Smith v. Strickland, 2022 NSSC 265

Supreme Court of Nova Scotia Citation: Smith v. Strickland , 2022 NSSC 265 Date: 20220210 Docket: SYD No. 464829 Registry: Sydney Between: Lawton Smith and Livingston Smith Plaintiffs v. Robena Strickland and James Strickland Defendants Library Heading Judge: The Honourable Justice Patrick J. Murray Heard: January 18, 2022 and February in Sydney, Nova Scotia Written Decision: February 10, 2022 Subject: Real Estate Law Facts: [ 1 ] The Defendants owned a restaurant. Their two daughters were involved in the business over the years.

The Defendants fell into financial hardship and placed their home and restaurant in the name of their daughter and son-in-law. [ 2 ] The Plaintiffs commenced this action claiming they were not properly reimbursed when the business was sold in 2016. The Plaintiffs claim that the Defendants were unjustly enriched at their expense. [ 3 ] The Plaintiffs further maintain they are entitled to retain ownership of the real property at 43 Holic Avenue, occupied by the Defendants. [ 4 ] The Defendant claims she is the beneficial owner of 43 Holic Avenue.

This was the family home of the Defendants and is the residence of both she and her late husband. She (Robena) claims a resulting trust in her favour, and asks the Court to order that the property be deeded to her. [ 5 ] Issue: 1. Do the Plaintiffs’ have a valid claim of unjust enrichment, entitling them to a share of the proceeds from the sale of the property and business in 2016? 2. What is the appropriate disposition of the property located at 43 Holic Avenue? Result: The Court found this was a family business that was operated for decades.

The Defendants sacrificed in hard times to keep the business going with the help of their family. The Court granted the following relief in this proceeding: 1) The sum of $40,000 payable to the Plaintiffs by the Defendant. This represents a 25% share of the sale proceeds, less the $10,000 for property tax credit received by the Plaintiffs; and less an amount of $10,000 for other benefits received by them. [6] At the core of the doctrine of unjust enrichment is the Court’s ability to be flexible in arriving at a just result.

The Court found the sum of $40,000 achieves that result. 2) The Defendant is the beneficial owner of the real property located at 43 Holic Avenue, by way of resulting trust. This property shall be conveyed to her upon the mortgage placed in 2007 being paid off in full. 3) The Counterclaim of the Defendant is dismissed.

Caselaw: B2B Bank v. Shane , 2020 NSCA 15 ; Kerr v. Baranow , 2011 SCC 10 ; Moore v. Sweet , 2018 SCC 52 ; Pecore v. Pecore , 2007 SCC 17 ; and Dorey v. Nelson , 2020 NSSC 107 THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET. SUPREME COURT OF Nova Scotia Citation: Smith v. Strickland , 2022 NSSC 265 Date: 20220210 Docket: SYD No. 464829 Registry: Sydney Between: Lawton Smith and Livingston Smith Plaintiffs v.

Robena Strickland and James Strickland Defendants Judge: The Honourable Justice Patrick Murray Heard: February 24, 25, 26, April 23, 2021 in Sydney, Nova Scotia Written Submissions: July 22, 2021 Written Decision: February 10, 2022 Counsel: Sean MacDonald for the Plaintiffs Alan Stanwick for the Defendants By the Court: Introduction [1] “Robena’s Restaurant” was a popular restaurant and bakery, located in North Sydney, Nova Scotia. The food and the baked goods were “homecooked” by the proprietor Robena Strickland.

The restaurant was run by she and her husband, James Strickland, for almost 25 years from 1992 to 2016. [2] In 2016 the business was sold, including the building and chattels, at 266 Commercial Street. A profit was made on the sale when compare to the price paid in 2007, when purchased. [3] During the operation of the restaurant Mr. and Mrs. Strickland had help from members of their family. The Defendants’ had two daughters, Lawton Smith and Rebecca Anthony.

Lawton (Lottie) is married to Livingston Smith and both were involved in the business over the years, in different capacities. [4] The Plaintiffs, Lawton and Livingston Smith, have commenced this action claiming, that despite their efforts in maintaining essential aspects of the business, they were not properly reimbursed when the business was sold in 2016 by James and Robena Strickland. [5] The Plaintiffs claim that the Defendants were unjustly enriched at their expense and that there is no lawful reason for this enrichment. [ 6 ] James Strickland, the Plaintiffs’ father and father in law, unfortunately passed in 2019. [ 7 ] The Plaintiffs’ further maintain they are entitled to retain ownership of the property at 43 Holic Avenue.

