CITATION: Newlands Estate, 2017 ONSC 7111

COURT FILE NO.: 01-2747/15

DATE: 20171129

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF JOHN MITCHELL NEWLANDS, deceased

BETWEEN:

JOAN ELIZABETH FELKAI and BRIAN CULLEY NEWLANDS in their capacities as CO-ESTATE TRUSTEES OF THE ESTATE OF JOHN MITCHELL NEWLANDS (deceased)

Applicants

– and –

JOHN EDWARD NEWLANDS, in his capacity as CO-ESTATE TRUSTEE and in his beneficial capacity OF THE ESTATE OF JOHN MITCHELL NEWLANDS (deceased)

Respondent

David C. Rosenbaum, for the Applicants

Ian M. Hull and Doreen So, for the Respondent, John Edward Newlands

HEARD: August 16, 2017

SPIES J.

REASONS FOR DECISION

Introduction

[1] John (aka Jack) Mitchell Newlands, (“father” or “the Deceased”), died on May 12, 2015. He is survived by his three children, the parties to this application, who at least by age, are now adults. All three are the Estate Trustees and the residuary beneficiaries of his estate (“the Estate”), which, at the time of his death, had a declared value of almost $4.5 million.

[2] This application was issued on June 21, 2016 and concerns one asset that the applicants allege is an asset of the Estate. That asset is a painting by Antoine Bouvard entitled “Venise, le Palais de Doges” (the “Bouvard”) which, in the application record, is stated to be worth “approximately $30,000.” There is also a claim for John Edward Newlands’ (John’s) alleged breach of fiduciary duty to the beneficiaries of the Estate, including damages for breach of fiduciary duty and negligence.

[3] As John’s counsel Mr. Hull submitted, the relief claimed, given what is in issue, is “over the top”. Not surprisingly I suppose, no mention is made in the notice of application of an on the record offer by John made on June 10, 2016, eleven days before the notice of application was issued, to pay the Estate $30,000 for the Bouvard. When I asked counsel for the applicants, Mr. Rosenbaum, at the outset of argument of the application, how what was clearly an expensive application, given the voluminous material stacked before me, could be in the best interests of the Estate, he was not able to give me a satisfactory answer.

[4] I am sure that the last thing the Deceased ever would have wanted or expected is that his three children would come to this Court, two against one, fighting to the point where the intervention of this Court is required. The applicants, in their capacities as co-Estate Trustees, have spent a mind boggling $243,626 to get to this point and their brother John, the respondent, has spent virtually the same amount; $238,701. I am certain this is not how the Deceased wanted his children to spend a sizable portion of their inheritance. Even in Estates Court, where emotion often clouds judgment, I have never seen anything even remotely close to this case where the parties have spent combined, almost half a million dollars, fighting over a painting worth, on the evidence before me, at most $30,000.

The Issues

[5] There is no dispute that the Bouvard belonged to the Deceased during his lifetime. The applicants take the position that their brother John took possession of the Bouvard in February 2014 but that it was just to store the Bouvard and that ownership of the Bouvard remained with their father until his death and that it is an asset of the Estate.

[6] John’s position is that in the course of determining which one of his children might wish to receive his personal possessions, he and his father entered into an oral contract regarding the terms in which he would receive ownership of the Bouvard when the Estate is settled. John argues that his brother and sister knew of this contract and that at the time they entered into their own contract with the Deceased, wherein they each were to receive ownership of a carpet of value under the same terms.

The Evidence and Findings of Fact

Family Background

[7] The Deceased was predeceased by his wife, Lillian Newlands (“Lillian”), on January 2, 2011 and he was survived by their three children, namely the parties to this proceeding.

[8] Jack died with a Last Will and Testament dated November 14, 2001 (the “Will”), a First Codicil thereto, dated January 27, 2010 (the “First Codicil”), and a Second Codicil thereto, dated February 23, 2015 (the “Second Codicil”).

[9] By virtue of the Second Codicil, the applicants, Joan Elizabeth Felkai (“Joan”) and Brian Culley Newlands (“Brian”), and the respondent, John (also collectively referred to as “the parties”), were all named as the Estate Trustees of the Estate. This Codicil also provides that if there is any difference of opinion among the Estate Trustees in relation to the commission or omission of any act in the execution of the trusts of the Will “the opinion of the majority of them shall prevail”.

[10] A Certificate of Appointment of Estate Trustee with a Will (“Probate”) was issued to Joan, Brian, and John on September 4, 2015.

The Deceased’s Move from Ancaster to Briton House

[11] Prior to his death, the Deceased resided in a condominium located in Ancaster, Ontario until January, 2014 when he was temporarily relocated to Briton House, a retirement centre in Toronto. After a few weeks of his temporary stay, the Deceased decided to relocate permanently to Briton House. The condominium in Ancaster was later sold on July 1, 2014.

[12] In the course of the Deceased’s relocation and the eventual sale of the condominium in Ancaster, the Deceased and his children engaged in a process of relocating and dividing some of his personal belongings.

[13] According to John, his father asked him and his sister Joan to remove the Bouvard and Lillian’s jewellery from Ancaster for safekeeping. Joan says it was her and John’s idea to do so. It does not matter. Lillian’s jewellery remained in Joan’s home and near the end of February, 2014; Joan delivered the Bouvard to John. There is a dispute as to whether or not this was for the purpose of storing the painting or so that John could see how the Bouvard looked in his home to determine whether he had any interest in receiving the Bouvard on his father’s death.

