COURT FILE NO.: CV-21-00662943-00ES

DATE: 20230214

ONTARIO

SUPERIOR COURT OF JUSTICE (ESTATE’S LIST)

IN THE MATTER OF THE ESTATE OF GUISEPPINA MOSSETTI, deceased

BETWEEN:

Frances Picone Applicant

– and –

Ernie Mossetti, personally and in his capacity as Estate Trustee of the Estate of Guiseppina Mossetti. Respondent

Counsel: Laura Cardiff, for the Applicant Appearing on his own behalf

HEARD: February 2, 2023

C. Gilmore, J.

JUDGMENT ON APPLICATION

INTRODUCTION

[1] In the within Application, the Applicant (“Frances”) seeks repayment from her brother, the Estate Trustee (“Ernie”), of 50 percent of $720,779.12 to be paid to her personally, plus the funds held in trust by Casey & Moss ($74,894.80) to be paid to Frances as part of her entitlement as beneficiary of her mother’s Estate.

[2] Frances’ position is that her brother misappropriated $342,759 by way of mortgage advances which he now claims were a gift from his mother (the deceased) and $378,109 by way of funds from the sale of the deceased’s home to which he now claims entitlement by way of compensation for caring for his mother for 31 years.

[3] Frances alleges that her brother breached his fiduciary duty to account. Further, he misappropriated funds both before and after his mother’s death in breach of his duties as her Power of Attorney (“POA”) for Property and in breach of his obligations as de facto Estate Trustee. Frances’ share of those funds must be repaid to her.

[4] Frances also seeks an Order that Ernie is to be solely responsible for the Estate Administration and all liabilities of the Estate going forward.

[5] Ernie agrees that he may owe his sister a small amount from his mother’s Estate. However, the balance of the funds he withdrew from his mother’s account and mortgage were intended as gifts to him or compensation for his caregiving services to his mother for over 31 years. He denies that he breached any fiduciary duty and takes the position that he has owned a joined account with his mother since 2007 and was entitled to withdraw at will any amounts in that account solely on the basis of his status as a joint account holder.

[6] Further, he told the Court that he is deserving of the amounts that he received because it is disgusting that his sister is seeking half of the Estate when she effectively abandoned her mother during the most difficult time in her life.

[7] For the reasons set out below, the relief sought by Frances is granted in its entirety. Ernie has failed to provide any evidence of the required elements of a gift, nor has he provided evidence that he is entitled to compensation for 31 years of caregiving. He has breached his fiduciary duties as an Attorney for Property and as de facto Estate Trustee. The fact that he is morally offended that his sister would receive half of his mother’s Estate is irrelevant to the legal considerations in this case and is offered by Ernie, in this Court’s view, as a way to obfuscate his own deceitful and indefensible actions.

THE ADJOURNMENT REQUEST

[8] At the commencement of the hearing Ernie announced that he was seeking an adjournment. This came as a shock to the Court and to Ms. Cardiff, counsel for the Applicant, as there had been no prior communication that an adjournment was being sought.

[9] In his September 27, 2022 endorsement, Sanfilippo J. ordered that this matter proceed on February 2, 2023, for one day. He then set out a timetable for the filing of documents and for cross-examinations. Ernie’s factum was due on January 19, 2023. No factum was filed. The Sanfilippo Order permits a variation of the litigation timetable on the agreement of the parties. Ernie did not communicate with Ms. Cardiff to request an extension of time or to even advise that there was a possibility that he would miss the court-ordered deadline for the factum.

[10] Ernie produced a copy of a Confirmation Form which he sent to the Trial Coordinator on January 30, 2023. It appears that he added the following to the Confirmation Form of the Applicant “Legal counsel for the Respondent was out of the country for the first three weeks of January – unexpectedly and unavailable. Respondent was not able to prepare the factum before the prescribed deadline.” Ernie checked off the “Adjournment” box on the Confirmation Form.

[11] It appears that the Trial Coordinator simply confirmed receipt of Ernie’s form but no one including Ernie took steps after that. Ernie did not advise Ms. Cardiff of his intention to request an adjournment or provide her a copy of the amended Confirmation Form. He submitted he was not aware he had to take further steps after sending in the Confirmation Form. The Court was not made aware of any change in scheduling due to the adjournment request. Both the Court and Ms. Cardiff prepared for today’s hearing on the assumption it was proceeding as scheduled.

[12] Ms. Cardiff opposed the adjournment sought by Ernie. Her position was that the matter has been ongoing since May 2021. In any event, Ernie has represented himself throughout most of this proceeding. He did not contact Ms. Cardiff about an extension of time to file his factum or the adjournment. Throughout this proceeding Ernie has caused delay due to his deficient accounting and his promises to provide documents which were never produced. Even if Ms. Cardiff had been notified of the request for an adjournment, she would have opposed it. There is no reason for further delay in this matter.

Ruling on Adjournment Request

[13] After hearing submissions from Ernie and Ms. Cardiff on the adjournment, I declined to grant the request. I advised that I would provide more fulsome reasons for the denial in my Judgment. These are those reasons.

