COURT FILE NO.: CV-20-994-00E

DATE: 2022/08/31

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ERICA HUMPHREYS-SAUDE Applicant

– and –

FILOMENA PAVAO IN HER PERSONAL CAPACITY AND IN HER CAPACITY AS ESTATE TRUSTEE FOR THE ESTATE OF ROY SAUDE AND THE ESTATE OF HELENA SAUDE, DECEASED Respondent

Matthew T. Kelly, Counsel for the Applicant

Anthony J. Gabriele, Counsel for the Respondent, Filomena Pavao

HEARD: February 24, 2022 by Video-Conference

SMITH, J.

reasons for judgment

A. BACKGROUND

[1] Roy Saude died intestate on November 26, 2019. Mr. Saude led what was referred to in the evidence as a “complicated life” which had been marred by addiction to drugs. At the time of his death, Mr. Saude lived in Cambridge in a rented apartment with his elderly mother, Helena Saude, who had cared for him for years.

[2] Mr. Saude was a man of modest means but, in September of 2019, he had the good fortune of winning $77,777 in an instant lottery.

[3] Mr. Saude’s will named his daughter, Erica Humphreys-Saude (the “applicant”), as his sole beneficiary. The will also named his mother as the primary estate trustee and, should Mrs. Saude be unable or unwilling to act, his sister, Filomena Pavao (the “respondent”), as the secondary trustee. The evidence suggests that Mrs. Saude assumed the responsibility of administering the estate and that, to some greater or lesser extent, was assisted in that regard by the respondent.

[4] At the time of Mr. Saude’s death his CIBC bank account had a balance of $57,548. By January 27, 2020, that balance had fallen to $37,249. This application concerns the $20,000 difference and, most importantly, whether the respondent bears any responsibility for any money which was dealt with in breach of the trust undertaken by Mrs. Saude even though the respondent was never named as estate trustee. The applicant argues that the respondent was a trustee de son tort or, in the alternative, provided knowing assistance to Mrs. Saude or, in the further alternative, was in knowing receipt of estate property. The respondent denies any liability.

[5] The applicant also seeks orders and directions respecting its case against the estate of Mrs. Saude.

B. THE EVIDENCE

1. Introduction

[6] Most of the relevant facts in this matter occurred on or before February 28, 2020, the day on which the CIBC froze Mr. Saude’s account (it seems that Mrs. Saude did not take steps to advise the bank that Mr. Saude had died or to have an estate account created). Thereafter, there was no relevant activity in that account. Furthermore, on April 1, 2020, Mrs. Saude died and, by order of Sloan J. dated September 21, 2020, which order was made with the consent of the respondent, the applicant’s mother and Mr. Saude’s former wife, Rhoda Humphreys, was named estate trustee.

2. A Chronology

[7] Mr. Saude died on November 26, 2019.

[8] Shortly thereafter, the respondent took Mrs. Saude, who was 81 years old and did not drive, to her bank, the Royal Bank (“RBC”), so that she could retrieve Mr. Saude’s will from her safety deposit box.

[9] On December 10, 2019, Mr. Saude’s remains were buried and family members attended a breakfast at a deli in Cambridge. On December 16, 2019, a memorial, or celebration of life, was held at the Oriental Club in Cambridge.

[10] Shortly after Mr. Saude’s death, the applicant learned from sources other than Mrs. Saude and the respondent that she was the sole beneficiary of Mr. Saude’s will. She testified that, having learned that information, but hearing nothing from Mrs. Saude, she made multiple requests of Mrs. Saude to provide information about the estate and its administration to her. In response, according to the applicant, Mrs. Saude “would not disclose anything to me whatsoever.”

[11] Frustrated, but not yet suspecting any wrongdoing, the applicant retained counsel who, on January 17, 2020, wrote to Mrs. Saude to demand information, including a copy of the will. The first response to counsel’s letter came on January 23, 2020, in the form of a text message to the applicant from the respondent. She asked the applicant what she wanted Mrs. Saude to do. The applicant responded that her counsel’s letter was self-explanatory. The text exchange continued over a number of days (ending January 28, 2020) and at one point the applicant proposed that Mrs. Saude could provide the requested information to counsel or that she would be willing to come and pick it up. It is apparent in the text exchange that the respondent was playing at least an intermediary role between the applicant and Mrs. Saude.

[12] Eventually, at some point after this exchange, documents were provided by Mrs. Saude. Those documents included the will and a bank statement for Mr. Saude’s bank account. That bank statement showed a decrease in the balance of the account by roughly $20,000 since Mr. Saude’s death. Upon further inquiry and a request for an accounting, Mrs. Saude provided a handwritten list of expenses which had been incurred in relation to Mr. Saude’s estate. It is not contested that this list was prepared at the direction of Mrs. Saude in the presence of the respondent and her husband, the latter of whom transcribed what Mrs. Saude dictated. The list was provided to the applicant unaccompanied by any receipts or other supporting documentation.

