Miranda v. Mendonca, 2017 ONSC 526
COURT FILE NO.: FC-15-94
DATE: 20170120
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Teresinha Celia Miranda
Applicant
– and –
Jose Do Carmo Mendonca
Respondent
Ellen M. Anderson, for the Applicant
Self-Represented
HEARD: January 12, 2017
REASONS FOR DECISION
EBERHARD J.
Service
[1] This matter is before me by way of a motion for undefended trial supported by an affidavit for uncontested trial in court form 23c.
[2] Essential to proceeding in this manner is a finding that the Respondent has been served and has failed to participate by filing an Answer (or even by appearance which might allow a court to grant extensions or otherwise permit participation in the proceeding). The Respondent has neither filed nor appeared.
[3] It is apparent that each judge that has had this matter before them has been highly vigilant to ensure that the Respondent has had notice of the proceeding and opportunity to respond. Directions have been given by the court and followed by the Applicant. Since there has been no assigned case management judge several different individual judges have given directions, making it necessary for me to require the Applicant to lead me through the several steps and stages of the effort to serve the Respondent and prove service, to demonstrate that the Respondent has had opportunity to respond and has not done so. Today, I am satisfied that the Applicant is properly before the court proceeding by way of the 23c affidavit for uncontested trial.
[4] Service was complicated by the fact that the Respondent resides in Brazil. The property which is the subject of the Application is in Bradford Ontario. In 2014 the Respondent attended in Ontario and retained local counsel, David Harris-Lowe, who initiated the dispute by a demand letter to the Applicant for partition and sale of the Bradford property. The Applicant retained her current counsel and there was negotiation between counsel with both parties providing disclosure in support of their position.
[5] Seeking finalization of the dispute the Applicant brought these proceedings but Mr. Harris-Lowe could not get instructions to accept service. He has been served each time under the directions of the court but he is not on record in the proceeding and has not participated.
[6] The Applicant obtained an order for substitutional service consistent with Family Law Rule on February 2, 2015 from Healey J which permitted service by ordinary mail on the Respondent in Brazil, specifying it was effective 20 days after mailing [4 times longer than Family Law Rule 6(9)] and extending the time for the Respondent to respond from 60 days [per Family Law Rule 10(2)], to 120 days.
[7] This order was granted prior to the ruling of the Divisional Court in Wang v Lin, (2016 ONSC 3967) but the law enunciated in that case must now be considered to determine whether the Healey order must now be seen to be wrong. It is noted in Wang that there were conflicting decisions in Ontario. Healey’s directions were not wrong when made.
[8] In Wang, the court defined the issue:
53 The problem is whether the Family Law Rules deal adequately with service outside the jurisdiction and if not, whether it is appropriate to apply Rule 17.05 of the Rules of Civil Procedure. If the Hague Service Convention applies, then it would be appropriate to refer to the Rules of Civil Procedure because Rule 17.05 implements the Convention in Ontario.
54 We are satisfied that r, 17.05 of the Rules of Civil Procedure applies to family law cases described in Rule 1 (2) of the Family Law Rules for four reasons.
[9] In Wang the court held:
65 Thus, the Hague Service Convention is a rule of private international law which was intended to apply to family law matters and which Ontario implemented in such a way that it applied to family law matters currently described in r. 1 (2) of the Family Law Rules.
66 We recognize that the Family Law Rules were enacted in 1999 to create a separate set of rules for family law proceedings. The Family Law Rules, however, were silent concerning service of documents outside Ontario. Silence cannot support a finding that Ontario, seven years after implementing the Hague Service Convention in family law matters, reversed its decision, thereby causing Canada to default on an international obligation. If Ontario wishes to declare that the Hague Service Convention does not apply to family law matters within its exclusive jurisdiction, it must do so in clear and unequivocal language. (See R. v. Hape, at para. 53; Metcalfe Estate v. Yamaha Motor Canada Ltd.. 2012 ABCA 240. 536 A.R. 67 (Alta. C.A.), at para. 48.)
[10] Included among the four reasons the court stated this:
68 For the sake of completeness, the phrase “by Article 10 of the Convention” was struck out of r. 17.05(3) and replaced by the phrase “by the Convention” in 2013, with the result that the rule currently provides as follows:
17.05 (3) An originating process or other document to be served outside Ontario in a contracting state shall be served.
(a) through the central authority in the contracting state; or
(b) in a manner that is permitted by the Convention and that would be permitted by these rules if the document were being served in Ontario
69 Fourth, it is imprudent for Ontario to choose to be outside the international mainstream in any area of law, including family law.
70 Specifically, Article 10 of the Hague Service Convention provides that documents can be served directly by postal channels or local judicial officers of the state of destination, unless that state objects. The state of destination for the application that the Respondent wishes to serve is the PRC, which state objects to service in the manner described by Article 10 and insists that service be effected by a designated central authority in accordance with Article 2 of the Hague Service Convention.
71 It is easy to imagine a situation in which the assistance of the PRC will be required in order to give effect to an order made by the Superior Court of Justice in a matter described in r. 1(2) of the Family Law Rules. For example, in this matter the Respondent ultimately seeks an order determining her property rights in shares of a British Virgin Islands company called Eminent Talent Limited. If the Superior Court of Justice in Ontario were to order the transfer of all or part of those shares to the Respondent or some third-party and the Appellant refused to cooperate, it is reasonable to think that the Respondent might have to ask this Court to issue a request for assistance addressed to the appropriate court in the PRC. In our view, there is a legitimate concern that a court in the PRC will be reluctant to lend its assistance if the Superior Court of Justice has in the same proceeding ignored the prerogative of the PRC to determine how documents are served within its territory.
