Court File and Parties

Court of Appeal for Ontario Date: 2021-03-12 Docket: C68520

Rouleau, Benotto and Thorburn JJ.A.

The Estate of George Paul Zachariadis, deceased, by his Estate Trustees Alessandra Saccal and Romina Saccal Plaintiffs (Appellants)

and

The Estate of Despina Giannopoulos, deceased, by her Estate Trustees Aris Giannopoulos and Parthena Giannopoulos, Dr. Aris Giannopoulos, John Doe and Doe Corporation Defendants (Respondents)

Counsel: Norman Groot and Geoff Keeble, for the appellants Justin de Vries and Diane Vieira, for the respondents

Heard: February 4, 2021 by video conference

On appeal from the judgment of Justice Markus Koehnen of the Superior Court of Justice, dated November 13, 2019, with reasons reported at 2019 ONSC 6505, and from the costs order, dated January 28, 2020, with reasons reported at 2020 ONSC 588.

Rouleau J.A.:

Overview

[1] Dr. George Zachariadis began a romantic relationship with Despina Giannopoulos in 1996. Dr. Zachariadis had divorced his former spouse and was estranged from his two daughters, Alessandra and Romina Saccal, the appellants in this action. Dr. Zachariadis was not invited to their weddings and never met his grandchildren. Their estrangement continued until his death.

[2] In July 2014 Dr. Zachariadis moved into Ms. Giannopoulos’s apartment. They had plans to get married. Dr. Zachariadis also acted as a father figure to Ms. Giannopoulos’s son Aris and transferred his medical practice to him.

[3] On or about November 12, 2014 Dr. Zachariadis gave Ms. Giannopoulos a bank draft for $700,000, which she deposited into her bank account. The only notations on the bank draft were the words “Payment to Despina” inscribed on the “Re” line.

[4] In December 2014 Dr. Zachariadis was diagnosed with cancer. He was hospitalized on February 2, 2015 and died two weeks later on February 19, 2015. Shortly before his death, Ms. Giannopoulos contacted the appellants to inform them of Dr. Zachariadis’s imminent passing. The appellants attended at the hospital but Dr. Zachariadis was unconscious by the time they arrived.

[5] Dr. Zachariadis died without a will. As a result, his estate passed on intestacy to the appellants, his two adult daughters. The appellants applied and were appointed co-estate trustees on December 4, 2015.

[6] On December 29, 2017 the appellants commenced this action to recover the $700,000 payment for the estate. They alleged breach of trust, fraud at equity, conversion and unjust enrichment. The respondents moved for summary judgment dismissing the appellants’ claim.

[7] The motion for summary judgment was heard on August 20, 2019. On a motion returnable the same day, the appellants sought to adjourn the hearing in order to examine eight non-party witnesses under r. 39.03 of the Rules of Civil Procedure, R.R.O., Reg. 194. The motion judge refused the adjournment for three reasons: the appellants had failed to act with reasonable diligence in seeking the examinations; the examinations were contrary to r. 39.02; and the examinations were unlikely to add anything of substance to the motion.

[8] The motion judge then granted summary judgment dismissing the claim. He did so on two bases. First, he found that the appellants’ action was commenced outside the strict two-year limitation period set out at s. 38(3) of the Trustee Act, R.S.O. 1990, c. T.23. Second, on the merits, he found that the respondents had established that the $700,000 payment was a valid gift and that, as a result, the claim could not succeed.

[9] In a costs endorsement dated January 28, 2020 the motion judge awarded the respondents substantial indemnity costs fixed in the amount of $199,602.46. The motion judge determined that the fraud claims made by the estate were unsupported and that the appellants had adopted an unnecessarily aggressive approach that tended to lengthen the litigation. The motion judge therefore exercised his discretion to award costs on a substantial indemnity basis and made the order against the estate as well as against the appellants as estate trustees.

Nature of the Appeal

[10] The appellants seek to set aside both the motion judge’s order granting summary judgment and the costs order.

