



COURT OF APPEAL FOR ONTARIO

CITATION: Hayward v. Hayward, 2021 ONCA 175

DATE: 20210322

DOCKET: C67890

Lauwers,
    Trotter and Zarnett JJ.A.

BETWEEN

Leslie
    Ann Hayward, as Estate Trustee and The Estate of

Jeanne
    Hayward also known as Jean Hayward

Applicants
    (Respondents)

and

Alexander William Keith Hayward
,
Shawn Hayward
,
David
    Hayward
,

Kelly Hayward and
Lori Hayward

Respondents
    (
Appellants
)

Robert J. De Toni, for the appellants

Robert A. Lewis, for the respondents

Heard: March 16, 2021 by video conference

On appeal from the judgment of Justice Stanley
    J. Kershman of the Superior Court of Justice, dated December 12, 2019, with
    reasons reported at 2019 ONSC 7083, and from the costs order, dated March 6,
    2020, with reasons reported at 2020 ONSC 1458.

REASONS
    FOR DECISION

[1]

This appeal concerns the estate of Jeanne
    Hayward. She is survived by her former husband, Alexander [Alex] Hayward, and
    their five adult children, Leslie, Shawn, David, Kelly, and Lori. (In these
    reasons we use first names to distinguish among them, not out of disrespect.)
    All five siblings were named as beneficiaries in Jeannes will, but Alex was
    not. Leslie is the estate trustee. Shawn, David, and Lori, but not Kelly, supported
    their fathers claims to various estate assets and estate funds.

[2]

Alex appeals the disposition of his claims to re
payment of a loan he made to Jeanne with
    which she bought a Chevrolet Malibu
and to ownership of
    a Montana tractor, and seeks leave to appeal the costs award. Shawn, David and
    Lori join him only in the appeal of the costs award.

The Chevrolet Malibu

[3]

Alex had claimed that although the Malibu was in
    Jeannes name, he had provided, as a loan, the cash with which it was
    purchased. The estate argued that Alex did not pay for the Malibu. The trial
    judge found that Alex had paid for Jeannes Malibu, but when he did so he was
    making a gift, not a loan. However, the estate had not argued that the money
    paid by Alex for the Malibu was a gift.

[4]

We agree with the appellant that it was not open
    to the trial judge to find that the funds Alex paid for the Malibu were a gift
    and not a loan. As Doherty J.A. noted in
Rodaro v. Royal Bank of
    Canada
(2002), 59 O.R. (3d) 74, at paras. 61-63, a trial judges reliance
    on a ground that was not argued is fundamentally unfair and potentially
    unreliable because it was not tested through the adversarial process. The law
    prescribes tests for determining when the payment of funds is a gift, but the
    trial judge did not apply or allow the parties to address those tests before
    determining that Alexs payment for the Malibu was a gift, not a loan. The
    appeal on this ground is allowed, and we remit the issue to the Superior Court
    for trial.

The Montana Tractor

[5]

Alex purchased the Montana tractor and the bill
    of sale was in his name. He paid the $1,000 down payment in cash. The balance
    of $12,560 was paid with a cheque in Leslies name. Leslie argued that the
    cheque came from her, and, since Alex never paid her back, the tractor was
    hers. Alex argued that the money actually came from Jeanne, and, because the tractor
    was in his name, he owned it. He said Jeanne probably borrowed the money from
    Leslie, but he was not sure.

[6]

The trial judge found that Alex had paid the
    initial deposit and owned the tractor. However, he found that Leslie had paid the
    balance of $12,560, which was most of the purchase price. Because there was no
    evidence Alex ever repaid her, the trial judge found that Alex owed Leslie
    $12,560.

[7]

The appellant argues that the trial judge erred
    in failing to find that repayment of the loan was time-barred under the
Limitations
    Act, 2002
, S.O. 2002, c. 24. This proceeding was started as an application
    and did not have full pleadings, but it was open to counsel to raise the
    application of the
Limitations Act
as a defence to Leslies claim. The
    trial judge cannot be criticized for failing to respond to a defence that was
    not raised by counsel. This ground of appeal is dismissed.

