Court File and Parties
COURT FILE NO.: FC-09-51-0002 DATE: 20160617
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
MARIO LAROUCHE Applicant – and – INGRID LJUCKANOV Respondent
Counsel: Self-represented (Applicant) Self-represented (Respondent)
HEARD AT OSHAWA: May 30, 31; June 1, 2, 3, 2016
REASONS FOR JUDGMENT
The Issues
1The Applicant, Mario Larouche, claims to be the beneficial owner of the property registered in the name of the Respondent, Ingrid Ljuckanov, municipally known as 2525 Brownsville Road, Newcastle (the Property). He seeks a declaration that the Property belongs to him, based upon a resulting or constructive trust, and based upon an oral agreement between the parties.
2The parties were in an “on again, off again” relationship but have never cohabited. They have a child, Mikael, born September 9, 2006. The Respondent seeks retroactive and ongoing child support from the Applicant, and she seeks to impute income to the Applicant in the amount of $100,000.00 per year for the purpose of establishing support.
Background Facts
3The Applicant works as a welder. The earnings from his self-employed welding business are in dispute. He has lived as a tenant at the Property since 1996. It is a farm with a modest house and 65 acres of land. He raises elks on the Property. He is presently 57 years old and has two children from another relationship, as well as 9 year old Mikael.
4The Respondent, now age 53, works as a nurse. She was a single mum raising her three children when she and the Applicant started a relationship in 2000 and 2001. The relationship resumed briefly from 2005 to early 2006, at which point it ended before the birth of Mikael. These facts are confirmed in the Applicant’s affidavits, but he seeks now to enlarge the time of the relationship. I accept the affidavit evidence of the parties on this point.
5In this application, Mr. Larouche claims a beneficial interest in the Property based upon his assistance to the Respondent for the acquisition of her first home, traced through the second home and finally to the Property. He also suggests that he made direct contributions to the acquisition of the Property by providing funds for the lawyers’ fees, down payment and land transfer tax. He alleges that there was an oral agreement that the Respondent would purchase the Property for his benefit.
The Proceedings
6In March 2015, the Respondent brought this application seeking a declaration that he was the beneficial owner of the Property.
7The Applicant pleads that he stopped paying rent when the Respondent reneged on her agreement to transfer the Property to him.
8In April 2015, the Respondent initiated proceedings under the Residential Tenancies Act, 2006, S.O. 2006, c. 17, seeking a declaration that the Applicant was in arrears of his rent payments, seeking an order for eviction based upon non-payment of rent, and based upon her desire as owner to move into the Property as owner.
9As well, the Respondent brought a motion for summary judgment in November 2015 seeking an order dismissing the Applicant’s claim, which was denied as the facts were in dispute and findings of credibility had to be made. However, an order was made by the motion judge, pending the trial in this matter, that the Respondent would pay the sum of $1700.00 per month as well as the taxes on the Property.
10This Court further made an order making it clear that the landlord and tenant proceedings should continue, notwithstanding the Applicant’s claim to an equity interest in the Property.
The Landlord and Tenant Proceedings
11The Applicant testified before the Landlord and Tenant Board that he was not a tenant, but was rather the beneficial owner of the Property.
12After a contested hearing, the Board concluded that the Applicant was a tenant, and did not accept his evidence that the Respondent would purchase a property for his benefit when they were no longer in a relationship and she was actively pursuing the Applicant for child support payments.
13On February 29, 2016, the Board found that the Applicant as tenant was in arrears of rent in the amount of $22,970.00. It made an order terminating the tenancy agreement, effective March 15, 2016, for non-payment of rent, and also as the Respondent as owner wished to move into the Property.
14The Applicant is appealing that decision.
Uncontested Background Facts
15In November 2002, the Respondent entered into an Agreement of Purchase and Sale for 7 Odessa Crescent, Whitby, Ontario (Odessa), a townhouse that was not yet built. The purchase price was $154,990.00 and the down payment was $8000.00. In 2004, when the sale was to close, the Respondent was not eligible for financing due to her bankruptcy following her divorce, and sought the assistance of the Applicant to acquire title and financing for Odessa.
16Odessa was initially registered in the name of the Applicant and the mortgage was in his name. The Respondent furnished the down payment and made all payments for the mortgage, taxes, etc.
17The Applicant acknowledges that he never lived in Odessa and that he contributed no money to its acquisition or any carrying costs, nor did he allege that he contributed any labour for improvements. His assistance to the Respondent was that he qualified for a mortgage when the Respondent was not eligible, and, therefore, Odessa was initially registered in his name. The Applicant claims an interest in Odessa traced to her other properties for his assistance in its acquisition.
18In 2007, the Respondent was furious when she found that the Applicant had taken additional equity of $27,000.00 on the Odessa mortgage without her knowledge or consent to purchase welding equipment. He repaid the amount taken.
19By 2007, the credit union where the Respondent banked confirmed that she qualified for the mortgage without the Applicant’s assistance, as she had stable employment and had paid the mortgage and house expenses without fail. Therefore, the Applicant transferred Odessa to the Respondent for no charge. The outstanding mortgage in the name of the Applicant was discharged, and the Respondent assumed a new mortgage.
