Walraven v. Tanne, 2011 ABQB 210

Court of Queen ’ s Bench of Alberta Citation: Walraven v. Tanne, 2011 ABQB 210 Date: 20110329 Docket: 9901 14430 Registry: Calgary Between: Corey Walraven Plaintiff - and - Victoria Tanne Defendant And Between: Corey Walraven Plaintiff by Counterclaim (Defendant) - and - Victoria Tanne Defendant by Counterclaim (Plaintiff) COREY WALRAVEN also known as JOHN C. WALRAVEN also known as CORNELIUS WALRAVEN also known as CORNELIUS JOHN WALRAVEN , operating as AIRPORT AUTO SALES Defendant by Counterclaim

Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. __________________________________________________ Memorandum of Decision of the Honourable Madam Justice S.L.

Hunt McDonald _______________________________________________________ Introduction and Pleadings [ 1 ] Corey Walraven (“Corey”) claims the sum of $52,000 from Victoria Tanne (“Victoria”) for money Corey alleges is owed to him for the purchase of property in the City of Calgary, municipally described as [...] Harvest Oak Rise N.E., Calgary, Alberta which is registered in the name of Victoria.

The legal description of the Harvest Hills home is Lot [...], Block 51, Plan 9712316, excepting thereout all mines and minerals. [ 2 ] In addition, Corey seeks judgment for one half of any remaining equity in the property once Victoria’s initial deposit is taken into consideration. [ 3 ] The property was purchased on June 22, 1998.

On September 4, 1999 the Defendant locked the Plaintiff out of the property. [ 4 ] In addition, in the Statement of Claim, Corey claims for the value of chattels which he alleges remain in the Harvest Hills home. [ 5 ] The essence of Corey’s lawsuit is his claim for monies he alleges he contributed or paid towards the purchase of the Harvest Hills home, namely a deposit of $9,000 plus a further sum of $42,006.50 for the cash to close. [ 6 ] Corey filed his Statement of Claim on September 10, 1999 claiming $52,000 as his interest in the Harvest Hills home prior to his request for an equal distribution of the remaining equity in the property once it is sold. [ 7 ] Victoria states that she is the sole legal, equitable and beneficial owner of the Harvest Hills home and denies any verbal agreement was discussed for the division of any equity between the parties. [ 8 ] Victoria admits that the parties maintained a residence at the Harvest Hills home until August 1999, at which time Victoria locked Corey out and did not allow him entry because of his physical, emotional and psychological abuse and manipulation of her.

[ 9 ] In the Counterclaim Victoria claims against the Defendant Corey Walraven, also known as Cornelius John Walraven, also known as John C.

Walraven and his son Randy Walraven as well as Airport Auto Sales and Airport Auto Sales Ltd. for proceeds of a used car business operated through the efforts and resources of Victoria during the time they co-habitated from June 15, 1991 to approximately August 19, 1991 at the City of Airdrie and then subsequently at the Harvest Hills home. [ 10 ] Victoria alleges she transferred her financial resources to Corey and Airport Auto Sales and committed her time and energy into the business and into incurring significant debt and liability for the sole and exclusive benefit of Corey and the business, without any financial compensation or remuneration. [ 11 ] As a result of these and other facts Victoria seeks 50% or some higher amount of the assets accumulated during the course of the relationship. [ 12 ] The claims of Victoria in the Counterclaim are made on the basis of quantum meruit , the equitable doctrine of tracing, fraud by Corey and Randy Walraven in using Victoria’s name on negotiable instruments, business documents and licensing forms and contracts without Victoria’s knowledge for Corey and Randy Walraven’s financial gain, for the value of property removed from her Arizona home, for repairs to her Arizona home due to the break in of Corey for nuisance, harassment, and punitive damages. [ 13 ] Victoria claims that as a result of the trespass, negligence, nuisance and harassment by Corey, she has suffered and continues to suffer ongoing loss of use and enjoyment of her property, mental distress and suffering, fear and apprehension for her safety, expenses for security and other special damages. [ 14 ] Her claim against Corey in the Counterclaim is framed on the basis of damages for unjust enrichment, constructive trust, special and punitive damages, and compensatory support. [ 15 ] Victoria also requests an Order directing the Registrar for the South Alberta Land Registration District to discharge the Certificate of Lis Pendens registered by Corey as instrument number 991266671 against her Harvest Hills home.

