COURT FILE NO.: CV-15-5735-00
DATE: 2021 04 27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CONCETTA ANGELONI by her estate representatives CALOGERO CINO and MARIA DI STEFANO
Derek Fazakas, for the Applicants
Applicants
- and –
ESTATE OF FRANCESCO ANGELONI, MARIA LUGONIA, LILIANA PALERMA, DORA POLLA, MIMMA SISTI, FERNANDO ANGELONI, FRANCA PONARI and TERESA PONARI
Peter M. Callahan, for the Respondents
Respondents
HEARD: October 28, 2020 by videoconference
REASONS FOR JUDGMENT
Fowler Byrne J.
[1] In this Application, the Applicant Concetta Angeloni (“Concetta”) pursued two forms of relief:
a) Support from the estate of her late husband Francesco Angeloni (“Francesco”); and
b) a finding that Francesco breached his fiduciary duty to her when acting as her power of attorney for property, and an order that his estate pay her damages arising therefrom.
[2] Unfortunately, after this application was commenced but before final argument, Concetta passed away. An Order to Continue was granted by this Justice on July 31, 2020. In the same order, the Applicant’s claim for dependant’s relief under the Succession Law Reform Act, R.S.O. 1990, c.S.26, was withdrawn, without prejudice to each party seeking their costs in respect of same.
I. The Parties
[3] The Applicant Concetta Angeloni (“Concetta”) was born on April 21, 1938. When this application was commenced, she was living in a long-term care facility and suffered from dementia. As a result, this Application was brought by her litigation guardians Maria DiStefano (“DiStefano”), who is her niece and only child of her late brother Calogero Cino, and Calogero Cino (“Charlie”), who is her nephew and only child of her late brother Luigi Cino. Due to Concetta’s death and the Order to Continue, DiStefano and Charlie are now named as Estate Representatives of the Estate of Concetta Angeloni (“Concetta Estate”).
[4] The Respondents are all beneficiaries of the Estate of Francesco Angeloni (“Francesco Estate”). They are as follows:
a) Lilianna Palerma, who is a surviving sister of Francesco (“Lilianna”);
b) Dora Polla, who is a surviving sister of Francesco (“Dora”);
c) Mimma Sisti, who is a surviving sister of Francesco (“Dora”);
d) Fernando Angeloni, who is a surviving brother of Francesco (“Fernando”);
e) Maria Lugonia: estate trustee for Francesco, and also the daughter of Francesco’s late sister Guisseppina Ponari (“Lugonia”); prior to Francesco’s death, Francesco also appointed Lugonia as his power of attorney for property;
f) Franca Ponari, who is the daughter of Francesco’s late sister Guisseppina Ponari (“Franca”); and
g) Teresa Ponari, who is the daughter of Francesco’s late sister Guisseppina Ponari (“Teresa”).
II. Facts
[5] Concetta and Francesco Angeloni (“Francesco”) were married in 1973. In 1976, Concetta and Francesco purchased a property as joint tenants, which was located at 3308 Joan Drive, Mississauga (“the Property”). They had no children and never separated.
[6] On November 29, 2011, Concetta signed a Continuing Power of Attorney, appointing Francesco as her attorney for property.
[7] In November 2012, Concetta was required to move into a long-term care facility. At that time, she had a diagnosis of Parkinson’s Disease, Alzheimer’s Dementia, and Type II Diabetes amongst other aliments. The medical documentation provided supports that his move was a medical necessity as her needs were high and Francesco was unable to manage them on his own.
[8] On December 17, 2012, approximately one month after Concetta was moved into the long-term care facility, Francesco severed the joint tenancy of the Property, thereby changing the ownership so that each owned a 50% share, as tenants in common.
[9] Francesco moved into a long-term care facility sometime in 2014. On March 31, 2014, Francesco sold the Property for the sum of $700,000. He signed all the necessary closing documents on his own behalf and as Concetta’s attorney for property. The net closing funds of $649,996.37 were paid entirely to Francesco. Francesco also received a refund of $10,450.00 from his real estate agent.