20In 2009, the Respondent sold Odessa for $210,000.00 and purchased the second property, 2360 Winlord Place, Oshawa, (Winlord). Part of the proceeds of the sale from Odessa, in the amount of $40,141.27, were used toward the purchase of Winlord. I find that the Applicant had nothing to do with her decision to sell Odessa and purchase Winlord.
21The Applicant acknowledged that he never resided at Winlord, that he did not contribute in any way financially or by way of work to the acquisition or maintenance of Winlord. In his application, the Applicant claims an interest in Winlord, as the proceeds from Odessa were used to acquire the second property.
22The parties were not in any relationship at the time of the sale of Odessa and the purchase of Winlord. In 2010, the Respondent initiated proceedings for child support.
23In September 2013, the Respondent sold Winlord for $320,000.00 and used the proceeds of sale of $113,752.80 towards the purchase of the Property in dispute in this proceeding: 2525 Brownsville Road in Newcastle.
24The Applicant has been in a relationship with Ms. Susan Hicks since 2008. On June 6, 2013 Ms. Hicks entered into an Agreement of Purchase and Sale with the vendor to purchase the Property on behalf of the Applicant. That deal did not proceed.
25At issue in this proceeding is why the transaction with Ms. Hicks did not proceed. The Applicant testified that the Respondent insisted on helping him, and that she entered into the same kind of arrangement as with Ms. Hicks for his benefit. Therefore the transaction with Ms. Hicks was cancelled.
26The Respondent and the vendor testify that the conditions on the Hicks offer were not met, and the Hicks transaction expired. After the Hicks deal fell through, the Respondent made an offer that was accepted by the vendor after the Hicks offer expired.
27The Respondent entered into an Agreement of Purchase and Sale for the Property on October 9, 2013 for $360,000.00 which closed on November 1, 2013. Her solicitor prepared the Agreement of Purchase and Sale. The vendor added the term that the sale was subject to the existing tenancy with the Applicant.
28The focus of the dispute between the parties is whether the Respondent was purchasing the Property on her own behalf, or for the benefit of the Applicant.
29The Applicant pleaded in his application and affidavits that he owned the beneficial interest in the three sequential properties acquired by the Respondent. Further, he pleaded that the Respondent in an oral agreement insisted that she wanted to help him acquire the Property and that she orally confirmed that she was willing to give up her equity from the sale of Winlord to help him. He argues therefore that the Property beneficially belongs to him.
30The Respondent testified that she acquired the Property for herself and her children, assuming the month to month tenancy agreement with the Applicant and agreeing that he could reside in the Property for one year paying $1800.00 per month in rent. Thereafter he agreed he would vacate the farm. There is an email prepared by the Respondent confirming this understanding. The Respondent testified that she rented alternative premises for one year intending to move to the Property after one year. She understood based upon their discussions that the Applicant would move back to Quebec.
31The Applicant paid the rent in the amount of $1800.00 until January 2015, when he stopped paying, refused to move and stopped paying child support when the Respondent wanted to move into the Property with her children.
The Witnesses and Findings of Credibility in this Application
32After her divorce, and before she met the Applicant, the Respondent and the children were in a very precarious financial position. The Respondent testified that she has carefully built equity for herself and the children over the years by going back to school to train as a nurse, working to support her family, and purchasing and selling the two properties to acquire the Property. She used the equity in one to finance the next acquisition. She testifies that she would never give up this precious, hard earned equity in 2013, as she was no longer in a relationship with the Applicant. Since 2010 she has been pursuing the Applicant in court for child support. She testified that she would not be pursuing the Applicant for child support, then agree to give up her equity in the Property.
33In stark contrast to the allegations by the Applicant in his application and his affidavits claiming that he owned the entire beneficial interest in the Property, the Applicant made clear admissions in his evidence at the trial that he always intended to repay the Respondent for any financial contribution she made to the Property, and that he never intended to claim her equity contributed to the Property from her prior homes.
34This was a complete 180 from his allegations in his application and various affidavits previously filed that the equity in the Property belonged to him.
35He provided a photocopy of an uncashed cheque made out to the Respondent dated December 2014 for $30,000.00 which he held for some time, as proof of his honourable intentions to repay the funds advanced by the Respondent to acquire the Property. The Respondent states that she had never seen this cheque until it was presented by the Applicant in court.
36The evidence is clear that, apart from assisting with the financing of Odessa without making any financial contribution whatsoever, the Applicant made no direct or indirect contributions to the acquisition or maintenance of either Odessa or Winlord. He confirmed in his cross-examination that he did not put “a penny” into either of the first two properties.
37He alleges that he paid the legal fees and land transfer tax for the acquisition of the Property, but has no documentary proof of any contribution. For reasons that I will outline, I do not accept this evidence.
38The issue in this proceeding then becomes whether the Respondent by oral agreement, was buying the Property on her own behalf or for the Applicant, with an understanding that he would repay any financial contributions made by the Respondent.
