CITATION: Kerr v. Metcalf, 2017 ONSC 4926
COURT FILE NO.: 2505/13
DATE: 2017 08 18
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF LLOYD ROBERT KERR, deceased
BETWEEN:
Thomas Robert Kerr and Catherine Helen Johnson
Applicants
– and –
Eleanor Georgina Metcalf and Lorna Ann de Witt
Respondents
Harry Mann, Counsel for the Applicants
David Morgan Smith, Counsel for the Respondent Eleanor Georgina Metcalf
HEARD: May 9, 2017
Woollcombe J.
A. Introduction
[1] Lloyd Robert Kerr (“Lloyd”) died at the age of 84 on November 30, 2012. He is survived by his common law spouse Eleanor Georgina Metcalf (“Eleanor”) and his three adult children.
[2] This application is brought by two of the surviving children, Thomas Robert Kerr (“Robert”) and Catherine Helen Johnson (“Catherine”). His third child, Lorna Ann deWitt (“Lorna”) has taken no part in these proceedings.
[3] Lloyd left a Will that he executed on October 28, 2004. That same day, he and Eleanor executed a Cohabitation Agreement.
[4] On December 10, 2008 Lloyd executed a Codicil to his Will. That same day, he and Eleanor executed an Amendment to their Cohabitation Agreement. These documents made substantive changes to the Will and Cohabitation Agreement.
[5] The applicants, Robert and Catherine, seek a declaration that the deceased’s Will dated October 28, 2004 is his last Will and that the Cohabitation Agreement signed that day remains valid and enforceable. They seek a declaration that the Codicil to the Will executed on December 10, 2008 is null and void and that the Amendment to the Cohabitation Agreement executed that day is null and void.
[6] The respondent, Eleanor, asks the court to find that the Codicil and Amendment to the Cohabitation Agreement are valid. In the alternative, she seeks support from Lloyd’s estate.
[7] The applicants seek occupancy rent from the respondent on behalf of the estate.
[8] Finally, the applicants deny that the respondent is entitled to the Life Income Fund (“LIF”) bearing number 545042004 from the Royal Bank of Canada.
B. Relevant Factual Background
[9] A review of some of the factual background is needed to understand the various issues. These facts are as agreed to by the parties.
[10] Lloyd and his wife separated in about 1972. They never reconciled and were divorced in 1984.
[11] Lloyd and Eleanor began cohabitating in 1977 and lived together until about three years before his death, at which point he moved into a long-term care home.
[12] At the time of his death, Lloyd and Eleanor owned a home together as tenants in common at 2219 Amberglen Court, Oakville.
The October 28, 2004 Documents
[13] Lloyd executed a Will on October 28, 2004. The Will named Robert and Eleanor jointly as Estate Trustees. There was a specific bequest of Lloyd’s motor vehicle to Eleanor, although it had been sold prior to his death. The residue of Lloyd’s estate was to be divided equally between his three children.
[14] Lloyd and Eleanor executed a Cohabitation Agreement on October 28, 2004. It provided for their rights and obligations during cohabitation vis-à-vis ownership and distribution of their properties and support obligations. At the time, they owned one property at 79 Gatehouse Drive in Cambridge as tenants in common. It was valued at $280,000. Lloyd and Eleanor agreed to keep their financial matters separate and independent and to divide their properties based on ownership. Each of them agreed to contribute towards monthly expenses and each waived any rights or claims to any kind of support arising from their cohabitation. Each of them was a retired professional and each had a steady flow of monthly income.
[15] In relation to their home, the Co-Habitation Agreement provided that in the event of the death of one party, the surviving spouse had 60 days after the date of death of the other to purchase the deceased’s half interest in the home at fair market value.
[16] Lloyd also executed a Continuing Power of Attorney for Personal Care and Property on October 28, 2004. In the Power of Attorney for Personal Care he appointed Lorna and Eleanor jointly as attorneys. On November 14, 2005, he executed a second Continuing Power of Attorney for Personal Care and appointed Robert and Eleanor jointly as attorneys. In his Power of Attorney for Property executed on October 28, 2004, he appointed Robert and Eleanor jointly as attorneys.
[17] The property owned by Lloyd and Eleanor at 79 Gatehouse Drive was sold on November 29, 2007. On November 26, 2007, they purchased property at 2219 Amberglen Court in Oakville. Title to this property was again taken as tenants in common with each having a 50 per cent share.
The December 10, 2008 Documents
[18] The documents executed on December 10, 2008 are the documents at issue in this application.
[19] On December 10, 2008, Lloyd and Eleanor executed an alleged Amendment to their Cohabitation Agreement. It states at paragraph 5 that each of them has received independent legal advice (“ILA”). Eleanor received her ILA from Michael C. Vokes and Lloyd received his ILA from Jeffrey Ritchey.
[20] Under the Amendment, the provisions that they had previously had respecting separate residences were deleted and replaced with a provision that Lloyd was to maintain a valid Will providing that if Eleanor survives him, his ownership interest in the home as a 50 per cent tenant in common would pass to Eleanor and that the costs of the transfer were to be paid by the estate.
[21] That same day, Lloyd is alleged to have executed a Codicil to his Will. It was allegedly signed by Lloyd in the presence of Michael C. Vokes, who has provided affidavit evidence that he saw Lloyd execute the alleged Codicil.
[22] In the Codicil, Lloyd provides that Eleanor receives his half interest in 2219 Amberglen Court, Oakville, with the residue of his estate to be divided equally among his three children.
[23] In 2013, the Amberglen property had a value of about $450,000.