[10] The proceeds of sale were disposed of as follows:
a) On April 1, 2014, both the proceeds of the sale of the Property and the refund from the real estate agent were deposited into a joint account held by Concetta and Francesco (“Joint Account 9783”);
b) On April 1, 2014, $500,000 was transferred from Joint Account 9783 to a TD Waterhouse Account (“Account M53A”), which was held by Francesco alone;
c) On April 2, 2014, a further $100,000 was withdrawn from Joint Account 9783 and was transferred to an account only identified as “TD Mutual Funds”; this account was later identified as a TD Mutual Fund held jointly by Concetta and Francesco (“Mutual Fund 1050”);
d) On February 9, 2015, Lugonia, allegedly on Francesco’s instructions and not pursuant to her power of attorney, closed Account M53A, which had grown to $505,323.28 and transferred it to bank account 6872852, which was jointly held by her and Francesco (“Account 2852”);
e) Immediately thereafter, Lugonia transferred the sum of $500,000 out of Account 2852 into a new TD Direct Investing Account held by Lugonia and Francesco jointly, (“Account M910”);
f) On April 22, 2015, $50,000 was withdrawn from Account M910, leaving a balance of $450,671.44.
[11] Francesco died on July 6, 2015. In his will dated June 17, 2014, he made no provisions for Concetta. Instead, he divided his estate evenly between his siblings. If a sibling was deceased, that sibling’s share was divided equally among the deceased sibling’s children.
[12] On July 15, 2015, approximately one week following Francesco’s death, Account M910 was closed out by Lugonia by withdrawing the remaining balance of $451,998.05. Being unaware of her obligation to refrain from distributing the estate within the first six months, Lugonia distributed the estate in accordance with Francesco’s will.
[13] On July 25, 2015, in their capacity as attorneys for property for Concetta, DiStefano and Charlie attended at Concetta’s bank. All of Concetta’s bank accounts were held jointly with Francesco. Accordingly, given that Francesco had died, DiStefano and Charlie ensured that these funds remained in Concetta’s name alone. The sum on that day that was transferred to Concetta alone was $296,841.37. Amongst these accounts was funds was Mutual Fund 1050, having a balance of $178,924.89, which included $100,000 from the proceeds of the sale of the Property.
[14] DiStefano and Charlie found this sum to be low considering they knew that Francesco and Concetta owned a home that had been sold the year before.
[15] DiStefano and Charlie were concerned that Francesco left no provisions in his will for Concetta and that the funds from the bank accounts may not be sufficient to support Concetta’s high needs care. Accordingly, in December 2015, DiStefano and Charlie commenced this application wherein they sought defendant’s relief under the Succession Law Reform Act, R.S.O. 1990, c.S.26 and an order that administration of the Francesco Estate be suspended, and monies returned, until which time this matter had been adjudicated.
[16] As details of the proceeds of sale of the Property came to light in this litigation, the Applicants amended this Application to include the claim for a full accounting and sought a declaration that Francesco breached his fiduciary duty to Concetta, as her power for attorney for property, as a result of the manner in which he dealt with the proceeds of the sale of the Property.
[17] While Concetta was in long term care, both her and Francesco’s income from their respective pensions was deposited into Joint Account 9783. While statements were provided only from the beginning of 2014 for this account, there appears to be a regular payment of $3,200 each month. There was no definitive evidence of what that expense was for, except that it is expected to be for long term care.
[18] This matter was before Price J. on August 30, 2017 on a motion for directions. When he released his decision on December 12, 2017, a number of orders were made, including that there be an accounting of the Francesco’s Estate by Lugonia, an accounting while Lugonia acted as Francesco’s power of attorney for property, that there be no further disbursements from the Francesco Estate, that none of the beneficiaries of the Francesco Estate dissipate what they received to date and that they return and pay into court what they did receive until the application was determined on a final basis (“Price Order”).
[19] Concetta died intestate from COVID-19 on April 24, 2020.
[20] As of July 31, 2020, when the Order to Continue was made, no monies had yet been paid into court. Finally, on August 20, 2020, the Respondents paid into court the sum of $409,642.66. In her affidavit, Lugonia confirms that she also held back an additional $50,000 to cover the legal costs of the Francesco Estate. There was no provision for this holdback in the Price Order.
III. Issues
[21] The Respondent’s raised a preliminary issue, alleging that the relief sought by the Applicants is not properly before the court and therefore, this court does not have jurisdiction to entertain the relief sought.
[22] Accordingly, the following issues to be decided are as follows:
a) Is the Application seeking a declaration that Francesco breached his fiduciary duty to Concetta properly before the court?
b) If so,
Did Francesco owe a fiduciary duty to Concetta?
If so, did Francesco breach that duty?
If so, what remedy is appropriate?
How should the damages be paid?
