Court File and Parties

COURT FILE NO.: CV-15-148 DATE: 2016-06-01

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF MARY PAULINA ANDRAYCHAK, Deceased:

AND IN THE MATTER OF THE ESTATE OF FRANK STROZOWSKI, also known as FRANCISZEK STRUZOWSKI

B E T W E E N:

JANINA RUDNICKI Applicant

- and -

DONNA RUDNICKA Respondent

COUNSEL: Mr. Morris Holervich, for the Applicant Mr. Michael Harris, for the Respondent

HEARD: April 28, 2016, at Thunder Bay, Ontario

Madam Justice H.M. Pierce

Reasons on Application

Introduction

[1] The applicant and the respondent are sisters. This application arises out of a dispute over the estates of their mother, the late Mary Andraychak and their uncle, the late Frank Strozowski.

[2] The respondent was named as the attorney for property for the parties’ mother during her lifetime, and as her estate trustee upon her death in 2010.

[3] Mary left three children surviving: the applicant, Janina Rudnicki who lives in Mississauga, Barbara Rudnicka who lives in Montreal, and the respondent, Donna Rudnicka, who lives in Thunder Bay.

[4] Mary got sick in 2000; thereafter, the respondent assumed a caring role for her mother who suffered from dementia prior to her death. Ultimately, Mary was admitted to a personal care home. Mary’s care needs involved her health and her finances. It appears that the applicant and her sister were content to leave the burden of their mother’s care to the respondent.

[5] Mary’s will provided that her estate would be divided equally among her three children. Unhappily, the sisters are estranged.

[6] As well, the respondent assisted in the management of Frank’s finances during his lifetime, through joint bank accounts. He appointed her as his attorney for personal care.

[7] Upon Frank’s death in 2014, the respondent was appointed as his estate trustee. Frank’s will provided that his estate would be shared equally by Mary’s three daughters and Frank’s brother who lived in Poland.

[8] Mary owned a home in Thunder Bay. In his later years, Frank moved into the home and paid some of the expenses. With the consent of Mary’s children, he occupied the home until his death. As Frank got frailer, the respondent moved into the home and assumed responsibility for his care and finances, as well as maintaining the home. The care provided included laundry, daily meals, hygiene, picking up prescriptions, and weekly trips to the bank. Frank remained competent to handle his finances during his lifetime.

[9] Ultimately, the home was sold after Frank’s death. Interim distributions have been made to the beneficiaries from both estates. Initially, the applicant questioned the respondent’s management of the estates and sought financial disclosure. Having had disclosure, the applicant has raised three issues in this application:

1. whether the respondent should reimburse Mary’s estate $10,000 she claimed to have paid personally for repairs to Mary’s home;

2. whether the respondent should reimburse Mary’s estate the sum of $8,199.72 claimed as executor’s compensation; and

3. whether the respondent should reimburse Frank’s estate the sum of $7,000 alleged to be a gift.

In addition, there is a fourth issue:

4. whether the applicant should reimburse Mary’s estate the sum of $5,500.77 to repay the balance of a loan made to her by Mary during her lifetime.

Reimbursement for Home Repairs

[10] The respondent claims that she personally paid the following expenses for maintenance of Mary’s home:

• roof shingles $3,800
• flooring $2,200
• new furnace $4,000

Total $10,000

[11] The respondent has produced invoices for assorted home repairs during the relevant period. The applicant concedes that approximately $10,000 was spent on the home between 2010 and 2014. The issue is whether the respondent paid the expenses personally.

[12] The applicant contends that the respondent had access to the bank accounts belonging to their mother and their uncle during that period of time. She alleges that the respondent has not proved “unequivocally” that she used her own money for home maintenance and repairs, rather than funds from Mary or Frank’s accounts.

[13] The test is not “unequivocal” proof but proof on a balance of probabilities.

