COURT FILE NO.: CV-21-00664182-00ES

DATE: 2022-06-28

SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: The Estate of Celeste Dos Santos Deceased, by the Proposed Litigation Administrator, Rui Santos, Applicant

AND:

John Santos, Patricia Popovich and Luis Santos, Respondents

BEFORE: Penny J.

COUNSEL: Joseph Figliomeni and Quinn Giordano for the Applicant

Marshall Reinhart for the Respondents John Santos and Patricia Popovich

Luis Santos on his own behalf

HEARD: June 21, 2022

reasons for decision

Overview

[1] Celeste Dos Santos was the mother of three adult children: Rui, Luis and John Santos. She died in 2013 at age 85. In 2021, Rui commenced litigation concerning the administration of Celeste’s estate.

[2] In his application Rui seeks orders:

(a) declaring that the property municipally known as 68 Roxton Road, Toronto (“Roxton”), of which John has been the registered owner since 2001, is an asset of Celeste’s estate on the basis of a resulting trust;

(b) appointing Rui as litigation administrator for Celeste’s estate;

(c) vesting title of Roxton in Rui in his capacity as litigation administrator of the estate;

(d) directing John to make application to pass his accounts as de facto power of attorney of Celeste’s property; and

(e) requiring John to serve and file with the court a sworn statement of the nature and value, at the date of death, of each of the assets that were owned solely, jointly, or beneficially by Celeste, including any policy of life insurance.

[3] The main issue in this application is the ownership of Roxton. Rui and Luis maintain that when Celeste transferred title to Roxton to John in 2001, it was her intention that John would hold title in trust for her and that, when Celeste died, her estate would become the beneficial owner. Rui and Luis rely on the principle of a resulting trust and the attendant evidentiary presumption. John accepts the presumption of a resulting trust but maintains that the evidence supports the conclusion that Celeste intended to give Roxton to him on the basis that she would continue to live there and John would look after her personal and financial affairs until her death.

[4] As I will explain below, I find, based on all the available evidence, that the transfer of Roxton to John in 2001 was intended to be a gift and that, consistent with Celeste’s intention and reasonable expectation, John fulfilled his undertaking to live with and look after Celeste at Roxton in her old age. This conclusion makes the relief related to the appointment of a litigation administrator, and vesting title to Roxton in the administrator, moot.

[5] I also find that Rui’s 2021 application for an order requiring John to pass accounts for his management of Celeste’s financial affairs before she died is out of time. In any event, it is a request which is now incapable of performance due to the unjustified delay in the commencement of Rui’s application for this relief. Further, there is no prima facie evidence of any impropriety in John’s management of Celeste’s affairs. As such, it would be unreasonable and unfair to require John to perform the requested accounting.

[6] Because John promised to provide his brothers with a statement of his mother’s assets and liabilities at the date of death, he should fulfill this undertaking. With the exception of this minor issue, the application is dismissed with costs.

Background

[7] Celeste and her husband Joaquim came to Canada from Portugal in 1968. Neither of them could speak English. Celeste could not read or write in either English or Portuguese. Joaquim worked in construction and Celeste worked as a house cleaner. Together, they saved enough money to purchase Roxton. Roxton had two units, a three-bedroom unit on the main and basement levels and a two-bedroom upper level. The upper level was rented out to a tenant. When the family first moved into Roxton, all three brothers lived there with their parents; John was about two years old, Luis was 12 and Rui was 17. In 1982, at the age of 28, Rui bought and moved into a home of his own. Luis moved out of Roxton in 1992 when he was 32 years old. John has lived in Roxton continuously since the age of two.

[8] Joaquim died in 1995. Celeste was the sole beneficiary of his estate. Roxton was paid for in full and free of any encumbrances.

[9] John was age 26 in 1995, unmarried and still living in Roxton with Celeste. In 1997, John married Patricia, who moved into Roxton with John. Patricia and John continued to live with and care for Celeste until she died. This is where they still live to this day.

