COURT FILE NO.: 15-64447

DATE: 2018/10/30

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

The McKay Cross Foundation, CAM 88 Inc., and Ann Cross

Plaintiffs

– and –

Innovative Community Support Services and Jaynee Champagne

Defendants

Joseph W. L. Griffiths, lawyer for the plaintiffs

Nadia J. Authier, lawyer for the defendants

HEARD: October 18, 2018

REASONS FOR DECISION

P.E. ROGER, J.

Introduction

[1] This decision is rendered following a motion for summary judgment by the defendants, seeking the dismissal of the plaintiffs’ action. A brief factual overview follows.

[2] The plaintiffs’ bring this action claiming the return of a $100,000 donation made to the corporate defendant in September 2012. Innovative Community Support Services is a non-profit charitable organization that creates and provides community-based programs and services, including operating residences for adults with developmental disabilities. Ms. Champagne, is the executive director of ICSS. Ms. Cross is the president of both corporate plaintiffs. Ms. Cross is also the legal guardian of her adult grandson, a young man born with a developmental disability who is totally dependent for care.

[3] In late 2011, Ms. Cross set out to find a new residence for her grandson and two disabled young men with whom her grandson had lived for the preceding years. She wanted the three young men to have a home and good care, preferably just the three of them, but if necessary then with one other funded compatible person. She was prepared to acquire a home suitable for their care and make it available on mutually agreeable terms. In December 2011, Ms. Cross approached a number of organizations, including the defendants, seeking an agency willing and able to provide quality care in the near future for the three young men. She met the defendants in that regard in February 2012.

[4] Ms. Cross and the defendants discussed the possibility of building or purchasing a house to accommodate the three young men. Related challenges were identified and communicated to Ms. Cross by the defendants. Ms. Cross pursued efforts to find and purchase a house, and considered purchasing a bungalow in 2012, but eventually did not. Ms. Cross and ICSS exchanged emails relating to a possible house, renovation cost, and lack of available capital funding for ICSS. By May 2012, ICSS was also conducting its own search for a house that could be used as a residence for the three young men, reiterating to Ms. Cross that funding was uncertain and that a fourth person would make it more cost effective and feasible for ICSS to operate.

[5] In June 2012, Ms. Cross sent Ms. Champagne a draft agreement prepared by Ms. Cross’ lawyer. This draft agreement named Ann Cross, ICSS, and the Ministry of Health and Long-Term Care as parties. It provided that Ms. Cross shall irrevocably contribute the sum of $300,000 for the purchase of a house for the three young men, conditional on ICSS obtaining equal or greater funding from the Ministry. The money from Ms. Cross was to be advanced in installments over the next four years, and legal title to the house was to be in the name of ICSS.

[6] The parties disagree over the response from ICSS to this draft agreement. The defendants say that Ms. Champagne advised Ms. Cross that the terms of this agreement could not be accepted by ICSS. The plaintiffs deny that Ms. Champagne advised Ms. Cross that she had difficulties with the draft agreement. Instead, the plaintiffs claim that Ms. Cross eventually agreed to donate the money directly to ICSS in exchange for a tax receipt on the clear understanding that the money was to be used for the sole purpose of purchasing a house for the three young men. Both parties mention a meeting where only the other was present and they disagree over what was discussed and agreed to at that meeting.

[7] In any event, both parties thereafter continued to look for a suitable placement for the three young men. On September 6, 2012, Ms. Champagne wrote to Ms. Cross and to the other two parents to indicate that she was meeting with a contractor to investigate the possibility of building a house suitable for four individuals. Ms. Champagne mentioned that funding was uncertain, but stated that she was working on it. She mentioned the possibility of a small grant and asked if the parents could write a letter of support. In response to an email from Ms. Cross, on September 6, Ms. Champagne wrote that she had construction plans, that the contractor was willing to work with them, that she would love to do a couple of homes, and that it’s about ICSS finding the capital to do the project. Ms. Champagne added:

One of the suggestions from our lawyers was to simplify the contract, it would say that you are donating $100,000 to the agency, no strings attached and that every year for the next 3 years you would donate $50,000, should anything happen to you, then the money would be held in trust with your lawyer. Our lawyer said because it is a donation, to put all the terms and conditions on it that your lawyer suggestion would not be feasible.

