Court File and Parties
COURT FILE NO.: CV-20-3581 (Milton) DATE: 2021-11-09 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Linda Palichuk Applicant
- and -
Nina Palichuk, Susan Palichuk and Public Guardian and Trustee Respondents
AND BETWEEN:
Nina Palichuk Applicant
- and -
Linda Palichuk, Susan Palichuk and BMO Nesbitt Burns Respondents
COUNSEL: J. Figliomeni and M. Dvorkina, for Linda Palichuk J. Waxman and J. Chumak (Student at law), for Susan Palichuk M.J. Sweatman and R. Moir for Nina Palichuk
HEARD: August 18, 2021 by video conference
BEFORE: Chown J.
REASONS FOR DECISION
[1] There were two applications and two motions before me at the hearing of this matter on August 18, 2021. Linda Palichuk is the applicant in the first application, which names her mother Nina Palichuk and her sister Susan Palichuk as respondents.
[2] Nina is the applicant in the second application, which names Linda and BMO Nesbitt Burns as respondents. BMO takes no position in these applications.
[3] For ease of reference, I will: (1) use the parties’ first names; and (2) use the word “respondents” to mean “Nina and Susan.”
[4] Linda’s application (the “guardianship application”) seeks a variety of orders which would have the effect of declaring Nina incapable; appointing Linda as guardian for property and guardian for personal care; excluding Susan from exercising control; assessing the validity of Nina’s Will, powers of attorney, and transfer of her home to Susan; and requiring Susan to provide an accounting.
[5] Nina’s application seeks an order removing Linda as a joint account holder on a BMO account (the “BMO application”).
[6] Linda brings a motion for an order consolidating the two applications and converting them to a single action.
[7] The parties cross examined each other. Linda brings a refusals motion. That was not substantively argued before me, I believe because the refusals were largely answered before the hearing, and I will not address it further.
[8] For the reasons that follow, I dismiss Linda’s application and allow Nina’s application.
The Impugned Instruments
[9] On September 11, 2020, Nina signed:
a. a Will which disinherited Linda;
b. powers of attorney for property and care which removed Linda as an attorney and appointed Susan as sole attorney; and
c. a transfer and a declaration of trust transferring her home in Acton (“the Acton property”) to Susan. In the declaration of trust, also signed by Susan, Susan agreed “I will hold and will have recorded in my name as bare trustee for Nina Palichuk” the Acton property. Title to the property was transferred to Susan the same day.
[10] I will collectively refer to these documents as “the impugned instruments.”
Background
[11] Nina is currently 90 years old.
[12] Nina and her husband of 62 years, Steve Palichuk, lived on a two-acre property in Acton for about 50 years. Steve died in 2015.
[13] Linda is married with one grown child and lives and works in Burlington.
[14] Susan is single with three grown children. She retired in 2015. She lived in Georgetown but moved in with her mother in Acton in 2016. She still owns her house in Georgetown.
[15] Nina executed power of attorney documents on July 4, 2016 naming both Linda and Susan as attorneys.
[16] Nina added Linda as a joint account holder on her BMO investment account in 2016.
Linda’s Narrative
[17] Linda’s evidence is that by 2017, Susan was unable or unwilling to assist with general maintenance and upkeep of the home and the home deteriorated. Linda says Susan was indifferent to the situation and reluctant to make repairs. Linda also says that Susan “began making excuses for why I could not, or should not, visit the family home.” Linda goes on to state that by the middle of 2018, Susan began denying her access to the point where when Linda and Nina wanted to see each other, Linda would have to wait for Nina outside of the home in the driveway. Nina would linger in the car when they got back, while Linda might do a bit of yard work at the front of the house.
[18] Linda’s narrative is supported by evidence that Susan has issues with hoarding. Linda’s affidavit of June 16, 2021 includes two photos of the inside of the Acton house which show squalid conditions. Linda took these photos when she could access the house because Susan was in hospital. The same affidavit also shows two photos of the outside of the house with overgrown weeds. A police report, which I will describe later, says that Susan “admitted that the house has issues and needs to be cleaned up but deflected on her hoarding issues.”
[19] Linda goes on to state that in late 2019 she noticed from her mother’s bank statements that there had been some large withdrawals but states that during the months that Susan was in the hospital, there were no unusual cash withdrawals. She says that her mother was not aware of what the money was used for.
[20] Nina moved into Amica, an assisted living retirement home, in November of 2019. Linda says when Nina moved to Amica there were mouse droppings “everywhere” in the house at the Acton property.
[21] Linda seems to have assumed that her mother would sell the Acton property after moving into Amica, and she took steps towards having landscaping done. She also arranged for junk removal and a property appraisal, but Susan would not allow this.
[22] In June of 2020, Nina went to live with Linda and her husband for three weeks. Linda says that during this time Nina was forgetting to take her medication.
[23] On July 9, 2020, Linda received an email from Amica stating that staff had noticed rotting food in Nina’s room and that Nina appeared to not be doing her laundry. Amica suggested added services for Nina.
[24] In her cross examination, Linda testified that in August of 2020, Susan began to talk about how expensive it was for Nina to live in Amica and how much cheaper it would be to have Nina return to the family home. This caused Linda to become concerned that Susan was plotting to move Nina out of Amica and back to the family home.
[25] Linda also testified that on August 15, 2020, Susan said to her:
that she deserved everything, that she had had a hard life, I had a husband, I had a job. I didn’t need anything. And after that, within a very short period of time, my mother would not talk to me.
[26] In August of 2020, Nina’s financial advisor told Linda that Nina wanted Linda’s name removed from the BMO investment account. Linda tried to visit Nina and speak to her about this but says that Susan refused to let Linda speak with Nina alone. A few weeks later, Nina told Linda she could not visit and that “Susan told me not to talk to you.”
[27] Nina changed her power of attorney documents to remove Nina as an attorney and she transferred title of the Acton home to Susan on September 11, 2020. Nina also changed her Will to disinherit Linda on the same date, giving everything to Susan and naming Susan’s friend as executor. The Will names two of Susan’s children as alternate beneficiaries but not Susan’s estranged child or Linda’s child.
[28] Linda deposed that Nina could not afford to live in Amica without selling the Acton residence. This is incorrect.
[29] Nina no longer drives but pays the insurance for a Chevy Cavalier and an old Mazda pickup used by Susan.
[30] Linda’s application was commenced on December 15, 2020.
[31] Nina fell and fractured her hip in January of 2021. Susan did not inform Linda of the fall or that Nina was in the hospital. Linda found out that Nina was in hospital through Linda’s daughter, Katherine Wignall (Katie), who had been informed by Amica staff that Nina was in the hospital.
