Analysis
The case concerned a dispute over ownership of a property. The property was registered in the name of the deceased, his sister (the plaintiff) and his wife (the defendant) as tenants in common. The plaintiff claimed that she was an owner of a one-half interest in the property based on an agreement entered into between her, the deceased and other family members at the time of purchase of the property in 1994. The defendant asserted that she and the deceased’s estate were solely the beneficial owners of the property, claiming that the reason the plaintiff was included as an owner on the title to the property was to assist the defendant and the deceased in obtaining a mortgage to finance the purchase of the property.
The property was purchased in 1994. There was a wide divergence in the evidence as to how the property purchase was financed. The plaintiff asserted that it was financed by $55,824 from the plaintiff (in large part from a gift to her from her sister, which was transferred to the defendant for the purchase from funds held in an account held jointly by the sister and her and her siblings’ father who had died in 1993), $28,321.25 from the deceased and the defendant and a mortgage of $224,000. The defendant’s evidence was that it was largely financed by her and the deceased.
The mortgage payments and other household expenses were initially shared by all family members residing in the property. From 1995 to 2003 the deceased and the defendant failed to contribute any funds to cover expenses. However, from 2003, the expenses were wholly paid for by the defendant and the deceased. The mortgage was paid off by the defendant in 2007 from proceeds derived from the life insurance policy taken out by the deceased.
There was conflicting evidence as to who occupied the property. It was accepted that the plaintiff and deceased’s mother, an aunt of the family and the defendant, deceased and their children occupied it immediately after purchase. The plaintiff also alleged that she and her husband occupied the property immediately after purchase. This was disputed by the defendant. The plaintiff and her husband briefly moved out of the property in October 1995, returning in February or March 1996 and moved out again in 2003. From 1995 to 2002 the deceased and defendant ceased to occupy the property.
A second mortgage on the property was approved after all three owners consented to and signed the mortgage documents but the proceeds of that mortgage were used for the sole benefit of the deceased and the defendant.
Held:
- 1) The defendant’s evidence lacked credibility, being completely inconsistent with that of others who gave evidence and documentary evidence. Considering all the evidence relating to the agreement among family members to purchase the property and regarding the assembly of funds to purchase the property, it was far more probable on the balance of probabilities that the evidence of the plaintiff and other family members represented the intention of the parties at the time; namely that the property was to be owned in equal shares by the plaintiff on the one hand and the deceased and defendant on the other.
- 2) The plaintiff’s case as to the finance of the purchase of the property was accepted.
- 3) As regards the sum transferred to the defendant by the sister of the plaintiff and deceased: though, as a general rule, where funds were deposited into a joint bank account there was a presumption of a resulting trust, where the account was held jointly by a father and minor child, the presumption of advancement operated instead in favour of the child. Accordingly the presumption of advancement applied to funds transferred into the joint account of the plaintiff and deceased’s father and their sister while the sister was a minor, and so these belonged to the sister in law and equity. Further, when the sister transferred those funds to the defendant to part-fund the purchase of the property, she was delivering a gift of that sum to the plaintiff.
- 4) The occupation of the home after its purchase was, at best, of minimal if any assistance in determining ownership.
- 5) The doctrine of indefeasibility of title places the burden upon the person challenging the state of the title to show that the registered owner holds his interest or a portion thereof in trust for another. However, there were equitable principles which could challenge indefeasibility. The statutory presumption could be displaced by the presumption of advancement or the enforcement of an agreement between the parties in order to prevent unjust enrichment if the face of a title is upheld or the presumption of resulting trust.
- 6) A party can no longer rely solely on the common intention resulting trust as the basis for rebutting the statutory presumption in cases where individuals enter into joint equity or co-investment ventures. Even if the court was wrong to find that the common intention resulting trust was not discredited as it pertains to the relationship between these parties, it did not impact on the ultimate conclusion in this case, as the court had decided that there was an agreement between the plaintiff and the deceased that they were contributing to the purchase of the property as co-owners.
- 7) To prove unjust enrichment the party claiming it must advance evidence to demonstrate (i) an enrichment, (ii) a corresponding deprivation and (iii) the absence of any juristic reason for the enrichment (in other words that there was no reason in law or justice for the retention of that benefit by the party benefitting). In the present case, if the state of the title was upheld the defendant would be enriched and the plaintiff would suffer a corresponding deprivation.
- 8) In the present case, the statutory presumption had been successfully rebutted by the plaintiff as there would be an unjust enrichment if the title were upheld. The plaintiff was entitled to an equitable 50% interest in the property. Further, as regards the second mortgage, there would be a further unjust enrichment to the defendant if the plaintiff’s 50% interest was to be reduced through the repayment of the amount owing.
9) The appropriate remedy was the remedial constructive trust entitling the plaintiff to have her 50% interest registered on the title, with her interest to be reduced by whatever amount remained outstanding on the second mortgage.
Continue reading "Frame v Rai [2012] BCSC 1876"