COURT FILE NO.: CV-21-00002042-00
DATE: 2021 09 13
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
NAVPREET PYLE (also
known as NAVPREET KAUR)
L. Jackson-Lawrence, for the Applicant
Applicant
- and -
AVTAR SINGH
Respondent
J. Dara, for the Respondent
HEARD: July 22, 2021
REASONS FOR JUDGMENT
Dennison J.
Overview
[1] The applicant and the respondent purchased a house together in May 2016.
The respondent moved out in August 2016 and the applicant continued to pay the operating expenses, including the mortgage. The house was sold in 2021. The net proceeds from the sale of the property, totaling $266,142.55, are currently held in trust.
[2] The applicant seeks a declaration that the respondent has been unjustly enriched and a constructive trust as a remedy. The applicant submits that although the parties owned the property jointly, 90% of the funds used to acquire and maintain the property were provided by the applicant.
Background Facts
The Purchase of the Property
[3] The parties purchased a property located at 3500 Glen Erin Drive, Unit 10, Mississauga, on May 26, 2016. The purchase price was $440,000.00.
[4] Both parties signed a knowledge and direction on May 2, 2016. It states that each party holds a 50% interest as tenants in common. It also states, “We confirm that in the event of sale of the above property, Avtar Singh shall receive his entire investment in the property prior to the sale proceeds being divided between us.”
[5] The applicant contributed $10,000.00 to the purchase price. The respondent contributed $19,235.33. The applicant submits that $10,000.00 of the respondent’s contribution was a gift to both parties from the respondent’s father. In support of her submission, the applicant relies on a letter, signed by Jasper Singh (the respondent’s father), that confirms a “financial gift in the amount of $10,000 has been made to Navpreet Kaur and Avtar Singh to assist in the purchase of a home. These funds are being provided as a gift.”
[6] The respondent submits that the gift was solely made to the respondent.
The form his father signed was provided by the Bank of Nova Scotia. The father had no intention to gift the applicant the money. The Bank of Nova Scotia put the applicant’s name on the document because she was also on the mortgage.
[7] The remainder of the purchase funds came from a mortgage that was taken out in both parties’ names. The mortgage was in the amount of $433,048.00.
Nature of the Relationship
[8] There is a dispute between the parties regarding the nature of their relationship at the time the property was purchased.
[9] The applicant states they were in a common law relationship at the time they purchased the property, and that the respondent moved out on August 1, 2016, after informing the applicant that he had married someone else the previous November while visiting his “sick” mother in India.
[10] The respondent states that he and the applicant were good friends and decided to purchase a house jointly with the intention of saving costs in rent and investing in real estate. The house was a three-bedroom townhouse with a finished basement, one car garage, additional parking, and a driveway. The respondent submits that the parties intended to rent out the third bedroom and the basement.
[11] The respondent states the applicant was well aware that he was married before they bought the property. The respondent was engaged to his wife in 2011 and married in October 2015.
The Respondent Moves Out
[12] The parties agree the respondent moved out on August 1, 2016. The applicant submits that the respondent moved out after telling her he was married.
[13] The respondent’s evidence is that he resided in one bedroom in the house, and the applicant resided in another bedroom. The third bedroom was vacant. In early June 2016, the applicant’s father arrived at the property. The applicant never informed the respondent that her father would be coming to stay with them. One month later, her sister moved into the property without the respondent’s consent.
[14] The respondent states the applicant threatened that if he did not leave the property, she and her sister would make false accusations against him and have him charged with sexual assault.
[15] The respondent also states that on June 21, 2016, the applicant’s father threatened that if the respondent did not move out of the property, he would cut the respondent up, and that he had connections in India waiting for the respondent.
The respondent called the police and was advised by police that he should move out.
[16] Once the respondent moved out of the property, the applicant paid all the mortgage and maintenance fees. The applicant states these costs totalled
$125,000.39. I have reviewed the costs and determined that this is not the correct number as I will discuss below.
[17] It is agreed that on April 10, 2017, the respondent visited the property and caused damage to the property. The respondent states the father threatened him over the phone and made inappropriate comments about his mother. The respondent was angry and lashed out. Police arrested the respondent. The charges were resolved by a peace bond. The respondent has since completed an anger management course and fully repaired the damage.
Trying to Sell the House
[18] On May 11, 2017, the respondent sent an email to the applicant and their mortgage broker. He advised that they were legally separated and that he had moved out of the property in July 2016. The respondent stated he wanted his name removed from title to the property and reimbursement for the $19,238.00 he put towards the property.
