ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Salvatore Falsetto
Plaintiff/Moving Party
– and –
Salvatore Fillipo Falsetto a.k.a. Sam Falsetto and Falsetto Homes Inc., 99 Cartier St. Apartments Inc., Clarence Street Apartments Inc., and Bronson Ridge Apartments Inc. and Canadian Imperial Bank of Commerce
Defendant/Responding Party
Raymond Murray, Avery Yandt, and Joseph Griffith, for the Plaintiff
Thomas G. Conway, Chris Trivisonno, and Abdalla Barqawi, for the Defendant
HEARD: February 14 - March 21 and March 28 - 29, 2022 via Zoom in Ottawa
R. Smith J.
REASONS FOR DECISION
1The Plaintiff, Salvatore Falsetto (“Salvatore”) has sued his son, Salvatore Fillipo Falsetto (“Sam”) and several of his companies seeking the return of the funds he transferred to Sam to acquire the properties listed in Schedule “A”, plus the gross sale price for the homes that Sam built on the Wilmont and Skeena properties. Salvatore transferred substantial sums of money to Sam on several occasions between November 3, 2010 and July 2, 2015. Sam used these funds to acquire and develop several properties and in particular to acquire three large apartment buildings. Sam claims that all of the funds transferred to him by Salvatore were gifts to him, except for his use of Salvatore’s line of credit, which were loans to assist him to develop properties.
2Sam testified that on each occasion, Salvatore authorized and consented to the transfer of funds and gave Sam his “blessing”, before any funds were transferred to him to acquire or develop the properties as set out in Schedule “A”. Each time, Salvatore expressed his intention to gift the money to Sam saying, “it’s yours son” and to go ahead and use the funds to acquire or develop the property in question.
3Salvatore now claims that he did not intend to gift the funds to Sam but intended that the properties purchased by Sam, listed in Schedule “A”, with a down payment from him, were to be put in his name, or alternatively to be held in trust for him, either on a specific trust, a resulting trust, or a constructive trust. Alternatively, Salvatore testified that the properties acquired were to be held with a 50% interest belonging to Salvatore and the other 50% interest belonging to Sam. Or in the further alternative, that the properties acquired were to be held in trust for Salvatore during his lifetime and thereafter for his five children.
4Salvatore also alleges that Sam breached his fiduciary duty when he acted as Salvatore’s Power of Attorney to acquire these properties. However, the evidence establishes that Sam did not use a Power of Attorney to transfer funds to himself.
5Salvatore seeks damages of $12,352,147.00 made up primarily of the total funds he transferred to Sam over the years, as down payments to allow Sam to acquire several properties as set out in Schedule “A” plus interest, the gross sale price of the homes Sam built on Wilmont and Skeena for $3,362,000.00, minus the income tax Sam paid on Salvatore’s account of $1,317,387. Salvatore also seeks an order for an accounting, equitable tracing, that the Defendants disgorge all of their profits, damages for breach of fiduciary duty, breach of trust, collusion, conspiracy, and unjust enrichment.
6Sam, Paul D’Angelo, and Peter Crowe testified that when Salvatore reached the $6,500,000 settlement with his brother Luigi and his nephew Albert in 2013, he expressed his intention to gift these settlement funds to Sam, provided Sam paid the income taxes on the settlement. The uncontested evidence is that Salvatore did in fact transfer approximately the amount of the settlement funds to Sam to allow him to acquire the three large apartment buildings and Sam paid Salvatore’s income taxes.
7Other witnesses, in addition to Sam, testified that Salvatore expressed his intention to gift his (and had gifted) assets to his son on many occasions, in various different circumstances. Their evidence was not contradicted.
Issues
8The issues to be decided are:
Did Salvatore intend to gift the amounts listed in Schedule “A” and the Skeena property to Sam to allow him to develop or acquire these properties?
Did Sam breach a fiduciary duty he owed to Salvatore?
Did Sam exercise undue influence on Salvatore?
Was Sam unjustly enriched by the transfer of funds and property from Salvatore? and
Are the Plaintiff’s claims barred by the statute of limitations?
Factual Background and Findings
Salvatore’s Background
9Salvatore was born in 1930 in a small town in Italy called Cleto. His parents were poor vegetable farmers. Salvatore testified that he grew up in an Italian family with tradition Italian values.
10Salvatore was proud to have worked with his father and he had learned important skills from him. He immigrated to Canada when he was 19 years old. Salvatore initially worked at a foundry for a year and worked as a labourer for a few years. Salvatore then began building homes with his brother Luigi, his uncle, and his cousin for 4 to 5 years. In the early 1960s, he commenced his own real estate and construction business where he would buy houses, renovate them, and sell them.
11Salvatore worked very hard and became very successful with buying, renovating, selling, or renting properties with family members and by himself. Salvatore acquired, renovated, and sold numerous rental properties over his lifetime. Salvatore is a very intelligent and experienced businessman in the renovation, development and rental of properties.
12Salvatore was also very experienced and knowledgeable about dealing with and using the services of lawyers and real estate agents as he had entered into many Agreements of Purchase and Sale and had completed many purchases and sales of properties.
13In 2014 when Sam purchased the three large apartment buildings at issue, Salvatore had considerably more experience in real estate than Sam. Sam had been involved in the real estate business for approximately 10 years at that time. In contrast, Salvatore had decades of experience in this area. As Salvatore stated “I had more experience than him” which explains why Sam took his father with him to view each of the three properties to obtain his opinion, before he made an offer to purchase each these properties.
Salvatore’s Separation
14In 1963 Salvatore married Mafalda L’Orello. They had five children together: Luisa born in 1965, Sandra in 1968, Delia in 1972, Milva in 1976, and Sam in 1979.
15Salvatore and Mafalda separated in 1985 and all of the children remained with their mother. Their separation was bitter and is part of the contextual factual background that has some relevance to the issue of whether Salvatore gifted a large part of his wealth to his son Sam between 2011 and 2014.
16Delia testified that her mother separated from Salvatore because he subjected his wife and daughters to repeated physical and verbal abuse. Salvatore denied that he ever acted in an abusive manner towards his wife or daughters and blamed a friend of his ex-wife’s for criticizing him for working too hard, which in his opinion caused her to separate from him.
17Luisa swore an affidavit in the divorce proceedings in 1985 stating that Salvatore frequently belittled and screamed at her mother and the children. During cross-examination Luisa denied that the statements she made in her affidavit were true and testified that her mother manipulated her into swearing this affidavit. She admitted during cross-examination however that at the time she swore the affidavit, she believed the statements she made were true. Sandra also agreed that at the time the statements Luisa made in her affidavit were Luisa’s truth. Both Louisa and Sandra now blame their mother for brainwashing them into refusing to have any contact with their father from the date of the separation until approximately 2013. Luisa and Sandra re-established contact with their father some time in 2013, and since then they have refused to have any contact or relationship with their mother.
18Luisa and Sandra were over the age of majority at the time of the separation in 1985 and chose not to have any contact whatsoever with Salvatore for approximately 28 years. Delia and Milva saw Salvatore on a few occasions after the separation, but they did not want to see him any longer because of the abuse they had suffered.
19Salvatore treated his son was differently from how he treated his daughters. He showed favouritism to his son and took Sam on trips as a child, including a trip to Disney in Florida with Sam’s cousin Albert. Salvatore never took any of his daughters on trips and had no relationship with them for many years after the separation. Salvatore remained very angry at being evicted from his house by the police on Christmas Eve. He would discuss how badly and unfairly he had been treated by his ex-wife with many individuals he would meet. Salvatore blamed his ex-wife for not allowing him to have any contact with his children.
20I find that Delia’s evidence about how Salvatore treated his wife and daughters was very believable and was not contradicted or challenged in cross-examination. Her evidence was also consistent with Luisa’s affidavit evidence and their decision to live with their mother and not to have any contact with Salvatore for almost 30 years.
21I also find that Luisa’s evidence that Salvatore was never abusive to his wife or daughters was not credible because it was directly contradicted by her own affidavit evidence filed in the divorce proceeding when she was an adult and both Luisa and Sandra still maintain that her affidavit evidence reflected “her truth” at the time.
22A number of very credible witnesses testified that Salvatore would often make derogatory comments about his ex-wife and his daughters. He would refer to them by very demeaning and insulting words, referring to them as “sl…s” or “turbo sl…s”. One of Salvatore’s long-time friends asked him to leave his house due to the derogatory language he was using to describe his ex-wife and his daughters.
Business Partnership with Luigi and Albert
23Salvatore worked in a partnership with his brother Luigi and his nephew Albert for many years. They acquired several rental properties in Ottawa, the most notable being 1245 Walkley Road and 462 Hazeldean Road. Although Salvatore was in business with Luigi and Albert, he also maintained his own independent rental properties separate from those of the partnership.
24From the 1990s and up to 2011, Salvatore had a very close relationship with his nephew Albert who he often described as his son. In cross-examination, Salvatore denied ever buying a luxury sports car for Albert and asserted that Albert had stolen the money from him for the NSX sports car. Salvatore’s evidence in this regard was contradicted by his long-time neighbour Mr. Carozza who testified that Salvatore showed him the NSX sports car when he bought it and told him that so that he was bought it for his nephew Albert. Mr. Carozza was a very credible witness and did not have any interest in the outcome of this litigation and I accept his evidence over that of Salvatore.
25Salvatore had given Albert signing authority over his bank accounts until about 2011 when he sued Albert and Luigi and alleged that Albert had stolen money from him. Salvatore had also given Albert a Power of Attorney during this period. Both of these documents were signed to allow Albert to pay Salvatore’s bills and complete transactions related to their business. No evidence was presented to show that Albert ever acted as Salvatore’s investment advisor, money manager, or financial caretaker. Salvatore was and remains a shrewd businessman with a good understanding of real estate rental properties.
Salvatore’s Reconciliation with Sam
26In 1998 when Sam was in his late teens, he made an effort to develop a closer relationship with his father. He dropped by his father’s house unannounced. They hugged and cried and spent a couple hours together. Salvatore blamed his ex-wife for not seeing Sam on a regular basis during the previous years. Salvatore also told Sam that Luisa threw him out of the house on Christmas Eve, which is a story he repeated to many of the witnesses who testified at the trial.
27Sam gave very emotional testimony describing how important this reconciliation was to him. He described it as a very significant moment in his life. In contrast, Salvatore testified that he had no memory of the day his son came back into his life and re-established a close and important relationship with him. I find that Salvatore’s evidence is not believable in the circumstances given the lengthy period of time that he had limited contact with his only son.
28Sam began to work with his father shortly after their reconciliation. He helped his father maintain his rental properties and Salvatore taught him how to do tile patching and painting. Salvatore testified that the value of a father teaching his son his business and passing on his knowledge was very important to him. Even though Sam worked with his father 6 days a week Salvatore did not pay him for the work that he performed. Salvatore told Sam that he could not pay him for his work because he was living on only $2,000 a month and said “don’t think you’re working for free, because… This is all yours. What I worked for I’m going to give it to you one day.”
29At around the same time, Sam was operating a small snow-plow business. Salvatore did not pay Sam for the snow clearing that he performed on his properties.
30In the early 2000s, Sam commenced a flooring business. He initially worked out of his mother’s car. When Salvatore became aware of the situation, he told Sam he could not work that way and he gave Sam his GMC Safari van.
31Sometime around 2006, Sam began purchasing semi detached homes, repairing them in the evenings, and selling them. Salvatore would visit Sam at these properties and bring him food.
32Sam purchased a property at 362 Wilmont, intending to renovate and sell the house on the property and to sever and sell a lot. Sam brought Salvatore to see the property and Salvatore advised Sam to tear down the house and build a new home on the property. Sam followed his father’s advice and built a semi-detached house and a single-family home on this lot. The project was funded with a construction mortgage from CIBC and Salvatore did not contribute any funds to allow Sam to acquire this property.
