COURT FILE NO.: FS-19-0115
DATE: 2021 04 09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SANA KHAN
Baqa Rashdi, counsel for the Applicant
Applicant
- and -
STEVE SOARES
Haiyun Wang, counsel for the Respondent
Respondent
HEARD: February 16, 17, and 18, 2021
REASONS FOR JUDGMENT
Justice Thomas A. Bielby
INTRODUCTION AND BACKGROUND
[1] The parties herein were in a common law relationship from January 2015 to May 2018.
[2] In January 2016 the parties purchased a residential property known municipally as 3600 Morning Star Drive, Unit 56, Mississauga, Ontario (the property). Title to the property was transferred from the vendor to the parties, as tenants in common, with the applicant shown as having a 99% interest and the respondent, a 1% interest.
[3] The property was sold in August 2020 and the net proceeds from the sale, being $211,739.79, remain in trust.
[4] The applicant submits that she is entitled to 99% of the funds (subject to other adjustments) on the grounds that she owns 99% of the property and was the sole source of the funds needed to pay the deposit, the down payment and closing expenses. She argues that the respondent was only shown on title (1%) in order to comply with the terms of the mortgage.
[5] The respondent submits that the parties were to be equal owners of the property and that the applicant holds in trust, on his behalf, a 49% interest in the property. He argues that the applicant was shown as having a 99% interest in order to maximize the amount of the Land Transfer Tax (LTT) rebate as the applicant was a first time home-buyer. As a term of the mortgage financing, he was required to be on title and a 1% share satisfied this requirement. The respondent further relies on the fact that it was his responsibility to make the bi-weekly mortgage payments of $614.88, which, over time, far exceeded the initial contributions made by the applicant. By doing so, it is submitted that the respondent has, in effect, more than repaid the applicant for 50% of the money initially advanced by the applicant to purchase the property.
RELIEF SOUGHT
[6] This action was commenced by application May 1, 2019. In the claim portion of the application, the applicant sought in para. 50,
a. possession of home,
b. dispense with the respondent’s signature and
c. sale of Home.
[7] Under the heading of, “Important Facts Supporting My Other Claims” the applicant sought, in sub-para. 4,
“In the alternative, an order to the real estate lawyer to release 99% of the need proceeds to the applicant, Sana Khan and balance to hold in trust account until disposition of this application.”
[8] Under the same heading, at sub-para. 5, the applicant sought an order declaring that she is entitled to all of the net proceeds from the sale of the property.
[9] The respondent opposed the claim as set out in his Answer dated June 28, 2019 and claimed at para. 50,
“Finding of unjust enrichment of the Applicant” and “Constructive Trust in favour of the Respondent and in the alternative, in personam relief.”
[10] Therefore, I am to determine the respective ownership shares in the property and how the remaining net sale proceeds, currently held in trust, are to be divided taking into account expenses related to the property.
INTERIM ORDER
[11] In bringing the application, it would appear that the applicant’s immediate goal was to obtain an order that the property be sold. The applicant had vacated the property in May 2018 and she alleges that she wanted to sell the property. However, the respondent, who was in possession of the property, would not co-operate in selling the property.
[12] A motion to sell the property was filed by the applicant and on February 28, 2020, the motion was heard by Ricchetti J. who concluded that the property must be sold, but noted that there was no issue in that regard (at the time of the motion). Ricchetti J. opined that the real issues were how and how much of the net proceeds, if any, are to be distributed to the parties (para. 15).
[13] From para. 16, of the Ruling I quote,
“There is evidence to support the Respondent’s delay in selling the home. The reason is obvious, he pays no occupation rent and there appear to be arrears in ongoing home expenses. Some of the documents suggest the Respondent has impeded the Applicant’s retrieval of her personal property.”
[14] The endorsement provided for the sale of the property and required the respondent to vacate the home by April 30, 2020 and that, until then, he was to pay the taxes, utilities and other expenses of the home.
PURCHASE OF PROPERTY
[15] Both parties filed document briefs. Exhibit 1 was filed by the applicant and Exhibit 2, by the respondent.
[16] The property was purchased in January 2016, and the parties retained David Rendeiro, barrister and solicitor, to act on their behalf. Many of the documents provided in the briefs were authored by Mr. Rendeiro and/or his office.
