Reasons for Decision Regarding Motion to Amend Pleadings
Court File No.: CV-19-00141408-00
Date: 2025-03-05
Superior Court of Justice – Ontario
Re: Rose Marrelli, in her capacity as Estate Trustee Without a Will of the Estate of Francesco Sposato (also known as Frank Sposato), Deceased, Plaintiffs / Responding Party
And: Carol Joan Benincasa, in personal capacity and in her capacity as Estate Trustee of the Estate of Tony Benincasa (also known as Anthony Benincasa), Deceased, Defendants / Moving Party
Before: Susan J. Woodley
Counsel:
Jamie M. Sanderson, Counsel, for the Plaintiffs / Responding Party
W. Patrick Sloan, Counsel, for the Defendants / Moving Party
Heard: February 26, 2025
Nature of the Motion
[1] The Defendants move under Rule 26.01 and alternatively under Rule 51.05 to amend the Statement of Defence: (i) to plead in response to the Plaintiff’s Amended Statement of Claim; (ii) to correct those portions of the defence that use plural language such as “Defendants”, “they” and “them” rather than use of singular/individual terms, such as “Carol” and/or “Tony”; and (iii) to clarify that Carol was not aware and did not receive funds from Frank, which corrections align with the evidence provided by Carol at her examination for discovery on August 25, 2020.
[2] The Plaintiff resists the proposed amendments and submits that the amendments constitute “withdrawal of an admission” thus engaging Rule 51.05. The Plaintiff submits that the Defendants have not submitted sufficient evidence to satisfy the three-part test [1] required for the withdrawal of an admission and claim that if the “withdrawal of an admission” were permitted the Plaintiff would suffer prejudice that could not be compensated in costs.
Determination of Motion
[3] For reasons that follow, I find that the proposed amendments do not qualify as a “withdrawal of an admission”, Rule 51.05 is not engaged, Rule 26 is applicable, and it is appropriate to grant leave to amend the Statement of Defence.
Facts
[4] The Plaintiff Rose Marrelli (“Rose”) is the Estate Trustee Without a Will for her deceased brother Frank Sposato (“Frank”).
September 9, 2013 – Bank Draft
[5] On September 9, 2013, Frank caused to have issued a bank draft for $160,000 payable to his cousin Tony Benincasa (“Tony”).
[6] On September 26, 2013, Tony deposited the proceeds from the bank draft into an account held jointly between Tony and his spouse Carol Benincasa (“Carol”). At the time of the deposit the balance in the joint account was -$60.00 CAD.
[7] On September 27, 2013, the Customer Notes for Tony made by Sajan T. (officer) at the financial institution (Scotiabank) where the funds were deposited record: “Sign dep are gifted from cousin for house purchase”.
[8] On October 8, 2013, the Customer Notes for Tony made by Sajan T. (officer) at the financial institution (Scotiabank) where the funds were deposited record: “draft for home purchase in Orr Lake N/C.”
[9] On October 11, 2013, Tony and Carol purchased a cottage at 2231 North Orr Lake Road for $379,900, as joint tenants.
November 22, 2018 – Death of Frank
[10] Frank died on November 22, 2018, without a Will, and without a spouse or children. Upon his death, Frank’s next of kin on intestacy were his siblings.
January 3, 2019 – Discovery of Bank Draft by Rose
[11] On January 3, 2019, following Frank’s death, his sister Rose and two further siblings were reviewing Frank’s documents and located a copy of a bank draft dated September 9, 2013, in the amount of $160,000 payable by Frank to their cousin Tony Benincasa (“Tony”).
[12] There was no other documentation found relating to this bank draft despite Frank keeping numerous records/ledgers/notes of other individuals who owed debts to him.
[13] On January 5, 2019, Rose telephoned Tony and “confronted” Tony about the existence of the bank draft. Tony replied “I don’t remember. You know I have been sick.” [2]
[14] On February 20, 2019, Rose wrote to Tony and asked that Tony repay the funds to Frank’s Estate.
[15] On March 13, 2019, counsel for Tony replied to Rose, acknowledging that Tony had received the funds from Frank and advised that the funds would not be repaid.
[16] On April 5, 2019, counsel for Rose wrote to counsel for Tony advising that if the issue of repayment of the funds was not resolved he would seek instructions to commence an action.
[17] On April 29, 2019, counsel for Tony wrote to counsel for Rose, advising in part: “Failing any new information or action, our client (Tony) has no intention of repaying this money (the “Funds”).”
May 14, 2019 – Appointment of Rose as ETWW for Frank
[18] On May 14, 2019, Rose was appointed as the Estate Trustee Without a Will for Frank’s Estate.
