COURT FILE NO.: CV-16-126117-00
DATE: 20210618
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE ESTATE OF TAI-KIU MAK, RAYMOND CHI-FAI MAK, EDDIE CHI-KWONG MAK and STEVE CHI-WING MAK
Plaintiffs
– and –
KENNY CHI-KEUNG MAK
Defendant
Thomas MacLennan, for the Plaintiffs
Mark Donald, for the Defendants
HEARD: Nov. 21-22, 25-29, 2019 Dec. 2-6, 2019 Feb. 12-14, 2020 Nov. 30 – Dec. 2, 2020 Jan. 11-14, 2021
REASONS FOR JUDGMENT
McKELVEY J.:
Introduction
[1] In the leading Supreme Court of Canada of decision in Pecore v. Pecore, 2007 SCC 17, [2007] SCJ No. 17, which deals with the law relating to a resulting trust, Justice Abella comments that,
Tolstoy wrote at the beginning of Anna Karenina: “Happy families are all alike, every unhappy family is unhappy in its own way.” That unhappiness often finds its painful way into a courtroom.
[2] Those comments best describe what has occurred in this case.
[3] The Mak family was made up of two parents, Yiu-Loi Mak (the “Father”), Tai-Kiu Mak (the “Mother”), and their four sons, Raymond Chi-Fai Mak (“Raymond”), Eddie Chi-Kwong Mak (“Eddie”), Steve Chi-Wing Mak (“Steve”) and Kenny Chi-Keung Mak (“Kenny”). I refer to the parties by their first names in order to avoid any confusion.
[4] The Mak family is described as a closely-knit family. Following the death of the Mother, who was the last surviving parent, this litigation was initiated after three of the four brothers learned that a significant portion of the estate had been “gifted” to the defendant, Kenny. Kenny asserts that while the wills of his Mother and Father provided for an equal division of the estate amongst the four brothers, it was his Mother’s and Father’s intent to benefit him by gifting him various items of property. The remaining brothers take the position that all of the property, including those which Kenny says he was gifted properly belong to the Mother’s estate.
Background
[5] Between 1970 and 1990 the various members of the Mak family emigrated to Canada from Hong Kong. Before emigrating from Hong Kong, the Father owned a mini-mart. When they arrived in Canada the parents were able to purchase a family residence in Markham which was located at 86 Morrison Crescent. The parents also purchased two rental properties. One property was located at 29 Fundy Bay Boulevard. The other was located at 72 Montezuma Trail.
[6] Raymond was the first member of the family to emigrate to Canada from Hong Kong in 1972. He was followed by Eddie, who emigrated in 1976 and by his parents, who arrived from Hong Kong in December, 1980. They arrived in Canada with Steve. Kenny emigrated in the early 1990’s.
[7] The parents, Kenny and Steve jointly purchased a townhouse in 1988 at 29 Fundy Bay Boulevard in Scarborough. This was described as an investment property and was placed in the names of Kenny, Steve and the Mother.
[8] In 1989, the Mother and Father purchased 86 Morrison Crescent.
[9] In November, 1989, the parents purchased 72 Montezuma Trail. This was also an investment property which was rented out to tenants.
[10] In 1994 the parents executed their wills. Property from each spouse was left to the other. The estate of the surviving spouse was to be split equally between the four sons.
[11] On February 11, 1998, the title to the 29 Fundy Bay property was transferred to Steve and Kenny Mak. Also on February 11, 1998, title to the 72 Montezuma Trail property was transferred to Kenny Mak.
[12] In 2002, the Father passed away.
[13] In 2006, the property at 72 Montezuma Trail was sold. The proceeds of the sale of $247,000 went into TD account no. 6218370 which was in the name of the Mother and Kenny as a joint account. $10,000 from the proceeds were paid to each of the brothers and the balance of the funds were directed to a GIC.
[14] By July, 2007, Kenny Mak had been listed as a beneficiary on the Mother’s RRIF account.
[15] In May, 2008, the property at 29 Fundy Bay was sold. The proceeds were paid one third to the Mother, one third to Steve and one third to Kenny.
[16] Between 2008 and 2012, purchases of gold were made through account no. 6220747 (held in the name of the Mother, Kenny and Steve) and account no. 6218370 (held in the name of the Mother and Kenny).
[17] In 2011, Kenny was added as the power of attorney for his Mother’s account no. 47L654 which held the Mother’s securities.
[18] In March, 2012, the Mother was examined by a neurologist, Dr. Kester Kong. He gave evidence at trial that he saw the Mother in March, 2012 on a referral from her family doctor. He was given a history that the Mother had suffered from memory problems for about a year prior to her visit. On testing, the Mother had significant mental deficits. She didn’t know where she was or the date and couldn’t concentrate. She was unable to do simple mathematical calculations. She could not draw a clock, which is a test of executive function, and had serious problems with her memory. Based on his assessment, Dr. Kong made a diagnosis of dementia.
[19] The Mother made a further visit to Dr. Kong in July, 2012, at which point Dr. Kong concluded that the Mother’s condition was worse. Dr. Kong continued to monitor the Mother’s condition and in January, 2014 he recommended that the family apply for a nursing home placement.
[20] In January, 2013, another joint account was opened in the name of the Mother and Kenny. The account number was 600Y23. According to Kenny it was at this point in time that his Mother gifted him the assets in her securities account 47L654.
[21] In March, 2013, $364,738 was transferred from the Mother’s security account no. 47L654 to account no. 600Y23.
[22] On August 13, 2014, $416,625 worth of securities were transferred from account no. 600Y23 to account no. 12YWO7. This account was solely in the name of Kenny Mak.
[23] In September, 2014, the sum of $434,659 was transferred from account no. 12YWO7 to account no. 140BO8, an account held in the name of Steve and Kenny. Kenny testified that this was done so that Steve could do computer trades. However, he acknowledged in his evidence that no computer trades were ever performed.
[24] In November of 2014, the Mother was admitted to a long-term care facility. She died on November 19, 2015.
[25] On November 27, 2015, $413,012 was transferred from account 140BO8 to account no. 397345E which was an account owned solely by Kenny.
[26] In November and December, 2015, there were a series of visits to the safety deposit box by Kenny. He accessed the safety deposit box on November 5, 16, 24, 25, December 4, 11 and 29, 2015. The plaintiffs assert that this is where the purchases of gold were kept and that the visits by Kenny on the above-noted dates were to remove the gold which was kept in the Mother’s safety deposit box.
[27] Kenny bought two condos. The first condo was at 75 South Town Centre and was purchased in 2005. On February 25, 2016, Kenny purchased a condo at 59 Laurie Shepway. The condo at the South Town Centre was sold prior to the purchase of the Laurie Shepway condo.
[28] Following his Mother’s death, Raymond Mak, acting as Estate Trustee of his Mother’s estate, sold the family home at 86 Morrison Crescent to the daughter of Eddie Mak for a price which the defendant asserts was far less than market value.
[29] Counsel for all of the parties have agreed that the following issues are to be determined by this Court:
The Plaintiffs’ Claims
72 Montezuma Trial
- Was the transfer of 72 Montezuma Trail in 1998 from Tai-Kiu Mak (Mother) and Yiu-Loi Mak (Father) to Kenny Mak subject to a resulting trust?
Joint Account 6218370
Was Joint account 6218370 opened on May 15, 2002 by Tai-Kiu Mak (Mother) and Kenny Mak?
Were the funds in Joint account 6218370, including the net proceeds of sale from 72 Montezuma Trail (deposited into the joint account in 2006) and GIC 8078294, beneficially owned by Tai-Kiu Mak pursuant to a resulting trust or undue influence?
Are the plaintiffs entitled to a tracing order with respect to all funds moved out of Joint account 6218370?
If the tracing order in #5, above, is granted, the plaintiffs seek to assert:
a. beneficial ownership of any property purchased with funds moved out of Joint account 6218370; or
b. a judgment against Kenny personally for damages based on funds moved out of Joint account 6218370.
