SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: 6804/12
DATE: 2014/04/16
RE: Peter Vladimir Catlos (by his Litigation Guardians Brian A. Catlos and Peter Valdis Catlos) (Plaintiff)
- and -
Miriam Barkley, Richard Barkley and Norman Catlos (Defendants)
BEFORE: Justice H. A. Rady
COUNSEL: Brian Ilion, for the Plaintiff Angelo C. D’Ascanio for the defendant, Richard Barkley Jennifer Quick, for the defendants Miriam Barkley and Norman Catlos
HEARD: April 11, 2014
E N D O R S E M E N T
Introduction
[1] The defendants seek an order setting aside an order to continue dated February 25, 2014 obtained by the plaintiff on requisition. A number of ancillary orders are sought but a determination of those matters are for another day. I considered that the threshold issue was whether the order to continue should be set aside and that a decision on that issue was necessary before the remainder could be adjudicated. At the conclusion of argument, I advised the parties that the order to continue was set aside with written reasons to follow.
Background
[2] This is hard fought and acrimonious litigation between siblings. The subject matter of the proceeding is the validity of an inter vivos gift from Peter Catlos Senior to his daughter Miriam of all but one of his shares in Tatra Corporation. The action was the subject of an order by Belobaba J. in 2012, who directed a trial of an issue, stipulated how the action would be titled and transferred it to London. Brian and Peter Catlos bring the action as Peter Sr.’s litigation guardians. Their sister, Miriam, her husband Richard Barkley and brother Norman are named as defendants.
[3] I was appointed as case management judge pursuant to Rule 37.15. On November 11, 2013, Peter Sr. died and consequently the action was stayed. Peter Sr. left two wills, a primary will and a secondary will. The primary will deals with any property owned by Peter Sr. other than his shares and loan receivables in Tatra Corporation. It appoints as estate trustees Peter Sr.’s brother-in-law and sister-in-law, Guntis and Anita Liepins. The secondary will deals with shares and loan receivables in Tatra Corporation and appoints Miriam, Norman and Peter Jr. as estate trustees.
[4] A case management hearing was arranged and scheduled between counsel to proceed before me on March 4, 2014.
[5] The following sets out the chronology of events leading to the case management hearing, which is important to understanding the rationale for my decision.
[6] On December 3, 2013, Mr. Ilion’s assistant emailed counsel for the defendants, requesting that a case conference hearing be scheduled.
[7] On the same day, Ms. Quick responded to ask “What is the purpose of the case conference?”, to which Mr. Ilion’s assistant responded: “The purpose of the case conference is to schedule any necessary motions and to discuss a plan for moving forward.”
[8] On December 5, 2013, Ms. Quick emailed counsel, Mr. Ilion, in the context of trying to schedule a mutually-convenient hearing date:
…[T]he proceeding is stayed, given the death of the plaintiff. I assume that your clients intend to seek relief to allow the proceeding to be reconstituted given the stay. I will agree to the case conference on the condition that it is without prejudice to my clients’ right to oppose such relief/re-constitution and on the condition that we receive your clients’ proposed agenda before February 1, 2013 [sic], which will be without prejudice to my clients’ right to contest any item therein and to propose additional items for the agenda.
[9] On the same day, Mr. D’Ascanio replied to all counsel in respect of the above email:
My agreement to the case conference is conditional on:
- Receipt of Brian’s [Ilion] proposal in the near future for our consideration for reconstituting the action given the plaintiff is dead. This may (or may not) turn out to be litigious and so I think we need to know what Brian intends to do to overcome the stay and the death of the plaintiff so we can start planning a litigation timetable if contentious.
[10] By email dated December 9, 2013, Mr. Ilion wrote to counsel for the defendants to “confirm that the booking of the case conference is without prejudice to any of the parties [sic] rights or positions with respect to the proceeding. On this basis We [sic] will confirm the date with the court. I will provide a proposed agenda by Feb 1, 2014.”
[11] By exchange of emails on December 18, 2013, counsel for the parties agreed to schedule the case conference hearing on March 4, 2014.
[12] By email dated February 3, 2014, Mr. Ilion provided counsel for the defendants with a proposed agenda for the March 4, 2014 case conference hearing. Point 1(a) of the proposed agenda provided as follows:
The Action: Continuation with Brian Catlos and Peter Catlos Jr. as Litigation Administrators. If Defendants object to Brian Catlos and Peter Catlos Jr. continuing as Litigation Administrators, then continuation of the Action by the Estate of Peter Catlos Sr. by Guntis and Anita Liepins, the named co-executors under Peter Sr.’s primary will.
[13] On February 3, 2014, Mr. D’Ascanio emailed Mr. Ilion responding to point 1(a) of the proposed agenda as follows:
1(a) – The Rules of Civil Procedure expressly provide that a Litigation Administrator may only be appointed where an executor is not named…Therefore, the court has no jurisdiction to appoint…Litigation Administrators to continue the action. In addition to this jurisdictional issue, I would oppose these appointments on their merits. It seems to me that the appropriate method by which to reconstitute and reactivate your action is by way of motion under the Trustee Act to:
(a) Have Miriam and Norman removed as estate trustees of the secondary will for proper cause;
(b) Have Brian appointed as a proper person to act as estate trustee along with the remaining estate trustee, Peter; and
(c) Obtain leave to waive the requirement for non resident estate trustees to have to post security.
