CITATION: Foisey v. Green, 2017 ONSC 7140
COURT FILE NO.: CV-17-0379
DATE: 2017-11-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DARLENE MARY FOISEY, also known as DARLINE MARY FOISEY, by her Litigation Guardian, THE PUBLIC GUARDIAN AND
J. Lester, for the Applicant
TRUSTEE
Applicant
- and -
JOYCE GREEN, Estate Trustee for the ESTATE OF WILLIAM JOSEPH GREEN
E. Morris, for the Respondent
Respondent
HEARD: November 3, 2017, at Thunder Bay, Ontario
Mr. Justice W.D. Newton
Decision On Application
Overview
[1] This is an application by the Public Guardian and Trustee (“PGT”) as Litigation Guardian of Darlene Foisey to compel Joyce Green, estate trustee for the estate of William Joseph Green, to pass the estate accounts.
[2] Mr. Green died intestate on March 7, 2014. He was survived by his two sisters, Joyce Green and Darlene Foisey. Joyce Green was appointed estate trustee by certificate of appointment dated June 25, 2014. At that time, the stated value of the estate was $830,821.14.
[3] On August 21, 2015, Ms. Foisey executed a release of the estate and estate trustee and received $291,432.70.
[4] Then, within three months, on November 10, 2015, Ms. Foisey, then aged 77, was assessed as incapable of managing her own affairs. She had been diagnosed as suffering from schizophrenia and dementia.
[5] The PGT brings this application because it alleges that it has reason to believe that Ms. Foisey did not receive her full entitlement. The PGT has asked repeatedly for an accounting but alleges that a satisfactory accounting has not been provided. The PGT argues that the release should be set aside.
The Facts
[6] Generally speaking, the facts are not disputed. What is in dispute are the inferences and conclusions that arise from some of the facts.
[7] Counsel for the PGT deposed that Ms. Foisey had been in a voluntary trustee program at the Good Shepherd Centre in Hamilton since 2006.
[8] In the Application for a Certificate of Appointment of Estate Trustee Without a Will, Ms. Green stated that the assets of the estate consisted of personal property in the amount of $680,821.66 and real estate net of encumbrances of $150,000, for a total estate value of $830,821.66.
[9] On August 21, 2015, Ms. Foisey executed a “Full and Final Release of Estate Trustee Without a Will” in the presence of the estate trustee’s lawyer, Mr. Wieckowski, acknowledging receipt of three installments totaling $291,432.70 and releasing and discharging Ms. Green from any claims which she now had or ever had “against the said Joyce Green in respect of or in connection with the Estate of the deceased.”
[10] On November 10, 2015, a capacity assessor found Ms. Foisey incapable of managing property. The assessor found cognitive deficits including short-term and long-term memory impairment, some confusion, and lack of adequate insight. The assessor noted that Ms. Green was “not aware of the basic facts or current issues relating to her finances and that she appears unable to learn this information.”
[11] As a result of the finding of incapacity, the PGT became the statutory guardian of Ms. Green’s property on November 10, 2015. Counsel for the PGT, noting that Ms. Green should have been entitled to approximately $415,000 (one half of the stated estate value of approximately $830,000) rather than the amount she received of $291,432.70 (a difference of approximately $124,000), wrote Mr. Wieckowski in January 2016 seeking, among other things, an estate accounting. Mr. Wieckowski responded advising that a release had been signed. Counsel for the PGT wrote again requesting the release and the estate accounting. On March 14, 2016, Mr. Wieckowski provided the release but not an accounting. The accounting was requested again on July 13 and September 14, 2016. On September 14, 2016, Mr. Wieckowski advised by correspondence that he did not have an accounting and stating “I know that it was between the sisters and so you may want to discuss this with Ms. Foisey.” Counsel for the PGT deposed that Mr. Wieckowski said in a telephone conversation that he recalled that the estate consisted of approximately $500,000 or $600,000 in savings, guaranteed investment certificates (“GICs”) and retirement income funds (“RIF’s”) and a house which sold for approximately $100,000. He also recalled significant tax on the estate and that he would look for the file for an accounting. Another request for an accounting was made again and Mr. Wieckowski advised by correspondence dated March 29, 2017 that “his recollection is that the estate was about $750,000 with the two sisters as the beneficiaries.”
[12] In an affidavit sworn August 24, 2017, Ms. Green deposed that she retained Mr. Wieckowski to handle the estate and that he made extensive searches for her sister, Ms. Foisey, who had disappeared years ago. Eventually, with the assistance of a private investigator, Ms. Foisey was located at Montgomery Lodge in Hamilton (“the Lodge”). Ms. Green deposed that she spoke to her sister by telephone and that her sister told her that she wanted Ms. Green to handle the estate. She says that she was informed that a lawyer in Hamilton, I. Douglas Smith, met with her sister to have her sign a renunciation to allow Ms. Green to become estate trustee.
