COURT FILE NO.: CV-22-00683495-00ES

DATE: 20230825

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

STEVEN WAYNE SPISAK Applicant

– and –

KAREN ROBIN SPISAK Respondent

Quinn Giordano, for the Applicant

Karen Robin Spisak, Self-represented

HEARD: August 2, 2023

REASONS FOR JUDGMENT

DIETRICH J.

[1] This application involves a dispute between two siblings, Steven Wayne Spisak (the “Applicant”), and his sister, Karen Robin Spisak (the “Respondent”), regarding the administration of the estate of their late father, Nicolaus Spisak (the “Deceased”).

[2] The Deceased died on December 28, 2020, at 94 years of age.

[3] In his Last Will and Testament, dated the 2nd day of November, 2016 (the “Will”), the Deceased named the Respondent as the Executrix and Trustee, and he named the Applicant as the alternative Executor and Trustee. He also directed that the residue of his estate (the “Estate”) be divided equally between them if they both survived him.

[4] The Respondent delayed the administration of the Estate and did not respond promptly to the Applicant’s inquiries about the Estate, including his request for a copy of the Will. Ultimately, more than 15 months after the Deceased’s death, the Respondent reported to the Applicant that there were no assets in the Estate for distribution to the beneficiaries. The Respondent claimed that all of the Deceased’s assets had been held jointly with her in a Toronto-Dominion chequing account (the “Joint Account”), which passed to her on the Deceased’s death by right of survivorship.

[5] The Applicant seeks a) an order declaring that the Respondent is in contempt of court for failing to obey court orders, for which she should be arrested, incarcerated, and ordered to pay a fine; b) an order for damages in the amount of $71,472.25, or such other amount as the court determines, for breach of trust, breach of fiduciary duty, and conversion; c) an order for punitive damages in the amount of $50,000; and d) an order for costs on a full indemnity basis.

[6] For the reasons that follow, I find the Respondent had no beneficial interest in the Joint Account, and it did not pass to her by right of survivorship; she breached her fiduciary duty to the Deceased during his lifetime and converted his property to her own; and she breached her fiduciary duty to the Applicant, as a beneficiary of the Estate. The Respondent is liable to the Estate and to the Applicant for damages for her breaches of fiduciary duty.

Background Facts and Evidence

[7] The Deceased was predeceased by his wife. He is survived by his only children, the Applicant and the Respondent, and the Applicant’s 15-year-old son.

[8] The Applicant filed two affidavits in support of his application. He was not cross-examined on his affidavits.

[9] Despite being ordered to do so twice, the Respondent did not serve and file any responding material. She sent the Applicant’s lawyer an unsworn 18-page letter (the “Respondent’s Letter”) on which the Applicant cross-examined her. During the cross-examination, the Respondent undertook to convert the Respondent’s Letter into a sworn affidavit and file it with the court, but she never did.

[10] The Applicant’s evidence is that when the Deceased sold the family home in Hamilton in or around 2010, he divided the proceeds equally among the Applicant, the Respondent, and himself. This evidence is undisputed.

[11] The Applicant also deposed that from 2010 to 2016, it was he, and not the Respondent, who was named on the Joint Account together with the Deceased. He stated that his name was added as a matter of convenience, and he did not withdraw any funds from the account, which then had a balance of approximately $100,000. He also stated that the Deceased had other accounts, including a TD Waterhouse account, which also had a balance, at that time, of approximately $100,000. The Respondent disputes that the Applicant would have any knowledge of the Deceased’s investment account.

[12] The Applicant also deposed that the Deceased showed him a copy of the will the Deceased made in 2010, which named the Applicant as Executor and Trustee, and named the Applicant and the Applicant’s wife as the beneficiaries of the Estate, and their son as the alternative beneficiary. A copy of this will is not included in the record.

[13] The Applicant also deposed that the Deceased showed him the Will in October 2016, and that the Deceased openly discussed the equal division of the Estate between the Applicant and the Respondent, as provided for in the Will. Further, the Applicant deposed that, at this time, he became aware that the Deceased had executed a Power of Attorney naming the Respondent as his attorney for property, and the Applicant as his alternative attorney for property. The Applicant deposed that, around the same time, the Applicant was removed from the Joint Account. A copy of the Power of Attorney is not included in the record, and the Respondent submits that no such Power of Attorney exists. She submits that the Deceased made all the decisions relating to his property up until the time of his death.