[11] The appellants argue that the motion judge erred in finding that their action was statute-barred. They renew their argument that Ms. Giannopoulos’s conduct constituted fraudulent concealment, tolling the two-year limitation period. The appellants also argue that the motion judge ought to have granted the requested adjournment in order to allow them to present additional affidavit evidence at the hearing of the motion.

[12] On the merits, the appellants maintain that they presented sufficient evidence of suspicious circumstances surrounding the alleged gift to warrant a trial. They emphasize the motion judge’s failure to grapple with the notation on the bank draft indicating that the $700,000 was intended as a “payment”. The appellants argue that the motion judge should not have accepted Ms. Giannopoulos’s videotaped testimony and rejected their affidavit evidence without also hearing viva voce evidence from them.

[13] Finally, the appellants propose to file fresh evidence consisting of documents and correspondence exchanged between Ms. Giannopoulos or her representatives and the Canada Revenue Agency (“CRA”). The fresh evidence, if admitted, would indicate that Ms. Giannopoulous referred to Dr. Zachariadis as an “arm’s-length” party for tax purposes, undermining the purportedly romantic nature of their relationship.

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

Analysis

(1) Adjournment request

[15] The appellants submit that the motion judge ought to have granted the adjournment request. They argue that, in order to properly rule on the motion for summary judgment, it was necessary that the court hear additional evidence from a list of non-party witnesses, including bank employees and Dr. Zachariadis’s physician. The appellants argue that the bank employees might have knowledge of the issuance of the bank draft, and that the physician might be able to say whether Dr. Zachariadis would have been physically capable of visiting the bank.

[16] I would reject this ground of appeal. The decision to grant or refuse an adjournment is discretionary: Khimji v. Dhanani (2004), 128 A.C.W.S. (3d) 904 (Ont. C.A.), at para. 14. The motion judge’s application of r. 39 of the Rules of Civil Procedure is entitled to deference. The motion judge determined that the appellants should not be granted additional time to examine the non-party witnesses. He explained that the appellants could and should have scheduled the examination of the non-party witnesses before the cross-examination of Ms. Giannopoulos. The appellants knew the identities of the witnesses long before the summary judgment motion was scheduled. The appellants had attended at Civil Practice Court on July 31, 2019 to seek a prior adjournment without raising the issue. They provided no satisfactory explanation for the delay in arranging the examinations.

[17] In any event, the motion judge found that the proposed non-party examinations would have added little to the evidentiary record. The motion judge had before him a statement from RBC indicating that the preparation of the $700,000 bank draft was, by all appearances, a “normal banking transaction” of which its employees had no memory. The motion judge also had Dr. Zachariadis’s medical records, accompanied by a letter from his physician, Dr. Yee, stating that she had no independent recollection beyond the clinical notes which had already been put before the court.

[18] The motion judge took into account all of the relevant factors before deciding to deny the adjournment request. Nothing suggests that he exercised his discretion unreasonably.

(2) Was the $700,000 payment a valid gift?

[19] The appellants argue that the motion judge erred in finding that the $700,000 payment was a valid gift. They submit that in reaching this conclusion the motion judge failed to consider and give adequate weight to the presence of numerous suspicious circumstances. Had he properly considered and weighed the suspicious circumstances, he would have concluded, at a minimum, that a trial was required to fully appreciate the circumstances surrounding the issuance and delivery of the bank draft, and to assess Ms. Giannopoulos’s credibility. The appellants argue that the gift is in the nature of a deathbed donation and, given the absence of any corroborative evidence, demands the strictest scrutiny.

