SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Giovanna Nicoletti, Applicant
AND:
Vittoria Nicoletti, Pietro Nicolletti and Bruna Nicoletti (aka Guido), Respondents
BEFORE: Penny J.
COUNSEL:
Tony N. Nguyen for the Applicant
Y. Kim for the Public Guardian and Trustee
Bruna Nicoletti on her own behalf
HEARD: May 1 and 2, 2014
ENDORSEMENT
Overview
1This is a dispute between two sisters over the handling of their mother’s property and personal care.
2There are a number of applications and motions but the issues boil down to these:
(1) Which, if any, of the three powers of attorney executed by Vittoria Nicoletti are valid?
(2) Should Bruna Nicoletti be removed as her mother’s power of attorney?
(3) Should the Public Guardian and Trustee, or an independent financial institution, be appointed as Vittoria’s statutory guardian?
(4) Who should bear the costs of Giovanna Nicoletti’s motion for a Mareva injunction before Whitaker J.?
(5) On the passing of accounts by both sisters, who is entitled to be reimbursed for what? and
(6) Costs of the proceedings generally.
Background
3Vittoria is an 88-year-old woman and the mother of three adult children, Pietro, Giovanna and Bruna. Vittoria’s husband died in February 2001. In April 2010, Vittoria was declared mentally incapable of managing her property.
4From 2001 to October 2009, Vittoria lived alone in her own home on Cabana Drive. Due to failing health, in 2009, Vittoria alternated between living with Giovanna and Bruna. This lasted until October 2010. Since that time, Vittoria has lived with Giovanna.
5In December 1994, Vittoria and her husband signed continuing powers of attorney for property which named Pietro, Giovanna and Bruna as joint attorneys. This document was prepared by Mr. Joseph Paradiso, Vittoria’s lawyer.
6In February 2010, Bruna took her mother to Louis Raffaghello, who was Bruna’s lawyer, where Vittoria signed a power of attorney for property and personal care appointing Bruna as her sole attorney.
7In March 2011, Vittoria attended at her own lawyer’s office, Paradiso, and signed new powers of attorney for property and personal care in which she again appointed her three children jointly as her attorneys.
Bruna’s Motion
8This litigation has dragged on quite unnecessarily for a long time. The respondent Bruna brought a last-minute motion for wide-ranging relief on the eve of the return date of these applications. These applications were the subject of a scheduling order of Morgan J. dated May 9, 2013 The scheduling order did not contemplate or permit Bruna’s motion.
9In my view, the motion was misconceived. It sought substantive disposition of many of the very issues that must be resolved in the applications. It seems to have proceeded from the erroneous premise that more motions were somehow going to help Bruna’s position. In my view, Bruna’s motion is duplicative and unnecessary. It has been brought in an effort to delay and complicate matters and to add to the already significant cost and controversy in this litigation. To the extent specific substantive issues are not dealt with in these Reasons, Bruna’s motion is dismissed.
The Powers of Attorney
10There are a number of important circumstances which inform the issue of the validity of the various powers of attorney.
11The 1994 power of attorney was prepared by an Italian speaking lawyer by the name of Joseph Paradiso. Paradiso was Mr. and Mrs. Nicoletti’s long-standing lawyer – a person known to and trusted by them. The powers of attorney granted by Vittoria and her husband contemplated all three of their children exercising a joint power of attorney.
12Giovanna and Bruna appear to have proceeded with disparate and sometimes conflicting actions concerning their mother’s capacity and care. I say this because they seem to have independently taken their mother to various lawyers and assessors without involving the other, and now rely on these reports as supporting their positions on their mother’s capacity or wishes.
13In August 2008, Giovanna took her mother to see a geriatric doctor, Dr. Krajewski. Dr. Krajewski concluded that Vittoria presented with “cognitive impairment” and had a “dementing process.” After another visit in September 2009, Dr. Krajewski reported that Vittoria was “showing gradual cognitive decline” and that she was “more forgetful, repeating the same phrases of the same stories over and over again.”
14Unbeknown to Giovanna, Bruna took Vittoria to a lawyer, Louis Raffaghello, in February 2010, where Vittoria signed powers of attorney for property and personal care appointing Bruna as her sole attorney.
15In March 2010, Vittoria met again with Paradiso. On her behalf, Paradiso sought all of the documents any of her children had concerning her powers of attorney or her capacity. Paradiso expressed the view that, at that time, Vittoria was at least competent to give him instructions to protect her interests.
