COURT OF APPEAL FOR ONTARIO

CITATION: Andrade v. Andrade, 2016 ONCA 368

DATE: 20160516

DOCKET: C59214

Simmons, van Rensburg and Hourigan JJ.A.

BETWEEN

Manuela Estrela Andrade

Plaintiff (Respondent)

and

Henrique
    E. Andrade and
Leonardo Andrade,

Estate Trustee for
    Luisa Cabral Andrade

Defendants (
Appellant
)

Gavin MacKenzie and Patrick T. Summers, for the
    appellant

John J. Longo and Pamela Miehls, for the respondent

Heard: November 12, 2015

On appeal from the judgment of Justice Edward M. Morgan
    of the Superior Court of Justice, dated July 28, 2014, with reasons reported at
    2014 ONSC 4473, and from the costs endorsement, dated September 23, 2014, with
    reasons reported at 2014 ONSC 5525.

van Rensburg J.A.:

A.

Overview

[1]

At issue in this appeal is the beneficial ownership of a house that has
    been in the Andrade family for over 40 years.

[2]

The house, located on Crawford Street in Toronto, was purchased in 1974.
    Luisa Andrade lived there until her death in 2014. Legal title was originally
    taken in the names of two of Luisas children, Henrique (Henry) and Maria
    Jesus. Five years later, title was transferred to Henry and his brother Joseph.
    Henry and Joseph remained on title thereafter as the legal owners of the house.

[3]

Joseph died in March 2007. In May 2007, Josephs widow, Manuela Andrade,
    transferred his half interest in the house into her own name. In 2009, she
    brought an action against Henry and Luisa seeking a declaration that she was
    the beneficial owner of a half interest in the house, and an order for
    partition and sale. Luisa counterclaimed for a declaration that she was the
    beneficial owner of the house and an order that Manuela and Henry transfer all
    of their right, title and interest in the house to her. In 2011, Henry
    transferred his half interest to Luisa. In 2014, a few months before the trial
    commenced, Luisa died. The action continued against her estate and Henry.

[4]

Manuela was successful at trial. The trial judge found that she was the
    beneficial owner of a half interest in the house, and he rejected the counterclaim
    that the house was held by Joseph and Henry in trust for Luisa. He directed the
    house to be sold, with half the net proceeds to be paid to Manuela. He awarded
    costs of $237,396.19 against Luisas estate. Luisas estate appeals and seeks
    leave to appeal the trial judges costs endorsement.

[5]

For the reasons that follow I would allow the appeal. In my view, the
    trial judge erred in failing to find a resulting trust in favour of Luisa. He
    made a palpable and overriding error of fact when he concluded that, at the
    time of the purchase and until she died, Luisa had no money of her own. This
    error informed his analysis of the parties legal rights. It caused him to
    ignore the evidence of Luisas intention when the house was put in her
    childrens names, and five years later when Joseph went on title, that she
    would remain the beneficial owner. Henry and Joseph held the house by way of
    resulting trust for Luisa who was, at the time of her death, its sole
    beneficial owner. Accordingly, I would dismiss Manuelas action, declare Luisas
    estate to be the sole beneficial owner of the house, and order Manuela to
    transfer her legal half interest in the house to Luisas estate.

B.

Facts

[6]

Luisa, a widow and the mother of seven children, immigrated to Canada
    from Portugal in 1969. She was accompanied by her oldest daughter, Maria Luisa,
    who was 17. Luisa worked as a cleaner for a number of years, supporting her
    children in Portugal and saving money for their plane tickets. The rest of the
    children arrived in 1972. Leonardo (Leo), the youngest, was five years old.

[7]

Luisa stopped working to care for her children. Each of the children
    left school and began working when they were teenagers. While they lived at
    home, they gave their earnings to their mother to support the family. This
    continued until they got married. Leo never married and he continues to live in
    the house.

[8]

The trial judge described the traditional pattern established by the
    Andrade family as follows:

Everyone who testified at trial  described a tight-knit family
    that greatly respected and continuously supported their mother, and that tended
    to pool resources to an unusual extent. As each child left school and began
    their working lives, they contributed their paycheques (or a substantial
    portion thereof) to their mother for her support and for support of the
    children still too young to work.

[9]

Initially, the family lived in a series of apartments. In September
    1974, Luisa decided to buy a house, and with the help of a real estate agent,
    found the house on Crawford Street. The house had two upper floors subdivided
    into apartments that could be rented out.

[10]

The purchase price was $58,500. Luisa signed the offer to purchase. She
    borrowed a cash deposit of $1,000 from a member of the community. The bulk of
    the purchase was financed with two mortgages, and a balance of $1,395.85 was
    paid on closing.

[11]

At Luisas direction, the house was put in the names of her oldest son,
    Henry, who was 19, and her second daughter, Maria Jesus, who was 18, as joint
    tenants, and they signed the mortgages. Maria Luisa had married and moved out. Henry,
    Maria Jesus and Joseph (who was 15) were the children who lived at home, and worked
    and supported the family at the time.

[12]

In 1979, on Luisas direction, Maria Jesus and Henry transferred the
    house to Joseph and Henry as tenants in common for nominal consideration of
    $2.00 brother and sister to brother and brother. The mortgages were renewed
    in the names of Joseph and Henry. At the time, Joseph and Maria Ludevina were
    the working children who provided their earnings to their mother.

[13]

Over time, each of the children (except Leo) married, moved out and
    stopped giving their earnings to their mother. Maria Jesus did so in 1976.
    Henry did so in 1978 (although he and his wife lived in a rented apartment in
    the house for three years). Joseph married Manuela and moved out in 1980. Maria
    Ludevina started working in 1976 or 1977 and moved out in 1983. Manuel (Manny) started
    working in 1980 and married and moved out in 1989. Leo contributed his
    paycheques from 1980 to 1995. Commencing in 1995, Leo stopped giving all of his
    earnings to his mother and began giving her a biweekly amount, which continued
    until 2003.

[14]

At various times between 1974 and 2011, Luisa rented out the upstairs
    apartments. She advertised for tenants, and negotiated and collected the rents.
    In 1983, Maria Luisa moved into a flat in the house with her three children and
    paid rent to Luisa until 1990. Henry too paid rent to Luisa when he and his
    wife lived in an apartment in the house from 1978 to 1981.

[15]

None of the children, with the exception of Henry for a brief period of
    time before he married, and Leo, many years later, paid any of the expenses
    associated with the house directly. Luisa repaid the $1,000 loan and paid all
    expenses in relation to the house with money from her bank account. The
    expenses included the mortgages (paid off in 2008), utilities, insurance and
    property taxes.

[16]

Until 1990, the money in Luisas bank account consisted of her
    unmarried, working childrens earnings and the rent she collected from tenants.
    In 1990 Luisa began receiving old age security benefits (eventually about
    $1,200 per month), and in 2003 she received a $21,000 settlement in a lawsuit.

[17]

Although they never received rent from the house, or incurred
    significant expenses without being reimbursed by Luisa, for tax purposes, Joseph
    and Henry declared the rental income from the house and claimed expenses in
    relation to the house. They paid taxes on the net rental income. Although Luisa
    never paid rent, she claimed a rental tax credit.

[18]

After Josephs death in 2007, Manuela registered her interest as
    Josephs executor on title. By lawyers letter, in April 2008, Manuela sought
    to have the house sold, to recover Josephs alleged interest. The letter also
    claimed an accounting of all revenue earned in respect of the property and
    expenses paid on account thereof since the property was purchased in 1979 [
sic
].
    All of the surviving siblings and Luisa resisted the sale, claiming that the
    house belonged to Luisa as beneficial owner. Manuela brought an action against
    Henry and Luisa seeking a declaration that she is the beneficial owner of a
    half interest in the house and an order for partition and sale.

[19]

Manuelas position in the litigation was that Joseph had been a
    beneficial owner of half of the house since it was purchased in 1974. All of
    the other siblings, and Luisa (whose affidavit, cross-examination and discovery
    evidence were admitted at trial) testified that the house belonged to Luisa.

[20]

At one point in the litigation, Henry sought to amend his pleading to
    assert a beneficial interest in the house. The amendment was refused, and in
    2011, Henry assigned his legal half interest in the house to Luisa. In January
    2014, Luisa died and her interest in the litigation passed to Leo, as estate
    trustee.

[21]

The action proceeded to trial in March and April 2014. The trial judge
    granted judgment in favour of Manuela and ordered the sale of the property at
    fair market value, with the net proceeds of sale to be divided evenly between
    Manuela and Luisas estate.

C.

Decision of the Trial Judge

[22]

The trial judge concluded that Luisa put no money of her own toward the
    purchase of the house. He said that she had no money of her own when the house
    was purchased in 1974 and thereafter. She had borrowed the deposit, and it was
    her childrens earnings (along with the rental income) that were used to pay
    the mortgages and other expenses.

[23]

The trial judge found that Henry, Maria Jesus and Joseph were working at
    the time the house was purchased and they gave their earnings to their mother.
    This pattern was later followed by each of the Andrade children (except,
    according to the trial judge, Leo).

