Reichmann v. Koplowitz et al., 2017 ONSC 4842
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Faigie Reichmann
AND:
Mark Koplowitz, also known as Mendy Koplowicz and Mississauga Apartments Partnership
BEFORE: Madam Justice J.T. Akbarali
COUNSEL: Matthew P. Gottlieb and Ryann Atkins, for the plaintiff/responding party/moving party
James Wortzman and Catherine Allen for the defendant/moving party/responding party Mark Koplowitz
HEARD: August 1 and 2, 2017
ENDORSEMENT
Background
1The plaintiff, Faigie Reichmann, and the defendant, Mark Koplowitz (“Mr. Koplowitz”), are two of four children born to Szmul Koplowitz and Cyrla Koplowitz.
2In 1994, the named defendant, Mississauga Apartments Partnership, acquired a multi-unit apartment building located at 190 Wyndham Street in Mississauga, Ontario. The funds for this purchase may have come solely from Szmul Koplowitz. This property is the partnership’s sole asset. The parties agree that when the partnership was formed, there were three partners: Cyrla Koplowitz, who held a 50% interest, Mr. Koplowitz, who held a 25% interest, and Ms. Reichmann, who held a 25% interest.
3Notwithstanding that he had no ownership interest, until his death in October 1999 Szmul Koplowitz received all the income from the property. Thereafter, Cyrla Koplowitz received all the income from the partnership.
4Mr. Koplowitz deposes that their family practices Orthodox Judaism, and that in their tradition, as patriarch, Szmul Koplowitz had the authority to direct the family’s business. Mr. Koplowitz states that he and his siblings accepted their father’s authority. He states that Szmul Koplowitz controlled all of the family’s business, regardless of how he chose to designate ownership of individual assets.
5After Szmul Koplowitz’s death, Mr. Koplowitz took over management of the partnership. Mr. Koplowitz states that he has managed the property in accordance with the wishes of his parents since that time.
6A key issue in this litigation is the ownership of the partnership today. Cyrla Koplowitz died in January 2001. Ms. Reichmann argues that on her death, Cyrla Koplowitz’s 50% interest in the property was to be shared equally between Ms. Reichmann and Mr. Koplowitz.
7Mr. Koplowitz states that Cyrla Koplowitz disposed of her interest in the partnership in the summer of 2000, giving 15% of the interest in the property to another daughter, Malka Bier, and the remaining 35% of the interest in the property to him, such that he now owns 60% of the partnership, Ms. Reichmann owns 25%, and Ms. Bier owns 15%.
8Neither the genesis of the partnership nor any subsequent changes to its structure are properly documented.
9There is a partnership agreement which Ms. Reichmann states dates from around 1994. She argues it supports her claim of the current ownership of the partnership. The agreement was signed by Cyrla Koplowitz, Ms. Reichmann, and Szmul Koplowitz, but not by Mr. Koplowitz. Ms. Reichmann relies on the partnership agreement to describe the intention of the parties, and in particular, her parents, that a deceased partner’s interest be split equally among the other partners. She argues that this is a binding intention.
10Mr. Koplowitz seems to agree that the intention of their parents binds them. He states that in 1996, Szmul Koplowitz took away Ms. Reichmann’s interest in the partnership (for no consideration) after a family dispute, but that he gave it back to her in 1998 after a reconciliation. Mr. Koplowitz states that they accepted that their father was entitled to make these decisions.
11In arguing that his mother distributed her share to him and Ms. Bier in 2000 and that this distribution is binding, Mr. Koplowitz relies on a draft transfer of the interest in the building from the partnership. The draft transfer purports to transfer the ownership of the building to Mr. Koplowitz, Ms. Reichmann and Ms. Bier personally. Mr. Koplowitz states that this demonstrates his mother’s intention. The draft transfer was not signed or registered.
12Cyrla Koplowitz’s will does not provide for the distribution of her interest in the partnership specifically but does provide that Mr. Koplowitz is entitled to 2/5 of her estate, while each of her three daughters is entitled to 1/5 of her estate.
13Ms. Reichmann commenced this action on March 27, 2012 seeking damages for conversion and misappropriation of her interest in the partnership, damages representing her share of the partnership profits which have been wrongfully withheld or improperly diverted by Mr. Koplowitz, an accounting of the partnership accounts, and the appointment of a receiver.
