Court of Appeal for Ontario

DATE: 20230725 DOCKET: COA-23-OM-0168

Pardu J.A. (Motions Judge)

BETWEEN

Ladan Javid in her capacity as Estate Trustee of the Estate of Aghdas Javid Applicant/Responding Party

and

Richard Keith Watson, Richard K. Watson Professional Corporation Respondents/Moving Parties

Counsel: Richard Keith Watson and Paul Robson [1], for the moving parties Marshall A. Swadron, for the responding party

Heard: July 19, 2023, by video conference

Reasons for Decision

[1] Richard Keith Watson and his professional corporation, Richard K. Watson Professional Corporation (“RKWPC”), move for urgent relief to require that the net proceeds of the sale of a King Street condominium be paid into court, pending hearing of their motion to extend the time for their proposed appeal from the underlying judgment of Dietrich J. The mortgagee is selling the property under power of sale and Mr. Watson estimates that the net proceeds will be approximately $100,000. The sale is scheduled to close on July 20, 2023. Because of the urgency of the matter, I dismissed the motion following the hearing, with reasons to follow.

[2] These are those reasons.

[3] The responding party, Ladan Javid (the applicant), is the estate trustee of the Estate of her late mother, Aghdas Javid, who passed away in 2018. The moving parties are the responding party’s former lawyer, Richard Keith Watson, and his professional corporation, through which he provides legal services, RKWPC. The responding party retained Mr. Watson to act for her in the administration her mother’s Estate.

[4] According to the findings made by Dietrich J., during the administration of the Estate, while acting for the responding party, Mr. Watson befriended the responding party’s sister, Jasmine Javid (“Jasmine”), a recipient of Ontario Disability Support Program (“ODSP”) benefits and a beneficiary of the Estate. Unbeknownst to the responding party, Mr. Watson created the Jasmine Javid Trust (“Jasmine Trust”) to receive Jasmine’s entitlements as a beneficiary of the Estate. He named RKWPC as the trustee, giving RKWPC absolute discretion over the trust, and named himself as the beneficiary upon Jasmine’s death.

[5] Also unbeknownst to the responding party, Mr. Watson transferred a King Street condominium, belonging to the deceased, to RKWPC and placed a $300,000 mortgage on the property. Mr. Watson guaranteed the mortgage personally and proceeded to lend the proceeds to one of his other clients, Curtis Petersen.

[6] In an application, commenced on November 30, 2020, the responding party sought a declaration that the Jasmine Trust was invalid and an order for the return to the Estate of assets transferred by Mr. Watson into the Trust. On December 7, 2022, Dietrich J. granted judgment, declaring the Jasmine Trust to be invalid and ordering the moving parties to discharge the $300,000 mortgage and return the assets from the Jasmine Trust to the Estate. The moving parties failed to comply with the December 7 judgment. Notably, they failed to provide documents and information that had been ordered produced in six prior interim orders. On May 24, 2023, Gilmore J. found the moving parties in contempt of the December 7 judgment for failing to provide the documents and information as required.

[7] Pursuant to the judgment of Dietrich J., the moving parties were ordered to discharge the mortgage they placed on the King Street condominium and transfer it to the Estate, free of encumbrances, on or before December 31, 2022. They have not done so, and the mortgagee has taken steps to sell the property.

[8] Mr. Watson submits that payment into court is necessary to protect Jasmine’s interests. The moving parties allege that the responding party has mismanaged the administration of the estate, to Jasmine’s detriment. He submits that there is a codicil granting the King Street condominium to Jasmine. The validity of that alleged codicil has yet to be determined.

[9] Mr. Watson filed an affidavit of Jasmine Javid in support of this motion. The allegations of misconduct on the part of the responding party are not credible. The affidavit contains bald allegations without supporting evidence and is marked by personal invective. In contrast, the affidavit of the responding party is meticulously supported by references to the record. I am not persuaded that payment into court is necessary to protect the interests of the beneficiaries; nor am I persuaded, on the limited record before me, that the codicil is likely valid.

[10] Jasmine was served in 2020 with the application leading to the December 7 judgment, and participated in that proceeding by swearing eight affidavits, but did not enter an appearance in those proceedings. Although not a party, she made brief submissions on the motion heard today, largely repetitive of those made by Mr. Watson. Her position has been allied with the moving parties, despite the apparently improvident dealings with the King Street condominium by said parties.

