Court File and Parties
COURT FILE NO.: 01-4698/96 DATE: 20180528 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jennifer Lyall and Randall Emond, Plaintiffs AND: Warren Whitehead, in his personal capacity and in his capacity as Estate Trustee for the Estate of Edward Carter Whitehead, deceased, Defendant/Moving Party
BEFORE: McEwen J.
COUNSEL: Ian M. Hull, for the Plaintiff, Jennifer Lyall Arieh A. Bloom and Amanda Bettencourt, for the Plaintiff, Randall Emond Kristine Anderson and Alex Turner, for the Defendant
HEARD: April 10 and 12, 2018
Endorsement
[1] Edward Carter Whitehead ("Mr. Whitehead") died on October 18, 1996. His son, Warren Whitehead (the "defendant") was appointed as Estate Trustee. He is also a beneficiary. Mr. Whitehead's grandchildren, Jennifer Lyall and Randall Emond (the "plaintiffs") are also beneficiaries of the Estate. They are the niece and nephew of the defendant. The defendant and the plaintiffs' mother were siblings. She predeceased Mr. Whitehead.
[2] The defendant brings a partial summary judgment motion against the plaintiffs. He submits that they are statute barred and estopped from bringing a portion of the action and are "wrong" with respect to two other allegations.
[3] The Estate is a complex one. Upon Mr. Whitehead's death in 1996 he owned a number of properties in Ontario that form the subject matter of this dispute.
[4] The matter has also been before the court on a number of occasions over an extended period of time.
[5] It first surfaced in the mid-1990's. This ultimately led to a judgment being rendered by Justice O'Leary on January 12, 1998 (the "Judgement"). At that time the plaintiffs were infants.
[6] Disputes arose again in 2005 which the parties resolved at a private mediation which led to a lengthy settlement agreement in 2006 (the "Settlement Agreement").
[7] The parties again find themselves in litigation.
[8] In the current amended statement of claim the plaintiffs seek $10,000,000.00 in damages against the defendant both as the Estate Trustee and in his personal capacity. In addition, they claim punitive damages. Significant allegations have been made against the defendant which include breach of fiduciary duties, breach of trust, breach of contract, dishonesty, acting in bad faith and fraudulent concealment.
[9] Against this backdrop, the defendant brings a motion for partial summary judgment with respect to sub-paragraphs 33(b), (c) and (e) of the amended statement of claim which read as follows:
- The defendant has breached and repudiated the Settlement Agreement by, inter alia:
a) Transferring the properties to which the Defendant was entitled under the Settlement Agreement to himself on or about October 31, 2007 without ensuring that the plaintiffs' assets were transferred;
b) Failing to list for sale and sell the assets of the Estate "as soon as possible", as required by the Settlement Agreement;
c) Failing to transfer the residuary shares to which the plaintiffs are each entitled to a corporate trustee of their choice, as required by the Settlement Agreement;
d) Failing to enter into and/or carry out the terms of the Settlement Agreement in good faith; and
e) Failing to ensure that the proceeds from the real property sold were paid out to a trustee of the Plaintiffs' selection. [Emphasis Added]
[10] In my view, this case is unsuitable for a partial summary judgment motion and for the reasons below the motion is dismissed.
THE LAW
[11] The Court of Appeal, in a number of recent decisions, has held that motions for partial summary judgment can only be brought in appropriate circumstances: Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 ("Baywood"); Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922; Butera v. Chown, Cairns LLP, 2017 ONCA 783 ("Butera"). In Butera the court identified specific problems with partial summary judgment motions that make them an "anathema to the stated objectives underlying Hryniak". These include:
- Such motions cause the resolution of the action to be delayed.
- Motions for summary judgment may be very expensive.
- Judges who are facing significant responsibility addressing the increase of summary judgment motions are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on issues that do not dispose of the action.
- The record available at the hearing of partial summary judgment motions will likely not be as expansive as a trial record therefore increasing the danger of inconsistent findings.
