2007 BCSC 1698 Sidhu v. Adams-Amaya

Before: The Honourable Mr. Justice Halfyard

Reasons for Judgment

Counsel for the Plaintiff:	A. Croll
Counsel for the Defendant:	P. McMurchy
Date and Place of Hearing:	November 15, 2007 Nanaimo, B.C.

Introduction

[1] The plaintiff, Mohinder Singh Sidhu, applies for summary trial of his claim for various relief against the defendant in connection with her registered interest in the property at 2209 Fern Road in Nanaimo, which claims are based on the essential allegation that the defendant holds her interest in the said property in trust for the plaintiff. If his application for summary trial is granted, the plaintiff seeks final judgment on all issues.

[2] The defendant, Daiza Judhit Adams-Amaya, also applies under Rule 18A for summary trial of her claims for relief (by way of counter claim) in respect of the property at 2209 Fern Road in Nanaimo. Her claims for relief include a declaration that she holds an undivided one-half interest in the property. Like the plaintiff, if the defendant’s application for summary trial is granted, she seeks final judgment on the essential issues.

[3] At the conclusion of final argument, I reserved decision. At that time, I made an order, by consent, that the property in question would be listed for sale forthwith, and that the parties would have joint conduct of the sale. The order also provided for temporary disposition of the sale proceeds, and gave liberty to apply for directions as necessary.

The procedural issue

[4] While recognizing that there were conflicts in the evidence on significant issues, both counsel urged the court to attempt to resolve the issues by way of summary trial procedure. I took this to mean that the parties were in agreement that the evidence being presented by way of affidavit on these applications, represents all of the evidence that would be presented if the case was tried in the conventional manner.

[5] After having reviewed the evidence and the arguments of counsel, I have concluded that the evidence does enable me to find the facts necessary to decide the issues of fact and law. I am also of the opinion that it would not be unjust to decide the issues on these applications by way of summary trial.

Background facts

[6] The plaintiff is 63 years of age. He is a retired saw-mill worker, and lives on a fixed income of $1,800 per month. Up until the end of May 2005, he was living in a townhouse (or condominium) in the Harewood area of Nanaimo which he owned. He immigrated to Canada from India in 1969. He speaks Punjabi. He has no education and cannot read or write Punjabi or English. He speaks English poorly and with a heavy accent.

[7] The plaintiff had been divorced twice, the last time in June 2003. He was desirous of finding another woman who would agree to marry him.

[8] The defendant is presently 55 years of age. She came to Canada from Venezuela in 1995. She first lived and worked in Ontario, and later moved to Nanaimo, British Columbia in 2004. In the fall of 2004, the defendant was the owner and operator of a grocery and convenience store business. Her store was named “Spanglish”, and was located on Victoria Road in Nanaimo. She was renting a house located across the street from the store. Her first language is Spanish, but she can speak, read and write English. She obtained a university education in Venezuela.

[9] The defendant has a son Jusem who is now 16 years of age. The boy’s father died before he was born. The defendant has supported herself and her son by working.

[10] In December 2004, the plaintiff met the defendant when he went into her store. He got to know the defendant, and seems to have visited her fairly often, but they did not enter into any romantic relationship. In April 2005, the plaintiff asked the defendant if she would be interested in marrying him. The plaintiff states in his evidence that the defendant told him that she would be prepared to discuss marriage, if he purchased a home. The defendant states that she told the plaintiff very clearly that she was not interested in marrying him or anyone else, and that she did not want to form any romantic relationship with him or any other man.

[11] The plaintiff says that his condominium was large enough for himself, the defendant and her son, and for his tenant, Tina Lagrotteria. But he says that the defendant did not want to live with him at the townhouse, but wanted a proper house. The defendant did not address the question of whether she did or did not want to live in the plaintiff’s condominium.

[12] The plaintiff, with the help of a real estate sales person, made a formal offer to purchase the property at 2209 Fern Road in Nanaimo for $259,000. He paid the deposit of $5,000. However, the plaintiff was unable to qualify for a mortgage loan to enable him to purchase the house, because of his low income.

