The Estate of A.J. Latner (Deceased) by its Estate Trustees S.D. Latner et al. v. J.I. Latner et al. M.E. Latner et al., Executors of the Estate of A.J .Latner (Deceased) v. J.I. Latner et al.
[Indexed as: Latner Estate v. Latner]
Ontario Reports
Ontario Superior Court of Justice,
McEwen J.
March 1, 2016
129 O.R. (3d) 283 | 2016 ONSC 364
Case Summary
Contracts — Parol evidence rule — Plaintiff, defendant and others entering into written agreement for support of plaintiff — Plaintiff and defendant entering into verbal agreement prior to execution of written agreement whereby plaintiff told defendant that he waived any payments from defendant under support agreement — Oral agreement running afoul of parol evidence rule and not admissible — Written agreement overriding ability of plaintiff and defendant alone to enter into subsequent oral agreement to waive payments as it provided that any modification, waiver or termination of agreement had to be executed by all parties.
Trusts and trustees — Resulting trust — Father and son executing deed of gift wherein father gave $13 million to son — Swiss banker testifying that father showed him notarized deed of gift and told him he was making gift to son to redress unequal treatment of his children — Son and other family member testifying that payment was gift — Presumption of resulting trust rebutted.
AL and his children, including JL, entered into a written support agreement in 2007 which provided for ongoing payments to AL. JL claimed that AL and he entered into an oral agreement before the execution of the support agreement in which AL waived any payments by JL under the support agreement. About a month later, JL and AL signed a deed of gift in Switzerland in which AL made a gift of $13 million to JL. The deed of gift was notarized by a local notary public. AL subsequently sued JL and JL's company for money owed to AL under the support agreement. In a second action, AL claimed that he was the legal and beneficial owner of the $13 million that he had advanced to JL. AL died before the trial of the actions, which were continued by his estate.
Held, the first action should be allowed; the second action should be dismissed.
Section 13 of the Evidence Act, R.S.O. 1990, c. E.23 did not apply to this case. Section 13 is limited to circumstances in which the interested party claims as an heir, next of kin, executor, administrator or assignee and does not apply where the interested party merely happens to fall within one of those categories. [page284] Moreover, the corroboration required by s. 13 of the Act is not required where the deceased was alive when the action was started.
The defendants were liable to pay the amounts agreed to under the support agreement. The oral agreement entered into by AL and JL before the execution of the support agreement ran afoul of the parol evidence rule and was not admissible. Furthermore, the support agreement terminated the prior oral agreement since it clearly stated that the support agreement superseded all prior agreements, whether written or oral. Even if the oral agreement was entered into after the execution of the support agreement, the support agreement contained a provision expressly forbidding the modification, waiver or termination of the agreement unless executed in writing by all the parties. That provision overrode the ability of AL and JL, acting alone, to enter into a subsequent oral agreement.
Since the $13 million payment to JL was a gratuitous transfer, there was a presumption of resulting trust. A Swiss banker testified that AL showed him the notarized deed of gift and told him that he was making a gift to JL because he wanted to equalize the financial treatment of his children. JL and his sister both testified that AL intended to make a gift to JL. They did not waiver in cross-examination and their evidence was largely corroborated by the banker and the documents. No evidence was introduced to show that AL was incompetent or coerced. JL had successfully rebutted the presumption of resulting trust.
