Court File and Parties
COURT FILE NO.: 15-388 DATE: 2017 April 7
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Deanna Lynn Peters Applicant – and – Howard James Swayze Respondent
Counsel: Lisa DeLong, for the Applicant Gerry Smits, for the Respondent
HEARD: March 20 and 22, 2017
The Honourable Justice R. J. Harper
Issues
[1] The only issue is whether or not the applicant, Deanna Lynn Peters, (Deanna) is entitled to a constructive trust interest in the home owned by the respondent, Howard James Swayze).
Background
[2] Deanna and Howard were never married. They cohabited for 15 years. They started to cohabit in 2000 and separated in 2015. However, according to Howard they mostly lived separate lives for the 3 or 4 years prior to separation.
[3] In 2000, Deanna, her daughter and Howard started to live together in an apartment. They moved to a townhouse. In or about 2002, they moved into the home that was owned by Howard. That home, located at 4 Robina Lane, Brantford, Ontario, had been owned by Howard and his first wife. In or around the time of cohabitation with Deanna, Howard had the home transferred into his name alone as there did not appear to be any equity in that home at the time.
[4] Both Howard and Deanna worked throughout the period of cohabitation. Howard worked for Carquest Canada Ltd. By the time of trial he was earning approximately $48,000 annually. Deanna worked at Arysta Canada Ltd. and earned approximately $58,000 per annum.
[5] They never had any joint bank accounts or joint savings. Deanna was on Howard’s benefits from his work and she and her daughter were on Howard’s car insurance as secondary drivers. The insurance home owners’ policy statements were sent both to Howard and Deanna.
[6] In or about the beginning of May 2005, Deanna and Howard ran up some significant debt. It is not clear from either parties’ evidence what the breakdown of responsibility for the debt is. Suffice it to say that the total debt was in the amount of $55,229. The parties consolidated the combined debt with a loan with Citi-financial. The total loan was for $57,290. Howard was the borrower and Deanna co-signed the loan.
[7] Howard testified that the carrying costs of the loan became too much and he refinanced the debt with a consolidation mortgage on his home in the total amount of $187,568. Citi-financial was paid $57,000 and after other legal expenses, Howard was paid $19,000 from the proceeds of that mortgage.
[8] At no time during the cohabitation was Deanna put on title to the property at 5 Robina. At no time during cohabitation was Deanna made liable for the mortgage on that property.
[9] The day to day finances of Howard and Deanna were not complicated. They had normal day living expenses. They accommodation expenses. They consisted of:
Monthly mortgage payment of: $ 1,005 Property taxes: $ 300 Home Insurance: $ 92 Utilities expenses, hydro, heat and telephone: $ 329 Variable expenses of, groceries, clothing, entertainment, vacation: $ 1,000
[10] Howard paid the mortgage, taxes and utilities and insurance. Deanna bought most of the groceries and contributed $500 per month. She stated the $500 was for her half of the mortgage. Howard stated that her $500 was for rent.
[11] Deanna did most of the gardening in the back yard and Howard cut the grass in the front. Deanna stated that she did the gardening because she loved it.
[12] Howard bought a fishing boat. It cost him approximately $27,000 inclusive of all of the fishing gear. He planned to use it as a fishing charter when he retired. Until then it was his hobby. As Deanna loved gardening, Howard loved fishing.
[13] The value of the 5 Robina home increased. The only expert to testify what the present value of the home would be was Cheryl Whitworth. She testified that as of August 1, 2016 the property had a value of approximately $320,000. Two other letters of opinion were filed without calling the person who offered the opinion. The value ascribed in February, 2016 was between $260,000 and $270,000. The value outlined in the April 2016 “Letter of Opinion” was between $290,000 and $299,000.
[14] The mortgage on that home had a balance owing as of December 31, 2016 in the amount of $140,231.45. Howard made a principle prepayment of $17,086.90 in order to reduce the principle down to that amount.