14There are two motions before me. In one, Mr. Koplowitz seeks summary judgment on the basis that Ms. Reichmann’s action is statute-barred. In the other, Ms. Reichmann seeks an order for a receiver and manager to be appointed for the partnership until trial, for a full accounting of the partnership’s business, for orders for further disclosure from the partnership and for a full accounting by Mr. Koplowitz of an account into which some funds from Ms. Reichmann’s partnership distributions were deposited to be given to charity.
Issues
15These motions raise the following issues:
a. Is there a genuine issue requiring a trial as to whether Ms. Reichmann’s action is statute-barred? This requires me to determine:
i. whether Ms. Reichmann’s claim is one for breach of fiduciary duty, in which case the parties agree that under the transition provisions of the Limitations Act, 2000, S.O. 2002, c. 24, Sch. B, there is no limitation period;
ii. if Ms. Reichmann’s claim is instead one for breach of contract, whether the entirety of her claim statute-barred, or whether there is a rolling limitation period such that her claims arising up to two years before March 27, 2012 may still be asserted?
b. If the action is not dismissed, should a receiver and manager be appointed for the partnership?
c. Alternatively, should a production order be granted? Should accountings of the partnership and the charitable contributions be ordered?
Summary Judgment
Is this an appropriate case for summary judgment?
16Summary judgment is appropriate where there is no genuine issue requiring a trial. This will be the case where the summary judgment process provides me with the evidence required to fairly and justly adjudicate the dispute, by allowing me to make the necessary findings of fact and to apply the law to the facts, and where summary judgment is a timely, affordable and proportionate procedure: see Hryniak v. Mauldin, 2014 SCC 7, at paras. 49-50, 66, [2014] 1 S.C.R. 87.
17The parties each argue that the limitation period issue is appropriate for summary judgment. Mr. Koplowitz seeks an order dismissing the claim on the basis of the limitation period. Ms. Reichmann asks that I make a positive finding that her claim is not statute-barred.
18I agree this issue is appropriate for summary judgment. It is a discrete, gate-keeping issue. Although this motion raises the limitation period, there are no significant facts to find to determine it. Discoverability is not in issue; nor are the merits of the claim in issue before me. The parties agree, to a large extent, on the law. The crux of the question before me is how to properly characterize Ms. Reichmann’s claim. This is not a question that requires a trial.
Is Ms. Reichmann’s claim grounded in breach of fiduciary duty?
19The parties agree that if Ms. Reichmann’s claim is for breach of fiduciary duty, the transition provisions of the Limitations Act, 2000 apply such that there is no limitation period.
20Prior to January 1, 2004, there was no statutory limitation period applicable to claims for breach of fiduciary duty1: K.M. v. H.M., [1992] 3 S.C.R. 6, at paras. 69-70; Intact Insurance Co. of Canada v. Lombard General Insurance Co. of Canada, 2015 ONCA 764 at paras. 8, 37, 54, 128 O.R. (3d) 617.
21Subsection 24(6) of the Limitations Act, 2002, provides that “if there were no former limitation period, and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after January 1, 2004”, there is no limitation period in respect of a claim discovered before January 1, 2004.
22There is no dispute that Ms. Reichmann discovered her claim before January 1, 2004. There is no dispute that the Limitations Act, 2002 would apply to Ms. Reichmann’s claim if it arose after January 1, 2004. The dispute thus turns on how to properly characterize Ms. Reichmann’s claim.
23Ms. Reichmann argues her claim is for breach of fiduciary duty, and relies on her pleading. Mr. Koplowitz argues that I must look at the true nature of her claim. He states that her claim for a 50% interest in the partnership can only find its genesis in the partnership agreement, and thus it is a claim for breach of contract. He argues I should not allow Ms. Reichmann to avoid the operation of the limitation period by dressing up her contract claim as a claim for breach of fiduciary duty.
24The prayer for relief in Ms. Reichmann’s statement of claim does not identify a claim for breach of fiduciary duty or for breach of contract. Rather, it seeks damages for conversion, misappropriation, wrongful withholding of partnership funds and improper diversion of partnership funds. It ties the claim for damages to what can be viewed as specific breaches of fiduciary duty.
