Court File and Parties
COURT FILE NO.: FS-16-0114 DATE: 20170110 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Trevor Griffith Applicant, Respondent on Appeal – and – Susan Davidson Respondent, Appellant on Appeal
Counsel: S. Morgan, for the Applicant J. Polis, for the Respondent
HEARD: October 24, 2016
Appeal of Arbitrator’s decision of March 29, 2016
M. J. Donohue, J.
Background
[1] The parties, Mr. Griffith and Ms. Davidson, had been living common-law for eight to ten years in a home which they held as joint tenants. Mr. Griffith argued that, as he paid the $10,000 deposit and made all the mortgage, tax and insurance payments, there was a resulting trust of her joint interest to him.
[2] The parties attempted to resolve the issue on a written record before an arbitrator.
[3] The arbitrator concluded on the facts and applicable law that the presumption of resulting trust applied, that Ms. Davidson had failed to rebut the presumption by proving that Mr. Griffith intended to gift her the interest in the property, and ordered Ms. Davidson to convey her interest in the property to Mr. Griffith in 30 days.
[4] The arbitration agreement allowed for an appeal to the Superior Court of Ontario on the basis of an error of mixed fact and law.
[5] The parties agree that the standard of review is palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
[6] Ms. Davidson argued that the arbitrator misapplied the law on the facts of the case and so erred.
[7] To the extent to which this court found that the arbitrator erred, the parties asked this court to order an appropriate result on the same record which had been before the arbitrator.
Analysis by the Arbitrator of the Applicable Law
[8] The arbitrator noted that resulting trusts arise where property is acquired by one person and placed in their name jointly with another person, without consideration passing between the two.
[9] The Supreme Court of Canada ruled in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, involving a joint bank account held by father and son:
[24] The presumption of resulting trust is a rebuttable presumption of law and the 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… This is so because equity presumes bargains, not gifts. [References Removed.]
[10] As Mr. Griffith paid the deposit for the home and placed title in joint names the presumption is that there was a resulting trust. The burden shifts to Ms. Davidson to establish that, in putting the property in joint names, Mr. Griffith intended to give her a gift.
[11] The arbitrator cited the longstanding principle of resulting trusts in the context of common law relationships, set out in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269:
…it had been settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, “results” to the person who advances the purchase money… [References Removed.]
[12] The arbitrator wrote at page 8:
The transferor’s intention at the time of making the transfer must be considered. If the transferee can establish that there was an intention to make a gift, the presumption of resulting trust is rebutted.
[13] My review of the law confirms her analysis is correct to this point.
Conclusion by the Arbitrator
[14] The arbitrator confirmed that Mr. Griffith put the title in both names for estate planning purposes such that, in the event of his death, Ms. Davidson would receive the property as the survivor.
[15] The arbitrator then stated at page 9:
This is not sufficient to establish that he intended at the time of purchase of the property to make a gift to Ms. Davidson of a 50 per cent interest in the property.
Joint tenancy is a legitimate estate planning tool used in many circumstances where an outright gift of property is not intended.
[16] Ms. Davidson appeals on the basis that these findings are errors of mixed fact and law.
Question of Mixed Fact and Law
[17] I find that a determination as to whether there is a gift or resulting trust is a question of mixed fact and law, as confirmed in J(D) v. (J)M, 2009 ABCA 272, 70 R.F.L. (6th) 63:
42 The trial judge excluded all of the Disputed Lands from the division by finding that those lands were the subject of a resulting trust in favour of the husband's parents. Whether the presumption of resulting trust applies and whether it has been rebutted are questions of mixed fact and law turning on whether there was a gratuitous transfer and whether a gift was intended. As such, the trial judge's interpretation of the evidence as a whole should not be overturned absent palpable and overriding error, or a fundamental mischaracterization, or misapprehension of the evidence… [References Removed.]
Evidence of a Will
[18] The arbitrator did not have in evidence Mr. Griffith’s will made at the time of the purchase of the property. It had been Ms. Davidson’s evidence that the will confirmed Mr. Griffith’s intention that the property was a joint asset. The arbitrator stated:
Regardless, I would not find such a document helpful to Ms. Davidson’s case. It would confirm Mr. Griffith’s stated objective in putting the home in joint names, being to benefit Ms. Davidson upon his death. Further, if the home was in joint names, it would pass to Ms. Davidson by right of survivorship rather than through a will…
[19] With respect, the existence of a will at the time of the purchase of a property put in joint tenancy is relevant to the intention to gift.
[20] The purchase was made in July 1997.
[21] The evidence which the arbitrator did have was a letter dated May 26, 1998 jointly to Ms. Davidson and Mr. Griffith. It referred to enclosed “new wills” and “new powers of attorney”. Ms. Davidson’s will, which was in evidence, made Mr. Griffith her beneficiary. Mr. Griffith’s reply stated that “he changed his will in 2002 such that Ms. Davidson was no longer his beneficiary”. It is a reasonable inference that Mr. Griffith made Ms. Davidson his beneficiary in his 1998 will shortly after the purchase of the joint property.
