JEAN CHESTNUT PLAINTIFF - v. -, 2023 NBKB 036

SJC/218/2022 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF SAINT JOHN Citation: 2023 NBKB 036 BETWEEN: JEAN CHESTNUT PLAINTIFF - and - NORTONDALE FARM LTD. DEFENDANT BEFORE: Justice William T. Grant HEARING HELD: Saint John TRIAL DATE: February 17, 2023 DATE OF DECISION: March 2, 2023 SUBJECT MATTER: Breach of Trust and/or Breach of Contract COUNSEL: Rodney J. Gillis, K.C., for the Plaintiff Michel Boudreau for the Defendant GRANT, J (Orally) [ 1 ] Ethel McConchie died testate on February 24 th , 2009.

In her will she named her husband, Lavern, as her executor but if he pre- deceased her, which he did, she named her three children, Larry McConchie, Kenneth McConchie, and the plaintiff, Jean Chestnut as her executors and trustees. She also made the follow bequest: (

b) if my husband should predecease me, or should survive me but die within a period of thirty (30) days after my death, I direct my Trustees to: (

i) transfer by deed my present home property to my daughter, JEAN CHESTNUT, to be hers absolutely; this because I have heretofore transferred the farm property to my sons, KENNETH and LARRY. The deed to the property should give KENNETH and LARRY and their sons a right-of-way to use the house driveway to their property.

[ 2 ] By deed dated April 30 th , 2009 the estate of Ethel McConchie and Jean Chestnut in her own right, conveyed the home property (“the property”) to the defendant, Nortondale Farm Ltd. No consideration was paid by Nortondale to the plaintiff, Jean Chestnut, for the property. By that time Nortondale owned the land referred to as “the farm property” in the bequest. [ 3 ] Mrs.

Chestnut says that she agreed to the transfer of the property to the defendant in order to provide the defendant with access to its property as contemplated in her mother’s will. [ 4 ] She further alleges that around the time the deed was signed, she and her brother Kenneth, whom she understood to be the sole shareholder of Nortondale, agreed that Nortondale would pay her $50,000.00 for the property when it was able to do so (“the verbal agreement”). In her affidavit in support of this action Mrs. Chestnut deposes, inter alia : 5.

On April 30, 2009, while still grieving the loss of my mother, I did sign a deed conveying the home property to the Defendant Nortondale Farm Ltd. which conveyance was done to give Kenneth McConchie, Larry McConchie and their sons a right-of-way to access their property behind the home property. 6. The home property had an assessed value of $98,900 at the time of the conveyance. 7. I had no intention then or at any time to make a gift of the home property to the Defendant. 8.

I have never had any shares or other interest in the Defendant at any time and I was led to believe by my brother Kenneth McConchie that he owned the shares of the Defendant. 9. My brother, Kenneth McConchie, told me on several occasions he acknowledged there was no gift and further advised that he would make the payment for the home property when he would get some money ahead. . . . 11.

My intention was that Nortondale Farm Ltd. was and is holding the home property in trust for the purposes of the right-of- way for the benefit of those who would use the right-of-way and otherwise the home property was to be returned to me. [ 5 ] Kenneth McConchie died on February 7 th , 2020, by which time neither he nor Nortondale had paid the plaintiff any money for the property. By letter dated March 22 nd , 2021 Mrs. Chestnut wrote to Kenneth’s widow, Mary McConchie, whom she then understood to be the sole shareholder of the defendant.

In that letter she referred to her bequest in her mother’s will and the deed to Nortondale in April 2009. She continued: At that time (April 2009) and up to the present time I did not have and do not have any intention to make a gift of the property to the company in which I did not have any ownership interest. This fact was acknowledged by Kenny to me on several occasions. Since that time, on several occasions, I had conversations with Kenny about payment for the property and he told me from time to time that when he would get some extra money, he would give such to me.

