Mitchell v Pytel, 2021 ABQB 403

Court of Queen’s Bench of Alberta Citation: Mitchell v Pytel, 2021 ABQB 403 Date: 20210521 Docket: 0703 08593 Registry: Edmonton Between: Ronald William Mitchell Plaintiff - and - Edward John Pytel aka Ed John Pytel Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.N. Renke _______________________________________________________ [ 1 ] The Plaintiff, Ronald William Mitchell, transferred a 6-unit apartment building (the 92 nd Street Property) to the Defendant, Edward John Pytel, pursuant to a real estate purchase contract.

The purchase price was $78,000. Mr. Mitchell also provided funds to Mr. Pytel for the renovation of the 92 nd Street Property. By his own admission, Mr. Pytel has not paid anything to Mr. Mitchell. Mr. Mitchell therefore commenced an action that came to trial in December 2020. [ 2 ] This apparently straightforward set of circumstances masks some complexities. The agreement concerning the 92 nd Street Property was signed in January, 1999. The transfer was signed in February 1999 and registered in April 1999. In 2001 and 2002, Mr.

Mitchell registered caveats protecting an unpaid vendor’s lien against the certificate of title for the 92 nd Street Property. In June and November 2002, Mr. Mitchell’s counsel sent correspondence to Mr. Pytel demanding payment. Mr. Mitchell commenced this litigation on July 5, 2007. [ 3 ] The nature of the transaction that resulted in Mr. Pytel becoming registered owner of the 92 nd Street Property is at issue. Some considerable evidence was tendered to put the transaction in its proper context. A more fundamental issue is whether Mr. Mitchell’s claim is statute-barred. If Mr.

Mitchell’s claim is not statute-barred, the amount owing by Mr. Pytel to Mr. Mitchell must be determined. [ 4 ] Following some comments on witnesses and evidence, I will review the facts leading to the transfer of the 92 nd Street Property, determine the nature of the transaction resulting in the transfer of that property to Mr. Pytel, decide whether Mr. Mitchell’s claim is statute-barred, and provide an assessment of damages should Mr. Mitchell’s claim not be statute-barred. [ 5 ] Mr. Mitchell’s trial counsel were not Mr. Mitchell’s counsel at the time of filing the Statement of Claim or earlier.

Table of Contents I. Witnesses and Evidence . 5 A. Expert Testimony . 5 B. Mr. Mitchell’s Evidence . 5 1. Rule 8.17 Application . 5 2. Principled Exception to the Hearsay Rule . 6 C. Sources of Evidence . 7 D. Credibility and Reliability . 7 1. Mr. Mitchell 7 2. Mr. Pytel 8 II. Facts – Mr. Mitchell, Mr. Pytel, and the 92 nd Street Property . 9 A. Before the Transfer: Mr. Mitchell’s Real Estate Background and the 92 nd Street Property . 9 B. Mr. Pytel and Mr. Mitchell 10 C. The Sale of the 92 nd Street Property . 11 D. Mr. Pytel and the 92 nd Street Property, 1999-2001 . 12 E. Mr. Mitchell and Mr.

Pytel – 2001 and 2002 . 13 F. The 92 nd Street Property: 2003 . 15 G. The 92 nd Street Property: 2006 . 15 H. Litigation . 16 I. Current Assessed Value of the 92 nd Street Property . 17 J. Rental Revenues . 17 III. The Nature of the 92 nd Street Property Transaction . 17 A. Erroneous or Unsupported Perspectives . 17 1. Undue Influence . 17 (

a) Mr. Mitchell and Mr. Pytel 18 (

b) Origin of the Idea of Selling to Mr. Pytel 18 (

c) the Offer to Purchase and the Transfer 19 2. Bare Trustee . 19 3. Resulting Trust 22

4. Sale, Renovation, Sale and Split of Proceeds . 23 B. The Nature of the Transactions . 25 1. Sale of the 92 nd Street Property . 25 2. Purchase Price . 26 3. Mortgage . 26 4. Further Investments . 26 5. Repayment Terms . 27 6.

Summary . 28 C. Validity of the Transaction . 28 1. Statute of Frauds . 28 2. Parol Evidence and the Statute of Frauds . 30 3. Certainty of Terms . 32 4. Remedial Consequence . 34 IV. Application of the Limitations Act 35 A. Statutory Provisions . 35 1. Transitional Provisions not Engaged . 35 2. Burden of Proof . 35 3. Limitation Period . 35 4. More than a Declaration . 36 5. Inapplicability of ss. 3(3)(

f) and 3(4) 37 B. Principles . 37 1. Cumulative Test 37 2. Knew or Ought to Have Known . 37 3. Facts, Not Law, Not Assurance of Success . 38 4. Injury . 38 5. Warranted . 38 C. Claims Concerning the 92 nd Street Property and Advances . 39 1. Knowledge and Attribution of Injuries . 40 2. Warranted . 41 3. Communications by Mr. Pytel 43 4. No Agreement or Acknowledgement 43 5. Estoppel 44 D. Heating Payments . 48 1. Payments Made . 48 2. Nature of the Payments . 48 3. Amount of the Payments . 48 4. Limitation Period . 48 E. Conclusion . 49

V. Quantification . 50 A. Purchase Price . 50 B. $3,000 Payment by Mr. Mitchell to Mr. Pytel 50 C. Advances for Building Supplies and Contractors . 50 1. $10,000 for Plumbing/Boiler and Installation . 50 2. Totem Building Supplies . 50 3. Cheques . 51 4. Total 51 D. RRAP Funds . 51 E. Rentals . 52 F. Heat Payments . 52 G. Interest 52 VI. Conclusion and Costs . 53 I. Witnesses and Evidence [ 6 ] Two witnesses were called for the Plaintiff, Mr. Mitchell and Lara Hess, who now works with Mr. Mitchell. Ms. Hess contributed no useful admissible evidence. Mr. Pytel was the sole Defence witness. A.

Expert Testimony [ 7 ] A licenced realtor was proposed as an expert witness by the Plaintiff. She would provide an opinion respecting the value of the 92 nd Street Property. Her evidence would have been relevant and “necessary” as going beyond opinions that the trier of fact could draw. As a licenced realtor since 2005, she had professional experience that would have supported her qualification as an expert. See, e.g., Kopr v Kopr , 2009 ABQB 93 , Thomas J at para 32. However, I did not permit her to testify, for two reasons. [ 8 ] First, aside from the Form 25, no report was provided.

The Form 25 merely stated that the realtor would be providing an opinion based on a market evaluation and comparable properties. The information and assumptions on which the expert’s opinion was based were not described. A

summary of the expert’s opinion was not provided. In my view, the documentation provided did not satisfy the requirements of rule 5.34(

a) and Form 25.

The failure to set out the bases for the opinion was not merely a formal error but undermined the ability of opposing counsel and the Court to evaluate the opinion: see De Sousa v Rogers , 2019 BCSC 128 , Kelleher J at para 143 (“The Court must know the facts on which the opinion is based”) and R v J-LJ , 2000 SCC 51 , Binnie J at paras 59 and 57 (“He offered a packaged opinion but was not prepared to share with the trial judge the data which he relied on”); and see, respecting the former rule, Elgert v Home Hardware Stores Ltd , 2010 ABQB 57 , Lee J at paras 54, 55 and Ramirez v Brander , 2007 ABQB 729 , Macklin J. [ 9 ] Second, the Form 25 was dated December 7, 2020, shortly before trial commenced.

The expert report should have been provided before the matter was set down for trial: rule 8.4(2), (3)(c). See Benc v Parker , 2016 ABCA 82 at para 11 : “the completion of a Form 37 constitutes, in our opinion, an undertaking in the throes of litigation by one party to another that absent mutual error or unilateral mistake in completing the Form (in which case an application for relief may be brought before a judge), the plaintiff and the defendant will take no further pre-trial steps.” See also Vu v Hope , 2017 ABQB 136 , Tilleman J at para 13. B. Mr. Mitchell’s Evidence [ 10 ] At the time of trial, Mr.

Mitchell was nearly 86 years old. [ 11 ] Mr. Mitchell’s evidence raised three sets of issues. 1. Rule 8.17 Application [ 12 ] Mr. Mitchell’s counsel applied under rules 8.17 and 13.25 for Mr. Mitchell’s evidence in chief to be provided by way of an affidavit sworn some years earlier. Mr. Mitchell would be available for cross-examination and the transcript of his cross-examination on affidavit would be filed as well. The grounds for the application were that the Mr. Mitchell is elderly and “takes considerable time to listen to, and to answer ... questions in an expeditious manner.” [ 13 ] Mr.

Mitchell’s affidavit was a sworn document and he had been cross-examined on it. The affidavit was sworn in 2007, substantially closer in time to events of the late 1990s and early 2000s. The affidavit was known to the Defence as Mr. Pytel’s current

counsel had cross-examined Mr. Mitchell on that affidavit. [ 14 ] Nonetheless, I denied the application for the following reasons. [ 15 ] First, as a matter of principle and as an aspect of the open courts principal, the general rule is that evidence at trial is provided orally rather than in recorded or written form. See Sir Jack I.H. Jacob, The Fabric of English Civil Justice (The Hamlyn Lectures, 38 th Series , London: Stevens & Son, 1987) 19-20 and fn 22. See also Good Spirit School Division No 204 v Christ the Teacher Roman Catholic Separate School Division No 212 , 2016 SKQB 148 , Layh J at para 16.

