CITATION: Monaco v. Rate, 2010 ONSC 2349
Court File No.: 08-CV-350262PD3 Divisional Court File No.: 537/09 Date: 20100423
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
BENITO VITTORIO MONACO, Plaintiff (Appellant)
– and –
CAROL ANN RATE, Defendant (Respondent on Appeal)
Counsel: Umberto Sapone, Counsel for the Appellant Jonathan Rosenstein, Counsel for the Respondent
HEARD at Toronto: FEBRUARY 24, 2010
ENDORSEMENT: GREER J.:
[1] Benito Vittorio Monaco (“the Appellant”) appeals from the Order of Master Dash, dated October 21, 2009 (“the Order”), dismissing his Motion, as plaintiff, to add himself as a party to these proceedings, in his capacity as the Estate Trustee for the estate of his late son, Paolo Monaco (“the deceased”). The Respondent on the Appeal is Carol Ann Rate (“Rate”) was the common law spouse of the deceased at the date of his death.
[2] In his Order, the Master refused to add, as a party defendant, the Appellant as Estate Trustee for the deceased in the proceedings. Since the Master’s Order was a final Order, an appeal lies to a single Judge of the Divisional Court.
[3] The Appellant says that the grounds of the Appeal are as follows:
The Master erred in deciding that the claim of the deceased’s estate arose on the date of the death of the deceased on June 1, 2007, being the date that the Respondent took her interest in properties jointly held by her and the deceased at the date of his death; or in the alternative, at the very latest on the date that she registered her Survivorship Application.
The Master erred in deciding that he is barred by Rule 39.04(2) from referring to his own discovery transcript on the Motion.
The Master erred in deciding that the appellant did not present any evidence in relation to the “discoverability principle”.
The Master failed to consider the facts alleged in the pleadings and in the Appellant’s evidence at his examination for discovery.
The Master failed to observe the principle of natural justice and procedural fairness in the hearing of the Motion.
On the Motion before me, the Appellant did not raise all of these issues and only emphasized the first three issues.
Some background facts
[4] The Appellant is the father of the deceased who died intestate on June 1, 2007. The deceased and Rate had been living in a common-law relationship for a number of years prior to his death. On December 17, 2004, before his death, the deceased had borrowed the sum of $85,000 from the Appellant. Rate witnessed the deceased’s signature on the document. The Appellant says that the loan was secured by this “unregistered mortgage” at an interest rate of 4.25% amortized over 15 years. Monthly payments set out in the document were to be $637.84 until the loan was paid in full. The Appellant says that the monies were to be used by the deceased to purchase a house in Peterborough, Ontario, from the Respondent’s father’s estate.
[5] The deceased, however, without telling the Appellant, is said by him to have used the monies so advanced to purchase not only the Peterborough house but some money may have gone into the purchase of a second house in Niagara Falls. No documents or mortgages were ever registered on the title to either house to show that funds had been advanced by the Appellant.
[6] During his life, the deceased on January 3, 2006, made one payment of $10,000 on the unregistered mortgage. After the deceased’s death, the Rate, on July 25, 2007, made another $10,000 payment on the unregistered mortgage. No further payments were ever made on the balance then owing of $65,000.
[7] After the deceased’s death, the Appellant discovered that not only had the deceased may have purchased two properties with the money so advanced to him, the deceased had, on September 5, 2005, registered the title to the Peterborough property, in his name and that of Rate, as joint tenants with right of survivorship. They, in turn, on October 13, 2006, borrowed money from Resmor Trust Company for a mortgage on that property in the amount of $193,951, which the Appellant says exceeded the value of the house.
[8] The Niagara Falls property was later purchased on May 31, 2005 by the deceased and Rate. The title was put in their names as joint tenants. The two properties passed by right of survivorship to Rate on the deceased’s death. Each property remained subject to an institutional mortgage.
