COURT FILE NO.: 52630
DATE: 20140904
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Andrew Spylo, Annemarie Nittel and Katherine Duncan
L.A. Farrell, for the plaintiff, Katherine Duncan
Annemarie Nittel, in person
Andrew Spylo, in person
Plaintiffs
- and -
Gordon Spylo personally and as Estate Trustee for Mike Spylo and as Estate Trustee for Antoinette Spylo and Bonnie Spylo
Gordon Spylo, in person
Bonnie Spylo, in person
CIBC Mortgages Inc. Trading As Firstline Mortgages, not participating
Defendants
COURT FILE NO.: 58463
ONTARIO
SUPERIOR COURT OF JUSTICE
AND B E T W E E N:
Andrew Spylo, Annemarie Nittel and Katherine Duncan
L.A. Farrell, for the plaintiff, Katherine Duncan
Annemarie Nittel, in person
Andrew Spylo, in person
Plaintiffs
- and -
CIBC Mortgages Inc. Trading As Firstline Mortgages, Gordon Spylo, personally and as Estate Trustee for Mike Spylo and as Estate Trustee for Antoinette Spylo and Bonnie Spylo
Gordon Spylo, in person
Bonnie Spylo, in person
Defendants
HEARD: June 16, 17, 18, 19, 20 and 23, 2014
GRACE J.:
A. Introduction
[1] Mike and Antoinette Spylo died almost thirty years ago and less than a year apart. Their children, Gordon, Katherine (known as “Susie”) and Andrew, proclaim love and admiration for them.
[2] Unfortunately, what their parents did – or did not – leave them caused the relationship to crack, rupture and, before my eyes, explode. Added to the mix is a dispute over the long-time residence of Andrew and Annemarie Nittel at 279 Castlefield Avenue, Waterloo, Ontario (“Castlefield”).
[3] Andrew alleges he is the beneficiary of secret arrangements his elder brother, Gordon, denies exist.[^1]
[4] Susie supports Andrew and alleges that she continues to have an interest in various parcels of real estate despite executing transfers in favour of Gordon.[^2] At trial and despite denials in the statement of defence, Gordon accepted some, but not all, of Susie’s claims.
B. General Observations
[5] The parties proceeded to trial without having exercised their right to conduct examinations for discovery and without fully complying with interlocutory orders concerning documentary production.
[6] Further, from time to time, the acrimony between Gordon and Andrew was on full display. Arguments started and descended quickly into repeated and loud allegations and denials. Emotion impeded both questions and answers.
[7] The failure to exercise the right to oral discovery, limited documentary production and constant tension, had unfortunate, almost predictable, consequences. Some issues were canvassed exhaustively. A few were barely touched. Still others were largely ignored.
[8] To varying degrees each sibling testified with absolute certainty and in detail about undocumented conversations despite the passage of almost thirty years.
[9] Documentary evidence was often inconsistent with the oral testimony. However, the parties forged on. More often than not, documents were challenged on the basis of genuineness, completeness and/or accuracy.
[10] With certainty, I can say the evidence did not tell the entire story. What follows is my attempt at the impossible: putting together a puzzle while missing key pieces.
C. The Undisputed Facts
i. The Spylo family
[11] Apparently known as “Iron Mike”, Mike Spylo (“Mike”) was described as a bartender and hotel manager who loved investing in real estate in Timmins, Ontario and surrounding area.
[12] His spouse Antoinette was commonly known as “Mary”. For many years she owned and tirelessly operated a corner store at 201-203 Balsam Street South, Timmins: a multi-unit property Mike owned.
[13] Mike and Mary Spylo raised their sons Gordon and Andrew and daughter Susie in one of the apartments located there.
[14] Gordon, the eldest, is now a seventy one year old retired secondary school mathematics teacher. He has spent almost all of his life in Timmins where he continues to reside with his spouse Bonnie.
[15] Andrew is the middle child. Now in his mid-sixties, he describes himself as a part-time property manager. Citing his ongoing issues with Gordon, Andrew declined to disclose the location of his current residence. However and as mentioned, the issues between the parties include Castlefield. CIBC Mortgages Inc. (“CIBC”) obtained and enforced a judgment for possession against Andrew and Ms. Nittel. The mortgagee then sold the property under power of sale. The parties participating at trial assert competing claims to the surplus proceeds CIBC paid into court.
[16] Susie is in her early sixties. She is also a retired teacher. Susie had only been teaching in Toronto for a short time when she learned that her mother had suffered a stroke. Soon afterward Susie returned to Timmins to help with her mother’s care.
[17] In 1988 and following the death of her parents and the end of her marriage, Susie moved to London, Ontario to continue her teaching career. She continues to live in that city today.
[18] The siblings’ dispute starts with their father’s estate. While the extent of his non-real estate holdings is contentious, the list of real estate is not.
[19] At the time of his death, Mike owned or had an interest in ten pieces of real estate.
[20] Five parcels in Timmins, Ontario - municipally described as 7 and 15 Birch Street South/111 Algonquin Boulevard,[^3] 184-186 and 201-203 Balsam Street South, 139 Fifth Avenue and 252 A & B Lakeshore Road - were registered in Mike’s name alone.
[21] Mike’s undivided one-half interest in 205, 209-211 and 215-221 Birch Street South, Timmins, brought the total to eight. When their father passed away, Gordon and Susie each held an undivided one-quarter interest in those properties.
[22] The ninth parcel was 135-137 Fifth Avenue, Timmins, Ontario. Mike and Gordon held it as joint tenants.
[23] Mike had owned and then sold a tenth property: 47 Crawford Avenue, South Porcupine, Ontario (“Crawford”). He held a mortgage as security for payment of a portion of the purchase price. The mortgage went into default and in 1975, Mike sold Crawford to Susie pursuant to the power of sale provisions it contained. In 1978 and 1980 new mortgages were registered in Mike’s favour which he continued to hold when he died.[^4]
ii. Mike Spylo’s Wills
[24] After an extended illness, Mike Spylo died on June 29, 1985.
[25] Mike’s final probated will was dated July 18, 1984 (the “1984 Will”). It had been prepared by his long time lawyer Rino Bragagnolo, Q.C.
[26] Six parcels of real estate were the subject of specific bequests. Gordon was named as beneficiary of four of them and Susie two. Gordon was also to receive shares Mike held in two companies: NSR Resources Inc. and Global Energy Corporation. Mary was to receive the residue of the estate. While named alternate executor, Andrew was not named as a specific or residual beneficiary.
[27] The 1984 Will replaced an earlier version dated October 2, 1981 (the “1981 Will”).
[28] Andrew had been named as the alternate executor in the 1981 Will as well. He was also a beneficiary. Six parcels of land had been the subject of specific bequests in that document as well. However, their distribution was materially different.
[29] Under the 1981 Will, Mary, Gordon and Susie were each to receive one parcel. Andrew was the beneficiary of three properties. The 1981 Will also mentioned the mortgages Mike held on Crawford. Susie – the owner of the parcel – was to receive the benefit of one of them and Gordon and Andrew were to share the other.