33In 2007, Sam incorporated Falsetto Homes Inc. (“Falsetto Homes”) of which he is the sole shareholder. Between 2007 and 2010, Sam built a number of successful projects around the city of Ottawa including those at: 168 Nora Street, 42 Grosvenor Avenue, 77A Second Avenue, 213 Carleton Avenue, 598 Parkview Road, and 267 Dovercourt Avenue. None of these projects were financed with any contribution by Salvatore.
34Salvatore would visit Sam at his job sites almost every day. Sam and Salvatore established a routine where Sam would call his father around 8:30 a.m. or 9:00 a.m. Salvatore would be eating his toast and would ask Sam where he was working and he would then come by to visit Sam’s worksite. Salvatore enjoyed speaking with the trades on site and going to pick up material with Sam. Salvatore expressed great pride in the quality of Sam’s work.
35In 2009 Salvatore had knee surgery. Following the surgery, Sam asked his sister Milva if Salvatore could stay with her following his surgery. Salvatore had reconciled with Milva in 2004 after the birth of her first child. Salvatore spent two weeks at Milva’s home and then returned to live at his home at 1532 Skeen Avenue. Salvatore was advised to do more walking to assist with the rehabilitation of his knee. Sam suggested going to the Carlingwood Mall to exercise and also to socialize with a number of his old friends who went to the same mall.
Salvatore’s 2009 Will
36In September 2009, Frank Falsetto (“Frank”), Salvatore’s long-time lawyer and cousin, prepared a Will dividing Salvatore’s estate equally amongst Delia, Milva, and Sam. Michael Ayoub, Milva’s husband, testified that Salvatore had called Milva and asked her to call Frank Falsetto, to get his affairs in order. Shortly thereafter Salvatore, accompanied by Michael and Milva Ayoub, attended at Frank’s office where Salvatore gave instructions for the preparation of his Will.
376 Wilmont
37In 2009, Sam commenced a project at 171 Carleton Avenue with his cousin Albert. Albert asked Sam to involve his sisters in the project and Sam agreed.
38When Sam told Salvatore about this arrangement involving Albert’s sisters Salvatore became very angry. He asked Sam “why in the hell do you have to go make somebody else money?”. A few months later Salvatore told Sam “Son, I have this money in the bank… It’s for you… It’s your money… Next time you find a property, let me know… I’ll give you the money… This way you never… have to go to partners with anybody.” These statements by Salvatore made it clear to Sam that Salvatore intended to give him money to buy property for his own benefit. I accept Sam’s evidence that Salvatore made these statements to him. Salvatore advised Sam that he should avoid partnerships because believed it had harmed his own finances.
39Shortly thereafter in 2010, Sam became aware of an opportunity at 376 Wilmont Avenue. He told his father about the property and the price and his father told him to buy it. Sam testified that they went together to the bank and Salvatore obtained the cheque for Sam to buy the property. A memo prepared by Salvatore’s lawyer, James MacGillivray in 2011, corroborates Sam’s evidence that Salvatore gave Sam the cheque. Salvatore withdrew $475,000 from a GIC at the CIBC, and the money was used along with money from Sam to purchase the property in the name of Falsetto Homes. I find that in 2010, Salvatore knew and intended to give the $475,000 to Sam to allow him to acquire the 376 Wilmont Street property, because he personally went to the bank and obtained the cheque or bank draft and gave it to Sam. Salvatore was also aware that he had made this gift to Sam because he received a copy of the memo from his lawyer, Mr. McGillivray, to whom he had described the transfer of funds to Sam in 2011.
Loan of $150,000 to Michael Ayoub
40In 2011, Salvatore loaned Michael Ayoub $150,000. Salvatore used a line of credit as a source of the funds. At the same time, Salvatore had split his line of credit into three smaller lines of credit. One of these lines of credit was the source of the funds loaned. The loan was not documented in writing.
41In 2012 Salvatore commenced a lawsuit against Michael Ayoub because believed that Mr. Ayoub had not repaid the loan in accordance with their agreement. The lawsuit was ultimately settled in accordance with an agreed repayment plan that included the original loan amount plus interest.
42Milva and her family were estranged from Salvatore from 2012 until 2013 when the litigation was settled. Mr. Ayoub has repaid the amount owing to Salvatore in accordance with the settlement agreement.
Dispute with Luigi and Albert
43Sometime around 2010, Salvatore’s relationship with his brother Luigi and his nephew Albert broke down. In 2003 while Salvatore was away on a holiday, a pipe burst at his home at 1532 Skeena. Sam cleaned up the water and ice. Salvatore blamed Luigi for the damage that was caused which included the mould in his basement. Salvatore never completed the renovations to remove the mould in his basement.
44In 2005, while Salvatore was away on a holiday in Italy, Luigi initiated a cleanup and renovation of Salvatore’s home with Sam’s help. They removed the clutter which occupied the entire house and replaced the old ceramic flooring with new hardwood flooring. The cleanup and renovations were undertaken because Salvatore had refused an insurance inspection and Albert was worried that the insurer would not insure the house in its state at that time. Salvatore testified that they had destroyed his house and he was particularly upset at the replacement of the old ceramic tiles. Salvatore’s evidence in this regard is not credible as Luigi, Albert, and Sam were assisting Salvatore by cleaning up and repairing his house. The photos introduced at the trial show that the condition of Salvatore’s house has reverted to a very cluttered and poorly maintained state.
45In the mid-2000s Albert became aware that Salvatore was speaking negatively about his wife and this contributed to the deterioration of their relationship. Around 2010, Salvatore told Sam that Albert and Luigi were trying to push him out of the business. When Sam took his father to the barbershop at 1245 Walkley, about a month before he retained James MacGillivray in 2011, Salvatore told Sam that Luigi and Albert were undervaluing his share of the business. Salvatore told Sam that he just wanted to be bought out of the partnership with Luigi and Albert and said “…I’m going to give you the money and you go do your own thing”. I accept Sam’s evidence of this conversation because it was identified as having occurred at a specific time and place and in unique circumstances.
46Sam helped his father retain James McGillivray to assist him with his dispute with Luigi and Albert. They met with Mr. McGillivray on June 16, 2011. Mr. McGillivray’s notes reflect that Salvatore’s complaint was that Albert made him sell certain properties and forced him to execute the transfers. Mr. McGillivray gave clear evidence that he was receiving his instructions from Salvatore and that Salvatore believed that Albert had improperly taken money from him. Mr. McGillivray’s evidence contradicts Salvatore’s evidence at trial that Sam was driving the litigation with his brother and Albert. I accept Mr. McGillivray’s evidence which was very credible that he was receiving his instructions from Salvatore.
47Salvatore testified that the reason he sued Albert was because Albert stole his money and that Salvatore worked all his life and Albert took everything from him. The draft statement of claim prepared by Mr. McGillivray on July 17, 2012, alleged that Albert was responsible for managing Salvatore’s financial affairs and owed him fiduciary duties. It alleged that Albert failed to account for the sale of certain properties, had made improper use Salvatore’s funds, sought an accounting and the disgorgement of the property from Albert. These allegations are very similar to the those made against Sam in this action. Salvatore engaged in a similar pattern of behaviour towards both individuals with whom he had built a close father-son relationship.
48It is noteworthy that Salvatore retained Peter Crowe as an accountant to review the financial records of the partnership to attempt to find any funds wrongfully taken by Albert. Peter Crowe testified that after examining the financial records of the partnership for the previous years, he did not find any evidence that Albert had taken or stolen any money from Salvatore. The litigation was ultimately settled on the basis of appraisals of the property values without any compensation for any wrongdoing. I accept Mr. Crowe’s evidence that he was unable to find any evidence that Albert had stolen any money from Salvatore.
Nelson Street Property
49On January 17, 2012, while the litigation was ongoing, Albert and Luigi’s lawyer wrote to Mr. McGillivray expressing a concern that Salvatore was denigrating Albert in front of mutual acquaintances. As a result, Albert refused to provide any more services for Salvatore’s property at 315 Nelson Street.
50As a result, Sam began to collect and deposit the rent from 315 Nelson Street and maintain the property without being paid by Salvatore. Sam was uncomfortable meeting Albert at the property because Albert owned the property next door so he asked his father what he wanted to do with the property. Sam testified that Salvatore responded “it’s yours, do what you want.” Sam then asked his father if he could sell the property and use the proceeds to buy another property and Salvatore agreed. I accept Sam’s evidence about this conversation occurred, which is clear evidence of Salvatore’s intention to gift this property to Sam.
51The property was listed for sale for a couple of months without success until an agent contacted Sam to ask if the property was still for sale and to discuss a potential offer. Sam spoke with his father and advised him that there was interest in the property and that Sam wished to sell. Sam testified that Salvatore approved the sale and provided Sam with his blessing to complete it. I accept Sam’s evidence that this conversation that took place as he testified.
52The Nelson Street property was owned by Salvatore’s numbered company. Frank acted on the sale. Frank’s reporting letter stated that the sale price was $3,645,000 less $1,330,243.50 for the assumption of the CIBC first mortgage. The net sale proceeds were deposited into Salvatore’s bank account.
53Sam used the proceeds of sale of 315 Nelson Street to buy properties at 369 Winston, 566 Hilson, and to pay down the mortgage at 43 Willard. Sam testified that before he wrote any of the cheques from his father’s accounts, he called his father to get his approval and obtain his father’s blessing. I accept Sam’s evidence that he made the phone calls to Salvatore and that Salvatore confirmed his intention to gift the funds to Sam to acquire these properties.
54Sam testified that he followed the same approach as he used with 315 Nelson every time before he purchased a property using Salvatore’s funds. He would either call his father or speak to him personally, he explained to his father what he wanted to use the money for and confirmed his father’s consent, which he referred to as his blessing, before he transferred any money to acquire properties, to finance renovations, or to pay down mortgages on properties he owned. I accept Sam’s evidence, which I found to be very credible. He was not shaken in cross examination on any of these points. He had specific recollections about each property that was purchased and for each time he used Salvatore’s funds in his real estate activities for all of the transactions set out in Schedule “A” hereto. I find that Salvatore was fully aware of the proposed use of his funds by Sam or Falsetto Homes and intended to gift the funds as set out in Schedule “A” to his only son, Sam.
Use of Salvatore’s Lines of Credit
55In 2011, Sam and Salvatore discussed where Sam was getting his construction financing. Sam explained that he had a line of credit and Salvatore advised his son that he also had unused lines of credit with a good interest rate. Salvatore told Sam that he should use his line of credit. Sam testified that Salvatore told him to use his lines of credit and to pay back the amounts he used whenever he wanted. These amounts were not gifts. Sam’s evidence was corroborated by Salvatore and Sam meeting with Cathy Meade at the CIBC to reactivate Salvatore’s lines of credit.
56On August 16, 2011, Sam used $225,000 from the line of credit ending in 4532 towards the purchase of 353 Whitby as well as 231 and 233 Carleton. On September 29, 2011, Sam used $125,000 from the line of credit ending in 6130 towards the purchase of 1546 Claymor. These transactions are shown on Schedule “A”. Sam testified that these amounts were not gifts and were loans that he has repaid. Mr. Crowe, Sam’s bookkeeper and accountant, calculated the amount that Sam had borrowed on Salvatore’s lines of credit including interest charges as being $314,775.09. Sam repaid this amount in October 2016. During the trial, the evidence showed that Salvatore had paid down $95,000 against the line of credit ending in 4532. As a result, Sam instructed Mr. Crowe to calculate the interest on this amount since May 22, 2014, and he sent a cheque to his father for $124,895.42 on March 18, 2022. The evidence shows that Sam has paid back the amount he borrowed on Salvatore’s lines of credit along with the interest thereon.
