Court File and Parties

Court File No.: CV-23-00707754-0000
Date: July 23, 2025
Court: Superior Court of Justice - Ontario

Applicant: Karen Harris
Respondent: Joseph Melo

Before: M.D. Faieta
Applicant Counsel: Bruce E. Bussin
Respondent Counsel: John P. Ormston
Heard: July 10, 2025

Endorsement

Background

[1] On December 1, 1989, the parties purchased an investment property in Toronto (“the Property”). The Applicant acknowledges that she did not contribute any money to the purchase of the Property. Since about 1991 the Applicant has lived in Vancouver and the Respondent has managed the Property.

[2] In her Application, issued October 16, 2023, the Applicant seeks, amongst other things, an order for the partition and sale of the Property, an order requiring the Respondent to deliver an accounting of all income and expenses in respect of the Property, and an order requiring the Respondent to pay to the Applicant fifty percent of the net income for the Property. In her Factum, and at the hearing of this Application, counsel confirmed that the latter two items are only sought from September 20, 2021.

[3] In his Cross Application, issued January 18, 2024, the Respondent submits that the Applicant is not the “true owner” of her 50% registered interest in the Property. The Respondent seeks a declaration that he is the sole registered owner of the property and an order rectifying title to the property to show him as the sole owner.

Background of the Relationship and Property

[4] The parties dated for a few years until their relationship ended in early 1990 when they were about 25 years old. The Applicant lived in her condominium in Mississauga and the Respondent lived in his mother’s home. There is no dispute that the parties were not spouses. The Applicant was a flight attendant and had taken some courses in interior design at a community college. The Respondent operated an arcade business and a vending machine business with his brother.

[5] The Property has a commercial unit on the ground floor and a two-bedroom apartment on the second floor. The Respondent states that he and Mario Ciniello entered into an agreement to purchase the Property for $314,000.00. They each paid $5,000 towards a $10,000 deposit. Although a copy of the APS was not produced, the Respondent produced a copy of the Statement of Adjustments documenting the Respondent and Mr. Ciniello as the purchasers and that a deposit of $10,000 had been paid. The Respondent states that immediately prior to closing the purchase of the Property, Mr. Ciniello told the Respondent that he could not proceed with the purchase as “… he had lost his money in a card game”. As a result, the Respondent states that he “… was pressured to find a signatory for the mortgage that he needed to complete the transaction”.

[6] Nowhere in his affidavit or on cross-examination did the Respondent state that he and the Applicant agreed or discussed, at the time of the purchase of the Property, that she would hold her 50% interest in the Property in trust for him. The Respondent states in his affidavit:

It was always the intention of the Applicant and me that she would come onto title so that I would qualify for the mortgage from [Central Guaranty] to complete the transaction.

At no time whatsoever was it agreed upon or intended that the Applicant would have a vested interest in the [Property] as an owner. She simply came onto title to assist me with the mortgage and for no other reason.

[7] The Applicant states in her affidavit:

In or about the time of the closing, Joseph shared with me his enthusiasm for the purchase of the Property and treated me as a full participant in “our” purchase. At no time did Joseph say or imply that I was less than an equal owner or merely a guarantor.

If either one of Joseph or Mr. Finkelstein had told me prior to December 1, 1989 that the Deed to me of a 50% interest, as appears on Exhibit “A”, was bogus or untrue, then I would never have agreed to being involved. Nor would have I agreed to misleading a mortgage broker or lender as to my involvement as a 50% co-owner when another source of financing was sought months later after completion of our purchase of the Property. …

When Joseph approached me in November 1989 about becoming a 50% co-owner, the purchase of the Property seemed to me a good investment, Joseph had a prior successful experience with an investment similar to this one, I believe that the Property was well located and its value would benefit from immediately cleaning upthe run-down Property and finding tenants at market rent.

[8] The Applicant states:

My name as a borrower on the VTB mortgage and on the mortgage to Central Guaranty Trust Company made me 100% responsible for the entire loan, interest and fees until the debts were fully repaid. … At that time, Mr. Melo was living at this mother’s home without any reported earnings nor investment gains. My financial future and my property were at risk, not Mr. Melo’s.

[9] The Applicant also states that she visited the Property on multiple occasions with the Respondent and discussed what changes to the Property were needed in order to make it attractive to tenants.

[10] The Applicant also states that she found a tenant to operate a restaurant on the ground floor and that she prepared the lease. The Applicant states that she would not have included herself as a landlord on the lease had she not been a co-owner of the Property.

[11] On the purchase of the Property the parties were represented by the late Mr. Harvey Finkelstein, Q.C. His file for this purchase has not been found. The following documents were registered on title to the Property. Some of these documents were filed as exhibits.

