Court File and Parties
COURT FILE NO.: CV-16-554222 DATE: 20240514
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
APHRODITE TZOUANAKIS Plaintiff – and – SANDY TZOUANAKIS and WILLIAM TRIANTAFYLLOPOULOS Defendants
COUNSEL: Alnaz I. Jiwa, for the Plaintiff and the Third Party Joel Vale and David Fogel, for the Defendants
– and – KELLY TZOUANAKIS Third Party
HEARD: September 18, 19, 20, 21, 22 and October 13, 2023
SHIN DOI, J.
[1] This is a dispute between the Plaintiff, Aphrodite Tzouanakis (the “Mother”) and the Defendants, daughter Sandy Tzouanakis (“Sandy”) and son-in-law William Triantafyllopoulos (“Bill”), and Third Party, daughter Kelly Tzouanakis (“Kelly”). The Mother claims a declaration of interest in land and premises municipally known as 275 Strathmore Boulevard, Toronto, Ontario (the “Strathmore Property”), legal title of which is held in the names of Sandy and the Mother’s younger daughter, Kelly. The Mother also claims a declaration that 66% of the land and premises municipally known as 2374 Goodison Avenue, Mississauga, Ontario (the “Goodison Property”), legal title of which is in the names of Sandy and Bill. In the alternative, the Mother seeks a determination of what amount of funds was contributed by the parties for the purchase and maintenance of the Goodison Property, and a declaration as to the percentage of shares that are held in trust.
[2] At the end of the trial, I declared that the beneficial owner of the Strathmore Property is the Mother. I declared that the interest held by the defendant Sandy (and Kelly) in the Strathmore Property is held in trust for the Mother. For clarity, the Mother is the sole beneficial owner of the Strathmore Property. I found that the Mother contributed a sum more than $100,000.00 towards the purchase and maintenance of the Goodison Property. The evidence indicates that approximately, $200,000.00 was contributed to the purchase of the Goodison Property by the Mother through cash and a mortgage on the Strathmore Property which she paid. I declared that the Mother owns 35.6% of shares in the Goodison Property and is therefore, entitled to 35.6% of the profit from the sale of the Goodison Property. I made an Order requiring the land registrar to transfer the interests as determined. I awarded the Mother pre-judgment interest from the date of closing of the sale transaction and post-judgment interest. The following are my reasons.
Facts
[3] In 1975, the Mother and her late husband (the “Father”) purchased a matrimonial home for the family. The Mother worked very hard to care for her family. She worked long hours and double shifts at a hospital, worked every holiday, and also worked at home, preparing meals and cleaning the house. The parents paid for everything including household expenses, the children’s clothing, and car insurance for the children. The children resided with their parents in the matrimonial home until their late 20s. The family was very close-knit, loving, and happy.
[4] In 2003, the Strathmore Property was purchased for $260,000.00. The Father paid $100,000.00 and the balance of $160,000.00 was financed through a bank mortgage in the names of Sandy and Kelly. The Mother also provided a personal guarantee.
[5] The Mother states that she asked Sandy to purchase the Strathmore Property in her own name which was later amended to both Sandy and Kelly. The Mother further submits that Sandy and Kelly applied for a mortgage on the Strathmore Property but did not otherwise contribute anything to the purchase closing costs, maintenance, rent, or payment of expenses.
[6] The Mother concedes that after closing of the Strathmore Property, Kelly and Bill and a few of their friends came to help clean the Strathmore Property and paint it. The costs of supplies was paid for by the Mother who also paid for their dinner to thank them. It is alleged that the none of them expected to be paid for any work they did at that time in 2003.
[7] The Mother explains that after closing, they opened a bank account in the names of the Mother, the Father, Sandy and Kelly. The Mother operated the bank account and during the months that there were no tenants, the Mother paid for any shortfall. The Mother states that Sandy and Kelly were not expected to and never contributed anything to the bank account or took care of any rentals.
[8] In 2005, Sandy and Kelly moved into a rental apartment. The sisters lived together for one year until Sandy moved in with her boyfriend at the time, Bill. Kelly returned home to live with her parents.
[9] In 2011, Sandy and Bill purchased the Goodison Property. The closing of the Goodison Property was completed on May 2, 2011. It is alleged that Sandy and Bill asked the Mother to join in purchasing the Goodison Property and that they agreed that 2/3 would belong to the Mother and 1/3 would belong to Sandy and Bill because 2/3 of the funds to buy the Goodison Property would be contributed by the Mother while Sandy and Bill would pay 1/3.