[14] The applicant alleges that a Zegil’s invoice for $347.45, paid in cash was actually paid out of $600 drawn from their mother’s bank account the same day. The respondent replied that it is common for Alzheimer’s patients to undress themselves and Mary was beginning to do so. Consequently, she ordered special clothing made for her mother with zippers down the back so that Mary would not be able to reach behind and undress herself. She advises that a person associated with Mary’s care home created the special clothing at a cost of $600 which she paid by withdrawing funds from Mary’s account. I accept this explanation as probable.

[15] The invoice for roofing in the amount of $3,853.30 was charged to the respondent’s Visa account. The slip has been produced. I conclude it was personally paid by the respondent.

[16] Additional invoices for home repair were produced by the respondent. Some were paid by cash. Some have Interac slips appended to the invoices. A realtor opined that, unlike other homes on the same street, Mary’s home was sold promptly and some $13,000 over the list price because of the improvements the respondent made to the property. These improvements included a new shower, new roof, new flooring, dryer vent, carpeting, new sump pump, dishwasher and furnace and a new furnace. The invoices produced document these improvements. The beneficiaries shared the benefit of a speedy sale at increased value.

[17] The applicant alleges that the roofing expense was paid by Frank and not by the respondent personally. The applicant raises this allegation based on withdrawals of $3,900 Frank made during July, 2013, the time when the roofing was done.

[18] In my view, this allegation amounts to speculation. Frank was competent to handle his financial affairs and the record shows that he made regular withdrawals from his account to cover his expenses. There is no evidence to support the applicant’s claim that Frank paid for re-re-roofing Mary’s house.

[19] As well, the respondent has produced Visa and Interac slips for some of the repairs. I conclude that it is probable that the respondent paid these expenses personally and she should be reimbursed accordingly. The claim that the respondent should reimburse Mary’s estate the sum of $10,000 is dismissed.

Executor’s Compensation

[20] The applicant objects to the sum of $8,199.72 taken by the respondent from proceeds of sale of Mary’s home as executor’s compensation. She complains that the respondent did so without obtaining the consent of the beneficiaries and without passing her accounts. However, the applicant does not seek an order that the respondent pass accounts.

[21] This is not the first time the applicant has complained about the respondent being paid compensation for looking after their mother.

[22] When the applicant and her sister objected to attorney fees being claimed by the respondent of $5,000 per year over ten years, the respondent instructed the solicitor to split the compensation three ways and to pay one third or $16,666.67 to each of her two sisters, even though they did not manage their mother’s affairs and were not entitled to share in compensation for doing so. Apparently, the applicant and Barbara were not embarrassed to receive these funds.

[23] Clearly the respondent’s gift to her sisters did not buy peace. It is noteworthy that the applicant made no complaint that these fees were not determined after a passing of accounts. Nor does she propose to repay Mary’s estate so that the attorney accounts could be passed. Undoubtedly, such a passing of accounts would be at great expense to the estate.

[24] To add insult to injury, the applicant is not prepared to make submissions on what she says would be appropriate trustee’s compensation. She submits that the compensation paid should be paid back to the estate which will “force the parties to deal with each other.”

[25] Section 61 of the Trustee Act, R.S.O. 1990, c. T.23 provides:

1. A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.

2. The amount of such compensation may be settled although the estate is not before the court in an action.

[26] The tariff guideline for executors’ compensation which was developed in 1975, and continues to the present, has been accepted by the courts as applying to estates of average complexity. It provides for trustee compensation of 2.5% of capital receipts and disbursements; 2.5% of income receipts and disbursements and 2/5 of one per cent of the average annual value of the trust where there are continuing trusts as a care and management fee. See: Estate Litigation, Vol. 1, Second Edition by Brian A. Schnurr, (looseleaf, Thomson Reuters, Toronto), p. 5-12.

[27] Mary’s home was sold for $175,000. The net proceeds of sale were $163,994.32. The amount of executor’s compensation was calculated by the solicitor who handled the sale of Mary’s home. He calculated the fee based on 5% of the estate, based on the tariff guideline of 2.5% on income received and 2.5% on income disbursed, for a total of $8,199.72. There is nothing improper about the manner or the amount of the compensation payable to the trustee.

