approach to documents and to the truth of their contents.

iv. Summary

105John’s evidence is that Jim was informed of their father’s decision to gift the Shares to John. That evidence was not confirmed by Jim.

106If as John testified, Jim was informed of the gift of the Shares, there was no reason for John to do anything other than ensure that the accountants and lawyers who worked for MMR were preparing documents which reflected the gift of the Shares. As the individual who signed the MMR tax returns (including the 1997 return), John had numerous opportunities to ensure that the documents accurately reflected the change in ownership of the Shares as of the date of the alleged gift.

107In addition, if John was confident in his brother’s and his mother’s knowledge of the gift of the Shares, there was no reason for him in December 1999 to execute the Declaration and identify himself as the beneficiary, pursuant to the Will, of the Shares. John’s alternative argument with respect to ‘gift’ (as executor he was in a position to complete the gift) runs contrary to that conduct.

108John’s conduct with respect to his late father’s Will is troubling for reasons which extend beyond the scope of this action. The Declaration is a misrepresentation of the contents of the Will. In addition, based on John’s evidence it is clear that the specific bequests to the grandchildren were not carried out in accordance with Mr. McMurtry’s instructions in the Will.

109John’s conduct over time, including the contradictory statements made regarding the ownership structure of MMR and the manner in which the Shares were allegedly transferred to him, supports a finding that he did not, in the 1980s or at any time thereafter believe that his father had made a gift to him of the Shares. As a result, I find that John’s conduct does not amount to acceptance of such a gift.

iii) Act Sufficient to Complete the Transaction

110When the individual alleging that a gift was made is unable to recall with any degree of accuracy when the gift was made or how it was carried out, it is difficult (if not impossible) to find that the transaction was completed. This is particularly so when the person who is alleged to have made the gift was fully aware, by 1984 at the latest, as to how to facilitate and document the transfer of shares in a company.

111John gave three different answers as to when Meeting No. 2 took place and Mr. McMurtry made the decision to gift the Shares. At first John said the meeting took place in 1984. He then said it took place in the mid-1980s. He ultimately conceded that he does not recall when the meeting took place. Even when given the August 1984 meeting at Mr. Clark’s office as a ‘marker’, John was unable to recall whether Meeting No. 2 occurred before or after that meeting.

112As to how the gift was carried out, John also gave contradictory evidence. His answers on the point were as follows:

• Following Meeting No. 2, John “assumed” the Shares.
• The physical transfer of the Shares was carried out at the MMR office and recorded in the Minute Book.
• He does not recall if the documents related to the transfer of the Shares from his father to him were recorded in the Minute Book.
• Although he believes he was present when Mr. McMurtry transferred the Shares to him, John does not recall if his father signed a share certificate or any other document consenting to the transfer.
• The transfer of the Shares was never communicated to MMR’s lawyers. That lack of communication does not seem odd to John even in light of the 1984 meeting at Mr. Clark’s office with respect to Michael’s shares.

113The only evidence as to how the alleged gift was completed is John’s. His evidence is contradictory and does not, on a balance of probabilities, support a finding that Mr. McMurtry took the steps required to complete a gift of the Shares to John.

114In making that finding I have also considered the evidence with respect to the transfer of Michael’s shares and documentation of that transfer in the Minute Book. As of the August 1984 meeting at Mr. Clark’s office, Mr. McMurtry clearly appreciated the importance of documenting the transfer of shares of MMR. The Minute Book was at Mr. Clark’s office as of that point in time.

115If a decision to gift the Shares was made by Mr. McMurtry before the meeting at Mr. Clark’s office, there would have been no reason for Mr. McMurtry not to document the change in ownership of the Shares at that or a similar meeting. If such a decision was made subsequent to the meeting at Mr. Clark’s office, there was no reason for Mr. McMurtry not to take the steps necessary to document in the Minute Book the change in ownership of the Shares.

116I find that the evidence does not, on a balance of probabilities, support a finding that Mr. McMurtry completed an act that was sufficient to effect a gift of the Shares to John.

