Court File and Parties

Court File No.: CV-22-00677419-00ES Date: 20230111 Ontario Superior Court of Justice – Ontario (Estates List)

In the Matter of the Estate of Wendy Elizabeth Dixon, deceased

Between:

HELEN BRIDIE DIXON Applicant

And:

KIRSTY ELEANOR SPENCER, SHANE SPENCER, ALEXIA MARY PRUDHOMME, and NICOLE RICHENDA AMOS Respondents

Before: Justice Sanfilippo

Counsel: Peter Askew, for the Applicant Kelly Charlebois, for the Respondent, Kirsty Eleanor Spencer Alexia Mary Prudhomme, self-represented Respondent Nicole Richenda Amos, self-represented Respondent

Heard by video: October 25, 2022

Reasons for Decision

Overview

[1] Wendy Elizabeth Dixon was born in England in 1934, moved to Canada in 1966 and died a resident of Ontario on October 7, 2018 (the “Deceased”). She was predeceased by her husband, Peter Michael Dixon, who died in 2011. She was survived by her four daughters: the Applicant, Helen Bridie Dixon, and the Respondents, Kirsty Eleanor Spencer, Alexia Mary Prudhomme and Nicole Richenda Amos. Ms. Dixon, along with Ms. Spencer and her spouse, Shane Spencer, were appointed Estate Trustees of the estate of Wendy Elizabeth Dixon (the “Estate”). The four sisters are equal beneficiaries under the Deceased’s Will.

[2] This dispute arises from a single asset, which I will refer to as the Aviva Bond, valued in the amount of $123,558.64. The Applicant, Ms. Dixon, claimed that the Aviva Bond ought to form part of the Estate and be distributed in equal shares of $30,889.66 to each sister. The Respondents maintained that, years prior to her death, the Deceased transferred the Aviva Bond to Ms. Spencer and Ms. Prudhomme as a gift. They submitted that the Aviva Bond did not form part of the Estate.

[3] On the basis of the reasons that follow, I find that the Aviva Bond is not an asset of the Estate. A declaration shall issue to this effect. This Application is otherwise dismissed.

I. Factual Background

[4] I will set out the facts that framed the background to this Application.

A. The Aviva Bond

[5] The Aviva Bond was originally arranged by the Deceased’s spouse and bears an “effective date” of May 5, 1998. It was a “With-Profits Life Assurance Premier Investment Bond”, bearing policy number R239571, administered by Aviva Life & Pensions UK Limited (“Aviva”), an insurance, wealth and financial company located in York, United Kingdom. Upon the death of her spouse, the Deceased became the only “Life Assured” on the Aviva Bond.

[6] After her spouse’s death in 2011, the Deceased assigned the Aviva Bond to herself together with two of her four daughters, specifically, Ms. Spencer and Ms. Prudhomme (then known as Alexia Dixon). In the Deed of Assignment, dated December 6, 2011, the Deceased confirmed that the Aviva Bond was being assigned “[b]y way of a gift, in consideration of natural love and affection”. The “Schedule of New Policy Holders” in the Deed of Assignment listed the Deceased, together with the Ms. Spencer and Ms. Prudhomme, as “Policy Owners”. The Applicant signed the Deed of Assignment as the witness to her mother’s execution of the document.

[7] The Aviva Bond generated income on an annual basis that was deposited into an International Premier Account at Lloyds Bank in the United Kingdom bearing account number ****7558 (the “Lloyds Bank Account”). In conjunction with the transfer of ownership of the Aviva Bond, the Deceased added Ms. Spencer and Ms. Prudhomme as joint account holders of the Lloyds Bank Account. By Direction provided jointly by the Deceased, Ms. Spencer and Ms. Prudhomme on April 11, 2016, the payments from the Aviva Bond into the Lloyds Bank Account were reinvested into the Aviva Bond rather than deposited in the Lloyds Bank Account.

B. The Will

[8] The Deceased executed a Last Will and Testament on August 9, 2016 (the “Will”). The Will appoints Ms. Dixon, Ms. Spencer and Ms. Spencer’s spouse as the trustees and executors. After payment of debts, taxes and the conferring of certain gifts, the residue of the Estate is to be divided and distributed in four equal shares to the Deceased’s four daughters.

[9] The Will does not make any reference to the Aviva Bond.

C. The Gift of the Lloyd’s Bank Account

[10] By letter dated May 26, 2018, the Deceased notified her daughters that she decided to provide a monetary gift to Ms. Spencer “since she has been so helpful and caring to myself, and in the past to your father, during the whole period of his treatments and care”. This gift consisted of the funds in the Lloyds Bank Account (the “2018 Gift”). The Deceased wrote that this gift was in addition to the wishes stated in her Will and was a gift that she wanted to give to Ms. Spencer “as a thank you.” No party disputed the validity of the 2018 Gift. Ms. Dixon deposed to her understanding that there was approximately £50,000 in the Lloyd’s Bank Account upon its transfer to Ms. Spencer in 2018, while Ms. Spencer deposed that the account had approximately $55,000 at the time of its transfer.