[12] All of these problems are present in this motion. Furthermore, the court noted that granting partial summary judgment is only appropriate in circumstances where the issues advanced are discrete and readily bifurcated from the issues of main action. If there is overlap that creates the potential for inconsistent findings or duplicative results, then it is not appropriate to advance a partial summary judgment.
[13] In an attempt to persuade me that partial summary judgment is appropriate the defendant relies upon the decision of Justice Myers in Mason v. Perras Mogenais, 2018 ONSC 1477 ("Mason"). Justice Myers held that discrete issues, like limitation periods, which do not overlap with the merits that are left for trial, are suitable for partial summary judgment motions. I do not read Mason to stand for the proposition that partial summary judgment motions are appropriate in each and every case that involves a limitation period issue. In Mason, partial summary judgment was granted in circumstances where the case was brought to an early end, in totality, against one of the defendants. In my view, that situation is more akin to a summary judgment motion than a partial summary judgment motion since the action was brought to an end against that defendant. That is certainly not the case here. As discussed below, the clear potential for duplicative results and major credibility issues in this case are outside the realm of what Justice Myers considered appropriate in Mason.
[14] I agree with the plaintiffs that, whether the action succeeds or not, the dominant narrative of the broader underlying claim concerns the defendant's conduct as Estate trustee and whether he breached his fiduciary duties to the plaintiffs. Even if the partial summary judgment motion was successful, the matter would move on to trial with several other significant issues and claims in play which raises the legitimate specter of inconsistent decisions. The facts underpinning the allegations the defendant seeks to dismiss are too deeply intertwined with the facts underpinning the remaining causes of action. It is not appropriate to grant summary judgment in this type of situation.
[15] This case falls entirely within the ambit of cases discussed in Baywood and Butera. In this regard I am mindful of the reasoning in Butera, which makes it clear that a motion for partial summary judgment should be considered a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and may be dealt with expeditiously and in a cost effective matter. As stated in Butera, such an approach is entirely consistent with the objectives set out by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7. I entirely agree, and in any event, the decision is binding upon me.
THE DEFENDANT'S POSITION
[16] The defendant makes the following four submissions with respect to sub-paragraphs 33(b), (c) and (e) of the amended statement of claim:
The plaintiffs have failed to advance a claim against the defendant with respect to the listing and selling of the real estate property, allegedly in breach of the Settlement Agreement, within two years after they discovered their claim and the claim is therefore barred by virtue of the provisions of the Limitations Act, 2002 (sub-para. 33(b)).
The plaintiffs are estopped from claiming that the defendant's actions in listing and selling the various properties breached the Settlement Agreement, since the plaintiffs participated in decisions as to how properties were to be sold and never demanded strict compliance to the terms of the Settlement Agreement (sub-para. 33(b)).
The plaintiffs are "wrong" in their assertion in sub-paragraph 33(c) of the amended statement of claim that the defendant was obligated to sell the real estate properties "as soon as possible".
The plaintiffs are "wrong" in their assertion in sub-paragraph 33(d) that the defendant's failure to transfer the plaintiffs' shares in the Estate and/or proceeds of sale of the Estate properties to a professional trustee should have occurred before the sale of the last Estate asset in 2014, and that the defendant breached the Settlement Agreement by not arranging for this transfer prior to the start of the litigation.
ANALYSIS
[17] I will deal with each of the above arguments separately. For the reasons below I am satisfied that in each instance there are genuine issues that require a trial. It is also premature and not possible to attempt to determine these issues at this motion.
1. The Limitation Period Issue
[18] This portion of the motion fails for a myriad of reasons including, most significantly, the following two:
- The defendant cannot pinpoint a time, with any specificity, as to when the plaintiffs ought to been aware of their claim arising out of the breach of the Settlement Agreement. The defendant submits that the plaintiffs should have been aware by July-September 2014, but concedes it could have taken up until August 2015 to discover the claim. This would bring it close to, or into, the two year time period in which the statement of claim was originally issued on August 18, 2017. Given that discoverability remains in issue, it is not appropriate to grant summary judgment on this point.