117For the same reasons, I find that John has not satisfied the burden of proof and established on balance of probabilities that the Shares, if given to him, were given to him on any basis other than a resulting trust. John has not rebutted the presumption in that regard.

i. Change of Mind

118Even if there was an intention (and I find that there was not) on the part of Mr. McMurtry to make a gift of the Shares to John, Mr. McMurtry was not bound by that stated intention. He was free to change his mind at any time.

119As noted above, there were a number of solutions available to Mr. McMurtry – other than to gift the Shares to John – to avoid the difficulties he is said by John to have encountered in dealing with Jim with respect to the business of MMR.

120Whether the intention to gift the Shares existed and Mr. McMurtry changed his mind or there was never such an intention in the first place, there is no evidence of an act on the part of Mr. McMurtry that is sufficient to complete the gift.

ii. Completing the Gift as Executor

121Having found that Mr. McMurtry did not intend to give the Shares to John, John’s alternative argument that he was in a position to ‘complete’ the gift, if necessary after his father’s death and in his capacity as one of the executors of the Will, must fail.

122In any event, the evidence does not support a finding that an intended gift (assuming there was such an intention) was completed by John in his capacity as an executor of the Estate. The only document which John completed, in that capacity and with respect to the Shares, was the Declaration. In that document John identified himself as a beneficiary under the Will.

123I find that the Declaration is not evidence of the completion of an intended gift.

b) Section 13 of the Evidence Act

124Section 13 of the Evidence Act, R.S.O. 1990, c. E.23 provides as follows:

In an action by or against the heirs, next of kin, executors, administrator or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.

125It is the position of Mrs. McMurtry that this section applies to John’s defence because the defence is effectively a claim of ownership, by way of a gift, of the Shares with the alleged gift having been made prior to the death of Mr. McMurtry.

126John’s position is that section 13 of the Evidence Act does not apply to this action because Mrs. McMurtry is not advancing her claim as an heir, next of kin, or executor of the deceased. The fact that Mrs. McMurtry happens to fall within one of those categories does not, in and of itself, bring the matter within the scope of the section. Mrs. McMurtry is advancing her claim as an alleged shareholder. John is a defendant as a shareholder and not as a beneficiary or executor of the Will.

127In support of his position, John relies on the decision of the Ontario Court of Appeal in Brisco Estate v. Canadian Premier Life Insurance Co., 2012 ONCA 854, 113 O.R. (3d) 161, at para. 63.

128I agree with John’s position and find that the action does not fall within the scope of section 13 of the Evidence Act. As a result, corroborative evidence is not, on the basis of the statutory provision alone, required. However, my finding in this regard does not eliminate the requirement for corroborative evidence generally.

c) Summary

129For the reasons set out above, I find that:

• Mr. McMurtry did not intend to make a gift of the Shares to John;
• Mr. McMurtry did not make a gift of the Shares to John;
• As of the date of Mr. McMurtry’s death in 1998, Mr. McMurtry remained the owner of the Shares; and
• Pursuant to the terms of the Will, on the death of Mr. McMurtry the Shares fell into and remain part of the residue of the Estate.

ISSUE NO. 2 – Claim for Declaratory Relief

a) The Positions of the Parties

130It is Mrs. McMurtry’s position that her claim with respect to ownership of the Shares is restricted to declaratory relief only and, is therefore not subject to any limitation period. Mrs. McMurtry relies on section 16(1)(a) of the Limitations Act, 2002, S.O. 2002, c. 24, which provides that there is no limitation period in respect of, “a proceeding for a declaration if no consequential relief is sought”.

131John’s position is that the claim advanced by Mrs. McMurtry is for more than declaratory relief and includes consequential relief. John argues that if Mrs. McMurtry is declared to be the owner of the Shares such a declaration on its own will not suffice to give effect to her claim. It is submitted on John’s behalf that if the declaration requested by Mrs. McMurtry is made, the Shares will have to be transferred to her and the Minute Book updated. John argues that for those two steps to be taken, Mrs. McMurtry will require an order of the Court (i.e. consequential relief). As a result, Mrs. McMurtry’s claim does not fall within the scope of section 16(1)(a) of the Limitations Act.

