Court File and Parties

COURT FILE NO.: CV-13-475825 DATE: 20160427 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ELENA MODANESE Plaintiff – and – SANTE MODANESE, also known as SANTE MODANEESE and DONNA LESSARD also known as DONNA HIXSON also known as DONNA LESSARD HIXSON Defendants

Counsel: Adam Wainstock for the Plaintiff Leigh Harrison-Wilson for the Defendant Donna Hixson

HEARD: April 18, 2016

PERELL, J.

Reasons for Decision

[1] The Plaintiff, Elena Modanese, sues her son Sante Modanese and Sante’s common law spouse Donna Hixson. There are several causes of action, but the main factual allegation is that Sante defrauded his mother, took her money, and used it for Ms. Hixson and for himself. Ms. Hixson moves for summary judgment to have the claim against her dismissed. Her defence is a denial of wrongdoing and the assertion that Mrs. Modanese has not proven that she defrauded her or that she aided or colluded with Sante to defraud her.

[2] On this summary judgment motion, although there is no cross-motion, Mrs. Modanese submits, however, that there is evidence to prove Ms. Hixson’s complicity in Sante’s fraudulent activities and, therefore, she should be granted summary judgment for approximately $85,000 on account of the misappropriation of about: $50,000 in withdrawals from her Bank of Montreal (“BMO”) account; $30,000 in mortgage proceeds; and $5,000 in credit card debt.

[3] On this summary judgment motion, there is no dispute about the law that applies, and the outcome of this motion and the notional cross-motion depends entirely on the court’s jurisdiction to make findings of fact including findings of credibility. The critical issues of fact are whether Sante misappropriated his mother’s money and whether Ms. Hixson was enriched by aiding and abetting Sante or by being wilfully blind to his alleged misappropriations.

[4] On this summary judgment motion, in making findings of fact, including findings of credibility, it is important to keep in in mind that one of the principles of a summary judgment motion is that the court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial.

[5] The court is entitled to assume that the parties have respectively advanced their best case and that the record contains all the evidence that the parties will respectively present at trial: Dawson v. Rexcraft Storage & Warehouse Inc., [1998] O.J. No. 3240 (C.A.); Bluestone v. Enroute Restaurants Inc. (1994), 18 O.R (3d) 481 (C.A.); Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372 at para. 11. The onus is on the moving party to show that there is no genuine issue requiring a trial, but the responding party must present its best case or risk losing: Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 255 (Gen. Div.); Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 28 O.R. (3d) 423 (Gen. Div.), aff’d [1997] O.J. No. 3754 (C.A.).

[6] The evidence for the summary judgment motion was comprised of affidavits from Mrs. Modanese, her daughter Sinte Hunter neé Modanese, and Ms. Hixson. All were cross-examined on their affidavits. I have read the affidavits and all of the transcripts of the cross-examinations.

[7] Mrs. Modanese was born in Italy 1936, and she moved to Canada in 1962. She married Egidio Modanese, who was a carpenter, and they had three children, Mrs. Hunter, Daniela McQueen neé Modanese, and Sante.

[8] Mrs. Modanese resides and has resided at 18 Abell Street, in Woodbridge, Ontario, which she purchased on December 4, 1998 with Egidio. He lived there until his death in the fall of 2011. Mrs. Modanese is now almost 80 years old. She speaks Italian, but she is functionally illiterate in reading, writing, or speaking English. Ms. Hixson and Mrs. Modanese do not understand each other because Ms. Hixson speaks English, and Mrs. Modanese does not understand English. Unless Sante was there to translate, Mrs. Modanese has had no independent conversations with Ms. Hixson.

[9] It was Mrs. Hunter’s evidence that her mother, Mrs. Modanese, never was capable of managing her family’s finances by herself, and she variously relied on her, her late husband, and when he lived with her, Sante, to pay for her own and the family’s modest living expenses. Mrs. Modanese’s evidence on her cross-examination demonstrated that Mrs. Hunter’s assessment of her mother’s capabilities was correct.

[10] An inference that I draw from Mrs. Modanese’s evidence, which is confirmed by other evidence, is that Sante was and is a freeloader and is incapable of supporting himself and of making his own way in the world without a helping hand from his family. Mrs. Modanese’s and Mrs. Hunter’s evidence was that Sante constantly begged for money to the extent that he depleted his parents’ bank account at HSBC Bank.

[11] Mrs. Modanese’s evidence was that Sante continually borrowed money and that they raised the money to loan to him by mortgaging their home. Sante along with his ex-wife would guarantee the mortgages, but there is no evidence about the extent to which up until 2013, he made or did not make the mortgage payments for the loans made through the generosity of his parents. It seems that Sante did work from time to time, but the extent to which he personally contributed to the mortgage payments was not described.

