Court File and Parties

COURT FILE NO.: CV-22-0067744900ES CV-18-0001070300ES DATE: 20230509

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: MARK DOBIS Applicant – and – ELIZABETH DOBIS, the Estate Trustee for Joseph Victor Dobis, Deceased Respondent

AND BETWEEN: ELIZABETH DOBIS, the Estate Trustee for Joseph Victor Dobis, Deceased Applicant

• and – MARK DOBIS and VLASTA KAPRALIK Respondents

Counsel: Hershel J Sahian and Mukta Batra, Counsel for the Applicant/Respondent Mark Dobis Christopher D. Salazar, Counsel for the Applicant/Respondent Elizabeth Dobis, Estate Trustee for Joseph Victor Dobis, Deceased

HEARD: May 8, 2023

C. GILMORE, J.

Introduction

1There are two Applications before the Court. The Application of Elizabeth Dobis (“Elizabeth”) against her son Mark Dobis (“Mark”) for damages and costs, and the Application to Pass Accounts brought by Mark.

2For the reasons set out below, I find that Mark must pay damages to Elizabeth in the amount of $20,932.24. He is not entitled to any set-off of those damages against future claims which remain outstanding in his Application for dependent’s support. Mark is also required to pay costs to Elizabeth although in an amount less than the amounts sought by Elizabeth.

3With respect to the Application to Pass Accounts, Mark’s accounts are passed, and the Objection by Elizabeth is dealt with in the context of the damages awarded.

Background Facts

4Victor Dobis (“the deceased”) died on November 6, 2015. He was survived by his wife, the Applicant Elizabeth Dobis (“Elizabeth”) and his two sons Richard Dobis (“Richard”) and the Respondent Mark Dobis (“Mark”). Richard is not a party to this litigation.

5The deceased left a Will dated November 3, 1992 (“the Will”). The Will names Elizabeth as Estate Trustee and sole beneficiary. Mark and his brother are named as alternate beneficiaries in the event their mother predeceased their father. A Certificate of Appointment was issued to Elizabeth in August 2018. Neither of the deceased’s children have challenged the Will.

6Much of the dispute in this case relates to a residential fourplex building located at 88 Overton Crescent in Toronto (“Overton”). Mark has lived in one of the units in Overton with his partner for over 17 years. He paid below market rent during the deceased’s lifetime and continues to reside at Overton and pay below market rent.

7In 2019 Justice Dietrich found that Mark and his father entered into an arrangement whereby he would provide certain management services for Overton in exchange for reduced rent. There is a factual dispute about what services Mark provided and whether the rent reduction was intended to cover those services. Mark claims there was no exchange of services for a lower rent.

8Mark commenced a separate Application for various relief in 2018. He amended his Application to seek dependent’s support in October 2018. No determination has been made in that Application.

9The within Application was commenced by Elizabeth in 2018 in order to gain control over Overton. She also sought an accounting and damages from Mark. Overton was transferred to Elizabeth in 2019. It is not disputed that after his father’s death, Mark took steps to divert rent from Overton to himself.

10This Application originally came on for a hearing in June 2019. In her endorsement related to that hearing, Justice Dietrich ordered that Mark pass accounts as she found that Mark’s accounting for the diversion of rents was not satisfactory and that he had misappropriated funds from the Estate. She also required that Mark forthwith remit to Elizabeth all funds which he received while acting as manager/superintendent of Overton. Justice Dietrich did not decide the issue of damages at that time.

11Mark did not commence his Application to Pass Accounts until February 2022. In that Application, Mark sought to pass accounts for the period of February 1, 2018 to July 2, 2019. Elizabeth filed an Objection to the Accounts. Her Objection mirrors her claim for damages.

12Because Mark had taken no steps to commence an Application to Pass Accounts, Elizabeth brought a motion returnable in July 2021 for contempt and to strike Mark’s Application. The parties attended at scheduling appointments in the fall of 2021 to set a timetable for the contempt motion which was to be heard on April 19, 2022. As a result of Mark issuing his Application to Pass Accounts, the contempt motion was no longer required. However, Elizabeth seeks her costs of that motion. Mark opposes paying costs for that motion.

