


COURT OF APPEAL
    FOR ONTARIO

CITATION:

Aragona v. Aragona, 2012
    ONCA 639

DATE: 20120926

DOCKET: C55324

Cronk, Epstein and Pepall JJ.A.

BETWEEN

Robert Aragona

Applicant (Respondent)

and

Beniamino Aragona, guardian of property for Maria Emilia
    Aragona
,

and the
    Public Guardian and Trustee

Respondents (
Appellant
)

John W. Bruggeman, for the appellant

J.Greg Murdoch and Cynthia Davis, for the respondent

Heard: September 6, 2012

On appeal from the judgment of Justice Gray of the
    Superior Court of Justice, dated March 5, 2012.

Epstein
    J.A.:

[1]

The
    appellant and respondent are brothers. On August 3, 1999 the appellant was
    appointed the guardian of property for their mother, Maria Aragona.  Ms.
    Aragona, who suffered from Alzheimers disease, died on March 6, 2010.

[2]

The appellant
    appeals from the March 5, 2012 judgment in which the application judge dismissed
    his application to pass accounts and awarded other relief, the effect of which
    amounted to a strong rebuke of the appellants conduct as guardian.

[3]

With
    the exception of one variation to take into account a possible benefit accruing
    to Ms. Aragonas estate, I am in full agreement with the application judges
    reasoning and conclusions.  I would therefore allow the appeal, in part.

Background

[4]

On
    May 1, 2001, pursuant to an order of the Superior Court, the appellant passed
    his first set of accounts.  On July 20, 2004, he was again ordered to pass
    accounts  this time within 30 days of that date and every three years
    thereafter. His failure to comply with the July 2004 order resulted in yet
    another order, dated June 8, 2010, requiring him to pass accounts.  On December
    14, 2010, this court dismissed the appellants appeal from that order. The application
    to pass accounts, the first since May of 2001, finally came before the application
    judge on January 9, 2012.

[5]

The
    application judges findings relating to the finances concerning Ms. Aragonas
    property, during the appellants guardianship, can be summarized as follows.

[6]

As
    of May 21, 2001 the capital in the estate, held in an investment account,
    amounted to $152,055.71 and the liabilities totalled $8,521.45.  The estate
    revenue from 2001 until her death was $195,776.41, an amount only $11,000 short
    of meeting Ms. Aragonas expenses during that period.  In September 2003 the investment
    account was closed and a money order in the amount of $117,881.95 was given to
    the appellant.  He deposited the money order into another investment account
    approximately a year later. Between May 31, 2001 and March 31, 2010, the
    appellant withdrew $122,534.40 from the investment account.  As of March 31,
    2010, this account held $46,562.91.

[7]

After
    hearing the contested passing of accounts and rejecting the appellants efforts
    to tender additional evidence as part of his written submissions, the application
    judge released reasons in which he identified certain misconduct in the
    appellants management of his mothers property.

[8]

This
    central finding of misconduct gave rise to the following terms of the decision that
    the appellant challenges on appeal.

[9]

On
    the basis of the application judges finding that the appellant transferred,
    without convincing explanation, a significant sum of money from his mothers investment
    account to his own account, the appellant was ordered to reimburse these monies
    through a payment of $132,628.

[10]

On the basis of the
    application judges conclusion that the appellant had incurred unjustified legal
    expenses in the management of his mothers property, the application judge
    ordered the appellant to reimburse the estate for certain legal costs paid by
    the estate and not use estate funds to pay other outstanding accounts.

[11]

Finally, citing
Zimmerman
    v. McMichael Estate
, 2010 ONSC 2947, 103 O.R. (3d) 25 (S.C.J.), the
    application judge ordered that the appellant was disentitled to compensation
    for his work as a guardian and that he personally pay the costs of the
    application itself.

Issues

[12]

The appellant submits
    that the application judge erred:

(1)   in including in his calculation of the money the
    appellant was ordered to repay the estate, the amount of $18,615.38 in legal
    costs;

(2)   in ordering that outstanding legal accounts not be paid
    by the estate;

(3)   in not adequately explaining his decision to require the
    appellant to repay $132,628 to the estate and his decision that outstanding
    legal accounts not be paid by the estate; and

(4) in depriving him of compensation as guardian of his
    mothers property.

Analysis

(1)

R
equiring the appellant to repay $18,615.38 to the estate

[13]

Of the $28,154 in
    legal fees the appellant claimed were expended on behalf of the estate, the
    respondent challenged the amount of $18,615.38.  The application judge found in
    the respondents favour on this issue and added this amount to the amount he
    ultimately ordered the appellant to repay the estate.

