Court File and Parties
COURT FILE NO.: CV-23-0191-00 DATE: 2023 09 13
SUPERIOR COURT OF JUSTICE – ONTARIO 611 Ninth Avenue East, Owen Sound ON N4K 6Z4
RE: Gough Lewis, plaintiff AND: Clarissa Lewis and Wendy Lewis, defendants
BEFORE: Justice J. K. Trimble
COUNSEL: Robert W. Scriven for the Plaintiff bscriven@kw-law.com Brooklyn Lester LSO #87937U blester@kw-law.com Brian Renken, for the defendant bhrenken@georgianbaylawyers.com
HEARD: September 13, 2023, in person
Endorsement
The Motion
1The Applicant, Gough Lewis, seeks a Certificate of Pending Litigation against the home his mother, Wendy Lewis, owns at 237 Vincent Street, Meaford, ON, which his sister and Wendy’s daughter, Clarissa Lewis, is selling under a Power of Attorney. The closing is set for 21 September 2023; hence this urgent motion.
2In this Endorsement I refer to all by their first names. I mean no disrespect by this familiarity. I do so for clarity since the parties share the same last name.
3Gough has commenced his action by Notice of Action, claiming a CPL and an interest in the property, meeting the formal requirements of a CPL.
Result
4The motion is dismissed with costs to the Defendants.
Facts
5The facts are in dispute. As I address later, I am still able to decide this motion on disputed facts on the face of the record. I do not need an oral hearing.
Gough’s Version
6Sixteen years ago, Wendy retired as a teacher and bought the property at issue. Gough came to Meaford from California to help Wendy settle into the new houses. Eventually, he decided to stay and live with Wendy.
7In 2013 Wendy was diagnosed with Parkinson’s Disease. Since then she has also fought and won her fight with cancer, although the cancer and its treatment may have exacerbated or accelerated her Parkinson’s Disease.
8Since Wendy’s initial diagnosis, Gough assumed more responsibility around the house and for Wendy’s care, ultimately becoming her full time care giver. He did all of the household chores and property maintenance. He paid for most of this himself.
9Gough says that “since moving back in with Mother, she and I had many conversations about the subject property and that it would eventually become mine.” He says she intended to give him the house but deferred doing so until “a small mortgage of approximately $140,000.00” was paid off. In her 2018 Will, Wendy provided that Gough would be the residual beneficiary of Wendy’s estate, thereby inheriting the house. In 2018, Wendy also named Gough as her Power of Attorney for property and personal care.
10By 2020, Wendy’s health had mental capacity had seriously deteriorated. Gough did everything to keep Wendy in her home including hiring a private nurse for which he paid approximately $5,000.00. By 12 November 2021, Gough moved Wendy to a nursing home as he could no longer deliver the level of care she needed. She is in a semi private room, and on a waiting list for a private room. The monthly cost of her care is between $3,600.00 and $4,000.00.
11Gough says that “[s]ince I have been detained in the Spring of 2023” he has retained a lawyer who has “maintained my funds and ensured bills are paid”, and who paid $17,000.00 in April and May on Wendy’s behalf and for the property. He later referred to the fact tha the is incarcerated following his arrest in April. He began renovations to the house which were interrupted by his incarceration.
12In Gough’s view, Wendy, since entering the nursing home, has not had capacity to manage her own affairs. He said the head nurse at the nursing home agrees with this. Gough believes Wendy is suffering end stage Parkinson’s dementia and says that Wendy’s Doctor can confirm this.
13Gough says that for 10 years he has looked after and paid for Wendy’s care, and in exchange, Wendy promised him the house. He promised Wendy that he would always ensure that she was cared for.
Clarissa’s Version
14Clarissa says that Gough was arrested on 11 April 2023 when he was stopped for speeding and the police found in his car a loaded handgun as well as two grenades, a police uniform, and other police related equipment. It was determined that the hand grenades were not active. Gough was charged with, among other things, dangerous operation of a motor vehicle, breach of her release order, unauthorized possession of a prohibited weapon for a dangerous purpose, possession of cocaine, and started driving and speeding. He was denied bail.
15Clarissa also said that Gough has been charged, before April 2023 with sexual assault and uttering death threats, but was released on terms still effective in April.
16While Gough claims to be a successful film producer, Clarissa says he has been unemployed since coming to Canada. He has lived in Wendy’s house while Wendy has paid all the household bills, the mortgage, and the cost of upkeep on the house out of her teacher’s pension. Gough has not contributed in any meaningful way to the household expenses and has allowed the house to fall into disrepair. For example,
a. In 2012, Wendy reached the limit of her Visa bill at $10,000 by paying for basic needs such as groceries, which Gough was not paying for. b. In 2015, Wendy gave Gough her car in order to drive Wendy to appointments necessary for her care. Gough was unable to purchase a vehicle because he had no credit as he was unemployed.
