CITATION: Jasmins v. Morris, 2016 ONSC 800
NEWMARKET COURT FILE NO.: CV-13-116346-00
DATE: 20160201
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
LORRAINE JASMINS
Plaintiff
– and –
MELISSA GAIL MORRIS and JOHN PATRICK MORRIS
Defendants
S.M. Philbert, for the Plaintiff
C. Baker, for the Defendants
HEARD: November 17, 18, 19, 20, and 23, 2015
REASONS FOR DECISION
MULLIGAN J.:
[1] When a mother and an adult daughter have a falling out, is the mother entitled to request the return of funds advanced to her daughter? In this case, the amounts advanced are not in dispute. Over a two-year period, the plaintiff advanced over $1,000,000 to her daughter. It is also not disputed that the legal principles applicable to this case have been canvassed by the Supreme Court of Canada in Pecore v. Pecore.[^1] It is now the law in Canada that when a parent advances funds to an adult child, there is a presumption of a resulting trust. If the adult child claims that these advances were a gift, the onus falls on that adult child to prove this on a balance of probabilities.
[2] In this case, the plaintiff is Lorraine Jasmins, who is 77 years of age. The defendants are her daughter, Melissa Gail Morris, age 53, and Melissa’s spouse, John Patrick Morris, age 49. Neither undue influence nor diminished capacity are factors in this case. No documents were prepared between the parties for any of these advances. Nor did the defendants request any of these advances. In addition to a claim for the return of funds advanced, Lorraine Jasmins also requests compensation for her moving expenses, occupation rent and punitive damages. Alternatively, she claims the return of her money advanced under unjust enrichment principles.
Legal Principles
[3] This case involves the advances of substantial sums of money from a mother to an independent adult daughter. Both parties agree that the court’s analysis of the facts in this case must be viewed through the legal lens set out by the Supreme Court of Canada in Pecore v. Pecore. In such circumstances, as Rothstein J. stated, at para. 27:
The presumption of resulting trust is the general rule for gratuitous transfers. … If the presumption of advancement applies, it will fall on the party challenging the transfer to rebut the presumption of a gift.
[4] The Pecore principles were restated recently by the Ontario Court of Appeal in Sawdon Estate v. Watch Tower Bible and Tract Society of Canada.[^2] Gillese J.A. restated those principles at para. 56, as follows:
Justice Rothstein, writing for the majority in Pecore, cleared away much of the confusion that has beset the common law presumptions of resulting trust and advancement. He stated that the presumptions continue to play a role in resolving disputes over gratuitous transfers, with the presumption of resulting trust being the general rule for gratuitous transfers. He made it clear that the presumption of resulting trust applies to gratuitous transfers made from a parent to an adult child. [Citations omitted].
[5] As to the evidence to be considered by the court, Gillese J.A. continued, at para. 58:
Justice Rothstein explained that the Court may consider the following types of evidence when determining the transferor’s actual intention:
Evidence of the transferor’s intention subsequent to the transfer;
The wording of the bank/financial institution documents;
Control and use of the funds in the accounts;
The terms of any power of attorney granted to the transferee; and
The tax treatment of the accounts. [Citations omitted.]
[6] In this case, the court heard evidence from Ms. Jasmins, the transferor, about these transfers. However, in Pecore, Justice Rothstein sounded a note of caution with respect to subsequent evidence about a transferor’s intention. As he stated, at paras. 56 and 59:
The reason that subsequent acts and declarations have been viewed with mistrust by courts is because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts.
The trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention.
[7] In Mroz v. Mroz,[^3] Gillese J.A., speaking for the Ontario Court of Appeal, summarized the principles arising from Pecore and Sawdon, at para. 72:
A resulting trust arises when title to property is in one party’s name but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner. When a parent gratuitously transfers property to his or her adult child, the law presumes that the child holds the property on resulting trust for the parent. The burden of rebutting the presumption is on the child. In determining whether the presumption has been rebutted, the trial judge must begin his or her inquiry with the presumption and then weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the parent transferor’s actual intention at the time of the transfer. [Citations omitted.]
The Elements of a Gift
[8] In McNamee v. McNamee,[^4] the Ontario Court of Appeal summarized the law of gifts, at para. 24:
The essential ingredients of a legally valid gift are not in dispute. There must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee, and (3) a sufficient act of delivery or transfer of the property to complete the transaction. [Citations omitted.]
Unjust Enrichment
[9] Kerr v. Baranow,[^5] dealt with unjust enrichment in the context of the separation of common law spouses. The Supreme Court set out the following principles, at paras. 31-32:
At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain. For recovery, something must have been given by the plaintiff and received and retained by the defendant without juristic reason. A series of categories developed in which retention of a conferred benefit was considered unjust. These included, for example: benefits conferred under mistakes of fact or law; under compulsion, out of necessity; as a result of ineffective transactions; or at the defendant’s request.
Canadian law, however, does not limit unjust enrichment claims to these categories. It permits recovery whenever the plaintiff can establish three elements: an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment. [Citations omitted.]
[10] As the Court noted in Kerr at para. 41, “Juristic reasons to deny recovery may be the intention to make a gift (referred to as a ‘donative intent’).”