[8] On September 6, Ms. Cross responded:

In a nutshell, we want a home and good care for our three guys and one other funded compatible person. Naturally I want my donation to help make that possible. We parents wish to work cooperatively with your staff and continue to be involved in the lives of our fellows. Does your year-end come into play for receiving donations? I have discussed my proposed gift with my accountant and it would suit me to give $100,000 before Christmas and $100,000 after Christmas but before June 30, 2013. These cheques can be issued at any time and will come from one of my companies CAM 88 Inc. I can either set up a payable for the balance in that company or include a clause in my will which is to be finalized and signed within a week. Will speak to my advisor tomorrow.

[9] On September 7, 2012, Ms. Champagne responded that for donations there is no year-end impact and that she would be speaking with her board president as well as with the Ministry of Community and Social Services and get back to her. During her cross-examination, Ms. Champagne did not remember why she wrote that she would speak with these persons and get back to Ms. Cross.

[10] On September 19, 2012, ICSS received a $100,000 cheque from Ms. Cross. The cheque was issued from the account of CAM 88 Inc., with the notation “Donation” written on the face of the cheque. No documents or terms were attached to the cheque, and a donation receipt was provided by ICSS. In November 2012, the three young men were placed together in a residence managed by the defendants on a temporary basis pending another house being found. Ms. Cross continued looking for a house, the defendants pursued funding to purchase a house, and the two corresponded on that basis.

[11] The parties disagree whether they discussed any alleged terms under which the donation had been made. Ms. Champagne says that Ms. Cross did not contact her to discuss terms under which the donation had been made, and that she did not make any representation that the donation would be earmarked for a specific purpose. In her affidavit, Ms. Cross says that she spoke about the $100,000 with Ms. Champagne the next time she saw her, and that during this conversation Ms. Cross confirmed, yet again, that the $100,000 donation was being made for the sole purpose of making a down payment to purchase a home for the boys. During her cross-examination, Ms. Champagne agreed that discussions were ongoing about building or buying a house. She did not remember whether she had conversations with the Ministry about a possible mortgage, but she did not disagree that she may have been trying to secure a mortgage. In addition, Ms. Champagne agreed that she was pursuing efforts to obtain funding from the Ministry to buy or build a house, and that in this regard, she wrote to the Ministry in June 2013 seeking funding to match the donation made by Ms. Cross. She agreed that in 2013 she continued to understand that the donation was tied to the house.

[12] Indeed, the defendants made efforts to find funding, and occasionally sought Ms. Cross’ and the other parents’ assistance. Ms. Champagne agreed that up until September 2013, she was looking for a house for ICSS to purchase, that this would be the preferable solution from an operational perspective, but that she then reached a dead-end. Ms. Champagne confirmed that by September 2013, it became apparent to the defendants that they would not obtain or have access to the required funding to buy or build a house for some time, and they so informed Ms. Cross. As a result, Ms. Cross then informed the defendants that the best option was for her to buy a house with their support and cooperation. Ms. Cross made an offer on a house and shortly thereafter purchased it (unlike what was contemplated by the draft agreement, The McKay Cross Foundation is listed as owner). As discussed and agreed between the parties, this house was rented by Ms. Cross to the defendant ICSS, and ICSS renovated and purchased equipment for the house with funding from the Ministry (except for private donations, everything at ICSS is funded by the Ministry).

[13] In 2014, the three young men moved into this residence and have been living there under the care of ICSS since, and will continue to up until the end of this year when the management of that home will be transferred to another organization.

[14] By letter dated December 1, 2014, The McKay Cross Foundation wrote to the defendants to request the return of the $100,000 donation.

[15] In their statement of claim issued May 28, 2015, the plaintiffs allege an agreement that Ms. Cross would donate the money to the defendant in exchange for a tax receipt, but that the money would be used for the sole purpose of purchasing a home for the boys. The plaintiffs argue that there was an express or implied term that the donation was for the sole and express purpose of purchasing a house or, alternatively, that ICSS represented to the plaintiffs that it would acquire a house (as outlined more particularly at paragraphs 17 to 24 of the plaintiffs’ statement of claim). In addition, in their factum, the plaintiffs also argue that the defendants had and breached their fiduciary obligations to ensure that the donation was applied according to the instructions of the plaintiff.

[16] The defendants bring a motion for summary judgement arguing that there is no genuine issue requiring a trial. They argue that there is no evidence capable of supporting the plaintiffs’ claim for breach of contract and negligent misrepresentation, and that the time has lapsed for the plaintiff to amend their statement of claim to include new causes of action.

