COURT FILE NO.: 01-1603/13
DATE: 20130916
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF PAUL McCOLL, a.k.a. PAUL MOYSAK, deceased
BETWEEN:
HEATHER McCOLL and
ANDREW McCOLL, a minor, by his Litigation Guardian, Heather McColl,
Applicants
– and –
NATALIYA McCOLL a.k.a.
NATASHA McCOLL, both in her personal capacity and In her capacity as named Estate Trustee of the Estate of Paul McColl, and CLARK FARB FIKSEL,
STUART M. PEIKES and DAVID SCHATZKER,
Respondents
Brendan Donovan, Counsel for the, Applicants
David Winer, Counsel for the Respondent Natasha McColl in both capacities
David Schatzker, appearing in person but not having filed a Notice of Appearance
HEARD: SEPTEMBER 9, 2013
ENDORSEMENT: GREER J.:
[1] The Applicant, Heather McColl, (“Heather”) is the former wife of the deceased, Paul McColl, who died on February 6, 2013. He died leaving as his next-of-kin, his second wife, Nataliya McColl a.k.a Natasha McColl (“Natasha”) and his son from his first marriage, Andrew McColl (“the son”), who is now 16 years of age. Heather brought on a Dependants’ Relief Application in June on her own behalf and that of their son. She now brings on this Motion on an urgent basis.
[2] Heather is asking the Court to make an Order preserving the deceased’s assets and asking the Court to appoint an Estate Trustee during Litigation (“ETDL”) since the deceased made no mention of his son, who is a dependant, in his Wills.
[3] The deceased died testate, leaving a Primary Will dated November 12, 2012 dealing with the residue of his Estate and a Secondary Will of the same date, which dealt with his corporate assets in three companies, namely Firestone Entertainment Company Limited, Limo 9 Inc. and Quicktel Inc. Natasha was named the sole Estate Trustee in both Wills. Other than leaving a specific bequest to his mother, Victoria Moysak (“the Mother”), the deceased left the whole of his Estate to Natasha.
[4] On July 16, 2013, Mr. Justice Whitaker made an Order Giving Directions in this matter. The Order dealt with disclosure issues and production of medical records, past and current solicitor’s files regarding the preparation of Wills, Codicils, file records and notes, the filing of a list of assets and values including all assets which would fall within S.72 of the Succession Law Reform Act, R.S.O. 1990, c. S.26.
[5] In para. 9 of the Order, Natasha and Gregory P. Jones were ordered to deliver all documents relating to the deceased’s assets from January 1, 1995 to the date of the Order, including copies of income tax returns. A Certificate of Pending Litigation was granted to be registered against the deceased’s condominium, which was registered jointly in his name and that of Natasha. Natasha was ordered to serve and file her Responding Application Record August 1, 2013.
[6] Heather proposes in her Motion that Ronald Rutman C.A. be appointed as the Estate Trustee During Litigation. Natasha opposes all of the relief requested.
[7] Heather and the deceased went through acrimonious and high conflict litigation on their marriage breakdown. Their son suffers from Autism and Tourette’s syndrome and has special needs. Heather and the deceased entered into a Marriage Contract in 1995, a Separation Agreement on January 13, 1998, a First Settlement Agreement on January 3, 2001, a Second Settlement Agreement on January 13, 2002 and a Third Settlement Agreement on May 26, 2011.
[8] In the last agreement, the deceased agreed to pay to Heather a lump sum child support in the amount of $140,000 in two instalments. In 10 days after that agreement was signed, the deceased paid to her the sum of $90,000. The balance of $50,000 was to be paid on the earlier of the date the son graduated from high school or on the death of the deceased. The $50,000 was to be secured by a non-interest bearing mortgage/lien against the condominium, second only to the first mortgage to the Bank of Montreal in the amount of $471,250.
The position of Heather
[9] Heather has brought on this Motion because she says that Natasha intends to liquidate one of the deceased’s companies, despite the Claim brought on by her and her son. There is evidence that Natasha has transferred the shares of at least one of the companies owned by the Estate into her own name, and she may be the sole President and Director. Under the SLRA, any distribution of the Estate is stayed pending the hearing of the Application.
[10] Further, there appears to have been no move to probate the Primary Will, despite the Order of Mr. Justice Whitaker. Natasha was ordered to provide the deceased’s bank books and records, tax returns, investment statements and data regarding all assets and values of the Estate. Natasha has not done this. The corporate assets were dealt with under the Secondary Will, which do not require probate but the disclosure obligations attaches to those assets as well.