[11] In Wang there were easily “imagined” enforcement issues in the other state. Here, it is local property. Other property in Brazil has already been the subject of adjudication in the Brazil court and the Applicant well knows the difficulties of enforcement as she has been unable to realize her adjudicated rights in relation to property in that jurisdiction. Further, it was the Respondent who raised the dispute in Ontario through counsel then refused to allow counsel to accept service. There are no international enforcement issues for the relief sought in the proceeding in Ontario.
[12] In Wang both parties were signatories of The Hague Convention and the court ruled that service under the Family Law Rules was insufficient. There had to be compliance with the service requirements of the Hague Convention.
[13] That is not our case. Canada is a signatory of the Hague Convention but Brazil is not. Brazil is a signatory of the Inter-American Convention on Letters Rogatory, but Canada is not. There is no obvious choice of procedure in these circumstances to assert that it is, “imprudent for Ontario to choose to be outside the international mainstream in any area of law, including family law.” When seeking the order the Applicant outlined the enormous complication and cost of service, both by way of money and time under the Inter-American Convention on Letters Rogatory.
[14] Healey J granted an order with ample extensions of time for the Respondent to respond. In doing so she was within the rule 17.05(3)(b) requirement for service “that would be permitted by these rules if the document were being serve in Ontario”.
[15] Rule 17.05(3)(b) also required service in a “manner that is permitted by the Convention”. As the court in Wang points out, this wording replaced “by Article 10 of the Convention” in 2013 which, as noted by the Wang court “provides that documents can be served directly by postal channels or local judicial officers of the state of destination, unless that state objects.” Article 10, though not specifically referenced in Rule 17.05, continues in force.
[16] As Brazil is not a signatory of The Hague Convention there is no inherent objection. By Brazil adhering to a different convention I see no inherent objection. There is no evidence before me that Brazil objects.
[17] So, in summary, I am considering the propriety of the order of Healey J, made at a time when there was conflicting law on point; dealing with a claim that raises no enforcement issue in another state; compliant with a method of substitutional service under the Ontario Family Law Rules (and the Rules of Civil Procedure); with no objection from the destination state which has not chosen to sign the Hague Convention but follow a different convention which does not bind Ontario; notifying the Respondent of proceedings on an Ontario property issue that he raised through counsel in 2014 then absented himself and refused to allow service on that same counsel.
[18] There is some anecdotal evidence that the first service was effective in a June 2015 encounter between the Applicant and an apparent agent of the Respondent wherein the Applicant was asked for information concerning the lawsuit at the Respondent’s behest.
[19] On the strength of proof of service as ordered by Healey J. the Applicant appeared before Graham J. to argue the motion on March 3, 2016. He declined to proceed out of an abundance of caution because he felt paragraph 73 or the Applicant’s Application indicated a willingess to extend time which was open-ended about how long the Respondent had to respond. Although I would have found that the Healey order did specify the response time, Graham J. had concerns and required the Applicant to reserve the Respondent, by the same method, but with specific notice as to the expiry date of the Respondent’s opportunity to respond. He declined to direct how this notice should be given. The Applicant swore a further affidavit, many times specifying the expiry date in bold font, and prominently displayed in the documents being reserved. The expiry date is reasonable because it is calculated by following the Healey order exactly. I find that the Respondent had until September 16, 2016 to respond and that this was clearly brought to his attention by the second service of documents on March 21, 2016.
[20] Graham J. also required counsel to use 23c forms when the motion returned for hearing so the Applicant’s did that but continues to reference her lengthier affidavit at volume 2, tab 2 of the continuing record.
[21] After this second service, on March 21, 2016, there is evidence that the Respondent attended upon the Applicant’s sister in Brazil referencing the box of material served upon him and stated that his position had not change and he expected a court order for 50% of the net equity in the Bradford home such that he need take no further action. This supports the inference that service was effective.
[22] As indicated, Mr. Harris Lowe was also served. Quite properly he makes no comment but it can at least be said that counsel of the Respondent’s earlier choice (though he did not have instructions to receive service) was aware of the Application and available to the Respondent.
[23] I find the Applicant did all she could do to serve the Respondent and prove service. She followed the directions of the court. There was no binding international convention to follow as the two states follow different conventions. The Respondent, having initiated the dispute with a demand letter, has had notice and has not filed response.
[24] I find the Respondent is in default and the Applicant may proceed by Motion for Uncontested Trial.
[25] Although it is the practice of this court to adjudicate motions for uncontested trial in chambers without hearing, where issues are complex it is prudent to require Applicant’s counsel to appear to guide the court through the documentation filed.
[26] The motion was placed on a motions list on November 10, 2016 before Quinlan J. but could not be reached due to a full court docket. It was intended to be heard during sittings in November on a call-in standby basis in accordance with the practice of the court for long motions, but for unknown administrative reasons came to Bennett J. in chambers on November 29, 2016. He did not appear to be aware of the status of the motion for uncontested trial and ordered service of the motion. On December 22, 2016 this misapprehension was corrected by letter to counsel on Court letterhead at the direction of Quinlan J. requiring Applicant counsel to schedule a motion date. In this manner it came before me. I find it is properly before me as a motion for uncontested trial supported by affidavit of uncontested trial which references the affidavit and exhibits in volume 2, tab 2 and tab 3 of the continuing record.
