COURT FILE NO.: CV-21-3198-00
DATE: 2023 01 20
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Spectrum Way Corp., Torcon Properties Inc. and Ireneusz Idzkowski also known as Ira Idzkowski
Plaintiffs
AND:
The Estate of Bibi Zariena Alli, deceased, Shamiza Kudwah, Nazrat Alli, Wajid Kudway, Nazreen Kudwah, Zamin Kudwah, Rafiza Ally, Mazum Alli, Hassan Alli, Feizul Ally, Akbar Alli, Cherokee Financial Inc. and Najjia Hawkins
Defendants
BEFORE: Mandhane J.
COUNSEL: M. Tufman, for the Plaintiffs
M. Rintoul, for the Defendant Bibi Zariena Alli, deceased
M. Hogan, for the Defendant Shamiza Kudwah, Nazrat Alli, Wajid Kudway, Nazreen Kudwah, Zamin Kudwah, Rafiza Ally, Mazum Alli, Hassan Alli, and Feizul Ally
Z. Khan for the Defendants Akbar Alli, Cherokee Financial Inc. and Najjia Hawkins
HEARD: January 12, 2023
ENDORSEMENT
INTRODUCTION
[1] The “Plaintiffs” are Ontario corporations, Spectrum Way Corp. and Torcon Properties Inc., and their President and sole shareholder, Ira Idzkowsky. The Plaintiffs seek a declaration that they are entitled to the net proceeds of sale from 1013 Windbrook Grove, Mississauga (the Property).
[2] The Plaintiffs say they entered into an agreement with Bibi Zariena Alli (Ms. Alli) on January 14, 2020 to purchase the Property for $760,000 (“Agreement”). Anticipating the transaction closing, Mr. Idzkowsky says he lent Ms. Alli $46,000 that she agreed to repay from the proceeds of sale (“the Loan”).
[3] Ms. Alli passed away on February 3, 2020 without a will. The Property is the sole asset of the Estate of Bibi Zariena Alli (the Estate), which is one of the Defendants in the action. The beneficiaries of the Estate are also Defendants; they are Ms. Alli’s children and next of kin.
[4] In their Statement of Claim dated September 7, 2021, the Plaintiffs say that the Agreement and Loan are binding on the Estate and/or its beneficiaries.
[5] In his Statement of Defence, Akbar Alli, one of the beneficiaries, says that he was a witness to the Agreement and Loan, but takes no position with regards to the Statement of Claim. In a joint Statement of Defence, the other nine beneficiaries say that there was no binding Agreement between the Plaintiffs and Ms. Alli and ask the claim should be dismissed.
[6] The Estate has not filed a Statement of Defence, at least in part because the beneficiaries have not yet appointed an estate trustee. While Akbar Alli filed an application to be appointed estate trustee, his application could not proceed because he did not have consent from a majority of the other next of kin: Estates Act, R.S.O. 1990, c. E.21, s. 29(2).
[7] The Plaintiffs now seek the appointment of Mr. Mark Lahn, from the law firm of Hull and Hull, as an independent, professional litigation administrator for the Estate. The Plaintiffs say that the Defendants have tried to delay this litigation by failing to appoint an estate trustee, and that an independent administrator should be appointed because of the potential conflict of interest between Akbar Alli and the other nine. beneficiaries.
[8] Akbar Alli did not take a position on the motion before me.
[9] The remaining beneficiaries oppose the Plaintiff’s motion. They say that allowing the Plaintiff’s motion to proceed would effectively allow creditors to select counsel for an estate under the pretense of conflicts amongst beneficiaries.
[10] They say that a creditor cannot be allowed to dictate who represents the estate for the purposes of litigation it has itself launched against the Estate.
[11] By way of countermotion, the remaining nine beneficiaries ask me to appoint Nazreen Kudwah as estate trustee. Ms. Kudwah is one of Ms. Alli’s daughter, her next of kin, a beneficiary of the estate, a named defendant in this action, and has the consent of a majority of Ms. Alli’s next of kin. She filed an application with the court to be certified as the estate trustee on August 24, 2022.
ISSUES
[12] Should I appoint an independent litigation administrator for the estate?
[13] Should Ms. Kudwah be appointed estate trustee for the Estate of Bibi Zariena Alli?
SHORT CONCLUSION
[14] I refuse to appoint an independent administrator for the estate.
[15] Ms. Kudwah shall be appointed estate trustee.
