Court File and Parties

COURT FILE NO.: CV-23-00707928-00ES DATE: 20240607 ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE BILL POLLOCK TRUST

BETWEEN: ROBERT WILLIAM POLLOCK, by his litigation guardian DONALD MASSE Applicant

AND:

JENNY BASSETT and SOTHEBY KETCHEN Respondents

COURT FILE NO.: CV-23-00709123-00ES

BETWEEN:

SOTHEBY KETCHEN and JENNY BASSETT, as the General Trustees of the Bill Pollock Trust and JENNY BASSETT, as Agent (Attorney-in-Fact) for Robert William Pollock under a Durable Power of Attorney Applicants

AND:

KAREN MEREDITH BLOTT, JOSEPHINE WHITTERS, DONALD MANASSE and ROBERT WILLIAM POLLOCK Respondents

BEFORE: Justice A.A. Sanfilippo

COUNSEL: Lincoln Caylor, Nathan Shaheen, Alexander Payne and Josephine Bulat, for Robert William Pollock, by his litigation guardian, Donald Masse, Karen Meredith Blott, Josephine Whitters, Donald Manasse and Robert William Pollock Daniel Dochylo, for Jenny Bassett and Sotheby Ketchen

HEARD: May 22 and 28, 2024

Endorsement

[1] The moving parties, Robert William Pollock by his Litigation Guardian Donald Manasse, Karen Meredith Blott and Josephine Whitters and Donald Manasse in his personal capacity (collectively, the “Pollock Parties”) brought two motions for approval of two settlements on behalf of a party under disability, in accordance with r. 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, an order, nunc pro tunc, appointing Mr. Manasse as litigation guardian for Mr. Pollock, and an order to vary a trust pursuant to s. 1(1) of the Variation of Trusts Act, R.S.O. 1990, c. V.1 (collectively, the “Motions for Approval”).

[2] The Respondents, Jenny Bassett and Sotheby Ketchen, consented to the orders sought in the Motions for Approval.

A. BACKGROUND

[3] Mr. Pollock is the 95-year-old founder of the business known as Drake International, which is comprised of some 50 companies operating internationally. Mr. Pollock has been the ultimate beneficial owner of Drake International since co-founding the company in 1951, having served at times as its chairman and chief executive officer.

[4] By a trust deed executed on December 29, 2016 (the “Trust Deed”), Mr. Pollock settled the Bill Pollock Trust (the “Trust”). The Trust Deed was prepared by Timothy Youdan who was, at that time, Mr. Pollock’s Ontario-based lawyer of more than 15 years. Mr. Youdan deposed that the purpose and intention of the Trust was to provide for succession planning in respect of Mr. Pollock’s control over the ownership and management of Drake International. Mr. Pollock transferred shares, interests, and holdings owned by him to the Trust, including all the entities and interests comprising Drake International. The Trust Deed provides that the “validity, construction and effect of this Deed and any trust created hereby” shall be governed by the laws of the Province of Ontario.

[5] On July 8, 2019, Mr. Pollock executed an amended trust deed (the “First Amended and Restated Trust Deed”) which, according to Mr. Youdan, updated discrete aspects of the Trust to account for changes resulting from the passage of time.

[6] Mr. Pollock is the sole beneficiary of the Trust while he is alive. Mr. Pollock does not have a spouse or children and his siblings are deceased. Mr. Ketchen is Mr. Pollock’s nephew, being the son of Mr. Pollock’s deceased sister, Lillian. Upon Mr. Pollock’s death, the beneficiary of the trust becomes a charitable foundation for under-privileged students (the “Charitable Foundation”) after bequests are made from the Trust (the “Bequests”). The ongoing business of Drake International would continue to operate to generate funds to carry out the purposes of the Trust, under the direction of the General Trustees, a term defined in the Trust Deed.

[7] Mr. Pollock was initially the only General Trustee. Upon Mr. Pollock’s death or incapacity, the Trust provided for the creation of an Appointment Committee to appoint replacement or additional General Trustees. Mr. Youdan deposed that the need to select appropriate persons to serve as General Trustees was critical to achieving a central purpose of the Trust because the General Trustees would exercise control over the ownership and management of Drake International.