[17] Neither party took any issue in regard to the authenticity of the documents entered into evidence.
[18] The Offer of Purchase and Sale is dated January 6, 2016, and both parties are shown as purchasers. A down payment of $5,000.00 was required on an agreed purchase price of $300,000.00. The deal was to close on January 29, 2016 (Exhibit 1, pg. 205).
[19] The Statement of Adjustments showed both parties as purchasers and noted a balance due on closing of $294,996.65. This amount included the money owed to the vendor, the Ontario Land Transfer Tax, the cost of title insurance and legal fees and disbursements (Exhibit 1, pg. 217).
[20] The Trust Ledger Statement confirms that the purchasers were to provide to Mr. Rendeiro $13,936.40 which, together with the deposit and the money advanced under the mortgage, would satisfy the amount of money due on closing and the costs thereof (Exhibit 1, pg. 218).
[21] One of the documents produced is entitled, “Direction Re Title” and is dated January 20, 2016. It is signed by both parties and directed the vendor and her lawyer to convey title to the property to,
“Soares, Steve (Capacity: tenants in common – 1.0%) and Khan, Sana (Capacity: tenants in common – 99.0%)”.
[22] In the applicant’s disclosure brief (Exhibit 1, pg. 224) can be found a note in the handwriting of a member of Mr. Rendeiro’s staff which reads,
“January 20, 2016
David advised clients to get a Trust Agreement prepared and signed.
clients didn’t want to get it done. Didn’t want to pay the additional $250 + HST. We advised about the Trust Agreement”
[23] When the parties separated, ownership of the property became an immediate issue and the respondent made some inquiries with Mr. Rendeiro’s office. An email, dated August 14, 2018, was sent from Mr. Rendeiro to the respondent and read,
“I am certain that both you and Sana will remember our discussion about your options with respect to title. By deciding to put a 99% interest in the name of Sana, who was a first time buyer you received a rebate/reduction of land transfer tax in the amount of $1,980 out of $2,975 and paid only $995. Your name went on title only as the remaining 1% interest. You did advise you were purchasing the property together, but wanted to maximize your Land Transfer Tax rebate, without breaching the conditions of your mortgage, which required title to be in both your names. I did discuss with you and recommended to you the preparation of a trust agreement where by Sana and you would agree that she would hold a 49% portion of her 99% interest on title in the capacity of trustee for you, so that you would be owners of the property in equal shares. I advised you there would be a $250.00 fee for this agreement, plus HST, but you did not wish to have it done in order to save money and reduce your costs. Although it would have been in your best interest to have this agreement done, this was not done.” (Exhibit 1, pg. 230)
[24] Mr. Rendeiro testified at this trial, as reviewed below, and was not really challenged on any of the facts set out in the aforementioned documents. It is noted that no where in the documents or the testimony of Mr. Rendeiro is there a reference to the applicant owning 99% of the property or that she did not want to enter into a trust agreement because she was to own a 99% interest in the property.
THE EVIDENCE OF WITNESSES
Sana Khan, the Applicant
[25] The applicant testified that she and the respondent commenced dating in 2014, and nine or ten months thereafter commenced living together in the respondent’s basement apartment.
[26] There were issues with the respondent’s landlord and the applicant testified that she decided to look for a property to purchase, located closer to where she works. She has never had a driver’s license. She testified that she had savings from which to make a down payment.
[27] It is uncontested that the respondent did not have money to contribute to the deposit or to the monies due on closing.
[28] The applicant identified and confirmed all the real estate documents reference above. She testified that the deposit and the $13,936.40 needed to close the deal were paid solely be her, from monies save and her personal line of credit.
[29] The applicant said that David Rendeiro, retained to act on behalf of both parties, was “a really good lawyer who had acted for the respondent previously”. All the documents needed to complete the purchase were signed by the parties, at the same time.
[30] The applicant testified that she did not qualify for a mortgage on her own and the mortgage approval required the respondent to be, “on title”. She testified that the mortgage requirement was the only reason, the respondent was an owner of a 1% share. From the mortgagee’s point of view, a 1% interest in the property still made the respondent jointly and severally liable for the entire mortgage debt.
[31] The applicant testified that because she put up all the money needed to purchase the property over and above the money advanced under the mortgage, she believed the property was hers. It was always her intention to own the property alone. She did not agree that the respondent was an equal owner and she testified that she would not have agreed to a 50/50 ownership.
