Court File and Parties

COURT FILE NO.: CV-22-680512-00CL CV-22-00688818-00CL DATE: 20230120 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: LISA KERBEL IN HER PERSONAL CAPACITY AND AS TRUSTEE OF THE ESTATE OF JOEL JAY KERBEL, Applicants AND MORRIS KERBEL HOLDINGS LIMITED, et al, Respondents

• and - RAQUEL KERBEL, BRITTNEY KERBEL AND COLE KERBEL, Applicants AND MORRIS KERBEL HOLDINGS LIMITED, et al, Respondents

BEFORE: Osborne J.

COUNSEL: Tina Lie and Denise Cooney, for the Applicant, Lisa Kerbel Brendan Donovan and Ayda Tabrizi, for the Applicants, Brittney, Raquel and Cole Kerbel Jonathan Lancaster and Rachel Laurion, for the Respondent, Susan Kerbel-Brown Richard B. Swan, for the Respondent, Matthew Kerbel Edward Babin, for the Respondents, Morris Kerbel Holdings Limited and Paladium Construction Limited Teodora Prpa, for the Respondent, Diane Kerbel Kelly Charlebois and Sheila Morris, Office of the Children’s Lawyer, for the minor, Shayne Kerbel

HEARD: January 9, 2023

Endorsement

[1] These two Applications came on today for hearing together.

The Four Proceedings and Procedural History

[2] The Applicant in the first proceeding, Lisa Kerbel (“Lisa”), seeks the appointment of an Inspector to conduct an investigation into the management and affairs of two companies: Morris Kerbel Holdings Limited (“MKH”) and Paladium Construction Limited (“Paladium” and collectively, “the Companies”) pursuant to ss. 161 and/or 248(3)(m) of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 (“OBCA”).

[3] The Companies are holding companies that own or previously owned certain real estate interests in both Canada and the United States.

[4] The Applicants in the second proceeding, Raquel, Brittney and Cole Kerbel, are the adult children of Lisa and have brought a companion OBCA Application to “support the application brought by Lisa” and in the alternative and if Lisa’s Application fails due to lack of standing, they seek essentially the same relief in their own right (i.e., the appointment of an Inspector and an order directing an investigation).

[5] These two Applications are in a series of pending proceedings between and among various members of the Kerbel family and related corporate entities. Given the commonality of surname, and for ease of reference, I will refer to the parties in this Endorsement by their first names.

Background

[6] Joel Kerbel (“Joel”) was a successful businessman who owned, together with his cousins, Jeffrey Kerbel (“Jeffrey”) and Howard Kerbel (“Howard”), various real estate holdings.

[7] Joel died on March 27, 2006, at the age of 47.

[8] Matthew Kerbel (“Matthew”) is the eldest son of Joel, and the only child from Joel’s first marriage.

[9] Joel married his second wife, Lisa Cohen, (now Lisa Kerbel), in 1997. Prior to that second marriage in January 1997, Joel prepared a will (the “1997 Will”) which left the residue of his estate to his present and future children. Other bequests were made under the 1997 Will to Lisa, and those included the family home, an RSP and a cash bequest.

[10] Lisa takes the position that she located a second will of Joel following his death and that this second will is said to be dated from 2003 (the “2003 Will”). It leaves Joel’s entire estate to Lisa.

[11] Lisa and Joel had four children: Raquel, Brittney, Cole, and Shayne.

[12] Shayne is a minor (and will be until June, 2023) with the result that he is represented on these motions by the Office of the Children’s Lawyer (“OCL”). The adult children of Joel and Lisa (Raquel, Brittney, and Cole) are referred to in the materials of the parties as “the Big 3”.

[13] Regrettably, Joel’s death has spawned litigation now reflected in four separate pending proceedings.

[14] The first proceeding is a will challenge commenced by Matthew (CV-21-00673227-00ES), in which Matthew, supported by Joel’s sisters, Susan Kerbel‑Brown (“Susan”) and Diane Kerbel (“Diane”) challenge the validity of the 2003 Will and take the position that it was created and witnessed after Joel’s death.

