Court File and Parties

COURT FILE NO.: CV-17-4660-00 DATE: 2019 07 02 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: ATMA SINGH DHILLON Applicant – and – PARAMJIT KAUR BRAR Respondent

Counsel: Shaun R. Singh, for the Applicant Obaidul Hoque, for the Respondent

HEARD: May 15, 2019

REASONS FOR JUDGMENT

Shaw J.

Overview

[1] The applicant and respondent are registered legal owners of a condominium in Mississauga. They hold title as tenants in common, each with a 50 percent interest in the property. The applicant commenced this application in October 2017, seeking a declaration that the respondent holds her 50 percent interest in the property in trust for him as a result of a constructive and/or resulting trust. He also seeks an order vesting in himself 100 percent beneficial ownership in the property and an order that such interest be recorded in the land titles registry for the property. While a declaration was sought that the respondent breached her duties as a trustee, there was no evidence led to support this claim.

[2] The respondent has filed a counter-application seeking an order for the listing and sale of the property pursuant to the Partition Act, R.S.O. 1990, c. P.4. She also sought a declaration that the property is subject to a resulting and/or constructive trust in her favour and a declaration that the applicant has breached his duties as a trustee. There was no evidence led to support the respondent’s claim that the applicant breached his duties as a trustee.

Litigation Background

[3] The matter was first before the court on August 15, 2018. On that day, it was adjourned to May 15, 2019, as a long motion. In his endorsement, Coroza J. set out a timetable for the litigation, including dates by which cross-examinations on affidavits, satisfaction of undertakings and service of factums were to be completed. Despite that order, when the matter was before the court nine months later on May 15, 2019, cross-examinations had not been conducted and the applicant requested an adjournment to conduct cross-examination on the respondent’s sworn affidavit. Counsel for the respondent indicated that he was prepared to proceed with the hearing without conducting cross-examinations. For oral reasons delivered on that day, I declined the applicant’s request for a further adjournment and the hearing proceeded.

Review of the Evidence

[4] The property in dispute is known municipally as 3455 Morning Star Drive Mississauga, Ontario, condominium unit number 208 (the “property”).

[5] The applicant did not file an affidavit in support of the application. Rather, his son, Pavitter Dhillon, swore an affidavit dated November 2, 2017. His evidence can be summarized as follows:

• The respondent is a family friend from the same village in Punjab, India;
• On September 9, 2014, he and his father, the applicant, purchased the property for $185,000;
• He and the applicant were told by a mortgage broker not to put the property in their names, since they were new to Canada and did not have good credit, they would not be approved for a mortgage;
• They sought the respondent’s assistance to put her name on title so that they could secure mortgage financing;
• According to the agreement of purchase and sale dated September 3, 2014, the purchasers were the applicant and respondent;
• The mortgage was obtained from CIBC Mortgages Inc. (“CIBC”) and named the applicant and respondent as mortgagors;
• The principle amount borrowed was $148,000, to be repaid on a monthly basis;
• Pavitter and the applicant paid the down payment, legal fees and land transfer tax for the purchase of the property;
• All payments for the carrying costs, including the mortgage, were paid by the applicant and Pavitter;
• Pavitter, the applicant and the applicant’s parents have lived in the property since it was purchased;
• The respondent has never lived in the property; and
• The applicant and Pavitter have recently been approved by TD Canada Trust for a mortgage and would like the property transferred back into their names.

[6] The respondent filed an affidavit in support of her counter-application seeking the sale of the property and in response to the application. She does not dispute that the applicant and his family have lived in the property since it was purchased or that he has paid the carrying costs, including the mortgage. The main issue in dispute is the acquisition cost for the property when it was purchased in 2014. Her evidence can be summarized as follows:

• In 2014, the applicant and his family had been living in basement apartments for over three years and were of modest means but wanted to purchase a property;
• At the time, the respondent also wanted to invest in a property;
• In May 2014, the applicant and the respondent’s family began discussing the possibility of purchasing a property that could be used as a residence for the applicant and his family as well as a rental property to generate rental income;
• The intention of the parties was that the property would eventually be sold when the value of the property increased, and the sale proceeds would be divided equally between the applicant and the respondent;
• The applicant could use his share of the sale proceeds to purchase another home;
• The applicant and the respondent agreed orally that the respondent and her husband would pay the down payment, land transfer tax and closing costs to purchase the property and the applicant and his family would live in the property and pay the carrying costs, including the monthly mortgage payment;
• In or around September 2014, the applicant and the respondent decided to make an offer on the property, and an agreement for purchase and sale was entered into on September 3, 2014, naming the applicant and the respondent as purchasers;
• The applicant and the respondent applied for a mortgage from CIBC, and the mortgage application was approved, naming the applicant and the respondent as the mortgagors;
• The applicant paid a $5,000 deposit to purchase the property, and on closing, the respondent paid the remainder of the down payment, land transfer tax and other closing costs, which totalled $36,160;
• The $36,160 was paid from the respondent’s line of credit; and
• Pavitter was not a party to the transaction, nor did he make any contribution towards the purchase price or other closing costs.

