Citation: Polten & Associates v. Resch, 2015 ONSC 3930

OSHAWA COURT FILE NO.: 89783/14

DATE: 2015-06-18

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Polten & Associates, Moving Party AND: Evelyne Resch, Responding Party

BEFORE: Mr. Justice J.B. Shaughnessy

COUNSEL: Eric P. Polten for the Moving Party Evan L. Tingley for the Responding Party

HEARD: May 27 and 28, 2015

ENDORSEMENT

[1] The originating motion indicates that this was an application for directions of the court on questions arising from the Certificate of Appointment of an Estate Trustee with a Will, dated January 28, 2014, and issued in favour of Evelyn Resch. This position was changed in the course of submissions, such that the actual purpose of the motion was to obtain an Order for payment out of the estate of the solicitor’s account of the moving party and any deficiency to be paid by the responding party Resch in her personal capacity.

Background Circumstances

[2] Polten & Associates law firm were originally retained in 2006 by Siegfried Rainer and his spouse Elisabeth Rainer to prepare a Continuing Power of Attorney for the Management of Property, a Power of Attorney for Personal Care, a Will and an Agreement dated September 6, 2006 executed by Siegfried Rainer and Elisabeth Rainer as well as the two estate trustees under the Will (and attorneys under the Power of Attorneys) namely Evelyne Resch and Susan Fueg. All of the documents were executed on September 6, 2006. The Polten law firm retained the Will for safekeeping.

[3] Evelyne Resch is a niece of Siegfried Rainer.

The Agreement

[4] The Agreement of September 6, 2006 provided that upon the death of the survivor of Siegfried Rainer or Elisabeth Rainer, Resch, in the exercise of her sole discretion, may obtain title to the “cottage property” and the “Don Mills property” (the Rainer’s home). It further provided that Resch was not obliged to take title to both properties. If she took title to one of the properties or none of the properties she would be entitled to the proceeds of sale of such property or properties.

[5] The Agreement, similar to the above in relation to Resch, provided that upon the death of the survivor of the Rainer’s’, Susan Fueg, in the exercise of her sole discretion, could obtain title to vacant land in Florida, or the property could be sold and the proceeds of sale paid to Fueg.

[6] The Agreement further provided that Resch would be obligated to pay the costs of any long term care facility or nursing home required by the Rainer’s, together with any other “duly appointed representative”, which may include Susan Fueg. “Resch shall pay from her share from her assets, and the “representative” shall pay from the cash assets of the Rainer’s.”

[7] When asked what purpose the Agreement served, Mr. Polten responded that in addition to its terms, because he was acting for the Rainer’s, Resch and Fueg, it avoided any potential for a “conflict of interest.”

[8] Elisabeth Rainer died on April 20, 2008. Her estate passed by her Will to her spouse Siegfried. Thereafter, but prior to the death of Siegfried Rainer, the Don Mills property, which was the matrimonial home, was transferred into the name of Siegfried Rainer and sold. The cottage property was then registered in the joint names of Siegfried Rainer and Evelyne Resch on September 30, 2009.

[9] The proceeds of the sale of the Don Mills property on September 28, 2009 realized $439, 000, presumably before adjustments, lawyers and real estate agent fees. The net proceeds of the sale were deposited into Evelyn Resch’s personal bank account.

[10] Siegfried Rainer had a stroke in December of 2008 and another stroke in 2009. His care required that he commence living at a senior’s home in Ajax, Ontario. Siegfried Rainer died on January 6, 2013.

The Will

[11] I am outlining a portion of the Will of Siegfried Rainer dated September 6, 2006, which Mr. Polten spent considerable time discussing in his oral argument and to which I will later refer. Mr. Polten argued that the Will of Siegfried Rainer provided that Resch and Fueg could act only as estate trustees in conjunction with one another “so that each could keep an eye on each other as a safeguard.” In the event that either Resch or Fueg could not act, then neither of them could and the trusteeship would then revert to Johann Draxler. Johann Draxler is the spouse of Evelyne Resch.

[12] The wording of the subject Will is that if his wife, Elisabeth, did not survive him or was unable or unwilling to act then he appointed:

Susan Fueg of the Town of Ajax in the Province of Ontario, and my niece Evelyne Resch, of the City of Graz, Austria, jointly to be the Estate Trustees, Executors and Trustees of this, my Last Will and Testament, in place and instead of my said wife. If Susan Fueg and Evelyne Resch both shall have predeceased me, or shall survive me but die before the trusts hereof shall have terminated or shall be unable or unwilling to act or continue to act as my Estate Trustee, Executor and Trustee, then I APPOINT the husband of my said niece Johann Draxler……….in the place and stead of Susan Fueg and Evelyne Resch.

