COURT FILE NO.: CV-20-00652655-0000

DATE: 2022-11-09

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

LORY ELIZABETH JAMES and

LORY ELIZABETH JAMES, as EXECUTOR OF THE ESTATE OF CLARENCE ROY JAMES

J. McReynolds, for the Plaintiffs

Plaintiffs

• and -

ESTATE OF CLARENCE ROY JAMES AKA C. ROY JAMES, JOHN ALVIN JAMES, PERSONALLY AND AS EXECUTOR OF THE ESTATE OF CLARENCE ROY JAMES, JAROC MANAGEMENT SERVICES INC., BANK OF MONTREAL, BMO NESBITT BURNS, BMO INVESTORLINE INC., GREGORY A. BRECHIN and BRECHIN & HUFFMAN LLP

M. Abradjian and D. Phillips, for John Alvin James

Defendants

AND BETWEEN

JOHN ALVIN JAMES

Plaintiff by Counterclaim

-and

LORY ELIZABETH JAMES, GLACIER

TRADING CORPORATION and JAROC MANAGEMENT SERVICES LTD.

Defendant by Counterclaim

HEARD: June 29, 2022, at Toronto, by video

Madam Justice T. J. Nieckarz

Reasons On Motion

OVERVIEW:

[1] Clarence Roy James (“Roy”) was the father of Lory Elizabeth James (“Lory”) and John Alvin James (“John”).

[2] Roy died June 10, 2018.

[3] Lory and John are the only children of Roy and his late wife (“Elizabeth”).

[4] Roy had a primary and secondary Will. John and Lory are appointed as co-Estate Trustees under both Wills and are the sole beneficiaries of Roy’s estate (the “Estate).

[5] Since Roy’s death, Lory and John have been at odds on virtually every aspect of the administration of Roy’s estate. This has resulted in three court proceedings: this action commenced in the Superior Court of Justice at Toronto by Lory on December 7, 2020 (the “Action”), an application commenced by Lory in the Superior Court of Justice at Hamilton on the same day (“Lory’s Application”), and an application commenced in the Superior Court of Justice in Hamilton by John (“John’s Application) on December 11, 2020.

[6] The situation between Lory and John has paralyzed the administration of the Estate. No Certificate of Appointment of Estate Trustee with a Will has issued.

[7] Each of Lory and John accuse the other of taking unilateral steps regarding the Estate and Estate assets. Fundamentally, they are unable to agree on what assets form part of the Estate.

[8] Lory’s Application seeks (among other relief):

a. the removal of John as Estate Trustee and ancillary relief;

b. her appointment as the sole Estate Trustee;

c. for John to provide an accounting for his dealings with Estate assets; and

d. disclosure of third-party solicitor and financial records relating to Roy.

[9] Lory’s Action seeks (among other relief):

a. In her personal capacity:

i. Damages against John, personally, for allegations of breach of fiduciary duty, negligence, breach of duty to act honestly and in good faith with respect to his administration of the Estate;

ii. Damages against John, personally, for allegations of fraudulent misrepresentation, fraud, forgery and conversion with respect to Estate assets;

iii. Damages against John, personally, in the amount of the alleged diminution of the value of Roy’s Bank of Montreal (“BMO”) RRSP/RRIF;

iv. An accounting performed by the Estate with respect to interfamily and intercorporate loans involving Roy, Elizabeth, John, Lory and Jaroc Management Services Limited;

v. Damages against the Estate on a quantum meruit basis for services alleged to have been provided by Lory to Roy, and for out-of-pocket expenses incurred on his behalf;

vi. Repayment by the Estate of alleged loans in the amount of $3 million;

vii. Various orders and declaratory relief with respect to Roy’s home;

viii. Various orders and declaratory relief with respect to ownership of an RRSP/RRIF at BMO, in addition to damages for negligence against BMO with respect to the RRSP/RRIF;

ix. Damages for breach of contract, breach of fiduciary duty, negligence, duty to act loyally and in good faith as against the Brechin Defendants; and

b. In her capacity as Estate Trustee:

i. Damages against the Brechin Defendants in relation to their acts/omissions as solicitor for Roy, Lory and the Estate; and

ii. Damages against John for conversion of Estate property to his personal use.