[11] Paul was in ill health when he signed his Wills. His signature on these documents is shaky and illegible. The Third Settlement Agreement was also entered into at this time. He had been diagnosed in June 2007 as having multiple myeloma. He and Natasha were married on November 29, 2009 and they entered into a marriage contract. Attached to it was a list of the deceased’s assets and their values. It was dated October 26, 2010, and showed assets valued at $4,550,000.
[12] Natasha has not provided valuations for the three companies owned by the deceased. She has been operating one on the companies on the advice of her counsel or the companies’ counsel. No information has been provided about the deceased’s “business telephone numbers”, which seem to relate to an unincorporated business.
[13] Heather’s position is that the truth about these assets will not be released and provided to her and her son unless the Court immediately appoints a neutral ETDL to operate the businesses and determine their values.
The position of Natasha
[14] Natasha has filed a 40 page Affidavit opposing the relief requested by Heather on her own behalf and that of her son. She does not want Heather appointed as the son’s litigation guardian. The Office of the Children’s Lawyer is on notice and no such appointment would be made without its consent. With respect to the $50,000, which was owing to Heather under the lump sum agreement for child support, Natasha says that she has raised that money from the equity in the condominium has been paid out to Heather. Natasha says that the Estate owes nothing to Heather for spousal support and nothing to the son for child support.
[15] Natasha says that she is operating Quicktel Inc., a company that owns or leases ATM’s. It is said to produce substantial income for the Estate. She says that Limo 9 Inc. is insolvent and not operating and is a liability. She says that Firestone is “Paul’s old company – defunct and irrelevant”. She says that the condominium was the deceased’s only other material asset, which now is encumbered by a mortgage of about $500,000, with a value of $800,000.
[16] Natasha believes that the appointment of an ETDL would have disastrous results for Quicktel, as the ATMs “cannot sit empty for days”. She says any freezing order would ruin the business. She says Limo 9 must be liquidated immediately.
[17] Natasha believes that Ronald Rutman should not be appointed because he has not responded to questions which her counsel has asked left in messages for him. She sees herself as the only person who could possibly deal with the assets.
[18] Natasha says that any ETDL should have post a Bond to protect the estate assets. She seems unaware of the cost of a Bond and that the cost is borne by the Estate. She says that deceased had no personal bank accounts at his death. The Estate therefore appears to be illiquid.
Analysis
[19] In my view, it is essential that Ronald Rutman C.A. be appointed the ETDL. It is imperative that the Applicants and the Court are in a position to know what the real value of the estate assets are and how they are to be administered during the litigation. Mr. Rutman has had a great deal of experience as an ETDL and is an Accountant who understands valuations of businesses. When acting as the ETDL in the Estate of Paul Penna, Mr. Rutman was not required to post a Bond for those very reasons. Mr. Rutman has filed a letter saying that he is prepared to act in that capacity and will file a Consent to Act if he is so appointed.
[20] An Order shall go appointing Ronald Rutman to act as ETDL in the Estate of Paul McColl without having to post an Administration Bond. I make the appointment for the reasons which follow.
[21] Natasha is herself in a position of conflict in this litigation. She is the sole beneficiary and trustee, yet has no business experience in operating the companies. There is no evidence that she was gainfully employed at the date of the deceased’s death. The only evidence before the Court is that Natasha may be a real estate agent. In addition, she has not complied with the Order of Mr. Justice Whitaker in making full disclosure about the estate assets.
[22] Natasha has been consulting the solicitor who drew the Wills and others about how she should operate the business. She has given no real explanation about how Quicktel operates and what the banking relationship is in this regard to keep the machines funded. She says that the deceased had no personal bank accounts in his name, which is an astonishing fact given that he was running two or three businesses at his death. His income must have come from these assets.
[23] Although the deceased entered into an Agreement before his death to pay lump sum support for his son, that was to cease at his death, the only term in that Agreement is that it was to continue until the son completed high school. There is no waiver of S.7 child expenses in that Agreement, yet the son has special needs. Also, there is no provision for post-secondary education or for medical and dental expenses. There is no evidence that the deceased had any plan to cover these needs for his son, if they arose. Therefore, there is a need for an ETDL while all the issues of dependency of the son and his needs are worked out.
[24] Natasha says that she only met the deceased’s son a few days before his death. The therefore has no relationship with the son although she and the deceased began dating in 2006 and were married in 2009.
[25] S.28 of the Estates Act R.S.O. 1990, c. E.21, gives the Court the authority to appoint, “an administrator of the property of the deceased person.” That administrator is given all the rights and powers of a general administrator, other than the right to make distributions under the Will or on an intestacy. The Court may direct that such administrator shall receive such reasonable remuneration as the Court considers proper. In addition, the Court has the power under subrule 75.06(3)(f) of the Rules of Civil Procedure R.R.O. 1990, Reg. 194 to appoint an estate trustee during litigation, and file such security as the court directs.