The Advances in Question
[11] It is not disputed that no documents were entered into between the parties as to whether or not these advances were gifts or loans. The advances in question are as follows:
(i) $160,000 advanced by Lorraine Jasmins to the two defendants in December of 2010. The defendants used these funds to pay off their existing mortgage on their Caledon residence;
(ii) $313,708 being the value of Trans Canada Corporation (TC) shares transferred from Lorraine Jasmins to Melissa Morris in February of 2011;
(iii) $210,000 being a transfer of funds from Lorraine Jasmins to Melissa Morris on October 4, 2011. These were the proceeds of Lorraine Jasmins’s cottage sale;
(iv) $346,503 being a transfer of funds out of a joint account registered to Lorraine Jasmins and Melissa Morris in July of 2012. Ms. Jasmins had transferred $351,000 into this joint account in anticipation of the sale of her townhouse in Mississauga. Melissa Morris then withdrew $346,503 to pay to her solicitor in trust, representing a portion of the closing funds required to purchase a new house in Minesing. That property was purchased for $865,000 and registered to Melissa Morris and John Morris as joint tenants. The balance of funds representing the purchase price came from the sale of Mr. and Mrs. Morris’s residence in Caledon; and
(v) $65,000 – Lorraine Jasmins advanced two sums, $20,000 and then $45,000 as deposits on a pool to be constructed at the new house in Minesing. These advances were in June of 2012 and August of 2012.
Their Relationship
[12] Before discussing the circumstances surrounding these advances over the period in question, it is important to review the history of the parties and their relationship.
[13] By all accounts, Lorraine Jasmins was a very astute businesswoman. With less than a full high school education, she started as a teller at the TD Bank and advanced through various positions at the bank, ultimately becoming responsible for staff loans within corporate head office. During her work with the bank, she built up a substantial portfolio of investments focused on TD stocks. After close to 25 years of service, she retired comfortably at the age of 56. She acknowledged in cross-examination that she had capital at her retirement and that she invested wisely in TD stock during her working years. Her post-retirement income exceeded $150,000. At the time of her retirement, in addition to her TD stock portfolio, she owned a townhouse in Mississauga and a cottage on Lake Simcoe.
[14] Lorraine Jasmins has one child, her daughter Melissa Morris. She has one grandson, Melissa’s son from a prior marriage, Derek, now aged 27.
[15] In 2010, Lorraine Jasmins was seriously ill with what was thought to be a terminal illness. She spent several months in the hospital. It is significant to note that at that point, she had not spoken to Melissa for 12 years. They had had a falling out. The reasons for the falling out are not important, but it should be noted that for 12 years, neither party made any effort to contact the other.
[16] While she was in the hospital, Lorraine Jasmins decided to reach out to her daughter. She asked her friend, Dahlia, to contact Melissa. In her testimony, she was asked the following question and provided the following answer:
Q. So, can you tell the court why you asked Dahlia to reach out to Melissa?
A. I didn’t think I was going to make it. I thought I was going to die and I wanted to make amends before I passed. So, I had Dahlia make arrangements and contact her, and let her know that I was in the hospital. And then it was up to her whether she came to see me or not.
[17] In fact, Melissa did contact her mother and a reconciliation took place. Melissa visited her often during the following months and tended to her personal needs. At the suggestion of a social worker at the hospital, Lorraine Jasmins appointed her daughter as her power of attorney.
[18] In 2004, during her retirement, Lorraine Jasmins acknowledged that she began to acquire a large portfolio of Trans Canada (TC) shares. Each year thereafter, she continued to purchase more of these shares and to re-invest the dividends flowing from these shares. In January of 2005, this portfolio was worth approximately $142,000. By January of 2011, when she transferred these shares to her daughter, this portfolio had grown to $313,708. At trial, she acknowledged that she paid capital gains tax on the value of these shares, which she transferred to her daughter for nominal consideration.
[19] Lorraine Jasmins had a townhouse in Mississauga, which she sold in 2012 to move with her daughter and son-in-law into a newly acquired residence in Minesing. Ms. Jasmins was not on title to this property in Minesing near Barrie.
[20] Ms. Jasmins had a cottage on Lake Simcoe, and for many years she would spend about six months of the year there. In 2011, she sold the cottage. Her initial idea of buying a condominium in Florida did not come to fruition. Instead, she transferred the proceeds of sale, $210,000, to her daughter, Melissa. These funds were deposited into an account at TD Waterhouse. Melissa used the same account manager that her mother had used. These funds remain intact at TD Waterhouse, except for amounts withdrawn by Melissa Morris to complete the purchase of the pool for the Minesing house.
[21] On November 1, 2010, Lorraine Jasmins was released from the hospital and moved in with her daughter and son-in-law at the Caledon residence. Because of her ongoing medical needs, it was impractical for her to return to her two-storey townhouse. After several months, she moved out and returned to her townhouse in Mississauga. Her evidence was that living with Melissa was impractical. There was only one bathroom on the main floor and it was inconvenient for her if her daughter or son-in-law were using the bathroom as they prepared for work each day. She was left at home during the day and her evidence was that she was involved in meal preparation and housework for her daughter. She did not dispute her daughter’s evidence that she had told her that her income in retirement was about $150,000 a year and that she had a TD stock portfolio worth $1.5 million.