[30] For ease of reference, a comparison of the key terms of the 1981 and 1984 Wills is set forth below.
| Property Subject to the Bequest | Beneficiary under the 1981 Will | Beneficiary under the 1984 Will |
|---|---|---|
| 205 Birch Street South, Timmins | Gordon (as to a ¼ interest. At that time, each of Gordon, Andrew and Susie also owned an undivided ¼ interest in the property). | Unchanged (However, Mike then owned a ½ interest in the property. At that time, each of Gordon and Susie continued to hold a ¼ interest in the property. The 1984 Will purported to direct Susie to give Gordon “a complete discharge of her interest in the said property”.) |
| 209-211 Birch Street South, Timmins | Susie (As to a ¼ interest. At that time, each of Gordon, Andrew and Susie also owned an undivided ¼ interest in the property.) | Unchanged (However, Mike then owned a ½ interest in the property. Gordon and Susie continued to hold an undivided ¼ interest in the property. The 1984 Will purported to direct Gordon to give Susie “a complete discharge of his interest in the said property”.) |
| Vacant Lots – 213, 217 and 221 Birch Street South, Timmins | Andrew (As to a ¼ interest. At that time, each of Gordon, Andrew and Susie also owned an undivided ¼ interest in the property.) | Gordon except for a 5 foot strip adjacent to 209-211 Birch Street South which was to be transferred to Susie. (However, Mike then owned a ½ interest in the property. Once again, Gordon and Susie continued to hold a ¼ interest in the property. The 1984 Will again purported to direct Susie to give Gordon “a complete discharge of her interest in the property.”) |
| Mortgage no. 261759 registered against 47 Crawford Street, South Porcupine | Andrew and Gordon, in equal shares. | This mortgage was not mentioned. However, Susie was to receive all of Mike’s “right, title and interest” in the property. |
| Mortgage no. 282836 registered against 47 Crawford Street, South Porcupine | Susie | This mortgage was not mentioned. However, Susie was to receive all of Mike’s “right, title and interest’ in the property. |
| 7 and 15 Birch Street (also known as 111 Algonquin Boulevard East), Timmins | Andrew (As to a ½ interest. Andrew already owned the other ½ interest in the property.) | Gordon (Mike was then the sole owner the property). |
| 184-186 Balsam Street South, Timmins | Andrew | Not mentioned |
| 203 Balsam Street South, Timmins | Mary | Not mentioned |
| 139 Fifth Avenue, Timmins | Not mentioned | Gordon |
| 40,000 shares in NSR Resources Inc. | Not mentioned | Gordon |
| 4,000 shares in Global Energy Corporation | Not mentioned | Gordon |
| Residue | Gordon | Mary |
iii. Antoinette (“Mary”) Spylo’s Will
[31] Mary Spylo passed away on March 28, 1986, only nine months after Mike.
[32] Her last probated will was dated August 8, 1985 and handwritten by her son Gordon. While expressing concern about her mother’s capacity, Susie’s lawyer was quick to say that the probated will was not being challenged.[^5]
[33] Mary appointed Gordon as her estate trustee and Susie as alternate. All of her property was to be divided equally between them. Mary’s will did not mention Andrew.
[34] At the time of her death, Mary was entitled to 184-186 and 201-203 Balsam and 252 A & B Lakeshore Road, Timmins as the residual beneficiary under the 1984 Will. She also owned in her own right properties municipally described as 21 Second Avenue (later changed to Dwyer) and 4 Spruce Street, Schumacher, Ontario.
iv. 279 Castlefield Avenue, Waterloo, Ontario (“Castlefield”)
[35] Andrew and Annemarie Nittel settled in Waterloo, Ontario. Ms. Nittel had acquired the Castlefield property in 1980.
[36] On October 16, 1981, judgment was granted in an ongoing proceeding involving Wanda Kowalski as plaintiff and Andrew as defendant. That judgment affected the Castlefield property.
[37] The Honourable Justice Boland of what was then the Supreme Court of Ontario declared Andrew to be the father of Jessica Antoinette Spylo. He was ordered to pay child support. Andrew’s past due and ongoing obligations were secured by his interest in three properties including Castlefield.[^6]
[38] On May 21, 1986, an order was obtained on consent amending the judgment to delete the Castlefield property.[^7] On that same day, Ms. Nittel transferred Castlefield to Gordon with Andrew’s consent.
[39] The consideration was shown as being $170,000. Canada Trustco Mortgage Company registered a mortgage and assignment of rents that same day. Requiring payments over a six month term, the mortgage secured payment of the principal amount of $125,000 plus interest at the rate of 9.5% per year. Eventually that mortgage was satisfied.
[40] Despite the transfer of ownership, Andrew and Ms. Nittel continued to live in the Castlefield property until dispossessed pursuant to a judgment obtained by CIBC.
[41] As mentioned, the subsequent sale under mortgage generated surplus proceeds which were paid into court to await this decision. CIBC played no part in the trial.
D. The Remaining Parties’ Positions
[42] Andrew alleges that he was to receive specific bequests from his father’s estate[^8] and a one-third share in his mother’s estate. Susie supports that position.
[43] Andrew and Susie maintain that Andrew was omitted from their parents’ wills because of his ongoing legal difficulties with Ms. Kowalski.
[44] Susie alleges that she continues to have an interest in the estates notwithstanding various documents she executed in Gordon’s favour.
[45] The siblings argue that Gordon has abused his position as estate trustee by treating all of the property of Mike and Mary as his own. They allege he has received and appropriated rental income, insurance proceeds and, in some cases, the proceeds of sale. They seek declaratory relief and damages.
[46] Andrew, Ms. Nittel and Susie also allege that the beneficial ownership of Castlefield never changed. It was, they say, held in trust for Andrew and Ms. Nittel. With Susie’s support, Andrew and Ms. Nittel claim the monies paid into court by CIBC.
[47] In the alternative, the plaintiffs allege that estate funds were used to pay the costs associated with Castlefield including payments to mortgagees and the municipality on account of realty taxes. Andrew and Susie claim an interest in the monies standing in court as beneficiaries of their parents’ estates.
[48] Gordon denies that his parents’ intentions were other than as stated in their wills. He therefore denies that Andrew is to receive anything from either estate.
[49] At trial, Gordon admitted that Susie continued to have an interest in parcels of land that were transferred to him for no or nominal consideration.[^9] However, he denied that she has any interest in two parcels which were transferred for value.
[50] Gordon also denied that he held the Castlefield property in trust and claimed that he used personal funds to satisfy mortgage and other payments due in respect of that property. He claims entitlement to the monies paid into court by CIBC.
E. Analysis and Decision
i. Mike Spylo’s Estate
[51] As mentioned, Gordon and Susie were named as beneficiaries in the 1984 Will. Andrew was not. Andrew and Susie allege that their father established a secret trust for Andrew’s benefit.
[52] Section 3 of the Succession Law Reform Act, R.S.O. 1990, c. S.26, provides that a “will is only valid when it is in writing.”
[53] Nonetheless, the object of a secret trust may claim to be a beneficiary despite being omitted from the written document. Feeney’s Canadian Law of Wills explains the principle in these terms:
The testator…may, after making the will, informally impose a “secret” trust upon what appears to be an outright gift to a beneficiary. However, the testator may only do so with the knowledge and acquiescence of the beneficiary… [T]he secret trust is enforceable against…the apparent beneficiary of a fully-secret trust, because the terms were communicated and accepted and on that faith, the testator…has left unrevoked a will made earlier. It is therefore said that no objection can be made to a secret trust on the basis of the wills statute because the matter is removed from the provisions of the statute and brought within the law of trusts by the faith and reliance of the testator on the honour of the trustee to observe the terms of the secret trust.[^10]
[54] The underlying rationale seems to be a simple one: equity will not allow a statute to be used as an “engine” of fraud.[^11] In Blackwell v. Blackwell, [1929] A.C. 318, Viscount Sumner wrote at p. 335:
For the prevention of fraud equity fastens on the conscience of the legatee a trust which would otherwise be inoperative: in other words, it makes him do what the will has nothing to do with, it lets him take what the will gives him, and then makes him apply it as the Court of Conscience directs, and it does so in order to give effect to the wishes of the testator, which would not otherwise be effectual.
[55] For that reason and because a secret trust operates outside a will, it may be proven by oral or written evidence.[^12] The onus, of course, lies on the person alleging its existence.
[56] In this case, the plaintiffs rely on documentary evidence that both pre and post-dates Mike’s death on June 29, 1985.
[57] In the pre-June 29, 1985 period, they point to the 1981 Will. As mentioned, Andrew was to receive Mike’s share of three parcels of real estate and was to share a mortgage on the Crawford property with Gordon.
[58] When the 1981 Will was executed on October 2, 1981, Mike owned only one of those parcels (184 – 186 Balsam Street South) outright. He shared ownership of 213 – 221 Birch Street South with all three children and 7 and 15 Birch Street South with Andrew alone.