[26] As is pointed out in Estate Litigation, B. Schnurr, 2nd ed., (Thomson Reuters, looseleaf), c.24.2, “A decision to refuse the appointment should only be exercised in the clearest of cases.” It goes on to say:
Generally, the Court’s discretion will be exercised in favour of the appointment of an Estate Trustee during Litigation where assets are required to be held, preserved or otherwise dealt with, and debts are to be paid. This will be the case in the vast majority of estates. However, in some simple estates, where the assets are all in liquid form, such as T-Bills or GICs, and little else is required to administer the estate, a Court may decide that an Estate Trustee during Litigation is not necessary.
[27] I have set out, in these reasons what the complications are in administering this estate. I am aware that Natasha wishes to control the estate because she is the sole residuary beneficiary. On the other hand, there must be a neutral person administering the assets to ensure that the real value at death is known and that the operation of the ATMs is done in transparent fashion in order to determine the true income for estate purposes and tax purposes. It is said that Natasha does not know how to operate the ATMs and has called on a competitor to operate them on behalf of the Estate.
[28] Victoria Moysak, the deceased’s Mother, swore an Affidavit on August 20, 2013, in these proceedings. She says that she believes that Heather has good reason to be concerned about how the deceased’s assets are being managed. She agrees with what Heather has said in her Affidavit. While Natasha says Limo 9 is insolvent, the Mother says that the company “owned” a fleet of approximately ten to twelve cars. She has spoken to the manager of the company, Dominic Travassos, and while that evidence in her affidavit is hearsay, she says she was told that the company employed 5 drivers. Natasha says there were 3 leased limousines.
[29] The Mother believes that the deceased invested close to a million dollars in the Limo 9 business and that it was very profitable. An ETDL will be able to determine where the truth lies in the operation of that business. Natasha has terminated the manager of Limo 9. The Mother says she went to the business premises in July and they appeared to be locked and not operational. She worries that Natasha will try to sell the cars.
[30] The Mother believes that Quicktal owned and operated around 70 automated teller machines, and that her son stocked the machines himself. She says that the Firestone business was her son’s original business and it operated pool tables, video games and jukeboxes in bars and restaurants. She says it was an entirely cash based business. The Mother says that the deceased operated these cash businesses through two bank accounts with the Bank of Montreal. that have not been disclosed. These are at 2194 Lakeshore Boulevard West and 165 The Queensway branches. In his marriage contract, the deceased acknowledged that he had a Line of Credit with that Bank and it held the mortgage on the condominium.
[31] The Mother’s evidence is such that it strongly shows the need for the appointment of an ETDL. See: Groner Estate, Re, 1994 CarswellOnt 2478 (O.C.J.(Gen.Div.)).
Orders
Ronald Rutman C.A. is appointed the Estate Trustee During Litigation of the Estate of Paul McColl to act without the posting of an Administration Bond. He shall immediately file his Consent with the Court and take immediate control of all assets of the Estate and Natasha shall fully co-operate in the hand-over of the estate assets and all records.
The issuing and entering of the Order setting out Mr. Rutman’s appointment as the ETDL shall be expedited, given the urgency of this appointment. If counsel wishes, he may forward the Order immediately to me at Osgoode Hall for signature. The approval of the draft Order by Natasha is dispensed with if the Order is sent to me.
An Order shall go on consent removing David Schatzker as a Respondent in this proceeding. The style of cause shall be amended accordingly. He is a barrister and solicitor with the law firm of Clark Farb Fiksel, also named as a Respondent.
Costs
[32] If the parties cannot otherwise agree on Costs, they shall send written submissions to me within 30 days of this Order with their Bills of Costs. Submissions shall be no longer than 3 pages in length and any case law on which they intend to rely. Since the Applicant was successful on the Motion, she shall send her Submissions first to the Respondent and the Respondent shall have 7 days thereafter to respond. The Applicant may, if necessary, Reply within 7 days thereafter.
Greer J.
Released: September 16, 2013
COURT FILE NO.: 01-1603/13
DATE: 20130916
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF PAUL McCOLL, a.k.a. PAUL MOYSAK, deceased
BETWEEN:
HEATHER McCOLL and
ANDREW McCOLL, a minor, by his Litigation Guardian, Heather McColl,
Applicants
– and –
NATALIYA McCOLL a.k.a.
NATASHA McCOLL, both in her personal capacity and In her capacity as named Estate Trustee of the Estate of Paul McColl, and CLARK FARB FIKSEL,
STUART M. PEIKES and DAVID SCHATZKER,
Respondents
ENDORSEMENT
Greer J.
Released: September 16, 2013