[19] On August 6, 2019, Rose, in her capacity as Estate Trustee Without a Will for Frank’s Estate commenced this action by Notice of Action as against Tony and his spouse Carol.
September 4, 2019 – Statement of Claim
[20] On September 4, 2019, Rose, in her capacity as Estate Trustee Without a Will on behalf of Frank’s Estate had issued a Statement of Claim that alleges that the funds advanced by Frank were a “loan” and alleged certain terms of the loan agreement including: that interest accrued at 4% per annum, the funds were advanced to purchase 2231 North Orr Lake Road, Elmvale (the “Cottage”), that the Defendants would sell this cottage property within five (5) years of purchasing it, and that repayment of the alleged loan was due immediately following the sale of the cottage (which was sold on November 30, 2016, two years prior to Frank’s death).
November 15, 2019 – Statement of Defence
[21] On November 15, 2019, the Defendants Tony and Carol served their Statement of Defence.
[22] The Statement of Defence contained a provision that the Defendants denied “all of the allegations…unless expressly admitted herein” and provided the following specific additional information:
- Paragraph 5: …although cousins, Tony and the late Frank were “very close and had more of a brotherly relationship with one another”.
- Paragraph 6: …in or around September 8, 2013, during a casual discussion between Tony and Frank it came out that the Defendants were struggling financially. The following day (September 9, 2013) Frank returned to the Defendants’ home and dropped off a bank draft in the amount of $160,000 which “they deposited on September 26, 2013. The Defendants state, and the fact is, that this money was a gift from” Frank to Tony, as confirmed by Frank to Tony.
- Paragraph 7: The Defendants specifically deny that any such loan agreement exists as alleged in the Statement of Claim and put the Plaintiff to the strict proof thereof.
- Paragraph 8: The Defendants state that at no time between September 9, 2013, and the time of his passing in November 2018 did Frank ask for repayment of the funds or suggest anything but that the money was a gift, as a result of Frank’s “love and affection for” Tony.
- Paragraph 9: At no time were the Defendants in breach of any contract, in writing (or implied) with respect to the funds gifted to them by the late Frank.
- Paragraph 10: Furthermore, had there been a Loan Agreement, which is not admitted but expressly denied, the Plaintiff has neglected or otherwise refused to provide evidence to the Defendants of such an agreement.
- Paragraph 11: The Defendants plead that the Plaintiff did not suffer loss and damages as a result of the funds gifted to them by the late Frank, as alleged in the Statement of Claim, and puts the Plaintiff to the strictest proof thereof.
- Paragraph 12: The fact is that the long delay without any demand for accounting or return of the monies, the failure to keep any written record of the transfer or the signing of a formal loan agreement, constitutes sufficient corroboration under Section 13 of the Evidence Act. It wasn’t until the passing of Frank when the family came to learn of the money he gifted to the Defendants, that any mention of a “loan agreement” was made. The Defendants state and the fact is that no such loan agreement exists and puts the Plaintiff to the strict proof thereof.
- Paragraph 13: The Plaintiff’s claim as against them is statute-barred under Section 4 of the Limitations Act …due to the failure to commence an action within two years of alleged breach of contract.
- Paragraph 14: The Defendants plead and rely on the provisions of the Negligence Act … Evidence Act … and the Limitations Act …, as amended.
- Paragraph 15: The Defendants submit that this action should be dismissed against them, with costs payable to them on a substantial indemnity basis.
July 2020 – Exchange of Documents
[23] On July 22, 2020, the Defendants served a joint affidavit of documents.
[24] On July 24, 2020, the Plaintiff served its affidavit of documents.
August 25, 2020 – Examinations for Discovery of Rose and Carol
[25] The examinations of all parties were scheduled for August 25, 2020. However, due to a deterioration in Tony’s health and capacity as the result of Alzheimer’s disease, Tony’s examination was cancelled.
[26] The examinations of Rose (for Frank’s Estate) and of Carol, proceeded on August 25, 2020.
[27] During her examination Rose testified that she “assumed” the existence of the facts as plead in the Statement of Claim, including having assumed (i) that the bank draft provided by Frank payable to Tony for $160,000 was a loan; and (ii) that the terms of the loan as plead and described as the “loan agreement” existed.
[28] Rose confirmed that no written record exists that substantiates her assumptions – nor was she provided with any specific instructions, details, or particulars by Frank before his death – nor were any details or particulars of the alleged “loan” and “loan agreement” found within Frank’s records and documents.
[29] During her examination, Carol testified that she and Tony married in 2012, while they were in their 60’s. When Carol and Tony married, they were not financially dependent on one another and entered into a prenuptial agreement prior to marriage.
