Court File and Parties
COURT FILE NO.: CV- 13-1191 DATE: 20170406 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
MOIRA ROBERTS Plaintiff – and – MARIO HYLAND Defendant
COUNSEL: D. Mills & D. Letto, for the Plaintiff S. Fairley, for the Defendant
HEARD: November 14 & 15, 2016
REASONS FOR JUDGMENT
DiTOMASO J.
INTRODUCTION
[1] This is a dispute between the plaintiff, Moira Roberts, and her brother, the defendant, Mario Hyland, over the ownership of a residential property located at 25 Lister Drive (the “Property”) in Barrie, Ontario.
[2] Initially, Ms. Roberts brought an Application for a Declaration that she is the sole beneficial owner of the Property. She further sought a Declaration that her brother, Mr. Hyland, holds title to the Property as bare trustee only and has no entitlement to any equitable or beneficial ownership interest in the Property. Mr. Hyland brought an Application for a Declaration confirming that he is a co-owner of the Property with his sister as joint tenants.
[3] By the Order of the Honourable Mr. Justice Bale dated January 29, 2014, it was ordered that the Applications be converted into actions to be heard together. Ms. Roberts’ Notice of Application became the Statement of Claim. Mr. Hyland’s Notice of Application became the Statement of Defence and Counterclaim.
[4] The trial without a jury took place on November 14 and 15, 2016. Ms. Roberts and Mr. Hyland were the only witnesses who gave evidence at trial.
OVERVIEW
[5] In 2002, Ms. Roberts and her then-boyfriend, Matt Penrose, purchased a house at 25 Lister Drive in Barrie, Ontario. It was their intention to live there along with Ms. Roberts’ young daughter and they did so for about a year.
[6] The purchase price of the home was the sum of $172,900. The property was mortgaged by Ms. Roberts and Mr. Penrose with RBC. The financed amount was the sum of $170,414.56.
[7] Within a year of moving into 25 Lister Drive, the relationship between Ms. Roberts and Mr. Penrose began to deteriorate. Mr. Hyland came to the assistance of his sister. He negotiated a settlement between his sister and Mr. Penrose, where Mr. Penrose would release all interest in the property upon payment of the sum of $10,000 by Mr. Hyland. Further, RBC required Mr. Hyland to go on title as a co-owner with Ms. Roberts and to assume the existing mortgage in place of Mr. Penrose in order for Ms. Roberts to remain in the house. The necessary documentation was prepared and registered on title on June 20, 2003, to give effect to the settlement and to this transaction. This was done as RBC would not agree to Ms. Roberts being the sole owner on title and the sole borrower on the mortgage or that Mr. Hyland would be a guarantor.
[8] The intention of the settlement was to allow Ms. Roberts and her daughter to continue to live in the house while at the same time, settling with Mr. Penrose once and for all so that he would not return.
[9] Later, Ms. Roberts met and married Brad Roberts who then resided with her and her daughter at 25 Lister Drive. Ms. Roberts was hired by her brother to carry out administrative duties for Mr. Hyland’s company, AEGIS, and office space was created in the basement at 25 Lister Drive. The basement was finished for that purpose and also for the purpose of allowing Ms. Roberts to carry on a daycare business in the house. To that end, Mr. Hyland contributed money towards work and materials for improvements both inside and outside the house. Mr. Hyland was building his own house nearby at 56 Coughlin Road in Barrie.
[10] In 2006, while the parties were joint tenants and while Mr. Hyland remained as co-borrower on the mortgage, Ms. Roberts and her family were looking for a larger house. To this end, she wanted to refinance the mortgage with RBC, take some equity out of 25 Lister Drive and leverage the purchase of another home located at 50 Hollymeadow Road in Barrie. Ms. Roberts also wished to convert the 25 Lister Drive house into a rental property. She and her brother had discussions in this regard. The end result was that RBC approved a new mortgage in the amount of $230,163.67 in October of 2006. Mr. Hyland signed as a co-borrower as he did before and he remained on title as a joint tenant with his sister.
[11] Mr. Hyland also contributed money for the purpose of making the necessary changes to convert 25 Lister Drive to a rental property.
[12] It was intended that the expenses of running a rental property would be paid by Ms. Roberts from the rents collected from tenants and these expenses would necessarily include the property taxes and mortgage instalment payments for 25 Lister Drive.
[13] After the conversion of 25 Lister Drive to a rental property, relations between Ms. Roberts and Mr. Hyland started to deteriorate. By 2007, they were not speaking to one another. Not only was there a deterioration in respect of their personal relationship, there was also a deterioration in respect of arrangements concerning the rental operation at 25 Lister Drive. Ms. Roberts failed to make the necessary property tax and mortgage payments with both being in arrears, unbeknownst to Mr. Hyland.
[14] Mr. Hyland first became aware of the property tax and mortgage payment arrears when he was notified by the Tax Department for the City of Barrie and the RBC in respect of these delinquencies. Both the City of Barrie and RBC were pursuing him because he was on title as the co-owner (joint tenant) and he had signed along with his sister as co-borrower on the new mortgage in the amount of $230,163.67. He paid both the tax arrears and outstanding mortgage instalment payments.
[15] Meanwhile, Ms. Roberts and her family were residing at 50 Hollymeadow Road in Barrie. She and Mr. Roberts wanted to sell the 25 Lister Drive property.
[16] In or around October, 2013, Mr. Hyland was approached by a realtor who wished to secure his signature on a listing agreement for the sale of 25 Lister Drive. It was at this time that he was told that he held the Property in trust for his sister. He had no discussions with Ms. Roberts about his financial contribution or interest in the Property. Mr. Hyland was told that he had no beneficial interest in the Property. He disagreed and refused to sign any documents for the sale of 25 Lister Drive.
[17] This led to Ms. Roberts’ Application followed by Mr. Hyland’s Cross-Application at the core of which are the issues relating to the ownership of 25 Lister Drive.
ISSUE
[18] The question of ownership requires the determination of a number of questions as follows:
(1) Is Moira Roberts the sole beneficial owner of 25 Lister Drive?
(2) Does Mario Hyland hold title to 25 Lister Drive as a bare trustee only and has no entitlement to any equitable or beneficial ownership interest in the Property?
(3) Is Mario Hyland a co-owner of the Property having both a legal and beneficial interest in 25 Lister Drive?
POSITIONS OF THE PARTIES
Position of the Plaintiff Moira Roberts
[19] Ms. Roberts takes the position that she is the sole beneficial owner of the Property. She submits her brother acted as bare trustee only and he has no entitlement to any equitable or beneficial ownership interest in the Property. She submits that the $10,000 payment made by her brother to Matt Penrose was in the nature of a loan which was repaid when the Property was refinanced by way of the $230,000 mortgage in 2006. The money advanced by Mr. Hyland was for her benefit and created a purchase price resulting trust. The intention between the parties was for Ms. Roberts to live in what she described as “her house” and it was never intended that Mr. Hyland would acquire an interest in that house as co-owner or as anything else.
[20] Ms. Roberts submits that the improvements to 25 Lister Drive and the monies spent by her brother were gratuitously made by him as he was very much a benevolent and generous person. As for his payments regarding the admitted property tax and mortgage arrears, these payments were entirely unnecessary as she had both accounts under control.
[21] In the end, Ms. Roberts contends that she would be entitled to all of the proceeds of the sale in respect of 25 Lister Drive because she is the sole beneficial owner.
Position of the Defendant Mario Hyland
[22] Mr. Hyland submits that the $10,000 payment to Mr. Penrose was not a loan made in favour of his sister. Rather, that payment was intended to permit Ms. Roberts and her daughter to continue to live at 25 Lister Drive while at the same time, removing Mr. Penrose from their lives. This involved settling any interest that Mr. Penrose had regarding the 25 Lister Drive property.
[23] To this end, Mr. Hyland was required by RBC to go on title as a joint owner with his sister and to assume the mortgage in place of Mr. Penrose as a co-borrower. RBC was not prepared to leave Ms. Roberts on title as a sole owner and as the sole mortgagor as she was self-employed. In order for Mr. Penrose to be released from his obligations to the bank, RBC required Mr. Hyland to be both co-owner and co-borrower and not as a guarantor. Both he and Ms. Roberts complied with RBC’s requirement and the necessary documents were prepared and registered on title. He denies that Ms. Roberts is the sole beneficial owner of the Property and that he is merely a bare trustee holding in trust a beneficial interest for his sister.
