COURT OF APPEAL FOR ONTARIO

CITATION: Gefen Estate v. Gefen, 2022 ONCA 174
DATE: 20220302
DOCKET: C67633, C67724 & C68850

Pepall, Tulloch and Roberts JJ.A.

DOCKET: C67633

BETWEEN

Lucia Saunders as Estate Trustee of the Estate of Yehuda Gefen, deceased

Applicant (Respondent)

and

Henia Gefen, and Ronald Rutman as Estate Trustee During Litigation of the Estate of Elias Gefen, deceased

Respondents (Appellant)

DOCKET: C67724

AND BETWEEN

Henia Gefen in her personal capacity and as Estate Trustee of the Estate of Elias Gefen

Plaintiff

and

Arie Gaertner, Miller, Canfield, Paddock and Stone LLP, The Jewish Home for the Aged, Baycrest Hospital, Baycrest Centre for Geriatric Care, Yehuda Gefen and Harry Gefen

Defendants

AND BETWEEN

Harry Gefen

Plaintiff by Counterclaim (Appellant)

and

Henia Gefen in her personal capacity and as Estate Trustee of the Estate of Elias Gefen, Harvey Gefen, Ashley Gefen, Dundas-Thickson Properties Ltd., 1393522 Ontario Limited and 1585708 Ontario Limited

Defendants by Counterclaim (Respondents)

AND BETWEEN

Harry Gefen

Third Party Plaintiff (Appellant)

and

Harvey Gefen

Third Party Defendant (Respondent)

DOCKET: C68850

AND BETWEEN

Henia Gefen in her personal capacity and as Estate Trustee of the Estate of Elias Gefen

Plaintiff (Appellant)

and

Arie Gaertner, Miller, Canfield, Paddock and Stone LLP, The Jewish Home for the Aged, Baycrest Hospital, Baycrest Centre for Geriatric Care, Yehuda Gefen and Harry Gefen

Defendants (Respondents)

AND BETWEEN

Harry Gefen

Plaintiff by Counterclaim (Respondent)

and

Henia Gefen in her personal capacity and as Estate Trustee of the Estate of Elias Gefen, Harvey Gefen, Ashley Gefen, Dundas-Thickson Properties Ltd., 1393522 Ontario Limited and 1585708 Ontario Limited

Defendants by Counterclaim (Appellant)

Lionel Tupman and Arieh Bloom, for the appellant Harry Gefen

Ronald Moldaver, for the respondents Henia, Harvey and Ashley Gefen

Christopher Graham, for the respondent Lucia Saunders, as Estate Trustee of the Estate of Yehuda Gefen

Heard: October 13, 2021 by video conference

On appeal from the judgment of Justice Jessica Kimmel of the Superior Court of Justice, dated October 17, 2019, with reasons reported at 2019 ONSC 6015 and 2019 ONSC 6017.

Pepall J.A.:

Introduction

[1] Elias and Henia Gefen were married for 65 years. They were Holocaust survivors from Poland who immigrated to Canada in 1951. They had very little when they started out. Elias was a roofer and Henia, a homemaker. They were a hard-working couple, and over the years they invested in real estate which became very valuable. The couple had three sons: Harvey, Harry, and Yehuda. During their lifetimes, the couple were very generous with each of their three sons.

[2] Elias and Henia had mirror wills, and when Elias died on October 28, 2011, his estate passed absolutely to Henia, and she was named as his sole executor.

[3] Two months before he died, Elias signed a document that is at the heart of this case. This document served as the anchor for Harry and Yehuda’s argument that there was a secret trust and a mutual wills agreement that operated to divide Elias’ Estate into equal shares for the three sons on Henia’s death.

[4] The family dynamics were discordant and characterized by conflict. Henia did not feel that her two younger sons, Harry and Yehuda, should receive any of her or Elias’ money. Between 2011 and 2016, she made various inter vivos gifts to Harvey. In 2013, Henia sued Harry and Yehuda; counterclaims and third-party claims ensued, and since that time, they have all been embroiled in litigation: Henia, Harvey, and his daughter Ashley versus Harry and Yehuda. Yehuda died at the age of 65 on May 6, 2016, leaving no issue. His Estate is represented in the litigation by his partner who is also his estate trustee, Lucia Maria Saunders.

[5] The trial took place in 2018 and 2019. It lasted six weeks and was hard fought. The parties called 22 witnesses and argued 21 fully briefed motions. It had been preceded by over 60 pre-trial motions. Henia effectively abandoned her main claims by electing not to call any evidence at the outset of the trial. As such, the trial involved various claims by Yehuda’s Estate and Harry against Henia, Harvey and Ashley,[1] and a claim by Henia relating to ownership of a condominium against Yehuda’s Estate.

