COURT FILE NO.: FS-14-19580
DATE: 20201007
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WEN-CHI TSAI
Applicant
– and –
LUCIEN DUGAL by his Estate Trustees JOHANNE DUGAL ROUSSEE and LUC DUGAL
Respondents
Michael Deverett, for the Applicant
Alexandra Carr, for the Respondents
HEARD: October 28, 29, 30 and November 1, 2019
Stewart, J.
[1] The Applicant Wen-Chi Tsai (“Tsai”) seeks an order for payment to her by the Respondents, the Estate Trustees of Lucien Dugal (“Dugal Estate”) in the sum of $813,000.00, plus interest and costs, in satisfaction of her claims against Lucien Dugal (“Dugal”). Tsai submits that amount represents her entitlement to a share of the proceeds of sale of certain real property owned by Dugal at the time of his death in November, 2017. She asserts a claim to payment in that amount based upon either a constructive trust against the property and/or unjust enrichment.
[2] The Dugal Estate characterizes Tsai’s claims as being without merit. The Dugal Estate therefore asks that her claims in the proceeding be dismissed and that the Trustees of the Estate be at liberty to distribute its assets to the beneficiaries.
[3] By order of Akbarali, J. dated July 12, 2019, the trial of this proceeding commenced on October 28, 2019.
[4] On consent, the evidence-in-chief at trial was predominantly tendered by way of affidavit evidence from Tsai, and from Johanne Dugal Rousse on behalf of the Estate, supplemented by cross-examination.
[5] Oral evidence of friends and neighbours – Ivy Yang, Jean Chen and Roza Ildatova – was called by was called by Tsai to describe her relationship with Dugal. Those individual witnesses called by Tsai were able to describe Tsai’s generosity in paying for some social encounters, gatherings and restaurant meals, but could not offer any substantial detailed knowledge of the parties’ private financial arrangements.
[6] Tsai also called viva voce evidence from a real estate appraiser, James Parthenis, to provide opinion evidence as to the value of 123 Morse Street, Toronto (“123 Morse”) at various points in time to the extent these may be relevant to a determination of the value of her claim for an interest in the property.
[7] Additional evidence was heard from Tsai at trial relating to her claim that Dugal had agreed to sign a will containing an irrevocable provision that would leave his entire estate to her upon death and that he had breached that agreement. As a result of this breach, Tsai maintained that she was entitled to receive the entire assets of the Dugal Estate on the basis of a resulting trust in her favour.
[8] Oscar Wong, the solicitor who had acted on some real estate transactions for the parties and had prepared wills for Dugal and Tsai in 2011 was called on behalf of the Estate and testified that he was never instructed by the parties to use language to employ provisions or language to make the wills irrevocable. In fact, he had advised Dugal when asked that he could change his will whenever he chose to do so.
[9] Indeed, after Dugal and Tsai separated Dugal changed his will to leave his estate to his adult children. As the evidence also revealed, after the separation Tsai changed her will to leave all of her property and assets to her adult son, Kirk.
[10] Following the completion of the evidence at the hearing, Tsai’s counsel indicated that Tsai’s claim for a trust against the assets of the Estate, insofar as it had been advanced on the basis that Dugal had breached their alleged agreement to draw up irrevocable wills, was being withdrawn.
[11] As a result, the only issue remaining for consideration and determination relates to the claim advanced by Tsai that she is entitled to an interest in the proceeds of sale of 123 Morse based upon the doctrine of unjust enrichment.
Evidence and Discussion
[12] Dugal was a divorced businessman with two adult children who moved from Quebec to Toronto following his retirement. Upon his arrival in Toronto, Dugal supported himself from savings and rental income from residential real estate investments.
[13] In 2001 Tsai and Dugal met and eventually began a romantic relationship. At that time, Tsai was operating a golf club in Toronto called Oasis.
[14] Dugal helped Tsai out by working at Oasis occasionally and also made a modest financial investment in the club’s operation. When the club was sold by Tsai for $100,000.00, Dugal received $25,000.00 from the sale proceeds to reimburse him for his investment.