Securities
The plaintiffs, on behalf of the estate, claim from the defendant the value of the securities transferred from account no. 47L654 to 600Y23, then transferred to 12YW07; then to account 140BO8; and then transferred out to Kenny Mak in November 2015 and December 2015.
- Was the transfer in 2013 of funds from Tai-Kiu Mak’s securities account 47L654 to the joint securities account 600Y23 in the names of Tai-Kiu Mak and Kenny Mak:
a. Subject to a resulting trust?
b. Subject to undue influence?
- If the answer to #7 a. or b., above, is yes, can the funds from account 600Y23 be traced:
a. to 12YW07 (in August 2014),
b. then to 140BO8 (in September 2014),
c. then to Kenny’s securities account 397345E (November 2015) and account 6218370 (December 2015), and
d. then to Kenny’s purchase in 59 Laurie Shepway (February 2016)?
- If the answer to #7 a. or b. above is yes, is the proper remedy:
e. a proprietary interest in 59 Laurie Shepway; or
f. a judgment against Kenny personally for damages based on the value of the amount transferred out of account 140BO8 in November and December 2015 (or at a prior point in time if subsequent tracing fails), plus pre-judgment interest?
Disputed Gold
The plaintiffs, on behalf of the Estate, seek judgment against Kenny for the value of gold taken by him from the mother’s safety deposit box.
Was 105 oz. of gold purchased between March 2008 and July 2012 from joint account 6218370 beneficially owned by Tai-Kiu Mak?
Was the 50 oz. of gold purchased in February 2010 from Tai-Kiu Mak’s account 6220747 beneficially owned by Tai-Kiu Mak?
Was any of the gold from #10 or 11, above, taken by Kenny in or around his Mother’s death in November 2015?
Can the 60 oz. of gold sold by Kenny in February 2016 and used in the purchase of 59 Laurie Shepway be traced back to #10 or 11 above?
If the answer to # 10 or 11, above, is yes, is the proper remedy:
g. a proprietary interest in 59 Laurie Shepway?; and/or
h. a judgment against Kenny personally for damages based on the value of the gold taken by Kenny in #12 (above), plus pre-judgment interest?
Kenny Mak’s Beneficial Designation
- Was the RRIF assignment of Kenny as designated beneficiary in 2007:
a. subject to a resulting trust?; and/or
b. subject to undue influence?
- If the answer to #15 a. or b. is yes, is it appropriate to award the plaintiff approximately $20,000 in damages, plus pre-judgment interest, as the asset is no longer in existence?
The Laurie Shepway Property
The plaintiffs on behalf of the Estate, claim an interest in the defendant’s townhouse at 59 Laurie Shepway.
Are any assets of the estate of Tai-Kiu Mak traceable to the equity in Kenny Mak’s home at 59 Laurie Shepway besides the 60 gold coins Kenny Mak says he took and sold to buy the property?
If the answer to #17, above, is yes, is the proper remedy:
i. a proprietary interest in 59 Laurie Shepway pursuant to a resulting trust?; and/or
j. a judgment against Kenny personally for damages based on the value of the property traceable to 59 Laurie Shepway, plus pre-judgment interest?
The Defendant’s Claims
Improvident Sale
The defendant Kenny Mak seeks damages against Raymond Mak and the Estate of Tai-Kiu Mak for improvident sale of the family home.
Was there an improvident sale of the family home?
If the answer to #20, above, is yes, is it appropriate to award damages of $62,500.00 as sought by Kenny Mak?
TFSA Repayment
The defendant Kenny Mak seeks damages from the defendant Raymond Mak and the Estate of Tai-Kiu Mak for the value of the Mother’s TFSA account worth $27,000 at the time of her death.
- Are Raymond Mak/The Estate of Tai-Kiu Mak liable to repay the $27,000 in TFSA funds transferred from Kenny Mak to Raymond Mak following the death of Tai-Kiu Mak?
[30] A claim for punitive damages was also included in the plaintiffs’ action. However this claim was withdrawn during final argument.
General Comments with Respect to the Credibility of the Parties
[31] Kenny made a very poor witness at trial and I had serious concerns with respect to his credibility during the course of his cross-examination. Examination-in-chief in this action was generally conducted by way of affidavit. As a result, Kenny’s examination-in-chief evidence was given by affidavit. During the course of his cross-examination, counsel for Kenny attempted to introduce a supplementary affidavit. It was immediately apparent that Kenny had been discussing his evidence during the course of his cross-examination in order to prepare the supplementary affidavit. This occurred despite clear advice which was given to the witness at the time of the adjournment during the course of his cross-examination that he was not to discuss his evidence with anyone including his counsel. Both Kenny and his counsel ignored this direction. I have taken this into account in considering the weight to be given to Mr. Mak’s evidence, especially on the issue of the alleged unlawful appropriation of the Mother’s gold in accordance with my decision dated January 7, 2021.
[32] There were also numerous inconsistencies in Kenny’s evidence between the evidence he gave in examination-in-chief by way of affidavit and his cross-examination and evidence he gave at examination for discovery. Some examples will be canvassed later in these Reasons. Kenny was often evasive during the course of his cross-examination. For example, his answers were often not responsive to questions he was asked on cross-examination. He often responded to significant issues by saying he didn’t recall or on occasion would ask a question in response to a question posed to him. As a result, I have significant concerns with respect to his credibility. Kenny suggested during his cross-examination that inconsistencies in his evidence from prior statements could be explained by errors by the interpreter (he gave his evidence through an interpreter during the course of this litigation). I do not accept this explanation. There were simply too many inconsistencies to account for and in any event this would not explain the inconsistencies which were apparent in his evidence at trial where no complaint was raised about his interpreter.
[33] The plaintiffs, however, generally appeared to give their evidence in a straightforward manner. On a number of important issues their evidence was supported by documentary evidence. There were few inconsistencies in their evidence.
[34] In general where there is an inconsistency between the evidence of Kenny and his brothers, I prefer the evidence of the plaintiffs.
Beneficiary Designation for the Mother’s RRIF
[35] The plaintiffs seek an order setting aside the beneficiary designation naming Kenny as the beneficiary of the Mother’s RRIF.
[36] In his evidence, Raymond testified in his Affidavit that following his father’s death in 2002, Kenny remained living in the family home with his Mother and she became dependant on him to drive her to and from appointments and to assist with her banking by driving his Mother to the bank. Raymond also states that his Mother’s dependency on Kenny following his father’s death made her vulnerable to pressure from him.
[37] At paragraph 75 of his Affidavit, Raymond states that his Mother’s naming of Kenny as the beneficiary of her RRIF in 2007 is also concerning because it was kept secret from the other sons. At paragraph 76 he states,
I do not believe that our mother freely designated Kenny as her beneficiary of her RRIF, but given her vulnerabilities, that she was vulnerable to undue influence from Kenny into naming him as beneficiary. Kenny has admitted that he did not protect our mother when she named him beneficiary of her RRIF.
[38] Raymond’s evidence does not appear to amount to anything more than speculation. The designation of Kenny as the beneficiary of the RRIF is reflected in a TD Mutual Funds statement filed as Exhibit 49 and which is dated for the period July 1 – September 30, 2007. This evidence confirms that Kenny’s designation as the beneficiary of the RRIF was made at some point prior to July 1, 2007. This is well prior to the Mother’s onset of dementia. There is no evidence that she did not make this designation of her own free will. There was no evidence called relating to the circumstances under which the Mother made Kenny the beneficiary of the RRIF.
