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Saga of the Relationship Between William and Gillian

1. Introduction

It is indeed a saga, and one that is in many ways incomprehensible. The facts are recorded in The Estate of William Robert Waters v Gillian Henry et al[1] (‘William’ and ‘Gillian’); a decision of Justice Callaghan. The saga is about William, a very rich man of almost 80 in 2009, when he and his wife, Phyllis, engaged Gillian, to serve as a nighttime PSW for Phyllis. Gillian immigrated from Guyana and was 40 years old in 2009. Soon thereafter, William and Gillian enter an intimate relationship that endures for approximately nine years. During the period of 2009 to 2019 William advances over $30 million to Gillian, most of it in the form of gifts.

Inexplicable, no? The first interpretation that suggests itself is that this a case of a predatory romance scam designed by Gillian to acquire her hands on most of William’s fortune. Indeed, that is exactly what William’s Estate argued (para 75). To be sure, the facts are very similar to those you find in predatory marriage cases. However, on the facts adduced in evidence, Justice Callaghan concluded that most of the advances were gifts. Nonetheless, it seems to me that, based on her acceptance of the large sums of money and the use she made of them, she can be described as a predatory participant. This is true especially of the moneys she knowingly received from William that were Phyllis’ moneys. Further, as Justice Callaghan states, she enjoyed living the good life (para 2).

The case is very lengthy and runs to 441 paragraphs. I shall present the facts, analysis and judgment in summary form. In doing so, I mean no disrespect to his Honour’s judgment but for a blog a summary form is de rigueur. However, to permit the readers to find their way in the reasons, I shall frequently mention the paragraphs on which I rely.

2. Facts

William

William came from humble beginnings. He was an orphan who was eventually adopted by a single parent. He could not afford to go to university but went to work. But, having earned sufficient funds, he was able to attend the University of Toronto (‘UofT’), where he earned an MBA. After that he earned a PhD in economics at the University of Chicago. Then he returned to UofT and taught at what is now the Rotman School of Management, where he was the first director of the executive MBA program. Later he married Phyllis.

William was a very successful businessman. He was an expert in financial returns for utilities and he used the data he accumulated to create computer modeling program companies. He founded two companies, which he later sold for approximately $50 million. He conducted most of his business through his company, William R Rogers Limited (‘WRW’). Remarkably, he did not use computers or mobile phones, but relied on his administrative assistant, Meredith Brown (‘Meredith’) to run his office, handle his emails, and prepare documents and emails from his handwritten notes. Agnes Kussinger (‘Kussinger’) also worked for William and his businesses.

William kept close tabs on all his affairs and gave personal directions to his bankers and business advisors. He also used other professional advisors, including lawyers and accountants. Lindsay Histrop (‘Histrop’) of Cassels Brock & Blackwell prepared his wills. Histrop and Kussinger are the trustees of his estate. Kussinger is also the attorney for property for Phyllis.

Although he was wealthy, he lived modestly. He was a very private person and did not share most personal information with his friends, staff, and professional advisors. Thus, none of them were aware of his relationship with Gillian. Meredith and Kussinger knew that he provided significant funds to Gillian but never confronted him about it because they knew that William would not appreciate it. Indeed, if a friend or professional advisor pressed him too closely on a matter, he ended the relationship forthwith.

Phyllis

William and Phyllis moved into a senior’s residence before Covid. They were married for 53 years but had no children. Phyllis was 85 at the time of the action. Some time ago, Phyllis had a fall and became a housebound recluse. She suffered from chronic pain, depression, and dependent personality disorder. She requires daily care and the assistance of a PSW. There was little contact between William and her. William was her attorney for property and at one time she held $5.4 million in investments. However, over time William dissipated most of her money, so that at the time of the action only approximately $500,000 was left (para 37). Phyllis was not a witness at trial because she lacked capacity to testify.

Gillian

Gillian was born in 1969 and came to Canada to join her mother when she was a teenager. She and her sisters were sexually abused as children in Guyana. She left school after grade, 10 but later became a PSW. She married twice and had a child by each husband. Both marriages ended early. On June 9, 2009, she ended up with the house that she and her second husband purchased on Elder Crescent (‘Elder’) but had to assume the mortgage debt. She earned only a modest salary and was heavily in debt in 2009.

Employment

When the Waters hired Gillian as a nighttime PSW in 2009, she was paid a salary of $60,000. Gillian got along well with Phyllis. William professed loyalty to Phyliss. But as Justice Callaghan stated in para 48, ‘loyalty to Phyllis was not the only reason to advance considerable sums to Gillian [to persuade her to stay as her PS, as the estate argued] and, in my view, this was a convenient explanation for William that kept prying eyes from inquiring into his real motives’.

