



COURT OF APPEAL FOR ONTARIO

CITATION: Lesenko v. Guerette, 2017 ONCA 522

DATE: 20170622

DOCKET: C62993

Rouleau, Trotter and Paciocco JJ.A.

BETWEEN

Pamela Lesenko

Plaintiff

(Respondent)

and

Victoria (Vickie) Guerette and Ralph MacEachran

Defendants

(Appellants)

Kyle A. MacLean, for the appellants

Suzy Johal, for the respondent

Heard: May 15, 2017

On appeal from the judgment of Justice Pamela L. Hebner of
    the Superior Court of Justice, dated October 27, 2016.

Rouleau J.A.:

[1]

The respondent brought a claim for unjust enrichment to recover money she
    paid to acquire and renovate a house registered in the appellants names. On a
    motion for summary judgment, the motion judge accepted the respondents
    evidence and rejected the version of events advanced by the appellants. The
    motion judge concluded that the respondent was entitled to the return of the
    $221,914.11 that the respondent alleges was invested by her to acquire and
    renovate the property.

[2]

On appeal, the appellants argue that this was not an appropriate case
    for summary judgment in that, at a minimum, some form of an oral hearing was
    required in order to make the required credibility findings. Further, the
    appellants submit that the motion judges reasons are insufficient and provide
    no analysis of or basis for the finding of unjust enrichment and for fixing
    $221,914.11 as the measure of the unjust enrichment.

[3]

In my view, the appeal must be allowed and the order set aside.

Facts

[4]

The appellants Victoria Guerette and Ralph MacEachern
[1]
are husband and wife and the respondent Pamela Lesenko is Ms. Guerettes sister.
    In 2009, the parties agreed to sell their homes and purchase a home together. That
    year the respondent sold her house for a net amount of $260,676.66. A portion
    of the proceeds then were used to purchase the subject property at 7710 Clayton
    Street in Port Franks, Ontario (the Property). The appellants and the
    respondent had agreed that they would jointly occupy the Property. Although the
    appellants were identified in the agreement of purchase and sale as buyers of
    the Property, the whole of the purchase price of $189,900, as well as the land
    transfer tax and the solicitors fees and disbursements, were paid out of the
    proceeds of sale of the respondents property. The respondents name did not
    appear in the agreement of purchase and sale nor on title.

[5]

The respondent moved into the Property in September of 2009 and in July
    of 2010, the appellants sold their home and also moved into the Property.

[6]

The Property was in need of renovations and according to the respondent,
    she paid a total of $34,240.76 towards these renovations between September 2009
    and 2012. The appellants dispute the amount allegedly spent and, in addition, stated
    that of the amount allegedly paid by the respondent, $10,000 was in repayment
    of a past loan they had made to the respondent.

[7]

For their part, the appellants claim that they paid $198,203.25 for
    materials and labour for the renovations and carried out work themselves that
    they value at $50,000. The appellants also maintain that, from the date of
    purchase, they paid all of the utilities, municipal taxes and insurance for the
    Property.

[8]

In April 2012, the respondent moved out of the Property claiming that
    the appellants had made it impossible for her to remain. After moving out, the
    respondent brought the present claim alleging unjust enrichment and seeking a
    return of the money she had invested in the Property. She claimed that the
    funds were advanced pursuant to an oral agreement she had with the appellants. That
    agreement provided that each of the three parties would have a one-third
    ownership interest in the Property. Although the respondent had paid the full
    purchase price, the agreement was that two-thirds of this amount was a loan to
    the appellants. The respondent claimed that despite several requests for
    repayment, the appellants have yet to repay that loan.

[9]

The appellants presented a totally different picture. They maintain that
    their agreement was to the effect that the respondent would pay for the
    purchase of the Property in exchange for the entitlement to live on the
    Property for the rest of her life. This arrangement was on the further
    understanding that the appellants would pay for the bulk of the renovations to
    the Property and all future ownership costs. If the appellants died before the
    respondent, the respondent would be entitled to continue living on the Property
    for her lifetime. If the respondent moved out after both the appellants died,
    the respondent would be entitled to one-third of the net proceeds from the sale
    of the Property.

[10]

Ms. Guerettes affidavit also set out that she and her husband had
    revised their wills to incorporate the grant to the respondent of the life
    interest in the Property. She appended an unsigned version of those wills to her
    affidavit.

[11]

In the course of preparing the materials responding to the motion for
    summary judgment, the appellants obtained an appraisal of the Property. Despite
    it having been purchased for in excess of $188,000, and $230,000 to $280,000 spent
    on renovations and labour, the appraised value had only risen to $252,000. This,
    the appellants submit, shows that both the appellants and the respondent have
    suffered a loss of part of their investment in the Property.

