Date: 19970115 Docket: F940744 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: PATRICIA KOROLYK PLAINTIFF AND: RONALD PRINCIPE DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE K.J. SMITH Counsel for the Plaintiff: Plaintiff in person Counsel for the Defendant: David R. Greig Place and Date of Hearing: Vancouver, B.C. January 8, 9, and 10, 1997 [1] The plaintiff makes several claims said to arise out of her romantic affair with the defendant, which she says lasted from October, 1990, to April, 1994, and included a period of cohabitation in a relationship approximating that of husband and wife from July, 1992, to April, 1994. They are: 1. a declaration that the defendant holds interests in certain properties in trust for her; 2. an order "transferring or conveying" the trust interests to her; 3. partition and sale of the properties; and 4. restitution. [2] On April 1, 1996, the plaintiff was ordered to deliver particulars of her claims "in unjust enrichment and restitution". An unfiled document entitled "Particulars" dated April 15, 1996, and signed by the plaintiff, was treated by the plaintiff and by defendant's counsel as a response to that order. It appears to advance a claim in quantum meruit in the suggested amounts of $10,230 for unpaid services rendered to the defendant's business and of $44,000 for money contributed to the defendant's businesses. Credibility of witnesses [3] Generally, I found all of the witnesses who testified, including the plaintiff and the defendant, to be credible in the sense that they were endeavouring to be truthful. I found the defendant's testimony to be more reliable than the plaintiff's, however, as it appeared to me that the feelings of hurt and rejection she has suffered have distorted her perspective of the relevant events and have magnified many of them to a level of importance not justified by the circumstances. As well, the defendant's testimony was supported by business records and, in many material respects, by the testimony of his witnesses Colin Fisher, Renalda Green, and Ron Svingen, whom I found to be credible and reliable. [4] I was not favourably impressed by the plaintiff's witness Kenneth Fisher. He appeared to me to be more of an advocate for the plaintiff than an objective and impartial witness, and the weight of his testimony was undermined by his admission that, although he was aware of my order excluding witnesses from the courtroom, he eavesdropped outside the courtroom door and made notes of matters he overheard and considered to be important. I found the plaintiff's witnesses Lawrence Mydonick, Patty Andrews, and Terrence Lockhart to be reliable and I accept their evidence, save for Mr. Lockhart's testimony concerning the time during which the parties cohabited. His memory in that regard was somewhat vague and was inconsistent with that of other witnesses. Findings of fact [5] I find the following as facts. The plaintiff, who is 55 years old, is a country-music singer and has made her living as a performer for many years. At one time she was prominent in her field but her career has declined in the past few years as a result of incapacitating injuries she suffered in a spate of automobile accidents commencing in 1989. She is attempting to revive her career and presently maintains herself on her earnings as an entertainer. [6] The defendant, who is 66 years old, operated a business for more than twenty years supplying hair products, furniture, and fixtures to beauty parlours and barber shops. The business was owned by a limited company, Surrey Beauty and Barber Supply Ltd., the shares of which were in turn owned as to 49% by the defendant and as to 51% by his father. It operated on the verge of insolvency during the material times and was wound up about two years ago. [7] The defendant also owns two residential properties, one jointly with his father, which are rented to tenants. As well, the defendant and his father are the shareholders of a company, Newton Farm Market Ltd., which owned a warehouse property in which the business of Surrey Beauty and Barber Supply Ltd. was carried on. The property was sold when the business was wound up. All of these real-property interests were acquired by the defendant many years ago and in circumstances that did not involve the plaintiff in any way. [8] The defendant drew approximately $20,000 per year from the business in the last few years before its demise. He maintained a suite in the warehouse and often resided there for periods of time. He presently resides in one of the rental houses. Since the business was discontinued he has not been gainfully employed and has been subsisting on a pension of approximately $1,000 per month. [9] The parties have known each other since the plaintiff was employed by the defendant as a hair stylist many years ago. They became friends and remained so over the years until the unfortunate events culminating in this lawsuit. [10] The plaintiff is a mother and grandmother but did not advise the Court of her marital history. [11] The defendant has been married three times and has seven daughters. His first marriage, when he was eighteen years old, ended in divorce. He remarried in the 1960's but he and his second wife were divorced about nine years later. He married his present wife in 1978 