[10] John’s Application seeks (among other relief):

a. the removal of Lory as Estate Trustee, and ancillary relief;

b. the appointment of an Estate Trustee During Litigation (“ETDL”) and ancillary relief;

c. disclosure of third-party solicitor and financial records of Roy and his companies;

d. for Lory to pass her accounts;

e. declarations as to what assets form part of the Estate, including ownership of Glacier Trading Corporation (“Glacier”);

f. for Lory to pay occupation rent to the Estate; and

g. the opinion, advice and directions of the court as to various issues with respect to the Applications and the administration of the Estate.

[11] By Order dated November 5, 2021, the applications commenced by Lory and John in Hamilton were consolidated with this proceeding. The relief sought in John’s application became a counterclaim in this proceeding.

[12] These reasons pertain to the following motions of the parties:

a. John’s motion to remove Lory as Estate Trustee of the Estate, and for an Order for the Appointment of an Estate Trustee During Litigation (“ETDL”), with ancillary relief; and

b. Lory and Glacier’s motion to strike the Counterclaim as against Glacier on the basis that the limitation period has expired.

[13] For reasons that follow:

a. Lory is not removed as co-Estate Trustee;

b. Mr. Earnshaw is appointed as ETDL; and

c. the motion to strike the counterclaim against Glacier is dismissed.

BACKGROUND FACTS:

56 George:

[14] Roy and Elizabeth lived in a home located at 56 George Street., Waterdown, ON (“56 George”).

[15] In 2000, as part of a mortgage financing condition to secure monies for the purchase of a property used to house Lory’s business, Roy and Elizabeth agreed to transfer a one-half interest in 56 George to Lory. Brechin states that a second Transfer/Deed was also signed at the time, transferring the property back to Roy and Elizabeth. Brechin states that Roy and Elizabeth were always intended to be the sole beneficial owners of the property, and that the transfer of a one-half interest was solely to facilitate the mortgage financing.

[16] In July 2001, Roy and Elizabeth instructed Brechin to register the second Transfer, returning ownership of the property to them.

[17] In July 2007, Roy and Elizabeth transferred a 1% interest in 56 George to Lory. Roy and Elizabeth retained the remaining 99% interest. This transfer occurred at the same time as a second CIBC mortgage was registered against the property. The bank required that Lory be on title to the property as opposed to being a guarantor.

[18] With Elizabeth’s passing, Roy became the sole owner of his and Elizabeth’s 99% interest in 56 George. This remained until the date of his death.

[19] Lory has sued Brechin on account of the registration of the second Transfer, which she alleges was improper. She alleges that she should have a 50% interest in the property.

[20] Prior to Roy’s death, Jay moved into a studio suite at 56 George. Between October 2016 and September 2017, he paid $600 per month towards the shared costs of maintaining the property and provided assistance from time to time to Roy with maintenance.

[21] Lory states that as her parents aged, their need for assistance so they could remain in their home increased. Jay took on much of the responsibility for the care of her parents, which is why he moved into their home. He regularly took them to various appointments. Lory further states that she came over 2 to 3 times a week to help with groceries, cook meals, go on outings, and coordinate staff to do maintenance and upkeep of the home and property. John did not live in the area.

[22] In March 2018, Lory and her housekeeper also moved into 56 George to assist Roy. She has remained there since Roy’s death. Lory has been offended by John’s demand for rent. She states that not only has she been paying all of the bills for the house, she has coordinated the maintenance of the property (such as painting and refinishing floors) and has worked countless hours to pack up the contents and ready the property for sale. Despite this, she states that she has paid $600 in rent, which is what her parents charged former tenants.

[23] John takes the position that 56 George should have been sold upon his father’s death and Lory has taken it over for herself. He argues that occupancy rent in excess of $100,000 is payable to the Estate. He also argues that Lory has paid very little for the housing expenses given the payments she claims to have made came from Glacier, payable to Jaroc.

The Family Cabin:

[24] Roy and Elizabeth owned a cabin in the District of Algoma, Ontario.

[25] After Roy’s death, John had the property appraised, and made known his intention to purchase it from the Estate.

[26] Lory alleges that John has continued to use the cabin without payment of rent to the Estate.

