Court File and Parties
Court File No.: CV-21-00657377-00ES Date: 2023-03-20 Ontario Superior Court of Justice
Between:
KATHLEEN FLORENCE DOHERTY in her personal capacity and capacity as Estate Trustee of MOLLY MARIE DOHERTY Applicant
– and –
TERRENCE RAYMOND DOHERTY also known as TERRANCE RAYMOND DOHERTY also known as TERENCE RAYMOND DOHERTY in his personal capacity and capacity as Attorney for Property for Molly Marie Doherty, SYLVIA JOAN KURKOWSKI DOHERTY also known as SYLVIA JOAN DOHERTY, and LIAM ALEXANDER DOHERTY Respondents
Counsel: Kimberly Gale, for the Applicant Kathleen Florence Doherty Terrence Raymond Doherty, Self-represented Sylvia Joan Kurkowski Doherty, Self-represented Liam Alexander Doherty, Self-represented
Heard: February 21, 2023
Reasons for Judgment
Dietrich J.
[1] This application involves a dispute regarding property owned by the late Molly Marie Doherty (“Mrs. Doherty”). The dispute is between Mrs. Doherty’s daughter Kathleen Marie Doherty (the “Applicant”) and the respondents, who are Mrs. Doherty’s son Terrence Doherty (“Terrence”), Terrence’s spouse, Sylvia Joan Kurkowski Doherty (“Sylvia”), and their son, Liam Alexander Doherty (“Liam”). [^1]
[2] Initially, the Applicant sought an accounting from Terrence for $709,515.01, which sum appeared to the Applicant to be missing from Mrs. Doherty’s bank accounts. Terrence has admitted that while he was acting as Mrs. Doherty’s Attorney for Property, $370,822.63 was withdrawn from Mrs. Doherty’s bank accounts. Terrence also admits that of this amount, $329,745.02 was transferred into accounts held directly or indirectly by each of Sylvia, Liam and himself (the “Transferred Amount”).
[3] Terrence asserts that the funds transferred to Liam and to himself from Mrs. Doherty’s accounts in 2018 were inter vivos gifts from Mrs. Doherty. Terrence also asserts that the transfers were made from joint accounts held by Mrs. Doherty and himself, with right of survivorship, and that he was a beneficial owner of those accounts.
[4] Liam admits that he received $78,000 of the Transferred Amount. Of this amount, Liam submits that $23,000 was a gift from Mrs. Doherty to pay off a truck loan on which Mrs. Doherty was co-signer. Regarding the remaining $55,000, Liam submits that this amount was loaned to him by Terrence to permit him to pay off credit card debt and to make a down payment on the house in Petawawa, Ontario, which he and his spouse, Danielle purchased, and where they reside.
[5] Terrence submits that other than amounts transferred to Liam, the balance of the funds comprising the Transferred Amount were his to deal with as he wished. Sylvia’s evidence includes no reference to funds that Terrence transferred into her bank accounts.
[6] The issues to be determined are whether the Transferred Amount was a valid inter vivos gift from Mrs. Doherty to Liam and to Terrence; and if it was not, whether the respondents are jointly and severally liable for the wrongful removal of the Transferred Amount.
[7] For the reasons that follow, I find that the Transferred Amount was not a gift, and that Terrence and Sylvia are jointly and severally liable for damages arising from the wrongful removal of the Transferred Amount from Mrs. Doherty’s accounts. I find that Liam must make restitution for the $78,000 he received.
Background Facts and Evidence
[8] Mrs. Doherty survived her husband Raymond Doherty, who died on November 13, 2015. Mrs. Doherty died on October 11, 2019, at 84 years of age.
[9] Following her husband’s death, Mrs. Doherty was diagnosed with pulmonary fibrosis. She continued to reside in the family residence at 24 Singleton Street, in Brighton, Ontario (the “Residence”). Terrence and Sylvia resided in the Residence from time to time, when they were not in Florida or staying in their trailer, near Flinton, Ontario. Since 2011, from October to May, Terrence and Sylvia lived on their sailboat moored in Florida, in the United States of America. Between May and October, they would either stay at their trailer or at the Residence. After 2016, until the Residence was sold in 2018, they spent their summers with Mrs. Doherty at the Residence.
[10] On November 29, 2017, Mrs. Doherty executed a power of attorney for property in which she appointed Terrence as her Attorney for Property and Terrence’s daughter, Meaghan Marie Doherty (“Meaghan”) as her alternative Attorney for Property.
[11] When Terrence and Sylvia returned from Florida in the spring of 2018, they noticed that Mrs. Doherty was not coping well. Her weight had dropped to 88 pounds, and the Residence, which was normally neat and tidy, had fallen into a state of disrepair and neglect. They discussed the necessary repairs and the possibility of selling the Residence.
[12] On June 14, 2018, with the assistance of a lawyer, Aleesha Camp, Mrs. Doherty executed a new power of attorney for property in which she appointed Terrence as her attorney for property, and Sylvia Doherty as her alternative attorney for property. Mrs. Doherty also executed a will in which she left the residue of her estate to Terrence, if he survived her, and failing Terrence, to Sylvia, if she survived Mrs. Doherty.
[13] Terrence and Sylvia undertook all the repairs at the Residence. The costs of the repairs and the labour were paid for by Mrs. Doherty out of her CIBC bank accounts, to which Terrence had access as her attorney for property.
