West v West Estate, 2016 ABQB 447

Court of Queen ’ s Bench of Alberta Citation: West v West Estate, 2016 ABQB 447 Date: 20160812 Docket: 1401 12101 Registry: Calgary Between: Brian West Applicant - and - The Estate of Donald Thompson West by its Executors Laura West, Craig West and Brian West, and Craig West and Laura West in Their Individual Capacities Respondents Corrected judgment: A corrigendum was issued on August 29, 2016; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice B.A.

Millar _______________________________________________________ I. Introduction [ 1 ] By Order of case management Justice C.M. Jones, this matter was directed to a two day oral hearing for: (

i) Entitlement to ownership of property located at 2417 – 25 th Street S.W., Calgary, Alberta (the “25 th Street Property”); and

(ii) Amounts allegedly owing by Brian West to the Estate of Donald Thompson West. [ 2 ] The interested parties are the; (

i) Applicant, Brian West (“Brian”) son of the deceased Donald Thompson West (“Donald”) in his personal capacity; (ii) Respondent, Estate of Donald Thompson West (“the Estate”) by its executors, Laura West (“Laura”), Craig West (“Craig”) and Brian (together, the “Executors”); (iii) Respondents, Craig and Laura as beneficiaries. [ 3 ] The Executors are also residual beneficiaries of the Estate. [ 4 ] Oral evidence was presented by Brian, Craig, Laura and Denise Newman.

In addition, the Court considered the Affidavit evidence of Brian, Laura and Craig together with the cross examination on the Affidavits of Brian and Laura. The Court also considered the Affidavit of Melanie McDonald (“Ms. McDonald”), legal counsel for the Estate. Other than the Affidavit of Ms. McDonald, the Estate took no

part in the dispute. II. Background [ 5 ] Donald died on April 7, 2012. He is survived by his adult independent partner, Diana Bradley (“Diana”), and his three adult children, Brian, Laura, and Craig (together, the “Children”). [ 6 ] Donald was still legally married at the date of his passing, but had long since separated from his wife, who is also the mother of the Children. Donald’s legal wife took no

part in this dispute and claims no interest in the Estate. [ 7 ] Donald’s will was signed June 13, 1996 and it appointed the Children as joint executors and equal beneficiaries of the Estate (the “Will”). [ 8 ] Donald is the registered owner of the 25 th Street Property, a single family dwelling that is occupied by Brian and his family. [ 9 ] At the date of his passing, Donald was a retired senior oil and gas executive with residences in Calgary and California. [ 10 ] Throughout his life, Donald had been generous and financially supportive of his Children.

Donald financially supported Brian’s business ventures; his support of Brian was disproportionally higher than his support of Craig and Laura. [ 11 ] When the Grant of Probate was issued in respect of the Will on February 22, 2013, the NC-7 Inventory did not list the 25 th Street Property as an asset, nor did it list any advances to the Children. III. Facts i.

The 25 th Street Property [ 12 ] The 25 th Street Property was purchased on or about February 10, 2012 for a price of $721,000 (the “Purchase”). [ 13 ] The pre-Purchase details are as follows: • Donald’s name was listed as the “Buyer” on the Residential Real Estate Purchase Contract (the “Purchase Contract”). • Donald paid the deposit on the purchase in the amount of $15,000, on or about January, 2012.

Brian submits he repaid Donald $5,000 and that the balance of $10,000 was designated by Donald to be used by Brian to purchase an automobile for Brian’s daughter, Taylor West, after she obtained her driver’s license.

There is no documentary proof of the automobile purchase. [ 14 ] The details of the close of Purchase are as follows: • Brian contributed $129, 200 as the cash-to-close. • The title to the 25 th Street Property was registered in Donald’s name. • Donald mortgaged the balance of the purchase price, $576,800, and registered it on title. [ 15 ] The post-Purchase details are as follows: • Brian, his wife, and their three children resided at all times in the 25 th Street Property and paid all mortgages, taxes, insurance and expenses with regard to the property from February 10, 2012 until present. • At no time did Donald reside at the 25 th Street Property. [ 16 ] Brian submits the 25 th Street Property and predecessor properties were purchased by him and registered in his father’s name to insulate Brian from potential execution by loan creditors.