[14] According to John, his parents told their children that whoever received the Bouvard and the dining room carpet (the “Dining Room Carpet”) would pay the Estate for the value of that item when the Estate was settled. The Bouvard and the Dining Room Carpet were distinguishable because they were items of value. Joan also gave similar evidence on cross-examination when she explained that “My parents in all of their possessions, there were two things of significant value, one being this particular painting and the other being this dining room rug”.

[15] According to John, while the Bouvard was in his home, his father asked him to obtain an appraisal of the Bouvard. That was done in order to determine what that painting was worth for purposes of whoever might want to acquire it. This evidence is corroborated by the fact that the Bouvard was appraised with a value of $30,000.00 by Odon Wagner Gallery as at April 1, 2014 (the “Appraised Value”).

[16] The Dining Room Carpet was appraised by Persian and Oriental Rug Imports on July 24, 2014 at between $10,000 and $12,000. The Dining Room Carpet was taken by Brian in August 2014 to British Columbia. Persian and Oriental Rug Imports also provided an appraisal of a smaller carpet located in the front hall (the “Front Hall Carpet”) of between $2,000 and $2,500 that Joan received in the summer of 2014.

[17] The fact these appraisals were obtained at this time corroborates John’s evidence. In my view it also makes it clear that the two carpets and the Bouvard were being dealt with in the same way by the parties and the Deceased, which is strong corroboration of John’s position on this application.

The Wish Lists

[18] Before the sale of the condominium, the parties discussed how to deal with their father’s personal belongings that he did not want with him in Briton House.

[19] In an email dated July 1, 2014 to John and Brian, Joan wrote:

…when he [their father] moved to Toronto in January, John and I decided what would fit in Toronto and what should be left in Ancaster thinking that dad may return there for the summer months. [Emphasis added]

[20] John sent an email to Joan on July 3, 2014, in which he wrote:

… please send a list of items in the condominium which you may wish so that we can set aside these items. Where more than one person has a desire for an item we will have to come up with a settlement procedure.

[21] On July 4, 2014, Joan wrote to Brian and John, copying “Dad”. She stated in that email:

During the last few months Dad has often asked me about various items. I told him that when he moved to Toronto in January, John and I decided what would fit in Briton House and that everything else was at the condominium except for mother's jewellery (it is at my house) and the Bouvard painting (it is at John's house).

First, we must ascertain Dad’s wishes. Recently Dad asked me what should be done with the condominium contents, I said that the decision should be his and perhaps the four of us should discuss this. … I feel very strongly against deciding what Dad should or should not have and what should be done with anything he does not want. [Emphasis added]

[22] This email is significant because it shows that the Deceased was concerned about the division of his possessions among his children and that he knew that the Bouvard was in John’s house. It also demonstrates Joan’s strong views that their father should decide on what should be done with the assets he no longer wanted in his possession.

[23] John emailed a list to his siblings of items he wished from his father’s possessions on July 8, 2014 and Brian did the same on the same day. Joan’s list was emailed to John and Brian on July 30, 2014.

[24] John was the only one who included the Bouvard in his list, although he referred to the Bouvard as "still a question mark". According to John this was because he wanted to confirm that the value of the Bouvard that his father would accept, in exchange for a transfer of the painting to him on his father’s death, was the Appraised Value. He also states he was uncertain of whether his father wished to have the Bouvard at Briton House. In any event it is very significant that at this time there is no dispute that only John expressed an interest in the Bouvard.

[25] The applicants submit that the emails that were exchanged among the parties at this time contain no reference to their father being involved in the decision-making of which child would get which item, beyond deciding what he wanted to keep for himself. John, however, claims that the ultimate decision maker was to be his father and that their father ultimately became aware of the lists. The applicants dispute this. Based on the July 4th email referenced above and the evidence that follows, I accept John’s position. This is also confirmed by an email of December 17, 2014 from Joan to her brothers that I will come to.

[26] In any event, as of August 2014, Joan and Brian were in possession of the two carpets and John still had the Bouvard. As for the rest of Jack’s personal items, apart from the items he wanted with him at Briton House, his remaining personal belongings were distributed among his three children and others who had expressed interest in them.

[27] John claims that there was a "mutual understanding" among himself and his siblings that Brian and he would respectively pay the Estate for the Dining Room Carpet and the Bouvard as valued by the appraisals. The applicants dispute this and say that it was agreed among the three children that the value of the Dining Room Carpet and the Front Hall Carpet would be balanced out among them later and specifically that Brian agreed to give each of Joan and John $4,000 for the Dining Room Carpet, based on an appraised value of between $10,000 and $12,000, (and I presume the same balancing would take place with respect to the Front Hall Carpet that Joan received). The applicants take the position that the Bouvard was not subject to the same agreement.

[28] There is no evidence that any payments were made by Joan or Brian with respect to the carpets to John or to each other. Based on the evidence that follows, it is clear that the parties intended these payments would be “balanced out” through the distributions from the Estate once it was settled.

The Alleged “Conditional Sales Contract” about the Bouvard

[29] It is the evidence of John that in August 2014, he spoke to his father, in person, and he presented his father with the lists that were exchanged between the parties. John says that he also spoke to his father about his wish to have the Bouvard in exchange for paying the Estate the Appraised Value of $30,000 after his father’s death. According to John, his father agreed with him about the Bouvard and his father confirmed that he did not wish to have the Bouvard at Briton House. According to John, his father was glad that John was keeping the Bouvard in the family, and he told John that he thought the Bouvard looked nice in John’s home.