[14] Refusal of an adjournment in this matter is not prejudicial to Ernie nor would granting an adjournment serve any purpose other than delay for the following reasons:

a. Ernie submitted that he had retained counsel, Ms. Jain, on an advisory basis. One of her roles was to assist him with his factum. No letter was provided from Ms. Jain to confirm her role or to confirm that she had to leave the country for three weeks for an urgent family matter;

b. There is no indication that Ernie contacted Ms. Cardiff to advise her of Ms. Jain’s circumstances, the possibility of a delay in delivery of his factum or the possibility of an adjournment.

c. The matter was set for a one day hearing over four months ago. Ernie provided a supplementary affidavit on November 26, 2022. He has had significant time to prepare for this hearing.

d. Ernie had an opportunity to fully cross-examine his sister. He did not upload a copy of the transcript to Caselines or send one to Ms. Cardiff but asked to rely on it at the hearing. The Court provided an indulgence to Ernie and permitted him to provide the transcript after Ms. Cardiff’s submissions and gave Ms. Cardiff 30 minutes to review the transcript.

e. A factum is not essential for Ernie’s case and the requirement to file one may be waived at any time by the Court. The requirement for Ernie to file a factum is hereby waived. Ernie’s court record was otherwise entirely complete including a Responding Record, a supplementary affidavit and the transcript of Frances’ cross-examination.

f. Ernie’s conduct in this proceeding has already caused considerable delay. No further delay will be tolerated.

FACTUAL BACKGROUND

[15] The Applicant, Frances Picone is the daughter of the deceased Guiseppina Mossetti (“Pina”) and the sister of the Respondent and de facto Estate Trustee, Ernie Mossetti. It should be noted that sometimes Pina used the first name “Josephine” on banking and other documents.

[16] Pina died on November 1, 2020 at the age of 94 without a Will. Pina’s husband Cesare Mossetti died in 1989. Frances and Ernie are her only children and equally entitled to her estate as her surviving heirs-at-law. Frances lives in Calgary with her husband Bruno. They have two adult children, Stefano and Matteo Picone. Ernie lives in Thornhill with his wife Helene Brown.

[17] Pina made POAs on May 16, 1997, naming Ernie as her Attorney and Frances as the alternate.

[18] On September 7, 2013, Pina signed a banking POA with CIBC naming Ernie as her POA. The POA was signed by Pina and Ernie and witnessed by two bank employees. The banking POA contained a handwritten addition initialed by Pina which set out as follows:

Please note, client gives permission for her POA, Ernie Mossetti, to cash cheques on her behalf and to withdraw cash of any amount for her benefit.

[19] The bank POA contains the following additional relevant provisions:

2. Actions for my benefit. My Attorney(s) must act exclusively for my benefit; they may not make withdrawals, sign cheques, or otherwise deal with my property for their personal purposes (including converting any of my accounts either to joint names or to my Attorney(s) name(s)). My Attorney(s) are aware of this limitation. CIBC may, therefore, choose not to allow them to make withdrawals, etc. if CIBC is not satisfied that such acts are for my benefit, and CIBC will not be liable if it acts in this manner (See Note C).

3. Compensation. Subject to applicable provincial law, I do NOT authorize my Attorney(s) to take annual compensation from my property (see Note G).

4. This Power of Attorney does not necessarily revoke any Power of Attorney that I have previously signed, but if a previous Power of Attorney has clauses that are inconsistent with this one, the terms of this one will prevail. I may sign other Powers of Attorney in the future.

[20] Pina’s assets consisted of her home, three GICs, a chequing account (“the 0038 account”) and a TFSA all held with CIBC. According to the CIBC legal department, the 0038 account was opened in 1984 in Pina’s name alone. Ernie was added as a joint account holder in August 2018.

[21] Pina lived frugally. Her income consisted of Old Age Security, Canada Pension and an Italian pension totalling approximately $24,000 per year. Her expenses were generally limited to phone, cable, food, insurance, property tax and utilities. Pina lived in a home located at 77 Sweeney Drive, Toronto (“the Property”). The Property had been mortgage-free for many years prior to Pina’s death.

[22] In 2010 Pina wanted to buy a new car but did not have the funds to do so. She took out a Canadian Home Income Plan (“CHIP”) mortgage with HomeEquity Bank (the “HEB mortgage”) on May 26, 2010. The Solicitor’s Final Report in relation to the HEB mortgage sets out that the mortgage was registered on May 27, 2010 with a principal amount of $390,743 and interest at the rate of 3.75 percent. The schedule to the mortgage indicated that there were no planned advances beyond the initial $30,000 advance.

[23] Pina withdrew $30,000 on May 26, 2010 in order to purchase a new car. Some of the $30,000 was used to pay administrative and legal fees. Pina later withdrew a further $7,000 from the HEB mortgage to pay for a new furnace and air conditioning unit. Ernie and Frances agree that their mother withdrew a total of $37,000 from the HEB mortgage.

[24] Over the ensuing years the HEB mortgage was fully drawn and by July 20, 2016 the total advances were $279,826 plus accrued interest, fees and charges of $117,389.44 for a total of $397,731.74. According to documents from HEB, all advances taken from the mortgage were done without a POA and deposited into the 0038 account. Ernie claims that all of the funds withdrawn from the HEB mortgage (other than the $37,000 set out above) were gifts to him from his mother. Ernie took the position that the funds in the 0038 account belonged to him and his mother. Either of them could withdraw funds at will and spend them as they wished.