13In his factum Mark alleges that he was the de facto trustee of the Estate and the superintendent of Overton and claims unjust enrichment. However, Mark’s Application has not been amended to include a claim for unjust enrichment.

14Subsequently, Mark’s Application to Pass Accounts and Elizabeth’s Application for damages were scheduled to be heard on November 8, 2022. For reasons beyond the control of the parties the matter could not be heard on November 8, 2022. On February 7, 2023, both matters were rescheduled to be heard on May 8, 2023.

The Issues to be Determined at this Hearing

15This hearing is intended to deal with Elizabeth’s damages claim, Mark’s Passing of Accounts and costs of both the contempt motion and Elizabeth’s Application. The parties have both been cross-examined and the transcripts were made available to the Court.

16The damages sought by Elizabeth total $25,574.10. Elizabeth claims that Mark diverted rents from Overton and used those funds to pay legal fees and personal expenditures. The damages may be broken down as follows:

a. Legal fees and disbursements - $20,015.69 b. Costs of motion - $750 c. Vehicle repairs - $3,457.40 d. Transfers to accounts - $1,351.01

17Mark does not dispute that as of December 2017 he opened a separate account at RBC and diverted rents from Overton into that account without advising his mother. Mark’s position was that he was carrying out his father’s instructions with respect to continuing to manage Overton and that his mother was not capable of undertaking such management.

18Subsequent to Mark advising his mother about the new account, Elizabeth commenced the within Application in December 2018. It was served on Mark in early January 2019. Elizabeth submits that despite having been served with her Application and the allegations contained therein, Mark continued to divert rents.

19It is undisputed that Mark used money from the diverted rents to defend Elizabeth’s Application and attempt to gain control of Overton.

20While Mark does not disagree that the sum of $20,932.24 from the diverted rent was used to pay for legal services and disbursements and must be repaid to the Estate, he submits that it should be set off against amounts which may be owed to him in the form of dependent’s relief and unjust enrichment.

21With respect to the balance of damages sought by Elizabeth, Elizabeth alleges these amounts were wrongfully removed by Mark to pay for car repairs. Elizabeth admitted in her cross-examination that she did not make any enquiries about these expenses to Mark. Her evidence was that she and her son have not spoken for over six years due to this litigation.

22Mark does not agree that anything other than the legal expenses mentioned above should be repaid to the Estate. The other amounts were used for car repairs. He needed a working vehicle in order to keep Overton running and to service the Homestay program.

23Mark alleges that the value of the services he has performed in relation to Overton amount to $122,393. As such, the Estate has been unjustly enriched by his services and he should not be required to pay the Estate any amounts until his unjust enrichment and support claim have been determined.

24During the period that he managed Overton after his father’s passing, he deposited all rents and made periodic distributions to his mother. The management of Overton was a full-time commitment which prevented him from seeking other employment.

25With respect to the Passing of Accounts, Mark submits that a detailed accounting has been provided and no objections received other than an objection related to the damages sought herein. As such, the accounts should be passed.

Analysis and Ruling

Issue # 1 – What is the Amount of Damages Payable by Mark?

26There is no issue with respect to misappropriation of funds by Mark in this case. A finding of misappropriation of funds was made by Justice Dietrich in her endorsement dated June 6, 2019. That finding has not been appealed. It was left to the judge hearing the Application to quantify the damages.

27Mark concedes that the amount of $20,932.24 should be repaid to the Estate representing the amount he removed to defend his mother’s Application to gain control of Overton and cease the diversion of rents. The only issue remaining is how and when the damages should be paid. That issue will be dealt with below.

28Mark does not agree that he is responsible for any further damages as those amounts relate to his management of Overton and the Homestay program. I agree. There is no dispute that, other than the legal expenses, Mark did not take money for himself from the rents. He paid the expenses and made distributions to his mother. On cross-examination, Elizabeth testified that when she had access to the joint TD account, she did not question the expenses paid by Mark in relation to Overton and was content to defer management of Overton to him following the death of her spouse.

