Court File and Parties
COURT FILE NO.: CV-22-0030-00 DATE: 2023-01-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Mary Maureen Marttunen, Applicant
- and -
Raymond McDevitt and Helen McDevitt, Respondents
COUNSEL: J. Clark, for the Applicants R. McDevitt, Acting in Person via Zoom H. McDevitt, Acting in Person via Zoom but making no submissions
HEARD: January 4, 2023, at Thunder Bay, Ontario
BEFORE: Mr. Justice F. B. Fitzpatrick
Judgment on Application to Pass Accounts
Background
[1] This application concerns the conduct of the Respondent Raymond McDevitt (Raymond) while acting as a power of attorney for property for his mother Helen McDevitt (Helen). Helen is now 93 years old. In July 2018, Helen was diagnosed with dementia.
[2] On September 24, 2009, Helen granted a continuing power of attorney for property to both Raymond and the Applicant Mary Maureen Marttunen (Maureen) acting jointly. Maureen denies knowing she was granted such authority at that time.
[3] In January 2022, Maureen commenced the within application. Among other things she sought an order that Raymond be required to pass his accounts for actions taken in his capacity as power of attorney for property for Helen. She sought orders in the nature of a declaration that Raymond has acted in breach of trust and/or breached his fiduciary duties owed to Helen. She sought orders for other relief suspending Raymond’s powers granted pursuant to the Power of Attorney.
[4] Initially Raymond retained counsel. He filed an application to pass his accounts for the period February 27, 2015, to January 2022 which was prepared with the assistance of counsel. He decided to represent himself at this hearing.
[5] In the course of several case conferences arranged to manage the proceedings, Raymond made verbal allegations that Maureen had acted improperly with respect to her conduct as joint power of attorney for property. On September 29, 2022, I ordered that Raymond was to bring his own application seeking express relief against Maureen if he intended to pursue those allegations. He was given until October 21, 2022, to file his material. Ultimately, he did not file any such material. He confirmed on the record for this hearing he did not file such material and instead intended to rely on his material filed together with his application to pass accounts.
The Evidence
[6] At all times material to this application Helen and Maureen have lived in Thunder Bay and Raymond has lived in Alberta.
[7] Helen does not own a computer. Helen does not know how to do internet banking. Since her diagnosis with dementia, she has not been able to use an ATM as her short-term memory issues have prevented her from remembering passwords.
[8] In July 2021, Helen had a bad fall and was admitted to Hospital. This situation caused Maureen to begin taking a closer look at Helen’s finances. Maureen asserts she did not know she was a joint power of attorney for property for Helen until July 2021. Raymond claims she knew all the time. In any event, Maureen’s inquiries of her mother’s accounts with the Royal Bank revealed what she characterized as “suspicious transactions” in the amount of $425,000.00. These transactions occurred over the period February 18, 2015 to December 10, 2021. Also, several transactions occurred in Fort Saskatchewan, Alberta in the amount of $49,008.50. Raymond has lived in Fort Saskatchewan, Alberta. Helen was not in Alberta at the time these particular transactions occurred. There was no evidence before the court that Helen was ever in Alberta at any time material to this application.
[9] Raymond made the following statements in his affidavit of August 3, 2022, at paragraphs 13 and 14:
I have reviewed all of the records from the Royal Bank of revenues received by my mother from February 27, 2015 (opening balance $76,099.67) to February 24, 2022 to be $727,470.26; and the disbursements to be $797,983.11, and a closing balance of $5,590.37 ($3.55 unaccounted) I am prepared to admit that my withdrawals for my personal benefit from the joint account during this same period were $412,308.50 by cash withdrawals and internet banking transfers. The amount undetermined is $31,665.54.
I have handwritten a summary of my life events and circumstances of health and job problems in explanation of my taking monies for myself from the joint account without to my mother about it, attached hereto as Exhibit "H".