[24] Mr. Hyland submits that he acquired Mr. Penrose’s interest in the Property. Mr. Penrose’s interest was not owned by his sister. She could not give Mr. Hyland what she did not own. He submits he acquired joint tenancy in 25 Lister Drive in 2002 and a 50% beneficial interest. He further submits that his course of conduct from 2002 onwards is consistent with his being a co-owner and possessing not only a legal interest but a beneficial interest in the Property. He paid for improvements. He paid property and tax arrears. He participated in a refinancing of the Property in 2006 where his exposure was increased as co-borrower and co-owner of the Property up to the sum of $230,163.67.
[25] Mr. Hyland denies that his contributions towards the Property improvements both for the daycare operation and later as a rental property was entirely gratuitous. He spent significant amounts of money regarding each renovation. The first time that he became aware of his sister’s position that he was a bare trustee and held no beneficial interest in the Property was when she and Mr. Roberts wanted to sell it in October of 2013.
[26] Mr. Hyland submits that he is a co-owner, a joint tenant and holds a 50 percent beneficial ownership interest in 25 Lister Drive.
Position of the Parties Regarding Ancillary Issues
[27] There are accounting issues between the parties in respect of relative contributions, improvements, payments of property taxes and mortgage arrears and rental income. The parties have asked this court only to determine the issue of ownership with all of the ancillary issues to be determined by way of a reference.
THE EVIDENCE
[28] Ms. Roberts and Mr. Hyland testified at trial. The following documents were made exhibits at trial:
- Joint Book of Documents, Volume I;
- Joint Book of Documents, Volume II;
- Supplementary Book of Documents of the Plaintiff;
- Brief of Undertakings by Moira Roberts at Examinations for Discovery on May 15, 2014; and,
- Email exchange between Ms. Roberts and Mr. Hyland dated July 24, 2002.
Evidence of Moira Roberts
[29] Ms. Roberts testified that she and her then-boyfriend, Matt Penrose, purchased 25 Lister Drive as a newly constructed residential unit for the purchase price of $172,900 in early 2002. She paid the sum of $1000 by way of deposit and $800.75 by way of a brick upgrade. The Agreement of Purchase and Sale also called for further three deposits of $2250 in December, 2001, January and February, 2002.
[30] RBC approved Ms. Roberts and Matt Penrose for mortgage financing in the amount of $170,414.56 and they took possession on February 23, 2002.
[31] Ms. Roberts, her young daughter and Mr. Penrose lived at the Property for just over a year. After they had moved in, the relationship between Ms. Roberts and Mr. Penrose began to deteriorate. She reached out to her brother, Mr. Hyland, because she wanted to keep the house. She testified that it was her deposit but she needed Mr. Hyland to co-sign her loan to the bank because she knew that she could not afford to keep the house on her own.
[32] Mr. Hyland stepped in and negotiated a settlement with Mr. Penrose. She did not know how they agreed upon the figure of $10,000. However, that amount was enough for Mr. Penrose to leave and not return. Mr. Hyland and Ms. Roberts retained a lawyer, Joy Levison, who had drafted the necessary Separation Agreement and documentation to effect the settlement with Mr. Penrose.
[33] Ms. Roberts testified that her initial conversations with Mr. Hyland were supportive and were directed to figuring out a way to take over the mortgage and keep the house. RBC did not create a new mortgage. Rather the bank wanted Mr. Hyland on the mortgage and Mr. Penrose off. Mr. Hyland was put on the mortgage in June of 2003. She considered that the 25 Lister Drive property was “her” property as Mr. Hyland was building his own house in the same subdivision. It was intended that when all was resolved, she would make the mortgage payments as she was living in the house. She was also responsible for paying the taxes and carrying charges for maintenance.
[34] Ms. Roberts referred to Exhibit One, Tab 12, being a letter from Joy Levison to Mr. Hyland dated August 7, 2003, regarding the conveyance of 25 Lister Drive. The beginning of paragraph one reads:
In order to assist Moira Heggart in purchasing Mr. Penrose’s interest in the above noted property and to obtain a release of his covenant under the mortgage, it was a term of the assumption that you become a registered owner of the property and that you assume responsibility under the mortgage…
[35] Ms. Roberts resided at 25 Lister with her husband, Brad Roberts, and daughter, until 2007 when they moved out after they acquired a larger house at 50 Hollymeadow Road in Barrie. In 2007, the use of 25 Lister Drive changed. It became a rental property and this occurred after the mortgage on the Lister property was refinanced and increased to the amount of $230,163 in October of 2006.
[36] Ms. Roberts testified that 25 Lister Drive still remains a rental property as of the date of trial. She and her husband, Brad, are responsible to obtain tenants, collect rent and maintain the Property.
[37] In October of 2006, Ms. Roberts testified that the Property was refinanced through RBC with the mortgage increased to the sum of $230,163. Out of the total refinancing, $70,000 was paid to her to pay some debts and $10,000 was paid to Mr. Hyland to repay the $10,000 debt representing the amount that he paid Mr. Penrose to settle with him. The $10,000 amount was paid by Mr. Hyland on his line of credit. The balance was paid by her to purchase the 50 Hollymeadow Road property.
[38] Ms. Roberts was taken to her email of October 26, 2006, to Mr. Hyland. She relied on this email to support her evidence that she was squaring accounts with Mr. Hyland and “paying her bill”. She told him that they were not going to be discussing finances any further. She testified that relations between her and her brother became strained whereas before he was very supportive. She also testified that her brother was very generous in providing trips, a set of skis and a minivan so that she could operate her daycare business. This was the daycare business she was operating before the Lister property was refinanced and became a rental business in 2006.
[39] Ms. Roberts testified about the basement renovation to 25 Lister Drive when she was running a daycare business before 2006. She did sign cheques for Mr. Hyland on his account. She did assist in the operation of his corporate business under the name ‘AEGIS’. Not only did Mr. Hyland own a house in the same neighbourhood, but he also lived in Maryland, U.S.A. A number of invoices were reviewed and she testified as to what these invoices were for and what cheques she wrote for these charges. She testified that in addition to finishing the basement, there was a small office created where she could work in the basement, tending to Mr. Hyland’s business matters for which she was paid.
[40] Ms. Roberts testified about the second renovation in February of 2007, when 25 Lister Drive was converted to a rental property. She testified that she had no discussions with Mr. Hyland regarding the conversion of 25 Lister Drive to a rental accommodation. Mr. Hyland has a different version of events and he testified that he did have conversations with her about the rental conversion. Those conversations were tied to the refinancing in 2006 and whether Ms. Roberts would have enough money from the rental income to pay the increased mortgage payments and property taxes.
[41] There was some evidence in respect of running a rental business out of the Property. She testified that she and Mr. Hyland have had no contact since the Fall of 2007.
[42] As for the property taxes, Ms. Roberts did not dispute that Mr. Hyland paid arrears in property taxes. However, she testified that she did not ask him to make those payments. She did not believe that they were necessary and she was always in touch with the Tax Department for the City of Barrie. She had no concern regarding 25 Lister Drive being sold for tax arrears.
[43] Mr. Hyland did not talk to her about making payments for arrears before they were paid. There appeared to be an adjustment required in respect of two payments made by Mr. Hyland on December 29, 2010, for the total amount of $4807.94 (see Exhibit One summary at Tab 16, page 35). Ms. Roberts has not repaid any of these amounts. They were credited back to Mr. Hyland’s own property tax account for 56 Coughlin Road.
[44] As for mortgage payments, she acknowledged that Mr. Hyland made payments in respect of mortgage arrears. Again, she did not ask him to do so and felt that it was unnecessary. Ms. Roberts testified that the Property was not at risk in respect of foreclosure. She also testified that the mortgage allowed for certain mortgage installments to be skipped which feature she used from time to time.
[45] When she and Brad Roberts wanted to sell 25 Lister in the Fall of 2013, she wanted Mr. Hyland to sign the Listing Agreement. He declined to do so and the first time that Mr. Hyland asserted an ownership interest in the Property was in response to her Application dated November 1, 2013.
