CITATION: Shanthakumar Estate v RBC, 2023 ONSC 4806

COURT FILE NO.: DC-23-26-0000

DATE: 2023-08-21

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

7755 Hurontario Street, Brampton ON L6W 4T6

RE:

The Estate of Sulochana Shanthakumar, Appellant

-and-

Royal Bank of Canada, Siva Gurrappadi, William Sykes, Usha Radhakrishan, Sheila Wilson, Attorney General of Canada, Phillip Carver, Albert Yang and The Attorney General for the Province of Ontario, Respondents

BEFORE:

C. Chang J.

COUNSEL:

P. Callahan, for the Appellant

G. Bowden, for the Respondents, Royal Bank of Canada, Siva Gurrappadi, William Sykes, Usha Radhakrisham and Sheila Wilson

K. Watt, for the Respondents, Attorney General of Canada, Phillip Carver and Albert Yang

N. Manwani, for LD Law LLP

HEARD:

August 15, 2023 (via videoconference)

ENDORSEMENT

[1] The appellant brings this motion for a stay of various orders of LeMay J. pending the disposition of its appeal from those orders.

[2] The respondents, Royal Bank of Canada, Siva Gurrappadi, William Sykes, Usha Radhakrisham and Sheila Wilson (collectively the “RBC respondents”) oppose the motion. The respondents, Attorney General of Canada, Phillip Carver and Albert Yang (collectively the “AGC respondents”) take no position on the motion. LD Law LLP (“LD Law”), which is not a respondent, but is the subject of some of the orders under appeal, also takes no position on the motion. The respondent, The Attorney General for the Province of Ontario (the “AGO”), neither filed any motion materials nor attended the motion hearing.

FACTS

[3] The facts relevant to this motion are undisputed and can be summarized as follows:

a. Sulochana Shanthakumar commenced an action against the RBC respondents, the AGC respondents and the AGO under Court File No. CV-13-2155-0000 (the “2013 Action”) for claims in, among other things, negligence, negligent investigation, malicious prosecution, defamation, breach of fiduciary duty, conspiracy to breach statutory duty and breach of her Charter rights;

b. the 2013 Action was administratively dismissed for delay in 2018, which dismissal was ultimately set aside and a litigation timetable order was made;

c. Mrs. Shanthakumar was diagnosed with dementia in 2018 and a litigation guardian was appointed for her, but was removed by order of Trimble J. dated July 14, 2021;

d. Mrs. Shanthakumar appealed from that order, but she passed away shortly after launching the appeal, which rendered it moot;

e. Santha Kumar Mylabathula was Mrs. Shanthakumar’s spouse and is her estate trustee;

f. Mrs. Shanthakumar and her estate have had various costs orders made against them in favour of the RBC respondents and more than $20,000.00 of those orders remains unpaid;

g. on January 4, 2023, Royal Bank of Canada commenced an application under Court File No. CV-23-31-00ES (the “2023 Application”) against the appellant for an order requiring Mr. Mylabathula to pass his accounts for Mrs. Shanthakumar’s estate and for the time that he acted as her guardian;

h. one of the key issues in the 2023 Application is the transfer from her estate to Mr. Mylabathula of real property in Richmond Hill (the “Property”) that was solely owned by Mrs. Shanthakumar before her death;

i. LD Law acted for Mr. Mylabathula in respect of his administration of Mrs. Shanthakumar’s estate, including the transfer of the Property from the estate to Mr. Mylabathula;

j. in early 2023, LeMay J. (who had been informally case managing the 2013 Action since November 2020 and was formally appointed as case management judge on February 28, 2023) heard various motions in the 2013 Action and the 2023 Application;

k. on April 12, 2023, LeMay J. released written reasons for judgment on those motions and, on April 24, 2023 and May 1, 2023, he made additional orders corollary to that judgment;

l. in both the judgment and the corollary orders, LeMay J., among other things, ordered that:

i. LD Law produce its file respecting the appellant,

ii. a representative of LD Law attend for examination, and

iii. Mr. Mylabathula pass his accounts for Mrs. Shanthakumar’s estate; and

m. the appellant has appealed from the above three orders (the “Subject Orders”).

ISSUE

[4] The sole issue for determination on this motion is whether I should grant the requested stay of the Subject Orders pending disposition of the appellant’s appeal from them.

