Court File and Parties

COURT FILE NO.: 58397/18 & 58548/18 DATE: 2019/06/06

ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF LESLIE ANDREW SALGA, also known as Leslie Salga, deceased

BETWEEN:

Karen Marley Applicant – and – Suzanne Marcela Salga, Michelle Jessica Salga, The Estate of Leslie Salga, and Helmut Klassen, in his capacity as Estate Trustee of the Estate of Leslie Salga Respondents

Counsel: Sarah Draper, for the Applicant Julian Cosentino, for the Respondents Suzanne Marcela Salga and Michelle Jessica Salga Anne Marie DiSanto, for the Respondent Helmut Klassen

AND BETWEEN:

Suzanne Marcela Salga and Michelle Jessica Salga Applicants – and – Helmut Klassen and Karen Marley Respondents

Counsel: Julian Cosentino, for the Applicants Anne Marie DiSanto, for the Respondent Helmut Klassen Sarah Draper, for the Respondent Karen Marley

HEARD: April 24, 2019

R. Reid J.

DECISION ON APPLICATIONS

Introduction:

[1] The parties made two applications that were ordered to be heard together or one after the other by the Order of Justice Walters dated October 11, 2018.

[2] In the application of Suzanne Marcela Salga and Michelle Jessica Salga, (the “Salga application”), they seek an order declaring that they are entitled as residuary beneficiaries in the estate of Leslie Salga to an undivided half interest in the real property known municipally as 28 Loretta Drive, Virgil, Ontario. By way of subsidiary order, they seek an order directing the estate trustee, Helmut Klassen, to sell the property and disperse the proceeds of the estate.

[3] The second application was made by Karen Marley (the “Marley application”) seeking a declaration that she is the sole legal and beneficial owner of the Loretta Drive property. In the alternative, if the Salga application is successful, Ms. Marley seeks an order that she be entitled to a percentage ownership of the property in excess of 50 percent and in the further alternative, that the estate interest in the property be reduced by half of the outstanding line of credit owed by Leslie Salga and Karen Marley at the date of Mr. Salga’s death.

[4] Neither Karen Marley nor Helmut Klassen challenged the standing of Suzanne Salga and Michelle Salga to bring the Salga application even though it could be argued that only the estate has standing as against the interest of Ms. Marley. The stated position of the estate trustee was that his only interest is in the proper execution of the will. In the circumstances, I am satisfied that the Salga applicants, as residual beneficiaries, are entitled to bring the application in effect in place of the estate trustee.

Relationship of the parties:

[5] Leslie Salga had three children: Suzanne Salga, Michelle Salga, and Andrew Salga. In 1999, after a divorce from his first wife who was the mother of the children, Leslie Salga married Karen Marley. They lived together as husband and wife until Mr. Salga’s death on August 28, 2015.

[6] By will executed July 29, 2015, (about one month before his death and during his final illness), Mr. Salga appointed Helmut Klassen to be his estate trustee.

The Will of Leslie Salga:

[7] In his will, which was prepared by a lawyer, Mr. Salga designated personal property to be given to each of his children and Ms. Marley. His two daughters were the residuary beneficiaries.

[8] Subparagraph 4(j) of the will directed the estate trustee as follows:

To allow my wife, KAREN ANNE MARLEY, if she survives me, the use, occupation and enjoyment of my one-half (1/2) interest in the house and lot municipally known as 28 LORETTA DRIVE, NIAGARA-ON-THE-LAKE, ONTARIO, on the following terms:

(i) KAREN ANNE MARLEY’s right to occupy such premises is conditional upon her continuing to pay all taxes, insurance premiums, mortgage interest (if any), repairs and maintenance, and any other charges relating to the said residence. In the event that, in the judgment of my Trustee, KAREN ANNE MARLEY is in default of her obligations hereunder, my Trustee may, in my Trustee’s sole discretion, give KAREN ANNE MARLEY sixty (60) days notice to remedy the default to my Trustee’s satisfaction, failing which, my Trustee will have the right to recover possession of the premises; and

(ii) KAREN ANNE MARLEY’s rights with respect to the premises will cease, and her right to occupy the premises will end in any event when:

A. She dies;

B. She shall in writing advise my Trustee that she no longer desires to have such property held for her;

C. She no longer personally makes her home in said premises;

D. My Trustee decides to exercise my Trustee’s right to recover possession of the premises in accordance with the terms and conditions of subclause (i) hereof;

E. She is absent from the said real property for an extended period of time with no reasonable expectation of her return to the said property; or

F. She becomes a spouse or co-habits within the meaning of the Family Law Act, R.S.O. 1990, c.F3, as amended,

whichever event shall first occur, whereupon the said dwelling house or residence shall be sold and the net proceeds shall be added to the residue of my estate and dealt with as part thereof.

