Tarantino v. Galvano, 2017 ONSC 3535

CITATION: Tarantino v. Galvano, 2017 ONSC 3535

COURT FILE NO.: 05-002/13

DATE: 20170704

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF ROSA GALVANO

BETWEEN:

TECLA TARANTINO and ROSA PIGNATELLI Plaintiffs/Applicants

– and –

NELLIE GALVANO also known as LEONARDA GALVANO Defendant/Respondent

Nicholas Tibollo, for the Plaintiffs/Applicants

Peter Chin, for the Defendant/Respondent

HEARD: November 28, 29, 30, December 1, 2, 12, 13, 14, 15, 16, 2016

kristjanson j.

Overview

[1] Nellie Galvano was a good daughter. From the time she emigrated from Italy in 1959 at the age of 12, Nellie helped her parents, Rosa and Filippo Galvano, navigate Canadian life. Rosa, born in Italy in 1922, had a Grade 5 education and never learned to speak English. Nellie lived with her parents her whole life other than a brief period during her marriage. She raised her two sons while living with her parents. After her father died in 1986, Nellie lived with and looked after her mother for the next 26 years, until Rosa’s death on February 20, 2012. As Rosa's health declined due to progressive dementia or Alzheimer's, Nellie and her son Claudio provided attentive loving care to Rosa. Nellie cared for Rosa at home, as Rosa became incontinent, as she could no longer walk, as she could no longer speak but only grunt, as she was fed by a tube in her stomach, and as she ultimately died in Nellie's arms in a very brief final hospitalization. This onerous burden was undertaken with love and attention.

[2] Rosa and Nellie owned the home together—Rosa had an 80.38% interest and Nellie had a 19.62% interest. In her 2005 Will, Rosa provided that her interest in the home would be sold and the proceeds brought into the Estate. Nellie had a right of first refusal to purchase the home. Nellie also had Rosa's power of attorney for property and power of attorney for personal care.

[3] On March 3, 2008, on the advice of and with the assistance of a solicitor, Felix Rocca, Nellie entered into an agreement between herself and Rosa which transferred Rosa's interest in the house and 75% of Rosa's pension income to Nellie, in exchange for Nellie acting as a caregiver for Rosa for the duration of Rosa's lifetime. Nellie provided Mr. Rocca with a letter from Rosa’s physician, Dr. Laura Chong, dated January 14, 2008. Dr. Chong’s letter stated that Rosa had Alzheimers, and was “unable to look after her own affairs.” Nellie signed for herself and in her capacity as attorney for property for Rosa.

[4] Rosa had two daughters—Nellie, and Giuseppina Bucci, who died in 2007. Giuseppina’s two daughters, who are Rosa's granddaughters, are Rosa Pignatelli ("Rosa P.") and Tecla Tarantino ("Tecla"). They are co-executrices and trustees of Rosa's Will, with Nellie. They commenced an application against Nellie on January 8, 2013, which was converted to an action in 2016. They seek: an accounting from Nellie with respect to Rosa's income and expenses, to set aside the house transfer, and to recover damages to the Estate, including occupancy rent, from Nellie. They do not acknowledge the value of any services provided by Nellie and Claudio in Rosa's lifetime. It is undisputed that Tecla and Rosa P. did not provide any personal care services to Rosa. Nellie raises a quantum meruit defence for services rendered and improvements to the house, and a counterclaim seeking declarations regarding Nellie’s entitlement to the house, the value of her services, and expenses.

[5] Nellie relied on an oral agreement with Rosa, later reduced to writing, to justify Nellie's cashing of the pension cheques, and later, the transfer of the house to Nellie's name. However, the oral agreement is not corroborated as required under the Evidence Act. As a result, I cannot find that there was part performance of the contract as argued by Nellie. I also find that the 2008 agreement must be set aside, notwithstanding the solicitor’s view that Nellie could enter into the agreement pursuant to the power of attorney for property without breaching her fiduciary duty. I find that in signing the agreement, Nellie was in breach of her duties under the Substitute Decisions Act.

[6] Nellie is under a duty to account for financial transactions relating to Rosa's funds from December 6, 2007 to Rosa's death on February 20, 2012. In the course of providing for her mother's care from 2008 to 2012, Nellie received and spent funds belonging to Rosa, and commingled some of these funds with her own. December 6, 2007 is the first time that Rosa's funds were commingled with Nellie's, and the first time that the power of attorney for property was exercised. I find that Nellie has met her duty to account on the basis of the evidence filed with this Court. The Estate owes Nellie money for amounts that Nellie spent from her own funds in meeting Rosa's needs.

[7] I also find that some of the expenditures undertaken by Nellie with respect to the maintenance of the house accrue to the benefit of the house, and proceeds of the sale of the house will have to account for these expenses.

[8] Nellie is entitled to a quantum meruit claim for care provided to her mother. Nellie provided an extraordinary level of care to her mother in accordance with what she understood to be Rosa's wish for her personal care - that she be looked after at home, attended by Nellie and Claudio. On the evidence before me I find that Nellie is entitled to a quantum meruit equitable set-off for the value of services provided by Nellie which enabled Rosa to live and die as she had wished.

[9] I disallow the quantum meruit claim in respect of Claudio's services. There is no doubt that Claudio provided personal care services which benefited Rosa, and made it possible for Rosa to live out her life at home. He is a good grandson. However, he is not a party to this lawsuit and no quantum meruit claim can be advanced as a result.

Issues

[10] This case raises the following issues:

1. Should the March 2008 Agreement entered into by Nellie personally and as attorney for Rosa, which transfers to Nellie substantially all of the assets of Rosa before her death, be set aside?

2. In entering the agreement using the power of attorney for property, did Nellie breach her fiduciary duties or duties under the Substitute Decisions Act?

3. Is Nellie under a duty to account with respect to Rosa's property and if so, has she met this duty?

4. What amount if any, should Nellie should be ordered to return to the Estate of Rosa Galvano? Should she be ordered to return Rosa's 80.38% interest in the house?

5. Is Nellie entitled to any relief under the quantum meruit claim or alternatiavely, under the Substitute Decisions Act?

6. Is Nellie entitled to any compensation as attorney under the power of attorney for personal care or for property?

7. Is Nellie liable for occupation rent from September 20, 2012 forward?

8. Should Nellie be removed as an executrix and trustee of the Estate of Rosa Galvano?

9. Is this an appropriate case for punitive damages?

Background Facts

1. Rosa's Will and Right of First Refusal Agreement

[11] In 2005 solicitor Angelo Mancini drafted a power of attorney for personal care, power of attorney property, a Will and a right of first refusal agreement for Rosa. Mr. Mancini testified that in 2005 he reviewed the documents with Rosa in Italian, took instructions in Italian, and gave advice in Italian. At that time he had no concerns with respect to Rosa's capacity, and there is no challenge with respect to Rosa's capacity to execute the 2005 documents.

[12] The key terms of Rosa's 2005 Will are as follows:

• Nellie, Rosa P. and Tecla were to be co-executrices and trustees. Any decision by them which was not unanimous would be determined by Nellie and one of the grandchildren;

• The Estate was to be divided into two equal shares:

▪ One share to Nellie, to be divided between Nellie's two children if she predeceased Rosa, and

▪ The other share to be held in trust for Giuseppina, with discretion in the trustees to distribute the income and capital. Upon her death or in the event she predeceased Rosa, the share to be divided in equal shares between Giuseppina's two children, Rosa P. and Tecla;

• The house was to be held by the trustees until the first of the following events (a "sale condition") occurred: (i) Nellie died, (ii) the home was sold, (iii) six months after the date of Rosa's death, or (iv) Nellie willingly surrendered the house;

• Until a sale condition occurred, Nellie was to be permitted to reside in the home free of rent, provided that all expenses relating to the upkeep and maintenance of the home and were paid by her;

• Upon the occurrence of the first of the sale conditions, the family home would be sold and Nellie had the right of first refusal to purchase it.

[13] In 2005 Rosa also entered a right of first refusal agreement which granted Nellie a right of first refusal to purchase Rosa's 80.38% interest in the home. Both the 2005 Will and the 2005 right of first refusal are similar to Rosa's prior Will, executed in 1996, and a 1996 right of first refusal in favour of Rosa which were also drafted by Mr. Mancini.

2. Power of Attorney, Personal Property

[14] The power of attorney for property is broadly drafted. Nellie is authorized amongst other things, to:

[D]o, on my behalf, any and all acts, which I could do if capable, …

AND to sign, draw, make and endorse my name to any cheque …AND also in my name to draw upon any …for any sum of money that is or may be to my credit …and to deposit same in any bank account or other place, and again at pleasure to draw the same from time to time as I could do. ……

AND as and when my said attorney(s) shall think fit to sell and absolutely dispose of my said real estate… as to my said attorney(s) shall seem reasonable and expedient; AND to convey, assign, transfer, and make over the same respectively to the purchaser…

AND for me and in my name and as my act and deed to execute and do all such assurances, deed, consents, contracts, covenants and things as shall be required and my said attorney(s) shall see fit for all or any of the purposes aforesaid…

AND generally to act in relation to my estate and effects, real and personal, as fully and effectually in all respects as I could do if personally present……..

………For greater certainty, my attorney(s) shall be entitled to review my Will, in order to be able to manage my estate in a manner that is sensitive thereto, and so as to be able to act as my attorney(s) sees fit.

[15] The power of attorney for property provided that it would come into effect when Rosa became "incapable of managing property within the meaning of that expression under the Substitute Decisions Act." The power of attorney states: "A letter from any medical doctor licensed to practice medicine in Ontario confirming mental incapacitation shall be sufficient to establish incapacity. In the event such letter is not available, incapacity shall be determined by the procedures contained in the said Act as amended from time to time."

[16] Nellie was authorized to receive compensation out of Rosa's property for any work done by her pursuant to the power of attorney Property, "as may be provided by regulation for the compensation of guardians of property made pursuant to section 90 of the Substitute Decisions Act."

3. Power of Attorney, Personal Care

[17] Rosa's granted Nellie the power of attorney for personal care pursuant to the Substitute Decisions Act. The power of attorney for personal care authorized Nellie to take compensation out of Rosa's property for any work done by her pursuant to the power of attorney for personal care, "in the same manner as may be provided by regulation pursuant to Section 90 of the Substitute Decisions Act for compensation of attorneys under a power of attorney.”