[59] A few days later,[^13] Andrew executed a transfer of his interest in those two properties to Mike.[^14] The transfers were registered four days after Boland J. granted Ms. Kowalski judgment against Andrew.
[60] According to Susie and Andrew it was the Kowalski action that caused Mike to make Andrew’s interest in his estate secret.
[61] Susie testified that “multiple levels” supported her position that Gordon held 7 and 15 and 213 – 221 Birch Street and 139 Fifth Avenue, Timmins and some of Mike’s shares in trust for Andrew notwithstanding the fact that those assets appeared to have been given to Gordon without qualification in the 1984 Will.
[62] First, she said that “the headache that Andrew was dealing with in Southern Ontario” was the subject of frequent conversation at her father’s home. She said that Mike was aware of the Kowalski action and followed it closely. She alleged that Mike told her that steps had been taken to shield his life’s work from that proceeding. She also maintained that Mike told her Andrew was included within his will, that she was “well aware of who was to get what” and that Gordon participated in conversations concerning solutions to Andrew’s problems.
[63] Second, Susie said that the three siblings assembled at Mr. Bragagnolo’s office for the reading of the 1984 Will shortly after their father passed away. Susie alleged that Mr. Bragagnolo observed that while Andrew was not mentioned in the 1984 Will, he was a beneficiary. She said that Mr. Bragagnolo told them how the properties were to be divided, said that the stocks would go to Andrew[^15] and that the money would be divided three ways once expenses were paid.
[64] Third, Susie alleged that the siblings left Mr. Bragagnolo’s office and went for coffee. She said that Andrew was interested in liquidating the estate because he wanted to receive his share. She said that Gordon wanted to maintain the status quo and offered to manage the estate for their mutual benefit. Susie testified that the offer was accepted.
[65] Andrew also maintained that his father made the decision to delete him as a beneficiary in the 1984 Will to place his inheritance beyond Ms. Kowalski’s reach.
[66] He claimed there was no other reason for the amendment. He said the relationship between father and younger son was positive and strong. In fact, Andrew alleged Mike had received and was holding $25k in cash and $35k in stock[^16] for his benefit, travelled to Toronto to meet with a lawyer dealing with the Kowalski action on Andrew’s behalf and offered to help Andrew refinance the Castlefield property.
[67] Andrew testified that notwithstanding the terms of the 1984 Will, it was his understanding that he would receive 7 and 15 and 213 – 221 Birch Street and 139 Fifth Avenue, Timmins and possibly the shares in NSR Resources Inc. and Global Energy Corporation.
[68] He said that his understanding was confirmed by Mr. Bragagnolo when the 1984 Will was read. He also alleged that the siblings agreed to pool all of the assets and leave them with Gordon to manage.
[69] Beyond denying its existence, Gordon barely addressed the issue of a secret trust in his testimony. In cross-examination, he accepted the obvious proposition that if Andrew had been named as the beneficiary of 7 and 15 and 213-221 Birch Street in the 1984 Will, each sibling would have received two parcels of real estate. Gordon seemed mystified by his sibling’s testimony concerning the reading of the 1984 Will and a subsequent coffee shop meeting.
[70] While it has been suggested that proof of a secret trust must be “clear and demonstrable”, only one civil standard applies: the balance of probabilities.[^17] The plaintiffs have not met that burden.
[71] Susie’s testimony concerning an alleged secret trust ranged from unsatisfactory to odd.
[72] Early on she identified the property she alleged Gordon was to hold in trust for Andrew despite the unqualified language of the 1984 Will. As mentioned, she testified Andrew was to receive 7 and 15 and 213 – 221 Birch Street South, 139 Fifth Avenue and an unidentified portion of the shares. However, I was never able to determine the basis for that assertion.
[73] Despite gentle and persistent prodding by her own lawyer, Susie spoke in generalities. She alleged that her father made her “well aware of who was to get what” under the 1984 Will. However, she never provided specifics of what her father said or when.
[74] She alleged that she and Gordon had many discussions with their father concerning “solutions” to Andrew’s problems with Ms. Kowalski but I was not told what they were.
[75] Susie said that during the reading of the 1984 Will, Mr. Bragagnolo told the siblings “how the properties were divided” but I never learned what deviations from the 1984 Will he allegedly outlined.
[76] She said that Mr. Bragagnolo spoke of monies being divided three ways after expenses were paid. However, it makes no sense that Mr. Bragagnolo would have said any such thing. Gordon and Susie were specific legatees. Andrew was alleged to be one too. The assets subject to those bequests – land and shares – were not to be sold by the estate. Any other assets were to go to the residual beneficiary: Mary. If the estate generated monies, they were to go to Mary, not the children.
[77] In the years that followed, every parcel of land mentioned in the 1984 Will was dealt with in some fashion. Those dealings included 7 and 15 and 213 – 221 Birch Street and 139 Fifth Avenue, Timmins – the parcels Susie said Andrew was to receive.[^18]
[78] The Evans, Bragagnolo firm acted for Gordon on every transaction. The instruments, letters and accounts evidence Mr. Bragagnolo’s continued involvement. Not once was Andrew involved or even mentioned.
[79] Mr. Bragagnolo’s attention was also directed to the shares Mike owned at the time of his death. In a March 24, 1992 letter addressed to Gordon, Mr. Bragagnolo wrote:
In the Last Will and Testament of Mike Spylo, forty-thousand (40,000) shares in NSR Resources Inc. and four thousand shares in Global Energy Corporation were to be transferred to you. Could you please advise if these shares have been dealt with.
[80] It is inconceivable to me that Mr. Bragagnolo would have ignored Andrew if he was the beneficiary of a secret trust relating to one, some or all of the parcels of real estate or the shares. While Mr. Bragagnolo may well have read the 1984 Will to Gordon, Andrew and Susie, I do not accept that he made any reference to a secret trust.
[81] For reasons that are unclear to me, Susie came across as Andrew’s champion. She did not hesitate to testify about meetings that she did not attend: pre-1985 meetings involving her brothers, father and Mr. Bragagnolo in Timmins and her brothers, father and another lawyer in Toronto.
[82] On more than one occasion she stopped mid-answer to provide some off topic comment. When asked to explain the basis for her statement that certain assets were to be held in trust for Andrew she started to answer and stopped to speak of her “stellar relationship” with each brother prior to 2006.
[83] When asked in direct examination to explain what happened after attending at Mr. Bragagnolo’s office for the reading of the 1984 Will, Susie did not immediately respond. Instead she said that “nothing was stated in the will that [Andrew] wasn’t going to be in the Will”. When asked to explain what she meant by her own clearly surprised lawyer, Susie restated her comment and added that she “just wanted to throw that in there”. These observations demonstrate why I did not find Susie’s evidence concerning her parents’ intentions credible or reliable.
[84] Andrew’s evidence seemed wishful, not factual. He did not identify a single instance where his father spoke to him about his testamentary intention. If Andrew’s version was correct, one would have expected the 1984 Will to have mirrored the 1981 Will except that Gordon would have been substituted where Andrew had earlier appeared.
[85] That only happened in part. As one would have expected, Gordon, not Andrew, became the beneficiary of 7 and 15 Birch Street South and, save for a five-foot wide strip that was bequeathed to Susie, 213 – 221 Birch Street South. However, there were many other unexplained changes too.
[86] Gordon was the residual beneficiary in the 1981 Will. That was changed to Mary in the 1984 Will.
[87] 184 – 186 Balsam Street South was left to Andrew in the 1981 Will. It formed part of the residue in the 1984 Will and was, therefore, left to Mary.
[88] The 1984 Will no longer mentioned mortgages held on the Crawford property. Instead, Mike conveyed his right, title and interest in the property to Susie.