[32] Linda acknowledges that the money in the BMO account is solely Nina’s money. The account requires Linda’s signature for withdrawals. Linda refuses to remove her name from the account because she believes Nina needs to be protected from Susan.
[33] Overall, Linda’s narrative is that Nina cannot look after her financial affairs and her health, Susan has alienated Nina from Linda, Susan wants Nina’s money, and Susan is not a suitable guardian.
Susan’s Narrative
[34] Susan’s narrative is that even before their father (Steve) died, Linda disengaged from Nina. She did not go on day trips with them, and Susan did. Linda did not go to the hospital when Steve had chest pains. After Steve died, Linda rarely attended the house. She would only call Nina at most 2-3 times per month but rarely visited. She denies ever prohibiting Linda from visiting the house.
[35] Susan says the property was not neglected while she lived there. She denies she is a hoarder. Repairs were regularly made as needed. She mowed the lawn. There were not mouse droppings “everywhere” but rather some were found behind a heavy cabinet that had not been moved in two decades before it was moved to Amica.
[36] Susan denies taking or receiving cash withdrawals from Nina’s account as described by Linda.
[37] Susan says the landscaping work was not needed or wanted and the landscapers did a poor job and damaged the irrigation system. Linda spent money on the landscaper contrary to her mother’s wishes.
[38] Susan says that Nina decided to move into Amica after visiting various places. She says that Nina continues to manage her own finances and has not relinquished control over her finances to either Linda or Susan. She drove Nina to the bank during the time she lived with her, but Nina would routinely go into the bank alone to pay her bills and withdraw cash. Although she has been appointed power of attorney, Susan is not acting as an attorney either for property or for care.
[39] After Nina fell and broke her hip, Susan wanted Nina to call Linda and Katie, but Nina did not want to.
[40] Susan denies influencing Nina in her decisions, including her decision to disinherit Linda, to change her powers of attorney, or to transfer the house to Susan in trust. She says that Nina is afraid of Linda.
Nina’s Narrative
[41] Three short affidavits from Nina focus on her capacity.
[42] In her affidavit of May 6, 2021, Nina states, “I do not need a guardian regarding my personal care and property.” She goes on to state:
Should the day come when I am no longer able of managing my property or making personal care decisions for myself, then I decided that I want my daughter Susan Palichuk (“Susan”) solely to make those decisions for me or manage my affairs.
[43] She then says that she has made Continuing Powers of Attorney for Property and for Personal care on September 11, 2020. She also says: “I do not want any communications or visits from Linda.”
[44] In her affidavit of May 10, 2021, Nina says she thought Linda and Susan should both be added to her accounts, but she felt bullied by Linda, was afraid of Linda, and agreed only because she felt she had no choice.
[45] Nina goes on to say that she no longer wants Linda on her BMO account. As Linda has refused to remove herself from the account, Nina commenced her application.
[46] In her affidavit of June 23, 2021, Nina states she is mad at Linda. She goes on to state that she still manages her own money. Linda “tries to get me to do as she wishes rather than what I want. She is very controlling.”
[47] Unfortunately, Ms. Sweatman repeatedly and inappropriately objected and interfered during Nina’s cross examination. It may have been an effort to protect Nina from relevant questioning, but it detracted considerably from Nina’s position.
[48] Despite this, in the uninterrupted portions of her examination, Nina answered most questions cogently. She knew her finances including her major assets and details such as the fact that her Canada pension goes to Tandia Credit Union and that her payments for Amica come out of that account. She related that her only significant monthly expense is Amica and described other small expenses she incurs, and she explained why she likes to have some cash on hand for these expenses. She explained that she withdraws cash for this purpose and does not characterize her withdrawals as large. She explained there is no mortgage on the house. She agreed she paid some of the house expenses, “because I want to.” She said she pays the electricity and the property taxes and knew that the house was electrically heated.
[49] Linda argues that it was obvious from the outset of Nina’s examination that her memory is impaired. She cites three examples.
a. She misstated the age of her granddaughter Katie, indicating Katie was probably nine or ten years told. However, she was aware that Katie lives in Calgary.
b. She said Katie works for Westjet, which Linda’s factum suggests is incorrect, but I was not directed to and could not find any contrary evidence on this point.
c. She says Nina testified that Susan must be living at her own home in Georgetown, when in truth Susan is living at the Acton property. In fact, Nina initially correctly stated that Susan lived at the Acton property: “She has a house on Prince Charles in Georgetown, but she is currently living in my house.” Later in the examination, Ms. Dvorkina asked Nina why Susan did not live at her own house. Ms. Sweatman interfered and there was a resulting disagreement between counsel. Nina was asked, “Does Susan live in her Georgetown house right now?” Nina changed her previously correct evidence to say, “She must be.” This answer appears to have been influenced by Ms. Sweatman’s interference.
[50] These misstatements and others which I noticed on my review of the transcript are not significant.
[51] Similarly, Nina misstated several things to Dr. Shulman, who conducted capacity assessments at the request of Ms. Sweatman. For instance, she told Dr. Shulman that Susan paid the property taxes at the Acton property. This was not correct. Nina is paying the taxes. According to Susan.
[52] Nina did not fully appreciate that she had transferred the Acton property to Susan in trust, with Susan a bare trustee. She told Dr. Shulman that she “transferred ownership of the Acton house to Susan” and that, “Her intention was a gift and has no expectation or understanding/agreement that Susan is holding the house in trust for her or for her sister/estate upon her death.” She said she had no recall of the trust declaration she signed and did not understand what a trust declaration was. Dr. Shulman’s report goes on to state:
She stated that her understanding is she gave ownership to Susan, but she can move back home if and whenever she wants to. She denied any concern or risk that she had given away the property to Susan because she was insistent that if she wanted to return to the house that she could do so to live there with Susan. She stated that she does not require the equity in the home as she has enough in BMO to sustain herself the rest of her life.
[53] During her cross examination, Nina was shown a copy of the trust declaration that she signed. She was asked what it meant: “That I gave the property to Susan.” She was asked why she signed it: “Because I wanted to.”
[54] At another point in her cross examination, Nina said she did not want to sell the house “because someday I would like to go back to it.” While Nina lacks a nuanced understanding of the terms under which she gave the house to Susan, her explanations suggest an adequate understanding to meet the test for capacity. I will return to this below.
[55] Dr. Shulman found that Nina had mild cognitive impairment. He said Nina does not have Alzheimer’s. Her memory impairment is a condition of aging and small vessel subcortical disease, but she still has the ability to understand information. He said the fine details are not recalled. “But the ability to understand the generalities was consistent.”
