Court File and Parties
COURT FILE NO.: CV-13-2155-00 DATE: 2023 04 12
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
THE ESTATE OF SULOCHANA SHANTHAKUMAR by her estate trustee, SANTHA KUMAR MYLABATHULA Plaintiff
P. Callahan, Counsel for the Plaintiff
- and -
ROYAL BANK OF CANADA, SIVA GURRAPPADI, WILLIAM SYKES, USHA RADHAKRISHAN, SHEILA WILSON, ATTORNEY GENERAL OF CANADA, PHILIP CARVER, ALBERT YANG and THE ATTORNEY GENERAL FOR THE PROVINCE OF ONTARIO Defendants
G. Bowden, Counsel for RBC Defendants K. Watt, Counsel for RCMP D. Yiokaris and N. Manwani, Counsel for LAWPRO
HEARD: February 13th and 27th and March 10th, 2023.
REASONS FOR JUDGMENT
LEMAY J
[1] I have been informally case-managing this action since November of 2020 when the parties first appeared before me. There has been a considerable history of litigation in this matter, as can be seen from a number of previous decisions that I have made in this matter. See, for example 2022 ONSC 4438 and 2022 ONSC 3787.
[2] This action has been ongoing since 2014. The litigation has become more complicated because the Plaintiff, Ms. Shanthakumar, passed away in the summer of 2021. She was originally diagnosed with dementia in 2018. The Plaintiff’s passing has resulted in numerous additional issues being raised, some of which were before me in this hearing. Given these complexities, I raised the issue of whether this matter needed to be formally put into case-management at a hearing on February 27th, 2023. On February 28th, 2023, Ricchetti R.S.J. formally appointed me as the case management judge.
[3] The complexities with the passing of the Plaintiff flow from the transfer of property from the Plaintiff’s Estate. Specifically, the Plaintiff was the sole owner of a property in Richmond Hill, Ontario (“the Property”), and the legal title was in her name. The Estate Trustee is the Plaintiff’s husband, Mr. Santha Kumar Mylabathula. At the time of the Plaintiff’s passing in the summer of 2021, she and her husband lived in the Property.
[4] The Property was transferred to the Plaintiff’s estate after her death. Sometime in the spring of last year, the property was transferred again from the Plaintiff’s estate to Mr. Mylabathula’s name.
[5] Shortly after the Plaintiff’s death, her Estate became responsible for costs awards totaling $16,500.00. Since the summer of 2021, there have been additional costs awards made against the Estate. They remain unpaid to this date. RBC had writs that were outstanding for these costs awards when the property was transferred from the Estate to Mr. Mylabathula.
[6] As a result, RBC is seeking to require Mr. Mylabathula to pass the Estate’s accounts. RBC is also arguing that the transfer of the property from the Estate to Mr. Mylabathula was improper. Based on this alleged impropriety, RBC is bringing a motion in June of this year to have the action stayed. In advance of that motion, RBC is seeking the disclosure of Mr. Mylabathula’s lawyer’s file from the real estate transaction transferring the Property to his name.
[7] The motion to disclose this file was supposed to proceed before me on February 13th, 2023. At the outset of that motion, counsel for the Estate raised for the first time a claim that I should recuse myself from hearing this motion because I had been involved in settlement discussions. This claim of recusal was ultimately advanced by way of a motion. I required the parties to file motion records on that motion.
[8] I addressed all three of these issues, being the motion to recuse myself from hearing the privilege motion, the privilege motion itself and the question of whether the Estate should pass its accounts at the hearing on March 10th, 2023. I dismissed the motion to recuse myself for written reasons to follow and reserved on the other two issues.
[9] For the reasons that follow, I have determined that Mr. Mylabathula has waived the privilege associated with his lawyer’s real estate file. I have also determined that RBC has the standing to ask that Mr. Mylabathula pass the Estate’s accounts and that those accounts are to be passed. I have also set out my reasons for dismissing the motion to recuse myself below.
[10] The Estate proceeding has been started as a separate application in Court File No. CV-23-0031-ES. I have not yet amended the style of cause above, but this decision applies to both this claim and that application. We will discuss this issue at the next hearing.
Background
a) The Parties and the Claims
[11] The Plaintiff, named as Sulochana Shanthakumar in the Statement of Claim, was employed as a nurse in North York when this action was commenced in 2013. In 2010, she had sought to borrow money from the Defendant the Royal Bank of Canada (“RBC”) for a plastics business. Her husband, Mr. Mylabathula was also involved in the loan application although he is not a party to this action in his personal capacity.
[12] The Defendant, RBC is one of Canada’s Schedule 1 banks. The Defendants Siva Gurrappadi, William Sykes, Usha Radhakrishan and Sheila Wilson were all RBC employees at the time. I will refer to them collectively as RBC or the RBC Defendants.
[13] The Defendants Phillip Carver and Albert Yang were both employed by the Royal Canadian Mounted Police (“RCMP”). They are both being sued alongside the Attorney General for Canada. I will refer to them as the RCMP Defendants.
[14] I am now going to provide a brief summary of the underlying case in this action. I am making no findings in respect of the underlying facts in this case, and nothing in these reasons should be taken as a finding of fact that binds either a summary judgment motions judge or a trial judge.
[15] The claims in this case arise from an attempt that was made by the Plaintiff and her husband in 2010 to obtain financing from RBC to start a plastics business. Mr. Mylabathula allegedly had a previous banking relationship with RBC that was terminated as a result of allegedly fraudulent conduct.