[24] In her Affidavit, Eleanor explains that the Amendment and Codicil reflected their decision to change their arrangements with respect to property, particularly with respect to their home. She says that the change also reflected Lloyd’s desire to ensure that she was properly provided for at a time when he had health issues. She explains that it was important to Lloyd that she be able to maintain the same lifestyle if something happened to him, and so he decided to leave to her the home that they had purchased together.
[25] Eleanor says that Lloyd told her that she had always treated him well and looked after his interests and that he knew that she would continue to do so and would care for him in his time of need. She says that this knowledge brought him peace and that he wanted to provide her with that same sense of peace were something to happen to him, so that she could continue to live as if he were still around.
Lloyd’s Health Issues
[26] Lloyd became seriously ill and was admitted to hospital in August 2008. He underwent major surgery for an abdominal aneurysm. He remained in Oakville General Hospital until late September. At around the same time as he was hospitalized for surgery, the doctors discovered a mass in Lloyd’s lung. A medical report dated August 22, 2008 indicates that the mass is likely a right upper lung malignancy. A subsequent biopsy of September 9, 2008 confirmed the presence of malignant cells.
[27] There is a disagreement between the parties about Lloyd’s state of health, including his psychiatric health, following his surgery. This is important as it was after this, in December 2008, that the critical documents at issue in this application were signed.
[28] Lloyd returned to hospital in late October 2009 after a fall due to progressive lower extremity weakness.
[29] In January 2010, Lloyd was transferred from Oakville General Hospital to a nursing home.
Lloyd’s Other Assets and Investments
[30] Lloyd made provision outside of his Will and the Cohabitation Agreement for two of the investments that he held with the Royal Bank of Canada (“RBC”) to be received by Eleanor after his death. More specifically, there was a Registered Retirement Income Fund (“RRIF”) that was valued at $47,880.74 as of December 31, 2012 and a RRIF valued at $54,613.65 as of December 31, 2012. He and Eleanor agreed that he had designated her as beneficiary of these finds in their Cohabitation Agreement. On consent, these investments have been paid to Eleanor.
[31] The estate assets also include, as of December 31, 2012, an RBC bank account containing $41,921.71 and Guaranteed Investment Certificates (GICs”) valued at $121,160.99. There is also a Life Income Fund (“LIF”), valued at $14,259.50, the status of which is in dispute in this application.
C. Analysis
a) Are the December 10, 2008 Codicil and Amendment to the Cohabitation Agreement Valid?
[32] The applicants submit that the Codicil to the Will dated December 10, 2008 and the Amendment to the Cohabitation Agreement dated December 10, 2008 are void. They submit that Lloyd was not competent to execute any legal documents at the time and lacked the requisite testamentary capacity. They argue that there was undue influence of Lloyd and a possibility of impersonation. In addition, they submit that he did not receive effective legal advice before signing these documents and that the circumstances of the legal advice are suspicious.
The Formal Requirements of a Valid Will or Codicil
[33] The Succession Law Reform Act, R.S.O. 1990, c.S. 26 (“SLRA”) sets out the formal requirements for a will to be valid. In order to be valid, the will must be in writing (s. 3), it must be signed by the testator at its end and the testator must sign in the presence of two or more witnesses present at the same time who subscribe the will in the presence of the testator (s. 4).
[34] The Codicil to Lloyd’s Will meets these formal requirements.
Whether the deceased had the capacity to execute the Codicil and Amendment to the Cohabitation Agreement
[35] The law begins from a presumption that a testator has the requisite presumption of capacity to execute a will. That presumption is rebuttable and may be displaced if it is shown, on a balance of probabilities, that there are suspicious circumstances. If there are, the burden moves to the propounder of the will who must show that the testator had knowledge of and approved of its contents. If the suspicious circumstances relate to mental capacity, then the propounder of the will reassumes the burden of establishing testamentary capacity: Vout v. Hay, 1995 (SCC), [1995] 2 S.C.R. 876 at paras. 26-27.
[36] The law as to the procedure when suspicious circumstances are contended is summarized in Schnurr, Estate Litigation, 2002 release, at pp. 2-5:
…when considering whether or not suspicious circumstances are present the court looks at a number of factors:
(1) The extent of physical and mental impairment of the testator around the time the will was signed;
(2) Whether the will in question constituted a significant change from the former will;
(3) Whether the will in question generally seems to make testamentary sense;
(4) The factual circumstances surrounding the execution of the will;
(5) Whether a beneficiary was instrumental in the preparation of the will.
See also: Gironda v. Gironda, 2013 ONSC 4133 at para. 55
[37] The degree of mental capacity necessary to make a valid will has been set out in Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 at p. 565 as:
a. The testator must understand the nature and the act and its effects;
b. The testator must understand the extent of the property of which he is disposing;
c. The testator must have the ability to comprehend and appreciate the claims to which he ought to give effect;
d. The testator must have a “disposing mind and memory” to comprehend the essential elements of making a will.
The Evidence about Lloyd’s Mental State on December 10, 2008
[38] The parties have provided a great deal of medical evidence about Lloyd and referred in detail to the evidence respecting his mental state during their submissions. I have reviewed that evidence with care and make the following observations.
[39] On July 28, 2008, some six months before signing the Codicil and Amendment to the Cohabitation Agreement, Lloyd was seen by neurologist Dr. Stirling because of a possibility of Parkinsonism. Dr. Stirling’s report indicates that from what Lloyd told him, it seemed that two months earlier, he had developed dysarthria (meaning that he had difficult or unclear articulation of speech that is otherwise linguistically normal) and weakness. Dr. Stirling recorded that Lloyd described this to him as transient and as saying that he had not mentioned it to anyone. Dr. Stirling’s assessment was that Lloyd had Parkinsonism. There is no suggestion of mental incompetence or incapacity.
