Tag: resulting or constructive trust

29 Jan

House Explosion Leading to Questions of Ownership and Ultimately, Responsibility Under the Law

Kira Domratchev Litigation, Uncategorized Tags: , , , , , , , , 0 Comments

Paul Zigomanis (“Paul”) died on April 20, 2015 as a result of an explosion that destroyed the home he lived in for 24 years (the “Brimley House”). At the time of Paul’s death, title to the Brimley House was in the name of Paul’s parents, John Zigomanis (“John”) and Mary Zigomanis (“Mary”).

A passerby who was driving by the Brimley House at the time of the explosion, and impacted by it, brought an action for negligence and under the Occupiers’ Liability Act as against Paul’s Estate and John’s Estate (Zambri v Cooperman, 2018 ONSC 7679). A motion was brought by the Estate Trustee During Litigation of Paul’s Estate, Jonathan Cooperman, (the “ETDL”) to determine whether the Brimley House was an asset of Paul’s Estate or John’s Estate, as this was an important issue that had to be determined before the litigation could proceed (Zigomanis Estate, 2017 ONSC 6855).

As there were more assets in John’s Estate, than in Paul’s Estate, the interested parties in the litigation would suffer an adverse consequence were it determined that the Brimley House properly belonged in Paul’s Estate.

The primary position of the ETDL was that a trust relationship was established between Paul’s parents and Paul, whereby a resulting trust arose between John and Mary and Paul and that title to the Brimley House “resulted back” to Paul upon John’s death on December 31, 2014.

Facts

On December 31, 1990, John and Mary took title as joint tenants to the property where the Brimley House was eventually built on, for $270,000.00, as joint owners. In May, 1991, Mary and John signed a deed transferring the Brimley House to Paul for “natural love and affection”. The Court found that Paul ultimately paid John and Mary $140,000.00 for the Brimley House. It was further held by the Court that the family understood that John and Mary were always going to help Paul to purchase a home.

After moving into the Brimley House, Paul developed a drug addiction. Thereafter, on August 1, 1996, Paul transferred the Brimley House to Mary and John for $2.00. Mary and John put all the insurance, taxes and utility bills into their names and had the bills sent to their own home, however, Paul would transfer $500.00 per month to them for the payment of these expenses. It was understood by the family that this was done in order to protect the Brimley House from the potential repercussion of Paul’s substance abuse problems.

Mary died on March 23, 2013, leaving her Estate to John, who at the time suffered from dementia. Shortly thereafter, Gail MacDonald (“Gail”) and Violet Cooper (“Violet”), Paul’s sisters, who were managing John’s affairs, realized that Paul stopped making regular payments to their parents towards the Brimley House and offered to have the Brimley House transferred to Paul, immediately. Importantly, this letter was written well before the explosion giving rise to the litigation, took place.

John died on December 31, 2014, leaving his Estate to Gail, Violet and Paul, equally. Gail was named as the Estate Trustee of John’s Estate. Before Paul’s death, Gail, through her counsel, and Paul, through his counsel, were engaged in settlement negotiations with respect to the Brimley House. The draft minutes of settlement exchanged included the following: “AND WHEREAS Mr. Zigomanis asserts that the Brimley Road property was transferred to the Deceased to be held in trust for the benefit of Mr. Zigomanis”. The Court held that this particular piece of evidence was indicative of the fact that it was always understood by the family that Paul was the beneficial owner of the Brimley House.

Paul died intestate and he did not have a spouse or any children. His beneficiaries were Gail and Violet, and the sole beneficiaries of his Estate.

Analysis and Decision

 

The Court was satisfied that, on a balance of probabilities, and in considering all of the evidence, John and Mary transferred both legal and beneficial title to the Brimley House to Paul in 1991, for valuable consideration. As such, no presumption of a resulting trust applied to this transaction.

The Court further held that the nominal consideration for which Paul transferred the Brimley House to John and Mary triggered the presumption of a resulting trust, such that the Court had to determine what Paul intended at the time of the 1996 transfer.

Based on the evidence considered, the Court found that the presumption of a resulting trust could not be rebutted, such that Paul was the true owner of the Brimley House, because John and Mary intended to transfer the legal title back to Paul, once they were reassured in his ability to control ownership. As a result, the Brimley House was ordered to be returned to the trustee of Paul’s Estate, effective January 1, 2015, being the following day after the death of John.

John’s Estate’s Liability in the Litigation Related to the Explosion

Following the Court’s finding regarding the ownership of the Brimley House, Gail, as trustee of John’s Estate brought a motion for an order that John’s Estate did not owe a duty of care to the Plaintiff and was not liable under the Occupiers’ Liability Act.

The Court held that a relationship between the Plaintiff, a passerby, and John’s Estate, a non-owner of property, is not one in which a duty of care had previously been recognized. The Court further held that although John had some involvement with the Brimley House, it would not be a sufficient basis to find a relationship of proximity with the Plaintiff that would give rise to a duty of care.

Based on the above findings, the Court held that John’s Estate did not owe a duty of care to the Plaintiff and there was no other legal or equitable basis to find that John’s Estate had an obligation to manage the Brimley House on behalf of or to supervise Paul’s behaviour, including any liability under the Occupiers’ Liability Act.

Thanks for reading!

Kira Domratchev

Find this blog interesting? Please consider these other related posts:

Legal vs. Beneficial Ownership – Not so easily distinguished?

The Beneficial Ownership of Shares in a Corporation

It All Comes Down to Intent

07 Jul

Supreme Court of Canada decisions in Kerr v. Baranow & Vanasse v. Seguin – Part 2 of 3

Hull & Hull LLP Common Law Spouses Tags: , , , , 0 Comments

In of Vanasse v. Seguin (the companion case to Kerr v. Baranow, heard at the same time) the common law couple was together for 12 years, from 1993 to 2005. For the first four years both parties pursued their careers. The common law wife (“wife”) then left her job to move to Halifax so the common law husband (“husband”) could pursue a business opportunity. Over the next three and a half years, their two children were born and the wife stayed at home to care for the family. The husband stepped down as CEO of the business he started and they returned to Ottawa in 1998, where they bought a home in both their names as joint tenants. In 2000, the husband received approximately $11 million for his shares in the business and from that time, until their separation in 2005, he participated more with the domestic chores.  

The trial judge found that there was no unjust enrichment for the first and last periods of the couple’s cohabitation, but held that the husband had been unjustly enriched at the wife’s expense during the period in which the children were born and was entitled to half of the value of the wealth the husband accumulated during the period of unjust enrichment, less her interest in the home and RRSPs in her name. 

The Ontario Court of Appeal set aside this award and directed that the proper approach to valuation was a quantum meruit calculation in which the value each party received from the other was assessed and set off, essentially treating the wife as an unpaid employee.

In the Vanasse appeal, the central problem was how to quantify a monetary award for unjust enrichment. The Supreme Court of Canada found that a monetary award for unjust enrichment need not, as a matter of principle, always be calculated on a fee-for-services basis, allowed the appeal, and restored the order of the trial judge.

Sharon Davis – Click here for more information on Sharon Davis

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