[14] It is undisputed that in 2020, the Deceased was diagnosed with pancreatic cancer. Until approximately one month prior to his death, the Deceased had been living in a retirement home. For the last month or so of his life, he lived with the Respondent at a house she rented in Mississauga, Ontario, having moved there from an apartment in November 2020. The Respondent’s evidence, on cross-examination, was that she moved from her apartment to a house so that she could provide palliative care to the Deceased at the end of his life. She deposed that both she and the Deceased were named as tenants on the lease, and that the arrangement between the Deceased and her was that she would pay the rent she had been paying at the apartment, and he would pay the difference. She deposed that the Deceased gave her a bank draft drawn on the Joint Account on October 1, 2020, for expenses relating to the lease and the house.

[15] The Respondent also said that she had arranged for some nursing care for the Deceased while he resided with her. It is unclear from the record when the Deceased moved into the house with the Respondent, but the Respondent stated during her cross-examination that he lived there for approximately a month and a half before he passed away on December 28, 2020.

[16] The Deceased’s funeral took place in January 2021. In November 2021, the Applicant made a number of requests to the Respondent, via email, asking the Applicant to provide him with a copy of the Will. A follow-up inquiry went unanswered. On December 3, 2021, the Respondent wrote to say that the Applicant would get a substantive response by the “end of the month if I can finish everything.”

[17] On January 16, 2022, the Applicant asked the Respondent for a firm date by which the Estate would be administered. The Respondent replied that she had been ill and in hospital over Christmas but would get things done when she could.

[18] The Applicant offered to assist the Respondent, but she declined that offer.

[19] In response to the Applicant’s inquiry about the Respondent’s health and the Estate, made on February 27, 2022, the Respondent replied on March 4, 2022 that she was still unwell, and that “[the Deceased’s] stuff has taken a back seat”, but she would be in touch when the paperwork was completed.

[20] Having heard nothing from the Respondent, the Applicant followed up on April 8, 2022 and asked for a copy of the Will by April 11, 2022. He also offered to take over as Executor and Trustee of the Estate.

[21] On April 12, 2022, the Respondent sent an email in which she stated as follows:

I will tell you that there were no funds left – apart from what minor amounts that were in my and Dad’s joint account. At his investment advisors advice the last of his investments were transferred to the joint account (prior to his death) and used to set him up for palliative care. I moved and took on a rental that was more than double what I had been paying. We had a joint one year lease and Dad wanted to make sure I didn’t get stuck so instructed me to use the funds in our joint account to assist me with my higher expenses until I could move. Over the last several years Dad had higher expenses. And he helped keep me afloat given I was taking more and more time off to care for him. And then Covid pretty much shut down my business. So he helped me with money.

I am sorry to give you this news. I am trying to get healthy and finish taxes etc. As you know I have no assets personally so unfortunately that is the end of this discussion.

[22] The Applicant does not accept that the Deceased authorized the Respondent to use his assets to fund her lifestyle.

[23] On July 6, 2022, after the Applicant commenced this application, the Respondent sent an email to the Applicant’s counsel in which she wrote:

All residual from my dad’s estate were used to pay his final expenses. Any other residual was in my dad and my joint account. I will send copies of the bank balance at date of death should I be advised to do so. Further funds from my dad’s investment account at my dad’s instruction (as suggested by his financial advisor) was deposited into our joint account.

Dad was able to make such instruction up to the time of his passing. I will be able to provide proof of such both from a capacity assessment conducted by my dad’s lawyer prior to adjustments to his last Will and Testament. I also can provide a letter from my dad’s palliative care doctor (who he saw regularly up to his death) should that be required.

[24] On November 18, 2022, I ordered the Respondent to produce the Deceased’s bank statements for any joint account with the Deceased, within 30 days, and to deliver a responding record by December 16, 2022. At that time, the Respondent agreed to provide a copy of the capacity assessment to the Applicant. The Respondent did not comply with that order, and she never provided the capacity assessment. It turns out that there was no capacity assessment.

[25] On February 21, 2023, Gilmore J. again ordered the Respondent to deliver her responding record and the bank statements by March 3, 2023, and to attend for an examination under oath on March 10, 2023. The Respondent did not comply with that order either.

[26] On March 29 and 31, 2023, the Respondent provided the Applicant with statements for the Joint Account, though some of the statements are missing. She also served on him the Respondent’s Letter and letters from three individuals who are not parties to the litigation or named in the pleadings.

[27] In the Respondent’s Letter, the Respondent admits to having struggled with her addiction to gambling in 2019, and she admits to withdrawing funds from the Joint Account for her own purposes.

[28] The Applicant’s evidence is that the Joint Account bank records he received show transfers out of the Joint Account totalling approximately $4,800 in 2017, $3,650 in 2018, a spike to over $100,000 in 2019, and nearly $30,000 in 2020. He claims the Respondent has neither provided an explanation for these transfers nor demonstrated that the transferred funds were used for the Deceased’s benefit.

