O’Donovan v. O’Donovan, 2020 ONSC 8001

COURT FILE NO.: C-248-07 (Kitchener), C-772-07 (Kitchener), 08-004-09 (Toronto), 08-005-09 (Toronto), ES-1040-11 (Kitchener), ES-1041-11 (Kitchener) ES-827-16 (Kitchener)

DATE: 2020-12-21

ONTARIO

SUPERIOR COURT OF JUSTICE

at KITCHENER

In the Michael Val O’Donovan Family Trust #1

In the Michael Val O’Donovan Family Trust #2

In the Sheila O’Donovan Family Trust

BETWEEN:

Steven O’Donovan aka as Stephen O’Donovan, Christopher Anthony O’Donovan, Brian O’Donovan, Patrick O’Donovan, Tyler O’Donovan, Fuyoku O’Donovan, Loretta O’Donovan and Michael O’Donovan

The Children’s Lawyer

Arieh Bloom and Lionel Tupman, Solicitors for Christopher O’Donovan and Steven O’Donovan, in their professional capacity as Trustees of the Michael Val O’Donovan Family Trust # 1 and Michael Val O’Donovan Family Trust # 2, directors and trustees of MVO Investment Ltd., and 1403627 Ontario Ltd. and as beneficiaries in the SOFT Trust

Justin H. Nasseri (formerly Tanya Pagliaroli and Justin H. Nasseri), Solicitors for Brian O’Donovan

Sean M. Grayson, Solicitor for Patrick O’Donovan, Tyler O’Donovan, Fuyoku O’Donovan, Loretta O’Donovan and Michael O’Donovan

Mark Muir Rodenburg, Solicitor for the Children’s Lawyer on behalf of all the minor beneficiaries, the unborn and the un-ascertained beneficiaries

Sheila O’Donovan (in her personal capacity and her capacity as the Trustee of the Sheila O’Donovan Family Trust)

Edward Kalkstein (in his personal capacity and his capacity as the Trustee of the Sheila O’Donovan Family Trust)

The Estate of Michael Val O’Donovan

Royal Trust Corporation of Canada

R. Douglas Elliottt, Joseph Figliomeni and Elena Mamay (formerly Paul D. Amey and John Morrissey), Solicitors for Sheila O’Donovan (in her personal capacity and her capacity as Trustee of the Sheila O’Donovan Family Trust)

Sandra E. Dawe, Solicitor for Edward Kalkstein

Unrepresented

D. Lobl, Solicitor for Royal Trust

HEARD: November 28, 29, 30, December 1, 2016 and October 29, 30, 31, November 1, 2018, October 19, 20, & 21, 2020

INDEX

The parties ………………………………………………………………………… 5

litigation history ………………………………………………………………. 9

current applications before the court …………………………….. 11

chronological history ……………………………………………………… 14

motions to strike Part of Sheila’s and ZEIFMAN’S affidavits … 20

motion to dismiss Steven and Christopher’s actions ………….. 31

motion for a further and better accounting …………………….. 77

application by Brian Patrick Michael and Tyler …………………… 102

SUMMARY reasons ……………………………………………………………….. 115

orders ……………………………………………………………………………….. 147

appendix A …………………………………………………………………………… 150

appendix B …………………………………………………………………………… 155

The Honourable Justice James W. Sloan

REASONS FOR DECISION

[1] The issues in this litigation, as the reader can see from above, have been argued over multiple days starting back four years ago in November 2016. My practice is to try to get the evidence and legal arguments down as soon as possible after I hear them. In this case, Sheila, the matriarch of the family, passed away on April 27, 2019. Therefore, in reading the first few hundred paragraphs of this judgment, the text may refer to her as being alive or deceased since I have made some corrections. In some instances, issues have become moot because of her passing.

[2] These actions involve unfortunate turmoil within a wealthy family, some of whom are estranged from others.

[3] When the court asked at the beginning of the motions whether or not mediation had been tried, the response was sadly, that it had not.

[4] The court has now spent days reviewing 59 volumes of material which encompass four full banker’s boxes, trying to take notes during eleven days of submissions by up to eight lawyers, all of whom were intimately familiar with the material. The court then spent innumerable nights and weekends inputting, reviewing and assessing the evidence and legal principles. Along the way, while dealing with the current motions, there were at least two other motions over procedural matters which the court had to rule on.

[5] There are currently actions, applications and motions before the court. I found it unnecessary to differentiate between these three types of court proceedings and have not done so in any technical sense. I intend that my findings and orders should apply to all the outstanding litigation between members of the O’Donovan family and the trusts set up by Val and Sheila O’Donovan.

[6] The term plaintiffs, depending on the context, usually means Steven and Christopher O’Donovan, but may include all of the parties who are in opposition to Sheila and Kalkstein.

[7] At the heart of this litigation are family trusts generally referred to as SOFT and MVOFT. The core issue from which the rest of this litigation has spawned is whether monies were inappropriately taken from these trusts by the trustees. As both the patriarch and now the matriarch of the O’Donovan family have passed on, the question of how to address this issue has become unduly complicated. Moreover, the longevity of this acrimonious litigation and the conduct of the parties have obfuscated this litigation’s central purpose, and have led to multiple related proceedings, which have drawn considerably on court time and resources. In the balance of these reasons, I will address each parties’ submissions with respect to the motions currently before the court, bearing in mind that notwithstanding my findings on these issues, the accounts still need to be resolved in some fashion for the benefit of the beneficiaries. Unfortunately, due to the trustees’ poor record keeping, this task will be undoubtedly difficult. However, the administration of justice demands that this process be carried out as best as possible, if necessary, with a wide brush as opposed to a calculator. Rule 1.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”), sets out that the Rules are to be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. This is certainly a case where the litigation has hit a point of diminishing returns, and mediation appears to be the best way forward in light of the Rules’ guiding principles.

The Parties

[8] Michael Val O’Donovan (“Val”) was the patriarch of the O’Donovan family and a very wealthy businessman. He passed away on February 5, 2005.

[9] Sheila O’Donovan (“Shelia”) was Val’s widow. She passed away during these proceedings on April 27, 2019.

[10] Sheila Ainsworth is the Estate Trustee of Sheila O’Donovan’s estate.

[11] In an effort to try to simplify the complexity of the number of parties, I have underlined the children of Val and Sheila with a single line, their grandchildren with a double line and their great-grandchildren with a wavy line.

[12] Christopher O’Donovan (“Christopher”) and Steven O’Donovan (“Steven”) are the biological sons of Val and Sheila.

[13] Simon Paul O’Donovan (“Simon”) was a biological son of Val and Sheila but passed away on January 5, 2014.

[14] Caroline O’Donovan (“Caroline”) is an adopted child of Val and Sheila.

[15] Mikako O’Donovan, Emiko O’Donovan and Kei O’Donovan are the minor children of Christopher (and Fuyuko) and the grandchildren of Sheila.

[16] Michael Andrew O’Donovan, an adult, and Kelly Nicole O’Donovan, a minor, are the children of Steven (and Loretta) and the grandchildren of Sheila.

[17] Brian O’Donovan (“Brian”), Patrick O’Donovan (“Patrick”) and Tyler O’Donovan (“Tyler”) are the adult children of Simon (and Gerry) and the grandchildren of Sheila.

[18] Kieran O’Donovan (“Kieran”), born June 15, 2013, is the child of Brian, the grandchild of Simon and the great-grandchild of Sheila.

[19] Finn O’Donovan (“Finn”), born February 4, 2014, and Caelan O’Donovan (“Caelan”) born February 29, 2016, are the children of Patrick, the grandchildren of Simon and the great-grandchildren of Sheila.

[20] Summer O’Donovan (“Summer”), born July 18, 2015, is the child of Tyler, the grandchild of Simon and the great-grandchild of Sheila.

[21] Caroline had four children, all of whom were adopted by other families, such that Caroline is no longer their legal parent. All such children are now adults. They reside somewhere outside of Ontario. They are not involved in this litigation.

[22] Edward Kalkstein (“Kalkstein”) was, at all material times, an accountant and one of the original trustees of SOFT.

[23] Laurence Zeifmans (“Zeifmans”) was at all material times an accounting partner and friend of Kalkstein.

[24] The acronym SOFT stands for the Sheila O’Donovan Family Trust.

[25] The acronym MVOFT stands for the Michael Val O’Donovan Family Trust.

[26] The acronym COFT stands for Caroline O’Donovan Family Trust.

MVOFT - (MVOFT1 and 2)

[27] MVOFT1 is a discretionary trust and was settled by Val on April 24, 1989, and the original trustees were Val and Sheila.

[28] Sheila was removed as trustee by way of deed, signed by all nine adult beneficiaries of the trust on August 25, 2005, approximately seven months after Val's death.

[29] The beneficiaries of MVOFT1 are Simon, Christopher, Steven, and their respective spouses and issue.

[30] On September 8, 2004, Christopher was added as a trustee and on September 6, 2005, Steven was added as a trustee.

[31] MVOFT2 was settled by Val on September 19, 2001, and the original trustees were Val and Sheila.

[32] The beneficiaries of MVOFT2 are Simon, Christopher, Steven, and their respective spouses and issue.

[33] In May 2005, Steven and Christopher were added as trustees and on September 3, 2005, Sheila was removed as a trustee.

[34] The underlying value of the MVOFT trusts are shares in MVO and 1993. 1993 is a wholly owned subsidiary of MVO. MVO and 1993 were companies owned by Val.

COFT

[35] COFT was settled by Val in February 1991 and the original trustees were Val, Sheila and Val’s accountant, Kalkstein.

[36] In the spring of 1996, the name of COFT was changed to the Sheila and Val O’Donovan Family Trust. The beneficiaries of COFT were the children, grandchildren and great-grandchildren of Val and their spouses. There was a resolution in February 1998 which purported to change the beneficiaries to only Tiffany and Deborah, the first two adopted children of Caroline.

SOFT

[37] SOFT is a discretionary trust that was settled by Sheila on July 3, 1996, and the original trustees were Val, Sheila and Kalkstein. Kalkstein resigned on November 6, 2012 0020, leaving Sheila as the sole trustee.

[38] The beneficiaries of SOFT are the issue of Sheila, other than Caroline.

[39] There is a resolution dated July 30, 2006, signed by Sheila and Kalkstein, which purports to change the beneficiaries to Brian, Patrick and Tyler (the adult children of Simon), Michael (the adult child of Steven) and Kelly (the minor child of Steven). This change purportedly removes Steven, Christopher and Simon, as well as their unborn offspring as beneficiaries. This resolution is one of the issues of the litigation.

[40] Kalkstein resigned as trustee on November 6, 2012. This left the trust without the required second trustee until Adam Cappelli was appointed as a trustee on June 30, 2016.

[41] The assets of SOFT were transferred to SOFT2016 on June 30, 2016.

[42] Val’s wills name Sheila, Steven and Christopher as estate trustees of both his primary and secondary estates.

[43] There are two trusts in each will, one being a spousal trust and one being a family trust, which is an issue before me.

[44] All the income from the spousal trust was to be used for the benefit of Sheila until her death and all income from the family trust was to be used for Sheila or any of Val’s issue in the absolute discretion of the estate trustees and if not so used, then added to the capital.

[45] On the death of Sheila, any amounts remaining in the spousal or family trusts fall into and form part of the residue of the estate to be divided among Val’s issue then living, in equal shares per stirpes, but excluding Caroline and her issue.

[46] In addition to the various inter vivos family trusts and trusts set up in Val’s wills, Val’s estate, or the family trusts, control or formerly controlled several corporations.

Royal Trust Corporation of Canada

[47] Royal Trust became the second trustee of SOFT2016 on or about June 2, 2017, when Adam Cappelli resigned as trustee. It has not taken a particularly active part in this litigation to date.

Brief History of the Litigation

[48] The following litigation has been commenced and for the most part remains unresolved:

(a) application # FS 4-07 (Kitchener) - by Sheila against her children for support;

(b) action # C-26-07 (Kitchener) - by Sheila against Val’s estate for support;

(c) action # C-248-07 (Kitchener) - by Steven and Christopher against Sheila and Kalkstein, for a Passing of Accounts for SOFT and MVOFT1, a declaration that Steven and Christopher remain beneficiaries of SOFT and for a declaration concerning ownership of the Bermuda property;

(d) application # ES-623-07 (Kitchener) by Steven and Christopher with Simon, Brian, Patrick, Tyler, Michael, Kelly, Sheila, Caroline, Lisaard House and others as respondents, seeking the opinion advice and direction concerning Val’s will (subject to an issue of costs this has been finally determined);

(e) application # C-772-07 (Kitchener) by the Children’s Lawyer with numerous respondents, for an order appointing a forensic accountant to investigate and prepare accounts with respect to MVOFT1, MVOFT2, COFT, SOFT and Val’s estate (subject to the issue of costs this has been finally determined);

(f) application # 08-004-09 (Toronto) by Brian, as applicant, and Sheila, Kalkstein, Patrick, Tyler and the Children’s Lawyer, as respondents, seeking an order to remove Sheila and Kalkstein as trustees of SOFT, replacing them with Christopher, Steven and the Bank of Montréal, an order that Sheila and Kalkstein prepare and pass accounts for SOFT and an order consolidating application and action #’s 08-004-09, 08-005-09, C-248-07 & C-772-07 and an order appointing a case management judge;

(g) application # 08-005-09 (Toronto) by Steven and Christopher as applicants and Sheila, Simon, Val’s estate and numerous others as respondents seeking an order that Sheila prepare and pass accounts for MVOFT1, an order that the appointed estate trustee of Val’s estate prepare and pass accounts for MVOFT1, an order for the appointment of an estate trustee for Val’s estate, an order consolidating application # 08-005-09 with the “other accounting actions or applications” and an order appointing a case management judge;

(h) application # ES-1006-10 (Kitchener) by the Children’s Lawyer against Steven and Christopher requiring them to pass the accounts for MVOFT1, MVOFT2 and MVOFT3 for the period of time when they were trustees (this has been finally determined);

(i) application # ES-684-11 (Kitchener) by Steven and Christopher to pass the accounts for MVOFT1, MVOFT2, MVOFT3, MVOFT4A, MVOFT4B and MVOFT4C for the period of time that they were trustees of such trusts (the various trusts were used to distribute the monies in MVOFT1 and MVOFT2 out to various beneficiaries in a tax efficient manner), (this has been finally determined);

(j) application # ES-1040-11 (Kitchener) by Sheila, to pass the accounts for MVOFT1 for the period August 24, 1989 to August 25, 2005, and to pass the accounts for MVOFT2 for the period of September 19, 2001 to August 25, 2005;

(k) application # ES-1041-11 (Kitchener) by Sheila and Kalkstein to pass their accounts for SOFT for the period July 3, 1996 to June 30, 2011;

(l) application # ES-827-16 (Kitchener) by Brian, Patrick, Michael and Tyler, as applicants, and Sheila, Kalkstein, Steven, Christopher, Val’s estate and the Children’s Lawyer as respondents, seeking an order removing Sheila as a trustee of SOFT, an order determining and declaring the beneficiaries of SOFT, an order that SOFT be distributed to the beneficiaries immediately or in the alternative that the assets of SOFT be paid into court, an order that Sheila pass the accounts of SOFT, an order that application # ES-827-16, # ES-1040-11 and # ES-1041-11 continue in the absence of a person representing Val’s estate;

(m) CV-18-596923 was commenced in Toronto on April 30, 2016, and is further litigation spawned from the ongoing O’Donovan family feud. In this action, Sheila sued the estate of her former lawyer, the late Paul Amey, his firm, Kalkstein, Kalkstein’s accounting partnership, along with Cosimo Fiorenza, who originally set up the trusts in the late 1980’s and in the1990’s;

(n) CV-18-1101 is a Kitchener action commenced by Steven and Christopher against Adam Cappelli, claiming that Cappelli breached his fiduciary duty to the beneficiaries of SOFT; and

(o) CV-20-792 is a Kitchener action commenced on June 9, 2020 by Royal Trust in its capacity as Trustee for SOFT2016 against Sheila’s Estate Trustee, Sheila Ainsworth, among others. In this action, Royal Trust seeks declaratory relief and special damages in the amount of $5,942,000.00.

Current Applications before the Court

Steven and Christopher

[49] In court actions/applications ES–1040–11 and ES–1041–11, Steven and Christopher seek the following relief from the court.

1. To strike out paras. 32, 51 and 55 of Sheila’s Affidavit sworn March 25, 2016. (V-10 T-2);

2. To strike out paras. 2, 60, 71, 72, 74, 81, 82 and 83 from Zeifman’s Affidavit sworn April 18, 2016. (V-17 T-2);

3. To strike the Affidavit of Dr. Kenneth Shulman (“Dr. Shulman”) and in the alternative, to strike the opinion evidence set forth in Shulman’s letters that opine on Kalkstein’s capacity to testify. (V-19 T-2);

4. To strike out paras. 7 and 8 from Zeifman’s Supplementary Affidavit affirmed September 8, 2016. (V-19 T-3);

5. An Order for a further and better accounting from Sheila and Kalkstein with respect to the accounts of SOFT;

6. An Order for a further and better accounting from Sheila with respect to the accounts of MVOFT1;

7. An Order dismissing Sheila and Kalkstein’s motion to dismiss the various accounting proceedings, on the grounds of delay and abuse of process; and

8. A time-table for a hearing of the Passing of Accounts for SOFT and MVOFT1 and 2 and a determination of the beneficial ownership of the Bermuda property.

Sheila O’Donovan

[50] In court actions/applications C-248-07 (Kitchener), C-772-07 (Kitchener), 08-004-09 (Toronto), 08-005-09 (Toronto), Shelia, seeks the following relief from the court:

1. Dismiss court action C-248-07 brought by Steven and Christopher as plaintiffs, for delay and abuse of process.

2. Dismiss application 08-005-09 brought by Steven and Christopher (Applicants), for delay and abuse of process.

3. Dismiss application 08-004-09 brought by Brian (Applicant) for delay, sheltering under the motion brought by Kalkstein.

Edward Kalkstein

[51] In court actions/applications C-248-07 (Kitchener), C-772-07 (Kitchener), 08-004-09 (Toronto), 08-005-09 (Toronto), ES-1040-11 (Kitchener), ES-1041-11 (Kitchener) and ES-827-16 (Kitchener), Kalkstein seeks the following relief from the court:

1. Dismissal of the motion of Steven and Christopher seeking to strike, (i) portions of the Affidavit of Zeifmans sworn April 18, 2016; (ii) portions of the Affidavit of Zeifmans sworn September 8, 2016; and (iii) the Affidavit of Dr. Shulman.

2. An Order setting aside the Summons to Witness to examine Kalkstein dated September 15, 2016, and served September 19, 2016, or, in the alternative, an Order allowing Kalkstein to respond in writing, within a reasonable period of time, to written questions submitted by counsel.

3. An Order removing Kalkstein as a party to the following proceedings, based upon the delay of Steven and Christopher and abuse of process by them:

(a) Action C-248-07 (Kitchener);

(b) Applications 08-004-09 (Toronto) and 08-005-09 (Toronto) [although no relief is sought against Kalkstein or Zeifmanss LLP in 08-005-09, both he and Zeifmanss LLP are listed as parties in 08-005-09. Regardless of the outcome of any of the motions, it is Kalkstein's position that this should be remedied on consent]; and

(c) Application ES-1041-11 (Kitchener).

4. In the event that Kalkstein remains a party, (i) dismissal of the motions for a further and better accounting in respect of SOFT; and (ii) a Timetable, including a Mediation, that will conclude this litigation without further delay or further proceedings initiated by parties without leave of the Court.

5. Costs to Kalkstein, payable by Steven and Christopher, for these motions, and, if Kalkstein is successful in respect of his removal from the proceedings, costs of the underlying proceedings.

