CITATION: Gefen v. Gefen, 2021 ONSC 6497
COURT FILE NO.: 611/21
DATE: 20211004
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Kristjanson, Favreau and Nishikawa JJ.
BETWEEN:
Henia Gefen, in her personal capacity and as Estate Trustee of the Estate of Elias Gefen
Plaintiff/Appellant
– and –
Arie Gaertner, Miller, Canfield, Paddock and Stone LLP, The Jewish Home for the Aged, Baycrest Hospital, Baycrest Centre for Geriatric Care, Yehuda Gefen and Harry Gefen
Defendants/Respondents
- and between-
Harry Gefen
Plaintiff by Counterclaim
- and-
Henia Gefen, in her personal capacity and as estate trustee of the Estate of Elias Gefen, Harvey Gefen, Ashley Gefen, Dundas-Thickson Properties Limited., 1393522 Ontario Limited and 1585708 Ontario Limited
Defendants by Counterclaim
- and between –
Harry Gefen
Third Party Plaintiff
-and-
Harvey Gefen
Third Party Defendant
Ronald Moldaver, for the Appellants, Henia Gefen, Harvey Gefen and Ashley Gefen
Gregory Azeff and Stephanie De Caria, for the Respondent, the Estate Trustee During Litigation
David Milosevic and Cameron Fiske, for the Third Party, Irving Garten and Mayer Investments Limited
Christopher Graham, for the Third Party, the Estate Trustee of the Estate of Yehuda Gefen
HEARD at Toronto (by videoconference): September 23, 2021
REASONS FOR DECISION
NISHIKAWA j.
Overview
[1] This appeal relates to the ongoing estate litigation over the Estate of Elias Gefen. The property at issue in this appeal is a plaza at 20-26 Kennedy Road, Brampton, Ontario (the “Brampton Property”).
[2] The Appellants, Henia Gefen, Harvey Gefen, and Ashley Gefen, appeal two orders made by the case management judge, Gilmore J., on July 6, 2021, authorizing the sale of the Brampton Property and ordering the terms of the sale. The Appellants also brought a motion to stay the orders pending the outcome of this appeal.
[3] The Respondent, the Estate Trustee During Litigation, Ronald Rutman (the “ETDL”), brings a motion to quash the appeal on the basis that it is not properly before this court.
[4] The third party, Irving Garten, joins in the relief sought by the ETDL. Mr. Garten is the principal of Mayer Investments Limited, which holds a 50 percent interest in the Brampton Property.
Procedural Background
[5] The estate litigation has been ongoing since 2013. By order dated January 27, 2015 (the “Management Order”), Newbould J. appointed Mr. Rutman as ETDL with respect to all of the property of the Estate. This included Elias Gefen’s interest in the Brampton Property (the “Gefen Interest”).
[6] Pursuant to the order of Conway J. dated September 21, 2015, the ETDL was ordered to manage the Gefen Interest. Conway J.’s order prohibited the ETDL from selling or encumbering the Gefen Interest except with the consent of the Gefen parties or by court order.
[7] After a lengthy trial, on October 17, 2019, Kimmel J. rendered a decision on the merits of the litigation (the “Judgment”). In the Judgment, Kimmel J. held that Elias Gefen owned a 50 percent interest in the Brampton Property at the time of his death. In their appeal of the Judgment, the Appellants appeal this finding, among other things. That appeal is scheduled to be heard by the Court of Appeal on October 13, 2021.
[8] After the Judgment, the Appellants contested the continued role of the ETDL. On October 29, 2020, Conway J. held that the role of the ETDL continues pending a final disposition of the litigation, including during any appeal periods. The Divisional Court dismissed the Appellants’ appeal of Conway J.’s order: Gefen v. Gefen, 2021 ONSC 1464. The Court of Appeal dismissed the Appellants’ motion for leave to appeal.