29Further, while there was no evidence that the Homestay program kept Overton solvent, it is clear from the accounting produced that it made revenue for Overton. In exchange, however, Mark was obliged to feed the Homestay residents and pay for certain of their related expenses (like Netflix). I find that he needed transportation in order to fulfil his Homestay obligations and that vehicle repairs were a necessary expense at that time. As such, that portion of the damages is not allowed and the final amount of damages payable by Mark is $20,932.24.

Issue #2 – Should the Damages be Set Off Against Mark’s Future Claims?

30Mark claims that his damages should be set off against any future award of dependent’s support either in the form of support or as compensation for unjust enrichment for services performed in relation to Overton.

31I find that Mark is not entitled to any set-off of damages for the following reasons:

a. Mark was not an Estate Trustee and is therefore not entitled to compensation. His claims of being a de facto Estate Trustee in accordance with his father’s wishes are without foundation and have never been proven.

b. Mark has set out a list of services he performed in relation to Estate Property in his Amended Application. The services lack corroboration in terms of dates and values. The amount of $122,393 which he includes in his factum as an estimate of the value of those services is without evidentiary foundation.

c. Mark does not fall within the parameters of s.111 of the Courts of Justice Act as the claims in his dependent’s support application remain unliquidated. The fact is that Mark issued his Application in February 2018 and has failed to take steps to prosecute those claims. The Application is now over five years old. The possibility of liquidating that claim in the near future, is, at its highest, remote. Mark states that he is impecunious and unable to take steps to pursue his claim yet provides no direct evidence of his financial circumstances.

d. In order to claim equitable set-off, the party relying on a set-off must show some equitable ground for being protected against its adversary’s demands (Pierce v. Canada Trustco Mortgage Co. at para 40). In this case, there has been a finding of misappropriation against Mark. Further, there is evidence that in the face of being served with his mother’s Application, Mark continued to divert rents. Finally, he did not comply with Justice Dietrich’s order to return diverted rents to his mother. There is no equitable ground on which Mark can rely to defer the payment of damages to a future date on the basis of a set-off.

Issue #3 – Should Mark’s Accounts be Passed

32Mark has provided an informal and a formal accounting. The only objection to the accounting is tied directly to the damages claim. My ruling on that issue as set out above deals with the only objection to the accounts.

33As such, the accounts are passed with the objection having been dealt with by an order requiring Mark to pay damages directly related to the objection.

Issue #4 - Costs

34In the end, this proved to be the most complicated issue in this case due to the lengthy period of time it has taken to arrive at today’s hearing and the many appearances and conferences held on what ended up being an argument about a difference of approximately $5,000 in the damages claimed and conceded.

35The costs claim can be broken down into to two parts; 1) Elizabeth’s claim for her costs of the damages Application and 2) Elizabeth’s claim for costs in relation to the contempt motion against Mark which ultimately did not proceed.

36Elizabeth claims substantial indemnity costs of $27,132.75 for all matters. She submits she is entitled to substantial indemnity costs because of the finding of misappropriation and because of Mark’s continued diversion of rents in the face of both her Application and subsequent Court Orders.

37Elizabeth is entitled to costs of the within Application but not in the amount sought. She did not receive the entire amount of damages claimed and, in this Court’s view, should have agreed to liquidated damages in the amount agreed to by Mark given Elizabeth’s evidence on cross-examination. However, she was successful on all other aspects including her request that no set-off be allowed.

38As such, and in all the circumstances, including lengthy cross-examinations and attendance and preparation for today’s hearing, Elizabeth shall receive $15,000 in costs for the within Application.

39The costs with respect to the contempt motion are more complicated. Mark submits that he should not be required to pay costs for the contempt motion as he produced the required accounting and received no objection to that accounting other than the expected objection related to the damages claim.

40Elizabeth submits that the matter is much more complex than Mark makes out and that the costs requested are in part payable because of Mark’s continued failure to meet court-ordered deadlines and produce adequate accounts with accompanying vouchers.

41The contempt relates to Mark’s alleged failure to commence an Application to Pass Accounts as required by the Court. The relevant Order is contained in the endorsement of Justice Dietrich dated June 6, 2019, as follows:

4. At his [Mark’s] own expense, prepare accounts, in court-approved form, relating to the funds, including all rents, received by him relating to the Property from January 1, 2018, to the date hereof, and pass those accounts before this court unless otherwise agreed to between the parties or ordered by this court;

42Mark took no steps to pass his accounts. The matter returned for a scheduling appointment on July 5, 2021. Elizabeth sought to schedule a contempt motion for Mark’s failure to commence the Application to Pass Accounts and Mark sought to schedule a motion for interim support from the Estate. The matter was set for a further scheduling appointment on August 23, 2021, at 2:00 p.m.