17Clarissa was not aware that in 2013 Wendy appointed Gough as her continuing power of attorney for property and personal care.
18In 2018, Clarissa visited Wendy. It was clear that Gough was not taking care of Wendy. The house in appalling condition. It smelled of urine. The floors and carpets were dirty. The room off the kitchen was full of garbage. The house was full of flies. She says the house looked like a hoarder’s house. At this time, Wendy was admitted to hospital where it was determined that she was suffering from malnutrition, a urinary tract infection, and sodium and potassium deficiency. Further, her medications were not being managed properly and she was suffering preventable side effects from her Parkinson’s medication.
19In 2020, Gough advised Clarissa that he had been charged with sexual assault and was released on terms. Clarissa visited the house. It was clear that Gough’s life revolved around alcohol and drugs and the house was “little more than a crack den. Wendy was living in filth. The walls had holes punched in them. The toilets were clogged and there was garbage throughout the house. Windows were broken and graffiti scrawled on the walls.
20The house was in the same condition in August 2023, as evidenced by photographs Clarissa took at that time.
21After Gough was arrested, he was taken to Cornwall Community Hospital on an involuntary psychiatric hold. While he was there he refused to take antipsychotic medication prescribed. The doctor told Wendy that Gough suffered from paranoid delusions, was psychotic, and diagnosed as having a narcissistic personality disorder and schizophrenia. These conditions were exacerbated by his drug and alcohol use.
22The inference to be drawn from the recitation of Gough’s alleged drug and alcohol use, and his psychiatric admission is that he is not capable of looking after Wendy.
23Clarissa says that Wendy’s care expenses were paid out of Wendy’s pension income which included CPP, OAS, and her teacher’s pension. In the spring of 2023, Wendy’s nursing home told Clarissa that nursing home expenses from the beginning of February were outstanding ($8279.71). She also found that household related expenses were in arrears: Hydro – $2102.73, municipal water – $1151.04, gas – $633.02. Property insurance and property taxes were unpaid.
24After Gough’s incarceration, Clarissa looked at Wendy’s finances. She found out:
a. On 11 March 2022, Gough, using his power of attorney, gave a mortgage for $150,000. Gough says that it was to finance the renovatiosn he began before his incarceration but could not complete because of it. Clarissa says that as of August 2023 no repairs were undertaken to the home. b. The mortgage was paid off in March 2023. Clarissa believes that the mortgage was paid off with funds that Gough received from their father’s estate, which remains active. c. There were many unknown or un-itemize charges on Wendy’s debit and credit cards payable to Amazon and Apple, notwithstanding that when these purchases were made Wendy was wheelchair-bound and in the nursing home. When Clarissa called Wendy’s bank to inquire about these charges, she was advised that the fraud department was investigating Gough but would not provide further information.
25On 3 May 2023, Clarissa took Wendy to the law firm of Scheifele, Erskine, and Renken, who had drafted an earlier Will and power of attorney for Wendy. The lawyer met with Wendy alone for about half an hour. As a result of that meeting, Wendy executed a power of attorney for property and personal care in favour of Clarissa.
26Wendy’s total pension income is $3,031.97 based on her teacher’s pension, OAS, and CPP. Clarissa understands that Wendy may qualify for a spousal pension from BC Hydro, but Clarissa does not yet have details of that pension.
27The cost of Wendy’s mortgage and semi-private room care is $3,957.00 per month. This would be approximately $400 higher where she two get a private room. Because of this discrepancy, Wendy decided that the property had to be sold. Since Gough’s incarceration, Clarissa says she has been making up shortfalls between Wendy’s income and expenses. In addition, she has incurred slightly over $30,000.00 in expenses necessary clean up the property.
28Under the power of attorney, Clarissa listed the home and on 25 August 2023 received an offer which she accepted, for $650,000, closing 21 September 2023. After real estate commissions, HST, legal fees, $128,000 for the Bank of Nova Scotia mortgage, and reimbursing Clarissa for $30,737.73 for home repairs, Clarissa estimates the net proceeds of sale to be are $453,037.27.
The Law
29Subsection 103(1) of the Courts of Justice Act requires that a party wishing to put others on notice of its claim to an interest in land must obtain and register a CPL on the title to the property. The purpose of a CPL is to warn any interested party that there is an outstanding claim against the property in question.
