Gajek v. Hermiston, 2020 ONSC 752

COURT FILE NOS.: CV-19-4270 and CV-18-4769

DATE: 2020 02 06

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: HANNA GAJEK, Applicant

v.

AGNIESKA EWA HERMISTON and KATARZYNA KROL, Respondents

BEFORE: COROZA J.

COUNSEL: Robert Jagielski, for the Applicant

Marc Whiteley, for the Respondent Agnieska Ewa Hermiston

Peter Chmiel, for the Respondent Katarzyna Krol

HEARD: January 9, 2020

ENDORSEMENT

A. Overview of the Litigation

1Marek Janusz Krol (“Krol”) died in September 2017. At the time of his death he was married to Hanna Gajek and they lived in Elliott Lake. Hanna claims that Krol died intestate.

2Krol was previously married to Elzbieta Krol who died in 2010. They had two daughters: Agnieska (“Agnes”) and Katarzyna.

3Agnes married Joel Hermiston. Joel is the litigation guardian of Agnes because she has been in a vegetative state as a result of a brain injury. They live at 1045 Cawthra Road in Mississauga, Ontario.

4Litigation has begun over the estate of Krol. At the time of his death, Krol owned the following properties:

1. 1045 Cawthra Road (“Cawthra”)

2. 31 Poplar Road, Elliott Lake

3. 92 Mississauga Road, Elliott Lake

4. 40 Main Street, Iron Bridge

5. 43 Meyers Road, Iron Bridge

5I will refer to properties 2 to 5 as the Northern Properties. Agnes argues that much is unknown about these properties.

6Agnes and Joel assert that Cawthra was a gift to Agnes. According to Joel, there are notes from a police officer in 2016 that corroborate their belief. The notes were created during a police investigation relating to Krol and suggest that Krol admitted to the police that Cawthra was a gift to Agnes.

7As of 2019 the Cawthra property taxes remained unpaid. Joel claims that up to this point he has paid the carrying costs to maintain this home, including the mortgage in favour of the Toronto Dominion Bank (“TD”). However, TD has stopped accepting mortgage payments and has issued a notice of sale under the mortgage.

(i) Application CV-19-4769

8Agnes and Joel have brought an application for the appointment of an Estate Trustee During Litigation (“ETDL”); dependent support against the estate of Krol; a declaration that Agnes is the true owner of Cawthra; damages against the estate of Krol based on a claim that Krol sexually abused Agnes when she was a minor and later in life as an adult; disclosure of financial documents; and directions.

9The parties on this application appeared before Fowler Byrne J. on February 19, 2019 and obtained an order for directions. The order permitted Agnes and Joel to compel production of financial disclosure from Hanna and Katarzyna. Fowler Byrne J.’s order also directed that the arrears on the property taxes for the Northern Properties be paid from Krol’s bank account at the credit union. Furthermore, disclosure of information, including the collection of rents, in affidavit form was to be provided by Hanna and Katarzyna within 30 days. It is clear that the order was made to provide some direction for this litigation and to ensure that Agnes and Joel were provided with disclosure.

10Agnes argues that Hanna and Katarzyna have not complied with this order.

(ii) Application-CV-19-4270

11For her part, Hanna wants to resolve the issue of her share of Krol’s estate. She claims that as Krol’s surviving spouse, she has a preferential share owed to her in the amount of $200,000, which is the total value of the properties. She disputes the claim that Cawthra was a gift to Agnes. She is supported in her claims by Katarzyna.

12Hanna has commenced an application to appoint an Estate Trustee Without A Will (“ETWOW”). She seeks the appointment of Marek Malicki, a lawyer, to act as the ETWOW and requests that she receive an advance from Krol’s estate in the amount of $28,000 to be credited to the estate.

13The parties appeared before Bielby J. on November 28, 2019. Hanna’s application was before the court and did not proceed. Bielby J. adjourned the following four issues:

1. Whether Marek Malicki should be designated as ETWOW;

2. Whether the estate bond should be dispensed with;

3. Whether an interim payment of $28,000 should be advanced to Hanna; and

4. Whether the tax arrears for the Northern Properties should be paid.

14On December 13, 2019, Hanna’s application was again adjourned to January 9, 2020.

B. The Proceedings on January 9, 2020

15Regrettably, there appears to be a breakdown in the relationship between Agnes, Katarzyna and Hanna. The pivotal issue that appears to be highly contentious is whether the Cawthra property forms part of the Krol estate. Hanna and Katarzyna take the position that Cawthra was not a gift. Agnes and Joel claim that it was.

