Date: 19990930
Docket: E004473
Registry: New Westminster

BETWEEN:

PLAINTIFF

AND:

DEFENDANT

[1] The plaintiff, Sheree Frederkind, and the defendant, Brian Frederkind, (whom I will call "the defendant") now age 42 and 45 respectively, were married for 23 years before they separated in August 1997. Their two children are now independent adults.

[2] The plaintiff claims a share of the beneficial interest in the house and three acre property in Surrey, B.C. ("the property") in which the couple lived almost all their marriage. The critical feature in this case is that the legal estate of the property is vested solely in the defendant's parents' company (which I will call "Carlono"). The defendant's parents are Waltraud and Arthur Frederkind (the "senior Frederkinds"). The plaintiff bases her claim on principles of resulting trust and alternatively, unjust enrichment on fairness, giving rise to the remedy of a constructive trust.

[3] The plaintiff also claims spousal support under the Family Relations Act: R.S.B.C. 1996 c. 128.

[4] The parties lived together for about a year before their marriage on October 12, 1974. The plaintiff no longer resides at the property while the defendant continues to occupy it.

[5] The property has been legally owned by the corporate defendant, Carlono, since June 1974 (although it was named "Art's Sewer & Drainage Service Ltd." until 1985). Carlono's only shareholders are Arthur and Waltraud Frederkind (the defendant's parents). Although the defendant is the president of Carlono, he owns none of its shares.

[6] Throughout their marriage, the parties paid rent to Carlono. It was initially about $150 to $200 per month. For many years, the rent has been $400 per month which is the amount of taxes Carlono pays on the property. Carlono has always paid the taxes and insurance premiums.

[7] The parties maintained and improved the property over the last 22 years of their marriage, including: extensive landscaping, constructing a shop for the business, and installing fences and driveways. They finished the basement, renovated the kitchen and bathroom, re-carpeted, painted and wallpapered. However, Carlono paid for most of these. The parties contributed their own labour, but only about $5400 of the cost of the maintenance and improvements.

[8] It is common ground that Waltraud and Arthur Frederkind through their company, Carlono, gave the parties gifts totalling $120,000. They also gave them Carlono's business assets, worth approximately $100,000. Furthermore, they purchased the defendant's Bobcat and options for a value of about $50,000. When the defendant sold Carlono's assets, the parties used the money for a family purpose.

[9] The plaintiff relies on Murdoch v. Murdoch, [1975] 1 S.C.R. 423, for the proposition that a resulting trust arises where there is evidence of a common intention between the parties that each would have an interest in the property; and, based on Rathwell v. Rathwell (1978), 1 R.F.L. (2d) 1 (S.C.C.) that in determining whether the necessary common intention existed, all the circumstances as to the acquisition, preservation and improvement of the property must be considered.

[10] I accept the evidence of Waltraud Frederkind who was a reliable and honest witness. She testified the purpose for which Carlono acquired the property was to relocate its business and for investment purposes. However, business was never relocated. Shortly after Carlono purchased the property, the senior Frederkinds decided it should be a home for the parties in which they could raise their family. While the primary use of the property for 22 of their 23 year marriage was as the parties' home, that was not the intention of the senior Frederkinds when their company, Carlono, acquired this property.

[11] The plaintiff testified there were various comments made during the marriage by the senior Frederkinds which implied or stated the property was hers and her husbands to do with what they wished. The parties spoke casually of having it sold and moving to Port Kells. While I find they did treat the property as though it were their own, they improved and maintained it for their own comfort. Their efforts were more than offset by the benefit they received from paying only nominal rent to Carlono.

[12] The plaintiff relies on the statement of Arthur Frederkind made one Christmas Eve in about 1986 or 1987 that he intended to transfer the title to their names. The following year the parties paid their monthly $400 as taxes rather than rent, but this was soon changed again to rent as Carlono was required to show income for tax purposes.

[13] Despite Arthur's Christmas Eve statement about transferring title to his son and daughter-in-law, his accountant advised that such a transfer would trigger hundreds of thousands of dollars in capital gains tax. While counsel for the plaintiff argues that but for the tax consequences, the transfer would almost certainly have been made, I find Arthur Frederkind's Christmas Eve statement did not bind him in any way. Rather, it was a statement of future intention made without any consideration from the parties. Arthur Frederkind was free to change his intention at any time. It was a statement of generosity made, as Waltraud Frederkind testified, in a Christmas Eve holiday spirit.