30The Court may only grant leave to register a CPL where it is satisfied that there is a triable issue in respect of the moving party’s claim to an interest in the land (see: Interrant International Properties Inc. v. 1167750 Ontario Inc., [2013] O.J. No. 3385). The threshold test to be applied in a contested Motion for a CPL is the same as if it were a Motion to discharge a CPL under s.103(6) of the Courts of Justice Act: namely, whether the party seeking the CPL has a “reasonable claim to the interest in the land” (see: West v. West (1997), 33 O.R. (3d) 472, Chippewas of Kettle and Stony Point v. Canada (Attorney General) (1994), 17 O.R. (3d) 831 (Gen.Div.), and Pacione v. Pacione, 2019 ONSC 813 at para. 20).
31This test requires the Court to exercise his discretion in equity and look at all the relevant circumstances between the parties to determine whether the CPL should issue or be vacated (see: Clock Investments Ltd. v. Hardwood Estates Ltd. et al (1977), 16 O.R. (2d) 671 (Div. Ct.) p.3).
32In this case, the factors to be considered include:
a. Wendy’s and Gough’s intentions; b. Whether Gough expended money or effort for Wendy’s benefit and/or on the house; c. Whether Gough paid rent or for his food or own expenses while living with Wendy; d. Whether Gough suffered a privation and Wendy a benefit; e. Whether there is an alternative claim for damages; f. The ease or difficulty of calculating damages; g. Whether damages would be a satisfactory remedy; h. The presence or absence of another willing purchaser; and i. The harm done to the defendant if the certificate is allowed to remain, or to the plaintiff if the certificate is removed, with or without the requirement of alternative security.
(see: JDM Developments Inc. v. J. Stollar Construction Ltd., para. 33).
33Other principles apply in this case:
a. The onus is on the party seeking to discharge the Certificate of Pending Litigation to persuade the court that its discretion ought to be exercised in favour of the discharge (see: 931473 Ontario Limited v. Coldwell Banker Canada Inc. [1991] O.J. No. 1150 (G.D.) p.12, McGrath v. B.G. Schickedanz Homes Inc. [2000] O.J. No. 4161 (S.J.C.) p.12, JDM, supra, para.70).; b. While the same level of full and frank disclosure does not apply to a motion for a CPL brought on notice as it does to one brought ex parte, the Court still requires candor from the parties. Where such candor is not provided, the affiant’s credibility may be negatively affected, perhaps so badly that the CPL cannot issue.
34In this case, the credibility of the parties is at issue in terms of whether, and to what extent I can accept the evidence of each.
Positions of the Parties
35Gough accepts that he is not entitled to a CPL on the basis that he is the residual beneficiary of Wendy’s Estate. He says, however, that he has an interest in land sufficient to support a CPL, by way of a constructive trust, unjust enrichment, or quantum meruit for services provided because:
a. Wendy promised that he would have the house. She would have given it to him, but an existing mortgage prevented her from doing so; b. For 16 years he cared for the increasingly invalided Wendy, did all the cooking, cleaning, and other housework, and performed all the home maintenance, all at his expense; c. During April and May 2023, through his lawyer, he paid $17,000 to Wendy’s benefit including paying for household expenses and her nursing home expenses.
36Clarissa says that it is not a triable issue that Gough has any interest in the house. He expended no effort or money to benefit Wendy. He did not care for Wendy. He did no home improvements. He incurred no expenses and paid no money on her behalf. Rather, the opposite is true. Gough abused his position. He lived off of Wendy. She paid for groceries and household expenses. Gough laid waste to the property, and contributed nothing.
Analysis
Credibility
37The evidence on this motion raises serious questions of credibility which each party alleges against the other. Most of the credibility issues relate to Gough’s credibility. Normally, credibility issues are deferred to the trial judge who hears viva voce evidence. In this case, however, the credibility questions can be resolved on the face of the record without an oral hearing.
38Both parties have an interest in the outcome of the litigation.
39Clarissa’s interest in the outcome of the litigation is not personal. She stands to gain and nothing. She is a residual beneficiary in Wendy’s Will, but only if Gough cannot inherit. In any event, the house will not remain in the estate should Clarissa become the primary beneficiary. Instead, Clarissa’s interest is that her mother be protected by the sale of the home to eliminate unnecessary expense and therefore eliminate the shortfall between Wendy’s cash flow and expenses, and to provide a pool of capital to meet Wendy’s needs.
40Gough, on the other hand, has a direct personal stake in the outcome of this motion and the action. He lived with his mother but is not on title. Subject to his current incarceration, Gough continues to live rent free of the house notwithstanding that his mother has been in a nursing home for 20 months. If he is successful in obtaining a CPL, the current sale of the home will be ended.
