CITATION: In the Matter of the Estate of Mildred Dixon, 2016 ONSC 7154

COURT FILE NO.: 01-3981/14

DATE: 20161206

SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE ESTATE OF MILDRED DIXON, DECEASED

RE: Anne Azzopardi, David Dixon, Howard Dixon, Mariann Dixon and Stephanie Winter, Applicants

AND:

Douglas Reginald Dixon and Kristopher Dixon, in their capacities as Estate Trustees of the Estate of Mildred Dixon and in their personal capacities, Respondents

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: Matthew Furrow, for the Applicants

Douglas Reginald Dixon and Kristopher Dixon, in Person

HEARD: November 8, 2016

ENDORSEMENT

[1] This is an application to resolve four sets of issues regarding the administration of the estate of Mildred Dixon (“Mildred”). In this endorsement, I address the principal issue, which is the treatment of certain payments that Mildred made during her lifetime. The remaining issues are to be addressed at a hearing to be scheduled by the parties at a 9:30 a.m. conference after this endorsement is released.

The Parties

[2] Mildred died on July 31, 2011 having made a will dated March 11, 2002 (the “Will”). Under the Will, she distributed the residue of her estate as follows: 1/7 to her daughter, the applicant Anne Azzopardi (“Anne”); 1/7 to her son Doug Dixon (“Doug”); 2/7 to her son Robert Dixon (“Bob”), who predeceased Mildred in 2010; and 2/7 to her son John Dixon (“John”), who died after Mildred in 2014.

[3] Doug and his son, Kristopher Dixon (“Kris”), were named as the estate trustees in the Will and are the respondents in this application (collectively, the “Executors”).

[4] The Will provided that Bob’s 2/7 share was to be paid to his issue in equal shares per stirpes. The known children of Bob are his sons David Dixon (“David”) and Howard Dixon (“Howard”), both of whom are applicants in this proceeding.

[5] There are ten payments made by Mildred before her death that are at issue in this application. One payment made in two parts in 1999 and 2001 to David and his wife Lianne Dixon was expressly treated as a loan. It is dealt with below. The remaining nine payments are the following:

(1) July 2, 2002 – $10,000 to Anne;

(2) November 8, 2004 – $2,000 to Anne;

(3) June 24, 2005 – $35,000 to Anne;

(4) June 24, 2006 – $13,525.20 gift of a car to Anne;

(5) April 8, 2004 – $20,000 to John;

(6) June 14, 2005 – $50,000 to John and his wife Mariann;

(7) June 7, 2005 – $50,000 to Howard;

(8) June 8, 2005 – $50,000 to Howard;

(9) December 2, 2004 – $10,000 to Doug’s daughter Charlene Dixon (“Charlene”), which Doug is treating as an advance to himself.

The Inter Vivos Gifts

[6] It is the Executors’ position that the foregoing payments were advances on account of the recipients’ inheritances under the Will. As such, the Executors have taken these payments into consideration in determining the remaining distributions to be made to the beneficiaries out of the residual estate. The Executors also appear to have suggested that interest should be computed in respect of these payments, but they disclaimed any such intention at the hearing of this motion.

[7] The legal basis for the Executors’ position is unclear.

[8] Insofar as the Executors rely on the legal doctrine of “ademption by advancement,” I do not think that such principle is applicable for a number of reasons.

[9] First, as a general matter, there is good reason to doubt that the principle remains the law in Ontario. Counsel has not found any Ontario cases on this principle in the last fifty years.

[10] Second, insofar as the principle continues to exist, the case law suggests its applicability is limited in a number of respects that are relevant for this proceeding. It only applies to a gift to a child made with a view to establishing him or her in life: see Plamondon v. Czaban, 2004 ABCA 161, 348 A.R. 103, at para. 44. None of the payments at issue in this case were made for such purpose. In addition, monies provided by a parent to pay a child’s debts, or otherwise in the nature of temporary assistance, will rebut the presumption: see Re Scott, [1903] 1 Ch. 1 (C.A.). In this case, the gifts to Howard were intended to be, and were, placed in a bank account to allow Bob to pay his debts. Similarly, the $35,000 paid to Anne was for the purpose of allowing her to pay off her mortgage. The gift of $20,000 to John was also to help with financial difficulties. Further, one of the payments was made to John and his wife Mariann jointly, which excludes the application of the principle.

[11] Lastly, it is probable that the doctrine of ademption by advancement only applies to substantial gifts of property and is directed, in such circumstances, toward preventing double recovery. Given the size of Mildred’s estate, none of the gifts at issue can be considered substantial, either individually or collectively, in respect of any recipient.

[12] In the alternative, the Executors may also be relying on the presumption of a resulting trust in respect of gratuitous transfers articulated by the Supreme Court in Pecore v. Pecore, 2007 SCC 17, 279 D.L.R. (4th) 513. The concept of a resulting trust is qualitatively different from the concept of an inter vivos gift of money on account of a future inheritance. I am not persuaded that the presumption in Pecore v. Pecore is applicable in the present circumstances.

