Court File and Parties

COURT FILE NO.: CV02-00012115-00ES DATE: 20230525 SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE ESTATE OF BETTY SHADDOCK, DECEASED

RE: Lorali Queripel, Former Estate Trustee of the Estate of Betty Shaddock, Applicant (Responding Party)

AND:

Clifford Shaddock, Succeeding Estate Trustee of the Estate of Betty Shaddock, Madison Shaddock, Joshua Shaddock, Jacob Shaddock, Jennifer Queripel a.k.a. Meredith Oliver, Respondents (Clifford Shaddock, Joshua Shaddock, Madison Shaddock and Jacob Shaddock – Moving Parties)

BEFORE: C. Gilmore, J.

COUNSEL: The Applicant did not appear Michael S. Deverett, Counsel for the Moving Parties

HEARD: May 23, 2023

Endorsement on Motion

Introduction

[1] The Moving Parties are Clifford Shaddock, the Succeeding Estate Trustee and the majority residual beneficiaries of the Estate, Joshua, Madison and Jacob Shaddock (the “Moving Parties”). The Responding parties to the motion are Lorali Queripel (“Lorali”) and Meredith Queripel (“Meredith”) (“the Responding Parties”). The Responding Parties have served no materials.

[2] Lorali did not appear at today’s motion. Her daughter Meredith appeared and explained that her mother was at work. No leave was sought by Meredith to act as her mother’s agent nor would such leave have been granted in the circumstances.

[3] The motion material was served on Lorali in February 2023. She has had significant notice of this date and the materials on which the Moving Parties rely. Meredith explained that her mother had the documents that she had been ordered to produce and that she could send them to Mr. Deverett. This was somewhat of a shocking revelation given that there have been two Court Orders requiring Lorali to pass her accounts and a further Order requiring her to provide an informal accounting, yet she has never provided a single document to confirm the assets of the Estate.

[4] The Moving Parties move for the following relief:

a. To determine the damages caused by Lorali Queripel while acting as Estate Trustee, and requiring her to pay said damages;

b. Requiring Lorali Queripel to pay punitive damages for failing to comply with Court Orders, and otherwise;

c. Requiring Lorali Queripel to comply with the Order of Justice Kimmel dated June 7, 2022 to pass her accounts, the Order of Justice Dietrich dated December 5, 2022 to (a) pass her accounts, (b) to transfer all estate assets to Clifford Shaddock as estate trustee, and (c) advise in writing of all estate debts and assets, and the Order of Justice Gilmore dated January 17, 2023 to produce an informal accounting by January 27, 2023; and

d. Requiring Lorali Queripel to pay costs of this motion on a full indemnity scale.

[5] The Moving Parties allege that Lorali has failed to comply with Court Orders, failed to communicate with the beneficiaries or respond to communication sent from them, failed to comply with the terms of the Will, defaulted on certain payments causing damage to the Estate and incurred significant legal fees for the Moving Parties due to her conduct.

Background Facts

[6] The deceased, Betty Shaddock, died on February 26, 2002 in Toronto. She was survived by her three children, Lorali, Clifford Shaddock (“Clifford”) and Robert Shaddock (“Robert”). There are five grandchildren; Joshua, Madison and Jacob Shaddock who are Clifford’s children and Meredith and Jennifer Queripel who are Lorali’s children. The grandchildren are all adults.

[7] Robert was never married and had no children. Betty’s spouse predeceased her.

[8] A Certificate of Estate Trustee with a Will was issued to Lorali and John Evanoff on August 8, 2002 as the Estate Trustees of Betty’s Estate.

