COURT FILE NO.: 06-005/06
DATE: 20140313
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Martin Mroz and Adrianna Mroz by their Litigation Guardian Agnieszka Mroz
Plaintiffs
– and –
Helen Mroz, Richard Paramonczyk, Kathleen Paramonczyk, Elizabeth Paramonczyk, Christine Paramonczyk, and Anne Paramonczyk
Defendants
Michael W. Czuma, Solicitor for the Plaintiffs
Monty Thomas Hyde, Solicitor for the Defendant Helen Mroz
HEARD: January 20, 21 and February 5, 2014
REASONS FOR JUDGMENT
Madam Justice D.A. Wilson
[1] The Plaintiffs, Martin and Adrianna Mroz [“Martin” and “Adrianna”] are the nephew and niece respectively of the Defendant Helen Mroz [“Helen”] and they bring this action seeking various forms of relief. They plead that Kazimiera Mroz [“Kay”], their grandmother and Helen’s mother, did not possess the necessary testamentary capacity to make a will when she executed her will on July 23, 2004. They seek a declaration that the 2004 will is invalid and that she did not possess the necessary capacity to transfer her home to herself and her daughter Helen as joint tenants when she executed her will. Damages for breach of trust are sought, as well as punitive and exemplary damages, although the latter was not pursued at trial.
[2] The Defendants assert that Kay had full mental capacity at the time she signed the will and intended to make the transfer of her home to Helen and herself as joint tenants and that Helen would own the house after her mother’s death. It is agreed that Kay “expressed a wish that the sum of $70,000 be paid to each of her grandchildren within one year of her death” but that when the sum was offered it was rejected as the Plaintiffs wished to contest the validity of the will.
[3] The Defendant Richard Paramonczyk [“Richard”] is the nephew of Kay and the remaining Defendants are his wife and daughters. I was advised by counsel at the outset of the trial that the claims against Richard and his crossclaim were settled.
[4] At the opening of trial, the Plaintiff amended the Statement of Claim on consent so that the claim for damages for breach of contract was in the sum of $140,000.00.
BACKGROUND
[5] Kay was born in Poland in 1923 and married Jozef in 1951. Their son, Stanley, was born in 1955 and their daughter Helen was born in 1960. Richard is the son of Kay’s sister and was born in 1950. His parents died when he was 13 and he went to live with the Mroz family until he was 21 when he moved out. He had a very close relationship with the family and was treated as a son. He married in 1975 to Anne and has 3 daughters: Elizabeth, Christine and Kathleen.
[6] By all accounts, Kay was a strong woman who knew her own mind. She worked throughout her life and ran the family finances. Stanley married Agnieszka in 1990 and they had two children: Martin, born in 1990, and Adrianna, born in 1993. The evidence indicates that the members of the Mroz family had a difficult time with Agnieszka and, after Stanley was killed in a motor vehicle accident in February, 2000, the relationship deteriorated.
[7] In 2001, Kay and her husband attended at the offices of the solicitor Marek Malicki [“Malicki”] and had a will prepared [“the 2001 will”]. In that will, all of her estate was given to Jozef. In the event that Jozef predeceased her, Helen and Richard were appointed executors of the estate. Her estate was to be divided into two equal shares, one to go to Helen and the other share to be split equally between the grandchildren Adrianna and Martin. Out of Helen’s share, the five members of the Paramonczyk family were each to receive $10,000. The 2001 will stipulated that Helen could live in the family home for two years following which the property was to be sold.
[8] The evidence suggests that Helen continued to live with her parents at the property located at 31 Rivercrest in Toronto. Jozef died in July, 2002. In October 2002, Kay was diagnosed with cancer and was hospitalized for treatment. She was then sent to a rehabilitation centre, where she remained until February 2003.
[9] In March 2003, Kay attended at the offices of Malicki in order to make a new will. She knew her prognosis was terminal. She had a meeting with Malicki but a new will was not signed at that time. Eventually, a new will was prepared and on July 23, 2004, Kay attended at the offices of Malicki and signed a new will [“the 2004 will”]. As well, she signed an acknowledgement and direction for survivorship application and she transferred the title of her house so that she and Helen were joint tenants.