[40] On August 29, 2008, Lloyd underwent major surgery for an abdominal aneurism. He remained at Oakville General Hospital until late September 2008. During the time in hospital, he underwent some additional medical testing.
[41] On September 11, 2008, Lloyd was seen by Dr. Chau. Dr. Chau observed that Lloyd had “intermittent confusion” and was undergoing a psychogeriatric assessment. Given that there had been slurred speech for the past four months, he was concerned about the possibility of small strokes.
[42] On September 12, 2008, Lloyd was referred to Dr. Zamar for a psychiatric assessment because of confusion. Dr. Zamar’s report indicates that Lloyd had become increasingly confused in the hospital. His “wife” (who appears to have been Eleanor) reported that his cognitive functions had been declining over the previous two years and that he was forgetful and frequently confused. For instance, he could not recall the names of his grandchildren or the number of them. His wife also reported that he had stopped driving in August 2007. His cognitive impairments up to the point he was hospitalized were described as mild in nature and manageable.
[43] Lloyd’s cognitive status was quantitatively assessed. He scored 25/30 on a Mini Mental Status Examination (“MMSE”). Dr. Zamar concluded that his pre-existing dementia had worsened post-surgery and recommended some medications. He diagnosed Lloyd as having “moderately advanced dementia, most likely of the combined degenerative and vascular type.”
[44] Before being discharged, Lloyd was seen by Dr. Lindner on September 24, 2008. He noted that Lloyd had begun a “cognitive enhancer” which he appeared to be tolerating reasonably well. Dr. Lindner suggested that the MMSE should be repeated as it was likely that post discharge, Lloyd would return to his baseline.
[45] There is no evidence as to what effect, if any, the medications recommended by Dr. Zamar were having on Lloyd’s mental functioning by December 2008.
[46] The evidence provided by Lloyd’s son Robert in his examination for discovery was that he saw his father regularly while he was in hospital, up to the third week of September 2008. But in the three months after that, up to the time the Codicil and Amendment to the Cohabitation Agreement were signed, he saw him “maybe two or three times”. He was unable to provide the dates for those visits. Robert thought that the last time he had seen Lloyd before December 2008 was in October, at which time Robert took his father out to a store to get some computer equipment exchanged. Asked how Lloyd had been mentally, Robert’s evidence was that “he was a little bit slow”, although he was unable to give any examples. He agreed that he engaged with his father in emails in early 2009 at a “relatively high level in terms of the subject matter”.
[47] The evidence of Lloyd’s daughter Catherine was that after August 1988, she saw her father between zero and twice a year. She had seen him after his aneurysm surgery while he was in hospital. She described him as having “memory problems” at that point. She could not recall if she saw him after his 2008 discharge from hospital.
[48] Lloyd was admitted to hospital on October 29, 2009 after a fall and was referred to Dr. Sohal for a consultation because of confusion. Dr. Sohal characterized Lloyd at this time, well after the execution of the Amendment to the Cohabitation agreement and Codicil, as having “mild dementia”.
[49] I accept that Lloyd was diagnosed as suffering from mild dementia while in hospital in August and September of 2008. He was prescribed medications. There is no medical evidence before me as to whether his mental condition had improved by December 2008 when the Codicil and Amendment to the Cohabitation Agreement were signed. The only other relevant evidence of a subsequent diagnosis respecting Lloyd’s cognitive functions is Dr. Sohal’s finding of “mild dementia” in October 2009.
[50] I do not think that the medical evidence, combined with the evidence of Robert and Catherine, supports a finding that at the time he signed the Codicil and Amendment to the Cohabitation Agreement, Lloyd’s mental decline precluded him having the ability to validly sign those documents. There was, certainly, some mental impairment or dementia. But there is no evidence that he lacked the mental capacity to make a will in the manner set out in Banks v. Goodfellow.
[51] At the same time, I recognize that one of the effects of some decline in his mental capacity may be that Lloyd was more vulnerable to undue influence. This is why a determination respecting whether there are suspicious circumstances requires an examination of more than just whether Lloyd had the capacity to make a valid will. Suspicious circumstances could exist despite him having testamentary capacity.
Whether the Codicil and Amendment to the Cohabitation Agreement constituted a significant change from the former will?
[52] The applicants say that the Codicil represented a significant change from Lloyd’s former will because previously he and Eleanor kept their financial matters separate and apart. They had expressly provided for their intention to keep ownership interests in property separate in the Cohabitation Agreement.
[53] I accept that the Codicil and Amendment to the Cohabitation Agreement made a significant change to what had been the arrangement between Lloyd and Eleanor. I accept the applicants’ position that when he drafted his Will and the Cohabitation Agreement, Lloyd intended for their property to be kept separate. While this is an important factor to consider, it must be considered in light of whether the Codicil and Amendment to the Cohabitation Agreement make testamentary sense and whether there is an explanation for this significant change.
Whether the Codicil and Amendment to the Cohabitation Agreement make testamentary sense?
[54] The applicants say that the Codicil and Amendment to the Cohabitation Agreement do not make any testamentary sense. A number of reasons are given.
[55] First, it is submitted by the applicants that there was always a clear agreement between Lloyd and Eleanor that their finances would be kept separately and that property bought together would be held such that they would maintain separate ownership interests. The applicants say that for Lloyd, who was a careful and intelligent man, to have decided to make such a significant change so soon after his surgery in 2008, is out of character and must be because of undue influence, mental impairment and manipulation.
[56] Second, the applicants say that the Codicil and Amendment to the Cohabitation Agreement make no sense in terms of fairness. This is because if Eleanor were to die first, her share of the home would pass to her estate (and thus her daughter) if Lloyd decided not to live there. But if Lloyd were to die first, his share would pass to Eleanor and then to her estate. Lloyd’s estate, and thus his children would receive no part of it. The applicants say that this arrangement was unfair to Lloyd and that he would never have agreed to it.