[15] Shortly following his move to Toronto, Dugal purchased 123 Morse and resided there while renting out a large part of the property to tenants. In 1990, Dugal purchased a second rental property on Morse Street. In March 2007, Dugal sold that second property at a considerable profit and used some of the proceeds of sale to pay down the mortgage on 123 Morse. Tsai had never made any direct contribution toward paying off the mortgage on or securing any equity stake in 123 Morse.
[16] During the initial portion of their cohabitation, Tsai and Dugal spent some of their time together at a condo in Don Mills owned by Tsai. However, for most of their time during the relationship they resided at 123 Morse. Tsai’s son Kirk also lived in the basement apartment at 123 Morse for extended periods.
[17] During the several years that Tsai and her son lived at 123 Morse, neither of them paid any rent to Dugal.
[18] At all times, including after his and Tsai’s relationship had progressed to co-habitation, title to 123 Morse was held in Dugal’s name alone. Similarly, title to the Don Mills condo remained in Tsai’s name alone.
[19] For approximately 5 of the years during which Tsai and Dugal lived at 123 Morse, Tsai rented out her Don Mills condo to a tenant. When she sold her condo in 2010, neither the rent she had collected for the years of rental nor the proceeds of sale of $80,000.00 were shared with Dugal.
[20] At no time did the parties hold joint bank accounts or joint savings, for household expenses or other purposes.
[21] Dugal and Tsai chose not to marry although they were both free to do so. They did not enter into any cohabitation or domestic agreement that provided for any ownership interest in the other person’s property or consensual terms for property disposition upon separation. This appears to be the case despite the fact that they were both capable business people with considerable experience in owning, buying and selling property.
[22] This evidence supports a conclusion that both parties intended to maintain separate title interest and ownership of their respective residential property during the time they lived together.
[23] Since 2008, Tsai has been working as a real estate agent in Toronto, assisting clients in the purchase and sale of properties. Tsai testified that for much of the time she and Dugal were together she was earning approximately $100,000 per year from commissions on real estate transactions.
[24] Tsai claims that she paid a significant share of the parties’ living expenses in amounts which have been asserted by her throughout the course of this litigation as being anywhere from $2500 to $5000 per month.
[25] Despite Tsai’s evidence, the income tax returns produced by her do not support the level of income she asserts. Instead, her taxable income is reported as being far less than the amount per year she has maintained to be the case in this proceeding. In most years after expenses were deducted her income tax returns reflect an annual taxable income closer to half of what she now asserts. This undermines the plausibility of the extent of her contribution to Dugal’s living expenses she asserts.
[26] Tsai also claims that she paid some of the insurance premiums for 123 Morse and made other substantial contributions to its maintenance and upkeep and remodeling.
[27] However, there is little in the way of documentary evidence to substantiate Tsai’s assertion that she made any major contribution to the upkeep or expenses associated with 123 Morse. Although there are some records to show that she paid a few insurance premiums, the bulk of the available receipts and other documents demonstrate that Dugal routinely paid the taxes, utilities and other bills associated with the property.
[28] To the extent any improvements or renovations to 123 Morse were carried out, there is little in the way of documentary evidence to clearly establish that Tsai paid for any of them to any appreciable degree. Similarly, Dugal’s financial information does not show receipt by him of substantial amounts of money from Tsai for such payment or assumption by her of any major role in paying for the upkeep of 123 Morse.
[29] Tsai’s son Kirk did not provide evidence at trial as to his knowledge or observations of Tsai’s alleged contributions to either Dugal’s living expenses or to 123 Morse. This gives rise to a reasonable inference that had he testified his evidence would not have been helpful to her.
[30] During the parties’ relationship Dugal purchased property at 11 Jones Avenue and at 1091 Queen Street East in Toronto. Both properties were purchased as investment properties and were held in Dugal’s name alone. Tsai released any spousal interest in the properties when they were purchased and apparently did not assume liability for their financing.
[31] According to Tsai, she contributed $35,000.00 towards the renovation of 11 Jones Avenue, paid for a property appraisal and contributed to the cost of insurance on the property in the amount of $6,600.00.
[32] Tsai also asserts that she made contributions toward the 1091 Queen Street East property which included a $50,000.00 share toward the down payment, payment for the preparation of an environmental assessment and appraisal, and coverage of one year of property insurance.
[33] During the parties’ relationship Tsai purchased two pre-construction condos in downtown Toronto. All legal and contractual rights to these purchase agreements were held by her alone. In addition, Tsai maintained an RRSP, cash savings and a luxury vehicle in her own name.