132John argues that the claims advanced by Mrs. McMurtry for declaratory relief and consequential relief: a) fall within the scope of either section 5 of the Limitations Act, 2002 (two years from date of discovery) or sections 45 and 46 of the Limitations Act, R.S.O. 1990, c. L.15 (six years for claims that existed prior to 2002); and b) are, as a result, statute-barred.

b) The Prayer for Relief

133Mrs. McMurtry commenced her action by way of a statement of claim issued in December 2012. The prayer for relief is as follows:

The Plaintiff claims against the Defendants as follows:

a) A Declaration that the Plaintiff, Mildred McMurtry is the lawful owner of ten (10) shares in the capital stock of Mic Mac Realty (Ottawa) Limited (the “Corporation”). b) An Order directing that the Corporate Minute Book of the Corporation be updated to indicate the ownership of shares of the Plaintiff at ten (10) common shares of Mic Mac Realty (Ottawa Limited). c) A Declaration that the Defendant, John McMurtry has acted in a manner that is oppressive of and which unfairly disregards and is unfairly prejudicial to the interest of the Plaintiff. d) An Order removing the Defendant, John McMurtry from any and all positions which he holds in any capacity in the Corporation. e) An Order that the Corporation’s assets be valued and liquidated and the appointment of a receiver to carry out the said liquidation. f) An Order for damages as against the Defendant, John McMurtry for his oppressive conduct with respect to the Plaintiff and the Corporation. g) An Order that John McMurtry repays to the Corporation all funds since 1998 that were misappropriated by him for his benefit. h) An Order for a full accounting of all personal expenses charged by John McMurtry to the Corporation and repayment of same.

c) Case Law and Academic Authorities

134The case law and academic authorities emphasize that “declaratory relief” is to be construed narrowly – specifically because relief in that form is not subject to a limitation period. In The Law of Declaratory Judgments, 3rd ed. (Toronto: Carswell, 2007) at p. 3, the author introduces the subject as follows:

The essence of a declaratory judgment is a declaration, confirmation, pronouncement, recognition, witness and judicial support to the legal relationship between the parties without an order of enforcement or execution …

If a declaration is merely ancillary to consequential relief which is statute-barred, the entire recourse is considered as consequential relief and will fall. [Footnote omitted]

135I find that Mrs. McMurtry’s claim with respect to ownership of the Shares is restricted to declaratory relief. Resort to the Court for additional relief would not be required for Mrs. McMurtry to enjoy the benefits of ownership of the Shares if she were to be declared the owner. It is the potential for additional resort to the judicial process, and not the potential for additional administrative or other steps to be required, that is meant by “consequential relief”.

136In Yellowbird v. Samson Cree Nation No. 444, 2008 ABCA 270, 433 A.R. 350, at paras. 45 and 46 [Yellowbird], the Alberta Court of Appeal summarized the meaning of “consequential relief”:

Rather, [the trial judge] held that “[t]he coercive nature of a remedial order is captured in the words, ‘requiring a defendant to comply’”, and concluded that a helpful test for determining whether a remedy was declaratory or remedial would be to ask:

If the Court granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff “leave the court in peace” and enjoy the benefits of the declaration “without further resort to the judicial process”? (para. 35)

The trial judge also held, at para. 36, that “[i]f the relief is executory or coercive, it is not declaratory”. Finally, he concluded that by describing remedial relief as being “ancillary’ to a declaration does not change its charter as a remedial order: at para. 38.

137There is nothing ‘executory’ or ‘coercive’ which would require John to comply in any way with a declaration, if made, that Mrs. McMurtry is the owner of the Shares: see Yellowbird at para. 45; and Joarcam, LLC v. Plains Midstream Canada ULC, 2013 ABCA 118, 90 Alta. L.R. (5th) 208 at para. 5 [Joarcam].

