COURT FILE NO.: CV-15-534600
DATE: 20190103
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SYLVIA AMABELLE NANTON
Rita Chrovalicius, for Ms Nanton
Plaintiff
- and -
DONNA NICOLE JULIEN, FRANCIS
Morris Cooper, for the Defendants
DAVE JULIEN and 1637166 ONTARIO
LIMITED
Defendants
DECISION
D.L. Corbett J.:
[1] The parties are involved in a family dispute about financial dealings going back many years. Ms Nanton is Ms Julien’s mother and Mr Julien’s mother-in-law. The corporate defendant is the Juliens’ company.[^1] Ms Nanton says that her daughter and son-in-law have used her money and she wants it back.
[2] The Juliens say that they owe Ms Nanton nothing. They acknowledge that Ms Nanton is elderly and, now, vulnerable, but they say that her claims lack substance and are a product, at best, of revisionist history:
As a consequence of poor financial decisions over the years, [Ms Nanton] never accumulated the wealth that she now wrongly claims has been taken from her. Further, the Canada Revenue Agency discovered a scheme by [Ms Nanton] to defraud the Government of Canada by falsely claiming Canadian residency, which resulted in the cancellation of the Plaintiff’s Canada Pension and Old Age Security benefit payments and claims against her of more than $90,000. This litigation came about after CRA’s findings. In an effort to secure alternative sources of money, [Ms Nanton] is revisiting events from many years ago even though she had arranged them with her own independent legal advice, and agreed to them at the time. [Ms Nanton has selectively recalled events from twenty to thirty years ago and ignored all of the evidence she finds inconvenient.[^2]
[3] There is another way to put these points, from Ms Nanton’s perspective. She entrusted her daughter and son-in-law with her financial affairs many years ago, and she was content not to inquire into them so long as she had enough to live on. When she encountered difficulties with CRA, she found she did not enough to live on and had to take action to secure her position. On closer examination, she believes that she should have much more than she does, and she is looking to her daughter and son-in-law to put matters right. Although her recollection may be imperfect on details, she knows that she had substantial resources, entrusted their management to the defendants, and now finds that they tell her that she has virtually nothing. And while it is true that Ms Nanton sought and received government benefits to which she was not entitled, she says that her daughter and son-in-law were privy to these arrangements and facilitated them by filing her Canadian tax returns for her.
[4] In this motion Ms Nanton seeks a certificate of pending litigation (“CPL”) against the Juliens’ family home, various relief associated with a condominium in Ottawa purchased by the defendant corporation as an investment, and an order that the defendants answer undertakings and objections. However, the Ottawa condominium was sold in August 2017 to an arm’s length purchaser, obviating the relief sought by Ms Nanton respecting that property: that aspect of this motion was not pursued. Therefore this decision addresses only the CPL sought against the Julien family home and the objections made during discovery of the defendants.
Disposition
[5] I am not satisfied that there is a proper basis to issue a CPL against the Julien residence. Ms Nanton’s unproven allegations could support such a claim, but where there is documentary evidence available to test those allegations, it generally favours the defendants’ account of events. Ms Nanton has mis-remembered some events to which she testifies in her affidavits, and she has a history of deceit in respect to false benefits claims she made from the Government of Canada when she was not resident in Trinidad and not in Canada.[^3] This does not mean that Ms Nanton has no claim here – the documentary evidence produced by the Juliens has significant gaps in it – however I am not satisfied, on the record before me, that the evidence establishes a prima facie case that Ms Nanton’s money went into the Juliens’ house.
[6] On a careful review of the record, this does not present as a case where trusted children have taken an elderly parent’s money for their own personal use. Rather, Ms Nanton, now elderly and perhaps infirm, was once a shrewd and capable person, experienced with lawyers and real estate investments, who was able to care capably for her own interests. The genesis of her claims goes back two decades, and it seems doubtful to me that she was wronged by her daughter and son-in-law, as she describes, so long ago, and then did nothing about it until 2014.
