DATE: 20010717 DOCKET: M27126/M27068/M27069

COURT OF APPEAL FOR ONTARIO

RE:

WILLIAM OSLER McARTHUR (Appellant/Plaintiff) v. JUDY DARLENE McARTHUR, NANCY LORRAINE McARTHUR and JUDY DARLENE McARTHUR and NANCY LORRAINE McARTHUR AS ESTATE TRUSTEES (Respondents/Defendants) – and - JUDY DARLENE McARTHUR, NANCY LORRAINE McARTHUR and JUDY DARLENE McARTHUR and NANCY LORRAINE McARTHUR AS ESTATE TRUSTEES (Respondents/Plaintiffs by Counterclaim) v. WILLIAM OSLER McARTHUR and BONNIE LEE McARTHUR (Appellants/Defendants by Counterclaim)

BEFORE:

OSBORNE A.C.J.O.

COUNSEL:

Ronald Carr for the appellants

Rod McLeod and M. Jasmine Sweatman for the respondents

HEARD:

March 20, 2001

On appeal from the orders of Jenkins J. dated November 24, 2000 and January 10, 2001.

E N D O R S E M E N T

Background

[1] This appeal concerns the estate of William James McArthur (the “deceased”), who died on April 16 1996. The deceased left a will executed November 1992 which appointed the respondents (plaintiffs by cross-appeal), his two great-nieces Judy and Nancy McArthur ("Judy" and "Nancy"), joint estate trustees and sole beneficiaries. The appellant (defendant by counterclaim) William Osler is the deceased’s nephew and Judy and Nancy McArthur's father. Bonnie McArthur ("Bonnie") is William Osler's spouse, and also a defendant by counterclaim. I will refer to William Osler McArthur as the appellant.

[2] The deceased’s estate includes three farm properties known as Lot 2, Lot 6 and Lot 9. Prior to his death, the deceased undertook an estate plan to carry out his intention to "skip a generation" and leave his estate to his great-nieces. Part of that plan was to execute his will. The other part was to effect inter vivos transfers of the three farm properties to his great-nieces. In May 1993 the deceased transferred Lots 2 and 9 to his great-nieces as joint tenants retaining a life-interest to himself and a subsequent life-interest to his nephew, the appellant. In 1994, he transferred Lot 6 to Judy and Nancy, retaining a life-interest for himself.

[3] There is a fourth property belonging to the estate known as Lot 1. It was purchased by the appellant and the deceased in 1966. In March 1992 the deceased transferred his one-half interest in Lot 1 to the appellant for nominal consideration. In October 1992 the appellant transferred his whole interest in the property to his daughter Judy.

[4] The estate also includes farm equipment and cattle (the "Inventory") and a GIC. The estate’s probate value was $190,000.

[5] In February 1994, after receiving independent legal advice, the appellant quitclaimed his life interest in Lots 2 and 9. In 1996 he commenced proceedings against the estate and his daughters, attacking the inter vivos transfers and challenging the 1992 will. During this time, the appellant retained and discharged several solicitors who undertook numerous interlocutory proceedings in his 1996 action.

[6] By March 1997, the appellant’s then-solicitors commenced this action in June 1997. It was consolidated with the 1996 action by a consent order. This action alleges, in part, that:

(i) the inter vivos transfers were invalid;

(ii) the 1992 will was a fraud, forged by the solicitor who prepared it;

(iii) the 1992 will was invalid on the grounds of undue influence, lack of testamentary capacity and improper execution; and

(iv) that the farm equipment and cattle belonged to William Osler.

[7] Pending resolution of this litigation, Judy and Nancy offered to let their father, the appellant, live in the house on Lot 1 rent and tax-free. The appellant accepted, and this arrangement was subsequently confirmed by two orders of Justice Stong, dated October 7 and 27, 1997.

[8] The action eventually proceeded to discoveries. A trial before Jenkins J. was scheduled and then adjourned because the appellant retained new counsel. The trial was rescheduled for May, 1999 and lasted 12 days. During that time, only the examination and partial cross-examination of the first witness, the appellant, took place. The trial was adjourned and scheduled to continue in January 2000. In the interim, the trial judge heard and granted a motion by the appellant’s counsel to be removed from the record. For a short period, the appellant represented himself. Eventually, he retained new counsel, Mr. Levitan.