4. The Oral Agreement

[18] Nellie gave evidence that she made an oral agreement with Rosa in December, 2007. In December, 2007 Rosa and Nellie went to Rosa P.’s home for a gathering. Rosa P. suggested that Rosa, her grandmother, should be placed in a nursing home, and suggested that Nellie try visiting senior’s homes and senior day-care. At the time, Nellie was still working, and Claudio was at home and able to assist his grandmother, but it was clear she would need increasing attention. Nellie and Claudio both testified that Rosa was upset hearing about Rosa P.’s comments, and strongly indicated that she did not want to go to a nursing home, but wanted to be looked after at home by Nellie and Claudio. Nellie says that she entered into an oral agreement with Rosa to care for Rosa at home, in exchange for Rosa’s interest in the house and a portion of Rosa’s pension income. Nellie says that it was pursuant to the oral agreement that she first began cashing Rosa’s pension cheques: the first pension cheque deposited in Nellie’s account was dated December 6, 2007.

5. The March 2008 Agreement

[19] Nellie, Rosa and Claudio met with two solicitors in January, 2008 seeking to draft an agreement pursuant to which Rosa would transfer the house and income to Nellie, and Nellie and Claudio would look after Rosa.

(a) January 2008 Mancini Visit

[20] On January 2, 2008, Nellie attended at the offices of lawyer, Angelo Mancini. Mr. Mancini is an experienced lawyer, called to the bar in 1972, with a general business practice including wills and powers of attorney. He had met Rosa in 1996 and 2005, and Nellie was a client of his. He did not recall the 2008 meeting, and was not sure if Rosa was present, although generally Nellie did bring her mother to meetings.

[21] His reporting letter addressed to Nellie dated January 22, 2008 provides that he discussed the following issues with Nellie:

• An immediate recognition of past services to Rosa and capital contributions to improvements to your home, which could be done by adjusting the percentage interest in the home,

• Entering into an agreement to provide services Rosa at an agreed rate of compensation for future services, and

• Having Rosa consider making a new Will which more accurately reflects her current wishes for the disposition of her estate.

[22] Mr. Mancini’s letter of January 22, 2008 also stated that Rosa would have to be “independently represented by a solicitor of her choice who can communicate with her in her native language”. In addition, he suggested that a capacity assessment be done. He indicated that he had a conflict, and could not act on the agreement.

(b) Lawyer Felix Rocca

[23] On January 11, 2008, Nellie and her son, Claudio Piruzza, visited lawyer, Felix Rocca. Mr. Rocca is an experienced lawyer called to the bar in 1978, engaged in a general practice involving business law including estates. Nellie Galvano was a pre-existing client of Mr. Rocca's. On January 17, 2008, Nellie and Claudio again attended at Mr. Rocca's office, this time accompanied by Rosa.

[24] Solicitor Felix Rocca gave critical evidence in this trial. He spoke to Rosa in Italian, alone, on January 17, 2008. He confirmed that "Rosa definitely wanted to be looked after by Nellie", and Rosa did not want to "waste away" in a nursing home. He determined, however, that she did not have mental capacity to manage her financial affairs. While he confirmed Rosa's intentions, he was not sure Rosa could appreciate the consequences of the financial decisions. He requested medical confirmation of her capacity, and was provided with a January 14, 2008 letter from Dr. Laura Chong, Rosa's physician which stated: "Rosa Galvano has been my patient since 1994. Patient suffers with Alzheimer's and is unable to look after her own affairs."

[25] After meeting with Nellie, Rosa and Claudio, Rocca drafted an agreement whereby:

• Nellie transferred the house into her name;

• Nellie agreed to be Rosa's caregiver for the duration of Rosa's lifetime;

• Nellie would look after Rosa's daily needs and assist her as a prudent caregiver would, by providing food, taking her to regular medical assistance, and helping her maintain her social contacts and activities;

• Rosa would pay Nellie 75% of Rosa's pension income income for food, shelter and household costs; 25% of Rosa's pension income would be left for Rosa's personal needs, including clothing and esthetics;

• Nellie acknowledged that Rosa wished to remain in the home and did not wish to be placed in a senior's residence;

• Nellie agreed that in the event Rosa became so physically or mentally disabled that she could not be attended in the home, and a doctor ordered Rosa to be placed in an institution which provided medical care, then Nellie would continue to visit Rosa and provide the care which could reasonably be expected from a next-of-kin;

• Nellie's heirs were bound.

[26] On March 4, 2008, Mr. Rocca reviewed the agreement with Rosa, Nellie and Claudio, cognizant that he was not sure to what extent Rosa could appreciate the consequences of the agreement. Nellie signed this agreement personally. Nellie also signed on Rosa's behalf using the power of attorney. Rocca required Nellie to sign on Rosa's behalf, using the power of attorney for property, given his capacity concerns.

[27] Mr. Rocca testified that in his view, the power of attorney was broad enough to allow for the execution of this agreement, and "what was being done in transferring the property was in compliance with the spirit and legality of the power of attorney." He specifically commented that the power of attorney required the attorney to be able to manage the estate in a manner sensitive to the Will, but ultimately, gave the attorney the power to act as she saw fit. He was of the view that the agreement met the fiduciary best interest test, which he expressed as that "the attorney has to do things for the grantor's benefit, not for his or her own benefit." He was of the view that this was a fair arrangement for someone of Italian origin living in Toronto, and "this was a situation where someone wanted to remain in the family context, with a daughter, close to her community. She did not want to be thrown into even a five-star hotel for old folks home where she'd be on a bed and really waste away." Mr. Rocca saw this as a fair bargain - that Nellie is getting the house and income in exchange for the obligation to care for her mother in the home. His reporting letter of April 4, 2008 states in part: "Basically, in consideration for the fact that you would be looking after your mother, you transferred your mother's interest in the property to yourself."

[28] Rocca testified that he explained in his meeting that the agreement would be vulnerable to challenge by the heirs. He testified to two possible challenges. His reporting letter to Nellie and Rosa of March 14, 2008 states in part:

Before the Transfer was made, we reviewed the circumstances of this matter and I explained to you that because by transferring the property to yourself, you are reducing the size of the estate which would be left by your mother, upon her death the beneficiaries of the estate might want to contest the validity of the Transfer which you made to yourself with respect to your mother's interest in the property.

You indicated that you were willing to take this risk rather than having to look after your mother without compensation.

[29] In court, Rocca testified that the second potential challenge he anticipated was that Nellie could be sued if she didn't look after her mother; that is, she could be sued for failing to keep up her side of the agreement.

6. Events After 2008

[30] Nellie kept her side of the agreement: she provided Rosa care, in the home, until her death in February, 2012. Nellie shut down her businesses early in 2008 to provide care to Rosa. Nellie and Claudio provided full-time care to Rosa from 2008 to January, 2010, when Nellie hired a live-in caregiver, Meth Garcia, to assist with Rosa’s care. Rosa was declining physically and mentally due to her dementia/Alzheimer’s. Rosa stopped walking in the fall of 2010; in December, 2010 a feeding tube was inserted in her stomach. Rosa’s physician began making house calls as of September, 2010, as Nellie could no longer take Rosa to the doctor’s office. Nellie and Claudio continued to provide care for Rosa, assisted by Meth Garcia, until Rosa’s death in February, 2012. During this time, Nellie also made renovations to the house. There is a dispute about the value of the care services provided by Nellie, as well as the value of the house renovations.

Issue #1: Should the March 2008 Agreement entered into by Nellie personally and as attorney for Rosa, which transfers to Nellie substantially all of the assets of Rosa before her death, be set aside?

A. Nellie argues that she and Rosa reached an oral agreement in 2007 under which Nellie would receive Rosa's interest in the house and her pension income, in exchange for Nellie and Claudio looking after Rosa, in the home, for the duration of Rosa's lifetime. Nellie argues that there was part performance of this agreement, pursuant to which Nellie cashed Rosa's pension cheques, quit her job, and began to look after Rosa full time in the home. The agreement was reduced to writing as soon as possible, in the March, 2008 agreement drafted by Rocca. As such, Nellie submits that the transfer is valid. However, I find that the agreement fails. First, there is no corroboration of the 2007 oral agreement. Second, as discussed under Issue #2, the 2008 written agreement was not a valid exercise of Nellie's power of attorney in the circumstances.

1. The Oral Agreement is Not Corroborated

[31] An oral agreement made by a deceased person must be corroborated by someone other than the beneficiary of the agreement when the agreement is challenged by the executors. Nellie's evidence of the oral agreement cannot be accepted without corroboration because of section 13 of the Evidence Act, R.S.O. 1990, c. E.23, which provides:

In an action by or against the heirs, next of kin, executors, 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.

[32] section 13 of the Evidence Act applies to this action because it is an action by executors of Rosa's Estate relating to a matter occurring before Rosa's death, the purported agreement to transfer Rosa's interest in the home and income to Nellie.

[33] Mr. Rocca and Claudio corroborate Rosa's wish that she be looked after at home by Nellie and Claudio. However, neither of them corroborated Rosa's agreement to the financial terms. Rocca could not confirm Rosa's agreement to the financial terms, because he was of the view that Rosa did not have the capacity to understand the financial consequences. Because there is no evidence to corroborate the alleged oral agreement, the acts claimed to be in part performance cannot be relied on. The March, 2008 agreement cannot be relied on as reducing the oral agreement to writing following part performance, in light of the lack of corroboration as to the underlying alleged oral agreement. As such, I go on to consider whether the March, 2008 agreement can be enforced as an agreement entered into by Nellie under the power of attorney for property, or whether this was a breach of the Substitute Decisions Act or of fiduciary duty.

Issue #2: In entering the agreement using the power of attorney for property, did Nellie breach her fiduciary duties or duties under the Substitute Decisions Act?

[34] Nellie signed the 2008 agreement for herself personally and on behalf of Rosa, using the power of attorney for property. This was an implicit acknowledgment that she had a fiduciary duty at the time of signing. In addition, the power of attorney for property stated that it came into effect when Rosa was "incapable of managing property", and that a letter from a medical doctor "confirming mental incapacitation" shall be sufficient to establish incapacity. Nellie obtained a letter from Dr. Chong dated January 14, 2008 stating that Rosa has Alzheimer’s and "is unable to look after her own affairs." This letter triggered Nellie’s duties under the power of attorney, including her duties under the Substitute Decisions Act and her fiduciary duties.