[9] Rate says that she and the deceased always intended to purchase her late father’s house in Peterborough and that it was intended “after a time” that the title would be in both of their names. She says that as the time to close the purchase of the Peterborough property drew closer, the deceased was worried that he would not have the financing arrangements completed with the bank, and he therefore sought bridge financing from his father.
[10] The Appellant’s position is that from the monies advanced by him, the sum of $26,250 went into the purchase of the Peterborough house and the sum of $31,500 went into the purchase of the Niagara Falls house.
[11] Since the deceased died intestate, without a Will, Rate, as the common law spouse, had the first right to apply to be the Estate Trustee without a Will of the deceased’s estate. The Appellant waited for this to happen and it did not take place. He eventually issued a personal claim against Rate on March 4, 2008, by way of Statement of Claim, claiming that she held part of her interest in the two properties as a constructive trustee for him, in that she had been unjustly enriched by the sum of $65,000, being the balance owing on the unregistered mortgage.
[12] In his Statement of Claim, the Appellant also noted that Rate also took full title to the property she and the deceased held in Toronto as joint tenants and took by right of survivorship. Finally, the Appellant advanced an additional claim in his Statement of Claim in the amount of $24,946 he advanced on or about October 30, 2006, to Rate to purchase a Lexus vehicle. She says she did not have the money to make the first payment on that loan and that she and the Appellant agreed to delay that payment.
[13] On April 16, 2008, Rate defended the Claim brought against her. She admits that she drafted what she calls the “Loan Instrument” dated December 16, 2004. The document, however, is said to be a “mortgage” on the face of the document. It reads in full:
I Benito Monaco agreed to loan Paolo Monaco for a mortgage of $85,000 at an interest rate of 4.25% amortized over 15 years, with a monthly Repayment of $637.84 until paid in full. This contract commencing Dec. 17/04; the Monthly payments commencing Jan.1/05.
The document was signed by the Appellant, with his signature witnessed by Francesca Monaco. The deceased signed the document and his signature was witnessed by Rate.
[14] Rate refused to make any further payments on the unregistered mortgage. The Appellant then issued his Statement of Claim on March 5, 2008, naming Rate as Defendant. He claimed the return on the $65,000 as a debt “…assumed by the Defendant after the death of the late Paolo Monaco.” In the alternative, he made a claim for damages for unjust enrichment in the amount of $65,000. In the alternative to that, the claim was drafted claiming that Rate held her interest in the two properties as a constructive trustee in that amount. He also made a claim in the amount of $24,946 for the monies borrowed by Rate on October 30, 2006, to purchase an automobile.
[15] Rate denies that any money from the monies advanced by the Appellant went into the purchase of the Peterborough property. She also denies that any went into the purchase of the Niagara Falls property.
[16] Eventually Rate agreed to sign the Renunciation required by her, if she was not going to apply to administer the deceased’s estate. Since Rate was in a position of conflict regarding these monies the Appellant said were owing to him, she renounced her right on August 11, 2008. This paved the way for the Appellant to apply for the Certificate of Appointment of Estate Trustee without a Will, of the deceased’s estate. The Certificate was issued to the Appellant on September 29, 2008.
The Motion before the Master
[17] The Appellant then moved to have himself as Estate Trustee without a Will of the deceased’s estate, added a party to his proceeding in his Claim against Rate. The Master dismissed that Motion and made certain Orders on consent with respect to undertakings.
[18] In his Reasons for Decision dated October 21, 2009, the Master held that the estate was not always a party in the proceedings by virtue of references in the Claim. He further held that the estate was not made a party “…as a defendant for the plaintiff to claim the debt against his son, as a plaintiff to seek the resulting trust relief …”. The Master then referred to Rules 9.03(2) and 5.03(5), which, he said, could have been used by the Appellant at some point in time to advance his claim.