[32] The applicant acknowledged that Mr. Rendeiro discussed with both her and the respondent the preparation and execution of a trust agreement at an additional cost of $250.00 plus HST. The applicant testified that she would not have let that happen (the preparation and execution of a trust agreement).
[33] The applicant was asked to comment on the email, dated August 14, 2018, that Mr. Rendeiro sent to the respondent. She testified that it was never sent to her and that if the issue was the payment of Land Transfer Tax, she would have paid it all if she had to. She explained she did not want to save on the tax and wanted to be a 99% owner. She stated that, why would she agree to 50/50 ownership when she put up all the deposit, down payment and closing costs.
[34] The applicant testified that it was her plan to make the mortgage payments but that the respondent insisted that he make the bi-weekly mortgage payments. The applicant agrees that apart from the mortgage payments due in the first month, the respondent was responsible for the mortgage payments, moving forward. The applicant testified that she was to pay all the other expenses related to the property, which included the utilities, municipal taxes, the cable bill and the monthly condominium fees. These expenses were paid from her personal bank account.
[35] Exhibit 1 contains the applicant’s bank statements for her Bank of Montreal personal accounts and the parties’ joint account.
[36] The applicant, during her examination in chief, went through all of the statements identifying the payments, the source of the payments and who paid what. It is not my intention to detail this evidence but conclude the following.
[37] The bi-weekly mortgage payment was $614.88 and the respondent deposited funds into the parties’ joint bank account to cover the payment on the same day the payment was made. The bank statements show that the payments were usually taken prior to the deposit of the funds but both entries occurred on the same date. As a result, as argued by counsel for the applicant, the account often went into overdraft for a portion of the day. While this is technically correct, no overdraft fees were charged, and I take no issue with the timing of the payments.
[38] I also accept that the respondent paid the insurance on the property.
[39] The records show a monthly condo fee of $291.60 was made each month by the applicant. The municipal taxes were paid by the applicant as payments came due, as were the utilities.
[40] The records show the regular purchase of groceries by the applicant at various stores such as Walmart, and perhaps cigarettes and gasoline at gas stations such as Petro Canada. There were purchases made at Dollarama which the applicant said was for items such as cleaning supplies for the property.
[41] For periods of time the respondent’s parents resided with the parties requiring the purchase of additional groceries and/or items for the property.
[42] In July 2018, the applicant, who had removed herself from the matrimonial home in May 2018, made her last municipal tax payment.
[43] After separation the applicant testified that she incurred moving expenses, including $90.84 paid to U-Haul for a rental. She paid $318.00 for an appraisal on the property and further moving expenses in the amount of $650.00.
[44] The applicant testified that since she received very little of the furniture from the property, she incurred an expense of $4,090.70 for furniture for her new rental residence.
[45] In and around May 2017, the parties decided to open a joint line of credit, secured against the property. The applicant testified that the respondent said he owed money on an old loan and wanted to consolidate all his debts, including credit cards, at a lower interest rate.
[46] On May 20, 2017, the respondent used $10,989.74 from the secured line of credit to pay off his credit card expenses. A further $6,453.41 was taken from by the respondent. On June 12, 2017, $1,940.00 was transferred from the line of credit by the respondent to pay monies owed to the Canada Revenue Agency.
[47] On January 5, 2018 the respondent, using the line of credit, paid off his CIBC credit card debt. In February 2018, the respondent apparently withdrew over $2,000.00.
[48] The applicant testified that none of the secured line of credit debt was incurred by her. The respondent was responsible for all but one of the payments on the secured line of credit debt.
[49] The applicant disputes the respondent’s claim that the credit card expenses paid off using the joint line of credit were all related to the maintenance and renovation of the property. The applicant testified that she can only recall the respondent painting three rooms. It is to be noted that the respondent has not produced any documentation to substantiate his claims as to the use of the secured joint line of credit.
[50] On the sale of the property the secured line of credit debt amounted to $19,091.95 and had to be paid out in order to convey title to the property.
[51] Both parties filed in the exhibit books calculations as to what they believed each of them contributed to household expenses, which expenses would include the mortgage, taxes, utilities, insurance, fuel, groceries and household items.
