Court File and Parties
COURT FILE NO.: CV-2300695726-00ES DATE: 20240105 SUPERIOR COURT OF JUSTICE – ONTARIO (ESTATES LIST)
RE: IN THE ESTATE OF JOHN DENNIS DRENNAN, DECEASED MELISSA MARY DRENNAN, Applicant -and- DAVID JOHN DRENNAN, JESSICA DRENNAN, AND NICHOLAS DRENNAN, Respondents
BEFORE: FL Myers J
COUNSEL: Dorota Irena Hagel, for the applicant David John Drennan, Jessica Drennan, and Nicholas Drennan Counsel, appearing for themselves
READ: January 5, 2024
Endorsement
The November 21, 2023 Endorsement
[1] At a motion heard November 21, 2023, the applicant sought an order removing the respondent David Drennan as estate trustee of the estate of the parties’ late father. Alternatively, she sought the appointment of an Estate Trustee During Litigation.
[2] The respondents represented themselves at the hearing. They did not deliver material despite the prior scheduling of steps. I heard them without objection by the applicant.
[3] By endorsement released later that day, I granted the applicant’s alternative relief by appointing an Estate Trustee During Litigation. He will function as a neutral administrator authorized to exercise stewardship over the assets of the estate while the litigation proceeds.
[4] David Drennan advised during the hearing that he had prepared a lengthy narrative document answering the applicant’s claims. He also indicated that the respondents may want to bring one or more claims to challenge their father’s will and to seek an accounting from the applicant for actions allegedly taken by her while she was their father’s attorney for property under a power of attorney.
[5] My endorsement once again describes procedural steps required by the respondents to participate in this proceeding. I strongly urged and urge the respondents to seek legal advice at least to help them decide how they wish to go forward (if not to perform the actual steps for them).
[6] If they wish to take part in this proceeding, I required the respondents to deliver notices of appearance and their sworn evidence by December 31, 2023. If they chose not to do so, the applicant was authorized to bring an early case conference to schedule the return of the application. If the respondents delivered responding evidence, then I set out a partial schedule for cross-examination and I encouraged the parties to try to resolve their differences by mediation as they had discussed.
[7] I also advised the respondents that I was not imposing a time limit on their entitlement to bring whatever applications they choose to bring. Only the regular limitations periods limit their rights to sue. I warned however, that if they did not bring their claims quickly, so as to try to combine their new litigation with this existing litigation, they may find this application heard before they are ready to go with their new claims (if any).
[8] Finally, I directed that if new claims are brought by the respondents, then the parties will need to speak about combining procedural steps in all claims to minimize delay and expense. A case conference will be required to implement an agreed schedule or for a judge to decide what scheduling directions may be appropriate if the parties do not agree.
[9] Finally, for the reasons set out in my endorsement, I made a costs order against David Drennan. His failure to disclose important facts and to abide by the timeline previously set required an otherwise unnecessary motion to be brought.
[10] Mr. Drennan advised at the hearing that he had determined some time ago that he would not take active steps as estate trustee because he might challenge the will as a beneficiary. There is nothing wrong with that approach. In fact, it is commendable. But he never told the applicant or the court about this decision until the hearing on November 21, 2023.
[11] Mr. Drennan left the estate assets to languish, unadministered instead of telling Ms. Hagel and agreeing to an ETDL appointment to protect the estate assets and the interests of the beneficiaries. As a result, the applicant had to incur costs to collect evidence of the deterioration of estate assets to support the motion for an ETDL.
[12] I explained to the respondents that every step in the proceeding involves a risk that one party can be required to pay a piece of the other’s legal costs.
[13] The issue of costs may loom again as a result of the respondents’ failure to participate in the approval of the draft order sent to them by Ms. Hagel.
The Need for a Formal Order
[14] I suspect that the respondents do not know that under Rule 59.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, after a decision is made by the court, a party may draft a formal order to carry out the operative terms of the court’s decision. While the parties have my endorsement or reasons explaining why I was appointing an ETDL, a formal order is needed to give effect to, or to evidence the terms that I ordered.
[15] Rule 50.03(3) provides that the order is to be in Form 59C of which more will be written below.