[30] John confirmed on cross-examination that the alleged agreement with his father was oral, that there is nothing in writing and that he never asked his father to confirm this agreement in writing. Based on how reasonable it appears that the parties were dealing with the “lists” at the time I would not have expected John to have thought he needed to have his father put this agreement in writing.

[31] In John’s words on cross-examination,

I liken it similar to a conditional sale contract where title remained with my father and/or estate until I paid for it, and the obligation I had was to pay for it when the estate settles, at which point, the title would be passed fairly to me.

I had the Bouvard right then. When my dad gave it to me then, I started hanging it in my dining room, so as far as I was concerned, the Bouvard was mine, and as far as I knew, my brother and sister knew the Bouvard was mine. [Emphasis added]

[32] Ultimately, John explained the process that came to pass by August, 2014 as follows,

My father, they were his possessions and he gave them to each of us, so in my view, that’s his decision. We, amongst ourselves, made the list that said here’s what we would like. Yes, I decided what I would like, my brother decided what he would like, my sister decided what she would like, but they were dad’s possessions, and it was his ultimate gift to each of us that said there’s your possessions, they’re your lists.

I was dealing with my father. My brother and sister knew that I wanted the painting. It was on my list. They knew that we had an understanding in the family that you paid based on the valuations. They had seen the valuations. They knew of the valuations, and they knew the same thing applies with the carpets. [Emphasis added]

[33] The position of the applicants is that they were not aware of any such agreement having been made. John admitted that he never expressly told his siblings about his alleged agreement with his father. Joan’s position is she did not know that John wanted the Bouvard, only that he may wish to have it if it worked in his home and that John never said that he wanted it. Brian's evidence is that by the time of their father's death there was no understanding or agreement as to how the Bouvard was to be distributed. He claims that he knew nothing about his father's wishes regarding the Bouvard. As I will come to, the position of the applicants, in my view, is inconsistent with their emails that I will come to.

The Parties’ Pre-Death Dealings with the Bouvard

[34] On December 8, 2014, before their father died, the parties met, in person, to discuss family matters, including the post-death division of their father’s personal items. Their father was not present at this meeting. Brian prepared “Notes for discussion” dated December 9, 2014 but I could not find this document in the voluminous materials. However, after this meeting, Brian, Joan, and John circulated emails to confirm what was discussed on December 8th and those emails are of assistance.

[35] By email dated December 17, 2014 to Brian and John, Joan thanked Brian for his Notes for discussion and stated that she had discussed points 1 and 3 to 11 “with dad as he asked me what we said about him at dinner the other night.” She stated that she could only think of one additional matter that Brian had not included in his summary as stated:

…we discussed about how to allocate/distribute/pay for (sorry I cannot think of the correct term) the Bouvard painting and the dining room rug. I also received an antique rug of value which I feel should also be considered [the Front Hall Carpet]. I discussed the division of family possessions with dad and he felt that we should determine a financially equitable way to divide and value the items that each of us has in our possession. I sensed his concern is that he would not want anyone feeling that the process was unfair or not equitable.

John, I found the receipt for the Bouvard painting. Attached is a copy as requested. [Emphasis added]

[36] This email is very significant because it makes it clear that the Deceased was involved in these discussions, that Joan indicated that she wanted to consider the carpet that she received in the same manner as the Bouvard and the Dining Room Carpet because it was “of value” (which I note shows how amiable the discussion of the lists was at this time) and most importantly that the parties’ father wanted his children to determine a “financially equitable way to divide and value the items that each of us has in our possession”. At this point the Deceased knew that the Bouvard was in John’s possession.

[37] It is clear that these items were not to be received by each of Joan, Brian and John as gifts in the true sense of the term, as these items each had different values. It is also clear that the parties were talking about the items of value that they each had in their possession. Since there was no dispute over who wanted what, in terms of these three items of value, everything seemed settled, or so the parties’ father would have thought. Furthermore, Brian admitted on cross-examination that Joan was accurate when she sought to add their discussion of the Bouvard to his memo of their meeting. John’s evidence was that he did not tell Joan and Brian about his “contract” with his father after this because Joan had summarized it nicely in this email.

[38] By email dated December 23, 2014 to Brian and Joan, John stated, with respect to the additional items, that they also discussed that the “payment for the carpet and the painting should be paid to Jack’s estate as Mom and Dad wished.” There is no evidence of either Joan or Brian disagreeing with this in writing and, as I will come to, it seems this was their understanding as well. The applicants argue that John did not say anything about an agreement with their father to acquire the Bouvard from the Estate for $30,000 but I would not have expected him to mention the price as he made no reference to the values of the Carpets either. By this time the appraisals had been done and the parties were all aware of them.

[39] On cross-examination, John testified that it never occurred to him to pay for the Bouvard before his father’s death because “when the estate settles, that’s when these get paid for”. As I have already stated, as I understand it Joan and Brian did not pay each other and John for the Carpets they obtained from their father, before he died. It seems from the emails that follow that refer to these items being “balanced out”, that the parties intended that the appraised value of the Carpets will be counted as a distribution when Joan and Brian’s share of the Estate is calculated. John’s position is that the same applies to the Bouvard.

[40] Brian's evidence is that at the December 2014 meeting John said that he wanted to see if the Bouvard worked in his house and he wanted to determine if he wanted to buy it although Brian does not recall the discussion referred to in John's email.

The Parties Post-Death Dealings with the Bouvard

[41] After Jack's death, there was an exchange of emails among the three executors and trustees in June 2015 concerning whether the Dining Room Carpet, and the Front Hall Carpet and the Bouvard should be included in the application for probate.

