Kuehl v. Ross, 2021 ONSC 4251

COURT FILE NO.: 202/12

DATE: 20210614

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Nancy-Lee Kuehl and Paul Schaefer, personally, and Nancy-Lee Kuehl, David Barry Kuehl and Paul Schaefer as Estate Trustees for the Estate of Budd Eldon Kuehl

Plaintiffs

– and –

Heather J. Ross and The Ross Firm Professional Corporation

Defendants

Philip B. Cornish, for the Plaintiffs

Sandra L. Barton and Holly V.A. Cunliffe, for the Defendants

HEARD: November 13, 14, 15, 18, 19, 21, 22, 2019, November 2, 3, 4, 5, 6, December 9, 15, 16, 17, 2020

Justice R. Raikes

[1] This is an action for damages for negligence, breach of fiduciary duty, and defamation.

[2] The claim centers around Budd Kuehl’s last Will and Testament, a mortgage transaction with a local credit union, the defendant’s brief representation of the Estate, and correspondence written by Heather Ross in the course of her representation of Budd Kuehl and after her retainer by the Estate was terminated.

[3] The trial in this action was lengthy and spread out in time for reasons beyond anyone’s control. This decision includes my reasons for granting leave to amend the statement of defence mid-trial. There is one evidence ruling that will be released separately but at the same time as this decision.

The Parties

a. Plaintiffs

[4] Nancy Kuehl (hereafter “Nancy”) and her brother, David Kuehl (hereafter “David”), were adopted at a very young age by Budd and Leah Kuehl.

[5] Nancy is 62 years old. She is married to the plaintiff, Paul Schaefer (hereafter “Paul”). Together they have a daughter, Amanda, born in 1997. Nancy was a Registered Nurse. She worked for many years in Huron County doing community nursing. She and Paul lived in Florida for three years where she also worked as a nurse.

[6] From 2002 to 2007, Nancy had a substance abuse problem and, as a result, she gave up her nursing licence in 2006. To her credit, she has worked very diligently since 2007 to overcome her addiction issues.

[7] Paul is a master upholsterer. For much of his working life, he did custom upholstery work including on boats, automobiles, and jets. From time to time he worked in the United States. Paul had a workshop at home where he did some custom work. More recently, Paul stopped working for health reasons.

[8] David worked as a carpenter with his father starting when he was 15 years old. He was not steadily employed and has been receiving disability payments for his back since 2006. David resides in a house on North St. in Clinton. During his life, David has had problems with addiction to alcohol that led to criminal charges.

[9] Budd Kuehl (hereafter “Budd”) was 82 years old when he died. He was survived by his wife, Leah Kuehl (hereafter “Leah”), and his children, Nancy and David. By then, Leah was living in Huronlea, a long-term care facility in Brussels, Ontario. Leah suffered from advanced dementia in the form of Alzheimer’s. She died May 28, 2016.

[10] Budd was a hydro inspector. He transferred to the Clinton area in 1962. He worked for Clinton Hydro for several years until he transferred to Sault Ste. Marie. He retired back to Huron County in 1992. Before he transferred to Sault Ste. Marie, Budd owned and operated a construction business, Huron Pines Construction, an electrical business, Huron Pines Electrical, and a realty business, Huron Pines Realty. Leah worked in the realty business selling real estate. After they moved north, she stopped working.

[11] By all accounts, Budd was a force of nature. He was described by Nancy as robust, gregarious, generous, and larger than life. He adored Leah and his children and grandchildren. Family was very important to Budd. When Budd decided something needed doing, he saw it done. Because of his background in construction and the trades, he was very particular about repairs and renovations.

[12] Leah is not a party to this action, nor is her Estate, but her circumstances are material to the events in this litigation. Leah lived with Budd in their home on Forest Ridge St. in Bayfield until the Fall of 2009. At that point, she was admitted to the Clinton Hospital. She remained there until a bed was available in Seaforth. She was in Seaforth for four to five weeks before she was admitted to Huronlea. She resided there until her death.

[13] Before Leah’s admission to hospital in Clinton, Budd and the family did their best to care for her at home but that was an increasingly difficult and exhausting effort. Leah had cardiac problems. Her dementia advanced significantly. She could not feed herself, get dressed or bathe on her own. She would sneak out of the house and wander.

[14] Nancy helped her father with Leah’s care. She lived nearby - a five-minute drive away. After she put Amanda on the bus for school in the morning, Nancy would go to her parents’ home to help care for Leah.

[15] Nancy, Paul, and David are Estate Trustees under Budd’s Last Will and Testament. The three Estate Trustees bring this action on behalf of the Estate of Budd Kuehl. Nancy and Paul also sue in their personal capacities.

b. Defendants

[16] Heather Ross was called to the Bar in 1986. She retired from the practice of law in 2018. She was, at all material times, a lawyer and principal in the defendant, The Ross Firm Professional Corporation (hereafter “the Ross Firm”).

[17] As at 2010-2011, Ms. Ross’ practice focused on real estate and wills and estates. Before 2007, she did a mixed bag of litigation and solicitor’s work. Ms. Ross was a Bencher for the Law Society for 24 years. She also sat as a Small Claims Court judge in Stratford and Goderich for nine years.

[18] Ms. Ross is married to Paul Ross, also a lawyer and founding member of the Ross Firm. Mr. Ross was Budd Kuehl’s primary lawyer at the Ross Firm until 2010. Over the years, the relationship between Budd and Paul Ross went beyond completing occasional transactions. Budd used to stop by the Ross Firm from time to time without an appointment just to chat. Their conversations included Budd talking about his children, their challenges, and their successes.

[19] Ms. Ross first met Budd and Leah Kuehl through her husband in the 1970’s at social get togethers. She first acted for Budd in 2010. She never acted for or performed any legal services for Leah before 2011. In the Fall of 2010, Heather Ross was asked by Paul Ross to assist Budd by drafting a new will and acting for Budd on the mortgage financing transaction on Nancy’s home.

[20] Heather and Paul Ross’ son, Quinn Ross, is also a lawyer at the Ross Firm. He did occasional legal work for Budd and David. He provided independent legal advice to Budd on the refinancing of Nancy’s home in 2010.

Title to Real Property

[21] In June 1988, Budd and Leah acquired title as joint tenants to their matrimonial home on Forest Ridge St. in Bayfield (hereafter “the Forest Ridge property”). When Budd died, title to that property transferred to Leah as the surviving joint tenant and, as a result, that asset did not form part of Budd’s estate.

[22] On November 1, 2000, Nancy acquired title to the property at 78451 Bluewater Highway, R.R. #1, Bayfield (hereafter “the Bluewater property”). On the same date, Nancy gave a charge over that property to the Clinton Community Credit Union Limited. That lender subsequently changed its name to the United Community Credit Union Limited (hereafter “UCCUL” or “the credit union”).

[23] On February 29, 2008, David and Budd acquired title as tenants in common to the property at 134 North St. S., in Clinton (hereafter “the Clinton property”). Budd held a 1% interest. The property was purchased for $60,000. The purchase price was financed by a charge in favour of UCCUL registered on title the same day in the amount of $61,860. Budd and David were jointly and severally liable for that debt.

[24] Thus, as of September 2010, Budd and Leah jointly owned the Forest Ridge property, Nancy was the sole registered owner of the Bluewater property, and David and Budd owned the Clinton property as tenants in common. All three properties were encumbered by separate charges registered in favour of UCCUL.

Wills and Powers of Attorney

a. Leah

[25] Paul Ross prepared mirror wills and powers of attorney for Budd and Leah in early 2002. Leah executed her Last Will and Testament and the Powers of Attorney (2) on January 29, 2002. Her signature was witnessed by Paul Ross and an assistant at the Ross Firm.

[26] The salient features of her Will are:

• Budd was named sole Executor and Trustee under the Will.
• If Budd predeceased her, Nancy and Paul Ross were appointed Executors and Trustees.
• All property of any kind was bequeathed to Budd.
• After payment of her debts and expenses, she made charitable bequests to five organizations totalling $4,500 and bequests to her four grandchildren totalling $30,000.
• The residue of her estate was to be divided equally between her children.

[27] Leah appointed Budd to be her attorney for personal care and her attorney for property. Although it was Mr. Ross’ usual practice to name one or more alternates in powers of attorney in case the primary attorney was unable or unwilling to act, no alternates were named in Leah’s Power of Attorneys.

[28] When Budd died in November 2010, Leah’s Power of Attorneys lapsed. A guardianship application was required for either Nancy or David to have the legal authority to deal with Leah’s assets or to make decisions regarding her personal care.

b. Budd

[29] Budd signed a Last Will and Testament on January 29, 2002. The terms are the same as Leah’s Will of the same date except that Leah was to be his Executrix and Trustee, and she was to be the principal beneficiary.

i. 2007 Will

[30] Budd replaced the 2002 Will with a new Will signed on September 24, 2007. The key terms of that Will are as follows:

• Quinn Ross of the Ross Firm was appointed his Executor and Trustee.
• If Quinn Ross was unable or unwilling to act, Paul Ross was appointed in his place.
• The residue of his Estate was payable to Leah provided she survived him by 30 days.
• If she did not survive him by 30 days, the residue was to be divided between his children.
• There were no bequests to grandchildren or charities.

[31] While family was preferred for the role of Estate Trustee and Executor, Budd did not want to use his children. Paul Ross recommended his son, Quinn Ross, a lawyer at the Ross Firm because he was younger. Paul Ross was nearing 70 years old. Paul Ross agreed to be the alternate Executor and Trustee at Budd’s insistence.

[32] Mr. Ross prepared an Acknowledgement and Direction that Budd signed the same day as he signed the new Will. It stated:

I, Budd Eldon Kuehl, hereby acknowledge and confirm that my spouse Leah Florence Kuehl suffers from the onset of some form of dementia. This has left her with diminished capacity. Paul Ross has advised me that the best person or persons to act as Estate Trustee and Attorney in my Power of Attorney would be a family member or friend. He has explained to me that as Estate Trustee or power or [sic] attorney who is not a family friend or relative will charge compensation for their services as Estate Trustee or Attorney in my Power of Attorney.

I have considered both of my children and feel that they are incapable of carrying out the duties of Estate Trustee or Attorney in my Power of Attorney.

I have specifically directed Paul Ross to name Quinn Martin Ross as my Estate Trustee and Attorney in my Power of Attorney for Property. I have asked Paul Ross to act as my substitute in both my will and Power of Attorney for Property.

[33] Mr. Ross testified that Budd stopped in to visit and chat with him at his office from time to time between 2002 and 2010. In those discussions, Budd informed him of Leah’s struggles with dementia. He also talked about his children, Nancy and David.

[34] I accept that Budd spoke with Mr. Ross during the 2002-2010 timeframe about personal matters. During those chats, he told Mr. Ross that his children were not good with money, that they regularly came to him for money to help them out, that he gave them money and helped as he could, and that both of his children had struggles with addiction.

ii. 2008 Will

[35] Budd executed another Will on May 30, 2008. It replaced and superseded the September 24, 2007 Will. The 2008 Will provided that:

• Budd’s son, David, and Quinn Ross were appointed Executors and Trustees.
• After payment of debts and expenses, Budd’s 1% interest in the Clinton property was to be transferred to David.
• The residue was to be transferred to Leah for her use absolutely.
• If Leah died before distribution of the Estate, the following bequests applied:
  • $25,000 to David
  • A total of $17,000 to three grandchildren
  • A total of $5,000 in charitable donations
  • The residue to be split equally between his children.

[36] The bequest of $25,000 to David is noteworthy. It states:

Whereas over the years, I have given cash gifts to my daughter but I have given no such gifts to my son, TO PAY to my son, David Barry Kuehl, the sum of twenty-five thousand dollars ($25,000) for his use absolutely. [Bold in original]

[37] I observe that the above provision evidences that some of the monies historically advanced by Budd to Nancy were gifts, not loans. To be clear, that does not equate to a finding that all monies or substantially all monies advanced by Budd to Nancy were given as a gift and were not repayable.

[38] Budd also executed a Continuing Power of Attorney for Property and Power of Attorney for Personal Care on May 30, 2008. He appointed David as his Attorney for Property and Nancy as his Attorney for Personal Care.

[39] The 2008 Will and Powers of Attorney were prepared by Paul Ross. He was a witness to Budd’s signature on all three documents.

c. Budd’s Final Will

[40] In the Fall of 2010, Budd came to Paul Ross to change his Will again. Mr. Ross asked Heather Ross to handle it because he was winding down his practice.

[41] According to Mr. Ross, he would have had a meeting with Heather Ross in which he advised her of the history of Budd and Leah’s reluctance to involving Nancy and David in their estates. The issue of their addictions would have come up but more important was their inability to handle money.

[42] Before he testified, Mr. Ross reviewed some of the documents adduced in this trial and spoke with Ms. Ross to refresh his memory. He was testifying to events that happened 10-18 years earlier. Understandably, there was much that he could not recall with specificity. He had, at best, a general recollection of his various discussions with Budd and of the meeting with Ms. Ross in 2010.

[43] Ms. Ross testified that Mr. Ross provided her with background and a synopsis of the work that had been done for Budd earlier. Mr. Ross informed her that there were two recurring issues for Budd with respect to his children: their historic substance addictions and mismanagement of money. The latter was the predominant concern. He also told her that Leah was suffering from some sort of dementia. There was no memorandum done nor any notes taken of that meeting.

[44] I find that by the time Ms. Ross first met with Budd to discuss his wishes regarding the new Will, she was alive to concerns about Nancy and David’s ability to manage money and their history of substance abuse through her discussion with Mr. Ross. Those concerns were partly re-enforced by Budd when she met with him.

i. Instructions

[45] Ms. Ross first met with Budd on or about October 11, 2010 concerning the new Will. A student at the firm was present. Budd asked Nancy to accompany him to Ms. Ross’ office. He drove. He and Nancy went into an office with Ms. Ross.

[46] Almost as soon as he sat down, Budd started to instruct Ms. Ross about a gift to a church camp. Nancy interjected. She indicated that he did not have to do that; that they would see that it happened. Ms. Ross immediately asked Nancy to leave the room.

[47] Ms. Ross testified that she explained to Nancy why she asked her leave. She told Nancy that she was concerned that there was a risk that other beneficiaries could later accuse Nancy of duress or undue influence. Ms. Ross was concerned that Nancy was trying to tell Budd what he should or should not put in his will. According to Ms. Ross, Nancy was unhappy but left the room.

[48] Nancy’s version of the meeting is substantially similar although she did not indicate that Ms. Ross provided any explanation for asking her to leave. She described it as a “huge miscommunication”. She left the room and waited outside the building for Budd.

[49] In my view, it was prudent and appropriate for Ms. Ross to ask Nancy to leave the room to ensure that Budd’s instructions reflected his wishes and were not influenced by Nancy. By the same token, I do not accept that Nancy was attempting to exercise duress or undue influence over Budd during that meeting. Any suggestion that she did so is a gross mischaracterization.

[50] Ms. Ross testified that Budd’s priority as expressed by him was to ensure that Leah was properly cared for after he died. To that end, he wanted all his assets to be available for that purpose until Leah died. Once she died, he wanted his children to share equally, but wanted their shares to be used first to pay down any mortgage debt. He directed Ms. Ross to remove the $25,000 gift to David and all bequests to charities and grandchildren found in the 2008 will.

[51] Budd advised Ms. Ross as follows during the meeting:

1. He understood from Nancy that her addiction issues were no longer a problem and he was satisfied on that point.
2. He wanted David to have the 1/100^th interest he held in the Clinton property. He had only taken that interest so that he could be on the mortgage because David would not have otherwise qualified for it.
3. His assets were to be held in trust for Leah’s benefit until she died.
4. The matrimonial home was held jointly.
5. He wanted the shares of the residue to be used to pay down mortgage debt because it would give Nancy and David greater security.

[52] There is no allegation that Budd was incapable when he gave instructions and later executed his Will. He impressed Ms. Ross as someone who knew exactly what he wanted to do and why. He was experienced in legal matters. She described him as “nobody’s fool”. His instructions and his rationale for same were clear.

ii. Execution of Will

[53] Budd signed his last and final Will at Ms. Ross’ office on October 15, 2010, slightly more than a month before he died. When he attended that day, he directed Ms. Ross to put back in the small bequests to charities and grandchildren.

[54] The material terms of the 2010 Will are:

• Nancy, David, and Paul were appointed Estate Executors and Trustees.
• After payment of his debts and expenses,
  • Budd’s 1% interest in the Clinton property was to be transferred to David,
  • The residue was to be held in trust for Leah’s benefit during her lifetime, and
  • Upon Leah’s death, modest amounts were to be paid to grandchildren and the same charities as in the 2008 Will, and the residue was to divided equally between his children subject to the proviso that each child’s share was to be “first used to pay off any mortgages owed solely, jointly or severally by such child to the fullest extent possible”.

[55] The trust for Leah states:

If my spouse, LEAH FLORENCE KUEHL, is alive at my death, I direct my Trustees to hold the residue of my estate (hereinafter called “LEAH FLORENCE KUEHL’S Trust”) to the benefit of LEAH FLORENCE KUEHL during her lifetime. My Trustees shall set aside LEAH FLORENCE KUEHL’S Trust and keep it invested and the whole or such part of the net income derived from LEAH FLORENCE KUEHL’S Trust, as my Trustees in their absolute discretion deem advisable, shall be paid to or for the benefit of the said LEAH FLORENCE KUEHL. I direct that any income not paid out to or for the benefit of LEAH FLORENCE KUEHL in any year shall be added to the capital of LEAH FLORENCE KUEHL’S Trust and treated as part thereof. In addition, I authorized my Trustees to pay such amount or amounts out of the capital of LEAH FLORENCE KUEHL’S Trust to or for the benefit of LEAH FLORENCE KUEHL as they in their absolute discretion consider advisable. In the exercise of their discretion, I direct my Trustees shall take into account the needs of my said spouse that cannot be met through her own assets and income and other benefits to which she is entitled. I direct that my said spouse at no time shall be held to have a vested interest in any of the income or capital of the said residue.

[56] At the time Budd provided instructions to Ms. Ross for his Will and signed same, he was involved in Nancy’s refinancing of her mortgage with the credit union to fund renovations to her home. Ms. Ross acted for Budd on that transaction as well.

[57] Because of the renovations, Nancy, Paul, and Amanda resided with Budd in his home starting in August or September 2010. They continued to live with him to the date of his death. According to Ms. Ross, Budd expressed that he was not happy with those living arrangements.

[58] Over the years and in 2010, Budd repeatedly expressed concern and frustration about his children’s poor financial management skills to Paul Ross and later to Heather Ross. He indicated that his children regularly came to him for money.