Salvatore’s 2012 Will and Power of Attorneys
57In August 2011, Sam and Salvatore attended at Frank’s office to discus making a new Will for Salvatore. Frank’s evidence was that Salvatore initiated this process and that he came to Frank with a clear intention to appoint Sam as his sole beneficiary under his Will. Frank was not surprised because Salvatore had told him that he was estranged from his daughters, had no relationship with them and that he believed they did not care about him. In contrast, Frank understood that Salvatore had a good relationship with Sam.
58Sam testified that at that meeting, Frank asked him if he would be Salvatore’s Power of Attorney. At that time Sam believed that a Power of Attorney related solely to end-of-life care decisions. Frank testified that he did not explain the nature of a Power of Attorney for property to Sam nor did he explain any obligations that Sam would have under any Power of Attorney. Sam’s evidence is consistent with Frank’s evidence that his ordinary practice was not to explain the nature of a Power of Attorney to the attorney (in this case Sam) where he was representing the grantor (Salvatore).
59Sam was not surprised that Salvatore was leaving everything to him in his Will because Salvatore was always telling him “…I work for you, I sacrifice for you… What do you think I’m going to do with this money? This is yours”.
60Sam testified that he went to the CIBC bank located at the trainyards with Salvatore to speak with Cathy Meade to add Sam’s name to Salvatore’s account so that Sam could pay the bills that Albert had been previously paying for Salvatore. Sam testified that he may have gone back to the bank to sign documents a second time. Sam acknowledged that he had signed some documents with Ms. Meade which he understood would add his name to the account. Sam testified that he never received a copy of the paperwork and no one explained the documents he signed to him. He understood that whatever paperwork he signed at the bank was simply to allow him to pay his father’s bills.
61Two documents were signed at the CIBC: 1) a signature card dated July 12, 2011 adding Sam as a signatory to Salvatore’s account ending in 6139 and 2) a CIBC standard form continuing Power of Attorney dated February 27, 2012. Sam recognized his signature on both of these documents but did not remember seeing them before this litigation was commenced. Ms. Meade could not give any evidence of what steps were taken to explain these documents to Sam and Salvatore because she was not part of the discussion, and she was not authorized and did not provide any advice to clients.
62On April 30, 2012, Salvatore executed a Will at Frank’s office naming Sam as his sole beneficiary. He also appointed Sam as Power of Attorney for personal care and property. This Will remained in effect from April 30, 2012 until July 29, 2016 when Salvatore executed a new Will with a new lawyer after he had suffered a stroke.
63The April 30, 2012 Power of Attorney for property, prepared by Frank, revoked all previous Powers of Attorney including the standard form Power of Attorney signed at the CIBC on February 27, 2012. Sam was not aware that he had been appointed as a Power of Attorney for the management of property by Salvatore until this litigation was commenced. Salvatore had given Sam an envelope which Sam now knows contained his 2012 Will and the Powers of Attorney. Salvatore told Sam that the envelope contained his Will. Sam reviewed the Will before filing it away but was unaware that he had been appointed as a Power of Attorney for the management of property. I except Sam’s evidence that he was not aware that he had been appointed as a Power of Attorney for the management of Salvatore’s property until he gave the envelope to his previous lawyer following the commencement of this litigation.
64Salvatore initially testified that when he met with the Frank to prepare and sign his 2012 Will that he was scared and intimidated by Sam and was forced to sign this Will and Powers of Attorney. Salvatore’s evidence was contradicted by his long-time lawyer Frank who testified that both documents reflected Salvatore’s intentions and that Salvatore had approached Frank with a fully formed intention to bequeath his assets to Sam.
65Salvatore’s initial evidence that he was scared and intimidated into signing his 2012 Will was not credible as he was not able to offer any reason for why he would have been frightened by Sam. In cross-examination Salvatore admitted that Sam never physically harmed him, never physically forced him into a car, never threatened him with physical harm, and never threatened him more broadly. In fact, Salvatore testified that he and Sam never had any arguments. Salvatore also recanted on his suggestion that his 2012 Will was not signed voluntarily, when asked directly by the court. Salvatore agreed that his 2012 Will was signed of his own free will and that he intended to bequeath everything to Sam at that time.
Luisa and Sandra re-establish contact with Salvatore
66Luisa and Sandra testified that they reconciled with Salvatore in August of 2013 by telephone. They then started to invite Salvatore to dinner on Sundays at Sandra’s house in Barrhaven, Ontario. Salvatore could not recall the details of his first meetings with Luisa and Sandra at his cross examination on the CPL motion. Salvatore told Sam that he believed Luisa and Sandra had reconciled with him in order to get money from him. Salvatore agreed with this sentiment in his cross-examination on the CPL discharge motion where he stated that that all of his daughters wanted money from him.
Salvatore expressed his intention to gift the Settlement Funds to Sam at the Mediation and at Fratelli’s Restaurant
67Sometime in 2013, Salvatore became frustrated with the slow progress of the litigation against Albert and Luigi. He asked Sam for assistance to find him a new lawyer. Sam recommended that he hire Paul D’Angelo who had done previous work for Sam’s company. Salvatore knew Mr. D’Angelo’s father and agreed to hire Mr. D’Angelo.
68Mr. D’Angelo is a lawyer who has practised mostly in the area of litigation in Ottawa since 1997. He initially worked at the Gowling’s firm, was a partner in the BLG firm, and the Perley Robertson firm, and is now practising association with Martin Black.
69In October of 2013, Salvatore attended a mediation accompanied by Sam, Mr. Crowe, and Mr. D’Angelo. At the mediation they reached an agreement with Luigi and Albert that Salvatore would sell them his interest in the real estate properties for $6.5 million.
70Mr. D’Angelo, Mr. Crowe, and Sam all testified that at the mediation, Salvatore expressed his clear intention to gift the entire settlement amount to Sam provided Sam paid the income tax on the amount. When Mr. D’Angelo asked Salvatore what he planned to do with the settlement money, Salvatore responded: “I’m giving it all to Sam… I don’t need the money, I don’t really want the money, I’m giving it to my son Sam.” Mr. Crowe also corroborated Mr. Angelo’s account that Salvatore intended to gift the settlement funds to his son Sam. Sam testified that he heard Salvatore make the statements described by Mr. D’Angelo and Mr. Crowe at the mediation.
71Sam and Salvatore attended at the offices of Perley Robertson to pick up the cheque for $6.5 million in February 2014. Sam testified that as he walked to the elevator, he went to pass the cheque to his father. Salvatore responded saying “no, no, put it in your account… Go buy yourself some property and… Just pay my income tax”. Sam told Salvatore that he had nothing to buy at that time. Sam told Salvatore that he should put the funds in his account and that he would let Salvatore know when he found property he wanted to buy.
72In Spring 2014, Sam, Salvatore, Peter Crowe, and Paul D’Angelo attended a celebratory dinner at Fratelli’s restaurant. Mr. D’Angelo testified that when he asked Salvatore what he planned to do with the settlement proceeds, Salvatore responded stating that he had “given” and was giving it all to Sam, he’s using it, I wanted him to have it.” Mr. D’Angelo’s evidence was corroborated by both Mr. Crowe and Sam and I accept Mr. D’Angelo’s evidence that Salvatore made these statements at the dinner.
73Mr. Crowe testified that when Salvatore met with him to sign his income tax return in April of 2015, Mr. Crowe, said that it was nice of him to give the money to Sam. Salvatore responded saying that if he had given it to his daughters, they would have just blown the money.
74Both Mr. D’Angelo and Mr. Crowe’s evidence was very credible. They had nothing to gain in this litigation. Mr. D’Angelo had a specific memory of the statements made by Salvatore and also his evidence was confirmed by a note made by him at the mediation. Their testimony is very strong evidence that Salvatore intended to give the proceeds from the settlement reached at the mediation to Sam.
Other witnesses’ evidence of Salvatore’s Intention to make a gift to Sam
75Several independent the witnesses testified that Salvatore had told them that Salvatore intended to give money or properties to his son Sam. These independent witnesses also testified that Salvatore spoke very negatively about his wife and daughters and women in general when he would meet them. I found the evidence of these independent witnesses very credible and I accept their evidence that Salvatore expressed a clear intention to gift money or properties or had gifted money or properties to Sam as stated in their evidence more particularly described below.
76Pasquale Carozza is the owner of an Italian restaurant that has been operated by his family for 35 years. He has known Salvatore since 1980 as Mr. Carozza was Salvatore’s neighbour on Skeena Avenue from 1988 to 1993 and from 2000 until Salvatore left his house. He testified that Salvatore expressed great pride in his son being a hard worker like him. Mr. Carozza testified that Salvatore told him on many occasions, from the early 2000s until the last time he saw Salvatore in or around 2014 when Sam was building the houses on Skeena Avenue, that “everything I have go to my son”. Mr. Carozza testified that he understood when Salvatore expressed these intentions that he already had given some money or all of the money to his son.
77Marcello Fatta is retired from the restaurant business. Salvatore is a relative of Mr. Fatta’s parents. He testified that he had spoken with Salvatore 5 or 6 times, primarily at the Carlingwood Mall. He confirmed that Salvatore called all women “s…s” including his daughters. When he asked Salvatore why he was walking the malls instead of going on a holiday, Salvatore replied “I’m going to give everything to Sam and I’m not going to give even a single… Dollar to any of my daughters.”
78Luigi Aiello is a real estate agent who met Salvatore approximate 20 years ago. Salvatore spoke very negatively about all women including his daughters and his ex-wife, whom he described as the worst. He travelled with Salvatore on a trip to Mexico in 2013 where Salvatore expressed pride in his son’s ability to build high-quality houses. Salvatore told him on the trip that Sam was going to get everything and he repeated these same statements, that he was giving everything to Sam when they were both at a job site on Dover Court Road.
79Rocco Manfredi is a real estate agent who testified that Salvatore often expressed pride in his son, referring to him as the best builder in Ottawa. While on site at the Wilmont property, Salvatore told him that Sam was going to get everything. Salvatore expressed this intention to him on multiple occasions and also stated that his daughters were not going to receive anything from him and that they were dead to him.
80Delia is Salvatore’s third oldest child, who works as a property manager for Sam’s company. She testified that she was estranged from her father from the time of her parents’ divorce in the mid-1980s until 2010 when she reconciled with her father. She testified that her father told her about the settlement with Luigi and Albert sometime in 2014 and told her that “he gave it all to Sam because Sam knows what to do with it and he wouldn’t just blow it away”. She told her father not to tell Luisa that he had given the settlement money to Sam because she thought Luisa would get upset. Salvatore responded saying “it’s my money, and if I want to give it all to Sam that’s my business, and nobody tells me what to do”. I accept her evidence and find that Salvatore is a strong-willed individual who made up his own mind and did not allow anyone to tell him what to do.
Settlement Funds
81Following the receipt of the settlement funds from Albert and Luigi in February of 2014, Salvatore and Sam attended at the CIBC and deposited the settlement funds into a flexible GIC account, where the funds could earn some interest, while remaining accessible without penalty to allow Sam to purchase properties. Both Sam and Salvatore signed a signature card for the GIC with each of them listed as a registered owner. The words “Power of Attorney” were written by hand beside Sam’s name on the banks signature card.
Severance of the Skeena Properties
82About a year before commencing the severance process to develop 1536 and 1540 Skeena Avenue, which occurred in the last half of 2013, Salvatore told Sam that “this is your house here… this is yours too”. Salvatore was referring to the lot next to his home with the bungalow. Sam testified that Salvatore told him to investigate whether he could build two houses on the lot. Sam told his father that he was too busy at that time. Some months later, Sam raised the issue with Salvatore and proposed to design two houses and to gauge the interest through a pre-sale. Salvatore agreed with this approach.
83Mr. Carozza, Salvatore’s neighbour and friend, spoke with Salvatore before the bungalow was demolished. Salvatore told him that he had given this property to Sam to build two beautiful houses. Salvatore said “I give (Sam) this, this property and he is going to build two beautiful houses”. I accept Mr. Carozza’s evidence that Salvatore expressed to him his intention to give the Skeena properties to Sam.
