Covey v. McNutt, 2020 NSSC 270

SUPREME COURT OF Nova Scotia Citation: Covey v. McNutt, 2020 NSSC 270 Date: 20201006 Docket: Hfx. No. 471146 Registry: Halifax Between: Michael Covey Applicant v. Holly McNutt Respondent DECISION Judge: The Honourable Justice Scott C.

Norton Heard: September 21 and 22, 2020, in Halifax, Nova Scotia Written Decision: October 6, 2020 Counsel: Matt Conrad, for the Applicant and Norma and Derek Barker as respondents to the Claim of McNutt Richard Bureau and Ryan Christen, for the Respondent By the Court: [ 1 ] “The phrase ‘No good deed goes unpunished’ is a sardonic commentary on the frequency with which acts of kindness backfire on those who offer them.

In other words, those who help others are doomed to suffer as a result of their being helpful.” [1] [ 2 ] This phrase rings true for Michael Covey. [ 3 ] This decision responds to an Application in Court filed on April 11, 2019 [2] by Mr. Covey seeking an order from the Court granting the following relief: 1. Possession of a home located at 3234 Micmac Street, Halifax, Nova Scotia (the “Property”) under the Overhold Tenants Act ; 2. Requiring the respondent Holly McNutt to vacate the Property; 3.

Damages payable by Holly McNutt to the applicant for rent wrongfully collected by Holly McNutt from a tenant at the Property; and 4. Damages for trespass and occupation rent 5. Costs

[ 4 ] The respondent, Ms. McNutt was identified by the name Holly Parnell until sometime in 2015. I will refer to her throughout this decision as Ms. McNutt. Ms. McNutt filed a Notice of Contest on May 2, 2019 denying the claims on the basis that the applicant is not the registered owner of the Property and that any interest in the Property was obtained by the applicant by misrepresentation or fraud. [ 5 ] Ms. McNutt filed a responding claim on May 2, 2019 against the applicant and Norma Barker and Derek Barker (the registered owners of the Property) seeking an order: 1.

Declaring she is the sole beneficial owner of the Property; 2. In the alternative, that the Property is held in a resulting or constructive trust for her; 3. In the event of a finding in her favour on claims 1 or 2, reimbursement for the decrease in equity caused by the applicant’s continued use of a line of credit/mortgage with Manulife Bank secured by the Property; 4.

In the alternative, if the applicant is found to be the owner of the Property, reimbursement of all equity in the property and all monies paid by her for the general well being of the property including but not limited to property taxes, insurance, repairs and maintenance [ 6 ] The parties consented to the joining of the Barkers as parties to the respondent’s claim. [3] The applicant and the Barkers filed a notice of contest to the respondent’s claims on June 3, 2019. [ 7 ] The parties have an extensive history before different levels of the judicial system including Residential Tenancy Board hearings and appeals, Small Claims Court, the Supreme Court (Family Division) and the Supreme Court.

These matters have ranged from peace bonds and emergency protection orders to exclusive possession and eviction hearings. They are further detailed in the affidavits filed on the application. [ 8 ] The evidence on the application included the following affidavit evidence: 1. Affidavit of Michael Covey sworn on December 5, 2017; 2. Affidavit of Holly McNutt sworn on December 17, 2017; 3. Affidavit of Holly McNutt sworn on March 20, 2018; 4. Affidavit of Michael Covey sworn on May 7, 2018; 5. Affidavit of Derek Barker sworn on May 7, 2018; 6. Affidavit of Holly McNutt sworn on May 30, 2018; 7.

Affidavit of Michael Covey sworn on July 13, 2018; 8. Affidavit of Christopher LaVigne sworn on January 11, 2019; 9. Affidavit of Holly McNutt sworn on July 31, 2020; and, 10. Affidavit of Christopher LaVigne Sworn on August 17, 2020. Each of the affiants was cross-examined in court. Background [ 9 ] In 1997, Louis Myatt and Ms. McNutt became owners of 3234 Micmac Street, Halifax, Nova Scotia. Mr. Myatt provided the funds for the down payment. He was an older gentleman that Ms. McNutt had befriended a few years earlier. [ 10 ] From 1997 to 2008, Ms. McNutt lived in the home. Mr.

Myatt’s presence was inconsistent. [ 11 ] In early 2008, Mr. Myatt and Ms. McNutt fell behind on their mortgage payments. As a result, The Toronto Dominion Bank sued them for $92,846.78 and sought an order for foreclosure, sale, and possession (the “TD Foreclosure Proceeding”). [ 12 ] During the TD Foreclosing Proceeding, Mr. Myatt died. As a result of his death on November 15, 2008, Ms. McNutt became the sole owner of 3234 Micmac Street. There is no evidence that Mr. Myatt’s estate provided a contribution towards the debt owed in the TD Foreclosure Proceedings. Ms.

McNutt, who had limited financial resources, was now facing foreclosure proceedings. [ 13 ] Just nine days after Mr. Myatt’s death, Ms. McNutt refinanced the home to avoid foreclosure. [4] To do so, she signed a new short term mortgage on November 24, 2008 with 3061312 Nova Scotia Limited for $127,000.00 at an interest rate of 18% per annum (the “306 Mortgage”). The total amount of the mortgage was payable June 1, 2009. [ 14 ] On April 30, 2009, Andrew Wolfson, counsel for 3061312 Nova Scotia Limited, sent Ms. McNutt a letter advising that he had been retained by 3061312 Nova Scotia Limited and that Ms.

McNutt was in arrears on this mortgage.

[ 15 ] Around the same time of Mr. Wolfson’s letter to Ms. McNutt, Ms. McNutt retained Chris LaVigne, a lawyer with Heritage House Law Office, with respect to the 306 mortgage. [ 16 ] Ms. McNutt attended Mr. LaVigne’s office in early May 2009 with a gentleman named David Hink. During this meeting, Ms. McNutt advised Mr. LaVigne, among other things, that with respect to the current mortgage: 1. Ms. McNutt was never informed there was a $10,000.00 lending fee in the mortgage; 2. No one reviewed the mortgage documents with Ms.