[42] In an email dated June 26, 2015 to John and Brian, Joan estimated the value of their father's personal property to be included in probate at $60,000 which included the Dining Room Carpet and the Front Hall Carpet at a total of $15,000, the Bouvard at $40,000 and the balance of their father’s personal effects at $5,000. In an email later that day she wrote to John and Brian:

Perhaps we do not need to include the 2 rugs (dining room and small one – appraised value $12 k-$14.5) for probate because dad had gifted those to Brian and me before his death.

As we do not know the status of the painting as at May 12 (i.e. if we are going to sell it or if one of us wants to keep it) I think it should be included as an asset of the estate.

I checked the appraisal value of the painting – it was $30 k not $40 k.

Therefore, for probate purposes the value of personal property should perhaps be $35k (the painting at $30 k plus $5k miscellaneous). [Emphasis added]

[43] Joan’s email is significant because she uses the work “gifted” even though the applicants do not dispute that they had to pay each other for the difference in value of the Carpets or otherwise account for their value on their father’s death. It seems that the only reason Joan would not know the status of the Bouvard is that John had not confirmed that he was prepared to pay $30,000 for it.

[44] John's response, sent the same day, was to ask for the list of items of personal property. Significantly, he did not respond to Joan's statement that "we do not know" if they were going to sell the Bouvard or if one of the trustees/beneficiaries wanted to keep it. Although John may not have appreciated this at the time, this appears to be the first sign of a rift between the parties over the Bouvard.

[45] On June 29, 2015, in an email to the Estate's solicitor and to his two co-Trustees, John referred to the Bouvard as having "a realizable value of about $22,500". [Emphasis added] This appears to be in the context of what value should be given to it on Probate. On his cross-examination, John explained this amount to be the $30,000 Appraised Value less a commission on sale. This is the first time that it appears John was trying to get the Bouvard for less than the Appraised Value.

[46] In Joan’s affidavit sworn June 15, 2016 in support of the application, she attached as an exhibit a copy of the undated Estate Information Return. It is significant that for personal effects of the Deceased, the fair market value is shown as $60,000. Although not itemized, based on the other evidence I find that this must have consisted of $40,000 for the Bouvard, $15,000 for the Carpets and $5,000 for miscellaneous items.

[47] In the applicants’ factum the position is taken that the Carpets were not included as assets of the Estate for probate purposes. I do not accept that statement given the only evidence I have of the Estate Information Return states to the contrary. This means that for probate purposes the Carpets and the Bouvard were treated the same. In my view they were treated properly as in each case payment for these items had yet to be made to the Estate or their value had yet to be taken into account in any distribution from the Estate. I would add that even if this is not the case, the fact John was content that the appraised value of the Bouvard be included for the purpose of probate does not in my view undermine his position since he has always taken the position that his payment for it was to be made to the Estate.

[48] On July 7, 2015, Brian sent an email to Joan and John in which he said:

The rug (which I received) and Joan also received a rug or rugs can be balanced later. John, I would understand that you do not wish the (sic) keep the painting, as you wanted it included in the dollar value of personal items for the probate fee calculation, thereby inferring that the painting was not gifted to you by Dad last year. Am I correct in my understanding? [Emphasis added]

[49] I have already found that the Carpets were included in the Probate and that, in any event, the fact the Bouvard was included does not undermine John’s position. Brian’s email is significant as it establishes that the Carpets were not gifts in the legal sense of the term and that the balancing or payment for them would be done later, presumably as part of the distribution of the Estate assets. It also confirms that Brian knew that John’s position was that their father had “gifted” the Bouvard to John because he states at least that John had wished to “keep” the Bouvard. This shows Brian knew more than he now admits. John's response to Brian’s email was: "As far as the painting, not really sure yet will advise shortly." It seems he did not appreciate that Brian was challenging his position that the Bouvard had been gifted to him if he paid the Estate the appraised value.

[50] On December 11, 2015, Joan sent an email to John and Brian in which she stated that she required that they provide to her by December 18, "a list of items that you would wish to have from mother's and father's possessions". John's reply on the same day included a suggestion that they deal with “the Bouvard, the carpet and the items at Valley City in Dundas at the same time” and:

I would like to know the amount that one would be required to pay the estate, as Mom and Dad said, for the Bouvard, which we have been storing since you dropped it off at our house. What is the amount that one would be required to pay the estate, as Mom and Dad said, for the carpet which Brian wishes to keep? [Emphasis added]

[51] The applicants argue that John’s use of the word “storing” is totally inconsistent with his position that he had an agreement with his father. I agree. It seems that John at this point was perhaps trying to see if he could negotiate the price of the Bouvard to something lower than the Appraised Value. I note he took that same position with the Carpets. That said, as already stated, in his email of July 7, 2015, Brian acknowledged at least that John had wanted to “keep” the Bouvard.

[52] On December 18, 2015, Joan sent an email to John and Brian in which she stated, among other things:

John, some time ago, well prior to Dad's passing, in the summer of 2014, you stated that you would wish the Bouvard and it went (sic) your home.

You qualified your desire to have it with the cavaete (sic) that you wanted to see how it would work and fit with your new mantle.

When you received the Bouvard, Brian received the 'big carpet' worth some $12,000 and I received a smaller carpet worth some $3,000.

I want to see if the Bouvard painting will work in my home.

