Nielson v. Dawes, 2013 BCSC 375

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Nielson v. Dawes, 2013 BCSC 375 Date: 20130307 Docket: 10 0359 Registry: Victoria Between: Sherril Lynn Nielson Claimant And Brian Edward Dawes Respondent Before: The Honourable Madam Justice Ross Reasons for Judgment Counsel for the Claimant: Laura G. Atkinson Counsel for the Respondent: Coll Gordon Place and Date of Trial: Victoria, B.C. November 27-29, 2012 Place and Date of Judgment: Victoria, B.C. March 7, 2013 Introduction [ 1 ] This is an action in unjust enrichment.

The claimant, Sherril Nielson, alleges that the respondent, Brian Dawes, has been unjustly enriched by her contributions to the acquisition, maintenance and improvements to Mr. Dawes’ real property located at Sunset Drive, Salt Spring Island (Sunset Property) where the parties lived together from 2001 to 2008. Ms. Nielson seeks a 33% interest in the net increase in value of the Sunset Property during the period of cohabitation. In the alternative, she claims in quantum meruit . Facts [ 2 ] Ms. Nielson is 58 years old. Mr. Dawes is 55 years old. Mr.

Dawes has three sons from his former relationship who are currently aged 31, 28 and 26. [ 3 ] The parties met in July 1999 when they were introduced by a mutual friend. At the time Ms. Nielson was living in rented accommodations on Salt Spring Island, frequently renting out rooms in the house to roommates. She maintained an office in her home. Mr. Dawes was living in the Sunset Property. [ 4 ] At the start of the relationship Ms. Nielson was working part time for the BC Ambulance Service (BC Ambulance).

The job was very flexible; she could bid on the shifts she preferred, which permitted her to take time off when she needed to be away working on her other ventures. Ms. Nielson usually worked about three to four shifts a week for BC Ambulance. The ambulance service operated on a call out system. If a person was on a shift, they did not need to be at the station so long as they were within six minutes of the station. Because she lived within six minutes’ travel time from the station, Ms. Nielson was able to work at home on her businesses during her shifts. By 1998, Ms.

Nielson had accumulated enough seniority to apply for full time employment with the ambulance service; however that would entail a move to Vancouver for four to five days a week until sufficient seniority had been accumulated to obtain a position back home. [ 5 ] In the year the relationship started, Ms. Nielson received $7,895 from her employment with BC Ambulance. She earned $11,832 the following year, composed of income from BC Ambulance and some income from Workers’ Compensation. Her earnings fluctuated between these amounts in the subsequent years, until she resigned from the service in 2005. [ 6 ] Ms.

Nielson also operated two businesses, Quanta Systems Ltd. and Everybody’s Kitchen Ventures Ltd. Ms. Nielson had written a book on food safety which Everybody’s Kitchen was endeavoring to market both in Canada and internationally. The book was first released in December 1996. The venture did not prove profitable but Ms. Nielson was changing direction and marketing it as a text. It was her expectation during the relationship that the venture would eventually turn a significant profit. There were some investors in Everybody’s Kitchen, including Mr. Dawes who had invested $10,000 in June 2000.

[ 7 ] However, despite Ms. Nielson’s optimism for the venture, Everybody’s Kitchen did not prosper. At the start of the relationship the financial statements register a net income loss and retained deficit of over $40,000. The pattern of losses continued with gradually increasing retained deficit. [ 8 ] Quanta Systems was a consulting business dealing with food safety issues for restaurants. Ms. Nielson provided services relating to food safety and first aid training. She was the sole operator and shareholder of Quanta. Ms. Nielson did experience success with Quanta.

At the start of the relationship it too was in a loss position with respect to both income and a retained deficit. However, its sales increased and in 2008 Ms. Nielson declared $5,523 of income from Quanta. This had increased to $20,000 by 2011. [ 9 ] Throughout the relationship Ms. Nielson worked at least 40 hours a week on her two business ventures. On occasion her work at Quanta required her to travel. [ 10 ] At the time the parties met, Mr. Dawes was in the midst of a divorce. He was living in the former matrimonial home, the Sunset Property. Mr. Dawes had built the home himself. Mr.