Intimate Relationship and Advancements of Money

The intimate relationship between William and Gillian began soon after she was hired. In 2009 he advanced her $101,000 so that she could buy a new car, namely, a Mercedes SUV at his suggestion. Two weeks later he advanced another $400,000 and took a mortgage on the Elder property, and the two of them signed a security agreement. Three weeks thereafter he advanced her another $310,000 to permit her to pay off the mortgages on her home and other debts. She testified that these last two sums were loans from William, but there were no signed loan documents for either amount, although there was an unsigned promissory note for the $310,000 in favour of WRW at 3% interest. Gillian testified that the money from William was to pay debts to others in connection with the Elder property, but she also used the money to make improvements to the property and for other expenses. All in all, within a little over a month after Gillian commenced employment for the Waters, William advanced more than $800,000 to Gillian without any signed note or security (para 59). As Justice Callaghan noted, this ‘was not just the generosity of an employer, but rather the generosity of an intimate partner’ (para 61).

His Honour notes that it is not surprising that William did not tell his friends and colleagues about the affair, first because it would impair his image with them, and second because he was a private person and did not share private matters with others (para 63). However, when he sought advice about his erectile disfunction, he told his family doctor that he had a girlfriend, which confirms the intimate relationship (para 64). The relationship was more than physical. Gillian spent time with William, and he regularly took her out to dinners.

Over the years, William made more than 393 transfers to Gillian, either by direct transfer or by cheque. William approved all advances. Gillian used the money to buy properties, cars, jewellery, trips, clothes and other things. She spent $12 million to purchase properties, and another $7 million on renovations to properties on Brock Road (the location of King of Hearts and King of Hearts Stables) and another property. Gillian incorporated a number of companies to hold title to the properties, one of which is 2325587 Ontario Limited (‘587 Ontario’).

William also paid for private school education of Noelle, Gillian’s daughter, at a private school in Newmarket, and Gillian brought a house on Secretariate Drive (‘Secretariate’), that was near to the school. She rented it out after 2011, when she bought another house on Northern Dancer Drive (‘Northern Dancer’) in Newmarket for $2 million. William guaranteed the mortgage on this property. Gillian acknowledged that she agreed to repay the money he advanced to buy Secretariate. It was sold in 2013, after which she transferred $700,000 to William.

King of Hearts

King of Hearts is the only asset owned by Gillian that is operated as a stand-alone business. Gillian acquired title to it through her 587 Ontario company and operated it as a horse farm to board the horses of Noelle and others. But William paid $2.1 million of the price. A note made on 5 September 2014 (‘September Note’) indicated that William held a business interest in King of Hearts (para 127) and Justice Callaghan so found (para 139).

Wills

William made several wills between 2011-2018. The last, in 2018, continued a large bequest of shares in a private company to Gillian, ‘provided she pays to my estate the assets she holds for me on resulting trust’. The condition was inserted at the suggestion of Histrop, who believed the Gillian was taking advantage of William (para 159), but she was unaware of the intimate relationship between the two. She counselled William to make a demand for Gillian to repay him for what she held for his benefit. He declined to do so (para 163).

William received independent legal advice on several occasions, mostly at the request of his bank because of his age. The advisors testified that William had capacity, was aware of the transactions, and did not appear to be concerned.

The Estate brought this action against Gillian and her corporations. The estate also sued Gillian’s children, her parents, and several siblings and their spouses.

3. Analysis and Judgment

Justice Callaghan began his reasons with a summary of his decision. This is perhaps unusual. But because it will assist in understanding the lengthy reasons, I reproduce the summary here:

1      William Waters … was an academic, successful businessman, and philanthropist. He had amassed a significant sum in his life. He died at the age of 88.

2      Upon his death, his estate trustees on behalf of his estate (the “Estate”) would learn that he had provided most of his money to his wife’s personal care worker, Gillian Henry …. Over the better part of 10 years, William had provided Gillian more than $30 million, which Gillian spent acquiring property and living the good life. Unbeknownst to his friends, colleagues, and the estate trustees, over those years, William was involved in an intimate relationship with Gillian.

3      The Estate sues Gillian seeking the return of the money and properties purchased with the money. It claims that Gillian cannot keep the money. It asserts the money was given to Gillian to invest for William. In contrast, Gillian states the money was a gift and she is not required to repay the Estate or return the properties.

4      This case turns on the intentions of William. Was the money a gift or was the money to be invested and returned to him? Of course, William is dead. He cannot speak and tell us his intentions. Instead, his intentions must be deciphered from the other evidence adduced at trial.

5      I have concluded that William did intend most of the money to be a gift. I have concluded that William intended to retain an interest in the business known as King of Hearts Stables (”King of Hearts”). I have further concluded that William improperly gifted his wife’s money to Gillian, which he could not do, and which must be returned to Phyliss. Further, there are certain debts that are agreed to be owing that must be repaid and a mortgage that must be discharged. Finally, there is an Order of Canada medal that must be returned.