[10] The Mother alleges that in 2011, she paid Sandy and Bill an amount of $100,000.00 and the amount of $98,948.91 to the lawyer from the refinancing of the Strathmore Property, as an investment in the Goodison Property. None of the refinancing funds from the Strathmore Property went to Kelly.
[11] The Mother alleges that in 2014, Sandy improperly withdrew funds in the sum of $16,8000 from the bank account for her own use. The Mother withdrew her claim against Sandy for that amount. When the Mother started questioning Sandy about the withdrawals, it is alleged that Sandy started asserting that she was the owner and wanted to sell and divide the Strathmore Property.
[12] On April 25, 2016, Sandy’s lawyers sent a letter to Kelly offering to sell Sandy’s 50% interest in the Strathmore Property to Kelly or having the Strathmore Property listed for sale. Sandy’s lawyers informed Kelly that if she was not agreeable, then immediate steps would be taken to obtain an order for sale of the Strathmore Property.
[13] The Mother commenced this action on June 6, 2016.
[14] Sandy acknowledges that the Mother provided financial assistance to her over the years but denies that the financial assistance was in the form of a loan or had any corresponding repayment obligations. Sandy and Bill argue that the monies provided by the Mother were a gift.
[15] Sandy and Bill sold the Goodison Property on November 18, 2021 and moved to Greece due to Sandy’s health.
The Strathmore Property
[16] It is clear that the Mother is the beneficial owner of the Strathmore Property through a resulting trust.
[17] “A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner” (Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 at para 20, cited in Andrade v. Andrade, 2016 ONCA 368 at para 57). Sanfilippo J. in Bradshaw v. Hougassian, 2023 ONSC 3266 sets out the principles as follows,
A resulting trust arises where the property is in one party’s name, but impressed with an obligation to return the property either because the holder is a fiduciary or because the transferee gave no value for the property. [12] To determine whether the transfer of property was made for no value, the actual intention of the transferor at the time of the transfer is the governing consideration. [13] Where a gratuitous transfer is made, there is a rebuttable presumption that the transferor intended to create a trust rather than to make a gift, on the principle that “equity presumes bargains and not gifts”. [14] The onus is on the person receiving the transfer to demonstrate that a gift was intended, failing which the transferee holds the property in trust for the transferor. [15]
[18] The title to the Strathmore Property is in the names of Sandy and Kelly but they gave no value for the Strathmore Property and they are under the obligation to return it to the Mother. The Father and the Mother purchased the Strathmore Property with their own money in 2003. Kelly testified that the sisters knew that the Strathmore Property was an investment property for their parents. Sandy and Kelly signed a mortgage of $160,000 but the Mother was the guarantor and the mortgage payments were made by the parents. Kelly testified that it was her parents who arranged the mortgage. Sandy stated that her parents would not make a purchase if they did not have the funds to do so. The parents wanted to plan for the future by purchasing the Strathmore Property so when they passed, the matrimonial home would go to one daughter and the Strathmore Property would go to the other daughter.
[19] In my view, the argument that the purchase of the Strathmore Property was a family partnership or venture is weak. Sandy and Kelly were adults in 2003, residing with their parents in the matrimonial home. However, Sandy and Kelly did not pay any rent to their parents. Bill was not part of the family in 2003 as he started dating Sandy in 2004. Sandy and Bill did not give any value for the Strathmore Property. Sandy and Kelly assisted in obtaining a tenant for the Strathmore Property by arranging signage and ads in the newspaper. They also prepared and cleaned the house and garage and helped with the landscape. However, in my view their assistance was minimal and not ongoing. The cost of supplies was paid for by the Mother who also paid for a dinner to thank them for their assistance. The Mother also offered to pay the taxes on the rental income. Kelly testified that she paid the taxes ($300/$400 per year) on the rental income but not because she was an owner of the Strathmore Property but because she was named on title. Kelly testified that she was not asked nor expected to contribute to the Strathmore Property and any assistance such as cutting the grass on occasion was to assist her parents.
[20] The Father managed the rental and upkeep of the Strathmore Property and then after he passed, the Mother managed the rental and upkeep of the Strathmore Property. The Mother obtained cheques from the tenants, deposited the cheques, and paid the property taxes. Neither Sandy or Kelly managed the Strathmore Property including roof and furnace repairs. There was a shortfall of $5,400.00 on monies payable in connection with the Strathmore Property in 2003, and Sandy did not pay any share of the losses. Sandy testified that if the Strathmore Property went into default, she knew that the Mother would cover it as a guarantor. Sandy was working full-time at that time but did not invest any of her money in the Strathmore Property. Sandy was a contributor of taxes to the Strathmore Property in the amount of $10,000.00. Sandy did not withdraw any monies from the joint account established for the collection of rent monies from 2003 to 2014. However, in 2014, Sandy did withdraw monies from the joint account but the Mother confronted Sandy about those withdrawals, and Sandy did not withdraw further monies. Sandy withdrew approximately $16,800.00 from the bank account.