[56] This rings true from my review of the transcript. Nina had insight. For instance, at one point near the end of her examination she said, “You got to remember I’m 90 years old, and I can be a little forgetful. And I know I am a bit forgetful. But I try and answer it correctly.”
[57] Nina justified disinheriting Linda, not necessarily reasonably, but rationally. At the time she changed her Will, she believed that Linda had misappropriated $7,000 from her. Linda had written two cheques from Nina’s account to Linda’s husband, and Nina jumped to the incorrect conclusion that Linda did this without justification. In fact, these cheques represented re-imbursement for invoices for the landscaping done at the Acton property. Nina never even asked Linda about these cheques or asked her to repay them. Later in her cross examination, Nina related detailed complaints about the landscaping work.
[58] In her Will, Nina justified disinheriting Linda as follows:
I MAKE NO provision for my daughter LINDA PALICHUK as she has misappropriated funds in a Tandia Credit Union Account bearing Number … and has denied me statements and access to an Investment Account in the Bank of Montreal. Both accounts consist of my money, and the aforesaid LINDA PALICHUK was added to both as a convenience to me and to avoid payment of probate fees.
[59] As indicated, it is not correct that Linda misappropriated funds from the account.
[60] With respect to the allegation that Linda has denied statements for Nina’s accounts, the circumstance for the BMO account is that Linda had the statements switched to online statements. Linda testified that she discussed this with Nina and was going to show Nina how to access them online. Nina does not have a computer. Linda says Amica has a computer for the residents to use.
[61] Either:
a. it is not true that Linda discussed this with Nina. If so, Nina’s belief that Linda denied Nina her bank statements is somewhat justified; or
b. it is true, in which case Linda thought she could teach Nina how to use a computer to access her online statements. If so, Linda must have thought that Nina was capable enough to learn a relatively complex new skill.
[62] In an email dated September 14, 2020 (three days after Nina signed her new Will), Nina’s investment advisor told Linda that she had not been able to reach Nina “to confirm that she is now getting her monthly statements.” This email confirms that the lack of bank statements was an irritant for Nina.
[63] In her cross examination, Nina also justified disinheriting Linda based on her belief, with limited evidence, that Linda is well off and Susan is not. Nina did not know how much money either of them had. She did not know the value of Susan’s house in Georgetown. But Nina did articulate a rational explanation for her belief. She said, “Linda has a good job,” and she said that Linda’s husband “is a retired firefighter … a lifetime of firefighting, so he’s got an extremely good pension. And Linda has always been a good saver.”
[64] Susan, in her cross examination, described limited income.
[65] Nina’s belief as to the relative wealth of Linda and Susan is rational, not delusional. It may or may not be accurate, but it is rational.
[66] Nina explained why she made two of Susan’s children alternate beneficiaries but not Linda’s daughter, Katie, or Susan’s estranged daughter, Sarah. The latter two were “well off” in her mind. She articulated her reasons for this view, but the reasons were not strong. In fact, they were more rationalizations than reasons. She said that Katie stood to eventually inherit from her well-off parents, and Sarah worked in computers so must be well off.
[67] Interestingly, in her cross examination, Nina confirmed that the photos of squalid conditions at the Acton house accurately depicted the state of the Acton property when she moved out. She said that “Susan had a flower shop and gift store, and she brought a lot of her stuff to the house to sort it out.” She claimed that Susan was “sorting her stuff out, boxing it, and putting it away,” and stated, “I see nothing wrong with that.” With respect to the overgrown-with-weeds exterior of the premises, she said, “It needed some shrubs removed and it needed some landscape work.” From my review of the photos, these answers lacked credibility. They were slanted towards Nina’s position in the application. Other answers Nina gave seemed motivated by a desire to paint a picture that Susan was deserving and Linda not deserving. Some positions Nina took regarding Linda appeared unfair.
[68] However, these failings bolster the conclusion that Nina has capacity, rather than detract from it. She was cagey enough to slant her answers towards the outcome she seeks in this proceeding.
Police Occurrence Reports
[69] During argument, all three counsel made reference to police occurrence reports. These were filed as part of a brief of answers to questions taken under advisement and refusals and not attached to any affidavit.
[70] On behalf of Linda, Mr. Figliomeni referred to these reports for the proposition that the police received allegations that Linda had misappropriated funds, but that after investigating the police determined they were not going to lay any charges. Susan and Nina relied on the reports as evidence of Nina’s competence and capacity, and as evidence that independent actors (the police) found Nina “articulate, alert and consistent.” Mr. Figliomeni did not object to these submissions as they were being made. However, Mr. Figliomeni did state in his reply argument that the occurrence reports were produced after cross examinations and are hearsay and not complete. There are apparently other police occurrence reports that have not yet been produced.
[71] The status of the occurrence reports as evidence in the application was left uncertain and not fully argued. However, since all parties referred to the reports to support their respective arguments, the occurrence reports should be treated as evidence in this application. I note that any of the parties could have obtained copies of these reports from the police at an earlier stage, so the lateness of their production is not a strong reason to exclude them. I will treat them as evidence of the truth of their contents from a disinterested non-party, although untested through cross examination.
[72] The occurrence reports strongly support Nina’s capacity. Nina was interviewed by police on September 30, 2020, so just over two weeks after she changed her Will to disinherit Linda. The reports indicate that Nina never wanted to sell the house, but Linda wanted her to do so, and she felt pressure from Linda but never planned to list it. Nina told the police that Linda had written two cheques from her account for $7,000 without cause or permission. She accused Linda of being controlling and expressed fear of Linda. She described “a great relationship with Susan” and that she felt no pressure from Susan and “Susan supports her in the decisions she makes.” The police explained to Nina that Linda could justify the spending and had receipts for the cost of landscaping and clean up that Nina authorized, but Nina said she did not authorize any landscaping and “Linda did it anyway to sell the house.”
[73] The report goes on to state:
Nina then asked Susan to take her to a lawyer and had her Will and POA changed to leave her assets to Susan and removed Linda. The writer discussed this drastic decision with Nina, but Nina was able to articulate that it was her decision to make. She said that Susan did not influence her in anyway. She advised Susan never asks for money and supports her a lot more than Linda does. At no time did Nina disclose any abuse or manipulation at the hands of Susan. To the contrary she blamed Linda for stealing money from her. The writer spoke with Nina alone and without any influence from Linda and Susan. It is clear to the writer that the feud between the daughters has caused conflict for Nina and the writer believes it’s the conflict that has caused Nina to favour Susan.
Nina was articulate, alert and consistent when talking to the writer.
[74] A further occurrence report dated November 12, 2020 indicates that two weeks later the police gave Nina the receipts for the landscaping to settle her concerns regarding misappropriation of funds.