This property had been placed in the name of the Plaintiff, Livingston Smith, in 1996 and was used to finance the restaurant business. [ 8 ] The Defendant, Robena Strickland, has claimed she is the beneficial owner of 43 Holic Avenue. This was the family home

of the Defendants and is the residence of both she and her late husband. [ 9 ] The Defendant claims a resulting trust in her favour, and asks the Court to order that the property be deeded to her, as she is the rightful owner of 43 Holic Avenue, North Sydney. [ 10 ] Evidence at the trial was given by Michael Tobin, Solicitor; Livingston Smith; Natasha Gauthier, manager at CIBC; Lawton Smith; Rebecca Anthony; and Robena Strickland.

Background [ 11 ] The real property located at 43 Holic Avenue, North Sydney was purchased by the Defendants, Robena Strickland and James Strickland, in or around 1986 (“the property”). [ 12 ] The Defendants conveyed the property to the Plaintiff, Livingston Smith, and their daughter, Rebecca Anthony because they (the Defendants) were having financial problems. [ 13 ] The transfer of the property was, in fact, made without consideration.

I shall address this. [ 14 ] The Defendant retained a life interest in the property. [ 15 ] The Defendant and her husband and then the Defendant, Robena Strickland alone, since the death of the James Strickland, have resided in the property from October, 1986 to the present. [ 16 ] The Defendant is seeking the following relief: (

i) a declaration that she is the beneficial owners of 43 Holic Avenue, North Sydney; (ii) an Order compelling the Plaintiffs to execute a Quit Claim Deed conveying 43 Holic Avenue, North Sydney, to the Defendant; (iii) an Order that the Defendant will be solely responsible to payout the mortgage on the property; (iv) an Order that the Deed signed by the Plaintiffs be held by the Plaintiffs’ lawyer until such time as confirmation is received that the mortgage is paid in full; (

v) an Order that upon confirmation that the mortgage has been paid out, the Plaintiffs lawyer shall release the executed Deed to the Defendant; (vi) an Order dismissing the Plaintiffs’ action; (vii) an Order that the Plaintiffs pay the Defendant the sum of $10,000 representing the property tax credit that was liquidated; (viii) an Order instructing Michael Tobin, Barrister and Solicitor, to release the Defendant the sum of $40,000 he is holding in his trust account; and (ix) Costs. [ 17 ] The Plaintiffs, Lawton Smith and Livingston Smith, reside at 6 Diggin Street in Sydney Mines, Nova Scotia.

They say the subject matter of the present litigation can be traced back multiple decades to the operation of a family restaurant named Robena’s Bakery at 266 Commercial Avenue in North Sydney, and the measures that the Plaintiffs, both individually and collectively, had to take over the course of many years in order to keep such business afloat and facilitate the purchase of 266 Commercial Avenue in 2007, and the subsequent sale of both the building and the business in November of 2016. [ 18 ] The following conveyancing documents and mortgages, are relevant to the issues: (

i) On November 28, 1996, James and Robena Strickland conveyed the property at 43 Holic Avenue, to the Plaintiff, Livingston Smith with their daughter, Rebecca Anthony. (ii) The 1996 Deed reflected that the consideration paid was the sum of $1.00, “and other good and valuable consideration”. By her own admission Robena and James were having financial difficulties and this was the reason for the conveyance. Both retained a life interest in the property (paragraphs 21 – 23) of Exhibit 3, Affidavit of Robena Strickland, May 10, 2017)). (iii) In 1999, (December 16), a mortgage was taken out on 43 Holic Avenue.

This mortgage was taken out for the benefit of the Defendants. (See Exhibit “C” to Robena Strickland’s affidavit and paragraphs 27 – 30). (iv) In her affidavit, Robena states that she and James made all of the mortgage payments on this mortgage, until the property was again remortgage in 1997. (

v) The CIBC mortgage in 1999 was for $70,000. (vi) In the year 2007, the Defendants decided to purchase the property at 266 Commercial Street, which housed the restaurant. (vii) Prior to this, the bakery has been renting the property from 1992 to 2007, 15 years. (viii) On June 10, 1997 Rebecca Lynn Anthony, formerly Rebecca Strickland, signed a Quit Claim Deed conveying her interest in the

property, as Grantor, to Livingston Smith, as Grantee. (ix) By mortgage dated July 4, 2007, Livingston Smith (and Lawton Smith) signed a mortgage to CIBC, (First Line Mortgages) on 43 Holic Avenue, in the amount of $130.000. [ 19 ] From the proceeds of the 2007 mortgage, the amount of $60,956.18 was deducted to pay out the 1999 CIBC mortgage.

