CITATION: Arcon v. Arcon, 2016 ONSC 2861
COURT FILE NO.: CV-13-0160
DATE: 2016-04-28
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF VINCENZO DEMASI, deceased:
B E T W E E N:
DEBBIE ARCON and LIDIA DEMASI
Morris J. Holervich, for the Applicants
Applicants
- and -
GORDANA GINA ARCON, aka GORDANA GINA ARCON-DEMASI
Walter C. Wieckowski, for the Respondent
Respondent
HEARD: February 19, 22, 23, 24, and February 25, 2016, at Thunder Bay, Ontario
Mr. Justice W.D. Newton
Reasons For Judgment
Overview
[1] Vincenzo (Vince) Demasi died on December 12, 2011, aged 63, without a will. He was survived by his common-law spouse of approximately 40 years, Gina Arcon, and three children, Debbie Arcon, Lidia Demasi and Pino Demasi.
[2] In 2013, an application was commenced by Debbie and Lidia claiming their share of the estate as beneficiaries. Gina defended the application on the basis that the children had signed over their rights to the estate to her.
[3] By order dated October 16, 2014, Wright J. directed a trial to determine the following issues:
a) are the children the beneficiaries of the estate?
b) does Lidia have a claim to one half of the RRSP?
c) is the mother entitled to some or all the estate assets either as a result of inter vivos gift from the children or by virtue of a constructive trust?
d) does the mother have a claim for support against the estate under the Succession Law Reform Act?
[4] As I said to the parties at the conclusion of the evidence and argument, these are sad circumstances with the sudden death of a father and common-law spouse. Sadder still is that less than a year after Vince’s death there was dissension in the family over the estate. Saddest of all is that, over several days, ten family members testified before me. Much of that testimony emphasized how acrimonious the family relationships have become.
The Family
[5] In order to place the evidence that follows in context, it is helpful to introduce the family members. Gina is 66. She was born in Yugoslavia. She met Vince in 1969. Gina already had an infant daughter, Borca Gaithier, from a prior relationship. Gina and Vince began to cohabit in 1970 or 1971. Vince was a carpenter and a contractor. Gina raised the children: Borca, Debbie, who was born in 1973, Lidia, who was born in 1982, and Pino, who was born in 1984.
[6] Vincent and Gina built a home on Maxwell Street and started living there in late 1991. They resided there together when Vince died. The home was in Vince’s name alone.
[7] After the children were older, Gina worked as a manager of a Robin’s donut shop. For a number of years prior to Vincent’s death Gina was in receipt of CPP disability benefits. She also delivered newspapers for a number of years.
[8] Her relationship with Lidia and Debbie has soured. At one point during the trial, Gina said that she loved her children but just did not like them.
[9] Debbie has lived in Edmonton for the last 15 years. Her eldest son, Taylor, lives, at present, with Gina. Debbie has two younger children with her common-law spouse. She runs a home based business.
[10] Lidia lives in Thunder Bay in a common-law relationship and has infant twins. At the time of her father’s death she was working as a retail manager.
[11] Pino lives with Gina. Since April 2015, Pino’s new wife also lives with them. They have a young child. He has worked as a contractor but is not working at present because of chronic illness. Since Vincent’s death, Gina has loaned Pino about $52,000 to pay for his wedding, to purchase a car and to start up his contracting business. Gina has also given Pino all of Vince’s tools.
[12] Borca lives in Fort Frances with her family. She described her half-sisters as “malicious and greedy”.
[13] Vincent and Gina maintained separate bank accounts. Vince’s business, Mid West Construction, operated out of their Maxwell Street home. Gina did not have signing authority for the business account. Debbie and Lidia said that Vince kept his money separate because Gina had a drinking problem and cannot be trusted with money. On her own, Gina bought a camp and the daughters testified that Vince never set foot on that property.
The Dining Room Discussions
[14] After Vincent’s death, the family gathered at Gina’s home. Debbie came from Edmonton and took charge, leading the family during funeral arrangements, assisting her mother with the necessary documents such as the application for CPP survivor benefits and arranging for her mother to see a lawyer. Debbie also provided financial assistance for funeral costs because her mother did not have access to Vince’s accounts.