Nina was no longer upset with Linda and changed her tune slightly not thinking that Linda had stolen from her, but rather she should have been advised of the spending. … She advised that she does not want to sell the house, wants Susan to remain in it and wishes to stay in Amica.
Nina advised she does want to talk to Linda again and asked the writer to relay that message on her behalf. Amica’s staff Michelle Payton was advised of the update and that Nina wants to see and talk to Linda again. Nina had previously requested Linda not attend to visit her. This was no longer her wish.
[75] Approximately one month after this, Linda commenced her application.
Is Dr. Shulman’s Report Improper Reply Evidence?
[76] Dr. Richard Shulman is a geriatric psychiatrist. After becoming a physician, he completed fellowships in psychiatry, clinical pharmacology, and geriatric psychiatry. He has been qualified as an expert witness in capacity assessments on three prior occasions. He prepared two reports at the request of Ms. Sweatman. His reports demonstrate an understanding of the proper role of an expert witness and a detailed understanding of the legal tests for capacity. In his reports, he concludes Nina has capacity.
[77] It is argued on behalf of Linda that Dr. Shulman’s second report is improper reply evidence and should not be considered. This argument is based in part on the timetable the parties agreed to for this application in the consent order of Coats J. dated June 9, 2021. Dr. Shulman’s first report had been served before that date but not his second report.
[78] The timetable set out deadlines in both the guardianship application and the BMO application.
[79] The timetable said that Linda was to file her reply materials in the guardianship application by June 17, 2021. Nina was to file her reply materials in the BMO application by June 24, 2021. Dr. Shulman’s second report and his affidavit were filed on that date.
[80] The consent order also said:
THIS COURT ORDERS that, on the return of the Guardianship Application and the BMO Application on August 18, 2021, the following are the issues for determination, in the order that the application judge determines: (a) Nina and Susan’s request that the Guardianship Application be dismissed; (b) Nina’s request that the BMO Application be granted; (c) Linda’s request that the Guardianship Application not be dismissed, and that the BMO Application not be granted, and that both Applications instead be consolidated and converted into a single Action.
[81] Linda takes the position that Dr. Shulman’s report goes beyond proper reply to Linda’s responding materials. It is more responsive to the guardianship application than the BMO application.
[82] Linda also argues that due to the timing of the delivery of Dr. Shulman’s second report, she was precluded by the consent order from serving her own expert’s report to respond. The consent timetable did not provide for the possibility that Linda could file additional materials in response to the reply or that Linda would need to respond to an expert report.
[83] It was not asserted that there was insufficient time for Linda to secure a responding expert report. The Shulman report was served June 24, 2021 and the hearing was not until August 18, 2021. She may have needed leave to file it, but she could have obtained a report. Instead, Linda took the position that the consent court-ordered timetable did not allow for Linda to obtain an expert report – by the time that Dr. Shulman’s second report was served, the time limit for Linda to file reply evidence had passed.
[84] At Linda’s cross examination on August 5, 2021, Mr. Figliomeni said that Linda intended to get an expert’s report. He had not previously advised the adverse parties of this. He did say that he had consulted with an expert. He declined to say who the expert would be and did not say when a report could be delivered. He did say the expert report would not be delivered prior to the August 18, 2021 hearing. He asked Mr. Upenieks (who appeared on behalf of Susan) whether he would be prepared to accept service of a report prior to August 18, 2021 to which Mr. Upenieks replied no and, “You’ve had ample time.”
[85] There is no evidence:
a. that there was insufficient time for Linda to obtain an expert report;
b. that a request was made for Nina to submit to an examination to support a capacity assessment;
c. of any effort to obtain a responding report; or
d. that an adjournment of the hearing was requested to allow Linda to obtain an expert report.
[86] During Linda’s cross examination, Mr. Upenieks suggested to her that she had no medical or scientific evidence that Nina lacked capacity. Then this exchange occurred:
MR. FIGLIOMENI: We rely on Dr. Shulman’s report. I don’t think it suggests what you seem to think it suggests, but ...
MR. UPENIEKS: You rely on the whole report, and not just bits and pieces, correct?
MR. FIGLIOMENI: Well, we rely on his conclusions that there is certainly an issue with respect to Nina’s susceptibility to undue influence.
[87] Dr. Shulman addresses undue influence only in his second report.
[88] This exchange occurred later during Linda’s cross examination:
MR. UPENIEKS: And there is no expert that you have tendered, put forward to suggest that Nina requires a power of attorney?
MR. FIGLIOMENI: As we have indicated, we are seeking to have this matter converted from an application into an action, and it would be in the context of that action that an expert report would be delivered.
[89] In my view, the best-foot-forward principle applies. Linda was aware from the consent order that the respondents request to dismiss the guardianship application would be addressed at the August 18, 2021 hearing. She was aware by June 24, 2021 that the respondents would be attempting to rely on both of Dr. Shulman’s reports. There is considerable overlap between the two reports. Linda made a strategic decision not to obtain an expert report to respond to Dr. Shulman for purposes of this hearing but rather to object to the admissibility of his second report. Having made this strategic decision, Linda cannot now claim prejudice. Dr. Shulman was cross examined on his reports. In the circumstances, both of Dr. Shulman’s affidavits and reports shall be received in evidence.
Dr. Shulman’s Evidence
[90] Dr. Shulman interviewed Nina alone on three occasions. His questioning of Nina was detailed. He read the application record and put many of Linda’s concerns to Nina for her reaction. His conclusions are persuasive. He cites very specific examples of his interactions with Nina which demonstrate her understanding. He appears to state the circumstances fairly. He acknowledges that Nina has mild cognitive impairment, but states that she has not been diagnosed with dementia and that she remains capable.
[91] Dr. Shulman states that Nina:
appears to have a strong-willed personality, determined to oppose Linda’s guardianship application and to maintain her own estate planning wishes. She is adamant that she may wish to choose to revise the Will again sometime in the future. I conclude that her mild cognitive impairment theoretically increases the vulnerability to undue influence but in my clinical opinion she is sufficiently cognitively intact to be able to resist any attempt at coercion or even subversion of will.
[92] One area of weakness in Dr. Shulman’s report is that he does not address Susan’s apparent hoarding. He does not, for instance, ask Nina’s views on whether Susan has a hoarding issue, or the extent of this problem. He did not address whether Nina appreciates that hoarding and lack of maintenance could substantially devalue the Acton property, her largest asset. However, as Dr. Shulman notes, Nina is determined in her opposition to Linda’s guardianship. There is no reason to think that this concern would impact Nina’s thinking.