[25] Pina’s health began to seriously decline in 2018. She was hospitalized on May 29, 2018, and never returned home. On August 15, 2018, she was moved to Villa Da Vinci, a long-term care home. She remained there until her death on November 1, 2020.

[26] The cost for Pina’s long-term care was between $6,000 to $8,000 per month. However, during the time she was at Villa Da Vinci the withdrawals from the joint account averaged $9,800 per month from August to December 2018 and $47,000 per month in 2019.

[27] In late 2018 Ernie sold the Property for $1,035,000 using Pina’s POA for Property. The sale closed in December 2018. In an affidavit sworn on December 13, 2018 Ernie deposed that his sister was aware of the house sale, the net proceeds of sale would be payable to Pina and that both Pina and his sister were agreeable to the sale. On sale, the total amount paid to discharge the HEB mortgage was $401,675.80. The balance of the net sale proceeds after payment of the HEB mortgage, real estate commission and legal fees was $574,010.52. That amount was deposited into the 0038 account on December 20, 2018. On that same day, $40,000 was withdrawn from the 0038 account.

[28] By February 3, 2020, the 0038 account was in overdraft. Only by repaying certain amounts into the joint account each month was Ernie able to cover his mother’s long-term care fees. On the date of her death Pina’s chequing account was overdrawn by over $2,000.

THE ESTATE ACCOUNTING

[29] After her mother died, Frances sought information about her mother’s Estate. She assumed the Estate consisted of the net house sale proceeds minus any amounts paid for her mother’s expenses. In February 2021 Ernie provided his sister with an informal accounting. Pina’s Estate should have been worth approximately $783,000. However, there was only $75,000 left in the Estate.

[30] In his February 13, 2021 email, Ernie explained the shortfall in the Estate to his sister as follows:

Here is the hard part - Only about 75,000 is left of mom's estate .... It's in a GIC and will rollover in May of this year. If I hadn't used any of mom's money it [sic] for myself it would have around 700,000.

My financial situation has been bad for a long while, despite what appearances may reflect. We remortgaged our house about 10 years ago because of debt and it's been uphill ever since. At that point I started taking money from the value of the house, the same way mom took out monies to pay for her new car –

I know this is not what you were expecting - I am sorry to cause such pain for you - and I wouldn't blame you if you despised me for what's happened. I ask that you give a chance to make good on the situation - this past year has been the best so far businesswise and 2021 will be much better still.

Some of the monies were to help sustain my expenses over the years and some went into went into the business - I'll explain more when we talk. I will assure you that none of it was used frivolously - even whatever travel Helene and I did was funded primarily by her. In all these years I haven't been able put aside any monies for retirement. It's been a living hell - I'm totally ashamed of what's happened.

[31] In a later email, Ernie wrote to his sister as follows:

Again - I am truly sorry for the situation. My choice in life was not a good one, and I found myself in desperate situations and made desperate choices.

[32] Frances sought vouchers to support Ernie’s accounting. Proper vouchers have never been provided. Ernie asserted on April 9, 2021 that he had removed $755,000 from the Estate. According to Ernie and contrary to the statements in his February 13, 2021 email, this amount was made up of a gift from his mother of $355,000 and $400,000 in compensation for caregiving provided to his mother.

[33] In May 2021 Frances commenced the within Application.

[34] In June 2021 Ernie was ordered to provide a proper accounting with vouchers for the period of May 2018 to November 1, 2020. Ernie provided an accounting on August 9, 2021 which showed that $367,924.68 was missing from Pina’s funds. The accounting included the net house sale proceeds, Pina’s bank balance as of May 2018 and her pension income from August 2018 to October 2020. Expenses included move out costs, move in costs for Villa Da Vinci, furnishings, mobility equipment, cable and TV charges, medications, diapers, and an air bed rental. No vouchers were provided for those expenses. The costs claimed without vouchers varied in the different accountings provided by Ernie. Vouchers were provided for the Villa Da Vinci fees and the funeral and burial costs.

[35] No explanation was given as to what had happened to the missing funds. No corroboration was provided as to the allegation that Ernie had been gifted $355,000. Further, all of the accounting presumed that the net proceeds of sale were $574,010.52 with no explanation as to why the HEB mortgage had been fully drawn down.

[36] On September 22, 2021, Ernie was ordered to provide a formal passing of accounts as POA for Property for the period of January 1, 2018, to the date of death and as de facto Estate Trustee from November 2, 2020, to September 22, 2021. Alternatively, he could provide an informal accounting with a sworn affidavit and all vouchers appended as exhibits.

[37] Ernie provided a further informal accounting on November 26, 2021. This is the only accounting accompanied by a sworn affidavit. The accounting was similar to the one provided in August 2021. That is, it calculated that Pina should have had $367,924.68 in her account on the date of death. No vouchers were provided for expenses other than a list of transactions from Pina’s account in 2019 and 2020. The expenses included the same ones included in his accounting from August 2021 set out above being a total of $269,556.45. While Frances has never received proper vouchers for these expenses, she accepts for the purposes of proportionality in this litigation that the expenses listed are likely reasonable.