The Animals/Pets in the Home
[15] A significant amount of time was spent in the trial about pets in the home; whose pets they were, how much damage they caused to the home and who was responsible for that damage.
[16] Howard stated that Deanna brought numerous pets in the home. It all started with a Chihuahua. Unfortunately due to allergies that Howard’s step sister, the Chihuahua had to go. However, the Chihuahua was followed by 2 Australian Shepherds and cats. I would be remiss if I didn’t mention the Iguana, who had its own room for a period of time.
[17] Howard stated that he received no benefit from Deanna’s gardening. He claimed that he could not tolerate walking in the backyard for fear of stepping on something that no one should have to step on. He admitted, however, that he would have gone fishing in any event.
[18] Howard conceded that, although he complained about the animals and the serious damage they were dong to the woodwork in the home, he just went along with it. He stated that he would not repair the woodwork until the animals were gone.
[19] Deanna stated that the animals were “family pets”. According to her, Howard loved the animals and, not only fed them; he would play with them and pet them. Howard retorted that, if the animal came up to him, of course he would pet it; he firmly averred that he would not simply toss the dog aside.
[20] Howard called evidence from a contractor in order to establish that the repair costs related to the pet damage would amount to $28,000. It was not until submissions that Howard’s counsel conceded that this claim of pet damage was not the strongest to advance. I agree with that late concession. After all there was no evidence that anyone tried to mitigate the mutt mess and damage from the feline ferocity.
[21] Howard’s claim for the pet damage is dismissed. Courts cannot be occupied by searching throughout the evidence with the degree of attachment to family pets in order to determine who is responsible for the damage.
Claim for Constructive Trust
[22] Justice D.C. Shaw set out an excellent and thorough review of the law in McKay v. Langstaff, 2015 ONSC 5223 commencing at paragraph 46:
(i) The Law of Unjust Enrichment
[46] The law on unjust enrichment arising out of the relationship between unmarried spouses has been comprehensively addressed by the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10, 2011 S.C.C. 10. In Elkaim v. Markina 2011 ONSC 2586, at para. 9, Sachs J. summarized the framework set out in Kerr to assess property claims in common law relationships:
The law surrounding the resolution of property claims in common law relationships has recently been clarified by the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10. In that case the Court found that the “common intention” approach to resulting trust has no “useful role to play” in the resolution of property claims by domestic partners on the breakdown of their relationships: at para. 29. The Court also found that the role of the parties’ reasonable or legitimate expectations in the unjust enrichment analysis was a limited one. Rather, the framework to be used can be summarized as follows:
(a) First, the court must determine if there has been an unjust enrichment.
In doing so, the questions are:
- Has the defendant been enriched?
- Has the plaintiff suffered a deprivation?
- Is there “no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff?”: at para. 40.
It is in the consideration of the third stage, “if the case falls outside the existing categories” of juristic reasons for the retention of the benefit, then the court may consider looking to “the reasonable expectation of the parties and public policy considerations to assess…whether particular enrichments are unjust”: at paras.43-44.
(b) If the court finds that there is a basis for the unjust enrichment claim the court must then turn its mind to the question of what remedy is appropriate to “reverse the unjustified enrichment.” This may include either a “monetary or proprietary remedy”: at para. 46.
(c) On the question of remedy, the first remedy to consider is “always a monetary award. In most cases it will be sufficient to remedy the unjust enrichment”: para. 47.
(d) A proprietary award may be required if:
(i) the plaintiff has demonstrated a sufficiently substantial and direct link between his or her contributions and the property, in which case “a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour”: at para 50; and,
(ii) the plaintiff has established that a monetary award would be insufficient in the circumstances. This involves considering the probability of recovery of such an award and considering whether “there is a reason to grant the plaintiff the additional rights that flow from recognition of property rights”: at para. 52.
(e) If a monetary award is appropriate, the question then becomes how to quantify that award.
To do so, the court must first characterize the nature of the unjust enrichment claim. Is the basis of the “unjust enrichment…the retention of an inappropriately disproportionate amount of wealth by one party when the parties have been engaged in a joint family venture and there is a clear link between the plaintiff’s contributions to the joint venture and the accumulation of wealth” : at para. 81.