[9] In the Salga application, orders are requested directing the estate trustee to deliver a statement of assets, an accounting, and to deliver personal property in accordance with the will. On the day of hearing, the parties were able to resolve those matters such that no submissions were necessary and no order needs to be made.

[10] In the Marley application, an order was requested deleting a notice filed by the Salga applicants on title of the Loretta Drive property. On the day of hearing, the parties were able to agree on that issue to the effect that upon the completion of the applications, the notice and the certificate of pending litigation will be deleted.

The Loretta Drive property:

[11] The Loretta Drive property was the matrimonial home of Leslie Salga and Karen Marley from the date of purchase in 2004 to the date of Mr. Salga’s death. Ms. Marley continues to reside there.

[12] After the distribution of the personal items identified in the will, the residue of the estate of Leslie Salga is of minimal value with the exception of the Loretta Drive property. The estimated value of the property at the date of his death was about $400,000 and the current estimated value is about $750,000.

[13] Following the purchase of the property on July 23, 2004, the report to Ms. Marley and Mr. Salga from their lawyer included the following under the heading “Transfer of Title”:

In accordance with your instructions, title was transferred on closing to Karen Marley and Leslie Salga as joint tenants.

Where title is held as joint tenants, if one owner dies, the survivor automatically becomes the sole owner of the property.

[14] No change was made to the registered title during Mr. Salga’s lifetime.

Issues for Decision:

[15] There was no dispute that the registered title to the Loretta Drive property shows Leslie Salga and Karen Marley as joint tenants. The first question to be decided on the applications is whether the joint tenancy was severed such that Mr. Salga and Ms. Marley held the property as tenants in common at the date of his death.

[16] If the answer to that question is “no”, it is dispositive of both applications.

[17] If the joint tenancy was severed, the second question to be decided is whether the estate trustee should be ordered to sell the property and divide the proceeds on the basis that Ms. Marley has disentitled herself to her life interest.

[18] If the joint tenancy was severed, the third question to be decided is whether the respective entitlements by Ms. Marley and the Estate should be adjusted in Ms. Marley’s favour to prevent unjust enrichment of the Estate.

Was the joint tenancy severed?

The Law:

[19] In the case of Hansen Estate v. Hansen, 2012 ONCA 112, 109 O.R. (3d) 241, at para. 32, the Ontario Court of Appeal endorsed three ways in which a joint tenancy may be severed, [1] referring to the classic statement by Vice-Chancellor Wood in Williams v. Hensman (1861), 70 E.R. 862, (Eng. Ch.), at p. 867:

A joint-tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund -- losing, of course, at the same time, his own right of survivorship. Secondly, a joint-tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested. You must find in this class of cases a course of dealing by which the shares of all the parties to the contest have been effected, as happened in the cases of Wilson v. Bell (1843), 5 Ir. Eq. R. 501 (Eng. Eq. Exch.) and Jackson v. Jackson (1804), 9 Ves. 591 (Eng. Chancellor).

[20] Chief Justice Winkler continued in Hansen Estate at para. 34:

The three modes of severance referred to in Williams v. Hensman have come to be known as the “three rules” … [which] may be summarized as follows:

Rule 1: unilaterally acting on one’s own share, such as selling or encumbering it;

Rule 2: a mutual agreement between the co-owners to sever the joint tenancy; and

Rule 3: any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

[21] For the purpose of these applications, the parties agree that the potentially relevant mode of severance is by a “course of dealing.”

[22] The equitable principle underlying the rule is to prevent a party from asserting a right of survivorship where doing so would not do justice between the parties in cases where there is no explicit agreement to sever the joint tenancy.

The evidence:

[23] In considering whether the facts of this case support a severance based on a course of dealing, it is necessary, as mandated by the court in Hansen Estate at para. 7, to consider the totality of the evidence so as to discern whether the parties shared a common intention to treat their interest in the property as constituting a tenancy in common. Was there communication or conduct to support the inference that the parties shared that common intention?

[24] The starting point is the purchase of the Loretta Drive property in 2004. Clearly the title was taken in joint tenancy.