[14]

With respect to this
    issue, the appellants primary submission is that he did not receive a fair
    hearing.  The transcript reveals, he says, that counsel for the respondent made
    it clear at the outset of the hearing of the application that his client did
    not take issue with any disbursements the appellant claimed he had made on
    behalf of the estate. Mr. Bruggeman, counsel for the appellant, submits that
    his clients case was presented on the basis of that representation.  The
    appellant was, therefore, taken by surprise when the respondents written
    submissions included argument in which these disbursements were challenged.  Mr.
    Bruggeman attempted to respond by including in his written submissions argument
    referencing material already in the record and additional documentation that
    had not been put before the application judge that related to these disbursements.
    The application judge refused to accept the new evidence
.


[15]

I do not agree with
    the appellants contention that, in these circumstances, he was treated
    unfairly.

[16]

From the outset the
    respondent signalled to the appellant his particular concern about the disbursements
    in question.  On August 2, 2011, the respondent served a Notice of Objection
    identifying missing documents and concerns relating to the Statement of Accounts
    the appellant had delivered.  On October 25, 2011, the respondent served an
    Amended Notice of Objection and a Demand for Particulars setting out additional
    concerns about the decrease in the capital of the investment account and the lack
    of documentary support for disbursements the appellant claimed to have made.

[17]

At the opening of the
    hearing of the application, an exchange took place between counsel and the
    application judge about what was in issue.  Counsel for the respondent indicated
    that his client was not challenging disbursements.  In the course of this
    exchange counsel agreed with the application judges expression of the
    understanding that disbursements were not in issue at this time.  It was
    against this background that the hearing proceeded.

[18]

During
    cross-examination the appellant was questioned about a number of disbursements allegedly
    paid by the appellant on behalf of the estate, over a number of years.  Significantly,
    Mr. Bruggeman neither objected to these questions nor dealt with the issue
    during re-examination.

[19]

Given the history of
    the appellants failure to fulfill his obligations as guardian of his mothers
    property and the respondents having put the appellant on notice about his
    concern about certain disbursements, (as evidenced by the Notices of Objection
    and the Demand for Particulars), the cross-examination of the appellant should,
    in my view, have caused counsel for the appellant to be concerned about whether
    the issue of the respondents challenge to the claimed disbursements had, in
    fact, been taken off the table. If appellants counsel firmly held the view
    that it was not in issue, he most certainly would have objected to the
    questioning. As indicated, he did not.

[20]

Moreover, when the
    appellant was clearly made aware, through the respondents written submissions,
    that these legal expenses were in issue, at least from the respondents
    perspective, the appellant was still unwilling or unable to support the
    challenged disbursements despite being given the opportunity on two subsequent
    occasions to do so. The application judge reviewed the appellants submissions
    on this issue and the documentation upon which he relied and was not prepared
    to accept the new evidence.  That said, based on his review, he concluded that
    the evidence was of no assistance - the new material simply disclose[d] what
    was apparent already. This is relevant to the fairness argument the appellant
    is advancing.  Finally, during oral argument before this court, the appellant still
    could not provide an explanation in support of the challenged disbursements
    despite being given an opportunity to do so.

[21]

The appellants
    fairness argument should be considered in the light of his statutory
    obligations.  Pursuant to the
Substitute Decisions Act, 1992
, S.O.
1992
,
    c. 30, a guardian of property has a fiduciary obligation to carry out his or
    her obligations with honesty and due care and attention.  The core of these
    obligations includes the duty to be in a position at all times to prove the
    legitimacy of disbursements made on behalf of the estate: Widdifield on
    Executors and Trustees, 6
th
ed. (Scarborough, ON: Thomson Carswell,
    2002) at p. 13-1. The history of the appellants conduct demonstrates that he managed
    his mothers property in blatant disregard of his obligations as guardian.

[22]

In the light of the
    appellants obligations as guardian and this history, I am not persuaded that
    he was treated unfairly with respect to the disbursements issue.  The appellant
    had ample opportunity on the passing of his accounts to justify the
    expenditures allegedly made on behalf of the estate.  He failed to do so. 
    Indeed, there is no indication that the appellant, even now, has access to any
    material that would have had an impact on the application judges decision in
    this respect.  In fact, in his reasons, the application judge gratuitously
    indicated that he may have disallowed the entire amount of claimed legal
    expenses, totalling $28,154, had the respondent challenged them.

[23]

I would therefore not
    give effect to this argument.

(2)

The order that the estate would not be
    responsible to pay unpaid legal accounts

[24]

The legal fees ordered
    not to be paid by the estate relate to lawsuits the appellant initiated against
    his brothers, on behalf of the estate.  In these proceedings, the appellant claimed
    that his brothers, in their management of their fathers estate, failed properly
    to account for assets under their management, the income from which was
    directed, through their fathers will, to the benefit of Ms. Aragona, during
    her lifetime.

