COURT FILE NO.: 77/16 DATE: 20181123 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
David Styles and Mary Styles L. Haskell, for the Plaintiffs Plaintiffs
- and -
Benjamin David Abel In Person Defendant
HEARD: September 22, 23, 2017 and April 25, 26, 2018
REASONS FOR JUDGMENT
FRAGOMENI J.
Introduction & Overview
[ 1 ] Mary Styles is the mother of Benjamin Abel. David Styles is Benjamin’s step-father.
[ 2 ] This case is about the purchase and renovation of a property located at 217 Victoria Street in Shelburne, Ontario, with the intention of renovating it and selling it for a profit.
[ 3 ] The parties purchased this property, renovated it and sold it, leaving net proceeds after sale in the sum of about $208,000.00. These funds are presently being held in trust at Shepherd, Osyany and King LLP. The parties cannot agree on how the funds ought to be dispensed.
[ 4 ] Mary and David plead that the purchase and renovation of 217 Victoria Street was financed by a line of credit at the Royal Bank of Canada secured against property owned by them. They plead further that the parties intended to apply any net proceeds towards the line of credit. This line of credit was also used to provide funds to Benjamin and his former spouse for other purposes.
[ 5 ] Mary and David plead that Benjamin refuses to abide by the terms of their oral agreement and consent to the release of funds to be applied to the said line of credit. As a result, Mary and David seek judgment in the sum of $313,815.28, plus interest from May 9, 2016, in accordance with the rates charged by RBC from time to time on the line of credit. They also seek an order that the funds being held in trust be released to them to be applied to their line of credit.
[ 6 ] Benjamin Abel sets out his position, as pleaded in his Statement of Defence, as follows: − a full breakdown of how the Plaintiffs calculated the $313,815.28 owing has never been provided to him − there was never any verbal or written agreement on the total amount owed and the repayment of funds owed, if any − renovating 217 Victoria Street was never the primary intention when the property was purchased. Renovations only became necessary as a result of substantial water damage created by the tenants − he has never been paid for the work he did on the property totalling $145,850.00 − the line of credit held by Mary and David existed prior to the purchase of 217 Victoria Street and was used by many others − the funds to renovate 217 came primarily through the insurance claim and not the Plaintiffs’ line of credit.
[ 7 ] Benjamin also pleads matters that do not deal with the issues I am asked to decide. At paragraphs 9 to 11 of his Statement of Defence, Benjamin alleges matters relating to David Styles’ conduct as a dentist and disciplinary proceedings by the Royal College of Dental Surgeons of Ontario. He also references criminal proceedings.
[ 8 ] At paragraphs 12 to 15 Benjamin alleges that the Plaintiffs have defrauded Nathanial Abel, Kevin Cooper and Joseph Abel. At paragraph 15 Benjamin pleads to the following:
Please note that because of strong religious belief, Nathanial Abel, Kevin Cooper, and Joseph Abel cannot take someone to court over money and as such have never sued the plaintiffs.
[ 9 ] This case is about an alleged agreement between Mary and David Styles and Benjamin Abel. It relates to money advanced to Benjamin Abel and an accounting of same. This case is not about the conduct of David Styles in his practice as a dentist. This case is not about bald allegations by Benjamin that the Plaintiffs defrauded Nathanial Abel, Kevin Cooper or Joseph Abel.
[ 10 ] My review of the trial evidence will be limited to the issues I am asked to decide between these parties.
Trial Evidence
[ 11 ] A useful and informative starting point in my review of the evidence called at trial is the Request to Admit, dated September 15, 2016, served on the Defendant and filed as Exhibit 2 at trial. The Request to Admit sets out the following:
The Defendant is the son of the Plaintiff, Mary Styles and the step-son of the Plaintiff, David Styles.
The Plaintiffs obtained a line of credit with the Bank of Montreal authorizing them to borrow from the Bank of Montreal, which was replaced by a line of credit at the Royal Bank of Canada on May 1, 2013.
The line of credit at the Bank of Montreal was used to make the following advances on behalf of the Defendant, at the request of the Defendant and for his benefit only: (a) November 21, 2011 - $40,000.00 advanced to buy a Jeep (b) February 28, 2012 - $30,000.00 advanced to the Defendant for the deposit on a property purchased by the Defendant and his wife in Melancthon Township (c) April 4, 2012 - $321,700.00 advanced for the balance of the purchase price of the Melancthon Township property
The line of credit through the Bank of Montreal and subsequently the Royal Bank of Canada was used to make the advances to the Defendant for the purposes set out in the attached spreadsheet.
Interest was incurred on the line of credit on the Plaintiffs’ property as shown in the attached spreadsheet and interest payments were made by the Defendant each month as shown in the attached spreadsheet.
The balance owing on the line of credit monthly was as shown on the attached spreadsheet.
The balance at August 29th, 2012 on the Bank of Montreal line of credit was $132,073.31 after a payment made by the Defendant from the proceeds of a mortgage through the Royal Bank of Canada in the amount of $260,789.68 on that day.
At the end of August, 2012 the line of credit was moved to the Royal Bank of Canada in the amount of $130,910.32 after a payment by the Defendant of $1,162.99.
On December 13th, 2013 the Defendant paid the line of credit down by $130,000.00 from another line of credit, leaving a balance owing at that time of $206,574.34.