[38] However, Frances requests that a further $10,095 be repaid to the Estate by her brother representing funds withdrawn during the period of January to May 2018. Frances submits that there is evidence that Pina was hallucinating and delusional during this time. According to Frances, certain highlighted withdrawals from the 0038 account as set out at Schedule “F” to her factum were made that she alleges were not for her mother’s benefit. As her brother was acting as a fiduciary at that time, he must account for the withdrawals. His accounting from November 2021 starts on May 29, 2018, and fails to provide information for the period of January 1 to May 29, 2018.

[39] Without going through each transaction between January 1 and May 29, 2018, it is quite easily seen that the highlighted transactions do not align with Pina’s regular spending patterns. Pina’s income was in the range of $1800 per month and her expenditures around $1500 per month. Cash withdrawals of $400 at a time within 48 hours of one another were not her habit. Other purchases included LCBO and international withdrawals in US dollars. Of interest is that the cash withdrawals were all made from banks in the Thornhill area where Ernie lives. Ernie has never provided any accounting for these funds or any explanation as to how they may have been for his mother’s benefit. His position on examination and throughout has been that he is not required to account for or particularize any of the withdrawals from the joint account because the nature of the joint account permitted withdrawals at will by either him or his mother, and without explanation.

[40] The November 2021 accounting assumed that all amounts withdrawn by Ernie from the HEB mortgage were gifts to him. At Schedule “E” to her factum, Frances has provided a schedule of what Pina’s accepted withdrawals of $37,000 would have cost inclusive of interest until December 2018. The schedule uses the different interest rates for each year from 2010 to 2018 using the interest rates in the HEB documentation. Based on this calculation Frances submits that Pina would have owed HEB the sum of $58,915.86 by way of discharge amount on the sale of the Property.

[41] At his cross-examination on December 22, 2022, Ernie asserted for the first time that his mother’s account had been a joint account with him since 2007. He refused to answer questions about specific transactions on the basis that any funds in the account were equally available to him and to his mother to spend on what they pleased. Ernie agreed that he took some of his mother’s money but that he “took a lot of it as a gift.”

[42] In April 2021 Ernie gave an undertaking to preserve Pina’s GICs which at that time were the only remaining assets in the Estate. Ernie did not reveal to the Court at that time that he had in fact already spent $6,300 from one of the GICs which had matured and been paid into the 0038 account. Ernie repaid the funds to Frances’ counsel’s trust account.

[43] Ernie did not take steps to notify government authorities of his mother’s death. As such, pension benefits totalling approximately $1040 per month continued to be deposited into the 0038 account from December 2020 to January 2022. Those amounts were withdrawn by Ernie and will be required to be repaid to the appropriate government authorities.

THE POSITION OF THE APPLICANT

[44] Frances concedes that her move to Alberta in 1981 was very hard on her mother. She did her best to maintain a close relationship with her which included weekly telephone calls on Saturday morning that lasted one to two hours and extended visits to Toronto every summer for up to six weeks. As Frances was a teacher, she was able to stay with her mother for extended periods during the summer. Her husband Bruno would join when he could given his own work schedule.

[45] During those summer visits, Frances helped her mother with day-to-day tasks and purchased things for her mother knowing she was on a minimal fixed income. While in Toronto she would attend Mass with her mother, take her to visit friends and engage in activities with her such as cooking, gardening and watching Italian television. Bruno helped with household repairs such as painting and changing the furnace filter.

[46] In 2000 Stefano moved to Toronto for school and began seeing his grandmother more often. He would generally have dinner with her once a week and update his mother on how she was doing.

[47] Frances deposed that up until 2016 her mother lived a very active life which included gardening, keeping her house clean and visiting with friends. Frances and Bruno attended Pina’s 90th birthday party in Toronto which was a large celebration. Pina actively enjoyed her party.

[48] According to Frances, Pina was able to speak and write in English and do her banking by telephone.

[49] At the beginning of 2018 Stefano reported that his grandmother was not looking well. Ernie provided very little detail about Pina’s health, generally simply saying that everything was fine.

[50] On May 26, 2018, Pina and Frances were having their usual Saturday morning call when Pina began to have a delusional episode. Frances contacted Ernie and urged him to take their mother to the hospital. Ernie dismissed Frances’ concerns.

[51] On May 27, 2018, Frances and her husband were on their way to France via Toronto for a vacation. Stefano told them that Pina was in critical condition. The trip was cancelled, and Pina was admitted to hospital. Frances stayed with her mother for two weeks. She returned again in July for a week. Frances deposed that her mother never returned to her same level of cognition and was no longer able to care for herself. Pina went to Villa Da Vinci in August 2018.

[52] After Pina went to Villa Da Vinci, Frances tried to continue to visit her twice a year but that was not possible in 2020 due to COVID. Frances noted that her mother’s condition declined rapidly once she went into long-term care. Pina was sad and had lost her independence. When her mother died in November 2020 Frances was distraught that she was not able to attend her mother’s funeral due to COVID related travel restrictions.

[53] Frances was candid that she and her brother had never had more than a cordial relationship. He has never been good with money. She and her husband lent Ernie $30,000 USD in 2009 to help him start a new business. A condition of the loan was that Frances and Bruno were to receive a percentage of the company’s sales. The loan was never paid back nor did Frances and Bruno ever receive a percentage of sales. Frances did not pursue repayment as she knew that money issues created anxiety for her mother and that any disagreement between Ernie and Frances about money would have been upsetting for her.

