Gray v Brathwaite, 2017 ONSC 1696

COURT FILE NO.: CV-11-00437115-0000 DATE: 20170320

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ROSE ELIZABETH GRAY Plaintiff – and – DAVID BRATHWAITE and 1492569 ONTARIO INC. and DAAB VENTURES INC. c.o.b. as CHESSWOOD TRANSMISSION DRIVELINE SPECIALISTS Defendants

Counsel: Sidney Klotz and Jennifer Klotz for the Plaintiff Blair Bowen for the Defendants

HEARD: January 16, 17, 18, 19 & 20, 2017

REASONS FOR JUDGMENT

DIAMOND J. :

Overview

1On June 20, 2016, I was scheduled to hear the five day trial of this proceeding. As set out in paragraphs 2-6 and 22-28 of my Reasons for Decision (“original Decision”) in Gray v. Brathwaite 2016 ONSC 4163, the trial was ultimately adjourned due to the plaintiff bringing a motion at trial seeking leave to amend her Statement of Claim.

2In paragraphs 38-53 of my original Decision, I granted the plaintiff leave to amend her Statement of Claim (with an obligation to provide further particulars) to advance a new cause of action, namely that she and the defendant, David Brathwaite (“David”) had organized their lives in a domestic partnership or joint family venture as those terms are defined by the Supreme Court of Canada in Kerr v. Baranow 2011 SCC 10.

3I seized myself of the trial, and permitted the parties to proceed with further examinations for discovery upon the amendments.

4The trial resumed before me on January 13, 2017 for five additional days. The entire thrust of the plaintiff’s position was now rooted in a theory of a joint family venture, with a request for monetary relief based upon a finding of unjust enrichment. Her previous causes of action, such as the plaintiff and David being partners in a legal partnership, were effectively abandoned at trial.

5The crux of the plaintiff’s claim is set out in paragraph 1(e.2) of her Amended Statement of Claim, wherein she requests “under the Family Law Act a claim for unjust enrichment, and a request for constructive trust remedy” based upon (a) the long term common-law relationship of the plaintiff and David, and (b) her contributions to the joint family venture, which included the defendant corporations 1492569 Ontario Inc. (“149”) and DAAB Ventures Inc. carrying on business as Chesswood Transmission Driveline Specialists (“DAAB”).

6Unfortunately, this action was never commenced as or converted into a Family proceeding. This action was issued and remained on the Civil list. It practically goes without saying that the plaintiff’s joint family venture claim would have obviously and greatly benefited from being prosecuted and tried on the Family list. As this did not happen, the Family Law Rules did not govern this proceeding, and none of the corresponding expansive financial disclosure obligations upon both parties (over and above those prescribed by the Rules of Civil Procedure) applied.

7Nevertheless, as the trial judge I was charged with finding the facts and deciding the issues based upon the legal theories presented and the evidentiary record before me. In my view, the following issues were raised by the parties and asked to be determined by the Court:

1. Is the plaintiff’s claim statute-barred by the virtue of the provisions of the Limitations Act, 2002, S.O. 2002 C.24 (the “Act”)?
2. If the plaintiff’s claim is not statute-barred by reason of the Act, was there a joint family venture arising from her relationship with David?
3. If a joint family venture existed, was there a disproportionate accumulation of wealth linked to the plaintiff’s contributions to the joint family venture?
4. If there was a disproportionate accumulation of wealth, what is the appropriate remedy in the circumstances?

Assessment of Credibility

8Before I embark on a disposition of the various issues, it is worthwhile to offer some general comments on the assessment of credibility. In every trial, the trier of fact is charged with determining the truth. In some cases, that task can be rendered unenviably difficult when both sides of a dispute are motivated to offer evidence designed to “fit” within a specific theory of the case. I am reminded of the words of Justice Cameron in Prodigy Graphics Group Inc. v. Fitz-Andrews 2000 CarswellOnt 1178 (S.C.J.) when he described this approach “selective hindsight through rose-coloured glasses”.

