COURT FILE NO.: CV-21-76264 DATE: 2023/01/10 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Kathy Ann Di Silvestro and Kandis Developments Limited Plaintiffs/Moving Parties – and – Laura Marie Di Silvestro, Matthew Dennis Di Silvestro, Anthony Di Silvestro, Marie Frances Teresa Di Silvestro, 547955 Ontario Limited and Adisco Limited Defendants/ Responding Parties
Shaun Laubman and Harold Niman, for the Plaintiffs/Moving Parties Derek Bell and Katelyn Ellins, for the Defendants/ Responding Parties Tsvetomira Niklin, for the Defendant, Anthony John Di Silvestro, Litigation Guardian for Marie F.T. Di Silvestro Kathleen Lindsay, for The Public Guardian and Trustee
HEARD: December 2, 2022
REASONS FOR DECISION: MOTION TO APPOINT LITIGATION GUARDIAN
justice l. sheard
Overview
1On December 1, 2021, the plaintiffs, Kathy Di Silvestro (“Kathy”) and her corporation brought a motion seeking, among other things, an order appointing a litigation guardian (“LG”) for Anthony Di Silvestro Sr. (“Tony Sr.”)1.
2On December 2, 2022, the motion was heard by me as case management judge. The single issue to be decided was who should act as LG for Tony Sr. I reserved my decision.
3Set out below are my reasons and decision on the motion.
Background
The Litigation
4Members of the Di Silvestro family are involved in litigation. There are two proceedings before this court: (1) This action, brought in January 2021 by Kathy and her corporation, loosely defined as the “Oppression Action”; and (2) In 2022, a Guardianship Application, brought by Kathy respecting her parents, Tony Sr. and Marie Frances Theresa Di Silvestro (“Marie”).
5In 2021, I was appointed to act as case management judge in the Oppression Action. On consent, by Order dated October 18, 2022, the Guardianship Application and the Oppression Action were ordered to be heard at the same time or one after the other and both to be case managed by me.
6There is some overlap between the issues raised in the Guardianship Application and the claims made in the Oppression Action. In both, Kathy alleges that the defendants, Laura Marie Di Silvestro (“Laura”) and Matthew Dennis Di Silvestro (“Matthew”), improperly influenced and took advantage of their parents, Tony Sr. and Marie. As at January 2021, Tony Sr, was 93 years old and Marie 86.
7Among other things, in the Oppression Action, Kathy challenges the propriety and validity of certain changes made by Tony Sr. to his business and estate plans in August 2020 which, Kathy alleges, were brought about by Laura’s duress and undue influence over her aged and vulnerable father. Kathy also seeks orders appointing a guardian of property and a guardian of the person for Tony Sr.
Case Management Conferences
8I have conducted a number of case management conferences (“CMCs”). Of relevance to this motion are the CMCs of August 24 and October 7, 2022.
(a) CMC of August 24, 2022
9In the August 24, 2022 CMC, the court was told that Tony Sr. was no longer able to instruct counsel or to act as attorney for property for Marie, also incapable, and that a litigation guardian (“LG”) needed to be appointed for each of them.
10The parties appeared to agree that Anthony John Di Silvestro Jr. (“Tony Jr.”), the fourth Di Silvestro child, would be a suitable person to act as LG for Marie. However, there was no agreement as to who should act as LG for Tony Sr.
11In the Guardianship Application, Kathy challenges the validity of a Power of Attorney (the “POA”) signed in August 2020 by Tony Sr., naming Laura as his attorney and LG, and Matthew as alternate. At the August 24 CMC, Kathy made it clear that she opposed Laura being appointed under the 2020 POA. As noted in my endorsement on the August 24 CMC, the litigation stalled due to capacity issues and counsel agreed that a first step would be to determine who would act as LG for Tony Sr.
(b) CMC of October 7, 2022
12Kathy’s motion to appoint an LG for Tony Sr. and Marie was again discussed at the CMC of October 7, 2022. This was a joint CMC, held in respect of the Oppression Action and the Guardianship Application. There remained no agreement over who should act as LG for Tony Sr.
