Court File and Parties

COURT FILE NO.: CV-16-561443

DATE: 20201130

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Mali Wasserman, Applicant

• and -

Avraham Sade et al., Respondents

BEFORE: F.L. Myers J.

COUNSEL: Samantha Schreiber, for Mali Wasserman Gregory M. Sidlofsky, in person for Wagner Sidlofsky LLP Michelle Isenstein, for Alegria Sadeh

HEARD: November 27, 2020

Endorsement

[1] Ms. Wasserman applies to enforce a judgment of the Jerusalem Court of Family Affairs in Israel dated October 2, 2019. The judgment recognized a settlement among the beneficiaries of the estate of the late Zion Sade. In that settlement, Ms. Wasserman became entitled to approximately $1 million that is currently being held by the Accountant of this court.

[2] Wagner Sidlofsky LLP objects to the enforcement of the foreign judgment and moves for standing to participate in this proceeding. It asserts a right against the funds in court to pay its outstanding legal fees.

[3] In my view it is premature to hear and decide both this application and the law firm’s motion. I need to balance:

a. This court's strong adherence to the principles of comity and its respect for the courts of the State of Israel;

b. Counsel’s entitlement to be paid its reasonable fees in recognition of results achieved through its efforts and industry; and

c. The avoidance of participation in dishonourable conduct here or abroad.

[4] Zion Sade died intestate and left a very substantial estate consisting of at least:

a. A Canadian property that has been sold for approximately $1,000,000;

b. Israeli property worth approximately $3.5 million (14 million NIS); and

c. Further funds in Israel totalling $3.5 million (another 14 million NIS).

[5] Alegria Sadeh is a resident of Israel and is Mr. Sade’s widow. Ms. Wasserman and the respondent Avraham Sade are the children of the deceased by a prior spouse.

[6] Alegria Sadeh retained Wagner Sidlofsky LLP to protect her interests in the Canadian property and a mortgage due to the deceased of approximately $280,000. At the very least, on the passing of the deceased, Ms. Sadeh, as his spouse, had a clear interest in at least 1/2 and possibly 3/4 of that secured receivable owing to the estate.

[7] Wagner Sidlofsky incurred fees on behalf of Ms. Sadeh of approximately $25,000 (64,000 NIS) to help protect Ms. Sadeh's interest in the mortgage and the property. The firm negotiated on her behalf and obtained an agreement and court order to allow the completion of the orderly sale of the property and payment of the proceeds into court pending resolution of the parties’ claims.

[8] The law firm did not require Ms. Sadeh to pay it a deposit or retainer. It did not require her to pay fees when they were incurred. It accepted her promise to pay its fees from her share of the proceeds of the property and the estate. She granted the firm security over her share of the property and the estate. She irrevocably directed her Israeli counsel and the estate trustees to pay Wagner Sidlofsky its fees from her share of the property and estate (whether determined by a court or settlement).

[9] Israeli counsel for Ms. Sadeh, Mr. Heller, gave independent legal advice to Ms. Sadeh and he signed the irrevocable direction as her witness. He referred to the firm's interest as a “lien” or, in our terms, a “security interest.” In his email of November 21, 2016, Mr. Heller instructed the law firm to appear in the Ontario proceedings to defend Ms. Sadeh’s interest in reliance on the irrevocable direction being signed.

[10] Ms. Sadeh, with Mr.. Heller’s representation, then settled with the other beneficiaries in Israel so that Ms. Wasserman is to receive the Canadian cash in court of $1,000,000 and Ms. Sadeh and Mr. Sade split the $7,000,000 in Israel in undisclosed shares.

[11] On consent, the beneficiaries had their settlement enshrined in a judgment of the Jerusalem Court of Family Affairs. It is this judgment that Ms. Wasserman seeks to enforce in this proceeding.

[12] After the beneficiaries settled and Ms. Sadeh parted with her rights to the funds being held by this court, Mr. Heller told the Wagner Sidlofsky that Ms. Sadeh “has no funds available” to pay the law firm’s fees. This is despite the fact that in the Israeli settlement that is subject to the foreign judgment, Ms. Sadeh is to receive an undisclosed share of some $7,000,000 of property.

[13] Neither Mr. Heller nor the estate trustees has paid the law firm in accordance with the irrevocable direction from Ms. Sadeh.

[14] Neither Mr. Heller nor counsel for any other beneficiary told the Israeli court that the share of the estate being conveyed to Ms. Wasserman in the settlement was encumbered in favour of the law firm. Ms. Wasserman says she did not know.

[15] Ms. Sadeh sent counsel to court to assist me in case I had any questions for her. When I asked two questions, counsel had no instructions and could only tell me that Ms. Sadeh does not attorn to this court’s jurisdiction. I note that this was not Ms. Isenstein’s doing.

[16] I do not know if the beneficiaries agreed to structure their settlement to defeat the law firm or if Ms. Sadeh has simply saddled an unwitting Ms. Wasserman with the law firm’s claim and somehow instructed Mr. Heller and the estate trustees to ignore her irrevocable direction to pay.

[17] I do not know if the law firm is entitled to a charging order on the proceeds in court under the Solicitors Act or to enforce a security interest under the Personal Property Security Act, to enforce an equitable mortgage, and/or creditor’s rights under the Fraudulent Conveyances Act.

[18] I do not know if the Israeli court would have countenanced Ms. Sadeh and Mr. Heller's conduct or if it might have taken steps to protect the law firm’s interest. No one told the Israeli court about it and no one gave notice to the firm of the Israeli settlement hearing.

[19] I do not know the full details of what was agreed in Israel because, to date, neither Ms. Sadeh nor Ms. Wasserman has produced even a single email evidencing settlement discussions that led to the Israeli judgment.

[20] I do know however that Ms. Sadeh came here and retained a law firm who agreed to act in good faith. She attorned to this court’s jurisdiction to obtain protection of her interests in Ontario property that she used to settle with the other beneficiaries in Israel.

[21] I do know that the parties are dealing with an amount of money that may practically preclude the law firm from chasing Ms. Sadeh in Israel.

[22] I know that Canadians are reputed to be polite and trusting, but no one likes to be played for a schmegegge.

[23] This proceeding has numerous issues to be resolved before I can decide whether to enforce the Israeli judgment or to grant the law firm standing and relief. All of it can be avoided if Ms. Sadeh settles with the firm in good faith or if Mr. Heller and the estate trustees carry out the irrevocable direction that they have received. If Ms. Sadeh has an issue with the quantum of the law firm’s fees, she can deal with that honourably and directly.

[24] I do not know yet whether Ms. Wasserman was complicit or if she has recourse to reimbursement from Ms. Sadeh if the funds in court are found to be encumbered by the law firm’s interest. Ms. Wasserman’s affidavit does not provide sufficient clarity on these issues.

[25] I adjourn this application and the law firm’s motion sine die. I remain seized of both. I will hear counsel at a case conference to consider the process for proceeding. It may be that an action will be required with discovery rights here and in Israel. For the present, I direct Ontario counsel for all parties, all officers of this court, to communicate with each other to try to find a way to resolve this $25,000 issue fairly, efficiently, affordably, proportionately, honourably, and with due respect to the courts and systems of justice of both countries.

F.L. Myers J.

Date: November 30. 2020