Hutchinson v. Hutchinson, 2018 BCSC 954

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Hutchinson v. Hutchinson, 2018 BCSC 954 Date: 20180612 Docket: E49771 Registry: New Westminster Between: Leonardo Felix Hutchinson Claimant And Clarice Hutchinson also known as Clarice Lattanzi, and Maria Hutchinson Respondents Before: The Honourable Mr. Justice Bernard Reasons for Judgment Counsel for the Claimant: A. Simoes Counsel for Respondent, C. Hutchinson: D. Boulding J. Dhillon Counsel for Respondent, M. Hutchinson: K. Dotten Place and Date of Trial/Hearing: New Westminster, B.C. May 15 & 16, 2018 Place and Date of Judgment: New Westminster, B.C.

June 12, 2018 A. Nature of Application [ 1 ] In these family law proceedings, Maria Hutchinson seeks

summary trial determination of her interest in the net proceeds ($471,421) from the sale of the former matrimonial home (“Saddle Street”) of her son Leo Hutchinson and his wife Clarice. [ 2 ] Maria claims entitlement to $309,750, which she says is the unpaid balance of a $410,000 interest-free loan she advanced to Leo and Clarice in October 2007, to help them with their financial troubles and to provide an income-stream to her.

Maria alleges that the terms of the loan were documented and that she was added to the title of Saddle Street as a registered owner of a two-third’s interest, as security for the loan. [ 3 ] Alternatively, Maria claims two-thirds of the net proceeds ($314,381) from the sale of Saddle Street as a registered owner of two-thirds the property, “plus an amount to account for without prejudice advances between the date of sale to date”. [ 4 ] In the further alternative, if Maria’s two-thirds registered interest in Saddle Street is determined to be family property for division between Leo and Clarice, then she claims two-thirds of the net sale proceeds on the basis of unjust enrichment. [ 5 ] Maria is a party, by counterclaim, to these contentious divorce proceedings.

A response to her counterclaim has been filed. She submits that her issue is discrete and suitable for

summary trial; moreover, she suggests that there is a need for timely resolution because she is an 85-year old woman with health issues and very modest means. [ 6 ] Leo consents to the relief sought by Maria, but Clarice is opposed. Clarice seeks a dismissal of this application on the basis that it is a matter not suitable for disposition by

summary trial. [ 7 ] Given names have been used herein for ease of reference; no disrespect is intended.

B. Background [ 8 ] Leo and Clarice are ages 58 and 55, respectively. They married in March 1995 and separated in March 2014. There are four children of the marriage: Felitche (22), Marialina (20), Lieto (14), and Athena (12). Felitche lives independently in Toronto. The other three children reside with Clarice in the former matrimonial home. Marialina has significant disabilities that preclude an independent life. [ 9 ] Leo and Clarice purchased the family home on Saddle Street in September 1995. It was sold in February 2017.

Clarice and the children continue to reside in it under a rental agreement with the new owner. [ 10 ] In October 2007, Maria advanced $410,000 to Leo and Clarice, from the net proceeds ($415,000) of the sale of her home. Further to this advance, Maria was added to the title to Saddle Street as a registered owner as to an undivided two-thirds interest. Leo and Clarice remained on title as owners of an undivided one-third interest as joint tenants. [ 11 ] On November 19, 2007, Maria, Leo, and Clarice signed a written agreement purporting to capture the parties’ understanding regarding the $410,000 advancement.

It is not contentious that the document was prepared by Leo and that the parties signed it without legal advice. It states as follows: We, the undersigned, Leo Hutchinson (son) and Clarice Hutchinson (daughter-in-law) agree to pay Maria Hutchinson (mother and mother in-law respectively) the amount of $1000 per month. This amount cannot be increased and it can only be provided to Maria Hutchinson for as long as she lives.

When Maria Hutchinson is unable to make a reasonable decision under her own will and opinion, the amount will be deposited directly to her estate funds. (NB: The final six words of the preceding paragraph were struck out by hand, replaced with “provided if needed”, and initialed by Leo and Maria only.) This amount may be decreased and/or nullified by Maria Hutchinson at any time by either a written or verbal consent to Leo and/or Clarice Hutchinson. In exchange for this payment, Maria Hutchinson agrees to give her 2/3 ownership of the title to the house located at 1026 Saddle Street, Coquitlam, B.C.