[13] The list reads as follows:

EXPENCES [sic]

CREMATION 1,717.60

CREMATION 550.00

BURIAL PLOT 518.67

MEMORIAL STONE 3,264.57 NOT PAID YET

CELEBRATION OF LIFE 1,000.00 COSTCO

500.00 CLUB

500.00 LIQUOR

500.00 BAKERY

200.00 MISCALENOUS [sic]

OWED MOTHER 10,000.00

ROGERS 3,000.00 ROGERS

DEBTS OWED 3,000.00

THE DAY ROY DIED THE POLICE CONFISCATED HIS CELL PHONE CASH AND A BIG BAG OF WHITE POWDER, MAYBE YOU SHOULD GO TO THE POLICE TO GET IT BACK SO YOU CAN SELL IT.

[14] This inadequate accounting, and its obvious mean-spiritedness,[^1] did not inspire confidence and, after Mrs. Saude died, the applicant took steps to have her mother, Ms. Humphrey, installed as the new estate trustee.

[15] Ms. Humphrey obtained bank statements and reviewed them. Those statements revealed that Mr. Saude’s debit card was used after his death. Between November 28, 2019, and January 22, 2020, the card was used 16 times at automated teller machines (“ATMs”) to make cash withdrawals ranging in size from $400 to $1,000 and totaling $13,300.00.

[16] Mr. Saude’s debit card was also used 24 times between December 2, 2019, and January 10, 2020, to make retail purchases totalling $6,559.09. The applicant is satisfied that some of these purchases were legitimate estate-related expenses and does not challenge them: $518.67 paid to the cemetery and $1,717.60 paid to a crematorium. Payments totalling $4,322.82, however, remain in issue. Those payments may be summarized as follows:

Costco $1,000.12 (total of purchases made on 3 occasions)

Euro Pastry & Bakery $ 591.24

Rogers $ 525.14

LCBO $ 448.25

Giant Tiger $ 447.32 (total of purchases made on 2 occasions)

Food Basics $ 352.88 (total of purchases made on 3 occasions)

Zehrs $ 311.63 (total of purchases made on 4 occasions)

50’s Deli $ 293.51

Dollarama $ 158.10 (total of purchases made on 3 occasions)

Esso $ 92.56

Swiss Chalet $ 65.11

Beer Store $ 36.95

Total $4,322.81

[17] On February 8, 2020, a headstone was ordered from Superior Memorials for the deceased’s grave. On February 28, 2020, the respondent went to CIBC to get a bank draft drawn on Mr. Saude’s account. Although the bank did issue the draft (in the amount of $3,092.81), it appears that thereafter Mr. Saude’s account was frozen, the bank having become aware that Mr. Saude was deceased. As with the payments made to the cemetery and the crematorium, the applicant does not challenge this expense.

[18] Investigation revealed that a CPP death benefit cheque ($2,500.00) was issued to the estate of Mr. Saude and that the cheque was deposited to an account at RBC. Mr. Saude did not have an account at RBC. Mrs. Saude did. Following Ms. Humphreys’ inquiries, RBC eventually provided the estate with a bank draft in the amount of $2,500.00.

[19] None of Mr. Saude’s personal effects were ever provided to the applicant. While it is believed that he had a small list of possessions, the value of which did not exceed $2,000.00, some of those possessions were of significant sentimental value to the applicant. As she said in her evidence: “I now have nothing of my dad’s when it comes to anything physical.” In particular, a jacket which Mr. Saude wore regularly was “important” to the applicant.

[20] In the exchange of text messages, the respondent advised that the applicant would have to deal with Mrs. Saude directly respecting Mr. Saude’s personal effects. However, according to the respondent, Mrs. Saude later took Mr. Saude’s effects and distributed them among family members not including the applicant, the one person who was entitled to have them.

[21] After Mrs. Saude died, although the respondent says she looked among Mrs. Saude’s possessions for receipts relating to Mr. Saude’s estate, “they were nowhere to be found.”

3. The ATM Withdrawals

[22] With one exception, there is no supporting documentation showing the justification for any of the cash withdrawals from Mr. Saude’s account. In particular, there is no evidence that Mr. Saude actually owed his mother $10,000. The only evidence of this debt is the hearsay evidence that Mrs. Saude told the respondent that the debt existed. During her cross-examination, the respondent testified that she had no idea whether there actually was such a debt.

[23] The respondent said that Mrs. Saude claimed to have used some of the withdrawn money to satisfy Mr. Saude’s remaining drug debts. There is no admissible evidence that he had any such debts, or that Mrs. Saude paid them.

[24] In her evidence, the respondent testified that she saw Mrs. Saude hand an envelope to the manager of the Oriental Club on the day of the celebration of life for Mr. Saude. She did not see what was in the envelope but referred to the envelope when asked by counsel if the rental of the club’s hall had been paid for in cash. There is no receipt or other documentation respecting the rental, and there is no evidentiary support for the claim in the handwritten list that the “CLUB” was paid $500, assuming that this was a reference to the rental of the hall.

[25] The one exception to which I have referred is a receipt from Holy Cross Catholic Cremation Centre which indicates that $550.00 was paid in cash and which is initialed by Mrs. Saude.

[26] No other explanation is given for the withdrawal of cash from Mr. Saude’s account.