[20] The suspicious circumstances that the appellants suggest were present include:

1. The $700,000 bank draft was issued when there was only $708,531.15 in Dr. Zachariadis’s account;
2. No one was present when Dr. Zachariadis gave Ms. Giannopoulos the bank draft and he did not explain how he arrived at the $700,000 figure;
3. Ms. Giannopoulos did not speak to anyone about having received the money;
4. Despite Dr. Zachariadis telling Ms. Giannopoulos that it was a gift, the word “gift” does not appear on the bank draft, which instead reads “payment”;
5. Medical records indicate that two days after the bank draft was prepared, Dr. Zachariadis was only able to walk five to ten minutes on level ground due to muscle weakness and lack of energy, raising questions as to whether Dr. Zachariadis was physically able to attend the bank to have the draft issued;
6. Ms. Giannopoulos testified that Dr. Zachariadis removed his property from her apartment before he died, yet she says she did not anticipate he was going to die;
7. Despite Dr. Zachariadis having lived with Ms. Giannopoulos prior to his death, she did not have any of his personal belongings, such as his wallet or passport;
8. Although Ms. Giannopoulos testified that, while in hospital, Dr. Zachariadis gave her a power of attorney for property, she was unable to locate it; and
9. Ms. Giannopoulos testified that she wanted to obtain medical treatment in the United States for Dr. Zachariadis and that she wanted to use her own money for this, not the $700,000 gift.

[21] I see no basis to interfere with the motion judge’s finding that the $700,000 payment was a gift. The motion judge had the benefit of viewing Ms. Giannopoulos’s videotaped testimony, including her cross-examination. He also had voluminous evidence filed by the appellants, including affidavits from each of them. The motion judge properly identified the applicable law, including that the onus rested on the respondents to prove that the payment was a gift. He noted however that:

While healthy skepticism may be appropriate and while the court should carefully scrutinize the cogency of the supporting evidence, the standard of proof remains the civil standard of proof on a balance of probabilities and not some higher standard: Burns Estate v. Mellon, [2000] O.J. No. 2130 at para. 9 (C.A.).

[22] The motion judge then set out the evidence in support of his conclusion that the payment was a gift. He noted, for example, that the couple had been in a relationship for 19 years and planned to marry; that Dr. Zachariadis had given Ms. Giannopoulos a cheque for $500,000 in July of 2014 that she had never cashed; that he told her the $700,000 bank draft was a gift; and that there were no restrictions on the use of the money. Much of this evidence came from the videotaped examination and cross-examination of Ms. Giannopoulos, whom the motion judge found to be a credible witness.

[23] The motion judge also noted that there was no active concealment on Ms. Giannopoulos’s part, and that the respondents pointed to no conduct that made it more difficult for them to discover their alleged cause of action apart from the fact that Ms. Giannopoulos did not volunteer the receipt of a payment, which she was under no obligation to do.

[24] The appellants argue that the motion judge should not have considered Ms. Giannopoulos’s videotaped evidence without hearing viva voce evidence from the Saccal sisters, especially if he knew or anticipated that he might reject some part of their affidavit evidence. The appellants point out that Romina Saccal was present in the courtroom to answer questions on her affidavit, and they argue that the motion judge should have asked her to give oral evidence before favouring Ms. Giannopoulos’s testimony. I disagree.

[25] The appellants made no request and gave no indication that either sister would give viva voce evidence at the hearing of the motion. The motion judge had their affidavit evidence, and there was little that they could have added by their testimony.

[26] The motion judge was entitled to rely on Ms. Giannopoulos’s videotaped evidence. He was well placed to assess Ms. Giannopoulos’s credibility, and his reasons on this point are comprehensive and cogent. His findings are owed deference. The appellants have not pointed to any palpable or overriding error.

[27] The appellants rely principally on the fact that the motion judge did not specifically address each of the alleged suspicious circumstances that they identify. They argue that the presence of these many suspicious circumstances warranted a trial. As noted earlier, the appellants place particular emphasis on the motion judge’s failure to address the fact that the word “payment” was noted on the bank draft.

[28] I see no merit in this ground of appeal. The motion judge had the benefit of extensive submissions and was clearly aware of the various alleged suspicious circumstances. The fact that he chose to address only a sampling of the alleged suspicious circumstances in his reasons does not constitute error. As this court acknowledged in Canadian Broadcasting Corporation Pension Plan v. BF Realty Holdings Ltd., 214 DLR (4th) 121, at para. 64, citing R. v. Burns, [1994] 1 S.C.R. 656, “[a] trial judge is not required in his or her reasons to demonstrate that all aspects of the evidence have been considered, nor is it necessary that reasons be given for every point raised in the case”. As for the presence of the word “payment’ on the bank draft, nothing suggests that the motion judge was unaware of that fact or failed to consider it. In any event, the word “payment” is neutral and does not necessarily imply that the payment was not a gift.

