ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Irene Bellefeuille by her Guardian of Property Jerry Bellefeuille
Plaintiff
– and –
Jacqueline Zinn
Defendant
Judith L. Turner, for the Plaintiff
Self-represented
HEARD: May 16, 17, 2022
REASONS FOR DECISION
McCarthy J.
[1]
Introduction
Jerry Bellefeuille (“Jerry”), as guardian of property for Irene Bellefeuille (“Irene”), brings a claim for the recovery of funds (“the funds”) withdrawn from Irene’s bank accounts and allegedly converted to the Defendant’s own use. Irene was born on May 14, 1926. She is the mother of both Jerry and the Defendant.
2The funds were withdrawn from Irene’s accounts during a period when the Defendant acted under a power of attorney for Irene. That period ran between 2005 and October 26, 2018 and is referred to as the “attorney-ship”.
3The Plaintiff argues that $87,518.70 of funds taken by the Defendant from Irene’s accounts remain unaccounted for. This figure is arrived at by taking the amount of $112,535.23 summarized in Exhibit 3 and giving credit for the amount of $25,016.53 which is the remaining total which can be traced from an initial $30,000 term deposit (“the term deposit”).
4In addition, the Plaintiff seeks to recover the costs ($21,010.54) paid by Irene to the successful applicant in the guardianship application (“the application”). The Defendant opposed that application on behalf of Irene causing her to incur these court ordered costs. The outcome of the application was the termination of the attorney-ship and Jerry’s appointment as guardian of Irene’s person and property.
The Application
[5]
The Application
In thorough reasons dated November 14, 2018, my sister Vallee J (“the application judge”) made several findings which undergirded her disposition of the application. The application judge found that: one, the Defendant had failed to comply with a previous court order to provide a full accounting of her management of Irene’s accounts; two, that the documents that the Defendant did provide to the court in the nature of an accounting were inadequate; three, that the Defendant had not performed her duties appropriately as a fiduciary; four, that the Defendant had not exercised her powers and duties diligently, honestly or in good faith for Irene’s benefit; and five, that there was strong and compelling evidence of misconduct by the Defendant during the attorney-ship.
6In reaching these conclusions, the application judge also found that the Defendant had used Irene’s money to purchase appliances for herself; and that the Defendant had improperly commingled her own funds with those of Irene.
The Law
[7]
The Law
Section 32 of the Substitute Decisions Act, 1992 S.O. 1992, c. 30 (“the Act”) requires an attorney to exercise her duties and powers diligently, in good faith, and with both honesty and integrity for the incapable person’s benefit.
8An attorney, like a guardian, must be always in a position to prove the legitimacy of disbursements made on behalf of the incapable person: see Aragona v. Aragona (Guardian of), 2012 ONCA 639 at para 21.
9In Zimmerman v McMichael Estate, 2010 ONSC 2947, 103 O.R. (3d) 25 at para 31 (“Zimmerman”), Justice Strathy (as he then was) warned as follows:
A trustee has an obligation to keep proper accounts. A trustee must keep a complete record of his/her activities and be in a position at all times to prove that he/she administered the trust prudently and honestly. He/she must have the accounts ready and give full information whenever required.
10The regulations under the Act required the Defendant as attorney to, inter alia, maintain an ongoing list of all money paid out on behalf of Irene including the amount, date, purpose of the payment and to whom it was paid (see Ont. Reg 100/96).
11As part of her defence to the present claim, it was therefore incumbent upon the Defendant to provide suitable evidence to the court that the funds withdrawn from Irene’s account were used for Irene’s benefit.
12As stated by Justice Strathy at para 36 of Zimmerman: “…an attorney who fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property has not adequately carried out his or her duties and will be held personally responsible for the unsubstantiated withdrawals.”
Analysis
[13]
Analysis
There are three bank accounts for the court to consider in the present action: Meridian Credit Union account numbers 1352475 and 2791170 in the name of Irene (referred to as “Irene 75” and “Irene 70” respectively) and Meridian account number 1808823 (referred to as “Jacqueline 23”).
