CITATION: Blackmore v. Bower, 2016 ONSC 6644
COURT FILE NO.: 01-420013
DATE: 20161118
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEREMY BLACKMORE, in his capacity as Estate Trustee of the Estate of Robert MacNeil
Applicant
– and –
MARK BOWER
Respondent
– and –
BETWEEN:
MARK BOWER
Respondent
(Applicant by Counter-Applicant)
– and –
Benjamin Arkin, for the Applicant
Kathryn Balter, for Jeremy Blackmore in his personal capacity
Douglas M. Cunningham, for the Respondent Mark Bower (Applicant by Counter-Application)
JEREMY BLACKMORE, in his capacity as Estate Trustee of the Estate of Robert MacNeil, and also in his personal capacity
Respondents
HEARD: October 28, 2016
L. A. PATTILLO J.:
Introduction
[1] Robert MacNeil (“Robert”) died on July 17, 2013. Jeremy Blackmore (“Jeremy”) is the Trustee of Robert’s Estate and in that capacity brings this Application to recover the Estates’ interest in 263 Mutual Street in Toronto (the “Townhouse”) from the respondent Mark Brower (“Mark”).
[2] The Estate has also brought a contempt motion against Mark arising out of an alleged breach of a court order dealing with the sale of the Townhouse.
[3] In response to the Application, Mark has brought a cross-application against Jeremy in his capacity as Estate Trustee for unjust enrichment, resulting trust and constructive trust and against him personally for unjust enrichment arising out of beneficiary designations made by Robert in respect of his life insurance, RRSP and other investments. Although the cross-application also asserts claims of inducing breach of contract and intentional interference with economic relations against Jeremy personally, those claims were not pursued.
[4] For the reasons that follow, the Application is allowed. In my view, Robert and Mark’s joint tenancy in the Townhouse was severed pursuant to an agreement reached between them prior to Robert’s death. As a result, at the time of his death, Robert and Mark held title to the Townhouse as tenants in common.
[5] Further, the Estate’s contempt motion is dismissed. While Mark’s behavior in holding up the sale of the Townhouse was inappropriate, I do not consider that it amounted to contempt of a court order.
[6] Finally, Mark’s cross-application is dismissed. Robert’s changes to the beneficiary designations in his life insurance, RRSP and other investments do not give rise to a claim for unjust enrichment. Nor is he entitled to a resulting or constructive trust.
The Hearing
[7] Initially the parties proposed to proceed with the Application, contempt motion and cross-application on the extensive record which has been filed (6 volumes) which includes affidavits from the parties and certain other individuals that had contact with Robert or Mark during the last few months of Robert’s life as well as extensive cross-examinations on each of the affidavits. The hearing was set by Newbould J. for October 27 and 28, 2016 with the proviso that the parties should have their witnesses available in the event the judge hearing the applications/motion wished to hear viva voce evidence.
[8] When I reviewed the record and the factums in advance of the hearing, it was clear that there were credibility issues that required viva voce evidence. I advised counsel in advance of the hearing that I would need to hear evidence concerning whether there was a severance of the joint tenancy prior to Robert’s death and whether there was a “mutual protection agreement” as Mark has termed it between he and Robert relating to beneficiary designations. I proposed October 27 for evidence and October 28 for argument.
[9] Counsel agreed that the record would stand as evidence and proposed to call Jeremy, Mark and Dean Leland, a close friend of Robert’s, for cross-examination only, in accordance with agreed time limits. As counsel were not able to arrange for the attendance of the witnesses on October 27, the hearing took place on October 28, 2016 with the agreement of all parties that the evidence would be heard in the morning with the argument following.
Facts
[10] The following are my findings of fact from the evidence. In that regard, I note that earlier court orders deemed any privilege attaching to either Robert’s or Mark’s discussions with their lawyers concerning the title to the Townhouse or the lawyers’ files to be waived.
[11] Robert and Mark began a conjugal relationship in the summer/early fall of 1995 in Halifax. In 1999, Robert moved to Toronto to start a new job. In March 2001, Mark moved to Toronto to join Robert.
[12] In 2007, when Robert set up an RRSP and other investment vehicles and became entitled to life insurance through his work, he designated Mark as the beneficiary of the various plans.
[13] On January 29, 2008, Robert and Mark purchased the Townhouse taking title as joint tenants. Robert paid the down payment and other costs of closing in the total amount of $168,212.27 and they assumed the first mortgage of $615,200.
[14] On January 26, 2008, in advance of the closing, Robert and Mark signed a brief written agreement which acknowledged that title to the Townhouse would be held by them jointly and provided that in the event the Townhouse was sold, Robert would first be repaid his down payment/costs of purchase of $168,212.27 from the net proceeds and the remaining sale proceeds would be divided equally between them (the “January 2008 Agreement”).
[15] Initially, Robert and Mark split the costs of the Townhouse. In 2008/09, Mark amassed a number of debts which became a source of tension in their relationship. On January 27, 2010, in order to deal with the debts, they placed a private second mortgage on the Townhouse for $80,000. They agreed that Mark alone was responsible for paying for the second mortgage.