[13] In any event, the presumption of a resulting trust is easily rebutted by the specific purposes for which the monies were paid to the recipients. Apart from two exceptions for which there is no evidence, in each case Mildred expected the monies to be applied by the recipients for specific purposes rather than retained by them. There is no evidence that they were not used by the recipients in each case for such purposes. In addition, more generally, there is evidence that Mildred was a very generous person during her lifetime. There is no reason why she would have intended that gifts that she made to third parties were to be treated differently from gifts that she made to her children.

[14] The Executors make three principal submissions.

[15] First, they say that they advised the applicants/beneficiaries under the Will of their position on several occasions without objection until the applicants engaged legal counsel. They suggest that the absence of any objections is evidence that the beneficiaries understood that the payments to them were in fact advances.

[16] I do not read the emails upon which the Executors rely as evidencing any acknowledgment of the Executors’ position. In Doug’s email of August 26, 2011, he inquired as to the purpose of the payments that he had identified. He now says he knew the purpose and was asking to see what the recipients of the email knew. Whatever the reality, this does not constitute an acknowledgement. Nor do emails of parties who are not named beneficiaries under the Will and were not parties to any discussion with Mildred at the time of the gifts.

[17] Second, the Executors, say that the beneficiaries knew that Mildred’s intention was to treat the payments as advances. However, the evidence is otherwise.

[18] There is no evidence that Mildred spoke to any of her children regarding this alleged intention, other than Doug’s allegation and one occasion, discussed below, on which her intention was unclear. Anne denies knowledge of any such intention. Doug acknowledges that the only other person that he or Mildred spoke to was Bob. This suggests that, at most, the gifts that were subject to the alleged intention to be treated as advances would be limited to the gifts to Howard, which were to be used by Bob. However, as Bob is deceased, there is no evidence in support of Doug’s position that Bob understood from Mildred that the payments made to him were on account of his inheritance.

[19] More significantly, when Mildred intended to loan money to David, she documented this, as described below. Doug acknowledges that it is therefore surprising that Mildred did not document her intentions in regard to the alleged advance payments. I note as well that Anne’s proportion of the aggregate payments exceeded her proportion of the estate, which would have been a good reason for documenting the alleged intention. Lastly, more than six years elapsed between the last of the cash gifts at issue and Mildred’s death. There was plenty of time for her to have documented her alleged intentions.

[20] The only evidence that could possibly support the Executors’ position is Anne’s acknowledgment that, at the time of the gift of the car to her, Mildred said words to the effect that “the car is coming out at the end.” However, this statement can be interpreted in numerous ways given the circumstances, including that Mildred intended to reflect this gift in some unspecified manner in a codicil to her Will and subsequently changed her mind. The statement is therefore not dispositive with respect to Mildred’s intentions regarding the car, much less with respect to her alleged intention more generally in respect of the other gifts to Anne and the other recipients, all of which pre-dated the gift of the car by a considerable period of time.

[21] Third, the Executors say that the payments were made on the advice of legal counsel for the purpose of reducing eventual probate fees. This may well be the case. However, that does not necessarily mean that the payments were to be treated as advances on account of future inheritances. It is not unusual for parents to pay monies to children during their lifetime to minimize taxes on their death. Such actions do not require that the payments be treated on account of advances unless the intention is made clear to, and acknowledged by, the recipients. In this regard, I would note that there is no evident pattern or relationship between the amounts paid and the intended inheritances under the Will that would support the Executors’ position. I also note that there is no evidence from the legal counsel involved regarding any conversations with Mildred respecting her intentions in respect of the gifts. Accordingly, the alleged purpose of the payments to reduce probate fees — even if established, which it is not — is not sufficient to support an inference that Mildred intended the gifts to be advances on account of the inheritances of the recipients under the Will.

[22] In summary, I see no basis for concluding that the inter vivos payments from Mildred described above were made with the intention that they be advances on account of future inheritances under the Will. Given the case law above, affirmative evidence in the form of documentation would be required to evidence such an intention. In the absence of such documentation, there is no basis for treating the inter vivos gifts as advances for purposes of the calculation of distributions from the estate.

The Loan to David

[23] The evidence establishes that Mildred made a loan to David totaling $37,140 in two lump sums in 1999 and 2001. There is a copy of an agreement of David and his wife in favour of Mildred to repay the loan in accordance with a repayment schedule by August 1, 2006. David acknowledges that this loan was made but says it was fully repaid in or about 2003.

[24] The evidence supports David’s position that repayments were made in accordance with the schedule drawn up by Mildred and that the outstanding loan balance was retired on or about July 19, 2003. He has produced a cheque of that date which has the words “paid in full” written on it, as well as evidence of cash deposits to pay instalments in 2001. Conversely, the Executors have no evidence that it was not paid in full.

[25] In any event, there is no evidence of any demand for payment by Mildred after that date, nor is there any acknowledgement by David since that date of any outstanding obligation in respect of the loan. Accordingly, any claim that the Executors might otherwise have on behalf of the estate is clearly statute-barred.

[26] Based on the foregoing, there is no basis for treating the loan as an asset of the estate.

Wilton-Siegel J.

Date: December 6, 2016