Ibottson v. Kushner, [1978] 2 SCR 858

Supreme Court of Canada

Ibottson v. Kushner, [1978] 2 S.C.R. 858

Date: 1978-03-07

Rose Marie Ibottson (Defendant) Appellant;

and

David Edward Kushner (Plaintiff) Respondent.

1977: October 26; 1978: March 7.

Present: Martland, Richie, Spence, Pigeon, Dickson, Beetz and Pratte JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Real property—Title—Trust—Conveyance “Cestui Que Trust”—Intention of the parties—Action for reconveyance of lands—Practice—Pleading—Rejection of defence raised for first time on appeal.

The parties met in 1971 and lived together in rented premises until November 1973. Respondent was married but was separated from his wife; appellant was divorced; and they were making plans to marry. By a deed to uses respondent’s mother conveyed land to respondent. The consideration was expressed as $1,000 but in fact no consideration passed nor was intended to pass. In furtherance of the marriage plans respondent agreed to purchase the materials to erect a prefabricated house on the land. A cash payment of $300 was made, of which appellant contributed over $100. To secure the balance of the purchase price of the house ($16,500) respondent executed a mortgage which appellant guaranteed. After receiving a judgment summons in respect of maintenance payments, respondent executed a deed, which was subsequently registered, to the appellant “In Trust” for the consideration of $2 and natural love and affection. The Land Transfer Tax Act Affidavit described the relationship between the grantor and the grantee as Cestui Que Trust but with no description of the objects of the trust. Later, appellant told respondent that she no longer had any feeling for him and thereafter left him. Respondent sought a declaration that appellant held the land in trust for him and a reconveyance of the lands. The trial judge concluded that the common intention of the parties had been a conveyance to appellant to be held in trust pending their marriage and that only upon the happening of that event were the parties each to have a one-half interest in the lands. Before the Court of Appeal appellant unsuccessfully raised a defence which had not been pleaded and which had not been argued at trial, that the conveyance had been made to avoid possible claims on the property and that respondent was

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therefore entitled to seek the court’s assistance in the matter of a reconveyance.

Held: The appeal should be dismissed.

The conclusion of the trial judge as to the intention of the parties was supported by the evidence. The Court of Appeal correctly held that the rejection of the defence raised by the appellant disclosed no error and that the additional defence could not be raised at that late stage in the proceedings. The conveyance was not illegal on its face and its illegality would depend on proof of the surrounding circumstances. Respondent had no notice of the need to lead evidence on such an issue. Further if the conveyance were illegal appellant might not be able to claim title under it.

North Western Salt Company Limited v. Electrolytic Alkali Company Limited, [1914] A.C. 461 followed.

APPEAL from a judgment of the Court of Appeal for Ontario dismissing an appeal from a judgment of Honey Co. Ct.J. at trial in an action for a reconveyance of lands. Appeal dismissed.

Ronald G. Chapman, for the appellant.

L.T. Forbes, Q.C., and J.D. Whiteside, for the respondent.

The judgment of the Court was delivered by

MARTLAND J.—This is an appeal from a judgment of the Court of Appeal for Ontario which upheld a declaration of the trial judge that the appellant holds Lot 3, Plan 2 for the Township of Hillier, in the County of Prince Edward, hereinafter referred to as “the land”, in trust for the respondent and an order vesting that land in the respondent as owner.

The parties met in 1971 and lived together in premises, rented by the appellant, in Trenton, Ontario, from the summer of that year until November 1973. The respondent was married, but was separated from his wife. The appellant was

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divorced. The appellant and the respondent were making plans to marry.

By a deed to uses dated July 30, 1973, and registered August 3, 1973, the respondent’s mother conveyed the land to the respondent. The consideration was expressed in the deed to be $1,000 but in fact no consideration passed, nor was there any intention that any consideration should pass.

In furtherance of their plans to marry, the respondent agreed to purchase from Muttart Builders’ Supplies Limited, hereinafter referred to as “Muttart”, the materials to erect a prefabricated house upon the land. A cash payment of $300 was made of which the appellant contributed something over $100. A mortgage of the land dated August 28, 1973, and registered September 18, 1973, was executed by the respondent in favour of Muttart in the amount of $16,500 to secure the purchase price of the prefabricated house. The appellant guaranteed payment of the mortgage.

In the same month, the respondent received a judgment summons from Family Court issued on behalf of his wife requiring him to show cause why he had not made certain maintenance payments. He instructed his solicitor to prepare a deed conveying the land to the appellant “in trust”. This deed was subsequently executed at the solicitor’s office.

The deed of the land, dated September 20, 1973, and registered September 28, 1973, from the respondent to the appellant “In Trust”, is expressed to be for the consideration of $2 and natural love and affection. The relationship between the grantor and the grantee is expressed in the affidavit under The Land Transfer Tax Act to be Cestui Que Trust. Paragraph 6 of the affidavit, after the words, “other remarks and explanations, if necessary”, is followed by the words, Cestui Que Use. There is no description of the objects of the trust in the instrument.

