COURT FILE AND PARTIES
COURT FILE NO.: CV-14-3104-00ES
DATE: 20160119
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ROSIE SCHWARTZ
Applicant
- and-
DAVID FUSS AND TERESA GLICKMAN
Respondents
P R O C E E D I N G S A T M O T I O N
BEFORE THE HONOURABLE JUSTICE L.A. PATTILLO On September 21, 2015 at TORONTO, Ontario
Courtroom 8-6
APPEARANCES
S. Graham, Mr.
L. Tupman, Mr.
A. Bloom, Mr.
Counsel for Rosie Schwartz
Counsel for Teresa Glickman
Counsel for Teresa Glickman
M. Davis, Mr.
Counsel for David Fuss
SUPERIOR COURT OF JUSTICE
T A B L E O F C O N T E N T S
REASONS FOR JUDGMENT
3-22
RULING ON COSTS
22-24
Legend
[sic] - Indicates preceding word has been reproduced verbatim and is not a transcription error.
(ph) - Indicates preceding word has been spelled phonetically.
[Indiscernible] - Indicates where a word or phrase is impossible to discern, and all avenues to ascertain what was said have been exhausted.
Transcript Ordered:
December 8, 2015
Transcript Completed:
December 14, 2015
Ordering Party Notified:
January 5, 2016
MONDAY SEPTEMBER 21, 2015
R E A S O N S F O R J U D G M E N T
Reasons for Judgment
This is a continuation of a motion that came before me on July 7th, 2015 concerning the funding of the ongoing care and maintenance of the respondent, Elsa Fuss (Elsa), who is 95 years of age. The other individual parties are Elsa’s children. Miriam Abbou took no part in the motion.
On July 8th, 2015, I released reasons (reported 2015 ONSC 4384) directing a bifurcated hearing concerning the issue surrounding the ownership and use of the condominium in Florida purchased in 1987 by Elsa and her husband, and now held in joint tenancy by Elsa and her daughter Rosie Schwartz (Rosie) (the Property).
Because there was urgency to resolve the funding issue, I set September 17 and 18 for the hearing and established a timetable for further material and examinations on the issues. The parties have all filed further affidavits and each has been examined at some length. No party wished to further cross-examine a witness at the hearing and I did not require viva voce evidence.
Based on the factums and submissions, the issues to be decided are essentially set out by me in my July 8th, 2015 reasons. They are: 1) what is the fair market value of the Property; 2) does section 35.1 of the Substitute Decisions Act (SDA) apply to Elsa’s 2003 codicil which provides Rosie with the right to purchase the Property; 3) is the transfer of the Property by Elsa to Rosie in joint tenancy in 2004 valid; 4) what are the amounts which Rosie has spent for renovations, maintenance, taxes, etcetera, on the Property since 2008; 5) should Rosie be charged with occupation rent, and if so, how much and for what periods.
Background
The facts are as set out in my July 8th, 2015 reasons, and I do not intend to repeat them in detail at this time. Briefly, however, Elsa owns two assets: the Property and a condominium in Toronto, which she lives in. She is confined to her home and has 24-hour care. In July, the evidence before me was that her living expenses were approximately $15,000.00 per month. The evidence is her expenses have increased since July, but why or by how much is not clear. Her expenses have been funded from a $90,000.00 line of credit against the Toronto condominium, which is fast being depleted. In my July 8th reasons, in order to cover any interim funding issues, I ordered that the line of credit be increased to $250,000.00 on certain conditions to ensure continued funding until the issues surrounding the Property could be resolved.
The one thing that all parties agree on in this matter is that Elsa should end her days in her own home in Toronto. Before me, on July 7th, Rosie’s position was that the best and most expeditious course to ensure Elsa’s continued care was to increase the line of credit on her Toronto home. Two of Elsa’s children, David Fuss (David) and Teresa Glickman (Teresa) opposed increasing the line of credit and submitted that, instead, the Property should be mortgaged or sold. Rosie opposed the sale or mortgaging of the Property on the grounds that she has an ownership interest.
Fair Market Value of the Property
Rosie filed a July 6th, 2015 appraisal by Accredited Appraisal Associates Inc. valuing the Property at $340,000.00 USD. David and Teresa have pointed to recent sales of other units in the same building for $335,000.00 USD and $364,000.00 USD to support a value of $350,000.00 USD. No information has been provided about those units or how they compare to the Property. In my view, therefore, the more reliable evidence is the appraisal for $340,000.00 USD, which I accept. Accordingly, I find the value of the Property to be $340,000.00 USD.