[9] On May 28, 2021, the Appellants, the ETDL, and Mr. Garten attended a case conference before Gilmore J., as case management judge during the appeal period, to discuss a process to move forward with the sale of two properties, including the Brampton Property. The other property, on Kingston Road, is not at issue in this appeal. In her endorsement dated May 28, 2021, the case management judge stated that while the parties disagreed regarding the terms of a sale of the Brampton Property “[t]here was no disagreement that a sale should take place.” The case management judge set a timetable for the delivery of “written submissions on a motion with respect to the terms of sale and where the proceeds… should be paid.”
[10] After receiving written submissions, the case management judge made two orders on July 6, 2021 (the “Orders”). The first order authorized the ETDL and Mr. Garten to sell the Brampton Property and execute an agreement of purchase and sale on behalf of the registered owners. The second order (the “Terms Order”) stipulated the terms of the sale, including that the sale process be managed by the case management judge and that the completion of any sale be contingent upon court approval.
[11] In her endorsement dated July 6, 2021 (the “July 6 Endorsement”), the case management judge stated that her May 28, 2021 endorsement confirmed that the Brampton Property was to be sold and the July 6, 2021 endorsement dealt solely with the terms of the sale. The July 6 Endorsement details the case management judge’s reasons for accepting the terms proposed by the ETDL and for rejecting the Appellant’s submissions, as will be detailed further in these reasons.
[12] The Appellants’ motion to stay the Orders pending this appeal and the ETDL’s motion to quash were scheduled to be heard before Corbett J. on September 1, 2021. Corbett J. found that the issue of whether the Orders were final or interlocutory was arguable, and declined to decide the issue on a motion to quash. Corbett J. determined that it would be more beneficial to the parties to have a panel consider the appeal on the merits in a timely manner rather than have the matter decided by a single judge on the motions.
Preliminary Matters
[13] At the outset of the hearing, the panel noted that the style of cause of the appeal included the estate proceeding (Court File No. 05-107/14) and a Partition Act, R.S.O. 1990, c. P.4, application brought by the Appellants (Court File No. CV-15-527353, the “Application”).[^1] The panel asked for submissions as to which matters were properly on appeal before the court.
[14] After hearing submissions from the parties, the panel ruled that this appeal is solely in respect of the estate proceeding (Court File No. 05-107/14). The Orders under appeal were made in the estate proceeding. At no time was the Application before the motion judge. The Application was not consolidated with the estate proceeding, nor is there any order that they be heard together. While there is an endorsement of Gilmore J. dated October 30, 2020 referring to the transfer of the Application to the Estates list, it is evident that the applicants in the Application have taken no steps to move that matter forward. No orders have been made in the Application.
[15] In addition, in an endorsement dated January 25, 2016, Conway J. held that in light of the Management Order, the Application was on hold until further order of the court.
[16] As a result, the panel ordered that the style of cause be amended to include only the estate proceeding and to delete all references to the Application (Court File No. CV-15-527353). Further, the record on appeal includes only those materials that were before the case management judge pertaining to the sale of the Brampton Property. The Appellants did not bring a motion to adduce fresh evidence on the appeal, which would not have been granted in any event. Any material that was not before the case management judge, including the application records in Court File CV-15-527353, are excluded from the record on appeal.
Issues
[17] At the hearing, the panel heard the ETDL’s motion to quash the appeal and reserved its decision. The panel then proceeded to hear the appeal on the merits.
[18] The main issues in this appeal are as follows:
(a) Are the Orders final or interlocutory?
(b) In the event that the Orders are interlocutory, is leave to appeal required, given that the Appellants appeal pursuant to s. 10(1) of the Estates Act, R.S.O. 1990, c. E.21?
(c) In the event that leave is not required, did the motion judge err in making the Orders?
Analysis
The Motion to Quash
Are the Orders Final or Interlocutory?
[19] The ETDL brought a motion to quash the appeal on the basis that the Orders are interlocutory and therefore required that leave of this court be obtained. The ETDL advised the Appellants of this position shortly after being served with the Appellants’ Notice of Appeal.
