Superior Court of Justice (Commercial List)
Court File No.: CV-16-11517-00CL Date: 2021-11-05
Between:
Jacqueline Strauss and Anne Urbanek on their own behalf and as Trustees of the Wright Family Trust Applicants
– and –
John (Jack) Wright and Anjay Limited Respondents
Counsel: David Chernos and Andrew Finkelstein, for the Applicants John O’Sullivan and Andrew Burgess, for the Respondents
Heard: April 6, 2021, June 1, 3 and 4, 2021 and August 6, 2021
Reasons for Judgment Dietrich J.
Overview
1Jack Wright (“Mr. Wright”) was born on October 6, 1926, and at the time of this trial, was 94 years of age. Mr. Wright attended each day of the trial, but he did not testify.
2Mr. Wright left high school after the tenth grade and found employment as a sheet metal worker. From there, he developed an interest in real estate, including mortgages and lending. He and his late wife, Anne Wright (“Mrs. Wright”), founded Anjay Limited (“Anjay”). Anjay was in the business of purchasing mortgages and lending, primarily to farmers. The business was very successful.
3Each of Mr. Wright, his late wife Mrs. Wright, and their daughters, the applicants, Jacqueline Strauss (“Ms. Strauss”) and Anne Urbanek (“Ms. Urbanek”), were shareholders in Anjay. Until Mr. Wright’s shares were redeemed recently, Mr. Wright controlled Anjay through his share ownership.
4On December 19, 2013, as part of a larger succession plan, the implementation of which began in 2007, Mr. Wright signed a half-page Deed of Gift in which he made a gift of his 40-per cent interest in a mortgage on a farm property known as the Johnson Farm, near the City of Vaughan, Ontario (the “Johnson Farm Mortgage”). At the time, the entire mortgage had a value of approximately $4.3 million. Mr. Wright made this gift to a family trust of which, his daughters Ms. Strauss, Ms. Urbanek, their respective issue, and other family trusts were named as beneficiaries (the “Wright Family Trust”). Mr. Wright was not a beneficiary or a trustee of the Wright Family Trust.
5The transfer of Mr. Wright’s interest in the Johnson Farm Mortgage to the Wright Family Trust was not made in 2007, when most of the other transfers were made to the Wright Family Trust. The transfer of the Johnson Farm Mortgage was postponed, permitting Mr. Wright to take advantage of a capital gains tax deferral relating to a reserve. Once the reserve had been fully exploited in 2012, on the advice of his accountant and his lawyer, Mr. Wright executed the Deed of Gift to transfer the Johnson Farm Mortgage.
6Mr. Wright now claims that the transfer of his interest in the Johnson Farm Mortgage to the Wright Family Trust was not a valid gift. He submits that: first, he did not have a donative intent to make the gift because he did not understand the gift or appreciate its effect; and second, he was unduly influenced to make the gift by Ms. Strauss and Ms. Urbanek.
7For the reasons that follow, I find that Mr. Wright had a donative intent to make the gift and he was not unduly influenced by Ms. Strauss or Ms. Urbanek to make it.
Background Facts
8In 2005, Mr. Wright and Mrs. Wright made mirror wills in which each left the residue of his or her respective estate to the other. If the gift to the spouse failed, the residue would be divided equally between Ms. Strauss and Ms. Urbanek. Each of Mr. Wright and Mrs. Wright included a specific provision in his or her will respecting his or her share of the Johnson Farm Mortgage. It would be paid to a testamentary trust created for the exclusive benefit of the surviving spouse, and on the death of the surviving spouse, his or her share of the Johnson Farm Mortgage would be added to the residue to be divided equally between Ms. Strauss and Ms. Urbanek, or their respective descendants.
9Mrs. Wright had been ill for a number of years before she died on September 16, 2008. Before she moved into a long-term care facility, Mr. Wright and she lived together in the family residence that they had shared for 55 years.
10Mrs. Wright had a caregiver named Josie. Once Mrs. Wright moved into a long-term care facility, Josie stayed on at the Wright household to assist Mr. Wright with household tasks. Josie was eventually replaced with Daria Ibasco, who was hired by Mr. Wright as a caregiver in 2006. Following Mrs. Wright’s death, Mr. Wright entered into a common law relationship with Ms. Ibasco, and he married her in 2016.
11Mr. Wright invited Jean Carberry (“Ms. Carberry”), who was his lawyer for nearly 30 years, Ms. Strauss, and Ms. Urbanek to meet with Michael Tibollo (“Mr. Tibollo”), who is another lawyer, Nina De Luca-Ford (“Ms. De Luca-Ford”), a Chartered Professional Accountant, and himself at the family farm on February 23, 2007 to discuss a succession plan for Mrs. Wright and him. The succession plan described by Mr. Tibollo and Ms. De Luca-Ford would involve a restructuring of Anjay’s shares and a transfer of certain assets owned by Mr. and Mrs. Wright to a family trust.
12Ms. Carberry’s notes from this meeting state that Mr. and Mrs. Wright were to be beneficiaries of the family trust, and inter vivos trusts that had been created [in 2006] for Ms. Urbanek and her family, and for Ms. Strauss and her family would also be beneficiaries of the family trust. Ms. Carberry’s notes also state that Mr. Wright was to keep control, and Ms. Strauss and Ms. Urbanek would be added as trustees of the trust to learn the business and carry it on. The assets to be rolled into the trust included the shares of Anjay, Mrs. Wright’s money, as well as other financial assets, for example, the Johnson Farm Mortgage, and the existing family farm. The benefits as set out in Ms. Carberry’s notes were described as follows: “i) circumventing probate tax; ii) a freeze that would cap the capital gains payable on death, protect from Family Law Act claims; iii) liability protection; and iv) flexibility - discretionary trust.” Mr. Tibollo had prepared an initial draft of a trust agreement that he would send to Ms. Carberry.
13Mr. Tibollo prepared a trust agreement for the Wright Family Trust (the “Trust Agreement”), which was made as of February [blank], 2007, and signed on May 16, 2007. Ms. Carberry witnessed the signatures of the settlor of the trust, and the trustees, Mr. Wright, Ms. Strauss, and Ms. Urbanek (“the Trustees”). Mr. Wright and Mrs. Wright were beneficiaries of the Wright Family Trust as were the A. Urbanek Family Trust and the J. Strauss Family Trust. The Trust Agreement provided that, during his lifetime, Mr. Wright would have authority “to make all decisions in all matters pertaining to the Trust Fund and its administration which decisions shall be final and binding upon all of the Trustees and all Persons having an interest in the Trust Fund ...” Mr. Wright also had sole signing authority under the Trust Agreement.
14A couple of months later, following a number of email exchanges between Ms. De Luca-Ford and a tax lawyer, Rob Martini, respecting the formation of the Wright Family Trust and the proposed transfers of property to it, Ms. De Luca-Ford alerted Mr. Martini to the facts that Mr. Wright would retain control of Anjay and the Wright Family Trust, and that he would be a beneficiary of the Wright Family Trust. A few weeks later, there were changes to the succession planning, and Mr. Tibollo presented Mr. Wright with another version of the trust agreement to sign (the “Trust Deed”). Under the Trust Deed, the trust would also be referred to as the Wright Family Trust; however, but Mr. Wright would not be a beneficiary of it, and he would no longer have a veto over decisions made by the Trustees. The Trustees remained the same.
15Mr. Tibollo had drafted the Trust Deed as well, and on July 27, 2007, he witnessed the signatures of the settlor, and of Mr. Wright, Ms. Strauss, and Ms. Urbanek, as Trustees. The Trust Deed is dated “as of February 12, 2007.” Compared to the terms of the Trust Agreement, the Trust Deed provided for a different settlor; Mr. Wright no longer had a veto over trustee decisions; and Mr. and Mrs. Wright were no longer beneficiaries of the Wright Family Trust. The beneficiaries of the Wright Family Trust, pursuant to the Trust Deed, were Ms. Urbanek and her issue, Ms. Strauss and her issue, The A. Urbanek Family Trust and The J. Strauss Family Trust. The trust created under the Trust Agreement and the trust created under the Trust Deed were both called “The Wright Family Trust.” Hereafter, all references to the Wright Family Trust refer to the trust created pursuant to the Trust Deed.
