Court of Appeal for Ontario
Date: May 3, 2017 Docket: C62280
Judges: Strathy C.J.O., Gillese and Pardu JJ.A.
Between
Giustina Morreale Plaintiff (Appellant)
and
Elisabeth Romanino Defendant (Respondent)
Counsel
Maurice W. Pilon, for the appellant
Nick A. Porco, for the respondent
Heard: April 20, 2017
On Appeal
On appeal from the order of Justice Cory A. Gilmore of the Superior Court of Justice, dated May 25, 2016, with reasons reported at 2016 ONSC 3427.
Decision
Gillese J.A.:
[1] The Central Question
[1] Did a daughter exert undue influence over her parents, which resulted in them making an inter vivos gift to her of the bulk of their assets? That question lies at the heart of this case.
Background in Brief
[2] Nicola Ruccia and Lavina Ruccia had two children: daughters Giustina Morreale (the "appellant") and Elisabeth Romanino (the "respondent"). At the time of trial, the appellant was 64 years of age and the respondent was 59.
[3] The appellant left her parents' home when she was 20, to get married. The appellant always had a good relationship with her parents but there was a falling-out between Mr. Ruccia and the appellant's husband in 2003. After that, Mr. Ruccia never saw or spoke to the appellant's husband again, until at his bedside on the evening of his death.
[4] The respondent lived with her parents all of her life, even after she married in 2003. She cared for them and this caregiving increased as the Ruccias aged.
[5] In 1995, the Ruccias executed mirror wills, leaving everything to one another on death. The wills provided that when the survivor died, two-thirds of the Ruccias' interest in a property on Beck Drive was to go to the respondent (who already had a one-third interest in the property) and one-third was to go to the appellant. The residue of the Ruccias' estate was to be divided equally between their two daughters.
[6] Mr. Ruccia was diagnosed with cancer in 2008 and his health began to fail. The respondent and her husband cared for him at home. He required considerable care in the months preceding his death. He died on March 5, 2009, and Mrs. Ruccia passed away a few months later on October 19, 2009.
[7] Following the Ruccias' deaths, the appellant learned that her parents had made an inter vivos gift of their only significant capital asset to her sister, the respondent. That asset was their equity in a property on Beck Drive in which they had lived, together with the respondent and her husband.
[8] The Ruccias did not have an interest in the Beck Drive property at the time of their deaths because it had been sold in 2006. Prior to its sale, title to the Beck Drive property was joint, with the Ruccias owning a two-thirds interest and the respondent owning a one-third interest.
[9] When the Beck Drive property was sold, the Ruccias had equity of approximately $162,000 in it. That money was used towards the purchase of a property on Russell Stover Court. The Ruccias continued to live with the respondent and her husband, at the Russell Stover property, until their deaths. Title to the Russell Stover property was taken in the joint names of the respondent and her husband alone – the Ruccias were not on title.
[10] There was no evidence that the Ruccias received independent legal advice on the sale of the Beck Drive property or the purchase of the Russell Stover property. The same lawyer acted for both the Ruccias on the one hand and for the respondent and her husband on the other, on the sale of the Beck Drive property and the purchase of the Russell Stover property.
[11] The appellant started this proceeding in which she alleged, among other things, that the gift of the Ruccias' equity in the Beck Drive property to the respondent was the result of undue influence. By the time of trial, this was the sole issue to be determined.
[12] Following trial, the action was dismissed.
[13] The trial judge referred to the relevant legal principles in Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, noting that the equitable doctrine of undue influence was developed not to save people from the consequences of their own folly but to save them from being victimized by other people. She also observed that, while it is natural to presume that influence will exist in a relationship in which trust and confidence is reposed in the donee by the donor, the factual underpinning of the process leading up to the gift must be examined in the context of equity protecting the "weak or momentarily weak, not from bad bargains, but from the abuse of trust, confidence or power".
[14] The trial judge found that the circumstances and the respondent's relationship with her parents had the capacity to create undue influence. However, she found that the presumption of undue influence did not arise because it was not possible "to find any specific act of coercion or domination that would lead to a presumption of undue influence".
[15] The trial judge further concluded that even if the presumption did arise, based on her findings of fact, the presumption was rebutted.
The Issues
[16] On appeal, the appellant submits that the trial judge erred in:
concluding that the presumption of undue influence did not arise because she found "no specific act of domination or coercion" on the part of the respondent; and
giving an inadequate analysis of why, if the presumption did arise, it had been rebutted.
Analysis
[17] For the reasons that follow, I would dismiss the appeal.
[18] Before addressing the specific issues that are raised, I make the following general observation. The trial judge canvassed the relevant legal principles and thoroughly reviewed the evidence. She made numerous factual findings, all of which were solidly grounded in the evidence. Appellate deference is owed to the factual findings of the trial judge – it is not for this court to retry the case or substitute its view of the evidence for that of the trial judge, absent palpable and overriding error: Omcon Investments Limited v. 1100828 Ontario Limited, 2012 ONCA 154, at para. 2.
1. The Presumption of Undue Influence Did Not Arise
[19] At para. 73 of her reasons, the trial judge stated:
I find that in these circumstances, and despite the "special" relationship that existed, it is not possible to find any specific act of coercion or domination that would lead to a presumption of undue influence.