[24]

The trial judge rejected the evidence of Albert Miller, the lawyer who
    acted on the purchase of the house, that he had discussed a trust with the
    Andrade children and Luisa. Neither Maria Jesus nor Henry recalled any specific
    discussions about a trust. The trial judge concluded that no one ever
    discussed or turned their minds to forming a trust for Luisas benefit at the
    time the property was purchased in [1974].

[25]

The trial judge found that title to the house was taken in the names of
    Maria Jesus and Henry as the two contributors who were old enough to go on
    title. He did not however make a specific finding that they were beneficial
    owners of the house when it was purchased. In fact, his reasons do not disclose
    any finding as to beneficial ownership of the house at that time.

[26]

As for the transfer in 1979 from Maria Jesus and Henry as joint tenants
    to Henry and Joseph as tenants in common, the trial judge again rejected
    Millers evidence that the transfer was precipitated by Maria Jesus impending
    marriage and that they had discussed a trust. He concluded that the transfer
    had far more to do with Josephs coming of age and his financial
    responsibility for the [house] than with Maria Jesus marriage three years
    previously, and that the mortgages and all other expenses rested largely on Josephs
    shoulders at the time.

[27]

The trial judge referred to certain subsequent dealings with the house
    as evidence that Henry and Joseph were the actual owners.

[28]

First, in July 1981, Henry and Joseph signed agreements of purchase and
    sale for the sale of the house and the purchase of a new property on Gilbert
    Avenue. He noted that the documentation does not refer to Henry and Joseph as trustees,
    so [b]y all appearances the two were selling one house they owned and buying
    another.

[29]

Second, there was the manner in which the house was treated for income
    tax purposes by Joseph, Henry and Luisa. The trial judge rejected Henrys
    explanation that he and Joseph were trying to help their mother by declaring
    the rental income she earned from non-family member tenants. He said it was contrary
    to what any tax accountant would have advised as both the correct and more
    tax efficient way to go about their filings.

[30]

The trial judge also rejected the evidence of Ted Ward, Henry and
    Josephs accountant, regarding the parties intentions respecting the property.
    He concluded that a letter Ward wrote in 2009, which supported the position
    that Henry and Joseph were trustees for Luisa, was inaccurate in certain
    respects and that Ward must have been asked by Henry to play a role in [the]
    drama, but  did not quite get his lines right.

[31]

Turning to the legal arguments, the trial judge rejected the claim that the
    property was Luisas by way of resulting trust. He stated that this was not a
    case where the child acted as agent for the parent in purchasing the house,
    nor was it one in which the parent claims to be beneficial owner because she
    remains in control of a property after transferring it to a child, because
    Luisa never owned the house and never paid for it in the first place.

[32]

In his constructive trust analysis, the trial judge rejected the
    contention that this was a case where property had been purchased with the
    money of one person but the conveyance was taken in the name of another, on the
    basis that Luisa had no money of her own.
[1]
He stated that it was Luisas children who worked and earned the money and it
    was her children, as well as the rental income from the property, that over
    time paid the mortgages. In his opinion, Luisa did not have a legal right to her
    childrens paycheques. Disposing of the constructive trust claim, the trial
    judge concluded that there was no causal connection between Luisa and the
    acquisition, maintenance, improvement, etc. of the [house]. Having made no
    financial or other legally cognizable contribution of her own, there is no
    equity in favour of Luisa.

[33]

The trial judge also stated that he found no real evidence of a
    commonly shared intention to purchase and hold the house in trust for Luisa.
    He referred to the fact that Henry, at one stage in the litigation, described
    Luisa as having what amounted to a life interest in the house, and the
    evidence of some of the children that the house was their mothers until she
    died.

[34]

The trial judge found that there was insufficient evidence that a trust
    for Luisas benefit was intended. He also concluded that it would be contrary
    to public policy to give credence to Luisas ownership claim because of how the
    property was treated for tax purposes.

D.

Issues

[35]

The appellant asserts that the trial judge erred in failing to find that
    Luisa, at the time of her death, was the beneficial owner of the house by way
    of resulting trust, or alternatively that her estate is entitled to the house
    by way of constructive trust. The appellants primary argument is that the
    trial judge made a palpable and overriding error in concluding that Luisa had
    no money of her own, and in holding that, without a financial or other legally
    cognizable contribution of her own, there was no equity in favour of Luisa. The
    appellant contends that, contrary to the trial judges conclusion, this was a
    case where property was purchased in the name of another with money provided by
    the beneficiary. The appellant asserts that the trial judge overlooked certain
    important and uncontroverted evidence with respect to intention. Finally, the
    appellant argues that the trial judge erred in invoking public policy as a
    further reason to reject Luisas ownership claim.

[36]

The respondent asserts that the trial judge made no such errors, and
    that the result was fully supported by his findings of fact. Luisa contributed
    no money of her own to the purchase and her estate failed to prove that her
    money (and not that of her children) was used in the purchase and maintenance
    of the house. The respondent also contends that the appeal attacks a key
    finding of fact by the trial judge  that Henry and Joseph were the legal and beneficial
    owners of the property from the date of the purchase in 1974, and that this
    finding is fully supported by the evidence. The respondent says that all of the
    alleged errors raised by the appellant are factual errors or errors of mixed
    fact and law, and the applicable standard of review is palpable and overriding
    error.

E.

Analysis

[37]

I will address each of the issues raised in turn. Since I have concluded
    that Luisa was the beneficial owner of the house by way of resulting trust, it
    is unnecessary to address the constructive trust claim.

[38]

As a preliminary point, the respondent is wrong to say that the trial
    judge found that Joseph acquired beneficial ownership in the property when it
    was purchased in 1974. Manuelas position at trial was that in 1974 Maria Jesus
    took title as bare trustee for Joseph, and that she agreed to transfer title to
    the property to him when he reached the age of majority. There was however no
    evidence to support that claim. The trial judge concluded only that Joseph
    acquired his one-half interest in the house in 1979. He did not find that
    Joseph was a beneficial owner of the house in 1974 or that Maria Jesus was a
    trustee. As I have already noted, he made no finding at all as to the beneficial
    ownership of the property when it was purchased.

[39]

Manuela also took the position at trial that while Joseph lived at the
    house his earnings were used to pay the mortgages and other household expenses,
    and that after he moved out the rents were sufficient to pay these expenses.
    The evidence respecting when the apartments were rented and the rental income
    that was generated was contradictory. In any event, the trial judge did not
    accept that only the rents were used to carry the house, after Joseph moved
    out, or at any time. Rather, he found that the Andrade children (except Leo)
    continued to give their paycheques to their mother until they married and it
    was their money, as well as the rent, that was used to pay the mortgages.

(1)

Luisa did in fact pay for the house

[40]

The cornerstone of the trial judges reasoning is not, as Manuela
    contends, that Joseph acquired beneficial ownership of the house because of his
    direct financial contributions. Rather, it is his finding that Luisa had no
    money of her own to purchase the house, and to pay the mortgages, and as such
    that she could not have been the beneficial owner of the house. That finding
    permeates his reasons, and is the basis for his rejection of the resulting and
    constructive trust claims advanced on Luisas behalf.

[41]

Luisa did not have paid employment from the time her children arrived in
    Canada until her death. From this, the trial judge concluded that [f]rom 1972
    until her death in 2014, she earned no income and was entirely supported by her
    children who worked. He noted Luisas admission in her examination for
    discovery, that in 1974 she had no money of her own to put toward the purchase.
    He found that Luisa had no funds of her own and did not advance anything in
    respect of the purchase of the [house], that she never contributed any money
    of her own to the purchase, and that all of the witnesses agreed that Luisa
    put no money of her own toward the purchase of the [house]. He explained that
    [Luisa] had not worked for a number of years prior to 1974, and had no income
    to contribute to the purchase or financing of the [house].

[42]

With respect to the argument that Luisa always paid the mortgages, the
    trial judge stated:

Luisa may have paid the mortgages on the [house] in the sense
    that the mortgage payments went to the mortgagees from her bank account. But
    she made those payments with her childrens money, not her own; she had no
    money of her own.  [I]t was Luisas children (along with the rental income that
    the [house] generated) who over time paid the mortgages.

[43]

He stated that the purchase funds were borrowed and the loans were
    serviced by Luisas unmarried working children.

[44]

In finding that Luisa contributed no money of her own to the acquisition
    of the house, both at the time of purchase and in paying down the mortgages,
    the trial judge made a number of errors.

(a)

Confusing Luisas money with its source

[45]

First, the trial judge erred in characterizing the money given to Luisa
    by her children and used by Luisa to pay for the house as the childrens money.
    The money her children earned, once given to Luisa, became her money, even if
    it was expected to be used, and was in fact used, for the support of the
    family, including to pay the mortgages.