138But for my decision with respect to the equitable defences of laches and estoppel, and the imposition of a constructive trust, the Shares would remain in the residue of the Estate and it would be open to the executors and trustees to take the steps necessary, in the context of the administration of the Estate, to facilitate a transfer, unconditionally, of the Shares from the Estate to Mrs. McMurtry.

139An order of the Court requiring the executors and trustees of the Estate to fulfil their obligations would not be required as a consequence of the declaration requested being made. Such an order, if required, would arise from and be consequential to a failure on the part of the executors and trustees of the estate to fulfil their obligations in accordance with the terms of the Will (i.e. as relates to the residue of the Estate). Such an order would be based on a cause of action distinct from that upon which Mrs. McMurtry’s claim for declaratory relief is based.

140Updating the Minute Book would not require an order of the Court. The lawyer for MMR, when presented with a copy of the declaration, if made, would take the steps necessary to have the Minute Book updated. An order, if required, would be consequential to the process of updating the Minute Book. Mrs. McMurtry would have a cause of action independent of the cause of action upon which the claim for declaratory relief is based.

141The legal consequences which naturally flow from a declaration which pronounces on a legal position do not constitute “consequential relief”. As noted by Verville J. at paragraph 43 of the decision of the Alberta Court of Queen’s Bench in Wasylyk v. Bonnyville (Municipal District No. 87), 2012 ABQB 348:

[T]he policy problem created by a situation where the necessary remedial order is barred by the Limitations Act, resulting in a declaratory order that the defendant does not have to obey, and a plaintiff with a support right but no remedy, … would undermine respect for orders of the Court. But this difficulty would only be avoided where limitations did not pose an issue in the first place. Taking this position to the extreme, no declaratory relief would ever fit the exception contemplated in [section 16] of the Limitations Act.

142In Joarcam the relief requested was determined to be remedial (not declaratory only) because the declaration sought was as to: a) ownership of the subject assets; and b) entitlement to recover from the defendant immediate possession of the subject assets. The trial judge, whose decision was upheld on appeal, concluded that the plaintiff was seeking an order that would require the defendant to transfer the subject assets – in other words more than a pronouncement of legal rights.

143Mrs. McMurtry is seeking nothing more than a declaration that she is the rightful owner of the Shares. The declaration, if made: a) would not require John to transfer the Shares to Mrs. McMurtry; and b) is nothing more than a pronouncement on the legal rights as between Mrs. McMurtry and John. On that basis, the matter before me is distinguishable from the decision in Joarcam upon which John relies.

144The fact that Mrs. McMurtry included in her pleading a request for an order that the Minute Book be updated does not mean that the request is: a) well-founded; or b) necessary as relates to ownership of the Shares. As noted above, such relief would stem from a separate cause of action.

145The balance of the relief requested by Mrs. McMurtry is essentially oppression remedy relief to which only an owner of shares in MMR may be entitled. The oppression remedy relief requires a determination that is distinct from the determination with respect to the ownership of the Shares.

146In summary, I find that the relief requested by Mrs. McMurtry with respect to ownership of the Shares is declaratory in nature and does not include any consequential relief.

ISSUE NO. 3 – Limitation Period

a) Declaratory Relief Only

147Having found that Mrs. McMurtry’s claim is for declaratory relief only, section 16(1)(a) of the Limitations Act, 2002 applies. I find that Mrs. McMurtry’s action is not barred by reason of a statutory limitation period.

b) Declaratory and Consequential Relief

148If I am incorrect in my finding under Issue No. 2, and the relief claimed on behalf of Mrs. McMurtry includes consequential relief, then I find that Mrs. McMurtry’s claim is statute-barred by virtue of section 5(1) of the Limitations Act, 2002. In all of the circumstances, Mrs. McMurtry knew or ought to have known more than two years prior to the date on which she commenced her action of the nature of the losses and damages which she is alleging in this action that she has suffered and that a proceeding would be an appropriate means to seek to remedy the losses and damages.

149The statement of claim in this action was issued in 2012. Mrs. McMurtry was aware in 1998 of the terms of the Will and that she is the residuary beneficiary. She also knew as of January 1999 that John was advancing the position that he is the owner of the Shares.