16Around the same time that the Trust Deed was signed, on July 27, 2007, Mr. and Mrs. Wright each made a Secondary Will, prepared, and witnessed by Mr. Tibollo. In each of their Secondary Wills, the testator directed the executors and trustees (being his or her spouse, Ms. Strauss and Ms. Urbanek) to hold the residue of the estate (including, in the case of Mr. Wright, his preference shares in Anjay), in trust for the exclusive benefit of the surviving spouse, and on the death of the surviving spouse, the remainder would be divided equally between The A. Urbanek Family Trust and The J. Strauss Family Trust.
17Mr. Tibollo sent Ms. Carberry a copy of the Trust Deed after it was signed. Following receipt of it, she met with Mr. Wright on August 21, 2007 to review it with him. She had observed that there were significant changes to the trust arrangement that would affect Mr. Wright, and these changes concerned her. She highlighted the changes on the copy of the Trust Deed that she left with Mr. Wright after meeting with him to advise him of the changes to the trust arrangement. Ms. Carberry asked him to get back to her with his further instructions.
18Ms. Carberry’s file does not include any notes reflecting her discussions with Mr. Wright or the instructions she received from him on the Trust Deed following their meeting on August 21, 2007.
19However, immediately following that meeting, Ms. Carberry sent a letter to Mr. Wright reminding him that she had left a copy of the Trust Deed with the changes from the Trust Agreement highlighted. She asked him to review the redrafted trust agreement and provide her with his instructions.
20On October 10, 2007, Ms. Strauss wrote to Ms. Carberry to advise her that Mr. Tibollo was seeking written confirmation from Ms. Carberry that Mr. Wright was in agreement with the trust.
21In Ms. Carberry’s diary from 2007, there was a notation on October 11, 2007 at 9:30 a.m. that reads “Jack.” There is another notation in the same diary on October 12, 2007 at 9 a.m. that reads “Jack Wright.”
22On October 17, 2007, Ms. Carberry wrote a letter to Mr. Tibollo in which the “Re:” line read: “Wright Family Trust.” The letter stated:
This will confirm that I have reviewed with Mr. Wright the Record Book which you sent me containing the family trust, corporate reorganization and related documents. Mr. Wright is in agreement with the contents of all the documents in the Record Book and you may proceed to finalize these matters.
23On December 6, 2007, Ms. Carberry sent a reporting letter and an invoice to Mr. Wright. The letter stated:
This will confirm that I received an amended Family Trust Agreement together with a binder containing the amendments as well as a new share structure for Anjay Limited and Janrite. I reviewed all of the same with you and corresponded with Michael Tibollo, solicitor regarding the amendments and reasons therefor. I also received e-mails from the accountant regarding a proposed assignment of the mortgages held by the companies. I also discussed this proposal with you.
Please advise if I am to do anything further in this regard. In the meantime I enclose my account to date.
24Once the Wright Family Trust was established, consistent with the discussion at the meeting on February 23, 2007, in December 2007, Mr. Wright and Mrs. Wright made a series of gifts to the Wright Family Trust, including their respective 50-per cent interests ($2,366,594.50 each) in a number of mortgages other than the Johnson Farm Mortgage; their respective 50-per cent interests ($149,999.99 each) in two GICs; Mr. Wright’s interest in a GIC ($1,022,247.27); and Mrs. Wright’s interest in another GIC ($1,410,096). Each of these gifts was made to the Wright Family Trust by a deed of gift prepared and witnessed by Mr. Tibollo.
25In 2009, Mr. Tibollo wrote to Ms. De Luca-Ford to advise that Mr. Wright had advised Ms. Urbanek that he thought it was a good idea to transfer his residence and farm property to a corporation.
26On November 10, 2009, Ms. De Luca-Ford wrote to Ms. Strauss to discuss the transfer of the residence to the Wright Family Trust. Ms. De Luca-Ford raised the fact that the residence would not continue to be a principal residence for tax purposes once transferred to the Wright Family Trust because Mr. Wright was not a beneficiary of the Wright Family Trust. In her communication to Ms. Strauss, Ms. De Luca-Ford stated that she “could come by Wednesday morning first thing to explain this to Jack while Michael [Tibollo] prepares the transfers.” Ms. Strauss then advised that she and Ms. Urbanek would like Ms. De Luca-Ford to “explain the consequences of the trust to us before you explain them to Jack.”
27On November 12, 2009, Ms. De Luca-Ford emailed Mr. Tibollo and stated: “Met with Jack to okay [the transfer] … He will gift the property to the trust.” Mr. Wright signed the documents prepared by Mr. Tibollo. Mr. Tibollo registered the transfer of the residence to the Wright Family Trust on November 24, 2009.
28Three months later, in February 2010, Mr. Tibollo prepared a codicil to Mr. Wright’s will which included a provision that would permit Ms. Ibasco, Mr. Wright’s then common law spouse, to reside in the residence following Mr. Wright’s death.
29On July 20, 2013, Ms. De Luca-Ford sent an email to Ms. Carberry outlining some issues to be addressed at a meeting the following week. Ms. Strauss and Ms. Urbanek were copied on the email. Among other matters, Ms. De Luca-Ford referenced the Johnson Farm Mortgage. This part of the email read:
Jack has agreed to gift to The Jack Wright Family Trust his mortgage receivable that is still outstanding regarding the VTB on the sale of the Johnson Farm. So we need to have a deed of gift drawn up and have Jack sign it to officially do this.
30Ms. Carberry made notes of a meeting held on July 24, 2013. The attendees at the meeting, according to her notes, were Mr. Wright, Ms. Urbanek, Ms. Strauss, Ms. De Luca-Ford, and herself. The note read in part: “Ass’t of mtge to be dated Jan 1st 2013 – req’d currently – Nina [DeLuca-Ford] to send form of ‘Deed of Gift.’”
31On November 30, 2013, Ms. Urbanek, on behalf of Mr. Wright, who did not have email, sent an email to Ms. Carberry asking her to prepare the Deed of Gift to facilitate the transfer of Mr. Wright’s interest in the Johnson Farm Mortgage. Ms. Carberry then prepared that Deed of Gift, which read:
DEED OF GIFT
WHEREAS by deed of gift dated January 1st, 2013 JACK WRIGHT gifted all his interest in a mortgage from Basepoint Estates Inc. (now Optimal Planning Solutions Inc.) on the lands and premises at Part Lots 21, 22 and 23, Concession 10, being designated as Parts 1, 2 and 3 on Plan 65R-10930, City of Vaughan to the Wright Family Trust (trust established February 12, 2007, trustees being Jack Wright, Anne Urbanek and Jacquie Strauss).
NOW THEREFORE THIS DEED OF GIFT WITNESSETH THE FOLLOWING:
The interest in the aforesaid mortgage is hereby gifted to the trust.
The gift is irrevocable.
DATED at Bolton, Ontario this 19th day of December, 2013
32Ms. Carberry arranged for Mr. Wright to come to Ms. Carberry’s office on the morning of December 19, 2013 to sign the Deed of Gift. Ms. Carberry had let Mr. Wright know that she had a number of other appointments that morning and that he might have to wait. Mr. Wright wanted to attend at her office that morning regardless because he had plans for the upcoming Christmas holidays. Mr. Wright drove himself to the appointment. Mr. Wright signed the Deed of Gift in the presence of Ms. Carberry’s secretary because he did not want to wait for Ms. Carberry to become available. Neither Ms. Strauss nor Ms. Urbanek was present when the Deed of Gift was signed.
33On December 30, 2013, Ms. Carberry arranged for the transfer of Mr. Wright’s interest in the Johnson Farm Mortgage to the Wright Family Trust. The transfer document reflected a transfer for no consideration to the Trustees of the Wright Family Trust pursuant to a Deed of Gift.
34On January 7, 2014, in the presence of Ms. Carberry, Mr. Wright signed an Acknowledgement and Direction confirming that he had reviewed the information set out therein and in the Transfer of Charge prepared by Ms. Carberry, that the information was accurate, and that the Transfer of Charge had been fully explained to him.
35On January 9, 2014, Ms. Carberry sent Mr. Wright an account for her work relating to the transfer of the Johnson Farm Mortgage and included with her covering letter a number of related documents including the Transfer of Charge and the Deed of Gift respecting the Johnson Farm Mortgage. In the account, the description of the legal services provided included preparing and registering the transfer of Mr. Wright’s interest in the said mortgage to the Wright Family Trust.