9Justice Cameron offered a non-exhaustive list of traditional criteria by which the evidence of each witness, and, where appropriate, the exhibits presented at trial, ought to be assessed:

1. Lack of testimonial qualification
2. Demeanour of Witness: apparent honesty, forthrightness, openness, spontaneity, firm memory, accuracy, evasiveness
3. Bias/Interest in the Outcome (if a party, motive)
4. Relationship/Hostility to a party
5. Inherent probability in the circumstances i.e. in the context of the other evidence does it have an "air of reality"
6. Internal consistency i.e. with other parts of this witness' evidence at trial and on prior occasions
7. External consistency i.e. with other credible witnesses and documents
8. Factors applicable to written evidence: (a) Presence or absence of details supporting conclusory assertions (b) Artful drafting which shields equivocation (c) Use of language in an affidavit which is inappropriate to the particular witness (d) Indications that the deponent has not read the affidavit (e) Affidavits which lack the best evidence available (f) Lack of precision and factual errors (g) Omission of significant facts which should be addressed, and (h) Disguised hearsay

10The assessment of the credibility of witnesses is especially important when bearing in mind the onus of proof. In these proceedings, I must decide whether a specific proposition of fact has or has not been established on a balance of probabilities by the party having the onus of proof.

11For a party to seek to discharge its legal onus of proof, the Court must first be satisfied with the credibility and reliability of the evidence in order to be in a position to make the relevant findings of fact. Put another way, a moving party has the onus of factual proof of the evidence necessary to satisfy its legal burden. As stated by Justice Stinson in Zesta Engineering Ltd. v. Cloutier 2010 ONSC 5810 (S.C.J.):

“In certain instances it is simply not possible to reconcile some aspects of the evidence that was presented by the witnesses at this trial. In part, I liken the situation to attempting to assemble several old jig-saw puzzles whose various parts have sat, co-mingled, in the bottom of an actively-used desk drawer for a decade: some pieces are missing, some are undecipherable, some have changed over time and no longer fit together, and some are not what they seem to be, all due to the passage of time and intervening events. In this case my task is to use the pieces of evidence to re-create as clear a picture of past events as I can given the foregoing limitations, applying the ‘real test of…truth’ as described above, drawing inferences where appropriate, and applying the rules of burden and standard of proof, as required.”

12As I have carefully listened to and absorbed the testimony of all witnesses called by both parties, and reviewed the exhibits tendered throughout the trial of this proceeding, I do not see a need to summarize the evidence of each witness or present an exhaustive, chronological narrative summary. I will refer to the findings of fact necessary to dispose of each of the four issues, which I now address in turn.

Issue #1 Is the plaintiff’s claim statute-barred by the virtue of the provisions of the Act?

13Pursuant to section 5(1)(a) of the Act, a claim is discovered on the earlier of the day upon which a person with the claim first knew, or a reasonable person with the abilities and in the circumstances of that person first ought to have known,

(i) that the injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to by an act or omission, (iii) that the act or omission was that of a person against whom the claim was made, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

14Section 5(2) of the Act and the jurisprudence developed thereunder is clear that a person with a claim is presumed to have known of the matters referred to above on the day the act or omission upon which the claim is based took place unless the contrary is proved. This is a presumption that can be rebutted by a plaintiff with necessary evidence.

15As the Court of Appeal for Ontario held in Miaskowski v. Persaud 2015 ONCA 758, a plaintiff is presumed to have discovered the material facts upon which his/her claim is based on the day the accident took place. There is an obligation upon a plaintiff to act with due diligence in determining if he/she has a claim. No limitation period will be tolled while a plaintiff sits idle and takes no steps to investigate any of the matters referred to in section 5(1)(a) of the Act.

16A plaintiff is not required to have a comprehensive understanding of his/her potential claim in order for the limitation period to commence. As held by the Court of Appeal for Ontario in Lawless v. Anderson 2011 ONCA 102, “the question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant.”

17Discoverability is thus a fact-based analysis. The discovery of a claim does not depend upon a plaintiff’s knowledge that his/her claim is likely to succeed, or awareness of the totality of a defendant’s wrongdoing. Knowledge of the material facts, and not the elements of a cause of action, will inform the Court’s assessment of the commencement of a limitation period. A plaintiff must show that he/she was both not subjectively aware of the factors set out in section 5(1)(a) of the Act, and that a reasonable person “with the abilities and in the circumstances of the person with the claim” would also not have been aware of these factors.

18It is David’s position that the plaintiff’s claim was discovered on the date of their separation, which he argues to have occurred in or around June 2008. As this action was not commenced until October 13, 2011, David submits that the plaintiff’s claim is thus statute-barred. I must thus determine on the record before me whether the plaintiff’s claim was discovered or discoverable prior to October 13, 2009.