and, although they separated in about 1990, they remain friends. They often attend family functions together and have holidayed together with their children and their children's families. [12] In the summer of 1990, at a chance meeting, the defendant advised the plaintiff that he had recently separated from his wife. Shortly thereafter, they began to date. The plaintiff was then living in her daughter's converted garage and the defendant was living in the suite in his warehouse. In time, the defendant began to spend many nights with the plaintiff in her residence, and it is not disputed that they had intimate sexual relations during this period. [13] The parties did not see each other for approximately three months during 1991, when the plaintiff was in Manitoba and then in a pain clinic for treatment of her injuries, but when she was released from the clinic they resumed their romantic association. [14] The relationship, which the plaintiff described many times during her testimony as "fiery" and "stormy", had its ups and downs during this period. The parties argued frequently and often separated from each other for periods of time. [15] They continued on this on-and-off basis throughout 1992. The plaintiff was hospitalized for a time in May, 1992, and the defendant visited her there. It was at about this time that she settled a lawsuit arising out of one of her automobile accidents and received approximately $69,000. [16] In the spring of 1992, during a hiatus in the relationship, the defendant lived in the warehouse and engaged in a romantic affair with Ms. Green, who confirmed that she spent many nights there with him from March through May of 1992. Their sexual relations ended in May, 1992, but Ms. Green and the defendant remain friends and she is presently a tenant, along with four others, in one of his houses. [17] In about September, 1992, the parties agreed to cohabit. They moved into a house owned by the defendant's father and shared it with three male renters. The defendant collected rent from the other tenants and paid his father $1,100 per month for rental of the house. The plaintiff paid no rent. [18] They found living with the others intolerable and, after a month or so, they moved into a house owned by the defendant. Again, the plaintiff lived rent-free. The defendant made the mortgage payments on the property. The plaintiff paid to have the house fumigated and the carpets cleaned. They seldom ate breakfast at the house and they usually bought their lunches and dinners in restaurants. They shared the household chores, like cooking and cleaning. They gave each other money in small amounts as needed and each paid household-related expenses from time to time. [19] The parties maintained separate bank accounts and credit cards at all times, and they have not owned any property together. They never discussed the possibility of marriage. [20] Although the parties were living together, the defendant continued to see his wife and daughters and to attend family functions to which the plaintiff was not invited. The plaintiff was aware of these activities and made no objection. [21] In the main, their activities together revolved around the defendant's business. The defendant often had yard sales of items he was unable to sell in his warehouse and the plaintiff assisted in these sales. Sometimes the defendant gave the plaintiff a share of the proceeds, which were seldom more than about $200 in a day. As well, they went to auctions together to purchase items for the business. [22] The plaintiff often assisted the defendant at the warehouse and was employed there for a period of time. That came about in the following way. [23] For several years before the events in question, Mr. Svingen had worked for the supply business as a warehouseman, deliveryman, and salesman. As the defendant also performed these functions, Mr. Svingen acted essentially as his assistant. [24] In December, 1992, Mr. Svingen became ill and was unable to work again until about June, 1993. To replace him, the defendant hired the plaintiff to look after the warehouse and to assist with the pickup and delivery of supplies, which she did with her automobile. Her duties at the warehouse consisted primarily of answering the telephone and dealing with customers. She did not take part in the heavy lifting involved in moving the fixtures and furniture which formed the bulk of the defendant's inventory, although she did assist by stocking shelves at times with what she described as "soft" products, that is, such things as shampoos and packages of hair-treatment products. The nature of the plaintiff's job was such that there was much free time and, with the defendant's encouragement, she used that time to practice and rehearse for her musical performances. As well, she was free to come and go when she was not needed and she took advantage of that flexibility to attend a chiropractor and a physiotherapist frequently for ongoing treatment for her injuries. [25] The defendant did not pay the plaintiff a car allowance, but he did pay for the replacement of the engine in her vehicle. As well, he paid her $195 per week for the time she worked. She claimed that she never kept that money and that she reinvested it in the defendant's business, but that assertion is unsupported by any other