Court File and Parties
COURT FILE NO.: CV-18-89-00 DATE: 2024/10/17 ONTARIO SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF ANNA EVELYN HARTIN, deceased
BETWEEN:
Sharon Hartin Applicant/Plaintiff – and – MARY MCINNIS in her capacity as Estate Trustee of the Estate of Anna Evelyn Hartin, deceased and in her capacity as Attorney for Property of ANNA EVELYN HARTIN Respondent/Defendant
Counsel: James L. McDonald and Desiree Smith, for the Applicant/Plaintiff Self-represented, for the Respondent/Defendant
HEARD: December 6 and 7, 2023, March 1 and April 4, 2024, and written submissions on October 8 and 9, 2024
REASONS FOR JUDGMENT
REes J.
Overview
[1] Anna Evelyn Hartin (Evelyn) was the mother of the applicant, Sharon Hartin, and the respondent, Mary McInnis. During her last years, Evelyn lived with Ms. McInnis, who acted as her attorney for property. When Evelyn died, Ms. McInnis became executor and estate trustee.
[2] Ms. Hartin objects to the passing of Ms. McInnis’s accounts as attorney for property and as estate trustee. Ms. Hartin argues that Evelyn transferred funds and gave gifts to Ms. McInnis in circumstances where a presumption of undue influence arises, and that Ms. McInnis has not rebutted that presumption. Ms. Hartin also argues that Ms. McInnis has not rebutted the presumption of a resulting trust in the accounts jointly held by Evelyn and Ms. McInnis. Ms. Hartin argues that Ms. McInnis did not keep proper records and that certain funds and transactions are not accounted for. Finally, Ms. Hartin contends that Ms. McInnis is in breach of previous court orders.
[3] I allow Ms. Hartin’s objections in part and order Ms. McInnis to repay $127,167.70 to the estate.
Background facts and procedural history
[4] In addition to the applicant and respondent, Evelyn had three other children. She had 16 grandchildren.
[5] In 2013, Evelyn had been living on her own in a condominium. She had been a widow for many decades. Because of declining health and concerns over her being taken advantage of by the respondent’s daughter, Evelyn moved into the home of the respondent and her spouse, Isadore Cybulski, on August 1, 2013. Evelyn lived with them for about 17 months.
[6] Evelyn moved into a nursing home on January 2, 2015. Sixteen months later, she died on May 4, 2016. She was 92.
[7] On November 30, 2016, a Certificate of Appointment of Estate Trustee with a Will was issued to the respondent. This certificate of appointment is for Evelyn’s will dated September 13, 2013. The will is not in dispute.
[8] The applicant commenced this application on March 14, 2018 for a passing of accounts during the period it is alleged that the respondent acted as attorney for Evelyn’s property and as executor of Evelyn’s estate.
[9] The application came for a hearing before Hurley J. on June 28, 2018, at which time the respondent was ordered, among other things, to pass her accounts as estate trustee by September 4, 2018 and deliver by October 4, 2018 an informal set of accounts consisting of the records relating to the Toronto Dominion Bank (“TD”) and Bank of Montreal (“BMO”).
[10] In an affidavit dated August 28, 2018, the respondent provided estate accounts.
[11] On December 20, 2018, the proceeding came for a further hearing before Mew J., whose order provides further direction to the respondent about disclosure and to the parties about the conduct of the proceeding.
[12] Further to this order, the respondent provided an affidavit dated January 29, 2019 in which she maintained certain assets passed to her as a designated beneficiary outside of the will and by right of survivorship.
[13] In an affidavit dated February 27, 2019, the respondent filed accounts relating to her actions as attorney for property.
[14] On March 21, 2019, the applicant served a notice of objection in respect of the estate accounts and in respect of the attorney for property accounts, which was amended on April 26, 2019.
[15] On April 9, 2019, the respondent served a reply to objection of accounts, including documentary disclosure.
[16] Further orders in respect of disclosure of relevant documents, preservation of estate assets, the conduct of cross-examinations following the respondent’s refusal to participate and the proceeding generally were made by Scott J. (June 13, 2019), Ryan Bell J. (July 25, 2019), MacLeod-Beliveau J. (February 20, 2020) and McLean J. (March 11, 2020).
[17] On July 25, 2019, Ryan Bell J. ordered the respondent to remit payment in the amount of $46,783.14 to the accountant of the Superior Court of Justice, which sum is made up of accounts in dispute, being:
a. BMO Account No. 2376 3990-948 value: $8,704.41; b. TD Account No. 6285019 value: $1,844.48; c. Fidelity Tax-Free Savings Account (“TFSA”) Nos. 59403634 value: $6,189.22; d. Fidelity Investment Account No. 59403626 value: $21,656.15; and, e. Estate value: $8,388.88.
[18] Justice Ryan Bell also ordered Ms. McInnis to pay into court the “Great-West Life" assets and provide confirmation of their value.
[19] On October 7, 2019, the respondent paid $18,914.22 into court. This payment relates to Evelyn’s interest in Great-West Lifeco Inc.
[20] On November 13, 2020, the application returned for a hearing before McLean J., who ordered that it continue for a trial of issues on an expedited basis.