19In McConnell v. Huxtable, 2014 ONCA 86, the Court of Appeal for Ontario dealt with the application of a limitation period to an unjust enrichment/constructive trust claim, and held as follows:

“I do not agree with the motion judge that a remedial constructive trust claim does not require any act or omission by the person against whom the claim is brought. Generally speaking, a claim of unjust enrichment requires that the defendant retain a benefit without juristic reason in circumstances where the claimant suffers a corresponding deprivation. In other words, the relevant act of the defendant is simply the act of keeping the enrichment (or the omission to pay it back) once the elements of the unjust enrichment claim have crystallized. In the family law context, this may typically occur on the date of separation, when shared assets, including real property, are divided and the possibility therefore arises of one party holding onto more than a fair share.

I agree with the motion judge that in some cases it may be difficult to apply the s. 5 definition of discoverability to equitable claims, including claims for unjust enrichment. But, that does not mean that the Act does not apply. It may well mean that the claim has not been discovered within the meaning of s. 5 and so the two-year limitation period does not run. This does not mean there is a gap in the legislation and there is no limitation period. Rather, the plaintiff will be able to pursue his or her claim until the ultimate limitation period in s. 15 applies …”

20My task is to decide whether the plaintiff regarded her relationship with David to have come to an end prior to October 13, 2009. In completing this exercise, David asks that I consider the decision of Justice Minnema in Holden v. Gagne, 2013 ONSC 1423, and in particular the following indicia of the termination of a family relationship:

(a) Whether the economic relationship between the parties changed; (b) Whether the parties continued to refer to each other as spouses and corresponds with others or in their income tax returns; (c) What the parties had communicated to each other about their intentions; (d) Whether the parties continued to be intimate; and (e) Whether friends and family of the parties considered them to be in a relationship.

21It is the plaintiff’s evidence that her relationship with David commenced in or around 1999, and that David moved into her home located at 62 Woodhall Road, Markham, Ontario (the “Woodhall property”, always owned by the plaintiff until its sale post-separation) in or around 2002. The plaintiff described a relationship that was certainly rocky at times, and as a result of several episodes of “verbal abuse and womanizing” on the part of David, in or around June 2008 the plaintiff left Ontario to pursue a new employment opportunity in the province of Alberta.

22The plaintiff testified that despite her relocating to Alberta, it was not the end of her relationship with David. The plaintiff gave evidence and produced plane and flight records showing that she travelled back and forth between Alberta and Ontario on what she claims to have been almost a monthly basis until the summer of 2010. These visits to Toronto were for the dual purpose of seeing her children, and ongoing joint reconciliation efforts with David. The plaintiff further testified that during the period of those reconciliation, David resided with her at the Woodhall property.

23In an affidavit sworn in this proceeding on October 12, 2011 (i.e. the outset of this proceeding), the plaintiff gave the following evidence:

“We separated in June 2008, as I could no longer tolerate the verbal abuse by the defendant Brathwaite nor his womanizing. I had worked in the business basically seven days a week doing physical labour and also completed the books and paper work. In addition, I looked after my two sons and his two sons. I put out tremendous resources during this relationship for the defendant David Brathwaite and I have never been repaid.

After the relationship broke down, Mr. Brathwaite and I had entered into negotiations to compensate me for my time and services rendered to him and the business and the return of the money that I had borrowed on my property and invested into the business and paid off his credit cards.”

24David argues that there is no mention in the plaintiff’s affidavit of any reconciliation efforts after she and David separated in 2008. Notwithstanding this omission, the plaintiff remained firm during her cross-examination that she and David remained committed to their relationship through ongoing reconciliation efforts well into 2010.

25In support of her position, the plaintiff called several witnesses at trial. Rudolph Franklin (“Franklin”) was a mechanic who worked for DAAB and described the plaintiff and David as “common-law partners”. Franklin further testified that after the plaintiff and David apparently separated, he recalled the plaintiff returning to Toronto “five or six times during 2009, and a couple of times during 2010” where he would typically see her at David’s work. During that time, Franklin testified that David was dating another woman, and that the plaintiff knew about this “affair”.

26Gary Nurse (“Nurse”) was a friend of both the plaintiff and David, but better friends with the plaintiff. At one time, Nurse resided at the Woodhall property. He testified that he would see the plaintiff when she would return from Alberta after June 2008, but could not specify when the plaintiff’s relationship with David actually ended.

27Dejuhan Gray (“Dejuhan”) is one of the plaintiff’s sons. He resided at the Woodhall property and met David at the age of five. Dejuhan testified that David moved into the Woodhall property in or around 2001-2002. After the plaintiff left for Alberta, she returned to Ontario on a regular basis while David still resided at the Woodhall property. Dejuhan testified that when he moved to New York City in or around July 2009, David was still residing in the Woodhall property. Dejuhan confirmed that when the plaintiff was in town, she and David resided in the same room, and in the same bed, at the Woodhall property. Dejuhan also stated that David’s presence at the Woodhall property began to dissipate from 2009 onward, and he would sometimes only reside there on the occasions when the plaintiff returned to Ontario.

