COURT OF APPEAL FOR ONTARIO
DOHERTY, FELDMAN and LaFORME JJ.A.
IN THE ESTATE OF NIELS MICHAEL MADSEN, deceased
B E T W E E N :
MARY ELIZABETH SAYLOR and WILLIAM ANTHONY MADSEN
Robert Cohen, for Mary Elizabeth Saylor and William Anthony Madsen
Plaintiffs (Respondents)
- and -
PATRICIA ANN BROOKS, Estate Trustee
Joel Skapinker, for Patricia Ann Brooks
Respondent (Appellant)
AND BETWEEN
MARY ELIZABETH SAYLOR and WILLIAM ANTHONY MADSEN
Moving Party (Respondents)
- and -
ROBERT ACKERMAN
Sean Cumming, for Robert Ackerman
Responding Party (Appellant)
Heard: June 30, 2005
On appeal from the judgment of Justice Francine E. Van Melle of the Superior Court of Justice dated November 23, 2004 and from the motion dated May 4, 2004.
H.S. LaFORME J.A.:
1These are two appeals that were heard together because of the close relationship between them. In what I will for the moment call the main appeal, this court is called upon to consider the application of the two equitable presumptions of advancement and resulting trust to a joint account. The second appeal involves rulings made by the trial judge in connection with accounts for professional services and costs orders regarding then counsel of record for Patricia Ann Brooks.
OVERVIEW
2The respondents are the sister and brother of Ms. Brooks who was named executor by their late father.
3Litigation was commenced by the respondents by way of application in September 2001. The appellant, Ms. Brooks was named in the application as respondent in her capacity of estate trustee only. In that application, the respondents sought an order requiring Ms. Brooks to account for the property of their deceased father; for division of the property in accordance with the will; and for an injunction requiring her to pay all estate monies into court. Ms. Brooks issued a counter application on February 11, 2002 solely in her capacity as estate trustee seeking an order for directions from the court. The application was returnable on February 13, 2002.
4The parties entered into a consent order in which Ms. Brooks was required to pay the amount in the estate account, $365,000.00, to her lawyer, Mr. Ackerman, who was to hold such funds pursuant to a handwritten undertaking agreed to by the parties. It was also ordered that the application was to be converted to an action. The statement of claim was issued on August 22, 2002 and Ms. Brooks was named as defendant both in her personal capacity and as estate trustee.
5The late father had transferred all of his bank accounts and investments into the joint names of himself and Ms. Brooks approximately seven and one half years before he died. At the time of his death he owned his interest in these joint accounts, a life insurance policy and real property in Mississauga, Ontario. Additionally, Ms. Brooks, as estate trustee, alleged that the respondent sister owed the estate $35,900.00 and the respondent brother owed $26,360.00 to the estate, which they had borrowed from their late father and sought an order for payment.
6The trial judge gave judgment allowing the claim that the funds contained in the bank account and certain investments held jointly by Ms. Brooks and her late father formed part of the estate. The trial judge also found that Ms. Brooks had breached her fiduciary duty by failing to include the joint accounts in the estate, but did not award damages; rather, Ms. Brooks was required to make restitution to the estate. Ms. Brooks' compensation as estate trustee was fixed. The trial judge dismissed the counter-claim and held that the sum paid by the estate to Mr. Ackerman for Ms. Brooks' legal fees was to be repaid to the estate, either by Ms. Brooks or by Mr. Ackerman. The determination of costs was then made on May 3, 2005 and Ms. Brooks was, in her personal capacity, ordered to pay the respondents’ costs fixed in the amount of $120,000.00.
7That judgment is being appealed by Ms. Brooks, and while I referred to it above as the main appeal, I will set it out below under the heading"The Brooks Appeal".
8Directly related to the estate proceedings, in mid trial, the respondents brought a motion against Mr. Ackerman, seeking payment into court of funds taken by that counsel from estate funds he was holding in trust. The trial judge found that the funds had been improperly taken and ordered Mr. Ackerman to pay $175,216.73 into court. In her May 3rd ruling on costs, the trial judge ordered Mr. Ackerman to pay costs of certain motions and awarded him $25,000 for his estate representation. I will say more about this later. Mr. Ackerman appeals those orders, and his appeal and that of Ms. Brooks were heard together. I will refer to Mr. Ackerman's appeal of those orders as "The Ackerman Appeal".
THE BROOKS APPEAL
9Ms. Brooks argued that the trial judge erred by failing to apply the presumption of advancement in determining whether her father gifted the joint accounts to her or whether they were meant to form part of his estate. Alternatively, she argues that if the presumption of resulting trust were to apply instead, she adduced ample evidence to rebut that presumption. Finally, she argues that the trial judge erred in finding that the estate’s claims for funds allegedly owed to the estate by the respondents were statute barred, as the respondents failed to raise this issue in their pleadings.
10In May 1991 the father, who died December 5, 1998, made Ms. Brooks the joint signatory on his bank accounts, which provided for a right of survivorship. In September 1997 the joint accounts were closed and the funds deposited into an investment account, which again was a joint account with Ms. Brooks and had a right of survivorship.