GOVERNING LEGAL TEST

[5] The overarching consideration on a motion for a stay pending appeal is whether a stay is in the interests of justice, the determination of which is informed by: 1) a preliminary assessment of the merits of the appeal to determine whether there is a serious question to be determined on the appeal; 2) a determination of whether the moving party would suffer irreparable harm if the requested stay were refused; and 3) an assessment of which of the parties would suffer greater harm or inconvenience from the granting or refusal of the requested stay (see: Fontaine v Canada (Attorney General), 2021 ONCA 313, at para. 38).

[6] The three parts of the applicable test are interconnected considerations and strength in one of them may compensate for weakness in another (see: Fontaine, at para. 39).

[7] The threshold on the first part of the test is a low one: on a preliminary assessment of the merits of the case, the issue on appeal must be neither frivolous (devoid of merit or with little prospect of success) nor vexatious (taken to annoy or embarrass the respondent or conducted in a vexatious manner, including an oblique motive for launching the appeal) (see: UD Trading Group Holding PTE. Limited v TransAsia Private Capital Limited, 2021 ONCA 279, at paras. 32-33).

[8] For the second part of the test, irreparable harm relates to the nature of the harm rather than its magnitude and the court must determine whether a refusal to grant the requested stay “could so adversely affect the moving party’s interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the stay motion” (see: Louis v Poitras, 2020 ONCA 815, at para. 49). Proof of irreparable harm cannot be inferred and evidence of it must be clear and not speculative (see: Schuster v Royal & Sun Alliance Insurance Company of Canada, at para. 27).

ANALYSIS

Part 1: Serious Question to be Determined

Parties’ Positions

[9] The appellant submits that there is significant merit to its appeal and that it should be successful given that LeMay J. was clearly wrong in making the Subject Orders. Respecting LD Law’s file and examination, the appellant argues that it clearly did not waive lawyer-client privilege. Respecting the passing of accounts, the appellant argues that the wording of rule 75.06(1) of the Rules of Civil Procedure, R.R.O, 1990, Reg. 194 and the applicable jurisprudence make it clear that creditors do not have standing to apply to the court for a passing of accounts.

[10] The RBC respondents submit that the appeal is clearly unmeritorious, as most of the appeal is moot and the law applicable to the balance of the appeal does not support the appellant’s position. They argue that the appeal from the Subject Orders respecting LD Law is moot, as the file was produced and the examination was completed before the appellant launched this appeal. Respecting the passing of accounts, the appellants argue that: 1) s. 50(1) of the Estates Act, R.S.O. 1990, c. E.21 expressly provides that creditors of a deceased person may initiate a passing of accounts; and 2) that statutory law “trumps” rule 75.06.

Decision

[11] On a preliminary assessment of the merits of the appeal from the Subject Orders respecting LD Law, I find that there is no serious issue to be determined based on the doctrine of mootness.

[12] The applicable LD Law file has already been produced and LD Law’s representative has already been examined; both in accordance with the Subject Orders and before the appellant launched its appeal. The appellant has adduced no evidence that it took any steps to prevent the file from being produced or the examination from being conducted. Therefore, even if the appellant were to succeed on the appeal from the applicable orders, neither the production nor the examination can be undone. Accordingly, the dispute between the parties on these issues has disappeared and, in my view, no consideration of the three rationales underpinning the mootness doctrine would reasonably result in the exercise of the court’s discretion to nonetheless hear the merits of the relevant appeal (see: Dagg v Cameron Estate, 2017 ONCA 366, at paras. 31-32).

[13] As a result, the appeal from the Subject Orders related to LD Law is devoid of merit and has little prospect of success. There is therefore no serious question to be determined on this aspect of the appeal.

[14] The same cannot be said about the appeal respecting the passing of accounts, which the RBC respondents do not argue is moot, but that it is completely devoid of merit because the law clearly supports their – and not the appellant’s – position.

[15] While I share more than a few of the concerns expressed by the RBC respondents respecting the merits of this aspect of the appeal, I am mindful that the applicable threshold for this part of the test is low. A fulsome exploration of the merits of the appeal on this issue is more appropriately for the panel hearing the appeal. On a preliminary assessment of those merits, I am unable to find the appeal to be frivolous or vexatious.

[16] As a result, in my view, there is a serious question to be determined on this aspect of the appeal.

Part 2: Irreparable Harm

Parties’ Positions

[17] The appellant directed none of its written or oral arguments to any irreparable harm associated with the Subject Orders respecting LD Law, but submits that it will suffer irreparable harm if the Subject Orders respecting the passing of accounts are not stayed. That harm, it says, is two-fold: 1) the cost associated with passing its accounts; and 2) it has no money to fund the passing of accounts, which puts it at risk of having its statement of claim in the 2013 Action struck out on the RBC respondents' upcoming motion seeking that relief.