Brian was an entrepreneur involved in a number of small business loans for

which he was personally liable. Additionally, having his father on title was helpful to secure better mortgage rates and to qualify for mortgages. ii.

Real Estate History [ 17 ] Brian and Donald had employed a similar arrangement on two prior properties; 432 – 49 th Avenue S.W., Calgary (the “Elboya Property”) and 28 Heritage Isle S.W., Calgary (the “Heritage Point Property”) (together, the “Real Estate History”). [ 18 ] On or about April 4, 1995, Donald, Brian, and Brian’s wife purchased the Elboya Property as joint tenants. [ 19 ] Brian submits that he provided the deposit on the original purchase for the Elboya Property. [ 20 ] On or about January 22, 1999, for nominal consideration, the Elboya Property was transferred to Brian and his wife, as joint tenants. [ 21 ] On September 14, 2006 the Elboya Property was transferred into Brian’s name alone for nominal consideration and a new mortgage in the amount of $410,000 was registered on title. [ 22 ] Brian, his wife, and their children resided at all times in the Elboya Property and paid all costs and expenses including the mortgage, tax, insurance, maintenance and upkeep.

At no time did Donald reside at the Elboya Property. [ 23 ] The Elboya Property was sold on or about February 4, 2010. No financial information was provided in evidence. [ 24 ] Prior to the sale of the Elboya Property, on or about June 20, 2006, Brian and his wife signed a purchase agreement for the Heritage Point Property. [ 25 ] That purchase agreement was subsequently amended (date unknown) deleting Brian and his wife and adding Donald as the sole buyer. [ 26 ] The contract appears to be a new home construction agreement.

The initial deposit, $25,000, was payable on signing and the balance, $175,000, was payable on June 30, 2006. The purchase price was $1,015,430.00. [ 27 ] Brian paid the $200,000 deposit and Donald mortgaged the balance of the purchase price on the closing date, December 5, 2007. Donald was the sole registered owner of the Heritage Point Property. [ 28 ] Brian, his wife, and their children resided at all times in the Heritage Point Property and paid all costs and expenses including the mortgage, taxes, insurance, maintenance and upkeep.

At no time did Donald reside at the Heritage Point Property. [ 29 ] The Heritage Point Property was sold on or about February 10, 2012 (sale price unknown). The sale proceeds were the source of the down payment on the 25 th Street Property. [ 30 ] Brian deposes that the arrangement with respect to these three properties has not resulted in defeating any creditors, nor are there claims by any creditors. Brian has no liability under any personal guarantees. iii. Denise Thompson [ 31 ] Ms.

Thompson was the Remax realtor who listed and sold the Heritage Point Property. [ 32 ] Donald’s instructions to her were: to deal with Brian in all matters; that Brian was the owner of the property; and that he was on title for the sole purpose of protecting the property from Brian’s potential creditors. Donald had no input on any matters necessary and incidental to the listing or sale of the property. iv. Laura West [ 33 ] Laura submits that Donald, beginning in 1995, made cash advances to Brian and to companies in which Brian was a shareholder. Donald may have been a shareholder in these same companies.

Laura submits that in all business transactions with Brian, Donald intended that Brian repay all advances (these collective debts will be referred to as “Brian’s Indebtedness”). [ 34 ] There were no loan documents or written agreements entered into evidence. Laura testified that in her opinion Donald felt uncomfortable that he was not doing more for her. v. Estate Counsel Melanie McDonald [ 35 ] Ms. McDonald is the lawyer for the Estate. She was also retained by Donald to update his Will and Enduring Power of Attorney on June 22, 2011.