[12] Between 2002 and 2012 and before the Home Trust Company mortgage, discussed below, that is part of Mrs. Modanese’s action against Sante and Ms. Hixson, there were nine mortgages registered against the Abell St. home and then replaced with new mortgages in which Sante was the guarantor and his parents were the mortgagees. On her cross-examination, Mrs. Modanese was questioned about these prior mortgages, and her evidence was as follows:

Q.82. Was your son working at the time? A. I don’t know. He was more home than at work. Q.83 Well, when he was working what was your son doing? A. I don’t know. Q.84 Did he – did your son come [to] you and say I – we – need help and you and your husband agreed to mortgage the house to help him? A. Yes. Q. Thank you. And you – you and your husband voluntarily helped him? A. Yes. It was my son.

[13] It would seem that, encouraged by Mrs. Hunter, Mrs. Modanese regards the most recent mortgage, the Home Trust Company mortgage, discussed below, which was guaranteed by Ms. Hixson, as a fraud on Mrs. Modanese. In encouraging her mother’s belief of being exploited by Sante, it is readily apparent, however, that Mrs. Hunter despises her brother and extends that animus to Ms. Hixson with whom she has spoken to only once or twice.

[14] While they have suspicions, neither Mrs. Hunter nor Mrs. Modanese have any direct evidence that Ms. Hixson misappropriated Mrs. Modanese’s moneys through the mortgage lending or otherwise.

[15] Mrs. Hunter, however, has more than suspicions that Sante may have taken advantage of his parents. Mrs. Hunter left the family home as a young adult, married, had children, and distanced her own family from Sante, whom she regarded and whom she regards as a substance-abuser incapable of holding a job. During her cross-examination, Mrs. Hunter testified about her relationship with Sante; she said:

Q.18 All right. Now I take it from what you’ve put in the affidavit as well [as] what’s in the police report that you did not have a good relationship with with Sante. A. No. Q. 19 --- is that right? What was your relationship with Sante like before your father’s death? A. The same. It’s been like that since a long time. Q.20 And what’s the reason for that? A. He’s an alcoholic and he’s a drug user, and I never wanted him around my kids. Q.21. When was the last time you would say that you had a decent relationship with Sante? A. Before ’92 when I got married. After I had kids, I – unless he changed, I did not want him around. Q.161 And I take it as a result of what’s gone on, your relationship with Sante continues to be poor. Is that fair? A. Yeah. I have nothing to do with him. Q.162 You feel that he’s taken advantage of your mother? A. He’s destroyed her.

[16] Mrs. Hunter was aware that her mother and father were lending money to Sante and that they had mortgaged the family’s home at 18 Abell Street to raise money for him. She gave the following evidence during her cross-examination:

Q.69 All right. Were you concerned at all that Sante had asked for help in [2002], that they had registered a mortgage. A. Oh, most definitely. I was totally against it. Q.70 What did you do? A. I pleaded with them, but my dad said he’s our son and we have to help him. Q.71 So when you told me before that you weren’t concerned about your mother’s finances until 2013, was that not accurate? A. No, because I figured he as the son was doing what he said he was going to do which was pay the mortgage that he took on their house. Q.72 Well, were you worried or were you not worried? A. No, I was not worried. Q.73 But you expressed concerns to them? A. In 2002. I never heard anything after that. They never once said anything after that that they signed anything else. I was always kept in the dark when it came to the house.

[17] Although the evidence indicates that his parents were supporting him willingly, Mrs. Hunter accuses Sante of supporting himself by pilfering money from their parents. Based only on some bank financial records, and because Ms. Hixson signed a guarantee, Mrs. Hunter infers that Ms. Hixson aided and abetted Sante in this alleged pilfering.

[18] Mrs. Hunter seems to have influenced Mrs. Modanese to share these beliefs about Sante and about Ms. Hixson. Encouraged by her daughter, Mrs. Modanese simply believes that it must be the case that Ms. Hixson aided and abetted her son in his alleged pilfering activities.

[19] Ms. Hixson, who is capable of supporting herself and has been a wage earner throughout, met Sante in September 2009. They began to live together at Sante’s house in Markham, Ontario. At the time, Ms. Hixson owned her own home at 361 Tampa Drive in Keswick, Ontario, which she had purchased in 2008.

[20] Ms. Hixson carried the mortgage payments on the Tampa Dr. property with rental income. I find as a fact that she never needed any moneys from Mrs. Modanese or from Sante to carry or to maintain the Tampa Dr. property. Although I shall find below that Sante did spend some money from his mother’s BMO account to make repairs and improvements at the 361 Tampa Dr. property, there was no wrongdoing by Ms. Hixson and no basis for a constructive trust on her property.