[29] The bank records show that, following the Deceased’s death, the Respondent continued to make withdrawals from the account until it was closed on August 30, 2022. Throughout this period, the bank statements record purchases from various retailers, gas stations, and shopping channels, among others.

[30] The Respondent was cross-examined on the Respondent’s Letter on April 12, 2023, at which time she stated: “I am here now under oath saying this is my affidavit. It is my truth.”

[31] Under cross-examination, the Respondent admitted the following:

1. she took money out of the Joint Account and used it for gambling for a four-month period in late 2019, and she put some money back in the account from her winnings, but she has provided no evidence or written explanation of any of these transactions;

2. she continued to spend money from the Joint Account after the Deceased died for bills owing by the Deceased and for herself, but she disagreed with the Applicant’s characterization of every expense;

3. regarding the after-death expenses, some relate to items ordered before the Deceased’s death for which she got a credit for after-death returns, and she would review the bank statements to identify which of these expenses were for her and which were for her father;

4. no capacity assessment had been done when the Deceased changed his Will;

5. she believed she had a survivorship right to the Joint Account;

6. she told the Deceased that she had gambled away about $70,000 of his money;

7. the Deceased’s only account at the time of his death was the Joint Account, and he had had another from which “we” transferred money;

8. she had no evidence that the Deceased understood her addiction, that they talked about it, and that he forgave her for taking money from the Joint Account for gambling;

9. the majority of the funds in the Joint Account were from the Deceased throughout his life, but he did allow her to use those funds for her own expenses; and there was no written agreement about this;

10. she never prepared an accounting of the Joint Account;

11. many withdrawals were made between August and December 2019 for gambling, but during the same period, she was making some contributions (approximately $21,000) to the Joint Account from her winnings;

12. there was money in the Joint Account when the Deceased died, and it is all gone;

13. she knew she had a duty to maintain an even hand and not to benefit one beneficiary over another;

14. she did utilize some funds for herself personally because she wasn’t able to make as much money while she was looking after the Deceased; and

15. she “had hoped on some level maybe [she] would have more money to contribute [to the Applicant’s one-half share of the Estate], but [she] didn’t have that opportunity.”

[32] At the cross-examination, the Respondent gave undertakings to a) provide a sworn affidavit by May 11, 2023; and b) provide personal bank statements for the period from January 1, 2018 to the end of August 2022 to identify withdrawals from the Joint Account. The Respondent has not complied with these undertakings.

[33] The Respondent takes the position that at the time of the Deceased’s death, there was no money other than what was in the Joint Account, and therefore there was no Estate.

Issues

[34] The issues in this application are as follows:

1. Did the Respondent have a beneficial interest in the Joint Account, and did the Joint Account pass to her by right of survivorship?

2. Did the Respondent breach her fiduciary duty to the Deceased during his lifetime by converting the Deceased’s property to her own?

3. Did the Respondent breach her fiduciary duty, as an Executrix and Trustee, to the Applicant, a beneficiary of the Estate?

4. If the Respondent breached her fiduciary duties, what is the remedy for the breach?

5. Should the Respondent be found in contempt of court orders and penalized for that contempt?

Law

[35] When a parent gratuitously transfers property to their adult child, the law presumes that the child holds the property on resulting trust for the parent. To rebut the presumption, the adult child must proffer clear, convincing, and cogent evidence that 1) the parent intended to make a gift of the property to the child; 2) the child accepted the gift; and 3) a sufficient act of delivery or transfer of the property occurred to complete the transaction: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795.

[36] The nature of a fiduciary duty was described by the Supreme Court of Canada in Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261. At para. 22, the Supreme Court stated that a fiduciary duty is a doctrine originating in trust. It requires that the fiduciary act with absolute loyalty toward the beneficiary in managing the beneficiary’s affairs. At para. 27 in Elder Advocates, the Supreme Court reiterated the hallmarks of a fiduciary duty outlined in Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99, and later adopted and applied in Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574:

Relationships in which a fiduciary obligation has been imposed seem to possess three general characteristics:

(1) The fiduciary has scope for the exercise of some discretion or power.

(2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.

(3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

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

Issue 1: Did the Respondent have a beneficial ownership in the Joint Account and did the Joint Account pass to her by right of survivorship?

[38] To claim the Joint Account as the surviving joint owner, the Respondent must prove that the Deceased made a gift to her of the Joint Account or the right of survivorship, or both. As set out in Pecore, it is presumed that on a gratuitous transfer or a gift of property from a parent to an adult child, the child is presumed to hold the property on resulting trust for the parent. The onus is on the Respondent to adduce evidence that the Deceased made the gift.

[39] The Respondent has adduced no sworn evidence in support of such a gift. For the reasons that follow, I find that the Respondent has not met her onus.

