Court File and Parties
COURT FILE NO.: CV-18-592446 DATE: 2020-04-28 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Maria Piecha, Plaintiff AND: Jacob Piecha, Defendant
BEFORE: Master P. Tamara Sugunasiri
COUNSEL: Fiske, C. and Sgro, D., Counsel for the Plaintiff (cf@mlflitigation.com) Reinhart, M., Counsel for the Defendant (marshall@rvlaw.ca)
HEARD: January 28, 2020
Reasons for Decision
Overview:
[1] Maria Piecha is Jacob Piecha’s grandmother. After Maria’s son Lawrence died, Jacob inherited Lawrence’s house. Maria alleges that she loaned Jacob money to pay off estate debts and to repair the home so that Jacob could live in it. According to Maria, the loan was comprised of several lump sum payments, Jacob’s use of her credit card, and his withdrawals from her investment and bank accounts. She sues Jacob to recover those funds under the doctrine of unjust enrichment.
[2] Maria now seeks to expand her Statement of Claim to include allegations of undue influence and breach of fiduciary duty giving rise to punitive damages. She also wishes to include facts that came to light at Jacob’s examination for discovery. Jacob objects on several grounds. First, he argues that undue influence is not a stand alone cause of action. Second, he submits that Maria’s proposed amendments lack the material facts to support the alleged breach of fiduciary duty. Finally, he suggests that in any event these new allegations our statute-barred by the Limitations Act, 2002.
[3] For the reasons that follow, I agree with Jacob and deny Maria’s motion. The proposed claim does not plead that Maria and Jacob are in a relationship of dominance that triggers the doctrine of undue influence. Second, undue influence is not a stand alone cause of action. Third, Maria has not pleaded the material facts to support breach of fiduciary duty. Finally, there is no independent actionable wrong to support a claim for punitive damages. It is plain and obvious that the proposed amendments cannot succeed. I need not address the limitations argument.
Law and Analysis:
[4] It is well established that amendments pursuant to Rule 26.01 are mandatory unless the amendments would cause non-compensable prejudice, are frivolous, vexatious or an abuse of process, or it is plain and obvious that the proposed claim cannot succeed. In assessing the proposed amendments’ tenability, the Court considers only the pleadings much like it does in Rule 21.01(1)(b) motions.[^1] In this case, it is plain and obvious that Maria’s amendments cannot succeed. I explain below.
Undue Influence is not a stand-alone case of action
[5] Maria proposes to amend her claim to allege that at all material times, Maria was vulnerable and susceptible to Jacob’s influence, and that Jacob influenced her for personal gain. She claims restitution as well as an award of damages to be restored to her original position.
[6] Undue influence is an equitable doctrine designed to protect the integrity of the weak or momentarily weak from entering into disadvantageous transactions. The doctrine is often used to challenge contracts or retract gifts. In such cases, a plaintiff must establish that the potential for domination inheres in the nature of the relationship itself.[^2]
[7] In this case, the transaction in question is the loan Maria gave Jacob as lump sums and account withdrawals. Maria and Jacob disagree as to the nature of the withdrawals. Maria claims that all monies that came to him were loans and that he was not supposed to use her funds for personal use that did not relate to the house and estate. Jacob alleges they were gifts. At its highest, Maria’s proposed pleading could suggest that if any of the sums are found to be gifts, they should be returned under the doctrine of undue influence (I note that Maria does not plead this. Rather, I give the pleadings its broadest interpretation).
[8] However, Maria does not allege that her relationship with Jacob was such that there was a potential for domination. The material facts she includes to support her undue influence claim do not, either individually or collectively, suggest the presence of a dominant relationship. Those facts include giving Maria advice on how to handle her money from the sale of her condominium; Maria was 92 years old at the time; Jacob helped Maria find a lawyer to sell her condo and execute a will and power of attorney; and Jacob helped Maria sell her condo and negotiating the agent fee.