V3C 3W3, or an equivalent amount of money (2/3 of the house evaluated at market price) to Leo Hutchinson before, if she chooses so, or after her death. Respectfully, Clarice Hutchinson Leo Hutchinson Maria Hutchinson [ 12 ] From November 2007 to December 2011, Maria received monthly payments of $1000 from Leo and Clarice pursuant to the foregoing agreement. In December 2011, Maria agreed to reduce future monthly payments to $750. Maria continued to receive payments from Leo after he separated from Clarice in March 2014, and after Saddle Street sold in 2017.

These payments total $100,250 as of the date of the instant application. [ 13 ] Leo filed for divorce and corollary relief on October 26, 2015. Maria was added as a party on September 22, 2017. Attempts to settle the action have failed; no trial date is set. C. Issues 1. Is Maria’s claim suitable for resolution by

summary trial? 2. If yes, then what is Maria’s interest in the net proceeds from the sale of Saddle Street? D. Evidentiary Synopsis [ 14 ] Maria describes herself as an 85-year old cancer survivor with “mostly stable” health. In December 2017 she suffered a bout of pneumonia, and in March 2018 she had heart surgery to open three blocked arteries. In relation to a timely resolution of her claim, she said: Given my health and my age, I would like this matter finalized as soon as possible.

It has been going on for a number of years and I have been without my most valuable asset for the entire time. [ 15 ] Maria lives independently in a suite in her daughter’s Burnaby home. Her monthly income is approximately $2250, comprised

of pensions and a $750 payment from Leo and Clarice. Maria says her “Canadian” assets consist of a $100,000 GIC, approximately $9000 in bank deposits, and the unpaid balance ($309,750) of the loan to Leo and Clarice. [ 16 ] Maria explained the circumstances of the $410,000 advance to Leo and Clarice as follows: (

a) In May 2007 she sold her house to her son John and his wife for $415,000, approximately $160,000 less than market value, as a gift to her son; (

b) At this time, Leo said he was in financial trouble and asked if she would lend him and Clarice enough money to pay off their mortgage and other debts; (

c) She wanted to help Leo, Clarice, and their four children, but her plan had been to purchase something that would produce rental income for her in her old age; (

d) Leo suggested she use her money to purchase a two-thirds interest in Saddle Street and he and Clarice would pay her $1000 per month; (

e) She agreed, on the understanding that she would be registered on title, and that the money was an interest-free loan to be repaid at the rate of $1000 per month (or a lesser amount if she agreed) until she died; (

f) She understood that if she needed the remainder of the loaned money prior to her death then she could “recall the loan” because it was secured against title; (

g) She did not receive legal advice in relation to the agreement, and did not consider specifically what would happen if Leo and Clarice separated and/or Saddle Street were sold prior to her death; (

h) When she signed the November 19, 2007 document she was told it was a written confirmation of the parties’ oral agreement; and, (

i) Her intention in lending $410,000 to Leo and Clarice was to help them financially but “at the same time, protect [her]self and keep [her] funds available to [her] if they become necessary to help support [her]self”. [ 17 ] Notwithstanding the foregoing, in an earlier affidavit Maria described the nature of the transaction and the agreement with Leo and Clarice as follows: [5] Following my purchase of a 2/3 interest in the Property, the claimant, the respondent Clarice Hutchinson and I entered into an agreement to [sic] that I would agree to ensure that my 2/3 interest was transferred to the claimant on my death as opposed to my other two children and in exchange they would pay me $1000 per month until my death unless I agreed to receive a lesser amount.

The agreement also provided that I could choose to transfer my 2/3 interest in the Property to the claimant sooner than my death . . . . . . [7] In early 2017, the Property was sold in connection with this proceeding. I agreed to the sale and signed all documents pertaining to the sale. I am told by the claimant, and I verily believe it to be true, that his lawyer has the net sale proceeds from the sale held in trust. . . . [9] I did not choose to transfer my 2/3 interest in the Property to the claimant prior to my death and it remained in my name until the sale of the property in connection with this matter.