[10] In the 2004 will, Helen and Richard were appointed executors. The will bequeathed “the sum of $10,000 to the five members of the Paramonczyk family, the sum of $5,000 to Jordan Mackinnon.” The will also contained the following paragraph:
I bequeath my share of the property at 31 Rivercrest Road in Toronto to my daughter Helen Mroz provided that she pay within one year of the date of my death the following legacies: 1). The sum of $70,000 to Adrianna Mroz; the sum of $70,000 to Martin Mroz. These legacies shall constitute a first charge on my property in favour of Adrianna Mroz and Martin Mroz, until the legacies are paid.
There were other provisions in the will in the event that Helen pre-deceased her mother but they are not relevant for the purposes of this action.
[11] Kay died on June 18, 2005. The evidence is uncontradicted that until the final few weeks of her life, she was mentally acute. Following Kay’s death, Helen and Richard retained a solicitor, Richard Howitt [“Howitt”], to deal with the estate. They met with him on July 14, 2005 and on August 10, 2005 Helen signed a survivorship application for the house which transferred it to her name.
[12] In October 2005, Helen sold the house for $534,000. The sum of $38,000 was taken off the sale price to reflect a problem with the foundation so the balance on closing was $476,605.85. The sale was completed on November 10, 2005 and the net sum of $467,435.17 was paid to Helen from the transaction.
[13] Helen immediately purchased a house in Milton located at 1653 Gowling Terrace. The purchase price of that house was not in evidence but Helen sold it in 2007 for approximately $287,000. She moved to Georgetown, to live with her friend Noreen Atkinson [“Atkinson”] where she continues to reside, paying rent of $400.00 per month.
[14] In January 2006, Mr. Malicki received a letter from counsel retained by Agnieszka requesting documentation from the will. Malicki replied that while he had drafted the will, he did not have a copy of it. Agnieszka changed lawyers and in March 2006, her new counsel wrote to Helen requesting a copy of the will and any documentation related to the house transfer. Richard retained counsel as well and by letter dated March 20, 2006, his solicitor wrote to Helen requesting copies of documentation concerning the estate of Kay and noting that she had been administering the estate as if she were the sole executor.
[15] An order was obtained from Justice Spence on April 19, 2006 requiring Helen and Richard to file an application for a certificate of appointment as estate trustee with a will. In May 2006, Helen’s counsel wrote to the solicitor for Agnieszka and advised that she would be bringing an application to pay the funds into Court “in accordance with the will” on behalf of her nephew and niece who were minors. By letter dated May 31, 2006, Mr. Howitt wrote to the solicitor for Agnieszka advising that he had been provided with a bank draft in the sum of $140,000 and was able to pay that amount into court to the credit of Adrianna and Martin. He wrote, “However, if you are contesting the validity of the Will then your client’s entitlement to these funds comes into question. Perhaps you would advise me as to your position.” The motion for directions was then brought.
[16] Helen testified at trial that in May 2006, she provided Mr. Howitt with the bank draft for $140,000 and he placed these funds in his trust account where they remained for approximately 2 years. Because Agnieszka was not prepared to settle the litigation for $140,000, Helen requested the funds be returned to her sometime in 2008 or 2009. It is not disputed that monies were never paid into court for the minor Plaintiffs.
[17] A further order was secured from Justice Morawetz on November 2, 2006 requiring Agnieszka to file a Statement of Claim within a certain time frame. That was done, pleadings were exchanged and the action proceeded in the usual course.
POSITIONS OF THE PARTIES
Plaintiffs
[18] The Plaintiffs argue that the Supreme Court of Canada has made it clear that for gratuitous transfers of property there is a presumption of a resulting trust. The onus is on Helen to demonstrate that her mother intended to gift the house to her and she has failed to meet this onus. Thus, the 2004 will is not valid and the 2001 will governs. Alternatively, it is the position of the Plaintiffs that Kay did not understand what the 2004 will meant in terms of putting the house in joint tenancy and the 2001 will should govern. In the further alternative, the Plaintiffs argue that Helen has not fulfilled her obligations under the will. It is submitted that Helen was a trustee of the $140,000 for Adrianna and Martin and she is liable to them in damages for the breach of that trust.