[39] The plaintiffs assert that the naming of Kenny as beneficiary of the RRIF is subject to the “presumption of undue influence”. The plaintiffs note that a presumption of undue influence will arise “in inter vivos gifts involving a relationship of influence by a donee over the donor of a gift”. However, the presumption of undue influence applies to inter vivos gifts only. As noted by the Ontario Court of Appeal in Seguin v. Pearson, 2018 ONCA 355, the rebuttable presumption of undue influence arises only in the context of inter vivos transactions that take place during the grantor’s lifetime. In the present case, however, what is involved is not an inter vivos gift, but rather a designation of Kenny as beneficiary of the RRIF.
[40] In the Seguin case, the Court of Appeal goes on to note that in the case of wills it is testamentary undue influence amounting to outright and overpowering coercion of the testator which must be considered. The court notes that, “the party attacking the will bears the onus of proving undue influence on a balance of probabilities.”
[41] The designation of a beneficiary of a RRIF is akin to a testamentary disposition and I therefore conclude that the onus is on the plaintiffs to establish undue influence. In the present case, there is no evidence to question the Mother’s capacity in making the designation and in the absence of any other evidence I conclude that the plaintiffs have failed to establish that the beneficiary designation was made as a result of undue influence.
[42] This leaves the question as to whether there is a presumption of a resulting trust. The leading case on the principles of a resulting trust were canvassed in the Supreme Court of Decision in Pecore v. Pecore, 2007 SCC 17, [2007] SCJ No. 17. I will have further comments about this case later in these Reasons. At this point, the issue is whether the principle of a resulting trust applies to a beneficiary designation. The plaintiffs argue that the presumption of a resulting trust applies and relies upon the decision of this Court in Calmusky v. Calmusky, 2020 ONSC 1506. In that decision the Court found that the doctrine of resulting trust applied to an RIF beneficiary designation. In arriving at that decision, the court relied on an obiter comment of this Court in McConomy-Wood v. McConomy (2009), 2009 CanLII 7174 (ON SC), 46 E.T.R. (3d) 259 (S.C.). In that case, the Court found on the evidence that there was not the “slightest doubt” that by designating her daughter as the beneficiary under her RIF, the now deceased mother intended that her daughter hold the RIF proceeds in trust for the beneficiaries of the mother’s estate. The trial judge went on to say that if he had to decide the presumption issue, he would agree with the current trend expressed by the Supreme Court of Canada in Pecore against applying a presumption of advancement.
[43] The Court also relied on a Manitoba Court of Appeal decision in Dreger (Litigation guardian of) v. Dreger (1994), Man. R. (2d) 39. This was a case decided before the Supreme Court’s decision in Pecore. In that case the court found that the mother’s intention at the time she designated her son as a beneficiary was that upon her death, her son would take the proceeds for the benefit of her estate.
[44] In my view, however, there is good reason to doubt the conclusion that the doctrine of resulting trust applies to a beneficiary designation. First, the presumption in Pecore applies to inter vivos gifts. This was a significant factor for the Court of Appeal in Seguin, and similarly is a significant difference in the context of a resulting trust. Further, the decision of this Court in Calmusky has been the subject of some critical comment. As noted by Demetre Vasilounis in an article entitled “A Presumptive Peril: The Law of Beneficiary Designations is Now in Flux”, the decision in Calmusky is, “ruffling some feathers among banks, financial advisors and estate planning lawyers in Ontario”. In his article, the author comments that there is usually no need to determine “intent” behind this designation, as this kind of beneficiary designation is supported by legislation including in Part III of the Succession Law Reform Act (the “SLRA”). Subsection 51(1) of the SLRA states that an individual may designate a beneficiary of a “plan” (including a RIF, pursuant to subsection 54.1(1) of the SLRA.)
[45] Section 53 of the SLRA provides that an institution administering the “plan” must pay it out in accordance with subsection 51(1) beneficiary designation upon the plan owner’s death.
[46] It is also important that the presumption of resulting trust with respect to adult children evolved from the formerly recognized presumption of advancement, a sometimes erroneous assumption for a parent that arranges for joint ownership of an asset with their adult child is merely “advancing” the asset to such adult child as such adult child will eventually be entitled to such asset upon such parent’s death. The whole point of a beneficiary designation, however, is to specifically state what is to happen to an asset upon death.
[47] I have therefore concluded that the Pecore presumption of a resulting trust does not apply to a beneficiary designation for the mother’s RRIF. Like the situation with the presumption of undue influence, the onus is on the plaintiffs to establish that the Mother’s intention was to benefit her estate with the beneficiary designation. Having failed to do so I have concluded that the plaintiffs have failed to establish an entitlement to the proceeds of the RIFF.
Transfer of Securities
[48] Following the Father’s death, the Mother inherited his security portfolio which at that time was valued at approximately $73,000. The securities were placed in TD account no. 47L654 which was an account held in the Mother’s name only. There was a suggestion in the evidence that in fact the Father’s security portfolio was worth considerably more than $73,000. However there is no evidence before me to either confirm or deny that suggestion. In any event, the account grew very substantially so that the securities held by the Mother were worth more than $364,000 by March, 2013. According to the evidence of Raymond Mak at paragraph 85, which was agreed to by Kenny Mak in his evidence, the Mother granted Kenny a power of attorney to conduct trades on her securities account no. 47L654 at some point in 2011.
[49] In March, 2013, Kenny transferred $364,738 from the Mother’s security account to account no. 600Y23 which was an account opened in the name of Kenny and his Mother in January, 2013.
[50] Kenny’s explanation was that in January, 2013, his Mother had decided to gift the assets in the security account to him. At paragraphs 48 and 49 of Kenny’s trial affidavit he states,
It was in late January 2013 that my Mother had decided to gift the assets in the 47L654 account to me. More specifically: In January 2013, my Mother and I were watching a television program called “Yesterday’s Glitter” which detailed a situation in which a Mother on that program had decided to give the majority of her assets to only one of her sons because that son was the most filial to his Mother. My Mother commented that she agreed with the premise of the TV show that the most filial and supportive children were deserving of a greater share of their parents’ assets. She also commented that such decisions were up to the parent making the gift. My Mother then commented that she was concerned about me because my low education, status as a single man, unstable job and my poor command of English. She indicated that she intended to transfer all of the assets presently in her securities account to me, in order to ensure that I remained financially stable both at that time, and in the future. She commented that I was the most filial of my brothers towards her and that I remained living with her and took the most care of her, and so deserved a greater share of her assets than did my brothers. She indicated that on the other hand, she did not worry as much about my brothers because they all had families, university degrees, and a stable family life, and were not as filial as I was. She indicated that she wanted me to take her to the bank to transfer the 47L654 account into my name.
We ended up making this trip on January 29, 2013. At the bank, my Mother instructed Wendell to change the name on the 47L654 account from her name to mine. Wendell indicated that bank policy dictated that a new account should be opened with my name, as opposed to the name change on the 47L654 account that my Mother was proposing. It was for this reason that the account 600Y23 was opened. I decided to have my Mother’s name added on the account in case I died before my Mother, so that the assets would then transfer to her.
[51] There were some significant inconsistencies about the circumstances surrounding the above-noted transfer. These were brought out in Kenny’s cross-examination. He was referred to an affidavit he signed on May 30, 2017. At para. 77 he gives evidence about the transfer of the securities which had been transferred from account no. 47L654 to account 600Y23, which were in turn transferred to account no. 12YWO7, and subsequently to account no. 140BO8. At para. 77 he states,
These funds were then transferred into the 140BO8 account, that being the final joint trading account administered by me prior to my mother’s passing in November 2015. It is these funds that are largely the subject of the within dispute. At the time of my mother’s passing, these assets were worth $413,012.94.
[52] There is no reference in the affidavit to the Mother giving the assets in the account to Kenny and in fact, his evidence in this affidavit suggested that they were only administered by him, presumably in accordance with the power of attorney he held.
[53] In response, on cross-examination Kenny testified that he did not recall how the affidavit was prepared and he did not read English. Kenny suggested that he did not have an official interpreter at the time. However, in his supplementary affidavit dated November 26, 2017, Kenny testified that he understood the May 30, 2017 affidavit, that this had been interpreted for him by a certified interpreter and that he had no changes to make to the May 17 affidavit. Plaintiffs’ counsel suggested to Kenny that he first asserted the allegation that his Mother gave him the securities in her security accounts in a May 2019 affidavit. Kenny agreed that this was correct.