[7] As is common enough in families that once trusted each other, some of their dealings are not well documented. Where documents do exist and have been presented, they favour the Juliens’ account of events. But the Juliens may well have to account to Ms Nanton in respect to some of the events that have taken place: having had Ms Nanton’s trust placed in them, it is for them to show what happened. But this seems, in this case, to be a matter of adjusting accounts, not of conversion or resulting trust. I am satisfied that Ms Nanton’s proper remedy is in damages, and I am not satisfied, on the record before me, that she can trace her money into the Juliens’ residence. For the reasons that follow, the motion for a CPL against the Julien family home is dismissed.
[8] The motion for refusals was not argued properly because there was insufficient time: as I indicated to counsel, such a motion, to be brought before the Master, usually takes 10-15 minutes per refusal (subject to some economies of scale if contested questions can be “grouped”). I was invited by counsel to address these issues on the basis of the information in the chart provided by the moving parties. I have concluded that the chart is sufficient for me to provide guidance to the parties – to the extent that they are unable to resolve contested questions on the basis of this guidance, they will have to return before me to argue the issues.[^4] They may seek an early date to do this during one of my non-sit weeks this winter – either side may contact my assistant to make the arrangements.
[9] Finally, the Juliens ask that this matter now go to trial with dispatch. That is a reasonable request. Either counsel may schedule a case management conference before me with a view to establishing a schedule to get the case to trial as soon as reasonably practicable.
Background
Ms Nanton’s Allegations
(a) The Greenview Property
[10] Ms Nanton claims to have provided all the money for the purchase of a condominium located at 325-25 Greenview Avenue, Toronto (the “Greenview Property”), which was purchased in 2009 for about $300,000. Ms Nanton alleges that the funds were provided by her to her daughter by way of bank drafts and money orders, together with proceeds of sale on February 28, 2014 of a condominium Ms Nanton owned in Trinidad. She claims to have been the sole beneficial owner of the Greenview Property.
[11] Ms Nanton alleges that her daughter took out a $320,000 line of credit against the Greenview Property in July 2010 and then used money derived from the line of credit for her own benefit to buy the Julien family home.
(b) The Tefley Property
[12] Ms Nanton alleges that the Juliens bought their family home, a property at 37 Tefley Road, on September 30, 2010, for $568,000. She also alleges that her daughter drew down the line of credit against the Greenview Property by $205,000 on September 29, 2010, and used that money to pay for the Tefley Road property.
[13] Ms Nanton alleges that the line of credit “was initially paid off” on February 10, 2014, “after the Defendants received a vendor take back mortgage payout for the sale of the Dewitt Property (described below) in the amount of $886,209.41.” She says that this does not discharge her claim arising from use of the line of credit to buy the Tefley Property because the vendor take-back mortgage payment belonged to her anyway: the Juliens cannot repay their use of the line of credit against the condominium by using Ms Nanton’s money to make the repayment.[^5]
(c) The DeWitt Property
[14] Ms Nanton alleges that she was the sole owner of a commercial property on DeWitt Road in Vaughan. She alleges that this property was transferred in 2004 to the defendant corporation for no consideration and without independent legal advice. Ms Nanton claims that she had beneficial ownership “of a substantial part” of the DeWitt Property at the time of the transfer.
[15] The DeWitt Property was sold in 2010 for $1,075,000, with a vendor take-back mortgage of $1,030,000. Ms Nanton says that she did receive some payments on account of the DeWitt Property, between June 2, 1996 and January 7, 1997, but says that she received no further payments thereafter.[^6]
The Defendants’ Allegations
(a) The Greenview Condominium
[16] In 2009, Ms Nanton was living in a condominium in Trinidad. She decided to return to Canada. She asked her daughter to find a condominium for her and told her to use the proceeds of sale from the Trinidad Condominium to pay for the condominium. Ms Julien located the Greenview Condominium, and paid a deposit of $20,000 for its purchase. At the time of closing of this purchase, Ms Nanton’s Trinidad condominium had still not been sold. Ms Nanton contributed $41,500 towards the purchase price. The Juliens contributed $156,312.15. The balance of $120,000 was paid by obtaining a mortgage. After this sale closed, Ms Nanton advised her daughter that there was a cloud on title to the Trinidad Condominium and that it could not be sold. Ms Nanton left it to the Juliens to rectify title and sell the Trinidad property, and she gave a power of attorney to Mr Julien so that he could attend to this issue. The power of attorney was provided after Ms Nanton had the benefit of legal advice in Trinidad. It took roughly three years to sort out the problems with the Trinidad Condominium and then to sell it.[^7] The net proceeds of sale of the Trinidad Condominium were CDN $99,237.80, and these proceeds were applied against the mortgage debt on the Greenview Property. Thus Ms Nanton contributed slightly less than $140,000 to the Greenview Condominium, and the Juliens contributed slightly more than $156,000 – leaving Ms Nanton as owner of about 44% of the condominium. The Juliens note that there is no correlation among the bank records showing Ms Nanton’s money being transferred to them, aside from the $41,500 Ms Nanton contributed to the purchase price for the Greenview Condominium. Thus they deny that Ms Nanton contributed any funds to the Greenview condominium by way of bank drafts or money orders. A review of the banking records that have been produced does not appear to disclose the sorts of transfers that Ms Nanton alleges took place and there does not appear to be any other dpcumentary evidence in the record to support her assertions about having made additional payments.