[59] To be clear, the statements made by Budd to Paul Ross and Heather Ross about his children - their addiction issues, David’s troubles with the criminal justice system, their spending, and their financial management skills - are hearsay and were not adduced for their truth. Rather, those statements are part of the narrative and informed what the lawyers understood the family dynamics to be, their understanding of Budd’s wishes, the advice that they provided to him, and their interactions with Budd’s children after his death.

[60] I will address the specific allegations against the defendants regarding the preparation and terms of the 2010 Will later in these reasons.

Refinancing of the Bluewater Property

Loan Application

[61] In May or June 2010, major improvements were made to the Clinton property. New windows were installed, a new roof was put on, walls were moved etc.. Budd arranged and paid for the work done. The improvements were funded through his line of credit with UCCUL. The cost was approximately $30,000.

[62] In September 2010, Nancy approached UCCUL for a loan of approximately $20,000 to fund a new roof and furnace for the Bluewater property. She spoke with Budd who went with her to the credit union to meet with the loans officer, Bev Britton. Budd had been a customer at UCCUL for 30 years and had an excellent credit history.

[63] The credit union arranged for an appraisal of the Bluewater property. The property was appraised as at September 14, 2010 on an “as is” basis. The appraised value was $220,000. The appraisal report indicated that the house was in below average overall condition. It needed a new roof and furnace, and the living room needed some drywall on the ceiling.

[64] The credit union was prepared to lend $60,000 provided Budd went on title to the Bluewater property and was a co-borrower. The loan would be at a significantly lower interest rate because of Budd’s long and excellent history with UCCUL. Nancy estimated the interest rate difference to be 4%.

[65] By September 21, 2010 when the loan application was signed, the new roof had been installed, the only bathroom in the house had been gutted, and the new furnace and new windows had been ordered. Budd indicated that some re-wiring would be needed which would cost roughly $2,600. Because Budd still had contractor status, he had ordered materials and was coordinating the trades. Nancy asked Budd to hold off until the refinancing was done but he went ahead with the new roof and paid the roofer using his line of credit.

[66] Nancy and Budd each signed a loan application. The applications are substantially the same except for the page where their respective assets and liabilities are listed. Nancy’s application shows that the balance then owing on the existing credit union charge on the Bluewater property was $82,543.89. Thus, she had equity in the Bluewater property of $137,456.11.

[67] Budd’s signed application indicates that the value of the Forest Ridge property was $325,000. There was a mortgage in favour of the credit union that had a balance owing of $59,158. He also had a separate line of credit with the credit union on which $79,888 was owed.

[68] The loan applications completed by Ms. Britton and signed by Nancy and Budd indicate that the $60,000 to be borrowed was to be used as follows:

$20,000 to pay debt owing by Nancy to Budd $6,600 for the roof $7,800 for the new gas furnace $8,000 for new windows $15,000 for the new bathroom $2,600 for wiring.

[69] In her testimony in-chief, Nancy indicated that she owed her father $10,000 for money he advanced her in June 2010 to buy a new truck and $6,600 paid by him for the new roof. Later in her examination, she acknowledged owing her father $20,000 and had no issue with that amount going into her father’s account. The $20,000 is a far cry from the amount alleged to be owing to Budd by Nancy and Paul in correspondence sent by Ms. Ross to David Murray in October 2010.

[70] On the loan applications under “Liability Remarks”, Ms. Britton wrote:

Bud has in his Will that both son and daughters mtgs [mortgages] are to be paid in full upon his death

This mtg [Nancy’s] is constantly in arrears so feel that if Bud on mtg it will always to be paid [sic]on time

Bud is married but wife in nursing home her pensions totally cover her expenses

Gave special rate as Bud has been a member with United for over 30 years and has always paid as agreed.

[71] The information concerning Budd’s Will was provided by Budd. I note that the loan application pre-dates his Will instructions to Ms. Ross and his execution of the 2010 Will which, for the first time, provided that the residue would be used to pay down mortgages owing by Nancy and David.

[72] Under “Final Remarks”, the loan application indicated that Budd was to get independent legal advice (“ILA”) as he would be going on the deed to the property. There were no discussions between Ms. Britton and Nancy and/or Budd as to what percentage interest Budd would hold in the Bluewater property or whether it would be as tenant in common or as joint tenant.

Loan Approved

[73] The loan was approved internally at the credit union on September 30, 2010. On October 6, 2010, Ms. Britton wrote to Nancy and Budd to advise that the loan had been approved (“loan commitment letter”) and attached Schedule “A” containing the terms and conditions to the loan, one of which required that Budd have ILA.

[74] Ms. Britton was called as a witness by the plaintiffs. She is no longer with the credit union. She has had significant health issues including shortly before she testified. Ms. Britton recalled little of the meeting(s) with Nancy and Budd leading to the loan application.

[75] Ms. Britton testified that:

• Budd regularly visited the credit union. She saw him roughly three times a week. He was lonely and came in to chat about personal matters.
• Nancy would not have been approved for the loan without Budd.
• Nancy had a history of not paying on time. When that happened, Ms. Britton tried reaching her by telephone to collect what was owing but those calls were not returned.
• Nancy had a poor credit score. The Credit Union was concerned that Nancy did not take her debts seriously.
• Budd had to be on the mortgage. They trusted that he would pay on time if she did not.
• The loan had to be approved by someone else as it was outside her approval limits.
• She had no role after the loan commitment letter was sent out. She did not prepare the terms and conditions to the loan.
• She did not prepare the instructions to counsel for the transaction; that was done by the “back office”.
• She had no idea whether the credit union required that Budd take a 50% interest as tenant in common of the Bluewater property. She only knew that he needed ILA.

[76] In her testimony, Nancy denied that she was not good with money; if anything, any money issues she had came about because she spent so much time helping her father care for her mother while Leah was still at home. She testified that she became worried in 2010 that her father was spending recklessly. He was buying Publishers’ Clearing House magazines and groceries far in excess of what he needed.

[77] I do not accept Nancy’s evidence on this point. The evidence indicates that Budd fervently believed in paying off debt. He managed his finances well. He had an excellent credit history and was well-regarded by the credit union. He paid for whatever he bought in a timely way. It distressed him that his children seemingly lacked the same fiscal discipline.

[78] Regardless the reason, Nancy was not prudent with money. She did not pay her debts in a timely manner. For example, when the refinancing was completed, she owed $7,064 in property tax arrears and roughly $800 for a sanitation bill that she claimed not to realize was unpaid. She had a poor credit history including with the credit union that held the mortgage on her home. I find that Nancy and Paul regularly turned to Budd for financial assistance including Paul’s use of Budd’s credit card to purchase materials and tools for his work.

Instructions re Title

[79] The loan commitment letter referred to Nancy and Budd as borrowers but did not specify that Budd was required to hold a 50% interest in the Bluewater property or that he must hold that interest as a tenant in common.

[80] On October 12, 2010, Jill McCullough, Administrator, at UCCUL faxed a letter to Heather Ross engaging her to act for the credit union in the preparation and registration of the new charge. Schedule A attached held the detailed instructions to counsel. The October 12, 2010 letter and the attached instructions were likewise silent as to the percentage interest Budd was required to hold in the Bluewater property and did not specify that he was to hold title as a tenant in common.

[81] How then did the 50% interest as tenant in common come about?

[82] Ms. Ross’ handwritten notes of October 15, 2010 set out information provided to her by Budd the same day she met with him to sign his Will. Those notes indicate that:

• Budd had a line of credit for $125,000 on which $80,000 was owing.
• Budd was a joint mortgagor on David’s house on which $60,000 was owing. He had a 1/100^th interest in that property.
• His children were “VERY BAD with $”.
• Both had addiction problems: Nancy with drugs and David with alcohol.
• Budd had “given” his children,
  • Nancy had received $50,000
  • David had received $20,000
  • Paul was using a Royal Bank Visa credit card that was in his name and Budd’s. There was $10,000 in outstanding charges incurred by Paul
  • In addition, Budd was paying property taxes and groceries for Nancy and Paul.
• Budd was paying for the roof on Nancy and Paul’s house - $5,000 had already been paid. He gave them the money to pay. More was owing.

[83] Ms. Ross’ handwritten notes set out the following instructions received from Budd on October 15 concerning the mortgage transaction:

1. The deed to the Bluewater property was to be held 1% by Budd and 99% by Nancy. (Ms. Ross corrected an error in the note that had the percentages reversed.) I note that this corresponds to his interest in the Clinton property.
2. He wanted an agreement with Nancy and Paul to acknowledge all the monies that he had loaned them or paid on their behalf.
3. The agreement must provide that the whole mortgage advance was to go to Budd c/o the Ross Firm in trust. $30,000 of that money would go on Budd’s line of credit. The remainder would be used to pay for the renovations at Nancy’s home which were itemized. Any money left over was to go to Budd.
4. He wanted proof that Nancy had paid the remaining $3,000 due to the roofer.
5. His line of credit at UCCUL was to be capped and reduced.
6. The credit card he shared with Paul was to be cancelled and paid off.

[84] Ms. Ross testified that that same day, but after her meeting with Budd, she had a telephone conversation with Ms. Britton in which Ms. Britton instructed her that Budd was to hold a 50% interest as tenant in common to the Bluewater property. No confirming letter was done to Ms. Britton or to Budd. No memorandum to file was done. Ms. Ross relies on her recollection and an undated handwritten note.

[85] The note has Bev Britton’s name in the top right corner and says “instructions” under “Credit Union”. The words “tenant in common” are not present but “50% - ownership” are. The note detailed amounts to be paid, and the amount drawn down on Budd’s line of credit per Ms. Britton.

[86] On October 18, 2010, Ms. Ross met with Budd and Nancy. She explained that she could not act for both. She suggested that Nancy get other counsel. As a result, Nancy told Ms. Ross that she would go to David Murray, the lawyer who acted for her when she purchased the Bluewater property.

[87] Ms. Ross’ docket for October 18, 2010 indicates:

To meet with client re mortgage – daughter does not want title in joint name – not necessary’ explained to client that this is required of mortgagee; to meet with client and daughter to explain Conflict of Interest; to telephone call to Dave Murray [Italics added.]

[88] Ms. Ross called David Murray on October 18, 2010. She informed Mr. Murray, inter alia, that:

1. She would be acting for Budd on the mortgage transaction.
2. Budd was to go on title as a 50% owner.
3. Nancy and Budd were borrowing an additional $60,000.
4. Budd had a line of credit for $109,000 which was at $96,000. Most of that debt had been used to help Nancy.
5. $40,000 of the $60,000 being advanced would go to Budd’s line of credit.
6. There was an outstanding oil bill in collection and arrears of roughly $3,000 in property taxes.
7. Paul was using Budd’s credit card.
8. $20,000 was to be used for renovations to Nancy’s house and Budd was to control the money. An agreement was needed between Budd and Nancy.

[89] On October 19, 2010, Ms. McCullough sent a letter to David Murray to engage him to act for UCCUL and attached the same mortgage instructions previously sent to Ms. Ross. Any alleged instructions by Ms. Britton that Budd hold a 50% interest as tenant in common did not find their way into the instructions to Mr. Murray.

[90] Ms. McCullough was called as a witness by the plaintiffs. She testified that:

• In 2010, she worked in what was known as the “back office” doing mortgage instructions, payouts, and administration. In that role, she had no direct dealing with customers. She could not change or add to loan application documents.
• Once borrowers signed and accepted the mortgage terms, she created the mortgage instructions to send to the lawyer.
• She prepared the letter to Ms. Ross dated October 12, 2010 and the accompanying mortgage instructions. Ms. Britton, as lender, would have advised who to send the letter and instructions to.
• She did not know why the instructions to the lawyer had to be re-sent to Mr. Murray after they were sent to Ms. Ross.
• She had no direct dealings with Heather Ross.
• Budd required ILA because he was not going to be living at the property. The credit union’s policy was if someone was going on the mortgage but not benefitting from the loan, he or she required ILA.
• Budd was to be added to title. She assumed that was because Nancy could not afford the mortgage on her own.
• The instructions say nothing about Budd going on title but if he was going on the mortgage, it meant the same thing.
• There was no specific direction provided to say how Budd was to go on title – joint tenant versus tenant in common.
• There was no specific direction provided as to what percentage interest of title he was required to hold.
• The lawyers were not authorized to deviate from the mortgage instructions provided without direction from the credit union. She was not aware of any change to the instructions she provided to counsel.
• It was open to the parties to seek clarification from the credit union regarding the terms of the mortgage.
• The credit union could provide further instructions on the form of title, if asked. If the credit union did so, there was nothing to prevent the parties from completing the transaction in accordance with those further instructions.

[91] I find Ms. McCullough to be a credible and reliable witness. She answered questions directly and thoughtfully. Her evidence was clear, cogent, and consistent internally and with the documents. I accept her evidence.

[92] On October 19, 2010, Nancy left a voicemail message for Mr. Murray to tell him that she wanted him to act for her on the mortgage transaction and Ms. Ross would fax the paperwork.

[93] Ms. Ross wrote Mr. Murray the same day. She provided the mortgage instructions she had received, the current parcel register, and a copy of the appraisal. In her letter, Ms. Ross advised that:

1. title was to be placed in Nancy and Budd’s names as tenants in common each as to a 50% interest;
2. the mortgage funds would be paid to his firm in trust and from those funds, the existing mortgage, his fees and disbursements and two debts owed by Nancy were to be paid. One was the property tax arrears;
3. a draft Direction and Agreement was enclosed for Nancy to sign to pay the net mortgage proceeds to the Ross Firm in trust “with Budd Kuehl receiving $40,000.00 to pay down his line of credit which line of credit represents money he has loaned to his daughter Nancy-Lee with the expectation it be repaid”;
4. the remainder of the net mortgage proceeds would be held by her firm in trust to be used for renovations to Nancy’s house, to be paid out on Budd’s direction based on invoices from third party contractors; and
5. any balance in the trust account after payment of the above was to be divided equally between Budd and Nancy.

[94] Ms. Ross did not specify that it was the credit union that required title to held in this manner; in fact, she made no mention of any change to or clarification received regarding the instructions to counsel from the credit union. She also did not refer to her conversation with Ms. Britton.

[95] Did the credit union require that Budd hold a 50% interest in the Bluewater property as tenant in common? Neither the documents from the credit union or the testimony of Ms. Britton corroborate that direction. The plaintiffs dispute any such direction or instruction was provided by the credit union and contend that this is something Ms. Ross concocted on her own initiative.

[96] Ms. Britton was told by defence counsel in cross-examination that Ms. Ross would testify about information provided to her by “someone” at the credit union about how Budd was to take title. Ms. Britton immediately responded that she had no such conversation with Ms. Ross; that was an issue she would have passed along to her boss or her boss’ boss.

[97] Ms. Britton was clearly trying her best to accurately recall events of nearly 10 years ago concerning a loan transaction among the many she did while with the credit union. Her unfortunate illness since 2010 no doubt made that more difficult. Her credibility is not in issue, but her reliability is. I observe that there were gaps in her recollection of what she was told by Budd and Nancy and what she inputted into the loan application.

[98] The only evidence that the credit union required that title be held in that manner comes from Ms. Ross. The conversation could have and should have been properly documented by way of a letter to Ms. Britton or someone at the credit union to confirm that instruction to counsel. At a minimum, a memorandum to file detailing the alleged call would have been helpful. As it is, Ms. Ross has only her recollection and the undated handwritten note that says 50% ownership.

[99] Although Ms. Ross’ letter to Mr. Murray on October 19, 2010 made no reference to the credit union as the source of the requirement that Budd go on title holding a 50% interest as tenant in common, she certainly indicated same in her letter to Mr. Murray of October 22, 2010.

[100] If no such instructions were provided by the credit union, Ms. Ross was taking a huge gamble that Mr. Murray would not call the credit union to verify that it “required” that title be held in that manner. His telephone worked. He could have called UCCUL for clarification. He did not. He was not asked whether he relied on Ms. Ross’ representation regarding title.

[101] It is open to me to accept all, some, or none of any witness’ evidence. I am troubled by the poor memorialization of the title instructions from the credit union; however, I accept Ms. Ross’ evidence that she spoke with Ms. Britton and was told that the credit union required that Budd hold a 50% interest in the Bluewater property as tenant in common. In coming to that finding, I prefer Ms. Ross’ evidence on this point to that of Ms. Britton who seemed to struggle recalling details of what was communicated so long ago. The handwritten note corroborates the direction that she received, and her subsequent actions and correspondence were consistent with that direction.

October 22, 2010 Letter by Ms. Ross

[102] As indicated, the October 19, 2010 letter from Ms. Ross called for payment of $40,000 of the mortgage proceeds to Budd for monies “loaned to” Nancy and Paul.

[103] Mr. Murray spoke with Nancy by telephone on October 20, 2010 and advised her of the letter received from Ms. Ross. Nancy was upset by the letter. She told Mr. Murray that her father did not want this and that her father held only a 1% interest in David’s property.

[104] Mr. Murray agreed to email the correspondence from Ms. Ross to her including the attachments. She told him that she would get back to him after she had reviewed them and spoken to her father.

[105] She spoke with her father after she received Ms. Ross’ letter. From those discussions, she understood that Budd did not agree with what was being done, but told her not to worry because he was going to change his Will so that when he died, his 50% interest in the Bluewater property would be transferred to her. She testified that she trusted her father to do the right thing. She did not agree that she owed $40,000 to her father but it was a family decision to “help him” by letting him have the extra money.

[106] Nancy called Mr. Murray on October 21, 2010 and left a voicemail message. She indicated that: 1) she had received the October 19 letter but not the attachments, and 2) the 50-50 interest in the property was okay, but she was not prepared to agree to the funds being held by Ms. Ross’ firm.

[107] Nancy and Mr. Murray then spoke by telephone on October 21, 2010 after her message. She confirmed to Mr. Murray that she agreed to her father having a 50% interest in the Bluewater property but she wanted the net monies to be deposited to her father’s account instead of Ms. Ross’ trust account. She also advised Mr. Murray that her father’s 50% interest would come back to her when he died; that she would trust her father to change his Will and she did not need an option to purchase, an alternative discussed with Mr. Murray. Finally, she indicated that she would be “square” with her father when she paid him the $40,000.

[108] Mr. Murray then spoke by telephone with Ms. Ross on October 21, 2010. He relayed his instructions from Nancy. Ms. Ross advised him, inter alia, that there was no clause in Budd’s Will about transferring his interest in Nancy’s property to her when he died. Ms. Ross did not agree that the $40,000 extinguished Nancy’s indebtedness to Budd; rather, a set-off needed to be done of the debt owing to Budd by Nancy after the transfer to Budd of the 50% interest. Mr. Murray requested that Ms. Ross provide a letter confirming what was allegedly owing by Nancy and Paul to Budd so that the deal could be finalized.