This principle is reflected in the opening words of rule 8.17 (“A fact to be proved at trial by the evidence of a witness must be proved by questioning the witness in open court” (unless an exception applies)). [ 16 ] Second, the Plaintiff relied on Justice Graesser’s decision in Brennenstuhl Estate v Trynchy , 2007 ABQB 647 , allowing affidavit evidence to substitute for oral evidence under former rule 2.61. However, in that case, the deponent was deceased whereas Mr. Mitchell was available to testify. There was no medical evidence showing that Mr.

Mitchell could not testify or that he was unable to recall events. [ 17 ] Third, unlike Brennenstuhl Estate , this case did not concern the

interpretation of documents. Credibility would be a critical factor. The assessment of credibility is aided by the observation of testimony and by cross-examination in the ordinary course. [ 18 ] Fourth, a 13-year old affidavit could not be assumed to match Mr. Mitchell’s current recollection of events.

Generally, a witness’s current recollection of events, not past recollection, is what is relied on and tested at trial. [ 19 ] Fifth, as Justice Layh observed in Good Spirit School Division , the ability to cross-examine is different if the cross-examiner hears a witness testify in his or her own words, as to opposed to basing cross-examination on the “narrative stylings” of counsel who drafted the affidavit. [ 20 ] Sixth, again as Justice Layh observed, I did not consider that reliance on Mr. Mitchell’s affidavit would save trial time. 2. Principled Exception to the Hearsay Rule [ 21 ] However, as Mr.

Mitchell testified in chief, it became clear that his memory was failing him and he was not responsive to questions. For example, respecting various official notices from the city relating to the substandard condition of the 92 nd Street Property, Mr. Mitchell claimed no recollection, perhaps because he didn’t open the envelopes, as he “disliked reading.” [ 22 ] I therefore revisited the issue of the admissibility of past recorded evidence of Mr. Mitchell. Relying on the “principled exception” to the hearsay rule, I admitted Mr. Mitchell’s 2007 affidavit and the transcript of cross-examination on affidavit. Mr.

Mitchell was cross-examined. [ 23 ] The affidavit was hearsay, as an out-of-court statement relied on as proof of the truth of its contents. As hearsay, the affidavit was presumptively inadmissible. [ 24 ] I found that “necessity” was established on the ground that Mr.

Mitchell’s evidence about the material events was not available or not substantially available through his testimony: R v Khelawon , 2006 SCC 57 , Charron J at paras 78 (unavailability of the testimony, not the witness), 40, 49. [ 25 ] I did not consider the affidavit to be “inherently reliable” or “substantively reliable.” The affidavit was sworn by a litigant who could not be said to be impartial. He had a litigation interest in particular views of the facts.

The affidavit was a document deliberately crafted for litigation purposes. [ 26 ] I found that there were adequate substitutes for contemporaneous testing of truth and accuracy. Procedural reliability was established: Khelawon at paras 63-64 . The affidavit was on oath. Mr. Mitchell had been cross-examined on his affidavit. The transcript of the cross-examination could be relied on by the Defence. The affidavit was proposed to be introduced in the litigation in which it was filed, with the same parties and the same issues (and the same counsel for the Defence): Khelawon at para 91 . Mr.

Mitchell was available for cross-examination and he could be (and was) effectively cross-examined: see Khelawon at para 76 (an important contextual factor is the availability of the declarant). See generally R v Bradshaw , 2017 SCC 35 , Karakatsanis J at paras 19-32. [ 27 ] Mr. Mitchell was more composed and focused during cross-examination. C. Sources of Evidence [ 28 ] Besides the testimony of Mr. Mitchell and Mr. Pytel and the trial exhibits generally, I will make special mention of the following: • Agreed Exhibits, Exhibit 1 (Ex 1, cited to tab) • Affidavit of Mr.

Mitchell, sworn September 26, 2007, Exhibit 2 (A) • Cross-Examination of Mr. Mitchell on Affidavit, November 9, 2007 (COE) and Questioning for Discovery of Mr. Mitchell, August 27, 2015 (QFD), Exhibits 3 and 9 • Capital Health Authority File, Exhibit 4 (Ex 4, cited to page number) • Read-Ins, Cross Examination on Affidavit of Mr. Pytel on November 21, 2007, Exhibit 6 (PRI).

D. Credibility and Reliability 1. Mr. Mitchell [29] Having regard to both his live and recorded evidence, I did not consider Mr. Mitchell to be a credible witness. I preferred therecollections of Mr. Pytel to the recollections of Mr. Mitchell when their evidence differed. I took into account the following factorsrespecting the evidence of Mr. Mitchell. (

a) Convictions [30] Mr. Mitchell had two convictions for failures to repair his properties (I will return to these below). Essentially, these wereconvictions for failing to correct deficiencies in low-rent housing to make premises safe for tenants. I acknowledge that these were notclassic offences of “dishonesty.” In R v Corbett, [1988] 1 SCR 670, , Justice LaForest properly noted at para 155, for the majority on this point, that offences of dishonesty have stronger probative value on the issue of credibility than otheroffences.

Chief Justice Dickson, though, had also observed at para 22 that There can surely be little argument that a prior criminal record is a fact which, to some extent at least, bears upon the credibility of awitness. Of course, the mere fact that a witness was previously convicted of an offence does not mean that he or she necessarily shouldnot be believed, but it is a fact which a jury might take into account in assessing credibility. The Chief Justice confirmed that this view reflects the legislative judgment expressed in s. 12 of the Canada Evidence Act that priorconvictions bear on the credibility of a witness.

This same legislative judgment is embodied in s. 24 of the Alberta Evidence Act.Moreover, I view the offences as having involved, if not precisely dishonesty, taking advantage of low-income vulnerable individualsand exposing them to significant risk. [31] Mr. Mitchell’s convictions were a consideration respecting his credibility. I kept in mind that his testimony should not bedisbelieved or rejected just because of his record. (

b) Inaccuracies [32] I found that Mr. Mitchell’s approach to the calculation of damages was casual, resulting in a damages claim of about doublewhat he could have been entitled to. He was not concerned with detail and this impaired my assessment of his reliability. [33] In his affidavit, Mr. Mitchell sought to show himself as having been unsophisticated, overwhelmed, and an easy target for Mr.Pytel’s depredations. I have rejected this characterization of the relationship of Mr. Mitchell and Mr. Pytel.

By way of example, Mr.Mitchell had claimed in his affidavit not to have any knowledge of the Residential Rehabilitation Application Program (RRAP): My lack of sophistication as a businessman is illustrated by the fact that after 30 years buying and managing low rental residential[tenancies], I had never heard of the RRAP program. In his cross-examination on affidavit, he confirmed that he had “heard of” this program, he was aware of the nature of the program andhe himself had made one application to the program, respecting another property: COE, 27.4-20.

He did not make RRAP applicationsrespecting other properties because “I didn’t like the process:” COE, 27.21-24. 2. Mr. Pytel [34] I acknowledge that many elements of the cross-examination of Mr. Pytel on his affidavit in 2007 were directed towardestablishing his lack of credibility. The questioning, though, tended to be argumentative and slanted, attributing the worst potentialmeaning to his answers and tending to generate digressions based on false or assumed postulates. I recognize that counsel’s job inquestioning is to advance the client’s position.

The tendentious nature of the questioning, though, diminished its efficacy in impeachingMr. Pytel’s credibility. Trial counsel, I should emphasize, was not Mr. Mitchell’s counsel at the time of questioning of Mr. Pytel. [35] One might suggest that from the perspective of honesty, Mr. Pytel could not claim to appear in a more favourable light than Mr. Mitchell. After all, Mr. Pytel has failed to pay Mr. Mitchell anything for the 92nd Street Property. Mr. Pytel’s dishonesty, his failureto pay what he promised to pay to Mr. Mitchell, was the foundation of the litigation. [36] However, Mr.

Pytel was abundantly and consistently clear that he had not paid Mr. Mitchell. The original reason for this wasthat their arrangement did not specify exactly when amounts would be paid and what or how much would be paid (more on this below).When their relationship broke down, Mr. Pytel considered Mr. Mitchell to have been demanding payment of far more than he was owed.Essentially, Mr. Pytel said to Mr. Mitchell, “So sue me. We’ll let a judge sort out what I owe.” [37] Mr. Pytel considered himself to have been provoked and wronged by Mr. Mitchell. Mr. Pytel was indubitably stubborn.

I donot consider him to have been dishonest in his dealings with Mr. Mitchell. [38] I discerned nothing in Mr. Pytel’s trial testimony and cross-examination that diminished my assessment of his credibility. II. Facts – Mr. Mitchell, Mr. Pytel, and the 92nd Street Property A. Before the Transfer: Mr. Mitchell’s Real Estate Background and the 92nd Street

Property [ 39 ] Mr. Mitchell began investing in real estate when he was working as a typesetter with the Edmonton Journal. He spent a lot of time working on the classified section. He discerned that it seemed to be cheaper to acquire real estate than to acquire cars. He came to the idea of buying real estate with very little money down. He bought his first investment property, a house, in the early 1960s. He retired from the Journal in 1975 to devote himself to managing his properties: A, para 1. [ 40 ] He developed a specialization in low-rent housing.

