Canada: Ontario Court Of Appeal Summaries (August 28 – September 1)

Last Updated: September 4 2017
Article by John Polyzogopoulos

Following are the summaries for this week's civil decisions of the Court of Appeal for Ontario.

Two of the three substantive decisions this week were in family law. One was a relocation application for a five year old child where the mother was unsuccessful at first instance but successful on appeal. The other concerned the application of the presumption of resulting trust in the division of property following the dissolution of a common law relationship. There was also a decision reminding counsel of the importance of making full and fair disclosure of all material facts when moving without notice.

Wishing everyone a great long weekend.

CIVIL DECISIONS

Chechui v. Nieman, 2017 ONCA 669

[Cronk J.A.]

Counsel:
Earl A. Cherniak, Q.C., Zohar R. Levy and Valois P. Ambrosino, for the appellant

Harold Niman and Chloe van Wirdum, for the respondent

Keywords: Family Law, Property Law, Joint Tenancies, Gratuitous Transfers, Gifts, Presumption of Resulting Trust, Unjust Enrichment, , Pecore v. Pecore, 2007 SCC 17, Kerr v. Baranow, 2011 SCC 10

Facts:

The appellant, Ian Jamieson Nieman ("Ian"), and the respondent, Victoria Chechui ("Victoria"), met in October 2009. In July 2010, the parties began living together at Victoria's house in Toronto. Ian's mother, Dianne, then received a $4 million inheritance and decided to invest part of it in a home on Austin Terrace in Toronto for Ian and Victoria's use. Ian and Dianne owned the house as tenants in common, with Ian owning 99 per cent and Dianne owning 1 per cent. In December 2010, Victoria sold her house and moved with Ian into the Austin Terrace property.

In December 2012, Dianne suffered a series of strokes and the parties agreed to have Dianne live with them. Dianne would require the use of a wheelchair, so the parties and Dianne decided to look for a new, wheelchair-accessible home in Toronto to accommodate Dianne's needs.

On March 16, 2013, Ian and Victoria entered into an agreement of purchase and sale to buy a house on Brookdale Avenue in Toronto for $2.6 million (the "Brookdale Property").

To finance the purchase of the Brookdale Property, Victoria obtained a $1 million mortgage in the parties' joint names from RBC Dominion Securities Inc. ("RBC"). The mortgage was later converted to a line of credit in the same amount. In addition, after obtaining independent legal advice, Dianne executed a gift letter, required by RBC, gifting $1.7 million to both Ian and Victoria.

On closing, title to the Brookdale Property was taken in both Ian and Victoria's names, as joint tenants. The parties moved into the Brookdale Property in April 2013. About one month later, Dianne passed away.

The Austin Terrace property was listed for sale after Dianne's death and eventually sold in October 2013 for $2.325 million. Ian deposited his share of the sale proceeds in his bank account, repaid the $1 million RBC line of credit on the Brookdale Property in full, and deposited $800,000 into an investment account with RBC, held jointly with Victoria.

Approximately two and a half months later, in January 2014, the parties separated. Their separation precipitated a dispute regarding Victoria's entitlement to a 50 per cent interest in the Brookdale Property and in the funds held in the RBC investment account.

Issues:

  1. Is the respondent entitled to a 50 percent interest in the Brookdale Property?
  2. Is the appellant entitled to a credit regarding the funds used by him to repay the joint line of credit?

Holding: Appeal allowed, in part.

Reasoning:

1. Yes. The respondent is entitled to a 50 percent interest in the Brookdale Property.

First, title to the Brookdale Property was taken in the parties' joint names. In addition, the Brookdale agreement of purchase and sale was in both Ian and Victoria's names.

The application judge expressly rejected Ian's claims that he did not know what the term "joint tenancy" meant, that he did not direct that title to the Brookdale Property be put in joint names, and that he did not read the real estate closing documents when he signed them. These findings were open to the application judge on the evidentiary record. His assessment of the credibility of Ian's evidence on these issues attracted deference from the court.

Second, there was the significant factor of Dianne's $1.7 million gift to both Ian and Victoria to assist in the acquisition of the Brookdale Property. There was ample evidence before the application judge to support his conclusion that this gift, to Ian's knowledge, was to both Ian and Victoria, and not to Ian alone.

Specifically, the application judge relied on: i) the terms of the gift letter itself; ii) the evidence from Dianne's wills and estates lawyer regarding her intended gift, evidence from the lawyer providing independent legal advice to Dianne regarding the gift letter, and the RBC mortgage specialist's testimony that all persons who were going to be on title to the Brookdale Property were to be named as mortgagors on the mortgage security, and iii) the application judge's rejection of Ian's testimony that Dianne's gift was to him alone. The court found no error in the application judge's approach to or assessment of the whole of the evidence on this issue.

