Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: NOAH SHECHTMAN, Applicant
AND:
MARY REICH SHECHTMAN, personally and in her capacity as a Trustee of the Shechtman Family Trust and the Shechtman Children Family Trust and ALLEN SHECHTMAN, personally and in his capacity as a Trustee of the Shechtman Family Trust and the Shechtman Children Family Trust, REBECCA SHECHTMAN, MATTHEW SHECHTMAN, and THE OFFICE OF THE CHILDREN’S LAWYER
BEFORE: Dietrich J.
COUNSEL: Arieh Bloom and Jessica Karjanmaa, for the Applicant
John J. Adair and Rebecca Kennedy, for the Respondents, Mary Reich Shechtman, personally and in her capacity as a Trustee of the Shechtman Family Trust and the Shechtman Children Family Trust and Allen Shechtman, personally and in his capacity as a Trustee of the Shechtman Family Trust and the Shechtman Children Family Trust, Rebecca Shechtman and Matthew Shechtman
HEARD: November 15, 2023
ENDORSEMENT
Overview
1The applicant/moving party Noah Shechtman (the “Applicant”) requests this case conference, in part, to deal, in a summary fashion, with responses to undertakings, under advisements, and refusals.
2The Applicant is a beneficiary of two inter vivos trusts. They are the Shechtman Family Trust (the “Family Trust”) and the Shechtman Children Family Trust (the “Children’s Trust”). The Applicant’s parents, the respondents Mary Reich Shechtman and Allen Shechtman (the “Trustees”) managed the Family Trust and the Children’s Trust (the “Trusts”) for over 21 years.
3The Applicant submits that the Trustees failed to comply with a consent order made by me on January 15, 2021 (the “January 2021 Order”), as amended by the endorsement of Kimmel J. dated January 27, 2022, and they failed to comply with an endorsement made by me, dated November 17, 2022, which is ancillary to the January 2021 Order. The January 2021 Order, as amended by Kimmel J., requires the Trustees to a) deliver a listing of assets and liabilities of the Trusts; b) disclose all professional (legal and accounting) advice, including correspondence, surrounding the transfer and/or dissipation of the assets of the Trusts; and c) commence an application to pass accounts in respect of the Family Trust and the Children’s Trust.
4The Trustees’ alleged failure to comply with the January 2021 Order, as amended, and the November 17, 2022 endorsement caused the Applicant to bring a motion for an order finding the Trustees in contempt (the “Contempt Motion”).
The Contempt Motion
5In the Amended Fresh as Amended Notice of Motion for the Contempt Motion, among other relief, the Applicant seeks an order, pursuant to the November 17, 2022 endorsement, that the Trustees produce all documents in their possession pertaining to mortgages registered on title to the Children’s Trust in favour of Ansbacher (Bahamas) Limited (“Ansbacher”) as Trustee of the Harvey Rubenstein Trust (the “Ansbacher Mortgages”), including any and all correspondence with the estate trustees of the estates of Barry Sherman and Honey Sherman (the “Sherman Estates”) relating to the Ansbacher Mortgages1. The Applicant also seeks an order that the Trustees disclose whether any agreement has been reached with a third party, including the estate trustees of the Sherman Estates in respect of the Ansbacher Mortgages.
6The Trustees have declined to file evidence in response to the Contempt Motion on the basis that a contempt motion is a quasi-criminal proceeding, and their Charter rights are engaged. As such, the Applicant must obtain evidence to prove contempt from other sources.
7For some time, the Applicant has been seeking disclosure relating to Ansbacher Mortgages. The Trustees maintained that the Ansbacher Mortgages were gifts (from the late Barry and Honey Sherman) and not loans and that they needed documents from the Sherman Estates in order to properly account. The Applicant submits that though the Trustees agreed to produce documents relating to the Ansbacher Mortgages, as is reflected in my endorsement dated November 17, 2022, they have not disclosed all relevant documents, and they have not provided a complete accounting for the Trusts.
8In my endorsement dated November 17, 2022, I noted that the Trustees did not deny that they had not provided a full accounting for the Trusts. They stated that they did not have complete information regarding a “quite significant aspect of the finances”, being the Ansbacher Mortgages. In that same endorsement, I ordered the Trustees to produce documents in support of the Ansbacher Mortgages by November 25, 2022.
9Because the Trustees declined to give evidence in respect of the Contempt Motion, the Applicant examined his brother, Matthew Shechtman (“Matthew”), under r. 39.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). Matthew was examined on June 1, 2023. He gave eleven undertakings, under advisements, and refusals, which remain outstanding. In the main, they relate to the Ansbacher Mortgages.
