Court File and Parties

Court File No.: CV-21-00673077-00ES Date: 2023-09-29 Ontario Superior Court of Justice

Re: Gordon Marcy, Applicant -and- Brian Marcy, Respondent

Before: FL Myers J

Counsel: Shelia Morris, for the Applicant Appiah Boateng, for the Respondent Noah Kochman, for the Estate Trustee Adam Hummel

Heard: September 29, 2023

Endorsement

[1] The Estate Trustee brings this motion urgently with very little notice.

[2] The applicant and the respondent are brothers. They are the residuary beneficiaries of their late mother’s estate.

[3] The parties’ mother passed away in 2015. Her will appointed Brian Marcy as her Estate Trustee. Last year, Justice Dietrich removed Brian Marcy and appointed Adam Hummel, an independent third party, as Estate Trustee.

[4] The Estate Trustee has sold the deceased’s house with closing set for October 4, 2023.

[5] Earlier this week Brian Marcy registered a caution on title to the house to stop the closing. He removed the caution yesterday after counsel for the ET and Gordon Marcy objected.

[6] Nevertheless, the ET seeks an order vacating the caution to ensure that any “no dealings indicator” is also removed from title. He also seeks an order preventing Brian Marcy from interfering with the upcoming closing. Finally he seeks costs on a full indemnity basis of $10,718.05.

[7] Mr. Boateng advised that his client did not seek an adjournment of the hearing to deliver material or to prepare a response. He was content to make submissions on the merits today.

[8] Mr. Boateng submits that under s. 9 of the Estate Administration Act, RSO 1990 c E.22, title to the property vested in the two brothers three years after their mother died. That was long before Mr. Hummel was appointed as ET last year. As such, Mr. Boateng submits that the ET has no right to sell his client’s vested interest in the house or to close the sale next week.

[9] Mr. Boateng submits that the registration of the caution was therefore reasonable. Moreover, although Brian Marcy has removed the caution in the lead-up to this hearing, Mr. Boateng does not yet have instructions as to whether his client intends to file another caution or to take steps to prevent the closing otherwise.

[10] Mr. Boateng advised that prior to making his submissions, he had not had an opportunity to review the Court of Appeal’s decision in Di Michele v. Di Michele, 2014 ONCA 261 provided by Mr. Kochman in his written submissions of law yesterday.

[11] I held the hearing down to allow Mr. Boateng to review the Court of Appeal’s decision.

[12] In Di Michele, Gillese JA wrote:

[98] First, s. 9 of the Estates Administration Act does not apply in the circumstances of this case. Section 9 (and its predecessors) was not enacted to limit the powers given to an estate trustee under a will. Rather, it was intended to give estate trustees additional powers, but only to the extent that the additional powers do not conflict with the provisions of the will. The intention of the deceased, as expressed in his or her will, is always paramount: Re Leblanc (1978), 18 O.R. (2d) 507 (C.A.), at pp. 513-15.

[99] This can be seen from s. 10 of the Estates Administration Act, which provides that nothing in s. 9 derogates from any right possessed by a trustee under the will. Section 10 reads as follows:

Nothing in section 9 derogates from any right possessed by an executor or administrator with the will annexed under a will or under the Trustee Act or from any right possessed by a trustee under a will.

[13] Mr. Boateng did not refer me to s. 10 of the statute that provides a full answer to his submission.

[14] Gillese JA continued:

[100] The paramountcy of the testator’s intention is confirmed in the jurisprudence. Where a will gives the estate trustee a power to sell property at such times and in such manner as the estate trustee sees fit, s. 9 of the Estates Administration Act will not limit the scope of that power by requiring that the property vest after a specific period of time: Re Proudfoot Estate (1994), 3 E.T.R. (2d) 283 (Ont. Gen. Div.), at paras. 8 and 11-12, var’d on other grounds Re Proudfoot Estate (1997), 19 E.T.R. (2d) 150 (Ont. C.A.). See also Re Leblanc, at p. 515.

