ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: C-8220-04

DATE: 20140319

BETWEEN:

The Bank of Nova Scotia Trust Company in its capacity as one of the Estate Trustees of the Estate of the late William Crozier

Plaintiff

– and –

Norma James, Judith Tomlinson, Karen Tomlinson, Anne Rutledge, Grant Crozier, William Crozier, Karl Crozier, Grace Latimer and Ralph Crozier and Barbara Belan and Donna Rose Langlois Estate Trustee with a Will of the Estate of Anne Crozier, Rita Tomlinson, Estate Trustee with a Will of the Estate of Ralph Tomlinson

Defendants

AND BETWEEN:

Ralph Crozier

Plaintiff by Counterclaim

• and -

The Bank of Nova Scotia Trust Company in its capacity as one of the Estate Trustees and the Estate of the late William Crozier

Defendants by Counterclaim

Meghan Butler, for the Moving Party

Leighton T. Roslyn, for all Defendants except Ralph Crozier

Ralph Crozier, no counsel

HEARD: March 14, 2014

RULING ON MOTION

GAUTHIER J.:

The Motion

[1] The Plaintiff, the Bank of Nova Scotia Trust Company in its capacity as one of the Estate Trustees of the Estate of the late William Crozier, (“Scotia Trust”) seeks an Order striking the Statement of Defence and Counterclaim of Ralph Crozier, (“Crozier”), or, in the alternative, an Order that Crozier produce information and/or series of documents in compliance with his undertakings, within 30 days, failing which Scotia Trust can obtain an Order striking the pleadings on the filing of an Affidavit confirming non-compliance with the Order.

[2] Scotia Trust relies on Rules 1.04, 30.02, 30.08, 31, 34.10, 34.15, 35.04 and 57.03 of the Rules of Civil Procedure.

[3] Crozier opposes the motion, taking the position that it is too late for Scotia Trust to bring the motion, and further, that the undertakings have been satisfied.

[4] In the normal course, my determination of the merits of the motion would be based exclusively on the motion materials; however, in this case, in order to have some context in which to consider the motion, it was necessary for me to review material which was not included in the motion record, that is the pleadings.

[5] Crozier is the nephew of the late William Crozier and was his attorney for property pursuant to a Continuing Power of Attorney from April 1, 1996, until February 18, 2000, on which date William Crozier died.

[6] It is alleged that during his tenure as attorney for William Crozier, Crozier made monetary payments totalling more than $750,000, to himself and to a number of William Crozier’s relatives, who are named defendants in the action.

[7] On January 18, 2001, the Court issued a Certificate of Appointment of Estate Trustees with a Will, appointing Scotia Trust and Crozier as Estate Trustees with a Will, of the estate of William Crozier.

[8] In 2003, Scotia Trust requested that Crozier pass his accounts, in connection with his management of William Crozier’s financial affairs for the period from 1996 to 2000, pursuant to the Substitute Decisions Act of Ontario.

[9] On November 20, 2003, Crozier delivered a Notice of Application to pass accounts, along with a statement of his accounts. The matter was first before the court on May 10, 2004. Notices of Objection had been filed by Anne Crozier and Ralph Crozier, as well as by Scotia Trust. The Notices of Objection alleged that Crozier had breached his fiduciary duties and obligations to William Crozier by having improperly paid himself in excess of $140,000. It was further alleged that the accounts were not in proper form.

[10] By way of an Order made on May 10, 2004, the Application to Pass Accounts was converted to an action pursuant to Rule 38(10) of the Rules of Civil Procedure, the issues being described as:

(1) During the period from April 1, 1996 to February 18, 2000, did Crozier owe a fiduciary duty to the deceased William Crozier; and

(2) Was that fiduciary duty breached in the distributions made to the respective beneficiaries, identified prior to the death of William Crozier?

[11] As a result of the May 10, 2004 Order, Scotia Trust began the within action by way of Statement of Claim issued in July 2004. The claims are for the following:

(a) A judgment or order of this Honourable Court declaring that the Defendant, Ralph Crozier, during the period from April 1, 1996, to February 18, 2000, in acting under a Continuing Power of Attorney for Property granted to the said Ralph Crozier by William Crozier, now deceased, owed a fiduciary duty to the deceased, William Crozier;

(b) A judgment or order adjudging and declaring that the Defendant, Ralph Crozier breached his fiduciary duty to the said William Crozier, as a result of several monetary distributions he made to himself and to certain individuals named in this action, while the said Defendant Ralph Crozier was acting as attorney for the said William Crozier, prior to his death.