150Mrs. McMurtry admitted that as of 2009 she knew of the dispute between Jim and John. She knew that her sons were unable, in their capacity as shareholders of MMR, to agree upon a division of the proceeds from the sale of a warehouse. Mrs. McMurtry knew that the disagreement arose because John was taking the position that he is the owner of 16 of the 22 shares in MMR (i.e. that John owns the Shares). Mrs. McMurtry testified that as of 2009, “That’s when I knew there was going to be trouble.”

151Exhibit 5 is a letter dated November 2011 in which Mrs. McMurtry asserts ownership of the Shares (“Letter No. 2”). Addressed “To whom it may concern”, Letter No. 2 consists of a single sentence as follows: “I believe that per the terms of my late husband’s Last Will and Testament, I am the legal owner of his shares in Mic Mac Realty (Ottawa) Ltd.”

152Mrs. McMurtry acknowledged her signature on Letter No. 2. However, when presented with the document, Mrs. McMurtry had no independent recollection of it. When asked if the document was the first time subsequent to her husband’s death that she put in writing that she claims ownership of the Shares, Mrs. McMurtry responded with “I guess so.”

153Mrs. McMurtry admitted that she wrote Letter No. 2: a) at a time when she knew Jim and John were involved in litigation (John’s action was commenced in 2011); and b) following a meeting that she attended with Jim and his counsel. Mrs. McMurtry did not type Letter No. 2 herself, as she does not type.

154Mrs. McMurtry’s evidence with respect to Letter No. 2 is not reliable. I am not persuaded that Letter No. 2 is indicative of the point in time at which Mrs. McMurtry understood that it was incumbent upon her to assert the position that she is the owner of the Shares. When asked if Letter No. 2 was prepared and given to Jim to assist him in his litigation with John, Mrs. McMurtry said, “I guess so, I don’t know.” Jim’s evidence is that he has no idea whether he was given a copy of Letter No. 2. Mrs. McMurtry’s evidence is that she did not give a copy of Letter No. 2 to John.

155I find that no later than 2009 – more than two years prior to the date on which Mrs. McMurtry commenced her action – “a reasonable person with the abilities and in the circumstances of [Mrs. McMurtry] ought to have known of” the circumstances giving rise to her claim: see ss. 5(1)(a) and (b) of the Limitations Act, 2002. As a result, if her claim includes a request for declaratory and other relief, her action is statute-barred.

ISSUE NO. 4 – Laches

a) The Positions of the Parties

i) John McMurtry

156John relies on the equitable doctrine of laches and takes the position that Mrs. McMurtry by her conduct acquiesced to John’s ownership of the Shares. That conduct includes Mrs. McMurtry authoring the Letter in January 1999.

157In the alternative, John argues that he reasonably relied on Mrs. McMurtry’s acceptance of the status quo from at least 1999 until 2011. John’s reliance is demonstrated by the work he has done on behalf of MMR, the work Brenda has done on behalf of MMR, and the personal financial investment which John and Brenda have made in MMR.

158John’s position is that he need only prove either acquiescence by his mother or reasonable reliance on his part to succeed on the basis of the defence of laches.

ii) Mrs. McMurtry

159On behalf of Mrs. McMurtry it is argued that her claim is one in law and, as a result, the doctrine of laches does not apply. No case authority is provided in support of that position.

b) The Law

160In the Supreme Court of Canada decision in M.(K.) v. M.(H.), 1992 SCC 31, [1992] 3 S.C.R. 6, at para. 18 [M.(K.)], it was emphasized by La Forest J. that: a) there are two distinct branches to the doctrine of laches; and b) either branch is sufficient as a defence to a claim in equity. Addressing the two branches, he said:

What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine.

161I agree with the submissions on behalf of John that “acquiescence is a stand-alone branch of laches that does not require a finding of prejudice for laches to apply.”: see Zurich Insurance Company v. TD General Insurance Company, 2014 ONSC 3191 (S.C.J.) at paras. 32 to 37.

