Court File and Parties

Court File No.: 65402/18 Date: 2022-01-07 Superior Court of Justice – Ontario

Re: Patricia Anne Kay, personally and as estate trustee for the estate of Anne Patricia Kay, Bernard John Kay, personally and as estate trustee for the estate of Anne Patricia Kay, and Randy William Kay, personally and as estate trustee for the estate of Anne Patricia Kay, plaintiffs And: Anthony Wellenreiter, defendant

Before: Mr Justice Ramsay

Counsel: Leslie M. Giroday for the plaintiffs; Jonathan Miller for the defendant

Heard: January 7, 2022 at Hamilton

Endorsement

[1] The plaintiffs move to amend the statement of claim. The defendant consents.

[2] The defendant moves for production of minutes of settlement of nine actions in which the plaintiffs and their siblings were parties in connection with the administration of their mother’s estate. The defendant asks in the alternative for leave to add the plaintiffs’ siblings as third parties. Finally he moves for leave to amend his statement of defence.

[3] Anne Kay died in 2015. She left the residue of her estate in eight equal shares to her seven surviving children and the daughter of her predeceased child. She appointed as executors her daughter Patricia and her sons Bernard and Randy. The will has never been contested.

[4] The defendant was Anne’s solicitor. He represented her when she severed her property into three lots in 2008 and for a few years thereafter. The deceased kept one lot, the King Street property. She transferred one lot, 1 Battlefield, to Patricia in trust for herself. She transferred another lot, 1 ½ Battlefield, to Danny. Anne mortgaged the King Street property. Later she refinanced. Some of the proceeds of the new mortgage on the King Street property were given to Danny and Paul. When Anne died, the mortgage was repaid from the value of the King Street property.

[5] The executors sued Danny and Paul for repayment of the money that had been advanced to them and for the proceeds of sale of the lot that had been transferred to Danny. They also sued the defendant for his work as Anne’s solicitor. Anne’s daughter, Suzie, who had lived with Anne, sued the estate for support and for services rendered to the deceased during her lifetime. Another daughter, Kathryn Lanari, sued for a declaration that Patricia held her lot in trust for the estate and applied successfully to have the estate trustees removed.

[6] On March 18, 2019 Sweeny J. removed the trustees and replaced them with an estate trustee during litigation: Lanari v. Kay, 2019 ONSC 1506. The new trustee then entered into mediation with the children about their various lawsuits. They came to a comprehensive settlement which is reflected in written minutes. A term of the settlement is that it be kept confidential.

[7] As part of the settlement, the estate assigned its interest in the present action to Patricia and Bernard. Randy discontinued. The remaining plaintiffs are, therefore, Patricia and Bernard. If the minutes of settlement are not produced, the defendant wants to add the other six residual beneficiaries of the will as third parties.

[8] The plaintiffs refuse to disclose the entire minutes of settlement without a court order. Furthermore, they say that such an order should not be made. They have moved to amend their statement of claim to provide that they are only seeking from the defendant damages for his personal acts. They renounce any claim for contribution by him for the acts of others. They submit that disclosing the minutes of settlement would not be in the interest of justice, that it could upset the settlement and that the contents of the minutes of settlement are not relevant to the present action given the amendment to the statement of claim. They also oppose granting leave to add third parties.

[9] The defendant does not oppose the amendment to the statement of claim but maintains that disclosure of the minutes of settlement and the ability to add third parties is still necessary to enable him to defend the action.

[10] The statement of claim alleges the following basis for the defendant’s negligence:

21. The Defendant was negligent and failed in his professional responsibilities and fiduciary duties to Anne, by neglecting to assist her to make appropriate legal and documentary provisions respecting: a) The transfer of the l ½ Battlefield property to Danny without payment of consideration; b) The mortgage to First Ontario, advancement of mortgage proceeds solely to Danny, and Danny's failure to repay his debts; c) The mortgage to Home Trust, advancement of mortgage proceeds to Danny and Paul, and Paul and Danny's failure to repay debts; d) The repayment of Anne's debts owed to Tricia and other children of Anne's; e) The arrangements for payment by Anne or her Estate, of personal care compensation to Suzie; f) The timely advancement and completion of an estate plan aligned with Anne's intentions and goals; By such failures and breaches of his duties as aforesaid, the Defendant has caused losses to Anne's Estate, increased costs to Anne's Estate, and created the potential disappointment and losses to the known residuary beneficiaries of Anne's Estate.

[11] The amended statement of claim adds the following paragraph:

The Plaintiffs' claims against the Defendant Wellenreiter are limited and confined to only that proportionate share and responsibility of damages sought by the Plaintiffs that is Wellenreiter's and his alone, for the relative degree of fault that is attributable to the defendant's negligence alone.

Disclosure of the minutes of settlement

[12] The plaintiffs argue that disclosure of the terms of the settlement might upset it and that it would damage potential litigants’ confidence in the enforceability of settlements.

