Executive Summary: Key Legal and Evidentiary Issues

• Competing positions on whether an oral agreement created a trust making Mr. Meehan the beneficial owner despite Mr. Swartzentruber holding legal title.
• Evidentiary weight of long-term conduct, including payment of mortgage, taxes, insurance and improvements by Mr. Meehan, against the formal documents characterizing him as a tenant.
• Significance of the tenancy agreement and tenant acknowledgement: whether they reflected a genuine landlord–tenant relationship or were execution-only documents to satisfy lender requirements.
• Application of the Statute of Frauds to an alleged bare trust in land and the equity-based exception preventing the statute from being used as an instrument of fraud.
• Availability and appropriateness of imposing a constructive trust to “perfect” the parties’ intentions versus resorting to unjust enrichment and quantum meruit.
• Determination of equitable relief requiring Mr. Meehan to reimburse the respondent’s property-related costs and down payment with portfolio-rate interest as a condition of conveyance, rather than awarding a quantified lump-sum damages judgment.

Background and parties

This case arises from a family-related property arrangement involving the applicant, Gary Paul Meehan, and the respondent, his brother-in-law, Jeffrey Scott Swartzentruber. The property at issue is a residence municipally known as 15 Windham East Quarter Line Road, Simcoe, Ontario. Mr. Meehan could not qualify for a mortgage in his own name, so he relied on Mr. Swartzentruber and later on friends to hold legal title while he occupied and financed the property. Over time, the relationship between the parties deteriorated, particularly after the death of Mr. Swartzentruber’s wife (Mr. Meehan’s sister) and as the property value appreciated. The central dispute became whether Mr. Meehan was merely a tenant with no equity or the true beneficial owner entitled to the property’s equity.

Initial acquisition and beneficial ownership arrangement (2012–2017)

In October 2012, Mr. Meehan agreed to purchase the property for $187,000 but was unable to secure mortgage financing. The agreement of purchase and sale was amended to show Mr. Swartzentruber as the buyer and mortgagor. The down payment of $47,000 came from Mr. Meehan’s parents, recorded as a “gift” to Mr. Swartzentruber for lender purposes, but in substance it was advanced for Mr. Meehan’s benefit. Mr. Swartzentruber did not pay the down payment, legal fees, or land transfer tax. Mr. Meehan moved into the home, paid all expenses associated with ownership either directly or by reimbursing Mr. Swartzentruber, and undertook improvements to the property. Both parties accepted that in this first period, legal title was held by Mr. Swartzentruber as trustee for Mr. Meehan, who was understood to be the beneficial owner and was to receive the net proceeds on sale or take title when he or his children could qualify for a mortgage.

Transfer to friends as trustees for Meehan (2017–2018)

By 2017, during his wife’s serious illness and before her death in October 2017, Mr. Swartzentruber no longer wished to remain on title. At Mr. Meehan’s direction, the property was transferred on May 30, 2017 to two friends of Mr. Meehan, Bente Jensen and Peter Bever, for $180,000. Mr. Swartzentruber received none of the sale proceeds and did not bear the legal fees on the transfer. Mr. Meehan’s mother, who managed his finances, received about $60,000 in proceeds on his behalf, which were applied to his business debts. Mr. Meehan stayed in the residence, continued to pay expenses, and believed the friends were similarly holding the property beneficially for him. Although the terms of this interim period were not fully detailed, the judge found they were consistent with Mr. Meehan being the beneficial owner while others held legal title.

Re-transfer to Swartzentruber and the formal tenancy documents (2018 onward)

At Mr. Meehan’s request, the property was re-transferred from his friends back to Mr. Swartzentruber in August 2018 for $197,000, a figure Mr. Meehan believed to be below market value at the time. For this second ownership period, Mr. Swartzentruber funded a down payment of $42,512.03 and again became the mortgagor. Mr. Meehan’s evidence was that the arrangement mirrored the first period: he remained the beneficial owner, would continue to live in and pay for the property, and on eventual sale or transfer he would receive the equity, while Mr. Swartzentruber would be repaid his down payment with interest calculated at the rate earned on the respondent’s investment portfolio. In contrast, Mr. Swartzentruber claimed that, after his wife’s death, he no longer agreed to hold the property as a favour and intended to own it outright, with Mr. Meehan as a long-term tenant who might provide him with equity upside on sale.