Facts [ 16 ] Corey and Victoria lived together for a period of eight years from 1991 to 1999. [ 17 ] Upon meeting, Victoria initially took a two year disability leave-of-absence based on health reasons from her job as a school teacher in Lethbridge to cohabit with Corey. [ 18 ] One year later, Corey took early retirement from his land agent job he held with the Alberta Ministry of Transportation and received a $31,000 retiring allowance. [ 19 ] At the commencement of cohabitation, Victoria owned a condominium in Lethbridge which she sold and moved in with Corey to his Airdrie premises.

Victoria had approximately $8,000 savings and transferred the proceeds of the sale of her Lethbridge condo into a business called Alberta Auto Sales (“AAS”) which she and Corey commenced. [ 20 ] Both parties had previously been bankrupt. Victoria was discharged on October 31, 1990 and Corey was discharged from his first bankruptcy in 1979. [ 21 ] At the time the parties commenced cohabitation in 1991, Corey had just paid the sum of $32,000 to his wife Connie to buy out her interest in the Airdrie property. Corey and Connie did not divorce.

At that time Corey’s equity in the Airdrie property was approximately $45,000 before granting his father a mortgage against that property in the amount of $35,000.

[ 22 ] The parties set up house together and a budget was calculated wherein each agreed to contribute funds to the household budget. I am satisfied that Victoria paid the sum of $800 monthly towards the budgeted expenses. Corey paid the mortgage, by pre- authorized debit from his bank account but for the most part did not make regular monthly deposits to a joint bank account towards expenses as agreed, other than paying property taxes and utility payments. [ 23 ] After her two year disability leave in September 1993, Victoria returned to her teaching position in Lethbridge.

Two months later she was able to take early retirement due to a program being offered by the Lethbridge School Board. She resigned from teaching on November 29, 1993, and received a retiring allowance of $16,000 which she invested into AAS. [ 24 ] When Victoria took early retirement from the Lethbridge School Board, Corey convinced her to buy back her maximum pension amount.

A sum of $16,800 was paid by taking a loan in the AAS’s name. [ 25 ] Corey had a hobby during the time of his full-time employment of buying used cars at auctions, doing some minor repairs and clean-up, and reselling the vehicles. [ 26 ] Corey assigned into bankruptcy on January 16, 1992. Subsequently, his income tax returns were filed by his trustee in bankruptcy. He paid funds to the trustee in order to attempt to obtain a discharge from bankruptcy. [ 27 ] Alberta Auto Sales was registered as a trade name in Victoria’s name in the Alberta Corporate registry on November 20, 1992.

Corey’s name did not appear on the documentation. [ 28 ] Corey’s name was not registered in the Corporate Records as a principal of AAS, but he was a signing officer in respect of cheques. [ 29 ] The business records of AAS shows Victoria made loans to the business. [ 30 ] At trial there was conflicting evidence presented that Corey had income from an appraisal undertaking with his former employer of almost $33,000. The income was shown in the books of AAS as loans from Victoria, although Corey testified it was actually income he earned which he did not declare to his trustee in bankruptcy.

Victoria denies Corey’s version of the origin for these loans. [ 31 ] Victoria says she signed a Partnership Agreement in blank which was subsequently filled out and registered by Corey at the Alberta Corporate Registry on May 7, 1993. She denies knowing she was signing a Partnership Agreement - she says Corey told her that she needed to sign some documents for the business. [ 32 ] During the time that Corey was in bankruptcy he arranged, with Victoria’s consent, for H&R Block to prepare income tax returns for the years 1992 to 1996 on Victoria’s behalf. Any income of AAS was shown as Victoria’s income.

Business losses were claimed annually. [ 33 ] Victoria invested the tax refunds received from Canada Revenue agency for the losses she declared in the operation of AAS back into the business. The refund amounts were $7,441.93 for the 1993 tax year, $9,474.86 for 1994, $6,700.32 for 1995 and $4,548.51 for 1996 and $1,110.53 for 1997 for a total of $29,276.15. [ 34 ] During these years the parties personal relationship continued. They lived in Airdrie mostly during the warmer months but then went south to places such as Utah, California, North Carolina and Arizona for portions of the winter.

[ 35 ] In 1994, Victoria purchased a trailer in Arizona. It was registered in her name. She paid $1,000 from her personal funds and funded the balance of $4,100 by taking funds from an AAS bank account. [ 36 ] The parties carried on their used car business out of a car lot in Calgary. Corey’s son Randy Walraven also participated in this venture, particularly during times when the parties were traveling down south. [ 37 ] Once the trailer was purchased in Arizona, the parties spent most of their time during the Canadian cold weather at their trailer in Phoenix.