I am therefore owner of 2/3 of the net sale proceeds. [Underlining added] [ 18 ] Leo has also deposed that the transaction in question was a purchase by Maria of a two-thirds ownership interest in Saddle Street, rather than a loan secured by registering Maria as an owner; moreover, he said the subsequent monthly payments were rent payments to Maria from Leo and Clarice for their sole occupation of Saddle Street. In his Affidavit #4, he explained the agreement as follows: [39] In or about October 2007 my mother sold her house. She intended to buy a couple of apartments as rental properties for her benefit.

Clarice and I were having financial difficulties and I suggested to my mother that she buy part of our house so that she could get some income and relieve us of some financial stress. . . . [46] We agreed to pay my mother $ 1,000.00 per month as rent for her 2/3 of the family residence. We paid this amount for the first two years.

After two years I started to pay $750.00 per month for a total of $9,000.00 per year, usually paid every two months by way of a $1,500.00 payment. [47] The payments to my mother were approximately half of what we were paying in finance payments to the bank. [ 19 ] Leo attached the November 19, 2007 document to his affidavit, as evidence of the parties’ agreement, but he did not elaborate upon it. [ 20 ] Clarice deposed that Leo kept her in the dark as to family finances during the marriage. She said she signed the property transfer

papers giving Maria two-thirds of Saddle Street, and the November 19, 2007 agreement, only because Leo told her to do so and becauseshe trusted him. She now believes that at the time of the transfer Leo was contemplating a separation and that his goal was to reduce thesize of the family asset pool available for division. She noted that the agreement provided for a transfer of Maria’s two-thirds interest toLeo, but not to her. She said: [44] Had I known that this was the impact of giving the Claimant’s Mother a 2/3rd interest in the House I would never have done so.

TheClaimant’s Mother helped pay our mortgage off, however she required that we pay her monthly at least $1000.00 regularly, though weregularly paid her $1,500.00.

Also the impact of such an arrangement is that the Claimant’s Mother would keep the 2/3rd interest in theHouse regardless of the amount of payment made to her. [45] The structure of this deal makes no sense once it was explained to me, and we would have been far better off with a conventionalmortgage because we would still be making payments but instead of paying the Claimant’s Mother we would be paying a financialinstitution, the principal of the mortgage would be reduced as we made those payments, and any increase in the house would solely gotowards our equity.

Further, the Claimant and myself would remain as joint tenants and be presumptively entitled an undivided 1/2interest in the House upon separation. [46] At Trial, I intend to argue that dividing the 1/3rd interest in the House that the Claimant and myself are joint tenants for would besignificantly unfair given the above circumstances, and that this is akin to a fraudulent conveyance or preference. [21] In her Affidavit #3, Clarice described the $410,000 advance from Maria as a loan that was to be repaid monthly until Maria’sdeath.

She said she had been told that she need not worry about the house and the money as it was “just a loan” and she would alwayshave a home.

She said that Maria always told her: “Don’t worry, Clarice, I am here to help you - what is mine is Leo’s and what is Leo’sis yours [because] you are his wife.” She said Maria has been enjoying her monthly income from them, and spending six-months of theyear in Greece. [22] Clarice described the consequences of the court accepting Leo’s version of events as follows: [11] If the Court believes my husband’s version, Leo and his mother Maria will get most of the money from the house and I will be onthe street with a child who is profoundly disabled and two teenagers who need support while my husband will start over with moneyfrom his mom . . .

E. Discussion Issue 1: Is Maria’s claim suitable for resolution by

summary trial? [23] The Supreme Court Family Rules [Rules] provides as follows: Rule 11-3(2) A party may apply to the court for judgment under this rule, either on an issue or generally, in any of the following; … (

c) a family law case by way of counterclaim in which a response to counterclaim has been filed. Rule 11-3(11)(

b) On an application heard before, or at the same time as, the hearing of a

summary trial application, the court may … (

b) dismiss the

summary trial application on the ground that (

i) the issues raised by the

summary trial application are not suitable for disposition under this rule, or (ii) the

summary trial application will not assist the efficient resolution of the family law case. Rule 11-3(15)(

