Palkowski v Ivancic, 2015 ONSC 7080
Jerry Palkowski and Jane Palkowski (M. Tufman and E. Izmaylov, for the Plaintiffs)
Stipan Ivancic (K. Borg-Oliver, for the Defendant)
HEARD: October 23, 2015
REASONS FOR JUDGMENT
 I am in this case required to decide between two parties, neither of whom has demonstrated particularly high moral fibre. I have found that the parties worked together to create a sham transaction that was intended to defeat at least one of the plaintiffs’ creditors and did in fact do so to the tune of about $75,000. The real victims here – the creditor pressed into settling for a discount or possibly even the real estate broker deprived of a commission – are not before the court. However inclined I may be to borrow the phrase of Mercutio from Romeo and Juliette and conclude “A plague on both o’ your houses”, I remain bound to dispense justice and to do so impartially. I must decide between two parties to a decidedly dishonourable transaction in order to settle the equities as between them. The task is a distasteful one. I cannot enforce the deal they made. However, doing nothing would leave one party with very substantial ill-gotten gains.
 I have accordingly chosen the least unjust remedy that I believe the authorities enable me to fashion. I shall leave the plaintiffs in possession of their home where they have lived for over 25 years and in which they are now retired. I shall however require them to repay their co-conspirator’s investment and to share with him at least those gains in the value of real estate which accrued before this action began.
 This litigation has been a marathon of almost ten years and must draw to a close. Justice, even rough justice, is better than none at all. It is impossible for me to deliver a perfect outcome – I have strived to deliver a reasonably fair one.
- I. Overview of Facts
 The plaintiffs Mr. Jerry Palkowski and Mrs. Janina (or Jane) Palkowski had five children between the ages of 10 and 18 in 1996 when many of the events important to this litigation occurred.
 Mr. Palkowski is 68 years old today and is a retired hardwood flooring contractor, an industry in which he worked for about 35 years. Mrs. Palkowski worked as an insurance salesperson in 1996 and is also now retired. Mrs. Palkowski was not closely involved in the family finances but has been generally aware of what was going on.
 The defendant Stipan (or Steve) Ivancic is somewhat older than the plaintiffs. He is now 80 years old. He has worked in the drywall and general construction business for many years and is also now retired.
 There were two trials heard together. For convenience sake, the “Plaintiffs” shall refer to the plaintiffs in the main action (i.e. Mr. and Mrs. Palkowski). The plaintiffs have brought the main action against Mr. Ivancic as defendant arising out of the transfer by Mr. Palkowski and Mrs. Palkowski of their family home to Mr. Ivancic in 1996. They claim that the transaction was intended to be a sort of a sham. In the second action, Mr. Ivancic as plaintiff has sued Mr. Palkowski alone as defendant. It arises from a 1989 promissory note which Mr. Ivancic alleges was never fully repaid. Although Mr. Ivancic admits that the claim under the note was statute barred, he claims that it was revived by reason of admissions made in the course of his lawyer’s cross-examination of Mr. Palkowski in the main action.
(a) Witnesses and General Observations re: Credibility
 I shall make a few preliminary remarks about credibility which shall be expanded upon as I review the facts, both admitted and in dispute.
 First the plaintiff’s witnesses.
 I found that Mr. Palkowski was, on the whole, a fairly credible and reliable witness. I do not accept without qualification his claims to victimhood as regards the scheme to defraud his creditors that I find occurred here. I find that he has rather minimized his own participation in the scheme and I cannot accept that he was a mere pawn following lawyer’s advice. The object of the scheme was to defeat a creditor of a significant claim and even the most mild-mannered of people can understand that. Apart from minimizing his own role in the scheme, his testimony was by and large credible, consistent with the evidence and not seriously shaken in cross-examination.
 I found Mrs. Palkowski’s testimony to have been quite entirely credible. She knew what she did not know and did not seek to guild the lily or embellish. She was brought in the scheme only near closing and participated to save the house for the family. Her testimony was frank and to the point.
 Similarly, I accepted the testimony of Mr. Palkowski’s sister, Marianna Mathauser. She testified only as to limited matters, but she was clear and believable on those matters. Mr. Ivancic was an ex-boyfriend with whom she had essentially no contact for more than twenty years. She was nevertheless entirely fair and even-handed in her descriptions of him despite the obvious animosity that has arisen between Mr. Ivancic and her brother since.
 The plaintiff called an expert real estate valuator witness (Mr. Buczkowski) whose credibility was neither challenged nor his evidence contradicted. I shall review that evidence in more detail below. I accept his evidence as quite credible and sensible.
 Finally, the plaintiff called Mr. Harry Goldstein – the lawyer who represented them on the subject transaction as well as his law clerk Mr. Rampersad. The former maintained a rather Nixonian lack of memory. I decline to comment further on whether his lack of memory was genuine or convenient. His file has been produced as has a single letter he admitted to the truth of – beyond those two contributions to the evidence, his actions are not before me to comment upon and I decline to do so beyond what is necessary to decide this case. The one letter he admitted to signing – in which he acknowledged knowing of the secret trust arrangement from the beginning – speaks sufficient volumes of what is needed to be known in his regard. His clerk, Mr. Rampersad was able to add only a small amount of additional detail. I had no difficulty accepting the bulk of his evidence such as it was – the gaps were however significant.
 The defendant testified on his own behalf and was the only witness called by the defence. I found Mr. Ivancic to be entirely lacking in credibility. His testimony was so often impeached by references to his own earlier affidavits or examination for discovery testimony as to make it unnecessary to compare his story to that of other witnesses. There being no reliable guide for when the man was telling the truth, when he was simply confused, when he was telescoping now-distant events or when he was simply repeating a story he has been very inconsistently maintaining since the litigation began, the only reasonable conclusion was to reject his evidence in almost every respect unless independently corroborated. There was little enough of that.
(b) Relationship between the Parties: 1980-1996
 The parties all knew each other reasonably well. How well has become a matter of some debate in this case. The facts of the relationship were quite simple and unremarkable. I have concluded from the evidence that Mr. Palkowski and Mr. Ivancic knew each other reasonably well and had done some business together. On at least two occasions before the subject transaction, Mr. Ivancic had loaned money to Mr. Palkowski. I find that they trusted each other.
 Mr. Palkowski’s family (4 brothers and two sisters plus his mother) had come with him from Poland in the late 1960’s. His sister Marianna Mathauser, testified at the trial. She is now 64 years old. In the late 1970’s Marianna had been recently divorced from her first husband and was a single mother with a young boy. Mr. Ivancic was a single man. She had known him as a friend of her ex-husband’s since about 1971. Mr. Ivancic and Marianna chanced to meet again while shopping in or about 1978 and renewed their acquaintance. At first nothing developed but then after about a year, the two began dating.