A further amount of $57,830.94 to purchase the building as shown on the Statement of Trust Funds contained in Exhibit 3, Exhibit “F”. [ 20 ] In her evidence, Robena maintains she (and her husband) made all of the mortgage payments “due and owing” under this 2007 mortgage. (Paragraph 47 of Exhibit 3) [ 21 ] This mortgage remains on the property to this day, and Livingston Smith and Lawton Smith, remain liable for the payments under the terms of the mortgage. [ 22 ] Title to 43 Holic Avenue remains in the name of Livingston Smith.

Robena Strickland and James released their life interest in the property, for the purpose of the mortgage in 2007. [ 23 ] In 2016, Livingston Smith executed an Authorization with respect to the disposition of the proceeds of sale of the 268 Commercial Street. The Authorization referred to monies “heldback” and other matters pertaining to the sale. (See Exhibit 1, Tab 20) [ 24 ] The validity of this authorization is in contention between the parties. Issues 1. Do the Plaintiffs’ have a valid claim of unjust enrichment, entitling them to a share of the proceeds from the sale of the property and business in 2016? 2.

What is the appropriate disposition of the property located at 43 Holic Avenue? Evidence at Trial [ 25 ] Much of the evidence at trial dealt with the deeding of the properties and 43 Holic Avenue and 266 Commercial Street to the Plaintiff, Livingston Smith, and the mortgaging of those properties to CIBC/Firstline mortgages in 1999 and 2007, being when the building containing the restaurant was purchased. [ 26 ] The evidence at trial focussed on two broad areas in relation to the Plaintiffs’ claim to 50% of the proceeds of the sale of 266 Commercial Street.

The claim of the Defendant, is founded on the doctrine of resulting trust, in regard to 43 Holic Avenue, North Sydney, NS. [ 27 ] The first area is whether the Plaintiffs’ should receive 50% of the sale proceeds. It is their onus to establish there was a deprivation suffered by them which corresponds to an enrichment to the Defendant.

It must also be established there is no juristic reason that would justify the Defendant being enriched to their depravation. [ 28 ] In simple terms, whether the contribution made to “Robena’s” by the Plaintiffs’ warrants payment from the proceeds of sale of 266 Commercial Street. [ 29 ] The second area dealt with in the evidence at trial focussed on whether it is equitable for the Plaintiff, Livingston Smith, to retain title to 43 Holic Avenue. Solicitor Michael Tobin prepared the Deed in 1996 signed by Robena and Jim Strickland.

He testified they never intended to convey title, stating it was done as a matter of convenience due to their financial difficulties at the time. [ 30 ] The Plaintiffs, however, testified this was not a gratuitous transfer, and there were clearly benefits that flowed to the Defendant, and her husband.

The Plaintiffs’ testified they were the ones that took on the liability and exposed themselves to the risks associated with these transactions. [ 31 ] In her evidence, which included her affidavit sworn in 2017, (Tab 2 of Exhibit 2), Robena Strickland said she and her husband, Jim, bought the property on Holic Avenue in 1986. For 35 years (until 2021) they (and she) paid the taxes, insurance and maintenance costs.

Robena also testified they made the mortgage payments. [ 32 ] There was no evidence of a residential lease, written or oral, for 43 Holic Avenue. [ 33 ] The Plaintiffs maintain there were times when they were required to make the mortgage payments, in order to avoid potential default on the mortgage. Rebecca Anthony [ 34 ] Rebecca Anthony testified that her mother was the “foundation” of the restaurant.

She was not concerned with assuming title 1996 and mortgaging the Holic Avenue property, in 1999 because she knew her parents would pay and keep the mortgage in good standing. [ 35 ] Rebecca testified that following the sale in 2016, she brought the cash payments for the mortgage first to Livingston and then directly to the Bank. [ 36 ] Natasha Gauthier representing Scotiabank testified, that a third party attended at the bank and made cash deposits on a regular basis. The Bank would provide a receipt, but did not maintain a record of who made the deposits.