The respondent stated at trial that he instructed his solicitor to place the title to the property in the appellant’s name, in trust, in order to protect it from claims of his wife, and to hold it for him “until things were settled”. He said he instructed his solicitor to draw the papers so he could get it

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back later if things did not “work out” with the appellant, and if they were married the property could be put in both their names.

In November, 1973, the appellant entered hospital and remained there for some three months. During this time, the respondent left the appellant’s Trenton home. He erected the prefabricated house on the land and moved in.

When the appellant left the hospital she went to Kingston and later moved into the newly erected house with her two children in about April, 1974. After one week she told the respondent that she no longer had any feeling for him and that she would make other living arrangements. She left the house in May or early June, 1974, some four to six weeks after she had arrived.

Following her departure the respondent, in October, 1974, brought action against the appellant seeking a declaration that the appellant held the land in trust for him and an order that the lands be re-conveyed to him. In her defence, the appellant alleged that she had, with the respondent, signed a promissory note for $5,000 for which amount she was liable. She stated that she had signed the mortgage to Muttart. In the alternative she pleaded that the real property was a gift to her from the respondent.

The only evidence given with respect to the promissory note was that of the respondent who said that a joint note for $4,300 had been given to the Bank of Nova Scotia to provide funds for the payment of the appellant’s debts and to pay for the respondent’s car. He said that the note had been replaced in March, 1974, by another note on which only he was liable. This evidence was not contradicted by the appellant.

At trial the appellant did not contend that there had been an outright gift of the land to her. She claimed that she was entitled to a one-half interest and, in support of this, contended that she had furnished consideration by providing financial support to the respondent while he lived with her in Trenton, by contributing three to four weeks work

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on the land in cutting down trees and clearing rubbish from the site, by contributing to the down payment of $300 to Muttart something over $100 and by signing the mortgage to Muttart as guarantor.

The arrangement at Trenton was that the appellant paid the monthly rent of $50 and paid the hydro and telephone accounts and her own bills. The respondent provided some of the groceries and said that he had been away a good deal during the period of his stay in Trenton. Most of the time the respondent lived in Trenton preceded the conveyance to him by his mother of the land, and his stay with the appellant during that time is not related to the acquisition of that land or of the Muttart prefabricated house.

The trial judge found that the appellant’s account of her work on the land was exaggerated. He did find that she worked for half a day installing insulation in the house during construction.

The payments on the Muttart mortgage were made by the respondent. No claim had been made on the appellant by virtue of her guarantee.

The trial judge found that the terms of the deed to the appellant “In Trust” did not support her claim to entitlement to the one-half interest which she claimed. He reached a conclusion as to what the common intention of the parties had been in the following passage in his reasons:

In this case, however, the land was conveyed to the Defendant in trust, and on the evidence, I find that the Plaintiff’s beneficial interest was conveyed to the Defendant as Trustee to be held by her pending their marriage, and upon the happening of that event the parties would each have a one‑half beneficial interest in the land.

The marriage did not happen, and it is clear from the evidence that it will not happen. In these circumstances the title to the property reverts to the Plaintiff, and he therefore holds the legal and beneficial title to the property. There is a resulting trust in favour of the settlor who is, in this case, the Plaintiff.

This conclusion is supported by the evidence of the respondent and that of the solicitor who prepared the conveyance from the respondent to the

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appellant. The Court of Appeal held that the rejection by the trial judge of the defences raised by the appellant disclosed no error.

In this case the trial judge on consideration of all of the evidence favourable to the appellant’s claim has concluded that the intention of the parties was that she would acquire a beneficial one-half interest in the land only in the event of her marriage to the respondent. In my opinion the evidence justifies this conclusion.

Before the Court of Appeal the appellant raised a defence which had not been pleaded and which had not been argued at the trial. It was contended that, as the conveyance to the appellant had been made as a means of avoiding possible claims on the property by his wife, he had disentitled himself from seeking the court’s assistance in the recovery of the property. The Court of Appeal, relying on the judgment of the House of Lords in North Western Salt Company Limited v. Electrolytic Alkali Company Limited[1], decided that this defence could not be raised at that late stage in the proceedings. I agree with that decision. The conveyance by the respondent to the appellant is not illegal upon its face and its illegality would depend upon proof of all the surrounding circumstances. The respondent had no notice of the necessity to lead evidence upon this issue. Furthermore, if the conveyance were illegal, the appellant might not be in a position to claim title under it.

In the result, I would dismiss this appeal with costs.

Appeal dismissed with costs.

Solicitor for the appellant: Ronald G. Chapman, Toronto.

Solicitors for the respondent: Byers & Williams, Picton.