To satisfy the lender when the property was re-conveyed in 2018, a tenancy agreement dated September 1, 2018 and a tenant acknowledgement dated August 20, 2018 were signed. Related closing documents from the friends referred to Mr. Meehan as tenant, showed rent at a stated amount, and allocated utilities to the tenant. Mr. Meehan, however, testified that these documents were executed solely to enable financing and did not reflect the actual arrangement. He acknowledged that the statements in the tenancy documentation were not literally true but described the forms as the easiest way to show the lender that he, not Mr. Swartzentruber, would cover the mortgage-related payments. Mr. Swartzentruber, by contrast, relied heavily on these documents to support his position that the relationship was landlord–tenant. The court examined the surrounding conduct. Mr. Meehan continued to live in the property, paid mortgage, tax and insurance amounts rather than a fixed rent, did not receive or request rent receipts, and made significant improvements at his own cost (including a roof, siding, and kitchen cabinets). Mr. Swartzentruber did not declare rental income on his tax returns on the basis that the arrangement was effectively “break-even.” These facts supported the conclusion that the parties were operating on a trust/beneficial ownership model rather than a conventional tenancy.

Text messages and evolving expectations about transfer and equity

From 2023 onward, the parties exchanged text messages about mortgage renewal and the transfer of the property to Mr. Meehan or his daughter. In March 2023, Mr. Meehan referred to ideas for paying off the mortgage, putting the house in his children’s names, and making sure there would be “some equity” for Mr. Swartzentruber, consistent with a beneficial ownership in Mr. Meehan with a defined equity component reserved for the respondent. Later that year, Mr. Swartzentruber acknowledged the impending mortgage renewal and referred to Mr. Meehan’s plan to have his children take over the mortgage, and both men discussed the need for mortgage and property tax statements to facilitate those plans. In July 2023, when a six-month open mortgage was suggested, Mr. Swartzentruber mentioned that his ability to buy a different property was constrained because the Simcoe property remained in his name. Mr. Meehan responded with a written commitment to have everything “changed over” by the end of August and later described a detailed plan for assuming the mortgage and getting the property off the respondent’s “books,” while ensuring that the respondent would be “whole.” None of these discussions included any assertion that Mr. Swartzentruber was now the beneficial owner or that Mr. Meehan would be required to pay him full fair-market-value equity.

Shift in position and commencement of litigation

In August 2024, for the first time, Mr. Swartzentruber took the position that he was entitled to sell the property and keep the net proceeds on the basis that Mr. Meehan had always been a tenant with no equity. He admitted that this shift coincided with receiving advice from realtors, mortgage specialists and his lawyer that he was being “bamboozled and hoodwinked,” particularly in light of the significant appreciation in the property’s value since 2018. At that point, the property’s value was estimated to have more than doubled, meaning that the equity at stake was substantial. This change in stance produced the present application, in which Mr. Meehan sought a declaration that the property was held in trust for him and, in the alternative, damages based on unjust enrichment or breach of contract.

Key factual findings on the nature of the relationship

The court accepted that in the first ownership period (2012–2017) both parties understood that Mr. Swartzentruber held legal title in trust for Mr. Meehan. The transfer to the friends and their period of ownership were found to be broadly similar, with the friends effectively holding for Mr. Meehan’s benefit. With respect to the second period of Swartzentruber ownership (from 2018), the judge considered that the pattern of arrangements, the flow of funds, and the parties’ communications all strongly resembled the earlier trust-based structure. Crucially, the judge rejected the notion that the 2018 arrangement was fundamentally different in nature. There was no contemporaneous documentary or oral evidence that Mr. Swartzentruber had communicated an intention to own beneficially in his own right. The court found it more likely that he only asserted beneficial ownership in 2024 after receiving advice that the prior arrangement put him in a financially unfavourable position. The tenancy agreement and tenant acknowledgement were found to be executed primarily to meet lender requirements for a non-owner occupant. The actual payment pattern—variable amounts targeting mortgage, tax and insurance obligations rather than a fixed rent—and Mr. Meehan’s assumption of improvement costs supported the view that the true understanding was that Mr. Meehan was the beneficial owner, not a mere tenant. The judge therefore found that, in both the first and second periods when Mr. Swartzentruber was on title, the parties did not regard themselves as landlord and tenant. Instead, there was an oral agreement under which Mr. Meehan was the beneficial owner, with legal title held in Mr. Swartzentruber’s name to facilitate financing.