Rebecca testified it was her and that the money came from her parents and then her mom, following James’ death.

[ 37 ] Entered into evidence as (Exhibit 2, Tab ) are approximately 40 pages of receipts issued by CIBC with respect to mortgage no. 0011967201. The Defendant submits that on thirty-nine (39) occasions, money in cash was brought into the bank to be applied to the mortgage account (the 2007 mortgage) between March 12, 2017 and February 10, 2021.

The Plaintiffs submit that of these 39 receipts, only two (2) receipts, showed that these deposits went directly on the mortgage. [ 38 ] Entered into evidence as Exhibit 7, is an email from Dylan Hart of CIBC addressed to both counsel, which attaches statements showing the transaction history for the bank account belonging to chequing account of Lawton and Livingston Smith. In Mr. Hart’s email he states: CIBC are unable to contact an unknown 3 rd party to refund cash they paid to a mortgage. CIBC cannot confirm who the depositor is for a cash payment.

As detailed in the attached statements, there were a total of 39 cash payments of $872 between September 8, 2017, to December 29, 2020. 37 of these payments were applied as “regular mortgage payments” and due to the good standing of the mortgage, were deposited back into the account belonging to Mr. and Mrs. Smith as is the CIBC procedure briefly described above. The remaining two payments were applied to the principle balance of the mortgage on June 30, 2020 and Feb 15, 2019, most likely as requested by the payor at the time of the cash payment.

Proof of these cash payments to the principle balance is also attached (last two pages of History of Cash Payments PDF). [ 39 ] In relation to Lawton’s contribution to the restaurant, Rebecca testified she was hired as a bookkeeper by her mother. She also testified that she attended at North Side Auto Salvage to meet with Livingston within two (2) weeks following the sale of Commercial Street. She asked Livingston about deeding the property at 43 Holic Avenue back to her parents. “He didn’t do it”, she said.

Robena Strickland [ 40 ] Robena Strickland testified that she and her husband ran the restaurant from 1990 - 2016. There was no bank account, they used the profits earned to pay the bills, and the salaries in cash. [ 41 ] Robena testified she paid the “day to day invoices”, and Lawton paid the “CRA bills” with money from the Restaurant. [ 42 ] She and her husband had opened earlier businesses, a dairy bar, café and baked goods, in various locations prior to Robena’s being located at 266 Commercial Street. [ 43 ] Robena said prior to 2010 “Jim gave Lottie money from the restaurant to pay bills”.

In terms of her role, Robena testified “I was in the flour, in the kitchen”. It was after Jim’s surgery in 2010 that Robena became involved in the personal and business finances. [ 44 ] Robena stated that she began giving the mortgage money to Livingston when Lawton was no longer coming in to the restaurant. After the sale in 2016, she testified she would transfer the money to Rebecca for her to pay the mortgage. [ 45 ] In her evidence Mrs. Strickland acknowledged that the $10,000 property tax credit was to be paid to her and her husband.

This was as provided for in the authorization signed by Livingston Smith. (See Exhibit 1, Tab 20 - Authorization) [ 46 ] She was asked if she was seeking repayment of the tax credit. She replied, “No”, adding that she did not expect it would be repaid in any event. Lawton (Strickland) Smith [ 47 ] Lawton acknowledged the restaurant paid the expenses including the mortgage, but said there were “a lot of times” when funds were short and she and Livingston paid them. She incorporated the company KAR Holding Limited to ensure source deductions and HST were paid from 2000 to 2011.

After that a second company was set up to do the same. As shown in Workers Compensation Act statements, and the four judgements, Lawton submitted they assumed the risk. [ 48 ] There was also an audit by CRA which Lawton dealt with according to her husband. This evidence uncontradicted. She testified there was also a loan in addition to the mortgage, originally in the amount of $20,000 for equipment (see Tab 6 page 70 amount $5,373). This loan was taken out in 2004 by the Plaintiffs.

In cross-examination Lawton confirmed it was paid out in 2007, at which time the balance was $895. [ 49 ] The Plaintiffs entered into evidence Exhibit 8, showing the balance ($4,154.28) of the previous loan was paid in 2004. Livingston testified the purpose of the 2004 loan was to pay the previous loan “gone bad”. Lawton testified the original amount was $20,000. Rebecca testified she thought it was either $20,000 or $25,000. The original loan was in Livingston and Rebecca’s name. Rebecca said this was paid down by her parents.