Over the course of the years he’s owned about a dozen rental properties: COE, 9.7-8, 10.11-13; see QFD, 5.24-6.9. Mr. Mitchell still owns about half a dozen rental properties: QFD, 44.17-22, 48.1-11. [ 41 ] When asked in cross-examination whether he used written rental agreements, he said No, “I avoided paperwork like the plague.” [ 42 ] Mr. Mitchell purchased the 92 nd Street Property in 1976. Before the transfer to Mr. Pytel, there was no mortgage on this property: COE, 13.5-7; A, para 2. [ 43 ] In 1996, Mr. Mitchell owned five or six rental properties.

He received Notices from Capital Health Authority, Community Care and Public Health, to repair certain deficiencies for several of his properties, including a property on 98 th Street (the 98 th Street Property): COE, 13,15-19. Mr. Mitchell was unable to obtain financing to do the repairs. [ 44 ] Mr. Mitchell was fined $2,000 for not completing the repairs in 1995: COE 28.24-26; A, para 7. Mr. Mitchell paid for some repairs for the 98 th Street Property. This property, though, bore a large mortgage. Mr. Mitchell could not afford to make the repairs and the mortgage payments.

This property was lost on foreclosure in 1997 or 1998: A, para 9. [ 45 ] The City of Edmonton delivered another Notice to Mr. Mitchell dated November 28, 1997 requiring him to repair deficiencies in the 92 nd Street Property: Ex 4, 27. The repairs were not completed by the specified time of January 5, 1998. [ 46 ] Capital Health issued a Notice to Vacate to the tenants of the 92 nd Street Property dated January 27, 1998: Ex 1, 4. This prevented units from being rented. Capital Health also gave notice dated January 27, 1998 declaring the 92 nd Street Property to be Unfit for Human Habitation: Ex 4, 4. [ 47 ] Mr.

Mitchell responded with correspondence to Mr. Kenneth Dong received February 11, 1998. Mr. Dong was an Environmental Health Officer with Capital Health, Community Care and Public Health. Mr. Mitchell requested permission to install a manager, caretaker, or repairman in one of the 92 nd Street Property suites, for “various security purposes:” Ex 4, 17. Mr. Dong responded on the date of receipt that permitting a caretaker to live on site would be permitted if certain conditions respecting the building condition were met. [ 48 ] The 92 nd Street Property was boarded up by February 11, 1998: Ex 4, 14, 36. [ 49 ] Mr.

Mitchell sought to negotiate these conditions with Mr. Dong by way of correspondence dropped off on March 12, 1998. He sought to have additional individuals in the building on an interim basis. An inspection report by Mr. Dong referred to the letter being dropped off and to Mr. Mitchell having made a comment about suing him: Ex 4, 36. Mr. Dong responded to Mr.

Mitchell’s correspondence confirming the repairs that would be required before occupancy was permitted. [ 50 ] The power for the 92 nd Street Property was shut off by Edmonton Power around April 9, 1998: Ex 4, 42. [ 51 ] On July 16, 1998, Capital Health filed a Notice of Health Hazard against the certificate of title for the 92 nd Street Property: Ex 1, 2; Ex 4, 47. This property was, in effect, condemned. Mr. Mitchell would be responsible for the costs of demolition: COE, 55.6-9; A, para 17. [ 52 ] Mr. Mitchell was prosecuted for his failures to repair the 92 nd Street Property: Ex 4, 32.

On July 20, 1998, he was fined $9,150 and ordered to pay costs of $3,050: Ex 1, 7; COE, 35.14-17, A, paras 15, 18; Ex 4, 51-52, 56-57, 61-62. [ 53 ] Mr. Mitchell had Mr. Pytel put a sign on the 92 nd Street Property, reading “For Sale – 6 Suite Building or 18 Room Mansion:” Ex. 4, 51-52. Mr. Pytel confirmed putting up this sign. [ 54 ] Mr. Mitchell applied to the Court for an extension to pay the fine and costs, which was granted: Ex 4, 88-102. [ 55 ] In cross-examination, Mr. Mitchell confirmed that he had three options respecting the 92 nd Street Property. He could leave it empty and fix it when he could.

He could, after making some repairs, put in a caretaker. He could sell the property. If he could sell the property, it would no longer be his problem. [ 56 ] As of July 21, 1998, Mr. Mitchell was looking to sell the 92 nd Street Property: COE, 36.10-13. Mr. Mitchell’s recollection was that he received no offers to buy the property, “not a one.” Mr. Pytel recalled two individuals and a “women’s organization” who had expressed an interest in buying the property. [ 57 ] On February 4, 1999, Mr. Mitchell reported to Mr.

Dong that he had received a phone call from “a guy named [redacted] who wants to buy the place,” and provided the prospective purchaser’s address (also redacted): Ex 4, 72. B. Mr. Pytel and Mr. Mitchell

[ 58 ] Mr. Pytel grew up on a farm in central Alberta. He has a grade 10 education. He worked with CNR for 6 years starting when he was 16. After a few jobs and getting an automotive mechanics qualification, he started his “Ed’s Handyman” business in Edmonton. He did moving and hauling, repairs and carpentry, tasks that didn’t require formal qualifications. [ 59 ] Mr. Mitchell had learned of Mr. Pytel through an ad Mr. Pytel placed in the newspaper offering his services as a handyman. Mr. Pytel recalled that he began doing work on Mr. Mitchell’s properties in 1994. [ 60 ] Mr. Pytel did jobs for Mr.

Mitchell that needed to be done. Mr. Pytel did minor repairs and other chores. “EJ looked after me very well,” Mr. Mitchell said. They got along well. [ 61 ] Unfortunately, Mr. Pytel “went bankrupt.” He lost his house in Millwoods. In 1998, Mr. Pytel and his brother became tenants in one of Mr. Mitchell’s properties, a 700 square foot two-bedroom house with an unfinished basement just off 99 Street and 81 Avenue in Edmonton. The rent was $500 per month. Each brother paid $250. Sometimes Mr. Pytel’s rent was set off by his fees for work done for Mr. Mitchell. Mr. Mitchell allowed Mr.

Pytel to fix up the basement in his rental property and to rent out the basement. Mr. Pytel kept that rental income. The accommodations, then, paid for themselves. C. The Sale of the 92 nd Street Property [ 62 ] By February 4, 1999, the 92 nd Street Property had been boarded up for about a year. It had no tenants for about a year: COE, 48.12-49.1. In answer to the question of whether this property was in “terrible shape” with “lots of drug dealers and prostitutes hanging out there,” Mr. Mitchell said that “It seemed to go from running smoothly to going to hell in a handbasket in a hell of a hurry:” COE, 54.1-10.

Mr. Mitchell remained responsible for taxes and he continued to pay for some utilities: COE, 55.1-5. [ 63 ] I find that Mr. Mitchell came up with the idea to sell the property to Mr. Pytel. (I will address the contrary view below, in the discussion of undue influence.) In contrast, Mr. Pytel testified that Mr. Mitchell “convinced” him “to go into the property.” [ 64 ] On February 4, 1999, Mr. Mitchell and Mr. Pytel entered into a Real Estate Purchase Contract whereby Mr. Pytel agreed to purchase the 92 nd Street Property for $78,000, payable by a $3,000 deposit and a “mortgage” back to Mr.

Mitchell of $75,000, with payments to commence on January 15, 2000 and interest set at 6.5% (the Offer to Purchase): Ex 1, 11. Mr. Mitchell knew that Mr. Pytel could not pay the $78,000. At the time, to Mr. Mitchell’s knowledge, Mr. Pytel remained an undischarged bankrupt. [ 65 ] Mr. Mitchell has claimed that he gave Mr. Pytel a cheque for $3,000 (in some iterations, $2,000) so Mr. Pytel could pay the deposit. Mr. Pytel denied that he received this amount, either by cheque or in cash. [ 66 ] The Offer to Purchase employed a pre-printed form, with particulars handwritten by Mr. Mitchell: COE, 41.12-19.

It was signed at a meeting at Buffet World at Westmount Mall, with Mr. Mitchell, Mr. Pytel, Dolly Jenkins, and Tom MacDonald in attendance. Ms. Jenkins was a tenant of Mr. Mitchell’s, who served “not really as a full caretaker” but as “an assistant who helped out” at times: COE 42.23-26. Mr. MacDonald was another tenant of Mr. Mitchell’s: COE, 42.15-17. [ 67 ] After the Offer to Purchase was signed, Mr. Pytel moved into the 92 nd Street Property and started renovation work. [ 68 ] On February 8, 1999, Mr. Mitchell, Mr. Pytel, and Ms.

Jenkins attended at the North Alberta Land Titles Office and a transfer of the 92 nd Street Property to Mr. Pytel was executed. The consideration was stated to be $78,000: Ex 1, 11. [ 69 ] The transfer was submitted for registration but registration did not occur until April 14, 1999, apparently because Mr. Mitchell delayed turning in the Duplicate Certificate of Title to the Land Titles Office: Ex 1, 15; Ex 4, 82. The Notice of Health Hazard Registration remained on title. [ 70 ] On February 8, 1999, Mr. Pytel met with Mr. Dong and advised he was buying the 92 nd Street Property. Mr.

Dong wrote that “I asked him to present to us the land title, and provide a letter of intent:” Ex 4, 75. Mr. Pytel subsequently confirmed his advice to Mr. Dong in correspondence: Ex 4, 77. Mr. Pytel stated that “I am awaiting the title duplicate from Mr. Mitchell in order to register title.” [ 71 ] On February 11, 1999, Mr. Pytel confirmed to Mr. Dong that the land had been transferred and he was living in the property: Ex 4, 79. D. Mr. Pytel and the 92 nd Street Property, 1999-2001 [ 72 ] Mr. Pytel required financing to acquire materials to renovate the property.