[21] On November 27, 2020, the respondent filed an assignment in bankruptcy, resulting in a stay of proceedings. The stay of proceedings was lifted on October 12, 2022.
[22] The applicant’s Amended Notice of Objection may be summarized as follows:
| Accounts | Objection | Asset/Expense | Value |
|---|---|---|---|
| POA | (e) Gains and interest from investments not accounted for | Unknown | Unknown |
| POA | (b) Unaccounted for reduction in TFSA ($26,263.53 - $10,764.05) | $15,499.48 | $15,499.48 |
| POA | (t) Gift to the respondent | $80,000.00 | $80,000.00 |
| POA | (m) Cash withdrawals after the Deceased moved to long term care | $2,854.35 | $2,854.35 |
| POA | (z) Alleged gift to assist with legal fees of the respondent | $2,000.00 | $2,000.00 |
| POA | (o) Monies paid to the respondent on account of Renovations | $27,428.24 | $27,428.24 |
| POA | (b) Missing RIF Investments ($1,458.47 x 2) | $2,916.94 | $2,916.94 |
| POA | (s) Amounts paid to respondent for "care" after the Deceased was no longer residing with the respondent, which the respondent now styles as and maintains are gifts | $17,500.00 | $17,500.00 |
| POA | (p) Unaccounted Funeral Costs Refund | $9,859.83 | $9,859.83 |
| POA | (k) Apparent double payment of bequests to three grandchildren | $3,000.00 | $3,000.00 |
| Estate | (b) Unaccounted Death Benefit | $10,000.00 | $10,000.00 |
| POA | (e) Unaccounted for Investment Income per Tax Returns (half of 2013, 2014, 2015) | $6,902.67 | $6,902.67 |
| POA | (l) Unaccounted for Tax Refunds (2014, 2015) | $4,984.58 | $4,984.58 |
| POA | (n) Canadian Premier Policy | Unknown | Unknown |
| Estate | (c) BMO Account No. -948 (Paid to respondent) | $8,704.41 | $8,704.41 |
| Estate | (c) TD Account No. -019 (Paid to respondent) | $1,844.48 | $1,844.48 |
| Estate | (c) Dodge Caravan | $3,826.11 | $3,826.11 |
| Estate | (c) Fidelity account number 59403626 (paid to respondent) | $21,656.15 | $21,656.15 |
| Estate | (c) Fidelity account number 59403634 (paid to respondent) | $6,189.22 | $6,189.22 |
| TOTAL: | $225,166.46 |
[23] I will consider each of these objections in my analysis below.
The trial of the issues
[24] This matter came before me for the trial of the issues. The respondent was unrepresented. I assisted the respondent within the boundaries of what is permissible while maintaining the court’s impartiality. For example, before the respondent gave evidence, I suggested an issue-focused structure to her evidence and invited her to raise any other issue she believed to be material. With the agreement of the applicant, I permitted the respondent to use an outline of topics to cover, which she had prepared, while testifying. And, with the agreement of the applicant, I posed questions during the respondent’s evidence-in-chief, to clarify or seek additional detail on the issues before the court.
[25] The respondent testified but did not call other witnesses. At the outset of her evidence the respondent tendered letters from non-parties. She wished me to rely on the letters for the truth of their contents. The applicant objected. I ruled the letters inadmissible because they were hearsay. I told the respondent she would have had to call the authors as witnesses and the time to have done so was that day, when the court was to hear the evidence on the respondent’s case.
[26] The respondent explained to me that she could not put the witnesses who wrote the letters through a trial. That is ultimately her decision.
[27] Not having called witnesses presents a significant problem for the respondent given s. 13 of the Evidence Act, R.S.O. 1990, c. E.23, which provides:
In an action by or against the 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.
[28] The Court of Appeal has explained that the corroboration must be evidence independent of the respondent’s evidence, which shows that her evidence on a material issue is true. It “can be either direct or circumstantial. It can consist of a single piece of evidence or several pieces considered cumulatively”: Burns Estate v. Mellon, 48 O.R. (3d) 641 (C.A.), at para. 29.
[29] The respondent could have but chose not to call her husband, Mr. Cybulski, who was present throughout the trial. I do not draw an adverse inference in this regard. But I note his availability to the respondent as a witness to allay procedural fairness concerns given the effect of s. 13.
[30] Evelyn was living with the respondent and Mr. Cybulski during the period a number of the alleged gifts were made and he would have observed her mental state. Further, on the respondent’s evidence, Mr. Cybulski did some of the work to repair the Ginger Street property prior to sale, payments which are objected to by the applicant. It was also the respondent’s evidence that Mr. Cybulski sometimes assisted by filling out cheques that were signed by Evelyn. Again, I underline this not because I am drawing an adverse inference, but to make it clear that the respondent had an opportunity to call Mr. Cybulski had she wished to corroborate her own evidence on these points. I will not speculate why the respondent did not do so.