[15] Mr. Boateng did not refer me to any of this binding authority defining the scope and (in)applicability of s. 9 of the statute on which his client relies.

[16] In this case, the will provides the ET with the “power to sell property at such times and in such manner as the estate trustee sees fit” as follows:

(a) To sell, call in and convert into money the whole or any part of my estate…in such manner and on such terms…as my Trustees in their absolute discretion deem advisable and in so doing to postpone the sale or conversion of any part of the same indefinitely or for such period as my Trustees deem advisable…

[17] Therefore, as held by Gillese JA, s. 9 of the Estates Administration Act “will not limit the scope of that power by requiring that the property vest after a specific period of time.”

[18] Mr. Boateng submits that Di Michele provides that s. 9 does not apply to an ET acting under a will. But here, his client was the ET for the first seven years and during that time he took no steps under the will to advance or preserve the estate’s rights over the real property. Therefore, he submits, absent some active step by the ET under the will, s. 9 applied to vest the property in the beneficiaries on the expiry of the initial three-year period.

[19] I did not call on Mr. Kochman to reply to this submission. It flies in the face of the words used by Gillese JA in para. 100 above. Where, as here, a will provides the ET with a power of sale on such terms as he finds appropriate, s. 9, “will not limit the scope of that power by requiring that the property vest after a specific period of time”. Section 9 simply does not apply regardless of the steps taken or not taken by the ET.

[20] In addition, by order dated August 11, 2022 in this proceeding, Dietrich J. declared that the property of the estate was vested in Mr. Hummel as replacement ET. Mr. Kochman submits that the ET’s title and therefore his entitlement to sell the house is already decided and may not be challenged again in this proceeding under the doctrines of res judicata or abuse of process.

[21] While Brian Marcy could try to argue that as of the date of the order made by Justice Dietrich there was no property left in the estate to vest in the ET, that is untenable. The dispute was about Brian Marcy’s ongoing occupation of the house and Gordon Marcy’s efforts to have the house sold. There was no point in the dispute and order if not to vest the house and the other piece of vacant land in a neutral trustee for administration (i.e. sale).

[22] This point is proven further by the order of Gilmore J dated May 24, 2023 in which Her Honour ordered Brian Marcy to provide vacant possession of the house to the ET. This was done to facilitate a sale by the ET. The ET’s title was not contested before Dietrich J or Gilmore J and it is incontestable now.

[23] Brian Marcy removed his caution in advance of the hearing today. Mr. Boateng advised that he did so to try to avoid the hearing and to avoid costs from accruing.

[24] That could and should have been the end of the matter. But Mr. Boateng’s submissions today that his client has title under s. 9 of the statute despite s. 10 of the statute, and despite Di Michele, coupled with his indication that he does not yet have instructions as to whether Brian Marcy intends to take further steps to prevent the sale from closing, leaves the ET and the closing of the sale transaction in jeopardy.

[25] The affidavit of the ET and of Ms. Ly Pham delivered for this motion make clear the extraordinary efforts that have been undertaken by the ET to try to accommodate Brian Marcy. He has been provided with every reasonable opportunity to advance his interest in the house. Brian Marcy advances no other basis to prevent the sale from closing. The balance of convenience associated with the upcoming sale favours getting the sale closed and moving the estate administration closer to an end.

[26] Brian Marcy may yet decide to advance a claim for improvident realization if he thinks the offer that he submitted to the ET was sufficiently, objectively better than the offer accepted by the ET so as to render the ET’s acceptance of the third party offer commercially unreasonable. But that is a potential damages claim for a later date. It is not an issue affecting the closing.

[27] I am also concerned that Brian Marcy’s stake in the house may already be at risk due to the claims made against him by Gordon Marcy for years of destructive waste of the house, accrued tax arrears, imputed rent, and outstanding costs orders. The excess costs of administration that may also be claimed to have been caused by Brian Marcy’s behaviour are substantial and material in the context of this estate.

