COURT FILE NO.: CV-21-00086353-0000
DATE: 2024/11/20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
PATRICIA PLAYFORD
(Applicant)
– and –
BRUCE MACRAE, in his personal capacity and in his capacity as Trustee for the Estate of John Lorne MacRae and IAN MACRAE
(Respondent)
Amanda Estabrooks, for the Applicant
Charlotte Watson, for the Respondent
HEARD: September 17 and 18, 2024
AMENDED REASONS FOR DECISION
The text of the original Reasons for Decision dated September 27, 2024, was amended on November 20, 2024 and the description of the amendment is appended.
Flaherty J.
[1] Lorne MacRae died on March 22, 2017 at the age of 87. He had been suffering from bladder cancer and had been showing signs of dementia, although the extent of his memory loss is one of the key issues in dispute between the parties.
[2] In the approximately 20 months before his father’s death, the respondent, Bruce MacRae, received funds from his father totalling $776,000. Specifically:
a. In April 2015, Bruce received a cheque in the amount of $98,000;
b. In September 2015, Bruce received $500,000 from Lorne’s CIBC Wood Gundy investment account; and
c. On various dates and at various times between September 2016 and Lorne’s death in March 2017, Bruce received 89 separate e-transfers from Lorne’s bank account, totalling $178,000. Each transfer was for $2,000, the maximum daily amount that could be transferred from the account.
[3] The applicant, Patricia Playfair, is Lorne’s daughter and Bruce’s sister. She claims that the above inter vivos transfers are void because they are subject to a resulting trust. She also submits that, in the circumstances, Bruce must be presumed to have exercised undue influence over his father.
[4] Bruce states that Lorne expressed a clear and corroborated intention to give this money to him. Bruce submits Lorne had the capacity to make these gifts, despite any memory loss issues. According to Bruce, the presumption of undue influence does not apply in the circumstances, and, in any event, any applicable presumption is rebutted by the evidence.
[5] The matter proceeded by way of application, based on affidavit evidence and the cross-examination of Patricia, her son Christopher Playfair, Bruce, and Shauna MacDonald, Lorne’s home support companion from June 2016 to March 2017. In addition, CIBC Wood Gundy responded to a series of questions by email and John Murphy, Lorne’s long-time investment advisor, was cross-examined.
[6] For the reasons that follow, the application is allowed in part. Two of the three transactions are not valid inter vivos transfers. The evidence about those transactions was insufficient to rebut the presumption of a resulting trust. The transaction of $500,000 is a valid inter vivos transfer. There was credible corroborative evidence to show that Lorne intended this as a gift to Bruce.
OVERVIEW
[7] The background facts are not in dispute. Lorne and his wife Anne had three children: Bruce, Patricia, and Ian. Until she passed away in February 2015, Anne and Lorne resided together in their home in Metcalfe, Ontario. Lorne was a retired military officer.
[8] Lorne’s daughter Patricia described her relationship with him as “loving and caring.” However, from 2015 to his death in 2017, she saw him only a handful of times each year. They did not often speak on the phone.
[9] Lorne and his son Bruce had a closer relationship. Bruce lived nearby, they spent time together, and he provided support and companionship to his father. Bruce was Lorne’s power of attorney for property and personal care.
[10] Following his wife’s death, Lorne lived with Bruce and his family for about a month between February and March 2015. Lorne then returned to his own home and lived there alone until December 2015. During this time, he lived largely independently and managed the household and his own daily living requirements.
[11] In the spring and summer of 2015, Lorne and Bruce toured a number of retirement residences. At Bruce’s invitation, however, Lorne moved in with Bruce’s family in December 2015 and he continued to reside with Bruce until his death in April 2017.
[12] Three main factual issues are in dispute:
a. The extent and impact of Lorne’s dementia;
b. Whether the relationship between Lorne and Bruce was such that the presumption of undue influence applies; and
c. Whether Lorne expressed an intention to give all or parts of the $776,000 to Bruce.
[13] The parties agree that these factual issues must be considered in relation to each of the transactions in question. Rather than drawing broad conclusions about Lorne’s intentions, the state of his memory loss, or his vulnerability, I have considered those issues at the times and in the context in which he allegedly made gifts to Bruce.
[14] Before conducting a detailed review of the facts, I begin by setting out the legal principles that apply and through which the facts must be assessed.
LEGAL PRINCIPLES
[15] The legal principles are not in dispute. Both parties relied on many of the same caselaw.