Dawes had separated from his wife in 1998. Mr. Dawes’ three sons were ages 13, 15 and 19 at the start of the parties’ relationship. The two oldest sons were living with Mr. Dawes in 1999. [ 11 ] Mr. Dawes has owned and operated an excavation business – Dawes Excavation Ltd. – since 1981. He is the sole owner and employee. He took on as much work as he could obtain and worked 40 hours or more per week at the business. During the relationship Ms. Nielson provided some assistance to Mr. Dawes’ business such as assisting him in creating ads for the business.

I find that this assistance was minimal. [ 12 ] The parties began a relationship shortly after they met. Ms. Nielson spent several nights a week at Mr. Dawes’ home, returning to her rented accommodation to work. During this period she cooked dinner, cleaned up after the meal and assisted around the house. She prepared lunch and morning coffee for Mr. Dawes. During the relationship the parties attended social functions together as a couple. [ 13 ] In August 1999, Mr. Dawes entered into a separation agreement with his wife.

At the time of the agreement there was a $71,000 first mortgage and equity loan of $56,000 registered against the home. Pursuant to the agreement, Mr. Dawes purchased his wife’s interest in the home for $102,839, secured by a third mortgage. [ 14 ] Ms. Nielson suffered an injury at work in 2000 and was off work at BC Ambulance for nine months. She returned to work, again on a part time basis, in June 2002. [ 15 ] Ms. Nielson moved in with Mr. Dawes in March or April 2001. The parties did not pool their finances. They never combined banking arrangements. However Ms. Nielson made Mr.

Dawes the beneficiary of her RRSP. She declared her status as single on her income tax returns. [ 16 ] At the time she moved in with Mr. Dawes, Ms. Nielson had significant personal and corporate debt, a negative balance in her bank account and no RRSP. Mr. Dawes had about $200,000 of debt. [ 17 ] Ms. Nielson did not pay rent. Mr. Dawes paid for virtually all of the household expenses including groceries and utilities. Mr. Dawes paid the property tax, insurance and mortgage payments. Ms. Nielson paid for the maintenance agreements for the appliances. She paid for some groceries to “top up” the weekly order.

After she moved into Mr. Dawes’ home, Ms. Nielson maintained a home office there. She paid for a fax and internet line that she used for her business. Mr. Dawes made some, extremely limited, use of the fax and internet. [ 18 ] Ms. Nielson cooked dinners and did the grocery shopping. She did some laundry and tidying up around the house. Ms. Nielson cleaned up after mouse infestations in the fall, cleaning, bleaching and checking traps. She stated that Mr. Dawes assisted in this task. Mr. Dawes did the outdoor work and inside work maintaining the home. He put in a garden for Ms.

Nielson, who enjoyed gardening as a hobby. Mr. Dawes did not keep up the garden after Ms. Nielson moved out and the garden was left to return to its natural state. The parties shared the costs of a housekeeper. Everyone shared the task of bringing in firewood. Ms. Nielson assisted in painting the deck. Ms. Nielson estimated that she spent about 20 hours a week cooking and doing housework. [ 19 ] Ms. Nielson received a $40,000 inheritance, paid in two installments in 2003 and 2004.

She used the funds to pay some personal bills and expenses and purchase an RRSP. [ 20 ] In 2003, the work done through Quanta expanded to include farm audits. This entailed considerable travel. [ 21 ] In June 1998, Ms. Nielson had put a $2,000 deposit on a 20 acre parcel on Stewart Road, Salt Spring Island. The total purchase price for the bare land was $285,000. The original closing date was May 2000 but that was extended to December 2003. Ms. Nielson stated that her plan at the time she made the deposit was to build a home on the lot.

She anticipated being in a position to accomplish this with the earnings she was anticipating from Everybody’s Kitchen. She testified that a backup plan was to go to work full time with BC Ambulance. [ 22 ] In December 2003, she decided not to proceed with the transaction and obtained her deposit back. Ms. Nielson testified that she decided not to proceed because Mr. Dawes said that they did not need another property; one was enough to deal with. However, she agreed in cross-examination that she did not have the funds necessary to close. [ 23 ] In 2003, Mr.

