Riordan v. Mellon

Riordan v. Mellon Collection Decisions of the Court of Appeal Date 2000-06-08 Docket numbers C31344 Judges Austin, Allan McNiece; Laskin, John Ivan; Borins, Stephen Subject Civil Decision Content DATE: 20000608 DOCKET: C31344 COURT OF APPEAL FOR ONTARIO AUSTIN, LASKIN and BORINS JJ.A. BETWEEN: ) ) Patrick Schindler PATRICIA RIORDAN, administrator ) for the appellant with the will annexed of the Estate) of Eugene Leo Burns, deceased ) ) Appellant ) ) - and - ) Benjamin Eisner ) for the respondent MARGARET MELLON ) ) Respondent ) ) Heard: February 16, 2000 ) On appeal from the judgment of Roberts J. dated December 17, 1998. LASKIN J.A.: [1] The general issue on this appeal is whether Roberts J. erred in concluding that the transfer of $195,000 by Leo Burns, now deceased, to the respondent Margaret Mellon in May 1995, two years before his death, was a gift. The appellant, Patricia Riordan, one of Burns’ daughters and the administratrix of his estate, challenges the trial judge’s conclusion. She contends that Ms. Mellon holds the money on a resulting trust for Burns’ estate. She makes three submissions: (i) the trial judge applied the wrong standard of proof; (ii) he erred in rejecting the evidence of Kenneth King and in ignoring the evidence of Burns’ other daughter Angela Wright; and (iii) he erred in finding that Ms. Mellon’s evidence had been corroborated, as required by s. 13 of the Ontario Evidence Act.1 BACKGROUND [2] Leo Burns met Margaret Mellon in May 1993. She worked for the Bank of Nova Scotia and tried to help him to resolve a complaint that he had against the bank. Both Burns and Ms. Mellon were Irish, and in their discussions they learned that their families came from the same county in Ireland. They became friends. At the time Burns was 78 years old, had been separated from his wife for over 20 years, and had an uneven, although ongoing relationship with his two daughters. Between the time they met and May 1995, when Burns gave Ms. Mellon a bank draft for $195,000, the contact between the two of them consisted of “a lot of phone calls and three lunches.” The appellant does not suggest that Ms. Mellon needed the money or that she influenced Burns to give the money to her. Burns died in May 1997, at age 82. His daughters acknowledge that he had always been of sound mind. [3] At trial, Ms. Mellon testified that the transfer to her was a gift. Roberts J. accepted her evidence as being truthful and accurate. The appellant does not attack that finding of credibility. That, however, does not end the matter. [4] In law, the transfer raises a rebuttable presumption of resulting trust in favour of Burns’ estate. The reason for the presumption is that “Equity assumes bargains, and not gifts”.2 Ms. Mellon had the onus to rebut the presumption. Moreover, because Burns is now deceased, s. 13 of the Evidence Act requires that the transfer be corroborated by some other material evidence. Against this background I turn to the appellant’s three submissions. DISCUSSION 1.Did the trial judge apply the wrong standard of proof? [5] To succeed in an action by or against a deceased’s estate, a living person’s evidence must be corroborated by some other material evidence. This requirement for corroboration is codified in s. 13 of the Evidence Act, which provides: 13. 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. Section 13 addresses the obvious disadvantage faced by the dead: they cannot tell their side of the story or respond to the living’s version of events.3 [6] Section 13 applies in this case because Ms. Mellon claims to have received a gift from someone who is no longer alive. The appellant submits that when s. 13 applies, proof is required on the criminal standard, or at least on a standard higher than the civil standard of the balance of probabilities. She relies on the following passage from the reasons of Middleton J.A. in Bayley v. Trusts and Guarantee Co. Ltd.4: [T]he Court should always have present to its mind the danger of relying too implicitly upon the evidence of the living in establishing a claim against the dead. The proper judicial attitude in the first place towards the evidence of the living claimant ought to be one of suspicion, even when that evidence is corroborated within the meaning of the statute, and effect ought not to be given to it unless the effect of the entire evidence, including that which is relied upon as corroboration, is to remove all reasonable doubt from the judicial mind. [7] Bayley was a case decided under s. 13. A related line of authorities from this court on the standard required to rebut a presumption of resulting trust also seems to support the appellant’s submission. In Johnstone v. Johnstone,5 both the donor and recipient of the gift were living at the time of trial. Nonetheless, Mulock C.J. for a five-member panel, seemed to invoke the criminal standard of proof when he wrote: In weighing the conflicting evidence, it is not sufficient that the preponderance of evidence may turn the scale slightly in favour of a gift. The preponderance must be such as to leave no reasonable room for doubt as to the donor’s intentions.6 [8] The appellant submits that the trial judge erred in failing to apply the standard of proof reflected in Bayley and Johnstone. Certainly, Roberts J. applied the civil, not the criminal, standard. Was he wrong to have done so? In my view, he was not wrong. [9] Admittedly, both Bayley and Johnstone have been followed in subsequent cases7 and neither has been expressly overruled by this court. In my view, however, a gift may be established under s. 13 and a presumption of resulting trust may be rebutted by proof on a balance of probabilities, recognizing that proof within the civil standard may vary depending on gravity of the issues. When a claim of gift is asserted against a deceased’s estate, a trial judge is justified in carefully scrutinizing the cogency of the supporting evidence. A “healthy scepticism” may be appropriate. But it is the civil standard not the criminal standard that should be applied. The passage from Bayley relied on for applying the criminal standard has been taken out of context. Moreover, both principle and recent case law support the application of the civil standard. [10] I begin with Bayley. That case focussed on whether s. 13 required corroboration of the “vital” facts in issue or whether corroboration of any of the “material” facts would suffice. Middleton J.A. concluded that corroboration of any of the material facts met the requirements of the section: …It must be corroboration of the party’s evidence in essential matters. On the other hand, I do not think that it is required that there should be corroboration of the evidence of the party with respect to that perhaps which is the vital and essential portion of his evidence in which he is in conflict with that which the executors are ready to admit. So to hold would be to impose an obligation upon the claimant far in excess of that which the statute requires.8 [11] His observations about “the proper judicial attitude of suspicion” and needing evidence “to remove all reasonable doubt from the judicial mind” were not the focus of his decision, and are extracted from a long paragraph in which he rejects extending the requirements of s. 13 beyond those established by the Legislature. The entire paragraph reads: I have quoted the opinions of the English Courts for the purpose of indicating that there is no principle that requires or justifies the carrying of our statutory provisions beyond that which is actually provided, and also for the purpose of indicating that the Court should always have present to its mind the danger of relying too implicitly upon the evidence of the living in establishing a claim against the dead. The proper judicial attitude in the first place towards the evidence of the living claimant ought to be one of suspicion, even when that evidence is corroborated within the meaning of the statute, and effect ought not to be given to it unless the effect of the entire evidence, including that which is relied upon as corroboration, is to remove all reasonable doubt from the judicial mind. It is not required by the statute that the plaintiff's claim must be established by the evidence of two witnesses, or by evidence apart from that of the claimant if there is apart from his evidence that which the statute regards as corroboration. The Courts have more or less studiously refrained, and wisely so, from any attempt to define in exhaustive terms precisely what constitutes corroboration within the statute. In an appeal from New Zealand, Minister of Stamps v. Townend, [1909] A.C. 633, at p.638, Lord Loreburn, L.C., delivering the judgment of the Judicial Committee with reference to a similar statute of New Zealand, said the statute was satisfied when, upon the evidence taken as a whole, "there is a substantial corroboration of the testimony given by the interested party." This "confirms the credit not only of the statements which are expressly supported, but of all statements made by the interested party."9 [12] I cannot accept that Middleton J.A. could have intended to impose the criminal standard of proof while at the same time rejecting the need for stricter corroboration. The criminal standard too would “impose an obligation upon the claimant far in excess of what the statute requires.” [13] Three other points tell against interpreting Bayley to have imposed the criminal standard. First, the English decisions relied on by Middleton J.A. did not require proof beyond a reasonable doubt. Second, later in his reasons, Middleton J.A. referred only to a “suspicious mind” and to “viewing the evidence with all possible caution.”10 Third, the plaintiff in Bayley succeeded though his case was far from overwhelming. He claimed that the deceased had failed to pay a commission on a real estate deal. The case turned on whether he had told the deceased, the vendor, that he was acting for the purchaser as well and was also receiving a commission from the purchaser. The plaintiff testified that he had so informed the deceased and, because he was receiving a commission from both sides, he agreed to charge the deceased a lower rate. The plaintiff produced a contract showing that the deceased had agreed