COURT FILE NO.: CV-19-4534
(Walkerton)
DATE: 20201210
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE ESTATE OF ARTHUR MARVIN PATTERSON, JR., deceased
RE: LINDA CAROLE MCQUOID – and – NATHAN BRANDON PATTERSON
BEFORE: Daley J.
COUNSEL: Ioula Vinogradova, for the Applicant
Mark Rodenburg, for the Respondent
HEARD: October 8, 2020, via video conference
ENDORSEMENT
A. Background & Evidentiary Record:
[1] This application relates to the Estate of Arthur Marvin Patterson, Jr. [the Estate] who died on April 2, 2019, without a will.
[2] The applicant asserts that she is entitled to receive a Certificate of Appointment as estate trustee, without a will, as the deceased's common-law spouse.
[3] It is also asserted by the applicant that she is entitled to the court's order and directions appointing an impartial estate trustee, who does not have a personal interest in the Estate so that the issues at stake in the estate may be resolved.
[4] Further, the applicant intends to advance a claim for relief as the deceased's dependent under the Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26 ("SLRA").
[5] It is common ground that the respondent is the biological son of the deceased and that as a child, he became a Crown Ward.
[6] It is the applicant's position on the pending application that both she and the respondent each have a disqualifying conflict of interest which precludes them from seeking an appointment as an estate trustee.
[7] Within the pending application, counsel for the respondent has brought a motion seeking a variety of relief , among other things:
an order declaring that the respondent is the sole beneficiary of the Estate;
an order appointing the respondent as the estate trustee of the Estate;
in the alternative to the last mentioned relief, an order appointing the respondent as the litigation administrator to represent the Estate pursuant to Rule 9.02, of the Rules of Civil Procedure, for the purposes of the intended proceeding to be commenced by the applicant against the Estate;
in addition to any order made in respect of the last item of relief sought, an order appointing a lawyer as the Estate Trustee during Litigation ("ETDL"), subject to terms to be determined;
an order requiring that the applicant as plaintiff or applicant commence legal proceedings against the respondent in his representative capacity in respect of the Estate including such claims which she believes she has against the Estate as a defendant or respondent which may include any claims for support she wishes to advance under the provisions of Part V of the SLRA and that she provide financial disclosure in respect of her claim of entitlement;
an order directing that a mediation of the disputes between these parties be conducted within 90 days after the close of pleadings in the applicant's SLRA action or application to be commenced.
[8] Although the pending application seeks a variety of relief, the respondent's motion gives rise to certain procedural matters that necessarily must first be considered and resolved before the application may properly proceed.
[9] Whether the respondent's former status as a Crown Ward has disentitled him to an interest in the deceased's estate as a beneficiary, in spite of his biological connection to the deceased, is a matter that must be considered at a later point in time.
[10] Without deciding this question, the law presented on behalf of the respondent seems to conclude that Crown Wardship orders do not terminate a parental relationship and it is only an adoption order that terminates that relationship: Jewish Family and Child Services v. K. (S.), 2015 ONCJ 605, at para 12.
[11] The applicant takes the position that, quite apart from his Crown Wardship status, the respondent does not have a sufficient connection with the deceased as it is asserted that he was estranged from him at the time of his death. Again, without determining that question on the respondent's motion, the case authorities seem to demonstrate that the estrangement of a sole surviving child from the deceased is irrelevant so far as the child's standing as a beneficiary is concerned: Eissmann v. Kuntz, 2018 ONSC 3560; Re Vaudrey, 2019 ONSC 7551.
[12] On his motion the respondent seeks to the following Orders pursuant to Rule 75.06:
a) an order that the issues to be decided between the parties are:
(I) whether the applicant has any valid claims against the Estate and if so;
(II) the value of such claims;
b) an Order that the applicant, as plaintiff or applicant commence legal proceedings against the respondent in a capacity as the Estate Trustee asserting whatever claims she believes she has against the estate under the provisions of Part V of the SLRA and an order that the applicant, in those proceedings, provide financial disclosure in compliance with the provisions of Rule 13 of the Family Law Rules ;
c) an order directing a mediation session be conducted between the parties within 90 days of the close of pleadings in the contemplated SLRA proceeding.
[13] Given the applicant's acknowledgement that she intends on instituting proceedings under the SLRA against the Estate and recognizing that all reasonable steps should be taken to avoid the risk of possible inconsistent findings of fact in separate proceedings, I have concluded that the questions posed for consideration by the respondent on his motion as well as the relief sought by the applicant on the application should all be dealt with by one court on a fulsome evidentiary record relating to all available causes of action being advanced by the the parties.