13By consent Order dated October 18, 2022, Tony Jr. was appointed to act as Marie’s LG. The Order also provided for an outside agency, Elder Caring Inc., to conduct an in-home audit of Marie and Tony Sr. and to make recommendations. A goal of engaging these professionals was to assist the Di Silvestro children in addressing conflicts among themselves concerning the personal care of their parents.
14On November 4, 2022, I issued an Endorsement respecting the October 7, 2022 CMC. The Endorsement notes that Kathy’s motion to appoint an LG for Tony Sr. would likely need to be argued and directed that the motion be placed on a long motions list. The parties were to agree on a timetable for the exchange of materials and cross-examinations, and a long motion date was to be set by the Trial Coordinator.
Motion to Appoint an LG for Tony Sr.
15Following the exchange of affidavits and completion of cross-examinations, this motion proceeded before me on December 2, 2022.
16In her responding affidavit on the motion, Laura disclosed that on August 10, 2022, she had filed an affidavit to be appointed as LG of Tony Sr. Laura indicated that based on her father’s age and cognitive decline, Tony Sr. no longer had capacity to instruct counsel in connection with this action.
17In her reply materials, Kathy expressed surprise that Laura had proceeded to apply to be appointed as Tony Sr.’s LG. As discussed at the October 7, 2022 CMC, it was understood by all that Kathy opposed Laura’s appointment and that the plan was to obtain a date to argue this motion. Kathy states that it was through Laura’s affidavit sworn November 2, 2022, that she first learned that in August 2022, Laura had filed an affidavit with the court to be appointed as Tony Sr.’s LG.
18In her factum and in oral submissions, Laura submitted that her lawyers disclosed at the CMC of August 24, 2022, that she had filed “the affidavit necessary to act as his litigation guardian” and that my endorsement failed to make note of that fact.
19On this motion, Laura submits that, because she has already been appointed as LG for Tony Sr., pursuant to rule 7.06 (2) , Rules of Civil Procedure , R.R.O. 1990, Reg. 194 (the “Rules”), Kathy must now show “misconduct” on the part of Laura to remove Laura as Tony Sr.’s LG; Kathy must show that Laura has not acted in the best interests of Tony Sr.
20I will address these submissions later in these reasons.
21Until the appointment of an LG for Marie, in this litigation, all the defendants, including Tony Sr. and Marie, were represented by the same lawyers. With his appointment as Marie’s LG, Tony Jr., has retained his own counsel.
22On this motion, Kathy seeks an order appointing an LG for Tony Sr. who is a stranger to the litigation and to Tony Sr.
23Kathy submits that, given the allegations she is advancing against Laura and Matthew, a person independent of the Di Silvestro family and their affairs should be appointed as Tony Sr.’s LG, and that the person appointed should retain separate counsel, independent of Laura and the other defendants. Kathy proposes Bryan Gelman, an insolvency trustee, as LG for Tony Sr.
24Laura seeks to remain as LG or, alternatively, to have the court appoint Matthew, or, in the further alternative, Nicholas Mastroluisi, an accountant, who knows and has done work for Tony Sr. over the years and who also has familiarity with the issues in this litigation.
The Law
25Rule 7 of the Rules governs the representation of a party under disability. As a starting point, the court must be satisfied that the party is under disability and requires a litigation guardian.
26Rule 7.03 (2.1) (b) provides that unless the court orders otherwise, a mentally incapable person who has an attorney under a power of attorney with that authority, the attorney shall act as litigation guardian. Rule 7.03 (2.2) requires the person with authority to file an affidavit pursuant to 7.03 (10). That affidavit is to set out the nature of the proceeding, the nature and extent of the disability, that the attorney and the person under disability reside in Ontario, the relationship of the proposed guardian and
(i) that the proposed litigation guardian,
(i) consents to act as litigation guardian in the proceeding,
(ii) is a proper person to be appointed,
(iii) has no interest in the proceeding adverse to that of the party under disability, and
(iv) acknowledges having been informed that he or she may incur costs that may not be recovered from another party.
27On this motion, the parties rely upon Gronnerud (Litigation Guardian of) v. Gronnerud Estate , 2002 SCC 38 , [2002] 2 S.C.R. 417. Gronnerud was an appeal from the Saskatchewan Court of Appeal, which removed the appellants as litigation guardians of the incapable person. Although The Queen’s Bench Rules of Saskatchewan differ somewhat from the Rules , the principles considered by the Supreme Court apply to this case.