D. The Administration of the Estate

[11] The Estate Trustees retained Ms. Erin Watson as their counsel regarding the administration of the Estate. Ms. Watson processed the Application for the Certificate of Appointment, acted on the sale of the Estate’s largest asset, a condominium owned by the Deceased, and reviewed the Estate accounting documentation.

[12] The proceeds from the Aviva Bond were not paid to the Estate, but rather were paid by Aviva to Ms. Spencer as a “surviving policyholder” (notwithstanding that Ms. Prudhomme was also a surviving policyholder). Aviva wrote, on February 20, 2019: “Unfortunately, we are unable to pay into the estate account you have provided as payment must be made to yourself and [Ms. Prudhomme] as the surviving policyholders. We are not able to pay to yourselves as executors as you are the policy holders under this policy and the proceeds are payable to yourselves and not the estate.” The proceeds of the Aviva Bond were paid by Aviva to Ms. Spencer as a surviving policyholder on August 15, 2019, by transfer of the amount of £77,660.99 ($123,558.64, Canadian currency) to Ms. Spencer’s personal bank account.

[13] On August 19, 2019, Ms. Spencer provided the Applicant, and the other Respondents with the interim estate accounting for the period ending August 15, 2019. This accounting did not include the Aviva Bond. Accordingly, the Estate accounting principally comprised proceeds from the sale of the Deceased’s condominium, which resulted in a net deposit to the Estate Account of $246,133.61. The Account Summary shows that after payment of expenses and distribution to grandchildren ($50,000), the Estate had a residue of $145,439.17 for equal interim distribution of $36,359,79 to each of the four sisters.

[14] On August 19, 2019, Ms. Dixon asked Ms. Spencer by email about the Aviva Bond: “Where do we see accounting of the Aviva monies from England?” Ms. Spencer responded that same day, writing: “Aviva funds are not part of the Estate Account”. On September 26, 2019, Ms. Dixon again raised by email her view that “[t]he Aviva money needs to be captured somewhere on these [Estate accounting] documents. It is part of the Estate.” Ms. Spencer replied that this was not the case: “Helen, the Aviva funds are not part of the estate. They cannot be added into any statement of account. They are a separate entity.” Ms. Amos supported this view, writing: “It is NOT part of the Estate.” On September 30. 2019, Ms. Dixon executed and delivered a “Notice of No Objection to Statement of Interim Accounts”. As no beneficiary objected to the interim estate accounting, Ms. Spencer completed an interim distribution of funds in accordance with the Summary of Accounts.

[15] Some two years later, on November 23, 2021, Ms. Spencer provided her sisters with the final estate accounting for the period ending November 23, 2021. The Final Statement of Account did not include the proceeds from the Aviva Bond. The accounting showed that the amount of $49,679.94 was held by the Estate and available for distribution. Ms. Spencer divided the amount into four equal shares for proposed distribution of $12,419.98 to each sister.

[16] Ms. Dixon inquired by email on November 24, 2021: “What is the latest with the Aviva money? What are the next steps for clearing that for disbursement?” Ms. Spencer responded that the Aviva Bond did not form part of the Estate. Ms. Dixon wrote that “a final accounting is premature without the inclusion of the Aviva money”. Ms. Dixon declined to sign a Notice of No Objection to the final estate accounting. On January 24, 2022, the lawyer retained by Ms. Dixon demanded that the proceeds from the Aviva Bond be included in the Estate. When Ms. Spencer did not do so, Ms. Dixon initiated this Application.

II. This Application

[17] By Notice of Application, Ms. Dixon seeks the following relief:

(a) The advice and direction of the Court as to whether the Aviva Bond is an asset of the Estate.

(b) A Declaration that the Aviva Bond is an asset of the Estate.

(c) An Order that the Respondents, Kirsty Spencer and Shane Spencer, repay the full proceeds of the Aviva Bond to the Estate.

[18] The Notice of Application also pleaded other related relief, none of which was sought on the hearing of this Application.

III. Issues Raised

[19] The parties submitted that this Application required determination of the following issues:

(a) Do Ms. Spencer and Ms. Prudhomme hold the Aviva Bond in resulting trust for the benefit of the Estate?

(b) Is this Application statute barred by expiry of the applicable limitation period?

(c) Is the Applicant estopped from claiming that the Aviva Bond is an Estate Asset?