Unfortunately, Kenny passed away a year ago but had failed to make the payments for the land that he promised. Nortondale Farm Ltd. is holding the property in trust for me. The reason for saying so is there was no intent for me to make a gift and no reason for me to make a gift to Nortondale Farm. I am, at this time requesting:

1. That Nortondale Farm Ltd. convey to me the property described in the deed, or 2. That arrangement be made for the payment to me of the assessed value of $98,900.00. Please advise which option you would wish to put in place, and I will contact John Malone to document such. [ 6 ] Mary McConchie responded through her lawyer, Carley Parish, advising Mrs. Chestnut that in 2014 Nortondale had transferred the property to Kenneth and her and they then transferred it to their son. No mention was made about Nortondale paying her for the property. [ 7 ] On June 11 th , 2021 Mrs.

Chestnut filed this action under Rule 79 of the Rules of Court . In it she claims the amount of $75,000.00 - the maximum that can be claimed under Rule 79 - from the defendant. She bases her claim on breach of trust, though her evidence also alleges breach of contract and the defendant has also pleaded to that evidence. [ 8 ] In its amended statement of defence the defendant denies the plaintiff’s allegations that the property was transferred to it in trust so as to provide a right-of-way for Kenneth, Larry and their sons. It further denies that Mrs.

Chestnut did not intend to make a gift to it of the property as well as her allegations that Kenneth McConchie acknowledged that the transfer was not a gift and that he and/or Nortondale agreed to pay for it once he and/or Nortondale had the money. It further alleges that there was no contract between the plaintiff and Kenneth McConchie for the purchase of the property. [ 9 ] Nortondale further pleads that Mrs. Chestnut’s claim is barred by

Section 5 of the Limitation of Actions Act , S.N.B. 2009 c. L-8.5 . ISSUES [ 10 ] The main issue in the case is whether, in transferring the property to the defendant, the plaintiff intended it to be a gift or, as the plaintiff alleges, she intended either a transfer in trust or a transfer for consideration to be paid later. If it was not a gift, then the issue of Mrs. Chestnut’s damages must also be resolved. Mrs. Chestnut does not request a declaration that she owns the property at this time. LAW [ 11 ] In Pecore v. Pecore , [2007] S.C.C. 17 Rothestein J. stated at paragraphs 20, 24 and 25: 20.

A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: …see D.W.M.Waters, M.R.Gillen and L.D.Smith eds., Waters’ Law of Trusts in Canada (3 rd ed. 2005) at p. 362. … . . . 24. The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof.

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

Rather, the onus is on the transferee to rebut the presumption of a resulting trust. [ 12 ] He further stated at paragraph 55:

55. Where a gratuitous transfer is being challenged, the trial judge must begin his or her inquiry by determining the proper presumption to apply and then weigh all the evidence relating to the actual intention of the transferor to determine whether the presumption has been rebutted. [ 13 ] In this case I find that since the transfer from the plaintiff to the defendant was gratuitous, then the presumption of a resulting trust applies and the burden is therefore on the defendant, Nortondale, to satisfy the Court on a balance of probabilities that the plaintiff intended to gift the property to it.

THE EVIDENCE [ 14 ] In April 2009 the three siblings, Kenneth, Larry and Jean and their spouses, Carol McConchie, Mary McConchie and Bill Chestnut respectively, met at Kenneth and Mary’s house when the subject of Jean’s bequest of her mother’s home property was discussed. [ 15 ] In his affidavit opposing the application Larry McConchie states, inter alia : 4. At the meeting, Jean Chestnut advised that she and Billy had discussed it, and they both agreed they wanted our mother’s house to go back to the Farm, being the Defendant Nortondale Farm Ltd. 5.

At this meeting I asked the Plaintiff whether she understood that the house could be sold or torn down eventually if that is what they chose to do. The Plaintiff acknowledged this. 6. At this meeting I do not recall any discussions about any payment owing to the Plaintiff, or the lands being held in trust on her behalf. . . . 8. Regarding the transfer of the house, ... I do not recall any negotiations about any sum that would be owing to the Plaintiff at any time as a result of this conveyance. 9.

During the entre period between 2009 and 2020, I have never discussed with Kenneth any payment owed to the Plaintiff for the transfer of the land. I have never had any discussions which would have suggested to me the land was held in trust for the Plaintiff’s benefit. 10.

Equally, I have never had discussions with my sister Jean Chestnut which would have suggested Ethel McConchie’s Land was held in trust for the Plaintiff’s benefit, or that anything was owed her following the transfer of this land a decade ago. [ 16 ] In that affidavit, sworn February 1 st , 2022 Larry McConchie also states that he gave up his shares in the defendant, Nortondale Farm Ltd., “over two decades ago”. [ 17 ] Carol McConchie also swore an affidavit opposing the application in which she states, in relation to the meeting of April, 2009: 3.