[16] When a party drafts a formal order, he or she is required to send it to the other side to approve its form and content. This is not a chance to re-argue the motion or to change the outcome. Rather, the process is just to ensure that the party who drafted the order correctly set out the terms ordered by the judge. Everyone is bound to cooperate to try to ensure that the formal order says what it is supposed to say in accordance with the judge’s endorsement or reasons.
[17] If the parties agree on the form of an order, then the judge or a court Registrar will sign the order and the court will “issue” the order by accepting it for filing in the court’s file under Rule 59.03(2).
[18] If the parties cannot agree on the form of a draft order, then Rule 59.04 provides processes to bring the matter before a Registrar or the judge who made the order in order to settle the terms of the formal order document.
[19] An order appointing an ETDL is complicated. One cannot just say that a named person is hereby appointed ETDL. The position and powers need to be described. This is not set out anywhere in the Rules of Civil Procedure. Rather, it is a practice that has developed over time on the Estates List.
[20] I would not expect a self-represented litigant to know what goes into an ETDL appointment order. The judge has a role therefore in making sure that the formal order properly expresses the court’s operative language from the endorsement.
[21] Ms. Hagel provided her draft order to the respondents on December 13, 2023. The draft was her attempt to encapsulate in a formal order document the operative terms that I ordered in the November 21, 2023 endorsement.
[22] Ms. Hagel invited the respondents’ comments on the draft order and asked for a response by December 27, 2023.
[23] Ms. Hagel advises that none of the respondents responded to her draft order. They asked no questions. They made no comments. They gave no approval. They just ignored the draft and the time by which a response was requested.
[24] On January 4, 2024, the applicant’s counsel sent to my Judicial Assistant a form of draft order for my signature.
[25] I could have, and perhaps should have, included in my endorsement a term that dispensed with the requirement for Ms. Hagel to seek the respondents’ approval of the draft order. While I know that I am well-situated to protect all parties by ensuring that I only sign orders that say what they are supposed to say, I hesitate to take the role of approving draft orders from self-represented parties. Although the step is devoid of substantive content, some self-represented parties take offence at being excluded from the process. Others will not see the intent to be helpful but will instead see a risk of collusion between the judge and applicant’s counsel.
[26] So, while approval of an order is a highly technical piece of the process and an ETDL order is especially difficult because of its complexity that is not written in the Rules, I did not dispense with the respondents’ approval in my prior endorsement.
How to Finalize the Draft Order
[27] As self-represented parties, the respondents are entitled to look to the court and even to counsel for parties opposite for some guidance as to the meaning of various procedural steps. But they also have a duty to try to educate themselves to participate in the proceeding properly.
[28] The thing the respondents cannot legitimately do is to just ignore steps and thereby require others to bear excess costs. If that happens, the respondents may find themselves being ordered to pay costs to the applicant again.
[29] The respondents ought to have responded to Ms. Hagel with their comments or approval of the draft order under Rule 59.03. If they were unsure of how to proceed, they should have asked Ms. Hagel to direct them to the right rule or sought their own counsel.
[30] On the other hand, as I have not dispensed with the need for the respondents’ approval of a draft order, Ms. Hagel is not entitled to simply send me the draft order with no approval by the responding parties. She needs a settlement conference either before me or a registrar under Rule 59.04.
[31] Usually, I do not hear oral submissions on competing draft orders. Rather, I have the parties send me their competing drafts blacklines to show their areas of disagreement. I ask them to make very brief written submissions as to why they disagree. Submissions are required just to say why the order as drafted either does or does not reflect the operative terms of the endorsement that has already been made. There is no re-argument of the motion. No additional relief is available.
[32] I have reviewed Ms. Hagel’s draft order and set out comments below. Once Ms. Hagel revises the draft, she should send it to the respondents for their approval. The respondents will be able to compare the order to my endorsement and consider the discussion below, to decide whether to approve the draft as a proper statement of what I already ordered, or to bring the issue of what the order should say to the court.
Review of the Applicant’s Draft Order
[33] I attach the applicant’s draft order as submitted to me as Schedule “A” to this endorsement.
[34] I note first that Form 59C has not been used. There is no place for the identification of the judicial officer or for the date of the release of the decision at the top of the draft order as required by the form.
