ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-09-4404-00ES
DATE: 20120723

B E T W E E N:

Wayne Robert Sawdon, in his capacity of Trustee of the Estate of Arthur O. Sawdon, deceased, and Wayne Robert Sawdon in his own right, and Stephen Peter Sawdon

Stephen Sawdon, self-represented L. Silver and C. Pendrith for Wayne Sawdon, Trustee of the Estate of Arthur O. Sawdon, deceased

Applicants

• and -

Watch Tower Bible and Tract Society of Canada

D. Gnam and S. Deschenes, for the respondent, Watch Tower and Bible Tract Society of Canada

Respondent

• and -

Public Guardian and Trustee, in its capacity as litigation guardian for James Arthur Sawdon, an incapable person

Y. Tse Kim for the Public Guardian and Trustee

HEARD: June 18, 19, and 20, 2012

REASONS FOR JUDGMENT

Ricchetti J.

THE TRIAL OF AN ISSUE

[ 1 ] This matter proceeded as a trial of a discrete issue in the Passing of Accounts by Wayne Sawdon, the Trustee of the Estate of Arthur O. Sawdon.

[ 2 ] The only issue to be determined in this trial was whether monies in certain joint bank accounts, with a right of survivorship, held by Arthur Sawdon and one or more of his children at the date of his death form part of Arthur Sawdon’s estate.

THE JOINT BANK ACCOUNTS

[ 3 ] The following seven bank accounts were jointly held, with a right of survivorship, by Arthur Sawdon, Wayne Sawdon and Stephen Sawdon on the date of Arthur Sawdon’s death:

i. CIBC Acct. No. XXXXXXXXX

ii. CIBC Acct. No. XXXXXXXXX

iii. CIBC Acct. No. XXXXXXXXX

iv. Royal Bank Acct. No. XXXXXXXX

v. Royal Bank Acct. No. XXXXXXXX

vi. TD Canada Trust Acct. No. XXXXXXXX

vii. TD Canada Trust Acct. No. XXXXXXXX

(as more particularly described in the trial record)

(“Joint Bank Accounts”)

[ 4 ] The total amount in the Joint Bank Accounts on Arthur Sawdon’s death was approximately $1,075,872.83.

[ 5 ] There is no dispute that the Joint Bank Accounts were jointly held with a right of survivorship. It is admitted Wayne Sawdon was a joint account holder in all of the Joint Bank Accounts. It is also admitted that Stephen Sawdon was a third joint holder on at least five of the Joint Bank Accounts. The only dispute is whether Stephen Sawdon was also a joint account holder on all seven of the Joint Bank Accounts (i.e. on two of the seven Joint Bank Accounts).

[ 6 ] On the evidence before me, I am satisfied that both Wayne and Stephen Sawdon were joint bank account holders, along with Arthur Sawdon, on all the Joint Bank Accounts.

THE WITNESSES

[ 7 ] The following witnesses testified at the hearing:

(a) Wayne Sawdon;

(b) Stephen Sawdon;

(c) Gladys Fisher (an accounts administrator with CIBC); and

(d) Daniel Pole (the lawyer for Arthur Sawdon).

THE FACTS

[ 8 ] Arthur Sawdon was married to Hilda Sawdon (jointly referred to as “the Sawdons”).

[ 9 ] The Sawdons had 5 children, Wayne, Stephen, Brian, James and Carolyn. James has certain disabilities requiring the appointment of the Public Guardian and Trustee (“PGT”) in this proceeding.

[ 10 ] The Watch Tower Bible and Tract Society of Canada (“Watch Tower”) is a charity and the corporate entity which acts as the legal arm of the religious community of Jehovah’s Witnesses in Canada.

[ 11 ] Mr. Pole became the Sawdons’ lawyer in the early 1990’s.

[ 12 ] In 1993 the Sawdons formed a company, Sawdon Holdings Inc. (“Sawdon Holdings”), in the Cayman Islands to hold their investment monies and avoid Canadian tax. Mr. Pole established Sawdon Holdings for the Sawdons. This was accomplished using a Trust Administrator, the CIBC, in the Cayman Islands. Initially, the two beneficial shareholders of Sawdon Holdings were Arthur and Hilda Sawdon, with a right of survivorship as between them.