[16] In any event, staff at RBC became suspicious of the loan request being made by the Plaintiff and conducted further investigations. These investigations led to criminal charges being laid by the RCMP. The Plaintiff’s husband was arrested at the same time. The criminal charges against the Plaintiff and her husband were ultimately stayed.
[17] In 2012, the Plaintiff commenced an action for, inter alia, negligence, malicious prosecution, breaches of statutory duties and breaches of the Plaintiff’s Charter rights. The action languished for a considerable period of time. Indeed, the action was administratively dismissed for delay. That decision was set aside by Fowler Byrne J. on October 26th, 2018 and the action was allowed to proceed.
[18] There were some other modest steps taken in 2019 to move the action forward, but the action was not significantly advanced in that year either. This case first came before me in November of 2020, when the Plaintiff brought a motion to strike the Defendants’ pleadings. At that time, I determined that the motion should not proceed and that the matter should be timetabled. Discoveries had not yet taken place at that point.
[19] As part of the timetable, I required the lawyers to advise me as to what motions needed to be heard. The only motion that was identified, other than potentially one to deal with undertakings flowing from discoveries, was a motion brought by the Defendants to remove the Plaintiff’s litigation guardian. At this point, the Plaintiff had developed dementia and a litigation guardian was required. I should note that this motion did not require leave to be brought, as it was proposed by RBC prior to me providing my directions in November of 2020.
[20] The motion to remove the litigation guardian was heard by Trimble J. in May of 2021, and a decision was rendered removing the litigation guardian on July 14th, 2021 (2021 ONSC 4966). This decision was appealed to the Divisional Court. The Plaintiff died on August 4th, 2021. The Plaintiff’s counsel advised the Court of that fact in early September of 2021. An order to continue was granted.
[21] In the meantime, on August 25th, 2021, Trimble J. ordered costs payable by the Plaintiff to the RBC Defendants in the sum of $15,000.00 inclusive of HST and disbursements. The Plaintiff had died by that point and, as a result, the costs became the responsibility of the Estate. I also made a costs award on October 13th, 2021 against the Plaintiff in the sum of $1,500.00 inclusive of HST and disbursements. I have reviewed my records and can confirm that my judicial assistant sent the costs award that I made to all parties.
b) The Events Between the Plaintiff’s Death and the Privilege Motion
[22] In September of 2021, I convened a further case conference. As a result of the fact that the Plaintiff had died, the pre-trial that I had ordered for October of 2021 could not proceed. In addition, discoveries had to be postponed to November of 2021.
[23] Those discoveries were held, and there were outstanding undertakings and refusals. I had originally scheduled those before another judge, but they were then adjourned by that judge to be heard at a long motion date. In order to keep the matter moving along, I determined that I would hear the undertakings motion primarily in writing as there was a summary judgment motion scheduled for October of 2022 and the undertakings and refusals needed to be dealt with prior to the summary judgment motion. I released a decision on that issue in the spring of 2022.
[24] I also scheduled a case conference for September 7th, 2022. At that time, I confirmed with the parties that they were ready for the October, 2022 summary judgment motion. I also addressed a further request from RBC for leave to bring a motion to have the Plaintiff’s action stayed. The basis for this motion was RBC’s claim that Mr. Mylabahtula had transferred the Property from the Estate to himself in a fraudulent manner without paying the costs awards.
[25] On September 7th, 2022, I granted leave to bring the motion to stay the Plaintiff’s action, and it is scheduled for June 14th, 2023. I set a timetable for the preparation of materials. I also placed a CPL on the Property that Mr. Mylabathula can vary by bringing a motion before me on short notice.
[26] The summary judgment motion did not proceed in October of 2022 because counsel for RBC did not file the confirmation of motion form. All of the materials for this motion have been filed by all parties, and the motion is now scheduled for the fall of 2023.
c) The Privilege Motion
[27] On December 15th, 2022, the parties appeared before me for a case conference. The privilege over the real estate lawyer’s file in respect of the transfer of the property was discussed, and Mr. Callahan confirmed that his client was not prepared to waive the privilege over this file. Mr. Bowden confirmed that his clients were continuing to seek disclosure of the file for use in the motion to stay.
[28] At that time, I determined that RBC should be entitled to proceed with a motion to address the question of whether that file was privileged. I timetabled the motion and set a date for it of either February 7th, 2023 or February 13th, 2023. The parties chose the February 13th, 2023 date.
[29] The law firm that the Plaintiff used for the real estate transaction was represented by LawPRO counsel throughout the discussion of privilege. Counsel did not take a position on the merits of the motion. However, he did advise that he was seeking some specific directions in the event that I did grant RBC’s motion.
[30] RBC filed its materials by way of a letter sent on December 22nd, 2022. In support of its position on the privilege motion, RBC referenced the materials that they had filed on the motion to strike the Plaintiff’s claim. On December 29th, 2022, I received correspondence from counsel for the Plaintiff in which he acknowledged receipt of RBC’s letter of December 22nd, 2022 and took the position that RBC had not filed any motion materials on the privilege motion.
[31] In the meantime, I had set a case conference date of January 13th, 2023 for the purposes of discussing what should happen with RBC’s motion to require the Estate to pass its accounts. I also determined that we would discuss the issue of RBC’s materials at that hearing.