Termination of Retainer

[13] Evelyne Resch and Susan Fueg, as attorneys under the Power of Attorney, terminated Siegfried Rainer’s retainer with the Polten law firm by e-mail from Fueg to Eric Polten dated July 14, 2009. Mr. Polten acknowledged in an e-mail dated July 15, 2009 the e-mail from Fueg. This e-mail also stated that the law firm was very busy but was reviewing the files. The e-mail also stated that since Siegfried Rainer “is the primary sole executor and trustee of the estate of his wife regarding which we are acting, we need proof that he is incapable to make his own decisions.”

[14] Evelyne Resch, in her affidavit sworn September 10, 2014, states that neither she nor Siegfried Rainer retained the Polten firm after July 14, 2009, nor did the Estate following Siegfried Rainer’s death on January 6, 2013. Further, she states that she did not receive any communication from the Polten law firm from July 15, 2009 until June 5, 2014 when Eric Polten wrote her counsel demanding the payment of amounts he claimed were owing to his firm by the Estate of Siegfried Rainer.

Disputes Between Resch and Fueg

[15] In 2010, a dispute arose between Evelyne Resch and Susan Fueg wherein it was alleged that Fueg was using the Power of Attorney to improperly withdraw certain funds from Siegfried Rainer’s accounts. Resch acted as Siegfried Rainer’s litigation guardian in a lawsuit commenced against Susan Fueg for the sums allegedly misappropriated by Fueg. This action settled at mediation on October 9, 2012. It is acknowledged that the Polten law firm did not act for any party in this action.

[16] As a term of the settlement of the action, Fueg renounced as estate trustee and resigned as Siegfried Rainer’s attorney. The Resignation and Renunciation document executed by Fueg is dated October 17, 2012. This document was forwarded to Mr. Polten on March 11, 2013. Fueg later signed a renunciation in form 74.11 dated October 10, 2013.

[17] The position of Mr. Polten, (Factum, para.34), is that the Polten firm was not informed about the “particulars of a rift between Resch and Fueg until the latter’s resignation and renunciation in her respective capacities as Siegfried’s attorney and as executor and trustee.” Therefore, it is submitted “her role as attorney thus terminated on or about October 17, 2012”.

Remaining Assets in the Estate

[18] With the 2009 transfers of the Don Mills property and the Cottage property referenced above, the Estate’s Ontario assets consisted of bank accounts totalling $47,530.72. The only other asset is an undeveloped parcel of land in Florida which is left to Fueg. The assessed value of the Florida land in 2013 was $2,700.

Transfer of the Will

[19] Following the death of Siegfried Rainer, Mr. Alexander Sennecke, acting on instructions from Resch, forwarded a letter to Mr. Polten dated March 4, 2013 providing a copy of the death certificate for Siegfried Rainer and requesting that the original Will be forwarded to the respondent’s law firm.

[20] Mr. Polten refused to deliver up the Will to Mr. Sennecke. The reasons for the refusal were that the Will had to be “released into the proper hands”. Mr. Polten argued that neither Resch nor her counsel could be provided the Will as Fueg was no longer an executor or trustee. Mr. Polten repeatedly argued on this motion that only Resch and Fueg jointly could be executors/trustees. Once Fueg was removed, then the only person who could be executor was Johann Draxler. Mr. Polten’s position is that he was under an obligation to keep the Will in safe keeping and only release it into the “proper hands”. He also took the position that Mr. Sennecke’s law firm could not act for Draxler. Accordingly, an agreement was reached whereby Mr. Polten would release the Will to a Mr. Martin Tiidus, Draxler’s lawyer. Mr. Polten submits that it was misrepresented to him that Draxler would make an application for appointment as executor /trustee and that Mr. Tiidus would hold the Will in his possession and control pending the appointment.

[21] Mr. Polten therefore submits that the Polten firm ceased to act for the Estate on October 16, 2013. The Will was released to Mr. Tiidus in August 2013. Further, it is submitted by the moving party that the issue of the Will transfer necessitated the post-death involvement of the Polten law firm.

[22] Through inquiries, the Polten law firm subsequently learned that on January 28, 2014, a Certificate of Appointment of Estate Trustee With a Will named Resch as the sole Estate Trustee. As such, the Polten law firm disputes the appointment, propriety and authority of Resch as Estate Trustee.

The Retainer of the Polten Law Firm by Susan Fueg

[23] As previously outlined, Susan Fueg as attorney sent an e-mail to Eric Polten on July 14, 2009 stating that on behalf of her and Evelyn Resch “as joint power of attorney”, terminated the retainer of the Polten law firm. Resch, in her affidavit sworn September 10, 2014, states that the e-mail was sent by Fueg with her knowledge and approval. At this point in time, Siegfried Rainer was reportedly a resident of Ballycliffe Nursing Home in Ajax, Ontario and was incapable of managing his affairs.