[19] The change in title did not take place. The applicant states the mortgage broker told them to obtain a notarized letter so that the applicant could transfer the property to her name. The applicant states the respondent did not get back to the applicant for some time.
[20] In an effort to settle the matter and pay out or purchase the respondent’s interest, the applicant obtained an appraisal in June 2017. The appraisal stated the property had a market value of $500,000.00.
[21] On August 28, 2017, the respondent sent an offer to settle. The respondent states he received no response from the applicant.
[22] On September 12, 2017, the respondent’s former counsel requested the applicant leave the respondent’s furniture outside the house for the respondent to pick up. While the applicant submits that the furniture was a gift, she nonetheless left the furniture outside for the respondent to collect. The applicant took photographs of the furniture outside the residence. The applicant believed the respondent picked up the furniture. The respondent denies that the furniture was returned.
[23] As of December 31, 2018, the principal owing on the mortgage was
$394,829.91.
[24] In March 2019, the applicant obtained an Opinion of Value for the property from a real estate broker, with the hopes of resolving the matter. The house was valued at $518,000.00.
[25] In March 2019, the respondent filed a Notice of Application for partition and sale of the property. The applicant prepared her response and made a proposal for settlement. The applicant tried to serve a responding affidavit, but it could not be filed because the respondent did not regularize his filing. It was discovered in June/July 2019 that the respondent’s counsel had an administrative suspension and could not practice law. Counsel for the respondent insisted that he could practice. No date was scheduled for the motion. The applicant sought costs thrown away from the respondent, but no response has been received from the respondent to date.
[26] The respondent also made a further offer to settle dated May 2, 2019.
[27] The respondent found and retained a new lawyer. In July 2020, the respondent sent another offer to settle, but no response was received from the applicant.
[28] In October 2020, the respondent’s new counsel contacted the applicant, and an agreement was entered into to sell the property.
[29] The property was sold on February 2, 2021. Both parties are listed as the sellers. The property sold for $662,500.00, which after adjustments came to
$630,773.59. An amount of $360,497.59 was paid to discharge the mortgage and
$4,133.45 towards various fees and disbursements. Therefore, the net proceeds of the property totalled $266,142.55. These funds are currently held in trust pending an agreement or court order.
Position of the Parties
[30] The parties agree that the applicant is entitled to be reimbursed for the following amounts: her $10,000.00 down payment; $780.00 she paid to the respondent; $960.50 for a clearance letter; and, $1,087.50 representing 50% of the cost to install a circuit panel. Beyond that, there is no agreement as to what monies each party should receive from the proceeds of the property sale.
The Applicant’s Position
[31] The applicant submits that she is entitled to 90% of the net proceeds of the property sale. She submits that the respondent would be unjustly enriched if he were to receive an equal share of the net proceeds. He made no contributions towards the upkeep of the property, whereas she paid all the mortgage, property taxes and maintenance fees.
[32] The applicant’s position is that the respondent is entitled to the money he contributed to the down payment of the house ($19,235.33). However, $10,000.00 of that amount was a gift to both parties, so that gift should be divided between the parties. Therefore, the respondent would be entitled to a contribution of
$14,235.33, and the remaining $5,000.00 would go to the applicant.
[33] With respect to the furniture, the applicant submits that it was a gift. Despite this, she put the furniture out for the respondent to pick up as he requested. She should not be held responsible if the furniture was not there when he went to pick it up.
The Respondent’s Position
[34] The respondent submits that he has been deprived of enjoying the property. Because he did not live at the property, he had the expense of paying rent at another property. In contrast, while the applicant paid the operating expenses of the property, she lived in the property for over four years rent-free despite the respondent’s attempts to sell the property earlier.
[35] The respondent submits that the parties had an agreement to hold the property as tenants in common and divide the proceeds of the house once it was sold. The proceeds should, therefore, be split 50/50 after the proper deductions are taken.
[36] The respondent submits that the applicant is only entitled to half the value of the mortgage and maintenance payments she made, because that portion was paid on behalf of the respondent.
[37] It is the respondent’s position that the applicant rented the rooms in the property as the parties intended and did not disclose this in her affidavit. In addition, members of the applicant’s family resided in the residence and should have paid rent. The respondent submits that $27,000.00 in occupational rent should be provided to him from September 2016 to March 2021.
[38] The respondent also submits that he is also entitled to reimbursement of
$19,235.33 for the down payment and $15,000.00 for furniture the applicant did not return.