Application of Section 35.1 of the Substitute Decisions Act
Turning then to the issue of section 35.1 of the SDA. Section 35.1 of the SDA provides that,
“The guardian of property shall not dispose of property that the guardian knows is subject to a specific testamentary gift in an incapable person’s will.”
In her factum, Rosie submits that section 35.1 prevents the court from ordering the Property sold given the 2003 codicil to Elsa’s will.
Although it was not argued by Rosie’s counsel at the hearing, I shall deal with this issue briefly. In her 2002 will, Elsa gave Rosie a right to purchase the Property from her estate at fair market value. In the 2003 codicil, Elsa amended Rosie’s right to purchase the Property by providing that she purchase it at the price at which Elsa acquired it by paying $25,000.00 to each of her siblings.
In my view, section 35.1 of the SDA does not apply to prevent the sale of the Property, if required. First, Elsa’s 2003 codicil does not create a “specific testamentary gift” to Rosie as required by the section. Elsa has given Rosie a right to purchase the Property only. She has not gifted the Property to Rosie.
Further, and in any event, section 35.1(3) (a) of the SDA provides that the guardian may dispose of the Property “if the disposition of that property is necessary to comply with the guardian’s duty.” The guardian’s primary duty is to act in an incapable person’s best interests. In the event, therefore, it is determined that it is in Elsa’s best interest to sell the Property, section 35.1 of the SDA would not restrict such a course.
Validity of the 2004 Transfer
Turning then to the issue as to whether the transfer of the Property by Elsa to Rosie in joint tenancy in 2004 was valid. By way of preliminary objections, Rosie submits that this court has no jurisdiction to adjudicate on the right and title to the Property, which is situate in Florida, and further, that any determination respecting the Property must be made according to Florida law.
The general rule is that Canadian courts have no jurisdiction to decide title to foreign land. As set out in Catania v. Giannattasio, 1999 1930 (ON CA), 1999 OJ 1197 (ON CA), however, Canadian courts will exercise an in personam exception to the general rule, but only if the following four criteria are met:
the court must have in personam jurisdiction over the defendant. Rosie concedes that this criterion is met in this case. All of the parties are resident in Ontario and she has attorned to the jurisdiction of the court;
there must be some personal obligation running between the parties. There is no question here given the issues between the parties that this criterion is also met in this case;
the jurisdiction cannot be exercised if the local court cannot supervise the execution of the judgment. Rosie submits that this criterion cannot be met because any order of this court concerning the Property cannot be enforced in Florida. In my view, it can be enforced in Ontario if need be through the court’s contempt powers. That is sufficient;
the last criterion is that the court will not exercise jurisdiction if the order would be of no effect in the situs, in this case Florida. As will be dealt with shortly in more detail, there is no evidence of Florida law before me. Accordingly, Rosie has not established that a Florida court would not exercise jurisdiction over an order of this court.
For the above reasons, therefore, in my view,
the exceptional in personam jurisdiction of
the Ontario court can be exercised in this case. Rosie’s preliminary objection with respect to jurisdiction is therefore dismissed.
Rosie further submits that any issues concerning title to the Property must be dealt with pursuant to Florida law. This issue first arose at a case conference on September 8th, 2015, held to discuss the status of the forthcoming hearing. Mr. Graham, who had only recently been retained by Rosie, submitted that he was attempting to obtain evidence as to Florida law. On the eve of the hearing, Mr. Graham sent me a memorandum from a Florida lawyer concerning Florida law. At the hearing, I declined to admit the memorandum or consider it. The issues between the parties concerning the Property have been outstanding for some time. In my July 8th reasons, I set a timetable for additional evidence. It is too late for additional evidence. Further, the “evidence” was not even in the form of an affidavit. Mr. Graham asked for more time to enable him to deliver a proper affidavit.
In the circumstances, and particularly given the urgency of the issues in respect of Elsa’s care, I declined Mr. Graham’s request. Foreign law must be pleaded and proved as a matter of fact in our courts. Absent proof of foreign law by expert evidence, foreign law is presumed to be identical to the law of Ontario. See Yordanes v. Bank of Nova Scotia, 2006 1777 (ON SC), 2006 78 O.R. 3rd 590 (SCJ) and Anand v. Rumpal, 2014 ONSC 6030 (SCJ). In the absence of any evidence concerning Florida law, the law of Ontario applies to the issues concerning the validity of the 2004 transfer of the Property by Elsa.