[30] Carol testified that she did not know Frank well and first met him at her 2012 wedding to Tony. By Frank’s death, Carol had only met Frank four times. Carol advised that during these meetings, she would say hello, provide food, and leave Frank and Tony to visit privately.
[31] Carol testified that she had no knowledge or involvement in the alleged conversations between Frank and Tony regarding the advancement of funds by way of bank draft payable to Tony for $160,000 – consistent with paragraph 6 of the Statement of Defence. Carol further testified that she did not know that Frank had provided Tony with funds until the Statement of Claim was served upon her.
[32] Carol further testified that when the Orr Lake Road cottage was purchased in October of 2013 – that she contributed money for the purchase from the sale of her own property and understood that Tony did the same and that the Orr Lake Road cottage was sold on November 30, 2016, approximately two years prior to Frank’s death.
March 10, 2021 – Death of Tony
[33] Tony was not examined on August 25, 2020, or any date thereafter due to failing health and incapacity caused by Alzheimer’s disease.
[34] Tony died on March 10, 2021, nine months following issuance of the Statement of Claim and seven months following the original examination date.
[35] Carol was appointed as Tony’s Estate Trustee with a Will and an Order to Continue was obtained following Tony’s death.
December 4, 2023 – Amendments to Statement of Claim
[36] On March 7, 2023, the Plaintiff served a motion record seeking to amend the Statement of claim to include a claim for “Implied, Resulting, and Constructive Trust” returnable October 11, 2023. The motion was initially opposed but the opposition was withdrawn, and the Claim was amended by Order of Associate Justice Josefo dated October 11, 2023, with the Amended Statement of Claim being issued on December 4, 2023.
[37] None of the amendments made by the Plaintiff claim that the funds received by the Defendants were “gifted” to the Defendants or either of them. Instead, the amendments claim that based on the facts as originally plead that the Defendants were “loaned” funds by Frank, that the Defendants failed to repay the “loan” pursuant to the “loan agreement” that the Defendants breached the loan agreement (contract) with Frank, and as such hold the funds on trust for Frank’s Estate.
Proposed Amendments to the Statement of Defence
[38] The Defendants submit that they withdrew their opposition to allow the amendments to the Statement of Claim as it was agreed that the Defendants could file an Amended Statement of Defence in response.
[39] The Defendants submit that following receipt of the Amended Statement of Claim in December of 2023 and during preparation of a draft Amended Statement of Defence, their lawyers discovered that the original Statement of Defence was inadvertently drafted using universal/plural terms such as “Defendants”, “they”, and “them” in certain paragraphs rather than singular/individual terms such as “Carol” and/or “Tony”, “which was a drafting oversight”.
[40] The Defendants submit that the proposed Amended Statement of Defence corrects the previous drafting errors as it relates to the evidence of Carol, by bringing the defence in line with her testimony provided by her at her examination for discovery on August 25, 2020.
[41] The Plaintiff submits that by the (original) Statement of Defence, the Defendants admitted to facts plead in paragraph 8 of the original Statement of Claim as follows: “On September 26, 2013, the Defendants deposited the Bank Draft” and that this statement constitutes an admission that cannot be withdrawn at this stage.
[42] The Plaintiff submits that paragraph 8 was unchanged in the Amended Statement of Claim and that by the Defendants’ proposed amendments, Carol is attempting to withdraw the admission.
[43] The Plaintiff further submits that as the result of Tony’s death, the Plaintiff has lost the opportunity to examine Tony on the proposed amendments and have no way to test the evidence. As a result, the proposed amendments to “withdraw the admission” cannot be compensated by costs or an adjournment as Tony has passed and the Estate will suffer actual prejudice.
Issues
[44] Do the proposed amendments to the Statement of Defence amount to a withdrawal of admissions?
I. If not, rule 26.01 applies.
II. If so,
a. do the proposed amendments raise a triable issue?
b. Were the admissions contained within the Statement of Defence made inadvertently and has a reasonable explanation been provided?
c. Is there any prejudice that will result which cannot be compensated for in costs through the withdrawal of the admissions?
Do the Proposed Amendments Amount to a Withdrawal of Admissions?
[45] Justice Zarnett, writing for the Court of Appeal in Shwaluk v. HSBC Bank of Canada, 2023 ONCA 538, has provided a clear and definitive outline of the procedure to be followed when determining this issue. The following analysis arises from Justice Zarnett’s decision and follows, almost verbatim, the analysis undertaken by the Court commencing at paragraph 20.
