In the recent case of Gill v. Gill before the Ontario Superior Court of Justice, a woman and her husband’s estate were involved in a trust dispute regarding the ownership of a property shared with her late husband’s brother.
A family dispute initiates the sale of a property
In Gill v. Gill, a first-generation Canadian family pooled their resources to purchase multiple properties. Amarjit and Karnail were brothers who first arrived in Canada in 1992. Their mother, Chand, was their Indian village’s matriarch who oversaw these purchases, although she remained in India.
In 1999, Amarjit married Kuldeep. Kuldeep moved to Canada to live with her new husband. Together with their nephew Sidhu, Amarjit and Karnail purchased a property as tenants-in-common in 2001. Each had an equal interest in the property and contributed $4,000 towards its down payment. All bills, from the mortgage to utility bills, were paid equally by each. Eventually, Sidhu married as well. His wife and Chand moved into the home.
Kuldeep and Sidhu’s wife did not get along. As a result, Chand suggested that one couple buy the other out of the property. A real estate agent valued the property to this end and prepared sale documents. Sidhu and his wife were to purchase Amarjit and Karnail’s interests. Amarjit and Karnail planned to use this towards a property for themselves, Kuldeep, and Chand.
Ownership of the property called into question as one owner passes away
The dispute at the heart of the legal proceedings in Gill arose over the ownership of the property. Title was divided between Amarjit, Kuldeep, and Karnail, so they all owned a one-third interest as tenants-in-common. Karnail had contributed $10,000 towards the deposit. However, Armarjit and Kuldeep understood this to be a loan so he could live with them temporarily, free of charge. Karnail allegedly did not contribute to the upkeep of the home. He relied on Amarjit and Kuldeep to get around and for reading, as he was illiterate.
The matriarch, Chand, passed away in 2014. In 2017, Karnail was asked to leave the property after his alcohol dependence began affecting the living situation. Amarjit returned to India that same year, and although he and Kuldeep were still together, he never returned to Canada. Instead, Kuldeep’s mother moved in.
In September 2017, Karnail asked Amarjit and Kuldeep to purchase his interest in the property. They refused. By summer 2019, Karnail retained counsel and demanded that the house be sold. At this point, there was considerable equity in the property.
Was one family member holding the property in trust for the others?
The main issue before the Ontario Superior Court of Justice was who had ownership of the property. The title indicated that Karnail had a one-third interest in the property as tenant-in-common. Kuldeep and Amarjit’s estate were required to demonstrate that Karnail held his title in trust for them. Kuldeep and the estate based their argument on two different types of trusts: resulting and constructive trusts.
A resulting trust occurs when a property’s title is in the name of a person who did not provide any value (consideration) in exchange for the property. As a result, that person is obliged to hold the property in trust for the original title owner and must return the property if requested.
In this case, the Court found there was no resulting trust. Karnail had contributed $10,000 towards the purchase of the property, nearly one-third of the required deposit. In exchange for this sum, he was registered as tenant-in-common with Amarjit and Kuldeep.
A constructive trust is a type of remedy that is available one party is deemed to have been unjustly enriched. Unjust enrichment occurs when one party benefits at the expense of another. As per the Supreme Court of Canada, the wronged party must establish three things to prove unjust enrichment has occurred: “an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment.”
If unjust enrichment is established, a court can order that the plaintiff is entitled to a constructive trust. This trust can be used as either a proprietary remedy or monetary compensation.
Court finds no unjust enrichment to form basis for constructive trust
In considering whether a constructive trust existed, the Court easily found that Karnail had been enriched “to the extent that he owns one-third of the Property as it is currently registered on title.” The Court needed to decide further if the enrichment was something justifying the court’s intervention.
The Court found that Karnail had continued to contribute to the property through the years in the following ways:
- Kuldeep and Amarjit tried to arrange to buy Karnail out of the property in 2019. They likely would not have done so if they did not believe he had an ongoing and legitimate interest in the property.
- Karnail must have signed all mortgage renewal documents through the years as an owner. He also took on substantial risk by being a named person responsible for the mortgage.
- There had been a tenant residing in the basement. Amarjit and Kuldeep collected rent but did not share it with Karnail. As he never received his one-third share of the rent owing to him, the Court inferred that Karnail contributed this share to the household.
- Additionally, Kuldeep had communicated with Karnail over the years about the cost of upkeep for the house. For instance, Karnail contributed $1,500 towards a new paint job for the house. Sidhu claimed to have taken Karnail to the bank specifically to get money for Kuldeep.
All parties declared tenants-in-common of property
On the balance of probabilities, Karnail had been contributing to the property. Therefore, as no unjust enrichment was found, there could be no constructive trust.
In the end, all parties (including the estate) were named one-third owners of the property as tenants-in-common. They were given the opportunity to purchase one another’s interests within 28 days from the date of the order. If no agreement could be reached by that time, the property would be sold by order of the Court.
Contact Derfel Estate Law for Experienced Representation in Trust Disputes
At Derfel Estate Law, our experienced team of estate lawyers provides skilled advocacy for clients involved in a variety of estate and trust disputes, including Will challenges and issues related to executors or trustees. We are conveniently located in Toronto and proudly serve clients throughout the Greater Toronto Area and Ontario. To schedule a confidential consultation, contact us online or by phone at 416-847-3580.