[10] His affidavit continued at paragraph 16:
- Attached hereto as Exhibit "J" are my handwritten notes concerning the establishment of the joint account with my mother, and as Exhibit "K" are the bank documents signed July 10, 2017 when the joint account was set up at the Royal Bank. From our discussions, I did believe that she intended that I could withdraw monies for myself if I wished to.
[11] Exhibit H is a five-page handwritten document. It details Raymond’s efforts expended to repair property owned by Helen. It set out that Raymond was injured in 2013 in Alberta. This injury limited his ability to work as an electrician in the oil patch. Raymond noted “During the time from 2018 to 2021, I relied on supplemental funds from the sale of my mom’s camp to offset any wages from work when I could get it”. Raymond retired in 2018. He also wrote:
“I regret not explaining to my mother why I never discussed my situation with her. I know she would have helped me out financially but tried to be the son she could look up to and be proud of. I always have been close to my mom and regret because of her age she may not be able to understand my unfaithfulness to her as power of attorney for property ”
[12] The contents of Exhibit J is a four page handwritten document. It gives further details of work Raymond did on a family camp property. It states Helen asked Raymond to be a “joint owner on her bank account” after the camp was sold in 2015. It also asserts that Helen said he could “use and withdraw money from our new joint bank account if you wish”. The notes continue to remark that “she said it was available to me to use, she did not call it a gift”.
[13] At paragraph 17 of his affidavit Raymond states, “I am without funds to repay her as an unhealthy retired 68 year old required to work part- time to pay monthly bills for myself and my spouse. I can only suggest that my mother should revise her Last Will and Testament to remove me as a beneficiary.” He concludes his affidavit with “I wish to be able to communicate with my mother and ask for her forgiveness for what I have done. I remain her loyal and loving son”.
The Law
[14] The Supreme Court of Canada in Niles v. Lake SCC set out the general rule respecting the application of a resulting trust in a case involving the creation of a joint bank account. Taschereau J. stated:
The law is well settled, I think, that when a person transfers his own money into his own name jointly with that of another person, except in cases with which we are not concerned, then there is prima facie a resulting trust for the transferor. This presumption, of course, is a presumption of law which is rebuttable by oral or written evidence or other circumstances tending to show there was in fact an intention of giving beneficially to the transferee.
[15] In Pecore v. Pecore 2007 SCC 17 the Supreme Court again dealt with a situation of a joint bank account involving a parent and an adult child. This leading case on the law of gifts reaffirmed at paragraph 24 that:
The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.
[16] At paragraph 36 of Pecore, the Court discussed a common current practice of ageing parents to transfer their assets into joint accounts with their adult children to facilitate assistance with their financial affairs. The Court affirmed a rebuttable presumption that those funds are held in trust by the adult child for the ageing parent.
[17] Section 32(1) of the Substitute Decisions Act 1992, S.O. 1992 provides that an attorney for property is a fiduciary, whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith for the benefit of an incapable person. A fiduciary’s first duty is to see to the best interests of the beneficiary regardless of their stated wishes ( Ontario (Public Guardian and Trustee) v. Harkins [2011] O.J. No. 3313 at para. 27 ). Breach of fiduciary duties can give rise to a wide range of equitable remedies designed to address not only the fairness between the parties but also the public concern about the maintenance of the integrity of the fiduciary relationship ( Hooper (Estate) v. Hooper, 2011 ONSC 4140 at para. 20 ). Section 178(1) (d) of the Bankruptcy and Insolvency Act (R.S.C. 1985 c. B-3) provides:
178 (1) An order of discharge does not release the bankrupt from…
(d) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in the Province of Quebec, as a trustee or administrator of the property of others;
Decision
[18] Raymond was candid in his affidavit material. He admitted he took $412,308.50 by way of cash withdrawals and internet banking transfers from the joint account. He did not assert the funds were his in the first place. He admitted his mother said the funds were not a gift. He admitted he took the money for his own benefit. He admitted he did not tell her what he was doing or discussed it with her in any way. He described his actions as power of attorney as being “unfaithful”. He asked for forgiveness for what he did.