[32] At a case conference on January 13th, 2023, I confirmed for the Plaintiff that RBC had referenced materials that had previously been filed with the Court in its December 22nd, 2022 submissions. I ruled that those were the materials that were before the Court on the privilege motion as well.
[33] In the hearing on January 13th, 2023, Mr. Callahan also raised the issue of whether having the Estate Trustee pay the outstanding costs orders would resolve the privilege motion and would permit him to bring a motion to have the CPL that I had placed on the property removed. Mr. Bowden advised that he would still be moving forward with the privilege motion (and the underlying motion to stay) and would oppose the lifting of the CPL even if the costs were paid.
[34] I provided the Plaintiff with an extension to file the submissions on the privilege motion and convened a further hearing on January 20th, 2023. At the January 20th, 2023 hearing, I was advised by counsel for the Plaintiff that his client would not be paying the costs into Court. I directed that the motion was to proceed on February 13th, 2023 and that copies of materials were to be provided to my assistant in advance.
[35] At the commencement of the hearing on February 13th, 2023, Mr. Callahan raised, for the first time, the issue of whether I should recuse myself from hearing the privilege motion. I originally intended to summarily dismiss that request, but determined that I would permit materials to be filed. I also advised the parties that recordings were made of all of the case conferences and that I expected the Plaintiff, at its’ expense, to obtain the transcripts from those case conferences.
[36] I advised the parties that the argument would take place on February 27th, 2023. However, I was assigned to hear a criminal matter that day and did not have the time to hear the complete argument. As a result, I addressed the issues of whether the formal appointment of a case management judge was necessary. All parties agreed that this case would benefit from case management, and I advised them that I would be recommending to Ricchetti R.S.J. that a case management judge be appointed.
[37] I also advised the parties that I was minded to deal with the question of whether RBC could require the Estate Trustee to pass the Estate’s accounts based on written submissions. There was no issue with my proposal to determine this issue on the basis of written submissions. Finally, I advised the parties that I might be providing them with additional cases for their consideration and scheduled a hearing for March 10th, 2023.
[38] I advised the parties that, if I determined the recusal motion, I expected them to be prepared to argue the privilege motion. As I noted above, I was appointed as case management judge by Ricchetti R.S.J. on February 28th, 2023. All issues were argued before me on March 10th, 2023, as I dismissed the recusal motion after hearing argument from Plaintiff’s counsel. I then heard argument on the remaining issues.
Issues
[39] The issues that I must determine on this motion are as follows:
a) Whether I should recuse myself from hearing the motion on privilege. b) Whether Mr. Mylabathula has waived privilege over the real estate lawyer’s file. c) Whether the Estate should be required to pass its accounts.
[40] I will deal with each issue in turn.
Issue #1 - Should I Recuse Myself?
[41] No.
[42] The Plaintiff argues that I should recuse myself from hearing this motion because I heard settlement discussions, that those discussions were obviously privileged and that my hearing those discussions was prejudicial to the Plaintiff’s position on the privilege motion. None of these arguments has any merit.
[43] I start with the question of whether I heard settlement discussions in the course of the appearance on January 13th, 2023. It is instructive to reproduce relevant excerpts from the transcript from the hearing that day. Those excerpts are as follows:
MR. CALLAHAN: Okay, if that's the position, then, then I, I see the roadmap and I can follow that. Thank you for clarifying. And, and if I might just interject, though, Your Honour, I think I might be able to help us shortcut this somewhat. As you know, this is -- the, the debts that Mr. Bowden is pursuing, which is really the basis of his motion in February, are debts owing by the estate. And at the current moment, the estate has no income -- no assets. And so, so that's, that's the situation. Mr. Mylabathula is on a fixed income, and he doesn't have access to a lot of assets himself. He had no ability to pay these cost awards or reimburse the estate, rather, so that the estate could pay. He's been able to, though, I've just learned, scrounge up some funds from other sources in order to reimburse the estate so that those costs orders can be satisfied. And then, with regards to why the cost orders are paid, at the time the property transferred, we will take that issue up with Mr. Mylabathula's solicitor, because it was wholly the solicitor's fault for, for that occurring. And I had thought that the solicitor might correct the problem by now, but he's taken no steps to do so. And so, Mr. Mylabathula has had to go out and try and raise the funds, and then we'll take up the, the, the argument with his lawyer, separately. So, if, if that's the case, then, then it seems to me that might resolve this issue that Mr. Bowden seems determined to pursue, which is, is, at this point, caused them to, to, to deliver materials for, I think, three separate motions for, for reasons I'm not fully comprehending, but it seems to me that might resolve it. However....
THE COURT: The materials that you've got....
MR. CALLAHAN: I have....
THE COURT: Sorry, the materials you've got in front of -- that I have, the first is this motion on privilege. The second is passing the estate's account. And the reason for that, if I understood it correctly, and I may have been mistaken, but if I understood it correctly, the reason for the passing of the estate's account, was because you were taking the position, Mr. Callahan, that some of the information that Mr. Bowden was looking for, he could -- that, that he wasn't entitled to it, and that Mr. Bowden said, well, as a creditor, I'm entitled to have the estate pass the accounts. Did I miss that?