[46]

In finding that Luisa had no money of her own the trial judge conflated
    income from paid employment and money. He confused the question of whether
    Luisa had money with the
source
of her money, which at least in the
    early years was the paid employment of her adult children. He did not explain
    why or how, once the working children gave their paycheques to Luisa, the money
    remained their money. It was no longer their money because they made a gift
    of it to their mother, knowing she would use it to support the family. Luisas
    bank account was not a trust account. There was no evidence that the money was
    earmarked for specific purposes. Once the money was given to Luisa, it became
    Luisas money.

[47]

The trial judge observed that Luisa had no legal right to her childrens
    paycheques. Whether she had a legal right is not the issue. Rather, the
    question is whether the paycheques were a legal gift, or were transferred to
    Luisa to acquire an interest in the house.

[48]

There was no evidence that any of the title holders provided their
    paycheques to their mother intending to acquire a property interest in the
    house. To the contrary, all of Luisas children, whether they were on title or
    not, behaved in the same manner. They provided their paycheques to their mother
    while they lived in the house and stopped doing so when they moved out. And the
    testimony of the children who testified at trial was unanimous. When they gave
    their mother their earnings, the money was for her to use as she saw fit.
    That is, the money was, as a matter of law, a gift to Luisa.

(b)

The rent belonged to Luisa

[49]

The trial judge referred to the fact that expenses in relation to the
    house were paid from rent generated by the house. He did not make any finding
    as to who the rent belonged to, but implicit in his decision is that the rent
    did not belong to Luisa.

[50]

Yet the evidence shows that Luisa was the only person (except in later
    years when she was assisted by Leo) who advertised for and negotiated with
    prospective tenants and collected their rent. Where rent was paid by cheque, the
    tenants cheques were made out to Luisa and deposited into her bank account.
    The legal title holders never collected rent from tenants or demanded an
    accounting from their mother.

[51]

Other than declaring the rent as their income for tax purposes, there is
    no evidence that Henry and Joseph made any claim to the rent. Henry
    specifically denied the rent was his, and only after Josephs death did his
    widow Manuela claim an accounting of rent from Luisa (going back to 1974).
    Maria Luisa paid rent to her mother, not to her brothers, when she lived in the
    house with her children for some eight years. Leo lived in the house from the
    age of four, and paid amounts to his mother, but not to his brothers.

[52]

In all of these circumstances, including those in the foregoing section,
    the rent generated by the house was also Luisas money.

(c)

Luisa had other sources of money

[53]

The trial judge erred in finding that Luisas children supplied all the
    money for the house and in saying that [f]rom 1972 until her death in 2014, [Luisa]
    earned no income and was entirely supported by her children who worked. This
    is incorrect. Luisas children did not support their mother financially after
    they married and moved out of the house. Joseph, for example, stopped
    supporting her and his siblings in 1980 when he married Manuela. The last of
    the Andrade children to marry (Manny) moved out in 1989.

[54]

In addition to rent, Luisa received old age security benefits commencing
    in 1990 (ultimately about $1,200 per month) and, in 2003, she received a settlement
    of $21,000. The trial judge did not consider these sources of Luisas money. Yet
    the evidence showed that for a period of 24 years Luisa paid all household expenses
    without
any
significant financial contribution from any of her
    children, except for Leo, who continued to live at the house.

[55]

Accordingly, the trial judge erred in concluding that Luisa had no money
    of her own and that she had contributed no money of her own to the purchase of
    the house. He was wrong to conclude that the loans [to purchase the house]
    were serviced by Luisas unmarried children  Maria Jesus, Henry, and Joseph.
    The loans were serviced by Luisa from money in her bank account. This included
    money given to her by her children, the rent she collected from tenants and,
    after 1990, her pension and settlement monies.

[56]

The trial judge concluded that the house was not held in resulting trust
    for Luisa. His rejection of the resulting trust claim was explained on the
    basis that Luisa never owned the house and never paid for it in the first
    place, and the fact that Luisa had no money of her own. In my view this was a
    palpable and overriding error that informed the balance of the trial judges
    analysis and ultimately his rejection of the resulting trust claim. I turn now
    to consider Luisas resulting trust claim.

(2)

The resulting trust claim

(a)

The relevant legal principles

[57]

A resulting trust arises when title to property is in one partys name,
    but that party, because he or she is a fiduciary or gave no value for the
    property, is under an obligation to return it to the original title owner:
Pecore
    v. Pecore
, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 20.

[58]

A purchase money resulting trust can occur where a person advances a
    contribution to the purchase price of property without taking legal title:
Nishi
    v. Rascal Trucking Ltd.
, 2013 SCC 33, [2013] 2 S.C.R. 438, at para. 21. It
    is one of the classic resulting trust situations and can arise when a party
    contributes directly to the purchase price or the mortgage: Eileen E. Gillese,
The
    Law of Trusts,
3rd ed. (Toronto: Irwin Law, 2014) at pp. 113-15. In
Kerr
    v. Baranow
, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 12, Cromwell J. noted
    that it has been settled law since at least 1788 in England (and likely long
    before) that the trust of a legal estate, whether in the names of the purchaser
    or others, results to the person who advances the purchase money.

[59]

Except where title is taken in the name of a minor child, where property
    is acquired with one persons money and title is put in the name of another,
    there is a presumption of resulting trust. While some authorities refer to a
    presumption of resulting trust arising when a gratuitous transfer is made between
unrelated
persons, the presumption of advancement between spouses was
    abolished by statute in Ontario (see
Family Law Act
,

R.S.O.
    1990, c. F.3, s. 14) and between parents and adult children by the Supreme
    Court in
Pecore
: see para. 36.

[60]

In this case the respondent argued both at trial and on appeal that the
    appellant had not overcome the presumption that the legal title holders owned
    the house. Given the evidence of Luisas contributions to the purchase price
    and mortgages, however, the presumption here was one of resulting trust.

[61]

The decision in this case however does not turn on the application of a
    presumption. A presumption is of greatest value in cases where evidence
    concerning the transferors intention may be lacking (for example where the
    transferor is deceased). [T]he focus in any dispute over a gratuitous transfer
    is the actual intention of the transferor at the time of the transfer  [T]he
    presumption will only determine the result where there is insufficient evidence
    to rebut it on a balance of probabilities:
Pecore
, at paras. 5 and
    44.

[62]

The trial judge referred on multiple occasions to the parties
    intentions, stating that he could find no real evidence of a commonly shared
    intention to purchase and hold the [house] in trust for Luisa. Common
    intention, however, is not the issue. The intention of the grantor or
    contributor alone counts, as the point of the resulting trust is that the
    claimant is asking for his or her own property back:
Kerr v. Baranow
,
    at para. 25.

[63]

The relevant time for ascertaining intention is the time of the
    acquisition of the property, when the funds were advanced:
Nishi v. Rascal
    Trucking Ltd.
, at paras. 30 and 41;
Pecore
, at para. 59. Evidence
    of intention that arises subsequent to a transfer must be relevant to the
    intention of the transferor at the time of the transfer. The court must assess
    the reliability of such evidence and determine what weight it should be given,
    guarding against evidence that is self-serving or tends to reflect a change in
    intention:
Pecore
, at para. 59.

(b)

The principles applied

[64]

Once it is accepted that Luisa had money of her own, and that it was her
    money that was used to purchase the house and to pay down the mortgages, then a
    purchase money resulting trust could arise. Luisa borrowed the deposit and paid
    it back, and she serviced the mortgages using money from her own bank account. Although
    they signed the mortgages, there was no evidence that the legal title holders
    considered themselves responsible for making any of the payments. Luisa
    borrowed their names, not their money. All of this is consistent with Luisa
    having advanced the purchase price of the property.

[65]

Having concluded that Luisa had not made a contribution to the
    acquisition of the house, the trial judge did not direct himself to the
    question of her intention. Rather, he looked at the intentions of Luisas
    children, and concluded that they did not intend to set up a trust for Luisa. The
    trial judge reasoned that, if Luisa had not put money of her own into the
    purchase of the house, then she had no resulting trust claim against those who
    were on title.

[66]

The trial judge mischaracterized the claim when he said that Luisas
    estate was not trying to recover something that Luisa once had. That is in fact
    how the claim was advanced. Luisas estate argued that Luisas money was used
    to purchase the house in that she borrowed the deposit and paid it back, paid
    the lawyers fees and other expenses in relation to the purchase, and paid the
    mortgages, using her money (consisting of the money she received from her
    children, the rent she collected, and later her old age pension and monies she
    received from a settlement).

[67]

The question was not whether the legal title holders intended to create
    a trust for Luisa (hence the trial judges focus on the fact that there was no
    trust document, that the parties did not understand the concept of a trust,
    and that the tax and other documents did not refer to Luisa as the beneficial
    owner). Rather, the question was Luisas intention. Having contributed the
    money toward the purchase of the property, did
she
intend to confer
    beneficial ownership of the property on the legal title holders, to the
    exclusion of herself and her other children?

[68]

Evidence of Luisas intention at two points is important  in 1974 when
    the property was first acquired, and in 1979, when Joseph went on title.