[13] Although the reasons and motives of the parties are in dispute, they did take steps to purchase the property together. The plaintiff sold his condominium and received about $72,700 net sale proceeds. He cashed in some of his investments. He gave about $34,700 to the defendant, and she put it in her bank account, to satisfy a condition required by the mortgagee for granting a mortgage loan of more than $190,000 to the plaintiff and the defendant required to finance the purchase of 2209 Fern Road.

[14] The defendant used the $34,700 given to her by the plaintiff, together with about $1,375 of her own money, to pay on the down payment of the home. The plaintiff also paid about $34,700. The Northern Savings Credit Union granted a mortgage in the names of the plaintiff and the defendant, for $194,250. The property was registered in the names of the plaintiff and the defendant as owners in joint tenancy, on June 01, 2005. The total amount of money required to complete the purchase, including property transfer tax, land taxes and legal fees and disbursements was $264,763.62.

[15] The parties moved into the house at 2209 Fern Road on June 1, 2005. They were not intimate with each other. In about mid June 2005, the plaintiff made sexual advances towards the defendant, which she rejected. She put a lock on her bedroom door. On some later date which is uncertain, the defendant told the plaintiff that he would have to live downstairs. There never was any romantic relationship between the parties. The plaintiff said that it was only after they moved into the house that the defendant told him she would not marry him.

[16] The plaintiff sought legal advice, and on September 15, 2005 his lawyer wrote a letter to the defendant. The letter recited facts consistent with the plaintiff’s present version of events, and asked the defendant to move out of the house and to transfer her interest in the property to the plaintiff “for $1.00.”

[17] The defendant did not move out of the house. The plaintiff moved to the downstairs part of the house likely in late September, 2005. Beginning October 1, 2005, the plaintiff’s former tenant Tina Lagrotteria moved into the basement area of the house as a tenant, and began paying $325 per month rent. As a result of the renovations done by the defendant, the downstairs part of the house was not accessible from the main level. There was a separate door to the downstairs level, from the outside of the house.

[18] The plaintiff and the defendant continued to live in the house. They each paid half of the monthly mortgage payments, and each paid half of the cost of the utilities. Part of the plaintiff’s half share of the monthly household expenses was paid by the $325 rent paid by Tina Lagrotteria. The defendant had paid $321 for a home inspection, and $294.25 for an appraisal of the property. After they moved in, she hired contractors to make improvements to the house, and paid the contractors, a total of about $6,500.

[19] The plaintiff commenced this action on February 3, 2006.

[20] The property has increased substantially in value as a result of a rising real estate market, and is likely to sell for about $380,000. The mortgage debt on the property is now about $187,000.

The case for the plaintiff

[21] Counsel for the plaintiff made three submissions. The first was that the plaintiff’s transfer of the $34,700 to the defendant was made without consideration, which gave rise to the presumption that a resulting trust was created. In order for the defendant to rebut this presumption, the law requires her to prove that the plaintiff intended the transfer to be a gift, on the balance of probabilities. See Pecore v. Pecore 2007 S.C.C. 17 at paras. 42 – 44. Counsel argues that, in the present case, the defendant has failed to establish on the balance of probabilities that the plaintiff intended the $34,700 to be a gift to the defendant, and so the presumption is determinative in the plaintiff’s favour.

[22] Secondly, plaintiff’s counsel submits that, although s. 23(2) of the Land Title Act creates the statutory presumption that the defendant is entitled to an estate in fee-simple to the property as a result of being a registered owner, the plaintiff has rebutted this presumption. It is argued that the evidence supports the inference, on the balance of probabilities, that the parties did not intend that the defendant should acquire a beneficial interest in the property.

[23] Finally, it was submitted in the alternative that, if the plaintiff has failed to rebut the statutory presumption in favour of the defendant’s beneficial interest in the property, then the net proceeds of sale of the property should be divided so as to reflect the fact that the plaintiff paid the entire down payment on the property, except for $1,375.00 paid by the defendant,. It is acknowledged that, in this situation, the plaintiff must be charged with one-half of the expenses paid solely by the defendant for house inspection, appraisal and house improvements.

