M. Mroz et al. by their litigation guardian A. Mroz v. Mroz et al.

[Indexed as: Mroz (Litigation Guardian of) v. Mroz]

Ontario Reports

Court of Appeal for Ontario,

Doherty, Gillese and Lauwers JJ.A.

March 16, 2015

125 O.R. (3d) 105 | 2015 ONCA 171

Case Summary

Trusts and trustees — Resulting trust — Testator transferring family home to herself and daughter as joint tenants and at same time making will which stipulated that her share of property was to go to daughter on condition that daughter pay bequests to grandchildren within one year of testator's death — Daughter holding property on resulting trust — Trial judge erring in finding that presumption of resulting trust had been rebutted — That conclusion precluded by trial judge's finding that bequests were intended to be paid out of proceeds of sale of property after testator's death — Daughter's failure to pay bequests to grandchildren constituting breach of trust.

K transferred title to the family home (the "property") to herself and her daughter H as joint tenants. At the same time, she executed a will in which she stipulated that her share of the property was to go to H on condition that she pay bequests to K's grandchildren within one year of K's death. After K's death, H sold the property and used the proceeds of sale for herself. The grandchildren challenged the validity of the will and H's conduct in relation to the property. The trial judge found that the will was valid, that K intended that her grandchildren were to be paid from the proceeds of sale of the property, and that the presumption of resulting trust in respect of the property had been rebutted. She found that the will made H a joint tenant of the property on condition that H pay each grandchild a bequest, creating a trust obligation that H breached. H appealed. The grandchildren cross-appealed the finding that the presumption of resulting trust had been rebutted.

Held, the appeal and the cross-appeal should be dismissed.

The trial judge did not err in finding that the will was valid.

H held the property on resulting trust. Once the trial judge found that K intended that the bequests were to be paid out of the proceeds of sale of the property, it was not open to her to find that the presumption of resulting trust had been rebutted and that H took the property by way of gift. On K's death, the property formed part of her estate and its disposition was governed by the terms of the will. H's failure to pay the bequests was a breach of trust.

Pecore v. Pecore, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17, 2007 SCC 17, 279 D.L.R. (4th) 513, 361 N.R. 1, J.E. 2007-874, 224 O.A.C. 330, 32 E.T.R. (3d) 1, 37 R.F.L. (6th) 237, EYB 2007-118938, 156 A.C.W.S. (3d) 502, apld

Sawdon Estate v. Sawdon (2014), 119 O.R. (3d) 81, [2014] O.J. No. 573, 2014 ONCA 101, 370 D.L.R. (4th) 686, 93 E.T.R. (3d) 247, 315 O.A.C. 129, 39 R.F.L. (7th) 6, 237 A.C.W.S. (3d) 560, distd

Other cases referred to

Perez (Litigation Guardian of) v. Salvation Army in Canada (1998), 1998 7197 (ON CA), 42 O.R. (3d) 229, [1998] O.J. No. 5126, 171 D.L.R. (4th) 520, 115 O.A.C. 328, 28 C.P.C. (4th) 11, 58 C.R.R. (2d) 320, 87 A.C.W.S. (3d) 375 (C.A.) [page106]

APPEAL AND CROSS-APPEAL from the judgment of D.A. Wilson J., [2014] O.J. No. 1273, 2014 ONSC 1030, 97 E.T.R. (3d) 32 (S.C.J.).

Montgomery T. Hyde, for appellant.

Michael Czuma, for respondents.

The judgment of the court was delivered by

[1] GILLESE J.A.: — An aging mother transferred title to the family home to herself and her daughter, as joint tenants. The family home was the mother's only significant asset. At the same time as she directed that the transfer be made, the mother executed a will in which she referred to the family home and made bequests to a number of family members. Some of the bequests were charged against the family home.

[2] On the mother's death, how was the family home to be dealt with? Did it become part of the mother's estate and devolve in accordance with her will? Did the daughter take it outright, by right of survivorship? Or did the daughter take the property as a trustee, with an obligation to sell it and distribute the proceeds in accordance with the wishes that her mother had expressed during her lifetime?