10For example, Matthew refuses to answer questions relating to whether an agreement was reached between the Trustees and the Trustee of the Harvey Rubenstein Settlement Trust regarding the Ansbacher Mortgages. He also refuses to produce any documents he may have in his power, possession, or control regarding the Ansbacher Mortgages and the discharge of them.
11The Applicant submits that the unanswered questions put to Matthew are relevant to both the Trustees’ agreement to produce Ansbacher Mortgage documents and to the question of whether they are in breach of the January 2021 Order, and the ancillary November 17, 2022 endorsement.
12On December 2, 2022, the Trustees produced some of the Ansbacher Mortgages documentation, including the real estate lawyer’s file regarding the purchase of real properties by the Trusts, the registering of the Ansbacher Mortgages, and other documents. The Trustees claim that they have produced all relevant, non-privileged documents. However, the Applicant notes that none of the documents produced make any mention of the Harvey Rubenstein Settlement Trust of which Ansbacher is the Trustee.
13The Applicant submits that the Trustees are in contempt of the January 2021 Order, and he seeks to have them produce the documents they were ordered to produce pursuant to the November 17, 2022 endorsement but failed to do.
14Subsequent to the Applicant bringing the Contempt Motion, and subsequent to my November 17, 2022 endorsement, the Ansbacher Mortgages (totalling over $10 million) were discharged without explanation. The Trustees did not revise their accounting for the Trusts and they did not disclose whether the Ansbacher Mortgages were loans or gifts.
15The Applicant submits that he knows that Mary Reich Shechtman has not produced all relevant Ansbacher Mortgages documentation because he found emails between Barry Sherman and her that reference the Ansbacher Mortgages. To date, no information has been produced relating to the Harvey Rubenstein Settlement Trust, which would appear to have a beneficial interest in the Ansbacher Mortgages.
16The Applicant asserts that Matthew, also a beneficiary of the Trusts, has information relating to the Ansbacher Mortgages that he refuses to disclose. Following his examination on June 1, 2023, Matthew delivered his responses to undertakings, under advisements, and refusals, which were due on July 31, 2023, on August 29, 2023. The Applicant seeks Matthew’s responses to the unanswered questions so that the Applicant can marshall the evidence to prosecute his case for contempt.
The Law
17In an examination under r. 39.03 of the Rules, the evidence sought to be elicited must be relevant to the issues on the motion. The test for relevancy is whether the question has a semblance of relevancy: Concord Adex v. 20/20 Management Limited, 2017 ONSC 3897, at para. 15; Ontario v. Rothmans Inc., 2011 ONSC 2504, at para. 143.
18In considering what is relevant, the court should consider the nature of the motion, and the grounds for the motion: Elfe Juvenile Products Inc. v. Bern, 1994 CarswellOnt 1065, at para. 30.
19All relevant evidence should be placed before the court to ensure a fair airing of the issues: Adam v. Ledesma-Cahit, 2015 ONSC 3043, [2015] O.J. No. 2391, at para. 9.
Matthew’s Responses
20The Applicant set out in a chart Matthew’s position and the Applicant’s response on the outstanding undertakings, under advisements, and refusals.
21Principally, Matthew refused questions on the basis that they are simply irrelevant to the issues in the motion, or they are irrelevant to the specific contempt allegation being advanced.
22In my view, a review of the chart shows that Matthew’s refusal to respond to the eleven undertakings, under advisements, and refusals, for the most part, is not appropriate. I find that much of the information sought in Matthew’s examination is relevant to the issues in the Contempt Motion and grounded in the evidence.
23Most of Matthew’s refusals pertain to the production of documents and information pertaining to the Ansbacher Mortgages. This production, and alleged failure by the Trustees to produce it, as ordered, is central to the Contempt Motion. For the Applicant to prove civil contempt where a breach of a court order is in issue, he must meet the test as set out in Susin v. Susin, 2014 ONCA 733, at para. 21. That is a) the order that is said to have been breached must be clear and unequivocal; b) the party who is alleged to have breached the order must be found to have done so deliberately and wilfully; and c) the evidence must prove contempt beyond a reasonable doubt. The Applicant needs to marshall the evidence to prosecute his case. The Trustees have declined to adduce any evidence, which is their right. Matthew, by contrast, is a witness, required on examination, to provide information that is relevant to the issues on the motion.
24The Trustees and Matthew submit that the scope for allowable questions for a witness examined under r. 39.03 is much more limited than on an examination for discovery. The witness need only answer questions relevant to the issues on the motion.