[34] Tsai and Dugal separated in 2014.
[35] At the time of their separation, Dugal owned the three properties in Toronto as referred to above: 123 Morse, 11 Jones Avenue and 1091 Queen Street East and held sole legal title to all three.
[36] Following the parties’ separation and prior to Dugal’s death, Tsai advanced and pursued her claim in this family law proceeding to an entitlement to a share in the ownership of the three properties owned by Dugal.
[37] Tsai made no claim for spousal support, nor does she seek retroactive support in this proceeding. Similarly, in responding to Tsai’s claims Dugal made no application for support from her.
[38] In May of 2014, Dugal sold the Jones Avenue and Queen Street East properties. On August 17, 2014, Tsai and Dugal agreed that she would receive $300,000.00 from the proceeds of the sale of the properties on Jones Avenue and Queen Street East as evidenced by a Mutual Consent executed by them.
[39] After having received the $300,000.00 as agreed, Tsai amended her Application to seek an “equalization payment” from Dugal despite the Mutual Consent the parties had signed and despite the fact they had never married. She also advanced a claim for a declaration that 123 Morse was being held in trust for her benefit.
[40] Dugal died on November 15, 2017.
[41] Tsai’s claims were continued against the Dugal Estate of which Dugal’s children are Trustees and sole beneficiaries.
[42] On a motion, the Estate obtained an order dismissing Tsai’s claim for an equalization payment. The Estate also obtained a discharge of the Certificate of Pending Litigation registered by her against 123 Morse Street in exchange for an agreement to preserve $500,000.00 of the proceeds of sale of the property pending determination of these proceedings. 123 Morse Street has been sold and the agreed funds are being held in trust.
Tsai’s Unjust Enrichment Claim
[43] It is admitted by the Dugal Estate that as a result of their cohabitation Tsai and Dugal were spouses as defined by s. 1(1) of the Family Law Act, R.S.O. 1990, c. F.3 until their separation in 2014.
[44] Tsai cannot assert any spousal property rights under the Family Law Act as the parties never married. However, Tsai claims that Dugal has been unjustly enriched as a result of her contributions to 123 Morse and that she should be compensated accordingly.
[45] In order to establish a claim for unjust enrichment, Tsai must demonstrate (a) Dugal’s enrichment, (b) Tsai’s corresponding deprivation, and (c) the absence of any juristic reason for the enrichment (Kerr v. Baranow, 2011 SCC 10).
[46] If an unjust enrichment has been established, the concept of joint family venture comes into play when considering a remedy. Interwoven with Tsai’s argument of unjust enrichment is the concept of joint family enterprise which she submits entitles her to a share of the value of 123 Morse.
[47] Among the factors to be considered in determining whether a joint family venture exists are (see: Peters v. Swayze, 2018 ONCA 189):
a. Mutual effort – did the parties pool their efforts and work toward a common goal?
b. Economic integration – how extensively were the parties’ finances integrated?
c. Actual intent – did the parties intend to have their lives economically intertwined?
d. Priority of the family – to what extent did the parties give priority to the family in their decision making?
[48] The determination of whether there has been unjust enrichment and whether a joint family venture has been established are questions of fact which Tsai bears the onus of proving.
[49] In my opinion, Tsai has failed to show that Dugal has been unjustly enriched. As a result, her claim fails.
[50] The evidence at trial demonstrates that, although Tsai and Dugal were spouses under the Family Law Act, they did not organize their finances or their relative contributions to their livelihoods in such a way as to unjustly enrich one to the deprivation of the other.
[51] Each party maintained a residence for all or some of the time they were together. Each earned a separate income from employment or investments. To the extent Tsai may have made contributions to the parties living expenses, such contribution was modest and are amply offset by being able to live with her son rent-free at 123 Morse.
[52] To the extent they may have had commercial property rental investments, Tsai was repaid her contributions to same and accepted a share of the sale proceeds in full satisfaction of all claims she may have had to a financial right to participate in the profits.
[53] Accordingly, Dugal was not financially enriched by their relationship. This finding means that Tsai’s claim must fail.