The line of credit at the Royal Bank of Canada was used mainly for the purchase of and renovations of 217 Victoria Street, Shelburne, Ontario as set out in the attached spreadsheet.
The line of credit was used in part to pay the money to the Defendant for expenses he had incurred with respect to 217 Victoria Street, Shelburne, partly to reimburse the Plaintiffs for expenses with respect to 217 Victoria Street, Shelburne and partly for payments directly to trades with respect to 217 Victoria Street, Shelburne.
The Defendant paid all interest up to April of 2016 as shown in the attached spreadsheet and thereupon stopped paying interest, whereupon the Plaintiffs were forced to do so.
217 Victoria Street, Shelburne was sold at the end of April 2016 and the net funds from the sale remain in the trust account of the lawyer handling the sale pending agreement between the parties.
The Defendant refuses to allow the funds to be released to pay down the line of credit which was used to fund the purchase and the renovations of 217 Victoria Street, Shelburne.
[ 12 ] Benjamin filed a Response to the Request to Admit. He admitted the truth of fact 13 and denied the truth of numbers 3A and 14. He refused to admit the remainder, citing an inability to confirm both the Plaintiffs’ financial transactions and his own parentage.
[ 13 ] Further, he refused to admit the authenticity of various RBC line of credit documents, stating that they did not comply with required specifications.
[ 14 ] Prior to reviewing the testimony of the witnesses called at trial it will be informative and useful to set out the calculations set out by the Plaintiffs, supported by the documents filed in the Document Book, Trial Exhibit 1, as it will provide context to the testimony of the witnesses.
Jeep
| Date | Item | Loan advance | Payments | Balance |
|---|---|---|---|---|
| November 21, 2011 | Advance to buy Jeep | $40,000.00 | $40,000.00 | |
| September 25, 2017 | Interest at 3.2877% for 524 days | $1,887.95 | $41,887.95 | |
| September 25, 2017 | Total owing re the Jeep | $41,887.95 |
Melancthon
| Date | Item | Loan advance | Repayment | Balance |
|---|---|---|---|---|
| February 28, 2012 | Down payment | $30,000.00 | $30,000.00 | |
| April 4, 2012 | Melancthon balance | $321,700.00 | $351,700.00 | |
| August 29, 2012 | Paid by Ben from new mortgage | $260,789.68 | $90,910.32 | |
| September 25, 2017 | Interest at 3.2877% for 524 days | $4,290.85 | $95,201.17 | |
| September 25, 2017 | Total owing re Melancthon | $95,201.17 |
217 Victoria Street
| Date | Item | Loan advance | Payment | Balance |
|---|---|---|---|---|
| February 12, 2013 | Cash advance to purchase 217 Victoria Street | $200,000.00 | $200,000.00 | |
| December 13, 2013 | Payment off principal from credit line and mortgage | $130,000.00 | $70,000.00 | |
| March 10, 2014 | Tfr to Ben for 217 reno | $5,000.00 | 75000 | |
| March 21, 2014 | Tfr to Ben for 217 reno – ductwork – G. Stringer | $500.00 | $75,500.00 | |
| April 1, 2014 | Tfr to Ben for 217 reno – ductwork – G. Stringer | $285.00 | $75,785.00 | |
| April 1, 2014 | Tfr to Ben for 217 reno | $4,000.00 | $79,785.00 | |
| April 10, 2014 | Plumbing – Brian Latter 217 reno | $150.00 | $79,935.00 | |
| April 16, 2014 | Tfr to Ben for 217 reno | $5,000.00 | $84,935.00 | |
| April 29, 2014 | Tfr to Ben for 217 reno | $5,000.00 | $89,935.00 | |
| April 30, 2014 | Tfr to Ben for 217 reno | $1,000.00 | $90,935.00 | |
| May 5, 2014 | Tfr to Ben for 217 reno | $2,584.75 | $93,519.75 | |
| May 14, 2014 | Tfr to Ben for 217 reno | $2,500.00 | $96,019.75 | |
| September 16, 2014 | Tfr to Ben – overdue water bill 217 Victoria | $2,607.80 | $98,627.55 | |
| August 18, 2015 | Tfr to Ben to cover short term expenses due to lost job | $45,000.00 | $143,627.55 | |
| September 4, 2015 | Principal payment – portion of insurance cheque | $9,678.38 | $133,949.17 | |
| September 17, 2015 | Tfr to Ben 217 reno | $2,500.00 | $136,449.17 | |
| October 20, 2015 | Tfr to Ben 217 reno – paid Paul Davis | $800.00 | $137,249.17 | |
| November 2, 2015 | Tfr to Ben 217 reno – paid Paul Davis | $1,220.00 | $138,469.17 | |
| January 7, 2016 | Tfr to Ben 217 reno | $300.00 | $138,769.17 | |
| January 18, 2016 | Tfr to Ben 217 reno – materials | $6,243.85 | $145,013.02 | |
| January 25, 2016 | Tfr to Ben 217 | $400.00 | $145,413.02 | |
| February 15, 2016 | Tfr to Ben 217 | $600.00 | $146,013.02 | |
| February 17, 2016 | Tfr to Ben 217 | $270.00 | $146,283.02 | |
| February 29, 2016 | Tfr to Ben 217 | $1,050.00 | $147,333.02 | |
| March 1, 2016 | Tfr to Ben 217 – unpaid property taxes | $4,773.01 | $152,106.03 | |
| March 10, 2016 | Reimbursement for 217 expenses D. Styles | $10,000.00 | $162,106.03 | |
| March 14, 2016 | Tfr to Ben 217 | $300.00 | $162,406.03 | |
| March 21, 2016 | Tfr to Ben 217 | $800.00 | $163,206.03 | |
| April 4, 2016 | Reimbursement for 217 expenses D. Styles | $13,448.27 | $176,654.30 | |
| April 5, 2016 | Reimbursement for 217 expenses D. Styles | $826.78 | $177,481.08 | |
| April 18, 2016 | Reimbursement fo4r 217 expenses D. Styles | $283.55 | $177,764.63 | |
| April 21, 2016 | Reimbursement for 217 expenses D. Styles | $137.18 | $177,901.81 | |
| May 24, 2016 | Tfr from joint account | $220.00 | $177,681.81 | |
| September 25, 2017 | Interest at 3.2877% for 524 days | $9,889.57 | $187,571.38 | |
| September 25, 2017 | Total owing re 217 | $187,571.38 |
David Styles
[ 15 ] David explained how it was that the line of credit was set up at the RBC and secured against this property. Benjamin’s background is in banking and he suggested securing their line of credit on the property would reduce the interest rate.