[18] The RBC respondents submit that the cost of passing accounts does not constitute irreparable harm and, in any event, the appellant has adduced no evidence of that cost or of its inability to pay it. Furthermore, they say, the appellant’s inability to pay was caused by the estate trustee, Mr. Mylabathula, transferring to himself the estate’s only asset after the RBC respondents served their notice to examine the appellant in aid of execution. Respecting the risk of having the statement of claim in the 2013 Action struck out, the RBC respondents submit that, again, the appellant brought that risk onto itself by effectively causing its own alleged financial inability to pass its accounts as ordered by the court. They also submit that nothing prevents the appellant from fully responding to the motion to strike and, indeed, the appellant’s position on that motion would be enhanced by the passing of its accounts.

Decision

[19] I find that the appellant will not suffer irreparable harm if a stay is not granted.

[20] As outlined above, the appellant directed none of its arguments to any alleged irreparable harm associated with the Subject Orders respecting LD Law and there is no evidence of any such alleged harm.

[21] Respecting the passing of accounts, I do not accept the appellant’s argument that the cost associated with it constitutes irreparable harm, as the appellant’s incurrence of that cost is not something that could so adversely affect its interests as to be irremediable if the appeal succeeds. If this aspect of the appeal is successful, then there are any number of available ways to remedy the applicable expenditure. Furthermore, and in any event, the appellant has adduced no evidence of the alleged applicable cost, its inability to pay it (directly or by other means) or of the lack of any other options to pass its accounts.

[22] I also do not accept the appellant’s argument that the risk to its statement of claim in the 2013 Action is a relevant consideration. There is no evidence before me that the failure of the appellant to pass its accounts will directly or necessarily result in the statement of claim being struck out. The appellant’s arguments are unsupported by any evidence and are based only on conjecture and speculation. In addition, based on the many orders made in the 2013 Action that the appellant has not complied with, the order for the passing of its accounts appears to be but one of many issues to be considered by the court on the motion to strike.

[23] I accept the RBC respondents’ argument that the appellant’s alleged inability to fund the passing of its accounts and the alleged risk to its statement of claim are both of the appellant’s own making. It is undisputed that the Property was the only asset of the estate until Mr. Mylabathula transferred title to it from the estate to himself. This rendered the appellant devoid of assets and therefore unable to fund a passing of accounts. Furthermore, if, as the appellant suggests, that inability puts its statement of claim in the 2013 Action at risk of being struck out, then the appellant is again the author of its own misfortune. It would be the appellant’s actions – not a refusal of the requested stay – that would bring about the alleged harm.

[24] There is simply no evidence of irreparable harm to the appellant should the requested stay be refused. Even if such harm would follow from that refusal, it would be of the appellant’s own making.

Part 3: Balance of Convenience

Parties’ Positions

[25] The appellant’s arguments on the issue of balance of harm/convenience completely overlap its arguments on irreparable harm and add nothing to them.

[26] The RBC respondents’ arguments on the balance of harm/convenience also significantly overlap their arguments on irreparable harm. However, they add that, if a stay is granted, they would suffer harm or inconvenience associated with the appellant’s persistent and long-standing delays and non-compliance with court orders in the 2013 Action. The action, they say, is “a cripple” (counsel’s words) and has “limped along” since 2013 due to the appellant’s inaction, its persistent non-compliance with court orders and its repeated efforts to thwart any enforcement of those orders. A stay of the order requiring the appellant to pass its accounts, the RBC respondent argue, would effect yet another delay in the timely adjudication of these litigations.

Decision

[27] I find that the balance of convenience favours neither granting nor refusing the requested stay.

[28] As outlined above, the appellant has adduced no evidence of irreparable harm in support of this motion. Similarly, it has also adduced no evidence of any harm or inconvenience it will suffer if I were to refuse the requested stay. Again, the appellant’s arguments on this point are based on conjecture and speculation.

[29] That said, I do not accept the RBC respondents’ argument that they will suffer harm or inconvenience if a stay is granted because it will add to the appellant’s long history of delay and flouting court orders. There is an insufficient nexus between that history and the requested stay. As outlined above, it is doubtful that the appellant’s non-compliance with the order to pass its accounts is the sole issue for consideration in the motion to strike out the statement of claim. As such, it is unlikely that a stay of that order will necessarily cause or necessitate a delay in the hearing of that motion. Furthermore, other than the Subject Orders, none of the orders made against the appellant in the 2013 Action is under appeal; meaning that a stay of the Subject Orders will, in no way, prevent the RBC respondents from enforcing those other orders.