[15] The position of the respondents is that there was a family meeting at the dining room table in which everyone agreed that Gina was getting everything. Both Debbie and Lidia deny that there was a meeting with Gina and the children discussing what to do with Vince’s property. Both say that there was a meeting to compose the obituary notice. Lidia said that estate matters were never discussed in front of Borca. Gina testified that “the kids said they are going to take care of me”. She said that Pino, Debbie and Lidia said that they are going to give her everything because they had to support her. Pino also testified that there was a discussion about the estate with his sisters and that everyone agreed that everything should go to their mother. Borca testified that she was also present and that “all agreed that everything be left in her mother’s hands and that her mother could then decide what she wanted to do”. Borca’s son, Armando, was not directly involved in any discussions but overheard that everything was going to his grandmother. It was, he said, a “no-brainer”. Gina’s brother, Bruno, was called as a witness by the respondents. He did not recall any discussion about Vince’s estate. Taylor, Debbie’s son, also said there was some discussion about signing everything over to “Bubba”.
Meeting with lawyer Peter Young
[16] Mr. Young testified and his entire file was made an exhibit. It was clear from his testimony that he regarded Gina as his client. It was also clear that he did not provide any legal advice to any of the parties about their legal rights on the intestacy or what the rights of various beneficiaries would be.
[17] The first entry in his notes indicates a telephone call from Debbie on December 17 to make an appointment. Gina and Debbie met with Mr. Young on December 27. His notes include reference to the fact that Borca left home at 18 and did not have any relationship with Vince. It is also noted that Vince’s estate included RRSPs with Lidia and Pino as designated beneficiaries.
[18] He testified that, at the initial meeting with Gina and Debbie, one of them expressed concerns that the “government would take everything” because Vince did not have a will.
[19] He testified that the “object was to put the mother legally in charge of everything.”
[20] He prepared an application for certificate of appointment of estate trustee without a will on behalf of Gina. The application listed Debbie, Lidia, Pino and Gina as persons entitled to share in the estate. Mr. Young testified that he listed Gina as entitled to share not because she was entitled as a beneficiary, but because she had a claim for support under Part V of the Succession Law Reform Act, RSO 1990, c. S. 26. He listed the value of the estate at $426,000, comprised of real estate in the amount of $300,000 (the Maxwell Street house) and personal property of $126,000. It is not clear how the value for the personal property was calculated. A bank statement from Canada Trust dated December 28, 2011, indicated total cash assets at $132,977.83, comprised of a bank account of approximately $73,000 and RRSPs of approximately $60,000. Vince also had a bank account for his business and other property including vehicles and tools of his trade.
[21] All three children consented in writing to the application on January 5, 2012. At the same time, all three children signed directions instructing solicitor Young to transfer title to Maxwell Street from Gina as estate trustee to Gina and all three signed acknowledgements that they were consenting to this transaction. Solicitor Young was adamant that everyone was in agreement that the house was being transferred to Gina.
[22] The same day, Gina signed a new will.
[23] Young’s reporting letter to Gina dated March 13, 2012, includes the paragraph: “You should provide to each beneficiary an accounting of the assets of the estate and the proposed distribution and obtain releases from each beneficiary.”
[24] In April 2012, solicitor Young was still trying to determine what to do with the RRSPs. His notes on April 23 include the reference: “beneficiaries are children – how to get without paying tax.” The following day he received an email from Jennifer Buchik at Scotia McLeod which reads (somewhat unclearly): “The beneficiary can request the funds be paid to the [sic] then pay the spouse and the spouse can then contribute the funds to her own registered account and file with the taxes a T 1090 or T 2019 to have the contribution deemed as exempt, thereby creating a tax free rollover.”
[25] The timeline is confusing because there is a letter of direction dated February 15, 2012, signed by both Lidia and Pino which acknowledges that each of them are designated beneficiaries for the RRSP accounts but they are “ renouncing” their rights under the plan. Ms. Lisa Klassen, the bank manager, testified. She did not seem to be clear on the tax consequence to the estate with respect to the RRSPs. She did not have any evidence to offer on Lidia’s and Pino’s intentions.
The Falling Out
[26] In August 2012, Lidia needed money for a new furnace. She called Gina and asked for $5000 from her (Lidia’s) RRSP money. Lidia testified that Gina said that she would call Lisa Klassen. When Lidia called Gina again, Lidia said that she was rudely refused and that Gina told her the money was hers. Lidia then turned to Pino to reason with their mother. The printout of the text messages between Lidia and Pino was filed as an exhibit. Lidia texted Pino (the text has been slightly edited):
So FYI mom screwed us out of the RRSP.