Analysis
[39] A constructive trust is an equitable remedy. It is only available if the applicant can demonstrate that a personal remedy, such as damages would be inadequate. A constructive trust is only to be imposed to the extent of the applicant’s proportionate contribution to the acquisition, preservation, maintenance, or improvement of the property: Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 91.
[40] A claim of unjust enrichment requires the applicant to show that:
i) The respondent was enriched by the applicant;
ii) The applicant faced a corresponding deprivation; and
iii) The benefit and corresponding detriment must have occurred without a juristic reason, making the retention of the benefit to the respondent unjust: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 32.
[41] The principled approach to unjust enrichment is flexible. It must enable the court to identify circumstances in which justice and fairness require one party to restore a benefit to another: Billimoria v. Mistry, 2021 ONSC 1939, at para. 132, referring to Kerr v. Baranow, at paras. 36-40; Moore v. Sweet, at paras. 37-38.
[42] In determining if the respondent was unjustly enriched, I do not need to resolve the issue of whether the parties were in a common law relationship or just friends, given the short duration (three months) that they resided together.
[43] There is no dispute that the applicant paid the mortgage and upkeep of the property from June 2016 to March 2021, when the house was sold. No evidence was led that the applicant made significant renovations to the property that increased its value.
[44] The applicant submits that the respondent benefited from her contributions towards the maintenance of the property. The benefit takes the form of increased sale proceeds currently held in trust, as the home sold for a higher price. Conversely, she suffered a deprivation because she made the contributions.
[45] I am prepared to find that the respondent benefited from the applicant paying the respondent’s portion of property maintenance. I do not find, however, that the applicant has demonstrated she suffered any deprivation. She had the benefit of residing in the property rent-free: Dhillon v. Brar, 2019 ONSC 4066, at para. 24.
[46] The applicant did not lead any evidence to show her contributions towards the property amounted to more than the rent she would pay to reside in the three- bedroom townhouse. Her monthly mortgage and maintenance fees were approximately $2,400.00 per month. Unlike the case of Billimoria, at para. 140, the applicant has not established that the amount paid was significantly more than the value of rent a tenant would have paid.
[47] Even if I were to assume that the applicant suffered a deprivation, there is a juristic reason for why the respondent is entitled to half the value of the house, aside from his share of operating expenses. When the parties purchased the house, both parties signed an agreement that stated when they sold the house,
they would equally split the net proceeds. The agreement had no time limitation or other caveat.
[48] There is no basis to depart from that agreement. While the respondent sent an email to a mortgage broker in May 2017, stating that if his name was taken off title, he only wanted his initial deposit of $19,235.33 returned, it appears nothing further was done. His name remained on title until the property was sold.
[49] It would be unfair to not enforce the agreement, considering the applicant benefitted from residing in the house rent-free during the entire period, and that the respondent is prepared to pay his share of operating expenses.
[50] As such, I am satisfied that the respondent is entitled to 50% of the net proceeds of the sale of the house, after proper deductions are considered.
[51] While I have not found that there is a constructive trust, I am nonetheless satisfied that any payments owed between the parties should be paid out of the proceeds of the property, as opposed to requiring the parties to enforce orders for damages. Both parties’ contributions are linked or causally connected to the property. It makes sense that payments come from the proceeds of the sale of the property: Moore, at para. 93.
Calculations
[52] I now turn to the amounts due to each party. The parties agree that the applicant is entitled to the following reimbursements:
$10,000.00
Down payment
$780.00
Payment to respondent
$960.50
Fee for clearance letter
$1,087.50
House maintenance (circuit panel)
[53] As I have found, the applicant is entitled to a 50% reimbursement for the mortgage payments and maintenance fees. The applicant’s material indicates that total mortgage payments were $94,142.54 (half would be $47,071.27) and the maintenance fees were $16,445.70 (half would be $8,227.85). The respondent calculated that half the mortgage payments was $67,502.85 and half the maintenance fees were $10,378.65
[54] Given the discrepancies, I did my own calculations which are attached as Appendix A to this decision. The total mortgage payments made were $135,006.60 (half would be $67,503.30) and the total paid for maintenance fees was $20,757.65 (half would be $10,378.83)
[55] The applicant claims expenses for utilities incurred while she resided in the house. It is not appropriate that she be reimbursed for expenses that relate to her use of the property. Again, I note that she did not pay any rent during this period.