[3] This appeal and cross-appeal depend upon the answers to these questions.

Overview

[4] Kazimiera (Kay) Mroz and her husband, Jozef Mroz, lived at [address omitted] in Toronto, Ontario (the "Property").[^1]

[5] On July 23, 2004, after Jozef's death, Kay went to her lawyer's office where she executed two documents: a new will (the "2004 will") and an acknowledgment and direction (the "direction").

[6] In the 2004 will, Kay named Helen Mroz and Richard Paramonczyk as her executors. Helen is Kay's daughter and Richard is Kay's nephew.

[7] In the 2004 will, Kay bequeathed $50,000 to Richard and his family.[^2] She also stipulated that her "share of the [P]roperty" [page107] was to go to Helen, on the condition that within a year of her death, Helen paid $70,000 to each of Martin Mroz and Adrianna Mroz. Martin and Adrianna are Kay's grandchildren and Helen's nephew and niece.

[8] In the direction, Kay authorized the transfer of title to the Property to herself and Helen as joint tenants.

[9] Shortly after Kay's death, Helen sold the Property for approximately $476,000. She used the sale proceeds for herself. All of this was done without notifying Richard, her co-executor under the 2004 will.

[10] As a result of Helen's actions, the Property did not pass through Kay's estate. Apart from the Property, the value of Kay's estate was approximately $3,200.

[11] Martin and Adrianna started legal proceedings in which they challenged the validity of the 2004 will and Helen's conduct in relation to the Property.

[12] A trial was held. The trial judge found that the 2004 will was valid and the presumption of resulting trust in respect of the Property had been rebutted.

[13] By judgment dated March 13, 2014, among other things, Helen's failure to pay $70,000 to each of Martin and Adrianna was declared to be a breach of trust and Helen was ordered to pay them those sums, plus prejudgment interest.

[14] Helen appeals. The essence of her appeal is that once the trial judge found that the presumption of resulting trust had been rebutted, the Property passed to her by right of survivorship and, therefore, she had no legal obligation to pay the legacies to Martin and Adrianna.

[15] Martin and Adrianna cross-appeal. The essence of their cross-appeal is that the trial judge erred in finding that the presumption of resulting trust had been rebutted and, accordingly, the Property formed part of Kay's estate. They also ask this court to make an award of punitive damages against Helen.

[16] For the reasons that follow, I would dismiss both the appeal and the cross-appeal.

Background

[17] Much of the following background information has been drawn from the careful and thorough factual findings of the trial judge, as expressed in her reasons. [page108]

[18] Kay was born in Poland in 1923. She married Jozef in 1951. They had two children: Stanley and Helen. Stanley was born in 1955 and Helen in 1960.

[19] Kay's sister had a son, Richard. Richard's parents died when he was only 13. He went to live with Kay and Jozef and their children, and stayed until he was 21. He had a very close relationship with the Mroz family and was treated like a son.

[20] Richard married Anne in 1975. They have three daughters.

[21] Helen's brother Stanley married Agnieszka in 1990 and had two children: Martin and Adrianna. Apparently, the Mroz family's relationship with Agnieszka was strained. After Stanley died in a car accident in 2000, the relationship further deteriorated.

[22] Helen did not marry or have children.

[23] Kay and Jozef had wills prepared in 2001 by a lawyer, Marek Malicki.

[24] In her 2001 will, Kay left all of her estate to Jozef. If he were to predecease her, Kay's 2001 will provided that her estate was to be divided into two equal shares: one for Helen, and the other to be split equally between Martin and Adrianna. Out of Helen's share, the five members of Richard's family were each to receive $10,000. Kay's 2001 will provided that Helen could live in the family home (the Property) for two years following Kay's death, after which the Property was to be sold.

[25] Helen lived with her parents at the Property. Jozef died in July 2002. In October 2002, Kay was diagnosed with cancer and hospitalized for treatment. Afterwards, Kay went to a rehabilitation centre where she remained until February 2003.