Brian O’Donovan, Patrick O’Donovan, Michael O’Donovan and Tyler O’Donovan

[52] In court actions/applications ES-827-16, Brian, Patrick, Michael and Tyler seek the following relief from the court:

1. Invalidating the transfer of SOFT’s assets into SOFT2016 and returning said assets to SOFT;

2. Removing Sheila in her capacity as a Trustee of SOFT and appointing Tyler;

3. Requiring that the assets of SOFT be distributed forthwith pursuant to Article 4.01(b) of the Deed;

4. Restraining Sheila from amending or varying SOFT;

5. Requiring Sheila to pass her accounts as a trustee of SOFT, which shall include an accounting for 1338, until the date of this Order and within 60 days of the date of this Order;

6. In the alternative, the same relief requested in this application against SOFT and Sheila to apply in respect of SOFT2016;

7. Declaring that Sheila has exercised and continues to exercise her powers as the sole officer and director of 1338 in a manner that is oppressive, unfairly prejudicial, or that unfairly disregards the interests of the Applicants and that of the other beneficial shareholders of 1338;

8. That forthwith, Sheila’s Class A and Class B preferred shares shall be redeemed by 1338 for $81,804;

9. That Sheila shall be removed as an officer and director of 1338 forthwith and that Tyler, or in the alternative one of the other beneficial shareholders of 1338, be appointed as a director and officer of 1338, subject to further vote of the common shareholders of 1338;

10. In the alternative, an Order for the liquidation and wind-up of 1338;

11. An Order that the proceedings in this application and the applications in ES-1040-11 and ES-1041-11 continue in the absence of a person representing the Estate of the deceased Michael Val O’Donovan;

12. An Order that any Order made by this Honourable Court in this proceeding or in ES-1040-11 and ES-1041-11 or any other related proceeding bind the Estate of Michael Val O’Donovan; and

13. An Order for costs.

Chronological History

[53] The following are significant dates pertaining to this litigation:

1. April 24, 1989 – Val settles MVOFT1. Val and Sheila are trustees. Sheila is removed as a trustee on August 25, 2005.

2. February 1991 – Val settles COFT. Val, Sheila and Kalkstein are trustees.

3. Spring 1996 – the name of COFT is changed to the Sheila and Val O’Donovan Family Trust.

4. July 3, 1996 – Sheila settles SOFT. Val, Sheila and Kalkstein are trustees. Kalkstein resigns on November 6, 2012.

5. October 1997 – Val and Sheila purchase the Bermuda property.

6. September 19, 2001 – Val settles MVOFT2. Val and Sheila are trustees. Sheila is removed as a trustee on September 3, 2005.

7. 2004 – Val suffers a stroke.

8. September 8, 2004 – Christopher is added as a trustee of MVOFT1.

9. February 5, 2005 – Val dies.

10. May 5, 2005 – Steven and Christopher are added as trustees of MVOFT2.

11. August 25, 2005 – Sheila is removed as a trustee of MVOFT1.

12. September 3, 2005 – Sheila is removed as a trustee of MVOFT2.

13. September 6, 2005 – Steven is added as a trustee of MVOFT1.

14. November 14, 2005 – Sheila is removed as an officer and director of MVO.

15. March 2007 – Steven and Christopher commence an action for the passing of accounts for MVOFT & SOFT.

16. October 2007 – Sheila and Kalkstein deliver their Statement of Defence.

17. January 31, 2008 – Latest date considered in the Rudson report.

18. March 2008 – Gordon J. appoints Rudson at a cost of $1,100,000 to prepare a forensic audit.

19. August 2008 – Shelia sells the Bermuda property at a loss during the world-wide financial crisis.

20. May 22, 2008 – Gordon J. orders Sheila and Kalkstein to serve a sworn affidavit of documents by July 15, 2008. It was received on June 12, 2009, after several adjournments to accommodate Kalkstein. The matter of a proper affidavit of documents was before the court on August 5, September 2, September 19 and December 22, 2008 and in January and June 2009.

21. August 6, 2008 – Flynn J. dismisses the motion made by Steven and Christopher for an order requiring that the net proceeds of the sale of the Bermuda Property be paid into Court.

22. April 7, 2009 – Steven and Christopher file a complaint with the Institute of Chartered Accountants of Ontario (“ICAO”) concerning Kalkstein.

23. June 24, 2009 –Gordon J. makes note in his endorsement of Kalkstein’s mental health problems. Gordon J.’s order also makes mention that this is the “third further and better Affidavit of Documents of… Kalkstein…”.

24. October 2, 2009 – Steven and Christopher change their lawyers from Madorin Snyder and Gowling to Hull & Hull.

25. November 2009 – Steven and Christopher start two Toronto actions asking for the same relief, i.e. passing of accounts for MVOFT & SOFT (the Rudson report was still a work in progress at this time).

26. April 2010 – The Toronto actions are ordered transferred to Kitchener.

27. May 5, 2010 – The Professional Conduct Committee of the ICAO closed Steven and Christopher’s complaint without referring it to the Discipline Committee. An independent review of the Professional Conduct Committee’s decision (requested by Steven and Christopher) upheld the Professional Conduct Committee’s original decision.

28. January 2011 – Rudson delivers its 11 volume report (21 months have gone by since Gordon J.’s order).

29. June 2011 – Steven and Christopher change their lawyers from Hull & Hull to Fasken Martineau.

30. August 8, 2011 – Sloan J. orders a litigation plan on consent. Sheila and Kalkstein are to file an Application to Pass their Accounts for the Trusts by October 31, 2011.

31. November 2011 – Sheila and Kalkstein deliver their accounts which are replete with zeros, tens and footnotes, one of which reads “these accounts do not deal with monies which may be in 1001338 Ontario Ltd.”

32. December 2011 – Steven and Christopher file their objections.

33. May 2012 – All counsel were working on an order for directions, until counsel for Steven and Christopher advised that their clients had retained new lawyers.

34. September 26, 2012 – Steven and Christopher, after changing lawyers from Fasken Martineau to Miller Thomson, deliver a 392 item Request to Admit (approximately ten months after their objections were filed).

35. October 12, 2012 – Kalkstein (Dawe) writes to Miller Thomson, proposing that the Request to Admit be withdrawn, since prior to their retainer, counsel had been seriously discussing a consent order for directions.

36. November 6, 2012 – Kalkstein resigns as a trustee of SOFT and Sheila remains the only trustee until June 30, 2016.

37. January 18, 2013 – Steven and Christopher advised that there would be no revised offers, that they were not interested in mediation and that they extended the deadline to respond to the Request to Admit to March 18, 2013. As a result, discussions with respect to settlement or procedure essentially ceased.

38. June 13, 2013 – Steven and Christopher had Simon’s children, Brian, Patrick and Tyler, file a second complaint with the ICAO. This complaint was also dismissed by the Professional Conduct Committee without referring the matter to the Discipline Committee.

39. September 30, 2013 – Sheila and Kalkstein deliver their responses to the Requests to Admit.

40. September 26, 2013 – Steven and Christopher (Miller Thomson) advised that they would not participate in mediation because Kalkstein would not attend and would not pay half the mediator’s fee (even though Sheila would pay half the mediator’s fee).

41. January 10, 2014 – Steven and Christopher (Miller Thomson) advised counsel that they would send their completed draft order for directions during the week of January 20, 2014. This never materialized.

42. October 2, 2014 – Sheila writes (Amey) to Steven and Christopher (Miller Thomson) expressing concerns about delay and reminding Steven and Christopher about the outstanding settlement offer. There was no response until November 4, 2015, more than one year later.

43. November 4, 2015 – Steven and Christopher serve a Notice Change of Solicitors from Miller Thomson to Whaley Estate Litigation (Bloom).

44. June 30, 2016 – Cappelli becomes the second trustee of SOFT and SOFT’s assets are transferred to SOFT2016.

45. July 30, 2016 – The trustees change the beneficiaries of SOFT.

46. January 7, 2016 – Steven and Christopher (Bloom) advised that they would be moving for directions, but instead served a motion seeking an accounting of various dividends etc. paid to Sheila, Val and Kalkstein.

47. January 2016 – Sheila and Kalkstein serve their motion to dismiss.

48. November 28, 29, 30 and December 1, 2016 – Shelia and Kalkstein’s motion to dismiss the plaintiff’s claim is commenced.

49. January 2017 – Amey (Sheila’s lawyer) passes away.

50. June 12, 2017 – When Sheila hired Cambridge LLP to represent her, the various plaintiffs brought a motion to remove Cambridge LLP as her lawyer. This motion was dismissed.

51. June 21, 2017 – Royal Trust replaces Cappelli as the second trustee for SOFT2016.

52. June 2018 – Sheila withdraws approximately $5,000,000 from 1338.

53. August 8 and 9, 2018 –Motion by Sheila to (1) withdraw admissions mistakenly made in her September 2, 2016, affidavit (drafted by Amey) and (2) to file two affidavits, Bushell’s (Sheila’s long-standing accountant since 2005, who advised her new lawyers of an error) and Benoji’s, which simply sets out historical timelines since the last hearing date.

54. Because of Shelia’s motion to withdraw admissions, the continuation of the dismissal motion, scheduled for four days in August, had to be further adjourned to four days commencing on October 29, 2018.

55. Because of other issues, including the unavailability of the motion’s judge, the motions were adjourned to October 19, 2020.

56. April 27, 2019 - The death of Shelia.

57. November 25, 2019 - Shelia Ainsworth becomes Shelia’s Estate Trustee.

Steven and Christopher’s Lawyers

58. From 2007 to October 2, 2009, Christopher was represented by Madorin Snyder and Steven was represented by Gowling.

59. On October 2, 2009, Steven and Christopher change their lawyers to Hull & Hull.

60. In June 2011, after release of the Rudson report, Steven and Christopher change their lawyers to Fasken Martineau.

61. In August 2012 Steven and Christopher change their lawyers to Miller Thomson.

62. On November 16, 2015, Steven and Christopher change their lawyers from Miller Thomson to Whaley and Associates (Bloom remains their lawyer)

The Children’s Lawyer on Behalf of Minor, Unborn and Unascertained Beneficiaries

[54] In court actions/applications C-248-07, 08-004-09, ES-1040-11, ES-1041-11, ES-827-16, C-772-07FS-4-07, C-26-07 & ES-623-07 the Children’s Lawyer seeks the following relief from the court:

1. That Adam Cappelli (if willing, or another neutral party) be appointed as an officer and director of 1001338 Ontario Limited, along with Sheila O’Donovan, and that neither of them be removed without a further Order of the Court;

2. For a declaration that the distribution of the whole of the trust fund from SOFT to SOFT2016 was valid;

3. That the appointed Estate Trustees of Val’s Estate (being Christopher, Steven and Sheila O’Donovan) be ordered to appoint a mutually agreeable person to represent Val’s Estate with regards to the numerous court proceedings within 30 days, failing which the Court should appoint a person to represent Val’s Estate with regards to the numerous court proceedings. In the alternative, the Court should make an Order that all of the enumerated court proceedings are to continue in the absence of a person representing Val’s Estate and that all Orders in all such court proceedings bind Val’s Estate;

4. That Sheila O’Donovan and Edward Kalkstein be ordered to provide a further and better accounting of SOFT and its sole asset, 1001338 Ontario Limited, which should include but not be limited to, providing explanations as to all of the issues raised in the Rudson Report;

5. That Sheila O’Donovan should be ordered to provide a further and better accounting of MVOFT1 and MVOFT2, which should include but not be limited to, providing explanations as to all of the issues raised in the Rudson Report;

6. That the Court provide a framework for resolving all of the outstanding issues - a suggested framework is to Order a consolidation of all ten court files, which still have unresolved issues, then to first resolve the primary issues (being whether monies are owed to MVOFT1, MVOFT2 and SOFT and if monies are owed, by whom and in what amounts) by hearing the six court proceedings [action # C-248-07, application # 08-004-09, application # 08-005-09, application # ES-1040-11, application # ES-1041-11 and application # ES-827-16] concerning the accounts of MVOFT1, MVOFT2 and SOFT together. Second, the remaining issues from application # C-772-07 [essentially costs issues (who should pay the costs of the forensic accountant and who should have their costs paid in that application and by whom)] should be heard. Third, any issues involving the proceedings of Sheila (application # FS 4-07 and action # C-26-07) for support should be heard. Finally, the last remaining issue of the Children’s Lawyer’s costs in application # ES-623-07 can be heard (as set out above such costs were left to be determined “upon completion of the companion actions”); and

7. Costs of the motions and application.

Motion to Strike Parts of Sheila’s and Zeifman’s Affidavits –

(Steven and Christopher as Plaintiffs)

Submissions by Bloom (Steven and Christopher)

[55] The plaintiffs started their argument by stating that Sheila and Kalkstein have brought a motion to strike out their motion on one of two grounds.

[56] The first ground being that they have been prejudiced by the passage of time because Kalkstein’s medical condition is such that he is unable to testify.

[57] The second ground being that the Rudson report contains all of the information that the plaintiffs are seeking for a better accounting, and therefore their action for a better accounting is an abuse of process.

[58] The plaintiffs seek to strike out paras. 32, 51 and 55 of Sheila’s affidavit dated March 25, 2016.

[59] With respect to para. 32, Sheila makes it sound like she has reviewed the Rudson report, when in fact she said she had not read any part of the report during cross examination.

[60] At para. 51, the plaintiffs take issue with Sheila stating that she now understands that Kalkstein is incapable of testifying in accordance with advice from his treating psychiatrist.

[61] Sheila goes on at para. 55 to state that the inability of Kalkstein to testify at trial is prejudicial to her because he is “arguably the most critical witness alive to explain the financial books and records, transactions and filings in the Financial Statements and Income Tax Returns of various entities, preparation of all documents which he personally oversaw”.

[62] Sheila admitted on her cross examination that she has not seen any of the actual doctor’s letters that say Kalkstein is incapable of testifying or going to mediation.

[63] The plaintiffs therefore argue that there is no factual foundation for Sheila to claim that Kalkstein cannot testify.

[64] Zeifmans has sworn two affidavits in support of Kalkstein’s motion to stay/strike the plaintiffs’ claim because he is incapable of testifying.

[65] The plaintiffs seek to strike out paras. 2, 60, 71, 72, 74 and 83 of Zeifman’s affidavit dated April 18, 2016.

[66] They submit that Zeifman’s does not state the source of the information or his belief that it is true, with respect to the allegations in para. 60, that “the Rudson report provides the same information as is being requested in the O’Donovan motion”.

[67] Remembering that Zeifman is an accountant and was the partner of Kalkstein, Zeifman testified in answer to questions on his cross examination that he had read the Rudson report a few years ago when it was released in 2011 and was unable to say what was in it with respect to MVOFT.

[68] Bloom argues that the Rudson report is not an expert report pursuant to r. 74.17 of the Rules and does not absolve fiduciaries from passing their accounts and for the Court to review their conduct as fiduciaries.

[69] The plaintiffs submit that the Evidence Act, R.S.O. 1990, c. E. 23, presumes that Kalkstein can testify since he had not filed an affidavit in these proceedings.

[70] With respect to the doctor’s letters attached to various affidavits, the plaintiffs submit that they are inadmissible opinion evidence, and essentially hearsay evidence, when attached to other people’s affidavits.

[71] With respect to the affidavit of Dr. Shulman dated November 10, 2016, to which he has appended a report from Dr. Levitt dated February 13, 2014, and his own reports dated March 4, 2016 and November 9, 2016, the plaintiffs submit that the reports are improper because the experts have not signed an acknowledgement pursuant to r. 53.03(2.1) of the Rules, nor is there an attached resume complete with qualifications.

[72] I note that on Dr. Shulman’s letterhead, it states that he is the Richard Lewar Chair in Geriatric Psychiatry and a Professor at the University of Toronto Department of Psychiatry.

[73] The plaintiffs drew my attention to Gordon J.’s endorsement of June 24, 2009, which sets out that Kalkstein was dealing with mental health issues at that time. They therefore submit that he should have acquired a proper expert’s report if he is unable to testify.

[74] The plaintiffs then took the court through several cases, including the following:

I. Danos v. BMW Group Financial Services Canada et al, 2014 ONSC 2060, standing for the proposition stated at para. 31, “Rejecting an expert report because it is appended to someone else’s affidavit is not just a triumph of form over substance. Introducing an expert’s report in this way prevents meaningful cross-examination.”

However, in this case Dr. Shulman has filed an affidavit upon which he could have been cross-examined. Alternatively, even without an affidavit, he could have been summoned to be examined.

II. R. v. Abbey, 2009 ONCA 624, 97 O.R. (3d) 330, is a criminal case where the court stated the following at para. 71: “Expert opinion evidence is different. Experts take information accumulated from their own work and experience, combine it with evidence offered by other witnesses and present an opinion as to a factual inference that should be drawn from that material… Consequently, expert opinion evidence is presumptively inadmissible. The party tendering the evidence must establish its admissibility on a balance of probabilities” (citations omitted).

It is difficult to see how this case applies to the facts before the court. Nowhere did Dr. Levitt or Dr. Shulman combine their own work and experience with evidence offered by other witnesses.

III. Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721, where the court makes the distinction between “litigation experts” and the “participant experts”. The plaintiffs urge the Court to retain its gatekeeper function in relation to the opinion evidence from “participant experts”, in this case Dr. Levitt and/or Dr. Shulman.

The plaintiffs urge the Court to require that the “participant experts” in this case to comply with r. 53.03 because their opinions went beyond the scope of an opinion formed in the course of treatment or observation for purposes other than the litigation.

Under the heading General Principles, the Ontario Court of Appeal at para. 60 stated, “Instead, I conclude that a witness with special skill, knowledge, training or experience who has not been engaged by or on behalf of a party to the litigation may give opinion evidence for the truth of its contents without complying with the rule 53.03 where:

• the opinion to be given is based on the witness’s observation of or participation in the events at issue; and

• the witness formed the opinion to be given as part of the ordinary exercise of his or her skill, knowledge, training and experience while observing or participating in such events.”

IV. Talluto v. Marcus, 2016 ONSC 3340, where the court took into account a lawyer’s letter requesting an opinion from a motor vehicle accident victim’s family physician in determining whether or not the doctor must comply with r. 53.03. The court ultimately concluded that the doctor must comply with r. 53.03 because it did not consider the doctor’s opinion, which was directed to the issue of causation, to be part of his ordinary practice in treating the plaintiff.

[75] The plaintiffs stated that they have no problem with respect to Dr. Shulman being offered as a participating witness for the purpose of offering an opinion, for example, that Kalkstein is depressed.

[76] However, the plaintiffs submit that when Dawe sends a letter asking for an opinion on whether or not Kalkstein can testify or respond to a summons, then, based on the principles enunciated in Talluto, Dawe has gone too far and the expert report must comply with r. 53.03.

[77] To state it another way, the plaintiffs submit that because of Dawe’s letter, Dr. Shulman has been engaged on behalf of a party to litigation.

[78] The plaintiffs go on to submit that essentially, because Kalkstein would know what an oath is and because he can communicate with Dr. Shulman and Zeifmans, he is competent to testify. They also submit that the onus is not on the plaintiffs to show that Kalkstein is competent to testify, but it is for him and Sheila to prove if he is not competent to testify.

[79] In addition, the plaintiffs point to Zeifman’s affidavit of April 18, 2016, where at para. 2 he states “I have discussed the matters in this affidavit with Kalkstein, and I confirm that he believes them to be accurate”, and also exhibit “A” of his affidavit of September 8, 2016, which attached time dockets for Kalkstein at the chartered accounting firm.

[80] The time dockets, however, show virtually no time being put in by Kalkstein at the accounting firm and it is Zeifmans’s evidence that the time that is shown on exhibit “A” would be reviewed to see if it was capable of being billed.

Response by Amey (now deceased) and Dawe (Sheila and Kalkstein) - Re: Plaintiff’s Motion to Strike Parts of Shelia’s and Zeifman’s Affidavits

[81] Pursuant to my consent order of August 8, 2011, which set out a litigation plan, the parties were permitted to come back to the court for further directions.

[82] Sheila was to deliver her accounting for SOFT and MVOFT and Kalkstein was to deliver his accounting for SOFT. The hearing was to be completed in 2011 or 2012.

[83] Sheila and Kalkstein delivered their accounts in November 2011 and Steven, Christopher and the OCL filed objections in December 2011.

[84] From that date forward, except for extensive requests to admit being served on Sheila and Kalkstein, almost nothing happened until January 2016 when Steven and Christopher brought their motion for further production and disclosure.

[85] Sheila and Kalkstein responded, stating that the plaintiff did not need this further information and brought a motion to dismiss the actions for delay and abuse of process.

[86] In response to Sheila and Kalkstein’s motion to dismiss, Steven and Christopher brought a further motion to strike parts of their supporting affidavits.

[87] Sheila and Kalkstein started their submissions by referring to r. 1.04(1) which states, “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”

[88] The rule goes on at subsection (1.1) to state, “In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.”

[89] In 2007 the OCL became involved at the request of Steven and Christopher and in 2008 Gordon J. appointed the accounting firm Rudson to author a report to the court with respect to the trusts and related corporate entities.