a) On the hearing of a

summary trial application, the court may (

a) grant judgment in favour of any party, either on an issue or generally, unless (

i) the court is unable, on the whole of the evidence before the court on the application, to find the facts necessary to decide the issues offact or law, or (ii) the court is of the opinion that it would be unjust to decide the issues on the application. [24] These provisions are virtually identical to those found in Rule 9-7 of the Supreme Court Civil Rules. In Gichuru v. Pallai, 2013BCCA 60, Madam Justice Smith, speaking for the Court, said, in relation to the application of Rule 9-7: [30] In Inspiration Management Ltd. v. McDermid St.

Lawrence Ltd. (1989), (BC CA), 36 B.C.L.R. (2d) 202 (C.A.),the court confirmed that the court under this rule “tries the issues raised by the pleadings on affidavits”, that “a triable issue or arguable

defence will not always defeat a

summary trial application”, and that “cases will be decided summarily if the court is able to find thefacts necessary for that purpose, even though there may be disputed issues of fact and law” provided that the judge does not find “it isunjust to do so” (p. 211).

In determining the latter issue (whether it would be unjust to proceed summarily), the Chief Justice identified anumber of relevant factors to consider (at p. 215): In deciding whether it will be unjust to give judgment the chambers judge is entitled to consider, inter alia, the amount involved, thecomplexity of the matter, its urgency, any prejudice likely to arise by reason of delay, the cost of taking the case forward to aconventional trial in relation to the amount involved, the course of the proceedings and any other matters which arise for considerationon this important question. [31] To this list has been added other factors including the cost of the litigation and the time of the

summary trial, whether credibility isa critical factor in the determination of the dispute, whether the

summary trial may create an unnecessary complexity in the resolution ofthe dispute, and whether the application would result in litigating in slices: Dahl v. Royal Bank of Canada et al., 2005 BCSC 1263 at para. 12, upheld on appeal at 2006 BCCA 369 . [25] Applying the foregoing to the instant application, I conclude that the issues raised by this

summary trial application are notsuitable for disposition under Rule 11-3 of the Rules. I am not satisfied that I am able to find the facts necessary to reach a justdisposition of Maria’s claim. The evidence is unsatisfactory, and it contains conflicts raising significant credibility issues that cannot beresolved without the benefit of the examination of witnesses at trial. There is conflicting evidence as to whether the $410,000 wasintended to be a loan, a payment for two-thirds ownership in Saddle Street, or something else.

Even if the validity of the parties’ writtenagreement were not in issue, it is anything but clear, from its wording, what the nature of the transaction was and what would occur inthe event of a marital breakdown between Leo and Clarice. [26] Leo asserts that Maria purchased a two-thirds interest in Saddle Street with the $410,000 and that the monthly payments, asprovided by the written agreement, were rent for his and Clarice’s sole occupation of Saddle Street; yet, the agreement does not state thatthe payments were rent and it is otherwise silent as to their purpose. [27] Latterly, Maria asserted that the money was an interest-free loan to Leo and Clarice that was being repaid in monthlyinstallments of $1000 and then $750; yet, in an earlier affidavit she asserted that the payment of $410,000 was for the purchase of two-thirds of Saddle Street.

She also said that the monthly payments from Leo and Clarice were not for rent; rather, they were paid inexchange for her agreement to give her share of Saddle Street to Leo either before or after her death. [28] Overarching these inconsistencies and vagaries is Clarice’s assertion that she would never have agreed to any arrangement withMaria that would have put her home in jeopardy; she says she signed the agreement simply because Leo told her to do so, at a time whenshe still trusted him.

She has also raised an allegation of collusion between Leo and Maria, in relation to the ownership of Saddle Street,for the purpose of keeping assets out of Clarice’s reach but within Leo’s family, in the event she and Leo separated. [29] Even if this court were able to find the facts necessary to justly dispose of Maria’s claim as a discrete issue, I am not persuadedthat doing so would assist in the efficient and just resolution of these family law proceedings. As Madam Justice MacKenzie, speakingfor the Court, said in Kaler v.

