COURT FILE NO.: CV-20-00083708-00ES DATE: 03-December-2021
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: JOHN JAMES ARNOLD and DAVID PAUL ARNOLD, in their capacity as Trustees of the MARIE BLANCHE ‘LOUISE’ ARNOLD ALTER EGO TRUST, Applicants
AND: DANIEL ARNOLD, Respondent
BEFORE: Associate Justice Kaufman
COUNSEL: Joel Reinhardt, Counsel for the Applicants Carmen M. Baru, Counsel for the Respondent
HEARD: October 21, 2021
REASONS FOR DECISION
[1] The applicants and the respondent have each brought their own refusals motion. These motions are brought in the context of an application by John and David Arnold, to evict their brother Daniel Arnold from their parents’ former home located at 1860 Fairmeadow Crescent (the “home”). Daniel Arnold has been diagnosed with schizophrenia and has been living in his parents’ home since shortly after it was purchased over 20 years ago. The parties’ father, Thomas Christie Arnold passed away in April 2016 and their mother, Louise Arnold (“Louise”), moved into a retirement home in March 2019. Louise suffers from dementia.
[2] On January 25, 2019, Louise transferred the title to the home into the Marie Blanche “Louise” Arnold Alter Ego Trust (the “trust”). She was assessed by Dr. Sarazin, a capacity assessor, as being capable to make testamentary decisions three weeks before the transfer. The trust is said to name Louise, John and David as trustees. It is in their capacity as trustees of this alter ego trust that the applicants bring this application. The applicants are also Louise’s attorneys for property.
[3] Daniel responds to the application by asserting that he is Louise’s dependant, that Louise always treated him as such, and that there are no valid financial reasons for evicting him. He believes that his brothers wish to evict him in order to deny him dependency status and thereby increase their share of Louise’s estate residue. He also questions Louise’s ability to understand the trust’s documents and suspects that she is being manipulated by the applicants.
[4] Daniel was cross-examined on his affidavit on February 25 and 26, 2021, and David Arnold, who did not swear an affidavit in support of this application, was examined under Rule[^1] 39.03 on January 11, 2021. Daniel has brought his own application for, inter alia, a declaration that he is Louise’s dependant and for a passing of accounts. These motions, however, are brought within this proceeding.
Applicable Principles
[5] Where a person is cross-examined on an affidavit, the questions asked must be relevant to the issues on the pending application, or to matters raised in the deponent’s affidavit, even if not relevant to the issues on the motion or application. Questions may also be asked that address the deponent’s credibility and reliability.[^2]
[6] The applicants argue that, because David was examined as a “witness” under Rule 39.03, the scope of his examination is limited to matters within his personal knowledge, he is not required to inform himself or make inquiries of others, and he is not obliged to give undertakings.[^3] While the applicants have accurately stated the law as it applies to witnesses examined under Rule 39.03, I do not accept that the scope of the examination should be so limited where the witness being examined under this rule is a party.
[7] The principles upon which the applicants rely were first pronounced in Magnotta Winery Corp. v. Ontario (Alcohol and Gaming Commission).[^4] In that case, a Crown employee was examined pursuant to this rule and certain questions were refused. Master McAfee (as she was then titled) noted that the employee was not providing evidence on behalf of the Crown, was not a party to the proceeding and did not swear an affidavit on the motion. She held that “the obligations of a witness being examined under Rule 39.03 must necessarily be even less onerous than on a cross-examination under Rule 39.02 since a Rule 39.03 witness is not put forth as a witness on behalf of a party”.[^5]
[8] Where, as here, a party to the proceeding is being examined under Rule 39.03, the scope of the examination should be the same as if that party was cross-examined on an affidavit. Non-parties should not be unduly inconvenienced with intrusive, onerous and time-consuming disclosure requirements.[^6] Parties, on the other hand, are obligated to consider the issues arising in an application and put all relevant evidence forward.[^7] They cannot shield relevant information from the Court and from other parties by choosing not to swear an affidavit in the proceeding.
Daniel’s Motion
[9] Daniel seeks orders compelling disclosure of the trust’s deed of settlement, Louise’s will, and her medical and financial records. I will address these issues in turn.
a. The deed of settlement
[10] The applicants commenced this application in their capacity as trustees of the alter ego trust.
