Harre v. Spitzer, 2016 ONSC 803
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HEINZ HARRE
Applicant
– and –
PETER CHRISTIAN SPITZER
Respondent
COUNSEL:
Andrew M. Mae, for the Applicant
Corey Wall, for the Respondent
HEARD at Parry Sound: 8, 9, 10 & 11 December 2015
REASONS FOR DECISION
mew j.
1The parties have each brought an application to determine the ownership status of a residential property at 10 Islandview Drive, Nobel, Ontario (the “Property”).
2By an order of Mr. Justice Koke, dated 11 December 2014, the application and cross-application were ordered to be heard as a trial.
Background
3Heinz Harre is 80 years old. He was born in Germany and immigrated to Canada in 1983. In 1985 he met Rosemarie Spitzer. She, too, is originally from Germany. They married in 1987.
4Heinz Harre has two adult children from a previous marriage, both of whom live in Germany. Rosemarie Harre has a son, the respondent, Peter Christian Spitzer, born in 1962, who lives in Ontario.
5Heinz Harre and Rosemarie Harre separated on 22 July 2012.
6The Property was previously owned by Dr. Eduard Stratmann. Dr. Stratmann, who was also German, had become enamoured with the Parry Sound area as a visitor and had bought the Property. Dr. Stratmann died in 2003. Just prior to his death, he had transferred his interest in the Property from himself as sole owner to himself and Katherine Brendes.
7A dispute then arose involving Ms. Brendes and Dr. Stratmann’s wife, Ilsa Stratmann. That dispute was eventually resolved and an order was taken out in this court on 7 April 2007 which, inter alia, transferred the Property to the estate of Eduard Stratmann and appointed James E. Lewis and Heinz Harre as estate trustees in place of Larry Douglas, who had previously acted in that capacity. At all material times, Messrs. Lewis and Douglas were lawyers practising in Port Carling and Parry Sound respectively.
8In May 2007, Mr. Spitzer entered into an agreement to purchase the Property from the estate of Eduard Stratmann for $156,000. Of that sum, $100,000 was contributed by Mr. Spitzer and $56,000 was paid from the joint account of Heinz Harre and Rosemarie Harre. Mr. and Mrs. Harre also paid the land transfer tax of $1,355.
9No deed of trust was entered into to evidence any interest in the Property on the part of either Heinz Harre or Rosemarie Harre.
10On 30 July 2007, a transfer/deed of land in respect of the Property was registered, transferring the title in the Property from Mr. Spitzer, as sole owner, to Peter Spitzer, Heinz Harre and Rosemarie Harre as joint tenants. In respect of that transaction, Mr. Spitzer executed a land transfer tax affidavit swearing that the transfer was a “Conveyance from son to mother, stepfather and son to create a joint tenancy”. The total consideration for the transaction was stated to be $2.00.
11No deed of trust was entered into between the joint tenants in respect of the 30 July 2007 transfer.
12On 9 April 2009, a transfer/deed of land in respect of the Property was registered, transferring the Property from Peter Spitzer, Heinz Harre and Rosemarie Harre as joint tenants to Heinz Harre and Rosemarie Harre as joint tenants. A land transfer tax affidavit sworn by Heinz Harre and Rosemarie Harre on 31 October 2008 in connection with that transaction described the transaction as “Conveyance from son, mother and stepfather to mother and stepfather”. The total consideration for the transaction was, once again, $2.00.
13On 18 April 2009, Heinz Harre paid to Peter Spitzer €18,900 by way of a bank transfer into Peter Spitzer’s account in a bank in Luxemburg. At the time, €18,900 equated to $30,661.47 (Canadian).
14On 4 June and 17 June 2009, further funds, totaling €31,500 ($51,102.45 (Canadian)) were transferred from an account belonging to Heinz Harre’s son, Klaus Harre, to Peter Spitzer’s Luxemburg account.
15On 10 August 2012, shortly after Heinz Harre and Rosemarie Harre had separated, Rosemarie Harre severed the joint tenancy in respect of the Property and transferred her interest to her son, Peter Spitzer. The transfer application was submitted by Larry Douglas. The consideration provided for the transaction was $2.00. The explanation for nominal consideration provided on the land transfer tax statement was “gift”.
16Since 10 August 2012, Peter Spitzer has refused to give Heinz Harre access to the Property and has had exclusive use and occupation of the Property.
17On 12 February 2013, the lawyer representing Rosemarie Harre in connection with her separation from Heinz Harre wrote to the lawyer representing Heinz Harre as follows:
“[Rosemarie Harre] is uncertain as to why her interest in 10 Island View Drive should have been transferred to Peter Spitzer and we are following up with Mr. Douglas regarding same.”
18A form 13.1 Financial Statement sworn by Ms. Harre on 12 February 2013 disclosed that on the date of her separation from Mr. Harre, her interest in the Property had an estimated value of $100,000, and that her share was transferred to Peter Spitzer.
19On 20 August 2013, Rosemarie Harre’s lawyer wrote to Heinz Harre’s lawyer (commenting on an affidavit sworn by Heinz Harre in relation to this proceeding, which Rosemarie Harre’s lawyer had been provided with a copy of) stating, inter alia:
“I don’t know why you would suggest that the letter of February 10th reflects Ms. Harre’s position then or now. It does not, and we expect that the court will be advised of this.”
