Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Michael Shapiro, Applicant
AND:
Jack Shapiro and Tracy Shapiro, Objectors
BEFORE: Justice Patrick Hurley
COUNSEL: Ian McBride, for the Applicant
Kathleen McDormand and Stephen Victor, Q.C., for the Objectors
HEARD: June 10, 2021
ENDORSEMENT
Introduction
1This is a motion for directions under rule 75.06 by the objectors Jack and Tracy Shapiro. They are the widower and daughter of Carol-Sue Shapiro who died June 24, 2020. Her son, Michael Shapiro, has applied for a certificate of appointment of estate trustee with a will.
2There are two wills in dispute, a primary will and a limited property will, both dated October 31, 2018. The objectors allege that Carol-Sue made the wills at a time when she lacked testamentary capacity; that she did not have knowledge or approve of their contents; that they were made under suspicious circumstances; and were procured by undue influence.
3Michael’s position is that the motion should be dismissed because the objectors have not met the necessary evidentiary threshold to support their request that the wills be proved in solemn form. Even if they have, the order being sought by them is too broad and it should be limited to an examination of Martin Black, the lawyer who prepared the wills, the production of his file, and medical and hospital records for a three year period.
4Because their surnames are the same, I will use first names when I refer to the parties.
Should an order for directions be granted?
5In Neuberger v York, 2016 ONCA 191, Gillese, J. A. described the correct approach to rule 75.06 at para. 89:
In my view, an applicant or moving party under rule 75.06 must adduce, or point to, some evidence which, if accepted, would call into question the validity of the testamentary instrument that is being propounded. If the applicant or moving party fails in that regard or if the propounder of the testamentary instrument successfully answers the challenge, then the application or motion should be dismissed. If, on the other hand, the applicant or moving party adduces or points to evidence that calls into question the validity of the testamentary instrument which the propounder does not successfully answer, the court would generally order that the testamentary instrument be proved. In determining the manner in which the instrument be proved, the court would have recourse to the powers under rule 75.06(3).
6In Seepa v. Seepa, 2017 ONSC 5368, Justice Myers explained this requirement of an evidentiary threshold at paras. 39 – 40:
The scope of the court’s discretion under Rule 75.06(3) helps to assess the sufficiency of an “answer” to the “minimal evidentiary threshold.” I cannot offer much desirable certainty in this case. But discretionary decisions are generally not certain of outcome by definition. In my view, the court ought to measure the evidence adduced by the applicant challenger against the evidence answered by the proponent of the will and assess what, if any, processes are required to resolve any conflicts that the court cannot fairly resolve on the record before it. The court will be guided in making directions, as always, by the primary dictate to fashion a process that provides a fair and just resolution of the civil dispute. A fair and just resolution process is one that is developed to meet the goals of efficiency, affordability, and proportionality that underpin all civil cases as directed by the Supreme Court of Canada in Hryniak.
It must be borne in mind at all times that what is at issue is whether the court should exercise its discretion to require proof in solemn form. The applicant will not likely be able to prove the case on the merits. This is not summary judgment. The question is whether the applicant ought to be able to put the estate and the beneficiaries to the burden of proof, expense, and delay by requiring proof in solemn form and, if so, what process of proof in solemn form will best achieve that outcome, be consonant with the goals of the civil justice system, and recognize the particular concerns that are to be balanced in the estates litigation context.
7I find that the moving parties have met this threshold requirement.
8Carol-Sue died at age 74 of heart failure. The last few years of her life had been marked by serious and debilitating medical problems. She required daily care and assistance, much of which was provided by Jack. They had been married for over 50 years. In 2008, they made what are commonly referred to as “mirror wills”. Jack thought that was his wife’s last will until he found out otherwise from Michael who informed him in June 2020 that she had made another one in 2018 which reduced his entitlement to a bequest of $250,000 and a life estate in the matrimonial home on condition that he pay all the carrying costs. According to Jack, the bequest is actually the repayment of monies owed to him from the transfer of another matrimonial home to Michael and his spouse Nikki. Tracy was disinherited.
9Jack was a teacher by profession and Carol-Sue worked part-time as a secretary at a school. It appears that they had a middle-class lifestyle until Carol-Sue inherited millions of dollars from her parents who were quite wealthy. Her father Casey Swedlove died in 2006 and her mother Bessie in 2015.
10The affidavits of Jack, Tracy and Leiba Krantzberg outline the precarious health of Carol-Sue in the last years of her life and a history of controlling behavior by Michael which made Carol-Sue particularly vulnerable to his influence. This evidence, if accepted by the trier of fact, could result in a finding that the 2018 wills are not legally valid. This conclusion would mean that the last valid will of Carol-Sue was the one she made in 2008.1
11Michael chose not to file an affidavit to rebut the allegations of his father, sister and Ms. Krantzberg. Instead, he relied on the evidence of Jason David and Steve Parker.
12The former is a financial advisor with Polaris Wealth who witnessed the execution of the 2018 wills at his office. He does not explain the nature of his relationship with either Michael or Carol-Sue. He deposed: “While I cannot offer a legal or medical opinion about Carol-Sue’s mental capacity at the time of the execution, I can say that Carol-Sue conversed freely and with an apparent good understanding of her affairs.”