[54] The inconsistencies in Kenny’s evidence with respect to the allegation are serious as his initial evidence would suggest that he was simply administering his Mother’s securities pursuant to a power of attorney he was given in 2011 as opposed to his later assertion that his Mother gave the securities to him in January, 2013. Another significant inconsistency in Kenny’s evidence related to the reasons why his Mother allegedly transferred her securities to him. In an affidavit dated November 18, 2019, Mr. Mak amplified or corrected evidence from a previous examination for discovery. The original answer from his examination as well as the corrected and completed answer for question 741 was the subject of cross-examination at trial. The question asked at Kenny’s examination for discovery was as follows,
But its not the bank manager who is giving you the account, its your mother who is giving you the account. So, I want to know your evidence is about that day where you say your mother transferred the ownership of this asset to you. So, what did she do? How did she express herself? What did she say?
[55] At discovery Kenny originally answered,
So, just transfer the account to me. She says, give everything to me so I can act on her behalf for any activities. She has to transfer it to my name, then I’ll be able to conduct business.
[56] In the corrected answer Kenny gives a version of events consistent with his evidence at trial which talked about his Mother watching a television program where the Mother decided to give the majority of her assets to one of her sons because that son was the most filial to his Mother. His answer at discovery was consistent with his evidence in the May 30, 2017 Affidavit that he was given the account to manage his Mother’s assets. When cross-examined on the discrepancies between the two versions of his evidence, Kenny reiterated that it was the TV program which gave his Mother the idea to transfer her securities to him. Nevertheless, this was a further example of a serious inconsistency in his evidence.
[57] A final example of a significant inconsistency in Kenny’s evidence about the transfer of securities from his Mother relates to a later transfer of these securities from account no. 600Y23 to account no. 12YWO7. Initially in his cross-examination, Kenny testified that he made the decision to transfer the securities because they were his property. Later when questioned further he testified that it was the Mother who initiated the transfer by requesting that her name be removed from the account. He testified that his Mother wanted her name removed because she was getting ready to go into a nursing home.
[58] The circumstances surrounding the transfer of the securities from the Mother’s account to account no. 600Y23 which was a joint account between Kenny and his Mother is a critical issue in this dispute. The question which arises is whether the transfer of the securities to a joint account with the Mother and later transferred to an account held by Kenny created a resulting trust.
[59] The leading case on the principles of a resulting trust were canvassed in the Supreme Court of Canada decision in Pecore v. Pecore, 2007 SCC 17, [2007] SCJ. No. 17. In that case, the Supreme Court noted that the presumption of resulting trust is a rebuttable presumption of law and a general rule that applies to gratuitous transfers. It alters the general practice that a plaintiff challenging a transfer bears the legal burden in a civil case to establish that the asset belongs to them. Instead, the onus is on the transferee to rebut the presumption of a “resulting trust”. This is so because the law presumes bargains, not gifts. This presumption applies to assets which are transferred from a parent to an adult child. There is a rebuttable presumption that an adult child is holding the property in trust for an aging parent to facilitate the free and efficient management of that parent’s affairs. The presumption also applies to gratuitous transfers to a “dependant” adult child. The presumption may be rebutted based on the civil standard of proof which is a balance of probabilities.
[60] According to the Court in Pecore, the relevant time for ascertaining the intention of the parties is at the time the property was acquired (see para. 59).
[61] In their decision, the Supreme Court notes that a trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention.
[62] The court in Pecore accepts that in considering the intention of the parent, evidence of intention that arises subsequent to the transfer should not automatically be excluded. Such evidence, however, must be relevant to the intention of the transferor at the time of the transfer. The court, at para. 59, comments that a trial judge, “must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention”.
[63] One of the ways to rebut the presumption of a resulting trust and the one relied upon by the defendant in this case is to establish that the transfer was a gift. To establish a gift three elements must be established: 1) the donor’s intention to make a gift; 2) acceptance of the gift by the donee; and 3) a sufficient act of delivery or transfer of the gift. See Pandke Estate v. Lauzon, 2021 ONSC 123, 2021, 154 O.R. (3d) 307. In this case the only issue raised is the Mother’s intention to make a gift.
[64] In addition, in this case, there is an issue about the Mother’s mental capacity and whether she had the mental capacity to understand substantially the nature and effect of the “alleged donation”. See para. 11 of Pandke Estate.
[65] Finally, in considering the issues raised in this matter, consideration must be given to s. 13 of the Evidence Act, RSO 1990 c. E.23, which provides that in an action by or against the heirs or exectuors of a deceased person an opposite or interested party shall not obtain a verdict or judgment on his or her own evidence in respect of any matter occurring before the death of the deceased unless such evidence is corroborated by some other material evidence.
[66] In the present case I have concluded that the defendant has failed to rebut the presumption of a resulting trust. When the securities account was transferred to Kenny, a resulting trust was created whereby Kenny held the funds in trust for his Mother and subsequently her estate. My reasons for this conclusion are as follows.
[67] Kenny’s evidence that his Mother told him that she wanted to gift the securities to him is contradicted by the evidence of the other brothers. For example, Raymond testifies in his affidavit at paragraph 104 that there were many conversations over lunch with Mother in or about 2014 where all brothers were present. He asserts that, “she told us she wished for the proceeds of the first joint trading account to be held by all four sons, and divided into four shares and paid equally to each of her sons upon her death”.
[68] In support of his position, Kenny relied upon the evidence of Victor Tam. Victor Tam in his affidavit at paragraph 6 testified that the Mother told him that she had given Kenny joint account holder status on her securities trading account because Kenny did not have a stable job nor a high income. Further, it is reported that the Mother indicated that she was concerned that Kenny had a very limited educational background and lacked a wife or children who would be able to look after him in the future.
[69] The statements which are reported to have been made by the Mother are clearly contradictory. They are hearsay but may be admitted as an exception to the hearsay rule as evidence of present intention. Having said that, I have concluded that no weight should be given to any of these statements. The statements of both the plaintiffs and the defendant are self-serving and in my view unreliable. The evidence of Kenny is further weakened by serious credibility issues. There are simply too many inconsistencies in his evidence to give his evidence any weight. Exhibit 79 is an affidavit by Kenny correcting answers from his discovery. The inconsistencies between his evidence at discovery and the corrected answers are one good example of irreconcilable inconsistencies in his evidence. (See for example the corrections for Questions 193, 196, 741, 897, 1005 and 1151). There were numerous other examples in the course of his cross-examination. In light of the unreliability of Kenny’s evidence, I reject Kenny’s evidence that his Mother expressed to him that she was gifting assets to him for his benefit only. Similarly, the evidence of Victor Tam is suspect. He is a very close friend of Kenny and Kenny refers to him as his “God son”. Mr. Tam attended with Kenny throughout most of the examinations for discovery in case some translation was required. He also attended on a motion for summary judgment and at the pre-trial with Kenny. Mr. Tam also suggested that the Mother had a very good memory in November of 2013 which is directly contradicted by the evidence of Dr. Kong who made a diagnosis of dementia in March, 2012. I therefore reject Victor Tam’s evidence and conclude that his evidence does not corroborate the evidence of Kenny.
[70] In light of the contradictory nature of the statements which are reported to have been made by the Mother and in light of the reliability and credibility issues, I am not prepared to place any weight on these hearsay statements.
[71] There is persuasive evidence that the Mother did intend to have her securities shared equally amongst her four sons. The most compelling evidence is the Mother’s will which provides that if her husband pre-deceased her, then the estate was to be divided equally amongst the four sons. Kenny in his evidence suggested that his Mother was persuaded to gift him the securities because she was concerned about his low education, his status as a single man and his unstable job. While in Canada, Kenny was employed as a baker and compared to his brothers earned a very modest income of something in the area of $10,000-$14,000 per year. It is significant, however, that all of these issues were known to both his parents when they prepared their wills in 1994.