If so, “a monetary award for unjust enrichment should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions”: at para. 87.
(f) To determine whether a joint family venture exists, the court should have regard to the following factors as set out in Kerr v. Baranow at paras. 87-99:
(i) Mutual Effort: Did the parties pool their efforts and work together towards common goals?
(ii) Economic Integration: This involves considering how extensively the parties’ finances were integrated.
(iii) Actual Intent: What did the parties actually intend? Did they intend to have their lives economically intertwined or did they make the choice not to? This intent may be expressed or inferred from conduct.
(iv) Priority of the Family: This factor asks the court to consider to what extent the parties gave priority to the family in their decision making. “A relevant question is whether there has been in some sense detrimental reliance on the relationship, by one or both of the parties, for the sake of the family.”
If the monetary award should not be quantified on a “joint family venture” basis, then the court should consider a “fee for service” or quantum meruit calculation. It is generally at this stage that the court will consider whether the claim should be discounted because of a mutual conferral of benefits.
[47] At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit that justice does not permit one to retain: Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, at para. 788.
[48] The Court has taken a straightforward economic approach to the first two elements – enrichment and corresponding deprivation: Kerr, para. 37.
For the first requirement — enrichment — the plaintiff must show that he or she gave something to the defendant which the defendant received and retained. The benefit need not be retained permanently, but there must be a benefit which has enriched the defendant and which can be restored to the plaintiff in specie or by money. Moreover, the benefit must be tangible. It may be positive or negative, the latter in the sense that the benefit conferred on the defendant spares him or her an expense he or she would have had to undertake (citations omitted).
Turning to the second element — a corresponding deprivation — the plaintiff’s loss is material only if the defendant has gained a benefit or been enriched (Peel, at pp. 789-90). That is why the second requirement obligates the plaintiff to establish not simply that the defendant has been enriched, but also that the enrichment corresponds to a deprivation which the plaintiff has suffered (citations omitted).
[49] The provision of domestic services can support a claim for unjust enrichment: Kerr para. 42.
[50] During both the benefit analysis and the deprivation analysis, the court must resist the temptation to evaluate the reciprocal exchange of benefits. “Attempting to set-off or account for reciprocal benefits to show that the plaintiff has not suffered any detriment and is, in fact, better off than before is not appropriate” Wilson v. Fotsch, 2010 BCCA 5, [2010] B.C.J. No. 8 (B.C.C.A.), at para. 19. “The receipt of benefits by a plaintiff does not mean ipso facto that the defendant has not been unjustly enriched”: Wilson, para. 31.
[51] Although mutual conferral of benefits should not be addressed at the benefit/detriment stage of the analysis, that is not to say that mutual benefits are to be ignored. Rather, as stated by Cromwell J. in Kerr, at para. 109:
- As I noted earlier, my view is that mutual benefit conferral can be taken into account at the juristic reason stage of the analysis, but only to the extent that it provides relevant evidence of the existence of a juristic reason for the enrichment. Otherwise, the mutual exchange of benefits should be taken into account at the defence and/or remedy stage. It is important to note that this can, and should, take place whether or not the defendant has made a formal counterclaim or pleaded set-off.
[52] At para. 124 of Kerr, Cromwell J. summarized the role of the parties’ reasonable expectations in the domestic context:
To summarize:
The parties’ reasonable or legitimate expectations have little role to play in deciding whether the services were provided for a juristic reason within the existing categories.
In some cases, the fact that mutual benefits were conferred or that the benefits were provided pursuant to the parties’ reasonable expectations may be relevant evidence of whether one of the existing categories of juristic reasons is present. An example might be whether there was a contract for the provision of the benefits. However, generally the existence of mutual benefits flowing from the defendant to the claimant will not be considered at the juristic reason stage of the analysis.
