Court File and Parties

COURT FILE NOS.: CV-20-00649435-00ES, CV-20-00650042-00ES DATE: 2021-07-21 SUPERIOR COURT OF JUSTICE – ONTARIO ESTATES LIST

IN THE MATTER OF THE ESTATE OF JOHN IHNATOWYCH, deceased

RE: Erica Berner, also known as ERIKA VON BERNER, Moving Party/Respondent AND: ULANA GORGI AND MARIAN IHNATOWYCH in their personal capacities and in their capacities as Estate Trustees of the Estate of JOHN IHNATOWYCH, Respondents/Moving parties

BEFORE: L. A. Pattillo J.

COUNSEL: James Dunphy, for the Moving Party/Respondent Justin de Vries and Karen Watters, for the Respondents/Moving Parties

HEARD: May 19, 2021 via Videoconference

ENDORSEMENT

Introduction

[1] There are two motions before the court. In the first, in application CV-20-00649435-00ES, Erica Berner ("Erica") seeks an order appointing an Estate Trustee During Litigation ("ETDL") in the Estate of John Ihnatowych, deceased (the "Estate"). The second, by Ulana Gorgi ("Ulana") in her cross-application CV-20-00650042-00ES, seeks an order evicting Erica from 3316 Dundas Street West, Toronto, (the "Property") and authorizing her, as Estate Trustee, to sell the Property.

[2] For the reasons that follow, I dismiss Erica's motion and allow Ulana's motion. In the circumstances, I consider that the appointment of an EDTL is not required or appropriate. Further, given the state of the Property and the finances of the Estate, I agree that the Property must be sold. Erica has satisfactory alternate accommodation available and her claims against the Estate can be protected.

Background

[3] John Ihnatowych ("John") died on May 2, 2020 at the age of 84. His health had been declining and he had mobility issues. He resided at the building on the Property in the lower of two residential units (the "Apartment"). The other residential unit was rented up until December 31, 2020 and has remained vacant since. There is also a commercial unit on the ground floor at the front of the building which remains leased.

[4] The Deceased left a Will dated May 12, 2009 which designates his children, Ulana and Markian Ihnatowych ("Mark"), as co-estate trustees. Mark has renounced his right to act and supports Ulana as Estate Trustee. As a residuary beneficiary, he opposes Erica's motion for an ETDL and supports Ulana's motion to sell the Property.

[5] The Will provides that the residue of the Estate, after payment of all debts and expenses and specific bequests be divided 10% to John's grandchildren alive at the time of his death, in equal shares per stirpes and the remaining 90% to his issue.

[6] Erica is 91 years old. She has two daughters from a previous marriage and a son. Her evidence is that she and John had a brief romantic relationship in the 1960's resulting in her son but the relationship ended before her son was born and she had no further contact with John until 2013 when they reconnected and she began living with him at the Apartment at his request. She has lived at the Apartment from 2013 up until his death and has continued to reside there following his death without paying any rent or utilities.

[7] In 2014, Erica obtained a subsidized apartment through Toronto Community Housing Corporation (TCHC) at 100 Cavell Avenue (number 537) in Toronto. Although she has not lived at the apartment, she has maintained it and uses it to store her furniture as the rent is cheaper than a storage unit. As late as August 2017, her address at Service Ontario was 537-100 Cavell Avenue.

[8] Erica alleges she was John's common-law spouse and her application claims dependent's support, unjust enrichment, quantum meruit, constructive trust and proprietary estoppel. She makes no claim in the application for a life interest in the Apartment. She has also filed an objection to Ulana acting as estate trustee. On her motion, in response to Ulana's motion, she asserts that John told her she could stay in the Apartment for as long as she wanted after he died.

[9] Ulana disputes that Erica's relationship with John was as a spouse. She also disputes that she has a life interest in the Apartment.

[10] The Will is silent in respect of Erica. Nor is there anything in writing from John about a life interest in the Apartment for Erica. In a video recording a few days before his death, John stated that Erica was to receive $50,000 from a life insurance policy. He also stated that the Property, "the place where I reside", is to go to his grandchildren.

[11] The Estate has two assets, a checking account with approximately $9,600 and the Property. While it receives income from the commercial tenant ($1,300/month) and signage on the building ($234/month), it has monthly expenses for hydro, gas utilities, insurance and taxes totaling $1,859.60. With the loss of the tenant in the second residential unit in December 2020, the Property been running a deficit since January 2021.

[12] In addition to funeral and other debts, the Estate has a tax liability of $135,135.51. Further, a site assessment carried out on the Property by Carson Dunlop Weldon & Associates Ltd. on July 9, 2020, concluded maintenance has been lacking and the Property requires several immediate repairs which over 2021/21 period were estimated to cost approximately $60,000. The building also has significant pest and odor issues which must be addressed.

[13] On May 7, 2021, the Toronto Fire Service issued two orders against the Property requiring the removal of "excess amounts of combustible material stored throughout the first story of the lower residential unit" and requiring construction of fire separation walls between the three units in the building. There is no estimate for those costs. Ulana says that the excess combustible material is clutter accumulated by Erica.

i. ETDL

[14] In support of her motion to appoint an ETDL, Erica submits that Ulana, as Estate Trustee is in a conflict of interest by opposing her claims for dependent support and quantum meruit and requiring that she vacate the Apartment. She characterizes Ulana's response to her claims as "selfish litigation interests".

[15] Both s. 28 of the Estates Act and rule 75.06(3)(f) provide for the appointment of an ETDL. The appointment of an ETDL is appropriate where a trustee is in an adversarial position towards a co-trustee or beneficiary. In such circumstances, the estate trustee should not normally be left in charge of trust property pending resolution of the litigation. Rather, a neutral trustee is required. See: Mayer v. Rubin, 2017 ONSC 3498 at para. 36 and Class v. Smith, 2018 ONSC 623.