39The Applicant provided affidavit material and testified. He filed affidavits of two witnesses: Ms. Susan Hicks, who first entered into an Agreement of Purchase and Sale to acquire the Property, as well as Ms. Hick’s friend Mary Elizabeth Chmiel, the mortgage broker retained to try to find financing for the Hicks purchase. Both witnesses were cross-examined. He also called Mr. Frank Mudra, the vendor of the Property to testify. The Applicant’s accountant was subpoenaed to the hearing to explain the Applicant’s income tax returns from his self-employed earnings, relevant to the issue of his income to establish child support.
40It is fair to say that the evidence of the Applicant in his affidavits and in his evidence before the court portrays various conflicting versions of events, and that his evidence has evolved and changed over time. He has no proof whatsoever that he contributed any funds to the acquisition of the Property, other than his assistance traced back to obtaining the financing for Odessa in 2004. I do not accept his suggestion that he contributed to the payment of the legal fees and land transfer tax or the deposit.
41The Applicant testified that the Respondent in 2013 insisted orally that she help him by acquiring the Property and agreed to transfer the Property to him after one year. According to Ms. Hicks, this agreement was reached in July 2013.
42He swears in his affidavit and in his evidence that he made arrangements with Mr. Mudra to simply change the names on the Agreement of Purchase and Sale from Ms. Hicks to the Respondent.
43The Applicant’s evidence is not corroborated by Mr. Mudra, who he called as a witness.
44I find that the Applicant’s evidence as to the alleged oral agreement with the Respondent for the Property – taken as a whole, and considered in light of all of the evidence, particularly the evidence of Mr. Mudra, the documents and the chronology – makes no sense and is not credible or reliable.
45A telling piece of evidence relevant to assessing the Applicant’s evidence is in relation to a car he transferred to the Respondent in exchange for four years of child support. The car was never driven by the Respondent and was stored by the Applicant. When the Respondent wanted to sell the car, he refused to furnish the keys. It turns out several years earlier, the Applicant had reported the same car as stolen, and had collected $14,950.00 from his insurance company. He never did explain this state of affairs.
46As well, I have serious concerns about the reliability and credibility of the evidence of Ms. Hicks and Ms. Chmiel, two witnesses called on behalf of the Applicant.
47I do accept the evidence of Mr. Mudra, the vendor called by the Applicant. His evidence supports the facts disclosed by the Respondent.
48The Respondent filed an affidavit and testified. The lengthy, well-prepared and detailed affidavit is supported by documents and refutes all of the allegations of the Applicant that he had a beneficial interest in the three properties, and, in particular, the Property. The Respondent was very emotional and angry with the Applicant, and clearly felt both outraged and vulnerable by the Applicant’s suggestion that she would give up her equity in her two prior homes for him given her personal struggle to go back to create a life for her and her four children.
49She filed affidavits of a long-time friend who had knowledge of her personal circumstances, as well as the real estate agents and mortgage broker who have acted on her behalf over the years. The Applicant chose not to cross-examine these witnesses. Her lawyer for the various transactions prepared a declaration, and also testified. These affidavits confirm the evidence of the Respondent, and I accept them as credible and reliable.
50For the reasons to follow, I accept the Respondent’s evidence that she was purchasing the Property for herself and the children as credible and reliable, and as supported by all of the documents produced. Her evidence is internally consistent, has been consistent throughout this proceeding and makes sense. Each time she was challenged by the Applicant, she was able to locate a document that corroborated her evidence. She has been to the planning department to explore options to build another home and provided these documents. I accept that she and the children are excited about moving into the Property. Her eldest son, who is working, is contemplating building a new home on the land.
Findings of Fact as to whether the Respondent Purchased the Property on her own Behalf or for the Applicant
51I find that the proposed deal with Ms. Hicks on behalf of the Applicant did not proceed as the condition for the financing was not met. The vendor, Mr. Mudra, then contacted the Respondent confirming that if she wished, she could make an offer. She proceeded with the purchase of the Property on her own behalf. Mr. Larouche played no role in brokering a deal between Mr. Mudra and the Respondent as he alleges.
52Mr. Larouche confirmed that Ms. Hicks was having difficulty obtaining financing for the purchase of the Property, and he was attempting to make improvements to encourage private financing.
53A further appraisal was conducted on the Property, dated August 2013, valuing the Property at $435,000.00, prepared presumably with the view of enticing private financing.
54Ms. Hicks testified to support the position that the Respondent was purchasing the Property on behalf of Mr. Larouche. Apart from one alleged telephone call, she had no firsthand knowledge of what transpired. Most of her affidavit and her evidence is inadmissible hearsay.
55She has been in a relationship with Mr. Larouche since 2008. It is not clear whether they are still romantically involved or whether they are just friends, but clearly she is aligned with Mr. Larouche. I accept Ms. Hicks’ evidence that the Respondent communicated with her by email under the name Dan for some time, and finally came in person to her office sometime in July 2010. Ms. Hicks was and still is very angry with the Respondent for this deception and has told the Respondent that if she contacts her she will call the police. Her distain for the Respondent in the courtroom was palpable.
