Court File and Parties

Court File No.: CV-17-222 Date: 2024/08/29 Superior Court of Justice - Ontario

In the Estate of Paula Vout, Deceased

Re: Al John Vout, Applicant -and- Sandra Florence Vout, Respondent

Before: Anne London-Weinstein J.

Counsel: Neil Milton, for the Applicant Respondent, Self-Represented

Heard: April 22, 2024 (Belleville)

Ruling on Motion for Directions

[1]

Ruling on Motion for Directions

This is a motion for directions under Rule 74 and 75 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, with respect to the estate of Paula Vout (the “Estate” and “Mother”, respectively). The issues are as follows:

a) Are there funds which are properly owed to the Estate which have been improperly diverted by the Respondent for her own use? b) Are the transfers which the Respondent claims were gifts, properly owed to the Estate? c) How should any resulting order be crafted to facilitate fair and practical enforcement by the successful party? d) Costs.

Background of the Parties

[2]

Background of the Parties

The Mother died on August 1, 2015. She had four children – the Applicant; the Respondent; a son, Michael, who is not a party but is a beneficiary of the Estate; and a daughter, Paula, who is a beneficiary of the Estate and is also represented by counsel for the Applicant in this matter. Paula was the primary affiant for the evidence on this motion.

3From 2008 onward, the Respondent controlled the Mother’s finances. The Respondent was named as the Estate Trustee in the Mother’s will. However, she did not apply for probate and adopted the position that there were no assets in the Estate.

4The Respondent was the joint owner with the Mother of various real and financial assets (the “Joint Assets”) which included the Mother’s house and some investments. The Mother’s will was made on March 20, 2008. The validity of the will was not challenged. The will named the Respondent as the Executrix of the Estate.

Background of the Litigation

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Background of the Litigation

These proceedings were commenced by Notice of Application issued on June 26, 2017. The Applicant sought a determination that the Joint Assets were impressed with a resulting trust in favour of the Estate on July 18, 2018 and on August 27, 2018.

6By decision dated September 26, 2019, Abrams J. held that:

a) The Joint Assets were impressed with a resulting trust in favour of the Estate and therefore belonged to the Estate; b) The Respondent should account for all savings and investment accounts of the Mother from 2008 forward; and c) Costs in the amount of $13,500 were payable by the Respondent to the Applicant.

7The Respondent has not complied with the order of Abrams J. While the Respondent did disclose the amount within the accounts that were joint prior to the Mother’s death, she did not turn over any assets to the Estate; she has not provided accounting for the bank accounts since 2008; and she has not paid the costs award.

8The Respondent initiated an appeal of Abrams J.’s judgment. Her appeal was dismissed for want of prosecution by the Court of Appeal on September 29, 2021.

9On December 21, 2020, Justice Kershman ordered that an Estate Trustee During Litigation (“ETDL”) should be appointed due to findings made by Justice Abrams.

10Liam Rafferty was appointed as an EDTL on September 13, 2022 by order of Justice Roger. The Respondent opposed this appointment.

11The Respondent did not vacate the Mother’s house. As a result, the ETDL was required to secure a writ of possession and have the sheriff enforce it to remove the Respondent from the house.

12The Respondent has not paid occupation rent, nor contributed to any of the expenses of the Mother’s house. The Respondent has used the Joint Assets to pay house expenses since the Mother’s death.

13The Respondent has not complied with Abrams J.’s order insofar as it required her to account for all savings and investment accounts of the Mother from 2008 onward. The Mother’s financial assets were known to be $680,000 in 2008 and $660,000 in 2013.

14The Respondent did not attend court appearances on January 2, 2024 or on February 15, 2024.

15Justice Muszynski noted the failure of the Respondent to attend the February 15, 2024 appearance date and ordered that the endorsement and the motion material filed by the Applicant be served on the Respondent.

16The Respondent also failed to attend the March 25, 2024 hearing. She had been served with all of the materials by email. Justice Muszynski discharged Liam Rafferty as Estate Trustee During Litigation finding that his role was limited, and that the Estate required administration. Mr. Rafferty was subsequently appointed as Estate Trustee. The court also reviewed and passed the Estate accounts.