[20] The appellant points to this sentence and submits that it demonstrates an error in law on the part of the trial judge because there is no need for a finding of a "specific act of coercion or domination" in order for the presumption to arise.
[21] I agree. In this regard it is important to distinguish between the presumption of undue influence and actual undue influence. In this case, the trial judge was addressing the question of whether the presumption of undue influence arose, not whether there had been undue influence exerted by the respondent over her parents. There is no need for a finding of a specific act of coercion or dominion in order for the presumption to arise. Whether a person's free will was overborne by an act of coercion or fraud is a question of actual undue influence: Keljanovic Estate v. Sanseverino (2000), 186 D.L.R. (4th) 481 (Ont. C.A.), at para. 61.
[22] In the case of voluntary gifts, whether the presumption of undue influence arises begins with an examination of the relationship between the parties and the first question to be addressed, in all cases, "is whether the potential for domination inheres in the nature of the relationship itself": Geffen, at p. 378. This test embraces those relationships that equity has already recognized as giving rise to the presumption, including parent and child: Geffen, at p. 378.
[23] However, while the test embraces relationships that have been recognized as giving rise to the presumption, it is not enough to simply show that such a relationship exists. Even for such relationships, the presumption does not arise unless it has been established that there is the potential for one person to dominate the will of another. The test requires the trial judge to consider the whole of the relationship between the parties to see if there is the potential for domination, rather than looking for a specific act of coercion or domination.
[24] Despite the impugned statement, in light of the trial judge's findings, I would not interfere with the trial judge's determination that the presumption did not arise in this case. Far from the respondent having the potential to dominate the will of her parents, the trial judge saw Mr. Ruccia as the dominant party in the financial transactions between the Ruccias and the respondent.
[25] The trial judge was very aware of the family dynamic. She recognized that the respondent lived with her parents all of her life and that, as the Ruccias aged, they became more and more dependent on the respondent and, eventually, her husband as well. However, the trial judge found that Mr. Ruccia told the appellant that she would receive less from their estate than would her sister and that he wanted to ensure that her husband would get no money from his estate. And, importantly, the trial judge found that Mr. Ruccia was a strong-willed individual who made all the financial decisions as between him and his wife and that he was so meticulous in respect of his personal financial affairs that he required the respondent to provide him with receipts for all bank transactions that she performed on his behalf.
[26] Given that Mr. Ruccia's mental capacity was not in issue and in light of the trial judge's findings as to the strength of his will in all things, including those financial, the trial judge made no error in concluding that the presumption of undue influence did not arise in this case.
2. If the Presumption Arose, It Had Been Rebutted
[27] After explaining why she found that the presumption of undue influence did not arise, the trial judge stated that if she were wrong and the presumption did arise, based on her findings, she would find that the presumption had been rebutted. The appellant submits that this was an inadequate analysis on the part of the trial judge.
[28] Counsel for the appellant makes two specific complaints. First, he says that the trial judge erred in relying on Mr. Ruccia's strong personality as a ground for finding that the presumption had been rebutted. He contends that just because Mr. Ruccia had a strong personality, it did not mean that Mr. Ruccia understood the nature and consequences of his financial decisions. Second, he submits that, as the Ruccias did not have independent legal advice during the real estate transactions involving the Beck Drive and Russell Stover properties, the trial judge should have drawn an adverse inference from the respondent's failure to call as a witness the lawyer who acted on those transactions.
[29] I do not agree.
[30] In finding that the presumption had been rebutted, the trial judge did not place undue reliance on Mr. Ruccia's strong personality. It is correct that the trial judge took into consideration the undisputed evidence that Mr. Ruccia was a strong-willed man "to the very end", who played a dominant role in the family. As I have explained, that consideration is relevant to the question of whether the presumption of undue influence arose because it speaks to the issue of the potential for domination. However, it is also relevant to whether the presumption was rebutted, if found to have arisen.
[31] In any event, the trial judge also made findings in respect of Mr. Ruccia's approach to financial matters. It was undisputed that Mr. Ruccia was acutely aware of his financial affairs and that, as between him and his wife, he was in charge of all financial matters and made all financial decisions. The trial judge alluded to these findings and, as I have already explained, she specifically found that Mr. Ruccia was meticulous in overseeing his personal financial affairs. The trial judge further found that Mr. Ruccia carefully reviewed his monthly statements. Additionally, as the trial judge noted, Mr. Ruccia was of sound mind throughout his life.
[32] In the circumstances, I see nothing inadequate in the trial judge's analysis, which included her consideration of Mr. Ruccia's nature and personality.
[33] I also reject the appellant's contention that the trial judge's analysis fell short because she failed to draw an adverse inference from the respondent's failure to call the lawyer who acted for the Ruccias and the respondent on the sale of the Beck Drive property and the purchase of the Russell Stover property. In my view, this contention cannot stand in light of the fact that independent legal advice is not required in order to rebut the presumption of undue influence: Bank of Montreal v. Duguid (2000), 47 O.R. (3d) 737 (C.A.), at paras. 26-27.
Disposition
[34] For these reasons, I would dismiss the appeal with costs to the respondent fixed at $6,000, all inclusive.
Released: May 3, 2017
"Eileen E. Gillese J.A."
"I agree. G.R. Strathy C.J.O."
"I agree. G. Pardu J.A."