Robena was asked about this loan in direct evidence and said she really didn’t know about it. Livingston confirmed the balance of this loan was paid in 2007 in the amount of $895.60. (Exhibit 1 Tab 22 Statement of Trust Funds) [ 50 ] Lottie has produced a large amount of documentary evidence including receipts and invoices paid by her out of her account with the Bank of Nova Scotia. She also testified she used her visa to pay the business expenses and repaid a loan for the business, in addition to making up the difference when the funds from restaurant were low.

There was considerable evidence about bills being paid in cash “from the restaurant” or “from the shop” or “from mom and dad”. [ 51 ] Lottie testified in terms of their investment being “short term pain for long term gain”. She stated, they believed their efforts were contributing to a “nest egg” for her own family. She received a payment of $3,000 from Robena before business was sold. [ 52 ] She performed an important role, but the evidence also points to her being an employee even though she owned and ran the companies.

Robena was aware of these companies. [ 53 ] There was no partnership agreement or shareholder agreement. Robena was the sole proprietor, but she was not the only

person that worked at the restaurant. Lottie was a waitress, a bookkeeper, and responsible for payroll, source deduction, and HSTremittance. If bills fell into arrears Lottie dealt with them, sometimes paying them herself, she said. (See Exhibit 1 Tab1 page 72). Shefelt responsible, she said. Livingston Smith [54] Livingston must take some responsibility for his actions. He signed the Deed as well as the Authorization which was plainlyworded. Nothing happened afterward to suggest he did not understand. Mike Tobin testified, he did not know that Livingston said hedidn’t understand it. [55] Mr.

Smith testified he had no problem with reading but chose not to read it. In cross-examination he agreed it was plainlyworded. [56] Livingston said the 1999 mortgage was for renovations to building, his father Cecil Smith built a kitchen on the back of thebuilding, 40 feet by 40 feet. He testified his wife Lawton, owned KAR Holdings Limited.

Part of the mortgage proceeds in 2007 wasused pay off the existing loan ($5,332.72) the Plaintiffs had taken out to pay off a previous equipment loan that had gone bad. [57] The Plaintiffs testified they used their personal visa to pay business expenses when there were insufficient funds from therestaurant. This amount ($8,819.00) was also paid from the mortgage with FirstLine in 2007. This debt had to be paid out, Livingstonsaid, before the mortgage went through. The visa account was in name of both Lawton and Livingston. [58] Mr. Smith testified that his wife also dealt with CRA audit in the year 2009 (Tab13).

In terms of the remittances, the monieswere usually paid by restaurant, but as stated with respect other monies due, such as mortgage payments, if funds were not available,Livingston stated, they would make up difference. “If they (Robena and James) couldn’t afford it, we’d pay it ourselves” he said. Interms of the mortgages Livingston said, he was prepared to do it for his wife, to secure a place for “her business”. [59] In cross-examination Mr. Smith testified the mortgage was paid with profits from restaurant.

After the restaurant sold, hesaid, Lawton was taking payments from Robena and then this stopped and was the reason Rebecca reached out to him. He also testifiedthat Robena was paying his wife a weekly wage to work in restaurant. [60] Mr. Smith was asked in cross-examination about a further conversation between he and Rebecca when she came to see him athis place of work at North Side Auto Salvage. It was put to him that she asked him about deeding the property at Holic Avenue back toher parents. He said this could have taken place but he did not recall the conversation. [61] In cross-exam Mr.

Smith acknowledged that the business paid for the expenses reported on his income tax and that he wasable to report those losses personally. He agreed that the work done by Robena benefitted him as he received tax refunds from beingable to report losses from rental income. He agreed he was not in a position to pay those expenses from an income perspective. Hetestified, however, that the expenses at his own home in Sydney Mines were minimal. [62] In terms of the authorization signed in Mr. Tobin’s office on November 30, 2007, Livingston testified he did not read it.

Healso said he did not talk to his wife about it, even though she seemed to handle such matters. He agreed there was no hesitation orquestions for his solicitor. Mr. Smith testified at trial that he didn’t understand the Authorization. Mr. Tobin’s evidence is thatLivingston signed it willingly and that he did not know Livingston later said he didn’t understand the document. Caselaw [63] In B2B Bank v. Shane, 2020 NSCA 15, the Court discussed “unjust enrichment”: [24] In Moore v.