[69]

It was Luisa who, in 1974, decided to buy a house where she and her
    children would live. As the trial judge noted, both Maria Jesus and Henry
    testified that the reason title was taken in their names was that, with the
    exception of Maria Luisa who was already married, they were the only two family
    members of age who had sufficient income to potentially qualify for a mortgage.
    Henry said, [t]he discussion was simple. [Luisa] couldnt get a mortgage and
    we [had] to put our names on it because we [were] working. Neither Henry nor
    Maria Jesus asserted that their mother intended to give them property rights.
    To the contrary, they claimed to be her nominees and regarded the house as her
    property.

[70]

Luisas evidence, although not mentioned by the trial judge, was to the
    same effect.
[2]
In her examination for discovery she said, [i]f the house had been purchased in
    cash, I wouldnt have needed their names. While there was some difficulty with
    Luisas evidence, which was given through an interpreter, on this point she was
    clear. She considered herself the owner of the house.

[71]

Manuela testified that, in 1974 (when she was 12 years old), Joseph told
    her that he bought a house, and that he referred to the house on Crawford
    Street as his house. Although the trial judge did not make a specific finding
    about beneficial ownership of the house when it was purchased, there was no
    evidence to support this theory, and there is nothing in his reasons to suggest
    that the trial judge accepted that Joseph was a beneficial owner in 1974, and
    that Maria Jesus was holding his interest as a bare trustee. Rather, he found
    that Joseph acquired his interest in 1979.

[72]

There was no evidence at all that Luisa intended to confer beneficial
    ownership on any of her children when the house was purchased in 1974.

[73]

As for the circumstances in 1979, there is no dispute that Joseph went
    on title at the time of a mortgage renewal, and at his mothers direction. Maria
    Jesus testified that she did what her mother directed, as it was her mothers
    house. This of course is inconsistent with Maria Jesus transferring a
    beneficial interest to her brother. And, if Maria Jesus was Luisas nominee,
    there was no evidence to suggest a
change
in Luisas intention  that
    is, to give Joseph a beneficial interest in the property when Maria Jesus had
    no such interest.

[74]

Luisa, in her examination for discovery, said that Joseph was unhappy
    that Henry was the boss and that she wanted to keep Joseph happy by putting
    him on title. She denied that he was the owner; she continued to deal with the
    house in the same way. The transfer to Joseph occurred without any consideration.
    Joseph paid nothing to Maria Jesus or his mother for the transfer. Luisa paid
    the legal fees then, as she had in 1974. The trial judge explained the transfer
    to Josephs name as occurring because, at the time, he was the senior working
    sibling, and was providing funds for the entire household.

[75]

All of these circumstances are consistent with a change in legal title,
    but not with a gift of half the property to Joseph. The fact that Joseph (as
    well as his sister Maria Ludevina) was providing his earnings to Luisa was
    consistent with the familys pattern. His contributions were no more
    consideration for a transfer of beneficial ownership than the contributions
    of his siblings.

[76]

Not only was there no direct evidence that Luisa intended to favour Joseph
    in 1979 when he went on title, the rationale for a gift was missing. There was
    no reason for Luisa to have made a gift of her house to two of her children to
    the exclusion of the others. After they married, neither Henry nor Joseph paid
    any of the household expenses directly. Rather, their younger siblings
    continued the family pattern of pooling their earnings and providing them to
    their mother. There is no basis for an inference that Joseph was to be favoured
    with beneficial ownership of half of the house because of his contribution,
    which was no greater than, and in fact less than, that of some of his siblings.

[77]

The respondent argues that the transfer of the house from Henry and
    Maria Jesus as joint owners to Joseph and Henry as tenants in common is
    consistent with an intention to confer beneficial ownership. However, there was
    no evidence to explain why this happened. The trial judge, quite properly, drew
    no inference of Joseph and Henrys beneficial ownership from the way title was
    taken in 1979.

[78]

As for subsequent conduct, there are several aspects of what occurred
    that are inconsistent with Luisa having an intention in 1979 to gift the house
    to Henry and Joseph.

[79]

Luisa continued to live in the house where she raised her other
    children, while Henry and Joseph purchased houses for their own families in the
    1980s. Luisa collected and kept the rent. Luisa paid all the bills in relation
    to the house, including the mortgages, property taxes, insurance and the cost
    of a number of repairs.

[80]

In 1990, Luisa sourced new lenders for a replacement mortgage which was
    renewed until it was paid off in 2008. It was Luisa who decided what repairs
    and renovations were needed and who directed and paid for work, including roof
    repairs, new flooring, and replacement of the furnace. She paid for materials
    but not labour that her children supplied. While Henry and Joseph did some work
    on the house, the other children also made contributions over the years. As the
    trial judge observed, the motivation for all of the Andrade siblings
    contributions to the household had more to do with family loyalty than with
    property rights.

[81]

Luisa was not simply a resident of the house (as the trial judge
    described her). She conducted herself in relation to the house as its owner
    from the time the house was purchased until she passed away.

[82]

The appellant relies on certain other evidence said to be supportive of
    the fact that Luisa was the beneficial owner of the house. Maria Jesus, Henry,
    Manny and Leo all testified that Joseph had complained about being on title and
    had asked his brothers to go on title for him. While it is true that the trial
    judge did not mention this evidence, much like the evidence of Manuela, her son,
    sister and nephew, that Joseph talked about the house as his house, which was
    also not mentioned, it is self-serving and of doubtful reliability. It is in
    any event of little assistance in resolving the issue of Luisas intention.

[83]

I turn now to two aspects of the evidence that the trial judge relied
    upon as subsequent conduct that was inconsistent with Luisas ownership of
    the house. Again, I emphasize that the trial judge considered this evidence in
    the context of whether there was a commonly shared intention or an intention
    by the children to [form] a trust for Luisas benefit.

[84]

First, the trial judge relied on the fact that in 1981 Henry and Joseph
    entered into two agreements of purchase and sale, one to sell the house and
    another to buy a new property. He noted that there was no reference to them
    being trustees and [b]y all appearances  Henry and Joseph were selling one
    house they owned and were buying another.

[85]

What the trial judge did not mention was the evidence of how the proposed
    transaction came about. Henry testified that Luisa was having trouble paying
    the mortgages, and she thought she could get by with a smaller house. Manuela,
    who was already married to Joseph at the time, did not testify otherwise. The
    fact that Henry and Joseph signed all the documents reflected what was already
    in place. Luisa could not go on title because she did not qualify for a
    mortgage. The fact that Henry and Josephs names were on the agreements was
    equally consistent with their position as Luisas nominees.

[86]

I note here that the appellant contends that the trial judge ignored
    evidence of a note from Millers file that stated no need for a trust
    agreement, wait to sell, which was contemporaneous with the proposed 1981
    transactions. This evidence is corroborative of Millers evidence that he
    understood the house was held in trust for Luisa and that he had discussed a
    trust with someone in the Andrade family, at least when the note was made (the
    note is undated). Miller identified the note in his testimony. Although the
    trial judge did not mention this evidence, there is no reason to doubt that he
    considered it. He rejected Millers evidence which was proven wrong on certain
    details. There is no reason to interfere with that assessment. I disagree with
    the appellants contention that the note was important evidence that the trial
    judge overlooked.

[87]

Second, the trial judge placed significant emphasis on how the parties
    dealt with the house for income tax purposes  with Henry and Joseph paying tax
    on the net rental income, including a deemed rent for Luisa, and Luisa taking a
    tax credit for rent paid to her sons. He regarded the tax treatment as
    evidence that Henry and Joseph were in fact the real, beneficial owners of
    the house, and, as discussed below, as the foundation for a public policy
    reason not to recognize Luisas beneficial interest in the house.

[88]

The way the parties dealt with the property for tax purposes was
    consistent with legal title, but did not reflect what was actually occurring. Luisa
    received the rents: her sons did not. Luisa never paid rent to her sons, and a
    fictional amount was used as the rent she paid in the parties returns. Luisa
    did not account to her sons for the rent received and expenses on the house.
    They included as expenses property taxes, mortgage payments and payments for
    repairs and maintenance which were paid by Luisa (and not only expenses they
    incurred themselves).

[89]

There was no evidence that Luisa was involved in any decisions about her
    taxes or her sons taxes. To the contrary, Luisa, who did not speak, read or
    write English, had her tax returns prepared first by a local travel agent, then
    by her daughter Maria Ludevina, who simply followed the pattern that had been
    established. Henry and Josephs returns were prepared by their accountant with
    figures provided by Henry, which were divided equally to attribute income and
    expenses to each brother.

[90]

The only evidence about why the tax returns were prepared that way came
    from Henry. He testified about a meeting in 1998 with the Canada Revenue Agency
    (CRA) who told him that Luisa had to pay rent because she lived in the house
    and that he and Joseph had to claim income on the property because they each
    owned and lived in other properties. Henry also said that he and Joseph were
    trying to help out their mother by paying the tax on the rental income.