[9] Merely being a helper to an able bodied and able minded person does not inherently give rise to a potential for domination. Otherwise the threshold would be too low. In my view, and in keeping with the tenure of the Supreme Court’s discussion of the issue in Geffen (supra note 2), there must be something more. In Geffen, Annie Sanofsky bequeathed her home to her daughter Tzina who was one of four children. Tzina’s three brothers were not pleased with this distribution. Ultimately, the siblings entered into a trust deed whereby the house would pass to all of Annie’s grandchildren equally rather than just to Tzina’s children. Tzina had required psychiatric care since she was a teenager. She claimed that she did not understand the effect of the trust deed and ultimately died with a Will that left the house to her children. The brother contested her will and her estate relied in the doctrine of undue influence to void the trust agreement. The facts of this case are far from Geffen. Most importantly, Maria is of sound mind, because her family doctor has said so, or because an expert has not deemed her to lack capacity. Either way, there is nothing in the pleading that suggests that she had the kind of relationship with Jacob that would make it inherently one of potential dominance. Absent the material facts needed to support the doctrine of undue influence, counsel has not provided any cases that recognize an independent tort of undue influence.[^3]
[10] Even if I am incorrect in my analysis above, the proposed undue influence pleading falls short in other ways. It does not state what the consequence of Jacob’s undue influence was, or what transaction it effects. Did it cause her to gift him amounts that he otherwise would not have received? Did he coerce her into lending him money? Did it cause her to retain money in her bank account instead of buying an investment property? The proposed plea of undue influence is untenable.
No Reasonable Cause of Action in Breach of Fiduciary Duty
[11] Similarly, Maria fails to plead the material elements of a breach of fiduciary duty in her proposed amended claim. She alleges that Jacob was her Power of Attorney from April 14, 2016 to May 16, 2017. It was during that time that Jacob made most of the credit card purchases. This, Maria argues, supports her proposed cause of action for breach of fiduciary duty.
[12] There is no doubt that a power of attorney creates a fiduciary relationship. However, Maria has failed to plead that Jacob was acting under the Power of Attorney during the material time, or the particulars of his misuse of the power. The alleged breach of fiduciary duty must arise in the context of exercising the power. These allegations are absent in the proposed amendments. For example, Maria does not allege that she needed Jacob to act on the Power of Attorney, or that she had been declared unable to manage her own affairs. She does not allege that Jacob was acting in his capacity as her Power of Attorney when he used her credit card or made bank withdrawals, or that the withdrawals represented a misuse of his power. Her allegation remains as it did in the original claim – that all amounts that were given to him were meant to be loans to repair the property and pay for estate matters, and that he must repay them.
[13] There are also no facts to suggest that Jacob was Maria’s fiduciary outside of the power of attorney. To be an “ad hoc” fiduciary, Maria would have to plead that Jacob undertook to act loyally, that she was vulnerable and subject to his discretionary power, and that the fiduciary relationship affected Maria’s legal or substantial practical interests.[^4] In my view, the proposed pleading attempts to fall within this framework in order to bolster Maria’s claim against Jacob. Unfortunately, it falls short of including these key components of an ad hoc fiduciary relationship. It is plain and obvious that the amendments have no possibility of success.
No claim for punitive damages
[14] Having concluded that it is plain and obvious that the undue influence and breach of fiduciary duty amendments cannot succeed, there is no basis to claim punitive damages. In order to ground a claim for punitive damages, there needs to be an independent actionable wrong.[^5] The existing pleading does not support a claim for punitive damages. It merely seeks repayment of loans and restitution of amounts Jacob took for his personal use.
Miscellaneous Issues
[15] Maria seeks to include evidence from Jacob’s discovery as well as her own medical evidence. Generally, discovery evidence should not find its way into a pleading. The information at proposed paragraphs 36-44 is either irrelevant to the existing claim or evidence of the material facts. Rule 25.06 dictates that every pleading shall contain a concise statement of the material facts but not the evidence by which those facts to be proved. To the extent that they are relevant, paragraphs 36-44 are precisely the type of evidence the rule prohibits.
[16] Having found that Maria’s proposed amendments have no reasonable chance of success, I do not address Jacob’s limitations argument.
Disposition:
[17] I dismiss Maria’s motion to amend her Statement of Claim.
Costs:
[18] The parties agreed to costs of $7500 to the successful party. As such, Maria shall pay Jacob $7500 payable within 30 days of today’s date.
Master Sugunasiri
Date: April 28, 2020
[^1]: Klassen v Beausoleil, 2019 ONCA 407 at para. 25. [^2]: Geffen v Goodman Estate, 1991 CanLII 69 at p. 378 (SCC). [^3]: See also similar concern in Taber v Paris Boutique & Bridal Inc., 2009 CarswellOnt 5308 at para. 12. [^4]: As recently stated in Wedemire v Wedemire, 2017 ONSC 6891 at paras. 51-52. [^5]: Whiten v Pilot Insurance Co., 2002 SCC 18, [2002] 1 SCR 595 at para .79 as cited by Master Jolley in Charles v Begum, 2017 ONSC 4690 at para 10.