Shelanu Inc. v. Print Three Franchising Corp. (2003), 2003 52151 (ON CA), 64 O.R. (3d) 533, [2003] O.J. No. 1919, 226 D.L.R. (4th) 577, 172 O.A.C. 78, 38 B.L.R. (3d) 42, 123 A.C.W.S. (3d) 267 (C.A.), distd
Other cases referred to
Brisco Estate v. Canadian Premiere Life Insurance Co. (2012), 113 O.R. (3d) 161, [2012] O.J. No. 5732, 2012 ONCA 854, 16 C.C.L.I. (5th) 45, 82 E.T.R. (3d) 211, 299 O.A.C. 283, 224 A.C.W.S. (3d) 349; Foley v. McIntyre (2015), 125 O.R. (3d) 721, [2015] O.J. No. 2711, 2015 ONCA 382, 8 E.T.R. (4th) 175, 254 A.C.W.S. (3d) 468; Kirpalani v. Hathiramani, [1992] O.J. No. 1594, 46 E.T.R. 256, 34 A.C.W.S. (3d) 1308 (Gen. Div.); Love v. Schumacher Estate, [2014] O.J. No. 3936, 2014 ONSC 4080, 2 E.T.R. (4th) 157, 243 A.C.W.S. (3d) 1029 (S.C.J.); McNamee v. McNamee (2011), 106 O.R. (3d) 401, [2011] O.J. No. 3396, 2011 ONCA 533, 69 E.T.R. (3d) 38, 280 O.A.C. 372, 335 D.L.R. (4th) 704, 4 R.F.L. (7th) 13, 204 A.C.W.S. (3d) 857; Pecore v. Pecore, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17, 2007 SCC 17, 279 D.L.R. (4th) 513, 361 N.R. 1, J.E. 2007-874, 224 O.A.C. 330, 32 E.T.R. (3d) 1, 37 R.F.L. (6th) 237, EYB 2007-118938, 156 A.C.W.S. (3d) 502; R. v. P. (R.), [1990] O.J. No. 3418, 58 C.C.C. (3d) 334, 10 W.C.B. (2d) 279 (H.C.J.); Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53, 2014EXP-2369, J.E. 2014-1345, 373 D.L.R. (4th) 393, [2014] 9 W.W.R. 427, 59 B.C.L.R. (5th) 1, 461 N.R. 335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1, 614 W.A.C. 1, 242 A.C.W.S. (3d) 266
Statutes referred to
Evidence Act, R.S.O. 1990, c. E.23, s. 13
Authorities referred to
Bryant, Alan W., Sidney N. Lederman and Michelle K. Fuerst, Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 4th ed. (Markham, Ont.: LexisNexis, 2014) [page285]
ACTION for payment under a contract; ACTION for a declaration of legal and beneficial ownership.
R.B. Moldaver, Q.C., for plaintiffs.
David Chernos and Andrew Finkelstein, for defendants Joshua I. Latner and JILCO Realty Group Ltd.
MCEWEN J.: —
Introduction
[1] The Latner family has been engulfed in intra-familial litigation for a number of years. Currently, a number of actions are pending in the Superior Court.
[2] This installment involves two actions. The first action was commenced by the late Albert Latner ("Albert") against his son, Joshua Latner ("Joshua"), and Joshua's company, JILCO Realty Group ("JILCO") (collectively the "defendants"). The second action involves an action by Albert against Joshua and the Swiss bank, Clariden Leu AG. The claims against Clariden Leu AG were not pursued at trial.
[3] Albert passed away in the summer of 2015 and his estate, by its estate trustees, Steven Latner ("Steven") and Michael Latner ("Michael"), subsequently continued the actions against Joshua and JILCO.[^1]
[4] Two discrete claims are pursued by the estate in the two actions:
First, Albert's claim that Joshua and JILCO owe him money pursuant to the terms and conditions of the Albert J. Latner 2007 agreement (the "Albert support agreement").
It is the defendants' position that, after entering into the 2007 Albert support agreement, Albert and Joshua orally agreed that Albert would not require Joshua to make any of the payments set out therein. Joshua also submits that if he and/or JILCO are responsible for the payments made as a result of the Albert support agreement, they are entitled to enforce the provisions of a $1 million promissory note that Albert provided to Joshua. There is a counterclaim in this regard. [page286]
Second, Albert's claim that he is the legal and beneficial owner of $13 million that he provided to Joshua, along with related relief, as well as punitive damages.
It is the defendants' position that the $13 million payment was a gift.
Background
[5] Albert was a very successful businessman. He and his wife, Temmy, had four children: Steven, Elise Assaraf ("Elise"), Michael and Joshua (collectively the "children").
[6] In or about 1979, Albert began to distribute vast amounts of wealth to the children. Initially, all seemed to go well, but relationships between the family members began to break down, apparently following the passing of Temmy in 1993.