[25] The Salga applicants bear the burden of proving on a balance of probabilities that there was a subsequent course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

[26] The lawyer’s reporting letter following the purchase in 2004, directed to both co-owners, and referred to above, confirms both the nature of the title and its consequence. Although the Salga applicants submitted that particularizing the contributions to purchase by each of Mr. Salga and Ms. Marley as shown in the lawyer’s reporting letter supported the severance by course of dealing, I find that evidence to be unhelpful to the Salga applicants given that the title was clearly taken in joint tenancy. If anything, approximately equal contribution is equivocal as between joint tenancy and tenancy in common.

[27] Many of the factors found in Hansen Estate to support the common intention to create a tenancy in common do not exist in this case. For example, there was no marital discord, separation, or intention to negotiate a separation agreement for the division of assets. There was no exclusion of Ms. Marley as a beneficiary of Mr. Salga’s estate. There was no isolation of the couple’s finances one from the other by transfers out of joint bank accounts.

[28] It is not, however, appropriate to simply enumerate factors found in other cases leading to a category-based approach to the course of dealing test but rather to consider the evidence of a course of dealing as a whole. Did the actions of Mr. Salga and Ms. Marley demonstrate a common intention to treat their interest in the property as constituting a tenancy in common?

[29] The Salga applicants rely mainly on two specific pieces of evidence to support their course of dealing argument.

The Will:

[30] The first significant piece of evidence is the specific provision in Mr. Salga’s will that allowed Ms. Marley the use, occupation and enjoyment of “my one-half (1/2) interest” in the Loretta Drive property for her lifetime, subject to the enumerated conditions. Clearly, that provision of the will, which was made about one month before Mr. Salga’s death, was inconsistent with the right of survivorship in joint tenancy.

[31] As noted in Hansen Estate at para. 63, a testamentary disposition cannot sever a joint tenancy. However, the provision in a will is a piece of evidence that can be used to help discern whether there was a common intention to treat the joint tenancy as severed, particularly if the provision in the will was known to the other party.

[32] In this case, the will is not only written evidence of the testator’s intent but is a document which, having been prepared by a lawyer, can be presumed to have been prepared on the instructions of the testator and reviewed prior to execution. Standing alone, it does not indicate a shared intention. However, when coupled with the recorded conversation as set out below, Ms. Marley’s knowledge of the will’s terms may be inferred.

The Recorded Conversation:

[33] The second key evidentiary component of the Salga applicants’ claim as to a course of dealing is a recorded conversation that is said to have taken place between Ms. Marley and Mr. Salga during his confinement to the hospital on July 1, 2015 for treatment during his final illness.

[34] According to the affidavit evidence of Suzanne Salga, sworn March 20, 2019, the recording was made on her hand-held cellular device which was in plain view of everyone present. She deposed that she, Michelle Salga and Andrew Salga were also physically present in the hospital room although there is no evidence that they participated in the conversation nor is there reference by Mr. Salga or Ms. Marley in this conversation to their presence. Ms. Marley appears to be whispering so as not to be overheard. When Mr. Salga asks her why she is not speaking up, Ms. Marley explains: “She’s taping that’s why”.

[35] In her affidavit filed in reply sworn April 15, 2019, Ms. Marley denies that there was an intention to sever the joint tenancy. She states that she does not recall the conversation, and cannot confirm that it occurred on July 1. She states that she did not see the recording device, and she did not consent to any conversation being recorded. She said that she spoke quietly during the conversation because she suspected that Suzanne might be recording as she had done in the past. Ms. Marley states that the recorded conversation is misleading because it does not capture earlier conversations in which Mr. Salga instructed her to “go along” with what Suzanne and Michelle Salga demanded since appeasement was easier than fighting. Ms. Marley also submits that the recording is incomplete. That evidence was not consistent; either there was a conversation or not, so it makes little sense to say that it was not recalled but that she spoke quietly so it could not be overheard.

[36] Michelle Salga did not file an affidavit on the subject of the July 1, 2019 recording. An affidavit of Andrew Salga sworn April 17, 2019 was filed by Ms. Marley, but it made no mention of the July 1 recorded conversation.

[37] I have listened carefully to the audio recording of the conversation. In general, it reflects concerns on the part of Ms. Marley that Mr. Salga’s daughters were attempting to minimize her personal and financial connection with Mr. Salga. As to his will and the disposition of the house, the conversation was transcribed as follows:

Karen: Okay. The will is already done, Lasco. It says right in the will. Whe-, I can stay in the house, uh, as long as I want with all the contents. And at the time that I can’t keep it up anymore and it gets sold, or I die, then your 50 percent of the house goes-, and whatever-, goes to the estate. Minus all exp-, your expenses. But in mine, mi-, mine’s all my expenses of my side. And what’s ever left on your side gets divided between the girls. That’s simply what it (inaudible), Lasco, and I have no problems (inaudible). If I had not tried to get you to get the will done, if you had died without a will, the girls would only have gotten a quarter of that, and I wanted them to get what you’re saying.