I don’t think Justice Rady at a case conference is going to decide this question of how your action should be reconstituted on its merits. At best there will be a discussion of the proper way to proceed to do this…If you serve your motion record before the case management hearing, that would expedite the working out of a timetable as we would only have to work out scheduling responding materials, etc.
[14] Mr. Ilion responded by emailing a letter on February 18, 2014 to counsel for the defendants. He advised that Guntis and Anita, the estate trustees under Peter Sr.’s primary will, “have consented to and instructed that an order to continue the action…against the defendants proceed”. He added that:
Mr. D’Ascanio’s objection to Guntis and Anita Liepins acting as litigation administrators appears unsupportable. We note that the Action is a chose-in-action forming part of the Primary Estate and note that the Secondary Will is limited exclusively to the disposition of Peter Sr.’s ‘shares and loan receivable in Tatra Corporation and all other shares and loan receivables which [he] may hold at the time of [his] death in private corporations’.
Accordingly, we disagree with Mr. D’Ascanio’s position concerning the rights of Guntis and Anita from acting as litigation administrators for the purposes of the Action.
[15] By exchange of emails on February 19, 2014, Mr. D’Ascanio asked Mr. Ilion to confirm that his proposed agenda was in final form so that he could deliver a responding agenda. Mr. Ilion’s assistant responded that Mr. Ilion would be happy to schedule a call to discuss. Mr. D’Ascanio responded “[U]nderstood it. I just wanted to make sure that he doesn’t plan to amend it (as I don’t want to respond to it only to find that he changes it).”
[16] The next communication between counsel was on February 25, 2014, when Mr. Ilion faxed counsel for the defendants a cover letter attaching an issued and entered Order to Continue ordering that the proceeding continue as a proceeding by the estate of Peter Sr., by his executors Guntis and Anita Liepins.
[17] The affidavit in support of the motion for the Order to Continue was sworn on January 9, 2014 by Peter Catlos Jr. before Mr. Ilion served the proposed agenda. Mr. D’Ascanio and Ms. Quick, with some justification, feel that they were misled by Mr. Ilion.
The Parties’ Positions
[18] The defendants submit that there are four grounds justifying why the Order to Continue should be set aside:
the affidavit used in support was materially deficient;
there was a breach of an agreement among counsel to discuss the issues raised;
the plaintiff deprived the parties of an opportunity to resolve the issues consensually; and
there is an issue whether the subject matter of the proceeding falls within the deceased’s primary or secondary will, which appoint different executors.
[19] The plaintiff stresses that the Order to Continue is obtained by way of an administrative rather than adjudicative function of the registrar and therefore the requirement of full and frank disclosure does not arise.
Analysis
[20] An Order to Continue under Rule 11 is obtained from the registrar upon requisition. Rule 37.14 provides the court with jurisdiction to review and set aside orders obtained without notice or made by the registrar.
[21] I tend to agree that the registrar does not perform an adjudicative function in granting an Order to Continue: see Paine Webber Mortgage Acceptance Corp. (Trustee of) v. Mundi (2007), 48 C.P.C. (6th) 391 (Ont. Master). I do not agree that the affidavit used in support of the Order was materially deficient, as Mr. D’Ascanio submitted during argument, because the mechanism for the transmission of interest was not identified.
[22] However, these conclusions do not in any way justify what occurred in this case. In the face of what he knew to a certainty was a contentious issue for which the parties had agreed to seek the court’s direction and ultimately, if necessary, its adjudication, Mr. Ilion, apparently on instructions, proceeded to obtain the order. Perhaps it was thought that the order would confer some kind of tactical litigation advantage. In my view, the decision was wrong.
[23] It is axiomatic that a lawyer must act in good faith and candour with all persons with whom the lawyer interacts during the course of professional practice. If Mr. Ilion received those instructions, which were inconsistent with those obligations, he should have attempted to dissuade his clients or declined to act.
[24] It is no answer to say that Mr. Ilion’s letter of February 18, 2014 somehow provided notice to counsel for the defendants of his intended course of action. Similarly, the contention that Mr. D’Ascanio could have availed himself of Mr. Ilion’s invitation to speak on the telephone lacks merit. Clearly, the defendants understood that the way in which the proceeding was to be constituted was before the court. By obtaining the order, the scheduled case conference was rendered of little use.
[25] Consequently, the order is set aside. The parties will return to court on an early date to be arranged with Ms. Beattie to address the outstanding issues raised and in particular, how this proceeding is to be continued. In my view, no additional material need be filed for the purposes of that attendance. I will receive written submissions on costs from the defendants by May 2, 2014 and from the plaintiff by May 16, 2014.
“Justice H. A. Rady”
Justice H. A. Rady
Date: April 17, 2014