Relief Sought:
(a) An Order noting the Respondent in default for failing to serve and file an Answer within the time lines set out in the Affidavit sworn by the Applicant March 15, 2016 for the purpose of clarifying the open ended wording of the Application at paragraph 73 and informing the Respondent of the time limit within which she was willing to extend the time for service of his Answer, in accordance with the endorsement of Justice Fred Graham dated March 3, 2016: namely by September 16, 2016; and in further accordance with the Order for Substituted Service of Justice Healey dated February 2, 2015;
(b) An Order pursuant to the Partition Act severing joint title to the property at 138 Simcoe Road Bradford ON L3Z 1Y2 and with the legal description of PT LT 27 RCP 1709 Pt 3 51R30145 BRADFORDWGW PIN 58018-0134 (LT) (“the property”) and revesting the property in sole title to the applicant because it would be unjust and inequitable to allow the respondent to claim an equal or any interest;
(c) In addition or in the alternative, an order pursuant to Family Law Act s. 23 and/or s. 10 or on such grounds as to this Honourable Court appears just, declaring that the property at 138 Simcoe Road Bradford ON L3Z 1Y2 is not a matrimonial home and revesting the property in sole title to the applicant;
(d) In addition or in the alternative, a declaration that the applicant holds the entire beneficial interest in the house whether by constructive trust or resulting trust or otherwise in equity or in law, on such grounds as to this Honourable Court appear just;
(e) In addition or in the alternative, an order for spousal support payable by the respondent to the applicant on a lump out basis, to be recovered notionally out of the value of any equity inhering in the house otherwise which this Honourable Court may determine to be otherwise owing to the respondent;
(f) In addition or in the alternative, an order for variation in share of equalization of net family property pursuant to Family Law Act s. 5(6), s. 2(8) and s. 7(3) and/or Limitations Act s. 15 and 16;
(g) Leave to amend her application at the hearing, as may be necessary, to seek a final Restraining Order against the respondent as described at paragraph 15 of her affidavit sworn March 15, 2016 at CR Vol. 2 Tab 3, Amended Application as attached to this Notice of Motion; which Restraining Order would restrain the respondent in whole from directly or indirectly contacting or communicating with the applicant; and restrain the respondent from coming within 100 m. of the respondent’s residence at 138 Simcoe Road Bradford ON L3Z 1Y2 or her workplace at Flex-N-Gate, 75 Reagens Industrial Parkway, R.R. # 1, Bradford ON L3Z 2A4; together with any other provision that the court considers appropriate; with leave to file such further and other materials as may be necessary;
(h) Her costs of this action;
(i) Such further and other relief as to this Honourable Court appears just, pursuant to its inherent equitable jurisdiction as a Superior Court of Justice in accordance with Courts of Justice Act, R.S.0,1990, c. C.43 s. 11 (2) or otherwise; and
(j) An Order that the Order of this Honourable Court shall be served upon the respondent in compliance with Rule 1(8.4)(1) and Rule 25(13) and the Order of Healey J. dated February 2,2015, namely by ordinary mail on his former counsel who was served with the Order for substituted service dated February 2, 2015; namely: David Harris-Lowe, Barriston Law LLP, 90 Mulcaster Street, Box 758 Barrie, ON L4M 4Y2 Fax 1(888) 866-1982; and And by ordinary mail, upon the respondent: Jose do Carmo Mendonca, Avenue JK 900, Jardin Panorama, Ipatinga , Minas Gerais, Brazil 3516425
[27] The evidence is, and I find, the parties were married in 1978, separated in 1999 and divorced by the Brazil court in 2006. The Respondent has lived in Brazil since 2004 but is a dual citizen and can return to Canada without restriction. The younger two of four children were 14 and 16 at separation. There has been no payment of child or spousal support.
[28] While in Ontario the parties resided together with their four children in rental premises in Bradford. After separation the Respondent returned to the rental premises for about 4 months in early 2000 and dwelled in the basement, with no attempt at reconciliation. The Applicant continued to rent the home. After the four months the Respondent moved to other premises.
[29] In 2002 the Applicant entered into an agreement of purchase and sale to purchase the home. On her modest income she was unable to secure mortgage financing. The Respondent’s name was added to title and the mortgage. The Applicant understood he was in the capacity of guarantor. She did not understand the implications of joint title. She put in $13,000 through Bradford Power as a down payment. Further down payment was received from Bradford Power, the corporation operated by the Respondent with a business associate, where she and the children worked without compensation and in which she and the wife of the business associate were named directors. This further down payment was between $10,000 to as much as $17,900 from Bradford Power.
[30] Aside from that $10,000 to $17,900 down payment, insofar as that may be characterized as a payment from him, the Respondent has had no involvement with the home.
[31] The value of the home on date of purchase was $189,000. The current evidence of value is $371,000 or less because maintenance and repair has fallen behind. The evidence is that equity sits at $317,162. Taking into account notional costs of sale the Applicant estimated proceeds of $294,506.01 if she is forced to sell.
[32] In 2014 the Respondent demanded partition and sale and through counsel, his agent who spoke to the Applicant on his behalf after the first service and his statement to the Applicant’s sister in Brazil after the second service, he expects 50% of the equity. The Applicant’s first head of relief is also by way of the Partition and Sale Act.
[33] Let me first consider other claims and possible limitations though no one appears to assert these defences.
[34] I pondered whether the premises was a matrimonial home though they cohabited there only when it was rental premises and never when it was owned, and/ or whether equalization principals should be considered. I do not need to decide whether it was a matrimonial home because claims under the FLA are statute barred by section S 7(3) which reads:
(3) Limitation - An application based on subsection 5(1) or (2) shall not be brought after the earliest of,
(a) two years after the day the marriage is terminated by divorce or judgment of nullity;
(b) six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation;
(c) six months after the first spouse’s death.
[35] Those time limits were long expired before the dispute over the property was initiated by the Respondent’s demand letter in 2014 or the Applicant brought her claim.
[36] The Partition Act proceeding is not statute barred. Firstly, as a matter of logic, how could joint title owners address title disputes if both are prevented by limitations from bringing a claim? Both have invoked The Partition Act.
[37] Secondly, the operating statute is The Real Property Limitations Act, R.S.0. 1990, c. L.15, ss. 4
Limitation where the subject interested
- No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it. R.S.O. 1990, c. L.15, s. 4.