[26] In March 2003, Kay returned to Malicki's offices in order to make a new will. She knew that her prognosis was terminal. She also knew that Agnieszka had received approximately $1 million after settling a lawsuit that arose from her husband's death in an accident, and that her grandchildren Martin and Adrianna had received some money from the settlement. Richard testified that part of Kay's motivation for changing her 2001 will was to reduce the amount of money her grandchildren would receive from her estate.

[27] On July 23, 2004, Kay attended at Malicki's offices and executed the 2004 will and the direction. Malicki had drafted the direction so that the Property would be transferred to Kay and Helen as tenants-in-common. However, in the executed direction, there is a line through the words "tenants-in-common" and the words "joint tenants" have been handwritten in. At trial, Malicki testified that he would have recommended to Kay that she and Helen take the Property as tenants-in-common. Helen [page109] testified that the Property was put into joint tenancy because her mother was a frugal woman and wanted to avoid paying probate fees. The trial judge found that Malicki would have explained the consequences of a joint tenancy to Kay, so that she understood what she was signing.

[28] In the 2004 will, Kay appointed Helen and Richard as co-executors.

[29] In para. 5(a) of the 2004 will, Kay bequeathed $10,000 to each of Richard, his wife and their three children, for a total bequest of $50,000. In para. 5(b), Kay made a bequest of $5,000 to Jordan Mackinnon.

[30] Paragraph 5(c) of the 2004 will is particularly significant, thus I will set it out in full. It reads as follows:

c) I BEQUEATH my share of the property at [address omitted] in Toronto, to my daughter, HELEN MROZ, provided that she pay within one (1) year of the date of my death the following legacies:

i) The sum of seventy thousand dollars ($70,000.00) to ADRIANNA MROZ, born on April 4th, 1993, for her own use absolutely, subject to provisions set out in this will;

ii) The sum of seventy thousand dollars ($70,000) to MARTIN MROZ, born on July 29th, 1990, for his own use absolutely, subject to provisions set out in this will.

These legacies shall constitute a first charge on my property in favour of ADRIANNA MROZ and MARTIN MROZ, until the legacies are paid.

[31] Kay died on June 18, 2005.

[32] Helen and Richard retained a solicitor, Richard Howitt, to deal with Kay's estate. They met with him on July 14, 2005.

[33] On August 10, 2005, Helen signed a survivorship application for the Property, which transferred it into her name alone.

[34] In October 2005, Helen sold the Property for $534,000. $38,000 was taken off of the sale price to reflect a problem with the foundation of the family home on the Property, so that the balance on closing was approximately $476,000.

[35] Helen sold the Property without notifying Richard of what she was doing. Later, when Richard discovered what had happened and protested, Helen said that she was solely entitled to the Property.

[36] As a result of Helen's actions, the Property was not dealt with as part of Kay's estate. The value of Kay's estate (without the Property) was approximately $3,200.

[37] After the sale of the Property closed, Helen purchased a house in Milton for an undisclosed price.

[38] In 2007, Helen sold the Milton property for approximately $287,000. She used most of the sale proceeds to put a 600 square [page110] foot addition on the Georgetown home of her friend, Noreen Atkinson. Helen then moved in with Atkinson, where she continues to reside, paying rent of $400 per month. Helen also paid for a number of improvements to the Atkinson property, including having a shed built on the property and a new roof put on the house. In addition, she bought Atkinson a used car, paid for Atkinson to return to school in New York, and went on a holiday to Holland.

[39] Meanwhile, Agnieszka took a number of steps to obtain information about Kay's estate. On April 19, 2006, by court order, Helen and Richard were required to file an application for a certificate of appointment as estate trustees with a will.

[40] Helen's lawyer, Richard Howitt, wrote to Agnieszka's lawyer in mid-May 2006, advising that Helen intended to pay into court $70,000 for each of Martin and Adrianna "prior to the one year date from the death of Kazimiera Mroz as stipulated in her Last Will and Testament".

[41] Agnieszka's lawyer responded that his client was not content with that proposal and indicated that a notice of objection would be filed, along with a motion for directions.