[89] The 1981 Will did not mention 139 Fifth Avenue. Under that document it would have been part of the residue to which Gordon was entitled. It was specifically bequeathed to Gordon in the 1984 Will. At no time was Andrew to be the beneficiary of that property and the basis for Andrew’s claim to it remains unclear and unproven.[^19]
[90] The same can be said for the shares in NSR Resources Inc. and Global Energy Corporation. I do not know when they were acquired by Mike but they were not referred to in the 1981 Will. If they existed, they would have formed part of the residue to which Gordon was entitled.
[91] I was not satisfied that Mike Spylo ever formulated an intention to create a secret trust in any asset, let alone the ones identified by Andrew and Susie. The evidence rises to the level of possibility, not probability, insofar as 7 and 15 and 213 – 221 Birch Street South are concerned. It does not even rise to that level in respect of anything else.[^20]
[92] Furthermore, I am not satisfied that Mike communicated any such trust to Gordon either directly or through Mr. Bragagnolo or that Gordon expressly or impliedly accepted it.
[93] It follows that I am not satisfied that the coffee shop meeting occurred as Susie and Andrew allege. There is no air of reality to Susie and Andrew’s suggestion that Andrew wanted to receive his share of the estate while still embroiled in proceedings with Ms. Kowalski. Liquidating and distributing the estate would have removed the cloak of secrecy Susie and Andrew allege their father maintained for Andrew’s benefit.
[94] As evidenced by the transfers in favour of his father in October, 1981 and other transactions I will come to, Andrew wanted nothing in his name.
[95] I do not pretend to know why Mike decided that Andrew would not share in his estate or why he made many other changes reflected in his 1984 Will. However, I am of the view that the “secret trust” Andrew and Susie allege exist is a figment of their imagination. The wishes Mike expressed in the 1984 Will govern.[^21]
[96] I have reached that conclusion notwithstanding a handwritten letter written by Gordon to Susie in, it appears, February, 1991. While faint in places, the relevant portion appears to read as follows:
Dear Susie
You’ll find enclosed the receipts (T3 + lawyers) you requested. I’ve also sent you T3 forms for Andrew. Give him these when you see him. The income tax dept. knows about the money being sent out. I’ve tried to reduce the burden for everyone especially you. Andrew, in fact, is getting the most; hence the bigger numbers appear on his T3 forms. I’ve appealed their judgments against me, but its [sic] touch and go. I expect the worst…
[97] Appended to the letter were five T3’s addressed to Andrew. Three of them related to estate of Mike Spylo. They showed payments to Andrew during 1988, 1989 and 1990 of $10,000, $2,000 and $12,000 respectively.
[98] I readily concede that the letter, the attachments and Gordon’s explanation concerning them left me unsure of the T3’s place in the story. It is my understanding that T3’s are issued so that recipients can report amounts received from an estate to the Canada Revenue Agency. If, as I have found, Andrew was not a beneficiary of Mike’s estate, why would Gordon, the estate trustee, issue a T3 to him?
[99] Eventually and after several attempts, Gordon testified that the T3’s were issued because he had made the mortgage payments on the Castlefield property when Andrew breached his promise to do so. In cross-examination Gordon was asked why the T3’s contained a reference to Mike’s estate if he was funding those payments from his personal funds. Gordon really had no explanation.
[100] While I do not understand all of the siblings’ machinations, I accept Susie’s testimony that the T3’s were never given to Andrew and Gordon’s evidence that T3’s were not issued for any year before 1988 or after 1990.
[101] In my view, the T3’s have nothing to do with the alleged secret trust.[^22] They relate to a dispute that arose after Mike died in 1985. They were created to address issues that arose in relation to the Castlefield property after Gordon acquired it in 1986. I will return to that topic later in these reasons.
ii. Mary Spylo’s Estate
[102] As noted, Mary died on March 28, 1986. Her August 8, 1985 Will directed that her property be equally divided between Gordon and Susie. Andrew was not given anything.
[103] Andrew alleges that his mother intended for him to be an equal participant in her estate. Andrew was not present when Mary’s Will was signed and did not address it in his testimony. Nor did Andrew mention any conversation with his mother or anyone else concerning her intentions.
[104] Oddly, Gordon did not address Mary’s Will in his narrative and was not asked about it in cross-examination.
[105] I am left with Susie’s testimony.
[106] Susie testified that Mary was living with her when Gordon attended with the Will he had drafted for Mary in hand. The Will was executed by Mary, she said, without Gordon discussing its terms with her and despite the fact that Mary’s health, including her memory, was failing. In fact, Susie alleged that Mary was not in a position to comprehend the will. Susie denied the suggestion put to her in cross-examination that the Will’s preparation had anything to do with her own matrimonial issues.
[107] Susie said that their mother would not have excluded Andrew from her Will but for the Kowalski action. Susie testified that Gordon adequately responded to the concern she expressed when she noticed that Andrew was not mentioned in the Will.
[108] She said that Gordon explained to her that all three siblings were to share equally in Mary’s estate despite the fact that only Gordon and Susie were named as beneficiaries. In other words, she maintained that Gordon had facilitated the creation of a second secret trust by their mother.
[109] No one seeks – or has sought – to challenge Mary’s Will. If Mary lacked capacity, as Susie alleges, I do not know how I can conclude that Mary intended to create a secret trust in favour of Andrew.
[110] While I do not profess to know what happened on August 8, 1985, when Mary’s Will was signed, I do not accept Susie’s version for two principal reasons.
[111] First, her version of events is contradicted by various documents she signed in 1991, 2001 and 2002 relating to her mother’s estate.
[112] In 1991, Susie signed two sworn consents relating to parcels of land that belonged to Mary at the time of her death. In them, Susie deposed, in part:
My brother, Gordon Michael Spylo and I are beneficiaries of the remainder of the Estate of our mother, Antoinnette [sic] Spylo.[^23]
[113] A third beneficiary was not mentioned.
[114] While unsworn, she signed similar consents in 2001. They were prepared by the Evans Bragagnolo firm. Using even stronger language, Susie said:
My brother, Gordon Michael Spylo, and I are the only beneficiaries of the Estate of Antoinette Spylo.[^24] [Italics added]
[115] Susie tried to distance herself from the 2001 consents. She suggested they were prepared by Gordon and signed in 1985 or 1986 after Gordon had an altercation with her former husband. She suggested that Gordon held onto the consents and used them to his advantage later. She is wrong. Both consents describe her residence as “London, Ontario”. Susie did not move to London until 1988.
[116] Susie also testified that she remembered signing a consent relating to 184 – 186 Balsam Street, Timmins. However, she did not recall signing a consent relating to 201 – 203 Balsam Street, Timmins. She suggested the signed consent was photocopied and attached to a second instrument without her knowledge or consent.
[117] Once again the allegation is without merit. The transfer relating to 184 – 186 Balsam Street South to which the “authentic” consent forms part was registered as instrument number 0512212. The second transfer said to relate to 201 – 203 Balsam Street South to which the photocopied consent is alleged to form part, bears the same instrument number. In other words, one instrument was used to transfer the two properties.[^25] Mystery solved.
[118] Another document was signed by Susie in 2002. Mary’s mother was Katherine Augustynowski. Ms. Augustynowski died intestate. Mary’s estate was entitled to share in her property. Susie renounced her interest in that estate. The renunciation recited the fact that she and Gordon were entitled to one-half of their grandmother’s estate. Andrew was not mentioned.
[119] The documents satisfy me that Susie’s testimony concerning Andrew’s entitlement is a product of post-2002 events. She is not recollecting conversations but rather creating them.
[120] Second, I do not believe her alleged conversation with Gordon occurred. Susie testified that she knew of Andrew’s ongoing legal problems and of the reason why he was not named as a beneficiary in the 1984 Will.
[121] Susie also said that in 1984 Gordon was a loved and trusted brother who willingly accepted the role as trustee of Andrew’s share of his father’s estate. Nothing had changed by August 8, 1985. Andrew’s troubles continued. There was no discord within the family. Yet, she alleges that barely a month after her father’s death she asked Gordon to explain why Andrew was omitted from their mother’s will. That version of events simply makes no sense.
