COURT FILE NO.: CV-22-00689871-00ES DATE: 20240308 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: GERSHON KAPLAN, Plaintiff AND: ANNIE HEBER, ABRAHAM KAPLAN, ESTHER KAPLAN and STAN SEIDENFELD, Defendants
BEFORE: M.D. Faieta J.
COUNSEL: Fred Tayar, for the Plaintiff Alexander Turner & Gila Gabay, for the Defendant Annie Heber Jacob Kaufman, for the Defendants Abraham Kaplan and Esther Kaplan Sean Grayson, for the Defendant Stan Seidenfeld
HEARD: January 10, 2024
Endorsement
[1] The following issues were raised on this motion:
- Should the issue of Gershon Kaplan and Adina Gordon be added as parties to this action pursuant to Rule 9 of the Rules of Civil Procedure?
- Should the plaintiff Gershon Kaplan bear the costs of this motion?
- What method of service should be used to serve the Amended Statement of Claim on the issue of Gershon Kaplan and Adina Gordon, who reside in Israel?
Background
[2] Sonia Kaplan was the mother of the following five children, whose approximate ages are noted:
- Abraham Kaplan, age 75
- Gershon Kaplan, age 73
- Esther Kaplan, age 71
- Annie (Kaplan) Heber, age 71
- Adina Gordon, deceased.
[3] Sonia Kaplan settled the Sonia Kaplan Family Trust (“SKF Trust”) on January 2, 1996. The beneficiaries of the SKF Trust were “Sonia Kaplan and the issue of Sonia Kaplan”.
[4] Paragraph 23(b) of the SKF Trust states:
Subject to the terms of this Trust, the Trustees shall, at the Time of Division, divide the Trust Estate among some one or more of the Beneficiaries with power to exclude any one or more of them, in such manner and proportion as the Trustees in the exercise of their absolute and uncontrolled discretion may decide, and failing such decision, they shall divide the Trust Estate in equal shares per stirpes among the Beneficiaries living at the Time of Division.
[5] Paragraph 1(h) of the SKF Trust defines “Time of Division” as follows:
“Time of Division” means the earlier of:
(i) The date of death of Sonia Kaplan;
(ii) The date which is one day prior to the 21st anniversary of the date of this Agreement; or
(iii) Such date as the Trustees may in their discretion determine by instrument in writing signed by the Trustees and delivered in counterparts to each and every adult Beneficiary living at the time of the signing of such instrument.
[6] The plaintiff Gershon Kaplan alleges that:
- The Trustees failed to divide the property in the SKF Trust on or before January 1, 2017, being one day prior to the 21st anniversary of the SKF Trust and, as a result, the Trustees were directed to divide the Trust Estate in equal shares per stirpes among the Beneficiaries of the SKF Trust alive at the Time of Division.
- On January 1, 2017, the property in the SKF Trust vested in Sonia’s five children in equal (20%) shares, with Adina Gordon’s 20% share vesting in her issue; or, alternatively, the property vested in Sonia and, on Sonia’s death, became part of the residue of her testamentary estate.
- As of January 1, 2017, Adina Gordon was survived by her six children who are still alive: Yossi Gordon, Eli Gordon, Batsheva Schweber, Shira Fuss, Chaim Gordon and David Gordon.
- In 2018, one or more of the defendants devised a plan to avoid the express direction of the SKF Trust by back-dating various documents including a written resolution of Annie and Sonia, as trustees, purporting to:
- Distribute the property of the SKF Trust among only three of the Beneficiaries, namely, Annie, Abraham and Esther; and,
- Exclude the plaintiff and the issue of Adina Gordon from any distribution of the Trust Estate.
- In the event that the property in the SKF Trust vested in Sonia as opposed to her five children, upon Sonia’s death on December 10, 2018, at about the age of 96, all of the property and income that comprised the property of the SKF Trust became part of the residue of Sonia’s testamentary estate and was devised under that Will, dated June 10, 2013, in equal 20% shares to the plaintiff, Gershon Kaplan (through a trust created in Sonia’s Will, called the Gershon Trust), Annie, Abraham, Esther and the issue of Adina Gordon.