The Applications
20Heinz Harre describes himself as “an unwilling co-owner with Peter Christian Spitzer as tenants in common” of the Property. He seeks:
(a) An order for partition and sale of the Property; and
(b) Occupation rent based upon Mr. Spitzer’s exclusive use of the Property since August 2012.
21Peter Spitzer seeks:
(a) A declaration as to the ownership of the Property;
(b) A declaration that Heinz Harre holds the Property in trust for Peter Spitzer;
(c) An order correcting the land title records to show Peter Spitzer as the sole owner of the Property; and
(d) A declaration that, as trustee, Heinz Harre has a duty to provide to Peter Spitzer a full accounting of money and assets held by Mr. Harre in trust for Peter Spitzer, and to return such monies and assets to Mr. Spitzer.
22Heinz Harre gave evidence at trial as did his son, Klaus Harre, who travelled from Germany to do so.
23Peter Spitzer gave evidence and called as witnesses his mother, Rosemarie Harre, and Larry Douglas.
24Both of the protagonists in this litigation acknowledge that credibility is a significant factor.
Heinz Harre’s Story
25Mr. Harre met Mr. Spitzer in 1985 shortly after he befriended Rosemarie Spitzer. At the time Mr. Spitzer was studying at the University of Windsor. Mr. Harre and Mr. Spitzer became closer after the latter had finished university. Mr. Harre saw Mr. Spitzer as his son and feels that he probably helped Mr. Spitzer more than he did his own sons.
26After Mr. Spitzer left university, he worked for Canadian Pacific in Toronto for a short period of time before becoming self-employed and setting up at least two companies, Corpex Computer Ltd. and Coss Systems Inc.
27Peter Spitzer and his then wife had separated in 2004. At some point in time, and for reasons that were not entirely clear, Heinz Harre started to hold monies in trust for Peter Spitzer.
28On 5 February 2005, Heinz Harre and Peter Spitzer entered into a beneficial trust account agreement with respect to Mr. Spitzer’s common shares in Corpex Computer Ltd. The effect of that agreement was for Heinz Harre to hold in trust Peter Spitzer’s shares in Corpex, with Heinz Harre exercising on Peter Spitzer’s behalf all rights and privileges conferred by that shareholding. Although the signed trust agreement was subsequently destroyed, Heinz Harre continued to run Corpex without a formal trust agreement until 1 July 2012, when the 5 February 2005 share transfer agreement and all related agreements, written and verbal, concerning any and all shares held by Heinz Harre as trustee for Peter Spitzer, were returned to Mr. Spitzer.
29Heinz Harre had met Dr. Stratmann in Canada. Dr. Stratmann had expressed interest in purchasing property and had asked Mr. Harre that if something came up in the Parry Sound area to buy to let him know. The Islandview Drive property came on the market and Mr. Harre, acting as Dr. Stratmann’s representative, purchased the property for him.
30When Dr. Stratmann died in 2003 he was living by himself. His wife was very sick in a home in Germany. However, Dr. Stratmann had met Ms. Brendes, who came from the United States. After Dr. Stratmann died, Mr. Harre was informed that Larry Douglas was the executor of Dr. Stratmann’s will in Canada but that there was also a will in Germany. A dispute arose between the German side and Dr. Stratmann’s wife there and the Canadian interests. Mr. Harre was appointed by the German side as a representative of the estate. Mr. Douglas was, from Mr. Harre’s perspective, acting for Ms. Brendes. There were court proceedings in Ontario which were settled on the basis of the estate being dissolved in accordance with the German will. Part of the resolution resulted in Mr. Douglas being removed as estate trustee. The German side of the estate was not comfortable with Mr. Douglas representing the estate in Ontario because of his apparent conflict having also represented Ms. Brendes. They also wanted a German speaking representative. Mr. Harre believes that these events soured his hitherto good relationship with Mr. Douglas.
31Mr. Harre and Rosemarie Harre saw the Property as their potential retirement home. They already resided in another, larger, property on Islandview Drive (No. 22). They thought that if or when they came to a point when No. 22 was too big for them, they would sell it and be able to move into No. 10. They saw No. 10 as an investment as well as retirement security.
32A discussion then took place with Peter Spitzer. Mr. Harre and Rosemarie Harre informed him of their intention regarding No. 10. According to Mr. Harre, it was clear that their intention was that he and Rosemarie would be owners of the Property for the rest of their lives.
33Although, according to Mr. Harre, he disclosed his interest in buying the Property to the German based trustee of the estate, he remained concerned that if, as an estate trustee of Dr. Stratmann’s estate in Ontario, he was to buy the house, Larry Douglas would give him “some trouble”. So it was agreed that the Property would be purchased in Mr. Spitzer’s name.
34Mr. Harre asserts that an added factor was that Rosemarie Harre was, at the time, concerned that Peter Spitzer was putting his money in the stock market. She felt it would be safer for him to put his money in property.
35The purchase of the Property was funded by Peter Spitzer putting in $100,000 with Rosemarie and Heinz Harre contributing the balance of $56,000. Mr. and Mrs. Harre also paid the land transfer taxes associated with the purchase.