[10] Joaquim and Celeste also owned property in Portugal. Over the course of time, this property was expropriated by Portuguese authorities and compensation was paid. This happened in about 2005. Most of the proceeds were gifted by Celeste to Rui and Luis in equal shares (about $96,000 each). A small portion was (apparently) retained by Celeste. John received nothing from this asset.

Analysis

68 Roxton Road

[11] All parties agree that in 2001, the three brothers met with their mother to discuss a plan for ensuring that Celeste would continue to receive the care and assistance she required to carry out her daily tasks and manage her financial affairs. It is common ground that Celeste was competent until her death in 2013, although she spoke no English and could not read or write. She was healthy and strong in 2001 but her physical health declined as she got older. While the three brothers all agree that there was a meeting in 2001, their views of what was “agreed” upon at that meeting vary significantly. In brief:

• John says it was agreed that Celeste would transfer Roxton to him as his own, on the understanding that she would continue to live there and that John and Patricia would continue to be her main supports and take principal responsibility for looking after her in her old age.
• Rui says that Roxton was transferred to John in 2001 in trust merely to make it easier for him to manage Celeste’s affairs. This was on the understanding that, when Celeste died, there would be an accounting which reflected what Rui and Luis ultimately received from Celeste from the proceeds of the expropriation and some unspecified adjustment paid by John to Rui and Luis for keeping Roxton.
• Luis says John was not to get title to Roxton at all and that it came as a complete shock to him when he discovered, allegedly for the first time in 2020 (seven years after Celeste died), that title to Roxton had been transferred to John in 2001. Luis agrees in substance with Rui that there was supposed to be some kind of accounting under which John would pay Rui and Luis a fair, to be determined, amount if he wanted to keep Roxton once Celeste died.

[12] One thing the three brothers agree on is that John was to open a joint account with Celeste into which Celeste’s income would be deposited. This was to facilitate payments by John on Celeste’s behalf because she spoke no English and did not read or write. There is also no dispute that this is exactly what happened.

[13] There is no written record of the 2001 meeting of any kind. Apart from the different recollections, all we know is what actually happened subsequent to that meeting.

[14] There is no dispute about the fact that, in 2001 after the family meeting, Celeste executed a deed of transfer conferring, without qualification, title to Roxton on John for natural love and affection and two dollars. John’s evidence is unchallenged that his mother met privately with a lawyer at the time the transfer was executed.

[15] Apart from the deed of transfer itself, however, there is no corroboration for any of the statements, agreements, intentions or understandings attributed to Celeste by any of the parties to this proceeding, which includes Rui, Luis and John. Given that Celeste has died and is unable to state her intentions for herself, therefore, I must look to the other objective, proven facts surrounding the transfer and its consequences to determine Celeste’s true intention.

[16] I find, as a fact that, following the family meeting, in 2001:

• Celeste unreservedly transferred title to Roxton to John by deed of transfer.

[17] I also find that, since this transfer, John:

• lived at Roxton with his wife and acted in a manner consistent with his, or his and his wife’s, beneficial ownership.
• in 2003, transferred title to Roxton from himself personally to joint tenancy with himself and Patricia, his wife.
• paid all carrying costs of Roxton such as taxes, utilities and the like.
• oversaw and paid for most repairs and improvements to Roxton.
• received the rent from the tenants at Roxton and managed the rental property.
• took primary responsibility for the daily care of Celeste until her death, including providing companionship, accompanying her to medical and similar appointments, and ensuring the provision of food, clothing, incidentals, outings and the like.
• encumbered Roxton to raise funds to satisfy personal financial obligations, mostly related to debts owed by him to CRA.

[18] There is no evidence that any of this was concealed or done in secret. There is no evidence that anyone, including Celeste, ever complained about John’s obligations or rights to do any of these things. There is no evidence that, prior to the commencement of this litigation in 2021, Rui or Luis ever questioned John’s management of Roxton, the rental income or the joint account with his mother. There is no evidence that John was anything less than fair and honest in connection with his management of Celeste’s finances, or anything less than attentive and generous in his care of his mother until her death in 2013.

