COURT FILE NO.: CV-16-0210-00
DATE: 2018/06/04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JULIA GURR LACASSE
Applicant
– and –
LINDA MIDDLETON
Respondent
William P.H. Procter, for the Applicant
Michael J. Pretsell, for the Respondent
HEARD at Picton: January 15 and February 26, 2018
hurley, j.
REASONS FOR DECISION
Introduction
[1] Eva Middleton died June 5, 2015 in Picton. She was 87 years old.
[2] She had moved to Picton from her home in Georgetown in October 2014. She brought with her two documents that she deposited at the office of a local lawyer, Ken Menlove, for safekeeping: her Will dated September 2, 2014 and a promissory note dated July 16, 2014.
[3] The promissory note was given to her by her daughter, the respondent Linda Middleton, as a result of a loan in the amount of $142,000 which she had made to her in July, 2014.
[4] In her Will, she appointed the applicant, her great niece Julia Gurr Lacasse, as her estate trustee. Soon after her mother’s death, Linda Middleton advised Ms. Lacasse that she had found a second promissory note, this one dated July 22, 2014. This note differed from the earlier one in a very important respect. It stated that the loan was forgiven upon death.
[5] Linda Middleton contends that her mother changed her mind after July 16, 2014 and decided that the loan would be forgiven upon her death. Ms. Lacasse disputes this.
[6] The question which I have to decide in this case is: did Eva Middleton change her mind? I have concluded that she did not.
[7] Because their surnames are the same, I will refer to them as “Eva” and “Linda”. I will refer to the applicant as “Ms. Lacasse”.
Procedural History
[8] Ms. Lacasse commenced an application on April 26, 2016. In the notice of application, the following relief is claimed:
“The opinion of the Court as to which of the July 16, 2014 Promissory Note or the July 22, 2014 Promissory Note (both as defined in the affidavit of Julia Garr Lacasse dated April 26, 2016) is valid and enforceable.”
[9] The title of proceedings did not identify the respondents but the notice of application was addressed to all of the named beneficiaries in Eva’s Will. On April 27, 2016, Justice Byers granted an order permitting substituted service of the notice of application on the beneficiaries.
[10] The only beneficiary to respond to the application was Linda. On June 17, 2016, the first return date of the application, Justice Quigley granted an order adding Linda as a party to the application and adjourning it to July 15, 2016 for further direction of the court.
[11] On July 15, Justice Tranmer ordered that cross- examinations be scheduled on or before October 1, 2016 and adjourned the application to October 21 to be spoken to.
[12] On October 21, Justice Byers ordered that a hearing with viva voce evidence be scheduled after a pretrial.
[13] The trial was scheduled for June 7, 2017 but was adjourned at the request of Ms. Lacasse because she had been unable to locate an essential witness.
[14] The hearing proceeded before me on January 15, 2018. Ms. Lacasse filed an amended trial record which included her supporting affidavit sworn April 26, 2016, an affidavit sworn by Linda dated June 13, 2016 and a third affidavit sworn by Joyce Willard dated June 2, 2016.
[15] At the outset of the hearing, I asked counsel to identify the issues because no pleadings other than the affidavits had been exchanged and there was no order setting out what the issues were. It was agreed that I would determine the following:
Which of the two promissory notes is valid and enforceable?
If I conclude that the second promissory note reflected the parties’ true agreement, is it nevertheless invalid because it was not delivered to Eva as required by section 178 of the Bills of Exchange Act, R. S. C., 1985, c. B- 4?
[16] Although the document at issue is a promissory note, the case is really about what was the agreement between the parties. There is no dispute that Eva loaned $142,000 to Linda and that the repayment terms were incorporated in a promissory note. The contentious issue is whether or not Eva subsequently changed her mind and agreed with Linda that the loan would be forgiven upon her death.
The evidence
[17] Six witnesses testified. They were Jacob Walinga and Mr. Menlove, two lawyers who acted for Eva; Charles Simpson, one of Eva’s grandsons and a beneficiary under her Will; Ms. Willard, a friend of both Linda and Eva; Linda; and Ms. Lacasse. As indicated above, there was also affidavit evidence from the latter three.