evidence and is denied by the defendant and by Mr. Svingen, who had some familiarity with the business. As well, it is controverted by the business records, which include cheques, money orders, and cash receipts endorsed by her. I do not accept the plaintiff's evidence on this point. [26] While the plaintiff was working at the warehouse, the parties had a falling-out. Their cohabitation had not ameliorated their incompatibility and, after an argument in about March, 1993, the defendant moved out of the house and back to the warehouse. Although they socialized sporadically thereafter, they have not cohabited as husband and wife since. [27] In November, 1993, the plaintiff was laid off from the warehouse. She was paid holiday pay and was given the necessary severance papers to permit her to apply for Unemployment Insurance, which she collected for some time thereafter. [28] In August, 1993, the defendant moved into one of his houses with Mr. Svingen, Colin Fisher, and a Ms. Cameron. Mr. Svingen and Mr. Fisher paid rent to the defendant. The defendant shared a bedroom with Ms. Cameron, and the two of them lived together in a common-law relationship from then until the spring of 1994, when the defendant moved back to his quarters in the warehouse. [29] The plaintiff stayed in the defendant's house after he moved out in March, 1993, but his business was suffering financial difficulties so he sold the house. The plaintiff has remained in the house as a tenant of the new owner. [30] Although the defendant had resolved that his relationship as it had been with the plaintiff must end, he continued to care for her. After the parties separated, he assisted her to attempt to acquire a place of her own. They found a suitable condominium but she was unable to qualify for mortgage- financing and nothing came of it. He also assisted her by making two or three monthly rental payments to her new landlord when she was unable to do so. [31] From time to time during 1992 and 1993, the plaintiff gave money to the defendant and paid personal or business obligations on his behalf. She claims these payments were made in the expectation that they would share their lives and fortunes and she claims compensation for them on a quantum meruit. [32] On one occasion, the plaintiff travelled to Nashville to make a recording. She asked the defendant to go along and act as her agent. The defendant could not afford the trip, so the plaintiff persuaded him to go on the basis that she would pay for it, as she then had funds remaining from her accident settlement. The trip was not a happy one and the parties had several arguments. After their return, the plaintiff asked the defendant to agree in writing to reimburse her for several expense items totalling $6,400, including the fumigation and carpet-cleaning in the house, an insurance premium she had paid on his behalf, and the travel expenses for the Nashville trip. On September 13, 1992, the defendant signed a document, described by the plaintiff as a promissory note, agreeing to repay these items. [33] On another occasion, in April, 1993, the business received a notice of disconnection of utilities for non-payment. This was not an uncommon thing for the defendant to experience, and he sometimes allowed disconnection to occur until he could generate enough cash from sales to pay to have the services reconnected. On this occasion, despite the defendant's objection, the plaintiff took it upon herself to pay the bill in the amount of $770.28 to forestall the disconnection. [34] The other such occasion mentioned by the plaintiff involved the utilities bill for one of the defendant's houses. The tenant complained that utilities had been disconnected for non-payment and, in the defendant's absence, the plaintiff paid the bill on May 14, 1993, in the amount of $492.19 and had the service reconnected. [35] The defendant does not dispute these matters but says he reimbursed the plaintiff. He produced copies of money-orders and cancelled cheques paid to the plaintiff between October 28, 1992, and October 28, 1993, totalling almost $6,000, which he testified were in repayment of these amounts. As well, he said he gave the plaintiff money on many occasions without receiving receipts. I accept his evidence and I am satisfied that any monies loaned to or paid on behalf of the defendant by the plaintiff have been substantially repaid. [36] The plaintiff asserted that she spent money for the business for which she has not been reimbursed. Mr. Svingen controverted that evidence. I accept his testimony that it was common for the defendant to give money to him and to the plaintiff and to ask them to pay for business inventory from their personal accounts. The defendant operated in this way to avoid depositing cash in the business bank account, where it would quickly be taken by the bank to cover overdrafts or by Revenue Canada or the provincial sales tax authorities for unpaid taxes. I am satisfied that the plaintiff received funds from the defendant to offset the payments she identified as made from her bank account on behalf of the defendant's business. The issues [37] The issues are as follows: 1. Has the plaintiff established a resulting trust? 2. Was there an unjust enrichment of the defendant by the plaintiff? 