Defendant Helen Mroz
[19] Helen submits that the 2004 will is valid and the Plaintiffs have not satisfied the burden of proof to demonstrate that Kay lacked capacity or failed to understand what she was doing when she made the 2004 will. It is submitted that Kay had a lawyer when she provided her instructions on the 2004 will and she wanted the house transferred into joint tenancy because she intended to give Helen a half interest in the house and the right of survivorship.
[20] On the issue of the payments under the will, Helen submits that she tried to pay the monies into court but the Plaintiffs were not content with the $140,000. They wanted more money, alleging the 2004 will was not valid. While Helen gave the money to her lawyer with whom it remained for more than 2 years, she no longer feels a moral or a legal obligation to pay the money to her nephew and niece since the Plaintiffs refused to settle the case and take the funds.
[21] With respect to the payments to the Paramonczyks, in the 2001 will it stipulated that each of them was entitled to receive $10,000 for a total of $50,000 but the 2004 will simply states the sum of $10,000 was to be given to the Paramonczyks. It is submitted that it is unclear how much the Paramonczyks were to receive from the 2004 will but in any event, those claims have been resolved.
THE EVIDENCE
[22] The evidence that was heard at this trial was far from satisfactory and left numerous questions unanswered. Some witnesses contradicted their own evidence and I attribute this, for the most part, to their self-interest.
Agnieszka Mroz
[23] I found Agnieszka to be an average witness; while she attempted to suggest that Kay had told her the particulars of the will and her wishes for the grandchildren following her death, it was obvious that after the death of her husband, she did not have a good relationship with her mother-in-law and saw her rarely, mostly at family gatherings. Indeed, on her own evidence she did not know of Kay’s death in June 2005 until Christmas of that year and had not seen her since at least October 2004. She was not a part of Kay’s life on a regular basis and unfortunately, neither was Adrianna or Martin. Kay wanted to see more of her grandchildren and Agnieszka was not prepared to allow that to occur.
[24] It was patently clear that Agnieszka and Helen had never been close and had always had an unfriendly, difficult relationship. The two women never spoke following Kay’s death.
[25] Much of Agnieszka’s evidence was of no assistance to the issues in this litigation. At one point, she testified that the signature on the 2004 will was not Kay’s signature and that this is the basis for her belief that the will is not valid. Despite the fact that this allegation is made in the pleadings, it was not seriously pursued at trial. No hand-writing expert was called by the Plaintiffs to support this contention. I reject the suggestion that the 2004 will was not signed by Kay. It is the view of Agnieszka that the first will ought to govern and, under that will, her children would share the estate with Helen equally, entitling them to a sum greater than $140,000. That is why she refused to settle for that amount.
Helen Mroz
[26] Helen is 53 years of age and works as a material handler at American Eagle Outfitters. She is an intelligent woman and was articulate during her testimony. I have no doubt she had a close relationship with her mother and assisted her significantly during her illness. However, following her mother’s death, Helen’s conduct changed for reasons which are not clear. I will have further comment on this later in my reasons.
[27] I accept Helen’s evidence about the circumstances surrounding the making of the 2004 will, and I note that her testimony was generally supported by the evidence of Richard in this area.
[28] I reject some of Helen’s evidence concerning events that occurred following Kay’s death. Her evidence about what transpired after her mother’s death was, in my view, tainted by her attempts to explain her own conduct and it was at times unreliable and at other times not capable of belief.
Richard Paramonczyk
[29] Richard gave his evidence in an honest manner, answered questions directly and I found him to be entirely credible. Despite the shoddy treatment he received from Helen, he did not colour his testimony against her but instead, appeared to simply provide the Court with the honest truth about events. Where his evidence differs from that of the other parties, I accept Richard’s evidence.
Marek Malicki
[30] Malicki was candid with the court and acknowledged that he had no independent recollection of Kay apart from his notes, which were entered into evidence on consent. He met with Kay in 2001 for the preparation of her will and again in 2003 and finally, in July 2004, when the new will was signed. He gave his evidence in a straightforward fashion without any attempt to colour his testimony for his own benefit. I found him to be a knowledgeable solicitor and an honest, credible witness.
