Aragona v. Aragona – An Update

In March, I commented on the Ontario Superior Court of Ontario decision in Aragona v. Aragona, where a son of a woman suffering from Alzheimer’s disease was appointed in 1999 as guardian over her property.  Among other abuses, the guardian was found to have withdrawn and deposited to his own bank account approximately $122,000 without documentation or a reasonable explanation for the withdrawals.  The guardian was also unable to explain most of the expenditures for certain legal fees paid for with his mother’s funds. 

The Court found the guardian’s behaviour to be abusive, stating:

“I am constrained to say that the conduct of Beniamino Aragona has been shocking.  He has literally helped himself to many thousands of dollars from his mother’s estate, at a time when his mother had Alzheimer’s disease and was unable to look after her own affairs.  Beniamino Aragona treated the money in the estate as if it was his own.”

After taking into account the improper withdrawals, adding the legal fees improperly charged to the mother, and deducting amounts properly charged to the estate, the Court ordered the son to pay to the estate a total of over $132,000.

The Court likewise denied the son’s request for compensation in its entirety.  In addition, the Court rejected the guardian’s claim for costs of the application to pass accounts and in fact ordered that the guardian pay the costs of the passing personally.

The case was appealed and a decision rendered by the Ontario Court of Appeal on September 26, 2012.  The Court of Appeal upheld the lower court decision with the exception of a small contingent allowance for recovery of some legal fees paid in the interest of the estate.

One ground of appeal raised by the guardian was that he had not received a fair hearing because the respondent, his brother, had taken the position through counsel that he was not challenging disbursements on the application to pass accounts.  While arguments were raised about whether the disbursements were or were not challenged, the Court found that, regardless, the fiduciary obligation of a guardian of property under s. 32 of the Substitute Decisions Act, 1992 to act “with honesty and due care and attention” required a guardian to be in a position at all times to prove the legitimacy of disbursements made on behalf of the estate.  Therefore, regardless of whether objections have been raised in a passing of accounts, a guardian (and a trustee or executor) should remain diligent at all times regarding its accounting and always be prepared to justify accounts.

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