17Justice Muszynski ruled that all of the evidence required for the motion had been filed and ordered the Applicant to upload all of the materials relied upon to Caselines with a new bundle. The Applicant’s counsel was also ordered to undertake to upload all of the evidence relevant to the issues to Caselines. The Applicant was also ordered to create and upload a compendium that indicates the key pieces of evidence relevant to the issues before the court.

18The Respondent did not file materials or attend the motion before this court on April 22, 2024. Justice Muszynski directed that this motion be limited to the evidence already filed. The motion was focused on resolving the financial issues and determining the issue of costs. The order of Justice Abrams did not address assets transferred from the Mother to the Respondent prior to the Mother’s death other than to order an accounting of funds expended from 2008 onward. This motion deals with those assets not addressed in the Abrams motion, namely the Missing Funds and whether the Real Estate Advances were gifts or not.

19The Respondent did provide some information about the joint financial assets since the Mother’s death. She claimed they were approximately $200,000 to $300,000 but then later disclosed them to be $157,000. The banking material provided on this motion indicates that $157,000 was the remainder in the account at death. That $157,000 is owed to the Estate.

20The Respondent provided evidence that the Mother’s Estate was valued at $680,000 in 2008 and $660,000 in 2013.

21The Applicant maintains that $523,000 is missing from the Estate. Of this amount, the Respondent acknowledged receiving $205,000 from the Mother to purchase real estate which is in the Respondent’s name alone (the “Real Estate Advances”). The Respondent’s position is that these advances were gifts to her from the Mother. The Applicant’s position is that the Respondent has not established that these funds were gifted to the Applicant and are owed to the Estate.

22In addition to the $205,000 in Real Estate Advances which the Applicant claims belongs to the Estate, the Applicant also argues that there is $318,000 in missing funds which belong to the Estate.

23The Respondent, in her original affidavit, indicated that the Mother survived on a small private pension, the Canada Pension Plan (“CPP”) and Old Age Security (“OAS”). She noted that the Mother had expended some of her capital to pay for $50,000 on private health care and nursing services. The Respondent indicated that the Mother spent $20,000 to replace furnaces on the properties owned by the Mother. Prior to replacing the furnaces, fuel prices were $12,000 per year, according to the Respondent. Property taxes and insurance were a further $10,000 per year.

24The Applicant maintains that the Mother’s expenses were modest, and her income was sufficient to meet those expenses. The Respondent claimed otherwise, and the Applicant points out that she has provided no evidence to support this claim.

25There is evidence that the Mother relied on a support worker in the past, increasing the likelihood that she would use a personal support worker to help her when her health demanded it. The Mother had significant health issues at various points in time. The Mother was in Belleville General Hospital in January of 2008 and was believed to be palliative at the time. Homecare workers were retained to assist the Mother when she returned to her home.

26The Mother had a triple bypass surgery in 2008, and a bad fall in 2009 where she broke her pelvis. She had a stroke in 2014 which affected the use of her left hand. She then had a series of mini strokes and was then moved to Belmont Nursing home in June of 2014.

27Therefore, given her past reliance on a caregiver and her various health issues, I am satisfied on a balance of probabilities that the Mother expended $50,000 on her private health care. I am also satisfied that her modest income was insufficient to pay for her private health care.

28The Mother had also been living in and renting the properties she owned for over three decades. It is reasonable that she would have had to replace the aging furnaces in those properties. I am satisfied on a balance of probabilities that the Mother expended $20,000 from her capital to pay for new furnaces for the properties.

29In my view, the evidence before this Court is that the Mother’s limited income would not have been sufficient to pay for these expenses. I find that the facts before me support the likelihood that the funds were expended in the manner described by the Respondent.

30While neither party has provided the court with the exact amount in private pension, CPP and OAS funds that the Mother received, the only evidence I have is from the Respondent, who, in her affidavit, argued that it was a modest amount but provided no further detail.

