Milionis v. Rivas, 2017 ONSC 5001
CITATION: Milionis v. Rivas, 2017 ONSC 5001
COURT FILE NO.: FS-15-400782
DATE: 20170825
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALIKI EFFIE MILIONIS Applicant
– and –
DONALD XAVIER RIVAS Respondent
-and-
TAXIARCHIS MILIONIS and TSAMBICA MILIONIS Added Parties
No one appearing for the Applicant
Donald Xavier Rivas, on his own behalf
Frank Mendicino, for the Added Parties
HEARD: May 9, 2017
M. D. FAIETA j.
REASONS FOR DECISION
INTRODUCTION
[1] The Applicant, Aliki Effie Milionis (“Aliki”) and the Respondent, Donald Xavier (“Xavier”) have five children ages 14 to 24. Aliki is a homemaker and is unemployed. Xavier, an information technology engineer, works as a salaried employee. His annual income is about $130,000.
[2] Aliki and Xavier are joint owners of their matrimonial home located at 48 Leacock Crescent, Toronto. The Added Parties, Taxiarchis Milionis (“Tasos”) and his spouse Tsambica Milionis (“Tsambica”) are Aliki’s parents (the “Parents”). Aliki is their only child. A demand mortgage in the amount of $400,000, at 3% interest, due in 2020, was registered against title to the property on July 11, 2005 in favour of the Parents (the “Mortgage”). No monthly or periodic mortgage payments are required nor have any payments have been made against the Mortgage.
[3] Aliki and Xavier separated on January 29, 2015. This Application was commenced on February 12, 2015. Aliki’s Financial Statement, sworn February 12, 2015, states that the sum of $530,780 in respect of the Mortgage, inclusive of accrued interest, is owed to her Parents.
[4] Xavier submits that the Mortgage is “invalid” and should be removed from the Net Family Property calculations. He also submits that the monies given by the Parents prior to the registration of the Mortgage were gifts rather than loans and that, in any event, the money given by the Parents was less than $400,000.
[5] The Parents bring this motion for summary judgment pursuant to Rule 16 of the Family Law Rules for an Order declaring the validity of the Mortgage. For the reasons given below, I have granted summary judgment in favour of Xavier. I have found that the monies given by the Parents to Aliki and Xavier, which they have subsequently claimed as being secured by the Mortgage, were in fact gifts at the time of the transfers. Xavier’s subsequently delivered Acknowledgment that those funds were advanced under the Mortgage does not alter the fact that the Parents intention, at the time of the transfers, was to gift those funds to the Aliki and Xavier.
BACKGROUND
[6] Aliki and Xavier married in February, 1993. Xavier had started to work full time in 1992 following the completion of a degree in computer engineering. They lived rent free in the Parent’s condominium until it was sold in 1995. Xavier states that the Parents told them that they wanted to help them acquire their first house and that the proceeds of sale from the condominium would be used to buy the house. He understood that these funds would be a gift as there was no discussion of a loan.
[7] Aliki and Xavier purchased a house located at 45 Grove Park Crescent, Toronto in 1995 for $275,000.00. Xavier’s evidence that the purchase of the house was funded by the proceeds of sale of the condominium and a mortgage of $145,000.00 provided by Canada Trust is undisputed. One half of this house was owned by Aliki and Xavier and the other half was owned by Tasos and Tsambica. Tasos stated that he put Aliki and Xavier on title because they “… did not have any money, so we gave them the money to start their new life”. At the same time, he told Aliki and Xavier that he wanted half of the equity in this property once it was sold and that he would gift them the other half. The Parents made some, if not all, of the mortgage payments on this property. Xavier states that there was no discussion of repaying the Parents for the mortgage payments that they made. He states that the Parents wanted to help as much as possible to have the mortgage on their house paid off as they believed in living mortgage free.
[8] Xavier states that Aliki believed that the schools in the neighbourhood of her Parents’ home were better than the schools in their area. Aliki registered their son, born in 1993, in a school in her Parents’ neighbourhood using her Parents’ address as their son’s home address. However, Aliki found the commuting to be difficult. Xavier states that Aliki told him that her Parents suggested that they buy a house in their neighbourhood and that the proceeds of sale of 45 Grove Park could be used towards its purchase.
[9] On May 30, 2000, Aliki and Xavier purchased the Matrimonial Home for $560,000.00. They funded the purchase primarily through bridge financing ($197,868 from a new first mortgage of $227,500 with interest at 7.4% per annum from Canada Trust) on 45 Grove Park and a mortgage against the Matrimonial Home ($350,000 from a first mortgage of $380,000 from Canada Trust with interest at 7.5% per annum). By this point, Xavier states that he left Bell Canada to work for a consulting company where he worked at for a few years before starting his own consulting business.
