In the Estate of Gerald Richard McCoy, deceased
Oshawa Court File No.: CV-19-1223
Date: 2021-03-31
Ontario Superior Court of Justice
Between:
Laura Tanya Cattley and Tina Marie Wagner Applicants
– and –
Steven Walter McCoy and Gerald Jeffrey Kevin McCoy Respondents
Counsel:
Laura Tanya Cattley, Self-Represented Tina Marie Wagner, Self-Represented
Kimberly A. Gale, for the Respondent, Steven Walter McCoy Sharon Warden, Counsel for the Respondent, Gerald Jeffrey McCoy and the Non-party, Edward Wagner
Laura Cardiff, Counsel for the Estate Trustee/Moving Party
Heard: January 28, 2021
Reasons for Decision
De Sa J.:
Overview
[1] The Estate Trustee of the Estate of Gerald Richard McCoy (the "Estate Trustee") has brought a motion for directions with respect to payment from the estate of unsecured debts allegedly owed by the late Gerald Richard McCoy (the "Deceased") to his son, the Respondent, Gerald Jeffrey Kevin McCoy ("Jeff") and his son-in-law, the non-party, Edward Wagner ("Ed"), at the time of his death.
[2] Gerald Richard McCoy, the Deceased, died sometime before February 25, 2019.
[3] The Deceased had four children: the applicants, Laura Tanya Cattley ("Tanya") and Tina Marie Wagner ("Tina"), and the respondents, Jeff and Steven Walter McCoy ("Steven").
[4] The Deceased did not have a spouse at the time of his death.
[5] The primary asset in the Estate is the property located at 2538 Tillings Road, Pickering, Ontario (the "Property").
[6] Angela Casey was appointed Estate Trustee with a Will for the Estate pursuant to an Order of Justice McKelvey dated July 19, 2019.
[7] Pursuant to an Agreement of Purchase and Sale dated November 21, 2019, the Property was sold for $730,000. The sale of the Property closed on March 6, 2020.
[8] Before the Estate Trustee can distribute the proceeds of sale of the Property to the children of the Deceased, she is required to pay off any debts owed by the Estate.
[9] Jeff and Ed have sought payment of certain debts alleged to be owed by the Deceased prior to distribution of the proceeds.
[10] Tanya, Tina and Jeff agree that Jeff and Ed should be paid $24,000 and $27,000 respectively in relation to the unsecured debts.
[11] Steven opposes the payment of these amounts to Jeff and Ed.
Summary of Facts
The Alleged Debts owed to Jeff and Ed
[12] For many years prior to Gerald McCoy's death, his family would provide loans and financial assistance to him.
[13] From approximately 1999 to 2002, Jeff worked for the Deceased's company. Jeff would invoice his father for the work done for the company. Given his financial situation, the Deceased was often unable to pay Jeff what was owed to him for his services. However, the Deceased agreed to pay Jeff when he was able to do so. The Deceased kept detailed records of the amounts owed to Jeff in unpaid wages.
[14] In 2006, Jeff's bank accounts and wages from his employment were erroneously garnished by the federal government as a result of his father's unpaid GST. He and his father had the same name. The Deceased felt bad for the erroneous charges, but assured Jeff he would pay him back for the amounts.
[15] Ed also assisted the Deceased financially by paying his mortgage when he did not have the money to do so. There were two occasions when the Deceased was at risk of losing his house because he was behind in his mortgage payments and on both of those occasions, Ed and Tina contributed funds in order to stop the mortgage proceedings and bring his mortgage current.
[16] Various family members were aware of the amounts owed to Jeff and Ed. Initially the Deceased said he would pay them back as soon as he was financially able to do so. Later, he said he would pay them back when his property located at 2538 Tillings Road in Pickering ("the Property") was sold.
[17] In a note dated February 17, 2015, written in the Deceased's own handwriting, the Deceased quantified the amount he owed to Jeff and Ed. To Jeff, he wrote down that he owed the amount of $24,000 and to Ed, the amount of $27,000.
[18] On February 19, 2015, a mortgage was registered on the Property in favour of Andrew in the amount of $200,000 to secure amounts that the Deceased owed to Andrew, to pay off the first mortgage on the Property ($31,000), and to cover potential future loans by Andrew to the Deceased.