[22] Vito Ruzzuto gave evidence at trial. He was Ms. Jasmins’ portfolio manager at TD Waterhouse, and indicated that he manages portfolios for high-net-worth individuals. He assisted with the transfer of the TC shares from mother to daughter, but he acknowledged that estate planning and legal advice was outside of his scope. He did recommend to Lorraine Jasmins that she rebalance her investment portfolio, which was heavily weighted in TD stocks. Although such a transfer would trigger capital gains, Lorraine Jasmins did it in a tax efficient manner by borrowing and using the cost of borrowing as a tax deduction.
[23] Melissa Morris and her husband, John Morris, lived in a house in Caledon. It was worth about $500,000 and had a mortgage of $160,000. She had a job that paid her $80,000 a year plus a bonus, which in some years amounted to $50,000. John was a truck driver and his income was about $50,000. Prior to her reconciliation with her mother, Melissa and John had attempted to sell the Caledon house privately. The sale fell through and they understood that they had to make certain improvements before putting it on the market. Their plan was to buy another house more suitable for their needs in the Caledon or Bolton area, in the price range similar to the value of their existing house.
[24] Melissa’s evidence was that she and John extended an open invitation to her mother to live with them for a week, months or forever. In fact, her mother lived with them at the Caledon house for about three months after being discharged from hospital. She thought they had a good relationship during this time. Melissa and her husband continued to work. Her mother was at home during the day. They ate meals together. Her evidence was that by February of 2011, her mother became angry with her and demanded to be taken back home to her Mississauga townhouse. They didn’t speak to each other for several weeks, but eventually they reconciled and continued to talk and visit.
[25] During the period after Lorraine’s hospitalization, she, Melissa and John updated their wills. Melissa understood that Lorraine’s previous will named Melissa’s son, Derek, as her sole beneficiary. Derek was a young adult, but Lorraine had not seen him since he was nine years of age. Changes were made to the will to add Melissa as a beneficiary. As previously noted, while in the hospital, Lorraine made Melissa her Power of Attorney. No use was made of the Power of Attorney by Melissa at any time. Lorraine also added Melissa’s name to her bank accounts.
[26] Melissa and John continued with their efforts to sell their house and by the spring of 2012, the Caledon house had been sold. Melissa had received three unsolicited advances from her mother at this point. Lorraine advanced funds to pay off Melissa and John’s mortgage, she transferred her Trans Canada shares to Melissa and she deposited the proceeds of the sale of her Lake Simcoe cottage into Melissa’s investment account. Lorraine then sold her townhouse in Mississauga and a determination was made that they would live together in a house that was suited to the needs of all three. Melissa and John decided they would like to live in the Barrie area and lined up some houses to look at. Lorraine came with them to look at houses. Lorraine’s priorities were that she would have a bedroom with an ensuite bath and access to facilities on one level within a house. She also wanted to be near shopping. She was satisfied with the house that was chosen in Minesing, in the Barrie area. This house was 5,000 square feet, almost twice as large as Melissa and John’s previous home. It was decided that Lorraine would have the main floor of the house, which gave her the master bedroom, an ensuite, kitchen, dining room, and living room. John and Melissa occupied the downstairs, which had additional bedrooms, washrooms and other facilities. They moved in in July of 2012. Melissa and John put the proceeds of the sale of their Caledon home towards the purchase price, and Lorraine contributed the rest of the funds.
[27] Melissa and John had enjoyed a pool at their Caledon residence. John Morris said in his evidence that Lorraine also enjoyed the pool and hot tub from time to time when she was there. Shortly after they moved into the Minesing home, Lorraine wrote a cheque for $20,000 as a deposit to a pool contractor. In August, she wrote a further cheque to the contractor for $45,000. Melissa and John paid the balance of the cost of the pool. It was Lorraine’s evidence that she contributed to the pool because John wanted it. Lorraine never used the pool. She moved out before it was completed.
[28] Life in Minesing was blissful at first. Lorraine moved in, bringing much of her furniture with her from her townhouse. Melissa quit her job. She felt she could do so because her mother had advanced funds to her, which relieved her of continuing in her high pressure occupation. By the time Melissa and John moved to Minesing, they had a very comfortable, mortgage-free house. Melissa had the TC stock portfolio, which was producing over $16,000 in dividends each year. She re-invested these dividends annually. Melissa was unsophisticated with respect to investments and continued with her mother’s original advice to maintain these TC shares as a good investment. In addition, Melissa had the remainder of the $210,000 investment portfolio, which her mother had advanced to her from the cottage sale. Melissa and John paid most of the bills for the house, but Lorraine paid the first tax bill issued by the Township. Lorraine and Melissa did things together, including going to Weight Watchers and shopping. Although Lorraine had her own car, she was unfamiliar with the new community and preferred not to drive on highways. Melissa often drove her to appointments and other events.