[14] While counsel for the plaintiff argues nothing had happened to contradict an intention of the senior Frederkinds that the property would belong to the parties, I accept the evidence of Waltraud Frederkind that the intention of the senior Frederkinds was that after their death, their children would inherit legal title to their properties. During the senior Frederkinds lifetime, however, their children would enjoy the occupation of the property. This is very different from finding that the senior Frederkinds' intention on acquiring the property, or the parties' occupation of it, was that the beneficial interest belonged to the parties.

[15] I cannot agree with the submission of counsel for the plaintiff that the evidence in this case points to a common intention, express or implied, that Carlono would continue to hold the legal title for tax reasons but that the parties would have the beneficial interest. Therefore, the evidence does not give rise to a resulting trust in favour of the plaintiff. Counsel submitted no authorities to support this argument and the authorities to which I will refer offer none.

[16] The senior Frederkinds were extremely generous to their son and daughter-in-law. The defendant worked for his father's company from the time he was in junior high school. His father eventually gave him the business, and later, when his son decided not to stay with the business, his father allowed him to keep the proceeds of sale of the company's equipment.

[17] The senior Frederkinds were very family oriented and wanted to help their children "get started" in life. When the parties struggled financially, as they often did during their marriage, the senior Frederkinds gave them generous cash gifts. The couple was given approximately $120,000 ($60,000 each), holidays in Mexico, dinners out and cash gifts to their children. Even after the separation in August 1997, the senior Frederkinds assisted their son with a cash gift of about $15,000. The defendant used this to replace items stolen in two break-ins to the property, insurance for his son's car and various other things.

[18] Based on McDougall v. Gesell Estate, [1999] M.J. No. 316 (Man. Q.B.) (Q.L.), a resulting trust is not supported by the facts of this case. In McDougall, Beard J. referred to Waters, in his text, The Law of Trusts in Canada, 2nd ed (Toronto: Carswell, 1984) as setting out the essential characteristics of a resulting trust. She concluded (at paragraph 13):

[19] When the property was first acquired, the parties had no interest in it. Rather, Waltraud and Arthur Frederkind purchased it for the purpose of transferring their company's business to the property and for investment. They purchased it before the parties' marriage. The parties had no involvement with the acquisition of the property.

[20] In Wong v. Wong, [1999] B.C.J. No. 1256 (Q.L.) Rowles J.A., delivering the judgment of the British Columbia Court of Appeal, discussed the equivocal state of matrimonial property law following the decisions in Murdoch and Rathwell. She quoted the judgment of Mr. Justice Dickson for the majority in Pettkus v. Becker, [1980] 2 S.C.R. 834, in which he referred to the difficulties inherent in using "common intention" as the conceptual underpinning for resulting trusts. Rowles J.A. quoted the following passage from his judgment (at S.C.R. 842-43):

[21] Rowles J.A. observed that the sought-for "common intention" is rarely, if ever, express; the courts must glean "phantom intent" from the conduct of the parties. The legal estate in the property in this case is of course one step removed from the defendant: it rests with the company owned solely by the defendant's parents. This fact has created a difficult legal hurdle for the plaintiff. I conclude that the evidence of the conduct of the parties in this case does not lead to an inference of common intention. Thus, the plaintiff's claim for a declaration of a resulting trust is dismissed.

[22] McLachlin J. set out the elements of a constructive trust in Peter v. Beblow, [1993] 1 S.C.R. at p. 984:

[23] The plaintiff says there would clearly be a constructive trust in her favour if the property were in the name of the defendant, Brian Frederkind, alone. However, it is not, so I need not consider that question.

[24] The plaintiff relies on Bebbington v. Carter, [1997] B.C.J. 961 (B.C.S.C.) (Q.L.) where the court found a constructive trust in favour of the spouse who did not have legal title. However, that case is distinguishable from this one; in Bebbington, one spouse had title to the property. Here, the plaintiff's claim for an interest in the property is not against her husband, but against the owner.

[25] The plaintiff argues that the improvements made to the property by the parties were far greater than anything, which could reasonably be expected of arm's length tenants. But the parties were not arm's length to the owners of the property. The parties' work on the property was reasonably consistent with their relationship to Carlono and to the senior Frederkinds. The parties made the improvements and maintained the property in the context of their own comfort during their 22 year occupation of it. Their work and modest expenses in doing so were more than offset by the benefit they received of paying only nominal rent, and the fact Carlono paid the insurance, taxes and most of the maintenance and improvement expenses. The young couple also received substantial cash gifts from the senior Frederkinds. There is no evidence before the court of the current value of the property. The plaintiff adduced no evidence of an enhancement of the value of the property through her efforts.