[12] The Statement of Claim further alleges that because of the payments made by Crozier to the named defendants, during the lifetime of William Crozier, the interests of named beneficiaries (including those who allegedly received funds prior to February, 2000) have been diminished as a “short fall” as part of their interests under the terms of the Will of William Crozier.

[13] The Statement of Claim goes on to allege that Crozier

21(c) has failed to produce any evidence other than his own verbal evidence as to his authority to make such substantial payments of monies from the estate of this deceased, while he was alive, and he has failed to provide any evidence as to the purposes of such payments.

(d) has failed to provide evidence establishing the use or uses to which all of the monies removed by and for himself, were put to, and he has failed to provide a full and detailed explanation of the justification for the payment and removal of such monies for his sole use and benefit as a result of which he has unjustly enriched himself to the detriment of other beneficiaries of the Will of the deceased.

[14] The Statement of Claim requested an accounting in proper form, evidence establishing Crozier’s authority for the making of the payments, an Order requiring Crozier to deliver all of the documents, records, bank books, financial records, vouchers and cancelled cheques, relating to the period in question, and reimbursement of the monies paid out to Crozier himself and the others, totalling more than $766,000.

[15] On February 18, 2005, Crozier delivered an Amended Amended Statement of Defence, a Crossclaim and Counterclaim.

[16] In his pleading, Crozier alleges that all payments made by him, to himself and to others, were on the instructions of William Crozier, “who was of sound mind and totally competent up to the time of his death.”

[17] He alleges further that he did provide accounting records and backup information for all matters in which he was involved, and he did so with the assistance of professional accountants.

[18] Crozier alleges that the action is brought in bad faith, evidenced by the fact that Scotia Trust purports to seek repayment only from him of the full amount that other beneficiaries received. He at no time breached any duty to the deceased.

[19] In April, 2011, Scotia Trust delivered its Amended Reply and Statement of Defence of the Plaintiff to the Amended Amended Statement of Defence, Crossclaim and Counterclaim of the Defendant Ralph Crozier.

[20] The action was administratively dismissed for delay, and that dismissal was set aside by Order made on April 21, 2011.

[21] Crozier’s Examination for Discovery was held on April 15, 2010, and October 28, 2010. He gave 39 undertakings. I am advised that at the conclusion of the discovery, Mr. Sirois would have involved the usual phrase “subject to the undertakings and to questions arising from them…”

[22] Counsel for Scotia Trust provided a list of Crozier’s undertakings (prepared from counsel’s written notes) to Crozier’s counsel on October 17, 2011. On December 16, 2011, a list of the undertakings prepared from the transcripts was provided to Crozier’s counsel, together with a request for fulfilment of same.

[23] A pre-trial was commenced on November 16, 2011. The matter was adjourned to a Trial Management Conference.

[24] At the Trial Management Conference on April 10, 2012, Gordon J. made the following Order, on the consent of all parties:

(i) All parties shall comply with their undertakings within 90 days;

(ii) Motions arising from those Undertakings shall be brought within 2 months thereafter.

[25] The within motion was originally returnable on December 13, 2013. It was adjourned on consent of counsel, ultimately to March 14, 2014, the date on which I heard the motion.

[26] Crozier’s original counsel of record was Joseph Bisceglia. In the spring of 2011, Joseph Bisceglia ceased to represent Crozier, and Augusto P. Palombi became counsel of record for Crozier. He continued in that capacity until March 10, 2014, at which time Mr. Palombi sent Scotia Trust’s counsel a Notice of Intention to Act in Person, from Crozier.

[27] Crozier appeared in person and made submissions on the motion on March 14, 2014, representing himself.

[28] Crozier took the position that the undertakings had been satisfied. He suggested further that Scotia Trust is barred from bringing the motion as it was brought outside the timetable set by Justice Gordon on April 10, 2012.

Issues

[29] There are three issues before me. The first I will deal with is the submission, by Crozier, that Scotia Trust is out of time for this motion and it should not be entertained.

[30] The motion was clearly brought some 15 months after the timetable specified by Justice Gordon. The explanation for the delay is that Scotia Trust was affording Crozier time to comply with the undertakings. Further, Scotia Trust suggests that, even if the motion was brought after the specified time, Crozier is still obligated to fulfill his undertakings.

[31] While the motion was not brought within five months of the Trial Management Conference in accordance with Justice Gordon’s Order, nor were all of the undertakings fulfilled within the 90 day period specified in the Order.

[32] On July 10, 2012, the very end of the 90 day period specified by Justice Gordon, counsel for Crozier wrote to Scotia Trust’s counsel, purporting to provide answers to most of the undertakings. It appears that 7 of the 39 undertakings were still outstanding at that time. I will expand on this later in these reasons.