He initially obtained a private mortgage with a face amount of $16,500 from a numbered company. He only received about $8,000 from this mortgage, after mortgage fees were paid as well as the outstanding property taxes for 1998 and 1999. Mr. Pytel testified that the fees for this mortgage “were outrageous,” probably because he was an undischarged bankrupt. The mortgage money received was not enough to do the required renovations. [ 73 ] The Safe Housing Committee, established by the City of Edmonton and Capital Health, conducted an inspection of the 92 nd Street Property on September 28, 1998.

By correspondence dated January 13, 2000 to Mr. Pytel, deficiencies or failures to comply with Safe Housing Standards were identified. Mr. Pytel was required to provide a written proposal for a completion

schedule for repair of the deficiencies: Ex 1, 16; Ex 4, 146-149. [ 74 ] Following discussions with Safe Housing and City of Edmonton representatives, Mr. Pytel applied to the “Residential Rehabilitation Assistance Program:” Ex 1, 17. This is a program sponsored by CMHC. Successful applicants receive funding, secured by a mortgage, to complete identified renovations. The property owner is responsible for hiring contractors and for ensuring that repairs are completed to acceptable standards and to Code. After work is completed and inspected, and after the property owner has paid for the

work and submits the invoices to CMHC, CMHC reimburses the cost of the completed work. That is, CMHC funds are received only after work has been done and paid for. If mortgagors comply with program terms, the amounts advanced are forgiven by CMHC. [ 75 ] The purpose of this program is to assist property owners to meet minimum health and safety standards for low-rent accommodations. Put another way, the forgivable loan program is a means for promoting the availability of accommodations for low- income individuals.

Mortgagors agree to rent units to tenants whose incomes fall at or below a specified threshold. [ 76 ] Mr. Pytel testified that he had learned about the RRAP in about 1997 while working with Mr. Mitchell. He read about it, it was mentioned by Safe Housing people, and Mr. Mitchell mentioned it. [ 77 ] Mr. Pytel’s application to RRAP was successful. He was approved in 2000 but because that year’s program funding was already allocated, he had to wait until 2001 for funding to commence. A loan to him of $108,000 was approved.

This represented the maximum of $18,000 for repairs for the 6 units of the 92 nd Street Property. The forgivable loan would be earned over a 15-year term. Mr. Pytel entered into a Rental RRAP Operating Agreement with CMHC dated March 2, 2001 and a mortgage was registered against the 92 nd Street Property. [ 78 ] The RRAP funding was not sufficient to rehabilitate the 92 nd Street Property. [ 79 ] Mr. Mitchell made a series of payments respecting the 92 nd Street Property, either to third parties or to Mr. Pytel. The amounts paid by Mr. Mitchell will be addressed below in the discussion of damages. [ 80 ] Mr.

Pytel did not pay any amount toward the purchase price for the 92 nd Street Property before starting its rehabilitation. [ 81 ] Mr. Pytel testified that he paid property taxes for the property. Mr. Mitchell did not pay the property taxes. E. Mr. Mitchell and Mr. Pytel – 2001 and 2002 [ 82 ] By mid-2001, Mr. Mitchell had yet to receive any payment from Mr. Pytel. Mr. Mitchell consulted counsel (First Counsel, not trial counsel). Mr. Mitchell confirmed that he “explained the whole situation” to First Counsel and received advice as to what to do: COE, 78.1-6. [ 83 ] Mr.

Mitchell caused a caveat to be registered against the certificate of title for the 92 nd Street Property to protect an unpaid vendor’s lien. The caveat was registered on September 26, 2001. It was signed on September 10, 2001. The Caveat claimed an interest arising under the Offer to Purchase, valued at $78,000: Ex 1, 19; COE, 78.16-21; A, para 53. [ 84 ] Mr. Mitchell and Mr. Pytel had discussions in October, 2001. [ 85 ] Mr. Pytel told Mr. Mitchell that the registration of the caveat prevented him from receiving further advances from CMHC: COE, 79.21-26. Mr.

Pytel had not received all draws of RRAP funding by this time. The first mortgage held by the numbered company was up for renewal as well. Mr. Pytel told Mr. Mitchell that if the caveat weren’t removed, the property would go into foreclosure. [ 86 ] At this time, Mr. Pytel and Mr. Mitchell had not agreed on what Mr. Pytel would pay to Mr. Mitchell. [ 87 ] Mr. Pytel testified that this incident “stopped us from working together.” He said he had “a lot of anger when he saw [the caveat].” In cross-examination, he confirmed that his relationship with Mr. Mitchell changed after Mr. Mitchell filed this caveat.

After this, they talked only rarely. [ 88 ] One result was that Mr. Mitchell discharged the unpaid vendor’s lien caveat: Ex 1, 20; A, para 55. He recalled that “I took it off and [First Counsel] said I was a damn fool for doing it:” COE, 80.8-9. In Discovery, Mr. Mitchell confirmed the following (QFD, 21.6-12): Q So your business partner ... says don’t be so generous and cavalier with EJ [Mr. Pytel], [First Counsel] says don’t be so generous and cavalier with EJ, but you ... disregarded their advice; is that right? A I, yes, I guess that’s essentially the, right, yeah. [ 89 ] Another result was that Mr.

Pytel and Mr. Mitchell signed a document dated October 12, 2001, prepared by Mr. Mitchell. The document recites that Mr. Pytel and Mr. Mitchell disagreed on the amount of cash injected into the 92 nd Street Property by Mr. Mitchell. The document continued as follows: I believe Mr. Pytel and I also had at least an agreement in principal ( sic ) on the terms of repayment. He had said he would make payments of $800 per month on the mortgage with presumably the current going rate of interest. I had asked for payments of $1,000 per month.

I feel we can, one way or another, arrive at a figure that will satisfy both of us. It does not seem necessary to me at this particular time to determine the exact monthly payment, although I would like to know how soon those payments would begin. Hopefully no later than January 1 st of next year. If Mr. Pytel agrees with this

summary of our agreement in principal ( sic ) by signing below I will continue my support of this project. Both signed the document: Ex 1, 21. Mr. Pytel confirmed signing it in testimony. [ 90 ] When the unpaid vendor’s lien caveat was discharged, Mr. Pytel renewed the private mortgage. The renewal was in the name of Helen Jaskiw as mortgagee rather than in the name of the numbered company. The Jaskiw mortgage replaced the numbered company

mortgage. Mr. Pytel got no new money from the Jaskiw mortgage. Mr. Pytel also granted an assignment of rents to “Equiplan Investors Fund Ltd.” This was protected by caveat. [ 91 ] On November 28, 2001, Capital Health rescinded the order declaring the 92 nd Street Premises Unfit for Human Habitation: Ex 1, 21; Ex 4, 168-169. [ 92 ] After the order was rescinded, Mr. Pytel started renting suites in the 92 nd Street Property. Mr. Pytel denied working with Mr. Mitchell to find tenants. [ 93 ] Mr. Mitchell claimed that he then began to rent the suites out, but Mr. Pytel kept the rent: A, para 59. [ 94 ] Mr.

Mitchell filed a second unpaid vendor’s lien caveat, with the same particulars, in February 2002: Ex 1, 22; COE, 80.14- 22; A, para 61. [ 95 ] Mr. Mitchell’s First Counsel sent a letter to Mr. Pytel dated June 26, 2002. The letter provided in part as follows (Ex 1, 23): I would require you to advise my client, with[in] 14 days of the date of this letter, of your intentions with respect to the payment of the monies owing to my client, and a firm payment schedule.

In the event a response is not received that is satisfactory to my client, I will be recommending that he proceed with whatever action is necessary to enforce his claim. [ 96 ] Mr. Pytel did not respond. [ 97 ] First Counsel sent a letter to Mr. Pytel dated November 25, 2002. The letter provided in part as follows: Further to my previous correspondence in this matter, and not having heard from you, I will be advising my client to proceed with enforcement of his caveat. [ 98 ] Enforcement of the caveat did not proceed. [ 99 ] Mr.

Mitchell claimed that over the next few years he initiated discussions about repayment with Mr. Pytel. According to Mr. Mitchell, “he always said he would pay me later.” [ 100 ] Mr. Pytel referred to discussions with Mr. Mitchell from around the time the second unpaid vendor’s lien caveat was registered. Mr. Mitchell expected to be repaid not only $78,000 plus about $30,000 for renovations, but $108,000 from CMHC. He felt that amount was his. Mr. Pytel accepted that he owed about $110,000. Mr. Mitchell wanted over $200,000. [ 101 ] Mr. Pytel said no. [ 102 ] He did not make payments to Mr.

Mitchell because the property was not rented out or not rented out fully. Money was still being put in. There was no excess money. [ 103 ] Mr. Pytel said there was “not much to discuss.” “I was under the impression we were going to court.” He has not paid anything to Mr. Mitchell because he has understood he was going to court. The issue was how much was owed. That would be decided by the court. F.

The 92 nd Street Property: 2003 [ 104 ] The Safe Housing Committee confirmed on February 3, 2003 that previously noted deficiencies had been addressed and the 92 nd Street Property met Safe Housing Committee requirements: Ex 1, 25. [ 105 ] Because of the registration of the (second) unpaid vendor’s lien caveat, CMHC did not advance the final draw. The amount of the loan was reduced by $5,898 to $102,102: Ex 1, 25. Mr. Pytel authorized CMHC to maintain the registration of the existing $108,000 mortgage. [ 106 ] Hence, $102,102 was the total amount advanced by CMHC to Mr. Pytel through the RRAP. G.