It was during this time Corey realized he could make a better profit selling used cars in Arizona. In 1995 the parties closed their Calgary used car business and concentrated solely on selling cars in Arizona. Corey purchased the cars from auctions in Alberta and Ontario and then transported the vehicles to Arizona for re-sale. Proceeds from sales were deposited into a bank account in Phoenix which was in Corey’s name. [ 38 ] When Corey’s income tax returns were filed by his bankruptcy trustee, he only declared $1,018.95 per month received from his work pension and disability pension as income.

No income was shown in his Income Tax Returns for the AAS operation which he was carrying on in Alberta and then subsequently in Arizona. [ 39 ] In 1997, Corey decided to sell his Airdrie home. Cash to close of $89,136.09 was received by Corey after the mortgage was discharged. Of those funds, Corey immediately paid a $9,000 deposit towards the purchase of the Harvest Hills home, and $13,925 to his bankruptcy trustee to try to make arrangements for a release.

He transferred the balance of funds to his Phoenix bank account which the parties used for AAS transactions. [ 40 ] Both parties signed an Offer to Purchase for a Harvest Hills home in November 1997. It was not to be ready for occupancy until sometime in 1998. [ 41 ] Corey paid a deposit of $9,000 for the Harvest Hills home from his Airdrie home sale proceeds. In addition, Victoria paid a $1,000 deposit from her personal funds. [ 42 ] In 1977 Victoria made an application to the Hong Kong Bank for pre-approval for a mortgage for the Harvest Hills home.

She was turned down on the basis of outstanding VISA accounts in her name. It turned out that Corey’s son, Randy Walraven, had obtained three credit cards in Victoria’s name fraudulently. Victoria had no knowledge of these accounts.

The outstanding amounts were eventually reversed by the credit card companies. [ 43 ] In February 1998, the parties separated for a period of three months but then resumed co-habitation. [ 44 ] Corey was finally discharged from bankruptcy on March 11, 1998. [ 45 ] After being released from bankruptcy, Corey hired a CGA, Max Fiander, to prepare income tax returns on behalf of both parties for the 1998 year. The income tax return for that year showed AAS business income totaling $35,394.91.

Each party declared one half of the income, namely $17,697.45, as their portion of income from the AAS used car business in their individual income tax returns. [ 46 ] This was the first year that the parties shared in the income from AAS. Previously, all income (or business losses) had been declared on Victoria’s individual tax returns. [ 47 ] During this period, Victoria was able to get approval for mortgage financing from Hong Kong Bank for the Harvest Hills home.

The approval was based on her personal income, as well as showing the income from AAS. [ 48 ] As Corey was a recently discharged bankrupt, the Hong Kong Bank would not allow his name to appear on title for purposes

of the mortgage financing.

Although the Offer to Purchase had been signed in both names, the parties instructed that title was to be registered in the name of Victoria solely. [ 49 ] The cash to close amount of $42,006.50 was paid on June 26, 1998 by the parties arranging for a transfer of funds from an Arizona bank account to a Calgary bank account (both in the name of Corey Walraven) so that a certified cheque could be provided to Jager Homes at the closing inspection. [ 50 ] It was also in this year that it came to the parties attention that Revenue Canada was conducting a re-assessment of the business expenses claimed by the parties in respect of the AAS used car business commencing from the year 1992. [ 51 ] Officials from Revenue Canada attended at the new Harvest Hills home to have a meeting with both the parties to discuss business expenses and to try and get further particulars.

Victoria gave evidence Corey instructed her he would do all the talking.

It was at that meeting that Corey indicated that he had lost his business records of AAS during the move from the Airdrie to the Harvest Hills home - he said that the business records were all in a box which had fallen off the truck during the move. [ 52 ] Victoria gave evidence that after the visit from Revenue Canada officials, she later went upstairs and found Corey in the office of their home tearing documents up and placing them in a garbage bag. [ 53 ] It appears in 1998 that Victoria was getting somewhat disenchanted with her relationship with Corey.

She gave evidence that when they met she thought Corey was an honest, astute and knowledgeable businessman. By 1998 she said she was brain-washed and felt afraid of Corey and further that Corey caused her great damage both morally and financially. She said she was forced by Corey to sign documents in anger and under duress. [ 54 ] In contrast, Corey gave evidence that the parties were “happy, happy, happy”, during their relationship and were totally in love, and that “everything they did, they did for us”. [ 55 ] Victoria also gave extensive evidence of Corey’s gambling addiction.