[21] Continuing my narrative of my findings of fact, in the summer of 2010, Sante sold his house in Markham, and in September 2010, he and Ms. Hixson moved in with his parents for what was supposed to be a temporary stay until Sante and Ms. Hixson found new accommodation.

[22] However, shortly after Sante and Ms. Hixson moved in with his parents, Egidio fell ill, and he died on November 15, 2010.

[23] Mrs. Modanese’s evidence is that with her husband having passed away, her son and Ms. Hixson did not vacate the family’s home at Abell Street and rather took over the place and relegated her to becoming a housekeeper and cook for them and their two cats and large dog. Mrs. Modanese deposed that she was afraid of her son and feared asking him to leave. In contrast to Mrs. Modanese’s evidence, Ms. Hixson said that Mrs. Modanese asked them to stay.

[24] Further, Ms. Hixson deposed that around the time of Egidio’s death, Mrs. Modanese was unable to keep up the mortgage payments on the Abell Street property and in order to help out, she began to make the monthly mortgage payment of $1,843.75. I find as a fact, however, that it was not Mrs. Modanese that was unable to keep up the mortgage payments of the Abell Street property, but rather that this responsibility, which rested with Sante, was taken over by Ms. Hixson after Egidio’s death because Sante was unable to keep up the payments. Ms. Hixson made the mortgage payments for December 2011, January 2012, and February 2012, totaling $5,531.25.

[25] I find as a fact that in March 2012, the mortgage on the Abell St. property came due and needed to be refinanced. In these circumstances, as he had done in the past, Sante asked his mother to re-mortgage the property. I find that, as she had in the past, probably with little understanding beyond knowing she was helping her son, she voluntarily agreed to refinance her home.

[26] I find as a fact that Ms. Hixson agreed to guarantee the mortgage - not to help Mrs. Modanese save her home - but rather to help out Sante, her common law spouse with whom she was living at his mother’s house.

[27] The outcome of the re-mortgaging was that the existing mortgage that had a principal of $295,000 was replaced by a $318,000 mortgage to Home Trust Company in which Ms. Hixson was the guarantor. Being a credit risk with outstanding debts and judgments, Sante was unacceptable as a guarantor, but the employed Ms. Hixson was acceptable to the lender.

[28] Sante, Ms. Hixson, and Mrs. Modanese attended at the law firm of Rose & Rose to complete the paperwork for the loan and the mortgage was registered on March 6, 2012. The next day the prior mortgage was discharged. There was no evidence that there were any surplus proceeds from the $318,000 loan after discharging the prior mortgage and paying the disbursements for the refinancing. Ms. Hixson testified that she was told that once the disbursements and the prior mortgage were paid, there was no money left to be disbursed. In any event, I find as a fact that Ms. Hixson in no way benefited from the $318,000 loan of which she was the guarantor.

[29] Beginning in May 2012, Ms. Hixson began to pay the monthly mortgage payments on the Home Trust Company mortgage in the amount of $2,300.73 per month. She also paid for the insurance on the Abell St. property, the amount of which was not disclosed to me. Ms. Hixson paid the mortgage from May 2012 until and including January 2013, which I calculate to be $20,706.57 in payments. Along with the payments made on the prior mortgage, Ms. Hixson paid $26,237.82 in mortgage payments with respect to the Abell St. property.

[30] While living with his now widowed mother, in December 2010, Sante took over paying for his mother’s household expenses. Before Sante moved in, Mrs. Hunter had assisted her mother and father in paying household expenses. Mrs. Hunter lost control of her mother’s bank account and of her mother’s bank card at the BMO. Sante arranged to have his mother change the bank card, and this prevented Mrs. Hunter from monitoring the BMO account.

[31] This state of affairs persisted from December 2010 to January 2013. In January 2013, there was an altercation at the Abell Street property between Mrs. Hunter, who wanted to speak to her mother, and Sante. The police were called. There are different versions of this incident including one in which Ms. Hixson says that she was punched in the face by Mrs. Hunter. I see no purpose in resolving the competing versions upon which nothing turns. The incident simply proves animosity between Mrs. Hunter, Sante, and Ms. Hixson, about which little proof was needed.

[32] What matters is later in the month of January 2013, Sante and Ms. Hixson finally moved out of the Abell Street Property to a rented apartment in Scarborough. Ms. Hixson stopped making mortgage payments.

[33] Around this time, Mrs. Hunter regained control of her mother’s BMO bank account. After Sante and Ms. Hixson moved out, Mrs. Hunter reviewed the bank statements. Based on Mrs. Hunter’s review, Mrs. Modanese alleges that the statements reveal unauthorized cash withdrawals and the misuse of the account by debit purchases made by Sante. Based on Mrs. Hunter’s review, Mrs. Modanese alleges that, in all, more than $52,000 in charges and withdrawals were made from the BMO account without her knowledge or permission.