[24] Eric Polten, in an e-mail dated July 15, 2009, acknowledged receipt of the Fueg e-mail the day prior. Based on the affidavit of Daniel Walker, sworn September 16, 2014 in support of the Polten application, I glean from the e-mails attached that Mr. Eric Polten wished to conduct due diligence in relation to the incapacity of Siegfried Rainer and an appropriate authorization and direction signed by both Resch and Fueg, prior to transferring the Rainer files to the new solicitor Alexander Sennecke.

[25] In an e-mail dated July 16, 2009, Mr. Alexander Sennecke acknowledged that Mr. Polten could conduct certain due diligence regarding the matter, but “for the record”, he advised Mr. Polten that “the client will not be responsible for any cost associated with your investigations.” In a reply e-mail dated July 17, 2009, Eric Polten inter alia responds that he “cannot accept that it is for us to work for free for doing a job you are being paid for, including the preparation of a proper Authorization and Direction.”

[26] The client’s files are then transferred to the Sennecke law firm. There is a significant gap in time and then on January 18, 2010, Eric Polten sends an e-mail to Alexander Sennecke stating that he (Polten) has been contacted by Susan Fueg “about new developments”. Mr. Polten states that he is “unsure in what capacity” he should be attending to these new developments. He requests that Mr. Sennecke update him on these developments.

[27] The “new developments” related to allegations that Susan Fueg was using the funds of Siegfried Rainer improperly. Attached to the affidavit material of the moving party is a “Retainer Agreement” entered into between Susan Fueg (on January 26, 2010) and Polten & Associates (on February 4, 2010). The client, under the terms of the agreement, is Susan Elisabeth Fueg. The retainer states in (para.5) that:

The client does hereby retain and instruct Polten & Associates, to act on his/her (sic) behalf with respect to all aspects as attorney for Siegfried Rainer, Evelyn Resch’s claims against her and all matters related thereto.

[28] Susan Fueg executes the retainer agreement in her personal capacity. There is no reference that she is executing the retainer agreement as trustee on behalf of the estate.

[29] In the supplementary affidavit of Daniel Walker, sworn September 16, 2014, at (para. 11 and 12) the moving party states that “the retainer of Polten by Fueg was refined, commencing in May 2010, to confine itself to Fueg’ s capacity as power of attorney for Siegfried and not her personal capacity.” Therefore, the moving party asserts that “to the time of Siegfried’s death in January 2013, the Polten firm derived its authority accordingly and the nature of its services rendered thus stood to benefit the best interests of Siegfried, and after his death the estate.”

[30] It is significant to note that there was no written agreement amending the retainer agreement and there is no affidavit filed by Susan Resch in this application. When pressed, Mr. Polten advised the court that his law firm received approximately $20,000 from Susan Resch in partial payment for services rendered on her behalf. There is no communication with Evelyn Resch or with the Sennecke law firm until accounts were rendered by Polten to the estate on June 5, 2014 and forwarded to the estate lawyers (the Sennecke law firm.)

Polten & Associates Solicitor’s Accounts

[31] In a supplementary affidavit of Julia Koenen, sworn September 26, 2014 on behalf of the moving party, there are attached three solicitors’ accounts. An account rendered by Polten & Associates is dated January 27, 2010. This account on its face states that it is rendered “Re: Estate matters”. The account indicates that it is forwarded to “Siegfried Rainer c/o Susan Fueg in her capacity as his joint Power of Attorney.” The account is for professional services rendered from March 3, 2009 through September 21, 2009. It is in the amount of $4,861.50. There is another account dated March 30, 2010 rendered by Polten & Associates “Re: Evelyn Resch” and forwarded to “Susan Fueg” for services rendered from February 17, 2010 through March 29, 2010. It is in the amount of $15,950.18. There is a third account rendered dated June 30, 2010, which on its face, states “Re: Evelyne Resch” and is forwarded to “Susan Fueg and Siegfried Rainer.” This account is for services rendered from March 30, 2010 through June 23, 2010.

[32] The summary of these Polten & Associates accounts are as follows:

January 27, 2010 account $ 4, 861.50 March 30, 2010 account $15, 950.18 June 30, 2010 account $ 6, 793.43 Total $27, 605.11

[33] On June 5, 2014, Polten & Associates send out what it describes as “invoices reprinted” and “unpaid”. This time the solicitor’s accounts were forwarded to Mr. Jeffrey Halman of the Sennecke law firm. There are 3 separate accounts all dated June 5, 2014, which are summarized as follows:

(a) Invoice 6214. This account of June 5, 2014 states that it is “Re: Estate of Siegfried Rainer et al.” This account of June 5, 2014 indicates that it is for services rendered from March 4, 2013 through October 16, 2013. The total amount claimed for the services rendered in this period of time is $27,385.55. The invoice, (found at pg. 98 of the Motion Record), also details amounts outstanding on invoices 4688 and 4740 relating to the March 30, 2010 and the June 30, 2010 accounts referenced above. Therefore, the total amount alleged to be owed to Polten Associates as outlined on this June 5, 2014 account is $50,129.16 ($27,385.55 + $15,950.18 + $6,793.43).