28In Gronnerud, the Court stated that a litigation guardian may be replaced by the court if it appears that they are not acting in the “best interests” of the incapable person. The best interests test requires that the litigation guardian: 1) not possess a conflict of interest vis-à-vis the interests of the party under disability; 2) be indifferent to the outcome of the proceedings so as to be able to provide a “neutral, unbiased assessment of the legal situation” of the party under disability and able to offer “an unclouded opinion as to the appropriate course of action” (at para. 20).
29Further, at paras. 20 and 21, the Court stated:
In essence the requirement of indifference on the part of a litigation guardian is a prerequisite for ensuring the protection of the best interests of the dependent adult. A litigation guardian who does not have a personal interest in the outcome of the litigation will be able to keep the best interests of the dependent adult front and centre, while making decisions on his or her behalf. Given the primacy of protecting the best interests of disabled persons, it is appropriate to require such disinterest on the part of a litigation guardian.
It is acceptable in most cases, and perhaps desirable in some cases, to have a trusted family member or a person with close ties to the dependent adult act as litigation guardian. For examples, see: [citations omitted]… However, there are exceptions. One such exception is the situation currently presented by this appeal, in which there is a particularly acrimonious and long-standing dispute among the children concerning their dead parent’s estate. In such cases, the indifference required to be a litigation guardian is clearly absent.
30The Ontario decision of Saleh v Salehe , 2020 ONSC 5631 provides a helpful application of the principles set out in Gronnerud. In Saleh, the plaintiff, as attorney for property of his mother, a party under disability, brought a motion to be appointed as her litigation guardian. The mother was named as a defendant in the action. In the action, the plaintiff was seeking to set aside a conveyance made by his brother, a defendant, of real property of which, the plaintiff alleged, their mother was the beneficial owner.
31The court granted the motion and found that “indifference”, as used in Gronnerud, was not equivalent to having no interest in the outcome of the proceeding but simply meant that the litigation guardian must not have interests adverse to those of a party under disability. The court considered that if the action succeeded, the mother would benefit; the fact that the plaintiff might receive modest benefit from the increase in the size of his mother’s estate did not give rise to an adverse interest as between the plaintiff and his mother.
32The court in Saleh also considered whether the level of acrimony was such as to disqualify the plaintiff from being appointed. In rejecting that submission, the court noted discussions between the siblings was “always respectful and centred on” their mother’s best interests.
Incapacity of Tony Sr.
33The parties do not dispute that at the time of the hearing of this motion, Tony Sr. was incapable of managing his property. According to his counsel, as of July 7, 2022, Tony Sr. was no longer able to instruct counsel.
34Tony Sr. underwent a Geriatric Psychiatry Consultation on September 13, 2022, at the Hamilton Seniors Mental Health Clinic, St. Joseph’s Healthcare, Hamilton. By report dated September 14, 2022, signed by Alexander Dufort, Staff Psychiatrist, Tony Sr. was assessed with “short-term memory impairment and language difficulties”, and that his cognition appeared “grossly impaired”.
35Based on all of the evidence before me on this motion, I am satisfied that Tony Sr. is a party under disability and for whom a litigation guardian ought to be appointed.
36Notwithstanding the submissions made by Laura’s counsel as to their assessment of Tony Sr.’s ability to retain and instruct counsel, whether Tony Sr. was incapable at the time of the transactions that are being challenged by Kathy, is an issue to be determined at trial. Based on the record before me, it is neither possible, nor necessary, for me to make any factual findings concerning Tony Sr.’s capacity, other than to find that he is a party under disability as at December 2, 2022.
Positions of the Parties
37Kathy takes the position that neither Laura, nor Matthew, is suitable to act as Tony Sr.’s LG: they are not “indifferent” to the outcome of the proceedings and, in particular, given the allegations that they influenced their parents to make changes to the family business and to their estate plan at a time when the parents were lacking capacity, it is important that Tony Sr.’s interests are represented independently and are not simply an extension of Laura and Matthew’s control.