Dawes increased the debt registered against the Sunset Property in order to purchase equipment for his business. [ 24 ] Ms. Nielson resigned from her position with BC Ambulance in 2005. She stated that one reason was that it was no longer as convenient for her given the location of Mr. Dawes’ home which was nine minutes’ travel from the station. Because it took longer than six minutes to drive from Mr. Dawes’ house to the station, Ms. Nielson could not work at home during her shifts. She was required to take her work to the station while she was on call. She said that another reason was that Mr.

Dawes was not supportive of her work with BC Ambulance. Ms. Nielson agreed that because she resigned from BC Ambulance, she was able to devote more time to her work.

Quanta’s revenue increased dramatically in 2004-2005, the beginning of a trend to profitability. [ 25 ] In that year Mr. Dawes made Ms. Nielson the beneficiary under a life insurance policy. Mr. Dawes explained that he trusted Ms. Nielson, at that point, to look after his children who were not old enough to benefit directly. [ 26 ] In the fall of 2006, Mr. Dawes advanced $25,000 to Ms. Nielson to purchase a 2001 Ford Explorer that was purchased through Quanta. The arrangement was to be a loan. Ms. Nielson was to repay principal and interest at $300 per month.

She made payments as follows: November 2006 $2,600 December 2006 $300 April 2007 $600 May 2007 $600 [ 27 ] The beginning of the end of the relationship occurred in November 2006 when Mr. Dawes told Ms. Nielson that he was preparing a will. He said that it was his intent to leave her as the beneficiary of a $100,000 life insurance policy and to permit her to remain living in his home for two years after his death. Ms. Nielson stated that she was shocked by this news. She had expected to be given a life estate in the home. She told him that he had to find a way to take care of both her and his children. Mr.

Dawes said he would have to think about it and Ms. Nielson agreed to give him time. [ 28 ] Ms. Nielson stated that, during the relationship, her expectation was that they would be a family together. She never anticipated separation. Mr. Dawes gave her an eternity ring, which she took to be a sign of serious commitment. [ 29 ] Nothing further was said about the subject for about a year. Then Ms. Nielson asked Mr. Dawes if he had come to any conclusions and he said that he had not. At that point Ms. Nielson moved out of the bedroom they shared and into the guest room.

She also stopped doing cooking and cleaning. [ 30 ] Mr. Dawes went on a trip for about a month in April 2008. When he returned in May he told Ms. Nielson that he wanted her to move out of the house. She stated that she could not afford to move out at the time and so she stayed in the home until December of that year. She borrowed $10,000 from Mr. Dawes to finance her move. At Mr. Dawes’ insistence, Ms.

Nielson took with her everything she had purchased for the household, including the gardening tools, shed, benches, planter boxes, hanging baskets, and outside potted plants from the garden. [ 31 ] The Sunset Property was assessed at $277,700 in 2001, the year Ms. Nielson started residing there. The assessed value was $672,000 in 2008, the year the parties separated. There is an appraisal in evidence that places the value of the home at $684,000 as of September 30, 2008. The increase in value is due to changes in the market.

Legal Principles [ 32 ] The applicable legal principles that govern claims in unjust enrichment and constructive trust in family matters are described in Kerr v. Baranow , 2011 SCC 10 . For Ms. Nielson to be awarded a remedy for unjust enrichment, she must establish three elements as described in Kerr , at para. 32 ; namely enrichment of the defendant by the claimant; corresponding deprivation of the claimant; and absence of a juristic reason for the enrichment. [ 33 ] In order to establish enrichment, the claimant must establish that she gave something tangible to the defendant that was received and retained.

The benefit can be positive or negative, that is something that spared the defendant an expense. The claimant must then show that she suffered a deprivation that corresponded to the enrichment. The balancing of a flow of reciprocal benefits between the parties is generally to be undertaken at a later stage in the analysis. [ 34 ] The claimant must next establish that there is no reason in law or justice for the defendant to keep the benefit received from the claimant.