[16] Robert and Marks’ relationship ended in the late fall of 2010. In December 2010, Robert began a conjugal relationship with Jeremy. At the same time, Mark continued to live in the Townhouse.
[17] In May 2011, Robert was diagnosed with cancer.
[18] In October of 2012, Robert consulted Andrej Markes (“Markes”), a lawyer, about various matters including the preparation of a co-owners agreement with Mark concerning the co-ownership of the Townhouse (the “Agreement”) and a will.
[19] Between July 2012 and March 2013, Robert changed the beneficiary designations under his life insurance, RRSP and other investments as follows:
a) On July 11, 2012, he changed the beneficiary of his locked in retirement account and his RRSP, both with CIBC, from Mark to his Estate;
b) On December 17, 2012, he changed his Manulife RRSP and Deferred Profit Sharing Plan beneficiary to Jeremy; and
c) On March 23, 2013, he changed the beneficiary under his work group life from Mark to Jeremy (90%) and his father, Douglas (10%).
[20] Markes delivered the first drafts of a will and the Agreement to Robert on March 11 and 12, 2013 respectively. Included in the draft Agreement were questions that Markes had concerning various issues. Markes also included a draft Acknowledgement and Direction changing the title to a tenancy in common.
[21] The draft Agreement contained a preamble and was divided into five parts. The preamble set out a number of paragraphs concerning the purchase and subsequent ownership of the Townhouse. It noted the amount of the down payment by Robert. Paragraph (G) of the preamble stated that although initially the parties took title to the Townhouse as joint tenants, they have determined that they should have taken title as tenants in common, with Robert owning 80% and Mark the remaining 20%. Part 1 dealt with the sale of the Townhouse if either both parties were alive or if one had died and gave the other party the right to purchase the selling party’s share and set out how the price was to be determined; Part 2 dealt with the distribution of the proceeds of sale and provided, among other things, for repayment of Robert’s down payment amount prior to division of the net proceeds between the parties; Part 3 dealt with the Townhouse expenses and how they were to be paid; Part 4 dealt with what happens if either party was in default; and Part 5 was a general section dealing with, among other things, notice, dispute resolution, amendments and being binding on the parties, their respective heirs, estates etc.
[22] Robert responded by email to Markes on April 20, 2013 stating that the draft Agreement “looks good” and answered some of the questions Markes had raised. He indicated that Mark would be returning from California on April 20th and would “catch up soon on this.”
[23] On May 1, 2013, Mark emailed Robert attaching the draft Agreement and stating that his notes were highlighted in pink on the draft. They were few and didn’t take issue with the tenancy in common. In particular, in respect of paragraph (G) of the preamble (the 80/20 ownership), Mark commented: “The intent here was to ensure that any proceeds after the sale were divided 80/20, not the actual ownership structure of the house which should remain 50/50.” Robert forwarded Mark’s email and comments on the draft Agreement to Markes on the same day.
[24] Later on May 1, 2013, Markes sent a revised draft Agreement to both Robert and Mark by email responding to Robert and Mark’s comments. He noted that he had made some remarks on the draft which were highlighted in yellow and indicated if a discussion was necessary, he was available. Following paragraph (G) of the preamble, Markes said: “I recommend against having the registered title reflect a 50/50 split as it could lead to disputes and unwanted results given the public record would not reflect or be consistent with this agreement. My recommendation is that title be recorded as ‘tenants-in-common’ but that the actual interest held by you and Mark remains undisclosed on title and that it be governed by this Agreement.” There were no substantive changes from the first draft.
[25] On June 4, 2013, Robert emailed Markes and copied Mark. He said: “Mark and I are in agreement with the co-owners agreement.” When Markes did not respond, Robert sent a further email to him on June 7th stating that he wanted to finalize matters quickly as he only had a limited amount of time left. He noted Mark was in California for two weeks but can catch up when home.
[26] On June 5, 2013, Markes sent Robert an email, copied to Mark, attaching what he described as the final version of the Agreement to be signed unless advised otherwise by him or Mark. There were no changes to the May 1 draft. Neither Robert nor Mark responded to Markes.
[27] On June 11, 2013, Robert attended at Markes office. He executed his will and signed the June 5 version of the Agreement as well as the Acknowledgement and Direction authorizing the transfer of title from Mark and him as joint tenants to themselves as tenants in common.
[28] On June 17, 2013, Robert sent an email to Mark indicating that he needed to sign a few forms at his lawyer’s office and that Markes had arranged for a lawyer to represent him. On June 18th, Mark connected with Markes by email. Markes advised him of his right to seek independent legal advice and gave him the contact information for Kerry Johnston (“Johnston”), a lawyer he had spoken to who was agreeable to representing him.
[29] On June 27, 2013, Mark met with Johnston in his office. Johnston had received and reviewed a copy of the June 5 version of the Agreement in advance from Markes. Mark had also read it.
[30] The meeting lasted only 15 to 20 minutes. Johnston explained the Agreement generally and that its effect was to sever the joint tenancy. As they proceeded to go over the paragraphs, one by one, Mark raised a concern with the 80/20 split as tenants in common. He told Johnston that was not what he and Robert had agreed upon. He told Johnston that he was not signing the Agreement and that he would speak to Robert further about it and be in touch. The meeting ended abruptly.