38Kathy also objects to the appointment of Mr. Mastroluisi, on that basis that he is not truly independent.
39Laura takes the position that she should continue to act as LG for Tony Sr., who twice named her as his LG: firstly, in his POA of 2012, on which Laura was named as his second choice, after Tony Jr.; and secondly, in his POA of August 2020, in which she was Tony Sr.’s first choice and Matthew, his second choice.
40Laura asserts that on this motion, because Laura, through filing her affidavit in August 2022, is currently Tony Sr.’s LG, Kathy must show malfeasance to unseat Laura and must establish there is a real conflict between the interests of Laura and Tony Sr.
41In her factum, Laura also asserts that the validity of the 2020 POA has not been raised in this proceeding and that Kathy’s claim that the 2020 POA is invalid, while raised in the Guardianship Application, cannot be considered on this motion; Laura asserts that, in law, Tony Sr. was presumed capable and that, on this motion, the court must assume that the 2020 POA is valid.
42In addition, Laura asserts that, until June 2022, Tony Sr. was capable of retaining and instructing counsel and that his choice to jointly retain counsel with Laura and Matthew and other defendants should be respected.
43In oral submissions, counsel for the defendants also urged the court to accept their assessment as his lawyers that, until June 2022, Tony Sr. was capable of giving them instructions, and did so freely, without any improper influence by Laura or anyone else. Again, the determination of Tony Sr.’s mental capacity at any given time is not an issue that can be determined on this motion; it is an issue for trial.
44As mentioned, in his POA of 2012 – which is not challenged – Tony Sr. named Tony Jr. as his first choice for LG. However, because Tony Jr. has been appointed to act as LG for Marie, all parties agree that he cannot also act for Tony Sr. This is because Kathy has alleged that, when he acted as Marie’s attorney for property, Tony Sr. did not act in Marie’s best interests, and that certain transactions that he effected on behalf of Marie should be set aside. As such, Tony Jr. would be in a conflict if he were to also act as LG for Tony Sr.
Non-family Members put Forward as LG
(a) Bryan Gelman
45Kathy puts forward Bryan Gelman LIT, CIRP 2 to be appointed as Tony Sr.’s LG. She submits that he is the only truly independent person put forth on this motion.
46Mr. Gelman swore two affidavits in support of his appointment. In the first, to which his C.V. is attached, he outlines his qualifications, and that he has “a wide range of experience in complex corporate litigation/insolvency engagements, multi-creditor negotiation, and business operations and real estate transactions” and he has been appointed by the court “to act as insolvency trustee, receiver, liquidator, monitor, and investigative receiver in numerous legal proceedings.”
47Mr. Gelman proposes to retain an independent law firm to represent him as LG, and sets out the terms of his fees and retainer, and indicates his expectation that he will be fully indemnified by Tony Sr. for all expenses and fees.
48In his second affidavit, Mr. Gelman corrects a statement made in his first affidavit that his fees would be covered by Tony Sr. and states “ I acknowledge that I have been informed that if appointed as litigation guardian for Anthony Di Silvestro in this proceeding, I may incur costs that may not be recovered from another party.”
(b) Nick Mastroluisi
49Laura submits that, if neither she nor Matthew is appointed, Mr. Mastroluisi CPA, CBV, TEP 3 would be a suitable LG for Tony Sr.
50Mr. Mastroluisi has known and done work for Tony Sr. since 2007. Until 2020, Mr. Mastroluisi was a partner in the accounting firm of Pettinelli Mastroluisi LLP (“PM LLP”). Since January 2021, Mr. Mastroluisi has had a contractual relationship with PM LLP.
51Mr. Mastroluisi is familiar with the corporations that are the subject, in part, of the litigation; he is willing to act as LG and has agreed to charge an hourly rate of $300, less than one- half the rate to be charged by Mr. Gelman. In contrast to Mr. Gelman, Mr. Mastroluisi indicated that, if appointed as Tony Sr.’s LG, he would consider continuing to use the lawyers jointly retained by the defendants and would seek independent legal advice, when required.