[42] In a letter dated May 26, 2006, Howitt responded that Helen supported the 2004 will and would bring an application to "pay the funds into Court in accordance with the Will".

[43] Helen gave Howitt a bank draft, dated May 29, 2006, for $140,000.

[44] By letter dated May 31, 2006, Howitt advised Agnieszka's lawyer that Helen had given him $140,000 and he was in a position to pay that sum into court to the credit of Martin and Adrianna. The letter continued: "However, if you are contesting the validity of the Will then your client's entitlement to these funds comes into question. Perhaps you would advise me as to your position."

[45] The money was not paid into court. Instead, it remained in Howitt's trust account for approximately two years, at which point Helen had the money returned to her.

[46] In January 2007, Martin and Adrianna (through their mother, Agnieszka, as litigation guardian) filed a statement of claim in which, among other things, they challenged the validity of the 2004 will and Helen's sale of the Property.

[47] Helen, Richard and the members of Richard's family were named as the defendants in the action. Helen defended. Richard defended separately and asserted a cross-claim.

[48] The matter proceeded to trial, by which time the claims against Richard and his family, and Richard's cross-claim, had been settled. [page111]

[49] At trial, Martin and Adrianna argued that the 2004 will was invalid because Kay lacked testamentary capacity and/or because Helen had exerted undue influence on Kay. They also contended that the Property formed part of Kay's estate and that the 2004 will created a trust in their favour for the amount of their legacies.

[50] Helen claimed that the 2004 will was valid and that she had taken title to the Property as the surviving joint tenant. She said that she had tried to pay $140,000 into court but as the plaintiffs refused to accept the money in settlement of the matter, she had no legal or moral obligation to pay the legacies.

The Decision Below

The 2004 will is valid

[51] The trial judge indicated that all of the witnesses at trial confirmed that Kay was a strong, intelligent woman who knew her own mind, worked throughout her life and ran the family finances. By all accounts, Kay was financially astute.

[52] In finding the 2004 will to be valid, the trial judge stated that there was "absolutely no evidence" that Kay lacked testamentary capacity when she made the 2004 will. Further, there was no reliable evidence that Helen deceived her mother into putting the Property into joint tenancy. The trial judge also found that Helen had not exerted undue influence over her mother when her mother transferred the Property to herself and Helen as joint tenants.

Ownership of the property and obligation to pay the legacies

[53] The trial judge referred to the seminal case of Pecore v. Pecore, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17, 2007 SCC 17, in which the Supreme Court clarified the law regarding the presumptions of resulting trust and advancement. Pecore established that (1) the presumption of resulting trust applies to gratuitous transfers of property from a parent to an adult child; and (2) the trial judge must begin his or her inquiry with that presumption and then weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor's actual intention at the time of transfer: Sawdon Estate v. Sawdon (2014), 119 O.R. (3d) 81, [2014] O.J. No. 573, 2014 ONCA 101, at paras. 56-57.

[54] The trial judge then reviewed the relevant evidence of intention and, at paras. 42-43 of her reasons, concluded:

[Kay] wished to gift Helen full title to the house upon her death, with the understanding that the house was to be sold within a year of [Kay's] death [page112] and specific bequests, including the monies for the grandchildren, were to be paid from the proceeds of the sale. Accordingly, Helen has rebutted the presumption of a resulting trust.

To be clear, the gift of her share of the house to Helen was not for Helen's personal use entirely but for her to distribute proceeds of the sale in accordance with Kay's wishes.

[55] At para. 65 of the reasons, the trial judge stated that on Kay's death, Helen become sole owner of the house by right of survivorship and the house did not form part of the estate. However, at paras. 68-69 of her reasons, the trial judge stated:

It is beyond dispute that Helen knew her mother wanted the legacies paid and knew the deadline for payment; the [2004 will] states that they form a first charge on the [P]roperty. I find that Helen has failed to carry out the terms of the [2004 will] as she has failed to honour her mother's wishes[.]