[7] Albert and the children entered into a series of agreements with respect to various issues surrounding the wealth redistribution. The original agreement referred to at trial was prepared on March 1, 2001. Thereafter, an amended and restated family agreement (the "family agreement") was entered into on October 1, 2003. It was in or about this time that Joshua was essentially bought out of the family businesses.
[8] The JILCO group separation settlement agreement, dated November 30, 2006 (the "JILCO agreement"), finalized Joshua's separation from the family businesses.
[9] Subsequently, Albert, the children and their respective corporations entered into the Albert support agreement on February 22, 2007. This agreement provided for, amongst other things, the relinquishment by Albert of corporate control, Albert receiving payments for consulting fees, expenses and a retirement allowance.
[10] Prior to the execution of the Albert support agreement, Albert provided Joshua with a promissory note in the amount of $1 million dated February 6, 2007. Joshua testified that Albert did not want Joshua to make any payments under the contemplated Albert support agreement, but was concerned that, if Michael and Steven found out, they would not sign the agreement or make their own payments. Albert, therefore, told Joshua that he would give him the promissory note and Joshua could demand payment of the note from Albert if Joshua was called upon to make payments under the Albert support agreement.
[11] In April 2007, soon after the execution of the promissory note and Albert support agreement, Albert travelled to stay with Joshua and his family in Joshua's family home in Zurich, Switzerland. [page287]
[12] At that time, a number of documents were executed by Albert and/or Joshua as follows:
A document entitled "Deed of Gift" dated April 30, 2007 signed by both Albert and Joshua, wherein Albert "in consideration of natural love and affection . . . hereby irrevocably gifts the amount of . . . $13 million" to Joshua. Joshua acknowledged receipt of the money in the same document. The deed of gift was witnessed by Joshua's employee, Hugues Langlet, and notarized by a local deputy notary public.
Albert, thereafter, executed a number of transfer instructions to his bank to forward the $13 million payment to Joshua's account in Zurich.
Also, on April 30, 2007, Joshua executed a document entitled "Promissory Note Cancellation". This cancelled the $1 million promissory note that Albert gave him. This document was also notarized. Joshua testified that the promissory note was cancelled since he was not making any payments under the Albert support agreement. Accordingly, there was no longer any need for the promissory note.
[13] Later in 2007, Steven and Michael commenced a lawsuit against Albert, Elise and Joshua with respect to the family's charitable foundation.
[14] In late May 2008, Albert returned to Toronto and began living with Elise. Towards the end of June 2008, Albert and Joshua had a falling out, primarily over a dispute concerning Joshua's residence at [number omitted] Old Forest Hill Road, Toronto. Amongst other things, Joshua changed the locks on the home, an act to which Albert took exception. Subsequently, Albert launched a number of actions against Joshua which included these two actions concerning the payments due under the Albert support agreement and the $13 million payment. Thereafter, as a result of the lawsuits he started against Joshua, Albert also had a falling out with Elise. During this time he rehabilitated his relationship with Steven and Michael.
[15] During the course of this litigation Albert passed away in the summer of 2015. Steven and Michael, as executors, carried on with this litigation on behalf of the estate.
Analysis
Preliminary issues
[16] Prior to my analysis of the two claims and counterclaim, a number of issues bear noting. [page288]
Since Albert has passed away, does s. 13 of the Evidence Act apply?
[17] Section 13 of the Evidence Act, R.S.O. 1990, c. E.23 provides as follows:
- In an action by or against the heirs, next of kin, executives, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.
[18] As a result of its simple wording, the plaintiffs submit that s. 13 applies to this case.
[19] The defendants submit that s. 13 does not apply, relying upon the Court of Appeal's decision in Brisco Estate v. Canadian Premier Life Insurance Co. (2012), 2012 ONCA 854, 113 O.R. (3d) 161, [2012] O.J. No. 5732 (C.A.) and the decision of Tausendfreund J. in Love v. Schumacher Estate, [2014] O.J. No. 3936, 2014 ONSC 4080 (S.C.J.). I accept the defendants' submissions in this regard.
