Small Claims Court OF NOVA SCOTIA
Citation: Price v. Leddicote, 2023 NSSM 50
Date: 20230906
Docket: 523811
Registry: Halifax
Between:
Shelly Price
Claimant
v.
David Leddicote
Respondent
Adjudicator: |
Darrel Pink |
Heard: |
08/31/2023 |
Decision: |
09/06/2023 |
Appearances: |
Melissa McAdam – Counsel for Claimant David Leddicote – Appeared personally
|
By the Court:
[1] The Claimant resides in Victoria, BC, where she teaches at the University of Victoria. She formerly live in Halifax. The Defendant resides in Halifax. From about 2017 – 2021 the parties had an intimate relationship.
[2] Mr. Leddicote had a poor credit history. In December 2017, to facilitate the purchase of a new vehicle (2018 RAM 1500 referred to as the RAM) for him, Ms. Price facilitated the purchase taking out a car loan totalling $83,412.86. The loan will be paid off in February 2026.
[3] The circumstances of the Claimant signing the loan document were described by the Claimant. The couple purchased two vehicles form the same dealership. They believed they would get a better price if they did so. The Claimant felt the Defendant would be a better negotiator and she left it to him to deal with the salesman to complete the purchases.
[4] Once that happened while completing the paperwork for the transaction the Claimant learned the Defendant’s credit history precluded him from borrowing funds to purchase the RAM. The parties were ‘in the room’ with the ‘finance guy’. The Claimant was surprised when the loan documents were presented to her for signing. She felt pressured to take on the loan obligations. The Defendant assured her he would reimburse her for the costs she incurred on his behalf. The Claimant felt the Defendant took advantage of her.
[5] The RAM was registered in both their names. The Defendant used it for his work. His employer reimbursed or paid for some vehicle expenses. The Claimant has faithfully made the bi-weekly loan payments of $401.61.
[6] The parties shared expenses when they lived together. Each had a dependant who lived with them full or part-time. The Defendant paid the rent. The Claimant paid the car loans. They shared other expenses. The arrangement was loose and never confirmed by any form of agreement. The Defendant says this sharing of payments was a common understanding. In the context of a couple coming together in a new relationship, with children in the house, details of how money is spent and shared are often not clearly specified. I accept that while they cohabited, sharing expenses was equitable and their way of addressing the car payments as part of their household expenses.
[7] The relationship ended in late 2021. The Claimant left their home. She continued to pay the loan.
[8] In the 2107 to 2021 timeframe, the Defendant made no direct contributions on the loan. He only did so indirectly through sharing expenses.
[9] The Claimant’s payments on the loan have been exclusively for the Defendant. She never drove the RAM; she had not access to it; only once was it used to move some of her things.
[10] As of September 2021, the Claimant had paid $42058.45 for the Defendant’s benefit.
[11] As of this hearing, approximately $25000 remains owing on the loan.
Payments by the Defendant
[12] Since the parties separated, the Claimant regularly asked the Defendant to take responsibility for what she believed are his financial obligations. Between November 2021 and May 2022, he paid the Claimant $400 on 12 occasions, totalling $4800. Since May 2022 he paid $450 (or lesser sums) on about 20 occasions, totalling $9225.
[13] These $450 payments were made following execution of an ‘Agreement for Repayment’ (the Agreement) signed by the parties in late May 2022.
[14] Mr. Leddicote became ill in 2022. He says he was sick when the Agreement was signed. Though he did not disclose the nature of his illness, he testified it caused him to leave his employment. His short term disability ran out and for four months he had no income. He is now receiving long term disability.
[15] The Defendant did not have the benefit of legal advice when he executed the Agreement or at this hearing. In the Agreement he metaphorically fell on his sword and accepts the loan payments by the Claimant were solely for his benefit.