to pay him a 2 percent commission, instead of the going rate of 3 percent. The court held that the contract alone provided sufficient corroboration. For these reasons, I do not think that Bayley imposed the criminal standard for cases under s. 13 of the Evidence Act. [14] I next turn to more recent authority. In Moran v. Richards11 , Lerner J. reviewed Bayley in detail “to dispel the suggestion” it required “that the corroboration must be such as to satisfy the judge beyond a reasonable doubt”. His decision has been followed by several Ontario trial judges.12 More recently still, the Alberta Court of Appeal explicitly rejected the notion that Bayley required proof to the criminal standard: We do not take this to import a criminal standard of proof for the presence of corroborating evidence in these cases. Rather, this excerpt serves as a reminder of the unique evidentiary problem that is encountered in them, and that a healthy scepticism may not be wholly inappropriate.13 [15] The related line of authorities stemming from Johnstone has also been questioned. This court, in a short endorsement allowing an appeal and ordering a new trial, expressed doubt about the continuing validity of the criminal standard of proof set out in Johnstone for cases where a party seeks to rebut a presumption of resulting trust: It will be for the new trial judge to decide whether the onus laid down in Johnstone v. Johnstone applies or whether that judgment has not survived more recent judgments of this court.14 [16] In Dagle v. Dagle Estate15, MacDonald C.J.T.D. sitting ad hoc in the Prince Edward Island Court of Appeal reviewed the authorities and concluded that a presumption of resulting trust could be rebutted by proof on a balance of probabilities. His decision was recently followed in Ontario16 and has been approved by the authors of the Law of Evidence in Canada.17 Thus I conclude that recent case law supports the application of the civil standard where a party must meet the s. 13 corroboration requirement or seeks to rebut a presumption of resulting trust. [17] In principle, I see no justification for applying the criminal standard in a civil action. A criminal prosecution differs fundamentally from a civil action, and the criminal standard serves different ends and operates on different assumptions from the civil standard.18 Moreover, nothing in s. 13 itself suggests that the Legislature intended to displace proof on a balance of probabilities with proof beyond a reasonable doubt. [18] Supreme Court of Canada jurisprudence has repeatedly emphasized that in civil cases – even in civil cases where the alleged conduct is morally blameworthy or might attract penal sanctions – the standard of proof is on a balance of probabilities. Within that standard, the degree of proof may vary depending on what is at stake. [19] The Supreme Court of Canada affirmed the application of the civil standard in Continental Insurance Co. v. Dalton Cartage Co. Ltd.19, where an insured successfully recovered on an insurance policy that excluded “loss by infidelity”: Where there is an allegation of conduct that is morally blameworthy or that could have a criminal or penal aspect and the allegation is made in civil litigation, the relevant burden of proof remains proof on a balance of probabilities. So this Court decided in Hanes v. Wawanesa Mutual Insurance Co., [1963] S.C.R. 154 . … In my opinion, Keith J. in dealing with the burden of proof could properly consider the cogency of the evidence offered to support proof on a balance of probabilities and this is what he did when he referred to proof commensurate with the gravity of the allegations or of the accusation of theft by the temporary driver. There is necessarily a matter of judgment involved in weighing evidence that goes to the burden of proof, and a trial judge is justified in scrutinizing evidence with greater care if there are serious allegations to be established by the proof that is offered. … I do not regard such an approach as a departure from a standard of proof based on a balance of probabilities nor as supporting a shifting standard. The question in all civil cases is what evidence with what weight that is accorded to it will move the court to conclude that proof on a balance of probabilities has been established.20 [20] Similarly in Vout v. Hay21, where a will was alleged to be invalid because of suspicious circumstances and undue influence, McLachlin J. held that the civil standard of proof on a balance of probabilities, not a higher standard, applied, though “the evidence must, however, be scrutinized in accordance with the gravity of the suspicion.” [21] I therefore conclude that both principle and recent case law support the application of the civil standard in this case, and neither Bayley nor Johnstone justify departing from that standard. As Roberts J. properly applied the civil standard, I would not give effect to this ground of appeal. 