28For his part, David testified that he did not move into the Woodhall property until September 2006, even though there is a plethora of evidence that his common-law relationship with the plaintiff commenced years before then. David testified that his relationship with the plaintiff was over in 2007, and he began moving his belongings out of the Woodhall property in 2008. He admits residing in the Woodhall property until late 2008 and then moved out for good. He denies ever staying over at the Woodhall property once he moved out in 2008, but did admit being present there on a few occasions after he and the plaintiff had separated.

29On cross-examination, David’s evidence changed and he admitted to staying over at the Woodhall property post-2008, but when the plaintiff returned to town they “slept in different rooms”. If David was together with another woman at that time, why would he sleep over at the Woodhall property at all, let alone in different rooms?

30I did not find David to be an impressive witness. He was impeached with his evidence from examination for discovery on several occasions and his attempts to shore up his seemingly irreconcilable positions were, for the most part, forced and unsuccessful. On occasion, he simply avoided his obligation to answer proper and relevant questions posed to him by counsel for the plaintiff. As an example, David denied having any post-separation (and pre-litigation) discussions with the plaintiff with a view to resolving her claims. Evidence presented to him in the documentary record, and his own discovery testimony, showed otherwise. Yet David seemed steadfast in maintaining his denials, almost to prevent a display of weakness in the courtroom.

31On another occasion, David denied the simple suggestion put to him by counsel for the plaintiff that at the outset of the relationship, he and the plaintiff agreed to “pull their lives together”. It was as if David believed that the easiest way out of this litigation was to downplay any evidence that could support the existence of a common-law relationship at all.

32In my view, David was unnecessarily adversarial during cross-examination, bordering upon being rude in his responses to proper questions posed by counsel for the plaintiff. I did not find him to be a credible witness, and I reject his evidence that his relationship with the plaintiff ended for good in June 2008. While I would have preferred some additional documentary evidence to support the plaintiff’s position, I am satisfied on a balance of probabilities that due to the reconciliations efforts between the plaintiff and David continuing into 2010, the plaintiff was effectively prevented from discovering that she had a cause of action, and specifically a claim based upon David possibly retaining a disproportionate share of the accumulated assets and wealth of a joint family venture (as that claim is discussed below).

33I further find that until 2010, the plaintiff reasonably understood herself and David to still be parties to what she claims to have been a joint family venture. The plaintiff’s cause of action was therefore not discoverable until those reconciliation efforts were finally exhausted, and as such the plaintiff’s claim is not statute-barred by reason of the Act.

34Accordingly, the answer to Issue #1 is “no”.

Issue #2 If the plaintiff’s claim is not statute–barred by reason of the Act, was there a joint family venture arising from her relationship with David?

35As stated in paragraph 45 of my original Decision, in Kerr the Supreme Court of Canada held that a party who asserts the presence of a joint family venture must lead evidence to allow the Court to consider and assess four main factors:

(a) Did the parties exert mutual efforts and work collaboratively towards common goals? (b) Were the parties’ economic interests intertwined, or was there mutuality and independence in their economic relationship? (c) Was there actual intent on the part of the parties to participate in a joint family venture? (d) To what extent did the parties give priority to the family in their decision making?

36The remedy of a joint family venture is available to protect against unjust enrichment in domestic, common-law relationships, many of which are to be realistically viewed as a joint venture to which the parties jointly contribute. As stated in Kerr:

“At least one other basis for an unjust enrichment claim is easy to identify. It consists of cases in which the contributions of both parties over time have resulted in an accumulation of wealth. The unjust enrichment occurs following the breakdown of their relationship when one party retains a disproportionate share of the assets which are the product of their joint efforts. The required link between the contributions and a specific property may not exist, making it inappropriate to confer a proprietary remedy. However, there may be clearly a link between the joint efforts of the parties and the accumulation of wealth; in other words, a link between the ’value received’ and the ‘value surviving’. ”

37Following the release of Kerr, the Court of Appeal for Ontario released its decision in Martin v. Sansome 2014 ONCA 14 and established the following analysis for the determination of an unjust enrichment-based claim within the contents of a domestic common law relationship:

1. Have the elements of an unjust enrichment - enrichment, a corresponding deprivation, and an of absence of a juristic reason - been made out?
2. If so, will monetary damages suffice to address the unjust enrichment, keeping in mind bars to recovery and special ties to the party that cannot be remedied by money?
3. If the answer to question #2 is yes, should the monetary damages be quantified on the fee for service basis or a joint family venture basis?
4. If, and only if monetary damages are insufficient, is there a sufficient nexus to a property that warrants impressing it to with a constructive trust interest?