She drew attention to bank accounts that indicated that there were substantial cash withdrawals taken out at various gambling establishments located between Phoenix and Calgary along the route which they travelled several times a year. [ 56 ] Upon finding out that Corey had never divorced and being tired of all Corey’s “pocket to pocket” transactions, Victoria locked Corey out of the Harvest Hills home in August 1999 and two weeks later out of the trailer registered in her name in Arizona. [ 57 ] At the time of the break down of the relationship there were negotiations conducted between their lawyers as how to sort out various assets and liabilities.

Loans had been taken out by Victoria to provide funding to run the AAS used car business, particularly during the last couple of years of the relationship. Accordingly, there were extensive discussions between their lawyers as to selling off cars which had been purchased in order to pay off debts to the finance companies. There was also contention over which party owned various pieces of furniture that was purchased during the course of their relationship both in Calgary and Arizona.

A Consent Restraining Order was put in place in May 23, 2000 as Victoria felt she was being stalked by Corey and wanted to put an end to such encounters. [ 58 ] At trial, the parties’ accountant Max Fiander gave evidence of attempting to make sense of the ownership of each of the parties in the AAS used car business. He notably said that in his opinion there was more money going out of the used car business then was ever coming in and it was his view that revenue was under reported.

Further, he could not ascertain the source of funds to purchase the car inventory, nor were proper records kept of purchase amounts and subsequent sale amounts. [ 59 ] It was his view that Corey viewed AAS as his business but that the business had been put into Victoria’s name initially, and then in both names as a 50/50 split in order to optimize the tax situation between them once Corey had been discharged from bankruptcy. Previous to that, any business income or losses had been reported solely in the name of Victoria.

[ 60 ] The denouement of the reassessment by Revenue Canada was that initially a sum of $41,000 approximately was declared to be owing by Victoria to Revenue Canada for income tax plus penalties, interest, understated sales revenue and overstated business deductions. Victoria’s son James Tanne negotiated with Revenue Canada on Victoria’s behalf. On appeal to the Tax Court of Canada from the reassessment of Revenue Canada under the Income Tax Act for 2005, Victoria was allowed to claim $133,271.35 as a business loss deduction against her 2005 income. Accordingly, the sum owing to Revenue Canada was reduced.

Justice Pizzitelli of the Tax Court of Canada stated in his Judgment dated April 22, 2010 that he considered that $137,271.35 resulted from a loss of trading assets and income from AAS through theft, defalcation or embezzlement. [ 61 ] Victoria instituted a lawsuit against Corey in Arizona claiming damages for the goods removed from the trailer by Corey after she had the locks changed. Previous to that time, Corey had assured Victoria that he had paid all expenses in respect of rent and taxes when in fact, he had not. Eventually, that property went into foreclosure and was lost.

As Victoria had an asthma attack, she was not able to attend the Arizona court proceedings. Accordingly, Corey was able to get the claim dismissed and in fact has a $10,000 US cost judgment against Victoria in respect of the Arizona proceedings. Issues [ 62 ] The issues arising from these facts are as follows:

a) Is Corey entitled to an interest in the Harvest Hills house on the basis of the principles of resulting trust or constructive trust?

b) Has Victoria rebutted the presumption of resulting trust in favor of Corey?

c) Was Corey successful in tracing funds used for the deposit and cash to close on the Harvest Hills home?

d) Alternatively, is Corey entitled to an interest in the Harvest Hills home based on the principles of unjust enrichment?

e) If Corey is determined to have an interest in the Harvest Hills home, what is the appropriate date to determine such valuation given that the case came to trial eleven years after he filed the initial Statement of Claim?

f) Is either party entitled to an equitable remedy based on illegality or fraud?

g) What was the intention of the parties when the Harvest Hills home was purchased? Did Corey intend to gift any monies to Victoria that he provided towards the deposit or cash to close?

h) Did Victoria ever agree that she was holding a one-half interest in the Harvest Hills home in trust for Corey?

i) Is Victoria entitled to damages for her Counterclaim against Corey applying the principles of unjust enrichment based on her investment in AAS?

j) Is Victoria entitled to a judgment for damages against Corey as he took advantage of her good name and credit rating?

k) Is Victoria entitled to an Order removing Corey’s Certificate of Lis Pendens registered against title to the Harvest Hills home?

