Court File and Parties
COURT FILE NO.: CV-19-629349-0000 DATE: 2020/03/30 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
NAZHA BOULOS, ESTATE TRUSTEE OF THE ESTATE OF EDWARD JOSEPH BOULOS, deceased Applicant
- and -
DUCA FINANCIAL SERVICES CREDIT UNION LTD. and AGHJAN YAKOB Respondents
Counsel: Maija Pluto for the Applicant
Application under Rule 14.05 of the Rules of Civil Procedure
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
A. Introduction
[1] The Applicant Nazha Boulos, who is the estate trustee of her late husband, Edward Joseph Boulos, seeks an Order declaring that Mr. Boulos’ Estate is the beneficiary of three RRIF (Registered Retirement Investment Funds) held at the Duca Financial Services Credit Unit for the late Yura Nicola Khagek.
[2] Duca Financial does not oppose the Application.
[3] The Application was served on Aghjan Yakob, a resident of California, U.S.A. who is a cousin of the late Mr. Khagek. By correspondence, Mr. Yakob asked for an adjournment, but he did not deliver an Appearance in the application and did not file any material on the Application, which was heard in writing due to the current Covid-19 pandemic.
[4] For the reasons that follow, the Application is granted without costs.
B. Facts
[5] In the 1980s, Yura Nicola Khagek joined the Lady of Lebanon Church where he met Edward Joseph Boulos and his wife Nazha Boulos. Mr. and Mrs. Boulos were members of the congregation, and he was the Church’s bookkeeper. Mr. Khagek volunteered to help raise donations for the Church. Mr. Khagek and Mr. Boulos became close friends. Mr. Boulos would refer to him as his brother. Mr. Khagek was a frequent visitor at the Boulos home.
[6] In the late 1980s, Mr. Khagek lived with the Boulos for six months, and then he moved into his own residence. He left behind many of his belonging which he stored at the Boulos home for almost ten years.
[7] In the early 1990s, Mr. Khagek moved to California to live in a monastery. He asked Mr. Boulos to handle his financial affairs in Ontario, and Mr. Boulos administered Mr. Khagek’s bank Accounts at Duca Financial Services Credit Union Ltd. Mr. Boulos paid Mr. Khagek’s bills and filed his income tax returns. Mr. Khagek listed the Boulos home as his residence. Mr. Boulos collected the mail and would hold it for Mr. Khagek’s return visits.
[8] At Duca Financial Mr. Khagek opened up several joint bank Accounts with Mr. Boulos. The following Accounts were opened:
a. Savings Account (No. 308766.0) b. Personal Chequing Account (No. 308766.1) c. US$ Account (No. 308766.10) d. TFSA Account (No. 308766.14) e. Bonus Shares Account (No. 308766.28)
[9] At Duca Financial Mr. Khagek opened up three RRSP (Registered Retirement Savings Plan) Accounts with Mr. Boulos. Mr. Khagek was the sole annuitant under the RRSP Accounts. Mr. Boulos was the designated beneficiary of the RRSP Accounts. The following RRSPs Accounts were opened:
a. RRSP No. 1 (Class A Share) (No. 308766.1685), December 1, 1986 b. RRSP No. 2 (No. 308766.40-16523), opened on February 16, 1988 c. RRSP No. 2 (No. 308766.40-17752), opened on April 24, 1988
[10] Mr. Khagek would return each summer to Canada and stay at the Boulos home over the summer months.
[11] In August 2003, Mr. Khagek designated Mr. Boulos as the beneficiary of the RRSP Accounts. The beneficiary designation was never revoked.
[12] In 2008, Mr. Khagek’s mother passed away and Mr. Khagek told the Boulos that he had no other relatives and that the Boulos were his best friends and his family. Mr. Khagek told the Boulos that he planned to leave his estate to Mr. Boulos.
[13] In late 2011, in compliance with the requirements of the Income Tax Act, which require the termination of a RRSP when the account owner turns 71 years old, Duca Financial converted Mr. Khagek’s RRSPs into RRIFs, which were given new account numbers.
[14] Beneficiary designation forms were never signed for the RRIFs. The following RRIF Accounts were opened totaling $125,000.34:
a. RRIF No. 3 (Class A Share) (No. 308766.47-31350) $7,813.00. b. RRIF No. 2 (No. 308766.48-43631) $35,107.53. c. RRIF No. 3 (No. 308766.48-43632) $89,892.81.