[54] Frances did not become aware of the 2007 POAs until Ernie told her about them in the fall of 2018. Frances’ view was that her mother remained lucid and able to manage her own affairs until she was hospitalized in May 2018.

[55] Frances was aware that her mother had taken out a home equity loan to purchase a car. Frances had driven the car on several occasions when she came to visit her mother. Frances was aware that her mother would likely have relied on Ernie to help her with the mortgage transaction as she often relied on Ernie for financial matters that were outside of regular bill payments.

[56] When her mother went to Villa Da Vinci, Frances called Ernie to ensure there were sufficient funds to cover their mother’s care. Ernie assured her that that there were.

[57] Frances was shocked when she received the February 13, 2021 email from Ernie confessing to taking money from Pina. Frances recounted receipt of a further email from Ernie on February 22, 2021 outlining the work he did for Pina and suggesting that he was entitled to the funds that he took. Further, he told his sister that he would not be sending her any documents by way of an accounting and that he would “hang on to the GIC for now.”

[58] Shortly after this, Frances retained her counsel who requested that Ernie provide an accounting. Ernie then retained counsel who confirmed on April 5, 2021 that Ernie would preserve the three GICs that had been owned by Pina.

[59] On April 18, 2021, Ernie’s counsel sent Frances’ counsel a letter confirming that the $700,000 he removed from the Estate was made up of a gift of $350,000 from Pina and compensation of $400,000. The compensation amount was based on Ernie’s calculation that he had spent 8,000 hours assisting and caring for their mother over 31 years.

[60] Frances submits that bank records obtained from CIBC show that both before and after Ernie admitted to acting on the 2007 POA for Property in May 2018, there are withdrawals from the 0038 account that do not appear to be for Pina’s benefit, contrary to the terms of the bank POA. Further, in January 2015, $20,425 was withdrawn from Pina’s TFSA leaving only $11.79 in the account. There is no corresponding deposit to the 0038 account. Frances is not pursuing any relief in relation to the 2015 TFSA given the date of the transaction.

[61] Beginning in August 2017, statements for the 0038 account show regular cash withdrawals from banks in the Thornhill area where Ernie lives. In March and April 2018 there are international cash withdrawals of US dollars. Pina did not travel at that time.

[62] After the net house sale proceeds of $574,010.52 were deposited into the 0038 account, the withdrawals increased substantially such that by May 1, 2019 only $369,838.78 was left in the account. Ernie has not explained what happened to the balance.

[63] In May 2019 eight GICs were purchased, four worth $50,000 and four worth $25,000 for a total of $300,000. Three of the GICs matured on May 4, 2020 each with a balance of $51,206.73 and deposited into the 0038 account. The same day $150,000 was withdrawn from the 0038 account in three separate transfers of $50,000. There is no information as to what happened with the other five GICs. They were not deposited into the 0038 account.

[64] The 0038 account was in overdraft by November 1, 2020 and had a balance of -$2,772.75 on Pina’s death.

[65] With respect to the HEB mortgage, Frances takes the position that her mother withdrew only $37,000 for the purchase of a car and a new furnace. However, documents obtained from HEB show that after the initial $30,000 advance there were advances of $55,000 in 2010, $43,000 in 2011, $80,000 in 2012, $50,000 in 2013 and $21,826 in 2016. HEB clarified that each advance was made by way of written request from Pina. Ernie has conceded in his affidavit sworn August 9, 2021 that his mother only withdrew $37,000 from the HEB mortgage to pay for a car and a new furnace.

[66] Frances submits that her mother was very careful about how she spent her money and preserving the equity in her home. She does not believe that her mother was aware that Ernie had drawn down the HEB mortgage by $240,000.

[67] Frances is concerned that Ernie has failed to properly administer the Estate. This includes failing to file tax returns or notify government authorities that pension benefits continued to be deposited into the 0038 account until January 2022, all of which were withdrawn by Ernie.

THE POSITION OF THE RESPONDENT

[68] Ernie’s position is that he was his mother’s essential caregiver for 31 years following his sister’s marriage and move to western Canada in 1981. Ernie submitted that he was responsible for driving his mother to her many medical appointments including chemotherapy treatment and psychiatrist and doctors’ visits.

[69] In contrast, Ernie submits that Frances was absent from his mother’s life and played no caretaking role in their mother’s life. Contrary to Frances’ evidence, Ernie deposed that his sister only visited their mother for a few days each summer, not for up to six weeks.

[70] Ernie’s care of his mother affected both his professional and personal life, but he acted out of love for his mother.

[71] Pina was aware of Ernie’s financial struggles and in 2010 she began to gift him money. Ernie accepted those gifts. After taking out the HEB mortgage Pina continued to make gifts to Ernie to assist him with a new business.

[72] Ernie generally visited his mother once or twice a week. When she went into hospital he visited her twice a day, a round trip of 100 km per day. In 1995 when Pina was diagnosed with colon cancer, Ernie took his mother to bi-monthly chemotherapy treatments.

[73] Ernie claims that from the time that his mother was hospitalized in May 2018 until her funeral in November 2020 Frances never made single call to find out how her mother was doing.