16In April 2010, Vittoria was assessed by Paul Cappuccio, MSW/RSW, who is a certified capacity assessor. Mr. Cappuccio concluded that Vittoria was incapable of managing her property.
17In August, 2010, Bruna took her mother to another certified assessor, Ms. Carrabau, who opined that Vittoria had capacity, at that time, to grant a power of attorney for property.
18In March 2011, Giovanna took her mother to Paradiso, where Vittoria signed continuing powers of attorney for property and personal care appointing all three of her children as her attorneys. There is February 2011 correspondence in the evidence from Paradiso reflecting meetings he had with Vittoria leading up to this event, in which he states that:
(a) Vittoria wanted any decisions about her personal and financial wellbeing to be made by all three of her children collectively; and
(b) Vittoria could not recall the February 2010 power of attorney or understand why she would give a power of attorney to Bruna alone when she had always wanted all of her children to hold her power of attorney together.
19Both sides claim the other manipulated their mother into signing the conflicting powers of attorney. Both sides attack the circumstances of the meetings with the lawyers and the lawyers’ bona fides.
20Meanwhile, in February 2010, Bruna transferred her mother’s savings (about $93,000) from her mother’s account to a joint account with Bruna. In March 2010, Bruna caused title in Cabana Drive to be transferred from her mother’s name alone to Vittoria and Bruna as joint tenants. In July 2010, Bruna initiated steps to sell her mother’s home on Cabana Drive.
21Giovanna brought an ex parte emergency motion for a Mareva injunction. On July 30, 2010, Whitaker J. issued an order restraining Bruna from selling or encumbering Cabana Drive and ordering Bruna to return all personal property, funds and real property belonging to Vittoria. The Mareva injunction was continued and varied by order of Himel J. on August 9, 2010. On September 20, 2010, Himel J. further ordered that the injunction continue until January 19, 2011, which was the scheduled hearing date for the main application.
22Bruna discharged her counsel and retained new counsel in January 2011. The parties then entered into extensive settlement discussions and agreed to adjourn the hearing of the application. The parties agreed to the sale of Cabana Drive in February 2011. Giovanna took the view that the net proceeds of sale were to be deposited into an account solely held by Vittoria. This was not done and the funds went into a joint account with Bruna. Giovanna brought a motion for contempt. This came before Matlow J. in March 2011.
23Matlow J. reserved adjudicating on the motion until Vittoria had counsel. He noted that although a certificate of incapacity regarding property had been issued in April 2010, there was no evidence that Vittoria was incompetent to instruct counsel. “It would appear, therefore,” he said, “that Vittoria may be able to instruct counsel herself and seek any remedy she required relating to her care and the protection of her property.” Matlow J. subsequently appointed the PGT as Vittoria’s Litigation Guardian on April 4, 2011.
24From April to August 2011, the parties attended before Matlow J. on four occasions to deal with a number of issues. While Matlow J. was seized of this matter, both Bruna and Giovanna provided their accounting spreadsheets explaining their version of Vittoria’s funds and the disposition of those funds. Both parties were required to produce receipts and support for expenses incurred on behalf of Vittoria.
25According to Giovanna, on October 24, 2011, the parties reappeared before Matlow J. and, with assistance from the PGT, reached a settlement. Minutes of settlement were drafted by counsel but Bruna would not conclude the settlement.
26On December 15, 2011, after further settlement attempts failed, Matlow J. concluded that the time had come to move ahead with the litigation and made interim orders pending final disposition of the applications. He suspended all powers of attorney but provided that Vittoria would live with Giovanna under her care and supervision. Vittoria’s assets were frozen, with the exception that $5,000 could be withdrawn on account of reasonable disbursements already made on Vittoria’s behalf by Giovanna and, commencing January 2012, Giovanna was entitled to withdraw the sum of $3,500 from her mother’s account to cover reasonable disbursements made by her for Vittoria’s benefit. Malow J. ordered Bruna to pay to Giovann’s costs of $10,000 and pay to the PGT costs of $6,000. Giovanna was ordered to pay $2,398.73 towards the PGT’s costs.