14The evidence filed by the Plaintiff, and in particular Exhibits 1 and 3, establish that there was a lengthy history of cash withdrawals and money orders debited from Irene 75 together with a series of transfers from Irene 75 to Jacqueline 23. The present guardian was unable to determine the nature or purpose for the various withdrawals and transfers. The Defendant’s explanations for the transactions were not supported by any contemporaneous documentation or other independently verifiable evidence. In particular, the Defendant’s explanation that some of the money orders were used to pay for family headstones was without back-up. At trial, the Defendant plainly admitted that all of the deposits flowing into Jacqueline 23 came from Irene’s accounts. Moreover, she admitted that the balance remaining in Jacqueline 23 belongs to Irene. That being the case, all of the monies which flowed into Jacqueline 23 should have been used for the benefit of Irene. Why the Defendant chose to conduct her affairs this way was unclear. She could have easily registered the power of attorney for property document with Meridian and maintained effective control of Irene’s accounts in that fashion.
15In what I found to be a desperate, last gasp attempt to explain these transfers, the Defendant asserted that they were designed to keep Irene’s money safe from other members of the family who might attempt to take it.
16In response to her failure to provide an acceptable accounting or any supporting documentation to demonstrate how the disbursements were for the benefit of Irene, the Defendant asserted that she provided that supporting information to her former solicitor and that she therefore cannot access it. In my view, this is either a weak excuse for her poor record keeping or a thinly veiled attempt to side-step the unpleasant truth that the Defendant simply expended Irene’s money without regard for her best interests. Regardless, the obligation to provide both an accounting and detail in support of that accounting rests always with the attorney; that obligation cannot be off-loaded onto any other person.
17At trial, the Defendant presented the court with a motley assortment of print-outs which compositely made up Exhibit 8. It was ex post facto accounting at its worst. There was no documentation in support of any of the entries; the descriptions under “Items Purchased” were mostly insufficient (e.g. “2014-12-31 winners stationary”); often they were vague (e.g. “2016-09-24 Elements – hair for wedding $57.46”); and in some cases they were bereft of any detail (“2015-11-26 pharmasave ? $13.56”). Many of the items could not be considered wholly or even partially for the benefit of Irene: meals, outings, wedding gifts, LCBO purchases, furniture, groceries.
18There was a particularly disturbing entry on May 6, 2013 from Jacqueline 23: a cheque to TD Financing Services in the amount of $11,056.57. Because all the money on account in Jacqueline 23 were funds coming from Irene’s account, this significant expenditure demands an explanation of how it was for Irene’s benefit. The Defendant’s assertion that it represented the transfer of an income tax refund that Irene had received after the Defendant was claimed as a disabled dependent on Irene’s income tax return not only raises the specter of tax fraud on the part of the Defendant, but leaves unanswered the more relevant question of whose benefit the payment to TD was for. The Defendant was unwilling or unable to provide any detail in that regard.
19Other evidence left the court with profound doubt that anything but a fraction of the payments, disbursements and withdrawals from Irene’s accounts were for her benefit: the Defendant admitted to using Irene’s funds for repairs and gas on her personal vehicle because she used that vehicle to pay visits to Irene in Barrie. Not only were such disbursements entirely unsupported by back-up documentation, but it remains unclear how such expenditures would be for Irene’s benefit when she was residing with and paying room and board to her other daughter Jane. In a very troubling admission, the Defendant conceded that she used Irene’s funds to pay for gas and hotel on a trip to Nova Scotia, a trip that did not involve Irene. There are 81 debit or withdrawal entries for shopping or gasoline expenditures for the 90-day period preceding the September 30, 2015 statement for Irene 23. I agree with counsel for Plaintiff that at age 88, no realistic assessment of Irene’s needs would include 81 shopping trips in 90 days. I am not persuaded that the expenses incurred during these shopping trips were solely for Irene’s benefit.
20I do not accept the Defendant’s evidence that Irene resided with her for 4-5 months most years. I accept the evidence of Jerry who testified with commendable specificity that Irene resided with the Defendant for up to 12 weeks on only one occasion, shortly after Irene’s other sons had passed away. Otherwise, Irene resided with her daughter Jane in Barrie. Irene came to stay with the Defendant for brief periods of respite during the attorney-ship. This is also consistent with the steady payment of room and board to Jane over a number of years of the attorney-ship ($1200 monthly by the time of the application). It follows that the expenses related to Irene while in the Defendant’s “care” would have been minimal at most. I note from the application decision that the Defendant claims to have used Irene’s funds to purchase a freezer and a stove for the Defendant’s home in anticipation of Irene moving in with her. Leaving aside for a moment that Irene never did come to live with the Defendant, this rather begs the question of why the full-time care of an incapable person would require a new freezer and stove! I can fairly take judicial notice that most if not all independent dwelling units in 21st century Ontario already have a freezer and a stove. There was certainly no evidence that the Defendant was living her life without these modern conveniences or that those she owned were not functioning satisfactorily. At the very least, the Defendant should have refunded the cost of those new appliances to Irene once it became apparent that her mother was not moving in with her after all.