[14] On August 10, 2018, Mrs. Doherty entered into an Agreement of Purchase and Sale to sell the Residence. The Agreement of Purchase and Sale was signed by Mrs. Doherty and, at the specific request of the listing agent, by Terrence, as well, in his capacity as Attorney for Property. The real estate agent expressed some doubt about Mrs. Doherty’s ability to fully understand the Agreement of Purchase and Sale. The Residence was sold for $260,000, and the transaction closed on October 1, 2018. The 2018 Power of Attorney document was registered on title. Proceeds of $243,418.95 were deposited into Mrs. Doherty’s CIBC account on October 2, 2018.
[15] Terrence’s evidence is that the Residence was sold at approximately 30 per cent below its market value but that it was Mrs. Doherty’s decision to sell it at that price.
[16] During the last week of September 2018, Mrs. Doherty moved into Applefest Lodge, an assisted-living facility in Brighton.
[17] Weeks later, on October 5, 2018, Mrs. Doherty moved into McQuigge Lodge, a long-term care facility, in Belleville, Ontario.
[18] Later that October, Terence and Sylvia left for Florida where they stayed for the winter.
[19] In February 2019, while in Florida, Terence and Sylvia were advised that Mrs. Doherty had two visitors at McQuigge Lodge. They were the Applicant and Meaghan. The Applicant had been estranged from the Doherty family for a number of years and had not been living in the Brighton area.
[20] During the visit, the Applicant made some inquiries regarding the sale of the Residence, as well as the management of Mrs. Doherty’s property and her personal care.
[21] Terence and Sylvia returned to Brighton in May 2019 for the summer, but they did not visit Mrs. Doherty. Sylvia’s evidence is that they did not do so because they knew that the Applicant was then spending every day at McQuigge Lodge with Mrs. Doherty, and if they had gone, there would have been a confrontation between them and the Applicant.
[22] On June 16, 2020 the Applicant contacted the Ontario Provincial Police (the “OPP”), alleging that Terrence had stolen $400,000 from Mrs. Doherty while acting as her attorney for property.
[23] Terrence’s evidence is that the Applicant was telling people that he and Sylvia had sold the Residence, put Mrs. Doherty in a care facility, and left the country with Mrs. Doherty’s money. Terrence attested that shortly after the Applicant’s arrival, she reported Mrs. Doherty’s credit cards stolen, she attended at the OPP detachment in Brighton to allege that Terrence had committed fraud, and she sought an investigation into allegations that Terrence had threatened Mrs. Doherty with firearms, sold her Residence, forced her into long-term care, and abused Mrs. Doherty, including by starving her. Terrence also attested that the Applicant had alerted Aleesha Camp’s law office that they would be charged with aiding and abetting in fraud relating to the sale of the Residence and theft of Mrs. Doherty’s money.
[24] Between June 1, 2018 and August 14, 2019, more than $370,000 had been withdrawn from Mrs. Doherty’s CIBC bank accounts. Terrence does not dispute that within 20 days of the deposit of proceeds of $243,418.95 from the sale of the Residence, he arranged for a total of $230,000 to be transferred to Sylvia and Liam.
[25] At the date of Mrs. Doherty’s death, her assets totalled $46,682.78.
[26] The Applicant arranged for a capacity assessment of Mrs. Doherty by A.S. Kaye Consultants. In a letter to the Applicant’s counsel dated August 2, 2019 (“Ms. Kaye’s Opinion”), Ms. Kaye confirmed that she had assessed Mrs. Doherty in order to provide an opinion concerning Mrs. Doherty’s capacity to grant/revoke powers of attorney for property and personal care, as well as her testamentary capacity. In Ms. Kaye’s Opinion, she stated: “Despite the cognitive deficits, Mrs. Doherty displayed the ability to comprehend both the risks and the benefits of executing a power of attorney for property and it is, therefore, my opinion that she meets the legal criteria to assign/revoke a power of attorney for property.” Ms. Kaye came to the same conclusion regarding Mrs. Doherty’s capabilities regarding a power of attorney for personal care.
[27] On August 13, 2019, Mrs. Doherty executed a new power of attorney for property and a new power of attorney for personal care, in each of which she appointed the Applicant as her attorney, and in the alternative, she appointed Meaghan as her attorney. Mrs. Doherty also executed a new will in which she appointed the Applicant as her Estate Trustee, and she bequeathed her estate to the Applicant and Meaghan in equal shares.
[28] According to Terrence’s evidence, on the same day, the Applicant arranged to have Mrs. Doherty leave McQuigge Lodge. He and Sylvia then retained a lawyer to assist them to have Mrs. Doherty returned to McQuigge Lodge. They were unsuccessful in their attempts, and they decided to get on with their lives and not to pursue legal avenues available to them. They returned to Florida that fall.
[29] On September 17, 2020, Terrence and Sylvia, having returned to Ontario from Florida for the summer, heard from the Brighton OPP about an ongoing criminal investigation into Terrence’s management of Mrs. Doherty property, including allegations of fraud and theft. It was during their interview with the OPP on September 27, 2020 that they learned that Mrs. Doherty had died 11 months earlier.
[30] Pursuant to the Applicant’s complaint to the OPP, the OPP pursued a “Power of Attorney Theft” investigation. Following the investigation, PC Watson prepared a Report dated January 10, 2021 (the “OPP Report”). No criminal charges were laid. The OPP concluded that the matter was a civil matter between family members.
Did Mrs. Doherty make a gift of the Transferred Amount?
Law regarding gifts
[31] A gift is a voluntary transfer of property to another without consideration: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 23.