B. THE EMERGENCE OF THE DISPUTE

[8] Mr. Youdan deposed that in September 2021, upon being consulted by Mr. Pollock regarding further amendments to the Trust Deed, he observed, and raised with Mr. Pollock, that Mr. Pollock, at that point in his early 90’s, was “struggling with his memory”. Mr. Youdan was alerted to similar concerns from Ms. Bassett, who began working as Mr. Pollock’s executive assistant in June 2021, and Wendy Kennedy, Drake International’s General Counsel.

[9] On January 25, 2022, Mr. Pollock was assessed by Dr. Andrew Dean, a Certified Clinical Neuropsychologist associated with the UCLA Department of Psychiatry. Mr. Pollock was at that time residing in California. Dr. Dean analysed whether Mr. Pollock was incapable of managing property within the meaning of s. 1(viii) of the First Amended and Restated Trust Deed, which provides that a person is incapable when “such individual is not able to understand information that is relevant to making decisions in the management of such individual’s own property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision” (the “Trust Deed Capacity Definition”). Dr. Dean concluded that Mr. Pollock’s memory impairment rendered him incapable of managing his property for the purposes of the Trust Deed Capacity Definition.

[10] In February 2022, Mr. Pollock retained a Los Angeles-based law firm to advise him on estate planning. On February 24, 2022, Mr. Pollock was assessed by Dr. Daniel A. Plotkin, a Los Angeles-based psychiatrist and neurologist certified with a subspecialty in geriatric psychiatry, who provided the opinion that Mr. Pollock had testamentary capacity as well as contractual capacity necessary to make changes to his estate plan. With the assistance of his California lawyers, on March 8, 2022, Mr. Pollock executed amendments to the Trust Deed (the “Second Amended and Restated Trust Deed”).

[11] The Second Amended and Restated Trust Deed removed Ms. Whitters, Mr. Kennedy and Christopher Ouizeman from the Appointment Committee and provided that Ms. Bassett and Mr. Ketchen, along with three regional employees of Drake International would form the Appointment Committee tasked with appointing the General Trustees upon Mr. Pollock’s death or incapacity. The Second Amended and Restated Trust Deed also provided for a bequest of $350,000.00 (USD) to Ms. Bassett.

[12] On June 30, 2022, Mr. Pollock executed in Los Angeles an Enduring Power of Attorney and Advance Health Care Directive (the “June 2022 Power of Attorney”) in which he appointed Ms. Bassett as his agent to make health care decisions on his behalf.

[13] Ms. Bassett deposed that during July and August 2022 she observed changes in Mr. Pollock’s behaviour and interactions with others. On September 3, 2022, Dr. Brandon Koretz, a medical doctor and professor of clinical medicine in the division of geriatrics at UCLA, assessed Mr. Pollock and delivered a report to Mr. Pollock’s Los Angeles-based lawyers, dated September 5, 2022, setting out his opinion that Mr. Pollock was incapable of managing property. On October 17, 2022, Dr. Plotkin delivered a further report in which he opined that Mr. Pollock has impairments that resulted in a lack of capacity to manage his business.

[14] On or about October 27, 2022, Ms. Bassett, Mr. Ketchen and the other three members of the Appointment Committee that was constituted under the Second Amended and Restated Trust Deed appointed themselves as General Trustees of the Trust effective September 5, 2022. These General Trustees, who referred to themselves as the ONE Drake Team (“ODT”), would assert control of the Trust and its assets.

[15] Ms. Bassett deposed that on February 1, 2023, Mr. Pollock was hospitalized to treat a fractured pelvis, necessitating a lengthy rehabilitation and convalescence. On March 13, 2023, Dr. Koertz conducted a further assessment and opined that Mr. Pollock suffered from a medical condition that caused permanent impairment in his decision making for both medical and financial issues. Dr. Plotkin rendered a report on June 9, 2023 that provided a similar opinion to that rendered by Dr. Koertz.