162In M.(K.) the consideration to be given to the plaintiff’s state of knowledge is described as follows at paras. 101 and 104:

As the primary and secondary definitions of acquiescence suggest, an important aspect of the concept is the plaintiff’s knowledge of her rights. It is not enough that the plaintiff knows of the facts that support a claim in equity; she must also know that the facts give rise to that claim: Re Howlett, [1949] Ch. 767. However, this Court has held that knowledge of one’s claim is to be measured by an objective standard: see Taylor v. Wallbridge (1879), 2 S.C.R. 616, at p. 670. In other words, the question is whether it is reasonable for a plaintiff to be ignorant of her legal rights given her knowledge of the underlying facts relevant to a possible legal claim.

In equity, however, there is a residual inquiry: in light of the plaintiff’s knowledge, can it reasonably be inferred that the plaintiff has acquiesced in the defendant’s conduct?

163As to the state of Mrs. McMurtry’s knowledge over time, I find as follows:

• Mrs. McMurtry was by her own admission aware no later than 1998, in the months following the death of Mr. McMurtry, of the contents of the Will including that: a) she was the sole residuary beneficiary; and b) there was no specific bequest of the Shares.
• Brenda gave evidence, which I accept over that of Mrs. McMurtry on the subject, with respect to the extent to which Mrs. McMurtry was, in 1998 following her husband’s death, upset and concerned about her financial well-being given the terms of the Will. Based on Brenda’s evidence in that regard, I draw an inference that Mrs. McMurtry was:
  • Upset because she was aware that she was the residuary beneficiary only; and
  • As a result, concerned that the residue of the Estate would not provide her with financial comfort.
• Mrs. McMurtry was aware no later than 1998 that she was one of three executors and trustees of the Estate. She chose to do nothing in that role, leaving it entirely up to John to take the steps necessary to administer the Estate.
• When she wrote the Letter in January 1999, Mrs. McMurtry understood that John was advancing the position that he was the owner of the Shares and that he would act on the Letter with respect to the business of MMR, including as may be required to update the Minute Book.
• Mrs. McMurtry was aware that John and Brenda were effectively running MMR by the date of Mr. McMurtry’s death and that they had gradually, over time, increased their respective roles in MMR.

164If Mrs. McMurtry truly believed that she was, by virtue of being the residuary beneficiary of the Estate, the beneficial owner of the Shares it was incumbent upon her personally to take action in the context of the administration of the Estate. Moreover, it was incumbent upon Mrs. McMurtry to fulfil her role as an executor and trustee and address that issue in the administration of the Estate. Mrs. McMurtry sat back and did nothing personally or in her capacity as an executor of the Estate to ensure that the Estate was administered on the basis of what she testified she believed, at the time, to be the intentions of her late husband (i.e. that the Shares would form part of the residue of the Estate).

165The determination of this matter does not require a detailed review of the case authorities with respect to the fulfilment by an executor of his or her obligations. The case authorities are clear; there is no distinction to be made between sophisticated and unsophisticated individuals in the fulfilment of their obligations as executors and trustees. Mrs. McMurtry’s decision not to be an active executor and trustee of the Estate and to leave the work in that regard to John is a decision the consequences of which she must now bear.

166With respect to the doctrine of laches, I find as follows:

a) By January 1999 at the latest it was not reasonable for Mrs. McMurtry to be ignorant of her legal rights (as residuary beneficiary) given her knowledge of the circumstances existing as of that date – namely John’s pursuit of and/or claim to ownership of the Shares. b) Mrs. McMurtry’s conduct from at least 1999, when she wrote the Letter, until 2011 when she wrote Letter No. 2, amounts to acquiescence; and c) On the basis of acquiescence alone, it is just in the circumstances to apply the doctrine of laches.

167As noted above, acquiescence is a stand-alone branch of the doctrine of laches and prejudice is not required in addition to acquiescence. In any event, I find that there is clear prejudice to John by reason of his mother’s delay in advancing her claim.