[21] The Defendants argue that the presumption of resulting trust is rebuttable. They cite Pecore at 24,
The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p.375 and E.E. Gillese and M. Milczynski, The Law of Trusts (2 nd ed. 2005), at p. 110. This is no because equity presumes bargains, not gifts.
[22] The Defendants produced a reporting letter dated September 4, 2003, in connection with the purchase of the Strathmore Property (Exhibit 25). The reporting letter does not mention that title was being held by Sandy and Kelly in trust for their parents. The lawyer who was retained for the purchase of the Strathmore Property testified that he would have included the beneficial owners or mention the beneficial ownership in the reporting letter. He stated that the box was not checked indicating trustees. In 2003, however, there was no requirement to indicate beneficial ownership in a prescribed form. He said that he would review reporting letters for errors and correct them. However, the reporting letter contains an error – it is addressed to Mr. and Mrs. Sandy Tzouanakis instead of to Sandy and Kelly. The lawyer stated that either he or his Assistant would have drafted the reporting letter which is a template form and information would have been inserted into the form. The events occurred 20 years ago. The lawyer said he was not able to find his complete file because it was an old file and destroyed. He did not have any notes or remember meeting with the parties. The lawyer testified that he did 200 to 300 real estate transactions per year and did not have a specific recollection of that transaction.
[23] Kelly testified that she remembered visiting the real estate lawyer with her parents and Sandy about the purchase and sale of the Strathmore Property. Kelly stated that she and Sandy were not involved in the discussions with the lawyer as the lawyer was talking directly to the parents about the transaction. The parents were the controlling minds.
[24] In my view, there is insufficient evidence to displace or rebut the presumption that the Mother is the beneficial owner of the Strathmore Property through a resulting trust.
The Goodison Property
[25] The Mother has a 35.6% interest in the Goodison Property through a purchase money resulting trust, and the monies contributed by the Mother were not a gift to Sandy and Bill but an investment.
[26] The Supreme Court of Canada explained a purchase money resulting trust in Pecore at para 21,
The purchase money resulting trust is a species of gratuitous transfer resulting trust, where a person advances a contribution to the purchase price of property without taking legal title. Gratuitous transfer resulting trusts presumptively arise any time a person voluntarily transfers property to another unrelated person or purchases property in another person’s name (D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (4th ed. 2012), at p. 397).
[27] “Courts have applied the presumption where funds are advanced between a parent and an adult child, particularity in matrimonial claims” (Bradshaw v. Hougassian, 2023 ONSC 3266 at 40). It was further held in Pecore at para 36, “There should therefore be a rebuttable presumption that the adult child is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs.” In Nishi, the court held at para 30, “the presumption of resulting trust can be rebutted if the recipient of the property proves, on a balance of probabilities, that the person who advanced the funds intended a gift (Pecore, at paras. 24 and 44).”
[28] The Defendants argue that the Mother gifted the monies to Sandy and Bill to purchase the Goodison Property. Sandy and Bill testified that the Mother gifted monies to her grandchildren and offered to help them buy the house because they had a child and were living in a condominium at the time. Bill stated that it was customary in Greek culture that parents would gift monies for the purchase of a home. The Mother toured houses with Sandy and Bill prior to the purchase. Sandy and Bill assured the Mother that there would be a place for her in the Goodison Property.
[29] In Bill’s discovery transcript, questions 39, 40, and 41, Bill admits that the amount of $200,000 was received from the Mother towards the purchase of the Goodison Property. Bill admitted that $100,000 was received from the Mother through her own savings and applied towards the purchase of the Goodison Property. Bill admitted that the amount $98,948.71 was received from the refinancing of the Strathmore Property. As discussed above, the beneficial owner of the Strathmore Property is the Mother and those amounts contributed should be credited to her.
[30] The Mother testified emphatically that the monies contributed were an investment. The Mother had previously invested in the Strathmore Property. The Mother also managed her money well. She worked hard to provide for her family when the Father fell ill and passed. The Mother submitted that she agreed with Sandy and Bill that 2/3 of the Goodison Property would belong to the Mother and 1/3 would belong to Sandy and Bill because of the funds contributed. However, there is no documentation or evidence setting out that split of ownership.