[16] A valid inter vivos gift is one that is intended to take effect during the lifetime of the donor. It consists of a voluntary transfer of property to another with the full intention that the property will not be returned. Establishing a gift requires an intention to donate, sufficient delivery of the gift and acceptance of the gift: Foley v. McIntyre, 2015 ONCA 382 at para. 25 (“Foley”). The case at hand is primarily about whether Lorne had the intention to donate.
[17] As the Court of Appeal discussed in Foley, two presumptions can apply to inter vivos gifts.
[18] First, there is a presumption of a resulting trust. The principles of equity assume a bargain rather than a gift. Thus, when a parent gratuitously transfers property to an adult child, the law presumes that the child holds the property on a resulting trust for the parent. The onus is on the child to rebut the presumption by proving the contrary intention on a balance of probabilities. There is no dispute that the presumption of a resulting trust applies to all the transactions in this case.
[19] Second, the presumption of undue influence applies to inter vivos transfers if there is potential for domination in the relationship between the donor and the recipient. In such circumstances, the person who receives the funds must establish on a balance of probabilities that the gift was the result of full, free, and informed thought. There is no need to establish actual undue influence, it is the potential for dominance within the relationship that will trigger the presumption. There is a dispute between the parties as to whether this presumption applies.
[20] In determining whether the presumption of undue influence applies, courts begin by considering whether there is a potential for dominance, given the nature of the relationship: Geffen v. Goodman Estate [1991] 2 S.C.R. at p. 355. The presumption does not automatically apply to a parent-child relationship, unless the relationship between an elderly parent and a child is characterized by dependency or dominance: Pandke Estate v. Lauzon 2021 ONSC 123 at para. 13 and Modonese v. Delac Estate, 2011 BCSC 82 at paras. 103 – 106. This is a question of fact. It requires the courts to consider whether the parent can assert their will and act independently of the child.
[21] If either presumption applies, the common law requires corroborating evidence to rebut that presumption. Corroborating evidence can be direct or circumstantial. It can consist of a single piece of evidence or several pieces considered cumulatively: Foley at para. 29. Where, as here, the donor is deceased, corroborating evidence is also required by section 13 of the Evidence Act, R.S.O. 1990, c.E.23.
[22] The caselaw identifies examples of corroborative evidence that can rebut presumptions regarding inter vivos transfers. For example, corroborative evidence can include the post-transfer conduct of the parent, where that is relevant to the parent’s intention to make a gift: Pecore v. Pecore, 2007 SCC 17 795 at 819. It can also include written confirmation from the donor that the money is a gift: Pecore, at para 104. While not required in every case, evidence that the parent received qualified, independent advice can serve to rebut the presumption of undue influence: Foley, at para. 28
[23] This case does not require the court to make findings about Lorne’s capacity and, in any event, there would not have been sufficient medical evidence for me to do so. That said, Lorne’s dementia and related vulnerability are relevant to whether the presumption of undue influence applies. They are also relevant to assessing whether the transfers were the result of full, free, and informed thought. I deal with these issues, below, in the analysis of the facts.
ANALYSIS
Credibility
[24] The materials facts in this matter were highly contested and witnesses provided different versions of events. Much turns on the assessment of the credibility and reliability of the evidence, particularly as it relates to Lorne’s dementia and memory loss at the time of the transactions.
[25] Patricia and her son Christopher testified about Lorne’s memory loss. Patricia described a few incidents where Lorne appeared forgetful, beginning in 2014. Christopher testified that he saw his grandfather more frequently after Anne died in February 2015. According to Christopher, Lorne did not recognize him and he repeated himself during their conversations. In considering this evidence, it is significant that these witnesses’ contact with Lorne was infrequent, irregular, and did not specifically correspond to times when the transactions took place.
[26] For his part, Bruce submits that he spent more time with Lorne and was in a better position to testify about his cognitive acuity. According to Bruce, while Lorne may have had some memory issues, they did not impact his ability to make financial decisions. Bruce was insistent that Lorne managed his finances independently until the day he died, in March 2017.
[27] In my view, there were significant difficulties with Bruce’s evidence. A number of considerations (when taken together and considered on a balance of probabilities) lead me to conclude that Bruce’s evidence is not credible or reliable. Specifically:
At times, Bruce’s evidence was inconsistent with information contained in the medical records and in certain documents.
Some of his evidence was internally inconsistent or inconsistent with what seemed reasonably probable in the circumstances.
[28] For example, Bruce’s assertion that Lorne managed his own finances until he died is contradicted by a text message Bruce sent to his nephew Christopher, on February 29, 2016, almost a year before Lorne’s death. Bruce wrote:
Grandpa is not able to find anything these days (or use his computer much), so it would be best if you emailed me a soft copy of the [tax] returns.