36In the summer of 2014, Ms. Carberry and Mr. Wright’s daughters became concerned when he signed a cheque drawn on Anjay’s bank account made out by Ms. Ibasco to herself as an “advance birthday gift.” They then implemented a process whereby cheques would be signed by Mr. Wright and either Ms. Strauss or Ms. Urbanek.
37In 2014, Mr. Wright was interested in making an investment using proceeds from the discharge of the Johnson Farm Mortgage, which were then held in the Wright Family Trust. When he was reminded that he did not have autonomy over those proceeds, he retained a lawyer, James Ferguson, to review his succession planning including the creation of the Wright Family Trust and the transfers of property to the Wright Family Trust.
Issue
38The issue in this trial is whether Mr. Wright’s transfer of his interest in the Johnson Farm Mortgage to the Wright Family Trust constitutes a valid gift. Specifically: i) did Mr. Wright intend to make the gift to the Wright Family Trust; or ii) was he unduly influenced by his daughters Ms. Strauss or Ms. Urbanek to make that gift?
Positions of the Parties
39The applicants, Ms. Strauss and Ms. Urbanek, submit that Mr. Wright was a strong-willed businessman who had complete confidence in his long-time lawyer, Ms. Carberry, whose advice he sought regularly and followed. They further submit that Mr. Wright intended to make and did make an irrevocable gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust as part of a succession plan that involved a transfer of wealth from Mr. Wright and Mrs. Wright to their children and grandchildren. The applicants contend that they exerted no undue influence over Mr. Wright, and that he had the benefit of advice from Ms. Carberry, Mr. Tibollo and Ms. De Luca-Ford throughout the period during which the succession plan was conceived and implemented.
40The applicants further submit that Mr. Wright’s claim that he did not understand the gift or appreciate its effect at the time he made it is not credible.
41Mr. Wright submits that he did not intend to make a gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust, of which he was not a beneficiary, and, therefore, the Trustees of the Wright Family Trust hold his interest on resulting trust for him. Mr. Wright asserts that he believed that he was making a gift to a family trust over which he had control and of which he was a beneficiary. Mr. Wright submits that he did not know that he was not a beneficiary of the Wright Family Trust until Mr. Ferguson told him in 2014.
42Alternatively, Mr. Wright submits that the transfer of the Johnson Farm Mortgage was the product of undue influence by Ms. Strauss and Ms. Urbanek and should therefore be set aside.
Law
43The essential components of a valid gift are: a) an intention to make a gift; b) acceptance by the donee of the gift; and c) a sufficient act of delivery or transfer of the property to complete the transactions: McNamee v. McNamee, 2011 ONCA 533, 2011 ONSC 533, 106 O.R. (3d) 401, at para. 25.
44Where a transfer of property is gratuitous between a parent and adult children, there is a presumption of resulting trust. The onus is on the recipient adult children to rebut the presumption. They must prove the donor’s intention to make the gift on a balance of probabilities: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 43-44.
45In Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721, at para. 26, the Ontario Court of Appeal explained the application of the resulting trust principle as follows in the context of gratuitous transfers by parents to their adult children:
Equity presumes bargains, not gifts. Thus, when a parent gratuitously transfers property to an adult child, the law presumes that the child holds the property on a resulting trust for the parent: Pecore v. Pecore, [2007] 1 S.C.R. 795, [2007] S.C.J. No. 17, 2007 SCC 17, at para. 36. The onus shifts to the adult child to rebut the presumption by proving the contrary intent on a balance of probabilities: Sawdon Estate v. Watch Tower Bible and Tract Society of Canada (2014), 119 O.R. (3d) 81, [2014] O.J. No. 573, 2014 ONCA 101, at paras. 56-57; Mroz (Litigation guardian of) v. Mroz (2015), 125 O.R. (3d) 105, [2015] O.J. No. 1284, 2015 ONCA 171, at para. 72. The trial judge must begin her inquiry with the presumption and then weigh all the evidence in an attempt to determine the parent's actual intent at the time of the transfer: Pecore, at para. 44; Sawdon, at para. 57; Mroz, at para. 72.
Analysis
Did Mr. Wright intend to make the gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust?
46On a balance of probabilities, I find that Mr. Wright had donative intent to make a gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust, as constituted by the Trust Deed. The gift was documented by a Deed of Gift, prepared by Mr. Wright’s lawyer of some 30 years, Ms. Carberry, at his specific request. The gift was effectively transferred to the Wright Family Trust when Ms. Carberry registered the Transfer of Charge, which she had reviewed with Mr. Wright. The Trustees of the Wright Family Trust accepted the gift.
47The transfer of the Johnson Farm Mortgage was a gratuitous transfer. The Trustees of the Wright Family Trust paid no consideration to Mr. Wright for it. As such, the onus is on the applicants, Mr. Wright’s daughters Ms. Strauss and Ms. Urbanek, as Trustees and beneficiaries of the Wright Family Trust, to rebut the presumption of resulting trust.
48Ms. Strauss and Ms. Urbanek, as well as the professional advisors to Mr. Wright, have adduced considerable evidence in support of an intention by both Mr. and Mrs. Wright to implement a succession plan that would see a transfer of assets amassed by them during their lifetimes, generally, and the Johnson Farm Mortgage, specifically, to the Wright Family Trust. The succession plan would involve an estate freeze, which would reduce their exposure to income tax, and facilitate the transfer of value in Anjay and other family assets to the Wright Family Trust, the beneficiaries of which would be their descendants.
a. Did Mr. Wright understand the terms of the Wright Family Trust?
49Mr. and Mrs. Wright’s succession plan, which would cause the family wealth to devolve to their descendants, was already in place at least as early as 2005. At that time, each of them had prepared wills that provided a life interest for the surviving spouse in the assets of the deceased spouse, including, specifically, the Johnson Farm Mortgage. And, on the death of the second spouse, the assets would devolve to their children equally.
50In 2007, Mr. and Mrs. Wright embarked on a more sophisticated succession plan to transition Wright family assets to the next generations, prior to their deaths, through an estate freeze. The proposed estate freeze would freeze the value of the shares that Mr. and Mrs. Wright owned in Anjay as of the date of the freeze. Each would receive preference shares in Anjay with a redemption value equal to the value of his or her shares at the time of the freeze. The future growth of the company would accrue to the common shares of Anjay, which would be held by the Wright Family Trust. The beneficiaries of the Wright Family Trust would be Mr. and Mrs. Wright’s children and remoter issue, and family trusts for the benefit of such children and issue. Income and capital gains on any assets transferred to the Wright Family Trust, apart from the common shares it acquired as part of the estate freeze, would also accrue to the beneficiaries of the Wright Family Trust from the date of the transfer. Accordingly, Mr. and Mrs. Wright’s exposure to capital gains tax in respect of assets transferred to the Wright Family Trust would be capped.
51Mr. Wright retained Mr. Tibollo and Ms. De Luca-Ford to advise him with regard to the succession plan. He did not turn to Ms. Carberry for this advice as it was outside of her area of expertise. She advised him on real estate and corporate matters. The evidentiary record shows that Mr. Tibollo and Ms. De Luca-Ford explained the succession plan to Mr. Wright. Mr. Wright invited Ms. Carberry to attend a meeting on February 23, 2007 with Mr. Tibollo, Ms. De Luca-Ford, Ms. Urbanek, Ms. Strauss, and himself. Ms. Carberry testified that the purpose of the meeting was to discuss a plan to transfer Mr. and Mrs. Wright’s assets to the next generations. Ms. Carberry’s notes from the meeting state that the future value of the shares of Anjay “flows to the trust” and that the benefits of the trust included the “ability to transfer in personal assets e.g. mtge on Johnson farm.” Ms. Carberry’s evidence, which I accept, is that her notes reflect the presentation made by Mr. Tibollo and Ms. De Luca-Ford. This evidence is not disputed.
52Mr. Tibollo prepared the Trust Agreement, which Mr. Wright signed in the presence of Ms. Carberry subsequent to the meeting. Under the Trust Agreement, Mr. Wright was a beneficiary of the newly created family trust, and, as a trustee, he had a veto power. As such, he controlled this family trust (which was also called the Wright Family Trust). This result was consistent with what Ms. Carberry was expecting. She testified that she had negotiated for this result on Mr. Wright’s behalf.