16Although there are many moving pieces in this litigation, I have decided to deal with the following matters:

1. Should I consolidate both applications?

2. Should I appoint an ETDL or an ETWOW?

3. Should there be an advance paid to Hanna?

4. Should the property taxes owing on the norther properties be paid?

C. The Positions of the Parties

17Agnes takes the position that Hanna and Katarzyna have not complied with Fowler Byrne J.’s February 19, 2019 order. Since they have not complied with the order, they should not be able to seek relief from this Court and the application should be summarily dismissed.

18Agnes takes the position that Hanna’s application was filed as a distraction to the Court to prevent it from focusing on the real issues that should be litigated: 1) What should happen to the Cawthra home? and 2) Did Krol really die intestate? As a result, they seek directions and assert that an ETDL should be appointed to provide the parties and the court assistance with determining the size of the estate.

19Agnes seeks several orders.

20First, Agnes requests that both matters be consolidated and remain in Brampton.

21Second, this case requires an ETDL because there is a live issue about whether Krol died intestate and there are issues about the size of the estate (i.e. whether Cawthra is part of the estate).

22Third, Hanna is not entitled to an advance from the estate because the value of the estate has not been determined. Agnes points out that her claims against the estate must be decided before any funds can be paid out from the estate.

23Fourth, the payment of outstanding property taxes on the Northern Properties should be deferred until Hanna and Katarzyna provide an affidavit as required by Fowler Byrne J.

24Hanna argues that there is no proof that Krol died leaving a will. Therefore, it is plain and obvious that he died intestate. She seeks the following orders.

25First, Marek Malicki should be designated as an ETWOW because Krol died intestate. Hanna argues that there is no authority to appoint an ETDL where there is no challenge to a will.

26Second, an interim payment of $25,000 should be advanced to Hanna by the Estate Trustee and credited against her preferential share as the surviving spouse of Krol.

27Third, the tax arrears for the Northern Properties should be paid.

D. Analysis

Issue 1: Consolidation

28In my view, the applications should be consolidated because there is considerable overlap between the two files. For example, whether the Cawthra property will be included in the calculation of the net value of the estate will feature prominently in both applications.

29Hanna argues that that the matter should be transferred to a court closer to where Hanna resides. I am not persuaded by this submission. I am satisfied that the consolidated matter should remain in Brampton. I say this for the following reasons.

30First, all counsel on this matter practice in Peel Region. As counsel for Agnes points out, there is nothing that suggests that a fair hearing of this matter cannot be held in Brampton.

31Second, one of the important properties that is the subject to this litigation is the Cawthra property, which is located in Peel Region.

32Third, although I acknowledge that Hanna lives in Elliott Lake and it is a burden for her to travel to Brampton, Hanna does not have to appear in person for the motions. Hanna can appear through counsel.

Issue 2: Estate Trustee During Litigation (ETDL) or Estate Trustee Without a Will (ETWOW)?

33I agree with counsel for Agnes that an ETDL should be appointed as opposed to an ETWOW.

34An ETDL may be appointed under s. 28 of the Estates Act, R.S.O. 1990, c. E.21, as amended, where the validity of a testamentary document is challenged, leaving no one with authority to act as the estate trustee. The primary obligation of the ETDL is to protect the estate until the litigation is completed. The ETDL, who is usually a neutral party, is subject to the Court’s direction and has all the rights and powers of a general administrator except the power to distribute the residue of the estate.

35Hanna argues that an ETWOW should be appointed because Krol died intestate. Section 29(1) of the Estates Act provides a list of persons from whom the ETWOW should be chosen. She argues that the authority to appoint an ETDL under s. 28 is limited to situations where there is a challenge to the validity of a testamentary document – namely, where an action is pending “touching the validity of the will”.

36However, s. 28 of the Estates Act also provides that an ETDL can be appointed for “obtaining, recalling or revoking any probate or grant of administration”. As I see it, I can appoint an ETDL in both scenarios: where there is a dispute on the validity of the will, or if there is a dispute about obtaining a grant of probate.

37Furthermore, as Agnes points out, there is also authority to appoint an ETDL under r. 75.06(3)(f) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. There is a line of authority suggesting that r. 75.06(3)(f) gives the court the authority to appoint an ETDL in a broader range of cases than under s. 28 of the Estates Act. In other words, even where there is no challenge to the validity of a testamentary document.