(c) The Public Guardian and Trustee
52A third potential candidate to act as LG was represented at this hearing: the Public Guardian and Trustee (the “PGT”). Pursuant to r. 7.06(2) where it appears to the court that a litigation guardian is not acting in the best interests of the party under disability, the court may substitute the PGT as LG.
53Counsel for the PGT made submissions on this motion. In particular, counsel made it clear that the PGT is an appointment of last resort. It is not open to this court or, indeed, to any party to demand that the PGT be appointed when there is another person who is willing and able to act.
54Based on the record before me, I cannot conclude that there is no other person willing or able to be appointed such that I could appoint the PGT.
Positions of the Parties
55Kathy opposes Mr. Mastroluisi’s appointment asserting that he is not able to provide a neutral or unbiased assessment of Tony Sr.’s legal situation or to offer an “unclouded” opinion as to the course of his defence.
56Kathy asserts that Mr. Mastroluisi’s affidavit does not fully disclose his involvement in the litigation; he and/or PM LLP has a professional relationship with Laura and her corporations; he has been involved in the litigation, and has had discussions with Laura and Matthew and their counsel, during which he has provided opinions and advice; in August 2020, when other contested changes were being made to Tony Sr.’s estate plan, at the request of Laura or a corporate lawyer, Mr. Mastroluisi replaced Tony Sr. as trustee of the Di Silvestro Family Trust.
57Laura’s opposition to the appointment of Mr. Gelman is set out in her factum as follows:
(1) Mr. Gelman is an insolvency trustee and there are no insolvency issues in the proceeding;
(2) he has never met with Tony Sr., Laura, Matthew, management of the corporations involved in the litigation, or Tony Sr.’s caretakers and has no knowledge of the business (in contrast to Mr. Mastroluisi);
(3) originally, Mr. Gelman did not understand that he had to acknowledge that he could be personally liable for costs;
(4) in cross-examination, Mr. Gelman did not mention his obligation as LG was to protect and further the “best interests” of Tony Sr. and stated that he would be responsible for making decisions and to stand in the shoes of Tony Sr;
(5) Mr. Gelman had already determined what counsel to retain, without discussing that with the defendants or anyone close to Tony Sr;
(6) if a “total stranger” is required to be litigation guardian, the appointment should go to the PGT and that “this Court should not countenance the creation of a new cottage industry of insolvency trustees expanding their practice to litigation guardian mandates, where lack of any knowledge or trust of the person under disability is touted as an asset, rather than the liability that it is” (Laura’s factum, at para, 57); and
(7) the court should be “very suspicious” of Kathy’s motivation in appointing Mr. Gelman and of Kathy’s conduct in gathering information.
Analysis: Appointment of Laura or Matthew
58I first address Laura’s submissions that because she was appointed as Tony Jr.’s LG, by filing the affidavit in August 2022, Kathy’s onus on this motion is to establish that Laura has engaged in misconduct as LG.
59I accept Kathy’s evidence that, until Laura’s affidavit of November 2, 2022 was served, she did not know that Laura had filed an affidavit to be appointed as Tony Sr.’s LG in August 2022.
60As is evident from the record before me, Laura’s LG affidavit, sworn August 10, 2022, was produced by her counsel’s letter dated November 14, 2022. In oral submissions on this motion, counsel for Laura asserted that at the August 24, 2022 CMC, he had disclosed to the parties that Laura was intending to or had applied to act as LG for Tony Jr.
61Without accepting or rejecting those submissions, I do note that my Endorsement respecting the August 24, 2022 CMC makes no reference to Laura’s appointment. Rather, the issue as to who should be appointed as Tony Sr.’s LG featured prominently in my Endorsement, which reads, in part, as follows:
…there is less optimism that an agreement will be reached as to who should act as guardian of Tony Sr.’s property and person and as his litigation guardian.
In the oppression action, Kathy challenges the validity of the 2020 Power of Attorney document executed by her father naming Laura Di Silvestro as his attorney and litigation guardian. Kathy will oppose Laura being appointed as her father’s litigation guardian on that basis and also on the basis that Laura’s interests conflict with her father’s.
The litigation was paused to allow for mediation and has now stalled somewhat due to the capacity issues that have now arisen and must addressed. Counsel agree that a first step will be to determine who will act as litigation guardian for Tony Sr. Kathy’s motion on this issue, which did not proceed, butwill now have to be updated and then brought back on for hearing.