Analysis [ 63 ] In order to come to a decision on the issues, I am called upon to scrutinize both parties’ conduct in their nine years of co- habitation and dealings. [ 64 ] It is my finding that both parties enjoyed their “lifestyle” while they were together. They lived in Alberta for six months during approximately May to October and then during the cold months were snowbirds traveling to Arizona or other locations south.

In addition to selling used vehicles they gambled, shopped and jointly wrote off many expenses they considered business expenses during the time when Victoria was either the sole proprietor or in a partnership with Corey in the used car business.

Revenue Canada determined that many deductions taken were not legitimate for income tax purposes. [ 65 ] I note that full copies of the tax returns that might assist in making some appropriate determination of exactly what funds were used to pay the cash to close on the Harvest Hills home were never disclosed and thus not available for the court to take into consideration.

The AAS proprietorship records were lost either by falling off a truck as Corey opined, or by one or other party either not keeping proper records or destroying evidence which they did not want to fall into the hands of Revenue Canada. [ 66 ] Certainly, Corey exhibited more fraudulent activity. Some of the things that I would note on that account are as follows:

a) When Corey placed a mortgage on his Airdrie home in favor of National Trust and his father to buy out Connie’s interest, he improperly signed a Dower Affidavit indicating that his wife had never lived on the premises since they were married. That was a false statement as Corey and Connie were still married and had certainly both lived together in the Airdrie home.

b) There was evidence that Corey had an Airdrie property known as 124 Ridgegate Way in his name as his son Randy could not qualify for a mortgage. That transaction was not noted in any property holdings required to be disclosed to the bankruptcy trustee when Corey declared bankruptcy on January 16, 1992.

c) By his own admission, Corey earned approximately $33,000 in income for appraisals from Alberta Transportation subsequent to his retirement which he did not declare. He admitted the funds were shown as a loan from Victoria in the books of AAS. (Victoria denies this allegation - she says the loan funds came from her resources.)

d) For the period 1992 to 1994 Corey was charged with 25 counts and pleaded guilty to five counts for criminal charges under the Weights and Measures Act for rolling back odometer readings in vehicles he purchased and re-sold.

e) Corey never showed any income in the 1992 to 1998 tax returns during his second bankruptcy from the sale of used cars either in Calgary or in Arizona.

f) Bank accounts were arranged by Corey in permutations of his first, middle and last names both in Calgary and Phoenix. Names used by Corey as the account holder were Cornelius Walraven, John C. Walraven, J. Cornelius Walraven - one would suspect so as to not allow any revenue authority to determine what funds Corey had at his disposal.

g) Corey’s son Randy signed or forged Victoria’s name on many cheques while he was operating the Calgary business while the parties were away in Arizona. It seems this practice was to some extent condoned by both parties, for appropriate business expenses, but some funds were converted by Randy for personal use.

h) Victoria gave evidence that Corey always kept $10,000 to $20,000 US hidden in the laundry room ceiling in their trailer in Arizona. This was during the time that Corey was in bankruptcy and declaring in income tax returns prepared by his bankruptcy trustee that his only income was derived from his pension and disability benefits.

i) Max Fiander, the CGA hired by Corey to do the parties income tax returns in 1998 indicated that notwithstanding his best efforts, he could not identify the source of some payments and his best sense was that there was more money going out than was ever shown as revenue coming in to the credit of AAS. He could never ascertain the source of funds used to purchase car inventory which the parties then sold.

j) Corey opened bank accounts in his name solely unknown to Victoria wherein he placed sale proceeds from the used car business. These facts only came to light after disclosure was ordered. [ 67 ] In respect of Victoria Tanne, I note the following:

a) She seemed to enjoy living the “lifestyle” while everything was going fine until the forged credit card incident and until there was a hint that Revenue Canada was auditing the AAS business expenses.

b) She signed her income tax returns prepared by H&R Block at Corey’s instructions which claimed business deductions, many of which were not for legitimate income tax purposes.

c) She did not move quickly to get out of the relationship once: (

i) she didn’t accept Corey’s story that all the business expense records of AAS were located in a box which had fallen off the truck during their move from the Airdrie house; and (ii) she determined that credit card expenses from Visa accounts resulted from Corey’s son Randy forging her name on credit applications. [ 68 ] In my view, there was certainly discreditable conduct by both parties, although Corey displayed more reprehensible conduct throughout the relationship. [ 69 ] One question that arises in this situation is the necessity for the court to determine not only the relative value of each party’s interest in the Harvest Hills home, but also to determine the reason for the eleven year delay in this matter coming before this court as there has been a significant increase in the value of the Harvest Hills home in that intervening period of time. [ 70 ] Max Fiander, the CGA hired to do the parties’ income tax returns in 1998 was not in a position to determine the value that each party allegedly owned in the AAS partnership.