THE ISSUES
[31] The issues to be determined are: whether Kay had the testamentary capacity to make the 2004 will and which will governs; whether Helen has rebutted the presumption of a resulting trust; and whether Helen has fulfilled her obligations under the will.
ANALYSIS
Have the Plaintiffs proven that, at the time of the signing of the 2004 will, Kay did not possess the mental capacity to understand the consequences of the changes she was effecting?
[32] While Mr. Czuma urged me to find that Kay did not possess testamentary capacity when she made the 2004 will, there was absolutely no evidence to support such a finding and no basis upon which to draw such an inference. On the facts, Kay was astute financially and she met with Malicki in 2003 to make changes to her will. It is not necessary for me to determine what caused Kay to change her will; however, in light of the arguments put forward by the Plaintiffs concerning undue influence and lack of testamentary capacity, I find that by the time Kay attended upon Malicki in 2003, her circumstances had changed. Her husband had died, leaving her a widow and she had been diagnosed with terminal cancer.
[33] Furthermore, the evidence is clear that following the death of her son Stanley, her relationship with her daughter-in-law Agnieszka deteriorated and, consequently, she was unable to see her grandchildren as often as she would have liked to. Indeed, when Kay met with her lawyer Malicki on July 23, 2004 she advised him that Agnieszka would not give her access to Martin and Adrianna and she asked Malicki to write a letter in this regard.
[34] There is no reliable evidence that Helen deceived her mother into putting the house into joint tenancy. Malicki had Kay sign the survivorship documents and again, it was his evidence that he would have explained the effect of these documents to her and unless he was confident she understood fully, he would not have had her execute them. I find therefore that the 2004 will is valid.
Resulting Trust Argument
[35] Counsel for the Plaintiffs relies on Pecore v. Pecore, 2007 SCC 17, [2001] 1 S.C.R. 795, and Madsen Estate v. Saylor, 2007 SCC 18, [2007] 1 S.C.R. 838, in support of his argument that Kay made a gratuitous transfer of her house to her daughter and thus, there is a presumption of a resulting trust that Helen must rebut by demonstrating her mother intended to gift her the house upon her death. Mr. Czuma argues that she has failed to satisfy this onus and therefore the transfer into joint tenancy should be reversed. I do not agree.
[36] Pecore established that gratuitous transfers between a parent and an adult child are subject to the presumption of resulting trust in favour of the deceased parent’s estate. More recently this issue was considered by the Court of Appeal in Sawdon Estate v. Sawdon, 2014 ONCA 101. In Sawdon, Justice Gillese summarized the Supreme Court’s direction on this point in Pecore as follows, at para. 57,
The trial judge must begin the inquiry with the applicable presumption and then weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention at the time of transfer.
[37] I will consider the evidence at this trial bearing on Kay’s intention when she met with Malicki in 2003 to change her will. I do not find it surprising that following the death of her husband and her own diagnosis with terminal cancer, Kay wished to update her will and effect some changes. By that time, Kay knew that Agnieszka had settled the lawsuit arising from Stanley’s death for just under a million dollars. She was aware that her grandchildren received monies from the settlement which were paid into court. Richard testified that Kay spoke to him before she met with the lawyer in 2003 about changing her will and confirmed that she wished to look after Helen and reduce the amounts the grandchildren would receive: she wanted each of them to get $70,000 from her estate. I accept this evidence as accurate.
[38] The evidence on the issue of the transfer of the house to joint tenancy comes from Helen and Malicki. Helen explained that her mother wanted to avoid paying probate fees as she was a frugal woman. Solicitor Malicki had no recollection of his meetings with Kay and relied on his hand written notes. He met with Kay alone in March 2003 and his notes indicate that she advised that she wanted to transfer title in the house to her daughter – “if she dies house goes to daughter.” The notes also indicate that $70,000 was to be paid to each of her grandchildren, $10,000 to each of the Paramonczyks and $5,000 to Jordan Mackinnon who was identified as a “friend.”