36On 2 July 2007, Peter Spitzer signed a letter of instruction to Lisa Lund, a lawyer practising in Parry Sound, to transfer the title of the Property to Peter Christian Spitzer, Rosemarie Harre and Heinz Harre with the right of survivorship. Mr. Harre understood that to mean that if one of the three owners died, the survivors would continue as owners. Mr. Harre’s evidence was that there was never any intention that he or Rosemarie Harre would hold their interest in the Property in trust for Peter Spitzer. He also understood that the nominal consideration which was subsequently recorded with respect to the transaction, namely $2.00, was to reflect the fact that ownership interest had changed hands within the family.
37According to Mr. Harre, the time of the transfer, Peter Spitzer was living in the Toronto area, although Mr. Harre concedes that the Property was occasionally used by him at weekends or vacation weeks, and that expenses for the Property were paid by Peter Spitzer, with the exception of taxes, which Mr. Harre paid until 2011.
38In September 2008, a further change of ownership was proposed. According to Mr. Harre, Mr. Spitzer was making his life in the Toronto area. Peter Spitzer and Heinz Harre agreed that Mr. Harre would reimburse Mr. Spitzer for the $100,000 he had invested in the Property so that Mr. Spitzer could have the use of the money and Mr. and Mrs. Harre could have ownership of the Property.
39On 2 September 2008, Mr. Harre wrote to Lisa Lund asking her to prepare a transfer deed to change the ownership arrangement from ownership of three to ownership of two (without Peter Spitzer). In Ms. Lund’s file, there is a copy of this letter with a handwritten notation, signed by Mr. Spitzer, in which Mr. Spitzer states that he agrees with the proposed changes and with his removal as a registered owner of the Property.
40Despite these instructions, it took some time before the transfer was effected. Mr. Harre links the delay in completing the transaction to the receipt by Peter Spitzer of funds and forgiveness of debts totaling $100,000. There is a telephone attendance note from Ms. Lund on 10 February 2009 indicating that Peter Spitzer had requested that the filing of the Property transfer not be done earlier than 6 March 2009.
41The formal transfer of the Property into the names of Heinz Harre and Rosemarie Harre did not take place until 9 April 2009. Although the land transfer tax affidavit showed consideration of $2.00 for the transfer, Mr. Harre says that, as agreed, he reimbursed Mr. Spitzer for the $100,000 that Mr. Spitzer had previously contributed towards the acquisition of the Property. He claims that he did so by a series of payments or credits, namely:
(a) The transfer from Mr. Harre’s account in Luxemburg to Peter Spitzer’s Luxemburg account of €18,900 ($30,661).
(b) The transfer of €31,500 ($51,102.45), initially from the joint account of Heinz Harre and Rosemarie Harre to Klaus Harre’s account in Germany, and then by further transfer from the account of Klaus Harre in Germany to Peter Spitzer in Luxemburg by way of two transactions for €19,500 and €12,000.
(c) The set off of a debt of $8,825 owed by Peter Spitzer to Heinz Harre.
(d) A cash payment by Heinz Harre to Peter Spitzer of $9,412.
42Mr. Harre has no record, other than a self-serving, after-the-fact, notation of his payment to Mr. Spitzer, of the cash element of the foregoing ($9,412), but he was adamant that a cash payment in that precise amount was, in fact, made.
43The representation in the land transfer tax affidavit that nominal consideration was given for the transfer from Peter Spitzer, Heinz Harre and Rosemarie Harre to Heinz Harre and Rosemarie Harre only, was incorrect. Mr. Harre acknowledges that “real” value, namely $100,000, was given. Mr. Harre agreed that if a declaration was made in his favour at the end of trial, that he would pay the land transfer tax applicable to his interest.
44After Heinz Harre and Rosemarie Harre separated on 22 July 2012, Rosemarie Harre told Heinz Harre that she had transferred her interest in the Property to Mr. Spitzer. Mr. Harre told Ms. Harre that he wanted to move himself into the Property. However, he was unable to gain entry because the locks had been changed. There was a sign on the door saying that for entry to call Peter Spitzer’s telephone number and “smile you’re on camera”.
45Rosemarie Harre and Heinz Harre signed an agreement on 17 November 2012 which provided, amongst other things, that the Property should be returned to the ownership of Rosemarie Harre and Heinz Harre as joint tenants. Heinz Harre denies that he put pressure on Rosemarie Harre to sign this document. According to Mr. Harre, Larry Douglas was acting for Peter Spitzer by that time. Rosemarie Harre was going to ask her son to the transfer the Property back. However, Peter Spitzer refused to do so.
46On 21 January 2013, Rosemarie Harre sent an email to her son. The original was in German. It said that Ms. Harre would like to get her half of the cottage back. A translation of part of the email reads:
I would like to get my half of the cottage back; it was intended to be an inheritance that I gave you before my demise; it was supposed to please you, and you claim that I owe it to you? … I will ask Larry to transfer half the cottage back into my name; I hope that you will not give me any problems.
47Mr. Harre denies that he put pressure on Rosemarie Harre to write that email.
48On 10 February 2013, there was a letter from Rosemarie Harre to her matrimonial lawyer which stated, inter alia, as follows:
I have changed house #22 from joint tenancy to tenancy in common. House #10 also from joint tenancy to tenancy in common. Also I have transferred my 50% of ownership in house #10 to my son Peter. Based on Peter’s statement that we owned house #10 only in trust for him and he would own #10.
I did not believe Peter and have asked Heinz to give me the documents which will show the reality of our rights on #10. As you will learn of the attached documents, Peter’s statements are not true. I have asked Peter to transfer my 50% of house #10 back to me. Peter is not willing to do this and therefore I need your help that I get my ownership of #10 back for my retirement.