[9] The trial continued before Jenkins J. in January 2000. On January 10, 2000 counsel advised the trial judge that all of the issues had been resolved. Minutes of Compromise and Settlement (the "Minutes") were signed by all parties on January 10, 2000 and approved by the trial judge on January 12, 2000. The Minutes provide that:

(i) the inter vivos transfers of Lots 1, 2, 6 and 9 are valid;

(ii) the 1992 will is valid;

(iii) the estate is deemed to own the Inventory;

(iv) a General Security Agreement was granted over the collateral;

(iv) the estate would obtain a severance approval of a two acre retirement lot and transfer the retirement lot to the appellant; this lot is Lot 1 to which I have previously referred.

(v) following severance approval, the estate would pay the appellant $140,000.00 for the purpose of building a house on lot 1 by November 15, 2000 [later extended by Jenkins J. to January 15, 2001];

(vii) the inventory would be returned to the estate;

(viii) the estate would sell all of the inventory and the proceeds would be held in trust. The obligation to pay the $140,000.00 would be a first charge on the proceeds received, unless otherwise paid.

(ix) the appellant would grant vacant possession to the estate of Lot 1 by January 10, 2001 [later extended by Jenkins J. to March 10, 2001].

[10] On January 12, 2000, after the parties had already approved the Minutes, Mr. Levitan stated in open court that he wanted to put ten items on the record. Item 5 related to the appellant's use of the retirement lot, and in particular his desire to build a barn on the lot and to farm the land. The excerpt from the transcript at page nine reads:

Number five, that this severed portion obviously be a severed lot that the municipality would allow for septic tank and there has to be access and the ability to have a well on it, and agricultural. In other words, if they want to put a little barn there to put a few animals in.

[11] However, because of its zoning provisions, such use was not permitted by the Township.

[12] The above-noted excerpt from the transcript was not incorporated into the Minutes.

[13] After the Minutes were signed and approved, the estate obtained severance approval for the appellant’s two acre retirement lot. The Committee of Adjustment issued its approval March 10, 2000. That same day the appellant wrote a letter to the Chief Building Official of the Township applying for permission to construct farm buildings on the lot. That permission was denied. On the basis of the appellant’s letter, the Township appealed the Committee of Adjustment's approval of the severance to the Ontario Municipal Board (the "OMB"). The appellant then withdrew his request to construct the farm buildings, and the Township withdrew its appeal to the OMB. The estate obtained the required Lot 1 final severance approval on July 12, 2000.

[14] On June 29, 2000 the respondents brought a motion before Jenkins J. to obtain direction from the court regarding the settlement. After outlining the problem surrounding the granting of the severance outlined above, counsel for the defendants made the following submission:

Now in our submission, Your Honour, it was abundantly plain January 12, 2000 that what William O. was getting as step one in this settlement was a retirement lot. I am very quick to concede that upon the finalization of the settlement Mr. Levitan, counsel for the Plaintiff, and I will leave this to him to explain to you, if I may, raised a number of issues that we recorded and subsequently had typed up and passed between counsel as potential issues of clarification and that one of the issues was the question of the extent to which as the occupant of a retirement lot the plaintiff may have some limited ability, whether it was a small barn or whatever it might be. However that may be, what is clear to me is by no stretch of the imagination could the Plaintiff or anyone else have had any honest belief that he was entitled to erect the buildings that he proposed in the letter of March 10.

The letter of March 10, in my respectful submission, was a flagrant contempt of Your Honour’s order approving the Minutes of Settlement. …

Thankfully there is hope for a way out of this. By negotiations with the solicitor for the Town of Bradford, West Gwillimbury we were able to get a commitment from him to advise his client, the Town of Bradford, West Gwillimbury that in the event that William O. McArthur and Bonnie McArthur signed here today in court a letter to the appropriate town officials withdrawing without equivocation the March 10 letter then the town would abandon its appeal to the Ontario Municipal Board …

[15] At that appearance, the appellant signed a letter unequivocally withdrawing his application for permission to use his retirement lot for agricultural purposes. He contends that he signed the letter under a form of duress. Be that as it may, the appellant did sign the letter and took no steps to set aside the settlement. Instead, he proceeded as if the settlement was intact, although he managed to breach many of its terms.