Jaroc:

[27] Jaroc Management Services Ltd. (“Jaroc”) is a management consulting company that Roy established in 1981, through which he offered engineering, mining and management consulting services.

[28] In February 2004, Roy transferred a 40% interest in Jaroc in return for $50,000 that John says he contributed to Jaroc for the purchase of the lands at 53 George Street (“53 George”). Lory disputes any ownership interest by John, in Jaroc.

Glacier:

[29] In August 1998, Roy and Lory’s ex-partner incorporated glacier Trading corporation (“Glacier”).

[30] Lory states that the business was originally set up by her, to do offshore purchasing and manufacturing in Vietnam for her clothing company, Banff Wear Ltd.

[31] In August 2000, Lory’s ex-partner transferred his shares in Glacier to Roy. Roy became the sole shareholder.

[32] In August 2016, Roy signed a declaration of trust, confirming that since August 2000 he has held his shares in Glacier in trust for Lory.

[33] Lory also became the President and Secretary of Glacier in August 2016. Previously she had been Vice-President.

[34] In August 2000, Glacier purchased a property located at 520 James Street North, Hamilton, ON (“520 James”) for the sum of $252,000. 520 James is used to house Lory’s clothing manufacturing business. Lory entered into the original Agreement of Purchase and Sale.

[35] Roy financed the purchase of 520 James in July 2000 with a $230,000 mortgage registered against 56 George. Roy loaned the money to Jaroc. Jaroc then loaned $260,000 to Glacier to purchase 520 James and registered a mortgage over the property as security. Glacier made interest only payments in the amount of $1,516.67 per month. John believes that there may be arrears owing on the mortgage, but he is uncertain until an accounting happens. Lory caused the mortgage to be discharged in September 2021.

[36] Lory states that in May 2019, she instructed her counsel to pay the sum of $284,921.53 on account of the Jaroc mortgage owed by Glacier. She alleges that this was the amount John said was owing, but he refused to accept the payout funds.

[37] Also in August 2021, a mortgage was registered against 520 James in favour of Quagmire Holdings Ltd., in the amount of $730,000. This was in addition to a $900,000 mortgage Lory had registered on 520 James on June 5, 2019, without John’s knowledge or consent. John does not know what funds, if any, were advanced to Glacier on account of these mortgages.

[38] Lory takes the position that Roy held his shares in Glacier in trust for her, and that she is the sole beneficial owner.

[39] John takes the position that the shares were owned by Roy as of his death, and pass to Lory and John equally pursuant to the terms of Roy’s Will.

[40] John commenced another action against Lory in June 2021, prior to the motion for consolidation of the other proceedings, claiming relief pertaining to Lory’s actions with respect to Jaroc and Glacier and in particular, the discharge of the Jaroc mortgage and addition of further mortgages against title to 520 James. This claim was not disclosed at the time proceedings were consolidated and was amended in January 2022 to add Glacier and Quagmire as parties.

The Wills and the Estate:

[41] Roy had two Wills on the date of his death. One Will dealt with his personal assets while the other dealt with the disposition of any shares in Jaroc and Glacier owned by Roy on the date of his death. Lory and John are the co-Estate Trustees and joint beneficiaries under both Wills.

[42] The Estate is comprised of the following:

a. Real estate (56 George and the cabin) totalling between $880,000 - $1.8 million;

b. Investments and bank accounts totalling $113,000;

c. A RRIF with a value of approximately $130,555;

d. Personal effects with a value in the range of $12,000 - $26,000;

e. Corporate assets (Glacier and Jaroc are specifically named in the Will), the value of which has yet to be determined, and ownership of which is disputed; and

f. Debts of approximately $200,000.

[43] In the summer of 2018, Lory changed the locks on the home located at 56 George and the mailbox. The mailbox was used for personal and corporate mail.

[44] Disputes also arose between Lory and John with respect to Roy’s terminal year tax return. Specifically, Lory took the position that the amounts she and Jay had paid were rental income, and taxable as such. She further took the position that the Estate was able to deduct various expenses given that the property was being rented. John disputed this and took the position they were contributions to common expenses. Over John’s objections, Lory filed an income tax return on behalf of the Estate. John alleges that by doing this without relying on professional accounting advice or accepting his input as co-Estate Trustee, Lory has significantly complicated the tax affairs of the Estate.