[19] At that time, the Deceased raised the possibility of Andrew making payments to Jeff and Ed of $24,000 and $27,000, respectively and then adding these amounts to the amount owing under the mortgage. Unfortunately, there was insufficient room available on Andrew's line of credit to include the amounts owed to Jeff and Ed.
[20] Ultimately, the Deceased decided that he would not sell the Property. This was known to the family well in advance of the Deceased's passing.
[21] Jeff and Ed did not bring a claim or make a demand for the amounts owing against the Deceased or seek to put a lien on the Property.
[22] When the Deceased passed in February 2019, the Property had not been sold and Jeff and Ed had not yet been repaid.
[23] The mortgage was paid out to Andrew out of the proceeds of sale of the Property in the amount of $171,828,75, including interest.
The Dispute
[24] Steven does not agree that the amounts sought by Jeff and Ed ($24,000 and $27,000 respectively) should be repaid out of the proceeds of sale of the Property.
[25] The Deceased never signed a loan agreement or promissory note to Jeff and Ed, nor is there evidence suggesting that the Deceased had intended that such funds be treated as credit advances. See Byrne v. Byrne, 2015 BCSC 318, at para. 43; Kuo v. Chu, 2009 BCCA 405, at para 9.
[26] Steven submits that the alleged 2015 handwritten notes are inadequate as they fail to comply with the formal requirements of Section 13 of the Ontario Limitations Act, 2002, SO 2CD2, c 24, Sched B (the "Act"). More specifically, the handwritten notes are: (i) Missing the requisite signature of the alleged debtor which the Ontario Limitations Act requires in order for an acknowledgment of debt to be statutorily recognized; (ii) Lack a "clear and unambiguous acknowledgment of liability", as to the precise amount owing.
[27] Section 13(9) of the Act states that acknowledgments of debt are a nullity unless they are directly made to the person with the claim (or the person's agent), before the expiry of the limitation period applicable to the claim. In this case, Steven submits that there is no evidence confirming that any acknowledgment of debt was sent from the Deceased to Jeff or Ed.
[28] The Deceased gave a mortgage to Andrew for the money advanced, but not to Jeff or Ed. According to Steven, this difference in approach to the funds also indicates the Deceased understood the monies given by Jeff and Ed to be gifts.
[29] Even if there was an oral agreement, Steven submits that Jeff and Ed did not bring a claim or make a demand for payment within the requisite limitation period. They were well aware that the Deceased decided not to sell the house. This was more than 2 years prior to the Deceased's passing. Accordingly, Steven submits they are statute-barred from seeking repayment now.
Analysis
[30] Section 13 of the Evidence Act, RSO 1990, c. E.23, provides that in estate litigation, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.
[31] The corroboration must be independent evidence which shows that their evidence on a material issue is true. This corroborating evidence can be direct or circumstantial, a single piece of evidence or several pieces of evidence considered cumulatively. Evidence Act, RSO 1990, c. E. 23, section 13: Re Gould, Exparte Garvey, 1940 89 (ONCA): Moran v. Richards, 1973 761 (ONSC); Burns Estate v. Mellon, 2000 5739 (ONCA), at paras. 14 and 29.
[32] Not every particular of the party's evidence need be corroborated but it must materially enhance the probability of the truth of the adverse party's statement. Moran v. Richards, 1973 761 (ON SC); Bolnick et al. v. The Samuel and Bessie Orfus Family Foundation, 2011 ONSC 3043, at paras. 15-16, affirmed at 2013 ONCA 225; Foster v. Royal Trust Company, 1950 91 (ON SC).
[33] When the entirety of evidence is considered, I am satisfied that the Deceased acknowledged the debts and intended to repay the amounts of $24,000 and $27,000 to Jeff and Ed, respectively once the Property was sold.
[34] There are various other pieces of evidence which support Jeff and Ed's sworn affidavits, including:
The two handwritten notes of Gerald made in February 2015 acknowledging the debts of $24,000 and $27,000 to Jeff and Ed, respectively;
The statements the Deceased made to his solicitor, Sheldon Stein, at the time of the placement of the $200,000 mortgage on the phone acknowledging the debts owing to Jeff and Ed in the amounts of $24,000 and $27,000, respectively, and other information in the solicitor's file;
The statements made by Andrew to the Estate Trustee that he intended to pay the amounts owed as part of the advance made to the Deceased;
The affidavit evidence of Laura Tanya Cattley; and
The affidavit evidence of Tina Cattley.
