COURT FILE NO.: CV39/15 &CV40/15 DATE: 2016-05-30 ONTARIO SUPERIOR COURT OF JUSTICE

In the Matter of the Estate of Pauline Medynski, Deceased – and – In the Matter of the Guardianship of Andrew Medynski

Applicant: BMO Trust Company Counsel: K. Whaley, L. Tupman and A. Bloom

Respondent/Objector: Lillian Sawchuk Counsel: N. Pizzale

Beneficiary: Aileen Young Counsel: P. Amey and H. Alexander

Beneficiary: Carol Medynski Counsel: M. McEniry

HEARD: April 25, 27, 2016 and May 2, 2016

The Honourable J.C. Kent

Reasons for Judgment

Introduction

[1] Pauline Medynksi and her spouse, Andrew Medynksi are both deceased. Sadly, their three adult daughters have been unable to work together to manage their parents’ affairs both before and after their parents’ deaths. Pursuant to a court order, BMO Trust Company became involved. As matters have evolved, all of the parties are now before this court on an application by BMO Trust Company to have its accounts for its services in the matter of the Estate of Pauline Medynski and in the matter of the Guardianship of Andrew Medynski passed by the court. Unfortunately, this is a highly contentious matter in which legal costs far beyond the total monetary measurement of any objections will be a matter that the court will ultimately need to determine.

[2] Fortunately, the court has had the benefit of submissions by very experienced counsel. Counsel were able to assist the court by providing a chronology of how everyone reached this point. That chronology is as follows:

DATE EVENT NOTES August 3, 2007 Will of Pauline Medynski Referred to in the Guardianship Order of Andrew Medynski July 9, 2008 Date of Death: Pauline Medynski Lillian Sawchuk, Aileen Young and Carol Medynski (collectively “Daughters” of Pauline and Andrew Medynski) named as Estate Trustees in Will of Pauline Medynski; unable to effectively work together consented to an Order to appoint BMO as Estate Trustee October 27, 2009 ( appears to have been recorded in some pleadings as October 2 9 , 2009 ) BMO appointed as Estate Trustee re Estate of Pauline Medynski on October 27, 2009 on hearing of Application of Carol Medynski Order of the Honourable Justice Arrell dated October 27, 2009 in Court file #CV-09-547 Daughters acted as attorneys for property and personal care for Andrew Medynski following Pauline Medynski’s death [July 8, 2008 until appointment of BMO as Guardian of Property October 29, 2010]. Daughters could not work together, legal wrangling. Daughters continued as attorneys for personal care of Andrew Medynski August 9, 2010 Certificate of Appointment of Estate Trustee re Pauline Medynski issued to BMO pursuant to Order of Justice Arrell dated October 27, 2009 October 29, 2010 Pauline’s husband, Andrew Medynski , declared incapable of managing his property and BMO is appointed as Guardian of Property Order of the Honourable Justice Arrell dated Friday, October 29, 2010 in Court file #CV-09-547 • Note the order refers to court file nos. CV-09-547 • Daughters shall jointly retain BMO to prepare on their behalf an accounting for their dealings of Andrew’s property from July 9, 2008 to October 29, 2010 September 24, 2011 Date of Death of Andrew Medynski Issues re validity of Andrew Medynski’s Wills dated February 22, 1995. January 3, 2007 and August 3, 2007 April 10, 2012 Application by Carol Medynski re validity of Wills of Andrew Medynski ; mediation to take place; • Adam Capelli shall be appointed as Estate Trustee During Litigation re Andrew Medynski • BMO to deliver to Adam Cappelli all documents in their possession re Andrew Medynski Order Giving Directions of the Honourable Mr. Justice Whitaker on Tuesday, April 10, 2012 in Court File No. 05-101-11 July 3, 2012 Adam Capelli is appointed ETDL by way of Certificate of Appointment of ETDL issued under Court File No. 01/1803/12 for the Estate of Andrew Medynski July 25, 2012 BMO delivered all documentation regarding Andrew Medynski to Adam Capelli October 4, 2012 BMO delivered coin and stamp collection held in BMO vault for safekeeping to Adam Capelli January 28, 2015 (Application Records served February 5/6, 2015) Applications to Pass Accounts by BMO • re Estate of Pauline Medynski for the period of July 9, 2008 to November 18, 2013 • re: the Guardianship of Andrew Medynksi for the period from October 29, 2010 to September 24, 2011 (returnable April 17, 2015) March 12, 2015 Notices of Objection by Lillian Sawchuk re Estate of Pauline Medynski and the Guardianship of Andrew Medynski April 22, 2015 Motion Record filed by BMO’s counsel re Order Giving Directions for timetable for delivery of materials re hearing of Applications to Pass Accounts re Estate and Guardianship (returnable May 1, 2015) Re Application for Estate of Pauline Medynski Court File No. CV-15-39 and Guardianship of Andrew Medynski Court File No. CV-15-40 May 1, 2015 Order Giving Directions in Court File No. CV-15-39 the Estate of Pauline Medynski : • The Applicant shall serve and file a response to Lillian Sawchuk’s Notice of Objection dated March 12, 2015 • Lillian Sawchuk will serve and file an Amended Notice of Objection, within 45 days of receipt of BMO’s Response to her Objections • BMO shall serve and file a Brief of Responses to Lillian Sawchuk’s Amended Notice of Objection within 30 days of receipt of her Amended Notice of Objection • Documents in the Response to Amended Objections shall be deemed to be authentic unless Respondents give notice within 30 days of service of the Response to Amended Objection of specific documents that are not admitted • Applicant or Respondent shall be at liberty to bring a motion for further directions pursuant to Rule 75.06 within 30 days of the Respondents’ receipt of service of Applicant’s Response to Amended Objections • Hearing shall be scheduled for a full day by the Registrar, BMO to serve its Factum 14 days before the hearing and Lillian Sawchuk’s Factum to be served 7 days before the hearing Order of the Honourable Justice Arrell in Court file #CV-15-39 May 1, 2015 Order Giving Directions in Court File #CV-15-40 in respect to the Guardianship of Andrew Medynski : • BMO shall serve and file a Response to Lillian Sawchuk’s Notice of Objection within 60 days of the date of this Order • Lillian Sawchuk shall serve and file an Amended Notice of Objection to Accounts within 45 days of the date of her receipt of BMO’s Response to her Notice of Objection • BMO shall respond to Lillian Sawchuk’s Amended Notice of Objection within 30 days of BMO’s receipt of same • Documents in the Response to Amended Objections shall be deemed to be authentic unless Lillian Sawchuk gives notice within 30 days of service of the Response to Amended Objection of specific documents that are not admitted • Applicant or Respondent shall be at liberty to bring a motion for further directions pursuant to Rule 75.06 within 30 days of the Respondents’ receipt of service of Applicant’s • Hearing of the Application shall be a full day on a date scheduled by the Registrar and the Factum shall be served by BMO 14 days before the hearing and Lillian Sawchuk’s Factum shall be served 7 days before the hearing Order of the Honourable Justice Arrell dated May 1, 2015 July 1, 2015 (served June 30, 2015) Response to Notice of Objection filed by BMO re Pauline Medynski and Andrew Medynski July 8, 2015 Amended Response to Notice of Objection filed by BMO re Pauline Medynski and Andrew Medynski August 26, 2015 Reply to Amended Response to Notice of Objection served by Lillian Sawchuk October 30, 2015 (served November 2, 2015) Response to Amended Objections by BMO November 11, 2015 (served November 12, 2015) Request for Increased Costs by BMO re Pauline Medynski and Andrew Medynski November 15, 2015 Offer to Settle by BMO November 30, 2015 DEADLINE by both parties to seek directions to convert an application into an action or submit other evidence March 3, 2016 Motion Record of Lillian Sawchuk • two Applications CV-15-39 and CV-15-40 re Estate and Guardianship be heard together • evidence in one Application be accepted as evidence on other • BMO representative to present its evidence in chief followed by cross-examination and any reply evidence, followed by evidence of Lillian Sawchuk to be provided by viva voce evidence in chief followed by cross-examination and reply March 16, 2016 Request to Admit served on BMO re Pauline Medynski March 17, 2016 Request to Admit served on BMO re Andrew Medynski March 18, 2016 Court dismissed Lillian Sawchuk’s Motion with an Endorsement • (a) and (b) two Applications be heard together and evidence on one accepted as evidence on other as per consent • (c) Refused [that representative of BMO and Lillian Sawchuk to provide viva voce evidence in chief followed by cross-examination and reply] • Issue to what extent BMO representative may be cross-examined remains live and may be determined by presiding Judge Endorsement of the Honourable Justice Kent March 24, 2016 Further Request to Admit served on BMO re Pauline Medynski March 24, 2016 Further Request to Admit served on BMO re Andrew Medynski March 28, 2016 Costs Outline - BMO re Pauline Medynski and Andrew Medynski March 28, 2016 BMO Supplementary Request for Increased Costs re Andrew Medynski March 29, 2016 Supplementary Request for Increased Costs by BMO re Pauline Medynski March 31, 2016 Revised Further Request to Admit served on BMO re Pauline Medynski March 31, 2016 Request for Increased Costs by Lillian Sawchuk served April 4, 2016 Response to Lillian Sawchuk Request for Increased Costs by BMO April 6, 2016 Factum re Lillian Sawchuck served April 6, 2016 Response to BMO Supplementary Request for Increased Costs by Aileen Young April 7, 2016 Responses to Request, Further Request and Revised Further Request to Admit re Pauline Medynski served on Lillian Sawchuk April 7, 2016 Factum and Brief of Authorities re BMO served April 7, 2016 Response to BMO Supplementary Request for Increased Costs by Carol Medynski April 7, 2016 Supplementary Record on Increased Costs of BMO re Pauline Medynski and Andrew Medynski (including Costs Outline) filed April 8, 2016 Responses to Request and Further Request to Admit re Andrew Medynski served on Lillian Sawchuk April 15, 2016 Supplementary Record of Lillian Sawchuk – Request for Increased Costs re Andrew Medynski April 15, 2016 Supplementary Record of Lillian Sawchuk – Request for Increased Costs re Pauline Medynski April 25, 27 and May 2 Cross examination of BMO trust officer completed and submissions completed. Decision reserved. Both Applications adjourned for costs submissions to be heard during week of 20 June, not to be called before 21 June, 2016