Let me know when I can pick it so you don't have to store it anymore. [Emphasis added]

[53] This is also a key email in my view because Joan confirmed that Brian received the Dining Room Carpet and she received the Front Hall Carpet at the same time that John received the Bouvard in the summer of 2014. This is before their father passed away and I find, given the earlier emails I have referred to, that the Deceased knew about this and that the parties and their father agreed that the differing values of these items would be taken into account as part of the settlement of his Estate. The applicants point out that John did not reply to this email to object to Joan’s position that she might want the Bouvard. However, in cross-examination Joan admitted that since John had had the Bouvard for well over a year and a half and had not made up his mind if he wanted it that she thought she “could take an opportunity, and if I wanted it and he didn’t, well then I could have it.” [Emphasis added] Again this is a significant admission as it implicitly acknowledges that if John wanted the Bouvard and of course paid for it, that it was his.

[54] John's reply to this email on December 19, 2015 was:

Regarding the Bouvard, in order for me to make my decision I need to know what amount would be paid to the estate in the event that any one of us wishes to keep it, as Mom and Dad always stated. May I please have your inputs on this?

Regarding the carpets, in order to follow the wishes of Mom and Dad, only the dining Room carpet is relevant. This also requires a value in order to determine the payment to the estate. May I please have your inputs on this?

[Emphasis added]

[55] The applicants argue that this email is inconsistent with John’s position that he had agreed on a price with their father as he treated setting the price of these items as a decision of the Estate.

[56] On December 21, 2015, John sent an email to Joan and Brian in which he said:

Until the three of us have arrive (sic) at the value that any one of us would need to pay the estate if any one of us wanted the Bouvard, I am not in a position to decide if I wish to purchase the Bouvard. As we all know, it was only me who expressed an interest in the Bouvard when the contents of the condominium were being dispersed, and I continue to have that interest. So until the price is determined, there does not seem to be any reason to change the location where it is currently being stored. [Emphasis added]

[57] John's explanation for why he asked about the amount to be paid "in the event that any of us" wishes to keep the Bouvard, rather than how much he would have to pay, is that he was "quoting what my mother and father had said all their life". The applicants argue that this makes no sense if John truly thought his father had agreed he could buy the Bouvard from the Estate for $30,000.

[58] On his cross-examination John was asked, with regard to these emails, why he did not respond by saying that he had an agreement with his father to acquire the Bouvard for $30,000. His responses included:

a) that his siblings knew that he wanted/had been given the Bouvard, and so he saw no need to correct them; and

b) his siblings had been deceitful with him and therefore he was concerned how to reply or did not know how to reply.

[59] The applicants argue that the alleged deceitfulness did not stop John from addressing other items in the emails, such as asking Joan to provide a list of items making up the $5,000 in the value of the personal possessions that she had estimated. They submit that John had not made up his mind whether he wanted the Bouvard and he did not know what the price would be if he wanted it. The applicants rely on the following exchange to illustrate John's inability to explain adequately why he did not tell his siblings that he had an agreement with his father:

378 Q: Let's see. We'll get there. In any event, you don't at any time, respond to this email from Brian by saying what are you talking about? The painting is mine. Dad said I could have it for $30,000, so that's why it was included in probate.

A. No, because I couldn't just answer it that way because he's asking, "Am I correct in my understanding?" When I read what his understanding is, his understanding is he and Joan received rugs which they put in probate which they wish to keep. John, there's a painting which is in probate that you were given by your father, and you may not wish to keep it.

379 Q. Why not respond by saying of course I want to keep it?

A. He asked me if he may not wish to keep it, so really, I didn't see, A, how to answer it, and by not answering it, when we read it now on that basis, he's only asking me if he's correct in his understanding.

380 Q. Couldn't you answer him by saying you're not correct in your understanding?

A. I maybe could have, but at this point in time, there was not much discussion going on because of the deceitfulness.

[60] John's explanation for why he asked in December 2015 what it would cost to acquire the Bouvard from the Estate is that Joan had valued the Bouvard at $40,000 for probate purposes, and he wondered "what was going on". The applicants argue that this is not credible because Joan corrected this the same day. That is a good point although it seems that it was included at that higher value for Probate purposes as I have concluded above.

[61] I do agree with the applicants, however, that given the exchange of emails it is strange that John would not simply state that the Bouvard was his and that their father had agreed he could keep it if he paid the Estate the appraised value of $30,000.

[62] By email dated December 21, 2015, Joan emailed John and Brian and asked John to let her know when she could come over and pick up the Bouvard painting.

[63] By email dated December 22, 2015, Brian stated to John the following:

It is my responsibility, as a trustee and my obligation to all beneficiries (sic) to obtain the highest dollar amount possible for the assets in the estate which would include the Bouvard painting.

It is my understanding that the estate has not determined the amount that would be required to be paid to the estate for the purchase of the Bovard (sic) at this time.

As this amount is not available it would stand, by your reasoning, that you will be unable to make your decision.

When an amount and value has been determined by the trustees of the estate, rest assured as a trustee I will advise prior to any action taken by the estate with regard to the Bouvard.

It is noted and appreciated that you so kindly stored the painting during the past few months as you mentioned.

As it appears that there is another party (Joan Felkai) who is showing some possible interest in the Bouvard. It is only logical then, that the interested party be given an equal opportunity to consider how the painting would or would not work for her.

It is my duty, as a trustee to instruct you, as you are holding an asset of the estate, to allow Joan to receive the painting…All interested parties must be afforded the opportunity to consider whether they actually wish to acquire the Bouvard from the estate/trust of Dad's.

Once all 3 of the trustees receive notification as to who is interested and a price determined we (the trustees) will move forward with the disposition to the party offering the most for the painting.

…It was agreed upon by the 3 of us that I receive the large rug and it would attract the value of $12,000 as per the appraisal. …Joan received the smaller rugs(s) which were valued I recall at about $2,500 to $3,000.