[31] On July 8, 2013, Mark sent an email to Johnston at 1:43 p.m. and asked for clarification on the status of the existing ownership of the Townhouse. Johnston replied at 3:59 p.m. on the same day explaining clearly the difference between joint tenancy and tenancy in common.
[32] Around July 10, 2013, Robert spent some time with friends, including Dean Leland (“Leland”) a longtime friend from Nova Scotia, at a cottage of mutual friends in Muskoka.
[33] On the morning of July 11, 2013, Robert flew to Sydney, Nova Scotia to spend time with his family at his father’s cottage in Cape Breton. Mark drove him to the airport in Toronto and Leland accompanied him on the flight.
[34] On the afternoon of July 11th, after he had reached the cottage, Robert received both a voice-message and an email from Markes indicating that Mark had not signed the Agreement. Robert reacted angrily to the news. He had his brother David call Mark. David overheard Roberts end of the conversation. He described what he heard in paragraph 7 of his affidavit:
- Rob became very agitated after hearing Mr. Markes’ message and immediately told me to find Mark’s phone number in his cell phone contacts and dial it for him. I sat next to Rob while he talked to Mark. The conversation was very hostile, with Rob saying things to Mark like, “My lawyer called and said you did not sign the agreement” and “You had agreed”. I heard Rob say, “Well, make it 70-30,” and then he said, “Fine, make it fifty-fifty, just get this done because it has to get signed.” During the conversation, Rob said: “You have to do this Mark, you said you would, it is what we agreed to.” Rob was visibly angry after the call.
[35] At 4:44 pm on July 11, 2013, shortly after their phone call, Mark sent the following email to Markes, copying Johnston and Robert (the “July 11 Email”):
Hi Kerry and Andrej
I am copying everyone on this email so we are all on the same page. Rob and I have talked and here is what we want …. I will leave it to you to draft the paperwork that reflects this:
Robert and I both own 50% of the property.
If either of us should pass away, we both want the ability to convey via our Will, our half of the property to another person of our choice (ie: I do not automatically inherit Rob’s 50% unless we specify that in our will and both of us have the ability to Will our half to someone of our choice).
The agreement should also reflect that if the property is ever sold then Rob’s estate is entitled to recover the down payment amount he made. The agreement should also reflect that first before any other proceeds from the sales are distributed.
Can I ask that you put this in writing for both of us to sign next week.
[36] Following the July 11 Email, Mark sent a text message to Robert saying: “I spoke to the lawyer, all taken care of.”
[37] Later the same day, Markes revised the Agreement to reflect the change from 80/20 to 50/50 in paragraph (G) of the preamble and circulated both a clean and blacklined version to Robert, Mark and Johnston by email. He noted that other than the change in the split of the net proceeds and a correction to the misspelling of Mark’s surname, there were no other changes from the June 5 version of the Agreement. He also stated that by virtue of holding title as tenants in common, Robert and Mark would each be able to leave their 50% interest in the Townhouse in their wills.
[38] The next day, July 12, Mark confirmed by email to Johnston that he had reviewed the revised Agreement received from Markes and “it all looks correct to me” except for a concern he had in respect of s. 1.01 dealing with the word “shall” as opposed to “may” concerning the Estate Trustee’s ability to sell the Townhouse in the event the other owner did not want to buy.
[39] Robert returned from Nova Scotia on July 14, 2013. He was hospitalized on July 16 and, as noted at the outset, died on July 17, 2013. The July 11 revised Agreement was never signed by either Robert or Mark.
[40] On July 19, 2013, Jeremy and Mark attended at Markes office. Markes told Mark that the joint tenancy had been severed and that he only owned a one-half beneficial interest in the house.
[41] On July 25, 2013, Mark registered a survivorship application transferring the title of the Townhouse to himself.
[42] Following Robert’s death initially Jeremy and later the Estate contributed equally with Mark to the costs of the Townhouse with the exception of the second mortgage which was paid by Mark who continued to live in the Townhouse.
[43] The order of Wilton-Siegel J. dated June 6, 2014 (the “June 6 Order”), required, among other things, that Mark pay 100% of the defined Occupant costs and 50% of the defined Owners’ costs and the Estate was required to pay the remaining 50% of the Owner’s costs.
[44] In accordance with the June 6 Order, the Estate paid Mark $800 every two weeks for its share of the Owner’s costs. However, Mark failed to pay all of the required costs of the Townhouse resulting in enforcement proceedings being commenced in respect of the two mortgages and a lien being filed by the condominium association for outstanding fees. In addition, there was an outstanding execution registered against the Townhouse from a personal judgment against Mark.
[45] On April 27, 2016, Mesbur J. made an order providing for the sale of the Townhouse (the “Mesbur Order”). The Mesbur Order provided, among other things, that the net closing proceeds from the sale were to be held in trust pending resolution of the ownership issue. As a result, the Townhouse was listed for sale.
[46] On June 2, 2016, the Estate and Mark signed an agreement of purchase and sale for the Townhouse for $1,149,000. The agreement was scheduled to close July 29, 2016.
[47] On the night before the closing, Mark, who was desperate for money, refused to sign the closing documents unless the Estate agreed that he receive $5,040.75 (one-half of the balance of the purchaser’s deposit) out of the sale proceeds immediately upon closing.