[32] The Court of Appeal for Ontario, in Teixeira v. Markgraf Estate, 2017 ONCA 819, 137 O.R. (3d) 641, at para. 38, set out the three-part test that a donee must meet to prove a gift. The donee must show (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration; (2) acceptance of the gift by the donee; and (3) a sufficient act of delivery or transfer of the property to complete the transaction.
[33] To make a delivery or transfer, the donor must divest himself or herself of all power and control over the property and transfer such control to the donee: McNamee, at para. 25.
[34] A claimant may not obtain a 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”: s. 13 of the Evidence Act, R.S.O. 1990, c. E.23.
Analysis
[35] To prove that the funds comprising the Transferred Amount were gifts, Terrence and Liam must show that Mrs. Doherty intended to make the gifts without consideration or expectation of remuneration; that the donee accepted the gift; and that Mrs. Doherty delivered or transferred the funds to complete the transaction. For the reasons that follow, I find that neither Liam nor Terrence has met his onus to prove that Mrs. Doherty made a gift to him of funds comprising the Transferred Amount.
[36] In Terrence’s affidavit sworn November 27, 2022, he makes three statements regarding Mrs. Doherty’s intention to make a gift of the Transferred Amount. The first relates to the alleged gift of $23,000 to Liam, the second relates to the alleged gift/loan to Liam to assist him and his spouse to purchase a house in Petawawa, and the third relates to the transfer of the balance of the funds, to accounts registered directly or indirectly to Sylvia.
a) The $23,000 paid to Liam
[37] Regarding the alleged gift of $23,000 from Mrs. Doherty to Liam, Terrence recounts a visit that Mrs. Doherty, Terrence, and Sylvia had with Liam. Terrence deposed: “While we were there having lunch, my mother was speaking with Liam about his deployment with the Canadian military to Latvia. During the long conversation my mother found out Liam still owed about $23,000 on his truck. My mother decided that Liam shouldn’t have to worry about it while overseas. Molly paid it off.” Terrence says that this conversation took place months before Mrs. Doherty moved into a long-term care facility.
[38] In Liam’s affidavit, sworn June 18, 2021, he stated that his grandmother, Mrs. Doherty, co-signed the loan on his 2013 Dodge RAM truck. Attached to his affidavit, as an exhibit, is documentation regarding that loan, which shows Molly Doherty as a Co-Borrower, but the document does not bear a date or Mrs. Doherty’s signature. Liam did not produce any sworn evidence regarding Mrs. Doherty’s intention to pay off the loan by giving him $23,000. Nor did he corroborate Terrence’s evidence regarding Mrs. Doherty’s intention.
[39] In Liam’s affidavit, he stated that “[t]he money to pay off the remainder of the loan on that truck was deposited into my bank account on 11 June 2018. The cheque to pay off the loan however was dated June 18, 2018.” Liam does not attest to the source of the funds deposited into his bank account. His documentary evidence does not include a copy of the cheque or other evidence of payment from Mrs. Doherty. However, records produced by CIBC include a copy of a CIBC bank draft bearing the name of “Terence Doherty” dated June 8, 2018. The bank draft directs a payment to the order of “Liam Doherty” in the amount of $23,000.
[40] Regarding the repayment of the truck loan on June 18, 2018, Liam included, as an exhibit to his affidavit, what appears to be an excerpt from an RBC bank statement for an account that Liam says is his, but neither his name nor an account number appears anywhere on the statement. The statement is for the period from June 1, 2018 to June 30, 2018. It shows a “BR to BR” deposit of $23,000 on June 11, 2018. As evidence that Liam paid off the loan, attached to his affidavit as an exhibit is a bank draft payable to Scotiabank Retail Service Centre, dated June 18, 2018 in the amount of $22,264.02, debited from Royal Bank of Canada. However, while the RBC bank statement shows the deposit of $23,000 on June 11, 2018, it does not show any withdrawals from the RBC account for the period from June 1, 2018 to June 30, 2018. This causes me to question the reliability of the RBC statement and the other documentary evidence provided by Liam regarding the alleged gift.
[41] Regardless, the documentary evidence does not prove a gift, or a payment of $23,000 from Mrs. Doherty to Liam to repay the loan. Contrary to Terrence’s statement that “Molly paid it off”, I find that there is no proof of that.
[42] Liam argues that the $23,000 was received by him prior to the execution of the June 14, 2018 power of attorney, therefore the gift had to be an inter vivos gift from Mrs. Doherty to Liam because it was not made using the power of attorney. I disagree.
[43] The CIBC bank draft for $23,000 clearly bears Terrence Doherty’s name, and not Molly Doherty’s name. Terrence Doherty could only have obtained the CIBC bank draft through his use of the earlier power of attorney, the one made on November 29, 2017.
[44] Even if it could be shown that Mrs. Doherty had intended to make the gift of $23,000 to repay the loan, there is no evidence that Mrs. Doherty, herself, delivered or transferred the funds to complete the transaction, or that she specifically directed or authorized Terrence to make the gift on her behalf from her CIBC account using the November 29, 2017 power of attorney.
[45] I find that the $23,000 that Liam received from Mrs. Doherty’s CIBC account, as facilitated by Terrence Doherty, was not an inter vivos gift, and that those funds must be returned to Mrs. Doherty’s estate.
b) The $55,000 paid to Liam
[46] Regarding the alleged gift of $55,000 to Liam to make a down payment on a house in Petawawa, Terrence’s sworn evidence is that when Liam decided to buy it, “Molly said to just forward the $55,000 from the Estate for the down payment for the purchase of the house; as a loan and give him time to get settled in before he started to repay it to you.”