[15] The conversions from RRSP Accounts to RRIF Accounts were done by Duca Financial without Mr. Khagek completing an application form or completing a form designating a beneficiary for the RRIF Accounts.
[16] Mr. Khagek’s summer visits lasted until the summer of 2012, when Mr. Khagek made his last visit to Canada. On this visit, Mr. Khagek told Mr. Boulos that he wanted Edward to be the beneficiary of his RRSP Accounts.
[17] After 2012 Mr. Khagek and Mr. Boulos would communicate regularly by telephone.
[18] On May 7, 2015, Mr. Khagek passed away. The Death Certificate indicates that the informant’s name for the Certificate was Aghjan Yakob with the relationship of cousin. It appears that Mr. Khagek died intestate. No last will and testament has been located.
[19] On February 18, 2017, Mr. Boulos passed away. Mrs. Boulos is the executor and sole beneficiary of his Estate.
[20] The Boulos Estate lawyers placed notices in the Antelope Valley Journal, a legal publication local to the Los Angeles and Palmdale area and in noticeconnect.com an Ontario legal publication service, requesting information about the existence of a last will and testament and about relatives of Mr. Khagek.
[21] The Boulos Estate lawyers conducted probate searches in the Superior Court of California – County of Los Angeles and in the Superior Court of Ontario, and no applications for probate were discovered.
[22] In the summer of 2017, Carol Poirier the Deposits Adminstrator of Duca Financial corresponded with Mr. Yakob and asked him to contact Duca Financial to settle the late Mr. Khagek’s Accounts with the credit union. Mr. Yakob responded asking for particulars of Mr. Khagek’s Accounts.
[23] On September 20, 2017, Ms. Poirier wrote to Mr. Yakob and asked him to provide a copy of the Mr. Khagek’s will, a copy of the death certificate, and personal identification documents for himself. Mr. Yakob responded and again asked for particulars of the late Mr. Khagek’s Accounts.
[24] On March 27, 2018, Ms. Poirier wrote Mr. Yakob, provided her phone number, and requested that he call. He did not make the call.
[25] On October 17, 2019, Mrs. Boulos as estate trustee brought this Application. It was supported by: (a) her affidavit dated September 11, 2019; (b) Ms. Poirier’s affidavit dated August 29, 2019; and (c) the affidavit of Jamie Otis dated January 27, 2020. Mr. Otis is a law clerk with Gaertner Baron Professional Corporation, the lawyers of record for Mrs. Boulos, Estate Trustee of the Estate of Edward Joseph Boulos.
[26] Duca Financial will remit the funds contained in the RRIF Accounts as the Court directs.
[27] On February 12, 2020, Mrs. Boulos’ Application came on for a hearing. Mr. Yakob did not appear, but he sent an email message to Mrs. Boulos’ lawyers and requested an adjournment for six months.
[28] I adjourned the hearing to schedule a case conference for March 10, 2020 to allow Mr. Yakob to file an appearance and to set a timetable for a defended application.
[29] On March 10, 2020, Mr. Yakob did not appear at the case conference, nor did he file a Notice of Appearance. Once again, he sent an email message requesting an adjournment.
[30] I did not adjourn the case conference and made the following File Direction:
This application was adjourned on February 12, 2020, and I scheduled a case conference for today to allow the respondent or affected party Yakob to file an appearance and to set a timetable. Mr. Yakob was given notice of my Order. He did not file an appearance. He did not appear in person. He sent an email to counsel requesting a six-month adjournment. Since Mr. Yakob did not file an appearance, I am not adjourning the application, which shall proceed based on the material already filed on March 25, 2020. I shall remain seized of the matter. A copy of this direction shall be served on email to Mr. Yakob. Counsel for the applicant shall send me a USB key a copy of the motion material.
[31] On March 2, 2020, because of the Covid-19 crisis, the Chief Justice of the Superior Court of Justice ordered all hearings of motions to be adjourned sine die.
[32] On March 19, 2020, I directed my assistant to write Mrs. Boulos’ counsel, the following email message:
Good afternoon,
Pursuant to Justice Perell’s endorsement, His Honour has asked me to send this email message. Pursuant to his direction of March 10, 2020, this application was to proceed based on materials already filed. The motion was to proceed on March 25, 2020. Justice Perell intends to now hear this motion as a motion in writing on or after March 25, 2020. In light of the Chief Justice’s direction with respect to motions amid the COVID-19 outbreak, it will not be necessary for counsel to attend. Would you please provide Justice Perell with electronic copies of all motion materials by email attachments to the undersigned. Thank you and have a great day and stay safe.