[46] In cross-examination Ms. Roberts agreed that on October 3, 2013, the proposed listing price was $317,900 for the Lister property. She agreed that today, the Property is worth somewhere between $350,000 and $400,000. She testified that any increase in the value of the Property between the original purchase price of $172,900 and $400,000 belonged entirely to her. She testified that Mr. Hyland had no interest in the increase in value of the Property.
[47] Ms. Roberts agreed that at the time she and Mr. Penrose purchased the Property, their equity was the sum of $2485.44. Shared between the two of them on a 50/50 basis, her equity would be approximately $1250.
[48] During her separation with Mr. Penrose, Mr. Hyland was very supportive. They spoke daily about problems. In the Spring of 2003, the situation became just too much for her. Her goal was to stay in the house with her daughter and to get Mr. Penrose out of the house. She wanted to untangle her relationship with Mr. Penrose. There were discussions with Ms. Levison about how to get Mr. Penrose out of her life. Ms. Levison prepared a Separation Agreement. Mr. Penrose had his own lawyer. In 2003 she was running a daycare business out of her house but not in the basement. Mr. Hyland lived in the United States at the time. She saw him once a month depending on his work schedule.
[49] Ms. Roberts recalled seeing Exhibit 5, which was an email between Ms. Roberts and Mr. Hyland. She saw it during the proceedings. This email was dated July 24, 2002. It spoke of setting up a trust. It spoke of incorporating a business. Nothing came of this email. She was taken to the account of Joy Levison dated August 14, 2003, Exhibit 1, tab 14, page 28. In respect of the services provided by Ms. Levison, all of those services were paid for by her brother
[50] Further, in respect of Joy Levison’s trust statement, at page 33 of the same exhibit, she agreed that her brother paid the sum of $12,019.40. All of the money reflected in the trust statement was paid by Mr. Hyland.
[51] Ms. Roberts was taken to Exhibit 1 at tab 5, being a letter dated May 12, 2003, faxed to Joy Levison by Mr. Hyland. In considerable detail, Mr. Hyland set out what everyone was going to do.
[52] At paragraph four he wrote:
I have personally become involved in this matter to try and referee it and have agreed with Matt in principle to pay $10,000 for his share of the house. This assumes that I am able to assist Moira complete the assumption of the mortgage.
[53] Mr. Hyland went on to set out what documentation needed to be prepared and asked Ms. Levison to prepare that documentation. Ms. Roberts agreed that what Mr. Hyland referred to in his letter of May 12, 2003 is in fact what happened.
[54] Ms. Roberts knew that she had to go to the bank and she needed someone to co-sign the loan because she was self-employed. She did not qualify with the bank. RBC sent real estate documents to her. She could not remember if she went to Joy Levison’s office to sign the documents. When asked if the documents were explained to her by Joy Levison when she signed them, she testified, “I assume so. I can’t remember much about it.” She was clear that she did not qualify to remain on title alone or qualify for the mortgage alone. She needed a co-signer. Her brother came along to co-sign and she was allowed to keep the house.
[55] In respect of Mr. Hyland’s letter to Joy Levison, Ms. Roberts understood that Mr. Hyland would be taking Matt Penrose’s place on the mortgage as the bank required it. She understood that Mr. Hyland took on the obligation to pay the mortgage and documents were executed in this regard. She understood that Mr. Penrose would receive $10,000. Mr. Hyland’s name would go on title to the Property, and Mr. Hyland’s name would go on the mortgage.
[56] Ms. Roberts testified that it was later when the bank wanted Mr. Hyland to go on title. I find the evidence discloses otherwise. RBC wanted Mr. Hyland on the mortgage and on title from the very outset. This was confirmed by Joy Levison’s letter to Mr. Hyland dated August 7, 2003 (see Exhibit 1, tab 12). Ms. Roberts could not remember receiving a copy of this letter. She still maintained that the business about title came up after the mortgage documents were signed.
[57] In cross-examination she testified that she had no discussions with Mr. Hyland about holding the Property in trust for her. She had no discussions with Joy Levison that Mr. Hyland was holding the Property in trust for her. No trust documents were drawn up in this regard. When she talked about “her” home, this was the house she was living in. She was taken to Exhibit 1 at tab 10, being the Transfer document registered on June 20, 2003. She and Mr. Hyland are identified as joint tenants. It shows a transfer from Ms. Roberts (Heggart) and Matthew Thomas Penrose to Ms. Roberts and Mr. Hyland as joint tenants. The Land Transfer Tax Statement is found at page 21. There are boxes to identify whether or not this transaction involved a trust. None of those boxes were ticked off. She agreed that the Land Transfer Tax Statement did not indicate that this was a conveyance in trust. Rather, box 1(c) was check marked to indicate that this was a transfer. She was asked whether or not the land transfer tax was paid by her. She could not remember. She then testified that the land transfer tax in the amount of $648.92 was paid by her brother. She confirmed that the transfer was to her brother and herself as joint tenants.
[58] Ms. Roberts could not remember discussing the concept of joint tenancy with Joy Levison. She did not remember if she had an opportunity to discuss the joint tenancy concept with Joy Levison. She did not know what Joy Levison covered when documents were signed. Ms. Roberts testified that she knows now that if she passes before Mr. Hyland, all title to the Property goes to Mr. Hyland. Her interest in the Property goes to Mr. Hyland. However, at the time of signing these documents, it was an emotional time and she did not remember what was relayed to her. She testified that no trust documents were prepared or contemplated. She testified that there was no written communication or document that 25 Lister Drive was to be held in trust. She also testified that none of the documents prepared in the 2006 mortgage financing indicated that the Property was being held in trust for her by Mr. Hyland.
[59] Ms. Roberts was taken to Mr. Hyland’s summary located at Exhibit 1, tab 16. She testified that Mr. Hyland incurred a number of expenses and she signed cheques on his account. She knew that there was money expended on 25 Lister by her brother. She had no objection to these monies being paid by him. Some monies were paid before and some monies were paid after Mr. Hyland took out Mr. Penrose’s interest in the Property. She agreed that Mr. Hyland went on title and there were expenses incurred around the time that he went on title. She acknowledged that he spent money to renovate the basement, to create an office for AEGIS and also so she could better operate her daycare business. She was an employee of AEGIS and worked in the business office that was created. She incurred expenses because she was the owner of the Property. However, she denied that Mr. Hyland also incurred expenses because he considered himself an owner of the Property. She testified that Mr. Hyland spent money because he was generous. She did not recall Mr. Hyland ever saying that he was spending money for free or for her benefit. She did not recall any conversation with Mr. Hyland where he said that he was paying money for her on his own account.
[60] Ms. Roberts has had no contact with her brother since 2007. In respect of the property taxes, there was some reallocation of monies paid by Mr. Hyland because of a mistake. Those funds were reallocated back to his own tax account for 56 Coughlin Road.
[61] Ms. Roberts acknowledged that all the mortgage payments were made by Mr. Hyland for past due amounts to keep the mortgage in good standing. She acknowledged a demand letter was sent to Mr. Hyland to make payment. She agreed that a payment was missed. She agreed that the mortgage was in arrears and that she had not made payments.
[62] In respect of the payments made set out in Mr. Hyland’s summary set out at Exhibit 1, tab 16, she testified that she had not reimbursed Mr. Hyland for any of these amounts or for any other expenses. Again, she maintained that contributions to the Property, for example, the air conditioner, were just gifts to her by her brother.
[63] Ms. Roberts was cross-examined about the 2006 refinancing. The mortgage was increased to approximately $230,000. Mr. Hyland stayed on the mortgage and he was obliged to the bank for $230,000. Mr. Hyland was still registered as a joint owner. Ms. Roberts wanted to take equity out of the 25 Lister Drive property and make a bigger down payment on 50 Hollymeadow Road and increase the growth on the Hollymeadow Road property regarding which Mr. Hyland had no part.
[64] In respect of the increased financing, $70,000 was paid to her and $10,000 was paid to Mr. Hyland. She used her money to pay some personal debts and she believed that 10 percent was put down on the purchase price of the Hollymeadow Road property.
[65] Ms. Roberts did not remember having any discussions with Mr. Hyland about making 25 Lister a rental property. (This is at variance with Mr. Hyland’s evidence).