As a first step, the court must determine if there is a juristic reason for the enrichment that falls into an established category, which includes contract, disposition of law, gift, or other common law, equitable or statutory obligations.

Consideration is then given to the reasonable expectations of the parties, public policy issues and potential new categories. [ 35 ] If the court concludes that there is no juristic reason to deny recovery, the court must then review possible defences such as a change of position; estoppel; statutory defences; laches and acquiescence; limitation periods; and counter-restitution: Wilson v.

Fotsch , 2010 BCCA 226 at para. 11 . [ 36 ] If the court finds unjust enrichment has occurred and no defences are available, then the next step is to determine the nature of the remedy, which may be in the form of a proprietary interest in the property or a monetary remedy. A proprietary interest should only be awarded where a monetary award is “inappropriate or insufficient” and the claimant can show a “causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property”: Kerr at para. 50 .

In the present case there is no suggestion that a monetary award would be inappropriate or insufficient. [ 37 ] A monetary award is not restricted to quantum meruit . In the event that the remedy is to be a monetary award, the amount may be calculated with the “value received” or quantum meruit approach or the “value survived”, or proportionate share basis, approach.

Kerr provides that where the unjust enrichment is a result of a joint family venture, the award “should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions”, or a value survived approach: at para. 87. [ 38 ] With respect to the monetary remedy in circumstances of a joint family venture, Mr. Justice Cromwell concludes in Kerr at para. 100 :

1. The monetary remedy for unjust enrichment is not restricted to an award based on a fee-for-services approach. 2. Where the unjust enrichment is most realistically characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions. 3. To be entitled to a monetary remedy of this nature, the claimant must show both (

a) that there was, in fact, a joint family venture, and (

b) that there is a link between his or her contributions to it and the accumulation of assets and/or wealth. 4. Whether there was a joint family venture is a question of fact and may be assessed by having regard to all of the relevant circumstances, including factors relating to (

a) mutual effort, (

b) economic integration, (

c) actual intent and (

d) priority of the family. [ 39 ] There is to be no presumption of a joint family venture: Kerr at para. 88 . In determining whether the parties are engaged in a joint family venture, the court is to consider four main factors. These are: (

a) Mutual effort – whether the parties worked together towards common goals, pooling their efforts, having and raising children together, pooling resources, use of funds for family purpose, and pooling resources where one party takes on a greater proportion of the domestic labour, freeing the other from those responsibilities and enabling them to pursue employment. (

b) Economic Integration – integration of the parties’ finances, economic interests, joint accounts, shared expenses, common savings, prioritizing family welfare over the interests of individual members. (

c) Actual Intent – the actual intentions of the parties, either expressed or inferred from conduct such as holding themselves out to the public as married and putting property in joint names; and the nature of any provision made for distribution of property on death. (

d) Priority of the Family – whether there has been detrimental reliance on the relationship for the sake of the family including financial sacrifices made by the parties for the sake of the family unit, reliance by one party on the other for economic security, leaving the workforce to raise the parties’ children, relocating for the sake of the partner’s career, foregoing promotion for the sake of the family.

Kerr at paras. 90-99 . [ 40 ] Finally, the court must do an analysis of whether the claimant’s award should be reduced if a mutual benefit has been conferred upon the claimant by the defendant: Kerr at paras. 101-116 . Where wealth has been accumulated as a result of a joint family venture, then benefits conferred on the claimant by the defendant should be taken into account when establishing the claimant’s proportionate share of the accumulated wealth.

However, where a joint family venture is not found and the appropriate remedy is a money award based on a fee-for-services-provided approach, mutual benefits are considered primarily at the defence and remedy stages. Discussion [ 41 ] Ms. Nielson made contributions that enriched Mr. Dawes. Specifically, she did the majority of the grocery shopping and cooking until 2007 when she withdrew her services. She did some tidying and cleaning between the weekly attendances of the housekeeper. She provided some assistance to Mr. Dawes with outside chores and helped to paint the deck.