The Issues
[93] Linda requests a variety of relief as set out in paragraph 1(a) through (x) of her notice of application. Some elements of the relief she has requested have already been dealt with and were not argued. For instance, she asks for production of any last Will and Testament and any powers of attorney. She also asks for production of medical, financial and solicitor’s records. At least some of these items were contained in the application materials. Linda’s notice of application also asks that Susan be required to provide a complete list of Nina’s assets and liabilities and an accounting for any transaction she has undertaken on behalf of Nina.
[94] None of these requests were pursued in argument or in Linda’s factum. I will not address them further.
[95] Linda’s application also asks that Nina “be assessed” by an approved capacity assessor. This has been done by Dr. Shulman and Linda has not asked Nina to submit to a second assessment. This request was not pursued in argument or in Linda’s factum. Again, I will not address this further.
[96] The respondents understood that Linda had abandoned her position that Nina lacked capacity. This position was based on their view that Dr. Shulman convincingly concluded that Nina had capacity, no opposing report was served, and no efforts to conduct a further capacity assessment were made. In addition, this exchange occurred during Linda’s cross examination:
MR. UPENIEKS: Okay. So, you are not pursuing the incapacity claim?
MR. FIGLIOMENI: Right now, the claim is with respect to the transfer of the property, and the undue influence that is alleged.
[97] Then, at the outset of his argument Mr. Figliomeni framed the issues as follows: (1) whether the power of attorney and Will and transfer of title to Nina’s home were procured by undue influence; and (2) whether Linda should be removed as joint account holder from the BMO account. He also said that a threshold issue is whether the two applications should be consolidated and converted to an action. He did not mention capacity as an issue or state that guardianship was being pursued. This evolved on my questioning as to whether Nina’s capacity was in issue. Mr. Figliomeni indicated that capacity is inextricably linked to undue influence. He also said that Linda was still pursuing her request to be appointed guardian.
[98] As Linda has not formally abandoned her guardianship request or withdrawn any of her requests for relief, Nina’s capacity remains a disputed issue.
[99] I frame the issues and my determinations as follows:
(1) Is it fair to decide Nina’s capacity on the current record, without a trial?
I conclude that it is fair and proper to decide this issue on the current record, without a trial.
(2) If so, did Nina have capacity to make the impugned instruments and does she have capacity to change them?
Yes, Nina had the requisite capacity to make each of the impugned instruments.
(3) Are the impugned instruments invalid due to undue influence and is a trial required for this purpose?
I will not determine the validity of the impugned instruments. It is not appropriate or necessary to do so when Nina has the capacity to change them.
Capacity is a Threshold Issue
[100] Linda argues that the impugned instruments are invalid because of undue influence, and a trial is required to determine the contested facts on this issue. She has not raised knowledge and approval as an issue.
[101] But there is no point in having a trial over the validity of the impugned instruments while the impugned instruments remain executory. By “executory,” I mean “to take effect on a future contingency”: Merriam-Webster online, https://www.merriam-webster.com/dictionary/executory, retrieved on November 8, 2021. Nina is free to change her Will and her powers of attorney, and she is free to collapse the trust which transferred the Acton property to Susan.
[102] If I allow this matter to proceed to trial to assess whether Nina was subject to undue influence when she made the impugned instruments, she could well prepare new ones before trial, or during the trial, and in that case the litigation would be moot. The circumstances of making the current impugned instruments would no longer matter as it would be necessary to consider the circumstances surrounding the making of the new instruments.
[103] Because the impugned instruments are executory, the issue that Linda seeks to have adjudicated is hypothetical and premature. The court should not expend its resources, or allow the parties to expend their resources, in a wasteful exercise.
[104] This view is supported by Re Skinner, 1970 360 (ON SC), [1970] 3 O.R. 35 (H.C.J.), at p. 40. In that case, the applicant was an executor who asked the court for advice and direction on several questions, including who should benefit under the Will if the respondent Dr. Skinner disclaimed certain interests under the Will. Addy J. said:
The question, in my view, is at the present time, a purely academic and hypothetical one; the function of the Court is not to answer hypothetical questions, but only questions of law as they arise as a result of a certain state of facts which actually exist.
[105] And at para 20:
the applicant executors are really asking the Court for its opinion and advice … concerning the contingent rights of certain of the respondents whose rights depend entirely on a decision which may or may not be made by Dr. Skinner.
[106] The Court of Appeal in Re Coulson (1977), 1977 1060 (ON CA), 16 O.R. (2d) 497 (C.A.), at p. 500, found that Re Skinner was wrongly decided but on a different question that is not applicable. Re Skinner has otherwise received favourable treatment in subsequent jurisprudence: see, e.g., Furfaro v. Furfaro, [1986] O.J. No. 280 (H.C.).
[107] I also find support in Brian A. Schnurr, Estate Litigation, Second Edition (Toronto: Thomson Reuters, 1994), Rel. 2021-6, at c. 12.3. The author states that “There are at least two types of questions that should not be put to the court by way of Notice of Application” [emphasis added]:
One type relates to matters of an academic or hypothetical nature…. The court will refuse to answer questions in the abstract or make a declaration as to the general state of the law. The court will only answer questions that apply to the facts of a particular case. … The other type of question that should not be put to the court is one that may or may not be a problem depending upon the happening of future events. [Footnotes omitted.]
[108] While stated to be limited to proceedings commenced by notice of application, I do not read the author as suggesting these principles never apply to proceedings commenced as an action. It is different when questions are hypothetical in the sense that they depend on facts which will be determined at trial. In that event, a trial is needed to end the dispute: Re/Max Ontario-Atlantic Canada Inc. v. Registrar of Real Estate & Business Brokers (1986), 1986 2822 (ON SC), 57 O.R. (2d) 354, at p.358; Re City of Burlington and Clairton Village (1979), 1979 2059 (ON CA), 24 O.R. (2d) 586 (C.A.), at p. 590; Anglo Canada Fire & General Ins. Co. v. Robert E. Cook Ltd., 1973 579 (ON SC), [1973] 2 O.R. 385, at p. 386. But where, as here, the questions will remain hypothetical whether a trial is held or not, hypothetical questions should not be decided by the court.
[109] In result, the controlling issue is Nina’s capacity. Once it is accepted that Nina has capacity, the outcome of both applications is defined: (1) the court should not appoint a guardian because no guardian is needed; (2) Linda should be removed from the BMO account; and (3) the court should not permit litigation to continue over the still executory impugned instruments.
[110] The result might be different if Nina was bringing the application for a declaration that she was capable and not subject to undue influence when she made the impugned instruments. A parallel circumstance was addressed by Addy J. in Re Skinner, at para. 19:
If the question, under circumstances as they presently exist, can be put to the Court at all, it must be put … by Dr. Skinner, the person whose rights are to be directly affected and who must make the decision.
