COURT FILE NO.: CV-15-4415
DATE: 2019 08 28
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: KIM NUTZENBERGER, ESTATE TRUSTEE FOR THE ESTATE OF PAULA SYLVIA DOUGAS, DECEASED and ANN PRYDE
BEFORE: D. E. Harris J.
COUNSEL: R. Brent Marshall for the Moving Party, Ann Pryde
J. David Keith for the Responding Party, Kim Nutzenberger
E N D O R S E M E N T
[1] There is no love lost between sisters Kim Nutzenberger and Ann Pryde. Kim claims that their parents, both now deceased, loaned Ann $75,000 which she never fully repaid.
[2] As trustee of their mother, Paula Douglas’ estate, Kim issued a notice of action against her sister Ann for repayment of the loan on September 25, 2015 about two months after the demise of their mother. Their father, John Trainor Douglas died a few months later, on May 30, 2016.
[3] Ann responds that in their parents’ wills, the $75,000 loan was expressly forgiven. Ann Pryde moves for summary judgment dismissing the plaintiff Kim’s claim for repayment.
[4] At bottom, the sole issue is the interpretation of the parents’ wills. Based on the correct interpretation of the wills, I would grant the relief requested by Ann and dismiss the claim.
THE LOAN
[5] The loan to Ann was for the acquisition and improvement of a property that she purchased in November of 2012. The loan was transferred from a joint account owned by Paula and John to an account owned by Ann. There was no written documentation of the loan other than the mention in the parents’ wills which were both executed on the same day, May 21, 2013. There were apparently no terms specified for the repayment of the loan.
[6] Ann paid $3600 back on the loan while her parents were still alive.
THE WILLS
[7] Paula and John executed wills mirroring each other. Two clauses are the key focus of the loan issue to be decided:
a) Both wills state in paragraph 3 that if the testator’s spouse is living on the 30th day after death, the residue of the testator’s estate would transfer to him or her;
b) Both wills state in paragraph 5 under the heading, “Forgiveness of Debt” that if the other spouse was not living on the 30th day following their death, the $75,000 loan to Ann would be forgiven and should be treated as a gift. John’s will referred to the $75,000 coming from his line of credit; Paula’s will referred to it as a loan from both her and her husband and coming from his line of credit.
SUMMARY JUDGMENT
[8] The parties agree that this is a tailor-made case for summary judgment: see Hryniak v. Mauldin 2014 SCC 7. I do not disagree. Of salient importance, the primary facts are not in dispute. These emerge from the wills themselves and the circumstances of the loan to Ann. Both are accepted facts and no additional fact finding is either possible or necessary.
[9] In accord with Rule 20.04(2) of the Rules of Civil Procedure R.R.O. 1990. Reg. 194., there is no genuine issue requiring a trial. I need not exercise any of the extra fact-finding powers provided for in Rule 20(2.1). There is no need to weigh the evidence, make findings of credibility or draw inferences from the evidence. The weighing of evidence and the drawing of inferences, because the primary facts are not in dispute, are entirely amenable to summary judgment. Nor is there any necessity to make credibility judgments in light of the narrow issue to be decided.
THE ISSUES TO BE DECIDED
i. Does Paula’s estate have standing to pursue the collection of the loan?
ii. What is the status of the loan originally made to Ann? Has it been forgiven per the terms of the wills or does it remain extant?
STANDING
[10] The issues to be decided on this motion require an interpretation of the wills. The loan is only documented in the wills and so it is to them that attention must first be turned. The pertinent perspective is the subjective intention of the testator. The language of the wills is uppermost. The circumstances in which the wills were executed are also germane: Estate of John Kaptyn; Kaptyn and Kaptyn, 2010 ONSC 4293. Because the two wills had mirror clauses and were executed the same day, it is reasonable to interpret them in concert.
[11] Ann asserts that Kim, as executor of their mother’s will, has no standing. We know from both wills that the loan came from John’s line of credit. John’s will refers to the loan as coming from his line of credit. Paula’s will refers to it as a loan from both her and John but advanced on John’s line of credit.
[12] While the origin of the loan from John’s line of credit might support a conclusion that he made the loan and was owed the proceeds, this is plainly contradicted by paragraph 5 of John’s will. In that paragraph, if Paula is still living, the loan continues and is a debt owed by Ann. The clear implication is that the proceeds of the loan were jointly and severally owed, at the time the wills were executed.
[13] Upon her death, as directed by paragraph 3 of Paula’s will, the residue of her estate passed to her husband John. Whether construed as a common and joint interest in the loan or a half interest in the loan, the asset of the proceeds of the loan passed to the surviving spouse.
[14] If this be the case, Kim standing in the shoes of Paula as her executor, had no standing. The proceeds of the loan passed with the residue of Paula’s estate upon her death to her husband John. The loan was no longer owed to Paula, as she was deceased, or to her estate. The proper remedy at that juncture, if he so chose, was for John to take action against Ann. It was only to him that the loan debt was owed.
[15] I would allow the motion to dismiss on the basis of a lack of standing. However, for the sake of completeness, I will also examine the merits.
HAS THE LOAN BEEN FORGIVEN ACCORDING TO THE TERMS OF THE WILLS?
[16] There is little doubt that the $75,000 began as a loan to Ann, albeit without terms. This was in contrast to a loan to another sister, Lyn, which was authorized in mirrored paragraph 4 of both wills to be written off by Kim as estate trustee in her unfettered discretion if so advised. In addition, paragraph 6 in each will recognized that a condominium transferred by Paula and John to a fourth sister, Jan, constituted a gift.
[17] The clause with reference to Ann was an awkward hybrid. With respect to Ann’s $75,000, this provision is not a model of drafting dexterity, to put it mildly. Nonetheless, the task remains to ascertain the parents’ intent taking the full context of the wills and the surrounding circumstances into account.
[18] Interpreting the intention of the testators, this was a loan on easy and flexible terms. It was a very loose and “non-legal” arrangement. The loan was intrafamilial to the testators’ daughter. There were no terms for repayment. It was envisaged that the loan would, upon the death of the two parents, be transformed into a gift by way of forgiveness of the debt.
[19] Action could have been taken while the parents were alive to call for the loan to be repaid. There is no evidence this ever occurred.
[20] I agree with counsel for Ann that the intention appears to be that if the parents needed the money, the loan proceeds could have been used for the parents’ expenses or by the surviving spouse. If not needed, on the other hand, the loan would be forgiven. Putting all the evidence together, this is an accurate summary of the testators’ joint intention.
[21] Both parents are deceased. Clause 4 in both their wills indicates that what started as a loan should be forgiven upon both parents’ demise. No action by either parent can be construed as a request for the loan to be repaid. That being the case, clause 4 of the wills is operative. The loan has been forgiven.
[22] Therefore, the action by Kim as estate executor for her mother to recover the loan with interest cannot succeed. It is dismissed.
[23] Brief submissions can be made in writing with respect to costs.
D.E. Harris J.
DATE: August 28, 2019
COURT FILE NO.: CV-15-4415
DATE: 2019 08 28
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: KIM NUTZENBERGER, ESTATE TRUSTEE FOR THE ESTATE OF PAULA SYLVIA DOUGAS, DECEASED and ANN PRYDE
COUNSEL: R. Brent Marshall for the Moving Party, Ann Pryde
J. David Keith for the Responding Party, Kim Nutzenberger
ENDORSEMENT
D. E. Harris J.
DATE: August 28, 2019