COURT FILE NO.: FC-16-33 (Hamilton)
DATE: 2022/09/30
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CAROL WASHINGTON
Applicant
– and –
VALERIO CESARINI and FEBO MARCHESE
Respondents
Laura Oliver and Aneesha Luthra, counsel for the Applicant
Brent Marshall and Victoria McDougall, counsel for the Respondent, Valerio Cesarini
HEARD: January 10, 11, 12, 13, 14, 17 and 18, 2022
GIBSON J.
REASONS FOR JUDGMENT
Overview
[1] The applicant Carol Washington was a mortgage agent. The respondent Valerio Cesarini was a realtor. For a period of time both of the parties were employed by the same real estate brokerage, but they did not work in partnership with each other. The applicant left her employment as a real estate agent and established her own business as a mortgage broker.
[2] The parties resided in a conjugal relationship from 1992 to 2015. They were not married to each other throughout the period of their co-habitation. They separated on May 20, 2015.
[3] At the time that the parties commenced co-habitation, the applicant was 44 years of age, and the respondent was 32. The applicant is now 74. The respondent is now 61.
[4] Throughout their relationship, the parties resided in a house at 76 Rita Avenue, Hamilton, Ontario. The property was purchased by the respondent in 1989 and it remains his home and in his sole ownership to date.
[5] When the applicant first moved into the property at 76 Rita Avenue, she paid the respondent $1,000 per month as rent.
[6] The respondent also owned an income property at 379 Rymal Road in Hamilton. This property has been sold, and the sale proceeds of $329,099.61 are being held in trust by the law firm of Scarfone Hawkins pending determination of this matter by the Court.
[7] The applicant owned a property at 699 Upper James Street in Hamilton.
[8] The applicant declared personal bankruptcy twice during the period of co-habitation.
[9] The respondent was able to make contributions to his RRSP plan both before and after co-habitation commenced. The applicant, as a mortgage broker, arranged for funds to be lent from the respondent’s RRSP account secured by second mortgages on properties owned by third parties, customers of the applicant.
[10] The respondent, with the exception of a large debt owed to Revenue Canada, has improved his financial situation since the date of separation from the applicant.
[11] The issues for trial were the applicant’s equitable claims in relation to a joint family venture and unjust enrichment.
[12] The respondent Febo Marchese has been released from this action with the consent of both the applicant and the respondent Valerio Cesarini.
Position of the Applicant
[13] The applicant contends that the evidence establishes that Carol Washington and Valerio Cesarini were clearly engaged in a joint family venture for their mutual benefit despite the fact that all of the assets at the end of the relationship were in the name of the respondent. She submits that the evidence shows mutual effort, economic integration, actual and implied intent and a primary consideration of family over the course of their 23-year relationship. She asserts that no reason was established at trial to justify Mr. Cesarini retaining all of the accumulated wealth.
[14] The applicant contends that, assessed in the context of the relationship as a whole, equity is effected by granting her a monetary judgment. She seeks an amount of $418,644.58, being 50% of her estimate of the value of the Rymal and Rita properties.
Position of the Respondent
[15] The respondent submits the applicant is not entitled to the relief sought. He asserts that the evidence does not establish that Carol Washington caused or contributed to the enrichment of Valerio Cesarini or that she suffered a corresponding deprivation. He asserts that there is no juristic reason for the value of his assets not to remain in his ownership.
[16] The respondent further submits that the evidence did not establish that the parties were engaged in a joint family venture for their mutual benefit; on the contrary, he submits, the evidence did establish that there was little if any economic integration between the parties, that there was no mutual effort with respect to the parties’ business interests or investments nor any actual or implied intent to share assets owned by Mr. Cesarini.
[17] The respondent submits that, if the Court finds an unjust enrichment, at its highest and best, the applicant’s claim should be valued at $286,325.23.
Law
[18] An action for unjust enrichment arises when three elements are satisfied: (1) an enrichment, (2) a corresponding deprivation, and (3) the absence of a juristic reason for the enrichment: Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] S.C.J. No. 36, 44 R.F.L. (3d) 329 (S.C.C.).