[48] The Estate did not agree. The purchaser agreed to postpone the closing. On August 4, 2016, the Estate brought an emergency motion to complete the sale. In addition, the Estate sought a contempt order against Mark for breach of the Mesbur Order and costs. The motion came on before Penny J. Mark’s counsel was not able to attend but sent a letter to the court. Justice Penny ordered that Mark’s signature on the closing documents be dispensed with (the “Penny Order”). The contempt motion and costs were adjourned to the judge hearing the Application. The Townhouse was sold later the same day.
[49] After paying off the mortgages (including all arrears and enforcement costs), the arrears of taxes and condominium fees, Mark’s execution costs and the costs of the sale (junk removal services and legal fees), the net sale proceeds were $447,962.44.
[50] Robert’s June 11, 2013 Will, appoints Jeremy as Estate Trustee. It provides that the residue of the Estate is to be divided into 20 equal shares and distributed to the named beneficiaries as follows:
a) Jeremy – 10 shares;
b) Douglas MacNeil (father) – 3 shares;
c) Douglas MacNeil (brother) – 2 shares;
d) Brian MacNeil (brother) – 2 shares;
e) David MacNeil (brother) – 2 shares; and
f) Mark – 1 share.
The Issues
[51] The issues raised by the parties are as follows:
Whether on Robert’s death, he and Mark held title to the Townhouse as joint tenants or whether they were tenants in common.
Whether there was an agreement between Robert and Mark to maintain each other as beneficiaries under their respective life insurance, RRSP’s and other investments. If so, did Robert breach the agreement.
Whether Mark has a claim against the Estate and Jeremy personally for unjust enrichment as a result of Robert’s beneficiary designations in their favour and against the Estate for a constructive trust based on his long standing common-law relationship with Robert and his substantial contributions to that relationship.
Whether Mark’s conduct in refusing to sign the closing documents on the eve of closing constituted contempt.
Analysis
I. Title to the Townhouse
[52] The Estate submits that Mark’s July 11 Email confirms a clear agreement to sever the joint tenancy into a tenancy in common. Additionally, The Estate submits that the course of conduct concerning the dealings between Robert and Mark and their respective lawyers from the time Robert first went to see Markes in March 2013 through to his death are sufficient to intimate that they mutually treated their interests in the Townhouse as tenants in common.
[53] Mark submits that there was no binding agreement between him and Robert to sever the joint tenancy. He submits that his July 11 Email does not reflect an agreement reached between he and Robert. It was always understood between them that until he had received legal advice and actually signed the written agreement there would be no binding agreement. Neither ever happened.
[54] Mark also disputes the Estate’s submission the course of conduct is evidence that he and Robert treated their joint tenancy as a tenancy in common. Robert’s actions were as a result of pressure from Jeremy to leave the Townhouse to him. At all times Robert wanted him to have the Townhouse when he died, not Jeremy. Mark relies on the evidence of Leland, Robert’s close friend, to support his position.
[55] In Hansen Estate v. Hansen, 2012 ONCA 112, the Court of Appeal stated at para. 34 that a joint tenancy may be severed in one of three ways:
A unilateral act affecting title, such as selling or encumbering the interest;
A mutual agreement between the co-owners to sever the joint tenancy; or
Any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.
[56] The onus of proof rests on the party asserting the severance: McKee v. National Trust Co. Ltd. et al. (1975), 1975 CanLII 442 (ON CA), 7 O.R. (2d) 614 (C.A.).
[57] On the evidence which I accept, I am satisfied that Robert and Mark reached a mutual agreement to, among other things, sever their joint tenancy and create a tenancy in common giving each of them a 50% interest in the Townhouse. The agreement to sever their joint tenancy is clear from their course of dealings from March 2013 onwards and culminating in the July 11 Email.
[58] Mark’s evidence that his July 11 Email does not confirm the agreement they had reached is preposterous to be charitable. It is clear and unambiguous. Paragraphs 1 and 2 set out a clear acknowledgement of a tenancy in common and a renunciation of a joint tenancy.
[59] Mark and Robert had been discussing a formal agreement governing their relationship in the Townhouse as tenants in common since March/April 2013 and likely earlier. Mark had seen and reviewed drafts of the Agreement prepared by Markes and was apparently prepared to sign off on the June 5 draft which Robert had signed. All of the drafts acknowledged that they had determined that they should take title as tenants in common. At no time did Mark ever raise any objection to or concern in respect of changing the title from joint to tenants in common.
[60] When Mark met with Johnston on June 27, 2013, his only objection was to the 80/20 split which he had not raised with either Robert or Markes previously. He told Johnston he needed to speak to Robert. But it is clear he didn’t although he had many opportunities to do so as he was living in the Townhouse with him.
[61] It was not until Markes contacted Robert on July 11 while he was in Nova Scotia and advised him that Mark had not signed the June 5 Agreement that Robert learned of his inaction and then, when he spoke to him, about his disagreement with the 80/20 split. Robert was clearly not happy with Mark’s demand for a 50/50 split of the net proceeds after deduction of the down payment but ultimately agreed to it to finalize their agreement. I accept Robert’s brother David’s evidence concerning Robert’s side of the call with Mark. It is consistent with the context. Further, Mark agreed that Robert was angry during the call.