• (a) A Power of Attorney dated November 29, 1989, from the Applicant to the Respondent which appointed him as her attorney limited to “the purpose of signing any necessary documentation for the purchase and necessary mortgaging of [the Property]”. The power of attorney does not include the power to manage the Property or to sell the Property on the Applicant’s behalf. The POA was drafted by Mr. Finkelstein. He registered the POA on December 1, 1989.
• (b) A transfer deed of the Property to the parties dated December 1, 1989. The registered deed shows that they took title “each as to an undivided 50% interest”.
• The accompanying Land Transfer Tax affidavit was signed by the Respondent as the Applicant’s attorney. It shows that the purchase price of $314,000.00 was paid by $40,000 in cash and a $274,000.00 vendor take back mortgage (“VTB Mortgage”). A $50,000 payment towards the principal of the mortgage was to be made on or before January 30, 1990.
• The Respondent states that he granted a mortgage to Central Guaranty in order to “close the transaction”. However, this is incorrect. The VTB mortgage was used to finance the close of the purchase was signed by the Respondent (both on his own behalf and for the Applicant) on November 30, 1989 and then registered on title as Instrument #C614873. This VTB mortgage was replaced by financing provided by Central Guaranty about five months after closing of the purchase of the Property.
• (c) A charge to Central Guaranty Trust Company (“Central Guaranty”) dated April 5, 1990.
• (d) A transfer of the charge to The Toronto-Dominion Bank dated February 14, 1994.
• (e) A charge from the parties to Uniscope Financial Corporation dated January 20, 2003.
• (f) A charge from the parties to Emanuel Ribeiro dated July 21, 2003.
• (g) A charge in the amount of $260,000 from the parties to Fernando Ribeiro in trust, Maria Ruivo Ribeiro and Marilyn Belas, dated March 11, 2011. The parties were represented by Jack Frymer. The Charge Document states “I, Joseph Melo, say that to the best of my knowledge and belief, the power of attorney is still in full force and effect and the principal had the capacity to give the power of attorney when giving it and was at least 18 years of age when the power of attorney was executed. … I, Jack Frymer, confirm that I have reviewed the power of attorney with the attorney, and the attorney has confirmed that 1. The attorney is the lawful party named in the power of attorney. 2. The attorney is acting within the scope of the authority granted under the power of attorney, and 3. To the best of the attorney’s knowledge, information and belief the power of attorney was lawfully given and has not been revoked.
• (h) A charge in the amount of $105,000 from the parties to Fernando Ribeiro, Marilyn Arruda, Maria Ruivo Ribeiro and Fernando Ribeiro dated July 17, 2012. The Charge Document contains the same statement from Mr. Melo and Mr. Frymer.
• (i) On May 15, 2017, the Applicant revoked the POA. On May 23, 2017, the Revocation was registered on title.

[12] In her affidavit, the Applicant states that her relationship with the Respondent ended in February 1990 after he assaulted her in her apartment in a fit of rage. The Respondent did not address this evidence in his affidavit, however on cross-examination he described being hurt and disappointed by the end of their relationship. He did not recall going to the apartment and denied having assaulted her. After this incident, the Applicant states that she took steps to ensure that she never saw the Respondent again. Sometime later in 1990, the Applicant states that she met her future husband and in 1991 moved to Vancouver, British Columbia where they married and has remained.

[13] As further described below, the Applicant states that she tried on three occasions, starting in about 1992, “to negotiate a resolution of the ownership of [the Property]”.

[14] When those efforts failed, the Applicant retreated. She learned in about 2017 that her POA had been used by the Respondent to secure additional financing in amount that is far greater than the initial mortgage. This led to the registration of her Revocation of the POA.

Issues

[15] This Application raises the following issues:

1. Should the Affidavits of Mario Ciniello and Ester Fontes be admitted?
2. Is the Respondent’s trust claim statute-barred?
3. If not, is the Applicant’s interest in the Property the subject of a resulting or constructive trust in favour of the Respondent?
4. Should an order for partition and sale be granted?

Issue #1: Should the Affidavits of Mario Ciniello and Ester Fontes be admitted?

[16] The Respondent relies on his affidavit as well as the affidavit of his life-long friend, Mario Ciniello, and the affidavit of Ester Fontes, who was Mr. Finkelstein’s law clerk. Neither Mr. Ciniello and Ms. Fontes attended for cross-examination on April 16, 2025, or April 23, 2025. After the first non-attendance, counsel for the Respondent stated “I will make best efforts to have them attend on the 23rd but they don’t have to do what I say”. Given the affiants’ repeated failure to attend for cross-examination, the Applicant has been unable to test their statements and their credibility. I find that it just to strike out their affidavits pursuant to Rule 34.15 of the Rules of Civil Procedure.