[35] Of greater note, Form 59C provides a paragraph to be used to recite the evidence that was before the court. There were four affidavits in evidence at the hearing of the motion. Each had exhibits. The draft order attached does not recite any evidence.
[36] The purpose of the recital of evidence paragraph in Form 59C is to provide a fixed and certain listing of all evidence that was before the court. This ensures that there is a public statement of what evidence exists and was before the court. It provides certainty. It promotes the open courts principle. It also tells the Court of Appeal precisely what was (or was not) admitted into evidence at the hearing in the court below.
[37] The evidence recital paragraph in Form 59C should contain a listing of all affidavits, transcripts, and other forms of evidence filed for use at, or admitted at the hearing. Witnesses who give live testimony in court should be listed.
[38] Answers to undertakings are often provide in unsworn letters from counsel. As answers to undertakings are deemed to be part of a witness’s testimony, those letters need to be listed.
[39] Counsel and parties may have to use judgment at times in trying to list evidence. For example, pleadings can sometimes be before the court without being sworn in evidence. So too correspondence, written undertakings, and other material that should be disclosed as being before the court.
[40] In the recital of evidence paragraph in Form 59C, there should be no reference to documents that are not in evidence, like: notices of motion, motion records, and factums. Listing these types of documents is neither required nor helpful.
[41] Paragraphs 1, 2, and 5 of the attached draft order are standard wording to appoint an ETDL and to vest the assets of the estate in the ETDL.
[42] Paragraph 3 of the draft order requires the ETDL to sell the deceased’s home upon obtaining two appraisals and without a court order or the consent of the beneficiaries. That relief was not sought at the motion nor granted in my endorsements. It is to be removed from the draft order.
[43] The ETDL is a temporary steward of assets. He is empowered to act as an estate trustee while the parties are in a dispute. An ETDL may take steps that an estate trustee is entitled to take in the exercise of his or her fiduciary duties but only where such steps are appropriate for an ETDL.
[44] An ETDL does not have carte blanche to ignore the parties who have real interests in the estate. Neither can an ETDL ignore that fact that its appointment is temporary to await the parties’ dispute. If the ETDL concludes that the house should be sold before the dispute is determined, the ETDL should be seeking the input of the beneficiaries and ensuring the parties’ entitlement to try to have their say in court if so inclined.
[45] Paragraph 4 contains a good delineation of the powers of the ETDL including the power to sell assets, if appropriate. The listing of express powers is not legally required as they all exist by the vesting of the assets of the estate in the ETDL anyway.
[46] But, like an order appointing a receiver and manager over a business, the express delineation of specific powers is designed to help the ETDL deal with third parties.
[47] Without a listing of express powers, third parties who do not know the legal status of an ETDL might hesitate to engage with him or her. Listing the power of sale, for example, lets an ETDL simply show the order to a real estate broker. This avoids having to engage counsel to speak to the broker’s counsel to satisfy everyone of the ETDL’s entitlement to sell an asset.
[48] Listing specific powers, while perhaps not legally necessary, saves time and money for all.
[49] The protection of the ETDL in para. 6, against liability for acts or decisions taken prior to the appointment of the ETDL seems fairly obvious. I suspect it was added to an order once long ago and it has stayed in the common or standard language ever since. It seems innocuous so I am content with it. Whether it is effective, especially in respect of “decisions” that may have been taken by a prior estate trustee or administrator but which could be reversed by the ETDL, is for another case.
[50] Para. 7 provides the ETDL’s right to access the deceased’s financial records with banks and financial institutions. That power flows from the appointment and could be listed in para. 4.
[51] Para. 8 requires the parties to take steps at the ETDL’s request to transfer assets to the ETDL. While I decline to grant extraordinary mandatory injunctions below, this is a version of a simple “further assurances” clause. It is implicit in the appointment of an ETDL.
LIABILITY OF ETDL
[52] I decline to protect the ETDL from liability to the Canada Revenue Agency as sought in the first sentence of para. 9 of the draft order. If the ETDL has a specific tax concern, he can bring it to the court’s attention on notice to the CRA. I know of no law enabling the court to simply ignore or exempt an ETDL for the income tax laws of Canada as enacted by Parliament if they apply by their terms.
