Finders and Keepers and the Hidden Half-Million Dollars

November 25, 2020 Ian Hull General Interest Tags: , , , 0 Comments

In 1972, Bill and Mary Moroz purchased a humble single-story bungalow, in Edmonton, on the banks of the North Saskatchewan River. They were the first and only occupants of the home and lived there the rest of their lives. William died in 2009 and in September of 2016, so did Mary.

Their nephew, William Smolak, was appointed personal representative of the Estate of Mary Moroz and set about preparing the house for sale. The house needed much work to clean and empty, but it was finally sold to Roger and Simone Gagne, and Christopher Short, who took possession on October 16, 2017.

Two days later, the new homeowners found $100,000 in a tin in a basement shoe cubby roughly 18” high.

Seven days after that, another $500,000 was found in more tins under the drawers in the basement kitchen. The Gagnes and Mr. Short did not contact the realtor or Mr. Smolak to tell them they had made this rare find. When Mr. Gagne attempted to deposit the $100,000, the bank notified the police, and the money was seized.

Mr. Smolak claimed the money belonged to the Estate of Mary Moroz, and he applied to the Court of Queen’s Bench of Alberta for summary judgment. The court’s decision in Moroz Estate v Gagne, 2020 was handed down this past November 4.

The Alberta Court of Appeal in Weir-Jones Technical Services Inc. set out the key considerations for an application for summary judgment, based on the test set out by the Supreme Court of Canada. In order to achieve an outcome that is “just, appropriate, and reasonable,” the court laid out four key considerations:

1) Having regard to the record and issues, is it possible to resolve the dispute on a summary basis?

2) Has the moving party met its burden to show that there is no merit or no defence and that there is no genuine issue requiring trial?

3) If the moving party has met its burden, has the resisting party put its best foot forward to demonstrate that there is a genuine issue?

4) Has the presiding judge been left with sufficient confidence to exercise their discretion and summarily resolve the dispute?

The court next turned to the law on finders:

“Orthodoxy has it that the finder of a chattel acquires a title that is good against the entire world except for the true owner […]. A recovered item may have been abandoned by a previous owner. It is self-evident that a finder of ownerless property can face no superior claim. It is not only the true owner who may assert a prior right, but anyone with a valid and subsisting entitlement, including, theoretically, some previous finder. Therefore, a more accurate general proposition is that a finder acquires a title that is good against the world, except for those with a continuing antecedent claim. This is a general statement about the relative rights of owners.” (Bruce Ziff, Principles of Property Law, 7th ed (Toronto: Thomas Reuters, 2018) at 176 [Ziff])

For Mr. Smolak, everything turned on an intent to abandon, a question of fact that relies on, among other things, the passage of time, the nature of the property, and the conduct of the owner. The burden of proving intention to abandon rests with the defendant.

Unfortunately for Mr. Smolak, he had given conflicting statements about his knowledge that gave rise to uncertainty in the court. While cleaning out the house, he had found receipts for gold wafers, and Mary’s daughter had told him about the possibility of hidden money and her parents’ distaste for banks. But Mr. Smolak also said he had no knowledge of any assets hidden in the house, and claimed he would have no intention of abandoning estate assets.

Ultimately, the court dismissed the application for summary judgment, citing its uncertainty and the need to determine Mr. Smolak’s state of mind after putting so much time and effort into cleaning and sorting the personal property and selling the house.

Unable to make a fair and just determination, the court welcomed further affidavits or a possible summary trial. In the meantime, however, it was unable to decide “keepers.”

We will keep you posted. . .

Thanks for reading!

Ian Hull and Daniel Enright

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