MR. CALLAHAN: No, no. But, but yeah, I think that's the position he took. I think you're right about that. That's how I saw it. But I guess what I'm saying is, Mr. Mylabathula, in an effort to try and just simply move forward with this, is going to now pay the cost awards on behalf of the estate, which means that the bank would no longer be a creditor of the estate. And Mr. Bowden would no longer have any entitlement to a passing of account, nor would he need it because he's collected the monies that he says we're owing to the bank. Nor would he need to, to bring the motion to examine the, the real estate solicitor for Mr. Mylabathula, nor does he need to bring a motion for the waiver of privilege in respect of the real estate lawyer's file. So I, I, I put that out there now, except with one, with one exception, one additional thing, rather. The monies will be paid, but in response, and at the same time, we will need an order lifting the writs, vacating the certificate of pending litigation, and removing the order from title that restricts the, the, the encumbrancing the title in any way, because those were only there to secure these, these cost awards that are owning by the estate. So, I, I'm happy to -- I don't know if Your Honour might be prepared to speak to that now or whether or not you would prefer us to, to bring a motion to that effect?
THE COURT: Well, in the, in the circumstances -- in the circumstances, it would seem to me that -- have you communicated this to Mr. Callahan -- sorry, Mr. Callahan, have you communicated this to Mr. Bowden before this moment?
MR. CALLAHAN: No, I haven't.
THE COURT: That's -- okay.
MR. CALLAHAN: The reason I haven’t is [indiscernible]....
THE COURT: It doesn't....
MR. CALLAHAN: 'Cause I didn't have the....
THE COURT: It doesn't matter why you weren't, the fact is that you weren't, and so, in the circumstances -- and that's understandable, settlements can sometimes come up quickly and things -- litigation is a dynamic landscape. But it seems to me that, Mr. Bowden, you may want to take instructions on this.
MR. BOWDEN: Your Honour, I can give my position now.
THE COURT: All right.
MR. BOWDEN: If that's okay?
THE COURT: What's your position?
MR. BOWDEN: Yes. My position is this. The application before the court is brought by RBC, a creditor. In response, all we -- we have no responding materials. All we have is a debtor estate where the executor says, yeah, I'm going to pay. That's, that's all we have here. Please, cancel that passing of accounts, because I'm going to pay. My friend asked Your Honour to -- order the discharge of writs so that -- 'cause he claims his client is going to pay. The document registered on title should be lifted because there's a bare promise to pay. And I do not agree that orders should simply be lifted and risk [sic] discharged, when a debtor says oh, yes, I'm going to pay. This is the same debtor who vehemently maintained he was impecunious, that the estate had no funds, and who had committed, what appears to be, a fraudulent conveyance to avoid his obligations to his creditors.
THE COURT: Mr....
MR. BOWDEN: So, on the record before -- yes, Your Honour.
[44] Plaintiff’s counsel outlined a basis upon which the Plaintiff was prepared to resolve the motion that was before the Court. However, the fact that a judge heard a party’s position on settlement of an issue within the litigation does not, without more, disqualify the judge from hearing the merits of a particular motion.
[45] Counsel for the Plaintiff pointed to the fact that pre-trial judges do not hear either trials or summary judgment motions. The prohibition on pre-trial judges hearing the trial is found in the Rules of Civil Procedure (Rule 50.10(1)). The Court of Appeal confirmed that this prohibition extends to motions for summary judgment: RBC v. Hussain 2016 ONCA 637, (2016) 133 O.R. (3d) 355.
[46] Counsel for the Plaintiff argues that there is a “long-held principle of civil practice in Ontario that where a Judge engages in without prejudice settlement discussions with the parties, that Judge ought not thereafter to decide the merits of the issues in dispute and which were the topic of the settlement discussions.” Therefore, counsel argues that I should apply the same principle in this case and recuse myself. I disagree for two reasons.
[47] First, Rule 50.10(2) specifically gives trial judges the ability to hear and conduct some conferences. That rule states:
50.10(2) Subrule (1) does not prevent a judge before whom a proceeding has been called for hearing from holding a conference either before or during the hearing to consider any matter that may assist in the just, most expeditious and least expensive disposition of the proceeding without disqualifying himself or herself from presiding at the hearing.
[48] This rule is written broadly and allows judges to inquire into issues that will permit the just, most expeditious and least expensive disposition of the proceeding. Once counsel for the Plaintiff suggested that his client might be willing to pay the costs, the Rules encourage me to explore that issue without losing jurisdiction to consider the merits of the motion if necessary.
[49] Second, this matter is being case managed. As Corbett J. noted in People’s Trust Company v. Atas 2018 ONSC 58 (at para. 248), case management judges have a responsibility to actively manage the proceedings before them. In my view, engaging in exploring the issue raised by Plaintiff’s counsel was something that I was obliged to do.
[50] Counsel for the Plaintiff also argued that these were privileged communications, and that the Court should have been aware of that fact the moment Mr. Callahan began to speak. It certainly was not clear to me that these were privileged communications. I viewed them as counsel for the Plaintiff explaining his client’s position in open Court.
[51] More specifically, we were advised that the Plaintiff might be seeking leave to bring another motion to have the CPL removed from the property. That is a motion that only the Regional Senior Justice or I could give leave to bring. Further, given the complexities that have arisen since the death of the Plaintiff it seemed appropriate to explore the possibility that both the motion before the Court and other litigation might not be necessary. I did so by discussing with the parties whether the RBC Defendants would accept this position (they were not prepared to accept it) and whether the Plaintiff was willing to pay the monies into Court given RBC’s position on their motion.