Sweet, 2018 SCC 52, the Supreme Court of Canada recently dealt with this doctrine and set out the basis on which aplaintiff will be successful in a claim for unjust enrichment: [35] Broadly speaking, the doctrine of unjust enrichment applies when a defendant receives a benefit from a plaintiff in circumstanceswhere it would be “against all conscience” for him or her to retain that benefit. Where this is found to be the case, the defendant will beobliged to restore that benefit to the plaintiff. As recognized by McLachlin J. in Peel (Regional Municipality) v.

Canada, (SCC), [1992] 3 S.C.R. 762, at p. 788, “At the heart of the doctrine of unjust enrichment . . . lies the notion of restoration of a benefitwhich justice does not permit one to retain.” [36] Historically, restitution was available to plaintiffs whose cases fit into certain recognized “categories of recovery” — includingwhere a plaintiff conferred a benefit on a defendant by mistake, under compulsion, out of necessity, as a result of a failed or ineffectivetransaction, or at the defendant’s request (Peel, at p. 789; Kerr, at para. 31).

Although these discrete categories exist independently ofone another, they are each premised on the existence of some injustice in permitting the defendant to retain the benefit that he or shereceived at the plaintiff’s expense. [37] In the latter half of the 20th century, courts began to recognize the common principles underlying these discrete categories and,on this basis, developed “a framework that can explain all obligations arising from unjust enrichment” (L. Smith, “Demystifying JuristicReasons” (2007), 45 Can. Bus. L.J. 281, at p. 281; see also Rathwell v.

Rathwell, (SCC), [1978] 2 S.C.R. 436, andMurdoch v. Murdoch, (SCC), [1975] 1 S.C.R. 423, per Laskin J., dissenting). Under this principled framework, aplaintiff will succeed on the cause of action in unjust enrichment if he or she can show: (

a) that the defendant was enriched; (b)that the plaintiff suffered a corresponding deprivation; and (

c) that the defendant’s enrichment and the plaintiff’s correspondingdeprivation occurred in the absence of a juristic reason (Pettkus v. Becker, (SCC), [1980] 2 S.C.R. 834, at p. 848;Garland, at para. 30; Kerr, at paras. 30-45). While the principled unjust enrichment framework and the categories coexist (Kerr, atparas. 31-32), the parties in this case made submissions only under the principled unjust enrichment framework. These reasons proceedon this basis. (Emphasis added)

[64] In Kerr v. Baranow, 2011 SCC 10, the Court described Steps 1 and 2: [36] The first and second steps in the unjust enrichment analysis concern first, whether the defendant has been enriched by the plaintiffand second, whether the plaintiff has suffered a corresponding deprivation. [37] The Court has taken a straightforward economic approach to the first two elements — enrichment and corresponding deprivation.Accordingly, other considerations, such as moral and policy questions, are appropriately dealt with at the juristic reason stage of theanalysis: see Peter, at p. 990, referring to Pettkus, Sorochan v.

Sorochan, (SCC), [1986] 2 S.C.R. 38, and Peel, affirmedin Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 31. [38] For the first requirement — enrichment — the plaintiff must show that he or she gave something to the defendant which thedefendant received and retained. The benefit need not be retained permanently, but there must be a benefit which has enriched thedefendant and which can be restored to the plaintiff in specie or by money. Moreover, the benefit must be tangible.

It may be positiveor negative, the latter in the sense that the benefit conferred on the defendant spares him or her an expense he or she would have had toundertake (Peel, at pp. 788 and 790; Garland, at paras. 31 and 37). [39] Turning to the second element — a corresponding deprivation — the plaintiff’s loss is material only if the defendant has gained abenefit or 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). [65] With respect to Step 3, without “juristic reason”, the Court again quoted from the Supreme Court of Canada in Moore v.Sweet, 2018 SCC 52, [54] ... As observed by Cromwell J. in Kerr (at para. 40): 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 . . . . [Emphasis added.] … [56] In Garland, this Court shed light on exactly what must be shown under the juristic reason element of the unjust enrichmentanalysis — and in particular, on whether this third element requires that cases be decided by “finding a ‘juristic reason’ for a defendant’senrichment” or instead by “asking whether the plaintiff has a positive reason for demanding restitution” (para. 41, citing Garland v.Consumers’ Gas Co. (2001), (ON CA), 57 O.R. (3d) 127 (C.A.), at para. 105).