The case for the defendant

[24] Counsel for the defendant submits that the presumption in s. 23(2) of the Land Title Act would give the defendant a 50% legal and beneficial ownership of the property, and that the plaintiff has failed to rebut that presumption. Moreover, it was argued that the evidence supports the inference that the parties intended the defendant to be a true co-purchaser of the property with the plaintiff. Counsel points to the facts that the defendant put up $1,375 of her own money, and signed the mortgage as co-mortgagor with the plaintiff.

[25] With respect to the $34,700 transferred by the plaintiff to the defendant, it was contended on behalf of the defendant that the presumption of resulting trust does not apply to this case. It was submitted that the defendant had given consideration for this money, by signing the mortgage and making herself liable for the mortgage debt against the property. Based on the acceptance of this proposition, counsel for the defendant argued, (by implication) that the onus was on the plaintiff to prove that he did not intend to gift the $34,700 to the defendant, and that he has failed to discharge this onus. It was pointed out that the defendant has given affidavit evidence to the effect that the plaintiff gave her the money as a gift. Accordingly, the plaintiff’s contradictory assertion, in the absence of any other supporting evidence, was not sufficient to prove the plaintiff’s case on this issue.

[26] Counsel for the defendant did not argue in the alternative, that if the presumption of resulting trust applied to the plaintiff’s transfer of $34,700 to the defendant, then the defendant had rebutted that presumption by proving on the balance of probabilities that the plaintiff intended the money to be a gift to her.

[27] As to the division of the net proceeds from the sale of the property, counsel for the defendant said that the proceeds should be divided equally between the parties, subject to adjustment in favour of the defendant for certain expenses paid solely by her. Counsel contended that there could be no argument made by the plaintiff that the defendant would be unjustly enriched by such a division, because the increased equity in the property was the result of a rising real estate market and was not due to any work or money provided by the plaintiff.

The law

[28] In addition to Pecore v. Pecore, counsel have referred me to a number of authorities. They both relied on the case of Bajwa v. Pannu 2007 BCCA 260. Counsel for the plaintiff relied also on the trial decision in that case, reported as Virk v. Pannu 2006 B.C.S.C. 921 (Arnold-Bailey J.). In that case Pannu made no contribution to the down payment on a residential property nor did he pay any expenses relating to the property after it was purchased. But he signed the mortgage as a covenantor, and became a registered owner as a joint tenant with two other persons. Pannu never resided on the property.

[29] At trial (by way of summary trial), Madam Justice Arnold-Bailey found that the Virks had failed to rebut the statutory presumption in s.23(2) of the Land Title Act in favour of Pannu. She noted that Pannu had signed as a covenantor on the mortgage and had therefore assumed a significant risk; and that there was no evidence of any agreement to suggest that Pannu’s interest would be limited, or that a trust was contemplated. Arnold-Bailey J. concluded that Pannu had an undivided one-third legal and equitable interest in the property. However, she concluded that, in order to prevent the unjust enrichment of Pannu, on partition and sale the Virks would recover the $35,000 down payment that they made, before division of the remaining sale proceeds with Pannu.

[30] In the Court of Appeal, the majority upheld the trial judge’s finding that the Virks had failed to rebut the presumption in s. 23(2) of the Land Title Act. It was not enough for the Virks to simply show that they had paid all of the $35,000 down payment. At paragraph 13, Mr. Justice Low stated (in part):

Mr. Pannu contributed significantly to the purchase of the property by pledging his credit and taking on a substantial debt. He made it possible for the Virks to buy property they otherwise were unable to buy and he exposed himself to the risk of having to meet mortgage payments or reimburse a shortfall if there was default.

[31] At paragraph 16, Mr. Justice Low adopted the following statement of law:

. . . for a resulting trust to be inferred the person said to be a trustee must have given no value for his legal interest. It follows that if it is found as a fact that the person whose equitable interest is challenged did give value, there can be no resulting trust. Whether value was given is a question of fact to be determined on the evidence in each case.