84Frank testified that Salvatore retained him with respect to the severance of the Skeena property next to his home. Frank testified that Salvatore understood that the bungalow next to his house was to be demolished. At trial, Salvatore testified that he was very upset that the bungalow next door to his home was demolished because he planned to retire to this bungalow when he could no longer climb the stairs. I find that the Salvatore’s evidence in this regard was not credible. I accept Frank’s evidence that Salvatore was well aware that the bungalow would be destroyed because it was a condition of obtaining the severance. Salvatore had signed the severance application and had received the reporting letter from Frank when the severance was completed which both the stated that the bungalow had been demolished.
85The severance could not be granted until the bungalow was demolished. The bungalow was next door to Salvatore’s home and he would have been aware when the bungalow was demolished. Salvatore also signed a declaration under oath confirming to the Committee of Adjustments that the bungalow had been destroyed in order to satisfy the condition for severance. He also signed an acknowledgement and direction, directing Frank to proceed to sever the property.
86Following the severance approval, 1536 and 1540 Skeena were transferred to Falsetto Homes. Frank acted for both Salvatore and Falsetto Homes to complete the transfer. Frank testified that Salvatore was well aware of and authorized the transfer to Falsetto Homes, who planned to build two houses on the property.
87Mr. Crowe testified that Frank called him on the day the transfer was to be completed and advised him that Salvatore was giving the property to Sam but that he needed to record an amount of consideration for the transfer. Mr. Crowe testified that he told Frank to insert an amount of $300,000 but Frank in fact inserted the amount of $336,000. Mr. Crowe testified that he told Frank to draft a promissory note for the transfer to avoid a possible audit of Salvatore’s income tax. He testified that they discussed that Salvatore did not intend to call the note because the transfer was a gift. Sam’s evidence was that his father told him he was gifting the property to him. Frank could not recall the details of these conversations. I accept Mr. Crowe’s evidence that the promissory note was prepared to avoid a possible tax audit and that the properties were gifted to Sam. I also accept Sam’s evidence that he understood that the properties were gifted to him by Salvatore.
The Three Apartment Buildings purchased by Sam with the Settlement Funds
a. 200 Bronson
88Sam purchased three rental properties during 2014 using funds gifted to him from the flexible GIC obtained from the settlement funds to make the down payments on each of the properties. Each time Sam sought to make a withdrawal from the GIC, he first discussed the purchase of the property with Salvatore and obtained his father’s consent or “blessing “ to withdraw money from the GIC to use for Sam’s benefit to make the down payment. I accept Sam’s evidence that this is what occurred before each withdrawal to purchase each of the three apartment buildings. Sam’s evidence was consistent throughout his testimony, he was not shaken in cross-examination, his actions were consistent with Salvatore’s stated intention to gift the settlement funds to him as expressed at the mediation and at Fratelli’s restaurant, and Salvatore authorized each transfer of funds by speaking directly with the CIBC by phone or in person.
89Sam’s evidence was very detailed for each property namely that he took his father to view the 200 Bronson property from the back parking lot and discussed the details of the property. Salvatore responded “if you like it, buy it… That’s your money… You think I’m going to give it to you when I die?… I want to give it to you now… I want to see you grow”. These statements are consistent with Salvatore’s previous expressed intention to gift the settlement funds to Sam.
90Sam then negotiated an agreement to purchase the property for $5.9 million and retained Frank to handle the purchase. Sam testified that he explained to Frank that he was using the settlement money from his father to purchase the property and Frank said he would speak to Salvatore. Frank did not recall whether he ever had this conversation with Salvatore.
91On July 24, 2014, before the closing of the transaction, Frank wrote to Sam telling him not to forget to send him the GIC. Sam then emailed Frank and the mortgage company financing the transaction, documentation identifying Salvatore’s GIC account as the source of the funds used to make the down payment. Salvatore signed an authorization, which was sent to the CIBC and to Frank authorizing the transfer of the funds to Hamilton Appotive (Frank’s law firm).
92Cathy Meade, the CIBC financial services associate who had provided services to Salvatore since the early 2000s, testified that she verified every single withdrawal from his GIC with Salvatore, to confirm that he authorized the transfer of funds. I accept her evidence which was not contradicted other than Salvatore testified that he did not have a recollection of signing the authorization.
93The first withdrawal from the GIC was made on July 2, 2014, for $1 million, which was used in part for the Bronson deposit and in part for subsequent deposits on the other buildings. On July 30, 2014, Salvatore authorized the transfer of $1,750,000 to Frank’s firm for the purchase of 200 Bronson. Salvatore signed a direction that was sent to the CIBC to authorize this transfer. Ms. Meade required a direction in writing which was prepared by Sam and signed by Salvatore. This was followed by a phone call from Salvatore to Ms. Meade and then Salvatore and Sam attended at the CIBC in person to ensure that CIBC would allow the withdrawal.
94Sam personally guaranteed the mortgage for approximately $4 million which was required to complete the purchase of the building. Sam and his company have managed the Bronson property and also assumed responsibility for making all of the payments on the mortgage. Salvatore did not assume any risk or any responsibility with regards to the mortgage since the closing. Salvatore, as a very experienced property developer, who would have known that if he had any interest in the property, he would have been required to sign closing documents and also to sign the mortgage documents.
b. 222 Clarence
95Sam became aware of an opportunity to purchase a property at 222 Clarence Street through a real estate broker named Jackie Laurin. Sam and Salvatore drove by the property to look at it together. Sam and Salvatore then attended at Ms. Laurin’s office because of Salvatore’s experience in real estate and to ensure that Sam had his father’s consent to proceed with the purchase. Ms. Laurin was preparing the offer of purchase and sale and asked whose name she should put as the purchaser in the agreement. Salvatore responded “Jackie, put the offer in Sam’s name”. Jackie Laurin testified at trial that this transaction was unique and stuck out in her mind because of the smile on Salvatore’s face and the pride in his face at the time. Her evidence directly contradicts Salvatore’s evidence at trial that he told Sam to put the properties he purchased in his name. I accept Ms. Laurin’s and Sam’s evidence that Salvatore instructed her to make the offer in Sam’s name. This is strong credible evidence that Salvatore intended to gift the down payment to acquire this property to Sam.
96Salvatore’s evidence that he never met Jackie Laurin is not credible. Ms. Laurin testified that, in addition to meeting Salvatore when the Agreement of Purchase and Sale was signed, she met Salvatore near the Tim Hortons at the Carlingwood Mall seven or eight months after signing the agreement for 222 Clarence. Ms Laurin was an independent witness and had no reason to give false evidence. Her evidence is consistent with the fact that Salvatore met his friends regularly at the Carlingwood Mall and that Salvatore told her to put the offer for this property in Sam’s name.
97On September 29, 2014, Sam sent an authorization signed by Salvatore to Ms. Meade directing the CIBC to transfer $2,010,000 to Hamilton Appotive’s trust account to be used as part of the purchase price for 222 Clarence. The authorization contains a note in Ms. Meade’s handwriting stating “verified by phone”. Ms. Meade testified that she spoke with Salvatore by phone confirming that he was directing the CIBC to forward the funds as directed in the written authorization.
98Sam and Falsetto Homes personally guaranteed the mortgage for 222 Clarence and Sam assumed responsibility for managing this property and for making the mortgage payments. Salvatore did not assume any risk with regards to the mortgage. Also Salvatore did not sign any documents on the closing of the transaction and would have known that if he was acquiring an interest in the property then he would have been required to attend at the lawyers office and sign documents.
c. 99 Cartier Street
99Sam became aware of the opportunity to purchase the property located at 99 Cartier Street through a real estate agent named Charles Mirsky. Sam first visited the property by himself and then he went with his father to obtain Salvatore’s input and advice about purchasing the property. Salvatore told Sam it was a nice property, in a good location, and that the parking on the side of the building was a positive. Salvatore told Sam to buy the property.
100On November 24, 2014, Salvatore attended in person at the CIBC Trainyards branch to withdraw $1.3 million as a down payment on the 99 Cartier St property. The internal CIBC debit memo bares his signature which confirms that Salvatore attended at the bank personally.
101The $1.3 million represented only a small portion of the $4.6 million down payment made by Sam. A portion of the down payment also came from the earlier withdrawal of $1 million and the remainder was paid by Falsetto Homes. In addition, Falsetto Homes signed a mortgage for approximately $6 million as the total purchase price for the property was approximately $10 million. This evidence undermines Salvatore’s testimony that he told Sam to put the properties in his name. It would not make commercial sense for the property to be put in Salvatore’s name when the vast majority of the down payment was being made by Falsetto Homes, and Salvatore was not assuming any risk on a very substantial mortgage of approximate $6 million. Falsetto Homes has maintained the property, managed the property, collected the rent, and made the mortgage payments since the purchase was completed.
Sam Paid Salvatore’s Income taxes on the Settlement Funds
102Sam paid Salvatore’s income taxes on the settlement amount of $6.5 million he received in 2014. Peter Crowe calculated the income taxes owing on the settlement funds at $1,327,397.42. The evidence is uncontested that Falsetto Homes paid this entire amount directly to the Receiver General of Canada in three payments. The payment of Salvatore’s income taxes by Sam is consistent with Sam’s evidence that Salvatore expressed his intention to gift the settlement funds to Sam provided he paid any income taxes on the settlement funds. Sam’s payment of Salvatore’s income taxes is further evidence of Salvatore’s intention to gift the settlement funds to Sam, provided he paid the income taxes on this amount.
103In May of 2014 Salvatore had a car accident. Salvatore told Sam that he was fine and did not wish to go to the hospital. He came to visit Sam at his jobsite about two hours later. Luisa called Sam and told him that that she had taken her father to the hospital later that day. After being released from the hospital later that night, Luisa asked Salvatore if he wanted to sleep at Sandra’s house. Salvatore declined telling her he wanted to sleep in his own bed. Salvatore’s car was too badly damaged to repair and so Sam bought Salvatore a new Ford Escape SUV. Sam also bought his mother a similar vehicle at the same time.
Sam and Salvatore’s close relationship
104From 1998 and onwards, Sam and Salvatore developed a very close relationship as described earlier. This close relationship continued following the settlement of the litigation with Albert and Luigi. Delia described the relationship between them as “like best friends.” Mr. Carozza described the pride expressed by Salvatore just before Sam started the development of the properties on Skeena and Salvatore said, “I give (Sam) this, this property and he going to build two beautiful house(s)”. Paul D’Angelo testified that in the Spring or Fall of 2015 he met Salvatore at the mall and Salvatore said, “I’m so happy with Sam, you know, I gave Sam the money so I’m so proud of Sam, Sam does so well, I love my son”. These statements are evidence of a very close relationship and also consistent with Salvatore’s intention to gift the properties to Sam.
105Sam took care of paying Salvatore’s bills after Albert stopped paying them. Salvatore would bring his bills to Sam at his jobsites or drop them off at the apartment buildings (200 Bronson, 222 Clarence, or 99 Cartier). Sam took the bills back to his office and put them in a basket on the wall labelled “Dad’s Bills”. Sam’s staff then processed the bills and Sam signed the cheques and sent them out. Salvatore often visited Sam at the buildings and cooked and brought Sam homemade meals when he visited Sam. Salvatore admitted that he was proud of his son Sam as Sam followed in his footsteps in the real estate development and admitted that he and his son were very close at that time.
Luisa became Suspicious in March of 2015
106Louisa testified that she developed suspicions about Sam long before Salvatore apparently asked her to investigate in the Spring or Summer of 2016. Luisa agreed that she began conducting her own investigations before Salvatore authorized her to investigate. In March of 2015 Luisa brought her father to see John Dempster, a litigation lawyer, along with Mike and Milva Ayoub. Mr. Dempster advised Salvatore to contact Frank to determine who owned the properties of concern but Salvatore did not follow his advice.