53However, after the Trust Agreement was signed, Ms. De Luca-Ford engaged another estate planning expert, a lawyer named Rob Martini. She asked him to review the Trust Agreement and certain documentation relating to proposed transfers of property to the newly created family trust. Following consultation with Mr. Martini, the Trust Agreement was replaced with the Trust Deed. Under the Trust Deed, Mr. Wright would no longer be a Trustee with a veto; rather, the Trustees, Mr. Wright, Ms. Strauss, and Ms. Urbanek, would make decisions by majority vote. The obvious inference is that Mr. Wright’s tax planning objectives could not have been achieved using the Trust Agreement, and these changes were necessary to address that issue before any transfers of property were made to the family trust to be created as part of the estate freeze.
54Mr. Wright asserts that he was not advised in July 2007, when the Trust Deed was signed by him and the other Trustees, that he was not a beneficiary of the Wright Family Trust, and that he did not control the Trust. He further asserts that he only became aware that he was not a beneficiary of the Wright Family Trust in 2014 when he was so advised by Mr. Ferguson. Accordingly, Mr. Wright asserts that he could not have had an intention to make a gift to the Wright Family Trust created by the Trust Deed because he believed that in making a gift to the Wright Family Trust he would be making a gift to a trust which he controlled and one in which he had a beneficial interest.
55I am not persuaded by Mr. Wright’s argument. Based on the evidentiary record, I find that Mr. Wright was aware that the Wright Family Trust, to which he and Mrs. Wright had transferred some of their assets, was a trust of which he was not a beneficiary and over which he did not have control.
56Mr. Wright signed the Trust Deed in the presence of Mr. Tibollo. Unfortunately, Mr. Tibollo did not have any notes from the meeting during which Mr. Wright signed the Trust Deed. Mr. Tibollo testified at the trial but could not recall with certainty whether the Trust Deed was signed in the presence of Ms. Strauss and Ms. Urbanek, who would have been required to sign as Trustees, as well as the settlor, Mrs. Wright. Mr. Tibollo testified that it was his practice when witnessing signatures to review the document with the signatories, and that this is what he would have done with Mr. Wright regarding the Trust Deed.
57On the same day they signed the Trust Deed, Mr. Wright and Mrs. Wright signed their Secondary Wills. Those wills provided that any property remaining in their hands following the estate freeze, and on the death of the survivor of them, would be transferred to their descendants or trusts for their benefit.
58While it would have been helpful to the court to have had the benefit of documentary evidence in support of his statement, I accept Mr. Tibollo’s evidence that he reviewed the Trust Deed with Mr. Wright. Having had discussions with Mr. Martini with regard to the kind of changes to the trust arrangements that were necessary to achieve Mr. Wright’s tax objectives, Mr. Tibollo would have appreciated that the changes would have a significant impact on Mr. Wright. I accept Mr. Tibollo’s evidence that he would have explained those important changes to Mr. Wright. The Trust Deed was materially different than the Trust Agreement in substance, and Mr. Wright would no longer have autonomy over the property held by the Wright Family Trust.
59Mr. Tibollo testified that given Mr. Wright’s age, and the fact that Mrs. Wright was terminally ill at the time, he wanted to be sure that Mr. Wright understood the Trust Deed. Therefore, Mr. Tibollo took an additional step to ensure that Mr. Wright would also have the benefit of advice from Ms. Carberry, his trusted advisor of many years. Mr. Tibollo sent a copy of the Trust Deed, as well as proposed transfer documents, in a record book to Ms. Carberry, for her review, and so that she could review the Trust Deed with Mr. Wright as well.
60I find that Mr. Tibollo’s actions are consistent with a lawyer who would seek confirmation of a client’s instructions from a second lawyer, who was familiar with, and the long-term trusted advisor of, that client, before proceeding with a plan that would result in an irrevocable transfer of property. While waiting to hear from Ms. Carberry, Mr. Tibollo did not proceed with the estate freeze, and no transfers were made to the Wright Family Trust.
61When Ms. Carberry received the Trust Deed, she arranged to meet with Mr. Wright on August 21, 2007. On the same day, she sent him a letter in which she stated:
This will confirm that I reviewed with you today the new version of the Trust Agreement. I have high lighted [sic] on your copy the areas which may give concern.
I understand that there may be some valid reason why these changes were made. I do not understand why Mr. Tibollo did not send me a draft with an explanation for the changes before having you sign the document.
Please review the above along with the redrafted Agreement and let me have your instructions as soon as possible.
62Based on the text of this letter, it is apparent that when Ms. Carberry received a copy of the Trust Deed, she was surprised by the changes, and queried why she had not been provided with a draft and an explanation of the changes before it had been signed. She then met with Mr. Wright to discuss the Trust Deed. She highlighted the changes on a copy that she left with him to consider. Following the meeting, she sent the letter, reminding him that she had left a copy with him, on which she had highlighted the changes from the original Trust Agreement and asked him to provide her with his instructions. Implicit in this request is the suggestion that Mr. Wright could still elect not to proceed with the estate freeze and the transfer of assets to the Wright Family Trust, if he did not agree with the changes included in the Trust Deed.
63When cross-examined on her reaction to the Trust Deed, Ms. Carberry confirmed that notwithstanding that she had not been consulted by Mr. Tibollo before he prepared the Trust Deed, she was able to tell Mr. Wright that there were “fairly fundamental changes.” I accept this evidence.
64In October 2007, Ms. Strauss contracted Ms. Carberry to find out whether Mr. Wright would proceed with the planning that had been documented. Ms. Strauss advised Ms. Carberry that Mr. Tibollo was waiting to hear from her.
65Ms. Carberry could not recall whether she met with Mr. Wright on October 11, 2007 or October 12, 2007, or had a discussion with him, on one or both of these dates. Her dockets do not show time billed to Mr. Wright on either of those dates though Mr. Wright’s name appears in her diary on both. Ms. Carberry testified that she “wasn’t the best at docketing everything that happened” and that the meeting with Mr. Wright could have been an occasion on which she did not record her time. She testified that sometimes she met with him at his home on her way to the office as his residence was en route. Ms. Carberry could not produce any notes from a meeting or telephone call with Mr. Wright on one or both of these dates, reflecting the instructions she received from Mr. Wright on one or both of those dates. Again, such notes would have been helpful to the court.
66However, it is apparent from the record that, around that time, Ms. Carberry did get instructions from Mr. Wright to proceed with the estate planning involving the Trust Deed as opposed to the Trust Agreement. Ms. Carberry wrote a letter to Mr. Tibollo on October 17, 2007 confirming that she had reviewed the record book containing the Trust Deed and related documents with Mr. Wright, and that Mr. Wright agreed with the contents of all the documents in the record book.
67I find Ms. Carberry’s evidence to be credible on this point. She had been Mr. Wright’s lawyer for approximately 30 years and had assisted him on many mortgage transactions. Based on the language she used in her August 21, 2013 letter, she was clearly concerned about the changes to the Trust Agreement that affected Mr. Wright directly. That is, he would neither control nor be a beneficiary of the Wright Family Trust to which he and Mrs. Wright would be transferring a number of their valuable investments. Under cross-examination, Ms. Carberry confirmed that the “review” she referred to in her October 17, 2007 letter included the review of the changes that resulted in Mr. Wright being removed as a beneficiary, and that the decision-making regarding the Wright Family Trust would be by a majority of the Trustees and not Mr. Wright alone. She testified that there was no doubt in her mind that Mr. Wright understood and agreed with the changes.
68I find that the changes, while significant, would not have been difficult concepts for Mr. Wright to understand. By the time the estate freeze was about to be implemented, Mr. Wright had been operating a very successful mortgage business for many years and had amassed millions of dollars in real estate and investments. What he may have lacked in formal education, he more than made up for in business experience and acumen.
69I find that Mr. Wright agreed to proceed with the estate freeze using the Wright Family Trust and that he appreciated the fundamental changes reflected in the Trust Deed. It is reasonable to infer that his lawyer and trusted advisor for some 30 years would not have sent a letter to Mr. Tibollo confirming Mr. Wright’s agreement with the contents of the documents in the record book, and permitting him to proceed to finalize those matters, if she did not have Mr. Wright’s instructions to do so, and if she were not satisfied that Mr. Wright understood the effect of the Trust Deed on him. Further supporting evidence can be found in Ms. Carberry’s letter to Mr. Wright dated December 6, 2007, in which the “Re:” line was “Family Trust.” In that letter, Ms. Carberry, again, confirmed that she had received an amended Trust Agreement and the record book, and that she had “reviewed all of the same with [him].” She enclosed her account with that letter, and it was paid.