38The plaintiff argues that during the term of her relationship with David, they were not only common law partners but also joint contributors to several businesses.

39DAAB was incorporated on June 5, 2000. David testified that the letters in DAAB stood for his full name, David Adrian Augustus Brathwaite.

40149 was incorporated on September 12, 2001. David testified that he caused both DAAB and 149 to be incorporated, paying all of the associated legal costs.

41In simple terms, DAAB was a vehicle transmission and driveline repair business operation. David has worked in the automotive industry for most of his entire adult life, and opened DAAB to “run his own shop” after working for some time in the industry.

42149 owns 1882 Wilson Avenue, Toronto, Ontario (the “Wilson property”), which is the property from which DAAB carries on business. At trial, the Plaintiff and David gave conflicting evidence surrounding the existence of three Acknowledgments of Trust Agreements all dated November 8, 2001, which specified that the shares in DAAB and 149, along with title to a rental property at 50 Yore Road, Toronto, Ontario (the “Yore Road property”) were all held by the plaintiff as bare trustee and in trust for David.

43The plaintiff testified that these documents were presented to her while she was recovering from a serious illness in the hospital in 2003 and backdated to make it look like the parties agreed “from the start” that David was and would always be the sole owner of 149 and DAAB to the detriment of the plaintiff and her contributions to the businesses (described hereinafter).

44In contrast, David testified that the Agreements were signed on November 8, 2001, and there was never any dispute that he was the sole legal and beneficial owner of both 149 and DAAB at all material times.

45In my view, it is not necessary to address the divergence in this evidence between the parties. The Acknowledgment of Trust Agreements are relevant to the original causes of action raised in the plaintiff’s initial Statement of Claim. There is no dispute that the companies were initially incorporated and owned by David. As was apparently typical during their common law relationship, assets were shielded when necessary from creditors by way of transfers and trust agreements. For example, prior to the plaintiff making a voluntary assignment into bankruptcy on October 19, 2006 [1], she transferred legal title to the Woodhall property to David (30%) and the plaintiff’s son Benjamin Allen (70%) as tenants in common. All parties agreed that both David and Benjamin held their respective shares in the Woodhall property in trust for the plaintiff.

46Likewise, the shares in 149 and DAAB were transferred to the plaintiff during a period when David was being chased by creditors. In my view, as the plaintiff now advanced a theory that she is owed a monetary award by reason of David being unjustly enriched after the end of their joint family venture, the issue of whether she did or continues to own any direct interest in DAAB or 149 has been rendered moot.

47Did the plaintiff contribute to 149 and DAAB? In my view there was evidence at trial to support the plaintiff’s contention that she expended efforts, both physically and financially, towards 149 and DAAB. Several DAAB employees testified as to the plaintiff’s administration/managerial role at the Wilson property/office, and her continuous presence there overseeing the scheduling of appointments, invoicing, collection of receivables and bookkeeping matters.

48The plaintiff tendered evidence in support of her position that she refinanced the Woodhall property on several occasions, and used part of those mortgage proceeds to either retire debts or inject capital into DAAB, 149 and some older business operations owned by David. In fact, the plaintiff testified that the majority of the debts listed on the Statement of Affairs in her bankruptcy represented monies actually owing to creditors of David and/or his businesses.

49In a somewhat confusing Damages Brief, the plaintiff tried to show that over the term of her common law relationship with David, she transferred more than $200,000.00 to David’s businesses and that money came from either the Woodhall property, the plaintiff or her line of credit.

50Counsel for David was effective in his cross-examination of the plaintiff and in casting doubt as to the reliability of many of the entries in the plaintiff’s Damages Brief. Of note, the dates of the refinancing did not correspond with many of the plaintiff’s alleged injections of capital into DAAB and 149, and the plaintiff could not adequately explain the alleged source of those entries in her Damages Brief. While I will have more to say about these shortcomings, it was very difficult for me to determine what amount was actually placed into David’s businesses by the plaintiff. As stated, the records were missing and/or incomplete, and often did not reconcile with the plaintiff’s testimony. Nevertheless, I do find that the plaintiff did expend efforts and conferred a benefit towards DAAB and 149.