[19] The common law of unjust enrichment should recognize and respond to the reality that there are unmarried domestic arrangements that are partnerships. The remedy in such cases should address the disproportionate retention of assets acquired through joint efforts with another person. This sort of sharing will not be presumed. Cohabitation does not, in itself, under the common law of unjust enrichment, entitle one party to a share of the other’s property or any other relief: Kerr v. Baranow, [2011] S.C.J. No. 10, 2011 SCC 10.
[20] In Martin v. Sansome, 2014 ONCA 14, the Court of Appeal for Ontario summarized the Supreme Court of Canada’s decision in Kerr v. Baranow as follows:
The monetary remedy for unjust enrichment is not restricted to an award based on a fee-for-service approach.
Where the unjust enrichment is most realistically characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions.
To be entitled to a monetary remedy of this nature, the claimant must show both (a) that there was, in fact, a joint family venture, and (b) that there is a link between his or her contributions to it and the accumulation of assets and/or wealth.
Whether there was a joint family venture is a question of fact and may be assessed by having regard to all the relevant circumstances, including factors relating to (a) mutual effort, (b) economic integration, (c) actual intent and (d) priority of the family.
In this way, the framework established in Kerr requires the court to ask the following questions:
i) Have the elements of unjust enrichment-enrichment and a corresponding deprivation in the absence of a juristic reason-been made out?
ii) If so, will monetary damages suffice to address the unjust enrichment, keeping in mind bars to recovery and special ties to the property that cannot be remedied by money?
iii) If the answer to this second question is yes, should the monetary damages be quantified on a fee-for-service basis or a joint family venture basis? and,
iv) If, and only if monetary damages are insufficient, is there a sufficient nexus to a property that warrants impressing it with a constructive trust interest?
[21] A spousal relationship is not a legal prerequisite to finding a joint family venture: Derakhshan v. Narula, 2019 ONCA 742.
[22] The absence of a juristic reason for the enrichment in question is a necessary prerequisite to any finding of unjust enrichment: Chechui v. Nieman, 2017 ONCA 669.
Evidence
[23] A large number of documents were submitted in evidence.
[24] The Court heard evidence from seven witnesses: the applicant Carol Washington; her friend Michelle Ahad; her sister Brenda Byrnes; her friend Ralph Tessaro; her daughter Carrie Lapadula; the respondent Valerio Cesarini; and Febo Marchese, an acquaintance and business partner of the respondent who had also originally been one of the respondents in this matter.
[25] All evidence-in-chief of these witnesses was by way of affidavit. Each was cross-examined by opposing counsel.
Issues
[26] Has the applicant established that she caused an enrichment or benefit to the respondent, that she suffered a corresponding deprivation as a result of those contributions, and is there a juristic reason for the enrichment?
[27] Has the applicant established that she and the respondent were engaged in a partnership of joint effort, a joint family venture, throughout their relationship that resulted in the accumulation of wealth in the hands of the respondent?
Analysis
[28] Ms. Washington must show her contribution to Mr. Cesarini’s enrichment as well as a corresponding deprivation to her. Mr. Cesarini must establish juristic reason for him to retain that enrichment. If he does not, the enrichment is unjust. The analysis at this third stage engages an assessment of the expectations of the parties as well as considerations of public policy.
[29] Voluminous documentary evidence has been presented by the parties in the course of this trial. The financial records, however, only relate to the past seven years, not the whole period of the relationship.
[30] Making findings of fact in this case is a difficult endeavour, complicated by the obvious reality that the evidence of both parties is problematic. Both suffer from significant deficits of credibility and reliability in their evidence.
Carol Washington
[31] In many respects, Carol Washington was not a credible or reliable witness. Her testimony was full of inconsistencies about cash withdrawals and deposits. Her evidence was frequently convoluted. Her finances were chronically a mess, and she did not offer any consistent or coherent account of how or why things went the way they did.