[47] Liam’s evidence is that he was in Latvia when he got the news about the opportunity to buy the house in Petawawa and that “[w]e borrowed $55,000 from my dad to pay off credit card debt and to cover the down payment and associated fees, on the agreement that I would repay the loan in installments, beginning when I returned to Canada.” In his affidavit, Liam deposed that he received $55,000 on October 19, 2018. Attached to his affidavit, as an exhibit, is a copy of a Bank of Montreal statement for the period ending October 25, 2018. The account appears to be in the names of Liam and his spouse, Danielle. The statement shows a transaction on October 19, 2018 described as “Incoming Wire Payment CA, Molly Doherty.” The amount of the transfer is $55,000.
[48] Based on the affidavits of Terrence and Liam, there is no evidence of Mrs. Doherty’s intention to make a gift of $55,000 to Liam. Both Terrence and Liam refer to the $55,000 transfer to Liam as a loan. Terrence refers to the amount as a loan from the “Estate”, and Liam refers to it as a loan from his father, Terrence.
[49] Liam argues that because there was no loan agreement or promissory note, and because he never made any payment on the loan to Mrs. Doherty or her estate, the conclusion must be drawn that the funds were meant as a gift. Liam offered no law in support of this position, and I reject it. On his own evidence, Liam made an oral loan agreement with his father to repay the funds. He had no agreement with Mrs. Doherty.
[50] Liam also argues that the $55,000 payment was a legitimate gift made by Terrence as Mrs. Doherty’s attorney for property pursuant to s. 37(3) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”). I reject this argument as well. It is inconsistent with Liam’s evidence that he borrowed the $55,000 from Terrence. Also, pursuant to s. 37(3) of the SDA, an attorney for property may only make gifts of an incapable person’s property to relatives if there is reason to believe, based on the intentions of the person expressed before becoming incapable, that he or she would make them if capable. Liam submits, without any documentary evidence, that Mrs. Doherty was incapable at that time. He also submits that the fact that Mrs. Doherty co-signed for his truck loan is evidence that she would make the $55,000 gift if capable. In my view, Mrs. Doherty’s act of co-signing on Liam’s truck loan while capable, in respect of which there is no evidence that she, personally, made any loan payment, is not evidence of an intention expressed before becoming incapable that she would make a gift of $55,000 to Liam to pay off credit card debt and make a down payment on a house.
[51] I find that neither Terrence nor Liam has shown that Mrs. Doherty had an intention to make a gift of $55,000 to Liam. At best, she had a loan in mind. Further, by October 19, 2018, when the wire transfer was made, Mrs. Doherty was residing in a long-term care facility. There is no evidence to suggest that she arranged for the wire transfer of the funds from her CIBC account into the Bank of Montreal account in the names of Liam and his spouse. According to the CIBC records produced, the wire transfer was arranged by Terrence using the June 14, 2018 power of attorney.
[52] I find that the $55,000 that Liam received from Mrs. Doherty’s CIBC account, as facilitated by Terrence Doherty, was not an inter vivos gift, and those funds must be returned to Mrs. Doherty’s estate.
c) The balance of the Transferred Amount ($246,745.02)
[53] Terrence does not dispute that he removed the balance of the Transferred Amount from Mrs. Doherty’s CIBC accounts while acting as Mrs. Doherty’s attorney for property.
[54] Based on the CIBC records, there were several transfers and withdrawals from Mrs. Doherty’s CIBC bank accounts by Terrence between June 2018 and October 2018. Included in these transactions are an internet transfer to Terrence for $1,000 on June 15, 2018, four unexplained internet transfers between July 18, 2018 and October 29, 2018 in the total amount of $18,105, several e-transfers, totalling $45,000, to “Al Frecso” and others, totalling $6,000, to “Sly One.” CIBC records confirm that the recipient account for both the “Al Fresco” and the “Sly One” transfers was a Toronto Dominion Bank account in the name of Sylvia Doherty. The CIBC records also confirm that the e-transfers were processed with a debit card issued on June 8, 2018 through the CIBC Brighton branch to Terrence Doherty.
[55] Neither Terrence nor Sylvia adduced sufficient evidence to show that any of these transfers or withdrawals, including the amounts transferred to Al Fresco or Sly One comprising the balance of the Transferred Amount, were valid gifts from Mrs. Doherty.
[56] Regarding the transfer of the balance of $175,000 on October 22, 2018, Terrence’s sworn evidence is: “The balance of the fund in the Estate of about $175,000 were mine to do as I wished. A gift Inter Vivos. My mother wanted the entire Estate settled since she was going into the home to die as I was her only kid [^2] I was going to get it all anyway. While having conversations with my mother about traveling and how Sylvia and I loved sailing, my mother said to take all the money and go sailing since if we didn’t, we would wind up just like her. On our way to visit my mom again we stopped at CIBC Branch in Tweed and transferred the funds to my Account.” The CIBC bank records show that on October 22, 2018, a transfer of $175,000 was made from Mrs. Doherty’s CIBC account to Sylvia’s Toronto Dominion Bank account.