IV. Analysis
A. Amended Claim Relating to Fiduciary Duty
[23] The Respondents maintain that the Notice of Application was never properly amended and served. Given that the remaining issues before the court arose only as a result of the amendment, it is argued that the claim for a declaration of a breach of fiduciary duty by Francesco and related claims are not before the court. Accordingly, the court has no jurisdiction to hear them.
[24] Rule 14.09 of the Ontario Rules of Civil Procedure states that an originating process that is not a pleading is amended like a pleading. It is clear that a Notice of Application is an originating process (see r.1.03(1)) and that it is not a pleading as defined by r. 25.01.
[25] Rule 26.02 of the Ontario Rules of Civil Procedure outlines the circumstances in which pleadings may be amended.
[26] Rule 26.02(a) states that no leave is required if pleadings are not closed and the amendment doesn’t seek to add new parties. Rule 25.05 defines the close of pleadings when the last Reply to a defence is served and filed, or the time to do so has expired. No such “close of pleadings” or an equivalent is defined for Applications.
[27] Guidance may be found in the case law. In the case of 1100997 Ontario Limited v. North Elgin Centre Inc. 2016 ONCA 848, in an application, a trial judge refused to all direct a trial of the issues and permit the delivery of a statement of claim for damages on the basis that the proposed statement of claim raised no claims that were not statute-barred. The Ontario Court of Appeal allowed the appeal, finding that the claims advanced in the statement of claim arose from the same factual nexus as set forth in the Application.
[28] In coming to that conclusion, van Rensburg J.A., writing for the court, stated as follows:
[16] A notice of application may be amended in the same manner as a pleading: r. 14.09. However, a notice of application is not a “pleading” as it is required to state only the precise relief sought, the grounds to be argued and the documentary evidence to be used at the hearing of the application: r. 38.04. It is therefore the supporting affidavit that typically contains the relevant facts.
[17] In Energy Probe v. Canada (Attorney General) (1989), 1989 CanLII 258 (ON CA), 68 O.R. (2d) 449 (C.A.), leave to appeal refused 37 O.A.C. 160 (S.C.C.), in determining whether a cause of action was disclosed, this court stated that “affidavit materials on an application are to be considered as the pleadings” (at para. 10). Further, where oppression proceedings commenced by notice of application were converted into an action in Przysuski v. City Optical Holdings Inc., 2014 ONSC 3686, Perell J. refused to strike paragraphs of the statement of claim as raising unanticipated claims as an abuse of process because “[t]he Notice of Application should be read with its supporting affidavits and with the evidentiary record for the Application” (at para. 11).
[29] Accordingly, an affidavit filed in support of an application is considered part of the Applicant’s pleadings. It appears logical then, that an affidavit filed in response to an application should be considered a pleading of the Respondent. Indeed, when a court hears an application and directs that some or all of the issues proceed to trial, the court will order that new pleadings be exchanged or make an order that the Notice of Application and any affidavits filed by the parties be considered the pleadings for the trial.
[30] The right to serve and file an affidavit in an application is restricted only in certain cases, such as when cross-examinations have been completed, as set out in r.39.02(2) or in accordance with a court-ordered schedule, as occurred in Van Decker v. Van Decker, 2006 CanLII 36258 at para. 3.
[31] In the case before me, the Notice of Application was amended before the Respondents filed a responding affidavit. In other words, the “pleadings” had not yet closed. In addition, the Respondents went on to file a responding affidavit to the amended Notice of Application. Accordingly, I find that the Notice of Application was properly amended, and no leave was required by the court to do so under r.26.02(a) of the Rules.
[32] With respect to service of the amended pleading, the Applicants maintain that the Amended Notice of Application was served, and that they have an affidavit of service in their file indicating such.
[33] I find this issue has already been determined. In paragraph 22 of his reasons for his decision of December 12, 2017, Price J. found that the Amended Notice of Application was served with the Supplementary Application Record in May 2017.
[34] Accordingly, the relief sought is properly before the court and should be decided.
B. Fiduciary Duty of Francesco
[35] In 2011, Concetta appointed Francesco as her attorney for property. Accordingly, it is clear that Francesco owed a fiduciary duty to Concetta. The Substitutes Decision Act, 1992, S.O., 1992, c.30, states:
32 (1) A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.