[9] Betty made a Will dated June 28, 1996. The Will has not been challenged. The Will provides as follows:

a. A fund was set aside for Robert consisting of Betty's residence, and the sum of $50,000, collectively defined as "Robert Shaddock Residence Fund" ("Fund")..

b. The net sale proceeds from the sale of the residence shall be added to the Fund.

c. The trustees shall keep invested the Fund and pay the net income to Robert and any amount of capital as they in their absolute discretion consider advisable.

d. Robert shall have the right to use the residence rent free during his lifetime and upon Robert advising that he chooses no longer to live there, the trustees shall sell the residence and purchase another residence for Robert to live in.

e. All charges or amounts necessary for the general upkeep of the residence for Robert shall be paid out of Robert's residuary share, later described, or out of the Fund.

f. Upon Robert's death, the residence shall be sold, and the net sales proceeds shall be added to the Fund, and the Fund shall be paid in equal shares to the grandchildren living at the date of Robert's death upon reaching the age of 21 years.

g. Betty's residual estate was divided into three equals shares, one each to Clifford and Lorali, and the third share to be held and invested as Robert's residuary share.

[10] On October 23, 2002 the Estate Trustees purchased a property at 3233 Eglinton Avenue East, suite 311 (“the Condo”) as a residence for Robert. Robert lived there until his death on July 17, 2022. The other Estate Trustee, John Evanoff, died on May 28, 2013.

[11] The Will requires that upon Robert’s death his residence was to be sold and the funds distributed equally to the grandchildren upon their reaching the age of 21.

[12] Except for one email dated March 31, 2023 and a brief email received the morning of this motion, Lorali has not communicated with Joshua, Madison and Jacob Shaddock since March 17, 2003, nor has she responded to any letters or emails from the Moving Parties’ lawyer. In an email to Mr. Deverett at 10:16 a.m. on the morning of the motion (the motion was scheduled for 11:00 a.m.) Meredith indicated that her mother was at work, and she would be representing her at the motion. No adjournment was sought.

[13] A title search done on the Condo revealed that title liens had been registered against it for default in payment of common expenses. The Moving Parties’ counsel wrote to Lorali on February 15, 2022 asking for an accounting, an explanation concerning the registration of the liens, occupation rent, damages, legal fees and that Lorali agree to be removed as Estate Trustee.

[14] On April 11, 2022 Lorali was served with a Motion Record requesting an Order for her to pass her accounts. On June 7, 2022 Justice Kimmel made an Order requiring Lorali to pass her accounts for the period of March 18, 2003 to June 7, 2022. Lorali has failed to comply with Justice Kimmel’s Order.

[15] On July 26, 2022 Clifford paid $6,366.38 to the condominium corporation’s lawyers to discharge the liens registered on title.

[16] On November 3, 2022 Lorali, Jennifer and Meredith Queripel were served with a Motion Record seeking to remove Lorali as Estate Trustee. A motion date was set for December 5, 2022. Lorali attended the motion date by video. She gave the Court her email address and admitted that she had received all communication from Mr. Deverett, that her address had not changed, and that she needed more time to finalize her accounting.

[17] On December 5, 2022 Lorali was removed as Estate Trustee and Clifford named as Succeeding Estate Trustee. Lorali was also ordered to comply with the June 2022 Kimmel Order, transfer all Estate assets to Clifford, advise Clifford of all debts and assets of the Estate, amend title to the Condo to show Clifford as Estate Trustee as the registered owner, and issuing a Writ of Possession for the Condo. The keys to the Condo were given to Deverett Law Office on December 8, 2022.

[18] Lorali holds an interest as joint tenant in property located in Pickering. The December 5, 2022 Order amended title to that property to sever the joint tenancy and change Lorali’s interest to a tenant in common, restraining Lorali from dealing with her interest in that property and registering the Order on title. The parties were required to return to Court on January 17, 2023 for a Case Conference.

[19] Lorali and Meredith attended the January 17, 2023 Case Conference. This motion was scheduled at that time.

[20] On March 31, 2023 Lorali sent an email to Michael Deverett. She explained that she had lived at the Condo with Robert, that she would deliver all documents in her possession to Deverett Law Office by April 4, 2023 and that she understood there were property tax arrears, a special assessment and legal fees. She requested a breakdown of the punitive damages sought.