[29] Unfortunately, the relationship turned toxic after a number of months. Lorraine’s evidence was that she was left to her own devices and that her daughter was mean or nasty to her.
[30] Melissa’s evidence was that her mother’s attitude became demeaning and belittling, and that she often insulted her. But Melissa acknowledged that they were both at fault. Melissa arranged counselling and they both went to a session. Although a second session was booked, Lorraine announced that she was moving out.
[31] Melissa’s version of events is that her mother said that she wanted to have a discussion, and at the kitchen table announced, “I’m moving out and I want my money back.” This was in December 2012; a certain level of civility followed, but her mother continued with her plan to move out. Melissa said she took her mother to look at some retirement residences in Mississauga. In February 2013, Lorraine moved out and returned to Mississauga. Both mother and daughter reported certain events that they thought illustrated the character of the other person. Lorraine spoke about having to return the garage door opener and being trapped in the house. Melissa’s evidence was that this was just a day or two before the move and she simply wanted to make sure that they had the controller back in their possession and didn’t have to replace it.
[32] Lorraine took some of her own furniture to furnish her accommodations in Mississauga, but there remained a substantial amount that she did not want. Rather than leaving it in the home for the benefit of Melissa and John, she called a junk dealer and had all of her remaining furniture scrapped.
[33] Before examining in detail the circumstances surrounding each of the advances by the plaintiff, a brief review of evidence from other witnesses will provide context. Lorraine called Vito Ruzzuto, her portfolio manager at TD Waterhouse. I will deal with his evidence when I deal with the TC share transfer.
[34] The defendants called Brenda Joyce Jasmins to give evidence. Because she shares the same last name as the plaintiff, I will refer to her by her nickname, BJ, which is how the parties know her. BJ is Melissa’s aunt. She was married to Ms. Jasmins’ husband’s brother, therefore she was related to the plaintiff by marriage. BJ is now 73 years of age. She maintains an ongoing friendship with Melissa, speaking to her frequently and occasionally visiting her in Minesing. She was aware of the stressful job Melissa had while she was living in Caledon, but she didn’t discuss Melissa’s family finances with her. During the lengthy 12-year period of estrangement between Melissa and Lorraine, BJ had very little contact with Lorraine, other than at a few family functions. She heard that Lorraine was in the hospital through Lorraine’s friend, Dahlia, and asked Melissa if she would contact her mother while she was in the hospital.
[35] After Lorraine returned to her Mississauga home following her recovery, BJ and Lorraine had several social lunches. BJ also visited the Minesing house during the time Lorraine lived there. However, she has not had contact with Lorraine since this lawsuit began.
[36] During these lunches, conversations came up about Melissa, and she felt that Lorraine gave the impression that she was wealthy and felt good about advancing money to Melissa. She recalled words to the effect that Lorraine had “bestowed” a gift to her daughter. She had known Lorraine for over 40 years. She knew of her business acumen and she felt that Lorraine was forceful about protecting her assets. She recalled that Lorraine saw these advances as an early inheritance to her daughter.
[37] BJ did not discuss any financial issues with Melissa. The knowledge that she gleaned came from these brief meetings or lunches with Lorraine. In cross-examination, she said that she understood the word “bestow” to mean gift, and she recalled specifically that Lorraine had used that word at one of their lunches. She acknowledged that no specific amounts were mentioned in their conversations, but she understood that these advances were substantial. Based on her lunches with Lorraine before the move to Minesing, she thought that Lorraine was excited about it, and it was a positive move. She knew that Lorraine discussed some ideas about moving to Florida, but that it never materialized.
The Advances Examined
(i) The First Advance: $160,000
[38] The first advance of $160,000, was in the form of a bank draft payable to Melissa and John, and presented to them by Lorraine. The bank draft was dated December 11, 2010, but it was not deposited by Melissa until December 29, 2010. It was Melissa and John’s evidence that this draft was presented in a Christmas card on Christmas Day, in circumstances where it was very clearly a gift. John and Melissa reacted with joy and happiness, and they expressed their gratitude to Lorraine. Melissa was unsure about whether or not her son Derek was present. Neither side called him as a witness. Melissa’s evidence was that she deposited this amount into her account on the first banking day after Christmas, December 29, 2010, and then made arrangements to pay off their mortgage with these proceeds. Lorraine explained that she made this advance so they could eventually buy a house together. The advance enabled Melissa and John to pay off their mortgage and save money toward a new house for the three of them.
[39] Lorraine’s evidence on this point was different. Her evidence was that she gave the bank draft to Melissa and John the same day she received it, December 11, 2010, not on Christmas Day. It was not presented in a Christmas card.
[40] She acknowledged that she was aware that Melissa and John had a mortgage of about $160,000. Her intention was that they use the money to pay off the mortgage, which would assist them in saving mortgage payments and in buying a new house. The plan was that they would buy a house together and she would get the money back if they did not. Further, if they had this money, it could be used to assist Lorraine if she had to move into a nursing home.
[41] At the time of this transfer in December of 2010, Lorraine had been living with John and Melissa in the Caledon house since her release from hospital at the beginning of November. She continued to live there until the following February, when she returned to her townhouse in Mississauga. As things unfolded, it was not until May of 2012 that she moved into the Minesing home with John and Melissa.