[20] The Appellants take the position that the Orders are final and that, even if they are not final, the appeal is as of right under s. 10 of the Estates Act. At no time did the Appellants seek leave to appeal.
[21] In Paulpillai Estate v. Yusuf, 2020 ONCA 655, at para. 16, the Court of Appeal recently articulated the following principles to be applied in determining whether an order is interlocutory or final:
(i) An appeal lies from the court’s order and not from the reasons for decision;
(ii) An interlocutory order does not determine the real matter in dispute between the parties, the subject matter of the litigation or any substantive right. Even if the order determines the question raised by the motion, it is still interlocutory if these substantive matters remain undecided;
(iii) To make the determination, one must examine the terms of the order, the motion judge’s reasons, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the Order; and
(iv) The issue of access to appellate review must be decided on the basis of the legal nature of the order and not on a case-by-case basis depending on the application of the order to the facts of a particular case.
[22] In this case, the Orders authorize the ETDL and Mr. Garten to sell the Brampton Property and stipulate the process and terms for the sale. The sale is to be supervised by the court. The proceeds of the sale are to be held in trust pending further order of the court. The Orders require that a case conference be scheduled before the case management judge immediately after the closing of the sale for the purposes of determining a process for distribution of the net sale proceeds. The Order specifically states that “nothing in this Order shall affect any interest of any party to the Net Sale Proceeds.”
[23] The Orders do not finally dispose of the issues in the estate proceeding. Because the sale is subject to the approval and supervision of the court, with the distribution of the proceeds to be determined at a later date, the Orders do not affect the substantive rights of the parties to the litigation. The Orders do not affect the Appellants’ claims to the net proceeds of the sale of the Brampton Property. As a result, the Orders are interlocutory.
[24] The Appellants argue that the Orders are final because they provide for the sale of the Brampton Property. However, selling a property in the context of estate litigation is not a final order as it does not finally determine the substance of the litigation, namely, the distribution of assets. In any event, in this case, as discussed in more detail below, there was no dispute between the parties that the Brampton Property was to be sold. The only issue was who would have control over the sale and the terms of the sale. These issues are clearly interlocutory.
[25] The Appellants also argue that the Orders are final because they effectively exclude them from the sale and permit the ETDL and Mr. Garten to market and sell the Brampton Property without their involvement or consent. The Appellants object on the basis that the ETDL is a non-party without any ownership interest. Contrary to the Appellants’ submission, and as the case management judge recognized, the ETDL is not an “interloper” but a court-appointed officer whose role is to manage the disputed assets of the estate.
[26] In any event, the Orders relate to the terms and process for the sale of the Brampton Property. The exclusion of the Appellants from the process does not affect a substantive right in a manner that would render the Orders final orders of the court.
Appeals under s. 10(1) of the Estates Act
[27] The Appellants rely on s. 10(1) of the Estates Act to support their position that leave to appeal is not required. Subsection 10(1) provides that any party or person taking part in a proceeding under the Act may appeal to the Divisional Court from an order, determination or judgment of the Superior Court of Justice, if the value of the property affected by the order exceeds $200.
[28] This court has held, in respect of an appeal under s. 10 of the Estates Act, that where the appeal is of an interlocutory order, leave under s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, is still required: Luck v. Hudson, 2020 ONSC 3811 at para. 5 (Div. Ct.).
[29] While the Appellants submit that Luck v. Hudson was wrongly decided, they have provided no basis to depart from that analysis. To the contrary, Luck v. Hudson is consistent with the court’s interpretation of similar appeal provisions in the Partition Act and the Ontario Business Corporations Act, R.S.O. 1990, C. B.16, as requiring leave to appeal interlocutory orders. See, e.g.: Nifco v. Nifco, 2017 ONSC 7475 (Div. Ct.); Watkin v. Open Window Bakery Ltd. (1996), 28 O.R. (3d) 441 (Div. Ct.).