6      There was a Counterclaim issued alleging that William committed a sexual battery on Gillian at the outset of their relationship. I have dismissed that claim.

Limitations and Corroboration

His Honour found that most of the claims were barred and only some were still within time (paras 229ff). He also held that corroboration was required because of s 13 of the Evidence Act.[2] And he accepted most, but not all, of the evidence (para 276).

Resulting Trust

The first main issue is resulting trust. The Estate relied on the presumption of resulting trust,[3] which places the onus on Gillian to prove that William intended gifts. His Honour concluded that most of the money William gave to Gillian was in the form of gifts. In his opinion, although the magnitude of the moneys might make a reasonable person question the transfers, they were made over 10 years and were made within an intimate relationship (paras 288-292). He held that the non-property amounts were all gifts and that the property amounts were also gifts to permit Gillian to purchase various properties, except for King of Hearts, in which William intended to retain a beneficial interest. Thus, there was a resulting trust for the purchase and renovation of that property, but there was no resulting trust with respect to the other properties (paras 316-317).

Since William was Phyliss’s attorney for property, he had a fiduciary duty to toward her. The parties agreed that he was a fiduciary (para 319) and that was not an issue, since that is a statutory rule.[4] Hence, the $5.4 million of Phyliss’s money that he lost must be repaid to Phyliss. The Estate agreed that they owe this amount to Phyliss (para 319). The evidence showed that $2.85 million was transferred by Phyllis to William between 2013 and 2018. His Honour concluded that William then passed on these transfers to Gillian as gifts, because they came from William’s Wood Gundy accounts and William used his margin account with Wood Gundy to fund his payments to Gillian (paras 321-327). His Honour also held that, as Phyllis’s caregiver, Gillian is in a fiduciary relationship with Phyliss (para 329). Regrettably, he did not give any authority for this proposition. However, it is clear that she is a fiduciary, since the fits the description of a fiduciary by Wilson J in Frame v Smith, where her Ladyship stated:[5]

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

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

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

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

It is true that Wilson J dissented in the case, but this statement has been accepted as correct in subsequent cases.[6]

Justice Callaghan went on to hold that William and Gillian’s actions were unconscionable, and that the doctrine of equitable fraud precludes Gillian from retaining the moneys[7] (paras 330-334). She must repay the moneys to the Estate, which must return the moneys to Phyllis (para 335).

Undue Influence

Justice Callaghan then addressed the issue of undue influence. He noted that there are two kinds of undue influence, actual and presumed.[8] Whether a presumption could be raised in this case depends on whether William reposed trust in Gillian for his finances. His Honour found that there was no evidence to that effect, so that the presumption did not apply. Besides, William controlled his own finances (paras 344, 347). Nor, considering that William was a strong-willed person who controlled his own financial affairs and knew what he was doing, was there actual undue influence (paras 349ff).

Unconscionable Procurement

The next issue is unconscionable procurement. His Honour mentioned the question whether the doctrine is part of the law of Ontario,[9] but held that, apart from King of Hearts and Phyllis’s money, the advances were all in the form of gifts. Therefore, there was no unconscionable procurement (para 361).

Ad Hoc Fiduciary Claim

His Honour also rejected the argument that Gillian is an ad hoc fiduciary toward William because she was not operating a property business for him and did not agree to hold her properties in William’s best interests (para 363).

Fraud

Similarly, his Honour rejected the claim that Gillian obtained the funds through fraudulent misrepresentation, since there was no misrepresentation (para 366).

Unjust Enrichment

Next his Honour rejected the argument that Gillian was unjustly enriched. Since he found that most of the advancements to Gillian were gifts (except for the money William took from Phyliss and the money he invested in King of Hearts), there was no basis for a claim in unjust enrichment[10] (para 367). However, there was an unjust enrichment with respect to the moneys that came from Phyllis. She was deprived of the $5.4 million and that amount was made up in part of the $2.85 million that was a corresponding enrichment to Gillian (para 369).

Claims Against Family Members

The claims against Gillian’s family members were based on the doctrine of knowing receipt. Many of these claims were statute barred. But in any event, except for Phyliss’s funds and King of Hearts, none of the funds were subject to a trust, and knowing receipt (as well as knowing assistance) is based on the premise that family members received trust property with actual or constructive knowledge that the property was being misapplied.[11] Therefore his Honour dismissed these claims.

Successful Claims

King of Hearts. While William acknowledged that Gillian had legal title to the property, he intended to hold an ownership interest. This meant that the court had to estimate the proportionate share of William’s interest. Based on the September Note, his Honour calculated William’s contribution to the purchase as $2.1 million and Gillian’s as $400,000. In his opinion, this meant that William intended to retain an 80% beneficial interest in King of Hearts. He did not believe that William’s additional investment in the form of payments for renovations should alter this calculation, in part because Gillian contributed sweat equity. This meant that the Estate is entitled to an 80% ownership in 587 Ontario’s interest in King of Hearts, which owns Brock, and an 80% interest in King of Hearts Stables Ltd. However, the award did not extend to other assets owned by 587 Ontario (para 385).