At this meeting, Jean Chestnut advised that she and Billy had discussed it, and they both agreed they wanted Ethel McConchie’s house to go back to the Farm, being the Defendant Nortondale Farm Ltd. 4. At this meeting, I do not recall any discussions about any payment owing to the Plaintiff, or the lands being held in trust on her behalf. 5. Regarding the transfer of the Disputed Land, I recall no agreements or even discussions regarding any agreement to hold the lands in trust.

[ 18 ] Mary McConchie, the widow of Kenneth McConchie is now the sole shareholder and president of Nortondale. In her affidavit opposing the plaintiff’s claim she states, inter alia : 21. Following the death of Ethel McConchie on February 24 th , 2009, the Plaintiff came to her brothers, as she and her husband did not want the Disputed Land and wished it to go back to the farm. 22. As a result, a meeting was held at my home in April of 2009. In attendance were Kenneth and me, Larry and his wife Carol McConchie, and Jean and Bill Chestnut. 23.

At this meeting, Jean Chestnut advised that she and Billy had discussed it, and they both agreed they wanted Ethel McConchie’s house to go back to the Farm, being the Defendant Nortondale Farm Ltd. 24. At the meeting, the Plaintiff was asked whether she understood that the house could be sold or torn down eventually if that is what they chose to do. The Plaintiff said she was ok with this. 25. At this meeting, I do not recall any discussions about any payment owing to the Plaintiff, or the lands being held in trust for her behalf. . . . 28.

The house on the disputed land was torn down in 2014, and a new house rebuilt. 29. The Defendant no longer owns the Disputed Land, as it was transferred to my son. [ 19 ] William Chestnut, the plaintiff’s husband, swore an affidavit in support of her claim in which he states, inter alia: 2. I have read the affidavit of Jean Chestnut sworn on the date of this my affidavit and was aware, from my discussions with my wife over the period of time from 2009 to present, of the facts set forth in paragraphs 3 to and inclusive 12 of her affidavit. 3.

On several occasions I was present when my wife had discussion with her late brother, Kenneth McConchie, about payment for the home property she conveyed to the Defendant. [ 20 ] On cross-examination Mrs. Chestnut was shown a statutory declaration that was attached to the deed she signed conveying the property to Nortondale. After acknowledging that she signed the declaration she read paragraph 9 in which she states: 9.

With this Deed I am releasing all of my interest in the Property and conveying all of my right, title, and interest in the Property to the Grantee. [ 21 ] She confirmed that it was true which I find, rebuts the presumption of a resulting trust. [ 22 ] However, she further testified that she and Kenneth also had an agreement that he and/or Nortondale would pay her for the property when they could. She referred to this as the verbal agreement.

The onus in this case now shifts to her to prove the existence of this agreement. [ 23 ] The alleged verbal agreement was between Kenneth McConchie on behalf of Nortondale and Jean Chestnut so the fact that Larry McConchie, who had no shares in Nortondale by then, doesn’t recall any discussion of it, carries little if any weight. The same applies to the evidence of Carol McConchie.

[24] Mary McConchie, as the wife of Kenneth McConchie, was more likely than Larry or Carol McConchie to have been aware of anyverbal agreement but the fact that she wasn’t is not determinative either. In essence her evidence only establishes that she was not awareof an alleged verbal agreement, not that it didn’t exist. [25] In the end it’s a question of Mrs. Chestnut’s credibility as well as that of her husband. Her evidence is inherently self-serving andis not supported by the evidence of any independent or disinterested witness, only that of her husband, whose evidence is also self-serving.

That, however, does not mean their evidence isn’t credible, only that I must consider that factor in weighing their evidence. [26] On cross-examination Mrs. Chestnut testified that when she and Kenneth made the verbal agreement he stated that they didn’t needto get any lawyers involved and she agreed because she trusted him. [27] She further testified that she asked him a number of times over the next eleven years when he would pay her but she never receivedany money under the agreement.