[74] After Pina’s health began to deteriorate in early 2018 Ernie took over his mother’s finances and ensured that her expenses were paid. He continued to do so while she was hospitalized and after she was moved to Villa Da Vinci. Frances did not help moving Pina from her home to Villa Da Vinci even though that took place in the summer when Frances was off work. She also did not help to locate a long-term care facility for their mother. All of this fell to Ernie.

[75] Ernie’s position is that Frances is undeserving of any further portion of the Estate. Ernie is entitled to retain what he received from the HEB mortgage, the GICs and the house sale proceeds given his mother’s intention that those funds be gifted to him and that he receive compensation for his extensive caregiving over 31 years.

[76] He is disgusted with his sister’s lack of involvement in their mother’s life at a time when Pina needed her the most. On moral grounds, his sister should receive no money from the Estate.

THE ISSUES

Issue #1 – Has Ernie Proven His Entitlement to any Gifts or Compensation from his Mother?

[77] Ernie must prove the validity of any gifts from his mother or he must repay the Estate the difference between the discharge of the HEB mortgage at $401,675.80 and the amount which he and his sister concede was used by their mother or $37,000 plus interest. I accept Frances’ calculation at Schedule “E” of her factum with respect to the interest which would have accumulated on the $37,000 under the HEB mortgage bringing the total amount to $58,915.86. Ernie did not provide any affidavit material on this point, nor did he submit that Frances’ calculations were inaccurate.

[78] Therefore, if Ernie cannot prove that the balance of the HEB mortgage funds were a gift, he owes the Estate the sum of $342,759.94 ($401,675.80 - $58,915.86).

[79] The components required to make a legally valid gift are not in dispute (see McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 24). There must be:

a. An intention to make a gift on the part of the donor, without consideration or expectation of remuneration;

b. An acceptance of the gift by the donee; and

c. A sufficient act of delivery or transfer of the property to complete the transaction.

[80] Even where the gift or transfer is between a parent and a child, the law of equity presumes that the transferee is holding the property on a resulting trust for the transferor (see Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 41). The transferee, in this case Ernie, has the burden of proving a gift. If there is no evidence of intention or such evidence is unpersuasive, the burden will not be met.

[81] Further, if the transferor is deceased, corroboration of intention is required pursuant to s. 13 of the Evidence Act, R.S.O. 1990, c. E.23 as set out below:

13 In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence. R.S.O. 1990, c. E.23, s. 13.

[82] In the case at bar, Ernie provides no corroborating evidence. What he does provide is the following:

a. An assertion made to his sister on February 13, 2021 by email that there should have been $700,000 in his mother’s Estate, but he has used $625,000 of that amount because of his difficult financial situation.

b. An assertion on both February 13, 2021 and later in February 2021 by email that he is both ashamed of what he has done and that he was desperate.

c. In cross-examination Ernie is unable to particularize exactly what portion of the funds taken from his mother were a gift.

d. An admission by Ernie that he was actively involved in the process of submitting requests to HEB for mortgage funds, that his mother’s profile with HEB used his email address, and that requests for funds were faxed from his office. While he asserted that his mother likely wrote him cheques for the advances when they came in, no such cheques were produced. I infer, therefore, that what happened in July 2016 (the last HEB advance) was exactly what happened with every other advance. The funds went into the 0038 account and were withdrawn by Ernie the next day.

e. I decline to accept that Pina’s signature on the requests for HEB advances are evidence of a gift. It is simply too implausible that a woman who lived frugally her entire life would give away 1/3 of what she had to her son without any evidence that was her intention.

[83] I am unable to find that there is any reliable evidence upon which to conclude that Pina intended to give Ernie, by way of gift, the balance of the withdrawals from the HEB mortgage. The only evidence in support of such an intention is Ernie’s own evidence. That is far from reliable for many reasons not the least of which is that he did not initially characterize any amounts he took from his mother as gifts. He was ashamed of what he had done. After better understanding the implications of his actions and his admissions, he changed his position and in April 2021 began to assert that of the $755,000 missing from the Estate, $355,000 was a gift.

[84] Ernie has failed to introduce any evidence that the gift to him was made by his mother as a result of her “full, free and informed thought”, see Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721, at paras. 28-29. Foley also confirms the requirement for corroborating evidence of such free and informed thought as required by the Evidence Act. The only evidence Ernie has provided in this proceeding is his own bald statements regarding his mother’s intentions.

[85] The issue of undue influence cannot be ignored when considering Pina’s donative intent. Both parties concede that Pina looked to Ernie to assist her with financial transactions that ran outside of her normal bill payments. Ernie was a fiduciary both before and after his mother’s death and according to him, he was also her “essential caregiver.” She trusted her son, but that trust proved to be misplaced.

[86] Ernie used his mother’s implicit trust to manipulate her and obtain money from her which he kept secret from his sister. The case at bar is similar to the situation in Mak (Estate) v. Mak, 2021 ONSC 4415 in terms of the conduct of the alleged donee. At paras. 74-75 of Mak, the Court outlined how one of the brother beneficiaries transferred over $400,000 of his mother’s funds to an account in his own name shortly after the mother’s death and without telling his brothers. When questioned by his brothers, he acknowledged that not all the funds belonged to him. He asked his brothers for time to sort things out. Later, in cross-examination he claimed he was referring to his mother’s house and not the funds in the account. The Court rejected that explanation and found that the mother had not gifted that son the subject assets and he had not rebutted the presumption of resulting trust.