27It is relevant to these proceedings that Matlow J. made the following statement in his Reasons on costs:
Although I have not made any findings of contempt against Bruna, there is substantial evidence that she repeatedly failed to comply with the orders and undertakings given by her. Throughout, she repeatedly displayed her articulated desire to be seen by others as the victor in this litigation regardless of the consequences of that approach. When, shortly after this motion was brought, her lawyer recommended the settlement which Giovanna had already accepted, on two subsequent occasions, while acting on her own behalf, she expressed her consent in open court to settlements that Giovanni had accepted and stated unequivocally that she would sign minutes of settlement after they were prepared. However, after Mr. Nguyen and Mr. Kim prepared the minutes of settlement, she disavowed them too and raised new clearly unreasonable issues to justify scuttling those efforts. As a result, many hours of work performed by Mr. Nguyen and Mr. Kim, for which substantial costs were incurred by Giovanna and the PGT, were wasted. Bruna continues to be unrealistic, unreachable and perhaps uncontrollable and, even in making her outlandish claim for costs, she continues on her own fantasy path motivated mainly by self-interest, vanity and hostility towards Giovanna. There is no good reason why Bruna should be given any award of costs.
28Bruna argues that the 2010 power of attorney, appointing her as Vittoria’s attorney for property and personal care, is the only valid power of attorney. She cites the Carrabau report from August 2010, stating that Vittoria was competent to grant a power of attorney at that time.
29Bruna attacks the 2011 powers of attorney as having been procured by Giovanna, while Vittoria was under her influence. She attacks Paradiso’s credibility as a result of alleged disciplinary action taken by the Law Society against him in other matters.
30In my view, most of Bruna’s arguments are a double-edged sword; they could equally be used to attack the 2010 powers of attorney. For example, there are circumstances from which an inference could be drawn that Bruna procured the 2010 power of attorney through some sort of influence or manipulation of her aging mother.
31A combination of the August 2010 capacity report of Carrabau, Paradiso’s correspondence (along with his view that Vittoria was competent to instruct counsel in 2011) and Matlow J.’s observation that there was no evidence of Vittoria’s incompetence to instruct counsel, satisfy me that Vittoria was capable of granting a power of attorney in 2010 and 2011.
32Accordingly, the 2011 powers of attorney, appointing all three children as joint attorneys are valid and, as a matter of law, therefore revoked and superceded the 2010 powers of attorney appointing Bruna as sole attorney.
Should Bruna be Removed as One of Vittoria’s Attorneys?
33I am satisfied, based on the information of Dr. Krajewski and Cappuccio, that Vittoria is incapable of managing her property. According, her attorneys for property must undertake that responsibility as her appointed fiduciaries. This raises the issue posed by the applicant of whether Bruna should be removed as Vittoria’s attorney, in spite of Vittoria’s demonstrated wish to have all three of her children assume that role.
34The test for removing an attorney despite the expressed wishes of the donor was set out by Fragomeni J. in Teffer v. Schaefers, [2008] CarswellOnt 5447 (S.C.J.) at paras. 24-25:
misconduct or neglect on the part of an attorney; and
whether the best interests of the incapable person are being served by the attorney.
35Giovanna argues that Bruna has proven to be an inappropriate attorney on both counts and should be removed. While both parties engaged in a good deal of mudslinging about the character and motivation of the other, the essence of Giovanna’s argument is that Bruna has:
(a) manipulated Vittoria into giving control of her money to Bruna under “false” pretenses;
(b) transferred Vittoria’s funds into a joint bank account and used them for personal purchases;
(c) transferred title in Vittoria’s former home into joint tenancy with herself;
(d) taken advantage of Vittoria’s vulnerability and diminished capacity to have her sign documents, such as the 2010 power of attorney;
(e) failed to involve other family members in decisions about Vittoria’s property and care;
(f) breached court orders and undertakings to the court; and
(g) conducted the litigation process unreasonably and for personal vindication without regard to the impact on Vittoria’s interests.
36Bruna’s principal response to these allegations is that she did what she did to protect Vittoria’s property and person against Giovanna. Even if this were true, in terms of the underlying motivation, Bruna’s conduct throughout this sad story has been entirely inappropriate. There is no justification for a power of attorney transferring the donor’s funds into a joint bank account or transferring the donor’s property into joint tenancy. Both steps are, in fact, reckless, even if done with the intention of supposedly “preserving” the donor’s property. This is because joint accounts/tenancy:
(a) exposes the donor’s property to the personal liabilities of the attorney; and
(b) confers on the attorney an unintended direct proprietary interest in the donor’s property (as that property would pass to the attorney on the donor’s death).
37In any event, the evidence does not support the proposition that Giovanna was, by any reasonable standard, trying to make off with her mother’s money. In other words, Bruna’s actions were unnecessary and unreasonable; Bruna’s cure was worse than the alleged disease.
38It is also clear that Bruna and her sister have an entirely dysfunctional relationship, such that a joint power over Vittoria’s property involving the two of them is unworkable and would not be in Vittoria’s interests.