I need a furnace and something fixed in my house. She said she would call Lisa. Now she tells me to go ****myself it’s hers.
[27] Pino responded as follows:
I’ll talk to her, I told her to keep my half. She says things out of anger Lidia. Be gentle when you talk to her. [Emphasis added.]
[28] Gina denies that she said this. She said that she told Lidia that she would speak to a friend of Vince’s about the cost of a furnace and that Lidia was then angry when she did not agree to give her money. Pino testified that Lidia came to the house to speak to their mother about needing money for a furnace and a lawyer and that Lidia was very angry and that he asked her to leave. Pino was not cross-examined on the text messages.
[29] Subsequently, Lidia wrote to solicitor Young on October 3, 2012, demanding copies of the documents that she signed and also stated: “I would also like to know if I have given up my rights to my father Vincenzo Demasi estate.”
[30] That prompted Mr. Young to send copies of the documents to Debbie, Lidia and Pino and his covering letter stated: “As you know this documentation was prepared on instructions received from Gina Arcon-Demasi and we did not represent you or provide legal advice to you in any way concerning this.”
Positions of the Parties
[31] At the outset, counsel for the daughters indicated that there was no issue that Gina is entitled to support from the estate. However, the applicants argued that, technically, residual beneficiaries, such as the three children here, cannot make a gift until the residue has been ascertained. (See for example Bickle v. Minister of National Revenue, 1966 CanLII 57 (SCC), [1966] S.C.R. 479)
[32] Alternatively, the daughters argue that the evidence does not establish a gift with respect to the estate assets including the interest in the RRSPs.
[33] Gina argues that all three children intended to gift Vince’s estate to her and that, in any event, she has a claim for support from the estate.
Analysis and Disposition
[34] One of the cases relied upon by the applicants was Punisic v. LaValley, [2005] O.J. 2350. After reciting the basic proposition that the donee must prove that a gift was intended, Zelinski J. cited the following authorities:
67 In Campbell v. MacKenzie, Judge Ayotte observed:
.. it is apparent from the decided cases that courts must look at all of the circumstances surrounding an alleged gift to decipher the real intent of the donor. The words spoken at or near the time of the transfer are not by themselves necessarily determinative. Apparent gifts are given by real people in real situations and usually without any thought of later legal consequences. The law would be sterile indeed if courts did not recognize the fact and apply it accordingly. Exchanges of property between those involved in a domestic relationship like this one may have many objects and the donor is unlikely to set out with much precision what they are, ... relying on the common sense of his or her partner to understand what is really intended…
70 In Robertson (Attorney for) v. Hayton Lofchik J. addressed the threshold which persons claiming gift must achieve to be successful as follows:
The standard of proof for intention to donate is high. The donee must show that that transaction was a gift by proving a clear and unmistakable intention on the part of the donor to make a gift to the donee. In weighing the conflicting evidence it is not sufficient that the preponderance of evidence may turn the scale slightly in favour of the gift. The preponderance must be such as to leave no reasonable room for doubt as to the donor's intention. It should be inconsistent with any other intention or purpose. If it falls short of going that far then the intention of gift fails. (Citations omitted).
[Emphasis added]
The Dining Room Discussions
[35] I am not satisfied on the evidence that anything said during the dining room discussions was sufficient to establish a clear and unequivocal intention that there was to be a gift to Gina of all the estate assets. I am satisfied on the evidence that the common objective of the children was to look after their mother. In coming to that conclusion, I adopt the statement of Ayotte J. quoted above that we are dealing with “real people in real situations”.
[36] On these facts, there are three categories of potential gifts: the Maxwell Street home, Vince’s bank accounts and other personal property and the RRSPs. Each type of property needs to be considered separately.
(i) Maxwell Street
[37] All three children signed directions instructing solicitor Young to transfer title to Maxwell Street from Gina as estate trustee to Gina. I am satisfied on the evidence that the three children knew that they were transferring title to the family home to Gina. Otherwise, I would have expected them to question why the property would not remain in Gina’s name as estate trustee. I am satisfied that these documents prove a “clear and unmistakable intention” to make this a gift. I am satisfied that they did this in furtherance of their common objective to look after their mother and in recognition that, at a minimum, their mother was entitled to some form of support from the estate.