She paid for the maintenance agreements on the appliances. She paid for a Telus fax and internet line, which she required for her businesses. Mr. Dawes made some minimal use of these. [ 42 ] Ms. Nielson made some purchases of household items during the relationship, but Mr. Dawes did not retain the benefit of these since she took them with her when the relationship ended. Ms. Nielson submitted that her gardening was another enrichment; however Mr. Dawes put the garden in at Ms. Nielson’s request because it was her hobby. He did not retain any benefit from the garden. When Ms.

Nielson left she took most of the gardening materials and Mr. Dawes did not maintain the garden. [ 43 ] I find that Ms. Nielson suffered some deprivation with respect to these contributions by spending her time and effort on her domestic responsibilities during the relationship. I find further that there was no juristic reason for the enrichment. While Mr. Dawes made contributions that enriched Ms. Nielson; the consideration of these reciprocal benefits is to be considered at the remedy stage of the analysis. [ 44 ] The next question to be addressed is whether the parties were engaged in a joint family venture.

Considering the evidence as a whole I find that this was not a joint family venture. [ 45 ] There was very little mutual effort by the parties and little evidence that the parties were working together toward common goals. The parties worked on their separate business ventures. While Mr. Dawes did make an investment in Everybody’s Kitchen, he received shares which he still holds. Ms. Nielson made no financial contribution to Mr. Dawes’ business. I find that her indirect contributions to his business were de minimus . The parties did not have children together. Mr.

Dawes’ younger children were 16 and 19 when the cohabitation began and Ms. Nielson did not take on the role of a parent. The parties shared work around the house and employed a housekeeper throughout the relationship. I find that this is not a case in which Ms. Nielson’s domestic labour freed Mr. Dawes from responsibilities at home, enabling him to devote more time to his business. [ 46 ] There was only very modest economic integration of the parties. Mr. Dawes did name Ms. Nielson as a beneficiary on his insurance and Ms. Nielson did name Mr. Dawes as the beneficiary of her RRSP.

However there was virtually no other economic integration. They did not maintain joint bank accounts. They made no joint investments, except for Mr. Dawes’ purchase of shares in Ms. Nielson’s company. They did not have common savings. They had no knowledge of each other’s debts and were each responsible for servicing their own debts. There was very little sharing of expenses. Mr. Dawes paid for virtually all of the household expenses with Ms. Nielson making minimal contributions.

[ 47 ] Ms. Nielson has submitted that her conduct showed that she was placing a priority on the family unit over her own personal interests, citing her decisions not to take on full time employment with BC Ambulance and later to quit the ambulance service altogether together with her decision not to complete the purchase of the Stewart Road property. [ 48 ] I have concluded that making family a priority over personal interests was not Ms. Nielson’s motivation with respect to any of these decisions. With respect to the ambulance service, Ms.

Nielson had accumulated sufficient seniority to be taken on full time prior to the commencement of the relationship. I find that she had not done so for various reasons. She liked living on Salt Spring and going on full time would require her to spend the majority of her time in Vancouver until there was a vacancy on Salt Spring that she had sufficient seniority to fill. Her primary career interest was in building her companies and full time employment would take away time and energy from her businesses. Moreover she acknowledged that the ambulance service was always her backup plan.

I find that those remained the primary reasons why Ms. Nielson did not choose full time employment with the ambulance service. [ 49 ] I find that Ms. Nielson quit the ambulance service, not because she was making family a priority, but because Quanta’s business was increasing and starting to turn a profit. The increased revenue was linked to increased need to travel. Moreover, due to Mr. Dawes’ support she had no need of the income from the ambulance service position. [ 50 ] I find that Ms. Nielson did not complete the Stewart Road purchase because she did not have the necessary funds.

When she entered into the purchase agreement, she believed that the Everybody’s Kitchen project would be a substantial financial success. That did not happen and in 2003, Ms. Nielson did not have the funds to complete. [ 51 ] I find that Mr. Dawes’ actual intent was that the parties’ economic lives were not to be intertwined and that he clearly expressed this intention to Ms. Nielson. He was in the midst of a divorce when the parties’ relationship started. Ms. Nielson acknowledged that he was “marriage phobic”.

