SUPERIOR COURT OF JUSTICE – ONTARIO

TORONTO REGION ESTATES LIST

RE: IN THE ESTATE OF Lorraine Eva Coombs, deceased

Diane Elizabeth Fergueson and Charlene Selina Coombs, Applicants

AND:

Waldo W. Martin, Susan Marie Coombs and Donna Rivers, Respondents

BEFORE: D. M. Brown J.

COUNSEL: P. Starkman, for the Applicants

D. Rose, for Susan Coombs

HEARING DATE: April 30, 2014

reasons for decision

I. Motion to limit access to joint accounts of the deceased

[1] The applicants, Diane Fergueson and Charlene Coombs, moved for the relief set out in paragraph (f) of their Amended Amended Notice of Motion – i.e. an order prohibiting the respondent, their sister, Susan Coombs, or any beneficiary of the Estate, from using funds of the Estate or joint accounts referred to herein pending a resolution of this proceeding”. The applicants relied on Rule 45.02 of the Rules of Civil Procedure.

II. Background evidence

[2] This proceeding will go to trial the week of October 6, 2014: 2014 ONSC 3817. The background facts were set out in Case Conference Memorandum No. 1 (2014 ONSC 2154):

[2] Lorraine Coombs died on April 27, 2012. Her last will was made December 22, 2009 (the “Will”). The respondent, Waldo Martin, was the solicitor who prepared that will.

[3] In her final years Lorraine Coombs lived with one of her four daughters, Susan Coombs, in a house which she, the testatrix, owned. Under the Will her two applicant daughters, Diane Fergueson and Charlene Coombs, each received $60,000. A respondent daughter, Donna Rivers, received $15,000. The residue went to the respondent, Susan Coombs.

[4] According to the application for a certificate of appointment of an estate trustee, at the time of her death Lorraine owned personalty worth about $366,000 (mainly cash and investments) and one house valued at $390,000 as of the time of the August, 2012 certificate application. In other words, a modest estate of $756,249.00.

[5] Diane and Charlene seek to set aside the Will on the basis of lack of testamentary capacity, lack of understanding of the Will’s contents and undue influence, in this case allegedly by Susan. They also allege that Susan has treated as her own property the contents of the joint accounts she had with her mother at the time of death, whereas the presumption at law is that those accounts, originating as they did with Lorraine’s funds, are held by Susan on a resulting trust for the benefit of the estate: Pecore v. Pecore, 2007 SCC 17, 2007 SCC 17.

[6] On January 25, 2013, over 14 months ago, Pollak J. granted the standard form of order for directions commonly used in the Toronto Region for will challenge cases. The order mandated the completion of examinations for discovery and the fulfillment of undertakings by May 31, 2013. As too often happens in these sorts of will challenge cases, the parties ignored that judicial timetable. As of today, examinations for discovery have yet to occur.

[7] Motions have been proposed and prepared. Late last year the applicant sisters brought a motion to preserve the funds in the joint accounts until the trial of their will challenge…

III. Evidence regarding the bank accounts

[3] Lorraine Coombs died on April 27, 2012

[4] On September 18, 2013, applicants’ counsel wrote to the Estate Trustee complaining that in 2012 Susan had used or withdrawn $53,984.69 from the estate’s RBC and CIBC accounts and that in 2013 Susan had withdrawn $1,900.34 from the CIBC account (up until May) and $16,555.51 from the RBC account (up until August). They asked the Estate Trustee to confirm that he would immediately take control of the bank accounts and not permit any future withdrawals by Susan.

[5] In November, 2013, the Estate Trustee confirmed that he was taking control of the accounts which had been solely in the name of the deceased, but he advised that most of the accounts were held jointly by the deceased together with Susan.

[6] In paragraph 8 of her affidavit sworn January 2, 2014, Susan identified the seven CIBC and RBC accounts of her mother on which she had been made a joint account holder around March, 2008. In paragraph 9 she identified an RBC Tax Free Savings Account of her mother on which she had been added as a beneficiary. I shall refer to the accounts identified in those two paragraphs as the “Accounts”. Susan’s affidavit evidence about the purpose of the joint Accounts was as follows:

My mother and I agreed that in placing me jointly and as beneficiary on these accounts, it was in consideration of my decision to move in with her and take care of her on a full-time basis, as well as my taking care of her house. My mother fully understood and appreciated that we would both be living off of the joint accounts.

During the period from March of 2008 until my mother’s passing I used the funds in the aforementioned accounts for the agreed upon purposes for caring for my mother, maintaining the house and supporting myself.

My mother expressed to me her intention that I receive full legal and beneficial ownership of the joint accounts through a right of survivorship upon her passing, and that I use the funds to get myself back into the workforce and re-establish myself, as she knew I was contemplating a career change.

I am currently residing at my mother’s former house…and using the funds in the aforementioned accounts to pay for my living expenses and my education as I am enrolled in a Paralegal diploma program.