The 92 nd Street Property: 2006 [ 107 ] Mr. Mitchell sent a letter to Mr. Pytel dated February 11, 2006: Ex 1, 28. Of greatest moment was the following: My accountant has recently informed me that I paid approximately $500.00 for the utilities for the month of January 2006 .... I have been subsidizing that property since before I went down to land titles with you and transferred the property from my name to yours. Mr. Mitchell said “I cannot afford to do it any more.” Mr. Mitchell stopped paying for heat: A, paras 66, 67. [ 108 ] Mr. Pytel confirmed that Mr.

Mitchell had been paying for heat since after the property “had been condemned,” but not for electricity. [ 109 ] Mr. Mitchell sent another letter to Mr. Pytel dated July 29, 2006. Pertinent elements are as follows: You said if I felt I was owed $200,000.00 it was pretty much an “I’ll see you in court” kind of situation ....

... [Y]ou said if I only wanted $10,000 you would make out a cheque for me on the spot, right then and there .... Since other than the aforementioned observations, you have made no offers or proposals of any kind on just how you would repay me for the 5-suite building, the lot, and the many thousands of dollars I advanced you for the project, from virtually the beginning of the project a few years ago, and right up to earlier this year when, hearing no payment plan from you, I cancelled my final subsidy of paying the gas bill .... ...

I have not only never received a solitary dollar on my very substantial investment, you have also never made a cash settlement offer or a proposal of any kind to reimburse me, I gather you are putting the onus [on] me to come up with a proposal. Mr. Pytel confirmed that the meeting occurred and that he had conveyed to Mr. Mitchell that if he wanted $10,000 he’d pay him immediately but if he wanted $200,000 they would have to go to court: PRI, 346.1-14. [ 110 ] Mr. Mitchell provided four proposals for repayment in the correspondence. [ 111 ] Mr. Pytel did not respond.

He did not offer any kind of payment scheme, either directly or through counsel: PRI 320.3-8, 321.1- 4. [ 112 ] Mr. Pytel could not recall any communications with Mr. Mitchell from the time he filed his second caveat until the conversation in July 2006. [ 113 ] Mr. Mitchell claimed that “[a]fter all the years of waiting to get paid and after all the money I put into the Property, I finally realized that he had tricked me into transferring the Property to him and that he never had any intention of ever paying me anything:” A, para 68. That is, Mr. Mitchell only realized that Mr.

Pytel would not pay him or transfer back the property in 2006. [ 114 ] Mr. Mitchell claimed that after his previous dealings with the court system, “I was too scared to go to court:” A, para 69. H. Litigation [ 115 ] Mr. Mitchell retained new counsel (Second Counsel, not trial counsel) and filed a Statement of Claim on July 5, 2007. Mr. Pytel defended. [ 116 ] Mr. Mitchell brought a

summary judgment application, heard by Justice Bielby (as she then was) on December 19, 2007. In the hearing, counsel for Mr. Pytel stated that he “concedes that he owes the plaintiff approximately $108,000 without question:” Transcript, 13.17. Mr. Pytel’s counsel proposed that the lands be sold, that the $108,000 with interest be paid out to Mr. Mitchell, and that the balance be paid into court with entitlement to be determined: 13.20-14.8. The response of Mr. Mitchell’s counsel was “No:” 14.19. Justice Bielby dismissed Mr. Mitchell’s application. [ 117 ] Mr.

Pytel confirmed in cross-examination that the settlement proposal was made before the hearing. He did not make an offer prior to this. He had no answer to the question of why he had not made an offer earlier. [ 118 ] Since that 2007 proposal Mr. Pytel has offered no settlement. I. Current Assessed Value of the 92 nd Street Property [ 119 ] As of November, 2020, the assessed value of the 92 nd Street Property was $287,000: Ex 1, 29. Mr. Pytel testified that in 2001, the assessed value was $54,500, in 2002, $114,000, in 2003, $117,500. J. Rental Revenues [ 120 ] Between 2002 and 2017 Mr.

Pytel rented units in the 92 nd Street Property. The rent per unit was about $600 per month. The number of units rented varied. Sometimes there were vacancies and sometimes there were not, but Mr. Pytel always had some tenants and collected some rent. [ 121 ] In 2017, Mr. Pytel had problems with tenants, unpaid rent, and drug use on the property. [ 122 ] Currently all six suites are habitable. Mr. Pytel lives in one unit, one tenant lives in another and uses another unit for storage. That tenant pays rent of $1,000 per month. [ 123 ] Building expenses were not in evidence. III.

The Nature of the 92 nd Street Property Transaction [ 124 ] The nature of the transactions resulting in the 92 nd Street Property being transferred to Mr. Pytel and further amounts being paid by Mr. Mitchell are left obscure by the evidence. [ 125 ] Some spade work, though, reveals the nature of the arrangement. I will address perspectives on the arrangement that I consider erroneous or not supported by the evidence before addressing the arrangement that, in my view, the parties intended.

A. Erroneous or Unsupported Perspectives 1. Undue Influence [ 126 ] The Statement of Claim and Mr. Mitchell’s affidavit, not prepared by trial counsel, were sprinkled with suggestions that the arrangements between Mr. Mitchell and Mr. Pytel were the product of Mr. Pytel having exercised undue influence over Mr. Mitchell. [ 127 ] To anticipate, a finding that Mr. Pytel exercised a form of undue influence over Mr. Mitchell would be relevant to the limitations argument. If Mr. Mitchell was duped and suborned by Mr. Pytel, that could go to when he knew or should have known that he had a claim against Mr.

Pytel and to when a claim against Mr. Pytel was warranted. Further, s. 4(1) of the Limitations Act might have been engaged. [ 128 ] Trial counsel confirmed that this theory was not being pursued.

That stance, in my opinion, was appropriate. [ 129 ] Undue influence may be actual or presumed. [ 130 ] Presumed undue influence turns on the whether the benefiting party had a particular identified role in the relationship with the other party or the parties had a relationship of trust or confidence: Professor Mitchell McInnes, The Canadian Law of Unjust Enrichment and Restitution (Markham, Ontario: LexisNexis Canada, 2014) at 507; see Lemoine v Griffith , 2012 ABQB 685 , Hunt McDonald J at para 133, affd 2014 ABCA 46 . [ 131 ] Actual undue influence concerns circumstances in which the complaining party’s act in entering the transaction was morally involuntary.

Choice was not eliminated or absent, but choice was improperly constrained and the complainant’s reasoning respecting his or her interests was suppressed. Undue influence improperly impairs reasoning, judgment, or cognition, resulting in the complainant choosing to promote interests that would not have been promoted absent the improper influence. See, in the testamentary context, Kozak Estate (Re) , 2018 ABQB 185 at paras 3-8 ; McInnes at 508-509. [ 132 ] On the evidence in this case, Mr. Pytel engaged in neither actual nor presumed undue influence over Mr. Mitchell. (

a) Mr. Mitchell and Mr. Pytel [ 133 ] Mr. Mitchell was a successful businessman who had supported himself through his ownership and operation of low-rent apartments. Mr. Pytel was Mr. Mitchell’s tenant and handyman with no real estate or business experience and little formal education. (

b) Origin of the Idea of Selling to Mr. Pytel [ 134 ] Mr. Mitchell pointed to evidence to suggest that Mr. Pytel had been plotting to acquire the 92 nd Street Property since at least 1998. [ 135 ] Mr. Mitchell referred to a Capital Health Environmental Health Inspection Report prepared by Mr. Dong on June 18, 1998: A, 21. A handwritten note on the report read as follows: [blank] advised me that he was purchasing the property from Ron Mitchell – Mitchell will be holding the mortgage. It might be adviseable to register a “Notice of Health Hazard” against the property.

The author of the note was not established in evidence but I will assume it was Ken Dong. Mr. Mitchell’s contention was that the person whose name was redacted could only be Mr. Pytel. Hence, he was indicating to others his intentions to acquire the property as early as 1998. [ 136 ] However, Mr. Pytel denied that he was the person referred to in this document. He identified two other individuals who were interested in purchasing the property at the material time, as well as a “women’s organization” that was interested in acquiring the property. [ 137 ] Mr. Mitchell claimed that Mr.

Pytel approached him and proposed moving into the 92 nd Street Property and living there rent- free in exchange for repairing the property. [ 138 ] Mr. Pytel testified that Mr. Mitchell approached him with this proposal. Mr. Mitchell’s proposal was not acceptable to Mr. Pytel. He was already living (in effect) rent-free and collecting rent from his basement renter. He told Mr. Mitchell he was not interested. [ 139 ] Mr. Mitchell commented in his testimony that Mr.

Pytel needed a place to live (which was false) and the City required the owner to be living there, “so I came up with the scheme to have him do the work while he was living there.” [ 140 ] Further, Mr. Mitchell had been trying to sell the property for about a year, with no success. Mr. Mitchell had already been convicted for offences for failing to maintain his properties, including the 92 nd Street Property. [ 141 ] On the evidence, it was far more likely that Mr. Mitchell proposed selling the property to Mr. Pytel than that the sale was Mr. Pytel’s idea. (

c) The Offer to Purchase and the Transfer [ 142 ] Mr. Mitchell stated that he was rushed and in a very confused stressed mental state. Mr. Pytel knew this: A, 24, 33. In testimony, Mr. Mitchell confirmed that despite “feeling pressure,” he did not see a psychologist or a family doctor.