[10] 45 Grove Park was sold for $350,000 on September 14, 2000 after certain renovations were made to the Matrimonial Home. The estimated net proceeds from the sale of 45 Grove Park were $108,392.50 after paying of the outstanding mortgage balance of $227,500, real estate commission and legal fees. As a result, Aliki and Xavier were entitled to $54,196.25 which represents a ½ share of the net proceeds of sale. The Parents were also entitled to the same amount. However, as noted above, Aliki and Xavier had already taken $197,868 in equity from 45 Grove Park to finance the purchase of the Matrimonial Home. Tasos states that none of the net proceeds of sale went to the Parents. Instead, he states that Aliki and Xavier told him that “… they’re going to give us the money a little later.” However, he did not ask for a mortgage or any other form of security. This is denied by Xavier. He states that there was no discussion of repayment or a loan. Both Tasos and Xavier indicate that a Statement of Adjustments from the solicitor who represented them on the sale of 45 Grove Park and which would have shown how funds were distributed on closing is not available.
[11] The sum of $25,000 was paid, at Tasos’ direction, by Tasos’ brother-in-law to Aliki and Xavier on March 20, 2001. A copy of the cheque was provided. These funds were paid towards the principal of the mortgage on the Matrimonial Home.
[12] The mortgage on the Matrimonial Home was replaced with a new mortgage with Maple Trust on July 20, 2001. This mortgage had a principal amount of $350,000 with an interest rate of 6.20% per annum calculated half-yearly not in advance. The monthly payment was $2,282.
[13] Xavier states that although he was doing well financially as an independent consultant at the time that the Matrimonial Home was purchased, his business experienced periods of inactivity. In May 2004 Xavier returned to work for Bell Canada. By this point Aliki and Xavier had five children. Although his income dropped to about $95,000 per year, he accepted this position because it had greater financial stability. As an employee, his take home pay dropped significantly. Xavier states that Aliki told her parents that her family was struggling to pay the mortgage. Xavier states that the Parents offered to help pay the mortgage.
[14] With the Parents’ help, Aliki and Xavier made two prepayments towards the mortgage. Given that they could prepay 15% of the principal each year, Aliki and Xavier paid $52,000 in 2004 ($20,000 in August 2004 and $32,000 in November, 2004) and a further $52,000 in early 2005 ($20,000 in January, 2005 and $32,000 on February 11, 2005). On each occasion, $20,000 was paid by the Parents and $32,000 was paid from a corporation controlled by the Parents which operates under the name Greek Telephone Guide.
[15] Xavier states that sometime around February 11, 2005 the Parents offered to give Aliki and Xavier money to allow them to discharge the Maple Trust mortgage to help them with their financial difficulties. He also states that Tasos asked him to find out the outstanding balance and the early payback penalty charges and did not mention anything about a loan or an interest rate. Xavier obtained a Mortgage Discharge Statement from Maple Trust dated February 15, 2005 which required payment of $189,850.64 by February 17, 2005. On February 17, 2005 the Maple Trust mortgage was paid off. Xavier states that it was his understanding at this point that the Matrimonial Home was mortgage free and that no one said that the funds used to pay off the Maple Trust mortgage would be a loan. The mortgage was subsequently discharged on April 27, 2005.
[16] Xavier states that a celebratory dinner was held sometime between February 17, 2005 and April 27, 2005 after the mortgage was paid off. He states that he, Aliki, and her parents went to a restaurant in North York to celebrate their mortgage free status. At this meal, Tasos reiterated how happy they were with the children, with Xavier and also pointed out how lucky they were to be mortgage debt free at such a young age. On questioning, Tasos had no recollection of a celebratory dinner or any dinner whatsoever. There is no evidence from Tsambica regarding this dinner. While Aliki states in her affidavit, sworn February 20, 2015, that “Xavier and I took my parents out after they loaned us the money, and Xavier thanked them graciously” she was unable when questioned on September 19, 2016 to recall any such event.
[17] Xavier states that Aliki told him for the first time, sometime in July, 2005, that Tasos wanted a mortgage on the Matrimonial Home in order to “put his name” on the money her parents had recently given them. Aliki said that her father felt that he had worked very hard for the money and did not want to lose it. Xavier was shocked. He states:
A few days after, I walked across the street to speak with Tasos at his house … and while I was in his living room and he was about to go to the 2nd floor through his stairs, I asked if it was true that he wanted to put a mortgage on our home.
He looked at me and confirmed that it was true.
I do not recall if it was him at this moment or Aliki that came out with an initial figure of $300,000 for this mortgage which was a rounded figure of the total of all advances made over the past few months from their personal account ($194,000 or $224,000) and from their business account ($64,000) after they offered to help us pay off our mortgage when I returned to Bell.