 I accept Marianna’s testimony that she and Mr. Ivancic were in a relationship from about 1979 until about 1986. During that time, Mr. Ivancic got to know the entire Palkowski family, including Mr. Palkowski and his family as well as Mr. Palkowski’s mother and siblings. Mr. Ivancic also bonded to some degree with Marianna’s young son. Although Marianna lost touch with Mr. Ivancic after their breakup in or about 1986, her son remember him fondly enough to invite him to the wedding in 2005 despite the chill that had developed in the relationship between Mr. Ivancic and Mr. Palkowski at that point.
 In 1980, Mr. Ivancic had acquired some land on Canterbury Drive in Mississauga. He built a house on one of the lots which he sold to Mr. Palkowski and Mrs. Palkowski in March, 1984. He kept another house for his own use. Mr. Palkowski and Mrs. Palkowski financed the purchase in part with a vendor mortgage from Mr. Ivancic. This was the first recorded instance of Mr. Palkowski and Mr. Ivancic combining business with their personal relationship although Mr. Palkowski says that they did occasionally do work together being both in complementary lines of work.
 There was disputed evidence at trial as to the relationship between the parties in those years. At trial, Mr. Ivancic testified that he was never a neighbour of the plaintiffs and claims the most distant of purely business relations with Mr. Palkowski. He claims that “six kids” from his home country of Croatia lived in the house on Canterbury Drive where he now lives in retirement. Later those “six kids” appeared to be identified as his nephews. He was unable to say when they moved in beyond suggesting that he did not do so until the early 1990’s. Until that time, he claims, he was renting a room on Indian Road in Toronto. This story told at trial did not compare well to the story told in earlier episodes of this long-running case. In an affidavit sworn February 8, 2006, Mr. Ivancic swore that “between 1984 and 1989, I saw Mrs. Palkowski occasionally as she lived next door”. In his April 13, 2006 cross-examination on that same affidavit Mr. Ivancic denied social visits between the neighbours but agreed they were neighbours for “a few years” at one point. He also recounted being in the plaintiffs’ house at one point helping to drywall the stairs. Confusion and time might cause him to make an innocent mistake as to the year he moved. Denial that he was ever a neighbour goes beyond mere confusion and enters the field of deliberate intent to mislead.
 This was but one of a great number of instances where Mr. Ivancic’s testimony was so diametrically opposite prior versions of events told by him as to exclude any allowance for innocent mistake or confusion. I simply cannot accept anything he has sworn to without independent corroboration.
 Both Mrs. Palkowski and Mr. Palkowski testified that they were neighbours of Mr. Ivancic for this time period. During this time, they say that they spoke and visited frequently with each other. Mr. Palkowski dropped in to Mr. Ivancic’s place often, Mrs. Palkowski less so. Mr. Ivancic came to dinner at their place from time to time.
 I found Mrs. Palkowski and Mr. Palkowski’s testimony on this subject to be consistent with each other, the testimony of Marianna and, at least partly, the 2006 affidavit of Mr. Ivancic. I accept their testimony as to the nature of their relationship with Mr. Ivancic prior to the 1996 purchase of 2154 Shawanaga Trail by Mr. Ivancic.
(c) Purchase by Plaintiffs of 2154 Shawanaga Trail
 The plaintiffs purchased 2154 Shawanaga Trail on June 23, 1988 for $600,000 and sold their former home on Canterbury Drive a few months later. Thereafter, while no longer neighbours of Mr. Ivancic, there continued to be dealings between the two families.
 Both sides agree that Mr. Ivancic never came to visit the plaintiffs at Shawanaga Trail. Mrs. Palkowski remembers some visits back to Canterbury Drive. Nobody claims they were fast friends socially at that time.
(d) Loan of $70,000 by Mr. Ivancic
 In November, 1989 Mr. Palkowski obtained a loan from Mr. Ivancic in the amount of $70,000. Apart from the dispute between the parties as to what relationship subsisted after Mr. Ivancic broke up with Marianna, this loan confirms that the parties were continuing to do at least some business with each other despite the break-up with Mr. Palkowski’s sister.
 The loan was evidenced by a promissory note dated November 17, 1989 in the amount of $70,000 with an interest rate of 15% (in line with historic rates being just 1% higher than the post-judgment interest rate then-prevailing). If further confirmation of Mr. Ivancic having lived on Canterbury Drive in the 1980’s were needed, Mr. Ivancic’s address on the promissory note is listed as 1298 Canterbury Drive.
 Mr. Palkowski admits to having borrowed the money but says that the loan was repaid in the early 1990’s. Mr. Ivancic claims that it was never fully repaid. Mr. Ivancic admits to having found evidence of $17,000 in payments in 1992 as well as a $2,000 interest payment that same year. He claims that nothing else was repaid, but has nothing like a loan ledger or any contemporary records to substantiate this. On cross-examination he allowed that his memory of repayments may not have been complete.
 Mr. Palkowski claims that Mr. Ivancic was repaid largely in cash payments at his request and this was done over time with the last payments likely in about 1994. He has some records which, in combination with Mr. Ivancic’s records add up to $69,000.
(e) Plaintiff’s Financial Crunch and 1996 Transfer of Home
 In 1996, the plaintiffs were suffering severe financial crises. Mr. Palkowski had lost money in two real estate investments that he had made. In Hamilton, a property had been taken on a tax sale. In Toronto, his credit union had seized a property on power of sale and was beginning to come after him for the shortfall. The only significant asset he had left was his family home that he owned jointly with his wife. The family had five children living with them at the time.
 Mr. Palkowski had significant debts.
 His credit union (Buduchnist Credit Union) had obtained a default judgment against him personally dated September 25, 1996 for $137,000 for the shortfall arising from one of the failed real estate investments he had made in Toronto. They had registered a writ of seizure and sale on October 31, 1996. Mrs. Palkowski was not a guarantor of the loan nor mentioned in the judgment. BCU was a large creditor to be sure, but having no security on the family home or covenant from Mrs. Palkowski, their ability to put the family out of house and home in the near term at least was quite limited.
 In fact, they did not take any steps to enforce the writ of seizure and sale beyond the small payment received as part of the transfer transaction to lift the writ and their claim was not finally settled until 2009.
 Toronto-Dominion Bank held two mortgages on the family home with a total amount outstanding of $318,866.51 as of December 23, 1996. Mr. Palkowski was in arrears on this mortgage and TD was threatening to institute power of sale proceedings. As first (and second) mortgagee, TD would be in a position to take an aggressive stance if Mr. Palkowski was not able to satisfy them. However, on all of the evidence, TD’s mortgages were very well secured and TD was not behaving particularly aggressively.
 Mutual Trust Company was owed $100,000 for which it had received a mortgage on a commercial property investment of Mr. Palkowski’s in Hamilton as well as a collateral third mortgage on the family home on Shawanaga Trail. By late 1996, the City of Hamilton had seized the property located there for tax arrears and Mutual Trust had not elected to redeem it. Mutual Trust was in arrears on mortgage payments but there is no evidence that they had actually commenced power of sale proceedings under their collateral mortgage over the family home at 2154 Shawanaga Trail.