[56] There is no documentary evidence showing the applicant paid for the respondent’s car insurance. In the absence of such evidence, I am not satisfied on the balance of probabilities that this money is owed to the applicant.
[57] The respondent claims he is entitled to $19,235.33, which was his portion of the down payment towards the house. The applicant submits the respondent is not entitled to the full $19,235.33 because $10,000.00 of the amount was a gift from the respondent’s father. The applicant relies on a letter signed by the respondent’s father stating that $10,000.00 is a gift to both the applicant and respondent. The respondent submits that this letter is a form filled out by the Bank of Nova Scotia, and that his father did not understand the consequences of signing the document, nor did he intend to gift the money to the applicant. Since the respondent seeks to challenge the letter, it is the respondent’s onus to demonstrate that the letter was not intended to be enforced. The respondent has not met his onus. There is no evidence from the father with respect to his intention in signing the letter. As such, the respondent is entitled to his down payment of
$14,235.33, and the applicant is entitled to deduct a further $5,000.00 from the net proceeds as her share.
[58] The respondent also requests that the court impose nominal rental income/occupational rent of $27,000.00. The respondent submits the parties always intended to rent out part of the house. There is no documentary evidence
to suggest this was the parties’ intention when they purchased the house. Further, no evidence suggests the basement was a separate rental unit. While persons often rent out parts of their house, I am not satisfied, on the evidence before me, that the parties intended to rent out part of the property when it was purchased.
[59] I am, however, prepared to find that the applicant should pay to the respondent nominal occupational rent. She resided at the property rent free for almost four years while the respondent had to pay rent. I realize that she paid the respondent’s share of the operating expenses, but he is paying that back. Occupational rent between non partners arises out of the common law and is an equitable remedy the nominal amount of $500.00 per month for a three bedroom townhouse is fair and reasonable (total $500.00 x 54 months= $27,000.00): see Cormpilas v. Ioannidis 2020 ONSC 4831 at paras. 15-16.
[60] Finally, turning to the respondent’s claim regarding furniture. There is no dispute that the respondent purchased the furniture. I am not satisfied that it was a gift to the applicant. The reasonable inference was the furniture would be used by both of them while residing in the residence. The applicant was requested to arrange for the furniture to be outside for the respondent to pick up at 1:00 p.m. The applicant left the furniture somewhere outside at 8:30 am, then left for work. The respondent did not pick up the furniture that day because he had a job. Therefore, I find that both parties are responsible for the loss of the furniture. First,
the applicant should not have left it out at 8:30 a.m. when the pickup was to be at 1:00 p.m. She was specifically asked if 1:00 pm was a good time and she agreed. Second, the respondent should have cancelled the pickup given that he knew he would be unable to pick up the furniture. In the circumstances, I am satisfied that reimbursing the respondent $7,500.00 for half the value of the furniture is an equitable resolution.
[61] As such, the following amounts should be deducted from the net proceeds of the sale of the property:
Description of Deductions
Applicant
Respondent
Down payment
$10,000.00
$9,235.33
Gift for down payment
$5,000.00
$5,000.00
Payment to respondent
$780.00
N/A
Fee for clearance letter
$960.50
N/A
Occupational Rent
N/A
$27,000.00
50% share of mortgage payments and property taxes
$67,503.30
N/A
50% of maintenance fees
$10,378.82
N/A
50% for circuit panel
$1,087.50
N/A
50% value of furniture
N/A
$7,500.00
Total
$95,710.12
$48,735.33
[62] Turning now to the distribution of the net proceeds. The calculations are as follows:
$266,142.55 held in trust less $95,710.12 to the applicant
less $48,735.33 to the respondent
$121,697.10 net proceeds after deductions
[63] Fifty percent of $121,679.10 is $60,839.55.
[64] Therefore, the proceeds currently held in trust shall be divided as follows: the applicant receives $156,49.67 ($95,710.12 deductions plus $60,839.55 share of remaining net proceeds), and the respondent receives $109,574.88 ($48,735.33 deductions plus $60,839.55 share of remaining net proceeds).
Costs
[65] Given the divided success on this application, the parties are encouraged to work out the issue of costs between themselves.
[66] If the parties are unable to resolve the issue of costs, the respondent shall serve and file written submissions of no more than two pages, double spaced, twelve-point font, with relevant case law, a detailed bill of costs, and any offers to settle, within ten days of receipt of this endorsement.