[122] Andrew has not proven that he is entitled to a share of Mary’s estate.
iii. Castlefield
[123] I have already recited some of the history of the Castlefield property. It was acquired by Ms. Nittel in 1980.
[124] Andrew was a real estate broker at the time. He was also involved in real estate development. His interests included a project in Tillsonburg, Ontario.
[125] The economic malaise of the early 1980’s affected Andrew. His income declined. Interest rates skyrocketed. Financial difficulties soon followed.
[126] While Andrew was not a registered owner, the judgment granted in favour of Ms. Kowalski in October, 1981 affected Castlefield. Andrew’s interest in the property was to stand as security for his child support obligations.[^26]
[127] According to Andrew, the child support obligation compounded his economic problem. Andrew claimed that his inability to pay child support resulted in a jail sentence.
[128] His objective was to refinance Castlefield. Andrew alleged that Ms. Nittel cashed in Canada Savings Bonds generating $35,000. He claimed that sum was sent to Mike for safekeeping. He alleged that Mike used the money to purchase shares in Campbell Red Lake Mines on Andrew and Ms. Nittel’s behalf.
[129] The Tillsonburg property was sold in 1983. Part of the purchase price was to be paid over time. That portion - $25,000 – was secured by a mortgage held initially by Susie and then, a few months later, by Mike. Andrew alleged that Mike soon received full payment[^27] and held that money in trust for him as well.
[130] Andrew claimed that his father pledged his support for the refinancing but died before it could be completed. He says he turned to Gordon.
[131] According to Andrew, time was of the essence. The Toronto-Dominion Bank (“TD”) had provided financing to Andrew’s company 472501 Ontario Limited. Andrew and seemingly Ms. Nittel, had provided a guarantee. TD had obtained a collateral mortgage over Castlefield. According to Andrew, TD agreed to discharge the collateral mortgage if it received a $50,000 payment by a stipulated date. The deadline had passed and TD’s patience was waning.
[132] Several instruments affecting the Castlefield property were registered on May 21, 1986. Sequentially they were:
a) A copy of an order granted on consent in the Kowalski action by McDonald J. amending the judgment of Boland J. to delete the Castlefield property;
b) A transfer from Ms. Nittel, with Andrew’s consent, in favour of Gordon. In the affidavit required by the Land Transfer Tax Act, Gordon swore that the purchase price was $170,000 and that he was the transferee;
c) A charge/mortgage of land from Gordon to Canada Trustco Mortgage Company for a six month term and securing payment of the principal sum of $125,000 (the “CT mortgage”). The CT mortgage required monthly payments of $1,077;
d) A general assignment of rents from Gordon to Canada Trustco Mortgage Company.
[133] While I was not shown an agreement of purchase and sale, the registered documents suggest a typical real estate transaction.
[134] Solicitor Stephen Kay appears to have acted for all parties on the transaction. I was shown his August 12, 1986 report. Nothing unusual appeared or was omitted.
[135] However, the plaintiffs allege that the transaction was not as it appears. They maintain that Gordon acquired Castlefield as trustee. They say that the CT mortgage was to be paid from two sources: first, the $60,000 that had been paid to Mike from Ms. Nittel’s Canada Savings Bonds ($35,000) and from the mortgage on the Tillsonburg property ($25,000) and second, from Andrew’s share of his parents’ estate.
[136] Andrew and Ms. Nittel continued to live in Castlefield. They raised their family there. They paid no rent. They made significant capital improvements to the residence and to the property on which it was situate.
[137] There is nothing on the face of any closing document or in Mr. Kay’s report that suggests a trust arrangement. However, Andrew relies on a handwritten document dated May 15, 1986 (the “trust document”) which reads as follows:
To Whom It May Concern
I, Gordon Spylo, agree to hold the following property in trust for Andrew Spylo
279 Castlefied (sic)
Waterloo, Ont.
Plan 921, Lot 133
Thanks
“G Spylo”
[138] Andrew explained the circumstances surrounding the creation and execution of the trust document. He alleged that Ms. Nittel did not know Gordon well in May, 1986 and wanted the arrangement documented.
[139] Andrew testified that Gordon was in Waterloo on May 15, 1986. He said that while the two of them were running errands together, he passed along Ms. Nittel’s request. Gordon responded by handwriting and signing the trust document in Andrew’s van.
[140] Gordon denies that there was any such arrangement. He acknowledged that the handwriting on the trust document appeared to be his but alleges that Andrew has somehow cobbled the trust document together. The original trust document has not been produced. I would have very much liked to have seen it.
[141] Susie alleged the original was in Gordon’s possession. That allegation was baseless. Susie had testified that she knew precisely why the trust document was requested and given. If so, she also knew that there was no reason for Gordon to retain the original. This was one of several examples of Susie’s preoccupation with her cause rather than her oath.
[142] Andrew testified that he thought the original trust agreement had been in his possession at one time but was not sure. He alleged that a bailiff retained by CIBC took possession of Castlefield and seized personal records. He said that he was directed to a storage locker in Niagara Falls but could not find the documents he sought. He said that he had learned that Gordon and Bonnie had been through the house.
[143] I reject the suggestion that records were lost by a bailiff or taken by Gordon and Bonnie. They specifically denied being inside the Castlefield residence during the mortgage enforcement proceeding. I believe them.
[144] CIBC obtained an order for possession from Festeryga J. of this Court on December 4, 2008 in a proceeding in which Andrew and Ms. Nittel fully participated. They knew when the order was obtained and when it would be exercised. In fact, they obtained a stay of the eviction from Templeton J. on December 19, 2008. The stay was lifted by Harper J. on May 11, 2009. Andrew and Ms. Nittel attended court that day.[^28]
[145] I have no doubt that Andrew and Ms. Nittel knew when the right of possession was going to be exercised and had the ability, before and after that date, to remove their personal property.
[146] Furthermore, Ms. Nittel did not testify despite being in court every day. She listened while Andrew attributed the creation of the trust document to her. She knew that Gordon questioned its authenticity. She did not say a word.
[147] I can and do draw an adverse inference from Andrew’s failure to introduce the original of a critical document and from Ms. Nittel’s decision not to testify.
[148] I do not believe Andrew’s evidence concerning the creation and execution of the trust document.
[149] Gordon testified that soon after his father’s death Andrew called him repeatedly to request that his brother help him out of a “bind”. Gordon said that he was willing to do so upon Andrew’s promise that he would buy Castlefield back within a six month period.
[150] Pending repurchase, Andrew was to remit to Gordon the amount necessary to pay the CT mortgage, municipal taxes and fire insurance premiums. Gordon alleged that aside from a payment or two, Andrew remitted nothing. Gordon claims he satisfied the CT mortgage from his personal funds while Andrew and Ms. Nittel lived in Castlefield and raised their family rent free.
[151] At this stage of these reasons it should come as no surprise to anyone to be told that, with one small exception, there is not a shred of documentary evidence to support Gordon’s version of events either.
[152] The exception is a copy of a statement of unpaid municipal taxes dated November, 1996. A post-it note had been photocopied on top. It read:
Andrew
Mortgage co. is on my case about the unpaid taxes. Please do something. Things are tough here. 5 apts empty. I hope your family is fine. Maybe we’ll see you at Xmas.
Gord
[153] Andrew suggested the note was an admission by Gordon that estate funds were being used to service the property. Gordon said it was simply a request to Andrew to pay something on account of a residence he and his family were enjoying for free.
[154] I found the fact the transaction was completed at all perplexing given Andrew’s explanation for it occurring. He said the Kowalski judgment[^29] necessitated the transfer. If so, why didn’t the McDonald J. order excising the Castlefield property from that judgment solve the problem? Why was it necessary to transfer Castlefield to Gordon?