[46] To determine whether an amendment withdraws an admission, two matters need to be considered: (i) the nature and extent of the admission in the original pleading; and (ii) the difference between the original pleading and the proposed amended pleading concerning what was admitted (Shwaluk v. HSBC Bank of Canada, 2023 ONCA 538, para 20).
[47] In addressing these matters, it is important to recognize that admissions can pertain to alleged facts or to the legal conclusions or consequences (i.e., the party’s positions) alleged to follow from the alleged facts, or to both.
[48] Therefore, when considering the nature and extent of an admission, a court must consider whether the admission does one, or both, of the following: makes a “deliberate concession to a position taken by” the other party; or, accepts that “a set of facts posed by” the other party is correct: Yang v. The County of Simcoe, 2011 ONSC 6405, para 46.
[49] That admissions may relate to facts or positions follows from the nature of the pleading process. Pleadings are required to set out the material facts on which a party relies for their claim or defence. However, they may also contain conclusions of law if the material facts supporting them are pleaded: r. 25.06(1) and (2). In other words, pleading must allege facts, but they also, permissibly and routinely, allege the positions said to follow from those facts.
[50] For example, a plaintiff’s pleadings may describe what the defendant did or failed to do, and it may also plead that such behaviour was negligent. The former are allegations of fact, the latter a position as it is a conclusion of mixed fact and law: Housen v. Nikolaisen, 2002 SCC 33, paras 26-29.
[51] Similarly, a pleading may allege that the defendant fired the plaintiff with a specific amount of notice − an allegation of fact − but may also allege that doing so was a wrongful dismissal, a position as it is a proposition of mixed fact and law: Dupuis v. Edmonton Cellular Sales Ltd., 2006 ABCA 283, para 6.
[52] Responsive pleadings (defences and replies) may address both the factual allegations and the conclusions or positions in the pleading being responded to, including by making admissions. Efficiency and fairness in the civil litigation process is advanced when this occurs.
[53] Although the Rules of Civil Procedure regarding defence and reply pleadings refer to admissions of alleged facts found in the pleading to which they respond (see r. 25.07(1) and r. 25.09(1)), nothing in the Rules prevents a party from also admitting, or denying, a legal conclusion or position that has been alleged. For instance, a defendant could admit that they behaved as the plaintiff contends and deny the position that the conduct constituted negligence or wrongful dismissal. Or they could, instead, admit that the conduct constituted negligence or wrongful dismissal, but then deny that the plaintiff suffered any damages. Doing so helps to frame the issues in the litigation.
[54] In the Shwaluk case, the opposing party alleged a fact, and a position or legal conclusion flowing from that alleged fact, in their pleading. The fact it alleged was that Ms. Shwaluk did not file an application for LTD benefits by a particular date. The position or legal conclusion it alleged was that the failure to file an application had a fatal consequence for her entitlement to LTD benefits.
[55] The Court considered what was the nature and extent of the admission Ms. Shwaluk made in her pleading in reply and whether the proposed amended pleadings withdrew the admission.
[56] Ultimately, the Court held that the amended pleadings continued the factual admission that an application for LTD benefits was not submitted and found that the amendment sought to clarify the pleading to align with the factual matrix.
[57] In the present case the Defendants seek to amend their Statement of Defence to clarify the pleading to align with the factual matrix as it applies to the facts plead: (i) that the funds received were a gift; and (ii) the nature of receipt of the funds.
[58] First and foremost, the primary allegation made by the Plaintiff in the Amended Statement of Defence is that the Defendants were advanced funds totalling $160,000 by Frank by way of a loan agreement, which agreement was subject to certain terms, including interest and repayment requirements. The Plaintiff further alleges that the Defendants breached the loan agreement through failure to repay the funds and by reason of the loan agreement, and the failure to repay the funds as required by the agreement, the defendants hold the funds in trust for Frank’s Estate pursuant to an implied trust, resulting trust and/or constructive trust.
[59] The Defendants by their Statement of Defence and proposed Amended Statement of Defence specifically deny that any loan agreement ever existed.
[60] The Defendants by their Statement of Defence and proposed Amended Statement of Defence specifically plead that the money advanced by Frank was not loaned but gifted as the result of Frank’s love and affection for Tony.
[61] The nature and effect of the pleading, including the amended pleading, is that the funds were not advanced by way of a loan but by a gift. To the extent that this statement constitutes an admission, it is not withdrawn by the Amended Statement of Defence. Instead, the amended pleading clarifies and aligns the pleading with the Defendants’ evidence including the independent evidence of the September 9, 2013 bank draft upon which the Plaintiff relies.
[62] In summary, while the facts underlying the defence are clarified, the Defendants’ position is not changed by the amended pleading.