[42] Lorraine gave evidence that she trusted Melissa with respect to repaying these funds. She spoke about a previous loan transaction with Melissa and Melissa’s former husband: about thirty years prior, she advanced $10,000 to assist Melissa to purchase her first home. Years later, when Melissa got divorced, the house was sold and $10,000 was paid back to Lorraine from the sale proceeds. Melissa’s evidence was that this was done to protect that amount of equity from being divided with her ex-spouse. The parties acknowledged that that previous loan was over thirty years ago.
[43] Lorraine’s evidence was that she did not require anything in writing from Melissa because it was her daughter, she trusted her, and she assumed that they would be living together.
[44] In cross-examination, she acknowledged that she had made Melissa her power of attorney, opened a joint bank account with Melissa and added Melissa to her will. She knew that their mortgage was paid off with this advance. She said that she didn’t believe in paying interest herself and she was saving Melissa and John this expense. She acknowledged in her cross-examination that she did not ask for repayment of these, or any other funds, until she vacated the Minesing home in the winter of 2013, when her relationship with Melissa once again broke down. She denied talking to BJ about gifts to her daughter, indicating she was a private person with respect to finances. There was no evidence that Melissa or John asked for this advance.
Conclusion on the $160,000 Advance
[45] I accept the evidence of Melissa and John that they received this sum in a Christmas card on December 25, 2010. I accept Melissa’s evidence that she deposited it into her account as soon as possible after she received it. It defies logic to assume that a person would receive a bank draft for a large sum of money on December 12, but not deposit it until December 29.
[46] The circumstances surrounding this advance lent further credence to the suggestion that this was a gift. It was made at a time when Lorraine was living at her daughter’s house. Her daughter had been of assistance to her while she was in the hospital. Melissa and John had made her welcome in their home without limitation. Lorraine said she wanted to make amends with her daughter when they began their reconciliation at the hospital. She made her daughter her power of attorney and changed her will. Although there was talk about buying a house for the three of them, that intention was not fully formed and Lorraine and John would not buy a house until 2012. By all accounts, Lorraine was an astute business woman who had significant assets. She was well-versed in proper lending procedures from her vast experience working in the corporate loans division of TD head office, yet no documents were created to signify that this was anything other than a gift. Further, when Lorraine moved out of the Caledon house in February of 2011, she did not ask for her money back or raise the issue in any way. It was not until she moved out of the Minesing house, one and one-half years later, that she requested the return of her money. I am therefore satisfied that on a balance of probabilities, the defendants have rebutted the presumption of advancement and the transfer was in fact a gift.
(ii) The Trans Canada Shares
[47] While she was still living in the Caledon house, Lorraine began discussing the transfer of her Trans Canada (TC) share portfolio to Melissa. Melissa had no specific details about her mother’s investments, but she felt that her mother was well-off. Melissa’s understanding was that her mother was earning about $150,000 a year post-retirement. In addition, her mother owned the townhouse in Mississauga and the cottage on Lake Simcoe. At the time of the transfer, Melissa and John had already received a Christmas gift of $160,000, which they used to pay off their mortgage. Lorraine contacted Vito Ruzzuto, who managed Lorraine’s TD Waterhouse investment portfolio, to assist with the transfer of these shares to Melissa. Mr. Ruzzuto came to the Caledon home to assist with the paperwork, and the shares were transferred on February 18, 2011. John Morris was not involved in these discussions and the shares were transferred solely to Melissa. At the time of the transfer, the shares had a value of $336,706 for the 8,538 shares. In order to facilitate this transaction, TD Waterhouse required Ms. Jasmins to sign the following letter to TD Waterhouse, “Please accept this letter as authorization to gift 8,583 shares of Trans Canada Corp. to my daughter’s account 7J3663E (Melissa Morris). Signed - Lorraine Jasmins” (emphasis added). Mr. Ruzzuto’s evidence was that a gift letter was required if there was no consideration between donor and donee with respect to the shares being transferred. Mr. Ruzzuto explained that the word “gift” had to be used because the shares were transferred without consideration. When cross-examined about Lorraine’s level of financial sophistication, Mr. Ruzzuto described her as “sophisticated” and “really sophisticated when it came to the TD bank stock.” Mr. Ruzzuto answered that if someone wanted to do a transfer or an early inheritance “we would have a whole bunch of other documentation that went along with it.” He was then asked:
Q. Can you tell me now that there is a transfer of these shares, how does it affect the legal title?
A. It’s completely 100% Melissa’s. She can do whatever she pleases with it.
[48] In cross-examination, Mr. Ruzzuto was asked about his ability to give estate planning advice. This exchange followed:
Q. You wouldn’t give it, but you’d refer her to somebody who could?
A. Correct.
[49] In cross-examination, Lorraine Jasmins’ attention was drawn to the word “gift” in the letter to the bank. Her answer was that this was just a banking word and she wasn’t gifting them. They had a verbal understanding and arrangement. She acknowledged that proceeds of these shares were not later used to purchase the Minesing house. Lorraine wanted her daughter to enjoy the dividends that these shares produced, over $16,000 per year. Lorraine reported this sale as a capital gain. Melissa received these shares into a TD Waterhouse account and has used the annual dividends for reinvestment purposes ever since. Vito Ruzzuto confirmed that Melissa was free to do with these shares what she wished. There were no restrictions on her ownership or her ability to sell or transfer these shares. They remained in her portfolio and she has received the dividends annually.