(b) Invoice 4740. This account, also dated June 5, 2014, is for services rendered March 30, 2010 to June 23, 2010 and is in the amount of $6,793.43. This statement of account also references invoice 4688 as being outstanding.

(c) Invoice 4688. This account, again dated June 5, 2014, is for services rendered February 17, 2010 through March 29 2010. It is in the amount of $15,950.18.

[34] Attached to all the accounts rendered by Polten & Associates are pages which summarize the “time expenditures” of each person working on the file and their hourly rate.

[35] I have compared the entries of the June 30, 2010 and June 5, 2014 Invoice 4740 Polten & Associates accounts. They are essentially identical accounts covering the same time period and for the same amount ($6,793.43). What are different are the dates on the accounts. Also, the June 30, 2010 account is “Re: Evelyn Resch” and it is sent to Susan Fueg and Siegfried Rainer c/o Susan Fueg. Whereas the account of June 5, 2014 is “Re: Powers of Attorney from Siegfried Rainer et al”, and this account is sent to “The Trustees of the Estate of Siegfried Rainer” to the attention of Mr. Halman of the Sennecke law firm.

[36] Again, I have reviewed and compared the accounts of Polten & Associates dated March 30, 2010 to the June 5, 2014, Invoice 4688. The accounts are identical except that the March 30, 2010 account is “Re: Evelyn Resch” and it is sent to Susan Fueg, whereas the June 5, 2014 account is “Re: Powers of Attorney from Siegfried Rainer et al” and it is rendered to “The Trustee of the Estate of Siegfried Rainer” through Mr. Halman of the Sennecke law firm.

[37] The Polten & Associates account of June 5, 2014, Invoice 6214, indicates on its face that it is for services rendered March 4, 2013 through October 16, 2013 (pg. 98 of the Motion Record). On close scrutiny of the entries of the account, I observe that the only entry that related to the estate is recorded on August 9, 2013, wherein Mr. Polten took exception to the manner of transferring the Will and the form of the Authorization and Direction detailed previously. In the earliest entry for this account, there is reference to the request for the Will of Ziegfeld Rainer to be transferred to the Sennecke law firm (March 4/13) and also to correspondence received from Mr. Tingley of the Sennecke law firm on March 11, 2013 advising that Susan Fueg had resigned as Trustee of the estate and as Power of Attorney effective October 17, 2012.

[38] I was provided with little or no assistance from Mr. Polten with respect to the various accounts rendered. Mr. Polten spent little time to explain any aspect of the accounts rendered, why the terms of reference were changed and why the accounts were sent to the persons indicated or indeed how they arrived at the amounts claimed. After reviewing all the material, I determined that the Polten account Invoice 4653, dated January 27, 2010, was not resent as a June 5, 2014 account and part of the bundle of other accounts to the Sennecke law firm.

Summary of the Accounts Claimed by the Moving Party

[39] Relying on the factum and materials presented and the analysis above, the amount claimed by the moving party on this “motion for directions” is summarized as follows:

(a) Account January 27, 2010 $ 4,861.50 (b) Account June 30 2010 (resent as June 5, 2014) $ 6,793.43 (c) Account March 30 2010 (resent as June 5, 2014) $ 15,950.18 (d) Account June 5, 2014 (invoice 6214) $ 27,385.55 Total amount claimed $ 54,990.66

Position of the Moving Party

[40] Mr. Polten’s submissions on this application were often confusing, at times incomprehensible and inconsistent. At his urging, I have made extensive reference to his factum, the motion record and the supplementary affidavits filed as well as counsel’s submissions to outline the moving party’s position.

[41] The position of the moving party, I summarize as follows:

(a) Mr. Polten argues that he was the only one looking out for the interests of Siegfried Rainer and Elisabeth Rainer in their specified intentions as expressed in their Wills and the Agreement entered into on September 6, 2006. He argued that the terms of the Power of Attorney of Siegfried Rainer and the Agreement were in a number of instances contravened. Accordingly, Mr. Polten submits that he had a professional duty to investigate the actions of the attorneys/trustees and their counsel. He submitted that in particular regarding his interpretation of the Will and Agreement, if one of Resch or Fueg could not act then the other could not act; and then Draxler, the spouse of Resch, could only act. Mr. Polten argues that the sale of the Don Mills home and the transfer of the cottage into the names of Resch and Rainer jointly, were breaches of the Power of Attorney and the Agreement. Therefore, Mr. Polten submits that these actions required that he exercise his “fiduciary duties” to his client (Rainer). He maintains that Resch took a risk by selling the Don Mills home and pocketing the money, and indeed the funds from that sale should form part of the estate to satisfy his outstanding solicitor’s account. He argues that Resch had no right to the funds until Siegfried Rainer had died and the accounts (including his) were satisfied by the estate.

