COURT FILE NO.: CV-20-3068-ES

DATE: 20220225

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE OFFICE OF THE PUBLIC GUARDIAN AND TRUSTEE in its capacity as Litigation Guardian of Othelia Renata Pelikan, Applicant

AND:

ERIK BOSTROM in his capacity as attorney for property or otherwise as a fiduciary of OTHELIA PELIKAN, SOPHIA BOSTROM, JESSICA MENEZES LIMA, CARINA HERMANSSON, and VALKYRIE NINE LTD., Respondents

BEFORE: Dietrich J.

COUNSEL: Matthew Rendely, Laya Witty, and Kimberly Whaley, for the Applicant, The Office of the Public Guardian and Trustee in its capacity as Litigation Guardian of Othelia Renata Pelikan

Paul Trudelle, for the Respondent, Jessica Menezes Lima

Spencer Toole, for the Respondent 200 Dunn Inc.

Tanisha Tulloch, for Carina Maria Hermansson

Samantha Preshner, for the Respondent, Office of the Children’s Lawyer

HEARD: February 22, 2022

ENDORSEMENT

Overview

[1] The Public Guardian and Trustee (the “PGT”) brings this summary judgment motion in its capacity as Litigation Guardian of Othelia Renata Pelikan (“Ms. Pelikan”). The respondents are Erik Bostrom (“Erik”) in his capacity as an attorney for property or otherwise as a fiduciary of Ms. Pelikan, and Valkyrie Nine Ltd. (“Valkyrie”), a private corporation controlled by Erik. The motion is brought with respect to certain matters pleaded in the PGT’s within application.

[2] The motion is proceeding in accordance with Justice Gilmore’s Order Giving Directions dated February 17, 2022. The issues to be determined, as set out in that Order, are a) whether Erik and/or Valkyrie are liable to Ms. Pelikan for breach of fiduciary duty at statute, law or equity, and if so, the damages flowing therefrom; b) whether Erik and/or Valkyrie are liable to Ms. Pelikan for conversion of Ms. Pelikan’s real property, and if so, the damages flowing therefrom; c) whether Erik and Valkyrie are liable to Ms. Pelikan for misappropriation or conversion of personal property in the sum of $150,015; d) whether Erik is liable to Ms. Pelikan for breach of fiduciary duty or conversion in respect of a mortgage loan, in the principal amount of $1,500,000 from proceeds of sale of a property owned by Ms. Pelikan, made to 200 Dunn Inc. in the form of a vendor take back mortgage, and if so, the damages flowing therefrom; e) whether Erik is in contempt of court for his failure to comply with the orders of this court requiring him to pass his accounts; and f) whether Erik should pay security for costs.

[3] Carina Hermansson is a respondent in the application. Justice Gilmore’s Order permits her to deliver materials and/or appear on the summary judgment motion on terms. Ms. Hermansson is or was a director of the respondent Valkyrie. She seeks a declaration that she is not liable as a former director and/or officer of Valkyrie for any payment found owing to Ms. Pelikan.

[4] For the reasons that follow, the PGT’s summary judgment motion is granted with respect to the relief sought regarding issues a), b), c), and d) above. The record filed with the court in advance of the motion does not support an order for contempt against Erik. This determination is without prejudice to the PGT to seek such an order at a later date. The PGT did not pursue the relief described in f) above. I decline to grant the relief sought by Ms. Hermansson. She did not comply with Justice Gilmore’s Order that she serve and file her materials by 4:00 pm on Monday, February 21, 2022. Instead, she attempted to file materials during the course of the hearing. There is no evidence that these materials were served on any other party, or that any other party has had an opportunity to respond to them.

Background Facts

[5] Ms. Pelikan is 61 years of age. She has suffered from chronic schizophrenia since the age of 23 years. It is alleged that Ms. Pelikan executed a form of Power of Attorney for Property on May 27, 2016 (the “Power of Attorney”), in which she appointed Erik as her attorney for property. The validity of the Power of Attorney and the authenticity of the grantor’s signature have been called into question in the within application. By order of Justice Gilmore dated April 9, 2021, the Power of Attorney was suspended.

