Ernst v. Ernst

COURT FILE NO.: CV-22-684494-00ES

DATE: 20221006

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF ADRIANA ERNST, deceased

BETWEEN: PAUL ERNST, in his personal capacity and in his capacity as Estate Trustee of Adriana Ernst

Applicant/ Responding Party

AND:

JEANNE ERNST, in her personal capacity and in her capacity as Estate Trustee of Adriana Ernst

Respondent/ Moving Party

BEFORE: SANFILIPPO J.

COUNSEL: Angela Casey and Rebecca Suggitt, for the Applicant/Responding Party

David Derfel and Charlie Fuhr, for the Respondent/Moving Party

HEARD

(By videoconference): September 29, 2022

ENDORSEMENT

[1] The Respondent, Jeanne Ernst in her personal capacity and in her capacity as Estate Trustee for the Estate of Adriana Ernst, brought this motion, under Rule 37.14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to vary an Order rendered on August 9, 2022 on a motion in writing brought without notice (the “August 2022 Order”).

[2] For the reasons that follow, I have determined that the August 2022 Order shall be set aside on the basis of breach of the requirement, set out in Rule 39.01(6), to provide full and fair disclosure of facts material to the motion in writing.

A. Background

[3] The deceased, Adriana Ernst (the “Deceased”), died on February 17, 2022, with a will dated November 29, 2016 (the “2016 Will”). The 2016 Will names as estate trustees the Deceased’s children: Ms. Ernst; and the Applicant/Responding Party on this motion, Paul Ernst.

[4] Ms. Ernst deposed, in her affidavit sworn on September 9, 2022 and filed in support of this motion, that the 2016 Will is the third of three wills that the Deceased executed, the previous wills said to bear the dates of June 20, 2005 (the “2005 Will”) and November 18, 2011 (the “2011 Will”). Ms. Ernst deposed that all the wills were prepared by the law firm of Mills & Mills (the “Law Firm”). Ms. Ernst deposed that the value of her inheritance diminished from an equal distribution of the residue of her late mother’s estate between Ms. Ernst and her brother in the 2005 Will and the 2011 Will to an unequal distribution in favour of Mr. Ernst in the 2016 Will. Ms. Ernst swore that it is her belief that her mother may have lacked testamentary capacity when she executed the 2016 Will, or may have been unduly influenced at the time of execution of the 2016 Will.

[5] Mr. Ernst tendered the affidavit of Jennifer Jiang, a law clerk with his lawyers, sworn September 22, 2022. Ms. Jiang set out a history of communications between the parties’ lawyers regarding the Estate of the Deceased, including as follows:

(a) On April 27, 2022, Mr. Ernst’s lawyer wrote to Ms. Ernst’s lawyer, stating that Mr. Ernst understood that his sister intended to challenge the 2016 Will, and requesting confirmation whether Ms. Ernst had filed a Notice of Objection or renounced as Estate Trustee. Having not received a response, Mr. Ernst’s lawyer sent follow-up emails on May 18 and May 25, 2022.

(b) On May 25, 2022, Mr. Ernst’s lawyer spoke with Ms. Ernst’s lawyer and requested her position, and was told to expect a response that day. When none was provided, Mr. Ernst’s lawyer followed-up on May 26, June 1, and June 7, 2022, without reply.

(c) On June 8, 2022, Ms. Ernst’s lawyer replied that her client wanted to see the drafting lawyer’s file before determining whether she would challenge the 2016 Will and asked that a joint request be made to the Law Firm for the file material.

(d) On June 15, 2022, Mr. Ernst’s lawyer wrote to the Law Firm to request, jointly on behalf of both parties, the Law Firm’s file material in respect of the preparation of wills for the Deceased.

(e) On June 16, 2022, the Law Firm’s lawyer, Ms. Mayeski, responded that as Ms. Ernst had notified the Law Firm that she intended to challenge the 2016 Will, “there is no one in a position to waive” the privilege that attaches to the file material. Accordingly, Ms. Mayeski stated that “Mr. Mills will not be releasing his file absent a Court Order that expressly waives that privilege.”