[66] Ms. Roberts was aware that Mr. Hyland was going to use Coughlin as a rental property. She would manage that rental. She had no expectation that Mr. Hyland would be involved in the day-to-day rental of the Lister property.
[67] She agreed that Mr. Hyland paid her for services provided to AEGIS. She assisted in banking services for AEGIS in Canada. AEGIS held no holdings in Canada. She does not remember any discussions with Mr. Hyland about his concerns that she would be able to carry 25 Lister as a rental property.
[68] Put to Ms. Roberts was an email exchange dated October 2, 2006, in respect of refinancing 25 Lister and Mr. Hyland looking for $10,000 to pay off or clear his line of credit.
[69] Although Ms. Roberts had sent an email to Mr. Hyland about not wanting to speak further about finances and about the payment of the $10,000, she acknowledged that both she and Mr. Hyland were on title and on the mortgage. She further confirmed that there were no discussions to get her husband, Brad Roberts, on title, on the mortgage and Mr. Hyland off both the mortgage and title.
[70] Ms. Roberts testified that back in 2003 she wanted Mr. Penrose out and if Mr. Hyland had not come to assist her, she would have sought someone else to be the guarantor.
Evidence of Mario Hyland
[71] Mr. Hyland testified that he has been a resident of the State of Maryland, United States of America, since 1994. He is involved in running AEGIS which is a computer internet company.
[72] Mr. Hyland is the brother of the plaintiff, Moira Roberts. He described his relationship with his sister as being pretty good leading up to 2003. They helped each other out in respect of emotional and financial problems.
[73] Mr. Hyland testified that he never owned a property before with his sister and never co-signed a loan with her before 2003. He first became involved with Ms. Roberts when her relationship with Matt Penrose had deteriorated. He knew that his sister and Mr. Penrose had purchased 25 Lister Drive in Barrie as a “new build” home. After Mr. Penrose and Ms. Roberts moved in, their relationship deteriorated very quickly. Their relationship was described as a violent one and a relationship which could not be fixed.
[74] Mr. Hyland had a discussion with Ms. Roberts about the best course of action to pursue. Being in the business in which he was engaged, his process was to organize his thoughts on a step by step basis. As far as Mr. Hyland was concerned, the object was to get Mr. Penrose out of the Property in the best and most effective way once and for all. Mr. Hyland asked Ms. Roberts to call RBC about a mortgage assumption. Ms. Roberts did call RBC (where she used to work) and was advised that they would need a lawyer. The lawyer they selected was Joy Levison.
[75] Mr. Hyland contacted Ms. Levison by letter dated May 12, 2003 (see Exhibit One, Tab 5). In that letter, Mr. Hyland set out all of the tasks to be undertaken and basically who would be doing what. His discussion with Ms. Roberts about the plan was very fluid. Mr. Hyland had taken time to figure out what to do. However, if Ms. Roberts wanted to stay in the Lister home, which was the objective, RBC dictated to them what needed to be done. RBC would not agree that someone in Ms. Roberts’ position and with her income could be the sole person on the mortgage. The bank needed another signer. At this point in time Matt Penrose and Ms. Roberts were still on title.
[76] Mr. Hyland had one discussion with Mr. Penrose which was not a good one. Mr. Hyland was looking for the simplest step to achieve the goal. It came down to how much money Mr. Penrose would accept to leave his sister and 25 Lister Drive once and for all. The purpose of the settlement was to have Mr. Penrose stop coming to the Property and stay away for good. As for the text of his letter to Joy Levison, this set out the “plan” to be pursued in respect of Mr. Penrose and Ms. Roberts and the letter went out as an attachment by email to Ms. Roberts. Mr. Hyland testified that both he and Ms. Roberts had reviewed this letter and then Mr. Hyland sent a copy to Joy Levison by fax. Mr. Hyland testified that the plan was very important. It did not just amount to a telephone call with Mr. Penrose. Mr. Hyland testified that everything was done in accordance with the “written plan”.
[77] Although his understanding with Mr. Penrose was not in writing, Mr. Hyland’s understanding was contained in his letter of May 12, 2003. In particular, he testified that he was to pay Matt Penrose $10,000 for Matt Penrose’s share of the house. At paragraph four of his letter he wrote:
I have personally become involved in this matter to try to referee it and have agreed with Matt in principle to pay $10,000 for his share of the house. This assumes that I am able to assist Moira complete the assumption of the mortgage…
[78] RBC required Mr. Hyland to not only assume the mortgage in place of Mr. Penrose, but also for Mr. Hyland to go on title as a co-owner.
[79] Mr. Hyland followed through in respect of his letter to Joy Levison. The things that he said he was going to do, he did; to take Matt Penrose’s place on the mortgage and on title.
[80] On a go forward basis, Mr. Hyland’s letter at page two indicated what he was going to do and what Ms. Roberts was going to do. Ms. Roberts was going to meet with RBC to begin the process of the assumption of the mortgage. It became crystal clear that RBC wanted Mr. Hyland to go on the mortgage and on title as a co-owner. This was from the very beginning and not some afterthought. Ms. Levison prepared the necessary documentation and the Transfer was registered on June 20, 2003. As part of the transaction, RBC insisted that Mr. Hyland sign as co-borrower (Exhibit 1, tab 7) and that in order to remove Mr. Penrose from the mortgage and title, Mr. Hyland would have to assume Mr. Penrose’s position. This was a requirement of the bank. The bank’s position was confirmed in a letter dated June 6, 2003, from Joy Levison to Ms. Roberts. (Exhibit 1, Tab 8). That letter spoke to both the Assumption Agreement and the “necessary conveyance” for the release of Mr. Penrose from his covenant for payment. It was clear that for Mr. Penrose to be released on the covenant to pay, Mr. Hyland would have to assume the mortgage in his place and also go on title as a co-owner with his sister (Exhibit 1, tab 9, RBC letter to Joy Levison dated June 10, 2003). RBC’s letter indicated what it required which specified and confirmed Mr. Penrose’s release from any and all obligations with respect to the mortgage provided the assumption agreement be signed and Mr. Hyland would go on title as a co-owner (joint tenant). By reference to the account of Joy Levison found at Exhibit 1, tab 14, Mr. Hyland recalled attending her offices with his sister to take advice and to sign documents. He paid the sum of $12,019.40 as evidenced by Joy Levison’s trust account and also paid her legal accounts.
[81] The Transfer was registered on June 20, 2013. It evidences a transfer of title from Ms. Roberts and Mr. Penrose to Ms. Roberts and Mr. Hyland. Ms. Roberts and Mr. Hyland were identified as joint tenants. (Exhibit 1, tab 10)
[82] At page 21 of Exhibit 1, tab 10, Ms. Roberts and Mr. Hyland are both identified as joint tenants. They are identified as transferees in the conveyance. In accordance with RBC’s instructions, they went on title as co-owners.
[83] Mr. Hyland testified that there were no discussions between himself and his sister that he would be holding the Property in trust for her. The Land Transfer Tax Statement did provide a place to check off if the Property was held in trust. There was no check mark in that place because no trust existed. To the contrary, Ms. Roberts and Mr. Hyland were identified as transferees and he paid the land transfer tax.
[84] As a result, RBC obtained what it required in order to effect the removal of Mr. Penrose on the mortgage and on title. Mr. Hyland took Mr. Penrose’s place.
[85] The arrangement on a go-forward basis was that Ms. Roberts would pay the carrying costs associated with 25 Lister Drive. She would pay the monthly mortgage payments and property taxes. Mr. Hyland had hired his sister in an administrative capacity to assist in the operations of his company and to help with the management of his own property at 56 Coughlin Road when he was not in Canada. He testified that she started to build her own creditworthiness. His sister and her daughter continued to live at 25 Lister Drive. She was going to pay the mortgage installments and this would be her principal residence. He had discussed this with her. Other than the mortgage she would pay the taxes, the utilities and upkeep in respect of the Property. He gave her the job with AEGIS so that she could pay those costs as well. On a go-forward basis, she was responsible for and she did pay these costs. She had signing authority over the payment of some of his accounts and could sign cheques and pay bills out of that account as well.