[18] I will begin my review of the evidence with a summary of background facts that are not disputed. Next, I will scrutinize the events that resulted in the execution of the promissory notes dated July 16 and July 22, 2014. The final chapter will be what transpired after July 2014 up to Eva’s death in June 2015.
Background
[19] Eva was a widower and had two daughters, Linda and Joy. Linda is a real estate agent and lives in Prince Edward County. In June 2014, Eva and Linda discussed Eva advancing funds to Linda to help her settle financial issues arising out of her marital separation. Linda and her former spouse, James Blackler, owned a cottage in Prince Edward County and Linda needed money in order to buy out his interest in it.
[20] Eva, who lived in Georgetown, consulted her long time solicitor, Mr. Walinga. He had prepared a new Will for her in March, 2014. He asked Linda to send him certain documents about the property, including information about the outstanding mortgage on it, which she did on July 7, 2014. He prepared a draft promissory note, a copy of which he gave to Eva to take to Linda.
[21] He did so because Eva told him that she would be loaning the money to Linda. The draft promissory note was dated July 20, 2014. It identified the principal amount as $142,000 with interest payable only upon default or after maturity. The monthly payments were $600 with the first payment due August 20, 2014 and the outstanding balance, if any, due and payable in full on July 20, 2019. The note matured on this date or the sale of the cottage property, whichever first occurred.
[22] Eva took this promissory note with her when she visited Linda in Picton in July 2014.
July 15- 22, 2014
[23] On July 15, 2014 Linda sent a fax to Mr. Walinga from her office at Sutton Group Prince Edward County Realty Inc. at 11:29 a.m. The cover page read:
“Hi, Mom & I have made a couple of changes to better reflect our understanding & agreement. Please review and she’ll be phoning this afternoon for your approval prior to signing. Thanks, Linda.”
[24] The promissory note that was enclosed with this fax was identical to the one prepared by Mr. Walinga except it added a sentence at the end of the second paragraph which read “The mortgage will be forgiven upon the death of the Lender, providing it is in good standing at the time of death” and deleted the maturity date of July 20, 2019.
[25] Mr. Walinga and Eva discussed the changes by phone that day. Eva objected to the addition of the sentence with respect to the forgiveness of the mortgage upon death, telling Mr. Walinga that she did not want the loan to be forgiven.
[26] At 2:02 p.m., Linda sent another fax to Mr. Walinga from her office. This time on the cover page she wrote: “Revised. Removed Last line 2nd paragraph”
[27] The amended promissory note was enclosed. The last sentence in paragraph two was deleted. However, it did not include the sentence identifying the maturity date of July 20, 2019 which had been contained in the original promissory note.
[28] Linda sent him another revised version of the promissory note at 2:19 p.m. There was no cover page with this document or, if there was one, it has been misplaced. This version did not specify the maturity date but added the phrase “and shall run for term of five years” in the sentence which identified the first payment date of August 20, 2014.
[29] On July 16, 2014, Linda signed a promissory note which was witnessed by Ms. Willard. This note was identical to the last version sent to Mr. Walinga except that it added this sentence as the final one in paragraph two: “This Note may be re-negotiated under any Mutually Agreeable Terms”
[30] On July 22, 2014, Mr. Walinga wrote the following letter to Eva which I reproduce in full:
“I have reviewed the amended draft promissory note sent to my office by Linda Jean Middleton on July 7, 2014. This version has reinserted into it the repayment term of five years, but then indicated it matured on the sale, transfer, or disposition of the cottage property. In a telephone message to you on July 7, 2014, I advised you of this contradiction. Upon a review of all of the adjustments made by your daughter to the promissory note, in my opinion, the original version which states the note becomes due on the earlier of July 20, 2019 or the date of sale, transfer, or disposition of the cottage avoids the confusion.
I do not know which version of the promissory note was signed by your daughter. I assume that you have this document containing the date and the original signatures of Linda Jean Middleton and the witness. Please place this document in a safe and secure place.
I have prepared and enclose my account on this matter. If you have any questions, please do not hesitate to contact my office.”
[31] It appears that the date of July 7, 2014 was a typographical error because Mr. Walinga’s enclosed account identifies the date of the conversation with Eva, his subsequent telephone message and the review of the amended promissory notes as July 15, 2014.
