Date: 19970731 Docket: 1630/93 Registry: Victoria IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: DANIEL JOHN McVIE PLAINTIFF AND: ARLENE ELLEN PERRY DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE COWAN Counsel for the Plaintiff: M. S. Frost and V. Pitt Counsel for the Defendant: W. Murphy-Dyson Place and Dates of Hearing: Victoria, B.C. May 12 - 14, 1997 [1] This action involves a claim by the plaintiff for a constructive trust. [2] The parties first met in November 1984. The plaintiff was then 31 years of age and the defendant was 40. The defendant's situation when she met the plaintiff was that she was separated from her husband. The separation took place in 1981. She had three children who at the time of the separation were aged 16, 13 and 8 years of age respectively. Following the separation she remained in the matrimonial home which was unencumbered. She and her husband were divorced in 1984. She had during the course of the divorce proceedings obtained an order for maintenance payments for the children. These payments were invariably in default. As a result she worked at two jobs to enable her to support herself and the children. She also obtained income by renting out an extra bedroom in the home to her father and later to a student. [3] Property issues in relation to the divorce proceedings were still unresolved when she met the plaintiff. As well she had been having problems with her husband stalking her from time to time. She had consulted the police regarding his actions, but was advised that she could not receive protection unless some physical acts occurred. [4] After dating several times following their meeting in November 1984, the plaintiff, who was then aware that the defendant owned her home and at the time had an extra room in it which was unoccupied, suggested that he would be interested in renting the room from her. He told her that he had little money but was prepared to come to some arrangement. [5] Before dealing further with the narrative of events which transpired between the parties and which ultimately gave rise to the plaintiff's claim in this action, it is necessary to deal with the issue of the credibility of the parties' respective testimony as there are a considerable number of conflicts in their evidence concerning what transpired during the course of their relationship. [6] Where those conflicts occur, I accept the evidence of the defendant where it differs from that of the plaintiff. I found her to be honest and straightforward in giving her evidence and in general her evidence was supported, I find, in large measure by the documentary evidence that was produced. [7] The plaintiff, on the other hand, I found to be less than frank in giving his evidence. His demeanour in the witness box and his evidence in chief generally left the impression that it was orchestrated. He was prone to exaggeration in giving evidence as to his contributions to the work he purportedly did on the property and in respect of payments which he said he made for materials purchased and household expenses generally. [8] Part of the arrangements which were discussed regarding the plaintiff renting a room from the defendant was that a figure of $400.00 per month for room and board would be reasonable. It was agreed, however, that since the plaintiff had as he said little or no income, that in lieu of paying the $400.00 per month, he would pay the property taxes and maintain the property and carry out renovations. [9] The plaintiff moved in to the spare room in the defendant's home in autumn 1985, bringing some bedroom furniture with him. [10] By early 1986 the plaintiff began coming into the defendant's bedroom at night and they began a sexual relationship. This would occur about three times per week. In 1987 the plaintiff moved into the defendant's bedroom permanently. [11] In 1986 the defendant's life was as she put it "in turmoil": her husband was continuing his stalking tactics, she was trying to obtain more remunerative employment and she was coping with the needs of her children and those of the plaintiff, as well as her ongoing litigation with her husband. [12] In July 1986 she applied for and obtained employment with the provincial Ministry of Health as an office assistant. Her father died in December 1986. [13] In 1987 an order was made in the defendant's divorce proceedings directing a sale of the home. An offer of $145,000.00 was made which the defendant had the opportunity of matching. She accordingly arranged a mortgage for $65,000.00 out of which she paid her husband $62,000.00, the balance of his share being made up of arrears of maintenance. The plaintiff attended with the defendant when the mortgage was arranged and documents executed. The plaintiff had no input in respect of the mortgage arrangements and there was no discussion between them concerning its repayment. [14] On November 6, 1987 the plaintiff made an assignment in bankruptcy. He declared assets of $1,300.00 and unsecured creditors of $29,800.00. The defendant became aware of his bankruptcy sometime in 1988 when he asked her to lend him $1,000.00 to enable him to apply for his discharge. This she did. The amount was ultimately repaid. He was discharged from bankruptcy in April 1988. [15] The day following his assignment in bankruptcy the plaintiff told the defendant that for tax