[17] The plaintiffs’ resist the motion arguing that there are several genuine issues requiring a trial relating to the parties’ understanding about the purpose of the donation. They argue that the donation was restricted and intended to be applied for a specific purpose, thereby obligating the defendants to hold the funds as a special purpose charitable trust or, alternatively, that the plaintiff’s donation constituted a conditional gift that the defendants failed to use in accordance with the agreed-upon specific and intended purpose. They argue that credibility issues raised by the materials filed on this motion require the process of a trial. They argue that there are real questions about what the defendants did and understood leading up to and following the donation made by the plaintiff, that there are genuine issues relating to whether the defendants intentionally or negligently misrepresented the purpose of the donation, whether the defendants owed a fiduciary duty, and whether the defendants failed to ensure that the donation was treated as a gift subject to conditions given the agreement and communications exchange between the parties.

Issues

[18] The overarching issue on this motion is whether there is no genuine issue requiring a trial with respect to the plaintiffs’ claims. Central to the arguments made by both parties is whether or not there is a genuine issue requiring a trial with respect to the factual underpinning of the $100,000 donation made by the plaintiffs.

Law and analysis

Summary judgment

[19] The Court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[20] The parties agree on the applicable test, as outlined by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 66:

1. On a motion for summary judgment, the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before him or her, without using the fact-finding powers provided under rules 20.04 (2.1) and (2.2). There will be no genuine issue requiring a trial if the summary judgment process provides the judge with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable, and proportionate procedure.

2. If there appears to be a genuine issue requiring a trial, the judge should then determine if the need for a trial can be avoided by using the fact-finding powers under rules 20.04 (2.1) and (2.2). The judge may, at his or her discretion, use those fact-finding powers provided that their use is not against the interest of justice. Their use will not be against the interest of justice if it will lead to a fair and just result, and will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole.

[21] Here, there appears to be a genuine issue that would require my using the fact-finding powers provided by rule 20.04 (2.1) of the Civil Rules of Procedure, R.R.O. 1990, Reg. 194. Indeed, Ms. Cross and Ms. Champagne relate conflicting versions of events about the terms of the $100,000 donation. They allege conflicting facts about their discussions relating to the draft agreement, and later about the terms of the donation.

[22] However, I am satisfied that the need for a trial can be avoided by using the powers at rule 20.04 (2.1) because the scope of the factual disagreement is narrow, it is between two parties who have filed affidavits and have been cross-examined, and because the subsequent correspondence and actions of the parties shed reliable and generally unambiguous light on the stated disputed facts. In addition, using the powers at 20.04 (2.1) is not against the interest of justice because the trial judge would similarly have to ascertain the nature of the understanding from the conflicting testimony of witnesses, and ultimately contrast what he or she heard with the contemporaneous emails and actions of the parties, which emails and actions are before me on this motion.

[23] While I agree that a trial generally offers a better forum to assess credibility and reliability, it is not necessarily so when disputed facts are focused, when disputed facts are between two or few witnesses, and when disputed facts can be assessed by considering other evidence such as what the witnesses said, wrote, or did at the time or on other occasions. In such cases, assuming at a trial, trial judges are alert to the fact that demeanour evidence alone is rarely a reliable predictor of the accuracy of the evidence given by a witness as “the law does not clothe the trial judge with divine insight into the hearts and minds of the witnesses” (Phillips et al. v. Ford Motor Co. of Canada Ltd. et al., 1971 CanLII 389 (ON CA), [1971] 2 O.R. 637). It is recognized that a valuable method of weighing the evidence, evaluating credibility, and drawing reasonable inferences from the evidence given at a trial is to consider the consistency of what a witness said and did on a material matter. Indeed, a valuable method of assessing witness credibility and reliability is to examine the consistency between what the witness said in the witness box (at trial) or in his or her affidavit (on a motion), and what the witness said on other occasions, whether or not under oath (see for example: R. v. M.G. (1994), 1994 CanLII 8733 (ON CA), 93 C.C.C (3d) 347 (Ont. C.A.), at para. 23, leave to appeal to S.C.C. refused, [1994] S.C.C.A. No. 390). Inconsistencies may emerge between a witness' testimony and statements previously given, and this is often telling when assessing credibility and reliability.

[24] As indicated by the Supreme Court of Canada in Hryniak (see para. 58), the inquiry into the interest of justice is, by its nature, comparative, and proportionality is assessed in relation to a full trial. This action seeks the return of a relatively small amount of money when compared to the cost of proceeding to a full trial. The plaintiffs argued during the motion that more witnesses will testify at trial in support of their position, including members of the defendants’ board of directors and representatives of the Ministry responsible for funding ICSS. However, questions were asked during the cross-examination of Ms. Champagne about communications to the board and a relevant extract of the board’s minutes of September 24, 2012, was produced by the defendants in answer to undertakings. With regards to witnesses from the Ministry, their evidence would relate to a rather opaque argument by the plaintiffs that the $100,000 was not used to fund the house of the three young men, or that the Ministry funded the house and not ICSS, and that evidence is not required for me to decide whether or not there is a genuine issue requiring a trial. I note as well that the plaintiffs did not examine a witness or seek an adjournment for that or for any other reason, including any related to the state of the evidence.