[57] This evidence of Mrs. Doherty’s intention to gift these funds to Terrence, as submitted by Terrence, is contradicted by Ms. Kaye’s Opinion. In Ms. Kaye’s Opinion, she describes her conversation with Mrs. Doherty about events leading up to her admission to an assisted-living facility. Ms. Kaye reported:
Mrs. Doherty stated that her son had told her to sign papers that she felt were to allow him to assist with renovations to her home. She reported that her son brought more papers to her and told her to sign them “or else I won’t get the money for the renovations.” She stated that she had done so assuming that she could trust him to get these things done. She stated that she had been told that the power of attorney meant “I could fix the house.” She stated, “I didn’t realize it would mean that he would have access to all my money.” She stated, “It was like a slap in the face. The (son and wife) never worked … they drank. They lived in the basement of the house” and she reported that she had been paying for the renovations to the house. She was aware that her home had been sold and the approximate price of the home, but she did not know exactly what had occurred. Mrs. Doherty reported that after she had signed these papers, her son told her she was “incapable” and that she did not know what had happened with any of her funds.
[58] To corroborate his evidence of the gift, Terrence relies on the OPP Report. In particular, he relies on PC Watson’s concluding statement: “it was concluded that an offence of power of attorney theft was not completed.” The final statement of the report is: “Complainant was advised of the civil issue between the estate.” The final statement is important. An OPP Report that falls short of recommending a criminal charge of fraud, where the onus is proof beyond a reasonable doubt, is insufficient to answer a civil proceeding in which the evidence must meet proof on a balance of probabilities.
[59] Further, in my view, the OPP Report also falls well short of evidencing any intention of Mrs. Doherty to make a gift of the balance of the Transferred Amount to Terrence. It appears that in reaching his conclusion that there was no power of attorney theft, PC Watson relied, at least in part, on Terrence’s statements made in the interview. Some of these statements were inconsistent with Terrence’s own sworn evidence, and others were not true. For example, PC Watson noted that Terrence “advised that any funds going in or out were done with Molly’s permission or was his own money.” There is no evidence, other than Terrence’s evidence, that Mrs. Doherty gave her permission for all transfers in and out of her bank accounts. Her own evidence, as recorded by Ms. Kaye, is to the contrary. There is no sworn evidence whatsoever, even from Terrence, that any of the funds in Mrs. Doherty’s accounts were “his own money.” Terrence also reported that the CIBC accounts from which the funds were transferred were joint accounts between Mrs. Doherty and him. This is not a true statement, which I will address further below. According to the OPP Report, Terrence told PC Watson that the transfers to “Al Fresco” were transfers to Mrs. Doherty’s brother. This statement is also untrue. As noted, the CIBC records show that the transfers to Al Fresco were transfers into a bank account owned by Sylvia. Terrence reported to PC Watson that the $55,000 transfer was made so that Mrs. Doherty’s grandson (Liam) could pay off his truck and put a down payment on a house at a time when the grandson was overseas with the Canadian military. This statement is also inconsistent with Terrence’s own evidence and Liam’s evidence. The $55,000 payment was used to repay credit card debt and to make a down payment. It was separate from the truck loan, which had been paid off prior to Liam’s deployment overseas. In the result, I find that the OPP Report in no way corroborates Mrs. Doherty’s intention to make a gift of the Transferred Amount.
[60] In addition to telling PC Watson that the CIBC accounts were joint accounts, Terrence has made this same assertion several times in these proceedings. Terrence argues that he has a beneficial interest in Mrs. Doherty’s CIBC bank accounts as a joint owner. This assertion is unfounded. The documents produced by CIBC show that Mrs. Doherty was the only account holder of the CIBC accounts.
[61] In his January 24, 2023 affidavit, Terrence stated:
“During the Estate planning discussions the point was made to my mother that it was not possible for me to add myself as POA to the bank accounts. Knowing this my mother decided to go to the bank with me and have me added to the accounts as her son and only child. The pros and cons of doing this were explained by her Account Manager Elizabeth Peake. As POA for Property I could access my mother’s accounts, make deposits and write cheques but it would create no ownership interest in the monies and each transaction would have to be approved by her and I would have the fiduciary duty putting my mother’s wishes first. As a joint owner I would become an owner of these monies as though they were mine. This is what my mother wanted. Since we were often sailing to and visiting other countries, my mother wanted me to have instant access to the money if needed or wanted globally. Since my mother was planning on moving into a seniors residence and expected to have limited access to her bank, me having my own bank card and unrestricted access was important to her.”
[62] Attached as an exhibit to Terrence’s affidavit are a “Signature Card” for each of Mrs. Doherty’s CIBC chequing and savings accounts. Mrs. Doherty appears to have signed the Signature Card for the Chequing Account on November 8, 2016; and Terence appears to have signed the Signature Card for the same account as “poa for Molly Doherty” on June 8, 2018. The Signature Card for Mrs. Doherty’s e-Savings Account appears to have been signed by Mrs. Doherty, and by Terrence as “poa for Molly Doherty”, on June 8, 2018. None of the Signature Cards shows any Secondary Account Holder. That space remains blank on each form. The Primary Account Holder is shown as Molly Doherty or “poa Molly Doherty.” There is a blank on each Signature Card under the heading “Joint.” These Signature Cards evidence that Terence had authority regarding Mrs. Doherty’s CIBC accounts as her attorney for property, but they do not evidence that Terence was a Secondary Account Holder or that the CIBC bank accounts were jointly held by Mrs. Doherty and Terrence. I find that they were not.
[63] Even if it could be found (which I have not) that Mrs. Doherty intended to make Terrence a joint owner of the CIBC bank accounts with full access to the accounts for his own purposes, and Terrence accepted that gift, I would find that Mrs. Doherty did not make a sufficient act of delivery or transfer of the CIBC bank accounts to complete the transaction. Mrs. Doherty could have added Terrence as a joint owner with a beneficial interest in the CIBC accounts, or she could have written a cheque to him in the amount of the Transferred Amount. To make delivery of a gift, the donor must divest himself or herself of all power and control over the property and transfer such control to the donee: McNamee, at para. 25. I find that Mrs. Doherty did not make such a transfer or delivery.