[16] In this case, Erica is neither a co-trustee nor a beneficiary under the Will. Nor has she challenged the Will. At best, if her claims are successful, she is a creditor of the Estate.

[17] Ulana, as Estate Trustee under the Will, has a duty to administer the assets of the Estate to maximize their benefit to the beneficiaries of the Estate. In that role, she is required to oppose claims against the Estate. In so doing, while she is clearly in an adversarial role vis a claimant, that conflict does not give rise to the type of conflict of interest that requires the appointment of an ETDL.

[18] In the circumstances here, the appointment of an ETDL is neither appropriate of necessary. Erica's motion is dismissed.

ii. Eviction and Sale

[19] Ulana seeks an order permitting her to sell the Property as Estate Trustee and requiring Erica to vacate the Apartment to facilitate that. Given the state of the Estate's finances, she submits that the only appropriate course for the Estate is to sell the Property, requiring Erica to vacate the Apartment.

[20] As noted, Erica is 91. She has had a hip replacement and has arthritis in both knees. She has mobility issues which are accommodated by the Apartment, which is on two levels, by a stair lift for the stairs and a ground floor entrance. She has a stationary bike and a foot sauna which she uses regularly.

[21] Erica submits that her apartment at 100 Cavell Avenue is not suitable for her to live in. She says it is a bachelor apartment on the fifth floor in an old building and the elevators are often out of order, and it is not big enough to accommodate her exercise bike and foot sauna or to enable her to use her walker. Further, there was a fire in one of the units in 2020 and she is concerned for her safety, particularly because the apartment is on the fifth floor.

[22] Erica says she is prepared to allow any bona fide repairs to the Apartment and to facilitate the removal of the clutter, provided that the necessary COVID protocols are taken.

[23] Erica further submits that to evict her from the Apartment prejudges her claim for a life interest. While that claim has only been raised as a defence to Ulana's motion, I consider it to have been properly advanced. It cannot, however, be considered in a vacuum. The circumstances of the Estate must be considered too. In that regard, the evidence is clear that the Estate does not have the resources to pay off the Estate liabilities or carry out the required repairs to the Property which is its primary asset.

[24] Erica's proposal is to obtain a mortgage on the Property to cover those costs. She has provided no evidence as to the availability or cost of a mortgage. Ulana's evidence is that a mortgage will be difficult to obtain and likely cost a lot, to the ultimate detriment of the beneficiaries of the Estate. She submits the best course for the Estate is to sell the Property, as is, and let the purchaser conduct the necessary repairs.

[25] In my view, considering both Erica's interests and those of the Estate, I am satisfied in the circumstances that the best course for the Estate is to sell the Property which means that Erica must vacate the Apartment. Even assuming a mortgage could be obtained, given the repairs required as noted in the July 2020 site assessment and the Fire Service orders, Erica would have to move out of the Apartment in any event while the repairs were being done.

[26] I am also satisfied from the evidence that Erica has a suitable place to live. Ulana's evidence, based on her inquiries of TCHC and news articles she has found is that 100 Cavell Avenue is specifically dedicated to seniors and in 2019 it underwent accessibility improvements by TCHC. Further, the building has three elevators, two of which are brand new having been installed within the last two years. Finally, the 2020 fire was contained to one unit, all residents were safely evacuated, and the building's fire alarm and other life safety systems were fully operational at the time.

[27] I do not accept Erica's evidence that her apartment at 100 Cavell Avenue is not a suitable place for her to live. In my view, she has exaggerated her concerns about living in the apartment. The building is specifically for seniors and can clearly accommodate her mobility issues. It is arguably safer than the Apartment at the current time from a fire standpoint. I also do not accept that she can't accommodate her walker, exercise bike and foot sauna. While she will have to dispose of some or all of her furniture, either to her children or otherwise, she will have to do that eventually, in any event. While moving will no doubt be difficult, she has her children to assist her.

[28] I also do not consider that her claim for dependent's support etc. will be prejudiced by requiring her to move. It will continue against the Estate. While her claim for a life interest in the Apartment will disappear, in all the circumstances, even if successful, it cannot be accommodated by the Estate.

[29] For the above reasons, therefore, Ulana's motion is allowed. Erica is ordered to vacate the Property on or before August 20, 2021 and leave it in a clean and broom swept condition. Given the time which has elapsed since John's death and the motion, the additional time should be sufficient to enable her to move.

[30] Further, Ulana is authorized to sell the Property in her capacity as Estate Trustee.

Costs

[31] Both sides have filed Cost Outlines as well as brief costs submissions claiming costs for both motions together. Each side seeks partial indemnity costs from the other. Both sides submit the "loser pays" principle should apply.

[32] Erica claims partial indemnity costs for both motions totaling $14,893.80. Ulana seeks total partial indemnity costs of $24,872.15.

[33] The Estate was successful on both motions and is therefore entitled to its costs for both. Having reviewed the submissions and the Cost Outlines, and given the issues involved, I consider a fair and reasonable partial indemnity amount for both motions is $15,000 in total, split $5,000 for Erica's motion and $10,000 for Ulana's motion, payable forthwith.

[34] If Erica is unable or fails to pay such costs, they may be set off by the Estate against any award Erica obtains against it in her application.

[35] The balance of Ulana's full indemnity costs as set out in the Cost Outline shall be paid by the Estate on a full indemnity basis.

L.A. Pattillo J.

Released: July 21, 2021