25Ms. Reichmann’s statement of claim relies on and pleads the partnership agreement, including specific provisions of it. It does not specifically plead that the agreement is binding or has been breached, although it does plead that Mr. Koplowitz did not transfer Cyrla Koplowitz’s interest pursuant to the partnership agreement.
26In her reply, Ms. Reichmann pleads that the partnership agreement was signed by all the partners or represents the partners’ agreement. In her affidavit filed on this motion, she relies on the partnership agreement in support of her claim to 50% of the partnership, and states that its provisions are consistent with her parents’ intention as told to her. Before me, Ms. Reichmann did not argue that Mr. Koplowitz had signed the agreement; rather, she argued that the partially-signed agreement was evidence of a binding intention to distribute a decreased partner’s interest – in this case, Cyrla Koplowitz’s interest – equally among the other partners.
27Ms. Reichmann’s statement of claim goes on to plead that Mr. Koplowitz appropriated the property for himself. This is presumably a reference to Mr. Koplowitz’s position that Cyrla Koplowitz distributed her interest in the property to him and Ms. Bier in the summer of 20002, a position that relies on Cyrla Koplowitz’s intention to transfer her interest, because no such transfer is properly documented. The only evidence of this transfer is Mr. Koplowitz’s evidence that Cyrla Koplowitz told him her intention, and the draft, unexecuted transfer.
28Ms. Reichmann’s statement of claim then states, at para. 17, that “independent of the Partnership Agreement or the validity of its provisions regarding transmission of interest,” she has a “direct proprietary interest in the Partnership, which has been entirely disregarded” by Mr. Koplowitz.
29In my view, this paragraph is the gateway to understanding Ms. Reichmann’s claims.
30Following para. 17, Ms. Reichmann’s statement of claim enumerates various ways in which she pleads that Mr. Koplowitz has breached his fiduciary duties to her and disregarded her interest. These include allegations that Mr. Koplowitz has converted the partnership’s income to his own use or benefit, that he has deliberately deprived Ms. Reichmann of her partnership interest, that he has failed to provide an accounting of the income and expenses of the partnership, that he has taken management fees for himself without authority or approval, and that he has made charitable donations ostensibly on behalf of Ms. Reichmann without her approval.
31The allegation that Mr. Koplowitz has deprived Ms. Reichmann of her partnership interest relates, in large part, to Ms. Reichmann’s claim that she owns 50% of the partnership, not 25%, and thus she was entitled to a greater share of the partnership income than she has received since her mother’s death. In my view, this is a claim to ownership of 50% of the partnership based on an alleged binding intention to distribute Cyrla Koplowitz’s interest in this manner and based on Mr. Koplowitz’s failure to implement it. The partnership agreement is evidence relevant to this claim, but not the basis for it.
32I agree with Mr. Koplowitz that not every breach of duty within a fiduciary relationship is a breach of fiduciary duty. One must be careful not to elevate, for example, breaches of contract to breaches of fiduciary duty simply because the breach occurs between partners3, but rather to look at the content of the alleged breach to determine if it is fiduciary in nature: Schneider v. State Farm Mutual Automobile Insurance Co., 2010 ONSC 4734, [2010] O.J. No. 3850 at para. 56. In my view, the allegation that Mr. Koplowitz was bound to distribute Mrs. Koplowitz’s interest equally between himself and Ms. Reichmann, but failed to do so in order to take a greater portion of the interest for himself, is not just a simple allegation of breach of contract but may amount to a breach of fiduciary duty, and has been pleaded as such.
33Looked at another way, the transfer of Cyrla Koplowitz’s interest in the partnership that Mr. Koplowitz states took place in the summer of 2000 is at least as equally undocumented as Ms. Reichmann’s claim that there was a binding obligation created in 1994. Ms. Reichmann denies that Cyrla Koplowitz disposed of her interest in 2000. If Mr. Koplowitz’s evidence of this transfer is rejected at trial, then by paying himself based on a 60% interest, Mr. Koplowitz may have breached his fiduciary duties as manager and partner.
34I thus find that Ms. Reichmann’s claim is one for breach of fiduciary duty, to which no limitation period applies. Since I have concluded that Ms. Reichmann’s claim is properly characterized as one grounded in breach of fiduciary duty, it is not necessary to consider whether a rolling limitation period applies here.