[90] The 11 volume final Rudson report was completed in January 2011, at a cost of $1,100,000 and the report will be evidence, whether or not the court strikes para. 32 of Sheila’s affidavit dated March 25, 2016. It is Sheila’s position that the contents of para. 32 are irrelevant with respect to the motion to strike.

[91] Sheila concedes that paras. 51 and 55 do not constitute evidence that would be sufficient for the court to conclude whether or not Kalkstein is or is not able to testify.

[92] However, Sheila submits that there is more evidence with respect to Kalkstein’s health.

[93] Sheila testified that Kalkstein was not well when she met with him in 2012 and she relies upon what Zeifman has told her about Kalkstein’s health.

[94] She also relies upon Zeifman’s and Dr. Shulman’s affidavits.

[95] Zeifman, in his affidavit dated April 18, 2016, deals with the health of Kalkstein and paints a very bleak picture of a once vibrant man.

[96] Attached to his affidavit are short medical reports from Kalkstein’s attending psychiatrists since January 2013.

[97] Dr. Levitt’s report is dated February 13, 2014, and Dr. Shulman’s report is dated March 4, 2016. Dr. Shulman has appended a more current report dated November 9, 2016 to his own affidavit. It is now November 2020.

[98] The medical reports of Dr. Levitt and Dr. Shulman leave little, if any, doubt that Kalkstein would not be able to participate in any meaningful way in this litigation involving accounting and factual material which goes back over a decade.

[99] With respect to the plaintiffs’ submissions that it is improper to append such medical records to an affidavit because in part it would insulate the doctors from being cross-examined, both Sheila and Kalkstein respond that this submission is incorrect, because the plaintiffs have the right to serve a summons to either one or both doctors so that they could examine them.

[100] Further, Sheila and Kalkstein submit that the plaintiffs could have served a summons to examine either or both of the doctors since April 2016, but for reasons only known to themselves they did not do so.

[101] Bloom in reply brought the court’s attention to the endorsement of Strathy J. in Suwary v. Women’s College Hospital, et al., 2008 CarswellOnt 1195 (S.C.), where at para. 31 he stated, “that it is not the defendant’s obligation to examine witnesses whose evidence is not properly before the court”.

[102] With respect to any procedural defect, Sheila and Kalkstein submit that it was cured when Dr. Shulman swore his affidavit on November 10, 2016, and he could have been cross-examined on that affidavit even though the timing might have been a little tight.

[103] Sheila and Kalkstein submit that the best evidence to meet the test as to whether or not Kalkstein can participate in this litigation comes from Dr. Shulman.

[104] They submit, in addition to the evidence from Dr. Shulman that Kalkstein cannot participate in the litigation, which would be actual prejudice, there is also a presumption of prejudice simply from the passage of time since this litigation started.

[105] They submit that Dr. Shulman is a participating expert witness and therefore he does not have to comply with the technicalities of r. 53.03 and in particular, the signing of the certificate acknowledging that he is independent.

[106] They submit that the mischief which r. 53.03 was trying to prevent was the hiring of an expert whose primary duty was to the client in the furtherance of his/her court action, in what became known as the “hired gun” expert.

[107] They submit that that is not the case here, since both Dr. Levitt and Dr. Shulman were attending psychiatrists of Kalkstein and were not hired and paid to offer an opinion based on an accumulation of facts and records, but were simply asked if it was medically feasible for Kalkstein to participate in this litigation, based on their professional interactions with him.

[108] With respect to the plaintiffs’ objection that there is no CV of either doctor attached to their report, there certainly is a brief CV of Dr. Shulman on the letterhead of Sunnybrook Health Sciences Centre, which shows he is the Richard Lewar Chair in Geriatric Psychiatry and Professor at the University of Toronto Department of Psychiatry. They submit that Dr. Shulman is therefore well-qualified to give the opinion that he has.

[109] With respect to the plaintiffs’ submission that because of the letters written by Dawe, Dr. Shulman has been changed from a participating expert to a hired expert, Sheila and Kalkstein point out that the plaintiffs seem to be saying that it is not okay for the lawyer to ask the question, but it would be okay for Kalkstein to take the summons to Dr. Shulman and ask him if he would be capable of attending the examination.

[110] Dawe responded to the above submission by stating that participating experts often respond to lawyers’ letters because it is often the fact that it is a court action that prompts the lawyer to seek a report from the participating expert.

[111] Sheila and Kalkstein query how the change in procedures can possibly change Dr. Shulman from a participating expert to a r. 53.03 expert.

[112] In reply, Bloom, on behalf of the plaintiffs, submitted that even if Kalkstein took the summons to Dr. Shulman, and Dr. Shulman opined as he did with respect to Kalkstein’s capacity to participate as a witness, Dr. Shulman would not be a participating expert, because assessing Kalkstein’s capacity to be a witness is outside the ordinary scope of the care that Dr. Shulman was providing.

[113] Sheila and Kalkstein submit that the thrust of Dr. Shulman’s report is, that in addition to other mental health concerns, Kalkstein has concentration and communication issues and that some of the events in this litigation go back as far as 1989.

[114] In addition to the two psychiatrists, Zeifman, Kalkstein’s longtime friend and business partner, swore an affidavit testifying to Kalkstein’s diminished capacity.

[115] The plaintiffs have been aware for a lengthy period of time that Kalkstein may be able to answer questions under less stressful conditions than a formal examination.

[116] From Kalkstein’s perspective, he is only a party of the SOFT accounting, and he resigned as a trustee in November 2012, now some eight years ago.

[117] Dawe, in June 2016, wrote a letter to the plaintiffs’ lawyers inquiring if they would consider sending written questions for Kalkstein to answer.

[118] After receiving no response, Dawe was served with a summons to witness for Kalkstein in September 2016.

[119] In addition to other relief requested on behalf of Kalkstein, Dawe requests that the summons be struck.

[120] She drew the court’s attention to the Newfoundland Court of Appeal decision in Kent v. Kent, 2010 NLCA 53, 301 Nfld. & P.E.I.R. 152, at para. 74, where the court stated;

Additionally, even if the material sought can be said to be relevant in this sense, there may be, as Re General Hospital Corporation indicates, other grounds on which a person subpoenaed may be able to quash the subpoena or at least postpone its execution. Aside from issues involving irregularity in issuance, and other grounds of inadmissibility, such as privilege and specific statutory exceptions, most other grounds are a manifestation of the jurisdiction of the court to control an abuse of its process. This involves taking into consideration the interests of the subpoenaed witness as well as the interests of the litigants by looking at the actions, motivations and purposes of the party issuing the subpoena as well as the impact on the person subpoenaed. Insofar as the litigant issuing the subpoena is concerned, the bona fides of the issuer may be inquired into with a view to determining whether the subpoena has been issued for an improper purpose. With respect to the subpoenaed person, the court could inquire into such issues as whether, given the significance of the evidence and the timing of the request for production, the request can be said to work an unnecessary hardship or would be oppressive as to the number, nature or breadth of the documents required, considering the time and expense involved in obtaining the information and the degree of private, personal information involved. This is essentially a balancing exercise, involving the application of the proportionality principle recognized by this Court in Szeto et al. v. Field, 2010 NLCA 36.

[121] Sheila and Kalkstein submit that if the court determines that the medical evidence of Dr. Shulman and Dr. Levitt should be struck, the court should allow them time to obtain an expert psychiatric r. 53.03 report.

[122] Unsurprisingly, Bloom objects to this submission and states that they have known for a long time that he was bringing a motion to strike the medical evidence and, faced with the possibility that their medical evidence might be struck out, they did not get expert medical evidence that complies with r. 53.03.

[123] Bloom relies on para. 34 of the endorsement in Suwary v. Women’s College Hospital et al., where Strathy J. stated the following:

It is well settled that a party may not “repair damage” to its case by introducing new evidence on a motion in order to patch up holes in the case created by the other party’s evidence or counsel’s submissions. [Citations omitted.]

[124] In reply to Bloom’s submission, Amey submitted that in this case no hole was created by the other party’s evidence or counsel’s submissions.

[125] Based on Dawe’s submission that the plaintiff has all the evidence that Kalkstein can provide because of their responses to the 392 items in the Request to Admit, Bloom responded that if that is true, then there is no prejudice with respect to delay and their presumption is rebutted.

Sheila and Kalkstein’s Motion to Dismiss for Delay,

Prejudice, Abuse of Process, Fairness etc.

[126] Sheila and Kalkstein move to dismiss Stephen and Christopher’s actions on several grounds, including delay, prejudice, abuse of process, and fairness. In the paragraphs that follow, I will be laying out the parties’ submissions on each of these grounds. As there are multiple parties involved, I have provided headings that indicate who is making the submissions, and on whose behalf. Ultimately, as I will later indicate in my reasons for judgment, I have found that the cumulative effect of these factors require the dismissal of Steven and Christopher’s actions. However, notwithstanding this decision, I am cognizant of the fact that the litigation will continue with respect to the beneficiaries of the trusts, who are entitled to a further and better accounting of the trust accounts.

Delay - Submissions by Amey and Dawe (Shelia and Kalkstein)

[127] The events that underlie all of the actions involving the parties hereto, go back as far as April 24, 1989, when Val settled MVOFT and Val and Sheila became the trustees. Val had a stroke in 2004, died in February 2005 and Sheila was removed as trustee of MVOFT on August 25, 2005.

[128] On July 3, 1996, Sheila settled SOFT and Val, Sheila and Kalkstein became the trustees. Kalkstein resigned as trustee on November 6, 2012.

[129] The plaintiffs call into question the accounting for both SOFT and MVOFT, and also the ownership of a Bermuda property known as “The Clearing.”

[130] Steven and Christopher in court action C–248–07 commenced an action against Sheila and Kalkstein requesting a Passing of Accounts in SOFT and MVOFT and for declarations concerning the ownership of The Clearing.

[131] On the consent of the parties, Gordon J. made an order dated March 28, 2008, which among other items, ordered that an accounting firm by the name of Rudson deliver a report which took until January 2011 to complete.

[132] Sheila and Kalkstein filed their accounts in November 2011 and Steven and Christopher filed their objections in December 2011.

[133] Nothing further happened in the litigation until September 2012, when Steven and Christopher delivered an approximately 392 item Request to Admit which was responded to by March 31, 2013.

[134] There was then an almost three-year delay between March 31, 2013 and January 2016.

[135] Sheila and Kalkstein put forward two theories for this delay. Sheila and Kalkstein advance the argument that the inordinate, unsatisfactorily explained delay has both created prejudice because of the passage of time and has created actual prejudice due to the specific facts of the case.

[136] Under the first theory, Sheila and Kalkstein rely on the following facts:

(a) The events go back as far as 1989, now over 30 years ago;

(b) There are numerous corporations and financial instruments involved;

(c) As can be seen from the $1,100,000 price tag for the Rudson report, the matter is extremely complicated;

(d) Sheila was essentially a housewife who did not work outside of the matrimonial home and was made a trustee because she was the wife of Val;

(e) Sheila has very little personal knowledge of all of the financial dealings;

(f) Sheila would require Kalkstein’s ability to recall the events and the reasoning behind the events since Val is not available;

(g) The first court actions were filed in 2007, which is thirteen years ago, and deal with events going back as far as 1989;

(h) Everyone’s memories fade with time;

(i) At the time of these submissions in 2016, Sheila was 79 years of age and has now passed away; and

(j) Kalkstein has mental health problems including problems with cognition, concentration and depression.

[137] The second theory is that the inordinate, unsatisfactorily explained delay, which is case specific, has created actual prejudice. Under this theory, Sheila and Kalkstein rely on the following facts:

(a) Kalkstein is a vital main witness;

(b) He was the sole accountant among the trustees;

(c) He dealt with the myriad of O’Donovan family trusts, corporations and personal accounting and tax issues; and

(d) Kalkstein is now unable to participate in the litigation in any meaningful way.

[138] Sheila and Kalkstein rely on r. 24.01 of the Rules and the court’s inherent jurisdiction to control its own process to request that the court strike out the actions against them.

[139] They rely on two cases from the Ontario Court of Appeal, those being Langenecker v. Sauve, 2011 ONCA 803, 286 O.A.C. 268, and Sickinger v. Krek, 2016 ONCA 459, 132 O.R. (3d) 548.

[140] Both cases set out the following same three requirements that the delay must be:

(1) inordinate,

(2) inexcusable, and

(3) such that it gives rise to a substantial risk that a fair trial of the issues in the litigation will not be possible because of the delay, i.e. gives rise to a presumption of prejudice.

[141] Inordinate delay is measured simply by reference to the length of time from the commencement of the proceeding to the commencement of the motion to dismiss.

[142] For the delay to be inexcusable, a determination of the reasons for the delay and the assessment of whether those reasons afford an adequate explanation for the delay is required.

[143] At para. 10 of Langenecker the court states the following:

In assessing the explanations offered, the court will consider not only the credibility of those explanations and the explanations offered for individual parts of the delay, but also the overall delay and the effect of the explanations considered as a whole.

[144] At para. 11 the court goes on to explain the third requirement:

The third requirement is directed at the prejudice caused by the delay to the defence’s ability to put its case forward for adjudication on the merits. Prejudice is inherent in long delays. Memories fade and fail, witnesses become unavailable, and documents and other potential exhibits are lost. The longer the delay, the stronger the inference of prejudice to the defence case flowing from that delay. [Citation omitted.]

[145] In Langenecker, the trial judge made a finding of actual prejudice, and decided there was prejudice flowing from the passage of time, which in that case was 15 years, notwithstanding that the parties had been discovered and there were medical records available.

[146] In Sickinger, the action was commenced in 2000, struck out in 2004 and the motion to dismiss was brought in 2015. At para. 50 the court stated the following:

First, the motion judge’s conclusion is supported by the appellant’s failure to rebut the presumption of prejudice. As noted, the motion judge concluded that the inordinate delay in this case gave rise to a presumption of prejudice. The appellant was required to lead evidence to rebut that presumption. He did not do that.

[147] The court went on at para. 54 to state that the plaintiff bears the responsibility for moving the action along.

[148] In the British Columbia Court of Appeal case of Irving v. Irving (1982), 1982 CanLII 475 (BC CA), 38 B.C.L.R. 318 (C.A.), at para. 8, the court cites with approval the following statement “As a rule, until a credible excuse is made out, the natural inference would be that it is inexcusable.”

[149] In the case of Berg v. Robins (2009), 266 O.A.C. 200 (Div. Ct.), at para. 14, the court stated the following:

However, whether, the delay is 8 years, 9 years, or 11 years, the fact remains that it is now 11 years since the events described in the Statement of Claim. That length of time presumes prejudice. The onus is upon the plaintiff to rebut the presumption of prejudice by showing that documents have been preserved, and that the issues in dispute do not require the recollection of witnesses, or that necessary witnesses are available with detailed recollection of events. Even if the plaintiff rebuts the presumption, the action may still be dismissed if the defendants lead evidence of actual prejudice. [Citations omitted.]

[150] In the case of Wallace v. Crate’s Marine Sales Ltd., 2014 ONCA 671, the Court upheld the motion judge’s dismissal of a simple contract case for inordinate and inexplicable delay.

[151] The Court of Appeal stated the following, at paras. 16, 17 and 20:

16 However, the motion judge did not rely on the listed examples of prejudice alone. He also noted that, while documentary evidence may well be available, “this is not litigation driven solely by documentation” (para. 86). He added: “Both parties have their own views as to what occurred and what should have occurred, in relation to the use and repair of the vessel and they are now relying upon memories of events that occurred over a decade ago.”

17 Based on these findings, the motion judge concluded that the appellants’ attempted rebuttal of the presumption of prejudice failed in the face of the respondent’s evidence as to the potential significance of testimony dependent upon the witness’s ability to recall statements and observations. These findings cannot be characterized as unreasonable.

20 Regarding the exercise of inherent jurisdiction, the motion judge stated:

A lengthy, unexplained delay in the case of this nature could well be defined as an abuse of the court’s process. There is, indeed, a strong public interest in promoting the timely resolution of disputes in our civil justice system, which is already overburdened. Litigants and the public regularly complain about inordinate delays in obtaining civil motions and trial dates. The delay in this matter, of over a decade, strains the empathy of the court to excuse the delay of this “magnitude and gravity” and further undermines public confidence in the administration of our civil justice system. (Para 95)

I agree. This is a simple case in which there was no reason to delay the trial to permit the situation to unfold, as there often is in personal injury cases, for example.

[152] Sheila and Kalkstein submit that any explanation for delay must come from Steven and Christopher.

[153] Sheila and Kalkstein submit that the following have been the time periods of delay since the action was commenced in March 2007 over 13 years ago:

(a) From April 2008 to January 2011 (about 33 months) while waiting for the Rudson report, which they submit should not be attributable to either party;

(b) From August to November 2011 (3 months) attributable to themselves as they prepared their accounts; and

(c) December 2011 to January 2016 (4 years) attributable to the plaintiffs.

[154] Sometime in 2012, Steven and Christopher changed lawyers and delivered two Requests to Admit, encompassing approximately 400 questions which Sheila and Kalkstein responded to in six months (March 2013).

[155] Simon, the brother of Steven and Christopher, died in January 2014. However, Simon was never an active litigant in these matters.

[156] Both Steven and Christopher blame part of the delay on Simon’s death because they became depressed. However, they have not brought forward any evidence to show that their grieving affected their ability to carry on with these court actions, and in fact, Christopher was able to carry on his job as a full-time professor at the University of Waterloo and Steven was able to carry on his full-time self-employment.

[157] Steven and Christopher also claim that they had to help their nephews administer Simon’s estate. However, it is difficult to see that there would be much to administer since his estate was essentially bankrupt and they had the resources to hire lawyers or accountants to assist them.

[158] In addition to the foregoing, Steven and Christopher, in what Amey described as an attempted “Hail Mary pass”, tried to blame their lawyers for the delay, but then refused to waive solicitor client privilege when questions were asked concerning this issue.

[159] At para. 11 of the Irving case, the court stated the following with respect to the issue of delay:

But the question here is not whether the reason is good or bad, or wise or unwise; it is whether the delay was excusable or inexcusable. A delay as a means of gaining tactical advantage is not to be compared to a delay forced on the plaintiff by negligent solicitors, impecuniosity, or illness…. Some delays may be so long and the prejudice to the defendant so great that no reason would excuse the delay. The question is whether this delay is excusable in the light of the reason for it and the other circumstances.

[160] Sheila and Kalkstein submit that there is no evidence of solicitor’s negligence, impecuniosity or illness.

[161] Steven and Christopher have since the inception of the litigation been represented by six different law firms.

[162] The question before me is, is there a substantial risk that a fair trial of the issues in the litigation will not be possible because of the delay?

[163] Sheila, who was 81 years of age in November 2018 (now deceased), and Kalkstein, rely on the presumption of prejudice by the passage of time.

[164] With respect to Sheila, while there are documents, very few were prepared by her and the events they refer to are complicated and ancient history.

[165] Sheila submits that there is also actual prejudice because she would require Kalkstein to be able to fully participate in these proceedings in a meaningful way and defend herself.

[166] In the action, Steven and Christopher are claiming that there are millions of dollars missing from the two trusts and that Sheila and/or Kalkstein were at all times fiduciaries to the beneficiaries.

[167] Sheila and Kalkstein submit that Dr. Shulman’s evidence that Kalkstein should not even attend a mediation speaks volumes about the mental health problems he is having.

[168] Both of Kalkstein’s psychiatrists have concerns about his cognition, concentration and depression. Dr. Shulman’s opinion is that he is severely dysfunctional, extremely depressed, emotionally vulnerable, and that being subjected to cross-examination would be stressful and even detrimental to his mental health.

[169] From Sheila’s perspective, both Val, who passed away in 2005, and Kalkstein, were the two people having intimate knowledge of the two trusts. Sheila was for the most part a wife, mother and homemaker.

[170] With respect to the magnitude of the trusts, in 2016 the SOFT assets were valued at approximately $14,000,000, and in 2006 the MVOFT assets were valued at approximately $50,000,000.

[171] Amey, on behalf of Sheila, points out that although Val was a trustee up until 2004, no claim has been brought against his estate notwithstanding that the trustees would be jointly and severally liable.

[172] In his examination, Christopher stated that he did not believe that Val misappropriated any money from MVOFT. However, Christopher was unable to say how he arrived at that conclusion.