IV. Analysis

[7] A presumption of resulting trust applies to gratuitous transfers from a parent to an adult child. The presumption may be rebutted by the transferee adducing evidence which establishes, on the civil standard of proof, that the transfer was intended as a gift.[^1] As to the application of those principles to bank accounts with rights of survivorship, in Pecore v. Pecore the Supreme Court of Canada stated:

45 In cases where the transferor's proven intention in opening the joint account was to gift withdrawal rights to the transferee during his or her lifetime (regardless of whether or not the transferee chose to exercise that right) and also to gift the balance of the account to the transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resulting trust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor's death.

46 In certain cases, however, courts have found that the transferor gratuitously placed his or her assets into a joint account with the transferee with the intention of retaining exclusive control of the account until his or her death, at which time the transferee alone would take the balance through survivorship…

53 Of course, the presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor's estate to be distributed according to the transferor's will.

[8] Some of the evidence which a court may consider in determining the intent of the transferor was discussed by the Supreme Court of Canada in the Pecore case:

60 In the past, this Court has held that bank documents that set up a joint account are an agreement between the account holders and the bank about legal title; they are not evidence of an agreement between the account holders as to beneficial title: see Niles and Re Mailman.

61 While I agree that bank documents do not necessarily set out equitable interests in joint accounts, banking documents in modern times may be detailed enough that they provide strong evidence of the intentions of the transferor regarding how the balance in the account should be treated on his or her death: see B. Ziff, Principles of Property Law (4th ed. 2006), at p. 332. Therefore, if there is anything in the bank documents that specifically suggests the transferor's intent regarding the beneficial interest in the account, I do not think that courts should be barred from considering it. Indeed, the clearer the evidence in the bank documents in question, the more weight that evidence should carry.[^2]

[9] In the present case Susan is an adult child of the deceased, Lorraine. The presumption of resulting trust applies with respect to the Accounts of Lorraine to which Susan was added as an account holder. The onus lies on Susan to rebut the presumption of a resulting trust.

[10] This is an interlocutory motion. The evidence adduced by Susan to rebut the presumption of resulting trust was thin. For example, she did not place in evidence the bank documentation signed in 2008 when evidently Susan was added as a party to the Accounts or any evidence from employees of the bank who were involved in the creation of the joint Accounts. Further, on her cross-examination conducted on February 5, 2014, Susan testified that she did not know why her mother did what she did in setting up the joint Accounts (Q. 164). However, she stated that her mother wanted to take care of her (Q. 165). Susan acknowledged that she did not have a specific discussion with her mother about the gifting of funds in the joint Accounts in March, 2008 (Q. 167). According to Susan, later in time her mother told her that she was going to take care of Susan (Q. 171), but there was no specific discussion about the bank accounts or the GICs (Q. 177). Elsewhere, Susan testified that her mother created the joint Accounts so that Susan could do her mother’s banking on-line (Q. 202), but she acknowledged that her mother continued to write cheques and do her own banking until about 2011.

[11] As a result, I conclude that the applicants have raised a serious question to be tried as to whether Susan has rebutted the presumption of resulting trust; that issue will be canvassed in full at the October trial. To permit Susan to continue to withdraw any amounts from the Accounts could result in irreparable harm to the estate in the event those accounts were drained prior to trial. I infer from Susan’s evidence that she has no other source of income and therefore probably has little in the way of assets which the estate could look to for recovery save for her ultimate entitlement to a portion of her mother’s estate.

[12] As to the balance of convenience, Susan deposed that she was a student, but she did not pay tuition relying, instead on government student loans: Cross-examination, Q. 339. Susan did not offer any evidence about the level of her necessary monthly living expenses. It appears that about $900 per month is required to cover the expenses of the house.

[13] Applicant’s counsel submitted that Susan’s withdrawals from the Accounts should be limited to $2,000 per month until trial. Susan testified that she could not confirm or deny the accuracy of the amounts applicants’ counsel had included in his September 18, 2013 letter. However, those amounts indicated that Susan had withdrawn about $2,000 per month out of the Accounts during the first seven months of 2013, so I conclude that the proposed limit on her withdrawals of $2,000 per month until trial would cover the necessary expenses of the estate and herself.

V. Conclusion and costs

[14] For the reasons set out above, I grant the motion of the applicants, and I order that until the trial of this proceeding, or further order of this Court, Susan shall be limited to withdrawing from the Accounts identified in paragraphs 8 and 9 of her January 2, 2014 the sum of $2,000 per month. In the event that the applicants succeed at trial, I leave it to the trial judge to make any order regarding the reimbursement which Susan must make for any amounts which she has withdrawn from the Accounts since the date of the testatrix’s death.

[15] The costs of this motion shall be in the cause of this proceeding.

D. M. Brown J.

Date: June 30, 2014

[^1]: Pecore v. Pecore, 2007 SCC 17, paras. 24, 27, 40, 41 and 44.

[^2]: Pecore, supra., paras. 60 and 61. See also, Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101.