2. Did the trial judge err by rejecting Kenneth King’s evidence and ignoring Angela Wright’s evidence? [22] King, an accountant, who helped Burns with his tax returns, gave evidence under Rule 36 of the Ontario Rules of Civil Procedure.22 He testified about his conversations with Burns concerning the transfer to Ms. Mellon. According to King, Burns regarded the money he gave to Ms. Mellon as his. He thought by transferring it to Ms. Mellon he would save taxes. King said that Burns told him he had demanded the money back. [23] The trial judge ruled King’s evidence inadmissible for four reasons: under the classic definition of hearsay, it was inadmissible for the truth of its contents; under the modern approach to hearsay, it was unreliable; King’s discussions with Burns were not contemporaneous with the transfer but took place 20 months later; and evidence of an illegal scheme will not be received to support a resulting trust. [24] The appellant submits that the trial judge erred in excluding King’s evidence from consideration. She submits that his evidence was admissible to show Burns’ state of mind, that he regarded the money as his and that he did not intend to make a gift. [25] Even if King’s evidence should have been admitted to show the deceased’s state of mind, the trial judge was quite correct not to give any effect to it because of its obvious unreliability. Two considerations undermine the reliability of King’s evidence. First, his conversation with Burns was not contemporaneous with the transfer, but took place months afterwards. Thus the conversation is of little help in determining Burns’ intention at the time of the transfer. A party cannot ordinarily rely on a declaration subsequent to a transfer to support his or her position. A subsequent declaration is only admissible as evidence against the party who made it. Therefore because Burns’ statements to King were not contemporaneous with the transfer the appellant cannot rely on them to support her position that the transfer was not a gift.23 [26] Second, King acknowledged that he had no confidence Burns would tell him the truth about the transfer. King testified: Question: Did you feel it’s possible that Mr. Burns told Ms. Mellon that he was giving the money to her as a gift and later lied to you about having given it to her for tax purposes? Is that possible? Answer: Well, anything is possible, but how could I get inside his head? I have no idea. It’s possible, but how would I know? Question: Do you feel you had the type of relationship with Mr. Burns, bearing Mr. Burns would never lie to you? Answer: The up and down relationship I had with Mr. Burns, I wouldn’t feel one way or the other about it. You’ve got to remember Leo was there, Leo could be very helpful. He was a neighbour. I didn’t get into – there were no – I didn’t labour my mind on how is Leo feeling today. Is he going to lie to me. Just another person in an apartment. It’s the first time I’d lived in an apartment, by the way. I therefore agree with the trial judge that King’s evidence was unreliable. [27] The appellant also contends that the trial judge ignored the evidence of Angela Wright, Burns’ other daughter. Ms. Wright testified that on one occasion when she visited her father in the hospital, he became agitated that Ms. Mellon had not returned the money. The trial judge did not refer to this evidence in his reasons. I think it is reasonable to conclude, however, that he did not refer to Ms. Wright’s evidence because he did not accept it. I think it significant that on a later visit to the hospital, her father refused to discuss the transfer with her. [28] I therefore would not give effect to this ground of appeal. 3. Did the trial judge err in finding that Ms. Mellon’s evidence had been corroborated as required by s. 13 of the Evidence Act? [29] The main issue on this appeal is whether Ms. Mellon’s evidence had been corroborated “by some other material evidence.” The corroboration required by s. 13 must be evidence independent of the evidence of Ms. Mellon, which shows that her evidence on a material issue is true. The corroborating evidence can be either direct or circumstantial. It can consist of a single piece of evidence or several pieces considered cumulatively.24 Roberts J. found that there was independent evidence corroborative of a gift. He relied on three pieces of evidence, which he “considered cumulatively.” (a) Burns made a holograph will in March 1996, about 10 months after the transfer. In his will he made detailed reference to all his assets, even an asset of only $2,500. He referred to the $100,000 loans he had made to each of his daughters, which loans he forgave. But he did not refer to the transfer to Ms. Mellon. (b) Burns kept no written record of the transfer. (c) Burns lived for two years after he transferred the money to Ms. Mellon. Yet there was no reliable evidence from any source that he asked for the money back or for an accounting of it at any time before he died. [30] The appellant submits that the trial judge erred in relying on the absence of a written record and the absence of a demand for repayment of the money, because neither piece of evidence was independent of Ms. Mellon’s testimony and neither was of much probative value. I accept that both pieces of evidence carry little weight. However, the will alone reasonably supports