[21] On April 14, 2023 Clifford submitted an affidavit in response to the March 31, 2023 email. He noted that no documents had been received as promised. He provided more particulars of his claims for damages for breach of fiduciary duty and punitive damages.

Particulars of the Damages Sought

[22] In his May 4, 2023 affidavit Clifford provided a breakdown of damages caused by Lorali. The total was $175,147.98. A damages chart was also provided and is located at page A1626 of Caselines. The damages include realty taxes, the Condo Special Assessment, common expenses, legal expenses, bank fees, painting and cleaning fees, interest and some small miscellaneous expenses. The largest expense was the legal fees at $125,810.48.

[23] Clifford paid $6,366.38 to discharge the Condo lien and common expenses of $609.13 up to August 1, 2023. The total common expenses paid from August 2021 to May 2023 were $12,791.73. A Special Assessment of $24,500 was also paid. Clifford submits that if the Condo had been sold in a timely manner after Robert’s death, the Special Assessment could have been avoided. The Special Assessment was paid out on the sale of the Condo on May 8, 2023.

[24] Legal expenses incurred from Deverett Law Offices from February 2022 to January 2023 were due solely to Lorali’s conduct. Specifically, Lorali failed to communicate with the beneficiaries or their lawyers, breached Court Orders, failed to pay realty taxes, common expenses and the Special Assessment, failed to sell the Condo in a timely manner, and required a removal motion as Estate Trustee. Further legal expense was incurred to discharge the Condo lien, change title of the Condo and deal with securing the Pickering property.

Particulars of the Punitive Damages Sought

[25] Lorali is in breach of three Court orders. She has failed to pass accounts as ordered by Justice Kimmel on June 7, 2022, transfer estate assets to Clifford as Estate Trustee as ordered by Justice Dietrich on December 5, 2022 and she has failed to produce an informal accounting by January 27, 2023 as ordered by me on January 17, 2023.

[26] Despite confirming in her email dated March 31, 2023 that she would deliver documents by April 4, 2023 she failed to do so.

[27] As Estate Trustee, she failed to follow the terms of the Will which required that the Condo be sold following Robert’s death. Instead, she lived at the Condo without compensating the Estate.

[28] Lorali failed to pay common expenses or the Condo Special Assessment resulting in additional legal expenses for the Estate. She failed to respond to the motion to remove her as Estate Trustee or any emails prior to the motion asking her to do so by way of resignation.

[29] In addition to violating three Court Orders, Lorali failed to communicate with the majority residual beneficiaries for more than 20 years, and except for one email she did not respond to communications from the Moving Parties’ counsel.

[30] Lorali failed to comply with the express terms of the Will to sell the Condo and defaulted in the payment of realty taxes in 2018 resulting in the City of Toronto issuing a warrant to distrain for taxes.

[31] Lorali has failed to admit her misconduct or respond to this motion.

[32] The Moving Parties therefore request that Loreli pay punitive damages of $100,000.

Analysis and Ruling

[33] As Estate Trustee, Lorali was a fiduciary with fiduciary obligations towards the Estate and the beneficiaries. In this case Lorali acted as Estate Trustee for a period of 20 years, from the date of death in February 2002 to her removal by Justice Dietrich in December 2022.

[34] After Mr. Evanoff’s death in 2013 she was the sole remaining Estate Trustee with complete discretion to manage the Estate in accordance with her fiduciary obligations. Joshua, Madison and Jacob were minors at the time of Betty’s death and were vulnerable beneficiaries.

[35] I find that Lorali breached her fiduciary duties and that she is liable to pay damages for that breach as follows:

a. She failed to communicate with the beneficiaries for 20 years and failed to respond to communication from their counsel other than one email in March 2023.

b. She has failed to provide an accounting of the Estate’s assets despite three Court Orders requiring her to do so (two of those Order required her to pass accounts).

c. With respect to the Condo, she resided there and did not pay rent to the Estate, failed to sell it after Robert’s death as required by the terms of the Will, failed to pay realty taxes since 2018, failed to pay the condo fees, and failed to pay the Special Assessment. Had she sold the condo following Robert’s death, she would not have had to pay the Special Assessment.

d. Lorali’s failure to maintain Estate assets resulted in a lien being placed on the condo and the City of Toronto taking steps to distrain for taxes. The Moving Parties incurred legal fees to remove the lien and deal with the City. Further, the Moving Parties had to use their own resources to remove the lien and pay other expenses related to the condo so as to avoid further legal costs and action.