[28] The claim that the respondent should reimburse Mary’s estate the sum of $8,199.72 claimed as executor’s compensation is dismissed.

Gift from Frank

[29] The third issue is whether the respondent should reimburse Frank’s estate the sum of $7,000 alleged to be a gift.

[30] The facts are these. The respondent assisted Frank Strozowski with his finances by means of being named jointly on his bank accounts. When he was in hospital, prior to his death, the respondent told her that he wanted to gift her the sum of $7,000 to recognize her efforts in looking after him. He told her that he did not want the money to go to her sisters. There is disagreement about whether the applicant and Barbara were aware of the gift at the time.

[31] On January 23, 2014, the respondent withdrew the sum of $2,000 from Frank’s account in partial payment of the intended gift. Frank died on January 25, 2014. On January 27, 2014, the respondent made two further withdrawals totaling $5,000. The applicant claims that the respondents did not disclose the gift to her.

[32] The respondent alleges that the applicant was aware of the gift but acquiesced to it as a bona fide gift. The respondent relies on DBDC Spadina Ltd. v. Walton, [2015] O.J. No. 4796, paras. 11 and 12 as authority for her submission that, having acquiesced to the gift, she should be estopped from objecting to it now.

[33] I do not agree that this authority has application on the facts of this case for three reasons:

1. The applicant disputes that she was aware of the gift. In the absence of convincing evidence that she knew about the gift and made no objection, it cannot be said that she acquiesced to the gift.

2. Paragraph 7 of Frank’s will stipulates:

(7) It is my intention and I declare that the beneficial interest in any deposit account in any bank, trust company or other institution authorized to accept deposits and which shall at the time of my death be in the joint names of myself and DONNA RUDNICKA or on which the said DONNA RUDNICKA shall have the right to draw cheques, shall not pass on my death to DONNA RUDNICKA by survivorship, but rather shall form part of my estate.

Thus, Frank’s will cut off the respondent’s entitlement to draw on his funds as of his death and specified that the remaining funds in the joint account belonged to his estate. Therefore the two withdrawals the respondent made post mortem were unauthorized.

3. The Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17, [2007] S.C.J. No. 17; [2007] 1 S.C.R. 795, para. 24 determined that the onus of proving the presumption of a resulting trust for gratuitous transfers made to an adult falls on the person alleging the gift to show that a gift was intended. In this case, the stipulation in Frank’s will makes it clear that no gift of jointly held funds was intended after he died: that the funds belonged to his estate. Accordingly, the respondent has not rebutted the presumption of resulting trust.

[34] The respondent shall therefore reimburse the Estate of Frank Strozowski the sum of $5,000, representing the funds she withdrew from his estate after his death.

Repayment of the Balance of a Loan Made to the Applicant

[35] In 1992, Mary made an interest-free loan of $30,000 to the applicant and her husband. In the course of this litigation, the applicant proved to the respondent’s satisfaction that all but $5,500.77 of the loan was repaid. The applicant does not disagree with this amount said to be owing; rather she submits that the balance of the loan she owes to the estate should be off-set by any further amounts payable to her.

[36] The estates have been largely distributed with the exception $10,000 being held-back by the solicitor for income tax and contingent liabilities. There is no evidence as to what these might be.

[37] The applicant requires that the respondent repay Frank’s estate for the contested gift, and I have so ordered. In the circumstances, there is no reason to why the applicant should not be subject to the same requirements, for ease of administration. The applicant is therefore ordered to pay to the Estate of Mary Andraychak the sum of $5,500.77.

Costs

[38] Unless the parties can agree on costs, either party may apply to the Trial Coordinator within thirty days of the release of these reasons for an appointment to argue costs, failing which costs shall be deemed to be settled. Costs submissions are not to exceed five pages.

“Original signed by”____ The Hon. Madam Justice H.M. Pierce

Released: June 1, 2016