25I agree. However, in my view, the undertakings, under advisements, and refusals in issue are relevant to the issues on the Contempt Motion. The questions asked of Matthew relate to the Ansbacher Mortgages, which are, by the Trustees’ own admission, critical to their accounting for the Children’s Trust and a “significant aspect of the finances of the trust.”
26The Trustees explained that they could not complete their accounting relating to the Trusts until they received missing information about the Ansbacher Mortgages from the Sherman Estates. They took the position that the Ansbacher Mortgages were not genuine loans but gifts from Barry and Honey Sherman, and they stated that whether they were right about the character of the Ansbacher Mortgages would “significantly affect the formal accounts prepared.” The Ansbacher Mortgages were subsequently discharged without any explanation by the Trustees, and their accounting was not adjusted.
27The Contempt Motion is focussed on the Applicant’s allegation that the Trustees wilfully failed to comply with the January 2021 Order, and the ancillary November 17, 2022 endorsement.
28The Trustees and Matthew submit that the November 17, 2022 endorsement does not establish relevance as the Applicant submits. They assert that the endorsement does not provide a foundation for the questions refused. They argue that the Trustees are only required to produce documents “in support of” the Ansbacher Mortgages and that this language, as used in the endorsement, can only refer to and encompass the supporting documentation for the Ansbacher Mortgages, being those documents pursuant to which the Ansbacher Mortgages were granted and registered on title (i.e., the loan agreement(s), mortgage documents and registrations on title). They submit that the endorsement does not require production of all documents related in any way to the Ansbacher Mortgages or that may in some way bear upon the Ansbacher Mortgages.
29I reject this argument that, in my view, places an inappropriately narrow and technical interpretation on the meaning of “in support of” in the context of the November 17, 2022 endorsement. This endorsement was issued at a case conference scheduled to address the Trustees’ failure to comply with the January 2021 Order and was made ancillary to it. The scope of the November 17, 2022 endorsement will be considered by the judge hearing the Contempt Motion.
30I find that Matthew’s refusal to respond to proper and relevant questions is prejudicial to the Applicant’s ability to prosecute the Contempt Motion. The Applicant has already been prejudiced by the Trustees’ failure to produce relevant documents and steps taken by them to prevent the examination of their professional advisors.
31All documentation relating to the Trustees’ dealings with the Ansbacher Mortgages is relevant to their administration of the Trusts that held the properties secured by the Ansbacher Mortgages, and to their fiduciary duty to list and account for all assets and liabilities of the Trusts. The January 2021 Order directs the Trustees to discharge their duty.
32Whether the funds transferred in respect of the Ansbacher Mortgages constituted a genuine loan or a gift is material to the proper accounting of the property of the Children’s Trust. The failure of the Trustees to produce information relevant to that issue is an issue on the Contempt Motion.
33Through the examination of Matthew, the Applicant is entitled to obtain evidence that is relevant to the issues on the Contempt Motion so that he can prosecute his case. The unanswered questions put to Matthew have more than a semblance of relevancy in the context of the Contempt Motion. Matthew, a witness, is required to answer each of these questions insofar as he has information, as opposed to his own belief, which is responsive to the question asked. He is also required to produce documentation within his power, possession and control, which relates to such information.
Costs
34The Applicant has been successful in obtaining the relief he seeks at this case conference. He is entitled to his costs. Neither party has submitted a costs outline. If the parties are unable to resolve the matter of costs, the Applicant may serve and file a one-page costs submission within 14 days. The Trustees and Matthew may serve and file a similar costs submission 14 days thereafter. If written costs submissions have not been served and filed as set out here, I will assume that the matter of costs has been resolved.
Motion to Quash
35The motion to quash the relief as it relates to the r. 39.03 examinations of Phil Spring, Jack Rotsztain, and Alex Glasenberg is rescheduled to be heard on February 14, 2024, at 10 a.m., for half a day, subject to Mr. Sean Dewart’s availability.
Dietrich J.
Date: December 15, 2023
Footnotes
- The Applicant’s request for directions from the court for non-compliance with the November 17, 2022 endorsement, which specifically required the Trustees to produce documents pertaining to the Ansbacher Mortgages, was added to the Notice of Motion on June 2, 2023. However, the request for an order, pursuant to the November 17, 2022 endorsement, that the Trustees produce all documents in their possession pertaining to the Ansbacher Mortgages, including any and all correspondence with the estate trustees of the Sherman Estates relating to the Ansbacher Mortgages, was included in the notice of motion dated April 21, 2023, as was the request for an order that the Trustees disclose whether any agreement had been reached with a third party regarding the Ansbacher Mortgages.