[86] After the mortgage was assumed, he was shown correspondence by Joy Levison addressed to him, dated August 7, 2003. He does not remember reading this letter in August of 2003 and he does not recall responding to Joy Levison regarding this letter. Mr. Hyland did acknowledge assisting his sister in purchasing Mr. Penrose’s interest and to obtain a release for Mr. Penrose’s covenant under the mortgage. Mr. Hyland became a registered owner of the Property and he assumed responsibility under the mortgage. Mr. Hyland testified that he purchased Matt Penrose’s interest and that interest was not purchased by his sister.
[87] Mr. Hyland further testified that his actions were consistent with his being a co-owner. He prepared a summary (Exhibit 1, tab 16) describing improvements to the Property in 2003, to finish the basement in order to assist Ms. Roberts’ daycare business and to create a small office for Ms. Roberts to secure AEGIS records and work from home. Invoices in this regard total the sum of $12,341.99. This amount is in addition to the amount that he had paid to Joy Levison. He detailed what the improvements were inside and outside of the home. Again, he testified that he paid for these renovations to assist Ms. Roberts in earning income and also to create and office in the basement that was secure. He considered these expenditures as an investment in 25 Lister Drive.
[88] Mr. Hyland was questioned about the 2006 refinancing. In this regard, he was surprised to receive a telephone call from Ms. Roberts. She told him she was looking for a larger home for herself, Brad Roberts and their family. She told him that they wanted to pull the equity out of 25 Lister Drive and to leverage the purchase of a new property. She told him that she wanted to convert 25 Lister Drive into a rental property. He discussed with Ms. Roberts the obligations associated with the rental property and the need for income to pay expenses, particularly where 90 percent of 25 Lister was going to be financed. Ms. Roberts told him that she understood the economics and could make a go of it. Mr. Hyland testified that he went along with the refinancing. He would do so, provided his sister would be the property manager and she would take care of all the costs associated with running the rental property and that the rental income would cover all costs. Ms. Roberts had experience in this regard and Mr. Hyland was not worried. Later, 56 Coughlin was sold and Ms. Roberts was not asked to be a property manager in respect of this property.
[89] Mr. Hyland was taken to his email of October 2, 2006, to Ms. Roberts. (Exhibit 1, tab 19). In respect of the additional financing, $80,000 raised by way of the increased mortgage, $70,000 would be paid to Ms. Roberts and $10,000 to be paid to Mr. Hyland. Mr. Hyland was required to sign by the bank as co-borrower to increase the mortgage on 25 Lister from approximately $152,000 to $230,000. He would remain on title as a co-owner. Ms. Roberts would obtain renters and pay the costs associated with running a rental business.
[90] The new mortgage was in the amount of $230,163.67 as evidenced by RBC Approval dated October 11, 2006 (Exhibit 1, tab 21). Mr. Hyland signed as a co-borrower. As before, he understood that he was responsible for 100 percent of the mortgage debt. He knew that if the mortgage was not paid, RBC could go after him for the full amount.
[91] Mr. Hyland testified that after the property was refinanced, he also contributed to the cost of improvements to convert 25 Lister to a rental property.
[92] Mr. Hyland also testified that there was conduct on his part which was consistent with his being an owner of the property. He was not only a legal owner on title but also a beneficial owner as well.
[93] Mr. Hyland testified that the City of Barrie approached him in respect of property tax arrears. He was surprised when he learned that those property taxes were in arrears. After sorting out the error and overpayment on December 29, 2010, in the amount of $4867.94, he paid tax arrears in the approximate amount of $16,000.
[94] At this point in time Mr. Hyland was not having any discussions with Ms. Roberts. He had not asked her for repayment because he was a co-owner. He did not have any knowledge that Ms. Roberts had approached the City of Barrie Tax Department to adjust the taxes to credit the 56 Coughlin tax account. Nevertheless, he paid the arrears of taxes. Ms. Roberts had acknowledged that he had paid these tax arrears.
[95] Further, Ms. Roberts was in arrears in respect of paying the mortgage instalments. Again, he did not learn of these arrears until the bank approached him and insisted upon payment of those arrears. He paid mortgage arrears in the amount of $6571.55 (see Summary, Exhibit 1, tab 16). In addition to this amount, in October of 2015, he paid RBC a further $5318.52 in respect of mortgage arrears. Mr. Hyland did not recall having any discussions with Ms. Roberts about this last payment. He did not recall requesting Ms. Roberts to pay this amount because he was a co-borrower.
[96] Mr. Hyland testified that he did not have any discussion with Ms. Roberts about holding a beneficial interest in trust for her regarding 25 Lister Drive. The first time he heard of any such thing was when he was requested to sign a listing for sale. He was told by a realtor that he held property in trust for his sister and that someone would be coming over to have Mr. Hyland sign documents. Mr. Hyland was surprised and he had no discussions with Ms. Roberts about Mr. Hyland’s financial contribution or interest. When Mr. Hyland started asking questions, he was told that he had no beneficial interest at all. With this proposition he disagreed and declined to sign documents listing 25 Lister Drive for sale.
[97] As for Ms. Roberts’ evidence that Mr. Hyland was generous and that his contributions towards the 25 Lister Drive property were gifts, he denied that they were gifts. Apart from a gift of a pair of skis and a trip to Disney World, he had a minivan in his own name which he loaned to his sister because she needed transportation. The contributions towards the renovations were not a gift. He testified that 25 Lister was an investment property and those renovations contributed to the value of the investment.
[98] In cross-examination he testified that the $10,000 paid to Mr. Penrose was more than what Mr. Penrose held by way of equity in the home.
[99] Mr. Hyland testified that the “plan” set out at Exhibit 1, tab 5, in his letter to Joy Levison was followed. He wrote the document, discussed it with his sister and faxed it to Joy Levison.
[100] Mr. Hyland disagreed that the mortgage was assumed at some later stage because the bank wanted a change of title. RBC wanted him to assume the mortgage and to also go on title from the start
[101] Mr. Hyland was questioned about Ms. Levison’s letter to him dated August 7, 2003 (Exhibit 1, tab 12). He did not recall seeing or reading this correspondence at the time.
[102] Mr. Hyland was cross-examined about some corrections in respect of his Summary.
[103] Regarding the refinancing in 2006, Ms. Roberts assured him that the rental operation would not generate losses. If she had not done so, he would not have agreed to refinance the Property to the level of 90 percent of its value. It was always expected that Ms. Roberts would pay the mortgage payments. Mr. Hyland agreed to the refinancing and when that happened, his responsibility increased in keeping with the increased mortgage.
[104] Mr. Hyland testified as to being approached by RBC and the City of Barrie Tax Department in respect of mortgage and tax arrears. Each time a creditor called, he paid because he believed it was his responsibility. He was not a co-manager of 25 Lister but a co-owner.
[105] When the mortgage was refinanced and the equity was taken out of 25 Lister, of the $80,000 amount, $70,000 was paid to Ms. Roberts and $10,000 was paid to Mr. Hyland. He testified that Ms. Roberts did not repay a loan of $10,000, being the amount paid to settle with Mr. Penrose. Rather, Mr. Hyland’s line of credit exceeded $10,000. His expenses also exceeded $10,000 when all of the contributions regarding 25 Lister were considered. He testified that the $10,000 amount related to his line of credit balance (see Exhibit 1, tab 19).
[106] Mr. Hyland did not agree with Ms. Roberts’ email of October 26, 2006 (Exhibit 1, tab 27, paragraph 4) where she did not want to discuss finances. He did not agree that she was simply paying her bill upon the distribution of $10,000. He did not agree, particularly in face of the refinancing that increased his exposure to the sum of approximately $230,000.
[107] Mr. Hyland did not reply to the email. He still considered himself a co-owner. He never asked for an accounting regarding 25 Lister Drive until this litigation.
[108] There was some cross-examination about the rental business and rentals from 56 Coughlin and reporting for tax purposes.
[109] Mr. Hyland learned of the arrears for property taxes in December of 2010. He had to act as fast as he could to avoid the December 31 deadline. He was not aware of any arrangement that Ms. Roberts was making in respect of the payment of tax arrears. He paid them. He paid them; notwithstanding being assured by his sister that everything was under control. He contacted Ms. Roberts and advised her not to get into this situation again.
[110] The same thing happened in respect of the mortgage arrears. The bank pursued him and he did not want the Property sold. RBC contacted him because of several unsuccessful attempts to contact Ms. Roberts. Mr. Hyland had no problem with the bank contacting him and his response was immediate. He paid the mortgage arrears.