70When cross-examined on when the review with Mr. Wright took place, Ms. Carberry testified that she thought that there were several meetings after she received the amended trust agreement. When taken to her dockets, Ms. Carberry identified the August 21, 2007 meeting referred to in the dockets, as well as a time entry on August 22, 2007 that read “preparation, review agreement, and telephone.” Ms. Carberry testified that “telephone” most likely referred to a telephone call with Mr. Wright. Ms. Carberry also testified that while it may not have been reflected in her dockets, she recalled that Mr. Wright and she “were back and forth with it” and that she “corresponded or spoke to Mr. Tibollo regarding the changes.” Ms. Carberry also testified that Mr. Wright did not ask her to review the Trust Deed, but she took the initiative to discuss the Trust Deed with him when it was sent to her because she realized that there were “fundamental changes.” She confirmed that she told Mr. Wright that “it was very different from what had been signed in the first place.” I find Ms. Carberry’s evidence on this point to be credible. Her conduct is consistent with a desire to ensure that her long-standing, senior client understood the transaction into which he was entering.
71Under cross-examination, Ms. Carberry was asked whether it was correct that Mr. Wright’s goal in embarking on the succession plan was to save taxes. Ms. Carberry testified that the tax benefits of the estate freeze were “probably important” to Mr. Wright, but she did not think it was “the main thrust of what he was trying to do.”
72As further evidence of Ms. Carberry’s belief that Mr. Wright appreciated that he was carrying out an estate plan that would irrevocably transfer wealth to the next generations, Ms. Carberry testified that, following the implementation of the estate freeze and related planning, Mr. Wright would often tell her that he was working for his daughters, or that he was working for his grandchildren. Her impression was that he was very proud of the transition of power.
73On cross-examination, Ms. Carberry confirmed that she would not have written to Mr. Tibollo to say that she had reviewed the record book and took Mr. Wright’s instructions if she had not done so. I find Ms. Carberry to be credible on this point.
74There is no evidence that Mr. Wright disagreed with the contents of Ms. Carberry’s December 6, 2007 letter, or that he followed up with her in response to her request that he advise her if she was to do anything further in respect of the “Family Trust.”
75Rather, on December 20, 2007, Mr. and Mrs. Wright signed Deeds of Gift transferring to the Wright Family Trust family assets worth millions of dollars. Making these significant gifts to the Wright Family Trust relatively soon after Mr. Wright’s meeting with Ms. Carberry to review the Deed of Trust, and, specifically, the changes that affected him as a Trustee and a beneficiary, reinforces my view that both Mr. and Mrs. Wright intended to make significant gifts of their assets to the Wright Family Trust. These gifts would accrue to the benefit of Ms. Strauss, Ms. Urbanek, and their respective descendants in accordance with Mr. and Mrs. Wright’s estate planning objectives.
76Mr. Wright was 87 years of age at the time of these transfers. The record shows that he owned other valuable assets at that time apart from the Johnson Farm Mortgage. These assets included a personal investment portfolio worth approximately $1 million, his preference shares in Anjay with a redemption value of approximately $1.6 million, and substantial amounts owing to him from Anjay in respect of his shareholder loans.
77The Johnson Farm Mortgage was not transferred on December 20, 2007. That transfer would be made later. On December 11, 2008, Ms. De Luca-Ford made a “To Do” list respecting Mr. Wright’s planning, which showed “To Do - Deed of Gifts ready for: Johnson Mtge.”
78The Deed of Gift regarding the Johnson Farm Mortgage was signed in December 2013. There is a logical explanation for the delay in transferring this asset. Ms. De Luca-Ford had advised Mr. Wright of certain tax deferral advantages that were available to him if he deferred the transfer of the Johnson Farm Mortgage to the Wright Family Trust. Accordingly, he waited until she advised him to make the transfer, the timing of which coincided with him having fully exploited his tax reserve.
b. Did Mr. Wright intend to make a gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust?
79On July 20, 2013, Ms. De Luca-Ford sent an email to Ms. Carberry stating: “Jack has agreed to gift to the Jack Wright Family Trust his mortgage receivable that is still outstanding regarding the VTB on the sale of the Johnson Farm. So we need to have a deed of gift and have Jack sign it to officially do this.” Ms. Carberry testified that she was surprised in 2013 that the Johnson Farm Mortgage had not already been gifted to the Wright Family Trust. It was her understanding from the 2007 meeting at which the succession plan was presented to Mr. Wright that the Johnson Farm Mortgage would be one of the assets to be transferred to the Wright Family Trust.
80On July 24, 2013, Mr. Wright met with Ms. Carberry, Ms. De Luca-Ford, Ms. Strauss, and Ms. Urbanek at Ms. Carberry’s office to the discuss the gift of the Johnson Farm Mortgage to the Wright Family Trust. In Ms. Carberry’s affidavit dated September 13, 2016, Ms. Carberry stated: “It was clear to me that Jack understood the import of this gift.” Ms. Carberry made notes at this meeting referring to the transfer of the Johnson Farm Mortgage to the Wright Family Trust and that the Deed of Gift would be dated January 1, 2013. She noted that Ms. De Luca-Ford would send her the form of the Deed of Gift to be used.
81Ms. Carberry testified that Mr. Wright knew the value of the Johnson Farm Mortgage at this time. The mortgage had a value of approximately $4,300,000. Mr. Wright’s interest in it was 40 per cent.
82Ms. Carberry prepared the Deed of Gift. She testified that she called Mr. Wright to arrange for him to come to her office to sign the Deed of Gift on December 19, 2013. Ms. Carberry testified that when she booked the meeting for him to come in and sign the Deed of Gift, she would have described it to him. She further testified that it was not a new concept for him as they had been discussing it for about six months by then. He and Mrs. Wright had signed a number of similar Deeds of Gift in 2007. I accept Ms. Carberry’s evidence regarding Mr. Wright’s understanding of the effect of the Deed of Gift.
83Ms. Carberry was not available at the time Mr. Wright arrived at her office. She testified that when she had called him to book the appointment, she had told Mr. Wright that she might not be available at the time he chose, and that if he wanted to meet with her, he might have to wait. But Mr. Wright did not want to wait or reschedule because, he had told Ms. Carberry, he had Christmas holiday plans. So, he signed the Deed of Gift in the presence of Ms. Carberry’s assistant.
84While Ms. Carberry did not review the Deed of Gift with Mr. Wright on December 19, 2013 when he came to her office to sign it, she did review with him, on January 7, 2014, the Acknowledgement and Direction relating to the Transfer of Charge (being the Johnson Farm Mortgage). Her evidence is that, in her review of the Transfer of Charge, she pointed out to Mr. Wright that the transfer was made for “no consideration” and that the transfer was being made “in favour of the Transferees as the trustees of the Wright Family Trust.” I accept Ms. Carberry’s evidence and find that given Mr. Wright’s depth of experience in the mortgage business, the Transfer of Charge form would have been one with which he was very familiar. He would have appreciated that by signing the Transfer of Charge document, in his capacity as the transferor, the transaction would be binding on him. There is no evidence that Mr. Wright lacked capacity to manage his property at the time of this or any other transfer of property to the Wright Family Trust. Mr. Wright himself testified that he was familiar with the effect of an Acknowledgement and Direction and had signed many in his mortgage business.
85Ms. Carberry’s evidence is consistent with Ms. De Luca-Ford’s evidence, which is that Mr. Wright requested that Ms. Carberry prepare the Deed of Gift and she accommodated that request. Ms. De Luca-Ford also testified that Mr. Wright understood that he was making a gift to the Wright Family Trust.
86Ms. Carberry’s dockets from 2013 do not refer specifically to the Deed of Gift regarding the Wright Family Trust. In her testimony, Ms. Carberry explained that between July 2013 and December 2013, she was in “frequent contact with Jack over a number of matters. There were five or six active mortgage files that he was giving me instruction on, in addition to the meetings from time to time with the two daughters when they were there. There were many meetings and telephone calls with Jack. We went to court together on a matter one day, and I believe we travelled together to court. We were in frequent contact. He never raised with me any concern about the Deed of Gift. If he had any concern, he had every opportunity to express it.” Despite Mr. Wright’s frequent dealings with Ms. Carberry, there is no evidence that he expressed any misgiving about transferring his interest in the Johnson Farm Mortgage to the Wright Family Trust.