35While my finding regarding the limitation period is binding, I do not intend to bind the trial judge with respect to any of the facts laid out in these reasons. The trial judge will have a fuller evidentiary record before her and should not be constrained by any statements of the facts that I have set out herein.
36I note that in Hryniak, the Supreme Court of Canada expressed the view that a summary judgment motion judge ought to seize herself of the trial of the action if the motion for summary judgment is dismissed. In this case, I will hear the trial if I am available. I decline, however, to seize myself of it. The action has not yet been set down for trial. There may be a motion to amend the defence to plead laches. Further productions and discoveries may be required as a result.
37In Toronto, where trial judges sit on teams, and move between those teams, it can create scheduling difficulties and delay the trial if a judge seizes herself of the trial of a summary judgment motion when the timeline within which it will proceed to trial is unclear. Moreover, the limitation period issue raised on this motion was discrete. I do not consider that I would have a significant advantage over any other trial judge in conducting an efficient trial.
Should a Receiver and Manager be appointed?
38Ms. Reichmann seeks the appointment of a receiver/manager, arguing that Mr. Koplowitz:
a. has failed to provide her with the partnership records she seeks when she requests them;
b. has preferred his own interest with respect to the timing and quantum of partnership distributions;
c. has taken management fees in a manner that is not transparent and without her advance permission;
d. has paid his legal fees in this litigation with partnership funds; and
e. has made charitable withholdings from Ms. Reichmann’s distributions without her authorization.
39Ms. Reichmann states that Mr. Koplowitz has had complete control of the partnership and the property to her exclusion. Ms. Reichmann wants to know what is going on with the partnership and wants to have a say in its management.
40Mr. Koplowitz states that as majority owner (a contention that is in dispute in this litigation) he is entitled to make the decisions. He states that before this litigation, he provided Ms. Reichmann with annual financial statements, exactly as their father had done during his lifetime. In the course of this litigation, he has made significant additional financial disclosure.
41Mr. Koplowitz also states that, in an agreement he and Ms. Reichmann entered into in 2015, he agreed not to withhold from Ms. Reichmann’s distributions for charitable contributions. He states that he only ever did so because it was the express wish of their father that he believed they both wished to honour.
42Mr. Koplowitz also states he was entitled to pay legal fees from the partnership because the partnership is a defendant herein. He states that the management fees he has taken are in accordance with industry standards and Ms. Reichmann has given evidence that she does not object to them. Finally, he denies he has preferred his own interest, although his counsel concedes that in 2005, the timing of partnership distributions favoured Mr. Koplowitz in a manner that was probably improper, but argues that single instance does not justify the appointment of a receiver.
The Test to Appoint a Receiver/Manager
43Ms. Reichmann argues that the test regarding the appointment of a receiver/manager is whether the appointment is just and convenient having regard to the nature of the property and the rights of the parties in relation thereto: Padda v. 2074874 Ontario Inc., 2010 ONSC 2872 at para. 32, [2010] O. J. No. 2221. In Padda, a receiver was appointed where the plaintiff had been cut out of management and participation in the activities of the companies at issue and there was evidence that suggested that assets may be in the process of being dissipated or that the directors were not effectively managing the business.
44Mr. Koplowitz argues the test to appoint an interim receiver is onerous. He relies on the decision in Anderson v. Hunking, 2010 ONSC 4008, at para. 15, [2010] O.J. No. 3042, where Strathy J. (as he then was) noted s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.48, which allows a court to appoint a receiver where it appears to be “just and convenient to do so”. Strathy J. then identified the following principles that govern such motions [citations omitted]:
(a) the appointment of a receiver to preserve assets for the purposes of execution is extraordinary relief, which prejudges the conduct of a litigant, and should be granted sparingly;
(b) the appointment of a receiver for this purpose is effectively execution before judgment and to justify the appointment there must be strong evidence that the plaintiff’s right to recovery is in serious jeopardy;
(c) the appointment of a receiver is very intrusive and should only be used sparingly, with due consideration for the effect on the parties as well as consideration of the conduct of the parties;
(d) in deciding whether to appoint a receiver, the court must have regard to all the circumstances, but in particular the nature of the property and the rights and interests of all parties in relation thereto;
(e) the test for the appointment of an interlocutory receiver is comparable to the test for interlocutory injunctive relief, as set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at paras. 47-48, 62-64:
(i) a preliminary assessment must be made of the merits of the case to ensure that there is a serious issue to be tried;
(ii) it must be determined that the moving party would suffer “irreparable harm” if the motion is refused, and “irreparable” refers to the nature of the harm suffered rather than its magnitude – evidence of irreparable harm must be clear and not speculative;
(iii) an assessment must be made to determine which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits – that is, the “balance of convenience;
(f) where the plaintiff’s claim is based in fraud, a strong case of fraud, coupled with evidence that the plaintiff’s right of recovery is in serious jeopardy, will support the appointment of a receiver of the defendants’ assets.