(ii) Vince’s bank accounts and other personal property
[38] At the time of his death, Vince had two bank accounts. At TD Canada Trust he had an account (number ending 907) with a balance of $72,580.79 as at December 28, 2011. The statement of money and investments filed with the trial record as ordered by Wright J. shows that that account was closed out to Gina on April 27, 2012, with a payment of $57,683.09. Mid West Construction had an account (number ending 984) with a balance of $35,004.52. Therefore, shortly after Vince’s death, cash deposits totaled approximately $130,000. Certain expenses were paid, although on the statement of money and investments found in the trial record there seems to be overpayment of funeral expenses based on the documents as prepared by the estate trustee, Gina. Total funeral expenses claimed to be paid from both accounts is approximately $44,000. Based on receipts filed at trial, the actual funeral expenses were $29,701.72.
[39] The evidence also disclosed that there were other estate expenses including legal fees at $2667.69, a probate fee at $5890 and income tax of $17,090.82. The total estate expenses in evidence total $55,350.21. After deducting the payment to Gina on April 27, 2012, there appears to be approximately $18,000 unaccounted for. Some of that discrepancy is likely due to the funeral expenses which appear to have been counted twice. The cash for distribution to beneficiaries was, therefore, between $57,000 and $75,000.
[40] Vince also owned four vehicles and Gina has listed the value of those vehicles at $20,000 on her financial statement filed as part of the trial record. Vince also had construction tools. No value was placed on those tools and Gina said that she gave those tools to Pino who intended to carry on in his father’s trade.
[41] I accept the statement of Lofchik J., also quoted above, that “the standard of proof for intention to donate is high.” Unlike the circumstances surrounding the transfer of Maxwell Street, there is nothing to point to which proves a “clear and unmistakable intention with respect to the bank accounts and personal property” to make a gift. In fact, what clear evidence there is points to the opposite conclusion.
[42] Solicitor Young’s reporting letter to Gina dated March 13, 2012, includes the instruction:
“You should provide to each beneficiary an accounting of the assets of the estate and the proposed distribution and obtain releases from each beneficiary.”
[43] I conclude that the respondent has not proven that a gift was intended of this personal property. Therefore, this personal property forms part of Vince’s estate. Each of the three children is to share equally, subject to my determination of the estate’s support obligation, if any.
(iii) The RRSPs
[44] I reach the same conclusion with respect to the RRSPs. Although Lidia and Pino signed acknowledgments that they were renouncing their rights as designated beneficiaries to the RRSPs, I conclude that the respondent has not proven that a gift was intended. In reaching that conclusion, I favour the evidence of Lidia concerning the “falling out” and find that Pino’s statement – “I’ll talk to her, I told her to keep my half” – confirms Lidia’s understanding that this was not a gift but was done to minimize tax consequences. The fact that Pino has subsequently made a gift of his interest in the RRSPs does not change the fact that Lidia has a beneficial interest.
[45] From the listing found at page 32 and 33 of the trial record it appears that the RRSP accounts totaled, as at December 28, 2011, $60,305.45. However, Exhibit 23 shows the RRSP balance as at December 30, 2011, at $60,196.31. Whatever the balance, Lidia is entitled to one half.
Support
[46] It is conceded by the daughters that their mother has a right to claim support from the estate. No issue is raised with respect to the six-month limitation period. Section 58 (1) of the Succession Law Reform Act, R.S.O. c. S. 26, provides that a court may order such provision for support as it considers adequate out of the estate for the proper support of the dependant. Under the Act, Vince’s RRSPs, even though beneficiaries were designated, would form part of the estate for the purposes of support.
[47] The factors for determination of the amount of support are set out in s. 62 (1) and include the dependant’s assets and means, now and in the future, the capacity of the dependant to contribute to his or her own support, the dependant’s age and health and the dependant’s needs. In determining the dependant’s needs the court shall have regard to the dependant’s accustomed standard of living. Section 63 provides that the court may impose such conditions and restrictions as appropriate and may make periodic or lump-sum payments.
