Court File and Parties

COURT FILE NO.: 05-110/19

DATE: 20190923

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BETTY TILLEY and VERNON MERCER, Applicants/Responding Parties

AND:

ROXANNE HERLEY, Respondent/Moving Party

BEFORE: Dietrich J.

COUNSEL: Lionel J. Tupman and Megan Levy-McLaughlin, for the Applicants/Responding Parties

Larry R. Plener, for the Respondent/Moving Party

HEARD: September 17, 2019

ENDORSEMENT

[1] The late Shirley Fell (the “Deceased”) had been estranged from her four children for much of their lives. Over time, she gradually reconciled with her daughter, the Respondent, Roxanne Herley. The Deceased had no contact with her two sons since 1968. Late in her life, she had some contact with her other daughter, Betty Tilley, but they did not reconcile.

[2] The Deceased died on March 16, 2019. In her last will and testament dated September 27, 2008 (the “Will”), the Deceased appointed the Respondent as her sole executrix and trustee, and named her as the beneficiary of her entire estate.

[3] Betty Tilley and the Deceased’s son Vernon Mercer brought the within Application. They challenge the validity of the Will and allege that the Deceased lacked testamentary capacity when she made the Will, that the Will was procured by undue influence, and that it was executed under suspicious circumstances. The Deceased’s other son has withdrawn from this litigation.

[4] It appears that there are no significant assets forming part of the Deceased’s estate. Prior to her death, the Deceased transferred her principal asset, a residence at 3318 Juanita Court, in Mississauga, Ontario, to herself and the Respondent as joint tenants with right of survivorship. On the Deceased’s death, the residence passed to the Respondent by right of survivorship. The Will specifically states that in respect of any joint interest with right of survivorship with any of the Deceased’s children, the presumption of advancement exists and that there was no intention on the part of the Deceased to establish any type of resulting trust. The Applicants nonetheless seek a declaration that the residence is subject to the presumption of a resulting trust.

[5] Following the Deceased’s death, the Respondent sold the residence. In light of the Application, the parties agreed that the proceeds of sale would be held in trust.

[6] The parties obtained a consent order on June 6, 2019 (the “Consent Order”). The Consent Order authorized the payment of $293,541 out of the sale proceeds to the Respondent as reimbursement for the payment she had made from her own funds during the Deceased’s lifetime to pay off the Deceased’s high interest reverse mortgage. The Consent Order also directed that the balance of the proceeds, being $606,255.80, be invested in a GIC and held by the Respondent’s lawyer in trust pending the outcome of the Application.

[7] The Respondent brings this motion seeking an interim distribution from the funds held in trust in the amount of $151,563.95, being 25 percent. She argues that even if the Applicants are successful in challenging the Will, on an intestacy, she would receive 25 percent of the residue of the estate and, therefore, the interim distribution is justified. The Respondent also submits that during the Deceased’s lifetime the Respondent and her husband spent some $110,000 of their own funds for the benefit of the Deceased (including, among other things, capital improvements to the residence and airline tickets from their home in Newfoundland to stay with her to provide care). As a result, the Respondent submits, she and her husband are now financially strapped.

[8] The Applicants oppose the interim distribution to the Respondent. They assert that the Respondent agreed in the Consent Order that, apart from the reimbursement to her for the mortgage payment, the proceeds from the sale of the residence would remain in trust “pending the resolution of this matter or otherwise as agreed to by the Parties.” The Applicants argue that the Consent Order cannot be varied without their consent, which they are not prepared to give.

[9] The Applicants submit that there is no guarantee that the Respondent would be entitled to a 25 percent interest in the residue of the estate if the Will is successfully challenged. It is common ground that there is evidence that the Deceased may have made an earlier will. At this point, such earlier will has not been located and there is no evidence of its contents.

[10] Rule 59.06(2) of the Rules of Civil Procedure deals with the variation or setting aside of a court order. To vary a court order, the moving party must show that: i) grounds exist that would invalidate a contract; or ii) circumstances exist which would make a variance necessary to achieve justice in the case: Gobeil and Williams v. Smith et al., 2010 ONSC 6495 at para. 25.

[11] In Verge Insurance Brokers Limited et al. v. Richard Sherk et al., 2015 ONSC 4044, it was held that a consent judgment can only be rectified on the same grounds on which a contract can be rectified, and that Courts should not upset the bargain struck by the parties as evidenced by their consent freely and involuntarily given (see paras. 54, 89).

[12] The Respondent did not adduce any evidence to support an invalidation of the consent given by all the parties to the Consent Order.

[13] The Respondent submits that she agreed to permit the Consent Order to be amended for the benefit of the Applicants when they sought to adjust the timetable for bringing the matter to a hearing. Therefore, she argues, the Applicants should now consent to an amendment that would allow the interim distribution she seeks.

[14] The timetable amendment was made in another consent order dated August 6, 2019, which is referred to in my endorsement of even date. At that time, the Respondent advised that she would bring this motion to seek an interim distribution, and a date for the motion was set out in the endorsement. I do not find that the Respondent’s agreement to vary the Consent Order, as evidenced in the August 6, 2019 endorsement, was in any way contingent on the Applicants’ agreement to her request for an interim distribution of the proceeds held in trust.

[15] Further, I find that an interim distribution of 25 percent of the net proceeds held in trust would be premature and inappropriate. It is common ground that the net sale proceeds would represent the bulk of the Deceased’s estate if the transfer of the residence were set aside. However, there has been no accounting with respect to the entire estate including an estimate of the debts and liabilities of the estate and future expenses, which could include costs related to the litigation. It is, therefore, impossible to determine with any degree of accuracy the value of a 25 percent interest in the estate.

[16] In addition, at this point, it cannot be confirmed that the Respondent’s interest in the Deceased’s estate, would be, at a minimum, 25 percent. The parties do not disagree that the Respondent would be entitled to a 25 percent share on an intestacy. However, until the Deceased’s earlier will is located, if indeed it can be, it is impossible to know whether the Respondent is a beneficiary under that will and, if so, the extent of her entitlement. It is conceivable that none of the Deceased’s children would be beneficiaries under the earlier will.

[17] Accordingly, I decline to order an interim distribution of $151,563.95 to the Respondent at this time.

[18] The Respondent’s motion is dismissed. Having succeeded, the Applicants are entitled to costs pursuant to rule 57.01(1) of the Rules of Civil Procedure. I have reviewed the Costs Outline of both the Applicants and the Respondent. The Applicants seek costs of $7,605.61, including HST and disbursements on a partial indemnity basis. If successful, the Respondent would have sought costs of $5,959.62, including HST and disbursements, on a partial indemnity basis. The costs sought by the Applicants are somewhat higher than the Respondent would have sought, on a partial indemnity basis, and are therefore likely more than she would have expected to pay.

[19] I therefore fix the costs at $6,775, inclusive of HST and disbursements, payable to the Applicants by the Respondent. This quantum is fair and reasonable, within the reasonable expectation of the Respondent, and accords with the principles set out by the Ontario Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.).

Dietrich J.

Date: September 23, 2019