[7] In her affidavit, the applicant claimed that there was also an oral agreement that part of the condominium, was to be rented, with the rental income divided equally between herself and the applicant. Her evidence was that she believes that the applicant has been receiving rental income since September 2014. She has received $4,000 from the applicant as her share of the rental income by way of two lump sum payments in 2016, but she believes more is owing to her. While she claims an accounting and payment of 50 percent of the total rental income the applicant has received, this relief was not requested in her counter‑application. The issue is therefore not before the court for adjudication.

[8] In addition to the affidavit evidence, a copy of the real estate file from Anant Jane Law Professional Corporation was filed as evidence. There is no reference to any trust agreement in the file. Throughout the file it indicates that the property is being purchased by the applicant and the respondent who both applied and qualified for mortgage financing through CIBC.

Position of the Parties

[9] The applicant’s position is that the respondent’s 50 percent interest in the property is held in trust for him, as he paid the entire purchase price and the respondent’s name was only placed on title for financing purposes.

[10] The respondent’s position is that the parties entered into an agreement to own the property as tenants in common and that she paid the bulk of the down payment for the property. She did not obtain title to the property gratuitously.

Analysis

Resulting Trust Claim

[11] There is no written trust agreement between the parties, but a trust does not necessarily require an agreement in writing. A resulting trust exists when a party purchases property and puts it in the name of another, but that second person holds the legal title in trust for the benefit of the person who paid to acquire the property. Thus, if the person who does not hold legal title requests that title be returned, they do so based on the principle that the beneficial interest in the property “results” back to the true owner: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 20; and Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 12. A resulting trust may also exist where title is held jointly between two persons, but one person holds that title in trust for the other; Chechui v. Nieman, 2017 ONCA 699, 136 O.R. (3d) 795.

[12] There is a presumption of resulting trust where title to property is gratuitously transferred from one person to another without consideration, or where a person supplies the entire purchase price for the property but title is taken in another person’s name. That presumption may be rebutted if the transferee shows that the transfer was intended to be a gift: Pecore, at para. 24; and Kerr, at paras. 17-18.

[13] In this case, the applicant’s evidence is that he paid to acquire the property and that title was put in the respondent’s name only for financing purposes. The respondent’s evidence is that she paid for the bulk of the acquisition costs. On this issue, there is a dispute in the evidence.

[14] The applicant did not file any affidavit evidence to support his claim. The only evidence was provided by his son. There was no affidavit filed in reply to the respondent’s affidavit, despite having been served on November 30, 2017.

[15] The affidavit sworn by the applicant’s son Pavittar is vague and sparse in support of the applicant’s position. There is a bald statement that they paid to acquire the property without any supporting evidence. Conversely, in support of her claim that she paid $36,130 to acquire the property, the respondent filed as evidence a copy of the bank draft made payable to the real estate lawyer that handled the transaction. In addition, in the trust ledger statement from the lawyer, there is an entry for the amount of $36,160 having been received from the applicant and the respondent. In a response to a request to admit served on the applicant, the applicant admitted the authenticity of the bank draft. As there was no reply affidavit, I accept the respondent’s evidence, as supported by the bank draft, that she paid $36,160 towards the purchase of the property. I find this documentary evidence to be more reliable than Pavittar’s bald assertion that he and the applicant paid the acquisition costs for the property.

[16] Based on this finding, this is not a situation where the purchase price was provided by one party and title put in the name of the other. The evidence, that I accept, is that the respondent contributed to the acquisition cost of the property, and title was put in both the applicant’s and the respondent’s names as a result of that contribution. There is therefore no evidence that the respondent received title to 50 percent of the property gratuitously, and thus no presumption of resulting trust arises.