 The evidence of actual action taken by these creditors in late 1996 was slight. The only evidence of Mutual taking aggressive steps was a “Final Demand before Legal Action” letter to Mr. Palkowski dated October 4, 1996 which noted that only $4,833.07 was then overdue. TD sent a lawyer’s demand letter dated October 22, 1996 citing overdue payments of $12,349.91 that they demanded be brought current before the end of the month.
 The total of the above-mentioned debts was approximately $555,000. Importantly, Mrs. Palkowski as joint-tenant owner of the family home was not responsible for $137,000 of that total.
 These were pressing claims to be sure, but the defendant’s attempt to paint them as extremely urgent is overdone. Mr. Palkowski was no doubt losing sleep over these, but given even the most pessimistic value of the home, there was little reason to assume that the situation could not have been managed for a while at least. Neither TD or Mutual was anywhere near being in a position to take possession of the house and the amounts they were demanding in the short run totaled only $17,000. BCU was potentially more troublesome with a $137,000 writ of seizure and sale (not registered until the end of October) but their debt was as against Mr. Palkowski alone.
 Mr. Palkowski did not want to sell the family home. His reasons were quite understandable. His children were still young and he had a large family. He was, however, increasingly finding himself between a rock and a hard place. His other investments had soured. Even if the creditors were not in a position to take possession right away, his problems were certainly becoming more pressing. Something needed to be done, but I do not accept that it was as urgent as the defendant suggests.
 In February, 1996 Mr. Palkowski consulted Remax Professionals Inc. for an inspection and estimate of value of the home. This was shortly after BCU had commenced the power of sale proceedings to take over his Toronto investment property. Remax wrote him a letter dated February 6, 1996 which suggested the family home then had a value in the range of $570,000 to $590,000. It was suggested that an initial listing at $619,000 would be an appropriate strategy coupled with an agreement to reduce the price to $599,000 if no offers were received within 30 days. Mr. Palkowski did not proceed to list the house at that time.
 On August 17, 1996, Mr. Palkowski and Mrs. Palkowski finally did list the home for sale with Royal LePage Real Estate Services Ltd. as broker. The listing extract produced suggests that it may have been originally listed at $539,000. There is nothing before me that suggests that it was actually on the market at the $539,900 level for any period of time and the ambiguous notes on the face of the listing document do not enable me to make a secure finding in that regard. Mr. Palkowski testified that his must have been a mistake and had no memory of it ever being listed for that low a price. Error or no, the listing was at some point revised upwards to $699,900. I cannot conclude that the property was ever listed at the lower price or, if it had been, that it was exposed at that price for a more than a few days in August when it may not have attracted any attention.
 Mr. Palkowski testified that he did not want to sell the property. His actions at this time corroborate that. A listing in the dead of summer at a price that is significantly over the appraised value of the house he had received only six months earlier (even allowing for a recovering market) would appear to signal a vendor more interested in appearing to be selling than one vitally interested in actually selling at the highest price obtainable. I infer that he wished his creditors to believe he was actively selling and even perhaps to suggest that he had more equity in the home than he actually did.
 What was the value of the home at this point in time? Mr. Ivancic presented no expert evidence on the subject at all. The letter from Remax from February 6, 1996 quoted earlier suggested a value in the $570,000 to $590,000 range with a recommended listing price even higher. I also heard the expert evidence of a qualified real estate appraiser, Mr. Peter Buczkowski who provided a valuation as of December 23, 19961.
 Mr. Buczkowski valued the land at $300,000 and the building at a depreciated value of $325,109 which total value he rounded down to $600,000 by reference to comparable sales. In his opinion, the home would have required approximately 30-60 days to sell.
 In his report and under examination, Mr. Buczkowski testified that he examined the property at the time of his report (dated July 12, 2011). His report cites a number of features observed including many of the items the plaintiffs attribute to their own upgrades after 1996. The defendant suggests that this report ought to be discounted for having included these items. I disagree.
 Firstly, the land value Mr. Buczkowski found was $300,000. His opinion was not challenged at all on this point. If the $350,000 paid by Mr. Ivancic on December 23, 2006 were to be accepted as an arm’s length purchase price, this would attribute only $50,000 in depreciated value for a 3,358 square foot house. This conclusion would not advance the defendant’s case by much.
 Secondly, the defendant has misapprehended Mr. Buczkowski’s evidence. While he referred to the then-present state of the house, the report found that a “home in very good condition at the time of inspection indicates excellent condition in 1996”. His building value was premised on an overall value per square foot having regard to the state of repair of the building and assuming a similar state of repair in that era. He was not building up a value hardwood floor by window pane by roof by fireplace. In his oral evidence he said that he could generally tell what was new and what had been there a while and even when all of the post-1996 estimates of renovations were listed in cross-examination did not suggest that his valuation was off by any material order of magnitude. Given the methodology he employed – which appears to me to have been entirely reasonable – I concur.
 I find that the value of the home as of December 23, 1996 was $600,000. I also find that this value – or one very much like it – would have been known to both the plaintiffs and the defendant.
 The plaintiff deliberately set the listing price of the house at an aspirational figure but it was one which was sufficiently within the bounds of feasible (if not reasonable) to persuade a listing agent to accept the listing. By listing at almost $700,000, the plaintiffs were, in effect, willing to take a “high end of high” offer but not encouraging much else to come their way.
 Mr. Ivancic indicated that he had been “in the market” for investment properties at about this time. He claimed to have been looking into a power of sale property down the street. He claimed to have friends who were helping him in getting a feel of market values, including a real estate broker (although he had not engaged one). I find both Mr. Palkowski and Mr. Ivancic had a general idea of the value of 2154 Shawanaga Trail and knew that it was worth something near $600,000.
 Having regard to the foregoing, the next steps to the chronology make no sense at all if anything other than the assumption of a sham transaction is applied. The undisputed fact is that an Agreement of Purchase and Sale naming Mr. Ivancic as purchaser was signed on November 18, 1996 at a price of $350,000 and was completed on December 23, 1996 with the plaintiffs remaining in possession of the house, no keys having changed hands and no written lease agreement executed.
 At this point in time, the only creditors with mortgages on the home (TD Bank and Guaranty Trust) had not proceeded beyond mere lawyer’s letters and had not even accelerated the mortgage debt. The house was listed with an agent (whose listing did not expire until December 16, 1996). While no sale had been secured at the aspirational price of $699,900, no attempt was made to drop the listing to a lower figure – even one below the appraised value from February - to generate a quick sale. The idea of accepting an offer at half of the listed price and just over half of the recently-appraised value without even attempting to test the market at more reasonable price levels is beyond astonishing – it is not credible. I find that the plaintiffs still had plenty of time to arrange a market price sale if that had been their intention.
 I begin with the Agreement of Purchase and Sale dated November 18, 1996. It is on a standard OREA form with only a handful of typewritten or handwritten insertions. While I find that the document was a sham, it is necessary to start with the document the parties signed.
