ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-21122
DATE: 20140416
IN THE ESTATE OF LAWTON GEORGE LOWE, DECEASED
BETWEEN:
GARRY LORNE LOWE, ESTATE TRUSTEE WITH A WILL IN THE ESTATE OF LAWTON GEORGE LOWE, DECEASED
Applicant
– and –
RICK W. LOWE
Respondent
Michael C. Bruder, for the Applicant
Richard P. Startek and K. Morimoto, for the Respondent
HEARD: January 30, 2014
The Honourable Mr. justice Robert B. Reid
[1] This application concerns $64,495.95 held in a joint bank account in the names of Lawton Lowe, the deceased, and the respondent, Rick Lowe, the deceased’s nephew. The dispute is about whether that sum became estate funds under the control of Lawton Lowe’s personal representative following the date of death, or alternatively was available for distribution by the respondent.
[2] The amount of funds at stake is not large, and arguably is not nearly enough to justify the time and expense of this litigation. However, as is often the case in estate litigation, the court process is the means by which a dysfunctional family has chosen to wage battle, and proportionality is a casualty of the early skirmishes.
[3] There was no dispute that the respondent became the legal owner of the funds on the death of Lawton Lowe by right of survivorship. The parties disagreed about whether the beneficial owner of the funds on Lawton Lowe’s death was the estate or the respondent, in trust for others.
Background:
[4] Lawton Lowe died on August 28, 2009. He had signed a will in November 2005 appointing his wife, Esther Lowe, as the sole executor and trustee. His son, Garry Lowe, was the alternate. The will provided that debts should be paid, that his wife was the residual beneficiary and that if she predeceased, the residue was to be divided amongst his two children: Susanna Reid and Garry Lowe. In December 2008, the deceased prepared a codicil changing the amount payable to his daughter in the event his wife predeceased him.
[5] In October 2009, Esther Lowe renounced her right to act as sole executor and trustee, and in due course the applicant was appointed. Esther Lowe died on October 29, 2010.
[6] It appears that the estate is insolvent, with insufficient assets available to pay the debts. It also appears that Garry Lowe, in his personal capacity, is responsible for some of the debts jointly with the estate.
[7] Lawton Lowe died at the age of 83 as a result of pancreatic cancer. According to the affidavit of the respondent, the deceased received a terminal diagnosis in November 2008. Shortly after that time, he separated from his spouse and became estranged from his son. Eventually he decided to relocate from his home in British Columbia to his birthplace in Ontario. Upon his return to Ontario, he lived first in a long-term care facility and then with his sister.
[8] Rick Lowe is a nephew of Lawton Lowe and a resident of Beamsville, Ontario. He and Lawton Lowe communicated by telephone in December 2008. Rick Lowe visited and assisted his uncle in British Columbia in January 2009, and helped with arrangements to move and reestablish him in Ontario. They visited regularly.
[9] When living in Ontario and until days before his death, Lawton Lowe handled his own financial affairs.
[10] Lawton Lowe advised Rick Lowe in April 2009 that, on his death, he wished to contribute $10,000 to his alma mater, Canadian University College, and that he wished to transfer to his granddaughter, Jennifer, the sum of $35,000. Jennifer is the estranged daughter of Garry Lowe, and is a single mother residing in New Hampshire, USA. According to the affidavit of the respondent, the deceased was concerned that his son Garry would not carry out his wishes if those instructions were left to him to perform.
[11] On April 23, 2009, Lawton Lowe changed his TD Canada Trust bank account in Fonthill, Ontario to a joint account with himself and Rick Lowe as owners. The account card signed by both the deceased and the respondent indicated that the terms of the account included a right of survivorship. Rick Lowe made no contribution to the contents of the account.
[12] On August 11, 2009, about two weeks before his death, Lawton Lowe confirmed his instructions to Rick Lowe about a payment to Jennifer and to the Canadian University College by means of a signed, handwritten note, although the note showed that $40,000 (rather than $35,000 as previously instructed) should be paid to Jennifer.
[13] Lawton Lowe was admitted to hospital on August 13, 2009, as a result of deteriorating health. On August 18, he gave the respondent another handwritten note indicating as follows: “C.U.C. $10,000” and “Jennifer $35,000”. Added were the words: “Canadian chequebook in drawer near computer”. The respondent advised Garry Lowe that day at the hospital of his uncle’s instructions.
[14] Rick Lowe confirmed in his affidavits and cross-examination that he was made a joint account holder as a convenience to his uncle, in order to give effect to Lawton Lowe’s instructions. He made no use of the joint account until shortly before Lawton Lowe’s death when some utility and credit card bills were paid. There is no issue about that.
[15] There is also no issue that on and after August 26, 2009, two days before Lawton Lowe’s death, Garry Lowe specifically directed the respondent not to write any cheques on the joint account except as authorized. Those instructions were originally conveyed on behalf of Garry Lowe and Esther Lowe and later on behalf of Garry Lowe as executor of the estate. This was on the apparent assumption that Garry Lowe was in fact the executor, even though that status was not assumed officially until October 2009.