[52] As noted, what really is at issue here is the ownership interests the parties had in the property and a minutiae comparison of what was payed and by whom over a number of months is of limited assistance. However, the parties’ respective calculations are noted, and it can be said that both parties contributed significantly to the costs of maintaining the household.
[53] As noted above, this application was commenced because the respondent would not co-operate in the sale of the property. After the parties separated the applicant testified that she asked the respondent to either buy her interest in the property or sell it. The respondent agreed to neither and continued residing therein. By default, he was responsible for all of the household expenses which resulted in some arrears which had to be paid on closing, as set out below.
[54] The Trust Ledger Statement included in Exhibit 1, lays out the following expenses that had to be paid in order to convey good title to the property, on a sale price of $525,000.00.
Mortgage $266,320.13
Line of Credit $19,081.95
Taxes $2,778.03
Alectra Utilities $614.92
PCC (condo corp.) arrears $362.19
[55] After these payments and other normal adjustments, the net proceeds were $211,737.79, and which, as noted above, remain in trust.
[56] On cross-examination, the applicant agreed that when the parties resided together, she was to pay the condominium fees and the municipal taxes. Together these payments totalled approximately $541.00 per month. She agreed that the monthly mortgage payment and the property insurance premiums, on a monthly basis exceed the monthly expenses paid by the applicant by, $720.00. However, the applicant disagreed with the suggestion that this arrangement was agreed to by both parties and that it represented an arrangement to justify equal ownership of the property.
[57] The applicant did confirm that when the property was acquired, she and the respondent were in a committed relationship and that in 2017, the parties became engaged and were planning a future together.
[58] Regardless, the applicant opined that, in her mind, the respondent was only paying rent.
[59] The applicant agreed that in many ways, she and the respondent pooled their money. When it was suggested to the applicant that when the utility expenses were credited to her, there was still a difference of $419.00 per month, the applicant testified, “he had a choice”.
[60] With respect to the secured joint line of credit, the applicant reiterated that it was the respondent’s idea and that he was to be responsible for its payments, although initially she thought she could use it to finance the purchase of another property.
David Rendeiro
[61] As noted above, Mr. Rendeiro was the lawyer the parties retained to act on their behalf in purchasing the property. In regard to the document, “Direction Re Title” (Exhibit 1, pg. 223), Mr. Rendeiro testified that the document was a standard document in a real estate transaction and confirmed that the parties took title as tenants in common, the applicant having a 99% share and the respondent, 1%.
[62] Mr. Rendeiro testified that the applicant was a first-time home buyer and that she and the respondent wanted to maximize the LTT incentive available to first-time purchasers. Had the parties taken “equal” title, a significant portion of the incentive would be lost.
[63] Mr. Rendeiro also confirmed that pursuant to the terms of the mortgage approval, the respondent was required to be an owner, so he had to be on title as an owner with a minimal 1% interest in the property.
[64] Mr. Rendeiro testified that he explained the meaning of the Direction Re Title to both parties when they attended at his office to sign the papers necessary to close their purchase of the property. He testified that he asked the parties if they were interested in a trust agreement, that is to say, an agreement in which the applicant would acknowledge that she is holding, in trust for the respondent, a 49% interest in the property. Both parties declined to do so.
[65] Mr. Rendeiro was questioned in regard to memos made to the file in 2018, saying they related to calls made to his office by the respondent. With respect to the memo dated August 13, 2018 (Exhibit 1, pg. 231), Mr. Rendeiro explained that the respondent wanted a letter to confirm that he went on title at 1% so they did not have to pay LTT on his 50% share of the property, and that they did not want to pay for a trust agreement.
[66] The email from Mr. Rendeiro to the respondent dated August 14, 2018, was in answer to the respondent’s inquiry. Therein, Mr. Rendeiro confirmed that he told both parties that if the intent was to own the property in equal shares, it would be in their best interests to complete and execute a trust agreement. He confirmed they did not want to spend the money necessary to obtain a trust agreement.
[67] When cross-examined Mr. Rendeiro confirmed that it was clear to him that the parties were buying the property together but also wanted to maximize the LTT incentive for first time home buyers. On re-examination Mr. Rendeiro testified that he knew they were buying the property together but was not initially aware of the respective interests.