[87] With respect to delivery of the gift, this issue also presents problems for Ernie. In his text, Principles of Property Law, 2nd ed. (Toronto: Carswell, 1996), Bruce Ziff explains the concept of delivery of a gift at p. 135 as follows (my emphasis):

The third basic requisite for a gift deals with the organizing concept of this chapter – possession. There must be an effective delivery of the gifted property or some accepted substitute. As a rule, the gift must literally be given away. This act of transfer serves the purpose of providing tangible proof of a gift. In the absence of consideration of the type that can support a simple contract, delivery of the gifted item is the main way that the necessary donative intention can be shown concretely. The requirement of proper delivery is therefore the functional counterpart of the ancient ceremony of livery of seisin. Words alone are insufficient as proof of delivery because there is a “facility with which words may be distorted”. The stress placed on the transfer of possession is a symptom of a cynical society which assumes bargains and not gifts, so much that when the trappings of a contract are missing, tangible proof of donative action is demanded. In the words of Lord Harman, “the … law of the transfer of property, dominated as it has always been by the doctrine of consideration, has always been chary of the recognition of gifts.”

[88] Ernie does not offer the tangible evidence that Professor Ziff says is necessary for delivery of a gift. That is, Ernie deposes that his mother began gifting him money because she knew of his financial struggles and that the manufacturing business he started in 2009 was not going well. There is no evidence, for example, that any of the funds from the HEB mortgage went into Ernie’s business, or that he was in fact struggling either personally or professionally. The only available evidence is that other than the $37,000 used by Pina, the balance of the HEB mortgage was withdrawn and used by Ernie for his own personal purposes.

[89] Ernie’s wife Helene Brown swore an affidavit dated August 9, 2021. That affidavit does not in any way address the issue of Ernie’s personal or professional financial situation or the issue of funds gifted to Ernie or why or how such funds were gifted to him.

[90] Further, there is the bank POA which is clear that any funds taken from the 0038 account are to be for Pina’s benefit. As there is no evidence of any cheques written to Ernie for the HEB mortgage withdrawals, the assumption must be that they were deposited to the 0038 account as they were in July 2016. Withdrawals made by Ernie from that account from the HEB mortgage could not have been for Pina’s benefit.

[91] In summary, I do not find that there is sufficient evidence of a gift of the HEB mortgage amounts with respect to either intention or delivery. The evidence from Ernie is entirely uncorroborated and self-serving.

[92] Turning to Ernie’s claim for compensation, there is again no evidence that Ernie and his mother had any arrangement with respect to such compensation. Indeed his own evidence on cross-examination was as follows:

70. Q. In the moment of driving over to her house; is that what you mean?

A. I never expected compensation from my mother ever, the entire time that she was alive from my dad's time to when she died. I never expected compensation from my mother. So, the answer to your question is no, there is no record of us having a compensation between her and me. So, I never expected compensation.

[93] Despite Ernie’s submission that he and his mother had an understanding that he would receive compensation for his caregiving, there is no actual evidence of this. In fact, his own evidence and submissions contradict his evidence on examination that he never expected compensation. There is also the evidence that Pina lived an active life and was fully able to care for herself until her health began to decline in early 2018. The fact that Ernie may have driven her to doctor’s appointments in the years prior to 2018 does not substantiate compensation of $8,000 a year for 31 years.

[94] Finally, there are the terms of the banking POA which specified that no compensation was payable to the Attorney (Ernie) and that the banking POA provision in this regard took precedence over any existing POA. Ernie signed the banking POA and agreed to this provision. Therefore, notwithstanding Ernie’s bald assertions about his mother’s intentions to compensate him, such intentions (even if corroborated) would not take precedence over the terms of the banking POA restrictions on compensation for Pina’s Attorney.

[95] In summary, I do not find that Ernie has met the required tests to receive either a gift or compensation from his mother. The funds he misappropriated must therefore form part of a resulting trust in favour of the Estate. Frances’ share of the amount wrongfully taken by Ernie must be repaid to Frances.

Issue #2 – Did Ernie Breach his Fiduciary Duty to Account?

[96] I agree with Frances that Ernie has breached his duty to account as both Attorney for Property and de facto Estate Trustee. Acting in those capacities, Ernie was a fiduciary and had duties of loyalty, honesty and good faith. I find that he has breached those duties.

[97] In Zimmerman v. McMichael Estate, 2010 ONSC 2947, 103 O.R. (3d) 25, the Court found that the Applicant who had acted as both Attorney for Property and Estate Trustee had breached his duty as a fiduciary and was required to repay $450,000 in pre-taken compensation. Specifically, the Court found, at para. 113, that the Applicant was “grossly indifferent to his duty to account,” that the accounts presented to the beneficiaries were “manifestly inaccurate, incomplete and false,” and that he mingled Trust property with his own property and used the two for his own purposes.

[98] In Zimmerman, the Applicant was found to have taken unsubstantiated withdrawals for which he was held personally liable. The Court at para. 44 adverted to the “basic principle of trust law that a trustee is not entitled to use the trust property for his or her own personal benefit.” In the case at bar, it could not be clearer that Ernie did just that. He removed funds from his mother’s account while her Attorney for Property and while de facto Estate Trustee for which he failed to account. He refused to provide any evidence about what he did with the money claiming that he was not required to because the money came from a joint account and/or that the money was his by way of gift and compensation.