[11] There is an outstanding motion by the moving parties to extend the time for appeal, now set to be heard on September 19, 2023. If the moving parties fail to pay $25,800.00 in costs by August 30, 2023, the respondent can move, without notice, to dismiss the motion to extend time and there will be no appeal. Mr. Watson has unsatisfied executions outstanding against him and there is no evidence that he has the means to pay those costs. He appears to be judgment-proof. Based on the material before me, I conclude that it is unlikely that this appeal will proceed.

[12] The conduct of the moving parties has been to obstruct the administration of the Estate and these proceedings in multiple ways. Mr. Watson has been found in contempt for failure to disclose information material to the administration of the estate. He has failed to comply with court-ordered timetables on multiple occasions. He brought a meritless motion to remove the responding party’s counsel, which resulted in further delay. Even on the first return of the motion to extend time to appeal, there was an order requiring further disclosure on his part. The motion to extend time to appeal was brought some six months after the judgment in issue, with no adequate explanation for the delay. Mr. Watson failed to approve the draft judgment against him from December 13, 2022, and did not respond to four communications asking for his comments or approval. He declined to indicate his availability for an appointment to settle the judgment. An appointment was ultimately obtained to settle the judgment on February 27, 2023. On February 24, 2023, Mr. Watson indicated that he did not object to the draft judgment and did not appear on the appointment. Costs were awarded against him for that matter, fixed at $3500.00. This resulted in an 11-week delay in the responding party’s ability to enforce the judgment.

[13] On May 24, 2023, Mr. Watson was found in contempt due to his failure to comply with paragraph 10 of the judgment of Dietrich J., which required him to account and provide certain information and documents previously ordered to be produced. This resulted in a costs order against him of $25,000, which remains unpaid.

[14] The overall picture is one of obstruction and delay by Mr. Watson. The administration of the Estate has been hampered by his conduct. Payment of money into court will result in further delay. The responding party, as estate trustee, will ultimately account to the beneficiaries. Jasmine’s entitlement to the King Street condominium, if it ever existed, has been frustrated by Mr. Watson’s actions in placing a highly improvident mortgage on that property. It is difficult to see how he can purport to represent Jasmine’s interests on this motion, given that his conduct in respect of assets that she claims is in issue.

[15] The application judge made apt observations of the conduct of Mr. Watson at paras. 99 and 102 of her reasons,

The applicant submits that Mr. Watson’s conduct giving rise to the proceedings falls outside of established norms of the legal profession. The applicant submits that he has courted conflicts of interest, breached his duty of loyalty to the applicant, and has undertaken transactions that benefited other clients of his practice to the applicant’s detriment. I agree. Further, I find that Mr. Watson has continued to flout court orders setting timetables and his obligation to account. He has continued to withhold documents and information regarding the King St. Condo mortgage contrary to court orders. Mr. Watson attempted to bring a motion to remove the applicant as Estate Trustee, and then he tried to remove her counsel as lawyer of record. Justice Gilmore found the latter application to be completely without merit and an unjustifiable attack on the professional integrity of the applicant’s counsel.

In my view, Net Connect sets an appropriate precedent to be followed in this case, in which the respondents’ conduct falls outside of the established norms of the legal profession. In encumbering the King St. Condo, Mr. Watson has used the Estate’s asset to benefit another of his clients to the detriment of the Estate. When ordered to pay the mortgage proceeds into court, he did not. Whether Mr. Watson has also benefited personally remains to be seen. Mr. Watson has not provided the requested information and documentation regarding the mortgage loan despite multiple court orders to produce that information and documentation. Mr. Watson persisted in his lack of cooperation throughout his cross-examination.

[16] The administration of the Estate should be permitted to continue without further delay. The motion for payment into court of the net proceeds of sale of the King Street condominium is dismissed, with costs payable by the moving parties to the responding party, fixed at $4500.00 on a partial indemnity basis, by August 20, 2023, failing which the responding party may move, without notice, for dismissal of the motion to extend the time to appeal.

[17] I have not dealt with any other issues raised by the motions now set to be argued on September 19, 2023.

"G. Pardu J.A."

[1] Mr. Robson appeared but made no written or oral submissions on behalf of the moving parties.