Court File and Parties
COURT FILE NO.: CV-11-106458-00 DATE: 20160525 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: GIUSTINA MORREALE Plaintiff – and – ELISABETH ROMANINO Defendant
COUNSEL: Maurice Pilon, for the Plaintiff Nick Porco, for the Defendant
HEARD: May 17, 18, and 19, 2016
Reasons for Decision
Introductions
1The plaintiff (Ms. Morreale) and defendant (Ms. Romanino) are sisters. Following the death of their parents in 2009, a rift occurred between them. Ms. Morreale learned that her parents had gifted the bulk of their assets to her sister prior to their death and without her knowledge.
2Ms. Morreale’s concern about her sister’s alleged undue influence on her parents in making the inter vivos gift has resulted in this litigation. It is hoped that once this judgment is released, the sisters and their families may see fit to repair the damaged relationship for the sake of their parents’ memory.
Background Facts
3Many of the background facts to this case are not contested. Ms. Morreale is the older of the two sisters. She is 64 years old and was married to her husband Salvatore for 43 years. He passed away approximately 15 months ago. Ms. Morreale has two children Elio and Maria. Her son Elio has three children. Ms. Morreale has worked for 28 years with Sceptre Canada Incorporated in customer service.
4Ms. Morreale and Ms. Romanino are the only two children of Nicola Ruccia and Lavina Ruccia. Mr. Ruccia died on March 5, 2009 followed by his wife Lavinia who died on October 19, 2009.
5Ms. Morreale left her parents’ home at the age of 20 in order to get married. Her evidence was that she lived in an apartment when she first left home. After she was married for approximately three years her parents and Ms. Romanino moved in with her and her husband and they all lived together for approximately five years.
6In 1978, Mr. and Mrs. Ruccia purchased a home at 40 Blue Eagle Terrace approximately five minutes away from Ms. Morreale’s home. The Ruccia’s and Ms. Romanino lived there until they purchased 1 Beck Drive in Markham for $350,000. The home on Beck was purchased on March 2, 1990. Title was taken as joint tenants with Mr. and Mrs. Ruccia obtaining a 2/3 interest and Ms. Romanino a 1/3 interest.
7Ms. Romanino was married on April 12, 2003 and continued to live with her parents’ with her new husband Rosario Romanino.
8Mr. and Mrs. Ruccia decided to sell their home on Beck in 2005. In order to purchase a new home they placed a new first mortgage on the Beck property in the amount of $231,000. $111,617.49 was paid to the bank of Nova Scotia to discharge the existing mortgage. A new home was purchased for $485,000 at 22 Russell Stover Court in Markham with a closing dated of December 9, 2005. On closing, the mortgage on Beck was discharged and a first mortgage of $363,750 was secured against Russell Stover.
9Title to Russell Stover was taken in the names of Rosario and Elisabeth Romanino as joint tenants. Sale proceeds from Beck totalling $133,909 and owed to the Ruccias were directed to the Romaninos. The Romaninos used those funds to reduce their mortgage on Russell Stover. The Ruccias guaranteed the mortgage on 22 Russell Stover at the request of the bank.
10Following the death of Nicola Ruccia, his wife received life insurance proceeds totaling $35,000 being $30,000 from his Sun Life Insurance policy and $5,000 from his school board policy. Mr. Ruccia had worked as a caretaker for a school board prior to his retirement.
11The amount of damages claimed by Ms. Morreale represents half of the Ruccia’s share of funds used to buy Russell Stover. That is, there was approximately $240,000 used from the mortgage and sale of Beck to buy Russell Stover. As 2/3 owners of Beck, Mr. and Mrs. Ruccia were entitled to approximately $162,000 of the total. According to Ms. Morreale she should have received half of that in accordance with the terms of her mother’s will.
12The contents or execution of Ms. Ruccia’s will are not in dispute. The will was executed on March 27, 1995. It appoints Ms. Romanino as executrix of the estate in the event that Ms. Ruccia was predeceased by her husband. The will leaves Ms. Ruccia’s entire estate to her husband. In the event that he predeceased her (which he did), Ms. Romanino was to receive occupancy of Beck and a 2/3 undivided interest of that property. Ms. Morreale was to receive a 1/3 undivided interest in Beck.