[6] The trial judge gave detailed and thoughtful reasons for decision. Before this court, Harry alone challenges her conclusion that he and Yehuda had failed to establish a mutual wills agreement or a secret trust, and by failing to void certain inter vivos transfers by Henia in favour of Harvey. Henia challenges the trial judge’s conclusion that the joint tenancy in the condominium was severed in favour of Yehuda’s Estate, and also takes issue with the trial judge’s factual finding on the real property encompassed by Elias’ Estate. For the reasons that follow, I would dismiss all of the appeals.

Background Facts

[7] At trial, Harry and Yehuda’s Estate sought a proportionate one-third share of the collective wealth and assets accumulated by Elias and Henia over their lifetimes, all of which was held by Henia following Elias’ death in 2011. She was a very wealthy woman after Elias died, with a fortune estimated to be in the $30 million range. By the time of the trial, Henia had transferred a significant portion of this wealth to Harvey and Ashley, and her net worth had been depleted by at least 50%. In addition, she had purported to confirm indebtedness and granted security over all her remaining assets in favour of Harvey and his family. Her physician, Dr. Shulman, was asked to undertake capacity assessments of Henia in 2012 and 2014, specifically with respect to her transfers to Harvey and Ashley.

[8] Dr. Shulman concluded that Henia understood the nature of the wealth and assets she was transferring, as well as the value. Her rationale for these transfers was to reward her son Harvey, whom she considered to have been devoted and hardworking and to have helped her with her investments and property development. She felt that her other two sons had made no contribution. She also wanted to benefit her granddaughter Ashley, of whom she was extremely proud. Dr. Shulman concluded, both in 2012 and 2014, that Henia was competent. She remained completely lucid and aware of her current financial and personal circumstances and was capable of having made these substantial transfers to Harvey and Ashley.

[9] Elias and Henia’s assets were comprised of cash, cash equivalents and holdings in commercial real estate. The couple’s assets also included a joint tenancy in a condominium at 11 Townsgate Drive in North York. It was Elias’s and Henia’s matrimonial home. In October 2010, Elias and Henia transferred the condominium into their joint names and that of Yehuda. When Elias died, Henia and Yehuda held the property as joint tenants. Yehuda’s death in 2016 led to a survivorship application by Henia, and questions over whether Yehuda’s joint tenancy had been severed prior to his death. If it had been severed, Henia and Lucia Saunders as Estate Trustee would hold the property as tenants in common. If not, it would be held by Henia alone.

[10] In October 2007, Elias and Henia signed primary and secondary mirror wills. The wills granted to the surviving spouse the residue of the deceased spouse’s estate for his or her own use absolutely, with a gift over of the residue to their three sons if the other spouse did not survive for 30 days. The lawyer who prepared the wills, Noah Okell, is Henia’s nephew. At trial, he testified that neither Elias nor Henia ever told him that they had an agreement not to change their 2007 wills, nor did they give him any indication that they wanted to place any restrictions on the survivor’s ability to use or deal with the estate as they wished, nor that they desired any equalization or accounting of the gifts and property they had given to their sons during their lifetimes.

[11] In 2011, Elias was ill with lymphoma and in care at Baycrest Hospital. In June 2011, he granted Yehuda power of attorney for his personal care.

[12] Harvey had been managing Elias’ real estate assets. Elias became concerned and instructed a lawyer, Arie Gaertner, to investigate the status of the business interests that were being managed by Harvey and to take such legal steps as were necessary to protect Elias’ estate. Ultimately, on August 10, 2011, Stephen Greenberg was granted a power of attorney over Elias’ property to make inquiries and to look into whether Harvey had undertaken transactions involving Elias’ property that Elias was unaware of. No one suggested that Elias lacked the capacity to retain and instruct counsel, or to execute any of the legal documents in the timeframe prior to his death. Harvey and Henia were upset that Elias had retained and instructed counsel without their knowledge, and Henia was particularly upset about the Greenberg power of attorney.