[72] There is also a serious issue about the Mother’s capacity to make a gift in 2013. The evidence of Dr. Kong is that the Mother had serious dementia which was diagnosed by March of 2012. I was impressed by the evidence of Dr. Kong who has no interest in the litigation and whose observations are supported by contemporaneous notes that he made at the time. Dr. Kong’s evidence would suggest that the Mother’s memory and cognitive functioning were significantly impaired by March of 2012. Kenny on the other hand testified that his Mother’s cognitive abilities were good up until at least December 2013. He points to the fact that his Mother executed a power of attorney for personal care in favour of Raymond in December of 2013. The circumstances surrounding the signing of the power of attorney for personal care are not entirely clear. The lawyer who arranged for the signing was not called as a witness at trial. I have also taken into account that the mental capacity to sign a power of attorney for personal care is significantly less than the ability to make financial decisions such as gifting assets to one child and effectively favouring that child in preference over her other three children. I conclude that the Mother did not have the necessary mental capacity to gift her securities account to Kenny in January, 2013.
[73] Further movements of the assets in the securities account are also a matter of concern. In August of 2014, $416,625 from the securities account was transferred to another account no. 12YWO7 which was solely in the name of Kenny Mak. In September, 2014, $434,659 was transferred from account no. 12YWO7 to account no. 140BO8, which was an account in the name of Steve and Kenny Mak. Kenny says this was so that Steve could do computer trades. However, there is no evidence that any computer trades were ever performed by Steve which calls into question the explanation given by Kenny in his evidence. Kenny testified that any trading on the account was done by him according to his usual practice which was by telephone.
[74] The Mother passed away on November 19, 2015 and within a matter of days afterwards on November 27, 2015, Kenny transferred $413,012 from account no. 140BO8 to account no. 397345E. This account was solely in Kenny’s name. Kenny’s evidence was that he did not want to have the securities in an account which was also held in the name of one of his brothers and might have been considered to be part of his Mother’s estate.
[75] There is no evidence before me to suggest that Kenny had told his brothers prior to the Mother’s death that the Mother had “gifted” the securities in the account. When his brothers confronted him generally about how much of his Mother’s estate had been “gifted” to him, Kenny appeared to acknowledge that not all of the assets belonged to him. In an email dated February 26, 2016, he states, “Mom’s assets also don’t exclusively belong to me. Later, I will give it to you guys after I sort it all out. Can you give me some time?”. In cross-examination, Kenny suggested that in this note he was just referring to his Mother’s house and not to his Mother’s assets. I reject this explanation because the note does not specifically refer to the home.
[76] In cross-examination Kenny was asked about his Mother’s mental capacity when she first saw Dr. Kong. He testified that her mental issues were not a problem at that time. He insisted that his Mother had a “clear mind” and had no problems in calculating. He did not notice any problems in her executive functioning. He stated that her mental problems did not really start to become a problem until she had to go into long-term care which occurred in November of 2014. I reject Kenny’s evidence on these issues in favour of Dr. Kong’s evidence. The evidence of the plaintiffs also supports a conclusion that there were significant capacity issues being experienced by the Mother in 2012. For example, Raymond testified at paragraph 7 of his affidavit that the decline in his Mother’s memory and cognitive abilities was noticeable by 2011 which was what led to the consultation with Dr. Kong on referral from her family doctor in 2012.
[77] For the above reasons, I have concluded that the defendant has not rebutted the presumption of a resulting trust in relation to the Mother’s securities. I specifically reject Kenny’s evidence that his Mother gifted him these assets in January, 2013.
[78] As part of the relief in this action, the plaintiffs seek a tracing order with respect to the funds taken by the defendant Kenny, which was ultimately invested by him into the purchase of 59 Laurie Shepway.
[79] A tracing remedy flows out of a breach of trust or other fiduciary relationship. On breach of a fiduciary duty, the defaulting party may not retain any personal gain from the relationship. The defaulting party is considered a trustee of the wrongful appropriation for the benefit of the wronged claimant (see Reichmann v. Vered, 2003 CanLII 49295 (ON SC), at para. 286; see also Li v. Li, 2017 BCSC 1312). In the Reichmann case, it is noted that the beneficiary is entitled, at his option, either to assert his beneficial ownership of the proceeds or to bring a personal claim against the trustee for breach of trust. If the traceable proceeds are worth more than the original asset then the beneficiary will assert his beneficial ownership and obtain the profit for himself. The beneficiary’s proprietary claims to the trust property can be maintained against the wrongdoer and anyone who derives title from him, including a donee, except a bona fide purchaser for value without notice of the breach of trust.
[80] In the present case, the plaintiffs have elected to seek a tracing order with respect to the proceeds from the Mother’s securities accounts.
[81] According to the bank records, the sum of $413,012 was transferred to Kenny’s securities account 397345E and these funds were subsequently used to purchase the property at 59 Laurie Shepway as admitted by the defendant at paragraph 58 of his factum.
[82] I therefore conclude that the Mother’s estate is entitled to a tracing order for this amount against the property at 59 Laurie Shepway.
Transfer of 72 Montezuma Trail
[83] 72 Montezuma Trail was initially purchased by the parents in November of 1989. Title was taken in the name of both parents. Title to the property was transferred to Kenny on February 11, 1998. Kenny asserts that he was “gifted” the property in 1998 by his Father. At paragraph 22 of his affidavit he states,
Accordingly, for many years my parents were concerned about my long-term financial security. It was for this reason that in or around 1998, my Father indicated that one of my parents’ rental properties at 72 Montezuma Trail, Toronto, M1V 1H8 ( the “Montezuma property”), would be gifted to me. His rationale for doing so was that, I was highly dependent on my parents, while at the same time not being highly educated. My Mother knew and agreed with this principle. This designation occurred on or around February 11, 1998. At that time, I took legal and beneficial ownership of the Montezuma property.
[84] It is apparent that the reasons for the alleged “gift” are similar to those which were given for the alleged “gift” of the securities account. Many of the same concerns with respect to the securities account also apply to this transfer. For example, this transfer occurred only four years after the signing of the wills by both parents which split the estate equally amongst the four sons. It is apparent that Kenny’s issues as set out in his evidence were well known to his parents at the time their wills were prepared.
[85] In addition to that, there is other evidence which would call into question Kenny’s assertion that the property was gifted to him by his Father.
[86] The Montezuma property was one of two investment properties which were purchased. Title to the 29 Fundy Bay property was initially taken in the name of the Mother and Kenny Mak. The legal ownership was changed on February 11, 1998, the same date as the title to 72 Montezuma Trail was changed. At that time the property title was given to Steve and Kenny. The Mother was no longer identified as a legal owner of the property. Nevertheless, it is apparent that the Mother was a one third beneficial owner of the property when the property was sold in 2008. The Mother, Steve and Kenny shared equally in the proceeds from the sale. The proceeds from the sale were initially deposited to account 6220747 which was opened in the names of the Mother, Steve and Kenny. The Mother’s share was subsequently transferred to her securities account 47L654. This suggests that the transfers of legal ownership of the investment properties which took place in February of 1998 were not intended to extinguish the beneficial ownership by the parents.
[87] Further support for this position is found in the documentation which was entered into at the time of the transfer of the Montezuma property to Kenny Mak in February of 1998. At that time Kenny signed a continuing power of attorney for property in favour of his Father. Under this power of attorney the Father had the authority to manage both the Fundy Bay and Montezuma properties. This included the power to sell the properties and to retain the proceeds of sale. There is evidence that the Father continued to receive rents from the property following the transfer of title and that the expenses were also paid by him. Following the Father’s death, the rental receipts and expenses were paid out of an account in the joint names of Kenny and his Mother. Kenny maintained that this account was his account and that his Mother was only named in the event that he predeceased her.