[40] The evidentiary record leads to the conclusion that the Deceased did not make a gift of the Joint Account or the right of survivorship to the Respondent. In an email to the Applicant, and under cross-examination, the Respondent stated that the Deceased made all decisions regarding the Joint Account, and he would regularly go to the bank to have his passbook updated. She also stated that he reviewed the bank statements, and that it was in doing so that he discovered that significant amounts had been withdrawn in the fall of 2019, and that when she told him that she had used the money for gambling, he became very angry.

[41] Under cross-examination, the Respondent testified that the Deceased helped her with her expenses and paid for things, like gas for her car, groceries, or a meal in a restaurant, from time to time. If the Deceased had, in fact, made a gift of the Joint Account to her, she would not have needed further gifts of money from the Joint Account to pay her expenses, and the Deceased would have no right to comment on how the funds in the account were being spent. Both the Deceased and the Respondent conducted themselves as though the funds in the account belonged solely to the Deceased. Though the Respondent submits that she made contributions to the Joint Account, based on her own admissions and the bank statements, those contributions were made to compensate the Deceased for funds taken from the account and lost through gambling. If the Joint Account had been gifted to her, there would have been no need for the Respondent to reimburse the Deceased.

[42] The Respondent has also not shown that even if the Deceased did not make a gift of the Joint Account to her during his lifetime, he intended to make a gift of the right of survivorship. The Respondent offered no evidence to support this conclusion. If the Deceased had intended to make such a gift and, in fact, had made such a gift, then the Respondent could have told the Applicant immediately following the Deceased’s death that the Deceased’s only asset was the Joint Account, which had passed to the Respondent by right of survivorship. The Respondent did not do so. Instead, she led the Respondent to believe that there was an Estate to administer, and she was in the process of administering it. Further, under cross-examination, the Respondent admitted that she had hoped that she would have had the opportunity to contribute to the Joint Account so that there would be an inheritance for the Applicant, but she did not. In making this statement, the Respondent concedes that the Deceased did not make a gift to her of the right of survivorship in the Joint Account. She knew that the Deceased had intended that his Estate be divided equally between his children. This distribution is consistent with the Deceased’s decision to divide a share of the proceeds from the sale of his residence in 2010 equally between himself and his two children, and it is also consistent with the terms of the Will made in 2016.

[43] I find that the Deceased made a gratuitous transfer of the Joint Account when he added the Respondent as a joint owner, and not a gift. Accordingly, I find that the Respondent held the Joint Account on a resulting trust for the Deceased and, following his death, for the Estate.

Issue 2: Did the Respondent breach her fiduciary duty to the Deceased?

[44] The Respondent submits that she never acted as the Deceased’s attorney for property, and she asserts that there is no Power of Attorney for Property. None is included in the record. She submits that the Deceased made all his own decisions regarding his property. Therefore, she was not a fiduciary.

[45] I disagree. As the Court of Appeal for Ontario held in Falsetto v. Falsetto, 2023 ONCA 469, at para. 45, “Pecore provides that when a parent gratuitously transfers property to their adult child, the law presumes that the child holds the property on resulting trust for the parent. That is, the law presumes the child is a fiduciary.” The Respondent has not rebutted the presumption of resulting trust in relation to the transfers and withdrawals she made from the Joint Account, which she has not shown to have been for the Deceased’s benefit. Accordingly, she is a fiduciary.

[46] As a joint holder of the Joint Account, the Respondent had power over it, and she used that power to affect the Deceased’s interests in the account. The Respondent breached fiduciary obligations owed to the Deceased in making significant transfers and withdrawals from the Joint Account for her own benefit, and paying for some of her own expenses from it. Although the Respondent argues that the Deceased approved some of these transfers, for example, payments to assist her to buy gas or groceries, her evidence on this point is uncorroborated and does not meet the test under s. 13 of the Evidence Act. The Respondent has no evidence to show that the Deceased authorized any of the transfers or withdrawals of funds out of the Joint Account.

[47] The Respondent does not deny that the Deceased did not authorize all the transfers and withdrawals from the Joint Account that she made for her own benefit. She concedes that she converted the Deceased’s property to her own when she took funds from the Joint Account without his authorization. She used them to gamble, and she did not fully reimburse the Joint Account. Despite the Respondent’s contributions to the Joint Account, which appear to be evidenced in the bank statements, the Respondent has not shown that any funds she paid into the Joint Account were used for the Deceased’s benefit, and she has not shown that the funds she contributed to the Joint Account were not sourced from the Deceased’s own funds that she had transferred to, or withdrawn for, herself.