31The Applicant disputes that the Mother would have to dip into her savings to pay for these expenses. However, the evidence before me is that the Mother owned multiple properties. It is not unreasonable that a senior living on a fixed income would have to reach into her savings to pay for major expenditures like private health care and the replacement of furnaces.

32However, the Respondent provided no evidence to support her claim regarding the costs of fuel, property taxes and insurance. She did not comply with the order of Justice Abrams to disclose the relevant financial records from 2008 onward. Unlike health care and furnace replacement, I am unable to be satisfied on a balance of probabilities that the funds claimed were expended in the amounts claimed, or that the Mother would be unable to pay these smaller amounts from her modest income. I find that the Mother expended $70,000 from her capital on the furnace replacement and health care. However, the other expenses claimed for which no documentary evidence was provided are not properly deductible from the amount owed to the Estate.

33The Respondent has been served by regular mail and by email with all materials for each appearance for this motion, including the original date of January and each subsequent step. Separate service of the Motion Records, confirmation forms, and factums was also served on the Respondent. In fact, she has been provided service regarding this matter 15 times with respect to the relief sought on this motion. The Applicant has also made numerous attempts to serve the Respondent personally with the orders and endorsement of Muszynski J. of March 25, 2024 but as of April 3, 2024 has been unable to effect personal service on her.

34The Respondent did not file material in response to the Applicant’s material on this motion, nor did she attend the motion.

35The Respondent did not explicitly claimed that the Missing Funds are a gift from the Mother. Rather, she provided no explanation for the Missing Funds aside from pointing to expenses that the Mother incurred related to her health and the maintenance of her many properties and arguing that the Mother gifted her $205,000 in Real Estate Advances.

36As the Estate Trustee, the Respondent was in a fiduciary relationship to her elderly Mother.

37A fiduciary duty is a trust-based doctrine requiring that the fiduciary act with complete loyalty toward the beneficiary in managing the beneficiary’s affairs: see Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261. At para. 27 in Elder Advocates, the Supreme Court described the defining characteristics of a fiduciary duty outlined in Frame v. Smith, [1987] 2 S.C.R. 99, and later adopted and applied in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574:

Relationships in which a fiduciary obligation has been imposed seem to possess three general characteristics:

(1) The fiduciary has scope for the exercise of some discretion or power. (2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests. (3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

38In this case, the Respondent has not indicated what became of the Missing Funds, despite the order of Abrams J. that she account for those funds from 2008 onward.

39The Respondent was in a position to exercise discretion and power in relation to the Mother’s assets and was able to unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.

40The evidence is that the Mother feared being put in a nursing home which, along with her age, made her particularly vulnerable to the power held by the Respondent. Paula Vout’s evidence, which is referenced in further detail in a later section of this decision, satisfied me that the Mother would not have gifted these funds to the Respondent voluntarily. The evidence suggested the Mother was a frugal person, whose experiences as a Holocaust survivor left her fearful and cautious regarding her finances.

41When a parent gratuitously transfers property to their adult child, the law presumes that the child holds the property in a resulting trust for the parent. To rebut the presumption, the adult child must proffer clear, convincing, and cogent evidence that 1) the parent intended to make a gift of the property to the child; 2) the child accepted the gift; and 3) a sufficient act of delivery or transfer of the property occurred to complete the transaction: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795; Spisak v. Spisak, 2023 ONSC 4726, 91 E.T.R. (4th) 122, at para. 35.

42The presumption cannot be rebutted by evidence from the Respondent alone. Corroboration from evidence independent of her claims is required. Section 13 of the Evidence Act, R.S.O. 1990, c. E.23, provides as follows:

In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.

43There was no such evidence suggesting that the Missing Funds were intended as a gift. In fact, the existing evidence suggests otherwise.