107Luisa testified that at multiple family events she overheard Sam openly stating that the three large apartment buildings belonged to him. Sam was referring to the 200 Bronson, 222 Clarence, and 99 Cartier properties. The fact that Sam was openly discussing that he owned the properties is consistent with the properties being gifted to him. If Sam had secretly put the properties in his name instead of his father’s name as alleged by the Plaintiff, then he would not be expected to openly tell his family members that he owned the properties and not his father.
108In December 2015, Salvatore suffered a stroke. Sam’s evidence is that Salvatore never told Sam that he had suffered a stroke but instead referred to some vision problems. Luisa testified that the night Salvatore suffered his stroke, she could not reach her father and called the hospital and was able to find out that Salvatore was in the hospital.
109Any hearsay evidence that I have referred to in this decision is considered for purposes of the narrative to understand what or why something was done.
110In May 2016, Luisa contacted social workers and told them that Salvatore was being financially abused by Sam. The social worker’s notes of this call are different from Luisa’s evidence at trial. The notes state that Luisa advised the social worker that she had been suspicious of her brother for a few years, but Luisa insisted that the social worker’s notes were not accurate. The social worker’s notes are hearsay evidence as the social worker was never called to testify and a notice of business records was not served.
Salvatore executed a new Will in 2016
111In June of 2016, Luisa’s written statement said that “Richard Nishimura was hired by Luisa as her father’s new lawyer”. In cross-examination she denied that she hired the lawyer and asserted that it was her father who wanted to hire a new lawyer. Luisa testified that the social worker’s notes were not accurate and had been changed from what she told her. Luisa destroyed all of the communications and documents she sent to the social workers which is unusual behaviour and casts suspicion on her credibility.
112On July 29, 2016, Salvatore executed a new Will drafted by Mr. Nishimura who was different from Salvatore’s long-time lawyer and cousin who had prepared Salvatore’s two previous wills in 2009 and 2012. The 2016 Will directed that the residue of Salvatore’s estate be distributed to his five children equally. This is the first Will where Sandra and Luisa were named as beneficiaries.
113On August 4, 2016, Sam received a letter from Salvatore’s new lawyer expressing concerns about how Sam had used the money transferred to him by his father. The largest gifts Salvatore made to Sam were made in 2014 from the settlement funds. Prior to the August 4, 2016 letter, Salvatore had never expressed any concerns to Sam about the purchase of the properties or how Sam had used the money Salvatore had given to him. Sam continued to have a close relationship with Salvatore until shortly before receiving Mr. Nishimura’s letter. Salvatore has not spoken to Sam and he has not spoken to Salvatore since receiving the letter from Mr. Nishimura.
114In October 2016, Luisa asked the social worker for a referral to a new litigation lawyer for her father. The social worker’s contemporaneous notes of the October 17, 2016 phone call with Luisa described Mr. Nishimura as Luisa’s lawyer. In cross-examination, Luisa testified that the social worker’s notes were inaccurate and that her recollection was more accurate than the contemporaneous notes. This aspect has little impact because Salvatore in fact approved of Luisa’s retaining another lawyer on his behalf.
115Salvatore did not to take any steps to commence litigation against his son until August of 2017. No reasons for the delay were given other than the submission that Salvatore was unaware that the properties purchased with his funds were not in his name.
116In July 2017, according to Luisa’s evidence, Salvatore experienced a significant health issue while visiting Luisa and Sandra for supper. Salvatore was taken to the hospital where he remained for a week. On his release Luisa and Sandra offered to take care of Salvatore at Sandra’s home. Salvatore agreed and has lived at Sandra’s house in Barrhaven with Sandra and Luisa since that date. No evidence was presented of the nature of the health issue suffered by Salvatore at that time. The litigation was commenced very shortly after Salvatore suffered this health issue and after he had moved from his home to live with Sandra and Luisa.
117Luisa has been very involved with this litigation and had exchanged 486 emails with the Plaintiff’s law firm as of August 16, 2021. Shortly before the commencement of the trial, Salvatore appointed Mr. Griffiths as an additional lawyer to act on his behalf, who had previously represented Luisa.
118Surprisingly on cross-examination, Salvatore testified that he did not know that Mr. Griffiths had previously represented Luisa and was not even sure who Mr. Griffiths was. This evidence supports an inference that Salvatore had difficulty remembering recent events and that his memory of events was not reliable. Salvatore was also unable to remember authorizing the CIBC to transfer of the funds to allow Sam to acquire the three properties. Salvatore also was unable to remember signing the various signature cards and documents at the bank, although he acknowledged it was his signature.
Salvatore Makes a New Will with another Lawyer
119On June 27, 2018, Salvatore executed another Will drafted by Ms. Bulger, a new lawyer for Salvatore. This new Will appointed Luisa and Sandra as Estate Trustees and stated that Luisa and Sandra would receive Salvatore’s house at 1532 Skeena Avenue. The residue of Salvatore’s Estate was to be divided between Luisa, Sandra, and Salvatore’s grandchildren. An unusual clause was inserted stating that Sam, Milva, and Delia “shall receive nothing from my estate”. Again, consistent with Salvatore having difficulty remembering recent events at trial, Salvatore testified he could not recall who he was leaving his assets to in his Will and at examinations for discovery, Salvatore was unable to remember the beneficiaries of his Will which was executed quite recently in 2018. During cross examinations on the CPL motion in 2018, Salvatore was unable to remember that he had executed a Will with Ms. Bulger. Salvatore’s inability to remember recent events is consistent with his inability to remember that he had gifted amounts of money to Sam to help him acquire or develop properties, had gifted the Skeena property to Sam, and in particular had gifted the settlement funds to Sam that allowed him to purchase the three large apartment buildings.
120Sam has continued to send his father $3,000 per month since the beginning of 2021. He previously sent cheques of $2,000 per month which were not accepted by Salvatore. Salvatore also currently receives approximately $,1500 per month from Canada Pension Plan and Old Age Security for a total of $4500 per month.
121Peter Crowe testified that he was responsible for the book-keeping and making the entries into the financial recording system used by Sam’s company. Mr. Crowe testified that Sam was not involved in the book-keeping entries for his business and had very little involvement in the bookkeeping aspects of the business.
122Mr. Crowe initially recorded the amounts that were transferred to Sam or Falsetto Homes by Salvatore as unsecured interest-free loans in the accounting ledgers. Mr. Crowe testified that he did not discuss these transactions with Sam or Salvatore before recording them as entries in the ledgers. He made the bookkeeping entries based on the documentation available to him such as deposit slips. He also testified that he never discussed how to record these amounts with Sam. I accept Mr. Crowe’s evidence that this was how he made the bookkeeping entries as his evidence was confirmed by Sam and uncontradicted.
123Mr. Crowe testified that he was not aware that Salvatore was giving the settlement funds to Sam until Salvatore told him at the mediation that this was his intention. Mr. Crowe testified that before he learned at the mediation that Salvatore intended to gift the settlement funds to Sam he had recorded the amounts received from Salvatore as loans rather than shareholder loans from Sam. He testified that he did so because he believed it was best for the company to avoid being audited by the Canada Revenue Agency.
124After the mediation, Mr. Crowe recorded all new amounts received from Salvatore as shareholder loans, which is consistent with Salvatore gifting the money to Sam and then Sam transferring it to Falsetto Homes. On April 1, 2015, Mr. Crowe reallocated the funds received from Salvatore, that he had initially recorded as interest-free loans, to shareholder loans, to represent the fact that the funds were gifted from Salvatore to Sam. Mr. Crowe testified that he was unaware of Salvatore’s intention to gift the funds to Sam until the mediation in 2013, but he did not want to change the bookkeeping entries because he anticipated another audit the following year. By April 2015, Falsetto Homes had been audited twice and he was then comfortable with changing the allocation because a further audit was unlikely. Mr. Crowe testified that he did not discuss making this change with Sam.
125I find that Mr. Crowe’s evidence was credible as he offered a reasonable explanation for making the bookkeeping entries and changing the allocations on April 1, 2015. Also, neither Sam nor Mr. Crowe were aware of any possible claims from Salvatore at the time the changes were made, as Sam only became aware of a possible claim when he received the letter from Mr. Nishimura on August 4, 2016, expressing concerns with how Sam had used the money transferred to him by Salvatore. Mr. Nishimura’s letter was received approximately 16 months after Mr. Crowe made the accounting reallocations in the bookkeeping records. Also, Mr. Crowe did not attempt to conceal either the initial bookkeeping entries or the reallocation of the bookkeeping entries in 2015. Finally, the Plaintiff has never alleged that the amounts Salvatore transferred to Sam were intended to be loans to Sam or Falsetto Homes. I, therefore, accept Mr. Crowe’s evidence of how the bookkeeping entries were made and why he made the alterations to his initial entries.
Issue #1 - Did Salvatore gift the amounts listed in Schedule “A” and the Skeena property to Sam to allow him to acquire or develop these properties?
126In Pecore v. Pecore, 2007 SCC 17 at paras 24, 36 and 43-44, the Supreme Court of Canada held that when an elderly parent transfers property to an adult child without consideration, the law presumes that the child holds the property on a resulting trust, for the parent’s benefit. The presumption of a resulting trust will prevail where evidence of the transferor’s intention is unavailable, unpersuasive, or fails to meet the evidentiary burden.
127To rebut the presumption of a resulting trust, the adult child must prove all three elements of the gift on a balance of probabilities. To do so, the adult child must proffer “clear, convincing, and cogent” evidence that the donor intended to gift the property.
128The adult child must prove the following:
a. That the parent intended to gift the property to the adult child;
b. that the adult child accepted the gift; and
c. that a sufficient act of delivery or transfer of the property occurred to complete the transaction.
Absent the proof of any of these elements, the presumption of resulting trust will prevail, and the adult child will only be permitted to use the property for the parent’s exclusive benefit.
129In Pecore, the Supreme Court of Canada held that when an elderly parent transfers property to an adult child without consideration, the law presumes that the child holds the property on a resulting trust for the parent’s benefit. The onus of rebutting the presumption of a resulting trust rests on Sam in this case. Sam must prove the three elements to establish a gift with “clear, convincing and cogent” evidence on a balance of probabilities that Salvatore intended to gift the funds and properties in question to him.
130In Teixeira v. Markgraf Estate, 2017 ONCA 819 at para. 318, the Court of Appeal also held that the adult child must prove that:
a. The parent intended to gift the property to the adult child;
b. The adult child accepted the gift; and,
c. A sufficient act of delivery or transfer of the property occurred to complete the transaction.
131In Pecore, at para. 55, the Supreme Court of Canada stated that the analysis is on the contemporaneous intentions of the transfer, which depend on the circumstances of each case. At para. 59, the Supreme Court stated that post transfer declarations and conduct by the transferor are admissible evidence of what the transferor intended at the time of the transfer. The Supreme Court added that it was also important to guard against self-serving evidence by the transferor that: “tends to reflect a change in intention”.
132In Barber v. Mageo, 2017 ONCA 558 at para. 4, the Court of Appeal held that the absence of a recording or documentation of a transfer indicates that the transfer was a gift and stated: “[a] gift is a transfer in which the absence of an expectation of repayment tends to be reflected in the absence of security, recording, payments or efforts to collect payments.” This is the situation in this case because no security was provided or requested, no payments were made by Sam, and Salvatore never made any efforts to collect payments until commencing this action in 2017. In fact, Salvatore does not claim that the money advanced by him to Sam were loans. Rather, he claims that his intention was that Sam would use the funds transferred to him to buy property in Salvatore’s name and would manage the property for him during his lifetime and then for his five children after his death.
(a) Did Salvatore intend to gift the funds and property to Sam?