[50] Lorraine’s evidence was that she wanted her daughter to enjoy the dividends that these shares produced, and possibly to assist her daughter financially so that she could give up her job. She had already eliminated her daughter’s mortgage by a previous gift, but she felt that these shares would provide money to help Melissa take care of her. There was no evidence that Melissa requested these shares. As previously noted, Lorraine was an experienced businesswoman, having spent close to 25 years working for TD Bank, and ultimately rising to the position of loans officer for staff loans at head office. She signed a letter to TD Waterhouse that these shares were a “gift”. In my view, if her intention was to have these shares in her daughter’s name in trust for her, such an arrangement ought to have been documented. If the funds were held in trust, it is logical to assume that the dividends earned on this account ought to have been attributed to the donor, Lorraine. However, there was no evidence that Lorraine included these dividends in her income each year.
Conclusion on the Trans Canada Shares Advance
[51] Further, Lorraine did not request these shares back when she moved out of the Caledon house. In fact, she did not request her money back until she left the Minesing house in February of 2013, on bad terms with her daughter. I am satisfied on a balance of probabilities that this stock transfer was a further gift to her daughter, Melissa, without any restrictions.
(iii) The Advance of $210,000
[52] On October 4, 2011, Lorraine deposited the sum of $210,000 into Melissa’s TD bank account. This amount represented the proceeds of Lorraine’s sale of her Lake Simcoe cottage. Her evidence was that this would assist her daughter with a house that the three of them might purchase, and if money was needed to sustain her in a nursing home, the equity would be there for her to recover. At the time of this transaction, she was no longer living in the Caledon home with her daughter; she was living in her townhouse in Mississauga. The funds went into a TD Waterhouse portfolio managed by Vito Ruzzuto for Melissa. These funds remained intact, other than amounts withdrawn by Melissa to complete the purchase of the pool installation at the Minesing home about a year later. These funds were not used to purchase the Minesing house.
[53] Prior to this transfer, Lorraine considered buying a condo in Florida. She had enjoyed spending about six months of the year at the Lake Simcoe cottage; however, the plans to purchase something in Florida never came to fruition. Melissa thought that such a purchase was highly impractical due to her mother’s ongoing health concerns and the lack of immediate family support if she were residing in Florida for such a length of time.
[54] Melissa’s evidence was that this was just another generous gift from her mother. She did not request these funds. The word “loan” was never used for this or any other of the transactions. Her mother called her at work to indicate that this had been deposited into her sole bank account. At no time did her mother ask for this, or any amount, to be returned until she moved out of the Minesing house. This, and other gifts, made it easier for Melissa to consider giving up her employment, knowing that she had some financial security by way of gifts from her mother. When cross-examined, she indicated that she never thought it would be necessary to put something in writing when a gift was received. Melissa’s evidence was that she never would have accepted any of these advances if they were loans.
[55] At the time of the $210,000 deposit, there was no fully developed plan that she and John would buy a house suitable for them and Lorraine, but she indicated that Lorraine was always welcome to live with them for as long as she wished. On that basis, Lorraine had lived with them in the Caledon house for several months after Lorraine’s release from hospital in 2010.
Conclusion on the $210,000 Advance
[56] I am satisfied that the $210,000 transfer was yet another gift from Lorraine to Melissa. At the time of this transfer, although they were not living together, they still enjoyed a good relationship. From the very beginning, Lorraine wanted to make amends with her daughter. She made a generous gift of $160,000 at Christmas 2010, and shortly thereafter began taking steps to gift the TC shares to her daughter. I am satisfied that Lorraine indicated to Brenda Joyce Jasmins that she was bestowing generous gifts on her daughter in circumstances that could be considered an advance on an inheritance. Once again, Lorraine did not prepare any documentation indicating that this was any sort of a loan or trust, notwithstanding her substantial experience in banking and her own financial sophistication. I am satisfied on a balance of probabilities that this transfer was another generous gift from a mother to a daughter.
(iv) Advance of $346,503
[57] By 2012, the relationship between mother and daughter was still going well. Lorraine continued to live in her townhouse in Mississauga. Melissa and John continued to live in the Caledon home, but they had put it on the market for sale. Their initial plan was to buy another house in the Caledon or Bolton area in the same price range, but discussions with Lorraine changed this plan. Lorraine decided to sell her townhouse and accept the offer to live with Melissa and John. Lorraine was having difficulty with mobility in the two-storey townhouse and recognized that it no longer suited her needs. The idea of living with Melissa and John appealed to her. Her priority was to have a bedroom with an ensuite bathroom in a bungalow-type setting that did not involve stairs. She also wanted to be close to shopping, in other words, not in a rural location.