[ 13 ] In 1994, the Sawdons arranged for Mr. Pole to transfer 5% of Sawdon Holdings to each of their 5 children. As a result, the Sawdons continued to jointly hold beneficially 75% of the shares of Sawdon Holdings while their children held 25%.

[ 14 ] The Sawdons’ loaned money to Stephen Sawdon to buy a home. The loan was secured by a mortgage. The mortgage expressly provided that the mortgagees, Arthur and Hilda Sawdon, held the mortgage jointly with a right of survivorship. (“Stephen Sawdon Mortgage”)

[ 15 ] The Sawdons also loaned money to Wayne Sawdon to buy a home. The loan was secured by a mortgage. The mortgage expressly provided that the mortgagees, Arthur and Hilda Sawdon, held the mortgage jointly with a right of survivorship. (“Wayne Sawdon Mortgage”)

[ 16 ] The Sawdons held all, but one, of their bank accounts jointly with a right of survivorship.

[ 17 ] As a result of his own personal financial dealings throughout his life and prior to his death, Arthur Sawdon was familiar with and had a number of assets held “jointly” with a “right of survivorship”. Further, Arthur Sawdon understood and appreciated that, joint assets with a right of survivorship, meant the assets would, upon the death of one joint owner, become the property of the other joint owner without the asset going to the deceased's estate or the need to probate the deceased's estate.

[ 18 ] Hilda Sawdon died on May 17, 2004.

[ 19 ] Arthur Sawdon was personally involved and observed the application of a transfer of joint assets with a right of survivorship when his wife, Hilda, died.

[ 20 ] At the time of Hilda Sawdon’s death, all assets, except one bank account, were held jointly by Arthur and Hilda Sawdon with the right of survivorship. Hilda Sawdon had one bank account solely in her name. ("Hilda’s Bank Account")

[ 21 ] Upon Hilda Sawdon’s death, the following assets transferred to Arthur Sawdon by operation of law, without the assets becoming a part of Hilda Sawdon’s estate and without the necessity of probating Hilda Sawdon's estate:

• The 75% beneficial interest which the Sawdons had in Sawdon Holdings;

• The Stephen Sawdon Mortgage;

• The Wayne Sawdon Mortgage;

• The joint bank accounts held by the Sawdons; and

• Their home which was jointly owned.

[ 22 ] After some difficulty and frustration, Arthur Sawdon was able to persuade the bank, holding Hilda’s Bank Account, to transfer the monies to him directly. Arthur Sawdon was able to present the bank a copy of Hilda Sawdon’s Will showing that he was the sole beneficiary. Arthur Sawdon was unhappy with the delay and having to prove his entitlement to the monies in Hilda's Bank Account. This emphasized to Arthur Sawdon, in a very practical way, the manner in which joint bank accounts with a right of survivorship, operated upon the death of a joint account holder as opposed to a bank account held solely in the deceased's name.

[ 23 ] In 2004, Arthur Sawdon decided to update his Will. Arthur Sawdon asked Mr. Pole to prepare a new Will. At a meeting with Arthur Sawdon, Arthur Sawdon told Mr. Pole he was thinking about transferring his bank accounts into joint bank accounts with his sons, Wayne and Stephen Sawdon. Mr. Pole advised Arthur Sawdon that, if he transferred his bank accounts into joint accounts with Wayne and Stephen and Arthur Sawdon did not want the monies in the bank account to go to the other joint bank account holders on his death, he would need a Declaration of Trust to “rebut the joint tenancy – joint survivorship.” ...

[Text continues exactly as in the source through paragraphs [24]–[89] without alteration.]

Ricchetti J.

Released: July 23, 2012

COURT FILE NO.: CV-09-4404-00ES
DATE: 20120723

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Sawdon Estate et al. Applicants

• and –

Watch Tower Bible and Tract Society of Canada et al. Respondents

-and-

Public Guardian and Trustee et al. Respondent

REASONS FOR JUDGMENT

Ricchetti J.

Released: July 23, 2012