13Ms. Romanino denies any actual or presumed undue influence on her parents. Her position is that the gift in her mother’s will with respect to Beck has lapsed. She and her husband received title to the Russell Stover property at the request of her parents who were both of sound mind at the time such arrangements were made.
14Ms. Morreale claims that she is entitled to the damages as set out above and all she has received from the estate thus far is her share of her parents’ jewellery and clothing and cash from her mother’s safety deposit box totalling $4,500. Her position is that since her sister lived with her parents, she is presumed to have influenced them. It is not logical according to Ms. Morreale that given the intentions her parents expressed in their mirror wills that they would have gifted the bulk of their assets to her sister had she not exercised influence over them.
Summary of the Evidence
The Evidence of the Plaintiff
15Before this litigation and while her parents were alive, Ms. Morreale had a good relationship with both her parents and her sister. She spoke to her parents by phone daily and she visited her parents or they visited her frequently.
16In 1975, her parents and sister moved in with her and her husband. In 1978 her parents purchased a house at Blue Eagle Terrace. In 1990 her parents purchased the home at 1 Beck Drive in Markham. In February 2006 her parents and sister moved to 22 Russell Stover. Ms. Morreale testified that her mother did not want to move to the Russell Stover home but the decision had been made by her father. Mrs. Ruccia liked the Beck home because it was on a corner lot and she liked to sit on the large porch. She would call her daughter and cry on the phone about having to move. Ms. Morreale tried to comfort her.
17Ms. Morreale was unaware of the financial or title arrangements for any of the abovementioned purchases. Her father did not discuss financial arrangements with her except on one occasion which will be detailed below. Ms. Morreale agreed that if there were conversations of a financial nature between her parents and her sister, she may not have known of them nor would she have been included in the reasons or rationale behind any financial decisions made by her parents. However, when there was something important to share, her father would inform her. An example of this was him telling her he had made a will in 1995 in which he named her sister as the executrix.
18Ms. Morreale described her parents as frugal people. They did not spend money on luxury vacations or cars. They lived simply and loved to spend time in their flower garden. While her father could read and understand some English, her mother always spoke to her and her children in Italian. She could not read or write English.
19Ms. Morreale agreed that her father was a strong-willed and stubborn man. It was hard to change his mind once he had made a decision. She agreed that her father kept close check on his financial matters. Although she had never seen him do it, she was certain he regularly reviewed his bank statements. She knew he requested a receipt from her sister when she went to the bank on his behalf. Her mother deferred to him on all financial matters. She agreed that her father would not have hesitated to speak up if something concerned him. She agreed he remained this way until he was diagnosed with cancer and became ill in 2008.
20Ms. Morreale described an incident which led to the severance of the relationship between her father and her husband. After her sister was married in 2003, her father was critical of what he considered to be insufficiently generous gifts of money given at the wedding in accordance with Italian tradition. Mr. Morreale said that he and his wife were also subject to the same lack of generosity at their wedding. An argument ensued and Mr. Ruccia walked out in a rage. He never saw or spoke to his son-in-law again until he requested to see his entire family at his bedside on the evening of his death.
21The rift between her father and husband meant that Ms. Morreale saw her parents somewhat less frequently although her evidence was that this rift did not affect her relationship with her parents or sister.
22Another intervening event prevented Ms. Morreale from spending time with her parents especially when they became more feeble. Her granddaughter Julia had major surgery when she was seven months old and was then diagnosed with cancer. Ms. Morreale spent time at the hospital and subsequently with her son’s family once this diagnosis was known.
23After her parents and sister moved to the Russell Stover home, Mr. Ruccia asked Ms. Morreale to come to his house for a meeting. She arrived and her parents and sister were present. At that meeting, her father told her that because of the rift with her husband, he was not going to leave her share of his estate as set out in his will because he wanted to ensure that her husband got nothing. Instead, he would open an account for Ms. Morreale and put her share from his estate there. Ms. Morreale responded that she wanted nothing from her father but anything she did receive would be divided equally between her children. Ms. Morreale was clear that her impression from this discussion was that she would receive her fair share of her father’s estate but that it would be received in such a way that her husband would not have an interest in it.