[111] Mr. Hyland testified that Exhibit Five, dated July 24, 2002, references “trust” but it had nothing to do with 25 Lister Drive.
[112] Mr. Hyland testified that he had approached RBC through his sister in 2002. He offered to be a trustee but RBC said no. The bank would only permit Ms. Roberts to remain at 25 Lister Drive if Mr. Hyland assumed the mortgage and went on title in place of Mr. Penrose.
ANALYSIS
Credibility
[113] In this case, the court has been asked to determine the threshold issue of ownership. Ms. Roberts and Mr. Hyland testified at trial. Of these two witnesses, I find Mr. Hyland to be the more credible. His recollection of events is more consistent than that of Ms. Roberts when it comes to what actually happened. I find his evidence to be more preferable than that of Ms. Roberts for the following reasons.
[114] I find the evidence of Mr. Hyland to be consistent with his beneficial ownership of a one half interest in 25 Lister Drive than simply being a bare trustee. Mr. Hyland set out in detail how he took steps to help his sister disengage herself from her relationship with Matt Penrose once and for all. His evidence was consistent with the documentary evidence set out in the exhibits as to how he acquired Mr. Penrose’s interest in the Property. To remove Mr. Penrose from the life of Ms. Roberts, Mr. Hyland was required by RBC to go on title as a joint tenant and to assume Mr. Penrose’s position on the mortgage. Mr. Hyland did so as is also evidenced by the documentation. Mr. Hyland was personally exposed to the amount of the original mortgage in the neighbourhood of $170,000. Later, he continued to be on title and on the new mortgage which increased his exposure to the amount of approximately $230,000. He remained a joint tenant and he remains exposed on the most recent mortgage which came about as a result of the refinancing of the Lister Property in 2006.
[115] Mr. Hyland also made contributions towards the improvement of 25 Lister Drive over the years. Those improvements related to the daycare business operated at the house by Ms. Roberts. The improvements also related to the house later being converted to a rental property.
[116] In addition, he paid for legal fees, outstanding property tax arrears and outstanding mortgage instalment arrears, all in addition to paying money to settle with Mr. Penrose.
[117] Mr. Hyland’s testimony was direct, credible and consistent with his conduct as a beneficial owner of an interest in the 25 Lister property. His evidence was entirely inconsistent with his acting as a bare trustee. That scenario was first put to him when Ms. Roberts sought to have him sign a listing agreement in the Fall of 2013 when she and Mr. Roberts wanted to sell the Lister property. He has denied that characterization throughout and asserts that he has a legal and beneficial interest in the Lister property. He denies that his interest was only that of a lender in the amount of $10,000 for which he has been repaid which is the position taken by Ms. Roberts. Further, there was absolutely no oral or documentary evidence establishing any intention to create a trust of any kind in favour of Ms. Roberts where Mr. Hyland was to act as trustee.
[118] As for Ms. Roberts’ evidence, the exhibits and evidence of Mr. Hyland do not support her position that a purchase money resulting trust has been created by Mr. Hyland paying $10,000 to Mr. Penrose. She further asserts that all of the money paid by Mr. Hyland for improvements were gratuitous payments. They were gifts as were gifts of skis, trips and a motor vehicle. It is implausible that Mr. Hyland would have made all of these payments simply out of generosity instead of making all of those contributions because of his ownership interest in the Property. It makes no sense that he would have contributed all of those monies and at the same time risk exposure on an increased mortgage to RBC simply on the basis of generosity and brotherly largesse.
[119] Ms. Roberts’ evidence that it was always “her house” and that Mr. Hyland had no ownership interest in all the circumstances does not make sense. It is not a credible reflection of what actually transpired in this case. Her evidence in respect of the dealings with Joy Levison were vague. She did not have a very good recollection or any recollection at all as to what transpired at Ms. Levison’s office. Mr. Hyland’s evidence is to be preferred as to how the RBC documents were generated and how they came to be executed at the same time and not with the title documents being executed at a different time as was suggested by Ms. Roberts. It is clear that RBC was not prepared to release Mr. Penrose until and unless all of the documents and commitments it required were satisfied. All of this was done leading up to the registration of the Transfer on June 20, 2003, having the effect of removing Mr. Penrose from title and putting Mr. Hyland and Ms. Roberts on title as joint tenants. That fact of title has not changed to this day.
[120] Further, Mr. Hyland’s evidence in respect of the payments that he made in respect of property tax and mortgage arrears is to be preferred over the evidence of Ms. Roberts. She acknowledges that there were such arrears. However, she maintained in her evidence that everything was under control. Quite to the contrary, everything was not under control. As a result of her not making the payments, both the City of Barrie and RBC demanded satisfaction. When those arrears were not paid by her, they turned to Mr. Hyland as a co-owner of the property and demanded payment from him. For her to suggest that those payments were unnecessary and that she never asked Mr. Hyland to make those payments also is not to be believed in the face of her delinquency in making those payments, Mr. Hyland being pursued by both the City of Barrie Tax Department and RBC and Mr. Hyland making those payments in order to protect the property from being disposed of either by the City of Barrie or RBC.
[121] In the face of all of the evidence and circumstances, it also makes no sense and is not credible for Ms. Roberts to assert that Mr. Hyland is a bare trustee and has no beneficial interest in the Property. Her evidence that if he would not assist her, she would seek someone else to be her guarantor is self-serving. RBC was not satisfied with a guarantor and there was no evidence of anyone other than her brother coming to her aid. The final note of incredulity rests with her assertion that she alone is entitled to the increased value of 25 Lister Drive on any sale and Mr. Hyland is entitled to nothing. For these Reasons the totality of the evidence and testimony of Mr. Hyland is to be preferred over that of his sister, Ms. Roberts.
Findings
[122] On the exhibits before the court and upon hearing the evidence of Ms. Roberts and Mr. Hyland, I find that in 2003 Mr. Hyland came to the assistance of his sister as her relationship with Mr. Penrose deteriorated. At the time, Ms. Roberts and Mr. Penrose had purchased 25 Lister Drive in Barrie. They had lived there for about one year over which time their relationship deteriorated beyond repair.
[123] Mr. Hyland came to the assistance of his sister. He had the financial wherewithal and problem solving ability to assist her in this stressful and emotional time. The end game was to produce a result that would allow her and her daughter to remain in residence at 25 Lister Drive while at the same time settle any claims that Mr. Penrose might have once and for all. Ms. Roberts wanted to disengage herself entirely from her relationship with Mr. Penrose and she did not want him coming around 25 Lister Drive in the future.
[124] To this end, I accept Mr. Hyland’s evidence that he and his sister retained Joy Levison to negotiate and conclude a settlement agreement between Ms. Roberts and Mr. Penrose. Mr. Hyland’s letter faxed to Levison dated May 12, 2003 sets out “the plan” as to how the objectives were to be achieved. The letter is detailed as to who would do what. It does not speak of any trust arrangement between Ms. Roberts and Mr. Hyland. To the contrary, subsequent events transpired in accordance with that plan. Mr. Penrose’s interests were settled upon payment of $10,000 by Mr. Hyland. Mr. Hyland paid all the legal fees. Mr. Penrose exited the picture on a final basis and was released by RBC.
[125] Insofar as RBC was concerned, Mr. Penrose’s interest would not be released unless Mr. Hyland not only assumed the mortgage as a co-borrower but also went on title as a joint tenant. This was the only way that RBC would permit Mr. Penrose to be released from any and all obligations and covenants with respect to the mortgage. The face amount of that mortgage was first $170,414.56. Both Ms. Roberts and Mr. Hyland complied with the requirements of RBC.
[126] I find that in respect of Mr. Hyland’s letter of May 12, 2003, he acquired Matt Penrose’s share in 25 Lister Drive.
[127] At paragraph four of Exhibit 1, tab 5, Mr. Hyland states in his letter to Ms. Levison dated May 12, 2003:
I have personally become involved in this matter to try to referee it and have agreed with Matt in principle to pay $10,000 for his share of the house. This assumes that I am able to assist Moira complete the assumption of the mortgage…
[128] It is clear and I find that this is exactly what happened in this case. There was no discussion of any trust being created, either express, constructive or resulting trust created by the payment of purchase money. There were no documents evidencing the intention to create any trust or that Mr. Hyland would act as bare trustee for the benefit of Ms. Roberts regarding 25 Lister Drive.