[88] The existence of the power of attorney strongly suggests that the Father intended to retain beneficial ownership of the property and that his intention was not to gift it to Kenny. The plaintiffs assert that the reason for the change was so that the parents would not have to report the rental income and minimize the likelihood of an old age security claw back on their tax returns. The tax return documented that the parents turned 65 at around the time of the transfer but as pointed out by the defence, the parents’ income would not have resulted in a claw back of the old age security payments. While this may or may not have been the rationale for the transfer, the existence of the power of attorney signed by Kenny would call into question his Father’s intention to gift him the property.
[89] When questioned about this on cross-examination, Kenny testified that he was unaware that his Father had the authority to sell the property. He thought he was only authorizing him to manage the property. He suggested that the lawyer did not explain the fact that his Father was authorized to sell the property and keep the proceeds. He acknowledged, however that his Father continued to manage the property prior to his death. This was in contrast to his assertion at paragraph 28 of his affidavit at trial where he states, “I managed the Montezuma property as its owner”.
[90] Regardless of Kenny’s understanding, the power of attorney is strong evidence of the Father’s intention to retain beneficial ownership of the property.
[91] Kenny also relies on evidence Shau King Tam and Fuk Cheng Yu to support his assertion that the Montezuma property was gifted to him.
[92] Shau King Tam was a friend of the parents who testified that over the decades, the parents had commented that Kenny was the only one of their sons who made a meaningful effort to look after them. They were also reported to have stated that they were worried about Kenny’s future prospects because he was not married and did not have a profession. The witness recalled that on a few occasions the parents indicated that because of these concerns they intended to gift a house to Kenny because he was single and did not have a good job. Shau Tam was not a credible witness. She had a very poor recollection of any details of any discussions with the parents when she was questioned about this on her cross-examination. She could only pinpoint the time when these discussions allegedly took place as being some time after 1982 which gives very little probative evidence as to what the intentions were when the property was transferred in 1998. Shau Tam was not responsive to many of the questions posed on cross-examination and appeared to be more of an advocate than an independent witness. Finally, Ms. Tam was cross-examined on an affidavit from October 13, 2017 which was identical to her affidavit at trial. The earlier affidavit, however, does not make reference to a townhouse being gifted.
[93] In the affidavit of Fuk Cheng Yu, he stated at paragraph 3 that the parents told him quite a few years before the Father’s death that they intended Kenny to have their townhouse. On cross-examination, Mr. Yu confirmed that he was a former work colleague of Kenny and had been friends with Kenny since the 1990’s.
[94] There were significant credibility issues with Mr. Yu. He also was not responsive to many questions in his cross-examination. There were also significant inconsistencies in his evidence from what he had given in an earlier affidavit. In particular, in an earlier affidavit, Mr. Yu did not make any reference to the townhouse being “gifted”.
[95] For the above reasons, I do not find that the evidence of either Mr. Yu or Ms. Tam are capable of corroborating the evidence of Kenny that his father gifted him the townhouse at 72 Montezuma Trail.
[96] The Montezuma property was sold in 2006. At that time Eileen Mak, who is the wife of Raymond, acted as a real estate agent for the sale. In her affidavit she testified that she took instructions for the listing solely from the Mother. The Mother selected her as agent and decided the terms of the listing agreement including price. The Mother made all of the decisions about the sale of the property and Kenny was not involved with the transaction other than signing the necessary documents as the legal owner. Eileen Mak was not seriously challenged on this evidence in her cross-examination and I accept her evidence on these issues.
[97] The proceeds from the sale of the Montezuma property were placed in TD account no. 6218370. Kenny testified that this account was his personal account and that his Mother was placed as a joint account holder simply because he wanted her to have the right of survivorship.
[98] The ownership of the account was vigorously contested during the trial. It is apparent, however, that the funds being placed in this account is not inconsistent with the Mother being the beneficial owner of the property. What I found particularly significant, however was that $10,000 was given to each of the sons from the proceeds of sale. Kenny’s evidence is that he provided each of his brothers with $10,000 in an effort to placate them. At paragraph 35 of his affidavit he states,
On the contrary, it was I, and not my Mother, that made those payments directly to my brothers following the sale of the Montezuma property, and in the course of my dealings with those funds. These payments were made gratuitously as I was concerned by my brothers jealously that I would be entitled to the proceeds from the Montezuma property. Accordingly, I provided them each with $10,000 in an effort to placate them (along with a $10,000 payment to my own securities account: 397345E). Their assertion that these payments were somehow related to our Mother’s intentions regarding distribution of the Montezuma property proceeds is incorrect.
[99] What remains unexplained, however is why Kenny would feel the need to make a separate payment to himself of $10,000 if the purpose of these payments was to simply placate his brothers. It also calls into question his assertion that the account 6218370 was truly his account, given that the $10,000 he received was transferred into another securities account owned by him. The transfers are more consistent with the Mother providing each of her sons with an equal amount from the sale of the Montezuma property which is consistent with the Mother being the beneficial owner of the property and intending to treat each of her sons equally.
[100] When cross-examined as to why he would need to pay himself $10,000 from the proceeds of the Montezuma sale if he was beneficially entitled to all of the proceeds, Kenny responded simply that it was his money and he could do whatever he wanted with it. I did not consider this an adequate explanation as to why this payment into a separate account would be made by him. I have concluded that it was the Mother who kept control of the proceeds and made the decision to distribute $10,000 to each of her sons. This further supports a conclusion that the Mother intended to treat each of her sons equally.
[101] For the above reasons, I have concluded that Kenny has not rebutted a presumption of a resulting trust. The funds held by Kenny from the sale of 72 Montezuma Trail (apart from the initial distribution of $10,000 per child distributed following the sale) is held by him as part of a resulting trust. I specifically reject Kenny’s evidence that his father gifted him the home at 72 Montezuma Trail in February, 1998.
[102] The plaintiffs seek a tracing order for the funds generated from the sale of 72 Montezuma Trail. The account information summary found at Exhibit 58-9 documents that the sum of $247,888.34 was transferred into the joint account owned by the Mother and Kenny numbered 6218370. From this amount the sum of $40,000 was transferred out to the Mother’s four sons leaving the sum of $207,888.34 which was transferred out to acquire GIC 8114649.
[103] The banking records record that the sum of $58,184.22 was transferred from GIC account 8114649 to account 6218370 and that from that account the sum of $50,000 was transferred to the Mother’s securities account 47L654. It is also documented that $51,055.27 was transferred from GIC account 8114649 to account 6218370 on December 20, 2006 and from that amount $50,000 was also transferred to the Mother’s securities account 47L654. The total transfer to the Mother’s securities account is therefore $100,000 and this amount has already been captured in my consideration of the Mother’s security account. There is, however, the residual amount from the two transfers which total $9,239.49 which was not transferred to the Mother’s securities account. There is no evidence to suggest that these funds ended up in the purchase of 75 South Town Centre Boulevard. As a result I order that the Mother’s estate shall have judgement against the defendant for this amount.
[104] This leaves the balance from the sale of 72 Montezuma Trail which was $207,888.34 less the two payments transferred from account 6218370 as described above leaving a net balance of $98,648.85. It appears that this amount was included in a transfer to account 6220747 of $108,752.74 on February 16, 2010 and which was used to purchase gold as described below.
[105] As a result, there is no evidence that the funds from the sale of 72 Montezuma Trail were used to purchase 75 South Town Centre Boulevard or 59 Laurie Shepway. A tracing order shall therefore not issue for any of these funds, except in the context of gold purchases as described below.