[155] Andrew was asked those questions. He said there was an urgent need to pay TD the promised $50,000 or else the settlement achieved with that institution would be lost. Andrew said that the application for financing Gordon had submitted to Canada Trustco Mortgage Company would have had to be redone. However, that explanation is inconsistent with other testimony. According to Andrew, $60,000 was being held in trust for Ms. Nittel and him in Timmins. Why could that money not be immediately accessed? I simply don’t know.
[156] Andrew also suggested that his problems with Ms. Kowalski were not at an end despite the fact that she consented to the May 21, 1986 order. He seemed to have forgotten earlier testimony that he and Ms. Kowalski had reached an agreement prior to the transfer to Gordon. Doubts concerning the accuracy – and truth – of Andrew’s testimony grew.
[157] Contributing to an increasingly noxious odour was a startling statement by Andrew. He suggested that the purchase price for the Castlefield property was not $170,000 at all. The statement of adjustments required payment of $168,260.02 on closing. Mr. Kay’s trust statement showed receipt and distribution of only $148,618.18. Andrew alleged that the true purchase price was that lesser amount.
[158] Andrew went so far as to say that Canada Trustco Mortgage Company was misled: told the purchase price was an inflated amount to obtain a larger mortgage than was justified by the actual consideration.
[159] The implications seemed to escape him.
[160] His credibility was further eroded by his explanation concerning a $15,000 bank draft Bank of Montreal issued on the day of closing. It was payable to Mr. Kay’s law firm. The brothers argued about the source of the money used to acquire the draft. The requisition was signed by a bank representative named “L. Lambert”. Andrew claimed L. Lambert was a Kitchener based employee of Bank of Montreal and that he had acquired the draft using $15,000 in cash.
[161] Gordon said he dealt with L. Lambert at a branch of that bank in Timmins and that he paid for the draft using money from his account there. I have no way of knowing where L. Lambert worked. However, given all that I heard about Andrew’s financial difficulties at the time, it is inconceivable that in 1986 he had $15,000 in cash to purchase a bank draft.
[162] After closing, the strangeness continued. In October, 1986 a $25,000 second mortgage was registered against Castlefield in favour of William Evans (the “Evans mortgage”). It was for a one month term. The due date came and went.
[163] Gordon testified that he knew nothing about the Evans mortgage until 1988 when an agitated Ms. Nittel called to ask for further financial assistance because Mr. Evans was threatening to foreclose.
[164] While that call may well have been made, I do not accept Gordon’s statement that he was unaware of the Evans mortgage. When shown a copy of the Evans mortgage and an acknowledgement of receipt of standard charge terms, Gordon agreed that they bore his signature. Furthermore Gordon’s records included a copy of a November 3, 1986 reporting letter from Mr. Kay.[^30]
[165] However, I do not believe Gordon intended to deceive me. There was no debate about the recipient of the loan the mortgage secured. It was advanced to Andrew. The transaction occurred soon after the sale to Gordon. Gordon’s lack of memory is consistent with his belief that Andrew would buy Castlefield back within six months and that the Evans’ mortgage would be Andrew’s concern, not his.
[166] The Evans mortgage was discharged in July, 1988 by a cheque drawn on Gordon’s account with Canada Trustco Mortgage Company in Timmins. The brothers debated whether the funds that were used to make that payment belonged to Gordon or Andrew.
[167] Andrew relied on an undated note in Gordon’s handwriting that indicated that a second mortgage was “paid in full” and which included the words “receipt in folder 472501”. 472501 Ontario Limited was the company Andrew had used to acquire the Tillsonburg property. Andrew suggested that monies belonging to that company had been used to discharge the Evans’ mortgage. I do not believe the note relates to the Evans’ mortgage at all. The amount referenced in the handwritten note is $26,960. The amount paid to discharge the Evans' mortgage was $26,449.30. That latter amount corresponds precisely with the amount set forth in a July 8, 1988 demand letter from Evans’ lawyers less the $800 fee that would have been charged if the term of the mortgage had been extended. Further, the handwritten note speaks of a telephone transfer. The Evans’ mortgage was paid by cheque.
[168] The undated handwritten note relates to the Tillsonburg property, not Castlefield.
[169] In my view, Gordon’s money – not Andrew’s - satisfied the Evans’ mortgage.
[170] I accept Gordon’s explanation for the Castlefield transaction. Throughout the trial Andrew mentioned the fact that Gordon had barely visited him in Waterloo over the last twenty five years or more. He wondered why Gordon had driven past Waterloo when visiting sons living in London, Ontario.
[171] Andrew and Susie seemed to cast blame on Bonnie: the alleged evil sister-in-law who hated Andrew without reason.
[172] The more likely explanation relates to the fact that Castlefield became an albatross for Gordon. Advantage was taken of him. He was the one who provided – he thought - short-term financial assistance to a younger brother in need. Promises were made and broken. The older brother ended up providing financial assistance to his younger sibling for years.
[173] That is why T3’s were prepared for the years 1988 – 1990 and sent to Susie – at her request – for delivery to Andrew. It was another failed attempt to get him to fulfill his promises. In fact, Susie did not even deliver them to Andrew. Gordon’s letter did not have the desired effect. No other T3’s were prepared.
[174] Andrew was a memorable witness. He volunteered or readily admitted concealing assets from Ms. Kowalski: real estate and cash. He did not blink when he testified that the purchase price for Castlefield had been artificially inflated.
[175] He ought not to be surprised that the only portions of his testimony I do accept are his deceptions. Andrew is a dishonest man. He will say whatever he thinks is necessary to accomplish his objective.
[176] The final straw came when Andrew denied that anyone other than Ms. Kowalski had obtained a judgment against him.
[177] Rotman v. Spylo, 1994 CarswellOnt 3466 (C.A.) was brought to his attention. In that case, Andrew unsuccessfully appealed a judgment granted against him in the amount of $437,418.45 plus interest and costs. The matter had gone to trial. A significant amount was in issue. Andrew appeared and made submissions in the Court of Appeal. He did not forget the Rotman judgment. He tried to conceal it.
[178] Andrew and Ms. Nittel have failed to satisfy me that Castlefield was held in trust for them.
iv. The Transferred Properties
[179] In the 1984 Will, Susie was named as the beneficiary of Crawford and 209 – 211 Birch Street South.
[180] In 1991, Susie became the sole owner of 209 – 211 Birch Street. On May 16, 1997, she transferred the property to Gordon and Bonnie. A substantial deposit on account of the $75,000 purchase price was made.[^31] The balance was paid on closing.
[181] Susie was already the registered owner of Crawford when her father passed away. Mike did, however, hold two mortgages over the property. As noted, Mike’s right, title and interest in Crawford was bequeathed to Susie in the 1984 Will.
[182] Susie agreed to sell Crawford to Gordon pursuant to an agreement of purchase and sale dated August 11, 1998. The transaction was completed on August 31, 1998.
[183] One-half of the $50,000 purchase price was paid on closing. The balance[^32] was secured by a vendor-take-back mortgage. On August 28, 2008, Riopelle J. of this court concluded that the mortgage had been satisfied and ordered its discharge.
[184] Susie alleges that the transfers were not as they appear. She claims that the flow of monies from her parents’ estates had stopped, that she was in need of funds and that the transactions were simply intended to facilitate catch up payments. Susie alleged that her interest in Crawford and 209 – 211 Birch Street South was to continue.
[185] I reject her evidence. The steps taken and documents exchanged were typical of any real estate transaction.
[186] While the extent of their involvement is not clear, Susie utilized the services of the Siskinds firm to facilitate closing of the Crawford transaction. A November 17, 1998 report was provided to Susie by the Evans, Bragagnolo & Sullivan firm concerning “the sale” of Crawford.[^33] There is no evidence Susie alleged the transaction was otherwise until these proceedings were commenced more than eight years later.
[187] The October 2, 1997 report from the Evans, Bragagnolo & Sullivan firm to Gordon Spylo concerning “the purchase” of 209 – 211 Birch Street South is unremarkable. While I have not seen a report addressed to Susie concerning this transaction, I have no doubt one was prepared. Once again, there is no evidence of any complaint before the commencement of these proceedings.