Issue #2: Is the Respondent’s trust claim statute-barred?

[17] Section 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15 (“RPLA”) states:

No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[18] In Browne v. Meunier, 2023 ONCA 223, the Ontario Court of Appeal found that the common law rule of discoverability applies to the application of the limitation period under section 4 of the RPLA. At para. 14, B.W. Miller, J.A. stated:

The running of the limitation period under s. 4 would therefore be tolled until the material facts constituting the infringement were discovered or were discoverable by a reasonably diligent person in the circumstances of the rights holder. …

[19] The ten-year limitation period in section 4 of the RPLA applies to a request for a declaration that a person has a beneficial interest in land by way of constructive trust or resulting trust. In Waterstone Properties Corporation v. Caledon (Town), 2017 ONCA 623, para. 32, L.B. Roberts J.A. stated:

The words "action to recover any land" in s. 4 of the RPLA are not limited to claims for possession of land or to regain something a plaintiff has lost. Rather"to recover any land" means simply "to obtain any land by judgment of the Court" and thus these words also encompass claims for a declaration in respect of land and claims to the ownership of land advanced by way of resulting or constructive trust:

[20] In Gomes v. Da Silva, 2024 ONCA 792, para. 12, a mother and her son held an undivided 50% interest in title of a home as joint tenants. In 2008, the mother rejected her son’s request for consent to borrow against her interest. She proposed that either one of them purchase the other party’s interest. The Court found that the mother’s response had put her son on notice as to her position on ownership of the home and commenced the running of the limitation period.

[21] The Applicant submits that her position regarding ownership of the Property was “probably” known to the Respondent at the time of its purchase by the fact that the Property was registered in her name. It cannot be inferred from the mere fact that the Applicant was the registered owner of a 50% interest in the Property, that the Respondent knew nor ought to have known in December 1989 that the Applicant believed that she was also the beneficial owner of that interest. There is no evidence that the Applicant made any such statement to the Respondent at the time of the purchase.

[22] The Respondent states that in his affidavit:

From 1990, when our relationship terminated until 2023 when this Notice of Application was served, the Applicant never made any form of claim or demand for the [Property].

In or about 2015, the Applicant wanted to be removed from title. At that time, the Applicant discovered her claim to the [Property]. The Applicant knew that she would have to issue a lawsuit to obtain any participation in the [Property]; and knew that I was the one who did not agree to her claim for a portion of the [Property].

[23] In response, the Applicant states that on three occasions prior to this Application, she hired lawyers to negotiate a resolution of the ownership of the Property. She states that the first of these three occasions was in 1992. The Applicant states that she called to speak to Mr. Finkelstein to find out why he had not responded to any communications sent by her lawyer at WeirFoulds. Instead, the Applicant spoke with his law clerk, Ms. Fontes, who told her that the Respondent had an outstanding account with Mr. Finkelstein which led him to stop responding to her lawyer. The Applicant’s affidavit provides no further detail of her three attempts to resolve matters.

[24] On cross-examination, the Applicant states that she hired WeirFoulds in 1992 for the purpose of being “removed from the mortgage and to be removed from the title of the property.” The Applicant states that her lawyer had discussions with Mr. Finkelstein, whom she states represented the Respondent, over a three-year period with no resolution. The Applicant states:

At the end of it...and I still have the paperwork from it, at the end they were saying, “Well, you know, the last correspondence you were really anxious to get this done”. They are dealing with Finkelstein. And at the end then they said, “Well, we haven’t heard from you, what is holding it up?” and apparently Joe hadn’t paid his legal fees. … [Questions 155-160]

[25] On cross-examination, the Respondent agreed that the Applicant had hired WeirFoulds and in 1991 or 1992 was in communication with Mr. Finkelstein about a transfer of the Applicant’s interest in the Property to a person named Marcelo. Neither party provided a last name for this person. Marcelo worked in the restaurant located on the ground floor of the Property. The Respondent states that Marcelo had an issue with financing and backed out. [See Questions 175-177]

[26] There is no mention in the Applicant’s evidence, whether in her affidavits or on cross-examination, of a possible sale of her interest in the Property to Marcelo.

[27] However, the Applicant’s efforts to sell her interest in the Property to anyone, including Marcelo, is clearly inconsistent with the view that she held her interest in the Property for the benefit of the Respondent. While additional evidence, particularly the letters that were exchanged between counsel, may have been helpful, I find that the Respondent had notice that the Applicant, by her actions, was taking the position since at least 1995 that she held both the legal and beneficial title to 50% of the Property.

[28] Accordingly, I find that the Respondent’s claim for a declaration that the Applicant’s interest in the Property is being held in trust for him is statute-barred.

Issue #3: Is the Applicant’s interest in the Property being held in trust for the Respondent?