[106] The plaintiffs assert an interest to all the funds in account 6218370. I have concluded that this was a joint account owned by Kenny and his Mother. This is consistent with the banking records. I accept that Kenny’s paycheques from employment were deposited to this account. There were numerous transfers of money into and out of this account. Some, like the entries relating to the sale and distribution of funds from the sale of the 72 Montezuma Trail property went through this account. These funds I have found belong to the Mother. In other cases, there were significant deposits by Kenny to this account. However, for a significant number of transactions I am not able to determine the source of the funds.
[107] All of this makes it impossible for me to know to what extent the funds in the account belong to the Mother or to Kenny. The plaintiffs theory appears to be that if a trustee mixes his own funds with another, all of the property must be taken to be the other’s property until the trustee is able to prove what part of it is his own. I question whether this principle applies to a jointly held bank account. Nor are the plaintiffs clear as to what amount or remedy is sought under this heading of damages.
[108] In these circumstances, I require further submissions from the parties on this issue if this claim is being pursued. I direct the plaintiffs solicitor to deliver further written submissions within 30 days from the release of this decision and the defendant is required to respond with responding submissions within 30 days of the delivery of the plaintiffs submissions. The plaintiffs solicitor is then required to contact the trial coordinator within 30 days to schedule a date for oral submissions on this issue. I will then deliver supplementary reasons.
Purchases of Gold
[109] The parents purchased gold as an investment which was kept in a safety deposit box at the bank. The plaintiffs allege that Kenny used his Mother’s financial resources to purchase gold and then subsequently removed the gold from the Mother’s safety deposit box at around the time of her death.
[110] In the present case, there is clear evidence that significant purchases of gold were made from accounts 6218370 and 6220747 between 2008 to 2012. This summary is found at Exhibit 21 and shows that 98 ounces of gold were purchased through account no. 6218370 and 50 ounces were purchased through account no. 6220747. According to the plaintiffs, all four sons attended at the TD Bank on December 29, 2015 where the safety deposit box was opened. According to the affidavit of Eddie Mak at paragraph 48, the plaintiffs were shocked when the safety deposit box was opened as all of the parents’ jewellery and all of their gold, other than four five ounce bars, were gone. Each of the sons was given one five ounce bar.
[111] In addition to the gold which was purchased between 2008 to 2012 as set out in Exhibit 21, the plaintiffs allege that there was additional gold which was stored in the safety deposit box. The exact amount of gold, however, which was being stored is not entirely clear. At paragraph 50 of the affidavit of Eddie Mak, he states,
Our parents had purchased gold for years and kept it in their safety deposit box. Kenny’s statement of defence admits that our Mother’s box contained about $140,000 of gold when gold traded for about $800 USD, or the equivalent of another 175 ounces. Our parents added Steve as a holder of the safety deposit box from the date they opened it in 1980’s. Steve had only accessed the account once in 1997.
[112] The affidavit of Raymond at paragraph 128 states that his Mother’s gold comprised about 175 ounces held by her in 2006 when Kenny was granted access to her safety deposit box plus an additional 155 ounces purchased through her bank accounts through 2008 to 2012 for a total of 330 ounces of gold.
[113] It is not clear to me how the plaintiffs would be aware of how much gold their parents had kept in the safety deposit box when the evidence would suggest that the last time any of them had accessed the safety deposit box was in 1997 (see para. 50 of the Affidavit of Eddie Mak as referenced above). There are no records to document any gold purchases prior to 2008.
[114] In addition, the suggestion that Kenny had admitted the amount of gold in the safety deposit box in his statement of defence does not appear to be accurate. Paragraph 38 of the Amended Statement of Claim alleges that the safety deposit box included gold bars which were purchased for about $130,000 when gold traded for $800 an ounce. In the amended statement of defence, Kenny admits paragraph 38 but does not admit, “the precise value of the gold bars, which is unknown at this time”.
[115] I have concluded that there is no reliable evidence as to the amount of gold which was kept in the Mother’s safety deposit box prior to 2008.
[116] Kenny’s evidence does not assist in knowing the amount of gold that was in the safety deposit box or how much he might have taken out of the safety deposit box. At paragraph 64 of his affidavit he states that the exact amount that his Mother owned in the box was “unknown”. He also appears to suggest that his Mother may have taken gold out of the safety deposit box. The bank records record a series of visits to the safety deposit box by Kenny on November 5, 16, 24, 25, December 4, 11, and 29, 2015. At paragraphs 65 and 66 of his affidavit Kenny states,
My brothers assume that each time I visited my Mother’s safety box, that it was to misappropriate her gold. The fact is that I went there for numerous reasons: I would on occasion drive my Mother to the safety box, and sign-in so that she could visit the box. I would then wait outside the room while my Mother attended to the box. I have no knowledge as to what, if anything she did with her gold assets.
I also had a watch in my safety deposit box that needed to be shaken periodically to keep working. I also attended to check, clean and maintain the jade jewellery in the box, which needed to be cleaned and touched up to maintain its luster.
[117] The suggestion by Kenny that he had to go to the safety deposit box to wind his watch and polish jade is totally inconsistent with his past patterns of accessing his Mother’s safety deposit box. There were, for example, no visits between December 2014 to November, 2015. When confronted with this discrepancy on cross-examination Kenny responded that this didn’t really mean anything because when he visited the safety deposit box was not really an issue. However, the timing in my view is a significant issue. His Mother died on November 19, 2015, which makes the visits in the time period just before and after her death very suspicious. I therefore reject Kenny’s evidence and have concluded that Kenny’s attendances in the latter part of 2015 were to facilitate removal of the gold from the Mother’s safety deposit box.
[118] Other evidence given by Kenny with respect to the alleged removal of his Mother’s gold was also concerning to me and reflected very poorly on his credibility. During his cross-examination, he initially reported that he had sold gold which had belonged to him in order to pay ongoing living expenses and to pay down his mortgage. Later he suggested that he would buy and sell gold in order to make profits. He inferred that this was an investment strategy he took advantage of. When confronted with the apparent inconsistency in his evidence he refused to acknowledge any inconsistency and stated that there can be many reasons to sell gold, not just to pay for expenses.
[119] Later Kenny was cross-examined about statements he made at his examination for discovery about his failure to comply with court orders for an accounting. In his answer he attempted to lay blame on his previous lawyer. He suggested that his previous lawyer had a close connection with other members of the family and he lost trust in him. This lead to the discharge of that lawyer. However, the transcript from discovery clearly identifies that his counsel at the time was his current lawyer in whom presumably he has complete trust.
[120] Kenny was also referred to a further discovery transcript for October 3, 2019 where he was asked the following question:
Question: I just want to confirm, you did not sell any gold other than through TD Canada Trust?
Answer: No.
[121] This evidence was inconsistent with his evidence at trial that he sold gold to a private individual called Mr. Ho. When confronted with this inconsistency, Kenny responded that in connection with his contact with Mr. Ho he was not selling gold, but was rather exchanging gold for cash. He stated that gold itself is cash and therefore exchanging gold for cash does not constitute a sale of the gold. Kenny’s evidence on this point further eroded my impression of his credibility.
[122] In the end, I am only prepared to accept that gold was purchased and kept in the Mother’s safety deposit box which is documented in the banking records filed at trial. These records document that 98 ounces of gold were purchased through account no. 6218370 and 50 ounces were purchased through account no. 6220747. It seems possible that more than this amount was kept in the Mother’s safety deposit box. However, in the absence of any reliable evidence on this point, I am not prepared to find that more than these amounts were stored in the box.
[123] With respect to the purchase of 98 ounces of gold through account no. 6218370, the records show that for each purchase of gold there was a deposit from Kenny’s personal securities account roughly equivalent to the cost of each purchase except for two occasions. The first occasion was on April 4, 2012, where three ounces of gold were purchased. The other occasion was on July 24, 2012 when five ounces of gold were purchased. There was, however, a deposit from Kenny’s personal securities account of $2,000 representing just less than half of the cost of the gold on that date.
