Date: 19961223 Docket: C952617 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: SOCORRO CALVEZ MALAZARTE PLAINTIFF AND: RENATO AGOSTI DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE SHAW Counsel for the Plaintiff: David G.M. Nicol Counsel for the Defendant: Andrew G. Sandilands Place and Dates of Trial: Vancouver, B.C. October 16, 17 and 18, and November 15, 1996[1] The plaintiff Socorro Calvez Malazarte and the defendant Renato Agosti lived together for a period of time. They have since separated. [2] While they cohabited they both worked at paying jobs and kept their finances separate. Neither party was financially dependent upon the other and both improved their financial positions. They each contributed to the household in their own way and at the same time they pursued their separate careers and investments. They now claim from each other benefits that each says were unjustly bestowed upon the other. In my view, this is not a case where the law of unjust enrichment is applicable in either direction. My reasons for arriving at this conclusion are set out below. [3] Ms. Malazarte's claim is essentially for housekeeping services performed at Mr. Agosti's home at 2493 East 4th Avenue in Vancouver. She claims an interest in Mr. Agosti's house. [4] Mr. Agosti's claim is for occupational rent and renovation work at a house in Maple Ridge which he and Ms. Malazarte bought as a joint investment. [5] There is one claim that is not contested. Mr. Agosti asks that the house in Maple Ridge be sold and an accounting ordered. Ms. Malazarte agrees, but as she is living in the house, she wishes to have an opportunity to buy out Mr. Agosti's interest. FACTS [6] Ms. Malazarte and Mr. Agosti are in their 50's. They met at a dance in January, 1986. Mr. Agosti was recently separated from his wife and Ms. Malazarte was single. They commenced seeing each other, generally at her place, and their relationship became intimate. [7] In August 1987, Ms. Malazarte moved into Mr. Agosti's house at 2493 East 4th Avenue in Vancouver and there they lived together. By agreement she paid him rent of $250 per month for a living area in the basement. However, she shared his bed on the main floor and had the run of the house. She explained that she paid rent so as to give the appearance that she was not living with a man. According to him, he charged a rent that was less than market, it being understood that she would also do household chores. She did, in fact, do most of the household chores, both indoors and outdoors where she did much of the gardening. He, too, did some of the household work and gardening, but the bulk, on a day to day basis, was done by her. He did the household repairs and maintenance. Both did the grocery shopping and they shared this expense. They had separate telephones and each paid for their own. He paid the B.C. Hydro charges and the mortgage payments on the house. [8] The house had formerly been owned by Mr. Agosti and his wife. After separation he bought out her share and became the sole owner. This occurred before he and Ms. Malazarte began living together in the house. [9] The rent of $250 per month continued from August, 1987 to April, 1990 when Mr. Agosti raised it to $395 per month. Ms. Malazarte said this occurred after an argument and that she paid the higher rent to make him happy. [10] Ms. Malazarte moved out in February, 1991 when she and a woman friend jointly purchased a house on Somerville Street in Vancouver as an investment. The first period of time that Ms. Malazarte and Mr. Agosti cohabited ended when Ms. Malazarte and her friend went to live in the Somerville Street house in February, 1991. [11] Ms. Malazarte stayed with her friend in the Somerville Street house from February, 1991 until July, 1992 when her friend bought her out. On this investment Ms. Malazarte made a net profit of approximately $16,000. [12] There is a conflict in the testimony of Ms. Malazarte and Mr. Agosti as to whether their sexual relationship continued while Ms. Malazarte was living in the Somerville Street house. Ms. Malazarte said that it had; Mr. Agosti said that it had not. On this point I prefer the evidence of Ms. Malazarte, although I infer from all the evidence that the relationship was not of the same intensity as before. [13] Before Ms. Malazarte moved out of the Somerville Street house in July, 1992, she arranged to move into a rented basement suite (not owned by Mr. Agosti). When the landlord of the basement suite refused to go ahead with the rental, Ms. Malazarte then moved into a condominium owned by Mr. Agosti. She stayed there for one month and then moved into another basement suite (not owned by Mr. Agosti) as a temporary residence. In January, 1993, she had to move out of the basement suite without notice when persons for whom the suite was intended arrived in Vancouver. [14] It was then, in January, 1993, that she moved back into Mr. Agosti's house on East 4th Avenue. This time there was no discussion as to rent. She again took up the household duties she