I find that Helen's failure to pay $140,000 to the grandchildren is a breach of trust. In Theobald on Wills, the authors note that a devise of property in a will on condition that the inheritor of the property make certain payments creates a trust obligation for the inheritor[.]

(Citations omitted)

[56] The trial judge concluded that the 2004 will made Helen a joint tenant of the Property on condition that Helen pay each grandchild $70,000 within a year of Kay's death, creating a trust obligation that Helen had breached.

Helen's conduct

[57] The trial judge made a number of adverse findings about Helen's conduct. She found that Helen, without any justification, had treated Richard in a "despicable fashion". The factual context within which the trial judge made this finding was Helen's sale of the Property without any notice to Richard, her co-executor of Kay's estate. The trial judge found that by failing to keep Richard apprised of what she was doing with the Property, Helen had "deceived" Richard about its sale and the payments that were due on the closing of the sale transaction.

[58] The trial judge also noted that Richard had settled his family's claims under the 2004 will for less than they were worth, simply to put an end to the matter. She described Helen's failure to make the payments owed to Richard and his family under the 2004 will as "particularly odious given that Richard had always acted in an honourable fashion toward Helen and was treated as a son by Kay".

[59] The trial judge also found that Helen was a devoted daughter who took care of her mother after her father's death and assisted her mother significantly during her illness. However, the trial judge found that Helen's conduct changed after her [page113] mother's death. She said that Helen's conduct in selling the Property and failing to use the sale proceeds to pay the legacies owed under the 2004 will was "beyond comprehension". The trial judge stated that the evidence of all witnesses, including Helen, was that Kay wanted her grandchildren to each receive $70,000 from the proceeds of the sale of the Property, and Richard's family to receive $50,000. Nonetheless, the trial judge found, rather than carrying out the terms of the 2004 will, Helen spent the money from the sale of the Property primarily on Atkinson. She described this aspect of Helen's behaviour as "nothing short of disgraceful".

[60] At para. 73 of her reasons, the trial judge explained why she did not award punitive damages against Helen:

Although the Statement of Claim includes a claim for punitive and exemplary damages, this was not pursued at trial nor was it argued in submissions, thus I make no order. However, I do find that the conduct of Helen after her mother's death is worthy of an order for these types of damages as it is egregious and worthy of censure.

The Issues

[61] On appeal, Helen submits that the trial judge erred in finding that

-- the 2004 will imposed a trust over the Property;

she was obliged to pay Martin and Adrianna the amount of their bequests under the 2004 will; and

her failure to have paid those bequests was a breach of trust.

[62] On cross-appeal, Martin and Adrianna submit that the trial judge erred in finding that

-- the 2004 will was valid; and

the presumption of resulting trust had been rebutted in respect of the Property.

[63] As well, Martin and Adrianna ask this court to award punitive damages against Helen.

[64] I will first address the issue of the validity of the 2004 will. Then I will address whether Helen is obliged to pay Martin and Adrianna the amount of their bequests under the 2004 will. In so doing, I will deal with the interrelated matters of the presumption of resulting trust, whether Helen took the Property as a trustee, and whether Helen's failure to have paid the bequests [page114] to Martin and Adrianna was a breach of trust. I will conclude by considering the claim for punitive damages.

Analysis

Did the trial judge err in finding the 2004 will valid?

[65] The trial judge described Kay as a strong, intelligent, financially astute woman who knew her own mind. She found that Kay was, at the relevant times, served by a knowledgeable and competent lawyer. The trial judge found that there was no evidence to support the challenge to Kay's testamentary capacity.

[66] The trial judge rejected the submission that Helen had deceived her mother or exerted undue influence over her, stating that there was no reliable evidence to support that submission.

[67] The trial judge's findings that Kay had testamentary capacity and that Helen did not exert undue influence on her were fully available on the record. Accordingly, I see no basis on which to interfere with the trial judge's determination that the 2004 will was valid.

Did the trial judge err in finding that Helen is obliged to pay Martin and Adrianna the amount of their bequests under the 2004 will?