[129] Pursuant to “the plan”, the title was transferred as evidenced by the transfer of title registered June 20, 2003. Mr. Penrose came off title and Mr. Hyland went on title with his sister as joint tenants. He paid the land transfer tax. The Land Transfer Tax Statement does not disclose that the conveyance was in trust. Rather, the Land Transfer Tax Statement confirmed the opposite, that Ms. Roberts and Mr. Hyland were transferees as described in the conveyance. Documentation from Ms. Levison to RBC also confirmed that Mr. Hyland executed the necessary mortgage assumption.
[130] In her reporting letter to Mr. Hyland, dated August 7, 2003, paragraph one of the letter confirms that Mr. Hyland assisted his sister in purchasing Mr. Penrose’s interest in the Property and to obtain a release of Mr. Penrose’s covenant for payment of the mortgage. I find that it was Mr. Hyland who purchased Mr. Penrose’s interest in the property in order to obtain Mr. Penrose’s release. Further, it was a term of the assumption that Mr. Hyland become a registered owner of the Property and that he assumed responsibility under the mortgage. These preconditions were met by Mr. Hyland. He did not do so as a bare trustee. He did not do so out of generosity or largesse. His payment to Mr. Penrose was not a $10,000 loan to be repaid at some point in time by his sister. There was no mention, discussion or documentation between anybody at that time that would even suggest that Mr. Hyland was acting as a bare trustee and held no beneficial interest in respect of 25 Lister Drive.
[131] To the contrary, I find that the evidence supports Mr. Hyland’s testimony that he did in fact acquire a beneficial interest in the Property by purchasing Mr. Penrose’s interest. That interest was not for Ms. Roberts to sell. She did not sell or convey her one half interest in the Property. Rather, it was Mr. Penrose’s interest in 25 Lister Drive that was acquired by Mr. Hyland.
[132] Subsequent events further support Mr. Hyland’s position that he had a beneficial interest in the Property. After the departure of Mr. Penrose in 2003, Mr. Hyland contributed to renovations to 25 Lister Drive in order to assist his sister in the operation of a daycare business which she conducted at the house.
[133] This involved finishing the basement and creating a small office for AEGIS as well as other improvements which included installation of air conditioning, paving the driveway and installing a staircase. All of these renovations confirm Mr. Hyland’s ongoing proprietary interest in the Property. Those improvements consisted of thousands of dollars’ worth of renovations.
[134] The renovations did not end in 2003. There were further renovations as a result of the refinancing in 2006 when 25 Lister Drive was converted to a rental property.
[135] I find that those contributions by Mr. Hyland further confirm his interest as a beneficial owner of the Property. They were not made gratuitously. They were not a gift. I find the only gift that Mr. Hyland made to Ms. Roberts was a pair of skis, a corporate trip to Disney World and the use of a minivan owned by Mr. Hyland for the purpose of Ms. Roberts’ daycare business.
[136] As for the refinancing of 25 Lister in 2006, Mr. Hyland was still on title as a joint tenant and still was bound as a co-borrower on the original mortgage of approximately $170,000 with RBC. It was not his idea to refinance the Property. Rather, Ms. Roberts and her husband and family needed a larger property. To this end, they wanted to refinance 25 Lister with a view to purchasing 50 Hollymeadow Road in Barrie. I do not accept Ms. Roberts’ evidence that she and her brother had no discussions in the context of converting 25 Lister Drive to a rental property. I find that they did have conversations with Mr. Hyland expressing his concern over whether Ms. Roberts would be able to carry the increased mortgage payments which would result if the Property were refinanced. She assured him that she could and she assured him that the rental business would operate at profit as opposed to a loss. On the basis of her reassurance, he agreed that the Property be refinanced. The new mortgage was in the amount of $230,163.67. The refinancing freed up some $80,000. The sum of $70,000 was paid to Ms. Roberts. Out of this amount she paid down some debt and the remainder was placed as a down payment on the purchase of the 50 Hollymeadow Road property. The sum of $10,000 was paid to Mr. Hyland. I accept his evidence supported by the exhibits that the $10,000 was not a repayment of the money that he had funded to settle with Matt Penrose. Rather, the sum of $10,000 was paid to him so that he could apply that amount to pay down his line of credit.
[137] I reject the evidence of Ms. Roberts in respect of her email to Mr. Hyland found at Exhibit 1 tab 27. It was Ms. Roberts’ position that she did not want to argue with Mr. Hyland about money any more. She was paying her bill and they were not to discuss finances any longer and were to put such discussions behind them.
[138] I do not find that Ms. Roberts’ view of financial dealings between herself and Mr. Hyland was accurately reflected in her email. To the contrary, there was much more in play at this point in time rather than Ms. Roberts simply declaring that she was paying her bill and that was that.
[139] At this point in time, Mr. Hyland’s financial exposure did not come to an end. To the contrary, his financial exposure to RBC had increased to approximately $230,000 while he was still a joint tenant on title. He knew that the bank could pursue him for the entire mortgage debt but he also knew that he was a joint tenant to the Property. I find the increased exposure to the mortgage amount by Mr. Hyland is not consistent with his being a bare trustee. Rather, his increased exposure to the RBC mortgage is more consistent with his conduct as a co-borrower and joint tenant with a beneficial interest in the Property. His position in 2006 was the same as his position in 2003 as to owing a legal and beneficial interest in 25 Lister Drive, only his financial exposure in 2006 had increased significantly. I find that significant increase was not borne by Mr. Hyland as a result of gratuity, generosity or largesse in favour of his sister. To the contrary, I find Mr. Hyland’s conduct was consistent with his acting as a co-owner and co-borrower regarding the Property and was conduct consistent with protecting his proprietary interest in that Property.
[140] I also accept Mr. Hyland’s evidence regarding the property tax arrears and the mortgage instalment arrears. He was surprised to learn that his sister had not made these payments as she was obliged to do. As a result, the City of Barrie Tax Department and RBC pursued him as a co-owner of the Property. Demand was made for Mr. Hyland to pay the arrears as those arrears had not been paid by Ms. Roberts. He paid them and she acknowledges that he paid both the property tax and mortgage instalment arrears. What is incredible is the evidence of Ms. Roberts that it was not necessary to make these payments and she did not ask Mr. Hyland to make these payments. She testified his paying these amounts was unnecessary. Her evidence is rejected. It is clear is that by 2007, Mr. Hyland and Ms. Roberts were not talking to each other. He was being pursued by the City of Barrie Tax Department and RBC to pay property tax and mortgage arrears. I accept his evidence that he made these payments as a co-owner of the Property to protect the Property from any disposition or risk of disposition by the City of Barrie or RBC. I accept his evidence that he was not making these payments as a gift to his sister or as a bare trustee with no beneficial interest in the Property. Again, he paid thousands of dollars’ to satisfy both property tax and mortgage instalment arrears. His conduct and such payments were not consistent with the actions of a bare trustee.
[141] This brings us to the proposed sale of 25 Lister Drive in October 2013 for approximately $319,000. It is important to note that at this point in time Mr. Hyland was still on title as a joint tenant and was still on the mortgage with RBC as a co-borrower. There were no discussions whatsoever to substitute Mr. Roberts in the place of Mr. Hyland as a joint tenant or a co-borrower in respect of the 25 Lister Drive property. Mr. Hyland was still exposed to the tune of approximately $230,000 and was still exposed as a joint tenant of the Property.
[142] Also, the evidence of both Ms. Roberts and Mr. Hyland confirms that there were no discussions that the Property was to be held in trust by Mr. Hyland at any time. There were no such discussions and no such documentation reflecting any such trust agreement back in 2002/2003. There were no such discussions or documentation regarding any sort of trust arrangement leading up to the refinancing in 2006. As part of the refinancing in 2006, there were no discussions and no documentation generated to suggest any sort of trust arrangement between Ms. Roberts and Mr. Hyland.