[173] In the case of Alberta v. Akena (1995), 1995 ABCA 10, 162 A.R. 207 (C.A.), the Alberta Court of Appeal upheld the motion judge’s decision to dismiss an action for delay, stating the following at para. 7:

With respect to the third test, that is whether serious prejudice had been suffered by the defendant, the learned chambers judge looked to the problem presented to the defence by the fact that the appellant’s immediate superior, Mr. Masuda, had in the delay period suffered a serious mental disability and as a result had become so mentally incompetent that he was unable to testify in any credible fashion. She also found that Mr. Masuda was indeed a critical witness having in mind the nature of the action, and that the delay clearly caused serious prejudice to the respondent.

[174] Unfortunately, the reported decision does not specify what evidence was before the chambers judge with respect to Mr. Masuda’s mental disability.

[175] In the case of E. George Kneider Architects v. Anthony Gardynik Investments Ltd. (1998), 17 C.P.C. (4th) 272 (Ont. Div. Ct.), where the plaintiff did not cross-examine upon any of the three affidavits filed by the defendants, the Divisional Court found that the material filed by the defendants provided unchallenged and unrebutted evidence of actual prejudice and therefore the question of presumption of prejudice was irrelevant.

Submissions by Amey and Dawe (Shelia and Kalkstein) Re: Abuse of Process (Including multiplicity of proceedings, actions taken for a collateral purpose and the effect of the Rudson report etc.)

[176] Dawe submits that the concept of “abuse of process” is a very flexible tool for the court. It is unencumbered by specific requirements and is part of the inherent power of the court to control its process to prevent the administration of justice from being called into disrepute.

[177] Dawe states that abuse of process could encompass things such as a multiplicity of proceedings, vexatious proceedings and proceedings brought for a collateral purpose.

[178] Although her submissions are made on behalf of her client, Kalkstein, where appropriate they are adopted by Amey on behalf of Sheila, and likewise Dawe adopts the submissions of Amey where appropriate.

[179] Dawe seeks to dismiss three actions in which Kalkstein is involved, those being action or application numbers C–248–07, 08–004–09, and ES–041–11.

[180] She submits that all other actions arise from action C–248–07 which was commenced in 2007.

[181] She relies on r. 21.01(3)(d) which authorizes a judge to dismiss an action that is frivolous, vexatious or otherwise an abuse of the process of the court.

[182] In the case of Behn v. Moulton Contracting Ltd., 2013 SCC 26, [2013] 2 S.C.R. 227, the Supreme Court confirmed that the doctrine of abuse of process is flexible and unencumbered by specific requirements.

[183] The court in Behn stated the following at para. 41:

As can be seen from the case law, the administration of justice and fairness are at the heart of the doctrine of abuse of process. In Canam Enterprises and in C.U.P.E., the doctrine was used to preclude relitigation of an issue in circumstances in which the requirements for issue estoppel were not met. But it is not limited to preventing relitigation. For example, in Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44, [2002] S.C.R. 207, the Court held that an unreasonable delay that causes serious prejudice could amount to an abuse of process: paras. 100–21. The doctrine of abuse of process is flexible, and it exists to ensure that the administration of justice is not brought into disrepute.

[184] While Dawe suspects Bloom will argue that once Sheila and Kalkstein comply and produce better accounts, the matter could then go to a summary hearing, she submits that the ship on a simple summary action sailed in 2007 when Steven and Christopher commenced action C–248–07.

[185] In their Statement of Claim, Steven and Christopher seek an order that Sheila prepare and pass accounts for MVOFT from 1989 to September 6, 2005, and that Sheila and Kalkstein prepare and pass accounts for SOFT from 1996 to a date the court deems appropriate.

[186] The plaintiffs, however, have not sued Val or Val’s estate, notwithstanding the fact that he was a trustee of both trusts up to 2004/2005 and therefore arguably jointly and severally liable for anything that went on in the trusts from their inception to that date.

[187] Steven and Christopher are on record stating that they do not believe that Val did anything wrong. However, at para. 29 of their Statement of Claim, they allege that Val personally received $5,382,328, which should have been payable to MVOFT.

[188] In addition, at paras. 31 and 32, Steven and Christopher allege that Val and Sheila used money belonging to MVOFT to purchase property in Bermuda known as “The Clearing”.

[189] Notwithstanding all of the above-mentioned facts, Steven and Christopher have been and are still resistant to mediation, which Dawe submits is not only troubling but also points to how they are abusing the court process.

[190] With respect to the issue of participating experts and based on para. 13 of the case of Imeson v. Maryvale, 2016 ONSC 6020, Dawe submits that if I find Dr. Schulman’s opinion is required to be given by a r. 53.03 expert, I can excise the offending part of his report and rely on the rest.

[191] Dawe submits that Steven and Christopher’s position on Kalkstein’s mental health, notwithstanding the evidence of Zeifmans, Sheila and Dr. Shulman is in itself evidence of abuse.

[192] Steven and Christopher further abused both Sheila, Kalkstein and the justice system when they approached the Ontario Children’s Lawyer, which spawned another court action that claimed similar relief and asked for the appointment of a forensic accountant.

[193] After Sheila and Kalkstein produced an Affidavit of Documents, Steven and Christopher brought a motion for a further and better Affidavit of Documents.

[194] Then, throughout the course of the motion for a further and better affidavit, Steven and Christopher brought a contempt motion.

[195] Notwithstanding Kalkstein’s delivery of a further and better affidavit on June 9, 2009, Steven and Christopher proceeded with their motion both for a further and better affidavit and to have Kalkstein held in contempt.

[196] Dawe submits that because Gordon J. in his endorsement of June 24, 2009, references Kalkstein’s mental health problems, all parties would have known about his mental health difficulties. She submits that this is another aspect of Steven and Christopher’s abuse of process.

[197] From 2007 to October 2, 2009, Christopher had been represented by Madorin Snyder LLP and Steven had been represented by Gowling Lafleur Henderson LLP.

[198] After receiving the further and better affidavits and having Rudson appointed to do a forensic audit, Steven and Christopher changed lawyers on October 2, 2009, to the firm, Hull & Hull, for themselves personally and to the firm, Whaley & Associates, for their positions as trustees of MVOFT.

[199] On June 8, 2011, less than two years later, Steven and Christopher again changed lawyers from Hull & Hull to Fasken Martineau DuMoulin LLP

[200] On December 27, 2013, approximately two and a half years later, Steven and Christopher again changed lawyers to Miller Thomson LLP.

[201] On November 16, 2015, approximately two years later Steven and Christopher again changed lawyers to WEL Partners, which appears to be the continuation of the firm Whaley & Associates.

[202] Shortly after retaining Hull & Hull, Steven and Christopher filed two new applications, this time in Toronto.

[203] These two Toronto applications, which sought relief similar to the relief claimed in file C–245–07, were quickly ordered to be transferred to Kitchener by Pattillo J.

Proceedings Taken for a Collateral Purpose – Submissions by Dawe (Kalkstein)

[204] On April 7, 2009, Steven and Christopher made a complaint to the Institute of Chartered Accountants of Ontario (ICAO) concerning Kalkstein’s alleged conduct regarding his role as trustee and accountant for Val and his family.

[205] On May 5, 2010, the Professional Conduct Committee closed the file without referring it to the Discipline Committee.

[206] Steven and Christopher sought an independent review of this decision, however, the independent review upheld the decision of the Professional Conduct Committee.

[207] On June 13, 2013, Steven and Christopher participated in a second complaint to the ICAO brought by Brian, Patrick and Tyler, the children of Simon, regarding Kalkstein’s activities as a trustee of SOFT and the accounting work that he performed for 1338. Again, the Professional Conduct Committee did not refer the matter to the Discipline Committee.

[208] Dawe submits that some of the material used in the complaints would likely have breached the implied undertaking rule. In addition, she submits that this essentially brought the litigation back to the stage it was at on April 29, 2010, the date of the Pattillo J. order.

[209] She submits that the professional misconduct complaints against Kalkstein are part of the factual matrix of the abuse perpetrated by Steven and Christopher.

[210] Neither the specific complaints nor the ICAO’s decisions were referred to in this motion.

Effect of the Rudson Report – Submissions by Amey and Dawe (Shelia and Kalkstein)

[211] The next meaningful event in the course of this litigation was the release of the Rudson report on January 19, 2011.

[212] Shortly after the release of the Rudson report, Steven and Christopher changed counsel to Fasken Martineau DuMoulin LLP (“Fasken”).

[213] The next event seems to be Sloan J.’s consent order of August 8, 2011, which included a litigation plan with the expectation of a hearing by the end of December 2011.

[214] Based on the litigation plan in that order, Dawe submits that all parties must have envisioned a hearing or summary hearing using the Rudson report.

[215] The Notice of Intention to Pass Accounts was delivered in November 2011 and objections to same were delivered in December 2011.

[216] In May 2012, all counsel were working on an order for directions, but this ceased when Fasken advised that they were no longer retained.

[217] With the changing of counsel, came a change in litigation tactics.

[218] On September 26, 2012, the new lawyers for Steven and Christopher, Miller Thomson, delivered a Request to Admit. There were 256 requests with respect to SOFT and 142 requests with respect to MVOFT.

[219] In response to the Request to Admit, Dawe wrote to Miller Thomson on October 12, 2012 as follows:

It is my view, in which Amey concurs, a Request to Admit at this stage of the proceedings is inappropriate and is contrary to the purposes of Rule 51. I am proposing that the Request to Admit be withdrawn, and that we obtain an Order for Directions [on consent, if possible] and proceed with the litigation in an orderly and fairly expeditious manner.

As you may be aware, the last activity in the Passing of Accounts proceedings was in early May 2012, when your predecessor counsel were obtaining comments on a draft Order for Directions. It appeared that most matters had been resolved, and anything that remained was to have been dealt with before Justice Gordon on May 16, 2012.

Under the draft Order for Directions, there was to have been pleadings, and potentially discoveries. As well, your predecessors advised that they would shortly be delivering an expert’s report that would clearly define their [and now your] clients’ position. We have received neither a Statement of Claim nor the expert report on behalf of your clients. Other than the Notices of Change of Solicitors, we have heard nothing from May until late September, and had no forewarning of your clients’ intention to attempt to so significantly change the procedure that had been under discussion amongst counsel.

[220] She then went on to discuss other matters, including the appointment of a new case management judge, since Gordon J. had indicated that he would no longer fill that role.

[221] All discussions with respect to either settlement or procedure ceased on January 18, 2013, when Miller Thomson advised that there would be no revised offers, their clients were not interested in mediation at that time, and they extended the deadline to respond to the Request to Admit, to March 18, 2013.

[222] On September 26, 2013, Miller Thomson wrote to advise that its clients would not participate in mediation because, (1) Kalkstein would not attend; and (2) Kalkstein and Zeifmans would not pay half of the mediator’s fee.

[223] These reasons made no sense given the fact of Kalkstein’s health issues and the fact that Sheila said she would pay 50 percent of the mediator’s fee.

[224] Dawe submits that this was a good time to mediate, because it would have come after the answers to the Request to Admit had been delivered.

[225] She submits that this type of behaviour is again part of the factual matrix that the court should consider.

[226] On January 10, 2014, Miller Thomson wrote to advise all counsel that they would send their completed draft order for directions during the week of January 20, 2014. However, this never materialized.

[227] From March 18, 2013 to October 2, 2014, (approximately 19 months) nothing happened.

[228] After Amey wrote to Miller Thomson on October 2, 2014, reminding them about an outstanding settlement offer and expressing concern about “the delays in taking steps to resolve this long outstanding matter”, there was silence for over a year until November 4, 2015, when a notice of Change of Solicitors was received advising counsel that Steven and Christopher were now represented by Whaley Estate Litigation (“WEL Partners”).

[229] On January 7, 2016, Bloom advised that his clients would be moving for directions, however, rather than moving for directions, Steven and Christopher served a motion seeking an accounting of various dividends and other incomes that were paid to Sheila, Val and Kalkstein.

[230] Dawe submits that after this motion was served, litigation regressed right back to where it was when I gave my August 8, 2011 order.

[231] In response, Sheila and Kalkstein moved to strike the claims of Steven and Christopher, which they agree is not an easy motion.

[232] In summary, they state that to date there has been 13 years and counting of very expensive litigation, a clear multiplicity of proceedings brought by Steven and Christopher, two collateral attacks against Kalkstein brought and/or participated in by Steven and Christopher by filing complaints with the ICAO, both of which were summarily dismissed, repeated changes in litigation tactics, refusal to mediate for irrational reasons, long periods of unexplained delays and the serious and deteriorating mental health issues related to Kalkstein and now the death of Shelia.

[233] Dawe relies on the cases of Nearctic Nickel Mines Inc. v. University of Toronto, 2016 ONSC 5190 and Adams v. Canada (Attorney General), 2011 ONSC 325, 272 O.A.C. 301 (Div. Ct.) to support her position that Steven and Christopher’s claims ought to be dismissed.

[234] In the Nearctic case, commencing at para. 29, the court comments that the issues in the case were not particularly complicated. It goes through the procedures that the parties took and suggests at para. 30, that after ten years where the plaintiffs failed to make progress, the court should consider dismissing the action as an abuse of process. The court states the following at para. 133:

In making this determination, I am relying, as did the Court of Appeal, on the inherent jurisdiction of the court rather than any specific rule… In my view, the direction to the courts to be more efficient must be recognized and respected by lawyers and parties. Nothing that has happened in this case reflects on this requirement.

[235] The Adams case deals at least in part with the issue of multiplicity of proceedings. Dawe submits that this is part of the matrix of abuse and consistent with Steven and Christopher’s constant change of tactics.

[236] At paras. 55 and 56 the court states the following:

It is contrary to the interests of justice to have parallel proceedings in relation to the same subject matter. This is not an efficient use of judicial resources, is unduly costly to the parties, and raises the risk of inconsistent verdicts. Multiplicity of proceedings is always to be avoided.

The application in the Divisional Court does not advance Adams’ claims in any way that is not achievable, and perhaps more easily achievable, in the Superior Court action. I would, therefore, have stayed the judicial review application on this ground alone, independent of my conclusions on the jurisdiction issue.

[237] Dawe submits that under r. 74 of the Rules, after a 13 year journey, Steven and Christopher’s abuses of process and the recent concessions made by Sheila in 2016 (subsequently withdrawn), the court has what it needs to turn these actions into an uncontested Passing of Accounts.

[238] She further submits that the court can remove Kalkstein from the proceeding because he has provided whatever evidence he can provide, he is no longer a trustee, and there is a remaining trustee.

Abuse of Process Argument – Bloom’s Response (Steven and Christopher)

[239] Bloom submits that to evaluate if the administration of justice would be brought into disrepute, the court must look at the history of the proceedings, the merits of the proceedings and aspects of trust law that go to the heart of the fiduciary obligations that Sheila and Kalkstein owe to the respective trusts.

[240] Bloom submits that Sheila and Kalkstein, who were at all times represented by counsel, are obligated to deliver a sworn meaningful Affidavit of Documents under the court Rules. Notwithstanding this obligation, the plaintiffs needed to get an order in May 2008 in an attempt to force Sheila and Kalkstein to comply with this requirement, despite the fact that they had delivered their Statement of Defence in October 2007.

[241] Notwithstanding Gordon J.’s order dated May 22, 2008, requiring a sworn Affidavit of Documents to be filed before July 15, 2008, it was not until June 12, 2009, after several adjournments were given to accommodate Kalkstein, that an appropriate Affidavit of Documents in fulfilment of Gordon J.’s order was received. The matter of a proper Affidavit of Documents was before the court on August 5, September 2, September 19 and December 22, 2008, and in January and June 2009.

[242] Therefore, the plaintiffs submit that part of the matrix for the court to consider under the rubric of abuse of process, is that Kalkstein did not follow court orders and had to be continually pushed to do so.

[243] In making his order of June 24, 2009, Gordon J. endorsed the record “third further and better Affidavit of Documents of the defendant Edward M. Kalkstein, affirmed June 19, 2009”. In addition, Gordon J. ordered Kalkstein to pay $10,000 to the plaintiffs for costs, which this court understands were still outstanding more than seven years later.

[244] Although Sheila and Kalkstein submit that the Rudson report can be used to assist in the Passing of Accounts, Pattillo J., in his endorsement of April 29, 2010, stated, “There is no issue that the accounts prepared by Rudson may not be in form to qualify as formal accounting in respect of the Passing of Accounts. Also, no issue that the trustees are required to pass their accounts.”

[245] Notwithstanding that it took three years to get the Rudson report after Gordon J.’s order, Sheila has still not read the report, nor is the report referred to in the account she has filed for the Passing of Accounts.

[246] Steven and Christopher state that it was out of frustration that they brought the applications in Toronto, in an effort to get the matter on the Estate’s list to try to get it heard.

[247] All parties consented to a litigation plan before me on August 8, 2011. Part of the litigation plan obligated Sheila and Kalkstein to file an application to pass accounts for the respective trusts by October 31, 2011.

[248] The statement of accounts from July 3, 1996 to June 30, 2011 for SOFT is replete with zeros, except for one cash receipt of $10. There are ten footnotes, the last one of which reads “these accounts do not deal with monies which may be in 1001338 Ontario Limited [1338].”

[249] Likewise, the statement of accounts filed for MVOFT 1 and 2 from April 24, 1989, to August 25, 2005 contains mostly zeroes, and in addition the account for MVOFT1, has 18 footnotes.

[250] Footnote 5 references the sale of $1,857,240 common shares of ComDev International Ltd., but this amount does not appear in the accounts notwithstanding the fact that there are tax filings detailing the sale of the shares.

[251] Footnote 16 refers to the purchase of the Bermuda property and states that the manner in which this acquisition was ultimately financed is uncertain. In addition, footnote 18 indicates that these accounts do not deal with monies which may be in MVO Investments Ltd., which is the main asset of the trust and worth tens of millions of dollars.

[252] The plaintiffs submit that it is ludicrous for the trustees to think that these accounts, with absolutely no information in them, can serve as the basis for an uncontested Passing of Accounts. Bloom submits that the abuse of process criteria has to cut both ways and that the court must look at the conduct of all parties and not just the plaintiffs.

[253] With respect to the submission that the plaintiffs’ Request to Admit may have been abusive, Bloom submits that in complex matters, requests to admit are tools that assist the parties and the court, because they are a means of narrowing the issues and provide a firm evidentiary foundation.

[254] The plaintiffs rely on three cases to show what the obligations of trustees are.

[255] All of the cases tend to stand for the proposition that unless the trustee acts reasonably, he/she will be responsible to the beneficiaries of the trust.

[256] The case of Cahill v. Cahill et al., 2016 ONSC 1385, 129 O.R. (3d) 401, aff’d, 2016 ONCA 962 (“Cahill ONSC”), at para. 51, the court stated, “The case law is clear that there is no distinction to be made between sophisticated and unsophisticated individuals in the fulfilment of their obligations as executors and trustees” (citations omitted).

[257] In the case of Penman v. Penman, 2014 ONCA 83, 119 O.R. (3d) 128, the court found that an aunt who was duped by her two nephews, one of whom was a lawyer, was jointly and severally liable to the beneficiaries of the trust. The court stated the following at para. 5:

5. The application judge’s core findings regarding the reasonableness of the appellant’s conduct are perhaps most succinctly set out at paras. 86, 87 and 102 of her reasons:

While there is no suggestion of any dishonesty on her part, the evidence clearly establishes that Ms. McGillivray did not act reasonably: she failed to consider all relevant criteria in determining whether the proposed investments were appropriate; she completely delegated the exercise of her discretion to Mark Penman and to Randall Penman; and she failed to make any reasonable inquiries about the proposed investments or to follow-up regarding their status.

It is wilful neglect and default of a trustee to place trust funds in the hands of another and allow it to remain there for years without any inquiry or any assurance that the trust is being properly administered. Ms. McGillivray’s failure to make any further inquiry about the investment of the trust funds constitutes wilful neglect in default of which Ms. McGillivray would not have been guilty in the management of her own affairs.

Even if I were to accept Ms. McGillivray’s evidence at its highest, other than a brief conversation concerning an investment of the trust funds in a GIC, it appears that, by her own admission, Ms. McGillivray barely read anything to do with the proposed investment of the trust funds but simply signed whatever was placed in front of her. She made no inquiries to understand all of the details of the investment. She signed a director’s resolution to allow Mark Penman to do whatever he wished with the trust funds without the necessity of having to consult her further or obtain her authorization. She made no further inquiries of the progress or status of the investment of the trust funds. She simply assumed without any rational justification that things were going well.