 The ORIGINAL Agreement of Purchase and Sale was introduced as Exhibit 2 at the trial and was identified by all of the parties to it. It came from Mr. Goldstein’s files. It differed in some important respects from the copy of the APS which the defendant produced from its lawyer’s files.
 On its face, the original APS appears to look like a typical example of an offer, a counter offer and then a final agreed amount. The offer is framed as an offer from Mr. Ivancic at a price of $340,000. It called for a closing on December 16, 1996 (the same day the listing agreement expired). It is signed by Mr. Ivancic but not witnessed and is dated November 15, 1996 (a Friday that year).
 The typed amount “forty’ and the number 340,000 are both crossed out and “sixty” and “360,000” are inserted immediately above. These changes are both initialed by Mrs. Palkowski and Mr. Palkowski suggesting a counter-offer by the vendor. Their signature is found on the back page and is apparently witnessed by, incredibly, Mr. Shaw. Mr. Shaw of course is Mr. Ivancic’s lawyer and why he would have been witnessing a counter-offer form the vendors makes no sense at all. All parties concurred that the witness signature appeared to be that of Mr. Shaw. Mrs. Palkowski had no recollection of seeing him. Finally, the purchase price is again crossed out with “fifty” and “350,000” written in by hand. This last interlineation is initialed by
each of Mr. Ivancic, Mr. Palkowski and Mrs. Palkowski. Each of them acknowledged their initials. To complete the confusion, Mr. Ivancic signed in blue ink on the second page whereas the alleged vendors’ counter-offer was done in blue ink on the first page with the final “offer” and all other signatures being in black ink.
 Mr. Shaw’s role in the execution of this document becomes even more enigmatic when the original Agreement of Purchase and Sale is compared to the copy that was produced by the defendant in the litigation. The defendant’s copy of the document – and only a photocopy was produced by him – has what appears to be Mr. Shaw’s signature witnessing Mr. Ivancic’s signature (no such witness appears on the original Exhibit 2) while no witness appears opposite the plaintiff’s signatures. Further, initials which appear to be in the same hand (i.e. Mr. Shaw’s) appear over all of the interlineations of price on the first page. These do not appear in the original.
 Not a single one of the witnesses described the execution of this document in a fashion remotely consistent with the way it reads, including Mr. Ivancic. I conclude without hesitation that the Agreement of Purchase and Sale was a sham document drawn up to give the impression of a conventional offer from a purchaser with counter-offer and then final settled price between the two. In other words, it was drafted to appear to be the product of arm’s length negotiations. In fact there was no exchange of offers and counteroffers over a weekend. Everything happened all at once – this is the one thing the parties do agree on.
 Mr. Ivancic’s lawyer, Mr. Shaw signed as witness to the signature of Mr. Palkowski and Mrs. Palkowski. He was not called as a witness and no witness said that he had witnessed their signature of a counter-offer. Mr. Ivancic said that he met Mr. Palkowski at Mr. Shaw’s office after all the deal was done. Mrs. Palkowski does not recall meeting him at all. I find that he did not witness the signatures. I cannot attribute much significance to any documents witnessed by him without him being in court to explain these discrepancies. He was not called.
 I shall summarize here the two conflicting versions of the parties as to how the document I have found to be a sham came to be executed.
 Firstly, the plaintiffs’ version of events. Mr. Palkowski was a first-hand participant in most of the events recounted, Mrs. Palkowski had only some knowledge of some of them.
 Mr. Palkowski claims that he consulted his lawyer, Mr. Goldstein about what to do regarding his financial problems. He alleges Mr. Goldstein suggested to him that he should find a friend that he could trust to hold the property. It could not be a family member as that would look suspicious. It had to be someone who could be relied upon to return the property.
 As I have indicted above, I hesitate to some degree in accepting Mr. Palkowski’s protestations of innocent receiver of legal advice at this stage. The object of the exercise was to persuade a mortgagor – Mutual Trust – to abandon their mortgage at a discount. Some stories are too good to be true and he must have known this legal advice, if received, was suspect. That being said, Mr. Goldstein has admitted to having been aware that Mr. Ivancic was holding as trustee for Mr. Palkowski. I shall say no more than to note that there are a great number of unanswered questions regarding Mr. Goldstein’s conduct in this affair which I cannot fairly address at this stage since he is not a party.
 Mr. Palkowski said that Mr. Ivancic was the first person he approached with this idea. Mr. Ivancic accepted to participate and agreed to help out by putting the property in his name. Mr. Ivancic would pay $350,000. The $350,000 figure was the amount that had been calculated as being needed to settle the debts. Mr. Ivancic did not inspect the house before agreeing to participate and in fact never did so (until the litigation began).
 Mr. Palkowski admitted that the two had not fully discussed what Mr. Ivancic would get (apart from his money back) at the end of the day. He said this was “open”. He suggested at one point that Mr. Ivancic really didn’t seem to want more than his money back since he would have to pay capital gains. I find the latter suggestion a bit unlikely. However, Mr. Palkowski was clear in saying that the matter was “open” in that no final agreement was reached as to what would be “in it” for Mr. Ivancic beyond, of course, getting all of his money back and interest covered.
 The Agreement of Purchase and Sale was signed in Mr. Goldstein’s office. Mr. Palkowski was adamant that the price had already been agreed before they went to the lawyer’s office. Mr. Rampersad prepared the document.
 After signing it up in Mr. Goldstein’s office (before Mr. Rampersad), Mr. Palkowski took the document to Mr. Shaw’s office to be finalized. Mr. Shaw was the lawyer for Mr. Palkowski. Mr. Palkowski recalls meeting both Mr. Ivancic and Mr. Shaw at Mr. Shaw’s office. Neither Mr. Palkowski nor Mrs. Palkowski could remember clearly how and when the various interlineations were added. They were clear, however, that there was but the one signature session at Mr. Goldstein’s office followed by Mr. Palkowski taking it over to Mr. Shaw’s.
 Mrs. Palkowski had not been part of the discussions with Mr. Goldstein described by Mr. Palkowski when the scheme was devised. She did hear of the scheme and didn’t question it. She knew the house was worth $600,000 or more and agreed to sell because she thought it was only a “temporary situation” to pay the credit union off. She attended at Mr. Goldstein’s office to sign the documents and did so in order to save the house. She insisted that it was not a sale since Mr. Ivancic would be giving it back.
 Mr. Ivancic, needless to say, tells an entirely different story. As he gave his evidence, the plaintiffs objected that Mr. Ivancic’s evidence violated the Rule in Brown v. Dunne since neither of them had been cross-examined by the defendant on this completely different version of events leading to the signature of the agreement of purchase and sale. While I believe that the objection was technically correct, I allowed the questioning to continue. The two utterly conflicting versions of the story have been what this whole litigation is about. I hesitate to say that no surprises were involved since Mr. Ivancic’s testimony at the hearing was such a marked departure from earlier versions of his story, even if the broad lines were similar.