(b) Mr. Polten argues that he was “deceived” by lawyers and Draxler in relation to the transfer of the Will out of his law firm. Therefore, he argues that this court ought to exercise its discretion to do “justice” and provide relief to the moving party “by way of equity” by ensuring that the work he and the Polten firm performed, as detailed in the solicitor accounts, is properly paid by the estate and any shortfall by the trustee Evelyn Resch. Mr. Polten submitted to the court that he should not have to “suffer” when he acted as a “do-gooder” on behalf of the interest of Siegfried Rainer. He maintains that the cottage property, in the joint names of Resch and Rainer, as well as the remaining funds in the estate account, can be resorted to as a means to satisfy the accounts due and owing to Polten & Associates.

(c) Mr. Polten made a submission that I should include in my decision a paragraph to the effect that Eric Polten first came to the court to seek relief before going to the Law Society and Canada Revenue Agency. I state here that I dismiss this suggestion at the outset. I see no reason to comment on what I consider to be an irrelevant consideration.

(d) Mr. Polten suggests that because he perceived serious transgressions by those entrusted with the affairs of the estate, in particular the appointment of Evelyn Resch as estate trustee, he (Polten) became a “lawyer of necessity” to the estate and as such his law firm should be compensated for the work it did.

(e) It is the position of the moving party that Susan Fueg had the authority to retain Polten & Associates as Power of Attorney, and that she did retain the law firm and as such had authority to bind the estate to pay the legal fees for services rendered.

(f) Mr. Polten stated on several occasions, that he did not wish to cause the estate any more costs for litigation or passing of accounts. He stated that he would prefer that Evelyn Resch not be removed as trustee for “practical reasons”, but “if justice requires, then so be it.” He acknowledged that the true intent and purpose of his motion was to have the Polten & Associates accounts paid. The Notice of Motion seeks an order for directions and the removal of Evelyn Resch as Executrix and Trustee.

(g) In the alternative (Factum para.9) to an Order for payment, the Polten law firm seeks an Order pursuant to R. 74.15 and/or s. 50 of the Estates Act requiring Resch to pass her accounts in her capacity of Estate Trustee. Further, (Factum para 11) the Polten law firm, as a creditor, “but not as judgment creditor of Siegfried (sic) and his Estate” pursuant to s. 42 of the Substitute Decisions Act 1992”, applies “for leave of this court to compel Resch, in her capacity as power of attorney for Siegfried (sic) to the time of his death to pass her accounts”.

(h) It is submitted that Polten & Associates has standing to bring this motion based on R. 75.06(1) wherein “any person who appears to have a financial interest in an estate may apply for directions….as to the procedure for bringing any matter before the court.” It is submitted (Factum para. 49), that while the Polten firm “has been solely representing its own interests since October 16, 2013, and thus is equally and admittedly ‘not a party in the strict sense’, it necessarily acted for the protection and benefit of the Estate, in light of its possession of the original Will.” Therefore, it is contended that the Polten law firm should be paid for services rendered; either based on an express contract, an implied retainer, or on “equitable or restitutionary quantum meruit principles.”(Factum para. 50).

(i) It is the position of Mr. Polten that his law firm has a solicitor’s lien over the Estate assets, “including those assets which appear to have been deliberately excluded from Resch’s calculation of the undistributed Estate proceeds.” (Factum para. 57) However, since the Polten law firm “did not withhold the Will through the exertion of a solicitor’s lien” it should now be paid its outstanding fees “for reasons including the lien it could have then claimed, and has now in fact claimed as part of the process leading to this motion….” (Factum para. 62).

(j) It is argued that the deposit of the sale proceeds of the Don Mills property to Resch’s personal bank account instead of the Estate Bank account “was a clear attempt to bypass the Will, the Agreement and the Estate, resulting in a contrived and substantial reduction to the Estate’s dollar value and the intentional hindrance of payment of the Polten firm’s fees and to other potential creditors.”(Factum para. 81).

Responding Party’s Position

[42] The Responding party’s position is :

(a) The Estate does not owe any money to Polten & Associates and therefore does not have a financial interest to bring a motion as required by the Rules.

(b) Alternatively, even if Polten and Associates were owed money, they do not have a judgment to present to the Estate.

(c) Alternatively, there is no basis for the court to interfere with the administration of the Estate. It is submitted that even if one could accept Mr. Polten’s interpretation of the Will as correct, meaning that Draxler ought to be the estate trustee instead of Resch, the distribution of the estate would not proceed differently. It is submitted that the beneficiaries of the Estate (Resch and Fueg) have not been prejudiced by Resch acting as estate trustee instead of Draxler. A substitution of estate trustee would further add to the delay and cost, with no corresponding benefit to the beneficiaries or the Estate.