87Ms. Carberry further testified that “when he signed the deed of gift and the other document [the Acknowledgement and Direction] – it was clear that he understood what he was doing.” Ms. Carberry testified that there was never any doubt in her mind that Mr. Wright fully understood that the effect of this gift was that an asset worth approximately $4 million was being transferred to the family trust and that he would not own it after that.
88Under cross-examination, Ms. Carberry confirmed that Mr. Wright understood the difference between his “interest” in the Johnson Farm Mortgage and “interest” he would earn on the mortgage, and that he knew that he was conveying his interest in the principal and the interest of that mortgage to the Wright Family Trust. She also confirmed that Mr. Wright knew that the reference to “Optimal Planning” in the Deed of Gift was a reference to the Johnson Farm Mortgage from which he had been receiving interest payments twice a year. Ms. Carberry testified that there was no question about Mr. Wright’s capacity. She testified that they were doing many transactions during that time period, and that “he was still quite on top of his game at that time.”
89I find Ms. Carberry to be a credible witness. She testified in a straightforward manner, and often, her evidence was supported by documentary evidence. Based on the totality of her evidence, I find that she was well-acquainted with Mr. Wright and Anjay, her clients of some 30 years, and had a true appreciation for Mr. Wright’s ability to understand legal documents. I also find that Ms. Carberry satisfied herself that Mr. Wright understood the documents underlying a transaction before he entered into it.
90Mr. Wright asserts that he could not have intended to make a gift of the Johnson Farm Mortgage to the Wright Family Trust because he did not appreciate that he did not control the Wright Family Trust and that he was not a beneficiary of the Wright Family Trust; rather, he believed the opposite - that he was a beneficiary of the Wright Family Trust, and that he controlled this Trust.
91Mr. Wright argues that it was not only he who believed that he was in control of, and a beneficiary of, the Wright Family Trust. He asserts that Ms. Strauss and Ms. Urbanek shared the same belief.
92Each of Ms. Strauss and Ms. Urbanek conceded under cross-examination that she did not have a deep understanding of the terms of the Wright Family Trust. They testified that there was a lot going on around the time the Trust Deed was signed, including their mother’s illness, and that they were not that focused on the Wright Family Trust. Further, from their perspective, Mr. Wright seemed to have control of the Wright Family Trust, and they did not appreciate that, technically, he did not have that control. His signature was required on behalf of the Wright Family Trust for every transaction. Ms. Strauss and Ms. Urbanek both testified that they deferred to Mr. Wright on business decisions, including investment decisions relating to the mortgages held by the Wright Family Trust.
93There is no evidence to suggest that any of the professionals had reviewed the terms of the Deed of Trust with Ms. Strauss and Ms. Urbanek with them. The same cannot be said for Mr. Wright. Mr. Wright had the benefit of advice on the Trust Deed from both Mr. Tibollo and Ms. Carberry. Even though Ms. Carberry was not specifically asked by Mr. Wright to advise him on the Trust Deed, which he had already signed by the time it came into her possession, she took it upon herself to explain to Mr. Wright how it differed from the Trust Agreement he had signed earlier. Ms. Carberry testified that she pointed out to Mr. Wright that he was not a beneficiary of the Wright Family Trust and he did not have a veto over decisions made by the trustees.
94Mr. Wright chose not to testify at the trial. I am not persuaded based on his affidavit evidence and the evidence from his de bene esse examination that he did not intend to make a gift of the Johnson Farm Mortgage to the Wright Family Trust. The option to transfer the Johnson Farm Mortgage to the Wright Family Trust was part of the discussion going back to the first meeting among Mr. Wright, his professional advisors, Ms. Strauss, and Ms. Urbanek in 2007. This transfer did not take place in 2007 for tax reasons and Ms. De Luca-Ford added it to her “To-Do” list in 2008. Once Mr. Wright had fully exploited an available tax reserve, Mr. Wright and his professionals took steps to transfer his interest in the Johnson Farm Mortgage to the Wright Family Trust. I am satisfied that Mr. Wright intended to make a gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust as part of his succession plan from the outset, and that he did not resile from that intention prior to making the gift. That he may have come to regret his decision is a different matter.
Conclusion re Mr. Wright’s Intention
95I am satisfied that the totality of the evidence meets the threshold to rebut the presumption of a resulting trust. Mr. Wright’s intention to benefit subsequent generations through the Wright Family Trust is wholly consistent with, and corroborated by, the Wills prepared by Mr. Wright and Mrs. Wright in 2005 and 2007. The evidence of Mr. Wright’s intention is further corroborated by the various notes and instructions of Ms. De Luca-Ford confirming Mr. Wright’s agreement to proceed with the transfer of his interest in the Johnson Farm Mortgage to the Wright Family Trust, and Ms. Carberry’s evidence confirming that, in her professional opinion, she had no doubt that Mr. Wright understood the effect of making a gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust.
96The evidence that Mr. Wright relies on regarding his intention is largely based on advice he received from Mr. Ferguson in the fall of 2014 and thereafter, regarding the succession planning Mr. Wright implemented between 2007 and 2013. Mr. Ferguson’s advice seems to have caused Mr. Wright to reconsider his succession plan, perhaps with some regret over his earlier decision to make a gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust. Traditionally, evidence with respect to the intention of the donor “ought to be contemporaneous, or nearly so” because a transferor can change his mind and donors are not permitted to retract gifts. Evidence of subsequent acts and declarations are “viewed with mistrust by courts”: Pecore, at paras. 56-59 and Thorsteinson Estate, 2016 SKCA 134, 404 D.L.R. (4th) 453, at para. 26.
Did Ms. Strauss and/or Ms. Urbanek exert undue influence on Mr. Wright to transfer his interest in the Johnson Farm Mortgage to the Wright Family Trust?
97For the reasons that follow, I find that there is no evidence that either Ms. Strauss or Ms. Urbanek were in a position to dominate the will of Mr. Wright regarding the transfer of his interest in the Johnson Farm Mortgage to the Wright Family Trust. Therefore, the presumption does not arise. Even if a presumption of undue influence could be found, I find that it would be rebutted based on the uncontroverted facts.
Law
98The Supreme Court of Canada set out the applicable principles regarding undue influence in Goodman Estate v. Geffen, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, at paras. 40-45 as follows:
(i) a presumption of undue influence will arise only when the parties are in a relationship of influence, where one person is in a position “to dominate the will” of another through manipulation, coercion or outright but subtle use of power, i.e., to exercise persuasive influence over him or her, and whether the “potential for domination inheres in the nature of the relationship itself”;
(ii) the presumption arises in those relationships that equity has already recognized such as “solicitor and client, parent and child, and guardian and ward, as well as other relationships of dependency which defy easy categorization”;
(iii) once the presumption of undue influence arises, the onus shifts to the person alleged to have exerted such influence to rebut the presumption;
(iv) a presumption of undue influence may be rebutted by showing the transferor entered into the transaction as a result of his or her own "full, free and informed thought", which may entail showing, for example, “that no actual influence was deployed in the particular transaction, or that the [transferor] had independent advice ...”; and
(v) the presumption is to be rebutted on a balance of probabilities.
99Once a parent-child relationship has been found, the presumption will only arise where it is established that there is the potential for domination. In such a case, a review of the whole relationship is required: Morreale v. Romanino, 2017 ONCA 359, at para. 23.
Analysis
The Presumption of Undue Influence
100Based on the evidence before the court, I am unable to find that the presumption of undue influence arises. In this parent-child relationship, Mr. Wright has not proved that there was actual influence exerted on him by either Ms. Strauss or Ms. Urbanek. I find that there was no domination by them over Mr. Wright, or even the potential for domination.
101Where assets are transferred from an elderly parent to an adult child, the presumption of undue influence does not arise automatically. However, where there is a relationship characterized by trust and dependency, the presumption may arise depending on the facts.
102Mr. Wright relies on the case of Leydier v. 525400 Ontario Inc. et al., 2019 ONSC 4042, where the presumption arose between an older mother and her daughter. In that case, the instructions to both the accountant and the lawyer came from the daughter, the daughter took her mother to the lawyers’ office, and was likely there when a deed of gift and cancellation of a promissory note were signed. The daughter is described as having a close and confidential relationship with her mother. These facts gave rise to the presumption that the transfer was not made with the mother’s “full, free and informed thought.” In this case, there was a lack of evidence of what the mother knew to be the value of her shares.