[48] Gina provided a financial statement sworn February 3, 2016. Her assets consist primarily of Maxwell Street with a value of $270,000. The bank balances are stated to be approximately $1200. The RRSPs have been depleted to about $10,000. She lists debts due from Pino of $52,000.
[49] Gina testified that her camp was sold in August, 2014 for $75,000. There was not any satisfactory explanation of where the sale proceeds went. Sometime in the early 2000s, Gina received a personal injury settlement of $135,000. She testified that she gave that money to Vince but does not know what he did with it.
[50] Gina’s monthly income includes CPP and OAS at approximately $1100, and $500 for delivery of papers. Her monthly expenses relating to maintaining Maxwell Street alone are approximately $1200. That is before transportation, health and personal expenses of over $700, excluding cable. And this does not include groceries. Pino, his wife and the infant child and Debbie’s son, Taylor, all live with Gina with little contribution from any of them to assist her with the expenses. Even with support from the estate it is clear that, if the financial information provided is accurate, Gina cannot continue to reside at Maxwell Street for long. Her decision to loan $52,000 to Pino has significantly depleted the available assets. Even then, there is not a satisfactory explanation as to what has happened to all the estate assets. Based on my findings, cash from Vince’s bank accounts would have totaled between $57,000 and $75,000 at the time of his death. Gina took the RRSP money of $60,000. She sold her camp for $75,000 less than two years ago. Even accounting for the loans to Pino and the shortfall in her monthly income versus expenses, it appears that significant funds are not accounted for. I conclude that I cannot accept all of the financial information put forward by Gina in her claim for support.
[51] Nevertheless, I conclude that Gina is entitled to some support from the estate in addition to the gift of Maxwell Street. In reaching this conclusion I rely upon the direction contained in s. 62(1) of the Act that “the court shall consider all the circumstances of the application, including, the dependant’s needs… hav[ing] regard to the dependant’s accustomed standard of living”. I have also considered the apparent dissipation of assets by Gina and Gina’s age and ability to contribute to her own support in addition to the other factors listed in s. 62(1). I conclude that Gina is entitled to support equal to a lump sum payment of 50% of Vince’s personal property comprised of his cash assets, vehicles, and tools. The three children shall share the residue equally. However, I would expect that any share owing to Pino would be offset totally by the debts due to his mother. For clarity, I confirm that the RRSPs are excluded from this calculation.
Conclusion
[52] I answer the questions directed by Wright J. as follows:
a) Are the children the beneficiaries of the estate?
It is not disputed that the children are the beneficiaries of the estate on an intestacy since Gina and Vince were not married.
b) Does Lidia have a claim to one half of the RRSP?
For the reasons given at paragraphs 43 and 44, I conclude that Lidia does have a claim to one half of the RRSP.
c) Is the mother entitled to some or all the estate assets either as a result of inter vivos gift from the children or by virtue of a constructive trust?
For the reasons given at paragraph 36, I conclude that Gina is entitled to the Maxwell Street property as an inter vivos gift from the children.
d) Does the mother have a claim for support against the estate under the Succession Law Reform Act?
For the reasons given at paragraphs 45 to 50, I conclude that the mother does have a claim for support against the estate under the Succession Law Reform Act. I fix the support payable to 50% of Vincent’s personal property, excluding RRSPs, as described in para 50.
[53] I will remain seized of this matter to deal with any issues arising from my decision including any accounting required to determine the value of the residue of the estate, excluding the Maxwell Street property and the RRSPs. The parties may seek an appointment with me through the trial coordinator to, first of all, determine the outstanding issues and set the process for determination of those outstanding issues.
[54] Once all outstanding issues have been resolved, then the parties can make an appointment through the trial coordinator to deal with costs of this trial and the previous motions. Prior to making oral submissions, which will be limited to 30 minutes per party, each party is to file costs submissions not to exceed five pages plus cost outline.
“Original signed by”____
The Hon. Mr. Justice W.D. Newton
Released: April 28, 2016
CITATION: Arcon v. Arcon, 2016 ONSC 2861
COURT FILE NO.: CV-13-0160
DATE: 2016-04-28
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DEBBIE ARCON and LIDIA DEMASI
Applicants
- and -
GORDANA GINA ARCON, aka GORDANA GINA ARCON-DEMASI
Respondent
REASONS FOR JUDGMENT
Newton J.
Released: April 28, 2016
/cs