Steve Soares, the Respondent
[68] The respondent testified that the only reason the applicant was shown as a 99% owner was to maximize the Land Transfer Tax rebate. He explained that money was “tight” and both parties jointly decided to forgo a trust agreement because of the additional cost. The respondent went on to explain that he and the applicant were in love and were planning a future together. He explained that he never believed his ownership share would be an issue and that he agreed to make the mortgage payments of $614.88 bi-weekly, so that he could catch up with the initial financial obligations incurred by the applicant to acquire the property.
[69] The respondent testified that he and the applicant had discussed all of this and when the mortgage was up for renewal after five years, title would be amended to reflect equal ownership.
[70] The respondent testified that he and the applicant, more or less, equally shared the cost of groceries. He paid most of the car repairs and fuel expenses but from time to time he would ask the applicant for financial help.
[71] With respect to the “secured” joint line of credit, the respondent testified that it was set up to take advantage of a lower interest rate. The respondent’s credit card debt was paid off using the new line of credit. It was also used to pay for other expenses such as car repairs.
[72] The respondent testified that he made a number of repairs/renovations to the property, using his credit cards to pay for the materials. These debts were then transferred to the line of credit. The respondent testified that he painted the whole house, did some flooring, did some interlock brick in the back, and did some electrical and plumbing, including installing a fan in the sunroom. However, he did not keep any of the receipts nor did he produce any bank statements related to his credit cards debts. Nor were any pictures of the work he alleged he did entered into evidence.
[73] After the parties separated, the respondent continued making the minimum payments required on the joint line of credit. He paid the municipal taxes, although at the time the property was sold there were tax arrears.
[74] The respondent testified that he too bought things for the household but kept no receipts of such.
[75] The respondent confirmed that his annual income was greater than the income earned by the applicant.
[76] On cross-examination the respondent again stated that he told the applicant that he would pay the mortgage to make up for the applicant bearing the costs, over and above of the mortgage, to acquire the property. He again stated that after five years, when the mortgage would be renewed, ownership would be ”50/50”.
[77] The respondent testified that in regard to the Direction Re Title document, when he signed it, he knew a trust agreement would protect a 50% ownership but explained that they did not have any extra funds to pay for it. He explained that he trusted the applicant and forgo the need for such an agreement.
ARGUMENT
The Applicant
[78] The applicant submits that it was her intention to buy a property but to do so she required a co-borrower. She had savings (and a line of credit) and could provide all the money needed initially to buy the property. The respondent had no money to contribute.
[79] It is submitted that the real estate documents confirmed how title was to be taken and that both parties agreed not to have a trust agreement prepared. It is submitted that the only reason the respondent was on title was to satisfy the requirements of the mortgage financing.
[80] The existence of an agreement for the respondent to make up a share of the money needed for the purchase by paying the mortgage is denied.
[81] The applicant submits that apart from the mortgage payments (and the house insurance) she bore all the other expenses of the household and has filed as part of Exhibit 1, all of the monthly bank statements to confirm her position.
[82] With respect to the repair/renovation expenses claimed by the respondent, it is submitted that he has not provided any proof of his assertions. It is submitted that the respondent used the joint line of credit for paying his personal expenses and not for repairs/renovations.
[83] It is submitted that over the time the parties lived together in the property, the contributions of both parties do not support equal ownership.
[84] Counsel for the applicant relies on the interim decision of Ricchetti J. in this matter and his comment that there is evidence to support the assertion that the respondent wanted to delay the sale and remain, post separation, solely in possession of the property.
[85] The applicant submits that of the money in trust, the respondent is entitled to a 1% interest ($2,117.37), subject to a set-off for the arrears of taxes, utilities and condo fees that accrued between the date of separation and the date of the sale of the property, a period in which the respondent had sole possession of the property. As a result, it is submitted, that the respondent ought not to receive any of the money in trust and in fact would still owe money to the applicant.
[86] Justice Ricchetti in his interim endorsement, deferred costs of the motion to the trial judge and the applicant seeks costs of the motion, on a full indemnity basis, in the amount of $4,757.17 (substantial indemnity basis, $3,175.15).
The Respondent
[87] Counsel for the respondent submits that this case is all about the parties’ intention at the time the property was purchased and that most of the facts in this case are not in dispute.
