Doing the Right Thing the Wrong Way

Tarantino et al. v. Galvano, 2017 ONSC 3535^[1] is an example of well intentional behaviour that does not comply with the law both technically and substantively. But the “bad” behaviour ultimately is resolved by the Court in what seems to be a common sense and fair result.

The defendant in the case was a daughter who lived with her elderly mother and had been granted Powers of Attorney for both Property and Personal Care by her mother. The mother’s Will named both her living daughter and another daughter as co-executrixes and Trustees of her Will and split her estate between the two of them. In the event of the death of a daughter, that daughter’s children, her grandchildren, would inherit the daughters share.

The live in daughter claimed that a few years before the death of her mother, she and her mother had entered into an oral agreement that she would look after her mother at home until she died and in exchange her mother would transfer her 80% interest in her home to her along with a significant portion of pension income.

Shortly thereafter, the mother as diagnosed with Alzheimer’s disease and her family doctor concluded she was unable to look after her own affairs. Acting on the advice of a lawyer, the live in daughter entered into a written agreement between herself and her mother whereby her mother transferred her interest in the house to her and three-quarters of her pension income in exchange for the live in daughter acting as her caregiver for the duration of her lifetime. The live in daughter signed the agreement on her own behalf and on behalf of her mother using the Power of Attorney for Property.

Thereafter the live in daughter closed down her own businesses and provided her mother with what the Court found to be a high standard of care at her home until her death, 4 or 5 years later.

The plaintiffs in the case were the nieces of the live in daughter, the daughters of her sister who had died before the death of the mother. They alleged that the defendant had not acted properly and that the live in daughter had breached her fiduciary duty to her mother and her duties under the Substitute Decisions Act (Ontario)^[2]. From their perspective, the aunt had taken their grandmother’s house and three-quarters of her pension income improperly and thereby deprived them of a substantial portion of their grandmother’s estate to which they were entitled to one-half.

The Court made a number of findings including:

1. The original oral agreement between the living daughter and mother was not corroborated, so the defendant was precluded under the Evidence Act (Ontario)^[3] from asserting that a subsequent written agreement merely reduced the oral agreement to writing after commencement of performance under that oral agreement.
2. The defendant had breached her fiduciary duty and her duties under the Substitute Decisions Act (Ontario)^[4] by entering into the written agreement using the Power of Attorney and signing on behalf of her mother. There was no justification under the terms of the Power of Attorney for Property or under the Substitute Decisions Act (Ontario) which would allow the transfer of title to the house.
3. Accordingly, the transfer of title to the house should be set aside and the defendant was required to account for her expenditures made in respect to her mother’s care. While it was not necessary ultimately to make such a finding, the Court did decide that the defendant was entitled to relief under the Substitute Decisions Act (Ontario)^[5] of liability for committing a breach of fiduciary duty as she had acted honestly, reasonably and diligently. Further, she had also acted with legal advice and with the belief that she was honouring the terms of the agreement.
4. Finally, the live in daughter defendant was entitled to relief on a quantum meruit basis (a fairness remedy compensating a person for services provided) because she had provided high quality care to her mother. The Court calculated compensation for the excellent care provided for over 4 years and in difficult circumstances using an equivalent personal care worker comparison and concluded that the value of the care provided was to be valued at Two Hundred and Seventy Three Thousand and Thirty Nine Dollars and Fifty Four Cents ($273,039.54).

At the end of the day the deceased’s mother’s 80% interest in the house was restored to being part of her estate, while her live in daughter was compensated for the care that she provided to her mother notwithstanding the fact that the agreement to provide such care was legally invalid.

The lessons of this story are that family arrangements can sometimes run a foul the exact principles of fiduciary duties, contract law and evidence. However, the law can be used applying equitable principles to sort out a well-intentioned mess.

[1] 2017 ONSC 3535
[2] Substitute Decisions Act, 1992 SO 1992, c 30.
[3] Evidence Act, RSO 1990, c E.23.
[4] Supra Note 2
[5] Supra Note 2