[45] Lory alleges that John has removed items from 56 George, refused her access to the cabin, improperly tried to access Estate bank accounts, has refused to repay loans he owed personally to their parents and now the Estate, and made unilateral decisions with respect to Roy’s cremation and funeral.

[46] Further disputes arose over the dealings of the parties with personal items of Roy’s and his Registered Retirement Investment Fund (“RRIF”).

[47] Roy designated John and Lory as equal beneficiaries of the RRIF.

[48] Lory alleges that she had been the sole beneficiary of Roy’s RRIF, and that John falsified a beneficiary designation naming his mother as the sole beneficiary and he and Lori as residual beneficiaries. John denies these allegations. Because of the dispute, the RRIF proceeds cannot be distributed without a court order.

[49] Lory believes that the issues between her and John arose well before Roy’s death and following Elizabeth’s death. Lory believes that John actively took steps to undermine her with her father, and to sabotage her, going as far as tampering with a vehicle and stealing clothing items. She believes he has tampered with correspondence and sent emails from “fake” addresses, purporting to be her. She alleges that he removed jewelry and other valuable items from her parents’ home. She suggests that her parents’ deaths were suspicious, and both occurred while John was with them. Lory does not trust John at all.

[50] Lory also alleges that John borrowed money from his parents over an 11-year period between 1985 to 1996 that he has never repaid. She alleges that more than $550,000 is owed by John, with compound interest accruing at 10% per annum. The majority of what is alleged to be owed is on account of interest, with the principal amount being $28,700.

Removal of Lory as Estate Trustee

[51] Section 37(1) of the Trustee Act, R.S.O. 1990, c. T.23, gives the court discretion to remove a personal representative and appointment of another person to act in their place.

[52] The removal of an executor requires proof of significant wrongdoing or risk of wrongdoing to overcome permanently the testator’s wishes as to the administration of his estate. See: Mayer v. Rubin, 2017 ONSC 3498, at para. 29.

[53] John argues that Lory has put her own financial interests ahead of the interests of Roy’s Estate and has acted in an obstructionist manner such that the administration of the Estate has ground to a halt. He points to her actions with respect to:

a. the occupancy of 56 George without proper occupation rent, preventing its sale, and excluding him from the property by changing the locks;

b. the improper preparation of the Estate tax return without consulting him;

c. her refusal to cooperate with respect to having Roy’s rifles released to John;

d. the improper discharge of the Jaroc mortgage on 520 James;

e. the improper mortgaging of the 520 James; and

f. her refusal to cooperate with all other aspects of the administration of the Estate.

[54] John also points to Lory’s ongoing action against the Estate for approximately $3 million, in arguing that her interests are in conflict with those of the Estate and prevent her from being a suitable Estate Trustee.

[55] Lory denies any wrongdoing and points to actions she has taken that she argues are designed to preserve the Estate and further its administration. She denies many of John’s allegations and offers explanations for her actions that she says are consistent with the best interests of the Estate. She alleges that it is in fact John who has committed the wrongdoings and who cannot be trusted to act in the best interests of the Estate.

[56] On a motion, based on conflicting affidavit evidence, it is impossible for me to make the credibility and other findings necessary to grant this relief. If the allegations of each of Lory and John have some semblance of truth to them, then each of them may be guilty of wrongdoing and acting in their own self-interest as opposed to the best interests of the Estate and its beneficiaries. A trial judge will be in a better position to make these determinations based on a complete evidentiary record and proper credibility findings.

The Appointment of an ETDL

[57] Rule 75.06(3)(f) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, gives the court discretion, on a motion, to direct that an ETDL be appointed, and that they be required to file such security as the court directs.

[58] The test for the appointment of an ETDL is less onerous than for the permanent removal of an executor. In Mayer v. Rubin, Myers J. explained at paras. 30 - 32:

[30] “…Executors and trustees may need to stand aside for a period of time so as to allow them to exercise full throated adversarialism. The parties’ duties as fiduciaries can be inconsistent with their ongoing litigation interests. They often cannot be loyal and selfless to each other while theya re adverse in interest in litigation. Looked at from the estate’s perspective, the estate should be neutral as between the participants in the litigation. Properly instructed, the estate should want to be left alone. Its assets should be administered to maximally benefit the interests of the beneficiaries and to be neutral in regard to positions of the parties in the litigation.