[48] Without any accounting from the Respondent, it is difficult to interpret the bank statements. In 2017 and 2018, the monthly transactions in the Joint Account remain fairly consistent, with one exception. The Deceased’s pension income is deposited, there is a pre-authorized transfer of approximately $2,000 - $3,000 at the beginning of each month to account 65***86, likely for the Deceased’s rent,[^1] there are monthly credit card payments (in the low hundreds of dollars), tax installment payments, and miscellaneous retail purchases from retailers (Petro-Canada, Walmart, Fortinos). The month-end balance is consistently in the $5,000 to $6,000 range. The Applicant disputes that some of the withdrawn amounts and some of the expenditures were for the Deceased’s benefit or approved by the Deceased. The Respondent has not provided any voucher material in support of the bank statements. Based on the record, I find that, on a balance of probabilities, the Deceased had an appreciation of the activity in the Joint Account in 2017 and 2018, which was fairly consistent. It is not disputed that, at that time, he was regularly updating his passbook. There is no evidence to suggest that he was unhappy with the activity in the Joint Account in those years, or that he objected to any of the expenditures.

[49] Things changed in 2019, when it appears that transfers from the Deceased’s investment account to the Joint Account began. Instead of having a month-end balance of $5,000 - $6,000, the Joint Account was often in overdraft, notwithstanding the substantial transfers from the investment account. Credit card payments in December 2020 alone exceeded $11,000.

[50] The bank records show a number of transfers from the Joint Account to an account bearing number 6586. On a balance of probabilities, I find that this account was the Respondent’s bank account, or an account over which the Respondent had control. This inference can be drawn from the Respondent’s testimony that she paid the Deceased’s rent on his behalf, and the bank statements show a monthly payment, which could be rent, at the beginning of most months from the Joint Account to account number 6586. Further, the Respondent testified that, in 2019, when she was using the Deceased’s money for gambling, she was also making deposits into the Joint Account. In the fall of 2019, the bank statements show several transfers from the 65***86 account into the Joint Account. Those transfers in coincide with several withdrawals made from the Joint Account, often on the same day or within a day or two, which, based on the Respondent’s testimony, were likely used for gambling. The Respondent undertook to provide copies of her bank statements, but she has not complied with that undertaking.

[51] The bank statements also show that deposits were made into the Joint Account from another account bearing the number 8Y***3T. Based on the record, it is likely that this was an investment account owned by the Deceased. The Applicant and the Respondent both deposed that the Deceased had an investment account. The Respondent deposed that the funds from the Deceased’s investment account were transferred to the Joint Account on the advice of the Deceased’s financial advisor. There is no corroboration for this evidence.

[52] The Respondent’s evidence on her cross-examination was that the Deceased directed the transfer of funds from the investment account to the Joint Account. She testified that all banking transactions were authorized by him. This statement is also uncorroborated, and there is no documentary evidence relating to the transfer of funds from account 8Y***3T to the Joint Account, including evidence showing who initiated the transfer and how it was done.

[53] A history of the transfers from account 8Y3T to the Joint Account is instructive. Based on the bank statements, the first such transfer occurred on May 29, 2019. It was in the amount of $14,252.49. On June 3, 2019, that same amount was transferred to account 6586.

[54] On August 27, 2019, a second transfer of $35,000 was made from account 8Y***3T to the Joint Account. The bank statements show an unexplained transfer out of the Joint Account of $18,716.91 on August 28, 2019, and a cash withdrawal of $15,000 on August 30, 2019.

[55] By October 7, 2019, the Joint Account was in an overdraft position. On October 15, 2019, a third transfer of $15,000 was made from account 8Y3T to the Joint Account. On October 16, 2019, $8,000 was transferred from the Joint Account to account 6586. On the same day, there were two bank machine withdrawals of $2,000 each from the Joint Account. Another $3,000 was transferred to account 6586 on November 4, 2019, and a further $1,800 was transferred to account 6586 on December 23, 2019, resulting in another overdraft in the Joint Account.

[56] On January 29, 2020, a fourth transfer of $20,000 was made from account 8Y3T to the Joint Account. On January 31, 2020, $18,000 was transferred from the Joint Account to account 6586, and on February 4, 2020, there were two cash withdrawals from the Joint Account of $2,500 and $1,000.

[57] On November 13, 2020, a fifth transfer[^2] of $15,000 was made from account 8Y3T to the Joint Account; and on November 16, 2020, a sixth transfer of $10,000 was made from account 8Y3T to the Joint Account. On the same day, $5,000 was transferred to account 65***86. On November 24, 2020, a bank draft was issued from the Joint Account in the amount of $9,600. On December 8, 2020, there was a $2,000 credit card payment and an $800 cash withdrawal.