IV. Analysis

[20] There is no dispute that Ms. Spencer and Ms. Prudhomme obtained the proceeds from the Aviva Bond in their capacity as surviving policyholders. Ms. Dixon claimed that while they may be the legal owners of the Aviva Bond, that the Estate is the beneficial owner of the Aviva Bond on the basis that Ms. Spencer and Ms. Prudhomme hold the proceeds in resulting trust for the Estate. The question is whether the Deceased intended to make a gift of the Aviva Bond to Ms. Spencer and Ms. Prudhomme alone, or whether the Deceased intended that they hold the proceeds from the bond in resulting trust for the benefit of her Estate, to be shared in equal portions with Ms. Dixon and Ms. Amos in accordance with her Will.

A. Does the Aviva Bond form part of the Estate?

[21] The principles of resulting trust were established by the Supreme Court in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. In Pecore, the Supreme Court considered whether the recipient of a gratuitous inter vivos transfer of joint bank and investment accounts held the assets in resulting trust for the transferor. The Supreme Court explained, at para. 20, that “[a] resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner.”

[22] The Supreme Court stated that gratuitous inter vivos transfers between a parent and an adult child are subject to a presumption of resulting trust in favour of the deceased parent’s estate: specifically, a presumption that the transferred assets were intended to be held in trust for the transferor. This is referred to as a “rebuttable presumption”, being a legal assumption that the Court will make unless sufficient evidence is proven to displace the presumption: Pecore, at para. 22. When the transfer is challenged, the presumption allocates the burden of proof, assessed on a civil balance of probabilities, on the transferee to establish that the transferor intended a gift: Pecore, at paras. 24, 43-44.

(a) The Parties’ Positions

[23] The Applicant submitted that principles established in Pecore were directly applicable and govern the determination of whether Ms. Spencer and Ms. Prudhomme (whom I will refer to at times as the “Transferee Respondents”) hold the Aviva Bond in resulting trust for the Estate. The Applicant contended that since Ms. Spencer and Ms. Prudhomme received an inter vivos assignment of the Aviva Bond from the Deceased for “no value”, they presumptively hold the Aviva Bond in resulting trust for the Deceased and are thereby under an obligation to return the Aviva Bond to the Estate. Ms. Dixon submitted that the presumption of resulting trust is only rebuttable by the Transferee Respondents, who must establish, on a balance of probabilities (more likely than not), that the Deceased intended that they receive the Aviva Bond as a gift.

[24] The Transferee Respondents submitted that the Aviva Bond is not a joint bank account, as was considered in Pecore, but rather is a life insurance bond consisting primarily of a payout value on the death of the Deceased, the named “Life Assured”. They maintained that the assignment of the Aviva Bond into joint ownership with the Transferee Respondents as Joint Owners was “akin to an irrevocable beneficiary designation” in an instrument that is “akin” to a testamentary gift in that it is activated on the death of the donor. The Transferee Respondents thereby contended that there is no presumption of resulting trust on the transfer of the Aviva Bond but rather that the principles regarding beneficiary designations are directly applicable.

[25] The parties submitted that the law is not settled on the issue of whether the presumption of resulting trust applies to a beneficiary designation in an instrument that is activated on the death of the transferor. The Applicant relied on Justice Lococo’s finding in Calmusky v. Calmusky, 2020 ONSC 1506, at para. 56, that the presumption of resulting trust should apply to the designation of a beneficiary under a Registered Income Fund (“RIF”) in the same way as to the gratuitous transfer of bank accounts into joint ownership. Conversely, the Transferee Respondents relied on Justice McKelvey’s finding in Mak (Estate) v. Mak, 2021 ONSC 4415, at para. 47, that the presumption of resulting trust does not apply to a beneficiary designation, in that case under a Registered Retirement Income Fund (“RRIF”). Recently, in Fitzgerald Estate v. Fitzgerald, 2021 NSSC 355, the Nova Scotia Supreme Court held that the presumption of resulting trust does not apply to a beneficiary designation in a Tax-Free Savings Account (“TFSA”). The Court rejected the reasoning in Calmusky. At paras. 102-108, it held that joint bank accounts and beneficiary designations are different in that a beneficiary designation does not involve an immediate transfer of an asset into joint names and there is no joint access to the asset during the transferor’s lifetime.

(b) The Transfer of the Aviva Bond Was a Gift

[26] The debate in this Application was whether the Transferee Respondents have the burden of establishing, on a balance of probabilities, that the Deceased intended a gift of the Aviva Bond, or whether the Applicant bears the burden of establishing that the Deceased intended to benefit her estate by the assignment of the Aviva Bond. This debate was complicated by the lack of evidence regarding the nature of the Aviva Bond. In Mak, Calmusky and Fitzgerald, the plans that were subject to a beneficiary designation were well-defined: a RRIF, a RIF and a TFSA, respectively. In this Application, the limited evidence tendered showed that the Aviva Bond has a dual aspect. It is like an inter vivos transfer in terms of the annual payment of investment return into the Lloyds Bank Account. It is also like a testamentary gift, in that the proceeds under the Aviva Bond were payable on the death of the Deceased.