11The issue is whether the father intended to make a gift of that money to Ms. Brooks or whether he intended to remain the beneficial owner of it. If it was a gift, Ms. Brooks will take it outside of the will. If it was not a gift, and the father remained the beneficial owner, the money will form part of his estate.
ANALYSIS
12Much of the analysis of the trial decision focused on determining the appropriate presumption to apply to the transfer of the accounts. Although I do not find the presumptions necessary in order to determine the intention of the parties in this case, I will nonetheless start with an examination of the relevant presumptions.
The Presumptions
13As a starting point it is important to remember that: Equity does not assume a gift; rather, a donee is required to prove that a gift was intended: Waters’ Law of Trusts in Canada, 3d ed. (Toronto: Carswell, 2005) at 362 [“Waters”]. From this tenet two equitable principles have evolved: the presumption of resulting trust, and advancement. The trial judge in this case held that:
[I]t is time for the presumption of advancement from father to child to be abandoned in favour of the presumption of resulting trust in all but the most limited cases. I agree with the views of Heeney J. [in McLear v. McLear, [2000] O.T.C. 505 (S.C.J.)] that because the presumption of advancement was historically grounded in relationships of dependency, then logically it should apply equally to mothers and fathers with respect to dependent children but should not apply to either mothers or fathers in situations where the recipient children are independent adults. (para. 24)
14Generally speaking, and in the context of this case, a resulting trust is presumed where a person makes a gratuitous transfer of property into another person's name, or into the joint name of him or herself and another. There is then a presumption that the transferee intended to transfer legal title, but retain beneficial title. This presumption may be rebutted by evidence showing that the transferor intended a gift.
15The presumption of advancement is somewhat different. Historically the presumption of advancement arose in the limited circumstance where a male person transferred property into the name of his child or his wife. In these circumstances it was presumed that a gift was intended, unless there was evidence to the contrary: see Waters, supra.
16In Ontario, s. 14 of the Family Law Act, R.S.O. 1990, c. F.3 mandates that the presumption of resulting trust be applied to questions of the ownership of property between spouses. However, if property is held in each of the spouses' names as joint tenants, or if money on deposit is in the name of both, that is sufficient to prove joint tenancy, unless there is evidence to the contrary. In Cho Ki Yau Trust (Trustees of) v. Yau Estate (1998), 29 E.T.R. (2d) 204 at para. 27 (Ont. S.C.), Cullity J. describes the law in Ontario:
[T]he presumption of advancement…in this jurisdiction has been preserved for this purpose [i.e. where a bank account is held in the name of both spouses] by the provisions of section 14 of the Family Law Act….
17Thus, the general rule in this province, at least as it relates to transfers of property between spouses, is that the presumption of resulting trust will apply, except where property is held in both names. Where property is held jointly, the written record - subject to rebuttal by evidence - proves the presumption of advancement to the contrary.
18Where, however, a parent transfers property into a child’s name, or into both of their names, the application of the presumption of advancement is less clear. And, as I will demonstrate below, while there is some debate surrounding the presumptions of advancement and resulting trust, the presumption of advancement might still apply in situations where a parent transfers property into the name of a child, or into their joint names.
19While it seems clear that the presumption of advancement applies to transfers from a father to a child, the jurisprudence is conflicted about whether it applies to transfers between a mother and child: see for example Edwards v. Bradley, 1957 17 (SCC), [1957] S.C.R. 599. This case, given the facts, does not require that I enter into this debate. It is sufficient for my purposes to say that, at least between father and child, “the presumption appears to retain much of its original vigour”: Waters, supra, at 381.
20As well, there is some jurisprudence that suggests the presumption of advancement would not apply to a transfer from a parent to an independent adult child: McLear v. McLear, supra. More recently, however, the Alberta Court of Appeal held that the presumption of advancement did apply in a transfer of assets from a father to his adult son: Plamondon v. Czaban (2004), 2004 ABCA 161, 348 A.R. 103.
21There have been other decisions that have disagreed with the suggestion in McLear, supra, and have instead grounded the presumption of advancement on parental affection, not on financial dependence: see for example Re Dagle (1990), 1990 2646 (PE SCAD), 70 D.L.R. (4th) 201 (P.E.I.S.C. (A.D.)); Christmas Estate v. Tuck, (1995), 10 E.T.R. (2d) 47 (Ont. Gen. Div.); and Yau, supra. This seems to me to be a reasonable and sensible approach. Therefore, the presumption of advancement can still apply to transfers of property from a father to a child, including an independent adult child.
22For the reasons just stated then, the trial judge was incorrect in applying the law of resulting trust and should have applied a presumption of advancement - if indeed, as I explain below, she was required to consider either.
23While the debates surrounding the application of the presumption of advancement are interesting and important, they are not necessary to resolve the issue in this case. Here, the intention of the parties at the time of transfer is demonstrated on the evidence.
The Role of the Presumptions
24Reliance on the presumptions has diminished because the courts are now first examining all the evidence to determine the transferor’s intent. That is to say, courts are tending to examine the evidence in its entirety, and base findings regarding intention on all the facts. It will only be where the evidence itself is unclear that reliance on the presumptions becomes necessary.1 Cullity J., in Yau, supra, demonstrates this approach wherein he states that the overall aim is to discern the intention of the transferor:
[T]he historical origins of the equitable presumptions are generally ignored and their justification is most commonly found in the extent to which they reflect, and correspond with, the more likely intentions of a transferor or purchaser. The relationship that is said to give rise to a presumption of advancement “is no more than a circumstance of evidence which may rebut the presumption of resulting trust” [footnotes omitted] (para. 37).