[31] The purchase price of the Goodison Property was $561,000.00. The sum of $200,000.00 contributed by the Mother represents 35.6% of the purchase price of the Goodison Property. Sandy and Bill also borrowed the amount of $411,000.00 from Computershare Trust Company of Canada and mortgaged the Goodison Property. Sandy and Bill made a monthly mortgage payment of $1500.00.
[32] The total amount paid or raised to buy the Goodison Property was $609, 672.96 or $58, 323.88 more than required to buy the Goodison Property. The Mother argues that neither Sandy nor Bill paid anything to buy the Goodison Property. Bill explained that the costs of the Goodison Property was actually much more than $561,000.00 due to renovations and other related costs.
[33] Bill testified that they sold their condominium residence in 2011 for $281,000.00 and paid $250, 137.38 to discharge the first mortgage. Accordingly, Bill and Sandy had cash to contribute to the purchase of the Goodison Property.
[34] The Statement of Adjustments for the Goodison Property (Exhibit 27) indicates that the sale price was $561,000.00 and two deposits of $10,000.00 each were made. The realty taxes were in the sum of $644.76 and the balance due on closing was $541,644.76. The letter dated May 2, 2011, from real estate lawyer R. Zarowsky regarding the purchase of the Goodison Property indicates that the sum of $410,724.25 was received from Computershare Trust Company of Canada, the amount of $98,948.71 was transferred from the refinancing of the Strathmore Property and that the amount of $41,031.36 was received in cash. Bill testified that he paid the amount of $41,031.36. Bill further testified that he and Sandy applied for the mortgage and that Bill and Sandy were responsible to pay for the mortgage. Bill and Sandy made monthly payments on the mortgage.
[35] During the ownership of the Goodison Property, Sandy and Bill borrowed funds from multiple lenders. It is evident that the couple had financial difficulty and tried to refinance the Goodison Property. Kelly testified that she wrote a cheque, noting on the cheque that it was a loan (Exhibit 14), to Sandy because Kelly understood from the Mother that Sandy was experiencing financial difficulty and unable to pay her mortgage on the Goodison Property.
[36] The Trust Ledger Statement dated November 18, 2021 from the real estate lawyer to Bill and Sandy indicates that the Goodison Property was sold for the sum of $1,000,701.86 and the amount of $622,328.27 was paid to First National Financial to discharge the mortgage. After legal fees and disbursements, the sum of $376,489.09 was paid to Sandy and Bill. The mortgaged amount of $622,328.27 was more than the original purchase price paid for the Goodison Property.
[37] I find that the Mother contributed approximately, $200,000 towards the purchase of the Goodison Property which was priced at $516,000. Accordingly, the Mother holds a 35.6% share in the Goodison Property through a purchase money resulting trust. A one-third share (30% to 33%) is not sufficient given the correct calculation. The presumption of a resulting trust was not rebutted on the evidence.
[38] The Mother is entitled to 35.6% of the $376,489.09 sum paid to Sandy and Bill from the proceeds of sale of the Goodison Property. That 35.6% share is the amount of $134,030.11. While it is arguable that the Mother is entitled to 35.6% of the total sale price of the Goodison Property, the monies contributed by the Mother constituted an investment and hence, in my view, she assumed some financial risk. The financial risk in this case resulted from the repeated borrowing by Sandy and Bill against the Goodison Property as collateral because they had financial issues and hardship. Hence, those mortgaged funds must be deducted from the proceeds of sale before distribution to the parties.
Disposition
[39] I declare that the interest held by Sandy in the Strathmore Property, legal title of which is held in the names of Sandy and Kelly, is held by Sandy and Kelly, in trust, for the Mother. I declare that the Mother is the sole beneficial owner of the Strathmore Property. I order the Land Registrar to transfer title of the Strathmore Property to the Mother.
[40] I declare that prior to the sale of the Goodison Property, the Mother had a 35.6% interest in the Goodison Property, legal title of which was in the names of Sandy and Bill. I order Sandy and Bill to pay the Mother the amount of $134,030.11 plus pre and post-judgment interest.
[41] The claims requiring Sandy to repay the Mother for monies withdrawn from the bank account and damages for misappropriation and/or conversion are withdrawn by the Mother.
[42] I order costs payable to the Mother on a partial indemnity basis in the amount of $35,000.00 as proposed by Sandy and Bill. The amount of the costs is reasonable and proportionate given some success by Sandy and Bill and withdrawal of certain claims by the Mother.
Justice J.S. Shin Doi Released: May 14, 2024
