An appeal decision rendered by the Ontario Court of Appeal in September of this year raises two important issues in estate litigation: 1) evidence of wishes and intentions concerning inter-familial loans must be clearly documented; and 2) evidence of the testator’s solicitor is important in establishing his/her wishes and intentions.
Eva Middleton died on June 5, 2015. Her estate trustee brought an application seeking the court’s opinion as to which of two promissory notes concerning a $142,000 loan that Eva advanced to her daughter, Linda Middleton, was valid and enforceable. The first promissory note, dated July 16, 2014, set out a payment plan and a maturity date. The second promissory note, dated July 22, 2014, stated that the loan would be forgiven upon Eva’s death.
The court directed a trial, and six witnesses testified, including Eva’s two lawyers. Eva’s Georgetown lawyer, Jacob Walinga, testified that he prepared the first promissory note for Eva in July 2014. At no point did Eva say to him that she wanted the loan to be forgiven on her death. He recalled receiving a fax from Linda attaching a revised draft of the note, with the maturity date deleted and a provision included for the forgiveness of the loan. He called Eva and left her a voice mail, suggesting that she use the note that he drafted. On July 16, 2014, Linda signed the first promissory note as originally drafted by Mr. Walinga.
Eva’s Picton lawyer, Ken Menlove, testified that he met with Eva in December 2014 when she needed a local lawyer to assist with her estate. He recalled that she brought with her a will and the first promissory note, both prepared by Mr. Walinga. He further recalled that Eva wanted the loan to be paid upon her death. He confirmed that Eva did not mention any other paperwork pertaining to the loan.
Linda testified that she and her mother had several conversations about the loan. She recalled that her mother did not want the forgiveness of the loan included in her will, and so she decided to capture her intentions in the second promissory note. The same individual, Joyce Willard, witnessed both promissory notes. Ms. Willard testified that after she witnessed the first promissory note, Eva told her there might be a second note as she wanted to “think everything through”. She said that she and Eva did not have any discussions about any gifts Eva wanted to give to her children. She further stated that she did not read either of the two notes when she witnessed them.
Linda relied on an email dated December 12, 2014 that she purportedly received from Eva, which stated that the loan was “cleared upon [Eva’s] death”. Charles Simpson, Eva’s grandson, testified that he bought his grandmother an iPad and helped set up her email on that device. He produced a number of emails that he received from his grandmother in December 2014 and noted that her emails usually had the signature “Sent from my iPad”, while the December 12, 2014 email produced by Linda contained no such wording.
The lower court found that only the first promissory note was valid and enforceable. Linda appealed on the following grounds: 1) the trial judge erred by rejecting Ms. Willard’s evidence; 2) the trial judge erred by finding that an email purportedly sent by Eva to Linda on December 12, 2014 was never in fact sent; and 3) the trial judge did not properly assess the evidence as he failed to consider the possibility that Eva was confused when she met with Mr. Menlove in December 2014. In support of her second argument, Linda brought a motion to introduce fresh evidence on appeal.
The Ontario Court of Appeal dismissed Linda’s motion to introduce fresh evidence and her appeal. On the first ground, Linda argued that Ms. Willard’s evidence would have supported her version of events, particularly as she witnessed Linda signing the second promissory note after Eva decided she would forgive the loan. The Court of Appeal deferred to the trial judge’s assessment of the credibility and reliability of the witnesses’ evidence. In particular, the Court held that nothing Eva said to Ms. Willard indicated that she intended to forgive the loan. Further, her evidence did not contradict the direct evidence of Mr. Menlove that Eva delivered to him her will and the first promissory note in December 2014 and confirmed her intention to have the loan repaid upon her death.
On the second ground, Linda attempted to introduce evidence that Eva was in the hospital on December 17, 2014, and therefore could not have sent any emails to Charles Simpson on that day or thereafter because she did not bring her iPad with her. The Court of Appeal rejected this argument, relying on the Sengmueller test. The evidence at trial was that Eva was in and out of the hospital in December 2014, and therefore Linda and her counsel had ample opportunity to question the credibility of Charles Simpson’s evidence. Further, the Court was not convinced that the fresh evidence would change the outcome of the trial. The Court stated at paragraph 31 that “sentiment expressed vaguely in an email could not displace the only direct evidence of Eva Middleton’s intention with respect to the loan and her estate, which was her delivery, just a couple of weeks earlier, of the first promissory note and her will to Mr. Menlove”.
Finally, on the third ground, the Court of Appeal found that the trial judge specifically addressed Linda’s concern that Eva might have been confused about her wishes, or that she might have given Mr. Menlove the wrong instructions. The Court rejected this argument as the evidence showed that Eva deposited her will and the first promissory note with Mr. Menlove and reviewed her wishes with him. Eva confirmed with Mr. Menlove that she wanted the loan repaid upon her death, and there was no evidence at trial to support a finding that she was confused when she met with him. As such, the Court of Appeal held that the trial judge was entitled to conclude that Eva accurately conveyed her wishes to Mr. Menlove when they met to discuss her estate.
While it may be unnatural and awkward to do so, careful documentation of the wishes and intentions of family members, particularly where loans or gifts are concerned, can go a long way in avoiding the stress and expense of litigation. Further, the importance of having detailed contemporaneous notes in a solicitor’s file cannot be overstated.