[52] The Plaintiff’s argument on this point raises a further issue that I should address. I reject counsel’s assertion that his comments made in a case management hearing were immediately privileged and immediately triggered an obligation for me to recuse myself from hearing the motion. Acceding to counsel’s submission would permit any lawyer to arrive at a case management or motion hearing, disclose a settlement position on the record and then insist that the judge who had been assigned to hear the motion had to recuse themselves. If adopted, counsel’s submission would permit parties to engage in both adjudicator shopping and delay tactics.
[53] Even if these were settlement discussions, I see no basis for concluding that they were privileged. Counsel for the Plaintiff raised these issues in open Court during a case conference. There was no notice given to any of the parties that these issues were going to be discussed in advance of the hearing and no basis to claim that these discussions were covered by settlement privilege.
[54] Counsel for the Plaintiff argues that these settlement discussions disclosed information that, if disclosed to the judge hearing the motion, would prejudice Mr. Mylabathula’s position. I asked counsel for the Plaintiff whether the alleged prejudice flowed from any of the following: the fact that his client was impecunious; the fact that he was prepared to pay the money; or the fact that he had collected the money to pay the costs.
[55] I was advised that my knowledge of this information was not particularly prejudicial to the Plaintiff. I agree with that position. The fact that a party was prepared to pay the costs into Court does not change the issues I have to determine or affect my view of them.
[56] Instead, counsel for the Plaintiff directed me to his comments that Mr. Mylabathula was going to hold his real estate solicitor responsible for the fact that the liens had not been found when the property was transferred from the Estate to him personally. That passage is set out at paragraph 43 above.
[57] The problem with the assertion that my knowledge of this information would be prejudicial is that it had already been disclosed to the Court in one of Mr. Mylabathula’s Affidavits. Specifically, in his Affidavit dated December 15th, 2022, Mr. Mylabathula stated:
The RBC defendants assert, without evidence, that I acted fraudulently in transferring the property out of the Estate's name in order to put it out of reach of the Estate's creditors. This allegation is false.
I am also not aware of any steps taken by the RBC defendants to seek relief against me, or the Estate, under the Fraudulent Conveyances Act.
To be clear, at no time did I do anything improper with respect to the Estate, or with respect to the administration of the Estate, or at any other time, as alleged by the RBC defendants.
Prior to the death of my wife, I had never acted as an Estate Trustee at any time in my life. For that reason, on or about May, 2022, I retained the law firm LD Law LLP to administer the Estate on my behalf, as I was required to do as Executor of the Estate. I do not know anything whatsoever about how Estate matters are to be handled, and that is why I retained experienced legal counsel to take care of it for me. I relied 100% on the experience and expertise of LD Law LLP in all matters pertaining to the administration of the Estate.
As far as I am aware, LD Law LLP handled the administration of the Estate, and they rendered an account for their services, which I paid on behalf of the Estate.
[58] In addition, on the examination in aid of execution (held on August 15th, 2022), the following questions and answers were given:
Q. Mr. Mylabathula, you’ve just said under oath that you started the process with a lawyer in March, to transfer the home. Will you produce documents that would be in the lawyer’s file, to prove that this is true?
R/F MR. CALLAHAN: No.
MR. BOWDEN: And the reason for that, Counsel?
MR. CALLAHAN: Because it’s privileged information.
MR. BOWDEN: Oh, I see. All right.
BY MR. BOWDEN:
Q. Now, do you see where it says in the document, and I quote, “This transaction is not subject to any writs of execution. Execution searches completed on June 10th, 2022.” Do you see that, sir?
A. Listen, I see that. Why - - I ask you one stupid question, if you have money owed by the estate, my wife’s estate, why did you not register you - - your claim against the property before I do all these damn things? Why didn’t you do that? Why didn’t you register your execution and before I transferred the property March - - March 29, before. You didn’t do your work. I don’t know. Somebody owe you money? You always claim money. I don’t know which one is true, which one is not true.
Q. So Mr. Mylabathula, if we’d filed a writ before the transfer, you would have let the estate pay the judgment. Is that what you - - -
A. That’s correct. That’s correct.
Q. Okay. Well, the thing is, sir, we did file a - - -
A. That’s your fault. That’s your fault. You did not do that.
Q. Well, actually, sir, we did. I’m showing you a writ filed on - - -
A. You did not. My lawyer checked everything. There’s no writs - - writs on the property at that time. If there’s any writs there, they will not transfer the property. There’s nothing there.
Q. Except there was. I’m showing it to you now. Do you see a document called Issue and File a Writ, Writ Details on the screen? Mr. Mylabathula?
A. I’m not answering the question. I already told you.
[59] These paragraphs make it clear that Mr. Mylabathula is blaming the real estate solicitors for the failure to find and/or pay the liens when the property was transferred. These paragraphs are consistent with the position that Mr. Mylabathula would likely adopt on RBC’s motion to stay. Indeed, the motion to stay would be more difficult for Mr. Mylabathula to resist if he was found to be responsible for transferring the property while the writs were on it. In any event, however, the issue of Mr. Mylabathula’s position on who was responsible for missing the writs has been well-known in this litigation for a long period of time.
[60] Based on the foregoing, I concluded that there was no “long standing principle” that prevented me from hearing this motion and that there would be no prejudice to the Plaintiff if I heard the motion. The only other way that I could be disqualified from hearing the motion is if there was a reasonable apprehension of bias.
[61] The test for a reasonable apprehension of bias is whether an informed person, viewing the matter realistically and practically, and having thought the matter through, would conclude that it is more likely than not that the judge, whether consciously or unconsciously, would not decide fairly. Wewaykum Indian Band v. Canada 2003 SCC 45, [2003] 2 S.C.R. 259 at para. 60, Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369 at 394. This standard is a high one to meet. R. v. Grant 2016 ONCA 639.