He said something along the lines of “pay me back if you don’t agree to put a mortgage”
Of course that [sic]with a $95,000 salary, five young children and Aliki only doing occasional work, Aliki and I were not in a position to pay him back.
I remember being taken aback by his attitude and visible irritation and told him that “I was not married to his daughter out of interest and that he could put the value of the whole house if he wanted on the mortgage”.
At this moment, he arbitrarily raised the amount from $300,000 to $400,000 and said “$400,000 then”. …
Tasos did not mention any details such as mortgage length, terms, payment expectations or interest rates at this meeting nor any time before.
[18] When Xavier returned home he told Aliki about what Tasos had said. He stated that Aliki assured him that the Matrimonial Home was their home in any event and that a mortgage of $400,000 would look better than $300,000 for their oldest son’s upcoming financial scholarship application to Upper Canada College. Xavier discussed with Aliki what should be the interest rate for the mortgage. He states that Aliki stated that they should pick an interest rate that would make the mortgage look real in the event that UCC audited them. A few days later, Aliki told him that they were to sign the mortgage documents on July 11, 2005. Xavier states that he signed the mortgage documents because he wanted to please his wife and avoid a family conflict.
[19] Tasos’ recollection of events surrounding the discharge of the Maple Trust mortgage is different. Tasos states that Xavier approached him in the summer of 2004 and told him that he and Aliki were having financial difficulties. Xavier asked Tasos to sell a portion of his investments and give that money to pay off the Maple Trust mortgage. Tasos states that Xavier proposed the idea of a new mortgage given to the Parents in the amount of $400,000.00. He also states that Xavier proposed an interest rate for the mortgage of 3% calculated half-yearly not in advance, which was accepted. He states that to alleviate their financial strain, the mortgage would have no regular mortgage payments and the reduced interest rate of 3% would be paid at the end of the 15 year term so that they could concentrate on raising their five children. Tasos stated that he was not in a financial position to advance all of the funds required to discharge the Maple Trust mortgage in the summer of 2004.
[20] Tasos states that in February 2005 he provided Aliki and Xavier with the funds to discharge the Maple Trust mortgage before he departed to Greece for a vacation. He also states that it was agreed by the parties, that upon their from Greece, Tasos would retain a lawyer to prepare the necessary documentation to have their mortgage registered on title.
[21] Tasos states that he returned from Greece in June or early July, 2005. He states that he did not prepare a mortgage for Aliki and Xavier in February, 2005 because Xaevier agreed that the Mortgage would be prepared and executed once they returned. On his return from Greece, Tasos went to see his lawyer, Mr. Prattas, and said that he had given Aliki and Xavier close to $600,000 and “…we agreed to give them a break for $400,000 with a very, very low interest for 15 years”.
[22] On July11, 2005, Xavier and Aliki attended a lawyer’s office to obtain independent legal advice regarding the mortgage documents that had been prepared by the Parents’ lawyer. They signed the following documents:
a) Certificate of Independent Legal Advice;
b) Mortgage of Land in Preparation and Acknowledgment and Direction re: Electronic Registration;
c) Acknowledgment of Receipt of Standard Charge Terms No. 200033;
d) Acknowledgment re: Mortgage Proceeds;
e) Statutory Declaration re Residency, Planning Act, Family Law Act, etc.;
f) Acknowledgment that Prattas & Prattas is only acting for the Mortgagee;
g) Acknowledgment previous mortgage has been discharged;
h) Statutory Declarations regarding identity of mortgagors; and
i) Certificate of Advance.
[23] The Mortgage, in the amount of $400,000, was registered on July 12, 2005.
ISSUES
[24] Xavier submits that the following defences raise a genuine issue requiring a trial of whether the Mortgage is valid and enforceable:
a. Xavier was under duress and/or undue influence when he signed the Mortgage;
b. Xavier did not receive independent legal advice before he signed the Mortgage;
c. All monies given by the Parents to Aliki and Xavier to buy the Matrimonial Home and to discharge the Maple Trust Mortgage were gifts, not loans; and
d. The sum claimed as loans do not add up to $400,000 – being the principal amount of the Mortgage.
ANALYSIS
[25] The test on a motion for summary judgment under the Family Law Rules reflects the approach under Rule 20 of the Rules of Civil Procedure. Rule 16 of the Family Law Rules states:
WHEN AVAILABLE
- (1) After the respondent has served an answer or after the time for serving an answer has expired, a party may make a motion for summary judgment for a final order without a trial on all or part of any claim made or any defence presented in the case. …
EVIDENCE REQUIRED
(4) The party making the motion shall serve an affidavit or other evidence that sets out specific facts showing that there is no genuine issue requiring a trial.