[16] Though, according to him, he was sick, and signed the Agreement under duress, he agrees the outstanding loan was around $37000 ($37,348.91 on March 29, 2022) and that he would make 52 payments every other week of $450 to the Claimant. Further, by May 20, 2024 (after the 52 payments were made) he would take responsibility for the entire remainder of the loan by borrowing funds to do so. He further agreed that in default of payment he would sign his interest in the RAM to the Claimant.
[17] The Defendant’s credit standing has not improved since the money was borrowed in 2017 and may have worsened. Efforts he made to obtain a loan in his own name were unsuccessful. He does not appear to have the ability to borrow any money, let alone the outstanding balance on the loan Ms Price has paid for his benefit.
[18] At the hearing, the Defendant acknowledged that he could not borrow any money and under the terms of the Agreement or otherwise, he owes the Claimant a substantial sum to compensate her for what she has paid on his behalf. That is evident from the numerous messages he sent to Ms. Price indicating he was meeting with or hoped to meet with bank representatives to facilitate a loan in his name, none of which came to fruition. On several occasions he held out hope that a solution to his situation was at hand and that there would be funds for him to take over the vehicle financing.
[19] He has offered to deliver the Ram to the Claimant forthwith and transfer his registered interest to her. He did not offer to sell the RAM and deliver the proceeds to the Claimant. Given that the Defendant lives on the West Coast of Canada, delivering the RAM to the Claimant to sell is not practical or convenient.
[20] Based on the Agreement’s terms and the payments made by the Defendant, he owes the Claimant more that $37000.
The Claim
[21] The Claimant seeks $25000, the Court’s maximum jurisdiction. The claim is for return of the RAM and monetary compensation for the remainder.
[22] There are two bases for the Claim: breach of contract or unjust enrichment.
[23] The breach of contract claim is founded on the Agreement and the Defendant’s failure to comply with its terms. The Agreement is enforceable. It fixes the amount of Mr. Leddicote’s indebtedness at $47,191.56 (the ‘Total Debt) made up of $37,348.91, for the loan, plus $9237.03 for his failure to make payments to the Claimant.
[24] There is also reference to $1006.62 owed because of the Claimant’s payment of an insurance premium. Because the Agreement stipulates this sum as owing, it is part of the claim. The evidence supporting it as a debt is not reliable and if the Defendant had not acknowledged it, I would not include it in the amount owing.
[25] The three sums aggregate $47,191.56.
[26] The Agreement stipulates that 52 payments are to be made ($450 bi-weekly) and then the Defendant is to assume responsibility for the debt.
[27] Because the Defendant has failed to continue to make payments, he has breached his obligation to the Claimant. He did not get to the point in the Agreement when he would assume responsibility for the loan, and thus the Agreement’s provisions regarding default of that obligation, in May 2024, have not materialized.
[28] The Agreement states failure by the Defendant to meet his obligations under it results in him awing the ‘Total Debt’ which the Agreement fixes at $47,191.56) less payments made by him of $9225. [Ex 1, Tab 3, para. 3(a)] The Defendant’s debt to the Claimant is $47,191.56 - $9225 = $37966.56.
Analysis
[29] The Defendant suggested he was under a form of duress when he signed the Agreement. The document was drafted by her counsel to benefit the Claimant. The recitals and the substantive terms are in her favour.
[30] The Defendant offered no evidence to support a claim of duress. He said he could not get letters from any doctor regarding the Hearing, but he did not outline, even without the benefit of medical evidence, on what basis he was forced to sign the Agreement. He was reluctant to disclose any information on his illness that might have allowed the Court to understand his situation.
[31] Based on the Defendant’s testimony, the Court concluded he acknowledged a substantial benefit from having the RAM for many years while paying nothing towards it. Though while the parties co-habited, their quid pro quo may have been one where he paid rent, she paid the vehicle loan, and they shared other household expenses, that certainly did not pertain after they went their separate ways in late 2021.
[32] The Defendant produced no evidence he was coerced, forced or was under duress when he executed the Agreement. Had he not signed, nothing would have happened to him, other than a possible claim against him, which does not, by itself, constitute duress.
[33] There is no merit in the defence the Defendant was under duress when he signed the Agreement. The Agreement is enforceable.