103By contrast, in the case at bar, the evidence is that Mr. Wright drove himself to meetings with Ms. Carberry. Ms. Strauss and Ms. Urbanek were not present when he signed the Deed of Gift to transfer the Johnson Farm Mortgage. Mr. Wright’s evidence is that he did not discuss the Deed of Gift with Ms. Strauss or Ms. Urbanek. Their evidence is consistent; they did not discuss the Deed of Gift with Mr. Wright.
104Ms. Carberry testified that other than business meetings to which Ms. Strauss and Ms. Urbanek attended as Trustees or persons with an equity interest in Anjay, she met with Mr. Wright on his own. Ms. Carberry did not give any example in which she received instructions from Mr. Wright via either Ms. Strauss or Ms. Urbanek. It would not have been unusual for Ms. Strauss and Ms. Urbanek to be at the meeting with their father when the Trust Agreement and Trust Deed were signed because they were all signatories on both documents.
105Ms. Carberry’s evidence was that during the period 2007 to 2013, when the estate freeze was being implemented, Mr. Wright had a good grasp of what his assets were worth, especially his mortgage investments. Ms. Carberry described Mr. Wright as “at the top of his game” during this period when it came to his investments.
106Mr. Wright also relies on MacNeill v. MacNeill, [2002] O.J. No 3206, in which the court found that the presumption of undue influence applied where a son played a “dominant role in his parents’ lives” and Dempsey v. Dempsey, 2010 NSSC 96, 289 N.S.R. (2d) 159, where the court found a son to be in a dominant position vis-à-vis his aged father who suffered from physical and psychological issues.
107Mr. Wright relies on these cases in support of his view that there was a power imbalance between himself and Ms. Strauss and Ms. Urbanek. He relies on a statement made by Ms. De Luca-Ford when she was being cross-examined on her affidavit in 2016. She commented that Mr. Wright worked well with his daughters and mentored them, but over time became vulnerable, began to lose his independence, and became dependent on the people around him. These comments were made in response to a question put to her about her perception of Mr. Wright, and whether she would invest money with him “today, in 2016,” not during the 2007 to 2013 period during which he was implementing the estate freeze. Further, Ms. De Luca-Ford referred to Mr. Wright’s dependence on the “people around him,” and not Ms. Strauss and Ms. Urbanek in particular. From 2007 to 2013, Ms. Ibasco was employed on a full-time basis to assist and care for Mr. Wright. Ms. Strauss and Ms. Urbanek were paying the bills and attending to the banking arrangements for Anjay, but this was part of the administrative work they took on when Mrs. Wright was no longer able to do that work.
108A few witnesses, including Ms. Strauss and Ms. Urbanek, testified that Mr. Wright’s business acumen lost some of its sharpness over time. He was making uncharacteristic mistakes and getting some numbers wrong. Steps were taken at Anjay to ensure that controls were put in place to reduce the risk of error. For example, it was decided that Mr. Wright would not have sole signing authority, and that either Ms. Strauss or Ms. Urbanek would co-sign company cheques. These arrangements were put in place in 2014, after Mr. Wright had made gifts to the Wright Family Trust, and after he signed a company cheque payable to Ms. Ibasco in the amount $100,000, which she had written out for him.
109Mr. Wright submits that when he transferred the family residence to the Wright Family Trust in 2009, Ms. Strauss and Ms. Urbanek, rather than he, took the lead in dealing with Ms. De Luca-Ford and Mr. Tibollo. Mr. Wright asserts that the timing of the transfer appears to relate to the risk that Mr. Wright was going to give the residence to Ms. Ibasco, with whom he was not then living and whom he married seven years later, in 2016.
110Initially, Mr. Tibollo wrote to Ms. De Luca-Ford advising that [Mr. Wright] thought it was a good idea to transfer the house and farm property to a corporation. Before Mr. Wright ultimately transferred the residence to the Wright Family Trust, Ms. Strauss wrote to Mr. Tibollo to advise that the “highest priority” was that “we get the house and farm secured before we start up with all of the Daria details because Dad may lose it and change his mind.” Ms. Strauss then suggested that Ms. Urbanek and she meet with Mr. Tibollo and Ms. De Luca-Ford before they present the option to Mr. Wright. Ms. De Luca-Ford responded to Ms. Strauss’ email explaining that if the residence were transferred to the Wright Family Trust, it would lose its principal residence exemption, and that she would visit Mr. Wright the following Wednesday morning to explain this to Mr Wright. Ms. Strauss then asked Ms. De Luca-Ford to explain the consequences to the Wright Family Trust of such a transfer to Ms. Urbanek and her before Ms. De Luca-Ford explained them to Mr. Wright.
111In my view, these facts do not amount to undue influence or rise to the level of domination. Ms. Strauss testified that Mr. Wright had approached Ms. Strauss and Ms. Urbanek with concerns about Ms. Ibasco and her frequent requests for money. This evidence was not challenged. In this context, it is not surprising that the family would be discussing the use of the Wright Family Trust to protect certain family assets. Ultimately, the decision was Mr. Wright’s to make. Ms. De Luca-Ford planned to attend on Mr. Wright to explain the tax consequences of a transfer of the residence to the Wright Family Trust. Ms. Strauss asked if Ms. De Luca-Ford would explain the “consequences of the trust” to Ms Urbanek and her. It is reasonable to expect that Ms. Strauss and Ms. Urbanek, as Trustees and beneficiaries of the Wright Family Trust, would want to appreciate the consequences, including the tax consequences, of the proposed transfer of the residence to the Wright Family Trust. Gathering this information would not put them in a position of domination over Mr. Wright.
112On November 9, 2009, Ms. De Luca-Ford emailed Mr. Tibollo and stated: “Met with Jack to okay [transaction] … He will gift the property to the trust.” Mr. Tibollo prepared the transfer of the residence from Mr. Wright to the Trustees of the Wright Family Trust for no consideration. There is no evidence to suggest that, following the meeting between Ms. De Luca-Ford and Mr. Wright, Mr. Wright had any hesitation in transferring the residence to the Wright Family Trust, that he regretted that decision, or that he felt pressured by Ms. Strauss and Ms. Urbanek to make that decision. Mr. Wright did not assert that it was not his idea to transfer the residence to the Wright Family Trust.
113Oddly, a few months following Mr. Wright’s transfer of the residence to the Wright Family Trust, Mr. Tibollo prepared a codicil to Mr. Wright’s Will. The codicil provided that Ms. Ibasco would be permitted to reside in the residence for a period of time following Mr. Wright’s death. Mr. Tibollo could not explain why the codicil was prepared at a time when Mr. Wright no longer owned the residence, other than to say it was a mistake. I am not persuaded by Mr. Wright’s submission that the codicil was prepared because he believed that he was the sole trustee of the Wright Family Trust and in that capacity, he had the authority to create an interest in the residence for Ms. Ibasco.
114The gift of Mr. Wright’s interest in the Johnson Farm Mortgage was made in 2013. At that time, neither Ms. Strauss or Ms. Urbanek was living with Mr. Wright and he was not dependent on them in any respect. Ms. Strauss and Ms. Urbanek testified that, prior to this litigation, the family got together for holidays and celebrations. Otherwise, Ms. Strauss and Ms. Urbanek dropped by his house about once a week to attend to business affairs.
115Ms. Strauss and Ms. Urbanek were not providing personal care to Mr. Wright. Mr. and Mrs. Wright had hired a caregiver to look after Mrs. Wright in their home. While Mrs. Wright was still alive, that caregiver was replaced by Daria Ibasco. When Mrs. Wright moved into long-term care, Ms. Ibasco stayed on and continued to provide caregiving and housekeeping services to Mr. Wright. Mr. Wright deposed that he began a relationship with Ms. Ibasco in 2013 and that they were living together at that time. He married Ms. Ibasco in 2016. There is no evidence to suggest that Mr. Wright was dependent on Ms. Strauss or Ms. Urbanek for care in 2013 when he transferred his interest in the Johnson Farm Mortgage to the Wright Family Trust. Ms. Ibasco was Mr. Wright’s caregiver.