[35] I find that Nellie did keep up her side of the agreement under very difficult and challenging circumstances few could ever have met. However, Rosa lacked the capacity to make the agreement, and the transfer made pursuant to the power of attorney was not valid.

[36] Both common law and statute law impose fiduciary obligations on an attorney for property. Section 32(1) of the Substitute Decisions Act sets out the following duties of a guardian of property (which also apply to a power of attorney for property):

(1) A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person's benefit.

(1.1) If the guardian's decision will have an effect on the incapable person's personal comfort or well-being, the guardian shall consider that effect in determining whether the decision is for the incapable person's benefit.

(1.2) A guardian shall manage a person's property in a manner consistent with decisions concerning the person's personal care that are made by the person who has authority to make those decisions. (emphasis added)

[37] The duties of a guardian for personal care extend to health care, nutrition, shelter, clothing, hygiene and safety: Substitute Decisions Act, s. 45. As attorney for personal care, Nellie was able to take into account Rosa’s wish that she be looked after at home. Section 66(3) of the Substitute Decisions Act provides that the attorney for personal care should make decisions in accordance with wishes expressed when the person was capable, and otherwise, should make decisions in accordance with the person’s best interests. Section 66(4) of the Act requires the attorney to take into consideration the following factors in deciding what is in the incapable person’s best interests:

(a) the values and beliefs that the guardian knows the person held when capable and believes the person would still act on if capable;

(b) the person’s current wishes, if they can be ascertained; and

(c) the following factors:

1. Whether the guardian’s decision is likely to,

i. improve the quality of the person’s life,

ii. prevent the quality of the person’s life from deteriorating, or

iii. reduce the extent to which, or the rate at which, the quality of the person’s life is likely to deteriorate.

2. Whether the benefit the person is expected to obtain from the decision outweighs the risk of harm to the person from an alternative decision.

[38] I accept that Rosa expressed a wish to be looked after in her home, by Rosa and Claudio. This is corroborated by both Mr. Rocca and Claudio. She did not want to go to a nursing home. Not many people do. I accept that in making this decision, Nellie took into account Rosa’s best interests, including that the decision to look after Rosa at home would likely improve the quality of Rosa’s life, or reduce the rate at which the quality of Rosa’s life would likely deteriorate in an institution. I also accept that under the power of attorney for personal care, Nellie’s overriding obligation was to consider Rosa’s wishes for care, and Rosa’s best interests. She did not owe a duty to the Estate or the beneficiaries, but to Rosa.

[39] As the attorney for property, Nellie could make the financial arrangements to implement the care decision she made in Rosa’s best interests—that Rosa would be cared for in her home. As attorney for property, Nellie could make expenditures from Rosa’s funds that were “reasonably necessary” for Rosa’s support and care in the home (Substitute Decisions Act, s. 37(1)). In determining what is reasonably necessary for a person’s support and care, the guardian is to consider the value of the property and the accustomed standard of living of the incapable person, as well as the nature of other legal obligations. In this role, too, Nellie’s duty was to act in Rosa’s best interest; if an expenditure was reasonably necessary for Rosa’s care and support, Nellie was entitled to make such an expenditure, even if it would reduce the size of the estate available to the beneficiaries of the Will. Again, Rosa’s interests predominated.

[40] The decision to transfer the entirety of Rosa’s interest in the house at the outset of the care arrangement, together with 75% of the pension cheques, however, was not “reasonably necessary”, and was an imprudent arrangement which benefitted Nellie beyond that “reasonably necessary” to provide adequately for Rosa’s care.

[41] The granddaughters submit that Nellie, as “attorney, executrix and trustee of Rosa Galvano and her Estate,” breached her fiduciary obligations, by

• Signing the agreement or transferring the property at a time when Rosa did not have the legal and mental capacity to agree, “contrary to the provisions of the Substitute Decisions Act, 1992 and the known intentions of Rosa Galvano as set out in her Will”;

• Causing banks and investment accounts of Rosa Galvano to be transferred into Nellie’s name and spending or transferring funds that have not been accounted for “ contrary to 35.1(1) of the Substitute Decisions Act, 1992 and the known intentions of Rosa Galvano as set out in her Will”; and

• Disposing of, misappropriating and converting to her own use the assets of Rosa and her Estate “contrary to 35.1(1) of the Substitute Decisions Act, 1992, and the known intentions of Rosa Galvano as set out in her Will.”

[42] The power of attorney for property is broad enough to allow dispositions contrary to the Will, where reasonably necessary for Rosa’s care. The granddaughters rely in part on s. 35.1 of the Substitute Decisions Act, which provides that a guardian of property "shall not dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person's will." Section 35.1(2), however, provides that this section does not apply in respect of a “specific testamentary gift of money.”

[43] Rosa’s bank and investment accounts were not named or bequeathed separately in the Will and simply form part of the estate; they are not subject to a specific testamentary gift, so section 35.1 does not apply. I find that the house was not the subject of a specific testamentary gift to the beneficiaries as property; as property, it was subject to a right of first offer by Nellie. The house was to be sold, the proceeds taken into the residue of the Estate, and the value (money) distributed to the beneficiaries. The interpretation that a right to proceeds of sale is not a specific testamentary gift is supported by the language of s. 36 (1) of the Substitute Decisions Act, which provides:

The doctrine of ademption does not apply to property that is subject to a specific testamentary gift and that a guardian of property disposes of under this Act, and anyone who would have acquired a right to the property on the death of the incapable person is entitled to receive from the residue of the estate the equivalent of a corresponding right in the proceeds of the disposition of the property, without interest. (emphasis added)

[44] The Act itself distinguishes between a right to property (the subject of a specific testamentary gift), and a right to proceeds of the disposition of property. In this case, the Will made provision for Nellie to have the first right of refusal, and the “net proceeds pertaining to my interest in the property shall then be brought into the residue and distributed….” As a result, s. 35.1 does not apply to the house.

[45] In addition, s. 35.1(3) provides that the guardian “may dispose of that property if the disposition of that property is necessary to comply with the guardian’s duties.” Again, the ability to deal with the house depends on necessity. The power of attorney for property provided Nellie with the ability to dispose of real estate on Rosa’s behalf, although the power of attorney also indicated that Nellie was entitled to review the Will “in order to be able to manage my estate in a manner that is sensitive thereto, and so as to be able to act as my attorney sees fit.” Ultimately, the power to dispose of the house was open to Nellie under the power of attorney, subject to Nellie’s duties under the Substitute Decisions Act, including common law fiduciary duties.

[46] Under the Substitute Decisions Act, Nellie could only enter into the agreement to transfer the house and pension income if it was “reasonably necessary” to provide for Rosa’s care, which I find it was not. As a fiduciary, an attorney for property is "obliged to act only for the benefit of [the donor], putting her own interests aside": Richardson Estate v. Mew, 2009 ONCA 403, 96 O.R. (3d) 65, at para. 49. An attorney is prohibited from using the power for their own benefit unless "it is done with the full knowledge and consent of the donor": Richardson Estate, at paras. 49-50. Rosa lacked capacity at the time of the Agreement, and the transfer of the house and pension income therefore were not done with Rosa’s full knowledge and consent.

[47] In Zimmerman v McMichael Estate, 2010 ONSC 2947 the various duties of an attorney as fiduciary are discussed. They include:

• A fiduciary is under a duty to account,

• A fiduciary has a duty not to commingle trust funds with the attorney's property, and to provide an accounting if they are commingled,

• a fiduciary must not make a profit or to put himself/herself in a position where his/her interests and his/her duty conflict unless the trust instrument expressly so provides,

• As a fiduciary, an attorney for property is not entitled to exercise that power for his or her own benefit unless expressly authorized to do so, and

• The fiduciary bears the onus of establishing that the management and disbursement of funds is consistent with the terms of the power of attorney.

[48] I have found that it was not “reasonably necessary” under the Substitute Decisions Act to dispose of the house and the interest in the pension in March, 2008 to provide the care that Rosa wished, and that Nellie deemed appropriate both in her capacity as attorney for property and as attorney for personal care. Rosa required full time care. Nellie indicated that she could not care for her mother without “compensation;” otherwise, she would have nothing to live on. Nellie shut down her businesses to look after her mother, and she and Claudio sacrificed their lives to provide the care. Compensation was clearly warranted. However, the manner in which the compensation was taken—pursuant to the 2008 Agreement—breached Nellie’s duties. There was no link between the value of the transfer of property and the care required by Nellie. If Rosa died after two weeks, the deal would be clearly improvident, and benefit Nellie excessively. At the same time, I recognize that Nellie consulted a solicitor; after Mr. Mancini advised that a capacity assessment should be done, she obtained the letter from Dr. Chong and provided it to Mr. Rocca so that he was aware of the capacity issue; the solicitor testified that he believed that the Agreement was permissible under the power of attorney, and did not breach Nellie’s fiduciary duties. As such, Nellie had every reason to believe that the Agreement was a valid and enforceable manner of meeting Rosa’s needs. If required, I would find under s. 33(2) of the Substitute Decisions Act that Nellie should be relieved of liability for committing a breach of duty, as she acted honestly, reasonably and diligently.

[49] The transfer of title to the house must be set aside, and Nellie must account for expenditures made in respect of Rosa’s care. I separately consider and award to Nellie the value of care services as a quantum meruit equitable set-off.

Issue #3: Is Nellie under a duty to account with respect to Rosa's property and if so, has she met this duty?

[50] The triggering event under the power of attorney for property was incapacity, to be determined by a letter from a physician or else in accordance with the Substitute Decisions Act. Dr. Chong's letter was dated January 14, 2008. I find that until at least January 14, 2008, Rosa was capable. The power of attorney was only triggered on delivery of the letter.

[51] The granddaughters argued that incapacity arose at a much earlier time—in 2006—and sought an accounting from the date the power of attorney for property was granted, in 2005, or the date of incapacity, rather than the date it was triggered. I do not accept the granddaughters’ arguments. The burden is on the granddaughters to establish an earlier date of incapacity, and they have failed to do so. I review that evidence in the next section.

[52] Nellie gave evidence confirming that commingling occurred commencing with the December 2007 pension cheques which Nellie deposited to her own account, relying on her belief that she had entered into an oral contract. Having reviewed the financial records filed and the evidence before me, there is no reason to believe that Nellie had breached her fiduciary duty, or that the power of attorney for property was misused at any earlier date. As a result, given the commingling which commenced on December 6, 2007, Nellie must account for income and expenses made from Rosa’s accounts or on Rosa’s behalf after December 6, 2007.