56Ms. Hicks came across as an angry, rigid woman who is protecting Mr. Larouche, and was prepared to say just about anything to denigrate the Respondent. She testified that she thought the Respondent was bringing this proceeding because she is “nuts” and that she is treating Mr. Larouche very unfairly by taking his farm. She testified that she understood that the Respondent was “dragging” him to family court “every month”, when, in fact, the Respondent brought one proceeding, and – after several court appearances when the Applicant did not file the required financial documents ordered to be produced – an order for child support was made based upon imputing income to him of $52,200.00 annually. Ms. Hicks appears to have no knowledge of the facts of this case. She was a partisan witness. I conclude that her evidence is neither reliable nor credible.
57I do not accept her evidence about how and when the Respondent became the purchaser of the Property, as it conflicts with the straight forward evidence of Mr. Mudra, which I accept, as well as the chronology of events confirmed in the documents.
58The evidence of Ms. Hicks in her affidavits evolved and changed.
59In her first affidavit, sworn in July 2015, she says she is an “acquaintance” of Mr. Larouche, when clearly they were in a relationship. She outlines the nature of the transaction she entered into for Mr. Larouche. Her affidavit states: “However, I am advised by Mr. Larouche and do verily believe I was advised by Mr. Larouche that Mr. Larouche and the Respondent entered into the same agreement. Mr. Larouche was able to convince Mr. Mudra to disregard the said agreement of purchase and sale, and to instead enter one with the Respondent.” All of this is inadmissible hearsay, but reflects the story of Mr. Larouche.
60Ms. Hicks’ second enhanced affidavit and her evidence at trial was that, in July 2013, she received a call from the Respondent confirming that the Applicant loved her and that she was concerned about the “farm papers.” I note that this alleged conversation was not mentioned in the evidence of Mr. Larouche. Further, this important fact was not included in her first affidavit filed. This phone call is denied by the Respondent. I note for at least half of July 2013 the Respondent was out of the country. Had this conversation taken place and had the Respondent agreed to help the Applicant, the timing makes no sense, as the Respondent did not list Winlord for sale until September 2013, i.e., two months later. If she was going to buy the Property to help Mr. Larouche, surely she would not have waited until September to take steps to sell.
61I do not accept Ms. Hicks’ hearsay evidence that her deal was cancelled as it was replaced with the deal agreed to by Mr. Mudra with the Respondent. This evidence conflicts with that of Mr. Mudra and the Respondent. Ms. Hicks knew no details of the transaction, had no documents and could not recall any dates.
62The evidence of Ms. Hicks makes no sense in its totality, and is closely aligned with the evolving evidence of Mr. Larouche. Ms. Hicks did not provide any corroborating evidence from her lawyer who was representing her in this transaction to support her version of events that the deal was cancelled, rather than not completed for lack of financing.
63Ms. Chmiel is a long time friend of Ms. Hicks and was the mortgage broker trying to obtain a mortgage for Ms. Hicks for the acquisition of the Property. I do not accept her suggestion that she could have obtained financing for the acquisition of the Property prior to the deadline stipulated in the Agreement of Purchase and Sale signed by Ms. Hicks, and that she was told that the deal was to be cancelled. She had no file, had no memory of any dates, and advised that the file would have been shredded. She was a partisan witness as a friend of Ms. Hicks. I accept her evidence that Ms. Hicks could not obtain traditional financing for the Property, and that she was looking for private financing.
64I find that the time for coming up with the required financing by August 2013 had expired prior to the mortgage broker arranging any financing and, as a result, the deal fell through.
65The Hicks closing was scheduled for September 12, 2013. It did not proceed.
66Mr. Mudra was a neutral, credible witness. He was called as a witness for the Applicant, but his evidence confirmed the facts alleged by the Respondent. He had a clear recollection of the events.
67He did not confirm, as suggested by Mr. Larouche, that the Applicant told Mr. Mudra to substitute the name of the Respondent for the name of Ms. Hicks.
68This evidence was crucial to Mr. Larouche’s version of events.
69Mr. Mudra confirmed the Respondent called several times in 2013 expressing interest in purchasing the Property, and that he advised her that he was bound by another agreement. He advised the Respondent that the offer had to “play out” before he could consider an offer from her. Mr. Mudra called the Respondent and confirmed that the Agreement with Ms. Hicks expired, and that the deal “fell through”, as the conditions had not been met. He did not specify which condition had not been met, but, given the evidence, I conclude the problematic condition was the inability to obtain the necessary financing.
70Mr. Mudra then contacted the Respondent after the deal with Ms. Hicks fell through to confirm that the Respondent could make an offer to purchase the Property on basically on the same terms as previously negotiated by the Applicant.
71Mr. Mudra did not accept Mr. Larouche’s suggestion that he was told by the Applicant to exchange the name of Ms. Hicks for the Respondent. The lawyer representing the Respondent for the purchase of the Property testified that Mr. Mudra wanted to sell to a person capable of finding the financing.
72The chronology of events does not support the evidence of the Applicant, or his witnesses.
73Winlord was listed for sale by the Respondent on September 12, 2013 and sold immediately on September 13, 2013 for $325,000.00.