[62] Robert told Mark to get in touch with Markes and sign the Agreement. Mark agreed. He responded with his July 11 Email and sent a separate text to Robert to confirm. That email clearly indicates that Mark was in agreement with title being a tenancy in common, which he well understood.
[63] Mark had many reasons why the July 11 Email doesn’t mean what it says. None in my view are credible. He deposed in his affidavit (para. 106) that it was sent to Markes with the intention of further delaying the process because of pressure from Jeremy. I will discuss his allegation of Jeremy’s pressure in more detail shortly. Suffice it to say there is no basis for that allegation. In his cross-examination on his affidavit, he said the July 11 Email wasn’t about separating their interests but about making sure he could stay in the Townhouse and own it. He also said it was subject to him getting independent legal advice and a final written agreement being signed. Nowhere in the July 11 Email does it say that.
[64] Before me Mark said the July 11 Email was simply asking his lawyer (although he addressed it to Markes) to get in touch with Robert’s lawyer to put an agreement together for their review. It was also subject to him getting legal advice. He said the phone call with Robert was short and all that was discussed was getting in touch with the lawyer. He said that the three numbered paragraphs were concepts he really didn’t understand. He simply went back to previous drafts and pulled out the concepts.
[65] The plain and unambiguous wording of the July 11 Email along with the prior course of dealings defeats Mark’s attempts to otherwise explain it. His reliance on a further draft agreement is not genuine. The terms of the agreement as reflected in the July 11 Email were short and clear. He said: “Put it in writing and we will sign next week.” There is no statement requiring further review of the agreement.
[66] Nor as I’ve indicated, do I consider his reliance on further legal advice to be genuine. I have no doubt that he clearly understood the concepts he set out in the July 11 Email and specifically the difference between joint tenancy and tenancy in common. The difference had been explained to him at his meeting with Johnston on June 27 and again in an email from Johnston on July 8. Further, the repayment to Robert of the original down payment was something that had been in the draft agreements all along and was well understood by Mark.
[67] I also do not accept Mark’s evidence concerning discussions he says he had with Robert concerning title to the Townhouse. More specifically, I consider that Mark is lying when he says that Robert always wanted him to have the Townhouse and they never intended to sever the joint tenancy into a tenancy in common. The evidence of Robert’s actions in having Markes prepare the draft Agreement, Mark’s responses to it, the finalization of the draft Agreement, Mark’s receipt of independent legal advice, the July 11 telephone discussion between Robert and Mark and the virtually contemporaneous July 11 Email all indicate otherwise.
[68] I agree with the Estate’s submission that Mark fabricated the evidence of his conversations with Robert about Robert wanting him to have the Townhouse. Mark’s fabrication is apparent in his affidavit testimony.
[69] At paragraphs 137 to 139 of his affidavit, Mark relates a conversation he says took place between he and Robert in July 2013 while he was driving Robert to the airport to fly to Nova Scotia and before they picked up Leland. He deposed that Robert made it clear to him that he did not want to deal with any changes to their ownership of the Townhouse even though Jeremy continued to ask him about that issue. He goes on to state at para. 139:
When I asked Rob what he wanted to do with the revised draft that Mr. Markes had sent to me, he said that he did not want me to do anything with it, and that he was not expecting to receive a revised draft as quickly as he did, and that he had not even looked at it.
[70] As is clear from his affidavit, in relaying that conversation, Mark was under the mistaken belief that Robert had flown to Nova Scotia on the 12th of July, the day after the July 11 Email and Markes quick turnaround with a redraft of the June 5 Agreement. It is clear, however, that the conversation could not have taken place as Mark reported it because when he drove Robert to the airport on July 11, Markes had not yet sent his revised draft. When Mark was challenged about the clear error, he agreed that the conversation took place on July 11 and said it was about an older version of the Agreement. One lie gives rise to another. While Markes had previously turned around drafts and sent them to both Robert and Mark at the beginning of May and in early June, it makes no sense given what had transpired since that on July 11, some one or two months later, they would be talking about the earlier drafts. I find that Mark fabricated his version of the conversation with Robert on the morning of July 11 to support his position. That fabrication taints all of his evidence about his discussions with Robert that cannot otherwise be corroborated.
[71] Mark’s position that Jeremy pressured Robert to leave him the Townhouse is a theme that Mark repeats throughout his affidavit. Although he says on more than one occasion that Robert told him Jeremy was pressuring him about the Townhouse, on cross-examination (and in his evidence before me) he agreed that he had no direct evidence to support that allegation. He said that it was based on Robert saying to him that he was worried about Jeremy’s future. Because of their relationship for many years, Mark said he understood Robert to be saying he was being pressured by Jeremy. I do not accept Mark’s evidence in that regard.
[72] All of the affiants agree and I find that Robert was a very private person about his personal life and also about his assets and finances. He never discussed his personal finances with Jeremy nor did Jeremy raise them. Jeremy was unaware that he consulted Markes. Mark became aware of it from their discussions about the Townhouse. Neither Mark nor Jeremy was aware that Robert had changed his beneficiary designations. Further, up until Robert went into the hospital on July 16, 2013, while his physical skills were failing him, he was coherent and in complete control of his mental faculties.