[53] I first address the arguments of the granddaughters that since incapacity commenced at an earlier date, the accounting must extend to the earlier date of incapacity.

1. The test for legal capacity to manage property

[54] Section 2(1) of the Substitute Decisions Act establishes a presumption of capacity for entering into a contract for persons over 18 years of age. Section 6 of the Substitute Decisions Act states:

A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.

[55] There is similar language in the test for whether a person is incapable of making personal care decisions under section 45 of the Substitute Decisions Act.

[56] The Supreme Court has interpreted the meaning of understanding information and appreciating consequences requirements of the incapacity test in the concept of treatment decisions, which I adapt to the property context: Starson v. Swayze, [2003] S.C.R. 722. Justice Major, for the majority in Starson, summarized the test as follows, at para. 78:

Capacity involves two criteria. First, a person must be able to understand the information that is relevant to making a treatment decision. This requires the cognitive ability to process, retain and understand the relevant information. […] Second, a person must be able to appreciate the reasonably foreseeable consequences of the decision or lack of one. This requires the patient to be able to apply the relevant information to his or her circumstances, and to be able to weigh the foreseeable risks and benefits of a decision or lack thereof.

[57] In Johnson v. Huchkewich, 2010 ONSC 6002, 62 E.T.R. (3d) 144, which was a case about testamentary capacity, the primary medical evidence before the court was the testimony and clinical notes and records of the testatrix's family doctor. The family doctor's evidence indicated that the testatrix was experiencing a mental decline at a time shortly after she made the Will, including some forgetfulness, but that she did not lack capacity. Another doctor working in geriatric services at a hospital diagnosed the testatrix with the onset of dementia and/or Alzheimer's around the time the testatrix made the will.

[58] Justice Corbett was of the view that "[t]he diagnosis of [the doctor specializing in geriatric services], that [the testatrix] was experiencing the onset of dementia and/or Alzheimer's by December 1999, is not a basis for drawing such an inference [of incapacity]." Justice Corbett went on to state that an expert opinion (para. 44):

could have assisted the court in understanding the functional impact of these descriptions and diagnoses. In the absence of an expert opinion, I rely upon [the family doctor's] observations and conclusions, and the dearth of evidence establishing any practical functional impairment of [the testatrix's] abilities that would bear on her testamentary capacity in April 1998.

[59] Although Johnson dealt with testamentary capacity, the analytical approach is applicable to the present case. While the clinical notes of Rosa's family doctor, Dr. Chong and the specialist, Dr. Koponen, indicate severe memory loss and a progressive onset of dementia and/or Alzheimer's, there is no evidence as to the functional impact of this diagnosis on Rosa's capacity.

[60] In Flynn v. Flynn, 2007 CarswellOnt 10220 (Ont. S.C.), Justice Pattillo was asked to find that there were reasonable grounds to believe that the respondent lacked capacity and that she should be referred for a capacity assessment under the Substitute Decisions Act. Justice Pattillo concluded that the respondent's "hallucinations, delusions, and disorientation from time to time" did not establish reasonable grounds to believe she was incapable within the meaning of the Substitute Decisions Act: para. 11.

[61] Courts have held that the question of whether a person has testamentary capacity may be answered by lay evidence, particularly given that friends and family will often have greater knowledge of the testator's behaviour and state of mind over the long term: see e.g. Davis Estate, Re, 1963 CanLII 118 (ON CA), [1963] 2 O.R. 666, at para. 16; Spence v. Price, 1945 CanLII 339 (ON CA), [1946] 2 D.L.R. 592, at para. 6.

[62] Evidence of memory loss alone does not ground a finding of testamentary incapacity; it must be linked to the "relevant time": Royal Trust Corp. of Canada v. Ritchie, 2007 SKCA 64, 33 E.T.R. (3d) 159, at para. 20. There may be periods of lucidity. Delusional beliefs alone do not ground a finding of testamentary incapacity; they must be "in relation to the testator's property or expected beneficiaries": Royal Trust Corp. of Canada v. Saunders, 2006 CanLII 19424 (ON SC), 2006 CarswellOnt 3478, at para. 62 (Ont. S.C.). A person may have capacity to enter into a contract although they have been diagnosed with Alzheimer's: Lynch Estate v. Lynch Estate (1993), 1993 CanLII 7024 (AB KB), 8 Alta. L.R. (3d) 291 (AB. Q.B.)

[63] In Khan v. St. Thomas Psychiatric Hospital (1992), 1992 CanLII 7464 (ON CA), 7 O.R. (3d) 303 (Ont. C.A.), the appellant challenged orders of the Review Board confirming her incapacity to consent to treatment and to "manage her estate" under the Mental Health Act, R.S.O. 1980, c. 262. The Court of Appeal adopted the following test for "capacity to make a financial decision” (para. 36):

Capacity to Make a Financial Decision - In order to be considered mentally capable to make a financial decision, an individual must have the ability:

a) to understand the nature of the financial decision and the choices available to him or her;

b) to understand his or her relationship to the parties to and/or potential beneficiaries of the transaction or transactions which give rise to the decision; and

c) to appreciate the consequences of making the decision.

[64] I review the evidence in accordance with this framework, taking into account the presumption of capacity, to determine whether the granddaughters have established on a balance of probabilities that Rosa lacked capacity prior to January 14, 2008, so that Nellie must account for income and expenses at a date earlier than December 6, 2007.

2. Evidence Relevant to Capacity

(a) Dr. Chong

[65] Dr. Chong was Rosa's family physician. She also noted that Rosa always attended appointments with Nellie or occasionally with Claudio, as they functioned as Rosa's interpreters since Rosa did not speak English. She administered mini mental state (MMSE) examinations to Rosa, which showed declining scores over time. She described the MMSE as a standardized test for assessing orientation and registration, and agreed the scores were affected by both language and education. She noted that she did not put much credence in the MMSE scores, particularly in light of Rosa's language barrier, limited education, and literacy issues. She agreed that the MMSE score does not correlate with whether one has the ability to understand an issue, whether it is to give a gift or be cared for in the home.

[66] Dr. Chong prescribed Aricet, an Alzheimer's drug, in 2003. Her clinical notes record that in October 2006 Rosa's self-care was fine; she was able to cook light meals, bathe and clean the home; her long term memory and behaviour were fine, although she was very forgetful and did have progressive dementia. Her notes from October, 2007 record that Rosa was suffering from short-term memory loss with good long-term memory, and there was no disruptive behavior. On December 18, 2007, Dr. Chong referred Rosa to a senior's day program, with a diagnosis of "short-term memory." As noted, she wrote the January 14, 2008 letter stating Rosa had Alzheimer's and could no longer manage her financial affairs, although no capacity assessment was conducted.

[67] Rosa was hospitalized in February, 2008 for pneumonia. The York Central Hospital emergency consultation report dated February 19, 2008 notes that Rosa's dementia is quite mild, and is mainly forgetfulness. Nellie informed the hospital that Rosa still walks on her own, goes shopping with her daughter, but needs help getting dressed and getting bathed.

[68] The first significant mention in Dr. Chong's notes of a clear decline was on June 30, 2008, Rosa was brought to the appointment by Nellie. Her notes record that Nellie was upset with Rosa's behaviour as she was undressing herself, laughing and talking to herself in the mirror, could not be left alone, was incontinent and not able to clean herself well. Dr. Chong noted caregiver stress and specifically noted "would never put her in a nursing home."

[69] On December 30, 2008 Dr. Chong noted dementia, sometimes cries incessantly then laughs; now sleeps spontaneously, and noted "moderate/severe Alzheimer's". On April 22, 2009 Dr. Chong completed an application for disability tax credit backdated to 2006 with respect to feeding, dressing, mental function and elimination.

[70] Rosa became bedridden in the fall of 2010. A discharge report from William Osler Health Center December 10, 2010, noted that at this point Rosa had "end stage dementia”, with a feeding tube in place. There was discussion at the time of palliative care. Nellie did not feel that Rosa was ready for palliative care. The consult noted that the family is willing to take her under these very difficult circumstances. She was given a discharge for home care with the diagnosis of severe dementia, failure to thrive, PEG feeding and diabetes.

[71] Dr. Chong's records show sixteen house calls between June 14, 2010 and February 16, 2012.

[72] Dr. Chong's notes record that by January 14, 2011 Rosa was suffering from advanced dementia and was undergoing gastric feeding. On May 18, 2011, a house call notes there was "progressive advanced dementia, spasticity and Rosa was grunting only." On February 22, 2012 Nellie called to advise that Rosa had died in the hospital. I do not find that Dr. Chong’s evidence establishes incapacity with respect to financial decisions prior to January 14, 2008.

(b) Dr. Koponen

[73] Dr. Koponen is a general neurologist in Brampton. She consulted with Rosa on November 21 and 28, 2006. Nellie attended to translate for Rosa. Dr. Koponen administered a variety of tests to Rosa, and found that Rosa had "quite severe memory loss" and "severe cognitive dysfunction" even accounting for Rosa's limited education (Grade 5), lack of literacy, and lack of English. She was not asked to assess capacity, and could not offer any opinion on capacity. She did not diagnose dementia, but did diagnose quite severe memory loss. I do not find that Dr. Koponen’s evidence establishes incapacity with respect to financial decisions prior to January 14, 2008.

(c) Zoltan Polyak

[74] Zoltan Polyak, a contractor who worked on the house, also gave evidence about his observations of Rosa. In 2008 and 2009 he would exchange pleasantries with Rosa, and noted that she was clean and happy. In 2009 he recalled Rosa moving around, standing up, and dancing when Nellie put music on. He says he did not know that Rosa had a mental illness in 2009. She would smile, wave and talk when he walked by and he said he could not tell the difference between 2002 (when he first met Rosa) and 2009. Zoltan does not speak Italian, so his interactions were minimal.

(d) Claudio Piruzza

[75] Claudio Piruzza lived with Rosa for 37 years, until her death. Prior to Rosa's February 2008 hospitalization for pneumonia, Claudio would drive his grandmother wherever she needed to go, to church, to visit his aunt Giuseppina, take her on family visits, take her shopping, take her to the factory where she would often visit with Nellie. After her hospitalization, he spent many nights with her, providing intimate personal care. He had a good opportunity to observe Rosa.