74I accept the evidence of the Respondent that she was contacted by Mr. Mudra after the sale of her home and he advised her that the other offer had “fallen through” as the conditions had not been met. He was prepared to sell to her the Property for the same price as in the other offer.
75The Respondent’s lawyer prepared an Agreement of Purchase and Sale for the Property dated October 3, 2013, which was accepted on October 9, 2013 with amendments by Mr. Mudra including that the sale was subject to the tenancy agreement.
76Mr. Mudra confirmed that he received the offer to purchase from the Respondent’s lawyer, and that all negotiations and discussions were between the two of them, without any involvement of the Applicant.
77Ms. Hicks signed a release from the first agreement at the request of the Respondent in early October 2013.
78I note that the Agreement of Purchase and Sale prepared by the Respondent’s lawyer, apart from the price, is quite different in substance from the offer prepared by Ms. Hicks, which is corroboration for the proposition that Mr. Larouche had no involvement with the purchase by the Respondent. There were fewer conditions. Ms. Hick’s Agreement confirms that the sale was subject to the tenancy of Mr. Larouche. Mr. Mudra added the term by hand to the Agreement of Purchase and Sale with the Respondent that the sale was subject to the tenancy agreement.
79The sale of Winlord closed on October 31, 2013 and the Respondent’s purchase of the Property took place on November 1, 2013, subject to the tenancy with Mr. Larouche.
80Mr. Larouche suggested that he paid for the down payment, legal fees and land transfer tax for the purchase of the Property. He provided no proof whatsoever that he contributed to these costs. He was given every opportunity to obtain corroborating documents. The Respondent confirmed that she paid the $5000.00 down payment from a transfer from her daughter’s account. This is corroborated by the bank statement. I accept the Respondent’s evidence that the $7000.00 deposit to meet the closing costs came from cash money that she had from her sister for an interest in a property in Croatia. All other funds came from the sale of Winlord.
81At the time of the Respondent’s purchase, Mr. Larouche was a month to month tenant with no lease. I accept the evidence of the Respondent that Mr. Larouche agreed to pay $1800.00 per month to cover the mortgage and the taxes for a one-year period and confirmed that he would vacate the Property after one year. The Respondent rented a premise for herself and her children for a year.
82When the Respondent requested Mr. Larouche to vacate the Property in late 2014 in accordance with their agreement, he refused to leave. He stopped paying the rent and also stopped paying child support for Mikael. No further payments were made after January 1, 2015 until an order was made by this court in November 2015. The Respondent was in extreme financial difficulty, as she was paying her rent, paying the carrying costs of the Property and supporting her children on her salary as a nurse.
83Since the Respondent was in extreme financial difficulty, she decided to sell the Property. On March 15, 2015, the Applicant presented an Offer to Purchase the Property for $410,000.00.
84The Respondent did not accept this offer, as she did not believe that the Applicant had the prerequisite financing. He confirmed in his evidence that he did not have any financing in place when he made the offer, but that he “would have to find the money”. He also confirmed that he “didn’t know how he would get the money”.
85This proceeding was commenced by the Applicant on March 15, 2015 on the same day the offer to purchase was presented to the Respondent seeking a declaration that he was the beneficial owner of the Property.
86On an ex parte basis, his lawyer registered a certificate of pending litigation against the Property and also sought an order seizing Mikael’s passport for fear that the Respondent would return to Croatia. The certificate was vacated at the insistence of Justice McCarthy of this court. The passport was returned.
87The facts, documents and chronology clearly support the conclusion that Ms. Hicks’ deal did not proceed as the conditions were not met. I find that the Respondent was purchasing the Property for herself and the children. There is no credible evidence supporting the Applicant’s assertion that the Respondent orally agreed to purchase the Property on his behalf. The offer to purchase the Property for $410,000.00 clearly contradicts the assertion that the Applicant is the beneficial owner of the Property.
88I accept the evidence of the Respondent that she has arranged other financing, and that her present plan to move into the Property with the children.
Conclusions
89The parties each made impassioned arguments at the conclusion of the trial dealing with the facts, but without any reference to the law.
90In this Application, the Applicant asserts that he is the beneficial owner of the Property based upon a resulting or constructive trust.
91The position of the Applicant is that in addition to the oral agreement, he contributed to the equity in the Property by agreeing to hold title to Odessa from 2004 to 2007 when the Respondent did not qualify for a mortgage. His contribution created the seed money for the subsequent acquisitions by the Respondent.
92The Applicant resiled from his position in earlier affidavits and in the application, that the Respondent was holding the equity in Odessa, Winlord and the Property for him. His position now is that the Respondent verbally agreed to purchase the Property for him, but that he would pay back the equity contributed by the Respondent to its acquisition.
93As I have outlined, I do not accept the evidence of the Applicant that there was an oral agreement that the Respondent would purchase the Property for the benefit of the Applicant.
94It is not disputed that the Applicant was helping out the Respondent as a friend. The parties were not in a boyfriend/girlfriend relationship at that time. The Respondent and her children lived in Odessa. The Applicant did not contribute any money to Odessa, and never lived in Odessa.