had carried out before. In addition, as she was not paying any rent, she bought most of the groceries. They each continued with the household chores much in the same manner as described earlier. [15] Again, there is a conflict in the testimony as to whether the sexual relationship continued after Ms. Malazarte's return to East 4th Avenue. She said it had; he said that he tried to resume it, but it ceased as she did not want sex with him. On this point I accept the substance of Mr. Agosti's evidence. It is in keeping with the fact that at Ms. Malazarte's request he renovated the attic and that is where she had her bedroom and bathroom. Also, it is consistent with the fact that in the fall of 1994, Mr. Agosti brought another woman into the house and she shared his bedroom while Ms. Malazarte continued to occupy the attic bedroom. [16] In November, 1994, Ms. Malazarte and Mr. Agosti purchased in joint tenancy a house in Maple Ridge. They each paid one- half of the downpayment. The agreed upon basis of the purchase was that it would be an investment for both of them and that it would provide Ms. Malazarte with a place to live. This was a convenience to Mr. Agosti as he was in the uncomfortable position of having his present and former sexual partners under the same roof in the East 4th Avenue home. [17] It was also agreed that Mr. Agosti would carry out renovations such that the ground floor would be rented out to tenants, and that Ms. Malazarte and Mr. Agosti would share equally the out-of-pocket expenses for the renovations. Ms. Malazarte was to live in the basement and she would look after the tenants and be in the position to claim the homeowner's grant on the property taxes. There was no agreement that Ms. Malazarte would pay rent or that Mr. Agosti would be paid for the renovation work, apart from being reimbursed one-half of his disbursements. It was also agreed that the rental payments from tenants would be devoted to the mortgage payments and that Ms. Malazarte and Mr. Agosti would put up any shortfall, one- half each. [18] In fact Mr. Agosti did the renovation work and Ms. Malazarte paid him one-half of his expenses. Ms. Malazarte moved into the basement area and she still continues to occupy it. Tenants moved into the main floor and, except for a gap of a few months, tenants continued in occupation until at least the end of October, 1996. [19] In effect, the two were partners in the Maple Ridge project, the ultimate object of which was to hold the property as an investment and to sell it at some unspecified future date, with the expected profit to be shared equally. [20] In making these findings concerning the Maple Ridge property, I rely substantially on Ms. Malazarte's evidence. Where Mr. Agosti's evidence is in conflict, I do not accept it. His version of what was agreed upon is not consistent with the way he charged Ms. Malazarte monthly rent for East 4th Avenue and the way he charged her for renovations of the Somerville Street house. There was no similar conduct of charging Ms. Malazarte for rent and renovations at the Maple Ridge property. [21] The friendship was strained by the advent of Mr. Agosti's new woman friend, and further exacerbated by financial problems regarding the Maple Ridge premises, including the rentals obtained from tenants, the payment of taxes and the payment of the mortgage. In addition a problem arose from Mr. Agosti's refusal to renew the Maple Ridge mortgage and consequent foreclosure proceedings taken by the mortgagee. I was advised at the trial that the mortgagee would be applying in court on November 5, 1996, for a final order of foreclosure. I have not been informed as to whether the order has been granted. [22] Throughout the whole time of the relationship, Ms. Malazarte was employed full-time outside the Agosti house doing domestic work. She earned approximately $13,800 in 1988 and this rose annually up to about $16,500 in 1994. Ms. Malazarte also earned monies from interest paid by Mr. Agosti on monies she loaned him from time to time. The interest rates were agreed upon and were reasonable. The principal amounts of the loans were also repaid. In addition, Ms. Malazarte earned monies from investments that Mr. Agosti made for her with her monies. [23] Both Ms. Malazarte and Mr. Agosti carefully kept their monies and their investments separate. [24] I turn to a comparison of Ms. Malazarte's assets at the time she moved into Mr. Agosti's home in 1987 to when she moved out for the last time in 1994. In 1987 she had savings of approximately $15,000. She had no other assets of substance. By 1994, as a result of her savings from her work, investments she made on Mr. Agosti's advice, interest she earned on loans to him and the net profit she made on the Somerville Street house, her holdings, not including the Maple Ridge property, rose to between $100,000 and $110,000. If her present equity in the Maple Ridge property is added in, (if it still exists) her holdings are in excess of $130,000. [25] As for Mr. Agosti, he was a steam engineer