[73] The evidence does not support that Robert was the type of individual who could be pressured by others, even given his illness. I also accept Jeremy’s evidence that he did not speak to Robert about his finances or his plans for his assets or the Townhouse.
[74] Mark relies on a conversation Robert had with his good friend Leland on July 10, 2013 while they were together at a cottage in Muskoka. Leland said that during a short time when he and Robert were alone, he asked him if he had put all his affairs in order and whether he could assist him at all. He said that during the conversation, Robert told him that he wanted Mark to have the Townhouse because he and Mark had been together a long time; they had bought the Townhouse together and made a home together there. He said he’d made provision in his will for Jeremy in other ways but not for the Townhouse.
[75] In addition to his affidavit and cross-examination thereon, Leland was cross-examined before me. I found him to be both sincere and credible. He is clearly still affected by his friend’s death. I accept his evidence. But it does not change my conclusion given the evidence of Robert’s actions both before and after his conversation with Leland that Robert wanted to sever the joint tenancy and that’s what he and Mark agreed on.
[76] Nor do I consider that Robert’s desire to sever the joint tenancy to be inconsistent with what Leland says he told him. The June 5 Agreement which Robert had signed at the time and which he understood Mark had too gave Mark the opportunity to purchase Robert’s (his Estate’s) interest in the Townhouse if he wanted to.
[77] Mark submits that Robert’s failure to contact his lawyer between mid-June and his death supports his position that Robert did not want to sever the joint tenancy. I disagree. Robert signed the Agreement on June 11, 2013. It is clear that he understood all that remained was for Mark to sign. Mark did not raise with him his concern about the 80/20 split. When Robert learned from Markes that Mark had not signed the Agreement, he immediately contacted Mark. It was only then that he found out about Mark’s objection to the split which was quickly resolved. Once again, Robert felt all was agreed. The fact that Robert did not follow-up after July 11 was likely related more to his illness than that he didn’t want to sever the joint tenancy. He clearly did and felt that they had.
[78] I accept that the threshold of proof required for establishing a severance of a joint tenancy in a domestic context is higher than it might otherwise be. See: Su v. Lam, [2012] O.J. No. 1448 (S.C.J.) at para. 19. Although Robert and Mark had ended their relationship some time prior to the spring of 2013, I prepared to accept that the severance arises in a domestic context. Regardless, on the totality of the evidence which I accept, I am satisfied that the higher threshold has easily been met in this case.
[79] Although my conclusion that Robert and Mark had a binding agreement to sever the joint tenancy is sufficient to determine the issue, if I am wrong in that conclusion, I consider that the actions of both Robert and Mark from before Markes sent the first draft of the Agreement to Robert in March of 2013 to Robert’s death on July 17, 2013, constitute a course of dealing sufficient to conclude that they treated their interests in the Townhouse to be a tenancy in common.
[80] The essence of the Agreement is the severance of the joint tenancy. Given how the events unfolded, it is reasonable to infer that prior to Robert first speaking to Markes about an agreement; he and Mark had discussed the severance and agreed upon it. From that time forward, through Mark’s receipt and review of the first draft, through the subsequent drafts, through his discussions with his lawyer up to the final draft on July 11, 2013, and indeed up until Robert’s death, at no time did Mark raise one word in opposition to the fact as noted in paragraph (G) of the preamble that he and Robert “have determined they should take title as tenants in common”. Mark’s only objection to the severance was in respect of the ownership split. It is clear, in my view, that both Robert and Mark treated their interests in the Townhouse as tenants in common.
Mark’s Breach of Contract Claim
[81] Mark submits that he and Robert had an oral agreement reached at the time they purchased the Townhouse in early 2008 that they would each designate the other as beneficiaries under their life insurance, RRSP’s and other investments in lieu of getting mortgage insurance. Mark further submits that Robert’s changes to his beneficiary designations prior to his death constitute a breach of the agreement.
[82] Apart from the fact that there is no other material evidence to corroborate Mark’s evidence of the oral agreement as required by s. 13 of the Evidence Act, for the reasons already indicated, I do not accept any of Mark’s evidence concerning his discussions with Robert unless corroborated by other evidence which I accept. Such evidence is not present here.
[83] The evidence indicates that Robert designated Mark as the beneficiary of his work life insurance and RRSPs and other investments when they were first established in 2007 and not in respect of the Townhouse purchase. The beneficiary designations were not irrevocable. The designations were done when Robert and Mark were in a long term romantic relationship. It makes sense that when that relationship ended and Robert began a new one with Jeremy that he would take steps to change the beneficiary designations. Further, it is clear, based on the changes that he made, that he thought carefully about them.
[84] If the alleged agreement arose as a result of the purchase of the Townhouse and in lieu of obtaining mortgage insurance, one would have thought it would have been included as part of the January 2008 Agreement. It wasn’t.
[85] Mark has produced no substantial information concerning his beneficiary designations. Apart from his assertions to that effect, he has produced no documentation which establishes when the designations were made or whether they were irrevocable.