David and Teresa submit that the 2004 transfer does not give Rosie a beneficial interest in the Property. Rather, the circumstances surrounding the transfer give rise to a presumption of a resulting trust in favour of Elsa. They further submit Rosie has adduced no evidence to rebut the presumption. Initially, David and Teresa took the position that the 2004 transfer was not valid on the basis of undue influence and that Elsa did not have the capacity. Apart from statements by both David and Teresa as to their mother’s capacity at the time and their suspicions about Rosie, there is no evidence concerning either Elsa’s capacity at the time of the transfer or of undue influence. Accordingly, there is no evidentiary basis to substantiate those allegations. That said, David and Teresa’s factums and argument focus primarily on resulting trust.
As explained by the Supreme Court of Canada in
Pecore v. Pecore, 2007 SCC 17, 2007 1 S.C.R. 795 (SCC), at
paragraph 20:
“A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the Property, is under an obligation to return it to the original title owner. A presumption of a resulting trust arises in circumstances of gratuitous transfers for no value. In such circumstances, the onus is placed on the transferee to demonstrate that a gift was intended.” (Pecore v. Pecore, paragraph 24).
The circumstances surrounding the 2004 transfer of title in the Property to herself and Elsa as joint tenants comes primarily from Rosie’s evidence. Given Elsa’s current medical condition, that is understandable. An email from Rosie to Teresa on December 18th, 2013 indicates that as a result of a conversation that Rosie had with Elsa’s accountant, Murray Kline, about adding a name to both the Property and a bank account in Florida, she and her mother contacted a lawyer in Florida that Elsa and her husband had previously dealt with. He sent the papers to sign, which Elsa did while in Toronto. Her signature was witnessed by a lawyer in Toronto who drew her will and codicil. The documents were then taken by Elsa and Rosie when they returned to Florida the following November. As a result, Rosie became a joint tenant of the Property and, as I understand it, a joint holder of Elsa’s bank account in Florida.
In her cross-examination, at pages 79 to 81 of the transcript, questions 343 to 348, Rosie expanded on her discussion with Mr. Kline that she mentioned in the December 18th, 2013 email.
So, just turning to those questions:
− Question 343: “Really? So what was the reason that the title was transferred into joint tenancy.”
− Answer: “I don’t know the reason that my mother transferred it to joint tenancy. I do know we did have a discussion. Murray Kline called me on a personal note about who my mother’s insurance policy for Florida was through because he was talking about his mother-in-law’s condo, and he suggested that I suggest to my mother that my mother add a name to the title of the condo, and I told her that Murray Kline had suggested on a personal note.”
− Question 344: “So if I understand, your name was put on the condo because Murray Kline called and wanted to talk about adding a name to the condo and the bank account because he was looking into issues for his mother-in-law?”
− Answer: “No, that’s not what I said. What I said was, in a conversation that I had with Murray Kline, when he phoned me about who my mother had insurance with in Florida because he was looking for insurance for his mother-in-law’s condo, and in the discussion he suggested that it could be a problem if my mother’s name was on the deed, if only her name was on the deed, and that I might suggest to my mother that she put another name on the condo.”
− Question 345: “Did he tell you why it would be a problem if only your mother’s name was on the deed?”
− Answer: “He had said in terms of the U.S. government taxes.”
− Question 346: “What did he say to you about U.S. government taxes?”
− Answer: “He said there could be significant U.S. government taxes.”
− Question 347: “In what circumstances
would there be taxes?”
− Answer: “If my mother were to pass away.”
− Question 348: “And so that’s why Murray Kline told you that it was advisable to put your name on the deed?”
− Answer: “No, he told me to suggest to my mother that she not be the only person on the deed.”
Rosie’s emails and her cross-examination indicate that Elsa’s reason for the transfer of the Property into her name was for tax reasons. That Rosie did not consider she had beneficial interest in the Property is clear from her discussions with David in 2011 about buying the Property to save taxes. She raised a similar position in her December 18th, 2013 email to Teresa, where she stated,
“I have never claimed that I would own the condo if something happened to mommy. On the contrary, that’s why I was looking into purchasing it now to avoid the taxes.”
At the time of the 2004 transfer, Elsa was 84 years old. It is undisputed that Rosie paid nothing to Elsa for the transfer. The transfer is contrary to Elsa’s intentions as reflected in the 2002 will and her 2003 codicil, to give Rosie a right to purchase the Property. Finally, Rosie did not tell her siblings about the transfer until 2013. Although David knew that Rosie’s name had been added to the Property in 2004, he says that he did not understand that she had a right of survivorship until 2013.