[76] Claudio thought that Rosa lost her mental capacity in June 2009, at which time she was unable to appreciate or make decisions. He says that Rosa would have known the consequences of the agreement at the time they visited Mr. Rocca. I prefer Mr. Rocca’s evidence on this point, given his greater familiarity with issues relating to the ability to appreciate and understand the consequences of financial decisions.

(e) Rosa P. and Tecla

[77] Rosa P. gave evidence that in 2006, on a visit, Nellie stated that the mirrors were covered with blankets because Rosa was starting to hallucinate. I note that the mirror issue was reflected in Dr. Chong’s notes for the first time in June, 2008, when it was reported by Nellie. Rosa P. thought that in 2007, her grandma did not recall that Rosa P. owned her house on a visit there. She also testified that it was 2009 when Nellie left her job to stay home, which contradicts the other evidence. There was little detail about Rosa P.’s observations.

[78] Tecla fairly acknowledged in her evidence that due to surgery in 2014, she has significant memory issues respecting dates and also struggles with numbers; I find her an unreliable witness with respect to dates and numbers.

[79] Rosa P. and Tecla spent very little time with their grandmother. They never provided care to their grandmother. They didn’t take her shopping, on errands, or involve her in daily family life. They didn’t ask her how she felt about end of life care. They visited about 6 times a year in family settings and dropped by from time to time; neither had Rosa over to their homes after July, 2007. While they were no doubt loving granddaughters, they did not spend much time with Rosa; as they stated, they had children of their own and were busy. In their limited visits and given their limited contact with their grandmother, they did not have the opportunity to observe or make conclusions about capacity to make financial decisions, and offer vignettes poorly located in time. They offer little more than what Justice Pattillo referred to as “hallucinations, delusions, and disorientation from time to time”, rather than a functional impairment of capacity to make financial decisions prior to January 14, 2008.

[80] I have already noted that Mr. Rocca was of the view that in January, 2008, Rosa lacked the ability to appreciate the consequences of financial decisions.

[81] Although it is clear that Rosa had dementia or Alzheimer’s starting in approximately 2003, the granddaughters have not met the burden of establishing that Rosa lacked capacity to make financial decisions prior to January 14, 2008.

3. Findings on Nellie’s Accounting

[82] Nellie is required to provide an accounting only for the period following December, 7, 2007, when Rosa’s pension cheques were commingled with funds in Nellie’s account. The attorney for property is under an obligation to keep accounts only if “the grantor is incapable of managing property or if the attorney has reasonable grounds to believe that the grantor is incapable of managing the property”: Substitute Decisions Act, s. 32. Nellie is not liable to account for the prior period, when Rosa was on the evidence conducting her own banking and making her own decisions, and the power of attorney for property had not yet been triggered. I find that not only has Nellie accounted for the income and expenses, but that she has subsidized the care of Rosa from her own resources. I find that she did not appropriate any money for her own benefit, and moneys were appropriately spent.

4. Evidence of Nellie and Claudio re Accounting

[83] Nellie did not keep contemporaneous accounts in the form prescribed under Accounts and Records of Attorneys and Guardians, O Reg 100/96. For the purposes of this litigation, however, she has collected and itemized expenses, and provided copies of point of sales receipts, cheques, and withdrawals. No claim can be made for expenses incurred when Rosa was capable, or before Nellie exercised the power of attorney, and no obligation to account arises prior to that time. As well, Nellie’s duties under the power of attorney expired on Rosa’s death; all parties however looked to funeral expenses, and I have allowed them in the accounting rather than deferring to the Estate accounts.

[84] Nellie prepared an accounting for the purposes of the litigation using QuickBooks software for the period 1985 to 2015. Nellie and Claudio provided binders of original documents and QuickBooks accounting summaries. This was done to provide an accounting, and to support the quantum meruit claim. I have disregarded the expenses prior to December 6, 2007 as there is no basis for a claim by Nellie before that time. The accounting prepared by Nellie and Claudio was subject to an audit by the accountant retained by the granddaughters and, subject to my comments below, I accept the figures set out in the Mak reports, which are based on the materials provided by Nellie and Claudio, as a more thorough and reliable accounting of income and expenses.

5. Evidence of Alan Mak

[85] The granddaughters rely on the evidence of Alan Mak, a forensic litigation accountant qualified to provide expert accounting evidence. He acknowledged his expert's duty in Form 53. He provided opinions in two areas: income and expenses, and occupation rent. Mr. Mak provided reports relating to Rosa’s income and expenses in the time period 2005 to 2013, and reports on the economic value of Nellie and Claudio's continued occupancy of the house from September 2012 to November, 2016. Nellie relied on the expert evidence of John N. Douglas, a forensic and investigative accountant engaged to review and provide commentary on the Mak income and expenses report. He too was qualified to provide forensic accounting evidence, and provided a Form 53 acknowledgment of expert duties.

[86] Mak took the accounts prepared by Nellie and Claudio. He reviewed the supporting cheques, receipts, bank statements, investment statements, point of sales receipts and other materials provided by Nellie. He ensured that the items were not duplicated. He prepared an accounting of income and expenses, 2005 through 2013.

[87] On the income side, he reviewed bank statements for Nellie and Rosa, and investment statements to summarize inflows and outflows and verify payment of documented costs.

[88] He classified each expense in one of three categories. Mr. Mak only considered expenses which were corroborated by documentary evidence (bank statement debits, cancelled cheques, paid invoices, receipts, etc.), and only for the period 2005 to 2013. The categories were:

• Related to Rosa’s care, which included expenses of apparent benefit to Rosa, required for her care, or related to home ownership. These costs were subject to two possible apportionments. Mr. Mak determined that “where a cost appears to have benefitted the entire household as a cost of occupancy, we have apportioned the cost by one-third (33.33%) to Rosa” (since she lived with Nellie and Claudio.) This is what is referred to as the “occupancy cost”. In addition, Mr. Mak found that “where a cost appears to have improved the property (capital cost), we have apportioned the cost according to ownership interest (80.38%) to Rosa. Expenditures relating to home ownership after the date of death were included and apportioned to Rosa 80.38%,

• Not related to Rosa’s care/benefit (e.g. expenses after Rosa’s death, doesn’t appear to relate to Rosa’s care/benefit/home ownership), and

• Unknown (proof of payment, but expenditure purpose not clarified, or further supporting documentation not available).

[89] I accept some, although not all, of his assumptions and his evidence.

[90] I have used the evidence provided by Nellie and Claudio, as audited by Mr. Mak and set out in the restated schedules to his November 25, 2016 report, together with the oral testimony to approve the accounts and determine the income and expenses of Rosa in the period noted above.

6. Rosa’s Income

[91] Mak’s evidence is that in the period 2005 until her death in February, 2012, Rosa's income was $202,167.00. However, the relevant income is the period in which Nellie was commingling the assets, and using the power of attorney to disburse Rosa’s funds. While the power of attorney for property was granted in 2005, it expressly did not take effect until incapacity. Rosa continued to attend at the bank and signed on her own behalf until sometime in 2008. There is no evidence that Nellie began to commingle assets until the December, 2007, in reliance on her understanding of the oral contract.

[92] Based on the expert evidence of Mr. Mak, at Schedule 2, taking into account the period taking into account the income from December 6, 2007 including the Dec. 6, 2007 pension cheque ($1449.45); the Dec. 15, 2007 cheque ($1211.61), and the Dec. 28, 2007 cheque ($1449.45), to the date of death, the total income for which Nellie must account is $141,990.00.

7. Conclusion on Expenses

[93] I take into account only expenses incurred in the period December 6, 2007 through to Rosa's death February 20, 2012, allowing for funeral and related expenses.

(a) Occupancy Cost Assumption

[94] Mak made an “occupancy cost” assumption, which I reject. In Mak’s evidence, all utilities are subject to an “occupancy cost” allocation (1/3 to Rosa, 2/3 to Nellie and Claudio). I find that Rosa required 24 hour a day care. Nellie and Claudio, and later Meth Garcia, lived in the house and provided care to Rosa 24 hours a day. In order to be cared for by a caregiver team, it was essential that the water tank held hot water, that the lights were turned on, and the home was heated. Since the decision was properly made to provide care to Rosa in her home, those costs are allocated to Rosa. In each case, I accept the expenses commencing after December 6, 2007, to the most recent bill following Rosa’s death on February 20, 2012. Therefore, I accept Mr. Mak’s calculations on Schedules 5 and 5.1 for the period December 17, 2007 to March 12, 2012, except that no occupancy cost assumption is to be applied, and I find all the costs are Rosa-related.

[95] I also reject the occupancy cost assumption as it applies to maintenance and other expenses on Schedule 14 such as the Reliance Water Tank Rental, and accept those Schedule 14 expenses should be allocated to Rosa’s account, including the “Unknowns”, for the relevant period.

[96] I attribute all of the occupancy costs in Mr. Mak’s schedules to the personal care of Rosa. Having accepted that Rosa's wish was to be looked after at home, and having accepted that in her capacity as attorney for personal care it was appropriate for Nellie to make arrangements for Rosa to be looked after in the home, those expenses are properly attributable to the care of Rosa.

(b) Investment Withdrawals and Payments to Granddaughters/Nellie

[97] Investment withdrawals which were taken into Rosa’s income and subsequently distributed to the beneficiaries were not allocated as Rosa-related expenses in Mr. Mak’s analysis (Schedule 14). I find this to be in error, as these were legitimate Rosa-related expenses. In May 2011, there was a withdrawal of $21,000 from RBC Investment Account 7781. $10,000 was paid to Nellie, $5,000 was paid to Rosa P., and $5,000 was paid to Tecla; the amount of $20,000.00 is a Rosa-related expense. I find that the three executors/beneficiaries (Nellie, Rosa P. and Tecla) agreed on the withdrawal of the $20,000, and understood it was coming from Rosa’s funds.

[98] In addition, in June, 2008 $2,400 was paid to Rosa P. and Tecla as a gift, in consultation with Nellie. The decisions to distribute the $20,000 and the $2,400 were properly made pursuant to ss. 37(3) and (4) of the Substitute Decisions Act, and I consider them an allowable expense to be allocated to Rosa on Schedule 14.

(c) Home Renovation Expenses

[99] On the evidence before me, the Home Depot, Rona, Canadian Tire, Zoltan Polyak and Other Renovation expenses on Mr. Mak’s Schedules 6 to 10, including the “Unknowns”, are properly included as capital costs, 80.38% to be allocated to the benefit of Rosa, for the period after December 6, 2007.