Only after I will have my part in #10 back, I will find the basis for assessment agreement with Heinz.
Mr. Harre claims that his estranged wife asked him to put this letter together. Although he prepared a draft of the letter for her, he claims that it was her letter.
49Despite the email from Rosemarie Harre to her son, Rosemarie Harre’s letter to her lawyer and the indication in her lawyer’s letter to Mr. Harre’s matrimonial lawyer that he was going to follow up with Mr. Douglas concerning the transfer of the Property, the Property was not transferred back to Rosemarie Spitzer. Rosemarie Spitzer told Heinz Harre that she had spoken to Larry Douglas and he had told her that he could not do anything, and that Mr. Harre would have to deal with Mr. Spitzer.
50There was evidence of various other financial transactions involving Mr. Spitzer and Mr. Harre. Mr. Harre indicated that none of them were related to the Property. Some of the transactions related to Mr. Harre’s activities managing trust funds for Mr. Spitzer. There was also a transaction relating to the purchase of a Mercedes motor vehicle.
51As indicated, Klaus Harre also gave evidence.
52He described how he had helped Peter Spitzer set up a bank account in Luxemburg (this required a personal introduction). He said that Peter Spitzer had asked him to do this because he wanted to have a safe account that his former wife could not touch. Klaus Harre claims that Peter Spitzer knew that Heinz Harre had a Luxemburg and that this had sparked the idea that Peter Spitzer should have a similar account.
53Klaus Harre essentially confirmed his father’s evidence as to the intended use and possession of the Property by Heinz and Rosemarie Harre, with Mr. Spitzer getting his $100,000 investment back. Klaus Harre confirmed that part of the $100,000 repayment was made by way of a transfer of money by Heinz and Rosemarie to himself with the funds then being transferred on by Klaus Harre to Peter Spitzer’s Euro account in Luxemburg in two tranches of €19,500 and €12,000.
Peter Spitzer’s Story
54Peter Spitzer described his early acquaintance with Heinz Harre after Mr. Harre had immigrated to Canada in 1983. He claims that Mr. Harre was having problems with obtaining proper immigration status to Canada because of unresolved bankruptcy issues in Germany. His mother Rosemarie stepped in to the situation and sponsored Mr. Harre, thereby facilitating his ability to remain in Canada.
55After Heinz Harre and Rosemarie Harre married in 1987, they borrowed money from Peter Spitzer and Klaus Harre to acquire properties in the Parry Sound area and to build their own home. At one point, Heinz Harre and Rosemarie Harre lived in a home which Peter Spitzer had purchased.
56In 1997, Heinz and Rosemarie Harre built a bed and breakfast residence at 22 Islandview Drive.
57Dr. Eduard Stratmann came into the picture in 1998. He subsequently stayed at his parents’ bed and breakfast at 22 Islandview Drive. When an opportunity arose to purchase No. 10 Islandview Drive, Dr. Stratmann took it. The building and all work necessary to construct the property was completed by Heinz Harre through his company, Harre Holdings Limited.
58In 2004, Mr. Spitzer’s personal circumstances changed when his marriage broke up. Heinz Harre said that he could assist Mr. Spitzer with respect to organising a separation agreement but “insisted that he [Mr. Harre] would be responsible for looking after all of my finances”. Mr. Spitzer “imprudently agreed to that position as he was my stepfather and was of the belief he was acting in my best interest”.
59In an affidavit sworn on 11 September 2013, Mr. Spitzer continues:
“Through December of 2004 and January 2005, I allowed Heinz Harre to attempt to negotiate a consulting contract that was part of the business separation with my exwife and this situation turned out to be negative and counterproductive both with respect to the matrimonial resolution and our business resolution with my exwife. In that period of time it stood out to me that Heinz Harre is prepared to be very deceitful in terms of how he wished to achieve goals and using very negative strategies” [emphasis added]
60Mr. Spitzer was living in Woodbridge when, in February 2007, his ex-wife announced that she was going to move to the United States. At around the same time, Mr. Spitzer was advised by Mr. Harre that the Property at 10 Islandview Drive could be purchased from the estate of Dr. Stratmann together with items such as a boat and a car. Mr. Spitzer felt that it would make sense for him to sell his condominium in Woodbridge and acquire a permanent residence in the area of Noble and close to his mother. He cleared $127,000 from the sale of his Woodbridge condominium which was transferred to Mr. Harre in trust. This $127,000, together with remaining funds previously transferred to Mr. Harre in trust, were then used to fund the purchase of the Property and an 18.5 ft. Bayliner boat.
61In an affidavit sworn on 24 July 2013, Mr. Spitzer stated that he purchased the Property for $156,000. Although he paid the purchase price together with the applicable registration and land transfer taxes, the affidavit for land transfer tax was completed and signed by Heinz Harre as an authorized agent for Mr. Spitzer.
62Initially, Mr. Spitzer described the two subsequent transfers of the Property in these terms:
I was encountering certain potential financial difficulties as a result of marriage breakdown and I transferred the lands subject to this Application to myself, Heinz Harre and my mother Rosemary Harre… This transfer was made for nominal consideration for $2.00. The land transfer affidavit…was sworn to by myself and [sic] July 25, 2007 indicating that this was a conveyance from son to mother, stepfather and son to create a joint tenancy and confirming that nominal consideration was $2.00.