(b) The Tefley Property
[17] In 1988, Ms Nanton purchased the DeWitt Property for $645,000. Ms Nanton placed three mortgages on the property and had virtually no equity in it at the time of purchase. Annual income from the property was about $65,000, but annual expenses were about $79,000. Ms Nanton had claimed there was but one mortgage on the property when it was acquired. Mr Julien stated in his responding affidavit that there had been three mortgages. Ms Nanton responded that Mr Julien was wrong. Mr Julien then responded further, attaching a copy of a lawyer’s reporting letter showing that there had been three mortgages and almost no equity in the property. Ms Nanton responded further that her mistake was because the mortgages did not show on a title search because the events took place before conversion the land titles system in 1995, and the second and third mortgages had been discharged by that time.
[18] In 1994, the Juliens loaned Ms Nanton almost $206,000 to reduce mortgage debt and to pay for lawyers on account of litigation respecting the property. It is not clear to me whether this loan is documented in the record before me.
[19] In 1996, when Ms Nanton decided to move to Trinidad, she asked the Juliens for money to facilitate her move. The Juliens agreed provide $125,000 in exchange for a 25% interest in the DeWitt property (this transaction is apparently not now challenged by Ms Nanton[^8]). This was done, the Juliens say, and they financed this transaction with a $100,000 mortgage against their family home (the Tefley Property).
[20] Once Ms Nanton moved to Trinidad, the Juliens took over management of the DeWitt Property. They say it had declined in value as a result of its being neglected by Ms Nanton, and that they expanded and renovated the property, at a cost to them of just less than $504,000, which they paid themselves.[^9] These expenses are particularized “to the penny” (as Mr Morris put it in argument), but back-up documentation has not been provided for these expenses.
[21] In 2004, Ms Nanton transferred the DeWitt property to the defendant corporation, a company she herself caused to be incorporated. The intention was to place the beneficial ownership in the hands of Ms Nanton’s grandchildren, with Ms Nanton retaining a 5% ownership interest. This reflected the financial contributions the Juliens had made to the property and Ms Nanton’s desire to provide for her grandchildren. This transaction was arranged by Ms Nanton through her own lawyer, Samuel Osak, from whom she received independent legal advice about the transaction.[^10]
[22] Following the 2008 financial downturn, the DeWitt Property experienced high vacancy rates and could not meet its expenses. The Juliens injected their own funds to address this problem, and then obtained a line a credit for the company secured by a collateral mortgage against the Greenview property. The DeWitt property was sold in 2010, and when the vendor take-back mortgage for the property was paid off in 2014, some of the proceeds were used to pay off the line of credit against the Greenview Property.
[23] The Tefley Property was purchased for $578,000 in September 2010. The Juliens say that they paid for the property with proceeds from the sale of their previous home ($453,000), with the balance coming from their own resources. It may be that some of this balance came from the money from the line of credit against Greenview – that is not clear to me on the record before me – but the difference is $125,000, not the full $205,000 drawn down from the line of credit, and in any event this money was subsequently repaid.
Summary
[24] To be clear, my summary findings are based on the limited materials before me, without the benefit of having heard the witnesses myself. These findings do not bind the trial judge, who will be immersed in the case and will have the benefit of being able to make credibility findings on the basis of a complete record.