[25]

The application judge
    held that these proceedings were ill-advised given the financial stability of
    Ms. Aragonas estate and therefore that the estate should not be responsible
    for the legal costs associated with these proceedings.

[26]

However, the appellant
    submits that the application judge erred in failing to take into account the
    possibility that the estate could actually benefit from the proceedings.  He
    points to an award of costs in the amount of $25,000 in favour of the estate
    arising out of a motion for contempt brought in one of the proceedings.  While
    these costs have not yet been paid to the estate, there is nothing in the
    record to support the conclusion that all, or at least part, will not be
    collected.  It would be unfair, argues the appellant, for the estate to receive
    a benefit from the contempt motion, without having to incur any of the associated
    costs.

[27]

I find merit in this
    argument.  And counsel for the respondent, quite fairly, advised the court that
    he does as well.  However, his submission is that if and when any part of the
    award is collected, the parties should look to the trustee of Ms. Aragonas
    estate to determine what, if any, responsibility the estate should have for the
    legal fees incurred by the appellant in respect of the contempt motion that led
    to the award.

[28]

The difficulty with
    this suggestion lies in the wording of the specific terms of the judgment under
    appeal.  Paragraph 4 orders that [a]ny outstanding legal accounts directed to
    the estate of Maria Emilia Aragona shall not be paid by the estate.  Left
    unchanged, this provision would preclude the trustee from authorizing the
    payment of legal costs from the estate.

[29]

I am of the view that
    this issue can be resolved in a manner designed to be fair to those whose
    interests are affected and also cost-effective, having regard to the amounts
    potentially in issue.  With these objectives in mind, I would order that if the
    estate collects the total amount of $25,000 pursuant to this award, that it reimburse
    the appellant in the amount of $7,500 for legal fees he can demonstrate he paid
    and that led to this award.

(3)

The Sufficiency of Reasons

[30]

I do not find merit in
    the appellants argument that the application judges reasons relating to his
    decision to order him to repay $132,628.33 to the estate and that the estate
    not be responsible for the legal fees associated with the $25,000 costs award,
    are inadequate.

[31]

As put by Doherty J.A.
    in
Law Society of Upper Canada v. Neinstein
(2010),
317 D.L.R. (4th) 419
, when the adequacy
    of the reasons is raised as a ground of appeal the courts focus is on whether
    the reasons explain what was decided and why that decision was made.

[32]

Shortcomings
    notwithstanding, I am of the view that the application judges reasons are
    adequate.  The findings of fact that the application judge was required to make
    were supported by the record and those based on the application judges
    unfavourable assessment of the appellants credibility are entitled to
    deference. And, the application of these facts to the controlling legal
    principles leading to the conclusions reached is explained.

[33]

Ultimately, the test
    is whether the reasons permit reasonable appellate review.  In my view, they
    do.  I would therefore not give effect to this ground of appeal.

(4)

Compensation and Costs

[34]

The application judges
    reliance on
Zimmerman
was well-placed given his strongly-worded
    conclusion at para. 34 that the conduct of (the appellant) has been shocking. 
    He has literally helped himself to many thousands of dollars from his mothers
    estate, at a time when his mother had Alzheimers and was unable to look after
    her own affairs. (The appellant) treated the money in the estate as if it was
    his own.

[35]

The application
    judges assessment of the appellants failure to keep proper accounts and of his
    indifference to his fiduciary obligations, finds ample support in the record. 
    It follows that depriving him of compensation for his guardianship was clearly
    within the application judges discretion:
Zimmerman
at para. 34.

[36]

I would also reject this
    ground of appeal.

Disposition

[37]

Accordingly, for the
    reasons given, I would allow the appeal in part by varying paragraph four of
    the judgment to read as follows:

4.       Any outstanding legal accounts directed to the estate
    of Maria Emilia Aragona shall not be paid by the estate save and except that,
    to the extent that the estate collects all of the $25,000 costs awarded in its
    favour under paragraph eight of the Order of Somers J., dated January 5, 2006,
    in action no. 01-0373/03, the estate shall pay the total amount of $7,500,
    inclusive of disbursements and all applicable taxes, on account of those legal
    fees incurred by Beniamino Aragona in respect of the underlying motion that led
    to the award.

[38]

In all other respects,
    I would dismiss the appeal.

[39]

The respondent is entitled
    to his costs of the appeal paid by the appellant, personally.  As agreed, these
    costs are fixed in the amount of $10,600, inclusive of disbursements and all
    applicable taxes.

Released:

SEP 26 2012

GE                                                  Gloria
    J. Epstein J.A.



I
    agree E.A. Cronk J.A.

I
    agree Sarah Pepall J.A.