21In sum, the Defendant was unable to provide a satisfactory accounting for the handling of Irene’s funds during the attorney-ship. To the extent that Exhibit 8 constitutes an accounting, it is incomplete, unsupported, unsubstantiated, and unreliable. It does not satisfy the requirement demanded by the regulations under the Act. Worse, the evidence serves as proof that, not only did the Defendant commingle Irene’s funds with her own but she elected to use Irene’s funds for the benefit of others including herself.
22With the exception of the remnant term deposit, there is no evidence that any of the funds expended made their way into any investments for the benefit of Irene.
23The Defendant has therefore breached her fiduciary duty to act in the best interest of Irene. This is hardly a novel finding. It is consistent with and follows logically from the findings made by the application judge. There was no compelling evidence produced by the Defendant to displace or challenge those findings.
24The Defendant has compounded her breach since the judgment rendered by the application judge. After being removed as attorney, she continued to hold onto funds she had withdrawn from Irene 75 but which she admitted belonged to her mother. The Defendant’s failure to disgorge those funds to the newly appointed guardian, coupled with her continued use of those funds after that appointment, constitute a distinct and ongoing breach of trust on her part.
Remedy
[25]
Remedy
It being unlikely that the funds can be traced or recovered, there is only one remedy available to achieve justice here: the Defendant must make good the funds that she has taken from Irene and for which she has been unable to properly account for. An award of damages for breach of fiduciary duty is entirely appropriate in the circumstances.
26I accept the summary prepared by the Plaintiff in Exhibit 3 which is based upon the evidence from the accounts. During the period of the attorney-ship, there were $147,250.23 in transfers from Irene’s funds to the Defendant. There was $34,715 transferred back into Irene’s accounts (largely it seems for payment of room and board to Jane), leaving a net total of $112,535.23 which remains unaccounted for. I am satisfied that the term deposit that started with the $30,000 invested from Irene 23 in November 2012 appears to have made its way, in part, into other investments available to Irene except for the amount of $4,983.47 which remains missing and unaccounted for. The net amount of $25,016.53 which results is therefore accounted for and remains available for Irene’s benefit. That sum is properly deductible from the amount to be recovered from the Defendant because of her breach. That leaves the sum of $87,518.70 for funds taken by the Defendant during the attorney-ship which remain either unaccounted for or have not been proven to have been expended for Irene’s benefit.
27I am not prepared to include that entire sum in any judgment against the Defendant however. That would be unfair to the Defendant and would result in a windfall to the Plaintiff. I do accept the Defendant’s testimony to a limited extent: a portion of the expenses from the funds would have resulted in a benefit to Irene. One thinks of shared meals out, transportation expenses, clothing, personal hygiene, health care items, passports, wedding gifts etc., which one sees peppered throughout the accounts’ transaction histories. It is a difficult task to assign a fixed amount to the expenses from which Irene likely derived any benefit. There was no evidence to contradict the Defendant’s insistence that she was a frequent visitor to and companion of Irene. It is therefore fair to accept that a reasonable percentage of the expenses incurred during the visits and outings with daughter and mother would have been for Irene’s benefit. I am prepared to find that 25% of the unaccounted-for funds were used towards Irene’s benefit. This leaves the net sum of $65,639.03 which constitute funds which have not been proven to be partially or solely for Irene’s benefit.
28In addition, I am persuaded that the Defendant should also be responsible for the sum of $21,010.54 which is the amount paid by Irene for court ordered costs incurred for the application. Irene should not be responsible for litigation expenses made necessary by the Defendant’s conduct in failing to properly discharge her duties as attorney. That amount must be fully repaid to Irene.
Disposition
[29]
Disposition
The Plaintiff is therefore entitled to judgment in the total sum of $86,649.57. In addition, the Defendant is ordered to forthwith cause to be transferred to Irene’s guardian of property any amounts remaining in Jacqueline 23 together with any further amounts being held in trust for the benefit of Irene. Any sums transferred or returned by the Defendant within 30 days of today’s date shall serve to reduce the amount of the judgment owing.
30There remains the issue of costs of this action as well as the form and content of any proposed judgment. The parties are invited to contact the trial coordinator at Barrie to obtain a date to appear before me in person to address these matters. At that time, counsel for the Plaintiff is encouraged to provide the court with a proposed draft judgment together with a bill of costs.
McCarthy J.
Released: September 9, 2022