51In considering the four factors relevant to the inquiry into a joint family venture, I make the following findings:

Mutual Effort

52The length of the relationship between the plaintiff and David was approximately nine years. Both the children of the plaintiff and the children of David resided at different times at the Woodhall property.

53The plaintiff and David worked together. They were parental figures to each other’s children.

54In my view, the evidence confirms that the plaintiff and David did work collaboratively towards common goals. There was pooling of effort and teamwork between them. There were joint financial contributions to the expenses of both the home and David’s businesses. David testified that he consistently paid the mortgage on the Woodhall property. As found above, the plaintiff made significant contributions, both financially and with her time, to David’s businesses.

55I find that the first factor in the Kerr analysis has been satisfied.

Economic Integration

56There is little doubt that the plaintiff and David shared expenses, as at least some of the equity in the Woodhall property was used to fund DAAB and 149 through capital injection or payment of expenses.

57During the term of their common-law relationship, the plaintiff and David did not lead independent economic lives as they both contributed to the family economic unit.

58As held by Justice Sutherland in Gibson v. Mead 2015 ONSC 6935, “economic integration is present where there is a sense of collectivity, mutuality and prioritization of the overall welfare of the family unit of the individual interest of the individual members.”

59Title to the Woodhall property and the shares in DAAB and 149 were transferred back and forth between the plaintiff and David to protect their joint, economic interest.

60I find that the second factor in the Kerr analysis has been satisfied.

Actual Intent

61Despite David’s protestation to the contrary, I find that he and the plaintiff remained together, in good times and bad, with a view to maintaining and fixing their relationship even after the plaintiff had relocated to Alberta. The plaintiff gave evidence that David was still seeking to reconcile with her even after the commencement of this proceeding.

62The evidence of the witnesses called by the plaintiff confirmed an actual intent on the part of the plaintiff and David to economically intertwine their respective lives. The relationship between the plaintiff and David was stable enough, even in the last two difficult years. They were reliant upon each other, both financially and emotionally. Their actual intent was consistent with a joint family venture.

63I find that the third factor in the Kerr analysis has been satisfied.

Priority of the Family

64Both the plaintiff and David gave priority to their family unit. They worked together, suffering through the burdens and enjoying the benefits. As stated, they were parental figures to each other’s children. The Woodhall property was a home for the plaintiff, David and their respective children at different times during the common law relationship.

65Both the plaintiff and David made numerous decisions on a joint basis for the betterment of their relationship and their families, including shielding assets from creditors so as to hopefully maintain their worth for everyone’s benefit.

66I find that the fourth factor in the Kerr analysis has been satisfied.

67In my view, all the indicia of the joint family venture are present. Accordingly, the answer to Issue #2 is “yes”.

Issue #3 If a joint family venture existed, was there a disproportionate accumulation of wealth linked to the plaintiff’s contributions to the joint family venture?

68It is important to remember that the basis of unjust enrichment is the retention of an “inappropriately disproportionate amount of wealth” by one party engaged in a joint family venture.

69In Gonsalves v. Scrymgeour 2016 ONSC 6659, Justice Glustein held that once a joint family venture is found, the Court is to then consider whether there is a disproportionate accumulation of assets of one party linked to the contributions of the other party in the joint family venture. Justice Glustein went on to find that a joint family venture is a “category” of unjust enrichment, and as such the Court need not consider if there has been corresponding deprivation or absence of juristic cause, as a finding of joint family venture incorporates those factors.

70While I agree with Justice Glustein, I will also attempt to assess the plaintiff’s claim of unjust enrichment by determining whether (a) David was unjustly enriched, (b) the plaintiff suffered a corresponding deprivation, and (c) whether or not there was a juristic reason for the enrichment.

71For the plaintiff to succeed, she must prove that her contributions to the joint family venture are linked to the generation of wealth. As held in Kerr, unjust enrichment is understood to arise when a party who leaves the relationship with a disproportionate share of the wealth is denying a claimant his/her reasonable share of that wealth accumulated through joint efforts in the course of the common-law relationship. The Supreme Court of Canada further stated in Kerr:

“Provided that they confer a tangible benefit on the defendant, services will generally constitute in an enrichment and corresponding deprivation. Whether the deprivation was counterbalanced by benefits flowing to the claimant from the defendant should not be addressed from the first two steps of the analysis.”

72Curiously, the plaintiff’s definition of the assets of the joint family venture seems to consist only of 149 and DAAB (and her financial contributions and services provide to those companies), and nothing more. David remitted several mortgage payments on the Woodhall property during the term of their common law relationship. After their relationship ended, the plaintiff unilaterally listed and sold the Woodhall property, keeping all of the net sale proceeds (approximately $277,000.00) for herself. She failed to account for any of those proceeds at trial.