[20] As stated in Brisco Estate, at para. 63, s. 13 is limited to circumstances in which the interested party claims as an heir, next of kin, executor, administer or assignee, and not simply because, coincidentally, the person happens to fall within one of these categories (as is the case with Steven and Michael). In the present case, Albert was alive when the actions began, and so his evidence could have been presented or preserved. His unfortunate passing did not occur until approximately seven years after the actions were commenced. Further, the decision in Love is directly on point. I agree with Tausendfreund J. that the corroboration contemplated by s. 13 of the Evidence Act is not required where the deceased was alive when the action was started.
[21] In any event, even if I am wrong with respect to my interpretation of s. 13, it is my view that sufficient corroboration was provided by way of other material evidence on behalf of the defendants, including the evidence of Mazzoni, Elise and the documentation, all of which will be referred to below.
Are alleged statements made by Albert admissible?
[22] In my view, the defendants are able to properly introduce into evidence the alleged statements made by Albert to Joshua, Elise and Mazzoni, which are relevant to the issues and referred to in my reasons.
[23] As stated in Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 4th ed. (Markham, Ont.: LexisNexis 2014), at p. 342, para. 6.324: "The rules of evidence as developed to this [page289] point do not exclude evidence of utterances by a deceased which reveal her state of mind, but rather appear to provide specifically for their admission where relevant."[^2]
[24] In this case, the statements purportedly made by Albert to Joshua, Elise and Mazzoni were relevant to his state of mind in or about the time Albert wavied the provisions of the Albert support agreement vis-à-vis Joshua, the promissory note was cancelled and the $13 million was advanced.
[25] In any event, I accept the defendants' submission that the statements constituted declarations against interest. Declarations of a person, even if deceased, which were against his pecuniary or proprietary interest at the time that he made them, are admissible as evidence of the facts contained in the declarations, provided that he had competent knowledge of the facts stated: see Sopinka, Lederman & Bryant, at p. 285, para. 6.166; Kirpalani v. Hathiramani, [1992] O.J. No. 1594, 46 E.T.R. 256 (Gen. Div.), at p. 17 (QL ). In my view, this principle directly applies to this case. The statements are admissible and the issue that follows is what weight they should be given.
Does the parol evidence rule apply?
[26] The plaintiffs submit that the evidence of Albert is also not admissible with respect to the his waiving Joshua's obligation to pay under the Albert support agreement or with respect to the $13 million payment since it "flies in the face" of the JILCO agreement and the Albert settlement agreement, and that the oral agreements between Albert and Joshua constitute parol evidence and ought to be excluded.
[27] With respect to the alleged forgiveness under the Albert support agreement, the plaintiffs rely predominantly on paras. 1.2 and 9.6. The paragraphs state as follows:
1.2 Termination of Prior Agreements
(a) This Agreement shall, without further act or formality on the date of execution and delivery of this Agreement by all parties hereto, (i) constitute the entire agreement among the parties hereto with respect to the subject matter hereof as the Effective Date and (ii) supersede the 2003 Family Agreement and all other prior agreements, understandings, negotiations and representations, whether written or oral, among the parties hereto with respect to the subject matter hereof. For greater certainty, the 2003 Family Agreement shall, without further act or formality on the date of execution and delivery of this Agreement by all of the parties hereto, be of no further force and effect as of and from such date. [page290]
(b) For further certainty, in the event of any conflict between the provisions of this Agreement and the provisions of any agreement entered into with any person, firm or corporation who are not members of a Group, the provisions of this Agreement shall, as among the parties hereto, prevail.
9.6 Amendment or Waiver
No supplement, modification, wavier or termination of this Agreement shall be binding unless executed in writing by all the parties bound thereby. No consent to or waiver of any breach or default of a party hereunder shall be binding upon any other party hereto unless such consent or waiver is made in writing and signed by such other party and such consent or waiver shall not constitute a consent or waiver by such other party (or limit the rights of such other party) with respect to any other breach or default hereunder. Failure on the part of any party to complain of any act or default by any other party shall not constitute a waiver by the first-mentioned party of any of its rights hereunder.