[32] Linda signed another promissory note in front of Ms. Willard which is dated July 22, 2014. This version deleted the phrase “and shall run for the term of five years” and the sentence “This Note may be re-negotiated under Mutually Agreeable Terms” that was at the end of the second paragraph of the note signed by her on July 16, 2014. Instead, the final sentence now read “The mortgage will be forgiven upon the death of the Lender, providing it is in good standing at the time of death”. This note was identical to the first version which Linda had sent to Mr. Walinga on July 15, 2014.
[33] From this point forward, I will refer to the two promissory notes that were signed by Linda on July 16 and July 22 as, respectively, promissory note 1 and promissory note 2.
[34] Ms. Willard had known Linda for several years and they were friends. She first met Eva in 2014 when she dropped in at the local Community Care Centre where Ms. Willard volunteered. She testified that Linda brought promissory note 1 to her home where both signed it. Ms. Willard did not read or date it. Eva had called her that morning and asked if she could witness Linda’s signature. She told her that the document was about the cottage and she would explain it to her in a couple of days.
[35] Ms. Willard also signed promissory note 2 at her home. She knows that it was July 22 because she wrote the date on it when she signed it. She recalled that Eva had told her that there would possibly be a second promissory note and was about something to do with her Will, either getting things out of her Will or not putting her wishes in it. She told her that Linda would bring the document to her. She called Ms. Willard that morning before Linda came over with the document. Ms. Willard did not read promissory note 2 nor did she ever speak to Eva about it again. She saw Eva on a regular basis after she moved to Picton in October 2014 and they became good friends.
[36] Ms. Willard swore an affidavit about these events on June 2, 2016 which was prepared by Linda. In that affidavit, she described the circumstances surrounding her witnessing of the promissory notes as follows:
“One day in July 2014 Eva phoned me and asked if I would witness a signature and that she would explain later. Her daughter Linda arrived at my house for me to witness her signature on a document. I know that it was a Promissory Note, but I was not privy to the details.
In the next day or 2 Eva and I met for coffee. She explained that it was a Promissory Note for the cottage money that I had witnessed the day before. Eva told me that she and her lawyer had also prepared another Promissory Note as she was trying to figure out how to leave her personal wishes out of her Will. She said that I may be asked to witness the other version once she had thought it all through.
Eva called me about a week later to ask me to witness the replacement Note that she mentioned and I did so.”
[37] Linda testified that she did not know that Eva intended the advance of the money to be a loan rather than a gift until Eva showed her the promissory note prepared by Mr. Walinga when she came to Georgetown in July to pick up her mother and take her to Picton. Linda was taken aback by this and asked her mother why it was a loan and not a gift. Eva told her that her income had gone down since her husband’s death and she could use the money.
[38] They had a further discussion about it in Picton which included the forgiveness of the loan upon her death. According to Linda, both were concerned about her sister Joy’s potential reaction to this if it was stated in Eva’s Will.
[39] Eva was at Linda’s office when she sent the faxes to Mr. Walinga on July 15. At one point, Mr. Walinga was on the speakerphone and they discussed whether or not the forgiveness of the loan would be in Eva’s Will or in the promissory note. She recalled that Mr. Walinga said something about it not having to be in the Will. It was her understanding that she would sign a promissory note that did not refer to forgiveness of the loan but her mother would have that put in her Will.
[40] Mr. Walinga made two pages of notes about the telephone call and message of July 15 which were made an exhibit and he used them to refresh his memory. He spoke to Eva by telephone once that day after receiving the promissory note which made the loan forgivable on death. Eva told him that she did not agree to that change and would speak to Linda about it. He then received another promissory note from Linda with that sentence removed. However, he was concerned that it still did not contain the maturity date of July 20, 2019 and left a voicemail message to this effect on Eva’s telephone, suggesting that she should use the promissory note which he had drafted. He said that there was no discussion with Eva about including the forgiveness of the loan in her Will during the telephone call nor is there any reference to this in his notes.
[41] Linda gave promissory note 1 to Eva and drove her back to Georgetown later that week. Eva subsequently called her and told her that she had decided to forgive the loan on her death but would not put that in her Will. As a result, Linda prepared promissory note 2 and signed it on July 22, 2014.