24Ms. Morreale was cross-examined about this meeting with her father. At her discovery in October 2012, she said;
…my father sat me down one day and he told me that my sister was going to get a little bit more than myself, and because of the help that she supported him. And because he wasn’t talking to my husband, he didn’t want to give the money directly to me, whatever was my portion, and I agreed with him. I said, ʽI didn’t get this money, but whatever was coming to me that it was going to be split between my two kidsʼ, and we agreed, and my sister was there that day too.
25Ms. Morreale agreed that her father was clear that her sister would be receiving more than her on his death because of the care she had provided to her parents. While she agreed that the intention was for her own share to go to her children, she agreed that her children were not parties to this law suit. Ms. Morreale also agreed that although she was claiming undue influence on the part of her sister, she was unable to point to any specific act of undue influence.
26After her mother’s death in October 2009, Ms. Morreale and her sister arranged the funeral. Shortly after the funeral, her sister informed her by phone that she was no longer part of the family. Ms. Morreale knew her sister was angry with her because she felt that she had not devoted enough time to assisting with the care of her parents when they were ill. Ms. Morreale testified that she was torn between her obligations to her granddaughter and those to her parents. She felt her sister did not sufficiently understand this dilemma.
27Ms. Morreale did not ask her sister about her parents’ estate. She trusted her. She and her sister divided her parents’ clothing and jewellery without incident. Later, she went to the bank with her sister to divide the contents of her mother’s safety deposit. Ms. Morreale recalled that when her mother was still alive she had gone to the bank with her and met her sister and brother-in-law there. She saw her mother take three envelopes out of her purse and put them into her safety deposit box. However, after her mother’s death when she returned to the bank with her sister there was only one envelope left in the safety deposit box. She asked her sister about the other envelopes and was advised there was only one. She accepted that answer. She and her sister divided the cash in the envelope equally. Ms. Morreale received $4,500 cash. She divided this money equally between her two children. After this encounter, the sisters never spoke again because Ms. Morreale discovered that the $4,500 she received was the extent of her share given the gift of equity to her sister from the Beck sale.
28In the course of this lawsuit Ms. Morreale discovered that upon her father’s death her mother received about $35,000 in life insurance proceeds. Ms. Morreale testified that her father was always in control of financial matters as between he and her mother. He made all the financial decisions and did not discuss financial matters with his children. He was not one to give gifts of money however she recalled that on one occasion he gave her daughter $1,000 for taking time off work and looking after him at home for a month.
29It was not until this lawsuit that Ms. Morreale was able to view her parents’ bank accounts and the account that her sister had with her mother after her father’s passing. Ms. Morreale was shown Exhibit 5 which was a summary of her parents’ bank account for the period of January 2004 to February 2006. She was not aware that during that 26 month period (as an example) her parents made all mortgage, tax, and insurance payments for the Beck property. This surprised her as she assumed her sister was making a more significant contribution to expenses.
30Ms. Morreale agreed that at the time of the transactions set out in Exhibit 5 her father was still in control of his finances. She conceded that she could not know if any of the transactions in that exhibit were improper because she was unaware of what arrangements were in place as between her father and sister.
31Ms. Morreale was also shown Exhibit 6 which was a summary of cash withdrawals from her parents’ account for the period of February 2006 to November 2009. She was very surprised by the number of cash withdrawals, stating that her parents would never have withdrawn such large amounts of cash.
The Evidence of the Defendant
32Ms. Romanino was 59 years old at the time of trial. She testified that she had lived with her parents her entire life. She did not go out to parties or on many vacations when she was young. She lived at home with her parents and did not even marry until she was 43. Even then, her husband Rosario moved into the family home with her and her parents. Ms. Romanino testified that her parents were her life. They relied on her and as they aged, she became responsible for their medications and all of their needs.
33Ms. Romanino described her parents as having a loving relationship. They were married for over 60 years. Her father was very clearly the head of their family unit. Although she and her mother would be free to make suggestions, the ultimate decision about all family matters rested with her father.
34Ms. Romanino’s description of the history of the various house purchases was different from that of her sister. She told the court that her father decided that buying the home on Blue Eagle Trail in 1978 was necessary. They were not getting along with her sister while living with her. It was time for them to be on their own. While living with her sister, her parents paid her $200 per month rent. Her mother did all the cooking and cleaning and babysat her sister’s children so she could work.