[188] Susie alleged that the sales were for inadequate consideration. No evidence was introduced concerning the value of either property at the relevant time.[^34] There is no evidentiary basis to support her contention.
[189] That brings me to the rest of the real estate that was included in Mike or Mary’s estate.
[190] 252 A & B Lakeshore Road, Timmins was owned by Mike when he died. It passed to Mary as the residual beneficiary and, in turn, to Gordon and Susie in equal shares. In 1988, the parcel was sold by Gordon for $36,000. He alleges that the sale occurred with Susie’s consent and that the proceeds were used to help renovate Crawford and 209 – 211 Birch Street South and pay legal costs relating to Susie’s matrimonial proceedings. I am satisfied no money is payable in respect of the Lakeshore property.
[191] In 1991, 205 and 213 – 221 Birch Street South, 135 - 137 and 139 Fifth Avenue, Timmins and 4 Spruce Street, Schumacher, Ontario were transferred into the name of Gordon with the consent of Susie.
[192] In my view, Susie has and had no interest in any of those Timmins properties. Mike bequeathed three of them[^35] to Gordon. Mike and Gordon owned the fourth as joint tenants.[^36]
[193] Nor does she have any interest in the Schumacher property. I accept Gordon’s evidence that it was a small piece of vacant land that was not rented and that it was sold by the municipality on account of municipal tax arrears.
[194] In 2001, 7 and 15 Birch Street South, Timmins was transferred into Gordon’s name without Susie’s participation. That was the last parcel gifted to Gordon in the 1984 Will.
[195] In that same year, Susie consented to the transfer of 184 – 186 and 201 – 203 Balsam Street South, Timmins and 21 Second/Dwyer Avenue, Schumacher to Gordon. No consideration was paid. At trial and contrary to his statement of defence,[^37] Gordon conceded he held one-half of each parcel in trust for Susie. He said that the transfers were designed to facilitate the process of borrowing money on the security of the parcels involved.[^38]
[196] Unfortunately, the matter is complicated by Gordon’s post-2001 dealings. Gordon managed the properties but did not account to Susie prior to trial. According to the handwritten rental income statements produced during the hearing, 184 – 186 Balsam Street Limited generated a net loss in each year from 2001 – 2004. No supporting documents were provided by Gordon.
[197] In 2004, Gordon sold 184 – 186 Balsam Street South for $30,000. The sale generated net proceeds of $24,593.53. Susie should have received half being $12,296.77.
[198] The other properties are still owned by Gordon. Handwritten rental income statements were prepared for the years 2001 – 2010 with respect to 201 – 203 Balsam Street South and 21 Second/Dwyer Avenue. During that period, the former generated an aggregate net loss of $10,599.23 and the latter an aggregate net profit of $6,870.70.
[199] Again, no supporting documents were provided and no good excuse exists for the failure to provide statements for the period from 2011 through 2013 by the time of trial. Gordon is ordered to deliver them to Susie by no later than October 31, 2014. By that same date, those properties (201 – 203 Balsam Street and 21 Second/Dwyer) shall be transferred into the names of Gordon and Susie as tenants in common.
[200] If those two properties have generated an aggregate net profit for the period from 2001 to December 31, 2013, Gordon shall pay Susie one-half by November 30, 2014. Going forward, Gordon shall provide Susie with a rental income statement for each property for the period ended December 31, 2014 by no later than March 15, 2015 and so on from year to year until the two properties are sold. He shall allow Susie to inspect and to make copies of the source documents underlying the entries contained in the rental income statements. Susie shall exercise that right by no later than July 31, 2015 and so on from year to year until the properties are sold.
[201] I am hopeful Gordon and Susie can resolve between them the timing of the distribution of any net profit or funding of any net loss. If not, arrangements for a further attendance may be made through the trial coordinator.
[202] In 2002, Susie renounced her interest in the estate of her grandmother. That resulted in her relinquishing her interest in 214 – 216 Balsam Street South, Timmins. Again at trial, Gordon conceded that he holds one-half of that property in trust for Susie.[^39]
[203] Rental income statements were produced with respect to that property for the period from 1991 – 2001 reflecting an aggregate net loss. Gordon testified that the building on the property was badly damaged by fire soon after he received Susie’s renunciation. He alleges that insurance proceeds of $52,000 were received and used to pay off a mortgage and municipal taxes relating to 214 – 216 Balsam, a legal bill, the costs of demolition[^40] and costs associated with other, unspecified properties.
[204] Gordon did not account to Susie before trial. He should have. In Zimmerman v. McMichael Estate, 2010 ONSC 2947, 103 O.R. (3d) 25 (S.C.J.), Strathy J. (as he then was) summarized the duty that lies upon a trustee. At para. 31, he wrote:
A trustee has an obligation to keep proper accounts. A trustee must keep a complete record of his/her activities and be in a position at all times to prove that he/she administered the trust prudently and honestly. He/she must have the accounts ready and give full information whenever required. [Citations omitted]
[205] Later, at para. 92, he added:
The trustee, not the beneficiaries, bears the onus of establishing that the management and disbursement of funds is consistent with the terms of the trust. [Citations omitted]
[206] Gordon has not done what he was required to do.[^41] By October 31, 2014, Gordon shall cause 214 – 216 Balsam to be transferred into the names of Gordon and Susie as tenants in common. By December 15, 2014, he shall pay Susie $5,000 on account of the insurance monies received following the fire.
v. Susie’s Claim to Castlefield
[207] In the statement of claim in court file no. 52630, Susie anticipated the possibility that the claim of Andrew and Ms. Nittel to the Castlefield property would fail. Susie seeks alternative relief: a declaration that Castlefield is her property. I turn to that topic now.
[208] As noted, Susie continues to have an interest in three parcels Gordon acquired in 2001 for no consideration. Two of them are income properties. The third is vacant land.
[209] I have already referred to the limited information Gordon has provided for the two income properties which suggests that, on a consolidated basis, they generated a net loss for the period from 2001 – 2010 of approximately $3,700.[^42]
[210] The charge held by CIBC over Castlefield went into default years ago. While I recognize that the information provided by Gordon is far from perfect, it seems clear that Susie’s remaining interest is in a very modest revenue stream. It is highly unlikely that monies to which Susie was entitled were used to satisfy mortgage payments due in respect of the Castlefield property. Susie has not proven she has an interest in that parcel of land or in the monies paid into court.
F. Summary
[211] For the reasons given:
a) The claims of Andrew Spylo and Annemarie Nittel in both actions are dismissed;
b) Katherine (“Susie”) Duncan shall have judgment for the amounts set forth in paragraphs 197 and 206 of these reasons;
c) The judgment shall include the operative portions of paragraph 199 (the second and third sentences), 200 (the entire paragraph) and 206 (the second sentence) of these reasons;
d) Subject to subparagraphs b) and c) above, the claims of Katherine Duncan in both actions are also dismissed;
e) All monies standing in court to the credit of action no. 58463, together with all interest accrued or accruing thereon, shall be paid out of court to Gordon Spylo;
f) The certificate of pending litigation issued and registered pursuant to the December 14, 2006 order of Jenkins J. in action no. 52630 is hereby discharged in respect of parcels (4) and (6) and shall be discharged in respect of parcels (1), (2) and (5) upon registration of transfers in favour of Gordon Spylo and Katherine Duncan as tenants in common.[^43]
[212] The issue of costs and prejudgment interest on the amounts set forth in paragraphs 197 and 206 should be addressed in person. Arrangements may be made through the trial coordinator. Any written material relating to those issues (short written submissions not exceeding five double spaced pages, a bill of costs, any offer(s) to settle and/or a book of authorities) must be served and filed not less than seven days before the date set for the hearing of those submissions.
[213] I would be grateful if counsel for Ms. Duncan would prepare a draft judgment in action no. 52630 and a draft order in action no. 58463 for my signature. Counsel should send a copy of the drafts and cover letter to the parties participating without legal counsel but their prior approval of the form of judgment and order is not required.