- The Will provides that during Gershon’s lifetime, the Trustees of the Gershon Trust should pay him the whole or part of the annual net income of the Trust as they consider advisable. At any time, the trustees may pay to Gershon any or all of the capital of the Gershon Trust, in their absolute discretion. The capital of the Gershon Trust shall not otherwise vest in Gershon. Upon Gershon’s death, the trustees shall pay the outstanding burial and funeral expenses for Gershon and any medical bills which are unpaid, and then pay out the balance equally among his issue in equal shares per stirpes.
- The defendants have failed to give a full accounting of the property of the SKF Trust and the proceeds generated from such property and income.
[7] At the time of Sonia’s death, Annie and Sonia were the trustees of the SKF Trust. Annie is the sole remaining trustee of the SKF Trust.
[8] The defendant Annie alleges that:
- in accordance with the discretion granted to the Trustees, the capital of the SKF Trust was distributed in equal shares to the defendants Esther Kaplan and Abraham Kaplan pursuant to a trustee resolution executed by Sonia and Annie. Annie denies that the resolution was back-dated;
- the resolution followed Sonia’s expressed preferences that the issue of Adina Gordon should receive no part of the SKF Trust’s capital and that they should receive no part of her real estate holdings on her death.
- Sonia was aware of the plaintiff’s unstable financial situation for many years and this informed Sonia’s decision to exclude him from the resolution. Such concerns are reflected by the establishment of the Gershon Trust under Sonia’s Will.
- The plaintiff’s claim is barred as the limitation period for commencing this action expired.
[9] The defendants Abraham and Esther deny that they took part in or caused the drafting of the resolution and deny that they devised a plan to avoid the express direction in the SKF Trust by back-dating various documents.
[10] On March 4, 2020, the defendant Stan Seidenfeld was appointed as a special trustee of the Gershon Trust that was created under the Last Will and Testament of Sonia Kaplan to replace Alan Heber, who resigned the same day. The plaintiff seeks to remove Annie and Seidenfeld as the trustees of the Gershon Trust and replace them with his son.
[11] Gershon Kaplan has the following children: Chaim Kaplan, Chaya (Jennifer) Messinger and Yitzchak Kaplan.
Issue #1: Addition of Parties
[12] The plaintiff failed to include the issue of Gershon Kaplan and Adina Gordon as parties to this action even though they clearly have a pecuniary interest in the outcome of this action. It has been left to Annie to correct this omission. At this point, none of the parties object to this aspect of Annie’s motion.
[13] Rule 5.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states:
General Rule
5.03 (1) Every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding. …
Power of Court to Add Parties
(4) The court may order that any person who ought to have been joined as a party or whose presence as a party is necessary to enable the court to adjudicate effectively and completely on the issues in the proceeding shall be added as a party.
[14] Further, Rule 9.01 states:
General Rule
9.01 (1) A proceeding may be brought by or against an executor, administrator or trustee as representing an estate or trust and its beneficiaries without joining the beneficiaries as parties.
Exceptions
(2) Subrule (1) does not apply to a proceeding,
(a) to establish or contest the validity of a will;
(b) for the interpretation of a will;
(c) to remove or replace an executor, administrator or trustee;
(d) against an executor, administrator or trustee for fraud or misconduct; or
(e) for the administration of an estate or the execution of a trust by the court.
Beneficiaries and Others Added by Order
(4) The court may order that any beneficiary, creditor or other interested person be made a party to a proceeding by or against an executor, administrator or trustee.
[15] I agree with the Annie’s submission that Adina Gordon’s children should be added on the basis that they are beneficiaries under the SKF Trust. Further, the plaintiff’s allegations of malfeasance against Annie in her capacity as a trustee of the SKF Trust trigger the requirement of the beneficiaries being added by Rule 9.01(2)(d).
[16] I also accept Annie’s submission that the beneficiaries of the Gershon Trust should have been added as parties as well, given that Gershon seeks to remove Annie as a Trustee of the Gershon Trust and replace her with his son. Given that 8 of 10 of Gershon’s grandchildren are minors and given the contingency that one of Gershon’s children may predecease him, I agree with Annie that the Children’s Lawyer should be added on behalf of Gershon’s minor, unborn or unascertained beneficiaries.