41Setting aside the effect on his credibility of Gough’s direct personal interest in obtaining a CPL, Gough’s evidence, itself, causes me to reject his evidence. He lacked candour and was vague in circumstances were both were called for. Some examples of this are:
a. Most of his evidence consisted of bald assertions. b. He relied on the opinion of people who did not give evidence directly. For example, he bolstered his opinion that Wendy lacked competence to give the 2023 Power of Attorney to Clarissa by saying that doctors and the nursing home chief nurse agreed. He obtained no opinion or affidavit from them. He did not identify the individuals nor indicate when the opinion was proffered. This is hearsay. Gough has no demonstrated expertise to opine on Wendy’s competence to give the Power of Attorney.. c. Gough gives the impression that he looked after his mother and the house, perhaps not perfectly but adequately. He said that in the winter of 2022 and spring of 2023 he planned and began renovations to the house which he could not complete because of his incarceration. He produced no bank statements, receipts, or credit card statements to substantiate that he spent any money he spent for Wendy’s benefit or to maintain the house. The photographs taken in 2023 indicate he did not maintain the house or that he commenced any renovations before his incarceration. The photographs indicate that he could not have looked after Wendy adequately, or at all, in that house, in that condition. Because Wendy’s evidence about the house’s condition in 2023 is corroborated by photographs that show the deplorable conditions which make the house uninhabitable, I accept Wendy’s evidence that the house was in the same condition in 2018, and 2020. d. He first said that as of the spring of 2023 he was “detained’. He later admitted he was incarcerated. He never mentioned why. Clarissa argues that Gough must have known that these facts were relevant to his credibility, especially the breach of condition charges. Any impact on Gough’s credibility by virtue of his not mentioning why he was incarcerated is limited. There has been no finding with respect of the charges. He is presumed innocent until then. e. He mentioned that there was a mortgage of $140,000 on Wendy’s house that prevented her from giving title to him. He failed to mention that he gave another mortgage under the power of attorney, which he discharged in March 2023. He indicated that this mortgage was given to fund home repairs. The photographs from August 2023 indicate that no such repairs were commenced. f. Clarissa said that after 3 May 2023, she discovered that expenses from February were outstanding: namely, approximately $8,300 in nursing home fees, $2,100 in Hydro accounts, $1,151 in water bills, and $633 in gas bills. In addition, the insurance and property taxes were in arrears. Gough’s lawyer’s trust statement indicates that the outstanding house insurance for the 2023-2024 policy year was $5212.08. Gough said that since he was incarcerated from 11 April onward, he instructed his lawyer in May, to pay outstanding expenses as evidenced by the lawyer’s trust statement. Gough does not explain, however, why he allowed the arrears to accrue for the three months before he was incarcerated. g. He says nothing about the obvious state of the house at the time he was incarcerated. h. He says that he had an agreement with Wendy that he would get the house once the mortgage was paid. This is an agreement with respect to land and should be evidenced in writing, but is not. Further, Wendy is alive. She is presumed competent under the Substitute Decisions Act as she is over 18. The lawyer who drafted the Will and power of attorney in 2023 was obliged to satisfy himself that Wendy was competent to appreciate the nature of the document she was instructing upon and competent to give the instructions. Based on that, I infer that she is likely currently competent. Wendy could have confirmed the oral agreement she had with Gough. No evidence came from Wendy directly or indirectly. The failure to call evidence from Wendy affects both parties. Gough, however, has the persuasive burden on the motion.
42Many of the issues raised above do not pertain directly to the test for granting a CPL. They directly and negatively affect Gough’s credibility with respect to why he says he is entitled to the CPL.
43Based on the foregoing, I cannot accept Gough’s evidence except where it is corroborated by other independent evidence. For example, I accept that in May 2023, through his lawyer, Gough paid four months of arrears in nursing home fees, as well as made payments for the house insurance, Hydro, gas, and water bills. These payments are corroborated by the lawyer’s trust ledger. The trust ledger does not indicate for what time period the Hydro, gas, and water bills were outstanding.
Is there a Triable Issue that Gough has an Interest in the Property?
44Given the credibility findings I have made on the face of the record with respect to Gough, I do not find that there is a triable issue that he had an interest in the real estate sufficient to support a CPL.