McNutt, and she was simply told that if she wanted to avoid her house from being sold, she had to sign the mortgage; 3. The only money she received from this mortgage was $1,050.00; 4. Ms. McNutt signed the documents in the presence of Lola Doucet, a lawyer acting for Stephen Spellman (Mr. Spellman was associated in some way with the lender in some sort of broker capacity). [ 17 ] At this meeting Mr. Lavigne had a general discussion with Ms.

McNutt about her ability to get caught up on the arrears of the 306 mortgage, the possibility of finding another lender, the consequences if she neglected to make regular payments and the possibility of putting her house up for sale so as to obtain the market price rather than let it go to foreclosure and sale. [ 18 ] Sometime in the late summer, Ms. McNutt approached Mike Covey (the Applicant in this proceeding) seeking to have Mr. Covey purchase 3234 Micmac Street to preserve the equity in the house for their daughter. Mr. Covey and Ms. McNutt have a long history which produced a child.

Their child is an adult now and aside from their joint desire to keep the house for their child, the child had nothing to do with these proceedings. [ 19 ] Mr. Covey attempted to purchase the home from Ms. McNutt. On September 9, 2009, Mr. Covey and Ms. McNutt executed an Agreement of Purchase and Sale whereby Mr. Covey would purchase 3234 Micmac Street from Ms. McNutt for $138,000.00 (the amount owing on the mortgage). [ 20 ] Unfortunately, Mr.

Covey could not complete the transaction due to his own difficulties obtaining financing. [ 21 ] On October 1, 2009, 3061312 Nova Scotia Limited filed a Notice of Application in Chambers seeking an order for foreclosure, sale, and possession with respect to 3234 Micmac Street. As a result, Ms. McNutt was facing foreclosure proceedings for the second time in a year with respect to two different mortgages. The application was set down for hearing on October 29, 2009. [ 22 ] Mr. Covey remained interested in assisting Ms. McNutt.

As a result, he sought out financing from his friends, Derek and Norma Barker. [ 23 ] The Barkers agreed they would use their ability to obtain financing to assist Mr. Covey in purchasing the home. They also needed to ensure that the full balance of the 306 mortgage was paid out. [ 24 ] The amount needed to pay out the 306 mortgage was approximately $150,000.

The mortgage broker apparently advised that to obtain that amount from Manulife (who were providing the Barkers with a line of credit secured by a mortgage), that the purchase price would have to be $190,000. [5] The mortgage broker suggested that the difference could be made up from a “Gift Letter” from Ms. McNutt to the Barkers of $40,000. [ 25 ] The form of the letter was provided by the mortgage broker. Ms. McNutt purportedly signed the Gift Letter on October 15, 2009. Derek Barker signed the letter on October 14, 2009 and Norma Barker signed on November 4, 2009. Ms. McNutt denies signing the Gift Letter.

The Gift Letter stated that Ms. McNutt had gifted the Barkers $40,000.00. Ms. McNutt did not actually gift the Barkers any money. [ 26 ] There were no appraisals obtained by the parties and it is unknown as to whether an appraisal was obtained by the mortgage broker or Manulife. There is no direct evidence of any equity in the Property. [ 27 ] On October 29, 2009, Mr. Wolfson, Ms. McNutt, and Mr. Covey attended court with respect to the Notice of Application in Chambers for foreclosure. As a result of the pending negotiations between Ms.

McNutt and the Barkers, the Application was adjourned to November 25, 2009. [ 28 ] On November 24, 2009, Ms. McNutt executed an Agreement of Purchase and Sale to sell 3234 Micmac Street to the Barkers for $190,000.00. The closing date was scheduled for November 30, 2009. None of the conditions within the Agreement of Purchase and Sale were followed: there was no deposit, no disclosure statement, no inspection and no adjustments for fuel, etc. on closing. [ 29 ] As a result of the agreement between Ms. McNutt and the Barkers, Mr.

Wolfson wrote the court on November 24, 2009 advising that a deal had been reached and that the court date should be postponed without day pending closing. [ 30 ] The agreement between Ms. McNutt and the Barkers did not close on November 30, 2009. It was delayed by a little over a week. [ 31 ] On December 4, 2009, Ms. McNutt signed the closing documents. On this date, she signed the following documents: 1. Warranty Deed transferring title from Ms. McNutt to the Barkers; 2. Affidavit of Spousal Status for Ms. McNutt; 3. HST Certificate;

4. Direction and Authorization to Pay. [ 32 ] Where Ms. McNutt signed these documents and who witnessed her signature is disputed and will be discussed in further detail below. [ 33 ] Mr. LaVigne’s office prepared a Statement of Account dated December 4, 2009, showing an amount owing by vendor (Ms. McNutt) in the amount of $2,160.06. [ 34 ] On December 7, 2009, the Barkers executed a document to transfer the beneficial interest in 3234 Micmac Street to Mr. Covey (the “Trust Agreement”). As a result, Mr.

Covey became the beneficial owner of the 3234 Micmac Street and was entirely financially responsible for the Manulife line of credit obtained by the Barkers. [ 35 ] On December 9, 2009, Mr. Covey paid Heritage House Law the amount owing by Ms. McNutt ($2,160.06). As a result, Ms. McNutt was able to avoid foreclosure, avoid eviction, avoid the chance of a deficiency judgment, and she did not pay out of pocket any of the expenses. [ 36 ] Ms. McNutt accompanied Mr. Covey to Mr. Lavigne’s office on December 9, 2009. Mr.

Lavigne, having recalled her statement to him in the Spring of 2009 that she claimed no understanding of the documents related to the prior mortgage, and with a view to avoiding a similar claim, had Ms. McNutt sign the following handwritten note witnessed by his office manager: “December 9, 2009 I have been fully advised on the sale of my home at 3234 Mic Mac Street Halifax. I have seen the payment to Wolfson Schelew Zatzman showing the payout of $149,152.52.