The Costs Award

[8]

The major issue in this appeal is the trial
    judges award of substantial indemnity costs against the appellants.

[9]

The appellants make three arguments. They argue,
    first, that the trial judges discretionary award of substantial indemnity
    costs against Alex, Shawn, David and Lori was wrong in principle. We agree with
    the trial judge that the behaviour of the appellants warranted substantial
    indemnity costs in light of Alexs misconduct. That misconduct was worthy of
    sanction under the principles in
Davies v. Clarington
    (Municipality)
, 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 28-31 and 40.
    This misconduct was supported by the sibling appellants.

[10]

The trial judge noted that Alex disputed the
    authenticity of a document, signed by Jeanne and Alex as a supplement to their separation
    agreement, disposing of some assets. Its authenticity was a significant issue
    at trial and consumed time and resources. Each appellant contributed to the
    allegation that the agreement was not authentic. The trial judge noted, in his
    costs award:

[Alex] was fully supported in this position by
    Shawn, David and Lori Hayward. In addition to giving evidence in support of it
    being not authentic they also provided their own evidence claiming that it was
    fraudulent. At one point in the trial, Shawn Hayward testified that Leslie
    Hayward could have tampered with her mother's computer. Leslie Hayward claimed
    that she could not have manipulated some of the emails.

[11]

Alex and the siblings supporting him brought a motion
    on short notice to introduce an expert report regarding the authenticity of
    this document. This forced the estate to hire an expert to prove that the agreement
    was authentic. The trial judge relied on the estates expert evidence and Kellys
    testimony to find that the agreement was authentic. The implication is that
    Alex had advanced an argument that he knew to be false, which is surely good
    evidence of egregious misconduct.

[12]

The trial judge also found that Alex was
    tenacious and intransigent; that he signed the agreement, even though he
    claimed otherwise; and that he denied that Leslie paid for the Montana tractor,
    even though the cheque proved she did.

[13]

The appellants second costs argument is that
    the siblings should have been considered by the trial judge to be non-parties
    without any responsibility for costs. We reject this argument.

[14]

There is no error in the trial judges
    disposition of this issue. He found:

The Court finds that Shawn, David and Lori
    Hayward were in this together with Alex Hayward. The Court rejects [their]
    argument that the costs should be only as against Alex Hayward. The Court finds
    that Shawn, David and Lori Hayward actively participated with their father in
    these proceedings and costs consequences should apply to all of them.

On this basis, the Court finds that the
    interests of Alex Hayward are not separate from Shawn, David and Lori Hayward.

[15]

The appellants third costs argument is that the
    trial judge erred in finding
that Leslie, as trustee,
    was entitled to recover her full indemnity costs out of the estate, including
    those costs related to disputes over items solely between her and Alex. Counsel
    for the estate agrees. The parties concurred in suggesting that the range of
    costs attributable to Leslies personal disputes warrant a reduction of between
    $5,000 and $10,000 from the total award to her. We fix the amount of the
    deduction at $7,500.

[16]

Accordingly, we vary the trial judges costs
    award by reducing the remainder of costs he ordered to be paid by the estate to
    the estate trustee of $16,030.23 by $7,500. We leave the disposition of costs
    on the Malibu loan/gift issue remitted to trial including the original trial to
    the trial judge hearing the re-trial; we recognize that doing so benefits
    Leslie and the estate somewhat since the trial judges costs disposition
    includes an amount on account of this issue but it appears most efficient to
    proceed in this manner. The costs appeal is otherwise dismissed and the
    respective obligations to pay forthwith come into force.

[17]

The costs of this appeal are payable forthwith
    by the appellants to the respondents in the reduced amount of $15,000 inclusive
    of costs and disbursements, to reflect the appellants partial success.

P.
    Lauwers J.A.

Gary
    Trotter J.A.

B.
    Zarnett J.A.