[11] In their Notice of Application, they assert that, on January 25, 2019, Louise transferred ownership of her home into the Marie Blanche “Louise” Arnold Alter Ego Trust. The trust allegedly names Louise, John and David as the trustees. John testified that Louise settled the trust for her benefit during her lifetime, and for the benefit of others upon her death. The applicants claim that the trust provisions outlined in the deed of settlement permit the majority of the trustees to sell the property for Louise’s benefit. The deed of settlement was filed with the Registrar for the use of the Court pursuant to Rule 4.06(3)(b).
[12] The applicants refuse to produce the deed of settlement because it is “arguably” a testamentary document in relation to which Louise has a privacy interest. In oral submissions, counsel for the applicant argued that the issues surrounding Louise’s estate have been very acrimonious, and that revealing this document could damage the relationships among family members.
[13] I agree with Daniel that the deed of settlement must be produced to him. It is the foundational document relied upon to confer upon John and David the standing to bring this application. John has described it in his affidavit but has not attached it.
[14] Daniel has put John and David’s authority to commence these proceedings in issue, and the deed of settlement is therefore relevant. I appreciate that the applicants seek to keep the document confidential in order to avoid further damage to the family. However, it appears that much damage has already been done through this application to evict Daniel, and a prior proceeding involving the parties’ brother Marc.
[15] The applicants argue that this application is not the proper forum to challenge the validity of Louise’s will, the alter ego trust, the continuing power of attorney or the authority of the trustees. I accept that challenges to these instruments must follow the requisite statutory procedures under the applicable statutes. However, Daniel is responding to an application for an order to evict him from the home he has occupied for the past 20 years. He is entitled to question the basis for the applicants’ authority to bring this application. Moreover, Dr. Sarrazin assessed Louise as not having the capacity to manage her property. I agree with Ms. Baru that Daniel should be entitled to assess whether the deed of settlement was a document she could execute. While the applicants wish to make the deed of settlement available to the Court, it should also be provided to Daniel to enable him to adequately participate in a proceeding that has the potential to affect his legal rights and fundamental interests, and to ensure the efficacy of the adversarial process.
[16] The relief sought in the application includes an order that the deed of settlement be kept confidential and under seal by the Registrar for use of the Court, and that it be returned to counsel for the applicants upon disposition of this application. In determining a refusals motion, the Court must be mindful not to assume the application judge’s role and make final orders on interlocutory motions. Accordingly, and subject to any further court order, I will also order that the respondent and his counsel treat the deed of settlement confidentially and that they not disclose it to anyone except to the extent required to respond to this application or in support of Daniel’s own application.
b. Louise’s will
[17] Daniel seeks an order compelling the applicants to produce a copy of Louise’s will. Daniel argues that the will is required to determine if John or David stand to benefit from the will and if they are in a conflict of interest. Daniel also relies on the fact that the applicants offered to buy him a condominium as part of a settlement, but that the condominium’s value would be considered an advance on his inheritance. Daniel argues that he cannot assess the merits of this offer if the will’s provisions are not disclosed.
[18] The applicants refused to produce the will on the grounds that it is not relevant. They also contend that a will is a private document, the production of which should not be compelled during the testator’s life. They rely on Abrams v. Abrams,[^8] where Justice Strathy (as he then was) refused to order production of a will citing the privacy interests attached to such documents, and the intrusive nature of compelling disclosure of a person’s testamentary wishes prior to his or her death.
[19] There is authority for the proposition that a will is a privileged document.[^9] Moreover, at common law, a will could not be challenged until the testator’s death because, before death, it was a mere “piece of waste paper” which could be revoked by a new will the very next day.[^10]
[20] In recent years, courts have entertained will challenges of living persons where there was evidence that the testator had lost the mental capacity to change his or her will.[^11] In Weatherill (Estate of) v. Weatherill,[^12] the Court ordered the production of the incapable plaintiff’s will where it was relevant to the allegations of capacity and undue influence. I conclude that a will attracts a high privacy interest but may be ordered produced in the appropriate case.
[21] I decline to order the production of Louise’s will because I am not satisfied that undue influence or Louise’s capacity are issues that belong in this application. On December 19, 2018, Dr. Sarrazin assessed Louise to be competent for the purpose of making testamentary dispositions, which was consistent with Louise’s estate lawyer’s own observations regarding her capacity. While Daniel questions the applicants’ motivations for bringing this application and Louise’s capacity, I agree that any challenge to Louise’s will or to her capacity must be brought under a separate application under the applicable legislation.