39For these reasons, I find Bruna’s conduct in relation to her purported exercise of Vittoria’s power of attorney discloses neglect and misconduct in relation to Vittoria’s property and that leaving Bruna as Vittoria’s power of attorney (joint or otherwise) is not in Vittoria’s interests. For this reason, Bruna shall be removed as Vittoria’s power of attorney for property.
40Having made this determination, I order that the freeze on Vittoria’s assets ordered by Matlow J. pending this hearing is hereby lifted. The remaining attorneys for Vittoria’s property have authority to manage Vittoria’s assets in her best interests, subject to their fiduciary duties as her attorneys.
The PGT or a Third Party as Guardian
41Another issue raised in the applicant’s material is whether the PGT or a financial institution should be appointed as Vittoria’s guardian of property.
42The simple answer is that the PGT does not consent to assuming this role and there is no evidence before the Court that any financial institution is willing to do so or what cost and other constraints would be associated with taking such a step. For these reasons, I am in no position, even if I were otherwise inclined to do so, to appoint a third party to manage Vittoria’s affairs.
43More importantly, I do not think there is any evidence supporting the proposition that Giovanna or Pietro are incapable or unqualified to act as joint guardians. To the extent Bruna argues otherwise, I find she has not proved her allegations on a balance of probabilities.
44The applicant seeks, collateral to this issue, an order that she be permitted to apply, on her mother’s behalf, to an Italian-speaking long term care facility, anticipating that her mother’s dementing illness may soon reach the point where home-care, even with a full time care giver, is no longer viable. I do not think this request falls within the proper scope of this application. The attorneys for personal care appointed under the 2011 powers of attorney for personal care have this responsibility. If they were to reach an impasse, there are procedures for resolving that (including mediation, which I would strongly recommend in this case). I therefore decline to make any forward-looking orders affecting Vittoria’s future personal care.
Costs of the Mareva Injunction Motion
45The costs of the applicant’s motion for a Mareva injunction were reserved by Whitaker J. to the hearing of this application.
46Giovanna argues that she was successful on the motion and that it preserved Vittoria’s assets pending the hearing. She says that she should, therefore, be entitled to her costs.
47Bruna argues that the motion was entirely unnecessary. She argues that Vittoria’s assets were never in jeopardy and the entire exercise was a self-interested attempt by Giovanna to gain control of Vittoria’s assets. She seeks her own costs of that motion.
48In my view, even if Bruna was not seeking self-interested gains from control of her mother’s property, her behavior was unreasonable. Unilaterally transferring assets without consultation with other family members created a situation which was bound to raise suspicions and animosity. Further, as noted above, once Vittoria’s assets were in joint accounts/tenancy, they were at risk to Bruna’s personal liabilities. In my view, Bruna was the author of her own misfortune and brought the Mareva injunction on herself through her own unreasonable conduct. The motion was successful. It was extended on two occasions by Himel J. No appeal was ever concluded. The normal rule of costs to the successful party should apply in this case.
49I am not satisfied that an increased scale of costs is appropriate. Accordingly, the costs of the Mareva injunction motion shall be paid by Bruna to Giovanna on a partial indemnity basis.
50I fix these costs in the amount of $7,500 inclusive of fees, disbursements and all applicable taxes.
The Passing of Accounts
51Both parties purported to spend money on their mother’s care and wellbeing. Some of that money was their own, for which they seek reimbursement, and some of it was their mother’s money, for which they are liable to account.
Giovanna’s Application (April 26, 2009 to November 30, 2013)
52Giovanna sought in her application to justify $54,800 of expense incurred on her mother’s behalf. This was the product of revenue receipts of $126,100 and disbursements of $180,900.
53The PGT filed an initial Notice of Objection with a substantial number of issues. Giovanna responded to the PGT’s Notice of Objection, as a result of which the PGT’s concerns were largely satisfied. In particular, for current purposes (focusing on the legitimacy of the claimed expenses incurred on Vittoria’s behalf) I note that the PGT was given the opportunity to review detailed supporting invoices (filed at the hearing in hard copy). As a result of its review, the PGT had “no major concerns regarding the amount being claimed for reimbursement.”
54Bruna’s Notice of Objection is largely occupied with a vitriolic attack on her sister, with allegations of contempt of court, misconduct and fraud. Few specifics or details were provided. Central to Bruna’s allegations was that Giovanna submitted fraudulent invoices for payments to a care-giver, Ms. Crivaro. Crivaro and Giovanna had a falling out and there were employment-related proceedings arising out of Crivaro’s dismissal. Thus Crivaro and Giovanna were understandably at odds. More importantly, I find that while the invoices themselves were not sent to the care-giver, they reflect (on a tax favourable treatment) payments made to the caregiver. In other words, the care-giver saw the net amounts, not the gross amounts submitted for withholding and other purposes. The expenses claimed were, in my view, legitimate from an estates/passing of accounts point of view.