45Ms. Reichmann argues that some of these principles do not apply here, because there is no allegation that the appointment of a receiver is necessary to preserve the asset. Accordingly, this motion is not like a mareva injunction, and there is no suggestion that the appointment of a receiver prejudges Mr. Koplowitz’s conduct. Rather, the appointment of a receiver is necessary to ensure the equal treatment of the partners and to allow Ms. Reichmann to participate in the partnership and receive information from it.
46I disagree with Ms. Reichmann. An order appointing a receiver in these circumstances would be based on her allegations that Mr. Koplowitz has not treated her fairly or equally. Those are issues that will be engaged in the trial of the action. An order appointing a receiver would, to some extent at least, prejudge Mr. Koplowitz’s conduct.
47I must also consider the effect on Mr. Koplowitz of an order appointing a receiver, described by Quigley J. as “tantamount to placing a notice in the window of the business that the proprietors are not capable of managing their own affairs”: Fisher Investments Ltd. v. Nusbaum, [1988] O. J. No. 1859 (S.C). Mr. Koplowitz has been managing the property for many years, first with his father, and since 1999, on his own. The evidence must justify displacing him from that role.
48In my view, this is not an appropriate case in which to appoint a receiver for the following reasons:
a. While Ms. Reichmann received only the financial statements for many years, she has now received significant additional production. Her counsel identified certain “holes” in the production, and there will be additional records created between now and trial which Ms. Reichmann will seek to access. Ensuring Ms. Reichmann has access to the records that she requires can be addressed through a production order, if necessary, or through the exercise of her right as partner to inspect and copy records of the partnership: Partnership Act R.S.O. 1990, c. P.5, s. 24. A receiver is not required to ensure Ms. Reichmann can access the records.
b. While there is evidence that in 2005, distributions from the partnership were made in a manner that preferred Mr. Koplowitz’s interests to Ms. Reichmann’s, there is no evidence that the timing of distributions has been a problem in any other year. The problematic timing of distributions in 2005 does not justify the appointment of a receiver in 2017.
c. Ms. Reichmann alleges that Mr. Koplowitz has preferred his own interests in terms of the quantum of distributions. This claim turns on the respective ownership interests of the parties and is a claim that will be decided at trial.
d. The claim that Mr. Koplowitz has taken management fees without Ms. Reichmann’s advance permission does not justify appointing a receiver. Ms. Reichmann gave evidence that if Mr. Koplowitz is managing the property (as he seems to be), he is entitled to a management fee. There is no disagreement that 5%, the amount Mr. Koplowitz is taking as a management fee, is standard in the industry.
e. Ms. Reichmann objects that Mr. Koplowitz has, in some years, underpaid himself, and then taken the management fee he earned in a subsequent year. She states that by doing so, the management fee is not transparent and she cannot tell how much he is being paid. In my view, this claim does not justify the appointment of a receiver when Ms. Reichmann does not allege that Mr. Koplowitz is taking more in fees than that to which he is entitled.
f. Mr. Koplowitz argues that he is entitled to pay legal fees for this litigation from the partnership because the partnership is a defendant. He argues the partnership will seek its costs on a full indemnity scale from Ms. Reichmann at trial. In my view, this argument is best left to the trial judge to address. There is no evidence to suggest that payment of the legal fees from the partnership is jeopardizing the business.
g. Although there was disagreement between the parties as to whether their 2015 agreement that Mr. Koplowitz would no longer deduct charitable contributions from Ms. Reichmann’s share of distributions applies to this partnership4, Mr. Koplowitz argues that he is bound by the agreement not to deduct charitable contributions from any distributions from the partnership to Ms. Reichmann. This claim cannot be tested because the partnership has made no distributions since the agreement was signed. However, Mr. Koplowitz’s statement that he is contractually bound not to do so suggests that this is a past problem that does not now justify the appointment of a receiver.