[100] On the oral evidence of Zoltan, Nellie and Claudio, together with the accounts provided by Nellie and Claudio, the expenses were all incurred with respect to renovations or maintenance of the house. Those renovations will benefit the Estate. For example, while the granddaughters denied value with respect to the basement renovations, the 2012 property appraisal specifically cited “Basement area is recently refinished in 2012 and contains 2 bedrooms, kitchen, dining, a 3-pc bathroom with marble top, cold room, laundry and utilities.” While Nellie agreed on cross-examination that the basement renovations were not for the benefit of her mother, I took that to mean that her mother was not using the basement: she was not stating that the renovations did not enhance the value and ultimate marketability of the house, which enures to the benefit of the Estate. On the basis of the oral evidence and documents, I accept the “Unknowns” on Schedules 6 through 10 as attributable to house renovations and maintenance at the Aberdeen house, and they should be allocated as capital costs, 80.38% to Rosa’s benefit.

(d) Property Taxes

[101] The property taxes in Mak Schedule 13 are properly allocated as capital costs between Rosa and Nellie, 80.38% to Rosa’s benefit.

(e) Insurance

[102] Home insurance for the years 2008 to April 19, 2012 on Schedule 14 are properly allocated as capital expenses, 80.38% to Rosa’s benefit.

(f) Funeral Related Expenses

[103] Some of the items which are included properly relate to estate rather than power of attorney matters, such as funeral expenses. However, since they occur shortly after the death, and were dealt with by Nellie, I allow the funeral arrangement related expenses on Schedule 14 (Creative and Eternal Designs, Glendale Memorial Gardens) as part of the accounts which relate to Rosa.

(g) Remaining Expenses

[104] I accept the values in the remaining Mak schedules; they must be adjusted for the December 6, 2007 start date (Schedule 4, Meth Garcia expenses less room and board; Schedule 11, Pharmacy; Schedule 12, Medical Expenses; Schedule 14, Diapers and remaining items).

(h) Expenses Without Support

[105] The expenses are understated, but Nellie has failed to provide documentary evidence and, as noted, she did not keep contemporaneous accounts. The Mak Schedules made no provision for clothing for Rosa, and allocate less than $1,000 for food over the period January 1, 2008 to February, 2013 other than the verified medical (G-tube or feeding tube) related expenses. The G-tube was inserted in December, 2010. While the full amount of Meth Garcia's room and board payment was allocated to income, there is no corresponding expense to food (board) that may have been paid. There is, however, no evidence of these expenses. Where expenses are not supported by documentary evidence, they are not included in this accounting. The burden is on Nellie to establish the accounting, and she has not provided evidence to support the food, clothing and Meth Garcia board expenses.

(i) Conclusion on Income and Expenses

[106] The income and expenses require adjustment, pursuant to my findings. The parties may request a case conference if they need to clarify the schedules and amounts. I have done a preliminary calculation, which indicates that the Estate owes Nellie money. These amounts are to be set-off against the value of the Estate and will enure to Nellie’s benefit.

8. Investment Account Issues

[107] The granddaughters raise a specific issue regarding what they allege are funds taken from an RBC investment account by Nellie and improperly diverted to an account held by Nellie and Rosa in August, 2007. This is at a time when Rosa was capable, and I have found Nellie is not under a duty to account. However, given the gravity of the allegation and the fact that it is specifically raised by the granddaughters, I deal with the RBC investment account issue here. The burden is on the granddaughters to establish some wrongdoing on Nellie’s part; I find they have not done so, and there is no duty to account on Nellie.

[108] Rosa P. gave evidence that an RBC investment account number 7459 was opened under the names of her mother Giuseppina, Rosa P. and Tecla, and also, she says, joint with Rosa. The account statements read “G. BUCC, M. PIGNATELL, T. TARANTINO JWROS.” Rosa P. says that she understood that “JWROS” meant “Joint with Rosa Galvano.” She says this was Rosa's account, and it was Nellie's idea to open it and put their names on it, with money from Rosa. That account was closed on August 3, 2007, when funds of $25,959.56 were withdrawn from the account. Rosa P. denies closing the account or withdrawing the funds. She gave hearsay evidence that the "bank" told them that their names were no longer on the account, as Nellie had taken their names off the account in 2007. At her cross-examination on affidavit October 27, 2012 (which constituted a read-in after the application was converted to an action), Rosa P. gave evidence as follows:

Q: How are you aware [that the account was closed]?

A: My sister contacted the RBC Bank and was advised that all money was removed from this investment account.

Q: Yes?

A: And put into Nellie Galvano and Rosa Galvano’s name.

[109] At trial, Rosa P. testified as follows, this time claiming that she had called the bank herself:

Q: Sorry, who called the bank?

A: I called the bank to find out, and my sister also called the bank, too, to find out why—

Q: What did the bank tell you?

A: They said that our title—our names were no longer on that account.

Q: Did they tell you how your names were removed from the account?

A: Yes, that Nellie Galvano had gone in and removed the accounts—removed our names from the accounts.

[110] Tecla testified that Nellie asked Giuseppina, Tecla and Rosa P. to attend at RBC to sign on an investment account. She recalls her mother Giuseppina Bucci, and her sister Rosa P. signing the signature card, together with Tecla. She understood “JWROS” to be joint with Rosa Galvano, and not joint with right of survivorship. The accounts were sent to Tecla's address. Her evidence is that in August 2007 the account was closed by Nellie and Rosa Galvano. She says she called the bank and they told her the account was closed. She says Nellie told her that she had reinvested the money into another account, and not to worry about it. Tecla denies closing the account and withdrawing the funds.

[111] Nellie denies closing the account and transferring the funds. At one point she seemed to acknowledge that she did so, but she was tired and confused, and later corrected her testimony. I accept that she did not close the account and transfer the funds.

[112] The signature card is in evidence: the only signatures are those of Giuseppina, Tecla and Rosa P. Nellie and Rosa were not signatories to the account. The account is only in the names of Giuseppina, Rosa P. and Tecla. I accept Nellie’s evidence that “JWROS” means “joint with right of survivorship”, not joint with Rosa Galvano. Indeed, the other RBC Investment Account documents in evidence also use the identical terms and format “JWROS” to mean joint with right of survivorship. Tecla and Rosa P. did not call anyone from the bank to give evidence. Rosa P. changed her story about who called the bank. Despite the fact that neither Rosa nor Nellie were signatories to the account or on the account, Tecla and Rosa P. submit that somehow it was either Rosa or Nellie who closed that account. I find in fact that the granddaughters have not established on a balance of probabilities that Nellie closed the bank account and diverted the funds.

[113] Nellie and Rosa were joint account holders in a different RBC Investment Account 7781; I declare that this account is held in trust for the Estate.

Issue #4: What amount if any, should Nellie should be ordered to return to the Estate of Rosa Galvano? Should she be ordered to return Rosa's 80.38% interest in the house?

[114] Nellie must return Rosa’s 80.38% interest in the house, and I issue the following declarations to that effect:

• A Declaration that Nellie Galvano has held from on or about April 1, 2008, an 80.38% interest in the Property in trust for the Estate of Rosa Galvano;

• A Declaration that the conveyance by Nellie Galvano of Rosa Galvano's 80.38% interest in the lands and premises legally described as Parcel 66-1 Section 65M-2177 Lot 66, Plan 65M-2177, City of Vaughan, Regional Municipality of York, Registry Office for the Land Titles Division of York Region (#65), with P.I.N.03290-0144 (LT) and municipally known as 544 Aberdeen Avenue, Vaughan, Ontario L4L 5M1 (hereinafter the Property), by Transfer/Deed registered on April 1, 2008 as Instrument number YR1143352 at the York Region Land Registry Office (#65) is a nullity and of no force and effect and that it be expunged and discharged from title to the Property;

• An Order directing Rosa Galvano to execute and register a Transfer of 80.38% interest in the Property from Nellie Galvano to the Estate of Rosa Galvano forthwith at her own expense.

[115] The income and expenses require adjustment in accordance with my decision. I have done a preliminary calculation, which indicates that the Estate owes Nellie money both for expenses related to Rosa’s care, and expenses related to capital costs. The parties will have to calculate these sums. I issue a declaration that Nellie is entitled to repayment of the amounts to be calculated in accordance with this judgment, such amounts to be set off against the Estate, before any distribution.

Issue #5: Is Nellie entitled to any relief under the quantum meruit claim or alternatiavely, under the Substitute Decisions Act?

[116] The next issue is the quantum meruit claim by Nellie for services provided to Rosa, as well as contributions to the property. In her Statement of Defence and Counterclaim, Nellie claims that Rosa's Estate has been unjustly enriched by the value of the care services she provided to Rosa and the amounts she spent for the benefit of or on behalf of Rosa. Nellie seeks compensation on a quantum meruit basis, i.e. for the reasonable value of the services she provided. The granddaughters plead that Nellie's unjust enrichment/quantum meruit claim is statute-barred by the expiration of the two-year statutory limitations period. Nellie also claims for the value of renovations to the house, as the Estate will have the benefit of the renovations.

1. Quantum Meruit Claim is Not Barred by a Limitation Period

[117] Nellie's plea for quantum meruit (fee for services) compensation is not statute-barred by the expiration of a limitations period. Claims in equity are subject to the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 2(1) (see Boyce v. Toronto Police Services Board, 2012 ONCA 230, at para. 2) and counterclaims are subject to the statutory limitations period as "claims pursued in court" under section 2(1) of the Limitations Act. However, a plea for equitable set-off is a defence rather than a claim or counterclaim and is not subject to a limitation period.

[118] The availability of equitable set-off is governed by the factors set out by the Supreme Court in Telford v. Holt, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193, at para. 35 (citations omitted):

1. The party relying on a set-off must show some equitable ground for being protected against his adversary's demands

2. The equitable ground must go to the very root of the plaintiff's claim before a set-off will be allowed

3. A cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross-claim

4. The plaintiff's claim and the cross-claim need not arise out of the same contract

5. Unliquidated claims are on the same footing as liquidated claims

[119] I find that this test is met. Therefore, I go on to consider the quantum meruit and unjust enrichment claims advanced as a set-off in this case. Nellie also seeks a declaration as to the value in the counter-claim.