Third, Ian's argument that Victoria was unjustly enriched when she received an interest in the Brookdale Property was considered and properly dismissed by the application judge.

While Ian mentioned unjust enrichment in his Answer, he failed to plead it with any specificity. When Ian was given an opportunity by a case conference judge to address deficiencies in his pleading by submitting an Amended Answer, he did not plead any further facts in support of an unjust enrichment claim.

Regardless, the application judge's factual finding that Dianne gifted $1.7 million to Ian and Victoria jointly is fatal to Ian's unjust enrichment claim regarding the Brookdale Property. The joint gift furnishes a juristic reason for Victoria's enrichment in respect of the Brookdale Property. The absence of a juristic reason for the enrichment in question is a necessary pre-requisite to any finding of unjust enrichment.

2. Yes. The applicant is entitled to a credit in respect of funds used by him to repay the joint line of credit.

The court found that the application judge's finding that Ian "gifted the payment of [$1 million] to pay off the line of credit" was tainted by palpable and overriding error.

There is no dispute that the debt incurred under the line of credit was joint. Thus, Ian was responsible for payment of at least 50 per cent of the funds owed under the line of credit; this defeats his claim for the repayment of the full $1 million debt under the joint line of credit.

The issue, therefore, is whether, on the future division of the proceeds of sale from the disposition of the Brookdale Property, Ian is entitled to credit for his repayment of Victoria's $500,000 share of the parties' joint debt under the line of credit.

The court found that there was no affirmative evidence that Ian intended to gift Victoria the equivalent of $500,000 by reason of his repayment of her share of the line of credit. The application judge's ruling rested on Victoria's evidence that the parties always intended to own the Brookdale Property "jointly and equally regardless of their contributions to the purchase". The court did not agree that the parties' intention to hold joint title to the Brookdale Property necessarily rebuts the presumption of a resulting trust in respect of Ian's repayment of Victoria's debt under the line of credit.

First, Ian's repayment of the $1 million line of credit, established to facilitate the purchase of the Brookdale Property, was gratuitous and directly linked to the acquisition of the house. The Supreme Court emphasized in Kerr and in Pecore that in situations involving gratuitous transfers, as in this case, the governing consideration is the transferor's actual intention.

In these circumstances, the relevant question was what Ian intended at the time of repaying the line of credit – not what the parties commonly intended concerning ownership of the Brookdale Property. By focusing on the latter question, rather than the former, the application judge erred.

Accordingly, Ian's repayment of Victoria's share of the parties' debt under the line of credit was gratuitous, and directly linked to the purchase of the Brookdale Property. Victoria bore the onus of establishing that Ian intended to gift her the sum of $500,000. There was no independent evidence of such an intention by Ian. It follows that Victoria failed to meet her burden to prove that Ian intended to gift the repayment of the line of credit to her, in whole or in part.

A resulting trust therefore arises in relation to Ian's repayment of Victoria's share of the joint debt under the line of credit. Thus, the court found that the appropriate remedy was for Ian to be credited with the amount of $500,000 on division of the proceeds of sale of the Brookdale Property.

Misir v. Misir, 2017 ONCA 675

[Pepall, van Rensburg and Trotter JJ.A.]

Counsel:

D Reiter, S Hicks and B Chung, for the appellants

A Chima, for the respondent

Keywords: Civil Procedure, Motions, Without Notice, Full and Fair Disclosure of Material Facts, Rules of Civil Procedure, Rule 39.01(6), Mariani v. Mariani, [2010] O.J. No. 1464 (S.C.), Balanyk v. Greater Niagara General Hospital, [1997] O.J. No. 4867 (C.A.)

Facts:

An action was commenced in 2001 by Randy Misir (the respondent in this appeal). The action was not defended. The respondent obtained a judgment after an assessment of damages for $85,984, and the appellants were noted in default.

In 2004, the appellants moved to set aside the judgment upon learning that the judgment and writs of execution had been filed against them. Swinton J. granted an order that set aside the judgment and the noting in default. Swinton J. required that the appellants serve a statement of defence by June 30, 2004. The appellants filed their statement of defence on June 28, 2008.

The original judgment was later reinstated in 2008 by Brown J. When the respondent appeared before Brown J., he was asked provide evidence under oath that no defence was filed and that he did not know where the appellants were. The respondent testified that a statement of defence was never served on him by or after June 30, 2004, and that he noted the defendants in default "in September, or sometime of that year, of 2004". He also testified that the appellants had commenced an action against him which had been administratively dismissed. Finally, he testified that he did not know where the defendants lived, that they disappeared, and that Immigration was looking for them.