133Salvatore gave testimony at trial that was inconsistent with his previous statements, and I find that his evidence was not credible or reliable for the following reasons:
a. Salvatore pleaded that he intended that Sam hold the properties he acquired using the funds he transferred to him in trust for the benefit of Salvatore and his five children. Salvatore also sought a declaration that Sam was a trustee of the properties he acquired, however, there was no evidence that Sam and Salvatore entered into such a trust agreement. Salvatore testified at trial that his intention was for Sam to buy the properties and put them in Salvatore’s name, which is different from what he pleaded. The pleadings do not claim that the properties acquired were to be put in Salvatore’s name, but rather allege that they were to be held in trust by Sam for Salvatore’s benefit and then, for his five children following his death;
b. Salvatore’s evidence that he intended that the properties purchased with the funds he transferred to Sam be put in his name is not credible because Salvatore knew from his extensive experience buying and selling real estate that if properties were being put in his name, he would have had to attend at his lawyer’s office to sign closing documents. He would also have had to sign a mortgage and probably give a personal guarantee. I infer that Salvatore knew or ought to have known that the properties were not being put in his name because he did not sign any documents on the closings;
c. In addition, Salvatore either personally obtained the bank drafts or authorized CIBC to make the bank drafts payable to Falsetto Homes or to Frank’s law firm in trust. Salvatore never instructed Frank to register any of the properties in his name because Frank testified that he followed the instructions he received from Salvatore. I except Frank’s evidence that he registered the properties in Sam’s company’s name as instructed by Salvatore;
d. Salvatore testified that he did not recall signing any documents with CIBC and did not recall meeting with, or speaking with, Cathy Meade on the phone to authorize any of the transfers to allow Sam to purchase the properties. This evidence demonstrates that Salvatore’s memory is unreliable and he has forgotten these events after his stroke in 2016 or he has changed his mind since he began living with Luisa and Sandra;
e. The statement of claim alleges that the conversation about Salvatore’s intention for Sam to hold the properties he acquired in a trust occurred in 2011. However, this could not have occurred on that date because the mediation agreement was only reached in 2013 and the settlement funds were only received in February of 2014;
f. Salvatore admits that he never signed an Agreement of Purchase and Sale or any documents for the purchase of 200 Bronson, 220 Clarence, or 99 Cartier. Salvatore knew or ought to have known that if he didn’t sign any documents for the purchase of a property that the property was not being registered in his name. He would have known this because he was an experienced real estate businessman who had purchased and sold many properties where he had to sign documents to complete each purchase. This evidence supports a finding that Salvatore knew that the properties were being registered in Sam’s name and that he intended to gift the funds he transferred to Sam to allow him to purchase the properties for Sam’s own benefit;
g. Salvatore also gave contradictory evidence at the cross-examination on his affidavit signed for the CPL motion. Salvatore stated that he knew Sam was buying the buildings and that “Sam was to get paid first and then think of the five of us”. Sam was to decide how much he would pay himself. This is inconsistent with putting the properties in Salvatore’s name or holding the properties in trust for Salvatore where Sam was to receive 2%, 3% or 4% in management fees;
h. In the same cross-examination, Salvatore stated that Sam was “supposed to get half of whatever property and I get half”. Yet Salvatore testified that he never had any such conversation or agreement with Sam as Salvatore stated “I didn’t tell him nothing, he didn’t tell me nothing”. Salvatore later stated that Sam was to invest for “both of them” without mentioning his other children;
i. Salvatore gave inconsistent answers about whether he intended that the properties purchased were to be in (1) his name, (2) in Sam’s name in trust where Sam had a 50% interest, (3), in Sam and Salvatore’s names, or (4) in Sam’s name in a trust where Sam received 2%, 3% or 4% in fees and the remainder to be held in trust for Salvatore and his five children;
j. At discovery, Salvatore denied the allegation in his pleadings that he told Sam to manage his assets for the benefit of his five children after his death. Salvatore testified at trial that he never talked about his death with Sam;
k. Salvatore testified that he never spoke in disparaging terms about his wife, his daughters, or women in general. His evidence, and Luisa’s evidence in this regard, was not credible because it was contradicted by many credible witnesses whose evidence I accept. Sam testified that he had to speak with Salvatore and ask him to stop talking so negatively about his ex-wife and daughters because it made them look bad. Mr. Carozza, Salvatore’s neighbour and friend, Mr Fatta, and Mr. Aillo all testified that Salvatore spoke so negatively about his wife and daughters so often that he was given the nickname,”Turbo” because he repeatedly referred to them as “turbo-sl.ts”. I found their evidence to be very credible; and,
l. Louisa’s evidence at trial that Salvatore was never abusive to his wife or daughters was contradicted by her own affidavit filed in Salvatore’s divorce proceeding. I find that Delia’s evidence of how Salvatore treated his daughters was much more credible and I accept her evidence.
134I find that Sam’s evidence was consistent and credible, and he testified about the specific circumstances of the gift of funds to acquire each property. His evidence was detailed and specific to a time and place. Importantly, Sam’s evidence was corroborated by the evidence of Ms. Meade from CIBC, who testified that she always obtained Salvatore’s approval before each transfer was made to acquire each of the three main properties acquired with the settlement funds. For these reasons I accept Sam’s evidence that Salvatore intended and did gift him the funds to acquire or develop the properties listed in Schedule “A” and the Skeena property.
135Salvatore’s intention to gift the settlement funds to Sam was corroborated by two independent and very credible witnesses. Both Paul D’Angelo and Peter Crowe testified that Salvatore told of them on two separate occasions that he intended to gift the settlement funds of 6.5 million dollars to his only son, Sam. Salvatore also told Mr. Carozza, his friend and neighbour, that he was giving, or had given, the two Skeena Avenue properties to Sam to allow Sam to build two new houses. I except Mr. Carozza’s evidence because he was a very credible witness and was an independent party.
136Mr. D’Angelo has been a litigation lawyer in Ottawa for many years. He testified that he remembers Salvatore telling him at the mediation that he intended to give the settlement funds to his son Sam. He also made a note at the mediation corroborating his evidence that Salvatore told him that he intended to give the settlement funds to his son Sam. Salvatore repeated his intention to give the settlement funds to Sam at Fratelli’s restaurant. Mr. D’Angelo is a very credible witness and I accept his evidence.
137Mr. Crowe was Sam’s bookkeeper and he corroborated Mr. D’Angelo’s evidence that Salvatore stated that he intended to give the settlement funds to Sam both at the mediation and at Fratelli’s restaurant celebratory dinner.
138Most of the gifts of funds or properties were made to Sam, when he was the only child with whom Salvatore had a good relationship. Salvatore did have contact with Delia, primarily to see him his grandson. Luisa and Sandra only re-established contact with Salvatore around 2013 but they had not had any contact with Salvatore for 28 years before 2013. In contrast, Salvatore had enjoyed a good relationship with Sam since 1998. They called each other almost daily and Salvatore visited him at his work sites almost daily, often brought food to Sam at his work sites. Delia described as “best friends”.
139Salvatore was a shrewd and experienced businessman and if he intended to create a trust and appoint Sam as a trustee to hold the properties acquired for him during his lifetime and his five children after his death, he would have documented the trust terms. Salvatore had access to legal advice through his cousin Frank, who prepared at least two of his Wills and had acted for Salvatore on many real estate transactions. The lack of documentation is consistent with Salvatore intending that the transfers were gifts to Sam. If Salvatore intended to create a trust, he would have made sure it was properly documented. Salvatore had used a trust previously for the 315 Nelson property.
140Salvatore’s 2012 Will left all of his assets to Sam which is also consistent with his intention to leave all of his assets to Sam throughout the 2012 and to 2016 time period when most of the transfers were made to Sam. The 2012 Will is inconsistent with Salvatore’s pleading that he intended that his assets be managed by Sam in a trust for him during his lifetime and for his five children after his death.
141In late 2010, Salvatore personally went to CIBC to withdraw the first transfer of $475,000 that was used by Sam to purchase 376 Wilmot. This is confirmed by the memo prepared by Mr. McGillivray, Salvatore’s former lawyer. Mr. McGillivray testified that he had prepared this memo in 2011 based on information provided to him by Salvatore and he would have sent a copy to Salvatore. Based on Mr. McGillivray’s evidence, which I except, there is no doubt that Salvatore was aware that these funds were being used to purchase properties in Sam’s or his company’s name.
142All of the transfers of funds to Sam were for large amounts, in the hundreds of thousands of dollars. They were transferred from Salvatore’s bank accounts between 2011 and 2015. Each of the withdrawals were shown clearly on Salvatore’s bank statements which he received each month. Salvatore as a successful businessman would have noticed the withdrawals in his bank statements and would have objected if he was not in agreement. The evidence is uncontested that Salvatore never objected to any of the transfer of funds to Sam, which is evidence that he was aware of and intended that the transfers were gifts. Salvatore only indicated that he was objecting in 2016 when his lawyer sent a letter to Sam, six years after the first gift of $475,000 was made to Sam.
143Salvatore personally authorized the largest gifts to Sam from his flexible GIC at the Bank of Commerce (CIBC”). Salvatore personally signed the authorization to the CIBC to transfer $1,750,000 on July 30, 2014, and $2,000,000 in September of 2014 and he confirmed his authorization with Cathy Meade to proceed with each transfer. On November 24, 2014, Salvatore personally went to the CIBC and withdrew the sum of $1,300,000 used to allow Sam to purchase 99 Cartier. These transactions were not completed using a Power of Attorney because Salvatore explicitly authorized each of these transfers of funds to Sam himself.
144It does not make any commercial sense for Sam to have agreed to get involved in a complex trust relationship where Salvatore would own the property and Sam would receive some unspecified part of the profits or a management fee. Sam had his own successful construction business as builder of homes, and he was not an asset manager or investment advisor. Sam never acted in this role towards Salvatore, in fact he sought Salvatore’s advice about the properties before he purchased them. Sam would not have contributed substantial amounts of his own funds and have assumed personal responsibility to make the payments on mortgages of up to $4,000,000 for the benefit of Salvatore and the five children. It would not be commercially reasonable for Sam to have entered into such an arrangement, which would have required a well documented trust agreement. The absence of any such documentation supports a finding that the funds transferred to Sam were intended as gifts by Salvatore.
1536 and 1540 Skeena
145Sam testified that Salvatore told him that these properties (one lot only before severance) belonged to Sam and encouraged him to develop the lots by obtaining a severance and building two houses on the property. Sam followed his father’s advice. Mr. Carozza Salvatore’s neighbour and friend, corroborated Sam’s evidence that Salvatore intended to gift 1536 and 1540 Skeena to Sam.
146Salvatore’s evidence that Sam demolished the bungalow on the property against his wishes is also not credible. In Salvatore’s previous statement of claim before the amendments, he admitted authorizing the transfer of the Skeena property to Sam. Frank, Salvatore’s lawyer, testified that Salvatore understood that the bungalow on the lot would be demolished because Salvatore signed a declaration to complete the severance stating that the bungalow had been destroyed. In addition, Salvatore lived next door and was well aware when the bungalow was destroyed and when Sam built two new houses next door to where he lived.
147Frank acted for both Salvatore and Falsetto Homes to complete the transfer of these lots from Salvatore to Falsetto Homes and he testified that Salvatore was very aware of and authorized the transfers to Falsetto Homes. Salvatore signed an acknowledgment and direction to Frank for both the severance and the transfer to Falsetto Homes. I accept Frank’s evidence in this regard.
148For all of the above reasons, I find that Salvatore’s evidence at trial was not credible or reliable because it was inconsistent and contradicted by many credible witnesses. I find that Sam’s evidence and the evidence of Frank Falsetto, Paul D’Angelo, Peter Crowe, Mr. Carozza, Mr. Fatta, Mr. Manfredi, Mr. Aillo, Jackie Laurin, Delia, and Mr. MacGillivray were very credible, and I accept their evidence. Based on all of the evidence, I find that Sam has proven with a clear convincing and cogent evidence on a balance of probabilities that Salvatore intended to gift the amounts used by him to acquire and develop the properties listed in Schedule “A” and he also gifted 1536 and 1540 Skeena to Sam and that he has rebutted the presumption of a resulting trust. The funds used by Sam on Salvatore’s line of credit were not intended as gifts and were to be repaid by Sam, which has occurred.