EVIDENCE OF RESPONDING PARTY
(4.1) In response to the affidavit or other evidence served by the party making the motion, the party responding to the motion may not rest on mere allegations or denials but shall set out, in an affidavit or other evidence, specific facts showing that there is a genuine issue for trial.
EVIDENCE NOT FROM PERSONAL KNOWLEDGE
(5) If a party’s evidence is not from a person who has personal knowledge of the facts in dispute, the court may draw conclusions unfavourable to the party.
NO GENUINE ISSUE FOR TRIAL
(6) If there is no genuine issue requiring a trial of a claim or defence, the court shall make a final order accordingly.
POWERS
(6.1) In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties, and the court may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
ORAL EVIDENCE (MINI-TRIAL)
(6.2) The court may, for the purposes of exercising any of the powers set out in subrule (6.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation. …
[26] In Hryniak v. Mauldin, 2014 SCC 7 at para. 49, the Supreme Court of Canada stated the following:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[27] In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial: see Rule 20.02(2). Each side must “put its best foot forward” with respect to the existence or non-existence of material issues to be tried: Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 11. A court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: Aronowicz v. EMTWO Properties Inc., 2010 ONCA 96, 98 O.R. (3d) 641, at paras. 17-19.
[28] On a motion for summary judgment, a judge may grant judgment in favour of a responding party, even in the absence of a cross-motion for such relief, so long as it is within the scope of the motion: Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235, at paras. 147, 148.
Were the Funds Transferred by the Parents from 2000 to 2005 Intended to be Loans rather than Gifts?
[29] In order to enforce the Mortgage, the Parents must prove that they advanced funds by way of loans that were to be secured by the Mortgage: See A.A. v. A.G, 2017 ONCA 243, para. 45.
[30] The principal amount of the Mortgage is $400,000.00.
[31] After receiving ILA on July 11, 2005, Xavier and Aliki signed an Acknowledgment Re Mortgage Proceeds which states:
We hereby acknowledge and confirm that we have already received the total proceeds of the mortgage herein from the mortgagees and that no proceeds are outstanding to be paid to us, the mortgagors, from the mortgagees. …
[32] In my view, the above statement does not resolve the issue of whether the funds which were allegedly secured by the Mortgage were given as gifts rather than loans.
[33] There is a presumption of a resulting trust when there is a gratuitous transfer of property from a parent to an adult child. In such cases because the adult child gave no value for the property, he or she is under an obligation to return it to the original owner. When a transfer is challenged, the onus is placed on the transferee to demonstrate, on a balance of probabilities, that a gift was intended by the transferor. The intention of the transferor at the time of the transfer(s) “ought to be contemporaneous, or nearly so”, to the transaction. The quality of the relationship between the transferor and the transferee is also relevant in determining whether the presumption has been rebutted. As well, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of a resulting trust. However, subsequent acts and declarations are viewed with mistrust by courts because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts: Pecore v. Pecore, 2007 SCC 17, paras. 24, 25, 37, 41, 44, 56.
[34] Xavier submits that the monies that he and Aliki received from the Parents, as described below, were gifts rather than loans. He states that there was never anything said by the Parents which indicated that any of the monies given to him and Aliki were loans until several months after the Maple Trust mortgage on the Matrimonial Home.
Funds used to Purchase the Matrimonial Home from the Parents’ Share of the Proceeds of Sale of 45 Grove Park Crescent
[35] The parties did not provide a reporting letter from their solicitor on the sale of 45 Grove Park which would have greatly assisted in showing how the proceeds of sale were divided between the parties.
[36] Tasos submits that the Parents were entitled to $197,868.00 from the sale of 45 Grove Park. There is no explanation given to support this particular amount. There is no evidence of any agreement with respect to these funds.
[37] However, it is undisputed that the Parents, as co-owners, were to receive one-half of the net proceeds of sale. The parties placed a new mortgage on 45 Grove Park which allowed Aliki and Xavier to draw $197,868 to finance the purchase of their Matrimonial Home. Given that the new bridge financing mortgage on 45 Grove Park was in the amount of $227,500, this suggests that there was a mortgage balance of $29,632 prior to the draw made by Aliki and Xavier. Accordingly, it appears that but for this draw down by Aliki and Xavier, there would have been approximately $306,260.50 in equity to be split between the parties after deducting real estate commission and estimated legal fees. [See Xavier’s affidavit, sworn December 8, 2016]. In that case, the Parent’s share would have been $153,130.25. However, the net proceeds of sale were only $108,392.50 after discharging the mortgage used to finance the purchase of the Matrimonial Home
[38] Given that the Matrimonial Home was purchased using these funds and a mortgage on the Matrimonial Home, I am satisfied that the Parents did not contribute their net proceeds of sale to the purchase of the Matrimonial Home. Tasos testified that the Parents’ share of the proceeds were given to Aliki and Xavier however he provided no documentary proof to support this assertion. This is denied by Xavier. Without more, I cannot determine whether the Parents’ portion of the proceeds of the sale of 45 Grove Park were given to Aliki and Xavier, nor can I determine what amount the Parents received as their portion of the proceeds of sale
[39] However, it is clear that Aliki and Xavier’s draw of $197,868 was more than their share of the one-half of the net proceeds. As a result I calculate that Aliki and Xavier received the additional sum of $44,737,75 which belonged to the Parents, as their share of the equity was $153,130.25.