35Ms. Romanino testified that she put down a deposit of $7,000 on the Blue Eagle home. The money came from savings she had accumulated. Her father, however, made the decision that her name would not go on title. Once moved to Blue Eagle, Ms. Romanino described the financial arrangement as one of “pooling” funds. Generally her father paid for the mortgage, taxes and insurance and she paid for all other expenses. Groceries were generally shared.
36When the Beck home was purchased, Ms. Romanino put down a deposit of $25,000. Her father paid the mortgage and taxes. Her evidence was that she paid the insurance, out of pocket expenses, and she funded two trips to Italy with her parents. She also bought an off lease car for her father for $3,600 and made contributions of approximately $18,000 towards her parents crypts. She produced a copy of a cheque dated October 27, 1999 for $4,388.40 which she said was a deposit on the crypts. She produced no other cheques for the crypts because she testified she was not asked to do so.
37Her father was very aware of his financial situation. When his bank statement arrived in the mail, he would comb through it and ensure all was in order. He never questioned his daughter about any withdrawals. He knew exactly what was coming in and going out of his account.
38Ms. Romanino testified that she was the named attorney in the Power of Attorney for personal care and property for both of her parents. However, she never exercised her power under either of those documents because it was not necessary for her to do so. She was aware that her parents had made wills and Powers of Attorney in 1995 and that those were the only documents expressing their wishes. She acknowledged that her parents’ wills set out that she and her sister were to share the residue of their estate after their shares of the Beck property had been paid out.
39Title to the Beck property was taken jointly with a 2/3 interest owned by the Ruccias’ and a 1/3 interest by Ms. Romanino. Ms. Romanino’s evidence was that her parents told her verbally that she really owned a 50% interest in Beck given all of the time she spent caring for them. However, that intention was never reflected on any change in title.
40During the time that Ms. Romanino and her parents lived at Beck, her mother made meals and did the housecleaning. Her father did all of the outside work until Ms. Romanino married at which point her husband helped as well. Ms. Romanino agreed that during the period of Exhibit 5 (2004-2006) her parents made all the mortgage, tax and insurance payments at Beck. She was asked why her husband (who was working full time) was not contributing to the mortgage payments given the benefits he received from living there. She told the court that he had no ownership interest in Beck and she had an arrangement with her parents. Ms. Romanino did not dispute the accuracy of Exhibit 5 and agreed that it meant that over the 26 month period covered by that document her parents contributed $40,000 to the mortgage and she contributed about $5,000 to $15,000 towards Beck during that same period. Her response was that one could not put a price on caring for one’s parents.
41Ms. Romanino gave her version of the conflict that led to the rupture between her father and her brother-in-law. She advised the court that her father had been upset about comments made by her brother-in-law which were critical of what the family had done for them. After that disagreement, Ms. Romanino testified that her sister became more distant and sometimes did not visit her parents for a month.
42With respect to the decision to sell the Beck property, Ms. Romanino’s evidence was that this was her father’s decision. He said that it was time to sell because Beck needed a new roof, windows, furnace and air conditioner. Further, more space was needed to accommodate his wife who was on oxygen full time. According to Ms. Romanino, her father told her he wanted her and her husband to own the home. He no longer wanted the burden of home ownership.
43Ms. Romanino knew that her mother did not want to leave Beck but the decision had already been made by her father. She denied that the move was precipitated by her and her husband wanting a home in their name.
44The family started looking at homes and settled on the Russell Stover property. Ms. Romanino and her husband paid a deposit for Russell Stover and then refinanced Beck in order to complete the purchase. When they went to the lawyer’s office to sign documents, her father told the lawyer that he wanted his daughter to have all of the remaining sale proceeds from Beck as she and her husband would be taking care of them. This was completely her father’s idea. She was not expecting it, but was grateful.
45Ms. Romanino’s parents guaranteed the mortgage that was necessary to buy Russell Stover. She testified that they did this to help her and her husband. However, she conceded they also did so because it was a requirement of the bank in order for her and her husband to qualify for the mortgage. Her evidence was that she and her husband sold Russell Stover in June 2015 for $990,000.