He told her that as a consequence of the divorce he had purchased his wife’s interest in the Sunset Property and he did not intend that to occur in the future. Ms. Nielson was never on the title of the Sunset Property. Mr. Dawes’ estate planning was consistent with an intention that the parties were not engaged in a joint family venture. [ 52 ] Ms. Nielson’s intentions were different, as evidenced by her devastation when she learned of Mr. Dawes’ proposed estate plan. Given Mr. Dawes’ stated intentions, I think that there was an element of wishful thinking at play. Ms.

Nielson has submitted that the parties had a stable relationship and that they had a social life as a couple. This is clearly the case, however that was in no way incompatible with a stable relationship of cohabitation that was not a joint family venture. [ 53 ] Finally, there is scant evidence to suggest that the parties gave priority to the family in their decision-making. As noted above, I have concluded that it is not the case that Ms. Nielson chose not to pursue full time employment with BC Ambulance in order to further her relationship with Mr. Dawes. While Ms.

Nielson did rely upon the relationship for future economic security, as witnessed by her response to Mr. Dawes’ estate plans, it is not the case that this was manifested in detrimental economic reliance. On the contrary, during the relationship Ms. Nielson devoted herself to developing her businesses and made a success of Quanta. Neither party left the workforce for the relationship or relocated for the benefit of the other’s career. At the end of the relationship Ms.

Nielson’s business had become profitable and she was in a stronger economic position. [ 54 ] As noted above, I have concluded that the parties were not engaged in a joint family venture. I have also concluded that there is no link between Ms. Nielson’s contributions and the accumulation of assets or wealth. Mr. Dawes’ business did increase during the time the parties cohabited and has declined in the period since separation. However, I find that this was not the result of contributions Ms. Nielson made. Mr. Dawes took on as much work as was available. I find that Ms.

Nielson’s domestic services did not enable him to take on more work. I find further that the decline in business after the separation is the result of the business cycle, not the absence of Ms. Nielson’s services. [ 55 ] Ms. Nielson made no financial contribution to the acquisition, construction or maintenance of the Sunset Property. Her indirect contributions to the property were modest.

The increase in property value was the result of market forces and not from any of her efforts. [ 56 ] Accordingly, I find that the relationship cannot be characterized as a joint family venture, nor is it the case that the joint efforts of the parties are linked to the accumulation of wealth. Accordingly it is not appropriate to address the enrichment from the value survived approach. [ 57 ] At this stage it becomes necessary to consider the benefits conferred upon Ms. Nielson by Mr. Dawes during the relationship. These were substantial. She lived rent free. Mr.

Dawes paid for her groceries and expenses such as utilities and cable. As a result, Ms. Nielson was able to retire considerable personal debt and devote herself and her finances to developing her businesses. She left the relationship in much stronger financial condition than when she entered it. [ 58 ] In addition, Ms. Nielson received several direct payments from Mr. Dawes that should be included in the setoff. These were: (a) $25,000 advanced by Mr. Dawes in 2005 for the purchase of a Ford Explorer. Mr. Dawes borrowed the money and is still paying it off. Ms.

Nielson was to repay the advance with interest at $300 per month. She has repaid only $4,100 and ceased making any payments in May 2007. Ms. Nielson has realized a tax benefit as the purchase price is being amortized yearly by her company Quanta. (b) $2,000 advanced in 2006 so that Ms. Nielson could travel to visit her mother who was ill. (c) $10,000 advanced in December 2008 to provide funds so that Ms. Nielson could leave Mr. Dawes’ home. [ 59 ] I do not agree with Mr. Dawes’ submission that the $10,000 Mr. Dawes advanced to Ms. Nielson for shares in Everyone’s Kitchen is properly included in this regard. Mr.

Dawes acquired shares in the venture for his investment. [ 60 ] I find that during their relationship there was an exchange of services between the parties, by each of the parties to the other with each enjoying some corresponding benefits. On the balance of probabilities, I find that the benefits conferred by Mr. Dawes were at least equal to those conferred by Ms. Nielson. In the circumstances, I have concluded that Ms. Nielson is not entitled to a remedy and the

action is dismissed. “Ross J.”