[111] In any event, the issue is not before me as Nina does not seek a declaration.
[112] Regarding Linda’s argument that capacity and undue influence are inextricably intertwined, I agree that to assess undue influence one must also consider the testator’s capacity to withstand undue influence. But I do not agree that the converse is true. The testator’s capacity can be assessed without determining whether, on the occasion a Will was signed, the testator was subject to undue influence.
Is it Fair to Decide Capacity Without a Trial?
[113] In Przysuski v. City Optical Holdings Inc., 2013 ONSC 5709 at para. 5 to 10, Justice Firestone succinctly outlined the general principles to consider in determining whether an application should be converted into an action. He said:
It is a well-established general principle that an application should be used when there is no matter in dispute and when the issues to be determined do not go beyond the interpretation of a document: see Collins v. Canada (Attorney General) (2005), 2005 28533 (ON SC), 76 O.R. (3d) 228 (S.C.), at para. 28; …
Where the legislature has stipulated that a proceeding may be brought by application, there is a prima facie right to proceed by application and the matter should not be converted into an action without good reason.
A good reason to convert an application into an action is when the judge who will hear the matter cannot make a proper determination of the issues on the application record: see Collins, at para. 29.
When issues of credibility are involved the matter should proceed by way of action.
A factual dispute simpliciter in itself is not sufficient to convert an application. The fact(s) in dispute must be material to the issues before the court.
In determining whether to convert an application into an action, Collins sets out the following factors that are relevant at para. 5:
whether material facts are in dispute;
The presence of complex issues that require expert evidence and/or a weighing of the evidence;
Whether there is a need for pleadings and discoveries; and
The importance and impact of the application and of the relief sought.
[Emphasis added. Except for the references to Collins, citations are omitted.]
[114] The legislature has stipulated in ss. 22 and 55 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (SDA) that “The court may, on any person’s application, appoint a guardian…” “It is significant that in the SDA the Legislature decided that guardianship proceedings should be brought by way of application, not by way of action”: Abrams v. Abrams, 2010 ONSC 1254, at para. 32.
[115] Rule 14.05(d) provides that a proceeding may be brought by application where the relief claimed is “the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution.” The court has the power to hear such matters as applications, even if there are material facts in dispute, although “in an appropriate case the court may decide to direct the trial of an issue, or otherwise deal with the application”: McKay Estate v. Love (1991), 1992 7508 (ON SC), 6 O.R. (3d) 511 (Gen. Div.) at para. 6.
[116] The court can also use the application procedure under rule 14.05(h) where the relief claimed is “in respect of any matter where it is unlikely that there will be any material facts in dispute requiring a trial.” The words I have emphasized were added in an amendment to the Rules which came into force on January 1, 2019. Even before this amendment, F.L. Myers J. held in Rubner v. Bistricer, 2018 ONSC 1934, at para. 105, that, “There is no point converting an application into a trial of the issues if there is no genuine issue requiring a trial.” He also said, at para. 108, “In all, I am satisfied that resolving these applications summarily is the most proportionate and fair process.” The same applies here.
[117] Rule 38.10(1) gives the court the discretion to “(a) grant the relief sought or dismiss or adjourn the application, in whole or in part and with or without terms; or (b) order that the whole application or any issue proceed to trial and give such directions as are just.”
[118] Linda argues that her motion for an order consolidating and converting the applications to a trial is the threshold issue that I should decide, and that I should set a timetable and procedure for the balance of the action. She maintains that there are disparate factual narratives that cannot be resolved without a trial.
[119] Having found that Nina’s capacity is a controlling issue, at this stage I only need to concern myself with whether there are “material facts in dispute requiring a trial” that touch on this issue. Put differently, I need to be satisfied that I can “make a proper determination” of the capacity issue based on the application record, and without a trial.
[120] It would be wrong to conflate the issue of undue influence with the issue of capacity. The evidence on undue influence is discrepant, but the evidence of Nina’s capacity is incontrovertible. If the issue of undue influence required resolution, Linda’s position would be much stronger, but as I have already indicated, on my view of this case I should not address the undue influence issue.
[121] Linda draws a parallel between this case and Messmer v. Pilz, 2016 ONCA 893. She argues that there are overlapping facts clearly in dispute, and I should consolidate the proceedings and impose timelines, as the Court of Appeal suggested in that case. Messmer does not assist Linda’s position. The order of the applications judge did not dispose of the parallel proceeding, creating the risk of inconsistent findings in the parallel proceedings, which risk in fact materialized. As the Court of Appeal stated at para. 35, “the most efficient disposition would have been to consolidate” the two proceedings. Here, I am able to fairly adjudicate both proceedings on the available record. There is no risk of inconsistent findings, and a trial is unnecessary and would not be more efficient.
[122] I do acknowledge that there are some contested facts which speak to Nina’s capacity, but the evidence in Nina’s favour on this issue is overwhelming. The contested facts are minor and do not qualify as “material facts in dispute requiring a trial.”
[123] I conclude that it is fair to decide the issue of capacity without a trial.
Capacity
[124] This case involves questions of: (1) capacity to manage property and personal care; (2) capacity to revoke and give a power of attorney; (3) testamentary capacity; and; (4) capacity to make an inter vivos gift.
[125] It is obvious that I must determine Nina’s capacity in connection with Linda’s guardianship application. Similarly, as Linda challenges Nina’s capacity to revoke the 2016 powers of attorney and to grant the 2020 powers of attorney, I must assess whether Nina meets the test for capacity to revoke and give a power of attorney.
[126] It is less obvious that I need to assess Nina’s testamentary capacity or her capacity to transfer the Acton property to Susan, when Nina is alive and these instruments are executory. However, if Nina did not have the requisite capacity, and if she was not expected to regain capacity, it might be open to Linda to challenge the validity of the Will at this time. In that case, the issue of the validity of the Will and property transfer might not be premature or hypothetical.
[127] I will therefore assess Nina’s capacity for the four areas in question.
Onuses
[128] The onus for the determinations of capacity is not the same for all four of these assessments. However, because the differing onuses are not material here, I will not address the issue. This is not a case which will be decided based on who bears the onus. Nina readily meets the test for capacity in all applicable spheres.