Compensation Agreements

[3] For its services to the Pauline Medynski estate, BMO agreed to accept a flat rate of $12,000.00 plus HST. The provisions of the 29 October 2010 order of Justice Arrell provided that BMO would administer the guardianship of Andrew Medynski and set the terms for BMO’s compensation and indemnification for costs. It provided protection to BMO for transactions that occurred before its appointment.

[4] Paragraph 11 of the aforementioned order provided that BMO’s compensation would be paid as follows:

a) 2% of capital receipts; b) 0.65% of the average annual market value of the assets; c) work done on behalf of the adult daughters to assist them with their own accounting to be charged at the rates in the Substitutes Decisions Act; d) time to obtain and provide access to documents to the adult children to be billed at a reasonable hourly rate; e) indemnification and reimbursement for out of pocket expenses.

[5] A compensation agreement was executed by all three adult daughters of Pauline and Andrew Medynski. The work done and the transactions carried out by BMO in its capacity as Estate Trustee of the Pauline Medynski estate and the guardianship of Andrew Medynski in the accounting period is set out in the Statement of Accounts.

[6] The trust officer in the employ of BMO with carriage of both the estate and the guardianship provided affidavits swearing that the Statement of Accounts were complete and correct. Until this matter was scheduled for hearing, neither the objector Lillian Sawchuk or her counsel sought to cross-examine on those affidavits. BMO has received its compensation in the Pauline Medynski estate and does not seek any additional compensation for its services in that regard.

[7] After Andrew’s death, litigation was commenced between the adult daughters and other family members regarding the validity of Andrew’s various last wills and other issues. At the time, BMO was holding assets in accordance with its responsibility in the guardianship of Andrew. It was possible that BMO may have been appointed as an Estate Trustee During Litigation, however, on 10 April 2012, Whittaker, J. made an order, inter alia, appointing Adam Capelli as the Estate Trustee During Litigation. The order required BMO to give him all originals or copies of Andrew’s testamentary documents in its possession.

[8] BMO complied with the above order and transferred all assets of Andrew in its possession to the estate Trustee during litigation. This would appear to have been completed by 25 July 2012 and on 5 February 2015 BMO’s applications to pass its accounts in both the estate and guardianship were served.

[9] Aileen Young and Carol Medynski do not oppose BMO’s request for judgment for passing its accounts. They do, however, oppose increased costs being paid on these applications and have instructed counsel to appear on their behalf. The third adult daughter, Lillian Sawchuk, served a Notice of Objection in both the estate and guardianship proceeding. She has raised approximately 80 objections although different quantities could be calculated depending on how one considered the numbers of the sub-paragraphs to the objections. Since that date, and subject to the order of Arrell, J. made 1 May 2015; responses to Lillian Sawchuck’s objections have been provided. The objections have been amended and further responses to the amended objections have been given. In addition, shortly before this matter came on for hearing, a number of requests to admit were served upon BMO by counsel for the objector, Lillian Sawchuck.

The Nature of the Objections

[10] Most of the objections were detailed and specific, but they do not conveniently lend themselves to a monetary or other determination.