(d) Evelyn Resch was not made aware, until receiving Mr. Polten’s correspondence of June 5, 2014, that the Polten firm was claiming it was retained by, and was owed money by, the Estate. Resch has no knowledge of or involvement with any of the docket entries set out in the Polten accounts rendered June 5, 2014. In particular, Resch was never copied on any of the numerous emails between Fueg and members of the Polten law firm that are referred to in those accounts. Resch never signed a retainer agreement with the Polten law firm, and never received a reporting letter or similar document over the course of the alleged representation of Polten & Associates on behalf of the Estate.

(e) Upon receiving the Polten correspondence dated June 5, 2014, the Estate’s counsel replied on June 17, 2014 that the Polten firm was not a creditor of the Estate and that the Estate would not be paying any amount.

Analysis

Does the Estate Owe Any Money to Polten & Associates?

[43] Susan Fueg forwarded an e-mail on July 14, 2009 as Power of Attorney on behalf of Evelyn Resch terminating the retainer that Siegfried Rainer had with the Polten firm. Eric Polten acknowledges the e-mail in a responding e-mail dated July 15, 2009. He makes no objection in this response.

[44] I find as a fact that there is no further evidence of a retainer of the Polten firm by the Estate. There is evidence that Susan Fueg, in her personal capacity, later retained Polten and Associates pursuant to a written “Retainer Agreement”, executed by Fueg on January 26, 2010. This retainer agreement expressly states Polten & Associates were retained on Susan Fueg‘s behalf with “respect to all aspects of her (Fueg) acting as attorney for Siegfried Rainer, Evelyn Resch’s claims against her and all matters related thereto (sic)”. Fueg executes this retainer agreement in her personal capacity only. This retainer agreement is not executed by Evelyn Resch or the Estate. The timing or sequence of events are that Resch accused Fueg of “using the power of attorney to improperly withdraw certain funds” from Siegfried Rainer’s accounts (para 13 of Resch Affidavit sworn September 10, 2014). This issue proceeded to litigation. It resolved at mediation on October 9, 2012. Part of the settlement of the action was that Fueg renounced as estate trustee and resigned as Siegfried Rainer’s attorney. The Polten law firm did not act for any party to this proceeding. Indeed, Mr. Polten stated that he was unaware of the terms of settlement of the proceeding until June 17, 2014 in correspondence received from the Estate solicitor.

[45] This takes me to the statement contained in the Supplementary Affidavit of Daniel Walker, sworn September 16, 2014. At paragraph 11, the affiant states that Fueg’s Retainer Agreement with Polten & Associates “was then refined, commencing in May 2010, to confine itself to Fueg’s capacity as power of attorney for Siegfried and not her personal capacity.” There is no evidence to support this bald statement. There is no affidavit by Susan Fueg to support this contention. I reject this statement in the Supplementary Affidavit. It follows that I also reject paragraph 12 of the Walker affidavit, which contends that the Polten law firm derived its authority from this “refined” retainer for the interest of Siegfried Rainer and the Estate.

[46] There is no reasonable or rational basis to accept that Polten & Associates would initially prepare a very detailed retainer agreement with Susan Fueg but then not prepare and have executed an amending retainer agreement or a new retainer agreement, when there was such a significant change in the nature of the retainer. Accordingly, I find that there was no amending retainer agreement or even a “refined” agreement which authorized Polten & Associates to act on behalf of the Estate.

[47] There is also the issue of the accounts rendered by Polten & Associates, which I have detailed above. The respondent submits that the statute of limitations has run with respect to what in fact are the January 27, 2010, March 30, 2010 and June 30, 2010 Polten firm accounts. It is submitted that on their face these accounts were forwarded to Susan Fueg and not to the Estate or Resch. Mr. Polten never explained why the dates and reference in two of the accounts were altered and sent to the Estate counsel on June 5, 2014. One is left to speculate as to the rationale. However, I do not find it necessary to make a finding with respect to whether a limitation period had expired in relation to those three accounts. What I do find based on counsel admission and the material filed, is that Mr. Polten received approximately $20,000 from Susan Resch to act on her behalf in relation to the Resch allegations of impropriety and pursuant to the retainer agreement. There is no accounting for how these funds were used or a credit as against the accounts rendered. Mr. Polten, in response to questions asked by the Bench, responded that those funds are of no significance in relation to this matter. However, Mr. Polten later submitted that Susan Fueg “ran out of money” to pay him and she was hoping that the Estate would pay her legal fees. I find based on the evidence and submissions of Mr. Polten, that he effectively decided without any contractual basis to re-issue some legal accounts and render other legal accounts in a manner to capture the Estate in a manufactured obligation.

[48] As I have indicated, Mr. Polten spent no time explaining the various accounts rendered. Mr. Polten was not involved and indeed he states he was unaware of the status of the litigation as between Resch and Fueg, or the terms of settlement. The account entries cannot relate to that aspect of matters. The accounts appear grossly excessive and without any meaningful assistance to the Estate. If it was Mr. Polten’s intention that I approve the accounts, I decline to do so.