[53] The second sentence of para. 9 of the draft order provides an indemnity to the ETDL for all interest and penalties owing to CRA. The ETDL’s entitlement to indemnity from the estate for proper fees and disbursements is not in doubt. But this clause would enable an ETDL to deliberately refuse to file tax returns on behalf of the estate and then be entitled to indemnity for amounts due by him, her, or the estate due to criminal misconduct.
[54] I realize that no one intends this outcome. But I see no reason for a specific indemnity regarding taxes unless there is evidence of an issue and a properly limited clause. Why won’t the estate trustee’s regular right to indemnity suffice?
[55] Like para. 6, para. 10 relates to acts that occurred before the ETDL’s appointment and is likely both unnecessary and innocuous. I am content with it generally.
[56] Para. 11 of the draft order protects the ETDL from all liability for carrying out his or her duties except, “any gross negligence or willful misconduct on his part”.
[57] I know that court-appointed receivers and managers are usually protected from liability other than for gross negligence and willful misconduct. They are officers of the court and case law provides the basis for the protection. I do not know if there is the same need and jurisdiction to make that order for an ETDL. Why, for example, should an ETDL not be liable for negligent performance of his duties like everyone else? Perhaps there is good reason supported by case law. I just do not know.
[58] I am not inclined to order that the ETDL has, “no personal liability for any actions or omissions of the Deceased or any prior Trustee”. If facts arise for which the law provides that an ETDL has no liability, then that law will apply. But if a circumstance arises where an ETDL might be found liable for something done by the deceased person or a prior estate trustee, on what basis can I simply wipe that liability away in advance on notice to no one? This is an overreach in the absence of a specific problem, brought on evidence, and due notice.
COMPENSATION OF ETDL
[59] Paras. 12 and 13 provide for the payment of the ETDL. They are standard terms. The only concern I raise is that the obligation to account to an interested party and the court in para 13, should not be expressed “if necessary”. The proper condition is that the ETDL’s fees and disbursements are subject to review by the court if requested by any interested party.
ADMINISTRATION OF THE ESTATE
[60] Paras. 14 and 16 should be merged so that the ETDL can retain agents including counsel. The right or power is to be expressed as being subject to the ETDL’s obligation to submit its fees and disbursements to the court for review under the current para. 13 (i.e., on request of any interested party). The ability to retain agents cannot be a loophole around a trustee’s accountability for fees.
[61] Para. 15 would have me make a mandatory order requiring Canada Post to redirect the mail of the deceased on the ETDL paying the appropriate fee. I would have no issue if the power to re-direct the deceased’s mail was among the specific powers of the ETDL delineated in para. 4 of the draft order. It could then be shown to Canada Post Corporation representatives if the recognition of the ETDL became an issue. But if Canada Post Corporation refuses to recognize the ETDL and the ETDL wants to seek mandatory injunctive relief against the corporation, then a hearing on notice to Canada Post Corporation is necessary. Para. 15 is to be removed.
[62] Para. 17 recognizes that the ETDL is part of the litigation process by precluding it from making distributions from the estate to any party except with an order of the court. This is the type of limitation of an ETDL’s authority due to the nature of the appointment that I was referring to above when dealing with para. 3 of the draft order.
[63] Para. 18 is a standard provision allowing the ETDL to move for directions.
[64] Para. 19 is a mandatory injunction requiring the parties to cooperate with the ETDL. The meaning of “cooperation” is anything but certain. It is not an appropriate word to use when the consequence of a breach is a charge of contempt of court. I do not know why this clause is needed in addition to the further assurances clause already approved.
[65] Para. 20 is a negative injunction preventing parties from hiding or failing to turn over to the ETDL documents and property of the deceased. The ETDL has its rights as vested owner. I see no basis for a blanket injunction absent evidence of a specific concern.
[66] Para. 21 provides for police enforcement of the ETDL’s right to vacant possession of the deceased’s house. It goes beyond the protection in s. 141 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and would have the court direct police, the Sheriff, and private bailiffs to do the ETDL’s bidding.