[16] On the day of Lawton Lowe’s death, shortly after the death occurred, the respondent paid $35,000 to Jennifer Lowe. On September 23, 2009, the respondent paid $10,000 to the Canadian University College. After the payment by the respondent of other undisputed expenses, the balance in the account as of January 31, 2010 was $12,414.82. The respondent paid $5,000 of those funds as a retainer to his legal counsel and transferred the balance to his own account.
[17] The written notes by Lawton Lowe did not indicate how the balance of the funds should be disbursed. However, in his cross-examination, Rick Lowe was very clear that his uncle verbally directed him to send the balance to Garry, and that position was communicated to Garry Lowe by correspondence from Rick Lowe soon after Lawton Lowe’s death.
Analysis:
[18] As noted above, there is no dispute that the legal ownership of the funds in the joint account passed on Lawton Lowe’s death to Rick Lowe by survivorship.
[19] In Pecore v. Pecore,[^1] the Supreme Court of Canada confirmed that as a general rule where a transferor makes a gratuitous transfer and the effect of the transfer is challenged, an onus is placed on the transferee to demonstrate that a gift was intended since equity presumes bargains, not gifts. A rebuttable presumption of a resulting trust arises.[^2]
[20] In the situation where a person gratuitously adds another’s name as owner of a bank account with right of survivorship, the transferee must rebut the presumption of resulting trust by proving that it was not the transferor’s intention that the funds from the joint account flow to the estate on the transferor’s date of death.[^3]
[21] Thus, the debate is about who is entitled to the beneficial ownership of the funds on the transferor’s date of death.
[22] Normally, evidence showing the transferor’s intention at the time of transfer ought to be contemporaneous, or nearly so, to the transaction.[^4] Subsequent acts or declarations have been viewed with mistrust by courts, since the testator could have changed his mind subsequent to the transfer and because donors are not allowed to retract gifts. But, where the subsequent conduct is relevant to and consistent with the apparent intention of the testator at and around the time of the transfer and is sufficiently reliable, the evidence may be acceptable.[^5]
[23] Lawton Lowe is not available to confirm his intention. He did not leave an unequivocal instruction, such as a simple written statement at the time the account was made joint with Rick Lowe. As a result, the quest for his intention requires an analysis of the pieces of reliable evidence from which that intention can be gleaned. The respondent bears the onus of proof on a balance of probabilities, failing which the presumption of resulting trust applies, and the account contents at Lawton Lowe’s date of death belong to the estate.
[24] While not determinative of the issue, a helpful starting point is to note that unlike most cases of this kind, where the self-interest of the transferee is aligned with finding him or her to be owner of the beneficial interest, here Rick Lowe has no personal stake in the outcome. It was his job, as he understood it, to distribute the funds in accordance with Lawton Lowe’s instructions, retaining none for himself.
[25] Lawton Lowe believed that the use of a joint account could be helpful as an estate planning tool. He wrote an email to Garry Lowe dated January 28, 2009, which deals with a variety of issues within the family. Relevant to this inquiry is his comment: “We put you on our joint account to save you paying income tax when we died – it didn’t involve your property and you never put one cent towards the Joint account.” Lawton Lowe clearly understood that it was possible for the proceeds of a joint account not to fall into the estate.
[26] In a typewritten note dated April 27, 2009, four days after the bank account was made joint, Lawton Lowe wrote about his last wishes, including cremation and details of his memorial service. In this note, there are several references to the responsibilities that Rick Lowe was to undertake. It contained this line: “Richie is joint owner of my bank account so he will see that everything is paid and reported to the executor!” The previous line reads: “My will is in my case and this is to be sent to my Son in British Columbia – he is my executor.”
[27] The applicant relies on the note to conclude that, since Rick Lowe was to report to the executor, he was to be handling estate funds. Although Rick Lowe was clear that he was verbally instructed by his uncle to give the remaining account funds to “Garry” after payment of the two specific gifts, nowhere else is there a reference to remitting the funds to the executor or to the estate.
[28] It appears to me that Lawton Lowe was not using language with sufficient precision to support the applicant’s contention that the bank account contents were estate funds. First, Garry Lowe was not named as the executor. Second, “reporting” to the executor does not necessarily connote a legal responsibility, much less an estate ownership of the funds. It is equally possible that Lawton Lowe wanted the completion of his wishes, both inside and outside the will, to be accounted for in one place.
[29] On August 10, 2009, Lawton Lowe requested that $42,000 be transferred from his Registered Retirement Income Fund into the joint bank account. In the letter of instruction to the banker, he wrote: “The main reason I am asking for this money is because I didn’t want to change my Will or add an addendum to it and I thought going through my Riff [sic.] would be the easiest for everyone!” Once again, Lawton Lowe displays an intention to use the account as an estate planning tool, and as an alternative to a will or codicil, both of which he had previously executed.