[27] Neither party tendered into evidence the founding document, policy, or plan agreement by which the Aviva Bond was established. Neither party established the terms, conditions, provisions, rights and entitlements under the Aviva Bond. Ms. Spencer submitted that the Aviva Bond was a form of testamentary gift in that it was a “hybrid” investment instrument with “life insurance components” that resulted in payment to surviving Policy Owners “akin to an irrevocable beneficiary designation”. But the Aviva Bond did not contain an express beneficiary designation. Meanwhile, Ms. Dixon submitted that the assignment of the Aviva Bond was functionally comparable to the gratuitous inter vivos transfer of an asset from parent to adult child. But her position did not account for the Aviva Bond being activated only on the death of the Deceased.

[28] In my view, it is not necessary to determine on this Application whether the Aviva Bond was entirely an inter vivos transfer or a “hybrid” insurance instrument akin to a testamentary gift. Nor is it necessary to determine whether a rebuttable presumption of resulting trust applies to the assessment of the Aviva Bond, whatever its proper characterization. This is because the presumption of resulting trust can be rebutted by the transferees establishing that the transfer was a gift, as explained in Pecore, at para. 41. I have determined that the evidence strongly supports the conclusion that, beyond a balance of probabilities, the Deceased intended that Ms. Spencer and Ms. Prudhomme receive the Aviva Bond as a gift.

[29] In McNamee v. McNamee, 2011 ONCA 533 at para. 24, the Court of Appeal explained that three elements must be proven to establish a legally valid gift: “There must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee and (3) a sufficient act of delivery or transfer of the property to complete the transaction.” These principles were affirmed by the Court of Appeal in Foley (Re), 2015 ONCA 382, 125 O.R. (3d) 721, at para. 25. In this case, the only issue raised is the Deceased’s intention to make a gift. I find that the Deceased’s intention to gift the Aviva Bond to the Transferee Respondents was clearly established for reasons that I will now explain.

[30] First, the Deceased confirmed, in the Deed of Assignment, that the assignment was made as a gift. The Deed of Assignment states, in pertinent part, as follows:

3. By ticking one of the boxes below the Present Policy Owner confirms this assignment is made By way of a gift, in consideration of natural love and affection.

[31] This written confirmation is contemporaneous, in that it was made at the time of the assignment, and is therefore admissible and probative: Pecore, at para. 56. Further, this statement by the Deceased is clear and, according to the Supreme Court’s statement at para. 61 of Pecore, may be treated as strong evidence of the Deceased’s intention: “Therefore, if there is anything in the bank documents that specifically suggest the transferor’s intent regarding the beneficial interest in the account, I do not think that courts should be barred from considering it. Indeed, the clearer the evidence in the bank documents in question, the more weight that evidence should carry.”

[32] As Justice Abella stated in Pecore, at para. 104, “bank account documents which specifically confirm a survivorship interest, should be deemed to reflect an intention that what has been signed, is sincerely meant.”

[33] Ms. Dixon witnessed the Deceased’s execution of the Deed of Assignment, and thereby witnessed the Deceased’s written confirmation that the assignment to the Transferee Respondents was intended as a gift. Ms. Dixon deposed that: (i) she and all her sisters were present when the Deceased signed the Assignment Deed; (ii) that she discussed with her sisters the best way to handle the Aviva Bond; (iii) that the Deceased added Ms. Spencer and Ms. Prudhomme to the Aviva Bond and the Lloyds Bank Account because this was “the best way to facilitate the proceeds of the Aviva Bond from the U.K. upon her death”; and (iv) that the ownership of the Lloyds Bank Account was transferred to joint ownership at the same time as the Deceased transferred to joint ownership the bank accounts that she had with the Tangerine Bank and the CIBC, neither of which were intended as gifts.

[34] The credibility and reliability of Ms. Dixon’s evidence was compromised in cross-examination. Ms. Dixon’s testimony that “all four of us were present at Mother’s home in Orillia when she executed the deed of assignment” was shown to be incorrect. Ms. Prudhomme established that she was in Morocco when the Assignment Deed was signed by the Deceased. Ms. Amos was not present, either. Ms. Dixon conceded in cross-examination that she “incorrectly assumed” that her sisters were present. Ms. Dixon also admitted that she was incorrect in stating that the Deceased transferred the Lloyds Bank Account to joint ownership at the same time as her other accounts. The Tangerine Bank account was not made joint with Ms. Spencer until 2016 and the CIBC bank account was not made joint until 2012. The transfer of the Aviva Bond in 2011, and the transfer to joint ownership of the Lloyds Bank Account, stood apart from the transfer of bank accounts that were intended to form part of the Estate.