[15] The second proceeding is an Application commenced by Susan for relief under the OBCA which remains outstanding, but which has been informally stayed, or more accurately paused, on the consent of the parties pending the disposition or resolution of the will challenge proceeding brought by Matthew (CV-21-00655019-00CL).

[16] At present, Susan’s OBCA Application is on hold, as noted. Matthew’s will challenge proceeding is at the discovery stage, and the remaining two Applications are before me today pursuant to various timetabling, scheduling and case management orders made in these and the other related proceedings.

[17] Given that the relief sought by Lisa in her Application, and the relief sought by Raquel, Brittney and Cole collectively in their Application, is essentially the same, and those parties support one another in their respective positions, I will refer to them collectively as “the Applicants” unless it is necessary to distinguish between or among them (i.e., Lisa on the one hand and the Big 3 on the other hand) in which case I will so distinguish.

[18] Essentially, the Applicants seek the appointment of an Inspector to investigate the management and affairs of the Companies from the date of Joel’s death on March 27, 2006, up to the present, on the basis that the Respondents, Susan and Diane, have operated the Companies in a manner that is oppressive and unfairly prejudicial to the shareholders. Lisa’s complaint is, in large part, that she is not receiving equal treatment (with Susan and Diane) on distributions and loans from either or both of the Companies.

[19] At the time of Joel’s death, each of he, Susan and Diane were a one‑third shareholder of each of the Companies, and a director of both.

[20] Joel’s cousins, Jeffrey and Howard Kerbel, were also his business partners, largely through jointly held companies in which each side of the family held an interest: Central Peel Holdings Ltd. (“Central Peel”) and Central Peel Holdings (1982) Ltd. (“Central Peel 1982”).

[21] Central Peel and Central Peel 1982 are owned as to 50 percent by Joel (and now by his estate under either will) and as to the remaining 50 percent by his cousins Jeffrey and Howard.

[22] MKH is, as noted above, a holding company. At present, its only material assets are a 50 percent interest in each of Central Peel and Central Peel 1982, which are companies that in turn, hold the significant real estate interests in Ontario, a 98 percent interest in another company called Kerbel (Ohio) Ltd. that previously held interests in U.S. properties but which currently has only a modest amount of cash in its bank account, and a Florida townhouse which is not revenue producing.

[23] The only significant asset of Paladium is a 50 percent interest in a retail/commercial plaza in Brampton, Ontario held indirectly and through a subsidiary.

[24] Lisa is the sole estate trustee under both the 1997 Will and the 2003 Will, although she is also a beneficiary (indeed the beneficiary of the entirety of Joel’s estate) under the 2003 Will if it is found to be valid.

[25] There is no dispute about the authenticity of the 1997 Will. The authenticity and validity of the 2003 Will which would supersede it, however, is vigorously disputed. As stated above, it is alleged to have been discovered by Lisa in 2006, approximately three years after it was purportedly executed and some months after Joel’s death.

Relief Sought

[26] The Applicants have provided to me a draft Order setting out the scope of relief sought today. I should observe that counsel for the Applicants advised during submissions that the Applicants would be content if the final form of Order was resolved and amended if necessary, depending on the substantive relief granted or not granted in these Applications.

[27] The proposed draft Order is broadly consistent with the relief set out in the respective Notices of Application, although as further described below it is broader in certain respects. Today, the relief that the Applicants seek would provide, among other things, for the following:

(a) the appointment pursuant to s. 161 of the OBCA of Cohen Hamilton Steger & Co. Inc. represented by Greg McEvoy as an inspector (the “Inspector”) of the Companies;

(b) the direction to the Inspector to conduct an investigation of the Companies for the purposes of reviewing and reporting on their use of corporate funds from March 27, 2006 (the date of Joel’s death) to the present, including, without limitation:

(i) the payment of salaries and any other amounts to Susan, Diane, Lisa, and Bradley Brown (Diane’s husband, “Bradley”) and any related parties;

(ii) a review of loans made by the Companies to the shareholders;

(iii) the sale of any of the Companies’ assets and the use of proceeds thereof;

(iv) charges and/or loans secured against the Companies’ assets, and the use of the proceeds thereof;