[ 16 ] David identified Exhibit 1, the Book of Documents, and explained each of its nine tabs. Tab 2 is the spreadsheet of payments prepared by David and his wife, Mary. The bank statements contained at Tabs 5 and 6 were utilized by them to extract the information contained in the Tab 2 spreadsheet.
[ 17 ] In 2011 Benjamin approached them to extend him credit to purchase a Jeep, a Wrangler Jeep Sahara edition. David and Mary were happy to do so and did. As set out in the Plaintiffs’ calculations the advance was $40,000.00 and as of September 25, 2017 the amount owing with respect to the Jeep is $41,887.95. The principle amount in relation to the Jeep was never paid off.
[ 18 ] With respect to the Melancthon property, David testified that on February 28, 2012, $30,000.00 was extended to Benjamin as a down payment to purchase the Melancthon property. This was followed by the balance of the cost of the Melancthon property of $321,700.00. On August 29, 2012, Benjamin rolled over a portion of the cost of this property to a mortgage attached to the property in the sum of $260,789.68. As per the Plaintiffs’ calculations referenced earlier the amount owing to David and Mary as of September 25, 2017, is $95,201.17. The down payment and portion of the cost not assumed in the mortgage remained on the Plaintiffs’ line of credit. Benjamin did, however, pay the interest charge regularly.
[ 19 ] When Benjamin became branch manager in Shelburne they had a number of discussions about possible investments. At this point in time David was no longer practising as a dentist. They looked at a property in Shelburne as a potential rental property. Benjamin advised against purchasing that particular property. Benjamin did eventually find 217 Victoria Street, an old home with three rental units. Benjamin approached David about providing financing to purchase 217 Victoria Street. David was happy to provide some financing but he did not want to be involved in the day-to-day workload of managing this property.
[ 20 ] As set out in the Plaintiffs’ calculations, on February 12, 2013, a cash advance of $200,000.00 was provided to Benjamin. The property was registered in Benjamin and David’s names. David described it this way:
A. Okay. Well, basically I said to Benj, I’m happy to provide you with the financing. And he said in, out of consideration for this financing, I’ll put your name on the Deed. I said, that’s fine, but this is your project. Any profits that accrue after the debt’s been paid, you know, are yours. So, that was fine, and he proceeded to look after the property, collect the rent, address tenant issues. And then as time went on you’ll see that we eventually switched the credit line from the Bank of Montreal to the Royal Bank.
[ 21 ] Benjamin then helped them move the line of credit from BMO to the RBC.
[ 22 ] Benjamin continued to make the interest payments. On December 13, 2013, Benjamin rolled a portion of the purchase price for 217 Victoria Street into a small mortgage of $130,000, as shown on the Plaintiffs’ calculations chart.
[ 23 ] David Styles testified further that regular transfers of funds were made to Benjamin for renovations at 217 Victoria Street. David set out the following transfers to Benjamin for that purpose:
March 10, 2014 $ 5,000.00 March 21, 2014 $ 500.00 April 1, 2014 $ 285.00 April 1, 2014 $ 4,000.00 April 16, 2014 $ 5,000.00 April 29, 2014 $ 5,000.00 April 30, 2014 $ 1,000.00 May 5, 2014 $ 2,584.00 May 14, 2014 $ 2,500.00 Sept. 17, 2015 $ 2,500.00 Oct. 20, 2015 $ 800.00 Nov. 2, 2015 $ 1,220.00 Jan. 7, 2016 $ 300.00 Jan. 18, 2016 $ 6,243.85 Jan. 25, 2016 $ 400.00 Feb. 15, 2016 $ 600.00 Feb. 29, 2016 $ 1,050.00 March 10, 2016 $10,000.00 March 14, 2016 $ 300.00 March 21, 2016 $ 800.00 April 4, 2016 $13,448.27 April 5, 2016 $ 826.78 April 18, 2016 $ 283.55 April 21, 2016 $ 137.18
[ 24 ] These figures are as set out in the Plaintiffs’ calculations.