She always brought it up in conversation so she has no notes or text messages to confirm it nor couldshe say how often they talked. The last time they discussed it was in late October or early November of 2019 in Sussex. [28] When asked by the Court how much they agreed to she answered without hesitation, $50,000.00 and explained that although it wasassessed at $98,900.00, Kenneth pointed out, and she agreed, that it was in need of a lot of work so they agreed that $50,000.00 wasreasonable. [29] In the case of Faryna v. Chorney, (BC CA), [1952] 2 D.L.R. 354 (B.C.C.

A) O’Halloran, J.A. stated at paragraph357: The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whetherthe personal demeanor of the particular witness carried conviction of the truth. The test must reasonably subject his story to anexamination of its consistency with the probabilities that surround the currently existing conditions.

In short, the real test of thetruth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practicaland informed person would readily recognize as reasonable in that place and in those conditions. [30] In this case I find that Mrs. Chestnut’s evidence, although self-serving, is credible. I was particularly struck by her lack ofhesitation and candor when I asked her how much the defendant had agreed to pay for the land.

Even though her claim was for$75,000.00, the maximum under Rule 79, she made no attempt to try to fit her evidence about the agreement into that pleading. Rather,she answered the question spontaneously and gave me the impression that she was telling the truth as she knew it, even though heranswer was contrary to her own self-interest. [31] Her evidence is also consistent with the maxim that equity presumes bargains, not gifts. There is nothing whatever on the recordbefore the Court in this case that would explain why Mrs.

Chestnut would have made a gift of her inheritance to a company in which shehad no ownership interest, particularly given that her brothers had already received their share of their mother’s property as noted by herin her will. [32] I therefore accept Mrs. Chestnut’s evidence and find that there was a verbal agreement between the plaintiff, Jean Chestnut, andKenneth McConchie, as a shareholder of the defendant that Nortondale Farm Ltd. would pay her for the property. [33] Nortondale submits that Mrs. Chestnut’s claim is barred by

Section 5 of the Limitation of Actions Act, supra., the relevant portionsof which read as follows: 5(1) Unless otherwise provided in this Act, no claim shall be brought after the earlier of (

a) two years from the day on which the claim is discovered, and (

b) fifteen years from the day on which the act or omission on which the claim is based occurred.

5(2) A claim is discovered on the day on which the claimant first knew or ought reasonably to have known (

a) that the injury, loss or damage had occurred, … [ 34 ] I find that the date when Mrs. Chestnut ought reasonably to have known she had suffered a loss in this case was when she received a reply to her letter to Mary McConchie dated March 22, 2021. The date of that reply is not in evidence but since it was referenced in the statement of claim dated June 11 th , 2021, I infer that it was between those dates. I therefore find that this action was commenced within the two year limitation period set out in the Limitation of Actions Act . [ 35 ] Since the agreement was in 2009 and the action was commenced in 2021, twelve years later, it also falls within the fifteen year limitation, set out in

Section 5 of that Act . DAMAGES [ 36 ] Having accepted Mrs. Chestnut’s evidence that there was an agreement between her and the defendant, I also accept her evidence that the amount owing by the defendant under the agreement is $50,000.00. Mrs. Chestnut also claims interest but there is no evidence that she and Kenneth had agreed that Nortondale would pay any interest under the verbal agreement. I therefore find that she is entitled to interest at the rate of 7% from the date this action was commenced, i.e., June 11 th , 2021 until the judgment is paid in full. DISPOSITION [ 37 ] In

summary, I find that when the plaintiff, Jean Chestnut, transferred the property to the defendant, Nortondale Farm Ltd., she did so based on a verbal agreement with her brother, Kenneth McConchie, on behalf of Nortondale, that Nortondale would pay her $50,000.00 for the property. [ 38 ] I further find that Nortondale has not paid her any money for the property to date. Consequently, there will be judgment in favour of the plaintiff against the defendant for the sum of $50,000.00 plus interest from the date of the notice of action until the judgment is paid at a rate of 7%. COSTS [ 39 ] Mrs.

Chestnut is also entitled to costs, which I assess based on an amount involved of $50,000.00 under scale 1 of the Rules of Court at $2,925.00 plus all taxable disbursements. ___________________________________________ William T. Grant Judge of the Court of King’s Bench of New Brunswick