[19] The Master dismissed the Appellant’s submission that the estate was always a party by virtue of certain references in the Statement of Claim. He dismissed the Appellant’s argument that the estate could not have been added as a party until there was an Estate Trustee without a Will appointed. He relies on Rule 9.03(2) which states:
A proceeding commenced by or against the estate of a deceased person,
(a) by naming “the estate of A.B., deceased”, “the personal representative of A.B., deceased” or any similar designation; or
(b) in which the wrong person is named as the personal representative, shall not be treated as a nullity, but the court may order that the proceeding be continued by or against the proper executor or administrator of the deceased or against a litigation administrator appointed for the purpose of the proceeding, and title of the proceeding shall be amended accordingly.
The Master, however, did not refer to subsection (5) thereof, which states:
A proceeding by or against a deceased person or an estate shall not be treated as a nullity because it was not properly constituted, but the court may order that the proceeding be reconstituted by analogy to the provisions of this rule.
[20] The Master then went on to say that if the Appellant had concerns about having Rate as both plaintiff and defendant, if she consented to have the Estate added as a defendant, he could have added it as a defendant under Rule 5.03(5). It reads:
A person who is required to be joined as a party under subrule (1), (2) or (3) and who does not consent to be joined as a plaintiff or applicant shall be made a defendant or respondent.
In my view, the Master was wrong in making this statement, since it was necessary to have the Estate as the plaintiff in the proceedings. It is only through the Estate Trustee without a Will that the claim of the deceased can be made. This is what the Appellant tried to do by amending the Claim and adding the Estate Trustee as a plaintiff.
[21] The Master also examined when the limitation period started to run under Section 5 of the Limitations Act, 2002 stating that it was either on the date that Rate took” her interest” by right of survivorship, namely either June 1, 2007, the date of death of the deceased, or on August 17/07 the date on which she registered the transfer of title. He finds that the Motion, which was served on August 31, 2009, was effectively served on September 2, 2009. August 31, 2009 was a Monday and September 2, 2009 was a Wednesday. Since August 31 was not a holiday, that was the date of service, being either one (1) month or 13 days outside the two (2) year limitation period, depending on which date applies.
[22] The Master recognized that the Appellant became the Estate Trustee “…on a later date” but then says he presented no evidence invoking the discoverability principle. In fact, the Appellant became the Estate Trustee without a Will on September 9, 2008.
[23] The Master finally says:
I also disagree with the submission that Section 11 of the Act helps to roll the limitation period since there was never an “agreement” to have a mediation. This motion was not served until August 31/09, being effectively served on September 2/09 given the effect of Rule 16.05(2.1). It is out of time and the limitation period has expired.
[24] Section 11 of the Limitations Act, 2002 relates to parties’ attempts to resolve their differences using an independent third party to resolve the claim or assist them in resolving the claim. This prevents the limitation periods established by sections 4 and 15 of the Act from running while the mediation or attempted resolution is in process.
The position of the Respondent
[25] The Respondent refers to the advancement of the money by the Appellant to the deceased as a “Loan”. The parties to the agreement, however, refer to it as a “mortgage”. The terms of the document signed by the parties are certain. The amount is the amount that passed between them. It has a fixed repayment term, with interest calculated at a reasonable amount and a fixed monthly repayment. All the document lacks is a description of the land in Peterborough, which the deceased was purchasing and which the Appellant assumed the loan would attach to.
[26] The Respondent, on the Motion before the Master, consented to the late filing of an Affidavit of Mario Cautillo, a partner in the law firm representing the Appellant. Attached to this Affidavit were parts of an Examination for Discovery of the Appellant held on June 11, 2008. The Respondent refused, however, to provide her consent to the Appellant making use of his own discovery transcript. Such consent is necessary under rule 39.04(2). The Master therefore did not err in not allowing part of the transcript to come in as fresh evidence.
[27] The Respondent says that the Master was correct in his application of the two (2)-year limitation period, in saying that the Appellant was out of time when he brought on his Motion to amend the Statement of Claim to add the Appellant as a plaintiff in his capacity as Estate Trustee without a Will, in order to make the claims against Rate.