I have signed all documentation being fully advised by my lawyer. (sgd) Christene Hatcher (sgd) Holly Parnell” It is to be noted that the payout figure is slightly off. In addition Mr. Lavigne had Ms. McNutt initial a document titled “Completion Statement for Vendor” that showed the “Sale Price of Property” as $190,000, the “Payout of Existing Mortgage”, which Mr. Lavigne had negotiated down by $2,000 to $147,295.16, and the “Letter of Gift” as a deduction from the purchase price of $40,000. [ 37 ] Around this time, Mr. Covey moved into 3234 Micmac Street. He lived on the main level and Ms. McNutt lived upstairs.

Ms. McNutt’s financial issues continued. Her only income was a disability pension of $800 per month. Mr. Covey agreed Ms. McNutt could continue to live in the property without paying rent. [ 38 ] In January 2010, Ms. McNutt required proof of residence for social services to approve her for Pharmacare. As such, Mr. Covey prepared a lease between Mr. Barker as Landlord and Ms. McNutt as Tenant for 3234 Micmac Street for a monthly payment of $550.00. She signed this lease and on January 18, 2010 presented it to social services so as to allow her to obtain Pharmacare. Mr.

Covey never expected to receive any rent from Ms. McNutt, and he did not receive any rent from her. [ 39 ] Ms. McNutt acknowledges requesting what she called a “bogus” lease to allow her to obtain Pharmacare but says she did not know that she was not the owner of the Property. She does acknowledge that the lease she presented to social services showed Mr. Barker as Landlord. She admits that when she was applying for social services in January 2010, they told her she did not own 3234 Micmac Street. [ 40 ] She claims this is when she started requesting copies of the property file from Chris Lavigne.

There is no evidence of her requests. She hired her present counsel in 2015 and when he requested the file from Mr. Lavigne he received it within 4 days. I find that there was no request to Mr. Lavigne for the file materials prior to Mr. Bureau’s request in 2015. [ 41 ] After Mr. Covey moved back into 3234 Micmac Street, he renovated the basement apartment and rented out the basement. He collected rent from the tenant directly during this time. [ 42 ] In or about April 2015, while Mr. Covey was away, Ms. McNutt changed tenants and began to collect rent from the tenant directly. As a result, Mr. Covey asked Ms.

McNutt to move out of the house. She refused. [ 43 ] Mr. Covey applied to the Residential Tenancy Board to have Ms. McNutt evicted from 3234 Micmac Street on August 26, 2015. Three days later, on August 29, 2015 Ms. McNutt requested an Emergency Protection Order (the “EPO”) against Mr. Covey. The EPO granted Ms. McNutt exclusive possession of the property. Since that time, Mr. Covey has been excluded from his property and Ms. McNutt has lived there collecting rent for the basement apartment from a series of tenants. [ 44 ] On October 6, 2015, Mr.

Covey’s application to the Residential Tenancy Board was dismissed on the basis that Ms. McNutt was not a tenant as required under the Residential Tenancies Act, R.S.N.S., c. 401 . [ 45 ] Mr. Covey appealed this decision to the Small Claims Court. The Small Claims Court denied the appeal on the basis that there was no tenancy relationship as defined in the Residential Tenancies Act. [ 46 ] Ms. McNutt sought exclusive possession of the property in the Supreme Court (Family Division). Her application for exclusive possession was dismissed. However, Ms. McNutt was able to obtain various peace bonds against Mr.

Covey which have had the effect of excluding Mr. Covey from the property. [ 47 ] On December 17, 2017, Mr. Covey filed an application in Chambers. Through various adjournments, changes of counsel, and

other factors, the matter has been delayed. All of these delays have resulted in Ms. McNutt continuing to reside at 3234 Micmac Street. [48] The evidence established that between December 2009 and October of 2015 the line of credit had been reduced by paymentsfrom Mr. Covey from the original amount of $152,000 to $97,417.06 and that between October 2015 and November 2019 the amountowing on the line of credit had increased to $152,492.50. Mr. Covey testified that at the present time the line of credit was at themaximum. [49] Ms.

McNutt admits that: 1. she signed all the documents related to the transfer of 3234 Micmac Street to the Barkers, (with the exception of the GiftLetter to the Barkers) 2. that the handwritten note signed on December 9, 2009 in Mr. Lavigne’s office was signed by her, 3. that she had the lease between her and the Barkers with rent payable to Mr.

Covey at least as of January 2010, 4. that she was advised in January 2010 by social services that she did not own the property, 5. that she made no attempts to deal with the ownership issue of the property except to obtain exclusive possession of theproperty, and 6. that she has collected rent from tenants living in the property. The Parties’ Positions [50] Ms. McNutt’s position is that she was duped into signing the agreement of purchase and sale, the deed, the affidavit of statusand the other documents related to the transfer of the Property to the Barkers. She says that Mr.

Covey had her sign only the signaturepages of the documents at her home with the explanation that he was obtaining a line of credit that would relieve her from the foreclosureproceedings. She is adamant that she was never told and did not know that she was selling the Property or otherwise transferring title tothe Barkers. [51] Mr. Covey submits that it is unbelievable and not credible that Ms. McNutt advances the argument that she had no idea thedocuments she admits that she signed meant that she transferred title of her home to the Barkers.

He says that she makes this argumentin the face of the fact that the Barkers took out a mortgage that paid her debt, in the face of the fact that the foreclosure proceedings wentaway, in face of the fact that that she did not execute a new mortgage, and in face of the fact that she never made any payments to resolvethe foreclosure proceedings or on any new loans. [52] Mr. Covey says that Ms. McNutt was fully informed and knew exactly what she was doing when she sold the property and wascontent with living in the property paying no mortgage and no rent until she faced eviction from Mr. Covey in 2015.

Since then she hasdone everything in her power to stay in the home. It has now been almost 11 years that she has lived in the home without paying a pennyto the Barkers or Mr. Covey for her use of the home. Issues [53] The claims made by the parties against each other raise the following issues: 1. Who is the owner of the Property? a. Was the deed and other documentation not completed as required by the terms of the Registry Act, RSNS 1989, c. 392,and/or the Land Registration Act, SNS 2001, c. 6, which voids the transfer ? b. Is the transfer void by misrepresentation? 2.

