



COURT OF APPEAL FOR ONTARIO

CITATION: Morreale v. Romanino, 2017 ONCA 359

DATE: 20170503

DOCKET: C62280

Strathy C.J.O., Gillese and Pardu JJ.A.

BETWEEN

Giustina Morreale

Plaintiff (Appellant)

and

Elisabeth Romanino

Defendant (Respondent)

Maurice W. Pilon, for the appellant

Nick A. Porco, for the respondent

Heard: April 20, 2017

On appeal from the order of Justice Cory A. Gilmore of
    the Superior Court of Justice, dated May 25, 2016, with reasons reported at
    2016 ONSC 3427.

Gillese J.A.:

[1]

Did a daughter exert undue influence over her parents, which resulted in
    them making an
inter vivos

gift to her of the bulk of their
    assets?  That question lies at the heart of this case.

BACKGROUND IN BRIEF


[2]

Nicola Ruccia and Lavina Ruccia had two children: daughters Giustina
    Morreale (the appellant) and Elisabeth Romanino (the respondent).  At the
    time of trial, the appellant was 64 years of age and the respondent was 59.

[3]

The appellant left her parents home when she was 20, to get married. 
    The appellant always had a good relationship with her parents but there was a
    falling-out between Mr. Ruccia and the appellants husband in 2003.  After
    that, Mr. Ruccia never saw or spoke to the appellants husband again, until at
    his bedside on the evening of his death.

[4]

The respondent lived with her parents all of her life, even after she
    married in 2003.  She cared for them and this caregiving increased as the
    Ruccias aged.

[5]

In 1995, the Ruccias executed mirror wills, leaving everything to one
    another on death.  The wills provided that when the survivor died, two-thirds of
    the Ruccias interest in a property on Beck Drive was to go to the respondent
    (who already had a one-third interest in the property) and one-third was to go
    to the appellant.  The residue of the Ruccias estate was to be divided equally
    between their two daughters.

[6]

Mr. Ruccia was diagnosed with cancer in 2008 and his health began to
    fail.  The respondent and her husband cared for him at home.  He required
    considerable care in the months preceding his death.  He died on March 5, 2009,
    and Mrs. Ruccia passed away a few months later on October 19, 2009.

[7]

Following the Ruccias deaths, the appellant learned that her parents
    had made an
inter vivos

gift of their only significant capital asset
    to her sister, the respondent.  That asset was their equity in a property on Beck
    Drive in which they had lived, together with the respondent and her husband.

[8]

The Ruccias did not have an interest in the Beck Drive property at the
    time of their deaths because it had been sold in 2006.  Prior to its sale,
    title to the Beck Drive property was joint, with the Ruccias owning a two-thirds
    interest and the respondent owning a one-third interest.

[9]

When the Beck Drive property was sold, the Ruccias had equity of approximately
    $162,000 in it.  That money was used towards the purchase of a property on
    Russell Stover Court.  The Ruccias continued to live with the respondent and
    her husband, at the Russell Stover property, until their deaths.  Title to the
    Russell Stover property was taken in the joint names of the respondent and her
    husband alone  the Ruccias were not on title.

[10]

There was no evidence that the Ruccias received independent legal advice
    on the sale of the Beck Drive property or the purchase of the Russell Stover
    property.  The same lawyer acted for both the Ruccias on the one hand and for the
    respondent and her husband on the other, on the sale of the Beck Drive property
    and the purchase of the Russell Stover property.

[11]

The appellant started this proceeding in which she alleged, among other
    things, that the gift of the Ruccias equity in the Beck Drive property to the
    respondent was the result of undue influence.  By the time of trial, this was
    the sole issue to be determined.

[12]

Following trial, the action was dismissed.