[16] By September 2023, Mr. Pollock, now resident in Monaco, France, took steps to revoke the Second Amended and Restated Trust Deed and its appointment of the ODT on the basis that he had not been found incapable in France. In an email dated October 3, 2023 to all staff, Mr. Pollock denounced the legitimacy of the ODT. Mr. Pollock, and those supporting him, including Mr. Pollock’s Monaco-based lawyer, Mr. Manasse, took the position that the Appointment Committee could only appoint General Trustees who met the criteria for serving as General Trustees and that the appointment of the ODT did not satisfy these criteria and was disruptive to the operation of Drake International. Mr. Fischer, the former Global Chief Financial Officer of Drake International, deposed that Ms. Bassett and Mr. Ketchen did not have the qualifications to act as General Trustees because Ms. Bassett’s role at Drake International was secretarial, and because Mr. Ketchen conceded that he had no knowledge of the business of Drake International.

[17] Ms. Bassett deposed that on October 2 and 3, 2023, three members of the ODT, and thereby three of the five General Trustees resigned, leaving only Ms. Bassett and Mr. Ketchen as General Trustees of the Trust.

C. THE APPLICATIONS

[18] By Notice of Application issued on October 17, 2023 and amended on January 9, 2024, in court file number CV-23-00707928-00ES, Mr. Pollock, through his litigation guardian, Donald Manasse, claimed the following relief, amongst others, from Ms. Bassett and Mr. Ketchen (herein the “Pollock Application”):

(a) A declaration that the Trust, as amended by the First Amended and Restated Trust Deed, is valid and in force. (b) A declaration that the Second and Restated Amended Trust Deed is invalid and of no force and effect. (c) A declaration that all steps taken by Ms. Bassett and Mr. Ketchen further to the Second Amended and Restated Trust Deed were and are invalid and improper. (d) An order varying the Trust to align with the purposes of the Trust, the intentions of its settlor, Mr. Pollock, in establishing the Trust, and the intentions and wishes of the current sole beneficiary of the Trust, Mr. Pollock, including to reconstitute and/or appoint appropriately experienced and qualified persons to serve as the “Appointment Committee”, “General Trustees” and the “Charitable Trustees”, as defined in the Trust. (e) If necessary, a declaration that the June 2022 Power of Attorney is of no force or effect in Ontario or at all.

[19] On November 3, 2023, Mr. Ketchen and Ms. Bassett issued a Notice of Application in court file number CV-23-00709123-00ES naming Ms. Blott, Ms. Whitters, Mr. Manasse, and Mr. Pollock as Respondents, claiming the following relief, amongst others (herein the “Ketchen/Bassett Application”):

(a) A declaration and order that the Second Amended and Restated Trust Deed is valid and in full force and effect and, in the alternative, the opinion, advice, and direction of the Court with respect to same. (b) An interim and permanent order confirming that Mr. Ketchen and Ms. Bassett are the duly appointed and continuing General Trustees of the Trust. (c) A declaration and order that Mr. Pollock was “incapable of managing property” as of September 5, 2022 within the meaning of the Trust Deed, as amended. (d) A declaration and order that the June 2022 Power of Attorney is in full force and effect. (e) An order that Mr. Manasse is not permitted to act as litigation guardian for Mr. Pollock in proceedings related to the Trust. (f) A permanent injunction restraining the Respondents Ms. Blott, Ms. Whitters and Mr. Manasse, and any others which are identified as participating, from attempting or purporting to act or from holding themselves out as acting in the name or on behalf of Mr. Pollock, the Trust or the corporations forming part of the Trust.

[20] The Pollock Parties filed extensive affidavit evidence in support of the Pollock Application and in response to the Ketchen/Bassett Application, including the following: affidavits of Mr. Manasse sworn October 17, 2023, December 20, 2023, January 26, 2024, April 17, 2024 and May 30, 2024; affidavit of Laura Tamblyn-Watts, Chief Executive Officer of CanAge, sworn December 20, 2023; affidavits of Daniel Fischer sworn December 14, 2023 and January 26, 2024; affidavit of Mark Coetzee, senior executive of Drake International, sworn December 13, 2023; affidavit of Gwen Kennedy, global General Counsel of Drake International, sworn December 18, 2023; affidavit of Ms. Meredith, sworn December 14, 2023; affidavit of Ms. Whitters, former executive assistant to Mr. Pollock, sworn December 13, 2023; affidavit of Mr. Youdan, sworn January 25, 2024. [1]

