Court File and Parties

COURT FILE NO.: CV-20-84458-ES (Ottawa)

DATE: 20220728

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sandra MacDonald Lamarche and Cynthia MacDougall, Applicants

AND:

Donna Ferguson and Joan McCosham, Respondents

BEFORE: Graeme Mew J.

COUNSEL: Michael N. Bergman and Patrycja Nowakowska, for the Applicants

Kathleen MacDormand and Jason Dutrizac, for the Respondents

HEARD: 12 April 2022, at Ottawa (by videoconference)

ENDORSEMENT

[1] Four siblings are embroiled in a seemingly endless dispute concerning their late mother, Alice Grace MacDonald.

[2] Alice and her late husband Donald MacDonald founded and operated a successful construction business. Donald passed away in 2005.

[3] Alice MacDonald died on 25 March 2016. She had made a will on 31 August 2000 which appointed her daughters, the respondents, Donna Ferguson and Joan McCosham, as her trustees and executors.

[4] On 30 January 2008, Alice granted a continuing power of attorney for property in favour of the respondents. At that time, unbeknown to the applicants, who had previously held their mother’s power of attorney for care, Alice also prepared a new power of attorney for care, appointing the respondents in place of the applicants.

Procedural History

[5] On 16 August 2016, as a result of their growing concerns regarding the management of Alice’s finances, and with the respondents’ fitness to serve as attorneys, the applicants commenced an application in Cornwall (the “2016 Application”) seeking the following relief:

a. removal of Donna Ferguson and Joan McCosham as trustees and executors of the estate of Alice MacDonald and replacing them with a court-appointed trustee;

b. passing of the respondents’ accounts as powers of attorney and trustees and executors for Alice MacDonald;

c. disclosure of all books and records relating to the estate of Alice MacDonald since 2008; and

d. directions regarding the proper administration of the estate of Alice MacDonald.

[6] On 26 May 2017, the 2016 Application was resolved in its entirety, save for the issue of costs. Leroy J. ordered production of Alice MacDonald’s banking records from 1 January 2008 to 1 December 2012 at the expense of the applicants, but otherwise dismissed the application.

[7] On 12 June 2017, the respondents filed an application for a certificate of appointment of estate trustee with a will. No notice of objection to this application was filed by the applicants.

[8] On 28 December 2017, the applicants delivered a notice of return of application which, in addition to notifying a return date for the issue of costs to be dealt with, advised that an issue had arisen with respect to the “breadth” of the previous judgment.

[9] The issue of costs of the 2016 Application was resolved by Leroy J. on 23 April 2018, at which time he ordered that the applicants should pay the respondents $25,000 and the balance of the respondents’ costs in the amount of $23,528.20 should be paid out of Alice’s estate. The order also recorded that a consent would be executed by the respondents authorising the applicants to request the banking records of Alice MacDonald and that any documents so obtained would be produced to the respondents.

[10] On 15 February 2019, the estate trustees (respondents) brought an application to pass accounts for the period from 25 March 2016 to 16 June 2018. On 13 March 2019, the applicants filed a notice of objection to the accounts. However, after the production of further information and financial documents requested by the applicants, they consented to a judgment on passing of accounts on 18 April 2019. The estate accounts for the period from 25 March 2016 to 16 June 2018 were, accordingly, passed. Paragraph 6 of the judgment also provided that:

6. THIS COURT ORDERS that this matter is concluded and the estate may now be distributed subject to the payment of any outstanding liabilities as set out in the accounts filed herein.

[11] The application to pass accounts was made in a separate application court file number CV-19-013 (Cornwall). The previous orders were made in relation to court file number CV-16-084 (the 2016 Application). As I will explain later, I am satisfied that the term “this matter” encompassed all aspects of the estate litigation between the parties.

This Application

[12] The present application was commenced on 14 September 2020. The amended notice of application seeks:

a. an order for the accounting of the Estate and, in particular, the still unaccounted sum of $393,755 outstanding; and

b. an order for the respondents to distribute any outstanding balance of the estate.

[13] According to the amended notice of application, at the beginning of 2019, the applicants began to suspect that the accounting of the estate had omitted to account for a significant sum of money. Due to their suspicion, Ms. MacDonald Lamarche contacted and retained the services of Robert Deacon, CPA, to produce a forensic accounting report to determine whether their suspicions were correct.

[14] The resulting report is dated 16 April 2019. According to the report, there was $461,040 could not be accounted for, and such sum had not been distributed based on the conditions set out in Alice’s will.

[15] On 13 January 2022, the report of Mr. Deacon was updated to narrow the focus of the questionable transactions solely to unexplained activities, namely: (1) transfers in the amount of $228,820.50 from a joint investment account; and (2) a series of questionable large sum withdrawals from joint accounts in the amount of $126,734. The updated report states that in order to determine the whereabouts of the missing funds, the joint account statements for an account jointly held by the respondents would confirm what happened to the $228,820.50 worth of GIC’s transferred on 5 January 2011 from a Scotiabank investment account.

[16] The issues, as framed by the applicants at this juncture, are:

a. did the funds withdrawn and/or transferred from joint accounts held by the late Alice MacDonald and Ms. Ferguson during the respondents’ power of attorney over property, constitute resulting trusts, and as such are owed back to the estate’s beneficiaries, including the applicants; and

b. in light of the prior litigation between the parties, does this application touch on issues previously canvassed or adjudicated and as such “impinge” on the current application by virtue of issue estoppel or res judicata.