2. Legal Basis for Quantum Meruit Claim

[120] A quantum meruit claim is "simply one of the established categories of unjust enrichment claims": Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 74. It is a claim that there has been unjust enrichment, and that the remedy should be a monetary remedy calculated on the basis of quantum meruit (fee-for-services) rather than a proprietary remedy (constructive trust over specific property). As Himel J. explained in Canadian Microtunnelling Ltd. v. Toronto (City) (2002), 28 M.P.L.R. (3d) 109, at para. 97 (Ont. S.C.):

Where valuable services are rendered without the existence of a contract and it is obvious those services were not intended to be gratuitous, the law will impose an obligation to pay for the value of the services without implying a contract or necessarily requiring the establishment of an employment relationship: Deglman v. Guaranty Trust Co. of Canada, 1954 CanLII 2 (SCC), [1954] S.C.R. 725 (S.C.C.). The law of restitution stands apart from the law of contract. The obligation to restore benefits unjustly retained does not arise from there being any implied contract between the parties, but rests upon an obligation imposed by law to prevent unjust enrichment.

[121] To make out a claim for unjust enrichment, the plaintiff must "establish three elements: an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment": Kerr v. Baranow, at para. 32. Courts should take a "straightforward economic approach to the first two elements": Kerr v. Baranow, at para. 37.

[122] For "enrichment or benefit", a plaintiff must show that there was "a benefit which has enriched the defendant and which can be restored to the plaintiff in specie or by money": Kerr v. Baranow, at para. 38. For "corresponding deprivation", the plaintiff must show "not simply that the defendant has been enriched, but also that the enrichment corresponds to a deprivation which the plaintiff has suffered": Kerr v. Baranow, at para. 39. Finally, the plaintiff must show "there is no reason in law or justice for the defendant's retention of the benefit conferred by the plaintiff, making its retention 'unjust' in the circumstances of the case": Kerr v. Baranow, at para. 40. Juristic reasons include gift, contract, or disposition of law.

[123] A party can make a claim for quantum meruit compensation against the Estate of a deceased person for services rendered to the deceased person during their lifetime: Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725. In Deglman, the claimant lived with his aunt for six months and claimed that she agreed to leave him her house in her will if he did various tasks for her, including driving her places and doing "odd jobs" and "errands". He provided various services to his aunt, but she died intestate. Any oral contract between the nephew and his aunt was unenforceable by virtue of the Statute of Frauds, and the aunt's estate refused to give anything to the nephew. In awarding monetary compensation for the nephew’s services, Justice Cartwright found, at para. 30:

In my opinion when the Statute of Frauds was pleaded the express contract was thereby rendered unenforceable, but, the deceased having received the benefits of the full performance of the contract by the respondent, the law imposed upon her, and so on her estate, the obligation to pay the fair value of the services rendered to her.

[124] Another example of a case where a person claimed against an estate for quantum meruit compensation is Foreman Estate v. Reid, 2010 BCSC 228, 87 C.P.C. (6th) 22. In defending a claim by the estate against him, the defendant (a friend of the deceased) advanced a quantum meruit claim against the estate for services he provided to the deceased during her lifetime. The defendant was a real estate agent who developed a friendship with the deceased and started providing increasing amounts of care to her, including cooking meals and transporting her, while spending less time on his paid employment. Justice Davies confirmed that the three-part test for unjust enrichment applied and found, at para. 101, that:

(1) Mrs. Foreman's estate was greatly enriched by Mr. Reid's contributions to her care and well-being;

(2) Mr. Reid suffered a corresponding deprivation for that enrichment - his deferral of the pursuit of his career as a realtor; and

(3) there was no juristic reason for the enrichment because, among other reasons, Mrs. Foreman's promises of additional compensation by way of a gift or bequest were thwarted by the actions of the granddaughters in June of 2005, to the benefit of Mrs. Foreman's estate.

[125] A party seeking quantum meruit compensation should provide evidence establishing the value of the services rendered: Lata v. Rush, 2012 ONSC 4543, 79 E.T.R. (3d) 130, at para. 66.

[126] The quantum meruit claim is established. Rosa received excellent care for over four years in very challenging circumstances—that is the benefit conferred. Nellie was correspondingly deprived; she closed her businesses and worked full time for the benefit of her mother. Nellie was meeting Rosa’s wish to be looked after in her home, not a nursing home. Nellie was no longer earning income, and was on call 24 hours a day until January, 2010 when Meth Garcia, the live-in caregiver arrived. Even then, Nellie remained available to provide care during the day, evenings, and weekends. Rosa avoided paying for this care during her lifetime. Finally, there is no juristic reason for the enrichment. Nellie believed she was keeping up her end of the bargain. However, this court has invalidated the contract. In the absence of the contract, the services must be acknowledged and paid for, to avoid an unjust enrichment.

3. Value of Care Services Provided by Nellie

[127] In support of the quantum meruit claim based on services provided by Claudio and Nellie, Nellie relied on the expert evidence of Clae Willis, who has 25 years of direct, future care cost analysis and rehabilitation experience. He holds an MSc, a graduate diploma in catastrophic case management and life care planning, is a certified life care planner, certified care manager and certified return to work coordinator. He has experience providing reports and testimony with the Financial Services Commission of Ontario, and the Superior Courts of Ontario and Nova Scotia. He also provided a Rule 53 acknowledgement of expert’s duty. He has experience as well providing retrospective reports such as the one prepared here, which was a preliminary restricted life care cost analysis, attendant care review, and was qualified to give evidence on care costs and attendant care. The report given was for the period of 1999 to Rosa's death. However, I find the quantum meruit claim is based on the period January 1, 2008 through to the death of Rosa.

[128] I accept Mr. Willis’ analysis of the level I attendant care provided by Nellie and Meth Garcia, as well as the level II attendant care for basic supervisory functions. I accept the analysis in his report with respect to the nature and quantity of the care provided by Nellie. Since Claudio is not a party to this proceeding, while I accept and acknowledge that he did provide significant care to his grandmother, I do not consider it in the evaluation of the quantum meruit claim. Therefore, the analysis is with respect only to the level of care provided by Nellie.

[129] On the evidence before me, Rosa needed 24 hour care as she could not be left alone. The evidence of Mr. Willis essentially analyses Rosa’s care needs, allocated this in terms of minutes per week for various dress, grooming, hygiene, medication and bathing functions, as well as mobility assistance, extra laundering, hygiene, bowel care, maintenance of supplies and equipment, coordination of attendant care or misery care. The nature of the types of attendant care required is supported by the evidence given by Nellie, Claudio and Dr. Chong.

[130] Mr. Willis’ evidence supported an hourly rate of $24 per hour for the care provided by Nellie. In the Toronto region, for example, the Toronto average for a general personal support worker in general attendant care was $24 an hour, an RPN was $44 per hour, and an RN $55 per hour. The evidence of market rates for general attendant care and personal support workers for 2010 onwards was also $24 per hour. However, this rate is based on fees charged by professional services in the Toronto region, and Mr. Willis’ evidence is that the average pay for personal support workers in the relevant period is $15.40 per hour. As a result, I calculate the value of the services rendered by Nellie not at the rate of the replacement professional, but at the rate of the personal support worker of $15.40 per hour.

[131] I accept the estimated time for attendant care and alternate basic supervisory care, at a reduced hourly rate of $15.40 per hour, for the period January 1, 2008 through to Rosa's death in 2012. Mr. Willis adjusted the time requirements for alternate basic supervisory care significantly downwards once Meth Garcia was hired, which I accept. With the downward adjustment for the hourly rate of care from $24 to $15.40 per hour, I award the following on the quantum meruit claim, restricted solely to Nellie Galvano and not including Claudio Galvano: $273,039.54. This is based on the monthly hours for each type of care as set out in the Willis expert report, for the period January 1, 2008 to Rosa’s death, and the hourly rate of $15.40 per hour:

2008

Attendant care $16,147.82

Alternate basic supervisory care $72,851.86

2009

Attendant care $23,562.00

Alternate basic supervisory care $65,439.53

2010

Attendant care $22,370.04

Alternative basic supervisory care $22,131.65

2011

Attendant care $22,647.24

Alternate basic supervisory care $21,852.60

2012

Attendant care $3,072.30

Alternate basic supervisory care $2,964.50

Total: $273,039.54

4. Quality of Care

[132] The granddaughters also sought to question the quality of care provided by Nellie and Claudio. I find the quality of care was excellent.

[133] Dr. Chong’s notes record that Nellie brought Rosa to medical appointments with Dr. Chong until June, 2010. The first house call made by Dr. Chong was June 17, 2010. Rosa at this point could not ambulate as a result of Alzheimer’s, and did not know who Dr. Chong was. Dr. Chong’s records record that she made 16 house calls between June, 2010 and February 16, 2012.

[134] In her testimony she noted that the house was well cared for, and Rosa was not in need of anything that she would require. Every time she made a house call, Nellie was there. Nellie and Meth participated in all aspects of care including bathing, feeding, treating ulcers and bowel and bladder needs.

[135] In a letter dated March 12, 2013 Dr. Chong noted the many visits to her office and house calls, stating Rosa was “always accompanied by her attentive daughter, Nellie.” The letter goes on to state:

“Over the 18 years that I attended to Mrs. Galvano, I can attest that she was always well cared for by her daughter, Nellie, who advocated for her, and spared no effort or expense in looking after her mother, including hiring a full-time excellent live-in care giver in the final years of her life.”

[136] Nellie and Claudio both gave evidence of the type of care Rosa required. It included dressing, diapers, cleaning/hygiene, laundry, meals, massage, and shopping for supplies. In later years, it included cleaning the mucus in her mouth, giving her a sponge on a stick to suck water out, turning Rosa over in order to avoid bedsores, providing medications, checking the glucometer, and other intimate tasks. Rosa needed care at night in addition to the daytime. She required 24 hour care. Even Rosa P. conceded that the care that Nellie provided to Rosa was “good, loving, true from the heart caring,” and Rosa lacked for nothing.

[137] The only contrary evidence is that given by Meth Garcia, who was called by the granddaughters. I do not find Meth Garcia’s evidence to be reliable or credible. Her evidence was clearly exaggerated, and contradicted by Dr. Chong, Zoltan Polyak, Nellie, Claudio and Rosa P. She seemed to bear a clear animosity to Nellie, and maintained absurd positions even when challenged. She exaggerated her contributions to Rosa’s care, and sought to minimize the contributions made by Nellie and Claudio. A few examples will suffice. Meth was adamant she was essentially at work from 8 a.m. to 9 p.m., Monday to Friday, more than 12 hours a day, as well as providing services in the evening and sometimes on weekends. However, Meth was equally adamant that she saw the family doctor make house calls on maybe one occasion. Dr. Chong’s notes reveal that she attended the home on 16 occasions during the time Meth was employed there. At least seven of those house calls were after 6 p.m. The evidence of Claudio and Rosa is that Meth worked until 5 p.m., although she would assist from time to time in the evenings. I cannot reconcile the adamant way in which Meth Garcia refused to concede that the family doctor attended frequently in the years she worked there, Meth’s adamant pronouncement that she worked 12 hours a day, past 6 p.m., and Dr. Chong’s sixteen visits.