[25] Considering the above, as well as all of the circumstances of this matter, I find that a trial will add disproportionate delays and expenses, while using the fact-finding powers under rule 20.04 (2.1) will lead to a fair and just result that will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole.

Breach of Contract

[26] On a motion for summary judgment, each side must “put its best foot forward” or “lead trumps or risk losing” (Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26). Obviously, this does not require that all the evidence that would normally be presented at trial be presented on the motion, otherwise a motion for summary judgment would avoid little of the time and expenses associated with a trial (Hanson v. Caputo, 2012 ONSC 2347, 23 C.L.R. (4th) 211, at para. 39). However, a responding party may not rest solely on allegations or denials, but must set out in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial (Chong v. Abrahams, 2017 ONSC 3663, at para. 54).

[27] The plaintiffs’ fundamental arguments are that the contract was simple and contained a single clause - that the money donated to ICSS was to be for the sole purpose of purchasing a home for the three young men; and, that factual discrepancies between the parties require a trial.

[28] The parties disagree about what was discussed and agreed to following receipt of the draft agreement prepared by the plaintiffs and provided to the defendants in June 2012. The defendants say that they advised Ms. Cross that the terms of the agreement could not be accepted and that ICSS would not sign such an agreement. Ms. Cross denies that she was advised of any issue or difficulty with the draft agreement. The parties also disagree over discussions about any alleged terms under which the donation had been made.

[29] ICSS admits that it was looking for a house and for funding, and that the plaintiffs’ donation was tied to a house. However, it argues that the donation was made with no strings attached.

[30] When I assess the evidence of the parties, I do so considering all of the evidence, including:

• On September 6, 2012, Ms. Champagne wrote to Ms. Cross to say that the draft contract was to be simplified to “…say that you are donating $100,000 to the agency, no strings attached and that every year for the next 3 years you would donate $50,000…”
• On September 6, 2012, Ms. Cross responded that all they wanted was “… A home and good care for our three guys… Naturally I want my donation to help make that possible.”
• On September 19, 2012, the defendants received a cheque from the plaintiffs in the amount of $100,000 that simply noted “Donation”. Contrary to earlier discussions and documents, no additional amount was donated by the plaintiffs and I have no evidence that additional amounts were subsequently discussed.
• The board of ICSS noted in their September minutes that ICSS’ intent was to serve their grandson within one of their homes or acquire a new home.
• Consistent with this stated intent, ICSS looked for and in November 2012 placed the three young men, on a temporary basis, in one of their homes. Thereafter, ICSS pursued efforts to locate a new house and the required funding, but by September 19, 2013, Ms. Champagne reached the conclusion and advised Ms. Cross that the Ministry said that no capital funding was available at this time, and that it could be months.
• On the same day, Ms. Cross responded that the best solution at this time was for her to buy the house with the support and cooperation of ICSS, and that she needed to know what resources were available for renovations.
• On the same day, Ms. Champagne responded that this sounded good but reminded Ms. Cross that the Ministry advised ICSS that “there are no funds available from MCSS for retro - I was at a meeting this morning and we were all informed NO MONEY FOR CAPITAL, how nice was that”.
• In October 2013, Ms. Cross proceeded to purchase a house with The McKay Cross Foundation as owner. In an email, Ms. Cross indicated that “On the advice of my advisors, I have decided that The McKay Cross Foundation will purchase the Quincy house and my lawyer … has been so informed.” Ms. Cross consulted and acted on the advice of her advisors and lawyer. She did not request, for this purchase, any financial assistance from ICSS, and she did not ask that the $100,000 donation made in September 2012 be applied to the cost of purchasing this house.
• On the contrary, in October 2013, Ms. Cross complained to a politician of her “awe at having to pay 100% for house”, and wrote emails to ICSS in a cooperative tone asking them how much they could pay for rent, what ideas Ms. Champagne had for renovations, and whether Ms. Champagne had applied for additional funding for the care of her grandson.
• Ms. Champagne responded that they could pay up to $2,500 for rent, and that she had applied for funding for required renovations, for a vehicle, and for additional staff.
• In October 2013 emails, Ms. Cross sounded upbeat that things “seem to be coming together”, was clearly in communication with directors of her corporations (see Exhibit N), and her requests for funding from ICSS were limited to renovation and to the cost associated with better quality of care for the three young men.
• Consistent with the above, ICSS sought and obtained funding from the Ministry for equipment, renovation, and better quality of care. ICSS also expended significant funds, approaching $400,000 (see Exhibits P and Q). While the exact tracing of funds is questioned or put in issue by the plaintiffs, it is not disputed that the house was renovated, that a vehicle was made available, and that the young men were looked after by ICSS up until now, and will be to the end of this year. It is also clear that funding for ICSS is limited to public funds and donations.
• It is only on December 1, 2014, that the plaintiffs sought the return of the donation.

