Cochrane v. Cochrane, 2017 ONSC 1920

Court File and Parties

COURT FILE NO.: 99-CV-169125 DATE: 20170324 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Benjamin Cochrane, a minor under the age of 18 years by his Litigation Guardian, William Cochrane, William Cochrane, personally and Carol Cochrane, Plaintiffs AND: Co-operators General Insurance Company, Defendant

BEFORE: E.M. Morgan J.

COUNSEL: Saba Ahmad, for the Plaintiff, Benjamin Cochrane Joshua Gleiberman, for the Plaintiffs, William Cochrane and Carol Chochrane

HEARD: March 24, 2017

Endorsement

Endorsement

1The Plaintiff, Benjamin Cochrane (“Benjamin”), brings this motion for a number of heads of relief, including removing the litigation guardian that was originally appointed on his behalf, a removal of his parents William Cochrane (“William”) and Carol Cochrane(“Carol”) as trustees of a trust of which he is the sole beneficiary, an accounting of monies distributed out of the trust by William and Carol since its inception, and compensation for monies which have been either misappropriated or improperly spent for matters other than Benjamin’s benefit by William and Carol.

2Counsel for William and Carol seeks an adjournment, arguing that he has had less than a week to respond to this motion and that he needs time to file more extensive materials and to conduct a number of cross-examinations.

3I agree that service has been short – less than a week – although it is not so short as to invalidate it under the rules. However, what concerns me is not the length of notice for the motion but the fact that since June 2016 lawyers representing Benjamin have been asking for an accounting of the trust from William and Carol and they have not been forthcoming. The trust has been in existence for roughly 20 years, and Benjamin claims to have seen little in the way of payments from it and has never received an accounting or any real explanation as to how the funds have been spent. There may well be an explanation for every penny of the trust funds, but the 9 month delay has created an understandable sense of urgency for Benjamin and his counsel.

4In addition, Benjamin has ongoing expenses, including living expenses and unforeseen medical expenses arising from a tumor that he has recently had treated, and is having a difficult time dealing with the expense of having to pursue litigation for an accounting that is clearly his right to receive. I understand that the funds from the trust are invested in an annuity with ManuLife, and that this annuity pays out roughly $1,645 each month. This money is paid by ManuLife into a bank account controlled solely by William. For the past year or so William has been then been forwarding the funds to a joint account he has with Benjamin. It is unclear what was being done with the monthly annuity payments before that time, although that is a subject matter for a future date.

Background

5The trust dates from when Benjamin was 12 years old and was compensated for injuries he incurred in a road accident. As he was a minor at the time, the claim was brought by his father as his litigation guardian and the compensation was paid to his parents in trust for him. Benjamin is now over 30 years old and lives on his own, is employed (although not a high income earner), and has attained a post-secondary education level. The litigation guardian and trusteeship was put in place due to his young age, not as a result of a finding of incompetence. There was some concern when he was a child that he may have suffered mental impairment from the accident that would leave him unable to look after his own affairs, but it is obvious that that has not turned out to be the case.

6Counsel for Benjamin has asked for a Mareva or Mareva-like injunction preventing William and Carol from disposing of their assets pending the return of this motion on the merits. Alternatively, she seeks a payment of the amount of the disbursements from the trust over the years – some $400,000 – into court, or in the further alternative, a certificate of pending litigation over the home owned by William and Carol. While there is some suspicion that the trust disbursements have been used for purposes other than for Benjamin’s benefit, there is no firm evidence of that. Hopefully, the accounting to be provided by William and Carol will clarify all of Benjamin’s questions in this respect; at least, it will serve to focus his inquiry on potential losses and will help him better define his claims. In the meantime, the adjournment is to be a short one, and I do not believe that William and Carol could dispose of their primary asset – their home – over the next two weeks. In any case, they are aware that they are now facing a claim in court and that any precipitous disposal of their assets other than ordinary living expenses would be subject to a fraudulent conveyance claim; their counsel himself rightly said so in responding to this point. I therefore do not think that any actual court order regarding their assets is called for at this point.

Terms of Adjournment

7I am willing to provide a short adjournment to allow William and Carol to properly respond, but some terms of adjournment are necessary. They are as follows:

1. William is hereby removed as litigation guardian for Benjamin. Benjamin is presumed competent under s. 2 of the Substitute Decisions Act. He does not have to prove his competence.
2. William and Carol shall remain as trustees until they have passed accounts of the trust and have provided a full explanation of all income and disbursements of the trust. Pending the return of this motion, all income earned by the trust, including any payments out of the ManuLife annuity, must be paid on a timely basis by William and/or William and Carol to Benjamin. Specifically, any annuity payments received from ManuLife must be forwarded by William to the joint account he has with Benjamin, and Benjamin shall be at liberty to use these funds as he sees fit.
3. The motion is adjourned to April 13, 2017 at 2:15 p.m. for two hours. William and Carol, through counsel, are to provide a full accounting for the trust to counsel for Benjamin at least 3 days before that date. The purpose of the April 13th hearing is to review the accounting with a view to then removing William and Carol as trustee for Benjamin so that Benjamin can receive the ManuLife annuity payments directly and manage his own funds himself.
4. Since the purpose of the April 13th hearing is limited to a review of the trustees’ accounting, there shall be no cross-examinations by either side relating to allegations of misappropriation or misuse of trust funds made by Benjamin. If Benjamin is not satisfied with the explanation provided by his parents for all of the funds that have come out of the trust over the years, he will after the April 13th hearing be at liberty to make whatever claim his counsel advises and he wishes to make in that regard. Until then, all allegations of misuse of the trust funds are premature.
5. Benjamin deserves the costs of today’s appearance and an interim costs award, and under section 131 of the Courts of Justice Act I have the discretion to make such an award. Benjamin should not have had to resort to initiating his own court proceeding to get an accounting from his parents as trustees. Counsel for Benjamin has provided me with a Costs Outline showing $5,650 on a partial indemnity basis and $7,600 on a substantial indemnity basis accumulated to date by litigation counsel. That does not include the costs of his previous lawyer who initially made the demand for an accounting last June. There are also $926.28 in disbursements owing, which includes a $776.00 fee for a capacity assessment that William and Carol demanded he undergo and which he never should have had to undergo. They know that he lives on his own, and they even had him sign a legal document last year when they gave him some money to take care of a debt he had incurred. The assessment was entirely unnecessary and, in any case, as I said above the onus was on William and Carol to prove his incapacity and not the other way around.
6. William and Carol shall pay Benjamin costs in the amount of $6,500 for today’s motion and as an interim costs payment toward the final determination of the costs of seeking and reviewing the accounting from the trustees. This figure is inclusive of fees and disbursements as set out on the Costs Outline provided to me today by Benjamin’s counsel.
7. I shall remain seized of this matter for the April 13, 2017 hearing.

Morgan J.