(f) On June 16, 2022, Ms. Ernst’s lawyer wrote that she was seeking instructions and suspected that her client would want to obtain an order producing the lawyer’s file material. Mr. Ernst’s lawyer responded that day that Ms. Ernst must bring a motion to obtain the lawyer’s file, satisfying the requirements set out in Neuberger v. York, 2016 ONCA 191, 129 O.R. (3d) 721 and Seepa v. Seepa, 2017 ONSC 5368. Ms. Ernst’s lawyer replied that she would “run this by senior counsel and let you know.”

(g) Mr. Ernst’s lawyer followed-up on June 23, July 4, and July 11, 2022, writing: “We would like to proceed with the probate application as soon as possible” but first sought a response regarding whether Ms. Ernst intended to renounce as estate trustee.

(h) On July 22, 2022, Ms. Ernst’s lawyer wrote that Ms. Ernst “would like to receive an order to release the file” but as Ms. Ernst’s lawyer was about to begin a maternity leave, she stated that she would refer this matter to senior counsel who would be handling the matter in her absence. The same day, Mr. Ernst’s lawyer responded by email to argue against the will challenge that Ms. Ernst had under consideration, and to notify that: “Given the continuous delays, we will be filing a motion today seeking orders for assistance under rules 74.15(a) and (c).”

B. The Motion Brought Without Notice

[6] On July 22, 2022, Mr. Ernst brought a motion, in writing under Rule 37.12.1(1) because it was without notice, for relief under Rule 74.15, including the following: (a) An Order that Ms. Ernst must file an application for a Certificate of Appointment of Estate Trustee with a Will in the court office within 30 days after this order is served on her; (b) An Order that if Ms. Ernst did not file an application for a Certificate of Appointment of Estate Trustee within that time, she shall be deemed to have renounced her right to be appointed as the estate trustee (the “ex parte Motion”).

[7] The ex parte Motion was supported by the affidavit of Mr. Ernst sworn July 21, 2022. Mr. Ernst’s affidavit consisted of 7 paragraphs, all but one of which recited uncontested background facts. The sole paragraph of Mr. Ernst’s affidavit with direct evidence in support of the relief sought was para. 7, which stated as follows:

Despite repeated requests from my counsel to hers, Jeanne has not yet advised whether she will be making an application for a Certificate of Appointment of Estate Trustee with a Will or renouncing. I am advised by my lawyer and verily believe it to be true that Jeanne’s counsel has not responded to correspondence from my counsel since June 15, 2022.

[8] I pause to observe that Mr. Ernst’s affidavit evidence that his lawyers had not “responded to correspondence from my counsel since June 15, 2022” was correct when the affidavit was sworn by Mr. Ernst on July 21, 2022. However, it did not tell the full story at the time the affidavit was filed on July 22, 2022, as Ms. Ernst’s counsel had responded that day to convey that Ms. Ernst sought an order to release the drafting lawyer’s file material. Mr. Ernst’s affidavit was not updated and was the only evidence on this motion in writing.

C. The August 2022 Order

[9] On August 9, 2022, Justice Dietrich granted the order sought in the ex parte Motion as follows:

1. THIS COURT ORDERS THAT you must file an application for a certificate of appointment of estate trustee with a Will in the court office within 30 days after this order is served on you.

2. THIS COURT ORDERS THAT if you do not do so within that time, you shall be deemed to have renounced your right to be appointed as the estate trustee of the deceased’s estate.

[10] This August 2022 Order was sent to Ms. Ernst’s lawyer on the date of its issuance.

[11] On September 8, 2022, Ms. Ernst’s lawyers served a “Notice of Motion to Amend and Vary an Order” in the within motion. On September 12, 2022, Ms. Ernst’s lawyers served the Motion Record in this motion for hearing on September 19, 2022. The motion was rescheduled to September 29, 2022.

D. This Motion

[12] This motion is brought under Rule 37.14(1)(a), which provides that “a party or other person who is affected by an order obtained on motion without notice … may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.”

[13] Ms. Ernst sought an Order varying the August 2022 Order in a manner that went well-beyond the scope of the ex parte Motion and, indeed, sought to re-write the August 2022 Order, as follows:

That an Application by [Ms. Ernst] and/or [Mr. Ernst] shall be filed within 30 days of their receipt of all documents and records in the possession and/or control of [the Law Firm] relating to the testamentary documents and creation of testamentary documents related to [the Deceased].

