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Rebutting Presumption of Indefeasibility of Title

Frame v Rai 2012 BCSC 1876 is a good illustration of how the law of unjust enrichment pertains rebutting the presumption of indefeasible title at the land title office. The case involved a multifamily cooperative use of property where the property was registered in the names of 3 family members equally as tenants in common, and one of the parties claimed a greater beneficial ownership.

The deceased and his plaintiff sister, along with his wife decided to purchase a property for the entire family to live in. The sister and her husband contributed much more to purchase the property that did the deceased and his defendant wife, but the property was registered in the names of the four them equally. Both parties live in the house at various times, and pulled together financial resources to pay expenses.

The wife claimed that she was the sole or alternatively two thirds beneficial owner of the property after the death of her husband.

His sister brought a court action for a declaration of equitable one half interest in the property, and that action was allowed.

The court held that the statutory presumption of indefeasibility of title was rebutted by the sister, as there would be unjust enrichment if the title were upheld.

If the state of title were upheld, the wife would be enriched and the sister would suffer a corresponding deprivation.

There was no juristic reason for any enrichment.

The court held that it was the parties intention to own the house in equal shares by the sister on one hand and the deceased and wife on the other, based on an agreement among family members to purchase the home.

The remedy of a remedial constructive trust was an appropriate remedy, and a constructive trust entitled the sister to have her 50% interest registered on title.

THE LAW

On this basis, it is my view that the rejection of the common intention resulting trust in Kerr, as applied in Dhalhval(2012), requires that Skender be read to permit a displacement of the s.23 (2) statutory presumption in cases where unjust enrichment would otherwise result. In the case of resulting trust, all that needs to be established is that there was no gift, and that the funds were not intended by the donor to be a loan. In the case of a constructive trust, evidence of an agreement is considered, albeit in a limited sense. Put another way, these recent cases explain that a party can no longer rely solely on the common intention resulting trust, which was relied upon in DhaliwaL as the basis for rebutting the statutory presumption in cases where individuals enter into joint equity or co-investment ven­tures.
Furthermore, it would appear that the equitable principles set out in Skender are in fact not an exhaustive list, but are subject to adaptation as the doctrinal development of trust principles necessitates. This is a logical conclusion given the recognition in recent years of the presumption of resulting trust as a third equitable principle that can be used to displace the statutory presumption: see Chuang v. Wong. 2012 BCSC 233 (B.C. S.C.) at para 9, citing Bajwa v. Pannu. 2007 BCCA 260(B.C. C.A.); Dhaliwal (2012), at para 40.

If I am wrong in finding that the common intention resulting trust is not discredited as it pertains to the rela­tionship between these parties, and in the related conclusion that Skender must be modified, it does not impact my ultimate conclusion in this case, as I have decided that there was an agreement between Harjinder and Jaswinder that they were contributing to the purchase of the property as co-owners.

While the common intention resulting trust has fallen out of favour, application of the doctrine of unjust enrichment (and the associated monetary award or remedial constructive trust remedy), as clarified in Kerr, has emerged as the appropriate vehicle to use in instances where the operation of the traditional resulting trust would be inadequate to balance the equities between the parties. As Cromwell J. stated in Kerr, “at the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain”: at para 31.

Applied to this case, the question is whether the evidence supports displacing the statutory presumption of the discussed above.

The two equitable concepts that could potentially bear on the resolution of this dispute include the common law doctrine of unjust enrichment and the remedial resulting trust (sometimes referred to as a “purchase money re­sulting trust”). In my view, the former is the appropriate route to the applicable remedy in this case given the facts as I have found them and context of the parties’ financial dealings.

The facts of the Dhaliwal case bear some resemblance to the circumstances of the present case, but for one important point. In DhalhvaL the property was first and foremost an investment property; a third party renter provided the funds to pay the mortgage every month and it was possible to determine the post-purchase contributions made by the Olleks.

Whereas here, the facts as I have found them demonstrate that both parties resided at the property at various times, and due to the financial integration of the family unit it is extremely difficult, if not impossible, to tell what portion of the mortgage payments were comprised of rent monies contributed by other family members. The parties’ relationship, even considering the Rai family as a whole, is not akin to the “joint family venture” as described in Kerr. however, the way that the property was used (as an extended family home) and the means through which both parties contributed to the purchase price, as well as the ongoing maintenance of the Surrey Property, leads me to conclude that it would be inappropriate to settle the interests of the parties through the vehicle of the “purchase money resulting trust”. Use of the doctrine of unjust enrichment is supported by the plaintiffs pleadings and evidence surrounding the financial transactions and makes sense in light of the cultural and family milieu that was evidenced at trial.
Unjust Enrichment

135 The requirements for unjust enrichment are well established. To prove unjust enrichment the party claiming unjust enrichment must advance evidence to demonstrate:

i. an enrichment;

ii. a corresponding deprivation; and

iii. the absence of any juristic reason for the enrichment.

(See: Becker v. Pettkus. T19801 2 S.C.R. 834 (S.C.C.))

136 Here, I will consider contributions made to the purchase of the property and its maintenance up to an in­cluding the date that the first mortgage was paid off. I find on the balance of probabilities that the plaintiff contributed $55,321.25 (-66%) towards the purchase price of the Surrey Property, whereas the contribution of defendant and her
late husband amounted to $28,321.25 (-34%). These figures represent the respective initial cash contributions which relate directly to the acquisition of the property. The plaintiffs greater contribution, coupled with

(a) the risk the plaintiff took by using her credit to apply for and be named on the mortgage

(b) my acceptance of the plaintiffs evidence that she and Alex assumed sole responsibility for the mortgage payments for the period of October 1995 to March 2003, and

(c) her contribution to the preservation and maintenance of the property through payments made by her or her husband, Alex Frame, I have no trouble finding that if the state of the title were upheld, the defendant would be enriched, and the plaintiff would suffer a corresponding deprivation.

As to whether there is a juristic reason for the enrichment, I must be satisfied “that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff: Kerr at para 40. It is here that the plaintiffs assertion as to an agreement amongst the family members, and in particular as between her and the de­fendants, comes into play.

The plaintiffs position throughout these proceedings was that it was the intention of Jaswinder and Harjinder, prior to the purchase of the Surrey Property, that Harjinder would be a half owner of the property. In light of this agreement, it would be contrary to the legitimate expectations of the parties that Harjinder could now be entitled to the greater share that would result if the presumption of resulting trust were to operate to apportion their respective shares at the time the property was acquired.

I conclude that the statutory presumption of the Land Title Act has been successfully rebutted by the plaintiff, as there would be an unjust enrichment if the title were upheld. The plaintiff is entitled to an equitable 50% interest in the Surrey Property.

As to the issue of the second mortgage, I find that there would be a further unjust enrichment to the defendants if Harjinder’s 50% interest were to be reduced through the repayment of the amount owing.

Appropriate Remedy

I find that the remedial constructive trust is the appropriate remedy in this case as a monetary award would be inappropriate in these circumstances. The plaintiff has demonstrated a causal connection between her contributions and the acquisition, preservation and maintenance of the property (see: Kerr at para 50). This entitles her to have her 50% interest registered on title.

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