Trust law issues and the Statute of Frauds

Legally, Mr. Meehan argued for either an express bare trust or a constructive trust. A bare trust, as an express trust, requires capacity, the three certainties (intention, subject-matter and beneficiaries), proper constitution (transfer of trust property to the trustee), and compliance with formalities such as those in the Statute of Frauds. The court was satisfied that capacity and the three certainties were present: the property was clearly identified, Mr. Meehan was the sole intended beneficiary, and there was a common understanding that Mr. Swartzentruber would hold title for Mr. Meehan’s benefit when the property was acquired in both 2012 and 2018. Legal title was duly transferred to the respondent in each case at Mr. Meehan’s direction. However, section 11 of the Statute of Frauds requires that “grants and assignments” of trusts in land be in writing signed by the grantor or settlor, failing which they are void and of no effect. Because there was no written and signed trust agreement, a strictly defined bare trust over land could not be enforced as an express trust.

Constructive trust and the “instrument of fraud” exception

The court then turned to constructive trust principles, including the rule that the Statute of Frauds does not defeat trusts that arise by operation of law. Canadian jurisprudence recognizes constructive trusts in multiple settings, including wrongful acquisition of property, unjust enrichment, and what some scholars describe as “perfectionary” situations—where equity enforces parties’ stated intentions to prevent one party from reneging and using formalities as a weapon. A long-established equitable principle is that the Statute of Frauds cannot be used as an instrument of fraud. Where a person takes legal title to land knowing that it is to be held on trust for another, equity will not permit that person to invoke the statute to keep beneficial ownership for themselves. The judge relied on recent Ontario authorities applying this exception, which emphasize that if the transferee knows at the time of conveyance that they are to hold as trustee for another, they cannot afterwards rely on the absence of writing to deny the trust. Applying this framework, the court found that in both ownership periods, Mr. Swartzentruber knew that title was being placed in his name to hold for Mr. Meehan’s benefit. Allowing him to rely on the Statute of Frauds to deny the trust, particularly after years of performance consistent with that understanding, would be inequitable. The court therefore imposed a constructive trust over the property in favour of Mr. Meehan, effectively “perfecting” the oral trust arrangement while sidestepping the statutory writing requirement that applies to express bare trusts in land.

Unjust enrichment as an alternative claim

As an alternative, Mr. Meehan advanced a claim for unjust enrichment, pointing to his payment of mortgage, taxes, insurance and substantial improvements, and sought damages equivalent to the full equity in the property. Mr. Swartzentruber argued that, at most, any recovery should be limited to a quantum meruit–type compensation for expenditures and services. Because the court concluded that a constructive trust was available and appropriate, and explicitly declared Mr. Meehan’s beneficial ownership and right to conveyance, it found it unnecessary to analyze or determine the unjust enrichment claim or the proper measure of monetary relief under that doctrine. No separate unjust enrichment damages award was therefore made.

Relief granted and financial consequences

The principal relief granted was declaratory and proprietary rather than a simple money judgment. The court declared that Mr. Meehan is the beneficial owner of the property and that a constructive trust exists in his favour. It further declared that he is entitled, on demand, to require that the property be conveyed to him. That conveyance, however, is conditional on Mr. Meehan reimbursing Mr. Swartzentruber for his out-of-pocket financial exposure as legal owner. Specifically, at the time of transfer, Mr. Meehan must pay all costs or debt obligations incurred by Mr. Swartzentruber arising from his ownership, including any costs of transfer and the $42,512.03 down payment, together with interest on that down payment calculated at the rate earned in the respondent’s investment portfolio from August 30, 2018 to the date of judgment. The judgment leaves the exact interest amount and any calculation disputes to be addressed between the parties, with the option of a case conference if they cannot agree. Because the constructive trust and conveyance declarations resolve the dispute, the judge found it unnecessary to address damages for unjust enrichment. The issue of litigation costs is reserved for later written submissions; no costs figure is ordered in the reasons. In outcome terms, the successful party is the applicant, Mr. Meehan. He obtains recognition of his beneficial ownership and the right to compel transfer of the property, but he must first reimburse the respondent’s documented property-related costs and the down payment with portfolio-based interest. The total monetary amount in his favour is therefore not expressed as a fixed award of damages or costs, and the judgment does not quantify an overall dollar sum ordered or granted.