[31] The respondent stated that she felt trampled as an unrepresented litigant and that she did not get the civil handbook for unrepresented litigants until the eleventh hour. Although I empathise with the difficulty of an unrepresented party navigating the civil justice system, an unrepresented party must still follow the rules of evidence and the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Here, the respondent’s opportunity to call witnesses at trial had been made clear to her at a pretrial conference by Lacelle J. on November 14, 2023. Lacelle J.’s pretrial endorsement specifically states that the respondent was told that if she believed any of her proposed witnesses had relevant evidence to provide, she should provide notice to the applicant of the nature of the evidence the witness will give. On the day of the pretrial, the respondent was also provided with the civil handbook for unrepresented litigants.
[32] In addition to fairness, there is the need for finality. By the trial, this application had been ongoing for five and a half years. It had been over seven years since Evelyn’s death. The matter had been set down for trial some time ago. On January 12, 2023, the court confirmed that the matter was listed on the December 2023 running list. The issues had been narrowed by the order of McLean J. At the pretrial, the respondent sought and was denied an adjournment of the trial. Given the procedural history, it was not in the interests of justice to delay further.
Issues
[33] Further to the order of McLean J., the trial addressed the following issues:
a. Did the respondent unduly influence the deceased to transfer or give funds to the respondent? b. Did the respondent improperly transfer the deceased’s estate assets in her capacity as estate trustee or as attorney for property? c. Did the respondent conceal the record of documents in her capacity as estate trustee or as attorney for property? d. Has the respondent failed to abide by previous court orders?
Analysis
[34] In my analysis, I reach three overarching conclusions: the presumption of undue influence arises; the respondent was acting as attorney for property from August 1, 2013 until Evelyn’s death; and the respondent failed to keep adequate records. In the context of these conclusions, I then consider the applicant’s specific objections and, where I agree with an objection, I order a specific remedy. Finally, I consider the respondent’s failure to abide by previous court orders, the disposition of the Great-West Lifeco proceeds, and whether I should make a declaration which would apply to the respondent’s bankruptcy proceedings.
The presumption of undue influence arises
[35] The applicant argues that the respondent unduly influenced Evelyn to transfer or give funds to the respondent.
[36] Where the potential for domination inheres in the relationship between the transferor of a gift and the recipient, the presumption of undue influence arises: Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721; and Roach v. Todd, 2018 ONSC 5289, 46 E.T.R. (4th) 49, at paras. 28-31. It is a factual determination based on the relationship between the transferor and recipient. First, is there a potential for domination inherent in the nature of the relationship itself? If so, in cases of bequests and gifts, the applicant need not prove that an undue disadvantage or benefit arose from the transaction. Rather, it is enough for the applicant to establish the presence of a dominant relationship. Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, at pp. 378-79. The transferor’s incapacity is not a precondition for finding that a transaction is subject to a presumption of undue influence: Wedemire v. Wedemire, 2017 ONSC 6891, at para. 57.
[37] Once the presumption is triggered, the onus shifts to the respondent to rebut it. The respondent must show that the transferor entered into the impugned transaction of her own “full, free, and informed thought”: Goodman Estate, at p. 379.
[38] I am persuaded that from when Evelyn moved in with the respondent, the potential for domination inhered in the relationship. I come to this conclusion for the following reasons:
a. Evelyn required assistance in her affairs for some time before moving in with the respondent. She had granted her son Gary and the applicant a continuing power of attorney on January 24, 2007. Both Gary and the applicant had previously acted as attorney for property. Gary did so until about March 2013 when he declined to continue due to family conflict. The applicant continued to act as attorney for property until Evelyn granted a continuing power of attorney to the respondent on August 1, 2013. b. By the time Evelyn moved in with the respondent, her physical health had declined and she required assistance with the tasks of daily living. She had several medical conditions. Evelyn had limited mobility. She used a walker. She was medicated for high blood pressure and was prescribed an antidepressant. She had irritable bowels, which caused her significant pain. She was experiencing urinary tract infections that affected her cognitively. Evelyn’s living conditions in her condo had deteriorated, including due to her incontinence. c. Evelyn had been taken advantage of by the respondent’s daughter, Amanda, under a purported power of attorney. The respondent acknowledged Evelyn’s vulnerability at this time. d. On February 14, 2013, the respondent wrote to a lawyer requesting him to draft documents making the respondent power of attorney for Evelyn. In writing to the lawyer, the respondent wrote that “there is a culture of elder abuse in which she finds herself and this had led to many irrational decisions, financial and otherwise, not to mention a high level of personal confusion and anguish.” Ultimately, however, the lawyer did not prepare the power of attorney signed by Evelyn. e. Rather, the respondent printed a power of attorney off the internet for Evelyn to sign. The respondent filled in the form and arranged for Evelyn to attend at the town hall in Napanee to execute the power of attorney and have it witnessed. Evelyn did not receive independent legal advice before signing the power of attorney. The power of attorney was executed on August 1, 2013, at the same time that Evelyn moved into the respondent’s home. f. The respondent immediately started using the power of attorney. She closed the accounts that had been maintained by the applicant under the previous power of attorney. g. On August 8, 2013, the respondent told the applicant that the respondent was acting as Evelyn’s attorney for personal care and for property, effective August 1, 2013. h. On August 1, 2013, the respondent moved Evelyn into her home without consulting the applicant or their other siblings. Whether or not by design, this had the effect of isolating Evelyn from them. i. The respondent redirected Evelyn’s mail to the respondent’s residence after she moved in with them. The respondent also redirected deposits that were previously made to the joint account that had been opened by Sharon, under a previous power of attorney, into a new account jointly held by Evelyn and the respondent. j. Evelyn’s physical condition continued to decline. Beginning in 2014, she required the care of a personal support worker. The respondent and her husband prepared Evelyn’s meals and assisted with her mobility. She required their help attending appointments. k. On January 2, 2015, Evelyn moved into a nursing home due to advanced kidney failure and related serious health issues. While at the nursing home, Evelyn was not able to leave independently. She required lift assistance to move from her bed to wheelchair. Once Evelyn moved into the nursing home, the respondent did not take her off the nursing home property.