[ 25 ] In addition to these payments to Benjamin, David made the following payments:
• September 16, 2014 - transfer to Benjamin for an overdue water bill of $2,607.80 • Aug. 18, 2015 – transfer to Benjamin of $45,000 to cover his short term expenses as he lost his job • March 1, 2016 – transfer to Benjamin for unpaid property taxes of $4,773.01.
[ 26 ] The grand total of all the above payments to Benjamin is $117,159.44.
[ 27 ] David explained that in May 2014 their relationship with Benjamin began to deteriorate. He described the situation this way:
A. …You’ll see on May 14 th , 2014, there was a transfer of $2500. Unfortunately at this point, our relationship with Benj degraded significantly. He became very hostile towards us. He was very angry, very upset. No longer wanted my involvement with the property at all.
Q. Anything in particular cause that breakdown that you know of?
A. He was having some serious personal struggles and he seemed to identify us as, you know, part of that. I never really understood that or, or know why, but we were asked to, to stay away. I know we were dis-invited from our granddaughter’s birthday party, which was quite hurtful, but we tried to respect his, his space and his privacy, and recognized that he needed, you know, work on some things, so that was fine. So, we tried to remain supportive and, and step back. And he asked that I not attend the property, not really have anything to do with it, which I thought was a bit unreasonable seeing as I was a co-owner, but out of respect for him, I, I tried to do that.
Q. Right.
A. Then on September 16, we received a communication from the Town of Shelburne saying someone was on their way over to turn the water off, and I knew there were tenants in the building, and apparently there was an overdue water bill. So – of 2600 – well, $2,607.80. I was not able to communicate with Benj at the time so I took it upon myself to pay that water bill and said please don’t turn off the water and they didn’t, and the bill was paid. So, that also went on the credit line.
[ 28 ] David also explained how it came about that he transferred $45,000.00 to Benjamin on August 18, 2015:
A. …As it turned, Benj had decided to turn two units into one unit, which, okay. At any rate, in – you’ll notice that in August, on August 18th, 2015, there’s a significant transfer to Ben of $45,000.
Q. What was that about?
A. Well, what happened was, he had been – he was a branch manager at Shelburne, he then was transferred to the Grand Valley branch as, I guess, an assistant manager, something like that. And then he lost his job. And apparently what he had done is set up a – some short term financing at the low interest rate to, you know, facilitate the completion of the renovations. And due to the loss of his job, that, you know, he wasn’t going to get that any more so he reached out and wanted to reconcile. And he asked me to come and meet him at the rental property, which I was a little bit concerned about because the tone of his earlier communications were quite threatening and hostile. So, I brought a mutual friend. He brought his cousin and I asked his ex-wife to attend as well. So, all five of us showed up at the property.
Q. His ex, being this fellow’s ex-wife?
A. Yes, Benj’s ex-wife. We all showed up and Benj wanted to reconcile, to put our relationship back, and to borrow money, because he was on the verge of bankruptcy.
[ 29 ] As a result of all of the issues relating to 217 Victoria Street, David suggested to Benjamin that it would be necessary to sell it and Benjamin was agreeable. They worked hard to get the renovations completed so it could be sold. The property was eventually sold for a good price.
[ 30 ] David testified that the understanding was that the net proceeds of sale would be used to reduce debt. David indicated that there remains about $210,000 in trust from the sale and this action is essential to have these funds released and to be applied towards the line of credit.
[ 31 ] April 2016 was the last month that Benjamin actually made an interest payment and has paid nothing since.
[ 32 ] With respect to whether the transfers were gifts or loans, David stated:
Q. All right. And lately I’ve heard him suggest that, notwithstanding what the statement of defence says, that these were somehow intended to be gifts and not loans. It’s not in the pleadings, but I’ve heard that not very long ago. What do you have to say about that?
A. Oh, no, it never was a gift. It was always intended to be short-term financing. It turned into rather long-term financing. Certainly not a gift, and he always understood that. So, that is a mis-representation of this situation.
Cross-Examination by Benjamin
[ 33 ] Benjamin asked his step-father about his history of helping Benjamin and his wife, Lydia. The $40,000 loan to purchase the Jeep was the first extension of credit he could recall. David said if he did assist Benjamin and Lydia prior to that, those funds would have been gifts to them with no expectation of repayment.
[ 34 ] With respect to the Melancthon purchase, David again confirmed that their only involvement was to transfer funds to Benjamin and Lydia to purchase the home.
[ 35 ] David also acknowledged that he did assist other children with bridge financing and that Benjamin was well aware of that as he was involved in setting up the credit lines.
[ 36 ] David acknowledged that he had pleaded guilty to his Dental Licencing Board. The allegations involved inappropriate billings, improper charting and rendering unnecessary treatment. He chose not to defend the allegations because he had retired from being a dentist.
[ 37 ] In further cross-examination David confirmed that there was no formal written agreement with respect to 217 Victoria Street. It was verbal only. The following exchange is relevant on this point:
BENJAMIN ABEL: Q. Is there any evidence whatsoever to verify this agreement? Anything in writing?
A. There is no explicit written agreement where you agree to release all the proceeds. That was based on a number of verbal interchanges. Clearly there was an exchange of emails where you, in effect, take responsibility for the debt. So, no, if you’re asking me if there was a legally attested to document, no such document exists.