[22] Finally, while I agree that the will is relevant for the purpose of responding to the applicants’ offer to settle, it is the relevance to the issues raised in this application that the Court must assess.
c. Louise’s medical records
[23] Daniel also seeks disclosure of Louise’s medical records from January 2018 to date. The basis for the request is that Louise was assessed as having the capacity to make testamentary dispositions and grant a power of attorney on December 19, 2018, but did not settle the alter ego trust until January 10, 2019, 22 days later. Daniel argues that capacity can fluctuate, and the medical records would speak to her capacity.
[24] I decline to order the production of the medical records because, even if Louise’s capacity was an issue for this proceeding, the applicants do not have the right or ability to disclose Louise’s personal medical records in their capacity as trustees of an alter ego trust or as attorneys for property.
d. Louise’s financial records
[25] Daniel argues that any claim he may have against Louise’s assets as a dependant would be subsidiary to Louise’s own financial needs during her lifetime. On this basis, he asked for an undertaking to disclose the value of Louise’s estate and her income and her expenses.
[26] Daniel has put forth evidence that Louise’s needs could be met during her lifetime because she earns investment income. Moreover, his brother Marc has offered to buy the family cottage while permitting Louise to use it for the rest of her life, thereby providing her with sufficient liquid assets. The applicants have not served any reply affidavit.
[27] It would be up to the applicants to raise Louise’s inability to meet her own financial needs during her lifetime as a justification to evict Daniel and sell the home, and they have not done so. John suggests in his affidavit that the costs of maintaining the home are substantial, but he does not assert that selling the home is required to provide Louise the cashflow necessary to pay for her expenses. I agree that the question 242: “Does Louise require to sell this house for her expenses” is a relevant question because, if this question was answered in the affirmative, it could have a significant impact on this application’s outcome.
[28] Question 242 should be answered. If the answer is “no”, then Louise’s financial situation is not an issue in these proceedings. If the answer is yes, then disclosure of Louise’s assets, income and expenses will be required.
The Applicant’s Motion
[29] The applicants move for an order compelling various financial documents that relate to Daniel’s allegation that he is Louise’s dependent. Daniel alleges in his affidavit that he has attempted to live independently but was unsuccessful. He also stated that he has tried to earn his parents’ financial support through contributing to the maintenance of the home. Finally, he alleges in cross-examination that he paid his parents $200 per month for room and board, and that this agreement was disclosed to the administrators of the Ontario Disability Support Program (“ODSP”). Daniel alleges that he has performed maintenance on the home and purchased household items such as rugs, paintings, or furniture to “offset” his rent payments to his parents.
[30] The applicants have requested the following documents to verify Daniel’s claims:
a. A listing of each bank account that Daniel owns himself or jointly with anyone else, including but not limited to Louise; and the account numbers, bank, and branch location where they are held.
b. To produce statements for the credit card, or bank account statements for the charges, which detail the offsets for the monthly rental amount.
c. To produce receipts for the alleged offsets and confirmation of which credit card or bank account the purchases were made from.
d. To confirm if the joint credit card held by Daniel with Louise Arnold ends with numbers 9437.
e. To confirm which credit card, credit card number and bank account was associated with expenses incurred for maintaining the property.
[31] The applicants contend that they are entitled to see receipts that confirm that Daniel made the alleged purchases to offset his rent.
[32] In my view, the applicant’s request for banking and credit card statements is overbroad. These documents would contain personal information that is unrelated to the household purchases alleged to have been made.
[33] I agree that Daniel’s income is relevant to the issue of his financial dependence. Daniel indicated at the hearing of the motion that he does not oppose an order to provide his ODSP benefit statements and his income tax returns. These documents would provide the applicants with the requisite information to assess his income from all sources. I order that these documents be produced for the past three years as this would be the most relevant period for the purpose of this application.
[34] The applicants request supporting documents for the household purchases Daniel alleges to have made. Daniel responds that these purchases were not made through banking or credit card transactions. The applicants respond that Daniel has referred to certain “pool” receipts. If Daniel has any receipts for expenses he has incurred for the maintenance of the home or for purchases of household items, these receipts are relevant supporting documents that should be produced. I recognize however that Daniel has lived at the home for over 20 years, that certain purchases may have been paid in cash, and that receipts may not be available anymore. I order that Daniel provide supporting documents for the expenses he alleges to have incurred to the extent they are still available.