[29] The motion judge’s conclusion that a trial was not warranted was similarly without error. A motion judge’s determination of what questions are appropriately decided on a motion for summary judgment is a question of mixed fact and law and is entitled to deference: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 81. The motion judge found Ms. Giannopoulos to be credible, and he was aware that, given her health, she would not be available to testify at a trial should one be ordered. In fact, she died approximately one week after the motion was argued.

[30] As for the evidence filed by the appellants, the motion judge said:

The [appellants] have introduced no evidence, let alone evidence that is corroborated, to support their theory that Despina either withdrew the money herself or that she received it subject to a trust. Instead, the [appellants] have raised a number of factors they say are “suspicious”. Suspicion does not, however, amount to evidence. The [appellants] have had ample time to convert their suspicions into evidence but have failed to do so.

[31] Nothing in the record before us, including the proposed fresh evidence, suggests that the motion judge erred in so concluding.

(3) Is the action statute-barred?

[32] At the hearing of the motion, the parties agreed that the applicable limitation period was the limitation set out at s. 38 of the Trustee Act. The relevant portion of that section is as follows:

38 (1) Except in cases of libel and slander, the executor or administrator of any deceased person may maintain an action for all torts or injuries to the person or to the property of the deceased in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do, and the damages when recovered shall form part of the personal estate of the deceased …

(3) An action under this section shall not be brought after the expiration of two years from the death of the deceased.

[33] Unlike the general two-year limitation period set out at s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, which begins to run when the claim is discovered, the two-year limitation period at s. 38(3) of the Trustee Act begins to run strictly upon the death of the deceased: Levesque v. Crampton Estate, 2017 ONCA 455, at para. 51. In this case, the appellants brought the action roughly two years and ten months after the death of Dr. Zachariadis.

[34] The appellants argued before the motion judge, and again on appeal, that the equitable doctrine of fraudulent concealment ought to extend the limitation period at least to the moment the appellants became aware of the payment having been made.

[35] As La Forest J. explained in M.(K.) v. M.(H.), [1992] 3 S.C.R. 6, at pp. 58-59, the doctrine of fraudulent concealment exists to ensure that a limitation period does not “operate as an instrument of injustice”. In order to invoke the doctrine, plaintiffs have traditionally been required to establish: (1) that the plaintiff and defendant had a special relationship; (2) that the defendant’s conduct was unconscionable in light of the special relationship; and (3) that the defendant concealed the plaintiff’s right of action either actively or by wrongdoing.

[36] After the hearing of this appeal, counsel for the appellants drew the panel’s attention to this court’s recent decision in Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, which draws upon Brown J.’s reasons in Pioneer Corp. v. Godfrey, 2019 SCC 42, 437 D.L.R. (4th) 383. In Pioneer Corp., the Supreme Court relaxed the requirement to establish the existence of a special relationship, stating at para. 54 that fraudulent concealment could apply if “it would be, for any reason, unconscionable for the defendant to rely on the advantage gained by having concealed the existence of a cause of action” (emphasis in original).

[37] While these developments may ease the necessity of establishing a special relationship, neither Beaudoin Estate nor Pioneer Corp. materially affects the analysis in this case. The motion judge found that none of the conditions for fraudulent concealment had been made out on the facts. Nevertheless, the appellants argue that the motion judge erred.

[38] As explained above, I see no basis upon which to interfere with the motion judge’s finding that the $700,000 payment was a valid gift. Consequently, even if it could be shown that Ms. Giannopoulos tolled the limitation period by her conduct, the outcome of the appeal would remain the same. In any event, I agree with the motion judge’s finding that Ms. Giannopoulos did not actively conceal the existence of the payment and that her failure to volunteer information about the gift was not unconscionable. Ms. Giannopoulos received what she understood to be a valid gift. She had no reason or duty to disclose the existence of the gift to the Saccals, whom she had never met. The doctrine of fraudulent concealment does not apply.