[29] Bruce’s evidence about Lorne’s dementia found some support in the evidence of Ms. MacDonald, who saw Lorne five days per week from June 2016 to March 2017. However, Ms. MacDonald’s own evidence was somewhat contradictory. She testified that Lorne was capable and fully aware of his surroundings and that his “dementia was not obvious at all.” Later in her affidavit, however, she stated that Lorne had “issues with his short-term memory.” He had to be coaxed to bathe and “had difficulty grasping the concept that once the [protective] underwear were wet that they had to be thrown in the garbage.” Ms. MacDonald testified broadly about Lorne’s abilities between June 2016 and March 2017. The medical reports show that Lorne’s dementia and physical health deteriorated during that time. Improbably, Ms. MacDonald’s evidence does not identify any changes to Lorne’s circumstances during this time.
[30] Bruce’s evidence was markedly different from the information contained in the medical notes, particularly beginning in 2016. Lorne’s physicians did not provide affidavit evidence, although both Patricia affidavit attached medical records. At the hearing, counsel for both parties agreed that these medical records could be relied on for the truth of their contents.
[31] Bruce testified that, in consultation with his treating physicians, Lorne made all decisions relating to his cancer treatment and end of life care. In cross-examination, however, Bruce confirmed that he provided informed consent for Lorne’s medical treatment in May of 2016.
[32] By 2016, Bruce was attending many of Lorne’s medical appointments. Notes from those appointments consistently refer to Lorne’s dementia as significant and impactful. Physicians described objectively poor memory loss that was progressing rapidly. During a geriatric assessment in August 2016, Lorne was unable to provide his medical history, recall how many grandchildren he had, or even remember that he used to live in Metcalfe. The August 2016 report noted that Bruce had to cue Lorne to take showers and baths.
[33] Bruce did not generally dispute the accuracy of other medical notes, including other notes that described significant cognitive impairment. In cross-examination, however, he stated that the doctor conducting the geriatric assessment had “made stuff up.” It is significant that many aspects of the geriatric report are consistent with what was noted by other physicians. Other than Bruce’s speculation, there is no basis to conclude that this report, or parts of it, were made up.
[34] Finally, Bruce’s evidence about e-transfers made between September 2015 and March 2016 is not reasonably probable in the circumstances. In the fall of 2016, Bruce knew that Lorne was not using his computer very much, could not find anything, and had to be cued to bathe. It defies belief that, in these circumstances, Lorne would have set up 89 individual e-transfers, at what appear to be random days and times in the months and days immediately before his death.
[35] In sum, I did not find Bruce to be a credible witness. As it relates to the extent and impact of Lorne’s dementia and where it differs from Bruce’s version of events, I prefer the information contained in the medical notes and the evidence of John Murphy, Lorne’s investment advisor. Mr. Murphy’s evidence is discussed in more detail below.
[36] As noted, Bruce’s testimony is often the only direct evidence of Lorne’s intentions. Except for the $500,000 transfer in September of 2015, Bruce was the only other person present for any conversation regarding Lorne’s intentions. Given the serious difficulties with other aspects of Bruce’s evidence, I find that he cannot be relied upon to tell the truth about private conversations he allegedly had with his father.
The Transactions
[37] The parties agree that, rather than drawing broad conclusions about Loren’s intentions, the state of his memory loss, or his vulnerability, those issues must be considered at the times and in the context in which he allegedly made gifts to Bruce.
April 2015: Bruce received a cheque from Lorne for $98,000
[38] Bruce testified that the $98,000 was initially to assist Bruce with painting and other home renovation expenses as he prepared his home for sale. When Bruce offered to pay Lorne back after the sale of the house, Lorne said wanted the money to be given to Bruce’s son, Branson, who was looking to purchase his first home.
[39] The evidence shows that Bruce did not transfer the entire sum to Branson and kept part of that money for himself. When pressed on cross-examination, Bruce acknowledged that a portion of the alleged gift to Branson “has been distributed among all the things that were necessary in [Bruce’s] life for years.”
[40] There is no dispute that this transfer is subject to a resulting trust and that the onus is on Bruce to show that this money was a valid inter vivos gift. Under section 13 of the Evidence Act, Bruce’s evidence, alone, is not sufficient and corroborating evidence is required.
[41] One of the difficulties with Bruce’s position is that (on his own evidence) Lorne intended that the $98,000 be loaned to Bruce and given to Branson. The evidence before the court is that the full amount was not transferred to Branson. It is not clear that the conditions of a valid inter vivos gift were met.