(v) the payment of dividends to shareholders; and

(vi) the payment of personal expenses over $250.00 on behalf of Susan, Diane, Lisa and Bradley, or any other related parties;

(c) the direction to the Inspector to make reports to the Court;

(d) authorization of the Inspector to enter any premises from which the Companies carry on business or such further or other premises in which there might be relevant information;

(e) authorization to the Inspector to have access to all the Companies’ books and records of any kind wherever situate including but not limited to financial statements, corporate income tax returns and notices of assessment, general ledgers including all supporting documentation, and access to all of the Companies’ computer systems wherever situate, present and historical, and the permission to take copies;

(f) authorization and power to the Inspector to require any persons employed, retained or contracted by the Companies, including their internal and external accountants, to provide any records;

(g) authorization for the Inspector to require any person to attend for an examination and be examined under oath; and

(h) authorization to the Inspector to retain professional advice as it may deem necessary, including counsel, forensic IT and real estate appraisers.

[28] The scope of the relief sought today by the Applicants and as reflected in the draft Order also includes an Order that the Companies and the directors (Lisa, Diane, and Susan) are jointly and severally responsible for all of the fees and disbursements of the Inspector, including but not limited to the funding of an initial retainer of $50,000.00.

[29] The draft Order would also give the Inspector a first-ranking Charge on the property of the Companies as security for fees and disbursements incurred both before and after the making of the Order sought.

[30] The draft Order would further provide a joint and several indemnity in favour of the Inspector from each of the Companies and the directors.

[31] Finally, the draft Order does not include a budget for the proposed Inspector but does set out at Schedule A the rates of Mr. McEvoy and other (unnamed) principals, associates/senior managers and support staff, with hourly rates ranging from $100.00 per hour to $725.00 per hour.

The Allegations and the Positions of the Parties

[32] The Applicants allege, as described in Lisa’s factum, that the Companies have “failed in their core obligations to provide their shareholders with information about their financial position and there was good reason to believe that the reasonable expectations of Lisa, as a one‑third shareholder, have not been met”.

[33] Lisa relies on four core complaints, or events or transactions, which the Applicants allege are the principal examples of the oppressive and prejudicial conduct:

(a) Susan and Diane have, over several years, removed funds from the Companies to their benefit. In 2020, they removed almost $1,000,000.00 from MKH, purportedly by way of loans, at a time when MKH had no revenue producing property. As of December 2022, only $4,000.00 in cash remains;

(b) in the last two years, Susan and Diane have caused the Companies to liquidate their revenue producing properties, without providing an accounting for or distribution of, proceeds to Lisa, or confirmation that such are being held in trust for Lisa. Susan and Diane have admitted to using Lisa’s share of the sale proceeds for other corporate purposes;

(c) the Companies have failed to comply with OBCA requirements to prepare audited financial statements or obtain a waiver of the audit requirement from shareholders, hold shareholder meetings, and provide appropriate information access to shareholders; and

(d) there is reason to believe that the unaudited financial statements that are available do not present an accurate financial picture of the Companies’ affairs.

[34] The Applicant Lisa takes the position that she is entitled to the production of information (and equal distributions) either as estate trustee under the 1997 Will, or as estate trustee and beneficiary under the 2003 Will, in either case from the date of Joel’s death forward to the present (i.e., approximately 16 years).

[35] The Big 3 Applicants take the position that, in any event of Lisa’s standing, they are entitled to the relief sought since they are beneficiaries under the 1997 Will, even if the 2003 Will is found to be invalid.

[36] The Respondents Susan, Diane, Matthew and the Companies [1] oppose the relief sought.

[37] The Respondents oppose the appointment of an Inspector at all and even if an Inspector were to be appointed, they oppose the scope of the appointment and in particular the following:

(a) an investigation into the business and affairs of the Companies going back some 16 years to 2006;

(b) the proposed joint and several liability and indemnification obligations of the Companies and the directors and officers, which, given that there are funds available in the accounts of the Companies only in the approximate amount of $4,000.00, would result for practical purposes in an Order requiring the Respondents Diane and Susan to fund the costs of the Inspector and therefore fund an investigation targeted at them;

(c) the appointment of an Inspector with exceedingly broad powers, including the right to enter into private dwellings to seize records; and

(d) the approval of a broad mandate for the Inspector in circumstances where there is no budget, no maximum or cap on fees or disbursements and therefore the cost is open‑ended and unknown.