[124] I conclude, therefore, that of the 98 ounces of gold purchased from account 6218370, Kenny has established that all but two transactions were made with funds received from his personal securities account. This leaves the purchase on April 4, 2012 of three ounces of gold and the purchase on July 24, 2012 of five ounces of gold for which only $2,000 out of the total purchase price of $5,055.05 was paid by Kenny. This translates into approximately five ounces of gold being unaccounted for from account no. 6218370 which I conclude is subject to a resulting trust.
[125] With respect to account no. 6220747, there was a purchase of 50 ounces of gold on February 19, 2010. Account no. 6220747 was held in the name of the Mother, Steve Mak and Kenny Mak. It initially received and then distributed the funds from the sale of 29 Fundy Bay Boulevard. Later, it received the sum of $108,752 from GIC 18114649 which I have previously found includes the sum of $98,648 from the sale of the 72 Montezuma Trail property. From that amount the sum of $65,736 was used to purchase 50 ounces of gold together with the 5 ounces of gold purchased from account 6218370, the result is Kenny purchased 55 ounces of gold using his Mother’s funds.
[126] From the 55 ounces of gold purchased, it is necessary to deduct 20 ounces which were distributed to the four brothers after their Mother’s death which leaves a net of 35 ounces which Kenny is required to account for by way of a resulting trust, as the funds used to purchase the gold came from the sale of 72 Montezuma Trail.
[127] Kenny’s evidence is that he sold 60 ounces of gold in order to complete the purchase of 59 Laurie Shepway. This transaction is documented and the sale price was $91,000 CAD. Based on the sale transaction, 35 ounces of gold would be worth $53,083. I conclude that this amount was subject to a resulting trust and represented a contribution from the Mother’s account to the purchase of 59 Laurie Shepway. The plaintiffs are entitled to a tracing order for this amount. Taking into account the other amounts which were traced into the property at 59 Laurie Shepway, the total amount consists of the following:
Amount transferred from the Mother’s securities account: $413,012
Amount received from the sale of 72 Montezuma Trail: $0
Amount received from sale of gold belonging to the Mother: $53,083
Total: $466,095
[128] Applying all of the tracing orders to the property at 59 Laurie Shepway and taking into account that this property was purchased for $671,000, I conclude that the Mother’s estate is entitled to a 69.5% interest in the property at 59 Laurie Shepway.
[129] I also conclude that the Mother’s estate is entitled to judgment for the difference between $98,648 which represents the balance of the funds received from the sale of 72 Montezuma Trail less $65,730 which was used to purchase gold. This results in an award of $32,918.
Counterclaim
Sale of Family Home at 86 Morrison Crescent
[130] Kenny has counterclaimed in the action for the loss to his Mother’s Estate based on what he asserts was an improvident sale of the family home at 86 Morrison Crescent. The home was sold by Raymond as the Estate Trustee. He sold the property to Eddie’s daughter Tiffany Mak for the sum of $850,000. Kenny asserts that the home was worth substantially more.
[131] As noted in the decision of this court, In the Estate of Norma Baer, (deceased), 2014 ONSC 4468, it is trite law that an estate trustee has a fiduciary duty to act in the best interests of an estate and its beneficiaries and an estate trustee must exercise the standard of care employed by a person of ordinary prudence in managing his or her own affairs. This includes an obligation, when liquidating estate assets, to obtain “fair market value” for the assets being sold. The traditional method of arriving at fair market value is to expose the asset for sale in the marketplace.
[132] The Mother’s will provides considerable discretion to the estate trustee in realizing the assets of the estate.
[133] The relevant portion of the will provides as follows:
My trustee may use his/her discretion in the realization of my estate, with power to sell, call in and convert into money any part of my estate not consisting of money at such time or times, in such manner and upon such terms and either for cash of (sic) credit or for part cash and part credit as he/she may in his/her absolute discretion decide upon, or to postpone such conversion of my estate or any part or parts thereof for such length of time as he/she may think best.
[134] The estate sale of the property to Tiffany Mak was made through an Agreement of Purchase and Sale dated February 14, 2016. The transaction closed on April 29, 2016 in accordance with the terms of the agreement.
[135] Kenny introduced evidence from a qualified appraiser, Kamton Chun, who assessed the value of the family home at $1,050,000 as at February 2, 2016. In his evidence, Mr. Chun testified that the period between October 2015 to March 2016 when the property was sold was a “hot market” in the Markham area where the property was located. As a result prices were increasing at the time of the sale. Mr. Chun was critical of the plaintiffs’ expert for failing to take this factor into account.
[136] Raymond testified that before selling the home to his niece he retained an independent expert, Calvin Brown, to value his Mother’s home. Mr. Brown is a certified residential appraiser. Overall the property was in below average condition and Mr. Brown provided his appraisal of the home which he valued at $880,000. After retaining the appraisal report, Raymond arranged three contractors to inspect the interior and exterior of the home, he received verbal quotes to renovate the property for roughly $70,000-$80,000. He comments that there was no money left in the estate to repair the home as Kenny had depleted his Mother’s accounts.
[137] Calvin Brown gave evidence at trial. He confirmed that he completed an appraisal report for the property at 86 Morrison Crescent at the request of Raymond Mak. He reached the conclusion that a fair market value for the property was $880,000. The comparables referred to in Mr. Brown’s assessment all dated back to November, 2015. In light of the evidence that this market was increasing in real estate values, I accept that the family home might have modestly increased in value by February of 2016. Overall, however, I doubt that the value would have reached the estimate given by the defendant’s expert as his opinion did not take into account the overall condition of the property. He did not have an opportunity to see the interior of the home.
[138] Further, it was reasonable for Raymond to rely on the estimate given by Mr. Brown who was qualified as a certified appraiser. It was also reasonable for Raymond to agree on a purchase price of $850,000 given that a real estate commission of 5% on a sale at $880,000 would have resulted in a commission of $44,000. Thus, the estate netted a better recovery than if the property had been sold through a realtor for $880,000.
[139] For the above reasons, the defendant’s counterclaim based on the sale of the family home is dismissed.
TFSA Repayment
[140] The defendant, Kenny, seeks damages from the plaintiff Raymond Mak and the Estate of the Mother for the value of the Mother’s TFSA account which was worth $27,000 at the time of her death. It is acknowledged that Kenny gave this money to the Mother’s estate following her death.
[141] The TFSA account was set up on November 12, 2013. At this point the Mother suffered from serious dementia. The account was set up in cooperation with Kenny who was also designated on the account as the power of attorney.
[142] I am satisfied that in these circumstances, the plaintiffs have established that Kenny exercised undue influence on his Mother at the time the account was set up and that the funds properly belonged to the Mother’s estate. For these reasons, this counterclaim is dismissed as well.
Conclusion
[143] For the aforesaid reasons, I conclude that the Estate of Tai-Kiu Mak is entitled to a declaration that the property located at 59 Laurie Shepway is owned 69.5% by the Estate of Tai-Kiu Mak, as well as an order for payment of $42,157.49 from the defendant. The defendant’s counterclaims are dismissed.
[144] If there are any issued outstanding which have not been addressed in these Reasons, I may be spoken to.
[145] Once the issue regarding account 6218370 has been addressed, I would encourage counsel to address the issue of costs. If costs cannot be agreed upon between counsel, then an appointment should be taken out with the trial coordinator within 30 days of the release of that decision to address the issue of costs. In such event, the parties will deliver concise briefs at least two days before their attendance. If no arrangements are made within 30 days for an appointment to speak to costs, there will be no order for costs in this action.
Justice M. McKelvey
Released: June 18, 2021
Mak (Estate) v. Mak, 2021 ONSC 4415
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE ESTATE OF TAI-KIU MAK, RAYMOND CHI-FAI MAK, EDDIE CHI-KWONG MAK and STEVE CHI-WING MAK
Plaintiffs
– and –
KENNY CHI-KEUNG MAK
Defendant
REASONS FOR JUDGMENT
Justice M. McKelvey
Released: June 18, 2021