[28] The Respondent also says that it is too late for the Appellant to now raise the issue of whether the Appellant’s claim is an equitable claim. The Respondent, relying on Graeme Mew, The Law of Limitations, 2nd ed. (Markham: Butterworths, 2004), at p.37, says the Act contains no explicit exception for equitable claims generally, and thus such claims are subject to the statute.
Analysis
[29] In my view, the Master erred in failing to consider what the Appellant says in his Affidavit sworn August 31, 2009 and what steps he had to take to get appointed as Estate Trustee without a Will. This is the only way he could legally make the claim on behalf of the deceased’s estate against Rate. The Appellant’s Statement of Claim, as originally issued, preserves his personal claim for the return of the money Rate borrowed to buy the automobile and it can proceed at any time without any involvement of the Estate.
[30] The Appellant points out that he was in the horns of a dilemma, given that Rate had been telling him that she intended to apply to administer the deceased’s estate in her capacity as the common law spouse. She was the one who delayed the procedure, after the deceased’s death, by not doing so. Finally, on July 17, 2008, the Appellant swore an Affidavit in support of a Motion for Order that Rate accept or refuse the Appointment as Estate Trustee without a Will.
[31] Madam Justice Herman, on July 23, 2008, made the Order giving Rate twenty (20) days after the Order was served on her to file an Application for an appointment. Rate finally signed her Renunciation on August 11, 2008 and the Appellant received his appointment as Estate Trustee on September 29, 2008. Upon receiving such appointment, the Appellant then moved to add himself, in his new capacity, as a plaintiff in the proceeding already commenced by him in his personal capacity.
[32] Had the Appellant simply started a new action as Estate Trustee, once appointed, the limitation period would not have started until that date and run until September 29, 2010. (emphasis added) He could have left his personal action in place for the sum owed on the car and begun a new action in the name of the Estate as Plaintiff. Therefore, the Master did not err when he said that he disagreed with the Appellant’s submissions that the estate was always a party by virtue of certain references in the Statement of Claim. The Master did err, however, when he made reference in paragraph four on p.1 of his Decision, that if there was a concern about Rate consenting to have the estate as a “defendant” and about Rate being both a plaintiff and defendant in two different capacities, “…the plaintiff could have added the estate as a defendant under Rule 5.03(5).” The Estate could only be a plaintiff in any action, since the Estate Trustee is suing on behalf of the Estate saying that either Rate owes money personally to the deceased or holds part or all of one or more joint assets on a resulting or constructive trust for the estate, founded in conjunction with the principle of unjust enrichment. The Appellant’s role as Estate Trustee would then be to collect all assets of the deceased and pursue claims the deceased may have had.
[33] It has been pointed out in McCracken v. Kossar, [2007] O.J. No. 664, 279 D.L.R. (4th) 431 (S.C.J.) at para. 37, Quicklaw version
A limitation act may expressly apply to an equitable claim, or a limitation may be applied, by analogy, to an equitable claim that is closely analogous to a claim that is expressly barred by a statutory limitation period. However, where those situations do not exist, it may be argued that the equitable claim is not subject to a limitation but only to equitable defences, such as laches or acquiescence.
While the Appellant raised the issue of equitable claim on the Motion, it was not part of his Notice of Appeal. The Respondent argued that it should therefore not be dealt with by me.
[34] The parties, however, should be cognizant that that the fact that equitable claims were not previously barred under the previous limitation act. Further, rule 1.04(1) of the Rules of Civil Procedure, states that the rules should be liberally construed to secure the “just, most expeditious and least expensive” determination of every civil proceeding on its merits. I point to this rule simply as a reminder that had Rate expeditiously renounced her right to act as Estate Trustee, the whole issue of the limitation period would not have arisen.