168In all of the circumstances, I find that based on Mrs. McMurtry’s delay in pursuing any claim related to the Shares, it was reasonable for John to alter his position in reliance on her stated acceptance of the status quo as of 1999. The status quo at that time was that John was attempting to re-create the Minute Book and, in doing so, hold himself out as owner of the Shares.

169I find that Mrs. McMurtry’s decision to write the Letter was a deliberate decision on her part. In 1994, Mrs. McMurtry assisted Jim with his financial circumstances by participating in the creation of a $175,000 mortgage which did not exist. Mrs. McMurtry’s willingness in 1999 to facilitate John’s claim to ownership of the Shares is consistent with her desire to ‘assist’ her children over time with their financial circumstances. Mrs. McMurtry was well aware by January 1999 of the work being done by John and Brenda in and for MMR. I find that the Letter was written at least in part in recognition of that work.

170I also find that by her conduct, Mrs. McMurtry permitted a situation to arise that would be unjust to disturb: see M.(K.), at p. 77. The ‘situation’ includes the personal and financial investment, without remuneration specific to their investment, on the part of both John and Brenda in MMR. Were the status quo to be disturbed and a declaration made that Mrs. McMurtry is on an unconditional basis the beneficial owner of the Shares, John and Brenda would, in my view, be entitled to pursue a claim based on unjust enrichment.

171I find that the declaration requested by Mrs. McMurtry, if made, would lead to significant disruption in the lives of the McMurtry family members including Mrs. McMurtry, Jim, John, and Brenda, disruption in the day-to-day operations of MMR; and a potential loss to the shareholders of MMR in the value of their shares.

172The equities of the ‘situation’ also require consideration of what has become of Mr. McMurtry’s businesses over time. Jim is now the sole owner of Keith’s Auto Sales and a 27 per cent shareholder in MMR. John has essentially devoted his working life to MMR. I find that it is just and reasonable in all of the circumstances to impose a constructive trust and determine that Mrs. McMurtry, as the residuary beneficiary of the Estate, holds the Shares in such a trust for the benefit of John.

173The imposition of a constructive trust in these circumstances is in keeping with the decision of the Supreme Court of Canada in Soulos v. Korkontzilas, 1997 SCC 346, [1997], 2 S.C.R. 217 [Soulos]. At paragraph 17 of her decision for the majority, and in referring to the history of constructive trusts, McLachlin J. said:

[The history] suggests that the constructive trust is an ancient and eclectic institution imposed by law not only to remedy unjust enrichment, but to hold persons in different situations to high standards of trust and probity and prevent them from retaining property which in “good conscience” they should not be permitted to retain.”

174The passage quoted above serves to emphasize, as did much of the balance of the decision of McLachlin J. the “diverse circumstances” (see paragraph 34 of Soulos) in which a constructive trust may be imposed.

175The next steps include a determination of the end result of John’s entitlement based on the constructive trust imposed. A determination is also required of John’s and Jim’s respective claims for oppression remedy relief. There will, in my view, be an overlap between the financial evidence required to determine each of those claims. It may not be practical or cost-effective to determine John’s claim for a declaration of ownership of the Shares in isolation from the competing claims for oppression remedy relief. Counsel are to attend before me to make submissions as to how the balance of the issues in these actions are to be addressed.

ISSUE NO. 5 – Estoppel

176It is John’s position that Mrs. McMurtry is estopped by either convention or representation from pursuing her claim of ownership of the Shares. For the reasons set out below I agree. Whether by ‘convention’ or by ‘representation’, Mrs. McMurtry is estopped from: a) resiling from the wording of the Letter; and b) pursuing a claim that she is the owner of the Shares.

a) Estoppel by Convention

177In Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53 [Ryan] the issues of estoppel by convention and by representation were addressed by Bastarache J. who delivered the decision for the majority. At paragraph 59 of the decision he identified three criteria that must be satisfied for the doctrine of estoppel to apply:

(1) The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly). (2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legal position. (3) It must be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position.

178I find that each of the three criteria for the doctrine of estoppel to apply has been established by John.