Kaler, 2013 BCCA 57: [23] The real issue in this case is whether the judge should have acceded to the application for

summary trial on the discrete issue of theinterpretation of the Minutes when his efforts would do nothing to advance the litigation. Apt is the caution of Madam Justice Southinfor the Court in Bacchus Agents

(1981) Ltd. v. Philippe Dandurand Wines Ltd., 2002 BCCA 138 . After referring to subrule (8)of Rule 18A of the former Rules of Court, B.C. Reg. 221/90, which permitted the court to dismiss the application on the ground that thesummary trial application “will not assist the efficient resolution of the proceeding”, Madam Justice Southin described Rule 18A as “auseful rule intended to shorten litigation, thereby lessening its cost to the parties and to the public treasury and reducing delays in theprocess” (para. 6).

But she observed that “when ... the rule is invoked to try ‘an issue’ rather than the whole case – what I have oftencharacterized as ‘litigating in slices’ – it may become a hindrance to the ‘just, speedy and inexpensive determination’ of the dispute ‘onits merits’” (para. 7). [24] In Coast Foundation v. Currie, 2003 BCSC 1781 , Mr. Justice Groberman described the factors to consider whendetermining whether a

summary trial application will assist the efficient resolution of the proceeding: [13] The question of when the court ought to give judgment on an issue, as opposed to on the claim generally, is more complex. Thecourt is justifiably reluctant to decide cases in a piecemeal fashion. In addition to all of the concerns that arise when the entire claim isbefore the court, there is a multitude of others. The result is that the court must exercise considerable caution before coming to theconclusion that it should grant judgment on an issue in a

summary trial. … [16] It must be borne in mind that the primary purpose of Rule 18A is the efficient resolution of disputes. Where the court does notconsider that the determination of an issue under Rule 18A will assist in the efficient resolution of the dispute, it ought not to make thedetermination. [17] There are at least two aspects to be considered in gauging the efficiency of the

summary trial process. First, this court must beconcerned about the allocation of its own resources: North Vancouver (District) v. Lunde (1998), (BC CA), 60B.C.L.R. (3d) 201 at 212 (C.A.) (paragraph 33).

Summary trial applications that will not, even if successful, reduce the length of trial,should, in general, be discouraged. The court must recognize the reality that judicial time is a scarce resource. [18] Second, the court must consider the efficiency of a partial determination from the standpoint of the litigation itself. Piecemealdecision-making is rarely an efficient manner in which to resolve a dispute. It raises the possibility of multiple appeals on individualissues, and this will generally impede rather than hasten the orderly determination of the action.

[25] In my opinion, the caution against piecemeal decision-making in these cases also applies in this case. The

summary trial application did not assist the efficient resolution of this case and, in my view, it should have been dismissed as “unjust” under Rule 11-3(15)(a)(ii). I observe that Rule 11-3(11)(b)(ii) permits the Court to dismiss a

summary trial application where it will not assist the efficient resolution of the family law case. Although Rule 11-3(11)(b)(ii) appears to require a separate application, nothing prevents the Court on its own motion from also dismissing the application on this basis as “unjust.” [ 30 ] Maria’s claim is only one of several issues requiring resolution. It is not in the interests of justice to decide this issue separately, at this stage.

The ownership and division of proceeds of the sale of the matrimonial home is integral to the family law issues in this case and will likely be an important aspect of any eventual resolution; moreover, it is linked to allegations of fraudulent preference in relation to a transfer of family business assets to Leo’s brother.

To decide Maria’s claim independently of the other issues risks improperly “litigating in slices” and not assisting in an efficient resolution of this case. [ 31 ] Finally, I am not persuaded, despite Maria’s age and her claims of tenuous health and modest means, that the resolution of her claim is urgent or that she will be unduly prejudiced by delaying the resolution of her claim until a later trial.

Maria continues to receive the payments she expected to receive pursuant to the November 19, 2007 written agreement she relies upon; moreover, by the terms of this written agreement, Maria did not expect to receive anything more. She agreed either to bequeath her two-thirds interest to Leo upon her death or to give it to him at some point during her lifetime. F. Disposition [ 32 ] The

summary trial application is dismissed. Costs will be in the cause. “Bernard J.”