[19] Raymond’s notes indicate Helen’s intentions to have him on the account was to assist her in the administration of her affairs. Raymond’s argument that she really did not need the money he took is not sufficient to rebut a presumption that those funds were held in trust by him for her. I agree with Maureen’s submission that there is a fundamental difference in the act of accepting a gift as opposed to outright taking funds without letting the other person know that you are doing that.
[20] Based on this affidavit evidence, I do not accept the argument made by Raymond that Helen permitted or allowed Raymond to take over $400,000.00 of her money. I find that Raymond has not rebutted a presumption that the moneys held in the joint account were trust funds belonging to Helen. He had no right to remove $412,308.50 of Helen’s funds for his own benefit.
[21] I also find that the sum of $31,665.54 noted as “undetermined” were Raymond’s responsibility to protect for Helen’s benefit. He had joint control of the account. He was freely accessing it. I find he has failed to properly account for these funds.
[22] Accordingly, I find and declare that the sum of $443,974.04 ($412,308.50 plus $31,665.54 “undetermined”) were held on a resulting trust by Raymond for Helen.
[23] I find Raymond has not adduced clear, convincing or cogent evidence that Helen intended to gift her property to him. His own evidence is expressly to the contrary. The money was placed in the joint account by direct deposit from sources who owed the money to Helen not Raymond. There is no convincing evidence of any intention by Helen to gift these funds to Raymond by her doing anything to transfer the funds to him. He simply took the money without letting her know.
[24] I find Raymond’s acts in removing the sum of $412,308.50 from the joint account for his own benefit and failing to account for the sum of $31,665.54 represented an act of breach of trust by Raymond.
[25] I also find that Raymond acted in breach of his fiduciary duty to Helen in his capacity as power of attorney for property by removing funds without her consent following her diagnosis of dementia in 2018. It was a further breach of fiduciary duty not to use those funds removed after that date for her benefit.
[26] I do not accept Raymond’s arguments that Maureen has acted in any improper manner. He had the opportunity to bring his own application with direct evidence to support these allegations. He did not do so. I was not persuaded that what Maureen set out in her affidavit material before the Court was a “false narrative” as submitted by Raymond.
Remedy
[27] In light of the above findings, I am of the view the Court must impose a variety of equitable remedies in these circumstances. Maureen has provided the Court with a draft order seeking the following relief:
i. An order and declaration that any assets or funds held jointly between the Respondent, Raymond McDevitt and the Respondent, Helen McDevitt either now or in the past, including but not limited to any funds held or that passed through Royal Bank of Canada Account Numbers: 034445021449, 56863 5650, 88513 1136, 88513 1144; 88513 1151; 88513 1169 and 5092 00809 (the "RBC Accounts") are held in trust by the Respondent, Raymond McDevitt for and to the benefit of the Respondent, Helen McDevitt;
ii. An order that Raymond McDevitt shall forthwith transfer or convey any funds or assets held jointly or in trust for the Respondent Helen McDevitt to the Respondent, Helen McDevitt for her own use absolutely;
iii. An order that the Respondent, Raymond McDevitt shall forthwith repay to the Respondent, Helen McDevitt the sum of $454,023.95;
iv. A Declaration that the Respondent, Raymond McDevitt in his capacity as Attorney for Property or as agent for the Respondent, Helen McDevitt has acted in breach of trust and has breached his fiduciary duties owed to the Respondent, Helen McDevitt by misappropriating, embezzling or defalcating property owned legally or beneficially by the Respondent, Helen McDevitt;
