Winarski v. Sproul, 2015 ONSC 812
COURT FILE NO.: 01-0096/13
DATE: 20150209
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARILYN ANN SPROUL WINARSKI, in her capacity as trustee of the ESTATE OF ANN G. SPROUL
Applicant
– and –
JAMES D. SPROUL
Respondent
Clayton A. Hudson and Matthew Urback, for the Applicant
Hari Nesathurai and Glen M. Perinot, for the Respondent
HEARD: February 3, 2015
L. A. PATTILLO J.:
APPLICATION UNDER THE pARTITION aCT, r.s.o. 1990 C. p.4
[1] This is an application by Marilyn Ann Sproul Winarski, in her capacity as trustee of the Estate of Ann G. Sproul (the “Applicant”) for an order directing the sale of property municipally known as 402 Hillsdale Avenue East, Toronto (the “Property”) pursuant to s. 3 of the Partition Act, R.S.O. 1990 c. P. 4 and ancillary orders concerning the sale. The Applicant also seeks an order that the proceeds of the sale be split equally between herself and the respondent James D. Sproul (“James”) or in proportion to their ownership interests.
[2] The Applicant and James are sister and brother. The deceased, Ann Sproul is their mother. Title to the Property is held 7/13 by the Estate and 6/13 by James. James submits that in November 2002, his mother signed a deed of transfer of her interest in the Property to him. The Applicant disputes the transfer.
[3] When the matter first came before me, it was apparent that there were significant issues, including credibility, which could not be resolved on affidavit evidence. Accordingly, I directed a mini-trial on the issue of ownership of the Property to determine the application.
[4] The Property was purchased in 1989 for $320,000 by James’ parents, Ann and Leonard Sproul and Ms. Pennie Murray who was James girlfriend at the time. The Sprouls paid $70,000 and Ms. Murray paid $60,000 towards the purchase price and the balance was mortgaged. The Sprouls took title to 7/13 as joint tenants and Ms. Murray took title to the remaining 6/13. After the purchase, James and Ms. Murray lived at the Property.
[5] James evidence is that his credit at the time was not good and his parents agreed to help him out with purchasing the Property. His best recollection was that his parents lent him $10,000 at the time. Before me he said he contributed some of his own money but never said how much. In 1990 or 1991, James says he paid his parents back the money they lent him to buy the Property.
[6] James and Ms. Murray married in October 1993 and separated in December 1995. They were formally divorced on May 7, 1996. As part of the separation, James paid Ms. Murray $50,000 for her interest in the Property. On May 10, 1996 the Sprouls and Ms. Murray registered a transfer deed transferring Ms. Murray’s 6/13 in the Property to James.
[7] Leonard Sproul died on November 13, 2001. On November 15, 2002, Ann Sproul executed an application to have the title to the 7/13 of the Property placed in her name by right of survivorship. The documents were registered against the Property on November 20, 2002.
[8] Also on November 15, 2002, Mrs. Sproul executed a deed of transfer (the “Transfer Deed”), transferring her 7/13 interest in the Property to James for “natural love and affection.”
[9] Both the survivorship application and the Transfer Deed were prepared in the law office of McMahon, Raine. Mr. Daniel McMahon, a partner in the firm, had acted for the Sprouls in the past and had drafted Mrs. Sproul’s will which was executed in 1995. Mr. McMahon attended at Mrs. Sproul’s condominium to review the documents with her and obtain her signature.
[10] Mr. McMahon testified. He said that when they went to register the Transfer Deed, there was an execution against a person named Sproul. Rather than register it, he contacted James and told him about it and asked him to look into it and clear it up. Although Mr. McMahon followed up a number of times, to his knowledge James did nothing to resolve the issue and the Transfer Deed was never registered.
[11] On January 20, 2011, Mrs. Sproul died. Her will left everything to the Applicant and James equally. On May 26, 2011, when she attended Mr. McMahon’s office with James to sign the papers to probate her mother’s will, the Applicant learned for the first time that her mother had transferred her interest in the Property to James in November 2002. It was always her understanding from her father that her parents’ financial contribution to the purchase of the Property was an investment and not a loan or a gift.