[35] The evidence provided by the other three sisters of their mother’s intention regarding the Aviva Bond stands in stark contrast to the evidence of Ms. Dixon. Ms. Spencer, corroborated by Ms. Prudhomme, deposed that the Deceased did not, at any time, state that the proceeds of the Aviva Bond were to be shared with Ms. Dixon and Ms. Amos. Ms. Spencer deposed that the Deceased intended that Ms. Spencer and Ms. Prudhomme own the Aviva Bond. Ms. Prudhomme, corroborated by Ms. Spencer, deposed that her mother intended to transfer the Aviva Bond to her and Ms. Spencer as an “unconditional gift”. The evidence of Ms. Spencer and Ms. Prudhomme that the Aviva Bond was “never intended to be part of Mother’s estate” was corroborated by Ms. Amos.

[36] Ms. Amos deposed, contrary to her financial interest, that the Deceased intended to gift the Aviva Bond to Ms. Spencer and Ms. Prudhomme, and not for the beneficial interest of either Ms. Amos or the Applicant, Ms. Dixon. Ms. Amos submitted that it was well known amongst the sisters that the Deceased did not treat them equally, and so the Deceased’s unequal gifting of the Aviva Bond was characteristic. Ms. Amos deposed, as well, that none of the sisters took issue with the Deceased transferring, during her lifetime, the Lloyds Bank Account to Ms. Spencer as a gift because “we all knew the efforts made and incredible support given by [Ms. Spencer] during my father’s lengthy illness and my mother’s widowhood.” Ms. Amos submitted that there is “zero evidence” that the Deceased ever intended that the Aviva Bond be distributed evenly amongst the sisters and supported the position of the Transferee Respondents.

[37] Weighing the evidence of the four sisters in the totality of the Application Record, I do not accept Ms. Dixon’s evidence as reliable or plausible. Ms. Dixon admitted that her evidence of the execution of the Aviva Bond was based on incorrect assumptions. The Respondents showed that Ms. Dixon’s evidence of family discussions regarding the Aviva Bond could not have taken place in the setting that she described. Ms. Dixon’s evidence on communications with her late mother was not corroborated by “other material evidence” and was thereby inadmissible on the basis of s. 13 of the Evidence Act, R.S.O. 1990, c. E.23. In contrast, the evidence of Ms. Spencer of communications with her late mother was corroborated by Ms. Prudhomme and Ms. Amos, and the evidence of Ms. Prudhomme was corroborated by Ms. Spencer and Ms. Amos. But even if Ms. Dixon’s evidence on discussions with the Deceased had been admissible, her evidence lacked logical and internal consistency and constituted, in my determination, faulty reconstruction rather than reliable recall.

[38] Therefore, the second reason for my determination that the Deceased intended that the Aviva Bond be transferred to Ms. Spencer and Ms. Prudhomme as a gift is that I prefer the evidence of Ms. Spencer and Ms. Prudhomme, corroborated by the evidence of Ms. Amos, over the evidence of Ms. Dixon, on all points where the evidence of Ms. Dixon diverges from the evidence of the Respondents.

[39] Third, the Supreme Court stated in Pecore, at para. 59, that evidence subsequent to the transfer may be relied on in determining the transferor’s intention at the time of the transfer. In my view, the 2018 Gift is confirmatory that the Deceased intended to gift to Ms. Spencer the Lloyds Bank Account, which contained the annual income earned from the Aviva Bond. The Applicant did not challenge the validity of this inter vivos transfer but rather agreed, together with the Respondents, that the transfer of the Lloyds Bank Account was a gift and thereby did not form part of the Estate. The Deceased’s unchallenged gift of the Lloyds Bank Account to Ms. Spencer, in conjunction with the assignment of the Aviva Bond which produced deposits of annual income into the Lloyds Bank Account, supports a finding that the Deceased intended to gift to Ms. Spencer and Ms. Prudhomme the Aviva Bond.

[40] Fourth, the Will makes no reference to the Aviva Bond even though the Assignment Deed was executed years earlier than the Will. This subsequent conduct shows, in my view, that if the Deceased had intended that the Aviva Bond form part of her Estate, she would have provided for the Aviva Bond expressly in her Will.

[41] Fifth, control over an asset and use of the funds is a relevant consideration in the determination of the transferor’s intention: Pecore, at para. 63. Ms. Spencer established that she accessed the Lloyds Bank Account funds during the Deceased’s lifetime, with the Deceased’s knowledge, for the payment of personal expenses. The Transferee Respondents received updates of the value of the Aviva Bond. These are indications that the Deceased intended the funds from the Aviva Bond to be a gift.