 At trial, Mr. Ivancic suggested that he had been looking at investment opportunities in a general way in September or October 1996. One day he was out with some friends looking at a house with a pool that was being sold under power of sale at the end of Shawanaga Trial, a few hundred metres down the road from the plaintiff’s house. They parked the car and, after walking down Shawanaga to see what other properties were also for sale, Mr. Ivancic noticed Mr. Palkowski in his yard. They struck up a conversation. Mr. Palkowski, learning that Mr. Ivancic was looking at buying a home in the area, suggested that Mr. Ivancic should buy his as he was selling it. There and then Mr. Ivancic says that he went inside with Mr. Palkowski and inspected the house. He already had a good idea of value in the area. He had a price in mind but did not share it with Mr. Palkowski.
 The next day, Mr. Ivancic testified that Mr. Palkowski came over to his house. Mr. Ivancic offered him $340,000. Mr. Palkowski wanted $360,000. No documents were exchanged. The next day he came back and proposed $350,000. Mr. Ivancic agreed. I have edited Mr. Ivancic’s testimony slightly since I assume he erroneously said 350 when he meant 360.
 On cross-examination the story shifted somewhat. Instead of seeing Mr. Palkowski in September or October, he began to suggest it might have been somewhat later, although there was no snow. He suggested that Exhibit 2 (the original signed Agreement of Purchase and Sale) was brought fully typed up by Mr. Palkowski (even though it is framed as a purchaser’s offer) on the second day. Mr. Palkowski allegedly prepared the document with a price of $340,000 filled in by typewriter by him even though he would not accept that price. It was only after the parties had gone back and forth and settled on $350,000 as the price that Mr. Ivancic agreed to sign.
 Suffice it to say that Mr. Ivancic’s story is entirely inconsistent with the written document he signed. It is also substantially inconsistent with each and every account he gave of the circumstances surrounding the execution of the Agreement of Purchase and Sale in affidavits and cross-examination. While Mr. Ivancic is 80 today, the events occurred when he was in his early 60’s and the affidavits and cross-examinations occurred largely in 2006 – almost ten years ago. As regards to the formation of the agreement which is at the core of this litigation, Mr. Ivancic has simply been unable to repeat the same story twice without material variations. This cannot all be attributed to age, stress, confusion or language difficulties. I simply cannot credit his story at all and do not do so.
(f) Closing of Agreement of Purchase and Sale
 I make the liberal assumption that the Agreement of Purchase and Sale was executed somewhere on or about the 18th of November. Given that the story as told on the face of the documents is denied by all parties to it, a certain degree of skepticism is in order. However, the usual sort of letters one expects to see in a lawyer’s file after an agreement of this sort do appear to arrive in Mr. Goldstein’s file late in November, so the 18th is likely a reasonable working assumption.
 TD provided its mortgage payout statement on December 4, 1996 with a payout date as at December 16, 2006. The figure was revised to $318,866.51 to reflect a smaller negotiated holdback and a closing which occurred a week later than expected (December 23, 1996). TD duly warned that it would not defer pursuing its remedies if the closing were delayed. I attribute nothing to that ritual warning.
 On December 10, 1996 Mr. Goldstein’s clerk, Mr. Rampersad, spoke to BCU to seek an agreement to lift the writ of execution.
 Mr. Rampersad’s letter provided counsel for BCU with a copy of the Agreement of Purchase and Sale and noted the sale was scheduled to close on December 16, 1996. Mr. Rampersad indicated that, after paying off TD Bank there would remain $29,000 “from which sum the vendors have offered to pay to Mutual Trust Company the sum of $25,000 in order to obtain a discharge. The vendors are offering your client the sum of $4,000 to lift their execution and then re-file.”
 The fact that this initial offer to BCU did not seek to settle the claim but merely to lift the writ long enough for closing to occur leads me to infer that BCU was never the object of the scheme. Indeed, the fact that BCU ultimately took no further action and eventually settled in 2009 (after this litigation had been commenced) leads me to conclude that BCU was never the primary object of the scheme.
 A similar offer was made to Mutual Trust by a letter of December 10, 1996 from Mr. Rampersad although of course without the feature of offering to allow the mortgage to be re-filed.
 BCU responded to the offer on December 12, 1996 raising a number of factual questions. Mr. Rampersad answered these in part on December 18, 1996 but did not satisfy BCU. A further letter seeking clarification was sent on December 19, 1996. It appears that BCU was ultimately satisfied with the responses it received as it agreed to accept the offer and permit closing to occur by a letter dated December 20, 1996.
 On December 18, 1996, Mutual Trust also responded to Mr. Rampersad’s offer and agreed to grant a discharge of mortgage against payment of $25,000.
 As a result of the delay in getting BCU and Mutual Trust resolved, the closing did not occur on the 16th as originally planned but was deferred until December 23rd. On that day, Mr. Ivancic paid $350,000 to purchase the property. The proceeds were used to pay the three creditors as indicated. The balance represented transaction fees and a small surplus returned to Mr. Palkowski and Mrs. Palkowski.
 Mr. Ivancic’s purchase price was financed as to $150,000 from his own funds and as to $200,000 by a mortgage from HSBC. The mortgage, which was rolled over from time to time, had an initial interest rate of 4.45%. It was discharged in or about 2002 and transferred to Mr. Ivancic’s home on Canterbury Drive (rolling two loans together at a lower rate). At the time of discharge, Mr. Ivancic indicated that there was about $130,000 remaining on the mortgage on Shawanaga Trail.
(g) Lease and Improvements
 There is no dispute that the plaintiffs did not in fact move out of the family home on closing on December 23, 1996. They remain there to this day.
 Mr. Ivancic claims that originally there was no discussion of the plaintiffs remaining. After the APS was signed, Mr. Palkowski suggested that they might do so. Mr. Ivancic consulted his lawyers and ultimately agreed to do so. He claims the parties agreed on a rental of $1,500 per month with the tenant being responsible for all utilities and property taxes.
 Mr. Palkowski’s version of events is quite different. I accept it. He testified that there had never been any intention of the plaintiffs moving out nor of him “renting”. Originally, he wanted to keep paying for property insurance but this could not be arranged since he would not have legal title to the house. This anecdote finds some support in the fact that Mr. Goldstein’s file contains a Mutual of Omaha insurance business card. A vendor would not normally be looking to secure insurance. He says that he agreed with Mr. Palkowski to pay $1,500 per month to cover Mr. Ivancic’s mortgage expenses. Once again, the record provides some support for this. The mortgage that Mr. Ivancic did take out ($200,000 of the $350,000 purchase price) was at an interest rate of 4.45%. On the full $350,000 this would represent a monthly cost of funds of $1,297. Allowing for the cost of home insurance, the figure of $1,500 would be a reasonable estimate of the carrying cost to Mr. Ivancic of this arrangement.