[26] I accept that the plaintiff excelled in her role as homemaker and primary childcare giver. It is also clear on the evidence of Waltraud Frederkind that her son, the defendant, will continue to have occupancy of the property if he wishes. I find these factors are only relevant to the plaintiff's entitlement to spousal support and the defendant's ability to pay it.

[27] I have considered the totality of the evidence, but I find that the plaintiff has not proven the requisite elements of unjust enrichment. Thus, I dismiss her claim of constructive trust. There is no basis for that remedy on unjust enrichment, unconscionable conduct or fairness.

[28] The defendant was employed throughout the marriage, first by his father's company, then in his own business and by taking over Carlono for his father. Since about 1993, he has been employed by the Province of British Columbia as a Corrections Officer. The defendant now earns a gross salary of approximately $40,000 a year as a Corrections Officer. He is a member of a union and has guaranteed full time work.

[29] The plaintiff was only briefly employed during the marriage. She was a short-term bookkeeper at Carlono, she sewed for others in the home, did some day care and spent about eight months as an office manager trainee. Apart from brief occupations, she assumed the "traditional" role, with her husband's agreement, of homemaker and caregiver to her husband and children. She embraced this role with enthusiasm.

[30] Immediately after the parties' separation, The plaintiff acquired training and employment as an Activity Worker at a long term care facility in Delta, B.C. She earns approximately $18.00 per hour. Until recently, she was classified as "point four" permanent part time. She is now working a "point eight" position that is expected to end in February, 2000. The plaintiff anticipates she will then revert to her "point four" position. She will earn approximately $22,000 gross this year.

[31] In Henderson v. Scarborough, [1999] B.C.J. 1960 (B.C.S.C.) (Q.L.) Grist J. summarized the guiding principles from Bracklow v. Bracklow as follows:

[32] Martinson J. recently summarized the guiding principles on spousal support in Dubreuil v. Dubreuil (19 May 1999) New Westminster Registry D038748 (B.C.S.C.) [1999] B.C.J. No. 1389. She said at paragraphs 39 - 45:

[33] In reviewing the law of spousal maintenance Martinson J. found there are two things judges must look at; the objective for spousal support and the factors for consideration that Parliament has set out in the Divorce Act. According to the Supreme Court of Canada there are four equally important objectives which are as follows: (s. 15.2(6))

[34] In reference to these stated objectives Martinson J. states at paragraph 42 and 43:

[35] Martinson J. then recites the factors that the court must take into consideration: (s. 15.2(4))

[36] In reciting the Supreme Court of Canada's finding that the length of the marriage is not determinative of support paid, Martinson J. reviews the two competing models of marriage and post marriage obligations referred to in Bracklow as follows:

[37] McLachlin J. underscored the importance of both models. She said it is critical to recognize and encourage the self-sufficiency and independence of each spouse but it is equally vital to recognize divorced people may move on to other relationships and obligations. She recognized that too often self-sufficiency at the time of marriage termination is an impossible aspiration and that marriage is an economic partnership built on a premise of mutual support.

[38] I observe that periodic spousal support is taxable in the hands of the person who receives it, and tax deductible for the payor.

[39] On applying the guiding principles to this case, it is apparent the plaintiff has suffered a significant economic disadvantage by the breakdown of the marriage in which she played a settled "traditional" role. Indeed, the defendant concedes she is entitled to spousal support. On May 25, 1998, Boyle J. ordered interim spousal support of $1200 per month. On November 27, 1998, Master Bolton reduced it to $700 per month. The defendant argues her spousal support should be limited to a duration of two years because his income as a Corrections Officer, though reliable, is not growing. He says the plaintiff has the greater potential for increased earnings. I observe that whether the defendant advances in his career and increases his salary is a choice that depends on his own motivation. The parties have not accumulated substantial assets. Both are entitled to approximately equal standards of living.

[40] The defendant argues it would be an error to proceed as if his parents will continue to assist him financially. He says while they may do so, they are not so legally bound. I note that Waltraud Frederkind, candidly testified she will allow the defendant to remain a tenant on the property for as long as he wishes. This, of course, enhances his ability to pay spousal support as he will continue to pay only nominal rent and live in a spacious and attractive house.

[41] Based on the relevant factors in the Divorce Act and the Family Relations Act, the principles in Bracklow, and considering the means of each party, I exercise my discretion to allow the plaintiff's claim for spousal support. I have considered the chart prepared by counsel that shows a net result to each party of various gross amounts of spousal support. I order the defendant to pay the plaintiff $850 a month in spousal support. In all the circumstances, I decline to limit the period for which it will be payable.

[42] In view of the divided success in this case, I make no award of costs.

"A.W. MacKENZIE J."