[36] In terms of the quantum of damages, they are broken down above. I see no reason why those damages should not be paid. They have been adequately particularized and supported with all relevant documents. Lorali has not provided any response or defence to the amounts sought.

[37] The Moving Parties claim punitive damages of $100,000. This is a different matter. Orders for punitive damages are rare and ordered only in the most egregious of circumstances.

[38] In Walling v. Walling, 2012 ONSC 6580, the beneficiaries’ uncle was appointed as Estate Trustee. The value of the Estate was estimated to be $25,000. The Court found that the Uncle had failed to comply with previous Orders, breached his fiduciary duty by failing to account to the beneficiaries, failing to distribute the Estate and using Estate funds as his own.

[39] The plaintiffs in Walling sought punitive damages of $50,000. The Court awarded $100,000 in punitive damages finding that the Estate Trustee had been derelict in his duties to the Estate, squandered the inheritance of his vulnerable nephews (who were minors at the time of their father’s death), took chattels from the Estate, failed to account, failed to include the beneficiaries in any funeral ceremonies for their father and was indifferent to their feelings. The result of the Estate Trustee’s actions was that the beneficiaries did not have funds available for their post-secondary education as planned by their father.

[40] The Court in Walling found that the Estate Trustee’s breach of Court Orders alone would have been sufficient on its own to award punitive damages but found that increased damages were warranted because of the Estate Trustee’s squandering of Estate assets and the resultant emotional harm. The Court also awarded substantial indemnity costs against the Estate Trustee.

[41] As in Walling, the Court needs to send a message in this case regarding its abhorrence of the Lorali’s conduct while she was an Estate Trustee and the amount of punitive damages must be sufficient to reflect deterrence in similar cases.

[42] There are aspects to this case that are similar to Walling including the actions of the Estate Trustee causing increased costs, a failure to communicate with vulnerable beneficiaries and failing to account.

[43] Lorali remains in breach of three Court Orders. Adding insult to injury is the fact that just before this motion began, Meredith revealed that the documents sought by the Moving Parties for the last two years have been in Lorali’s possession throughout. She simply did not get around to producing them.

[44] Lorali’s conduct in this matter cannot be considered as anything other than egregious, abhorrent and dismissive of Court authority. An award of punitive damages will communicate to those named as Estate Trustees that breaches of fiduciary duty, and a continuing failure to account or communicate with beneficiaries will be considered conduct that should be the subject of deterrence.

[45] Therefore, Lorali should be required to pay punitive costs but not in the amount sought by the Moving Parties. Had she sold the Condo and used the proceeds for herself that may have been a different matter and more in line with Walling. However, in this case, there are sale proceeds available from the Condo sale which may be distributed to the beneficiaries.

[46] The Moving Parties seek full indemnity costs. I see no reason not to award costs on this scale in the circumstances. This motion arises solely out Lorali’s conduct which has been censured by this Court. The full indemnity costs for this motion sought by the Moving Parties shall be awarded.

Orders

[47] Given all of the above, I make the following Orders:

a. Lorali shall pay damages for breach of fiduciary duty to the Estate of Betty Shaddock in the amount of $175,147.98;

b. Lorali shall pay punitive damages to the Estate of Betty Shaddock in the amount of $50,000;

c. Lorali shall pay the full indemnity costs of this motion to the Estate of Betty Shaddock in the amount of $49,601.09.

[48] I have signed the Order provided by the Moving Parties’ counsel which contains the above terms plus additional terms.

C. Gilmore, J. Date: May 25, 2023