55I conclude that Bruna’s objections are not well founded. They arise from the highly emotional, adversarial position that Bruna has displayed throughout this litigation. I share Matlow J.’s view that Bruna has been motivated by her “desire to be seen by others as the victor in this litigation regardless of the consequences of that approach” and is consumed by “self-interest, vanity and hostility towards Giovanna.” Have reviewed the detailed accounts I agree with the PGT that Giovanna’s expenses have been proved.
56Giovanna is therefore entitled to total reimbursement from her mother in the amount of $54,800.
57Giovanna shall file her notice of application to pass accounts for the period December 1, 2013 to December 31, 2015 no later than April 1, 2016 and no less than every two years thereafter.
Bruna’s Application (October 1, 2009 to November 30, 2013)
58Bruna’s material submitted to the court was initially incomplete and failed to provide invoices to support the schedule of her purported expenses. I allowed Bruna additional time to organize and submit her supporting documentation, which she did on the second day of the hearing.
59In her notice of application, Bruna claimed $31,343.51 as legitimate expenses incurred on her mother’s behalf. At the hearing, Bruna submitted a claim and receipts well in excess of this number. A large percentage of the new amount sought related to trips taken many years ago when Vittoria accompanied Bruna and her husband on holidays to the Caribbean, etc. Reimbursement for these particular expenses was only sought after this litigation began. This was in an effort, Bruna admitted during submissions, to boost her own claim because her sister was seeking so much. It was conceded during argument that there had been no expectation of repayment when these trips were originally taken. Without these trips, Bruna sought approximately $36,000. It was agreed between all parties that Bruna had been paid approximately $27,000. Bruna was, therefore, seeking reimbursement for an additional $9,000.
60Giovanna’s position was that many of the amounts claimed were not supported by proper receipts or were, on their face, not proper expenses for which reimbursement should be allowed. Examples included clothing purchases at Holt Renfrew, grocery purchases during a time when Vittoria was living with Giovana, caregiver expenses by way of cash payment and ATM withdrawals on Vittoria’s bank card.
61Giovanna’s position was that only about $10,000 of expense had been justified as legitimate. Accordingly, she argued, Bruna owed her mother about $17,000.
62Mr. Kim for the PGT went through Bruna’s claims carefully, adopting a “golden mean” approach of giving some benefit of the doubt to Bruna without being overly generous or forgiving. The PGT took issue with certain room and board and care-giving expenses. Room and board was inflated, he argued, because for a year Vittoria was spending only half her time with Bruna (and the other half with Giovanna). Receipts for caregiver expenses were not produced because Bruna claimed to have paid cash. A prudent attorney in a fiduciary relationship would be in a position to provide receipts for this type of expense.
63The PGT argued that Bruna had justified about $23,000 of legitimate expenses. Having been paid $27,000, Bruna owed her mother $4,000.
64In my view, while a truly stringent standard was not met by Bruna in the proof of her claims, the PGT’s approach of allowing recovery of expenses within a reasonable framework for this family is the right one. I agree with Mr. Kim’s submissions. I find Bruna has justified $23,000 of legitimate expense on her mother’s behalf. I therefore order that she reimburse her mother $4,000.
Conclusion
65To summarize, the issues are disposed of as follows:
(1) The 2011 powers of attorney are valid and governing;
(2) Bruna shall be removed as a power of attorney for property;
(3) There is no need for a third party guardian of property;
(4) The motion for a Mareva injunction was necessary and costs are payable by Bruna, as fixed above; and
(5) Giovanna’s application to pass accounts is allowed. Bruna’s application is allowed in part.
Costs
66The parties made submissions on costs at the conclusion of the hearing. In my view, Giovanna was substantially successful on the applications. She is entitled to her costs, payable by Bruna (excluding the Mareva injunction motion, dealt with above) in the amount of $10,000.
67The PGT seeks total costs of $15,000. The PGT’s involvement was both necessary, as litigation guardian for Vittoria, and helpful to the Court. In the circumstances, I award the PGT its costs of $15,000, $5,000 of which shall be paid by Bruna and $10,000 of which shall be paid from Vittoria’s funds.
Penny J.
Date: July 31, 2014