[91]

While the trial judge did not reject Henrys explanation outright, he
    observed that it raises more questions than it answers. He did not resolve
    the question of what the tax treatment said about intention, and in particular,
    Luisas intention. Instead he moved directly to the conclusion that the tax
    returns accurately reflected the beneficial ownership of the property.

[92]

The issue here however is to determine Luisas intention. The fact that
    a party represents or deals with property in a certain way that is inconsistent
    with beneficial ownership does not preclude a claim of beneficial ownership in
    litigation. The tax reporting issue in this case raises concerns similar to those
    in a line of cases referred to by the appellant  cases where a party transfers
    property to a spouse to defeat creditors and then claims to be the beneficial
    owner of that property. In each case, the trust claimant makes a claim that is
    inconsistent with how the property was dealt with at another stage and for
    another purpose.

[93]

In
Schwartz v. Schwartz
, 2012 ONCA 239, title to a matrimonial
    home was transferred from the wife to the husband. There were competing claims
    to the house by the wife and the husbands judgment creditor. The central issue
    was whether the wife had conveyed her entire interest in the matrimonial home
    to her husband. Simmons J.A. held that the fact that the transfer may have been
    for the purpose of insulating the wife from claims by her own potential
    creditors did not in itself rebut the statutory presumption of resulting trust
    between spouses. She stated, at paras. 42-43:

In
Kerr
, the Supreme Court of Canada also confirmed
    the view expressed in
Pecore v. Pecore
,
2007 SCC
    17
,
[2007] 1
    S.C.R. 795
, at paras. 43-44, that where there is a gratuitous
    transfer, the actual intention of the transferor is the governing
    consideration. At para. 44 of
Pecore
, Rothstein J. noted that where a
    gratuitous transfer is being challenged, [t]he trial judge will commence his
    or her inquiry with the applicable presumption and will weigh all of the
    evidence in an attempt to ascertain, on a balance of probabilities, the
    transferor's actual intention.

Further, as Karakatsanis J. observed in
Nussbaum v.
    Nussbaum

(2004), 9
    R.F.L. (6th) 455
(Ont. S.C.), at paras. 20 and 32, while the intention
    to gift property trumps the presumption of resulting trust, a party's
    intention at the time of a conveyance is a question of fact. Further, as she
    stated, at para. 32, [w]hile evidence that someone intended to fully evade
    creditors can be evidence that they intended to gift their entire interest in
    the property, a party's actual intention remains a question of fact to be
    determined based on the whole of the evidence.

[94]

See also
Korman v. Korman
, 2015 ONCA 578, at para. 38, where,
    citing the same passage from
Nussbaum
, and the
Schwartz
decision,
    this court confirmed that the motivation to shield property from a transferring
    spouses potential creditors does not in itself rebut the presumption of a
    resulting trust in a gratuitous transfer of property between spouses.

[95]

Similarly, in the present case, the analysis cannot not begin and end
    with the tax treatment of the house. The court was entitled to consider the
    fact that Luisas tax filings are contrary to her estates argument that she
    was a beneficial owner of the property, as well as all of the evidence as to
    how this came to be. The tax treatment is some evidence of intention, but
    Luisas actual intention at the time of the transaction remains a question of
    fact to be determined on the whole of the evidence.

[96]

The fact that Luisa had no part in deciding how the house would be
    treated for tax purposes is inconsistent with any admission by her respecting
    her intention. Certainly the tax treatment can be explained other than as an
    acknowledgment by Luisa that her sons were the beneficial owners of the house.
    As such, what was in her tax returns sheds little light on whether it was
    Luisas intention to confer beneficial ownership of the property on her sons.

(c)

Conclusion respecting resulting trust

[97]

I have concluded that the money used in the purchase of the Crawford St.
    property was Luisas money. Although its source was in part money given to her
    by her working children, Luisa was the person who took on the responsibility to
    pay for the house at the time of the purchase, in 1979, and during the next 35
    years until she died. Although the house was in her childrens names, her
    intention was not to benefit the title holders to the exclusion of her other
    children by giving them a property interest in the house. The evidence is
    inconsistent in particular with Manuelas claim that Luisa intended to give
    Joseph a beneficial interest in the house from the time it was purchased in
    1974. While the parties income tax returns treated the house in a way that was
    consistent with legal title, they did not reflect the reality of how the
    property was handled  that Luisa, and not Henry and Joseph, collected and kept
    the rents, that Luisa, and not Henry and Joseph, paid the expenses in relation
    to the house, and that Luisa treated the house as its owner, and not as a
    tenant.

[98]

In these circumstances, I find that Luisa was the beneficial owner of
    the house by way of resulting trust.

(3)

The public policy issue

[99]

In addition to holding that there was insufficient evidence that a trust
    for Luisas benefit was intended, the trial judge concluded that for public
    policy reasons this is not an appropriate case in which to impose any trust
    with Luisas estate as a beneficiary. In my view, the trial judge cast the net
    too broadly in concluding that it would be against public policy to recognize
    Luisas estate as the beneficial owner of the house when she had received tax
    credits on the basis that she was not the beneficial owner.

[100]

Rosenthal v.
    Rosenthal
(1986), 3 R.F.L. (3d) 126 (Ont. H.C.J.), the case relied upon by
    the trial judge, was a matrimonial case. There was an issue about whether
    certain shares owned by the husband had been purchased by him (in which case
    they were part of his net family property) or received as a gift (and thus excluded
    from net family property). There was evidence that while an initial transfer of
    shares from a third party was by way of gift, two subsequent transfers of
    shares by the same party were made in exchange for demand notes bearing no
    interest. The third party testified that his intention was to gift all of the
    shares to the husband and that the demand notes were forgiven over time. He
    said the reason for structuring the latter two transfers in this manner was to
    avoid payment of gift tax, which was in operation at the time.

[101]

The trial judge
    in
Rosenthal
held that the initial transfer of shares was a gift but
    the latter two transfers were not and thus the value of those latter shares
    should be included in the husbands net family property. He stated, at para.
    51, that it is being argued that for the purpose of the Income Tax Act in
    1969, the transfer of shares was not a gift, but for the purpose of the Family
    Law Act in 1986, the transfer of shares was a gift. Such a result should not be
    condoned by the court on the grounds of public policy alone.

[102]

His logical
    conclusion was that, having structured a transaction as a purchase specifically
    to avoid taxes that would be payable if it were a gift, the husband could not
    subsequently claim that the transaction was in fact a gift. While he did not
    explain the public policy concern in any detail, it appears to be that a party
    should not be permitted to structure a transaction in one way to avoid the
    payment of taxes, and then to subsequently disclaim that very structure.

[103]

In the present
    case, there was no evidence that Luisa put the property into the names of her
    children so as to avoid taxes or to obtain a tax benefit. The evidence was to
    the contrary  the children took legal title because Luisa did not have paid
    employment and could not qualify for a mortgage. The fact that subsequently the
    Andrade family treated the house for tax purposes in a manner that was consistent
    with the legal title, as a result of which Luisa received some benefit (and her
    sons some detriment), is, as noted earlier, evidence to be considered when
    determining Luisas intention but is not determinative.

[104]

Rosenthal
does
    not stand for any general public policy principle that would prevent a party
    from taking one position for tax purposes, and another in respect of a claim in
    litigation. In cases where a party must rely on fraudulent documents to prove a
    claim, the clean hands doctrine and considerations of illegal purpose may bar
    the claim: see e.g.
Buist v. Greaves
(1997), 11 O.F.L.R. 3 (Gen. Div.).
    However actions unrelated to ones claim will not necessarily bar a plaintiff
    from her remedy: see e.g.
Parnell v. Viger
(2003), 41 R.F.L. (5th) 327
    (Ont. S.C.), revd in part on other grounds (2005), 14 R.F.L. (6th) 84 (Ont.
    C.A.), at paras. 20-23 (f
raudulent documents
    filed with Revenue Canada did not disentitle a plaintiff from an equitable
    remedy where she did not have to rely on the documents to prove her claim). The
    governing principle was stated by Lord Browne-Wilkinson of the House of Lords
    in
Tinsley v. Milligan
, [1994] 1 A.C. 340 (U.K.), at p. 375: A
    party to an illegality can recover by virtue of a legal or equitable property
    interest if, but only if, he can establish his title without relying on his own
    illegality."

[105]

In the present
    case, Luisas estate does not seek to profit from the manner in which her tax
    filings were arranged. Rather, it seeks equitable relief in relation to Luisas
    interest in the family home. Her tax filings are not fundamental to that cause
    of action. They are not necessary to establish the relief that she seeks. They
    are relevant evidence, but are not in any way dispositive of her claim.

[106]

And, the
Schwartz
and
Korman
cases referred to earlier confirm that even if a party
    has transferred ownership of property in one way for one purpose (such as to
    defeat creditors) a resulting trust claim is not precluded. The question
    remains one of the transferors intention at the time of the transfer.

[107]

The trial judge
    erred in treating the fact that Luisa claimed tax credits as dispositive of her
    trust claim for public policy reasons alone. While her tax treatment of the
    property, considered in isolation, was evidence inconsistent with her
    beneficial ownership, her actual intention in relation to the property was a
    question of fact to be determined based on the whole of the evidence.