[30] That said, I certainly share the RBC respondents’ concerns respecting the appellant’s clear history of delay and non-compliance with court orders, but I am also mindful that the applicable analysis is limited to harm or inconvenience resulting from the granting or refusal of the requested stay.

[31] Considering all of the above, in my view, the balance of convenience favours neither granting nor refusing the requested stay.

Additional Observation: “Clean Hands” Doctrine

[32] Although the RBC respondents’ arguments respecting the appellant’s litigation misconduct do not tip the balance of harm/convenience in favour of refusing a stay of the Subject Orders, they are relevant to the “clean hands” doctrine. In addition, the fact, timing and circumstances of the appellant’s transfer of the Property out of the estate and into Mr. Mylabathula hands are also relevant to the question of whether the appellant has “come to equity with clean hands”.

[33] I am mindful that the “clean hands” doctrine is not a strict rule that functions to automatically disentitle a party from relief, but, rather, is applied in the court’s discretion considering the specific circumstances of each case (see: Hrvoic v Hrvoic, 2023 ONCA 508, at para. 18).

[34] In the specific circumstances of the case-at-bar, I find that the appellant’s litigation conduct and its transfer of the Property render its hands “unclean”.

Summary and Conclusion

[35] As set out above, while I am satisfied that there is a serious question to be determined respecting the appeal from the order for the passing of the appellant’s accounts, there is no serious question to be determined respecting the appeal from the other Subject Orders, which are moot. I am also not satisfied that the appellant will suffer any irreparable harm if the Subject Orders are not stayed or that the balance of convenience favours either granting or refusing the requested stay.

[36] Viewing the above considerations as interconnected factors, I find that the appellant has failed to establish that a stay of the Subject Orders would be in the interests of justice. The appellant’s marginal success on the “serious question” consideration does not, in any way, make up for the complete lack of any evidence of irreparable harm and the level balance of convenience. The appellant’s motion should be dismissed accordingly.

[37] In addition, even had the appellant satisfied the test for a stay, I would have exercised my discretion under the “clean hands” doctrine and dismissed the motion. However, to be clear, it is the appellant’s failure to satisfy the test for a stay of the Subject Orders that is determinative of this motion.

COSTS

[38] The RBC respondents were successful on this motion and are entitled to their costs.

[39] The parties agree that the appropriate scale is partial indemnity.

[40] In accordance with their costs outline, the RBC respondents seek costs on a partial indemnity basis in the all-inclusive amount of $9,755.66 for Mr. Bowden’s work at the applicable rate of $333.33/hour. By comparison, the appellant’s costs outline claims costs on a partial indemnity basis in the all-inclusive amount of $5,140.37 for Mr. Callahan’s work at the applicable rate of $385.00/hour, a law clerk’s work at the applicable rate of $175.00/hour and disbursements.

[41] The appellant argues that the RBC respondents’ claimed costs are excessive, as the claimed time includes matters unrelated to this motion (e.g., case conferences), and the claimed counsel fee for the hearing is for six hours of time when less than two hours was actually spent in court. The RBC respondents submit that the case conferences were directly related to this motion and that the appellant’s unreasonable conduct in bringing this motion necessitated them.

[42] I agree with the appellant that the RBC respondents’ costs outline includes time clearly unrelated to this motion. In addition, even if the case conferences were directly related to this motion, I was not provided with any orders or endorsements that reserved any applicable costs to the hearing of this motion. There are also other time entries that clearly bear no relation to this motion. I also agree with the appellant respecting the claimed counsel fee. This virtual motion hearing was, most certainly, not six hours in duration.

[43] Taking into consideration the factors set out in rule 57.01(1) of the Rules of Civil Procedure, including, without limitation, the degree of complexity of this motion, the experience of counsel, the rates charged, the time spent and the reasonable expectations of the unsuccessful appellant, I find the all-inclusive amount of $7,000.00 to be fair, reasonable and proportionate in the circumstances.

DISPOSITION

[44] I therefore make the following orders:

a. the appellant’s motion is dismissed; and

b. the appellant shall pay to the RBC respondents their costs of this motion on a partial indemnity basis, which are hereby fixed in the all-inclusive amount of $7,000.00 and payable within 30 days of the date of this endorsement.

C. Chang J.

Date: August 21, 2023