179In the Letter which Mrs. McMurtry voluntarily wrote in January 1999, she confirmed John’s assumption or belief that the Shares were transferred to him in the 1980s. On cross-examination, Mrs. McMurtry admitted that she knew John would rely on the Letter for the business of MMR. It was also her evidence that she thought that in 1999 John believed the Shares had been transferred to him.

180For the reasons discussed above, I find that Mrs. McMurtry was fully aware in January 1999 of the significance, including to John, of the contents of the Letter. I find that from January 1999 forward, Mrs. McMurtry and John conducted themselves on the basis of the mutual assumption that John was the owner of the Shares. The wording of the Letter is certain and clear. Mrs. McMurtry and John were of like mind. I find that the first criterion for estoppel by convention is satisfied.

181John relied on the mutual assumption as he carried forward with the day-to-day operations of MMR. He and Brenda devoted their working lives to MMR from the 1980s and, subject to John’s limitations by reason of his health concerns, continue to do so to this date. Not only have they invested time, they have personally invested in MMR on a financial basis. John has, on at least one occasion, personally guaranteed indebtedness of MMR. I find that the second criterion for estoppel by convention is satisfied.

182With respect to the second criterion, John points to the admission by Mrs. McMurtry, that she knew when she wrote the Letter that John would rely on the Letter for business purposes, including re-creation of the Minute Book. Mrs. McMurtry’s knowledge at the time of John’s intention to rely on the Letter is not, in my view, part of the second criterion. In any event, I agree with the submission made – that Mrs. McMurtry was aware when she wrote the Letter of the significance of the contents of the Letter and the use to which the Letter would be put by John.

183For the reasons set out above in the discussion of the doctrine of laches it would be unjust or unfair to allow Mrs. McMurtry to resile or depart from the common assumption made by her and John as of January 1999 at the latest. In addition, in the period subsequent to the mutual assumption being made, John has been and he will continue to be detrimentally affected if Mrs. McMurtry is permitted to resile from the mutual assumption. I find that detrimental reliance, the third criterion for estoppel by convention, is satisfied.

b) Estoppel by Representation

184John also relies on the doctrine of estoppel by representation, which does not require that there be a mutual or shared assumption. As set out in paragraph 5 of Ryan, estoppel by representation requires:

[A] positive representation made by the party whom it is sought to bind, with the intention that it shall be acted on by the party with whom he or she is dealing, the latter having so acted upon it as to make it inequitable that the party making the representation should be permitted to dispute its truth, or do anything inconsistent with it (Page v. Austin (1884), 10 S.C.R. 132 (S.C.C.) at p. 164).

185I find that the criteria for estoppel by representation are met in this matter. In the Letter Mrs. McMurtry represented to John (and the rest of the world) that he was the owner of the Shares; Mrs. McMurtry knew that John would act upon that representation; and as noted above John acted to his detriment in reliance on the Letter.

Conclusions

186It is unfortunate for the members of the McMurtry family that they find themselves embroiled in litigation over the business established by the patriarch of the family, Mr. McMurtry. The strain which the litigation has placed on the family relationships and on the individual members of the McMurtry family who testified at trial was clearly visible. This determination as to ‘ownership’ of the Shares is only the initial step in a series of steps required to bring the proceedings to a conclusion.

187For the reasons set out above, I order as follows:

1. It is declared that Mrs. McMurtry: a) Is, by virtue of her status as the residuary beneficiary of the Estate of Keith McMurtry (“the Estate”), the beneficial owner of 10 common shares in Mic Mac Realty (Ottawa) Ltd. (“the Shares”); and b) Has in that capacity since January 1999 held and continues to hold the Shares in a constructive trust for John McMurtry.
2. Pending further order of the Court, the executors of the Estate are prohibited from taking any steps to transfer ownership of the Shares from the Estate to Mrs. McMurtry or to any other individual.

188Counsel for the parties to the companion actions are to contact the Civil Trial Co-ordinator to make arrangements to appear before me and make submissions with respect to both the next steps in the proceedings and the timing for submissions with respect to costs of the proceeding to date.