F.

Disposition

[108]

For these
    reasons, I would allow the appeal and set aside the judgment in the court below
    (including the award of costs). I would dismiss the claims of Manuela Andrade; order
    and declare that the Estate of Luisa Andrade is the sole beneficial owner of
    510 Crawford St., Toronto (the Property); order and declare that Manuela
    Andrade holds registered title in the Property as trustee for the Estate of
    Luisa Andrade; and order Manuela Andrade to forthwith transfer all of her
    right, title and interest in the Property to the Estate of Luisa Andrade.

[109]

If the parties
    are unable to agree on costs in the court below, they shall provide their
    written submissions to this court within 20 days, limited to five pages each,
    exclusive of any bill of costs or offer to settle. The respondent shall pay the
    appellants costs of the appeal fixed at $30,000, the amount agreed between the
    parties, which is inclusive of HST and disbursements.

Released: (KMvR) May 16, 2016

K. van Rensburg
    J.A.

I agree Janet
    Simmons J.A.

I agree C.W.
    Hourigan J.A.

[1]
As explained below, such a trust is properly termed a purchase money resulting
    trust, however the trial judge appears to have considered this argument in the
    context of his constructive trust and unjust enrichment analysis.

[2]
Except for her concession that she had no money of her own, there is no
    reference in the trial judges reasons to Luisas evidence.


COURT OF APPEAL FOR ONTARIO

CITATION: Antunes v. Limen Structures Ltd.,
    2016 ONCA 344

DATE: 20160506

DOCKET: M46037 (C60563)

Simmons, Gillese and Hourigan JJ.A.

BETWEEN

John Antunes

Plaintiff
    (Respondent)/

Responding Party

and

Limen Structures Ltd.

Defendant (Appellant)/

Moving Party

Arnold B. Schwisberg, for the appellant/moving party

James VanWiechen, for the respondent/responding party

Heard: May 5, 2016

APPEAL BOOK ENDORSEMENT

[1]

We do not read paragraph 23 of the motion judges reasons in the way
    that the moving party has urged on us.  However, even if the motion judges
    finding that the moving party managed its affairs so as to minimize its
    financial exposure to Mr. Antunes cannot be sustained, we are not satisfied
    that warrants interfering with the motion judges decision to lift the
    automatic stay of the wrongful dismissal damages award.

[2]

The motion judges findings that the merits of this aspect of the appeal
    were weak, financial hardship to Mr. Antunes and aggressive tactics by the
    moving party are supported by the record.

[3]

The review motion is dismissed.  Costs of the motion are fixed in the
    amount of $5,000 inclusive of disbursements and applicable taxes on a partial
    indemnity scale payable within 30 days.


COURT OF APPEAL FOR ONTARIO

CITATION: Architectural Millwork & Door Installations
    Inc. v.

Provincial Store Fixtures Ltd., 2016 ONCA 320

DATE: 20160502

DOCKET: C60951

LaForme, Pardu and Roberts JJ.A.

BETWEEN

Architectural Millwork & Door Installations
    Inc.

Plaintiff (Respondent)

and

Provincial Store
    Fixtures Ltd.

Defendant (Appellant)

Marco Drudi and Lisa Lutwak, for the appellant

Wade Sarasin, for the respondent

Heard: March 11, 2016

On appeal
    from the judgment of Justice A.D. Grace of the Superior Court of Justice dated
    August 5, 2015, with reasons reported at 2015 ONSC 4913.

ENDORSEMENT

[1]

The appellant appeals the partial summary judgment granted to the
    respondent.

[2]

The respondent sued the appellant claiming damages for breach of
    contract, unjust enrichment and in
quantum meruit
because of the
    appellants failure to pay the respondents invoices. The respondent had
    subcontracted with the appellant to install millwork manufactured by the appellant
    at the OLG Casino construction project in Brantford.

[3]

The appellant raised no deficiencies with the respondents work on the
    OLG Casino Project and admitted that the monies claimed were owed. However, the
    appellant claimed no payment was required because of the application of the
    credit memo issued by the respondent and the appellants assertion of the right
    to set-off monies related to alleged deficiencies in the respondents work on
    other unrelated construction projects.

[4]

The motion judge partially allowed the respondents motion for summary
    judgment in the amount of $61,696.31 and rejected the appellants claim for
    set-off. The sole issue deferred for trial, from which no appeal has been
    taken, is whether the credit memo continues to be operative.

[5]

The only issue on appeal is whether the motion judge erred in rejecting
    the appellants claim for set-off under s. 12 of the
Construction Lien Act
,
    R.S.O. 1990, c. C.30 (
CLA
), or by way of equitable set-off. The
    appellant did not pursue the issue of legal set-off raised in its notice of
    appeal.

[6]

We see no basis to interfere with the motion judges decision.

[7]

First, s. 12 of the
CLA
does not apply in the circumstances of
    this case.  This section provides as follows:

Subject to Part IV, a trustee may, without being in breach of
    trust, retain from trust funds an amount that, as between the trustee and the
    person the trustee is liable to pay under a contract or subcontract related to
    the improvement, is equal to the balance in the trustees favour of all outstanding
    debts, claims or damages, whether or not related to the improvement.

[8]

The motion judge disposed of the appellants claim for set-off under s.
    12 of the
CLA
, as follows:

In
C & A Steel
,
supra
, it was appropriate
    to apply the statutory right of set-off the
CLA
created. Sharpe J. (as
    he then was) explained why:

the plaintiff has claimed the benefit of the construction
    lien statute and has obtained security for its claim. Having availed itself of
    the benefits of the Act, I fail to see how the plaintiff can claim to deprive
    the defendant of the benefits of the statute, including the broad set-off
    provision of s. 17(3).

This case is a different one. AMDI has not claimed the benefit
    of the
CLA
.

AMDI does not assert a lien. It does not allege the existence,
    let alone breach, of that statues trust provisions. Section 12 of the
CLA
is not engaged.

[9]

The appellant argues that the motion judge erred in determining that s.
    12 of the
CLA
did not arise because the respondent framed its pleading
    in breach of contract, and did not claim a lien or invoke the trust or other
    provisions of the
CLA
, and that s. 12 of the
CLA
would only
    apply in cases where a plaintiff explicitly refers to or relies upon the
CLA
in its pleading.

[10]

We
    agree that, as a general rule, a plaintiffs framing of its claim does not
    dictate the defendants response. To hold otherwise would be contrary to rule
    25.07(4) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, which
    requires a defendant to plead any matter on which the party intends to rely to
    defeat the claim of the opposite party and which, if not specifically pleaded,
    might take the opposite party by surprise or raise an issue that has not been
    raised in the opposite partys pleading. We do not take the motion judge to
    have held otherwise.

[11]

Rather,
    we read the motion judges comment, quoted above, as effectively holding that
    an ordinary breach of contract claim cannot be met with a claim for set-off of
    trust funds under s. 12 of the
CLA
where the plaintiff has not
    asserted a claim to trust funds in the first place. In other words, in such
    circumstances the defendants purported defence is not responsive to, and
    cannot defeat, the plaintiffs claim.

[12]

We
    need not decide whether the motion judge was correct on this point, because we
    agree that, in any event, s. 12 has no application to this case.

[13]

Provided
    the criteria of s.12 of the
CLA
are met, a trustee of the trust funds
    may, without breaching the trust, retain but not spend any of the monies set
    off against the trust funds on account of outstanding debts, claims or damages.
    This section does not give a trustee the right to put some or all of the trust
    funds retained to general use:
Datasphere Sales Ltd. v. Universal Light
    & Power Corp.
, 1991 CarswellOnt 804, at para. 13;
Arborform
    Countertops Inc. v. Stellato
, 29 O.R. (3d) 129, [1996] O.J. No. 1275, at
    para. 43.

[14]

The
    availability of the right of set-off under s. 12 of the
CLA
requires
    the party seeking to exercise it to prove the existence of specific
    circumstances and particular considerations, including the existence of trust
    funds against which set-off can be applied. If no trust funds are retained or
    all the monies are spent, the purpose of the trust provisions is defeated and
    any right of set-off is extinguished:
Arborform Countertops Inc.
, at
    paras. 39 and 43.

[15]

In
    the present case, neither party pleaded the existence or breach of a trust
    fund. The respondent did not assert any claim to trust funds. The appellant did
    not allege there was a trust fund under the
CLA
or at all. Rather, the
    appellant pleaded that it had not been paid by the owner for the work performed
    by the respondent and therefore had no obligation to pay the respondents
    invoices, negating the existence of a trust fund.

[16]

While
    there was evidence from the appellants representative, Regina Dee, that the
    appellant had received monies from the owner, there was no evidence that those
    monies were held in trust or retained at all. In a subsequent answer to
    undertakings, the appellant admitted that it did not maintain a separate bank
    account for the OLG Brantford Casino Project.