[63] With respect to the proposed amendment relating to the receipt of the funds, again, the proposed amendment seeks to align the pleading with the facts and the Defendants’ evidence. The amendment does not seek to withdraw an admission or amend the Defendants’ position. To the extent that the Defendants acknowledge that the funds were deposited into their joint bank account constitutes an admission, it is not withdrawn by the Amended Statement of Defence. Again, akin to the amendments relating to the funds being gifted, the amended pleading clarifies and aligns the pleading with the Defendants’ evidence including the bank teller notes from September 27, 2013, which the Plaintiff has produced.
[64] In summary, while the facts underlying the defence are clarified, the Defendants’ position is not changed by the amended pleading.
[65] For the foregoing reasons, I find that the proposed amendments do not constitute a withdrawal of an admission nor do the proposed amendments seek to withdraw a position or conclusion in law. Instead, the amendments seek to provide additional facts and/or corrections to clarify the pleading to align with the factual matrix.
[66] As I have found that the proposed amendments do not seek to withdraw an admission, r. 26.01 applies to the proposed amendments.
[67] Rule 26.01 provides as follows: “On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment”.
[68] As per Shwaluk, under this rule, the court must permit an amendment, regardless of the stage of the action at which it is sought, unless the party opposing the amendment can demonstrate actual prejudice that is non-compensable, or unless the delay in seeking it was so long, and the justification so inadequate, that prejudice is presumed.
Rule 26 – Amendment of Pleadings
[69] Under r. 26 the onus falls upon the Plaintiff to demonstrate actual prejudice that is non-compensable, or unless the delay in seeking it was so long, and the justification so inadequate, that prejudice is presumed.
[70] The Plaintiff’s claim that non-compensable prejudice would be suffered due to their inability to examine Tony on the proposed amendments does not satisfy the onus. The fact remains that Tony was not capable of being examined in this proceeding at any time, regarding any aspect of the defence – whether it was the original Statement of Defence or the proposed amendments due to incapacity caused by Alzheimer’s disease. The facts establish that Tony was incapable of being examined on August 25, 2020, and there is no suggestion that he recovered capacity any time thereafter.
[71] As for any delay, the Defendants moved quickly to serve and file their original Statement of Defence and were the first parties to serve their Affidavit of Documents.
[72] There does not appear to have been any delay attributable to the Defendants relating to the original examination date of August 25, 2020. However, as noted, even by this early date, Tony’s health had deteriorated and he was incapable of being examined. Tony died shortly thereafter.
[73] Carol, on the other hand, was capable and was examined for discovery. Carol provided her evidence on August 25, 2020, and Carol’s evidence, which clarifies the position set out in the Statement of Defence is not sought to be varied. The Plaintiff’s have been aware of the Defendants’ position and have been aware of the facts sought to be clarified by the Amended Statement of Defence since at least August 25, 2020. In the circumstances, I find no non-compensable prejudice that would disallow the amendments.
[74] I further find that any delay which has been occasioned as the result of the Defendants has been explained and is justified. The Defendants have moved expeditiously throughout this proceeding despite Tony’s Alzheimer’s disease, his failing health, and his death, which left Carol widowed with the responsibility to solely defend the claim. These facts coupled with the inherent delays that face all civil litigants as the result of the civil backlog, provide adequate explanation and justification for the delay. No prejudice shall be assumed in the circumstances.
Determination of Motion
[75] For the foregoing reasons, the Defendants are granted leave to amend the Statement of Defence in accordance with the draft Amended Statement of Defence which was attached to their motion materials.
[76] The Defendants shall forward a clean copy of the draft Order contained in the motion materials with a clean copy of the Amended Statement of Claim attached thereto as Schedule A to my judicial assistant, Hannah Sewpersaud, for signature, issuance, and entry.
[77] As the Defendants are the successful party, they shall be entitled to their costs, on a partial indemnity basis, in accordance with their Bill of Costs filed, fixed at $3,271.11 inclusive.
Susan J. Woodley
Date: March 5, 2025
[1] See Antipas v. Coroneos, 26 C.P.C. (2d) 63 and Philmor Developments (Richmond Hill) Ltd. v. Steinberg (1986), 9 C.P.C. (2d) 20 (Ont. Master); aff’d 9 C.P.C. (2d) 43 (Ont. H.C.).
[2] On August 25, 2020, Tony’s examination for discovery was aborted as it was disclosed that Tony suffered from Alzheimer’s disease and Tony’s doctor confirmed by letter dated September 23, 2020, that Tony was “not capable”. Tony died on March 10, 2021.