Mroz v. Mroz et al., 2015 ONCA 171

• Judge: Doherty, Gillese and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: February 04, 2015
• Jurisdiction: Ontario
• Citations: 2015 ONCA 171;(2015), 330 O.A.C. 324 (CA)

Mroz v. Mroz (2015), 330 O.A.C. 324 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. MR.022

Martin Mroz and Adrianna Mroz by their litigation guardian Agnieszka Mroz (plaintiffs/respondents/appellants by way of cross-appeal) v. Helen Mroz, Richard Paramonczyk, Kathleen Paramonczyk, Elizabeth Paramonczyk, Christine Paramonczyk and Anne Paramonczyk (defendants/appellant/respondent by way of cross-appeal)

(C58622; 2015 ONCA 171)

Indexed As: Mroz v. Mroz et al.

Ontario Court of Appeal

Doherty, Gillese and Lauwers, JJ.A.

March 16, 2015.

Summary:

Kazimiera (Kay) Mroz and her husband lived in a home in Toronto, Ontario (the "Property"). After her husband died, Kay executed a new will (2004 Will) and an Acknowledgement and Direction (Direction). In the 2004 Will, Kay named her daughter Helen Mroz and her nephew Richard Paramonczyk as her executors. In the 2004 Will, Kay bequeathed $50,000 to Richard and his family. She also stipulated that her "share of the [P]roperty" was to go to Helen, on the condition that within a year of her death, Helen paid $70,000 to each of Kay's two grandchildren. In the Direction, Kay authorized the transfer of title to the Property to herself and Helen as joint tenants. Shortly after Kay's death, Helen sold the Property for approximately $476,000 and used the proceeds for herself, all without notifying Richard, her co-executor under the 2004 Will. As a result, the Property did not pass through Kay's estate. Apart from the Property, the value of Kay's estate was approximately $3,200. The two grandchildren sued, challenging the validity of the 2004 Will and Helen's conduct regarding the Property.

The Ontario Superior Court, in a decision reported at [2014] O.T.C. Uned 1030, held that the 2004 Will was valid and the presumption of resulting trust respecting the Property had been rebutted. Further, the court declared that Helen's failure to pay $70,000 to each of the two grandchildren was a breach of trust and it ordered Helen to pay them those sums, plus prejudgment interest. Helen appealed. She argued that once the trial judge found that the presumption of resulting trust had been rebutted, the Property passed to her by right of survivorship and, therefore, she had no legal obligation to pay the legacies to the grandchildren. The grandchildren cross-appealed. They argued that the trial judge erred in finding that the presumption of resulting trust had been rebutted and, accordingly, the Property formed part of Kay's estate. They also asked the court to make an award of punitive damages against Helen.

The Ontario Court of Appeal held that, as the trial judge had found that the Property was to be used by the estate to satisfy Kay's wishes as expressed in the 2004 Will, she could not find that the presumption of resulting trust had been rebutted and that Helen took the Property by way of gift. It was an error in principle to so find. Therefore, it fell to the Court of Appeal to determine whether Helen had rebutted the presumption of resulting trust. To answer that question, the court applied the relevant legal principles to the trial judge's factual findings on Kay's actual intention at the time of the transfer. The court found that Helen had not rebutted the presumption of resulting trust and taken the property by way of gift. The court dismissed the appeal and cross-appeal.

Gifts - Topic 527

Gifts inter vivos - Presumption against gift - Resulting trust - Rebuttal of presumption - The Ontario Court of Appeal stated that "A resulting trust arises when title to property is in one party's name but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner. ... When a parent gratuitously transfers property to his or her adult child, the law presumes that the child holds the property on resulting trust for the parent. ... The burden of rebutting the presumption is on the child. In determining whether the presumption has been rebutted, the trial judge must begin his or her inquiry with the presumption and then weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the parent transferor's actual intention at the time of transfer. ... The kind of evidence relevant to determining the transferor's actual intention at the time of transfer depends on the facts of the case. ... A court may consider evidence of the transferor's conduct after the transfer, so long as it is relevant to the transferor's intention at the time of the transfer ...". - See paragraphs 72 and 73.