[68] In my view, the trial judge correctly concluded that Helen was liable to pay $70,000 to each of Martin and Adrianna and that Helen's failure to have made those payments from Kay's estate was a breach of trust. However, I arrive at this conclusion for different reasons than those given by the trial judge. In my opinion, Helen held the Property on resulting trust. Consequently, when Kay died, the Property formed part of Kay's estate and was to be dealt with in accordance with the 2004 will. Under the terms of the 2004 will, Martin and Adrianna were each entitled to a legacy of $70,000 and those legacies were a first charge on the Property.

[69] The trial judge erred in principle, at para. 42 of her reasons (set out above, at para. 54). In para. 42, the trial judge found that Helen had rebutted the presumption of resulting trust, stating that when Kay transferred the Property into joint tenancy with Helen, Kay "wished to gift Helen full title to the house upon [Kay's] death . . . and specific bequests, including the monies for the grandchildren were to be paid from the proceeds of sale". However, since Pecore, it is clear that once the trial judge found that the sale of the Property after Kay's death was to be the source of funds for bequests under the 2004 will, she could not find that the presumption had been rebutted. [page115]

[70] Pecore, at paras. 48-50, explains that a gift from a parent to an adult child in circumstances such as these includes the right of survivorship and is inter vivos, meaning that the gift vests immediately at the time of transfer. Such a gift is not testamentary and nothing more need be done to complete the gift of the beneficial title. On the findings of the trial judge, Kay intended that Helen was to sell the Property after her death and use the sale proceeds to fund the bequests in her 2004 will. Clearly, that is a testamentary disposition. As the trial judge found that the Property was to be used by the estate to satisfy Kay's wishes, as expressed in the 2004 will, she could not find that the presumption of resulting trust had been rebutted and that Helen took the Property by way of gift. It was an error in principle to so find.

[71] Because of this error, it falls to this court to determine whether Helen rebutted the presumption of resulting trust. To answer that question, I will apply the relevant legal principles to the trial judge's factual findings on Kay's actual intention at the time of the transfer.

[72] A resulting trust arises when title to property is in one party's name but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: Pecore, at para. 20. When a parent gratuitously transfers property to his or her adult child, the law presumes that the child holds the property on resulting trust for the parent: Pecore, at para. 36. The burden of rebutting the presumption is on the child. In determining whether the presumption has been rebutted, the trial judge must begin his or her inquiry with the presumption and then weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the parent transferor's actual intention at the time of transfer: Sawdon Estate, at paras. 67-71.

[73] The kind of evidence relevant to determining the transferor's actual intention at the time of transfer depends on the facts of the case: Pecore, at para. 55. A court may consider evidence of the transferor's conduct after the transfer, so long as it is relevant to the transferor's intention at the time of the transfer: Pecore, at para. 59.

[74] The trial judge's key findings on Kay's actual intent at the time of transfer are as follows: Kay wanted Helen to have title to the Property after her death (paras. 42 and 59); Kay wanted her grandchildren and Richard's family to receive their bequests from the sale of the Property (paras. 42, 59 and 67); and Kay wanted Helen to pay the bequests to Kay's two grandchildren within a year of her death from the proceeds of sale of the Property (paras. 43 and 69-70). Indeed, the trial judge found that all of the [page116] witnesses, including Helen, acknowledged that Kay wanted to use the proceeds of sale of the Property to make the bequests to Richard and his family, and to each of her two grandchildren.

[75] With these legal principles and factual findings in mind, I return to the question at hand: did Helen rebut the presumption of resulting trust and take the Property by way of gift? The answer to that question must be no.

[76] If the presumption was rebutted, then the transfer of the Property was an inter vivos gift and Helen became solely entitled to the Property on Kay's death by virtue of the right of survivorship. In that case, the Property would not have formed part of Kay's estate and Helen would have no legal obligations in relation to the Property or the proceeds of its sale. These legal consequences, however, are inconsistent with the trial judge's findings that Kay's actual intention at the time of the transfer was to provide for Helen after her (Kay's) death and that Helen was to use the Property to make the bequests to Richard and his family, and to her two grandchildren.