[19] I further find as a fact that, in about 2005, Rui and Luis received substantially all of the proceeds from the expropriation of Celeste’s Portugal property, that John received nothing from that asset and that John was not privy to any of the payment arrangements by Celeste to his brothers in connection with Celeste’s distribution of these proceeds.

[20] I also find as a fact that, after 2005 but prior to the initiation of this litigation in 2021, neither Rui nor Luis ever raised with John the concept that, although they had received essentially all the proceeds from the expropriation of Celeste’s property in Portugal during Celeste’s lifetime, John would be obliged to account for the Roxton property and potentially make an “equalization” payment to them based on current market value when Celeste died.

[21] Finally, I find as a fact that the brothers were until very recently, unaware that Celeste had a will (it was originally a joint will with Joaquim). The will was only discovered in February 2022. The will, executed on November 20, 1989, provides for an equal distribution of Celeste’s estate to her three sons. There is no mention of Roxton, any properties in Portugal or any other specific assets.

[22] It is common ground between the parties that the presumption of a resulting trust set out by the Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, applies in this case. It should not be presumed that an elderly parent is making a gift each time he or she puts the name of an assisting child on an asset. The presumption that accords with this social reality is that the child is holding the property in trust for the ageing parent, to facilitate the free and efficient management of that parent’s affairs. The presumption that accords with this social reality is, in other words, the presumption of resulting trust: Pecore, paras. 34 and 36.

[23] The presumption of resulting trust will determine the result where there is insufficient or unpersuasive evidence to rebut it on a balance of probabilities. This is especially true when the transferor is deceased and thus unable to tell the court of her intention in effecting the transfer: Pecore, paras. 23 and 44.

[24] Nevertheless, there are situations where a transfer between a parent and an adult child will have been intended to be a gift, and it is open to the party claiming that the transfer was a gift to rebut the presumption of resulting trust by bringing forward sufficient evidence to support their claim. The evidence required to rebut the presumption of resulting trust is evidence of the transferor's intention to gift the transferred property on the balance of probabilities. The court must weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. The presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities: Pecore, paras. 41 to 44.

[25] The Court of Appeal has observed that reliance on the presumption of resulting trust has diminished because the courts are now first examining all the evidence to determine the transferor’s intent. This entails examining the evidence in its entirety and basing findings regarding intention on all the facts. Only where the evidence itself is unclear does reliance on the presumptions become necessary: Saylor v. Brooks (2005), 2005 CanLII 39857 (ON CA), 261 D.L.R. (4th) 597 (Ont. C.A.), at para. 24.

[26] To establish a legally valid gift, which will rebut the presumption of resulting trust, three elements must be established: (1) an intention to make a gift on the part of the donor, (2) an acceptance of the gift by the donee, and (3) a sufficient act of delivery or transfer of the property to complete the transaction. Rui and Luis do not dispute that (2) and (3) are established on the facts of this case. The issue is solely one of determining Celeste’s intention from all the evidence.

[27] Applying these principles to this case, therefore, the court must act on such a preponderance of evidence as to show whether the conclusion John seeks to establish is substantially the most probable of the possible views of the facts: Clark v. The King (1921), 1921 CanLII 603 (SCC), 61 S.C.R. 608, at p. 616.

[28] As I will explain below, the conclusion which John urges upon the court is the most probable of the possible views of the facts.

[29] When asked in cross examination what he thought would happen to Roxton when his mother passed away, Rui replied “we never discussed that. I thought it would be divided by the three sons” (emphasis added). Later, he admitted “I always thought my brother [John] should get a bit more” (emphasis added) because he looked after Celeste and the property.

[30] Rui’s assertion that title to Roxton was transferred to John to make it easier for John to look after Celeste makes no sense. There was no need for John to have title to Roxton to look after the property or to pay taxes, utilities, etc. There was no need to borrow against the house, and even if there were, title did not need to be in John’s name in order for Celeste (if she needed access to more money) to do so. Rui admitted all of this in cross-examination.