[109] On October 22, 2010, Ms. Ross wrote to Mr. Murray, as requested, setting out her client’s position as to amounts owing by Nancy and Paul. She sent a copy of the letter to Budd the same day.

[110] A draft of that letter with extensive handwritten notations is part of Ex. 2. There is a handwritten note at the top of page one that says, “Meeting with Budd Kuehl Oct. 22, 2010”, that Ms. Ross indicated was in her clerk’s handwriting. The rest of the handwriting on the document was hers.

[111] I observe that Ms. Ross’ docket for October 22, 2010 is silent as to any meeting or conversation with Budd. The docket entry refers only to correspondence to Mr. Murray and her client. She indicated in her testimony that she did not docket all her time because she was charging a flat fee. I observe that her earlier dockets refer to meetings with clients and she took the time to docket the letter written on October 22.

[112] I do not doubt that Ms. Ross spoke with Budd at some point about what was owed to him by Nancy and Paul. She did not make up the amounts or the nature of the advances/loans in her October 22 letter from whole cloth. Whether that happened in person or by telephone on October 21 or 22 is unclear.

[113] In her October 22, 2010 letter, Ms. Ross indicated that:

• The source of her information concerning the alleged debts was Budd and Bev Britton.
• Budd had drawn down his line of credit with the credit union by $55,000 for the following:
  • $30,000 to pay credit card charges incurred by Paul on Budd’s Royal Bank credit card
  • $10,000 paid to the credit union for a loan for Nancy and Paul
  • $5,000 paid to the roofer
  • $10,000 for Nancy’s car.
• Paul had incurred a further $10,000 plus on Budd’s credit card.
• Budd had paid interest on his line of credit and credit card estimated at $5,000.
• Budd paid $5,000 toward the down payment and closing costs when Nancy purchased the Bluewater property.
• Budd paid debt for Nancy historically, the precise amount of which was not available but exceeded $10,000 at a minimum.
• The payment of the $40,000 from the mortgage proceeds was to be applied to the above debt.
• The new mortgage was to be $143,000 [the existing mortgage balance plus $60,000].
• The appraised value of the property was $220,000 which would generate net proceeds if sold of $200,000.
• The net equity was $57,000.
• After payment of the $40,000, Budd was still owed a minimum of $35,000.
• “The difference between what will be owed Mr. Kuehl and the available estimated equity is about $22,000 ($57,000 - $35,000) and we have not calculated anything for interest…”.

[114] Upon receipt of the October 22 letter, Mr. Murray contacted Nancy to come in to meet with him the same day. It was a Friday. She attended his office and received a copy of the letter. She was shocked and angered it.

[115] They went through the alleged debts item by item. It was clear to Mr. Murray that Nancy agreed that Budd had used his line of credit from time to time to assist them; however, she did not agree with the amounts in the letter and, in some cases, she asserted that the alleged debts were, in fact, gifts.

[116] At trial, Nancy testified that:

• With respect to the alleged $30,000 on her father’s line of credit, she had bank statements showing that they had made payments to Budd. At some point, Budd asked for money to be paid in cash. She had no idea what he did with the money they gave him.
• She had no idea what the $10,000 credit union loan paid by Budd referred to.
• She agreed she owed Budd $10,000 for her vehicle and the $5,000 for the roof.
• She agreed that Paul and Budd shared a credit card, but they added up what Paul owed and paid his share to Budd.
• Both sets of parents gifted money to them for the down payment on the Bluewater property.
• She had no idea what was being referred to by Budd having paid debt for Nancy historically of at least $10,000. There was no such debt.
• She was unaware of any documentation that evidenced the alleged debts.
• She did not owe her parents $75,000.
• She did not agree that Budd should get all proceeds from the sale of her property. He was getting $40,000 and a half-interest in her property.

[117] Mr. Murray had no documentation from Ms. Ross to corroborate the alleged debts. Neither did Ms. Ross, nor did she ask for any documents. She had only the information provided by Budd which she accepted at face value.

[118] She testified that Budd struck her as honest and as a man who knew his finances. She believed him when he told her that he had drawn down on his line of credit or given cash to Nancy and Paul.

[119] As mentioned, Ms. Ross sent a copy of her October 22, 2010 letter to Budd. He never contacted her to correct any of the information in her letter to Mr. Murray. She agreed in cross-examination that she could not be certain that he received her letter.

[120] At the meeting with Nancy on October 22, Mr. Murray reviewed the pros and cons of going ahead with the refinancing including the transfer of a 50% in the Bluewater property to Budd. Mr. Murray explained to Nancy the difference between holding title as tenants in common versus joint tenancy, and the consequences of same.

[121] Mr. Murray was called as a witness by the plaintiffs. I find his evidence to be credible and reliable, and I accept it. Mr. Murray answered questions directly and carefully. His answers were consistent and largely corroborated by his notes and correspondence. He was candid about his role and responsibilities including what he did and did not do. He was an impressive witness.

[122] Mr. Murray testified, inter alia, that:

• Nancy told him that he needed to “educate” Ms. Ross about the debts and he responded that he was not in the business of educating another lawyer.
• He laid out two options: 1) verify what was owed to Budd and what was gift, or 2) go ahead and trust Budd to do the right thing.
• Nancy could not recall what was debt and what was gift. That could not be confirmed without documentation.
• Nancy acknowledged that they had used Budd’s line of credit, but she was unsure how much and doubted that it had to be repaid to him.
• He gave her an alternate approach – an option to purchase.
• He advised her that relying on her father to do the right thing carried risk. He might not change his Will. He might change it back later.
• He understood from Nancy that she could not finish the renovations or repay Budd any debts owed to him without the loan monies.
• Nancy should or could have put other steps in place to protect herself but “chose a different path”.
• He never saw Budd’s Will or powers of attorney. He had no knowledge as to what instructions Budd had given to Ms. Ross.
• Nancy never instructed him to ask Ms. Ross whether she could corroborate the debts. Nancy followed the “practical approach” rather than the technical approach.
• He did not ask Ms. Ross to have Budd’s 50% interest in the Bluewater property revert to Nancy when he died or when the mortgage was paid off.
• He told her that she should not sign over the undivided 50% interest but could see that she needed to consider doing so.
• He never asked Ms. Ross for corroborating documents for the alleged debts because he was not instructed to do so.
• He received instructions on Monday, October 25, 2010 from Nancy to go ahead and complete the mortgage transaction including the transfer to Budd.

[123] Nancy left the October 22, 2010 meeting with Mr. Murray to consider what she wanted to do. Did she want to challenge the alleged debts – demand proof of what had been advanced and whether it was gift or loan? Did she want to go ahead with the deal trusting in her father to sort things out later – to do the right thing for her benefit? She wanted to talk to her father and to Paul.

[124] It must be remembered that at that point, she was living with Budd because her house was in the midst of renovations. She needed the furnace installed. The only bathroom was unusable. The commitment letter from the credit union required that the funds be drawn within seven days of acceptance of the loan commitment which had already passed.

[125] Nancy spoke with her father and Paul. They discussed the alleged debts including those they disagreed with. According to Nancy, Budd “instructed” Nancy to go through with the transaction and she agreed to do so.

[126] On October 25, 2010, Nancy called Mr. Murray to advise that she wished to go ahead with the transaction as the credit union required without changing the terms in Ms. Ross’ letter.

[127] They spoke again on October 27, when he discussed the consideration to be specified in the Transfer to her father, He advised that if he used “for natural love and affection”, no Land Transfer Tax was payable; if he specified an amount paid by Budd for his 50% interest, tax was payable. Nancy instructed him to use natural love and affection.

[128] Mr. Murray wrote to Ms. Ross on October 27, 2010. He wrote:

Thank you for your fax October 22, 2010. We have no evidence to either confirm or deny the indebtedness set out in your letter. Be that as it may my client has instructed me to prepare a deed transferring an undivided one-half interest to her father for natural love and affection.

Nancy agreed in cross-examination that she authorized Mr. Murray to write those words and that letter was sent with her instructions.

[129] Mr. Murray did not call Ms. Ross to tell her that Nancy did not agree with the debts alleged or the amounts in her October 22, 2010 letter. The only response received by Ms. Ross to her October 22 letter was Mr. Murray’s October 27 letter. According to Ms. Ross, she understood from that letter that Nancy and Paul had no evidence to contest what Budd said was owing to him.

[130] Ms. Ross testified that Budd came to see her before closing. He had no appointment. His legs were bothering him, so they met in a ground floor meeting room.

[131] Budd advised Ms. Ross that his daughter was upset with how the Will was drawn, how the mortgage was structured, and how title was drawn. Ms. Ross went through each item with him including the terms of his Will. She confirmed his previous instructions and that Leah was his number one priority. He instructed her to leave the Will as it was.

[132] Ms. Ross explained to Budd that by going on the mortgage he was taking on $143,000 of debt if Nancy did not pay. His property interest in the Bluewater property protected him against that debt. Again, Budd told her to leave things as they were. There was no change to his instructions.

[133] I do not accept that this alleged meeting with Budd occurred. Once again, there was no memorandum to file, no confirming letter, not even a handwritten note of this important meeting and Budd’s instructions. Ms. Ross’ dockets contain no reference to this meeting. She never mentioned the meeting to Nancy, Paul, and David in their meeting on November 26, 2010. She never mentioned it in her correspondence to Donnelly & Murphy or the PGT in 2011.

[134] I am satisfied that Ms. Ross’ evidence of this alleged meeting with Budd before the mortgage transaction closed was contrived to paint Nancy in a bad light - that she was unhappy and was pushing her elderly, beleaguered father to change his Will.

Deal Closed

[135] The transfer of a half interest in the Bluewater property and mortgage transaction closed on November 1, 2010. Mr. Murray prepared all documentation for the completion of the transaction. He explained each document to Nancy before she signed.

[136] The closing documents included a Direction signed by Budd and Nancy to Mr. Murray and Ms. Ross for the Transfer/Deed to be to Nancy and Budd as tenants in common. The Direction contained the following:

Joint tenants own the land equally together and when one owner dies, the land passes automatically to the other joint tenant. Tenants-in-common can own the land in disproportionate shares, and when one owner dies, his/her share passes to his/her estate, not to the other tenant-in-common. [Italics added.]

[137] Certificates of ILA were obtained for Paul and Budd, with Budd’s signed by Quinn Ross who stepped in because Ms. Ross was away.

[138] Nancy and Budd signed a Declaration that the cost of the renovations to be done to the Bluewater property was $20,000 of which $6,000 had been paid.

[139] The Statement of Adjustments showed the following:

• The credit union advanced $142, 543.89 from which the appraisal ($282.50) and existing mortgage balance ($82,649.05) were paid to UCCUL.
• Tax arrears of $7,064.78 were paid to the Municipality of Central Huron.
• Credit Risk Management received payment of $800 for the Chamney Sanitation debt.
• Legal fees and disbursements for Mr. Murray were deducted.
• $40,000 was paid to UCCUL to pay down Budd’s line of credit.
• The balance of $10,196.48 was paid to the Ross Firm in trust to complete the renovations.

The Statement of Adjustments was signed by Nancy, Budd, and Paul.

[140] Budd received a copy of the documents for the transfer and mortgage transaction from Quinn Ross on November 1, 2010. The Ross Firm billed him for the work done on the same day.

Budd’s Death

[141] Budd died suddenly on November 18, 2010, only 17 days after the mortgage refinancing and transfer of the one-half interest in the Bluewater property was completed.

[142] Nothing had materially changed in that intervening period: Budd’s Will remained the same, there was no agreement about what was debt and what was gift, Budd held a 50% interest in the Bluewater property as tenant in common, Budd was a co-mortgagor on the mortgage to UCCUL, Nancy and her family were living at Budd’s home on Forest Ridge, and the renovations at Bluewater were incomplete.

[143] At the luncheon following Budd’s funeral service, Ms. Ross approached Nancy and Paul. She told them that she wanted to see them with David at her office on November 26, 2010.

[144] I pause to observe that telling Nancy and Paul that they were to attend her office on November 26, rather than asking if that would work for them, is consistent with my observations in court of Ms. Ross as a witness. She tried at various points to control the cross-examination and was at times quite condescending. I am mindful that demeanor is not to be used as the sole basis for assessing a witness’ credibility and reliability.

Reading of the Will

[145] Nancy, Paul, and David attended at Ms. Ross’ office on November 26, 2010 for the reading of the Will. Ms. Ross and Michaela Johnston, a law clerk at the Ross Firm, were present.

[146] Ms. Ross reviewed and explained the terms of the Will. She advised that because Leah’s powers of attorney named only Budd as her attorney with no alternate, an application for guardianship was necessary to give Nancy, David and/or Paul the legal authority to manage and make decisions regarding Leah’s property and care. The Ross Firm was prepared to assist with that application.

[147] Ms. Ross raised Budd’s wish that Leah be moved from Huronlea in Brussels to Huronview, another long-term care facility closer to Bayfield. Nancy advised that her father’s primary reason for wanting to move Leah was the drive – 45 minutes each way. Nancy had spoken with the doctors and nursing staff at Huronlea. She was satisfied with the care Leah was getting and the drive was not an issue for her. They preferred that Leah remain at Huronlea.

[148] Ms. Ross did not object to that decision. She did not express any misgivings about it. The rationale provided by Nancy for that decision was entirely reasonable in the circumstances. Leah suffered from advanced dementia. She had been at Huronlea for more than a year. She was well-cared for and Ms. Ross had no reason to suspect otherwise.

[149] Ms. Ross advised the plaintiffs that all of Budd’s assets went into the Trust under the Will for Leah; the residuary beneficiaries (Nancy and David) would not receive any money from Budd’s Estate until Leah died. She indicated that the Forest Ridge home was not part of Budd’s Estate and would be transferred to Leah as the surviving joint tenant. The application for guardianship would give authority to sign the necessary papers to effect the change to title.

[150] None of the plaintiffs expressed displeasure with any of the terms of the Will during the meeting. No one suggested that Budd had meant to change his Will. No one asked if he had given instructions to change his Will. No one questioned Budd’s capacity at the time he signed the Will.

[151] Ms. Ross further advised the plaintiffs during the meeting that the 1/100^th interest that Budd had in the Clinton property would be transferred to David. It did not go into the Trust for Leah.

[152] The plaintiffs assert that during the meeting at Ms. Ross’ office, Paul asked Ms. Ross when Budd’s interest in the Bluewater property would revert to Nancy and Ms. Ross told them that it would revert when the mortgage was paid off.

[153] Ms. Ross denies that that question was asked of her and that she gave that answer. She points to the detailed memorandum done by Ms. Johnston of the meeting which is completely silent about that issue.

[154] Ms. Johnston was not called as a witness. The memorandum is not dated. The reference line refers to the November 26, 2010 meeting but does not say when the memorandum was prepared. Ms. Ross testified that the memorandum was done from notes made by Ms. Johnston during the meeting. Those notes were not retained or produced. They were not listed in Schedule “C” to the defendants’ Affidavit of Documents. In these circumstances, the document is of little assistance.

[155] Did Ms. Ross advise the plaintiffs that Budd’s interest in the Bluewater property would be transferred to Nancy or revert to Nancy when the mortgage was paid off? Frankly, it makes no sense that Ms. Ross would have given such advice if asked that question. If she gave that response, it would be wrong as a matter of law.

[156] Budd’s Will expressly provided that all his property of any kind, except the 1/100^th interest in the Clinton property, was to go into the Trust for Leah. There is no exception for the Bluewater property. Likewise, there was no written agreement between Nancy and Budd outside of the Will to that effect.

[157] For Ms. Ross to have given the advice that Paul and Nancy say she did, Ms. Ross would have had to not only ignore Budd’s wishes but override them. She did not do so. I accept Ms. Ross’ evidence that the question was not asked, and she never gave that advice.

[158] It is undisputed that at the November 26, 2010 meeting, Ms. Ross and the plaintiffs discussed the steps that needed to be taken to realize and collect Budd’s assets including setting up an Estate bank account. Ms. Ross walked them through their roles as Estate Trustees, what was needed, and what the Ross Firm would look after.

[159] Ms. Ross advised the plaintiffs that an application for a Certificate of Appointment of Estate Trustees with a Will was required. She was prepared to assist them with that application. At the conclusion of the meeting, she walked them across the street to the bank where the Estate account was opened.

[160] Ms. Ross wrote a letter to the plaintiffs on December 2, 2010 confirming that her firm would be acting on behalf of Budd’s Estate. She advised that her firm would be preparing an application to appoint a committee for personal care and property for Leah.

[161] As at December 2, 2010, Ms. Ross and her firm were ready and willing to assist the plaintiffs as Estate Trustees and to have one or more of the plaintiffs be appointed as committee for Leah’s care and property. At no point in 2010 did Ms. Ross express any concerns or reservations about the plaintiffs’ ability to carry out such roles. She did not, for example, write a letter setting out the duties they would be taking on and suggest that if they were not prepared to do so, or felt unable to do so, they should not act. There is no memorandum to file reflecting any concern with the plaintiffs’ ability to properly perform their duties under the Will or otherwise.

Termination of the Ross Firm

[162] The plaintiffs, notably Nancy, did not want to continue to use Ms. Ross or the Ross Firm as their legal counsel. While other reasons were advanced for that decision, I find that, simply put, Nancy did not like Ms. Ross. She felt that Ms. Ross did not like her. She knew that Ms. Ross was aware of her addiction issues, just as she was aware of Quinn Ross’. Nancy perceived that Ms. Ross looked down on her.

[163] The plaintiffs talked among themselves and by Christmas 2010, they had decided to change law firms. Because law firms were closed over the Christmas holidays, they deferred delivering a termination letter until January 3, 2011.

[164] On January 3, 2011, the plaintiffs delivered a letter to the Ross Firm terminating the retainer of Ms. Ross and the firm. The letter stated:

This letter is to inform you of our decision as Trustees for the estate of Budd Eldon Kuehl, that as of today, January 03, 2011, we are removing your firm as the legal representative of all and any duties in relation to the above named estate and the estate of Leah Florence Kuehl.

Please forward any and all matters to the Donnelly and Murphy law firm, attention: Mr. Michael Donnelly... [Italics added.]

[165] As at January 3, 2011, none of the plaintiffs had any authority to act on Leah’s behalf with respect to her assets. No application to appoint a committee for that purpose had been brought and no order made. Accordingly, the plaintiffs had no right to purport to terminate the retainer, if any, of the Ross Firm concerning Leah’s Estate.