44I have concluded the following with regard to the Missing Funds:

• The Mother’s assets totalled $660,000 in 2013 and $680,000 in 2008.
• The Mother’s pension and small income were insufficient to replace her furnaces on her properties or pay for private healthcare. As a result, she spent $70,000 of her savings in this regard. This $70,000 is not owed to the Estate.
• There were three transfers of funds in the amount of about $100,000 which were outside of the normal requirements of the Mother’s banking.
• The Applicant identified $198,000 in transfers to the Respondent from the limited banking records which could be accessed.
• The Respondent owed a fiduciary duty to her elderly Mother.
• The Mother’s past behaviour regarding money is inconsistent with her gifting funds to the Respondent.

45I find that the Missing Funds are impressed with a rebuttable presumption of a resulting trust. The Respondent has not rebutted the presumption of a resulting trust in relation to the missing funds. The missing funds, minus $70,000 spent on furnaces and health care, are owed to the Estate. The Respondent has not only failed to rebut this presumption of a resulting trust, but she has also failed for five years to comply with an order of accounting by Abrams J.

46Therefore, allowing for the $70,000 which I have already determined was expended by the Mother for private health care and property maintenance, the missing funds equal $610,000 minus $157,000, which is $453,000.

47Because of the delay in this case, the Applicant could not recover complete bank records to independently establish the location of the Missing Funds.

48The ETDL sold the Mother’s house for gross proceeds of $950,000 as of July 10, 2023.

49The Estate has sufficient funds on hand to pay all known debts, and there will be a residue for distribution to the beneficiaries. I turn now to analysis of the issue of the funds advanced for real estate.

The Real Estate Advances

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The Real Estate Advances

The order of Justice Abrams did not deal with the Real Estate Advances to the Respondent, which the Respondent characterizes as gifts from the Mother. The analysis regarding the Real Estate Advances also turns on whether the presumption of a resulting trust has been rebutted by the Respondent.

51Having concluded that the Respondent has not accounted for the remaining $453,000 in missing funds, I turn now to her claim that $205,000 of the $453,000 was gifted to the Respondent by the Mother so that the Respondent could purchase Real Estate. These funds have been described as the Real Estate Advances.

52Unlike the Missing Funds, the Respondent acknowledges the Real Estate Advances but maintains that these were gifts from the Mother to the Respondent. As with the Missing Funds, the onus is on the Respondent to rebut the presumption of a resulting trust to establish that the Real Estate Advances were gifts.

53The Respondent must be able to prove that the Mother made a gift to her of the Real Estate Advances. As indicated in Pecore, and discussed above, a gratuitous transfer from a parent to an adult child gives rise to a rebuttable presumption that the property is being held on a resulting trust for the parent. The onus is on the Respondent to adduce evidence that the Mother made these transfers as gifts.

54The Respondent has not provided independent corroborating evidence, as required by s. 13 of the Evidence Act to support her claim that the Real Estate Advances were gifts. In addition, the past behaviour of the Mother regarding her finances suggests she would not have gifted these funds to the Respondent.

55Paula provided evidence that the Mother was a Holocaust survivor who was extremely concerned about running out of money. She described her mother as being frugal, an individual who hoarded her savings and did not expend money or make large gifts. The evidence established that she kept large amounts of cash at home or in a safety deposit box, as she did not trust banks or investment companies.

56By way of example, Paula indicated that she once received a loan from her Mother to purchase a home in Trenton, Ontario in 1986. Despite there being no reason to suspect that Paula would not repay the loan – she worked as a dentist for the Armed Forces – and the fact that the Mother would receive a lower rate of interest at the bank than she would by holding Paula’s mortgage, the Mother demanded repayment prior to the expiry of the loan.

57Based on this example, and the Mother’s longstanding and consistent approach to money, Paula’s evidence was that she was certain that her Mother never gifted funds to the Respondent, and any large advance from the Mother to the Respondent was a repayable loan. I accepted Paula’s evidence on this issue.

58Paula’s evidence also indicated that the Mother consulted her before making two loans to the Respondent. She understood that the Mother, upon her advice, retained a lawyer in Cobourg and had a promissory note or similar acknowledgement of debt signed by the Respondent. I accepted Paula’s evidence on this point.

59From spring 2008 onward, the Mother lived alone with the Respondent. Paula indicated that the Mother was old and infirm and was terrified of being left alone or being placed in a home.