[13] Ms. Green further deposed that when the Clearance Certificate was received from Revenue Canada she spoke to Mr. Wieckowski who told her to speak to her sister and explain to her how much money had been received and how much was spent. She deposed that he also told her sister that they could pass the accounts or have a release signed. She deposed that she was told that it would cost $5000 to $10,000 to pass the accounts. She deposed that she spoke to her sister and told her the funds received and paid out for probate fees, taxes, the funeral, the headstone, cleaning her brother’s house, and accountant and lawyer fees. She said that she told her sister that each would be receiving approximately $300,000. She deposed that her sister understood everything that was said to her and understood that she would sign a release. She deposed that she did not receive any more money than her sister, namely, $291,432.70. She deposed that she asked Mr. Wieckowski to meet personally with her sister to make sure that she got her money.
[14] She deposed that she was told by Mr. Wieckowski that he went to Hamilton and met with her sister in the presence of her lawyer, Mr. Smith, a childhood friend, and someone from the Lodge. She said that he advised her sister that she was receiving her share and that she was entitled to have the accounts passed and did not have to sign a release. She deposed that she was told that no one interjected to stop her sister from signing a release or raised any issue with Ms. Foisey’s mental status.
[15] Ms. Green deposed that she did not keep any records of the estate accounting because her sister signed the release.
[16] Ms. Cassels, Ms. Foisey’s case manager with the voluntary trusteeship program at the Good Shepherd Centre, swore an affidavit dated September 14, 2017. She deposed that Ms. Foisey became a client and part of the voluntary trusteeship program in 2006. She deposed that, in 2015, she became aware Ms. Foisey would be receiving a large inheritance. She deposed that she spoke to Ms. Green on two occasions before Ms. Foisey received her inheritance. She deposed that Ms. Green wanted to make sure that Ms. Foisey’s “money would be safe and secure”. Ms. Cassels deposed that she explained her role as trustee to Ms. Green.
[17] Ms. Kozar, the administrator of the Lodge, swore an affidavit on September 12, 2017. She deposed that Ms. Foisey had been a resident at the Lodge and was diagnosed with schizoaffective disorder as well as symptoms of a mood disorder. She stated that throughout the years she has known Ms. Foisey, Ms. Foisey would often present as aware but was often forgetful and did not always comprehend what was said to her. She was present at the meeting with Mr. Wieckowski and others when the release was signed. She says that Ms. Green was present also. She deposed that the purpose of the meeting was to give Ms. Foisey her cheques and to have Ms. Foisey sign a release saying that she received the money and that she would not hold her sister responsible if she lost the cheque nor would she “make any claims against your sister.” She deposed that there was no mention of a judge or having the right to ask for an accounting. She stated that Ms. Foisey was “confused” during this meeting. She said that she remembered asking Ms. Foisey questions after the meeting about finances and said that Ms. Foisey could not remember the answers to those questions even after she was provided with the information.
[18] Ms. Green provided a subsequent affidavit sworn October 19, 2017. She denies that she was present in Hamilton when the release was signed. She says again that no one ever advised her of any issues respecting her sister’s capacity.
[19] Mr. Wieckowski also swore an affidavit dated October 19, 2017. He set out the circumstances of the meeting with Ms. Foisey at which the release was signed. He deposed that he told her that, if she signed the release, she could not ask Ms. Green for anything more from the estate and told her that she did not have to sign the release but that he then would have to go before a judge and that would cost more. He said that Mr. Smith then explained what had been said as did Ms. Kozar. He said that Ms. Foisey said she understood and would sign the release.
[20] He deposed that he was never told by anyone that Ms. Foisey was suffering from any disability and that neither Ms. Kozar nor anyone else stopped the meeting because Ms. Foisey was confused. He deposed that he saw no evidence that she did not understand or that she was suffering from a mental illness.
Position of the Parties
[21] The PGT argues that the release is invalid. It argues that Ms. Foisey lacked capacity to sign the release. The PGT argues that, notwithstanding the presumption of capacity, the fact that the release was signed within one year prior to the guardianship, places the onus of proving that Ms. Green did not have reasonable grounds to believe that Ms. Foisey was incapable upon Ms. Green. The PGT argues that there are a number of “red flags” which should have raised the capacity issue: Ms. Foisey was in assisted living, she was 77, and that she was in a trusteeship program.