95The Applicant acknowledges that he did not contribute “a penny” to the acquisition or maintenance of Odessa or Winlord. For the reasons that I have outlined, I do not accept that the Applicant made any direct contribution to the acquisition costs of the Property.
96He did pay rent in the amount of $1800.00 per month from November 2013 to December 2014 as a tenant, when he stopped paying. As found by the Board in the landlord and tenant proceedings, he is presently still in arrears of rent in the amount of $22,950.00.
97The Respondent gratefully acknowledges the assistance of the Applicant, by taking title to Odessa between 2004 and 2007, but argues that this act of friendship does not give rise to any equitable or legal interest in Odessa or any subsequent property.
98In 2007, the Applicant took steps to have the home transferred to her for no consideration as by then she qualified for a mortgage, which she arranged for on her own. The mortgage that the Applicant had assumed was discharged, and a new mortgage was registered.
99I agree with the Respondent that the assistance that the Applicant rendered in holding title and the mortgage for the Respondent from 2004 to 2007 does not give rise to either a legal or equitable interest in Odessa. When Odessa was sold in 2009, the proceeds which were used to acquire Winlord belonged to the Respondent. I do not accept the evidence of the Applicant that he advised her to purchase Winlord. He had absolutely nothing to do with the purchase, and had no legal or equitable interest in Winlord.
100When the closing of the sale of Winlord took place on October 31, 2013, the equity from the sale in the amount of $113,752.80 that was used to acquire the Property belonged to the Respondent. Notwithstanding the allegations in the Application, or prior affidavits, the Applicant in his evidence at this trial acknowledged that this equity belonged to the Respondent.
101For the reasons that I have previously outlined, I find that the Respondent was purchasing the Property on her own behalf for herself and the children.
102I agree with the conclusions reached in the landlord and tenant proceeding, that the Applicant is a tenant and not an owner of the Property. This is the status claimed not only in the Respondent’s 2015 tax return, but also in the tax return Part A of the Applicant’s 2015 return prepared by his accountant showing the Respondent as the landlord.
103The Applicant has pleaded entitlement by a resulting or constructive trust. For reasons outlined below, neither applies in the facts of this case.
Resulting Trust
104A resulting trust arises when one person transfers property to a second person for no consideration. The law imposes a trust on the second person as holding beneficial title of the property for the original owner: see Eileen Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014), at p. 109. Or, as Cromwell J. wrote in Kerr v. Baranow; Vanasse v. Seguin, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 16:
… [I]t is widely accepted that the underlying notion of the resulting trust is that it is imposed "to return property to the person who gave it and is entitled to it beneficially, from someone else who has title to it. Thus, the beneficial interest 'results' (jumps back) to the true owner” …
105The presumption of a resulting trust exists because the law presumes bargains, not gifts: see Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 24-26. However, for this presumption of a bargain to arise, there must be an actual transfer of value.
106The Applicant cannot make a successful claim based on a resulting trust for any interest in the Property, based upon his prior holding of title to Odessa or to the acquisition of the Property. All the funds to acquire both Odessa and the Property came from the Respondent. The Applicant was a tenant in possession of the Property paying rent. The Respondent agreed to give him one year to vacate the Property. Paying rent obviously does not give rise to any interest in the Property.
107The presumption of a resulting trust is not applicable in the facts of this case.
Unjust Enrichment in the Family Context
108The facts of this case confirm that the Respondent was never unjustly enriched by the actions of the Applicant: see Pettkus v. Becker, [1980] 2 S.C.R. 834.
109Without a finding of unjust enrichment, it is not open to this Court to order any of the remedies available to resolve unjust enrichment in the family context, i.e., joint family ventures, orders for quantum meruit, or constructive trusts.
110To demonstrate unjust enrichment in the family context, a party must establish the three factors from Pettkus:
- An enrichment;
- A corresponding deprivation; and,
- The absence of a juristic reason for the deprivation.
111The Applicant cannot make out any of these prerequisite elements to prove unjust enrichment.
112Assisting the Respondent when she had a poor credit rating by holding title and the mortgage, without more, does not meet this test.
113If anything, the Applicant benefited from holding title to a property and the mortgage in his name, as the Respondent paid the payments as they fell due, which would, if anything, have enhanced the Applicant’s credit rating as he had been a tenant since 1996.
114Further, the parties were never in a joint family venture within the meaning of the case law: see Kerr v. Baranow; Vanasse v. Seguin, 2011 SCC 10, [2011] 1 S.C.R. 269. Though the parties were occasionally in a relationship, there was no “wealth… accumulated as a result of joint effort”: see Szyngiel v. Rintoul, 2016 ONSC 2876, at para. 51.
115To assist in this assessment of what constitutes a joint family venture, Cromwell J. in Kerr provides four criteria including, mutual effort (i.e., “… whether the parties worked collaboratively towards common goals …”, Kerr, at para. 90); economic integration; the actual intent of the parties and the priority of the family in the parties’ decision-making process. For recent examples of this analysis, see Reiter v. Hollub, 2015 ONSC 6397; Gibson v. Mead, 2015 ONSC 6935.