In all of the circumstances, I am of the view that a presumption of resulting trust arises in respect of Elsa’s 2004 transfer of the Property to Rosie in joint tenancy. The onus, therefore, shifts to Rosie to rebut the presumption on a balance of probabilities. In my view, based on Rosie’s evidence alone, she has failed to meet that onus.
Rosie submits that at the time of the transfer, Elsa had lawyers involved both in Florida and in Toronto, and, therefore, it should be presumed that she received legal advice. Rosie concedes, however, that a resulting trust can arise even in the face of legal advice. Given the circumstances of how the documents came into existence and were signed and Rosie’s involvement, I am not prepared to infer that Elsa received any legal advice in respect of the transfer.
Mr. Graham submits that David and Teresa could easily have obtained information from the lawyers and did not. Given that it is his client’s onus, the same submission applies equally if not more so to Rosie.
Rosie also relies on Elsa’s intention as contained in the will and codicil to favour Rosie in respect of the Property and submits the transfer is simply an extension of that favour. But as Mr. Graham noted, the intention to grant Rosie a right of purchase can also be interpreted against granting Rosie a beneficial interest in the Property. In my view, the submission does not assist Rosie in meeting her onus.
Finally, Rosie submits that Elsa took no steps to assert her ownership after the transfer, which reflects her intention to give Rosie an ownership interest in the Property. Given Elsa’s age and the issues surrounding her capacity, I do not think that Elsa’s lack of assertion concerning Rosie’s use of the Property or her ownership confirms any intent on Elsa’s part in 2004 to give Rosie a beneficial interest in the Property. As Rosie herself stated, Elsa was incapable of managing her property in 2009. Rosie used the Property with her mother, and it follows that Rosie would continue to do so in her absence, particularly given she was paying the insurance, taxes and maintenance on the Property. Once again, I do not consider that Elsa’s inaction, however caused, assists Rosie in meeting her onus. Accordingly, for the above reasons, I find that the 2004 transfer of the Property by Elsa to herself and Rosie as joint tenants gives rise to a resulting trust in Elsa’s favour and Rosie holds her interest in the Property as trustee for her mother. The beneficial interest in the Property remains with Elsa.
Expenses and Occupation Rent
Turning to expenses and occupation rent. Rosie has claimed in excess of $170,000.00 in expenses she said she and her husband spent on the Property since 2008, which in the event the Property is sold, she is seeking reimbursement for. Specifically, the expenses break down into three categories: renovations of $48,523.03; travel expenses for Rosie and her husband of $29,824.95 to oversee renovations; and other expenses (taxes, insurance, utilities, service contracts, and maintenance fees) of $91,832.99.
Rosie has the invoices for the expenses, but can only prove payment for slightly more than $13,000.00. In addition, Rosie claims that she and her husband spent $30,000.00 on renovations prior to 2008. They have produced bank statements to show that amount being paid from a USD account, but no invoices (except
for one small amount).
David and Teresa take issue with the expenses. They submit that Rosie has failed to produce sufficient proof of payment. They also take issue with some of the renovation expenses, which they say were done for Rosie’s benefit, and they totally disagree with the travel expenses.
There is no question that lack of proof of payment creates an issue. Rosie and David became Elsa’s co-attorneys for property in 2007. Rosie handled the Property finances. Further, Elsa had a bank account in Florida which Rosie became the joint holder of in 2004, at the same time that she became the joint tenant of the Property. The joint Florida bank account was closed by Rosie in 2012. No records of that account have been produced. The concern is that, in the absence of proof that Rosie paid the amounts she claims directly, the monies could have come from Elsa.
Mr. Tupman on behalf of Teresa has submitted that an accounting of Elsa’s attorneys is part of the applications before the court, and, accordingly, the issue of expenses should be adjourned to be dealt with on an accounting. As I advised counsel, however, I am not prepared to do that because of the costs involved and the delay. This matter has already taken up far too much lawyer time and cost the parties too much money. It is time they started to resolve matters for Elsa’s sake.
I accept from the evidence that the renovations of $48,523.03 claimed were done and that Rosie paid for them. Some were done for Elsa’s benefit to enable her to better use the Property. Some were upgrades or repairs, which are Elsa’s responsibility and to her benefit as the owner. Regardless, they are for Elsa’s account. I also accept Rosie’s evidence that she and her husband paid for them. Accordingly, she is entitled to be repaid for them. I do not accept the pre-2008 $30,000.00 amount given the lack of information concerning those expenses.
I am not prepared to accept the travel expenses claim. The expenses claimed involved trips to Florida - Thanksgiving, Christmas, and other winter months (two summer trips in 2009 and 2012) - by Rosie and her husband. Though the trips may have involved checking on the renovations, they also involved a getaway for the two of them. I do not think that Elsa should have to pay for those travel expenses.