 It is common ground that there was never any rental agreement. The alleged landlord (Mr. Ivancic) never received keys at closing or ever. There was no agreement as to term or when, if ever, the “rent” might be increased. Over the next eight years at least, Mr. Ivancic made no effort to inspect the property. He did not ask to increase the “rent”. In almost 20 years – the last ten or so in litigation – Mr. Ivancic has not spent as much as $1.00 on the maintenance of his alleged asset. Not many homeowners could make that boast. In the meantime – at least until 2014 when the plaintiffs estimated Mr. Ivancic’s mortgage should have been retired – he has received approximately $315,000 in payments (the $1,500 monthly amount). He has refinanced his original mortgage at a substantially lower rate.
 Mr. Ivancic continued to see Mr. Palkowski on a more or less monthly basis. Mr. Palkowski dropped by to pay his $1,500 every month and paid in cash. Some months were missed if Mr. Ivancic was travelling and made up in subsequent months.
 Over the following years, Mr. Palkowski made numerous improvements to the property. In so doing, he alleges that he fully expected and believed that he was the beneficial owner of the property. I accept his evidence of his belief. Mr. Palkowski has provided invoices totaling $188,000 for such matters as installing hardwood flooring, building a walk-out from the basement, extensive landscaping, adding a new roof and similar matters. The invoices Mr. Palkowski provided include at least some materials and labour from his own company. The amounts of the invoices appeared reasonable to me and were not seriously challenged on cross-examination. The pictures of the completed work appear to me to fully justify the plaintiff in his claims if indeed they are not understated for failure to include the value of his own labour as a flooring contractor.
 Mr. Ivancic attempted to challenge many of these expenditures with his own evidence. The problem with his evidence – apart from the main problem that it was almost always and everywhere lacking in credibility – was that he was faced with a conundrum of reconciling 2006 affidavits and transcripts suggesting the property was in rough shape in 1996 and needed a lot of work with his 2015 statements that much of the work claimed by the plaintiffs had already been performed before 1996. His second major handicap was his complete lack of familiarity with the place having almost never seen it from the inside. His descriptions appeared all to arise from his 2006 lawyer’s visit being the only visit that I have been able to confirm he made.
 Sometime in 2004, Mr. Ivancic evidently decided that he wanted it all. He had a girlfriend of his make a call asking Mr. Palkowski not to make intended renovations to his bathroom. The call came like a bolt form the blue to Mrs. Palkowski.
 Little of what followed is particularly relevant. The parties soon began jockeying for position for litigation that eventually commenced in November, 2005.
 There was considerable debate as to when the famous phone call from Mr. Ivancic’s girlfriend was made. Mrs. Palkowski was adamant that it was in January 2005 or near to the time when legal advice was sought. Mr. Ivancic places the call six months earlier. Given the credibility of one compared to the other, I have little hesitation in accepting Mrs. Palkowski’s evidence on the point although I don’t see that anything whatever turns on the precise date. Mr. Ivancic has not lost touch with his now-former girlfriend and could have found her to testify had the issue been of major importance.
 The plaintiffs’ evidence, which I accept, was that the receipt of this call led them to seek legal advice. They were asked to arrange to bring Mr. Ivancic to Mr. Goldstein’s office to attempt to straighten matters out.
 There was a meeting arranged at Mr. Goldstein’s office with Mr. Ivancic and Mr. Palkowski. The date of the meeting is unclear, but it was in 2005 prior to the litigation being commenced.
 Mr. Ivancic’s account of the meeting is entirely without credibility. He claims that Mr. Palkowski simply wanted to make an offer to purchase the property. Although he claimed that he had bought the property to retire in (and he had been retired for many years by 2005 without taking any steps to obtain possession), he readily agreed that he would sell at a price. Strangely though, neither side disclosed a price on his telling. Mr. Ivancic allegedly went to Mr. Goldstein’s office in order to hear Mr. Palkowski’s offer. I find that quite unbelievable.
 The subject-matter of the meeting was the oral trust arrangement and that is what was discussed. Mr. Palkowski asked for his property back. Mr. Ivancic refused. Mr. Palkowski made a number of offers to make Mr. Ivancic whole which were also refused. Mr. Ivancic challenged Mr. Rampersad to provide a piece of paper to document the trust agreement they were talking about. Mr. Rampersad had believed there was such an agreement and indicated it would take some time to locate. Mr. Ivancic agreed to wait while Mr. Rampersad searched through the file.
 I find that Mr. Ivancic was unsure as to whether there was indeed a memorandum in writing of some kind and that his object to attending the meeting was to find that out – to find out how strong a hand he had to play. When he had his answer (there was none) he left.
 The plaintiffs’ claim followed this in December, 2005. The defendant moved for summary dismissal of the claim. Without following the ins and outs of the litigation record that followed, it is sufficient to summarize that the Court of Appeal ultimately upheld the dismissal of the plaintiff’s claim to enforce what was described as an express trust. Proving title to the land via an oral trust would violate the Statute of Frauds. The surviving claim of the plaintiffs was thus (i) unjust enrichment and constructive trust as a remedy; (ii) proprietary estoppel; and (iii) a claim under s.37 of the Conveyancing and Law of Property Act. I incorporate by reference at this point my endorsement of September 28, 2015, which provides more detail.
 Finally, I note that in the course of the litigation, Mr. Goldstein signed a letter dated July 26, 2006 in which he indicated that his firm was “very well aware that there was an oral trust agreement”. He was cross-examined on that letter and while disclaiming authorship (alleging the plaintiffs’ lawyer actually drafted it), he admitted to signing it after reading it and that it was true when he signed it.
 The following issues are raised by this application:
- Whose story is true?
- If the plaintiffs’ story is true, what relief are they entitled to
- Unjust Enrichment?
- Proprietary Estoppel?
- S.37 of the Conveyancing and Law of Property Act?
- Does Mr. Ivancic have any claim in respect of the loan?
- III. Analysis and Discussion
a. Whose story is true?
 I find without hesitation that Mr. Ivancic and Mr. Palkowski had an agreement between them which they intended should govern the ownership and occupation of the property. Unfortunately for the plaintiffs, that agreement is quite unenforceable as a breach of the Statute of Frauds. Given that its purpose was also to defeat at least one creditor – Mutual Trust – of its claims, there is some justice in the application of a statute of that name in these circumstances.
 Mr. Ivancic’s evidence was utterly incredible. He called no witnesses who might have corroborated his story in whole or in part. The friends who were with him when he saw the house initially, who allegedly inspected the house (if even from the outside), his ex-girlfriend who called the Palkowski’s – none of these were called and he admitted most were still available to him.
 Among the features of Mr. Palkowski’s story that I view as confirming its credibility:
- Value of the house – the uncontradicted evidence of the expert called at trial and the February 6, 2006 letter from Remax all concur that the house was worth much more than $350,000;
- Failure to List at a Lower Price – Mr. Palkowski’s creditors were circling to be sure, but there was no urgency to the point of precluding him from lowering the listing price closer to the level he had earlier been advised to list at;
- Logic of the Deal – Mr. Palkowski was able to use the leverage of an apparently arm’s length deal to negotiate a $75,000 discount from Mutual Trust. This cut his losses from the failed Hamilton venture quite substantially.