h. There is no allegation that the assets of the partnership are at risk or that the partnership is being ineffectively managed.
i. There is no allegation that, if Ms. Reichmann is found to be entitled to damages because she owns more of the partnership than Mr. Koplowitz alleges, she will be unable to recover the amount owing.
j. Ms. Reichmann has raised the concerns she advances in this litigation for some time, including some very shortly after her mother’s death. She commenced this action in March, 2012, but waited more than three years after that to bring her motion. The leisurely manner in which she has asserted the need for a receiver indicates that there is no pressing concern, but rather that Ms. Reichmann’s claims can be fully addressed at trial without the need for an interim receiver.
49In my view, these factors support the conclusion that there is no clear evidence of irreparable harm if a receiver is not appointed, and that the balance of convenience favours not appointing a receiver.
50Had I agreed with Ms. Reichmann that the test to appoint a receiver requires me only to consider if it is “just and convenient” to do so, I would have found it was not just and convenient for the reasons set out above.
Is Ms. Reichmann entitled to further production?
51Ms. Reichmann seeks an order that Mr. Koplowitz produce all documents related to all costs, expenses, payments and revenues relevant to the partnership.
52Mr. Koplowitz argues that he has given full production though acknowledges there may be some “holes”. He argues that his obligation as partner does not extend to providing copies of all source documents of the partnership to Ms. Reichmann.
53Ms. Reichmann has not particularized her request for production of all relevant documents. The “holes” are not specified although some, like the 2012 ledger, were identified in argument. Ms. Reichmann has not identified any statutory provision upon which she relies.
54In my view, the basis for the production sought should be identified. Potentially, there are two basis upon which Ms. Reichmann can assert an entitlement to production.
55First, Ms. Reichmann may be entitled to the information she seeks because she is a partner in the partnership. Section 24 of the Partnership Act provides that a partner is entitled to have access to, inspect and copy any of the partnership’s books and records. However, it contemplates the partner doing so at the partnership’s principal place of business. Ms. Reichmann has made no attempt to attend at the place of business to inspect the books. This may not be practical for her, since she does not live near the partnership’s principal place of business. However, neither has she sent an agent or explained why she could not do so.
56Mr. Koplowitz argues that a partner is not entitled to demand that every record be copied as a matter of course; this would be an onerous burden on a partnership and interfere with its business. I agree. The Partnership Act allows a partner to inspect the records, and to make any copies she wants. This provides a legislative compromise, entitling a partner access to any records she wishes but putting the burden on her to inspect, review and copy them. Accordingly, I do not order production based on Ms. Reichmann’s status as a partner. Ms. Reichmann is free to exercise her rights under the Partnership Act to inspect the records and make copies as she chooses.
57A second possible basis for Ms. Reichmann’s request lies in Mr. Koplowitz’s production obligations arising out of this litigation. Presumably the production he has made to date is in furtherance of those obligations because it is contained in multiple affidavits of documents. However, Ms. Reichmann does not rely on the discovery obligations contained in the Rules of Civil Procedure R.R.O. 1990, Reg. 194, on this motion. In argument, Mr. Koplowitz’s counsel stated that if there were holes in the production that Ms. Reichmann identified, he would consider filling the holes. If Mr. Koplowitz’s production is missing some items, or if the documentary discovery needs to be updated, the first step is for counsel to discuss what is required. If there is no agreement, Ms. Reichmann can bring a production motion based on the Rules. That is not the motion before me.
Is Ms. Reichmann entitled to an accounting?
58Ms. Reichmann seeks an accounting of all costs expenses, payments and revenues relevant to the partnership, in reliance on the evidence I have already reviewed relating to her concerns about the partnership.
59Ms. Reichmann also requests a full accounting for any and all alleged distributions of funds from the partnership to any charity.
60These distributions that were allocated to charity were run through what was referred to before me as the “charity account” - an account in Mr. Koplowitz’s name, over which he has sole authority, and into which have been deposited withholdings for charity from Ms. Reichmann’s partnership distributions, as well as money from other sources. Mr. Koplowitz states that when there is a need, or the funds are sufficient, he makes donations from that account to charity and receipts are allocated depending on the source of the funds. There is no dispute that Ms. Reichmann has received charitable receipts in respect of contributions withheld from her partnership distributions. It is not clear whether the receipts match the withholdings.