[138] Meth was also challenged with respect to her description of the amount of time she spent with Rosa, based in part on her responsibility for the care of her 8 year old child. She said – “you just need to prepare the food and that’s it. You don’t need to shower him. You don’t need to bring him to school.” When asked about the food preparation for her son, she said “Do you know…how fast it was to take the rice and put them eating there, and that’s it…Less than two minutes.” Again, this evidence was emphatically overstated.

[139] Meth also gave evidence that Nellie did not quit her job, but rather, worked full time after Meth’s arrival. This evidence is contradicted by every other witness—by Claudio, by Zoltan Polyak who was in the house often and saw both Nellie and Meth provide care, by Tecla and Rosa P. who saw Nellie in the home providing care, by Dr. Chong, and by Nellie’s own business records. I do not believe it.

[140] In addition, her description of the lack of care provided by Nellie – for example, Meth said Nellie would just let Rosa soak in her pee weekends – is not consistent with the evidence of others including Dr. Chong, Claudio and Nellie, nor is it consistent with the loving and attentive care which Rosa P. noted, and indeed, which marked Nellie’s life of caring for her mother. I do not accept the evidence of Meth Garcia regarding quality of care provided by Nellie and Claudio, or the assertion that Nellie worked full time while Meth was there.

5. Conclusion

[141] I issue a declaration that Nellie Galvano is owed $273,039.54 by the Estate pursuant to a quantum meruit claim for the personal care provided to Rosa by Nellie. This is to be set-off against the value of the Estate prior to distribution.

Issue #6: Is Nellie entitled to any compensation as attorney under the power of attorney for personal care or for property?

[142] Nellie has established a claim in quantum meruit relating to providing care for her mother. There is no other evidence which would support a claim for compensation for services provided as attorney for personal care.

[143] Under the power of attorney for property, Nellie claims compensation in accordance with Section 40(1) of the Substitute Decisions Act, which provides that a guardian of property or attorney under a continuing power of attorney may take annual compensation from the property in accordance with prescribed fee scale set out in O Reg. 26/95, Substitute Decisions Act.

[144] Nellie failed to keep contemporaneous accounts as required under the Substitute Decisions Act, which is one of the major responsibilities of an attorney for property. While she has now provided those accounts, due to her poor record-keeping, I find she is not entitled to compensation under the power of attorney for property. Compensation for an attorney under a power of attorney may be reduced or eliminated where the conduct of the attorney falls below the standard expected of her, or she fails to meet duties under the Substitute Decisions Act: Zimmerman v. McMichael Estate, 2010 ONSC 2947.

Issue #7: Is Nellie liable for occupation rent from September 20, 2012 forward?

[145] The granddaughters make a claim for occupation rent, which is an equitable claim based on the unjust enrichment doctrine. Under the Will, Nellie was entitled to stay in the house for six months, until September 20, 2012, as long as she paid the costs. The house was then to be sold, and Nellie was entitled to a right of first refusal/right of first offer. The house has not been sold, and Nellie and Claudio are still occupying the house.

[146] The granddaughters rely on the expert evidence of accountant Alan Mak. He estimates occupation rent to November 30, 2016 in a range from $91,068 (based on monthly rent of $2,700) to $111,095 (monthly rent of $3,200), taking into account a 19.62% reduction for Nellie’s ownership interest and property taxes paid by Nellie. After Rosa’s death Nellie has an ownership interest of 59.81% of the house under the Will (half of Rosa’s 80.38% interest, plus her existing 19.62% interest), so the value of any occupation rent to anyone other than Nellie would be 40.19%. Mr. Mak’s report states that the property values were based on the opinion of a realtor as set out in the realtor’s letter of July 20, 2016. That letter is not in evidence, which is significant since it is the foundation for Mr. Mak’s report. There is no evidence that the properties are comparable, and in particular, no evidence of how rent would be affected if only 80.38% of a house is offered for rent, rather than rent for a whole house. 80.38% of a house offered for rent will not be of the same value as a whole house offered for rent.

[147] Nellie and Claudio have paid property tax, insurance, and other maintenance and occupation costs. Nellie has paid property taxes of approximately $20,000 from February 12, 2012 to the date of decision, based on extrapolating Mr. Mak’s figures to July, 2017.

[148] In November, 2014, the granddaughters sought and obtained an undertaking that Nellie would not sell the house or deal with the property until this litigation was completed. This, in effect, prevented the sale of the house. It would be wrong to have Nellie pay rent to now when she was prevented from selling the house by the granddaughters themselves. Importantly, Nellie was prevented from exercising her right to purchase the house under the Will by virtue of the undertaking, and under the Will, Nellie is beneficial owner of 59.81% of the house. Given that the litigation between the parties left the Estate unable to deal with the house during the time period Nellie was in occupation, it would be unfair now to charge Nellie for "rent" that accrued during that time period and I do not so order. At the same time, given that she did have the benefit of occupancy in this period, the expenses incurred by Nellie such as property taxes and maintenance expenses will be borne by Nellie.

Issue #8: Should Nellie be removed as an executrix and trustee of the Estate of Rosa Galvano?

[149] The granddaughters seek to remove Nellie as co-executrix and co-trustee of the Estate. Section 37 of the Trustee Act, R.S.O. 1990, c. T.23, provides that: “The Superior Court of Justice may remove a personal representative upon any ground upon which the court may remove any other trustee, and may appoint some other proper person or persons to act in the place of the executor or administrator so removed.” There is therefore jurisdiction to remove estate trustees in appropriate circumstances.

[150] The relevant principles have been set out by Fairburn, J. in Ricci v. Ricci Estate, 2016 ONSC 6614 at paras. 25-28:

25 A testator's wishes as to who should act as trustee should only be interfered with in rare circumstances: Chambers v. Chambers, 2013 ONCA 511 (Ont. C.A.), at para. 95; Weil, Re, 1961 CanLII 157 (ON CA), [1961] O.R. 888 (Ont. C.A.) at p. 889. A named trustee should only be removed on the "clearest of evidence" and only where there is no option available other than to remove the trustee: Chambers Estate, at para. 95.

26 Adopting the court's comments in Re Leguia (No. 2) (1936), 155 L.T.R. 270, at p. 276, Gillese J. in Chambers, at para. 95, found that the removal and replacement of an executor is an "unusual and extreme course", although one that does fall within the discretion of the court. A conflict of interest with the estate is one basis upon which an executor can be passed over: Chambers, at para. 96.

27 The main guide for determining whether a trustee should be removed is the "welfare of the beneficiaries": see Tulloch J. (as he then was) in Limebeer, at para. 20, citing Letterstedt v. Broers (1884), (1883-84) L.R. 9 App. Cas. 371 (South Africa P.C.), at pp. 385-89. The court should grant relief only where allowing the trustee to continue to act will imperil the administration of the trust: Hawkins, at para. 34; Limebeer, at paras. 22-23.

28 The applicant and respondent encourage the court to consider a number of principles in determining whether Livio should be removed and replaced by Michael. While they state the considerations in slightly different ways, they largely come together on the factors that should be taken into account:

(a) the court should not lightly interfere with the testator's choice of trustee;

(b) the trustee of choice should not be removed except where it is clearly necessary to do so;

(c) the court's main guide should be the welfare of the beneficiaries;

(d) the court must find that allowing the trustee to continue will prevent the proper execution of the trust; and

(e) the past misconduct is likely to continue such that the assets and interests of the beneficiaries will not be protected.

[151] Rosa’s Will provides that in the event the executrices were not able to agree, then a decision made by Nellie together with one of Tecla and Rosa P. would be valid. Rosa clearly wished Nellie to act as an executrix. This is not a decision I would lightly interfere with.

[152] I do not find that allowing Nellie to continue would prevent the proper execution of the trust. I would be very reluctant to remove her without replacing her. To the extent that financial decisions are required, they require Nellie and one of the granddaughters to agree. She is not a sole executor. I have found that Nellie, on the advice of a lawyer, believed that she had the authority to enter into the agreement, and having entered into the agreement, she did not believe that she had to keep accounts. There is no reason to believe that any past misconduct would continue. Nellie has maintained the investment account for the benefit of the Estate, rather than assuming that the joint account with Rosa was available to her. There are three beneficiaries of the Estate, and I make this decision considering the beneficiaries. Nellie will continue as a co-executrix and trustee.

Issue #9: Is this an appropriate case for punitive damages?

[153] This is not an appropriate case for punitive damages. I have found that Nellie did not meet her duties under the Substitute Decisions Act, but she did consult a lawyer, and that lawyer was of the view that the Agreement, signed by Nellie in her capacity as power of attorney for property, met Nellie’s fiduciary duties. He advised that it was vulnerable to “challenge”—but every contract is vulnerable to challenge. He never advised Nellie that she was in breach of her duties in signing the Agreement. Nellie spent years, as a result, caring for her mother in very difficult circumstances, in reliance on a contract that I have set aside. She kept her side of the bargain. There is nothing that would indicate punitive damages are warranted in the circumstances.

Costs

[154] If the parties are not able to settle the issue of costs, they may make submissions to me by July 31, 2017. The submissions should be no longer than four pages, exclusive of the Bill of Costs.

Kristjanson J.

Released: July 4, 2017

Corrected: October 12, 2017. The trial dates were corrected. The amount of $212,094 in paragraph 91 was replaced by $202,167. The amount of $149,799 in paragraph 92 was replaced by $141,990.

CITATION: Tarantino v. Galvano, 2017 ONSC 3535

COURT FILE NO.: 05-002/13

DATE: 20170704

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF ROSA GALVANO

BETWEEN:

TECLA TARANTINO and ROSA PIGNATELLI Plaintiffs/Applicants

– and –

NELLIE GALVANO also known as LEONARDA GALVANO Defendant/Respondent

REASONS FOR JUDGMENT

Kristjanson J.

Released: July 4, 2017