… my time is limited so please note that I will be unable to respond or discuss any estate matters until the first week or so in January, 2016.

[Emphasis added]

[64] Joan requested the Bouvard again by email dated January 16, 2016. John did not specifically reply to this email. At this point emails were being exchanged on the issue of an interim distribution of cash from the Estate.

[65] On February 1, 2016 Brian emailed Joan, copying John stating:

John indicated quite some time ago – late November or early December – that he wanted to clear up the rugs, painting and other stuff.

Joan, you indicated that you wanted to take a look at the Bouvard painting to confirm whether or not you had an interest.

It has now been well over a month (I asked John to take the painting to you on December 22) – and as yet I have received no reply as to your desire regarding the painting.

Would you please make up your mind regarding the painting ….

[Emphasis added]

[66] On February 2, 2016 Joan responded to Brian and John that “Yes, I did indicate that I may now have an interest in the Bouvard painting” but she continued that as she had not heard from John as to when she could pick up the painting she was unable to confirm her interest in it.

[67] It is clear from the evidence that certainly by now, and likely earlier, that Joan and Brian were in one camp and John in the other. There were other issues besides the Bouvard. In an email from Joan to Brian dated February 26, 2016 she told him, with respect to a dispute with John over an interim distribution, that “if he [John] does not want to discuss things with us I guess then this is how we proceed. You and I can discuss things, you and I can make proposals for the 3 of us to consider, and then the estate trustees proceed as to how at least 2 of the 3 of the trustees decide”.

[68] On March 8, 2016, Brian in his capacity as an Estate Trustee sent an email to John “formally” directing John to release and deliver the Bouvard to the office of the Estate's lawyer by March 15, 2016. Although this letter was marked "without prejudice", it was not a settlement proposal. The email went on to note that:

It has been requested that you deliver or allow Joan Felkai to pick up the Bouvard Painting on several occasions in the past. Each request has been ignored and Joan Felkai has been prevented by your actions, from viewing the painting.

As you are aware she wished to view the painting in her home, in order for her to determine if she has a desire to purchase the painting from the Estate.

[69] John testified that this was the first time that he realized the Joan and Brian were trying to take possession of the Bouvard as an asset of the Estate.

[70] In an email sent to Brian, copied to Joan on March 10, 2016, John stated:

Dad gave me the Bouvard as he did the Dining Room carpet to you with the understanding that we would pay the estate based on the valuations done at the time dad sold the condominium. Copies of both were forward to you at that time. It has been documented that I received the Bouvard and you received the Dining Room carpet. It has also been acknowledged that dad knew we each had these possessions from the condominium and he hoped it was all equitable. Dad also was very pleased to see the Bouvard in my house when he was here, and was glad that I would be keeping it in the family.

My concern at this time is that you are suggesting that an item which dad clearly gave to me when he had moved into Briton House is available to Joan if she now wishes it. This leads me to conclude that you feel that any item which each of us was given by dad is now on the table for each of us to request. This is clearly not my understanding, nor was it what dad intended.

I have asked you previously to advise what price I would be required to pay the estate, as I had got the impression that you did not feel that the price would be the net realizable value based upon the valuation as mom and dad had always said. [Emphasis added]

[71] This appears to be the first time that John stated in writing that his father had given him the Bouvard on the understanding that he would pay the Estate, albeit he said that he would have to pay the net realizable value, a position he took at the time of the Probate application. As the applicants point out, it appears John was hoping to pay less for the Bouvard to take into account the commission that would be paid if it were sold. He was however asserting a position consistent with his position on the application and making it clear he still wanted the Bouvard.

[72] John claims that it was only at this time that he realized that his siblings were trying to "take the Painting away" from him, even though the position outlined in the March 8, 2016 email did not differ materially from what Brian had written in December 2015.

[73] Brian responded by email later the same day demanding that the Bouvard be delivered to the Estate lawyer's office before March 15, 2016. John responded on March 13, 2016 by saying that it would not.

The Application

[74] The then-lawyers for the applicants sent a "letter before action" to John on April 5, 2016, demanding delivery of the Bouvard to their offices within 48 hours, failing which litigation would be commenced. On May 30, 2016 Mr. Hull wrote to the applicants’ lawyers and advised that the Bouvard was in his possession at his office.

[75] Mr. Hull sent a further letter on June 10, 2016 to the applicants' then-lawyers setting out John’s position that the Bouvard was given to him by his father on condition that he pay its Appraised Value. The letter set out John’s formal, on the record offer to pay $30,000 forthwith to the Estate in exchange for the Bouvard (“John’s June 10, 2016 Offer”). The letter went on to state that Mr. Hull’s position that requests to deal with the administration of the estate had gone unheeded and that the letter was John’s final request for a detailed administration report of the steps the applicants had taken to date as well as an anticipated schedule for the steps that remained outstanding in the administration of the Estate. This offer was made prior to the commencement of this application on June 21, 2016.

[76] When asked in cross-examination why John’s June 10, 2016 Offer was not accepted by the majority of the trustees it was Brian’s position that “because we felt it was an asset of the estate, and it would be determined by the trustees as to what steps to take next”. However, Brian also said that in terms of next steps with respect to the Bouvard, he and Joan had not discussed it and so he could not say what would happen next.

[77] On cross-examination, Joan gave evidence that she did not accept John’s June 10, 2016 Offer due to the other administration issues that were raised in the balance of that letter. Joan also later answered that she could not accept John’s June 10, 2016 Offer “until the Executors had determined if any of the other beneficiaries wished to purchase the Bouvard and an updated valuation had been obtained.”