38 (1) Section 32, except subsections (10) and (11), and sections 33, 33.1, 33.2, 34, 35.1, 36 and 37 also apply, with necessary modifications, to an attorney acting under a continuing power of attorney if the grantor is incapable of managing property or the attorney has reasonable grounds to believe that the grantor is incapable of managing property.
[36] The medical records entered into evidence in this application show clearly that Concetta was unable to manage her property well before Francesco sold the Property. Accordingly, he owed to her a fiduciary duty when he sold her share in the Property and collected the sum of $649,996.37 for the Property and the sum of $10,450.00 as a refund from their real estate agent.
C. Was there a Breach of Francesco’s Fiduciary Duty?
[37] When acting as a fiduciary under a power of attorney, the attorney can only act for the benefit of the donor. The attorney is prohibited from using the power for their own benefit without the full knowledge and consent of the donor. If the donor is mentally incapable, the attorney’s position approaches that of a trustee: Richardson Estate v Mew 2009 ONCA 403 at para. 48-50.
[38] On the facts before me, I find that Francesco did breach his duty to Concetta.
[39] On March 31, 2014, Francesco received a total of $660,446.37, half of which belonged to Concetta. This sum was first deposited into Joint Account 9783, which was in both their names. While it would have been preferable that their funds not been comingled, I find that there was no breach in fiduciary duty at this time. In addition, when Francesco then transferred $100,000 to Joint Account 1050, those monies again remained for the benefit of Concetta. At all times, Concetta’s money in Joint Account 1050 remained available for her benefit.
[40] The difficulty arose when Francesco transferred $500,000 to Account M53, which was for his benefit alone. No evidence was presented that would show that any of this money was used for Concetta’s benefit. It stayed either in Francesco’s name or was held jointly by him and Lugonia. The money continued to grow with interest, until $50,000 was withdrawn just before his death. There is no evidence that this $50,000 was for Concetta’s benefit. After that, it was dispersed to Francesco’s family. Accordingly, when Francesco transferred the sum of $500,000 into his own account on April 1, 2014, Francesco breached his fiduciary duty to Concetta.
[41] The remainder of the proceeds of sale and the real estate refund (the sum of $60,446.37) remained in Joint Account 6639783. Concetta and Francesco’s pensions continued to be deposited into this account and expenses were paid from it. It is not clear whether it was Francesco’s or Concetta’s long term care expenses were paid from this account. It is clear that some of Francesco’s expenses were paid from this account, such as the Rogers account. There is also the occasional withdrawal of up to $1,000 and a payment to Lugonia of $5,000 on November 14, 2014. Although Lugonia was ordered to provide an accounting of when she acted as power of attorney for Francesco, she maintains that Francesco never lost capacity and she never assumed this role. Nonetheless, as estate trustee, she had access to this information and could have ascertained what happened to the funds in Joint Account 6639783. She failed to do so as contemplated by the Price Order. I draw an adverse inference from this failure to do so and find that the dealings of this account also show a breach of Francesco’s fiduciary duty to Concetta.
[42] The Respondents argue that Francesco did look after Concetta’s interests when he arranged his financial affairs in such a way that she was well looked after through the joint accounts. They also argue that after considering all the money she received from the joint accounts, less her cost of care, she was actually left with a sum that approximated one half of the proceeds of sale of the Property. It is argued that this was Francesco’s estate plan.
[43] The uncontested facts do not support this theory. Francesco severed the joint tenancy. This shows that he wanted Concetta to benefit from one-half of the proceeds of the sale, irrespective of what bank accounts they held. When he withdrew the sum of $500,000 in 2014, he would have had no idea what the balances of the joint accounts would be on his death one year later. He would not have been able to calculate the amount that would have been left to her after taking into consideration Concetta’s cost of care, thus ensuring that she received one-half of the proceeds of sale.
D. Damages for Breach of Fiduciary Duty
[44] Fiduciary relief is equitable in nature. Remedies for breach of a fiduciary duty are discretionary, depending on the facts before the court, and generally have two goals: restitution and deterrence: Mady Development Corp. v Rossetto, 2012 ONCA 31 at 18.
[45] Compensation for breach of fiduciary duty is typically determined according to restitutionary principles, where the Plaintiff is entitled to be put in the same position had the breach not occurred. That being said, for compensation to be awarded for breach of fiduciary duty, the Plaintiff must establish that the defendant’s breach caused the plaintiff’s loss: Stirrett v Cheema, 2020 ONCA 288 at 65, 68.