In a pre-trial proceeding the court ordered King of Hearts to be sold. It has not yet been sold and at the conclusion of the trial his Honour ordered that no sales take place until these reasons are released. His Honour has now ordered that it be sold and that the net proceeds be divided 80/20 between the Estate and William. However, this is subject to the comments regarding Phyliss below, and if there is a good reason for not selling the property, either party may seek a case conference to address the matter (para 386).

Outstanding Loans. Justice Cavanaugh next dealt with the outstanding loans of $2.6 million. He ordered that Gillian pay the Estate the amount of the loans less the $1.6 million Gillian already repaid. Since the outstanding loans included a mortgage on Elder, the Elder mortgage should be discharged once the loans were paid (pars 389, 391).

Since the sale of the properties may influence the calculation of the overall payments, and since the moneys used to purchase the properties were gifts, this may create a further offset. To resolve that the parties should reach an agreement or attend before his Honour to resolve the issue. Until it is resolved a formal order cannot be issued.

Phyliss’s Money

There was another issue with respect to the $2.85 million Gillian received from Phyliss and which must be paid to the Estate for the benefit of Phyllis. The moneys were paid to her beginning in December 2013 and continued for a number of years thereafter. This coincided with the period when $4.5 million were used to renovate King of Hearts. This meant that some of the $2.85 million should be borne by the Estate in proportion to its ownership in King of Hearts. His Honour estimated this figure as follows. In his calculation, 40% of the money spent between 2014 and 2018 was spent on King of Heart. Applying the 40% to the $2.85 million, $1.14 million of Phyliss’s money (i.e., 40% of $2.85 million) was used for King of Hearts. Consequently, when the funds are ultimately settled, the Estate must hold $912,000 (i.e., 80% of the $1.14 million) in trust for Phyllis. Gillian will be responsible for the remainder, $1,938,000.

Guarantee

It was intended (as indicated in the trust document and William’s Wills) that his guarantee on Northern Dancer would be extinguished on his death. Thus, Gillian must pay off the mortgage.

Order of Canada

Phyliss gave William’s Order of Canada medal to Gillian. She was unable to do so, since it belongs to the Estate. Gillian must return it to the Estate.

Counterclaim

As mentioned above, Gillian counterclaimed that William sexually abused her soon after she was hired and before their intimate relationship began. She based her claim on sexual battery. The only evidence is Gillian’s evidence. His Honour found that there was no clear, convincing, and cogent evidence to prove that battery took place. He did not find Gillian’s evidence credible on this issue. Moreover, she failed to provide corroborative evidence as required by s 13 of the Evidence Act. Therefore, he dismissed the counterclaim.

Costs

Since there are further issues to be resolved, no costs order can be made until they are, or the court is informed that there are no further issues that need to be dealt with. Considering the divided success, it will be interesting to see the treatment of costs in this matter.

4. Concluding Comments

In these types of situations involving an estate there are always evidentiary hurdles, yet equitable remedies seem to be a common theme in the remedies accepted and applied. In this instance, resulting trust, unjust enrichment, unconscionability, and the doctrine of equitable fraud were tools used by the court to resolve William and Gillian’s fiduciary breaches to Phyliss, which caused financial devastation to her.

[1]    2024 ONSC 4190.

[2]    RSO 1990, c E.23.

[3]    Citing Pecore v Pecore, 2007 SCC 17.

[4]    Substitute Decisions Act, 1992, SO 1992, c 30, ss. 32 and 38.

[5]    [1987] 2 SCR 99, 42 DLR 4th 81, 1987 CarswellOnt 969.

[6]    It should be noted that in Hodgkinson v Simms, [1994] 3 SCR 377 at 409, La Forest J suggested that an element of vulnerability is not essential to every fiduciary relationship. He regarded Justice Wilson’s tri-partite test as containing ‘indicia that help recognize fiduciary relationships rather than the ingredients that define it’.

[7]    Citing Performance Industries Ltd v Sylvan Lake Golf & Tennis Club Ltd, 2002 SCC 19.

[8]    Citing Bank of Montréal v Duguid (2000), 47 OR 3d 736 (CA), para 6.

[9]    Citing Gefen v Gaertner, 2022 ONCA 174, para  61.

[10]   Citing Moore v Sweet, 2018 SCC 52, paras 57-58.

[11]   Citing Quantum Dealer Financial Corporation v Toronto Fine Cars and Leasing Inc, 2023 ONCA 256, para 52.

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