the trial judge’s finding of corroboration. The will is an especially strong piece of circumstantial evidence because it addresses the vital issue in the case, whether Burns intended the transfer to be a gift or whether he intended the money to be repaid. The will, though short, is quite detailed, and no evidence was led to suggest that Burns’ omitted any of his assets. The will provides: I want out of my financial account Two Thousand Dollars given to the Redemptorist Fathers Roman Catholic Order, 426 St. Germain Avenue for 400 masses said for the repose of my soul helping me to reach heaven. Together with this money I want Thirty-eight Thousand Dollars given also to the Redemptorist Fathers to assist in the education and ordination of priests to the order. Funeral expenses and taxes are also to be paid for out of my estate. A considerable amount of cash should still remain in the form of RSPs of which my daughter Pat holds the certificate. I have recently been informed by my previous employer namely Gulf Oil Co. that I hold a “Group Life Insurance Plan” to the value of $2,500.00 payable to whoever my Beneficiary may be. My apartment furniture will be left at the disposal of my two daughters namely Patricia Riordan 759 Balmoral Drive, bramalea, Ont. And Angela Wright 2660 Brock Rd. North, Pickering Ont. Patricia’s tel no. 792-0151. Angela’s tel. No. 428-6459. The apt has to be cleared out to the bare walls to comply with Building Owner’s request. My financial accounts are held by the Toronto Dominion Bank, Yonge St. & Bedford Park Ave. My previous employer Gulf Oil Co. now in Calgary, Phone 1-800-661-3376. When all expenses are paid, a large surplus of money should remain. This is to be divided equally between my two daughters names previously stated. They are also allowed to keep the $100,000.00 given each of them in previous years. [31] The absence of any reference in the will to the $195,000 transfer and the explicit reference to the loans to Burns’ daughters, taken together, corroborate Ms. Mellon’s evidence that the transfer was a gift. The trial judge could reasonably infer that if Burns had treated the $195,000 as a loan, he would have listed it in his will along with his other assets. Even in Bayley, this court found that a single document, the agreement of purchase and sale, amounted to sufficient corroboration. So too in this case does the will. [32] Another piece of evidence, not referred to by the trial judge, further corroborates Ms. Mellon’s evidence. When Burns’ daughters visited their father shortly before his death, they asked him for an explanation about the transfer. He refused to give them an explanation, from which a court could infer that he did not want to tell his daughters about the money because it was a gift to another woman. [33] In my view the trial judge’s finding that Ms. Mellon’s evidence had been corroborated as required by s. 13 of the Evidence Act is reasonably supported by evidence. That finding is therefore entitled to deference from this court. I would not interfere with it. [34] I would therefore dismiss the appeal with costs. “John Laskin J.A.” “I agree: Austin J.A.” “I agree: S. Borins J.A.” Released: June 8, 2000 _______________________________ 1R.S.O. 1990, c. E.23. 2 Donovan W.M. Waters, “The Doctrine of Resulting Trusts in Common Law Canada” (1970), 16 McGill L.J. 187 at 199. 3 Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 2nd ed. (1999) at 994. 4 [1931] 1 D.L.R. 500 at 505 (Ont. C.A.). 5 (1913), 28 O.L.R. 334 (C.A.). 6 ibid. at 337. 7 See Lahay v. Brown Estate (1957), 8 D.L.R. (2d) 728 (Ont. C.A. ), Frosch v. Dadd, [1960] O.R. 435 (C.A.), Turk v. Turk, [1957] O.R. 482 (C.A.), and Ollson v. Fraser, [1945] O.R. 69 (C.A.), Van Fleet v. Risi (Public Trustee of), [1948] O.W.N. 349 (H.C.), Cuthbertson v. Adam Estate, [1958] O.J. No. 331 (Ont. H.C.), Playter v. Hayward Estate, [1970] O.J. No. 666 (Ont. H.C.), Cranston v. Wilson Estate, [1971] O.J. No. 557 (Ont. H.C.) and McTaggart v. Boffo (1976), 10 O.R. (2d) 733 (H.C.). 8 supra, at 506. 9 supra, at 505. 10 ibid. at 507. 11 [1973] 3 O.R. 751 at 757. 12 Re Vien (1985), 50 O.R. (2d) 246 (Ont. H.C.J.), Holler v. D'Amboise (1983), 2 C.L.R. 18 (Ont. H.C.), and Leeson v. Brentz (1978), 3 E.T.R. 161 (Ont. Surr. Ct.). 13 Murphy Estate v. McLean Estate (1992), 96 D.L.R. (4th) 535 at 546. 14 Duncan v. Goldenberg, [1980] O.J. No. 863 (C.A.). 15 (1990), 70 D.L.R. (4th) 201 at 210 (P.E.I.C.A.). 16 See Re Wilson, [1999] O.J. No. 1274 (Ont. Gen. Div.). 17 John Sopinka, Sidney N. Lederman, and Alan W. Bryant, The Law of Evidence in Canada, 2nd ed. (1999) at 116; see also the recent decision of Cullity J. in Cho Ki Yau Trust (Trustees of) v. Yau Estate, [1999] O.J. No. 3818 at paras. 31-33. 18 See R. v. Schwartz, [1988] 2 S.C.R. 443 at 462, per Dickson C.J.C. and Lamer J. 19 [1982] 1 S.C.R. 164; 131 D.L.R. (3d) 559. 20 per Laskin C.J.C. at 169-71. 21 [1995] 2 S.C.R. 876 at 888. 22 R.R.O. 1990, Reg. 194. 23 See Snell’s Principles of Equity, 29th ed. (1990) at 180. 24 Paquette v. Chubb (1988), 52 D.L.R. (4th) 1 (Ont. C.A.) approving Sands Estate v. Sonnwald (1986), 9 C.P.C. (2d) 100 (Ont. H.C.J.).