[17]

As
    a result, the appellant has no right under s. 12 of the
CLA
to set-off
    against the monies that it admits are owed to the respondent.

[18]

Second,
    we also find no error in the motion judges determination that equitable
    set-off is not available to the appellant. The motion judges finding that the
    OLG Casino Project and Imara Project were unrelated and entirely separate
    because, among other things, payment on one project was not tied to the other,
    funds were segregated, and the projects were undertaken at different times, in
    different cities and for different owners, was amply supported by the evidence.

[19]

Accordingly,
    the appeal is dismissed.

[20]

Costs
    of the appeal are to the respondent in the agreed amount of $6,000.00.

H.S. LaForme J.A.

G. Pardu J.A.

L.B. Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Auciello v. Mahadeo, 2016 ONCA 414

DATE: 20160527

DOCKET: M46375 (C60320)

Hourigan J.A. (In Chambers)

BETWEEN

Vito Auciello

Plaintiff (Appellant)

and

Gail
    Mahadeo, Klein & Schonblum Associates, Fred Goldberg, David Wagman, Jeffery
    Wagman, Ronni Fingold, Arnold Bobkin, Forest Hill Real Estate Inc., Jan
    Perkins, McLarens Canada and Granite Claims Solutions

Defendants (Respondents)

Vito Auciello, in person

Jeremy Opolsky, duty counsel

R. Leigh Youd, for the respondents Gail Mahadeo and
    Klein & Schonblum Associates

Joseph Juda, for the respondents Fred Goldberg, David
    Wagman, Jeffery Wagman, Ronni Fingold, Arnold Bobkin and Forest Hill Real
    Estate Inc.

Murray Stieber for the respondents Jan Perkins, McLarens
    Canada and Granite Claims Solutions

Heard:  April 28, 2016

ENDORSEMENT

[1]

The appellant brings a motion seeking an order
    setting aside the order of the Registrar dismissing his appeal for delay,
    extending the time for perfection of the appeal, and permitting him to file a
    factum longer than 30 pages.

Background Facts

[2]

The background to this litigation may be
    summarized as follows.

[3]

On January 28, 2010, the appellant commenced an
    action in Small Claims Court arising out of his purchase of property in trust
    for Network Cash Mart Ltd. (Network), a company he owned. The essence of this
    claim was that the real estate brokerage involved in the transaction (the
    Forest Hill Defendants) acted negligently in failing to insert a clause in
    the agreement of purchase and sale that required the property to be transferred
    as two separate lots.

[4]

On October 27, 2010, Network commenced an action
    in the Superior Court of Justice against the Forest Hill Defendants and the
    vendor of the property, Ettie Rosen. The claim was for breach of contract
    against Ms. Rosen. It also alleged breach of contract, negligence, and breach
    of fiduciary duty against the Forest Hill Defendants, largely for the same
    reasons described in the Small Claims Court action.

[5]

On December 2, 2011, the parties entered into
    minutes of settlement, which appear on their face to settle the matters in
    issue in both proceedings. On May 17, 2013, the Forest Hill Defendants brought
    a motion to enforce the terms of the settlement. That motion was granted by
    Chiappetta J.

[6]

On December 2, 2013, the appellant commenced a
    new action against the Forest Hill Defendants. He also added as defendants the
    lawyers for the Forest Hill Defendants, Klein & Schonblum Associates, and a
    claims adjusting company acting for the Forest Hill Defendants Errors and
    Omissions insurer, Granite Claims Solutions. The appellant sued in deceit,
    conspiracy, bad faith conduct, fraudulent misrepresentation or, in the
    alternative, negligent misrepresentation. He alleged that the defendants
    conspired to deceive him and the court and thereby negotiated a settlement that
    was not in his interests.

[7]

The defendants brought a r. 21 motion to strike
    the new statement of claim. On March 10, 2015, Faieta J. granted the motion and
    struck the claim without leave to amend. He found that it did not disclose a reasonable
    cause of action and further, that it was frivolous and vexatious. He declined
    to strike out the claim on the basis that the action was
res judicata

and thus an abuse of process.

[8]

The present appeal is from the order of Faieta
    J. On January 22, 2016, Strathy C.J.O. ordered that the appellant perfect his
    appeal by Sunday, April 10, 2016. The appellant attempted to perfect his appeal
    on April 11, 2016, but his filing was rejected by staff at the Court of Appeal
    because his factum exceeded 30 pages in length.

[9]

That day the appellant wrote to responding
    counsel seeking their consent to an extension of time to perfect his appeal.
    That consent was not forthcoming. Consequently, the appellant brought this
    motion.

The Motion to Extend Time

[10]

The respondents oppose the motion, arguing that the
    appeal is devoid of merit and that there has been a long history of delay on the
    part of the appellant.

[11]

The case law regarding an extension of time in
    this court is well-established. The following five factors are relevant on
    motions to extend
the time limit that applies to perfecting
    an appeal:

(1)
    whether the appellant formed an intention to appeal within the relevant period;

(2) length
    of, and explanation for delay;

(3)
    prejudice to respondent;

(4) merits
    of the appeal; and

(5)
    whether the justice of the case requires it.

See
Issasi
    v. Rosenzweig
, 2011 ONCA 112, 277 O.A.C. 391, at
    para. 4.

[12]

The overarching principle is that an extension
    should be granted if
the justice of the case requires it:
Miller Manufacturing & Development Co. v. Alden
(1979), 13 C.P.C. 63 (Ont. C.A.), at paras. 4-5;
Frey v. MacDonald

(1989), 33 C.P.C. (2d) 13 (Ont. C.A.), at para. 3. The failure to
    meet any one factor is not necessarily fatal because consideration must be
    given to all the factors in deciding whether the overall justice of the case
    requires that leave be granted: see
Leighton v. Best
, 2014 ONCA 667,
    20 C.B.R. (6th) 326, at para. 14.

[13]

When considering the merits of the appeal, it is
    not with a view to determining whether the appeal will succeed, but only with a
    view to determining whether the appeal has so little merit that the court could
    reasonably deny the important right of appeal:
Issasi,
at para. 10; see
Duca Community Credit Union Ltd. v. Giovannoli
(2001)
,
142
    O.A.C. 146 (Ont. C.A.), at para. 15. The merits of a proposed appeal can be
    decisive on a motion to extend the time for filing. Even if the other factors
    militate against extending time, the merits may be so significant as to justify
    extending time:
Howard v. Martin
, 2014 ONCA 309, 42 R.F.L. (7th) 47,
    at para. 36.

[14]

Even where it is difficult to see the merits of
    a proposed appeal, a party is entitled to appeal and should not be deprived of
    that entitlement where there is no real prejudice to the other side:
Denomme
    v. McArthur
, 2013 ONCA 694, 36 R.F.L. (7th) 273, at para. 10.

[15]

The appellant clearly had an intention to appeal
    and the very short delay has been adequately explained. I am also satisfied
    that there is no prejudice to the respondents.

[16]

The real issue on this motion is whether the
    merits of the appeal are so limited that the justice of the case does not
    favour a short extension.  I agree with the respondents that the appeal is very
    weak. However, I cannot say that the appeal is entirely devoid of merit. The
    appellate has an arguable position that he should have been granted leave to
    amend in order to assert his new claims arising out of the settlement.

Disposition

[17]

I conclude that the justice of the case requires
    a short extension. The order of the Registrar, dated April 15, 2016, dismissing
    the appeal for delay is set aside. The appellant shall have until June 10, 2016
    to perfect his appeal. There is no basis to make an order permitting the
    appellant to file a factum longer than 30 pages and I decline to so order.
    Costs of the motion are reserved to the panel hearing the appeal.

C.W. Hourigan J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Balice v. Serkeyn, 2016 ONCA 372

DATE: 20160517

DOCKET: C61354

Rouleau, Pardu and Benotto JJ.A.

BETWEEN

Claudio Balice

Applicant (Respondent)

and

Joanne Serkeyn

Respondent (Appellant)

Stanley P. Jaskot, for the appellant

Mitchell B. Rosenblatt, for the respondent

Heard: May 4, 2016

On appeal from the order of Justice Cheryl Lafrenière of
    the Superior Court of Justice, dated November 3, 2015.

ENDORSEMENT

[1]

This appeal concerns an order made following a contempt finding against
    the appellant. Among other things, the motion judges order made significant
    changes to the parties access schedule to their two children. Those changes
    were based on her conclusion that 122 days of access should be transferred to
    the father over a two-year period to make up for the mothers contempt. For the
    reasons that follow, we are allowing the appeal.

Background

[2]

The parties are the parents of two children, now aged 12 and 14. Their
    parenting arrangements were the subject of an order by McLaren J. on January 3,
    2013. On April 17, 2014, the respondent moved for a finding of contempt against
    the appellant for not complying with numerous terms of that order. The motion judge
    agreed and found the appellant in contempt on January 26, 2015. This finding is
    not in dispute on appeal.