[54] The parties had no children together. Tsai was free throughout the relationship to pursue her career full- time and to seek out her own investment opportunities, which she did. The evidence does not disclose that she suffered any real deprivation, an ingredient which likewise is necessary to sustain her claim of unjust enrichment.
[55] Having found there to be no enrichment to Dugal and no deprivation to Tsai, it is unnecessary for me to consider whether there was any juristic reason for either.
[56] Although this finding makes it unnecessary to determine whether a joint family venture was entered into by the parties during their relationship, I would conclude that no family venture has been established by Tsai on this evidence.
[57] Although Tsai and Dugal lived together and apparently made some real estate investments in co-operation with one another, in my view the evidence indicates that they did not go so far as to be able to be described as having pooled their efforts and worked toward a common goal.
[58] Tsai and Dugal did not fully integrate their finances. None of the real estate investments referred to were held jointly and no steps were taken to transfer title to either of their residences into joint names. They maintained individual savings accounts and vehicles, and appear to have kept much of their respective assets separate from one another.
[59] From the evidence, I consider that a fair inference may be drawn that Tsai and Dugal, although co-habiting in a romantic relationship, wished to maintain a significant degree of economic independence.
[60] As mentioned, both parties had adult children from previous marriages. There does not seem to be much significant decision-making that would indicate a desire to give priority to family concerns. Although they did initially prepare wills directing their estates to be left to the other upon death, that provision was changed by both of them when they separated.
[61] Although the Dugal Estate correctly relies upon s. 13 of the Evidence Act, RSO 1990, c. E.24 to argue that corroboration of Tsai’s evidence is required to sustain her claims, I have found that the evidence and lack of evidence adduced is so lacking that it is unnecessary to rely on that evidentiary provision to support my findings and conclusions.
[62] As a result of the above, Tsai is found to have failed to discharge the burden upon her to establish any joint family venture.
[63] Further, were I to have found that such a family venture had been established, any financial remedy that I would have considered to be appropriate could not be calculated based upon any alleged right to a simple percentage participation in the proceeds of sale of 123 Morse.
[64] Rather, full regard would have to be taken as to the value of assets amassed by Tsai during her relationship with Dugal, either in her own name or that of any nominee. In my view, although subject to debate depending on the facts surrounding the acquisition and disposition of such assets, the value of Tsai’s property would have to be determined as of the date of the parties’ separation.
[65] The issue of a remedy therefore would require determination on a reference. The availability and quantum of any such remedy must be examined in light of the value of 123 Morse on the date of separation and the payments already received by Tsai from the proceeds of sale of 11 Jones Avenue and 1091 Queen Street East.
Conclusion
[66] For the above reasons, all claims advanced by Tsai are hereby dismissed.
[67] Should I be held to be wrong in this determination, I would direct a reference to assess the value of Tsai’s property as at the time of the commencement of co-habitation and of separation in order to arrive at a fair and just quantum for payment to her by the Dugal Estate. I would do so with some great reluctance as Tsai had ample opportunity to present such evidence at trial but failed to do so.
[68] For the purpose of this assessment, I would find the value of 123 Morse Street as of May 15, 2005 to be $470,000.00 and as of July 18, 2014 to be $1,160,000 as estimated by James Parthenis who gave his expert opinions to that effect in his testimony.
[69] As a result, and in the absence of any other impediment, the Trustees of the Estate shall be at liberty to distribute the assets of the Estate in accordance with the provisions of Dugal’s will.
Costs
[70] As reflected in the endorsement of Akbarali, J. dated June 20, 2019 claims were advanced by Tsai in this family law proceeding and in a separate application pursued as an Estates matter. Various costs demands from the Estates matter were agreed to be preserved to be dealt with in this proceeding.
[71] If all issues of costs cannot be agreed upon, which I urge the parties to try to do, written submissions on the subject may be delivered on behalf of the Respondent within 30 days of the date of this decision, and by the Applicant within 30 days thereafter.
Stewart J.
Released: October 7, 2020
COURT FILE NO.: FS-14-19580
DATE: 20201005
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WEN-CHI TSAI
Applicant
– and –
LUCIEN DUGAL by his Estate Trustees JOHANNE DUGAL ROUSSEE and LUC DUGAL
Respondents
REASONS FOR JUDGMENT
Stewart. J.
Released: October 7, 2020