[258] Bloom submits that since Kalkstein was a chartered accountant, he cannot be considered a lay trustee.

Delay – Bloom’s Response (Steven and Christopher)

[259] The plaintiffs submit that the court does not have the jurisdiction to dismiss an application and rely on para. 6 in the case of Cole v. Minister of Public Safety and Emergency Preparedness, 2015 ONSC 5728, where Corthorn J. stated, “I am not satisfied that this Court has the jurisdiction to dismiss an application for delay”. (V8 T18)

[260] They also submit that once a litigation plan has been ordered, it must be carried out if it has not been appealed or varied.

[261] The plaintiffs agree that the 2016 Court of Appeal decision of Sickinger sets out the legal criteria for the court to consider on a motion for dismissal for delay, in that the delay must be inordinate, inexcusable, and prejudicial.

[262] The plaintiffs submit that in applying the law to this case, trust law principles must be considered. The plaintiffs rely on the case of Ekstein v. Brown Estate,1996 CarswellOnt 3179 (Ont. Gen. Div.), and particularly pgs. 10-11 where the court states the following:

The respondent argues that Mrs. Ekstein’s claim is extinguished by laches and by s. 43 of the Limitations Act, R.S.O. 1990, c. L.15. I do not agree. Mrs. Ekstein moved promptly upon discovering that the trustee had recovered funds in excess of Nugate’s claim. Prior to that she was unaware that there was any basis upon which she could assert a claim against the trustee. Having failed to keep Mrs. Ekstein, or anyone else, advised as to the assets of the trust, it would be inequitable for the trustee to avoid the claims of beneficiaries who failed to assert claims in ignorance of the facts upon which such claims would be based. This is particularly the case since there has not been any prejudice to the trustee as a result of the delay. The trustee argues that prejudice arises from the failure of the trustee to keep proper books and records of his dealing with the assets of the trust. However, the trustee had a duty to keep proper records regardless of whether or not any claims were brought forward by beneficiaries… A trustee cannot rely on his own failure to properly administer the trust as a ground for defeating the claims of beneficiaries. Accordingly, I do not see any basis for denying Mrs. Ekstein’s claim under the doctrine of laches. [Citation omitted.]

[263] In the case of The Children’s Lawyer v. Penman, 2013 ONSC 1471, at para. 35 the court stated the following:

As Haley J. noted in Roger Estate v Leung, citing Sheard J. in Re Warsh:

It would seem to me anomalous that a trustee should be under an unquestionable duty to account, but that, in the absence of explicit statutory enactment, this Court should be powerless to require the trustee to provide an accounting, unless a beneficiary brings an action alleging breach of trust… The cestui que trust would be indeed in a helpless position if the trustee remained mum as to his accounts and the courts were powerless to order an accounting unless the cestui que trust brings what would have been a speculative action for breach of trust.

[264] In the case of Zimmerman v. McMichael Estate, 2010 ONSC 2947, 103 O.R. (3d) 25, the court under the heading of “the duty to account” stated the following at para. 31:

A trustee has an obligation to keep proper accounts. A trustee must keep a complete record of his/her activities and be in a position at all times to prove that he/she administered the trust prudently and honestly. He/she must have the accounts ready and give full information whenever required. [Citations omitted.]

[265] Steven and Christopher therefore submit that the delay in prosecuting an accounting in equity does not fall at the feet of the beneficiaries, since trustees have an ongoing obligation, without any court action having been commenced, to have their accounts ready to be passed.

[266] Bloom further argues that Steven and Christopher are not submitting that any significant delay is attributable to Simon’s death, either from their personal mourning or helping with his estate, but that it is a factor to be taken into account with respect to the issue of delay.

[267] With respect to what Amey described as the “Hail Mary excuse” of blaming their lawyer for the delay in bringing the motion, Bloom submits that his clients are not suggesting any negligence on behalf of their lawyer. However, Finch, the senior lawyer they had retained at Miller Thomson, ran into health problems which forced him to retire. That was the reason for the change of lawyers in November 2015.

[268] With respect to the law and the length of delay, Bloom submits that the delay falls squarely at the feet of the trustees, since it is their duty to always be in a position to render their accounts. In addition, the accounts in question were complex, indicative of the court ordering an expert, and that expert taking approximately three years to issue an 11 volume report. This extraordinary measure of paying $1,100,000 to get a forensic accounting report falls squarely at the feet of the trustees who did not keep proper trustee/trust accounts.

[269] Bloom submits that when Steven, Christopher, and others objected to the accounts, they did not get responses to their objections, notwithstanding that the trustees have an obligation under the Rules to respond.

[270] Bloom submits that the trustees have an even greater duty to keep and pass their accounts because they are fiduciaries. He submits that using a Request to Admit is a very appropriate procedure when a beneficiary is trying to get information from their trustee.

[271] With respect to the approximate delay of three years between when the requests to admit were sent and when Bloom was retained, he submits the excuse for delay is intertwined intrinsically with the obligation that a trustee has to its beneficiary.

Prejudice – Bloom’s Response (Steven and Christopher)

[272] Bloom submits that in the event that the court does not find that Dr. Shulman needs to be a r. 53.03 expert, the court should nonetheless not dismiss the action, on the basis of the questionable and non-specific evidence of Dr. Shulman and with Kalkstein not having filed an affidavit. To do so, Bloom submits, would be draconian.

[273] Bloom also submits that Dr. Shulman’s report does not address the test for capacity.

[274] If the court rejects Dr. Shulman’s affidavit, he submits that Sheila and Kalkstein cannot patch up their case by then obtaining an affidavit from Dr. Shulman that would comply with r. 53.03.

[275] Bloom further submits that, if I reject Dr. Shulman’s affidavit on the motion to dismiss for delay and abuse of process, that would not preclude Sheila and Kalkstein from filing a further and better medical affidavit(s) at the Passing of Accounts hearing, at which time there could be a hearing to determine whether or not Kalkstein is able to testify.

[276] However, Bloom submits that it is difficult to see what evidence Kalkstein could provide, since it is Zeifman’s evidence that Kalkstein did nothing as a trustee except consent to be a trustee.

[277] During his examination of October 6, 2016, Zeifman testified that Kalkstein became a trustee “as a concession to his client, which accountants often do”. Zeifman went on to testify that Kalkstein was a passive trustee and that “absolutely” all decisions would have been made by Sheila and Val and not Kalkstein.

[278] When asked if Kalkstein abdicated the decision-making to Sheila and Val, Zeifmans provided the following answer to question 300:

I wouldn’t use the word “abdicated.” I would say that he accepted their authority to make those decisions given that it was a trust for their children and grandchildren. It was a trust that had assets that they had earned, that Michael O’Donovan – – that Val O’Donovan earned in his business career. He was doing a favour to Val and Mrs. O’Donovan by agreeing to be a trustee of this trust.

[279] At paras. 11 and 12 of his affidavit dated 18 April 2016, Zeifman swore the following:

11 Val, sometimes with Kalkstein’s assistance, tended to the financial affairs of himself, Sheila and their family. Kalkstein had no direct involvement as a trustee of SOFT, other than agreeing to his appointment. Rather, he relied on the instructions of Val and/or Sheila with regards to the trust, as he had no reason to believe they would act in any manner contrary to the best interest of their children and grandchildren or in contravention of the terms of the trusts.

12 Val instructed Kalkstein to compile financial statements for various family – controlled entities and provided Kalkstein with very limited information. Kalkstein did not advise on the establishment of these entities. Consistent with the independent and direct management style of Val, Kalkstein was simply informed of the existence of the entities. Kalkstein was not engaged to, nor was he provided with, sufficient information to assess whether the instruction for in accordance with the entities’ structures.

[280] Based on the foregoing paragraph, Bloom submits that Kalkstein is clearly liable, and therefore the Passing of Accounts then becomes an issue of quantum.

[281] With respect to the issue of quantum, Bloom points out that we have a large documentary record including the following:

(a) Affidavits of documents sworn by Kalkstein and all other parties;

(b) The 11 volume expert report of Rudson;

(c) The answers to the 392 questions in the Requests to Admit; and

(d) Cross examinations on all the affidavits.

[282] Steven and Christopher rely in part on the Ontario Court of Appeal decision in Armstrong v. McCall (2006), 2006 CanLII 17248 (ON CA), 213 O.A.C. 229 (C.A.), where the Court overturned the motion judge’s dismissal of a medical malpractice claim after a seven year delay in part because “it was significant that the evidence in respect of the claim and the defence was largely documentary.”

Presumption of Prejudice on the Passage of Time –Bloom’s Response (Steven and Christopher)

[283] Steven and Christopher submit that, based on Zeifman’s evidence as outlined above, there cannot be any prejudice to Kalkstein because he did not do anything and therefore does not know anything.

[284] In addition, they submit that Kalkstein swore an Affidavit Verifying Trust Accounts, (Form 74.43) on November 8, 2011 with respect to SOFT. Paragraph two of the affidavit reads “The accounts marked as Exhibit “A” to this affidavit are complete and correct.”

[285] Sheila signed a similar affidavit on November 7, 2011, with respect to SOFT and MVOFT 1.

[286] On her cross examination on September 28, 2016, after being shown the accounts, Sheila acknowledged that her signature was on both of them but testified that she did not prepare the accounts, nor did she oversee their preparation.

[287] In his cross examination on September 6, 2016, Zeifman testified that he was not involved in the preparation of the accounts, that Amey took the lead on behalf of Sheila, and that Kalkstein signed the affidavit verifying the accounts.

Abuse of Process - Grayson’s Response (Patrick, Tyler, Michael, Fuyoku, Loretta)

[288] Grayson adopts Bloom’s submissions with respect to the issue of abuse of process and whether or not there should be an uncontested Passing of Accounts.

[289] By way of context, Grayson states that his clients are beneficiaries of a trust and objectors to the Passing of Accounts which have been commenced by the trustees of that trust.

[290] Grayson started his submissions by drawing the court’s attention to the June 11, 2016 balance sheet for 1338, which shows that there was $9,662,876 owing to shareholders, in this case Sheila.

[291] On May 10, 2016, he wrote to Amey seeking particulars of this amount. After receiving a follow-up request, Amey replied on June 15, 2016, still maintaining that the $5,942,000, which Sheila had returned to 1338 upon the sale of the Bermuda property, was money owing to her.

[292] In response to Grayson’s and Nasseri’s Applications served in August 2016, Sheila served her second affidavit sworn September 2, 2016. Although Sheila was later allowed by the court to withdraw admissions set out in her September 2, 2016 affidavit, the following paragraphs in italics were submissions made by Grayson and others in November or December 2016. Sheila has been or can be cross-examined on these issues.

[293] During the early part of these motions, Sheila filed an affidavit abandoning her claim to the $5,942,000 and conceding that a further $728,000 was misappropriated from the trust. Later in these proceedings, on a motion within a motion, she was allowed to withdraw these admissions, which is the position her estate maintains at this time.

[294] At the time of these later withdrawn admissions, Sheila’s claim for reimbursement from the trust had dropped from $9,663,197 to $2,992,724.

[295] Notwithstanding the court ordered production of the Rudson report, Sheila admits that she has not read any part, and notwithstanding that, she has signed her affidavit of verification and submitted her accounts for the Passing of Accounts.

[296] At pg. 75 of the Oral Argument Compendium marked as Volume 42 to this motion, Grayson points to the January 31, 2016, year-end statement for 1338, which shows a loan payable to Val and Sheila in the amount of $1,068,049. However, at the next page of the Compendium there are two cheques signed by Val both dated in March 1998 to Revenue Canada and the Minister of Revenue totaling the same number of $1,068,049.

[297] Pursuant to a letter from Amey dated November 4, 2016, Sheila now agrees that this $1,068,049 should be deducted from what she is owed. Grayson therefore submitted Shelia’s potential claim was then down to $1,924,675.

[298] In answer to a question put to her by Rodenburg on her examination with respect to the amount due to shareholders, Sheila answered “I’m a shareholder, but I knew that it was an incorrect number and I’ve always known.”

[299] Grayson submits, therefore, that we have financial statements for 1338 that are put out annually and the statement about what is due to shareholders has always been incorrect. We also have an application for a Passing of Accounts outstanding by the trustees, and on the face of the applications, they are deficient.

[300] Grayson submits that the trustees have made no attempt to come forward to do a proper accounting and they now ask the court to dismiss the beneficiaries’ actions based on the beneficiaries’ alleged abuse of process.

[301] He further states that there are $4,500,000 worth of questionable dividends that have been paid by 1338 to Sheila. If the dividends have to be paid back, Sheila’s potential claim for $1,924,675 would have evaporated and she would have ended up owing the trust approximately $2,500,000. These numbers are based in part on admissions by Sheila which were later withdrawn.

[302] In addition to the above, the beneficiaries found out in September 2016 that a new trust, known as SOFT2016, had been created and a $1,000,000 tax liability had been incurred as a result of the creation of that trust.

[303] Although Grayson states that Sheila has admitted that the tax liability is personal to her, he submits that technically, the trust owes the tax and that all of the common shares of 1338 which were in SOFT have now been transferred to SOFT 2016.

[304] Furthermore, Sheila refused to pay the tax until she was paid what she was owed by 1338, but Grayson points out that there is potential that Sheila owes money to 1338 and if that is the case, the tax liability could very well fall to the beneficiaries of the trust.

The following paragraphs are based on Grayson’s submissions received on or after October 29, 2018.

[305] Sheila does not have personal knowledge of the shareholder loan account for 1338. (V-42 T-25 P-173) Sheila relies, for the quantum of the shareholder’s loan, on the accounting work done by Bushell of KPMG.

[306] In her affidavit sworn August 3, 2017, she states that she believes that the quantum of the shareholder’s loan in the financial statement of 1338 for the year 2016 is accurate and that she is owed $5,942,000.

[307] She went on at para. 29 of her affidavit to state that she had not repaid herself any of the $5,942,000 pending this court’s decision. The phrase “this court’s decision” was not defined and in May or June 2018 Sheila paid herself the $5,942,000.

[308] Bushell, in his affidavit of August 3, 2017, states, “pursuant to KPMG’s analysis the current balance of all shareholders loans… is $9,663,176.32”, however it appears to be clear that $8,572,122.77, which makes up the bulk of the $9,663,176.32 figure referred to in Bushell’s affidavit at para. 24, is simply transposed from accounting work done by Zeifmanss LLP, without any analysis being done by KPMG on how Zeifmanss LLP arrived at that figure. (V-46 T-22 P-2027 & 1031) (V-46 T-18 P-940-941)

[309] When it was suggested to Bushell on his examination that dividends were capped at $9,820 per year, he admitted that in addition to relying on information from Zeifmans LLP, the quantum of proper dividends were an area for discussion. He went on to say that an accountant should look at the Articles of Amendment in deciding whether or not to declare a certain dividend. (V-45 T-12 P-720-723)

[310] An issue raised in the Rudson report was the potential overpayment of dividends to Sheila in the amount of $4,789,656. (V-38 P- 29) (Rudson report V-38 P-29 - this volume references paragraph 2(e) of Gordon J.’s order dated March 28, 2008)

[311] With respect to KPMG’s draft accounting for Sheila’s shareholder loan for the years from January 31, 1998 to 2007 (V-46 T- 22 P-1027), Bushell agrees that based on “the articles in the corporation”, Rudson’s number of $2,886,574 is correct for the year 2000. (V- 46 T- 18 P-972 – 979)

[312] Bushell, when taken through other years in the Rudson report, agrees that the $8,572,122 figure should be reduced by $637,352 plus $4,789,656. (V46 T-18 P-982) Based on these numbers, which only deal with the issue of the quantum of the shareholder’s loan, would bring Sheila’s claim down to approximately $3,100,000.

[313] The accounting, however, omits to mention 1338, which was the primary asset of SOFT and now SOFT2016. No restated accounts have been produced for SOFT and no accounts have ever been produced for SOFT2016.

[314] Sheila always knew that the accounting of 1338 was incorrect. (V-42 T-35 P-227)

[315] Grayson submits that Bushell appears to know that the shareholder loan number is wrong, but simply adopts Zeifmans LLP’s numbers.

[316] Based on this, “the beneficiaries” filed legitimate Notices of Objection asking for a Passing of Accounts.

[317] Sheila herself, in her factum in response to an application to remove her as trustee of SOFT and director of 1338, (V- 14 P-23 Para-V(a)) requests an order “requiring Sheila (and Cappelli) to prepare accounts for SOFT from July 1, 2011 to July 2016.”

Prejudice - Grayson’s Response (Patrick, Tyler, Michael, Fuyoku, Loretta)

[318] Because of Sheila’s recent medical diagnosis, all parties have been involved in cooperating to have her examined pursuant to r. 36. Four days of examinations have taken place so far and nine other days are currently scheduled.

[319] Therefore, all of Sheila’s evidence will be available to the court and all counsel have agreed that her affidavit and examinations are her examinations for discovery. (Shelia dies before her examinations were completed.)

[320] All of the other parties, with the exception of Kalkstein, were not involved in the trusts and therefore, while they have questions, they have no evidence to offer with respect to an accounting.

[321] Sheila has the right to discover the other parties.

[322] There is a massive well-documented paper record, including the Rudson report.

[323] On the massive amount of evidence produced so far, the testimony of the parties will be insignificant, and all parties will be relying on facts already in evidence.

[324] The trust accounting issues are significant and the Passing of Accounts in this matter could never be done on an unopposed basis.

The following paragraphs are based on Rodenburg’s submissions on or after October 29, 2018, with respect to the issues of delay and abuse of process.

Delay – Rodenberg’s Response (OCL)

[325] Rodenburg drew the court’s attention to paras. 4 to 7 of the Langenecker case, paras. 23 to 30 of the Sickinger case and para. 18 of the Wallace case. He stated that in all three of these cases, the defendants blamed the plaintiffs for the delay. In addition, rr. 21.01(3)(d) and 24.01 also talk about the defendant and indicate circumstances in which the defendant may move to have an action dismissed.

[326] He posed a question to the court: who was responsible to move the matter forward, or to use his analogy, who was driving the bus?

[327] Using his bus analogy, he submits the following:

(a) Steven and Christopher are the bus drivers in file C–248–07 (the ongoing action for an accounting) and in 08–005–09. Sheila and Kalkstein are the respondents.

(b) Brian is the bus driver in 08–004–09. Sheila and Kalkstein are the respondents.

(c) Sheila is the bus driver in ES–1040–11, in which she seeks to pass the accounts for MVOFT1 for the period August 24, 1989, to August 25, 2005, and for MVOFT2 for the period September 19, 2001 to August 25, 2005.

(d) Sheila and Kalkstein are the bus drivers in ES–1041–11, in which they seek to pass their accounts for SOFT for the period July 3, 1996 to July 30, 2011.

[328] Sheila and Kalkstein seek to dismiss their own actions ES–1040–11 & ES 1041-11. Steven and Christopher are not the bus drivers of these files and the OCL has never been a bus driver.

[329] Pursuant to my order dated August 8, 2011, Sheila and Kalkstein were to serve and file their application to pass accounts by October 31, 2011. (V-17 T-l P-131)

[330] Rodenburg submitted that based on the Wallace case, Sheila and Kalkstein have the responsibility to move their Passing of Accounts forward, not Steven, Christopher or the OCL.

[331] Although Sheila, in her factum at para. 49(c), blames the delay from December 2011 to January 2016 on the plaintiffs, it was Sheila and Kalkstein who were driving the bus.

[332] Likewise, the late Amey’s fallback submission, that the delay of three years after Sheila and Kalkstein answered the Requests to Admit lies at the feet of the plaintiffs, is similarly flawed because Sheila and Kalkstein were driving the bus.

[333] However, whether we are talking three years or four years, Sheila and Kalkstein did nothing to move their applications to pass accounts forward.

[334] Inherent in the court’s order for Sheila and Kalkstein to pass their accounts is the obvious obligation that they must move those applications along. They did not appeal the order. They did nothing and are now essentially asking the court to dismiss their own actions based on their delay.

[335] With respect to r. 21.01(3)(d), it only allows the defendants/respondents to move to have an action dismissed on the grounds that it is an abuse of process. As stated before, Sheila and Kalkstein are the applicants with respect to the applications to pass their accounts.