[32] The evidence of the applicant Carol Washington on cross-examination was disorganized and imprecise. She could not delineate a calculable contribution. Her responses were frequently not coherent or convincing. She was largely unresponsive to questions, repeating a mantra that she was better with cash than banking, rather than answering the questions put to her. She prevaricated in particular about her debt to the CRA, and the business expense income tax deductions she claimed, she says, on the advice of her accountant. Her answers about gambling and the money she made at casinos, and her claimed deposits into bank accounts originating from this, were simply not credible, and frequently appeared disingenuous.
Applicant’s witnesses
[33] The evidence of the witnesses called by the applicant was largely overtly partisan and of little assistance to the Court. All indicated that they had no direct knowledge of the financial arrangements or finances of the parties, including their respective incomes.
[34] The evidence-in-chief of Michelle Ahad was given in her affidavit dated March 24, 2021. Her evidence shed little light on the issues in the trial.
[35] The evidence-in-chief of Brenda Byrnes was contained in her affidavit of March 23, 2021. While Ms. Byrnes had donated a kidney to the respondent Valerio Cesarini, this remarkable act of kindness does not by itself establish any of the factors relied upon by the applicant. It speaks to Ms. Byrnes’ charity, but does not illuminate any of the issues in this trial.
[36] The evidence of the applicant’s friend Ralph Tessaro was advanced in his affidavit dated March 23, 2021. Mr. Tessaro was a diffident and combative witness, whose evidence was not balanced or persuasive.
[37] The evidence in chief of the applicant’s daughter, Carrie Lapadula, was contained in her affidavit dated March 26, 2021. Ms. Lapadula was a profoundly unimpressive witness. Her evidence was neither credible nor reliable. It was evident that she did not take the court process seriously. Her smirking demeanour communicated diffidence and a disdain for the proceeding. She was partisan, nonchalant, argumentative and combative on cross-examination. Her repeated refrain of “I don’t remember” on cross-examination was not credible and disinclines me to give any weight to her evidence.
[38] The evidence-in-chief of Febo Marchese was contained in his affidavit dated April 24, 2021. His evidence did little to assist either party.
Valerio Cesarini
[39] The evidence-in-chief of the respondent Valerio Cesarini was contained in his affidavit dated April 23, 2021.
[40] The evidence of Mr. Cesarini was, if anything, even more problematic than the evidence of the applicant. He was peevish and evasive. He was frequently dismissive, contrary and argumentative on cross-examination. His frequent and adamant denials that signatures on documents were his was incredible. He even contended that the signature on his Answer was not his. He consistently and readily defaulted to “I don’t recall”. The repetition of this mantra eroded his credibility. He was contrary and unwilling to acknowledge even common-sense propositions. He was unwilling to take responsibility for any shortcomings in compliance with his disclosure obligations.
[41] The position taken by the respondent displays inconsistencies. He did not bother to inform himself as to any receipt of commissions, he signed the document granting the applicant an interest in the Rita property, he made her the beneficiary of his RRSPs at one point, he gave her an engagement ring, and at one point made arrangements for them to be buried together. He had to have known that some of what she says were her expectations cannot be said to have been entirely unreasonable. But these considerations and an adverse finding regarding his credibility are not, by themselves, enough to demonstrate the requisite elements of the claim.
[42] On the other hand, the narrative advanced by the applicant does not find a secure foundation in the evidence either. An artificial balance sheet approach to contribution and deprivation should not be adopted. It must be acknowledged that the facts in such cases are not always neat or cohesive. A flexible and common-sense approach to the evidence should be adopted responsive to the particular circumstances of each case. But there must be a demonstrable link between the joint efforts of the parties and the accumulation of wealth. It is the applicant who has the onus to demonstrate this. There are many aspects of the evidence that detract from her argument.
[43] The applicant was a frequent gambler. Significant amounts of money were withdrawn from the respondent’s and the applicant’s bank accounts to pay for the gambling. The applicant testified that she made money gambling. While she claims to have deposited her winnings back into the bank accounts, she was unable to identify those deposits and there were few deposits of cash that coincided with the applicant’s trips to casinos. Her evidence in this regard was not credible.