[39] Collectively, this resulted in Evelyn being totally dependent on the respondent and her husband for her shelter, personal care, transportation, social needs, and finances. All this during the time of the impugned transfers and purported gifts to the respondent and her husband.
[40] Evelyn was in a highly vulnerable position vis-à-vis the respondent. I find that there was a significant power imbalance between them in favour of the respondent.
[41] Therefore, the presumption of undue influence arises.
[42] I am unpersuaded by the respondent’s evidence that Evelyn remained in control of her finances. I find that the respondent’s explanation that Evelyn relied on her or Mr. Cybulski to fill in cheques but that she would sign them as evidence of Evelyn’s continuing autonomy to lack credibility. I find the respondent’s evidence about her mother’s control and autonomy over her finances when challenged on specific transactions to be inconsistent with the respondent’s evidence regarding her mother’s general dependence and vulnerability.
[43] Generally, I found the respondent to be an unpersuasive witness, lacking in credibility with respect to the disputed transactions. She retreated to vagueness and generality when challenged on the specifics of her evidence. I find this was not a lack of memory; rather, she lacked truthfulness. Her account is also belied by the secrecy around the transactions. The gifts and transfers to the respondent and her husband were not disclosed to the applicant and the other siblings until the respondent was compelled by court order to account for the transactions.
[44] Quite apart from disbelieving the respondent, I find that her account of her mother’s autonomy and control over her finances is not independently corroborated.
[45] To be clear, I am persuaded that the respondent genuinely cared for her mother during the period at issue and provided for her mother’s needs. I find, however, that she did not act solely in her mother’s best interests. The respondent also acted to her own personal financial benefit. Both the respondent and her husband benefitted financially from the transfers of Evelyn’s assets to themselves. They derived these benefits while in a position of dominance over Evelyn.
[46] I will address whether the respondent has rebutted the presumption of undue influence in my analysis of the specific objections below.
The respondent was acting as attorney for property
[47] Where an attorney for property alleges gifts received from a grantor, and regardless of the existence of any issues as to undue influence or capacity, the attorney bears the onus to prove that any gifts were given voluntarily and deliberately. The onus is to prove that there was an intention by the donor to transfer both the legal title and the beneficial ownership. If the recipient cannot prove all of that, a presumption in law arises that the alleged gift created a resulting trust in favour of the donor. See Volchuk Estate v. Kotsis, at paras. 77-78.
[48] It was the respondent’s evidence that she did not act as attorney for property, except to help her mother take control back from the applicant, and that her mother made her own decisions until the end of her life. It was the respondent’s evidence that she and her spouse Mr. Cybulski would fill out cheques for Evelyn, which she would sign herself. It was the respondent’s evidence that they filled out the cheques because her mother expected it – “she was spoiled and she liked everything done for her”.
[49] I am not persuaded by the respondent’s evidence. I find it to be self-serving and to lack credibility. As I found above, Evelyn was in a vulnerable state once she moved in with the respondent (and later into the nursing home). I find that the respondent was acting as attorney for property from August 1, 2013 until Evelyn’s death. It is of no moment that Evelyn signed cheques or other documents herself because she was, as discussed, in a state of complete dependency on the respondent for her most basic needs. The respondent took control of Evelyn’s finances. The respondent relied on the power of attorney to establish a jointly owned bank account and redirected deposits from the account previously held by Evelyn and the applicant to this account. The respondent exercised the power of attorney to sell Evelyn’s real estate, for example.
[50] Again, I will address whether the respondent has proven that any gifts were given voluntarily and deliberately in my analysis of the specific objections, below.
The respondent did not keep adequate records in her capacity as attorney for property and as estate trustee
[51] The respondent did not keep adequate records in her capacity as attorney for property. Nor did she do so in her capacity as estate trustee. She was under an obligation to do so: s. 2(1) of O. Reg. 100/96 (as attorney for property); and Re Ross, [1946] O.W.N. 767 (Ont. H.C.) (as executor and estate trustee). An attorney for property is a fiduciary whose powers and duties must be exercised and performed diligently, honestly, and in good faith, for the incapable person’s benefit: Estate of Ronald Alfred Craymer v. Hayward, 2019 ONSC 4600, 49 E.T.R. (4th) 276, at para. 25; Zimmerman v. McMichael Estate, 2010 ONSC 2947, 103 O.R. (3d) 25, at paras. 29-33. An estate trustee has the same obligation: Zimmerman, at paras. 30-31.
