ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 315/10
(Guelph)
BETWEEN:
ROBERT ARAGONA Applicant – and – BENIAMINO ARGONA, guardian of property for Maria Emilia Aragona and the Public Guardian and Trustee Respondents
Greg Murdoch, for the Applicant
John W. Bruggeman, for the Respondent Beniamino Aragona
No one appearing for the Public Guardian and Trustee
HEARD: January 9, 2012
REASONS FOR JUDGMENT
GRAY J.
1This is a contested passing of accounts. It has an unfortunate procedural history. After many twists and turns, an application to pass the accounts was made, and was heard by me.
2In the result, the accounts presented to the Court are entirely unsatisfactory. In essence, the respondent, Beniamino Aragona, has simply helped himself to thousands of dollars out of his mother’s estate, which I will order him to repay. I will deny him any compensation as the guardian of property, and I will order him to pay the applicant’s costs, personally.
Background
Background
3The applicant and the respondent, Beniamino Aragona, are brothers. On August 3, 1999, Beniamino Aragona was appointed the guardian of property for his mother, Maria Emilia Aragona. In 2001, he was ordered to pass his accounts, which he did on May 1, 2001.
4Cullity J., on September 26, 2004, ordered that Beniamino Aragona pass his accounts within 30 days of that date, and every three years thereafter. Notwithstanding that order, Beniamino Aragona did not pass his accounts again until he was required to do so by an order that I made on June 8, 2010.
5Maria Aragona suffered from Alzheimer’s disease, and for many years she resided in a nursing home. She died on March 6, 2010.
6As noted, on June 8, 2010, I ordered Beniamino Aragona to pass his accounts from the date of his appointment as attorney until the date of his mother’s death on March 6, 2010. On December 15, 2010, the Court of Appeal dismissed an appeal from my order: see Aragona v. Aragona , 2010 ONCA 863 .
7After the decision of the Court of Appeal, Beniamino Aragona filed an application to pass the accounts, returnable on August 22, 2011. On that date, Seppi J. vacated the hearing, and required that counsel for Robert Aragona, the applicant, file a more detailed Notice of Objection to the accounts. An Amended Notice of Objection, dated October 24, 2011, was served on Beniamino Aragona’s counsel, together with a demand for particulars of the same date.
8The matter ultimately came before me on January 9, 2012. Three days prior to the return of the application before me, counsel for Beniamino Aragona served a large document brief in support of the application, which itself is very large.
9Accompanying the accounts is the affidavit of Beniamino Aragona, in which he swears that the accounts are complete and correct. In addition, Beniamino Aragona gave sworn testimony, viva voce , at the hearing of the application on January 9, 2012.
10As noted earlier, Beniamino Aragona had passed his accounts in 2001. As of May 21, 2001, the sum of $152,055.71 was in an investment account with Nesbitt Burns. Effectively, that constituted the capital of the estate as of the date that Beniamino Aragona had passed his accounts in 2001.
11The total liabilities of the estate as of May 31, 2001, consisted of a legal bill of $5,067.10, and a small deficit of $3,454.35, for a grand total of $8,521.45.
12For the most part, any revenue of Maria Aragona until her death consisted of pension income and Old Age Security, together with relatively small amounts for tax and GST refunds, and investment income. The total revenue of the estate from 2001 until Maria’s death on March 6, 2010 amounted to $195,776.41.
13The disbursements of the estate, for the most part, were nursing home expenses, and relatively small amounts for medical expenses and clothing. In addition, about which more will be said later, are various legal fees charged to the estate. Including the legal fees, the total disbursements of the estate from 2001 until Maria Aragona’s death amounted to $207,036.44.
14Assuming that all of the disbursements of the estate including legal fees were legitimate, the revenue was almost sufficient to defray the disbursements. The difference is only $11,260.03.
15As noted earlier, the investment account had a value of $152,055.71 on May 31, 2001. As of March 31, 2010, the account was worth $46,562.91.
16From May 31, 2001 to March 31, 2010, there were cash withdrawals by Beniamino Aragona from the account, totalling $122,534.40.
17During his evidence given under oath before me on January 9, 2012, Beniamino Aragona had virtually no explanation for the cash withdrawals of $122.534.40. He insisted that any withdrawals went to pay his mother’s expenses. However, he had no explanation as to why the revenue would not have been sufficient to pay almost all of the expenses.
18He also had little explanation for the claimed legal expenses on behalf of his mother’s estate. From 2001 to 2010, they amount to $28,154. The best explanation I received was that they may have had something to do with a claim being made against Romeo Aragona, another brother, by the estate of Maria Aragona’s late husband.