60Paula indicated that the funds borrowed by the Respondent included $100,000 for asphalt paving and renovations to the Respondent’s office on Heber Street in Trenton. A loan to the Respondent in the amount of $105,000 was made by the Mother in 2008 to assist the Respondent to purchase real property located at 109 Aikins Road, Belleville, Ontario which the Respondent purchased on December 19, 2008 for $105,000 and which the Respondent still owns.

61Pursuant to searches conducted by the Applicant in September of 2023, it was discovered that the Respondent owned, as sole owner, three unencumbered pieces of real property in Ontario: one acquired in 1984, one in 1996, and one in 2008.

62I find that the Real Estate Advances transferred to the Respondent from the Mother are not gifts and that the presumption of a resulting trust has not been rebutted. The Respondent’s claim of a gift is inconsistent with Paula’s evidence regarding the Mother’s attitude and actions regarding giving money to her children. That evidence demonstrated that the Mother was very cautious with her funds. Further, there is no independent evidence to support the contention that these advances were gifts.

63The corroboration required by s. 13 must be independent evidence, which shows that the evidence on a material issue is true: Burns Estate v. Mellon (2000), 48 O.R. (3d) 641 (C.A.), at para. 29.

64While the burden of proof for the rebuttal of the resulting trust is to a civil standard, the evidence of the party seeking to rebut the resulting trust should be viewed with a “healthy scepticism” and must “be scrutinized in accordance with the gravity of the suspicion” and for cogency and consistency with the circumstances and behaviour of the deceased: see Burns Estate, at para. 9; Vout v. Hay, [1995] 2 S.C.R. 876, at para. 24.

65Having found that the presumption of a resulting trust has not been rebutted, the Real Estate Advances are owed to the Estate.

66I have concluded that the Real Estate Advances of $205,000 are the property of the Estate. I have also concluded that the Mother spent $70,000 of her savings on replacing furnaces and paying for private health care. There was $157,000 left at the time of the Mother’s death. Therefore, $453,000 is owed to the Estate ($610,000 minus the $157,000 remaining). The $157,00 which was remaining in the Mother’s account is the property of the Estate.

Enforcement and Collection

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Enforcement and Collection

The Applicant points out that the Estate Trustee has sufficient funds on hand to deal with all the debts of the Estate, including any of the Applicant’s costs to be paid by the Estate, regardless of the debt owed by the Respondent to the Estate.

68If the Respondent’s debt is collected, it would increase the value of the Estate and the residue. Prior to the collection of this debt, the Estate Trustee can set off the Respondent’s debt against her share of the residue of the Estate.

69The Applicant also submits that he is in a better position than the Estate Trustee to recover any funds in excess of the amount owed to the Respondent from the residue.

70I do not agree that it is appropriate in these circumstances to order any amount payable by the Respondent to the Estate payable to the Applicant in trust for the Estate. It is the responsibility of the Estate Trustee to collect the funds and administer the Estate. The Estate Trustee serves an important role in administering the estate in the manner in which the Mother desired. See: James Estate (Re) 2024 ONCA 623 at para 29.

71A draft order reflecting the court’s decision should be provided by the Applicant.

Costs

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Costs

The Applicant seeks full indemnity of his costs. I indicated at the time that I heard this motion that the court would require additional submissions — which can be done by Zoom — to deal with the issue of costs. This is due to the length and history of this proceeding and the fact that several of the appearances were determined to be “in the cause”. The Respondent may also be given an opportunity to make submissions with regard to costs, even though she has not participated in these proceedings, nor has she filed material on the motion.

73A date can be affixed for hearing submissions regarding costs by contacting trial coordination. If the Applicant has additional submissions to make regarding costs, they should be no longer than three pages in length and should be served on the Respondent, if possible, and filed with the court two weeks prior to the oral hearing. The Respondent should direct any submissions regarding costs to the court two weeks prior to the hearing. Any costs affixed on this motion are in addition to the costs which were already awarded by Abrams J. in this matter in the amount of $13,500.

Anne London-Weinstein J.