[166] The termination letter came out of the blue to Ms. Ross. She was unaware of any issues or concerns with her or her firm. Ms. Ross testified that she accepted their decision which they were entitled to make. I do not accept that she was indifferent; rather, I find that she decidedly displeased as reflected by her subsequent conduct.

Correspondence to Donnelly & Murphy

[167] Ms. Ross wrote to Michael Donnelly of Donnelly & Murphy on January 5, 2011 regarding transfer of the file. In the last paragraph, she wrote:

With respect to Leah Florence Keuhl [sic], she and her late husband Budd Eldon Kuehl have always been clients of our firm. Leah is still alive but suffering from advanced Alzheimer's. We consider ourselves her lawyers until such time as there is a court order appointing a legal representative on her behalf and further instructions thereafter. [Italics added.]

[168] On January 12, 2011, Ms. Ross rendered a final account for services provided to Budd’s Estate in the amount of $1,340.72. The account was promptly paid in full by Nancy on January 21, 2011.

[169] On January 31, 2011, Ms. Ross wrote to Mr. Donnelly enclosing the Ross Firm file for Budd’s Estate. Ms. Ross then volunteered information much of which mirrored her October 22, 2010 letter to Mr. Murray regarding alleged debts owing by Nancy and Paul to Budd (see para. 113 above).

[170] Ms. Ross prefaced the information provided by the following:

Mr. Kuehl has been a longstanding client of The Ross Firm together with his wife, Leah. I met with Mr. Kuehl in respect of certain matters, including preparing his current will, and preparing a mortgage with the United Communities Credit Union (“UCCU”) in November 2010. I would like to offer you some information by way of background which I believe is of importance to the administration of this Estate. What may appear to be debts of the Estate are actually debts owing to the Estate by certain individuals. [Italics added.]

[171] I observe that Ms. Ross did not attach Mr. Murray’s letter of October 27, 2010 nor did she mention same. She overstated her role in the mortgage transaction – she did not prepare the mortgage. She indicated that Mr. Murray acted for Paul when he did not. Mr. Murray acted for Nancy and UCCUL. Paul received ILA from another lawyer as Ms. Ross was aware.

[172] At pages 2-3, Ms. Ross repeated the information in her October 22, 2010 letter concerning Nancy and Paul’s alleged indebtedness to Budd before the mortgage transaction closed. She reiterated what debt would remain if the Bluewater property were sold within a year at its appraised value.

[173] At page 3, Ms. Ross wrote:

Wills and Powers of Attorney

In October 2010, Mr. Kuehl attended at our offices to discuss updating his Will and Powers of Attorney. Nancy-Lee Kuehl attended with him at our office on several of these occasions. It appeared to me that Ms. Kuehl was attempting to influence our client in how to draft his Will. Ultimately, I met with Mr. Kuehl alone, without the presence of Nancy, Paul or David, and prepared his current Will. The provisions contained in this Will were carefully prepared in order to ensure that his wife, Leah, would be provided for in the first instance. Upon her death, certain legacies are to be paid first with the residue to be shared amongst his children, provided that such child share be first be used to pay off any mortgages owed solely, jointly or severally by such child to the fullest extent possible. [Original in bold and underlined. Italics added.]

Mr. Kuehl was also most anxious to have his wife moved from Brussels to Huronview. This is order that he and the family and her many friends could visit her easily. I don’t believe that this happened although Mrs. Kuehl is on the Huronview waiting list.

Correspondence by Ms. Ross to PGT

[174] Without waiting for a response from Mr. Donnelly, Ms. Ross contacted and wrote to the Office of the Public Guardian and Trustee (“PGT”) on February 1, 2011. She referred to Leah as “our client”. She advised that Leah suffered from advanced Alzheimer’s and gave the name and address of the nursing home where Leah was residing. She indicated that Leah had no attorney after her husband died and her mental capacity precluded her from appointing one. She asked that the PGT investigate and take such steps as it deemed advisable.

[175] Ms. Ross made no mention of Leah’s children, that she had acted for them as recently as January 2, 2011, that they were represented by Donnelly & Murphy, or that she had discussed bringing a guardianship application for them in respect of Leah. She also did not disclose that she had been terminated by the Executors of the Estate of Budd Kuehl.

[176] The PGT was unable to act unless and until a capacity assessment had been done to establish that Leah was incapable of managing her property and to make decisions regarding her personal care. Ms. Ross was given the name of a local capacity assessor, Theresa Daly, by the PGT and wrote to Ms. Daly on February 8, 2011 to engage her to do the assessments under s. 16(1) of the Substitute Decisions Act. Again, Ms. Ross referred to Leah as “our client”.

[177] Ms. Ross indicated in her letters to the PGT and Ms. Daly that they were “concerned for the best interests of our client, Leah…”. She did not consult with any of the plaintiffs nor their counsel before writing to the PGT or engaging Ms. Daly. They were kept entirely in the dark that this was happening.

[178] Ms. Ross wrote Mr. Donnelly again on February 15, 2011. The header referred to Leah and to Budd’s Estate. She made no mention of her communications with the PGT or that she had engaged Ms. Daly to do the capacity assessments. Instead, she indicated that her firm would “continue to represent” Leah with a view to ensuring that her interests were protected. She demanded that Mr. Donnelly serve her with any application in respect of Budd’s Estate or any matter affecting Leah.

[179] On February 16, 2011, Ms. Ross wrote to Hillary Callin, Program Coordinator at the PGT in Toronto. On February 17, 2011, Ms. Ross wrote an identical letter to Ms. Bouvier, an investigator with the PGT. In the letters, Ms. Ross

• Attached her letter of October 22, 2010 to Mr. Murray as setting out “the latest and most recent debt entered into by” Budd to raise money for his daughter, Nancy, and son-in-law, Paul”, both of whom she indicated were Trustees of Budd’s Estate;
• Expressed concern for Budd and Leah related to Nancy’s “apparent attempts to exercise duress and undue influence over her father” when he attended to prepare his Will;
• Advised that Budd’s single most significant asset was his home “which we are now told is being lived in by his daughter and son-in-law”;
• Characterized the majority of the debt to be debt owed by Nancy, Paul and David, not the Estate; and
• Stated, “I am concerned that the Executors are in a conflict of interest and are preferring their own interests to that of the sole beneficiary, Leah…”.

None of the plaintiffs were copied with these letters to the PGT, nor was Donnelly & Murphy.

Nancy’s Voicemail Message

[180] On February 18, 2011, Nancy called Ms. Ross and left the following voicemail message:

Heather Ross, this is Nancy calling. I just want to say how disappointed I am and being a supposed friend and loved my dad for 20 years since he's come back from the Sioux [sic] and you left his will in such a mess, that nothing can be resolved. We're going to be 2 years dealing with this. I don't care about the money but that [sic] are family heirlooms now that Dave and I can't even get without purchasing them from the Estate. And you know in your heart that this is not what my dad wanted. And I just hope that you are very proud of yourself and that you can live with yourself and the day my mother dies don't you dare set foot near us because I don't ever ever [sic] want to see you again.

[181] Ms. Ross provided a transcription of the voicemail message to the PGT by letter dated February 28, 2011. Ms. Ross wrote: “Nancy Kuehl’s message appears to bear out our concerns for the welfare of our client.”

[182] In the same letter, Ms. Ross provided the completed capacity assessments performed by Ms. Daly. Ms. Ross advised that she had paid Ms. Daly’s account of $636.60 and requested reimbursement from the PGT.

PGT Acts as Leah’s Statutory Guardian of Property

[183] On March 2, 2011, the PGT issued a certificate that it would act as Leah’s statutory guardian of property pursuant to s. 16 of the Substitute Decisions Act. A copy of that certificate was attached to a letter sent to Ms. Ross on that date. The PGT asked Ms. Ross to provide the original Last Will and Testament of Leah.

[184] Ms. Ross provided the requested documents and on April 25, 2011 and submitted an account to the PGT for services rendered for Leah. The account included the cost of the capacity assessments by Ms. Daly. The account was for $2,174.04 of which $1,275 plus HST was for fees. The PGT paid that account from monies managed for Leah.

[185] On April 27, 2011, Nancy submitted an application to the PGT to replace the PGT as the statutory guardian of Leah’s property. The information provided by her was hand-written. She indicated in the application that David was then incarcerated in Walkerton.

[186] In the Management Plan submitted, Nancy indicated that she was residing at the Forest Ridge property and planned to continue doing so to “maintain it and keep it in good repair”. The evidence at trial confirms that Nancy and her family continued residing at the Forest Ridge property after Budd’s death. They paid no rent to the Estate prior to the PGT appointment. The renovations to the Bluewater property were never completed.

[187] The Management Plan required the applicant’s plan for property. Nancy wrote:

Keep and care for the house until my mother passes, unless there are not enough funds then I will sell the house in order to care for my mom in the nursing home. The house will be sold at market value. The contents will be sold at market value.

[188] She similarly indicated that with respect to household items and vehicles, she planned to keep the furniture until her mother passed away; they would retain the vehicle and use it as necessary to pay her mother’s bills; and they would use the tools on the property to maintain the property.

[189] The upshot of Nancy’s plan was, until her mother died, she and her family would continue to live in her parents’ home and use her parents’ chattels unless money was needed to pay any of Leah’s expenses. There was no proposal to pay any rent, but they would maintain the home.

[190] Nancy testified that she was told by Ben Pettigrew of the PGT in Toronto that “because of Ms. Ross’ letter, I didn’t have a chance in Hell of winning this application”. It is not clear when that statement was made but, in any event, the statement is hearsay and not admissible for its truth. It is, however, undisputed that the April 27, 2011 application was not accepted by the PGT who managed Leah’s assets until she died.

Fire at the Bluewater Property

[191] On June 13, 2011, Nancy’s home at the Bluewater property was destroyed by a fire. The home and contents were insured by West Wawanosh Mutual Insurance Company.

[192] Nancy filed a Proof of Loss Claim on July 25, 2011. Nancy and Budd’s Estate were the named insureds on the claim form. According to the claim submitted, the balance owing on the UCCUL mortgage as at July 29, 2011 was $141,305.89.

[193] The insurer issued a cheque payable to UCCUL for the full amount of the balance of the mortgage. That cheque was provided to UCCUL by plaintiffs’ counsel on July 29, 2011. The UCCUL charge was discharged from title on August 30, 2011.

[194] When the fire occurred, Nancy, Paul, and Amanda were still living at her father’s home on Forest Ridge. In August 2011, Nancy and her family were given one week to vacate the Forest Ridge property by the PGT. She and Paul found a place to rent.

[195] Discussions took place with the insurer and PGT. The PGT wanted Budd’s share of any insurance proceeds paid into the Estate account for the Trust. Budd had no personal property at the Bluewater home and was not entitled to any monies paid for personal contents. The Estate was entitled only to his 50% share of the insurance paid for the value of the house after deduction of the payment to UCCUL.

[196] On November 17, 2011, Ms. Ross wrote a letter to Nancy in response to a voicemail message by Nancy. Ms. Ross suggested that Nancy was trying to retain her to act regarding insurance issues arising from the fire. She declined because of a conflict of interest. She wrote:

As you know I acted for your father in the matter of negotiating the manner in which title to your home is currently held in order to ensure that monies he had loaned you and your husband without any security were guaranteed to be repaid at some point. You were represented by Mr. David Murray. [Italics added.]

[197] At first blush, the above statement appears at odds with what Ms. Ross told Mr. Murray, Budd, Nancy, and this court – that it was the credit union who required title to be held 50-50 as tenants in common. I note, however, that the documents and evidence of Mr. Murray and Ms. Ross are otherwise consistent: there were no negotiations with Mr. Murray about the manner in which title was to be held; rather, the discussions with Mr. Murray centered on whether the payment of $40,000 extinguished all debt owing to Budd. To the extent her letter of November 17 suggests otherwise, it is inaccurate. By the same token, I have no doubt Ms. Ross saw the half interest in the Bluewater property as a means to repay Budd what he was owed.

Applications

[198] On February 9, 2012, Mr. Walters of the PGT in London wrote to plaintiffs’ counsel (Mr. Cornish) seeking a detailed response to the “apparent debts” owed to Budd’s Estate as set out in Ms. Ross’ earlier correspondence to the PGT.

[199] On May 1, 2012, Mr. Cornish wrote to Mr. Walters to advise that his clients were applying for a Certificate of Appointment of Estate Trustees with a Will. Mr. Cornish reiterated Nancy’s request to be appointed as Leah’s guardian of property. He wrote:

The Public Guardian was inappropriate in unilaterally rescinding my client’s application and in doing so without written direction. The handling of this matter more generally, starting with the Ross Firm and moving to the Public Guardian, is cause for concern, and may well lead to litigation.

[200] On May 10, 2012, Mr. Cornish wrote again to Mr. Walters. In that letter he accused the Ross Firm of having “bungled” the repayment of any debt owed to Budd. The alleged debts were “nebulous” and Ms. Ross’ allegations concerning those debts were “spurious”. He demanded full particulars of the alleged debts owing to the Estate.

[201] There is no evidence that the plaintiffs or PGT ever provided the other with the documents/particulars/details of alleged debts demanded.

[202] On May 22, 2012, Nancy, Paul, and David made the application for a Certificate of Appointment of Estate Trustee with a Will for Budd’s Estate. Budd had been deceased for 18 months by then.

[203] On November 7, 2012, Nancy, Paul, and David submitted a joint application to replace the PGT as the statutory guardian of property for Leah.

[204] On November 19, 2012, this action was commenced.

[205] On June 7, 2013, the PGT formally rejected Nancy’s application to replace the PGT as statutory guardian. Ms. Sienkiewicz of the PGT provided the following reasons for the refusal:

1. Our office has information from Heather Ross, Budd Eldon Kuehl’s former legal representative, indicating that Nancy-Lee Kuehl attempted to exert undue influence on Budd Eldon Kuehl as to the terms of his will. In light of this information, our office is not prepared to appoint Nancy-Lee Kuehl as Leah Florence Kuehl’s fiduciary.

According to Ms. Ross, Budd Kuehl met with her on or about October 11, 2010, to make changes to his will. Nancy-Lee Kuehl accompanied Budd Kuehl to the meeting. Once the meeting began, it became clear to Heather Ross that Nancy-Lee Kuehl was attempting to influence Budd Kuehl as to the terms of the will, such that Heather Ross asked Nancy-Lee Kuehl to leave the meeting.

2. Our office has information indicating that Budd Eldon Kuehl loaned Nancy-Lee Kuehl and her husband Paul Schaefer tens of thousands of dollars, for which Mr. Kuehl actively sought reimbursement.

Given Nancy-Lee Kuehl's historical reliance on financial support from her father, our office is not prepared to appoint Nancy-Lee Kuehl as guardian of property for her mother. Furthermore, our office is of the view that Nancy-Lee Kuehl’s actions caused Budd Eldon Kuehl and Leah Florence Kuehl to deplete their resources, as evidenced by the debt incurred on their joint line of credit. Ultimately, the balance of the line of credit was repaid using funds that Leah Kuehl received from a life insurance policy of Budd Kuehl’s. The amount paid to discharge the debt was $77,505.33.

3. Budd Eldon Kuehl entered into a real estate transaction with Nancy-Lee Kuehl involving a mortgage refinancing of her home, which closed November 1, 2010. As part of the transaction, Budd Kuehl obtained a 50% interest in Nancy-Lee Kuehl’s residence as tenant in common, and a partial repayment of the debt owed to him by Nancy-Lee Kuehl.

Budd Kuehl passed away shortly thereafter. Leah Kuehl is the primary beneficiary of his will, with Nancy-Lee Kuehl named as one of the trustees required to administer the trust for her benefit. Yet the full amount of the debt owed to Budd Eldon Kuehl was not repaid to him prior to his death. Therefore, our office is of the view that Nancy-Lee Kuehl would be in a conflict of interest with Leah Kuehl, the primary beneficiary of Budd Kuehl’s estate.

Furthermore, as Nancy-Lee Kuehl’s residence was later damaged in a fire, our office is also of the view that in light of Budd’s ownership interest in the property, Leah Kuehl should have a resulting interest in the insurance payments stemming from the fire. Nancy-Lee Kuehl in no way acknowledges this issue in her Management Plan.

4. Leah Kuehl has been residing in a long-term care facility for quite some time. Our office is currently taking steps to sell Leah Kuehl’s vacant home.

Nancy-Lee Kuehl resided in Leah Kuehl’s home for several months after Budd Kuehl’s death, until our office requested her to vacate the property. The Management Plan submitted by Nancy-Lee Kuehl indicates that she would be prepared to sell Leah Kuehl’s property.

Yet Nancy-Lee Kuehl has objected to steps our office has taken to sell the property, suggesting that she and her husband moved into the property instead. Our office is therefore of the view that Nancy-Lee Kuehl lacks a clear plan with regards to the management of Leah Kuehl’s property.

[206] On July 2, 2013, the PGT brought an application, inter alia, to confirm the PGT’s refusal to issue a certificate of statutory guardianship to Nancy. I infer from the fact that the PGT continued to manage Leah’s property until her death that the application brought by the PGT was successful or did not proceed and the status quo remained in place.

[207] After they left the Forest Ridge property in August 2011, Nancy and Paul regularly drove by the property. They noticed that the property was not being well-maintained. For example, they observed a tree growing from the eavestrough. In their view, the property was poorly managed while the house sat vacant.

[208] Nancy made inquiries from time to time of the PGT to rent the home but was told that the PGT was not in the business of being a landlord. She and Paul learned that the house was going on the market and offered again to rent the home. Finally, in March 2014, Nancy entered into an agreement with the PGT as guardian of Leah’s property to rent the Forest Ridge property for $1,000 per month.

[209] When they re-entered the home, they found lots of dead bugs and rodent droppings. Nancy paid rent to the PGT as agreed until Leah died.

Claims re Will and Estate Planning and Administration

[210] The plaintiffs’ claims pertaining to Budd’s Will, the estate planning provided, Leah’s POA, and the mortgage transaction with the credit union are framed in negligence and breach of fiduciary duty.

[211] To succeed in a claim in negligence, the plaintiffs must prove on a balance of probabilities that: 1) the defendants owed a duty of care to the plaintiffs, 2) the defendants breached their duty of care by failing to observe the relevant standard of care, and 3) causal harm that was not too remote resulted from that breach: Lawrence v. Prince Rupert (City) (2005), 2005 BCCA 567, 49 B.C.L.R. (4^th) 89 (C.A.), at para. 39; Canada Bread Co. v. Grigg, [1942] 2 D.L.R. 374 (Ont. C.A.), at p. 377.