Leslie: Yeah, okay, so, so, so the fact is, the fact is…

Karen: (inaudible).

Leslie: …that everybody’s getting 50, 50, okay? Fifty-fifty.

Karen: You and I are?

Leslie: Yea-, yeah, yeah-, yes, 50, 50 minus your …

Karen: Yes.

Leslie: ...whatever.

Karen: Yes, yes, yes.

Leslie: And that’s the final number.

Karen: It already says that.

Leslie: So I’m not gonna say, oh …

Karen: Yeah

Leslie: …(Inaudible)-, 50-50.

Karen: Oh, yes, yes, yes, yes.

Leslie: All this is gonna be written.

Karen: Yes.

Leslie: And I’m going to (inaudible) because I am, I am (inaudible)…

Karen: I know you are.

Leslie: …so I have to be very careful (inaudible).

Karen: Yes, you do.

Leslie: Okay? So, so, I-, so everything is gonna be written.

Karen: Yes.

Leslie: And everything is gonna be like, like it should.

Karen: Yes.

Leslie: Okay, and no more hysteria. Okay, so we have…

Karen: yeah.

Leslie: …deal, Karen?

Karen: Yes, it is a deal. And I told the girls many, many times Lasco, I’m not cheating them of anything. (Inaudible) and they get 50 percent of-, I said, if it wasn’t for the will, and me forcing your dad to go and sign the will, you girls would have only gotten a quarter of that.

Leslie: Yeah.

Karen: I said, I went and got you the whole 50 percent.

Leslie: Yeah.

Karen: Okay? They got the whole 50 percent minus my expenses, of course.

[38] I am not satisfied on the evidence that the conversation was made in the presence of anyone other than Mr. Salga and Ms. Marley. The evidence of Suzanne Salga is uncorroborated when corroboration might well have been expected from either Michelle or Andrew Salga.

[39] It may well be that Suzanne Salga made the recording surreptitiously. She is alleged to have done that from time to time and she had a clear ongoing concern about the personal and financial relationship between her father and Ms. Marley. However, the unauthorized recording of a conversation does not make the evidence inadmissible, regardless of whether it was legal to do so. Therefore, I will consider it as part of the evidence of a course of dealing as a whole.

[40] The substance of the conversation makes clear reference to the terms of a will in which Ms. Marley was to receive a life interest in the Loretta Drive property. She also clearly indicates her understanding that the estate will receive the remaining half interest in the property at the end of the life interest. Both Ms. Marley and Mr. Salga indicated an expectation of a 50-50 sharing of the property proceeds in due course. Ms. Marley seems to take some credit for encouraging preparation of the will, the terms of which benefited the Salga applicants. Ms. Marley does not deny the content of the conversation as recorded. In my view, even if she and Mr. Salga were trying to appease the Salga applicants as alleged, their mutual intention appears clear.

Other Evidence:

[41] The Salga applicants note that, despite receipt of a copy of the will shortly after Mr. Salga’s death, Ms. Marley took no steps to act on her right of survivorship until after the Salga application was started in March 2018, over two and a half years after Mr. Salga’s death. Ms. Marley registered a survivorship application on title to the property on June 25, 2018 and started her application herein in early September 2018. They submit that Ms. Marley’s acquiescence in view of the specific provision in the will is evidence that she accepted the tenancy in common.

[42] In my view, it can be inferred from Ms. Marley’s evidence that she simply relied on the nature of the registered title as per the 2004 transfer and that she only reacted to confirm that position once the Salga applicants made their claim. As such, I do not consider the delay in Ms. Marley’s registration of a survivorship application to be significant on the issue of course of dealing.

[43] In her affidavit sworn March 20, 2019, Suzanne Salga deposes that her father verbally advised her and her sister that he wanted the two of them to inherit his 50 percent ownership interest in the property. I find that evidence to be of little weight in part because it is self-serving and in part because she makes no allegation that Ms. Marley was party to the communication.

[44] In the same affidavit, Suzanne Salga refers to “several audio recordings” containing acknowledgment and agreement by Ms. Marley that half the property was being left to the Salga applicants. Other than the July 1 recording to which I have referred, no other recordings were exhibited. Therefore, her statement about other recorded statements is vague, unproven, and therefore of no weight on the issue of course of dealing.