[29] Even though I have found that the Respondent’s claim for a declaration that the Applicant’s legal interest in the Property is being held in trust for him is statute-barred, for completeness, I will address the issue of whether such trust claim has been established.

[30] In Rascal Trucking Ltd. v. Nishi, 2013 SCC 33, Rothstein, J. stated:

1 A purchase money resulting trust arises when a person advances funds to contribute to the purchase price of property, but does not take legal title to that property. Where the person advancing the funds is unrelated to the person taking title, the law presumes that the parties intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person's contribution. This is called the presumption of resulting trust.

2 The presumption can be rebutted by evidence that at the time of the contribution, the person making the contribution intended to make a gift to the person taking title. While rebutting the presumption requires evidence of the intention of the person who advanced the funds at the time of the advance, after the fact evidence can be admitted so long as the trier of fact is careful to consider the possibility of self-serving changes in intention over time.

29 … In the context of a purchase money resulting trust, the presumption is that the person who advanced purchase money intended to assume the beneficial interest in the property in proportion to his or her contribution to the purchase price: see Waters' Law of Trusts in Canada, at p. 401.

[31] In Andrade v. Andrade, 2016 ONCA 368, para. 58, K. van Rensburg J.A. stated:

A purchase money resulting trust can occur "where a person advances a contribution to the purchase price of property without taking legal title": Rascal Trucking Ltd. v. Nishi, 2013 SCC 33, [2013] 2 S.C.R. 438 (S.C.C.), at para. 21. It is one of the "classic resulting trust situations" and can arise when a party contributes directly to the purchase price or the mortgage: Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014) at pp. 113-15. In Kerr v. Baranow, 2011 SCC 10, para. 12, Cromwell J. noted that it has been "settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, 'results' to the person who advances the purchase money". [Emphasis added]

[32] Where a party’s only contribution to a purchase is to sign on to the mortgage, this is insufficient to rebut the presumption of a purchase money resulting trust: Bachand v. Leclair et al., 2024 ONSC 4044, para. 37. The Applicant’s reliance on Inniss v. Blackett, 2022 ONCA 166 for the principle that “the court regards the assumption of liability on the mortgage financing as a contribution towards the purchase of a property” is misplaced as the presumption of a resulting trust in that case was based not only on the assumption of risk in co-signing the mortgage that made the house purchase possible but also on a modest financial contribution to the cost of purchasing the house: See Inniss, at para. 13.

[33] In this case, there is no dispute that the Applicant made no financial contribution to the purchase of the Property. Similarly, there is no evidence that she made any financial contribution to the mortgage payments. The Applicant’s assumption of risk on the mortgages that she signed, by her attorney, along with her limited involvement with the Property after it was purchased, is insufficient to rebut the presumption of a purchase money resulting trust. Further, there is nothing in the actions of the Respondent, at the time of the purchase or thereafter, which reflect an intention to gift 50% of the Property to the Applicant.

Issue #4: Should an order for partition and sale be granted?

[34] In Inniss v. Blackett, 2022 ONCA 166, para. 26, the Ontario Court of Appeal stated:

Joint tenants have a prima facie right to force a sale of a property under s. 2 of the Partition Act: Davis v. Davis, [1954] O.R. 23 (Ont. C.A.) (C.A.), at p. 29. The onus is on the party resisting the sale of the property to demonstrate that the property should not be sold. To exercise its discretion not to approve a sale, a court must be satisfied that the party seeking the sale is acting in a malicious, vexatious or oppressive fashion: Brienza v. Brienza, 2014 ONSC 6942, para. 25.

[35] The respondent concedes that if the applicant is found to have an ownership interest in the Property, then there are no grounds to oppose the order for partition and sale. However, the Applicant seeks additional terms such as control over the sales process, which I am not prepared to grant given that the parties have not had the opportunity to work out these issues through their lawyers.

Judgment

[36] Judgment shall be granted on the following terms:

1. The Respondent’s Cross-Application for a declaration that the Applicant is holding her 50% legal interest in trust for the Respondent is dismissed on the grounds that it is statute-barred.
2. An order for the partition and sale of the Property is granted. The parties shall make every reasonable effort to agree on terms related to the sale of the Property failing which either party may return to the court for directions.
3. The Respondent shall provide an accounting of income and expenses, with related supporting documents, for the period commencing September 20, 2021 to the present. One-half of the net income for that period shall be paid to the Applicant from Respondent’s share of the net proceeds of sale.

[37] The Applicant shall deliver her costs submissions by July 30, 2025. The Respondent shall deliver his costs submissions by August 8, 2025. Costs submissions shall be no more than three pages in length excluding a Bill of Costs and any Offers to Settle.

M.D. Faieta
Date: July 23, 2025