[38] The evidence is that the Applicant requested that title be put in her name when the divorce proceedings in Brazil were ongoing. This was declined. The Respondent made a demand for partition and sale in 2014. The claim is within 10 years of dispute regarding title arose and was revived by the Respondent’s demand.
[39] I find the Applicant’s claim for partition and sale is not statue barred.
[40] If we begin with the presumption of 50/50 of the equity there is nevertheless a consideration of amounts that should be set off against the share of one or the other. In her affidavit at volume 2/ tab 2 from paragraph 35 on, the Applicant describes personal debt of the Respondent, family debt and business debt of Bradford power that she has paid as well as the mortgage and upkeep of the Bradford property where she has resided and their children have resided without the benefit of child support. Support obligations cannot be calculated because the material does not provide income information.
[41] Summarized at paragraph 57 there is evidence of set off amounts that, I find, should be made.
[42] The Applicant has as of January 2016 paid $259,038 by weekly PIT mortgage payments. By January 2017 I calculate a further $369 x 52 weeks=19,188 for a total of $278,226. To preserve the asset she has paid fire and liability insurance of $11,475 to January 2016, and I calculate $12,325 to January 2017. If it were asserted that half of those payments were made to preserve her own asset and half to preserve the property of the Respondent, she has benefitted him no less than ½ those payments for which he would have to account in the amount of $145,275.50 from his share of the equity which at 50/50 is $294,506.01 divided by 2 =$147,253.
[43] Taking into account the Applicant paid a downpayment of $13,000 and concedes that between $10,000 to $17,000 came from Bradford Power, if it were asserted that that $10,000 -$17,000 came from the Respondent, without regard to complicated issues of the uncompensated work and the interest the Applicant may have had in that company as named director, the initial investment by way of downpayment deserves consideration.
[44] A debt was owed to Canada Revenue Agency for Bradford Power in the amount of $17,280.52. Between 2009 to 2012 the Applicant was forced to pay $18,607.80 by garnishment from her wages. Accordingly, whether the initial investment of $10,000-$17,000 came from Bradford Power or indirectly from the Respondent through Bradford Power it has likewise been more than repaid by the Applicant through her involuntary payment of the tax debt of Bradford Power.
[45] There was a debt to RBC which the bank enforced as a joint debt. I do not need to decide whether it was joint or largely a personal debt of the Respondent. It was fully paid off by the Applicant by garnishment of $11,127.44 from her account in 2006. Even if only half is credited to his benefit, a further $5,563.72 must be accounted for.
[46] There are further such business and joint debts demanded of the Applicant but as yet unpaid.
[47] In summary, considering only the Respondent’s share of expenditures that the Applicant has made to maintain the Respondent’s half of asset held in joint title; pay business debt to reimburse any downpayment paid by the business; and debt paid by her alone when both were liable under the debt thus conferring benefit on the Respondent; her expenditure for his sole benefit exceeds his notional 50/50 share of the equity. He must account before realizing his share.
[48] An order for monetary accounting is futile and unenforceable. The Applicant has sought the only sensible remedy which is to vest his share of the equity in the Applicant to account to her what she is owed. She asserts entitlement to a vesting order by three lines of authority: under the Partition and Sale Act; by Constructive Trust invoking the doctrine of proprietary estoppel; and by Resulting Trust.
Vesting Order
[49] I find that the remedy of Partition and Sale is open to the Applicant. There is no evidence of vexatious or oppressive conduct on her part to bar the remedy.[^1]
[50] Claims for an unequal division of the proceeds are also available remedies notwithstanding financial contribution by the joint title holder particularly when there is a family law component to the claim. Unequal division may be facilitated by spousal support considerations or set off of equities between the former spouses even where the husband had made the down payment[^2]. The Applicant has advanced a claim for spousal support in support of her claim for unequal division.
[51] The availability of a vesting order was recently granted in circumstances not unlike those before me in reference to the past a conduct and anticipated future conduct of the Respondent.[^3] It too was an undefended trial. The Applicant had paid out the mortgage since separation, taxes, insurance, utilities. A vesting order was made to set off the Respondent’s liabilities to the Applicant. The court relied on, as I do, on the helpful authority of Blair J. A. :[^4]
Section 100 of the Courts of Justice Act states: A court may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed.
As this court noted in HSBC Bank of Canada v. Regal Constellation Hotel Ltd. (Receiver of) (2004), 71 0.R. (3d) 355. [2004} O.J. No. 2744, 2004 206 (ON CA), 242 D.L.R. (4th) 689 (C.A.). at paras. 32-33:
The vesting order itself is a creature of statute, although it has its origins in equitable concepts regarding the enforcement of remedies granted by the Court of Chancery. Vesting orders were discussed by this court in Chippewas of Sarnia Band v. Canada (Attorney General) 2000 CanUI 16991 (ON CA), (2000), 2000 16991 (ON CA), 51 O.R. (3d) 641. 195 DIDN'T.R. (4th) 135 (CAJ at pp. 726-27 O.R., p. 227 D.L.R., where it was observed that:
Vesting orders are equitable in origin and discretionary in nature. The Court of Chancery made in personam orders, directing parties to deal with property in accordance with the judgment of the court. Judgments of the Court of Chancery were enforced on proceedings for contempt, followed by imprisonment or sequestration. The statutory power to make a vesting order supplemented the contempt power by allowing the Court to effect the change of title directly: see McGhee, Snell’s Equity 30th ed., (London: Sweet and Maxwell, 2000) at pp. 41-42. (Emphasis added) 2014 CarswellOnt 6882,2014 ONSC 2757,240 A.C.W.S. (3d) 689, [2014] W.D.F.L. 2793,46 R.F.L. (7th) 66
A vesting order, then, has a dual character. It is on the one hand a court order (“allowing the court to effect the change of title directly”) and, on the other hand a conveyance of title (vesting an interest in real or personal property” in the party entitled thereto under the order)… [page651]
The rationale for the vesting power, therefore, is to permit the court to direct the parties to deal with property in accordance with the judgment of the court. The jurisdiction is quite elastic. Nothing in the language of either s. 100 of the Courts of Justice Act or s. 34(l) (c) of the Family Law Act operates to constrain the flexible discretionary nature of the power.