[34] If I am wrong and the agreement can be vitiated from duress, so the Defendant did not fully agree to its terms and thus is not bound by them, the Claimant has suggested an alternative basis for her claim. That alternative is unjust enrichment.
[35] In effect the Claimant says because the Defendant has benefited from the RAM since the domestic relationship ended in late 2021, and she has paid the loan, solely for him, that he has been enriched and should compensate the Claimant. The claim is framed in the law of unjust enrichment.
[36] The Nova Scotia Court of Appeal recently considered how unjust enrichment is to be approached in Canada (Attorney General) v. Geophysical Services Incorporated, 2022 NSCA 41. In paragraph 91, the Court stated:
In Kerr, Cromwell J., for the Court, noted the wide variety of situations where the law of unjust enrichment has been used to provide redress for claims of inequitable distribution on the breakdown of domestic relationships. He commented on the law’s recognition of categories where retention of a conferred benefit had been considered unjust, but the Canadian law of unjust enrichment was not limited to those categories. He explained:
[31] At the heart of the doctrine of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain: Peel (Regional Municipality) v. Canada, 1992 CanLii 21 (SCC), [1992] 3 S.C.R. 762, at p. 788. For recovery, something must have been given by the plaintiff and received and retained by the Defendant without juristic reason. A series of categories developed in which retention of a conferred benefit was considered unjust. These included, for example: benefits conferred under mistakes of fact or law; under compulsion; out of necessity; as a result of ineffective transactions; or at the Defendant’s request: see Peel, at p. 789; see, generally, G. H. L. Fridman, Restitution (2nd ed. 1992), c. 3-5, 7, 8 and 10; and Lord Goff of Chieveley and G. Jones, The Law of Restitution (7th ed. 2007, c. 4-11, 17 and 19-26.
[32] Canadian law, however, does not limit unjust enrichment claims to these categories. It permits recovery whenever the plaintiff can establish three elements: an enrichment of or benefit to the Defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment: Pettkus; Peel, at p. 784. By retaining the existing categories, while recognizing other claims that fall within the principles underlying unjust enrichment, the law is able “to develop in a flexible way as required to meet changing perceptions of justice”: Peel, at p. 788. (Emphasis in original)
[37] There is no question the Defendant received a benefit from payment by the Claimant of the loan after the couple separated in 2021. The issues to be determined is whether there is ‘the absence of a juristic reason’ that would entitle the Claimant to recover what she bestowed on the Defendant.
[38] The question of when there is an absence of a ‘juristic reason’ was analysed by the Supreme Court of Canada in Garland v. Consumers' Gas Co., 2004 SCC 25. Starting at paragraph 31, Justice Iacobucci framed the basis for analysing whether there is the absence of a juristic reason entitling the Defendant to keep the enrichment received. At paragraph 36 he says:
(a) Enrichment of the Defendant
36 I agree with the analysis of Borins J.A. on this point. The law on this question is relatively clear. Where money is transferred from plaintiff to defendant, there is an enrichment. Transfer of money so clearly confers a benefit that it is the main example used in the case law and by commentators of a transaction that meets the threshold for a benefit (see Peel, supra, at p. 790; Sharwood & Co. v. Municipal Financial Corp. (2001), 2001 CanLii 24066 (ONCA), 53 O.R. (3d) 470 (C.A.), at p. 478; P. D. Maddaugh and J. D. McCamus, The Law of Restitution (1990), at p. 38; Lord Goff and G. Jones, The Law of Restitution (6th ed. 2002), at p. 18). There simply is no doubt that Consumers’ Gas received the monies represented by the LPPs and had that money available for use in the carrying on of its business. The availability of those funds constitutes a benefit to Consumers’ Gas. We are not, at this stage, concerned with what happened to this benefit in the ongoing operation of the regulatory scheme. (Emphasis added)
…
(b) Absence of Juristic Reason
(i) General Principles
38 In his original formulation of the test for unjust enrichment in Rathwell v. Rathwell, 1978 CanLii 3 (SCC), [1978] 2 S.C.R. 436, at p. 455 (adopted in Pettkus, supra, at p. 844), Dickson J. (as he then was) held in his minority reasons that for an action in unjust enrichment to succeed:
. . . the facts must display an enrichment, a corresponding deprivation, and the absence of any juristic reason — such as a contract or disposition of law — for the enrichment.