during most of the time of his cohabitation with Ms. Malazarte. He also did renovation work from time to time. His annual earnings from 1986 through to 1994 varied from $29,000 to $62,000, averaging in excess of $40,000. In 1987 Mr. Agosti's sole asset of substance was his East 4th Avenue house. After purchasing his wife's share of the house and remortgaging to do so, his net equity in 1987 was about $35,000 to $40,000. The value of the house has since risen and his net equity is now about $150,000. He also has various investments. The total value of his holdings, including East 4th Avenue, but excluding the Maple Ridge property, is now about $390,000. Adding in the Maple Ridge equity (if it still exists) the total exceeds $410,000. [26] There is no evidence that Mr. Agosti led Ms. Malazarte to expect that she would share in any of his assets. Nor was there any evidence that she led him to expect that he would share in any of hers. They scrupulously kept their financial dealings separate. The only exception is the Maple Ridge property which was an investment they went into as equals. ANALYSIS [27] I do not think it matters whether the relationship between Ms. Malazarte and Mr. Agosti can properly be described as "common law". It was close to that during the first cohabitation period, but clearly not so thereafter. In Ford v. Werden (1996), 78 B.C.A.C. 126, Newbury J.A. for the court said at p. 130: But this characterization [of "common law marriage"] by itself does not determine that Mr. Werden was unjustly enriched. The question is whether the three necessary elements for this claim were shown -- the enrichment of Mr. Werden, a corresponding deprivation of Ms. Ford, and if so, the absence of any "juristic reason" for the enrichment: Pettkus v. Becker (1980), 19 R.F.L. (2d) 165, at 180. [28] In Peter v. Beblow, [1993] 1 S.C.R. 980 at 988, McLachlin J. for the majority said: There is a tendency on the part of some to view the action for unjust enrichment as a device for doing whatever may seem fair between the parties. In the rush to substantive justice, the principles are sometimes forgotten. These are words which, in my view, must be kept in mind in the present case. [29] In Ford v. Werden, supra, there was a relationship markedly like that found between Ms. Malazarte and Mr. Agosti where each party continued with his and her career and handled their finances and investments separately. The Court of Appeal dismissed an unjust enrichment claim by the woman partner. In doing so, Newbury J.A. for the court said at p. 134: In any event, the fact that "spousal services" can be and are now regarded by Canadian courts as valuable and compensable does not in my view remove the necessity of determining on the facts of each case whether there is no juristic reason for the enrichment -- i.e., whether the enrichment is "unjust" or, in the terms advanced by Cory, J., whether one party's expectation to share in the other's property is a "legitimate" one. In situations involving "traditional" common law marriages, these are not difficult questions -- the court is generally confronted with one party (usually a woman) who has subverted her economic independence to the greater good of the family, foregoing opportunities to maximize her own income stream or asset base in the expectation that the relationship will last and she will be in a position to share in the income stream of her husband and in the appreciation of his assets. The courts rightly regard it as unjust to permit the husband thereafter to walk away from the relationship, taking with him all his assets and his entire income stream, enlarged or improved as it is by the common law wife's efforts. It is a different matter, however, to apply these assumptions to relationships that are not the stereotypical or "traditional" type of common law marriage. If one considers the three factors suggested by McLachlin, J. at p. 990-1 of Peter v. Beblow, distinct differences are apparent. In these non-traditional relationships, each party confers "benefits" on the other without expecting to be paid -- except perhaps in kind by reciprocal services. The very nature of the relationship as a kind of partnership between two independent persons necessarily implies mutual duties and obligations that for legal purposes might be described as "gifts" in the sense that they are rendered outside of the realm of contractual, common law, equitable or statutory obligation and without a known expectation of compensation. Newbury J.A. further said at pp. 134-5: In British Columbia, the legislature has enacted the Family Relations Act to provide married persons with property claims and interests in "family property". This statute presumes that equal entitlement will generally be the fair resolution of those claims. The legislature has not done the same with respect to common law spouses or other adults living together. Nor has a rule developed at common law that whenever two adults live together, they thereby acquire claims to or interests in each other's