Preliminary instructions were received but no new Will was signed prior to passing. [ 36 ] Ms. McDonald’s notes indicate that Donald advised her that there were no loans to his Children and that he does support his Children financially. [ 37 ] A draft Will was prepared and Donald indicated his desire to discuss his intentions with his common law wife, Diana, and his Children (the “Draft Will”). The Draft Will provided that Diana would receive $300,000 and a condo and that the balance would be

divided equally between the Children. [ 38 ] The 25 th Street Property was not listed as an asset in Donald’s Estate questionnaire, nor did Ms. McDonald have any notes or recollection of discussing the 25 th Street Property with Donald. [ 39 ] Donald passed away before the Draft Will could be finalized. [ 40 ] Brian disclosed that he resided in and paid all of the expenses for the 25 th Street Property from the beginning of the Estate administration. This information was known to the rest of the Executors. [ 41 ] The NC-7 Inventory was prepared without the 25 th Street Property and related mortgage indebtedness.

Ms. McDonald advised the Executors that she could not provide specific legal advice about the 25 th Street Property. She was specifically advised by the Executors to neither investigate nor collect evidence about the 25 th Street Property as the Executors would do so themselves. [ 42 ] The Executors signed the probate application with the NC-7 Inventory attached. vi.

Craig West [ 43 ] Donald gifted money to all his family members and there was never an indication from Donald that these monies were to be repaid. [ 44 ] Donald was on title to the 25 th Street Property to protect Brian from any potential claims from creditors. [ 45 ] Donald financially assisted Craig with the purchase of his first home and “bailed” him out of credit card debt. All without obligation to repay. vii. The Probated Will [ 46 ] The Will was signed on June 13, 1996. A Grant of Probate was issued in respect of the Will on February 22, 2013. [ 47 ] The second para of clause 6(

c) of the Will states that: “THE net present value of any indebtedness of any of my children shall be included as an asset of my estate and the equal share of the residue which each child....would otherwise receive shall be reduced by the aggregate of the net present values of each child’s indebtedness to me. The final decision concerning the determination of such indebtedness or its net present value shall be made by my Trustee and shall be binding on all my beneficiaries.” IV.

Issues [ 48 ] Is Brian entitled to be declared the legal and beneficial owner of the 25 th Street Property? [ 49 ] Is Brian indebted to the Estate for the debts referred to as Brian’s Indebtedness? V. Positions of the Parties [ 50 ] Brian submits that the Court should declare him the legal and beneficial owner of 25 th Street property. Brian argues that he paid the purchase money for the 25 th Street property and that Donald took legal title to protect Brian from potential creditors.

He argues that he is the beneficiary of a resulting trust. [ 51 ] Brian denies liability for the debts referred to as Brian’s Indebtedness. [ 52 ] Laura submits that the 25 th Street Property is an Estate asset because Donald was its registered owner on the date of his passing. She argues that the Statute of Frauds applies to any oral agreement relating to 25 th Street Property: Statute of Frauds:

An Act for the prevention of frauds and perjuries , 29 Charles II, c 3 (1677, UK) [ Statute of Frauds ]. As a result, she contends that any oral agreement between Donald and Brian with respect to the 25 th Street Property is unenforceable or void. Laura submits that Brian has failed to prove any of the exceptions to the Statute of Frauds . [ 53 ] Laura submits that Brian is indebted to the Estate for Brian’s Indebtedness. She also argues that a resulting trust actually arose in favour of Donald in respect of all monies that make up Brian’s Indebtedness. She claims that the 25 th Street Property is tied in some way to Brian’s Indebtedness. VI. Law i. The Statute of Frauds

[54] The Statute of Frauds imposes requirements for agreements involving land in Alberta: Statute of Frauds, supra.

Section 4requires that contracts concerning land, including contracts creating a trust in land, be in writing and signed by the party to be sued:Statute of Frauds, supra, at s

Section 7 requires that a declaration of trust be in writing and signed by the party enabled to declare thetrust: Statute of Frauds, s 7. Failure to meet these requirements renders an agreement unenforceable, if the agreement falls under section4, or void, if the agreement falls under

section 7: Statute of Frauds, supra, at ss 4, 7. [55] There are, however, two exceptions to the requirements of the Statute of Frauds. First, the Statute of Frauds will not applywhere a trust arises by implication or construction of law (i.e. constructive or resulting trust): Statute of Frauds, supra, at s 8; Singh vKaler, 2015 ABQB 738, at paras 97-98 [Singh]. Second, the Statute of Frauds will not apply where there has been part performance of anoral contract: Singh, supra, at para 92. [56] Brian did not advance the argument that he was entitled to the property based on part performance.