39 Later formulations of the test by this Court have broadened the types of factors that can be considered in the context of the juristic reason analysis. In Peter, supra, at p. 990, McLachlin J. held that:
It is at this stage that the court must consider whether the enrichment and detriment, morally neutral in themselves, are “unjust”.
. . . The test is flexible, and the factors to be considered may vary with the situation before the court.
40 The “juristic reason” aspect of the test for unjust enrichment has been the subject of much academic commentary and criticism. Much of the discussion arise out of the difference between the ways in which the cause of action of unjust enrichment is conceptualized in Canada and in England. While both Canadian and English causes of action require an enrichment of the defendant and a corresponding deprivation of the plaintiff, the Canadian cause of action requires that there be “an absence of juristic reason for the enrichment”, while English courts require “that the enrichment be unjust” (see discussion in L. Smith, “The Mystery of ‘Juristic Reason’” (2000), 12 S.C.L.R. (2d) 211, at pp. 212-13). It is not of great use to speculate on why Dickson J. in Rathwell, supra, expressed the third condition as absence of juristic reason but I believe that he may have wanted to ensure that the test for unjust enrichment was not purely subjective in order to be responsive to Martland J.’s criticism in his reasons that application of the doctrine of unjust enrichment contemplated by Dickson J. would require “immeasurable judicial discretion” (p. 473). The importance of avoiding a purely subjective standard was also stressed by McLachlin J. in her reasons in Peel, supra, at p. 802, in which she wrote that the application of the test for unjust enrichment should not be “case by case ‘palm tree’ justice”.
41 Perhaps as a result of these two formulations of this aspect of the test, Canadian courts and commentators are divided in their approach to juristic reason. As Borins J.A. notes in his dissent (at para. 105), while “some judges have taken the Pettkus formulation literally and have attempted to decide cases by finding a ‘juristic reason’ for a defendant’s enrichment, other judges have decided cases by asking whether the plaintiff has a positive reason for demanding restitution”. In his article, “The Mystery of ‘Juristic Reason’”, supra, which was cited at length by Borins J.A., Professor Smith suggests that it is not clear whether the requirement of “absence of juristic reason” should be interpreted literally to require that plaintiffs show the absence of a reason for the defendant to keep the enrichment or, as in the English model, the plaintiff must show a reason for reversing the transfer of wealth. Other commentators have argued that in fact there is no difference beyond semantics between the Canadian and English tests (see, for example, M. McInnes, “Unjust Enrichment — Restitution — Absence of Juristic Reason: Campbell v. Campbell” (2000), 79 Can. Bar Rev. 459).
42 Professor Smith argues that, if there is in fact a distinct Canadian approach to juristic reason, it is problematic because it requires the plaintiff to prove a negative, namely the absence of a juristic reason. Because it is nearly impossible to do this, he suggests that Canada would be better off adopting the British model where the plaintiff must show a positive reason that it would be unjust for the defendant to retain the enrichment. In my view, however, there is a distinctive Canadian approach to juristic reason which should be retained but can be construed in a manner that is responsive to Smith’s criticism.
43 It should be recalled that the test for unjust enrichment is relatively new to Canadian jurisprudence. It requires flexibility for courts to expand the categories of juristic reasons as circumstances require and to deny recovery where to allow it would be inequitable. As McLachlin J. wrote in Peel, supra, at p. 788, the Court’s approach to unjust enrichment, while informed by traditional categories of recovery, “is capable, however, of going beyond them, allowing the law to develop in a flexible way as required to meet changing perceptions of justice”. But at the same time there must also be guidelines that offer trial judges and others some indication of what the boundaries of the cause of action are. The goal is to avoid guidelines that are so general and subjective that uniformity becomes unattainable.