I do not think any useful purpose is served by attempting to categorize the types of circumstances in which a vesting order may issue in family law proceedings. The court has a broad discretion, and whether such an order will or will not be granted will depend upon the circumstances of the particular case. I agree with the appellants that the onus is on the person seeking such an order to establish that it is appropriate. As a vesting order - in the family law context, at least - is in the nature of an enforcement order, the court will need to be satisfied (as the trial judge was here) that the previous conduct of the person obliged to pay, and his or reasonably anticipated future behaviour, indicate that the payment order will not likely be complied with in the absence of more intrusive provisions: see Kennedy v. Sinclair, 2001 28208 (ON SC), [20011 O.J. No. 1837.18 R.F.L. (5th) 91 (S.CJ.). affd2003 57393 (ON CA), [20031 Q.J. No. 2678.42 R.F.L. (5th) 46 (C.A.). Thus, the spouse seeking the vesting order will have already established a payment liability on the part of the other spouse and the amount of that liability, and will need to persuade the court that the vesting order is necessary to ensure compliance with the obligation.
In addition, the court should be satisfied that there is some reasonable relationship between the value of the asset to be transferred and the amount of the targeted spouse s liability and, of course, that the interests of any competing execution creditors or encumbrancers with exigible claims against the specific property in question are not an impediment to the granting of a vesting order. However, I would not go so far as to say - as argued by the appellants - that the onus to satisfy the court on these matters is at all times on the person seeking the order. I shall return to these issues later in these reasons.
[52] From my review of the financial liabilities which the Applicant paid to the benefit of the Respondent, I clearly find there is “reasonable relationship between the value of the asset to be transferred and the targeted spouse’s liability”. Moreover, I find that the conduct of the Respondent in the past: leaving the country so that creditors pursued the Applicant for company and joint debts; his return to demand 50% of the equity then refusing to allow his counsel to accept service leaving it entirely to the Applicant to pursue a determination in the courts; as well as the backdrop of threatening conduct throughout their relationship; the unenforceability of the Applicant’s rights under judgements of the Brazil court in litigation commenced by the Respondent there; it is necessary to ensure compliance with his Ontario obligations to the Applicant through a vesting order.
Constructive Trust and Proprietary Estoppel
[53] The Applicant also pursued relief by claiming a constructive trust and, within that, the doctrine of proprietary estoppel. The equitable doctrine of constructive trust is available[^5] to spouse and common law spouses, as a means of redressing unjust enrichment by the other spouse. Therefore, where a person:
(1) confers a benefit or enrichment on another;
(2) suffers a corresponding deprivation as a result of the contribution which he/she has made; and
(3) there is no juristic reason for the enrichment
a constructive trust may be imposed by the court. Where a constructive trust is found, an interest in property may be awarded to the beneficiary of the trust.
[54] I have already reviewed the payments the Applicant made to the benefit of the Respondent, not only by paying off joint or business creditors, but also by paying every mortgage, tax, insurance, upkeep and utilities to increase the equity in the subject property. The Respondent has done nothing and paid no more than a portion of the downpayment through the business (whose tax debt greater than the downpayment, the Applicant had garnished from her wages.). With her share of the down payment she has paid $291,226 (as of January 2016) and equity is only slightly more at $294,506.01. This unilateral servicing of all expenses associated with the property, thus preserving and enhancing its value, constitutes an enrichment of the Respondent and a corresponding deprivation of the Applicant. That leaves only the question of whether there is a juristic reason why the Respondent should be entitled to half of the increased value.
[55] There were no contracts or agreements. The Applicant was the intended purchaser but needed the Respondent on title to get financing. She did not understand that joint title gave him a presumed 50% interest in the value of the property but understood his role in the nature of a guarantee, one that was never pursued as she has diligently paid the mortgage.
[56] I am persuaded that the claim for constructive trust is renewed every time the Applicant makes a mortgage payment. No limitation prevents her from bringing forth her claim. Moreover, she asserted the claim by requesting transfer in 2006 and the Respondent made a demand in 2014 for 50% thereby raising a cause of action for constructive trust to counter his demand.
[57] By “sitting in the bushes” and making no claim until 2014 while the Applicant paid all expenses of the property, he has encouraged or at the very least acquiesced in, her understanding that she was the owner of the property despite his name on title for financing purposes.
[58] The cause of action thus arising was considered and explained by the Court of Appeal[^6] in a waterlot case where the court ultimately found that the claiming cottagers were never lead to believe they had a proprietary right. Nevertheless the review is helpful:
34 The test for proprietary estoppel is set out in this court’s decision in Eberts v. Carleton Condominium Corp. No. 396, 2000 16889 (ON CA), [2000] O.J. No. 3773 (Ont. C.A.) at para. 23:
Proprietary estoppel is a form of promissory estoppel. It is commonly supposed that estoppel cannot give rise to a cause of action, but proprietary estoppel appears to be an exception to that rule: see Lord Denning in Crabb v. Arun District Council (1975, 1 Ch. 179 (Eng. CA.) at 187-188. But there must be an estoppel. The basic tenets of proprietary estoppel are described in McGee, Snell’s Equity, 13 ed (2000) at pp. 727-28:
Without attempting to provide a precise or comprehensive definition, it is possible to summarize the essential elements of proprietary estoppel as follows:
(i) An equity arises where:
(a) the owner of land (o) induces, encourages or allows the claimant (c) to believe that he has or will enjoy some right or benefit over O’s property;
(b) in reliance upon this belief, C acts to his detriment to the knowledge of O; and
(c) O then seeks to take unconscionable advantage of C by denying him the right or benefit which he expected to receive.