[31] Luis’s argument that John was never supposed to get title to Roxton at all and that, on Celeste’s death, John would “pay what he owed us” is completely uncorroborated and inconsistent with Rui’s evidence, not to mention John’s.

[32] I find Rui and Luis’s evidence, in general, to be vague and impressionistic. They make many assertions about what they “thought”, what they “understood” and what they assumed or expected to be the arrangement with their mother. There are very few details and there is no support or corroboration for anything they now say.

[33] I accept that the deed of transfer itself, although it is some evidence of Celeste’s intentions in 2001, is not, standing alone, sufficient to displace the presumption of a resulting trust. However, the deed of transfer is not the only evidence supporting the inference of Celeste’s intention to give Roxton to John as his own.

[34] Evidence of the surrounding circumstances supports the inference that Celeste intended John to have Roxton. In particular, I rely on the following facts for this inference:

• in 2001, Rui and Luis lived in their own homes. John still lived with Celeste at Roxton and had done so since he was two years of age.
• after Joaquim’s death, John (and, later, John and his wife Patricia) took primary responsibility for looking after Celeste and her affairs. All three continued to live together in Roxton until Celeste’s death.
• the proceeds from the expropriation of Celeste’s Portugal property were largely given to Rui and Luis. John knew nothing about the details of Celeste’s transfers of these funds to his brothers at the time.
• the only evidence of value of Roxton in 2001 is John’s evidence that it was worth about $330,000. Each of Rui and Luis received approximately $96,000 from Celeste as a result of the Portugal expropriation; that is, an amount representing roughly a third of the 2001 value of Roxton.
• in contrast to the deed of outright transfer of Roxton to John, John and Celeste had a joint account to hold Celeste’s cash from which her expenses were paid.
• John collected the rent from the tenant at Roxton. No one ever took issue with this until 2021 when this litigation was commenced.
• John transferred title to himself and Patricia as joint tenants in 2003. This transfer was registered on title. No one ever took exception to this transfer until 2021.
• John encumbered Roxton in order to pay personal debts. These mortgages were registered on title. No one ever took exception to those mortgages until 2021.

[35] Rui relies heavily on the decision of Code J. in Reid Estate v. Reid Estate, 2010 ONSC 2320, 57 E.T.R. (3d) 35, as having similar facts. In Reid, at para. 135, Code J. found it unnecessary to rely upon the presumption of resulting trust because the facts clearly established that the transferor had not intended to make a gift. As Pecore makes clear, the determination of transferor intention must be determined on a case by case basis having regard to all of the evidence. While some facts in Reid are similar to this case, many others are not. The transfer in Reid was in joint tenancy, not outright, and the clear, corroborating evidence was that this transfer was done to save probate fees. There was also, in Reid, a great deal of evidence about the transferor’s larger estate planning objectives, all of which was inconsistent with an intention to make an inter vivos gift to one person. There is no similar evidence in this case.

[36] The evidence of Celeste’s recently discovered will is entirely neutral. The will neither contemplates the Portugal property nor Roxton. If these assets of Celeste were gifted inter vivos, they would no longer make up part of Celeste’s estate. The existence of a will made in 1989 is evidence of certain intentions of the testator as to the disposition of her estate after death. But the will is essentially meaningless in the context of Celeste’s intentions to make inter vivos gifts to her sons in 2001 or thereafter. Whatever intentions she had in 2001 arose after Joaquim died; her other life circumstances had also changed considerably since 1989. There is nothing inconsistent between the 1989 will and Celeste’s intentions to make inter vivos gifts to her sons in 2001 or 2005.

[37] For all these reasons and having regard to all the available evidence, I conclude, on a balance of probabilities, that Celeste intended to give Roxton to John by her deed of transfer in 2001. This evidence, when viewed as a whole, rebuts the presumption of a resulting trust. I find John is the legal and beneficial owner of Roxton. This determination renders Rui’s application to be appointed as litigation administrator for Celeste’s estate and vesting title of Roxton in the litigation administrator moot.