73When asked how the plaintiff could maintain a position that the joint family venture only included DAAB and 149, and not any other assets or wealth (such as the Woodhall property), counsel for the plaintiff responded that the Woodhall property “wasn’t part of the deal”. Respectfully, to the extent that there was ever “a deal”, it was the plaintiff who submitted that the essence of that “deal” was that her common law relationship with David was, in and of itself, a joint family venture.

74What the plaintiff is effectively saying is that under the guise of a joint family venture, she wants a return of all of the money she injected into David’s businesses by way of constructive trust. With respect, that is not what I believe to be the approach mandated by the Supreme Court of Canada in Kerr and the Court of Appeal for Ontario in Martin. In my view, by definition a joint family venture encompasses the accumulation of all assets and wealth during the course of a common law relationship. The plaintiff cannot ex post facto “cherry pick” which assets form part of the joint family venture (i.e. only the ones for which she claims to have contributed). It is as if the plaintiff is seeking to reap all benefits from her common law relationship with David, and not account for any of the burdens.

75In addition, the monetary relief sought by the plaintiff is to be calculated on a “value survived” basis, i.e. both parties’ contributions resulted in an accumulation of assets and wealth during their common law relationship, and David retained a disproportion of share of the assets and wealth after the relationship ended. I agree with David that in deciding this issue, the Court ought to examine all of the assets and wealth of the family unit, including the value of the Woodhall property and shares in other businesses owned at certain times by the plaintiff.

76I have accepted the plaintiff’s position that her relationship with David was a joint family venture, and that it ended in or around the summer of 2010. Using Justice Glustein’s approach in Gonsalves, I find that the plaintiff has, regrettably, tendered zero evidence to assist this Court in the valuation of the assets and wealth of the joint family venture, and as a result I am unable to find that the plaintiff’s contributions led to an increase in the assets and wealth of the joint family venture (let alone whether David retained any disproportionate share). No evidence, expert or otherwise, was tendered with respect to the valuation of the shares in 149 and DAAB from incorporation until 2010.

77Counsel for the plaintiff asked the Court to infer that the value of the Wilson property was at least $700,000.00 due to David obtaining a mortgage in that amount subsequent to the end of his common law relationship with the plaintiff. This is, naturally, far from sufficient, admissible evidence required in order for the Court to determine the value of the equity in the Wilson property, if any. More importantly, the Wilson property is an asset of 149, and the plaintiff has no direct interest in the Wilson property. Of note, the financial statements of DAAB and 149 [2] (which were not current but were produced until 2009) show the shareholder’s equity in both companies to be in a negative position. That shareholder’s equity deficit had in fact increased during the course of their common law relationship. At most, David’s interests in those companies appear to have a nominal value by the end of his relationship with the plaintiff.

78David remitted many payments towards the mortgage on the Woodhall property during his common law relationship with the plaintiff, and yet the plaintiff retained all of the $277,000.00 in net sale proceeds. I have no valuation evidence before me confirming any accumulation of assets or wealth by way of the value of the shares in DAAB and 149. On the record before me I cannot conclude that David retained a disproportionate share of any assets and wealth accumulated due to the plaintiff’s efforts during the joint family venture.

79For completeness of the exercise, I also find that the plaintiff has failed to prove the elements of unjust enrichment. To begin, the onus was on the plaintiff to prove not only that it was more likely than not that she had transferred funds to DAAB and 149, but also to prove the probable amount of those funds, at least in approximate terms. For the reasons set out above, I find that the evidence adduced by the plaintiff precludes me from determining the amount of those funds with any confidence.

80There is no doubt that the plaintiff contributed her services to both DAAB and 149, and normally a party providing personal services suffers a corresponding deprivation of their own time and effort. However, there was no corresponding deprivation as the plaintiff received income from the defendant companies. The plaintiff gave evidence that in August 2007 she began to spend more time “away from the shop and found employment someplace else.” That new employment was a night time job with Wal-Mart for six months (which generated a total of $10,523.67 in income).

81However, until 2007 the plaintiff earned income from 149 and/or DAAB, and the majority of that income appeared to be in cash. A review of the plaintiff’s personal banking records show a series of deposits in fixed, even sums ranging from $500.00 to $10,000.00. The plaintiff’s income tax returns while she resided in Ontario show average annual reported T4 income in the $10,000.00 - $20,000.00 range. Even though she also reported some additional rental income during a few of those years, the amount of her total annual reported income was not reconcilable with the amount of expenses the plaintiff claimed to have incurred during this time period. Indeed, during her cross-examination the plaintiff admitted to underreporting her cash income to Canada Revenue Agency.