Does the respondent have an equitable claim to title through a resulting trust? 3. Does the respondent have a claim in unjust enrichment? a. If so, what is the remedy? 4. If the answer to questions 1, 2 and 3 are “no”, what damages, if any, are owed to that applicant by the respondent? Reliability and Credibility [54] I adopt the following statement about fact finding from Warner J. in Burghardt v Burghardt, 2019 NSSC 106: [44] Fact finding requires the court to assess both reliability and credibility. Reliability involves an assessment of the witness’scapacity to observe, recall and communicate accurately.

Credibility involves the assessment of the witness’ believability and truthfulness.The most important factor is the application of common sense to all of the evidence, which can be tested in a particular case.

This isespoused in Faryna v Chorny, (BC CA), [1952] 2 DLR 354 (BCCA), at paras. 9 to 11. [45] Other indicia of reliability and credibility include the appearance of honesty, the accuracy and completeness of observations, thecircumstances between the parties, the consistency or inconsistency of their evidence, both internally and with other evidence before thecourt, and demeanour but with caution. [46] Demeanour was the central issue in the Supreme Court of Canada decision in R. v N.S., 2012 SCC 72. In all three sets of reasons,

the court described the role of demeanor in the assessment of a witness’s evidence. While all recognized that demeanour is not the most important factor going into the assessment of credibility, there appeared to be agreement that determining credibility is not based on a single factor but on the application of common sense to all of the evidence. The actual words used are the “visible or audible form of self expression manifest by a witness”, and together with the words used constitute the communication in court. [47] I am not required to believe or accept a witness’ evidence in its entirety.

I may believe or rely upon none, part or all of a witness’ evidence, and attach different weight to different parts of it. The bottom line is that there is no magic formula for deciding what or how much to believe or rely upon, except the application of common sense. [ 55 ] The claims of the respondent are contrary to the written documentation in evidence before the court. As such, the veracity of her allegations requires the court to assess the reliability and credibility of the parties. I had the opportunity to observe each of them closely as they gave their evidence. I found that Mr. Covey and Mr.

Barker gave their evidence in a truthful and reliable fashion. Their testimony was internally consistent and objectively supported by the documentation. Their testimony was also corroborated by each other and by the evidence of Chris Lavigne, a practising lawyer and officer of the court. [ 56 ] I did not find Ms. McNutt to be a reliable and credible witness. Her evidence was not internally consistent. It was not objectively corroborated by the documentation or by any other witness. It did not have the appearance of honesty. Her observations were inaccurate and incomplete.

While I will refer to additional specifics in my analysis, some examples that led me to form this opinion include: 1. On various occasions during cross-examination, she denied the truth of a proposition put to her where she had made an admission of the same fact in her sworn affidavit. 2. She denied having any knowledge of the foreclosure proceeding relating to the 306 mortgage and said that she had never seen the affidavit of Terry Black filed in support.

She was then faced with an affidavit of service that was filed with the court on the foreclosure establishing that she was personally served with the affidavit. She denied being present in court for the foreclosure hearing but the evidence shows that she in fact appeared at the foreclosure hearing on the date and time in the Notice served on her. 3. Before being shown the documents, she identified in her testimony the amount of the TD mortgage debt but when shown the foreclosure documentation she claimed she could not remember the very same figures. 4.

Throughout her evidence she would adamantly state she did not sign a document and then, when pressed, would acknowledge that it could be her signature but she “did not recall” signing it. 5. When she was unsure of what impact an answer would have on her case, she would change her answer from affirmative to negative or from negative to positive and then to not recalling to try and avoid the issue. 6.

She repeatedly claimed to have not seen documents, or if that could not be claimed, that she did not understand what they were; or that she was only shown the signature page to sign and never saw the body of the document. Yet, she made none of these claims in her sworn affidavit, except on one occasion. 7. Every time she was forced into the position of having to concede a proposition that was true she would adopt an answer of “I can’t recall”. 8. She claimed she tried to obtain a copy of the real estate file from Chris Lavigne starting in January 2010 without success.

There is no evidence to support even one attempt by her to contact Mr. Lavigne. When he was contacted by Mr. Bureau on behalf of Ms. McNutt in April 2015, he sent a copy of the file to Mr. Bureau within 4 days. As stated above I find she made no such attempts to obtain the file. [ 57 ] Accordingly, where the testimony of Holly McNutt conflicts with the documentary evidence or the testimony of another witness, I accept the document or the evidence of the other witness as more reliable. 1.

Who Owns the Property Was the Property Transfer Invalid Under Provincial Legislation? [ 58 ] An agreement of purchase and sale dated September 9, 2009 was entered into for the purchase price of $138,000 with Holly McNutt shown as the seller and Michael Covey as the purchaser. In the 3 affidavits she swore in December 2017, March 2018 and May 2018, Ms.

McNutt made no acknowledgement of signing this document. [ 59 ] She testified in cross-examination that she never signed a piece of paper, that she saw, to sell the Property to Mike Covey. [ 60 ] In the July 31, 2020 affidavit, she acknowledged signing the document “as indicating a desire to sell the property”.

However she says that she saw this “to be a manner in which I could have had financing on the property which would provide me some relief on the high mortgage rate I was paying.” As mentioned above, she had received notice from legal counsel dated April 30, 2009 that she was in arrears and he was instructed to bring foreclosure proceedings.

She gave no explanation of how she was to obtain financing from signing this document purporting to sell the property without selling the property. [ 61 ] After being referred to her affidavit, she then testified that Mike Covey never showed her the document – just asked her to sign the signature page. She had never made that allegation in her affidavit. [ 62 ] Mr. Covey was unable to obtain financing so that agreement lapsed. [ 63 ] Soon thereafter, Mr. Covey approached his friend Derek Barker to ask if Mr. Barker would assist Ms. McNutt to avoid

foreclosure by purchasing the property so that Covey and McNutt’s daughter could one day inherit the property. Mr. Covey would be responsible for the payments on the mortgage financing and all other expenses. Covey would be the actual owner of the property by an agreement to be made between Covey and the Barkers. [ 64 ] Derek Barker testified that he agreed to do this as a favour for his friend Mike Covey. There was no reason not to because as he saw it all the risk was with Mike Covey. [ 65 ] On October 15, 2009, Ms. McNutt purportedly signed a “Gift Letter” form that the mortgage broker had provided to Mr.