[45] Similarly, in the same affidavit, Suzanne Salga deposes that a recording was made of a conversation between Leslie Salga and his son Andrew in the Slovakian language disclosing that he intended that his half interest in the property after death was to be distributed to his daughters. The translated transcript of the conversation does not support that allegation and it is specifically denied by Andrew Salga in his affidavit of April 17, 2019. Therefore, Ms. Salga’s evidence based on the conversation between Mr. Salga and Andrew Salga has no weight.

[46] Suzanne Salga relies on the “List of Estate Assets and Liabilities” prepared by the estate solicitor showing that half the value of the property belonged to the estate for the purpose of calculating estate administration tax. She asserts that the document is further evidence of the course of dealing. For his part, the estate trustee deposed in his affidavit of April 15, 2019 that he had no opinion on whether the deceased intended to sever the joint tenancy but rather that he and the estate solicitor tried to follow the deceased’s wishes as provided for in the will. In effect, the List of Estate Assets and Liabilities is simply a restatement of the will, after the fact, and does not represent independent evidence which bears on the course of dealing argument.

[47] The Salga applicants relied upon three additional affidavits.

[48] Jan Baca was a friend of Michelle Salga. She recalled one specific occasion, while a guest in Leslie Salga’s home, that Mr. Salga indicated his intention to leave his half interest in the home to his two daughters. She deposed that Ms. Marley as well as Michelle Salga were present. She recalls him explaining why his son Andrew was not to receive part of the inheritance. She recalled another occasion in the summer of 2014 where Mr. Salga confirmed his intention that his half interest in the home would be left to his two daughters following his death. This conversation was in the presence of Ms. Marley and his two daughters. She added that there were “at least 10 different and separate occasions”, but without providing any further particulars, during which that information was provided.

[49] Gabriella Mijailovic was a family friend of Mr. Salga for over 30 years. She recalled an occasion when she and Mr. Salga were speaking on the telephone and he made known to her his intention to leave his half interest in the home to his daughters. He explained why his son Andrew was not being included in the inheritance. She deposed to “at least 12 different and separate occasions” but without providing any further particulars, when Mr. Salga confirmed his intention to leave his share of the property to his daughters. She speculated that on one occasion Ms. Marley was eavesdropping and tried to convince Mr. Salga to end the conversation hastily.

[50] Mary Gedeon was another long-time family friend of Mr. Salga, and was named as the alternate estate trustee in his will. She deposed to having had multiple conversations with him on the topic of inheritances. She mentioned one occasion in the spring of 2014 at a restaurant in Toronto in which, in the presence of Ms. Marley, Mr. Salga indicated that his half interest in the home would pass to his daughters on his death and that Ms. Marley would retain her half interest after his death. He explained why his son Andrew was not to be a beneficiary.

[51] Obviously, the communications referred to on the part of Mr. Salga in the three affidavits is hearsay. That evidence is tendered for the truth of its contents. No cross-examination on the affidavits took place. The evidence is relevant to a key issue, namely whether Mr. Salga and Ms. Marley engaged in a course of dealing giving rise to the inference that the joint tenancy was severed.

[52] I give no weight to generic evidence about numerous conversations without particulars, as offered by both Ms. Baca and Ms. Mijailovic. It is vague and uncorroborated.

[53] I give the more specific evidence of Ms. Mijailovic no weight since, while consistent with what was alleged to be Mr. Salga’s intention, the conversation was said to have been by telephone between her and Mr. Salga and not clearly in the presence of Ms. Marley. Therefore, the evidence was not indicative of the mutuality required to support the course of dealing argument.

[54] I turn then to the specific conversations alleged by Ms. Baca and Ms. Gedeon, which allegedly took place in the presence of both Mr. Salga and Ms. Marley.

[55] Evidence which, as here, does not fall under one of the traditional exceptions to the rule against hearsay, may be admissible under the principled approach when the twin requirements of necessity and threshold reliability are met.

[56] The ultimate reliability of hearsay evidence under the principled approach is the domain of the trier of fact to be determined at the end of the proceeding on the basis of all the evidence. At the admissibility stage, a determination of threshold reliability ensures that there is sufficient indicia of reliability to evaluate the truth of the evidence. The reliability requirement operates as a substitution for the ability to test the evidence by cross-examination. It requires a review of the circumstances of the making of the statement unless there is some other way to test its truth and accuracy.

[57] Because the statements made by Mr. Salga were in the course of casual conversations, there is no procedural reliability that would be found in statements made, for example, under oath or to persons in authority such as police officers.