25This approach reflects what I believe to be a sensible and modern approach to an analysis of the presumptions. I take comfort in knowing that other knowledgeable jurists and scholars also share this view: see Dredger (Litigation Guardian of) v. Dredger (1994), 1994 16643 (MB CA), 5 E.T.R. (2d) 250 (Man. C.A.); Cooke v. Cooke Estate (2005), 16 E.T.R. (3d) 108 (B.C.C.A.). Indeed, my colleague, Gillese J.A. in Essentials of Canadian Law: The Law of Trusts (Irwin Law: Concord, 1997), advocates the approach that there is no need to resort to the presumptions where evidence of intention is clear. This approach is both contemporary and reasonable since the overall purpose is, after all, to ascertain the transferor’s intention.
Intent at the Time of the Transfer - The Bank Accounts
26It was forcefully argued – and I think with some persuasion - that the uncontested evidence of bank documents establishes joint accounts as being per se evidence of intent to gift. This, it might be said, taken together by way of analogy with the above-referenced law in Ontario, as it exists with respect to spouses and as clarified in s. 14 of the Family Law Act, demonstrates a clear intention to advance a gift to Ms. Brooks.
27Bank documents can be strong evidence of a party’s intention at the time the parties signed them. I do not, however, agree that the bank documents should be assigned presumptive value when trying to determine a party’s intention. The probative value of such documents, like any other relevant evidence, can only be ascertained after an assessment of the totality of the relevant evidence. As this case demonstrates, the document does not always provide accurate evidence of the parties’ intent.
28A judicially created presumption, which places documents at the top of the evidentiary ladder, may bring some predictability to the factual question of a party’s intention, but it will do so, in my view, at the expense of the fact finding process. Triers of fact routinely determine questions of intention without any judicially created presumptions. I am confident that they can do so where bank documents constitute part of the evidentiary picture.
29In this case, the trial judge specifically addressed the evidentiary value of the bank documents. She found that "[t]he joint account agreement is not determinative of the relationship between [the deceased] and [Ms. Brooks]". In doing so she relied on Vokey v. Vokey Estate (1997), 1997 14698 (NL CA), 149 Nfld. & P.E.I.R. 1 (Nfld. C.A.) where, in connection with documents stipulating that funds were to be held as joint property with survivorship, that court held that the terms"cannot be viewed as supporting rebuttal of the presumption of a resulting trust in favour of the deceased's estate" (para 26).
30She also relied on Re McKenna Estate (1994), 1994 18986 (NS SC), 134 N.S.R. (2d) 218 (Prob. Ct.), following the Supreme Court of Canada decision, Niles v. Lake, supra, that quoted the head note of Niles at p. 248 as follows:
The bank form, although it may have indicated a joint tenancy by way of beneficial interest, merely defined the relationship between the holders of the account and the bank and, even though it was under seal, it could not be deemed decisive as to the relationship between A and B inter se.
31The more recent bank agreements provide for a right of survivorship so it can no longer be said that the documents do not define rights as between the joint account holders. However, there is no reason to treat the documents as dispositive of the actual relationship between the parties. Documents remain a piece of evidence – perhaps a very important piece of evidence – going to the intention of the parties who created the document. Nevertheless, the weight to be assigned to such documents in any given case must be left to the trier of fact.
The Approach to Joint Accounts2
32By way of summary then, I would approach the issue of the joint accounts in this case as follows. First, the court should have evaluated the whole of the evidence, including the bank documents, to determine whether there was a clear intention at the time of the transfer on the part of the late father to gift the joint accounts to Ms. Brooks. Second, if, the intention of the late father remained unclear after this evaluation, then the court should have resorted to an analysis of the application of the presumptions of advancement or resulting trust. Indeed, this was the method of analysis in Yau, supra, wherein Cullity J. concluded that the bank agreement was the only reliable evidence before him and thus the presumption of advancement applied.
Application to this case
33In applying the just-stated principles to the case at bar, the evidence at trial established that in 1991 the father made his bank accounts joint accounts with the appellant. In 1994 he executed new powers of attorney in favour of the appellant. Then in 1997 all of the joint bank accounts were transferred into two new joint accounts. On the evidence of Ms. Brooks, from 1991 on, her father was in control of his finances. In this regard, he claimed all the interest from the joint accounts for tax purposes. Further, during her father's lifetime, she never deposited any of her own money into the accounts and she only drew cheques on her father's directions. Finally, she testified that there was some discussion she had with her father where he suggested that he might remove her from the joint accounts if he were to remarry.