[33] These are my Reasons for Decision to be released on March 30, 2020. For the Reasons that follow, I grant the Application.
C. Discussion and Analysis
[34] Part II of the Succession Law Reform Act, governs the designation of beneficiaries of interest in funds or plans, including RRSPs and RFIFs. Section 51 of the Act states:
Designation of beneficiaries
51 (1) A participant may designate a person to receive a benefit payable under a plan on the participant’s death,
(a) by an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction; or
(b) by will,
and may revoke the designation by either of those methods.
Idem
(2) A designation in a will is effective only if it relates expressly to a plan, either generally or specifically.
[35] Section 146(2)(b.4) of the Income Tax Act stipulates that RRSPs cannot provide for maturity after the end of the year in which the annuitant attains 71 years of age. In compliance with this stipulation, in the absence of a direction from the annuitant, the issuers of RRSPs automatically convert RRSP accounts to RRIF accounts by December 31 of the year that the annuitant turns 71. This is what occurred in the immediate case in 2011 when Mr. Khagek’s RRSP accounts were converted into RRIFs.
[36] In Ashton Estate v. South Muskoka Memorial Hospital Foundation, 2008 ONSC 21421, Justice McIssac held that RRIFs are connected to or derivatives of the RRSP from which they have been converted.
[37] In the Ashton Estate, at the time of his death, the testator did not own any RRSPs, but he was receiving income from RRIFs that were the product of the conversion of his former RRSPs. In his will, the testator designated his children as beneficiaries of any RRSPs that he might own. Justice McIssac held that the children were the beneficiaries of the RRIFs derived from the RRSPs.
[38] In the immediate case, the late Mr. Khagek designed Mr. Boulos as his beneficiary of the RRSPs, and in my opinion that designation was meant to designate Mr. Boulos the beneficiary of the funds constituting the RRSPs which designation would follow or trace the conversion of those funds into a RRIF, absent Mr. Khagek revoking the designation, which he never did.
[39] In McConomy-Wood v. McConomy, 2009 ONSC 7174, Justice Herold held that where there is a gift, the paramount consideration is the intention of the person making the gift. In this case, before her death, the testatrix designed her daughter as the sole beneficiary of a RRIF. In her will, however, she named her daughter as her estate trustee and according to the will, the estate was to be divided equally among the testatrix’s three children. The Court was asked to determine who owned the RIF (approximately $392,190 at the date of death) and whether the RIF or its proceeds were subject to a resulting trust or some other valid legal claim. Justice Herold held that there was abundant evidence that testator intended that all his children benefit equally from the RRIF funds. He held that the RRIF funds were to be held in trust for all the children in equal shares.
[40] In the immediate, the evidence reveals that the late Mr. Khagek wished to gift to Mr. Boulos the funds in his RRSPs and in the conversion of those funds to be held in another type of registered account under the Income Tax Act. Mr. Boulos was in possession of the RRSP accounts. I conclude that Mr. Khagek effected a gift of his RRSP Accounts and the derivative RRIF Accounts to Mr. Boulos.
[41] In the result, Mrs. Boulos’s Application on behalf of the Estate of Mr. Boulos is successful.
D. Conclusion
[42] For the above reasons, the Application is granted without costs.
[43] In the circumstances of the Covid-19 emergency, these Reasons for Decision are deemed to be an Order of the court that is operative and enforceable without any need for a signed or entered, formal, typed order. The terms of the Order are follows:
THIS COURT DECLARES THAT Nazha Boulos, Estate Trustee of the Estate of Edward Joseph Boulos, deceased is the beneficiary of the following Registered Retirement Income Fund (“RRIF” accounts of Yura Nicola Khagek, deceased held by Duca Financial Services Credit Union Ltd. (“Duca”); i. RRIF (Class A Share) (No. 308766.47-31350) ii. RRIF (No. 308766.48-43631) iii. RRIF (No. 308766.48-43632)
THIS COURT ORDERS that the funds held in the RRIF Accounts be transferred by Duca to Nazha Boulos, Estate Trustee of the Edward Joseph Boulos, less withholding, if any, on account of income tax liabilities with respect to the RRIF Accounts.
[44] The parties may submit formal orders for signing and entry once the court re-opens; however, these Reasons for Decision are an effective and binding Order from the time of release.
Perell, J.