v. An order that the Respondent, Raymond McDevitt shall within thirty (30) days provide a written detailed accounting, under-oath in an Affidavit to the Respondent, Helen McDevitt with respect to all funds accessed by the Respondent, Raymond McDevitt in any way from the RBC Accounts including particulars of its uses, dispositions, and the fund's path to date. That would include how and where the funds obtained from the Respondent, Helen McDevitt was expended, and particulars of any profits earned or assets purchased using these funds;
vi. An order that the Respondent, Raymond McDevitt shall within thirty (30) days produce to the Respondent, Helen McDevitt any and all of his own personal banking statements from January of 2017 into which the Respondent, Helen McDevitt's funds were deposited;
vii. An order that the Respondent, Raymond McDevitt's obligation to account to the Respondent, Helen McDevitt will continue on an ongoing basis, as requested by the Applicant, Mary Maureen Marttunen, until such time as this Judgment and any subsequent costs Orders are paid in full;
viii. An order that the Respondent, Raymond McDevitt shall submit to an examination under oath regarding any documents received pursuant to the accounting Ordered in Paragraphs 5 and 6 herein;
ix. An order that the Respondent, Raymond McDevitt is hereby removed as an Attorney for Property and Attorney for Personal Care for the Respondent, Helen McDevitt;
x. An order and declaration to the effect that the Applicant, Mary Maureen Marttunen is the sole remaining Attorney for Property and Attorney for Personal Care for the Respondent, Helen McDevitt;
xi. An order dismissing the balance of Raymond’s Application to pass accounts.
[28] As I have found that Raymond has without colour of right, misappropriated the sum of $443,974.04 from Helen for his own benefit, an order will go encompassing the terms set out in the draft order as set out immediately above as paragraphs numbered i through iv.
[29] Maureen has requested relief in the nature of a tracing order. This relief was set out in paragraph v above. In my view, Raymond has already answered the question as to funds he has accessed from Helen. Given his affidavit evidence that he has no means to repay Helen and his submissions that he would respond to any judgment by seeking bankruptcy protection, it seems to me that further litigation may ensue as the result of this judgment. This is unfortunate. In any event, I find that the amounts taken by Raymond were acts of misappropriation by him. In my view, the obligation of Raymond to repay Helen now created by the terms of this judgment would be one that would be covered by the provisions of section 178(1) (d) of the Bankruptcy and Insolvency Act (R.S.C. 1985 c. B-3).
[30] In my view, Raymond’s obligation to make Helen whole for the breaches of trust and fiduciary duty requires him to make further and better disclosure of what happened to the money he took. He also cannot be allowed to continue as power of attorney for property or personal care for Helen. I am ordering that Raymond’s ability to act further to the power of attorney for property dated September 24, 2009, is terminated in accordance with the authority granted to the Court under section 42(7) of the Substitute Decisions Act 1992, S.O. 1992. Accordingly, the following orders are made for this matter in addition to the terms already provided for above.
[31] On or before March 17, 2023, Raymond shall provide Maureen and Helen a duly sworn affidavit detailing any and all assets purchased with funds removed from the joint bank account by Raymond for the period February 27, 2015, to January 1, 2022. The affidavit shall further provide particulars of any debt payments made on Raymond’s behalf using the funds removed from the joint bank account for the period February 27, 2015, to January 1, 2022.
[32] Effective January 1, 2023, Mary Maureen Marttunen is declared to be the sole power of attorney for property and personal care for Helen.
[33] I appreciate there were no issues raised in the materials about the appropriateness of Helen’s care. From the materials it appears to me only Maureen has been attending to Helen’s personal care needs. Raymond, on the other hand, has demonstrated a concerning pattern of failing to act in his mother’s best interest. I therefore agree with the Applicant that he should not remain as Helen’s power of attorney for personal care.