4. The purchases before December 10, 2019

[27] Between December 2 and December 9, 2019, Mr. Saude’s debit card was used 10 times to make purchases. Two of these expenses (payments made to the cemetery and to the crematorium) are not contested, but the remainder are. These purchases include purchases made at Giant Tiger (twice), Swiss Chalet, Costco, Dollarama, the LCBO, and Zehrs. There is also a payment made to Rogers.

[28] There are no receipts for any of these expenses.

[29] Nothing in the evidence justifies an expense at Swiss Chalet.

[30] The respondent testified that she did not know about all that was purchased at the various stores, but she believes that her mother purchased various items, including paper tablecloths, plates and cups, plastic cutlery, and other miscellaneous items for the celebration of life to be held on December 16, 2019. Those purchases were made at Costco, Dollarama and Giant Tiger. The respondent said that she was present when some of these purchases were made but did not know if she had been present for all of them.

[31] With respect to Zehrs, again, there is no receipt for the purchases made on December 4, 2019, and no explanation for how this expenditure was related to Mr. Saude’s estate.

[32] The respondent testified that the payment to Rogers was made by Mrs. Saude to pay off the respondent’s Rogers bill. This had nothing to do with Mr. Saude’s estate. Moreover, it also has nothing to do with the reference to Rogers on the handwritten list, a debt which was said to have been incurred by Mr. Saude on Mrs. Saude’s Rogers account but which, if it ever actually existed, was satisfied by means other than drawing on Mr. Saude’s account.

[33] On December 3, 2019, Mr. Saude’s debit card was used to make a purchase of $448.25 at the LCBO. The respondent testified that this purchase was for alcohol to be served at the celebration of life on December 16, 2019. However, the evidence of Ms. Humphreys was that there was a cash bar at the celebration of life, although she did testify that her former husband had been fond of port and that port had been available to people at the celebration free of charge. This evidence was uncontradicted by the respondent. Again, there is no accounting for any of this.

5. December 10. 2019

[34] Mr. Saude was buried on December 10, 2019. That day, following the burial, family members (including both the applicant and the respondent) had breakfast together at a restaurant in Cambridge. On that date, Mr. Saude’s debit card was used by Mrs. Saude to pay $293.51 at the 50’s Deli in Cambridge. There is no receipt or other document supporting this payment.

6. December 13 and 16, 2019

[35] The celebration of life was on December 16, 2019. On December 13, Mr. Saude’s debit card was used at Zehrs and Euro Pastry & Bakery. On December 16, purchases were made at Food Basics, Costco, Dollarama, Esso and the Beer Store.

[36] Although there is no receipt, the respondent testified that the expense at Euro Pastry & Bakery was for food served at the celebration of life. She said that Mrs. Saude lived across the street from the bakery and had placed the order herself on December 13. On December 16, with Mrs. Saude, the respondent picked up the order and took it to the reception.

[37] There is no receipt from Zehrs and no explanation for this expense.

[38] As for the purchases made on December 16, 2019, again, there are no receipts. The respondent said that some of these expenses may be related to the celebration of life, and that her mother often shopped for groceries at Food Basics. There is no explanation for the expenses at Esso or the Beer Store.

7. Purchases made after December 16, 2019

[39] On dates after the celebration of life, purchases were made at Costco, Food Basics (twice), Dollarama, and Zehrs (twice). There are no receipts for any of this and no justification for any of it in the evidence.

8. Ms. Saude’s fitness

[40] The applicant takes the position that Mrs. Saude could not have administered the estate herself unassisted and that the respondent provided that assistance. The applicant, supported by the evidence of Ms. Humphreys, says that Mrs. Saude was frail and suffered from various ailments, including heart and mobility issues, that Mrs. Saude did not drive, and that English was not her first language. The applicant testified that Mrs. Saude’s eyesight was poor and that, as a result, she used a remote for her television which was very large. The applicant testified that she did not think Mrs. Saude could have operated the keypad used for bank withdrawals and debit transactions without assistance.[^2]

[41] The respondent concedes that she did help by driving Mrs. Saude to the bank and to shops (Mrs. Saude’s driver’s licence was taken from her when she turned 80), and that she assisted with documents (Mrs. Saude could not read or write in English) and dealing with some issues, but she denied that she played any part in making decisions for the estate. She testified that Mrs. Saude was a strong-willed person, to the point of stubbornness, and that Mrs. Saude made all her own decisions, including all decisions respecting her son’s estate. The respondent is supported in this respect by affidavits from her daughter and her husband.

[42] The applicant conceded that she was able to communicate with and to understand Mrs. Saude.

[43] The respondent tendered a letter from a physician indicating that Mrs. Saude was of sound mind until her death. While this letter is not before me in an admissible form, all witnesses confirm that Mrs. Saude lived independently and cared for her adult son until his death. That death (from a heart attack), according to the respondent, was unexpected.

[44] I note that the applicant and Ms. Humphreys had limited contact with Mrs. Saude in the years preceding the relevant events, whereas the respondent was with her frequently.

[45] In all the circumstances, I cannot find that Mrs. Saude was incapable of administering the estate or of understanding matters of consequence respecting it.