No evidence was adducedthat would support the essential elements of a contract. Therefore, the remainder of the judgment focuses solely on the resulting trustexception to the Statute of Frauds. ii. Resulting Trusts [57] There is no dispute that Donald was the registered owner of the 25th Street Property as of the date of his passing. “Equity,however, recognizes a distinction between legal and beneficial ownership.

The beneficial owner of property has been described as "[t]hereal owner of property even though it is in someone else's name"”: Pecore v Pecore, 2007 SCC 17, at para 4 [Pecore] citing Csak vAumon (1990), (ON SC), 69 DLR (4th) 567 (Ont HCJ), at p 570. [58] In cases of gratuitous transfers of property between family members, the Supreme Court of Canada (“SCC”) has set out anumber of different presumptions to “provide a guide for courts in resolving disputes over transfers where evidence as to the transferor'sintent in making the transfer is unavailable or unpersuasive”: Pecore, supra, at para 23.

These presumptions are referred to as thepresumptions of resulting trust and advancement: Pecore, supra, at paras 20-21, 24-27; See also Rascal Trucking Ltd v Nishi, 2013 SCC33, at paras 1-2, 21-22 [Rascal]. [59] The presumption of advancement is limited to gratuitous transfers from parents to their minor children and, as such, isinapplicable in this case: Pecore, supra, at para 40.

The presumption of resulting was described by the SCC, in Pecore, as follows: 20 A resulting trust arises when title to property is in one party's name, but that party, because he or she is a fiduciary or gave novalue for the property, is under an obligation to return it to the original title owner: see D.W.M. Waters, M.R. Gillen and L.D. Smith,eds., Waters' Law of Trusts in Canada (3rd ed. 2005), at p. 362.

While the trustee almost always has the legal title, in exceptionalcircumstances it is also possible that the trustee has equitable title: see Waters' Law of Trusts, at p. 365, noting the case of Carter v.Carter (1969), (BC SC), 70 W.W.R. 237 (B.C. S.C.). … 24 The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When atransfer is challenged, the presumption allocates the legal burden of proof.

Thus, where a transfer is made for no consideration, the onusis placed on the transferee to demonstrate that a gift was intended: see Waters' Law of Trusts, at p. 375, and E. E. Gillese and M.Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts. 25 The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging thetransfer in these cases) bears the legal burden in a civil case.

Rather, the onus is on the transferee to rebut the presumption of a resultingtrust. 26 In cases where the transferor is deceased and the dispute is between the transferee and a third party, the presumption of resultingtrust has an additional justification. In such cases, it is the transferee who is better placed to bring evidence about the circumstances ofthe transfer.

Pecore, supra, at paras 20, 24-26. [60] In Rascal, the SCC held that where more than one person is advancing funds in a transaction, “the law presumes that partiesintended for the person who advanced the funds to hold beneficial interest in the property in the proportion to that person’s contribution:Rascal, at para 1. [61] Recently, the Alberta Court of Appeal (“ABCA”) articulated a three-step test for proving a purchase order resulting trust: B &R Development Corp v Trail South Developments Inc, 2012 ABCA 351, leave to appeal refused [2013] SCCA No 34 [B&RDevelopment].

Starting at para 60, the ABCA set out the test that an applicant must meet in order to establish a resulting trust andthereby, qualify for the presumption (the “B&R Test”): 60 For the law to recognize a purchase money resulting trust, the appellants must establish that: (1) the trustee has title to the property; (2) the claimant supplied the whole or part of the purchase price when the property was being purchased from a third party andtransferred to the name of the trustee; and (3) the claimant acted throughout as the purchaser. (A.M.K. Investments Ltd. v. Kraus (1996), (ON SC), 13 O.T.C. 254 (Ont.