Covey. There was no actual $40,000 gift. Ms. McNutt did not have that kind of money. It was a paper amount that satisfied the lender’s requirements in order to lend the Barkers the $150,000 required to pay out the 306 mortgage and avoid the foreclosure. The Gift Letter was signed by Derek Barker on October 14, 2009 and by Norma Barker on November 4, 2009. In her affidavit Ms. McNutt attested that did not sign the Gift Letter. She testified that she had never seen the Gift Letter until it was shown to her at the Tenancy Board hearing in 2015.

She was referred to her discovery examination wherein she agreed that it was possible that she signed the document but did not understand “what it was doing”. I note that the form of signature on the Gift Letter appears consistent with the form of signature that Ms. McNutt admitted to be hers on other documents. Ms. McNutt did not call any handwriting expert to say that the signature was a forgery. I find as a fact that the Gift Letter was signed by Holly McNutt on October 15, 2009. [ 66 ] Ms.

McNutt made much of the fact that the Gift Letter form states that the signatories certify that the donor and the recipients of the gift are immediate family members. Whether that was a condition that Manulife required is not known on the evidence. It is not relevant to the issues as between these parties. [ 67 ] An agreement of purchase and sale dated November 24, 2009 was prepared on Heritage House Law Office precedent with a purchase price of $190,000 (the sum of the payout of the mortgage and the amount of the Gift Letter) with Ms.

McNutt as vendor and the Barkers as purchasers. [ 68 ] The agreement was signed by the Barkers on November 24, 2009 and their signatures were witnessed by Mr. Covey. It is signed by Ms. McNutt on November 24, 2009, with her signature witnessed by an unidentified person. It was completed on the day before the foreclosure hearing. As a result of the agreement, the foreclosure hearing was postponed. Ms. McNutt admits in her affidavit that she signed this agreement and that the agreement showed the purchase price of $190,000. Ms.

McNutt further attests that she did not wish to sell the home and wished to obtain financing so that she could keep the home. [ 69 ] At the hearing she testified that she did not recall signing this document and that it did not look like her signature. When confronted with her affidavit, she then testified that she was only shown the signature page by Mr. Covey and did not see the entire document and did not know the sale price was $190,000. None of this appeared in the 4 affidavits she has filed in this proceeding since 2017. The signature is again indistinguishable from signatures she admits to be hers.

I do not accept her testimony. I find that she signed the agreement of purchase and sale, that she knew the purchase price to be $190,000 and that she knew that the $40,000 gift letter was a fiction necessary to obtain the $150,000 financing necessary to pay out the mortgage being foreclosed. [ 70 ] On December 4, 2009 the warranty deed transferring title to the property was signed by Ms. McNutt. She admits to signing this deed.

On the same date she signed an affidavit of spousal status (required by the Matrimonial Property Act, R.S.N.S., c. 275); an HST Certificate; and a Direction and Authorization to Heritage House Law Office to receive money in trust and pay all the money required to be paid out including real estate commissions, legal fees and any related disbursements. [ 71 ] Ms. McNutt acknowledges that it is her signature on these documents. She claims that they were brought by Mr. Covey to her house for her to sign. She admits that Mr. Lavigne has never been to her house. [ 72 ] Mr. Covey says that he and Ms.

McNutt attended at Mr. Lavigne’s office on December 4, 2009 where these documents were signed. Mr. Lavigne attested that he had a 10:00 a.m. scheduled meeting on December 4, 2009 to go over all the documents relating to the sale of the property including the agreement of purchase and sale. [ 73 ] The Affidavit of Spousal Status on its face indicates that Ms. McNutt appeared before Mr. Lavigne and swore to the truth of the contents. [ 74 ] The original warranty deed was placed in evidence as Exhibit 11. It appears to have white-out on the witness line adjacent to where Ms. McNutt signed.

It is apparent when the document is held up to a light that the witness line was signed by Mike Covey. His signature is covered by “white-out” paste. Mr. Lavigne has signed the witness line over the white out material. He has also signed the certificate below that Ms. McNutt signed the document in his presence. [ 75 ] Counsel for Ms. McNutt suggested to Mr. Lavigne in cross-examination that the documents had been signed by Ms. McNutt at her home and witnessed there by Mr. Covey and then brought in to Mr. Lavigne to sign and that this necessitated Mr. Lavigne white-out the witness line and sign it himself. Mr.

Lavigne was offended by the suggestion and adamant that he would never do such a thing as a licensed lawyer and officer of the court. He admittedly cannot recall the details of this particular transaction 11 years later. He cannot say specifically how it was that Mr. Covey originally signed the witness line. Every lawyer who has practised law for a period of time will have experienced that during a meeting with clients documents get improperly signed or witnessed or initialed in the wrong place or by the wrong person and white-out is often used to repair the mistake. Mr.

Lavigne makes the point that, if the deed had been witnessed by Mr. Covey outside the office, he would have used a different certificate form with Mr. Lavigne certifying that Mr. Covey as witness came before him and certified that he witnessed Ms. McNutt’s signature. [ 76 ] I accept Mr. Lavigne’s evidence that he personally witnessed Ms. McNutt sign the deed and personally took her oath on the Affidavit of Spousal Status and that these documents were signed by Ms. McNutt in his presence at his office on December 4, 2009. I do not accept Ms.