[88] It is submitted that apart from the mortgage payment(s) due in the first month, the respondent made all such payments, including those payments due after separation.
[89] It is submitted that the only reason the applicant was shown a 99% owner was to maximize the LTT rebate and was not based on her initial contributions to acquire the property.
[90] It is submitted that while both parties declined to pursue a trust agreement, the decision was based on a need to minimize expenses and the fact they planned a life together, which is further evidenced by their engagement to marry in 2017.
[91] It is submitted that each month, the respondent paid $1,229.76 on the mortgage which was greater than the money contributed monthly to the property by the applicant.
[92] Counsel for the respondent submits that her client’s evidence as to the use of the joint line of credit ought to be accepted, and that the purchase of the property and the money expended thereafter represent a “joint venture”.
CASE LAW
[93] The applicant relies on only one authority, being the decision of Heeney J. in Kamermans v. Gabor 2018 ONSC 5241 (the Gabor case). The respondent did not provide any case law.
[94] In Gabor, the issue was whether the respondent, who contributed the entire down payment of the purchase of the home in which the parties resided in a common law relationship, should be re-paid, “off the top” of the net proceeds resulting from the sale of the home, after which the balance of funds would be divided equally.
[95] The respondent in Gabor, argued that the applicant would be unjustly enriched if the entire proceeds of sale are divided equally, and claimed a constructive trust in the applicant’s interest to the extent of one-half of his down payment.
[96] While the facts of the case are unique, it can be said that the parties for a time, lived in a property owned by the respondent, prior to the parties commencing to live together. This home was sold and $70,461.72 realized from the sale was utilized as a down payment for the purchase of the parties’ jointly owned home.
[97] The new property required multiple repairs and renovations to which both parties contributed both money and labour. Each of the parties, when testifying, detailed their work and expenses contributed to their new home.
[98] Further, the respondent made all the mortgage payments, but the applicant paid the utility accounts.
[99] From paragraph 17, I quote,
“Once again, though, it is not necessary or desirable to go through a line by line analysis of who paid what expense during the co-habitation. Both parties had jobs throughout cohabitation and used those earnings toward the cost of running and renovating the house. On all of the evidence, I am satisfied that both parties made significant and roughly equal contributions toward their overall living expenses and toward the domestic tasks of running a home, and it is not necessary to be more precise than that.”
[100] In the matter before me, I adopt the same approach.
[101] Returning to the Gabor decision, commencing at para. 22 Heeney J. discusses the concept of a resulting trust and its reliance on the proof of common intention as to ownership. Reference was made of the judicial reasoning found in Kerr v. Baranow 2011 SCC 10, [2011] 1 S.C.R. 269, paras. 23 and 29, in which Cromwell J., opined that a resulting trust arising from the common intention of the parties no longer has any useful role to play in resolving property and financial disputes in domestic cases.
[102] Heeney J. concluded that the case was to be analyzed and decided as a claim for unjust enrichment and constructive trust, noting that in the Kerr decision Cromwell J. referred to the remedial constructive trust as, “the more flexible and appropriate lens through which to view property and financial disputes in domestic situations” (para. 30).
[103] A resulting trust was said to focus solely on the initial transaction, where title was gratuitously put in the name of someone who advanced no consideration for the purchase of a property whereas constructive trust claims, allow the court to take into consideration the entire history of the domestic relationship (para. 31).
[104] There are three elements to a constructive trust claim: first that the applicant has been enriched by the respondent; second, that the respondent has suffered a corresponding deprivation; and third, that there lacks a juristic reason.
[105] In Gabor, the court concluded that the applicant had been unjustly enriched because of one-half of the respondent’s contribution to the down payment (para. 40).
[106] As a result, the respondent had been deprived of one-half of the down payment since he gave away that amount of equity in the property (para. 41).
[107] In the Kerr decision, in describing the third element, “the lack of a juristic reason” means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case (Kerr para. 40).