[31] 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.

[32] 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).

[59] The court’s primary concern is ensuring fairness to the parties. As such, the court will favour appointment of an ETDL in the majority of cases and will refuse the appointment only in the clearest of cases. Courts have appointed an ETDL in situations in which the estate needs to be protected from the trustees’ animosity and refused the appointment when the administration of the estate is particularly straightforward or simple. See: Mayer v. Rubin, at paras. 33 – 35.

[60] More recently in Baran v. Cranston, 2020 ONSC 589, at para. 24, Parfett J., setting out some of the factors to be considered in determining whether the discretion to appoint an ETDL should be exercised. I disagree with Lory’s position that they are not equally applicable to a case such as this. They are:

• 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.

[61] Lory takes the position that an ETDL is not necessary. She argues that the value of the Estate is relatively modest, and that the fees for a professional ETDL are likely to consume a significant portion of the value of the Estate. She argues that with the exception of the cottage in Algoma, various assets of the Estate are either effectively frozen pending a resolution of the litigation or being managed efficiently and economically by Lory.

[62] Applying the legal principles to the facts of this case, I cannot envision a clearer case in which an ETDL is required. It is abundantly clear from the affidavits filed by Lory and John, and the allegations made against each other, that neither of them is in a position to act in the best interests of the Estate and both beneficiaries during this litigation. Their interests are simply too adverse, and they have not demonstrated an ability to date to put aside their hostility towards each other to ensure the effective administration of the Estate. Each of them appears intent on making claims against the other and would be well served to step back and seriously evaluate the merits of certain claims

[63] Lory’s position also entirely disregards the fact that she is suing the Estate. Both Lory and John will be the primary witnesses in this case. I fail to appreciate how she can act in the best interests. the Estate while she is suing it. I agree with counsel for John when he says there is no clearer example of a conflict. In the face of clear conflicts, neither Lory nor John can objectively advocate for her / his own position, and for what is fair and reasonable to the Estate. This is not a criticism of either Lory or John, but a reflection of reality. The complaints each has about the other only confirms the veracity of this concern.

[64] I further agree with counsel for John that the appointment of an ETDL has the potential to save the Estate money in the long run. The current situation cannot continue. The litigation and conflict between the co-trustees have the potential to financially exhaust the Estate. Every step in the administration of the Estate appears to have been the source of conflict that requires intervention of counsel and ultimately a court proceeding. A neutral Estate Trustee is required to protect the interests of the Estate. Documents need to be gathered so that the Estate’s value and interests can be properly assessed and managed. I have no confidence that either Lory or John currently has the perspective required to do this on behalf of the Estate.

[65] The question then becomes, who should be the ETDL. This is yet another area of dispute as between Lory and John.

[66] Lory proposes that Allan Socken be appointed. Mr. Socken is a practicing lawyer. He has been practicing law since 2006 (16 years) and has previous experience as an ETDL. His practice is primarily related to estates, and estate litigation. His hourly rate is $250 plus HST.

[67] John proposes Mr. Ross Earnshaw, a retired litigator. Mr. Earnshaw practiced law for more than 40 years before retiring in December 2019. He is familiar with real estate related litigation, corporate/commercial matters including shareholder disputes, civil fraud actions, and estate litigation. He has appeared before all levels of court, including the Supreme Court of Canada, and has experience as a mediator/arbitrator. He was a Bencher at the Law Society of Ontario, and in 2019 served as the President of the Federal of Law Societies of Canada. His hourly rate is $300 plus HST, although there is some indication in the materials, he is prepared to match Mr. Socken’s rate of $250 per hour. The difference in rates is not determinative of the issue for me.

