Ontario Court of Appeal denies wife's trust claim against her mother-in-law

The Ontario Court of Appeal has denied a wife’s claim against properties allegedly held in trust by her mother-in-law.

In Karatzoglou v. Commisso, 2023 ONCA 738, Rosetta Commisso claimed support and equalization of property against Philip Karatzoglou following divorce proceedings commenced in 2017. Rosetta claimed that the property in Rainbow Valley was the matrimonial home, and the property in Bullock Drive was where Philip’s business was located. Rosetta argued that the value of these properties should be included in Philip’s net family property and subject to equalization.

Rosetta and Philip had no property title, so Rosetta added her mother-in-law, Lisa Karatzoglou, to the proceedings. Rosetta claimed that Lisa held the two properties in trust.

The Ontario Court of Appeal noted that Lisa and her late husband, Christos, purchased the Rainbow Valley property and registered its title in both of their names. It was not their principal residence, but they allowed Rosetta and Philip, who were then living in subsidized housing and unable to purchase a home, to move to the Rainbow Valley property. Philip signed a rental agreement with his parents.

Lisa sold the Rainbow Valley property in 2021. She gifted a portion of the sale proceeds to Philip as an advance on his inheritance.

Lisa and Christos also purchased a business property on Bullock Drive. Philip was 15 at the time, and it was there that Christos operated his car repair business. When Christos died, the title to the property passed solely to Lisa, and Philip then took over running the car repair business.

The motion judge granted summary judgment, finding no evidence of any kind of trust concerning the Rainbow Valley and Bullock Drive properties. The judge also ruled that Rosetta lacked standing to pursue the trust claims against Lisa.

Rosetta raised the matter to the Court of Appeal, arguing that the motion judge made an error in law by determining that the case was suitable for summary judgment because there was inconsistent evidence concerning beneficial ownership, requiring a trial to resolve. However, the appeal court rejected Rosetta’s argument.

The appeal court found that the motion judge was correct in concluding that there was no evidence of Philip’s beneficial ownership of the properties and that there was no need for a trial on the issues of resulting or constructive trust.

The court found that Philip made no financial contribution to purchase the properties. The court also noted that Rosetta and Philip did not make any other significant contribution to the properties that could lead to a finding of unjust enrichment and support a remedy of constructive trust. Moreover, the court said that a person does not have standing to advance a trust claim on behalf of a former spouse for equalization purposes. Consequently, the court found that summary judgment was appropriate.

The court noted that when Lisa and Christos purchased the Rainbow Valley property, Philip and Rosetta lived in subsidized housing and subsisted on Philip’s modest income. They could not afford to buy a home. The court found no corroborating evidence to substantiate Rosetta’s claim that Philip made any financial contribution.

Furthermore, the court found no evidence that could give rise to a constructive trust interest. Rosetta’s claim for unjust enrichment was entirely based on the fact that she contributed furniture, some uncertain amount of money for “renovations”, cared for their son Lucas while Philip was working, and undertook ordinary domestic duties around the house. The appeal court said that the motion judge was correct in concluding that none of these claims amounted to an enrichment of or benefit to Lisa, who had no use of the home during this time.

The court also ruled that the Rainbow Valley property was not a matrimonial home because Philip and Rosetta did not hold an interest in it at the time of separation.

Similarly, the court found no evidence substantiating Rosetta’s claim over the Bullock Drive property. Christos and Lisa purchased the property when Philip was 15 years old. Philip operated the car repair business on the property, but Lisa continued to own the property. The court noted that Philip agreed to pay the expenses of the premises directly in exchange for using the property.

The court further pointed out that Rosetta was not involved with the business or the property, and she did not advance evidence of any contribution that would give rise to a trust interest. Ultimately, the court dismissed Rosetta’s appeal.