[67] If and when the ETDL needs and obtains a writ of possession, it will be enforceable under s. 141 of the Courts of Justice Act. If something further is required or desired at that time, the ETDL can ask for it on such notice as may be appropriate.
[68] Once the applicant has revised the draft order, counsel can seek the approval of the respondents and proceed accordingly.
FL Myers J Date: January 5, 2024
SCHEDULE “A”
CV-23-00695726-00ES ONTARIO SUPERIOR COURT OF JUSTICE IN THE ESTATE OF JOHN DENNIS DRENNAN, DECEASED MELISSA MARY DRENNAN Applicant and DAVID JOHN DRENNAN, JESSICA DRENNAN, AND NICHOLAS DRENNAN Respondents
ORDER APPOINTING ETDL
THIS MOTION, made by Applicant, Melissa Drennan, seeking, inter alia, an order appointing and Estate Trustee During Litigation, was heard, by videoconference, on November 21, 2023 at the court house, 330 University Avenue, Toronto ON, M5G 1R7.
ON READING the Motion Record of the Applicant, Melissa Drenna, and hearing the submissions of the counsel for the Applicant and the submissions of the Respondents David Drennan, Jessica Drennan and Nicholas Drennan,
THIS COURT ORDERS that Michael Kulbak, CPA, is hereby appointed as the Estate Trustee During Litigation (the “ETDL”), without security, of all of the property of the Estate of John Dennis Drennan (the “Estate”) and that a Certificate of Appointment of Estate Trustee during Litigation shall be issued to Michael Kulbak, without the need to post security bond or the necessity for further consents or renunciations from any interested parties, upon filing of the necessary supporting application pursuant to the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
THIS COURT ORDERS that all of the property and assets forming part of the Estate including the residential property identified by municipal address as 4 Allen Avenue, Etobicoke, Ontario, M8V 1R8 and registered as PT LTS 10, 11 & 12, PL 2616, AS IN TB266233; ETOBICOKE, CITY OF TORONTO, PIN 07625-0121 (the “House”) are hereby vested in the ETDL, as of the date of this Order appointing the ETDL, with all rights and powers conferred by the Estates Act, R.S.O. 1990 c. E.21, the Trustee Act, R.S.O. 1990 c.23, and the common law.
THE COURT ORDERS that the House shall be sold. The ETDL shall take necessary steps to have the House listed for sale upon obtaining two independent valuations of the property and without further order of this Court or consent of the parties.
THIS COURT ORDERS that the ETDL shall have all the rights and powers of an administrator, other than the right of distributing the residue of the Estate. Without limiting the generality of the foregoing, this includes the rights and powers to: (a) To gather in and take full account of the assets and liabilities of the Deceased and this Estate, (b) To manage or liquidate any investment assets of the Deceased and his Estate, (c) To pay all just debts, funeral and testamentary expenses and all income taxes of the Deceased and of the Estate, including any taxes or debts of any nature or kind in respect of any assets, whose ownership or beneficial entitlement may be in dispute, (d) To obtain information, records and files relating to the assets and liabilities of the Deceased in the same manner and to the same extent as the Deceased would have been able to if he were alive, (e) To obtain appraisals of the House, (f) To sell the House (g) To place a mortgage on the House, if deemed necessary, (h) Sell any articles of personal, domestic or household use or ornaments comprising assets of the Estate, (i) To execute any documents and authorize any transactions related to the administration of the Estate, (j) To appoint agents and seek assistance from time to time as the ETDL may consider necessary for the purpose of performing the duties of the ETDL hereunder and to pay those agents and representatives from the Estate, and (k) To invest any assets of the estate in guaranteed investment certificates.
THIS COURT ORDERS THAT all of the property and assets forming part of the Estate, including with the House, are vested in the ETDL from the date of this Order prior to the issuance of a Certificate of Appointment of Estate Trustee During Litigation. The ETDL shall have full authority and power to access, collect and gather in all assets of the Estate, from any financial institution, or other persons or entities.
THIS COURT DECLARES that the ETDL shall not be responsible for any act or decision made prior to the appointment hereunder, including any obligation to account for anything prior to his appointment as ETDL.