[58] The question is whether there was sufficient substantive reliability arising from the circumstances surrounding the making of statements and including any corroborating evidence, to substitute for the lack of cross-examination. If so, the evidence may be admitted and it is then a question of weight as to its significance in deciding the question before the court.

[59] Ms. Gedeon was a friend of Mr. Salga for over 40 years. She is godmother to Andrew and Suzanne Salga, and alternate executor and trustee in the will of Mr. Salga. She deposed that she and the deceased had a close relationship. One godchild (Suzanne Salga) will benefit if the joint tenancy is severed, and the other (Andrew Salga) will not. She deposed to many serious conversations with Mr. Salga, especially late in life, which makes sense given the length and closeness of their relationship. She was specific about a time (spring 2014), and place (the “Heart Café” on Bloor Street West in Toronto) when she, Ms. Marley and Mr. Salga met. He asked her to be an executor. She said they specifically discussed the division of the property on the basis that Mr. Salga’s 50 percent share would be divided between the two daughters, with the son being excluded for reasons that were explained. She recalled the meeting as the last one with Mr. Salga before his death.

[60] Based on the recent decision of R v. Bradshaw, 2017 SCC 35, [2017] 1 S.C.R. 865, at para. 44, “A trial judge can only rely on corroborative evidence to establish threshold reliability if it shows, when considered as a whole and in the circumstances of the case, that the only likely explanation for the hearsay statement is the declarant’s truthfulness about, or the accuracy of, the material aspects of the statement.”

[61] In the circumstances, I am satisfied that the evidence of Ms. Gedeon is properly admissible based on the principled approach. I conclude that she had no reason to be untruthful. The provisions discussed were consistent with the contents of the will, including her appointment as alternate trustee. The reasons for excluding Andrew Salga were the same as those deposed to by other witnesses. It was reasonable based on the nature of her relationship with Mr. Salga to have had the conversations to which she attested.

[62] Jan Baca has been a friend of Michelle Salga for about nine years. In her affidavit, she deposes that she “befriended” Mr. Salga. As a guest in his home, she overheard discussions on the subject of his estate. She identified an occasion when, in the living room, Mr. Salga communicated his intention to leave his half interest in the property to his daughters. Ms. Marley, Michelle Salga, her cousin Roman Salga, and his wife Cheryl were said to be present. No date or approximate time is given. Neither Michelle, Roman, nor Cheryl Salga provided evidence on the point. Ms. Marley did not specifically deny the conversations but generically stated that when she disagreed with what Mr. Salga was saying, she stayed silent so as not to cause a fight or an argument. Obviously, the evidence provided by Ms. Baca is beneficial to the interest of her friend, Michelle Salga.

[63] Ms. Baca deposed to another occasion in the summer of 2014 when she was a guest on the patio at the Loretta Drive property. Mr. Salga again recited his intentions as to his estate. Also present were Ms. Marley, Suzanne Salga and Michelle Salga. None of them provides any corroborative evidence.

[64] I am not satisfied that there has been proof of threshold reliability sufficient that the evidence of Ms. Baca is properly admissible. She testifies as a friend of one of the applicants. She is not specific in her recollection as to time and there is no corroborative evidence that might otherwise have been expected from others present including either of the Salga applicants. Therefore, that proposed evidence will not be considered.

Conclusion as to severance of the joint tenancy:

[65] Ms. Marley has denied that Mr. Salga intended to treat the joint tenancy as a tenancy in common. In fact, however, she does not deny that he expressed his intention that his half interest in the Loretta Drive property would belong to his estate and ultimately to his daughters as residual beneficiaries. Rather, she deposes that he said such things to appease his daughters and she was advised to simply go along with what the daughters wanted so as not to engage in a fight.

[66] She does not deny the conversation that she and Mr. Salga had in the hospital that was recorded, nor does she deny the conversation described by Ms. Gedeon at the café in Toronto.

[67] On its face, the will is clear: there is an assumption by the testator that he owned a half interest in the Loretta Drive property that would become part of the residue of the estate. He made specific provisions for Ms. Marley to continue to live there for her lifetime.

[68] The hospital conversation which was recorded makes it clear Mr. Salga and Ms. Marley were in agreement as to how the property was to be handled on his death and Ms. Marley even appears to take credit for supporting the terms of the will in favour of the daughters. The submission that the conversation is incomplete or that it was a ruse to satisfy the daughters when in fact she and Mr. Salga intended otherwise is not a persuasive answer negating the apparent content of the conversation.