The Other Relief Sought

[38] Rui and Luis raised no specific issues about John’s ownership of Roxton, or his management of Celeste’s affairs, until 2020, and commenced no legal proceedings until 2021. Celeste died in 2013. Rui and Luis try to explain this eight-year delay on the basis that John claimed in 2013 to be stressed out by his financial difficulties and needed time to settle his affairs. I find this explanation highly questionable and unsatisfactory to support taking no action whatsoever for eight years. While John concedes that the issue of his title to Roxton is likely subject to the 10-year limitation period under the Real Property Limitations Act, R.S.O. 1990, c. L.15, there is no explanation for why other aspects of Celeste’s estate, and John’s management of Celeste’s affairs during her lifetime, were not pursued earlier.

[39] Rui argues that an application to pass accounts does not fall within the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, and is not subject to the basic two-year limitation period set out in s. 4. Rui claims that John “has a statutory obligation to pass accounts” pursuant to section 42(1) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30. Rui also relies on Armitage v. Salvation Army, 2016 ONCA 971, 406 D.L.R. (4th) 563, and Wall v. Shaw, 2018 ONCA 929, 43 E.T.R. (4th) 1, to argue that the Limitations Act does not apply to their application to require John to pass accounts.

[40] Rui has seriously misread the SDA and both these cases which, in my view, confirm rather than exclude the application of the Limitations Act to the commencement of a procedure to require a passing of accounts.

[41] Contrary to Rui’s argument, the SDA does not impose upon an attorney an “obligation” to pass accounts. The legislation is quite explicitly permissive, unless an interested party obtains, on application for this relief, an order from the court requiring the attorney to pass accounts. Section 42 provides that the court “may, on application, order that all or a specified part of the accounts of an attorney or guardian of property be passed” and that an attorney “may apply to pass the attorney’s accounts”.

[42] In Armitage, the Court of Appeal concluded that an application by an attorney to pass accounts is not a “claim” and is therefore not subject to the Limitations Act. The issue in dispute in that case was whether, prior to the death of the incapable person, the attorney had to apply for compensation annually. Armitage has no application, however, to an originating process brought for the purpose of compelling an attorney to pass accounts. Such an application, in my view, is clearly a “claim” within the meaning of the Limitations Act.

[43] In Wall, the question was whether a notice of objection to an application to pass accounts was caught by s. 4 of the Limitation Act. Both the application judge and the Court of Appeal (sitting as the Divisional Court) held it was not, on the basis that a notice of objection does not commence a proceeding to pass accounts (or, for that matter, to require a party to pass accounts). Neither Armitage nor Wall, explicitly or by implication, support Rui’s argument that the Limitations Act does not apply to his application for an order requiring John to pass accounts.

[44] In any event, John’s unchallenged evidence is that he no longer has any records of his mother’s financial affairs prior to her death, given that it was nine years ago. Leaving aside the question of limitation periods, it is simply unfair and unreasonable, in the absence of a good explanation for a delay of eight years, to expect John to prepare detailed accounts relating to events that took place so long ago. This is particularly so where there is no prima facie evidence of any wrongdoing on John’s part.

[45] John did promise his brothers he would provide a statement of his mother’s assets and liabilities, to the best of his ability now, as of the date of her death. Because he promised to do so, he should make good on that undertaking.

Conclusion

[46] The application for orders (a) declaring that the property municipally known as 68 Roxton Road, Toronto, is an asset of Celeste’s estate on the basis of a resulting trust; (b) appointing Rui as litigation administrator for Celeste’s estate; and (c) vesting title of Roxton in Rui in his capacity as litigation administrator of the estate, is dismissed.

[47] The application for an order directing John to make application to pass his accounts as guardian of Celeste’s property is also dismissed.

[48] John shall, within 60 days, provide to his brothers a sworn statement of the nature and value, at the date of Celeste’s death, of each of the assets that were owned solely, jointly, or beneficially by Celeste, including any policy of life insurance.

Costs

[49] Both sides agreed that all-inclusive costs of $26,000 should be awarded to the successful party. John is therefore entitled to costs from Rui and Luis in that total amount.

Penny J.

Date: June 28, 2022