[42] Sixth, the Supreme Court instructed that evidence of the quality of the relationship with the transferee can be considered in the assessment of the transferor’s intention to gift: Pecore, at para. 37. Ms. Spencer, corroborated by the evidence of Ms. Amos, deposed that she had a close and supportive relationship with the Deceased. Ms. Spencer was one the Deceased’s attorneys for personal care.

[43] Seventh, I did not see any merit in the Applicant’s submission that the Respondents’ position in relation to the Aviva Bond was motivated by its use as leverage in another ongoing dispute between the sisters. The Respondents allege that Ms. Dixon improperly took ownership of certain shares formerly owned by their father, said by Ms. Dixon to be of nominal value, in M. Wright & Sons Ltd., said to be a family-operated U.K.-based textile business that has been in the parties’ family for seven generations. The Applicant submitted that the Respondents are using their position in relation to the Aviva Bond as leverage in relation this other family dispute. In my view, the parties’ motivation to litigate or resolve is not material to my determination of this Application.

(c) Conclusion – The Aviva Bond is not an Asset of the Estate

[44] For the reasons now explained, I conclude, on the objective, credible and material facts that I have accepted, that the Respondents have clearly shown, beyond a balance of probabilities, that the Deceased intended that Ms. Spencer and Ms. Prudhomme receive the Aviva Bond as a gift. Accordingly, even if the presumption of resulting trust is applicable to the transfer of the Aviva Bond, Ms. Spencer and Ms. Prudhomme have rebutted the presumption. They did not hold the Aviva Bond in resulting trust for the Estate.

B. The Remaining Issues – Limitation Defence and Estoppel Bar

[45] Considering my determination that the Aviva Bond does not form part of the Estate, it is not necessary to determine the Respondents’ defences that this Application is statute barred by expiry of the applicable limitation period, and that the Applicant should be barred from advancing this Application on the basis of estoppel.

[46] Had it been necessary to determine the limitation defence, I would not have granted the Respondents’ limitation defence, on the following reasoning. Under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Ms. Dixon had 2 years to bring this Application. This limitation period commenced on the date that she discovered, or reasonably ought to have discovered, her claim. This statutory limitation period was extended by six months by reason of the Covid-19 pandemic, in accordance with s. 7.1(6) of the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9.

[47] Ms. Spencer submitted that Ms. Dixon ought reasonably to have discovered her claim on August 19, 2019, when Ms. Spencer notified Ms. Dixon that she was taking the position that the Aviva Bond did not form part of the Estate. Presuming that Ms. Dixon’s claim was reasonably discoverable on August 19, 2019, the limitation period (as extended) would have expired on February 19, 2022. This Application was initiated 5 days later, on February 24, 2022.

[48] I do not accept that, for the purposes of s. 5(1) of the Limitations Act, Ms. Dixon’s claim was subjectively discovered on August 19, 2019, or could have been reasonably discovered by that date by a person with Ms. Dixon’s abilities and in her circumstances, for two reasons. First, Ms. Spencer’s communication of her position that day was not sufficiently clear or categorical to cause Ms. Dixon, or a reasonable person with her abilities, to know that she had lost a beneficial interest in the Aviva Bond. Second, I am not satisfied that, having regard to the positions taken and the circumstances that existed on August 19, 2019, a legal proceeding would have been an appropriate means to seek a remedy, as required by s. 5(1)(a)(iv) of the Limitations Act. The Estate was still being administered and was ongoing, and the final estate accounting had not yet been produced.

[49] On similar reasoning, had it been necessary to determine the estoppel issue, I would not have upheld the Respondents’ submission that Ms. Dixon was estopped from bringing this Application by reason of having delivered a Notice of No Objection on September 30, 2019, in the circumstances of this case. Estoppel is an equitable remedy. In my view, it is not available in this case without a clear and categorical statement by Ms. Spencer that the Aviva Bond would not form part of the Estate. I see such a statement by Ms. Spencer in November 2021, but not on September 30, 2019, when Ms. Dixon returned her Notice of No Objection to the interim accounting.

V. Costs

[50] At the conclusion of the hearing of this Application, I heard costs submissions. This was in accordance with Rule 57.01(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194: “The court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs…” As I had taken my decision under reserve, the parties made submissions both based on success in the Application and, in the alternative, in the event of failure. There were no offers to settle the Application.

[51] I observed, from a standpoint of proportionality, that the amount in dispute in this Application was $30,889.66. The proceeds of the Aviva Bond were $123,558.64. Ms. Dixon was one of four beneficiaries of the residue of the Estate. The other three beneficiaries agreed that the Aviva Bond did not form part of the Estate. If Ms. Dixon had been successful, she would have been entitled to one-fourth of the amount paid from the Aviva Bond on the Deceased’s death.