[57] It seems to me that what the applicants are really saying is that this arrangement is unfair them, rather than to Lloyd. They cannot fathom how he could have, or why he would have made a decision to have his share of the home pass to Eleanor, rather than to them, through his estate, as had been his intention in the Cohabitation Agreement.
[58] In my view, when all of the circumstances and evidence are considered, the Codicil and Amendment to the Cohabitation Agreement do make testamentary sense. There is a fair and legitimate explanation for what appears to have been a change in Lloyd’s intentions. When the Cohabitation Agreement and Will were prepared in 2004, Lloyd was still relatively healthy. By 2008, he was in some decline. He had a significant surgical procedure and had been diagnosed with lung cancer. As Eleanor explained in her affidavit, and during her examination for discovery, Lloyd changed his views in 2008 as he faced his own mortality. Even the applicant Robert, acknowledged during his examination for discovery that after the diagnosis, Lloyd was contemplating his own mortality. It is not unreasonable to accept that a life-changing diagnosis might well trigger a person to change their plans. This is particularly so when it became apparent that Eleanor, who was 11 years younger than Lloyd, was very likely to outlive him.
[59] According to Eleanor, Lloyd wanted to ensure that she would have the same lifestyle if he died. She said that Lloyd wanted her to either be able to live in their home, or sell it and have the money to look after herself.
[60] Eleanor explains that initially, when they went to see counsel on December 10, 2008, it was with the intention of Lloyd transferring his share of the property to her. However, she says that after they spoke with Mr. Vokes, and asked him to prepare the paperwork for that, Mr. Vokes sent Lloyd to Mr. Ritchey for ILA. She said that at some point, Lloyd changed his mind and decided to leave his share of the property in his name until he passed away, but arranged that if he passed away before her, his share would pass to her.
[61] Viewed in light of this evidence, I do not accept that the Codicil and Amendment to the Cohabitation Agreement make no testamentary sense. Lloyd knew he was likely to predecease Eleanor. I accept her evidence that he was concerned about ensuring that she would be able to maintain their lifestyle and that she would be able to either stay in their home or sell it to pay for an alternative arrangement. While it may not seem fair to the applicants that if Lloyd died first, his estate (and thus his children) would not receive his half of the house and if Eleanor died first her estate (and thus her daughter) would, I am not persuaded that the absence of a parallel result between the two families is either unfair or without testamentary sense. It made sense from Lloyd’s perspective, bearing in mind what Eleanor says had become his priorities.
Whether the circumstances surrounding the execution of the Codicil are suspicious
[62] The applicants say that a careful review of the circumstances surrounding the creation of the Amendment to the Cohabitation Agreement and Codicil are suspicious and suggest that Lloyd was under undue influence and pressure.
[63] Counsel for the applicants refers to the many documents that have been filed relating to how Lloyd’s Will and Cohabitation Agreement were prepared in 2004. There are 22 documents in the Joint Document Brief setting out the detailed work that went into the preparation of those documents. I accept the applicants’ position that these documents, cumulatively, reveal Lloyd to have been careful, even meticulous, in his dealings with his lawyer at the time, Gregory Onorato. I accept that Lloyd was intimately involved in the drafting process. I accept that he and Eleanor each knew the other’s monthly income. I accept that Lloyd specifically provided that his two RRIFs, which were at that time were worth $160,670, would go to Eleanor. Lloyd provided that his share in the home, as well as his bank accounts and GICs, would go to his estate.
[64] After the completion of the Will and Cohabitation Agreement, the evidence shows that Lloyd continued to use the services of Mr. Onorato as his counsel. Mr. Onorato prepared for Lloyd a Power of Attorney for Personal Care in 2005 and then acted as the real estate lawyer for the closing on the sale of the house at Gatehouse and the purchase by Lloyd and Eleanor of the house on Amberglen in Oakville. Lloyd does not appear to have continued to retain as counsel Mr. Onorato, whose practice was in Cambridge, Ontario, after he and Eleanor moved to their Oakville home. Given Mr. Onorato’s location, this makes some sense to me.
[65] The background evidence as to how Mr. Vokes came to prepare the Codicil and Amendment to the Cohabitation Agreement is not entirely consistent.
[66] Mr. Vokes testified on his examination for discovery that he met with Eleanor first without Lloyd. At some point in the fall of 2008, before November Eleanor and her daughter Debbie McPherson attended at his office to see him. He had no notes of that meeting. He said that he had previously acted as solicitor for Ms. McPherson and that she brought her mother in to ensure that her interests were looked after. He said that he was shown the Cohabitation Agreement and that Eleanor was concerned that if Lloyd were to predecease her, she would not have the resources to follow through with the terms of their Cohabitation Agreement, which provided that the survivor would have 60 days in which to purchase the interests of the deceased in the home.
[67] Mr. Vokes said that Eleanor wanted Lloyd to transfer his interest in the property to her immediately. Mr. Vokes said that he told her that Lloyd was under no obligation to do anything he did not want to, and that if a transfer was to proceed, it would have to be with Lloyd’s approval and cooperation, and that he would need ILA. Mr. Vokes suggested that she speak to Lloyd and then come back to see him.
[68] Mr. Vokes said that he then met with Eleanor and Lloyd on November 6, 2008. His instructions after that meeting were to prepare a Power of Attorney for Personal Care for Lloyd, naming Eleanor as the attorney and Debbie, Robert and Catherine as joint and several substitutes. He also had instructions to correct an error to the Will that is of no significance for this application. Finally, and most importantly for this application, he said that he was instructed to amend the Cohabitation Agreement to reflect a change of ownership in the home to Eleanor, with a provision that Lloyd could remain as long as he wished and that he would pay all costs. Mr. Vokes was clear that he received these instructions in a meeting at which both Lloyd and Eleanor were present. He said that after that meeting, he began to prepare documents for the property of Lloyd to be transferred to Eleanor.