82I wish to address one last matter before concluding Issue #3. During closing submissions, I posed many of the preceding questions and concerns to counsel for the plaintiff. Ultimately, counsel for the plaintiff advised that to the extent he could not provide adequate responses to my questions, he wished that I order a reference (presumably before a Master) to permit the plaintiff a further opportunity to adduce additional evidence to prove that David retained a disproportionate share of the assets and wealth accumulated during the joint family venture.

83I have reviewed the Amended Statement of Claim. No request for a reference is claimed. At most, the plaintiff requested at paragraph 1(e.1) that “there be a full accounting of David’s operation of DAAB and 149.” An accounting is not a reference, and is a remedy sought at the trial (emphasis given because there is to be one trial) of this proceeding.

84Pursuant to Rule 54.02(1) of the Rules of Civil Procedure, the Court may direct a reference to determine an issue where (a) the parties consent, (b) a prolonged examination of documents or an investigation is required which, in the Court’s opinion, cannot conveniently be made at trial, or (c) a substantial issue in dispute requires the taking of accounts. As the Court of Appeal stated in Elcano Acceptance Ltd. et al. v. Richmond, Richmond, Stambler & Mills, the right to direct a reference of an issue in a proceeding is a narrowly circumscribed power as “it is a basic right of a litigant to have all issues in dispute resolved in one trial.”

85In Tukara v. Nicksic Estate (1976) 2 C.P.C. 301 (Ont. Div. Ct.), the Divisional Court stated:

“Moreover, even if the learned Surrogate Court Judge had been perfectly clear as to his findings in law, and had acted within his jurisdiction in directing the reference as to the two claims as he did, it has long been considered by the Courts to be a wrongful exercise of the discretion of a trial Judge to direct a reference under circumstances where the litigants would be forced to lead evidence before the referee all or most of which has been already led before the trial Judge.”

86The trial of this proceeding was already delayed once due to the plaintiff seeking leave to amend her Statement of Claim and pursue a new cause of action at the commencement of the trial. Once I granted the plaintiff leave to amend, the issue of whether David was unjustly enriched was front and center, and the trial was adjourned so that the plaintiff could pursue this new cause of action. The plaintiff bore the onus of leading the necessary evidence to permit the Court to come to the conclusions she requested.

87This is not one of the rare cases where the Court ought to exercise its limited discretion and essentially bifurcate the trial. The accumulation of assets and wealth of the joint family venture was something the plaintiff was required to prove on her theory of the case. I do not think it sound policy to permit the plaintiff another proverbial “kick at the can” when she failed to lead evidence to prove a necessary element of her cause of action.

88Accordingly, the answer to Issue #3 is “no”.

Issue #4 If there was a disproportionate accumulation of wealth, what is the appropriate remedy in the circumstances?

89As a result of my disposition of Issue #3, the question posed in Issue #4 has been rendered moot.

Counterclaim

90David’s counterclaim, which was not strenuously pursued at trial, was only relevant in the event that all four issues set out above were answered in favour of the plaintiff.

91David’s counterclaim is therefore dismissed.

Costs

92I would urge the parties to try and resolve the issues of costs of this proceeding. In the absence of such an agreement, the parties may deliver written costs submissions for my review and consideration.

93David may serve and file his costs submissions within 14 business days of the release of these Reasons. Those submissions shall be no more than seven pages including a Bill of Costs.

94The plaintiff shall thereafter have an additional 14 business days from the receipt of David’s costs submissions to deliver her responding costs submissions which shall also be no more than seven pages including a Bill of Costs.

Diamond J. Released: March 20, 2017

Footnotes

1Of note, in paragraph 47 of my original Decision, I questioned whether the plaintiff’s cause of action for unjust enrichment/constructive trust was precluded by reason of her voluntary assignment into bankruptcy (i.e. did her cause of action vest in her trustee). That argument was not really pursued by David when the trial resumed before me as subsequent to the release of my original Decision, the plaintiff secured an agreement with her Trustee in Bankruptcy transferring any interest that the Trustee may have had in this cause of action back to the plaintiff for valuable consideration.

2All of the financial statements for DAAB and 149 were prepared and produced by Paul Lochab, a chartered accountant called as a witness at trial by the plaintiff in an effort to verify some of the financial records and source documents tendered by the plaintiff in her Damages Brief.