[58] John and Melissa had a pre-existing interest in living in the Minesing area outside of Barrie. Their agent lined up a number of houses for them to look at and they went on a buying trip with Lorraine. They found a house that was very appealing, although it was quite a bit more expensive than the proceeds available from their Caledon sale. The house was about 5,000 square feet, twice the size of their previous home. But it did have a master bedroom with an ensuite bath and other facilities for Lorraine on the main floor. The downstairs had living facilities, including bedrooms and bathrooms suitable for John and Melissa. Melissa and John put an offer in and the offer was accepted. The purchase price was $865,000. In addition to the proceeds of their Caledon home, they needed about another $350,000 to complete the purchase if they were to be mortgage-free. Lorraine agreed to advance funds that she had available to her from the proceeds of the sale of her townhouse. When she learned that Melissa and John were putting their house on the market, she did the same and her house sold quickly. Lorraine did not request that her name go on title, despite having her attention drawn to the issue at the time. She attempted to obtain a bridge loan against the sale of her townhouse, but was turned down because she was not going to be on title to the Minesing home. Instead, she contacted her financial advisor, Vito Ruzzuto, and borrowed against her savings. She deposited $351,000 into a joint bank account with Melissa. Melissa withdrew from that account the sum of $346,503, payable to her lawyer in trust, representing the balance due on closing. Melissa otherwise did not access any funds from that account, which was later closed by Lorraine when the relationship deteriorated.
[59] Vito Ruzzuto acknowledged that there were discussions about the three of them buying a home together when he visited Melissa’s home in February 2011 with respect to the stock transfer. He was led to believe that they were going to buy a home together. He later stated in his evidence, “Well, I don’t even know if they did or did not buy anything because it’s not a conversation that I would have been part of.” He acknowledged that advising them about legal advice would be outside his scope and he would instruct them to seek outside counsel.
[60] After the transaction closed in July 2012, John and Melissa moved in and Lorraine moved in a day later. Lorraine brought all of her furnishings from her Mississauga townhome. She had the master bedroom with ensuite and the main floor facilities of this house. She had her own vehicle, although she was reluctant to drive in an area that was new to her. Her daughter took her on various outings, including to Weight Watchers, shopping and medical appointments. The house did not have a pool, unlike the Caledon house, and Lorraine advanced funds to install one. I will discuss that issue later.
[61] Once again, no documentation was drawn up regarding the contribution and there was no discussion about Lorraine going on title, notwithstanding the substantial advance that she made towards the purchase of the house.
[62] By the fall of 2012, the relationship between Melissa and Lorraine was deteriorating. Both parties blame each other. John Morris noticed the tension in the relationship by the fall of 2012. Later in 2012, Lorraine made up her mind to leave and asked for her money back. Her evidence was that Melissa said, “That’s not going to happen.” Melissa’s evidence was that her mother invited her and John into the kitchen to have a discussion, but the discussion was Lorraine simply saying, “I’m moving out and I want my money back.” Melissa was upset but she thought things remained civil, and she assumed that just like the tiff they had in Caledon, her mother would come around. However, after Christmas, she helped her mother look at some condos or retirement homes. They were still talking to each other, but things did not improve and her mother moved out. Melissa’s evidence is that her mother was spiteful. Her mother had moved in with high quality furniture. When she left, she took what she needed to her new condo, but gave away the rest of her furnishings to a junk dealer, leaving nothing in the rooms that she had occupied.
[63] Still, Melissa thought that the relationship would repair itself as it had in the past. However, they received a demand letter from Lorraine’s lawyer about six weeks later and have not spoken since. This lawsuit then commenced.
[64] It is not necessary to ascribe blame for the breakdown of the relationship, which had broken down often in the past. I am satisfied that Lorraine left on her own. The situation in the home became intolerable for her. Although she had advanced considerable sums to her daughter, there is no question that she still had considerable resources in her portfolio. There is nothing in the evidence that suggested that she “needed” the funds returned to her. The evidence suggests that she “wanted” the funds she had advanced to her daughter because of the breakdown in their relationship.
[65] In moving to Minesing, Melissa made a career change. She left a high-paying but stressful job to be at home full time with her mother. Her mother had health and mobility issues. It was her understanding that her mother encouraged her to leave her job and the stresses it entailed. Her mother’s encouragement was not just moral, it was financial. The gifts provided security for Melissa and John, and a source of income from the TC shares and the TD investment portfolio. Melissa and John bought a house larger than their previous home in a price range substantially higher than they would have contemplated if it was just for their own use. Melissa extended an open invitation for her mother to live there, in a house that specifically met her mother’s needs. Her mother accepted that invitation and lived there for over six months.
Conclusion on the $346,503 Advance
[66] When viewed in isolation, this transfer of funds to an adult daughter to buy a house could be considered a resulting trust. But in the context of the previous gifts, I am satisfied that this, too, was a very generous gift from a mother who could afford it to a daughter who was prepared to give up her job to assist her mother. By the time of the Minesing purchase, there was an established pattern of substantial monetary gifts from mother to daughter. Melissa relied on her mother’s gifts and encouragements to give up a well-paying job. Lorraine was a sophisticated investor with a large portfolio. Because of her career, lending documents were not foreign to her. She was aware that she was not on title to this Minesing property. She took no steps to document this advance as a loan. She did not request the return of these funds until she found the situation in the Minesing home to be intolerable. With respect to this transaction, once again, I am satisfied that the defendants have satisfied the onus upon them that this advance was a gift.