[14] In the result, I will address certain issues raised by both counsel in this decision in respect of the application, the respondent’s motion and the contemplated SLRA proceeding, with the other issues raised by both parties to be determined in a subsequent hearing or hearings.
B. B. Legal Framework & Decision:
Who Should Be Appointed the Litigation Administrator?:
[15] It must be determined who may properly be appointed as the Litigation Administrator for the Estate in this application and the contemplated SLRA proceeding.
[16] Rule 9.02 provides as follows:
9.02 (1) Where it is sought to commence or continue a proceeding against the estate of a deceased person who has no executor or administrator, the court on motion may appoint a litigation administrator to represent the estate for the purposes of the proceeding.
(2) An order in a proceeding to which a litigation administrator is a party binds or benefits the estate of the deceased person, but has no effect on the litigation administrator in a personal capacity, unless a judge orders otherwise.
[17] There are two different legal capacities and roles for persons appointed to in some way represent an unrepresented estate, whether there is a will or an intestacy as is the case here.
[18] Firstly, in order to allow for the proper conduct of litigation such as the pending application and the contemplated SLRA proceeding, there must be a person appointed as the Litigation Administrator pursuant to Rule 9.02.
[19] As distinct from the legal capacity and duties of the Litigation Administrator, particularly in an intestacy, the day-to-day management of an estate typically would require the appointment of an Estate Trustee During Litigation ("ETDL").
[20] The position advanced on behalf of the applicant included several submissions which tended to blur the distinction between a Litigation Administrator appointed pursuant to rule 9.02 and ETDL as provided for by rule 75.06 (3) (f). It was asserted that the Estate, as a party to litigation such as this application and the contemplated proceeding, must be represented by an independent arm's-length person. That submission may be apt with respect to the appointment of an ETDL, however given the terms of rule 9.02 (2) which provides that where a person is appointed as Litigation Administrator, such appointment has "no effect on the litigation administrator in a personal capacity, unless a judge orders otherwise."
[21] Thus, as the respondent is acknowledged to be the biological son of the deceased and subject to a later determination as to the effect of his Crown Wardship, he presumptively would be first entitled to act as Litigation Administrator without the need to have an independent arm's-length person appointed to that role.
[22] For the reasons set out below, if so appointed as Litigation Administrator, the respondent would not have access to assets of the Estate nor any ability to manage those assets during the course of this litigation and the contemplated proceedings under the SLRA. As a result, any concerns expressed by the applicant as to the possible mismanagement or misappropriation of estate assets would be unfounded.
[23] As such I have concluded that in all of the circumstances, and considering all of the evidence submitted by these parties, the respondent shall be appointed as the Litigation Administrator for the Estate in this application and in the SLRA proceeding to be commenced and that such appointment will have no effect on his rights in his personal capacity as a claimant as against the Estate assets, given the appointment of the ETDL as discussed below.
Who Should Be Appointed ETDL?:
[24] Generally in the case of litigation relating to the property of a deceased person, where a will or grant of probate or administration is an issue, Section 28 of the Estates Act, R.S.O. 1990, c. E.21, provides authority to the court to appoint an administrator of the estate during the course of litigation. The section is also applicable in the case of intestacies in certain circumstances. That section reads as follows:
28 Pending an action touching the validity of the will of a deceased person, or for obtaining, recalling or revoking any probate or grant of administration, the Superior Court of Justice has jurisdiction to grant administration in the case of intestacy and may appoint an administrator of the property of the deceased person, and the administrator so appointed has all the rights and powers of a general administrator, other than the right of distributing the residue of the property, and every such administrator is subject to the immediate control and direction of the court, and the court may direct that such administrator shall receive out of the property of the deceased such reasonable remuneration as the court considers proper.
[25] I have concluded that in the circumstances of this case section 28 of the Estates Act is not engaged here, but rather the court's inherent discretionary jurisdiction allowing for the appointment of estate representatives, as codified in rule 75.06 (3) (f), is more apt to the present circumstances.
[26] As to the evidence and considerations applicable under rule 75.06 having regard to the appointment of an ETDL they include:
(1) whether a trustee may be a witness in the litigation;
(2) potential for conflict of interest;
(3) conflict between the interests of the trustees and/ or beneficiaries;
(4) hostility between the trustees and/or beneficiaries;
(5) lack of communication between the parties; and
(6) evidence of settlement discussions that exclude some of the parties: Baran v. Cranston, 2020 ONSC 589; Mayer v. Rubin, 2017 ONSC 3498.