[6] Ms. Pelikan self-requested a capacity assessment, was assessed by a capacity assessor on November 26, 2019, and found by the assessor to be incapable of managing her property. The PGT has been acting as Ms. Pelikan’s statutory guardian since then. On May 12, 2020, Ms. Pelikan was found by a capacity assessor to be incapable of revoking the Power of Attorney.

[7] Based on the record, Erik, a former boyfriend of Ms. Pelikan, has been involved in the management of Ms. Pelikan’s property since 2009. It is alleged that between 2009 and 2020, Erik misappropriated property owned by Ms. Pelikan with a value of approximately $4 million. The PGT has reason to believe that Erik had stewardship of Ms. Pelikan’s property during this period, and the PGT is continuing its investigation to determine the full extent of the alleged misappropriation.

[8] The record shows that between 2014 and 2017, Ms. Pelikan was hospitalized from time to time owing to her medical condition. On her release, she was referred to Reconnect Community Health Services for assistance in managing her symptoms and living in the community.

[9] Ms. Pelikan owned a five-unit residential building at 200 Dunn Avenue (the “Residence”), in the City of Toronto, which she had purchased in 1984. Ms. Pelikan rented out four of the units and resided in the other until around September 2015. Erik also resided there sometimes, including on September 8, 2016. On that day, while Ms. Pelikan was being treated as a patient at a psychiatric facility at St. Joseph’s Health Centre in Toronto, Erik registered a copy of the Power of Attorney on the unencumbered title to the Residence and transferred the Residence to himself in trust for his minor daughter, the respondent Sophia Bostrom. The transfer was made for no consideration.

[10] On January 25, 2018, Erik mortgaged the Residence by borrowing $500,000 from the respondent Jessica Menezes Lima, and using the Residence as security. On the same day, he granted the mortgagee an assignment of the rental income from the rental units.

[11] On May 22, 2020, using the Power of Attorney, Erik sold the Residence to the respondent 200 Dunn Inc. for $2.55 million.

[12] As part of the sale transaction, Erik offered the purchaser a vendor take back mortgage in the principal amount of $1.5 million with an interest rate of 8 per cent. The vendor take back mortgage was not registered on title to the Residence, but rather on title to another property owned by the purchaser/mortgagor.

[13] The solicitors’ reporting letter on the closing of the sale of the Residence states that $350,000 of the purchase price was credited to Erik from advances made to him prior to the closing, and that a certified cheque for the balance of $717,598.97 was paid to Erik’s solicitors on closing. On June 2, 2020, these solicitors paid $615,350.48 to discharge Ms. Lima’s mortgage and the assignment of rents on the Residence.

[14] Between January 31, 2013 and January 13, 2020, the balance in Ms. Pelikan’s TD Bank account dwindled from $486,696.23 to $100. The record shows that $150,015 was transferred from this account to Valkyrie.

[15] Erik has not accounted for any of the proceeds from the sale of the Residence, and he is in breach of this court’s order dated April 9, 2021 requiring him to pass his accounts respecting his management of Ms. Pelikan’s property.

Analysis

[16] On a motion for summary judgment, as set out in Hyrniak v. Maudlin, 2014 SCC 7, I must first determine if there is a genuine issue requiring a trial based only on the evidence before me, without resort to the fact-finding powers available to me under Rules 20.04(2.1) and (2.2).

[17] I am satisfied that none of the issues to be adjudicated on this motion require a trial. Erik has not filed a notice of appearance in the within application, and he has filed no responding materials in respect of the application or the motion. In Justice Gilmore’s order dated October 1, 2021, she validated the PGT’s service of its application materials on Erik, and she ordered that any further materials may be served on Erik and Valkyrie by email.

[18] Erik is a self-represented litigant, who does not acknowledge that he is “Mr. Bostrom”, and he prefers to be addressed as “Erik” or as “i.” He does not accept the jurisdiction of this court to adjudicate this motion. Notwithstanding, I granted Erik leave to make submissions in response to the serious allegations brought against him and his company, Valkyrie. Erik declined to address the issues, and he offered no defence, or any explanation whatsoever respecting his actions in the management of Ms. Pelikan’s property either as a trustee de son tort, or as an attorney for property, or in any other capacity.

[19] Valkyrie did not file any responding materials in the application, or this motion, and it was not represented on the motion.

