Court File and Parties

COURT FILE NO.: CV-22-00680865-00ES

DATE: 20231219

ONTARIO SUPERIOR COURT OF JUSTICE (ESTATES LIST)

IN THE MATTER OF THE ESTATE OF JOSEPH HARVEY EARL SULLIVAN, deceased,

B E T W E E N:

CATHERINE MARY SULLIVAN, personally, and in her capacity as joint estate trustee of the Estate of Joseph Harvey Earl Sullivan, deceased

Applicant

-and-

KEVIN PATRICK SULLIVAN, personally, and in his capacity as joint estate trustee of the Estate of Joseph Harvey Earl Sullivan, deceased,

Respondent

BEFORE: FL Myers J

COUNSEL: Arieh Bloom, for the applicant

Jake Sandler, for Emma Sullivan, James Sullivan, and Kate Sullivan - Beneficiaries of Estate of Kevin Sullivan

HEARD: December 19, 2023

ENDORSEMENT

[1] This is an unusual matter.

[2] In this litigation, the applicant claimed that her brother, as co-estate trustee of their late father’s estate, pledged the estate’s assets as margin for his personal trading debts.

[3] On June 22, 2022, Dietrich J. ordered Kevin Sullivan to apply to pass his accounts within sixty days.

[4] He did not do so.

[5] By order dated August 10, 2022, Dietrich J. declared that Kevin Sullivan breached his fiduciary duty as estate trustee by pledging the estate’s assets as security for his personal liabilities. She ordered that the applicant’s damages would be assessed as part of the passing of accounts. She also ordered Kevin Sullivan to pay costs to the applicant of $16,509.63.

[6] Despite this order, Kevin Sullivan did not apply to pass his accounts or pay the costs.

[7] By order dated March 3, 2023, with reasons reported at 2023 ONSC 1477, Dietrich J. held Kevin Sullivan to be in contempt of her June 22, 2022 order for failing to pass his accounts.

[8] Before passing sentence on Kevin Sullivan for his contempt of court, Dietrich J. gave him another 28 days to “purge his contempt” by commencing a proceeding to pass his accounts. She ordered him to pass his accounts within 28 days failing which she would hear sentencing submissions.

[9] At the same time, the applicant asked for leave to proceed with an uncontested trial to fix her damages flowing from Kevin Sullivan’s breach of fiduciary duty.

[10] The applicant sought this relief independent of the issue of contempt of court. Rather, the applicant sought leave under Rule 57.03 (2) of the Rules of Civil Procedure, RRO 1990, Reg,. 194. That rule empowers the court to make any order as is just where a party fails to pay a costs order.

[11] Dietrich J. refused to allow the damages assessment to proceed independent of the passing of accounts and the contempt issue at that time. She held:

[36] I decline to grant an order permitting the Applicant to proceed with an uncontested trial at this time. I do so without prejudice to the Applicant's right to seek such relief at a later date should the Respondent fail to purge his contempt by bringing his application to pass the Raymond James Estate Accounts within 28 days, as ordered.

[12] Dietrich J. reasoned that if Kevin Sullivan passed his accounts as ordered, then all issues could still be dealt with efficiently in that one proceeding.

[13] Incredibly, the 28 days offered by Dietrich J. to cajole Kevin Sullivan to pass his accounts came and went. Kevin Sullivan did not purge his contempt by starting a proceeding to pass his accounts in the 28-day period provided to him.

[14] Then, on August 7, 2023, Kevin Sullivan died. He died before the applicant could schedule a hearing to make submissions on sentencing him for contempt of court.

[15] Mr. Sandler was retained by Kevin Sullivan’s three children. They will be the sole beneficiaries if, as it appears, he died intestate.

[16] Mr. Sandler advises that Kevin Sullivan’s only asset was his share of his late father’s estate.

[17] The children understand that Kevin Sullivan’s share of his father’s estate is subject to the applicant’s entitlement to damages for his breach of fiduciary duty. Whether subject to a constructive trust or not, creditor claims will take ahead of beneficiaries in the ordinary course.

[18] Kevin Sullivan’s are not willing to invest their own money to administer their father’s estate just to inherit debt.

[19] The applicant renews her request to assess her damages at an uncontested trial in writing under the proviso set by Dietrich J. in para. 36 of her March 3, 2023 endorsement cited above.

[20] Kevin Sullivan’s children know of today’s motion. In light of their position however, Mr. Sandler attended today without instructions. I appreciated him appearing as an officer of the court.

[21] Mr. Bloom advises that he could find no authority for dealing with a contempt of court proceeding where the contemnor dies having failed to purge his contempt but not yet having been sentenced. If Mr. Bloom does not know and cannot find authority for a legal proposition, I am satisfied that it is a matter of first impression.

[22] Mr. Sandler inquires whether the court has any directions to offer to his clients.

[23] The court will not second-guess the business judgment or cost-benefit analysis made by Kevin Sullivan’s children. If they believe there are no assets and, in light of their father’s defalcation, they are not willing to spend their own money to chase their father’s share of his father’s estate, that is their choice to make. It appears to be both sensible and economically. But it is a decision for them and not for the court.

[24] Mr. Sandler, for his part, has fulfilled his duty to the court and is released from further appearances unless properly retained and instructed.

[25] Although the question of whether civil contempt of court might survive death may be of academic interest, it is not actually before me today. Rather, what is before me is a renewed request under Rule 57.03 (2) to allow the issue of damages to be determined in writing on an uncontested basis due to Kevin Sullivan’s failure to pay costs and his subsequent failure to commence a passing of accounts.

[26] I see no point in forcing the applicant to appoint someone to administer Kevin Sullivan’s estate on behalf of beneficiaries who have, for all intents and purposes, renounced their entitlement to share in an insolvency.

[27] In addition, it is apparent that there will be no passing of accounts brought by Kevin Sullivan.

[28] Forcing the applicant to spend any more money than is absolutely necessary would not be just in light of Kevin Sullivan’s failure to pay costs as ordered (which is a symptom of his lack of assets no doubt).

[29] In my view, the applicant should have leave to proceed to an uncontested trial in writing to quantify her damages against Kevin Sullivan under Rule 57.03 (2). There is no one to pay the outstanding costs order or to contest the claim. I dispense with the provisions of Rule 11 of the Rules of Civil Procedure. An order to continue would be an empty formality in this case.

[30] I leave the question of whether civil contempt of court dies with the contemnor to a case in which the issue us squarely raised.

[31] The costs reserved by Dietrich J. on March 3, 2023 and the costs of today are reserved to the trial judge. However, this is without prejudice to the argument that the costs reserved by Dietrich J. as part of the contempt of court proceeding, if part of the sentencing process, may not survive Kevin Sullivan’s death.

FL Myers J

Date: December 19, 2023