[ 143 ] This confusion, according to Mr. Mitchell, was manifest in connection with the Offer to Purchase. Mr. Mitchell claimed that because Mr. Pytel did not have money for the deposit, Mr. Mitchell gave him a cheque for $3,000 for the deposit. Mr. Mitchell said that Mr. Pytel cashed the cheque and kept the money and did not return the money to Mr. Mitchell: A, para 32. [ 144 ] The evidence shows that Mr. Mitchell was not rushed and confused respecting the Offer to Purchase. He prepared the document.

He brought his witnesses, tenants from his other properties, to the meeting at Buffet World. [ 145 ] I find that Mr. Mitchell did not provide the $3,000 cheque to Mr. Pytel. Mr. Mitchell could not produce a copy of the cheque. Numerous other cheques were in evidence relating to amounts Mr. Mitchell did expend relating to the 92 nd Street Property. [ 146 ] Mr. Mitchell claimed that on February 8, 1999, Mr. Pytel insisted that he and Mr. Mitchell go to the Land Titles Office to complete the transfer to Mr. Pytel: A, 39. Mr. Mitchell, again, brought one of his tenants to the meeting at the Land Titles Office.

I find that he took Mr. Pytel to the Land Titles Office, not the other way around. 2. Bare Trustee [ 147 ] Plaintiff’s counsel suggested that Mr. Pytel was to hold the 92 nd Street Property in trust for Mr. Mitchell. Mr. Pytel would be the registered owner, allowing him to obtain financing. Once the property was rehabilitated he would return it to Mr. Mitchell. Mr. Pytel, then, was not precisely a “bare trustee” or nominee since he did have some duties to perform respecting the property, but he was (on this theory) only the registered owner. Mr. Mitchell was the beneficial owner and Mr.

Pytel had an obligation to transfer the property back to Mr. Mitchell. (I will consider the related “resulting trust” theory in the next section.) [ 148 ] A “bare trustee” characterization might have some bearing on the limitations argument, since it might be a way to delay the triggering of the limitations period until the time when Mr. Mitchell knew or should have known that Mr. Pytel would not transfer the lands back to him and would not repay him. This sort of characterization might be relevant to a bid to distinguish the Daniels v Mitchell , 2005 ABCA 271 line of cases and to fit Mr.

Mitchell’s claim under s. 3(4) of the Limitations Act (remedial order for possession of real property). Finally, this characterization might have been argued to support purely declaratory relief, a declaration that Mr. Mitchell was the beneficial owner of the 92 nd Street Property, although the prospects of success of that argument would have been low. [ 149 ] The overall answer to this claim is found in my account of the nature of the transactions between Mr. Mitchell and Mr. Pytel. At this point, I will deal only with some evidence claimed to support Mr.

Mitchell’s maintained beneficial interest and some unwelcome implications should Mr. Mitchell have maintained the beneficial interest in the property. (

a) Evidence (

i) Mr. Mitchell’s Evidence [ 150 ] In his affidavit, Mr. Mitchell stated at para 37 that “As I understood it, transferring the title would just be a ‘technicality’ to satisfy Capital Health. The Defendant wouldn’t really own the Property because he couldn’t pay for it.” [ 151 ] Mr. Mitchell stated at para 42 that “I still treated the Property as mine. I continued paying for all the repairs, the taxes and the gas utilities.” In his testimony, Mr. Mitchell reiterated this last point, stating that he would not have paid the amounts he did respecting the property unless he believed he was the real owner.

Certainly there could be no inference that the payments were a gift to Mr. Pytel. [ 152 ] However, Mr. Mitchell’s testimony respecting his beneficial ownership and his right of return of the property was equivocal. [ 153 ] Mr. Mitchell did testify that “It was not my intention to sell [Mr. Pytel] the property.” But shortly afterward, when asked whether the sale was just a technicality and whether he was still the owner, he said it “sounds plausible but also dubious.” [ 154 ] When asked why the 92 nd Street Property was put into Mr. Pytel’s name, Mr.

Mitchell said “momentary insanity,” “I was being dramatic taking my name off and putting his on,” “I might have been showboating or something, trying to fight the system or something.” [ 155 ] When asked in cross-examination whether the transaction was a sale to Mr. Pytel or the property was just to be in Mr. Pytel’s name with Mr. Mitchell to continue to be the owner, Mr. Mitchell replied “Who knows?” When asked whether he was still the owner or not, Mr. Mitchell said, “not likely, I don’t think so.” He testified that “I guess I thought it was EJ’s building.

The City would be out of my life forever – but I can’t remember exactly what my feelings were.” [ 156 ] In his testimony, when asked whether he ever expected to get the land back, Mr. Mitchell said that “was pretty pie in the sky, if not vague.” He said “I trusted [Mr. Pytel] so much, I thought we’d work something out. I hoped I’d benefit as much as he did from the deal.” Otherwise, “I hadn’t thought that far down the road.” He then did say that “I supposed I thought I’d get the land back.” [ 157 ] Even taken by itself, Mr. Mitchell’s testimony did not establish on a balance of probabilities that Mr.

Pytel was only the registered owner and Mr. Mitchell remained the beneficial owner of the 92 nd Street Property. [ 158 ] The evidence as a whole further diminished the likelihood of the “bare trust” theory. I will consider Mr. Pytel’s evidence next, but before turning to his evidence, I will look to the after-the-fact evidence of the two unpaid vendor’s lien caveats.

I bear in mind the Court of Appeal’s warning in Singh v Kaler , 2017 ABCA 275 at para 25 that “[p]ost-transaction evidence is only relevant if it shows time-of-transaction intent.” See also Nishi v Rascal Trucking Ltd , 2013 SCC 33 , Rothstein J at para 41. Neither caveat protected Mr. Mitchell as beneficial owner of the lands. Both referred to his interests as an unpaid vendor. Both caveats were filed with the assistance of counsel. There is no reason to attribute a lack of reliability to this characterization of Mr. Mitchell’s interest.

The caveats confirm sale rather retention of beneficial interest in the lands.

(ii) Mr. Pytel’s Evidence [ 159 ] Mr. Pytel testified that he made no promises respecting Mr. Mitchell’s ownership of the property. [ 160 ] There was some evidence in the Plaintiff’s read-ins from Mr. Pytel’s Questioning on Affidavit that supported the trust and right of return theory. Mr. Pytel confirmed, for example, that “It was always understood at least by me that any time he was unsatisfied he would take the property back:” 89.3-6; see also 88.20-26; 110.25-27. [ 161 ] However, the line of questioning and the answers that supported a “right of return” to Mr. Mitchell must be understood in context.

At this point in questioning, Mr. Pytel was dealing with a hypothetical, with a situation in which the RRAP funding did not come through and there was no money for renovations. In his trial testimony, Mr. Pytel explained that this was a “different situation,” a “what if.” If what didn’t happen had happened, then, as Mr. Pytel said, he “would not be able to do anything” with the property. If Mr. Mitchell asked, he’d return the property to him: see 89.15-18, .25-26, .6-9; 115.15-19. I understand Mr. Pytel in the Questioning to have been offering a practical solution to a hypothetical problem.

If he got no funding for renovations, the property was of no value to him. He would return it to Mr. Mitchell. This would be the equivalent of a quit claim back to the vendor/mortgagee, Mr. Mitchell. [ 162 ] Mr. Pytel’s evidence, however, no more means that Mr. Mitchell was the beneficial owner of the lands than that any mortgagee is the beneficial owner of a mortgagor’s lands. (iii) Further Considerations [ 163 ] On the “bare trust” theory, Mr. Pytel would have left his effectively rent-free accommodations and done some hard work and organization to renovate the 92 nd Street Property – and for what?

The nature of any compensation for Mr. Pytel on return of the property was lacking on the evidence (I will return to the $125,000 issue below). Moreover, the evidence did not provide any indication of when the obligation to return the property to Mr. Mitchell would be triggered. [ 164 ] At the time of execution of the Offer to Purchase, the 92 nd Street Property had a clear title. The lands were not mortgaged. Mr. Mitchell had other properties. Mr. Mitchell could have mortgaged the property himself to finance renovations. He could have applied for RRAP funding himself. Granted, Mr.

Mitchell would not likely have wanted to live onsite or to have been his own general contractor. But Mr. Dong was willing to allow a caretaker to live on site if some renovations were completed: Ex 4, 19, 36. Mr. Mitchell could have hired Mr. Pytel or someone else to supervise the renovations and serve as caretaker. Installing Mr. Pytel as registered owner was unnecessary. [ 165 ] The solution to Mr. Mitchell’s problems with the 92 nd Street Property was in fact, as he testified in cross-examination, to sell the property to Mr. Pytel and no longer be bothered with it. Mr.

Mitchell was trying to “get the City out of my hair.” He was “overwhelmed” with “fighting the City.” Mr. Pytel “would get a place to live and solve the problems and not cost me any money as well.” [ 166 ] I find that Mr. Pytel established that the arrangement with Mr. Mitchell was not that Mr. Pytel would be only the registered owner of the 92 nd Street Property, with Mr. Mitchell retaining the beneficial interest and with Mr. Pytel being under an obligation to return the property to him. In all the circumstances, it would not have made sense for Mr.