[46] Of course, that does not mean that the respondent did not play a role. I turn now to the evidence on that topic.

9. The respondent’s role

[47] The respondent testified that she never wanted to have anything to do with the administration of Mr. Saude’s estate, that she never consented to having any such role, and that her strong-willed mother made all decisions respecting the estate until she died. It is clear, however, that the respondent did play a role in this matter.

[48] The respondent testified that she routinely drove her mother around town so that she could attend to errands. This was true in the period after Mr. Saude’s death. The respondent testified that she drove Mrs. Saude to the bank on more than one occasion, to Costco, and to other retail outlets. Sometimes she would pick up things for Mrs. Saude. This form of assistance began shortly after Mr. Saude died when the respondent drove Mrs. Saude to her bank to retrieve the will.

[49] On the evidence before me, the respondent was aware that Mrs. Saude was using Mr. Saude’s debit card after he died, both at ATMs and at stores. In her affidavit, she says that any such withdrawals or payments were made by or at the direction of Mrs. Saude. She testified that Mrs. Saude had the debit card before Mr. Saude died and that she kept it in her own wallet.

[50] There is no doubt that the respondent knew that the debit card was being used at Costco. The respondent testified that Mrs. Saude had no Costco membership but that she did. Accordingly, when purchases were made at Coscto (which occurred three times, each time in the respondent’s presence – although later in her evidence she said that others might have taken Mrs. Saude to Costco), the respondent’s Costco membership card was used so that purchases could be completed. The respondent says in her affidavit that Mrs. Saude “used my membership card because she did not have one. However, she is the one who provided payment using the debit card.”

[51] The respondent responded to the following questions on cross-examination:

Q. […] correct me if I’m wrong on this but my understanding is that at Costco if you are using somebody else’s membership card, like the person whose card is being used is the person who has to provide payment, is that correct?

A. That’s true, but the girl that I dealt with, I knew her. […] And I explained to her what we were doing and she said that that was fine.

Q. So the person that you dealt with allowed, allowed Helena to pay using the card from Roy’s account?

A. Yes.

[52] The respondent also knew that Mrs. Saude was withdrawing cash. In addition to being present for withdrawals, some of those withdrawals were made at drive through ATM’s. I note again that Mrs. Saude did not drive.[^3] Moreover, in her affidavit, the respondent says that “with respect to the various cash withdrawals, I can advise that I attended at the Bank with my mother to assist her in making withdrawals. However, any withdrawals were made on her instruction and direction. I am uncertain what she did with this money. However, I can advise that I did not spend any of this money” [emphasis added].

[53] The respondent testified that she was aware that Mrs. Saude was claiming to have made some of the withdrawals so that she could pay off drug debts incurred by Mr. Saude. The respondent’s affidavit indicates that Mrs. Saude had been contacted by people who scared her and that “I told my mother on multiple occasions that she should not be paying these people, but she said they were harassing her.” She testified in cross-examination that she did not advise the police about the harassment because she did not want to get involved.

[54] The respondent received the benefit of $525.14 when, according to her, Mrs. Saude used Mr. Saude’s debit card to pay the respondent’s Rogers bill. On this topic, the respondent says that she was contacted by Rogers while she was in the car with her mother. Mrs. Saude insisted on paying this bill for the respondent and did so that day at a Rogers store. The respondent said that she “had no idea this money was being paid from Roy’s account using his debit card.” She testified that “I will gladly give them that money, that wasn’t right, I agree 100 percent.”

[55] It is apparent that the respondent was also involved in funeral and related arrangements. For example, the respondent communicated with the City of Cambridge respecting costs associated with internment at the cemetery. The respondent’s name, address and signature appear on the invoice, and she concedes in her affidavit that she contacted the cemetery “to help my mother makes the arrangements” and that she took Mrs. Saude to the cemetery to make payment where, according to the respondent, “I expect she used Roy’s debit card.”

[56] The contract for the headstone is in the respondent’s name as purchaser and includes her husband’s email address. The order form also bears the respondent’s telephone number for contact purposes, although the respondent says (supported by evidence from her husband) that Mrs. Saude was present when this order was made and that the order represents Mrs. Saude’s decision. The respondent says she merely dealt with the documents and agreed to be a contact person as a matter of convenience. She concedes that she attended at the bank with a copy of the invoice from Superior Memorials so that the bank could pay Superior directly from Mr. Saude’s account.

[57] On the other hand, the funeral service contract is in Mrs. Saude’s name and bears her initials and signature. The cremation services contract also bears Mrs. Saude’s initials.

[58] The respondent also played the role of intermediary during the exchange of text messages in January 2020, and she and her husband were present when the handwritten list of expenses was created because Mrs. Saude could not read or write in English.

[59] Last, the respondent claims that she had nothing to do with the deposit of the CPP death benefit cheque, and there is no evidence to the contrary.

C. ANALYSIS

[60] The applicant alleges that there has been a breach of trust in this case and that both Mrs. Saude and the respondent were responsible for it. The law recognizes three ways in which this might be so for the respondent.