Because my personal affairs were in difficulty, I completed a transfer from myself together with Heinz Harre and Rosemarie Harre to the Respondent Hinze [sic] Harre and Rosemary as joint tenants again for nominal consideration of $2.00. …
I had always considered the lands subject to Application as my property and that the lands were being held in trust for me by Heinz Harre and my mother Rosemary Harre as a resulting trust.
63In his subsequent affidavit of 11 September 2013, Mr. Spitzer said, inter alia:
“I had discussions with my mother and Heinz Harre that in the future they may want to retire at 10 Island View Drive when the bed and breakfast was beyond them and there might be some general arrangement about trading with 22 Island View Drive insuring [sic] that their finances would be looked after in the future. Although the 10 Island View Drive property was originally transferred to me Heinz Harre continued to assist that with an ongoing dispute with my ex-wife that Heinz Harre and my mother should be placed on title securing this asset and allowing for some security for future use by them for the property. At the same time, Heinz Harre indicated that there should be documents prepared that would outline I gave him a gift of the 18.5 Bayliner boat and there should be a lien put on the Audi car which I had purchased in his favour. It seemed that he had concerns that my ex-wife might make claims and that he wanted my assets under the umbrella of his control either by way of joint ownership or outright ownership or some sort of lien.
In 2007 and 2008 my new business did have some financial conflict over the retirement of one shareholder in the corporation. Heinz Harre felt it more appropriate that I remove my name from title to avoid any potential issues and he would keep the property safe for me. It was on that basis that the property was then ultimately transferred to my mother and Heinz Harre absolutely with my thought that they were holding it in my favour by way of trust.
In the years following I agreed that Heinz Harre had the authority to take monies from my accounts and business and to achieve certain tax splitting arrangements and to move money through different accounts both in Canada and Europe. I was aware that monies were in various accounts for me which I considered trust accounts between Scotia Bank and CIBC and RBC as well as accounts in Europe.”
64During the course of his oral testimony at trial, Mr. Spitzer expanded on his business ventures as a computer consultant and his dealings with Mr. Harre. He said that they “kind of” struck a “family agreement” with Mr. Harre looking after the business end and Mr. Spitzer using his knowledge as he moved forward with trying to get his life back together. In Mr. Spitzer’s words:
“I was more worried about the bits and bites than the structure of a share”.
65In a financial statement sworn in connection with his matrimonial proceedings on 25 November 2008, Mr. Spitzer declared a part interest in the Property which he valued at $47,000. He explained that he did this, notwithstanding his assertion that the Property was being held in trust for him, because Mr. Harre had told him that legally it was only one-third his property.
66Mr. Spitzer also disclosed a personal loan of $20,000 which he owed to Mr. Harre in his 25 November 2008 financial statement. He claims that Mr. Harre told him at the time that that is what Mr. Spitzer owed him. He says he has no idea what the $20,000 related to.
67On 25 May 2009, in another financial statement prepared in connection with his matrimonial proceedings, Mr. Spitzer made no reference to the Property because, by that time, it was “in trust with Heinz and Rosemarie” and Mr. Spitzer understood that, as a result, he did not legally own it and therefore did not have to list it. The financial statement also disclosed a loan to Mr. Harre of $28,000. Again, Mr. Spitzer claims that he depended on Mr. Harre to tell him that he owed that sum. Mr. Spitzer acknowledged that he could not recall having been lent any additional money by Mr. Harre between the November 2008 and May 2009 financial statements being completed.
68Mr. Spitzer claims to have been unaware of the $56,000 contribution which Mr. Harre asserts was made towards the initial purchase of the Property until after his parents separated. According to Mr. Spitzer there should have been enough money being held in trust for him by Mr. Harre to cover the entire cost of acquiring the Property.
69Mr. Spitzer does not dispute that Mr. Harre paid the land transfer tax on the purchase of the Property but maintains his instructions were to use the trust funds.
70Mr. Spitzer acknowledges that the transfer of funds into his Luxemburg account occurred. However, he believed the purpose was to take some of the trust funds being held by Mr. Harre in Canada and place them in the European account. Mr. Spitzer denies that he wanted to keep money offshore to keep it out of the reach of his ex-wife.
71Throughout the period 2007 to 2012, Mr. Spitzer acknowledges that he has had various lawyers as well as an accountant and a financial adviser. Nevertheless, he claims that he relied heavily on Mr. Harre to provide him with advice. Every one of the lawyers he consulted during the 2007-2012 period was for a specific role only.
72Despite noting in one of his affidavits that, in 2012, when the marriage between Heinz Harre and Rosemarie Harre broke up, Mr. Harre had entered into another relationship, Mr. Spitzer denies that he became angry with Mr. Harre when Mr. Harre separated from his mother. However, he acknowledged, that today he dislikes Mr. Harre. Although he claims that he did not start to dislike Mr. Harre until after the break-up, he acknowledges that he started mistrusting him before the split.
73Notwithstanding his affidavit evidence that as early as December 2004 and January 2005, Mr. Spitzer was aware that Heinz Harre was “prepared to be very deceitful”, Mr. Spitzer, who regards himself as “an honest, ethical man” continued to trust Mr. Harre and follow his advice. He said that Mr. Harre was his mentor. He would explain questionable things and Mr. Spitzer would accept his explanations.