[78] Despite Joan’s late stated interest in the Bouvard, there is no evidence that she or the applicants have obtained an updated appraisal of the Bouvard. If the applicants seriously believed the Bouvard was worth more than $30,000 they could have arranged for their own appraisal since pursuant to the Order Giving Directions of Justice Penny, dated August 4, 2016, the Bouvard was delivered to the office of the mediator on September 26, 2016, which is where the Bouvard remains today. Furthermore, if Joan was serious about the Bouvard she could have obtained her own appraisal and made her own formal offer for the Bouvard. The fact none of these steps have been taken makes it clear to me that unfortunately other issues have divided Joan and Brian on the one hand from John on the other, resulting in this extremely costly battle over a painting worth no more than $30,000 and likely worth less.

[79] Throughout February 2014 to now, John has personally obtained and paid all necessary insurance premiums to insure the Bouvard. In the course of obtaining insurance coverage for the Bouvard at the office of the mediator, the Bouvard was appraised with the value of $18,000.00 on September 21, 2016.

[80] Mr. Hull confirmed during argument of the application that John’s June 10, 2016 Offer is still open for acceptance.

[81] The specific order that the applicants submit I should make is as follows:

a) a declaration that the Bouvard forms part of the residue of the Estate;

b) an Order that the Bouvard be delivered to the applicants; and

c) an Order that the Estate Trustees seek to realize the maximum value for the Bouvard in the following manner:

(i) by obtaining an undated (sic) appraisal at the Estate's expense;

(ii) by exploring and determining whether value would be maximized by exposing the Bouvard to auction or by selling it (or distributing it in specie) to a beneficiary; and

(iii) by then proceeding to sell the Bouvard either at auction or to the highest bidder among the beneficiaries, whichever will result in the highest net return to the Estate.

Analysis

[82] I do not see this as a complicated legal issue. In my view it is clear from the emails that before the parties’ father died he was concerned that he had two items of significant value as opposed to the rest of his possessions; namely the Dining Room Carpet and the Bouvard. To her credit, Joan added the Front Hall Carpet to this list. The Deceased did not want any of these items with him in Briton House and so after the appraisals were done I am sure it seemed to him that everything was settled; Joan and Brian would “keep” the Carpets in their possession and John would keep the Bouvard. Although each of the parties speaks of their father “gifting” a particular asset to them the fact is that the Deceased was prepared to let his children keep the asset of value in their possession on the understanding that they would rely on the appraisals to “balance out” the fact that these items had different values during the settlement of his Estate.

[83] If Jack’s entitlement to the Bouvard is not an enforceable agreement then neither is what the applicants insist is a gift from their father of the Carpets. The agreement John relies upon is clearly set out in the emails between the parties, particularly those before their father died which in my mind are the more reliable ones. I have already referred to the significance of Joan’s email dated December 17, 2014, to Brian and John which as I have said makes it clear that their father was involved in the discussions as to how to deal with his assets of value and that he wanted his children to determine a “financially equitable way to divide and value the items that each of us has in our possession”. At that time those items were the two Carpets and the Bouvard and they were each in the possession of one of the parties. Despite the emails that John has sent that seem to contradict his position, in my view this evidence clearly corroborates John’s position that their father agreed that his children could keep the assets that they currently had in their possession provided that they paid their appraised value on his death when his Estate was settled.

[84] Furthermore, I agree with John’s position that the consideration passing from him to his father was peace of mind that John’s possession and ownership of the Bouvard would not be unfair or inequitable if John paid the appraised value when the Estate is settled, which the Deceased was concerned about, according to Joan, based on her email of December 17, 2014. The same is true for the agreement concerning the Carpets.

[85] An estate trustee is bound by the same contracts that the deceased was bound by during his/her lifetime. According to Widdifield on Executors and Trustees,

Prima facie, it is the duty of a legal personal representative to perform all contracts of his testator or intestate, as the case may be, that can be enforced against him or her, whether by way of specific performance or otherwise: Anguilla v. Estate & Trust Agencies (1927) Ltd., 1938 CanLII 430 (UK JCPC), [1938] 3 W.W.R. 113 (Singapore P.C.).

[86] In this particular Estate, while discretion was conferred to John, Joan, and Brian, as Estate Trustees, to act in accordance with the “opinion of the majority”, that discretion was explicitly limited by the Second Codicil to “the commission or omission of any act in the execution of the trusts of my Will”. The “trusts of my Will” is in turn statutorily limited by section 2 of the Succession Law Reform Act, R.S.O. 1990, c. S.26, wherein

a person may by will devise, bequeath or dispose of all property (whether acquired before or after making his or her will) to which at the time of his or her death he or she is entitled either at law or in equity [Emphasis added]

and the opinion of the majority cannot do what the deceased would not have been entitled to do at the time of his death. In other words, the opinion of Joan and Brian, as the majority, cannot alter the Deceased’s pre-existing contractual obligations without the consent of the parties to the Deceased’s contract, even if the contractual party also happens to be an Estate Trustee.

[87] John analogized his contract with his father to a “conditional sales contract” and I think that is a reasonable characterization of the agreement Jack reached with each of his children. According to Black’s Law Dictionary, a “conditional sales contract” has the same meaning as a “retail installment contract”: “A contract for the sale of goods under which the buyer makes period payments and the seller retains title to or a security interest in the goods”.

[88] In this case, rather than periodic payments, John, his siblings and their father agreed to a deferred payment when the Estate settles. Despite his vacillations, John has formally attempted to perform his contractual obligation to the Estate by his [John’s] June 10, 2016 Offer which he made prior to the commencement of this application and well before the Estate has settled.