[34] I am satisfied with the level of disclosure of Helen’s affairs made by Raymond on this application. The end result was troubling but in my view the orders being made as the result of the information put before the Court on this passing application by Raymond will see justice done. Raymond is not entitled to any compensation for his actions as power of attorney for property or personal care as his exercise of any authority was done solely for his own benefit. While I am not prepared to declare the accounts as passed as the result of Raymond’s misconduct, I see no need or possible benefit in Raymond being required to take any additional steps by way of disclosure or passing of accounts others than those contemplated by the judgement. The balance of Raymond’s Application to pass accounts is dismissed with a declaration that Raymond need not apply again to pass his accounts unless otherwise ordered to do so on some subsequent application.
[35] Maureen is entitled to costs of this application personally against Raymond. If the parties cannot agree on costs, Maureen may make written submissions as to costs. The submissions shall be no more than three pages plus a bill of costs. It shall be uploaded to Caselines on or before February 2, 2023. Raymond may make written reply submissions of no more than three pages that are to be uploaded to Caselines on or before February 17, 2023. If no written request for costs is submitted by February 2, 2023, the issue of costs shall be considered settled.
[36] I expect there may be some urgency in obtaining an order reflecting this judgment. Maureen may forthwith submit an order for my signature to my judicial secretary. The need for Raymond to approve said order is hereby dispensed with. I direct the form of the order to contain the following paragraphs to facilitate its issuance and entry in a timely manner:
THIS COURT ORDERS AND DECLARES that any assets or funds held jointly between the Respondent, Raymond McDevitt and the Respondent, Helen McDevitt either now or in the past, including but not limited to any funds held or that passed through Royal Bank of Canada Account Numbers: 034445021449, 56863 5650, 88513 1136, 88513 1144; 88513 1151; 88513 1169 and 5092 00809 (the "RBC Accounts") are held in trust by the Respondent, Raymond McDevitt for and to the benefit of the Respondent, Helen McDevitt;
THIS COURT ORDERS AND ADJUDGES that Raymond McDevitt shall forthwith transfer or convey any funds or assets held jointly or in trust for the Respondent Helen McDevitt to the Respondent, Helen McDevitt for her own use absolutely;
THIS COURT ORDERS AND ADJUDGES that the Respondent, Raymond McDevitt shall forthwith repay to the Respondent, Helen McDevitt the sum of $454,023.95;
THIS COURT DECLARES that the Respondent, Raymond McDevitt in his capacity as Attorney for Property or as agent for the Respondent, Helen McDevitt has acted in breach of trust and has breached his fiduciary duties owed to the Respondent, Helen McDevitt by misappropriating, embezzling or defalcating property owned legally or beneficially by the Respondent, Helen McDevitt;
THIS COURT ORDERS that on or before March 17, 2023 Raymond McDevitt shall provide Mary Maureen Marttunen and Helen McDevitt with a duly sworn affidavit detailing any and all assets purchased with funds removed from the RBC Accounts by Raymond McDevitt for the period February 27, 2015 to January 1, 2022. The affidavit shall further provide particulars of any debt payments made on Raymond McDevitt’s behalf using the funds removed from the RBC Accounts for the period February 27, 2015 to January 1, 2022;
THIS COURT ORDERS AND DECLARES that effective January 1, 2023 the Respondent, Raymond McDevitt is hereby removed as an Attorney for Property and Attorney for Personal Care for the Respondent, Helen McDevitt;
THIS COURT ORDERS AND DECLARES that effective January 1, 2023 the Applicant, Mary Maureen Marttunen is the sole Attorney for Property and Attorney for Personal Care for the Respondent, Helen McDevitt;
THIS COURT ORDERS the balance of the Application to pass the accounts of the Respondent Raymond McDevitt is hereby dismissed. No further application to pass accounts in respect of Helen McDevitt’s power of attorney for property need be made by Raymond McDevitt for any period except by further Court order;
THIS COURT ORDERS that costs of this application are payable by the Respondent Raymond McDevitt to the Applicant Mary Maureen Marttunen in an amount to be agreed or fixed by Fitzpatrick J. in a subsequent order.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: January 9, 2023