Bktcy.) at para 12, citing Prof. DWM

Waters, Law of Trusts in Canada, 2nd ed (Toronto: Carswell, 1984) at 302 and 305.) 61 The claimant must establish that it did more than simply provide funds: it must prove that it advanced the money in the characterof a purchaser. Otherwise, the claimant is merely a creditor: Annapolis Valley Peat Moss Co. v. Barone Monti Trading Inc., 2005 NSCA57 (N.S. C.A.) at para 24, (2005), 232 N.S.R. (2d) 115 (N.S. C.A.); Fobasco Ltd. v. Cogan (1990), (ON SC), 72 O.R.(2d) 254 (Ont. H.C.) at paras 26, 28.

Where a claimant advances the purchase funds as a financier it will not be considered to have actedas a purchaser throughout: Annapolis Valley Peat Moss Co. v. Barone Monti Trading Inc. at para 23. [62] Based on the above, the Court has two tasks when faced with an alleged purchase order resulting trust. First, the Court mustdetermine whether the applicant has proved a resulting trust using the B&R Test and, thereby, qualified for the presumption.

Second, theCourt must consider and weigh “all of the evidence relating to the actual intention of the transferor to determine whether the presumptionhas been rebutted”: Pecore, supra, at para 55. [63] The SCC, in Rascal, described the evidence that a court can consider to determine whether the presumption has been rebuttedas follows: 2 The presumption can be rebutted by evidence that at the time of the contribution, the person making the contribution intended tomake a gift to the person taking title.

While rebutting the presumption requires evidence of the intention of the person who advanced thefunds at the time of the advance, after the fact evidence can be admitted so long as the trier of fact is careful to consider the possibility ofself-serving changes in intention over time. Rascal, supra, at para 2. [64] The civil standard, the balance of probabilities, applies to rebut the presumptions: Pecore, supra, at para 43. VIII. Analysis i. Entitlement to the 25th Street Property [65] Brian has the burden of meeting the B&R Test. [66] Brian has met step one of the B&R Test.

Brian submits that Donald was the trustee. There is no dispute that Donald held the legal title to the 25th Street Property at all material times. [67] Brian has met step two of the B&R Test. I accept that the 25th Street Property was purchased for a price of $721,000, with amortgage of $576,800. I find that Brian used proceeds from the sale of the Heritage Point Property as the source of his down payment on the 25th Street Property. While Donald may have paid the $15,000 deposit, I believe Brian’s evidence that he repaid Donald $5,000 andthat the remainder of the deposit was a gift from Donald.

Therefore, the claimant, Brian, supplied $144, 200 toward the purchase price for the 25th Street Property when it was transferred to the name of the trustee, Donald. [68] Brian has met step three of the B&R Test. Brian says he was the true purchaser of the 25th Street Property. However, “to saythey were purchasers is not sufficient proof that they acted as purchasers”: Singh, supra, at para 106. There is also sufficient evidencethat Brian “acted throughout as the purchaser”. It is true that Brian is not listed as the “Buyer” on the Purchase Contract. However, thisstep is a matter of substance not form.

Leading up to close of the Purchase, Brian chose the house and had the deposit paid. At close, headvanced a significant down payment that formed part of the cash-to-close.

Following the close of the Purchase, he and his familyresided at all times in the 25th Street Property and paid all mortgages, taxes, insurance and expenses with regard to the property fromFebruary 10, 2012 to present. [69] These facts are distinguishable from Singh, a case involving real property, where the third step of the B& R Test was not met.In Singh, the claimants’ only actions, in addition to their contribution to the cash to close, were a few sporadic payments toward themortgage.

The ABQB found that these payments, without more, were insufficient to prove that the claimants acted as purchasers asopposed to creditors: Singh, supra, at paras 107-108. Brian’s pre- and post-Purchase conduct was much more extensive than that found inSingh. Therefore, I am convinced that Brian “acted throughout as the purchaser”. [70] Upon finding that Brian has proved a resulting trust, I could move on to apply the presumption of resulting trust.