[13]

The trial judge referred to the relevant legal principles in
Geffen
    v. Goodman Estate
, [1991] 2 S.C.R. 353, noting that the equitable doctrine
    of undue influence was developed not to save people from the consequences of
    their own folly but to save them from being victimized by other people.  She
    also observed that, while it is natural to presume that influence will exist in
    a relationship in which trust and confidence is reposed in the donee by the
    donor, the factual underpinning of the process leading up to the gift must be
    examined in the context of equity protecting the weak or momentarily weak, not
    from bad bargains, but from the abuse of trust, confidence or power.

[14]

The trial judge found that the circumstances and the respondents
    relationship with her parents had the capacity to create undue influence. 
    However, she found that the presumption of undue influence did not arise
    because it was not possible to find any specific act of coercion or domination
    that would lead to a presumption of undue influence.

[15]

The trial judge further concluded that even if the presumption did
    arise, based on her findings of fact, the presumption was rebutted.

THE ISSUES

[16]

On appeal, the appellant submits that the trial judge erred in:

1. concluding that the
    presumption of undue influence did not arise because she found no specific act
    of domination or coercion on the part of the respondent; and

2. giving an inadequate analysis
    of why, if the presumption did arise, it had been rebutted.

ANALYSIS

[17]

For the reasons that follow, I would dismiss the appeal.

[18]

Before addressing the specific issues that are raised, I make the
    following general observation.  The trial judge canvassed the relevant legal principles
    and thoroughly reviewed the evidence.  She made numerous factual findings, all
    of which were solidly grounded in the evidence.  Appellate deference is owed to
    the factual findings of the trial judge  it is not for this court to retry the
    case or substitute its view of the evidence for that of the trial judge, absent
    palpable and overriding error:
Omcon Investments Limited v. 1100828 Ontario
    Limited
, 2012 ONCA 154, at para. 2.

1.       The Presumption of
    Undue Influence Did not Arise

[19]

At para. 73 of her reasons, the trial judge stated:

I find that in these circumstances, and despite the special
    relationship that existed, it is not possible to find any specific act of
    coercion or domination that would lead to a presumption of undue influence.

[20]

The appellant points to this sentence and submits that it demonstrates
    an error in law on the part of the trial judge because there is no need for a
    finding of a specific act of coercion or domination in order for the
    presumption to arise.

[21]

I agree.  In this regard it is important to distinguish between the
    presumption of undue influence and actual undue influence.  In this case, the
    trial judge was addressing the question of whether the presumption of undue
    influence arose, not whether there had been undue influence exerted by the
    respondent over her parents.  There is no need for a finding of a specific act
    of coercion or dominion in order for the presumption to arise. Whether a
    persons free will was overborne by an act of coercion or fraud is a question
    of actual undue influence:
Keljanovic Estate v. Sanseverino

(2000),
    186 D.L.R. (4th) 481 (Ont. C.A.), at para. 61.

[22]

In the case of voluntary gifts, whether the presumption of undue
    influence arises begins with an examination of the relationship between the parties
    and the first question to be addressed, in all cases, is whether the potential
    for domination inheres in the nature of the relationship itself:
Geffen
,
    at p. 378.  This test embraces those relationships that equity has already
    recognized as giving rise to the presumption, including parent and child:
Geffen
,
    at p. 378.

[23]

However, while the test embraces relationships that have been recognized
    as giving rise to the presumption, it is not enough to simply show that such a
    relationship exists.  Even for such relationships, the presumption does not
    arise unless it has been established that there is the potential for one person
    to dominate the will of another.  The test requires the trial judge to consider
    the whole of the relationship between the parties to see if there is the
    potential for domination, rather than looking for a specific act of coercion or
    domination.

[24]

Despite the impugned statement, in light of the trial judges findings, I
    would not interfere with the trial judges determination that the presumption
    did not arise in this case.  Far from the respondent having the potential to dominate
    the will of her parents, the trial judge saw Mr. Ruccia as the dominant party
    in the financial transactions between the Ruccias and the respondent.