[108] In Gabor the trial judge went on to consider the conferral of mutual benefits, opining that this is where the work done and expenses incurred by both parties have the most relevance (para. 53). He again relied upon the decision of Cromwell J. in Kerr, and quoted the following:
“…The answer is fairly straightforward when the essence of the unjust enrichment claim is that one party has emerged from the relationship with a disproportionate share of assets accumulated through their mutual efforts. These are the cases of a joint family venture in which the mutual efforts of the parties have resulted in an accumulation of wealth. The remedy is a share of that wealth proportionate to the claimant’s contributions. Once the claimant has established his or her contribution to a joint family venture, and a link between that contribution and the accumulation of wealth, the respective contributions of the parties are taken into account in determining the claimant’s proportionate share. While determining the proportionate contributions of the parties is not an exact science, it generally does not call for a minute examination of the give and take of daily life. It calls, rather, for the reasoned exercise of judgment in light of all the evidence.”
[109] After considering the above passage, Heeney J. opined that in the matter before him there was a clear link between the contributions of both parties and the accumulation of wealth represented by the increase value of the house. He assessed the parties’ contributions to be roughly equal (para. 56). The trial judge did not find it necessary or desirable to conduct a line by line analysis of each task accomplished by each party and each expense incurred. It was said to be “undesirable” to engage in “duelling quantum meruits.”
ANALYSIS
[110] After reviewing the facts and the law, I am of the opinion that a constructive trust has been made out by the respondent. As a result of the contributions of the respondent, over the time of the parties co-habitation and after the date of separation to the date the property was sold, the applicant, if allowed a 99% interest, in the property would be unjustly enriched and the respondent would suffer a corresponding deprivation. Further, there is no juristic reason otherwise.
[111] I would categorize the financial relationship of the parties, after the property was acquired, as a joint family venture, the parties having divided up the financial obligations of maintaining the household.
[112] I find that at the time of the purchase of the property the parties intended to equally share the property, if not immediately, after a period of time of five years or less. On this point I prefer the respondent’s evidence over that of the applicant.
[113] I accept that the applicant was shown as a 99% owner for the sole reason to maximize the LTT rebate. The applicant was a first-time homebuyer and entitled to such a rebate. The respondent had to be shown as an owner, albeit a 1% owner, in order to obtain a mortgage. Both parties wanted to minimize the initial costs of acquiring the property; money was tight.
[114] This conclusion of joint intention was corroborated by the evidence of the lawyer, Mr. Rendeiro. He testified that the parties were purchasing the property together but wanted to maximize the LTT rebate (see the August 14, 2018 email from Rendeiro to the respondent).
[115] Mr. Rendeiro suggested to the parties that they enter into a trust agreement. The only reason that Mr. Rendeiro would suggest a trust agreement would be to protect the respondent’s interest in the property which was not to be reflected on the title documents.
[116] Mr. Rendeiro, in his email to the respondent dated, August 14, 2018, again confirmed this conclusion by confirming that the parties were purchasing the property together but wanted to maximize their LTT rebate without breaching the conditions of the mortgage, requiring title to be placed in both of the parties’ names.
[117] In my opinion the parties chose not to move ahead with the trust agreement because they simply did not want to incur the additional cost of $250.00 plus HST.
[118] I reject the evidence of the applicant that at all times she was the sole owner of the property, and that the respondent held a 1% share only to satisfy the mortgage requirements.
[119] It is more likely that both the applicant and the respondent expected to be together forever and believed they could trust each other. The parties 2017 marriage engagement is corroborative of this belief.
[120] The parties jointly contributed to the expenses incurred to carry the household and as said in the Gabor case and quoted above, it is not necessary to do a line by line analysis of who paid what. I am satisfied that both parties made significant contributions to the costs of running the household.
[121] I accept that the respondent took on the financial responsibility of the bi-weekly mortgage payment in an effort to compensate the applicant for the money she initially contributed to the purchase of the property. On this point the respondent testified that he had no money to contribute to the initial costs of acquiring the property. He believed that his payment of the mortgage, over a period of time, would compensate the applicant for her initial financial contributions.
[122] The respondent testified that he believed that when the mortgage had to be renewed after five years, title to the property would be put in the parties’ joint names, as equal owners. The applicant testified that in regard to the respondent paying the bi-weekly mortgage, “he had his choice”.
[123] The respondent continued to make the mortgage payments after the date of separation, until the property sold in August 2020, four and one-half years after the property was acquired and within five months of the need to renew the mortgage. The applicant was enriched by this as the mortgage was paid down and the property increased in value.
[124] In my opinion, my findings of the intentions of the parties as to equal ownership is a factor in determining the issue of whether there was a constructive trust in that the applicant held a 49% interest in the property in trust for the respondent.