[52] An attorney for property or estate trustee who fails to keep proper accounts or who fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property has not adequately carried out their duties and will be held personally liable for the unsubstantiated withdrawals: Craymer Estate, at para. 26; Zimmerman, at para. 36; Lanthier v. Dufresne Estate, at paras. 52-57; Ronson (Re), [2000] O.J. No. 1294 (S.C.), at paras. 15-20.
[53] As discussed below, the respondent’s failure to keep adequate records leaves many of the items to which the applicant objects inadequately or wholly unaccounted for. In this regard, she has breached her fiduciary duties. I address the applicant’s specific objections below, as well as the appropriate remedy in each case.
Application to the disputed accounts
(a) Joint banking and investment accounts
[54] In addition to failing to rebut the presumption of undue influence over gifts made by Evelyn to the respondent, the respondent was in a fiduciary relationship in respect of the joint banking and investment accounts.
[55] The law presumes that an adult child holds property gratuitously transferred by a parent on a resulting trust for the parent. This is so with respect to bank accounts held jointly between aging parents and adult children to have their child assist them in managing their financial affairs, for example: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795; Foley, at para. 26. The presumption of a resulting trust means that it falls to the respondent, as the surviving joint account holder, to prove that Evelyn intended to gift the right of survivorship to the assets that were left in the account to the survivor at the time of Evelyn’s death. If the respondent cannot do so, the balance of the account will be considered part of Evelyn’s estate and distributed according to her will.
[56] I must begin my inquiry with the presumption and then weigh all the evidence to determine Evelyn’s actual intent at the time of the transfer: Pecore, at para. 44; Foley, at para. 26. The evidence needed to rebut the presumption depends on the facts: Pecore, at para. 55; Foley, at para. 27. As discussed, corroborating evidence is required to rebut the presumption: Foley, at paras. 29-30.
[57] Evelyn held two bank accounts jointly with the respondent: a BMO and a TD Account. These accounts are listed as original assets in the Estate Accounts filed by the respondent. The balance of the BMO account as at the Deceased’s date of death was $8,704.41 and the balance of the TD account was $1,844.48. The BMO and TD accounts are listed as a capital disbursement from the estate accounts paid to the respondent as at June 2016 in the Statement of Capital Disbursements filed by the respondent.
[58] Based on all the evidence, the respondent has not demonstrated that Evelyn intended to gift her the right of survivorship to the assets left in the joint account at the time of Evelyn’s death. There is no corroborating evidence that would support a finding that Evelyn intended to gift her the right of survivorship.
[59] To the contrary, the respondent was added to the accounts after she became power of attorney and understood that the purpose of being added to the accounts was so that she could help Evelyn. It was the respondent’s evidence that she did not pay taxes in respect of the joint investment accounts. It was also her evidence that she did not contribute any of her own funds to joint accounts.
[60] Evelyn also held the following two investment accounts when she died:
a. Investment TFSA held by Fidelity Investments, with a balance of $6,189.22 as at June 10, 2016; and, b. Fidelity Investment Account with a balance of $21,656.15 as at December 21, 2015.
[61] The assets in the investment accounts were not included in the Statement of Distribution by the respondent. The Fidelity Investment Account is not included in the Estate Accounts.
[62] The applicant objects to the List of Original Assets and the Statement of Distribution on the grounds that the TFSA and the Fidelity Investment Account are not listed, nor has satisfactory evidence been provided to rebut the presumption of a resulting trust or that the respondent did not designate herself as beneficiary of the TFSA. I agree.
[63] The TFSA statement from June 2016 shows a beneficiary designation of “Mary McInnis”. The respondent maintains her mother wished her to be the beneficiary, but that the respondent was told that she could not be made the beneficiary, that it had to be paid to the estate. The respondent maintains that the money was paid into the joint bank account with her mother and that she is entitled to anything that is left in the joint bank accounts. But, as discussed, the respondent has not demonstrated that Evelyn intended to gift her the right of survivorship to the assets left in the joint account.