[64] In the result, I find that the sum of $246,745.02 comprising the Transferred Amount, which Terrence removed from Mrs. Doherty’s CIBC bank accounts, the bulk of which was transferred to bank accounts registered to Sylvia, was not an inter vivos gift to Terrence or Sylvia. Those funds must be returned to Mrs. Doherty’s estate.
Liability
[65] The Applicant submits that Terrence committed fraud in dissipating Mrs. Doherty’s assets, and that he breached his fiduciary duties by transferring the funds comprising the Transferred Amount to Sylvia, Liam and himself. The Applicant further submits that Sylvia and Liam were aware of and participated in a conspiracy to defraud Mrs. Doherty. Accordingly, she asserts that Terrence, Sylvia and Liam should be held jointly and severally liable for a) the Transferred Amount plus interest, b) the Applicant’s full indemnity costs, c) the Public Guardian and Trustee’s costs of $3,750 for reviewing the accounts prepared by Terrence as an attorney for property, and d) an amount equal to the difference between the partial indemnity costs awarded to the Applicant in earlier proceedings in this matter ($17,206) and her full indemnity costs of those proceedings.
a) Breach of Fiduciary Duty
[66] I have found that Mrs. Doherty did not make a gift of the Transferred Amount. Terrence removed the funds comprising the Transferred Amount from Mrs. Doherty’s CIBC bank accounts, using a power of attorney for property granted to him by Mrs. Doherty. He has admitted this. The accounting he has prepared shows that $329,745.02 was transferred from Mrs. Doherty’s CIBC accounts to Terrence, Sylvia and Liam or bank accounts controlled by them.
[67] The distinction between whether an attorney is acting pursuant to a continuing power of attorney for property or as an agent when conducting business on the donor’s behalf is an important one. In Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. Ct. J. (Gen. Div.)), Cullity J. considered the difference between an attorney acting for a donor who has mental capacity versus a donor who does not. At para. 151, Cullity J. stated:
An attorney for a donor who has mental capacity to deal with property is merely an agent and, notwithstanding the fact that the power may be conferred in general terms, the attorney’s primary responsibility in such a case is to carry out the instructions of the donor as principal. As an agent such an attorney owes fiduciary duties to the donor but these pale in comparison to those of an attorney holding a continuing power when the donor has lost capacity to manage property.
[68] However, in cases in which an abuse of a power of attorney is alleged, this distinction is less significant because the named attorney will have a fiduciary duty to the donor regardless. The agent-principal relationship is one that is recognized as being fiduciary in nature because the agent can exercise its power over the principal: Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, [2011] 2 S.C.R. 261, at para. 33. An attorney for property acting as such is under a strict fiduciary duty to act in the donor’s best interest. This obligation flows from the breadth of the agent’s powers.
[69] Irrespective of the capacity in which an attorney is acting, the attorney cannot exceed the scope of authority granted to him, and if he does, he will be liable for any breach of fiduciary duty. In this hearing, I make no finding as to whether Mrs. Doherty had or did not have capacity to manage her property when Terrence made the transfers and the withdrawals. The parties take opposing views on whether Mrs. Doherty had capacity to manage her property from time to time.
[70] Even if Terrence was acting as an agent for Mrs. Doherty, he was not permitted to withdraw funds from her bank account for his personal use and the use of his spouse and son. An agent is prohibited from competing with the principal or taking unfair advantage of his or her position in using things acquired because of the agency relationship or because of the opportunities afforded by the position: Tombill Gold Mines Ltd. v. Hamilton (City), [1954] O.R. 871 (H.C.); aff’d, [1955] O.R. 903 (C.A.); aff’d, [1956] S.C.R. 858.
[71] There is no independent, admissible evidence to support Terrence’s claims that Mrs. Doherty authorized any of the transfers. Terrence has not met his burden to prove that the transfers were inter vivos gifts.
[72] Accordingly, I find that Terrence has breached his fiduciary duty to Mrs. Doherty and is liable for the damages that flow from such breach.
b) Joint and Several Liability
[73] A stranger to a fiduciary relationship may be liable under the doctrine of “knowing receipt” if the stranger receives trust property in his or her own personal capacity with constructive knowledge of the breach of trust or fiduciary duty. This is a recipient-based claim arising out of the law of restitution: Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, at p. 21. The Applicant was granted rights under a tracing order, and through her tracing efforts, she can demonstrate receipt of the bulk of the Transferred Amount into Sylvia Doherty’s bank accounts. The CIBC records regarding the repayment of Liam’s truck loan show that the bank draft drawn on Mrs. Doherty’s CIBC account was in Terrence Doherty’s name and not Mrs. Doherty’s. Terrence would only have been able to obtain this bank draft by relying on the November 29, 2017 power of attorney.