[16] Following receipt of the final severance approval, the estate went about complying with the conditions of the Minutes. According to the Minutes, part of the estate’s obligation was to conduct a proper inventory of estate assets, and to move toward a sale of those assets.

[17] On October 26, 2000, Mr. Levitan resigned as the appellant’s counsel. On November 24, 2000, Jenkins J. was asked to give directions further to the provisions of the Minutes. After hearing submissions from counsel for the respondents and from the appellant, who was then representing himself, Jenkins J. confirmed the settlement as modified on consent on June 29, 2000. He also ordered that “the remaining inventory items” were to be sold at a public auction to be held on April 13, 2001.

[18] On November 27, 2000 Judy and Nancy arrived at the property to retrieve the inventory. At this point they discovered that the appellant had sold the cattle belonging to the estate for $1.00 a head.

[19] On January 10, 2001, the respondents sought further directions from Jenkins J. The appellant and his wife did not appear on this date, despite the fact that they were aware of it as a result of discussions in court on November 24, 2000. On the return of the motion, Jenkins J. made a number of orders, including that the appellant and his wife were to provide vacant possession of Lot 1 by March 10, 2001. This vacant possession date was subsequently extended on consent. Jenkins J. also found that the appellant had wrongfully sold the cattle. He valued the cattle and corresponding costs at $77,776.22. He found that there had been partial payment of that amount by the estate with respect to the $140,000.00 to be paid to William Osler. Further to the Minutes, he ordered the estate to pay the balance of $62,223.78 into Court by January 15, 2001, which it did. He also found that pursuant to the Minutes, the appellant and Bonnie McArthur must vacate Lot 1 by March 10, 2001.

The Appeals

[20] On December 28, 2000, the appellant served a Notice of Appeal of Jenkins J.'s November 24, 2000 order (the "first appeal"), which set a schedule for the pick-up of the estate inventory and ordered an auction of that inventory. On February 9, the appellant served a Notice of Appeal of Jenkins J.'s January 10, 2001 order (the "second appeal"), where Jenkins J. found that there had been partial payment for $77,776.22 by the estate to the appellant and that the appellant and Bonnie McArthur were to vacate Lot 1 by March 10, 2001.

[21] On February 27, 2001, new counsel for the appellant requested an agreement that the estate not take steps to enforce the March 10, 2001 vacant possession date, in order to provide him with a "reasonable opportunity" to put his materials together. On March 5, 2001 the estate agreed not to take steps to enforce the date, pending the appeal and on certain terms as set out in the Notice of Cross-Motion.

The Motions

[22] On March 20, 2001, I heard the following motions:

• A motion by the appellant to consolidate the two appeals.

• A motion by the appellant to extend the time to perfect the appeal.

• A motion by the appellant to stay Jenkins J.’s January 2001 order.

• A motion by the appellant to stay the appeal pending disposition of his motion to set aside the January 12, 2000 settlement.

• A cross-motion by Judy and Nancy for an order permitting the auction to proceed on April 13, 2001.

• A cross-motion by Judy and Nancy for an order imposing a timetable for the perfecting and hearing of the appeal and for an order expediting the hearing of the appeal.

• A cross-motion by Judy and Nancy for an order for security for costs.

[23] At the conclusion of counsel’s submissions, with the exception of the security for costs motion, I disposed of each motion in brief oral reasons. I advised counsel that I would provide written reasons explaining my disposition of the various motions. I reserved judgment on Judy and Nancy’s cross-motion for security for costs.

[24] I granted the appellant’s motion to consolidate the two appeals from Jenkins J.’s orders. This order was made on consent.