purposes he wished to put some money into her name. She agreed and arrangements were made for two terms deposits of $5,000.00 each to be taken out at a credit union. The deposits were for a one year term. [16] Notwithstanding the plaintiff's statement to the defendant that the term deposit arrangements were for tax purposes it is clear from the evidence that the sole purpose of the arrangement was to enable the plaintiff to conceal the $10,000.00 from his trustee in bankruptcy and his creditors. His sworn statement of affairs filed with his trustee was clearly false. [17] In August 1988 the plaintiff suggested to the defendant that as he did not need the monies in the term deposits that the monies should be applied on the mortgage. She agreed to this being done. A total of $12,971.83 was applied on the mortgage. The plaintiff testified that the total amount which was paid came from the $10,000.00 of term deposits plus accrued interest on them. The documentary evidence refutes that that was the case. The total realized from the term deposits was $10,684.25. The balance of the payment was paid by the defendant. [18] The plaintiff also testified that this payment was made in accordance with arrangements which had been made with the defendant at the time the mortgage was taken out to the effect that he would make lump sum payments on the mortgage from time to time. The defendant denied that any such arrangement was ever made between them. I accept her evidence in that regard. [19] The evidence is clear, I find, that the parties kept their respective financial affairs separate during the period of their relationship. The defendant was aware that the plaintiff was employed from time to time but was not aware of his financial situation except that he delayed in paying the 1986 taxes until 1987 and that he borrowed $1,000.00 from her in 1990 to pay that year's taxes. [20] In 1989 when the mortgage came up for renewal the plaintiff advised the defendant that he wished to help her out by giving her $10,000.00 towards the mortgage. She accepted this money and it was applied on the mortgage. [21] The mortgage again came up for renewal in August 1990. At that time the plaintiff again offered the defendant a further $10,000.00 to be applied on the mortgage. When this offer was made she became suspicious as to the plaintiff's motives. They had previously discussed whether he expected to have any claim on the property. The plaintiff had denied that that was the case. When the plaintiff offered the $10,000.00 in August 1990, the defendant refused to take it but did agree to accept $6,000.00 since his contributions to the restoration and maintenance of the property had been minimal as had his contributions to the purchase of groceries or any other household expenses. She accepted the $6,000.00 since she felt that it was owed to her for the room and board which she had provided him since the inception of their relationship. When the $10,000.00 was offered in August 1990 the defendant again queried the plaintiff concerning whether he felt he had any claim on her property arising from his payments towards the mortgage. At that time he denied that that was the case, a statement which she accepted. The situation, however, continued to bother her and in October 1990 she prepared a short typed agreement to the effect that neither party would in the future make any claim against each other's assets. She presented this document to the plaintiff who advised her that he would just have to take it to a lawyer. Nothing further came of the matter and the defendant did not press the matter with the plaintiff although it clearly continued to be a matter of concern to her. [22] The parties continued to occupy the same bedroom, and live as before until September 1992 when the plaintiff locked the defendant out of the bedroom and the defendant moved into another room. The plaintiff's drinking habits which often consisted of his drinking nearly a dozen beer a day and passing out on several occasions became worse and he became more aggressive. The defendant after being locked out of her bedroom became more fearful than before of the plaintiff. She placed wedges under the door of the room she occupied to endeavour to keep the plaintiff out. He, however, forced the door open on several occasions and sexually assaulted the defendant. [23] Finally in April 1993 the defendant told the plaintiff he would have to leave. He refused, telling the defendant that he intended to get the house into his name and take over paying the mortgage. The defendant finally consulted a lawyer who instructed her to place a notice on the defendant's door advising him to leave and to remove all his personal property by May 15, 1993 as of 1:00 p.m. The plaintiff ignored the notice. On the morning of May 15, 1993 the defendant, after an argument with the plaintiff who requested an extension of his leaving which she refused, called the police to attend at 1:00 p.m. which they did. The plaintiff had, however, moved out by that time. [24] Within five days the plaintiff caused the writ to be issued in this action. The defendant learned of it when she received notice from the Land Titles Office that a lis pendens had been filed against the property. [25] The evidence at trial disclosed that the plaintiff was not unfamiliar with constructive trust claims as