[39] Every witness at this trial confirmed that Kay was a strong, intelligent woman who knew her own mind and that she wanted to provide for her daughter after her passing. The decision to put the house in joint tenancy was likely made out of a desire to avoid probate and the expense that process entails. Malicki confirmed that he would have recommended the house be in the names of Kay and Helen as tenants in common. The will was not completed at the initial meeting in 2003, although clearly there was a discussion between Malicki and Kay in the absence of Helen about the house and how title should be held.
[40] He met with Kay again in July 2004, and documentation concerning changing the title on the house to joint tenancy with Helen was signed. Malicki expected that the title would be tenants in common in accordance with his earlier recommendation and that is why the direction was initially prepared to reflect this. However, Kay must have decided she wanted the title be changed to joint tenants and he would have explained the consequences of that amendment before she signed it, ensuring she understood the import of what she was signing.
[41] Malicki testified that in accordance with Kay’s instructions he changed the will to make the house joint tenancy with Helen. He was certain that Kay instructed him to make the transfer of the house conditional on payments being made to Adrianna and Martin in the sum of $70,000 each and that these payments would constitute a first charge on the property until they were paid. Although counsel for the Plaintiffs suggested to Malicki on cross examination that these provisions constituted a conundrum, he disagreed and replied that these paragraphs simply reflected the wishes of Kay that the monies be paid to the grandchildren before the house was dealt with. I accept this evidence. While Malicki conceded he did not have a specific recollection of the meetings with Kay in 2003 or 2004, he was clear that he would have discussed the meaning of putting property into joint tenancy with Kay and his hand written notes reflect this. Further, Malicki testified he would not have had her sign the documents if he felt she did not understand the import of what she was doing. The evidence from Richard, which I accept, is that Kay wished to ensure her daughter was provided for after her death and, as well, she wished to give specific bequests to her grandchildren.
[42] I have considered all of the evidence on the issue of Kay’s intention at the time of transfer and draw the following conclusion from Kay’s decision to transfer the house into joint tenancy with right of survivorship going to Helen: She wished to gift Helen full title to the house upon her death, with the understanding that the house was to be sold within a year of her death and specific bequests, including the monies for the grandchildren, were to be paid from the proceeds of the sale. Accordingly, Helen has rebutted the presumption of a resulting trust.
[43] To be clear, the gift of her share of the house to Helen was not for Helen’s personal use entirely but for her to distribute proceeds of the sale in accordance with Kay’s wishes.
Has Helen discharged her obligations under the 2004 will?
[44] I turn now to the events following the death of Kay on June 18, 2005. Helen and Richard were appointed co-executors under the will and they retained a solicitor, Mr. Howitt, on July 14, 2005. Howitt’s dockets indicate that he prepared the survivorship application on that date. There was a life insurance policy in the amount of $13,000 which named Helen and Richard as beneficiaries and that was paid out. A bank account was opened on July 23, 2005 in the name of the estate with Helen and Richard as signatories. Helen signed the survivorship application on August 10, 2005 and Kay’s name was deleted from the register.
[45] Helen sold the house in November 2005, and used the proceeds of $476,605.85 to buy a house in Milton. No explanation was offered by Helen for her failure to pay the monies at that time to her nephew and niece, or to Richard and his family pursuant to the will. Helen did not advise Richard that the house was in joint tenancy nor did she tell him that Howitt had registered her as sole owner of the property, notwithstanding the fact that he was a co-executor of the will.
[46] Further, she did not advise Richard when the house sold. Howitt sent Helen an account for administration of Kay’s will in November 2005, and there was no further contact with the lawyer until Helen received a letter from Agnieszka on March 20, 2006 requesting documentation from the will. Helen took that letter to Howitt for a response.
[47] Howitt wrote to Agnieszka’s lawyer May 18, 2006 advising that Helen intended to pay into court $70,000 for each of Adrianna and Martin “prior to the one year date from the death of Kazimiera Mroz as stipulated in her last will and testament.” Counsel for Agnieszka advised that his client was not content with that proposal and indicated that a Notice of Objection would be filed along with a motion for directions. Howitt’s response by letter dated May 26, 2006 was that Helen supported the will and she would proceed to bring an application to “pay the funds into court in accordance with the will.”