ANALYSIS
[16] Rule 75.06(3)(f) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, allows “any person who appears to have a financial interest in an estate” to apply for directions to the court, and permits the court to direct “that an estate trustee be appointed during litigation…”
[17] None of the Plaintiffs’ cases are directly on point. The caselaw applying Rule 75.06(3)(f) generally involves disputes between and amongst estate trustees and/or potential beneficiaries: Re Bazos, 1964 CanLII 258 (ONCA); Mayer v. Rubin, 2017 ONSC 3498 at para. 36; McQuoid v. Patterson, 2020 ONSC 7690.
[18] In such cases, Myers J. found that: “It is in the interests of all beneficiaries that the assets of the estate be immunized from the tactics employed by litigating parties. The court must protect the level playing field. Neither side should be able to use their control over the estate to benefit themselves or to prejudice the other. It is a simple inference that a trustee who is an adversarial position with a co-trustee or a beneficiary should not normally be left in charge of trust property”: Mayer v. Rubin, at para. 36.
[19] In my view, the Plaintiffs reliance on this caselaw is misguided. The Plaintiffs are not akin to beneficiaries or trustees of the Estate; they are creditors who have sued the Estate and its beneficiaries. In the case of duelling beneficiaries or trustees, appointing a litigation administrator makes sense because both parties have a legal claim to the estate such that estate itself must remain neutral as between them. In contrast, a creditor has no claim to the estate, its claim is against the estate. The estate (and by extension, estate trustee) does not owe a fiduciary duty to potential creditors in the way that it does vis-à-vis beneficiaries. Hence, there is no duty of neutrality owed to a creditor, and no need to appoint an independent litigation administrator.
[20] Moreover, the Plaintiff’s allegations of conflict between Akbar Alli and the other nine beneficiaries are speculative. Akbar Alli’s Statement of Defence takes no position on the outcome of the litigation, and he did not participate in the motion or countermotion in any way. However, if there is a conflict between Akbar Alli and the other nine beneficiaries, consistent with the caselaw above, he could bring a motion under Rule 75.06(3)(f) for appointment of an independent litigation administrator. He has not done so to date.
[21] Finally, pursuant to Rule 1.04(1), I must exercise my discretion under Rule 75.06(3)(f) consistent with my overriding duty to “secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Clearly, in an adversarial system, allowing one litigant to effectively select counsel for an opposing party does not further the just determination of the proceeding on its merits. Indeed, Creditors’ nominated trustee implicitly has an interest adverse to the estate involving an unproven claim.
[22] On the other hand, Ms. Kudwah has the support of majority of beneficiaries and is one of Ms. Alli’s next of kin. She has been involved in defending this litigation and there should be no delay occasioned by her certification as estate trustee. Given the modest value Estate, it is also more cost effective to have Ms. Kudwah perform the role.
[23] I would dismiss the Plaintiff’s motion and grant the relief sought by the Defendants.
COSTS
[24] The Plaintiffs shall pay the Defendants $1500 in partial indemnity costs. While I accept that the Plaintiffs initially filed this motion to spur the Defendants into action, once Ms. Kurdha filed her application to be certified as estate trustee, it would have been prudent and expeditious for the Plaintiffs to have abandoned this motion.
Mandhane J.
Date: January 20, 2023
COURT FILE NO.: CV-21-3198-00
DATE: 2023 01 20
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Spectrum Way Corp., Torcon Properties Inc. and Ireneusz Idzkowski also known as Ira Idzkowski v. The Estate of Bibi Zariena Alli, deceased, Shamiza Kudwah, Nazrat Alli, Wajid Kudway, Nazreen Kudwah, Zamin Kudwah, Rafiza Ally, Mazum Alli, Hassan Alli, Feizul Ally, Akbar Alli, Cherokee Financial Inc. and Najjia Hawkins
BEFORE: Mandhane J.
COUNSEL: M. Tufman, for the Plaintiffs for the Plaintiffs
M. Rintoul, for the Defendant Bibi Zariena Alli, deceased
M. Hogan, for the Defendant Shamiza Kudwah, Nazrat Alli, Wajid Kudway, Nazreen Kudwah, Zamin Kudwah, Rafiza Ally, Mazum Alli, Hassan Alli, and Feizul Ally
Z. Khan for the Defendants Akbar Alli, Cherokee Financial Inc. and Najjia Hawkins
ENDORSEMENT
Mandhane J.
Date: January 20, 2023