(Emphasis added)
[28] With respect to the $13 million payment, the plaintiffs primarily rely on the first paragraph of the JILCO agreement, which reads as follows:
NOW THEREFORE in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:
- The Settled Amount is agreed to be the sum of $1,800,000. Except as expressly provided for herein, there shall be no further cash adjustments. For further clarity, the parties reaffirm on their own behalf and on behalf of any companies that they own or may control directly or indirectly the valuations used in order to give effect to the JILCO Group Separation.
(Emphasis added)
[29] The defendants disagree, and instead point to the Court of Appeal's reasoning in Shelanu Inc. v. Print Three Franchising Corp. (2003), 2003 52151 (ON CA), 64 O.R. (3d) 533, [2003] O.J. No. 1919 (C.A.), [page291] specifically paras. 49-60 of the decision. In reviewing this decision, I accept that an exception to the parol evidence rule exists where there is a subsequent oral agreement to rescind or modify a written contract. That is, while clauses such as those relied upon by the plaintiffs (i.e., so-called "entire agreement clauses") are normally used to exclude representations made prior to the signing of the written agreement, they are not generally meant to capture representations made after the signing.
[30] With respect to the issue of parol evidence, the general rule precludes admission of evidence outside the words of the written contract, made in advance of the formation of the contract, that would add to, subtract from, vary or contradict a contract that has been wholly reduced to writing: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, [2014] SCC 53. It therefore follows that any oral agreement concerning the promissory note and the Albert support agreement that the defendants allege was made prior to the signing of the Albert support agreement is not admissible since it constitutes parol evidence. Alternatively, the oral agreement that Joshua alleges was entered into between him and Albert must be considered in the context of the terms and conditions of the Albert support agreement which specifically contains provisions concerning previous oral agreements.
[31] On the other hand, based on the reasoning in Shelanu, I can have regard to Albert's statements that were made after the Albert support agreement and JILCO agreement were executed. The question remains, however, as to whether those statements can be used to override the aforementioned written agreements.
First issue: Are the defendants liable to pay the amounts agreed to under the Albert support agreement?
[32] The defendants are liable to pay the amounts agreed to under the Albert support agreement.
[33] I accept the plaintiffs' submission that, prior to the execution of the Albert support agreement, Albert and Joshua entered into a verbal agreement whereby Albert told Joshua that Albert was waiving any payments from Joshua under the forthcoming Albert support agreement, and if Albert did claim payment, then Joshua could call upon Albert to make the $1 million payment as per the promissory note. Joshua testified to this effect.
[34] In my view, the oral agreement that was entered into between Albert and Joshua, noted above, runs afoul of the parol evidence rule and is not admissible. This agreement is clearly outside the words of the Albert support agreement and would preclude Joshua from having to make the payments contained in the Albert support agreement. Further, the agreement does not amount to additional evidence about the surrounding circumstances, but rather it undermines the purpose of the Albert support agreement which was clearly designed to achieve finality with respect to, amongst other things, payments that were to be paid to Albert.
[35] Furthermore, in any event, para. 1.2 of the Albert support agreement terminated the oral agreement between Albert and Joshua since, by its clear language, it stated that the "Albert support agreement superseded all prior agreements . . . whether written or oral".
[36] Even if the oral agreement was entered into between Albert and Joshua after the execution of the Albert support agreement as alleged by the defendants, which I do not accept, [page292] para. 9.6 of the Albert support agreement had a contractual provision expressly forbidding the "supplement modification waiver or termination of this Agreement . . . unless executed in writing by all the parties".
[37] This contractual language in para. 9.6, which is binding on Albert and Joshua, overrides their ability, alone, to enter into a subsequent oral agreement. By not informing the other siblings -- particularly Michael and Steven -- of the second agreement, it cannot be suggested that the subsequent agreement represents an implied understanding between all of the parties to the Albert support agreement. Nor was it reasonable for Joshua to rely upon this change in the absence of the other children being advised.[^3] Albert's waiving of the obligation support is a violation of clear, contractual language.