[42] In any event, for this transaction, there is insufficient credible evidence to rebut the presumption of a resulting trust. The evidence is Lorne had a history of giving financial gifts to his children, in different amounts and at different times. However, $98,000 is larger than any gift he had given in the past. The only direct evidence of the alleged gift is from Bruce. For corroboration, he relies on Lorne’s post-transaction conduct, namely the fact that Lorne did not seek repayment of the $98,000. Importantly, however, this assertion also relies heavily on Bruce’s own evidence: it is Bruce who says that Lorne did not seek repayment.
[43] The fact that Lorne did not discuss repayment issues with Patricia or Christopher is not, in my view, sufficient to corroborate Lorne’s intentions. Their contact was irregular and infrequent. Christopher helped his grandfather prepare his tax returns, but there was no evidence to suggest that Lorne typically discussed his finances or any gifts or loans to his other children with Patricia or Christopher.
[44] In these circumstances, the evidence is not sufficient to rebut the presumption of a resulting trust. Accordingly, I find that the transfer of $98,000 was not a valid inter vivos gift.
September 2015: Bruce Received $500,000 from Lorne’s Investment Account
[45] The $500,000 transfer was executed following written instructions, which Lorne signed. Bruce and the investment advisor, John Murphy, both testified about the circumstances that led to that transfer. There is some divergence in their evidence and, for the reasons provided, I prefer Mr. Murphy’s version of events.
[46] On September 9, 2015, Bruce and Lorne met with John Murphy and provided him with RBC Gift Letter, which they had already filled out. There is no dispute that Bruce filled out the Gift Letter, except the date and the signature, which were added by Lorne.
[47] The Gift Letter states:
The undersigned hereby confirms that a financial gift in the amount of $500,000 is being provided to:
Name of Person receiving the gift (Recipient) Bruce MacRae
To be used as all or part of the down payment for the purchase of the property located at [address of home purchased by Bruce]
[48] Mr. Murphy testified that he did not specifically discuss Lorne’s intention to give the money to Bruce. However, Mr. Murphy understood from the Gift Letter that this was his intention.
[49] On September 9th, Lorne and John Murphy discussed the tax implications of drawing from a non-registered account. Mr. Murphy suggested that Lorne cash in a TFSA, but Lorne disagreed and directed a withdrawal from his non-registered account. They also discussed that $500,000 was “pretty well everything” in Lorne’s investment account. Mr. Murphy described Lorne as lucid and testified that he provided clear instructions. Nothing in Lorne’s behaviour on September 9, 2015 caused Mr. Murphy to question Lorne’s instructions.
[50] Bruce was present for the entire September 9th meeting, although Mr. Murphy said he spoke very little. Mr. Murphy did not specifically recall meeting or speaking to Lorne without Bruce present, either before, during, or after the September 9th meeting.
[51] The $500,000 was ultimately transferred from Lorne’s account to Bruce on approximately September 30, 2015. This liquidated of approximately 82% of the value of Lorne’s entire investment portfolio.
[52] There is a presumption that this money was subject to a resulting trust. The issues in dispute are whether the presumption of undue influence applies and whether Bruce has met the onus of rebutting the applicable presumption(s) on a balance of probabilities.
Does the Presumption of Undue Influence Apply?
[53] I find that in September 2015, Lorne and Bruce’s relationship was not characterized by dependency or a potential for dominance. The evidence establishes that Lorne was exercising his will and acting independently in September 2015.
[54] In this respect, Mr. Murphy’s evidence is significant. He testified that on September 9th, Lorne was “quite intent” on making the transaction and he provided “direct and clear instructions,” including about which accounts should be liquidated and when this should occur. As noted, Lorne exerted his will and declined to follow a suggestion by Mr. Murphy.
[55] Both Patricia and Christopher testified about occasional incidents of memory loss in 2014 and 2015, but those incidents do not correspond in time to the September transaction. In any event, occasional incidents of memory loss do not lead to a blanket assumption that Lorne was incapable of managing his finances or understanding the consequences of making a gift, particularly when the evidence points to the contrary.
[56] In September 2015, Lorne was living on his own. Although he received some assistance with his filing his tax return, he was otherwise managing most of his own affairs. While the medical reports in 2015 refer to treatment for memory loss, Lorne’s cognitive impairment at that time was reported to be both minimal and stable.
[57] I am mindful that Bruce completed most of the Gift Letter and attended the September 9th meeting. However, in the circumstances, this is not sufficient to establish a potential for dominance. As noted, Lorne took the lead at the meeting and asserted his will. While Bruce completed most of the form for him, Lorne verbally indicated to Mr. Murphy that he wished to withdraw $500,000.