44 The parties and commentators have pointed out that there is no specific authority that settles this question. But recalling that this is an equitable remedy that will necessarily involve discretion and questions of fairness, I believe that some redefinition and reformulation is required. Consequently, in my view, the proper approach to the juristic reason analysis is in two parts. First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. By closing the list of categories that the plaintiff must canvass in order to show an absence of juristic reason, Smith’s objection to the Canadian formulation of the test that it required proof of a negative is answered. The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter, supra), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis. (Emphasis added)
45 The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery. (Emphasis added)
46 As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. It may be that when these factors are considered, the court will find that a new category of juristic reason is established. In other cases, a consideration of these factors will suggest that there was a juristic reason in the particular circumstances of a case which does not give rise to a new category of juristic reason that should be applied in other factual circumstances. In a third group of cases, a consideration of these factors will yield a determination that there was no juristic reason for the enrichment. In the latter cases, recovery should be allowed. The point here is that this area is an evolving one and that further cases will add additional refinements and developments.
47 In my view, this approach to the juristic reason analysis is consistent with the general approach to unjust enrichment endorsed by McLachlin J. in Peel, supra, where she stated that courts must effect a balance between the traditional “category” approach according to which a claim for restitution will succeed only if it falls within an established head of recovery, and the modern “principled” approach according to which relief is determined with reference to broad principles. It is also, as discussed by Professor Smith, supra, generally consistent with the approach to unjust enrichment found in the civil law of Quebec (see, for example, arts. 1493 and 1494 of the Civil Code of Quebec, S.Q. 1991, c. 64.)
[39] Applying this approach to the facts, there is no doubt the Defendant received a benefit or enrichment. So when analyzing the situation from the Claimant’s perspective, the Court must ask “Is there is or is there not a juristic reason to take away or deny the Defendant the benefit he has received?”
[40] The arrangement leading to the Claimant’s assumption of responsibility to pay the vehicle loan arose from the domestic relationship between the parties. The terms of sharing domestic expenses were not specified. Whatever agreement the parties had was dependent or conditional upon them living in a relationship where they shared expenses. Once they lived separately, no agreement existed.
[41] Put another way, while the parties were a couple, there was an agreement between them ( a juristic reason) that expenses would be shared which include the Claimant’s payment of the vehicle loan. This agreement was conditioned on them cohabitating. Once that ended, so did the agreement to pay the loan.
[42] All payments after January 2022 benefitted the Defendant. There was no contract or other juristic reason entitling the Defendant to the benefits the Claimant bestowed on him.
[43] He has been unjustly enriched by those payments and the Claimant is entitled to an order for payment of $25000, a sum less than the benefit or enrichment provided to the Defendant.
[44] Sections 9 and 29 of the Small Claims Court Act enable the Court to order delivery of specific personal property to a successful Claimant. That remedy is usually employed where a specific item has been wrongfully detained by a party and the appropriate remedy is to return the personal property to its rightful owner.
[45] Here though the RAM is registered jointly, other than under para. 2(d) of the Agreement, the Claimant is not entitled to possession of the property. That provision states that if the Defendant fails to obtain financing, he must deliver the RAM to the Claimant. The date by which that obligation is triggered is May 27, 2024, well into the future.
[46] I am not satisfied that an order under s, 29 of the Act is appropriate.
[47] If the value of the RAM is to be applied to reduce the Defendant’s indebtedness, that should be through enforcement processes available to the Claimant or by him voluntarily selling the vehicle and applying the proceeds to his indebtedness.
[48] It is ordered the Defendant pay to the Claimant $25000 plus costs of $199.25.
[49]Counsel for the Claimant shall prepare an order to reflect this decision. If costs of service were incurred, they may be included in the Order if proof of the expense is provided by way of receipt. No consent as to form by the Defendant is required.
Darrel Pink Small Claims Court Adjudicator