[212] It is undisputed that the defendants owed a duty of care to Leah in the preparation of her POA, and to Budd in the provision of legal advice and services related to his Will and the Bluewater refinancing transaction. It is also undisputed that they owed a duty of care to the Estate Trustees in their capacity as such when the defendants acted for the Estate following Budd’s death.

[213] It is well-settled that a lawyer who undertakes to prepare a will has the duty to use reasonable skill, care and competence “in carrying out the testator’s intentions”: Hall v. Bennett Estate, 2003 CanLII 7157 (Ont. C.A.), at para. 48. The lawyer’s duty of care is owed primarily to the client. The duty of care may extend to another person, such as an intended beneficiary, where that person is injured as a result of the lawyer’s negligence in performing the work for which he or she was retained by the client: Hall, at para. 49. Whether a duty of care is owed to a beneficiary or intended beneficiary so as to ground an action in negligence will depend on the circumstances: Hall, at para. 50.

[214] A lawyer is required to bring reasonable care, skill and knowledge to the performance of the professional service which he or she has undertaken: Central & Eastern Trust co. v. Rafuse (1986), 1986 CanLII 29 (SCC), 31 D.L.R. (4^th) 481 (S.C.C.). Lawyers are not held to a standard of perfection. A lawyer will be liable for any loss incurred by a client that results from a want of that degree of knowledge and skill ordinarily possessed by other lawyers similarly situated, or from omissions to use reasonable care and diligence: Blackburn v. Lapkin (1996), 1996 CanLII 7973 (ON SC), 28 O.R. (3d) 292 (Gen. Div.) (cited with approval in Folland v. Reardon, 2005 CanLII 1403 (ON CA), at para. 37. This is referred to as the reasonable lawyer standard.

[215] The constituent elements of a claim for breach of fiduciary duty are: 1) a fiduciary relationship, 2) a fiduciary duty, and 3) breach of the fiduciary duty: Galambos v. Perez, 2009 SCC 48, at para. 37; Boal v. International Capital Management Inc., 2021 ONSC 651, at para. 80.

[216] Lawyer and client relationships have been recognized as a category of fiduciary relationship: Boal, at para. 91; Strother v. 3464920 Canada Inc., 2007 SCC 24, at para. 34. In Strother, Justice Binnie wrote at para. 34:

[34] When a lawyer is retained by a client, the scope of the retainer is governed by contract. It is for the parties to determine how many, or how few, services the lawyer is to perform, and other contractual terms of the engagement. The solicitor client relationship thus created is, however, overlaid with certain fiduciary responsibilities, which are imposed as a matter of law. The Davis factum put it well:

The source of the duty is not the retainer itself, but all the circumstances (including the retainer) creating a relationship of trust and confidence from which flow obligations of loyalty and transparency.

Not every breach of the contract of retainer is a breach of fiduciary duty. On the other hand, fiduciary duties provide a framework within which the lawyer performs the work and may include obligations that go beyond what the parties expressly bargained for. The foundation of this branch of the law is the need to protect the integrity of the administration of justice: MacDonald Estate v. Martin, 1990 CanLII 32 (SCC), [1990] 3 S.C.R. 1235, at pp. 1243 and 1265. “[I]t is of high public importance that public confidence in that integrity be maintained”: R. v. Neil, 2002 SCC 70, [2002] 3 S.C.R. 631, at para. 12.

[217] A fiduciary relationship imposes a duty on the fiduciary to act solely in the best interests of the person to whom the fiduciary duty is owed. The relationship is marked by obligations of loyalty, good faith, transparency, and honesty. A fiduciary may make a mistake. Not every mistake by a fiduciary is a breach of fiduciary duty; it may be mere negligence or even an innocent mistake in judgment that does not amount to negligence.

[218] In Strother, Justice Binnie wrote at para. 95: “Misconduct by a person who is a fiduciary does not necessarily mean that there has been a breach of fiduciary duty; rather, for there to be a breach of fiduciary duty, the misconduct must involve the particular duties that the law imposes on the particular fiduciary”.

[219] I turn now to the specific allegations concerning Leah’s POA, Budd’s Will (including estate planning advice), and the services rendered to the Estate by the defendants.

a. Leah’s POA

[220] There is one allegation made by the plaintiffs concerning Leah’s POAs. At para. 31(a) of the Statement of Claim, the plaintiffs allege:

31. The Plaintiffs assert that Heather Ross and The Ross Firm P.C. were negligent in their duty owed to provide effectual legal services and advice, and more particularly that:

(a) they failed to make provision for an alternate attorney for Leah Kuehl, thereby creating a planning gap and requiring the Office of the Public Guardian and Trustee to take over this role instead of Nancy Kuehl or David Kuehl;

[221] As already indicated, neither Leah nor her Estate are parties to this action. The plaintiffs sue in their capacity as Estate Trustees of Budd’s Estate and personally. What standing do they have to assert a claim of negligence in relation to Leah’s POAs? The defendants submit that only Leah or her Estate could have such standing.

[222] I agree that the plaintiffs personally have no cause of action in respect of Leah’s POAs. They were not the clients. The work was done for Leah, not them. Nancy and David’s wishes were not relevant to who would be Leah’s POA if Budd could not do so. That was Leah’s decision to make and there is no evidence that the POA fails to comply with her instructions to Paul Ross.

[223] As for any claim by Budd’s Estate, the estate planning done by Mr. Ross in 2002 for Budd and Leah was a joint retainer. The work was done for them together. The Wills and POAs were signed the same day. They were prepared by Mr. Ross. They dovetailed and mirrored one another as is often the case when spouses have their Wills and POAs done at the same time.

[224] It could be argued that in those circumstances, a duty of care was owed to Budd and Leah jointly to ensure that their mutual estate planning documents accorded with their instructions and were done in a manner consistent with the appropriate standard of care - that of a reasonable and prudent lawyer preparing Wills and POAs in 2002.

[225] There is no requirement in law that an alternate be named as POA. It is a personal choice by a client whether to name an alternate or not, and who.

[226] The burden of proof rests on the plaintiffs. It is not sufficient to simply assert that the absence of a named alternate means Mr. Ross must have breached his duty of care and was thereby negligent.

[227] The plaintiffs adduced no expert evidence as to the standard of care in 2002 or that Mr. Ross failed to meet that standard. There is no evidence that Mr. Ross acted contrary to the instructions he received from Budd and Leah. At that point in time, Nancy was struggling with her addictions as was David. Neither child was named an alternate POA or Executor and Trustee to either parent’s Will. Budd’s 2007 Will and POAs show Budd’s ongoing reluctance to name either child as Estate Trustee or POA.

[228] Even if I were prepared to find that a reasonable and prudent lawyer would recommend that a client name an alternate attorney in his or her POA, there is no evidence that Mr. Ross did not do so. There is no evidence that Leah would have named any alternate had she been asked. It is not for Mr. Ross to prove he acted as a reasonable and prudent lawyer at the time; it is incumbent on the plaintiffs to prove he did not. They have failed to do so.

iii. Budd’s 2010 Will

[229] The plaintiffs assert that the defendants were negligent and/or breached their fiduciary obligations in the estate planning and drafting of Budd’s 2010 Will and in the advice and representation provided to the Estate Trustees after Budd died.

[230] The following allegations are made in the Statement of Claim:

24. The Plaintiffs state that the trust created in the Will was effectively impotent because there were virtually no assets of Budd Kuehl in the Estate. Rather, the majority of the value of the assets of Budd Kuehl were held outside the Will. Specifically, the home of Budd Kuehl and Leah Kuehl was held jointly and life insurance proceeds were directed to Leah Kuehl. Consequently, the trust created through the Will was largely ineffectual.

25. The Plaintiffs assert that Heather Ross and The Ross Firm P.C. were negligent in their duty owed to provide effectual legal services and advice, and more particularly that:

(b) they failed to properly serve the interest of Budd Kuehl and to reasonably advice [sic] him on appropriate guardianship and estate planning matters;

(c) they failed to properly follow the directions of Budd Kuehl;

(d) they failed to meet the appropriate standard of care in arranging for the estate planning for Budd Kuehl and his heirs;

(e) they prepared the Will of Budd Kuehl with the intent of defeating or inhibiting the roles of Nancy Kuehl and Paul Schaefer in managing the affairs of Budd Kuehl;

(f) they failed to act in a bona fide a manner in handling the affairs of Budd Kuehl and the Estate of Budd Kuehl following his death.

32. The Plaintiffs assert that Heather Ross and The Ross Firm P.C. breached their fiduciary obligation in that:

(a) they exerted wrongful influence against Budd Kuehl in the making of his Will;

(b) they failed to properly protect the interest of Budd Kuehl and to provide effective legal advice to address his circumstances; …

[231] Most of the above allegations are very broad and lack specificity as to exactly what it is that Ms. Ross and her firm are alleged to have done wrong or improperly. No motion for particulars was brought. Counsel on both sides seemed to know the nature and parameters of the issues raised at trial such that matters of relevance were able to be argued and ruled upon.

[232] I will address first the allegations in respect of estate planning and drafting of the Will before dealing with allegation of negligence after Budd died.

Estate planning advice and Will

[233] It is undisputed that the defendants owed a duty of care to Budd in the provision of legal services to him in 2010 in connection with his Will and the mortgage transaction for the refinancing of the Bluewater property.

[234] Neither party called any expert evidence on the applicable standard of care or fiduciary obligations owed by Ms. Ross when she acted for Budd in 2010 to draft his Will. Thus, the plaintiffs adduced no expert evidence that any alleged acts or omissions by Ms. Ross fell below the applicable standard of care or were in breach of her fiduciary duties owed to Budd.

[235] The defendant called an expert witness but only with respect to the allegations concerning the mortgage transaction. Mr. Radomsky was qualified only in respect of the real estate issues and gave no opinion evidence concerning the standard of care that applied to Budd’s Will and estate planning.

[236] As a general rule, it is inappropriate for a trial court to determine the standard of care in a professional negligence case in the absence of expert evidence: Krawchuk v. Scherbak, 2011 ONCA 352, at paras. 130 and 132. There are limited exceptions to this general rule:

1. Where the court is faced with non-technical matters or where the issue(s) is one that an ordinary person may be expected to have knowledge of;
2. Where the impugned conduct of the defendant is so egregious that his or her conduct falls short of the standard of care even without defining the precise parameters of the standard; or
3. Where the standard of the profession is clear that the client should be advised of significant legal risk and the lawyer did not meet the standard.

(See Krawchuk, at paras. 133 and 135; Lindsay v. Aird & Berlis LLP, 2018 ONSC 7424, at paras. 46-49.)

[237] This action is, at its core, a professional negligence case. As such, it is surprising that the plaintiffs did not call expert evidence on the applicable standard of care, duties owed, or the failure to meet the standard of care. None of the exceptions to the general rule against determining the standard of care in the absence of expert evidence are engaged. The failure to call expert evidence on this critical issue is fatal to the claim in negligence.

[238] Further, I find as follows with respect to the specific allegations of negligence above:

1. The trust created by the Will was not “effectively impotent” per para. 24 of the statement of claim. It ensured that whatever assets did not pass to Leah by survivorship (like the matrimonial home) were preserved for her use and benefit during her lifetime. That included Budd’s half interest in the Bluewater property. Doing so aligned with Budd’s express priorities – Leah first, the children second and only after Leah died.
2. The Will and the advice provided to Budd by Ms. Ross for estate planning purposes served Budd’s interests and accorded with his wishes.
3. There is no credible or reliable evidence that the Will fails to accord with Budd’s instructions.
4. Nothing in the Will inhibited or defeated Nancy and Paul’s roles in managing Budd’s Estate and there is no evidence of any intent by the defendants to do so.

[239] The allegations of negligence suggest that Ms. Ross failed to follow Budd’s instructions and failed to properly advise Budd to achieve his estate planning objectives. The evidence is the opposite.

[240] Ms. Ross met with Budd to get his instructions. He made clear what his wishes were. The Will reflects those wishes and his instructions. Budd signed the Will after reviewing it. There is no evidence that he was not competent to instruct or execute the Will; to the contrary, the evidence overwhelmingly supports his capacity throughout.

[241] Whatever statements Budd might have made to Nancy and/or Paul to the effect that the Will was not what he intended, if he indeed made any such statement, that was not communicated to Ms. Ross. If he promised Nancy that he would change his Will after the mortgage refinancing was done, he did not communicate same to Ms. Ross, nor did he attend to instruct her to amend his Will.

[242] Ms. Ross cannot be faulted for failing to carry out instructions never received. The notion that she thwarted Budd’s wishes or made the management of Budd’s Estate more onerous for Nancy and Paul is pure speculation that lacks any air of reality.

[243] Neither the statement of claim nor the evidence adduced at trial provide any hint as to what Ms. Ross should have done differently or was required to do in her advice to Budd concerning his estate planning or the drafting of his Will. It strikes me that the plaintiffs are unhappy with Budd’s Will, especially with the existence of the trust for Leah and that, unlike David, Budd’s interest in the Bluewater property was not transferred to Nancy upon Budd’s death. It was not Ms. Ross’ role to ensure Nancy’s happiness with the Will nor to see that the two children were treated the same. She was obligated to follow her client’s instructions and there is no reliable evidence that she did not.

[244] The plaintiffs submit that the Will as drafted gives David a ¼ interest in the Bluewater property upon Leah’s death. Because Budd held a half-interest as tenant in common, that half-interest passed to the Trust for Leah. Upon her death, it formed part of the residue of Budd’s Estate to be divided equally between Nancy and David. Thus, David would gain a half-interest in Budd’s half-interest in the Bluewater property.

[245] I disagree. Budd’s half interest in the Bluewater property was payment in kind for monies he alleged were owed to him by Nancy and Paul. That property interest was substituted for the debt. The Will does not transfer a ¼ interest in the Bluewater property to David. It merely gives David a half-interest in the residue of Budd’s Estate after Leah died. Nothing in the Will required that David’s share of the residue must be paid by way of transfer of an interest in the Bluewater property.

[246] On Budd’s death, his interest in the Bluewater property passed to the Trust for Leah, not to Nancy and David. On Leah’s death, her Will governs the assets in her Estate and Budd’s Will governs whatever assets remain from the Trust. The Bluewater property could have been sold so that all Budd’s assets were converted to cash. Alternatively, the value of David’s residuary interest in Budd’s Estate could be paid from other funds including part of Nancy’s share of any monies she was to receive from Leah’s Estate including the proceeds from the sale of Budd and Leah’s home.

[247] My point is that the plaintiffs’ assertion that David would suddenly own a ¼ interest in Nancy’s property is misplaced. Further, there is no causal harm even if I accept the assertion of plaintiffs’ counsel that such an outcome results and is due to negligence by Ms. Ross, which I do not. David expressly renounced any right, title, interest or claim to such an interest in his testimony. Any possible harm caused by the Will in this regard is moot.

[248] The claim in negligence as it relates to the Will, estate planning and Leah’s POA is without merit and fails.

[249] The allegations of breach of fiduciary duty at para. 32(a) and (b) of the statement of claim are likewise not proven on a balance of probabilities. There was no influence by Ms. Ross on Budd much less any “wrongful influence”. Budd knew what he wanted. He expressed himself clearly. Ms. Ross followed his instructions in drafting the Will.

[250] The allegation in para. 32(b) is again vague and over-broad. It seems to imply negligence, not breach of a fiduciary obligation. There is no particular fiduciary obligation alleged to have been breached, nor does the evidence reveal such a breach.

Negligence in acting for Estate

[251] I turn next to the negligence allegation that after Budd died, the defendants “failed to act in a bona fide a manner in handling the affairs of … the Estate of Budd Kuehl …”.

[252] Once again, the allegation is incredibly broad and non-specific. No expert evidence was adduced by the plaintiffs as to the standard of care applicable to a lawyer acting and advising an Estate. No expert evidence was adduced that Ms. Ross’ advice and conduct fell below the applicable standard of care. Again, that failure is fatal to the claim.

[253] I observe that the defendants were retained at the reading of the Will on November 26, 2010 and discharged by the Estate Trustees on January 3, 2011. Thus, the retainer lasted roughly six weeks. The principal allegation of bad advice in that period is that Ms. Ross told Paul and Nancy at the November 26 meeting that Budd’s interest in the Bluewater property would revert to them when the mortgage was paid in full. No such advice was given by Ms. Ross as indicated earlier in these reasons.

[254] The plaintiffs also argued that Ms. Ross breached her obligation of confidentiality when she wrote to the Donnelly Murphy firm and to the PGT in which she disclosed information obtained from Budd and others in the course of the mortgage transaction. Counsel points to the Rules of Professional Conduct that applied to Ms. Ross.

[255] That issue is best addressed in the defamation claim below. It is not pleaded in the allegations of negligence or breach of fiduciary duty.

[256] I conclude that the plaintiffs have failed to prove any negligence by Ms. Ross or the defendant firm following Budd’s death.

Claim re Real Estate Transaction

[257] The plaintiffs’ allegations concerning the mortgage refinancing and the transfer of a 50% interest in the Bluewater property are found at paras. 15,16, 28, 29, 30 and 32(c) of the statement of claim. The plaintiffs allege:

15. Budd Kuehl requested Heather Ross to assist him in the legal work required for the refinancing. Heather Ross then insisted that Budd Kuehl would need to go on title to the property as a 50% owner as well as being co-signer on the Charge. Further, Heather Ross insisted that title would be amended to Budd having a 50% interest as a tenant in common and Nancy Kuehl would have the remaining 50% interest.

16. Because Nancy Kuehl needed to complete a refinancing promptly they proceeded with the arrangements and attended with another lawyer to complete the signing of documents.

17. On or about June 13, 2011 a fire occurred totally destroying the home of Paul Schaefer and Nancy Kuehl. Insurance coverage on this loss facilitated the payment of the Charge in full, however Nancy Kuehl learned that the interest of Budd Kuehl did not revert to her as she had understood.

18. Following the loss of their home, complications in the settlement of the homeowners’ insurance matter arose because of the title status, specifically that the Estate of Budd Kuehl had the entitlement to half of the proceeds, thereby making it impossible for Nancy Kuehl and Paul Schaefer to have funding to rebuild their home.

19. The Plaintiffs, Nancy Kuehl and Paul Schaefer, state that the actions of Heather Ross have caused severe hardship and loss to them. Following the loss of their home by fire, they were put in an untenable financial position because of the manner in which Heather Ross provided an ownership interest in their property to Budd Kuehl based on unsubstantiated and exaggerated alleged debts owed by them to Budd Kuehl. As a result they were forced to rent alternate accommodations and have not been able to rebuild their dwelling, and they have suffered severe financial stresses. In the meantime, the home of Budd Kuehl and Leah Kuehl is vacant and unused.