[38] The Respondents take the position that such information as shareholders are entitled to, has been provided. They say that the relief sought amounts to a fishing expedition and at best constitutes premature discovery, in that these Applications are effectively a collateral attack on the pending will challenge proceeding brought by Matthew, and that the relief is sought for the purposes of delay and obfuscation.

[39] The Respondents argue that there is no reason why Lisa and/or the Big 3 cannot bring an ordinary course oppression action or application, if they so choose, in the course of which they would be entitled to the usual production and discovery rights. As a result, they submit, there is no prejudice to the Applicants if the relief sought on these Applications is denied.

[40] The Respondents further submit that the proposed powers for an Inspector would go beyond the finding of relevant facts and amount to a determination of legal rights, which is inappropriate.

[41] Finally, the Respondents argue that the relief sought is discretionary and that such discretion ought not to be exercised in favour of Lisa as a result of what they allege is a lack of clean hands.

[42] They assert that Lisa’s Application is motivated by an extension of “the same meddling that underlies the impugned 2003 Will”. While the validity (or lack thereof) of the 2003 Will is not before me today, the Respondents point to what they allege are highly unusual and concerning circumstances in which the 2003 Will came about. If the 2003 Will is ultimately held not to be valid, they argue, Lisa has no personal beneficial interest in the estate.

[43] The Respondents submit that neither company currently generates any material revenue and are not operating entities but are simply shareholders themselves in companies that operate in partnership with other companies controlled by Joel’s cousins, Jeffrey and Howard as described above.

[44] Moreover, the Respondents assert, and it seems to be common ground, that since 2019, Jeffrey and Howard have refused to allow distributions to be made to the Companies by the jointly held corporations, with the result that their revenue streams have essentially been cut off. For practical purposes, there are no ongoing operations of the Companies.

[45] Finally, counsel for all of the Respondents confirmed in argument that they would consent to providing the information and documents relevant to the four core events or transactions about which Lisa complains and which are described above, on the condition that they were produced subject to the deemed undertaking rule with the one exception that they could be used, as suggested by counsel for Matthew, for the purposes of a subsequent oppression claim brought by Lisa against any or all of the Companies, Susan and Diane, if she so chose to bring such a proceeding. To be clear, however, the documents were not to be shared with, for example, non‑parties such as Jeffrey and Howard.

[46] In response to an inquiry from the Court, the Respondents have also confirmed that they would consent to the release to the Applicants of the federal income tax returns for MKH for the taxation years 2017 – 2020 inclusive (2020 being the last year that a federal tax return was filed) and the federal income tax returns for Paladium for the years 2017 – 2022 inclusive, all on the same basis as the materials referred to above.

The Test

[47] The parties agree on the applicable test. Pursuant to s. 161 of the OBCA, the Court may order an investigation where it appears to the court that:

b) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted, or the powers of the directors are or have been exercised, in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards, the interests of a security holder; … or

(d) persons concerned with the formation, business or affairs of the corporation or any of its affiliates have in connection therewith acted fraudulently or dishonestly.

[48] This Court has adopted a three-part test with which I agree, to be applied in a determination of whether to order an Inspector to conduct an investigation:

a. the applicant is a security holder;

b. there is a prima facie case that one of the circumstances set out in s. 161(2) has been met; and

c. the court must consider the appropriateness of the proposed investigation, bearing in mind its usefulness and reasonableness under the circumstances, with due consideration to its expected costs and benefits.

(See Khavari v. Mizrahi, 2016 ONSC 4934 (quoting with approval from Trackcom Systems International Inc. v. Trackcom Systems Inc., 2014 QCCA 1136)).

[49] The Court of Appeal for Ontario has observed that this relief is generally available where it is apparent that the corporation’s books and records are not properly kept or are inaccurate, or where there has been some deceit or oppressive conduct practised against the shareholders. The purpose of an investigation is to ensure that a corporation discharges its core obligation to provide shareholders with an accurate picture of its financial position (see Akagi v. Synergy Group (2000) Inc., 2015 ONCA 368, 125 O.R. (3d) 401).