[59] The doctrine of proprietary estoppel is linked to constructive trusts.[^7] Referring to Schwark the Ontario Court of Appeal reviews the history and, though recognizing 5 historic criteria, adopted as sufficient the 3 Schwark elements, stating:
52 A summary of the principles governing proprietary estoppel based on the modem approach include the following:
• proprietary estoppel may form the basis of a cause of action;
• it is not essential that the five probanda be satisfied;
• rather, three elements must be established:
(i) the owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property;
(ii) in reliance upon his belief, the claimant acts to his detriment to the knowledge of the owner; and
(iii) the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive;
•detriment includes expenditures but countervailing benefits may also be considered;
• reliance may be express or inferred;
• if an equity arises, the court has abroad discretion to fashion an appropriate remedy.
[60] The Court of Appeal then approved the reasons of the Trial Judge grounded in unjust enrichment:
62 Before discussing the remedial implications of proprietary estoppel, I next explain why the trial judge also correctly concluded that the respondent’s unjust enrichment claim precluded the appellant from revoking the respondent’s licence to use the camp.
63 The appellant submits that the Trial Judge erred in concluding that the appellant was unjustly enriched by the revocation of the licence. She argues that the trial judge failed to consider the $17,000 loan and erred in concluding that there was no juristic reason for the enrichment. The appellant submits that the juristic reason was the respondent’s breach of the parties’ expectations relating to his use of the camp.
64 To establish unjust enrichment, a plaintiff must prove an enrichment; a corresponding deprivation; and the absence of a juristic reason for the enrichment: Peter v. Beblow 1199311 S.C.R. 980 (S.C.C), at p. 987. In Kerr v. Baranow, 2011 (S.C.C.) 10, 2011 SCC 10, [2011] 1 S.C.R. 269 ((S.C.C.), Cromwell J. framed the absence of juristic reason at para 40 as “no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case”.
65 The trial judge found that there was an enrichment and a corresponding deprivation, noting at para. 29 that the appellant had never made any contribution towards the camp’s construction, improvement or maintenance.
66 At para. 31, he considered the $ 17,000 loan. Although the loan was relevant to the enrichment inquiry, the Trial Judge found that the appellant’s enrichment and the respondent’s deprivation “far exceed the amount loan notwithstanding the loan issue.” There was evidence to support this finding.
67 The parties’ expectations do not inform the findings of facts relating to enrichment and deprivation, as these elements require a “straightforward economic approach”: Kerr, at para. 37. Here the trial judge expressly found that the respondent had made significant contributions to the camp. While this might be offset to a degree by occupation rent, the trial judge again made an express finding that it was not. In the face of those findings, the first two elements of unjust enrichment are satisfied.
68 Turning to the issue of absence of juristic reason, it is at this juncture that the parties’ reasonable or expectations are to be considered.: Kerr, at para. 9. In that decision, at para. 34, Cromwell J. observed that the legal principles embedded in the law of unjust enrichment must be applied in the particular factual and social context out of which the claim arises. If there is no established basis such as a contract or a gift on which to deny relief to the party who has suffered a detriment, a trial judge should then consider whether there is another reason to deny relief. At this second stage of the analysis, a trial judge may take into account the parties’ legitimate expectations and moral and policy-based arguments as to whether particular enrichments are unjust. Overall, the test for juristic reason is flexible, and the relevant factors will depend on the situation before the fell: Kerr, at paras. 43-44. A trial judge is best positioned to perform the juristic reason analysis; however, The analysis should not be “purely subjective” with unacceptable “immeasurable judicial discretion”: Kerr, at para. 43.
[61] In the present case I find the Applicant was uninformed of and mistaken as to her legal rights, she fully paid all expenses of the property based on the mistaken belief. She was providing shelter for the unsupported children of the parties, including two who were of an age when child support was statutorily expected. True, the Applicant had the benefit of dwelling in the home which benefit may sometimes attract consideration of occupation rent, but her occupation was fully paid for by herself without demand from the Respondent for any such rent. Obviously the Respondent was aware of his legal right based on joint title, as he returned to Ontario to assert it in 2014 all the while knowing she was paying down the mortgage and did nothing to stop it. I find it is not a proper case to impose an obligation for occupancy rent. The Respondent refused to sign over title when requested in 2006, “waited in the bushes”, then demanded partition and sale. In doing so he had expressed he didn't care if she was thrown out and yet encouraged her in paying off the mortgage by abstaining from asserting his legal right until 2014.
[62] The Court of Appeal also discusses in Clarke that the court has a broad discretion to fashion an appropriate remedy.
78 A successful claim for unjust enrichment may attract a monetary or a proprietary remedy. The first remedy to consider is always a monetary award and in most cases, it will be sufficient to remedy the unjust enrichment: Kerr, at para. 47. A proprietary award may be required when a monetary award is inappropriate or insufficient: Kerr, at para. 50. “Where the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property, a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour”: Kerr, at para. 50.
79 In the case under appeal, the trial judge considered a monetary remedy and rejected it as inappropriate in the context of the facts before him. He also addressed the link between the respondent’s contributions and the camp, and determined that a constructive trust was the appropriate remedy. While the imposition of a constructive trust generally makes the claimant the beneficial owner of the property or a portion thereof, the trial judge crafted a narrower remedy in this case which accords with the appellant’s intention that the property would not leave her family. …
….82 The trial judge’s approach is also consistent with the Supreme Court’s comments in Kerr, at paras. 71 and 73, that it has “often emphasized the flexibility of equitable remedies” and that the remedy “should mirror the flexibility inherent in the unjust enrichment principle itself, so as to allow the court to respond appropriately to the substance of the problem put before it.” The same flexibility should be applicable to proprietary estoppel.