THIS COURT ORDERS that the ETDL may seek and obtain production of all financial records and files relating to the assets held by Deceased from any financial or banking institution, whether in Canada or elsewhere in the same manner and extents as if the Deceased would have been able to if he were alive.
THIS COURT ORDERS that the parties shall execute documents and such other things as the ETDL may request in writing to ensure that the House and the assets of the Estate are properly transferred and vested in the ETDL within 10 days of such a written request being made by the ETDL.
LIABILITY OF ETDL
THIS COURT ORDERS THAT the ETDL shall not incur any liability arising from any loss or liability of the Deceased or the Estate arising or incurred prior to the date of this Order, including interest and penalties owing to Canada Revenue Agency (“CRA”). The Estate shall indemnify the ETDL for any interest and penalties owing to CRA with respect to the filing of any tax returns and payment of taxes from the assets of the Estate.
THIS COURT ORDERS that there shall be no right of action as against the ETDL or claims made by any party or any beneficiary of the Estate, with respect to actions of any party or a beneficiary of the Estate relating to the assets and administration of the Estate prior of the appointment of the ETDL by this Order. The ETDL shall have no obligation to identify, locate, resolve or otherwise administer any issues pertaining to any assets disposed of or otherwise dealt with prior to his appointment that are not available, or not in the possession of the Estate at the time of his appointment.
THIS COURT ORDERS that Michael Kulbak, in his capacity as the ETDL shall incur no liability or obligation as a result of his appointment or the carrying out the provisions of this Order, save and except for any gross negligence or willful misconduct on his part, and he shall have no personal liability for any actions or omissions of the Deceased or any prior Trustee.
COMPENSATION OF ETDL
THIS COURT ORDERS THAT the ETDL shall be entitled to compensation with respect to the administration of the Estate of the Deceased at the rate of $300.00 Canadian Dollars per hour plus HST.
THIS COURT ORDERS THAT the remuneration of the ETDL, including disbursements and all applicable taxes, may be pre-taken and paid out of the assets of the Estate on a monthly basis without requiring the approval of the beneficiaries and shall be a first charge against the assets of the Estate, subject to review and adjustment of the said remuneration by the Court, if necessary. Monthly invoices shall be provided by ETDL to all parties. Disbursements and expenses shall include, without limitation, professional fees for investment advice and management, tax advice and preparation of filings, commissions and property management fees incurred by the ETDL.
ADMINISTRATION OF THE ESTATE
THIS COURT ORDERS that the ETDL may retain and pay legal counsel and or other professionals to assist him with his duties as ETDL and that the reasonable costs of retaining legal counsel and other professional advisors shall be paid out of the Estate, in addition to the hourly rate of the ETDL.
THIS COURT ORDERS that Canada Post shall, upon payment of any usual fee prescribed by Canada Post, proceed to redirect and forward any and all mail, correspondence, communications or other items received and intended for the Deceased or the Estate to the ETDL at an address so provided by the ETDL on a going forward basis, pending further order of this Court.
THIS COURT ORDERS that without restricting the powers set out herein in any way, the ETDL is hereby authorized to appoint an agent or agents, and retain a property manager or property management company, to manage and seek assistance from time to time, as the ETDL may consider necessary, in his sole and unfettered discretion for the purposes of performing his duties as ETDL.
THIS COURT ORDERS that the ETDL shall not distribute any funds from the Estate to any party to the litigation, including reimbursements for claimed expenses without further Court order of this Court.
THIS COURT ORDERS that the ETDL may move for such other and further directions as may be advisable or necessary with respect to his role and the due administration of the Estate on at least 15 days notice all parties.
THIS COURT ORDERS that the parties shall fully cooperate with the ETDL in effecting immediate transfer of possession of all of the assets of the Deceased, including the House to the ETDL.
THIS COURT ORDERS that the parties should not take, hide, alter, destroy or fail to turn over to the ETDL any property, documents or assets of the Deceased
THIS COURT ORDERS AND DIRECTS that peace officers, including police officers, the Sheriff or private bailiffs as deemed necessary by the ETDL and at the ETDL’s request may accompany and assist the ETDL in taking vacant possession of the Deceased’s House or other assets of the Estate.