[58] On December 18, 2020, 10 days prior to the Deceased’s death, a final transfer of $46,892.17 was made from 8Y3T to the Joint Account. On the same day, $15,000 was transferred to account 6586. On December 18, 2020, there was a TD VISA payment of $3,500; on December 21, 2020, there was another credit card payment of $5,577.32 and a cash withdrawal of $3,000, all from the Joint Account.

[59] Based on the bank statements produced, which are incomplete, $156,144.66 was transferred from the Deceased’s investment account to the Joint Account between May 2019 and December 2020.

[60] On December 29, 2020, the day following the Deceased’s death, the balance in the Joint Account was $21,192.02. Of that amount, $12,539.22 was transferred to account 65***86 on January 4, 2021. The Respondent has not accounted for the date of death balance.

[61] Based on the bank statements, on a balance of probabilities, I find that of the $156,144.66 transferred from the Deceased’s investment account into the Joint Account, $113,816.91 was either transferred to the Respondent’s account or otherwise transferred for her benefit, or withdrawn by her without the Deceased’s authorization. Also, I find that of this amount, she received a bank draft of $9,600, and she paid off credit card debt of $12,077.32 in the final month of the Deceased’s life that was not likely his debt. Based on the banking records, which appear to show withdrawals by the Respondent for gambling purposes (from July 2019 to December 2019) followed by contributions to the Joint Account as reimbursement, I find that more than $20,000 was withdrawn than was repaid. In the result, based on the available evidence, I find that, at a minimum, the Respondent converted $155,494.23 of the Deceased’s property to her own.

[62] On the Respondent’s own evidence, it is doubtful that the Deceased knowingly authorized the transfers from his investment account to the Joint Account, that he fully appreciated the likely purpose of the transfers, or that he appreciated that the transferred funds would not be used for his benefit. The Respondent has not provided any evidence to suggest that she discussed the transfers with the Deceased, or provided any corroborating evidence that these transfers were being undertaken on the advice of a financial advisor. These transfers took place at a time when the Respondent admitted that she had lapsed into gambling, to which she submits she has an addiction. The Respondent admitted that when she disclosed to the Deceased how she had been using his funds, he was very angry. This reaction is inconsistent with an informed approval and authorization to transfer significant amounts from his investment account to the Joint Account over a short period of time.

[63] The Respondent further submits that once she told the Deceased about her use of his funds for gambling, he forgave her. There is no corroboration for this statement. Even if it could be proven that the Deceased had forgiven her for the breach of her fiduciary duty and conversion, there is no evidence to suggest that the Deceased did not expect her to remedy the breach so that both his children would share equally in the Estate as provided in the Will.

[64] For these reasons, I have no hesitation in concluding that the Respondent breached her fiduciary duty to the Deceased.

Issue 3: Did the Respondent breach her fiduciary duty to the Applicant, a beneficiary of the Estate?

[65] Under cross-examination, the Respondent admitted that as the Executrix and Trustee of the Estate, she has a fiduciary duty to act in the interest of the beneficiaries of the Will, and that she has a responsibility to look after the Estate property and keep proper records.

[66] The Respondent is the sole Executrix and Trustee of the Estate. She has complete discretion in winding up and distributing the Estate pursuant to the terms of the Will. When the Respondent was faced with medical issues early on in the administration, the Applicant volunteered to take on the role of Executor and Trustee, but the Respondent did not accept that offer. She continued in the role and was, therefore, obligated to act in the best interests of the Applicant, a beneficiary of the Estate.

[67] Instead, the Respondent breached her fiduciary duty to the Applicant. She did not act promptly in responding to his questions regarding the administration of the Estate or in providing him with a copy of the Will when he asked for it. In the email exchanges with him, she led him to believe that he could expect a report on her administration as soon as she was well enough and had completed it. Ultimately, the Respondent reported to the Applicant that there was no share for him. She advised that the Estate had been used to pay the Deceased’s expenses and what remained was held in a joint bank account, which passed to her as the surviving joint tenant.

[68] The Applicant was then put to the trouble and expense of retaining counsel and obtaining two court orders directing the Respondent to comply with her fiduciary duty, including by producing the bank statements for the Joint Account, and to file responding material.

[69] When the Respondent finally produced the bank statements for the Joint Account, the Applicant discovered that considerable sums had been transferred out of the Joint Account between January 1, 2018 and the Deceased’s date of death, which would otherwise likely have formed part of the Estate. He also discovered that, following the Deceased’s death, the Respondent continued to use the Joint Account to pay for items that were of no benefit to the Deceased or the Estate, but benefitted her personally. Such purchases were made from Amazon, Pet Valu, Wayfair, Lenovo, The Shopping Channel, Homesense, and Petro-Canada, among others.