[20] The title documents relating to the transfer of the Residence from Erik as an attorney for property for Ms. Pelikan to himself (as trustee for his daughter), for no consideration, plainly evidence a breach of Erik’s fiduciary duties as an attorney for property. There is no evidence to suggest that Ms. Pelikan authorized the transfer or was even aware of it. The transfer was made while she was in hospital under psychiatric care.

[21] Later, Erik sold the Residence to 200 Dunn Inc., and again appears to have relied on the Power of Attorney, notwithstanding the earlier transfer of the Residence to himself, as trustee. In my view, this transaction marks a continuation of his breach of fiduciary duty to Ms. Pelikan who continued to be the beneficial owner of the Residence.

[22] This court ordered Erik to pass his accounts and to account for the sale proceeds of the sale of the Residence, including the granting of a vendor take back mortgage. In a further breach of his duty as an attorney for property, or a trustee de son tort, Erik has declined to provide any accounting to the PGT.

[23] Similarly, Erik has provided no explanation for what appear to be gratuitous transfers from Ms. Pelikan’s TD account, in the total amount of $150,015 to Valkyrie, the company Erik controls. There is no evidence to suggest that Ms. Pelikan was indebted to Valkyrie. There is also no evidence to suggest that Ms. Pelikan had capacity at the time the transfers were made, or if she did, that she approved the transfers. I find that these transfers were made by Erik in breach of his fiduciary duties to Ms. Pelikan whose property he was managing.

[24] If, in the management of Ms. Pelikan’s property, Erik was acting as an attorney for property for Ms. Pelikan at a time when she was not capable of managing her property, he was a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith for her benefit: Substitute Decisions Act, 1992, S.O. 1992, c. 30, ss. 32 and 28, and Banton v. Banton, 1998 CanLII 14926 (ON SC), at para. 183.

[25] Should an incapable person suffer damages as a result of her attorney’s failure to comply with his fiduciary duties, or as a result of the attorney having made expenditures that are not authorized under the SDA, such as expenditures that are not for the benefit of the incapable person, the attorney will be liable for such breaches of duty: SDA, s. 33.

[26] I am prepared to draw an adverse inference based on Erik’s failure to file any responding materials or to provide of any explanation regarding his management of Ms. Pelikan’s property as an attorney for property or a trustee de son tort. Such failure amounts to an implied admission that his evidence would not support the proper execution of his fiduciary duties in these roles.

[27] It is in the interests of justice that the matters raised in this motion be addressed summarily in order to obtain the most expeditious and least expensive determination on the merits. Ms. Pelikan is a vulnerable person, whose significant wealth has been stripped from her through actions taken by Erik in breach of his fiduciary duties. She is now living in a boarding house and is being deprived of the care she requires for her medical condition.

[28] An order shall issue:

1. Requiring Erik to pay or cause to be paid to Ms. Pelikan damages in the amount of $2,550,000 in respect of the proceeds of sale of the Residence, such payment to be made within 30 days of this judgment.

2. Requiring Erik to pay or cause to be paid to Ms. Pelikan damages in the amount of $1,500,000 in respect of the vendor take back mortgage, such payment to be credited against the amount of the proceeds of sale referred to in 1. above, plus interest on the principal, calculated in accordance with the terms of the mortgage, such payments to be made within 30 days of this judgment.

3. Requiring Erik and Valkyrie, jointly and severally, to pay or cause to be paid to Ms. Pelikan the amount of $150,015 within 30 days of this judgment.

4. Confirming that any reference to a payment to Ms. Pelikan shall be made to the PGT on her behalf as Ms. Pelikan’s statutory guardian.

5. Confirming that any finding of fact or determination made in this motion is without prejudice to the position that any of the respondents in the application, other than Erik and Valkyrie, may take with respect to any such finding of fact or determination.

[29] The parties may attend at a case conference to address matters relating to the form of the judgment, if required.

Costs

[30] The PGT, as a statutory guardian of Ms. Pelikan’s property, shall be entitled to his costs on a full-indemnity basis. Having reviewed the PGT’s Bill of Costs, and heard the submissions of counsel for the PGT, I fix those costs at $20,209.39, payable by Erik within 30 days of this judgment.

Dietrich J.

Date: February 25, 2022