38In my view, the authority for appointing an ETDL is also squarely found under r. 75.06(3)(f) where a party brings an application for directions. An application for directions can be brought whether there is a will or not. Distilled to its essentials, that is exactly the relief Agnes seeks.

39In my view, it makes more sense to appoint an ETDL at this time. Even if I appointed an ETWOW, Agnes would then likely file a notice of objection and then someone would have to bring the matter back to court under r. 75.03(2) to seek directions. At that time, Agnes could ask for the appointment of an ETDL.

40I have concluded that an ETDL should be appointed to administer the estate pending the outcome of the dispute. Part of that dispute is the validity of a will and whether Cawthra forms part of the net value of the estate.

41The appointment of a neutral ETDL helps to ensure a level playing field between the parties while the issues are litigated. In this respect, a court appointing an ETDL is concerned with fairness. However, a potential downside to the appointment of an ETDL is that the cost to the parties may be disproportionate to the size of the estate.

42After reviewing the materials filed by all the parties, I am satisfied that the ETDL should be Rajendra Bickhram. Mr. Bickhram has been proposed by Agnes. Mr. Bickhram’s rates are much cheaper than the proposed parties put forward by Hanna. This factor pulls heavily in favour of his appointment. I have also considered Hanna’s argument that Marek Malicki speaks Polish but I am satisfied that this factor does not carry much weight because it does not demonstrate that Hanna will be prejudiced by the appointment of an ETDL that does not speak English. I note that her counsel Mr. Jagielski speaks Polish.

Issue 3: Should there be an advance paid to Hanna?

43I am of the view that this issue should be deferred until there is compliance with Fowler Byrne J.’s order. Furthermore, the ETDL must be put into place to obtain disclosure, ensure that arrears are paid out and provide the court with a picture of the state of affairs relating to the estate. It is too early to provide an advance. It would frustrate the purpose of appointing an ETDL. There is a serious dispute about the size of the estate and the issue of whether an advance should be paid is deferred until further information is provided to the Court by the ETDL.

Issue 4: Should the property taxes owing on the Northern Properties be paid?

44During oral submissions, counsel for Agnes and Joel acknowledged that the taxes should be paid. However, his position was that financial disclosure should also be provided about the rents. I agree. As I see it, the appointment of the ETDL will assist in the payment of the arrears and ensure compliance with Fowler Byrne J.’s order.

E. Order

45For the purposes of this motion, I am prepared to make an order that will appoint Rajendra Bickhram as the ETDL and direct him to exercise his powers under the Estates Act. Furthermore, I will make an order that will ensure that the Cawthra property is preserved until the dispute is resolved. I make the following orders:

1. The Application known by Court File No. CV-19-4720 shall be and is hereby consolidated with the Application in Court File No. CV-18-4769.

2. Rajendra Bickhram is hereby appointed as the Estate Trustee During Litigation (ETDL) of the Estate of Marek Janusz Krol, and a Certificate of Appointment of Estate Trustee During Litigation shall be issued to him regarding the Estate of Marek Janusz Krol.

3. Hanna Gajek, Katarzyna Krol and Joel Hermiston shall execute any and all documentation as is reasonably required of them to effect the transfer of the estate assets to the ETDL in the Estate of Marek Janusz Krol.

4. Hanna Gajek, Katarzyna Krol and Joel Hermiston shall forthwith deliver all documents within his/her possession, custody or control relating to the Estate of Marek Janusz Krol to the ETDL.

5. Rajendra Bickhram, as the ETDL, shall be and is hereby authorized to exercise those powers given by law to an administrator including such powers under the Estates Act, R.S.O. 1990 c. E.21, as amended, and without limiting the generality of the foregoing, Rajendra Bickhram is hereby specifically authorized to do the following:

(a) To gather and maintain the assets and liabilities of the deceased and of the Estate as of the date of the Order;

(b) To pay all just debts, funeral and testamentary expenses and all income taxes of the deceased and of the Estate excluding any taxes or debts of any nature or kind in respect of any assets whose ownership or beneficial entitlement may be in dispute;

(c) Upon the request of the parties, to obtain information, records and files relating to the assets and liabilities of the deceased in the same manner and to the same extent the deceased would have been able to if alive;

(d) To obtain a real estate appraisal of any real property comprising the assets of the deceased; and

(e) To be at liberty to appoint an agent or agents and seek such assistance from time to time as Rajendra Bickhram as ETDL may consider necessary for the purposes of performing his duties hereunder and to pay those agents and representatives, including legal counsel, from the Estate.