[50] All parties agree that for the purposes of these two Applications, the first part of the test is met and that the Applicant Lisa is a proper person to bring this application.

[51] The parties disagree on whether the second and third parts of the test are met. The Applicants submit that the evidentiary threshold required to appoint an Inspector is low and that the Court is entitled to make an order for an investigation if “it appears on the face of the materials submitted to the Court that there is good reason to think that the conduct complained of may have taken place, or if there is an appearance of oppressive conduct and the applicant has made out a prima facie case. (see Jones v. Mizzi, 2016 ONSC 4907, 61 B.L.R. (5th) 95, quoting with approval from Consolidated Enfield Corp. v. Blair (1994), 1994 7543 (ON SC), 19 B.L.R. (2d) 9 (Ont. Gen. Div.) ).

[52] The Applicants submit that the unaudited financial statements of the Companies do not present a complete and accurate picture of their financial position largely because of various alleged discrepancies between what the statements reflect on their face and admissions given principally by Susan on cross-examination (see, for example, paragraph 56 of the factum of the Applicant, Lisa).

[53] The Applicants argue that in addition, the other shareholders have withdrawn amounts from the Companies, describing them either as salaries or loans, without accounting for them and without making corresponding payments to Lisa including using funds from the disposition of properties owned by the Companies (see, for example, paragraph 64 of the factum of the Applicant, Lisa).

[54] The Respondents argue that the purpose of an investigation is to find facts (see Catalyst Fund General Partner I Inc. v. Hollinger (2004), 2004 66299 (ON SC), 48 B.L.R. (3d) 194 (Ont. S.C.)). They submit that an investigation is an extraordinary discretionary remedy not required here since all facts into which the Applicants wish to inquire are either known by them or are ascertainable through reasonable inquiry including the litigation tools available in a proceeding such as an oppression proceeding were one to be brought.

[55] The Respondents rely upon the observations of Farley J. in Budd v. Gentra Inc., 1997 CarswellOnt 5226 (Gen. Div.), quoting with approval from Re Royal Trustco Ltd. (No. 3) (1981), 14 B.L.R. 307 (Ont. H.C.), to the effect that an investigation is only an investigation, and is not a proceeding for the determination of rights. The investigation provided for by [the relevant section of the OBCA] is not one which should concern itself primarily with disputed or uncertain questions of law.

[56] The Court in Royal Trustco went on to observe that in that case, the issue of whether the directors had failed in their obligation of disclosure was a question more properly resolved in a lawsuit than in an investigation into matters of fact only, and the court was unable to conclude that any substantial area of factual investigation was required since there was already on the table ample material on which any shareholder or other aggrieved party may decide whether or not to take legal proceedings.

[57] Finally, the Court in Royal Trustco noted that there might be sufficient justification to order an investigation if there were not the ability to obtain information and materials (“i.e., to ascertain facts in a manner and to an extent that might be beyond the capabilities of an ordinary shareholder to do”). Ultimately, the Court in that case concluded that: “the turning point in the present case is that the issues raised in this case, which are legal ones, or mixed legal and factual ones, are better disposed of in litigation between parties, where rights can be determined, than in an investigation which cannot determine rights.” (see Royal Trustco, at p. 314).

[58] In the circumstances of these two Applications, and in the context of the overarching disputes between the parties including the four pending proceedings, in my view the above observations of the Court in Royal Trustco are applicable here.

[59] As has been observed by this Court, an investigation as contemplated in the OBCA is an extraordinary remedy and is not intended to assist the Court in making findings of oppressive conduct, and nor should it be used to assist parties to prepare for litigation (Cormpilas v. 1490565 Ontario Limited, 2022 ONSC 119, 73 E.T.R. (4th) 229).

[60] While the threshold for oppressive conduct in order to satisfy the first branch of the test may be low, it is not sufficient for an applicant to merely allege misconduct or raise suspicion. It is incumbent on the Court to review the entire record before determining whether the test has been met (see Khavari).