[38] The defendants put great weight on the aforementioned decision in Shelanu. In my view, this case is distinguishable from Shelanu and the other case law relied upon by the defendants.
[39] Briefly, Shelanu involved parties to a franchise agreement that included provisions similar to those set out in paras. 1.2 and 9.6 of the Albert support agreement. When the relationship between the parties broke down, they entered into a series of oral agreements which the franchisor later argued were inoperative due to provisions in the franchise agreement that prohibited waiver/change amendments, unless in writing and contained an entire agreement clause. The Court of Appeal found [at para. 50] that the exclusion provisions did not apply to the oral agreements, because the parties did not intend them to "cover any and all future contractual relations" between the parties.
[40] Here, on the other hand, it is apparent that the other siblings, particularly the brothers, were not a party to the subsequent, alleged oral agreement and obviously could not consent to the contractual change. Accordingly, there is no evidence that all of the parties did not intend the entire agreement clause to structure their relationship moving forward. To put it another way, the need for all party consent constitutes an implicit recognition that the application of para. 9.6 extended into the future and thus was prospective in nature. Therefore, the alleged, subsequent oral agreement between Albert and Joshua cannot override the Albert support agreement, which required all party consent. [page293]
[41] In short, Albert and Joshua, no matter when the agreement was entered into, struck a secret deal which is in clear violation of the Albert support agreement. Further, as I have found, it was entered into before the Albert support agreement and violates the parol evidence rule.
The Counterclaim
[42] Insofar as Joshua's counterclaim for payment of the $1 million pursuant to the promissory note is concerned, based on the same reasoning above, I would dismiss it. Once again, the promissory note was signed before the execution of the Albert support agreement. It involved a purported oral agreement between Albert and Joshua designed to override the Albert support agreement. The oral agreement runs afoul of the parol evidence rule and paras. 1.2 and 9.6 of the Albert support agreement. Only Albert and Joshua saw Joshua as being no longer bound to the obligation to pay Albert while the rest of the parties to the contract were unaware of the arrangement and obviously did not consent. In these circumstances, Joshua is not entitled to set-off against the plaintiffs or to rely on the principle of promissory estoppel (the latter of which was argued but not pleaded).
Damages Re: Albert Support Agreement
[43] The parties have agreed to a calculation totalling $2,214,895 with respect to the support payments up to Albert's passing, i.e., the amounts that were not paid by Joshua.
[44] Based on my findings above, the defendants are liable to the estate for this amount.
Second issue: The $13 million payment
[45] The plaintiffs submit that, since the $13 million payment was a gratuitous transfer, there is a presumption of a resulting trust. The plaintiffs rely on the Supreme Court of Canada's decision in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17 for this submission. Thus, the onus is upon the defendants to demonstrate that the payment was intended to be a gift. The defendants do not disagree. Instead, they submit that the presumption is rebuttable; the civil standard of proof applies to the rebuttal; and they have rebutted the presumption.
[46] In light of the presumption of a resulting trust, the plaintiffs elected not to call any viva voce evidence, but instead filed [page294] a book of documents,[^4] which included the aforementioned agreements and documents. The only viva voce evidence with respect to the $13 million payment -- and, for that matter, the Albert support agreement -- came from Claudio Mazzoni ("Mazzoni"), a Swiss banker with the former defendant, Clariden Leu AG, Joshua and/or Elise.
[47] In my view, the $13 million payment was a gift, and Joshua has successfully rebutted the presumption of a resulting trust.
[48] The defendants rely upon the evidence of Mazzoni, Joshua and Elise, along with the documentation that was prepared around the time the $13 million payment was advanced to Joshua by Albert.
[49] Mazzoni was present in Joshua's apartment in April 2007. Mazzoni testified that Albert told him that he was making a gift to Joshua since he wanted to equalize the financial situation between the children. Mazzoni further testified that Albert made the point completely clear and that he appeared capable when he made the statement. Albert also showed Mazzoni the witnessed and notarized deed of gift. This deed of gift was important to Mazzoni, since, if the money was being provided to Joshua to invest on behalf of Albert, Swiss law required that a new account be opened to show that Albert was the beneficial owner of the account. Mazzoni was not cross-examined on this testimony.