34The evidence relevant to the execution of the bank documents more than supports the trial judge's findings and demonstrates the correctness in her assessment of the persuasiveness of this evidence. In this regard, the trial judge found that:
The deceased had sole control over the money in the joint accounts during his lifetime and it was used solely for his benefit. Ms. Brooks herself testified that, she "would follow his instructions regarding the money in the accounts and that the investments with CIBC Wood Gundy were done with the knowledge, consent and agreement of [the deceased]”. As further evidence of this finding, a letter written to the respondents’ solicitor by Ms. Brooks' former counsel stated that, “[the deceased] was in full control of his assets until the time of his death. Ms. Brooks did not assume any control or management of [the deceased's] estate and was merely acting at his discretion in assisting him to carry on his personal accounts.”
The deceased was the one who declared and paid income tax on the money in the joint accounts.
35Significantly, the trial judge plainly did not believe much of Ms. Brooks' evidence. She found that Ms. Brooks “was evasive and gave conflicting evidence, [and,] she purposely misrepresented events.” The trial judge in my view had ample evidence on which to base her skepticism with respect to Ms. Brooks' evidence. For example, she cites:
The fact that Ms. Brooks allegedly went to her former solicitor’s office and may have stolen his file on this matter.
The fact that Ms. Brooks testified that a colleague of her former solicitor forced her into signing an affidavit that contained statements that she claims were untrue. The trial judge clearly believed the solicitor’s evidence that he spent quite a bit of time going over it with her, and that she signed it voluntarily.
Uncorroborated allegations that her brother physically abused their mother and his first wife, and that he physically assaulted his father on one occasion.
36Importantly, the trial judge did not simply believe the respondents’ evidence in its entirety and disbelieve Ms. Brooks'. In fact, she finds that:
There is no question that at trial, the parties to this action all gave evidence designed to support his or her version of events. I am sure that Anthony [the respondent son of the deceased] and Betty [the respondent daughter of the deceased] left out certain incidents and skewed events to put themselves in the most positive light possible. However, I do not believe that they purposely misrepresented events that had occurred. (para. 49)
37As I noted above, the trial judge found the opposite was true with respect to Ms. Brooks' evidence. The respondents testified that their father put the bank accounts in both Ms. Brooks' name and his own purely for convenience. They also testified that their father treated all of them equally.
38A finding that the depositor is the beneficial owner generally depends on evidence that the depositor’s intention was to permit an account to be operated by the other party solely for the convenience and benefit of the depositor. Based on the findings of fact by the trial judge, this is such a case. While Ms. Brooks had access to the funds, it was only to administer her father’s finances; it was not for the purpose of Ms. Brooks’ spending money on herself.
39Ms. Brooks gave evidence that she never deposited any of her own money into the joint accounts and she never withdrew money except in accordance with her father's directions. Absent evidence that both parties made withdrawals for their own benefit, which is not present in this case, the facts as found by the trial judge establish that beneficial joint ownership was not intended. The presumption of advancement therefore is not triggered.
40In the final analysis, regardless of whether the trial judge applied a presumption of advancement or a resulting trust, it is evident from her detailed reasons that she carefully weighed all of the evidence before arriving at the conclusion that at the time of transfer the joint bank account and joint investments were not intended as gifts, but rather were intended to be included as part of the estate. Specifically, she found there was “no evidence to support [Ms. Brooks'] position that [the deceased] intended to gift the contents of his joint accounts to her.”
41In sum, there is simply no basis upon which this court should interfere with the trial judge’s factual findings and conclusions on this issue.
42Finally, I would set aside the trial judge’s finding that Ms. Brooks was in breach of her fiduciary duty by failing to include the joint accounts as estate assets. The trial judge did not provide any analysis or reasons for her findings on this issue. Moreover, the litigation was to determine the intention of the father, and Ms. Brooks defended the action on that basis. It was unnecessary to the trial judge’s ultimate decision, including the appropriate remedy, to decide the issue of any breach of fiduciary duty
The Loans
43Finally, Ms. Brooks argues that the trial judge erred in finding that the estate’s claims for the loans allegedly owed by the respondents were statute-barred. She submits that the respondents failed to raise this as a defence at trial, and therefore the trial judge was precluded from relying on it.
44Even if the trial judge should not have considered it because the Limitations Act was not pleaded, she had an entirely independent basis for deciding the matter as she did. The trial judge clearly stated that, even if the collection of the loans was not statute-barred, she was “not satisfied” that Ms. Brooks had “successfully established that the Promissory Notes [were] outstanding and were meant to be repaid to the estate.” Again, there is no basis on which this court should interfere with this factual finding.
45Accordingly, the Brooks' Appeal is dismissed.
THE ACKERMAN APPEAL
46On April 30, 2004 the trial judge made rulings respecting three mid-trial motions. One was in connection with a previously referenced motion, where the trial judge merely reaffirmed her order given on April 8th, namely, that any estate funds held by Mr. Ackerman were to be paid into court, and that he was to account for the balance. The second was regarding Mr. Ackerman's motion to be removed as counsel of record. And, the third was in connection with a motion brought on behalf of Ms. Brooks’ children, who had asked that a mistrial be declared because they, and the other beneficiaries, had not been made parties to this action.
47As I noted at the outset, prior to the commencement of this trial, the parties had entered into a consent order that required Ms. Brooks to pay the amount that was in the estate account, namely, $365,000.00, to Mr. Ackerman. Mr. Ackerman was to hold such funds pursuant to a handwritten undertaking agreed to by the parties. From this estate account, Mr. Ackerman had unilaterally paid himself legal fees for the ongoing litigation. His contention was that he was entitled to such fees in accordance with the language of the undertaking.