19It should be noted that in September, 2003, the investment account was closed and a money order in the amount of $117,881.95 was given to Beniamino Aragona. He kept that money order for a year, and in September, 2004, the money order was deposited into a Bank of Montreal investment account. Beniamino Aragona explained that the delay was due to a restrictive term of an order of Madam Justice Wilson, dated September 28, 2001, which was later changed by Cullity J. on July 26, 2004.
20Beniamino Aragona claims that as of March 6, 2010, there was “cash on hand”, in addition to what was in the investment account, of $12,699. Presumably, the cash is in Beniamino Aragona’s personal possession, since there is no evidence that any separate account for the estate was ever opened, apart from the investment account. Obviously, this must be repaid to the estate.
21Beniamino Aragona claims that $25,000 is owing to Maria Aragona’s estate, being costs awarded against Romeo Aragona.
22Beniamino Aragona claims that there are certain outstanding legal accounts that have not been paid, totalling $54,873.91. These relate to certain proceedings arising out of claims against Romero Aragon and Robert Aragona, having to do with the estate of their late father.
23Beniamino Aragona claims costs of $12,277.88 on the passing of accounts. In his application, he also claimed $10,070.32 as attorney’s compensation. He has since amended that claim so that he now claims $37,748.
24After the hearing of the application, including the viva voce testimony of Beniamino Aragona, it was agreed that the parties would file written submissions.
25In Beniamino Aragona’s written submissions, he has purported to file new evidence. Specifically, he has filed a spreadsheet, on a CD-ROM, that purports to be a full calculation of the cash withdrawals from the investment account. He has also filed summaries of the calculations. They purport to show that the total cash withdrawals were $122,432, and that the “net withdrawals” total $56,254 after accounting for investment income, monies transferred to the nursing home for Maria Aragona’s use, and guardian fees.
Submissions
Submissions
26Counsel for Robert Aragona submits that Beniamino Aragona has failed to account for cash withdrawals in the total sum of $122,534.40. Furthermore, he has failed to explain why certain legal bills were properly chargeable to the estate. He also submits that further outstanding legal accounts are not properly chargeable to the estate.
27Robert Aragona also submits that Beniamino Aragona should receive no compensation for his administration of the estate. The estate was not difficult to manage, and Beniamino Aragona has failed to meet the standard of care required of a guardian of property. He has failed to keep a proper accounting, he has comingled the estate’s money with his own, and he has misappropriated $122,534.40 in cash withdrawals from the investment account. He improperly held $117,881.95 as a bank draft for a year, and he should pay the interest the estate could have earned.
28Counsel for Beniamino Aragona submits that some of the items challenged by Robert Aragona should not be considered, because it was agreed at the hearing that certain items would not be challenged. As a result, Beniamino Aragona did not tender viva voce evidence with respect to those items.
29Counsel for Beniamino Aragona submits that there was nothing improper in Beniamino in holding the bank draft in the amount of $117,881.95 for about a year, because it resulted from a reasonable interpretation of an order of this court. Once the order was clarified, the bank draft was deposited in a new investment account.
30Counsel for Beniamino Aragona disputes the assertion that the estate was not complicated. Counsel notes that Beniamino Aragona was required to bring motions in order to effectively manage his mother’s investment account.
31Mr. Bruggeman submits that the funds expended on the claims for his late father’s estate are properly chargeable to his mother, because his mother was entitled to the income from the assets of her husband’s estate for her lifetime.
32Counsel for Beniamino Aragona acknowledges that the accounts are not perfect, but submits that Beniamino Aragona has provided the vast majority of the documents that underpin the numbers in the accounts. He submits that the statements from the Bank of Montreal did not become available until very shortly before the hearing, and accordingly Beniamino Aragona was unable to calculate the cash withdrawals in time for the hearing. He submits that based on the figures put together by his accountant subsequent to the hearing, he now acknowledges that there were improper withdrawals totalling $56,254, which he is prepared to repay to the estate. However, he submits that his compensation as the guardian of property should be increased to $37,748, based on Ontario Regulation 159/00. He submits that he was entitled to take his compensation monthly, quarterly or annually, and thus he should be given credit for the total amount of compensation that he has taken.
33Beniamino Aragona submits that it is only where there is exceptional misconduct that a guardian should be deprived of his or her right to compensation. He submits that nothing of the kind is shown here. He relies on Re Assaf Estate , [2009] O.J. No. 1086 (S.C.J.), where Justice Strathy awarded 50 percent of an executor’s normal compensation where the executor forged a signature and swore three false affidavits. It is submitted that Beniamino Aragona did the best he could under difficult circumstances.
Analysis
Analysis
34I am constrained to say that the conduct of Beniamino Aragona has been shocking. He has literally helped himself to many thousands of dollars from his mother’s estate, at a time when his mother had Alzheimer’s disease and was unable to look after her own affairs. Beniamino Aragona treated the money in the estate as if it was his own.
