Justice Mulligan of the Ontario Court of Superior Justice recently released his reasons in the matter of Danilova v Nikityuk, which he described as a “clear case of elder abuse”.[1]

FACTS

The defendants in the action were an elderly Russian couple (the “Defendants”), who were sponsored to immigrate to Canada by the wife’s daughter and her husband (the “Plaintiffs”). The elderly Russian couple began to contemplate and discuss immigration with their daughter and son-in-law in 2004 which led to the parties signing a Sponsorship Agreement (the “Agreement”) which sets out the parties’ obligations to what is now the Department of Immigration, Refugees and Citizenship Canada (“IRCC”).[2]

The Agreement, which remained in effect for a ten year period upon the couple’s arrival in Canada,[3] took effect in 2008. The couple’s decision to immigrate was precipitated by an “inducement e-mail” (the “E-mail”) sent to them by their son-in-law in January 2008.[4] The E-mail contained budget projections for their new life in Canada and constituted an offer from the daughter and son-in-law which the couple accepted.[5] The offer constituted of the couple’s liquidated assets, estimated at CAD$200,000, to be placed into a bank account that would accumulate 10% interest per year. This E-mail Offer would allow the Defendants to live in a one bedroom apartment and would cover the majority of their expenses, with minimal support from the Plaintiffs.

The Agreement stated that due to the Defendants’ ages, they were not expected to look for a job or care for themselves.[6] The Agreement further stipulated that the Plaintiffs would be in breach of the Agreement as it related to their obligations to IRCC if the Defendants became reliant on social assistance during the life of the Agreement.[7] The Plaintiffs did not disclose this consequence to the Defendants.

The Defendants, who spoke no English, placed their trust in the Plaintiffs when it came to their money and sponsorship to Canada. Just prior to their immigration to Canada, the Defendants liquidated their assets and sent CAD$260,842.71 (the “brought capital”) to their daughter, as per the E-mail.[8] Upon receipt of the funds, the son-in-law proceeded to invest all of the Defendants’ life savings in the stock market, which he lost a few days later as a result of a stock market decline. He did he not discuss with the Defendants that he intended to invest their money in the stock market, and he did not notify them of their loss.[9]

Upon their arrival in Canada, the Defendants’ finances were controlled, managed and overseen by their daughter, who took them to a Russian-speaking lawyer where they executed general Powers of Attorney in her favour.[10] The Plaintiffs gave the Defendants credit cards for their use, but the Defendants’ daughter required them to give her two days’ notice if they wanted to withdraw cash from the account that received their Russian pensions. Additionally, in order to assist with an audit he was undergoing by CRA in 2009, the son-in-law had the elderly couple sign a “loan agreement” which indicated that the brought capital was a loan, despite the capital already having been lost.[11] The audit was prompted by his use of the interest on the Defendants’ loan and the stock market losses to generate tax losses.[12]

Shortly after their arrival in Canada, the Defendants moved into a home (the “Home”) that they believed to be purchased by the Plaintiffs with the money they had sent from Russia, and that they believed they owned.[13] In reality, only $51,640 of their money was put towards the down payment, while the remainder was financed by a mortgage taken out by the Plaintiffs.[14] Another $15,000 from the couples’ liquidated Russian bank accounts that they brought with them when they entered Canada, was used to furnish the Home.[15]

Approximately one year later, the Plaintiffs moved into the Home with the Defendants because they could not afford to support the Defendants and themselves on the son-in-law’s salary alone. While the parties’ relationship remained strong for some time, it ultimately deteriorated and resulted in the Defendants moving out on October 17, 2011, and into social housing based on allegations of elder abuse.[16]

By October 17, 2011, the Defendants had developed a safety plan and had been pre-approved for social housing. They achieved this with the help of a settlement counsellor at their local YMCA, whom they met through their participation in an ESL course there.