he himself had been the subject of such an action in the early 1980's brought against him by a woman he had been living with who had paid mortgage payments on the house in which they lived which he owned. A judgment was obtained against him in the action for $3,000.00. [26] That knowledge, coupled with the alacrity with which the writ was issued in this action after he was forced out of the defendant's home lends credence, in my opinion, to the defendant's concerns regarding the plaintiff's motives in making the lump sum mortgage payments which he did. [27] After learning of the filing of the lis pendens in this action, the defendant continued to see the plaintiff to endeavour to reach an amicable solution to their problems. The plaintiff insisted when this occurred that she should have sex with him before he would engage in any discussion. Finally in September 1995 she consulted her solicitor, who advised her to have no further dealings with the plaintiff, which advice she followed. [28] Before dealing with the specifics of the constructive trust claims submitted by plaintiff's counsel there are two other matters which are collaterally in issue between the parties. They relate to a house trailer and a Valiant automobile which were purchased by the parties during their relationship. The trailer remains on the defendant's property. The plaintiff has possession of the Valiant. [29] The trailer was purchased in December 1987 to provide the defendant with some rental income which it did off and on as it was rented. They each paid $1,500.00 towards its purchase. The wheels of the trailer were removed by the plaintiff and used by him to make a utility trailer for his truck. [30] The Valiant automobile was purchased in 1989 for $1,500.00. On discovery the plaintiff contended that he had paid one-half of the purchase price. This evidence was later refuted when in response to a notice to admit accompanied by documentary evidence, the plaintiff admitted that the defendant had paid the full purchase price. [31] I find that the appropriate and just resolution of the issues concerning the trailer and the Valiant is that the defendant should retain the trailer in its present state as her property exclusive of any claim of the plaintiff and that the plaintiff should retain the Valiant as his sole property exclusive of any claim by the defendant. [32] As stated at the outset of these reasons, the plaintiff has characterized his claim in this action as a constructive trust claim. Plaintiff's counsel in his written "opening" states: The Plaintiff does not claim a quantum meruit award or the determination that there exists a resulting trust (though there are certainly remedies available to the Court). He claims what he expected: an interest in the property. [33] In his closing argument, however, plaintiff's counsel resiled from that position when he stated that the plaintiff did not want an interest in land, but a monetary award. [34] That being the case the action cannot, in my view, be characterized as a "constructive trust claim" but rather a claim for unjust enrichment, resulting in a monetary rather than a proprietary award. [35] In the case of Peter v. Beblow (1993), 44 R.F.L. (3d) 329 (S.C.C.), McLachlin J. who gave the main judgment for the court said at pages 335 - 336: In recent decades, Canadian courts have adopted the equitable concept of unjust enrichment, inter alia, as the basis for remedying the injustice that occurs where one person makes a substantial contribution to the property of another person without compensation. The doctrine has been applied to a variety of situations, from claims for payments made under mistake to claims arising from conjugal relationships. ... The basic notions are simple enough. An action for unjust enrichment arises when three elements are satisfied: (1) an enrichment, (2) a corresponding deprivation, and (3) the absence of a juristic reason for the enrichment. [36] In the present case I am satisfied that the defendant was enriched to the extent of at least some of the lump sum mortgage payments made by the plaintiff. The plaintiff's other claimed enrichment of the value of the property by his services were negligible in my opinion. [37] Did the plaintiff suffer a corresponding deprivation? I consider that he did to the extent he no longer had available to him the monies he paid towards the mortgage even though $10,000.00 of those monies were monies he would not have had available to him were it not for his concealment of them from his trustee and his creditors at the time of his bankruptcy. As to the absence of a juristic reason for the defendant's enrichment the plaintiff was under no legal obligation to make the payments he did. [38] In quantifying the plaintiff's claim counsel in his closing argument submitted that the court should use the "value survived" approach referred to by McLachlin J. in Peter v. Beblow, supra, at page 343, that is to have regard to the amount by which the property has been improved. [39] It was submitted that the following amounts should be considered in assessing an award on a "value survived" basis. They are: (1) $93,500.00 - this amount is based on appraisal evidence presented which placed the value of the defendant's property as of March 1985 at $150,000.00 and as at May 15, 1993 at $337,000.00, an increase in value of $187,000.00 of which the plaintiff claims one-half. (2) $26,000.00 - representing payments made by the plaintiff on the mortgage. (3) $8,000.00 - representing one-half of the rental income generated by rental of the trailer. (4) $9,700.00 - representing property taxes paid by the plaintiff. The total of these amounts is $137,200.00, an amount which plaintiff's counsel says should be reduced because the plaintiff got some benefit. He accordingly submits that a "fair distribution of benefits is the sum of $100,000" and that that is the award which should be made. [40] In my opinion, this is not a case in which the value survived approach to valuation is appropriate. [41] In this case the plaintiff seeks only a monetary award. McLachlin J. in Peter v. Beblow, supra, at page 344 stated "For a monetary award, the 'value received' approach is appropriate; the value conferred on the property is irrelevant." [42] In the recent Supreme Court of Canada decision of Soulos v. Korkontzilas (unreported May 22, 1997, File No. 24949) the court again considered the matter of the equitable remedies of constructive trust. McLachlin J. delivering the majority judgment of the court, stated at page 16: ... Equitable remedies are flexible; their award is based on what is just in all the circumstances of the case. [43] From the plaintiff's standpoint he did make the $26,000.00 in mortgage payments which benefitted the defendant, not just to the extent of their payment but also by reducing the amount of interest she would pay on the reduced principal balance. He also paid the taxes on the property in an amount, I find, of $8,000.00. His other financial contributions were minimal and generally unsupported by any documentary evidence. [44] Balanced against the monies he contributed there must be taken into account the benefits he received. The defendant, I find, provided him with room and board and domestic services generally which undoubtedly enabled him to save at least some of the money which he used to make the monetary payments he did. [45] In Peter v. Beblow, supra, McLachlin J. at pages 340 - 341 said: ... Today courts regularly recognize the value of domestic services. This became clear with the court's holding in Sorochan, leading one author to comment that "[t]he Canadian Supreme court has finally recognized that domestic contribution is of equal value as financial contribution in trusts of property in the familial context" (Mary Welstead, "Domestic Contribution and Constructive Trusts: The Canadian Perspective" [1987] Denning L.J. 151, at p. 161). If there could be any doubt about the need for the law to honestly recognize the value of domestic services, it must be considered to have been banished by Moge v. Moge, supra. While that case arose under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), the value of the services does not change with the legal remedy invoked. I cannot give credence to the argument that legal recognition of the value of domestic services will do violence to the law and the social structure of our society. It has been recognized for some time that such services are entitled to recognition and compensation under the Divorce Act and the provincial Acts governing the distribution of matrimonial property. Yet society has not been visibly harmed. I do not think that similar recognition in the equitable doctrine of unjust enrichment will have any different effect. [46] I am of the opinion that the value of the domestic services rendered by the defendant to and for the benefit of the plaintiff must accordingly be brought into the equation in establishing the quantum of any monetary award to be made. [47] Defence counsel submitted that the defendant's services in providing room and board to the plaintiff should be valued based on the $400.00 per month figure which the parties originally discussed and considered fair, and that the defendant should be credited with that amount for the period of 96 months during which the parties cohabited. [48] I agree that the $400.00 per month figure is a fair starting point to assess the value of the defendant's services; however, the plaintiff did make some monetary contributions for materials used in certain of the work he did from time to time. He should also receive some credit for what work he did perform on the premises. I consider that the amount claimed by the defendant for services she provided to the plaintiff should be reduced, therefore, by $100.00 per month to reflect the contributions of the plaintiff. [49] Based on 96 months at that figure the defendant is entitled to a credit against amounts reasonably claimable by the plaintiff in the sum of $28,800.00 (96 months x $300.00). The plaintiff, I consider, is entitled to be credited with the $26,000.00 in mortgage payments he made; $8,000.00 in respect of property taxes paid by him; and a further $8,000.00 to reflect his share of the rent generated by the trailer which the parties jointly purchased; the total is the sum of $42,000.00. [50] Accordingly, the plaintiff is entitled to judgment in the sum of $13,200.00. The plaintiff does not claim interest on the amount awarded. [51] As to costs, defence counsel asked to speak to costs after judgment had been delivered. Arrangements in that regard should be made with the Trial Co-ordinator. "J. C. Cowan, J." The Honourable Mr. Justice Cowan