[44] The applicant and her daughter were involved in a joint business venture regarding properties owned by her daughter that bled financial resources from the applicant. A significant portion of the applicant’s income was devoted to paying mortgages and related expenses for the properties owned by her daughter.
[45] The applicant submits that it would not be appropriate to hold her to a standard of precision to quantify her contributions, and this is apt. But the applicant has failed to show any direct financial contributions, or even an ability to have made direct financial contributions. The evidence concerning her income does not demonstrate an ability to make significant contributions. The applicant concedes that she did not have “stellar money management skills”. This is evidently the case for both parties. But she still has the evidentiary burden of establishing her case. In cross-examination dealing with banking records, she conceded many instances where funds were transferred from the respondent’s accounts to the other accounts to cover overdrafts or make payments, and was unable to point to many deposits that came from her funds. The available evidence from the banking records of the parties for the last seven years does not accord with her position. It is apparent that Mr. Cesarini had more than adequate means to satisfy his obligations throughout the relationship. He also testified that his mother gave him additional funds to allow him to meet his obligations. In contrast, the evidence regarding income of the parties indicates that the income of Carol Washington was not sufficient to meet her own needs, as further evidenced by her two bankruptcies. It is implausible that she had ready cash available to assist the respondent. Simply repeatedly insisting that “we were cash people” does not substantiate her position.
[46] Direct financial contributions are not the sole criteria to be considered in determining contribution to enrichment. However, no evidence was submitted by the applicant of any deprivation to her as a result of her contributions, pecuniary or otherwise, including in kind in the form of referrals of real estate transactions and placement of second mortgages as a mortgage broker. No evidence was submitted with respect to any fees that were waived or what the quantum of those fees may have been. Indeed, the evidence indicates that she was using the respondent’s money to fund her expenses. He freely gave her access to his accounts, his bank card, his PIN and his RRSPs. She withdrew substantial amounts from his RRSPs, often signing his signature.
[47] No evidence was presented by the applicant to indicate that contributions by the respondent to his RRSP had deprived her of making contributions to her own plans. She did in fact make contributions to her own plan.
[48] Many traditional indicia of non-pecuniary contribution by persons claiming unjust enrichment are simply not present in this case. The evidence established that: the parties had no children; the parties did not participate in a family business; little or no effort was expended on any joint venture; the parties had no joint bank accounts; the parties contributed equally to day-to-day living expenses; the parties had no joint pool of savings; and only the respondent was liable for the debts on the assets that he owned.
[49] On the basis of the evidence before the Court, an actual intention on the part of both parties to engage in a joint family venture has not been demonstrated.
[50] The respondent may claim some juristic reasons for retaining any advantage. Ms. Washington has already received benefits from the relationship. She had a place to stay, she had cheap rent and she freely made use of Mr. Cesarini’s funds.
[51] At the end of the day, the onus is on the applicant to substantiate the necessary elements of her claim on the balance of probabilities. The evidence in this case falls short of establishing mutual effort, economic integration, intent and priority of the family. I must conclude that the applicant has failed to satisfy the onus upon her to substantiate her claim.
Conclusion
[52] I find that the applicant has not established that she caused an enrichment or benefit to the respondent, that she suffered a corresponding deprivation as a result of these contributions and that there is no juristic reason for the enrichment. The applicant has not established that she and the respondent were engaged in a joint family venture for their mutual benefit. The applicant has not established an entitlement to the relief sought.
Order
[53] The applicant’s claim is dismissed.
Costs
[54] The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant at mona.goodwin@ontario.ca and to Kitchener.SCJJA@ontario.ca. The respondent may have 14 days from the release of this decision to provide his submissions, with a copy to the applicant; the applicant a further 14 days to respond; and the respondent a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received any response or reply submissions within the specified timeframes after the respondent’s initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.
M. Gibson, J.
Date: September 30, 2022
COURT FILE NO.: FC-16-33
DATE: 2022/09/30
ONTARIO
SUPERIOR COURT OF JUSTICE
CAROL WASHINGTON
– and –
VALERIO CESARINI
REASONS FOR JUDGMENT
Gibson, J.
Released: September 30, 2022