[30] The Orders are interlocutory orders of the Superior Court. Pursuant to r. 61.03(1)(b), the Appellants were required to seek leave to appeal within 15 days of the Orders. The Appellants did not seek leave to appeal, even after having been advised of the ETDL’s position that leave was required. Accordingly, the appeal must be quashed.
[31] In the interest of avoiding the unnecessary prolongation of this matter, I go on to consider whether this Court would grant leave to appeal or even the appeal. I recognize that this is unusual, but the panel heard full arguments on the appeal and this will avoid the possibility of a motion to extend the time for bringing a motion for leave to appeal and any subsequent proceedings on this issue. It is evident that this is hard fought and contentious litigation and it is in the interests of all parties to put this aspect of the litigation to an end.
Would Leave be Granted?
[32] At no time, including at the hearing, did the Appellants seek leave to appeal the Orders. Had the Appellants brought a motion for leave to appeal, it would not have met the stringent test for leave to appeal an interlocutory order in r. 62.02(4) of the Rules of Civil Procedure, R.R.O. which states that leave shall not be granted unless: (a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter and it is desirable that leave to appeal be granted; or (b) there appears to the panel hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that leave to appeal should be granted. The merits of the appeal are addressed below. In addition, this is not a case that raises any issues of importance beyond the dispute between the parties.
Would the Appeal be Granted?
[33] Given the panel’s ruling that the Orders were not made under the Partition Act, the Appellants’ arguments on the merits of the appeal were limited to the following issues:
(i) Whether the case management judge had the authority to make the Orders; and
(ii) Whether the case management judge erred in the exercise of her discretion in excluding the Appellants from the sale of the Brampton Property.
[34] The standard of review of the case management judge’s decision is correctness on questions of law and palpable and overriding error on questions of fact. Mixed questions of fact and law are reviewable on a deferential standard except that any “extricable” errors of law are reviewable on a correctness standard.
Did the Case Management Judge Have the Authority to Make the Orders?
[35] The Appellants submit that the case management judge lacked jurisdiction to make the Orders because any order for sale had to be made under the Partition Act. I do not agree.
[36] Pursuant to s. 28 of the Estates Act and previous orders of the court, the case management judge had jurisdiction to order the sale of the Brampton Property.
[37] Section 28 provides that an estates trustee during litigation has “all the powers of a general administrator, other than distributing the residue of the property…[.]” The Court of Appeal has affirmed that the appointment order was made under s. 28 of the Estates Act: Gefen v. Gaertner, 2019 ONCA 233. As noted earlier, the ETDL is to continue in its role until final resolution of the dispute, including during any appeal periods.
[38] The court has authority to direct an ETDL to sell properties pending the outcome of the underlying litigation and to direct the terms of a sale: see, e.g.: Class v. Smith, 2018 ONSC 623, at para. 56 and Poole Estate v. Elliott, 2007 CarswellOnt 3893. As a result, the ETDL was not required to proceed under the Partition Act.
[39] In addition, the Management Order authorized the ETDL “to exercise those rights and powers given by law to an Estate Trustee without a Will, other than the right to distribute the Estate of the deceased.” The ETDL was not permitted to sell any real estate in which Elias Gefen had an interest “without the prior approval of the Court or all of Henia, Harvey, Yehuda and Harry Gefen.”
[40] As noted in the July 6 Endorsement, Conway J.’s order of September 21, 2015 further provided that the ETDL “shall exercise all decision making rights and powers of a personal representative with respect to the Gefen Interest in the Eastown Plaza…, except that the ETDL shall not sell or encumber the Gefen Interest in Eastown Plaza… without the consent of Henia, Harvey, Ashley, Harry and Yehuda Gefen, or without further Order of this Court.”