[61] In addition, the third part of the test, consideration of the appropriateness of appointing an inspector, arises from both the fact that the remedy is discretionary and that it is an extraordinary remedy, with the result that the courts have had regard to a number of factors, including:

a. whether the applicant needs access to the information;

b. whether there are better, less expensive means to acquire the information;

c. whether the proposed investigation would give a tactical advantage to the applicant; and

d. the expense of the investigation as compared to the benefits.

(See Khavari quoting with approval from Trackcom).

[62] I am satisfied, particularly with the undertakings of the Respondents referred to above to provide materials and information relating to the four core transactions about which the Applicants complain and on which they rely for their allegations of oppression, together with the tax returns of the Companies, that the Applicants have, or can have if they wish to commence oppression proceedings, the information and materials to which they say they are entitled and they require to determine their positions.

[63] Accordingly, I am not satisfied that the second and third elements of the test have been met here.

[64] Moreover, the Applicants have not put forward on these Applications any complete record of the evidence, materials and information they already have. For example, Lisa’s accountant, Mr. Weisdorf, has acted for her since 2007 and continues to do so. There is no evidence from him, and nor has his file been produced notwithstanding that the evidence of Susan on cross-examination was to the effect that he had received financial statements every single year for which they were completed. It is not clear on the record that Lisa herself has knowledge with certainty as to what information Mr. Weisdorf (and therefore she) does or does not have.

[65] The cross-examination of Susan covered questions relating generally to the status of the shareholder accounts at both Companies as well as distributions (by way of equity or loan) to shareholders. While it may very well be that additional information and materials are properly sought and produced, that is not sufficient to justify the relief sought.

[66] I accept the submission from counsel for Lisa to the effect that much of the information she now has was obtained only as a result of commencing this proceeding and she had not been able to obtain it otherwise. There may well be some merit to that statement as a fact, but I am not persuaded that it justifies the scope of the inspectorship and investigation now sought.

[67] As noted above, the Applicants take the position that they should get the information and materials now through the proposed inspectorship and investigation, whatever rights they may have in any subsequent litigation. I observe that Lisa has herself been clear that: “I reserve the right to commence further proceedings under the OBCA against the Companies, Susan and/or Diane, arising from any information gathered in the investigation” (Reply Affidavit of Lisa, affirmed November 29, 2022, at paragraph 22).

[68] Given the particulars of the complaints of oppressive conduct set out by Lisa in her materials and relied upon by all of the Applicants, I am satisfied that they already have material facts sufficient to prepare a claim alleging oppressive conduct and seeking relief should they choose to do so.

[69] I am not persuaded that the appointment of an inspector to carry out the investigation, which I pause to observe would be an investigation into facts only, and not questions of law (i.e., whether such facts as may be disclosed constitute oppressive conduct), would materially advance the just, equitable and efficient determination or resolution of any issues between and among the parties. An inspectorship is not justified under s. 161.

[70] I am not persuaded that the proposed investigation is appropriate and reasonable in the circumstances, or that it would be more appropriate and more efficient for the parties than if the information were sought pursuant to the ordinary course discovery process in an oppression proceeding if the Applicants or any of them elected to bring such a proceeding, in which case the issues might well be more particularly and accurately framed by the pleadings in that proceeding.

[71] As noted, the relief sought is extraordinary and discretionary. The proposed scope of the investigation sought here is wide, and covers virtually all activities and operations of the Companies for a period reaching back 16 years. The investigation and the scope of documents to be produced could very well represent a massive undertaking with corresponding costs.

[72] The fact that the Applicants have not put forward a proposed budget for the inspector or investigation is not itself determinative of whether the test is met, but the absence of any budget, or even an outline of proposed scope of work or phased or staged approach [either temporally or according to issue or allegation, for example] increases my concern about directing such an open-ended and far-ranging inquiry.

[73] In addition, the proposed scope of relief would authorize the Inspector to retain professional support, including appraisers and accountants, to assist as necessary. That could further increase the costs to a significant but unknown extent.