Q. Was there a legally attested document which confirmed the repayment of any of the claimed debt?
A. Not to my recollection. It was based on repeated verbal assurances.
Q. So you have no written documentation to confirm any agreements between the Plaintiffs and the Defendant?
A. Insofar as you’re referring to a, you know, prepared legal document, I don’t recall that any exist.
Q. The debt went to a series of purchases jointly made by Benjamin and Lydia, correct?
A. I, I, I’ll take your word for it. I never verified that.
Q. I’m curious as to why you would sue Benjamin only if the debt was for both parties?
A. Because the understanding was that when 217 was sold, the proceeds would be released to pay down your outstanding debt. That was the only extant money available. So, in as much as you and I were co-owners of the property, you refused to release the full amount as per our understanding, hence the action is directed at you, because Lydia was not on the Deed, nor was Mary, just you and me. So, the action has to be directed at you, because you’re the one who needs to release the funds.
[ 38 ] David also stated that he and Benjamin had a joint account to deposit rent and pay expenses for 217 Victoria Street.
Mary Styles
[ 39 ] Mary is David’s spouse and Benjamin’s mother. At the time of this trial her relationship with her son had deteriorated. She said their relationship “had been rather strained.” The following explanation for the strained relationship is set out in the trial transcript as follows:
Q. What do you think caused the breakdown?
A. I think there were a number of factors contributing to that. Benjamin, through his teenage years, struggled with substance use issues, and those continued into his adult life. When he was living in England he had issues with marijuana and alcohol use. I didn’t realize the extent of that at the time. I was party to it later on after he’d moved over here and he did share some of those issues with us. In May of – excuse me, 2014, he asked me to facilitate his entry into a rehab program. And as a mental health therapist, I did that, and he went into a rehab program in North Bay. Primarily, he said, for the use of marijuana and alcohol. In April of 2016, when he was in custody, he did disclose that he had other substance use issues, including methamphetamines, and that those were the reasons for going into rehab primarily. I think that’s contributed to this breakdown and I can’t, you know, really see any other reason for it, because, you know, prior to that what I was dealing with were normal teenage issues, and throughout the years we’ve both been very, very supportive of Benjamin. We’ve paid for him to go to University. We’ve facilitated his travel. We supported his marriage. We went to Hong Kong for his wedding. We put on a large reception for him when he returned home. Very supportive of him through the birth of their two children. They lost a child in between those two children, and I flew over to Hong Kong where his wife was at the time, to facilitate her return home, and as well I drove up to North Bay to be with Benjamin during that time, because it was very difficult for him. I felt that I had a good relationship with both of them and I was completely taken aback by his disclosure to me that he had come over here with the intent of basically financially ruining us.
[ 40 ] At Tab 1 of the Document Book there is an email dated May 14, 2014, from Benjamin to Mary at pages 1 and 2. Only two sentences were put to Mary by her counsel:
Pg 1 - At each of the instances I engaged Dad to confirm his continued support with the use of his credit line in order to fund this reno Pg. 2 - Of course it will be easier and cheaper for me to use your credit line however we need to make sure everyone in this situation understands this point.
[ 41 ] At the suggestion by Benjamin that the amounts advanced were gifts, Mary testified that her understanding was that they were loans and that Benjamin would be responsible for paying the interest. Mary was taken to page 7 of Tab 1 of the Document Book, which shows an email confirming that Benjamin accepted responsibility for the debt. The email is dated March 24, 2015:
I am struggling to understand your sudden urgency at becoming involved, or why you seem to be panicking. At no point in the past has there ever been any issues with debt repayment and despite all the financial challenges I have personally faced on the mortgage on 217 continues to be paid without issue, having never missed a payment. I have no plans to default on any debts nor do I plan to cause you any financial concerns…
Cross-Examination by Benjamin
[ 42 ] Benjamin asked his mother to explain why there was a change in interest on two occasions. There was no issue that Benjamin continued to pay the interest, however, Mary provided this explanation:
Q. Is it correct then that Benjamin and Lydia paid substantially more interest in this case than actually was owed?
A. My understanding, Benjamin, is that there were money coming in and out of that account. That amount, if you look at the bank statement, of 241,718.67, was used to facilitate the purchase of your sister’s house in Alliston, Natt and Naomi(ph), and that might have accounted for the increase in interest, but you still paid the interest. And as you had done with your other siblings, with Rachel and her husband Winton, when there was some overlapping financing taking place, you sorted out interest payments between you and them. But specific to the money that you owed us, you were paying interest on what you believed to be your portion of that debt. And any interactions between your siblings, financially, I have no knowledge of.
Q. Okay. So then, can you shed some light on why the interest payment jumped again in November 2012? And we can get this information from either your spreadsheet but also from your bank accounts?
A. So, where are you now on the spreadsheet?
Q. Year, November 2012.
A. So, going back.
Q. November 2012 you had an interest payment of $388 and change. You had no increase in the claimed debt, yet you had a significant increase in the payment amount, jumping up from 388 to 623.
A. I don’t know why there would be that increase, but again, I note that it was paid by you, so I’m assuming that whatever the increase was, if it was something between you and your siblings, you sorted that out. But you did take responsibility for the debt.