(b) Sufficient Delivery
149The second requirement to complete a gift is that the donor must divest control over the property and the receiver must obtain control. In Teixeira, at paras. 45-46, the Court of Appeal held that in the case of a cheque, delivery occurs when the cheque is cashed, and the monies in issue are actually paid.
150In this case, all of the cheques or bank drafts were cashed by deposing them in Sam’s, Falsetto Homes’, or Frank’s trust account where the cheques were cleared. The funds were removed from Salvatore’ control when they were cashed and used to acquire properties identified in Schedule “A”, and when the transfers for 1536 and 1540 Skeena were registered in the name of Falsetto Homes in May of 2014.
151Once the funds were transferred to Sam or Falsetto Homes and the purchase or transfer of the properties were registered in Sam’s or his company’s name, Salvatore had divested himself of control and Sam had obtained control over the funds and property transferred to him or his company.
152For the above reasons, I find that all of the transfers of funds to Sam listed in Schedule “A” and the transfers of the 1536 and 1540 Skeena properties were delivered to Sam or his company. The transfers of the properties and the cashing of the cheques or bank drafts are tangible proof that the gifts were delivered to Sam.
(c) Acceptance
153The third requirement to complete a gift is that the receiver must accept the gift. In McNamee v. McNamee, 2011 ONCA 533 at para. 48, the Court of Appeal held that acceptance “involves an understanding of the transaction and the desire to assume title”.
154Sam was aware of the receipt of the funds which he used to purchase properties in his, or his company’s name. The evidence is overwhelming that Sam knowingly received the funds that he used to acquire properties as listed in Schedule “A”, understood the transactions and desired to assume the title to the properties. Sam also knowingly received the transfers of the 1536 and 1540 Skeena properties because he was aware the properties were registered in the name of Falsetto Homes and he built two houses on the lots, which he then sold. I find that Sam accepted the gifts from Salvatore.
Disposition of Issue #1
155For the above reasons I find that Sam has proven with a clear convincing and cogent evidence on a balance of probabilities, that Salvatore intended to and did gift the Skeena property and the funds used by Sam to acquire the properties listed in Schedule “A” to him.
Issue #2 - Did Sam breach a fiduciary duty he owed to Salvatore?
156Salvatore submits that Sam owed him a fiduciary duty because he was named as his Power of Attorney and because he had given Sam signing authority on his bank accounts. Salvatore alleges that Sam breached his fiduciary duty to him by failing to register the properties acquired by Sam with funds transferred to him by Salvatore, in Salvatore’s name.
157Sam denies that he owed fiduciary duty to Salvatore and if he did, he denies breaching any fiduciary duty to Salvatore.
158In Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 at para 28, the Supreme Court of Canada held that a fiduciary duty arises where the relationship between the parties renders one vulnerable to the power of the other. The law seeks to protect the vulnerable party, the beneficiary, from an abuse of the fiduciary’s power. To achieve this end, the fiduciary is obligated to act “with absolute loyalty toward” the beneficiary when managing their affairs.
159In Alberta, at para 27, the Supreme Court of Canada stated that fiduciary relationships have three characteristics:
a. The fiduciary has scope for the exercise of some discretion or power;
b. the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interest; and,
c. the beneficiary is particularly vulnerable to or at the mercy of the fiduciary holding the discretion or power.
160In August 2011, when Salvatore met with Frank to update his Will, Frank asked Sam if he would agree to be Salvatore’s Power of Attorney. Sam agreed to act as Salvatore’s Power of Attorney but testified that he did not understand his obligations under a Power of Attorney and that no one explained them to him. Sam testified that his understanding of his obligations under the Power of Attorney were to make decisions for Salvatore’s end of life care. I accept his evidence, which was not contradicted.
161On February 22, 2012, Salvatore signed a Power of Attorney prepared by Frank for management of property naming Sam, limited to signing checks on Salvatore’s CIBC bank account ending in 2900. No evidence was presented that Sam was aware of this Power of Attorney, but it is consistent with his evidence that he and Salvatore signed documents at the CIBC bank on February 22, 2012, which Sam believed gave him signing authority on the same account to allow him to pay his father’s bills.
162The documents that Salvatore and Sam signed at the CIBC to allow Sam to pay Salvatore’s bills included a CIBC standard form of Power of Attorney for property. Sam testified that no one at CIBC explained any obligations he had from being named as a Power of Attorney. Ms. Meade, who prepared the bank’s Power of Attorney, testified that she did not explain any obligations this created for Sam. Her evidence was not contradicted.
163Sam testified that he and Salvatore went to CIBC to sign documents that would allow Sam to write cheques on Salvatore’s bank account in order to pay his bills, because Salvatore’s nephew Albert had refused to continue paying Salvatore’s bills. This evidence is consistent with the February 22, 2012 Power of Attorney prepared by Frank.
164On April 30, 2012, Salvatore signed another Power of Attorney prepared by Frank. Frank acted for Salvatore and witnessed this Power of Attorney. This Power of Attorney revoked all previous Power of Attorneys including CIBC’s Power of Attorney signed on February 27, 2012. Sam testified and Frank agreed that he did not explain to Sam any obligations Sam had because Salvatore had named him as his Power of Attorney. Sam had agreed to be Salvatore’s Power of Attorney but was not aware of terms of the Power of Attorney.
165Frank mailed Salvatore’s 2012 Will and Power of Attorney to Salvatore. Salvatore brought the envelope containing his Will and Power of Attorney to Sam at one of his work sites. When Sam arrived home, he opened the envelope, looked at the Will, and filed the envelope in one of his filing cabinets. Sam testified that he did not notice or review the Power of Attorney at that time. The first time Sam became aware of the terms of the Power of Attorney was when they were explained to him by Mr. Seller, his previous lawyer. I accept Sam’s evidence which was not contradicted.
166Sam was not aware that he was named as a Power of Attorney for the property, what a Power of Attorney for property entailed, or that he had any obligations or responsibilities as a result. Sam understood that he had agreed to be a Power of Attorney to make end of life care decisions for his father. Sam also agreed to have signing authority on Salvatore’s CIBC bank account in order to allow him to pay Salvatore’s bills. In fact, this is what he did. Salvatore would bring his bills to Sam, Sam would leave them in a basket at his office, an employee would write the cheques, and Sam would sign them and mail them out.
167Sam’s evidence of his understanding of his obligations as a result of being named as a Power of Attorney is reasonable given his circumstances. Sam graduated from Grade 12 at high school, he has worked primarily in the construction and real estate area, and no one explained or told him he had any fiduciary obligations or what such obligations might be. Sam paid his father’s bills that were dropped off to him, but he never managed his father’s businesses or investments under the authority of the Power of Attorney. Salvatore always had full authority and made his own business and investment decisions.
168The claim alleging a breach of a fiduciary duty is an equitable claim. In Moore, at para. 71, the Supreme Court stated that equity imposes duties of conscience on parties based on their relationship with one another. In circumstances where Sam never understood or agreed to manage Salvatore’s investment or property under a Power of Attorney, where no one explained to him that he had any obligations as a Power of Attorney for property, where he only understood that he had agreed to assume the responsibility to make end of life decisions for his father, and to pay his bills, it would be unjust and contrary of the principles of equity to impose a fiduciary duty on Sam in these circumstances. It would be very unfair and unequitable to allow an individual to create fiduciary obligations for another person without their knowledge or consent.
169I have found that Salvatore intended to and did gift property and money to Sam as set out in the attached Schedule “A”. Salvatore made the decision to make each gift and had full capacity to understand that he was making each gift of funds or property to Sam. Sam did not make any gift to himself using the Power of Attorney that was not specifically approved and authorized by Salvatore before it was made.
170Even if Sam owed a fiduciary duty to Salvatore, there cannot be any breach for transfers of funds or property to Sam before February 27, 2012, when the CIBC standard form of Power of Attorney was signed. The April 30, 2012 Power of Attorney revoked all the previous Power of Attorneys including that signed at the CIBC in any event.
171The only transaction between February 27, 2012 and April 30, 2012, was a cheque for $200,000 made on April 9, 2012, which Sam used to assist with cash flow for a construction project. I accept Sam’s evidence that like for all of the transfers of funds made to him by Salvatore, he first spoke to his father and obtain Salvatore’s up approval and authorization before Sam took any further steps. This transfer was authorized by Salvatore and was not completed by Sam under a Power of Attorney, without first obtaining specific approval and authorization from Salvatore.
172When Salvatore transferred 1536 and 1540 Skeena to Sam’s company, Salvatore signed the documents to complete the transfer himself. The transfer registration specifically stated that the transfer was not authorized under a Power of Attorney. Salvatore’s practice was to personally authorize transactions, even when he had appointed a Power of Attorney. This was the case for the transfer of 315 Nelson, when Albert held a Power of Attorney for property. The transfer was still signed by Salvatore personally and was not signed by Albert. Salvatore’s practice was to limit what his Power of Attorney could do to paying his bills, while he continued to exercise his authority to personally manage his property and make his own investment decisions. This practice continued with Sam.
173On April 30, 2012, Salvatore executed a Power of Attorney prepared by Frank, which revoked the CIBC’s standard form of Power of Attorney. Sam was not aware of this Power of Attorney had been signed and could not have advised CIBC that its Power of Attorney had been revoked.
174In any event, the transfers that occurred before Feb. 27, 2012, were not made pursuant to a Power of Attorney; therefore, cannot constitute a breach of a fiduciary duty. The largest transfers were for the purchase of the Bronson, Clarence, and Cartier properties. The transfers of funds that were used as a down payments to acquire these properties were all authorized by Salvatore, in writing, by phone, or in person. Salvatore signed the authorization sent to CIBC for the amount of $1,750,000 used to purchase 200 Bronson and Cathy Meade confirmed with him personally his instructions to transfer the funds as he directed. Likewise, Salvatore personally authorized the transfer of $2,010,000 to purchase 220 Clarence, by signing the authorization and confirming his instructions with Cathy Meade. For 99 Cartier, Salvatore went to the bank personally and withdrew $1,300,000 by signing the bank draft which he gave to Sam. These transactions were not carried out by a Power of Attorney.
175Even if the transfers of funds used to purchase the three large apartment buildings were made pursuant to a Power of Attorney, there would be no breach of fiduciary duty because Sam followed Salvatore’s instructions. In Leung Estate v. Leung, [2001] O.J. No. 2171 on page 12, para. 5, the court held that an attorney under a Power of Attorney acts as an agent for the donor. The agent has a duty to follow the principal’s instructions strictly.
176In some instances, an attorney, acting as agent, may owe a fiduciary duty to the donor. The level of fiduciary duty depends on whether the donor had capacity, when the attorney was undertaking activities under the Power of Attorney. If the donor has capacity, then the fiduciary duty is primarily informed by following the donor’s instructions. If the donor lacked capacity at the time the attorney was undertaking activities, then the fiduciary duty owed is much higher and much closer to that of a Trustee.
177This distinction was upheld by the Court of Appeal in Richardson Estate v. Mew, 2009 ONCA 403 at paras. 47 and 48. In this case, Salvatore had full capacity throughout the whole gifting period between 2010 and 2016, had full knowledge, and consented and authorized each transfer of funds or property to Sam. There wasn’t any evidence presented at trial that Salvatore lacked capacity at any time and in particular in the 2010 to 2014 time period. In fact, Salvatore made a Will in 2012 and made two other wills dealing with his property in 2016 and again in 2018.