35He should have been under no illusions. He had already passed his accounts once, in 2001, and he had been ordered to pass his accounts every three years. At all relevant times, he was represented by competent counsel, and he utilized the services of competent investment advisors.
36Notwithstanding Beniamino Aragona’s submissions to the contrary, the estate was not complicated. Maria Aragona was in a nursing home, and her needs were fairly simple. There was a regular revenue stream which should have paid almost all of her expenses. A significant amount was in her investment account, and any shortfall as between revenue and expenses could have been covered by a modest encroachment on capital.
37Instead, Beniamino Aragona took over $120,000 from the investment account, and put it in his own bank account. His explanation that he used the money to benefit his mother is not convincing, and is not supported by any documents filed with the Court.
38I reject Beniamino Aragona’s attempt to file new evidence after the hearing. Obviously, he was not cross-examined on any of this new material. I am not persuaded that it was necessary to file new material because the Bank of Montreal records were only available shortly before the hearing. I have been given no reason why they were not available sooner. Beniamino Aragona has known for a long time that he would need to pass his accounts. He had plenty of time to gather together the appropriate records, and if he did not do so it does not excuse the filing of new material.
39At any rate, the new material simply discloses what was apparent already – that is, Beniamino Aragona helped himself to many thousands of dollars out of his mother’s estate. The ex post facto analysis purports to show that he has improperly withdrawn only $56,254, rather than the amount calculated by Robert Aragona. I accept his late admission that he has helped himself to the money, but I reject his calculation. It is notable, in my view, that his late admission is contrary to his sworn affidavit and his sworn viva voce testimony.
40I accept Robert Aragona’s calculation that Beniamino Aragona improperly took $122,534.40 from the estate. He must repay that amount.
41I noted earlier that Beniamino Aragona claims that $28,154 in legal fees were expended on behalf of the estate. Robert Aragona challenges $18,615.38 of that total. I uphold the challenge. Had the entire amount been challenged I might have disallowed all of it.
42After taking into account the improper withdrawals from the investment account, adding the legal fees improperly charged as referred to in the preceding paragraph, and deducting the amounts properly charged to the estate, being Mr. Lalonde’s legal account of $5,067.10 and the small deficit of $3,454.35, the total amount payable by Beniamino Aragona is $132,628.33.
43I am not persuaded that the other legal accounts that remain unpaid, relating to claims on behalf of the estate of Maria Aragona’s late husband, are appropriate. I direct that they not be paid by the estate of Maria Aragona.
44I reject the request of Beniamino Aragona for compensation. This is not a case like Re Assaf , supra . In that case, Strathy J. was prepared to allow a trustee 50 percent of his normal compensation, even though he had sworn false affidavits and forged a document, because there had been no harm done to the estate itself. The trustee had rendered substantial service to the estate in the face of unwarranted attacks by one of the beneficiaries. In the case before me, the guardian of property has adversely affected the estate. As noted, he has helped himself to large amounts of money. The investment account has been reduced to a fraction of its original size, with no convincing explanation. This case is much closer to Zimmerman v. McMichael Estate (2010), 2010 ONSC 2947 , 103 O.R. (3d) 25 (S.C.J.), in which Strathy J. awarded no compensation for a guardian of property, where significant amounts of money had disappeared from an estate without adequate explanation.
45For the same reason, I am not prepared to award the guardian of property any costs arising out of the application to pass his accounts: see Zimmerman v. McMichael Estate , 2010 ONSC 3855 , [2010] O.J. No. 3022 (S.C.J.). Instead, I order that he personally pay Robert Aragona’s costs of this application, and I will entertain written submissions as to the scale and amount of costs. Robert Aragona shall have ten days to file his submissions and Beniamino Aragona shall have ten days to respond. Robert Aragona shall have five days to reply.
Disposition
Disposition
46I order as follows:
(a) the application to pass the accounts is dismissed;
(b) Beniamino Aragona shall pay to the estate of Maria Emilia Aragona the sum of $132,628.33;
(c) Beniamino Aragona shall repay the sum of $12,699 to the estate of Maria Emilia Aragona;
(d) any outstanding legal accounts directed to the estate of Maria Emilia Aragona shall not be paid by the estate.
(e) Beniamino Aragona shall receive no compensation as guardian of property for the estate of Maria Emilia Aragona;
(f) Beniamino Aragona shall receive no costs of and incidental to the passing of accounts; and
(g) the costs of Robert Aragona for this application shall be paid by Beniamino Aragona personally, in an amount to be fixed by me.
GRAY J.
Released: March 5, 2012
COURT FILE NO.: 315/10
(Guelph)
DATE: 2012-03-5
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ROBERT ARAGONA Applicant – and – BENJAMINO ARGONA, guardian of property for Maria Emilia Aragona and the Public Guardian and Trustee Respondents REASONS FOR JUDGMENT GRAY J.
Released: March 5, 2012