13The latter is an accountant who provided services to both Mr. Swedlove and Carol-Sue. In his affidavit, he describes Carol-Sue’s management of the money she inherited from her father, Michael’s participation in meetings with them about it and what he understood to be Carol-Sue’s estate planning. In his view, Michael was not “in any way acting improperly or exerting any undue influence” over her.
14This evidence supports Michael’s position that the 2018 wills are legally valid. But that is all it does. It is certainly not determinative and is far from the kind of cogent evidence that would cause me to effectively end the objectors’ challenge to the wills at this preliminary stage of the litigation.
15Before the hearing of this motion, Michael sought to cross-examine Jack, Tracy and Ms. Krantzberg. The objectors say that cross-examinations should not take place until after this motion is decided. As Myers, J. noted in Seepa, the principles of efficiency, affordability and proportionality apply in all motions, not just ones for summary judgment. Cross-examinations before there is any documentary discovery in this case are unlikely to accomplish anything of real benefit. They would only add to the legal costs and beget delay. Michael also declined to file an affidavit, thus shielding himself from any cross-examination. A fair and just resolution of this motion can be achieved without cross-examinations.
What should be the terms of the order for directions?
16Rule 75.06 (3) provides:
(3) On an application or motion for directions, the court may direct,
(a) the issues to be decided;
(b) who are parties, who is plaintiff and defendant and who is submitting rights to the court;
(c) who shall be served with the order for directions, and the method and times of service;
(d) procedures for bringing the matter before the court in a summary fashion, where appropriate;
(e) that the plaintiff file and serve a statement of claim (Form 75.7);
(f) that an estate trustee be appointed during litigation, and file such security as the court directs;
(g) such other procedures as are just.
17At the conclusion of the hearing, I asked counsel to provide me with their proposed draft orders.
18I will deal first with the relatively uncontentious terms. Both sides agree on the parties and the issues to be tried. They also concur that Mr. Black should be examined under Rule 31.10 and produce a copy of his file in relation to the 2018 wills but disagree on the scope of his examination and other documents in his possession, custody or control. They agree on the production of medical and hospital records but the objectors want all records from January 1, 2013 to the date of Carol-Sue’s death while Michael contends that they should be restricted to January 1, 2016 to January 1, 2019.
19I do not believe there should be any restriction on the scope of Mr. Black’s examination or the documentary production as proposed by Michael given Mr. Black’s involvement in the preparation of both the 2008 and 2018 wills and his past representation of both Jack and Carol-Sue. Any estate planning advice would be relevant as would be the transfers of the matrimonial residences.
20The objectors are also seeking to examine Mr. Black with respect to any payments, shares or personal property received by Carol-Sue from the estates of her mother and father which would include, presumably, the potential production of any documents in this regard. To the extent these questions and documents relate to Carol-Sue’s estate planning, they are relevant.
21There is a reference in paras. 12 and 13 of the objectors’ draft order to production of documents from other lawyers or law firms. If it turns out there are any such documents, notice will have to be provided to the lawyer(s) and, absent agreement on the disclosure of those documents, the objectors will have to bring a motion under Rule 30.10 to examine the lawyer or obtain the documents.
22On its face, the request for medical and hospital records from 2013 onwards seems overbroad, particularly when it comes to hospital records which can be voluminous and of little value in a case of this nature. A more reasonable period would be January 1, 2015 to the date of death and the records would be restricted to the treating physicians. With these in hand, the parties should be able to reach an agreement on what other hospital records should be obtained. If they cannot agree, another motion for directions can be brought.
23The costs of obtaining records should be borne by the estate at this stage subject to the judge presiding at the hearing making a final determination with respect to costs.
24It appears that the parties are in agreement on what are described as “miscellaneous” terms but, based on the submissions made at the hearing, it was my understanding that the costs of the motion remain in issue. If that is the case, I will allow the parties to make written submissons; otherwise, para. 21 of the objectors’ draft order is appropriate.
25I now turn to the disputed terms.
26The objectors are seeking the appointment of an estate trustee during litigation and have proposed that Travis Webb, an Ottawa lawyer, be it. Michael submits that there is no need for one in this case because the estate assets consist of a condominium, an investment portfolio managed by Mr. Parker and modest personal accounts.
27In Mayer v. Rubin, 2017 ONSC 3498, Myers, J. reviewed the jurisprudence at paras. 31 – 36:
Rule 75.06 (3)(f) provides for the appointment of an estate trustee during litigation. It does not point however to any specific source of the court’s authority to make the appointment. In my view, the power to appoint an estate trustee during litigation is an exercise of the court’s inherent jurisdiction to do justice among the parties before the court.
The purpose of an estate trustee during litigation is to ensure that the playing field is kept level. Dempster v Dempster, 2008 59588 at para. 24 (ON SC).
When dealing with trusts and estates, the court is primarily concerned with ensuring fairness to the participants. Section 37 of the Trustees Act is not a complete code. The court’s inherent jurisdiction exists in parallel with the court’s statutory powers to ensure fairness and practicality are maintained while litigation proceeds. Gonder v Gonder Estate, 2010 ONCA 172, at paras 21, 24, 41 and 42.