[25] I granted the appellant’s motion to extend the time to perfect the consolidated appeal. I am advised by the Court of Appeal office that the appeal was not perfected by the prescribed date. I assume the appellant and his wife do no intend to proceed with the appeal.

[26] I dismissed the appellant’s motions to stay Jenkins J.’s January 2001 order. It is clear that what the appellant really sought was not a stay of this order pending his appeal. Rather, the appellant was seeking a stay of this order pending the disposition of his motion (not yet commenced) to set aside the settlement, further to which both the November 2000 and January 2001 orders were issued.

[27] In RJR-MacDonald v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, the Supreme Court summarized its earlier decision in Manitoba (Attorney General) v. Metropolitan Stores Ltd., 1987 CanLII 79 (SCC), [1987] 1 S.C.R. 110, which adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction:

First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

[28] On a motion to stay execution of an order of a trial judge, where no obvious error has been made, courts are reluctant to grant a stay. See Bijowski v. Caicco (1985), 1985 CanLII 4996 (ON CA), 45 R.F.L. (2d) 266 (Ont. C.A.); Lee v. Kim, [1999] O.J. No. 1252 (Ont. Ct. Gen. Div.). I see no obvious error here.

[29] I accept that the threshold to be met on the preliminary assessment of the merits of the case is low. At one time, an applicant needed to demonstrate a strong, prima facie case. See American Cyanamid Co. v. Ethicon Ltd., 1975 CanLII 2598 (FC), [1975] A.C. 396. Now, it will generally suffice if the applicant can show that there is a serious issue to be tried.

[30] After reviewing the merits of his appeal, I am not satisfied that there is a serious issue to be tried. There is no obvious error in the order under appeal. It simply provides direction to the parties on the implementation of the binding settlement entered into by them, including the appellant while he was represented by competent counsel.

[31] Even if there is a serious issue to be tried, the second test in an application for a stay is whether irreparable harm will be suffered unless the stay is granted. According to the Supreme Court, the only issue to be decided at this stage is:

… whether a refusal to grant release could so adversely affect the applicants’ own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.

"Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. RJR-MacDonald, supra at paragraphs 58-59.

[32] In this case, the $140,000.00 payment to the appellant by the estate is for the purpose of building a house on the retirement lot. In my opinion, the appellant will not suffer irreparable harm if the stay is not granted. Any harm in this regard can be quantified in money terms.

[33] As for the date for vacant possession, there is no question that eviction from one's home is a serious matter that can cause considerable disruption. This is particularly true for the appellant and his wife, who have two school-age children, and who say that they require a farming property in order to carry on their livelihood. However, as of March 20, 2001, the date this motion was heard, the appellant had over 14 months notice of the date for vacant possession. In the event that he is successful on appeal, the enforcement of Jenkins J.'s order for vacant possession can be compensated by monetary damages.

[34] The third test to be applied on a stay application requires a balancing to determine which of the two parties will suffer greater harm from the granting or refusal of the stay sought. The factors to be considered in assessing what is referred to as the "balance of convenience" will vary in each case. In this case, the $140,000.00 payment by the estate was ordered so that the appellant could build a house on the retirement lot.

[35] It seems to me that the balance of convenience lies with the respondents, and is not offset by any harm the appellant may suffer if the relief is denied. The motion to stay is therefore denied.

[36] I denied the appellant’s motion to stay the appeal pending disposition of the motion to set aside the settlement. I am not convinced that there is a serious question to be tried with regard to the settlement. As of March 20, 2001, the appellant has not moved to set aside the settlement. He claims that he executed the Minutes in the belief that a severance could not be obtained for a lot in excess of two acres in size, and that he could carry on his livelihood as a farmer on the property. He claims that his counsel, Mr. Levitan, made that clear to Jenkins J. when he clarified the terms and conditions of the settlement on January 12, 2000.

[37] Yet, the "clarification" that he claims Mr. Levitan put on the record was not part of the Minutes; nor was it binding on the estate. Indeed, at an appearance before Jenkins J. on June 29, 2000, Mr. Levitan conceded that it was only “the hope” of the McArthurs that they would be able to farm the land. In any case, his dealings with the municipal corporation show that he clearly understood what he could and could not do on Lot 1.