43At the scheduling appointment on August 23, 2021, the Court noted that Mr. Sahian was finalizing the accounts which would be delivered by September 10, 2021. A further scheduling appointment was set for September 23, 2021, to monitor the progress of the accounts.

44By September 23, 2021, an informal accounting had been delivered but Elizabeth’s counsel objected to the accounts as unsatisfactory. Elizabeth then sought to move forward with a contempt motion. Mr. Sahian agreed to deliver a formal accounting within 30 days. A further scheduling appointment was set for November 2, 2021, at 12:30 p.m. The Court indicated it would set a date for the contempt motion at that time depending on what transpired with the accounting.

45On November 2, 2021, the matter was adjourned to December 9, 2021, for scheduling. The matter came before Justice Dietrich who indicated in her endorsement that the Applicant was not pursuing her contempt motion at that time. Rather, a timetable for the delivery of materials on the passing of accounts and the damages claim was established which required that Mark serve and file his accounts by December 14, 2021. A hearing date for both matters was scheduled for April 19, 2022.

46On April 19, 2022, the matter came before Justice Kimmell for the hearing. She noted that Mark’s material (in response to the damages claim) was filed late and that cross-examinations were adjourned twice at Mark’s request which resulted in the parties not being ready for the hearing. A new hearing was set for November 8, 2022, and dates were set for cross-examinations. Mark was required to deliver all supporting documents in relation to the accounts by May 31, 2022.

47Unfortunately, no judge was available to hear this matter on November 8, 2022, and a scheduling appointment was set for February 7, 2023. A hearing date of May 8, 2023 was set on that date.

48Elizabeth served and filed her contempt motion in July 2021 after the July 5, 2021, scheduling appointment. It should be noted that at that point Mark had taken no steps for two years with respect to the accounting ordered by Justice Dietrich in June 2019.

49Accounts were ultimately delivered in September 2021, but they were not satisfactory. Even by the time the matter came before Justice Kimmell for a hearing in April 2022 the accounts were not complete. She also found that Mark’s requests for adjournments of the cross-examinations and his failure to deliver his material for the hearing on time caused the hearing to be adjourned. Because of a lack of available judges, the matter took another year before it could be heard.

50I find that Elizabeth had no choice but to serve and file her contempt material because Mark simply did nothing about the court-ordered accounting for two years. Even when Elizabeth returned the matter to Court, it took a further five appearances before accounts in some form were delivered and a date for a passing of accounts could be scheduled.

51While I accept that Elizabeth had access to some of the accounting that was produced and gave refusals related to some of that accounting on examination, I find that in large part, Mark was responsible for the inordinate delay in this matter. Elizabeth’s somewhat desperate actions in relation to Mark’s inaction (the contempt motion) appeared to motivate Mark to take steps. Elizabeth should not have had to resort to such steps in the face of Justice Dietrich’s clear directions in her June 2019 endorsement.

52In summary, Mark should pay some costs in relation to the preparation of the contempt materials. Given the amounts set out in the Costs Outline provided by Elizabeth, a proportionate amount of costs is $2,100.

Orders

53Given all of the above I make the following Orders:

Re: Court File No. 01-0703/18:

a. The Respondent shall pay damages to the Applicant in the amount of $20,932.24.

b. The damages are payable forthwith and the Respondent is not entitled to set-off of those damages against any outstanding claims related to the Estate of Victor Dobis.

c. The Respondent shall pay costs to the Applicant in the within Application in the amount of $17,100.

Re: Court File No. CV-22-00677449

d. The Accounts for the period of February 1, 2018, to July 2, 2019 are hereby passed. The objection to those accounts filed by Elizabeth Dobis has been wholly dealt with by way of the damages award in Court File No. 01-0703/18.

C. Gilmore, J.

Released: May 9, 2023

Formal Judgment Statement