That if [Ms. Ernst] or [Mr. Ernst] do not file an Application within 30 days of their receipt of all documents and records in the possession and/or control of [the Law Firm] relating to the testamentary documents and creation of testament documents related to the Deceased, either one shall be deemed to have renounced their right to be appointed as the estate trustee.

An Order compelling [the Law Firm] pursuant to Rule 30.10 to deliver up all documents and records … in their possession or control relating to the testamentary documents and creation of testamentary documents related to the Deceased to [Ms. Ernst] and [Mr. Ernst] within thirty (30) days from the date of the Order.

E. Analysis

[14] I will deal first with whether Ms. Ernst brought this motion “forthwith after the order” came to her attention, as required by Rule 37.14(1)(a). Ms. Ernst brought this motion 29 days after the August 2022 Order came to her attention. While the motion could have been brought sooner, I am prepared to accept that the motion was brought promptly within the time frame permitted by Rule 37.14(1)(a) in the circumstances of this case, which include the transition in the carriage of the matter by reason of the maternity leave taken by the lawyer initially handling this matter on behalf of Ms. Ernst.

[15] I turn next to the nature of the Order to vary sought in this motion. The moving party seeks more than a variation. The moving party sought a complete re-write of the August 2022 Order involving relief that might be sought under Rules 30.10 and Rule 75 but that was not sought, or capable of having been sought in the ex parte Motion. Had the motion been brought under Rule 75, it would have engaged the principles set out in Neuberger, Seepa and most recently Johnson v. Johnson, 2022 ONCA 682. None of this was raised by the ex parte Motion and cannot be sought as new and further relief on this motion to vary under Rule 34.17. I thereby declined to grant the variation sought by Ms. Ernst of the August 2022 Order.

[16] I turn to whether the moving party has established a basis for the August 2022 Order to be set aside. Ms. Ernst argued that the August 2022 Order should be set aside on the basis that Mr. Ernst failed to provide full and fair disclosure of material facts, and because it was improperly obtained without notice, in that Ms. Ernst had made clear that she intended to have a role in the determination of her mother’s estate and intended to move to seek disclosure of the Law Firm’s file.

[17] Rule 39.01(6) provides as follows:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

[18] The moving party contended that Mr. Ernst’s affidavit in support of the ex parte Motion breached Rule 39.01(6) in the following ways:

(a) Mr. Ernst’s statement that Ms. Ernst’s lawyers had not responded to correspondence from his counsel since June 15, 2022 did not set out the complete facts pertaining to communications between counsel when the affidavit was filed on July 22, 2022.

(b) Mr. Ernst did not fully and fairly disclose the stated intention on the part of Ms. Ernst to obtain a copy of the drafting lawyer’s file, and that Mr. Ernst had joined into this joint request for the file production.

(c) Mr. Ernst did not set out that Ms. Ernst was taking the position that she be provided with an opportunity to review and consider the drafting lawyer’s file before deciding whether to renounce her position as an estate trustee.

[19] Mr. Ernst’s lawyers contended that orders for assistance under Rule 74.15(1), like here, are permitted to be brought without notice, in accordance with Rule 74.15(2): “A motion under subrule (1) may be made without notice, except a motion under clause (1)(e), which requires 10 days’ notice to the estate trustee.” No doubt, motions under Rule 74.15(1) may be brought without notice, where appropriate.

[20] However, when a motion under Rule 74.15 is appropriate to be brought without notice, it is not exempted from the requirements of Rule 39.01(6) and is thereby not immune from being set aside when there has been a breach of the requirement of full and fair disclosure of material facts. I find that, in the circumstances that were present on July 22, 2022, Mr. Ernst did not make full and fair disclosure of material facts. There is no doubt that Mr. Ernst stated that Ms. Ernst was represented by counsel, but he did not disclose in his affidavit that: (i) Ms. Ernst’s lawyers were engaged and had responded to the position stated by Mr. Ernst; (ii) Ms. Ernst intended to move to seek production of the Law Firm’s file regarding the deceased’s wills; (iii) that Mr. Ernst had joined in this request but that it was declined by the Law Firm; (iv) that Ms. Ernst sought an opportunity to obtain, review and consider the drafting lawyer’s file prior to taking the next step in the estate.