[35] No one could be appointed the Estate Trustee until Rate had renounced. She ought to have done that earlier rather than later, as this left the estate in limbo. She was aware of the debt owing, and in fact made the $10,000 payment on account of that debt after the deceased died. She has already been discovered on what she knew about the debt and the repayment.
[36] The parties did enter into mediation on July 14, 2009, which was unsuccessful. The mediation took place ten (10) months after the Appellant’s appointment as Estate Trustee. The heading on the mediator’s report is dated July 23, 2009 and only states “Monaco v. Rate”, two months before the Appellant was appointed as the Estate Trustee. The Master therefore erred on page 2 of his Decision when he said that Section 11 of the Act did not apply to “roll the limitation period since there never was an “agreement” to have a mediation.” A copy of the Mediator’s Report is attached as Exhibit G to the Appellant’s Affidavit sworn August 31, 2009.
[37] There is also, in Toronto, mandatory mediation for all estate matters if the matter had been on the Estates List. This was not the case but would have come to pass if a new claim had been started with the Estate as plaintiff. Again, that would have extended the time before the limitation period began to run.
[38] As an addendum to the above, since Rate consented to the late filing of the Affidavit of the Appellant sworn August 31, 2009, to it was also attached as exhibit “F”, a letter dated February 5, 2009 from Rate’s counsel to the Appellant’s counsel which says:
I also understand that your clients are administering the Estate and that there is a real prospect that funds will be paid into it; indeed, there may well be enough in the estate to pay your client’s claim.
I would recommend that we hold the litigation in abeyance in the interim, to determine whether or not there will be funds in the Estate to compensate your client.
In my view, the wording of this letter between the parties’counsel infers that Rate would not raise the limitation issue to prevent the Appellant’s claim as the Estate Trustee since the parties were talking settlement.
[39] Section 11 of the Limitations Act, 2002 is headed “Attempted resolution”. Subsection 11(1) reads:
If a person with a claim and a person against whom the claim is made have agreed to have an independent third party resolve the claim or assist them in resolving it, the limitations periods established by section s 4 and 15 do not run from the date the agreement is made until,
(a) the date the claim is resolved;
(b) the date the attempted resolution process is terminated; or
(c) the date a party terminates or withdraws from the agreement.
The fact that the parties did enter into mediation on July 14, 2009, extended the limitation period so that the Appellant was in time when he moved to have himself added as a party to the proceeding in his capacity as Estate Trustee. The Master therefore erred in holding that the limitation period began either at the date of the deceased’s death or when Rate registered her transfer by right of survivorship.
[40] In the alternative, the Appellant, once appointed as Estate Trustee in September 2009, could have started a new action against Rate and a new limitation period would have begun and continued until September 2010.
Conclusion
[41] Either way, the Master erred in coming to the conclusion he did in finding that the Estate Trustee was prevented by the Act from making his claim against Rate. The Appeal is therefore allowed. An Order shall go setting aside the Master’s Order dated October 21, 2009 and his Order for costs to the plaintiff in the amount of $1,200. The Estate Trustee may move on the Estates List to make the Estate’s Claim against Rate by way of a new action, which she may defend.
[42] On the other hand, if the parties agree by way of written consent, they could agree to have the Amended Statement of Claim issue and by my Order, have the file praeciped from the regular civil list to the Estates List. I leave that up to them.
[43] At the conclusion of the Appeal before me, the parties agreed that whoever was successful on the issue of Costs would receive Costs in the amount of $3,500 inclusive of disbursements and GST. Order to go that these Costs are payable forthwith by the Respondent to the Appellant.
Greer J.
Released: April, 23, 2010
CITATION: Monaco v. Rate, 2010 ONSC 2349
Court File No.: 08-CV-350262PD3
Divisional Court File No.: 537/09
Date: 20100423
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
BENITO VITTORIO MONACO, Plaintiff (Appellant)
– and –
CAROL ANN RATE, Defendant (Respondent on Appeal)
ENDORSEMENT
Greer J.
Released: April 23, 2010