[69] The affidavit evidence of Mary Gedeon, while hearsay as to Mr. Salga’s comments, is admissible based on the principled approach for the reasons indicated. While as such, it is not as strong as the other more direct evidence, I consider it to be credible and supportive of the contents of the will and of the recorded hospital conversation.

[70] Based on that evidence, I am satisfied that there was a course of dealing on the part of Mr. Salga in which Ms. Marley shared sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. I come to that conclusion based on the totality of the evidence, including both the positive evidence offered by the Salga applicants and the equivocal denials made by Ms. Marley to which I have referred.

Should the Trustee be ordered to sell the Loretta Drive Property?

[71] The Salga applicants submit that the trustee should be ordered to list the Loretta Drive property for sale and disperse half the net sale proceeds of the sale to them. They submit he has the legal obligation to do so generally as trustee, and also pursuant to s. 9(1) of the Estates Administration Act, R.S.O. 1990, c. E.22. Section 9(1) provides that any real property not disposed of within three years after the death of the deceased vests in the beneficiaries under the will.

[72] In addition, the Salga applicants rely on s. 2 of the Partition Act, R.S.O. 1990, c. P.4, to the effect that a tenant in common can by application compel another tenant in common to sell jointly owned land.

[73] They argue that it is unfair to deny them their inheritance indefinitely. I disagree.

[74] Subparagraph 4(j) of the will of Leslie Salga, set out above, makes clear that Ms. Marley is entitled to a life interest subject to certain conditions. The decision about whether those conditions are breached thereby terminating the life interest is left entirely to the discretion of the trustee. Although there were some submissions made that, after the death of Mr. Salga, Ms. Marley did breach her obligation to make mortgage payments, it appears that the breach was corrected and, of greater importance, there was no decision made by the trustee to use his discretion to terminate the life interest.

[75] In his will, Mr. Salga explicitly delayed the distribution of the residue of the estate as to his portion of the Loretta Drive property. The Salga applicants have no right to demand receipt of their inheritance at any time prior to that contemplated under the will.

[76] Neither the terms of the Estates Administration Act nor the Partition Act apply to negate the provisions of the will. As residuary beneficiaries, the Salga applicants do not have the status to apply under the Partition Act since they do not have an interest in the land. They were not bequeathed a half interest in the Loretta Drive property. Their sole interest in the estate of Leslie Salga is in the listed personal property and in the residue. Only on the termination of the life interest will the estate be in a position to dispose of the real property and distribute those proceeds as part of the estate residue. Section 9(1) of the Estates Administration Act deals with the situation where an estate trustee is legally capable of conveying the property, but fails to do so. In that case, the property vests in the beneficiaries in any event by operation of law three years after the testator’s death. Here, the trustee cannot legally convey the Loretta Drive property until the life interest ends.

[77] Therefore, the claim by the Salga applicants that the trustee be ordered to sell the estate’s share of the Loretta Drive property and distribute the net proceeds is dismissed.

Should there be deductions from the Estate’s half interest on sale?

Registered encumbrances:

[78] It is uncontroversial to observe that, when the Loretta Drive property is ultimately sold, the estate will be responsible for half the debt outstanding as of the date of Mr. Salga’s death. This is consistent with the date of death inventory of estate assets prepared by the estate trustee where the estate’s interest in 28 Loretta Drive is shown to be “less half of the outstanding mortgage.” It appears that there was a secured RBC line of credit at the date of Mr. Salga’s death in the approximate amount of $73,000. Any other debt secured against the property at the date of death and interest thereon would also be payable by the estate to the extent it relates to the estate’s share of the property and by Ms. Marley as to her share of the property.

[79] The evidence of Ms. Marley was that, because of the litigation, it was not possible to have the existing line of credit renewed. Therefore, it was replaced with a private mortgage registered on or about November 27, 2018. The evidence is not clear as to whether the private mortgage related exclusively to an amount of debt outstanding on the date of Mr. Salga’s death and interest on that debt, or whether it included liabilities incurred since the date of death. It is within the purview of the trustee to determine, on behalf of the estate, the extent to which any debt registered against the property is the responsibility of the estate.

Unjust enrichment:

[80] The more controversial claim by Ms. Marley is that she should receive an interest greater than half upon the ultimate disposition of the Loretta Drive property based on unjust enrichment. Her theory is that because during the marriage she paid virtually all of the carrying costs of the property, while Mr. Salga spent his money on other matters, including gifts to his daughters, it is unfair that she should receive only a half interest.

[81] A claim for unjust enrichment arises when three elements are satisfied: (1) an enrichment, (2) a corresponding deprivation, and (3) the absence of a juristic reason for the enrichment.