[25] It appears to me that the only two issues here concern payment for the Greenview Condominium, and Ms Nanton’s claim to an interest in the DeWitt Property. The proceeds of sale of the Greenview Condominium are already subject to a protective order made by this court. The claim to an interest in the DeWitt Property is based on events that took place in the 1990’s and the early 2000’s. The documents that exist seem to favour the Julien’s account of what happened, and Ms Nanton’s recollections of events have been contradicted by documents – regarding the original three mortgages – and by her conduct in transferring the property to the defendant corporation and then apparently taking no further interest in DeWitt until after its sale. As Mr Cooper pointed out in his argument, Ms Nanton’s conduct is hard to square with her claims: she made no inquiries and received no proceeds from a property she alleged was a valuable income-generating piece of commercial real estate after she transferred it, for more than a decade, and then still did not assert any claim until long after it had been sold.
General Legal Principles
[26] “… [W]here property is acquired with one person’s money and the title is put in the name of another, there is a presumption of resulting trust.”[^11] This presumption applies between unrelated persons, and between spouses[^12] or between parents and adult children.[^13] This presumption applies not only to purchase or transfer of property, but also to post-purchase reduction of liabilities associated with the purchase or transfer of the property, such as paying down mortgages or lines of credit.[^14]
Application of the Principles
[27] On the facts, as she alleges them to be, Ms Nanton contributed $205,000 towards the purchase of the Tefley Property, being money drawn down from the line of credit secured against the Greenview Property, which she owned entirely. This contribution was not repaid when the line of credit was paid down, because it was paid down with Ms Nanton’s own money – the payment of the vendor take-back mortgage for the DeWitt Property – which was hers already. The facts as alleged by Ms Nanton are consistent with a resulting trust interest in the Tefley Property.
[28] On the facts alleged by the Juliens, the line of credit against Greenview was used to finance expenses related to DeWitt, and was paid off when the take-back mortgage from the DeWitt sale was paid off. The DeWitt Property had already been transferred to the numbered company – for consideration, with the benefit of independent legal advice, and on Ms Nanton’s instructions.
Certificates of Pending Litigation
[29] Ms Nanton seeks the certificate of pending litigation on the basis that she has a beneficial interest in the Tefley Property. The defendants resist the CPL because, they allege, Ms Nanton does not have any reasonable claim to an interest in the property, has not prosecuted the proceeding with reasonable diligence, the land is not unique, and damages are ascertainable and an adequate remedy. They argue that the claim for a CPL is really a request for a Mareva injunction pretending to be a motion for a CPL, a form of seizure before judgment.
[30] A certificate of pending litigation should not be issued where the claimant claims a sum of money in place of or as an alternative to the interest in the land claimed, the claimant does not have a reasonable claim to the interest in the land claimed, the claimant does not prosecute the claim with reasonable diligence, where the interests of the party can be protected adequately by another form of security, or on any other ground that is considered just.[^15]
[31] If this was a clear case of misappropriation, I would be inclined to grant the CPL, notwithstanding some of the factors that tend towards a decision to the contrary.[^16] However, given the debatable aspects of Ms Nanton’s claims, on the merits, the lengthy delay in her commencing a claim for a CPL (the impugned transactions took place back in the 1990’s and the early 2000’s, and she did not assert the CPL against Tefley until this motion in 2017), her claim for damages as an alternative remedy, and the security she already has in the net proceeds of sale from the Greenview Property, I consider that she is adequately protected and that the additional security of a CPL against the Juliens’ residence is not warranted.
Undertakings and Objections
[32] There was insufficient time to hear oral argument on the undertakings and objections. The parties will have to return before me, as soon as practicable, to argue these issues, if they cannot be resolved. However, I have reviewed the list of questions and can make the following observations that may be of use to the parties in resolving these issues, or narrowing areas of disagreement:
(a) Many of the requested documents date back many years. If the documents do not exist anymore, then of course the defendants will not be able to produce them. All of the questions should be understood as qualified to be requests on a reasonable best efforts basis.
