COURT OF APPEAL FOR ONTARIO

CITATION: Donis v. Georgopoulos, 2016 ONCA 194

DATE: 20160308

DOCKET: C58818

Gillese, Huscroft and Miller JJ.A.

In the Estate of Sofia Donis, deceased

BETWEEN

Christos Antoniou Donis

Appellant (Applicant)

and

Dimitra Georgopoulos and Eleni Antoniou Donis

Respondent in Appeal (Respondents)

Constantine Alexiou, for the appellant

Maurice W. Pilon, for the respondent

Heard: October 7, 2015

On appeal from the judgment of Justice S.E. Firestone of the Superior Court of Justice, dated April 15, 2014, with reasons reported at 2014 ONSC 1427.

Miller J.A.:

Overview

[1] At issue in this appeal is the validity of a memorandum of agreement (the “MOA”) that transfers ownership of a house from Sofia Donis (the “mother”) to her daughter, Dimitra Georgopoulos, in exchange for $100,000 and a promise that the mother could remain living in the house for the rest of her life.

[2] A few months after the execution of the MOA, the mother died unexpectedly. The transfer of the house substantially reduced the inheritance of the mother’s son, Christos Donis (the appellant), and other daughter, Eleni Donis.

[3] Christos challenged the validity of the transfer primarily on the basis that: (1) their mother’s rudimentary understanding of English prevented her from having the requisite capacity and understanding to execute the MOA; and (2) Dimitra exercised undue influence over her mother, who did not receive proper independent legal advice.

[4] The trial judge dismissed his challenge and Christos appeals.

[5] For the reasons that follow, I would dismiss the appeal.

Background

[6] Dimitra was the primary caregiver for her aging parents who were no longer able to care for themselves: first for her father, who died in 2005, and then her mother, who died in 2008.

[7] In order to facilitate her mother’s desire to remain living in her own home, Dimitra undertook a burdensome caregiving routine. For approximately two years, Dimitra left her own family after dinner each evening to care for her mother. She stayed overnight at her mother’s house, before returning to her own home the next morning.

[8] It is uncontroverted that although Christos shared the overnight duties with Dimitra for one year, Dimitra thereafter assumed sole responsibility for them.

[9] On September 18, 2007, Dimitra and her mother executed the MOA, which had been drafted by her mother’s solicitor, Michael Shea. The MOA stated:

I, Sofia Donis, herein agree to transfer all of my right, title and interest in the property municipally known as 41 Corinthian Blvd., to my daughter, Dimitra Georgopoulos.

I will do so at the time when she pays to me the sum of $100,000.00 out of the proceeds from the sale of her own property.

I, Dimitra Georgopoulos, herein agree to allow my mother, Sofia Donis, to continue to reside with me at 41 Corinthian Blvd., for the balance of her lifetime unless she is unable for health reasons to do so.

[10] The mother was fluent in Greek and Macedonian. The extent of her English language skills was disputed by the parties. The trial judge found that Mr. Shea was able to communicate with the mother in English. To some extent he was assisted by Dimitra, who attended his office with her mother on each of her mother’s meetings with Mr. Shea.

[11] The trial judge found that the mother’s instructions to Mr. Shea changed over time. Originally, she sought to change her will, so that her house would be left to Dimitra to the exclusion of her other children. Eventually, she settled on a plan to sell her house to Dimitra for $100,000, the sum of which she would then bequeath to Christos and Eleni through a revised will. There was some dispute between the parties as to whether the MOA was inter vivos in nature or testamentary. The trial judge concluded that it was inter vivos.

[12] He found that Mr. Shea’s practice over the course of these meetings was to confirm his instructions from the mother with Dimitra out of the room. He took the additional step of having the mother see Mr. Petrovski, a Macedonian-speaking lawyer, to confirm that she intended to transfer her house to Dimitra. Mr. Petrovski did not review the MOA with the mother, as it had not been prepared by that time. His role was simply to confirm that it was the mother’s independent desire that Dimitra have the house to the exclusion of her siblings.

[13] On February 14, 2008, before Dimitra could complete the sale of her own home, her mother died. Two weeks later, the sale of Dimitra’s home was completed. Dimitra’s solicitor held back $100,000 from the sale proceeds in accordance with the MOA, and that sum is being held pending the outcome of this litigation. Legal title to 41 Corinthian Boulevard has not yet been conveyed to Dimitra.

[14] The appellant testified that his mother “wasn’t straight in her mind”, but he did not request anyone to investigate this concern. Although the mother’s family physician, Dr. Zeidenberg, testified that the mother’s medication made it difficult for her to think clearly, he did not refer her for a capacity assessment or to a memory clinic, or perform any cognitive impairment assessments. Mr. Shea’s evidence, from his interactions with the mother, was that she was fine notwithstanding some forgetfulness.

