Stos v. Stos, 2022 ONSC 1137

CITATION: Stos v. Stos, 2022 ONSC 1137

DIVISIONAL COURT FILE NO.: DC-21-2666

DATE: 2022-02-18

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Ivan Stos, Applicant (Respondent in Appeal)

AND: Janko Stos and Mary Bendastos as Power of Attorney for Janko Stos, Respondents (Appellant)

BEFORE: Swinton, McGee and Nieckarz JJ.

COUNSEL: John J. Cardill, for the Applicant (Respondent in Appeal)

Cheryl Letourneau, for the Respondent Mary Bendastos as Power of Attorney for Janko Stos (Appellant)

HEARD at Ottawa (by videoconference): February 15, 2022

ENDORSEMENT

THE COURT:

Overview

[1] Mary Bendastos, as Power of Attorney for Janko Stos, appeals, with leave, the order of McLean J. dated May 27, 2021 in Court File CV-19-80614. At the end of oral argument, the Court announced that the appeal would be allowed, except in respect of paragraph 4 of the order, with reasons to follow. These are our reasons.

Background Facts

[2] There were two applications before the application judge. The first was brought by Ivan Stos to remove his sister Mary Bendastos as power of attorney for personal care and property for their father Janko Stos, to obtain a declaration that Janko Stos was incapable, and to appoint a lawyer as guardian of property (Court File CV-19-80614). This application was later amended to request an order that Ivan be named as guardian of personal care. The second application was brought by Mary Bendastos to require Ivan Stos to bring a line of credit obtained by their deceased mother Marija into good standing and for an accounting and other relief (Court File CV-20-83136).

[3] The parties to this appeal had consented to an order by Linhares de Sousa J. dated November 22, 2018 (the “2018 Order”) to settle litigation in three earlier proceedings – one under the Family Law Act, one under the Partition and Sale Act, and the third a notice of objection to Ivan Stos acting as Estate Trustee for his mother Marija’s estate. The 2018 Order, among other things, provided for the creation of an alter ego trust in the name of Janko Stos, specified seven real properties to be transferred to the named trustee, provided for resolution of disputes regarding the trust by arbitration by a named arbitrator, and provided for a passing of accounts by Ivan and Mary at the date of division – essentially, on the death of Janko.

The proceeding before the application judge

[4] After a hearing respecting the two applications on February 11 and 26, 2021, no decision was rendered. The hearing ended on February 26, 2021with the parties agreeing to attempt to come up with a consent order. They failed to agree.

[5] The application judge then met with the parties to settle the order on May 27, 2021. He had issued no endorsement with respect to the hearing on February 26.

[6] On May 27, he issued an order with respect to the transfer to the trustee of the seven properties that had already been dealt with in the 2018 Order, a vesting order, and a requirement that Mary disclose various information to the trustee. Paragraph 1 included a requirement that Mary transfer real properties in a schedule and “other assets” to the trustee. The application judge also ordered a passing of accounts by Mary and Ivan respecting the period when each held a power of attorney for Janko, even though the 2018 Order had dealt with accountings as well as the transfer of the real properties to the trustee. Finally, he ordered Mary to provide information to Ivan for his passing of accounts.

[7] The application judge made no endorsement to explain the terms of this order, and he did not deal with the relief requested in the application respecting the letter of credit. That application and Ivan’s application were adjourned sine die.

The issues on appeal

[8] The appellant argues that the application judge erred in law in making the order, because the matters dealt with in the 2018 Order were res judicata. The appellant also argues that parts of the order were an abuse of process and beyond the jurisdiction of the judge, given the arbitration process in the 2018 Order.

[9] The respondent argues that the order was made within the inherent power of the judge to control the court’s process, and the appeal is moot since applications for the passing of accounts have commenced in the Superior Court of Justice.

Analysis

[10] Correctness is the standard of review on an appeal from a judge’s order based on a question of law (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 8).

[11] The respondent conceded in oral argument that the application judge did not deal with the merits of the two applications that were before him. Counsel pointed to a passage in the transcript where the application judge stated that he was going to give an order to stop the bleeding in the litigation between the parties. The respondent submitted that the judge had inherent power to make such an order.

[12] Whatever the scope of the court’s inherent jurisdiction, the court must still be guided by the pleadings before it and must act in accordance with procedural fairness. Here, the task before the application judge was to deal with two applications concerning guardianship and a line of credit. Neither application asked for the relief that he ordered – for example, an order respecting the transfer of the seven properties (already ordered by Linhares de Sousa J.) and adding a requirement that Mary transfer “other assets” to the trustee. Neither application asked for a change with respect to the provisions respecting the passing of accounts in the 2018 Order.

[13] Moreover, the process used was unfair. The meeting on May 27 was to settle an order. Instead, the court made a decision about the content of the order without giving adequate opportunity to the parties to argue the merits of the applications before him.

[14] Most importantly, the application judge gave no reasons for his decision about the content of the order, and it is not obvious from the record why he made the order, given the existence of the 2018 Order, made on consent. Given the total absence of reasons, his decision is not capable of meaningful appellate review. The lack of any reasons amounts to an error of law in the circumstances of this case and is grounds alone for allowing the appeal (Bruno v. Dacosta, 2020 ONCA 602 at paras. 15, 22 and 24).

[15] Moreover, the application judge dealt with matters concerning the transfer of named properties that were already the subject of the 2018 Order and, therefore, res judicata. However, he went further and ordered Mary to transfer “other assets” to the trustee, without explaining what those assets were or why they should be transferred. Moreover, there was no request for this relief in Ivan’s guardianship application that was before the court, and no submissions on this issue.

[16] The application judge also ordered an accounting by Ivan and by Mary with respect to the periods when they held powers of attorney for Janko. However, he failed to explain why there was a change to the 2018 Order, which required an accounting, at the time of Janko’s death, with respect to both Marija’s and Janko’s property. As well, there was no claim for a variation of the 2018 Order in the two applications before him.

[17] In the same vein, the application judge imposed a broad disclosure obligation on Mary in respect of the passing of accounts that is neither explained nor justified. He also ordered her to make disclosure to the trustee, a matter that was again not requested and is better left to be dealt with by the trustee and the arbitration process, if necessary.

[18] The application judge also failed to address the claim for relief in Mary’s application respecting an accounting by Ivan in respect of the line of credit. Indeed, no order was made in relation to this application, and no explanation given.

Conclusion

[19] Given the lack of explanation for the order made, the contradictions with the 2018 consent Order, the unfairness in making such an order without a request from the parties and proper submissions thereon, the appeal is allowed.

[20] The order of the application judge is set aside, except paragraph 4, which deals with a vesting order. The parties consented to this part of the order.

[21] The matter is referred back to a different judge of the Superior Court for determination of the two applications, if the parties choose to pursue them.

[22] The respondent shall pay costs to the appellant in the amount of $5,000 for the leave motion and $10,000 for the appeal.

Swinton J.

McGee J.

Nieckarz J.

Date: February 18, 2022