property. Overall, it is my view that there is no "unjustness" that needs to be remedied in the circumstances by the imposition of a special rule or presumption not found in the general law of unjust enrichment, and that ultimately, the analysis should involve a close examination of the facts in each case. [30] Another similar case is Hougen v. Monnington (1991), 37 R.F.L. (3d) 279 (B.C.C.A.). During the period that the unmarried couple lived together, the woman (the plaintiff) continued her career. She looked after the domestic work in the home and bought the groceries. The man (the defendant) did everything else in the house and paid all the household bills other than the food. The relationship lasted about five years. Financially, the woman was in a better position at the end than she was at the start; so was he. The trial judge, Drake J., dismissed the woman's claim, holding that she had suffered no deprivation by the union. His judgment was upheld by the Court of Appeal. Hollinrake J.A. for the court said at p. 280: In my opinion, there was ample evidence upon which the trial judge could conclude, as he did, that there was no deprivation here as a matter of law. In my opinion, it cannot be said that the plaintiff in any way prejudiced herself in entering into, and during the course of, this relationship. On the contrary, in my opinion, she has benefited from it. I use the word "prejudice" in the context of the law of constructive trusts and unjust enrichment. [31] In my opinion, the analyses in Ford v. Werden and in Hougen v. Monnington have direct application to the facts of the present case. Ms. Malazarte and Mr. Agosti remained financially independent of each other and neither were prejudiced by the relationship when viewed in its overall context. Both continued their careers; she provided household services; he provided a place for her to live at a low rental rate and did some of the household work himself; both paid for groceries; he paid for the heat, light, property taxes and mortgage. In the end they were both in substantially improved financial positions. As I said at the outset, my view is that there has been no unjust enrichment on the facts of this case. [32] For the forgoing reasons I dismiss Ms. Malazarte's claim. [33] As for Mr. Agosti's claim for remuneration for his renovation work in the Maple Ridge house and his claim that Ms. Malazarte pay occupational rent, there was no agreement that Mr. Agosti would be paid for either of these matters. When the claims are considered under the principles of unjust enrichment, they must fail because, in my opinion, the facts do not establish that Ms. Malazarte was unjustly enriched. There was a juristic reason for Mr. Agosti's work and Ms. Malazarte's occupation: these benefits were bestowed pursuant to the agreed upon roles each was to play in their joint investment. [34] I dismiss Mr. Agosti's claim for remuneration and occupational rent. [35] Mr. Agosti's claim that the Maple Ridge property be sold is not contested. An order for sale will go, assuming that the property has not yet been foreclosed. If it has, then there can be no order of sale. In the event the property can be sold, both parties will have conduct of the sale. In order to give Ms. Malazarte reasonable time to find alternate housing, the closing date of the sale will not be within sixty days after the date of these reasons for judgment. Assuming that Ms. Malazarte wishes to remain in the premises (as she said in court), she will have the right to be a potential purchaser. That right will not be extended to Mr. Agosti, except by consent in writing by Ms. Malazarte. [36] In any event, there will be an accounting between the parties of their respective receipts and expenditures regarding the Maple Ridge property. [37] I think the accounting should be straight-forward. I do not wish to involve the parties in another hearing if it can be avoided. To this end, I require that the parties, through their counsel, submit to me their respective accountings so that I may review them and, if possible, render a final accounting. The accountings are to be submitted in writing within four weeks of the date of these reasons for judgment. Each party will then have two weeks to reply. If I can then render a final accounting without a further hearing, I will do so. Otherwise, a hearing before the District Registrar or a Master may be necessary. [38] If any further directions are needed to carry out the sale or the accounting, each party will have liberty to apply. COSTS [39] Given the particular facts of this case and the divided success of the contested issues, I order that there will be no costs to either party. SUMMARY [40] Ms. Malazarte's claim is dismissed. [41] Mr. Agosti's counterclaim is dismissed except that a sale (if possible) and an accounting of the Maple Ridge property are ordered as set out above. [42] There will be leave to apply for further directions in respect to the sale and the accounting. [43] There will be no costs to either party. "D.W. Shaw, J."