[52] The Application Record and Responding Records were over 250 pages, and the parties filed cross-examination transcripts that took place over the course of three days. The Respondent, Ms. Spencer’s answers to undertakings were 141 pages. The parties’ factums comprised 84 pages of written submissions.

[53] The Respondent, Ms. Spencer, filed a Cost Outline totaling $50,740.91 on a full indemnity basis and $26,992.27 on a partial indemnity basis. The Applicant’s Bill of Costs totaled $38,328.65, on a full indemnity basis, $34,616.82, on a substantial indemnity basis and $23,481.35, on a partial indemnity basis. These claims in costs approached or exceeded the amount in issue in the Application. In consideration of proportionality. Ms. Spencer reduced her cost demand, on a full indemnity basis, to $45,000, all inclusive.

[54] The self-represented Respondent, Ms. Amos, submitted that she has incurred expenses in the amount of $300.00 in preparing and filing an affidavit and factum in this Application. Ms. Prudhomme, also self-represented, submitted that she has incurred expenses and disbursements of about $200.00 in preparing and filing her affidavit and factum.

(a) The Determination of Costs of the Application

[55] The Applicant submitted that she acted reasonably in bringing this Application, as a co-estate trustee, to obtain a determination of the estate assets, and that the costs of the Application should be paid out of the Estate. The Applicant relied on White v. Gicas, 2014 ONCA 490, 98 E.T.R. (3d) 197, wherein the Court of Appeal set aside an award of costs rendered against the applicant estate trustee, and instead ordered that they be paid by the Estate, on the finding that the problems that underpinned the estate trustee’s uncertainty regarding the estate assets was caused by the conduct of the testator. I do not agree that this case is applicable.

[56] In McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), the Court of Appeal made clear that the traditional view that everyone’s costs in estate litigation are paid out of the estate is no longer relevant, stating at para. 85: “Gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation.” This point was emphasized by Justice D.M. Brown, as he then was in Bilek v. Salter Estate, 2009 ONSC 28403, [2009] O.J. No. 2328, at para. 6:

Parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation. The “loser pays” principle brings needed discipline to civil litigation by requiring parties to assess their personal exposure to costs before launching down the road of a lawsuit or a motion. There is no reason why such discipline should be absent from estate litigation.

[57] The Court of Appeal explained in McDougald Estate, at para. 80, that the cost rules applicable to civil litigation apply in estates litigation, except in those limited cases in which public policy considerations require a different result: “The modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations applies, to follow the costs rules that apply in civil litigation.” These principles were affirmed in Sawdon Estate v. Sawdon, 2014 ONCA 101, 119 O.R. (3d) 81, at paras. 84-85, wherein the Court of Appeal explained that there are two policy considerations that have a role in the determination of costs: “(1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered.”

[58] The first public policy consideration is not applicable as this Application did not deal with the validity of the Will. The second public policy consideration does not assist Ms. Dixon because I find that Ms. Dixon did not act reasonably as a co-estate trustee in bringing this Application. Ms. Dixon brought this Application in self-interest to seek a 25% interest in the Aviva Bond when all other parties – including Ms. Amos who, like Ms. Dixon, was excluded from sharing in the Aviva Bond – agreed that the Aviva Bond did not form part of the Estate. Further, Ms. Dixon persevered with this Application even after her cross-examination revealed that her supposition regarding the Deceased’s intention was based on a mistaken recollection and erroneous assumptions regarding the circumstances in which the Aviva Bond was transferred.

[59] Unlike in White, this Application, and its resultant costs, were not made necessary by the conduct of the Deceased through lack of clarity in her handling of the Aviva Bond, the Joint Bank Account or, indeed, her Will. The costs of this Application were, in my determination, caused by the position taken by the Applicant.

[60] The costs of this Application affecting the unsuccessful Applicant shall be determined in accordance with the general civil litigation costs regime. Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides the court with discretion in the determination of costs. The exercise of this discretion is guided by the principles set out in Rule 57.01, and applicable jurisprudence, having regard for the overriding principles of reasonableness, fairness and proportionality: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 38; Zesta Engineering Ltd. v. Cloutier, 2002 ONCA 25577, [2002] O.J. No. 4495 (C.A., at para. 4.

[61] The rules and principles pertaining to the issue of costs have five principal purposes: (i) to indemnify successful litigants for the expense of litigation, although not necessarily completely; (ii) to encourage settlement; (iii) conversely, to discourage frivolous claims and defences; (iv) to facilitate access to justice; (v) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22; 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10.

[62] The successful parties on the Application have an entitlement to an award of costs, consistent with the principle that, absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd. (1994), 111 D.L.R. (4th) 589 (Ont. C.A.); Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal refused, 2014 ONCA 353; St. Jean v. Cheung, 2009 ONCA 9, at para. 4. Accordingly, as the Respondents were successful on this Application, the Respondents are entitled to an award of costs payable by the Applicant.