[82] In this case, the first two elements are based on the alleged benefit received by Mr. Salga (and eventually, his estate) such that he was allowed to live in his home expense-free, thus preserving his assets for his own personal use while Ms. Marley was responsible for all the household expenses. Her finances were depleted accordingly.

[83] Because Mr. Salga is deceased, he is not present to respond to the allegations. They are denied by the Salga applicants. The details of Mr. Salga’s financial affairs, to the extent that those details exist, are presumably within the control of the trustee and were not disclosed in the proceedings as support for either position. The evidence was that Mr. Salga earned income outside the home, but the amount of that income was not disclosed. It is undisputed that, other than the personal effects distributed or to be distributed by the trustee, there were virtually no assets left in the estate apart from the Loretta Drive property. Ms. Marley did not work outside the home, and the source of funds used by her to pay household expenses was not identified.

[84] Assuming the truth of Ms. Marley’s allegations despite the proof problems to which I have referred, the bigger issue for her is to prove the absence of a juristic reason for the enrichment.

[85] Obviously, Ms. Marley and Mr. Salga were spouses. They cohabited and were not separated up to the date of his death. Marriage is assumed to be a partnership. Except in circumstances of unconscionability, courts anticipate an equal division of assets.

[86] One of the accepted juristic reasons to deny recovery based on a claim of unjust enrichment is the existence of a contract, that is, if the parties have agreed to the conferring and receiving of a benefit. In this case, Ms. Marley’s allegation is that the arrangement whereby she was responsible for the carrying costs of the home existed for many years. It was not a source of dispute. It was also not an issue raised by her in response to the expressed intention by Mr. Salga to provide a life interest to Ms. Marley in the Loretta Drive property and to divide the residue of his estate between his daughters.

[87] Ms. Marley submits that it is unfair for her to have paid a disproportionate share of household expenses over the years as compared with the contribution made by Mr. Salga if she is only to receive a half interest in the property as tenant in common. Implicit in that position is her expectation that her disproportionate contribution would have been justified if she had received the entire value of the property on Mr. Salga’s death as the surviving joint tenant. However, assuming that joint tenancy represented fairness, the entire value of the property would have devolved solely to Mr. Salga’s heirs if Ms. Marley had died first, despite her disproportionate contribution which by her approach would be much less fair than the effect of holding the property as tenants in common.

[88] Based on the lack of evidence of deprivation and enrichment to which I have referred, and the failure to prove the absence of a juristic reason for the enrichment, Ms. Marley’s claim to damages for unjust enrichment is dismissed.

Capital Improvements during the Life Interest:

[89] A related claim is that the estate should be responsible for half the cost of capital improvements made during Ms. Marley’s period of residence pursuant to the life interest. She argues that this is consistent with logic.

[90] As noted above, the will provides in clause 4(j) that Ms. Marley is to be responsible for “all taxes, insurance premiums, mortgage interest (if any), repairs and maintenance, and any other charges relating to the said residence.”

[91] In effect, Ms. Marley is asking that the terms of the will be rewritten to provide greater fairness.

[92] It is not the function of this court to determine whether the terms of the life interest set out in the will are fair. There is no juristic reason to change the terms. If Ms. Marley feels that her continued residence at the Loretta Drive property under the terms of the will is unfair to her, she can terminate the life interest.

Conclusion:

[93] Based on the foregoing, there will be an order as follows:

a. Declaring that the estate of Leslie Andrew Salga is entitled to an undivided one half interest in the real property municipally described as 28 Loretta Drive, Virgil Ontario as tenant in common with Karen Marley.

b. The balance of the Salga application is dismissed.

c. The Marley application is dismissed.

Costs:

[94] I encourage the parties to resolve the issue of costs consensually. In the event that they are not able to do so, I am prepared to receive written submissions according to the following timetable:

a. The Salga applicants are to serve Ms. Marley and Mr. Klassen with written costs submissions and a bill of costs consisting of no more than five pages on or before June 21, 2019.

b. Ms. Marley and Mr. Klassen are to serve the Salga applicants with written costs submissions each consisting of no more than five pages and a bill of costs on or before July 5, 2019.

c. The Salga applicants are to serve Ms. Marley and Mr. Klassen with any responding submissions on or before July 19, 2019.

d. All submissions are to be filed with the court no later than July 22, 2019. If submissions are not received by that date, or any agreed extension, the matter of costs will be deemed settled.

Reid J.

Released: June 6, 2019

[1] leaving aside other means of severance including that which occurs on bankruptcy or by judicial sale.