[22] The PGT argues that Ms. Foisey did not receive any independent legal advice prior to signing the release. The PGT notes the absence of any information from Mr. Smith, the purported solicitor for Ms. Foisey.
[23] Ms. Green argues that estate releases are appropriate to avoid the cost and delay of passing of accounts and relies upon Sheard Estate (Re), 2013 ONSC 7729. Ms. Green argues that there is a distinction between capacity to enter into a contract or a release and capacity to manage property. Ms. Green argues that no one, including representatives of the Lodge, raised any capacity issue with her or Mr. Wieckowski. Ms. Green relies upon Sandhu v. Insurance Corporation of British Columbia, 2011 BCSC 793, for the proposition that a contract with an incapable person is voidable and that, at the time of the contract, it must be proven that the person was not capable of appreciating his or her own interests (see para. 29).
The Law
[24] The Substitute Decisions Act, 1992 S.O. 1992, Chapter 30 provides:
Presumption of capacity
- (1) A person who is eighteen years of age or more is presumed to be capable of entering into a contract. 1992, c. 30, s. 2 (1).
Same
(2) A person who is sixteen years of age or more is presumed to be capable of giving or refusing consent in connection with his or her own personal care. 1992, c. 30, s. 2 (2).
Exception
(3) A person is entitled to rely upon the presumption of capacity with respect to another person unless he or she has reasonable grounds to believe that the other person is incapable of entering into the contract or of giving or refusing consent, as the case may be. 1992, c. 30, s. 2 (3).
Onus of proof, contracts and gifts
(4) In a proceeding in respect of a contract entered into or a gift made by a person while his or her property is under guardianship, or within one year before the creation of the guardianship, the onus of proof that the other person who entered into the contract or received the gift did not have reasonable grounds to believe the person incapable is on that other person. 1992, c. 30, s. 2 (4). [Emphasis added.]
[25] Counsel advised that there is no authority that considers s. 2(4).
Analysis and Disposition
[26] I want to say at the outset that, apart from the inability to produce records validating the administration of the estate, there is nothing to suggest that Ms. Green or Mr. Wieckowski mishandled or misappropriated estate funds. I take notice of the fact that there would be tax consequences for RIFs in the estate. It is quite possible that Ms. Foisey received exactly what she was entitled to. The issue here is whether the release stands to block the requirement for an accounting.
[27] In these circumstances, an accounting is required. In so deciding I am mindful of the fact that no one from the Lodge suggested that Ms. Foisey was incapable of executing legal documents and that, at times, Ms. Foisey would present as normal. I accept that Mr. Wieckowski properly explained the nature of the release to Ms. Foisey.
[28] However, I agree that there were “red flags” that preclude me from finding that Ms. Green has satisfied me that she did not have reasonable grounds to believe that her sister was incapable. I find that Ms. Foisey was suffering from a long standing mental illness. The fact that Ms. Green did not have any contact with her sister for a number of years and had to retain a private investigator to locate her suggests that Ms. Green did not know as much about her sister as she should have. Ms. Foisey’s presence in assisted living and her participation in a trusteeship program should have alerted all involved to take additional steps to satisfy themselves with respect to Ms. Foisey’s capacity. While it may have been expedient and less costly to proceed with a release rather than an accounting, or, at a minimum, a fuller capacity investigation, I conclude that it was not appropriate to do so.
[29] In the circumstances, I order that Ms. Green pass the estate accounts. I recognize that Ms. Green may, with effort, be able to satisfy the PGT without the formal requirement of the passing of accounts by obtaining the terminal tax return and certain other source documents. If the PGT is satisfied that the formal passing of accounts is not required then the parties may file a consent order dispensing with the passing of accounts. If further directions are required with respect to the passing of the accounts the parties may re-attend before me.
[30] With respect to the costs of this application, these costs are in the discretion of the judge who hears the application to pass accounts. If the PGT waives the formal passing of accounts, the parties may make written submissions with respect to costs to me at that time.
[31] Although unfortunate, this case underscores the importance of keeping adequate records notwithstanding the execution of an estate release.
“original signed by”__
The Hon. Mr. Justice W.D. Newton
Released: November 29, 2017
CITATION: Foisey v. Green, 2017 ONSC 7140
COURT FILE NO.: CV-17-0379
DATE: 2017-11-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
DARLENE MARY FOISEY, also known as DARLINE MARY FOISEY, by her Litigation Guardian, THE PUBLIC GUARDIAN AND
TRUSTEE
Applicant
- and -
JOYCE GREEN, Estate Trustee for the ESTATE OF WILLIAM JOSEPH GREEN
Respondent
DECISION ON APPLICATION
Newton J.
Released: November 29, 2017
/sab