[64] Accordingly, I order the respondent to reimburse the estate the sum of $38,394.26, being:
| Accounts | Objection | Asset/Expense | Value |
|---|---|---|---|
| Estate | (c) BMO Account No. -948 | $8,704.41 | $8,704.41 |
| Estate | (c) TD Account No. -019 (paid to respondent) | $1,844.48 | $1,844.48 |
| Estate | (c) Fidelity account number 59403626 (paid to respondent) | $21,656.15 | $21,656.15 |
| Estate | (c) Fidelity account number 59403634 (paid to respondent) | $6,189.22 | $6,189.22 |
| Total | $38,394.26 |
(b) Unaccounted for funds
[65] The respondent has not accounted for the following funds:
a. BMO TFSA. As at December 31, 2014, the BMO TFSA had a cash value of $25,920.18. By March 8, 2016, the cash value was $10,764.05. The respondent maintained that Evelyn distributed a lot of money when she lived with the respondent and that everything is accounted for. The respondent also maintained that money from the BMO TFSA was automatically put into their jointly held account. But the respondent has been unable to account for the difference in cash value of the BMO TFSA as at December 31, 2014 and March 8, 2016. This difference in value is $15,499.48 and must be reimbursed by the respondent to the estate. b. RIF investments. The List of Original Assets provided by the respondent as at August 1, 2013 refers to a “RIF” and a “BMO RIF”, both in the amount of $1,458.47. The respondent has not accounted for these investments and has no explanation. Although the respondent has not provided an adequate accounting or explanation, I find it is improbable that there were two RIF accounts with exactly the same amount in them. It is more likely that this was double counted in the List of Original Assets. Thus, I find that $1,458.47 is unaccounted for and must be reimbursed by the respondent to the estate. c. Funeral cost refund. Evelyn had enrolled in Assurant Life of Canada’s Growth Funeral Plan Annuity to cover her funeral costs. These were initially prepaid to Hannah Funeral Home but Milestone Funeral Center ultimately provided Evelyn’s funeral services. Hannah Funeral Home therefore reimbursed $9,859.83 to the estate. The respondent testified that she handed the cheque from Hannah Funeral Home directly to Milestone Funeral Center. Although there is no independent documentation to corroborate the respondent’s evidence, there is also no evidence that additional funeral expenses were incurred with Milestone Funeral Center. Thus, I find that the absence of additional funeral expenses from Milestone Funeral Center is consistent with the respondent’s account. I therefore decline to order the respondent to reimburse this amount to the estate. d. Investment Income. For the years 2013 through 2015, Evelyn’s income tax returns show investment income totaling $6,902.67. There is no evidence of where the income was deposited. The respondent has not accounted for this investment income. Justice Mew ordered her to do so by no later than April 12, 2019. I therefore order the respondent to reimburse this amount to the estate. e. Income tax refunds. Evelyn was entitled to income tax refunds in 2014 and 2015, and a credit in 2016, collectively in the amount of $4,984.58. None of the refunds or credit are accounted for in the respondent’s accounting. There is no evidence where these refunds and credit were directed. I therefore order the respondent to reimburse this amount to the estate. f. Death benefit from Public Works. The respondent received a death benefit in the amount of $10,000 from Public Works. Evelyn signed a beneficiary designation on January 7, 2014, after she moved in with the respondent. It was witnessed by Mr. Cybulski. There is no independent evidence that Evelyn intended to gift the death benefit to the respondent. As discussed, there is a presumption of undue influence, which the respondent has not rebutted. I thus direct the respondent to reimburse this amount to the estate. g. Dodge Caravan. After Evelyn moved in with the respondent, the respondent purchased a Dodge Caravan because her previous vehicle was not suitable to transport Evelyn. The Dodge Caravan was in the respondent’s name but purchased with Evelyn’s funds in the amount of $3,826.11. At some point the van had an electrical fire. Shotton’s Garage tried to fix it. Ultimately, the respondent gave the van to Shotton’s Garage in payment of their labour. There is independent evidence by way of a signed letter from Gary Shotton of Shotton’s Garage to this effect. The admissibility of the letter was not objected to. I am satisfied that at the time of its disposition the van was worth the same or less than the value of the service owed to Shotton’s Garage. In my view, the respondent has provided an adequate accounting in this regard.
[66] Accordingly, I order the respondent to reimburse the estate the sum of $38,845.20, being:
| Accounts | Objection | Asset/Expense | Value |
|---|---|---|---|
| POA | (b) Unaccounted for reduction in BMO TFSA ($26,263.53 - $10,764.05) | $15,499.48 | $15,499.48 |
| POA | (b), (e) Missing RIF Investments | $1,458.47 | $1,458.47 |
| POA | (e) Unaccounted for Investment Income per Tax Returns (half of 2013, 2014, 2015) | $6,902.67 | $6,902.67 |
| POA | (l) Unaccounted for Tax Refunds (2014, 2015) | $4,984.58 | $4,984.58 |
| Estate | (b) Unaccounted for Death Benefit | $10,000.00 | $10,000.00 |
| Total | $38,845.20 |
(c) Payments to grandchildren
[67] Evelyn bequeathed $1,000 to each of her surviving grandchildren in her will. Before Evelyn’s death, $1,000 each was paid to several of Evelyn’s grandchildren. The respondent’s evidence is essentially that they were payments during Evelyn’s life of the specific bequests.
[68] It is unclear exactly how much was gifted before Evelyn’s death. In her evidence, the respondent acknowledged there were some accounting errors in terms of whether the amounts were double counted in her accounts as attorney for property and the estate accounts. The respondent maintains that there were no double payments – that is, none of Evelyn’s grandchildren who received a payment of $1,000 during Evelyn’s lifetime received a second payment following her death.
[69] The evidence is murky. Because the respondent has not adequately accounted for the payments to the grandchildren during Evelyn’s lifetime, I direct her to reimburse the estate $3,000, which is the amount disputed by the applicant in her factum.