[46] The goal of deterrence is of particular importance where the beneficiary suffers no identifiable loss: Mady at para. 20.
[47] The damages for the transfer of $500,000 is clear and quantifiable. One-half of this amount, plus one-half of any interest earned on this sum should be paid to the Concetta Estate. When Account M53 was closed on February 9, 2015, the balance was $505,323.28. Accordingly, one-half of the interest earned, being $2,661.64 should be paid to Concetta’s Estate as well.
[48] From February 9, 2015, the principal of $500,000 was again moved to Account M910, where it continued to earn interest of $671.44 until April 22, 2015 when $50,000 was withdrawn. One-half of this interest should be paid to the Concetta Estate. By July 15, 2015, when the rest of the funds were withdrawn, an additional $782.26 in interest was earned on the remaining $450,000. That sum should be grossed up to the sum of $869.18, which, using the same rate of interest, would have been the sum earned had the $50,000 not been withdrawn. One-half of that should be paid to Concetta Estate as well. Accordingly, in addition to the principal sum of $250,000, the Concetta Estate is entitled to interest in the sum of $3,431.95.
[49] With respect to the sum of $60,446.37 left in Joint Account 9783, the damages are hard to quantify. At least $30,223.19 is attributable to Concetta, but we do know there were costs associated with her care, which are properly paid by her share of the proceeds of sale. Even conservatively, her costs of care would have exceeded that sum. In these circumstances, it is difficult to ascertain whether the breach of the fiduciary duty actually caused damages to occur.
[50] Accordingly, while Francesco did breach his fiduciary duty with respect to how he handled the remaining funds in Joint Account 9783, it is difficult to find that his breach caused the damages, if any, with respect to the amount remaining. In any event, Concetta received the entire proceeds of this account on Francesco’s death.
E. Payment of Damages
[51] When Lugonia closed Account M910, she did so as the surviving joint account holder. Nonetheless, the facts of this case clearly establish that she was holding these funds for the benefit of the Francesco Estate. She contributed nothing to these accounts. The proceeds of sale of the Property was clearly traceable through Joint Account 9783 to Account M53, to Account 2852, and to Account M910 from which they were dispersed. Of the $500,000 plus interest that was dispersed, $409,642.66 has been paid into court plus another $50,000 retained by Lugonia. Accordingly, any damages to be paid by the Francesco Estate should come from the monies being held in court. If the monies being held are insufficient to satisfy any judgment, plus costs, the remaining damages or costs should be paid from the $50,000 held back by Lugonia, in contravention of the Price Order.
V. Conclusion
[52] For the foregoing reasons, I make the following orders:
a) The late Francesco Angeloni breached his fiduciary duty to Concetta Angeloni by keeping for his own benefit a portion of Concetta’s one-half share of the proceeds of sale of the Property;
b) The Francesco Estate shall pay to the Concetta Estate the sum of $253,431.95, being the principal sum of $250,000 plus interests of $3,431.95 up to July 15, 2015;
c) The Francesco Estate shall pay to the Concetta Estate pre-judgment interest from July 16, 2015 to the date of this judgment, in accordance with the Courts of Justice Act, R.S.O. 1990, c.C.43, which shall be paid from the funds currently held in court to the credit of this application;
d) Any unsatisfied outstanding costs orders in the Applicant’s favour, that pre-date this judgment, shall also be paid from the monies held in court to the credit of this Application;
e) The remaining monies being held in court shall remain until which time the issue of costs is decided;
f) The parties are encouraged to resolve the issue of costs themselves. If they are unable, both parties shall provide their written costs submissions, limited to 2 pages, double spaced, single sided, exclusive of Costs Outline and case law, to be served and filed no later than 4:30 pm. on May 14, 2021. Any responding written submissions, with the same size limitation, shall be served no later than 4:30 p.m. on May 28, 2021; and
g) The remainder of the application is dismissed.
Fowler Byrne J.
Released: April 27, 2021
COURT FILE NO.: CV-15-5735-00
DATE: 2021 04 27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CONCETTA ANGELONI by her estate representatives CALOGERO CINO and MARIA DI STEFANO
Applicants
- and -
ESTATE OF FRANCESCO ANGELONI, MARIA LUGONIA, LILIANA PALERMA, DORA POLLA, MIMMA SISTI, FERNANDO ANGELONI, FRANCA PONARI and TERESA PONARI
Respondents
REASONS FOR JUDGMENT
Fowler Byrne J.
Released: April 27, 2021