The parties’ reasonable or legitimate expectations have a role to play at the second step of the juristic reason analysis, that is, where the defendant bears the burden of establishing that there is a juristic reason for retaining the benefit which does not fall within the existing categories. It is the mutual or legitimate expectations of both parties that must be considered, and not simply the expectations of either the claimant or the defendant. The question is whether the parties’ expectations show that retention of the benefits is just.
[53] The concept of a “joint family venture” comes into play at the remedy stage, after it has been determined that there has been an unjust enrichment
[55] At para. 80, Cromwell J. held:
Where the unjust enrichment is best characterized as an unjust retention of a disproportionate share of assets accumulated during the course of what McLachlin J. referred to in Peter (at p. 1001) as a “joint family venture” to which both partners have contributed, the monetary remedy should reflect that fact.
[56] At para. 81, Cromwell J. described the appropriate remedy:
In such cases, the basis of the unjust enrichment is the retention of an inappropriately disproportionate amount of wealth by one party when the parties have been engaged in a joint family venture and there is a clear link between the claimant’s contributions to the joint venture and the accumulation of wealth. Irrespective of the status of legal title to particular assets, the parties in those circumstances are realistically viewed as “creating wealth in a common enterprise that will assist in sustaining their relationship, their well-being and their family life” (McCamus, at p. 366). The wealth created during the period of cohabitation will be treated as the fruit of their domestic and financial relationship, though not necessarily by the parties in equal measure. Since the spouses are domestic and financial partners, there is no need for “duelling quantum meruits”. In such cases, the unjust enrichment is understood to arise because the party who leaves the relationship with a disproportionate share of the wealth is denying to the claimant a reasonable share of the wealth accumulated in the course of the relationship through their joint efforts. The monetary award for unjust enrichment should be assessed by determining the proportionate contribution of the claimant to the accumulation of the wealth.
[23] In this case, I must first ask the question of whether or not there has been an unjust enrichment. Was the wealth in this case created from the “fruits of their domestic and financial relationship?” On the evidence before me I find that it was not so created.
[24] Deanna was never a titled owner to 5 Robina. She was never financially liable for the mortgage on that home. She did contribute to the carrying costs of the home by paying $500 per month, however, she also received the benefit of her and her daughter living in that home with no contribution by the daughter and no other contribution by Deanna. With respect to living expenses, Deanna contributed to groceries and to a substantial expense to Bell Canada for internet and Express Vu services. Once again she and her daughter were the ones who received the larger benefit from that.
[25] Deanna claimed that she did all of the cleaning in the home. Pictures of the home were filed as exhibits. The daughter’s room can only be described as a disaster area. Not only was it cluttered in the extreme, there were holes in one of the walls. Graffiti was the main feature on another wall. The animal claw marks on much of the woodwork in the home were extreme. I accept Howard’s evidence, also supported by pictures, that there were cob webs in many of the corners of the home and gobs of hair stuck in grease around the kitchen. This evidence represents the exact opposite of the conferring of a benefit.
[26] Deanna received a substantial benefit from the consolidation refinancing in 2009. She was no longer responsible for significant debt that she had run up between 2005 and 2007.
[27] Kerr, supra, does not create an equitable remedy that calls for courts to undertake a minute analysis of every expenditure that parties incur during their cohabitation and somehow assign a debit or a credit to one of the cohabitees.
[28] As I alluded to earlier, the financial circumstances of these parties is not unique or complicated. They each earned relatively the same amount of money. They each contributed to their living costs. They each had separate life interests. They had separate bedrooms. They rarely went on joint vacations. They did not have joint bank accounts or joint investments.
[29] I am of the view that the mere appreciation of one of the cohabitant’s assets under the circumstances of this case does not of itself create an unjust enrichment. Deanna has not established that she gave something tangible to Howard that he received or retained.
[30] As a result of the above analysis, Deanna’s claim for an interest in 5 Robina Lane is dismissed.
[31] If costs cannot be agreed upon, the parties may provide written submissions within 30 days.
Harper, J. Released: April 7, 2017