[70] The Respondent has not provided the Applicant with any proof that the Joint Account passed to her by right of survivorship as she asserted. I have found that it did not. Rather, she held the Joint Account on a resulting trust for the Deceased and, on his death, it became an asset of the Estate.

[71] The Respondent’s breach of her fiduciary duty to the Deceased resulted in losses to the Applicant, a beneficiary of the Estate. But for the Respondent’s conduct, the Estate would have been aggrandized by the value of the Deceased’s property that she wrongfully converted. Following the Deceased’s death, the Respondent continued to exploit the Joint Account by continuing to use it as if it were her own and not an Estate asset. The Respondent’s conduct in this regard was a breach of her fiduciary duty and contrary to the interests of the Applicant.

[72] For these reasons, I find that the Respondent is also in breach of her fiduciary duty to the Applicant.

Issue 4: What is the remedy for the breaches of fiduciary duty?

[73] Breach of fiduciary duty is a serious violation. The Court of Appeal for Ontario, in Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 186 O.A.C. 201 (C.A.), at para. 651, held that “[t]he basic rule of equitable compensation is that the injured party will be reimbursed for all losses flowing directly from the breach.” The court may remedy the breach to put beneficiaries in the position they would have been but for the breach of fiduciary duty by a trustee.

[74] The Applicant reviewed the bank statements that the Respondent provided. He tallied the cash withdrawals of approximately $4,800 in 2017, approximately $3,650 in 2018, approximately $104,591.50 in 2019, and approximately $29,903 in 2020. He arrived at a total of $142,944.50. The Applicant submits that none of these withdrawals were for the benefit of the Deceased, and the funds ought to have remained in the Deceased’s Joint Account for the beneficiaries of the Estate. Accordingly, as the beneficiary of one half of the Estate, he seeks an award of damages in the amount of $71,472.25, or such other amount as determined by the court, to put him in the position he would have been but for the Respondent’s breaches of fiduciary duty.

[75] The Respondent is liable to the Applicant for the losses to him that arise as a result of her breaches of fiduciary duty to both the Deceased and him, qua beneficiary of the Estate: Waxman, at para. 651.

[76] Had the Respondent not breached her fiduciary duty to the Deceased, there would have been at least $155,494.23 of additional value in the Estate, to which the Applicant would have been entitled to one half. Accordingly, of the amount of $155,494.23 owing by the Respondent to the Estate, it is fair and appropriate that the Respondent pay one half of that amount, $77,747.11, directly to the Applicant as damages for the Respondent’s breach of fiduciary duty to the Deceased.

[77] The Respondent, in her role as Executrix and Trustee, breached her fiduciary duty to the Applicant, as a beneficiary of the Estate, through her ongoing exploitation of the Joint Account following the Deceased’s death. For this breach, the Respondent is also liable to the Applicant for his losses. At the Deceased’s date of death, the amount remaining in the Joint Account was $21,192.02. The Applicant received none of this amount. I find that he is entitled to additional damages equal to one half of $21,192.02, net of the Deceased’s just debts and reasonable testamentary expenses.

[78] The Respondent has not filed the Deceased’s tax returns and she submits that there may be taxes owing. To the extent that there are taxes owing, the amount of the tax owing by the Deceased or the Estate shall be deducted from the $21,192.02 amount. However, owing to the Respondent’s further breach of her fiduciary duty in not filing the tax returns on a timely basis, she alone shall be responsible for any penalties and interest owing by the Deceased or the Estate.

Punitive Damages

[79] In addition to damages for his losses arising from the Respondent’s breaches of fiduciary duty, the Applicant seeks punitive damages of $50,000. In making this request, the Applicant relies on Walling v. Walling, 2012 ONSC 6580, 84 E.T.R. (3d) 146, and Queripel v. Shaddock et al., 2023 ONSC 3114.

[80] In Walling, the court found the impugned trustee’s indifferent use of estate funds for his own personal use as an egregious example of a breach of fiduciary duty. The court awarded $100,000 in damages. In Queripel, the court found the trustee’s conduct egregious, abhorrent, and dismissive of court authority and awarded $50,000 in punitive damages.

[81] In the present case, I decline to make an award of punitive damages against the Respondent. I do not find that she was indifferent to the use of Estate funds for her personal use. Despite her argument that she believed the Joint Account was hers by right of survivorship, in my view, the Respondent was aware that her use of the Deceased’s funds to support her gambling addiction was wrong and she knew she was taking funds from the Estate that did not belong to her. For this reason, she was transferring funds into the Joint Account, and she testified that she had hoped to be able to contribute more to the Joint Account so that there would be an inheritance for the Applicant. The Respondent’s gambling addiction does not excuse her conduct, and she will be ordered to make the Applicant whole in respect of his losses as a result of her breaches of fiduciary duty. During cross-examination, the Respondent was asked whether she sought help regarding her addiction to gambling once she relapsed in 2019, and she admitted that she had not. I find that it was largely the Respondent’s addiction to gambling and not her indifference to the administration of the Deceased’s property that caused her to breach her fiduciary duty to the Deceased and to delay in disclosing to the Applicant the true state of the Deceased’s affairs at the time of his death.

