SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 09-45538
DATE: October 29th, 2013
RE: Thomas Theodore Assaly et al v. Gloria Assaly et al
BEFORE: Master MacLeod
COUNSEL:
Ian M. Hull, for the Plaintiffs
Rodrigue Escayola, for the Defendants
Gail S. Nichols for the Third Party estate
HEARD: August 22nd, 2013
ENDORSEMENT
There are competing motions before the court. The plaintiff moves to remove and replace the litigation guardian, amend the statement of claim, adjust the timetable and to obtain disclosure as well as other relief. The defendant moves for security for costs.
For the reasons that follow there will be an order amending the statement of claim and adding the estate. On certain terms there will also be an order permitting the litigation guardian to withdraw and appointing Conor Assaly in her place. There will also be an order requiring the plaintiffs to post security for costs and requiring that the plaintiffs pay the costs thrown away in defending the action as originally constituted. Assuming such security is posted as ordered there will be an order for disclosure of documents.
My reasons follow.
BACKGROUND
The action was commenced in July of 2009 seeking inter alia a declaration that the second marriage of the late Thomas C. Assaly to Gloria Assaly was an invalid marriage but also seeking damages and punitive damages in the amount of $4.5 million.
Thomas C. Assaly was a builder and developer in Ottawa. He married Gloria Assaly for the first time in 1956. They raised a family of four sons together and they separated and divorced in 1974. Following his second marriage and divorce, Thomas and Gloria began to cohabit once again in 1999 and they remarried in December of 2005. Mr. Assaly died not long afterwards on July 9th, 2007. He last made a will on April 22, 2004 but pursuant to the provisions of the Succession Law Reform Act that will would have been revoked by the marriage. Accordingly when Thomas C. Assaly died he was deemed to have died intestate. The plaintiffs who are grandchildren of the deceased would have received specific monetary gifts under the will but do not share in the intestacy.
Thomas G. Assaly (“Thomas Assaly Jr.”) is the son of the deceased and of the defendant Gloria. He is not a party to this proceeding but the plaintiffs are his children and the current litigation guardian is his wife. Thomas Jr. is apparently precluded from suing either his mother or the estate by terms of certain minutes of settlement. In addition he received a substantial sum from the estate as his share of the intestacy. It is the contention of the defendants that this litigation is improper proxy litigation directed by Thomas Jr. although it is ostensibly launched by Karen Assaly on behalf of her disinherited children.
Karen Assaly is no longer resident in Ontario as she has relocated and now lives in the state of Florida in the United States of America. The fact that the litigation guardian (and the remaining minor plaintiffs) no longer reside in Ontario has provoked a motion for security for costs.
In the face of the demand for security for costs, the plaintiffs propose to replace the litigation guardian with Conor Assaly one of the minor plaintiffs who now an adult. Conor has a financial interest in the outcome of the proceeding, is apparently prepared to shoulder the burden of protecting the interests of the other minor plaintiffs, acknowledges his potential liability for costs. He is a resident of Ontario, albeit a 22 year old university student who may not have any significant income or assets.
As originally drafted the statement of claim included a claim for damages and other relief which the defendants have always argued were improper. Mr. Hull who has now taken over the litigation as counsel agrees that the action is improperly constituted. In fact he argues it should more properly have proceeded as an application under the estate rules. He now seeks to amend the claim by abandoning the claim for damages. The action would then become an action only for declaratory relief.
Of course the declaration which the plaintiffs seek is not sought in a vacuum. If the marriage is invalid then they seek a declaration that the will is valid and then of course the grandchildren would lay claim to the gifts they should have received under the now valid will.
THE AMENDMENT
The amendment is in substance withdrawal of the claim for damages and punitive damages set out in the original claim. The only additional relief is a declaration of validity of the will of April 22, 2004. Mr. Hull of course argues that this is the natural legal consequence of the declaration of invalidity of the marriage and all parties have always understood that the objective of the litigation was to validate that will and enforce the gifts under that will. I agree. This is not a new claim but a necessary corollary of the original declaration.
The only other change is the addition of the estate as a defendant. The estate or at least the estate trustee is currently a third party.
Rule 26.01 is the rule governing amendments and it provides that amendments will ordinarily be granted unless the amendment results in prejudice which cannot be remedied by an order of costs. That is the case here. The only prejudice claimed by the defendants is the prejudice of having to defend against an action which they claim to be improper in the first place. The amendment does not increase this prejudice. If anything it reduces it.
The addition of the Estate as a party is governed by Rule 5.04 (2) which contains essentially the same language as Rule 26.01 but in less mandatory language. On the other hand, the language of Rule 5.03 (1) is mandatory. That rule requires that all parties whose presence is necessary to enable the court to adjudicate effectively and completely shall be made a party. As the plaintiff seeks declaratory relief intended to be a remedy binding on the estate, the estate is a necessary party. As noted, the estate trustee is already a third party. Moreover the estate trustee has defended against the current action and therefore has already joined issue with the plaintiff.