However,presumptions simply, “provide a guide for courts in resolving disputes over transfers where evidence as to the transferor's intent inmaking the transfer is unavailable or unpersuasive”: Pecore, supra, at para 23 [Emphasis Added]. In this case, however, the transferor’s intent is actually available and persuasive.

I believe that Brian intended to retain beneficial ownership in the 25th Street Property and that he did not intend to gift the 25th Street Property to Donald. [71] I find support for this conclusion in the following evidence: • Brian’s evidence respecting the agreement he had with his father related to the 25th Street Property; • Brian’s post-Purchase conduct; • The Real Estate History between Donald and Brian; • Craig’s corroborating evidence with respect to Brian; and

• Ms. McDonald’s evidence respecting the absence of evidence relating to the 25 th Street Property in any documents or discussions involving the Will or the Draft Will. [ 72 ] Even if I found it necessary to apply the presumption, the presumption would apply in Brian’s favour. Equity would presume a bargain negotiated, as opposed to a gift given, between Brian and Donald: Pecore , supra , at para 24 . Laura has provided no evidence to rebut this presumption; she did not provide any evidence that Brian intended to gift the 25 th Street Property to Donald. [ 73 ] For the foregoing reasons, I find that:

(1) Donald held the 25 th Street Property in trust for Brian; and

(2) Brian is entitled to legal and beneficial ownership of the 25 th Street Property. [ 74 ] In the following section, I explain why I do not accept Laura’s claims relating to Brian’s Indebtedness. Therefore, I find from Laura’s argument, that a resulting trust somehow arose in favour of Donald out of Brian’s Indebtedness, has no basis in fact or in law. ii. Brian’s Indebtedness [ 75 ] I am unconvinced by Laura’s evidence with respect to Brian’s Indebtedness.

Laura did not provide the Court with any loan documentation or written agreements that would support her claim that Donald advanced Brian money with the expectation of being repaid. Any oral agreements of this nature would be unenforceable as they would be subject to the Statute of Frauds . [ 76 ] I find that Donald was an experienced business man at the executive level; he knew how to protect himself financially. I believe Brian’s assertion that Donald invested in and supported Brian’s business ventures. Donald’s investments in this respect were neither loans nor cash advances contingent on repayment.

In addition, I am convinced by Brian and Craig’s evidence that Donald had been generous and financially supportive of all of the Children and that his support had always come without the obligation to repay. [ 77 ] The above evidence is bolstered by Ms. McDonald’s evidence that: Donald advised her that there were no loans to his Children; Donald advised her that he supported his Children financially; and the NC-7 Inventory did not list any specific advancements to the Children. The mere existence of clause 6(

c) of the Will, which contemplates that the Children could have outstanding debts owing to the Estate, is not evidence of Brian’s Indebtedness. [ 78 ] Accordingly, I find that Brian is not indebted to the Estate for the debts referred to as Brian’s Indebtedness. IX. Disposition [ 79 ] I declare that:

(1) Donald held the 25 th Street Property in trust for Brian; and

(2) Brian is entitled to legal and beneficial ownership of the 25 th Street Property. [ 80 ] I order the Registrar of the Alberta Land Titles Office to reissue title to the 25 th Street Property in the name of Brian West pursuant to

section 190 of the Land Titles Act, RSA 2000, c L-4 . I order that Brian assume or discharge the mortgage that is currently registered on title to the 25 th Street Property in the Executor’s names. [ 81 ] I deny Laura’s request for an accounting and repayment of the debts referred to as Brian’s Indebtedness. [ 82 ] The parties have 30 days from the date of this judgment to send their written submissions on costs. Heard on the 25 th day of January, 2016. Dated at the City of Calgary, Alberta this 12 th day of August, 2016. B.A. Millar J.C.Q.B.A. Appearances: Brian West in his individual capacity

for the Applicant Craig West in his individual capacity for the Respondent Tiro Clarke Counsel for the Respondent Laura West _______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Mr. Justice B.A. Millar _______________________________________________________ The date this decision was signed was Friday, August 12, 2016. The date on p 11 showed this decision being signed on August 13, 2016, that correction has been made.