Certainly, the Court is not in a better position than Max Fiander to make such a determination. [ 71 ] Corey’s attempted tracing of funds from depositing his net Airdrie house sale proceeds in a Calgary bank account to the transfer of funds from an Arizona bank account back to Calgary to provide the cash to close the Harvest Hills home purchase failed to convince the Court that the funds came solely from his resources. [ 72 ] The monies transferred to the bank account in Calgary to pay the $42,000 cash to close were proceeds from the endeavors of running the AAS used car business in Arizona.

The Arizona bank account was used by the parties for the used car business, of which Victoria had at least a 50% interest, or the entire interest if one relies on the income tax return information for the parties prior to 1998. [ 73 ] The Harvest Hills home is currently registered in the name of Victoria. There is a first mortgage registered to Hong Kong Bank of Canada, and subsequent to that mortgage Corey filed a Certificate of Lis Pendens on September 14, 1999 as Instrument no. 991266671. Subsequent to the Lis Pendens, the balance of any equity has been mortgaged by Victoria in favour of members of her family.

[ 74 ] In Alberta, spouses are generally held to be entitled to any increase in value of matrimonial assets until the divorce occurs. Of course in this situation, the parties had never married. [ 75 ] In Alberta, common law spouses do not enjoy the same property rights as married spouses.

In most instances, courts have felt that presumption of advancement does not apply to unmarried parties. [ 76 ] The parties carried on the used car business with the purpose of making money, but at the same time reporting as little income as possible using the device of writing off personal expenses as business expenses. [ 77 ] Now that their relationship has unraveled, they come to this Court seeking an equitable remedy.

How ironic. [ 78 ] Does the discreditable conduct of either party disentitle them to the equitable remedies they claim? [ 79 ] There were many inappropriate dealings by the parties in respect of income tax reporting. Courts do no rush to assist parties by imposing equitable remedies when they are not blameless.

Trust Claims [ 80 ] In the claim and counter-claim, the parties ask the Court to impose a resulting trust or alternatively a constructive trust due to alleged unjust enrichment. [ 81 ] There are two sources of a trust obligation, first the intention of the property owners to create a trust and second the imposition of trust on persons: D.W.M. Waters, Waters’ Law of Trusts in Canada , 3 rd ed. (Toronto: Thomson Carswell, 2005) at p. 454. Resulting Trusts [ 82 ] A resulting trust is when one party holds legal title to property while the de facto title is shared by others.

A resulting trust is identified by following title. It can occur when two parties jointly purchase a property but the title is held by only one party. Another situation where a resulting trust might apply is when an express trust (such as a will) has failed: CED Trusts IV.1, § 138. [ 83 ] The topic of resulting trust is discussed at page 414 of Waters’.

It is said “the presumption of resulting trust, like the presumption of advancement, is a reflection of the fact that if one person asserts a proprietary interest in an asset the title to which is in another, the claimant must ordinarily show it was intended he should have that interest. The constructive trust aside, intention is the key requirement in the acquisition of a proprietary interest.” [ 84 ] A resulting trust can come from either the intentions of the parties or imposition.

In contrast, a constructive trust can only come from the imposition of a trust on the parties. [ 85 ] The intention of the parties at the time of taking title to the Harvest Hills home is not clear. Certainly there was no agreement that Victoria was holding half of the property in trust for Corey. [ 86 ] As said in Waters’ at page 400, if the Plaintiff is fraudulent himself, that must be the end of the matter, unless the courts are prepared to break with principle, weigh the degree of deceitful behaviour in each, and award the property to the person who is less blameworthy.

[87] In this case, the burden is upon Victoria to prove that a gift was intended. Quoting from pages 416 and 417 of Waters’ theproblem of intention becomes more difficult if the property is new to both parties and it is put in the name of one party (Victoria) but theother party (Corey) claims he contributed to the acquisition and is entitled to his share in the property. [88] There is now a question of whether there is any such intent.