[34] Many of the purchases were made at stores allegedly frequented by Ms. Hixson, including Wal-Mart, Wiedemann’s Car Sales, Lowe’s, The Home Depot, and Keswick Home Hardware. Mrs. Hunter and Mrs. Modanese ask the court to infer that Ms. Hixson was unjustly enriched because of the coincidence that some of the stores where purchases were made are located in proximity to 361 Tampa Drive, Keswick, Ontario.

[35] I rather find that while a few purchases may have benefited Ms. Hixson, there was no unjust enrichment because Ms. Hixson was making mortgage and insurance payments that vastly overtopped any benefit she gained from her association with the Modanese family. Ms. Hixson also showed that she used insurance funds to pay for the repairs to the property in Keswick.

[36] Further, while the payments being made by Sante may not have been specifically authorized by Mrs. Modanese, the fact remains that she had entrusted her son with the responsibility of managing the household expenses. Some of the payments he made for such matters as the cable and utilities for the Abell Street property were authorized and payments for groceries and household items and to repair and maintain or improve the property do not count as misappropriations. For example, Mrs. Modanese testified on her cross-examination as follows:

Q.170 Would you go grocery shopping with Sante and Donna? A. Yes. Q. 172 And you saw Sante use the card? A. Yes. Q. 173. Did you object to Sante using the card? A. No, I trusted and I was – I had faith in him. Q. 174. Did you ever see Donna use the card? A. With me, no.

[37] Undoubtedly some of the money was used by Sante for his exclusive personal benefit, but Sante has enjoyed the largesse of his late father and his mother for many years. In any event, there is no evidence that Ms. Hixson aided and abetted any breaches of trust, misappropriations or pilfering by Sante.

[38] On March 8, 2013, supported by Mrs. Hunter, Mrs. Modanese commenced an action against her son and Ms. Hixson. Mrs. Modenese alleges that her son coerced her into registering mortgages against the Abell St. property, fraudulently acquiring funds from her credit card and bank account, all with the assistance of the Ms. Hixson. She alleges that the Defendants were constructive trustees and in breach of fiduciary duties owed to her. She claims that Ms. Hixson aided or abetted Sante in stripping her of her only asset in order to maintain the equity in Ms. Hixson’s home at 361 Tampa. She claims damages for fraud, unjust enrichment, and breach of fiduciary duty. I find as a fact that these allegations have not been proven.

[39] On April 9, 2013, Mrs. Modanese obtained a Certificate of Pending Litigation, which was registered against the Tampa Dr. property.

[40] On July 26, 2013, an Order Vacating the Certificate of Pending Litigation was issued. As part of this Order, $31,125.77, which was derived from the sale of the Tampa Dr. property, was held in trust by Falconeri Munro Tucci LLP.

[41] On October 16, 2013, Sante and Ms. Hixson delivered a Statement of Defence.

[42] On December 22, 2014, Sante delivered a Notice of Intention to Act in Person.

[43] In August 2015, Ms. Hixson brought her summary judgment motion.

[44] On this summary judgment motion, I find as a fact that Ms. Hixson has obtained no benefit from the Home Trust Company mortgage. I find that Ms. Hixson did not have control of the BMO bank card and she could not have used the card to make cash withdrawals at ATM machines or at the bank or to make debit payments. I find as a fact that the BMO account was under the control of Sante. Even assuming that some part of the $55,000 alleged to have been misappropriated by Sante from the depleted BMO account was a breach of trust, there is little evidence that Ms. Hixson knowingly aided and abetted the wrongdoing or was wilfully blind to it, and I find that it has not been proven on a balance of probabilities that Ms. Hixson did anything wrong.

[45] These conclusions also apply with respect to the $5,000 credit card debt that Mrs. Modanese inherited from Sante after his departure in January 2013. Mrs. Modanese testified that she did not know that a credit card was part of the Home Trust Company loan and thus she did not know that Sante was using the card. When Mrs. Modanese learned about this card around the time of the commencement of this litigation, it had an outstanding indebtedness of approximately $5,000.

[46] For the above reasons, I dismiss the action against Ms. Hixson, with costs of the motion fixed at $15,000, all inclusive.

[47] It follows that the $31,125.77 held in trust with Falconeri Munro Tucci LLP should be returned to Ms. Hixson.

[48] If the parties cannot agree about the costs of the dismissed action, they may make submissions in writing beginning with Ms. Hixson’s submissions within 20 days of the release of these Reasons for Decision followed by Mrs. Modanese’s submissions within a further 20 days.

Perell, J. Released: April 27, 2016