[67] The applicant may file a response consisting of written submissions of no more than two pages, double spaced, twelve-point font, with relevant case law and a detailed bill of costs (if not already provided), and any offers to settle, within ten days receipt of the respondent’s submissions.
[68] The respondent may file a one-page reply, double spaced, twelve-point font, within five days of receipt of the applicant’s submissions on costs.
Dennison J.
Released: September 13, 2021
COURT FILE NO.: CV-21-00002042-00
DATE: 2021 09 13
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
NAVPREET PYLE (also known as NAVPREET KAUR)
Applicant
- and -
AVTAR SINGH
Respondent
REASONS FOR JUDGMENT
Dennison J.
Released: September 13, 2021
Appendix A
Mortgage payments
TOTAL PAID:
135,006.60
*Note: Applicant claimed $94,142.52
2016
2017
2018
Jun
1075.37
Jan
1075.37
Jan
1117.38
1075.37
1075.37
1117.38
Jul
1075.37
Feb
1075.37
Feb
1117.38
1075.37
1075.37
1117.38
Aug
1075.37
Mar
1075.37
Mar
1117.38
1075.37
1075.37
1117.38
Sep
1075.37
1075.37
Apr
1117.38
1075.37
Apr
1075.37
1117.38
1075.37
1075.37
1117.38
Oct
1075.37
May
1075.37
May
1117.38
1075.37
1075.37
1117.38
Nov
1075.37
Jun
1075.37
Jun
1117.38
1075.37
1075.37
1117.38
Dec
1075.37
Jul
1075.37
Jul
1117.38
1075.37
1075.37
1117.38
Subtotal
16130.55
Aug
1075.37
Aug
1117.38
1075.37
1117.38
Sep
1075.37
1117.38
1075.37
Sep
1117.38
1075.37
1117.38
Oct
1075.37
Oct
1117.38
1075.37
1117.38
Nov
1075.37
Nov
1117.38
1117.38
1079.28
Dec
1117.38
Dec
1079.28
1117.38
1079.28
Subtotal 28085.65 Subtotal 28937.58
2019
2020
2021
Jan
1079.28
Jan
1094.22
Jan
1094.22
1079.28
1094.22
1061.9
Feb
1079.28
1094.22
1061.9
1079.28
Feb
1094.22
Feb
1061.9
Mar
1079.28
1094.22
1061.9
1079.28
Mar
1094.22
Subtotal
5341.82
1079.28
1094.22
Apr
1079.28
Apr
1094.22
1079.28
1094.22
May
1079.28
May
1094.22
1079.28
1094.22
Jun
1079.28
Jun
1094.22
1079.28
1094.22
Jul
1079.28
Jul
1094.22
1079.28
1094.22
Aug
1079.28
1094.22
1079.28
Aug
1094.22
1079.28
1094.22
Sep
1079.28
Sep
1094.22
1079.28
1094.22
Oct
1079.28
Oct
1094.22
1079.28
1094.22
Nov
1079.28
Nov
1094.22
1079.28
1094.22
Dec
1079.28
Dec
1094.22
1079.28
1094.22
Subtotal
28061.28
Subtotal
28449.72
Maintenance Fees
TOTAL PAID:
20,757.65
*Note: Applicant claimed $16,445.70
2016
2017
2018
July
302.4
Jan
302.4
Jan
313.07
Aug
302.4
Feb
302.4
Feb
313.07
Sept
302.4
Mar
302.4
Mar
313.07
Oct
302.4
Apr
313.07
Apr
346.81
Nov
327.4
May
313.07
May
346.81
Dec
302.4
June
313.07
June
346.81
Subtotal
1839.4
July
313.07
July
346.81
Aug
313.07
Aug
346.81
Sept*
0
Sept
346.81
Oct
313.07
Oct
346.81
Nov
313.07
Nov
346.81
Dec
313.07
Dec
346.81
Subtotal 3411.76 Subtotal 4060.5
*Note: Sept not claimed
2019
2020
2021
Jan
346.81
Jan
415.57
Jan
451.56
Feb
346.81
Feb
415.57
Feb
451.56
Mar
346.81
Mar
415.57
Mar
451.56
Apr
415.57
Apr
451.56
Subtotal
1354.68
May
415.57
May
451.56
June
415.57
June
451.56
July
415.57
July
451.56
Aug
415.57
Aug
451.56
Sept
415.57
Sept
451.56
Oct
415.57
Oct
451.56
Nov
415.57
Nov
451.56
Dec
415.57
Dec
451.56
Subtotal
4780.56
Subtotal
5310.75