In appointing an estate trustee during litigation, the court will consider the balance of convenience. Marilyn Dietrich et al. v. Matthew Playfair et al., unreported decision of the Ontario Superior Court of Justice dated June 24, 2013, Court File No.2012-272, per Greer J. Recently, the court appointed an estate trustee to protect the estate from the trustees’ animosity in Henia Gefen v. Arie Gaertner et al., unreported decision of the Ontario Superior Court of Justice dated January 27, 2017. Court File No. CV-13-486451, per Newbould J.
In McColl v McColl et al., 2013 ONSC 5816, Greer J. made the point that the appointment of an estate trustee pending litigation whether under s. 28 of the Estates Act or Rule 75.06 (3)(f) is not extraordinary. In fact, she approved the suggestion in Estate Litigation, B. Schnurr, 2nd ed., (Thomson Reuters, looseleaf) at c.24.2 that “[a] decision to refuse the appointment should only be exercised in the clearest of cases”. She adopted the author’s further suggestion that the court will favour appointment in the vast majority of cases unless the administration of the estate involved is particularly straightforward or simple.
I agree. It is in the interests of all beneficiaries that the assets of the estate be immunized from the tactics employed by litigating parties. The court must protect the level playing field. Neither side should be able to use their control over the estate to benefit themselves or to prejudice the other. It is a simple inference that a trustee who is in an adversarial position towards a co-trustee or a beneficiary should not normally be left in charge of trust property. Simple prudence calls for the temporary replacement of a trustee who is in an adversarial position with a co-trustee or a beneficiary. It is not an insult to anyone’s integrity to understand that conflicts of interest are insidious. Conflicts of interest play havoc with peoples’ judgment of their own capacity to maintain neutrality and a fiduciary stance. The facts of this case make the truth of that proposition clear.
28This decision was recently followed by Parfett, J. in Baran v Cranston, 2020 ONSC 589 where she upheld the decision of Master Fortier appointing Mr. Webb as an estate trustee during litigation. She summarized the factors which I should consider at para. 24:
The decision whether to appoint an ETDL is discretionary. Some of the factors to be considered in determining whether the discretion to appoint an ETDL should be exercised include,
Whether a trustee may be a witness in the litigation;
Potential for conflict of interest;
Conflict between the interests of the trustees and/or beneficiaries;
Hostility between the trustees and/or beneficiaries;
Lack of communication between the parties; and
Evidence of settlement discussions that exclude some of the parties
29All of those factors apply in this case with the exception of the last one concerning settlement discussions.
30However, as she notes, it remains a discretionary decision. Although no issue is taken with Mr. Webb’s qualifications, I am concerned about the scope of the order being requested by the objectors if the estate is as uncomplicated as Michael asserts. Michael has not been forthcoming with information about the estate’s assets, refusing even to disclose the entire limited will. It is also unknown what, if anything, he has done with the estate assets. Instead of transparency, there is opaqueness. I am not implying that he has acted improperly but, to ensure fairness to all parties, I have concluded that Mr. Webb should be appointed on an interim basis and be given the authority set out in paras. 2(a)-(h) of the objectors’ draft order. I also find that paras. 5, 6 and 7 are appropriate.
31It is my expectation that Mr. Webb will be able to make the necessary inquiries and receive comprehensive information about the financial circumstances within a short period of time. He will report to the parties and they can, if so advised, bring a motion for further directions which would include a more fulsome evidentiary record. In my view, a judge will need this information in order to determine whether Mr. Webb should remain as estate trustee during litigation and what steps are necessary to preserve the assets of the estate pending a final resolution of the litigation.
32Given Mr. Parker’s longtime association with Mr. Swedlove and Carol-Sue, Mr. Webb should retain his services as an accountant and investment manager unless there is good cause not to.
33The objectors are also seeking the production of all financial records for the period January 1, 2013 to the date of death. As with the medical records, a more reasonable period would be January 1, 2015 to the date of death. There would also be the same provision with respect to the estate paying the costs of obtaining these records at first instance.
Summary
34I conclude that the appropriate terms of the order are paras. 1, 2(a)-(h), 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 20 and 21 (if agreed) of the objectors’ draft order subject to it being revised to accord with these reasons. I do not believe para. 18 is necessary because it is a duplication of para. 6.
35In the notice of motion, the objectors requested that I direct a mediation. This is not referred to in their draft order. Rule 75.1 applies to Ottawa so an order is unnecessary. The parties can bring a motion for any necessary directions under subrule 75.1.05 if there is a dispute over the process.
36In the event there remains a disagreement over the terms of the order, counsel can request a telephone or Zoom conference with me under Rule 59.04 to settle the order.
37I asked counsel to exchange costs outlines at the conclusion of the hearing. If they cannot reach an agreement on costs, the objectors shall file written submissions not to exceed two pages exclusive of their costs outline within ten days of the release of this decision and Michael has seven days in which to file responding submissions of the same length.
______________________________ Hurley, J
Date: June 22, 2021