The parties may in fact have agreed to such a thing, but, if there isno evidence of an express intent and nothing conclusive can be implied from their words and conduct, it is first a question of law as towhether the claimants’ acts can constitute a contribution which would lead to a share in the property acquired under a resulting trust. Ifthe act passes that test, the next question is whether the parties in fact agreed that should such acts should confer upon the claimant ashare - an equitable proprietary interest - in the property.

If they did so agree, the final question is; In what proportion the parties agreedto divide the property between themselves? [89] I find that Victoria has not proven that a gift was intended. Corey’s potential success turns on the willingness of this Court todiscover an implied intent that he is entitled to a half interest in the Harvest Hills home as Victoria has been unjustly enriched by hiscontribution of funds. Unjust Enrichment [90] Unjust enrichment is defined as profit acquired through wrongdoing: Waters at p.507. In Becker v.

Pettkus, (SCC), [1980] 2S.C.R. 834 this doctrine is used in property disputes following the breakdown of a cohabitational relationship. [91] The Supreme Court of Canada defined the test for unjust enrichment in Becker v. Pettkus as:

(1) Enrichment of the defendant;

(2) A corresponding deprivation of the plaintiff; and

(3) Absence of any juristic reason for the enrichment. [92] The Supreme Court of Canada recently considered the application of resulting trusts and unjust enrichment in the context offormer common law relationships in Kerr v. Baranow, 2011 SCC 10. I recognize that this case was decided after written and oralarguments were presented by counsel. However, the Kerr decision is relevant to the present case and builds upon earlier authorities. InKerr, the Supreme Court considered two appeals by former common law partners.

Both appeals involved claims of unjust enrichment forwealth accumulated during the relationships. [93] Corey and Victoria signed an Offer to Purchase the Harvest Hills home in November 1997. Corey was discharged frombankruptcy in March 1998. The bank providing the mortgage for the Harvest Hills home disallowed a request that Corey’s name beplaced on title since he was a recently discharged bankrupt. Thus Victoria’s name is solely on title for the Harvest Hills home. Coreyprovided $9,000 as a deposit for the house.

AAS funds totaling approximately $42,000 were advanced to pay the cash to close. [94] I will now discuss each requirement for unjust enrichment in turn.

(1) Enrichment of the Defendant [95] The Supreme Court affirmed a straightforward economic approach to enrichment and corresponding deprivation: Kerr at para.37 [96] In Becker v. Pettkus the parties had cohabitated for 19 years during which Plaintiff Becker made a substantial contribution to

Defendant Pettkus’ beekeeping business. The Supreme Court found that the Pettkus was enriched by Becker’s labour. [97] A threshold requirement that the plaintiff has made a substantial contribution to the asset claimed was added in Peter v.Beblow, (SCC), [1993] 1 S.C.R. 980. Peter cohabitated with Beblow for 12 years and did domestic work and somehome improvement without compensation. [98] I find that Victoria was enriched in receiving the benefit of $9,000 from the proceeds from the sale of Corey’s Airdrie houseas a deposit towards the home that she acquired in Harvest Hills. Victoria was also enriched by Corey’s portion of the funds that camefrom the AAS business.

(2) A Corresponding Deprivation of the Plaintiff [99] In Sorochan v. Sorochan, (SCC), [1986] 2 S.C.R. 38 the plaintiff lived and worked on the defendant’s farmfor 42 years without remuneration. The Supreme court held at p. 46 that a casual connection, or a sufficient nexus, is required betweenthe plaintiff’s deprivation and the property in question. A similar finding was made for the plaintiff’s 19 years of unpaid labour in Beckerv. Pettkus at p. 849.

(3) Absence of any Juristic Reason for Enrichment [100] A Court’s analysis of juristic reasons should first consider established categories and second the reasonable expectations of theparties. At the second stage, the Court can consider the legitimate expectations of the parties as well as moral and policy-based reasonswhy a particular enrichment is unjust: Kerr at paras. 41-44. [101] In Becker v.

Pettkus the lack of a statutory scheme requiring the equal division assets acquired by common law spouses did notprevent a finding of unjust enrichment. [102] The categories of “juristic reasons” were defined in Garland v.

Consumer Gas Company 2004 SCC 25, [2004] 1 S.C.R. 629 atpara. 44 as: The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), adonative intent (Peter, supra), and other valid common law, equitable or statutory obligations (Peter, supra). [103] I find that none of the established categories apply to either the deposit or AAS funds. [104] At the second stage of the juristic reason analysis from Kerr, the expectations of the parties and policy-based reasons areconsidered.