[69] Mr. Vokes said that he completed the documents for the transfer of property on December 9, 2008. His plan was for Lloyd and Eleanor to sign the documents with him on December 10, 2008. However, he wanted to ensure that Lloyd had ILA before this. He explained that a day or two before they were scheduled to come and sign, his assistant called various lawyers in the vicinity to see if one of them was available to provide ILA to Lloyd. Jeffrey Richey was available to provide this ILA. Mr. Vokes was clear that Lloyd required ILA because he was being asked to give up, without consideration, his interest in a piece of property.
[70] Mr. Vokes said that he provided to Mr. Richey a cover letter and various documents to be signed by Lloyd after the provision of ILA. These included a blank certificate of ILA, the Cohabitation Agreement and the Amendment to the Cohabitation Agreement, the parcel register and the transfer documents. Mr. Vokes instructed Eleanor that on December 10, 2008, she was to take Lloyd to Mr. Richey’s office, and then to come to his office and wait for Lloyd.
[71] Mr. Vokes said that what actually happened on December 10, 2008 was that Lloyd and Eleanor turned up at his office before seeing Mr. Ritchey. So, he walked them over to Mr. Richey’s office and then returned to his office with Eleanor.
[72] While Lloyd was meeting with Mr. Ritchey, Mr. Vokes said that he received a telephone call that Lloyd was not going to sign the documents as drafted and that he would not transfer the property to Eleanor. This was a huge surprise to Mr. Vokes. However, Mr. Ritchey told him that Lloyd was prepared to leave the property to Eleanor in his Will. Mr. Vokes said that he immediately advised Eleanor of Lloyd’s change in position. He said that she was not happy but that she understood that she was getting security by him leaving the house to her, even if she was not getting it immediately.
[73] Mr. Vokes then prepared a new draft of the Amendment to the Cohabitation Agreement and another draft Codicil to reflect that Lloyd’s property would be transferred to Eleanor upon Lloyd’s death. He sent the Amended Cohabitation Agreement to Mr. Ritchey and Lloyd signed it with Mr. Ritchey.
[74] Counsel for the applicants makes much of the fact that there are differences in Eleanor’s recollection of the events. I agree that there are some differences between the versions of events provided by Mr. Vokes and Eleanor.
[75] Eleanor says that prior to December 10, 2008, she had not met with Mr. Vokes about changing the Amendment or Codicil. According to her, everything happened on December 10, 2008.
[76] Eleanor says that she and Lloyd made an appointment to see Mr. Vokes on December 10, 2008. Lloyd indicated that he wished to transfer his share of the home to her. Mr. Vokes said that he needed to see Mr. Ritchey for ILA. She thought that Mr. Vokes prepared the documents. She and Lloyd walked around the corner to Mr. Ritchey’s office and Lloyd spoke with Mr. Ritchey alone. They then returned to Mr. Vokes’ office.
[77] It was Eleanor’s evidence that Lloyd told her he had changed his mind about transferring the home to her and had decided that the property would pass to her if he died before her.
[78] Mr. Ritchey also provided evidence about the Amendment to the Cohabitation and the Codicil. He said that he met with Lloyd on December 10, 2008 to provide ILA. He said that he never takes notes when he provides ILA. In every situation, he asks the person to whom he is providing advice some questions to determine if he or she is competent. Typically, he asks four questions of people: where they came from, how long they’ve lived in Oakville, what their job was and how many children they have. He does not take notes and asks the same questions every time in order to gauge if the person is lucid and competent and knows what he is doing.
[79] Mr. Ritchey said that he could not recall much of his discussion with Lloyd but was certain that he met with him alone. He said that he would not normally ask for a retainer for the provision of ILA and that he does not believe he was paid by Lloyd. He said that he frequently did not charge seniors for ILA. He did not think he had obtained a copy of Lloyd’s identification as he did not believe that it was required.
[80] Mr. Ritchey recalled that he received a letter from Mr. Vokes that included an Acknowledgement and Direction, a Certificate for the ILA and the Amendment for the Cohabitation Agreement. He recalled that there was an issue as to whether Lloyd would transfer over his 50 percent interest in the house at that time. He discussed this with Lloyd and said that Lloyd decided that he could “go the other route” and leave his interest in the property to Eleanor through a Codicil to his Will. Mr. Ritchie explained that the case was unique because Lloyd had options with respect to how to deal with the property, and typically, ILA is based on an agreement.
[81] Mr. Ritchey said that prior to Lloyd signing the Amendment to the Cohabitation Agreement, he reviewed the terms of it with Lloyd. He testified that he would have read the Amendment to Lloyd in order to make sure that he understood what it meant. He witnessed Lloyd’s signature on the Amendment to the Cohabitation Agreement. He was not sure whether it had already been signed by Eleanor or not. He said that he and Lloyd also signed the certificate that counsel had explained to him the nature and effect of the Amendment and that he had executed it without compulsion or influence from Eleanor or anyone else.
[82] Mr. Ritchie was asked whether he had explained to Lloyd that the Amendment meant that if he died first, she got his 50 per cent but that if she died first, he did not get her 50 per cent as it went to her estate and that this was not fair. He responded that this was what they had agreed to and that it was not his place to judge what was fair, particularly when they had been living together since 1977. He was satisfied that Lloyd knew what he was doing.