[ 43 ] The line of credit was attached to David and Mary’s home and it was a joint credit line in the name of David and Mary. Mary also stated that the proceeds of sale from 217 Victoria Street were to go directly back to her and David to pay back the line of credit. That was her understanding because the debt was incurred in relation to 217 Victoria Street.
[ 44 ] With respect to the Jeep, Mary’s understanding was that the Jeep was something that Benjamin wanted to buy for Lydia. Benjamin had told her this. At page 63 of the trial transcript:
A. That was a verbal communication between you and myself, because when you talked about purchasing a car and a home for Lydia, you were purchasing something that she liked. And at that point you told me that you wanted to purchase a Jeep for Lydia. And we forwarded you the money to do that. I have no written documentation to support that. That was purely a verbal exchange.
[ 45 ] Mary’s understanding was that the Jeep was a gift from Benjamin to Lydia.
Benjamin Abel
[ 46 ] In his initial testimony Benjamin provided the court with a great deal of detail about his personal relationship with David and Mary and his siblings. I will not review that detail.
[ 47 ] I will, however, review his testimony as it relates to the financial issues I am asked to decide.
[ 48 ] While Benjamin was in North Bay he was managing two RBC branches. His life was very stressful. He needed a place to live and Lydia needed a car. He was adamant that his wife not purchase a Jeep as the cost was outrageous. He could not afford it. David and Mary were supportive of Benjamin getting a Jeep. It was David and Mary who suggested financing by using their line of credit to keep the costs low. Benjamin accepted their offer. Benjamin testified as follows on the point:
…I fully intended that we were going to pay that money back somehow. David and Mary then provided funding for me to purchase my first property in Canada, utilizing their credit line.
[ 49 ] Benjamin was transferred to the Shelburne branch. He approved the transfer of David and Mary’s Line of Credit from BMO to RBC. Bank policy provided that he could not be involved in a review of their financial details or in transactions on their accounts.
[ 50 ] Benjamin testified that David made it clear to him that the amount remaining on his credit line was to be considered Benjamin’s inheritance and was not a repayable debt. The inheritance would come when David sold his dental practice.
[ 51 ] In 2012, David approached Benjamin in relation to acquiring investment property. David’s goal was to acquire five properties in the next five years. David knew that Benjamin had the expertise, because he had two rental properties, had exposure to the market, and had a wealth of investment information at his disposal.
[ 52 ] Initially, 217 Victoria Street was a purchase they both wanted to make. The agreement was that Benjamin would manage the tenants, the rent, and the monthly rental income versus the mortgage expenses. This was a triplex so the income potential was significant.
[ 53 ] They had no intention of renovating it or selling it. Benjamin did not realize that David had used his line of credit to fund the deposit on the property.
[ 54 ] The property went bad very quickly. The third unit had extensive damage. David and Benjamin were discussing how the renovations on the third unit would be funded. Renovations were undertaken and near the completion of the renovations a pipe burst, causing a water leak in the first two units. An insurance claim was made. In addition to the insurance claim, Benjamin testified he did a lot of the work himself.
[ 55 ] The $45,000 transferred to him by David and Mary was for work completed on 217 Victoria Street that he had personally done.
[ 56 ] Eventually 217 Victoria Street sold for $388,000. All the mortgages were paid off. David demanded the balance of the net proceeds be applied to his and Mary’s line of credit. Benjamin testified, however, that David and Mary only contributed about $103,000 of funds from their credit line towards the renovations. Benjamin feels that he did about $100,000 of work personally on the property, so he feels that whatever is left in trust should be split 50/50 with David and Mary.
Cross-Examination by Mr. Haskell
[ 57 ] In cross-examination Benjamin acknowledged that nowhere in his Statement of Defence did he allege or state that the funds advanced to him by the Plaintiffs were in fact gifts.
[ 58 ] Benjamin also acknowledged that the Statement of Defence he drafted was done so in haste and that most of that defence is irrelevant to this case.
[ 59 ] He acknowledged that David and Mary Styles did pay him funds for renovation expenses over the course of the renovations.
[ 60 ] Benjamin confirmed that he did pay the interest on the line of credit every month. Benjamin then acknowledged the money the Plaintiffs contributed towards 217 Victoria Street was never intended to be a gift. The following exchange is relevant on this point:
A. …In total, I have – that David and Mary contributed $103,209.
Q. Sorry, how much?
A. $103,000…
Q. All right. So that’s what they put into the renovations?
A. Including reimbursements back to David Styles for expense, which includes interest payments on the line of credit.
Q. Well, you were paying the interest every month?
A. Up until the point where he started reimbursing himself, yes.
Q. Well, until you got incarcerated, I think you told us 20 minutes ago. I mean look, this is the second problem with your story that these amounts are intended to be gifts, which is you paid the interest from day one, every single month until you got incarcerated, right?
A. Correct. The money that they contributed towards 217 was never intended to be a gift.
[ 61 ] With respect to the Jeep, Benjamin confirmed that he always intended to pay the $40,000 back.
Q. …as I was listening to the other things, because you’ve only told us today that the car and the, what, Melancthon were supposed to be gifts?
A. No, the car was – I always intended to pay back.
Q. All right. So agree there’s $40,000.
A. $40,000 was due to be paid back, absolutely. The only thing that was supposed to be a gift was the funds that were remaining from the Melancthon purchase.