[40] Xavier submits that there was no discussion regarding whether the additional sum described above was a gift or loan. Tasos submits that it was a loan however he has no documentary evidence to support that assertion.
[41] There is no evidence that repayment of this amount was discussed nor any evidence that the Parents sought any form of security (such as promissory note, mortgage or ownership interest) for this amount as they did with the purchase of 45 Grove Park when they became co-owners. There was no meeting of the minds to form an agreement by which Aliki and Xavier would be liable to repay the funds transferred at a later date. There were no terms discussed or agreed upon despite the source of the same funds being a prior investment made where terms were agreed.
Payment of $25,000 – March 2001
[42] The sum of $25,000 was paid, at Tasos’ direction, by Tasos’ brother-in-law to Aliki and Xavier on March 20, 2001. A copy of the cheque was provided. These funds were paid towards the principal of the mortgage on the Matrimonial Home. Once again, there is no evidence that repayment of this amount was discussed nor any evidence that the Parents sought any form of security. There was no meeting of the minds to form an agreement by which Aliki and Xavier would be liable to repay the funds transferred. There were no terms discussed or agreed upon despite the source of the same funds being a prior investment made where terms were agreed.
[43] For the same reasons as given above, I find that this amount was given by the Parents as a gift and without any requirement for its return.
Payments made by the Greek Telephone Guide – October 2004 and February 2005
[44] On questioning, Tasos explained that he gave $32,000 to Xavier from his business bank account in exchange for an invoice, dated October 6, 2004, in that amount which his business, Greek Telephone Guide, used as a business expense for tax purposes. Another $32,000 cheque was issued by Greek Telephone Guide following delivery of an invoice dated December 30, 2005. Both cheques were deposited by Xavier and used to reduce the amount of the mortgage.
[45] Xavier states that the Greek Telephone Guide business was operated out of two rooms in the Parents’ house. The business has four or five computers, a few printers, a scanner and network that Xavier set up and occasionally maintained. He also provided advice and set up software. Xavier states that he provided assistance to Greek Telephone Guide from about the time he married Aliki. He also states that he and Aliki did work periodically for the Greek Telephone Guide however they never asked Tasos to pay for that work as they were happy to help as much as possible. The above two invoices were the only invoices he issued to the Greek Telephone Guide.
[46] In questioning Tasos had the following exchange with Xavier’s lawyer:
Q: So, your business paid an invoice, you wrote off the expense, and now you say that should be part of the money that your daughter and Mr. Rivas owe – owe to you, correct?
A: The money, which I gave to both of them, to Mr. – Xavier, and to Aliki, they were more than $600,000.
Q: You have- you have to answer my question.
[47] In my view, the two payments of $32,000 did not constitute a loan but rather were payments for services provided to Greek Telephone Guide even though Tasos in questioning, denied having received much help with their computer system from Xavier. The Parents cannot have it both ways. Tasos admits that he represented to the government that thethe payments were lawfully incurred business expenses for tax purposes. The Parents cannot now credibly argue in this proceeding that the payments were consulting expenses paid but were loans.
[48] In addition, there is no evidence that repayment of this amount was discussed nor any evidence that the Parents sought any form of security. There was no meeting of the minds to form an agreement by which Aliki and Xavier would be liable to repay the funds transferred at a later date.
[49] Further, Tsambica’s evidence on questioning is that the Greek Telephone Guide is the operating name of TNT Milionis Limited. Accordingly, any claim for repayment would have to be made by the Greek Telephone Guide rather than the Parents.
Mortgage Pre-payments of $52,000 – 2004 and 2005
[50] Tasos states that a total of $52,000 was paid by the Parents to Aliki and Xavier towards the Mortgage from August 23, 2004 to December 31, 2004. This amount includes the $32,000 payment described above, and a $20,000 payment from his personal bank account. [Affidavit sworn September 6, 2016, paragraph 95]
[51] Tasos states that a further $52,000 was paid by the Parents to Aliki and Xavier towards the Mortgage from January 1, 2005 to February 11, 2005. This amount includes the $32,000 described above and two cheques of $10,000 each from the Parents’ personal bank account. [Affidavit of Tasos, sworn October 13, 2016, para. 22.]