[28] I am not in a position to find that any loss that may be suffered by the estate or the beneficiaries by any further actions by Brian Marcy to interfere with the closing of the sale can be made up from Brian Marcy’s share of the house proceeds. Thus the ET and Gordon Marcy are at real risk of being unable to recover any losses incurred by any further interference with the upcoming closing by Brian Marcy. That is another way of saying that if Brian Marcy interferes with the closing, the estate and the applicant are likely to suffer irreparable harm.

[29] This is therefore a proper case for the court to grant an interlocutory injunction prohibiting Brian Marcy, anyone acting on his instructions or on his behalf, and anyone with knowledge of this order from taking any action that may interfere with the closing of the sale of the house by the ET. I so order. For greater certainty only, and without limiting the generality of the foregoing, Brian Marcy, anyone acting on his instructions or on his behalf, and anyone with knowledge of this order, are expressly prohibited from registering any document or interest on title to the property except with leave of the court obtained on notice to the ET and Gordon Marcy.

[30] The ET is prepared to offer Brian Marcy one last chance to attend at the house to remove his own personal property under para. 2 of the order made by Gilmore J. on May 24 of this year. If he wishes to do so, Brian Marcy’s counsel should speak to the ET or his counsel to agree upon the timing and terms of the attendance. The ET has a legitimate interest in attending and observing (a) to ensure that Brian Marcy takes only property that has been purchased by him as ordered by Gilmore J; and (b) to ensure that Brian Marcy or others do not cause any damage to the property. If the parties cannot agree on terms, they may contact my Judicial Assistant to convene a brief case conference under Rule 50.13 (6) to set terms for an attendance by Brian Marcy at the property before closing.

[31] It was not reasonable for Brian Marcy to register a caution intending to prevent a closing of a sale of property based on an assertion of title under a law that (a) does not apply by its own terms; and (b) the Court of Appeal for Ontario has held does not apply.

[32] While the withdrawal of the caution would have gone a long way to ameliorate a costs award had Brian Marcy confirmed with withdrawal of his underlying claim, his counsel took the opposite position this morning despite and in face of clear and binding law.

[33] I disagree with Mr. Boateng’s submission that Brian Marcy’s registration of a caution was not frivolous or vexatious in light of his claim under s. 9 of the Estate Administration Act. Advancing a claim under a statute that does not apply is a frivolous step. Doing so without disclosing to the court the very next section of the statute and without reading or disclosing Court of Appeal authority directly on point is vexatious. Registering a caution without a legal basis designed to stop a lawful transaction from closing is vexatious if not tortious.

[34] Gordon Marcy does not seek his costs of this motion.

[35] There are just two residuary beneficiaries of the estate. Any costs incurred by the ET that are not fully indemnified will then effectively be borne 50:50 by each beneficiary. It is neither fair nor reasonable for Gordon Marcy to have to bear his lawyer’s costs and then 50% of the costs of the ET caused by the vexatious misconduct of Brian Marcy.

[36] I therefore exercise my discretion under s. 131 of the Courts of Justice Act to order Brian Marcy to pay costs of the ET on a full indemnity basis fixed at $10,718.05. Taking frivolous and vexatious steps to stop a transaction without lawful excuse is the type of reprehensible conduct properly addressed by a full indemnity costs award.

[37] The hours incurred by the ET’s counsel to bring this urgent motion and the rates charged are reasonable and are within the amount that Brian Marcy ought reasonably to have contemplated to be the outcome of his registration of the caution and his continued assertion of rights despite his withdrawal of the registration.

[38] If necessary, the ET may recover its costs from Brian Marcy’s share of the proceeds of sale of the assets of the estate prior to any distribution to Brian Marcy.

[39] Order to go as well removing any “no dealings indicator” from title as a result of the caution registered and withdrawn by Brian Marcy. I will not order the caution to be vacated as it is already withdrawn and I have prohibited any further interference with the sale.

FL Myers J Date: September 29, 2023