[61] First, a stranger to the trust may be liable for breach of trust where the stranger takes it upon herself to act as a trustee and to possess and administer trust property if she commits a breach of trust while so acting. This is the doctrine of “trustee de son tort.” Second, a stranger to the trust may be liable as a constructive trustee if she knowingly provides assistance to a trustee in the breach of the trust relationship. This is “knowing assistance.” Third, a stranger to the trust may be liable as a constructive trustee if she knowingly received trust property in her personal capacity in a breach of the trustee’s duty. This is “knowing receipt” (see: Air Canada v. M & L Travel Ltd., 1993 33 (SCC), [1993] 3 S.C.R. 787, per Iacobucci J., at pp. 808 – 810; Citadel General Assurance Co. v. Lloyds Bank of Canada, 1997 334 (SCC), [1997] 3 S.C.R. 805, at para. 19).

1. Trustee de son tort

[62] In Air Canada, supra, at p. 808 – 809 [citations omitted], Justice Iacobucci described trustees de son tort as follows: “Such persons, although not appointed trustees, ‘take on themselves to act as such and to possess and administer trust property.’” He went on to explain that “a trustee de son tort will not be personally liable simply for the assumption of the duties of a trustee, but only if he or she commits a breach of trust while acting as a trustee.”

[63] In my view, the applicant has not shown that the respondent acted as trustee de son tort. The evidence does not establish that the respondent took it upon herself to act as a trustee, or to possess and administer trust property. The evidence suggests instead that the respondent, a faithful daughter to Mrs. Saude, who was elderly, had mobility issues, and did not read or write English, assisted Mrs. Saude in Mrs. Saude’s administration of the estate.

[64] It is true that the respondent drove Mrs. Saude from place to place for the purpose of carrying out tasks related to the estate or involving estate property (including the making of purchases and bank withdrawals), that she communicated with the City of Cambridge with respect to arrangements at the cemetery, that she was involved in the arrangements for Mr. Saude’s headstone, that she acted as an intermediary between Mrs. Saude and the applicant, but the applicant has not established that the respondent did any of these things as anything more that an assistant to, or occasionally as agent for, Mrs. Saude (whom I have already found was able to carry out the functions of an estate trustee despite her limitations). The respondent asserts that this was the role she played, and the applicant has adduced no evidence that this was not so. Moreover, there is no evidence that the respondent did anything respecting the estate after the death of Mrs. Saude and before Ms. Humphreys’ appointment as estate trustee.

[65] Apart from the payment made to the respondent’s Rogers account, there is no evidence that the respondent possessed trust property. The respondent denied being in possession of any of the withdrawn funds or items purchased with Mr. Saude’s debit card, and the applicant has not led any evidence to the contrary. With respect to the Rogers payment, in my view, it is better analyzed under the headings of “knowing assistance” and “knowing receipt.”

2. Knowing assistance

(a) The law

[66] In Air Canada, supra, at p. 811, Justice Iacobucci adopted the description of “knowing assistance” offered in Barnes v. Addy (1874), L.R. 9 Ch. App. 244, at p. 255: “persons who ‘assist with knowledge in a dishonest and fraudulent design on the part of the trustees’ will be liable for the breach of trust as constructive trustees.” Iacobucci J. went on to say (at p. 812) that proof of knowing assistance required proof of “actual knowledge; recklessness or wilful blindness” of the trust and the breach of trust by the stranger to the trust, and that the breach of trust be dishonest in nature (see pp. 813 – 827).

[67] In a dissenting opinion later adopted by the Supreme Court of Canada, van Rensburg J.A. enumerated the elements of knowing assistance as follows: “(1) a fiduciary duty; (2) fraudulent and dishonest breach of duty by the fiduciary; (3) actual knowledge by the stranger to the fiduciary relationship of both the fiduciary relationship and the fiduciary’s fraudulent and dishonest conduct; and (4) participation by or assistance of the stranger in the fiduciary’s fraudulent and dishonest conduct” (DBDC Spadina Ltd. v. Walton, 2018 ONCA 60, at para. 211; Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd., 2019 SCC 30, at para. 1).

[68] Justice van Rensburg expanded on the final element as follows (see para. 216):

Liability for knowing assistance in a breach of fiduciary duty is fault-based. It requires an intentional wrongful act on the part of the “stranger” or accessory, to knowingly assist in the fraudulent and dishonest breach of fiduciary duty. Participation in a breach of fiduciary duty for the purpose of knowing assistance requires that the accessory “participated in or assisted the fiduciary’s fraudulent and dishonest conduct”: Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650, at para. 23.

(b) Knowledge of the trust relationship

[69] In this case, there is no doubt that there was a trust relationship and that the respondent was aware of that relationship. Indeed, this point has been conceded.

(c) Breach of trust by Mrs. Saude

[70] It is also clear that there was a breach of trust by Mrs. Saude. By itself, the use of Mr. Saude’s debit card after he died was an act of fraud and dishonesty. Moreover, to do so for any purpose unrelated to the proper administration of the estate was a serious breach of trust (see, for example, Re Pivoc Estate, [2000] O.J. No. 682 (S.C.J.)).

