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“You can’t make a silk purse out of a sow’s ear”: Kozusko v. Kozusko

On July 21, 2015, the decision of the Honourable Mr. Justice André on a motion in the case Kozusko v. Kozusko was released. This motion was for the determination of two (presumably key) issues in the conduct of the Application:

  1. whether the gratuitous transfer of the title to the Deceased’s house to the Deceased and the Respondent as joint tenants was void as having been tainted by undue influence; and
  2. alternatively, whether the transfer of title gave rise to a resulting trust for the benefit of the Deceased’s estate instead of an outright gift to the Respondent.

Facts

The facts of this case are succinctly stated by Justice André as follows:

[2]       [the Deceased] died on April 13, 2014 at the age of 87 years. His wife predeceased him in April 2003.

[3]       He was survived by four children, including the respondent.

[4]       Three of [the Deceased]’s children moved out of his home many years before his death. The only child who remained in the house was the respondent […].

[5]       On November 26, 2004, the legal title of [the Deceased]’s home was transferred from [the Deceased] to [the Deceased and the Respondent, the Deceased’s adult son] as joint tenants for no consideration. At the time of the transfer the deceased was 77 years old and was living with the respondent.

[6]       The deceased also signed a Will and a Power of Attorney for Property and another for Personal Care on November 26, 2004. The deceased named the respondent as his estate trustee, attorney for property and for personal care.

[7]       The deceased had three meetings with his solicitor […] in November, 2004. The respondent was present during the third meeting when the deceased signed his Will and Powers of Attorney. Following the transfer of title, the deceased paid all the expenses associated with the ownership, use and maintenance of his property. He continued to do so even after moving out of his home on or about May 2012.

Issue 1:

The moving parties claimed that the 2004 transfer was tainted by undue influence because:

  1. the Deceased spoke little English;
  2. the Deceased was 77 years and in poor health;
  3. the Deceased’s wife had passed away in 2003; and
  4. the Deceased was unsophisticated and socially inactive.

The Court found, however that:

  1. the Deceased owned his own business as a plumber and worked for many years as a Team Leader at the Toronto Transit Commission, and was not, therefor as unsophisticated as the Applicants suggested; and
  2. there was no evidence that the deceased had difficulty understanding English, and in any event, his lawyer spoke Ukrainian and explained his last Will and Testament to the Deceased.

Justice André also stated: “[e]ven if I am wrong that the circumstances do not create a presumption of undue influence, it would be my view that the respondent has rebutted the presumption of undue influence.”

In particular, the Court held that the evidence of the Deceased’s long-time neighbor that the Deceased intended to leave his house to his son, and the evidence of the Deceased’s lawyer, which demonstrated that (a) the Respondent was not present during the Deceased’s consultation with his lawyer; (b) the lawyer testified as to the Deceased’s expressed intentions during their consultation; (c) the lawyer provided her notes of the meeting which demonstrated that the Deceased’s Will was read to him in English and in Ukrainian and that he understood and approved the contents of the Will; and that (d) the Deceased was in good health and mental condition to provide instruction on his Will.

On the basis of this evidence (inter alia), the Court concluded that any concern of undue influence was rebutted.

Issue 2:

The Applicants submitted that the Deceased did not intend to gift the house to his adult son because:

  1. it was unclear whether the transfer was of a legal title only or a legal and beneficial ownership of the land;
  2. the Deceased continued to pay all expenses related to his house until his death; and
  3. the Deceased told his friends and his other siblings that he wanted all his children to inherit his house.

The Court held, however, that the evidence of the Deceased’s lawyer regarding the conversation she had with the Deceased at the consultation was sufficient to rebut the presumption of resulting trust. The Court further held that:

[t]he fact that the deceased continued to pay the expenses associated with the house does not detract from the fact that the deceased gifted his house to his son. Lastly, even if the deceased indicated at some time prior to 2004 that he wished to bequeath his house to all of his children, his specific instructions to [the Deceased’s lawyer] was that he wished to leave his house to the respondent.

The Court dismissed the Motion.

Commentary

It would have been interesting to attend the hearing of this Application to see what evidence was adduced by the Applicants. Conspicuously absent from this decision is reference to the Applicants’ evidence. Most of the evidence referred to by the Court was adduced by the Respondent. On the basis of what is included in the Court’s decision, there appears to have been very little evidence relied upon by the Respondent to rebut the presumption of resulting trust, save and except the Deceased’s statements made to his lawyer during the consultation.

What this case demonstrates (based on the information we see in the decision) is that Applicants must mount a robust Application to set aside a transfer of property from a parent to an adult child. Even with the presumption of resulting trust under Pecore v. Pecore, it will not be sufficient for an Applicant to simply put a transfer at issue. The wiser course of action for litigants seeking an Order for resulting trust is to lead evidence tending to demonstrate the contrary intention of the donor; i.e., that the property at issue should be impressed with a trust.

It is noteworthy that the Court did not refer to evidence adduced by the Applicants to suggest that the donor expressed that the property was to be divided amongst all his children, and not received solely by the Respondent. The Court refers to the Applicants’ submission on this point, but if one infers from the absence of any mention of specific evidence, it is reasonable to conclude that this evidence simply does not exist.

We do not know what evidence was adduced by the Applicants in this case, however one thing is clear: Applicants must mount a meaningful and persuasive case in support of their claim for the imposition of a resulting trust. In the absence of evidence (from either party), the Court will rely on the evidence that is filed: you can’t make a silk purse out of a sow’s ear.

A note for practitioners who do not regularly practice Estate Litigation

An Application is very different from an action in many ways.

The evidence before the Court on the hearing of an Application will, in most circumstances, be limited to that which is contained in the Application Record and in some circumstances, the transcripts of evidence of examinations/cross examinations filed with the Court in advance of the Application. Usually, that’s about it.

Courts do not generally require the parties to call oral evidence at the hearing of Applications. In terms of the evidence to be filed on an Application, it is best to think of an Application in the same way you might think of a motion: if you want to obtain particular relief on an Application, the evidence on which you rely for the relief you seek must be filed with the Court. The Court will not generally consider evidence which is not before it on the hearing of the Application.

When issues of credibility or hearsay evidence exist as a result of the materials filed by the parties to an Application, cross-examination on the Affidavits filed may be of considerable utility to assist the Court in deciding which version

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