- Sham Paper Trail – the witnesses all concurred that the counter-offer and signature trail on the formally executed Agreement of Purchase and Sale did not reflect what actually happened. The inference to be drawn was that the document was drawn up to mislead an audience – in this case Mutual Trust and BCU to a lesser degree – rather than to reflect the actual agreement between the parties.
- Lack of Visits by Purchaser – I find that the defendant likely never visited the house before a litigation-supervised visit in 2006 and had minimal knowledge of the inside of the house when he allegedly purchased it for fair value in 1996.
- Suspicious leasing arrangement – Mr. Ivancic never got a set a keys, never inspected the premises after closing, never attempted to revise or raise rent and never even checked on the state of repair of the premises in at least nine years. He settled on a “rent” amount that had the tenant paying all taxes, rates and utilities directly with a “triple net” rent back to him that coincidentally covered his cost of funds and insurance almost to the penny. None of this is typical of a normal, arm’s length residential rental arrangement nor even his own practice at the rental property he did own.
- Confirmation of Multiple witnesses – the oral trust arrangement, as unenforceable (and vague in detail, lacking as it did precision on what Mr. Ivancic would receive at the end) as it was, was confirmed by credible witnesses (Mrs. Palkowski) an even by a witness whose credibility I shall refrain from commenting upon directly (Mr. Goldstein). Mr. Goldstein’s letter of July 26, 2006 has doubtless got him in no small amount of difficulty but does explicitly confirm the arrangement in principle if not in detail.
 In conclusion on this point, I have found as follows:
- The house was worth $600,000 when conveyed for only $350,000 to the defendant;
- This value – or at most a range of values near it – was known to each of the parties to this litigation at all material times;
- The intent of the transaction was to change legal ownership without changing beneficial ownership even if the parties were unsuccessful in that latter goal;
- The written agreement of purchase and sale was, and was intended to be, a sham for purposes of deceiving Mr. Palkowski’s creditors;
- If the parties had an agreement as to what Mr. Ivancic’s ultimate pay-out was intended to be, neither has seen fit to share it. While the parties were intending to share in the “upside” of the benefit to be obtained from reducing creditor demands, the details were not fully settled.
Appropriate Relief: Unjust Enrichment
 The defendant was certainly enriched to the extent of $250,000 on December 23, 2006. The surplus value of $250,000 was never intended to belong to the defendant and yet would do so if legal title alone were the determinant. There was no juristic cause for the enrichment. The authorities entitle me to use the remedy of constructive trust to enable restitution to be made: see Soulos v. Korkontzilas et al, 1997 CanLII 346 (SCC),  2 S.C.R. 217as well as my earlier endorsement in this matter at the pre-trial hearing.
 I have two options open to fashion a remedy for this. I could provide the plaintiffs with an equitable interest to the amount of $250,000/$600,000 or 41.6% of the home. That would not be an entirely fair outcome given that the plaintiffs covered virtually 100% of the defendant’s cost of funds for many years and have borne 100% of the costs of ownership since (albeit with the benefit of 100% of the rights of occupation in the interim as well).
 The relief for unjust enrichment that I am prepared to order will be $250,000 to be provided by way of a lien, an equitable lien on the house plus interest under the Interest Act at the rate of 5% from December 23, 1996 which I have calculated to be $361,609 as of the commencement of this action on November 17, 2005. I have done a number of interest calculations and all of them may be assumed to be E.&O.E. If there is an error and the parties
bring it to my attention I will correct it. I would order that this amount be a lien on the defendant’s interest in the house (applying ordinary pre and post-judgment interest from the date the action began in 2005).
Appropriate Relief: Proprietary Estoppel
 I don’t find the proprietary estoppel adds anything useful to the analysis that is not already covered by constructive trust as a remedy for unjust enrichment coupled with the application of my discretion under s.37 of the CLPA.
Appropriate Relief: s.37 CLPA
 Section 37 of the CLPA provides as follows:
37.(1) Where a person makes lasting improvements on land under the belief that it is the person’s own, the person or the person’s assigns are entitled to a lien upon it to the extent of the amount by which its value is enhanced by the improvements, or are entitled or may be required to retain the land if the Superior Court of Justice is of opinion or requires that this should be done, according as may under all circumstances of the case be most just, making compensation for the land, if retained, as the court directs. R.S.O. 1990, c.C.34, s.37(1); 2006, c.19, Sched. C, S.1(1).
 The first issue is whether the plaintiffs have made lasting improvements on the land in the belief that it is their own. I have found that the plaintiffs believed – mistakenly – that they had beneficial title to the land from 1996 through to the commencement of the litigation (if not until the point where the Court of Appeal finally ruled against them). I have also found that they made at least $188,000 in capital expenditures on the property. These sort of improvements satisfy the requirements of lasting improvements as that term was construed by Laskin J.A. as he then was in Gay v. Wierzbicki 1967 CanLII 352 (ON CA),  2 O.R. 211 (C.A.).
 S.37 provides me with two options to consider: I can provide the plaintiffs with a lien for the improvements to the extent they have improved value or I can order a transfer of the property if it is just to do subject to compensation to be paid.
 I consider the following factors: The defendant has spent exactly $0.00 on maintenance in almost 20 years. But for the expenditures by the plaintiff the property would certainly be worth much, much less than it is today.
 That being said, $188,000 in expenditures does not translate into dollar for dollar increases in value so much as it cumulatively prevents decrease in value. Indeed, this was what the appraiser was primarily getting at with his comments on the state of the house in 2011 as implying the state of the house in 1996: it was well maintained and he could tell that it had not all just been done.
 In the circumstances I find that is just and equitable to exercise my discretion to grant title to the plaintiffs. The plaintiffs cannot pick up a house that they have decorated and improved to their own personal style and taste in the mistaken belief that it was theirs. They have incurred substantial costs, including a great deal of their own labour which cannot be recovered by a simple economic analysis of the improvements in the value of the house.
 In my view, the fairest answer in all of the circumstances is to provide for title to transfer subject to compensation. What measure is fair?
- I have determined that the starting point is the fair market value of the property at the time litigation commenced on November 27, 2005. That will be the valuation date.
- The plaintiffs shall be entitled to a credit for their unjust enrichment claim for which I have ordered a lien in the amount of $361,609.60 as at November 27, 2005. Again that is subject to the interest calculations I described. If there is an error in there I will correct it.
 MR. BORG: Your Honour, is that the plaintiff or the defendant, I just want to make sure I’m keeping track.
THE COURT: The plaintiff is getting a credit but the defendant is receiving the money, so I’ll come back.
 I will start again. The compensation the defendant is entitled to receive will be the fair market value of the property as at the start of litigation on November 27, 2005, subject to the following two credits.
- A credit for the unjust enrichment lien described above, in the amount of $361,609.60, and;
- A credit for $100,000 of the $188,000 expended which I deem to be an adequate proxy for the minimum maintenance that would have been necessary over that 9 year span to maintain the value of the house without an interest component.