116There is also no evidence that Mr. Wright had any financial dependence on Ms. Strauss or Ms. Urbanek. Ms. Carberry testified that Mr. Wright was financially independent and fully in charge of his financial affairs. This evidence is uncontroverted. Mr. Wright was managing his own investment portfolio and proud of his investment returns. There is no evidence of any incapacity on the part of Mr. Wright to manage his property in 2013. To the contrary, Mr. Wright was still fully engaged in the mortgage lending business and at Anjay at that time. Ms. Carberry testified that she did not have any concerns about Mr. Wright’s capacity around the time when he signed the Deed of Gift or the Acknowledgement and Direction.
117Ms. Carberry testified that she had no concerns about potential influence by Ms. Strauss and Ms. Urbanek over Mr. Wright at any time between 2007 and 2013. She testified that she never saw them exert any pressure on him to make any gift for their benefit. Ms. Carberry also testified that Mr. Wright never expressed any such concerns with her, and that the gift of his interest in the Johnson Farm Mortgage was consistent with the estate planning objectives of Mr. and Mrs. Wright. Each of them had agreed that their interests in the Johnson Farm Mortgage would accrue to the benefit of subsequent generations. Ms. Carberry described Mr. Wright as “active” during this time period; he drove himself around and contacted her frequently about matters without any involvement of the applicants. She described him as being “strong-willed.”
118Ms. Carberry testified that Mr. Wright never suggested to her that the changes to the Trust arrangements were at the behest of Ms. Strauss and Ms. Urbanek. Ms. Carberry confirmed that she appreciated that the changes to the beneficiaries were as a result of advice from Mr. Martini about who can be a beneficiary of a trust in the context of an estate freeze.
119Ms. Strauss and Ms. Urbanek themselves described Mr. Wright as “captain of the ship” and the “boss.” They testified that even if they disagreed with him with respect to which mortgages Anjay should consider for investment, his decision was final.
120Mr. Tibollo testified that he never had any concerns about Ms. Strauss or Ms. Urbanek exerting pressure on Mr. Wright and saw no evidence of such pressure.
121Based on the evidence, I find an absence of dominance and influence by Ms. Strauss and Ms. Urbanek regarding the gift of Mr. Wright’s interest in the Johnson Farm Mortgage to the Wright Family Trust. Ms. Strauss and Ms. Urbanek were not in a position to unduly influence Mr. Wright because they were not in a relationship of influence over him, and they could not dominate his will through coercion, manipulation, or power.
Rebutting the presumption
122Had I decided the issue of dominance and influence differently and found that the presumption of undue influence had arisen, I would have found that it had been rebutted on the basis that no actual influence was applied by them. In making the gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust, Mr. Wright was informed and acted freely. He also had the benefit of independent advice from both his lawyers and his accountant.
123I disagree with Mr. Wright’s assertion that Ms. Strauss and Ms. Urbanek took the lead with respect to the professionals. The evidence makes clear that Mr. Wright often attended meetings with his advisors, such as Ms. Carberry, Mr. Tibollo, and Mr. Ferguson, on his own. There were some meetings between Mr. Wright and his professionals at which Ms. Strauss and Ms. Urbanek were in attendance. Given their role as Trustees of the Wright Family Trust and as an officer or director of Anjay, their attendance at such meetings is not surprising or inappropriate. There is no evidence that either Ms. Strauss or Ms. Urbanek drove Mr. Wright to a meeting with a professional. Neither of them was present at the lawyer’s office when the Deeds of Gift were signed.
124I am satisfied that Mr. Wright received independent advice. Ms. Carberry had a nearly 30-year professional relationship with Mr. Wright. She testified that when his mortgage business was active, she would meet or talk to him many times a week, including at his home. Mr. Wright did not refute this evidence. Sometimes the meetings with Ms. Carberry were family meetings in which Ms. Strauss and Ms. Urbanek participated because they were involved in operating the family business. Ms. Carberry testified that Mr. Wright was mentoring them and grooming them to run the business. They were also Trustees of the Wright Family Trust. In addition to representing Mr. Wright personally, Ms. Carberry also represented Anjay and the Wright Family Trust.
125There were instances in which Ms. Urbanek conveyed Mr. Wright’s instructions to Ms. De Luca-Ford or Mr. Tibollo. Ms. Urbanek testified that she did so, at Mr. Wright’s request, because he did not have email. I accept that evidence. Further, I am satisfied that each professional confirmed the instructions with Mr. Wright before acting on them. For example, after Ms. Urbanek advised Ms. De Luca-Ford that Mr. Wright would proceed to gift the Johnson Farm Mortgage to the Wright Family Trust, Ms. De Luca-Ford held a meeting with Mr. Wright, Ms. Carberry, Ms. Strauss, and Ms. Urbanek to discuss the transfer. Ms. De Luca-Ford deposed that Mr. Wright had requested that she ask Ms. Carberry to prepare the Deed of Gift, and that she recalled discussing with Mr. Wright the purpose of that gift, i.e., to transfer some of his wealth to the next generation. Ms. De Luca-Ford’s evidence was that Mr. Wright wanted Ms. Carberry to prepare the Deed of Gift, and that Mr. Wright wanted to make this gift.
126Mr. Wright retained Mr. Ferguson to advise him in 2014. Mr. Ferguson took instructions from Mr. Wright and testified that when he was providing legal services to Mr. Wright, Mr. Wright understood the legal advice being provided regarding the structure of Anjay and the Wright Family Trust. Mr. Ferguson’s firm continued to take instructions from Mr. Wright into 2015. There is no suggestion from Mr. Ferguson or any other professional that Mr. Wright was suffering from any cognitive decline at the time he made the transfer of his interest in the Johnson Farm Mortgage.
127The Supreme Court of Canada explained in Geffen, at para. 124, that the rebuttal of the presumption could be demonstrated by showing that no actual influence was deployed in the transaction, or that the transferor had independent legal advice.
128I am satisfied that, in this case, both relevant tests set out in Geffen, at para. 124, are met. I find that there was no actual influence by Ms. Strauss and Ms. Urbanek on Mr. Wright, and Mr. Wright had the benefit of independent legal advice from a few professionals throughout the period during which the succession plan was being implemented and the gift of his interest in the Johnson Farm Mortgage was made to the Wright Family Trust.
Conclusion re Undue Influence
129Mr. Wright attended at Ms. Carberry’s office to sign a straightforward Deed of Gift less than half a page in length. Ms. Strauss and Ms. Urbanek were not present, and Mr. Wright testified that he did not discuss the Deed of Trust with them. They were not in a position to dominate Mr. Wright’s will respecting the gift of the Johnson Family Mortgage to the Wright Family Trust.
130Mr. Wright transferred his interest in the Johnson Farm Mortgage to the Wright Family Trust of his own full, free, and informed thought.
131He made this transfer with the assistance of Ms. Carberry, who had been Mr. Wright’s lawyer and trusted advisor at that time for approximately 30 years, and with the assistance of Ms. De Luca-Ford, a Chartered Professional Accountant, who provided him tax and accounting advice.
132No evidence was led to suggest that Mr. Wright was incapable of managing his property during the relevant time. The uncontroverted evidence is that Mr. Wright was capable throughout December 2013 when he signed the Deed of Gift.
Disposition
133The applicants have met their onus. Mr. Wright’s gift of his interest in Johnson Farm Mortgage to the Wright Family Trust is a valid gift. A gift, once made, cannot be retracted if the donor changes his mind: Pecore, at para. 56. The applicants have proved on a balance of probabilities that they do not hold Mr. Wright’s interest in the Johnson Farm Mortgage on resulting trust for him.
134The applicants did not exert undue influence over Mr. Wright regarding his gift of his interest in the Johnson Farm Mortgage to the Wright Family Trust. Even if the presumption of undue influence could be said to have arisen, which I do not find it did in this case, the applicants have raised sufficient evidence to rebut the presumption by proving that they did not dominate Mr. Wright’s free will, and that he made the gift as a result of his own full, free and informed thought, and with the benefit of independent advice.
Costs
135I strongly encourage the parties to agree on the matter of costs. In her endorsement dated October 7, 2016, relating to this application, Justice Conway stated that she would determine the matter of costs, if need be, once all of the substantive issues in the application had been determined. All substantive issues have now been determined. Given that the trial of this issue took considerably more time than the other issues in the application, it is appropriate that I determine the matter of costs, if necessary. If the parties cannot agree on the matter of costs, each may serve and file written costs submissions, not exceeding five (5) pages in length (excluding a Bill of Costs and offers to settle, if any). Such costs submissions shall be made within 14 days of the date of these reasons. Reply submissions may only be made with leave.
Dietrich J. Released: November 5, 2021