[52] Once again, there is no evidence that repayment of the payments of $20,000 were agreed to be loans nor any evidence that the Parents sought any form of security. There was no meeting of the minds to form an agreement by which Aliki and Xavier would be liable to repay the funds transferred at a later date.
Mortgage Discharge Payment of $189,850.64 – February 17, 2005
[53] As described above, Tasos states that Xavier offered to have him place a mortgage of $400,000 on the Matrimonial Home in the summer of 2004.
[54] I prefer Xavier’s evidence over Tasos’ evidence on the circumstances surrounding the transfer of funds used to discharge of the Maple Trust mortgage. . It makes little sense that Xavier would have offered to have a $400,000 mortgage placed on the Matrimonial Home in the summer of 2004 when the existing balance of the Maple Trust mortgage at that time was only about $272,000 [See the Statement from Maple Trust dated August 27, 2004, Exhibit “N” to Xavier’s affidavit sworn September 6, 2016]. Further, if a mortgage had been contemplated since the summer of 2004, then I would have expected that Tasos would have given his lawyer instructions to prepare a mortgage for signature well before he advanced the funds required to discharge the Maple Trust mortgage. I accept Xavier’s evidence that there was no mention that the funds advanced to discharge the Maple Trust mortgage were loans from the Parents and that the request for a mortgage was made by the Parents, not him, after their return from Greece.
[55] I also accept Xavier’s evidence that the Parents, Aliki and Xavier went to a restaurant after the Maple Trust mortgage was paid off. This was also Aliki’s affidavit evidence but later she and Tasos could not recall this event. I accept Xavier’s evidence regarding the purpose of the dinner and that, amongst other things, Tasos stated that they were lucky to be mortgage debt free at such a young age.
Conclusions
[56] Having considered the evidence submitted by the parties, I am satisfied that I cannot fairly resolve the matter on the contested record alone and that it is fair and appropriate to use the expanded fact-finding powers rather than requiring a trial or mini-trial on the issue of whether the transfers were intended to be loans or gifts.
[57] In coming to this conclusion, I have had the benefit of reviewing a great deal of affidavit evidence, documentary evidence and transcripts of the examination of all four family members. Given that the events at issue took place more than a decade ago, it is my view that recollections will be no better than they were at the time of the examinations in late 2015. The parties have had the opportunity to put their best foot forward on this motion. I accept the Parents’ submission that this is an appropriate case for a motion for summary judgment and find that there is no genuine issue that requires a trial related to whether the monies provided by the Parents to Aliki and Xavier to buy their homes and to pay down the mortgages on those homes were gifts or loans. I find that Xavier has established on a balance of probabilities that the funds given to them by the Parents, as described above, were gifts.
[58] I do not accept Tasos’ evidence that the many transfers of money were loans. He stated that each of the transfers constituted a loan however, as noted earlier, there was no evidence that the Parents at the very least told Aliki and Xavier that those transfers were loans or that he communicated the loan terms of each transfer to Aliki and Xavier. I accept Xavier’s evidence that the Parents never suggested to him until June or July 2005 that the transfers made from 2000 to 2005 were loans.
[59] With respect to the transfers in February 2005 that resulted in the discharge of the Maple Trust mortgage, it makes little sense that Xavier would have offered to have a $400,000 mortgage placed on the Matrimonial Home in the summer of 2004 as suggested by Tasos when the existing balance of the Maple Trust mortgage at that time was only about $272,000 [See the Statement from Maple Trust dated August 27, 2004, Exhibit “N” to Xavier’s affidavit sworn September 6, 2016]. Further, if a mortgage had been contemplated since the summer of 2004, then I would have expected that Tasos would have given his lawyer instructions to prepare a mortgage for signature well before he advanced the funds required to discharge the Maple Trust mortgage. I accept Xavier’s evidence that there was no mention that the funds advanced to discharge the Maple Trust mortgage were a loan from the Parents and that the request for a mortgage was made by the Parents, not him, after their return from Greece.
[60] During the period prior to July 2005, the Parents helped their only child, who at all times was a homeworker caring for her children with little or no income, to purchase two houses and relieve her, and incidentally her husband, from the pressures of carrying a mortgage so that they could more comfortably raise their children. There was nothing said or written at the time of these transfers of funds which suggests that the transfers were loans. For instance, the Parents did not take an ownership interest in the Matrimonial Home as they had done with 45 Grove Park even though they made a significant contribution to its purchase nor did they demand a promissory note or mortgage until June or July, 2005. In fact, the statements of the Parents at the celebratory dinner shortly after they gave funds to pay off the Maple Trust mortgage, make it clear that these funds were a gift, rather than a loan.