48Pursuant to a motion brought by the respondents in mid-trial, the trial judge found that the funds had been improperly taken and ordered Mr. Ackerman to pay $175,216.73 into court. The trial judge disagreed with Mr. Ackerman's interpretation of the undertaking. Mr. Ackerman immediately appealed the mid-trial order causing a stay of the order. Thus, the funds have not been paid into court. They remain in Mr. Ackerman's trust account, and he claims on this appeal that he is entitled to at least some of them as reasonable compensation for work done on behalf of the estate.
49In her reasons for costs issued on May 3, 2005, the trial judge ordered Mr. Ackerman to pay the entire amount of Mr. Blackadder's account for the second of the three motions argued on April 30, 2004. Mr. Blackadder acted as counsel for the respondents on that particular motion, because the respondents’ regular counsel had filed an affidavit. Regarding the costs sought against Mr. Ackerman, the trial judge held:
I see no reason why he should not pay Mr. Blackadder’s entire account, which I find to be eminently reasonable for the work that he did on the motion. He should also pay something towards the motion on April 8, 2004. I fix costs against Mr. Ackerman in the amount of $6,500.00. (para. 41)
50The trial judge indicated earlier on in her reasons – and I think correctly - that Mr. Ackerman was only required to pay the costs of the motion where the respondents sought the remitting of the estate’s funds into court. As noted, three motions were heard on that date, and it is clear that Mr. Blackadder’s account related to all of the motions heard that day. Thus, in ordering Mr. Ackerman to pay the entire amount, the trial judge effectively ordered Mr. Ackerman to pay for the costs of the work done on motions unrelated to the one for which he was ordered to pay.
51Costs are normally awarded on a partial indemnity basis and the trial judge did not conduct an analysis as to whether substantial indemnity costs should have been awarded. Despite this, she ordered Mr. Ackerman to pay the entire amount of Mr. Blackadder’s account. The trial judge provided no reasons for departing from the normal rule of awarding costs on a partial indemnity scale. Her reasons for awarding substantial indemnity costs appear to relate only to the costs awarded against Ms. Brooks. There are in effect no real reasons provided by the trial judge for awarding substantial indemnity costs. Accordingly, this part of Mr. Ackerman's appeal is allowed.
52Mr. Ackerman should only have been responsible for costs in connection with the payment into court motion, and then only on a partial indemnity scale. In his factum Mr. Ackerman submits that an appropriate amount would be $3,000 and I agree with that amount.
53As regards Mr. Ackerman's claim for costs payable out of the estate for the proper estate expenses, the trial judge held that, an appropriate amount was $25,000 inclusive of fees, disbursements, and G.S.T. Furthermore she found no reason to award an amount payable from the estate for the issuance and prosecution of the Counter-Claim.
54With respect to this issue, all parties generally agree that the mid-trial ruling of the trial judge is no longer of any consequence. Rather, they accept that the real issue is whether the trial judge properly held that Mr. Ackerman's reasonable entitlement was $25,000. I think this concession is correct.
55In reaching the conclusion that $25,000 was the appropriate amount to be paid out as the proper expenses of the estate, the trial judge gave virtually no reasons for settling on this amount. Furthermore, she provided no reasons for not allowing any amount referable to the counter-claim, which was clearly brought on behalf of the estate and related to the loans to the respondents. It was apparent that the counter-claim was not without merit.
56In addition, the trial judge was in error when she treated Mr. Ackerman's claim for reasonable compensation for estate work as though it were a claim by a lawyer for costs from an opposing party. In fact, Mr. Ackerman was claiming reasonable compensation from his own client, and the factors referable to that claim should have guided the trial judge's assessment. Accordingly, this aspect of Mr. Ackerman's Appeal is also allowed.
DISPOSITION
57The Brooks Appeal is dismissed.
58The Ackerman Appeal is allowed. First, the order of the trial judge that Mr. Ackerman is to pay all the costs of Mr. Blackadder is set aside. Mr. Ackerman shall be ordered to pay only the costs of the motion regarding payment into court of estate funds. This amount is fixed at $3,000. Second, the trial judge's order fixing Mr. Ackerman's entitlement for estate expenses at the all-inclusive amount of $25,000 is also set aside. In connection with this, there is to be an order for an assessment to review the payments made by Mr. Ackerman from monies held in trust to determine what were reasonable legal fees and expenses of the estate, including the expenses of litigation. In addition, the assessment is to be further guided by the following:
In so far as Mr. Ackerman's work before the issuing of the statement of claim is concerned, the parties are at liberty to argue what part, if any, was referable to estate work and what part was referable to work on behalf of Ms. Brooks personally. Mr. Ackerman is entitled to compensation from the estate only for the former work.
With respect to work done after the statement of claim was issued, it is agreed that work, if any, referable to the counter-claim is properly charged to the estate and Mr. Ackerman is entitled to reasonable compensation. It is also agreed that work referable to the "joint account" issue was work done for Ms. Brooks personally and Mr. Ackerman is not entitled to compensation from the estate.