[35] I also disagree that Jeff and Ed were required to commence a claim or make a formal demand for payment of the amounts when the Deceased decided not to sell the Property. The Deceased was in a vulnerable state. The fact that the family prioritised their father's welfare over the debts he owed is hardly a basis to construe the statutory provisions in a manner that would penalize them for being considerate to their father in such a difficult period of his life.
[36] When viewed in their proper context, the loans in question were not demand loans, but contingent loans. It was understood by all involved that the Deceased would pay the loans as soon as he was able to.
[37] Jeff and Ed did not make any formal demands for payment prior to the Deceased's death. A demand must be clear and unequivocal.: Berry v. Page, 1989 5207 (BCCA), at para. 8. Accordingly, the statutory limitation period only began to run once the Deceased passed away. Re Gould, Exparte Garvey, 1940 89 (ONCA); Berry v. Page, 1989 5207 (BCCA), at paras. 8-9; Carenza v. City Optical, 2010 ONSC 1889 at paras. 24 to 27.; Limitations Act, 2002, SO 2002, c. 24, section 5.
[38] Even absent an oral agreement, in my view, Jeff and Ed would be entitled to the funds on the basis of quantum meruit.
[39] Where a claim for restitution is based on quantum meruit, an explicit mutual agreement to compensate for services rendered is not a prerequisite to recovery. It suffices if the services in question were furnished at the request of, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services. See: Ariston Realty Corp. v. Elcarim Inc., 2014 ONCA 737, at paras. 25-32; Deglman v. Brunet Estate, 1954 2 (SCC), at pp. 734-735.; Kerr v. Baranow, 2011 SCC 10, at para. 31; and Nijar v. Feldman, 2020 ONSC 552, at para. 100.
[40] The heart of a claim for unjust enrichment lies in the notion of retaining a benefit which justice does not permit one to retain. For recovery to be granted, something must have been given by one party and received and retained by another without a juristic reason. See: Kerr, supra., at para. 31.
[41] There are three elements to establishing a claim for unjust enrichment:
(1) An enrichment to the benefit of the defendant;
(2) A corresponding deprivation of the plaintiff; and
(3) An absence of juristic reason for the enrichment.
Kerr v. Baranow, 2011 SCC 10, at para. 32.
[42] In this case, there was clearly a benefit conferred on the Deceased. There is also a corresponding deprivation. The only question is whether there was a juristic reason for the enrichment.
[43] Steven submits that the financial support provided to the Deceased was rendered by family members out of love and a sense of duty. The monies were given without the expectation of return and are more properly understood as gifts.
[44] While gifts would be a juristic reason for the benefit being conferred, I cannot agree that the amounts should be viewed as gifts. The scope of the assistance provided by Jeff and Ed over many years was extensive and beyond what could reasonably be considered a gift. There was also clearly the understanding that the money would be paid back at some point. Indeed, a record of the balance owing was kept by the Deceased for the amounts given.
[45] In the circumstances, it would be unfair for the Estate to retain the benefit conferred by Jeff and Ed.: Moore v. Sweet, 2018 SCC 52, at para. 57.
Disposition
[46] For the reasons set out above, Jeff and Ed are to be paid the amounts of $24,000 and $27,000, respectively, from the capital of the Estate.
[47] The Estate Trustee's legal costs of this motion shall be paid from the capital of the Estate on a full indemnity basis in the amount of $16,890.06, including HST and disbursements, $10,932.13 of which has already been paid to the Estate Trustee; and
[48] The balance of the Estate is to be distributed in accordance with the terms of the Deceased's Will.
[49] If the parties cannot agree on costs, I will accept cost submissions within 2 weeks of the release of this decision.
Justice C.F. de Sa
Released: March 31, 2021
Ontario Superior Court of Justice
Between:
Laura Tanya Cattley and Tina Marie Wagner Applicants
– and –
Steven Walter McCoy and Gerald Jeffrey Kevin McCoy Respondents
Reasons for Decision
Justice C.F. de Sa
Released: March 31, 2021