Court File and Parties
COURT FILE NO.: 02-103/12 DATE: 20170322 SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE ESTATE OF Marshall Frilegh, deceased
RE: Merna Frilegh (Executor and Trustee for the Estate of Marshall Frilegh), Applicant AND: Lindsay Iris Rudman and Brooke Taylor Rudman, Respondents
BEFORE: Mr. Justice H.J. Wilton-Siegel
COUNSEL: Albert Miller, for the Applicant Executor and Trustee, Merna Frilegh Lindsay Iris Rudman, Objector, in Person Brooke Taylor Rudman, Objector, in Person
HEARD: March 2, 2017
Endorsement
[1] The testator, Marshall Frilegh (the “Deceased”), died testate on July 22, 2011. In his will dated August 9, 2006 (the “Will”), he left a bequest to each of his four grandchildren which was subsequently reduced to $15,000 each pursuant to a codicil dated December 17, 2010. He left the residue of his estate to his second wife Merna Frilegh (“Merna”), who was also named as the executor and estate trustee of the Deceased’s estate (the “Estate”).
[2] On this application, Merna seeks a passing of her accounts. Objections have been raised by Lindsay Rudman and Brooke Rudman (collectively, the “Objectors”), who are two of the Deceased’s grandchildren. They are the daughters of the Deceased’s daughter Robin Rudman (“Robin”) by his first marriage. Robin’s brother and his two children are not participating in this action.
The Parties
[3] This proceeding has apparently become complicated because of the relationship of some of the participants to the Deceased. Counsel for Merna in her capacity as executor and estate trustee is her son-in-law Albert Miller. He is married to Sherry Miller (“Miller”), who is one of three daughters of Merna by a first marriage and therefore was a step-daughter of the Deceased. Miller acted as the Deceased’s investment advisor for a period of time prior to his death.
[4] Merna is 86 years old and is suffering from dementia. Kathryn Winthrope-Kates (“Kathryn”) is one of the other daughters of Merna from her first marriage. She has assisted Merna with the Estate accounts and is familiar with them. She was present in court to represent the Estate and gave evidence on certain matters pertaining to the Estate accounts.
[5] This matter has been prosecuted by Robin. However, she is not a party. It became clear that neither of the Objectors were able to describe their position on the issues raised by their mother without her assistance. I therefore allowed Robin to testify as a witness for the purpose of providing the Court with the factual basis of the Objectors’ position on the issues raised by the Objectors.
The Estate Accounts
[6] The Estate accounts are of an informal nature which reflects the limited assets and liabilities of the Estate. The accounts are limited to two schedules: (1) a schedule of assets at the date of death which also includes three subsequent receipts on account of income which are treated as assets at the date of death; and (2) a schedule of liabilities at the date of death which also includes various expenses paid out of the Estate assets, principally funeral-related expenses, which are treated as liabilities at the date of death.
[7] At the opening of the hearing, counsel for the Estate provided updated schedules. These schedules provide that the Estate was insolvent, having assets of $44,619.12 and liabilities of $56,527.91 after giving effect to a pro rata settlement of the trade creditor liabilities at the date of death. Merna says that she covered this deficit out of her personal assets. In addition, there were a number of assets that passed to Merna personally outside of the Estate on the death of the Deceased.
The Issues on this Application
[8] The Objectors raise two categories of issues: (1) the treatment of the assets that were received outside of the Estate; and (2) the treatment of certain assets and liabilities in the Estate accounts. I will deal first with the assets treated as having been received outside of the Estate and then deal with the objections pertaining to the assets and liabilities in the Estate accounts.
[9] It is important to note that, in assessing the issues in this proceeding, the Court must rely on the evidence before the Court, particularly the documentary evidence. The Objectors have the onus of establishing any alleged error in the Estate accounts, including any omission of assets from the accounts, on a balance of probabilities.
The Assets Treated as Received by Merna Outside of the Estate
[10] At the date of the Deceased’s death, title to a condominium in Pompano, Florida (the “Condominium”) was registered in the name of Merna. In addition, the Deceased and Merna jointly held a mortgage investment in the approximate amount of $102,000. Further, the Deceased designated Merna as the beneficiary of his TFSA and his two RRIFs with Investors Group Financial Services Inc. (“Investors Group”), in the approximate amount of $137,656.83. It is Merna’s position that these assets are not assets of the Estate. The Objectors say that they should be included as assets of the Estate. I will deal with these in turn.
The Condominium
[11] The Deceased and Merna acquired the Condominium in 1998 for approximately $116,000. At the time of the purchase, the Condominium was registered in the name of the Deceased and Merna as joint tenants with right of survivorship. In April 2011, after the Deceased became ill, the Deceased transferred title to the Condominium into the name of Merna by a quitclaim. It is not suggested that the Deceased lacked capacity to manage his property at such time.
[12] The Objectors say that the Condominium is still a matrimonial property and, as such, is beneficially owned by each as to an undivided 50% interest. Alternatively, the Objectors say that section 72(1) of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”) applies to treat the Condominium as an asset of the Estate.
[13] Title to the Condominium was conveyed to Merna by the Deceased in April 2011. There is no basis for a finding that the Deceased retained an undivided 50% interest in the Condominium. Further, section 72(1) of the SLRA is inapplicable in the present circumstances. This provision only applies for the purposes of Part V of the SLRA, which relates to claims for dependent’s relief.