46The lawyers handling the Russell Stover transaction were the same firm that had done the work on the purchase and sale of Eagle Terrace and Beck. The lawyer at that firm acted for all four parties. Her parents did not receive any independent legal advice. During the course of signing documents at the lawyer’s office, the lawyer spoke to his mother in English. Ms. Romanino had previously acknowledged that her mother always spoke to family members in Italian and could not read or write English.
47Ms. Romanino agreed that the equity in Beck just prior to its sale would have been about $243,000. Her parents’ share of this equity would have been $160,000. However, the arrangement that ensued was that all of the equity in Beck ultimately went to Ms. Romanino leaving her parents with no assets other than their bank account. Ms. Romanino explained that this is what her parents wanted and she saw no reason to tell her sister about it because clearly her parents felt she deserved all of the equity. Ms. Romanino denied that she was present at any discussion between her father and sister during which her father said that her sister was to receive her share of the estate directly so as to ensure her husband would not receive anything.
48Once they moved into Russell Stover, the dining room was converted into a bedroom. This allowed Mrs. Ruccia to have her bedroom, bathroom and the kitchen all on the same floor and accessible. Mr. Romanino used money he received from his father’s estate ($32,000) to build a cement deck out back so that Mrs. Ruccia could sit outside. Ms. Romanino did not ask her parents to pay rent once they moved to Russell Stover. Her father offered to pay any expenses related to his care and that of her mother.
49After her father was diagnosed with cancer in 2008, his health began to decline. Ms. Romanino rented a hospital bed at her own expense and she and her husband took turns caring for her father. He refused to go into any care facility so Ms. Romanino cared for him at home until his death. From about November 2008 until his death in March 2009, Mr. Ruccia required considerable care. Ms. Romanino was working full time at this point and found it very stressful trying to cope with work and the care of her parents.
50Ms. Romanino was shown Exhibit 5. She testified that she was not working in 2004 and her parents took on more of the household expenses. She also made deposits to their accounts which are not shown. Her parents were compensated by her for expenses they paid on her behalf.
51Ms. Romanino was also asked about the withdrawals outlined in Exhibit 6. She testified that she and her father had an understanding that when he wanted funds, she would withdraw them at this direction and give him a receipt. The $1,000 withdrawal in April 2008 was compensation to his granddaughter for caring for him. Ms. Romanino confirmed that her parent’s joint pensions totalled about $3,000 per month. She was asked why their account did not increase by over $100,000 during the period of Exhibit 6 (or $3,000 x 36 months). That is, the balance of their account was about the same in February 2006 as it was in February 2009 even though Ms. Romanino testified that her parents did not pay her money for caregiving. She explained that they spent money on Christmas gifts and a new electric stove.
52Ms. Romanino testified that her mother received $30,000 in life insurance proceeds after her father’s death. She was asked if her mother spent all of this in the six months prior to her own death. Ms. Romanino’s evidence was that these funds were used to pay her father’s funeral expenses of $13,000 plus other incidental expenses.
53Ms. Romanino did not agree that her sister only received $4,500 in cash from her mother’s estate. The safety deposit box contained two envelopes each containing $5,000. She gave $5,000 to her sister and the other $5,000 to her niece with instructions that it was to be divided between her and her brother. Ms. Romanino then took $5,000 out of the joint account with her mother. She explained that this made it fair as everyone received $5,000. After all expenses of the estate were paid, her sister received a further $4,800.
54Generally, Ms. Romanino worked full time throughout the time she lived with her parents with some exceptions. Between 2006 and 2008 Ms. Romanino did not work. Her mother asked her to stay home and take care of her.
The Evidence of Rosario Romanino
55Mr. Romanino was 63 years old at the time of trial. He has been married to Ms. Romanino since 2003 after dating her for two months. Once married, he moved in with the Ruccia family and became very close to them. He drove his father-in-law to appointments and for outings. He did work around the house. He became part of the family and he loved his in-laws.
56He described Mr. Ruccia as being in control of everything. It was his decision to sell Beck because it needed significant improvements and because more room was needed for Mrs. Ruccia.
