COURT OF APPEAL FOR ONTARIO

LABROSSE, MacPHERSON and JURIANSZ JJ.A.

B E T W E E N:

JODI EDELL and CARA EDELL, HAYDEN EDELL, SAMANTHA EDELL, MAREK EDELL and MAYSON EDELL, by their Litigation Guardian, JODI EDELL

Howard S. Black for the plaintiffs (appellants)

Plaintiffs (Appellants)

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PAUL SITZER and MICHAEL SITZER

Benjamin Zarnett and Jessica Kimmel

Defendants (Respondents)

for the defendant (respondent) Paul Sitzer and for the respondents

A N D B E T W E E N:

(defendants by counterclaim) Paul Sitzer Holdings Limited and

Geraldine Sitzer Holdings Ltd.

MICHAEL SITZER

Plaintiff by counterclaim (Respondent)

Harvey T. Strosberg, Q.C. and David L. Robins for the defendant (respondent) plaintiff by counterclaim

• and -

Michael Sitzer

JODI EDELL and CARA EDELL, HAYDEN EDELL, SAMANTHA EDELL, MAREK EDELL and MAYSON EDELL, by their Litigation Guardian, JODI EDELL, PAUL SITZER HOLDINGS LIMITED, GERALDINE SITZER HOLDINGS LTD. and PAUL SITZER in all of his capacities

Defendants by counterclaim (Appellants) (Respondents)

Heard: May 31, 2004

On appeal from the judgment of Justice Maurice C. Cullity of the Superior Court of Justice dated July 13, 2001.

BY THE COURT:

[1] This is an appeal from the decision of Cullity J. who summarized the major issues at trial as follows:

This litigation concerns…the alleged interests of (the appellant) Jodi (Edell) and her issue in Paul (Sitzer’s) estate under the doctrine of mutual wills, or otherwise pursuant to a constructive trust or other equitable obligation, and their interests as beneficiaries of the Jodi Trust.

[2] Except for some aspects that need not be addressed here, the trial judge, after a 21‑day trial, dismissed the appellants’ claims with costs.

[3] Paul and Sidney Sitzer are brothers and successful businessmen who built a real estate business and own substantial commercial properties through various share structures. In 1989-90, the brothers executed an estate freeze intended to minimize tax on death and to plan for their succession. As part of the restructuring, their respective sons, Michael and Howard, would manage the family businesses. Paul and his wife, Geri (she died on October 28, 1991) established trusts in favour of their children, namely the Michael Trust and the Jodi Trust, intended to benefit their children and their issue. In 1992 and 1993, Paul executed new wills for assets on the subject of the trusts in which Jodi and Michael (and their issue) were the beneficiaries. Following a family meeting in August 1993 which was intended to explain the objectives and particulars of the corporate and estate planning structure, the relationship between Jodi and Paul, for various reasons, started to deteriorate. On November 25, 1996, Paul executed a new will and disinherited Jodi and her children because of his displeasure over Jodi’s and Steven’s (her husband) conduct.

[4] Attempts to reach a financial settlement under which the Edell family would agree to separate themselves from the financial affairs of the other members of the Sitzer family failed and this litigation was commenced. On January 6, 1998, Paul encroached on the Jodi Trust in favour of Michael.

[5] The trial judge was required to decide between conflicting evidence and credibility was a central issue. In detailed and considered reasons, the trial judge found Paul to be a credible witness and that his evidence, where it conflicts with that of Jodi or Stephen, should generally be accepted. In some instances, he specifically disbelieved their evidence.

[6] The appellants’ recitation of the facts in this appeal ignores the extensive findings made by the trial judge. The appellants have identified evidence that was presented at trial that they suggest might indicate different conclusions.

The Mutual Will Issue

[7] On August 27, 1984, Paul and his wife, Geri, had executed separate but similar wills. The beneficiaries were their two children, Jodi and Michael. At trial, the appellants alleged that these were mutual wills and that Paul was prohibited from varying the estate plan found in Paul’s will.

[8] After a thorough review of the evidence and the applicable jurisprudence, the trial judge found that there was no contract, or other agreement between Paul and Geri that restricted the survivor of them from varying the estate planning arrangements or from dealing freely with his or her own property or making new wills as they pleased. The trial judge accepted Paul’s evidence that he would never have entered into such an agreement. Accordingly, the trial judge concluded that the requirements of an application of the rules governing mutual wills were not satisfied.

[9] The trial judge also found that Paul has not constituted himself a trustee over his personal assets and that there was no evidence of an express trust and no basis to impose a constructive trust in Jodi’s favour. The evidence failed to establish that Paul and Geri had entered into an irrevocable agreement or made promises or representations to the effect that each of their children would receive assets of equal value upon the death of their parents.

[10] The trial judge made no error in his analysis of the standard or legal requirements for the doctrine of mutual wills to apply. His findings that Paul and Geri did not agree to execute mutual wills and that there was no basis to impose a trust over any of Paul’s assets are amply supported by the evidence.

The Jodi Trust

[11] Paul and Geri were the trustees of the Jodi Trust. After considering the purpose of the estate freeze and the creation of the Jodi Trust, the trial judge found a clear intention that control of the destination of the income and capital of the trust money was to be retained by the trustees until the trust was terminated. The trial judge correctly concluded that the words of the trust instrument authorized the trustees to encroach in favour of Michael.

[12] The trial judge specifically found that Paul’s displeasure and disapproval of Jodi’s conduct were not considerations that contributed materially to his decision. Rather, the trial judge concluded that Paul encroached only when Jodi’s behaviour led him to conclude that Jodi’s ownership of equity of the family businesses would be ruinous to them and, in consequence, detrimental to his descendants as well as to the descendants of Sidney.

[13] Accordingly, the trial judge concluded that Paul’s exercise of his power of encroachment in Michael’s favour should not be interfered with because it was exercised in good faith and not for any improper purpose. Once again, this is a finding of fact that is amply supported by the evidence.

[14] In our view, the detailed findings of fact made by the trial judge, which include specific findings grounded in credibility assessments, are well supported by the evidence. This court is being asked to reject the trial judge’s findings of fact, reweigh the evidence and substitute new findings of fact. This is not the role of this court. No overriding and palpable errors, as these terms are defined in the authorities, have been demonstrated. Nothing in the appellants’ submissions warrants this court’s reconsideration of the trial decision.

[15] Accordingly, the appeal is dismissed with costs fixed at $35,000 for the respondents Paul Sitzer, Paul Sitzer Holdings Limited and Geraldine Sitzer Holdings Ltd., and $25,000 for the respondent Michael Sitzer, both amounts inclusive of disbursements and G.S.T.

Released: JUN 03 2004 Signed: “J.-M. Labrosse J.A.”

JML “J.C. MacPherson J.A.”

“Russell G. Juriansz J.A.”