David and Teresa have no issue with the other
expenses. There is no question that they had
to be paid to maintain the Property. I accept that Rosie and her husband paid them.
David and Teresa submit that Rosie should have to pay occupation rent for the Property. They accept Rosie’s amount of $2,000.00 per month, and submit that Rosie, who has had exclusive use of the Property since January 2009, which was the last time Elsa was there, should pay occupation rent for six years, amounting to $144,000.00 ($2,000.00 x 12 x 6).
Rosie submits that if she is required to pay occupation rent, it should be just for $20,000.00, recognizing the limited time she spent at the Property each year over the period. While the evidence indicates that Rosie has had exclusive use of the Property since 2009, neither David or Teresa ever pressed the issue or showed any real interest in spending any time at the Property. It is clear from her will and codicil, as well as from her actions in putting Rosie on as a joint tenant of the Property and joint holder of the Florida bank account, that Elsa understood it was Rosie who enjoyed the Property and would look after it for her. In such circumstances, apart from maintaining the Property (which is not inexpensive) I do not consider that Elsa would charge Rosie any occupation rent. Accordingly, I consider that the expenses claimed by Rosie of $91,832.99 to maintain the Property since 2009 are sufficient to cover any occupation rent which
she should have to pay.
Disposition
In my July 8th reasons, I stated that if the Property is Elsa’s alone, I would have no hesitation in ordering it be sold immediately. I have now found that the Property is hers alone. It is clear that it needs to be sold for her benefit. Accordingly, it should be sold immediately.
Rosie has submitted as an alternative, that if the Property is to be sold, she would like an opportunity to purchase it. In my view, in the circumstances, that is appropriate. Rosie’s position was based on her obtaining a credit for many of her expenses (she cut in half the travel expenses) and paying $20,000.00 for occupation rent. Her position may be different now based on my decision today. Accordingly, Rosie shall be entitled to purchase the Property from Elsa’s guardians for property for the amount of $291,476.97 USD, which is ($340,000.00 less the $48,523.03).
Rosie shall have ten days from today to advise the guardians if she is prepared to purchase the Property at that price. If she is, the transaction shall close within 30 days from today. The guardians are authorized to
negotiate such payment terms as they consider appropriate. In the event that Rosie declines
to purchase the Property as directed within ten days, the guardians are directed to
immediately list the Property for sale in Florida with the view to obtaining at least $340,000.00 USD net. The final selling price remains in their sole discretion. To the extent required, Rosie is directed to take all steps necessary to enable such sale to proceed immediately and to provide quickly the transferring of the title back to Elsa or to the new purchasers. Upon completion of the sale, Rosie is entitled to be reimbursed $48,523.03 USD as I have determined. If there are any issues concerning the sale, I may be spoken to.
R U L I N G O N C O S T S
Ruling on Costs
Mr. Graham, I think and I recognize that in circumstances undue influence, the allegation of it, and how it is alleged can amount to and be tantamount to fraud. But I do not think that is the case in this case. I think that undue influence was raised, but David and Teresa relied on just the facts surrounding the actual transfer. They did not say that Rosie was doing anything untoward, apart from what she said happened in relation to the 2004 transfer. So I do not consider that it
negates their entitlement to costs.
I do consider that David and Teresa are entitled to costs. They were primarily successful. I am not going to take into account their offers because it is a really complicated situation. The way I view it is, there would have to have been a joint offer which was accepted so that all three would go to the guardians and say we have agreed on how this should be resolved, and then it would be up to the guardians before that offer would click in. And I do not think that happened in this case, nor could it have happened in light of the offers.
I am troubled by the allegations that Rosie raised against David and Teresa. I think they were completely unfounded and inappropriate in terms of what we were dealing with. But I am not prepared to award substantial indemnity costs. I think costs of this matter have to be appropriate given the amount involved and the issues. And I realize the issues were very important for Elsa and I realize that David and Teresa stepped forward to fight them. I do think, however, that it was and is appropriate that one counsel fee be awarded.
So, I am going to award costs on a partial indemnity basis to David and Teresa - one counsel fee of $70,000.00. I think that that should be appropriate, and I think it is reasonable particularly in light of Rosie’s bill of costs. So costs to David and Teresa in the joint amount of $70,000.00 all in. That is all in, inclusive of disbursements and taxes. Okay, thank you all very much. As I said, if there are any issues relating to the sale, I can be spoken to.