[49] I reference the January 27, 2010 account as illustrative of what transpired in this matter. There are a few entries relating to March 4, 2009. The vast majority of entries commence July 14, 2009, upon receipt of Susan Fueg’s e-mail sent also on behalf of Evelyn Resch terminating the Polten & Associates retainer for Rainer. The work done was excessive and the amount charged excessive. Further, even if one were to look at the March 4, 2009 entries, Mr. Polten does not produce prior accounts rendered to the Rainer’s when the Will, Agreement and Power of Attorneys were prepared. In short there is no context.

[50] Another example is the June 5, 2014 account, Invoice 6214, in the amount of $27,385.55, which is found at pg.98 of the originating motion record. The entries commence March 4, 2013 and continue for six pages. Mr. Polten claims that he was not aware until March 11, 2013 that Fueg was removed as trustee and attorney. Accepting this as a fact, nevertheless, the vast majority of the entries identify that the Polten firm was spending a very significant amount of time to resist handing over the Will to the Sennecke law firm. There are numerous e-mails back and forth to Fueg in August 2013 as but one example. Yet by this time, Fueg has resigned as Estate trustee and Resch’s evidence is that she was not copied on any of the e-mails. Further, there is no evidence of the Polten firm communicating with the Estate.

[51] Therefore, I find on the evidence and analysis that the Estate never retained Polten & Associates. On this basis, the request for relief is denied.

[52] This finding would appear to put an end to this motion. However, I will review the other issues advanced by the parties.

Is their Relief Under Rule 74 and 75 and s.50 of the Estates Act?

[53] I find alternatively, that Polten & Associates do not have standing to bring this motion. The Notice of Motion relies on rules 74.15(1) (h) and 75.06 and s. 50 of the Estates Act.

[54] Rule 74.15(1)(h) reads in part, as follows:

In addition to a motion under section 9 of the Estates Act, any person who appears to have a financial interest in an estate may move

(h) for an order (Form 74.42) requiring an estate trustee to pass accounts

[55] Rule 75.06 states:

Any person who appears to have a financial interest in an estate may apply for directions……..as to the procedure for bringing any matter before the court.

[56] The Estates Act s.50 (1) provides that an executor or administrator shall not be required by any court to render an account of the property of the deceased, unless at the instance or on behalf of some person interested in such property or “of a creditor of the deceased….”

[57] Polten & Associates has no judgment against the Estate and has not commenced proceedings to obtain payment of the accounts it says are owing.

[58] I find that Polten and Associates do not have a “financial interest” in the estate based on the reasoning in HSBC Bank of Canada v. Capponi Estate 2007 CanLII 37889 (ON SC) para 21 and 23. In the Capponi decision, the deceased had signed a guarantee. The Bank brought an application under Rule 74 and 75 for various relief. While the Bank had commenced an action on the guarantee but, as with the case of the Polten firm, the Bank did not have judgment against the deceased or his estate. In Capponi, the court held that the financial interest had not crystallised and therefore was not within the scope of Rule 74 and 75. The court went on to state that the Bank had no standing to do so. Following the law “expressed in Belz, Rule 74 and 75 were not intended to be used by creditors to secure recovery of assets within an estate and moreover these Rules do not allow parties in HSBC’s circumstances to secure the assets of a deceased’s estate in advance of obtaining a judgment on the guarantee. These Rules are procedural in nature and do not give HSBC any additional substantive rights nor standing to proceed with the application it has brought.”

[59] I find that the moving party’s motion cannot be brought under Rule 74 and 75. The Polten law firm was not retained by the Estate. It has no standing to bring this application. It has no judgment against the Estate. In short, I find that it has no “financial interest” in the Estate. Finally, as noted previously, Mr. Polten submitted that he did not wish to pursue a passing of accounts “unless the court felt it was necessary” to effect justice. I do not find that a passing of accounts is required or necessary. Further, I reject Mr. Polten’s argument that he has a solicitor’s lien and that this constitutes a financial interest in the estate. Further, on the same analysis, s.50 (1) has no application to this motion. I find that the Polten firm was not a creditor of the deceased. Also, the arguments advanced are illogical and irrelevant based on my finding that the Estate never retained Polten and Associates after July 14, 2009.

[60] The moving party has relied on the decision in Salzman v. Salzman 2012 ONSC 1733, as a basis for supporting its arguments and to distinguish its case from the Capponi decision supra. Mr. Polten argues that his firm, while not strictly retained, nevertheless has standing under Rule 75.06 as it has a financial interest. I find that the Salzman decision does not assist the moving party’s argument. At paragraph 14 of the decision, the motion judge made a specific finding that the specific law firm, while not a party in the strict sense, nevertheless remained retained by a party to the application. Therefore, the motions judge found that the law firm could bring the motion for directions under Rule 75.06 as a person “who appears to have a financial interest in an estate”. Clearly, the Salzman case is distinguishable on the facts in this case. The Polten law firm is not retained by any party to this application. Therefore, I dismiss the moving party’s argument on this ground.