[50] Joshua also testified that the $13 million payment was a gift. He stated that Albert had revisited the share that Joshua had originally received in November 2006. This occurred as a result of the sale of a significant family property located at the intersection of Yonge Street and Eglinton Avenue, Toronto (the "Yonge/Eglinton property") for a much greater value than it was thought to be worth. This is corroborated by the fact that Albert also sent copies of his wills and codicils to Joshua in or about March and April 2007 in which Joshua received the entire residue of Albert's estate. These codicils also referred to the fact that Albert had revisited the amount of money that had previously been provided to Joshua and that Joshua had been "persuaded by me to give up substantial value in the arrangements which he made with his siblings". Albert asked Joshua not to tell his siblings of the wills. Also, Albert also asked Elise to pay Joshua an amount between $1-2 million, which she did. [page295]
[51] It was not until June 2008 that Albert took the position that the money was not Joshua's. At this time, he was back in Toronto, the dispute over the house had arisen and Albert was once again in communication with his other sons, Steven and Michael.
[52] Elise's testimony supported Joshua's evidence with respect to the $13 million payment being made as a result of the Yonge/Eglinton property deal and that Albert was trying to clear up the perceived inequality among the children. Elise testified that Albert first told her about the payment in May 2008, and asked her to keep it from her other two brothers. Shortly thereafter, difficulties arose concerning Joshua's house which led to a falling out as between Albert and both Joshua and Elise.
[53] I accept that some scrutiny must be applied to the evidence of Joshua and Elise given the family dynamics. I accept their evidence, however, as it is largely corroborated by Mazzoni, the documents, and they did not waiver in cross-examination.
[54] Importantly, both Albert and Joshua executed the deed of gift which simply and clearly stated that Albert wanted to provide Joshua with a gift in the amount of $13 million. This makes sense in light of the evidence of Joshua and Elise that Albert wanted to right the wrong that had been done to Joshua when Albert persuaded him to accept less money, particularly in light of the sale of the Yonge/Eglington property. As noted, the plaintiffs did not introduce any evidence to contradict this state of affairs that existed at the time the $13 million was given to Joshua via the deed of gift.
[55] Notwithstanding this evidence, the plaintiffs submit that it is not a gift for two reasons:
it would make no sense for Albert to give away this money since it constituted about 70 per cent of his remaining net worth which stood at approximately $17 million; and
in any event, the payment is not a gift, but rather a contract that runs afoul of the JILCO agreement.
[56] I reject the first argument. The overwhelming evidence at trial, which includes the deed of gift, suggests that Albert clearly intended to give Joshua the $13 million payment as a gift. An unsworn financial statement of Albert's was introduced into evidence showing a net worth of approximately $17 million, but it was never proven for authenticity or accuracy. Further, even though Albert may have been giving away the majority of his wealth, he was doing so in circumstances where he was now receiving a number of payments, including a generous [page296] living allowance. Finally, though it is perhaps trite to say, Albert was free to do with his money as he pleased. Given Albert's past track record of giving money to his children, there is nothing to suggest that this payment broke with that tradition.
[57] All of these observations are made against the backdrop that no evidence was introduced to suggest that Albert was incompetent or coerced in any way. Specifically, as noted above, no one testified on behalf of the plaintiffs, including Michael or Steven. This is significant, because they might have shed some light in support of the plaintiffs' case if in fact there was support for these serious allegations. I am satisfied that the defendants have, therefore, established that the gift was a result of Albert's full, free and informed thought: Foley v. McIntyre (2015), 2015 ONCA 382, 125 O.R. (3d) 721, [2015] O.J. No. 2711 (C.A.).
[58] In light of the evidence of Mazzoni, Joshua and Elise, the documentary evidence and the failure of the plaintiffs to lead any evidence to the contrary I find that the defendants have established that Joshua did not exert undue influence over Albert in making the decision to pay him the $13 million.