[63] It is certain that a monetary remedy would be unenforceable against the Respondent. If the bare fact of his absence and without other assets in Ontario were not enough, in the present case there is also the fact of a Brazil judgement from which the Applicant has been unable to enforce the rights resulting from the judgment.
[64] Moreover, nothing short of title is enough. The Applicant purchased and paid for a home, sunk all her resources into that home as her present and future. Now in poor health and of an age when improvement in her financial situation cannot be expected, selling and paying out proceeds to the Respondent from the home would confirm her deprivation into devastation.
[65] In Clarke and other remedies arising from proprietary estoppel[^8] where a down payment was outweighed by all the claimant subsequently paid, courts have granted proprietary remedy.
Resulting Trust
[66] Notwithstanding the evolution of trust law as expressed in Kerr,[9] to the point some commentators say the resulting trust is dead, the Applicant has put forth a third characterization of the equities she asserts following a recent Ontario Court of Appeal case that has much similarity.[^10] In Andrade a Portuguese widow, mother of 5, acquired a house for herself and the children to live but she was never on title as could not qualify for the mortgage. The children were on title as some of them qualified for the mortgage. She always made the mortgage payments but some of the funds she used were given to her by the children. The Applicant, never on title, claimed there was a resulting trust. The Court of Appeal, post Kerr and citing Kerr agreed:
(2) The resulting trust claim
(a) The relevant legal principles
57 “A resulting trust arises when title to 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 (S.C.C.) 17. [20071 2007 SCC 17, 1 S.C.R. 795 (S.C.C.), at para. 20.
58 A purchase money resulting trust can occur “where a person advances a contribution to the purchase price of property without takmg legal title” Rascal Trucking Ltd v. Nishi. 2013 (S.C.C.) 33. [201312 S.C.R. 438 (S.C.C.), at para. 21. It is one of the “classic resulting trust situations” and can arise when a party contributes directly to the purchase price or the mortgage: Eileen E, Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014) at pp. 113-15. In Kerr v. Baranow, 2011 (S.C.C.) 10. [201111 S.C.R.269 (S.C.C), at para. 12, Cromwell J. noted that it has been “settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money”.
59 Except where title is taken in the name of a minor child, where property is acquired with one person’s money and title is put in the name of another, there is a presumption of resulting trust. While some authorities refer to a presumption of resulting trust arising when a gratuitous transfer is made between unrelated persons, the presumption of advancement between spouses was abolished by statute in Ontario (see Family Law Act, R.S.0.1990, c. F.3, s. 14) and between parents and adult children by the Supreme Court in Pecore: see para. 36.
60 In this case the respondent argued both at trial and on appeal that the appellant had not overcome the presumption that the legal title holders owned the house. Given the evidence of Luisa’s contributions to the purchase price and mortgages, however, the presumption here was one of resulting trust.
61 The decision in this case however does not turn on the application of a presumption. A presumption is of greatest value in cases where evidence concerning the transferor’s intention may be lacking (for example where the transferor is deceased). “[T]he focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer… “[T]he presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities”: Pecore, at paras. 5 and 44.
62 The trial judge referred on multiple occasions to “the parties’ intentions”, stating that he could find “no real evidence of a commonly shared intention to purchase and hold the [house] in trust for Luisa.” Common intention, however, is not the issue. The intention of the grantor or contributor alone counts, as the point of the resulting trust is that the claimant is asking for his or her own property back: Kerr v. Baranow, at para. 25.
63 The relevant time for ascertaining intention is the time of the acquisition of the property, when the funds were advanced: Rascal Trucking Ltd. v. Nishi, at paras. 30 and 41; Pecore, at para. 59. Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of the transfer. The court must assess the reliability of such evidence and determine what weight it should be given, guarding against evidence that is self-serving or tends to reflect a change in intention: Pecore. At para. 59.
[67] Accordingly we look to the Applicant’s intention when, post separation she entered into an agreement of purchase and sale, found she could not qualify for financing, then the Respondent was added to title. Financing was obtained and the Applicant has paid that mortgage without assistance from the Respondent. His name had to be on title to accomplish that. A contribution to the downpayment was also received through the corporation he operated, with the Applicant as named director and for which the Applicant and children worked without compensation.
[68] Like Andrade, as described in para 64, the Applicant “serviced the mortgages using money from her own bank account. Although they signed the mortgages, there was no evidence that the legal title holders considered themselves responsible for making any of the payments. Luisa borrowed their “names”, not their money. All of this is consistent with Luisa having advanced the purchase price of the property.” Like Andrade there is no evidence the Respondent considered himself responsible to make any mortgage payments.(emphasis added)
[69] Unlike Andrade, in para 64, the Applicant did not “borrow[ed] the deposit and paid it back”. Rather, she paid tax debt of the corporation from which a contribution to the down payment came, greater than the contribution, and by garnishment from her funds as the Respondent was absent and had no assets in Ontario.
[70] Like Andrade, in para 81, the Applicant “was not simply a “resident” of the house (as the trial judge described her). She conducted herself in relation to the house as its owner from the time the house was purchased until she passed away.”
[71] Like Andrade, in para 85, “The fact that Henry and Joseph signed all the documents reflected what was already in place. Luisa could not go on title because she did not qualify for a mortgage. The fact that Henry and Joseph’s names were on the agreements was equally consistent with their position as Luisa’s nominees.
[72] The Court of Appeal declare the non-titled claimant the sole beneficial owner, that the Respondent holds registered title in the property as trustee and ordered the Respondent to forthwith transfer all of her right, title and interest in the property.