20. The Plaintiffs assert that Heather Ross and The Ross Firm P.C. breached their fiduciary obligation in that:

(c) they improperly induced and influenced Budd Kuehl on the terms of the refinancing arrangement;

[258] The essence of the plaintiffs’ claim is: 1) Budd holding a 50% interest in the Bluewater property was Heather Ross’ idea and she, not the credit union, insisted on it; 2) Ms. Ross improperly induced and influenced Budd to structure the transaction as she did; 3) Nancy went to see another lawyer simply to sign the documents and did so because she needed to complete the refinancing immediately; 4) Nancy understood that Budd’s interest would revert to her when Budd died; and 5) because the transaction was structured as it was, Nancy was unable to rebuild her home.

[259] I will deal with these assertions in the same order as above.

a. Defendants insisted Budd hold 50% as tenant in common

[260] I have already addressed this allegation above and found that Ms. Ross was told by Ms. Britton that the credit union required that Budd hold a 50% interest in the Bluewater property as tenant in common.

[261] There is no evidence that it was Ms. Ross who suggested or insisted on a 50% interest to Ms. Britton. I decline to draw that inference.

b. Ms. Ross induced/influenced Budd

[262] Nancy approached the credit union for a loan. According to Ms. Britton, she would not have been loaned any money without Budd as a co-borrower. His presence had the added significant benefit of a reduced interest rate.

[263] Nancy owed her father money. She disputes the amount owed but agrees that she owed him some money. The loan allowed her to pay back some or all of what she owed Budd. The amount of the loan - $60,000 – was discussed between Nancy and her father, and the two of them and Ms. Britton before any involvement by Ms. Ross.

[264] At that juncture, Nancy and Amanda were living with Budd. The renovations were underway, funded by Budd’s line of credit. Materials had been ordered for more work to the Bluewater property. It is entirely reasonable that Budd would expect to be reimbursed for monies already advanced by him for the renovations and for Nancy to repay him monies he had loaned her and/or Paul.

[265] Ms. Ross could not act for both Nancy and Budd. There was a clear conflict of interest to do so. The credit union required that Budd have ILA. Nancy went to her previous lawyer, David Murray, and it is Mr. Murray who represented and advised her on the mortgage transaction and related transfer to Budd.

[266] Ms. Ross was never Nancy’s lawyer on the mortgage transaction or the transfer of the 50% interest in the Bluewater property. Her client was Budd and only Budd. She owed no duty of care or fiduciary duties to Nancy.

[267] The plaintiffs adduced no expert evidence as to the standard of care in respect of the refinancing and transfer to Budd. The defendant’s expert, Mr. Radomsky, was clear and consistent – no duty of care was owed to Nancy and it was up to Mr. Murray, not Ms. Ross, to protect Nancy’s interests on the transaction. In his opinion, Ms. Ross met the standard of care applicable to her representation of Budd’s interests. I agree.

[268] Ms. Ross discussed the transaction with Budd. He made her aware of the debts owed by Nancy. He provided her with the information about the alleged debts. He was sharp and appeared to know his finances. Ms. Ross’ letter of October 22, 2010 drew on the information provided by Budd. There was no reason for her to doubt its veracity or accuracy. There was no reason for her to suspect Budd of any impropriety: Shute v. Premier Trust Co. (1993), 44 ACWS (3d) 164 (Ont. Gen. Div.), at para. 84.

[269] Ms. Ross acted in accordance with Budd’s instructions on the transaction. She did not browbeat Budd, nor did she mislead him. He wanted to be repaid what he felt he was owed – monies advanced to Nancy and Paul over a long period of time; monies that he characterized as loans.

[270] Ms. Ross copied Budd on the October 22, 2010 letter. He never contacted her to say the letter was wrong. He never asked her to change the transaction. There is no evidence that he asked the credit union to change the structure of the financing to reduce his percentage interest in the Bluewater property. He could have. So could Nancy. There is no evidence that either made that request.

[271] Budd signed the documents to complete the transaction. The documents were explained to him. He made no objection.

[272] Nancy and Paul both spoke to Budd about the letters written by Ms. Ross and the structure of the deal. He told Nancy to go ahead as is, that he would sort it out later. She did so despite specific advice from Mr. Murray that if she disagreed with the alleged debts, they could demand proof and negotiate an agreement. She rejected the option to purchase alternative he put to her.

[273] There is no evidence that Ms. Ross influenced Budd or induced him to do anything he did not want to do. Ms. Ross acted per Budd’s instructions. She acted in reliance on the information he provided. The advice provided by her to Budd appears on its face to be reasonable and appropriate. By all accounts, Budd was a man who knew what he wanted.

c. Nancy’s retainer of Mr. Murray

[274] As indicated, Mr. Murray was Nancy’s lawyer. He provided advice to her on the mortgage transaction and in respect of the transfer of a 50% interest in the Bluewater property to Budd. He was more than a mere conduit for signing the necessary documents. He provided representation, not simply ILA. He offered legal advice. He took instructions from Nancy including whether to complete the financing and to transfer a half interest to Budd.

d. Nancy understood Budd’s interest would revert

[275] This allegation is completely contradicted by the direction signed by Nancy as part of the closing documents. That direction clearly and unambiguously explained that on death of either tenant in common, the deceased’s interest would pass to his or her estate, not the other tenant in common.

[276] Mr. Murray explained to Nancy the difference between joint tenants and tenants in common. She could not have expected that Budd’s interest in the Bluewater property would revert to her on Budd’s death absent a change to Budd’s Will. I note that at the November 26, 2010 reading of the Will, neither Nancy nor Paul expressed surprise that Budd’s interest in the Bluewater property passed to his Estate.

[277] In any event, no claim lies against Ms. Ross or The Ross Firm for completing the transaction as required by the credit union and as agreed to by Nancy. Nancy could have refused the loan and looked elsewhere to obtain financing where her father was not a co-borrower, did not go on title to her home, did not receive a 50% interest in her property. She did not. Instead, she agreed to proceed and she relied on her father “to do the right thing”. That he subsequently failed to change his Will is not the fault of the defendants.

e. Inability to rebuild home

[278] Nothing done or omitted to be done by the defendants prevented Nancy from rebuilding her home after the fire. That Budd’s Estate was entitled to be paid part of the insurance proceeds is a consequence of how title was held which, as indicated above, is what Nancy accepted by closing the refinancing transaction.

Claims re Correspondence to PGT and Lawyers

[279] The remaining claims asserted by the plaintiffs arise from correspondence sent by Ms. Ross to the PGT, Donnelly & Murphy, and Devereaux & Murray. The claims are framed in the tort of defamation.

[280] The plaintiffs plead at paras. 25, 26, 27, 33, and 34 of their statement of claim:

25. Heather Ross further proceeded to write a letter to the Office of the Public Guardian and Trustee in which she made disparaging and defamatory allegations against Nancy Kuehl and Paul Schaefer, thereby invoking the Public Guardian and Trustee to intervene to manage the affairs of Leah Kuehl, notwithstanding the trust created in the Will. The plaintiffs state that she did so out of vindictiveness and malice toward Nancy Kuehl and Paul Schaefer.

26. Because of the defamatory, disparaging and inaccurate allegations made by Heather Ross against Nancy Kuehl and Paul Schaefer in correspondence, and by other means, with the Office of the Public Guardian and Trustee for Ontario, Nancy Kuehl states that the Office of the Public Guardian and Trustee summarily denied her application to act as guardian for her mother, Leah Kuehl, as a direct consequence of the actions of Heather Ross. The Public Guardian has asserted its right to manage the affairs of Leah Kuehl, and denied that role to Nancy Kuehl.

27. The plaintiff states further that Heather Ross profited from her actions with the Public Guardian and Trustee, and was paid a substantial legal bill which she remitted to the Public Guardian and Trustee for her role in dealing with the affairs of Leah Kuehl without proper instructions.

28. The plaintiff state that Heather Ross made defamatory remarks against Nancy Kuehl and Paul Schaefer:

a) by sending correspondence to the Office of the Public Guardian and Trustee in which false allegations were levied against Nancy Kuehl and Paul Schaefer;

b) by sending defamatory correspondence to Donnelly & Murphy, Barristers and Solicitors, and Devereaux & Murray, Barristers and Solicitors.

34. As a result, the defamation has impugned the reputations of Nancy Kuehl and Paul Schaefer which has caused them loss and harm, and in particular has denied Nancy Kuehl the opportunity to serve as guardian or her mother as a result of determinations made by the Office of the Public Guardian and Trustee flowing directly as a consequence of the defamation.

Defamation

Motion to Amend Statement of Defence

[281] The defendants brought a motion after the close of the plaintiffs’ case to amend their statement of defence to more specifically plead the defences of truth, fair comment, and qualified privilege to the defamation claim. The motion was formally put before me after Ms. Ross testified in-chief but before her cross-examination started. Plaintiffs’ counsel had notice of the proposed amendments earlier. The motion was argued after Ms. Ross testified.

[282] I allowed the amendment on terms which included permitting the plaintiffs to have further cross-examination of Ms. Ross and expanded scope of reply evidence. The issue of costs of the motion was preserved. I indicated in my endorsement that reasons would follow. These are those reasons.

[283] Amendment of pleadings is governed by r. 26.01 which states:

On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[284] An amendment is to be granted unless it would have been struck out under r. 21.01 if it had been pleaded originally, and where there is no prejudice not compensable by costs: Spar Roofing & Metal Suplies Ltd. v. Glynn, 2016 O.A.C. 330 (Ont. C.A.). In considering whether to grant leave to amend, a court should not examine whether there is sufficient evidence to sustain the pleading, weigh evidence or make findings of fact. To do so would turn the motion to amend into a summary judgment motion. The court need only be persuaded that had the pleading been asserted in the first place, the pleading could not be immediately struck under r. 21 or 25: Griffiths v. Canaccord Capital Corp. (2205), 2005 CanLII 42485 (ON SCDC), 204 O.A.C. 224 (Div. Ct.).

[285] The plaintiffs argued, inter alia, that the amendment came too late in the day, the evidence at trial did not establish the facts pleaded, and the amendments were unnecessary if, as asserted by defence counsel, these defences were already pleaded.

[286] I allowed the amendment for the following reasons:

1. The mandatory language in r. 26.01 is clear – “shall” and “at any stage in the action”.
2. The existing statement of defence already pleaded facts that raised these defences albeit without expressly naming the defences as such.
3. Defence counsel in her opening statement specifically referred to these defences in relation to the defamation claim. Plaintiffs’ counsel did not object or suggest at any point that the defences were not in play.
4. The evidence already adduced at trial was consistent with those defences and the proposed amendments.
5. The amendments are relevant to the claims asserted and would not be struck pursuant to r. 21 or r. 25.
6. There was no prejudice to the plaintiffs by granting the amendment. The amendments merely served to clarify defences already pleaded of which plaintiffs’ counsel was well-aware from the outset of trial. The expanded right of reply and ability to recall Ms. Ross for further cross-examination if desired mitigated any possible prejudice.

Defamation - Law

[287] A statement is defamatory if it tends to lower the reputation of the plaintiff in his or her community in the estimation of reasonable persons: Crookes v. Newton, 2011 SCC 47, at para. 39; Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60 (SCC), [1995] 3 S.C.R. 3, at para. 62.

[288] For a publication to be defamatory, the court must be satisfied that:

1. The impugned words are defamatory in the sense that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person;
2. The words, in fact, referred to the plaintiff; and
3. The words were published: Health Genetic Center Corp. o/a Health Genetics Center v. New Scientist Magazine, 2018 ONSC 7224, at para. 43; Grant v. Torstar Corp., 2009 SCC 61, at para. 28.

[289] To prove the publication element of defamation, a plaintiff must establish that the defendant has, by any act, conveyed defamatory meaning to a single third party who received it: McNichol v. Grandy, 1931 CanLII 99 (SCC), [1931] S.C.R. 696, at p. 699. In general, the form that the defendant’s act takes and the manner used to cause the defamatory content to reach a third party are irrelevant: Crookes, at para. 16.

[290] Once the plaintiff proves a defamatory publication on a balance of probabilities, the onus shifts to the defendant to advance a defence to escape liability: Grant, at para. 29.

[291] In this case, the defendants deny that they made any defamatory, disparaging or false allegations against Nancy or Paul. If the court finds the statements made to be defamatory, they plead and rely on the defences of truth or justification, qualified privilege, and fair comment.

[292] In Health Genetic Center Corp., Justice Lederer succinctly summarized the applicable legal principles for the defences advanced by the defendants. With respect to the defence of truth, or justification as it is sometimes called, he wrote at paras. 50-52:

50. …I start with justification:

Defamatory words are presumed to be false. The onus is on the defendant to displace the presumption of falsity by establishing the truth of the defamatory words as a matter of fact [Peter A. Downard, Libel, Third Edition, supra (fn. 33) at p. 105 referring to Littleton v. Hamilton, 1974 CanLII 438 (ON CA), [1974] O.J.No. 1955, 4 O.R. (2d) 283 (Ont. C.A.) at 286 leave to appeal to S.C.C. refused (1974), 4 O.R. (2d) 283n (S.C.C.); Govenlock v. London Free Press Co., 1915 CanLII 555 (ON CA), [1915] O.J. No. 15, 35 O.L.R. 79 (Ont. C.A.) at 83; Jameel v. Wall Street Journal Europe SPRL (No.3), [2005] EWCA Civ 64 (Eng. H.L.] at para. 4 rev’d on other grounds (2006), [2007] 1 A.C. 359 (Eng. H.L.).

51. No matter how damaging or disparaging it may be to the plaintiffs, the truth can never be actionable. A plaintiff has no right to shield his or her character or reputation from an imputation that is not false [Raymond Brown, Brown on Defamation (Canada, United Kingdom, Australia, New Zealand and United States), Second Edition (Toronto: Thomson Reuters Limited) at ch. 10, para. 10.2]. The defence of justification or “Truth” is a complete defence. If the facts which comprise the defamatory material are true, a defendant cannot succeed … [Leenen v. Canadian Broadcasting Corp. (2000), 2000 CanLII 22380 (ON SC), 48 O.R. (3d) 656 (Ont. S.C.J.) at para. 92].

52. Truth is not absolute. Where an allegedly defamatory statement of fact is “substantially true” the defence of justification will apply [Grant v. Torstar, at para. 32]:

What is required to be proven is not the truth of each and every word or the literal truth of the statement, but rather the truth of the substance of the allegation or the sting of the charge … [Cimola v. Hall, 2005 BCSC 31 at para. 172].

Where the gist or sting of the charge is proven to be true, minor inaccuracies do not defeat the defence of justification … Conversely, if the overall impression of the publication is false, the defence fails even if some or even all of the literal words are proven to be true. Half-truths can be just as damaging as outright falsehoods, and their effect may be even more severe because they can be more difficult to explain ... [Cimola v. Hall at para. 173 referring to Hodgson v. Canadian Newspapers Co. (1998), 1998 CanLII 14820 (ON SC), 39 O.R. (3d) 235 (Ont. Gen. Div.) …]

[293] Justice Lederer wrote at paras. 133, 134, and 137 with respect to the defence of qualified privilege:

133. … Qualified privilege has been explained as:

An occasion is privileged if a statement is fairly made by a person in the discharge of some public or private duty, or for the purpose of pursuing or protecting some private interest, provided it is made to a person who has some corresponding interest in receiving it. The duty may be either legal, social or moral. The test is whether persons of ordinary intelligence and moral principle, or the great majority of right-minded persons, would have considered it a duty to communicate the information to those to whom it was published. [Brown, The Law of Defamation, 2^nd ed. (loose-leaf) (Toronto: Carswell, 1999) at p. 13-14 quoted in Leenen v. Canadian Broadcasting Corp, supra, at para.107]

134. The privilege does not attach to the statement itself [Myers v. Canadian Broadcasting Corp., [1999] O.J. No. 4380 (Ont. S.C.J.), at para. 67 referring to Botiuk at p. 626]. At common law an occasion of qualified privilege exists if the defendant either had a duty to publish or a legitimate interest in publishing the defamation and the person or persons to whom the defamation was published had a legitimate interest in or duty to receive it [Peter A Downard, Libel, Third Edition, supra at p. 5]. Employment references, business and credit reports, and complaints to police, regulatory bodies or public authorities are classic examples of occasions of qualified privilege [United Soils Management Ltd. v. Mohammed, 2017 ONSC 4450 at para. 56; D’Addario v. Smith, 2015 ONSC 6652, [2015] O.J. No. 6459, at para. 55; and Cusson v. Quan, 2007 ONCA 771, at para. 39]. The reciprocity between the party publishing the statement and those receiving it is an essential characteristic of the circumstances that permit reliance on the defence. …

135. In Leenen v. Canadian Broadcasting Corp. the court concluded that an essential element of the defence of qualified privilege is whether the communication was made in good faith. An honest belief in the truth of the material broadcast is not sufficient to constitute good faith [Grant v. Torstar, at para. 113 referring to Teskey v. Canadian Newspapers Co. (1989), 2003 CanLII 64306 (ON SC), 68 O.R. (3d) 737 (Ont. C.A.)]. It is important that those publishing or broadcasting defamatory statements do so after a proper and thorough investigation of the facts [Grant v. Torstar, at para. 113].

[294] Finally, he wrote at paras. 149, 150, 151, 152 and 156 as follows concerning the defence of fair comment:

149. The following tests apply:

(a) The comment must be based on a matter of public interest.

(b) The comment must be based on fact.

(c) The comment, though it can include inferences of fact, must be cognizable as comment.

(d) The comment must satisfy the following objective test: could any person honestly express that opinion on proved facts?

(e) Even though the comment satisfies the objective test the defence can be defeated if the plaintiff proves that the defendant was actuated by express malice [Grant v. Torstar, at para. 31; Bernstein v. Poon, 2015 ONSC 155, at para. 103].

150. Any concern as to the applicability of the defence requires consideration of whether the words of concern are comment and whether, as comment, they are supported by facts. “The comment must be an expression of opinion on a known set of facts, and the audience must be in a position to assess or evaluate the comment” Mainstream Canada v. Staniford, 2013 BCCA 341, at para. 24]. …

151. In this context, what is comment? The Supreme Court of Canada adopted a view expressed by the Court of Appeal of New Brunswick:

“… “comment” includes a “deduction, inference, conclusion, criticism, judgment, remark or observation which is generally incapable of proof”. [Simpson v. Mair, 2008 SCC 40, [2008] 2 S.C.R. 420, at para. 26, referring to Ross v. N.B.T.A., 2001 NBCA 62, at para. 56.]