[27] In Mayer, the court summarized the legal principles engaged when considering the appointment of an ETDL which included:
(1) the court has a broad and inherent power to supervise the management of estates and can draw upon its inherent jurisdiction to protect parties so that justice can be done in the proceeding;
(2) the court must ensure that there is a level playing field between the parties, and that the assets of the estate are insulated from litigation strategies employed by the litigants;
(3) the appointment of an ETDL should only be refused in the clearest cases, for example where an estate is simple or straightforward and without conflict between trustees and beneficiaries the appointment of an ETDL may not be necessary.
[28] An additional consideration when assessing whether or not an ETDL should be appointed is the size of the estate. While the estate in this matter is quite modest, as the only possible persons entitled to any of the assets under the estate are the litigants in this application and given they have inherent conflicts of interest as a result of their respective positions, I have concluded that the appointment of an ETDL is necessary in the circumstances in order to gather in, account for and protect the estate assets and maintain the value of the estate without dissipation and minimal, if any, expense to the estate pending the outcome of this application as well as the contemplated SLRA proceedings.
[29] Counsel for the respondent, proposed in the alternative that if the respondent was not appointed the ETDL, an independent solicitor should be appointed by the court to that position. Counsel put forward the name of a solicitor practising in Owen Sound as a possible candidate for this appointment. The record contains information with respect to that solicitor's terms of retainer, hourly rates, terms dispensing with the requirement of a bond and other conditions related to the management of the estate during litigation.
[30] The applicant did not expressly oppose the appointment of the solocitor as ETDL as offered by the respondent nor were any issues taken with his qualifications or terms of retainer.
[31] In order to ensure that the parties to this application have all reasonable opportunity to consider the identity of an ETDL to be appointed, rather than simply appointing the solicitor proposed by the respondent, the applicant shall advise me within 20 days from the date of release of these reasons whether the proposed candidate is acceptable or not including the reasons for any objection.
[32] Hopefully the parties can come to an agreement on the identity of an appropriate ETDL, if the solicitor proposed is not acceptable or is unable to act due to possible conflict of interest. In the event no response whatsoever is received from the parties within 20 days, by supplementary reasons for decision, I will appoint the proposed solicitor as the ETDL.
[33] In addition to identifying the ETDL, counsel shall, within 20 days, file submissions with respect to the exact terms of retainer for a solicitor being appointed as the ETDL, which will include terms to the effect that the ETDL shall do all that is necessary to protect and preserve the assets of the estate, and if necessary, with court approval, sell assets and preserve capital without any distribution to either party or creditors of the estate pending the outcome of this application and the SLRA proceedings.
Other Orders & Directions:
[34] The full duties and responsibilities of the ETDL to be appointed shall be determined following the release of this decision and counsel for the parties are urged to come to an agreement on those, however if that cannot be achieved they shall file written submissions as to the ETDL's scope of duties and responsibilities and the court will determine same.
[35] Further, the court, at a later date, will determine who will bear the responsibility for the costs incurred by the ETDL in her/his management of the estate during litigation.
[36] As to the SLRA proceeding ,which is to be commenced the applicant herein shall, following commencement of that proceeding, provide financial disclosure to the respondent having regard to the terms of section 62 of the SLRA.
[37] The applicant shall institute as plaintiff or applicant proceedings against the respondent in his capacity as Litigation Administrator of the Estate asserting all claims she believes she has as against the Estate including such claims for support under the provisions of Part V of the SLRA.
[38] With respect to the applicant's responsibility to make financial disclosure, the applicant shall comply with the provisions of Rule 13 of the Family Law Rules, including the service and filing of a Financial Statement in Form 13.1 of the Family Law Rules along with additional disclosure as called for in Rule 13 (3.3) and Rule 13 (5.0.2).
[39] The parties to the SLRA proceeding are ordered to attend a mediation session within 90 days following the close of pleadings in the SLRA proceeding and following receipt by all parties of a statement from the ETDL setting out an estimated value of the estate.
[40] As to costs of this attendance, including the respondent's motion, counsel for the respondent shall file his submissions with respect to costs of no longer than three pages, along with a costs outline within 20 days followed by similar submissions on behalf of the applicant within 20 days thereafter. No reply submissions shall be filed.
[41] An order shall issue in accordance with the terms of this endorsement.
Daley, J.
Released: December 10, 2020
COURT FILE NO.: CV-19-4534
DATE: 20201210
ONTARIO
SUPERIOR COURT OF JUSTICE
LINDA CAROLE MCQUOID
Applicant
- and -
NATHAN BRANDON PATTERSON
Respondent
ENDORSEMENT
Daley, J.
Released: December 10, 2020