[71] In my view, the applicant has shown on a balance of probabilities that the debit card withdrawals and purchases constituted a breach of trust. This leaves the consideration of whether the respondent knew of the breach of trust and whether she assisted in it.

(d) The respondent’s knowledge of the breach of trust

[72] With respect to the former question, the respondent had actual knowledge that Mrs. Saude was using a deceased person’s debit card (she concedes as much in her factum, noting that both she and her husband saw Mrs. Saude using Mr. Saude’s debit card), had actual knowledge that Mrs. Saude was regularly withdrawing cash from Mr. Saude’s account, and was regularly using his debit card to make purchases at stores. All that conduct, of which the respondent had knowledge, was dishonest. With respect to the cash withdrawals, the respondent testified as follows:

Yes I did take her to the bank, now what she did with the money I have no idea and they know it and your clients know exactly what my mother was like. There was no talking her out of anything, believe you me I tried.

[73] In other words, the respondent knew of the cash withdrawals and knew that they were wrong.

[74] Although I am not of the view that the purpose of the withdrawals or purchases detracts from the dishonest nature of transactions executed with a dead person’s debit card, the respondent had knowledge of, or was at a minimum wilfully blind to, the reasons for the cash withdrawals. The respondent knew that, in response to alleged harassment from drug dealers, Mrs. Saude claimed to be using some of the withdrawn cash to pay off debts incurred by Mr. Saude’s purchase of illicit drugs – a purpose which was both illicit and not in the interests of the estate. The respondent testified that she advised against the illicit payments but did not want to get involved in them by alerting the police.

[75] With respect to the purported $10,000.00 loan to Mrs. Saude (of which there is no admissible evidence), this claim has all the hallmarks of an ex post facto explanation for the periodic and improper cash withdrawals. Even accepting that Mrs. Saude told the respondent that there was such a loan, there is no evidence that the respondent made any inquiry about the loan at any time, but especially not at the time of the withdrawals. The respondent was at least wilfully blind in this respect.

[76] And the circumstances called out for inquiry. To the respondent’s knowledge, Mr. Saude had had a sudden financial windfall shortly before his death. To the respondent’s knowledge, Mrs. Saude was using his debit card after he died, not having advised the bank of his passing. The respondent observed that Mrs. Saude started acting unusually, making cash withdrawals regularly and in amounts that would have been large for her. Mrs. Saude did not explain why, if her son really did owe her $10,000, he had not paid out that loan at the time he won the lottery – which he could have done easily. She did not explain why she was satisfying the $10,000 debt by taking money out of Mr. Saude’s account in dribs and drabs. She did not produce documentary evidence of the debt even when the applicant’s counsel demanded documents justifying the expenditures in Mr. Saude’s account. The respondent testified that she never asked her mother about the cash withdrawals “because it was none of my business and it wasn’t my money, I had nothing to do with that.”

[77] With respect to the purported $10,000 loan, the respondent said that she had a conversation with Mrs. Saude “years ago” about a $10,000 debt owed by her brother. There is no evidence that she made any effort to make inquiries about it after Mr. Saude died.

[78] The respondent argues that no-one knows whether the cash withdrawals were made for a proper purpose, and therefore the respondent cannot be found to have knowledge of fraudulent or dishonest conduct. She points to the likelihood that the Oriental Club was paid in cash, as an example of a proper use of money withdrawn from Mr. Saude’s account.

[79] I do not accept this argument. As I have said, the use of a dead man’s debit card alone was a dishonest act. Since those cash withdrawals were made, none of the cash has been accounted for in any way. To take the respondent’s example, there is no evidence that the Oriental Club was paid in cash, or that even the Club was paid at all. But assuming that the Club was paid, and that it was paid in cash, there is no admissible evidence of the amount that it was paid.

[80] With respect to the retail purchases which were made with Mr. Saude’s debit card, as with the ATM withdrawals, the use of the debit card after Mr. Saude died was dishonest and fraudulent. There appears to be no justification at all for many of the purchases, although some of them do appear to have been for purposes related to the estate, a point the applicant concedes.

[81] The respondent drove Mrs. Saude to some of the retail establishments and was aware that Mrs. Saude was using Mr. Saude’s debit card. This is especially so at Costco, where the respondent used her membership card and discussed the use of Mr. Saude’s debit card with an employee at Costco.

[82] I add here that I do not accept the respondent’s evidence that she did not know that Mrs. Saude used the debit card to pay off the respondent’s Rogers bill on December 4, 2019. By that date, the respondent had full knowledge that Mrs. Saude was using Mr. Saude’s debit card and that she had been making cash withdrawals and retail purchases with it. She testified that she knew that Mr. Saude’s lottery winnings had been deposited to the account associated with the debit card. Moreover, the respondent testified that her mother “lived on a fixed income … so obviously she didn’t have a lot of money.” In all these circumstances, I do not believe that the respondent did not know that the debit card was used to pay a $525.14 bill.

[83] As Justice Iacobucci noted in Air Canada, supra, at p. 812, where “the stranger received a benefit as a result of the breach of trust, this may ground an inference that the stranger knew of the breach.”