152. And went on to cite a well-known text in furtherance of a more refined understanding:

Brown’s The Law of Defamation in Canada (2^nd ed. (loose-leaf)) cites ample authority for the proposition that words that may appear to be statements of fact may, in pith and substance, be properly construed as comment. This is particularly so in an editorial context where loose, figurative and hyperbolic language is used (Brown, vol. 4, at p. 27-317) in the context of political debate, commentary, media campaigns and public discourse.

156. To support “comment” it is required that the factual foundation is properly disclosed, sufficiently indicated or so notorious as to already be understood by the audience [Bernstein v. Poon, at para. 115 referring to Simpson v. Mair, at para. 131]:

What is important is that the facts be sufficiently stated or otherwise be known to the listeners that listeners are able to make up their own minds on the merits of [the] comment [Mainstream Canada v. Staniford, at para. 25 quoting from Simpson v. Mair, at para. 31].

[295] The defendants cannot rely on the defences of qualified privilege or fair comment if the impugned statements were motivated by malice. There is a presumption that they were not and it is for the plaintiffs to show that they were: Health Genetic Center Corp., at para. 177.

[296] Malice in the context of a defamation action includes any form of improper motive for speaking or writing the words complained of, and is not limited to knowledge that the statement was false or that it was published reckless as to its truth or falsity: Grant v. Cormier- Grant, 2001 CanLII 3041 (ON CA), [2001] O.J. No. 3851 (Ont. C.A.), at para. 11. In most cases, there is rarely direct evidence of malice, but malice can be inferred from extrinsic evidence.

[297] Thus, the analytical framework is as follows:

1. Have the plaintiffs proven that they were defamed by the defendants?
2. If yes, were the words used true or “substantially true”?
3. If the answer to question one is yes, were the statements by the defendants made on an occasion of qualified privilege?
4. If the answer to question one is yes, were the statements made cognizable as “comment” based on facts sufficiently stated or known?
5. If the answer to questions 3 and/or 4 is yes, has the plaintiff proven that the impugned statements of fact or comment were motivated by malice?

Defamation - Analysis

[298] The plaintiffs’ defamation claim is focused on four letters written by Ms. Ross as well as her oral communications with the PGT. The four letters are:

1. The October 22, 2010 letter to Mr. Murray in which Ms. Ross set out debts alleged to be owing to Budd by Nancy and Paul;
2. The January 31, 2011 letter to Michael Donnelly at Donnelly & Murphy; and
3. Letters dated February 16 and17, 2011 to the PGT.

[299] The plaintiffs did not specifically plead the words complained of nor how they would be understood by a reasonable person. This is consistent with the broad-brush approach taken by plaintiffs’ counsel to the statement of claim as a whole.

[300] The defendants did not move for particulars or to strike the statement of claim for this manifest deficiency, presumably for tactical reasons. In the course of this lengthy trial, it seemed that counsel were well-aware of the disputed documents that form the basis for the defamation claim. No one was misled as to what was in issue and no unfairness resulted from the general pleading. In these circumstances, I would, if necessary, permit an amendment of the statement of claim to meet this technical concern: Link v. Venture Steel Inc. (2010), 69 B.L.R. (4^th) 161 (Ont. C.A.).

[301] I will first consider the communications between Ms. Ross and Mr. Murray in October 2010, her correspondence with the Donnelly & Murphy firm in January 2011, and finally her communications with the PGT.

i. October 22, 2010 letter to Mr. Murray

[302] Both the October 19 and 22, 2010 letters to Mr. Murray refer to monies loaned to Nancy and Paul by Budd that he wished repaid as part of the mortgage refinancing for the Bluewater property. I find as follows:

1. The words used, particularly those in the October 22, 2010 letter, are disparaging in the sense that they would tend to lower Nancy and Paul’s reputation in the eyes of a reasonable person. The clear inference is that Nancy and Paul have repeatedly “borrowed” money from Budd or run up his credit card for Paul’s business without repaying him. This pattern of borrowing and not repaying was long-standing. They were taking advantage of Budd;
2. The words used are clearly in directed at Nancy and Paul; and
3. The publication is in the form of a letter to a third party – Mr. Murray.

[303] The plaintiffs have proven the elements for defamation on a balance of probabilities.

[304] Ms. Ross cannot prove the truth of the statements made in her letter as to the alleged debts owing to Budd. There are no promissory notes to evidence the debts. No corroborating documents were provided to her nor were any sought before the letter was sent. Ms. Ross candidly admitted that she relied entirely on the information she received orally from Budd.

[305] The October 19 and 22 letters were sent by Ms. Ross in her capacity as Budd’s lawyer. In doing so, Ms. Ross was acting in accordance with instructions from Budd. Mr. Murray asked her to provide details of the alleged debts following receipt of her October 19, 2010 letter. The October 22, 2010 letter was in response to his request.

[306] I find that the defence of qualified privilege is established by the defendants. Ms. Ross had a legal obligation to write the letter that she did. Mr. Murray had a reciprocal duty to receive it. A majority of right-minded persons reading the correspondence and hearing of the communications between counsel in the circumstances at that time would readily conclude that Ms. Ross had an obligation to write to Mr. Murray to provide the information contained in the letter.

[307] I do not see any “comment” in the letters. The defence of fair comment is not engaged.

[308] The plaintiffs submit that the failure of Ms. Ross to require proof from her client to corroborate the debts alleged means that she was reckless as to the truthfulness of the statements made. They argue that the defence of qualified privilege is vitiated by malice. I disagree.

[309] There was no malice or improper purpose in writing the letters dated October 19 and 22, 2010 to Mr. Murray. Ms. Ross was asked by Mr. Murray to provide details of the alleged debts, not corroboration of same. She expressly indicated that she was relying upon information from her client and Ms. Britton. Budd was capable and competent. He had been complaining for years about his children using him as a piggybank. He appeared to be truthful.

[310] Ms. Ross was not reckless with the truthfulness of the alleged debts; rather, she simply conveyed information from her client. She was not personally asserting or attesting to the accuracy of these debts. I find that Ms. Ross was acting in accordance with her obligations as Budd’s lawyer and for no improper purpose.

ii. January 31, 2011 letter to Donnelly and Murphy

[311] Ms. Ross wrote Mr. Donnelly on January 31, 2011 ostensibly for the purpose of providing the file for Budd’s Estate. The letter goes well-beyond that, however. She reiterated most of the information from her October 22, 2010 letter to Mr. Murray concerning alleged debts then owing to Budd.

[312] I note the following statements of fact in the letter:

• “Mr. Kuehl has been a longstanding client of The Ross Firm, together with his wife, Leah.”
• “I would like to offer you some information by way of background which I believe is of importance to the administration of this Estate. What may appear to be debts of the Estate are actually debts owing to the Estate by certain individuals.” [Bold added.]
• “Prior to the mortgage closing, I confirm that the indebtedness of Nancy-Lee Kuehl and her spouse Paul Schaefer to the late Budd Kuehl was, according to Mr. Kuehl and Bev Britton of the United Communities Credit Union as follows: …” [Bold added.]
• “Of the minimum $75,000.00 owed by Nancy and Paul to the Estate of Mr. Kuehl it was paid down by $40,000.00 from the new mortgage, leaving $35,000.00 still owing at minimum….” [Bold added.]
• “In October 2010, Mr. Kuehl attended at our offices to discuss updating his Will and Powers of Attorney. Nancy-Lee Kuehl attended with him at our office on several of these occasions. It appeared to me that Ms. Kuehl was attempting to influence our client in how to draft his Will. Ultimately, I met with Mr. Kuehl alone without the presence of Nancy, Paul or David, and prepared his current Will.” [Bold added]
• “Mr Kuehl was also most anxious to have his wife moved from Brussels to Huronview. This is in order that he and the family and her many friends could visit her easily. I don't believe this has happened although Mrs. Kuehl is on the Huronview waiting list.”

[313] The letter is extraordinary both for the information provided and omitted; in particular:

1. As mentioned, she did not attach or refer to Mr. Murray’s letter of October 27, 2010 in which Mr. Murray indicated that his client could not confirm or deny the indebtedness alleged in the October 22 letter.
2. She did not inform Mr. Donnelly that Mr. Murray had previously indicated his client’s view that the payment of $40,000 from the mortgage proceeds would make Nancy and Paul “square” with Budd.
3. She did not advise him that Budd’s 2008 will referred to Budd having earlier “gifted” monies to Nancy.
4. She did not advise that she had no documentary evidence of these alleged debts and was relying solely on what Budd had told her.
5. She did not mention that the $5,000 advanced toward Nancy’s down-payment and closing costs when she purchased the Bluewater property was more than 10 years in the past and likely statute barred.
6. She failed to advise that moving Leah had been discussed at the November 26, 2010 meeting and Nancy had provided a cogent reason for leaving Leah at Huronlea; one that Ms. Ross appeared to accept at the time.
7. She suggested that Nancy attended more than one meeting with her father concerning his Will. She did not. Nancy was present only for one such meeting and then, only briefly. On a plain reading of her letter, the suggestion is that Nancy attempted to influence her father concerning his Will on multiple occasions.
8. She indicated that Nancy attempted to influence her father’s Will instructions without providing the context of what happened.
9. She failed to mention that she (Ms. Ross) had ordered Nancy to leave the room very early in the meeting and took Budd’s instructions.

[314] I am satisfied that the letter to Mr. Donnelly is disparaging of Nancy and Paul. It infers debt owed by them to Budd’s Estate, that Nancy improperly tried to influence her father in the making of his Will, and that Nancy and Paul repeatedly borrowed money from Budd and/or used Budd’s credit card without repayment. It expressly states that debts that appear to be those of the Estate are actually debts owed to the Estate by Nancy and Paul.

[315] I find that the letter written by Ms. Ross would tend to lower Nancy and Paul’s reputations in the eyes of a reasonable person. The letter explicitly refers to Nancy and Paul. It was written to Mr. Donnelly, a third party, and thereby “published”.

[316] I turn now to the defences asserted.

[317] The defendants have not proven the truth or “substantial truth” of the statements made. As indicated earlier, the suggestion that Nancy tried to exercise undue influence or duress on Budd in the making of his Will is a gross mischaracterization. It overstates what actually happened at the one meeting for Will instructions where Nancy was present only briefly.

[318] Further, there is no proof of debts owed by Nancy and Paul to Budd or his Estate.

[319] Ms. Ross testified that she took Mr. Murray’s letter of October 27, 2010 to be an acknowledgement that Nancy and Paul had no evidence to contradict what Budd said he was owed. Thereafter, it appears that Ms. Ross acted as though the debts were admitted even though Mr. Murray’s letter did not say that his client accepted the debts set out in her October 22 letter nor did his letter amount to same. His previous communication to her indicated that payment of the $40,000 would be enough to repay any debt owing to Budd and nothing in his letter deviated from that position.

[320] As mentioned above, in her letter of October 22, 2010, Ms. Ross provided information from Budd of indebtedness of approximately $75,000 with nothing to corroborate that debt. Some of the amounts indicated were mere estimates. Ms. Ross had no new information after October 27, 2010 concerning the alleged debt. She did nothing to investigate or corroborate the debt before writing her letter to Mr. Donnelly.

[321] Even if the debts in the October 22, 2010 letter were indeed owing, Budd received payment of $40,000 against that debt which left a balance of $35,000 owing. He also received half of the equity in the Bluewater property. That was worth roughly $38,728 (($220,000 value less $142,543 owing to UCCUL) x .5). The two amounts combined exceed the alleged debt.

[322] Nevertheless, Ms. Ross wrote of debts that appeared to be owing by Budd’s Estate but which were, in fact, debts owed to the Estate. What debts? Immediately following that assertion, Ms. Ross provided information on the mortgage refinancing and the debts owed to Budd. The implication is that Nancy and Paul remained indebted to Budd’s Estate; that the refinancing transaction including the transfer of a half-interest in the Bluewater property to Budd did not extinguish whatever debt was owed in October 2010.

[323] Unless Ms. Ross was treating the half-interest in the Bluewater property as a gift to Budd, (and there is no basis for that position), the monies alleged to be owed to Budd in Ms. Ross’ October 22 letter had been paid. Even if the value of the half-interest was modestly discounted, the amount potentially owing to the Estate would be very little. Moreover, Ms. Ross had to know when she wrote the letter to Mr. Donnelly that, with Budd then deceased, she and the Estate had no way to prove the alleged debts.

[324] Ms. Ross also relies on the defence of qualified privilege. She was transferring her file to succeeding counsel. She was simply communicating information that would likely not be evident from the Estate file to assist Mr. Donnelly in his role as counsel. In that role, Mr. Donnelly had a reciprocal duty to receive it.

[325] Certainly, it is not uncommon for counsel transferring files to provide background information or to alert new counsel to urgent issues or outstanding matters that need to be addressed. If there is something important that is not in the file, counsel may draw that to new counsel’s attention as a matter of both professional courtesy and doing what is best for the client.

[326] I accept that the information provided to Mr. Donnelly as to the background to Budd’s half-interest in the Bluewater property would be helpful to him, albeit more helpful if presented in a fair and accurate manner. Likewise, it was appropriate to alert Mr. Donnelly to debts owed or potentially owed to the Estate including by Executors and beneficiaries.

[327] The information concerning the preparation of the Will stands on different footing. How was the suggestion that Nancy tried to improperly influence her father in the making of his Will helpful to Mr. Donnelly in the administration of the Estate unless as a warning that Nancy could not be trusted? Therefore, the defence of qualified privilege is made out in respect of some but not all of the defamatory words.

[328] I will deal first with fair comment before addressing the issue of malice.

[329] Are any of the statements made by Ms. Ross in her letter to Mr. Donnelly fair comment?

[330] The first statement is: “What may appear to be debts owing to the Estate are actually debts owing to the Estate by certain individuals.” The statement does not meet the test for fair comment because,

1. It is not cognizable as an expression of opinion. It is a statement of fact;
2. It is not made on a matter of public interest. The issue was a private matter between family members; and
3. A reasonable person in the shoes of Ms. Ross, familiar with the mortgage transaction and the frailties of proof of the alleged debts, would not be honestly able to express that opinion, if it was opinion.

[331] The second statement is: “In October 2010, Mr. Kuehl attended at our offices to discuss updating his Will and Powers of Attorney. Nancy-Lee Kuehl attended with him at our office on several of these occasions. It appeared to me that Ms. Kuehl was attempting to influence our client in how to draft his Will.”

[332] The last sentence is clearly an expression of opinion by Ms. Ross. It is not, however, an opinion or comment on a matter of public interest. The circumstances surrounding the making of Budd’s Will are the epitome of a private, confidential matter.

[333] In these circumstances, the defence of fair comment is not made out.

[334] Why did Ms. Ross write this letter to Mr. Donnelly as she did? Was she merely trying to convey relevant information to a new lawyer assuming carriage of the Estate file?

[335] The motivation behind this letter cannot be considered in isolation and out of context. Budd died November 18, 2010. The defendants were retained by the Estate Trustees on November 26, 2010 at the reading of the Will. Ms. Ross was content to act on their behalf and to assist them in a guardianship application for Leah. Six weeks later, the retainer was terminated. There was no explanation provided. There was no precipitating event.

[336] Ms. Ross testified that she was not upset by the termination – clients come and clients leave. That may be so, but I find that for some reason, this one stung and Ms. Ross was not pleased to be fired, especially by Nancy.

[337] Nancy testified that she did not like Ms. Ross and felt that Ms. Ross did not like her. Ms. Ross testified that she respected Nancy’s efforts to overcome her addictions and harboured no animosity toward her. I do not believe Ms. Ross.

[338] Within two days of termination of the retainer, Ms. Ross wrote Mr. Donnelly to say that the defendants would be continuing to act for Leah.

[339] Ms. Ross testified that she considered the retainer with the firm to be an old fashioned “faithful family retainer”. As such, it included Leah. Thus, the plaintiffs had no authority to terminate the retainer as it related to her.

[340] I note the following:

1. Heather Ross had never acted for Leah and, apart from a very brief encounter at the Seaforth hospital where she did not speak with Leah, she had not seen Leah in decades.
2. Paul Ross acted for Leah only once, in 2002, when he prepared her Will and Powers of Attorney.
3. Mr. Ross testified that there was no continuing retainer to act for Leah following that transaction.
4. There was nothing in Leah’s Powers of Attorney, her Will or any document to evidence any ongoing retainer by the Ross Firm.
5. There was no evidence that Budd had asked anyone at the Ross Firm to act for Leah or look out for Leah’s interests if he died.
6. While Budd may have used the Ross Firm since 2002, it was incorrect to say that he and Leah had “always been clients” of the firm as she did in her January 5, 2011 letter.

[341] I find that there was no retainer by Leah of the Ross Firm in existence as at early 2011. Ms. Ross’ assertion of same was entirely misplaced.

[342] Ms. Ross knew, however, that the matrimonial home passed to Leah by survivorship and all of Budd’s assets were subject to a trust for her benefit. In effect, the assets lay with Leah.

[343] She wrote to the PGT on February 1, 2011, the day after her letter to Mr. Donnelly, to ask that the PGT investigate and take such steps as it considered advisable. There was no mention of Leah’s children, Nancy and David; no mention that they and Paul were appointed Trustees of the Trust or Executors under the Will. She did not provide Mr. Donnelly’s name as the new lawyer for the Estate. And she kept her correspondence with the PGT entirely secret from Mr. Donnelly and her former clients.

[344] It is in that context that the January 31, 2011 letter was written by Ms. Ross to Mr. Donnelly. I find that the overarching purpose of Ms. Ross’ letter to Mr. Donnelly was to paint Nancy and Paul in a bad light with their new counsel, to complicate the administration of the Estate for the Estate Trustees, and to make matters difficult for Nancy and Paul of whom she had a very negative opinion. She wanted to create the appearance of a conflict of interest by Nancy and Paul. The letter was written for spite, not for the assistance of new counsel nor for Leah’s benefit.

[345] In these circumstances, I find that the plaintiffs have rebutted the presumption that the words were written for a legitimate purpose and have proven malice. The defence of qualified privilege is not available and/or is defeated.

iii. Correspondence to PGT

[346] Ms. Ross wrote identical letters to two different representatives of the PGT on February 16 and 17, 2011. She wrote:

This is further to my letter to you of February 1, 2011.