[48] Helen testified that she provided Howitt with a bank draft for $140,000 for the payment to Martin and Adrianna and that he placed the funds in his trust account. Howitt corresponded with Agnieszka’s counsel by letter of May 31, 2006, advising as follows:
My client has now placed me in funds in the amount of $140,000 and I am in a position to pay this sum into Court to the credit of Adrianna Mroz and Martin Mroz. However, if you are contesting the validity of the will then your client’s entitlement to these funds comes into question. Perhaps you would advise me as to your position.
A motion for directions followed and the litigation proceeded.
[49] Helen testified that the monies were in Howitt’s trust account for two years and, since Agnieszka did not want to accept the funds and settle the case, Helen asked for the return of the funds as she “no longer felt morally obligated to pay the money” to Martin and Adrianna.
[50] Under cross examination, Helen agreed that under either will the grandchildren would recover at least $140,000, and that she had provided Howitt with instructions to make the payment into court. Unfortunately, that was never done and when she was asked why, Helen testified that she did not know. She agreed that sometime after the examinations for discovery in April 2008, she went to see Howitt and had the money paid back to her. She stated that she recalled little about how that occurred and she did not ask him why he had not paid the funds into court.
[51] Howitt was not called as a witness at the trial and no explanation was offered for his absence. His notes were introduced on consent and they indicate that the house was to be sold and distribution would occur after the sale.
[52] I am perplexed by the failure of Helen to call Howitt as a witness. His letters make it clear that he was instructed to obtain an order permitting him to pay the funds into court to the credit of the minors pursuant to the terms of the will; yet he never did so. The explanation offered by Helen makes no sense and I do not accept it. Despite the fact that Agnieszka was not content with what her children would receive under the 2004 will and disputed its validity, this should have had no bearing on the decision of Helen to pay the funds into court. Helen’s position throughout this litigation has been that the 2004 will was valid and reflected the wishes of her mother. The lawyer’s letter indicates that Helen had given him instructions to make the payments into court. If he failed to follow her instructions, I would have expected Howitt to have been summoned as a witness by Helen. Since he was not and his absence was unexplained, I presume he did not pay the money into court on Helen’s instructions and instead, returned the funds to her.
[53] Helen failed to notify Agnieszka or Richard that she had taken the funds back from the lawyer. Moreover, she made no efforts to make the payment to the Paramonczyks as set out in the will.
[54] By this time, in the spring of 2008, she had sold her house in Milton for $287,000 and used the majority of the money from the sale, perhaps $180,000-$200,000, to put a 600 square foot addition on the Atkinson home for Helen’s use. She moved into that house where she continues to live. Helen is not on title to the Atkinson house.
[55] Helen testified she did not know how she spent the $140,000 but she was unemployed for a period of time and had to “dip into it.” She also paid for a shed to be built on the Atkinson property, she bought her a used car, she paid for her to return to school in New York, she paid for a new roof to the house, she paid for various improvements to the Atkinson house and she went for a holiday to Holland.
[56] Helen is an intelligent, articulate woman. She agreed that she knew her mother wanted the grandchildren and Richard and his family to receive certain bequests under her will and that Kay expected that Helen would fulfill her wishes. She acknowledged the terms of the will stipulated that in order for Helen to receive full title to the house, she had to pay the monies to the grandchildren within a year of Kay’s death. She offered no reasonable explanation for her failure to make the payments under the will. She attempted to explain her behaviour by asserting that while she felt a “moral obligation” to make the payments at one point, after Agnieszka refused to accept the money and settle the litigation, she felt she had waited long enough and there was no longer a “legal obligation” to make the payments.
[57] I reject this evidence and this self-serving justification of her conduct. Richard recalled that Kay was “very clear” about her desire to give money from her estate to his family and to her grandchildren. Richard testified that Helen did not tell him when she put the house up for sale and never told him when it sold; he was co-executor under the will and he felt misled by Helen. As I have indicated, I found Richard to be a credible, honest witness who spoke the truth without colouring his evidence to benefit his position. He settled the claims of his family arising from the will for less than they were worth simply to get the matter over with. He was treated in a despicable fashion by Helen without any justification.