74According to Mr. Spitzer, he did not receive copies of bank statements or otherwise receive an accounting from Mr. Harre of how his trust funds were administered by Mr. Harre. As a result, he acknowledged that he did not always know what was in trust and could not, accordingly, put an appropriate value on the financial statements that he swore on his matrimonial proceedings. He said that he did not believe it was material.
75Among some productions which were uncovered by Mr. Spitzer when he was looking through boxes containing matrimonial litigation documents, there was an unmarked folder containing two cheque counterfoils. One bears a date of 23 May 2007. It is in the amount of $100,000. The payee is Stratmann Estate and it purports to be for “Property 10 Islandview Dr., Nobel”. The other is dated 15 June 2007. The amount is $40,000. The payee is Heinz Harre. The reference is “reimbursement property sale”.
76Mr. Spitzer did know that Mr. Harre was an estate trustee of Dr. Stratmann’s estate, but was unaware that Mr. Douglas had previously been a trustee and had been removed and replaced by Mr. Harre. He claims to have been unaware that, in February 2007, his mother and Heinz Harre were interested in buying 10 Islandview Drive themselves.
77In connection with the letter to Lisa Lund dated 2 September 2008 and the subsequent transfer of the Property from Heinz Harre, Rosemarie Harre and Peter Spitzer to Heinz Harre and Rosemarie Harre, nothing was expressed in writing about Mr. Harre and Mrs. Harre holding the Property in trust for Peter Spitzer. Despite having concerns about “trust issues” at the time, Mr. Spitzer executed the transfer. He says that when he expressed concerns, his mother would say “it’s family”. On cross-examination, however, Mr. Spitzer acknowledged that it did not make sense that, at a time he was having misgivings about Mr. Harre’s handling of trust funds, he was conveying his interest in the Property to Mr. Harre and Rosemarie Harre, without any stipulation that the Property was being held in trust.
78Mr. Spitzer emphatically denies that any of the monies received by him from Mr. Harre (or from Klaus Harre) were related to repayment of the $100,000 invested by Mr. Spitzer in the Property. He believed the Euro transfers to be the release by Mr. Harre of trust funds.
79Mr. Spitzer confirms that he denied Mr. Harre access to the Property in and after August 2012. As there was nothing in the cottage belonging to Mr. Harre, Mr. Spitzer felt justified locking it up.
80Asked about the email he received from his mother on 21 January 2013, Mr. Spitzer said he did not know why his mother would be claiming that she should have half of the cottage back. In an email sent by Mr. Spitzer in response he said to his mother:
“We will both not be happy if you don’t think of the consequences of what you want to do.”
Mr. Spitzer denied that by making this statement he was emotionally blackmailing his mother. He denied that he was putting pressure on her. Instead, he was trying to be of assistance to his mother. But he felt Mr. Harre was putting pressure on his mother. Asked why he did not simply say to his mother “it’s my Property”, Mr. Spitzer said that she would have known.
81Larry Douglas was called to give evidence. He said that in August 2012 Rosemarie Harre had arrived, unannounced, at his office, in a distraught state. She said that she and her husband had separated. She wanted some advice. Mr. Douglas does not practise family law and therefore referred her elsewhere for matrimonial advice. In the meantime, Mrs. Harre said that she wanted to transfer her interests in the tenancy in common of the Property to her son, Peter, because “it’s Peter’s”. Mr. Douglas agreed to assist her in this regard.
82Mr. Douglas maintains that everything he has done in connection with the transfer of the Property was based on instructions. He took those instructions directly from Rosemarie Harre. He acknowledges that what Rosemarie Harre told him about the reason for her instructions may or may not have been accurate.
83Later on, Peter Spitzer asked Mr. Douglas to act for him in his dispute with Heinz Harre. Although he initially agreed to act, because of the potential for conflict, Mr. Douglas ultimately advised Mr. Spitzer that he should retain someone else.
84Mr. Douglas believes that there was no real overlap between him acting for Rosemarie Harre with respect to the transfer of the Property and being consulted by Mr. Spitzer with respect to his interests in the Property and his blossoming dispute with Mr. Harre. The extent of any advice that Mr. Douglas would have provided to Rosemarie Harre after he had been consulted by Peter Spitzer would have been to impress on her that she needed to get a family lawyer as quickly as possible.
85Mr. Douglas acknowledged that if had known that Mr. Harre was buying the Property as estate trustee of Dr. Stratmann, he would have had concerns. But he had no direct first-hand knowledge about the sale of the Property. When he heard that Mr. Spitzer had bought the Property, at the end of the passing of accounts hearing, he had no idea who he was. It was only some months later that he became aware that there was a relationship between Mr. Spitzer and Mr. Harre.
86Rosemarie Harre claims that the letter that she wrote to her lawyer and the email that was sent to her son in which she said that she wanted to get the cottage back for herself were not written of her own free will. She claims that Heinz Harre forced her to sign and send these communications.
87Generally, Rosemarie Harre trusted her husband and signed the papers that were prepared for him and placed before her.
88When she went to Mr. Douglas in August 2012 and transferred her interests in the title of the Property back to Peter Spitzer she did so because she knew it was Peter Spitzer’s property. She denies that Peter Spitzer asked her to sign the Property over to him. She denies being put under pressure by Peter Spitzer.
89Mrs. Harre says that she was never aware that she held the Property in trust for Peter Spitzer because she always believed it was his.