[3]

A further hearing was set for July 13, 2015, and it is the disposition
    of that hearing that is being appealed. The parties disagree about whether the
    July 13 hearing should be characterized as one in which the appellants purging
    of her contempt was considered, as the respondent describes it, or as a penalty
    hearing, as the appellant argues.

[4]

The motion judge released her decision on November 3, 2015. She found
    that the appellant had not purged her contempt, and accepted the respondents
    submission that from January 3, 2013 to July 13, 2015 the respondent had missed
    122 days of access. The motion judge concluded that an order requiring the
    appellant to purge her contempt by transferring time with the children from the
    appellant to the respondent was in the best interests of the children. This was
    appropriate, in her view, because the mother has enjoyed more time with the
    children than the [McLaren] order provided due to the conflict in the parties
    work schedule.

[5]

This appears to be a reference to the provisions in the McLaren order
    that the access schedule was to be constructed based on the appellants work
    schedule (she is a police officer). Because the balance of the days with the
    children would not necessarily fit well with the respondents work schedule (he
    is a firefighter), the order provided for a mechanism whereby the appellant was
    to work with the respondent to ensure that there would be an adjustment for the
    missed days. This clearly did not occur.

[6]

The motion judges order provided, among other things:

a)

that the appellant was to purge her contempt by giving the respondent
    more time with the children than provided in the McLaren order to make up for
    the time he has missed;

b)

that this make up time was to be made up by the appellant giving the
    respondent between three to five additional overnights each month beyond what
    was provided for in the McLaren order, and giving the respondent some of the
    time allocated to the appellant during the childrens school break at
    Christmas, during the March break and during the summer school break;

c)

that commencing December 1, 2015, the access schedule was to be based on
    the schedule of the respondent and not, as provided in the McLaren order, based
    on the appellants work schedule; and

d)

that the parties were to return before the motion judge every six months
    during the two years within which the appellant had to purge her contempt.

[7]

The appellant appeals on various grounds including that the motion judge
    erred by:

a)

failing to allow cross-examination on the affidavits at the July hearing;

b)

finding that the appellant had failed to purge her contempt;

c)

ordering an increase in the respondents access and adjusting the schedule
    set out in the McLaren order without having considered the best interests of
    the children; and

d)

failing to consider proper sentencing principles in imposing the penalty
    for the contempt.

[8]

The appellant also seeks leave to appeal the motion judges costs award
    and to introduce fresh evidence. The proposed fresh evidence sets out events
    that have occurred since the July 13 attendance and contains expert evidence on
    whether the November 3 order is in the best interests of the children and
    evidence of whether it was consistent with the childrens views and
    preferences.

[9]

For his part, the respondent maintains that the order was properly made.
    He also raises a jurisdictional issue, arguing that the order under appeal is
    an interlocutory order, whose appeal lies to the Divisional Court, with leave.

Discussion

[10]

In our view, the appeal ought to be allowed.

[11]

It is unclear from the motion judges reasons and the terms of the order
    whether that order was intended as a penalty for the appellants contempt, a
    variation of the custody order, or a stand-alone order delaying the penalty
    phase and specifying what the appellant must do to purge her contempt and
    ordering it to be done within 24 months.

[12]

However the order is characterized, it effects substantial changes to the
    custodial arrangements of the children. It ought not to have been made without
    evidence of the childrens current circumstances, and careful consideration of
    that evidence, to determine what was in their best interest. The motion judges
    order that, in effect, the appellant purge her contempt by transferring 122
    days of her custodial access to the respondent in the ensuing two years simply
    cannot stand on the record before us.

[13]

The McLaren order provided for substantial time being spent with each
    parent and established a schedule found to be in the best interests of the
    children. It also provided a mechanism whereby missed days could be made up.

[14]

The amount of make-up ordered by the motion judge, however, is well
    beyond what could have been reasonably contemplated by the McLaren order. It
    significantly alters the balance established by that order for the two parents
    contact with their children for two years.

[15]

The motion judges reasons contain only two references explaining why
    this change was in the best interests of the children: first, a statement that
    the McLaren order was in the best interests of the children at the time it was
    made and continues to be in the best interests of the children; and, second,
    the statement referenced earlier in these reasons to the effect that
    transferring 122 days was in the best interests of the children because the
    appellant had enjoyed more time with the children over the previous
    two-and-a-half years.

[16]

There is no reference to the evidence led at the hearing on the childrens
    wishes nor any reference to the childrens current circumstances. The decision
    appears to be based simply on the premise that each day missed by the
    respondent must be made up within the following 24 months, without considering
    the impact that such a large shift would have on the children.

[17]

Whether make up time is appropriate in any given case, and in what
    amount, must be based on a determination of the best interests of the children
    that takes into account all of the relevant circumstances. The relevant
    circumstances will invariably include the magnitude of the make up time sought
    and can, in the appropriate case, include considerations such as the wishes of
    the children and concerns about alienation of one of the parents.

[18]

The motion judge found that the appellant was attempting to undermine
    the respondents relationship with the children. It may be that the childrens
    best interests require more time with the respondent to offset her efforts and
    preserve his relationship with his children. But a more detailed examination of
    the impact of 122 days make up time is required to assess the need for such an
    order and its effect on the childrens best interests.

[19]

Because we are allowing the appeal and directing a new hearing based on
    inadequate consideration of the best interests of the children, we see no need
    to deal with the other grounds of appeal, nor is it necessary to consider the
    appellants fresh evidence application. We note, however, that this dispute has
    been ongoing for some time. It is by both parents working cooperatively that
    the best interests of the children are achieved.

Disposition

[20]

Accordingly, the motion judges order is set aside and the matter is
    remitted for a fresh hearing. If either party seeks a variance of the McLaren
    order, it may well be more efficient, subject to the motion judges direction,
    to have that motion to change made returnable at the same time as the fresh
    hearing ordered herein.

[21]

As the matter is being remitted for a fresh hearing, we also set aside
    the costs order. In doing so, we should not, however, be taken to disagree with
    the motion judges exercise of discretion in setting the amount of costs, given
    the finding of contempt on the appellants part.

[22]

For the appeal itself, we consider it appropriate to make no costs order.

Paul
    Rouleau J.A.

G.
    Pardu J.A.

M.L. Benotto J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Bayerische
    Landesbank Girozentrale v. Grant Thornton Limited, 2016 ONCA 399

DATE: 20160525

DOCKET: C59939

Doherty, Tulloch and Benotto JJ.A.

BETWEEN

Bayerische Landesbank Girozentrale

Plaintiff (
Respondent/Appellant by way of cross-appeal
)

and

Grant Thornton Limited, Trustee of the Estate of Helmut Sieber, A
    Bankrupt, Helga Sieber, H.J. Sieber Farms Ltd. and
Rosen Ridge Farms
    Ltd.

Defendants (
Appellant
/Respondent by way of
    cross-appeal
)

Benjamin Bathgate and Samantha Gordon, for
Bayerische Landesbank
    Girozentrale

H. Cohen and A. Wilford, for Rosen Ridge Farms Ltd.

Heard:  May 24, 2016

On appeal from the judgment and vesting order of Justice E.M.
    Morgan, of the Superior Court of Justice, dated September 25, 2015.

APPEAL BOOK ENDORSEMENT

[1]

The respondent on the cross-appeal seeks an adjournment indicating that
    a motion will be brought before the trial judge to set aside the judgment on the
    basis on evidence discovered after the judgment.

[2]

The respondent has not filed any material on the merits of the
    cross-appeal but does not seek an adjournment to file material.

[3]

We see no reason to adjourn the cross-appeal.  It may be helpful if the
    terms of the trial judgment are fully settled before the next round of
    litigation in the trial court.

[4]

We would allow the cross-appeal in part.

[5]

First, in respect of the trial judges deletion of the word sham from
    para. 1 of the judgment, we see no error.  The trial judge declared that the
    transaction was void.  His reason for the declaration, i.e. because the trust
    was a sham, is clearly set out in his reasons for judgment.  He made no error
    in deleting the factual finding upon which the declaration in para. 1 of the
    order was based from the terms of the judgment granting the declaration.  The
    relief requested in para. 42(a)(i) of the cross-appellants factum is refused.

[6]

In respect of the trial judges deletion of the accounting and seizure
    remedies from the draft judgment, we accept the submission that the
    cross-appellant was entitled to that relief, but as against the defendant,
    Rosen Ridge Farms, only and not as against Helmut Sieber who was not a party to
    the trial.

[7]

The relief requested by the cross-appellant at paras. 42(a)(i) and
    42(a)(iii) of its factum should be granted save that the reference to Helmut
    Sieber should be deleted.

[8]

The cross-appeal is allowed per the terms of this endorsement and the
    trial judgment should be varied accordingly.

[9]

The cross-appellant is entitled to costs on the cross-appeal.  However,
    those costs are tempered by the mixed result and the relatively uncomplicated
    nature of the cross-appeal once the cross-appellant conceded that the order
    could not be made against Mr. Sieber.  Costs are awarded in the amount of
    $5,000, inclusive of disbursements and applicable taxes.