6. All property and assets forming part of the Estate of the deceased shall be and hereby are vested in the ETDL, Rajendra Bickhram, from the date of the within Order.

7. The rate of compensation for the ETDL, Rajendra Bickhram, shall be fixed at $250.00 per hour plus HST, and disbursements.

8. The requirement of posting of security pursuant to the Estates Act by Rajendra Bickhram, as ETDL of the Estate of Marek Janusz Krol, is hereby dispensed with.

9. Leave is granted to continue any application against Rajendra Bickhram (in his capacity as ETDL of the Estate of Marek Janusz Krol), and leave is granted to amend the title of proceedings accordingly.

10. The Applicants in CV-18-4769 shall have leave to issue a Certificate of Pending Litigation as against the property legally described as PT LT 114, PL C23, Part 2, 43R21186; Mississauga T/W Easement over PT LT 113, PL C23, DES PT 2 PL 43R27543, in favour of PT LT 114, PL C23, DES PT 1 PL 43R27543, as in PR461566. S/T Easement over PT LT 114, PL C23, DES PT 1 PL 43R27543, in favour of PT LT 113, c23, DES PT 2 PL 43R27543, as in PR 461567 and known municipally as 1045 Cawthra Road, Mississauga, Ontario (the “Cawthra Property”).

11. Rajendra Bickhram (in his capacity as ETDL of the Estate of Marek Janusz Krol) shall not take any steps to sell the Cawthra Property, but will maintain the status quo in the application in CV-18-4769. The applicants in CV-18-4769 are granted leave to enjoy quiet possession and enjoyment of the Cawthra Property as against the ETDL, Hanna Gajek and Katarzyna Krol until further order of the Court or written agreement of the parties, and the Applicants in CV-18-4769 shall continue to keep the property insured and those carrying costs, which are permitted to be paid, paid and up to date.

12. Nothing in this Order is intended to or does affect any rights the Toronto-Dominion Bank may have pursuant to its mortgage registered on title to the Cawthra Property.

13. Rajendra Bickhram as ETDL is expressly authorized to pay any existing property taxes owing on the following properties from the funds formerly owned by the Deceased at the Northern Credit Union: 92 Mississauga Road, Elliot Lake, Ontario (the “Mississauga Road Property); 40 Main Street, Iron Bridge, Ontario (the “Main Street Property”); the 43 Meyers Road, Huron Shores, Ontario (the “Meyers Road Property”); and 41 Poplar Road, Elliot Lake, Ontario (the “Poplar Road Property”) (together the “Northern Properties”).

14. The payments out of the assets of the Estate toward property taxes on any of the Northern Properties and those made pursuant to the Order of Fowler Byrne J. dated February 19, 2019 are subject to be claimed back by the Estate from any party or other person found to have collected any rents generated from the Northern Properties following the date of death of the deceased, as are any such rents themselves.

15. Hanna Gajek and Katarzyna Krol shall comply within 30 days of the date of this Order with the Order of the Fowler Byrne J. dated February 19, 2019 and provide the disclosure contemplated by that Order to the parties and to the ETDL.

16. All parties shall be and are hereby entitled to compel production of all financial records and files relating to the assets held and financial affairs of the deceased prior to, and after death or under attorneyship either solely or jointly by the deceased with another from any financial or banking institution or agency, including but not limited to the Canada Revenue Agency, the Toronto-Dominion Bank and the Royal Bank of Canada, whether in Canada or the United Sates, or elsewhere, in the same manner and to the same extent as the deceased would have been able, if he was alive, and all productions received shall be produced to the other parties on request.

17. Any party shall be entitled to return to this Court for further directions as is necessary and advisable to do so, including in relation to this Order and the other relief claimed in CV-18-4769 and CV-19-4720 and specifically as it relates to disclosure from third parties.

F. Costs

46If the parties cannot resolve the issue of costs, they may submit costs submissions in writing. Counsel for Agnes may make written submissions as to costs within 14 days of the release of this Endorsement. Counsel for Hanna and Katarzyna have 10 days after receipt of the submissions filed by Agnes to respond in writing. All such written submissions are to be no more than 3 pages double spaced exclusive of a bill of costs.

Coroza J.