[63] I have reviewed the Costs Outline filed by Ms. Spencer and find that the number of hours docketed and the partial indemnity hourly rates are within reasonable and fair ranges. The disbursements of $871.75, being the costs of the cross-examinations, including transcripts, are reasonable. Comparatively, the amount of partial indemnity costs claimed by Ms. Spencer ($26,992.27) is within the range that Ms. Dixon could have expected to pay if unsuccessful in this Application as Ms. Dixon’s counsel’s Bill of Costs, on a partial indemnity basis, was comparable at $23,481.35, all inclusive.

[64] I am satisfied that Ms. Spencer has established an entitlement to an award of partial indemnity costs, payable by Ms. Dixon, fixed in the amount of $26,000.00, all inclusive. I am also satisfied that Ms. Amos shall receive an award of costs of $300.00, all inclusive, as claimed for expenses and disbursements, and Ms. Prudhomme shall receive an award of costs of $200.00, as claimed for expenses and disbursements.

(b) The Responding Trustee’s Indemnification from the Estate

[65] Ms. Spencer claimed that she incurred $50,740.91 in fees and disbursements, on a full indemnity basis, in responding to this Application. She reduced this claim to $45,000.00, all inclusive. I find that these amounts have been established in this Respondent’s Costs Outline.

[66] Ms. Spencer sought a blended cost order, whereby she receive an order declaring that, as estate trustee, she is entitled to be indemnified from the Estate for the balance of the costs incurred in this Application beyond the partial indemnity costs that I have now ordered. I accept this position based on the principles set out by the Court of Appeal in Sawdon, at paras. 87-100. At paras. 96-97, the Court explained that, in certain circumstances, a blended cost order can both meet the public policy considerations that are integral parts of the modern approach to costs in estates litigation and “maintain the discipline of which Brown J. spoke” in Bilek, at para. 6, quoted earlier.

[67] In my determination, there are several reasons why Ms. Spencer should be indemnified by the Estate for the balance of the costs incurred in responding to this Application beyond those partial indemnity costs ordered to be paid by Ms. Dixon. First, Ms. Spencer had a public policy basis to respond to this Application, specifically, the need for the proper administration of the Estate. One of her duties as Estate Trustee was to bring in the assets of the Estate. Ms. Spencer’s decision, as Estate Trustee, to exclude the Aviva Bond from the Estate accounting was disputed by Ms. Dixon, necessitating a response and, ultimately, a determination.

[68] Second, Ms. Spencer had knowledge of the Deceased’s intentions in relation to the Aviva Bond, and categorically denied the accuracy of the evidence tendered by Ms. Dixon. Ms. Spencer’s evidence was accepted over the evidence of Ms. Dixon. Ms. Spencer had no choice but to incur reasonable costs to adduce her evidence of the Deceased’s intentions to ensure that the Court had all available evidence.

[69] Third, the responding position advanced by Ms. Spencer proved to be for the benefit of the Estate in that the administration of the Estate may now be advanced to completion. The administration of the Estate has been stalled since November 2021, when Ms. Dixon refused to deliver a Notice of No Objection, necessitating the determination of this Application to finalize the Estate.

[70] Like in Sawdon, at para. 87, I conclude that Ms. Spencer acted reasonably throughout and for the benefit of the Estate. She is thereby entitled to be indemnified from the Estate for the balance of the full indemnity costs that she does not recover from Ms. Dixon. I fix these costs at the amount of $19,000: ($45,000 - $26,000 = $19,000). An order shall thereby issue declaring that the Respondent Ms. Spencer is entitled to be indemnified by the Estate for the balance of her costs of this Application not provided for by the partial indemnity cost award, fixed in the amount of $19,000.

VI. Disposition

[71] On the basis of these reasons, I order:

(a) I declare that the “With-Profits Life Assurance Premier Investment Bond”, bearing policy number R239571, administered by Aviva Life & Pensions UK Limited and referred to herein as the “Aviva Bond” is not an asset of the Estate of Wendy Elizabeth Dixon, Deceased (the “Estate”).

(b) The Applicant, Helen Bridie Dixon, shall pay costs of this Application as follows:

(i) To the Respondent, Kirsty Eleanor Spencer, costs fixed in the amount of $26,000.00, all inclusive.

(ii) To the Respondent, Alexia Mary Prudhomme, costs fixed in the amount of $200.00, all inclusive.

(iii) To the Respondent, Nicole Richenda Amos, costs fixed in the amount of $300.00, all inclusive.

(c) I declare that the Respondent, Kirsty Eleanor Spencer is entitled to be indemnified by the Estate for the balance of her costs of this Application, fixed in the amount of $19,000, all inclusive.

(d) This Application is otherwise dismissed.

Justice Sanfilippo Date: January 11, 2023