[336] No party has submitted that either Brian or the OCL is guilty of any abuse of process. Application number ES–827–16 brought by Brian, Patrick, Michael and Tyler was commenced in 2016, and there cannot possibly be an abuse of process. Among the numerous claims for relief requested, are that Sheila pass the accounts of SOFT and that application numbers ES–1040–11 and ES–1041–11 continue.

[337] Sheila and Kalkstein have not asked the court to strike out the Notices of Objection, so it is impossible to have an unopposed passing of accounts.

[338] In any event the accounts still need to be passed.

[339] Originally the OCL was content with Sheila staying on as trustee of SOFT/SOFT2016. However, now that approximately $6,000,000 has been removed, they seek to have her removed as trustee of SOFT2016 and as an officer and director of 1338.

[340] The primary issues are whether monies are owed to MVOFT1, MVOFT2 and SOFT/SOFT2016, and if so by whom. All of these issues are clearly raised and set out in the Rudson report.

The following paragraphs are based on Elliott’s reply submissions on or after October 29, 2018, with respect to the issues of delay and abuse of process.

Delay and Abuse of Process – Elliott in Reply (Sheila)

[341] On behalf of Sheila, Elliott seeks to dismiss files C–248–07, 08–004–09, 08–005–09 and ES–827–16. He is not seeking to dismiss ES-1040–11 or ES-1041–11.

[342] Sheila’s complaints are leveled at Steven and Christopher. They are the trustees of Val’s estate and are responsible for administering it properly. Court action ES–827–16 is against Val’s estate in addition to others.

[343] File number 08–005–09 is an action brought by Steven and Christopher in their personal and trustee capacities, which seeks among other things to compel the trustees of Val’s estate to commence an application to pass the estate’s accounts. In addition, Steven and Christopher, as Val’s estate trustees, defended Sheila’s action against Val’s estate for support in file C–26–07.

[344] Since this motion was last heard on December 1, 2016, there has been further delay. Some has been the fault of Steven and Christopher, some has been Sheila’s fault, and some has been no one’s fault. However, the overall delay in getting this matter to trial is a factor.

[345] With respect to delay, he submits that the fact the motion could not be completed in December 2016 and had to be adjourned, while no one’s fault, did cause delay. The matter was rescheduled to August 2017, however, again through no one’s fault, Amey passed away in January 2017.

[346] He submits that after being hired in February 2017, his firm did everything it could to get ready for the return of the motion in August, including getting duplicate copies of documents with the assistance of other counsel.

[347] The next delay happened because Steven and Christopher brought a motion to remove Elliott’s firm from the record. This not only caused a delay in itself, but it would have caused even more delay if Steven and Christopher had been successful because Sheila would have had to find a new lawyer. He submits that this delay should be attributable to Steven and Christopher because it was their deliberate choice to bring the motion. The submission is countered by Bloom, who submits that his clients, in their mind, had good reason to bring application and that they lived with the result, including the payment of costs.

[348] The next delay occurred when Elliott had assembled sufficient material and saw what he thought was a major error in accounting, and therefore from his perspective there was an incorrect multimillion-dollar admission in Sheila’s affidavit. He submits that this error came from the fact that SOFT and 1338 are different entities and the obligations that attach to the trustees of SOFT and the officers and directors of 1338 are very different. In addition, he stated that there could not have been any co-mingling of funds because SOFT never had a bank account.

[349] After checking with Bushell at KPMG, he asked other counsel if he could withdraw Sheila’s earlier admissions. The other parties refused to allow her to withdraw the admissions, leading to another motion and further delay of greater than one year, which Elliott submits is attributable to Steven and Christopher.

[350] Sheila’s cancer diagnosis was in April 2018 and was followed by five weeks of chemotherapy. She is currently waiting on the prognosis of the chemotherapy, however, currently she gets tired and confused easily and is forgetful. Since this case will likely not be heard until 2021 or 2022, there is a risk that Sheila will not be here to partake in the proceedings, or alternatively, she may be too compromised to partake in the proceedings. (Shelia has now passed away).

[351] Elliott acknowledges that Sheila is currently being video examined under r. 36, but she is disadvantaged because the case is not fully developed yet. In addition, she is currently giving r. 36 evidence without knowing my decision. Nine more days of examinations are scheduled and since Sheila tires easily, she cannot attend for multiple days in a row. Therefore, at this point in time it is not known whether or not she will be able to complete the r. 36 examinations. (Shelia was unable to complete the r. 36 examinations).

[352] Elliott submits in short that the tactics of Steven and Christopher continue because they challenged his retainer and would not allow Sheila to withdraw admissions. They simply continued to run up expenses. Now Amey is dead and Sheila is dying.

[353] None of the cases referred to by other counsel have dealt with the impending death of the party who is also an important fact witness. Sheila will not be able to instruct counsel if she is not here or incapable of giving such instructions. In addition, there will be no evidence before the court from Val, and on the evidence before the court Kalkstein will also be unable to testify.

[354] If able to testify, Kalkstein could probably shed light on the purchase of the Bermuda property, the setting up of the trusts, and also discussions he may have had with Val.

[355] The compounding effect of all of these unfortunate circumstances exponentially raise the effect of the prejudice.

[356] Elliott submits that everyone agrees there is a three-pronged test for the court to consider.

[357] Is the length of the delay inordinate and if it is, is it excusable? To answer this, a court must analyze the extent to which the party, whose action may be dismissed, caused the delay.

[358] He submits that there are two kinds of prejudice, presumptive and actual. Presumptive prejudice is present simply from the passage of time and one’s ability to defend oneself when memories fade and documents go astray. For presumptive prejudice, no evidence is needed, and the court simply draws an inference.

[359] With respect to actual prejudice, the onus is on the defendants, Sheila and Kalkstein. In this case, the important witnesses, Val and Kalkstein, will not be able to testify and while Sheila may be able to testify, r. 36 evidence is not the same as testifying in person.

[360] Therefore, when considering fairness, the court has to balance the right of the defendant to a fair trial, which is increasingly difficult with the passage of time, versus the right of the plaintiff to have his/her day in court.

[361] Even if the three-pronged test is not met, the court can dismiss the action using the flexible doctrine of abuse of process. This brings in the concept of fairness and the court should not be blinded by matters of accounting.

[362] In this case, there is no doubt that Steven and Christopher have been driving the bus for 11 years. They invited the Greek chorus to support them. When Steven and Christopher did nothing for four years, neither did anyone else, even after a $1,100,000 forensic audit was completed by Rudson in 2011. They have essentially followed a scorched-earth policy of litigation.

[363] The court is only being asked to strike out the claims of Steven and Christopher. The actions pertaining to the grandchildren and unborn will continue. Therefore, there will still be a contested passing of accounts, however not by Steven and Christopher. In this family, Steven and Christopher shared in $50,000,000 from trusts set up by Val. Sheila, who was upset by this, simply set up SOFT/SOFT2016 for the benefit of her grandchildren.

[364] In Steven and Christopher’s statement of claim (V-1 T-Y) (March 8, 2007), they asked that the accounts be prepared and passed and questioned the financing of the Bermuda property. Since Steven and Christopher’s objections have not been struck, Elliott sees no problem in passing accounts using those objections (V-2 T-JJ, KK).

[365] Bloom objected on the basis that if Elliott was suggesting that Steven and Christopher’s objections should be struck, this has not been requested in anyone’s pleadings, nor was it argued, and it was being raised for the first time in reply. Bloom also submitted that it is draconian to continually blame Steven and Christopher for commencing the two Toronto actions. He admitted it was a bad move, albeit based on legal advice, and that Steven and Christopher have paid for that decision by the court ordering them to pay costs.

[366] Elliott submitted that by striking out Steven and Christopher’s action for delay and/or abuse the court, the actions become simpler and more straightforward.

[367] 1338 was incorporated approximately four years before SOFT came into existence and SOFT never had a bank account. Sheila has been the sole officer and director and had voting control of 1338 from its inception and up to today. SOFT, now SOFT2016, was and is a shareholder of 1338. 1338 may owe SOFT2016 approximately $20,000.

[368] Elliott submits that Grayson’s accounting arguments were cherry picking. Elliott stated that he would not be responding in depth because there will still be an accounting.

[369] He submits that when Grayson said Sheila took $728,407, she actually paid it back to 1338 voluntarily, and therefore in the accounting records at V-46 T-22 P-1031, the number $728,473 should not be in brackets.

[370] When Sheila stated that she always knew Zeifmans LLP’s number were wrong, she was labouring under the misapprehension that SOFT and 1338 were one and the same entity. Sheila clearly lost confidence in Zeifmans LLP, because she transferred her work to KPMG. In addition, by paying the $728,473 voluntarily into 1338 because she was concerned about an error, the payment had the effect of increasing her shareholder loan.

[371] With respect to the Bermuda property, when Steven and Christopher brought an application for an injunction to block the sale and/or freeze the sale funds, Flynn J. dismissed the motion, finding that Sheila owned the property by right of survivorship. Flynn J.’s judgment was never appealed.

[372] When Sheila chose to pay the net or some of the proceeds from the sale of the Bermuda property into 1338, it increased her shareholder’s loan, and this is shown on the records of 1338.

[373] Because Sheila thought SOFT and 1338 were one and the same, she incorrectly assumed that the money was trust money and she could not touch it. This is incorrect and there is nothing to prevent her from withdrawing the money because it is part of her shareholder’s loan and not trust funds. In addition, the withdrawal did not negatively affect 1338 or SOFT2016, it only decreased Sheila’s shareholder loan in 1338. Further, there will be a passing of accounts with respect to SOFT2016. Bloom objected on the basis that Elliott’s above submissions were not in evidence and that he, Bloom, has a motion waiting in the wings to request a better accounting.

[374] In conclusion, Elliott stated that there are some unique features of prejudice in this case because of the death of Sheila’s counsel and that he could not find any cases on point. In addition, Elliott submitted that the records he received from Amey’s office were incomplete. Moreover, evidence by r. 36 cannot make up for being unable to attend trial and Sheila’s dependent relief claim will fail. Shelia is being asked to account for years of trust accounting, but she is unable to ask Val or Kalkstein for assistance.

Fairness - Elliott in Reply (Sheila)

[375] In reply, Elliot submits that the court should balance the issue of fairness, taking into account Amey’s death, Kalkstein’s illness, and Sheila’s impending death. Sheila lives a modest lifestyle while Steven and Christopher live it up after winning the DNA lottery which gave them approximately $25,000,000 each. Sheila sees these court actions as a contest between her handsomely rewarded sons and her grandchildren, who she would like to benefit through SOFT2016.

[376] Therefore, dismissing Steven and Christopher’s actions would not be an injustice.

The following paragraphs are based on Dawe’s reply submissions on or after October 29, 2018, with respect to the issues of delay and abuse of process.

Delay and Abuse of Process - Dawe in Reply (Kalkstein)

[377] Dawe submits that Kalkstein should be removed from the proceedings and that the court has the ability to control its own process. From her observations, based on submissions made on October 29, 2018, she submits that this motion is being argued as if it was a passing of accounts.

[378] She submits there is ample evidence available to pass the accounts, including the 11 volume Rudson report and Christopher’s evidence. She queried why Steven and Christopher did not proceed with an uncontested Passing of Accounts instead of bringing another motion for a contested Passing of Accounts.

[379] She submits that when Bloom came on board, Steven and Christopher’s tactics changed. She argues that the multiplicity of proceedings and the change in tactics are an abuse of process.

[380] Aside from the length of time that has passed, Steven and Christopher have lodged two institutional complaints with respect to Kalkstein and have refused to mediate. (The court is cognizant of Steven and Christopher’s position that they would not mediate because Kalkstein would not attend, and Sheila and Kalkstein would not pay. However, Sheila was prepared to pay for half of the mediation.)

[381] Although the accounts put forward with respect to SOFT appear bald, they must be viewed in the circumstances of this unusual case, which include the following:

(a) SOFT only had one asset, that being the shares of 1338. Therefore, while on their face the accounts appear bald, they are accurate because they show SOFT’s interest in 1338.

(b) The parties have the $1,100,000 independent Rudson report which was three years in the making. In completing the report, Rudson consulted with other parties, including the accounting firm Zeifmans LLP, and accessed their numbers.

[382] Kalkstein is the only party who has no interest in the litigation. His only role was being one of three trustees for SOFT, when Val was alive, and being one of two trustees after Val died in 2005, until he resigned on November 6, 2012, eight years ago.

[383] Because of Sheila’s recent lawsuit against him, Kalkstein now stands alone. Kalkstein never did an audit, was not asked to do an audit and simply produced the lowest form of financial statement possible, which is where he took his clients’ information and put it in a financial form. From the beginning, all parties knew the issues and they remain the same, that is the approximately $5,900,000 surrounding 1338.

[384] With respect to the issue of dividends, Rudson did a forensic analysis which is marked as V-38 on this motion. The index of V-38 sets out the potential shareholder overpayments to Sheila for 12 separate years. At V-38 P-29, it shows that almost all of the questionable dividends were paid out during the time Val was alive.

[385] The lawsuit commenced by Sheila against Kalkstein and others was issued in April 2018, but not disclosed to Kalkstein until September 6, 2018. This caused Kalkstein’s lawyers to attend Sheila’s motion to withdraw admissions with only a watching brief. In addition, his lawyers attended Sheila’s examinations in May and June, and Bushell’s examination in July, with only watching briefs.

[386] Dawe was not appointed to defend Kalkstein on the professional negligence claim until September 19, 2018. This was after Bushell’s September 13, 2018 examination. However, Dawe’s firm did put on the record on September 13, 2018, that it was inappropriate to proceed with Bushell’s examination until the insurance company appointed counsel for Kalkstein.

[387] In addition, although the plaintiffs continually submit that the trustees have joint and several liability, they never added Val’s estate as a defendant in their claims. Therefore, if the plaintiffs can continue with the passing of accounts without Val, they can also continue with the passing of accounts without Kalkstein.

[388] In V-43, which contains answers prepared by three experienced counsel after the first four days of this motion, the following is readily apparent with respect to SOFT:

(a) The core issue is the Bermuda property purchased by Val and Sheila jointly.

(b) Steven and Christopher concede that Val did nothing wrong.

(c) The Bermuda property was sold by Sheila after Val’s death.

(d) The money was put into 1338 by Sheila.

(e) The money was taken out of 1338 by Sheila after Kalkstein resigned as a trustee of SOFT.

[389] The money exists and the money is in dispute, but it is an issue between Sheila, her children and her grandchildren, not Kalkstein.

[390] There is no issue of liability for Kalkstein, because all decisions made during Val’s lifetime are expressly not challenged. Therefore, Steven and Christopher cannot challenge Kalkstein when he defers to Val’s decisions.

[391] Val cannot be jointly liable because you cannot separate the conduct of Sheila and Kalkstein from the conduct of Val before his death. There is no evidence that Sheila and or Kalkstein acted behind Val’s back. In fact, Steven and Christopher submit that Val was a man of integrity and they do not question what he did. Zeifman testified that Kalkstein deferred to Val’s decisions and essentially rubberstamped his requests.

[392] This does not mean that Steven and Christopher cannot challenge who owns the approximately $6,000,000, but Kalkstein is not necessary to make that determination.

[393] Even if the claim against Val’s estate is statute barred, it is still relevant if Val caused the loss. In addition, Val’s estate is before the court in one or two actions.

[394] In V-43 P-2-5, Steven and Christopher take issue with whether or not Sheila can direct the assets of SOFT2016 to the grandchildren. Dawe submits that Sheila’s conduct is intertwined with Val’s conduct, and his conduct is above reproach.

[395] Action C-248-07 has been before the court for 12 years (now 13 years 8 months). There is no evidence that Kalkstein has ever engaged in any self-dealing or other nefarious conduct. With respect to the $25,000 payment to the Kalkstein Family Trust raised by Steven and Christopher, Dawe said it is all set out in the Rudson report at V-40 P-28.

[396] Based on Bloom’s acknowledgement that he would not need Sheila or Kalkstein to testify if he had better accounts, Dawe submitted that the necessary evidence is in the Rudson report, yet to date no one has examined the author of the Rudson report.

[397] Steven and Christopher’s Notice of Objection to the November 2011 accounts was delivered in December 2011. Through to the spring of 2012, all counsel were negotiating an order for directions for the passing of accounts. In the spring of 2012, Steven and Christopher changed counsel from Fasken Martineau to Miller Thomson, who on September 26, 2012 delivered huge Requests to Admit. Responses were delivered by March 2013. This was the last substantive step before Bloom brought his motion for further and better accounts.

[398] For some reason, known only to them, Steven and Christopher chose a different course of action. To use the bus metaphor, they left the 401 on an exit ramp. This was a tactical manoeuvre by Steven and Christopher.

[399] Kalkstein’s evidence is not necessary, he has health issues and has offered to try to answer written questions. In response to this, Steven and Christopher continued their abuse by delivering a summons.

[400] Bloom relies on the cases of Penman and Cahill (ONSC), which are in Steven and Christopher’s book of authorities, for the proposition that despite his deference to Val, Kalkstein is still liable for the trust funds. (V-8 T-8, 9-10)

[401] Although Dawe does not dispute the legal principles involved, she disagrees with Bloom’s characterization of them. This court should not be concerned with proceeding with the passing of accounts without Kalkstein. While Bloom submits, based on Penman, that a trustee is liable if he/she leaves their duty to others, Dawe submits that the facts of this case are very different. In Penman, one trustee simply turned a blind eye to what was going on around her.

[402] In this case, the trustees were dealing with wealth created by Val and Val’s family. There is no evidence that Kalkstein turned a blind eye. The evidence is that Kalkstein and Sheila deferred to Val’s analysis and decisions. She submits that if there was ever a person to defer to in business/investing matters, it was Val. (V-17 T-2 Para-11 & V-29 P-608)

[403] Since Kalkstein’s deference to Val on the facts of this case was entirely reasonable and since reasonableness is the applicable standard a trustee has to meet, he cannot be held liable. It is for the court to determine what is reasonable through the lens created by Steven and Christopher that Val could do no wrong.

[404] Dawe also submitted that the court has inherent jurisdiction to remove Kalkstein from these proceedings and referred the court to the para. 22 of the Wallace case (V-21 T-7) where the court stated:

22 There comes a time, in short, when enough is enough, and the civil justice system will no longer tolerate inordinate and inexplicable delay. The court may then eject the action as an exercise of its inherent jurisdiction, whether or not the relevant rules expressly mandate it. This is such an action. The motion judge properly exercised his jurisdiction to dismiss the claim and the counterclaim.

Grayson in Reply (Patrick, Tyler, Michael, Fuyoku, Loretta)

[405] With respect to Elliott’s comments about opposing parties challenging his retainer, para. 6 of my endorsement dated June 28, 2017 states, that “I did not find anything nefarious in the applicant’s motion.”

[406] He submits that there is nothing tactical about objecting to Sheila’s motion to withdraw admissions she had made in a proceeding that had already gone on for four days. He submits that opposing counsel are entitled to put their client’s case forward, which is all they did.

[407] He submits that what should be of greater concern to the court is the fact that Sheila and Kalkstein have never come back to court with a proper accounting.

[408] Given the fact that Bushell is a forensic accountant who did not try to confirm whether or not Zeifmanss LLP’s numbers were correct, Grayson queries what his purpose was.

[409] Rudson was not retained to do the trust accounting, that is the obligation of the trustees, even though Rudson should/would have been of assistance to them.

[410] Sheila and Kalkstein cannot take issue with the other parties not suing Val’s estate when they themselves saw no need to third party his estate.

[411] The beneficiaries of a trust are entitled to present a claim against the trustees for the breach of their duties as trustees, even if their testimony at the passing is not necessary.

Bloom in Reply (Steven and Christopher)

[412] Bloom submits that from a practical point of view, dismissing Steven and Christopher’s action makes no sense since the grandchildren’s actions will continue on with the same issues. Also, if the court were to dismiss Steven and Christopher’s action, it would be akin to a partial summary judgment which the Court of Appeal has frowned upon, in light of the fact that the action going forward would require the same witnesses and deal with essentially the same issues.

[413] The problem at the heart of this litigation arose after Val’s death, and concerns how the proceeds of the Bermuda property were dealt with.