Victoria’s counsel cites Garland as a basis upon which to deny Corey an interest in the Harvest Hills home. Garlanddiscusses the necessity for the Court to closely examine the actions of a party claiming restitution, especially in light of their own illegalor unethical conduct.

The Court determined that it is contrary in both law and equity to allow a party to retain or obtain a benefit from itsown illegal acts. [105] I conclude that there is no juristic reasons to deny Corey’s claim to the $9,00 deposit paid towards the Harvest Hills home. [106] However, Corey admitted to committing illegal acts related to the AAS used car business and his illegal acts have beenconsistently paid for by Victoria’s assets, income and efforts. Consideration relevant to the second stage of the juristic reason inquiryinclude:

(

a) The Tax Court of Canada’s finding that Victoria’s losses of $137,271.35 resulted from the loss of trading assets through theft,defalcation or embezzlement from the income of AAS. (

b) Victoria ended up in a significantly detrimental financial situation with Revenue Canada due to income from the used carbusiness being declared in her name alone in Income Tax filings during the period of Corey’s second bankruptcy. (

c) Corey provided insufficient evidence that investment of the AAS funds in question to pay the cash to close were solely derivedfrom him. (

d) The eleven year lag in time from the filing of the Statement of Claim to when this case was heard at trial was not explained byCorey. As he is the Plaintiff, I find he did not pursue his claim in a timely manner which only exacerbated Victoria’s involvement withRevenue Canada. [107] Waters’ commented on delay by a Plaintiff in an equitable claim at p. 1255: By and large, when delay is in question the court is concerned with the justice of giving the remedy sought as between the parties.

If theclaimant fully realized the facts, and had simply done nothing about them, being fully able to take action, it may be hard on thedefendant at some very much later date to require him to compensate the claimant. [108] In Lawrence v. Lindsey, (AB KB), 38 A.R. 462 a trust claim was launched eighteen years after thedissolution of a common law relationship. During this time, all but five acres of the original twenty acre property in question wassubdivided and sold. The Defendant died before the claim came to trial.

The Court held that the plaintiff’s unreasonable delay prejudicedthe defendant and dismissed the claim. [109] Similarly, Victoria’s financial matters have been prejudiced by Corey’s delay in advancing this matter. [110] Under the second stage of the juristic reason analysis from Kerr, I find that Corey’s illegal and unethical conduct is sufficient todeny his claim to any AAS funds. Corey could not reasonably expect to maintain an interest in these funds after admitting to illegal actsagainst Victoria related to the joint business from which the funds were derived.

Furthermore, there are sufficient moral and policy-basedreasons to deny such a claim. As put by D.W.M. Waters, the Constructive Trust (London: The Athlone Press, 1964) at p. 7: Equity imposes trust obligations upon the party who has acquired title to something to which in fairness he is not entitled as againstanother [...] [111] Corey’s illegal acts constitute a juristic reason to deny his claim to any AAS funds that he did not fairly receive.

Remedies [112] Corey is entitled to be remunerated for his $9,000 deposit for the Harvest Hills home based on the doctrine of unjustenrichment. [113] A constructive trust and a monetary award are alternative remedies for unjust enrichment. [114] In Kerr the Supreme Court upheld the holding from Peter v. Beblow that a constructive trust should only be considered when amonetary award is inappropriate or insufficient. This could be due to the limited probability of recovery or a special reason to grant

recognition of property rights. [ 115 ] In my view, it is not appropriate for this court to impose a constructive trust when it is able to award monetary damages to compensate Corey for the deposit. [ 116 ] Accordingly, it is held by this Court that Corey Walraven is entitled to judgment against Victoria Tanne for $9,000. [ 117 ] I order the Certificate of Lis Pendens that currently is registered as Instrument 99126661 against the Harvest Hills home be discharged pursuant to s. 152 (

a) of the Land Titles Act , RSA 2000 c. L-4 notwithstanding s.191(1) of the Act : 395432 Alta Ltd. v. Broadcast Hill Holdings Ltd., 2003 ABCA 96 and 327 A.R. 117. [ 118 ] All other claims and counterclaims by the parties are hereby dismissed as insufficient evidence was adduced to support the claims. [ 119 ] Costs shall be spoken to at a future date as arranged by Counsel. S.L. Hunt McDonald J.C.Q.B.A. Heard on the 9 th day of September, 2010. Dated at the City of Calgary, Alberta this 29th day of March, 2011. Appearances: Ben R. Plumer

for the Plaintiff Ruellen Forsyth-Nicholson for the Defendant