[62] I have set out the reasons why I have concluded that the Plaintiff is not prejudiced by the information that I have heard. There is no basis in this case to find a reasonable apprehension of bias on my part. I am fortified in that conclusion by the fact that the test for recusal of a judge who is case managing a matter is even higher. Cosentino v. Dominaco Developments 2018 ONSC 4092 at paras. 46 to 51. Indeed, for the reasons set out at paragraph 52, I am of the view that recusing myself from this motion would raise legitimate concerns for the Defendants.
[63] Finally, before leaving this issue, I should address one further question. In his oral submissions on February 13th, 2023, Mr. Callahan stated that the reason he had failed to raise the recusal issue before the hearing was because he was surprised that I was hearing the motion. I reject this submission. It does not fit with the way that this case has been litigated for three reasons:
a) During the course of the case conferences on both January 13th and January 20th, 2023, I made it clear that I would be hearing the motion on privilege. b) The practice in this matter has been for me to advise the parties when someone else will be hearing a motion. For example, the parties were advised that the summary judgment motion that was scheduled for October of 2022 would be heard by another judge. I gave the parties no indication that it would be anyone other than me who would be hearing the motion. c) The parties were directed to provide my judicial assistant with copies of all of the materials as well as uploading them to CaseLines. If I was not hearing the motion, there would have been no need for this direction.
[64] In addition, I note that Mr. Callahan has practiced in this jurisdiction for a long time. His claim that he thought that, since the February 13th, 2023 hearing was at 10:00 a.m., it would be heard by a different judge is without foundation. Regular civil motions in Brampton are heard on Tuesdays, Thursdays and Fridays and they have been for many years. February 13th, 2023 was a Monday. Given all the other points I have set out in the previous paragraph, it should have been clear to Mr. Callahan that I was hearing the motion.
[65] I am not, at this point, concluding that the purpose of the recusal motion was to delay this matter. However, I would remind the parties that I have outlined the consequences for each side of delays in this matter. For clarity, those consequences are as follows. If the Defendants delay this matter, they may very well lose the right to bring the motions that are scheduled later this year. If the Plaintiff delays this matter, then the matter could very well be struck from the trial list and require leave to be put back on the trial list.
Issue #2 - Whether Mr. Mylabathula Has Waived Privilege Over the Estate File?
[66] In considering this issue, there are two key principles that must guide my reasoning, as follows:
a) Solicitor-client privilege is one of the cornerstones of our legal system and should be protected unless the protection is waived. R. v. Campbell, [1999] 1 S.C.R. 565 at para. 49. b) The burden of proving a waiver of solicitor-client privilege in this case rests on the Defendants. Guelph (City) v. Super Blue Box Recycling Corp., (2004) 2 C.P.C. (6th) 276 (ONSC).
[67] Privilege may be waived either expressly or implicitly. In his argument, counsel for the Plaintiff stated that Mr. Mylabathula had never said that he was waiving privilege. While this argument assists in determining that there has been no direct waiver of privilege, it is not the test for determining whether privilege has been implicitly waived.
[68] The circumstances in which privilege would be waived implicitly were described in Feigin v. Alter 2022 ONSC 192, at para. 19:
[19] Implied (or implicit) waiver may arise by disclosure or reliance. The former involves, most often, the disclosure of a document (or documents), advertently or inadvertently, in respect to which the party claiming the privilege resists its later use in the case or resists the disclosure of the entire subject matter of the communications relating to it. Waiver by reliance involves party pleading or saying they are relying upon a privileged communication substantively relevant to their legal position in a case. Not uncommonly this is what may be described as “state of mind” pleading. Mere disclosure of the receipt of, and reliance upon, legal advice is not sufficient to give rise to an implied waiver of privilege. But where a party directly raises reliance on legal advice to explain their conduct, privilege is implicitly waived.
[69] Counsel for the Plaintiff relies upon the decision in Spicer v. Spicer 2015 ONSC 4175 for the proposition that the mere receipt of and reliance upon legal advice is not sufficient to give rise to a waiver of privilege. I accept that proposition. However, in Spicer, Woodley J. goes on to say (at para. 19) that “the issue is whether the Respondent has opened an inquiry into whether the legal advice effected his state of mind, thereby waiving privilege in that legal advice.”
[70] I have reproduced excerpts from both Mr. Mylabathula’s Affidavit and from his testimony on the Examination in Aid of Execution at paragraphs 57 and 58 above. Those paragraphs clearly demonstrate that Mr. Mylabathula’s position is that the transfer of the property was done by his lawyer, he relied upon his lawyer in ensuring that the transfer was proper and that it was his lawyer’s fault that the writs were missed.
[71] The Courts will not permit a party to say that they got legal advice to make a particular decision and then hide behind privilege in order to avoid disclosure of that advice. As Woodley J. noted in Spicer (at para. 10):
[10] The reasoning behind waiver by implication and rejection of partial disclosure is that a party cannot be allowed to disclose only that portion of communication that could advance their position but mislead the other party. As such, full disclosure will be ordered in circumstances where fairness requires it.
[72] In this case, Mr. Mylabathula claims that he was acting in accordance with the advice of counsel and was relying on the lawyer to make sure that the transaction was properly done. It is not open to Mr. Mylabathula to then claim privilege over the lawyer’s file. This would be partial disclosure that could have the effect of misleading the Defendants. As a result, I conclude that the privilege over the lawyer’s file on the real estate transactions has been waived.