116The parties never cohabited, and never shared their finances. They were in a relationship in 2000 and 2001. They were also in a relationship in 2005 to 2006. Mikael was born in September 2006.
117None of the prerequisite four factors to prove a joint family venture is present in this case.
Constructive Trusts as a Remedy for Unjust Enrichment in the Family Context
118If there is unjust enrichment, then and only then can the remedy of constructive trust giving rise to a propriety interest in property be considered if quantum meruit and money do not provide an adequate remedy.
119I have already concluded that there is no joint family venture, and no unjust enrichment.
120Had I reached other conclusions on these issues, I would have found that any monetary remedy through quantum meruit would be nominal, for the contribution of holding title to the Odessa property. The Applicant paid not a penny, and contributed no labour. The Respondent paid for all the costs of purchasing and maintaining Odessa. The Applicant took on little to no financial risk on the mortgage: see, for example, Wachter v. Carlson, 2012 BCSC 1390, at para. 63.
121Even if I had made a finding of unjust enrichment, (which is not my finding), the Applicant cannot meet the criteria to justify the imposition of a constructive trust.
122Cromwell J. in Kerr noted that a party must establish two elements: first they establish a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property. Importantly, a party must demonstrate a “sufficiently substantial and direct link”, “causal link” or “nexus” between these contributions and the property (at para. 51). A party must also establish that a monetary remedy would be insufficient.
123The party seeking to establish a constructive trust must bring evidence to establish that these two criteria are both met: see Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522, at paras. 58, 60-61; Cork v. Cork, 2014 ONSC 2488.
124The Applicant fails the first criteria to justify a constructive trust. Any alleged improvements to the Property by the Applicant (i.e., by building fences) took place during his 20-year tenancy with Mr. Mudra, not after the Respondent purchased the Property. The evidence does not support a finding that the Applicant enhanced the value of the Property after it was acquired by the Respondent. To the contrary. She provided photos showing that the Applicant had moved back a wood stove during his tenancy. This change was contrary to the terms of the insurance, and so the insurance policy was cancelled. He also appears to have done some work by placement of fill and site grading on the Property without authorization. This unauthorized work resulted in a stop work order and a Notice of Violation for interference with wetlands being issued in February 2015.
125As such, the Applicant is unable to meet his onus to prove a causal link between his contributions and the Property. Had there been entitlement based on unjust enrichment, (which is not my conclusion), I find the Applicant could not make out a claim based upon constructive trust. His claim for a contribution based on quantum meruit would have been nominal.
Child Support Issues
126The Respondent seeks increased child support retroactively to 2010.
127She obtained an order for child support in 2010 in the amount of $473.00 per month, based upon imputed income to the Applicant of $52,200.00. When the order was made, the Applicant had not filed any materials or tax returns.
128The Applicant is in arrears of child support as calculated by the Family Responsibility Office in the amount of $14,141.58, taking into account a payment due for June.
129Until 2014, the Applicant had covered all of the Respondent’s children, not only Mikael, on his health and dental plan and claims had been made. This benefit costs the Applicant around $210 per month to maintain, although no proof of this figure was provided.
130In this proceeding, Mr. Larouche has produced his income tax returns, as well as his bank statements. I am satisfied that the Applicant is a hard worker as a welder, but is not a good businessman in terms of keeping track of his records and keeping current with his filings with the Canada Revenue Agency.
131He came to court each day with his papers in moderate to total disarray, all of which were kept in a strawberry packing box. The interpreter for the proceeding was his guardian angel. As interpreter she followed the evidence and helped him sort through his paperwork. The Applicant has a Grade 8 education, and I accept his evidence that he gave his papers to his accountant and relied on him to sort things out.
132The accountant for the Applicant testified. He was very helpful and candid in terms of what adjustments should be made to expenses claimed by Mr. Larouche that may be accepted by the Canada Revenue Agency but then need to be added back to establish the Applicant’s income for the purpose of establishing child support.
133I accept the evidence of the accountant as to the appropriate adjustments for deductions made from Mr. Larouche’s earnings to make his earnings comparable to a salaried T4 employee. Various costs should be backed out of the financial statements, including: his credit card charges, meals, entertainment and the portion claimed as a deduction for his housing cost. As well, 20% of the costs associated with Mr Larouche’s vehicle should be added back into his income as personal use.
134The difficulty with the accountant’s evidence and Mr. Larouche’s tax returns was his gross income. The Applicant’s counsel had provided his bank statements pursuant to various court orders for disclosure. The deposits to the Applicant’s mixed business and personal account were in excess of his reported gross income for taxation purposes. The accountant confirmed that gross income for the purposes of the Canada Revenue Agency can be established one of three ways: either through deposits, or through receipts for work performed, or, ideally, by cross-referencing both documentary sources. The problem of gross earnings was more marked for 2013 and 2014.
135The accountant prepared further summaries as to gross income based upon the bank records and the adjustments to gross income have been made for the years 2013, 2014 and 2015. There is a modest dispute for the 2014 income, but for reasons below I am not prepared to consider retroactive support for any period prior to this proceeding commencing.