1. Has the plaintiff established a resulting trust? [38] To establish a resulting trust the plaintiff must show that she contributed to particular property with the common intention that she and the defendant would own the property together: Pettkus v. Becker, [1980] 2 S.C.R. 834, Reid v. Ferguson (28 May 1993) Vancouver A922615 (B.C.S.C.) at p. 3. [39] At its best, the plaintiff's evidence establishes no more than a hope or understanding on her part that she would share in the defendant's assets and fortunes. She was unable to identify any basis in any statement by the defendant that would support her understanding. The defendant denied any intention that she should share in his property and I accept his evidence in this regard. [40] Moreover, the plaintiff did not establish any particular contribution linked to any specific property of the defendant. There is nothing in the evidence to support the suggestion that she made any material contribution to the acquisition or the maintenance of any of the defendant's property. [41] Accordingly, the claim for a declaration of resulting trust is not made out. 2. Was there an unjust enrichment of the defendant by the plaintiff? [42] In Peter v. Beblow, [1993] 1 S.C.R. 980, the Supreme Court of Canada reaffirmed that there are three essential elements to be proven to establish an unjust enrichment, namely: 1. An enrichment; 2. A corresponding deprivation; and 3. The absence of a juristic reason for the detriment. The Court also recognized that household and other services performed in a marriage or marriage-like relationship can be the basis for a claim of unjust enrichment in some circumstances. In that regard, McLachlin, J. said, at p. 997: . . . I hold the view that in order for a constructive trust to be found, in a family case as in other cases, monetary compensation must be inadequate and there must be a link between the services rendered and the property in which the trust is claimed. Having said this I echo the sentiments of Cory J. at p. 1023 that the courts should exercise flexibility and common sense when applying equitable principles to family law issues with due sensitivity to the special circumstances that can arise in such cases. The next question is the extent of the contribution required to give rise to a constructive trust. A minor or indirect contribution is insufficient. The question, to quote Dickson J. (as he then was) in Pettkus v. Becker, supra, at p. 852, is whether "[the plaintiff's] contribution [was] sufficiently substantial and direct as to entitle her to a portion of the profits realized on the sale of the . . . property." Once this threshold is met, the amount of the contribution governs the extent of the constructive trust. . . . [43] The defendant admits that the parties were in a marriage- like relationship for a period of time. He says that relationship was confined to the few months they lived together from September, 1992, to March, 1993, while the plaintiff says it also existed before and after that time. The plaintiff's view of the relationship is clouded by her emotions and is based on her irrational hopes. The requisite marriage-like relationship existed for only the seven months or so described by the defendant. [44] The evidence does not support the plaintiff's assertion that the defendant was enriched - let alone unjustly enriched " by her during their relationship, even if it is considered to have existed for the time alleged by the plaintiff. Moreover, the plaintiff lived rent-free during the period of cohabitation and any enrichment the defendant may have gained was equalled or offset by the benefits derived by her. Thus, if it could be said that the defendant was enriched by the plaintiff, she suffered no corresponding deprivation. She was paid a wage for her services in the business and was repaid all or substantially all of any monies she advanced to it or on its behalf. [45] Accepting at its best the plaintiff's evidence of her contributions to the defendant's business and his property, the contribution is minor and insignificant and, having regard to the short duration of their cohabitation as well, is not sufficient to raise a constructive trust in any of his property. I am not satisfied that the plaintiff made any significant monetary contribution to the defendant or his property that has not been reimbursed by the defendant. [46] This is a difficult case in the sense that the plaintiff genuinely feels wronged. She enjoyed acclaim as a popular and successful entertainer for many years and entered into this relationship when she was in a very vulnerable state, emotionally and physically, as a result of the injuries she had suffered and of her declining career. She hoped to share her life and fortunes with the defendant, but her desire for that blinded her to the realities of the situation. The defendant's affection for her and his willingness to attempt to forge a lasting relationship were seen by her as more than they really were, and she took from them a commitment that he did not intend. [47] The emotional investment in a relationship like this one cannot be measured in economic terms and the law provides no recompense for its loss. The plaintiff has failed to prove entitlement to any remedy available at law and, accordingly, the action is dismissed. "K.J. Smith, J."