[32] With respect to his alternate submission concerning the division of the net proceeds of the sale of the property, counsel for the plaintiff referred me to Lindquist v. Waring 2007 B.C.S.C. 205, a judgment of Madam Justice Bruce. In that case, the plaintiff admitted that the defendant (who was registered as a joint tenant with him) was entitled to share in the sale proceeds, but argued that equal division would be inequitable because of his larger financial contribution. The defendant relied on the statutory presumption in s. 23(2) of the Land Title Act, as well as her evidence that the parties mutually intended that the equity in the property would be shared equally. Bruce J. found that the plaintiff had failed to prove that the defendant held her interest in the property in trust for him, and had thereby failed to rebut the presumption in s. 23(2) of the Land Title Act. However, with respect to the division of sale proceeds, Bruce J. said this (at paragraph 57):

Addressing the second issue, even though the parties both have a beneficial ownership in the Kilpatrick property, the division of any sale proceeds may still be based upon their respective contributions towards the property: Bajwa at para 21, Farrar at para 14 and Mayer at paras. 16 – 20. The fact that the parties hold the property in joint tenancy, and thus are presumed to have equal interests, does not change the nature of the court’s inquiry. Partition and sale is an equitable remedy which contemplates that the presumption of equal interests may be displaced if necessary to prevent an unjust enrichment.

[33] The case law that was referred to by Bruce J. is discussed at paras. 40, 42 and 44 of her judgment. In the result, Madam Justice Bruce divided the net sale proceeds slightly in favour of the plaintiff.

The issues of fact

[34] The plaintiff says that he wanted to marry the defendant, and that he decided to purchase a house for them to live in, only because the defendant made that a condition of her considering whether she would marry him. The defendant acknowledges that the plaintiff said he wanted to marry her, but says that she told him very firmly that she had no interest in marrying him or in having any romantic relationship with him. She flatly denies telling the plaintiff that she would consider marriage, if he purchased a house. She insists that the plaintiff made “a business deal” with her which was to be for the benefit of both of them, after he found himself unable to obtain the mortgage necessary to purchase the property on Fern Road.

[35] On the issue of the transfer of $34,700 to the defendant, the plaintiff says that he only gave this money to the defendant so that she could qualify to sign the mortgage with him as a co-mortgagor. Although he does not distinctly admit that he could never have purchased the house without the participation of the defendant, his counsel seemed to concede that point on the hearing. But the plaintiff insists that this money was not a gift to the defendant, but was only a step that was necessary for the joint purchase and joint financing of the property.

[36] The defendant claims that the $34,700 was a gift to her by the plaintiff, and seems to say that she required him to give her this money before she would agree to go ahead with the joint purchase and financing of the property.

The issue of whether the plaintiff has rebutted the statutory presumption in s.23(2) of the Land Title Act

[37] Counsel for the plaintiff argued that the defendant’s claim that the parties intended her to acquire a beneficial ownership in the property is inconsistent with the preponderance of probabilities in the case. It was implicit in this argument that the improbability was so great that the statutory presumption was rebutted.

[38] As I see it, there is not much conflict in the evidence given by the parties on this issue, other than the characterization of the transaction as being personal or for business reasons. In my opinion, even if the reasons advanced by the plaintiff for the purchase are accepted, the evidence falls far short of rebutting the statutory presumption that beneficial ownership was intended. The defendant paid a part (although a small part) of the down payment, and signed the mortgage. She paid for the home inspection and for the appraisal of the property. She agreed with the plaintiff that she would pay one half of the expenses relating to the property. The plaintiff may have been hopeful that the defendant would eventually agree to marry him or to have a romantic relationship with him. But he in no way imposed either of these things as being a condition of the defendant acquiring a beneficial interest in the property, nor did he even attempt to do so. He took the risk that she would refuse to marry him. On an objective view of the facts relating to the transaction, including the conduct of the parties, it appears that there was a common intention that the defendant would acquire a beneficial interest in the property, at the time that it was purchased. In the result, the statutory presumption prevails.