Issue #2: Method of Service Abroad
[17] The issue of Adina Gordon – namely, Yossi Gordon, Eli Gordon, Batshev Schweber, Shira Fuss, Chaim Gordon and David Gordon – reside in Israel.
[18] Israel is a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, signed at The Hague, the 15th day of November, 1965 (the “Convention”). The Convention provides that service of an originating process on a person who resides in another signatory country must be made through that country’s Central Authority unless another method of service is approved by the country.
[19] Rules 16.01(1) and 16.03(1) and (4) of the Rules of Civil Procedure state:
Originating Process
16.01 (1) An originating process shall be served personally as provided in rule 16.02 or by an alternative to personal service as provided in rule 16.03.
Where Available
16.03 (1) Where these rules or an order of the court permit service by an alternative to personal service, service shall be made in accordance with this rule.
Service by Mail to Last Known Address
16.03 (4) Service of a document may be made by sending a copy of the document together with an acknowledgment of receipt card (Form 16A) by mail to the last known address of the person to be served, but service by mail under this subrule is only effective as of the date the sender receives the card.
[20] Rules 17.05(2) and 17.05(3) of the Rules of Civil Procedure state that:
General Manner of Service
(2) An originating process or other document to be served outside Ontario in a jurisdiction that is not a contracting state may be served in the manner provided by these rules for service in Ontario, or in the manner provided by the law of the jurisdiction where service is made, if service made in that manner could reasonably be expected to come to the notice of the person to be served.
Manner of Service in Convention States
(3) An originating process or other document to be served outside Ontario in a contracting state shall be served,
(a) through the central authority in the contracting state; or
(b) in a manner that is permitted by the Convention and that would be permitted by these rules if the document were being served in Ontario. [Emphasis added]
[21] Article 10 of the Convention states:
Provided the State of destination does not object, the present Convention shall not interfere with -
a) the freedom to send judicial documents, by postal channels, directly to persons abroad,
b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,
c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination. [Emphasis added]
[22] Although the term “judicial documents” is not defined in the Convention, it is understood to include an originating process such as a statement of claim or application. See https://www.hcch.net/en/publications-and-studies/details4/?pid=27
[23] The State of Israel has declared that it does not object to the use of Article 10(a) provided that such method of service is not used to serve the State of Israel. Specifically, it states:
Declarations:
14-08-1972
b) The State of Israel, in its quality as State of destination, will, in what concerns Article 10, paragraphs b) and c), of the Convention, effect the service of judicial documents only through the Directorate of Courts, and only where an application for such service emanates from a judicial authority or from the diplomatic or consular representation of a Contracting State;
c) An application to relieve a defendant from the effects of the expiration of the time of appeal from a judgment within the meaning of Article 16 of the Convention will be entertained only if filed within one year from the date of the judgment in question.
16-08-2021
In accordance with the provisions of Article 21 of the Convention, the Government of Israel hereby notifies its opposition to the use of methods of transmission in its territory pursuant to Article 10(a) of the Convention with respect to documents addressed to the State of Israel, including its political subdivisions, agencies, authorities and instrumentalities, and to officials, or agents acting or who acted on behalf of the Government of Israel. Service of such documents shall be effected, subject to the provisions of the Convention, through the Directorate of Courts. [Emphasis added]
See https://www.hcch.net/en/notifications/?csid=405&disp=resdn
[24] Relying on Rule 17.05(3), Article 10(a) of the Convention and Israel’s declaration regarding the use of Article 10(a), Gershon proposes to serve his issue who reside in Israel with the Amended Statement of Claim by mail and email. He states that there is no principle of justice or fairness which requires personal service of the claim in Israel given that his issue in Israel have been aware of the claim since October 2023. Gershon also relies on Wilson v. Servier Canada Inc. (2002), 58 O.R. (3d) 753 (S.C.), for the submission that service by regular mail, once validated, is effective service under Rule 17.05(3) where the originating process came to the actual notice of the defendant.
[25] In short, a plaintiff cannot circumvent the Convention even if the defendant has actual notice of service. For the reasons described below, Wilson is no longer good law and Gershon’s submission is dismissed.
