LUTZ v LUTZ, 2013 ABCA 159


3.2: How to start an action

Case Summary

The Appellant and Respondent were brothers who purchased a residential property together. The property was registered in Joint Title. The purchase was financed by a Mortgage co-signed by both brothers. The brothers lived together in the house for 7 years, but in 2006, one brother, Eric, moved out and stopped making payments on the Mortgage.

In 2011, the other brother, Lucas, filed an Originating Application to have the property transferred to him, as sole owner, without compensation. The Chambers Judge determined that Eric was not a joint tenant, and that he held his interest in the property as a bare trustee for Lucas. As such, the Chambers Judge held that subject to his release from liability under the Mortgage, Eric was obliged to transfer his interest in the property to Lucas without compensation. Eric appealed on a number of grounds, including that the Chambers Judge erred in making a Decision on a summary basis after determining that there was conflicting evidence on material facts which related to the credibility of the witnesses.

The Court of Appeal held that a resulting trust arises when Title to a property is in one Party’s name, but the Party is under an obligation to return it to the original Title owner because he or she gave no value for the property. The Court held that Lucas had the onus of establishing that Eric never acquired an ownership interest in the property. Although most of the facts with respect to the property were in dispute, the Parties agreed that the money to purchase the property came from a Mortgage in the name of both brothers. The Court held that this was prima facie evidence that each brother acquired an ownership interest in the property, which would defeat any presumption of a resulting trust.

Rule 3.2(2) provides that proceedings may be commenced by Originating Application only where no substantial facts were in dispute. Given the conflicting evidence before the Chambers Judge, the Court held that it could not determine whether Lucas had discharged the onus of demonstrating that Eric never acquired an ownership interest in the property. Accordingly, the Court allowed the Appeal and remitted the matter to the Court of Queen’s Bench, where it could proceed by way of a Statement of Claim or the Trial of an Issue.

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