[86] Mark’s claim arising from Robert’s alleged breach of an agreement concerning beneficiary designations is therefore dismissed.
Mark’s Equitable Claims
[87] Mark also claims against both the Estate and Jeremy personally based on unjust enrichment. He submits that the Estate and Jeremy personally would each be unjustly enriched at his expense if they were entitled to acquire the monies flowing from the beneficiary re-designations by Robert without notice to or consent by Mark.
[88] For a claim of unjust enrichment to lie, there must be an enrichment or benefit to the defendant (the Estate and/or Jeremy); a corresponding deprivation of the plaintiff (Mark); and an absence of a juristic reason for the enrichment: Kerr v. Baranow, 2011 SCC 10 at para. 32.
[89] Accepting that the Estate and Jeremy have each received an enrichment from Robert’s re-designation of them as beneficiaries and Mark has suffered a corresponding deprivation as a result of being “undesignated”, on the facts there is no absence of juristic reason. Simply put, Robert’s designation of both his Estate and Jeremy as beneficiaries of his life insurance, RRSP’s and other investments is a juristic reason for the enrichment. See: Ferguson Estate v. Mew et al., (2008) 2008 CanLII 63218 (ON SC), 93 O.R. (3d) 537 (S.C.J.) at para. 56; aff (2009) 2009 ONCA 403, 96 O.R. (3d) 65 (C.A.).
[90] Mark also claims a constructive trust over the full amount of the balance of the sale proceeds based on his long-standing common law relationship and cohabitation with Robert; the fact that they each made substantial contributions to their relationship and to the acquisition, preservation and maintenance of the Townhouse.
[91] I am not satisfied from the evidence that Mark made any contributions to the purchase of the Townhouse or its maintenance apart from day to day costs which were shared. There is some evidence to suggest that as a result of Mark’s ongoing financial issues, Robert contributed more to the ongoing costs of the Townhouse than Mark. Hence the 80/20 split that appeared in the draft Agreements. In any event, the parties settled their respective interests in the Townhouse in accordance with the July 11 Email. I do not consider that there is any unjust enrichment arising out of the relationship between Robert and Mark such that a constructive trust can or should be imposed.
Contempt Motion
[92] The Estate’s motion for contempt arises out of Mark’s actions in refusing to sign the closing documentation on the eve of the closing date. The Estate submits his actions constituted a breach of the Mesbur Order.
[93] The Mesbur Order provides, among other things, that the Townhouse be sold; that Jeremy shall have carriage of the sale in consultation with Mark; that the Estate and Mark must accept any offer; the net proceeds are to be held in trust pending further order of the court or the written consent of the parties; Mark shall provide vacant possession of the Townhouse by June 30.
[94] Having regard to the provisions of the Mesbur Order, I do not consider that Mark’s actions in refusing to sign the closing documents constituted a breach of it to enable a finding of contempt. The Mesbur Order deals with the listing and acceptance of an offer but is silent in respect of co-operation on closing.
[95] That said Mark had no basis for taking the position that he would only sign the closing documents if the Estate agreed to pay him one-half of the down payment on closing. By taking the position he did, he required the Estate to bring the motion before Penny J. on short notice. He also increased the costs of closing as a result of the delay which occurred in closing.
[96] The Penny Order provides that the costs of the emergency motion are left to my discretion. In my view, Mark should pay for the full indemnity legal costs of the Estate in bringing the motion as well as all costs arising from the delay in closing.
[97] The Estate has filed a cost outline for the motion before Penny J. claiming full indemnity costs of $5,715.00. In my view, that is more than reasonable given the issues and the urgency of the motion.
[98] The Estate also claims two-thirds of the legal costs for the sale of $22,444.13 ($14,962.75) representing the additional fees and disbursements that arose from Mark’s refusal to sign the documentation and the delay in closing.
[99] I agree with Mark that the real estate solicitor’s fee concerning the sale seems very high. While I have no doubt that the fees would have increased due to the delay, I do not consider that the increase would have been very large. By the eve of the closing, most of the work had been done. In the absence of a breakdown of the account and specifically the amounts attributable to the delay, I am not prepared to attribute any of the solicitor’s costs to Mark above one-half.
[100] The balance of the increased costs arising from the delay in closing involves increased interest on the mortgages and has been factored into the adjustments claimed from Mark which I will address shortly.
Miscellaneous Issues
i. Repayment of the Down Payment
[101] The Estate submits that based on both the January 2008 Agreement and the July 11 Email that it is entitled to receive the amount of Robert’s down payment and closing costs for the purchase of the Townhouse from the net sale proceeds.
[102] Mark submits that the January 2008 Agreement concerning repayment of the down payment only applies if they sold the Townhouse while they each were alive, which did not occur. As the Townhouse was sold after Robert’s death, and Mark becomes the sole owner by survivorship, it no longer applies and the Estate is therefore not entitled to return of the down payment and other costs.
[103] While I do not disagree with Mark’s interpretation of the operation of the January 2008 Agreement, it is not applicable. First, as I have found, the parties severed their joint tenancy prior to Robert’s death. Second, and more importantly, as reflected in the July 11 Email, they agreed that if the Townhouse was ever sold, Robert’s Estate was entitled to recover the amount of the down payment before any other proceeds were distributed.