(e) Did the respondent assist in Mrs. Saude’s breach of trust?

[84] The last of the elements of “knowing assistance” to be considered is whether the respondent participated or assisted in Mrs. Saude’s dishonest conduct. In my view, she did.

[85] As I have said, for the withdrawals, the respondent knew that Mrs. Saude was using the debit card of a dead person, she assisted Mrs. Saude in making those withdrawals by driving her to the bank, sometimes to drive through ATMs, and by assisting her in the making of withdrawals.

[86] Similarly, with respect to purchases, the respondent knew that Mrs. Saude was using a dead man’s debit card. She assisted her in doing so by driving her to retail establishments to use the card and by assisting at the time of purchase, including by using her Costco membership card. As I have found, on one of the trips to do errands, the respondent drove Mrs. Saude to a Rogers store so that the respondent’s account could be paid with the debit card.

[87] With one exception, on the basis of the respondent’s own affidavit and cross-examination, I am satisfied that it was the respondent who was assisting Mrs. Saude for all of the withdrawals and purchases and withdrawals from the time of Mr. Saude’s death to December 20, 2019. She admitted knowledge of many of the purchases during this period, having been present when they were made, and it is plain on the evidence that in the period immediately after Mr. Saude’s death, as one would expect, there was much to do and that the respondent was helping Mrs. Saude do it. This period includes the trip to retrieve the will, all three visits to Costco, the payments for the cemetery and cremation, the attendance at Rogers, the breakfast on the day of Mr. Saude’s burial, and the day of the celebration of life.

[88] The exception to which I have referred are the purchases made on December 13, 2019, which, according to the respondent, Mrs. Saude made on her own. On this day, a purchase was made at Euro Bakery which was across the street from Mrs. Saude’s residence and within her ability to walk to.

[89] The evidence is less clear after December 20, 2019. The respondent conceded that she was the person who did the bulk of the driving for Mrs. Saude when she needed to do errands and that this was so during the period after Mr. Saude’s death. She did not concede, however, that she was present for all 16 ATM withdrawals or all 24 debit purchases. She said that others helped drive Mrs. Saude around town. Of course, the applicant has no evidence about how many transactions the respondent assisted with.

[90] On the basis of the respondent’s evidence that she played the primary role for driving Mrs. Saude on her errands, I am satisfied on a balance of probabilities that, for the period from December 23, 2019 to January 22, 2020, the respondent was present for at least half of the withdrawals and purchases made by Mrs. Saude.

3. Knowing receipt

[91] On the basis of the foregoing, it is not necessary that I consider knowing receipt. Under this heading, the applicant argues that the respondent was in knowing receipt of the $525.14 paid toward her Rogers account, about which I have already found that she provided knowing assistance.

[92] Accordingly, it is also unnecessary for me to consider the respondent’s objection that knowing receipt was not properly pled.

4. Liability of the respondent

[93] The respondent is liable then for payments and withdrawals made between November 26 and December 20, 2019 (excluding December 13, 2019) and for half of the payments and withdrawals made between December 23, 2019, and January 22, 2020, for which there is no justification in the evidence.

(a) November 26 to December 20, 2019

[94] The applicant concedes that debit payments made to the cemetery ($518.67) and crematorium ($1,717.60) on December 3, 2020, were for the benefit of the estate. I am of the view, however, that the evidence establishes that there were other payments which were made for the benefit of the estate, and which should be deducted from the respondent’s liability.

[95] On December 3, 2019, $550 dollars was paid in cash to the crematorium. There is a receipt for this payment. Otherwise, the cash withdrawals are not supported or justified in any way and were not in the interests of the estate. During this period, cash withdrawals of $7,600 were made. The respondent is therefore liable for $7,050 of that amount.

[96] I am also of the view that the evidence establishes that the payment of $293.51 to 50’s Deli on December 10, 2019, was a payment made for the benefit of the estate, i.e., a family breakfast following Mr. Saude’s internment.

[97] Last, I am satisfied that the purchases made at Food Basics ($113.40), Costco ($387.40) and Dollarama ($13.05) on December 16, 2019, the day of the celebration of life, were likely purchases made for that reception and served the legitimate interests of the estate. I do not accept that the other purchases made on this day related to the reception. The purchase at Esso ($92.56) was likely for the benefit of the respondent and the purchase at the Beer Store ($36.95) is in an amount that suggests mere personal use, not for use at the reception.

[98] I have concluded that the purchase made at Euro Bakery on December 13, 2019, for $591.25 was for the purposes of the reception, although, as I have found above, the respondent did not assist in this purchase in any event.

[99] Otherwise, the purchases made by Mr. Saude’s debit card are unjustified. In this regard, I note that I reject the respondent’s evidence that any purchases made before December 13, 2019, were for the purposes of the celebration of life. In addition to being more remote from the date of that event, there is simply no support for the claim that they had anything to do with the reception other than the respondent’s vague memory that this might be so. With respect to the purchase made at the LCBO, I note that the uncontradicted evidence of Ms. Humphreys was that there was a cash bar at the reception.