The events that followed the execution of the promissory notes
[42] Linda took promissory note 2 to Georgetown and gave it to her mother on September 9, 2014. She believed that her mother shredded promissory note 1. Eva had advanced the funds to her by that time. Of the total amount of $142,000, the sum of $132,000 was used to discharge the mortgage on the cottage.
[43] Eva had executed a new Will on September 2, 2014 that was prepared by Mr. Walinga. There is no reference in it to either promissory note or the loan to Linda. Mr. Walinga testified that he did not have any discussion with Eva about the promissory note and that the terms of this Will in relation to Linda were the same as the March 2014 Will but there were changes with respect to other members of the family, the charitable beneficiaries and the alternate estate trustee. Under this Will, Linda received 4% of the residue of the estate and her sister Joy 1%.
[44] Eva sold her home in Georgetown in October 2014 and moved to a condominium that she had purchased at 280 Main St. in Picton that month.
[45] On December 3, 2014 she met with Mr. Menlove at his office and gave him promissory note 1 and her Will dated September 2, 2014. Mr. Menlove testified that they spoke about the contents of both documents and Eva did not want to make any changes to them. According to Mr. Menlove, they specifically discussed whether or not the loan to Linda would be forgiven upon her death and Eva said it would not be.
[46] Eva was diagnosed with terminal cancer that month. Linda testified that she was not expected to live past Christmas. Eva was at her home on December 12, 2014 and spent the night there. She was, according to Linda, violently ill during the day. They discussed putting her financial affairs in order and late that evening Linda said that she received the following unsolicited email from her mother which read:
“yes Linda the documents are all correct and the note is cleared upon my death.
I hope to furnish it and enjoy it. god willing
you already have the void cheque for the taxes.
Can we have Sears deliver the sheds in the spring?
The wedding there would be good. I guess now its just a honemoon that I pay for as the wedding won’t cost as much as I thought.
I will get stronger i will eat little bits
Love Mom”
[47] A copy of this email was not attached as an exhibit to Linda’s affidavit sworn June 13, 2016. Rather, she found it after she retained Mr. Pretsell in 2017. There is nothing on this email which identifies the electronic device which Eva used to send it. The subject line is “cottage”. The date and time is “12/12/2014, 11:14 PM”. There was no evidence about Eva’s access to a computer or other electronic device at Linda’s home on that date.
[48] Charles Simpson testified that his grandmother owned an iPad at the time and that he had assisted her in setting up her email account on this device.
[49] He produced a series of emails that he exchanged with her commencing November 10, 2014 and continuing to March 28, 2015.
[50] On November 10, 2014, they exchanged the following emails:
“Hi grandma! How are you doing? How’s the iPad going, no issues I hope. I’m off tomorrow so I will give you a call, miss not seeing you as much :) can’t wait till spring :)”
“Hi Charles, miss you too. The iPad is working fine, cross my fingers, was wondering how to get into the game I used to play, can’t think what’s it’s called, but you added it’s on your mum’s iPad when she was in Georgetown. Somehow I have lost it. Yes the weather is too variable to come down now, unless you have a fewer days off, then you could come on the train, my treat! Tomorrow Linda and I are going to lay a wreath at the cenotaph in memory of Bert, who died a couple of days after I left the Gallery. Hope to see Jody tomorrow too, she seems better. How are you in that area? Had the stitches out? Will be at home by dinner time I expect. Love grandma.Xxxxx”
[51] On December 16, 2014, Mr. Simpson sent the following email to Eva:
“Hi grandma,
I’ve tried calling you a number of times back can’t seem to catch you. I hope everything’s all right. The weather’s been pretty mild here the last few days and I’ve been riding to work. Every time I keep hoping it’ll get just a couple of degree warmer but it never does. Hope your getting to enjoy some of these nice days. Please call me when you get time, I miss you, talk to you soon.
Love Charles”
[52] Eva replied the next day:
“Hi Charles,
I went to Linda’s on Friday. Jason is here with his children. May be home on the weekend. Will write then. Love grandma.”