(v) $65,000 Advance
[67] Once John and Melissa decided to purchase the house in Minesing in 2012, Lorraine agreed to advance $65,000 towards the purchase and installation of a pool. She contributed $20,000 as a deposit to the contractor before they moved in, and a further deposit of $45,000 in August 2012, while she was living there. Melissa paid the balance of the purchase price for the pool out of the $210,000 gift from her mother, the proceeds of the sale Lorraine’s cottage.
Conclusion on the $65,000 Advance
[68] I am satisfied that these advances were gifts. Lorraine knew that Melissa and John had a pool at the Caledon home and was happy to contribute towards a pool at this home. She would have had access to it, had she continued to live there. Once again, there was no documentation indicating that this was anything other than a gift, and there was no discussion that this would be paid back if Lorraine moved out. When looked at in the context of the previous gifts, I am satisfied that on a balance of probabilities, the $65,000 advances were further gifts from a very generous mother to her daughter and son-in-law.
Weighing the Evidence
[69] In satisfying myself that the defendants have met the onus upon them that these advances were gifts, I have considered and weighed the evidence of both parties. I put very little weight on the evidence of Ms. Jasmins that these advances were somehow loans to her daughter. Donors are not able to retract gifts (Pecore, para. 56). It was only after the breakdown in the relationship and after Ms. Jasmins expressed her desire to leave the Minesing property that she demanded her money back. This was two-and-one-half years after her initial advance. I view Ms. Jasmins’ evidence as a change in intention well after the gifts were made.
[70] The following points previously mentioned in this decision aid in this analysis:
(i) Ms. Jasmins wanted to make amends with her daughter after a 12-year period of separation;
(ii) Notwithstanding her lending experience, Ms. Jasmins did not prepare any loan documents to indicate that these advances were loans or upon what basis they would have to be repaid;
(iii) Ms. Jasmins signed a bank document that the share transfer was a “gift”’
(iv) Ms. Jasmins gave complete control of these funds to her daughter without reservation. Ms. Jasmins paid the applicable taxes on the transfer of shares. Ms. Morris assumed tax obligations with respect to dividends on the TC shares and interest on the funds received by her from her mother’s cottage sale; and
(v) Melissa did not request any of these advances.
Unjust Enrichment
[71] The doctrine of unjust enrichment does not operate where there is a juristic reason for a transfer. Gifts are juristic reasons that defeat the doctrine of unjust enrichment. As I have found that all of the transfers were made as gifts, the doctrine of unjust enrichment has no application to this case.
Moving Expenses
[72] Lorraine Jasmins further claims moving expenses of $1,438.21 incurred as a result of moving out of the Minesing home to Mississauga. I am satisfied that Lorraine Jasmins is not entitled to reimbursement for moving expenses. The Minesing house was specifically purchased with her needs in mind. She had the entire main floor available for her use. She had a car for her own transportation needs. There is no evidence before the court that she was forced out. She simply chose to leave when the relationship broke down.
Occupation Rent
[73] Lorraine Jasmins seeks occupation rent in the amount of $1,850 per month from February 1, 2013, the date that she vacated the Minesing property. Having determined that Lorraine Jasmins contribution to the Minesing purchase was a gift, she is not entitled to occupation rent for the period following her voluntary departure.
Punitive Damages
[74] Lorraine Jasmins seeks an order of punitive damages in the amount of $10,000 against the defendants. Punitive damages are often awarded to punish the other party when monetary damages are insufficient. In this case, the plaintiff has been unsuccessful in claiming monetary damages. Therefore, I see no basis for a claim for punitive damages. Even if the plaintiff was successful in achieving some monetary success, I see no conduct on the part of the defendants that rises to the level that would warrant punitive damages in the circumstances of this case.
Conclusion
[75] The plaintiff’s claim is dismissed. The plaintiff’s Statement of Claim requested a Certificate of Pending Litigation over the defendants’ property known as 9 Hilltop Court, R.R. #3, Minesing, Ontario. If a CPL was registered, the defendants can move in writing on notice to the plaintiff for an order vacating any such certificate.
Costs
[76] The parties are encouraged to settle the issue of costs as between them. However, if the issue of costs is not resolved, I will receive written costs submissions from the defendants, not exceeding five pages, together with a Costs Outline within 20 days of the release of this judgment. The plaintiff will then have a further 15 days to respond, with submissions not exceeding five pages plus a Costs Outline.
MULLIGAN J.
Released: February 1, 2016
[^1]: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795.
[^2]: 2014 ONCA 101, 119 O.R. (3d) 81.
[^3]: 2015 ONCA 171, 125 O.R. (3d) 105.
[^4]: 2011 ONCA 533, 106 O.R. (3d) 401.
[^5]: 2011 SCC 10, [2011] 1 S.C.R. 269.