[12] As Mrs. Sproul’s interest in the Property had not been included as an asset of the Estate, the Applicant refused to sign the papers and left Mr. McMahon’s office. Subsequently, the Applicant retained counsel and brought an application to be appointed Estate Trustee with a Will. James renounced. The application included the 7/13 interest in the Property as an asset of the Estate. Once appointed, the Applicant took steps to have the 7/16 interest in the Property transferred to the Estate.
[13] The Applicant submits that the Estate owns the 7/13 interest in the Property. The November 2002 Transfer Deed purporting to transfer Mrs. Sproul’s interest to James is not valid, as Mrs. Sproul did not have the capacity at the time to understand the nature of the document she was signing. In the alternative, she submits that the transfer is not valid as the deed was never registered.
[14] James submits that the Property belongs to him outright and the Estate has no interest in it. He has lived in the Property since it was purchased in 1989, and has paid the mortgage, taxes and upkeep on the Property from the outset. He relies both on his evidence that his parents’ initial contribution was a loan which he paid back and on the November 2002 Transfer Deed from his mother.
[15] I was not impressed with James’ evidence. I do not accept that his parents lent him the purchase money and that he paid them back in 1990 and 1991. First, he said that his best recollection was they lent him $10,000. The agreement between the Sprouls and Ms. Murray at the time of purchase clearly indicates that the Sprouls contributed $70,000 towards the purchase price. While much time has passed since the purchase, given the amounts involved, I would have thought James would have remembered the amount of his parents’ contribution given its size. It would have been at least equivalent to Ms. Murray’s contribution which he knew he paid $50,000 for in 1996.
[16] Further, and if James paid his parents off (and there is no evidence corroborating his statement to that effect), why didn’t he receive a deed of transfer from his parents in 1996 when he purchased his ex-wife’s interest in the Property. Mr. and Mrs. Sproul executed the deed transferring Ms. Murray’s interest to James. If he had paid off the loan to his parents as he says, they no longer would have had any interest in the Property. It would have been easy, inexpensive and appropriate at that time for the Sprouls to transfer their title to James. There is no evidence there was any reason at that time to keep the Property in his parents name apart from the fact that they owned 7/13th.
[17] Based on the evidence I accept, therefore, I find that the Sprouls owned 7/13 of the Property as joint tenants from the time it was purchased. When Leonard died, his interest passed to Mrs. Sproul by survivorship. That leaves the issue of whether the Transfer Deed in November of 2002 from Mrs. Sproul to James is valid.
[18] The Applicant said that she began to notice a decline in her mother’s functioning in 1999, just before her parents purchased their condominium. She said that her mother’s time management skills were diminishing. After her father’s death she said her mother was in a fog at the funeral. The Applicant lived in Oakville and later moved to Lakefield, Ontario. Although she spoke with her mother daily and visited her often, she was not involved in her mother’s finances. She had no knowledge of her mother having signed the Transfer Deed in November 2002 or of her appointeing James as her attorney for property on February 22, 2002.
[19] On November 14, 2001, the day after Leonard died, Mrs. Sproul was found by the Applicant collapsed on the floor of her bathroom in her condominium, dazed. She was 80 years old at the time. She was taken to emergency at North York General Hospital where she was admitted. While in hospital she was seen by Dr. Sharon Cohen, a neurologist who specializes in dementia.
[20] Dr. Cohen diagnosed Mrs. Sproul at that time with Alzheimer’s disease, which she said was in the early to mild stage and which was clearly aggravated by the death of her husband and being in the hospital. Dr. Cohen again saw Mrs. Sproul on February 7, 2002 in her office as an outpatient. She tested her cognitive skills and found that they were better than when she had seen her earlier in the hospital. It was her opinion that Mrs. Sproul’s Alzheimer’s was still in the mild stage. She did not say that Mrs. Sproul could not understand or make decisions.
[21] I accept Dr. Cohen’s evidence. As I said during the argument, Mrs. Sproul was lucky to have had a doctor of her expertise involved in her care. But Dr. Cohen’s evidence does not establish that Mrs. Sproul was not capable of understanding what she was doing at the time she executed the Transfer Deed in November 2002.
[22] While Mr. McMahon had no specific recollection of the circumstances surrounding Mrs. Sproul’s signing of the transfer deed in November 2002, he did recall that he went to her condominium to have her execute both the survivorship application and the Transfer Deed. He said that if he had any doubt at all at the time of execution of the documents that Mrs. Sproul didn’t have a full understanding of what she was signing, he would not have let her sign. Mr. McMahon was very firm on that point. I accept his evidence that he had no such concerns about Mrs. Sproul.