90Mrs. Harre claims to have been unaware of the financial dealings between Mr. Harre and her son. Nor does she recall any concerns about the Property being acquired in Peter Spitzer’s name. She does not recall wanting to acquire #10 Islandview Drive as a retirement home. According to her, the matrimonial home at #22 Islandview Drive was for retirement.
91Mrs. Harre trusted her husband and she trusts her son. She does not know anything about money being paid for the Property.
Discussion
92The many irreconcilable differences between the versions of events given by Mr. Harre and Mr. Spitzer inevitably requires the court to make findings of fact based on what is the most plausible. The evidentiary standard, of course, is a balance of probabilities.
93Absent evidence to the contrary, ownership of the Property is reflected by the registration of title: Land Titles Act, R.S.O. 1990, c. L. 5, s. 66. As a registered owner of the Property, in the quality of a tenant in common, Mr. Harre has a prima facie right to seek and obtain partition and sale of the Property.
94Mr. Harre argues that the fact that the consideration reflected in the transfers of title on 30 July 2007 and 9 April 2009 was nominal should have no impact on the quality of his title.
95The assertion by Mr. Spitzer of an equitable interest in the Property in the absence of writing is unsustainable under the Statute of Frauds, R.S.O. 1990, c. S.19 unless s. 10 of that Act applies, that is, that a resulting trust existed.
96Peter Spitzer’s position is that no consideration was provided by Rosemarie Harre or Heinz Harre with respect to either of the 30 July 2007 or 9 April 2009 transfers. As a result, he argues that the presumption of resulting trust applies. This presumption was described in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 at para. 25 in the following terms:
The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended….
97The standard of proof, the burden of which falls on the transferee, is to rebut the presumption of a resulting trust on a balance of probabilities. As noted by Rothstein J. in Pecore, at para. 44:
As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus, as discussed by Sopinka et al. in The Law of Evidence in Canada at p. 116 the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.
98Before turning to a discussion of the evidence, my findings, and how they impact on the applicable legal principles, I would note that the claim by Peter Spitzer for an accounting by Heinz Harre of his handling of Mr. Spitzer’s property was not seriously pressed at trial. The request for an accounting was only first advanced by an amendment to Peter Spitzer’s cross-application in November 2015, which was over three years after all trust arrangements involving Mr. Spitzer and Mr. Harre had been unwound. In light of the recent decision by the Court of Appeal in Intact Insurance Company of Canada v. Lombard General Insurance Company of Canada, 2015 ONCA 764 and, in particular, the Court’s conclusion that the general limitation period contained in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B applies to equitable claims, Peter Spitzer would have faced an uphill task persuading the court that his claim for an accounting was timely.
99In evaluating the evidence of the parties and their witnesses, I first make a number of general observations.
100I place no weight on the evidence of Rosemarie Harre. She was in an impossible position. She found herself torn between her loyalties to her son and her ex-husband. She was susceptible to the will of each of them.
101That said, one piece of evidence featuring Rosemarie Harre is pertinent. Before she transferred her legal title in the Property to Peter, she disclosed the value of her interest in the Property in a financial statement filed by her in connection with her matrimonial litigation with Heinz Harre. Declaring her interest in the Property as an asset for the purposes of a matrimonial dispute would seem inconsistent with Peter Spitzer’s assertion that his mother only ever held the Property in trust for him.
102The evidence of Klaus Harre corroborated the fact that funds were remitted by Heinz Harre to Klaus who, in turn, forwarded the funds onto Peter Spitzer’s account in Luxemburg. I would expect Klaus Harre to accept at face value whatever his father told him as to the purpose for transferring these funds. Accordingly, I place no reliance on the understanding expressed by Klaus Harre as to what the funds were for.
103I turn, then, to the competing testimonies of Heinz Harre and Peter Spitzer. There are good reasons to be dubious about aspects of each of their respective accounts.
104The purpose of the trust arrangement between Mr. Harre and Mr. Spitzer is unclear. Suffice it to say that the arrangement was an unusual one. Mr. Harre seemingly received and expended significant amounts of money on behalf of Mr. Spitzer who, during the course of over five years, neither received nor demanded any sort of meaningful accounting. It is not necessary, for the purposes of this action, to speculate whether the arrangement was designed to frustrate the interests of Mr. Spitzer’s ex-spouse or of those he did business with or of his creditors. But his professed lack of trust for, and concerns about, Mr. Harre rings hollow in the face of his participation, without protest, in such an arrangement for so many years.
105That is not to say that Mr. Harre, in his capacity as trustee, may not at times have acted in his own best interests rather than Mr. Spitzer’s. While I make no express finding in that regard, my general impression is that Mr. Harre would be capable of getting his own way when he wanted to.
106Both of the major protagonists are experienced in business. Mr. Harre is possibly more sophisticated than Mr. Spitzer when it comes to matters of business, but both have access to professional advice (particularly so in the case of Mr. Spitzer) and if, as Mr. Spitzer asserts was the case, he placed his blind trust in Heinz Harre, he did so willingly and without coercion.
107In trying to determine what really happened with respect to the Property, a review of contemporaneous documents is instructive.