[12]

The motion was brought before any discoveries had been held and neither
    party cross-examined on the affidavits filed. The appellants explained that
    once they obtained the appraisal, it became apparent that they would have to
    amend their pleadings. Specifically, in their defence, the appellants had
    pleaded that the respondent should receive a reimbursement of $191,914.77, less
    a reasonable and equitable contribution for living on the Property. This
    figure, however, was based on their expectation at the time that the value of
    the Property was substantially in excess of the recently obtained appraisal of
    $252,000.

Judgment Below

[13]

Relying heavily on the fact that the respondent had been left destitute
    after making the investment in the Property, the motion judge reasoned that the
    respondent would not have agreed to pay the whole of the purchase price on the
    terms alleged by the appellants. The motion judge therefore accepted the
    respondents version that, although she paid the whole of the purchase price, this
    was pursuant to an agreement whereby she was to acquire a one-third interest in
    the property, and two-thirds of the payment was a loan to the appellants.

[14]

The motion judge rejected the appellants version and found that the
    appellants had orchestrated the purchase of the Property in their name using
    the respondents funds. The appellants were therefore enriched to the detriment
    of the respondent. The motion judge saw no reason why a trial was required and,
    despite the appellants request, determined that she did not require
viva
    voce
evidence to make credibility findings.

[15]

The motion judge then referred to the case law establishing that when a
    person purchases a property in the name of another without consideration, it is
    presumed that the recipient holds the property in trust for the transferor. Although
    that presumption can be rebutted with evidence of the purchasers actual
    intention, the appellants had not succeeded in doing so. The motion judge
    therefore found that the respondent had an interest in the Property and
    determined the amount of that interest to be in the amount of $221,914.11. The
    appellant had therefore been unjustly enriched by the same amount.

[16]

The $221,914.11 figure was arrived at by adding the purchase price of
    $191,914.11 (made up of the purchase price and costs related to the acquisition
    of the property) and $30,000, which is the amount the motion judge found was contributed
    by the respondent for renovations to the Property.

Analysis

[17]

The appeal must be allowed. In my view, the motion judges reasons do
    not adequately explain how she resolved the conflicts in the evidence, nor do
    they support the conclusion that she reached.

[18]

The motion judge was presented with two very different versions of what
    the parties had agreed to. Faced with this conflict in the evidence, the judge
    determined that the respondents version of events should be preferred over the
    version advanced by the appellants. There is little explanation as to why she
    rejected the appellants version other than her finding that, because of the
    respondents limited means, it made little sense for her to have invested all
    of her money in the Property.

[19]

There was, however, substantial affidavit evidence supporting the
    appellants version of events, including their evidence that their wills were
    amended to give effect to the respondents life interest and the fact that they
    paid all of the Propertys expenses from the outset. The motion judges reasons
    do not explain why this evidence was rejected nor does the motion judge make
    and explain credibility findings. Given the important issues which turn on
    credibility in this case, the failure to make such findings was an error. If
    credibility cannot be assessed on a written record, that should indicate that
    oral evidence or a trial is required:
Trotter Estate
, 2014 ONCA 841, 122
    O.R. (3d) 625, at para. 55. Care must be taken to ensure that decontextualized
    affidavit and transcript evidence does not become the means by which
    substantial unfairness enters:
Baywood Homes Partnership v. Haditaghi
,
    2014 ONCA 450, 120 O.R. (3d) 438, at para. 44.

[20]

Further, having accepted the respondents version of events to the
    effect that the parties had agreed that the money advanced by the respondent was
    to acquire a one-third interest in the Property and that the balance was a
    loan, the motion judge does not explain why she did not give effect to that agreement.
    According to the respondent, she should have a one-third interest in the
    Property and be owed two-thirds of the $191,914.11 paid to acquire the Property.

[21]

A possible explanation is that, because there does not appear to be any
    documentation confirming the agreement, the
Statute of Frauds
, R.S.O.
    1990, c. S.19 operates to prevent enforcement of an oral agreement respecting
    land. This, however, is simply speculation as there is no indication either in
    the pleadings or the reasons of the motion judge that the
Statute of Frauds
was considered.

[22]

In apparent contradiction to her acceptance of the respondents evidence
    as to the terms of the agreement regarding the purchase of the Property, the
    motion judge found that the appellants held the whole of the Property in trust
    for the respondent. She did so in reliance on the presumption of resulting
    trust, as set out in
Pecore v. Pecore
, 2007 SCC 17, [2007] 1 S.C.R.
    795. Under that case, where a property is purchased in the name of another
    without consideration, it is presumed, as a general rule, that the property is
    held in trust for the person who advanced the funds. Despite the motion judges
    finding that the funds were advanced pursuant to the oral agreement alleged by
    the respondent, the motion judge nonetheless ruled that the presumption of resulting
    trust had not been rebutted with evidence of the [respondents] actual
    intention at the time of the purchase. This inconsistency is not explained.