61Ms. Reichmann has demonstrated some irregularities with respect to the charitable deductions. For example, in at least one instance, her contributions were withheld from her partnership distributions while Mr. Koplowitz’s and Ms. Bier’s contributions were paid directly to them and then, Mr. Koplowitz states, he and Ms. Bier paid the funds into the charity account.
62There are also instances where the partnership made charitable donations before the 20% deduction to charity was made from the partners’ distributions, thus increasing the charitable donations beyond Szmul Koplowitz’s wishes, which Mr. Koplowitz states are set out in Szmul Koplowitz’s Jewish will5.
63Mr. Koplowitz agrees the Jewish will is not legally binding. However he argues that Ms. Reichmann wanted to respect her parents’ wishes by donating to charity. Ms. Reichmann has given evidence to this effect but also states that she wanted to choose the charities to which her donations would be made.
64In summary, there are issues in dispute between the parties about the deductions made from Ms. Reichmann’s partnership distributions for charity.
65Ms. Reichmann has identified no basis upon which I can conclude I have jurisdiction to order the accountings that she seeks. In her motion, she relies on s. 101 of the Courts of Justice Act which is relevant only to her request for a receiver/manager to be appointed. There was no oral or written argument on the issue of my jurisdiction, or the proper test to apply, when considering whether an accounting is warranted.
66With no identified jurisdiction or framework to order an accounting, I decline to do so, both with respect to the charity account and the partnership. However, I make this order without prejudice to Ms. Reichmann’s ability to seek an accounting in a motion in which the basis for the request and the court’s jurisdiction is more thoroughly set out.
Conclusion
67Mr. Koplowitz’s summary judgment motion is dismissed. Ms. Reichmann’s claim is properly characterized as a claim grounded in breach of fiduciary duty to which no limitation period applies.
68I dismiss Ms. Reichmann’s motion for an order appointing a receiver. There is no evidence of irreparable harm if a receiver is not appointed, especially in view of the delay in advancing the motion. Moreover, the balance of convenience does not favour appointing a receiver. Ms. Reichmann’s complaints about the management of the partnership are isolated or as yet unproven. There is no risk to the assets of the business that warrant appointing a receiver.
69I dismiss the motion for further production or an accounting, however the dismissal is without prejudice to Ms. Reichmann’s ability to move for such orders on better materials that clearly set out the court’s jurisdiction and the basis for the motion.
Costs
70If the parties cannot agree on costs, they may deliver costs submissions of no more than three pages plus relevant attachments to my attention at Judges’ Administration, 361 University Avenue, within two weeks of the date of these reasons, and responding submissions of no more than two pages within one week thereafter.
Justice J. T. Akbarali
Date: September 14, 2017.
Footnotes
- Although there is no limitation period applicable if Ms. Reichmann’s claim is for breach of fiduciary duty, the doctrine of laches might be relevant. At the outset of the motion, I was advised that Mr. Koplowitz had served a factum raising laches for the first time on the eve of the motion. Ms. Reichmann argued I should not entertain that argument because the evidentiary record was deficient and she did not have sufficient time to research or argue the issue. I ruled that I would not hear the laches argument but noted that if the summary judgment motion does not succeed, Mr. Koplowitz may seek to amend his claim in the ordinary course to raise laches and if successful, the issue can be addressed at trial.
- Mr. Koplowitz’s counsel acknowledged in submissions that up until Cyrla Koplowitz’s death in 2001, all income from the partnership was paid to her, and after her death, it was distributed according to the respective partnership interests that Mr. Koplowitz states exist. However it appears no distributions were made between the alleged transfer and Cyrla Koplowitz’s death. I also note that counsel could identify no evidence before me that would assist in, for example, ascertaining whether Cyrla Koplowitz’s tax returns reflect a disposition of her partnership interest in 2000.
- Mr. Koplowitz admits that as a partner he owes a fiduciary duty to Ms. Reichmann.
- There are other investments that are not relevant to this litigation.
- Ms. Reichmann disputes whether the Jewish will that has been produced is authentic.