COSTS
59On the Brooks Appeal, the respondents are entitled to their costs on a partial indemnity scale in the all-inclusive amount of $15,000 to be paid by Ms. Brooks.
60Regarding the Ackerman Appeal, Mr. Ackerman is awarded his costs on the first part of his appeal dealing with Mr. Blackadder's account, again on a partial indemnity scale, paid by the respondents in the all-inclusive amount of $3,000. As for his second ground of appeal, namely, his entitlement to estate expenses, costs of this appeal, if any, will be determined by the assessment officer on a partial indemnity scale. It may well be that the trial judge was correct in choosing the original amount of $25,000.
“H.S. LaForme J.A.”
“I agree Doherty J.A.”
FELDMAN J.A. (Dissenting):
61I have had the benefit of reading the reasons for judgment prepared by LaForme J.A., and I agree with his disposition of the Ackerman appeal. However, on the Brooks appeal, respectfully, I do not agree with his approach or with the conclusion he reaches about the proper disposition of the appeal.
62The trial judge made an error of law by concluding that the presumption of advancement from father to child must be abandoned in law in favour of the presumption of resulting trust in all but limited cases (the parameters of which were not defined); that the presumption of resulting trust applied in this case; and therefore, that the onus was on the appellant to prove that her father intended to “gift the joint investment to her.” My colleague acknowledges that the trial judge erred in law.
63The trial judge viewed all of the evidence in terms of the burden of proof, which she placed on the appellant because she incorrectly applied the presumption of resulting trust. The trial judge also treated the case as one that turned on credibility. In part because she made negative findings about the appellant’s credibility, she found that the appellant had not met the burden of proof.
64The trial judge also erred by considering as part of the evidence of the father’s intention at the time he put the funds into joint accounts, events that occurred long afterward such as Christmas gifts he gave to his children years later and a statement he made when he was ill in the hospital shortly before his death. The law is clear that relevant evidence of intention is restricted to evidence that relates to the donor’s intention at the time of the transfer: see Shephard v. Cartwright (1954), [1955] A.C. 431 at 445-46 (H.L.); Clemens v. Clemens Estate, 1956 3 (SCC), [1956] S.C.R. 286 at 294; Re Wilson, [1999] O.J. No. 1274 at para. 49 (Gen. Div.); Donovan W.M. Waters, Waters’ Law of Trust in Canada, 3d ed. (Toronto: Thomson Carswell, 2005) at 376; John Sopinka, Sidney N. Lederman & Alan W. Bryant, The Law of Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999) at 116.
65My colleague is of the view that although the trial judge erred in law on the key legal issue in the case, the application of the presumptions, this court is still in a position to decide, based on the findings of credibility and fact made by the trial judge and by applying the correct law and onus of proof, what was the actual intention of the parties’ father when he put his funds into joint accounts and investments with the appellant.
66As the joint account documents are not determinative, the issue turns on hearsay evidence given by witnesses, much of which was uncorroborated. The court must also consider the acts of the father and determine what weight to give to them and what significance to assign to them, as discussed below. In my view, this is the type of case that requires the court to order a new trial. In this case the trial judge’s findings of credibility and fact were made based on applying the incorrect onus of proof. That error may well have influenced those findings: see e.g. Shakur v. Pilot Insurance Co. (1990), 1990 6671 (ON CA), 74 O.R. (2d) 673 (C.A.) at 682. Furthermore, it is the role of the trial court that hears all of the evidence to decide what weight to give to the relevant factors and acts of the father. This court does not have that benefit.
67My colleague places significance on certain facts and factors as showing that the father’s intent was not to give the appellant a shared interest or right of survivorship in the accounts. However, I note that similar factors were viewed by another panel of this court in the recent decision in Pecore v. Pecore, 2005 31576 (ON CA), [2005] O.J. No. 3712, as either not determinative of such an intention by the father in that case, or as reinforcing the opposite conclusion, namely that his intent was to benefit the joint tenant child.
68In Pecore, the father put significant funds into joint accounts with one of his three adult children, Paula, because she was the most financially in need. In his will, the father named Paula and her dependant husband as residuary beneficiaries. After the father’s death, the husband separated from Paula, learned that he was a residuary beneficiary under his ex-father-in-law’s will, and, in the course of his divorce proceeding against Paula, challenged her right of survivorship to the jointly-held funds, because the effect of the right of survivorship was that those funds did not form part of the estate.
69In the context of examining the facts that might speak to the father’s intention at the time he transferred his investments into joint ownership, the court first noted that the father was familiar with joint ownership as an estate planning tool because he and his wife had held their investments jointly and they had devolved to him as the survivor. The court concluded that the father therefore knew that on his death, his joint investments would devolve to Paula as his survivor.
70In this case, there was evidence that the father had also held his investments in joint tenancy with his wife, and they devolved to him on her death. Following his wife’s death, he opened a joint account with his daughter, the appellant. A court could therefore conclude that he knew that when he died, his joint investments would devolve to the appellant as his survivor. However, neither the trial judge nor my colleague chose to take this factor into account.
71A second factor considered by the court in Pecore was that the father gave Paula his power of attorney. The court took that as evidence that he was not using the joint account with Paula as a tool of convenience to give her signing access on the account. She would have that with the power of attorney. Rather, it showed that the father intended something more.