[68] Both Mr. Socken and Mr. Earnshaw are qualified to manage the Estate issues arising in this litigation. Each of them possesses experience and qualifications that could assist in effectively and efficiently dealing with this Estate. I have no issues or concerns with the qualification and expertise of either of them. Both strike me as appropriate choices, with the scales tipping in favour of Mr. Earnshaw given his experience as a mediator/arbitrator (which could be of considerable assistance in this case), and his status as retired. This matter has the potential to consume a significant amount of time for the proposed ETDL, which could prove difficult for a practicing lawyer. Mr. Earnshaw shall be appointed ETDL. Assets should not be sold by the ETDL unless the parties agree, until the ownership claims determined.

Dismissal of Counterclaim Against Glacier:

[69] Lory argues that John has known since at least 2016 that she is the 100% owner of Glacier, and that Roy had no remaining interest in Glacier as of the time of his death. There is a clear and unequivocal declaration of trust signed by Roy, in favour of Lory. The counterclaim is both without merit, and statute barred by virtue of the expiry of a limitation period. Glacier and Lory seek to have the counterclaim dismissed.

[70] With respect to the limitations issue, Lory argues that John’s claim is, in substance, a claim for conversion. She argues that any proceeding regarding ownership of shares by the deceased, or for conversion, must have been commenced within two years of Roy’s death. Even with the extension of limitation periods as a result of COVID-19, John is out of time.

[71] Lory relies on s. 38 of the Trustee Act. Section 38(3), in combination with s. 38(1) and (2), provides that an action for torts or injuries to the person or property of the deceased, or committed by the deceased against another, may not be brought after the expiration of two years from the death of the deceased. With the suspension of limitation periods during the COVID-19 pandemic, this means that claims falling under s. 38 needed to be commenced by December 8th, 2020. John’s claim was commenced December 11, 2020. Lory, therefore, argues that the counterclaim against Glacier should be dismissed.

[72] John acknowledges having seen the declaration of trust and confronting his father about it in January 2017. He alleges that Roy reassured him that he was the owner of Glacier, despite what is in the document. John had no reason to disbelieve him.

[73] John takes the position that he was not aware of Lory’s position that she was the sole legal and beneficial owner of Glacier until June 2019. John says this is when Lory first asserted that she, and not Roy, owned the shares in Glacier.

[74] Lory says this is not the case. She argues that Brechin told John this when the Will was read in mid-2018, but John would not accept it. She points to email correspondence from Brechin on June 21, 2018, that confirms this. I note that there is also a June 14, 2018, email from Brechin stating that Roy was never a beneficial owner of Glacier, and John should accept this.

[75] Lory also says there is correspondence from John’s counsel in September 2018 that asserts that the Declaration of Trust was part of an ongoing effort by Lory to convert her parents’ property to her own use.

[76] John’s position is that it is not appropriate to deal with the limitations issue on a motion such as this. Regardless, he argues that he is not making any claims in tort against Glacier. He is not seeking damages and alleges no injuries. He is merely seeking a declaration of ownership, and therefore the limitation period is not applicable.

[77] John relies on s. 16(1)(a) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, which provides that there is no limitation period applicable to a proceeding for a declaration if no consequential relief is sought. He argues that his counterclaim with respect to Glacier seeks only declaratory relief.

[78] Lory urges me to look closer at John’s claims. She argues that his claims for relief pertaining to the Jaroc loan and for financial discovery, which is not something a shareholder is entitled to, requires subsequent and consequential relief that is non-declaratory. She also urges me to look at a new action commenced by John in 2021, in which he seeks damages from Lory of over $1 million with respect to her actions in managing Glacier. He alleges conversion and fraudulent misrepresentation. This, Lory argues, reveals the true substance of the claim advanced in the counterclaim, with the request for declaratory relief in this action disguising John’s true intent.

[79] Firstly, the basis on which the motion is brought, and therefore the test to be applied, is not clear. The Notice of Motion indicates it is brought under s. 106 of the Courts of Justice Act, R.S.O. 1990, c. 43, along with sections 38 and 39 of the Trustee Act.

[80] Section 106 of the Courts of Justice Act gives the court discretion to stay a proceeding.

[81] A stay is not granted as a matter of course but lies within the discretion of the court. To order a stay, the defendant to the counterclaim must prove two things. First, the defendant must satisfy the court that the continuance of the action would work an injustice because it would be oppressive, vexatious or an abuse of process. Second, the stay must not cause an injustice to the plaintiff: See: Ieradi v. Gordin, 2007 48637 (ON S.C.J.), at paras. 9 and 10.