[74] Liam’s affidavit sworn June 18, 2021 provides little in the way of background to the $23,000 transaction. He simply states: “The money received to pay off the remainder of the loan on that truck was deposited into my bank account on 11 June 2018.” In my view, Liam was careful not to disclose who deposited the $23,000 into his bank account, or the circumstances of the deposit. If it had been he who made the deposit, he would have seen that the bank draft had not been negotiated by Mrs. Doherty but by Terrence. I also find that Liam did not disclose complete documentary evidence relating to the transaction. The statement he adduced for his own bank account into which the funds were deposited did not have his name on it. Further, though he testified that the loan was repaid by a cheque drawn on an RBC account, the statement he produced for the RBC account for the period June 1, 2018 to June 30, 2018 shows the deposit of $23,000 but no corresponding withdrawal of funds. I find that Liam has been less than forthright on the details of this transaction. Accordingly, I find that it is more likely than not, that Liam was aware that it was Terrence and not Mrs. Doherty who was facilitating the transaction, and that for Terrence to be able to do so, he would have had to rely on a power of attorney. Without Mrs. Doherty’s express permission to make this transfer on her behalf, Terrence’s actions would be outside of the scope of the power of attorney and a breach of his fiduciary duty. Based on the evidentiary record, there were no concerns about Mrs. Doherty’s capacity to do her own banking at this time. No explanation was posited as to why Mrs. Doherty would not write the cheque herself if she wanted to repay the loan. According to Ms. Kaye’s Opinion, Mrs. Doherty reported that “after her husband had passed away, she handled all of the finances and she had ensured that bills were paid automatically from the bank.”
[75] I find that the same analysis applies regarding the $55,000 deposited into Liam’s account by wire transfer from “Molly Doherty.” Though Liam testified that the $55,000 was a loan from Terrence, he would have known from his own bank records, which he produced, that Mrs. Doherty was the source of the funds, and that the transaction had been facilitated by Terrence using a power of attorney. At the time of this deposit, Mrs. Doherty was residing in a long-term care facility, and there is no evidence to show that she was doing her own banking.
[76] Accordingly, I find that Liam is in knowing receipt of trust property in his personal capacity with constructive knowledge of the breach of trust or fiduciary duty. Liam is in receipt of funds entrusted to Terrence and diverted to him in breach of his fiduciary duties. In the process, he has been unjustly enriched, and he must make restitution. He shall be required to repay the $78,000 he received from Mrs. Doherty back to her estate. I do not find that Liam knowingly assisted Terrence in the breach of his fiduciary duties such that he should be held jointly and severally liable for Terrence’s breaches of fiduciary duty.
[77] I find that there is no doubt that Sylvia is in knowing receipt of trust property in her personal capacity with constructive knowledge of the breach or trust or fiduciary duty. In Terrence’s affidavit evidence regarding the $175,000, he states that following a discussion that he and Sylvia were having with Mrs. Doherty, Mrs. Doherty told him that he should take all the money from her account. He further states, “[o]n our way to visit my mom again we stopped at CIBC Branch in Tweed and transferred the funds to my Account.” This statement is not entirely accurate. In fact, according to the CIBC bank records, the funds were deposited into Sylvia’s account. I am satisfied that Sylvia had actual knowledge of Terrence’s breach of fiduciary duty. Based on Terrence’s evidence, she attended at the CIBC branch when the funds were taken from Mrs. Doherty’s account and deposited into her own. It strains credulity to think that Sylvia would not have known that these funds came from Mrs. Doherty’s account, and that Terrence arranged the transfer using a power of attorney. At this time also, Mrs. Doherty was residing at a long-term care facility and not likely attending to her own banking.
[78] Terrence deposed that the use of the accounts in the names of “Al Fresco” and “Sly One” were “simply memos placed on the moneys to keep track of them, not shell companies.” I do not accept this explanation. Terrence had a different explanation for PC Watson. He told PC Watson that Al Fresco was Mrs. Doherty’s brother to whom Mrs. Doherty was pestering Terrence to make payments. The “Al Fresco” and “Sly One” destinations for Mrs. Doherty’s funds would have had to have been created with Sylvia’s assistance. Based on the CIBC records, the accounts with these names were Sylvia’s accounts at the TD Bank. I find it more likely than not that these account names were created by Sylvia and used by Terrence and her with an intent to deceive, and to make Mrs. Doherty’s funds more difficult to trace. Otherwise, Terrence could have been honest with PC Watson when the constable asked him about transfers of funds to the Al Fresco account.
[79] 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, 355 D.L.R. (4th) 333, at para. 23.
[80] I find that Sylvia was complicit and participated in Terrence’s breaches of his fiduciary duty by facilitating transfers to accounts in her name that would likely be more difficult to detect than accounts in Terrence’s name. In Air Canada v. M. L. Travel Ltd., [1993] 3 S.C.R. 787, the Supreme Court of Canada held that a stranger to a trust or fiduciary obligation may also be liable in equity based on “knowing assistance” when the stranger, with actual knowledge, participates in or assists a defaulting trustee or fiduciary in a fraudulent and dishonest scheme. The rationale underlying this category of liability is that actual knowledge of and assistance in the fraudulent conduct is sufficient to bind the stranger’s conscience to give rise to personal liability. I am satisfied that Sylvia was fully aware of Terrence’s fiduciary relationship as an attorney for property, and she was aware that he was breaching his fiduciary relationship by essentially draining Mrs. Doherty’s bank accounts for the benefit of persons other than Mrs. Doherty. Further, Sylvia knowingly participated and assisted in Terrence’s fraudulent and dishonest conduct.
[81] As Sylvia is in knowing receipt of trust funds, and she knowingly assisted Terrence in the breach of his fiduciary duties, she is jointly and severally liable for damages arising from her knowing assistance in the breach by Terrence of his fiduciary duties to Mrs. Doherty. Because she acted as an accessory to Terrence’s breach of duty, it is appropriate that she be jointly and severally liable with him. Accordingly, she too is liable for the full amount of the damages, and not just the share of the Transferred Amount that she received. The liability arises from fraud while acting as fiduciary, or knowingly assisting the fiduciary in his breach of his fiduciary duties.