[58] When Helen’s behaviour following her mother’s death is reviewed, it is exceedingly difficult to understand her actions. As I have indicated earlier in these reasons, I am quite certain Helen was a devoted daughter and she took care of her mother after her father’s death. I do not find that she exerted any undue influence over Kay on the issue of the transfer of the house into joint tenancy.
[59] The house where Kay and Helen lived was the only asset of any significant value that Kay owned. As I have indicated, I find that Kay wanted to ensure that Helen was “looked after” and thus, she wanted her to have the title to the house after her death. However, the evidence was consistent from all of the witnesses, including Helen, that Kay wanted her grandchildren to get $70,000 each from the proceeds of the sale and the Paramonczyks to recover $50,000. Helen, for reasons only she knows, chose not to follow her mother’s wishes and instead, spent the money primarily for the benefit of her friend Atkinson. Why she would do this is beyond comprehension and defies logic.
[60] I do not accept her explanation that she had offered to pay the money into court for her nephew and niece and, since their mother wanted additional money to settle the case, she felt somehow that relieved her of her obligation to carry out her mother’s wishes. Rather, this is simply a convenient way to attempt to excuse her behaviour which I find reprehensible in all of the circumstances. Regardless of her feelings toward her sister-in-law, she had a duty to carry out the terms of her mother’s will and she failed to do so.
[61] She did not keep Richard apprised of what she was doing concerning the winding up of the estate, even though he was also an executor. Helen offered no explanation for her treatment of Richard and his family and her failure to make the payments to them under the will. This is particularly odious given that Richard had always acted in an honourable fashion toward Helen and was treated as a son by Kay. I find that Helen, by failing to keep Richard apprised of what she was doing, effectively deceived him about the sale of the house and the payments that were due upon the closing of the transaction. Again, her conduct is unjustifiable regardless of her personal circumstances.
[62] Clearly, Helen preferred to give the money to Atkinson as opposed to honouring her mother’s wishes. Her motives behind doing so would only be the subject of speculation by this Court. While Mr. Hyde submits that Helen never attempted to hide her actions from the others, I reject this argument. The evidence of Richard, which I accept, contradicts this submission.
[63] Similarly, Mr. Hyde argued that when Helen’s prior counsel offered to pay $140,000 into court and the solicitor for Agnieszka rejected this sum as settlement of the litigation, this somehow entitled Helen to take the money back and do with it as she pleased. This is, with respect, entirely devoid of merit and without any foundation in law.
[64] With respect to Mr. Hyde’s argument that under the joint tenancy Kay could not attach any conditions or charges to Helen’s portion of the estate, he relies on the case Cameron (Re), 2011 ONSC 6471, 108 O.R. (3d) 117. That case does not assist counsel for the Defendant because it is factually different and the issue was whether, on a bankruptcy, a wife’s acquisition of her late husband’s interest in the matrimonial home by way of survivorship is a transfer at undervalue that can be set aside.
[65] The law is clear that in a situation of joint tenancy, on death, the surviving joint tenant automatically becomes owner of the whole. Thus, upon Kay’s passing, Helen became the sole owner of the house. It did not form part of the estate.
[66] Counsel for the Plaintiffs submits there is a conflict between placing the house in joint tenancy, since it was the only asset of the estate, and providing in the will that the property would be transferred to Helen only if the legacies to the grandchildren were paid within one year of death.
[67] The evidence concerning Kay’s decision to transfer her home to joint tenancy instead of tenants in common was somewhat thin. However, it does not support the conclusion urged on me by Plaintiffs’ counsel that Kay was deceived into transferring the house into joint tenancy and that Helen actively hid this from the others and, further, following Kay’s death deceived them about her actions. The evidence was clear and undisputed that Kay wished her grandchildren and Richard’s family to receive monies from the sale of the house. While I do agree that the will could have been drafted in a clearer fashion, I do not find this a “conundrum” as counsel for the Plaintiffs submits.