McNutt’s evidence as credible or reliable. [ 77 ] It is worth noting that the agreement of purchase and sale, the deed, the affidavit of spousal status, the HST Certificate and the Direction to Pay signed by Ms. McNutt on December 4 and reviewed with her by Mr. Lavigne contain clear and repeated statements that

the property is being sold. Although the evidence is that the funds advanced by Manulife were in the form of a line of credit secured by amortgage, not one of the documents signed or seen by Ms. McNutt refer to a line of credit. They all refer to the sale of the Property. [78] Ms. McNutt’s assertion that she did not know she was selling the property is nonsense. [79] Accordingly, I find that the documents were completed and filed with the Registry in compliance with its requirements. Ms.McNutt’s argument that the property transfer was invalid under provincial legislation fails.

Was the Transfer of Title Voidable Due to Misrepresentation? [80] The second argument advanced by Ms. McNutt is that the transfer of the Property should be voidable due to misrepresentation.She claims that the representations made to her by Mr. Covey were either fraudulently or negligently false and that these representationsinduced her to transfer the property. [81] Regardless of whether the claim is made in fraud or negligence, the representation alleged must be proven to be false in fact. [82] The basis advanced for these claims is that Mr. Covey induced Ms.

McNutt to sign the transfer documents in his presence bymisleading her to believe that this was just a line of credit and not a sale of the Property. [83] For the reasons stated above I reject the premise of the argument. I find that Mr. Covey did not approach Ms. McNutt at a timewhen she was extremely vulnerable. I find that Mr. Covey answered Ms. McNutt’s call for help to get out from under the pendingforeclosure and loss of the Property. I find that she was content to transfer the property first to Mr. Covey but when that did not workout, to transfer it to the Barkers knowing that Mr.

Covey would be making the payments and that it might be preserved as an inheritancefor their daughter. [84] I find that Ms. McNutt was content with this arrangement as it allowed her to continue to live in the house without having to payrent or a mortgage. It was only when she became greedy and started collecting rent from the basement tenant for herself that the situationchanged. Mr. Covey then demanded that she leave. Through the filing of an Emergency Protection Order and, later, applications forPeace Bonds, she has been able to extend her occupation of the Property since 2015. [85] In

summary, I find that that there was no misrepresentation made by Mr. Covey to Ms. McNutt. With this finding, the claimsfor fraudulent and negligent misrepresentation fail. 2. Does the respondent have an equitable claim to title through a resulting trust? [86] Both parties referred the court to the decision of Dorey v. Nelson, 2020 NSSC 107, where McDougall J. presided over a similarcase. The Applicants sought to remove the Respondents from the property. The Respondents were the parents of one of the Applicantsand had been living with them in the home. The Applicants had purchased the property.

The Respondents had paid rent and performedsome other work on the property. As part of the Respondents’ claim, they claimed a resulting trust and unjust enrichment against theApplicants. MacDougall J. provided a

summary of each of these causes of actions. Resulting Trust [87] In Dorey, supra, at paragraphs 14 and 15, McDougall J. summarized the law on resulting trust as follows: [14] Counsel for Mr. Dorey and Miss Nelson referred to the Supreme Court of Canada decision in Pecore v. Pecore, 2007 SCC 17,in which Rothstein, J., for the majority stated at para. 20, the following: 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 forthe property, is under an obligation to return it to the original title owner: see D.W. M. Waters, M.R.

Gillen and L.D. Smith, eds.,Waters’ Law of Trusts in Canada (3rd. ed. 2005), at p. 362. While the trustee almost always has the legal title, in exceptionalcircumstances it is also possible that the trustee has equitable title: see Waters’ Law of Trusts, at p. 365, noting the case of Carter v.Carter (1969), (BS SC), 70 W.W. R. 237 (B.C.S.C.). [Emphasis added] [15] Mr. Schwartz, as counsel for the Applicants, also cited the case of Nicholson v. Whyte, 2005 NSSC 198 wherein theHonourable Justice R.

James Williams, of this court, had this to say, at paragraph 7: The law relating to resulting trusts was summarized in Hamilton v. Hamilton

(1996) Carswell Ont. 2421 (Ont. C.A.) where the courtstated at paragraph 39: A presumption of a resulting trust arises in favour of persons who contribute financially to the purchase of a property but do not take titlein their own name, and do not intend to give a gift of the entire beneficial interest in the property to the registered or recorded titleholder. Equity presumes that the non-titled party does not intend a gift when he contributes to the purchase price of a property.

The non-titled party is treated as the equitable holder of the beneficial interest; the extent of his or her beneficial interest is proportionate to thefinancial contribution made to acquire the property. The presumption of a resulting trust is rebuttable on a showing by the title-holderthat the non-titled party intended the title-holder to have the property for his or her own benefit. The presumption of a resulting trust isalso rebuttable on a showing that the transfer to the titled party was not gratuitous.

See Oosterhoff and Gillese, Text, Commentary andCases on Trusts ,4th ed. (1992) and Hovius, Family Law: Cases Notes and Materials, 3rd ed. (1992).

[Emphasis Added] [88] For Ms. McNutt to establish a resulting trust, she must establish that title to the property is in the Barkers’ name and because theBarkers gave no value for the property or they were a fiduciary, they are under an obligation to return it. [89] A presumption of a resulting trust would arise if Ms. McNutt could demonstrate that she contributed to the purchase of theproperty, but did not take the property in title and did not intend to give a gift of the entire beneficial interest in the property to theBarkers.

The presumption of a resulting trust is rebuttable if the Barkers can show that the transfer of the title was not gratuitous. [90] I do not accept Ms. McNutt’s evidence that she was not aware that she was transferring title to the Property and was not awareof the Gift Letter. I find that she intended to make a gift of the beneficial interest in the property, knowing that it did not require her tomake any cash payment and that this would permit the financing to be obtained. She did this in the hope that it would permit aninheritance by her daughter.

On that basis alone the resulting trust argument should fail. [91] Ms. McNutt admits the Barkers (and Mr. Covey) paid approximately $150,000 for the property. The Barkers obtained a line ofcredit to pay a portion of this amount and Mr. Covey covered the balance. [92] Ms. McNutt complains that she did not receive the equity in the property and that instead the equity in the property was gifted tothe Barkers. First, there is no direct evidence before the court that there was any equity in the property.