The defendant resists the proposed amendment on the basis of the Limitations Act, 2002 and the Trustee Act. There are two answers to that. Firstly with respect to the minor plaintiffs, the limitation period does not run against minors until a litigation guardian is appointed. Thus by definition under s. 6 of the Limitations Act, 2002 an action commenced on behalf of minor plaintiffs is commenced within the limitation period. The substance of the claim as amended is identical to the claim as first pleaded. It is alleged that the marriage was invalid because Thomas C. Assaly was not competent when it was celebrated, was drugged at the time and there was no intention to enter into a marriage or to invalidate the will. This is unchanged by the amendments.
The second exception in the Act is that there is no limitation period for an action for a declaration if no consequential relief is claimed. There is a very real question as to whether the declaration sought here is or is not a claim for pure declaratory relief[1]. Since the claim of the minor plaintiffs is not barred in any event, I cannot conclude that the amended claim is incapable of success because of the passing of a limitation period.
I therefore allow the relief requested to amend the claim and to add the estate as a party. Accordingly the amended statement of claim in the form proposed will be allowed, the estate will be added as a party and the title of the proceedings will be amended accordingly.
Terms of Relief
Both rules 26.1 and 5.06 contain the mandate to address prejudice in the form of costs. The defendants have faced the claim as originally drafted for more than four years and there have been numerous interlocutory steps. Any costs thrown away in defending against the portion of the claim that has now been abandoned should be reimbursed. A new defence will now be required. The costs thrown away will at minimum include the cost of preparing the original statement of defence dealing with the improper claim for damages. No doubt there may be other costs related only to the original claim and if these can be identified, have not been dealt with on a previous motion and will be of not utility in dealing with the freshly amended claim, they are to be reimbursed on a substantial indemnity scale.
There is insufficient evidence before the court to calculate those costs precisely. Accordingly the defendants shall have 30 days to submit a bill of costs and if the parties cannot agree on the amount of the costs the quantification of costs shall be referred to the assessment officer. Any costs that were incurred because of the original form of the claim that would not have been required had the claim been in the form it will now take shall be reimbursed in full. This may include the motion for summary judgment if it was based on the claim for damages and if it will no longer be brought with respect to the claim for declaratory relief. I may be spoken to further if more specific direction is required for the purposes of assessment.
Rule 56.09 confers broad discretion on the court to order security for costs as a term of any order and in doing so the court need not make any of the findings required to order security under Rule 56.01 or 56.02. Consequently as a term of permitting the amendment, if the costs thrown away cannot be resolved within 45 days then rather than delay the action the plaintiffs will be required to post security for those costs until they are quantified at which point they may be paid out of court.
LITIGATION GUARDIAN & SECURITY FOR COSTS
Karen Assaly launched this action on behalf of her children, all but one of whom were minors when the action was commenced. She was at the time resident in Ontario but she has subsequently relocated the family to the State of Florida in the United States of America. Karen Assaly is therefore no longer resident in Ontario. She has not sought to show that she has assets in Ontario or to show any other reason why security for costs would not be appropriate.
What she does seek to do in response to the motion for security is to resign as litigation guardian. Conor Assaly then seeks to be added in her place. Conor deposes that he resides in Toronto where he is a full time student. He further deposes that he intends to remain in Toronto and to seek employment once he graduates. Of the other plaintiffs, Thomas T. Assaly was never a minor during the litigation and he resides in Halifax. Hunter Assaly is now 18 and no longer a minor. He is said to currently reside in Ottawa. Conor’s affidavit says nothing about his own income or his assets or his ability to satisfy an order for costs.
All of the minor plaintiffs reside in Florida with their mother Karen Assaly. It is conceded that the only reason she is resigning and Conor is applying to act in her stead is to avoid the need to post security for costs. Arguably Conor is legally qualified to act as litigation guardian since he has complied with the provisions of Rule 7.02 (2) and if the action was only just starting, he would be entitled to act as litigation guardian without leave of the court. It is quite another thing to permit Karen Assaly to resign as litigation guardian or to relieve her of the responsibilities she assumed when she launched the litigation in the first place.
There is no provision in Rule 7 permitting the resignation of a litigation guardian. Rule 7.06 permits the removal of the litigation guardian under two circumstances. The first is when a minor reaches the age of majority, files an affidavit certifying that he or she is now an adult, elects to continue the proceeding and obtains an order to continue. The second is if it appears to the court that the litigation guardian is not acting in the best interests of the minor plaintiffs. Neither of those provisions apply to this motion.
A person who instructs a lawyer to launch litigation on behalf of minor plaintiffs assumes significant duties and responsibilities. In the first place of course the litigation guardian has the duty to act in the best interests of the children. Secondly the litigation guardian assumes the potential liability for any costs award made against the plaintiff and must swear an affidavit attesting that he or she is aware of this risk. The instructions to counsel to frame the litigation as originally constituted came from Karen Assaly as did the instructions to amend the pleadings. As she is still responsible for the litigation at present then it must be presumed that it is still Karen who is responsible for instructing counsel. The motion to permit her to step down and be replaced by her son, brought as it is in the face of a motion for security for costs must be regarded as abuse of process.[2]
Given the nature of this litigation, and the cost consequences I have ordered as a term of the amendment, it would be fundamentally unfair to the defendant and to the estate to permit the substitution of the litigation guardian without strict terms. In my view appropriate terms would include payment of the costs thrown away as ordered above and posting of security for costs going forwards.