[33] Two and a half months later, on October 26, 2012, counsel for Scotia Trust sent a detailed response to Crozier’s counsel requesting more complete compliance with the undertakings. I will refer in detail to this letter as well later in these reasons.

[34] Crozier’s counsel did not respond to the October 26, 2012 letter.

[35] Notwithstanding the delay in bringing the motion (more than 12 months after the letter of October 26, 2012), Scotia Trust is not barred from bringing a motion to compel compliance with the undertakings. Scotia Trust is correct in its submission that there is a continuing obligation to comply with undertakings notwithstanding the failure to adhere to the court ordered time table. I note further that there was no suggestion that Crozier would have been prejudiced by Scotia Trust’s failure to bring the motion within the specified time period.

[36] The next issue I wish to address is the appropriateness of an Order striking a party’s pleadings when undertakings have not been fulfilled.

[37] The remedy of striking pleadings and thus denying a party the right to participate in a trial is “a serious one and should only be used in unusual cases”. See Marcoccia v. Marcoccia (2009), 2009 BCCA 111, 66 R.F.L. (6th) 1 (Ont. C.A.). It is available when a party demonstrates a “blatant disregard for the process and the orders of the court.” Sleiman v. Sleiman (2002), 2002 44930 (ON CA), 28 R.F.L. (5th) 447, at p. 448.

[38] Crozier is in breach of his obligation to honour his undertakings and of the Order of Gordon J. However, on the facts before me, I cannot find that he has demonstrated a “blatant disregard for the process and orders of the court”. Thus, it would not be appropriate to strike Crozier’s pleadings, and that request is denied.

[39] I turn now to the undertakings themselves and the issue of whether they have been satisfied or not. This involves a discussion of each of them individually, and a consideration of the July 10, 2012 letter from Mr. Palombi (the answers), and the October 26, 2012 response from Mr. Sirois.

(Complete undertakings discussion paragraphs [40]–[73] reproduced exactly as above.)

[73] There will be an Order that Crozier satisfy Undertakings #6, #10, #13, #14, #15, #16, #19, #20, #31, #33, #38, and #39, within 90 days of the date of this Order. Further, Crozier shall satisfy Undertaking #21 within 60 days of the setting of a trial date, Undertaking #24 within 30 days of this Order, and Undertaking #22, within 60 days of this Order.

[74] I turn now to the issue of costs.

[75] Scotia Trust seeks full indemnity costs in the amount of $7, 350.

[76] It is submitted that the undertakings given by Crozier go to the heart of the issues between the parties and relate to accounting for the monies that Crozier disbursed while he was acting under the Power of Attorney. I agree with Scotia Trust’s characterization of the undertakings.

[77] Scotia Trust relies on the three year hiatus between the date the undertakings were given and the bringing of the motion.

[78] I do not find this argument compelling. Counsel did not provide a list of the undertakings, nor make a request for answers for more than 12 months after the conclusion of the Examination for Discovery. And while Crozier’s counsel did not provide answers until very near the end of the time limit set by Gordon J., that does not account for the significant delay in bringing the motion. The motion was brought some 14 months after the time limit set by Gordon J.

[79] Although Scotia Trust was unsuccessful in its motion for an Order striking Crozier’s pleadings, it was largely successful in its claim for an Order compelling Crozier to comply with his undertakings.

[80] Having said that, this is not a case where a party has totally ignored his obligation to comply with undertakings. Out of the 39 undertakings given by Crozier, and out of the 15 undertakings that Scotia Trust maintained were outstanding, three had been satisfied, and a number appeared to have been satisfied from a technical perspective, when one considers the language of the original undertakings.

[81] For those reasons, I decline to award costs to Scotia Trust.

[82] ORDER:

(1) The Claim for an Order striking Ralph Crozier’s Statement of Defence and Counterclaim is denied;

(2) Ralph Crozier will satisfy Undertakings #6 , #10, #13, #14, #15, #16, #19, #20, #31, #33, #38, and #39 within 90 days of the date of this Order;

(3) Ralph Crozier will satisfy Undertaking #21 within 60 days of the setting of a trial date in this action;

(4) Ralph Crozier will satisfy Undertaking #24 within 30 days of the date of this Order;

(5) Ralph Crozier will satisfy Undertaking #22 within 60 days of the date of this Order.

(6) In the event that Crozier fails to comply with (2), (3) and (4) above, Scotia Trust will be at liberty to bring a motion to strike Crozier’s pleadings, without notice.

(7) No costs.

The Honourable Madam Justice Louise L. Gauthier

Released: March 19, 2014