[73] Having concluded that privilege over the contents of the real estate file in respect of the transfer of the Property has been waived, the question then becomes what remedies should be ordered. I note that counsel for the law firm that acted on the transfer of the Property sought several orders if I determined that privilege was waived. All of those Orders seem reasonable to me.
[74] First, I appreciate that counsel for the law firm has prepared a brief of the file for review. I am of the view that it is appropriate for me to review that file before requiring the file to be turned over to counsel for the Defendants. That way, I can ensure that there is nothing in those documents beyond what is intended to be caught by my Order. I understand that this brief has already been provided to the Plaintiff and/or his counsel. To that end, if counsel for the Plaintiff has any issues with documents in that brief, they are to advise me in writing in a letter of not more than two pages. That letter is to be uploaded to CaseLines and shared with counsel for the law firm, but not (at this stage) with counsel for RBC or the other defendants and is to be provided within seven (7) calendar days of the release of these reasons.
[75] Second, an examination of both Mr. Mylabathula (as Estate Trustee) and of his counsel is necessary. However, strict time limits should be put on those examinations, as follows:
a) The Plaintiff shall have no more than one (1) hour to examine the Law Firm’s representative. b) The Defendants shall have combined no more than one (1) hour to examine the Law Firm’s representative. To be clear this time can be allocated between the Defendants at their discretion. c) The Defendants shall have no more than two (2) hours to examine the Estate Trustee. Again, to be clear this time can be allocated between the Defendants at their discretion.
[76] One further requirement should be imposed on the parties. They are to agree on the dates, location and method for the examinations within seven (7) calendar days of the release of these reasons. If the parties cannot agree in that time period, I will fix the dates for the examination. My expectation is that the examinations will be completed within thirty (30) calendar days of the release of these reasons. I would remind the parties as to my comments on the issue of delay set out at paragraph to come.
Issue #3 - Can RBC Require the Estate Trustee to Pass the Accounts?
[77] Yes.
[78] I start with the question of why I determined that this Application should be heard by me in the context of this action. I am of the view that the passing of accounts is directly related to the matters that have to be determined in this case for three reasons. First, other than RBC, there do not appear to be any other creditors of the Estate. I am also given to understand that there are no beneficiaries of the Estate other than Mr. Mylabathula. Therefore, the parties that may be affected by the passing of accounts are all involved in the litigation I am case-managing.
[79] Second, the issue of the passing of accounts is clearly relevant to the Motion to Stay the action. If the Estate had no assets other than the Property, then the manner in which the Property was dealt with by the Estate Trustee may be relevant to the motion to stay. If the Estate did have other assets, then the question of how those assets were dealt with may also be relevant to the issues raised on the Motion to Stay.
[80] Finally, I am firmly of the view that, if I do not supervise the litigation between these parties, there is a real prospect that it will not proceed in an expeditious manner and will unnecessarily consume additional Court resources. The passing of accounts issue can be more simply and expeditiously dealt with before me. That conclusion is also supported by the fact that I am familiar with the underlying litigation.
[81] This brings me to the question of whether I should order the Estate’s accounts to be passed. Counsel for the Plaintiff argues that I should not order the accounts passed because Rules 74.15 and 75.06 of the Rules of Civil Procedure R.R.O. 1990 Reg. 194 permit a person with a financial interests in an estate to apply for directions.
[82] Counsel for the Plaintiff argues that the Courts have narrowly construed what constitutes a financial interest. In particular, counsel relied upon Weidenfield v. Parikh-Shah 2016 ONSC 7330. In that case, the Court stated (at para 20):
In the book MacDonnell Sheard and Hull Probate Practice, Fifth Edition, the authors state (at p. 38):
Rule 75.06(2) requires that the application for directions and the motion for directions must be served on all persons appearing to have a financial interest in the estate or as the court directs…It would seem that unless the court otherwise directs, “persons having a financial interest in the estate” would be those persons named as beneficiaries in the will in question and all previous wills and those entitled on an intestacy.
[83] Counsel for the Plaintiff argues that this reasoning has been adopted in Magnotta v. Magnotta 2020 ONSC 316 and flows from the finding in Belz v. Mernick Estate (2000), 42 C.P.C. (4th) 357. Neither the cases nor the Estates Act supports the Plaintiff’s position.
[84] I start with the Belz decision. In that case, the Court was concerned with the application of a judgment creditor who had a judgment against one of the beneficiaries of the Estate. In dismissing the claim of the judgment creditor that they had an interest in the Estate, the Court stated (at para. 14):
14 While it is true that the applicant as a judgment creditor may have a "financial interest" in the estate of Belle Mernick I think that interest can be more precisely expressed as an interest in the beneficial interest which Stephen Mernick has in the estate of Belle Mernick. It is a derivative interest arising out of the judgment debt but is not an interest in the estate in any sense similar to the "financial interest" referred to in rule 75.06 .(1).
[85] Belz is distinguishable on the basis that, in this case, RBC does have a judgment against the Estate. It is owed costs of at least $16,500.00 by the Estate and has been owed those costs since before the Property was transferred. The decisions in both HSBC Bank Canada v. Capponi Estate and Weidenfield, supra can be distinguished from the case I have before me on the same basis.