Security for costs is justified on three bases. Firstly the removal of the litigation guardian to Florida justifies an order for security for costs under Rule 56.01 (1) (a). The attempt to substitute Conor Assaly for Karen Assaly in the face of that motion is blatant abuse of process. Given that Conor is a university student whose mother and minor siblings reside in the United States, in the circumstances of this motion, based on his own evidence that he is and will be in regular communication with his mother, I conclude that he will be only a nominal plaintiff. Furthermore I can infer from his status as a student and the lack of any evidence before the court that he has any independent source of income or exigible assets in Ontario that there is reason to believe he may not have sufficient assets to satisfy an order for costs. This justifies an order under Rule 56.01 (1) (d). Finally I have overarching discretion under Rule 56.09.
The litigation to date has not proceeded in an efficient manner. The plaintiff has had several counsel. There have been numerous interlocutory proceedings. There is every indication the litigation will continue to be acrimonious. Accordingly the plaintiffs are to post $100,000.00 in cash, bond or letter of credit within 30 days. Unless they also agree on the costs thrown away and have paid them then they shall post a further amount of security sufficient to cover the claim for interim costs. I may be spoken to if further direction is required.
Rule 56.07 provides that an amount of security ordered by the court may be increased or decreased at any time. It will be open to either party to seek such a variation should it subsequently appear that the costs are either over secured or under secured by this order.
DISCLOSURE
- The plaintiff seeks an order for disclosure of documents. In particular it seeks access to the medical records of Thomas C. Assaly and to the records of the capacity assessor. These documents are of fundamental relevance to the claim as pleaded. The plaintiffs will be entitled to this relief upon posting the security for costs.
TIMETABLE
Master Roger has been case managing this action. The timetable for this proceeding will now have to be revised. The defendant will have to determine whether or not she still wishes to proceed with the summary judgment motion in light of the amended claim.
Pursuant to Rule 56.05 when an order for security has been made, the plaintiff may take no further steps in the action (other than an appeal) until the security has been posted. This too will interrupt the schedule.
Accordingly, upon posting security the parties are to arrange a case conference with Master Roger to reconsider the timetable for the proceeding. I will however remain seized of the following questions: directions regarding assessment of the costs thrown away; the amount of security for costs thrown away if the parties cannot agree; and, any question about the form of security for costs. In addition, if there were offers to settle the motions which were not disclosed to me and might have altered my disposition of costs, I may be spoken to in that regard.
COSTS
- There has been divided success on these motions. Subject to consideration of any offers to settle that have not been disclosed, there will be no costs of these motions.
SUMMARY AND CONCLUSION
In conclusion, for the reasons given above, an order will issue as follows:
Leave is granted to amend the claim as proposed and to add the estate as a defendant. The title of the proceedings will be amended accordingly.
The plaintiffs shall pay costs thrown away in respect of the portion of the original claim that is now abandoned on a substantial indemnity scale. The defendant shall elect whether to continue with the motion for summary judgment or to seek costs of that motion as costs thrown away.
The defendant shall have 30 days to serve a bill of wasted costs and the parties shall agree upon those costs within the next 45 days failing which the determination of those costs shall be referred to assessment. In that case the plaintiff shall post security for those costs pending resolution and the costs as assessed will be paid out of the security.
Regardless of the resolution of the costs thrown away, the plaintiff shall post additional security for costs in the amount of $100,000.00 by cash, bond or letter of credit.
Provided Conor Assaly complies with Rule 7.06 (1) (a), the costs thrown away are paid or secured and security for costs posted in accordance with this order, then at the option of the plaintiffs, Karen Assaly may withdraw as litigation guardian and Conor Assaly may be appointed in her place.
Providing the costs are paid or secured and security for costs posted as set out above, the plaintiffs shall be entitled to the disclosure of medical and capacity records as requested.
The parties are to obtain an appointment to appear before Master Roger for a case conference to establish a revised timetable for the litigation once security for costs have been posted.
Subject to reconsideration of the matter in the event there were offers to settle, there will be no costs of these motions.
Master Calum MacLeod
DATE: October 29th, 2013
[1] Toronto Standard Condominium Corp. No. 1703 v. 1 King West Inc. 2010 ONSC 2129; (2010) 318 D.L.R. (4th) 378 (Div.Ct.)
[2] Close Up International Ltd. v. 1444943 Ontario Ltd. [2006] O.J. NO. 3857 (S.C.J.) and Sydlo Inc. v. Mixing Equipment Co., [1986] O.J. NO. 2542 (Div. Ct.)