[13] On August 17, 2011, Elias and Harvey signed a document that is at the centre of the mutual wills and secret trust claims. Harry maintains that the document evidences a mutual wills agreement between Elias and Henia. The document was handwritten by Harvey and prepared without the assistance of counsel. Key paragraphs stated:

I, Elias Gefen direct my son Harvey & my wife Henia to immediately get rid of & revoke the Power of Attorney over Property given to Mr. Greenberg whom I do not know whatsoever. I understand that this took away my wife’s P of Attorney over Property given by myself to my wife & prepared by my own lawyer Noah Okell. I did not intend to do this in any way. Only Henia has had or will have Power of Attorney…

I ask that my wife be given back the Power of Attorney over Property and only my wife as she and I both built up the estate and own it together jointly as one pocket. Only Noah and Noah alone will represent myself and or my wife with respect to any will & estate work & our properties.

I further confirm that my latest will[2] as prepared by Noah has not knowingly been changed by myself to date nor will it be changed during my life. My wife Henia has told me that she also will not change the will either & that our intentions that the estate be divided equally between our 3 sons after our death stands.

In my condition I am tired & confused & do not understand everything & I want only Noah to be my lawyer so this will not happen again, any legal documents notwithstanding.

[14] That evening, in the presence of Harvey’s former lawyer and high school classmate, Nestor Wolicki, Elias signed a revocation of the Greenberg Power of Attorney and a new Power of Attorney for Property in favour of Henia. He also signed the handwritten document as did Harvey. Henia did not sign it, nor was she present when it was discussed, prepared, and signed.

[15] Although Henia did not sign the August 17 document, she testified that it was consistent with certain testamentary intentions that she held both prior to and at that time, in that:

a. it was her intention never to change her will during Elias’ lifetime, such that he would always inherit the residue of her estate if she died first. In her words “One will --- me and my husband --- me to my husband and my husband to me”;

b. it was her intention that the residue of their estate be divided equally between their three sons after their deaths.

[16] Elias’ interactions with each of his sons were tainted in the latter years of his life by their efforts to secure their respective financial positions. Elias was upset after visits from Harry and Yehuda during which they asked for, or about, the family finances. Meanwhile, on August 16 and October 15 (the day that Elias suffered his fatal cardiac arrest from which he never recovered consciousness and died two weeks later, on October 28, 2011), Harvey secretly made video recordings of Elias which display a tone of badgering by Harvey of Elias about legal and financial matters. The Baycrest Hospital records during the summer of 2011 provided insight into the negative effects of the family discord on Elias. Dr. Schwartz, Elias’ treating physician, testified on the family conflict that was greatly upsetting and distressing Elias. Mr. Gaertner testified on his concerns about the constant attempts of family members to influence Elias’ decisions and all the infighting that was wearing Elias out. That said, none succeeded in influencing Elias to make any changes to the status of the ownership of the real estate holdings or his testamentary dispositions.

[17] Following a family meeting at Baycrest on August 30, 2011, family visits were restricted and supervised by personal care workers. Henia came to believe that Harry and Yehuda had embarked on a campaign to keep her away from Elias while he was dying, and that Mr. Gaertner and Baycrest facilitated this campaign. This animated her claims against all of them that were effectively abandoned at the outset of the trial.

[18] In furtherance of his mandate to investigate, Mr. Gaertner reported to Elias on August 25, 2011 that Mr. Gaertner’s request to meet with Harvey and Henia’s lawyers had been ignored, and that Elias may have reason to suspect that Harvey and/or Henia may have something to hide. Mr. Gaertner recommended that Elias change his 2007 wills to provide for Henia in accordance with statutory obligations and to leave the rest to be divided equally among the three sons, with the inclusion of some mechanism for the trustee to be satisfied that monies or assets had not been taken without Elias’ knowledge or consent. Elias instructed him to prepare a new will in accordance with those recommendations, but Elias had not yet decided to sign it. Draft wills were never reviewed or considered by Elias.

[19] On October 17, 2011, Mr. Gaertner wrote in a letter to the members of the Gefen family and their counsel advising that Elias would not change his will, “[b]ased on his firmly held belief, brought about by the repeated assurances from his wife and Harvey, that his wife will not change her current will (i.e., the one prepared by Mr. Okell concurrently with Mr. Gefen’s own will) nor transfer any of his or her assets during her lifetime, other than to her three sons equally.” Mr. Gaertner also testified at trial about assurances given by Henia that she would treat her sons equally and equally distribute the assets on her death; that based on Henia’s assurances, Elias was satisfied that everything would be distributed in accordance with his wishes; and that Elias trusted his wife to give effect to the common intention to have their estates divided equally among their three sons.

(Decision continues with the remaining paragraphs exactly as in the source.)

Released: March 2, 2022 “S.E.P.”

“S.E. Pepall J.A.”

“I agree. M. Tulloch J.A.”

“I agree. L.B. Roberts J.A.”