[23] Ms. Heather Robinson worked for Mrs. Sproul four or five days a week as her full time care giver from the early part of 2003 until she passed away in 2012. She described her job as primarily to take care of Mrs. Sproul. She did not consider that Mrs. Sproul was either physically or mentally impaired in the initial years although as time went on, she said Mrs. Sproul became more forgetful. Mrs. Sproul read the newspaper every day and watched the news on TV as well as other shows and they had many conversations. They went out together for lunch or shopping for groceries. Mrs. Sproul selected her own groceries and paid for them using her Visa card. She would also occasionally sign cheques.
[24] The onus of proving incapacity is on the person who alleges it, in this case the Applicant: Calvert v. Calvert (1997), 1997 CanLII 12096 (ON SC), 32 O.R. (3d) 281 (OCJ Gen. Div.) at para. 59.
[25] In Calvert, which was a divorce case where one of the issues was whether the wife, who was suffering from the early stages of Alzheimer’s, had the capacity to divorce her husband. In considering the issue of capacity, Benotto J. (as she then was) stated at para. 57:
The courts are slow to take away a person's right to decide. This is reflected in the low threshold the courts have set for the determination of capacity. Persons have been held to have capacity who suffer from schizophrenia (Lovell v. Lovell, [1941] 58 T.W.N. 93); delusions (Kaczmarz v. Kaczmarz, [1967] 1 All E.R. 416); and other serious mental problems (Olenchuk, [1991] O.J. No. 1224). A person who suffers from a cognitive impairment is competent as long as the act in question takes place during a lucid interval: Banks v. Goodfellow (1870), L.R.5 Q.B. 549.
[26] In my view, the evidence establishes and I so find, that while Mrs. Sproul had early stage Alzheimer’s at the time she signed the Transfer Deed in November 2002, she had the capacity to make a gift of her interest in the Property to James. I am satisfied that she understood what she was signing when she executed the Transfer Deed and that she intended to give her 7/13 interest in the Property to James. In my view, the Applicant has failed to meet her onus.
[27] Further, I do not consider that the failure to register the Transfer Deed, for whatever reason, has the effect legally of voiding the transfer as against the Estate. The Transfer Deed was delivered to Mr. McMahon for registration. At that point, there was a valid gift. See: Carson et al v. Wilson et al., 1960 CanLII 104 (ON CA), [1961] O.R. 113 (Ont. C.A.). The fact that it was not registered may be relevant in respect of a claim by a third party without notice but not against the donor, Mrs Sproul (and hence her Estate).
[28] The Applicant further argues that the failure of James to register the Transfer Deed to avoid creditors amounts to improper conduct that should not be rewarded. In my view the evidence does not establish that the failure to register was to avoid creditors. Although the Transfer Deed was not registered initially due to an execution, it was never clarified whether that execution was filed against James or someone else by the name of Sproul. No reason was given for why James didn’t follow up to register the document.
[29] Accordingly, I find that at the time of Mrs. Sproul’s death, the Property belonged 100% to James. It did not form part of the Estate assets. As a result, the Estate is not entitled to an order for partition. The application is therefore dismissed.
[30] James is entitled to his costs of the application. His counsel did not file a costs outline at the conclusion of the hearing. The Applicant’s counsel submitted a bill of costs claiming $22,000 in partial indemnity costs. James submits that the amount claimed by the Applicant is not unreasonable.
[31] Having regard to the issues, the length of the hearing and the experience of counsel, I consider that a partial indemnity costs award of $17,500.00, inclusive of disbursements and taxes, is fair and reasonable. Payable out of the Estate.
L. A. Pattillo J.
Released: February 09, 2015
CITATION: Winarski v. Sproul, 2015 ONSC 812
COURT FILE NO.: 01-0096/13
DATE: 20150209
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MARILYN ANN SPROUL WARSKI, in her capacity as trustee of the ESTATE OF ANN G. SPROUL
Applicant
– and –
JAMES D. SPROUL
Respondent
REASONS FOR JUDGMENT
PATTILLO J.
Released: February 09, 2015