[82] The factum of Lory and Glacier seek to have the counterclaim ‘struck’ as opposed to stayed. “Struck” and “dismiss” have been used interchangeably in this matter.

[83] John argues that Lory’s motion is, in substance, either a Rule 21 or 25 motion. These rules provide for the striking of a pleading or claim in certain circumstances, with Rule 21 also providing for the determination of a question of law.

[84] Rule 21 allows a court to determine a question of law, or strike/dismiss a claim prior to a trial. Generally, no evidence is admissible on such motions.

[85] Courts generally discourage using Rule 21.01(1)(a) to determine limitation period issues because they typically raise contentious, fact-intensive questions, such as the discovery date of a claim. See: Kaynes v. BP, L.C., [2021] O.J. No. 266, 2021 ONCA 36, at para. 74.

[86] In rare cases, Rule 21.01(1)(a) may be invoked to strike a claim as statute barred where there is little or no disagreement on the facts. When the facts are not in dispute, the question of whether the action is statute-barred is a question of law which can be determined on a Rule 21.01(1)(a) motion. See: Brozmanova v. Tarshis, 2018 ONCA 523, at para. 20.

[87] Rule 25.11 permits the striking of a pleading, or portion thereof, in certain circumstances, including if it is determined to be frivolous, vexatious, or an abuse of process. Motions to strike pleadings, or a portion of pleadings under Rule 25.11 are only to be exercised in the clearest of cases.

[88] Neither party argued that this was a Rule 20 summary dismissal motion and therefore I have not treated it as one.

[89] Regardless of the basis, I find the motion must fail, without prejudice to the rights of the parties to raise these issues at trial. These reasons pertain only to why I do not feel it is appropriate to grant the relief sought on a motion, and my findings on this issue are not intended to bind a trial judge who will have the benefit of considering these issues on the basis of full argument on the law, and a complete evidentiary record.

[90] If the motion is brought for a stay under s. 106 as the notice of motion states, this is not a case in which it is clear that the counterclaim against Glacier would cause an injustice because it is vexatious, oppressive or an abuse of process. Nor is it a clear case under Rules 21 or 25 requiring the pleading to be struck. There are issues that need to be dealt with at a trial.

[91] Firstly, based on the pleadings in this action, the relief being sought appears to be declaratory in nature and not subject to s. 38 of the Trustee Act. This is subject to a determination otherwise by a trial judge at the hearing of this case, after hearing the evidence and positions of the parties.

[92] In Lafrance Estate v. Canada, 2003 CarswellOnt 994 (Ont. C.A.), 2003 40016 (Ont. C.A.), at para. 54, the Court of Appeal held that the question to ask in considering whether s. 38 of the Trustee Act applies to a claim, is whether the alleged wrong constitutes an injury to, or caused by, the deceased person.

[93] John’s counterclaim alleges no injury to or caused by Roy. The question becomes whether the relief sought is declaratory, with no consequential relief.

[94] A declaration is something that confirms or denies the existence of a right. It is a “formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs – it is restricted to a declaration of the parties rights and does not order any party to do anything.” See: Kyle v. Atwill, 2020 ONCA 476 at paras. 47 and 48.

[95] Declaratory relief is to be construed narrowly. See: McMurtry v. McMurtry, 2016 ONSC 2853, at para. 134.

[96] In McMurtry v. McMurtry, at paras. 136 and 137, Corthorn J., citing Yellowbird v. Samson Cree Nation No. 444, 2008 ABCA 270, 433 A.R. 350, outlined the difference between declaratory and consequential relief. The question to be asked in this case is whether the relief is executory or coercive and would require compliance in any way with a declaration, or whether John could leave the court in peace with the declaration and enjoy the benefits of it without further resort to the judicial process. I acknowledge that in asking this question, the true substance of the relief claimed and not just the words used, should be considered.

[97] In this action, John seeks a determination from the court as to the who is the owner of Glacier. He seeks a declaration 520 James is Glacier’s asset, and that the mortgage Lory caused to register against it is not valid. He seeks a certificate of pending litigation to be registered against 520 James, and production of Glacier’s financial records from Lory.