[86] This brings me to the Magnotta decision. In that case, the Court stated (at para. 41):
[41] Rule 75 is not intended to be used by creditors to secure recovery of assets within an estate: Weidenfield, at para. 19. Granting creditors, who have a variety of means to enforce their rights against the estate of a deceased person, standing pursuant to Rule 75 introduces unnecessary complexity into estate procedures: Belz v. Mernick Estate, [2000] O.J. No. 542, at para. 16.
[87] While I appreciate the possibility that allowing creditors of an estate to force the passing of accounts may add complexity to Estates proceedings, I am of the view that the complexities are significantly reduced when the creditors have an interest that has crystallized. In those circumstances, the creditors may have a financial interest in the estate. Indeed, in Magnotta, the court acknowledges as much (see para. 42). The view that creditors of the Estate are in a different position than creditors of a beneficiary also finds support in paragraph 16 of Belz.
[88] In addition, section 50 of the Estates Act needs to be considered. It states:
50 (1) An executor or an administrator shall not be required by any court to render an account of the property of the deceased, otherwise than by an inventory thereof, unless at the instance or on behalf of some person interested in such property or of a creditor of the deceased, nor is an executor or administrator otherwise compellable to account before any judge. R.S.O. 1990, c. E.21, s. 50 (1).
[89] This section specifically refers to the creditors of an estate having the ability to require the estate to render an accounting. This section supports the view that a creditor with an interest in the estate itself that has crystallized may seek a passing of accounts. In my view, it would be difficult to read the phrase “financial interest” in any narrower way. Had the legislature intended to limit the passing of accounts to beneficiaries, the language in section 50 would have been different.
[90] For these reasons, I conclude that RBC has the jurisdiction to seek a passing of accounts in this case. I am also of the view that one should be ordered as it may assist the Court in assessing, inter alia, what should be done with the litigation before the Court itself.
[91] I am also of the view that the passing of accounts should be done on terms, as follows:
a) The accounts of the Estate are to be passed for the period ending February 28th, 2023 within forty-five (45) days of the date of this Order. At this point, I am not prepared to permit any additional time as I am of the view that the accounts for this Estate should be relatively straightforward. b) The cost of passing the accounts should be borne, in the first instance, by the Estate and by the Estate Trustee. The question of who should ultimately bear those costs will be resolved in any ongoing litigation. c) I retain jurisdiction to deal with any other issues that flow from the passing of accounts.
[92] This brings me to the issue of the passing of the accounts for the Plaintiff while she was under a disability. This request was made in RBC’s application, and the Plaintiff strenuously opposed it on the basis that it was beyond what I had granted leave and that RBC did not have standing to bring this request.
[93] I note that there was no reply to this issue set out in RBC’s reply factum. At this point, I do not see any basis to require those accounts to be passed. If there is a basis for renewing this request, I will consider it in due course.
Conclusion and Costs
[94] For the foregoing reasons, I am ordering as follows:
a) The motion requesting that I recuse myself from hearing the privilege motion is dismissed. b) The privilege over the file of the Law Firm has been waived by the trustee, and the documents in that file are disclosable to the Defendants in this action to the extent that they cover the transfer of the Property to the Estate and then onwards to Mr. Mylabathula. c) Prior to disclosing the contents of the file, it is to be provided to me for review so that I can ensure that all of the documents in the file are covered by the order in paragraph (b). d) Any objection to the disclosure of the documents described in paragraph (c) by the Plaintiff is to be provided to me by way of a letter, copied only to counsel for the Law Firm, within seven (7) calendar days of the release of these reasons. e) The Plaintiff shall have no more than one (1) hour to examine the Law Firm’s representative. f) The Defendants shall have combined no more than one (1) hour to examine the Law Firm’s representative. To be clear this time can be allocated between the Defendants at their discretion. g) The Defendants shall have no more than two (2) hours to examine the Estate Trustee. Again, to be clear this time can be allocated between the Defendants at their discretion. h) The dates and other details for the examinations set out in paragraphs (d), (e) and (f) are to be agreed to by the parties within seven (7) calendar days of the release of these reasons. i) The accounts of the Estate are to be passed by the Estate trustee on terms that follow. j) The accounts of the Estate are to be passed for the period ending February 28th, 2023 within forty-five (45) days of the date of this Order. At this point, I am not prepared to permit any additional time as I am of the view that the accounts for this Estate should be relatively straightforward. k) The cost of passing the accounts should be borne, in the first instance, by the Estate and by the Estate Trustee. The question of who should ultimately bear those costs will be resolved in any ongoing litigation.
[95] This brings me to the subject of costs. The parties are encouraged to agree on costs. Failing agreement, costs submissions of no more than three (3) single-spaced pages for all of the matters that I have determined in this proceeding are to be served and filed by the Defendants within ten (10) calendar days of today’s date.
[96] If counsel for the Law Firm is seeking costs, he is to provide submissions of no more than two (2) single-spaced pages within the same timeline as set out in the previous paragraph. If counsel is not seeking costs, I would ask for a letter confirming that fact.
[97] The Plaintiff shall have a further ten (10) calendar days in which to provide any reply costs submissions for all of the matters that I have determined. Those costs submissions are not to exceed four (4) single-spaced pages.
[98] Submissions are to be uploaded to CaseLines and provided to my judicial assistant. Both methods of filing are required.
[99] The time for costs extensions cannot be extended, even on consent, without my leave. If I do not receive costs submissions in accordance with this timeline, then there will be no costs.
LEMAY J
Released: April 12, 2023