Capacity under the SDA
[129] Under the SDA, for Linda to obtain an order appointing her as Nina’s guardian for property, she must show that Nina is “incapable of managing property.” The test for incapacity is statutorily defined under s. 6:
A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
[130] To obtain an order appointing her as Nina’s guardian for personal care, Linda must show that Nina is “incapable of personal care.” The test for incapacity is statutorily defined under s. 45 of the SDA:
A person is incapable of personal care if the person is not able to understand information that is relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
[131] The law highly values autonomy and presumes capacity unless the contrary is proven: Starson v. Swayze, 2003 SCC 32, [2003] 1 S.C.R. 722, at paras. 7, 77, 85 and 91; SDA, s. 2. “The dignity and integrity of the individual depends upon this presumption. It should not be lightly interfered with”: Elmi v Hirsi, 2015 ONSC 6003, at para. 24. “Incapacity is a high threshold and appropriately so. It preserves freedom, autonomy and dignity, and seeks to restrict state attempts to impose value judgments and paternalism”: The Public Guardian and Trustee v. Golyzniak, 2021 ONSC 4524, at para. 16.
[132] Capacity exists if the person is able to carry out her decisions with the help of others: Koch (Re), (1997), 1997 12138 (ON SC), 33 O.R. (3d) 485 (S.C.) at p. 521.
[133] In applying these standards, it is readily apparent that Nina is capable of managing her property and her personal care. Dr. Shulman reviewed and applied the applicable tests in his report of May 5, 2021. His description of Nina’s answers to his questions generally accords with Nina’s evidence in her cross examination. His conclusions are grounded in the evidence and are well supported. There is no competing expert evidence.
[134] Linda noted that Dr. Shulman said Nina is capable to manage property “with assistance.” She argues that this is an equivocal opinion that justifies a trial. However, Dr. Shulman’s reports indicate only that Nina requires assistance with transportation to the bank and advice from her financial advisor, and help with showering so as not to fall. He did not imply that help was needed beyond this. This kind of assistance does not indicate that Nina is “not able to understand information that is relevant to making a decision” about the management of her property or her care.
[135] Linda raised as a concern the observations that she made in June of 2020 when Nina lived with her for three weeks. Nina forgot to take her medications. That is not a significant marker of lack of capacity under the SDA definitions. It again does not suggest Nina is “not able to understand information that is relevant to making a decision” concerning her care. In any event, even if Nina requires cuing to take medication this would not justify a guardianship order, especially in her current circumstances where she lives at Amica.
[136] I find it significant that, after having lived with Nina and observed her for three weeks in June of 2021, Linda does not raise examples of more significant memory issues, confusion, lack of comprehension of financial or other issues, or incompetence.
[137] Overall, it is clear that Nina is not “incapable of managing property” and not “incapable of personal care.”
Capacity to Give a Continuing Power of Attorney
[138] The capacity to give and revoke a continuing power of attorney is defined in s. 8 of the SDA:
Capacity to give continuing power of attorney
8 (1) A person is capable of giving a continuing power of attorney if he or she,
(a) knows what kind of property he or she has and its approximate value;
(b) is aware of obligations owed to his or her dependants;
(c) knows that the attorney will be able to do on the person’s behalf anything in respect of property that the person could do if capable, except make a Will, subject to the conditions and restrictions set out in the power of attorney;
(d) knows that the attorney must account for his or her dealings with the person’s property;
(e) knows that he or she may, if capable, revoke the continuing power of attorney;
(f) appreciates that unless the attorney manages the property prudently its value may decline; and
(g) appreciates the possibility that the attorney could misuse the authority given to him or her.
Capacity to revoke
(2) A person is capable of revoking a continuing power of attorney if he or she is capable of giving one.
[139] The granting a power of attorney for property “requires a lesser level of capacity than that required to manage property”: Covello v. Sturino, [2007] O.J. No. 2306, at para. 20.
[140] The capacity to give and revoke a continuing power of attorney for personal care is defined in s. 47 of the SDA:
Capacity to give power of attorney for personal care
47 (1) A person is capable of giving a power of attorney for personal care if the person,
(a) has the ability to understand whether the proposed attorney has a genuine concern for the person’s welfare; and
(b) appreciates that the person may need to have the proposed attorney make decisions for the person.
Capacity to revoke
(3) A person is capable of revoking a power of attorney for personal care if he or she is capable of giving one.
[141] Dr. Shulman reviewed the statutory tests in his report and concluded that Nina had the capacity to give and revoke a continuing power of attorney for property and for personal care. I again find that his observations are consistent with Nina’s cross examination testimony, and I accept his analysis.
[142] Nina is capable of giving and revoking a continuing power of attorney and a power of attorney for personal care.
Testamentary Capacity
[143] A detailed review of the law of testamentary capacity is found in John E.S. Poyser, Capacity and Undue Influence (Toronto: Carswell, 2014), at pp. 43 to 72. The author describes the following statement from Banks v. Goodfellow (1870), 5 Q.B. 549, at p. 565, as “[t]he time-honoured test for testamentary capacity”:
It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effect; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties – that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.
[144] In Schwartz v. Schwartz, 1970 32 (ON CA), [1970] 2 O.R. 61 (C.A.), aff’d 1971 17 (SCC), [1972] S.C.R. 150, Laskin J.A recited the test from Banks v. Goodfellow, followed by his own restatement of the test “[i]n more contemporary terms”:
The testator must be sufficiently clear in his understanding and memory to know, on his own, and in a general way (1) the nature and extent of his property, (2) the persons who are the natural objects of his bounty and (3) the testamentary provisions he is making; and he must, moreover, be capable of (4) appreciating these factors in relation to each other, and (5) forming an orderly desire as to the disposition of his property. [Citations omitted.]
[145] Laskin J.A. was writing in dissent. Neither the majority nor the Supreme Court of Canada on the further appeal mentioned his restatement of the test, but it has been cited and applied numerous times.
[146] Poyser notes at p. 47 that the Supreme Court of Canada has dealt with testamentary capacity on several occasions without mentioning Banks v. Goodfellow but describing the requirement for “a disposing mind and memory”: Leger v. Poirier, 1944 1 (SCC), [1944] S.C.R. 152, at para. 17; MacGregor v. Ryan, 1965 17 (SCC), [1965] S.C.R. 757, at pp. 761 to 672; Vout v. Hay, 1995 105 (SCC), [1995] 2 S.C.R. 876 at para. 20; Hayward v. Thompson (1960), 1960 430 (SCC), 25 D.L.R. (2d) 545, at p. 557.
[147] Poyser, at p. 47, describes the phrase “a disposing mind and memory” as “a convenient shorthand to refer to the test from Banks v. Goodfellow.”
[148] While a precise and definitive affirmation of Banks v. Goodfellow from the Court of Appeal or from the Supreme Court of Canada remains elusive, there is an abundance of authority which restates the test similarly, or which applies the test.