[77] Moreover, the legal consequences of finding that the presumption had been rebutted are inconsistent with the terms of the 2004 will. Kay executed the direction and the 2004 will on the same day, in the same meeting with her lawyer. Kay was an intelligent, financially astute woman. On the evidence, there can be no doubt that Kay knew that if the Property did not form part of her estate, there would be insufficient assets in the estate to satisfy the bequests for Richard and his family and her two grandchildren. Why would she have made those bequests in her 2004 will if she knew that they could not be realized? Why would she have stated in the 2004 will that she was dealing with "her share" of the Property, if she had intended to already give away the Property to Helen?

[78] As an intelligent, knowledgeable, financially astute person with only one asset of any significant value -- the Property -- Kay must have intended that the Property would be used as the source of funds for the bequests that she made in the 2004 will.

[79] I would conclude by noting that the facts of this case are materially different from those in Sawdon Estate. In Sawdon Estate, a father transferred his bank accounts, which had a right of survivorship, into joint names with two of his five children. On numerous occasions, the father made it clear to the two children on title to the accounts that on his death, he wished the money in the bank accounts to be given to all of his children equally. The two children on title assured their father that they would honour those wishes. The father's will made no mention of the bank accounts. [page117]

[80] This court held that the presumption of resulting trust, which applied to the bank accounts, had been rebutted. However, rebuttal of the presumption did not lead to the conclusion that the two children on title took beneficial title to the bank accounts on their father's death. Based on the findings of the trial judge, this court concluded that the father's actual intent in making the transfer was to place his two children under an immediate trust obligation to hold the amounts in the bank accounts, on his death, for all five children in equal shares: see Sawdon Estate, at paras. 64-72. That is, the father created an inter vivos trust although execution of the trust was not to take place until his death.

[81] Thus, it can be seen, the father's actual intention at the time of transfer in Sawdon Estate was significantly different from Kay's actual intention at the time of transfer in the present case. In Sawdon Estate, the father's actual intention at the time of the transfer was to place the two children on title under an immediate trust obligation. In the present case, Kay's actual intention at the time of transfer was to place an obligation on Helen, after she (Kay) died, to sell the Property and pay specific bequests from the sale proceeds. While the situation in Sawdon was an inter vivos trust, the situation in this case is a testamentary one in that the trust obligations did not arise until after Kay's death.

[82] For these reasons, in my view, the presumption of resulting trust was not rebutted. Consequently, on Kay's death, the Property formed part of her estate and its disposition was governed by the terms of the 2004 will. Under those terms, Helen was obliged to sell the Property within a year of Kay's death and to pay $70,000 to each of Martin and Adrianna from the sale proceeds. Her failure to make those payments was a breach of trust, as the trial judge found.

Should this court award punitive damages against Helen?

[83] In the normal course, appeals are not the proper forum in which to raise brand new issues which significantly expand or alter the landscape of the litigation: Perez (Litigation Guardian of) v. Salvation Army in Canada (1998), 1998 7197 (ON CA), 42 O.R. (3d) 229, [1998] O.J. No. 5126 (C.A.), at p. 233 O.R. Although punitive damages were claimed in the statement of claim, they were not pursued at trial. Thus, in effect, the claim for punitive damages is raised for the first time on appeal. In my view, it would not be appropriate to entertain such a claim at this stage in the proceeding. [page118]

Disposition

[84] Accordingly, I would dismiss both the appeal and the cross-appeal, with costs to the respondents fixed at $7,160, inclusive of disbursements and all applicable taxes.

Appeal and cross-appeal dismissed.

Notes

[^1]: Because a number of individuals involved in this matter have the same last name, for ease of reference I refer to all by their first names.

[^2]: There is some ambiguity about the meaning of the provision that makes this bequest in the 2004 will. It could be read as saying that each of Richard, Anne and their three children was to receive $10,000 for a total of $50,000, or that the five members of the family were to receive a total of $10,000. The trial judge adopted the first of the two interpretations and I have followed suit. Nothing at trial or on this appeal and cross-appeal turns on which of the two interpretations is correct.

End of Document