[414] Bloom submits that Dawe’s argument that Kalkstein is not necessary because there is a full evidentiary record is a two-edged sword. He relies on the case of Ali v. Fruci, 2014 ONCA 596, 122 O.R. (3d) 517, at para. 19, for the proposition that where there is a considerable documentary record, all parties would still have a fair trial. (V-8 T-22)

Rodenburg in Reply (OCL)

[415] Based on Amey’s submissions, on behalf of Sheila, on November 29, 2016, (V-55 P-90-94) Sheila wants actions ES–104–11 and ES–1041–11, among others, dismissed, and Kalkstein wants action ES–1041–11 dismissed or himself let out. Rodenburg made most of his submissions on these points in 2016.

[416] Rodenburg stated that the court should note that since November 2011, Sheila and Kalkstein have been driving the bus with respect to the above applications and have not done anything to move them toward the hearing.

Motion for a Further and Better Accounting

Submissions by Bloom (Steven and Christopher)

[417] The court on August 8, 2017, suggested to Elliott that the trustee’s accounts as filed were exceedingly sparse. (V-52 P-7-8). Yet, two years later no attempt has been made to file amended accounts.

[418] In the court’s endorsement dated August 18, 2017, granting leave to Sheila to withdraw certain admissions, the court stated the following at para. 118(a):

[118] At the end of this hearing there were discussions about the following:

(a) Mr. Elliottt will be talking with Mr. Bushell in an effort to resolve as many outstanding requests of an accounting nature that Mr. Bloom or other Counsel may have raised.

[419] Even though para. 118 does not have the force of an order, it should have at least been persuasive. However, neither Sheila nor Kalkstein have responded to the court’s suggestion.

[420] The parties and the court need better accounts because:

1. Everyone needs a starting point.

2. Once the trustees state their position, other parties will be entitled to agree or disagree.

3. Then a procedure can be worked out or set by the court to resolve the issues.

[421] Currently the accounting is the bottleneck which is holding up any and all progress.

[422] Bloom took the court through his Compendium for a Better Accounting. (V-58) (Unfortunately the page numbers in the Compendium are not numbered sequentially and while I hope my references to Tab numbers are correct, the reader, if he/she wants to verify my references will in most cases have to search for the page numbers that I reference, within the designated Tab.)

[423] Steven and Christopher take the position that SOFT owns not only the value of the shares, but also any and all dividends which should have accrued from the shares.

[424] Sheila settled SOFT with 100 common shares of 1338 on July 3, 1996. (V-58 T-3)

[425] In the Articles of Amendment for 1338 dated September 15, 1992, the quantum for the payment of dividends for both Class A and B shares was restricted on an annual basis by the following words:

“provided that such amount if any shall not be less than 1% nor more than 3% of the “Class (A or B) Redemption Amount” as hereinafter defined and no more,” (V-58 T-2)

[426] By resolution of the Board of Directors of 1338 dated January 5, 1993, the Redemption Amount of each Class A share was set at one dollar and on July 3, 1996, the Redemption Amount of each Class B was set at $54. (V-58 T-5)

[427] The Corporate Profile for 1338 shows that on April 22, 1997, Sheila owned 450,000 Class A shares and 91,667 Class B shares.

[428] The Shareholder Register for 1338 shows that on September 26, 1997, Sheila owned 25,194 Class A shares and as of November 13, 1998, she owned 1,049 Class B shares. Mr. Bloom submits that for this to happen, Sheila would have had to redeem 424,806 Class A (450,000-25,194) shares valued at one dollar each for a total value of $424,806. In addition, she would have had to redeem 90,618 Class B shares (91,667-1,049) valued at $54 each, for a total value $$4,893,372.

[429] This would make the total value of the shares she redeemed $5,318,187. (In his cross-examination Mr. Bloom used approximately $5,400,000 because he did not subtract the shares that Sheila did not redeem).

[430] To the best of Bushell’s knowledge, the shareholder register for 1338 was accurate as of November 13, 1998. This would confirm that on that date Sheila owned 25,194 Class A shares and 1,049 Class B shares. (V-58 T-5) In her answers to question 178 in the Request to Admit, Sheila acknowledged that during the 2000 fiscal year end of 1338, she owned the before mentioned quantity of shares with a Fixed Redemption value of $81,840.

[431] Bushell confirmed that in the 1990’s Sheila executed an estate freeze by settling her 100 common shares of 1338 in SOFT and that Val and Sheila did a similar estate freeze by settling common shares of MVO in MVOFT. He also confirmed that the maximum annual dividends Sheila could declare on her Class A and B shares of 1338, was $9,820.82 as of 1998. (V-57 T-6 P-706-707/717)

[432] Sheila and Val’s earnings for the years 1998 to 2005, including the earnings from management fees and dividends, are set out in chart form at V-58 T-7 P-198 and 199. This chart was prepared by Zeifmans LLP. In addition, at the same V-58 T-7 P-270 and 271, there is a chart titled “Summary of Amounts Owed to Sheila Through Dividends Paid for the years 1998 through 2006”. One of the columns reads “Debatable Dividends” and ends with a cumulative amount of $4,431,449.

[433] Sheila stated that she did not have any dockets, information or paper records that would demonstrate what she did at 1338 from 2000 to 2005, and on counsel’s advice refused to answer why she was taking management fees from 1338 if she was not doing anything there. (V-7 T-7 P-235)

[434] In answer to an undertaking about the above-mentioned schedules, Sheila stated the following:

The schedules were prepared by Francis Rodrigues (a chartered accountant at Zeifmans LLP). His recollection is, that the part shown as “debatable dividends” was based on conclusions per Paul Ross (a chartered accountant at KPMG) that the taxable dividends had to be split between Val and the trust and likewise for Sheila and the trust. (V-58 T-8 P-904)

[435] In Bushell’s cross examination, he indicated that Kalkstein (in his capacity as a chartered accountant at Zeifmans LLP) used aggressive tax reducing methods based on the Articles of Incorporation, as amended. The dividends reported in the Zeifmans LLP accounting records, were higher than he would have reported. (V-58 T-8 P-741-2)

[436] At this point Bloom suggested, as a possible way forward, that along with the paper record, Rodrigues, Bushell and perhaps Ross could be put in the box and cross-examined.

[437] In Bushell’s affidavit at para. 16(e) he states: (V-58 T-9 P-21)

16(e) The amounts owing to Mrs. O’Donovan from the Class B share redemptions and declared dividends in 1998 and 1999 were $6,130,047 ($4,893,372 + $300,000 + $936,675) of which she used $5,942,000 to repay the RBC loan.

[438] Rudson’s summary of findings with respect to dividends paid to the shareholders of 1338 reads:

Potential Overpayments to Sheila O’Donovan (section 7 and 9 below):

It appears that Sheila O’Donovan may have received overpayments of $4,789,656 paid as dividends from 338. Any overpayments to Sheila O’Donovan should potentially be recharacterized by 338 as loans due from her… (V-58 T-9 P-864 / V-38 P-6)

[439] Bushell agrees with the calculations of potential excess dividends paid to Sheila of $4,789,656 (V-58 T-9 P-982) as set forth in Rudson’s report. (V-38 P-29)

[440] Under cross-examination, Bushell testified that with respect to his knowledge of the $936,675 figure set forth in his affidavit (para. 16(e)), he relied on someone else’s accounting records. (V-45 T-12 P- 718 et seq.)

[441] Bloom submits that Sheila and Kalstein cannot argue there was an abuse of process on the basis that other parties did not consent to Shelia’s request to withdraw her admissions. This is because of Bushell’s admissions, and the fact that Bushell did not review the affidavit(s) of Christopher or the grandchildren before swearing his affidavit. (V-45 T-12 P-730) In addition, Bushell was aware of what Sheila and Val got in the way of dividends and management fees between 1998 and 2005, because he worked on their summaries of income, which are set forth at schedules 25 and 26 of the KPMG report. (V-58 T-7 P-198-199)

[442] Bloom, on several occasions, submitted that there was a co-mingling of monies between SOFT and 1338, however the repeated objection was that it was impossible to co-mingle funds because SOFT never had a bank account. In addition, there was an objection by Mamay, (who was assisting Elliott) that Bushell was being cross examined on an affidavit filed in support of Sheila, not knowing where the money came from to pay off the Bermuda property and it was not an examination for discovery.

[443] Elliott objected to Bloom’s questions, stating that Bushell’s affidavit was put forward to show that the money came out of 1338 and not SOFT. In addition, Steven and Christopher sought leave to appeal the court’s decision on the matter, which was denied. Notwithstanding paras. 16 and 17 of Bushell’s affidavit, (V-58 T-9 Paras-16-17) Elliott submitted that the reason for Bushell’s affidavit was to determine the source of the funds used to purchase the Bermuda property, and to ascertain whether they came from 1338 or SOFT. (V-58 T-9 Para 10) Bushell was not asked to determine the state of the shareholders’ loans and he did not do so.

[444] Dawe objected to the fact that the cross examination of Bushell had proceeded in her absence. On day one of Bushell’s examination, a member of Dawe’s firm attended with a watching brief after she was led to believe that her attendance was not necessary because it did not involve Kalkstein. She now submits that Bloom is making representations against Kalkstein based on the cross examination of Bushell.

[445] Dawe further stated that she did not take an active role in Sheila’s motion to withdraw admissions and did not oppose it. Also, on the first day of Bushell’s cross examination she was not aware of Sheila’s court action against Kalkstein. She queries how all of this affects the veracity of Bushell’s evidence.

[446] Dawe further submitted that Bushell was not there as an expert witness, opining about Kalkstein or Zeifmans LLP’s professional negligence (which has now been called into question). Therefore, the cross examination of Bushell cannot be used against either Kalkstein or Zeifmans LLP because it was obtained through an abuse of process.

[447] Grayson submitted that the evidence in Bushell’s affidavit has now been undermined and that the opposing lawyers are simply trying to resile from his answers.

[448] Bloom submitted, however, that based on Bushell’s answers on his cross examination, his affidavit does not take into consideration the debatable dividends of $4,431,449, and he refused to answer whether or not he addressed the issue of debatable dividends in his affidavit. (V-58 T-12 P-744-758 / 749-751 / 788)

[449] Bloom further submitted that at para. 20 of her new court action CV-18-596923, Sheila pled the following:

20 Sheila was incorrectly advised by Amey and Kalkstein that the monies used to repay a portion of the loan to RBC in 1998 belong to SOFT and that she had inadvertently used trust funds to repay the loan for the Bermuda property. She did not realize at the time, that the funds from the redemption of her 1338 Class B shares and dividends, which she used to repay the RBC loan ought to have been recorded as a shareholder’s loan to 1338. She did not realize and was not advised to this effect, that by injecting another $5,900,000 into SOFT from the sale proceeds of the Bermuda property resulted in an overpayment to SOFT and a corresponding debt owed to her by 1338.

[450] Mamay refused to allow Bushell to answer whether he thought the numbers he relied on from Zeifman were accurate when he opined that Sheila’s admissions should be withdrawn because Paul Amey was wrong. (V-58 T-12 P756)

[451] Bloom submits that, in the chart prepared by Bushell for 1338 as of January 31, 2016, (V-58 T-9 P-822) the shareholder’s advances of $5,942,000 should be reduced by between $4,400,000 to $4,700,000, and that this is nowhere to be found in his affidavit. In addition, based on Bloom’s October 31, 2018 submissions, another $500,000 should be deducted.

[452] It appears to be common ground that the Bermuda property sold at a loss of approximately $5,000,000. (This would have been during the 2008 worldwide financial crisis.) In addition, Bloom submits that along with “repaying” approximately $5,900,000, Sheila kept approximately $1,700,000.

MVO

[453] Bloom submits that approximately $6,000,000 of MVO and/or MVOFT monies were used to purchase the Bermuda property. While Elliott does not agree, Bloom queries who bears the loss when trust funds and non-trust funds are used to purchase a depreciating asset.

[454] The Class A and B shares of MVO had almost identical restrictions with respect to Redemption Amounts that 1338 had. MVO was wholly owned by MVOFT 1 and/or MVOFT 2.

[455] Bushell, when asked by Bloom whether he agreed that in 1998 Val withdrew $6,500,000 from MVO based in part on a December 7, 2016 letter from Amey, (V-58 T-16 P-890) Bushell stated he was not retained to take that detailed a look at MVO/MVOFT, (V-45 T-12 P-762/763) but that he would not disagree with Amey’s proposition.

[456] Bloom took issue with para. 24 of Bushell’s affidavit where he stated that pursuant to KPMG’s analysis, the total of all shareholder’s loans were valued at $9,663,176.32 and that he received instructions from Sheila not to bother looking into MVO after January 2, 2017. Bushell answered the question by stating that before 2017, everything about MVO was in KPMG’s 2005 analysis and he was told to concentrate on 1338. (V-45 T-12 P-765)

[457] Elliott submitted that Sheila ceased to be involved with MVO/MVOFT approximately 12 years before, and that in any event, Bushell said he took this into account in his analysis in 2005 and he was never asked if he changed his mind. (V-45 T-12 P-765)

[458] Bloom submitted that there was a debatable dividend of $5,176,301 set out in the KPMG report (V57 T-12 P-121), as well as a figure of $4,400,472 set out in the Rudson report, (V-58 T-12 P-124) yet neither number appears in Bushell’s affidavit. Bloom submits that this is important because MVO injected funds into the Bermuda property, but part of the proceeds of sale were deposited into 1338.

[459] As set forth in paras. 41 and 42 of Christopher’s affidavit, there has been no accounting or explanation provided for the dividend income/management fees payable by 1338, MVO, or 1993 to Val or Shelia. (V-58 T-13 P-25)

[460] By letter dated August 27, 1997, Sheila and Val acknowledged that the borrower from the Royal Bank (“RBC”) for the financing of the Bermuda property was MVOFT. (V-58 T-18 P-1182-1185) Bloom submits that the trust paid the mortgage to RBC and therefore it has a resulting trust claim. (Elliott submits that this issue has already been decided by Flynn J. in August 2008.) For this proposition, Bloom relies on the Ontario Court of Appeal case of Andrade v. Andrade, 2016 ONCA 368, 131 O.R. (3d) 532, where the court stated the following at para. 58:

58 A purchase money resulting trust can occur “where a person advances a contribution to the purchase price of the property without taking legal title”… It is one of the “classic resulting trust situations” and can arise when a party contributes directly to the purchase price or the mortgage: … In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 12, Cromwell J. noted that it has been “settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money”.

[461] Sheila acknowledges that the property was sold for $7,640,000 and that she kept $1,716,000, that being the difference between the sale price and $5,924,000. (V-58 T-17 Q-582) Bloom submits that there is no adjustment for the $1,716,000 in Bushell’s affidavit or documents he has referred to.

The evidence and submissions from this point

forward commenced on October 19, 2020.

[462] In a partial recap, Bloom reminded the court that the growth/common MVO shares were settled into MVOFT and that the growth/common shares of 1338 were settled into SOFT.

[463] Dividends on some of the shares in 1338 and MVO are restricted to between one to three per cent of the redemption amount of the share.

[464] Based on the above dividend restrictions in 1338, Bushell’s testimony on his cross examination was to the effect that the maximum dividends which could have been payable to Sheila for her class A and B shares would have been in the neighborhood of $9,200 per year. Bushell is a partner with KPMG. KPMG authored a “summary of income” for Sheila showing dividend income from 1338 for the years 1998 to 2005 to be in the millions of dollars.

[465] In addition, the same report shows Sheila receiving management fees of several hundreds of thousands of dollars for the same time period, when it is her evidence that she did not do anything for 1338.

[466] Bloom submits that the over-payment of dividends and the payment of management fees is money that properly and legally belongs to the beneficiaries of the trust.

[467] There are three sources showing/suggesting the overpayments to Sheila, including records/reports of Rudson, KPMG and Zeifmans.

[468] In addition, at question 371 of Sheila's examination held on September 28, 2016, she said, “I took money from my numbered company (1338) to help pay for the Bermuda house…” when asked about the overpayment of dividends.

[469] While acknowledging that no claim has been brought against Val’s estate, Bloom submits that the same dividend overtaking was evident in MVOFT, and since trustees are jointly and severally liable, all of the trustees must account for any overtaking.

[470] He submits that the overtaking of dividends is clearly set out in the Rudson report, at an excess of $4,400,000. (V-58 T-12)

[471] Bushell swore an affidavit dated August 3, 2017. Based on that affidavit, the court allowed Sheila to withdraw previous admissions concerning her taking of approximately $5,000,000 from the proceeds of sale of the Bermuda property.

[472] Under cross examination, Bushell admits that he reviewed the Rudson report, yet there is no reference in his affidavit to the following:

(a) Where he considered the KPMG schedules which he helped produce. (Vol 45 Tab 12 Ques. 174) The schedule shows Val’s overtaking of dividends of over $16,000,000. (V-58 T-12 P-120/199)

(b) Where he considered the Rudson report showing potential excess dividend payments to Val of over $4,400,000. (V-58 T-12 P-24)

(c) Where he considered the $4,400,000 in debatable dividends, when arriving at his opinion that Sheila had a $5,900,000 entitlement. (V-45 T-12 Ques-269-272)

[473] He also did not include in his analysis, when arriving at the $5,900,000 entitlement, the approximately $6,000,000 that was advanced from MVO or MVOFT. (V-45 T-12 Ques 338-340)

[474] Although he agrees that there were potential excess dividends paid to Sheila of $4,700,000, that fact is also not in his affidavit. (V-45 T-12 Ques 287-291)

[475] Based on the Articles of Incorporation, Rudson’s statement with respect to excess dividends for the year 2000 appears to be correct. (V-46 T-18 Ques 390-394)

[476] He also agrees that $4,789,656 plus $637,352 should be deducted from Sheila’s shareholder loan of $8,572,122. This is also not in his affidavit. (V-47 T-18 Ques 413-415)

[477] Based on Bushell’s affidavit, the court allowed Sheila to withdraw admissions and to pay herself money from 1338 which came from the sale of the Bermuda property.

[478] As a result of the above, Bloom submits that Bushell potentially put in a false affidavit and that he was Sheila and Kalkstein’s expert witness.

[479] Bloom relies on the Ontario Court of Appeal case of Wall v. Shaw, 2018 ONCA 929, 43 E.T.R. (4th) 1, for the proposition that the Limitations Act, R.S.A. 2000, c. L-12, does not apply to passing of accounts proceedings. All estate trustees have a duty to keep proper books of account, and a judge may order the trial of an issue of any complaint and shall then make all necessary directions as to pleadings, productions of documents, discovery and otherwise in connection with the issue. (V- 66 Paras 21-25)

[480] At para. 47 the Court stated:

47 As this court noted in Armitage, an application to pass accounts does not possess the remedial characteristics typically associated with a civil lis between two parties…. a key difference between a passing of accounts application and the typical civil proceeding: a passing of accounts initiates a judicial “inquiry” into the affairs of the estate. A conventional civil “claim”, if successful, results in judgment in favour of the claimant. By contrast, after inquiring into a notice of objection on a contested passing of accounts, a judge “may order the executor… to pay such sum by way of damages or otherwise… to the estate,” but the form of judgment prescribed by r. 74.18(14) does not provide for any personal remedy in favour of the objecting beneficiary: Estates Act, s. 49(3).

[481] Bloom submits that the statement of claim set out in Volume 1, is simply the plaintiffs trying to have the court order the trustees to pay back money into the trusts.

[482] The Court in the Wall case went on to state the following at paras. 56, 57 and 61

56 Rule 74.18 was not designed for the summary passing of accounts process to become bogged down by time-consuming and cost-imposing pre-hearing motions. Appropriate directions for any necessary pre-hearing steps can be obtained from the application judge or case management judge in accordance with r. 74.18(13.1).

57 I regard Mr. Shaw’s motion to strike out Ms. Wall’s notice of objection as substantially akin to a motion for partial summary judgment. He sought to eliminate the only detailed notice of objection to his accounts by obtaining, prior to the hearing, a final evidence-based determination that Ms. Wall’s notice of objection had no effect because of acquiescence, laches or prescription. Had he succeeded, he would have cleared the way to seek an uncontested judgment on accounts.

61 Instead, a hearing on the merits was deferred until the “motion to strike” was argued in early 2018. Then this appeal was argued in October 2018. So, here the litigation stands, some two years after the hearing on the merits should have been held, mired in an unreasonable summary judgment-type motion by the estate trustee. That kind of litigation delay by an estate trustee who has been ordered to account for his administration of the estate is unacceptable.