[25]

The trial judge was very aware of the family dynamic.  She recognized
    that the respondent lived with her parents all of her life and that, as the
    Ruccias aged, they became more and more dependent on the respondent and, eventually,
    her husband as well.  However, the trial judge found that Mr. Ruccia told the
    appellant that she would receive less from their estate than would her sister
    and that he wanted to ensure that her husband would get no money from his
    estate.  And, importantly, the trial judge found that Mr. Ruccia was a
    strong-willed individual who made all the financial decisions as between him
    and his wife and that he was so meticulous in respect of his personal financial
    affairs that he required the respondent  to provide him with receipts for all
    bank transactions that she performed on his behalf.

[26]

Given that Mr. Ruccias mental capacity was not in issue and in light of
    the trial judges findings as to the strength of his will in all things,
    including those financial, the trial judge made no error in concluding that the
    presumption of undue influence did not arise in this case.

2.       If the Presumption Arose, It Had Been Rebutted

[27]

After explaining why she found that the presumption of undue influence
    did not arise, the trial judge stated that if she were wrong and the
    presumption did arise, based on her findings, she would find that the
    presumption had been rebutted.  The appellant submits that this was an
    inadequate analysis on the part of the trial judge.

[28]

Counsel for the appellant makes two specific complaints.  First, he says
    that the trial judge erred in relying on Mr. Ruccias strong personality as a
    ground for finding that the presumption had been rebutted.  He contends that
    just because Mr. Ruccia had a strong personality, it did not mean that Mr.
    Ruccia understood the nature and consequences of his financial decisions. 
    Second, he submits that, as the Ruccias did not have independent legal advice
    during the real estate transactions involving the Beck Drive and Russell Stover
    properties, the trial judge should have drawn an adverse inference from the
    respondents failure to call as a witness the lawyer who acted on those
    transactions.

[29]

I do not agree.

[30]

In finding that the presumption had been rebutted, the trial judge did
    not place undue reliance on Mr. Ruccias strong personality.  It is correct
    that the trial judge took into consideration the undisputed evidence that Mr.
    Ruccia was a strong-willed man to the very end, who played a dominant role in
    the family.  As I have explained, that consideration is relevant to the
    question of whether the presumption of undue influence arose because it speaks
    to the issue of the potential for domination.  However, it is also relevant to
    whether the presumption was rebutted, if found to have arisen.

[31]

In any event, the trial judge also made findings in respect of Mr.
    Ruccias approach to financial matters.  It was undisputed that Mr. Ruccia was
    acutely aware of his financial affairs and that, as between him and his wife,
    he was in charge of all financial matters and made all financial decisions. 
    The trial judge alluded to these findings and, as I have already explained, she
    specifically found that Mr. Ruccia was meticulous in overseeing his personal
    financial affairs.  The trial judge further found that Mr. Ruccia carefully
    reviewed his monthly statements.  Additionally, as the trial judge noted, Mr.
    Ruccia was of sound mind throughout his life.

[32]

In the circumstances, I see nothing inadequate in the trial judges
    analysis, which included her consideration of Mr. Ruccias nature and personality.

[33]

I also reject the appellants contention that the trial judges analysis
    fell short because she failed to draw an adverse inference from the
    respondents failure to call the lawyer who acted for the Ruccias and the
    respondent on the sale of the Beck Drive property and the purchase of the
    Russell Stover property. In my view, this contention cannot stand in light of
    the fact that independent legal advice is not required in order to rebut the
    presumption of undue influence:
Bank of Montreal v. Duguid

(2000),
    47 O.R. (3d) 737 (C.A.), at paras. 26-27.

DISPOSITION

[34]

For these reasons, I would
    dismiss the appeal with costs to the respondent fixed at $6,000, all inclusive.

Released: G.R.S. May 4, 2017

Eileen
    E. Gillese J.A.

I
    agree. G.R. Strathy C.J.O

I
    agree. G. Pardu J.A