In accordance with discussions among counsel present, the following timetable is ordered:
By September 7, 2022, Kathy Di Silvestro is to serve updated motion materials for her motion to determine who should be appointed litigation guardian of Tony Di Silvestro (sr.). ( sic )
62Laura was served with Kathy’s motion to appoint an LG for Tony Sr. in December 2021. That motion was not withdrawn but put in abeyance while the parties attempted to resolve the issues at mediation. I find that Laura was fully aware of this pending motion when she filed her affidavit to be appointed as Tony Sr.’s LG in August 2022.
63Laura asserts that the only decision she has made since her appointment in August 2022 as Tony Sr.’s LG was to agree to stand down an unrelated motion.
64In my view, whether or not Laura was appointed as LG by having filed her affidavit in accordance with the procedure outlined under rule 7.03, has no bearing on this motion: Laura’s actions were taken in the face of Kathy’s pending motion and when Laura was acutely aware that her appointment as Tony Sr.’s LG was in dispute, and had been discussed at the CMCs of August 24 and October 7, 2022. For those reasons, Laura’s self-help in having herself appointed is of no relevance to the decision that must be made on this motion.
65I also do not accept Laura’s submissions that, as this motion is limited to appointing an LG for Tony Sr. in this action, the court cannot consider that Kathy has challenged the validity of the 2020 POA in a separate proceeding. Firstly, in the Oppression Action, Kathy does raise concerns over Tony Sr.’s capacity to make decisions in 2020 and Laura’s improper influence on Tony Sr. Secondly, the submission that this court should ignore the existence of the Guardianship Application would run counter to one of the purposes (and benefits) of appointing a case management judge to hear all interlocutory matters in the proceedings that are being case managed. Thirdly, Laura’s argument ignores the implications of the consent Order of October 18, 2022, by which, the proceedings are ordered to be tried together and appointing me as case management judge for both matters.
66The validity of the 2020 POA, under which Laura was appointed as LG and relies for her entitlement to act as Tony Sr.’s LG, is disputed. Thus, as stated by the court in Berkelhammer v. Berkelhammer Estate, 2012 ONSC 6242, the 2020 POA cannot be said to represent the “clear” wishes of Tony Sr.
67I accept that the “ best interests test ” for appointing or replacing an LG is as set out by the Supreme of Court of Canada in Gronnerud (at para. 20 ). The “indifference” by a litigation guardian requires that he or she be capable of providing a neutral, unbiased assessment of the legal situation of the incapable person and offering an unclouded opinion as to the appropriate course of action and does not have a personal interest in the outcome of the litigation.
68I also agree with the view expressed by Morawetz, J. (as he then was) in Shemesh v. Goldlist , at paras. 25 and 26 , that there is no significant difference between the “indifference” approach used by courts in Saskatchewan and the “conflict of interest” approach followed by courts in Ontario.
69At para. 22 of Gronnerud, the Court found that the lower court was correct to remove the litigation guardians because they were not indifferent to the outcome of the proceedings in that their financial interests were affected by the outcome of the litigation.
70Given the allegations made against Laura, I find that the concerns identified by the Court in Gronnerud are present in this case and apply to Laura.
71In her factum (at para. 38), Laura submits that a conflict of interest is one in which, what is “good” for the party under disability, must be “bad” for the litigation guardian, or vice versa.
72Laura further asserts that the joint defence is a complete answer to the allegation of conflict of interest: the statement of defence was prepared at a time when Tony Sr. was, in fact, capable and, therefore, there is no conflict. In support of that submission, counsel for the defendants asked this court to accept that they would not have taken instructions from someone they believed to lack capacity. Laura also asks the court to consider the opinion dated October 16, 2020, expressed by Dr. Kenneth Shulman, a geriatric psychiatrist at Sunnybrook Health Sciences Centre, that Tony Sr. was able to understand and appreciate the changes he made to his business and estate plan.
73As previously stated, based on the evidence before me, I am not in a position to make a determination as to the date on when Tony Sr. became incapable, or was of diminished capacity. Those issues are at the heart of the litigation between the parties and are to be determined at trial, on a full evidentiary record.