108There is no other evidence to corroborate Mr. Spitzer’s assertion that the entire purchase price of the Property was to come from the monies held in trust for him by Heinz Harre. Furthermore, even if one were to accept that the original intention was for the Property to be acquired solely with the resources of Mr. Spitzer, the subsequent transfer of the title for the Property from Mr. Spitzer alone to a joint tenancy with his stepfather and mother, within a matter of weeks, for nominal consideration but without any sort of written confirmation (let alone a trust deed) makes Mr. Spitzer’s version of events seem highly improbable.
109In the absence of any more precise evidence to contradict Mr. Harre’s concerning the purpose of the transfers into Mr. Spitzer’s Luxemburg accounts, I am satisfied that these payments were, in fact, part of the reimbursement by Mr. Harre to Mr. Spitzer of the $100,000 of Mr. Spitzer’s that was used to purchase the Property.
110The offsetting loan forgiveness and cash payment described by Mr. Harre are not properly documented. Nor, however, are other loans between Mr. Harre and Mr. Spitzer, including those declared by Mr. Spitzer during the course of his matrimonial proceedings. In other words, Mr. Spitzer has been unable to muster enough evidence to persuade me that Mr. Harre’s account is wrong.
111There was no other evidence to place into context the cheque stub indicating a $40,000 payment on 15 June 2007 in for “reimbursement property sale”. Mr. Spitzer had no independent recollection of the payment or why the amount was $40,000 as opposed to, for example, $56,000.
112It was an error, but, perhaps, an understandable one, for the consideration for transfer of the Property in 2009 to have been stated as nominal for land transfer tax purposes. While amends should be made, the land transfer tax issue is not dispositive of whether there was a valid transfer for appropriate consideration.
113As already mentioned, the inclusion by Rosemarie Harre of the value of her share of the Property in a financial statement that she filed in connection with a matrimonial dispute with Mr. Harre is indicative of how she viewed her interest in the Property at that time. Similarly, the inclusion by Mr. Spitzer in his sworn financial statement dated 25 November 2008 declaring his interest in the Property as being “my part interest valued at $47,000.00” and then, after the transfer, making no reference at all to the Property in his financial statements form on 25 May 2009, evidences the true position.
114Mr. Spitzer argues that the nominal consideration stated on the face of the transfers supports his contention that the transfers were gratuitous.
115The fact that the transfers were for nominal consideration of $2, a sum which never actually changed hands, does not mean that there was no consideration. As noted in 641224 Alberta Ltd. v. 610042 Alberta Ltd., 2005 ABQB 606 at para. 80:
Lawyers have, for the last 200 years, attempted to make contracts in which there is an exchange of promises, more binding by throwing in nominal consideration.
116Section 13(1) of the Land Registration Reform Act, R.S.O. 1990, c. L.4 deems all documents transferring an interest in land to be under seal: Durling v. Sunrise Propane Energy Group, 2012 ONSC 6570 at para. 187. The law will enforce a contract under seal even without consideration: Friedmann Equity Developments Inc. v. Final Note Ltd., [2000] 1 S.C.R. 842, 2000 SCC 34, at para. 20.
117Parol or extrinsic evidence to prove the “real consideration” is generally admissible: Cadinha v. Chemar Corp., [1995] B.C.J. No. 755 (B.C.S.C.), at para. 12.
118As indicated above, there is ample evidence in this case that Heinz Harre gave valuable consideration for his interest in the Property. Specifically, I find that, on a balance of probabilities, the payments and credits provided by Mr. Harre to Mr. Spitzer in 2008 and 2009 constituted repayment by Mr. Harre to Mr. Spitzer of the $100,000 contribution made by Mr. Spitzer to the purchase price of the Property and that valuable consideration was given by Mr. Harre for both the July 2007 and April 2009 transfers.
119Given my finding on the issue of valuable consideration, there is no basis for Mr. Spitzer’s claim that there is a resulting trust in his favour. However, if I am wrong about the existence of valuable consideration, I would find that there is sufficient evidence that Mr. Spitzer intended his mother and stepfather to enjoy ownership of the Property to rebut any presumption of a resulting trust in Mr. Spitzer’s favour.
120When all is said and done, the important elements of Mr. Spitzer’s story simply did not ring true. He is not nearly as naïve as he portrayed himself to be. Nor is Mr. Harre as powerfully manipulative as Mr. Spitzer would have had the court believe.
121It would have been easy for Mr. Spitzer to have protected the interests which he asserted at trial by creating a contemporaneous record. Not only did he fail to create such a record, he failed to displace the reasonable inferences that flow from what he said and did.
Disposition
122For the foregoing reasons, Mr. Spitzer’s counter application is dismissed. Mr. Harre’s application succeeds.
123The parties have agreed that the applicable occupation rent would be $3,250 per annum ($270.83 per month).
124It is therefore ordered that:
(a) The Property should be sold and the proceeds of sale should be divided equally between the parties;
(b) Heinz Harre shall pay the applicable land transfer tax and any penalties or interest in respect of the incorrect land transfer tax affidavit sworn by him on 31 October 2008; and
(c) Peter Spitzer shall pay to Heinz Harre occupation rent in the sum of $3,250 per annum pro-rata from July 2012 to the date of sale of the Property, such amount to be a first charge on the proceeds of sale after the usual sale costs.
125The parties have agreed that if Heinz Harre is successful the costs award in his favour should be $50,000 plus disbursements of $4,325.79 plus H.S.T. as applicable, and I so order.
126I may be spoken to if there are any issues relating to the implementation of my judgment.
Graeme Mew J.
Released: 29 February 2016