[15] From this evidence, the trial judge concluded that the mother was mentally capable.

[16] The trial judge also found that although the mother could not read English perfectly, she had sufficient ability to understand the contents of the MOA, which was a simple document. This finding was supported by the evidence of Mr. Shea and Dimitra, as well as inferences the trial judge drew from the length of time that the mother spent in Canada and the time she spent watching television in English.

[17] The trial judge held that the MOA was valid and made an order that title to 41 Corinthian Boulevard be transferred to Dimitra, and that Dimitra pay the sum of $100,000 to the estate of the mother. Christos appealed.

Issues on Appeal

[18] The appellant argues that the trial judge erred in finding that:

1. The mother understood the MOA and the MOA was not invalidated by the doctrine of non est factum;
2. Dimitra rebutted the presumption of undue influence;
3. The mother’s interests were protected by independent legal advice; and
4. The MOA was valid despite a failure of consideration.

[19] Given the interrelatedness of issues 2 and 3, they are dealt with together in the analysis below.

Analysis

(1) Non est factum

[20] The appellant, relying on Marvco Colour Research Ltd. v. Harris, 1982 CanLII 63 (SCC), [1982] 2 S.C.R. 774, at 784, argues that the MOA should be invalidated because “the evidence establishes that the document signed is of a different nature from that which the signer intended to execute”.

[21] The appellant argues that because his mother could not read the MOA for herself in English, and did not receive an explanation as to what the MOA said, the trial judge erred in not finding the MOA to be void on application of the doctrine of non est factum.

[22] I disagree. The factual findings of the trial judge are an unsurmountable hurdle to the claim of non est factum.

[23] There is no basis on which to interfere with the trial judge’s finding that the facts did not support a claim of non est factum. He found that: (1) the mother had sufficient ability in English to read and understand the MOA; (2) the mother had sufficient ability in English to understand Mr. Shea’s explanation of the content of the MOA; and (3) Dimitra provided her mother with an explanation of the content of the MOA in Macedonian.

[24] These findings are entitled to deference and are a complete answer to this argument.

[25] It should be noted that the appellant is seeking to invalidate a contract signed by a third party. The appellant did not direct us to any authority for the proposition that a third party can move to invalidate a contract on the basis of non est factum. However, given my conclusion on this issue, it is not necessary to decide that matter.

(2) Undue influence

[26] The appellant argues, in the alternative, that if the mother understood the MOA, she only signed it as a result of Dimitra’s undue influence on her, and the MOA should be invalidated on that basis.

[27] The trial judge found that the appellant had not adduced sufficient evidence to establish undue influence. However, he found, at para. 69, that there was sufficient evidence to raise the presumption of undue influence:

I do find, however, that because Sofia was dependent on Dimitra for her basic needs, she was in a relationship of trust and confidence with her daughter sufficient to raise the presumption of undue influence. It therefore falls on the respondent Dimitra to rebut this presumption.

[28] He went on to find that Dimitra had rebutted the presumption, pointing to, among other things, Shea’s evidence that the mother was not being coerced and Petrovski’s provision of independent legal advice to the mother.

[29] I see no basis on which to interfere with the trial judge’s determination of these matters.

[30] Once the trial judge found that there was no actual undue influence, he was required to inquire into the nature of the relationship between the parties to determine whether that relationship triggered a presumption of undue influence. Once he found the presumption to have arisen, the onus shifted to Dimitra to rebut it: Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, at 378-9.

[31] Rebutting the presumption may entail showing that there was no influence deployed in the transaction or that the donor had independent legal advice: see Geffen, at 379. In finding the presumption was rebutted in this case, the trial judge relied on both of these of factors.

[32] In finding that the mother was not being influenced, the trial judge placed great emphasis on Mr. Shea’s evidence (at para. 70):

Shea was of the opinion that Sofia was not being coerced and the idea to transfer her house to Dimitra was the product of her own free will. Having found Shea to be a professional and entirely credible and reliable witness, this evidence alone goes a long way to dispelling the presumption of undue influence.

[33] A second basis for the trial judge’s finding that the presumption was rebutted was that the mother had received independent legal advice from Mr. Shea.

[34] The appellant accepts that the mother received some advice from Mr. Shea, but argues that it was deficient and, in any event, insufficient to rebut the presumption of undue influence.

[35] The appellant objects that Mr. Shea did not explain the risks of the transaction to the mother and that he was in a conflict of interest due to Dimitra’s presence at all of the meetings. The referral to Mr. Petrovski did not remedy these defects, the appellant argues, because Mr. Petrovski could not explain the legal aspects of the MOA to the mother because the MOA had not yet been drafted. The appellant argues that Mr. Petrovski was therefore not able to advise the mother as to the risks of the transaction or to provide her with a recommendation of whether to proceed with it.