In early 2015, the appellants moved to set aside the judgment of Brown J. In the interim, the respondent brought an application to enforce the judgment by a court-supervised sale of the appellants' property. The appellants' unsuccessful attempt to set aside the reinstatement of the judgment is the subject of this appeal.

Issue:

Did the motion judge err in dismissing the appellants' motion to set aside the reinstated default judgment, and in authorizing the respondent to sell the appellants' property in satisfaction of the judgment?

Holding:

Appeal allowed.

Reasoning:

Yes. The respondent did not make full and fair disclosure of material facts. The Brown J. judgment ought to have been set aside on this basis. A party who seeks relief from the court in proceedings without notice is obliged to make full and fair disclosure of all material facts. This is a common law rule that is enshrined in rule 39.01(6). It is unnecessary to find that the court was deliberately misled before a court will set aside such an order. The basis of the rule is fairness. As the rule confirms, the failure to make such disclosure is a reason, in itself, to set aside the order made: Mariani v. Mariani, [2010] O.J. No. 1464 (S.C.) and Balanyk v. Greater Niagara General Hospital, [1997] O.J. No. 4867 (C.A.).

The respondent's counsel provided information to the court that was inaccurate – that no statement of defence had been filed, and that there had been no communication between the parties in the interim. The respondent did not correct this information.

Porter v. Bryan, 2017 ONCA 677

[Laskin, Feldman and Miller JJ.A.]

Counsel:
Paul Mongenais, for the Appellant

Thomas Mann, for the Respondent

Keywords: Family Law, Custody, Mobility

Facts:

This appeal concerns the proposed relocation of a five year old child from Cochrane, Ontario to Thunder Bay. The child's mother and father separated in November 2015 and agreed to joint custody and a shared parenting schedule by way of a consent order made in September 2016. That order was made without prejudice to the appellant mother bringing a mobility motion to move their son to Thunder Bay. That motion was heard and dismissed in January 2017.

The appellant mother was a prisoner transport officer in Cochrane but resigned because the unpredictability of her work impaired her ability to care for her son. Post-resignation the mother was unable to find employment in Cochrane. However, she had multiple job offers in Thunder Bay, where her extended family and new partner live.

The father is employed as a forest-fire crew leader with the Ministry of Natural Resources during the fire season from April to September. During his deployment, he lives in Cochrane eight to ten days per month. In the off-season, he is employed in Cochrane and lives there full-time. His extended family resides in Cochrane.

The mother argued that the move was necessary for her to remain financially viable, and to provide for her son, as she could find no employment in Cochrane that allowed her to fulfill her duties as a parent. She argued that she was her son's primary caregiver and, accordingly, her decisions about where to live and work ought to be given considerable weight.

The father opposed relocation on several bases. The principal objection is that relocation would, in the words of the motion judge, "leave [the son] without meaningful parental influence from his father." He also argued that whatever financial hardship the mother is experiencing is entirely self-imposed, and that the necessity of taking employment in Thunder Bay is mere pretext to be with her new partner.

The motion judge agreed with the father that neither party was the primary caregiver to the child. He also agreed that the mother's financial difficulties were self-imposed given that she would likely still be able to find suitable work in Cochrane. Accordingly, the mother's motion was dismissed.

Issues:

(1) Did the motion judge err in concluding that the mother was not the primary caregiver?

(2) Did the motion judge err in concluding that the mother's financial difficulties were self-imposed?

(3) Did the motion judge err in concluding that the mother could still be able to find suitable work in Cochrane?

Holding: Appeal allowed.

Reasoning:

(1) Yes. The motion judge made an error in principle by not characterizing the mother as the primary caregiver of the child. The motion judge held that in circumstances of joint and shared custody, there is no primary caregiver, and therefore neither parent's interests can have greater weight than the other's. This is incorrect. Although the parties have joint and shared custody, the mother in this case is nevertheless the primary caregiver. This conclusion was supported by both parties' evidence.

(2) Yes. The motion judge made a palpable and overriding error in concluding that the mother's financial difficulties were self-imposed. They were not. Her resignation resulted from her employer's withdrawal of an accommodation that had made her former employment compatible with her parenting responsibilities.

(3) Yes. The motion judge further erred in finding that the mother could be expected to find suitable employment in Cochrane. There was no evidence on which to base that finding. Although the motion judge did not have the benefit of the mother's fresh evidence, that evidence attests both to her continued inability to find work in Cochrane, and her employment opportunities in Thunder Bay.

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