[53] Eva does not identify the specific date but, because December 17, 2014 was a Wednesday, it is reasonable to infer that the Friday mentioned in this email was December 12, the same date that she had purportedly sent the email to Linda referred to above.
[54] All of the emails that Eva sent to Mr. Simpson up to the final one on March 22, 2015 came from her iPad.
[55] Although Eva had received a terminal diagnosis and was initially expected only to live a few weeks, she remained well enough to continue living at her condominium until late May 2015. Ms. Willard described her as a “feisty old gal” and she did not think the diagnosis was a setback for her.
[56] Eva had loaned $180,000 to Linda’s daughter, Jodie Armstrong, in December, 2014 in order to purchase a home. This loan was secured by a mortgage. Mr. Menlove acted for Eva when she advanced the funds to Jodie and met with her on two occasions in December 2014 to discuss the transaction.
[57] In April 2015, Linda prepared a document entitled “An Amendment to Mortgage Commitment”. This document changed the maturity date of the mortgage from December 19, 2015 to December 19, 2016 and included the following sentence: “This Mortgage will be considered paid in full upon the death of the Mortgagee”.
[58] Linda also prepared a Codicil to Eva’s Will that same month which bequeathed the Main St. condominium and its contents to Linda.
[59] Linda testified that Eva did not like Mr. Menlove and it was for this reason that she prepared the documents. She did not obtain any advice from a lawyer about them. According to Linda, Eva had decided to make these gifts to her and her daughter because of the care she had received from them in 2015.
[60] When Eva died on June 5, 2015, Ms. Lacasse was in Poland. Linda advised her that she had found promissory note 2 when she was going through Eva’s documents at her condominium. She emailed Ms. Lacasse a copy of promissory note 2 on June 13, 2015.
[61] The Estate Information Return signed by Ms. Lacasse in November 2015 stated that the total assets of the estate were $1,314,620. This included the condominium on Main Street which was valued at $312,000. The remaining assets consisted of three bank accounts totalling $18,747, a GIC of $460,212, a RRIF of $67,285, a TFSA with $53,943 in it and an investment portfolio worth $402,433.
[62] Ms. Lacasse was cross-examined about her decision not to legally challenge the forgiveness of the loan to Jodie Armstrong and the validity of the Codicil. She said that, although she had concerns about them, she decided not do so after receiving legal advice from the estate’s lawyer.
[63] During her testimony, Linda produced two emails that she says Eva sent to her in addition to the December 12, 2014 email. In the first one, dated August 21, 2014, Eva inquired about the transfer of the cottage to Linda. It was sent from Eva’s iPad. The second is dated February 21, 2015 and is about the mortgage amendment agreement which resulted in the forgiveness of the loan to Jodie. It reads: “Do the paperwork and bring it with you. I understand why we need to extend the lengthh of the term. I appreciate all that she does for me. Love Mom.” Like the December 12, 2014 email which Linda claimed that she received from Eva, it does not identify the device Eva used to send it.
Positions of the parties
[64] Ms. Lacasse submits that promissory note 1 reflects the agreement of the parties and that I should find it valid and enforceable. The evidence of two lawyers, Mr. Walinga and Mr. Menlove, support this conclusion. Eva told Mr. Walinga that she did not agree with the Linda’s change to the promissory note which forgave the loan upon her death. If Eva did, in fact, change her mind after promissory note 1 was executed, she would have given Mr. Walinga promissory note 2 or at least told him about it. Further, if promissory note 2 was the final agreement between the parties, Eva would have given it to Mr. Menlove but instead gave him promissory note 1. In her discussion with Mr. Menlove in December 2014, she confirmed that the loan was not forgiven upon her death. The email which Eva purportedly sent to Linda on December 12, 2014 is a forgery. There would have been no reason for Eva to send this email given that she had, according to Linda, received promissory note 2 from Linda in September 2014. Although raised as an issue at the outset of trial, the potential application of section 178 of the Bills of Exchange Act was not pressed in argument.