57He knew that his wife had received all of the proceeds from the Beck property. His evidence was that this was because his in-laws would be living with them. It was his father-in-law’s idea.
58Once living at Russell Stover, Mr. Romanino gladly used inheritance money from his father’s estate to make improvements for his mother-in-law’s comfort including the construction of a large back porch because she loved to sit outside. Mr. Romanino was never paid for looking after his in-laws. He did so out of his love and affection for them.
59Mr. Romanino testified that there were never any issues or complaints by his in-laws about money coming out of their accounts. When they needed money, one or the other of them would go with his wife to the bank. If his wife went alone, she would be required to present a receipt on her return. When the monthly bank statement came in, his wife would review it with her parents.
60Mr. Romanino agreed that he and his in-laws spoke Italian at home. His mother-in-law always spoke in “dialect” to him and his wife. He agreed that he did not pay any expenses while living at Beck. All of his pay went into their joint account. His wife took care of paying expenses.
The Reply Evidence of Maria Di Battista
61Ms. Di Battista is Ms. Morreale’s daughter. She was called in reply by the plaintiffs to address the issue of funds received from her grandmother’s estate.
62Ms. Di Battista testified that she was very close to her grandparents when they were alive. She visited them frequently both on her own and with family. She testified that after her grandmother’s death she received $2,500 in cash directly from her mother. She never received any other funds or any funds directly from her aunt.
Analysis
63Ms. Morreale did not make submissions on, nor does she intend to proceed with her claims in relation to any misappropriation of funds by Ms. Romanino. Therefore, the sole issue to be determined is whether the impugned transaction should be set aside based on undue influence and one-half of the equity owed to Mr. and Mrs. Ruccia from the sale of Beck paid to Ms. Morreale.
64A certain number of uncontradicted facts should be reviewed at this point before any analysis is undertaken:
(a) Mr. Ruccia and Mrs. Ruccia completed mirror wills in 1995. Their capacity with respect to both giving instructions and the execution of those wills is not in issue. (b) Mr. Ruccia died on March 5, 2009 and Mrs. Ruccia on October 19, 2009. (c) The wills bequeathed the entire estate to the other spouse. Where the spouse predeceased, and with certain conditions, 2/3 of the interest in Beck Drive was to go to Ms. Romanino and 1/3 to Ms. Morreale. The residue of the estate was to be divided equally between Ms. Morreale and Ms. Romanino. (d) When Mrs. Ruccia died, the Beck property was no longer in existence. (e) There is no issue as to the mental competence of Mr. and Mrs. Ruccia from the date of executing their wills in 1995 to the date of their respective deaths. (f) Title to the Beck Drive property before its sale was joint with a 2/3 interest owned by the Ruccias and 1/3 by Ms. Romanino. (g) Upon the sale of Beck, all of the equity was eventually put into Russell Stover. The Russell Stover property was put into the joint names of Ms. Romanino and her husband. (h) There was no evidence that the Ruccias received any independent legal advice with respect to the ownership of Russell Stover or the transfer of their equity in Beck to Russell Stover. The same lawyer acted for Ms. Romanino, her husband and Mr. and Mrs. Ruccia with respect to the sale of Beck, the purchase of Russell Stover and any required financing. (i) The Ruccia’s equity from Beck which went into Russell Stover was approximately $162,000. Ms. Morreale claims $81,060 or 50 percent of the Ruccia’s equity in Beck before it was sold. (j) Ms. Romanino lived with her parents all of their lives. She provided care for them. The caregiving increased especially after the sale of the Beck property as the Ruccias became more infirm and dependent on Ms. Romanino. (k) After the death of Mr. Ruccia, Ms. Romanino opened a joint bank account with her mother. Life insurance proceeds of $35,000.52 were deposited into that account in April 2009. (l) Ms. Morreale knew that her sister would receive more on her parents’ death than her. (m) Ms. Morreale knew that her father wanted to ensure her husband did not benefit from his estate. (n) Mr. Ruccia was a strong willed individual who was the head of his household. As between he and his wife, he was in charge of all financial matters and made all financial decisions.
65There are three main issues to be determined in this case:
(a) Does the presumption of undue influence apply given the nature of the relationship between Ms. Romanino and her parents? (b) If the presumption applies, has it been rebutted by Ms. Romanino? (c) If the presumption has not been rebutted by Ms. Romanino, has the gift lapsed?