Mitchell to have retained the beneficial ownership in the 92 nd Street Property. What was in his interest was what was done on the face of things – to wash his hands of this property, to make it someone else’s problem. (

b) Contrary to Public Policy [ 167 ] If Mr. Mitchell were to have remained the beneficial owner of the 92 nd Street Property and if transferring the title to Mr. Pytel would have been just be a “technicality” to satisfy Capital Health, the inference would be that the involvement of Mr. Pytel was just part of a scheme by Mr. Mitchell to avoid responsibility for the ongoing lack of repairs to the property and to avoid any scrutiny by the competent authorities while accruing any and all benefits to the lands effected by Mr. Pytel. If, through the transactions with Mr. Pytel, Mr.

Mitchell were the true beneficial owner of the 92 nd Street Property, in my view, the transactions would be contrary to the public interest and so void. [ 168 ] The intention and effect of the transactions would be to permit Mr. Mitchell to evade his responsibilities under the regulatory provisions governing safe housing and to make Mr. Pytel a party to this scheme. Mr. Mitchell would be hidden from prosecutorial view but would have maintained his beneficial interest in the property.

The transaction would “[operate] contrary to principles and policies underlying a statutory scheme:” McInnes at 849; J D McCamus, The Law of Contracts , 2nd ed (Toronto: Irwin Law, 2012) at 455. [ 169 ] As such, the transaction would not be enforceable by Mr. Mitchell. Hence, in my view, Mr. Mitchell would have no legally recognizable cause of action against Mr. Pytel. [ 170 ] Had I found that the “bare trust” arrangement was made out, I would have dismissed Mr. Mitchell’s claim against Mr. Pytel on that basis alone. However, I did not find that the “bare trust” arrangement was established on the evidence. (

c) Clean Hands [ 171 ] Further, Mr. Mitchell sought an accounting for “all rents and profits” made by Mr. Pytel and, as I understood the prayer for relief, for the disgorgement of those rents and profits to Mr. Mitchell. Insofar as the remedies sought by Mr. Mitchell were equitable in nature, Mr. Mitchell would have been met by the requirement that he who seeks equity must do equity, or more specifically, “He Who Comes Into Equity must come with Clean Hands:” J McGhee, ed, Snell’s Equity , 32nd ed (London: Thomson Reuters (Legal) Ltd, 2010) at 112 – 114 (§5-015). Even more specifically, equity will not “aid a litigant to derive advantage from the litigant’s own wrong” as by

aiding a litigant to achieve a dishonest purpose: see, e.g., KGH v SLV , 2013 ABQB 326 , Jeffrey J at paras 48-49; Wang v Wang , 2020 BCCA 15 at para 46 . In this case, the dishonest purpose would have been to evade the scrutiny of the competent authorities respecting the ownership of the 92 nd Street Property. The dishonest purpose would have been directly linked to the transaction giving rise to the claimed remedy. The dishonest transaction would have been the predicate for the relief claimed.

That dishonest purpose may well have caused the Court not to exercise its discretion to grant at least the equitable remedies sought by Mr. Mitchell. [ 172 ] But again, I did not find Mr. Mitchell merely caused Mr. Pytel to become the registered owner of the 92 nd Street Property while retaining beneficial ownership. 3. Resulting Trust [ 173 ] Plaintiff’s counsel contended that Mr. Mitchell was the beneficial owner of the lands by way of resulting trust, on the basis that the transfer to Mr. Pytel was gratuitous. [ 174 ] Mr. Pytel admitted that he did not pay Mr.

Mitchell for the 92 nd Street Property and he did not pay back the subsequent amounts spent by Mr. Mitchell. I realize that the mere fact that a debtor does not repay a loan or a party fails to pay an amount under a contract does not make that party a trustee for the person owed the money. The presupposition of these examples, though, is that the context was one of debtor-creditor or promisor-promisee under a contract. A difficulty in the present circumstances is that the nature of the arrangement between Mr. Mitchell and Mr.

Pytel was not carefully articulated by them. [ 175 ] I will take the evidence of complete non-payment as sufficient to engage the resulting trust doctrine. Mr. Pytel therefore had the burden of establishing that the 92 nd Street Property and the funds paid by Mr. Mitchell were not held in trust by him. The burden of rebutting the presumption of resulting trust lies on Mr. Pytel: Singh v Kaler at paras 7, 26 . [ 176 ] There was no evidence that Mr. Mitchell made a gift of the land or a gift of subsequent payments to Mr. Pytel. [ 177 ] Neither was there evidence that Mr. Mitchell owed anything to Mr.

Pytel and that the land and payments were transferred to discharge Mr. Mitchell’s own liabilities to Mr. Pytel. [ 178 ] Neither, though, was Mr. Mitchell a “purchase money” beneficial owner. Mr. Mitchell did not advance money for the purchase of this property. He was the owner. He purported to sell the property to Mr. Pytel. See Singh v Kaler at para 22 ; Nishi v Rascal Trucking at paras 1, 21-22. [ 179 ] I have found, as I will discuss below, that the Offer to Purchase was intended to constitute a contract. Mr. Pytel promised to pay $78,000 to Mr. Mitchell.

The promise to pay was consideration for the transfer of the 92 nd Street Property. Mr. Pytel also promised to secure his obligations by way of a mortgage. Mr. Pytel had obligations to pay Mr. Mitchell. Mr. Mitchell’s subsequent injections of cash were in the nature of loans or financing to Mr. Pytel. Mr. Mitchell expected to be repaid and Mr. Pytel expected to repay Mr. Mitchell. Both considered the advances to be secured by the property. I have found that the transactions amounted to a sale contemplating a deferred payment of the purchase price followed by loans to cover renovations also to be repaid by Mr.

Pytel. [ 180 ] Even though Mr. Pytel paid neither the deposit nor the remainder of the amount owing to Mr. Mitchell, that did not invalidate the intended contract (more on the validity of the contract below). The contract did not provide nothing to Mr. Mitchell. [ 181 ] Equity would have recognized that Mr. Mitchell had a charge against the lands for the unpaid purchase price. I would have also favourably entertained the argument that the charge would have extended to the additional advances made by Mr.

Mitchell: Re Nuport Holdings Ltd and Michael Duff Estate; Re Quieting of Titles Act , 2003 NLSCTD 63 , Green J at para 49. [ 182 ] On the evidence, I did not find that Mr. Mitchell was entitled to the beneficial interest in the 92 nd Street Property by way of a resulting trust. Mr. Pytel discharged his burden of showing that the transaction was not one that left the beneficial interest in the lands with Mr. Mitchell. 4. Sale, Renovation, Sale and Split of Proceeds [ 183 ] Yet another characterization of the arrangement between Mr. Mitchell and Mr. Pytel emerged in the cross-examination of Mr.

Pytel on his affidavit. We read the following at PRI 103: 103.3-5 Q In exchange for doing that you were going to make a profit of I’d say $125,000, right? A Possibly. .7-9: that’s assuming everything went according to these figures. 103.10-16 Q So Mr. Mitchell is going to part with a $75,000 property and let you make $125,000 some time years in the future just so you can pay him back $75,000? A Yes, if we consider what the value of the property was and what the property was, yes.

Q And that was the deal? A Yes. [184] What these comments might be taken to suggest is that the arrangement was not the formation of a trust but a sale to Mr. Pytel, on the conditions that Mr. Pytel renovate the 92nd Street Property, sell it, and split the profit with Mr. Mitchell. [185] In testimony, Mr. Pytel denied that this was the plan. He had “no plan of any profit.” By that I understood him to mean that hedid not have any specific profit amount in mind and that he did not consider a term of the agreement with Mr.

Mitchell to be that hewould sell the property to realize that profit. [186] The parties did not address the issue of whether the requirement for sale of the lands might be void as a condition againstalienation (or, in this case, non-alienation) running contrary to the concept of ownership. See Hongkong Bank of Canada v WheelerHoldings Ltd, (SCC), [1993] 1 SCR 167, Sopinka J at 205-209 and Master Quinn’s discussion at (AB QB). [187] Regardless, I find that this sort of arrangement was not contemplated by the parties. [188] In his testimony, Mr.

Pytel denied that the plan was for him to buy the property, fix it up, sell it for a profit and split the profitwith Mr. Mitchell. In cross-examination, Mr. Pytel said the $125,000 number did not come from him – “it is not my number.” It wasnever his intention to sell the property. This was never the plan. What appears to have occurred at this juncture in the cross-examinationon affidavit was that a profit number was put to Mr. Pytel and Mr. Pytel simply acknowledged the possibility of that quantification ofprofit. In the cross-examination, Mr. Pytel did not describe a sale followed by another sale.

If anything, he was confirming that he would be entitled to profit from the increase in value of the 92nd Street Property after the amounts owing to Mr. Mitchell were paid. That profitdid not depend on realization through a sale, still less a sale pursuant to a covenant or condition of the disposition of the property to Mr.Pytel. [189] Nothing in Mr. Mitchell’s evidence supported this particular arrangement or amount. B. The Nature of the Transactions [190] Mr. Pytel testified that “I would get a property.” Mr.

Mitchell would receive the sales price and “the money he put in.” Mr.Pytel testified that “I would buy the building, fix it up, and rent it out.” Mr. Pytel testified that the plan was to get the property rented,collect the rent, and pay the mortgage, the amount owing to Mr. Mitchell. [191] The transactions between Mr. Mitchell and Mr. Pytel had two main features. [192] First, Mr. Mitchell sold the 92nd Street Property to Mr. Pytel with the purchase price secured against the lands. [193] Second, the 92nd Street Property required renovations to make the money Mr.