Gifts - Topic 527

Gifts inter vivos - Presumption against gift - Resulting trust - Rebuttal of presumption - Kay Mroz and her husband lived in a home in Toronto, Ontario (the "Property") - After her husband died, Kay executed a new will (2004 Will) and an Acknowledgement and Direction (Direction) - In the 2004 Will, Kay named her daughter Helen and her nephew Richard as her executors - In the 2004 Will, Kay bequeathed $50,000 to Richard and his family - She also stipulated that her "share of the [P]roperty" was to go to Helen, on the condition that within a year of her death, Helen paid $70,000 to each of Kay's two grandchildren - In the Direction, Kay authorized the transfer of title to the Property to herself and Helen as joint tenants - Shortly after Kay's death, Helen sold the Property for approximately $476,000 and used the proceeds for herself, all without notifying Richard, her co-executor under the 2004 Will - As a result, the Property did not pass through Kay's estate - Apart from the Property, the value of Kay's estate was approximately $3,200 - The grandchildren sued, challenging the validity of the 2004 Will and Helen's conduct regarding the Property - The trial judge concluded that the 2004 Will made Helen a joint tenant of the Property on condition that Helen pay each grandchild $70,000 within a year of Kay's death, creating a trust obligation that Helen had breached - On appeal, the Ontario Court of Appeal stated that, on the trial judge's findings, Kay intended that Helen was to sell the Property after her death and use the sale proceeds to fund the bequests in her 2004 Will - Clearly, that was a testamentary disposition - Thus, she could not find that the presumption of resulting trust had been rebutted and that Helen took the Property by way of gift - It was an error in principle to so find - Therefore, it fell to the Court of Appeal to determine whether Helen had rebutted the presumption of resulting trust - The court applied the relevant legal principles to the trial judge's factual findings on Kay's actual intention at the time of the transfer - The trial judge's key findings relating thereto were as follows: Kay wanted Helen to have title to the Property after her death; Kay wanted her two grandchildren and Richard's family to receive their bequests from the sale of the Property; and Kay wanted Helen to pay the bequests to the grandchildren within a year of her death from the proceeds of sale of the Property - As an intelligent, knowledgeable, financially astute person with only one asset of any significant value, Kay must have intended that the Property would be used as the source of funds for the bequests that she made in the 2004 Will - See paragraphs 1 to 82.

Gifts - Topic 578

Gifts inter vivos - Transfer by donor to donee and donor jointly - Intention - [See both Gifts - Topic 527 ].

Gifts - Topic 730

Gifts inter vivos - Transfers in joint tenancy - Survivorship - [See second Gifts - Topic 527 ].

Gifts - Topic 953

Gifts inter vivos - Evidence and proof - Donor's intention - [See both Gifts - Topic 527 ].

Practice - Topic 9012

Appeals - Restrictions on argument on appeal - Issues or points not previously raised - A trial judge allowed an action against Helen, a co-executor under her mother's Will, but explained why she did not award punitive damages against Helen, as follows: "Although the Statement of Claim includes a claim for punitive and exemplary damages, this was not pursued at trial nor was it argued in submissions, thus I make no order. However, I do find that the conduct of Helen after her mother's death is worthy of an order for these types of damages as it is egregious and worthy of censure." - Helen appealed - The plaintiffs cross-appealed, seeking punitive damages - The Ontario Court of Appeal dismissed the appeal and the cross-appeal - The court stated that "In the normal course, appeals are not the proper forum in which to raise brand new issues which significantly expand or alter the landscape of the litigation. ... Although punitive damages were claimed in the statement of claim, they were not pursued at trial. Thus, in effect, the claim for punitive damages is raised for the first time on appeal. ... [I]t would not be appropriate to entertain such a claim at this stage in the proceeding." - See paragraph 83.

Trusts - Topic 1906

Resulting trusts - General principles - Gifts - [See both Gifts - Topic 527 ].

Trusts - Topic 2044

Resulting trusts - Voluntary property transfers - Presumption of resulting trust - [See both Gifts - Topic 527 ].

Trusts - Topic 2144

Resulting trusts - Intention - Evidence - [See both Gifts - Topic 527 ].

Wills - Topic 4

Testamentary instruments - General principles - What constitutes a testamentary disposition - [See second Gifts - Topic 527 ].

Cases Noticed:

Pecore v. Pecore, [2007] 1 S.C.R. 795; 361 N.R. 1; 224 O.A.C. 330; 2007 SCC 17, appld. [para. 53].

Sawdon Estate v. Watch Tower Bible and Tract Society of Canada et al. (2014), 315 O.A.C. 129; 119 O.R.(3d) 81; 2014 ONCA 101, dist. [para. 53].

Perez et al. v. Salvation Army et al. (1998), 115 O.A.C. 328; 42 O.R.(3d) 229 (C.A.), refd to. [para. 83].

Counsel:

Montgomery T. Hyde, for the appellant;

Michael Czuma, for the respondents.

This appeal was heard on February 4, 2015, by Doherty, Gillese and Lauwers, JJ.A., of the Ontario Court of Appeal. Gillese, J.A., delivered the following decision for the court on March 16, 2015.