[89] Section 13 of the Evidence Act, R.S.O. 1990, c. E.23 does require that before I find in favour of John’s position that I find that there is some corroboration by some “other material evidence” of this agreement. All of the evidence that I have referred to in my view constitutes such corroboration. Most significantly, the applicants’ contention that there is no objective or independent evidence that the Deceased intended to be bound by his discussions with John is inconsistent with their own position that the Deceased is bound by Joan and Brian’s lists of July, 2014 and in particular that they are entitled to keep the Carpet they each have in their possession provided they account for it in the settlement of the Estate based on its appraised value. Furthermore, the evidence set out in John’s factum at para. 44, which I have already referred to in my summary of the facts, corroborates his position. I will not repeat it here. There is also the evidence of Joan and Brian on cross-examination referred to in John’s factum that is consistent with this conclusion. In particular Joan said that the Carpets were not treated as an asset of the Estate because their father was not deceased when they were “given” the Carpets. I have already commented on the fact that the carpets were not a gift in the true sense of the word since the applicants admit they have to pay or balance out the differences in value during when the Estate is settled. Without a doubt the very same logic applies to the Bouvard.

[90] The only reason that I can see on the evidentiary record that the Bouvard should be treated differently now from the Carpets after Jack’s death is because of the wording of John’s emails. I am mindful of the fact that some of what John said and did not say in the email exchange I have referred to is inconsistent with his position on this application. There is also his vacillating over whether he wanted the Bouvard and whether or not he wanted to pay $30,000 for it. John, however, has never said he did not want the Bouvard and has never given up his right to it. The Estate is not yet settled and so in my view John still has in effect a first right to the Bouvard as Joan admitted on cross-examination.

[91] Considering all of the evidence I have no doubt of what was agreed to among the parties and their father before his death. After his death both the applicants and John said things that are inconsistent with this but this does not change my view. Furthermore, as John asserts while Joan and Brian contend that they are not aware of any such agreement between him and their father as it relates to the Bouvard, that assertion is inconsistent with their preoccupation with whether John wished to keep the Bouvard. As stated in the respondent’s factum, it is logically inconsistent to dwell on the allegation that “John never said he wanted it”, when the applicants’ position is that “there is nothing in the Will to indicate that the Deceased wished or intended that any one beneficiary would be entitled to any particular piece of property”. If that were the case, it does not make sense for Joan and Brian, at least initially, to conduct themselves as if John had a right of first refusal based on whether John wanted the Bouvard.

[92] For these reasons, I find on the evidence that John and for that matter his siblings reached an enforceable agreement with each other and their father that they could each keep the particular asset in their possession if they pay the appraised value of the asset in question to the Estate or otherwise “balance out” the differences in value before the Estate is settled.

[93] The evidence before me is that there is no higher value for the Bouvard than the $30,000 Appraised Value and in my view had the applicants really been interested in acting in the best interests of the Estate they would have accepted John’s June 10, 2016 Offer rather than commence this application. It is also clear to me that Joan has no real interest in the Bouvard given that she expressed her interest in it late, given she has made no effort to have it appraised and she has made no offer to pay anything for it at all. The fact that the applicants have spent almost a quarter of a million dollars fighting over a painting worth at most $30,000, and given the insured value, likely significantly less, demonstrates that this application is really being driven by the breakdown in the relationship the applicants appeared to have previously enjoyed with their brother and the unfortunate animosity that has developed between the siblings in the administration of their father’s Estate. John too, no doubt because of the animosity that has developed between him and his siblings has been willing to spend a comparable amount fighting to keep the Bouvard. The application is clearly not just about the Bouvard.

[94] For these reasons I find that the respondent’s position prevails. Provided John pays the $30,000 he has offered to the Estate, I find the Bouvard is not an asset of the Estate and it is not available for purchase by anyone else. For these reasons I also find that John has not breached his fiduciary duty to the Estate as an Estate Trustee.

Disposition

[95] For these reasons I find that a Judgment should go in accordance with the draft attached as Tab 1 to John’s factum. That draft Judgment leaves the amount of John’s costs blank. As the successful party, John is entitled to costs.

Costs

[96] I received Cost Outlines from both the applicants and respondent. Before I proceed to determine costs based on those Outlines I ask that the parties provide me with brief (no more than three pages) written submissions by 5:00 p.m. on Wednesday December 6, 2017. The reason I do so is that I have a note in my bench book that there were Offers to Settle. I am not sure now if the suggestion was that there are other Offers to Settle in addition to John’s June 10, 2016 Offer, which subject to argument in my view appears to be a relevant offer, which would entitle that John to substantial indemnity costs for this application which is what he has claimed. I trust that the submissions I have requested will speak to these issues.

SPIES J.

Released: November 29, 2017

CITATION: Newlands Estate, 2017 ONSC 7111

COURT FILE NO.: 01-2747/15

DATE: 20171129

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF

JOHN MITCHELL NEWLANDS, deceased

BETWEEN:

JOAN ELIZABETH FELKAI and BRIAN CULLEY NEWLANDS in their capacities as CO-ESTATE TRUSTEES OF THE ESTATE OF JOHN MITCHELL NEWLANDS (deceased)

Applicants

– and –

JOHN EDWARD NEWLANDS, in his capacity as CO-ESTATE TRUSTEE and in his beneficial capacity OF THE ESTATE OF JOHN MITCHELL NEWLANDS (deceased)

Respondent

REASONS FOR DECISION

SPIES J.

Released: November 29, 2017