[82] This case can be distinguished from the Walling case. In Walling, the estate trustee also breached court orders and failed to account for his administration of the estate. However, his conduct was more egregious. He took advantage of his vulnerable young nephews, squandered their relatively modest inheritance, took chattels from the estate and gave them away, failed to include his nephews in their father’s funeral, and caused them serious emotional harm.

[83] In Queripel, the court awarded punitive damages against an estate trustee who, apart from a single email, failed to communicate with vulnerable beneficiaries for 20 years. She also failed to respond to any correspondence from the solicitor representing the majority of the residual beneficiaries of the estate, and she failed to account for her administration of the estate. That estate trustee was also in breach of court orders, and she withheld documents that ought to have been produced.

[84] I find that the facts in Queripel can also be distinguished from the facts in the case at bar. The Respondent in this case was not dealing with a particularly vulnerable beneficiary in the Applicant. She did respond to his correspondence, although not to his satisfaction. She did delay in the administration of the Estate, but she explained to the Applicant that delay was because of her admission to hospital and the recovery that followed. It was approximately 15 months (as opposed to 20 years) between the date of the Deceased’s death and the date on which the Respondent delivered the bad news that there were no funds in the Estate. During that time, there was communication between the Applicant and the Respondent.

Issue 5: Should the Respondent be found to be in contempt of court?

[85] The Applicant also seeks an order declaring that the Respondent is in contempt of my Order of November 18, 2022, and the Order of Gilmore J. of February 21, 2023, and that she be arrested, incarcerated and fined. I decline to make this order.

[86] I agree that the Respondent has failed to fully comply with both my Order and Gilmore J.’s Order. Failure to comply with court orders is serious and worthy of sanction. However, in this case, the Respondent has now produced the bank statements that she was ordered to produce, although there are a few missing pages. She has not filed a responding record, but there is no longer any need to do so. The Applicant has proceeded with his application despite the Respondent’s failure to file responding material, and the Respondent has run the risk of adverse inferences being made against her in the absence of any responding record. While the Respondent did not attend for an examination under oath on March 10, 2023, she did attend for an examination on April 12, 2023. An order finding the Respondent in contempt of these court Orders will serve no useful purpose at this stage in the litigation.

Costs

[87] Notwithstanding that I decline to exercise my discretion to award punitive damages and to find the Respondent in contempt, the Respondent’s conduct is worthy of sanction. The Applicant has been overall successful in his application. For this reason, he is entitled to his costs.

[88] In this case, full indemnity costs are an appropriate sanction for the Respondent’s failure to comply with court orders and her breaches of fiduciary duty to the Deceased and to the Applicant, qua beneficiary of the Estate. The Respondent was warned on March 17, 2023, at a court attendance before Gilmore J. and in Gilmore J.’s endorsement of the same date, that her continued avoidance of the litigation would likely result in a significant costs order. Accordingly, the Respondent shall be required to pay the Applicant’s full indemnity costs. Having reviewed the Applicant’s costs outline, I fix those costs at $30,000 inclusive of disbursements and HST.

Orders

[89] For the foregoing reasons, I make the following orders:

1. The Respondent shall pay to the Estate $155,494.23 as damages for breach of fiduciary duty to the Deceased and the Estate, and of this amount, $77,747.11 shall be paid directly to the Applicant, as a beneficiary of one half of the residue of the Estate.

2. The Respondent shall pay to the Applicant as damages for breach of fiduciary duty to him as a beneficiary of the Estate, one half of $21,192.02, net of the Deceased’s just debts and reasonable testamentary expenses, not including any amount for interest and penalties owing on unpaid taxes. The Respondent shall also provide an accounting of the $21,192.02 amount.

3. The Respondent shall pay the Applicant’s full indemnity costs of $30,000 inclusive of disbursements and HST. Such costs are payable within 30 days.

Dietrich J.

Released: August 25, 2023

[^1]: The Respondent deposed that the Deceased’s rent was transferred from his account to hers, and she arranged for payment. [^2]: The bank statement for the period from September 8, 2020 to October 20, 2020 is missing. Therefore, it is unknown whether any transfers from the Deceased’s investment account to the Joint Account were made during that period and whether this transfer is the fifth or a later transfer.