Costs
[82] The Applicant has been successful in this proceeding, and she is entitled to her costs. She seeks costs of $74,289.16 on a full indemnity basis, and she seeks an order that the respondents pay the costs of the Public Guardian and Trustee ($3,750) for reviewing the accounts relating to Mrs. Doherty’s property.
[83] The Applicant submits that full indemnity costs are appropriate because she brought the application as the Estate Trustee of Mrs. Doherty’s estate, and because Terrence is in contempt of a number of court orders, including orders requiring him to provide a tracing of the funds he removed from Mrs. Doherty’s accounts, to make proper disclosure, and to pay costs of $17,206.
[84] The Applicant contends that full indemnity costs are appropriate for the entire proceeding because Terrence, with the assistance of Sylvia, misappropriated at least $329,745.02 from Mrs. Doherty’s bank accounts. The removal of the funds was outside of the scope of the powers of attorney on which he relied, and a breach of his fiduciary duties. The Applicant submits that such wrongful and fraudulent activity should be sanctioned with full indemnity costs at every stage. Further, the Applicant submits that full indemnity costs are appropriate in this case because Terrence sent unprofessional and threatening emails to her counsel.
[85] I decline to adjust the costs awards totalling $17,206 already made by adding to those awards an amount to reflect costs awarded on a full indemnity scale, as opposed to the partial indemnity costs awarded by the motion judge, Gilmore J. In respect of at least one of these awards, Gilmore J. heard the Applicant’s request for full indemnity costs and denied it.
[86] Considering the Applicant’s arguments and considering the relevant factors set out in r. 57.0l of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, I find that costs on a full indemnity scale in respect of costs not yet awarded are appropriate in this case. Terrence breached his fiduciary duties as his mother’s attorney for property and essentially drained her bank accounts, while she was living in a long-term care facility. He did this by transferring the bulk of her funds to family members for their own personal use. In my view, this conduct rises to the level of reprehensible, scandalous, and especially egregious. It is conduct worthy of the serious sanction of full indemnity costs.
[87] I find the Applicant’s Bills of Costs and written costs submissions somewhat difficult to follow. It appears that she has included in her request for full indemnity costs of $74,289.16 the partial indemnity costs that have already been awarded, plus an upward adjustment on those costs to reflect costs on a full indemnity scale, as opposed to a partial indemnity scale. As noted, I decline to make that adjustment. Further, this inclusion would result in a costs order for costs that have already been ordered.
[88] Considering the Bill of Costs, without the inclusion of costs for matters on which costs have already been awarded, and without the requested upward adjustment to those costs, it appears that the Applicant’s full indemnity costs would be $41,175. [^3]
[89] The Bill of Costs also appears to include disbursements that have already been ordered to be paid. Netting out those disbursements, the disbursements remaining appear to total $1,987.01.
[90] In the result, I fix the Applicant’s costs, on a full indemnity basis, at $41,175 plus HST, plus disbursements of $1,987.01 plus applicable HST. Those costs shall be payable by the respondents, Terrence, Sylvia and Liam, whose liability for such costs is joint and several, provided that Liam’s share of the costs shall not exceed one-third of the total costs owing. Such costs shall be paid within 30 days.
[91] Regarding the Public Guardian and Trustee’s costs of $3,750 plus HST for reviewing accounts relating to Mrs. Doherty’s property, it is unclear why the Public Guardian and Trustee would have been engaged, after Mrs. Doherty’s death, to review accounts relating to the management of Mrs. Doherty’s property while she was alive. However, it appears that Terrence mistakenly added the Public Guardian and Trustee as a respondent to his application to pass accounts as an attorney for property. It is, therefore, appropriate that Terrence pay the Public Guardian and Trustee’s costs of reviewing the application.
Disposition
[92] An order shall issue:
a. Declaring that $329,745.02 (the Transferred Amount) that Terrence removed from Mrs. Doherty’s CIBC bank accounts was not an inter vivos gift in whole or in part to Terrence or Liam, or both of them.
b. Directing Liam to make restitution by repaying $78,000 of the Transferred Amount to Mrs. Doherty’s estate within 30 days.
c. Declaring that Terrence is in breach of his fiduciary duties, and Sylvia knowingly assisted Terrence in the breach of his fiduciary duties; and they are jointly and severally liable for $329,745.02 (the Transferred Amount), the repayment of which shall be made to Mrs. Doherty’s estate within 30 days.
d. Directing Terrence to pay the Public Guardian and Trustee’s costs of $3,750 plus HST regarding its review of the accounts prepared by Terrence as attorney for property.
e. Directing the respondents to pay the Applicant’s full indemnity costs of the application in respect of her costs that have not already been awarded, as hereinbefore calculated, on a joint and several basis, within 30 days, provided that Liam shall not be required to pay more than one-third of such costs.
Dietrich J.
Released: March 20, 2023
Footnotes
[^1]: Because each of the three respondents bears the same surname, for clarity, I will refer to each by his or her first name. In doing so, I intend no disrespect. [^2]: Throughout the proceedings, Terrence expressed his view that he is the only child of Mrs. Doherty. This view is grounded in his belief that the Applicant abandoned the family and is therefore no longer a child of Mrs. Doherty. There is no evidence to suggest that the Applicant is not Mrs. Doherty’s child. [^3]: If there are arithmetical errors in my calculation, these may be addressed at a scheduling appointment on notice to all parties.