[104] Nor does repayment of the down payment constitute unjust enrichment of the Estate at Mark’s expense. The requirements for a claim for unjust enrichment have already been discussed. Given their agreement concerning repayment, a claim for unjust enrichment does not lie.
[105] Accordingly, I hold that the Estate is entitled to recover the down payment amount ($168,212.27) from the net proceeds in trust.
ii. The Second Mortgage
[106] Mark submits that the Estate is estopped from seeking full payment of the second mortgage from him based on Jeremy’s first affidavit filed in support of the Application which says that payment of the second mortgage (subject to costs arising from Mark’s failure to keep it in good standing) should be credited equally to the Estate and Mark.
[107] Mark’s position is disingenuous and completely unfounded. It is clear that when Jeremy swore his first affidavit, he was not aware of the agreement between Robert and Mark that Mark would be fully responsible for the second mortgage. While it was known to Robert and Mark, Jeremy and the Estate did not become aware it until Mark admitted in his responding affidavit that the second mortgage was Mark’s responsibility alone.
[108] Accordingly, Mark is solely responsible for the repayment of the second mortgage from his share of the sale proceeds.
iii. Adjustments to the Net Closing Proceeds
[109] The June 6, 2014 Order provided that the parties could seek adjustment/ reimbursement of the Townhouse expenses in any subsequent step of the proceeding for any period in time. Further, the Mesbur Order explicitly permits the Estate to recover expenses and arrears from Mark and requires that Mark “shall reimburse or indemnify the Estate for any liabilities, expenses, or loss of value resulting from any amount or amounts that he has failed to pay with respect to the Townhouse, whether before or after the date of the within Order, and the quantification of such reimbursement or indemnification shall be an issue to be determined by the judge hearing the application on affidavit evidence that may be admitted for this purpose.”
[110] The Estate submits that the following amounts which were owing by Mark personally or his responsibility were paid out of the gross proceeds of sale on his behalf at the time of closing and should be paid back by him out of his share of the net proceeds being held in trust. Mark does not dispute the amounts:
$27,998.15 on account of the execution filed against Mark for a judgment debt and enforcement costs;
$3,212.04 on account of first mortgage enforcement costs and fees;
$70,096.35 to pay off the second mortgage plus enforcement costs;
$6,664.15 on account of condominium fee arrears and enforcement costs;
$1,046.00 for property tax arrears;
$519.00 being one-half of the cost of junk removal prior to closing which was paid by the Estate.
[111] The legal account for the sale of the Townhouse was deducted from the monies held in trust. As I have already discussed, in the absence of a breakdown of increased costs, I am not prepared to allocate any further amount to Mark on account of increased costs caused by his actions.
Conclusion
[112] At the time of Robert’s death, he and Mark were tenants in common of the Townhouse and entitled to split the net proceeds, after payment of the first mortgage, and repayment of the down payment on a 50/50 basis subject to adjustment in respect of Mark’s obligation to repay the second mortgage.
[113] Mark’s cross-application and the Estate’s contempt motion are dismissed in their entirety.
[114] The net proceeds after payment of the first mortgage and costs are $447,962.44. After deducting the down payment amount of $168,212.23 which is payable to the Estate, the balance remaining is $279,750.21 which, when split 50/50 is $139,875.11 owing to each of the Estate and Mark. Those amounts must be adjusted to account for the costs Mark was responsible for personally as noted above which were paid from the closing proceeds. They must be subtracted from Mark’s share and credited back to the Estate’s share. Accordingly, after those adjustments, from the balance of $279,750.21, the Estate is entitled to $249,410.79 and Mark is entitled to $30,339.42.
[115] Further, the Estate is entitled to have credited to its share Mark’s obligation to pay the costs of the emergency motion which I have assessed at $5,715.00.
[116] Given that most of the adjustments arise from the closing which was recent, I am not prepared to order pre-judgment interest.
[117] In the result, the closing proceeds of $$447,962.44 currently held in trust shall be distributed as follows:
To the Estate, $168,212.23 on account of the down payment;
To the Estate, $255,125.79; and
To Mark $24,624.42.
[118] At the conclusion of the hearing, counsel advised that there were offers of settlement. Accordingly, cost outlines were not provided. The parties are directed to provide brief cost submissions of no more than three pages each together with cost outlines as follows:
The Estate and Jeremy within 20 days;
Mark within 10 days of receipt of the Estate and Jeremy’s cost submissions.
L. A. Pattillo J.
Released: November 18, 2016
CITATION: Blackmore v. Bower, 2016 ONSC 6644
COURT FILE NO.: 01-420013
DATE: 20161118
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEREMY BLACKMORE, in his capacity as Estate Trustee of the Estate of Robert MacNeil
Applicant
– and –
MARK BOWER
Respondent
– and –
BETWEEN:
MARK BOWER
Respondent
(Applicant by Counter-Applicant)
– and –
JEREMY BLACKMORE, in his capacity as Estate Trustee of the Estate of Robert MacNeil, and also in his personal capacity
Respondents
REASONS FOR JUDGMENT
L. A. PATTILLO J.
Released: November 18, 2016