72Similarly, in this case, the father also gave the appellant his power of attorney. The appellant was also the executrix of his estate and looked after him physically at the end of his life. Again, neither the trial judge nor my colleague viewed the giving of the power of attorney as a factor that suggested that the joint account was not set up merely as a tool of convenience for mutual access to funds.
73A third factor considered by the court in Pecore involved the significance of the father maintaining control over the investments during his life. In Pecore, Paula and her father had agreed that he would manage the investments and pay the taxes on them. This court held that “[w]hile control can be consistent with an intention to retain ownership, it is also not inconsistent in this case with an intention to gift the assets. Hence, this factor was not determinative of [the father’s] actual intention” (para. 40). In contrast, in this case, one of the main factors my colleague relies on to show that the father did not intend to create a beneficial joint tenancy is that he remained in control of his finances and that he paid the taxes on the interest on the funds.
74As demonstrated, the factors a court may take into account in its attempt to determine the transferor’s intention at the time of transfer will be given different weight. This will depend on how the trial judge views the whole of the evidence, including the credibility of the witnesses, and the trial judge’s view of the evidence may be affected by the onus of proof he or she applies. Since the trial judge in this case applied the incorrect onus of proof and relied on evidence that occurred years after the joint account was established, I am of the view that this court ought not to rely on her assessment of the evidence in order to determine the actual intention of the father when he put his funds into joint accounts with the appellant, nor should it determine the weight to be given to the factors that speak to the father’s intent at the time he established the joint account. Instead, in order to fairly decide this case, it seems to me that a new trial must be ordered.
75Having said that, I would like to comment on the issue of the status of the presumptions, and the effect of this court taking the approach that 1) the presumptions will only apply if the court is unable to determine the true intent of the transferor based on all the evidence; 2) there is no prima facie effect of placing funds into joint accounts, and that that action is just one piece of evidence to be weighed; and 3) the intent of every person who puts funds into a joint account can only be conclusively determined by a court (after the person’s death) based on “all of the evidence.”
76It appears that the common law origins of the presumptions of resulting trust and advancement are indeed ancient and arose from now obsolete technicalities of property law in England. They have also evolved over the centuries, sometimes with some conflict as to their application and interpretation: see the discussion by Cullity J. on this issue in Cho Ki Yau Trust (Trustees of) v. Yau Estate, [1999] O.J. No. 3818 at paras. 36-37 (S.C.J.).
77In particular, there has been judicial disagreement over whether the presumption of advancement applies to transfers from a mother to a child (see e.g. Edwards v. Bradley, 1957 17 (SCC), [1957] S.C.R. 599; Re Wilson, supra; Yau, supra), and over whether it applies to transfers from parents to adult children (see e.g. McLear v. McLear Estate, [2000] O.J. No. 2570 (S.C.J.) (no); Plamondon v. Czaban (2004), 2004 ABCA 161, 348 A.R. 103 (C.A.) (yes)). The presumptions, as they applied between spouses, were criticized by the Supreme Court of Canada, first by Laskin J. in dissent in Murdoch v. Murdoch, 1973 193 (SCC), [1975] 1 S.C.R. 423, and later by Dickson J. in Rathwell v. Rathwell, 1978 3 (SCC), [1978] 2 S.C.R. 436. However, as Cullity J. points out at para. 35 of his reasons for judgment in Yau, in spite of the criticism, the presumption of advancement between parents and children is still regarded as effective:
Quite apart from the present statutory endorsement of the presumption of advancement where spouses hold property in joint names [see s.14 of the Family Law Act, R.S.O. 1990, c. F-3], I believe it would be a mistake to extrapolate the treatment of the equitable presumptions in Rathwell out of their matrimonial property context to other situations including those involving the acquisition, or transfer, of property between strangers and between parents and their children. The trend of the authorities since Rathwell is consistent with this view: see Re Albert (1982), 1982 1261 (AB KB), 13 E.T.R. 149 (Alt. Q.B.); Cohen v. Cohen, [1985] A.J. 583 (Alt. Q.B.); Re Tucker Estate (1986), 1986 5557 (NB QB), 22 E.T.R. 73 (N.B.Q.B.); Boulos v. Boulos (1986), 24 E.T.R. 56 (Newf. S.C.); Dreger v. Dreger (1993), 1994 16643 (MB CA), 5 E.T.R. (2d) 250 (Man. C.A.); Re Wilson's Attorney [1999] O.J. No. 1274 (G.D.). In the second edition of Law of Trusts in Canada published in 1984, Professor Waters stated “for children, the presumption appears to retain all its original vigor”.
78The presumption of resulting trust and the presumption of advancement have also been the subject of criticism in other common law jurisdictions as well as in the academic literature on the subject, in large part because their origin is anachronistic, and their application by categories, is, in today’s social context, somewhat arbitrary: see e.g. Nelson v. Nelson (1995), 184 C.L.R. 538 at 601-602 per McHugh J. (H.C.A.); Dullow v. Dullow (1985), 3 N.S.W.L.R. 531 at 535-36 per Hope J.A. (C.A.); Pettitt v. Pettitt, [1970] A.C. 777 at 793 per Lord Reid, at 802 per Lord Morris, at 811 per Lord Hudson, at 823-824 per Lord Diplock (H.L.); Eileen E. Gillese & Martha Milczynski, The Law of Trusts, 2d ed. (Toronto: Irwin Law, 2005) at 109-112.