[149] Nina demonstrated that she has the required understanding of her main assets as she was able to describe them to Dr. Shulman. The law does not require a testator “to know the precise make up of her estate. She need only know in a general way the nature and extent of her property”: Orfus Estate v. Samuel and Bessie Orfus Family Foundation, 2013 ONCA 225 at para. 60; Re Schwartz, at p. 78; Quaggiotto v. Quaggiotto, 2019 ONCA 107 at para. 7. Nina’s estate is straightforward with the main assets being the house, the BMO account, and the Tandia account. She was aware that no appraisal of the house had been obtained and was content with this because she believes based on advice from her financial advisor that “she has sufficient resources to afford her current expenses for the remainder of her life even if she were to live to 110 years old,” according to Dr. Shulman’s report of June 23, 2021.
[150] Nina demonstrated acute awareness that Linda would “normally” be considered as an heir, and that all four of her grandchildren might also be considered among her heirs.
[151] Nina demonstrated full awareness that the effect of her Will, in combination with the transfer of the house to Susan, was to fully disinherit Linda and to give everything to Susan. Further, she fully understood that only two of Susan’s children would be alternate beneficiaries and not Linda’s child or Susan’s estranged child. Without question, Nina understood “the basic dispositive effect” of the Will (Poyser, at p. 74), which in this case has no complexity to it.
[152] Further, Nina appreciates the social awkwardness of her decision. On her cross examination, Nina was told that her then-current instruction to Amica prevented Linda from visiting her, and she was asked if she would change that instruction. She agreed, but said:
But I don’t want [Linda] to be forced to visit me. If she doesn’t want to, that’s her business. But, if she comes, I will certainly treat her like I treat Susan. She is my daughter after all. And I do love her, even if at times you think ... or Linda might think I don’t, but I do love her. She’s my daughter.
[153] She even told Dr. Shulman that her Will “is not written in stone and she would be willing to revise the Will to divide the BMO account distribution equally between the two daughters if Linda treated her better. This would include Linda dropping the lawsuit,” according to Dr. Shulman’s June 23, 2021 report.
[154] There is convincing evidence that Nina understands her assets, the social norms as to who might be her anticipated heirs, and the effect of her Will, and that she appreciates these factors in relation to each other and as a whole.
[155] She has testamentary capacity.
Capacity for an Inter Vivos Gift
[156] According to Poyser, at p. 373, Ball v. Mannin (1829), 4 E.R. 1241 (H.L.) “is widely accepted as the seminal case” in both England and Canada on the test for capacity applicable to inter vivos gifts. That test can be succinctly stated: the donor must be “capable of understanding what he did by executing the deed in question, when its general purport was fully explained to him.”
[157] Poyser goes on to say, at p. 377, that the test in Ball v. Mannin was expanded and made easier to apply in Re Beaney (Deceased), [1978] 2 All E.R. 595, at p. 601, where it was said:
The degree or extent of understanding required in respect of any instrument is relative to the particular transaction which it is to effect. In the case of a will the degree required is always high. In the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varies with the circumstances of the transaction. Thus, at one extreme, if the subject-matter and value of a gift are trivial in relation to the donor’s other assets a low degree of understanding will suffice. But, at the other, if its effect is to dispose of the donor’s only asset of value and thus for practical purposes to pre-empt the devolution of his estate under his will or his intestacy, then the degree of understanding required is as high as that required for a will, and the donor must understand the claims of all potential donees and the extent of the property to be disposed of.
[158] Several Canadian courts have followed or applied Ball v. Mannin and Re Beaney: e.g., MacGrotty v. Anderson, [1995] B.C.J. No. 1857 (B.C.S.C.); Lynch Estate v. Lynch Estate (1993), 1993 7024 (AB KB), 8 Alta. L.R. (3d) 291 (Q.B.), at para. 108, McLeod Estate v. Cole, 2021 MBQB 24; Egli v. Egli, 2005 BCCA 627; McLeod Estate v. Cole, 2021 MBQB 24.
[159] Re Beaney is generally consistent with an earlier Supreme Court of Canada decision, Mathieu v. Saint-Michel and Brassard, 1956 57 (SCC), [1956] SCR 477. In that case, an elderly and ill woman made an inter vivos gift of her house to a non-family member. The Supreme Court of Canada said, in the circumstances, that the test of competency to make an inter vivos gift is “substantially the same” as the test for testamentary capacity:
This would mean that she was of an understanding adequate to the act done, that she was able to grasp its character and effect in the setting of her circumstances, that she appreciated the value of the property, about $20,000, her own physical condition, her future, that she was disposing of her property to a virtual stranger whom she would not have as a neighbour for at least two years, and that the donation was irrevocable: that she had, in short, the intellectual capacity in some degree to view these matters in their entirety in the perspective of her present and possible future life and her family relationships.
So formulated and in the circumstances of the particular case, the test of competency in making the agreement is substantially the same as that of the will.
[160] Poysner notes, at p. 380, that Mathieu in fact sets the bar for capacity to make an inter vivos gift a little higher than for testamentary capacity, in that there is an additional element: an understanding of how the transfer affects the donor’s “own physical condition, her future,” that is, her future security and comfort. This is obviously something testators need not be concerned about after their death.
[161] In this case, the transfer of the Acton property might properly be treated as testamentary. Because Susan is a bare trustee, she will derive no benefit from the transaction until Nina dies. On this analysis, the additional element for capacity to give an inter vivos gift (understanding how the transfer affects the donor’s future security and comfort) is not necessary.
[162] However, even if the declaration of trust is considered an inter vivos gift, Nina easily crosses the additional hurdle. First, Nina believes, based on the advice of her financial adviser at BMO, that she has enough in her BMO investments to last her to age 110 at her current level of expenditure, and that her biggest expense is Amica. Second, the declaration of trust indicates that Susan is holding the Acton property as bare trustee, so Nina can get it back. Nina may not have fully understood this when she was interviewed by Dr. Shulman but, as indicated above, she did tell Dr. Shulman “that her understanding is she gave ownership to Susan, but she can move back home if and whenever she wants to.” That is a reasonable-enough lay explanation of the effect of the declaration of trust.
[163] Nina had capacity to transfer the Acton property.
Disposition
[164] Linda’s application is dismissed.
[165] Nina’s application is allowed. An order shall issue in accordance with paragraphs 1(a) and 1(b) of her notice of application.
[166] I will receive written submissions on costs. Nina and Susan shall provide written argument on costs consisting of not more than four pages, plus offers to settle, bills of costs, and supporting documentation, by November 15, 2021.
[167] Linda shall provide her responding materials, with the same page limits, by November 22, 2021.
[168] The materials should be filed with the Milton court office with a copy sent to my judicial assistant.
[169] If time extensions are needed counsel may email me through my judicial assistant.
“Justice R. Chown”
Released: November 9, 2021