“Justice A.D. Grace”
Justice A. D. Grace
Released: September 4, 2014
[^1]: Ms. Nittel claims to be a beneficiary of the Castlefield property as well.
[^2]: In one instance, she renounced her interest in the estate that owned the parcel of real estate.
[^3]: All of the witnesses described these municipal addresses as one parcel of land. They were treated as two separate parcels of land in the wills Mike executed in 1984 but Gordon was named as the beneficiary of both. For ease of reference I have described this parcel as 7 and 15 Birch Street South throughout these reasons.
[^4]: Susie testified that no monies were actually advanced by Mike to her.
[^5]: Susie testified that her mother’s memory was failing as evidenced by the fact that she did not recognize people she had known for years and thought that her deceased husband would be coming home soon.
[^6]: The copy of the judgment of the Honourable Justice Boland filed at trial was incomplete. It was missing page 3 and perhaps more.
[^7]: The Order was granted by the Honourable Justice F.J. McDonald.
[^8]: They were 7 and 15 and 213 – 221 Birch Street South and 139 Fifth Avenue, Timmins, Ontario and possibly the shares described in the 1984 Will. In paragraph 7 of the statement of claim, Andrew alleged that he was entitled to a one-third interest in the estates of both parents. In paragraph 12 of the statement of claim, he alleged that he was to receive a 100% interest in 139 Fifth Avenue and 7 and 15 Birch Street South, Timmins and, while rather confusingly written, a one-third interest in the balance of the estate except 205 Birch Street South and Crawford.
[^9]: Those parcels were 4 Spruce Street and 21 Second Avenue (now Dwyer), Schumacher, Ontario and 184 – 186, 201 - 203 and 214 – 216 Balsam Street South, Timmins, Ontario.
[^10]: James Mackenzie, Feeney’s Canadian Law of Wills, 4th ed. (Butterworths: Toronto, 2001) at §6.24. A number of authorities were cited there including Blackwell v. Blackwell, [1929] A.C. 318 (H.L.) at 339; Hayman v. Nicholl, [1944] S.C.R. 253; Champoise v. Champoise-Post Estate (2000), 33 E.T.R. 213 (B.C.C.A.) and Charlton v. Cipperly (1984), 19 E.T.R. 66 (Alta. C.A.). See, too, Re Romanow, 17 Sask. R. 384 (Surr. Ct.); Jankowski v. Pelek Estate (1995), 107 Man. R. (2d) 167 (C.A.); affirming (1995), 99 Man. R. (2d) 191 (Q.B.). The secret trust doctrine was referred to but not addressed when raised at first instance at the appeal level in Sawdon Estate v. Sawdon, 2014 ONCA 101.
[^11]: David Parker and Anthony Mellows, The Modern Law of Trusts, 3rd. ed. (Sweet & Maxwell: London, 1975) at p. 27.
[^12]: Ottaway v. Norman, [1972] Ch. 698.
[^13]: The transfers were signed October 7, 1981.
[^14]: According to the Land Transfer Tax Act Affidavit, each transfer was “from Trustee to beneficial owner”.
[^15]: In earlier testimony she had said some of the shares were to go to Andrew and some to Gordon.
[^16]: He said the shares were issued by Campbell Red Lake Mines.
[^17]: F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41 at para. 49.
[^18]: 7 and 15 Birch Street was transferred to Gordon in 2001. The other parcels were transferred to him in 1991.
[^19]: In paragraph 11 of the statement of claim, Andrew alleged that he and Gordon acquired the property in 1970.
[^20]: Because of my conclusion, it is unnecessary to consider whether the court should lend its aid to someone who attempted to avoid at least one creditor and place assets outside of their – and therefore the court’s – reach. For examples of cases dealing with the issue see Nussbaum v. Nussbaum (Ont. S.C.J.) and Holland v. Holland (Ont. S.C.J.).
[^21]: Because of my conclusion I did not have to wrestle with the fact that the “secret trust” was clearly intended to conceal assets from at least one (Ms. Kowalski) of Andrew’s creditors. Ms. Farrell submitted the issue was irrelevant because it was not raised in Gordon and Bonnie’s statement of defence. She relied on Day v. Day (1890), 17 O.A.R. 157 (C.A.). Paragraph 32 of the statement of defence alleged that Andrew “denied and disclaimed to third parties including his creditors, potential creditors and ex-spouses that he had any interest…to the properties mentioned in the statement of claim.” Leaving that aside, the issue raises public policy considerations: whether the court should “lend its aid to those who must rely upon an unlawful act in order to prove their claim”: Nussbaum v. Nussbaum, [2004] O.J. No. 3763 (S.C.J.) at para. 30. See, too, Holland v. Holland (Ont. S.C.J.) at paras. 7-15.
[^22]: With respect to the importance of subsequent conduct see Pecore v. Pecore, 2007 SCC 17 at paras. 56 – 59.
[^23]: The consents related to 135 – 137 and 139 Fifth Avenue and 1 Timmins. 139 Fifth Avenue is a property she testified at trial was held in trust for Andrew exclusively.
[^24]: Those consents relate to 184 – 186 and 201 – 203 Balsam Street South, Timmins and 21 Second (later Dwyer) Avenue, Schumacher, Ontario. While more convoluted, in 2002 Susie signed a document entitled Renunciation of Right of Beneficiary in the Estate. She renounced her interest in the estate of her grandmother, Katherine Augustynowski. The document contained a recital that she and Gordon were the beneficiaries of one-half of Katherine Augustynowski’s estate. Andrew was not mentioned.
[^25]: The transfer relates to parcels 3214 and 5839 Whitney and Tisdale. According to a March 24, 1992 reporting letter from Mr. Bragagnolo, the former parcel was municipally described as 201 – 203 and the latter as 184 – 186 Balsam Street South, Timmins.
[^26]: I do not know what interest he had.
[^27]: The mortgage was registered in August, assigned in October and discharged in December, 1993.
[^28]: That is apparent from Harper J.’s endorsement released May 11, 2009.
[^29]: Something he consistently and inaccurately described as a lis pendens.
[^30]: Gordon also received a handwritten demand letter from Mr. Evans dated May 20, 1988 and a written demand from Mr. Evans’ solicitors dated July 8, 1988. Ms. Nittel was copied with the latter letter which described her as “tenant”.
[^31]: According to the statement of adjustments a deposit of $18,750 was paid.
[^32]: The mortgage actually secured payment of $24,900.
[^33]: Susie signed a consent to the firm acting for the purchasers and vendor dated August 27, 1998.
[^34]: Crawford was sold by Gordon and Bonnie in 2008 for $97,500.
[^35]: They were 205 and 213 – 221 Birch Street South (save for a 5 foot strip in the latter case which became part of 209 – 211 Birch Street South which I have already addressed) and 139 Fifth Avenue, Timmins.
[^36]: That was 135 – 137 Fifth Avenue.
[^37]: In paragraphs 20, 21, 22 and 23, the defendants denied they held the properties in trust for any of the plaintiffs.
[^38]: It is therefore unnecessary to discuss the presumption of resulting trust or the presumption of advancement discussed in Pecore v. Pecore, 2007 SCC 17 at paras. 24 – 41.
[^39]: In paragraph 23 of the statement of defence, the defendants denied that the property was held in trust for any of the plaintiffs.
[^40]: Gordon alleges the property continues to be vacant.
[^41]: See, too, Watson Estate v. Beatrice Watson-Acheson Foundation, 2010 ONSC 5043 (S.C.J.) at para. 18.
[^42]: As noted, 21 Second/Dwyer was shown to have generated a net profit of $6,870.70 and 201 – 203 Balsam a net loss of $10,599.23.
[^43]: On May 11, 2009, Harper J. ordered the removal of the certificate of pending litigation insofar as the Castlefield property was concerned. A motion for a stay of Harper J.’s order was dismissed by Juriansz J.A. on June 20, 2009. I do not know what became of the appeal.