- I am also providing that the compensation to be payable by the plaintiffs to the defendant shall in no case be less than $506,253.42. That number has been calculated based on the same 5% Interest Act rate times the $350,000 outlay by Mr. Ivancic from December 23, 1996 until the valuation date. I am aware of the $1,500 per month paid by the plaintiff and have not for the purposes of calculation taken it into account.
- Compensation to be paid by the plaintiffs to the defendant will bear the normal pre and post-judgment interest rates (from November 27, 2005 and from today respectively).
 In my view, s.37 CLPA gives me discretion to order that which I have ordered above and the remedy of constructive trust available to me as described by the Supreme Court of Canada and the Soulos case above would provide me with substantially similar discretion. I find it unnecessary to deploy the constructive trust remedy given s.37 of the Conveyancing and Law of Property Act which is to substantially similar effect.
Claim on Loan
 There are two distinct issues in relation to the loan claim by Mr. Ivancic. Firstly, has Mr. Ivancic discharged his onus of proving that anything at all is owing? Secondly, is there any merit to Mr. Ivancic’s argument that the admittedly barred claim under the loan was somehow revived by reason of the alleged admissions given by Mr. Palkowski when cross-examined in the main action in 2006? In my view, both questions must be answered in the negative.
 Both parties admit the loan in the amount of $70,000 was advanced. Mr. Ivancic admits that it was repaid in part.
 Mr. Palkowski provided some evidence to back up his claim to have repaid at least part of the loan in cash (or via bank drafts). This claim is at least partly corroborated by his history of paying Mr. Ivancic $1,500 mortgage expenses since 1996 in cash. Both parties agree that these payments were made primarily in cash before the litigation at least. His bank book in that era shows a total of $50,000 in large debits ($20,000, 2 x $10,000 and 2 x $5,000) in April and May of 1991. Cheques – if written – are recorded as cheques and not mere debits. Mr. Ivancic produced two cheques from Mr. Palkowski that he admitted to having received in 1992. One of them was actually a bank draft in the amount of $10,000. The other was a personal cheque in the amount of $7,000. A further personal cheque from Mr. Palkowski in the amount of $2,000 from 1992 was also produced by Mr. Ivancic on which he had written a note in Croatian which he identified as meaning “Mr. Palkowski interest”. The total of these payments alleged by Mr. Palkowski and admitted by Mr. Ivancic is $69,000. Mr. Palkowski claimed the balance had been paid by approximately 1994 but with the passage of time was unable to produce the records to demonstrate this.
 Mr. Ivancic had no clear idea what had been repaid on this promissory note and I cannot accept any of his evidence on the subject. Mr. Palkowski was quite clear that this had been repaid. The evidence indicates support for Mr. Palkowski’s contention that he paid at least $69,000 by late 1992. That evidence may be lacking for the balance of the payments (or interest) is not particularly surprising. That is one of the reasons we have limitation periods.
 Mr. Ivancic had no explanation for why he had done nothing at all to collect on this alleged debt in so many years or why he would have been happy to buy Mr. Palkowski’s house (allegedly at arm’s length) in 1996 and leave Mr. Palkowski in as tenant if such a substantial debt had remained unpaid for all those years.
 I find the 1989 Loan was fully discharged by no later than 1994 as alleged by Mr. Palkowski and can find no basis to support Mr. Ivancic’s allegation that it is still outstanding.
 While my finding of fact is enough to fully dispose of Mr. Ivancic’s claim in this regard, I shall consider his allegation that Mr. Palkowski admitted the existence of this debt in 2006 and thereby revived the claim under the Limitations Act, 2002, S.O. 2002, c.23.
 The entire basis of this allegation arises from a transcript of the cross-examination of Mr. Palkowski on his affidavit of December 8, 2005 which was conducted on May 9, 2006. The affidavit had been sworn in relation to a motion for summary judgment brought by Mr. Ivancic in the main action. Mr. Ivancic’s affidavit brought up the issue of the loan and Mr. Palkowski had denied that it was still outstanding. As of that point, however, Mr. Ivancic had yet to formally commence a law suit to collect upon the alleged loan.
 In the course of the cross-examination, Mr. Skolnik for Mr. Ivancic asked whether the loan had been paid back. On two occasions Mr. Palkowski clearly and distinctly said “Yes” and claimed this had been done by 1994. When Mr. Skolnik sought to summarize the evidence, Mr. Palkowski allowed for the possibility that there may have been a small amount saying “if there was, it was a little”, later saying that “maybe” a few hundred or a few thousand dollars was still owing “because we didn’t keep track and he didn’t keep track”.
 In my view the exchange between Mr. Palkowski and Mr. Skolnik in the transcript is a very long way from an admission that anything is owing. Allowing for the possibility that a small amount might be owing due to both sides having no records does not amount to a withdrawal of his previous statement that the loan was repaid and that Mr. Ivancic agreed, never having made further demands. Factually, I cannot characterize these statements of Mr. Palkowski as any kind of admission at all. The statement is – at its highest – a less categorical denial than had previously been asserted. That sort of “admission” is nothing of the sort and does not come close to acknowledging the existence of any obligation.
 Mr. Ivancic’s claim in this regard is entirely without merit. Section 13 of Limitations Act, 2002 provides that a claim arises from the date of an acknowledgment made of a liquidated debt. However, by s.13(9) and (10) of the Act, the acknowledgment must be in writing and must be made before the expiry of the limitation period. The alleged admission in this case satisfies none of the conditions of s.13. There is no admission of liability since no stronger word than “maybe” is used. It thus fails to meet the most essential requirement of s.13(1). It was made many years following the expiry of the limitation period applicable (failing s.13(9)) and was not made in writing (failing s.13(10)). I refer generally to the decision of Emery J. in Cross Bridges Inc. v. Z-Teca Foods Inc., 2015 ONSC 2632 (CanLII) in whose analysis of s.13 of the Limitations Act, 2002 I concur.
 I dismiss the claim of Mr. Ivancic in action no. CV-06-315272PD1 with costs which I am fixing at $25,000.
 I am granting the plaintiffs judgment in action no. 05-CV-301237PD2 as follows:
- The plaintiff shall be entitled to a transfer of the property known as 2154 Shawanaga Trail, Mississauga (the “Property”) upon payment to the defendant Stipan Ivancic of the following amounts in compensation therefor:
The Fair Market Value of the Property as at November 28, 2005 LESS:
- The sum of $361,609.60; and
- The sum of $100,000.
(i) The determination of the Fair Market Value as of November 28, 2005 shall stand referred to the Master at Toronto without further order if the parties have failed to agree upon the value within thirty days of the date hereof;
(ii) The amount of compensation so determined shall be not less than $506,253 as of November 28, 2005.
(iii) The amount of compensation payable to the defendant so determined shall bear interest at the pre-judgment interest rate from November 28, 2006 until the date hereof and shall bear interest hereafter at the post-judgment interest rate; and lastly
- There shall be no order as to costs of the “main action” 05-CV-301237PD2.
Sean F. Dunphy
Released: November 19, 2015