45Setting aside the credibility issues, I can still not find an arguable case that Gough has an interest in the property sufficient to sustain a CPL:
a. Even if I accept that Wendy intended to give Gough the property, an intention to give is not enforceable and cannot sustain an interest in the property sufficient to support a CPL. b. Even if I accept the discussion with Wendy as reported by Gough in which she purported to agree to give Gough the house, that conversation as Gough relates it does not show that he and Wendy had a meeting of the minds on the essential terms of the agreement in order for me to find that there was a contract with respect to the transfer of the property to Gough (see: Downey v. Arey, 2021 ONSC 2781, aff’d 2022 ONCA 673). c. If Gough has an interest in the property, the only uncorroborated evidence is that he contributed $17,000.00 of money or effort to Wendy’s benefit. I find that this is insufficient to constitute a triable issue as to whether Gough had an interest in the property to sustain a CPL.
Damages
46Gough has claimed damages as an alternate to a CPL, on the basis of constructive trust, unjust enrichment, and quantum meruit for services provided. This is no longer fatal to an application for CPL. The question remains, however, whether damages are adequate relief in this case.
47I conclude that damages are adequate relief.
48In the circumstances of this case, there is no doubt that real estate is unique. If I accept that Wendy promised to give the house to Gough, it was the house they lived in, not some other house, or any house.
49Were I to accept that Wendy promised to give the house to Gough, he could only take title to the house if those with encumbrances agreed that Gough could assume the obligations secured by the encumbrances. The parties agree that there was a mortgage on the house at the time Gough was incarcerated, given to the Bank of Nova Scotia, of about $140,000. There is no evidence that the bank would consent to Gough assuming the mortgage, nor is there evidence that Gough had independent financing to pay off the mortgage.
50To the extent that Gough’s claim is in unjust enrichment or a quantum meruit return of his services to Wendy, damages are an adequate remedy.
Balance of Prejudice
51Before granting a CPL, I am required to weigh the harm done to Wendy if the CPL is allowed to issue against the harm done to Gough if this CPL is refused even with alternate security.
52This balancing of harm weights significantly against issuing the CPL.
53The cost of maintaining the home and of maintaining Wendy in the nursing home exceeds Wendy’s cash flow by $925.03. If she is given a private room (which all parties agree she should have) the expense over cash flow shortfall increases by about another $400. If the CPL is granted, Wendy will not be able to access the equity in the home to bridge the monthly deficit. The deficit will have to be covered by Clarissa, Gough, or somebody else. Without the expense of the house, the nursing home expenses are approximately $772.47 less than her income, or $372.47 less than her income if Wendy is placed in a private room. There would be little or no room for other expenses that Wendy might incur for things she might require.
54If the CPL is issued, then the current sale will be lost and Wendy will have to pay back the deposit and may face a lawsuit for failing to complete the transaction. Even if she is successful in defending such an action, she will still be prejudiced to the extent that she incurred non recoverable.
55Gough has not indicated that he can assume the costs of running the property.
56Gough suffers some prejudice without the CPL. Without the CPL, the sale of the home will complete on 21 September 2023. Gough will not be able to return to the home when he is released from his incarceration. He will not have access to any equity in the home.
Alternate Security
57While I have held that a Gough has failed to establish that he has a triable issue with respect to whether he has an interest in the property, I have done so solely for the purpose of whether a CPL should issue. My findings in this respect are limited solely to the motion and do not bind the trial judge who will have the benefit of a full record. Accordingly, a final determination on a full record of whether Gough has an interest in the property, has yet to be made. Further, whether Wendy had legal capacity to give the power of attorney she gave him 2023, whether Gough is entitled to damages because of a constructive trust, unjust enrichment, or quantum meruit for services rendered are also to be determined at trial.
58Balancing the need to protect Gough’s interests given the issues that have to be determined at trial, and the need to have funds available to Wendy to meet her needs comfortably, subject to final determination of this action by judgement or settlement, or any further order of the court, I order as follows:
a. The real estate agent handling the sale of the property (or such other person or institution as the Court may appoint or the parties agree to) shall hold the net proceeds of the sale in trust, with interest to be accrued to the credit of the action pending any further order of the Court; b. The exception to the foregoing is that the person or persons holding the net proceeds of sale in trust shall pay out a reasonable amount on a monthly basis or otherwise, as may be determined by agreement or by the court, to supplement Wendy’s pension income to meet her needs and requirements comfortably.
Costs
59Neither party filed costs submissions as required by the Central West Practice Direction and Notice to the Profession. Accordingly, I will decide who pays costs to whom and in what amount based on written submissions not to exceed 2 double spaced pages (excluding Bills of Costs and Offers). Wendy/Clarissa shall serve, file, and upload to Caselines her/their submissions by 4 pm, 27September 2023, and Gough, his by 4 pm, 1 November 2023.
Trimble, J.