[41] The Appellants now argue that the case management judge did not have the authority to make the Orders because they did not consent to the sale. In her endorsement of May 28, 2021, however, the case management judge stated that there was no disagreement that the Brampton Property be sold, and set out a process for the parties to make written submissions on the terms of a sale. The Appellants did not advise the case management judge of any error or objection to the terms of the endorsement. In fact, they participated in the process and made written submissions regarding a sale, thus indicating that they agreed that the property be sold.
[42] Accordingly, the case management judge had the authority to make the Orders and this ground of appeal would fail.
Did the Case Management Judge Err in Ordering the Terms of the Sale?
[43] The Appellants further submit that the case management judge erred in ordering terms that effectively excluded them from the sale of the Brampton Property.
[44] The Orders are discretionary decisions and are therefore entitled to deference on appeal. A discretionary order will only be set aside if the judge below made an error in principle or the order is clearly wrong.
[45] The case management judge made no error in excluding the Appellants from the sale process. The ETDL is a neutral, court-appointed third party with authority to manage the estate assets on a neutral basis, without the intervention of the parties, until the conclusion of the estates proceeding. The case management judge found that there was a good level of trust and cooperation between the ETDL and Mr. Garten. By contrast, there was a long history of mistrust between the Appellants and Mr. Garten, and fashioning a process requiring them to agree would simply open the matter up to more litigation. The involvement of both the ETDL and Mr. Garten would ensure that maximum value would be obtained on the sale of the Brampton Property.
[46] Moreover, it was within the case management judge’s discretion to set out the process and terms for the sale of the Brampton Property. The terms and process ordered by the case management judge are commercially reasonable and protect all of the parties’ interests, as is evident from the following:
(i) The sale process is supervised by the court and managed by the case management judge;
(ii) An acceptable offer to purchase will be on terms mutually agreed upon between the ETDL and Mr. Garten, or further order of the court;
(iii) In the event of disagreement between the ETDL and Mr. Garten in respect of the sale, both parties will appear at a case conference before the case management judge to assist with any potential sale. The case management judge will have authority to make decisions with respect to any management issues at the case conference, with discretion to have any issue determined by a formal motion or hearing;
(iv) Any sale transaction will be conditional upon the ETDL obtaining court approval. Upon entering into an agreement of purchase and sale, the ETDL is required to seek an Approval and Vesting Order from the case management judge;
(v) The closing of the sale transaction is contingent upon the ETDL obtaining the Approval and Vesting Order;
(vi) The net sale proceeds will be held in trust by counsel for the ETDL until further order of the court;
(vii) The ETDL is required to schedule a case conference before the case management judge, on notice to all parties, returnable immediately following the closing of the sale for the purposes of determining a process for distribution of the net sale proceeds; and
(viii) The ETDL and Mr. Garten are at liberty to apply to the case management judge for further advice and direction with respect to any aspect or implementation of the Order.
[47] Accordingly, the case management judge made no errors of law, no errors in the exercise of her discretion and no palpable and overriding error in making the Orders. Therefore, even if the Appellants had a right of appeal without leave of the court, I would dismiss the appeal.
Conclusion
[48] Accordingly, the appeal is quashed because the Appellants failed to seek leave to appeal. In any event, the appeal would be dismissed.
Costs
[49] The ETDL seeks his costs of the motions and the appeal on a full indemnity basis, with the Appellants paying substantial indemnity costs, and the balance payable by the estate. The ETDL’s full indemnity costs of the appeal, including the motion to quash and the Appellants’ motion for a stay, are $82,779. The ETDL’s costs on a partial indemnity basis are $49,660. All amounts include disbursements and HST.
[50] The ETDL relies on the principle of trustee indemnity and previous orders of the court in this matter to submit that, as a court-appointed officer, the ETDL is entitled to be fully indemnified for his legal fees. Counsel for the ETDL submits that the reasonableness of the costs will be assessed on the passing of the accounts at the conclusion of the estates litigation.