136This proceeding commenced in March 2015. I am prepared to consider retroactive support for 2015 to date, as well as ongoing support.
137In my view, it would not be appropriate to delve back further to consider retroactive support from the date of the support order being made prior to these proceedings commencing for several reasons:
- First, this court does not have the resources in a trial setting to do what in essence is a forensic accounting for retroactive child support.
- Second, it is clear to me that the Applicant does not have available cash on hand or assets to pay the present support arrears and to look after his back income taxes of approximately $22,000.00, let alone further support. I am more concerned to establish fair ongoing support, than to canvass the details of arrears.
- As well, until 2014, the Applicant covered not only Mikael on his family benefits, but also the Respondent’s other children at a cost of approximately $210.00 per month. This benefit should be taken into account in assessing support.
- Finally, the issue of the quantum of support arose only when the Applicant stopped paying in January 2015. The request for retroactive support was a reactive defence to the Applicant’s claim to ownership in the Property. In these circumstances the court should be reluctant to intervene.
138This Court is granted a broad discretion to impute a payor’s income for the purpose of child support, so long as the determination take place within the confines of some evidentiary basis: see Hunt v. Smolis-Hunt, 2001 ABCA 229, 205 D.L.R. (4th) 712. I am more concerned about future support for Mikael, who is only 9 years old, rather than past support.
139I accept the revised calculations prepared by the accountant that the Applicant’s gross income from his welding business for 2015 (as confirmed in Exhibit 23e) to be $85,880 (after deducting the HST). Less his business expenses, as adjusted by the accountant in his evidence, provides a net income of $52,250.00.
140The support payable from 2010 has been based upon an imputed income to the Applicant of $52,200.00. After all these calculations, a review of bank statements and tax returns, and hearing evidence from the accountant and the parties, for 2015 the imputed income used for the 2010 order appears to be accurate for the purpose of establishing child support.
141Therefore, I order that child support to continue for the balance of 2016 in the amount of $473.00 per month until June 1, 2017.
142In 2016, the Applicant appears to be having a banner year so far. His bank statements show deposits in excess of $80,000.00 to date for only five months.
143In June 2017, the Applicant shall produce his tax return for 2016 as well as all of his bank statements both personally and for his business. If he fails to produce his tax return as well as his bank statements as ordered, based upon the Applicant’s deposits to date, child support shall increase to $724.00 per month based upon one child and an imputed income of $80,000.00 net income effective June 1, 2017.
144The child support will continue thereafter at that level until the Applicant makes full disclosure of his complete tax return, as well as bank records, to be able to verify with some accuracy his net income for the purpose of establishing child support.
145If there is a dispute about income in the future, it will proceed by way of motion, not a trial. The system does not have the available resources to dedicate to a time consuming analysis to establish child support.
146The Applicant is not disputing his obligation to pay the requested section 7 expenses in the amount of $60 per month.
Orders Made
147For these reasons, the Application by Mr. Larouche for an interest in the Property is dismissed.
148The Respondent agrees that if she decides to sell the Property within the next year, the Applicant will have the right of first refusal, subject to him making a bona fide offer at reasonable fair market value, with credible proof of available financing. The Applicant may make such an offer within 60 days of receipt of notice to sell the Property, after which the right of first refusal expires.
149The child support shall continue in the amount of $473.00 per month until June 1, 2017.
150The Applicant is required to produce to the Respondent his complete tax return, and his bank statements, both for the business and personal, by June 1 each year.
151If the Applicant provides the required documentation, the parties shall seek assistance from the Applicant’s accountant to assess appropriate adjustments to his income to establish the appropriate level of child support, applying the Federal Child Support Guidelines, SOR/97-175. The costs of seeking the assistance from the Applicant’s accountant shall be shared equally.
152If the parties disagree over the amount, they will bring the matter back to this court on a motion (not a trial). Neither party may come back to review the question of child support until they have first sought the assistance from the Applicant’s accountant, after the Applicant has made complete disclosure as requested by his accountant. The party seeking review must come to court with a report from the accountant as to his recommendations as to the Applicant’s net income comparable to a T4 employee for the purpose of stipulating child support.
153If the Applicant fails to disclose his complete tax return and all bank statements, both personal and for the business, by June 1, 2017, or for any year following, the child support shall increase to $724.00 per month, based upon one child and an imputed net income of $80,000.00 annually. This imputed income is based upon the deposits for the year to date for 2016 reflected in the Applicant’s banking records, and taking into account his expenses disclosed in his tax return and commented upon by his accountant for 2015.
154The Applicant agrees to contribute to the section 7 expenses of the child in the amount of $60.00 per month.
155I asked for cost submissions from the parties at the conclusion of the argument. The Applicant sought costs of $50000.00 taking into account legal fees incurred. The Respondent as a self-represented party has been largely successful in this proceeding. She testified that she had incurred expenses with a lawyer to advise her. She provided proof of the legal fees incurred within the time that I stipulated. She is entitled to recover some of these legal costs. I therefore fix her costs payable in the amount of $3,500.00, inclusive of HST and disbursements payable by the Applicant to the Respondent forthwith.
J. Wilson J.
Released: June 17, 2016