[61] I find that there have been no advances under the Mortgage despite Xavier’s Acknowledgment, made far after the transfers, to the contrary. In Pecore, at paras. 55 and 59, the Supreme Court of Canada stated that it is the actual intention of the transferor, at the time of the transfer, that governs whether the transfer of property is a gift or loan. I find that, on the balance of probabilities, all of the transfers of money made by the Parents to Aliki and Xavier were gifts rather than loans.
[62] The Parents have continued to provide their daughter with financial assistance. On questioning, Tasos gave the following answers:
Q: So from 2005 to 2014, you continued to help the family, correct?
A: Up to today, yes.
Q: All right, are you going to ask for another mortgage?
A: Of course not. [Emphasis added.]
[63] The Parents generosity to their daughter has been consistent. However, in July 2005, Tasos demanded a mortgage in order to retract all gifts of money that the Parents had given to Aliki and Xavier. Given the above exchange on questioning, the request was likely made to prevent Xavier, rather than Aliki, from benefitting from gifts that the Parents had made in the event of their separation.
Was the Mortgage Signed by Xavier under Duress or Undue Influence?
[64] Given that the law does not lightly set aside an agreement, the threshold for establishing duress is high. In Barton v. Armstrong [1976] A.C. 104, at 121 (J.C.P.C.), Lord Wilberforce (dissenting in the result) stated:
The action is one to set aside an apparently complete and valid agreement on the ground of duress. The basis of the plaintiff's claim is, thus, that though there was apparent consent there was no true consent to the agreement; that the agreement was not voluntary. This involves consideration of what the law regards as voluntary, or its opposite; for in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate. Thus, out of the various means by which consent may be obtained—advice, persuasion, influence, inducement, representation, commercial pressure—the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion. In this the law, under the influence of equity, has developed from the old common law conception of duress—threat to life and limb—and it has arrived at the modern generalisation expressed by Holmes J.—" subjected to an improper motive for action " (Fairbanks v. Snow 13 Northeastern Reporter 596, 598). [Emphasis added]
[65] Duress requires proof of pressure that: (1) the law regards as illegitimate, such as threat of any form of illegal action; and (2) is applied to such a degree as to amount to a “coercion of the will” of the party relying on this defence. The following considerations apply in determining whether there is a “coercion of the will”: (1) did the party relying on this defence protest? (2) was there an alternative course open to him or her? (3) was he or she was independently advised? (4) after entering the agreement did he or she take steps to avoid the agreement after entering it? See A.A. v. A.G, 2017 ONCA 243, paras. 26-27; Gordon v. Roebuck (1992), 1992 CanLII 7443 (ON CA), 9 O.R. (3d) 1 (C.A.), at para. 3.
[66] An agreement obtained through duress is voidable at the instance of the party subjected to the duress unless by another agreement or through conduct, either express or implied, he affirms the impugned agreement at a time when he is no longer the victim of duress: Stott v. Merit Investment Corporation (1998), 1988 CanLII 192 (ON CA), 63 O.R. (2d) 545 (C.A.), at para. 49.
[67] Xavier submits that he signed the mortgage agreement because he did not want to upset his wife or her Parents. In his affidavit sworn September 6, 2016, Xavier states:
Sometime around the beginning of July, 2005 Aliki told me that her father wanted to “put his name” on the money her parents had recently given us.
She said it was “to protect us from losing this money to fraud, the bank or the stock market.”
She said that “her dad felt he had worked very hard for that money and wanted to make sure we did not lose it”.
I recall being confused, shocked and in disbelief but I also recall that I trusted my wife 100% and was very much in love with her. …
[68] In questioning, Xavier further explained:
Q: And you signed [the Certificate of Independent Legal Advice]?
A: I signed it, but I didn’t really – I – I didn’t pay attention to any – any of this documentation when I signed them because again, I trusted my wife – that what – what she has said in terms of the house being ours and everything. And that we were doing this just to – just to allow Tasos to sleep in peace. So, I – when I walked into that office, whatever papers they put in front of me, I signed me. …
Q: So, Mr. Rivas, I’m going to show you the next series of documents. There’s a Statutory Declaration … so, you’re saying you’ve signed this … to make your in-laws happy …
A: Well, because I – I felt that if I didn’t sign this, then there were going to be repercussions in terms of the relationship with – with her father and – and who knows what it might have led to at the time. So, I felt that I didn’t want to upset him and – and – and that I had no choice really. And – and Aliki reassured me that we were doing this just to let him sleep, but the house was ours.