[ 62 ] The Melancthon advance of funds, according to Benjamin, was a gift.
[ 63 ] With respect to the $40,000 owing in relation to the Jeep, Benjamin testified that he did not agree to pay that amount from the proceeds of the sale of 217 Victoria Street.
[ 64 ] Benjamin was cross-examined further about the Request to Admit and the spreadsheet prepared by the Plaintiffs. On this point Benjamin stated:
Q. So as of October 4 last year you had the spreadsheet?
A. Yes.
[ 65 ] Benjamin stated he didn’t have his personal records at the time but got them in or around April 2017. Mr. Haskell asked:
Q. So five months ago?
A. Yeah.
Q. And in five months, you haven’t done a spreadsheet to tally what you say you paid?
A. No I haven’t.
Q. What you were paid?
A. I haven’t. And clearly I should have.
[ 66 ] Exhibit A to his Statement of Defence is the work that he did personally and what the cost would have been had he hired people to do this work.
[ 67 ] As some of the evidence given by Benjamin was not put to David Styles I permitted David to address some of these issues on recall. In relation to the allegation that this debt would be taken care of by an inheritance from the sale of his dental practice, David explained it as follows:
A. The – okay, yeah, I didn’t understand that, because I sold the dental office in 2009 and continued to work as an associate for another four years. So I have no recollection of telling any of my children that they were going to get an early inheritance or that I was going to disperse the proceeds of the sale. That was essentially, you know, our savings for retirement. So no, there was no – I would never have suggested that or, you know, put it out there and, you know, we always tried to be very even-handed with our children. And, you know, if one – somebody – yeah, if one of the kids was going to get an early inheritance, they all would. And that was not going to happen.
Christopher Pollock
[ 68 ] Following a qualification voir dire Mr. Pollock was qualified as an expert. I gave the following ruling:
I am satisfied that Mr. Pollock has, over the last 20 years, acquired skill and experience in the construction industry such that I can hear his evidence on the matters set out in Exhibit A (filed as Exhibit 4 at the trial).
I am also satisfied that any deficiencies in expertise that may be exposed in cross-examination by Plaintiffs’ counsel will be considered when assessing the weight to be attached to Mr. Pollock’s evidence.
[ 69 ] Mr. Pollock was called by the defence to comment on the values attached to the list of work done by Benjamin as set out at Schedule A of his Statement of Defence.
[ 70 ] Benjamin took him through each item, except for the management fee of $15,000.
[ 71 ] On each item Mr. Pollock made one of the following comments:
− it was fair − it was too low − it was too high − he had no idea and could not comment on the amount
[ 72 ] At the end of his testimony, approximately $52,620.00 of the values set out by Benjamin could not be confirmed. For example, with respect to the floor installation he could not comment on the amount as he did not witness the work being done by Benjamin. As another example, Mr. Pollock also could not comment on the amount listed for duct work as he was not familiar with the work done.
[ 73 ] With respect to the demolition value of $16,750.00, Mr. Pollock said it was closer to $10,000.00 for the labour. A final example relates to the work on the backyard, which involved tree trimming, tree removal and stump removal. Mr. Pollock could not comment as those tasks were not within his field of work.
[ 74 ] I have not reviewed each item in these reasons but the amount deducted from the $145,850 that Mr. Pollock could not verify was approximately $52,620.00.
[ 75 ] In cross-examination Mr. Pollock acknowledged that the values set out by Benjamin could be as much as 30% different, plus or minus. The value Mr. Pollock opined on was based on skilled tradesmen.
[ 76 ] The following exchange with the court puts into context what Mr. Pollock considered with respect to his valuation:
THE COURT: And what was your hourly rate?
A. My hourly rate I believe is 20 dollars, which is pretty low for me. So, I was more of like helping out.
THE COURT: But you were doing most of the work there. But you were just helping out a friend, is this why you….
A. Well, it’s a friend price, basically.
THE COURT: Right. What’s your normal rate?
A. It’s about 40.
THE COURT: About 40.
A. Yeah.
THE COURT: So, Mr. Abel didn’t keep timesheets as you said, because he’s the he’s the owner?
A. Yeah.
THE COURT: He’s the property owner so he’s doing the work.
A. You expect once you invest your time and to the work, that you get the proceeds split in half.
Q. So you didn’t see any timesheets or logs from Mr. Abel?
A. No, no, no.
THE COURT: No. So the work that’s set out in Exhibit A is the, is, is the labour that Mr. Abel is saying he is charging?
A. Yeah.
Q. But you didn’t see any of his timesheets?
A. No, I didn’t see timesheets. I just witnessed the work that the put in and I’m giving a relative figure.
THE COURT: Could you log those hours?
A. Pardon me?
Q. Could you log those hours that he was putting in?
A. No, not for him.
THE COURT: No, not for him. So – all right. And what was – what was he charging an hour?
A. For?
THE COURT: For his labour?
A. To whom, himself?
THE COURT: What would he – what was his – what was his hourly rate that he’s coming up with these numbers on?
A. I think he’s trying to find a relative base cost of, you know, the labour involved of the job being completed, so that’s what….