(4) The fresh evidence

[39] The appellants sought to file fresh evidence on appeal. The evidence consists of correspondence between the CRA and Ms. Giannopoulos’s solicitor and accountant. The correspondence all predates the hearing of the motion. In it, the CRA raises the possibility of requiring Ms. Giannopoulos, as the recipient of a gift from Dr. Zachariadis to pay taxes assessed on Dr. Zachariadis that remain unpaid.

[40] The appellants submit that the respondents ought to have produced the documents in the course of the litigation, and that it was only by accident that they became aware of their existence after the motion judge rendered his decision. The appellants argue that one of the documents, a Notice of Objection filed by Ms. Giannopoulos’s accountant, is of particular importance because it represents her as being at “arm’s length” from Dr. Zachariadis and characterizes their relationship as one of friendship. The appellants argue that the Notice of Objection calls into question the romantic nature of the relationship and undermines Ms. Giannopoulos’s credibility.

[41] I would not admit the fresh evidence. As the respondents explained, the payment of taxes was not raised as an issue in the claim. The exchanges with the CRA over Ms. Giannopoulos’s potential obligation to pay Dr. Zachariadis’s taxes were at best of marginal relevance to the appellants’ claim to the $700,000 payment. It is understandable that the respondents did not see fit to produce these documents in the course of the litigation.

[42] As for the relevance of the fresh evidence in assessing Ms. Giannopoulos’s credibility, the respondents filed affidavit evidence from her accountant. In it, the accountant explains that he drafted the Notice of Objection without approval or review by Ms. Giannopoulos, who was by then very ill. In other words, the Notice of Objection was no more than the accountant’s characterization of the relationship between Ms. Giannopoulos and Dr. Zachariadis for income tax purposes. Even if Ms. Giannopoulos had herself employed the words “arm’s length”, those terms take a particular meaning in the context of taxation. In our view, it is highly unlikely that the fresh evidence could have had any impact on the motion judge’s decision.

[43] In any event, the documents ought to be excluded on the basis that they could have been obtained by the exercise of due diligence. When the respondents brought their motion for summary judgment, the appellants had a pending motion to obtain the respondent’s tax documentation from the CRA and were content to have that motion adjourned until after the summary judgment motion was heard.

(5) Appeal as to costs

[44] The appellants seek leave to appeal the order as to costs. They maintain that the motion judge gave disproportionate weight to the respondents’ settlement offers while failing to consider the settlement offers made by the appellants. They also argue that the motion judge gave undue weight to the appellants’ allegations of fraud. In their view, equitable fraud is not the same as common law fraud and does not carry the same stigma; similarly, the claim of fraudulent concealment is not the same as a pure claim of fraud and should not meet the same cost consequences. Finally, the appellants argue that the estate trustees ought not to have been held personally liable for costs. They argue that the litigation only arose as a result of the trustees seeking to ensure the proper administration of the estate by recovering the funds needed to cover the estate’s tax liabilities.

[45] There is no basis to interfere with the motion judge’s award of costs. In concluding that substantial indemnity costs were appropriate, the motion judge considered the correct factors, including the allegations of fraud, the settlement offers, the need to discourage and sanction inappropriate behaviour by litigants and the factors listed under r. 57.01 of the Rules of Civil Procedure.

[46] Similarly, I see no basis to interfere with the motion judge’s decision to award costs against the trustees personally. He rejected the suggestion that the appellants were simply trying to ensure that the estate had enough funds to pay the taxes owing to the CRA. His conclusion was well supported by the record.

Conclusion

[47] For these reasons, I would dismiss the appeal and deny leave to appeal the costs order. I would award the respondents costs of the appeal against the estate fixed in the amount of $40,000 inclusive of disbursements and applicable taxes.

Released: March 12, 2021 “P.R.” “Paul Rouleau J.A.” “I agree M.L. Benotto J.A.” “I agree J.A. Thorburn J.A.”