74I have also considered Laura’s submissions that, as stated by the court in Saleh, a litigation guardian ought not to be removed in the absence of evidence of actual misconduct. For the reasons set out, I do not accept that Laura’s appointment as Tony Sr.’s LG has any bearing on the determination of the issue on this motion.
75I also note that while in Saleh, the court determined that misconduct was required, its facts are distinguishable from those here. In Saleh, the plaintiff was suing the attorney for the incapable person to undo a transaction by which the attorney had stripped the incapable person of her main asset. It was the plaintiff who sought to be appointed as LG for the incapable person. In this case, it is Laura and Matthew, both defendants against whom allegations of undue or improper influence of the party under disability are made, who seek to be appointed as LG for the incapable person.
76In both proceedings, Kathy alleges that, for their own benefit, at a time when Tony Sr. and/or Marie were cognitively impaired, Laura and/or Matthew improperly influenced, manipulated or pressured Tony Sr. and/or Marie to change business affairs; estate plans; to gift or lend them significant amounts of money; and, in the case of Tony Sr., possibly, to improperly exercise his power as Marie’s attorney for property.
77Based on the allegations, I find that Laura and/or Matthew may have a financial interest in the outcome of these proceedings that could run counter to the best interests of Tony Sr. For example, it would not be in the best interests of or “good” for Tony Sr. for his longstanding business and estate plans to be changed at a time when his capacity was failing and as a result of the undue or improper influence of Laura and/or Matthew. Similarly, it would be “bad” for Laura and/or Matthew if the transfer of assets, gifts and/or loans, and/or control of the business, from which they have or may (improperly) benefit, are set aside.
78It is not just that Laura and/or Matthew are interested in the outcome of the proceedings. It is that their interest in the outcome may well run counter to the best interests of Tony Sr.
79Based on the materials before the court on this motion, I find that both Laura and Matthew have a personal interest in the outcome of the litigation. They will also likely be witnesses at trial. These additional factors further support a finding that neither is appropriate to act as Tony Sr.’s LG: see Berkelhammer, at para. 25 .
80For all the reasons set out, I conclude that Laura should be removed at Tony Sr.’s LG, and that Matthew should not appointed as Tony Sr.’s LG.
Analysis: Proposed Non-Family Appointments
Nick Mastroluisi
81PM LLP, is the accountant for Adisco Limited, one of the defendants, and for various Adisco subsidiaries. In his affidavit, Mr. Mastroluisi states that in 2021, this work generated less than .2% of the PM group’s revenues and that the accounting “field work” was done by an employee of PM LLP, under his oversight and review.
82Mr. Mastroluisi was cross-examined on his affidavit. He confirmed that he had had discussions with Laura about the litigation commenced by Kathy, including the specific claims made against the defendants. He also assisted with providing financial disclosure and in offering suggestions on the remedies sought by Kathy such as a buyout of shares, etc.
83Mr. Mastroluisi states that he already knows and understands the financial workings of Adisco. Mr. Mastroluisi states that, not only would it take “a substantial amount of time” for Bryan Gelman, the insolvency trustee, put forth by Kathy to act as LG for Tony Sr., to learn and understand the information, it would likely be Mr. Mastroluisi who undertakes that task; doubling the expense to the parties.
84Laura was cross-examined on her affidavit. She confirmed that Mr. Mastroluisi was well- aware of this litigation: he had been providing valuations of properties and had been in communication with her lawyers and with Tony Sr.
85Laura also confirmed that she had asked Mr. Mastroluisi to act as LG and that he expressed his view that she should not be set aside as Tony Sr.’s LG. Laura also confirmed that Mr. Mastroluisi had done work for the defendants in the context of the litigation and that he had been personally engaged by her and other defendants to prepare materials for the litigation.
86Matthew was also cross-examined on his affidavit of November 1, 2022. He confirmed that he had been in conference calls among Mr. Mastroluisi, Laura, and their lawyers with respect to the litigation during which Mr. Mastroluisi gave “opinions or advice”.