Is Quantum Meruit Applicable in the Circumstances?

[61] Mr. Polten also argued that the Polten firm’s accounts should be paid based on quantum meruit. He submitted he became “a lawyer of the estate by necessity” relating to the many transgressions he perceived in the Certificate of Appointment of Resch and her decisions relating to the sale or transfer of properties. Mr. Polten suggested his actions relating to the transfer of his files and the transfer of the Will were for the “financial good to society” and that he took the “high road” which benefited the estate. He argued that quantum meruit ought to be available to direct payments of his firm’s accounts as he respected “the high duty of a solicitor” in his actions throughout. He submitted that the rule of quantum meruit (and the finding of this court) should be that those who do good should be compensated and therefore this court “has to do justice by directing payment to the do-gooders.” To this Mr. Polten added “why should I suffer?” He also submitted “why should all the work [his] firm did accrue to the benefit of Evelyn Resch?” When pressed as to what benefit accrued to the estate as a result of his efforts, Mr. Polten did not have any reasonable response. He maintained that Resch “tried to benefit herself to the detriment of the Estate.”

[62] In the moving party’s book of authorities is the decision in Consulate Ventures Inc. v Amico Contracting & Engineering (1992) Inc. 2007 ONCA 324. At paragraph 99, the Court of Appeal provides the principle that where the claim for restitutionary relief is based on quantum meruit an explicit mutual agreement to compensate for services rendered is not a prerequisite to recovery.

It suffices if the services in question were furnished at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services. See Friedman [Restitution 2nd edition Toronto: Carswell, 1992] at pp. 290-92; Nicholson v St. Denis (1975), 1975 CanLII 393 (ON CA), 57 D.L.R. (3d) 699 (Ont. C.A.), leave to appeal to S.C.C. refused [1975] 1 S.C.R. x (S.C.C.).

[63] I find that there is no evidence that the services rendered by the Polten law firm were at the request, encouragement or acquiescence of the Estate. Indeed, as outlined at paragraph [25] herein, Mr. Alexander Sennecke specifically told Mr. Polten in an e-mail dated July 16, 2009, that “the client will not be responsible for any cost associated with your investigations.” In a reply e-mail dated July 17, 2009, Eric Polten inter alia responds that he “cannot accept that it is for us to work for free for doing a job you are being paid for, including the preparation of a proper Authorization and Direction.” This response appears to be a harbinger for the events that subsequently unfolded.

[64] I am unable to discern how the Estate benefited from the actions taken by Mr. Polten. If anything, his actions in relation to the transfer of the Will to the Sennecke law firm caused a delay in the application for the Certificate of Appointment. (The request to transfer the Will was made on March 11, 2013 and the Will was not transferred until August 12, 2013.)

[65] Therefore, I find no merit in the moving party’s argument that it ought to be compensated on the basis of quantum meruit.

Removal of Resch as Estate Trustee

[66] While the originating motion sought directions and the removal of Evelyn Resch as Estate trustee, Mr. Polten abandoned that request for relief and stated that for practical purposes he preferred that she continue in her present capacity. Consequently, I see no basis to provide an analysis of who should have applied to be estate trustee. Mr. Polten spent considerable time arguing his objections to the manner of the transfer of the Will and who ought to have been named estate trustee. However, I find the point is mute. Suffice to say I am not inferring that Mr. Polten’s interpretation of the Will and Agreement was correct. In any event, I find no evidence sufficient to warrant the removal of Resch in accordance with the principles and test outlined in Rose v. Rose, 2006 CarswellOnt 3776 para. 20. The significant point is that the Estate was administered such that Resch and Fueg each received what they were entitled to as beneficiaries under the Will. Therefore, there is no basis to remove Resch as trustee, or to order a passing of accounts.

[67] In relation to the 2006 Agreement, I would note the following:

(a) The Polten firm is not a party to the agreement;

(b) There is no clause in the Agreement to prohibit the disposition of the subject property while Siegfried Rainer was living;

(c) The Agreement does not give any rights to the Polten firm to control Siegfried Rainer’s property before or after his death. If there was such an intention, I do not find any clear language supporting it. If there was to be restrictions placed on the disposition of the property or other restrictions, one would expect these restrictions to be detailed in the Agreement. There are no such restrictions in the Agreement.

[68] There is no basis to interfere with the administration of the estate or removal of the Estate trustee based on the Agreement of 2006.

Conclusion

[69] Therefore, for the reasons provided, I dismiss the moving party’s motion.

[70] Counsel shall submit, within 30 days, their bill of costs as well as their submissions on costs, which are to be limited to a maximum of three pages typed and double spaced.

Justice J.B. Shaughnessy

Date: June 18, 2015