(d) Cash withdrawals
[70] While Evelyn was in the nursing home, there were cash withdrawals from her account totalling $2,854.35. The respondent’s evidence is that these amounts were for Evelyn’s personal items and incidental expenses which were not included in the fees paid to the long-term care home. Even though the respondent did not produce receipts, the amounts were incurred while Evelyn was in the nursing home and are consistent with the kinds of incidental expenses that are typically incurred by a resident of a nursing home.
[71] The respondent has satisfied me about the cash withdrawals.
(e) Amount paid to the respondent for renovations for the Ginger Street Property
[72] The respondent’s account show amounts paid to her totalling $27,428.24, which the respondent attributes to renovations. Many of these payments were made through cheques prepared by the respondent or her husband. The respondent claims that the renovations were done for the benefit of Evelyn’s properties. The respondent also claims the work was done by her husband, his son, and a Gerry Adams.
[73] The respondent is unable to establish what work was in fact performed for the costs claimed. Nor was she able to provide any evidence or invoices from non-parties to substantiate the work charged. The respondent provided an email prepared by the respondent and her husband with subtotals for materials (no invoices were provided), dumpster rentals (again, no invoices were provided), and labour said to have been paid to the Cybulskis and Mr. Abrams. No time sheets or supporting records were provided. In any event, the email prepared by the respondent and her husband was not admissible for the proof of its contents. As discussed, the respondent did not call Mr. Cybulski although he was present throughout the trial.
[74] The respondent provided photographs of a laptop showing photographs of some of the damage done to the Ginger Street property. The damage was caused by the respondent’s daughter, who lived at the Ginger Street property.
[75] While I would accept that the Ginger Street property needed some repairs or renovations to improve its saleability, the respondent has not put any admissible, independent evidence before me to establish what work was in fact performed for the costs claimed. I cannot speculate as to a number. I have no independent evidence allowing me to quantify the amount of the work done. There is no contemporaneous documentary evidence in the form of estimates, appraisals, or invoices to justify the payments for the Ginger Street renovations. Nor is there any admissible evidence regarding the cost of materials.
[76] Therefore, I direct the respondent to reimburse $27,428.24 to the estate.
(f) Net proceeds of the Ginger Street property
[77] The respondent’s evidence was that it had always been Evelyn’s intention that the respondent receive the Ginger Street property. When the mortgage came due, Evelyn did not want to renew it at her advanced age and likely could not have in any event. Therefore, the mortgage had to be paid off. To pay the mortgage, they were required to renovate and sell the property.
[78] The respondent used her power of attorney to sell the Ginger Street property on July 23, 2014. Following the sale, the respondent prepared a cheque dated August 29, 2014 for Evelyn to sign, which paid $80,000 to the respondent.
[79] The respondent also prepared a “Declaration of directed use of funds” which was signed by Evelyn. The declaration states that Evelyn instructs the respondent to obtain $80,000 from her personal account and to use the funds to ensure that the biological children of Amanda McInnis (the respondent’s daughter) will have their housing needs met through their childhood. If their housing was not an issue, the respondent was directed to use her discretion to ensure that the great-grandchildren benefit from the gift. The declaration stated that this was consistent with Evelyn’s ongoing desire to see her great-grandchildren taken care of and her desire that the respondent to receive funds from the sale of the Ginger Street property as stated in Evelyn’s will.
[80] As discussed, I have found that Evelyn was entirely dependent on the respondent at the time. I have also found that a presumption of undue influence arises.
[81] Evelyn did not receive any independent legal advice around the time of the sale of the Ginger Street property. But evidence of independent legal advice is not required in every case: Foley, at para. 28. There is evidence that Evelyn received some legal advice from Mr. Graeme Dempster, a solicitor, in 2011 regarding the Ginger Street property. The contents of the advice is inadmissible hearsay, however. Mr. Dempster was not called as a witness.
[82] And I give no weight to Evelyn’s declaration because it was prepared by the respondent.
[83] The only corroboration arises from Evelyn’s will, which she made on September 13, 2013. The applicant does not dispute the validity of this will. In it, Evelyn bequeathed the Ginger Street property to the respondent, subject to any outstanding debts or mortgages on the property paid from her estate. The will is not contested by the applicant.
[84] I recognize that the nature of gifts inter vivos and testamentary bequests are different. And I recognize that the bequest of Ginger Street in Evelyn’s will is not direct evidence of her intention to gift it to the respondent during her lifetime. But it provides circumstantial evidence that supports the respondent’s account, sufficient to meet the requirements of s. 13 of the Evidence Act. The will was made less than a year before the Ginger Street property was sold and the disputed gift was made. Through her will, Evelyn manifested an intention that the net proceeds from the sale of the Ginger Street property go to the respondent. It is a reasonable inference that Evelyn would equally have been in favour of gifting the net proceeds from the sale of the Ginger Street property to the respondent during her lifetime.
[85] I am therefore persuaded that Evelyn wished to sell the Ginger Street property and gift the net proceeds to the respondent so that the respondent could ensure that Amanda’s children’s housing or other needs were met. In effect, Evelyn did during her lifetime what she would have done through her will.