[100] There is no justification whatsoever for any of the purchases made after the celebration of life.

[101] From November 26, 2019, to December 20, 2020, excluding December 13, 2019, debit purchases of $5,364.50 were made. Deducting from that the payments made to the cemetery, the crematorium and 50’s Deli, and to Food Basics, Costco and Dollarama on December 16, 2019 – which purchases total $3,043.63 – leaves the respondent is liable for $2,320.87.

(b) December 23, 2019 to January 20, 2020

[102] For the period December 23, 2019, to January 20, 2020, I find the respondent liable to 50% of the withdrawals and purchases. The respondent will be liable for $2,850 (50% of $5,700 in withdrawals) plus $260.55 (50% of $521.11 in debit card purchases).

(c) Total

[103] In summary then, the respondent’s liability is as follows:

Withdrawals November 26 - December 20, 2019: $ 7,050.00

Purchases November 26 - December 20, 2019: $ 2,320.87

Withdrawals December 23, 2019 – January 20, 2020: $ 2,850.00

Purchases December 23, 2019 – January 20, 2020: $ 260.55

Total: $12,481.42

5. The request for relief from liability

[104] The respondent argues that, should she be found to have liability for any breach of trust, I should excuse her from that liability in whole or in part on the authority of s. 35(1) of the Trustee Act, R.R.O. 1990, c. T.23. That section, which falls under the heading “Technical Breach of Trust” reads as follows:

35 (1) If in any proceeding affecting a trustee or trust property it appears to the court that a trustee, or that any person who may be held to be fiduciarily responsible as a trustee, is or may be personally liable for any breach of trust whenever the transaction alleged or found to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust, and for omitting to obtain the directions of the court in the matter in which the trustee committed the breach, the court may relieve the trustee either wholly or partly from personal liability for the same.

[105] By its terms, section 35(1) requires the respondent to establish that she acted honestly and reasonably and that she ought fairly to be excused. I am not of the view that the respondent acted honestly and reasonably, for reasons described above. Moreover, to the extent that there were transactions for which the respondent can be fairly excused from liability, I have already deducted the amounts of those transactions from her total liability. There are no grounds to excuse the respondent further.

D. THE ESTATE OF MRS. SAUDE

[106] On the record before me, Mrs. Saude died on April 1, 2020 intestate and without any assets of significance. I have found that Mrs. Saude committed a breach of trust. Her estate is now liable for that breach of trust.

[107] The applicant served notice of this application on the children of Mrs. Saude, there having been no application for probate and no estate trustee. Mrs. Saude did not have a spouse at the time of her death. No-one stepped forward to respond to the application on behalf of the estate and there has been no application to have a litigation administrator appointed (Rule 9.02(1)) or to appoint a person to represent any person or class of persons with an interest in this matter (Rule 10.01(1)). The estate is now in default on the application.

[108] In this case, all persons with an interest in the proceeding are aware of it, and all those with relevant evidence have provided that evidence. The respondent Ms. Pavao, whose interests are most directly implicated by the application, was ably represented by Mr. Gabriele. In all these circumstances, and there being no assets, it was unnecessary to appoint a litigation administrator or to appoint a representative.

[109] In respect of the estate of Mrs. Saude, I make the following orders: (1) that service of this application on the estate is validated (Rule 16.08); and (2) that the estate of Mrs. Saude is liable for $12,750 in cash withdrawals from the account of Mr. Saude and for $2,923.61 in debit card purchases made on that account, for a total of $15,567.61.

E. SUMMARY

[110] In summary, the estate of Mrs. Saude and the respondent are jointly and severally liable to the applicant in the amount of $12,481.42. The estate of Mrs. Saude is further liable to the applicant for the amount of $3,192.19.

F. COSTS

[111] If the parties are unable to agree on costs, the applicant may serve and file brief written submissions and a bill of costs within 7 days of the release of these reasons. The respondent may serve and file brief responding submissions respecting costs within 7 days of the service of the applicant’s costs submissions. Any costs submissions shall be forwarded to my attention by way of email to my judicial assistant at Kelly.Flanders@ontario.ca with a copy to Kitchener.SCJJA@ontario.ca. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs between themselves.

I.R. Smith, J.

Released: August 31, 2022

COURT FILE NO.: CV-20-994-00E

DATE: 2022/08/31

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ERICA HUMPHREYS-SAUDE Applicant

– and –

FILOMENA PAVAO IN HER PERSONAL CAPACITY AND IN HER CAPACITY AS ESTATE TRUSTEE FOR THE ESTATE OF ROY SAUDE AND THE ESTATE OF HELENA SAUDE, DECEASED Respondent

REASONS FOR JUDGMENT

I.R. Smith, J.

Released: August 31, 2022

[^1]: For which the respondent apologized both in her affidavit and during her cross-examination.

[^2]: I note here that there was no evidence either way about whether Mr. Saude’s debit card could be used to make purchases by tapping the point-of-sale device or, if it could be so used, whether it was used in that way.

[^3]: I note also that a purchase was made at Esso for $92.56 on December 16, 2019, which would be an odd place for a purchase by someone who does not drive.