[23]

Having thus determined that the appellants held the Property in trust
    for the respondent, the motion judge decided, again without explanation, that
    the appropriate remedy was not to transfer the Property to the respondent but
    rather to return to the respondent her investment in the Property on the basis
    that the appellants were unjustly enriched. The investment to be returned was
    determined to be the $191,914.11 paid to acquire the Property as well as the
    $30,000 the respondent alleges she spent on renovations.

[24]

The difficulty with this conclusion is that the motion judge carried out
    no analysis of the equities and specifically, made no findings as to the
    parties understanding regarding all of the monies invested by them in
    renovating a property the motion judge concluded was owned by the respondent. Why,
    for example, would the appellants invest close to $200,000 in expenditures and
    $50,000 in labour to renovate someone elses property?

[25]

The understanding of the parties as to those renovation costs may well
    have an impact on the decision as to who should bear the apparent loss in the
    investments made to buy and renovate the Property. As set out earlier, the
    value of the Property is now substantially less than the sum of the purchase
    price and renovation costs.

[26]

There is also no explanation as to why the motion judge accepted that the
    respondent is entitled to repayment of $30,000 in alleged renovations. I can
    only assume that the motion judge rejected the appellants statement that
    $10,000 of this sum was in repayment of a loan they had advanced to the
    respondent. The finding and the basis for the rejection of the evidence are,
    however, absent.

[27]

In the end, the motion judge determined the motion on the basis of unjust
    enrichment. Where a remedy is granted for unjust enrichment, courts must take
    into account the mutual exchange of benefits between the parties:
Kerr v.
    Baranow
, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 109-111. For example,
    the amount awarded may be reduced to reflect reciprocal benefits. As explained
    in
Kerr
, the mutual conferral of benefits should be considered at the
    defence and/or remedy stages of the analysis and may, in certain cases, also
    provide evidence of a juristic reason for the enrichment.

[28]

In this case, considering the mutual conferral of benefits would include
    determining the understanding of the parties when they entered into the
    arrangement, as well as calculating the amounts advanced by both parties to
    purchase the Property and to renovate and maintain the Property. It would also
    be important to understand whether the renovations were for the benefit and at
    the request of one or other or both of the parties. Finally, the court should
    take into account the usage made by the parties of the Property over the course
    of three years of joint occupation as well as the value of the renovated
    property. The necessary findings were not made by the motion judge and it is
    not possible for this court to make them on the record before us.

[29]

Let me add two further notes. In the course of submissions, the
    appellants appear to have conceded that the respondent was entitled to recover
    $112,021.63 of the amounts she invested. According to the appellants
    calculations, this would be the equitable result if each party absorbed its
    share of the loss of the money invested in the Property. I have considered
    making an order that the respondent be granted partial summary judgment in that
    amount and that the issue as to whether the respondent was entitled to receive
    additional sums proceed to trial. To make such an order, however, I would have to
    make the findings necessary to support the payment of that amount. In other
    words, this court would have to decide whether the $112,021.63 payment is ordered
    pursuant to the parties agreement (and outline the terms of the agreement), or
    ordered as an equitable remedy, or on some other basis. The record does not
    allow me to make the necessary credibility and other findings, and doing so would
    limit the discretion of the judge ultimately charged with deciding the case. I
    therefore concluded that it is best to leave it to the parties to address the
    possibility of such a payment in the course of the litigation.

[30]

Used appropriately, summary judgment motions are an important tool for
    enhancing access to justice and achieving proportionate, timely and
    cost-effective adjudication:
Hryniak v. Mauldin
, 2014 SCC 7, [2014] 1
    S.C.R. 87. In my view, this motion for summary judgment was premature and
    should not have been brought until the positions of the parties and the issues
    were well defined. It was unclear from the pleadings and submissions whether
    the respondents claim sounded in contract or unjust enrichment. Further, as
    noted earlier, the appellants had indicated that their pleading required
    amendment with respect to the payment they were prepared to make. Moreover, the
    legal basis for the payment remains unclear. Faced with such a motion, where
    the record is clearly inadequate, a judge should be reluctant to attempt to
    resolve the case. Substantial costs are thereby incurred, and further delay
    caused, with little being achieved. As stated in
Baywood
, at para. 45,
    sometimes  it will simply not be possible to salvage something dispositive
    from an expensive and time-consuming, but eventually abortive, summary judgment
    process.

Conclusion

[31]

For these reasons, I would allow the appeal and set aside the judgment. I
    would also award the appellants their costs in this court and for the motion in
    the agreed upon amounts. The parties agreed that the successful party should be
    awarded $9,000 inclusive of disbursements and applicable taxes and, if the
    appeal were allowed, the appellants would be entitled to their costs of the
    original motion fixed in the amount of $7,276.07 inclusive of disbursements and
    applicable taxes.

Paul Rouleau J.A.

I agree G.T. Trotter
    J.A.

I agree David M.
    Paciocco J.A.

Released: June 22, 2017





[1]

This appears to be the correct spelling of Mr. MacEacherns
    name, which was misspelled in the order and judgment under appeal.