[99] Even when he did provide an accounting with a sworn affidavit, on examination Ernie stated that this accounting was not accurate. Further, while ordered to produce all vouchers, he never did so, while deposing on examination that he likely had the receipts but would not produce them.

[100] Based on Ernie’s own accounting which is by his own admission inaccurate but which has been accepted by his sister to avoid further litigation, there is $367,924.48 missing from the Estate for the period of May 29, 2018 to November 1, 2020. However, as outlined above, Ernie’s sworn accounting only starts on May 29, 2018, and fails to account for transactions between January 1, 2018 to May 29, 2018. The parties both agree that Pina’s capacity was compromised during this period. In short, Ernie either could not or would not explain transactions between January 1, 2018 to May 29, 2018, which did not appear to be for Pina’s benefit.

[101] When asked about the withdrawal of US dollars outside of Canada during that period, Ernie went so far as to speculate that his mother may have travelled during that time. This is absurd evidence given Pina’s health at that time and coming from someone who characterized himself as her essential caregiver who would have known of her whereabouts.

[102] On examination Ernie was asked about a cash withdrawal from the 0038 account on March 2, 2018. He admitted that he had withdrawn that amount but could not recall what it was for or whether it was for his mother’s benefit.

[103] For the reasons set out above, I find that the transactions identified by Frances for the period of January 1, 2018 to May 29, 2018 are ones which were not made for Pina’s benefit and must be repaid to the Estate. Therefore in addition to the amount identified by Ernie as missing from the Estate ($367,924.69), the further sum of $10,095 representing the identified transactions between January 1 to May 29, 2018 must also be repaid making a total repayment of $378,019.18.

[104] I also entirely reject Ernie’s argument that he had some form of account based right to withdraw funds from the 0038 account. Even without the limitations and restrictions in the bank POA, Ernie was not entitled to use that property for his own benefit based on his obligations as a fiduciary and on basic trust principles. That obligation did not change even when the account was officially changed to a joint account in 2018.

[105] In terms of the issue of compensation, I do not find that Ernie had any right to compensation as an Attorney or Estate Trustee due to his mismanagement and dissipation of his mother’s assets. As per the Mak decision, his pre-taking of compensation must be repaid due to his failure to account, his gross indifference to his fiduciary duties, and his use of his mother’s property as his own. If I am wrong, the bank POA overrides the POA for Property and specifically excludes any entitlement to compensation.

Issue #3 – What Should Happen to the Funds Held in Trust?

[106] The only remaining funds available in the Estate currently are the funds held by Casey & Moss LLP in the amount of $74,894.80 as ordered by Dietrich J.

[107] Repaying funds to the Estate would not be practical and would require the time and expense of appointing a Succeeding Estate Trustee. Any remaining liabilities of the Estate (such as the improperly deposited pension amounts) must be assumed by Ernie and paid from his 50 percent share.

[108] Given the above, any amounts owed to Frances are to be paid to her directly.

ORDERS AND COSTS

[109] The Respondent has failed to prove that he is entitled to any gifts from the deceased and must repay the sum of $342,759.94.

[110] The Respondent has breached his fiduciary duty to account for the period of January 1, 2018 to September 22, 2021. He must repay the sum of $378,109.18.

[111] The total owed by the Respondent to the Estate is therefore $720,779.12 of which the Respondent owes the Applicant the sum of $360,389.56.

[112] The funds held by Casey & Moss ($74,894.80) are to be immediately paid to the Applicant and deducted from the amounts owing to her by the Respondent, leaving a balance owing to the Applicant by the Respondent of $285,494.76.

[113] As it is not practical to appoint a Succeeding Trustee for the Estate, the amount of $285,494.75 owing from the Respondent to the Applicant is to be paid to the Applicant personally forthwith.

[114] The Respondent shall be solely responsible for the administration and any debts of the Estate going forward including any overpayment of government benefits to the deceased, the filing and payment of any taxes owed by the Estate or the deceased, and any other Estate liabilities. The Applicant shall not be responsible for any liabilities of the Estate.

Costs

[115] As Offers to Settle were apparently exchanged, I will receive written submissions on costs of no more than three pages (double spaced) excluding any Bill of Costs or Offers to Settle and uploaded to Caselines on the following schedule:

a. The Applicant’s costs submissions are due within five days of the release of this judgment.

b. The Respondent’s costs submissions are due five days after the Applicant’s costs are due.

c. Any reply costs submissions from the Applicant are due within three days of the Respondent’s costs submissions.

[116] If no costs submissions are receiving within 35 days of the date of release of this judgment, costs will be deemed to be settled.

C. Gilmore, J.

Released: February 14, 2023

COURT FILE NO.: CV-21-00662943-00ES

DATE: 20230214

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF GUISEPPINA MOSSETTI, deceased

BETWEEN:

Frances Picone Applicant

– and –

Ernie Mossetti, personally and in his capacity as Estate Trustee of the Estate of Guiseppina Mossetti. Respondent

JUDGMENT ON APPLICATION

C. Gilmore, J.

Released: February 14, 2023