Pytel needed to pay the purchase price.Renovations cost money, money Mr. Pytel didn’t have. Mr. Mitchell financed some renovations. This financing amounted to loans toMr. Pytel that Mr. Pytel was required to pay back. [194] I find that Mr. Mitchell’s transactions with Mr. Pytel respecting the 92nd Street Property had the elements that follow. 1. Sale of the 92nd Street Property [195] The parties contemplated and executed the sale of the 92nd Street Property from Mr. Mitchell to Mr. Pytel. [196] Mr. Mitchell’s motivation was clear.

He would rid himself of responsibilities to renovate a property that had already cost him aconviction and fine. The lands were a burden to him. He was forbidden to have tenants in the building. The building had been boarded upfor about a year. While at least two potential purchasers had circled the property, no one made an offer. [197] Mr. Mitchell would not make money immediately from the property by unloading it on Mr. Pytel, as he would with a typicalsale, but the property had not been generating any revenue for over a year and no buyers besides Mr.

Pytel were on the horizon. [198] A sales price of $78,000 made sense. The building itself was condemned, so worth nothing. In fact, were it not renovated, Mr.Mitchell would bear the demolition costs. The appraised value of the property in 1999 was $54,500. I interpret this as reflecting the valueof the lot only. The sales price, elevated to $78,000, recognized the anticipated delay in the payment of the purchase price. [199] Mr. Mitchell was transferring an imminent financial risk to Mr. Pytel. A profit on this deal was speculative. But if Mr. Pytelcould not get the project off the ground, Mr.

Mitchell would not be worse off than before the sale. If Mr. Pytel did get the project off theground, Mr. Mitchell stood to make some money. Mr. Mitchell would benefit regardless of Mr. Pytel’s success. Heads he wins, tails hewins. As Mr. Pytel’s evidence suggested, if Mr. Pytel failed to rehabilitate the property, he could return it to Mr. Mitchell – or try to doso. [200] Mr. Pytel’s motivation was clear. He would receive a potential revenue-generating property. He would become a commercialproperty owner and would leave his humble but rent-neutral accommodations.

He would be required to do the renovations that would putthe property into revenue-generating form. He was used to hard work. He could do some of the work himself and contract out what hecould not do himself. [201] If either party was buying into a dream, it was Mr. Pytel.

[202] The sale was reflected in the Offer to Purchase and the transfer. A contract of sale was contemplated and entered into, and theproperty was transferred. No caveats protecting Mr. Mitchell’s interests were filed for several years. [203] In 2001 and 2002, Mr. Mitchell filed unpaid vendor’s lien caveats. These were filed after consulting with counsel. This post-transfer conduct confirms the transaction represented by the Offer to Purchase and transfer. 2. Purchase Price [204] The purchase price for the 92nd Street Property was clear, $78,000.

This was stated in the Offer to Purchase. [205] Other aspects of the transactions, though, were murkier. 3. Mortgage [206] The Offer to Purchase contemplated that Mr. Pytel would secure the purchase price (less deposit) by a mortgage back to Mr.Mitchell. [207] But the deposit wasn’t made and the mortgage wasn’t granted. [208] Mr. Mitchell did have an equitable charge against the lands as an unpaid vendor, but it was not clear that he knew this beforegetting advice from counsel.

See 1279017 Alberta Ltd v 1257613 Alberta Ltd, 2009 ABCA 364 at para 15; Denny v Nozick, , 15 Alta LR 288 (CA), Stuart J at 292-294; Leacock v Leacock, 2009 ABQB 525, Laycock M at paras 6-7; Re NuportHoldings Ltd and Michael Duff Estate at paras 37, 42-43. [209] The Offer to Purchase specified an interest rate and stated that payments would start on January 15, 2000. [210] But no periodic payments were made by Mr. Pytel, whether in January 2000 or at any time. [211] Mr. Pytel’s failure to commence payments did not deter Mr. Mitchell from making further advances respecting the 92nd StreetProperty.

This conduct shows that what the parties had contemplated was not a mortgage with the terms set out in the Offer to Purchaseor that the parties contemplated repayment as set out in the Offer to Purchase. [212] The parties’ conduct supports the finding that the 92nd Street Property was truly sold to Mr. Pytel, who was responsible formaking the property a going concern again – with Mr. Mitchell’s further assistance – so that Mr. Mitchell could make his profit on thedeal. Mr. Mitchell, I note, had referred in the October 12, 2001 to his “continued support” for this “project.” 4. Further Investments [213] Mr.

Mitchell made further investments in the 92nd Street Property, in an amount I’ll discuss below, plus payments for the heatfor the building. (

a) Advances [214] The further investments were not made pursuant to a written agreement. [215] The parties appeared to understand, though, that the further investments were secured by the property, as if the mortgage (thathad not, actually, been granted) secured a line of credit. Again, there could have been an argument that these investments were securedby the unpaid vendor’s lien. [216] Why, though, would Mr. Mitchell have made “advances” unless he thought, for example, that the property was really his? (

b) Relevance of the RRAP [217] The RRAP played a crucial role in the arrangement between Mr. Mitchell and Mr. Pytel. [218] Despite his protestations to the contrary, Mr. Mitchell was familiar with the RRAP. He knew that it would reimburse renovationcosts. Mr. Pytel had stated that Mr. Mitchell did not give him money “to fix the place until I had RRAP funding:” PRI, 255.16-21. [219] The RRAP funding was relevant to Mr. Mitchell because it meant that there was funding to compensate for renovationexpenses. Money was not simply disappearing into the property with the hope that Mr.

Pytel would have the wherewithal to repay it.Funding was being received by Mr. Pytel that would improve the prospect of repayment of Mr. Mitchell. In Questioning, in response tothe question of why Mr. Mitchell would care about RRAP funding, Mr. Pytel rightly responded “it does help him:” PRI, 286.23-24. [220] RRAP funding required that renovations be paid for before being reimbursed. [221] If Mr. Mitchell did not make advances to Mr. Pytel, the work would not get done, Mr. Pytel would not get reimbursed, and Mr.Mitchell would not get any money from the property: PRI, 278.17-18. (

c) Heat [222] It appeared that Mr. Mitchell paid for “heat” or natural gas for the 92nd Street Property. Mr. Mitchell ceased to pay for heat in

January, 2006. What he paid for heat over the years was not expressly in evidence. The only evidence is his claim that in 2006 he paid$500 per month. [223] On the evidence, Mr. Mitchell paid for the heat by mistake. He did not intend to do so. Mr. Mitchell had paid for heat before Mr. Pytel took ownership of the 92nd Street Property. Mr. Mitchell had not realized that he continued to pay for heat after Mr. Pytel tookownership of the property until Mr. Mitchell was advised by his accountant. 5.

Repayment Terms [224] No documentation specified when (in the absence of the mortgage) the purchase price would be repaid or that the furtherinvestments would be repaid. Neither (in the absence of the mortgage) was an interest rate specified. [225] Given that Mr. Pytel had no resources independent of the 92nd Street Property to pay any monthly amount aside from earningsas a casual labourer, the parties must have contemplated that payment would come from rentals from that property. [226] However, it could not be that amounts would become due to Mr. Mitchell as soon as Mr.

Pytel received the first rent cheque.Some level of revenues in excess of ongoing expenses, some level of repayment of any personally-incurred renovation costs, and somelevel of return on Mr. Pytel’s investment would have to be provided for, before repayment to Mr. Mitchell. “Expenses” and any “level ofreturn” to Mr. Pytel would have to be specified. These sorts of qualifications of the repayment obligation, however, were not reduced towriting. [227] Mr.

Pytel’s evidence accurately reflected the state of affairs: we had an agreement for sale, but the details weren’t worked out –they still have not been worked out: PRI, 89.22. The numbers have not been put in place: PRI, 99.7-8. Mr. Pytel stated that Mr. Mitchell“told me we could deal with issues concerning interest and payments once the property was repaired and earning money:” PRI, 218.1-9. 6.

Summary [228] The nature of the transactions between Mr. Mitchell and Mr. Pytel was as follows: Mr. Mitchell sold the 92nd Street Property toMr. Pytel. Mr. Pytel was obligated to pay the purchase price and to repay advances made by Mr. Mitchell for the renovation of theproperty. Mr. Pytel’s obligations were “secured” by the property. Mr. Mitchell was not entitled to rental revenues, but Mr. Pytel expectedto pay Mr. Mitchell through rental revenues he received. When payments would begin, how payment would be calculated, and howmuch payments would be were not specified. C.

Validity of the Transaction [229] The overall transaction in which the sale, securitization, payment, further investment and further re-payment were embeddedwas not in writing. All that was in writing was the Offer to Purchase. [230] Four sets of issues beset the transaction: • was the transaction unenforceable because of the Statute of Frauds? • was the determination of the nature of the transaction circumscribed by the parol evidence rule? • was the transaction void because of lack of certainty of terms? • if the transaction were void, what would be the remedial consequences for Mr. Mitchell? 1.

Statute of Frauds [231] The Statute of Frauds (1676), 29 Car II c 3 was received in Alberta in 1870 and is unmodified respecting real property: J.E.Côté, “The Introduction of English Law Into Alberta”

(1964) Alberta Law Review 262 at 266; McInnes at 887; Coulee Creek ConsultingInc v Minion Estate, 2010 ABQB 583, Graesser J at para 28. The Statute of Frauds requires that agreements concerning land be inwriting. In modern language, the relevant elements of s. 4 of the Statute of Frauds are as follows: No action shall be brought … to charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in orcon

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