[31] Considering the above, I find that the evidence of Ms. Cross that there was an agreement that the $100,000 donation was being made for the sole purpose of making a down payment to purchase a home or to purchase a home for the three young men is not reliable because it does not fit with the evidence; it is contradicted by the above noted emails, and it is contradicted by how the parties acted. Indeed, the plaintiffs’ factual contentions at paragraphs 15, 18, and 20 of the affidavit of Ms. Cross (that Ms. Cross intended that the donation be used for the sole purpose of purchasing a house, that this was understood by Ms. Champagne, and that the agreement was that the money was to be used for the sole purpose of purchasing a house or of making a down payment to purchase a house) cannot be reconciled with how Ms. Cross acted during the plaintiffs’ actual purchase of the house. On the advice of her advisors, in consultation with her lawyer and her board, Ms. Cross never asked or even mentioned in any of the many emails exchanged during the purchase of the house, or in the months that followed, that the $100,000 donation should be applied to the purchase price of the house. Rather, she communicated quite cooperatively with Ms. Champagne seeking their assistance to help fund required renovations.

[32] On the other hand, considering all of the evidence, I find that the disputed evidence of the defendants makes sense, that it fits well with the rest of the evidence, and that reasonable inferences from the evidence support the defendants’ version of events that the donation was made without terms.

[33] I therefore find that the defendants have established that there is no genuine issue requiring a trial with respect to the alleged contract.

[34] The evidence might, at best, support a non-binding designation that the defendants would pursue funding for a home and better quality care for the three young men, which the defendants did. In that regard, this case is remotely similar to the facts in Sweda Farms where the few pieces of evidence that could support the disputed evidence of the plaintiffs did not knit into a coherent claim (Sweda Farms, at para. 20).

[35] Simply as an aside (as my decision is based on the above), I note as well that the contract that is alleged by the plaintiff is too vague to be enforceable. For example, it does not address the parties, the terms, the ownership of the house, how it would bind the parties, the timeframe during which it would bind the parties, or in what circumstance the donation or a portion thereof might have to be returned. As a result, establishing a breach of contract and damages would also be a major obstacle for the plaintiffs, but considering my decision this does not have to be addressed.

Misrepresentation and Other Claims

[36] In their statement of claim, the plaintiffs also allege that Ms. Champagne represented that she possessed sufficient skill and expertise to locate and acquire a home for the three young men, and that any donation made by the plaintiffs would be used for the express purpose of acquiring a home for them. In their factum, the plaintiffs also allege that the defendants owed and breached a fiduciary duty to the plaintiffs to ensure that the intent of the donation was capable of being fulfilled by the defendants.

[37] These claims and allegations rest on the factual foundation outlined above. Considering my factual findings, I therefore find that the defendants have established that there is no genuine issue requiring a trial with respect to the plaintiffs’ claims of misrepresentation and, as well, with respect to the plaintiffs’ not yet pleaded allegations of a breach of fiduciary duty.

Conclusion and disposition

[38] The defendants have established and this court is satisfied that there is no genuine issue requiring a trial with respect to the claims (and even the proposed claims) of the plaintiffs.

[39] Consequently, the plaintiffs’ action is dismissed with costs of $24,280, all-inclusive, payable by the plaintiffs to the defendants (the issue of costs was argued and an oral decision rendered on October 26, 2018, following my reading of this decision to the parties).

Mr. Justice P.E. Roger

Released: 2018/10/30

COURT FILE NO.: 15-64447

DATE: 2018/10/30

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

The McKay Cross Foundation, CAM 88 Inc., and Ann Cross

Plaintiffs

– and –

Innovative Community Support Services and Jaynee Champagne

Defendants

ENDORSEMENT

Mr. Justice P.E. ROGER

Released: 2018/10/30