The $40,000 was a fiction,created on paper, as a means to allow the Barkers to show equity to the bank to allow for funding. Ms. McNutt knew she was not goingto receive that money and that is why the Gift Letter was created and signed by her. [93] Furthermore, the September 9, 2009 agreement to sell this property between Ms. McNutt and Mr. Covey for $138,000.00confirms that Ms. McNutt was prepared to sell the property for the sum that would get her out from underneath another foreclosureproceeding. [94] The Barkers paid a substantial sum for the property. Ms.

McNutt’s complaint that she did not get full market value for theproperty is insufficient to create a resulting trust. Ms. McNutt could have listed the property for sale, but she did not want to move out.Mr. Covey and the Barkers solved the problem for her. She is now asking the court to reverse this transaction without any regard to therisks taken by the Barkers or Mr. Covey or the fact that she has lived free of any mortgage payment or rent payment for almost elevenyears. [95] The claim for a resulting trust is dismissed. 3. Does the Respondent Have a Claim in Unjust Enrichment? [96] Ms.

McNutt claims that the applicant and the Barkers have been unjustly enriched and that as a result the court should grant herequitable title through a constructive trust. She further requests that the court find that she is entitled to the return of her $40,000 giftbefore the entitlement to the Property is determined. [97] McDougall J., in Dorey, summarized the law of unjust enrichment. He cited the following passage from the decision of theSupreme Court of Canada in Peter v. Beblow: [27] In a more recent case, McLachlin, J. (as she then was), at page 987 of her decision in Peter v.

Beblow, ,[1993] 1 S.C.R. 980, said the following: The basic notions are simple enough. An action for unjust enrichment arises when three elements are satisfied: (1) an enrichment; (2) acorresponding deprivation; and (3) the absence of a juristic reason for the enrichment. These proven, the action is established and theright to claim relief made out. At this point, a second doctrinal concern arises: the nature of the remedy. ’Unjust enrichment’ in equitypermitted a number of remedies, depending on the circumstances. One was a payment for services rendered on the basis of quantummeruit or quantum valebat.

Another equitable remedy, available traditionally where one person was possessed of legal title to property inwhich another had an interest, was the constructive trust. While the first remedy to be considered was a monetary award, the Canadianjurisprudence recognized that in some cases it might be insufficient. This may occur to quote LaForest, J. in Lac Minerals Ltd. v.International Corona Resources Ltd., (SCC), [1989] 2 S.C.R. 574, at p. 678, ‘if there is reason to grant to the plaintiffthe additional rights that flow from recognition of a right of property’.

Or to quote Dickson, J., as he then was in Pettkus v. Becker, (SCC), [1980] 2 S.C.R. 834, at p. 852, where there is a contribution [to the property] sufficiently substantial and direct as toentitle [the plaintiff] to a portion of the profits realized upon sale of [the property].’ In other words, the remedy of constructive trustarises, where monetary damages are inadequate and where there is a link between the contribution that founds the action and the propertyin which the constructive trust is claimed. [Emphasis added] [98] Ms. McNutt relies on the following passage from the decision of Murphy v.

Colbourne, 2016 NSSC 211: [26] A person who has been unjustly enriched at the expense of another will be ordered to make restitution to that person. In Kerr v.Baranow, 2011 SCC 10, Cromwell J. speaking for an unanimous court, reviewed the Canadian law relating to unjust enrichment claimsin detail. He stated at paras. 31 and 32: At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain: Peel(Regional Municipality) v. Canada, (SCC), [1992] 3 S.C.R. 762, at p. 788.

For recovery, something must have beengiven by the plaintiff and received and retained by the defendant without juristic reason. A series of categories developed in whichretention of a conferred benefit was considered unjust. These included, for example: benefits conferred under mistakes of fact or law;

under compulsion; out of necessity; as a result of ineffective transactions; or at the defendant’s request: see Peel, at p. 789; see generally,G.H.L. Fridman, Restitution (2nd ed. 1992), c.3-5, 7, 8 and 10; and Lord Goff of Chieveley and G. Jones, The Law of Restitution (7thed., 2007), c.4-11, 17 and 19-26). Canadian law, however, does not limit unjust enrichment claims to these categories.

It permits recovery whenever the plaintiff canestablish three elements: an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of ajuristic reason for the enrichment: Pettkus; Peel, at p. 784.

By retaining the existing categories, while recognizing other claims that fallwithin the principles underlying unjust enrichment, the law is able “to develop in a flexible way as required to meet changingperceptions of justice”: Peel, at p. 788. [27] At para. 34, Justice Cromwell discussed the flexibility of the applicable principles when he stated: Although the legal principles remain constant across subject areas, they must be applied in the particular factual and social context out ofwhich the claim arises.

The Court in Peter was unanimously of the view that the courts “should exercise flexibility and common sensewhen applying equitable principles to family law issues with due sensitivity to the special circumstances that can arise in such cases” (p.997, per McLachlin J. (as she then was); see also p. 1023, per Cory J.).

Thus, while the underlying legal principles of the law of unjustenrichment are the same for all cases, the courts must apply those common principles in ways that respond to the particular context inwhich they are to operate. [28] Dealing with the elements of an unjust enrichment claim, he stated at paras. 38 – 41: For the first requirement -- enrichment -- the plaintiff must show that he or she gave something to the defendant which the defendantreceived and retained.

The benefit need not be retained permanently, but there must be a benefit which has enriched the defendant andwhich can be restored to the plaintiff in specie or by money. Moreover, the benefit must be tangible. It may be positive or negative, thelatter in the sense that the benefit conferred on the defendant spares him or her an expense he or she would have had to undertake (Peel,at pp. 788 and 790; Garland, at paras. 31 and 37). Turning to the second element -- a corresponding deprivation -- the plaintiff's loss is material only if the defendant has gained a benefitor been enriched (Peel, at pp. 789-90).

That is why the second requirement obligates the plaintiff to establish not simply that thedefendant has been enriched, but also that the enrichment corresponds to a deprivation which the plaintiff has suffered (Pettkus, at p. 852;Rathwell, at p. 455). … The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristicreason.