[125] As noted, I conclude that on all of the evidence, as of the date the property was sold, the applicant would be unjustly enriched if she was the owner of 99% of the property and the respondent would suffer the corresponding deprivation. There is no juristic reason.
[126] I find that, on behalf of the respondent, the applicant was a constructive trustee for a 49% interest in the property.
[127] Since the property has been sold and the remaining sale proceeds being held in trust, based on my ruling I start from the position that the parties should each receive 50% of the proceeds. However, there are adjustments to be made.
[128] I am cognizant of the order of Ricchetti J. noted above, that he believed there was an element of delay on the part of the respondent to sell the property and that there may be grounds for a claim for occupancy rent. The respondent was ordered to pay the taxes, utilities and other expenses of the property until April 30, 2020.
[129] I accept the evidence of the applicant that, shortly after the separation, she sought a sale of the property. The respondent was uncooperative, and the applicant was required to commence this application and bring a motion to affect a sale.
[130] As a result, the respondent will not be given any credit for the property expenses paid by him post separation.
[131] With respect to the secured line of credit debt paid from the sale proceeds, the respondent has failed to persuade me that any of this money can be said to relate to household expenses, repairs and/or renovations, or of benefit to the applicant. The respondent did not provide any evidence in the form of bank statements or credit card statements to substantiate the debt ought to be shared. While he testified that he no longer had these statements, he did not provide any evidence of efforts to retrieve copies from the bank. The respondent’s evidence in regard to the “secured” line of credit lacked specifics and details.
[132] The applicant ought not to be required to bear the burden of any of this debt and as a result the applicant is entitled to reimbursement of 50% of this debt which equals $9,540.98.
[133] Further, the applicant ought to be entitled to credit for one-half of the money paid on the closing of the sale of the property for arrears in taxes, utilities and condominium fees. The respondent chose to continue to reside in the property and benefited from doing so and would not agree to its sale. These debts are to be attributed solely to the respondent.
[134] Accordingly, and in total, the applicant ought to receive from the proceed held in trust ($211,737.79) one-half of the funds ($105,868.90) plus one-half of the payments required to convey title (with the exception of the mortgage) which amount to $11,418.56, resulting in a payout to the applicant, from the proceeds in trust, of $117,287.46.
[135] The respondent is to receive a one-half interest less the additional funds paid to the applicant, resulting in a payment of $94,450.33.
[136] There will be no other expenses reimbursed or taken into account. As noted above, the issues before me as set out in the Application and the Claim portion of the Answer were with respect to the respective ownership interests in the property and the respective shares in the money held in trust. Adjustments were made in regard to the expense paid related to the property and the payment of which was necessary to transfer clear title.
[137] Accordingly, the costs incurred by the applicant for moving, acquiring new furniture and renting alternate accommodations are not compensable.
[138] Nor will I make any adjustments for the money paid by the parties during the time they co-habited together in the property. As noted above, the parties each contributed significantly to the household expenses, representing a joint domestic venture.
RULING
[139] I declare that the applicant, at the time of the sale of the property at 56-3600 Morning Star Drive, Mississauga, being April 27, 2020, held in trust a 49% interest in the ownership of the property, on behalf of the respondent.
[140] From the money held in trust resulting from the sale of 56-3600 Morning Star Drive, Mississauga, $117,287.46 is to be paid out to the applicant, or as she directs in writing, and $94,450.33 is to be paid out to the respondent, or as he directs in writing.
[141] If, at the date of payout, the money in trust exceeds $211,737.79 the increase is to be shared equally by the parties.
[142] I will accept written submissions as to costs. Request for costs are to be received within 21 days of the release of this ruling and are limited to 3 pages, double spaced together with a cost outline and copies of any offers of settlement. The parties from whom costs are sought will have a further 10 days to respond to any requests for costs, limited to 2 pages double spaced.
[143] Cost consideration will include the costs incurred on the motion before Ricchetti J.
Bielby J.
Released: April 9, 2021
COURT FILE NO.: FS-19-0115
DATE: 2021 04 09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SANA KHAN
Applicant
– and –
STEVE SOARES
Respondent
REASONS FOR JUDGMENT
Bielby J.
Released: April 9, 2021