79I agree that there may be a need for a new system to replace the presumptions, however, in my view, their abolition or reform should be a matter for the legislature and not the courts. Other judges have expressed a similar view in recent years. In the 1995 decision of the Australian High Court in Nelson, McHugh J. observed that while the presumptions may not accord with contemporaneous practices and modes of thought, “[i]n the absence of knowledge as to what effect the abolition of the presumptions would have on existing entitlements, the better course is to leave reform of this branch of the law to the legislature which can, if it thinks fit, abolish or amend the presumptions prospectively” (p. 602). Similarly, in the 1985 decision of the New South Wales (Australia) Court of Appeal in Dullow, Hope J.A. stated that although the presumptions may be anachronisms, they “are so entrenched that they cannot be discarded by judicial decision. Their reform, which seems to me to be overdue, is a matter for the legislature” (p. 536). Most recently, in Plamondon, Côté J.A, writing for the Alberta Court of Appeal, stated that “[t]o do as the dicta in McLear hint, and abolish any presumption of advancement in any situation, and make resulting trusts universal, would upset a vast number of gifts every day. No expensive Christmas gift or birthday present would be safe” (para. 30). On this point, Côté J.A. concluded that “[t]his court should be slow to change precedent on which property rights depend” (para. 31).
80To date the Ontario legislature has stepped in to clarify the matter only for spouses. Under s. 14 of the Family Law Act, the presumption of resulting trust applies to all spousal property unless it is jointly-held, in which case the joint ownership is effective with the attendant right of survivorship, subject to actual evidence of a contrary intention. The effect of this section is to create a situation of effective certainty and predictability for spouses who hold property jointly.
81Furthermore, with all their flaws, the advantage of maintaining the presumptions pending legislative action in respect of transfers by people other than spouses, is that they provide a measure of certainty and predictability when persons give gifts to strangers or relatives, or put property into joint accounts. The result of this court acting on its own accord and replacing the presumptions with a system where a court must determine the actual intention of a person, who now being deceased is unable to speak for herself or himself, based on “all of the circumstances”, is to create uncertainty potentially in every instance. This is particularly the case where the document that the person has signed setting up a joint account with the right of survivorship is treated, not as prima facie evidence of intent, but only as one piece of evidence. It seems to me that if the presumptions were to be abolished, prima facie effect ought to be given to the document signed by the transferor, subject to relevant evidence that the person did not intend to give a gift or a right of survivorship.
82No doubt many people create joint accounts with one or more of their children, expecting and intending that the accounts will operate primarily for their own benefit during their life and any balance will belong to the surviving child or children upon their death. Cullity J. referred to this type of arrangement in Yau at paras. 25 and 28. It is precisely what occurred in the Pecore case. Part of the purpose of such an arrangement is to avoid the payment of probate fees on the amount remaining in the account, as it will not form part of the estate if the right of survivorship is effective.
83It seems to me that now in light of this court’s decision in the instant case, if a person wishes to set up such a joint account with one or more of his or her children, to be effective as a joint account with the right of beneficial survivorship, the person may have to write an “I really mean it” side letter, perhaps lodged with a lawyer, or a contemporaneous codicil to the person’s will, explicitly exempting the joint account from passing under the will. Another approach may be to specifically indicate on the bank’s joint account document whether the intent of the parties is that the funds remaining in the account at the death of either of the joint account holders is to belong to the survivor beneficially and not form part of the estate of the deceased.
84Such steps could provide clear evidence of a person’s intent and understanding of the effect of the transfer of an asset into joint tenancy.
85Otherwise, the outcome will be left to the vicissitudes of the anecdotal evidence that may be brought forward at a trial after the person’s death and will also turn on which evidence a court may accept and what weight the court may give to any particular piece of evidence or factor. My concern is that replacing the presumptions with an unstructured inquiry into the intentions of a deceased person is not a useful approach. Its effect is to create legal uncertainty and therefore the necessity, failing agreement or a settlement, for the survivor of the joint account to obtain a determination by the court of the intent of the transferor before he or she can confidently retain the funds.
86In a situation where there is no issue of undue influence or overbearance, but strictly a voluntary and intentional transfer into a joint account, in order to retain some certainty and predictability, my view is that the presumptions should remain as the prima facie result of a transfer, always subject to relevant evidence to the contrary, until the legislature deals with the issue in a comprehensive manner.
CONCLUSION
87I would allow the appeal, set aside the order of the trial judge and order a new trial. I would award costs of the appeal to the appellant fixed at $15,000. The costs of the original trial would be left to the trial judge hearing the new trial.
RELEASED:
“NOV –1 2005” “K. Feldman J.A.”
“DD”
Footnotes
- This approach is consistent with that recently advocated by this court in Pecore v. Pecore 2005 31576 (ON CA), [2005] O.J. No. 3712 at para. 9.
- It should be noted that the issue of the evidentiary value of joint bank accounts was not before this court in Pecore v. Pecore, supra.