[58] There is a dispute between the parties as to whether Mr. Murphy provided independent financial advice. I do not need to resolve this issue. Independent advice is not required in every circumstance and, even if I assume (without finding) that Lorne did not receive independent advice, the remainder of the circumstances establish that he was able to assert his will and act independently in September 2015.
[59] For these reasons, I find that the presumption of undue influence did not apply to Bruce and Lorne’s relationship in September 2015.
Is the Presumption of a Resulting Trust Rebutted?
[60] The Gift Letter is unambiguous and must be given considerable weight as corroborative evidence. It clearly states that the $500,000 was intended as a gift to Bruce. The presumption of a resulting trust is rebutted by the signed Gift Letter.
[61] The applicant suggested that Lorne did not understand the purpose of the Gift Letter. The evidence does not support this assertion. Lorne provided clear instructions to Mr. Murphy about how and when he wanted the withdrawal to take place. He also commended on the tax implications. In these circumstances, I cannot conclude that Lorne was unable to understand the purpose of a one-page document entitled “Gift Letter.”
[62] Accordingly, the $500,000 transfer in September 2015 was a valid inter vivos gift. Given this conclusion, it is not necessary for me to address the limitation period issue and the Respondent’s argument that the Applicant’s claim to the $500,000 is statue-barred.
September 2016 to March 2017: Bruce received 89 separate e-transfers totalling $178,000
[63] Bruce submits that a portion of these monies were reimbursement for expenses he incurred on Lorne’s behalf. The parties agree that Bruce is entitled to repayment for reasonable expenses incurred to meet Lorne’s needs, but they disagree as to which expenses should be reimbursed. Counsel have undertaken to discuss this further, with a view to narrowing or resolving the issues. I remain seized of this issue, if the parties are unable to resolve their differences. If necessary, counsel may provide brief written submissions in accordance with the scheduled agreed to at the hearing.
[64] Setting aside the issue of expense reimbursement, I have no hesitation in concluding that the balance of the money transferred to Bruce from September 2016 to March 2017 is not a valid inter vivos gift. There was no evidence to corroborate Bruce’s assertion that this money was intended as a gift.
[65] The respondent sought to rely on Lorne’s post-transfer conduct and the fact that he did not seek repayment of any portion of the $178,000. By October 2016, Lorne’s dementia and memory loss were significant. Even assuming he was aware of them in the first place, it would be unreasonable to expect Lorne to recall any of the 89 e-transfers or to take steps to seek their repayment. Lorne’s post-transfer conduct does not corroborate Bruce’s assertions and is not sufficient to rebut the presumption of a resulting trust.
[66] Some money may be owed to Bruce as reimbursement for expenses incurred on Lorne’s behalf. The balance of the $178,000 is not a valid inter vivos transfer. There is no credible evidence to rebut the applicable presumption of a resulting trust.
DISPOSITION
[67] The Application is allowed in part.
[68] The April 2015 cheque in the amount of $98,000 was not a valid inter vivos gift. There is insufficient evidence to corroborate Bruce’s assertion that this money was intended as a gift. Moreover, even on Bruce’s evidence, the alleged intended recipient of the gift did not receive of accept the full funds. The respondent must return the full sum of $98,000 to the Estate of Lorne MacRae.
[69] The September 2015 transfer from the CIBC Wood Gundy account is a valid inter vivos gift. Lorne’s intention to give this money to Bruce is corroborated by a Gift Letter, which Lorne signed. The presumption of a resulting trust is rebutted by the evidence. In the circumstances, the presumption of undue influence does not apply.
[70] The balance of the $178,000 (after deduction of eligible expenses) is not a valid inter vivos transfer. There was no credible evidence to rebut the applicable presumption of a resulting trust I remained seized of this issue, if the parties are unable to reach an agreement regarding eligible expenses.
[71] Success on this application was divided. If the parties are not able to resolve the issue of costs, they may make submissions within 30 days. The submissions must be no longer than three pages, exclusive of the Bill of Costs.
Madame Justice Michelle Flaherty
Released: November 20, 2024
APPENDIX
Playford v. McRae, 2024 ONSC 5374
Playford v. MacRae, 2024 ONSC 5374
COURT FILE NO.: CV-21-00086353-0000
DATE: 2024/11/20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
PATRICIA PLAYFORD
(Applicant)
– and –
BRUCE MACRAE, in his personal capacity and in his capacity as Trusteefor the Estate of John Lorne MacRae and IAN MACRAE
(Respondent)
AMENDED REASONS FOR DECISION
Madam Justice Michelle Flaherty
Released: November 20, 2024