Issue One – Does the Presumption of Undue Influence Apply?
66The leading case in this area is well-known. In Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 (Geffen), the Supreme Court of Canada summarized the state of the law with respect to undue influence and addressed a variety of important issues including the proper approach to the doctrine, the meaning of “influence,” the types of relationships that would support the presumption, and the types of circumstances which would rebut the presumption.
67Geffen is often cited for the following proposition; “the equitable doctrine of undue influence was developed, as was pointed out by Lindley, J. in Allcard v. Skinner (1887), 36 Ch. D. 145, not to save people from the consequences of their own folly but to save them from being victimized by other people.” Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 at para 23. That quote is entirely à propos in this case where Ms. Romanino’s father and mother gave her the bulk of their capital assets by way of an inter vivos gift without independent legal advice and contrary to the intentions stated in their mirror wills.
68The presumption of undue influence is predicated on the law of equity assuming that certain relationships will invoke a presumption of undue influence unless the contrary can be demonstrated. Those “special” relationships include, amongst others, solicitor and client, doctor and patient, trustee and beneficiary and parent and child. These categories are not exhaustive and the law has developed to recognize that the categories of such relationships cannot realistically be fixed and must instead be considered in the context of the facts of each individual case.
69Courts have considered the underlying factors in a relationship which may create influence. In Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 at para 31 the court determined that it was “natural” to presume that influence will arise in a relationship in which trust and confidence is reposed in the donee by the donor. In this case, Ms. Morreale argues that the Ruccias had the required trust and confidence in their defendant daughter. She lived with them all of her life and cared for them as they aged. Their financial arrangements were interrelated and even once married, Ms. Romanino and her husband lived with her parents as a family unit.
70The factual underpinning of the process leading up to the gift must be examined in the context of equity protecting Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 at para 37 the weak or momentarily weak, not from bad bargains, but from the abuse of trust, confidence or power. To attract equitable protection, the facts must demonstrate that in the context of the “special” relationship, some form of manipulation, coercion or subtle abuse of power occurred such that the transaction is removed from the category of simply a bad bargain and placed in the category of undue influence.
71A review of the salient facts leading up to the sale of Beck is therefore important. Those facts which I view as ones determinative of whether a presumption of undue influence existed are as follows:
(a) Ms. Romanino lived with her parents all of her life. She and her husband loved her parents and their life revolved around them. (b) As the Ruccias aged they became more and more dependent on their daughter and eventually her husband as well. (c) Ms. Romanino was her parents’ caregiver. While other family members contributed to caregiving, none did so to the same extent as Ms. Romanino and her husband. (d) While living at Beck, there is no doubt that Ms. Romanino and eventually her husband benefitted from the financial arrangements. The Ruccias paid a significant portion of household expenses and provided household services such as cooking and cleaning. I infer this meant that Ms. Romanino and her husband could accumulate savings from their employment while the Ruccias paid down the mortgage. (e) Prior to the sale of Beck, Mr. Ruccia told Ms. Morreale that she would not be receiving as much from the estate as her sister. He was clear that the end result was to ensure that no money from his estate went to Ms. Morreale’s husband. Ms. Morreale assured him that whatever she received would go to her children, which it ultimately did. (f) The Ruccias did not receive independent legal advice on the sale of Beck nor the title arrangements for Russell Stover. (g) Mr. Ruccia was aware of his financial circumstances. He was a strong-willed individual who made all financial decisions as between he and his wife. (h) Mr. Ruccia was meticulous with his personal financial matters requiring receipts from Ms. Romanino for all bank transactions she performed on his behalf, and carefully reviewing his monthly bank statements. (i) The Ruccias and Ms. Morreale were also close but, over time, not as close as the Ruccias and Ms. Romanino. The rupture with Ms. Morreale’s husband and the health of her granddaughter resulted in some distancing of Ms. Morreale and her parents. (j) The intention of the Ruccia’s mirror wills was to divide the residue of their estate equally between their daughters (after the division of Beck). There is no evidence that the Ruccias knew the effect of this intention or how much their “residue” actually was. (k) The result of the Beck/Russell Stover transactions was that the Ruccias gifted the only significant capital asset they owned (the equity in Beck) to Ms. Romanino. Their remaining assets (personal effects, a joint bank account) were nominal.