[73] Of course, the Respondent in this case is far away and there is no prospect that he will, upon learning of this judgement, comply with an order to forthwith transfer title.
[74] I find, whatever unexpressed intention the Respondent may have harboured, the intention of the Applicant, had she had any sophistication at the time when she had arranged to purchase the property but was forced to put it into joint names with her long-separated spouse in order to qualify for financing, was to add him to title as her nominee only, had no intention or expectation that he would contribute to the mortgage payments. She conducted herself, consistent with that intention, for 14 years as the owner of the property.
Conclusion
[75] The Applicant has taken three approaches to claim full title to the property. The evidence supports each of them individually. Claimed in the alternative, if one is rejected it does not taint the other. As argued, the Applicant asserts that they converge to provide mutual support for the same result.
[76] I have not referred to much of the evidence about the grim context for the Applicant’s conduct during and after the cohabitation. Her motivations and fears are necessarily anecdotal. The second hand reports and warnings she has heard do not rise to the evidentiary quality upon which a court relies. What I may, and do assess, is the authenticity of her fear.
[77] Equity not only calls out for relief on the evidence before me, it fairly sings its lament.
[78] The Applicant shall have judgment severing title to the subject property and re-vesting title to the subject property in her name alone.
[79] This judgment is effective 30 days after the earlier of service of these reasons and the entered judgment, by both of the following means:
a. by ordinary mail upon the Respondent in Brazil (service effective 20 days after mailing) and;
b. by ordinary mail (effective 5 days after mailing) upon David Harris-Lowe, the chosen counsel in Ontario who, though not permitted to accept service on behalf of the Respondent, may nevertheless have means of informing him that a judgement has been rendered.
[80] Effective immediately and with no expiry date in the terms of the order, I order that the Respondent be restrained from attending at the subject property or the workplace of the Applicant, and be restrained from communicating directly or indirectly with the Applicant except through retained counsel practicing in the Province of Ontario.
Costs
[81] The Applicant has succeeded in her claim. The Respondent’s demand necessitated the litigation then his conduct in absenting himself from Ontario and refusing to permit the counsel he had chosen to assert his claim to accept service prolonged the proceedings and generated cost.
[82] The bill of costs, totalling $20,817.94, submitted by counsel for the Applicant reflects counsel’s response to the circumstances of the Applicant inasmuch as she reduced the bill she rendered by 1/3 and then, as this motion proceeded through its many roadblocks to hearing, simply stopped billing. In effect much of the legal representation was provided pro bono.
[83] In 1465778 Ontario Inc. v. 1122077 Ontario Ltd.[^11] the Ontario Court of Appeal reviewed the traditional and statutory purpose of costs but went on to say both that costs can also be used to sanction behaviour that increases the duration and expense of the litigation and also:
The legal profession in Ontario has a history of commitment to ensuring access to justice and providing pro bono services through its members. That history is reflected in today’s litigation environment where it is both appropriate and necessary that costs awards be available to successful pro bono litigants in ordinary private law cases both at the end of the case and on interlocutory motions. The principles that will guide the court’s discretion in deciding when such costs will be awarded should be developed over time on a case-by-case basis.
[84] This approach was applied[^12] when rates were artificially low:
52 In a case like this one, where one party is represented by a lawyer whose hourly rate is artificially low because the lawyer is acting pro bono, or is retained on a Legal Aid Certificate, or in an arrangement such as the CAW Retainer and Fee Agreement, and the other is not, the hourly rate that each of the lawyers is normally entitled to on a claim on an assessment of costs should inform the litigants’ reasonable expectation as to the costs they will face if unsuccessful. Otherwise, the litigant whose lawyer is charging a standard hourly rate would be less circumspect in his or her conduct of the proceeding and in his or her response to the opposing party’s efforts to settle because the other party is self-represented, or is subsidized in his or her legal representation:
[85] The Applicant does not seek enhanced costs on these principles but only that it be considered when the court considers reductions of the bill of costs submitted.
[86] This was a complex case, substantively and procedurally, with every duty for its progress falling on counsel for the Applicant. It was necessary and important to the Applicant, vulnerable by way of the Respondent’s demand, her poor health and the presumptions that, if unchallenged, would have led to an unfair and inequitable result.
[87] I fix costs payable by the Respondent to the Applicant at $20,000 all in.
EBERHARD J.
Released: January 20, 2017
[^1]: Davis V. Davis, [1954J O.R. 23 (C.A.) at para. 8 and 9; Silva v Silva (1990) 1990 6718 (ON CA), 1 OR (3d) 436
[^2]: Barker v Barker 2011 ONCA 447
[^3]: Newton v Newton 2014 ONSC 2757
[^4]: Lynch v Segal (2005)
[^5]: Pettkus v. Becker 1980 22 (SCC), [1980] 2 S.C.R. 834,
[^6]: Schwark Estate v. Cutting 2010 ONCA 61
[^7]: Clarke v. Johnson 2014 ONCA 237
[^8]: Stiles V. Tod Mountain Development Ltd. 1992 2340 (BC SC), 1992 CarswellBC 50, [1992] B.C.W.L.D. 830, [1992] B.C.J. No. 440,22 R.P.R. (2d) 143,31 A.C.W.S. (3d) 999,64 B.C.L.R. (2d) 366,88 D.L.R. (4th) 735
[^9]: 2011 (S.C.C.) 10. [201111 S.C.R.269 (S.C.C),
[^10]: Andrade v. Andrade 2016 CarswellOnt 7727,2016 ONCA 368,17 E.T.R. (4th) 173,266 A.C.W.S. (3d) 770
[^11]: 2006 35819 (ON CA), 2006 CarswellOnt 6582
[^12]: Friday v Friday 2012 ONSC 6179, 2013 CarswellOnt 4439