[86] Accordingly, the respondent has rebutted the presumption of undue influence with respect to the net proceeds of the Ginger Street property, that is $80,000. For the same reasons, I am satisfied that the respondent has proven that Evelyn gave her the net proceeds of the Ginger Street voluntarily and deliberately – Evelyn intended for the legal and equitable interest in these proceeds pass to the respondent.
(g) Other gifts to the respondent
[87] The respondent continued to pay herself $2,500 from her mother after Evelyn entered the nursing home, for a total of $17,500. The respondent maintains that this was a combination of a gift and compensation for her care of Evelyn. Initially, the respondent prepared the cheques and they were signed by Evelyn. Later, the cheques were prepared and signed by the respondent.
[88] The respondent also maintains that Evelyn gifted her $2,000 to pay for legal costs arising from a child protection matter in relation to the respondent’s grandchildren.
[89] There is no independent evidence to corroborate these payments. The respondent has not rebutted the presumption of undue influence, nor has she proven that Evelyn gave her these payments voluntarily and deliberately. It is not enough that the respondent simply asserts that Evelyn intended to gift her the money: Volchuk Estate, at paras. 77-78; Roach v. Todd, 2018 ONSC 5289, 46 E.T.R. (4th) 49, at paras. 36-40.
[90] Even if I were to accept that the continuing payments of $2,500 were partially in compensation of the respondent’s care of Evelyn, I find that since the respondent did not keep proper records and accounts as attorney for property, she is disentitled to these payments as attorney for property.
[91] Accordingly, I order the respondent to reimburse the estate the sum of $19,500, being:
| Accounts | Objection | Asset/Expense | Value |
|---|---|---|---|
| POA | (s) Amounts paid to respondent for "care" after the Deceased was no longer residing with the respondent, which are now maintained as gifts | $17,500.00 | $17,500.00 |
| POA | (z) Alleged gift to assist with legal fees of the respondent | $2,000.00 | $2,000.00 |
| Total | $19,500.00 |
The Great-West Lifeco proceeds
[92] Evelyn’s will provides that her assets at death were to vest in Ms. McInnis as estate trustee. The Great-West Lifeco proceeds of $18,914.22, which Ms. McInnis paid into court on October 7, 2019, arise from shares owned by Evelyn at her death and which were subsequently paid to Ms. McInnis as estate trustee.
[93] Ms. McInnis has not provided any evidence of a designated beneficiary. Thus, there is no evidence that the Great-West Lifeco proceeds would fall outside the estate.
[94] Therefore, I declare that the proceeds of the Great-West Lifeco Inc. shares are assets of the estate.
The respondent failed to abide by previous court orders
[95] At trial, the applicant did not pursue a finding of contempt against the respondent, as the respondent had not been served with a notice of motion under r. 60.11 particularizing the allegations of contempt. I declined to try contempt allegations, without prejudice to the application bringing a motion for contempt at a later time.
[96] The applicant was content to proceed on the basis that the parties could lead evidence about whether the respondent had abided with previous orders on the main relief being sought in the application.
[97] In this context, I find that the respondent did not fully abide by the disclosure ordered by MacLeod-Beliveau J. on February 20, 2020 (at paras. 1, 2, and 4a).
[98] I also find that the respondent has not complied MacLeod-Beliveau J.’s order that she pay $46,783.14 into court and to pay $5,000 in costs to the respondent (at paras. 3 and 10).
Bankruptcy proceedings
[99] The applicant asks that I declare the amounts the respondent is ordered to reimburse to the estate a debt not released in the event of bankruptcy under s. 178(1)(d) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”), as a debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity.
[100] Courts in Ontario are divided on whether the court can or should grant a declaration under s. 178 of the BIA, outside of bankruptcy proceedings. See The Bank of Nova Scotia v. Rosario Rosado, 2024 ONSC 4395, at paras. 34-37; National Bank of Canada v. Pahuja, 2024 ONSC 736, at paras. 34-37. This case is somewhat different in that the respondent filed an assignment in bankruptcy on November 27, 2020.
[101] The bankruptcy proceedings are ongoing. I therefore exercise my discretion to decline to make a declaration under s. 178(1)(d) of the BIA in favour of the applicant seeking this relief in the context of the bankruptcy proceedings. The bankruptcy court will have the benefit of my findings.
Disposition
[102] The accounts for attorney for property filed by the respondent are not passed as presented. The estate accounts filed by the respondent are not passed as presented.
[103] I declare that the respondent breached her fiduciary duties to Evelyn as attorney for property. I further declare that the respondent has breached her fiduciary duties as estate trustee.
[104] Given the respondent’s misconduct, the Certificate of Appointment of Estate Trustee With a Will issued to the respondent is revoked.
[105] The respondent shall not receive compensation for services as estate trustee.
[106] The respondent shall forthwith reimburse the estate $127,167.70.
[107] The applicant is presumptively entitled to costs. If the parties cannot agree on costs, they can each make written submissions to me of no more than 1,000 words, accompanied by bills of costs, within two weeks of the release of these reasons for judgment. These are to be sent by email to scj.assistants@ontario.ca to my attention.
Justice Owen Rees Released: October 17, 2024