[83] The applicants say that there are a number of suspicious aspects to what happened on December 10, 2008
[84] First, the applicants say that there are concerns about the fact that Mr. Vokes described two meetings with Eleanor before the December 10, 2008 meeting to discuss securing her interest in the property whereas Eleanor claimed that the only meeting was on December 10, 2008. I note that Eleanor was not cross-examined about Mr. Vokes’ evidence as his examination for discovery took place after hers. I accept that Mr. Vokes’ evidence, which is confirmed to some extent by documents before me, is likely more reliable and I accept that there were two meetings before December 10, 2008. However, I do not see anything nefarious or concerning either about the fact that Eleanor and her daughter went to see Mr. Vokes in order to discuss her security, or about the fact that she did not recall those meetings, which would have taken place more than seven years earlier.
[85] Second, the applicants raise concerns about who Mr. Vokes was acting for and whether he was concerned at all with Lloyd’s interests. In my view, when it became clear that the interests of Eleanor and Lloyd might diverge, Mr. Vokes, quite properly, insisted that Lloyd should have ILA before transferring his interest in the property to Lloyd. I find nothing concerning about the manner in which Mr. Vokes conducted himself in relation to Lloyd.
[86] Third, the applicants are very concerned about whether Lloyd received any ILA from Mr. Ritchey and, if he did, about the quality of that ILA.
[87] To begin with, I do not accept any suggestion that the person Mr. Ritchey met with, and who signed the Amendment to the Cohabitation Agreement, was someone other than Lloyd.
[88] I accept that Mr Ritchie never asked for Lloyd’s identification. This is said to be concerning because he had never met Lloyd before. While I think it would have been prudent for Mr. Ritchey to have confirmed Lloyd’s identity, failing to do so is certainly not dispositive of whether or not it was Lloyd with whom he met.
[89] I have also considered the applicants’ position that if Lloyd had in fact signed the Amendment, he would have caught the typographical errors under Mr. Ritchey’s certificate in which Lloyd is referred to as “her” and “she”. I accept that in estate matters previously, Mr. Lloyd had been meticulous. But, given the portion of the document that contained the typographical error, which was in Mr. Ritchey’s portion of the Certificate, I cannot conclude that the fact that the gender errors were not corrected means that it was someone other than Lloyd who signed his portion of the Acknowledgement.
[90] In all of the circumstances, I do not accept the applicants’ position that someone other than Lloyd attended at Mr. Ritchey’s office on December 10, 2008. I find that the evidence as a whole strongly supports a conclusion that it was Lloyd who went to Mr. Ritchey’s office.
[91] The applicants also take issue with whether Lloyd was actually provided with any ILA from Mr. Ritchey that day. The history of the litigation in this matter reveals that Mr. Ritchey did not produce his file initially, and then said at his examination for discovery that it had become wet during a flood in his basement. When he found it, there were fewer documents than might have been expected. Moreover, while he did not think he had been paid, Eleanor produced a cheque written by Lloyd to Mr. Ritchey dated December 10, 2008. The applicants say this reveals that Mr. Ritchey’s recollections are unreliable and that his general evidence about how he provides ILA is an insufficient basis upon which to conclude that he actually provided Lloyd with ILA in this case.
[92] While I acknowledge that there have been challenges posed by Mr. Ritchey’s conduct, record-keeping and memory of the events in question, I cannot conclude that he is wholly unreliable. Indeed, to the extent that there are documents that support his evidence, I accept much of his evidence as to what occurred on December 10, 2008.
[93] On the basis of the evidence before me, I find that the circumstances suggest that Lloyd did understand what he was signing and that he chose, after receiving ILA, to sign the Amendment to the Cohabitation Agreement. I say this for several reasons. First, it is clear that Mr. Ritchey met with Lloyd alone for the purpose of ensuring that he had ILA before signing the document that proposed transferring his interest in his property to Eleanor. While Mr Richey’s recollections are not as clear as they might have been, he was satisfied that Lloyd understood what they were discussing and understood the effect of the Amendment to the Cohabitation Agreement.
[94] Second, I take comfort in the fact that Lloyd did not simply sign the proposed transfer of his property. Rather, as a result of whatever discussion he had with Mr. Ritchey, he decided to enter into an agreement that was, in fact, more advantageous for him. Rather than transferring his interest in the property, he decided to keep his interest until his death. This suggests to me that he was fully aware of the interests at stake and made, prudently perhaps, an informed decision about what he would and would not agree to.
[95] Third, I observe that despite his poor recollection of the conversation, Mr. Ritchey clearly signed the Certificate that he had provided ILA. Moreover, Lloyd signed the Acknowledgement that Mr. Ritchey had explained the effect of the Amendment to the Cohabitation Agreement to him and that he understood it and had executed it of his own volition. These signatures suggest to me, in the absence of evidence to the contrary, that Lloyd knew what he was doing and made the choice to sign the document.
[96] Mr. Vokes’ evidence was that he acted for Lloyd on the signing of the Codicil. He testified that after Lloyd had received ILA from Mr. Ritchey and signed the Amendment to the Cohabitation Agreement, the Codicil was signed. It was, effectively, the mechanism that put the new agreement into Lloyd’s Will. Mr. Vokes was the witness to the Codicil. In my view, there is nothing inappropriate in Mr. Vokes, in these circumstances, witnessing Lloyd’s signature of the Codicil, which merely put into place the agreement that he had reached in the Amendment to the Cohabitation Agreement.
[97] I note that at his examination for discovery, Mr. Vokes was asked, as Mr. Ritchey had been, about what counsel characterized as the lack of fairness in that the Amendment to the Cohabitation Agreement. That fairness was said to flow from the fact that it provided that if Lloyd died first, his half of the home went the Eleanor, but if she died first, her half went to her estate. Mr. Vokes’ evidence was that the two of them came as a couple to see him and that “there was never any question from Lloyd about him receiving a reciprocal provision in the cohabitation agreement”. As I have indicated, I am not troubled by the absence of a parallel plan and think that the changed agreement was consistent with what appears to have been Lloyd’s reasonable change in plans.