72Based on the above facts, the question must be posed as to whether such a factual matrix could lead to a presumption of undue influence. I find that, as in Kavanaugh v. Lajoie, [2013] O.J. No. 351, Ms. Romanino’s relationship with her parents had the capacity to create undue influence and that as such, the facts can be construed to create a “theoretical potential for domination or persuasive influence” by Ms. Romanino over her parents. Kavanaugh v. Lajoie, [2013] O.J. No. 351 at paras 134-135.
73However, having a theoretical potential for domination is not the same as actual domination or coercion. I find that in these circumstances, and despite the “special” relationship that existed, it is not possible to find any specific act of coercion or domination that would lead to a presumption of undue influence. Specifically, this court adverts to the following important facts:
(a) Mr. Ruccia was strong-willed to the very end. When he knew he was dying he called for his entire family to be with him and made amends with his son-in-law. He was aware of his financial circumstances at all times. His capacity is not in issue in this case. (b) The fact that his gift to Ms. Romanino was contrary to the stated intentions in his will is insufficient on its own to ground the presumption. See Kavanaugh v. Lajoie, 2014 ONCA 187 at para 143. (c) The lack of independent legal advice is a factor to consider but will not override all others. The lack of such advice must be considered within the background of the very close relationship between Ms. Romanino and her parents and all she had done for them. Further, such advice is not required to rebut the presumption. Bank of Montreal v. Duguid, [2000] O.J. No. 1356, paras 26-27. (d) As per Kits Estate v. Peterson, [1994] A.J. No 802 at paras 28-31 I find that in the context of Mr. Ruccia’s dominant behaviour (which was not disputed by either party), Ms. Romanino was not managing her father’s affairs, rather, she was simply following his directives as she had always done. Undue influence can only be present where the will of the person influenced is overborne such that their acts can no longer be considered their own. There is no evidence of Mr. and Mrs. Ruccia being “overborne” at any time. In fact, based on the description of Mr. Ruccia by all parties in this litigation it would appear that it was Ms. Romanino that was overborne by her father’s control over her life. (e) While it is clear that a parent/child relationship is one of the “special” relationships identified in Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 and other cases which may lead to a presumption of undue influence, I do not agree with Ms. Morreale’s counsel that the presumption should be imposed in the presence of such a relationship. I find that in this case, as in Modonese v. Delac Estate, [2011] B.C.J. NO 93 at 103, the facts must be carefully examined. Where a transfer of wealth has occurred from a parent to a child, even where such a transfer represents the bulk of that parent’s assets, the transfer should not impugned where the parent has all of their faculties and no evidence of coercion exists. (f) Ms. Morreale did receive her share of the “residue” of the estate, albeit an amount far less than she was expecting.
74Given all of the above, I find that the evidence and case law does not support the imposition of a presumption of undue influence in this case. However, if I am wrong and such a presumption should have been imposed, I would have found that the evidence and the facts found herein would support the complete rebuttal of that presumption.
75Having found no presumption of undue influence, and if one exists a rebuttal of that presumption, there is no need to examine the issue of whether the subject gift has lapsed or adeemed.
Costs
76This is not a case for costs. The result of the impugned transfer has fractured the relationship between these two formerly close siblings. Ms. Romanino, who was close to her niece and nephew has not seen them in years. Requiring Ms. Morreale to pay costs would only create further divisiveness within the family.
77I should add, that although I did not find in favour of Ms. Morreale, her concerns were not without foundation. I agree that Ms. Romanino’s air of entitlement was somewhat grating but that is insufficient to ground any legal finding in this case.
78If counsel do not heed the above and insist on providing written submissions on costs, I will consider a two page summary, exclusive of any Offers to Settle or Bill of Costs, starting with Ms. Romanino on a 7 day turnaround with the first submission to be provided within 7 days of the release of this judgment. If no costs submissions are received within 35 days of the release of this judgment, the court will deem to issue of costs to be settled.
Madam Justice C.A. Gilmore
Released: May 25, 2016