In this action, the Plaintiffs made out claims of defamation, inducing breach of contract (the Agreement), negligence and conspiracy against the elderly couple, the YMCA and the settlement counsellor. In response, the elderly couple counterclaimed against the Plaintiffs for damages for fraud and misrepresentation, conversion, unjust enrichment, breach of contract and for breach of fiduciary duty.

REASONS

In reviewing the evidence before him, Justice Mulligan determined that the Plaintiffs failed to demonstrate any of the claims they advanced on a balance of probabilities and as a result, the court dismissed all of the claims against the elderly couple, the settlement counsellor and the YMCA.

In addressing the Plaintiffs’ claims, the court held that the elderly couple Defendants had not breached the Agreement, as they were entitled to seek social assistance in the event of abuse. The court went even further in addressing the Defendants’ counter-claims and held that, in fact, the Plaintiffs had breached the Agreement. Justice Mulligan found that this occurred in two ways: 1) the Plaintiffs failed to honour their offer to provide 10% annual interest on their brought capital to balance their budget, which had been accepted by the elderly couple; and 2) the actions of the Plaintiffs’ caused the breach of the contract.[17]

In addressing the remainder of the elderly couple Defendants’ counter-claims, the court commendably employed several equitable doctrines in order to grant them significant relief.

In terms of the brought capital, the court found that the doctrine of resulting trust applied. Contrary to the allegations of the Plaintiffs—that the money represented a gift—the court agreed with the Defendants that the transferred sum was a loan pursuant to the Agreement and E-mail.

The court also held that the Defendants were entitled based on a constructive trust claim against the Home to $66,640, in respect of their money that was used for the down-payment and to furnish the house.

Moreover, the court held that in receiving the elderly couples’ brought capital, in using part of the funds to purchase a house in their own name, in preparing a loan agreement after the funds were no longer available to support such a loan, in acting as their Power of Attorney for their monthly pensions, and in preparing and filing tax returns on their behalf, the Plaintiffs assumed the role of fiduciaries to the elderly couple. Justice Mulligan found that this duty was breached by the Plaintiffs in using the Defendants’ funds for their own benefit.[18] Additionally, the court found that the Plaintiffs had committed civil fraud in making the false representation that the elderly couple’s capital could earn 10% per year.[19]

With that, the court awarded the Defendants $210,678, plus the $66,640 constructive trust award against the Home, for a total sum of $277,318 representing their brought capital. The court awarded $97,321 signifying the promised 10% interest on their brought capital, less the amount of support paid by the Plaintiffs after the Defendants moved out. Additionally, Justice Mulligan awarded the elderly couple $25,000 in punitive damages. The court has yet to receive cost submissions from the parties.[20]

The particularly notable aspect of this case is Justice Mulligan’s reasons for awarding $25,000 in punitive damages against the Plaintiffs. He expressly condemned their “reprehensible conduct [that] deserves to deter not only [the Plaintiffs], but others who may consider similar misconduct in the future if they gain control of the finances of elderly and vulnerable people”[21].

The court additionally commented that the elderly couple “[was] financially abused from the time they arrived in Canada. They wanted to live separately. That was the plan in the inducement e-mail. Social housing was not their first choice, but it seemed to them that it became their only choice. The [Plaintiffs] discouraged any talk of social housing and for good reason. They knew that if the [Defendants] moved into social housing, it would constitute a breach of the Agreement with the Government of Canada. The continual discussion about moving out and social housing became an irritant and led to emotional arguments. I am satisfied that there was a physical altercation as well…But even if I am wrong on that finding, it is clear that financial and emotional abuse had already occurred.”[22]

CONCLUSION

The court’s condemnation of the elder abuse that occurred in this case and Justice Mulligan’s use of contract, tort and equitable law doctrines to provide the Defendants with relief represents a step forward in the protection of the elderly who are vulnerable to abuse. Hopefully, this case will act as an incentive for the elderly and vulnerable who are victims of abuse to seek relief in civil courts.