(b) The defendants object to a number of requests for documents on the basis of the Limitations Act. Limitations apply to bar claims, not requests for documentary production. So long as the claim is properly pleaded and has not been dismissed by reason of a limitations defence, the parties are obliged to produce relevant documents, even if those documents date back to a time beyond the limitations period.
(c) A number of objections are based on Ms Nanton’s position as a minority shareholder in the numbered company. That does not appear to me to be a valid basis for an objection: the documents are sought as part of Ms Nanton’s efforts to trace money that flowed through the corporation, not on the basis of a claim she asserts as a minority shareholder. Further, whatever ability Ms Nanton may have, in law, to obtain information from management, is beside the point.
(d) Some of the requests seek records “to the present”. Those requests are over-broad. The DeWitt property was sold in 2010, and there would have been no day-to-day records pertinent to the claim after that date, saving only records that show the disposition of the proceeds received on payment of the vendor take-back mortgage in 2014, and documents related to the Greenview Condominium.
I appreciate that some of the requests might be thought burdensome. Nonetheless, family financial affairs have been intertwined to a significant extent, and disclosure is a necessary step in sorting them out. The defendants say that they have a strong desire to move to trial quickly – they should understand that taking a practical and accommodating approach to outstanding disclosure issues can only serve to facilitate achieving their goal.
Conclusion
[33] The motion as regards relief relating to the Ottawa Property is dismissed as abandoned. The motion for the CPL against the Tefley Property is dismissed. The motion for undertakings and objections is adjourned to be addressed in accordance with this decision.
[34] It also follows that the interim order I made on January 18, 2018 is set aside effectively on the date of release of this decision.
[35] I will decide costs after the undertakings and objections have been decided.
D.L. Corbett J.
Released: January 3, 2019
COURT FILE NO.: CV-15-534600
DATE: 20190103
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sylvia Amabelle Nanton Plaintiff
- and -
Donna Nicole Julien, Francis Dave Julien and 1637166 Ontario Limited Defendants
DECISION
D.L. Corbett J.
[^1]: Ms Nanton apparently has a small interest in the company. [^2]: Defendants’ Factum, para. 5. [^3]: As Ms Chrovalicius acknowledged candidly during reply argument, there is no issue that Ms Nanton did this; it is alleged by Ms Nanton that her daughter, who filed to returns on her behalf, was “in on it”. [^4]: I would ordinarily direct this aspect of the motion to the Master, but given the complicated factual background, with which I am now familiar, the very real interest in getting this case to trial promptly, I will hear the objections motion myself” this is simply the most expeditious, efficient way in which to proceed at this point. [^5]: The line of credit was subsequently drawn down by Ms Julien by $297,000, and then paid off, all in 2014. [^6]: I do not understand Ms Nanton to have offered an explanation as to why she did nothing if she was expecting payments after 1997 until she advanced the claims that are the subject-matter of this litigation, starting with lawyer’s letters in 2014. [^7]: Ms Nanton had failed to pay common expenses for the condominium for 12 years and the claim of the condominium company for common expenses had to be resolved before the property could be sold. [^8]: The original allegations were that Ms Nanton was the sole beneficial owner of DeWitt; by the time of this motion Ms Nanton conceded the transfer of 25% to the Juliens in 1996. [^9]: Ms Nanton says that there is no documentary evidence to support this allegation. [^10]: I am advised that Mr Osak is now deceased and that his files cannot be located, and no party has produced a copy of his reporting letter for the transaction. [^11]: Andrade v. Andrade, 2016 ONCA 368, para. 59, per van Rensburg J.A. [^12]: Family Law Act, RSO 1990, c. F.3, s.14. [^13]: Pecore v. Pecore, 2007 SCC 17, [2007] 1 SCR 795. [^14]: Chechui, v. Nieman, 20177 ONCA 669, paras. 57, 61 and 66. [^15]: Courts of Justice Act, RRO 1990, c.C.43, Rule 103; Wilanmar Holdings v. Meredith, 2008 63166, per Master Sproat; MTL-Can Investments v. Mickousky and James, 2011 ONSC 6233, per Master Sproat. [^16]: See, for example, Roseglen Village for Seniors v. Doble, ONSC 4680, para. 8 (affirming 2010 ONSC 3239, per Master Muir), where it is held that a CPL may be made to support a tracing claim.