[98] The declaration as to the rightful ownership of the shares of Glacier, appears, on its face to be declaratory in nature. With that declaration made, the shares fall within the Estate to be administered pursuant to the terms of the secondary Will. Nothing further is required with respect to ownership.

[99] Where the situation becomes more complex, is what then happens with respect to declaration of Glacier’s ownership of 520 James and the validity of Lory’s actions with respect to the mortgage, and what is the effect of the action commenced by John that has not been consolidated with this action.

[100] With respect to the ownership of 520 James, no transfer or coercive relief would be required with respect to a determination of ownership of this property. It is registered in the name of Glacier and would remain as such. The declaration sought with respect to the validity of Lory’s mortgage, and other relief sought in the action not yet consolidated with this proceeding could be different, but many different issues arise with these claims, including discoverability. This is particularly so with the conversion claims that arose as a result of Lory’s registration of mortgages against 520 James. In my view, these subsequent claims in the other action do not change the true nature of the relief claimed in this action. A trial judge may feel differently, particularly if the actions are consolidated. Regardless, it is not one of those clearest cases in which the issue should be determined prior to a trial.

[101] Aside from the fact that it is not clear on this motion that the relief sought is more than declaratory, there is also a triable issue with respect to discoverability. At first glance is appears that John was aware of an issue with respect to the ownership of the Glacier shares at least by June of 2018. Having said this, he denies that he knew Lory was asserting an ownership interest at this point, despite the Declaration of Trust. This will require further evidence from John as to his understanding of the discussions that lead to the Brechin comments in the email correspondence and otherwise, and credibility findings.

[102] Finally with respect to the merits, Lory argues that in the face of the Declaration of Trust signed by Roy in August 2016, the counterclaim cannot succeed and should be struck. Again, regardless of the test applied (Rule 25 or s. 106), John has raised triable issues as to the circumstances surrounding the declaration. While the strength of those arguments is questionable based on the limited evidentiary record on this motion, there are factual findings that will need to be made that are not appropriate in the context of this motion, based on the arguments made by the parties. Lory has not demonstrated that the claim is frivolous, vexatious, or an abuse of process.

ORDER:

[103] An order shall issue appointing Mr. Earnshaw as the ETDL, without the power to sell assets absent agreement of the parties. If the parties are unable to agree as to the terms of the order, I may be spoken to. Due to some unforeseen issues, I appreciate that this decision has taken longer to render than anticipated. Therefore, if it assists the parties in scheduling a further appearance faster, the settling of an order with terms for the ETDL may be scheduled for one hour at 9:00 a.m. or 4 p.m. (before or after the normal court sittings). The relief sought by John that was not argued on this motion (i.e. Lory to pass accounts), shall be adjourned.

[104] An order shall issue dismissing Lory’s motion to strike.

[105] The parties have filed costs outlines. A party claiming costs of either motion shall deliver further submissions, limited to 5 pages double-spaced (excluding bills of costs, offers, correspondence and caselaw) within 30 days of the release of this decision, failing which costs will be deemed to be resolved. The responding party shall deliver their materials, also limited to 5 pages double-spaced, within 30 days of receipt of the claiming party. Any reply submissions shall be delivered within 15 days, limited to 2 pages double-spaced.

“Original signed by” The Honourable Madam Justice T.J. Nieckarz

Released: November 9, 2022

COURT FILE NO.: CV-20-00652655-0000

DATE: 2022-11-09

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

LORY ELIZABETH JAMES and

LORY ELIZABETH JAMES, as EXECUTOR OF THE ESTATE OF CLARENCE ROY JAMES

Plaintiffs

• and –

ESTATE OF CLARENCE ROY JAMES AKA C. ROY JAMES, JOHN ALVIN JAMES, PERSONALLY AND AS EXECUTOR OF THE ESTATE OF CLARENCE ROY JAMES, JAROC MANAGEMENT SERVICES INC., BANK OF MONTREAL, BMO NESBITT BURNS, BMO INVESTORLINE INC., GREGORY A. BRECHIN and BRECHIN & HUFFMAN LLP

Defendants

REASONS ON MOTION

Nieckarz J.

Released: November 9, 2022