[13] Encouraging settlement of civil actions is an important public interest. Confidentiality is often an important factor in the decision to settle. For that reason, settlement discussions and the amount involved are privileged. The privilege has exceptions. See Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, paragraph 19. Exceptions can be made for competing public interests of sufficient weight. If an exception is made, a confidentiality agreement does not bind the court.

[14] The confidentiality clause in the present case provides that the parties shall not disclose or produce any information in connection with the minutes of settlement “except to the extent required by law.” On the terms of the minutes themselves, disclosure in compliance with a court order would not constitute a breach of the agreement. It would not upset the settlement.

[15] The principles that govern disclosure in civil cases are relevance and proportionality: Rule 30.02, Rule 1.04 (1.1). The potential undermining of potential litigants’ trust in confidentiality clauses is relevant to proportionality.

[16] The plaintiffs both depose, “Other than the details related to the assignment of the within proceeding … the MOS did not contain any terms, conditions or provisions which relate to the substantive particulars of the claims against Mr Wellenreiter contained in this action.”

[17] I am not prepared to act on this statement. First, it is not particularly convincing when a witness deposes as to the contents of a document while refusing to disclose it.

[18] Second, the statement is not strictly factual. It also involves a question of law.

[19] Third, the plaintiffs are contradicted by their own lawyer. Shortly after the minutes were drafted and just before they became final, on February 28, 2020 their lawyer, Ms Giroday, wrote to the defendant’s counsel in the following terms:

Because certain terms of the settlement pertain both to the estate’s and to my clients’ claim against Anthony Wellenreiter, I would like to discuss certain settlement terms with you. In advance of doing so, however, I am requesting that you confirm that any information, terms and/or conditions of the settlement that are shared in the course of such discussions with you, will be kept confidential and will not be disclosed to others.

[20] The defendant’s lawyer declined to give the requested assurance, so the discussion did not take place. Not only does Ms Giroday contradict her clients, she has in effect admitted on their behalf that certain terms of the settlement “pertain to the … claim against Anthony Wellenreiter.”

[21] Finally, the statement cannot be right. Even without reference to Ms Giroday’s admission of February 28, the record establishes that the minutes are plainly relevant. The plaintiffs have to prove negligence, causation of injury and quantum of damages. To prove damages they have to prove how much they lost. How much they lost depends on what they settled for. The defendant cannot defend himself unless he knows whether by settling the plaintiffs have eliminated, reduced or mitigated their damages. For example, the defendant has a vital interest in knowing whether Danny and Paul repaid the money advanced on the King Street property and what became of the two properties on Battlefield.

[22] The plaintiffs argue that the amendment to the statement of claim makes the settlement irrelevant. I do not accept this argument. On the facts pleaded, there is no way to limit the plaintiff’s claim “to only that proportionate share and responsibility of damages sought by the plaintiffs that is Wellenreiter's and his alone, for the relative degree of fault that is attributable to the defendant's negligence alone.” The unjust enrichment of the non-parties defines the defendant’s liability for damages.

[23] There is a public interest in a fair trial. In a fair trial, the defendant has a meaningful right to make his case. There is also a public interest in preventing a plaintiff from being overcompensated. On the particular facts alleged in the case at bar those interests outweigh the public interest in encouraging settlement.

[24] I have no reason to believe that the minutes may contain sensitive material that should be reviewed by the court before they are disclosed. Nor is it necessary to review them to know whether they are relevant. They should simply be disclosed.

The third party claim

[25] The motion to issue a third party claim is an alternative to disclosure of the minutes of settlement. Having ordered production of the minutes of settlement I do not need to decide it. I observe only that Rule 29.02(1.2) provides that a third party claim may be issued at any time with leave, “which the court shall grant unless the plaintiff would be prejudiced thereby.” The plaintiffs have not claimed any prejudice to their position. That would have been enough to grant the motion.

[26] Prima facie, the defendant’s claim against the third parties would fall within Rule 29.01(b). Again, it is conceptually impossible to limit the claim against the defendant to his own negligence without reference to the unjust enrichment alleged against the non-parties. Cases such as Taylor v. Canada (Attorney General), 2009 ONCA 487 would be distinguishable on that basis.

Amendment of the statement of defence

[27] The proposed amended statement of defence addresses the settlement, which had not taken place when the original statement of defence was filed. The defendant also particularizes his defence to the claims of negligence. There is no prejudice to the plaintiffs in allowing the amendment and the plaintiffs are not necessarily opposed in any event.

Conclusion

[28] The plaintiffs are given leave to amend their statement of claim as asked.

[29] The plaintiffs are ordered to produce the minutes of settlement demanded by the defendant within 30 days.

[30] The defendants are given leave to amend the statement of defence as asked.

[31] The parties may make submissions to costs not exceeding three pages in length, to which may be appended a bill of costs and any offers to settle, the defendant within 7 days and the plaintiffs within 7 further days.

J.A. Ramsay J. Date: 2022-01-07