[59] I also reject the second argument that, in law, the transfer would constitute a contract between Albert and Joshua as opposed to a gift. The law is settled that in order to establish a gift one must show the intention to donate, sufficient delivery of the gift, and acceptance of the gift: see McNamee v. McNamee (2011), 106 O.R. (3d) 401, [2011] O.J. No. 3396, 2011 ONCA 533. The clear evidence, both viva voce and in writing, was that Albert intended to equalize the perceived imbalance that had been created when Joshua was bought out of the family business before the Yonge/Eglinton property sale. There is no evidence in this case to suggest that Albert's intention was to enter into a contract with Joshua or to alter the contracts that had previously been entered into between them and the siblings.
[60] In my view, it was up to Albert to decide whether he wanted to make a gift to Joshua, and the evidence demonstrates that he did so. I do not accept the plaintiffs' submission that the payment constituted some sort of moral obligation or assuagement of guilt and thus constituted consideration. This argument is not legally tenable. The plaintiffs concede that there was no legal right for Joshua to attack the agreements he had entered into, therefore it cannot be said, in my view, that there was any consideration given.
[61] Further, in this regard, the language in the JILCO agreement -- and, for that matter, the earlier amended and restated family agreement -- do not override Albert's ability to provide Joshua with a gift, no matter how extravagant. In [page297] providing Joshua with the $13 million payment, no reference was made to any of the agreements and, again, no consideration was provided by Joshua.
[62] All of the evidence adduced at trial supported the conclusion that Albert meant the payment to be a gift at the time it was given. Albert later took a contrary position and, in the statement of claim, alleged that the money was given to Joshua to manage on Albert's behalf. There is simply no evidence, however, to support this allegation, nor, as noted, is there any evidence to support the plaintiffs' closing arguments that Joshua isolated Albert in Switzerland and preyed upon him. Further, Joshua was not cross-examined on this allegation. While it is certainly arguable that the circumstances surrounding the gift were unusual, this seems to fit Albert's pattern of divesting himself of his assets for the benefit of his children, and the preponderance of the evidence suggests that this $13 million payment was yet another example of this behaviour. Tellingly, Albert never pleaded that the payment ran afoul of any of the earlier agreements entered into between him and the children including the JILCO agreement and the amended and restated family agreement.
[63] For all of these reasons, I find that a gift was made and the plaintiffs' claim in this regard ought to be dismissed.
Disposition
[64] For the reasons above, the plaintiffs are entitled to damages against the defendants in action CV-08-360884-0000 in the amount of $2,214,895. Joshua's counterclaim is dismissed. The plaintiffs' claims against Joshua in Court File Number CV-08-367762-0000 with respect to the $13 million payment are dismissed.
[65] If the parties cannot agree on the amount of prejudgment interest or costs, I can be spoken to.
First action allowed; second action dismissed.
ADDENDUM
April 7, 2016
[1] MCEWEN J.: -- After delivering my reasons for judgment on March 1, 2016, I was contacted by the parties with respect to the damages that I awarded to the plaintiffs in action CV-08-360884-0000. [page298]
[2] Subsequent to the trial, the parties, on consent, provided me with a calculation of $2,214,895.00, which I included in paras. 43 and 64 of my reasons.
[3] The parties advise me that the aforementioned amount did not include the one-time payment of $562,000.00. They agree, therefore, that the calculation should be $2,776,895.00.
[4] The reasons are therefore amended so that the plaintiffs are entitled to damages against the defendants in action CV-08-360884-0000 in the amount of $2,776,895.00.
[^1]: I will refer to the "plaintiffs" as the titles of proceeding are structured in this way. I will also refer to the "defendants" even though the first action was commenced against Joshua and JILCO and the second action is only against Joshua. [^2]: The cited quotation is originally from R v. P. (R.), [1990] O.J. No. 3418, 58 C.C.C. (3d) 334 (H.C.J.). [^3]: Albert did later tell Elise while he was staying with Joshua in Zurich. [^4]: In preparing these reasons, as discussed in closing argument, I am only relying upon those documents that were entered as exhibits.