[74] My concerns about authorizing an investigation with costs that are not even sought to be quantified but based on the scope of the proposed investigation, will inevitably be very material, are heightened by the fact that the Companies lack any cash resources, with the practical result as noted above that these investigations will be funded by the shareholders (and particularly Diane and Susan, against whose conduct the investigation is directed) from the outset. This, too, reinforces my conclusion that the proposed investigation now is not appropriate, not reasonable and is not justified given the cost/benefit analysis, even to the extent that I am able to evaluate that requirement as against the absence in the record as to evidence as to the cost.

[75] Even if I were inclined to order an investigation, I would have concerns about the authorization to the Inspector to enter into private dwellings and otherwise with respect to the broad scope of the powers sought.

[76] I would have come to the conclusion as I have regarding the appointment of an Inspector and authorization for the proposed investigation were these two Applications the only pending proceedings between and among the parties, but I am reinforced in the result by the practical fact that, as noted above, these two Applications are but two of four currently pending proceedings between and among (largely) the same parties. In this broader factual matrix, I am reinforced in my conclusion that the extraordinary remedy of an inspector and an investigation is not appropriate, reasonable and proportionate here.

[77] I accept the position of the Applicant, Lisa, that the relief she is seeking in her Application before me today is not dependent upon the outcome of Matthew’s will challenge proceeding, since even if the 2003 Will is found to be invalid, she would still be entitled to the information in her capacity as estate trustee of the 1997 Will.

[78] The Respondents take the position that if the will challenge succeeds, it is unlikely, given her conduct, that Lisa will remain as estate trustee under the 1997 Will, with the result that she would have no entitlement to seek any information in any capacity, whether representative or personal. Even if Lisa did remain as an estate trustee under the 1997 Will, she would have no personal beneficial interest in the estate. That is not an issue that I need to determine today given my conclusions above.

[79] For the same reasons, the result on these Applications today is not different if the relief sought were granted in the Application of the Big 3, as opposed to the Application brought by Lisa. In addition, and while I appreciate that the Big 3 support the relief sought by Lisa, the evidence of Raquel, the only one of the Big 3 to put forward evidence, revealed on cross-examination that she has not made any requests of Susan or Diane for many of the documents that are said to be foundational (i.e., financial statements which she could have requested, tax returns, books and records, meeting minutes and resolutions).

[80] Finally, all parties made submissions about the temporal scope of the investigation, if so ordered, and whether it should extend back in time to cover periods and conduct in respect of which claims would be statute barred (See Cormpilas; Jones; and Zhao v. Li, 2020 ONCA 121).

[81] Given the conclusions I have reached above, it is not necessary for me to determine the temporal scope of an investigation and, as noted, in the circumstances, the issue of whether any claims are statute barred is best determined in the context of, and as against the pleadings framing, those claims.

[82] It is in that context that the Court can, and in my view is better situated to, make a determination about whether any limitation periods did not toll because some of the claimants were minors at the time, whether the oppressive conduct complained of consists of a series of discrete events or a pattern of ongoing conduct, and as a result which claims may be statute barred.

[83] Since the Companies are not operating entities, and distributions and loans from either of the Companies are a function of the financial circumstances of each which are exhausted at this point, and cash inflow to the Companies from the related entities described above has effectively been frozen since 2019, the risk of additional mischief and therefore prejudice to the Applicants if the relief requested is not granted, is lessened. Moreover, they are free to commence the oppression applications as they [or at least Lisa] have indicated they reserve their rights to do, at any time.

[84] In the result, these Applications are dismissed, without prejudice to the right of the Applicants or any of them to bring an oppression proceeding against any or all of the Companies, Susan or Diane if they so choose, and on terms that the Respondents will produce the documents and materials on terms, all as described at paragraphs 45 and 46 above.

[85] The Respondents have been successful in the Applications. They may make brief written submissions as to costs, not to exceed three pages in length, and file same together with their respective bills of costs, within 10 days. The Applicants may file responding brief written submissions also not to exceed three pages in length, within 10 days thereafter.

Osborne, J. Date: January 20, 2023

Note:

[1] The Respondents in Lisa’s Application include the Big 3 and Shayne. The Respondents in the Application of the Big 3, include Lisa. However, since Lisa and the Big 3 are the Applicants in one or other of the two Applications before me, references in this endorsement to "the Respondents" are references to the other parties who oppose the relief sought in both of these Applications unless otherwise indicated.