[143] During the time when the outstanding property tax arrears and mortgage instalment arrears became an issue, there was no discussion as to any sort of a trust arrangement between the parties. However, when Mr. Hyland was contacted to sign a Listing Agreement in October of 2013, he was made aware that all that was necessary was for him to sign the Listing Agreement and that someone would be coming over to see him to secure his signature. When he questioned what this was all about, he was told that Ms. Roberts wanted to sell the Property but that he had no interest in the Property. Only his signature was required. This was when he first learned that Ms. Roberts contended he held absolutely no benefit in the Property. There were no discussions with Ms. Roberts about his financial contribution or interest in 25 Lister Drive at that time. She simply wanted to sell the Property and as far as she was concerned, he had no interest in it. I find his conduct as a co-owner and co-borrower was also confirmed by his reaction to what he was told. Mr. Hyland disagreed entirely that he was nothing more than a bare trustee and he refused to sign the listing agreement.
[144] For these Reasons, I come to my conclusion in respect of the issue of ownership. I find that Ms. Roberts is not the sole beneficial owner of 25 Lister Drive. I also find that Mr. Hyland does not hold title to the Property as bare trustee only. Neither do I find that he has no entitlement to any equitable or beneficial ownership interest in the Property. To the contrary, I find Mr. Hyland is a co-owner of 25 Lister Drive, Barrie. He owns the Property as a joint tenant with his sister, Moira Roberts. He is not only a legal owner but also holds a one half beneficial interest in that Property. From the outset, he acquired the interest that Mr. Penrose held. Both he and Ms. Roberts were required by RBC to hold title to the Property as joint tenants and that Mr. Hyland assume the mortgage as a co-borrower in order for RBC to release Mr. Penrose. Mr. Hyland pursued the plan set out in his May 12, 2003 fax to Ms. Levison. There is no evidence that he acted as a bare trustee and there were no documents created at any time to establish that Mr. Hyland held any interest in 25 Lister Drive as a trustee for the benefit of his sister. Rather, the events in 2003, Mr. Hyland’s conduct consistent with being a co-owner and co-borrower including contributing to improvements, his involvement in the 2006 refinancing, his payment of property tax and mortgage instalment arrears and generally his conduct throughout is consistent with Mr. Hyland’s legal and beneficial ownership interest in 25 Lister Drive.
Legal Submissions
[145] Counsel for Ms. Roberts submits that this is a case where Mr. Hyland’s payment of $10,000 to Mr. Penrose was a purchase money payment creating a resulting trust in favour of his sister. He relies on the Ontario Court of Appeal decision in Andrade v. Andrade, 2016 ONCA 368. While counsel do not disagree with the legal principles set out in Andrade, there is disagreement as to whether the Andrade case on its facts and those principles apply to our case.
[146] In Andrade at paras. 57 and 58, the Court of Appeal cited the relevant legal principles:
[57] A resulting trust arises when title to the property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 20
[58] A purchase money resulting trust can occur “where a person advances a contribution to the purchase price of the property without taking legal title: Nishi v. Rascal Trucking Ltd., 2013 SCC 33, [2013] 2 S.C.R. 438, at para. 21
[147] In contributing money toward the purchase of the property, the issue in Andrade was whether Luisa Andrade intended to confer beneficial ownership of the property on the legal title holders, to the exclusion of herself and her other children. The Court held the money used in the purchase of the property was Luisa’s money. Although its source was in part money given to her by her working children, Luisa was the person who took on the responsibility to pay for the house at the time of purchase and during the next 35 years until she died. Although the house was in her children’s names her intention was not to benefit the title holders to the exclusion of her other children by giving them a property interest in the house. The evidence was inconsistent that Luisa intended to give one son a beneficial interest in the house from the time it was purchased: Andrade, paras. 67, 97.
[148] I find that the Andrade case is distinguishable. Our case is not a case of a purchase money resulting trust. Rather, in our case, Mr. Hyland paid money to Mr. Penrose to require Mr. Penrose’s interest in the Property. Ms. Roberts never owned a full interest in the house to begin with. When 25 Lister Drive was purchased for $172,900, the financed amount was $170,414.56. The equity held by Ms. Roberts and Mr. Penrose was the sum of $2485.44. Their respective shares of the equity was somewhere in the neighbourhood of $1250 each.
[149] There was no evidence to support a commonly shared intention by anyone at any time for Mr. Hyland to purchase Mr. Penrose’s interest and hold that interest in the 25 Lister Drive property in trust for his sister.
[150] There was no evidence that an express trust, constructive trust or a resulting trust was either intended or created in this case. There was no evidence of unjust enrichment accruing to Mr. Hyland. To the contrary, the evidence supports that Mr. Hyland not only acquired Mr. Penrose’s interest but also made substantial and significant contributions to the Property by way of improvements and by way of paying property tax and mortgage instalment arrears which only enhanced the value of the Property which the Parties now share.
[151] Counsel for Mr. Hyland relies on the decision in Sundarampillai v. Ponnambalam, 2015 ONSC 5466. He argues that case is not unlike our case.
[152] At paragraph 29, three characteristics for a declaration of trust were set out (see Metropolitan Trust Pension Plan (trustee of) v. Toronto (City), 213 D.L.R. (4th) 362 (Ont. S.C.J.). Those three characteristics for a declaration of trust are as follows:
(a) a certainty of intention to create the trust;
(b) the identification of the subject matter or property of the trust; and,
(c) the ascertainability of the persons intended as beneficiaries.
[153] Further, a constitution of a trust occurs where a declaration of trust is combined with a conveyance of property to a trustee.
[154] As in the Sundarampillai case, Ms. Roberts did not establish a trust. As in the Sundarampillai case, the issue of a trust was not raised until these legal proceedings were instituted. The evidentiary record discloses that there is not a single document reflecting any trust agreement or any stated intention by the Parties that Mr. Hyland held a one half interest in the Property in trust for his sister.
[155] As in the Sundarampillai, there were many opportunities where such a document could have been discussed, created, reviewed or signed. There were no such documents included in the file of Ms. Levison who had purged her file. She was not called to give evidence at trial. Accordingly, there was no evidence forthcoming from her evidencing the existence of a trust agreement or the stated intention by anyone to create one.
[156] Further, in the Sundarampillai case it was held that in the absence of any documents reflecting or evidencing a property interest in trust, the trust claim failed for violating the provisions of the Statute of Frauds, R.S.O. 1990, c. S.19. In Sundarampillai, the request for a Declaratory Order that Chitra held a one third interest in the property for Sukanthi was dismissed.
[157] As for any claim asserted on the basis of constructive trust, I find that Ms. Roberts has failed to prove a claim for unjust enrichment against Mr. Hyland. In Aksaman v. Shenderey, 2010 ONSC 4290, [2010] O.J. No. 3511 (S.C.J.), the test for unjust enrichment is as follows:
(a) the Moving Party must show he/she conferred a benefit or enrichment on the Responding Party;
(b) the Moving Party must show there is a corresponding deprivation to them; and,
(c) there must be no juristic reason for the Responding Party to retain that enrichment
[158] I find that there is no unjust enrichment in this case. Mr. Hyland was not unjustly enriched and he was not holding a half interest in the Property for Ms. Roberts by way of constructive trust. She only held a one half interest in the Property in the first place. She was not deprived of the interest that she had. She did not confer a benefit or enrichment on Mr. Hyland. She has not proved that there is a corresponding depravation to her. She has not established any juristic reason for Mr. Hyland retaining enrichment. In this case, there is no unjust enrichment. Rather, both parties have been benefited by the acts of Mr. Hyland.
CONCLUSION
[159] For these Reasons, I grant the Declaration sought by Mr. Hyland in that he is a legal and a 50 percent owner of 25 Lister Drive subject to an accounting to be determined by the local Referee. That task will include an accounting in respect of the rental operations at the Property, and of all expenses paid and outstanding to the Property and a determination of the value of each of Ms. Roberts and Mr. Hyland’s interests in the equity in the Property based on their relative contributions to the purchase, maintenance and ownership of the Property and amounts received for benefits directly or indirectly obtained by each of them.
[160] As for costs, if costs cannot be agreed upon by the Parties, I am prepared to consider costs submissions in writing; those of Mr. Hyland to be delivered within 15 days of the release of this Judgment and those of Ms. Roberts, 15 days thereafter, and any reply submissions within the following five days, all to the office of my judicial assistant in Barrie.
DiTOMASO J.