[483] With respect to the duties and liabilities of trustees, the Ontario Court of Appeal in Cahill v. Cahill, 2016 ONCA 962, 26 E.T.R. (4th) 2017 (“Cahill (ONCA)”), at paras. 25-26 stated the following: (V- 43 T-5)

25 In The Law of Trusts 3d ed…. at pp. 154-55 Gillese J.A. describes the nature of the trustee’s role:

Trusteeship is an extremely onerous position. Trustees are subject to the specific duties created by the trust instrument and by legislation. In addition, they have a great many duties placed upon them by equity.

An understanding of the common law duties imposed upon trustees has as its starting point the fact that a trustee is a fiduciary. The trustee exists to administer the property on behalf of the beneficiary.

Because of the dependency relationship and the fact that the trustee controls the beneficiary’s property, the trustee is held to the most exacting standards of all fiduciaries.

26 Justice Gillese goes on to observe that a breach of trust occurs “whenever a trustee fails to fulfill his or her obligations with respect to the administration of the trust”, and liability arises whether the breach is innocent, negligent or fraudulent. Liability “exists even if the loss would have occurred without the breach. In general, liability is imposed not to punish the trustees but to restore the beneficiaries to the position they would have been in had the breach not occurred”: p.178.

[484] The Court further states at paras. 34 and 35, that “each trustee must actively consider his discretion and will not be exonerated for passively acquiescing in the actions of a co-trustee” and that there is “joint and several liability for all that is done in the name of the trust or through the exercise of the office of the trustee.”

[485] Bloom also relies on D.W.M. Waters, M.R. Gillen, and L.D. Smith, eds. Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012), at p. 978, where p. it states the following:

As Canadian common law now stands, no distinction can be drawn between the lay trustee and the professional trustee. Both are required to act as a prudent person, or, as he is sometimes called, the prudent businessperson, would act … the professional trustee is subject to no higher standard of care.

[486] Bloom submits that, based on the large volume of written information now produced, Sheila’s estate and Kalkstein can integrate the evidence and admissions produced from these proceedings into a full and proper accounting for the two trusts.

[487] He further submits that if they are unable to produce better accounts then that should be an admission for the trial.

[488] On the issue of abuse of process, the trustees have utterly failed to produce meaningful accounts that would allow the court to properly pass them. The evidence is clear that money has disappeared from the trust and the beneficiaries are entitled to know where it went. Sheila and Kalkstein have not come close to complying with the minimal informational requirements necessary to proceed with the passing of accounts.

Submissions by Grayson (Patrick, Tyler, Michael, Fuyoku, Loretta)

[489] Grayson agrees with the submissions of Bloom.

[490] He finds it shocking that Bushell would sign the affidavit that he did without referring to and acknowledging the issues that were raised by Bloom. Particularly, the approximately $5,500,000 in excess dividends and other smaller items that should have been deducted from Sheila’s shareholder’s loan. (V-46 T-18 Ques 413-415)

[491] Bushell further admitted that his affidavit did not account for other amounts which he agrees should have further reduced Sheila’s shareholder loan in the approximate amount of $728,473. (V-46 T-18 Ques 298, 353)

[492] Notwithstanding the fact that Bushell had the analysis from KPMG forensics, he simply took Zeifmanss’ numbers without doing any analysis.

[493] He submits that there is obviously a need for a further and better accounting due from the trustees.

Submissions by Rodenburg (OCL)

[494] Rodenburg agrees with the submissions of Bloom and Grayson.

[495] He took the court through a short history of the litigation, reminding the court that there was a litigation plan dated April 12, 2011, which expected the matter to be heard by December 31, 2011, now almost nine years ago.

[496] What was produced by the trustees were essentially bald accounts with accounting notes indicating that the accounts did not deal with the corporate entities 1338 or MVO. Those are the assets where all the action took place and contained most of the value of the trust.

[497] He submits that, perhaps on a very technical level, the accounts as filed complied with something, but they were and are absolutely meaningless to the beneficiaries of the trusts. Therefore, the beneficiaries had/have no idea whether the trusts were being properly administered.

[498] He submits that the case of William George King Trust (Re) (1994), 1994 CanLII 7497 (ON SC), 113 D.L.R. (4th) 701 (Ont. Gen. Div.) provides some precedent for this case. In that case, there were underlying corporations in the trust similar to the case at bar.

[499] Briefly, Mr. King established a holding company, Neve Investments Limited (“Neve”), to manage the assets in both of the trusts. The net effect was that the assets of each trust were transferred to Neve, and in return one half of the shares of Neve were issued to each trust. At pp. 11-12 the court stated the following:

His first objection is of a rather technical nature. He submits that, in law, Neve is a separate legal entity. The trustees manage Neve but in doing so they are conducting the affairs of that corporation. He submits that to allow them compensation in their capacity as trustees is to ignore the legal nature of a corporation, and indeed to ignore the provisions of the Corporations Act.

… It seems to me to be perfectly obvious that, in spite of the fact that it is indeed a separate legal entity, Neve is nevertheless simply a vehicle that has been established (presumably) for the greater benefit of the beneficiaries of the trusts. That vehicle can only operate through the intervention of others, and the intervenors are the trustees and no one else. Everything that the trustees do in the name of that vehicle they do in their capacity as trustees of the trusts. Any benefit received from that vehicle is received in their capacity as trustees of the trust. Therefore the trustees are required to account for the conduct of Neve as part of their overall obligation to account for the administration of the trusts, and if they are entitled to remuneration at all for their conduct of Neve, it must be granted to them by the beneficiaries of the trusts…

[500] Therefore, Rodenburg submits that the trustees must account for what went on in the corporations 1338 and MVO.

[501] All parties are essentially asking for the same thing, which is for the trustees to account for how they managed the trusts during the time they were trustees.

[502] Based on different documentation and affidavits, the value of Sheila’s shareholder’s loan was estimated at $9,000,000 in early 2016, $3,000,000 in September 2016, $8,500,000 in August 2017, and $3,100,000 in September 2018.

[503] Based on the court order allowing Sheila to withdraw her earlier admissions, which was based on Bushell’s questionable affidavit, Sheila withdrew approximately $5,500,000 from 1338 in June 2018.

Response by Figliomeni (Shelia’s Estate)

[504] With respect to Bloom’s submissions, Figliomeni states that Flynn J.’s order in 2008 found that the Bermuda property was owned by Sheila and Val as joint tenants and on Val’s death belonged solely to Sheila.

[505] Since no one appealed Flynn J.’s order, his decision remains binding until some further court order changes it.

[506] It is simply unfair to say that that the monies in the bank accounts for SOFT and 1338 were co-mingled because SOFT never had a bank account.

[507] Sloan J.’s order of November 5, 2018, authorizes Sheila to pay legal fees associated with these court actions from 1338. There has been no appeal of that order.

[508] The money that Shelia took out of the 1338 corporate account had been put in there from the sale of the Bermuda property, which at the time of the sale Sheila owned.

[509] The motion for a further and better accounting (V-1) is not a motion for directions as suggested by Bloom. It is a motion for a further and better accounting and there is no alternative request for directions in that pleading.

[510] Figliomeni poses the question, “what is a motion for a further and better accounting?” It is not like a further and better affidavit of documents under r. 30.06(b). A passing of accounts is to be a summary procedure guided by r. 74.18.

[511] Since nothing in the Rules contemplates a motion for a further and better accounting, this motion should be dismissed.

[512] Sheila’s estate trustee has no personal knowledge of the financial affairs of either of the trusts or the underlying corporations. It appears that, because they took the court through reams of financial records, all opposing counsel have all the information they need.

[513] The court appointed Rudson, who filed an 11 volume expert report. Numerous people have filed affidavits and have been cross-examined on them to the extent that they were available. With the possible, but unlikely exception of Kalkstein being able to assist, there does not appear to be any further material that will become available to help the parties and the court resolve the situation.

[514] Everyone had the luxury of the Rudson report costing well over $1,000,000, which has been available since early 2011. Therefore, what more do the opposing parties want the trustees to do?

[515] Figliomeni is not aware of any cases where the court has ordered a better and further accounting in an estate matter after a forensic audit has been completed.

[516] There is no evidence before the court from an accountant on what is missing and necessary to complete the passing of accounts, keeping in mind the documentation that has been produced, including the Rudson and KPMG reports and all the filed affidavits and examinations.

[517] In addition, he points to the affidavit of Zeifman. Zeifman is an accountant and his affidavit dated April 18, 2016, states the following:

(a) Justice Gordon’s order of March 28, 2008 appointing Rudson states, among other things, that the matters to be investigated include dividends paid out by 1338 and MVO: see para. 18.

(b) The Rudson reports provide the same information as is being requested in the O’Donovan motion: see para. 60.

(c) The Rudson reports were undertaken for the very purpose of analyzing the various transactions, preparing accounts for the trusts and preparing financial statements for the O’Donovan Corporations: see para. 80.

(d) After receipt of the Rudson report, Steven and Christopher indicated that they would hire an accountant to review it and give them an expert report. No such report has ever been delivered: see para. 39.

[518] Bushell’s affidavit was tendered for the narrow purpose of seeking to withdraw an admission. Often, in his cross examination, he is being asked theoretical questions and often he is just acknowledging facts.

[519] Figliomeni therefore submits that the court should dismiss Steven and Christopher’s claim and allow Sheila and Kalkstein to pass their accounts on an uncontested basis.

Response by Dawe (Kalkstein)

[520] Dawe submits that even though so-called not nice people can ask the court to enforce their rights, the court can take into account how parties acted and instructed their lawyers in the litigation.

[521] She makes a reference to the quote “so take your penalty of a pound of flesh …” from the Merchant of Venice, in relation to the vengeful and inflexible behaviour of Steven and Christopher as it relates to this family litigation. In this case, Dawe submits that Steven and Christopher did not avail themselves of the summary process or mediation and have attempted to enforce their rights in an egregious manner.

[522] Since Zeifmanss is not a party to any of the actions, he did not do a forensic report, but simply did compilations to assist Sheila when she moved some of her accounting work to KPMG after Val died in 2005.

[523] In answer to undertaking 153, neither Kalkstein or Zeifmans LLP were ever engaged to review the KPMG report for veracity and therefore never challenged it. To the best of her recollection, the KPMG report has also never been challenged directly by either Steven or Christopher. (V-30 T-24 P-902)

[524] The items called “debatable dividends” set out in the exhibits “DD” & “EE” of Christopher’s affidavit sworn December 23, 2015, were prepared by Francis Rodrigues, an accountant at Zeifmans LLP and were based on the conclusions of KPMG accountant, Paul Ross.

[525] With respect to the request for a further and better accounting, Dawe argues that it made sense to argue the motion to strike first. Bloom now describes his three volume motion record as a summary. Nothing could be further from the truth.

[526] Steven and Christopher have launched many different abusive attacks to try to get what they want and have been vindictive towards their mother.

[527] Dawe submits that the Wall case is not helpful to Bloom’s position. As can be seen from para. 56, a passing of accounts is to be a summary process and necessary directions could be asked for from the application judge or case management judge in accordance with r. 74.18(13.1). However, by filing their large three volume motion, Steven and Christopher have bogged everything down.

[528] Back in 2011, now almost nine years ago, a litigation plan was ordered, and all counsel were working on a consent order for directions. After those discussions had proceeded for some time, Steven and Christopher changed lawyers and tactics. Rather than instructing their new lawyers to continue working on an order for directions, the new lawyers filed an extremely large Request to Admit in 2012, which was responded to in 2013.

[529] After the response to the Request to Admit, counsel tried to get back to negotiating an order for directions, however there was silence for over a year when, once again, Steven and Christopher changed lawyers, this time to Bloom.

[530] It is simply disingenuous for Steven and Christopher to do all they did between 2011 – 2016, and now tell the court that they want a summary procedure.

[531] Dawe, like Bloom, relies on para. 47 of the Wall case which states the following:

47 As this court noted in Armitage, an application to pass accounts does not possess the same remedial characteristics typically associated with a civil lis between two parties…. a key difference between a passing of accounts application and the typical civil proceeding: passing of accounts initiates a judicial “inquiry” into the affairs of the estate. A conventional civil “claim”, if successful, results in judgment in favour of the claimant. By contrast, after inquiring into a notice of objection on a contested passing of accounts, a judge “may order the executor… to pay such sum by way of damages or otherwise… to the estate,” but the form of the judgment prescribed by r. 74.18(14) does not provide for any personal remedy in favour of the objecting beneficiary: Estates Act, s. 49(3).

[532] The court did not direct what is happening now and this is anything but a summary procedure. To use Rodenburg’s bus analogy, the trustees were driving the bus at the start, but Dawe submits that Steven and Christopher pushed them aside.

[533] She states that the trustee’s accounts were complete after the delivery of the Rudson report and that the passing of accounts should have occurred shortly after the time.

[534] With respect to Bloom’s comments on partial summary judgment, Dawe submits that Kalkstein’s motion is to dismiss the entire claim against him is based on many factors, including delay, his health, the plaintiffs’ abusive conduct, the passage of time and his limited role as a passive trustee. None of the much talked about dividends and management fees went to Kalkstein.

[535] Steven and Christopher acknowledge that all the information has been assembled to allow for a passing of accounts, but they want the trustees to do the compilations. The information includes the 11 volume Rudson report and answers to their large Request to Admit. (V-43 P-9)

[536] In addition, the summary proceedings went off the rails for many reasons, including Steven and Christopher commencing two actions in Toronto, which were/are basically identical to the actions they commenced in Kitchener, bringing a contempt motion against Kalkstein, lodging complaints with the Institute of Chartered Accountants on two occasions, and frequently changing lawyers and tactics, which always occurred when all the other counsel were working on an order for directions.

[537] Steven and Christopher are on record as placing their father Val on a pedestal and essentially saying that he could do no wrong.

[538] If how Val handled his duties and obligations as a trustee was not wrong, then whatever Sheila and Kalkstein did, was, according to the logic of Steven and Christopher, also not wrong. Based on what we know about the brilliance of Val as a businessman, he would have been the one to either substantially or entirely call the shots on how the trusts were managed up until late 2004 or his death in 2005. By far, the vast majority of Steven and Christopher’s complaints regarding dividends, management fees and the purchase of the Bermuda property, took place in the years before 2005.

[539] To state it another way, when Val was alive, he made all the decisions and therefore Steven and Christopher have to accept what he did.

[540] How can it possibly be said that Kalkstein did not act reasonably when he deferred to decisions made by Val, a person who appears to have been a brilliant engineer and businessman on the record currently before the court?

[541] In conclusion, Dawe submits that the three volume motion record should have never been brought, a summary procedure should have been used and there should be sanctions again Steven and Christopher for how they have used and tried to manipulate the court system.

Reply by Bloom to Dawe/Figilomeni Submissions

[542] Bloom submits that even if there is a negative perception about Steven and Christopher, they are still entitled to rely on the law as it currently is.

[543] Kalkstein is in no position to complain about the conduct of others while he remains in breach of a court order to pay $10,000 in costs. (V-58 T-8 P- 90 Ques-327)

[544] With respect to the issue of Steven and Christopher’s adulation towards Val, Bloom submits that if Val had been alive when the Bermuda property was sold, he would have paid the appropriate amount of the proceeds back to the trusts. There is no evidence before the court with respect to this allegation.

[545] With respect to Kalkstein, Sheila relied upon his expert accounting advice and did not provide any meaningful direction to him. (V-10 T-2 Paras. 35-36)

[546] Based on Butera v. Chown, Chairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 38, the court should not dismiss the claim against Kalkstein having regard to the pleadings as a whole, where it is clear that Sheila relied upon Kalkstein’s advice to carry out her duties as a trustee. This could very well lead to inconsistent findings.

[547] It is unfair to suggest that Steven and Christopher were being tactical. When faced with accounts replete with zeros and tens, someone had to try to narrow the issues and Steven and Christopher took on this role.

[548] Bloom submits that using an expert’s report to assist in the passing of accounts is common and was done in the case of Bikur Cholim Jewish Volunteer Services v. Penna Estate, 2009 ONCA 196, 94 O.R. (3d) 401.

[549] He suggests following the example of an order set out at para.181 of the case de Vries v. Resetar et al., 2010 ONSC 2602, 2010 ONSC2602, 58 E.T.R. (3d) 254, which states the following:

[181] Ms. Foster shall have 45 days within which to file a further and complete Application to Pass Accounts which shall include, to the extent available to Ms. Foster, all accounting records described in Rule 74(17) (10) of the Rules of Civil Procedure and must include all supporting and back up documentation. Ms. Foster has in her possession relating to any receipt or disbursement of Estate monies, whether into or out of the Estate bank account or Ms. Foster’s personal bank accounts. Any further documentation produced by Ms. Foster after this date shall either be on consent or with leave of the judge hearing the Application to Pass Accounts.

[550] In the case of Cahill (ONCA), at para. 25 the court stated the following:

25 In The Law of Trusts , 3d ed. … at pp. 154-55, Gillese J.A. describes the nature of a trustee’s role:

Trusteeship is an extremely onerous position. Trustees are subject to the specific duties created by the trust instrument and by legislation. In addition, they have a great many duties placed upon them by equity.

An understanding of the common law duties imposed upon trustees has as its starting point the fact that a trustee is a fiduciary. The trustee exists to administer the property on behalf of the beneficiary.

Because of the dependency relationship and the fact that the trustee controls the beneficiary’s property, the trustee is held to the most exacting standards of all fiduciaries.

[551] Bushell relied on Zeifmans LLP’s very low-level accounting review and even though he was aware of the KPMG report, he decided not to comment on it or show it to the court.

[552] Bloom suggested that at this time there should either be a further and better accounting, or the court should rely on the independent expert, Rudson report, to assist in passing the accounts.

Reply by Grayson to Dawe/ Figilomeni’s Submissions

[553] Grayson submitted that KPMG was retained in 2005 after Val’s death and not in 2012, with another retainer in 2007. Bushell makes a distinction between Shelia retaining KPMG and KPMG Forensics. (V-44 T-3 Para-1) (V-46 T-18 Ques-25, 26, 36, 64, 65)

[554] Bushell’s sets out the “two” entities in his affidavit dated August 3, 2017. (V-44 T-3)

[555] Dawe agrees that Zeifmans LLP did the accounting up until 2011. (V-30 T-18 P-847, 857, 860)

[556] Bushell stated that in closely held corporations, there is often an informal practice which essentially tidies up personal versus business/trust expenses at the end of the tax year. On his cross examination, he agreed it created a wrinkle here, because Sheila also had co-extensive fiduciary obligations to the beneficiaries as a trustee. (V-45 T-12 Ques-243-244)

Reply by Rodenburg (OCL) to Dawe/ Figilomeni’s Submissions

[557] Rodenburg submits that Steven and Christopher’s requests to admits are not duplications of the Rudson report. The filed trust accounting is not reflective of the Rudson report and merely contains zeros and tens. If the trustees are now saying that the Rudson report is so important, why did they not use it to put some meaning to their accounts.

[558] Sheila and Kalkstein should be using the Rudson and KPMG reports and whatever else they wish to use, to complete meaningful and proper accounts so that they can be passed.

[559] If it is now the trustee’s position that the Rudson and KPMG reports contain all of the information available to them, then the Rules will allow this matter to proceed.

[560] Based on all of the submissions to date, it appears that all of the information that is available is now before the court even though it may not be in the appropriate form.

[561] Therefore, Sheila’s unfortunate death is insignificant in the context of the passing of accounts.

[562] Unlike the allegations against Steven and Christopher for improper proceedings etc., no allegations whatsoever have been made against the beneficiaries represented by the OCL and therefore the passing of accounts must proceed in any event.

[563] In addition to paras. 25 and 26 of the Cahill (ONCA) case previously referred to, Rodenburg relies upon paras. 33, 34, 35, 37 & 40 which state:

33 The obligation of a co-trustee is well established and described in numerous textbooks on trusts and trustees. David Hayton, Paul Matthews and Charles Mitchell write in Law of Trusts and Trustees, 8th ed. … at p. 839:

It is not unusual to find one of several trustees spoken of as the ‘acting trustee’, meaning the trustee who actively interests himself in the trust affairs, and whose directions are merely endorsed by his co-trustees. The court, however, does not recognize any such distinction; for the settlor has trusted all his trustees and it beholds each and every one of them to exercise his individual judgment and discretion on every matter, and not blindly to leave any questions to his co-trustees or co-trustee.

34 Similarly, Carmen S. Thériault, in Widdifield on Executors and Trustees, looseleaf (2016-Rel. 9) 6th ed. … at para. 8.7.2, states:

Not only must trustees be unanimous in the exercise of their powers, but each trustee must actively consider his discretion and not be exonerated for passively acquiescing