[17] The respondents say that everything that is now raised by the applicants has already been before the court. The power of attorney was not acted upon until 2012. Prior to that, Alice was managing her own affairs. If she chose to transfer funds from a joint account to an account held solely by Ms. Ferguson, that was her prerogative. They say there is no evidence of undue influence or other impropriety.

[18] According to the respondents, the judgment of 18 April 2019 closes the door on further litigation concerning the estate. At the passing of the accounts, the applicants had the opportunity to raise objections or concerns about the estate and to have them adjudicated. The purpose of the judgment was to provide finality so that the estate could be administered. The applicants had accepted the distribution of the estate following that order being made. There is no question of any fraud or other dishonesty. There is no new evidence that could not, with reasonable diligence, have been obtained in 2019. The respondents say that the applicants are now seeking an order for an accounting of the estate that has already been done. Concerns about the allegedly unaccounted for funds were raised and have been dealt with in the previous proceeding.

[19] The applicants counter that the issue of resulting trust was not before the court previously. Reliance is placed on the decision of the Supreme Court in Pecore v. Pecore, 2007 SCC 17 for the proposition that a presumption of a resulting trust applies to gratuitous transfers of property from a parent to an adult child.

Is This Application Barred?

[20] After hearing submissions, I reserved judgment on the issue of whether this application should be precluded on the basis of one or more of the following grounds:

a. res judicata;

b. issue estoppel/cause of action estoppel;

c. abuse of process; and

d. the judgment of 18 April 2019.

[21] Counsel for the applicants conceded that if I decide the case should proceed, it would likely make more sense for the issues to be adjudicated by way of a trial within the application, or by converting the current application into an action.

Analysis and Result

[22] The applicants rely on the report of Mr. Deacon dated 16 April 2019 as the basis for bringing this application. Both the scope of the application and the evidence of Mr. Deacon have subsequently narrowed; the former by an amended notice of application dated 17 February 2022 and the latter by the 13 January 2022 updated report.

[23] I note that Mr. Deacon’s reports are attached to affidavits of Ms. MacDonald Lamarche, and although described as “Expert” reports, neither of them is accompanied by an acknowledgment of expert’s duty (Form 53). It is well-established that where an expert report is relied upon in relation to a motion or application in which judgment is sought, the report should be in sworn form and should include a Form 53: Mitusev v. General Motors, 2014 ONSC 2342, at para. 83.

[24] More importantly, the original Deacon report is dated two days before the applicants consented to judgment which recited that “the estate may now be distributed subject to the payment of any outstanding liabilities as set out in the accounts filed herein”.

[25] According to the applicants, the 2017 hearing before Justice Leroy J. suffered from a lack of evidence – they say that neither the existence, nor identity of the account’s joint holder (Ms. Ferguson), nor the transfer activities, nor the identity of the recipient account holder were known to the applicants.

[26] While I would agree with the applicants that there was evidence which was not before Leroy J. that possibly could have been, and which might have influenced the exercise of his discretion, or prompted an assertion before him of the resulting trust arguments which the applicants now advance, the first Deacon report had not only been commissioned, but was hot off the press when the consent judgment of 2019 was entered into. Nowhere in the record is there an assertion that the applicants were unaware of the original Deacon report when they consented to a judgment seemingly ending it all.

[27] According to the applicants’ factum (para. 87):

It was only on April 16th, 2019, that the Expert Report revealed a number of questionable transfers and withdrawals – issues that could not have been raised in the prior proceedings.

[28] The applicants explain their assent to the 18 April 2019 judgment on the basis that the passing of accounts for a defined period – an informal procedure that is summary in nature (see Newell v. Newell, 2010 ONSC 5010, [2010] O.J. No. 3844, at para. 29) - was not focused on further examinations of the propriety of activities that took place prior to that period.

[29] Even if I were to accept all of the applicants’ arguments about the lack of transparency and the evidentiary deficits in the record before Leroy J., as well as the nature of the passing of accounts application, it would render the clear words and meaning of the 18 April 2019 consent judgment pointless if the applicants were to now be permitted to open up a new front in their ongoing sororal warfare with the respondents, notwithstanding that they had commissioned and received the original Deacon report before giving their consent.

[30] Nor do I accept the applicants’ argument that it was too late for them to raise their objections because of the strict time delays mandated by rule 74.14 (7) of the Rules of Civil Procedure. I might take a different view if there was evidence that an adjournment or an abridgment of time had been sought as a result of the updated Deacon report. But there is no such evidence.

[31] In my view, the only reasonable interpretation of the words “this matter is concluded and the estate may now be distributed subject to the payment of any outstanding liabilities as set out in the accounts filed herein”, which the parties agreed to insert in the judgment, is that the parties were recording that their litigation with each other was finished.

[32] Indeed, following the 18 April 2019 consent judgment, the respondents distributed and administered the estate in accordance with the judgment. The current application was not commenced until 28 months later.

[33] In these circumstances, it is not necessary for me to analyse the submissions on res judicata or estoppel. The application fails both on the basis of abuse of process and because it is foreclosed by the 18 April 2019 judgment.

[34] Enough is enough. The litigation over the estate of Alice Grace MacDonald should end now.

[35] The application is dismissed.

Costs

[36] I am presumptively of the view that the applicants should pay the respondents’ costs. If the parties cannot agree on costs, counsel for the respondents should notify me via my judicial assistant, Aimee McCurdy, at aimee.mccurdy@ontario.ca by no later than 12 August 2022 (in which event I will give directions regarding the delivery of written submissions and cost summaries).

Mew J.

Date: 28 July 2022