THE COURT: But the, this is what he did though. For example, the kitchen cabinet installation he’s put a figure down of 5250. So, if you charge $20 an hour with all your experience…
A. Yeah.
THE COURT: …let’s say, hypothetically, he’s, hypothetical, he’s charging $10 an hour, if we look at that, that’s 525 hours?
A. Well….
THE COURT: To install the cabinets.
A. Well, like I said, I’m giving him a, a friend price.
THE COURT: See, this is, this is what I, I’m just trying to get a clarification here. If, if you’re charging 20 with your experience and, you know – so I’m trying to do a breakdown, because these are, these are – this is his labour, right? So, strip the roof, rebuild and put in the new shingles, for example, that’s four – you said 4,000…
A. Mm’hmm.
THE COURT: …so if he charges $10 an hour, that’s 400 hours that he would have had to do that in the time period we’re looking at, right?
A. Yeah, but…
THE COURT: If he charged $15 an hour, it would be…
A. …not, not a lot of contractors are going to go in on an hourly rate, especially as low as the one I did, right?
THE COURT: No.
A. So, usually you’re gonna get them – if someone comes in to do a roof especially, they’re gonna give you a quote, quote….
THE COURT: But I’m, I’m concerned about Mr. Abel’s time, ‘cause this is what he’s claiming, not, not…
A. Yeah, I understand.
THE COURT: … - so it’s not a hypothetical in that sense. I’m just trying to understand, without you having a time docket or time sheet as to number of hours he spent on it – I gather during this time period he was working full-time?
A. For – up until April, I believe, until – then he went away to rehab and…
THE COURT: Right.
A. …he was full-time, yes.
THE COURT: Up until then.
A. And then he came back and the more the project continued, the more he was there every day. Because he has a family, so he’s busy, so.
THE COURT: Yeah, okay.
A. I think what he’s trying to do is….
THE COURT: No, I – don’t, don’t tell me what you think he’s trying to do.
A. Okay.
THE COURT: I’m – he’ll tell us – he’ll tell us that. I’m just looking at this, this sheet here and I’m trying to understand when we, when we break down – just, just for – ‘cause I have to – I’m gonna leave here tomorrow after submissions and I have to try to figure this out, so the more help that I get from everybody…
A. Yeah, I understand.
THE COURT: …the more I’m gonna be able to decide this case, but -. So, so the, the total – like, we’ve taken some out of here and Mr. Abel’s going to do – re-do the calculations for submissions tomorrow, but when I look at the total amount owed of $145,850, at, even at $10 an hour, that, that is a lot of hours.
Analysis & Conclusion
[ 77 ] Benjamin readily acknowledged that the money the Plaintiffs contributed towards 217 Victoria Street was never intended to be a gift. He also stated that the total that David and Mary contributed was $103,209.00.
[ 78 ] Benjamin seeks payment of $145,850.00 for work he did on the property. The amount Benjamin’s expert, Christopher Pollock, could not confirm was about $52,620.00. The net amount is $93,230.00. However, this amount cannot be quantified with any certainty considering the fact that Benjamin is not a skilled tradesman. Benjamin was a joint owner on this home. Christopher Pollock did not see Benjamin’s timesheets. He cannot say with any certainty whether the amount of time taken to do the work was reasonable.
[ 79 ] There is also no evidentiary foundation to establish how Benjamin determined a management fee of $15,000. I will not allow that amount in the circumstances. If that amount is taken off the net figure of $93,230 it results in an amount of $78,230 to which Benjamin could reasonably be entitled. With his admission that the Plaintiffs contributed $103,209 to 217 Victoria Street and considering the chart and the list of payments made by the Plaintiffs toward the property I am satisfied that nothing is owing to Benjamin as it relates to 217 Victoria Street.
[ 80 ] With respect to the $40,000 relating to the Jeep, Benjamin again readily acknowledged that $40,000 was due to be paid back. He stated he always intended to pay these funds back to the Plaintiffs.
[ 81 ] I am satisfied that the totals of $187,571.38 for 217 Victoria Street and $41,887.95 for the Jeep are properly owed to the Plaintiffs. The total is $229,459.33.
[ 82 ] With respect to the Melancthon property I am not satisfied that the only conclusion to be reached on the advancement of those funds is that they were loans. I am troubled by the fact that Benjamin did not plead that these funds were gifts, however, I cannot say that on a balance of probabilities they were not.
[ 83 ] Benjamin readily acknowledged his obligations relating to the Jeep. He also readily acknowledged certain amounts put into 217 Victoria Street by David and Mary. I am satisfied that those amounts are properly owing to the Plaintiffs.
[ 84 ] Benjamin does not acknowledge that he owes any money relating to the Melancthon property. As I indicated, I cannot say with any certainty that those funds were not intended to be a gift.
[ 85 ] The grand total owing to the Plaintiffs is thus $229,459.33.
[ 86 ] Judgment to issue as follows:
Judgment in favour of the Plaintiffs, David Styles and Mary Styles, in the sum of $229,459.33;
Pre-judgment interest and post-judgment interest in accordance with the Courts of Justice Act ;
That Shepherd, Osyany and King LLP release the funds presently being held by them to the Plaintiffs forthwith; and,
The Plaintiffs shall serve and file their written submissions on costs within 20 days. The Defendant shall serve and file his response within 20 days. The Plaintiffs shall serve and file any reply within 10 days.
Fragomeni J.
Released: November 23, 2018