[36] I reject the appellant’s arguments for two reasons.

[37] First, on the findings of the trial judge, Mr. Shea was not in a conflict of interest. The trial judge found that Mr. Shea was retained by the mother and was acting for her alone. Although Dimitra was present at each meeting with Mr. Shea, it was his practice to confirm his instructions from the mother directly, in Dimitra’s absence.

[38] Second, the trial judge found that the advice that Mr. Shea provided, and the assistance he received from Mr. Petrovski, ensured that the mother understood the nature of the transaction and its attendant risks.

[39] As the appellant argues, for independent legal advice to be effective for the purpose of defeating the presumption, it must have been informed and competent. That is, it must have been given with “a knowledge of all relevant circumstances and must be such as a competent and honest adviser would give if acting solely in the interests of the donor”: see Inche Noriah v. Shaik Allie Bin Omar, 1928 CanLII 611 (UK JCPC), [1929] A.C. 127, at 136.

[40] The trial judge found that Mr. Shea understood the mother’s circumstances. Mr. Shea understood that she wished to remain living in her home for the rest of her life. He understood that she wished to effect this by having Dimitra live with her full time and care for her. He understood that there were other children who would be affected by this decision.

[41] The trial judge found that Mr. Shea sent the mother to a Macedonian speaking lawyer to confirm that it was her intention to transfer the house. Mr. Petrovski confirmed to Mr. Shea that it was the mother’s intention to transfer the house to Dimitra to the exclusion of her other children (at para. 71):

In addition, Shea also insisted that Sofia receive independent legal advice from Petrovski. Petrovski was similarly of the view that the decision to transfer the home was Sofia’s and that she understood that the consequences of her decision would be to ultimately deprive her other children of some inheritance. It would have been preferable if Petrovski had had the opportunity to review the final MOA with Sofia, but that detail is not fatal. Independent legal advice need not be perfect to be effective.

[42] With respect to the competence of the advice provided, the trial judge found that Mr. Shea safeguarded the mother’s interests by structuring the transaction such that he would not transfer title until after she had received $100,000 from Dimitra. He also included a term in the MOA that Dimitra would allow the mother to remain living in the house for the balance of her lifetime. Mr. Shea met with the mother on several occasions, and the MOA was the product of her instructions. His role was not, as the appellant characterized it in oral argument, a matter of reading the document slowly to the mother and having the respondent translate it.

[43] I would differ slightly from the trial judge’s characterization of the consultation with Mr. Petrovski as independent legal advice. Mr. Shea was the mother’s lawyer and he was responsible for providing her with independent legal advice. He engaged Mr. Petrovski to assist him in carrying out his duties to his client. He referred the mother to Mr. Petrovski out of an abundance of caution, to ensure that it was her intention to transfer her house to Dimitra and that she understood the impact of the transaction on her other children.

[44] The appellant’s argument that the consultation with Mr. Petrovski did not satisfy the formal criteria for independent legal advice specified in the Law Society of Upper Canada’s Rules of Professional Conduct thus fails, as the receipt of independent legal advice from Mr. Petrovski in this form was not necessary to rebut the presumption of undue influence.

[45] The trial judge’s factual findings were all supported by evidence, and he was entitled to come to the conclusions that he did.

(3) Failure of consideration

[46] The final ground of appeal is that the trial judge erred in not finding the MOA to be invalid on the basis that there was a failure of consideration. The appellant argues that the MOA provided that Dimitra was to receive the property in exchange for $100,000 and the on-going provision of personal care for the mother thereafter. Given that the mother died prior to the transfer of the house to Dimitra, the appellant argues that Dimitra did not provide the future care that was required by the MOA.

[47] I reject this argument. As the trial judge held, at para. 77, “[t]he agreement did not provide that Dimitra could have the house for such a time as she continued to provide care to Sofia” (emphasis in original).

[48] The text of the MOA provided that Dimitra allow the mother “to continue to reside with [her] at 41 Corinthian Blvd., for the balance of [the mother’s] lifetime unless she is unable for health reasons to do so.” This was not, as the appellant characterized it, a contract for services. Although neither Dimitra nor her mother anticipated that the mother would die so soon after the MOA was executed, the fact that the mother died before the title was transferred does not affect the enforceability of the MOA.

Disposition

[49] I would dismiss the appeal. I would order costs to the respondent on a partial indemnity basis, fixed in the amount of $12,000, inclusive of disbursements and HST.

Released: “EEG” MAR 8 2016

“B.W. Miller J.A.”

“I agree. E.E. Gillese J.A.”

"I agree. Grant Huscroft J.A."