[11] For example, if the court were to find that a particular question or series of questions were not fully answered by the trust officer, or a request not fully complied with, what is the remedy?

[12] If a request has never been complied with or responded to, what is the remedy?

[13] If something is reported to have occurred in the year before BMO was appointed, does BMO have a responsibility to address that?

[14] If an item is not set out correctly in the accounts but the end result makes no difference financially, should there be a remedy?

[15] If a joint asset passes by survivorship, should that right of survivorship be presumed or should there be an analysis or investigation conducted? If that investigation was not conducted, what is the remedy?

[16] If there is disagreement as to whether a particular benefit should have been applied for, is there a remedy?

[17] If questions arise from a perusal of various estate documents, what investigation is called for? If no investigation is conducted, what is the remedy?

[18] Where matters were not addressed during the guardianship, but will need to be addressed by the Estate Trustee During Litigation at an expense to the estate, is there a remedy as against the trustee?

[19] The answer to the foregoing questions would appear to be that if, cumulatively, such objections lead the court on a passing of accounts to a conclusion that the trustee failed to meet the legal standard of care/conduct, trustee compensation can be reduced or refused.

[20] This court will review some of the case law concerning the standard of care/conduct later in these reasons.

[21] Certain of the objections do lend themselves to a consideration of a monetary determination and these will next be addressed.

1. The Sunlife/Massey Ferguson

   [22] BMO has acknowledged that it failed to make a claim for a $10.00 per day benefit that was available to pay for Andrew’s care while he was in a nursing home. If BMO made that claim on 23 November 2010 when it received the guardianship order, it could have obtained a total of $3,800.00. BMO acknowledges a loss to Andrew’s assets in the guardianship in the amount of $3,800.00 and it is content that its compensation be reduced by that amount.

2. Line of Credit Treatment in Pauline Medynski Estate

   [23] The underlying objection appears to arise from a concern that another beneficiary may have not repaid a loan that she had obtained from Pauline. That concern was elevated by the manner in which the BMO trust officer addressed the issue in the accounts. The bottom line, however, is that there is evidence that supports BMO’s position that the loan was, in fact, repaid.

3. Retaining Counsel

   [24] BMO retained counsel on the hearing before Whittaker, J. resulting in Adam Capelli being appointed as the estate trustee during litigation. Counsel for the objector argues that BMO should have just provided written consent to continue as estate trustee during litigation in the event that the court wished to order that. Counsel argues that the legal fees of $5,974.88 for counsel were, therefore, unnecessary. That, in hindsight, is arguable, but on its own, it is insufficient to constitute a basis for reduction in compensation. It was a reasonable step for BMO to have taken.

4. Sale of Andrew’s Toyota Motor vehicle

   [25] The evidence is that it was sold in an arm’s length transaction at an amount of at least its wholesale value and perhaps slightly more. It was a reasonable step for BMO to have taken.

5. Pauline Medynski’s Joint Investment with Benjamin Marco

   [26] BMO contends that on Pauline’s death, this investment went to Benjamin Marco by survivorship. He is the adult son of the beneficiary Carol Medynski. Counsel for the objector points out that BMO should have inquired into whether a presumption of trust applied. Such an inquiry was required by the Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. BMO’s trust officer conceded that no such inquiry was made. At this point, there was no evidence upon which any finding can be made other than finding that a follow would have been helpful.

6. Unanswered Questions, Failure to Follow up, Delays in Action and Possible Losses as a Result

   [27] The evidence supports a finding that all of the foregoing occurred during the period when BMO provided services to both the estate of Pauline Medynski and the guardianship of Andrew Medynski. Keeping in mind that the total under administration was almost 1.9 million dollars and that 234 transactions are noted in the accounts, it is not surprising that some follow up may still be required. That follow up will have to be completed by the Estate Trustee during litigation. Mr. Capelli, he may be able to follow up on things such as: Bank of Nova Scotia cheque(s), a coin and stamp collection, one or more income tax refund(s), and government bond interest. Unfortunately, at this point no monetary quantification can be made of loss, if any, regarding any of these items.

   [28] Counsel for the objector is correct that, in hindsight, the simplest way out of many of the areas of objection would have been to specifically address the concerns of the objector. He suggests that a refusal to answer reasonable questions and to take specific steps that the objector requested and to do so in a timely manner may have saved the huge costs that are ultimately going to need to be considered by the court.

   [29] The problem is that even if that did or did not occur, how can a result or non-result be quantified for the purpose of reducing compensation. Counsel suggests that the court could find that the objections, cumulatively, have demonstrated that BMO has breached its fiduciary obligation as a trustee and thereby disentitled itself to compensation.