The Romspen Mortgage Investment
[14] The record contains a copy of a joint application of the Deceased and Merna for an investment in a Romspen mortgage investment pool. There is only one investment account of the Deceased at Romspen as evidenced by the correspondence between the total investment set out in Schedule A to the joint application and the amount reflected on the investment statement for the period February 1, 2011 to January 31, 2012. This investment account is registered in the names of the Deceased and Merna jointly. I accept that there is also a document that may be another subscription form that was executed solely by the Deceased dated October 12, 2005. There is, however, no evidence as to what this relates, much less that it relates to a separate Romspen mortgage investment registered solely in the name of the Deceased. Accordingly, the Romspen mortgage investment passed to Merna by right of survivorship.
The TFSA and the Two RRIFs
[15] The Objectors do not question that Merna was the designated beneficiary for the TFSA and for one of the two RRIFs. With respect to the other RRIF, being the RRIF in account #12199634 of Investors Group, the Objectors say that the Estate was the designated beneficiary.
[16] The Objectors rely on an email dated March 17, 2013 from Sean Tidd at Investors Group. However, this email merely states that both the September 2011 account statement, which states that the beneficiary is the Estate, and a letter of Investors Group dated August 16, 2011, which states that Merna is the beneficiary, are valid documents of Investors Group. It does not resolve the contradictory language.
[17] The ownership of this RRIF is conclusively addressed in a letter dated April 4, 2013 of Investors Group, which states that the September 2011 account statement, and by implication previous statements, was incorrect in referring to the Estate as the beneficiary. This conclusion was based on the client application of the Deceased, which designated Merna as the beneficiary. The fact that the RRIF originally came from a Toronto-Dominion Bank investment account that was not a joint account is irrelevant. Accordingly, I conclude that Merna was the designated beneficiary for this second RRIF.
[18] I would add that, insofar as the Objectors also suggest that section 72(1) of the SLRA applies to include the Romspen mortgage investment and the RRIF discussed above in the assets of the Estate, this argument is rejected for the same reason as stated above with respect to the Condominium.
The Assets and Liabilities Reflected in the Estate Accounts
[19] As mentioned, the Objectors raise a number of issues regarding the treatment of certain assets and liabilities that are reflected in the Estate accounts. I will address the issues pertaining to the assets first and then consider the issues pertaining to the liabilities.
Issues Pertaining to the Assets
[20] The Objectors say the following five additional assets should have been included in the Estate accounts.
[21] First, the Objectors say the Deceased had a car at the date of his death. This has been clarified to be an Acura that was subject to a lease in his name. The accounts include as a liability the amount required to terminate the lease, being $1,600. There is nothing improper about paying such amount and terminating the lease. There is also no evidence of any value in the lease at the date of the Deceased’s death.
[22] Second, the Objectors say that the furniture in the Condominium, and in a Toronto apartment in which the Deceased and Merna lived, had a value of $50,000. There is no evidence of such furniture or support for such a valuation. Nor is there evidence as to whether the Deceased or Merna purchased the furniture. In the absence of such evidence, I think that the furniture should be presumed to have been jointly-held property that passes by right of survivorship.
[23] Third, the Objectors say the Deceased had jewelry estimated to have a value of $10,000 to $15,000. There is, however, no valuation to support this claim.
[24] Fourth, the Objectors say the Deceased’s business, which was a sole proprietorship, had value. There is, however, no evidence of any sale of the assets of his sole proprietorship. More importantly, the Deceased had been ill for a number of years, had been losing money on the business since at least 2008, and appears to have ceased business altogether in 2011, as evidenced by his tax returns. There is therefore no basis to believe that the business in general, or the client lists in particular, had any value that could have been realized by the Estate.
[25] Lastly, the Objectors say that there must have been another U.S. dollar account used by the Deceased to pay their bills in Florida. The Estate accounts include a U.S. dollar account at Scotiabank. There is no evidence of any other U.S. dollar account in Canada or the United States.
Issues Pertaining to the Liabilities
[26] The Objectors also raise the following five objections with respect to the liabilities shown in the Estate accounts.
[27] First, they object to the payment to Honda Finance. However, this liability reflects an obligation of the Deceased at his death with respect to the Acura vehicle. This has been dealt with above.
[28] Second, they object to the payment of $888.75 to a caterer, and $750 to a waiter/kitchen assistant, in connection with the memorial services for the Deceased following his funeral. These are reasonable expenses. It is to be noted that the Objectors’ family attended at these services.
[29] Third, it is agreed that an adjustment of one-half of the cost of the headstone should be made, totaling $1,723.25. However, the Objectors say that the cost of correction of the Deceased’s headstone should be borne by Merna personally. It is not clear whose actions caused the error. The Objectors say that Merna or her family had the responsibility. Kathryn says that they did not know the correct Hebrew name and relied on the funeral home. There is no other evidence on this issue. I therefore cannot find, on a balance of probabilities, that it was Merna’s error.
[30] Fourth, the Deceased had two credit cards in his name at the date of his death. The Objectors say that one credit card, with a balance of $5,506.39, was used exclusively by Merna. Whether or not this is correct, the evidence in the record is that this was a liability of the Deceased to Visa. There is also no evidence of any reimbursement obligation of Merna to the Deceased. The other credit card had a balance at the date of death of $6,931.52. The Objectors believe approximately $2,500 of this amount had been paid off by the Deceased. However, this alleged payment is not shown on the account statement for this credit card that is in evidence before the Court.
[31] Lastly, there is no reason for adjusting the 75% allocation of the accountant’s fee for tax returns in 2010 and 2011, which in any event is in an immaterial amount.
Conclusion
[32] Based on the foregoing, the Estate accounts are approved in the form presented to the Court at the hearing of this application, subject to a reduction in the liabilities of $1,723.25 on account of the cost of the dual headstone.