[22] I find that this was an error in fact which was material to the issue of intention to gift.
Did the Arbitrator Err in Stating Estate Planning Does Not Indicate a Gift in Joint Ownership?
[23] The arbitrator did not cite any authority for the proposition that where the testator changed their mind on sharing a property in joint tenancy, the testator was free to remove the other joint tenant’s name and interest from the property.
[24] Counsel for Mr. Griffith on the appeal did not have authority on this point either.
[25] The arbitrator appears to have concluded that, because one can change one’s will and estate plan, that one can unilaterally revoke a joint interest in property at some later date if they change their mind.
[26] I consider this an error as explained below.
The Law – Timing
[27] The intention of the parties at the time of the purchase is the relevant time frame to determine if there was an intention to gift or the intention to grant a trust.
[28] It is not open to a person to support a claim of resulting trust by showing at some later date that he intended a resulting trust, such as here, when Mr. Griffith states that in 2002, five years after the home was purchased, he removed Ms. Davidson from his will: see Majer v. Majer (1977), , 4 R.F.L. (2d) 383 (Ont. Co. Ct.), at para. 6, citing SCC in Taylor v. Wallbridge, (1879) , 2 S.C.R. 616.
The Right of Survivorship
[29] The right of survivorship and its significance to joint tenancy is set out as follows in Fuller v. Fuller Estate, 2010 BCCA 421, [2010] B.C.J. No. 1901, at para. 51:
[51] Integral to the discussion of whether the presumption of resulting trust has been rebutted in this case, is an appreciation of the concept of the right of survivorship that is inherent in the creation of a joint tenancy. The right of survivorship provides that where a joint tenancy continues until the death of a joint tenant the interest of the deceased joint tenant is extinguished and passes to the surviving joint tenant… A joint tenant may sever his or her interest in the joint tenancy during his or her lifetime and thereby convert the interest into an interest as a tenant in common… however, that did not occur in this case. [References Removed.]
[30] In Pecore v. Pecore the court dealt with a joint bank account and how it was to be handled on the death of one of the account holders. The court looked at whether the father (who put all the funds in the account) intended that his daughter, the other joint account holder, have a gift of the beneficial interest in the account on his death or whether he intended that they remain in trust for the benefit of his estate.
[31] At paras. 45 to 48, the court states:
45 In cases where the transferor’s proven intention in opening the joint account was to gift withdrawal rights to the transferee during his or her lifetime (regardless of whether or not the transferee chose to exercise that right) and also to gift the balance of the account to the transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resulting trust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor’s death.
46 In certain cases, however, courts have found that the transferor gratuitously placed his or her assets into a joint account with the transferee with the intention of retaining exclusive control of the account until his or her death, at which time the transferee alone would take the balance through survivorship…
47 There may be a number of reasons why an individual would gratuitously transfer assets into a joint account having this intention. A typical reason is that the transferor wishes to have the assistance of the transferee with the management of his or her financial affairs, often because the transferor is ageing or disabled. At the same time, the transferor may wish to avoid probate fees and/or make after-death disposition to the transferee less cumbersome and time consuming.
48 Courts have understandably struggled with whether they are permitted to give effect to the transferor’s intention in this situation. One of the difficulties in these circumstances is that the beneficial interest of the transferee appears to arise only on the death of the transferor. This has led some judges to conclude that the gift of survivorship is testamentary in nature and must fail as a result of not being in proper testamentary form… For the reasons that follow, however, I am of the view that the rights of survivorship, both legal and equitable, vest when the joint account is opened and the gift of those rights is therefore inter vivos in nature. This has also been the conclusion of the weight of judicial opinion in recent times… [References Removed.]
[32] In considering how this applies to real property, the case of Fuller v. Fuller is instructive at para. 53.
[53] In sum, when dealing with real property an undivided one-half interest held as a joint tenant is to be distinguished from a divided one-half interest held as a tenant in common. Upon death, the interest of a tenant in common passes into his or her estate while the interest of joint tenant, which carries with it the right of survivorship, passes to the surviving joint tenant. In other words, the legal and equitable title (the right of survivorship) of a joint tenancy vests at the time the joint tenancy is created. Therefore, the gift of a joint interest in real property is an inter vivos rather than a testamentary gift and cannot be retracted by the donor. It is a “complete and perfect inter vivos gift” … [References Removed.]
[33] As noted above, I consider Mr. Griffith’s testamentary intentions significant in determining whether there was a gift or trust.
Facts Relevant to Mr. Griffith’s Intention
[34] The facts before the arbitrator were as follows:
- The parties had dated for 21 years before the property purchase.