[26] Rule 17.05(3) is a complete code for service in a state that is a signatory to the Convention. A court may not deem other methods of service to be effective under Rule 16 in order to avoid the service requirements of Rule 17.05(3). In Khan Resources Inc. v. Atomredmetzoloto JSC, 2013 ONCA 189, 115 O.R. (3d) 1, Tulloch J.A., as he then was, stated at paras. 32-33, 49 and 77:
32 The mandatory language of rule 17.05(3) regarding contracting states stands in contrast to the permissive language of rule 17.05(2) regarding non-contracting states. Further, the old rule 17.05(1), which permitted service outside Ontario in the manner provided by the Ontario rules or by the rules of the other jurisdiction, stands in contrast to the current rule 17.05(2), which permits such service only in jurisdictions that are not contracting states under the Convention. The "manner provided by these rules for service in Ontario" referenced in rule 17.05(2) obviously includes the Rule 16 provisions for substituted service, validated service and dispensing with service. Rule 17.05(3) contains no such reference. The clear implication is that rule 17.05(3) is intended to provide a complete code for service in contracting states.
33 Third, interpreting rule 17.05(3) as a complete code for service is consistent with the principle that domestic law should be read, where possible, to comply with Canada's international legal obligations. In Bouzari v. Iran (Islamic Republic) (2004), 71 O.R. (3d) 675 (Ont. C.A.), Goudge J.A. explained, at para. 64:
Where Canada has undertaken treaty obligations, it is bound by them as a matter of conventional international law. Parliament is then presumed to legislate consistently with those obligations. Thus, so far as possible, courts should interpret domestic legislation consistently with these treaty obligations.
49 Finally, my conclusion that rule 17.05(3) should be regarded as a complete code for service in contracting states is strengthened by three earlier cases in which plaintiffs in Ontario sought substituted or validated service, or to dispense with service altogether, rather than comply with the Convention. All three cases stand for the same proposition: where service must be effected through the Convention, a plaintiff cannot circumvent this requirement even if the defendant has actual notice of service.
77 Rule 17.05(3) prescribes the only methods of service available when service is to be performed in a contracting state. A party seeking to perform service cannot resort to Rules 16.04 or 16.08 to substitute, dispense with, or validate service. This conclusion is required by the exclusive character of the Service Convention. [Emphasis added.]
[27] Having concluded that service of the Amended Statement of Claim must be made using one of the methods specified in Rule 17.05(3), Annie submits that Article 10(a) does not permit “service” of a document for the purposes of Rule 17.05(3) given that that provision only preserves a person’s “… freedom to send judicial documents by postal channels …”, whereas Articles 10(b) and (c) preserve a person’s “…. freedom to … effect service …” through the judicial officers, officials or other competent persons of the State of destination.
[28] The canons of international treaty interpretation are established by the Vienna Convention on the Law of Treaties and affirmed by Canadian case law. Courts must consider the grammatical and ordinary meaning of the words used, the context and purpose of the treaty, and the preparatory work involved in drafting the provision at issue: Holden v. ACE Aviation Holdings Inc. (2008), 296 D.L.R. (4th) 233 (Ont. Div. Ct.), at para. 12; Plourde c. Service aérien F.B.O. inc., 2007 QCCA 739, at para. 51, leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 400; Connaught Laboratories Ltd. v. British Airways (2002), 217 D.L.R. (4th) 717 (Ont. S.C.), at para. 44; Vienna Convention on the Law of Treaties, 23 May 1969, UN A/CONF.39/11/Add.2, Art. 31-33.