- Both sides raise significant credibility issues against each other. This is a thread that runs through all three sub-paragraphs the defendant seeks to dismiss and the action in general. In submissions, counsel for the defendant argued that, "the plaintiffs have significant credibility problems throughout their evidence to the point that taints the entirety of their evidence and where there are discrepancies between the parties the defendant's evidence should be favoured". The plaintiffs, on the other hand, submit that the defendant has engaged in dishonesty spanning multiple years and fraudulent concealment. The parties endured four days of cross-examinations and filed approximately 700 pages of transcript evidence to try to establish their positions. The defendant spent a tremendous amount of time in his factum outlining further credibility issues. In total, 20 briefs were filed.
[19] In my view, this is exact type of case warned against by the Court of Appeal in Baywood. In this case, credibility is extremely important. As stated in Baywood, voluminous affidavit evidence can obscure the affiant's authentic voice. That has happened here. I received the evidence in a decontextualized manner and to make any findings on credibility in this fashion would result in fundamental unfairness in a way it will not likely occur at trial where the trial judge will see all of the evidence. Put another way, I cannot make credibility findings on the issues before me without also impacting the trial judge's ability to independently assess the facts at trial. The trial judge's credibility findings will be based on a set of facts broader than mine, but will also inherently include those that the defendant has put before me. They are not readily bifurcated from the broader underlying claim.
[20] The plaintiffs also raise a number of very specific complaints against the defendant concerning his handling of the Estate. They claim that he obscured their ability to be fully informed of all of the rights and material facts necessary to form an opinion as to whether the defendant was acting inappropriately in his position. These include:
- The defendant did not abide by the Judgment which required him to pass accounts every three years. It was not until August 23, 2017 (after being served with the statement of claim) that the defendant passed accounts for the period between 2005 to 2017.
- The defendant did not file the Estate's tax returns in a timely fashion. He filed eight years' worth of tax returns in March of 2016 for which a clearance certificate has not yet been obtained.
- The accounts that the defendant ultimately passed in August 2017 revealed for the first time, according to the plaintiffs, that the defendant took $706,000 without authority. The accounts also allegedly revealed that the defendant used an additional $300,000 inappropriately to repair his properties. After receiving a letter from plaintiffs' counsel the defendant returned $280,000 to the Estate. Two days after a failed mediation in May 2017 the defendant returned $390,000 to the Estate.
[21] These events may prove to be significant at trial. I am certainly not prepared to make any decision on the issue of discoverability in these circumstances. It is premature to do so.
[22] In addition, there is also currently before the court a contested Passing of Accounts proceeding. Both counsel agree that the trials will likely take place at the same time. This is of significance with respect to the limitation issue. The issues raised concerning the limitation period that may succeed at trial may not succeed in the passing of accounts matter: see Wall Estate, 2018 ONSC 1753. Again, as noted above, there is overlap between the issues submitted by the defendant as appropriate for partial summary judgment and those currently scheduled to proceed elsewhere. Given that the plaintiffs' remaining causes of action are based on the same set of facts as the claims that the defendant now seeks to dismiss, the possibility of inconsistent verdicts arises.
[23] In such circumstances partial summary judgment should not be considered.
2. Are The Plaintiffs Estopped From Making A Claim That The Defendant's Actions Enlisting And Selling The Estate Properties Breach The 2006 Agreement?
[24] Many of the concerns raised above concerning the limitation period issue also apply here.
[25] Once again there are significant credibility issues that preclude me from meaningfully determining the matter. In circumstances where the defendant did not comply with the Judgment in passing the accounts, allegedly engaged in self-dealing including the inappropriate removal of $708,000, and did not file tax returns lead to a situation where it is premature to determine the issue of estoppel.
[26] Furthermore, evidence adduced by the plaintiffs at the motion discloses that the defendant wrote a series of letters to the plaintiffs in which he would often provide them with a cheque. They submit that these letters and the payment of funds were essentially designed to placate them so that they did not challenge the defendant's handling of the Estate and learn of his alleged inappropriate activities. In these circumstances, once again, determination of the estoppel issue is premature, particularly where the defendant was acting in a position of trust.