[30] The evidence of the respondent aligns with the two written notes from Lawton Lowe, dated August 11 and 18, 2009. The notes are admittedly incomplete, in that they do not deal with the remainder in the account after the two gifts are made. However, I am impressed that Rick Lowe candidly deposed that the clear verbal instructions of Lawton Lowe were to pay the balance to Garry Lowe.
[31] The evidence adduced by the respondent about Lawton Lowe’s actions indicative of his intentions after the creation of the joint account is consistent with the banking document indicating that the account was to include a right of survivorship and is consistent with the expectation that the funds were to be distributed by Rick Lowe. I have already made reference to Lawton Lowe’s prior understanding of a joint account as a method of estate planning. I consider that post-creation evidence to be reliable.
[32] The proposition advanced by the applicant was that Rick Lowe was authorized to use the account only during Lawton Lowe’s lifetime, and that upon his death, the entire balance became beneficially owned by the estate. By that argument, Rick Lowe could have made the two payments at any point up to Lawton Lowe’s death without challenge.
[33] If it was the deceased’s intention (which ultimately is the object of this enquiry) to have Rick Lowe make the two gifts inter vivos, it makes no sense that Lawton Lowe didn’t make the gifts himself, given that until the last few days or weeks of his life he was managing his own financial affairs. It is more logical that the gifts were not to be made until after his death because Lawton Lowe did not know the extent that he would need the funds for his own use during his final illness.
[34] I find that the lack of any personal benefit to Rick Lowe supports the evidence rebutting the presumption of resulting trust since it removes the concern that the evidence is self-serving. Lawton Lowe had the right to set up the joint account with the intention that the proceeds would belong to Rick Lowe legally, but to be used in accordance with Lawton Lowe’s instructions.
[35] The respondent has argued that, consistent with the decision of the Ontario Court of Appeal in Sawdon Estate v. Watch Tower Bible and Tract Society of Canada,[^6] Lawton Lowe’s intention was to establish a trust with the respondent as the trustee. In Sawdon, the deceased had set up multiple joint bank accounts with two of his adult children and had given them instructions to distribute all of the account proceeds equally amongst his five children upon his death.
[36] The Court of Appeal in Sawdon concluded that a trust was created when the bank account was put into joint names. Legal title to the accounts vested immediately and as such there was an immediate inter vivos gift of the beneficial right of survivorship to the children. From that point, the legal title holders of the accounts held the beneficial right of survivorship in trust for the children in equal shares.[^7]
[37] I am satisfied that the same analysis should be applied in this case. In effect, Lawton Lowe set up a trust with Rick Lowe as the trustee when he added Rick Lowe as legal title holder to the joint bank account. Lawton Lowe’s granddaughter, alma mater, and son Garry were the beneficiaries.
[38] Ultimately, the combination of the banking document, the written instructions, the prior use of joint banking for estate planning purposes, the confirmation that Rick Lowe would see that “everything is paid”, and the lack of direct and reliable evidence that the funds were to be treated as estate funds leads me to conclude that the respondent’s onus to rebut the presumption of resulting trust has been met.
[39] I observe that as of the date that the application was argued, the balance of the joint account funds had not yet been paid to Garry Lowe pursuant to the terms of the trust as I have found them to be. Based on my decision, I presume that there will be no dispute about Gary Lowe’s entitlement to those funds without deduction except as may previously have been agreed.
[40] As a result, I find that the contents of the joint bank account were not held for the benefit of the estate of Lawton George Lowe, deceased, and as a result, the application is dismissed.
Costs:
[41] If the parties are unable to resolve the issue of costs consensually, I am prepared to receive written submissions according to the following timetable. The respondent is to provide to the applicant his bill of costs together with brief written submissions within two weeks of this date. The applicant is to deliver his response to the respondent within a further two weeks. The submissions by both parties and any reply submissions by the respondent are then to be filed with the court by no later than May 23, 2014. If submissions are not received by that date or by any authorized extension, the parties will be deemed to have settled the issue of costs as between themselves.
Reid, J.
Released: April 16, 2014
COURT FILE NO.: 10-21122
DATE: 20140416
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GARRY LORNE LOWE, ESTATE TRUSTEE WITH A WILL IN THE ESTATE OF LAWTON GEORGE LOWE, DECEASED
Applicant
– and –
RICK W. LOWE
Respondent
REASONS FOR JUDGMENT
R.B. Reid J.
Released: April 16, 2014
[^1]: 2007 SCC 17, [2007] 1 S.C.R. 795.
[^2]: There are situations where a presumption of advancement applies, based on the relationship between the transferor and the transferee, but that presumption does not arise in the facts of this case.
[^3]: Pecore, at paras. 23 and 24.
[^4]: Pecore, at para. 56.
[^5]: Pecore, at paras. 57 and 59.
[^6]: 2014 ONCA 101.
[^7]: Sawdon, at para. 67.