Disposition: Mr. Mastroluisi should not be appointed as LG
87Based on the evidence on this motion, I find that Mr. Mastroluisi is well-intentioned and acting in good faith when he offers to act as LG for Tony Sr. I also accept his evidence that the accounting work Mr. Mastroluisi has done, either on his own behalf, or as a contractor with PM LLP, is modest, and that his financial interest in continuing to do accounting work for Matthew or Laura and/or the corporations over which she has management control, would not interfere with his ability to discharge his obligations as LG for Tony Sr.
88However, against those findings, the concerns identified by Kathy about Mr. Mastroluisi’s suitability to act at Tony Sr.’s LG must be weighed. Those concerns include Mr. Mastroluisi’s involvement to date with Laura and Matthew and their counsel in this litigation; that Mr. Mastroluisi has expressed the view that Laura ought not to be removed as LG for Tony Sr.; and that he is undecided about whether, if appointed as Tony’s LG, he would seek independent representation or continue to be represented by the counsel jointly representing Laura, Matthew and the other defendants, seeking advice from outside counsel only when he perceives the need.
89In my view, that latter concern is significant: if Mr. Mastroluisi, as Tony Sr.’s LG, chose to continue to be represented by Laura and Matthew’s lawyers, it would undermine his independence and could influence his decisions and interfere with his ability to provide the neutral, unbiased assessment of the legal situation of Tony Sr. and to offer an unclouded opinion as to the appropriate course of action, the essence of “indifference”: see Gronnerud, at para 20 .
90I conclude that Mr. Mastroluisi is not an appropriate person to be appointed as Tony Sr.’s LG.
Bryan Gelman
91Mr. Gelman appears adequately qualified to act as Tony Sr.’s LG and, of the persons put forth to act as LG for Tony Sr., he is the only one who appears to be truly independent of the parties, unfettered by any bias, pre-existing relationships, or other improper considerations.
92Mr. Gelman has also indicated that he intends to retain independent counsel, which will address concerns identified above respecting the defendants’ continued joint retainer of counsel.
93Laura correctly identified that Mr. Gelman must acknowledge that he could be personally liable for costs, and he did so in his second affidavit. The order appointing Mr. Gelman should also reference that potential personal obligation.
Disposition of the motion
94Based on the evidence put forth on this motion, and subject to my approval of the terms of order appointing him, I appoint Mr. Gelman as LG for Tony Sr.
Terms of Mr. Gelman’s Appointment
95Schedule C to Kathy’s factum sets out the proposed terms of Mr. Gelman’s appointment. The wording in paragraphs 1, 2, and 3 appear inconsistent with Mr. Gelman’s obligation as LG to acknowledge that he may be personally liable to pay costs, an obligation which must be reflected in any order appointing him. Kathy’s draft Order requires amendment on that point.
96The other terms set out in Schedule C are acceptable to the court.
97Kathy is to circulate a revised draft order for the appointment of Mr. Gelman. If the parties cannot agree on the wording of the order, counsel may seek a brief appearance before me, via ZOOM. In advance of any such appearance, each party shall serve and submit their proposed order to my attention, by sending the draft via email to the Assistant Trial Coordinator.
Costs
98As the successful parties on this motion, the plaintiffs are presumptively entitled to their costs. I would urge the parties to attempt to reach an agreement on costs. If they are unable to do so, then costs submissions shall be made as follows:
Within 14 days of the date of the release of this decision, the plaintiffs shall serve and file their written costs submissions, not to exceed three pages, double-spaced, together with a draft bill of costs and copies of any relevant offers to settle.
Within 7 days of the service of the plaintiffs’ costs submissions, the defendants shall serve and file their responding submissions of no more than three pages, double-spaced, together with a draft bill of costs and copies of any relevant offers to settle.
99If no submissions are received within 21 days of the date of the release of these reasons, the parties shall be deemed to have resolved the issue of the costs and costs will not be determined by the court.
Justice L. Sheard
Released: January 10, 2023
Footnotes
- For ease of reference only, and without intending any disrespect, I refer to the Di Silvestro family members by their first names.
- Chartered Insolvency and Restructuring Professional and Licensed Insolvency Trustee.
- Chartered Professional Accountant, Chartered Business Valuator, Trust and Estate Practitioner.