3. Are The Plaintiffs Wrong In Their Assertion That The Defendant Was Obligated To Sell The Estate Properties As Soon As Possible?
[27] Once again it is premature to determine this issue. The purpose of the Settlement Agreement, amongst other things, was to ensure that the defendant sold the Estate properties in order to wind-up the Estate. The plaintiffs assert that an orderly wind-up did not occur and the defendant misled the plaintiffs and breached his fiduciary duties, amongst other allegations.
[28] Once again, this involves a nuanced analysis that is inextricably linked to issues of credibility and the broader dealings between the parties. While the defendant may ultimately be vindicated at trial it is simply not possible to conclude, on the paper record before me, that the plaintiffs are wrong in this assertion.
[29] This fact-specific exercise will involve a determination of credibility based on the full evidentiary record. This is particularly so when the plaintiffs have made significant allegations against the defendant including fraud and breach of trust that spans their entire relationship. Any such attempted analysis would be made in a decontextualized fashion and fraught with difficulty. In my view, the risk of inconsistent verdicts is also high.
4. Are The Plaintiffs Wrong In Their Assertion That the Defendant Failed to Transfer the Plaintiffs' Shares In The Estate And/Or The Proceeds Of The Estate's Sale Of The Estate Properties?
[30] Here the defendant submits that the plaintiffs, once again, are simply wrong in claiming that he failed to transfer the shares in the Estate and/or the proceeds of the sale of the Estate properties to a professional trustee of the plaintiffs' choice before the sale of the last asset in 2014 and that the defendant breached the 2006 Settlement Agreement by not arranging this transfer prior to the start of the present litigation.
[31] I begin by restating that this is only one of several claims of wrongdoing against the defendant. In my view, for all the reasons already articulated, it is inappropriate to bring a partial summary judgment motion to determine a discrete issue intertwined with other contentious issues when the determination of this one particular issue would not, in my view, result in any efficiencies with respect to the ultimate trial. It runs contrary to the rationale of the Court of Appeal in Butera. A motion for partial summary judgment on this issue is inadvisable in the context of the litigation as a whole. All it does is increase the overall costs without enhancing access to justice.
[32] More specifically, I do not agree with the fashion in which the defendant has framed the plaintiff's pleading. Subsection 33(e) takes issue with the defendant's failure to ensure that the proceeds from the Estate property that were sold were paid to a trustee. The pleading goes no further. The defendant seems to interpret this to mean that the defendant could not be liable because he would not have been in a position to transfer anything to a professional trustee until after all of the properties were sold and tax returns filed.
[33] In my view, this distorts the claim against the defendant which focuses on his alleged inability or refusal to administer the sales in a timely fashion, failure to account as per the Judgment, and allegations of self-dealing. Further, in any event, as noted, this claim is intertwined with the broader allegations that the defendant failed to wind-up the Estate in a timely fashion and engaged in self-dealing and fraudulent activities including fraudulent concealment.
OTHER ISSUES
[34] Given the above, I do not propose to deal with all of the remaining defences to the motion for partial summary judgment raised by the plaintiffs which include the following arguments: the doctrine of fraudulent concealment applies to toll the limitation period under the Limitations Act, 2002; continuous breaches do not cause the limitation period to commence; the limitation period should be tolled given an agreement to mediate; and, the Real Property Limitations Act, R.S.O. 1990, c. L.15 applies and the limitation period is 10 years.
[35] These arguments should all be addressed by the trial judge on the basis of a complete record.
DISPOSITION
[36] The defendant's motion for partial summary judgment is dismissed.
[37] The plaintiffs are entitled to their costs. If the parties cannot agree they can make submissions to me, not to exceed 3 pages excluding bills of costs.
[38] The plaintiffs should provide theirs within 21 days and the defendant 14 days thereafter.
Mr. Justice T. McEwen
Date: May 28, 2018