[21] Rule 39.01(6) is clear that failure to make full and fair disclosure of material facts “is in itself sufficient ground for setting aside any order obtained on the motion or application.” Having found that there was a failure of full and fair disclosure, I have concluded that the August 2022 Order shall be set aside on this basis alone.

[22] Had it been necessary, I would also have found that the August 2022 Order be set aside by failure to bring the motion on notice to Ms. Ernst. In my view, the permissive wording of Rule 74.15(2) does not exempt a party from providing notice of the motion under Rule 74.15(a) where, like here, the party opposite has responded, has engaged counsel who has joined into the issue and has stated a position that is inconsistent with, or contrary to the relief sought, such that the relief sought can be presumed to be contested.

F. Conclusion

[23] On the reasons now stated, I conclude that the August 2022 Order shall be set aside on the basis of failure to provide full and fair disclosure, in accordance with Rule 39.01(6). Had it been necessary, I would have found that the August 2022 Order be set aside as a result of the failure to bring the motion on notice.

G. Costs

[24] Mr. Ernst submitted that any costs to which Ms. Ernst is entitled should be paid by the estate, as should the costs incurred by him in resisting the motion to vary, as they were reasonable in the administration of the estate, relying on Brown v. Rigsby, 2016 ONCA 521, 350 O.A.C. 236, at para. 11.

[25] I do not accept this submission. As the Court of Appeal stated in Johnson, at para. 21, estate litigation is subject to the same considerations on issues of costs as civil litigation except for those exceptional instances in which public policy permits payment of costs by the estate, citing, McDougald Estate v. Gooderham (2005), 2005 CanLII 21091 (ON CA), 199 O.A.C. 203 (C.A.), at paras. 78-80; Salter v. Salter Estate (2009), 2009 CanLII 28403 (ON SC), 50 E.T.R. (3d) 227, at paras. 5-6. I am not satisfied that there is a public policy consideration arising from the response to the motion to vary that would support payment of the cost award from the property of the estate.

[26] As I have rejected the responding party/Applicant’s arguments in support of the public policy basis for defence of the motion to vary, the cost rules in civil litigation are applicable. The moving party/Respondent, Ms. Ernst, was successful on this motion to vary and is therefore presumptively entitled to an award of costs: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 111 D.L.R. (4th) 589 (Ont. C.A.); Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal denied, 2014 ONCA 353. Ms. Ernst sought an award of partial indemnity costs in the amount of $5,090.00, all inclusive, payable by Mr. Ernst.

[27] The responding party/Applicant, Mr. Ernst, submitted that the amount of costs payable to Ms. Ernst should be discounted to reflect the following: (i) the motion to vary brought by Ms. Ernst sought relief that was overly broad, and not properly the subject of a motion to vary, necessitating a more expansive response by Mr. Ernst than ought to have been required; (ii) the motion in writing was brought because there had been periods of delay by Ms. Ernst’s lawyers, which ought not to be countenanced; (iii) Ms. Ernst’s delay in committing to a position caused costs to be incurred unnecessarily.

[28] I accept that the moving party/Respondent caused this motion to be much more complicated than was necessary. The moving party/Respondent improperly sought to include motions under Rules 30.10 and 75, which disproportionately – and unnecessarily - expanded the expense associated with the parties’ written and oral submissions. In the result, the moving party/Respondent was successful in setting aside the August 2022 Order, but not in achieving the variation that was sought.

[29] Having considered the factors listed under Rule 57.01(1), and recognizing that the award of cost must be reasonable, fair, and proportionate, as stated in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 38, I award Ms. Ernst costs of this motion fixed in the amount of $2,000, all inclusive, payable by Mr. Ernst.

H. Disposition

[30] On the basis of these reasons, the Order rendered without notice on August 9, 2022 is set aside. The moving party/Respondent, Jeanne Ernst, is awarded costs fixed in the amount of $2,000, all inclusive, payable by the responding party/Applicant, Paul Ernst.

Justice Sanfilippo

Date: October 6, 2022