   [30] The court will turn then to whether the case law would support such a ruling, if the findings sought by the objector were made in whole or in part.

The Law

[31] It is a fundamental principle in any Trusteeship that an obligation is owed by the Trustee to the Beneficiaries of a trust. Within reasonable limits, a Trustee may exercise its discretion. Ultimately, the Trustee is required to act honestly and with the level of skill and prudence which would be expected of a reasonable person of business in administrating his/her own affairs. See: Thompson Family Trust v. Thompson, 2012 ONSC 7138 at paragraph 22.

[32] When the Trustee’s work is deficient or falls below the above-standard, what can be done?

[33] There is authority to award damages against the Trustee for neglect or omission on a Passing of Accounts, but a breach of fiduciary obligation action and trial is the preferable course of conduct. See: Simone v. Chiefetz, 2000 ONCA 16978 paragraph 17.

[34] This court, and all involved in this matter, have endeavoured to avoid the much more costly step of a trial. One must, however, be mindful of the need to avoid turning a Passing of Accounts into a trial in the guise of what is really an an audit. See: Thompson Family Trust v. Thompson, 2012 ONSC 7138 at paragraph 27 and 28.

[35] There is authority to consider deficiencies on the part of a Trustee as alleged by an objector and where deficiencies are found to have occurred, the court may reduce or eliminate compensation on a Passing of Accounts. See: Zimmerman v. McMichael Estate, 2010 ONSC 2947 and Loveman Estate, 2016 ONSC 2687.

[36] There is also authority to require a Trustee whose work has been found deficient to reimburse an estate. See: Re Carley Estate (1994) 2 ETR (2d) 142.

[37] Every case, however, must be decided on its own circumstances and must be governed by reason and common sense. See: Sanford v. Porter [1889] O.J. No. 43 (C.A.).

[38] Sometimes that minutia should be ignored because the precise details, while interesting, may make no significant difference in the outcome. See: Eve v. Brook, 2016 ONSC 1496 at paragraph 61.

[39] When what may seem at the outset to be a good faith inquiry by an objector crosses a line and becomes a grand inquisition, with an ulterior motive relating to other beneficiaries, an objector risks the possibility of costs being awarded against him/her. See: Re Bedont Estate [2004] O.J. No. 4267 at paragraph 37 and Graves v. Nigro, 2016 ONSC 44 at paragraph 86.

Considerations and Findings

[40] Upon a review of the nature of the objections and the findings of this court, the only specific monetary reduction in BMO’s compensation can be the $3,800.00 that was conceded by BMO to be appropriate. The issue as to whether there should be any further reduction is the real issue for this court to determine.

[41] Some of the objections are more an expression of discontent over the perceived shortcomings in the accounting of the other two beneficiaries for the time prior to BMO’s involvement.

[42] Other objections are very general and/or not capable of quantification. This court does not go so far as to call them nit-picking as counsel for BMO suggests. They are, however, disproportionate to the value of the assets and the time required to fully assess and litigate every objection.

[43] There was delay on the part of BMO but, overall, that delay was not unreasonable, given the circumstances. There were, however, delays in responding to many inquiries and requests. Communication on the part of BMO was not as responsive as it might have been. While no possible loss can be quantified, the communication shortcomings, the delays and the failures to follow up must be found to have possibly put the assets/income at risk.

[44] On the other hand, some of the objections appear to have been more than merely a good faith inquiry.

[45] Given the foregoing considerations and findings, together with the applicable law set out above, this court has determined that a very modest reduction in the compensation sought by BMO is in order. The amount sought in accordance with the draft order is $27,655.05 That total is to be reduced by 6% and a further $3,800.00.

Costs

[46] In their factums, counsel made submissions as to costs. This court has set a date for oral submissions concerning costs on 21 June 2016.

[47] Counsel are directed to attend on that date and provide the court with a written outline of their submissions not exceeding three pages together with a costs outline in the usual format. This direction applies as well to counsel for the two beneficiaries who appeared at the outset of the proceedings and were excused until the date when costs were to be addressed.

The Honourable J.C. Kent

Released: May 30, 2016

In the Matter of the Estate of Pauline Medynski, deceased and In the Matter of the Guardianship of Andrew Medynski, 2016 ONSC 3353 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Estate of Pauline Medynski, deceased and the Guardianship of Andrew Medynski REASONS FOR JUDGMENT The Honourable J.C. Kent

Released: May 30, 2016