Q: Why do you say you had no choice? You had a choice, you didn’t have to – you didn’t have to sign the mortgage
A: Well, what it would have meant would have been probably – probably a big – a big, you know, dispute I guess, maybe, between her father and – and me, and then Aliki pressuring me, and then maybe she would have – maybe she would have said okay, well if you don’t sign it we – we get divorce. …
[69] In my view, Xavier’s defence of duress does not raise a genuine issue that requires a trial. His own evidence of the familial pressures that compelled him to sign the mortgage documents falls far short of the test for duress described above. In my view the pressure exerted on Xavier to sign the Mortgage was neither illegitimate nor did it amount to a coercion of Xavier’s will. Amongst other things: (1) there is little evidence that Xavier protested the demand for a Mortgage; (2), he received independent legal advice prior to signing the Mortgage; (3) he did not take steps to have the Mortgage set aside until this divorce application was commenced ten years later. Further, even if the Mortgage was voidable for duress, I find that Xavier implicitly affirmed the Mortgage by his failure to challenge its validity on grounds of duress for more than ten years following it execution.
[70] Xavier also alleges that the circumstances under which he signed the Mortgage and related documents constitute undue influence. In Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, at para. 26, Wilson J. adopted the following statement which explains that there are two types of undue influence:
First, there are the cases in which there has been some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, though not always, some personal advantage obtained by a donee placed in some close and confidential relation to the donor ... .
The second group consists of cases in which the position of the donor to the donee has been such that it has been the duty of the donee to advise the donor, or even to manage his property for him. In such cases the Court throws upon the donee the burden of proving that he has not abused his position, and of proving that the gift made to him has not been brought about by any undue influence on his part. In this class of cases it has been considered necessary to shew that the donor had independent advice, and was removed from the influence of the donee when the gift to him was made.
[71] Xavier was motivated to sign the Mortgage documents in order to keep peace in the family and, in these circumstances, that does not constitute actual undue influence. I also find that this was not a case of presumed undue influence as the relationship between Xavier and Aliki was not one of dependency and potential domination such as the case between solicitor and client, parent and child and guardian and ward. In any event, given the circumstances described above, I find that Xavier did not sign the Mortgage documents under undue influence.
Is the Mortgage Voidable for failure to obtain Independent Legal Advice?
[72] In his affidavit sworn September 6, 2016, Xavier states that “no independent advice, in a private setting, with the proper background, was provided to me alone without Aliki’s presence”.
[73] It clear from the various documents that he signed on July 11, 2005 (particularly the Certificate of Independent Legal Advice and the Acknowledge of Representation) that Xavier and Aliki did receive independent legal advice from Steve W. Rosenbaum prior to signing the Mortgage. The Certificate of Independent Legal Advice states that Mr. Rosenbaum was consulted regarding ‘… the legal effect of them signing and delivering to the Mortgagee the Mortgage … and giving security for the indebtedness and liability of the Mortgagor to the Mortgagee. … I explained to the Mortgagor the nature and contents of the said Documents … and advised them fully as to their respective legal liability they would incur by executing the said documents. …” The Acknowledgment states that Xavier and Aliki “… acknowledge being advised that Prattas & Prattas represent only the mortgagees in this transaction, and that we, the mortgagors, hereby consent to Prattas & Prattas acting solely for the mortgagees and we confirm that we have retained our own independent solicitors to act on our behalf in regard to this transaction”.
[74] Xavier complains that Mr. Rosenbaum was unaware of the prior mortgages that had been registered on the Matrimonial Home. I do not see how this is relevant to the task that was given to Mr. Rosenbaum. Further, Xavier could have sought independent legal advice without Aliki’s presence had he chose to do so.
[75] I find that there is no genuine issue that requires a trial related to whether Xavier received independent legal advice.
CONCLUSIONS
[76] I grant summary judgment for Xavier. This motion raises no genuine issues that require a trial. Although the Mortgage is valid, I find that there have been no advances under the Mortgage.
[77] I encourage the parties to resolve the issue of costs, failing which Xavier shall provide his costs submissions within two weeks of today’s date and the Parents shall provide their costs submissions within three weeks of today’s date. Such submissions shall be no more than three pages, exclusive of their outline of costs.
Mr. Justice M. D. Faieta
Released: August 25, 2017
CITATION: Milionis v. Rivas, 2017 ONSC 5001
COURT FILE NO.: FS-15-400782
DATE: 20170823
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
ALIKI EFFIE MILIONIS Applicant
– and –
DONALD XAVIER RIVAS Respondent
-and-
TAXIARCHIS MILIONIS and TSAMBICA MILIONIS Added Parties
REASONS FOR DECISION
Mr. Justice M. D. Faieta
Released: August 25, 2017