[98] I do not think that all of the circumstances surrounding Lloyd’s signing of the Codicil and Amendment to the Cohabitation Agreement are suspicious.
Whether a beneficiary was instrumental in the creation of the Amendment to the Cohabitation Agreement and the Codicil
[99] The final factor to consider in determining whether there were suspicious circumstances requires a consideration of whether Eleanor, as a beneficiary, was instrumental in the creation of the Amendment to the Cohabitation Agreement and the Codicil and whether that fact means that she exerted undue influence on Lloyd.
[100] I accept that it seems to have been Eleanor and her daughter who first went to see Mr. Vokes about changing the arrangements with respect to property. As I have said, Mr. Vokes’ evidence seems to me to be more reliable in this regard than Eleanor’s. However, I find no evidence that Eleanor was exerting undue pressure on Lloyd. To the contrary, the evidence of Mr. Vokes was that the decision about transferring Lloyd’s share of the property to Eleanor was for him to make, and he could not make it without independent legal advice. Mr. Vokes explained this to Eleanor.
[101] In my view, the fact that Eleanor was the person who was able to drive Lloyd and who helped to care for him is not as significant here as is the fact that they enjoyed a 35 year common law relationship. He was ailing and had been sick. Obviously, he had become dependent upon her after he moved home in the fall of 2008, given that he was both physically and somewhat mentally diminished. The fact that Lloyd was dependent on Eleanor, viewed alone, cannot support a conclusion that there was undue influence.
[102] As I have indicated, Eleanor has explained why there was a change in the fall of 2008. With surgery and his cancer diagnosis, Lloyd no doubt realized that he was likely to predecease Eleanor. When they made their Cohabitation Agreement in 2004, Lloyd had made clear that his half of the home (then valued at $140,000) would pass to his estate (and thus to his children) if Eleanor did not buy out his interest.
[103] By four years later, at which point they owned a home that was worth considerably more (Lloyd’s interest in the home was half of $450,000 or $225,000 by 2013). The Will provided that the surviving spouse had 60 days to purchase the deceased’s spouse’s half interest at fair market value. Eleanor’s assets, as set out in Schedule “B” to the Cohabitation Agreement, reveal that this might have proven very difficult for her. While Lloyd had left her his two RRIF’s, these had been worth $160,680 at the time the initial Cohabitation Agreement and Will were prepared. While there is no evidence as to their value in December 2008, by December 2012, their value had decreased to $102,593. Eleanor said that she and Lloyd had discussed the matter and that he wanted to ensure that she could stay in the home. I do not think, in the context of a 35 year relationship, the likelihood that he would die first, the increased value of the home, his desire to have her remain in it and her financial situation, that a reasonable conclusion can be drawn that Lloyd’s decision to transfer his interest in the home to her was the product of improper or undue influence.
Conclusions as the December 2008 Amendment to the Cohabitation Agreement and the Codicil
[104] Having carefully reviewed the evidence as to Lloyd’s health and mental impairment, the explanation for the change in Lloyd’s decision respecting his interest in the home he shared with Eleanor, the evidence surrounding the ILA that Lloyd received before signing the Amendment to the Cohabitation Agreement and Codicil, the circumstances surrounding that change and the fact that the change made testamentary sense, it is my view that there is no basis to find either the Amendment to the Cohabitation Agreement or the Codicil invalid.
b) Is the respondent a dependent entitled to support under the Succession Law Reform Act?
[105] The respondent advanced an alternative position that if the Amendment to the Cohabitation Agreement and Codicil are invalid, she is entitled to support from the estate.
[106] Given my conclusion that the Amendment to the Cohabitation Agreement and Codicil are valid, and that Lloyd’s interest in the property shall be transferred to Eleanor, I need not deal with this alternative claim.
c) Is the Estate entitled to occupancy rent from the respondent?
[107] The applicants made a claim for occupancy rent from Eleanor given that she has been living in the home and the estate has not been compensated. This claim is premised on the invalidity of the Amendment to the cohabitation Agreement and Codicil. Given my conclusion respecting the validity of the Amendment to the Cohabitation Agreement and Codicil, Eleanor is entitled to the home and there should be no order for occupancy rent.
d) Does the respondent have entitlement to the Life Income Fund?
[108] While the issue of the LIF was raised in the parties’ written submissions, at the oral hearing, they requested the opportunity to provide further written submissions on this issue. I received those submissions from the applicants on May 31, 2017 and from the respondent on June 12, 2017. I have reviewed those helpful submissions.
[109] Lloyd had a LIF valued at $14,259.50 as of December 31, 2012. There was no designated beneficiary of the LIF.
[110] Under s. 48(7) of the Pension Benefits Act, in the absence of a beneficiary designation, the LIF passes to a surviving spouse.
[111] On June 12, 2013, Justice Edwards ordered that Eleanor met the definition of a spouse under the Pension Benefits Act. On this basis, and on the basis of the consent of the applicants, the Royal Bank of Canada was authorized and directed to transfer the LIF to Eleanor forthwith.
[112] The applicants and respondent now have different positions with respect to entitlement to the LIF.