Enclosed is a letter to David Murray which sets out the latest and most recent debt entered into by the late Budd Eldon Kuehl in order to raise money for his daughter, Nancy-Lee Kuehl (a Trustee for the Estate of Budd Eldon Kuehl) and his son-in-law, Paul Schaefer (also a Trustee).

My concerns for Mr. Kuehl while he was still alive and for his wife, are related to the daughter’s apparent attempts to exercise duress and undue influence over her father when he attended at our office to prepare his Last Will and Testament. His key concern was the welfare of his wife, Leah Florence Kuehl, who has been diagnosed with Alzheimer's and resides in a nursing home facility ...

Mr. Kuehl left his entire Estate in Trust for his wife. His single most significant asset is his home which we are now told is being lived in by his daughter and son-in-law.

The majority of the debt which on the surface appears to be that of Mr. Kuehl’s Estate is in fact debt owed by Mr. Kuehl's daughter and son-in-law and, to a lesser extent, by his son, David Kuehl.

I am concerned that the Executors are in a conflict of interest and are preferring their own interests to that of the sole beneficiary, Leah Florence Kuehl. [Italics added.]

[347] The letters dated February 16 and 17, 2011 to the PGT are defamatory. They cast the plaintiffs, particularly Nancy, in a very negative light. Use of words like “duress and undue influence” are loaded terms, especially to the PGT. In essence, she accused Nancy of trying to bully her father and override his wishes when he made his Will. She also accused the plaintiffs of mismanagement and inappropriate use of Estate assets. A reasonable person reading these letters would infer that the plaintiffs were abusing their positions as Trustees and Executors and that Nancy tried to bully her father when he made his last Will.

[348] The letters went to two different PGT representatives. They specifically referred to the plaintiffs by name. The statements made were disparaging and would tend to lower the plaintiffs’ reputations in the eyes of a reasonable person reading the letters.

[349] I turn now to the defence of truth.

[350] Ms. Ross attached her October 22, 2010 letter to Mr. Murray dealing with the mortgage refinancing. The loan from the credit union was the most recent debt incurred by Budd for Nancy’s benefit. Budd was assisting Nancy to borrow money for renovations to her home and, as that letter indicated, he was to be repaid $40,000 of debt owing to him. That paragraph is substantially true.

[351] The assertion that Nancy attempted to exercise duress and undue influence on Budd when he made his final Will and did so more than once is false and/or a statement made with reckless disregard for its truth. Ms. Ross provided no detail of the so called “attempts to exercise duress and undue influence”. The reference to “attempts” plural implies Nancy tried more than once when he attended her office for Will instructions.

[352] The clear implication of the fourth paragraph of the letters is that Budd’s house is an asset of his Estate and part of the trust for Leah, and that Nancy and Paul (Trustees of Budd’s Estate) are living in that home. There is no indication that Budd and Leah owned the matrimonial home as joint tenants so that upon his death, ownership passed to Leah by survivorship. It was not an Estate asset and was not subject to any trust under the Will.

[353] In my view, the failure to provide that information fundamentally skews the import of the statement that Nancy and Paul were still living there. It colours their conduct in a cloak of misfeasance as Trustees under the Will.

[354] Ms. Ross also failed to advise that Nancy and Paul had been living with Budd for at least two months before he died because of the renovations being done to her home which Budd was supervising. Those facts would mitigate somewhat the inference that Nancy and Paul were seizing upon Budd’s death as an opportunity to use an Estate asset for their benefit.

[355] The fifth paragraph refers to debt of the Estate being debt of Nancy, Paul, and David. The inference is that the Estate does not really owe the money; rather, Nancy, Paul and David do. No explanation is provided nor are the debts specifically identified.

[356] Budd was a co-mortgagor on both his children’s mortgages. Budd was jointly liable to the credit union for that debt. While the mortgages were undoubtedly for Nancy and David’s benefit, the liability for that debt was also Budd’s. Budd had a half-interest in Nancy’s property that provided some protection to Budd should he be called upon to pay the credit union on that mortgage.

[357] It is misleading to characterize debt of the Estate as debt owed only by Nancy, Paul, and David. If the statement made was in reference to the two mortgages, they were, in fact, debts owing by Budd when Budd died. He and David were liable on one mortgage and he and Nancy were liable on the other. They were properly Estate debts.

[358] The last paragraph highlights the inference that Ms. Ross wished to convey to the PGT: the plaintiffs, in their capacities as Executors, were in a conflict of interest and were preferring their interests to Leah’s. That is an expression of opinion that flows from the facts provided earlier in the letter.

[359] The statements made by Ms. Ross in her letters to the PGT are substantially false or misleading by what she wrote and what she omitted. The reference to her understanding that Nancy and Paul were living in Budd’s former residence was accurate but even that statement omitted relevant information.

[360] Ms. Ross relies on the defence of qualified privilege. She submits that she had a duty to write to the PGT; viz. she was obligated by virtue of her continuing retainer for Leah. I have already addressed the lack of continuing retainer above.

[361] Alternatively, Ms. Ross argues that she had a moral or social duty to write to the PGT to advise of the plaintiffs’ conduct and conflicts of interest. Leah was incapable and was entirely dependent on her children to act fairly and appropriately. With Budd’s passing and until a guardian of property was appointed, she was vulnerable.

[362] I agree that ordinarily, where it appears that someone is taking advantage of an incapable person, there is a social or moral duty to report that fact to public authorities including the PGT. It is undisputed that the PGT had a duty to receive the information provided by Ms. Ross.

[363] I am, however, troubled by the previous lawyer-client relationship between the defendants and Estate. Ms. Ross made no mention that she had been retained to act for the Estate and that retainer was recently terminated. She made no mention that before she was terminated, she had discussed with the plaintiffs and was prepared to assist the plaintiffs to apply for guardianship of Leah’s property.

[364] Ms. Ross was writing to the PGT to disclose information about former clients, much of which was gleaned from her past representation of Budd. She did not have consent from the Estate Trustees to do so. It does not appear from the evidence of Ms. Ross that lack of consent or the prospect of a duty of confidentiality were considered before she wrote to the PGT.

[365] It is not necessary for me to determine whether Ms. Ross’ duty of confidentiality to her former clients trumped her social or moral duty to report to the PGT because I am satisfied that Ms. Ross wrote the letters she did for improper reasons. As discussed above, Ms. Ross acted from spite not Leah’s best interests.

[366] I pause to note that if Ms. Ross were truly concerned that Leah had no one looking after her financial interests and was incapable, Ms. Ross could have conveyed a fair and accurate picture of Leah’s predicament without attacking the integrity of the plaintiffs. Ms. Ross could have openly and fairly asked the PGT to assist Leah without painting the plaintiffs as dishonest and dishonourable. She could have acted transparently by copying the plaintiffs and Mr. Donnelly with her correspondence. She did not.

[367] I find that Ms. Ross was angered by the termination of her retainer. She had a low opinion of Nancy and Paul, and to a lesser extent, David. Once her retainer was unexpectedly terminated, she turned to the PGT to hinder the plaintiffs in their roles as Executors and Trustees and impede them from becoming Leah’s guardian. I find that Ms. Ross wrote the February 16 and 17, 2011 letters out of vindictiveness, not concern for Leah’s situation.

[368] The defendants argue that Ms. Ross’ statement to the PGT that she believed “the Executors are in a conflict of interest and are preferring their own interests to that of the sole beneficiary, Leah Florence Kuehl” is an expression of opinion and fair comment. I agree that it is an expression of opinion. I disagree that it is fair comment because it is not a statement based on facts, rather on false statements and half-truths, and it is not on a matter of public interest. In any event, the defence of fair comment, if applicable, is defeated by malice.

[369] Therefore, I find that the defendant defamed the plaintiffs in correspondence to the PGT. The statements made to the PGT were false and misleading and disparaged the plaintiffs.

Damages

[370] The plaintiffs claim:

1. general damages;
2. special damages representing amounts paid by them for rent, PGT expenses rendered during the PGT’s management of Leah’s affairs, legal expenses incurred to deal with the PGT; and
3. Aggravated and punitive damages.

[371] I note that the allegations of defamation specifically refer to defamation as against Nancy and Paul (see paras. 25, 33 and 34). David has not sued personally. I have addressed the damages for defamation without apportioning same as between Nancy and Paul.

[372] I will deal with the claim for special damages first.

i. Special Damages

[373] The Trial Record contains a Statement of Special Damages. It is comprised of:

1. Expenses paid for the Clinton property -$12,468.02
2. Fees paid to the PGT including rent paid by Nancy and Paul - $147,649.74
3. Monies paid to The Ross Firm by the PGT for Leah - $2,241.84.

The total on the statement is $162,359.60.

[374] In addition, during Nancy’s examination in-chief, plaintiffs’ counsel rendered a bill for services provided by him for the application for guardianship of Leah. The bill was for $12,000 plus HST for a total of $13,560. The bill indicates that Mr. Cornish expended 40 hours at $300/hour. The description of services provided is quite general and is not broken down by day or docket. It has the feel of the document hastily thrown together.

[375] The defendants objected to the late production of the document. I ruled that it could be admitted and offered an adjournment if desired.

[376] Thus, the aggregate of special damages claimed is $175,919.60.

[377] No evidence was adduced with respect to expenses paid for the Clinton property. That amount is not recoverable.

[378] The monies paid to the Ross Firm included $636.60 paid by the Ross Firm for the capacity assessment for Leah. That expense was necessary to meet the statutory preconditions to appointment of a guardian for property and health care and, as such, was one that would have been incurred whoever applied, including Nancy.

[379] The largest item in the special damages summary is $68,800 which represents rent paid by Nancy and Paul from the date they left the Forest Ridge property to the date that Leah died, including rent paid to the PGT after they entered into a rental agreement for Forest Ridge.

[380] Nancy and Paul continued to reside in the Forest Ridge home after Budd died. The renovations to the Bluewater property stalled and were never completed. They were living at Forest Ridge when the Bluewater home was destroyed by fire.

[381] Nancy and Paul resided in the Forest Ridge home until they were required to leave by the PGT in August 2011. They paid no rent for their occupation to that point. Nancy testified that her parents would have wanted them to stay there and they would not have seen her out on the street.

[382] I do not accept Nancy’s evidence that by staying at the Forest Ridge home they were maintaining it or “mom and dad” would want them to stay there. It is not for Nancy to speculate what her parents would want them to do. It was incumbent on Nancy and Paul to finish the renovations as soon as practicable and move back to the Bluewater home. The Forest Ridge home could then be sold or rented and later sold for Leah’s benefit.

[383] By the date of the fire, Nancy and Paul had been living rent free in the Forest Ridge home for 10 months. I do not agree that because their home renovations were incomplete or their home burned to the ground, Nancy and Paul were entitled to live in the Forest Ridge home indefinitely, nor to live there without paying rent.

[384] That home belonged to Leah. They knew that she was incapable of managing her property. They were not guardians of her property and had no right to be in that home without Leah’s consent which she could not give.

[385] I find that the rent paid by Nancy and Paul after they were told to leave the Forest Ridge home is not recoverable as damages. Whether they lived in that home or elsewhere, they would have and should have paid rent. Further, monies paid by Nancy and Paul to the PGT for rent after they moved back to Forest Ridge went into the account managed by the PGT for Leah and ultimately, came back to Nancy and David as residuary beneficiaries under Leah’s Will. Ms. Ross’ defamatory statements did not cause them to incur an otherwise unnecessary expense. The claim for rent is denied.

[386] The PGT charged management fees of $31,916.89, property management expenses of $12,789.50, legal fees totalling $22,256.25, and property appraisal expenses of $1,887.10. In addition, the PGT continues to hold $10,000 as a hold back against potential costs. It is plain from Nancy’s evidence that she feels that the charges and expenses incurred were grossly excessive.

[387] Plaintiffs’ counsel argues that but for Ms. Ross’ defamatory statements to the PGT, the PGT would not have become involved and/or Nancy’s application in April 2011 to be replace the PGT as statutory guardian of her mother’s property would have been successful and none of the charges and expenses by the PGT would have been incurred. That application was made by Nancy alone on April 27, 2011 and by the individual plaintiffs jointly in November 2012.

[388] Defence counsel submits, inter alia, that whatever expenses were incurred, they are not recoverable by the plaintiffs. They are expenses incurred by the PGT for Leah. Any claim belongs to Leah’s Estate. Further, they argue that the decisions made by the PGT were made after their own investigation and are not attributable to Ms. Ross. The appropriateness and fairness of any expenses or charges is a dispute that lies entirely with the PGT, not the defendants.

[389] The PGT issued its certificate of statutory guardianship on March 2, 2011, roughly two weeks after receiving Ms. Ross’ February 16 and 17 letters, and only two days after Ms. Ross provided a transcription of Nancy’s voicemail message of February 18, 2011 with the comment that “the message bears out our concern for the welfare of our client [Leah]” (see para. 180 above).

[390] I find that by March 2, 2011, Ms. Ross had poisoned the PGT’s view of Nancy, Paul, and David by the defamatory letters sent. The PGT issued its certificate and thereafter relied significantly on the information provided by Ms. Ross in their dealings and communications with the plaintiffs. For example, Mr. Walters wrote on February 9, 2012 seeking a detailed response to “the apparent debts” owed to Budd’s Estate as indicated in Ms. Ross’ letter of October 22, 2010.

[391] Similarly, in June 2013, Ms. Sienkiewicz wrote to reject the joint application by the plaintiffs to replace the PGT. In that letter, she relied extensively on the information provided by Ms. Ross in her letters above and the October 22, 2010 letter that accompanied her letters to justify the PGT’s decision.

[392] I find that by early March 2011, the dye was set. The plaintiffs were thereafter treated by the PGT as if guilty of the inappropriate behaviour Ms. Ross wrote of. Their applications to replace the PGT had no chance of success. Had they been copied with Ms. Ross’ letters when they were sent, they would have had an opportunity to set the record straight. No such opportunity was given.

[393] I am mindful that Ms. Ross was a well-respected member of the Bar in good standing. To the PGT, she must have appeared on the face of her correspondence to be a well-intentioned lawyer protecting the interests of “her client”, a vulnerable, incapable woman whose husband had recently died. Her correspondence cast the plaintiffs in a terrible light before and after Budd’s death.

[394] There is no question that Ms. Ross’ correspondence to the PGT had a profound impact on the willingness of the PGT to accept the plaintiffs as guardians of property. I infer from the evidence above that the PGT’s decision to issue the certificate of statutory guardianship and to reject the plaintiffs’ applications to replace the PGT were driven by the perceived need to protect Leah’s property from her children.

[395] I disagree that the plaintiffs cannot claim for the expenses charged by the PGT for the following reasons:

1. The defendants were aware, at all material times, of the terms of Leah’s Will, including that Nancy and David were residuary beneficiaries under that Will;
2. The defendants knew or ought to have known that if the PGT assumed financial management of Leah’s property, there would be expenses and charges levied against Leah’s property for that service;
3. The defendants knew or should have known that any such expenses would reduce the Estate on Leah’s death;
4. But for Ms. Ross’ defamatory correspondence to the PGT, it is unlikely that the PGT would have appointed itself Leah’s statutory guardian when it did and/or for as long as it did; and
5. Ms. Ross’ defamatory correspondence deprived the plaintiffs of the opportunity to fulfill that role instead of the PGT.

[396] How then should this loss be measured – the full amount charged by the PGT or a discounted amount to reflect the risk that the PGT would have acted as it did anyway or found the applications submitted unsatisfactory regardless? In my view, some discount is appropriate. There would have been some cost incurred even if management of Leah’s property was performed by the plaintiffs. Further, I cannot say with certainty that if Ms. Ross had not written the letters that she did, the outcome vis-à-vis the PGT would have been different. I think it likely but no more than that.

[397] The special damages figure includes $10,000 still held by the PGT as a holdback. That amount is not recoverable from these defendants. The plaintiffs can seek its return from the PGT.

[398] The total amount of the PGT expenses net of the claim for rent, the holdback and the capacity assessment cost is $69,486.34 ($149,891.58 less ($68,800 + $10,000 + ($2241.84 - $636.60))). I discount that amount by 30%. The loss for this item is $48,640 ($69,486.34 x .7). That represents the amount that would otherwise have been part of Leah’s Estate to be divided between Nancy and David.

[399] However, David is not party to the defamation claim. The title of proceeding and para. 33 of the statement of claim make that clear. Accordingly, the amount must be reduced by 50% to reflect only Nancy’s share. The amount recoverable for this item is $24,320 ($48,640 x .5).

[400] The plaintiffs also seek recovery of Mr. Cornish’s legal account of $13,560 inclusive of HST. There is inadequate evidence of the work done, the time spent, or the value of the service provided. The material filed at trial does show that Mr. Cornish wrote some letters to the PGT and assisted with the preparation of the joint guardianship application in November 2012. In these circumstances, I fix the amount recoverable for that expense at $2,000 inclusive of HST.

General Damages

[401] This is not a case where the defamatory words were widely disseminated. There is no evidence that the defamatory statements caused the plaintiffs a significant or any loss of reputation in the community. They were not publicly stigmatized by her defamation.

[402] Nevertheless, the defamatory words caused significant personal stress. It made their dealings with the PGT more onerous and frustrating.

[403] I have made a finding of malice in relation to both the letter to Mr. Donnelly and the correspondence with the PGT. I did not come to that conclusion lightly. Ms. Ross deliberately impugned the plaintiffs’ reputations and did so more than once. Her correspondence with the PGT is especially troubling both for what she wrote and omitted, and because of the lack of transparency, i.e., her former clients and their new counsel were not copied.

[404] In fixing general damages, I have taken into account my findings in relation to malice. I fix the general damages at $35,000.

Punitive Damages

[405] In my view, the compensatory damages awarded above are an adequate remedy in this case. There is no need for punitive damages.

Conclusion

[406] For the reasons set out above, I order as follows:

1. The plaintiffs’ claims for damages for negligence and breach of fiduciary duty are dismissed.
2. The defendants shall pay to plaintiffs, Nancy Kuehl and Paul Schaefer, damages for defamation in the amount of $61,320 together with prejudgment and post-judgment interest as applicable.
3. If the parties cannot agree on costs, they may make written submissions not exceeding 10 pages within 21 days hereof.

Justice R. Raikes

Released: June 14, 2021

COURT FILE NO.: 202/12

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Nancy-Lee Kuehl and Paul Schaefer, personally, and Nancy-Lee Kuehl, David Barry Kuehl and Paul Schaefer as Estate Trustees for the Estate of Budd Eldon Kuehl

Plaintiffs

– and –

Heather J. Ross and The Ross Firm Professional Corporation

Defendants

REASONS FOR JUDGMENT

Raikes, J.

SCJ

Released: June 14, 2021