To put it simply, this means that there is no reason in law or justice for the defendant's retention of the benefit conferred by theplaintiff, making its retention "unjust" in the circumstances of the case: see Pettkus, at p. 848; Rathwell, at p. 456; Sorochan, at p. 44;Peter, at p. 987; Peel, at pp. 784 and 788; Garland, at para. 30. Juristic reasons to deny recovery may be the intention to make a gift (referred to as a "donative intent"), a contract, or a disposition oflaw (Peter, at pp.990-91; Garland, at para. 44; Rathwell, at p. 455).

The latter category generally includes circumstances where theenrichment of the defendant at the plaintiff's expense is required by law, such as where a valid statute denies recovery (P.D. Maddaughand J. D. McCamus, The Law of Restitution (1990), at p. 46; Reference re Goods and Services Tax, (SCC), [1992] 2S.C.R. 445; Mack v. Canada (Attorney General) (2002), 60 O.R. (3d) 737 (C.A.)).

However, just as the Court has resisted a purelycategorical approach to unjust enrichment claims, it has also refused to limit juristic reasons to a closed list… [Emphasis Added] [99] In order to establish a claim for unjust enrichment against the Barkers or Mr. Covey, Ms. McNutt must show: 1. The Barkers and Mr. Covey retained an enrichment; 2. Ms. McNutt suffered a corresponding deprivation; and 3. The absence of a juristic reason. [100] I agree with the applicant that Ms. McNutt has not established any of these criteria. [101] Ms.

McNutt argues that it is the gift of $40,000 that is the benefit to the Barkers and the corresponding deprivation to her. Whileit is notionally arguable that the Gift Letter allowed the Barkers to obtain financing and was, in that respect beneficial, the evidenceestablishes that it was nothing more than a fiction. It certainly did not “enrich” the Barkers. [102] The Barkers took out a substantial line of credit placing their own credit at risk and transferred the beneficial interest in theproperty to Mr. Covey. They received no benefit to this transaction. Mr.

Covey assumed all liability on the line of credit to the Barkers.He has not been allowed to occupy the house since April 2015. There is no evidence he has retained a benefit. [103] Ms. McNutt has not suffered a corresponding deprivation. She gave up nothing more than her signature on the Gift Letter and that

she did intentionally. In fact, it is arguable that she has been enriched. She was released from an approximate $150,000 mortgage debt and foreclosure proceeding. She has lived free of mortgage and rent payments for eleven years, She has spent more than five years with exclusive use of the property. She has collected, or has had the opportunity to collect, a substantial amount of rent from the basement tenant. [ 104 ] As to the third element, there is clearly a juristic reason. I have found that Ms. McNutt intended to make a gift.

The Barkers purchased the property and assumed a massive debt under a contract with Ms. McNutt. [ 105 ] I find on the totality of the evidence that there is no basis to find that the Barkers’ and the applicant’s retention of the Property is “unjust”. [ 106 ] The claim in unjust enrichment fails. Accordingly, I will not address the issue of remedy for Ms. McNutt. 4. What Damages, if any, are Owed to the Applicant by the Respondent? [ 107 ] In addition to an order for vacant possession of the property, the applicant seeks damages for occupation rent relating to Ms.

McNutt’s occupation of the property since 2015 and damages in conversion for Ms. McNutt’s collection of rent from basement tenants since 2015. [ 108 ] Ms. McNutt acknowledged that she entered into a series of lease agreements for the basement apartment at the Property since 2015. She testified that from April 2015 until 2018 she charged $750 per month all inclusive. From 2018 to the present she charged $850.

She also acknowledged renting out the other parts of the house around the year 2000 for $1200, all inclusive, and she lived in the basement apartment. [ 109 ] In his closing submissions, the applicant merged his claims for occupational rent and conversion and submitted that this evidence suggests that the applicant could have rented the entire house for $2,000 per month at a minimum since April 2015 and, assuming expenses of 50%, that would equate to a claim to date (64 months) of $64,000. [ 110 ] The difficulty is that there is no evidence of what the net amount of rental income received by Ms.

McNutt was during this period. She testified that over the past 4 years she had to remove tenants on at least four occasions and there were periods of time that the apartment was not rented. Each time she had to clean and conduct some repairs and maintenance on the apartment. She also says that the money received was used to maintain the apartment and the Property. She has also made payments on the municipal taxes. [ 111 ] The applicant’s claim is for pecuniary damages. Such a claim must be specifically proved.

On the evidence before me, I am unable to determine what, if any, net rental income is due and payable to the applicant. I am not able to say that any such claim is not offset by the amounts paid by the respondent since 2015 for maintenance, repair and utilities. [ 112 ] Accordingly I decline to make any award of damages against the respondent. [ 113 ] The applicant seeks costs against the respondent. The respondent, in her brief, proposed that costs were payable based on Tariff A.

In respect of the “amount involved” she proposed that it should be set at between $200,000 and $300,000 based on the tax assessment for the current year of $234,200. On this basis Ms. McNutt proposed that the costs should be $22,750 plus $2,000 for each of two days of hearing ($4,000) for a total of $26,750 in costs. [ 114 ] I exercise my discretion to order costs payable by Ms. McNutt to the applicant in the amount of $20,000 inclusive of disbursements and order costs payable by Ms. McNutt to Norma and Derek Barker jointly in the amount of $5,000 inclusive of disbursements. [ 115 ] In

summary, for the foregoing reasons I allow the application and dismiss the respondent’s claims. An order will issue with the following provisions: 1. Declaring that the legal owner of the Property is Derek and Norma Barker and the beneficial owner of the Property under the Trust Agreement is Michael Covey. 2. Ms. McNutt shall be required to vacate the property and remove all items from the Property that belong to her on or before October 31, 2020 or such other date as is agreeable to the Barkers and Mr. Covey. 3. Ms. McNutt shall pay costs inclusive of disbursements to Mr.

Covey in the amount of $20,000 and to Norma and Derek Barker jointly in the sum of $5,000. [ 116 ] Order accordingly. Norton, J.