In an effort to eliminate theuncertainty between these competing approaches, Iacobucci J. formulated a juristic reason analysis that proceeds in two stages. [57] The first stage requires the plaintiff to demonstrate that the defendant’s retention of the benefit at the plaintiff’s expense cannot bejustified on the basis of any of the “established” categories of juristic reasons: a contract, a disposition of law, a donative intent, and othervalid common law, equitable or statutory obligations (Garland, at para. 44; Kerr, at para. 41).

If any of these categories applies, theanalysis ends; the plaintiff’s claim must fail because the defendant will be justified in retaining the disputed benefit. For example, aplaintiff will be denied recovery in circumstances where he or she conferred a benefit on a defendant by way of gift, since there isnothing unjust about a defendant retaining a gift of money that was made to him or her by (and that resulted in the correspondingdeprivation of) the plaintiff.

In this way, these established categories limit the subjectivity and discretion inherent in the unjustenrichment analysis and help to delineate the boundaries of this cause of action (Garland, at para. 43). [58] If the plaintiff successfully demonstrates that none of the established categories of juristic reasons applies, then he or she hasestablished a prima facie case and the analysis proceeds to the second stage. At this stage, the defendant has an opportunity to rebut theplaintiff’s prima facie case by showing that there is some residual reason to deny recovery (Garland, at para. 45).

The de facto burden ofproof falls on the defendant to show why the enrichment should be retained. In determining whether this may be the case, the courtshould have regard to two considerations: the parties’ reasonable expectations and public policy (Garland, at para. 46; Kerr, at para. 43). [59] This two-stage approach to juristic reason was designed to strike a balance between the need for predictability and stability on theone hand, and the importance of applying the doctrine of unjust enrichment flexibly, and in a manner that reflects our evolvingperception of justice, on the other.

Analysis [66] Lottie worked for a number of years without a salary. When she did receive one it was modest. As owner of the numberedcompany and KAR she risked personal liability as a director for income tax remittances, HST and other matters. [67] Livingston had been assigned a HST number which enabled him to sign an election with the Purchaser. This avoided HSTbeing collected at the time of sale by him as Vendor.

There appears to have been an agreement on the allocation of the sale price of$140,000 and $100,000 for chattels. [68] Property ownership brings with it a lot of responsibility and the potential for liability.

This is especially true of commercialproperty, but it is a lot the case with residential property ownership. [69] Livingston (and Lottie with respect to the substantial mortgage) took on a significant liability. [70] I find as a fact that while they received some benefits, the risk assumed was greater than what they received, and that riskworked to the benefit of the Defendant, Robena, in terms of legal liability.

[ 71 ] I find further that Robena, in taking responsibility for the payments of the mortgage and other bills, worked hard to minimize that risk and provide for her family. [ 72 ] Lawton did her best to help her parents by ensuring the debts of the business were paid including HST remittances, utility bills, sometimes using personal funds. [ 73 ] I find while it was Robena and funds from the restaurant that paid the clear majority of accounts/invoices, without the contribution of Livingston and Lottie, the purchase and subsequent sale of 266 Commercial Street would have been quite difficult, if not impossible. [ 74 ] In his evidence, Mr.

Tobin indicated that James and Robena could not qualify for a mortgage. [ 75 ] In weighing and considering this entire matter, it is not unreasonable for the Plaintiffs to have expected something more, when the restaurant business was sold in 2016, notwithstanding the ancillary benefits they did receive. They continue to be liable to this day, as the mortgagee on 43 Holic Avenue still exists and has not been paid out. [ 76 ] On the one hand, it is difficult to obtain a clear picture of the accounting situation.

There was no business account and the parties dealt mostly in cash generated from the restaurant. [ 77 ] On the other hand, Livingston was very much involved with the properties, while Lawton was very much involved in the business. To describe her as merely an employee only maybe underestimating her effort and commitment to Robena’s, and the time she put towards the business side of the restaurant. [ 78 ] I am satisfied that it was essentially Robena who paid the mortgage. She took that responsibility very seriously. Rebecca testified that since 2007, the mortgage was never in default.

Decision [ 79 ] Together the Plaintiffs made significant contributions to business. They received certain benefits such as a salary for Lottie, tax refunds for her husband, and other perks such as food/grocery items. When compared however to the risk of exposure and the potential liability, I find they were deserving of something more than they received when the business was sold. [ 80 ] I accept from the evidence that some bills were paid by Lawton and Livingston with their personal funds.