[65] Linda argues that, if I accept her testimony, that is the end of the case and I should find promissory note 2 valid and enforceable. There would have been no reason for promissory note 2 unless Eva changed her mind and decided to forgive the loan upon her death. Although Ms. Willard did not read promissory note 2, she did have a discussion with Eva about why a second promissory note had to be done. The email of December 12 is written corroboration that Eva had, in fact, changed her mind. I should discount Mr. Menlove’s testimony about his meeting with Eva in December because it is unlikely that they would have discussed promissory note 1 and, specifically, the potential forgiveness of the loan. Eva’s wish to provide additional postmortem benefits to Linda is supported by her subsequent decision to bequeath her condominium to her, a gift that was not challenged by Ms. Lacasse. Linda submits that, to find promissory note 2 invalid, I would have to conclude that she devised a subterfuge that she lacks the legal foresight and sophistication for – that, on her own initiative, she prepared promissory note 2 and had Ms. Willard witness it with the intention of using the document after Eva’s death to avoid payment of the outstanding balance of the loan.
Analysis
[66] There is no dispute that the advance of the funds started as a loan but Linda says that loan became a gift upon Eva’s death. In the circumstances, section 13 of the Evidence Act, R.S.O. 1990, c. E.23 applies. As Laskin, J. A. observed in Burns Estate v. Mellon, 2000 5739 (ON CA) about this provision: “[it] addresses the obvious disadvantage faced by the dead: they cannot tell their side of the story or respond to the living’s version of events.” (para. 5)
[67] He continued at para. 9:
“When a claim of gift is asserted against the deceased’s estate, a trial judge is justified in carefully scrutinizing the cogency of the supporting evidence. A “healthy scepticism” may be appropriate. But it is the civil standard not the criminal standard that should be applied.”
[68] In Pecore v. Pecore, 2007 SCC 17, the Court confirmed that a gratuitous transfer between a parent and an adult child was subject to the presumption of a resulting trust in favour of the deceased parent’s estate and, to rebut this presumption, the civil standard of proof applies: paras. 23-24 and 43.
[69] At para. 44, Rothstein, J. stated:
“As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus, as discussed by Sopinka et al in The Law of Evidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.”
[70] See also Foley (Re), 2015 ONCA 382 at paras. 26 and 29 for a recent restatement of these principles.
[71] There may not have been a consensus ad idem when Eva and Linda first discussed the advance of the funds but, by July 16, 2014, Linda had agreed to the terms of the loan and $142,000 was advanced by Eva based on the repayment terms contained in promissory note 1.
[72] I accept Ms. Willard’s evidence that she witnessed Linda sign promissory note 2. However, I have concluded that she is mistaken about the conversations which she claims she had with Eva about the promissory notes.
[73] Mr. Walinga’s testimony, which I have no hesitation in accepting, is that he did not prepare a second promissory note because Eva was “trying to figure out how to leave her personal wishes out of her Will” as Ms. Willard deposed in her affidavit sworn June 2, 2016. Mr. Walinga struck me as a careful solicitor and he prepared comprehensive notes of his discussion with Eva on July 15, 2014. If there had been a second promissory note prepared by him for the purpose described by Ms. Willard, he would have said so during his testimony and also recorded that in his notes.
[74] It is improbable that Eva would discuss such a private matter in detail with a person who she barely knew at the time. There was also a material difference between Ms. Willard’s testimony and her June 2, 2016 affidavit. In her testimony, Ms. Willard could not recall whether the purpose of the second promissory note was because Eva wanted her wishes excluded from, or included in, her Will. But she was certain in her affidavit that Eva told her the purpose of promissory note 2 was to exclude the remission of the loan from the Will. This happens to coincide with the purpose of it described in Linda’s affidavit sworn eleven days later. It is likely that Ms. Willard’s recollection of the conversations she claims to have had with Eva in July 2014 was influenced by what Linda discussed with her in June 2016 and that she now believes Eva said things to her about the promissory notes that Eva did not, in fact, say.
[75] There may have been a conversation between Eva and Ms. Willard about a second promissory note because of Mr. Walinga’s advice to Eva in his telephone message of July 15 and his reporting letter of July 22, 2014 that he was concerned about the potential confusion with respect to the maturity date and that the original promissory note which he had prepared should be used in order to clear up this issue. This would explain why Eva might have spoken to Ms. Willard about another promissory note.