[38] Even if there are grounds to set aside the settlement, a proposition which I do not accept, compliance with the orders of Jenkins J. would not cause the appellant irreparable harm. The appellant appeals Jenkins J.'s November 24, 2000 order, which set a schedule for the pick-up of the estate inventory and ordered an auction of that inventory. He also appeals Jenkins J.'s January 10, 2001 order, where Jenkins J. found that there had been partial payment for $77,776.22 by the estate to the appellant and ordered vacant possession of Lot 1. If his appeal is successful on the merits, any harm suffered by the appellant can be quantified in money terms, and cured by payment of the $77,776.22 and damages for the auctioned inventory.

[39] The balance of convenience does not lie in the appellant’s favour. This matter ought to have been brought to a head over one year ago. At that time, the estate offered the appellant a two acre retirement lot and funds to built a home on that lot. In January 2000, the appellant, in open court and represented by experienced, competent counsel, accepted the estate’s offer and signed the Minutes of Compromise and Settlement.

[40] Now, over one year after he accepted the deal and signed the Minutes, incorporated into an order by Jenkins J., the appellant moves to set aside the settlement. He does so after interfering with the estate’s ability to conduct a proper inventory and move toward a sale of the estate’s assets, by selling assets belonging to the estate, contrary to a court order. The evidence the appellant seeks to rely on to set aside the settlement is that a two acre retirement lot is zoned residential, and that it cannot be zoned for agricultural use. He has known about this problem for more than one year.

[41] This litigation has been costly and time-consuming. The estate is insolvent. The respondents have had to borrow large amounts of money to fund the estate administration and defend the litigation. Each property owned by the estate is fully encumbered.

[42] In my opinion, the balance of convenience lies with the respondents, and is not offset by the harm the appellants say they may suffer if relief is denied.

[43] I allowed Judy and Nancy’s cross-motion for an order permitting the auction to proceed April 13, 2001.

[44] On November 24, 2001, pursuant to Minutes agreed to and signed by the parties on January 12, 2001, Jenkins J. set a schedule for pick-up of the estate inventory and ordered an auction of that inventory. The respondents in their factum claim that not to allow the auction to proceed will cause irreparable harm to the estate:

...the costs thrown away; the cost to cancel the advertisements; the insolvent Estate will not be able to maximize the proceeds from selling the Inventory; the incurring of needless and further costs, which will not be recovered; the renewal of insurance on the equipment which presently expires on 10 May 2001; holding up the administration of the Estate; the negative effect the cancellation will have on the attendance, bids and proceeds of any rescheduled auction; the permanent withdrawal by Mr. Allen of his auctioneer services due to concerns about his reputation as an auctioneer in this area; and the near impossible position the Estate will be put in trying to find another suitable auctioneer willing to undertake this auction.

[45] In my view, the estate should continue complying with the Minutes by proceeding with the auction ordered by Jenkins J. I affirmed the date for April 13, 2001. The proceeds of the auction shall be held in trust in accordance with Jenkins J.’s order. In the event that the appellant is successful on appeal, any items over which he claims ownership that are sold can be compensated for by damages.

[46] I allowed Judy and Nancy's cross-motion for an order imposing a timetable for the perfecting and hearing of the appeal and for an order expediting the hearing of the appeal. This latter order is now moot since the appellant has not perfected his appeal in accordance with my March 20, 2001 order. If the consolidated appeal has not been dismissed by the Registrar, I expect that it will be dismissed shortly.

[47] At the motions hearing on March 20, 2001, I reserved judgment on the cross-motion for an order for security for costs. Since that time, counsel for the parties have appeared before me on another motion in the same proceeding. Counsel advised me that appeal was not perfected in accordance with my March 20, 2001 order. Therefore, the issue of security for costs is moot.

[48] The respondents are entitled to costs of the various motions heard on March 20, 2001, except for the security for costs motion. There will be no costs of that motion. The costs are payable forthwith.

“C.A. Osborne A.C.J.O.”