Valid examples of documentary proof are the personal loan at CIBC 2004 and the judgements against her personally. [ 81 ] While the evidence does not provide a clear picture of how much was contributed, Lawton testified, she generally used their personal Scotiabank chequing account when making up “the difference”. The Plaintiffs submitted a number of invoices stamped “ Scotiabank” with the account. [ 82 ] Livingston agreed to hold title to both properties, 43 Holic Avenue and 266 Commercial Street. Both he and Lawton agreed to take out mortgages on Holic Avenue in 1999 ($70,000) and in 2007 ($130,000).

It is likely neither the opening of the restaurant or the purchase of the building would have been possible without their involvement. The 1999 mortgage for renovations was an integral one for the restaurant, being a kitchen (40’ by 40’) added to the back of the building. [ 83 ] On the other hand, it is hard to square the notion that Robena was enriched. She took no salary and “toiled in the flour” in the early morning hours by herself, over the years. She made the daily soups, the gravy, and cooked the turkey.

Her skills were the tools that built the restaurant and “drove” the business, which also included the bakery. [ 84 ] It appears the majority of the bills were paid by Robena and James, including the mortgage on 43 Holic Avenue, during and after business sold. [ 85 ] The Defendant submits that a valid authorization, signed by Mr. Smith is documentary evidence of the property owner’s consent to release all of the proceeds.

I am not satisfied that a valid authorization, which I find this to be, means there is a juristic reason for Robena to retain all of the proceeds. [ 86 ] In terms of donative intent, Livingston stated he was prepared “anyhow” to assume the mortgage, stating he did it for his wife. Lottie testified she voluntarily assumed the risk. This, in my view, does not account for the entire contribution. [ 87 ] On balance, I find there is a deprivation to the parties which corresponds to the enrichment received by the Defendant in the form of the sale proceeds.

I find further, there is no juristic reason from any of the established categories for the retention of all of the proceeds, by the Defendant. There was no contract. I find that the Plaintiffs had a reasonable expectation of something in return. Robena and James may not have expected to reimburse them or believed they already had. [ 88 ] It is important to bear in mind that the remedy of unjust enrichment is flexible in nature.

I agree with the Plaintiffs that the case of Kerr is instructive on this point. ( See Kerr at paragraphs 73, 78 ) [ 89 ] With respect to the property at 43 Holic Avenue, I am satisfied in all of the circumstances, that the conveyance to Livingston was gratuitous. Further, I am satisfied that James and Robena never intended to convey title to him on a permanent basis. I am guided by the decision in Pecore v. Pecore , 2007 SCC 17 , and Dorey v. Nelson , 2020 NSSC 107 . [ 90 ] The Plaintiffs have not rebutted the presumption of resulting trust.

Remedies Granted [ 91 ] The Court grants the following relief in this proceeding:

4) The sum of $40,000 payable to the Plaintiffs by the Defendant. This represents a 25% share of the sale proceeds, less the $10,000 for property tax credit received by the Plaintiffs; and less an amount of $10,000 for other benefits received such as income tax refund, food items, the payment of Lawton’s salary while she was off work. I have taken into account the monies paid through their Scotiabank account by the Plaintiffs which total approximately $7,200 as well as the sum of $3,000 paid to Lawton by her parents before the business was sold.

Based on the math alone, this would leave a credit to the Plaintiffs of approximately $4,000, but there are other factors, which include the fact that the sum deducted for the benefits listed above is likely conservative. On the whole, I am satisfied this was a family business that was operated for decades by Robena Strickland and James Strickland. They sacrificed in hard times to keep the business going with the help of their family. At the core of the doctrine of unjust enrichment is the Court’s ability to be flexible in arriving at a just result.

I find the sum of $40,000 achieves that result. 5) The Defendant, Robena Strickland, is the beneficial owner of the real property located at 43 Holic Avenue, by way of resulting trust. This property is being held by Livingston Smith “in trust” for Robena Strickland, and shall be conveyed to her upon the mortgage placed in 2007 being paid off in full. 6) The Counterclaim of the Defendant is dismissed.

Conclusion [ 92 ] The Court grants judgement for the Plaintiffs in the amount of $40,000. [ 93 ] The Court directs that a Deed conveying the property at 43 Holic Avenue be executed by the Plaintiffs to the Defendant as directed above. [ 94 ] The Court reserves it decision on costs. Counsel may file submissions within 30 days. Murray, J.