The issue of whether the $34,700 was, or was not, intended as a gift

[39] The defendant claims, in substance, that she would not agree to proceed with the joint purchase and financing of the property with the plaintiff, unless the plaintiff paid her $34,700, and further claims that the plaintiff agreed with this, as being part of their overall “business” agreement. The plaintiff of course denies this, and says that he only paid this money to the defendant so that she could qualify as a co-mortgagor, and the house purchase could be completed.

[40] On behalf of the defendant Mr. McMurchy submitted, in effect, that the defendant had given good consideration to the plaintiff for the $34,700 (namely, by signing the mortgage), and so there could be no presumption of a resulting trust. I do not agree with this submission. The defendant did make a contribution to the purchase of the property, by putting up $1,375 towards the purchase price, and by making herself liable on the mortgage. Those facts prevented the plaintiff from rebutting the statutory presumption in favour of her acquiring a beneficial interest in the property. But in my opinion, the evidence does not support an inference that the defendant gave value to the plaintiff for the $34,700. Accordingly, I conclude that there is a presumption that this money was not a gift by the plaintiff to the defendant. That being so, the defendant bears the burden of proving on the balance of probabilities that the plaintiff did intend the money to be a gift to her.

[41] Counsel for the plaintiff argued on this issue also, that the defendant’s assertion that a gift was intended (as part of a “business agreement”) is entirely at odds with the probabilities of the case. Mr. Croll argued that it would make no sense for the plaintiff to enter into the alleged business relationship with the defendant, when he hardly knew her or her financial circumstances, and when he was economically self-sufficient and had suitable accommodation for himself. Counsel argued that there was no logical reason for the plaintiff to liquidate his investment asset or to sell his condominium, except for his desire to marry the defendant or at least to have a romantic relationship with her. It was contended that the evidence established that the plaintiff wanted to marry the defendant, and that his conduct was consistent with him having an expectation of an intimate relationship with the defendant, up until mid-June 2005 when the defendant rebuffed his sexual advances. It seems implicit in counsel’s argument that, if the defendant had agreed to marry the plaintiff or to have a romantic relationship with him, then the $34,700 might eventually be transformed into a gift. But it was submitted that, at the time of the transfer of the money to the defendant, it was highly improbable that the plaintiff possessed the intent required to constitute a gift.

[42] I agree with the thrust of this submission. As I see it, a reasonable person who observed the relevant events would conclude that both parties considered the $34,700 to be the plaintiff’s money at the time the transaction was completed. A person who intends to enter into a business venture with another person who has no money would not be likely to give his impecunious partner a substantial amount of money that would make the other person an equal partner from the outset. Nor would the impecunious partner have any reasonable expectation to receive such money as a gift. In the circumstances of this case, I think a reasonable observer would conclude that the plaintiff transferred the money to the defendant, only because it was necessary in order to obtain financing.

[43] I conclude that the defendant has failed to prove on the balance of probabilities that the plaintiff intended the $34,700 to be a gift to her. I would go further and say that, the probabilities in support of the plaintiff’s version of events on this issue are so much greater than those supporting the defendant’s version of a “business agreement” that the defendant’s evidence should be rejected. I would also draw the inference that the plaintiff did not intend to gift the $34,700 to the defendant. In my opinion, even without the benefit of the presumption of the resulting trust, the plaintiff must succeed on this issue.

The division of the net proceeds from the sale of the property

[44] I would adopt the approach taken in Virk v. Pannu and Lindquist v. Waring, with respect to the $34,700 given by the plaintiff to the defendant. While the figures may not be precise, I would order that, out of the net proceeds of the sale of the property, the plaintiff would be paid $64,445, and the defendant would be paid $8,490, and the balance of the proceeds will be divided equally between the plaintiff and the defendant, subject to any other proper adjustments between the parties. If further directions are necessary, there will be liberty to apply.

Costs

[45] There has been divided success on these applications. I am inclined to think that each party should bear his and her own costs. However, counsel reserved the right to make submissions on this issue. Accordingly, if there is a dispute as to costs, there will be liberty to make submissions. I would prefer to deal with this issue in court, rather than by way of written submissions, if that can be done within the next month or so.

_______________________

Mr. Justice Halfyard

Citation:	*Sidhu v. Adams-Amaya,*
	2007 BCSC 1698