[17] There is no dispute that the applicant and his family have lived in the property and have paid all carrying costs for the property. That evidence does not assist in determining if there was a resulting trust, as the doctrine of resulting trust involves a consideration of the circumstances when the property was purchased.

[18] There was no evidence led by either party that the $36,160 the respondent paid was a loan to the applicant. Had this been a loan that had been repaid by the applicant, there would be a finding that the respondent made no financial contribution to the purchase of the property, and a presumption of resulting trust would be made out when the applicant directed that the respondent have a 50 percent legal ownership in the property.

[19] The applicant’s undisputed evidence is that part of the property was to be rented out, and the rental income was to be shared between the parties. While I have found that the respondent cannot advance any relief regarding the rental income, as it was not claimed in the counter-application, she did file as evidence two cheques made payable to her. The first was in the amount of $3,000, dated May 28, 2016, and the second is in the amount of $1,000, dated June 10, 2016. The respondent’s undisputed evidence is that these cheques were received from the applicant and were her share of the rental income. Had the respondent been holding her 50 percent interest in the property in trust for the applicant, it does not make sense that she would then receive part of the rental income from the applicant for the property. Given the applicant’s claim, there is no reason for him to have made lump payments to the respondent for her share of the rental income. These payments are inconsistent with the applicant’s claim that the intention of the parties was that the respondent’s name was put on title solely for financing purposes.

[20] Based on all the evidence, the respondent did not receive a gratuitous conveyance of property. Rather, the evidence is that she contributed to the bulk of the purchase price.

[21] I therefore find that the respondent does not hold her 50 percent interest in the property in trust for the applicant, and I reject the applicant’s claim that he is the sole beneficial owner.

Constructive Trust Claim

[22] The applicant has also advanced a constructive trust claim. While the doctrine of resulting trust focuses on the acquisition of the property and the time when title is taken to property, the doctrine of constructive trust considers the history of the parties. A constructive trust is a remedy usually based on unjust enrichment and provides a right in property: 306440 Ontario Ltd v. 782127 Ontario Ltd., 2014 ONCA 548, 384 D.L.R. (4th) 278 at paras.23-26. There are three elements to a constructive trust claim: (1) an enrichment by one party, (2) a corresponding deprivation of the other party, and (3) the absence of a juristic reason for the enrichment: Kerr, at paras. 30-31.

[23] In this case, the only evidence led by the applicant to support a claim for unjust enrichment is that he has paid all the carrying costs for the property since he lived in it. There was no evidence led of any renovation work done which may have increased the value of the property.

[24] I do not find that the applicant’s payment of the carrying costs for the property is sufficient to establish unjust enrichment. While he paid the carrying costs, he did not suffer a deprivation, as he and his family have had the benefit of living in the property. There was also a juristic reason for the payment of the carrying costs, as he was paying the expenses incurred as a result of his and his family’s occupation of the property.

[25] The respondent had also claimed that the applicant was holding his 50 percent interest in trust for her. Her evidence, however, does not support such a claim, as her submission was that at the time the property was purchased, the intention of the parties was to each own 50 percent of the property and to divide the proceeds equally upon the sale of the property. She led no evidence to support her claim for either a resulting or constructive trust claim.

Sale of the Property

[26] In light of my finding that both the applicant and the respondent are 50 percent owners of the property, I grant the respondent’s relief to list and sell the property pursuant to s. 2 of the Partition Act. The applicant made no submissions regarding the respondent’s request for a sale.

[27] The law of partition and sale has evolved as a prima facie right of a tenant in common, with an obligation on the joint tenant in common, to permit the partition or sale: Hardy v. Lee, 2019 ONSC 640, at para. 20.

[28] In this case, there is no evidence that the respondent is acting with malice, oppression or vexatious intent with respect to the sale. Rather, as an investor, the respondent’s intention to sell the property with the net proceeds to be divided equally between herself and the applicant is reasonable.

Conclusion

[29] The applicant’s application is denied. The respondent’s counter-application for sale of the property only is granted. It should be forthwith listed for sale and the net proceeds divided equally between the applicant and respondent.

[30] The respondent had also sought relief in her affidavit for payment of interest she had incurred on the line of credit. That relief was not requested in the counter-application and is therefore not granted.

[31] The respondent is entitled to her costs. If the parties cannot agree on quantum, they may file a bill of costs, costs outline and one page submissions by July 15, 2019, together with copies of any relevant offers to settle.

L. Shaw J.

Released: July 2, 2019