178I also find that Sam did not owe Salvatore an ad hoc fiduciary duty apart from the Power of Attorney with regard to his use of Salvatore’s lines of credit. The relationship between Salvatore and Sam was that of lender/borrower. Salvatore authorized Sam to use his lines of credit to finance Sam’s development projects, but they were not intended as a gift. Sam has repaid all of the amounts that he used on Salvatore’s lines of credit with interest. Sam was not responsible for opening or reorganizing Salvatore’s lines of credit. Salvatore was not under Sam’s control or influence because Salvatore was independent, lived on his own, met his friends at the mall, went to Sam’s worksites on a regular basis, and retained lawyers when he deemed it necessary.
Disposition of Issue #2
179I find that Sam did not owe any fiduciary to Salvatore with regards to any of the transfers of funds or properties to him because they were gifted to Sam. If Sam owed a fiduciary duty to Salvatore because he was appointed as a Power of Attorney, then I find that he has followed Salvatore’s specific instructions and has not breached his fiduciary duty.
Issue #3 - Did Sam exercise undue influence on Salvatore?
180In Pandke Estate v. Lauzon, 2021 ONSC 123 at paras. 12-13, the court held that undue influence of an adult child over their parent will invalidate a gift. Undue influence occurs when the transferor is not operating with an independent mind and, as a result, can arise where the transferor has capacity. Undue influence may take two forms: actual undue influence or presumed undue influence. Actual undue influence occurs where the parent’s free will is over borne by the adult child’s acts of manipulation, abuse of power, coercion, or fraud.
181Undue influence can be actual or presumed. However, the presumption between a parent and child only arises if there is a factual foundation to support the presumption. In Morreale v. Romanino, 2017 ONCA 359, the Ontario Court of Appeal summarized the framework that applies in order for a presumption of undue influence to arise:
22In the case of voluntary gifts, whether the presumption of undue influence arises begins with an examination of the relationship between the parties and the first question to be addressed, in all cases, “is whether the potential for domination inheres in the nature of the relationship itself”: Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 SCR 353, at p. 378. This test embraces those relationships that equity has already recognized as giving rise to the presumption, including parent and child: Geffen, at p. 378.
23However, while the test embraces relationships that have been recognized as giving rise to the presumption, it is not enough to simply show that such a relationship exists. Even for such relationships, the presumption does not arise unless it has been established that there is the potential for one person to dominate the will of another. The test requires the trial judge to consider the whole of the relationship between the parties to see if there is the potential for domination, rather than looking for a specific act of coercion or domination.
182Sam did not exercise any undue influence over Salvatore and he made the gifts to Sam with “full free and informed thought”. When he testified, Salvatore demonstrated a resolute strength of will that would have been very difficult to influence, notwithstanding his advanced age. Salvatore’s sister, Ms. Plastino, testified that her brother was intelligent, brave, strong willed, and that he has been that way since he came to Canada. I accept her evidence in this regard.
183Sam never did anything to override Salvatore’s Will. The Plaintiff did not present any evidence that Salvatore lacked the mental capacity when he gifted the money or property to Sam.
184Salvatore made two new Wills with different lawyers after the transfers were made to Sam: one in 2016 and another in 2018. I also observed when Salvatore testified that he was a very strong-willed individual who made his own decisions. Salvatore was a very intelligent and successful real estate and rental property developer who had more experience in this area than Sam.
185Between 2011 and 2014, when the gifts were made to Sam, Salvatore was living completely independently. He lived by himself, was able to drive, and freely chose where he went and who he spoke to. This was the case when he chose to visit Sam’s worksite, visit his grandchildren at Milva’s and Delia’s homes or to visit with his friends at the Carlingwood Mall.
186While the Plaintiff has alleged undue influence in his submissions, his pleadings did not make any allegation of undue influence against Sam regarding the transfer of funds or property to him. I find that Sam did not exercise any actual or presumed undue influence on any of Salvatore’s decisions or actions of gifting funds to Sam to acquire or develop properties based on the lack of any such evidence at trial to support such a finding.
Disposition of Issue #3
187For the above reasons I find that Sam did not exercise any undue influence on Salvatore to transfer any funds or property to him.
Issue #4 - Was Sam unjustly enriched by the transfer of funds and property from Salvatore?
188In Moore v. Sweet, 2018 SCC 52, at paras. 33 and 35, the Supreme Court of Canada stated that unjust enrichment is an equitable “cause of action used where it is against all conscience” for one party to retain a benefit from another’s loss.
189In Moore at para 37, the Supreme Court stated that to succeed a claim of unjust enrichment a Plaintiff must prove that (1) the Defendant was enriched; (2) the Plaintiff suffered a corresponding deprivation; and (3) that the Defendant’s enrichment and the Plaintiff’s corresponding deprivation occurred in the absence of a juristic reason.
190In Moore, at para 57, the Supreme Court of Canada held that a “donative intent” was found to be an established category of juristic reason. In this case, there is a juristic reason for Sam’s enrichment, namely my finding that Salvatore intended to gift the funds listed in Schedule “A” and 1536 and 1540 Skeena to Sam.
191I find that the reasonable expectations of both Salvatore and Sam were that Sam would retain ownership of the properties transferred to him or acquired with funds gifted to him by Salvatore. This is corroborated by Sam’s giving his personal guarantee of a mortgage for $2,207,503 for 200 Bronson, a mortgage of $4,193,312.50 for 222 Clarence, and a mortgage of $6,608,100 for 99 Cartier. Sam would not have given his personal guarantee for such large amounts if he didn’t expect that the properties had been gifted to him.
192The reasonable expectation of the parties was that Sam would retain the gifts of funds and properties for his own benefit because Salvatore told him that he was gifting them to Sam. The second reasonable expectation of the parties was that Sam would support Salvatore for the reminder of his life. Sam has been paying Salvatore the sum of $3,000 per month since 2021 and Salvatore has been accepting the cheques.
193The third factor is that Salvatore did not raise any concerns or objections about the first gift for six years and for the three large properties purchased with the settlement funds for almost two years.
194Sam has also relied on Salvatore’s representations to him that the funds and property he transferred to Sam were gifted to him. Based on the representations made to him by Salvatore, Sam has personally guaranteed over $13,000,000 on the mortgages and has contributed several million dollars of his own funds to acquire the properties. Sam has changed his position because he relied on Salvatore’s representation that these transfers to him were gifts. In these circumstances, Salvatore should be estopped from changing his position in seeking the return of the funds and properties he transferred to Sam.
Disposition of Issue #4
195I find that Sam has not been unjustly enriched because there was a valid juristic reason for Sam’s enrichment, namely that Salvatore had the required donative intention to make the gift of the funds and properties to Sam.
Damages
196I have found that Salvatore gifted the properties and funds to acquire the properties outlined in Schedule “A” to Sam and as a result, I find that Salvatore is not entitled to any damages.
Issue #5 – Are the Plaintiff’s claims barred by the statute of limitations?
197It is not necessary to deal with this issue as I found that Sam has rebutted the presumption of resulting trust and proven that the properties and funds were gifted to him by Salvatore.
Final Disposition
198For the above reasons the Plaintiff’s claim is dismissed. I also dismiss Salvatore’s claim for a further accounting, as adequate financial details have been provided to Salvatore which are set out in the transfers of funds and properties outlined in Schedule “A”.
199I dismiss Salvatore’s claim for a resulting trust for the reasons given above finding that Sam has rebutted the presumption of a resulting trust and has proven with clear consistent and cogent evidence that Salvatore intended to gift the funds and properties to Sam on a balance of probabilities. For the same reasons Salvatore’s claim for equitable tracing and the Plaintiff’s claim for punitive damages is dismissed as I found that Salvatore intended to make the gifts of funds and properties set out in Schedule “A”.
200Salvatore’s claims for a constructive trust and unjust enrichment are also dismissed because there was a juristic reason for the enrichment, as I find that Salvatore gifted the properties and funds set out in Schedule “A” to Sam.
201For the above reasons, I also find that Salvatore does not have any property interest in any of the properties acquired by Sam or his company with funds gifted to him by Salvatore. As a result, I order that all CPLs registered by the Plaintiff against any properties owned by Sam, or his companies be discharged.
Costs
202The Defendants shall have 15 days to make submissions on costs, not exceeding 15 pages. The Plaintiff shall have 15 days to respond (not exceeding 15 pages), and the Defendants shall have 10 days to reply.
Mr. Justice Robert Smith
Date: July 5, 2022
Schedule “A”
Funds given Sam Falsetto and use of lines of credit
Date
Amount
Source
Information from Peter Crowe
November 3, 2010
$ 475,000.00
Bank draft
Purchase of 376 Wilmont
August 16, 2011
$ 225,000.00
Line of credit 00086-28-44532
Purchase of 353 Whitby and 231-233 Carleton on August 15.
September 29, 2011
$ 125,000.00
Line of credit 00086-28-36130
Purchase of 1546 Claymor
January 3, 2012
$ 100,000.00
Chq # 050, CIBC 6139
Cashflow for construction
January 31, 2012
$ 350,000.00
Chq # 005 from CIBC account 6139.
Purchase of 348 Winona
April 9, 2012
$ 200,000.00
Chq # 023, CIBC 6139
Cashflow for construction
August 27, 2013
$ 650,000.00
Chq # 057, CIBC 2190
Purchase of 369 Winston
September 11, 2013
$ 650,000.00
Chq # 243, CIBC 2910.
Purchase of 566 Hilson
November 13, 2013
$ 500,000.00
Chq # 267, CIBC 2190
Pay down 43 Willard mortgage
March 14, 2014
$ 100,000.00
Bank draft, CIBC 2910
Deposit for Westview, returned to Falsetto Homes
April 2, 2014
$ 100,000.00
Chq # 305, CIBC 2910.
Cashflow for construction
April 15, 2014
$ 100,000.00
Chq # 310, CIBC 2910.
Cashflow for construction
May 14, 2014
$ 95,000.00
CIBC 2910
Pay down line of credit from CIBC 2910
July 2, 2014
$ 1,000,000.00
GIC
Deposits on Cartier, Bronson, Clarence, purchase of Cartier
July 29, 2014
$ 50,000.00
Chq # 327, CIBC 2910.
Bronson Ridge Apartments Inc.
July 30, 2014
$ 1,750,000.00
GIC
200 Bronson
August 8, 2014
$ 336,000.00
1536 and 1540 Skeena
September 30, 2014
$ 2,010,000.00
GIC
222 Clarence
November 24, 2014
$ 1,300,000.00
GIC
99 Cartier
June 3, 2015
400,000.00
Sam Falsetto/Falsetto Homes
Income taxes
June 16, 2015
$ 110,000.00
Chq # 385, CIBC 2910.
Expenses on 99 Cartier
July 2, 2015
$ 100,000.00
Chq # 390, CIBC 2910.
Cashflow, helped with income tax.
July 9, 2015
750,000.00
Sam Falsetto/Falsetto Homes
Income taxes
July 24, 2015
167,387.42
Sam Falsetto/Falsetto Homes
Income taxes
February 11, 2016
$ 14,147.04
Chq #419, CIBC 2190.
Cartier expenses - Joule Windows and Doors
October 31, 2016
130,000.00
Sam Falsetto/Falsetto Homes
Repay line of credit
October 31, 2016
125,000.00
Sam Falsetto/Falsetto Homes
Repay line of credit
COURT FILE NO.: CV-17-73750
DATE: 2022/07/05
ONTARIO
SUPERIOR COURT OF JUSTICE
Salvatore Falsetto
Plaintiff/Moving Party
– and –
Salvatore Fillipo Falsetto a.k.a. Sam Falsetto and Falsetto Homes Inc., 99 Cartier St. Apartments Inc., Clarence Street Apartments Inc., and Bronson Ridge Apartments Inc. and Canadian Imperial Bank of Commerce
Defendant/Responding Party
REASONS for decision
Justice Robert Smith
Released: July 5, 2022