[51] Mr. Garten’s partial indemnity costs on the motion to quash and the appeal total $4,003 on a partial indemnity basis, or $6,672 on a substantial indemnity basis. Mr. Garten’s counsel filed materials on the motions and the appeal, and made brief submissions at the hearing.
[52] The Appellants submit that the ETDL’s costs are excessive and that the ETDL was unreasonable in opposing their motion to stay, as supported by Corbett J.’s order that the appeal proceed on the merits. The Appellants’ costs of the motion and appeal are $17,978.30 on a full indemnity basis, or $10,786.98 on a partial indemnity basis.
[53] Pursuant to the Courts of Justice Act, s. 131(1), the Court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). The principle of proportionality applies.
[54] Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the issue of costs, including, among other things, the complexity of the proceeding, the importance of the issues, and the conduct of any party that tended to lengthen unnecessarily the duration of the proceeding.
[55] I do not accept the Appellants’ position that because Corbett J. scheduled the hearing of the appeal on the merits on an expedited basis that the ETDL ought not to have opposed the Appellants’ motion to stay. Given the ETDL’s position that leave was required, his opposition to the stay was reasonable.
[56] While I recognize the principle of trustee indemnity, the ETDL’s legal fees must be reasonably incurred: Goodman Estate v. Geffen, [1991] 2 S.C.R. 353, at para. 76. In this case, I find the ETDL’s costs disproportionate to the complexity of the issues on both the motion to quash and the appeal. The ETDL’s position, that leave to appeal was required, was straight-forward. The merits of the appeal were similarly not complex. Under the circumstances, it was not reasonable to incur legal fees of over $80,000. I note that the ETDL’s full indemnity costs at first instance, before the case management judge, were $7,369. While some additional costs may be attributable to the Appellants’ inclusion of the partition application material, the costs are nonetheless excessive in relation to the complexity of the issues. In addition, the costs sought by the EDTL far exceed the costs generally awarded by the Divisional Court, including on matters far more complex that this one.
[57] In respect of Mr. Garten’s costs, given the position adopted by the Appellants, it was reasonable for Mr. Garten to participate in the appeal. While he joined in the ETDL’s position, he filed material, including an affidavit on the stay motion, and made helpful submissions to the court.
[58] Based on the foregoing considerations, I fix costs of the motions and appeal at $20,000, and order that the Appellants pay the ETDL’s partial indemnity costs of $12,000, with the balance to be recovered against the estate. We fix Mr. Garten’s costs at $2,500 on a partial indemnity basis, payable by the Appellants.
Nishikawa J.
I agree _______________________________
Kristjanson J.
I agree _______________________________
Favreau J.
Released: October 4, 2021
CITATION: Gefen v. Gefen, 2021 ONSC 6497
COURT FILE NO.: 611/21
DATE: 20211004
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Kristjanson, Favreau and Nishikawa JJ.
BETWEEN:
Henia Gefen, in her personal capacity and as estate trustee of the estate of Elias Gefen
Appellants
– and –
Arie Gaertner, Miller, Canfield, Paddock and Stone LLP, The Jewish Home for the Aged, Baycrest Hospital, Baycrest Centre for Geriatric Care, Yehuda Gefen and Harry Gefen
Respondents
- and between-
Harry Gefen
Plaintiff by counterclaim
- and-
Henia Gefen, in her personal capacity and as estate trustee of the Estate of Elias Gefen, Harvey Gefen, Ashley Gefen, Dundas-Thickson Properties Limited., 1393522 Ontario Limited and 1585708 Ontario Limited
Defendants by Counterclaim
- and between-
Harry Gefen
Third Party Plaintiff
-and-
Harvey Gefen
Third Party Defendant
REASONS FOR decision
NISHIKAWA J.
Released: October 4, 2021
[^1]: Mr. Garten had also brought an application for partition under the Partition Act, which has also not been consolidated nor ordered to be heard together with the estate proceeding and has not been decided.