[113] The applicants say that when they signed the Cohabitation Agreement on September 27, 2004, Lloyd and Eleanor agreed about how their assets and liabilities would be dealt with. Under paragraph 4.03, they agreed that there would never be support payable by one to the other. Further, Lloyd indicated that he had designated Eleanor as beneficiary under his two RRIFS and she indicated that she had designated him beneficiary of her pension. The applicants point out that there was no agreement in the Cohabitation Agreement that Lloyd would designate the LIF to Eleanor. Further, they point out that the LIF is specifically listed as one of Lloyd’s assets in Schedule “A” to the Cohabitation Agreement. The applicants say that Lloyd’s intention was to exclude Eleanor from receiving the LIF and that by signing the Cohabitation Agreement, after receiving ILA, she was knowingly relinquishing any claim to the LIF.
[114] The applicants further submit that the LIF does not qualify as a “pension plan” at all and so they say that s. 48(7) of the Pension Benefits Act, does not apply to the LIF at all.
[115] The respondent says that s. 48(7) of the Pension Benefits Act provides that in the absence of a beneficiary designation, the LIF passes to Eleanor as the surviving spouse. She says that the Cohabitation Agreement provides no express reference to the LIF and that she did not contract out of her entitlement to the LIF by signing the Cohabitation Agreement.
[116] I note that there is no affidavit evidence before me respecting the intention of the parties in relation to the LIF at the time they entered into the Cohabitation Agreement. There is no evidence from Eleanor that she either expected to be the beneficiary of the LIF or that she knowingly relinquished any claim to it.
[117] There is no question that the law permits parties to make a contract respecting their rights and obligations as a result of their relationship. Lloyd and Eleanor did so in a fulsome way, with the benefit of legal advice. The intended that their Cohabitation Agreement would set out their agreement respecting their assets. They agreed that neither would ever pay support to the other. They also agreed that Lloyd had designated Eleanor as beneficiary of his two Royal Bank RRIFs and that she had designated him as beneficiary of her Royal Bank of Canada pension. They are clear that they had received legal advice and that they did not want a court order that deviates from the terms of their agreement.
[118] In my view, this case is one in which the intentions of the parties are clear from the Cohabitation Agreement. They intended that only Lloyd’s RRIFs would pass to Eleanor on his death. This was the choice that they made respecting support for her. They could have included the LIF at para. 4.03(6) of the Cohabitation Agreement. They did not do so. While Lloyd set out the existence and value of his LIF in Schedule “A” to the Cohabitation Agreement, thus ensuring that Eleanor was aware of it, there appears to have been a deliberate and conscious choice made by them not to leave the LIF to Eleanor. There can be no question that Eleanor was aware of this and agreed with this decision.
[119] While I accept that there is no express and specific wording in the Cohabitation Agreement respecting the LIF, in my view there can be no question as to what they both intended: that the LIF pass to the estate on Lloyd’s death. To be clear, I reach this conclusion because: first, the parties are clear in the Cohabitation Agreement that they intend it to be comprehensive; second, the LIF is listed as one of Lloyd’s assets at the end of the Agreement (making clear that both of them were aware of it and of its value); third, the parties specifically provided for only the RRIFs to go to Eleanor; and fourth, the fact that the parties each had ILA.
[120] There is no evidence at all that each party believed that, in the absence of a beneficiary designation, Lloyd’s LIF would pass to Eleanor as surviving spouse under s. 48(7) of the Pension Benefits Act. I cannot accept that this is what the parties thought or intended.
[121] I think it would run contrary to the parties’ clear intentions, as expressed in the Cohabitation Agreement as a whole, for the LIF to pass to Eleanor under the Pension Benefits Act. I cannot accept that the statutory regime is so rigid as to foreclose giving effect to the clear intention of the parties in circumstances, expressed by specific inclusion of the RRIFS as Lloyd’s support, exclusion of the LIF under support, and inclusion of it and its value as one of Lloyd’s assets.
[122] My view is consistent with that of Weekes J. in Conway v. Conway Estate, 2006 (ON SC), [2006] O.J. No 234 (O.N.S.C.). In that case, the court observed that the separation agreement had no reference to the pension plan that was at issue. The court held that before it could be said that there was a revocation of the designation of beneficiary under the plan, there needed to be a specific reference to the plan in question. In my view, the inclusion of the reference to the LIF in the list of Lloyd’s assets in Schedule “A” is the critical reference to the LIF. Inclusion meant that Eleanor was aware of it and was aware that she was not entitled to it.
[123] I do not accept that the parties’ failure to include in the Cohabitation Agreement a further sentence that Eleanor specifically relinquished any claim to the LIF as surviving spouse was necessary to give effect to their agreement. This puts form over substance. I do not think it is appropriate, in these circumstances, to override their obvious intent: Burgess v. Burgess Estate, 2000 (ON CA), [2000] O.J. No.4846 (C.A.). Eleanor is not entitled to the LIF.
D. Costs
[124] The parties have not yet had an opportunity to make submissions as to costs. If they are unable to reach an agreement, they may make submissions in writing.
[125] While success was divided (the respondent was successful on the issue of the validity of the Amendment to the Cohabitation Agreement and the Codicil; the applicants were successful on the issue of the LIF), I view the respondent as having more overall success. Accordingly, the respondent will make costs submissions of not more than three pages, in addition to a bill of costs and any relevant authorities. These are to be served and filed within two weeks of the
release of this judgment. The applicants will have ten days to respond with submissions of the same length. There will be no reply without leave of the court.
Woollcombe J.
Released: August 18, 2017
CITATION: Kerr v. Metcalf, 2017 ONSC 4926
COURT FILE NO.: 2505/13
DATE: 2017-08-18
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF LLOYD ROBERT KERR, deceased
BETWEEN:
Thomas Robert Kerr and Catherine Helen Johnson
Applicants
– and –
Eleanor Georgina Metcalf and Lorna Ann de Witt
Respondents
REASONS FOR JUDGMENT
Woollcombe J.
Released: August 18, 2017