- It was Mr. Griffith’s intention to marry Ms. Davidson.
- Ms. Davidson was not employed when the purchase was made.
- Mr. Griffith paid the full deposit $10,000.
- Mr. Griffith understood the significance of joint tenancy title.
- He knew if he died the whole property would devolve to Ms. Davidson.
- In his evidence “it would guarantee her status in the house if I were to die”.
- The mortgage was in joint names.
- Mr. Griffith states in his application, that he “put both names on title to the property…in the expectation that the parties would cohabit as a couple” and “out of a sense of trust” that the parties would live together as a couple.
- His affidavit said “there were some estate planning considerations when we first bought the house which would have granted her a survivorship interest” and that he put the home in both names as he thought they were getting married.
[35] As I have noted above, Mr. Griffith named Ms. Davidson as the beneficiary in his will within the year that he bought the home.
[36] On these facts and law, I am satisfied that the arbitrator made a palpable and overriding error. The intention of Mr. Griffith to gift the property to Ms. Davidson at the time he placed title in joint tenancy is well supported. The fact that their relationship dissolved does not negate his actions at the time of purchase.
[37] When a gift is not expressed to be conditional at the time it is given, the fact that the donor comes to regret the gift based upon an unexpected turn of events cannot cause an otherwise absolute gift to morph into a conditional one: see Madill v. Leach, 2010 CarswellOnt 4463, at para. 7.
Is There an Unjust Enrichment Claim if a Gift is Found
[38] Mr. Griffith has always paid the mortgage, taxes and insurance for the property. He claims that if Ms. Davidson receives half the value, that she is unjustly enriched.
[39] For most of their relationship Ms. Davidson was not employed outside the home. There was not much evidence provided, but she did attend some schooling and briefly tried to set up a business.
[40] Her evidence was that when she was working she would pay the phone and cable. Her contributions to the house were largely not monetary. She was a homemaker for ten years. Her role was doing laundry, cleaning and gardening. As well she did some interior and exterior painting and repairs.
The Elements of an Unjust Enrichment Claim
[41] The elements of an Unjust Enrichment Claim are set out in paras. 36 and 40 to 41 of Kerr v. Baranow:
[36] The first and second steps in the unjust enrichment analysis concern first, whether the defendant has been enriched by the plaintiff and second, whether the plaintiff has suffered a corresponding deprivation.
[40] The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case… [References Removed.]
[41] Juristic reasons to deny recovery may be the intention to make a gift (referred to as a “donative intent”), a contract, or a disposition of law… [References Removed.]
[42] The principle of unjust enrichment does not apply when there is a gift: see Madill v. Leach at para. 10, citing Goldring v. Lococo (2002), , 33 R.F.L. (5th) 338 (Ont. Sup. Ct.), aff’d (2004), , 3 R.F.L. (6th) 39 (Ont. C.A.). If a gift is found, the joint title vests and there is no need to do an analysis as to whether there is unjust enrichment. The gift is the juristic reason for the enrichment.
[43] As such, I find that Ms. Davidson received joint title to the property as a gift from Mr. Griffiths and I further find that there has been no unjust enrichment.
Has Mr. Griffith Already Paid Ms. Davidson For Her Interest?
[44] Mr. Griffith’s evidence was that he has already made payments towards Ms. Davidson’s joint interest.
[45] In March 2005, Mr. Griffith wanted to be removed as guarantor on a line of credit which he says Ms. Davidson incurred. He paid $23,000 to her to clear the line of credit. He paid a further $4,320 and $3,860 that year to clear her debts. However, there is no indication that, in doing so, he was buying her interest in the home.
[46] In January 2007, Mr. Griffith paid a cheque of $30,000 to Ms. Davidson. He said that he paid this so that she would leave the home. Again, there was no indication that he was buying her interest in the home.
[47] The first written documentation of a request for her to give up her interest was in 2012.
[48] I agree with the arbitrator that these must be treated as gratuitous payments. The arbitrator stated that, “Mr. Griffith may have hoped that she would transfer title or move out as a result of these payments but no contract was established requiring her to do so at the time.”
[49] I conclude that Ms. Davidson has not been paid for her interest in the property.
Conclusion
[50] The appeal is allowed.
[51] Accordingly, as requested by Ms. Davidson, I order the parties to obtain a joint appraisal of the property.
[52] Mr. Griffith may buy out Ms. Davidson’s half interest within 60 days of the appraisal or the house may be sold and the proceeds divided.
[53] If issues arise from the valuation or the sale I remain seized of those issues.
Costs
[54] Ms. Davidson has 15 days to make written costs submissions. Mr. Griffith may respond with costs submissions 15 days thereafter. Submissions are to be five pages or less plus any costs outlines, offers and case law. They are to go to the attention of my judicial assistant at 7755 Hurontario Street, Suite 601, Brampton, Ontario L6W 3T6.
M. J. Donohue J.