Executive Summary: Key Legal and Evidentiary Issues

• Central issue was whether an equitable mortgage arose from Ms. Sibbald’s full financial contribution to the property’s purchase.

• No evidence was presented of a shared intention to make the property security for repayment, a legal prerequisite for an equitable mortgage.

• Ms. Sibbald admitted there was no agreement for a mortgage or security over the property.

• The Lavallees denied any undue influence and asserted the funds were a voluntary gift.

• The court found no genuine issue of material fact and granted summary judgment in favour of the Lavallees.

• Certificate of lis pendens was discharged as the claim did not establish any legal interest in the land.

Background and factual context

Jan Sibbald commenced legal proceedings against Donna and Colin Lavallee regarding the acquisition and ownership of a property located at 182 Falkenham Road, East Dalhousie, Nova Scotia (PID 55131098). In her amended statement of claim, Ms. Sibbald alleged that she was unduly influenced by the Lavallees to fund the purchase of the property, with the understanding that she would retain ownership until repayment was complete. The property was intended to be operated by Ms. Lavallee as a short-term rental (e.g., “Air B and B” or “VRBO”), with proceeds applied toward the purchase cost. The agreement was said to be both oral and written, but primarily oral.

Despite this, the Lavallees ultimately obtained sole title to the property without contributing any funds. On closing in May 2021, Ms. Sibbald paid $265,826.38 to the Lavallees’ solicitor to complete the purchase. No consideration was provided by the Lavallees. The property was never used commercially, but instead as their personal cottage. In return for the financial outlay, the Lavallees allegedly pledged to pay Ms. Sibbald $1,000.00 per month until full repayment. Only $12,000 was paid in total between October 2021 and March 2023, after which payments ceased.

Ms. Sibbald registered a certificate of lis pendens on October 11, 2023, and sought either repayment or a declaration of an equitable mortgage over the property.

Defendants’ version of events

The Lavallees denied any undue influence or wrongdoing. They claimed Ms. Sibbald voluntarily offered to gift Donna Lavallee a one-half interest in the property due to her support and friendship during Mr. Sibbald’s illness. Colin Lavallee was to obtain a mortgage to finance the other half. According to the Lavallees, there was never any discussion or agreement that the Sibbalds would have security over the property. They referred to a text from Ms. Sibbald dated March 22, 2021, stating “there will be no mortgage registered on the property.” No written or verbal agreement regarding any mortgage or charge in favour of Ms. Sibbald was made.

The Lavallees also filed a counterclaim relating to another property—185 Falkenham Road—alleging that they completed renovations with the expectation of sharing net proceeds, but that Ms. Sibbald sold it without compensating them. Ms. Sibbald denied the existence of any such agreement in her defence to the counterclaim.

Legal issues and summary judgment motion

The Lavallees moved for summary judgment to strike Ms. Sibbald’s alternative claim of an equitable mortgage and discharge the certificate of lis pendens. The court reviewed the applicable law on equitable mortgages, emphasizing that a common intention to use the property as security for a debt is essential.

Ms. Sibbald conceded that there was no evidence of any such shared intention. Her counsel argued that an equitable mortgage could arise in circumstances of unfair advantage alone, relying on the equitable maxim “equity looks on that as done which ought to be done.” However, the court rejected this broader interpretation, reaffirming that Canadian law requires a common intention to create a charge on property for an equitable mortgage to arise.

The court noted that an alternative mechanism to protect financial contributors without legal title is the purchase money resulting trust doctrine, which was not pleaded in this case.

Outcome and legal reasoning

Justice Ann E. Smith concluded that there was no evidence of a common intention to make the property security for a debt to Ms. Sibbald. The only evidence addressing this point confirmed that no such intention existed. Therefore, there was no genuine issue of material fact requiring a trial. The motion for summary judgment was granted, and the equitable mortgage claim was struck.

The court also ordered the discharge of the certificate of lis pendens, as without a valid claim for an interest in land, the registration was no longer legally supportable.

The Lavallees were awarded costs, with provision for written submissions in case of disagreement.