[76] Given that Mr. Walinga was her long time solicitor, her consultations with him in June and July about the promissory note and her execution of a new Will on September 2, 2014, it is passing strange that Eva withheld from him that she had changed her mind and a new promissory note had been prepared and signed by Linda.
[77] The most compelling evidence that Eva did not change her mind and that Linda did not give her promissory note 2 was the testimony of Mr. Menlove. Eva gave him promissory note 1 with her Will. Any argument that she could have been confused over the promissory notes and forgot that she had received a second note which superseded the first one founders on Mr. Menlove’s evidence that, at their meeting in December 2014, she confirmed that the loan remained payable on her death.
[78] I consider Mr. Menlove’s testimony both credible and reliable. Eva was an elderly client he did not know well, who met with him to discuss important legal documents prepared by another lawyer. He did what any competent lawyer would do in the circumstances – talk to his new client about their contents and ask if her wishes remained the same.
[79] There was no objection to either lawyer testifying about the conversations they had with Eva. In The Law of Evidence in Canada (5th ed.) by Sopinka et al, the authors state at pp. 364-365:
“Declarations of intent or state of mind made by testator’s stand on a special footing. Courts have traditionally taken a more liberal stance in will cases and have admitted a testator’s post – testamentary statement of memory or belief to establish antecedent facts. . . In addition, the courts have readily admitted pre – testamentary and contemporaneous statements of a testator or testatrix to show his or her state of mind when speaking, from which it may be inferred that he or she made a will consistent with that frame of mind.”
[80] The same principle would apply to the promissory note in this case. Further, the evidence of Mr. Walinga and Mr. Menlove is admissible under the principled approach to the admission of hearsay evidence. It is, in my view, necessary and reliable. There are circumstantial guarantees of trustworthiness; the primary ones are the contemporaneous notes made by Mr. Walinga and the fact that the documents were given to Mr. Menlove for safekeeping: see Orfus Estate v. The Samuel and Bessie Orfus Family Foundation, 2013 ONCA 225 at para. 67 and Williams v. Vogel of Canada, 2016 ONSC 3412 at paras. 44-51.
[81] I reject the evidence of Linda. She testified that she was present and overheard Eva speaking to Mr. Walinga on July 15 about whether or not the forgiveness of the loan would be in the promissory note or her Will. As stated above, Mr. Walinga, whose evidence I believe, testified that no such discussion took place.
[82] The email of December 12, 2014 does not corroborate Linda’s evidence because I find that it was not composed nor sent by Eva. It does not make any sense that she would send such an email if both of them knew of the existence of promissory note 2. Mr. Simpson’s evidence persuades me that, if Eva had composed and sent an email on that date, she would have done so using her iPad. The failure of Linda to attach it as an exhibit to her responding affidavit in June 2016 and its sudden discovery much later after she had retained a lawyer adds to its suspicious provenance. Finally, there is the evidence of Mr. Menlove about his meeting with Eva on December 3, 2014; it is simply not believable that, nine days later, Eva would lie to Linda about the promissory note being “cleared upon my death”.
[83] Linda’s claim that she did not possess the legal acumen to conceive and implement a plan to avoid liability for repayment of the loan is belied by the mortgage amendment agreement and Codicil she prepared in April 2015. Her objective from the start (revising the promissory note prepared by Mr. Walinga) to the finish (professing to find promissory note 2 among Eva’s personal effects shortly after her death) was, I find, to extinguish her obligation to the estate. This plan might very well have worked if Eva had not given promissory note 1 to her lawyer.
Conclusion
[84] It is my opinion that, of the two promissory notes, it is only promissory note 1 which is valid and enforceable.
[85] In view of this conclusion, it is not necessary for me to decide the second issue raised by Ms. Lacasse with respect to the delivery of promissory note 2.
[86] If the parties cannot agree on costs, Ms. Lacasse is to deliver brief written submissions within 15 days of the date of the release of this decision and Linda to do the same within 10 days of receiving Ms. Lacasse’s written submissions.
Judge
Released: June 4, 2018
Lacasse v. Middleton, 2018 ONSC
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JULIA GURR LACASSE
Applicant
– and –
LINDA MIDDLETON
Respondent
REASONS FOR decision
HURLEY, J.
Released: June 4, 2018