[68] It is beyond dispute that Helen knew her mother wanted the legacies paid and knew the deadline for payment; the will states that they form a first charge on the property. I find that Helen has failed to carry out the terms of the will as she has failed to honour her mother’s wishes. She has offered no reasonable explanation for her actions. Instead of making the payments to Adrianna and Martin, Helen spent the funds for the benefit of her friend. She attended Court and said the funds were gone, as if this is somehow an excuse for non-payment. Her own personal circumstances are irrelevant. She failed to pay the bequests within one year of Kay’s death, or to have those bequests paid into court once it became clear in May 2006 that the validity of the 2004 will would be contested. Her behaviour is nothing short of disgraceful. She preferred the interests of her friend over her duty to her dead brother’s children and at no point did she apologize for her conduct. As a result of her conduct, she has lost any relationship with her nephew and niece or with Richard and his family. She has caused irreparable rifts in the family. Although she attempted to explain her failure to honour her mother’s wishes by stating that she viewed Atkinson as family, this was self-serving evidence which offends the Court and I do not accept it.
[69] I find that Helen’s failure to pay $140,000 to the grandchildren is a breach of trust. In Theobald on Wills, 17th ed. (London: Sweet and Maxwell, 2001) at 651, the authors note, at p. 651, that a devise of property in a will on condition that the inheritor of the property make certain payments creates a trust obligation for the inheritor, to be distinguished from a voidable gift:
[A] devise “upon condition” that the devisee makes certain payments within a given time will, as a rule, be construed as a trust, and not as a condition.
This proposition was cited approvingly in Rochon v. Rochon, [1985] O.J. No. 1092 (Ont. H.C.J.), at para. 17, a case in which a father left his house to Gilles, one of several children, on the condition that Gilles make certain payments to his siblings within a six month period. The court held that Gilles obligation was one in trust.
[70] The 2004 will making Helen joint tenant of the house on condition of payments of $70,000 to each grandchild within a year of Kay’s death out of the proceeds of its sale, created a trust obligation that Helen breached.
[71] Having found Helen in breach of trust respecting her obligation to pay Adrianna and Martin $70,000 each under the 2004 will, this opens up the possibility of a proprietary remedy for the plaintiffs. Such a remedy allows the grandchildren to trace the trust funds into assets into which they were converted, and to follow those assets into the hands of a third party where they ended up. This may be necessary since, regrettably, Helen appears to have spent a large portion of the proceeds of the sale of Kay’s house on consumables for her and her friend Atkinson. Helen, on her own evidence, converted an amount greater than $140,000 into a 600 square foot addition and other improvements to Atkinson’s property which Helen does not hold title. If the grandchildren cannot recover the $140,000 from Helen, they may have a claim against Atkinson’s property. The court will not speculate on the outcome of any such claim against Atkinson’s property.
CONCLUSION
[72] I make the following findings:
The will of Kay dated July 23, 2004 is valid.
The transfer of Kay’s house located at 31 Rivercrest Road, Toronto, Ontario to herself and Helen Mroz as joint tenants registered July 29, 2004 is valid and binding.
[73] As a result, I make the following order:
Helen is to pay forthwith the sum of $70,000 each plus pre-judgment interest to the Plaintiffs Martin and Adrianna Mroz. Since both of these Plaintiffs have now attained the age of majority, there is no need for the funds to be paid into court pursuant to Rule 7 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Given that the claims of Richard and his family have been settled, I make no order on this matter.
Although the Statement of Claim includes a claim for punitive and exemplary damages, this was not pursued at trial nor was it argued in submissions, thus I make no order. However, I do find that the conduct of Helen after her mother’s death is worthy of an order for these types of damages as it is egregious and worthy of censure. Had such a claim been advanced at trial, I would have found the conduct of Helen deserving of an order for punitive damages.
[74] If parties are unable to agree on costs, I may be contacted.
D.A. Wilson J.
Released: March 13, 2014
COURT FILE NO.: 06-005/06
DATE: 20140313
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Martin Mroz and Adrianna Mroz by their Litigation Guardian Agnieszka Mroz
Plaintiffs
– and –
Helen Mroz, Richard Paramonczyk, Kathleen Paramonczyk, Elizabeth Paramonczyk, Christine Paramonczyk, and Anne Paramonczyk
Defendants
REASONS FOR JUDGMENT
D.A. Wilson J.
Released: March 13, 2014