[35] I agree with Daniel that the applicants, as Louise’s attorneys for property, can obtain the statements for any bank or credit card account that Louise jointly held with Daniel.
COSTS
[36] The parties have submitted costs outlines. Daniel’s partial indemnity costs for both motions are claimed at $3,000.85 while the applicants claim $6,652.15 for partial indemnity costs for their motion and a further $6,053.05 to respond to Daniel’s motion.
[37] The fixing of costs is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57 of the Rules. Rule 57.01 enumerates various factors to consider when exercising discretion to award costs.
[38] The ultimate question is whether an award of costs reflects “an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”[^13].
[39] Here, both parties’ motions were allowed in part. I consider the result of the motion and the importance of the issues to be the most relevant Rule 57.01 factors on this motion.
[40] Daniel is overall the more successful party because he was successful on the issue of the deed of settlement, and because the issues he raised were more important that the ones the applicants raised, which mostly concerned the disclosure of supporting documents for the minimal expenses Daniel alleged to have incurred.
[41] Considering the parties’ mixed success, I fix Daniel’s costs for both motions at $1,750.00, payable by the applicants forthwith.
DISPOSITON
[42] The Court orders that, within the next 30 days:
a. The applicants provide Daniel with a copy of the deed of settlement to the Marie Blanche “Louise” Arnold Alter Ego Trust. Daniel and his counsel shall treat this document confidentially and only disclose it to the extent required to respond to this application or in support of Daniel’s own application.
b. The applicants shall answer question 242: “Does Louise require to sell this house for her expenses”. If the answer is no, they are not required to provide any of Louise’s financial records. If the answer is yes, they shall disclose Louise’s assets, income and expenses.
c. Daniel shall provide his ODSP benefit statements, and his income tax returns for the preceding 3 years.
d. Daniel shall provide supporting documents for the expenses he alleges to have incurred to the extent they are still available.
e. The applicants shall pay Daniel’s costs of both motions, fixed in the amount of $1,750.00, payable forthwith.
Associate Justice Kaufman
Date: December 3, 2021
COURT FILE NO.: CV-20-00083708-00ES DATE: 03-December-2021
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ARNOLD et al v. ARNOLD et al
BEFORE: Associate Justice A. Kaufman
COUNSEL: Joel Reinhardt, for the Applicants Carmen M. Baru, for the Respondent
REASONS FOR DECISION
Associate Justice A. Kaufman
DATE: December 03, 2021
[^1]: Rules of Civil Procedure, R.R.O. 199, Reg. 194, (the “Rules”). [^2]: Manufacturers Life Insurance Company v. Parc-IX Limited, 2018 ONSC 4073 at para 7, citing Ontario v. Rothman’s Inc., 2011 ONSC 2504 at para 143. [^3]: Magnotta Winery Corporation v. Ontario (The Alcohol and Gaming Commission), 2020 ONSC 561 (Ont. Sup. Ct.), at para 52. [^4]: 2016 ONSC 3174 (Ont. Sup. Ct.). [^5]: Ibid, at para 18. [^6]: Mcgillivary v. Toronto Police Services Board, 2014 ONSC 865, (Ont. Sup. Ct.), at para 20. [^7]: Brock Home Improvement Products Inc. v. Corcoran, 2002 CanLII 49425 (ON SC), [2002] O.J. No. 931, at para 8. [^8]: 2008 CanLII 67882 (Ont. Sup. Ct.) [^9]: Schwartz Estate v. Kwinter, 2008 ABQB 123, at para 24. [^10]: S.A. (Dependent Adult) v. M.S., 2005 ABQB 549 at para 28. [^11]: Weinstein v. Weinstein (Litigation Guardian of), (1997), 1997 CanLII 24477 (ON SC), 19 E.T.R. (2d) 52 (Ont. Gen. Div.) at para. 12 ; See also Nystrom v. Nystrom (2006), 25 E.T.R. (3d) 297 (Ont. S.C.J.) at paras. 17-19. [^12]: 2003 ABQB 69. [^13]: Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), para 26.