[29] There is little Canadian caselaw on this point and no Canadian caselaw that supports Annie’s position. Without deciding the issue, the Saskatchewan Court of Appeal in Bulmer v. Nissan Motor Co., 2017 SKCA 19, at para. 36, described the views:
A second interpretational difficulty with Article 10(a) stems from its reference to the freedom to "send" judicial documents by postal channels. Articles 10(b) and (c) use the term "service" rather than "send". There is an obvious question, therefore, about whether Article 10(a) applies to the transmission of an originating document like, as is the case here, a statement of claim. The American authorities go both ways on this issue. A series of cases following Bankston v. Toyota Motor Corp., 889 F.2d 172 (U.S. C.A. 8th Cir. 1989) hold that Article 10(a) only provides for the sending of documents after service has been effected by another permitted method. Another line, following Ackermann v. Levine, 788 F.2d 830 (U.S. C.A. 2nd Cir. 1986), takes the opposite view. Several Canadian cases suggest "sending" a document includes "service". See: Wilson v. Servier Canada Inc. (2002), 58 O.R. (3d) 753 (Ont. S.C.J.) at para 14; Grant v. Grant, 2003 BCSC 649, at para 21, (2003), 38 R.F.L. (5th) 89 (B.C. S.C. [In Chambers]); Metcalfe Estate v. Yamaha Motor Canada Ltd., 2012 ABCA 240, at para 2, [2012] 12 W.W.R. 425 (Alta. C.A.).
[30] In my view, the better view is that Article 10(a) authorizes the service of an originating process abroad as do Articles 10(b) and (c).
[31] First, Article 10 is part of a scheme that addresses service of judicial and extrajudicial documents. The Preamble to the Convention states that the purpose of the Convention is to ensure that judicial and extrajudicial documents are “served abroad” in a timely manner.
[32] Second, there is nothing on the face of Article 10 or in the Convention that makes the distinction suggested in Bankston.
[33] Third, unlike the situation in Bankston, where the United States Court of Appeals, Eighth Circuit, found that “… it was “extremely unlikely” that Japan's failure to object to Article 10(a) was intended to authorize the use of registered mail as an effective mode of service of process, particularly in light of the fact that Japan had specifically objected to the much more formal modes of service by Japanese officials which were available in Articles 10(b) and (c)”, Israel has not objected to the more formal means of service provided by Articles 10(b) and 10(c).
[34] Fourth, the Practical Handbook on the Operation of the Service Convention (4th ed., 2016), published by the Permanent Bureau of The Hague Conference on Private International Law, states that “send” includes “serve” and “neither the letter nor the history of the Hague Convention can be used to support the approach applied in Bankston”: at para. 279.
[35] Finally, although there may be a substantial risk that one or more of the foreign defendants may not receive the claim by mail or may not send back their acknowledgement of receipt card, this is not a sufficient reason for reading Article 10(a) narrowly and in a manner that does not give full effect to Rule 17.05(3). In the event that the claim is not received by mail or the receipt card is not returned, this court may have authority to grant substitutional service if all avenues for service under the Convention have been exhausted: Khan, at paras. 56-58; Del Giudice v. Thompson, 2021 ONSC 903, at paras. 7-8.
[36] Accordingly, I direct that the originating process in this case, namely, Gershon’s Amended Statement of Claim, shall be served on the Added Parties who reside in Israel by one of the methods described in Article 10 of the Convention.
Issue #3: Costs
[37] Despite not having included his issue and the issue of Adina Gordon in this Claim, Gershon submits that he should not be liable for Annie’s costs of this motion as all costs claimed by Annie were incurred after she had written notice that he was not opposing her motion. I agree. There shall be no costs in respect of Issue #1.
[38] Given the novelty of the issue, there shall be no costs ordered in respect of Issue #2.
Decision
[39] Order to go as follows:
(a) The children of Adina Gordon, being Yossi Gordon, Eli Gordon, Batsheva Schweber, Shira Fuss, Chaim Gordon and David Gordon, and the issue of Gershon Kaplan, being Chaim Kaplan, Chaya (Jennifer) Messinger, Yitzchak Kaplan, Rachel Kaplan, Miriam Kaplan and the Children’s Lawyer, as litigation guardian of the unborn, unascertained or minor beneficiaries of the Gershon Kaplan Trust (“the Added Parties”), be added as party defendants to this action.
(b) The plaintiff is granted leave to amend his statement of claim in accordance with the draft amended statement of claim that has been filed.
(c) The Added Parties who reside in the State of Israel shall be served with the amended statement of claim in accordance with one of the methods authorized by Article 10 of the Convention including by registered letter in accordance with Rule 16.03(4) of the Rules of Civil Procedure.
(d) There shall be no costs awarded in respect of these motions.
Mr. Justice M.D. Faieta Date: March 8, 2024