



COURT OF APPEAL FOR ONTARIO

CITATION: Hobson v. Hobson, 2020 ONCA 234

DATE: 20200319

DOCKET: C67328

Rouleau, Hourigan and Roberts
    JJ.A.

BETWEEN

Gaetanne Hobson

Applicant
    (Respondent)

and

Tania Hobson

Respondent
    (Appellant)

Paul Ledroit, for the appellant

William Fawcett, for the respondent

Heard: March 12, 2020

On
    appeal from the order of Justice Helen A. Rady of the Superior Court of Justice,
    dated July 23, 2019, with reasons reported at 2019 ONSC 4429.

REASONS FOR DECISION

[1]

This case concerns the ownership of a cottage
    that was purchased by Keith (Keith) and Gaetanne Hobson (Gaetanne) for
    $147,694 in 2001. Title to the cottage was registered in the name of their
    daughter, Tania Hobson (Tania). At the time of purchase, a mortgage was
    registered against the property in favour of Keith and Gaetanne (the original
    mortgage). This mortgage was in the amount of $175,000, which represented the
    full purchase price plus the cost of planned improvements to the property.

[2]

In 2009, Keith passed away. Gaetanne had the property
    appraised. It had appreciated considerably. A new mortgage in the amount of
    $350,000 was registered on title in favour of Gaetanne (the subsequent mortgage).

[3]

After a falling out with Tania, Gaetanne commenced
    an application on October 30, 2018. The only substantive relief she sought was
    a declaration that she is the true owner of the cottage.

[4]

At the trial of the application, Gaetanne
    claimed ownership of the cottage through the operation of a purchase money
    resulting trust. Tania submitted that the cottage was a gift and that any
    mortgage was to be forgiven upon Keith and Gaetannes death. It was Gaetannes
    position that because the original mortgage was to be forgiven, she had not
    divested herself of all power and control over the cottage, and, therefore, the
    cottage was not a gift.

[5]

The trial judge found, at para. 26, that it was
    Keith and Gaetannes intention that Tania would have ownership of the cottage:

I am satisfied that preponderance of evidence
    demonstrates that at the time of the cottage purchase, Keith and Gaetanne
    intended that title would be in Tanias name and the cottage hers.

[6]

This finding was reflected in paragraph 1 of the
    trial judges order, which states that the cottage was a gift to the
    respondent [Tania] at the time it was made.

[7]

In her reasons, the trial judge went on to
    consider the effect of the mortgages. She found, based on a Direction and
    Acknowledgment dated September 23, 2001 and signed by Tania, Keith, and
    Gaetanne, that Tania was liable under the original mortgage for the amount it
    secured, being $175,000. However, the trial judge found there was no
    consideration received by Tania for the subsequent mortgage and, therefore, she
    was not liable for the full $350,000. Paragraph 2 of her order reflects these
    findings and states, the respondent is liable under the mortgage given by her
    at the time of the gift.

[8]

Tania raises one issue on appeal: whether the
    trial judge erred in making a determination regarding her liability for the
    mortgages. She makes three submissions on this ground of appeal:

(a)

Her liability under either mortgage was not an
    issue on the application, and was not addressed at trial;

(b)

There was no evidence or incomplete evidence to
    support a finding of liability under either mortgage; and

(c)

There was no consideration for either mortgage.

[9]

Gaetanne submits that Tanias liability under the
    mortgages was not a separate issue but an essential part of the trial judges
    decision regarding ownership of the cottage. Further, she argues that there was
    extensive evidence regarding the mortgages from all the major witnesses at
    trial. Therefore, Gaetanne submits that liability under the mortgages was
    properly determined by the trial judge.

[10]

We are not persuaded by that submission. While
    the mortgages were part of the factual matrix that the trial judge had to consider
    in determining whether to grant the relief sought in the application, the issue
    of Tanias liability under either mortgage was not squarely before her. The
    trial judge erred in granting an order on a substantive issue that was not in
    the notice application or contained in the submissions made by the parties at
    trial.

[11]

In these circumstances, it would be unfair to
    foreclose Tania from making arguments and adducing evidence as she deems fit in
    support of her position that she has no liability under either mortgage.

[12]

The appeal is allowed. We order that paragraph 2
    of the trial judges order be set aside. Tania, as the successful party, is
    entitled to her costs of the appeal payable by Gaetanne. Those costs are fixed
    in the agreed-upon, all-inclusive sum of $4,500.

Paul Rouleau J.A.

C.W. Hourigan J.A.

L.B. Roberts J.A.