[21] Mr. Ketchen and Ms. Bassett filed extensive affidavit evidence in response to the Pollock Application and in support of the Ketchen/Basset Application, including the following: affidavit of Ms. Bassett, sworn January 19, 2024; affidavit of Mr. Ketchen, sworn January 19, 2024; affidavit of Dr. Plotkin, sworn January 19, 2024; affidavit of Dr. Koretz, sworn January 17, 2024; affidavit of Samantha Bryan, acquaintance of Mr. Pollock, sworn January 16, 2024; affidavit of Samuel Gullotta, acquaintance of Mr. Pollock, sworn January 11, 2024; affidavit of Nick Polimenakos, a General Trustee in 2022, sworn January 11, 2024.

[22] The record on these competing Applications, with exhibits, exceeded 2,000 pages. The lawyers for the parties attended at six case conferences on the Estates List between November 2023 and March 2024 to speak to the procedural requirements necessary to prepare these Applications for adjudication. At the Case Conference conducted on February 14, 2024, I scheduled the two-day hearing of these Applications to proceed on June 18 and 19, 2024.

[23] Prior to proceeding to examinations and cross-examinations in preparation for the hearing of these Applications, the parties proceeded to mediation, beginning on February 1, 2024 and continuing on March 3, 4 and 19, 2024. Through the four-day mediation, the parties concluded a settlement of all issues in dispute, subject to Court approval on behalf of the party under disability.

D. THE MOTIONS FOR APPROVAL

[24] The Pollock Parties brought two Motions for Approval: (a) a Motion for Approval of the settlement between Ms. Basset and the Pollock Parties (the “Bassett Settlement”); and (b) a Motion for Approval of the settlement between Mr. Ketchen and the Pollock Parties (the “Ketchen Settlement”).

(a) The Motion to Approve the Bassett Settlement

[25] The Motion to Approve the Bassett Settlement was supported by the affidavit of Mr. Pollock’s litigation guardian, Mr. Manasse, sworn April 17, 2024, in compliance with r. 7.08(4)(a), and by the affidavit of the litigation guardian’s lawyer, Mr. Alexander Payne, affirmed April 17, 2024, in compliance with r. 7.08(4)(b). In compliance with r. 7.08(4)(d), Mr. Payne exhibited to his affidavit the minutes of settlement dated March 19, 2024 (the “Basset Minutes of Settlement”), the principal terms of which include the following:

(a) Ms. Bassett shall receive an “accelerated payment” of $250,000.00 (USD), as a compromise of the $350,000.00 bequest provided for Ms. Bassett by the Second Amended and Restated Trust Deed. (b) Ms. Bassett shall resign and confirm that she no long has any “roles, powers or capacities” arising from the Trust, the Second Amended and Restated Trust Deed and any power of attorney regarding Mr. Pollock, including the June 2022 Power of Attorney. Specifically, Ms. Bassett agreed that she is no longer a member of the Appointment Committee, a General Trustee, or a Charitable Trustee under the Trust. (c) The claims advanced against Ms. Bassett in the Pollock Application will be dismissed, and the claims advanced by Ms. Bassett in the Ketchen/Bassett Application will be dismissed. (d) Ms. Bassett and Mr. Pollock agree not to communicate, directly or indirectly, and to enter into a Full and Final Mutual Release in regard to all issues arising from the competing Applications.

[26] The approval of the Basset Settlement under r. 7.08 was supported by Mr. Manasse and Mr. Payne.

(b) The Motion to Approve the Ketchen Settlement

[27] The Motion to Approve the Ketchen Settlement was supported by the affidavit of Mr. Manasse, sworn May 18, 2024, and by the affidavit of the litigation guardian’s lawyer, Mr. Lincoln Caylor, affirmed May 17, 2024. I granted leave to Mr. Caylor to appear on the Motion to Approve the Ketchen Settlement notwithstanding his status as an affiant because he appeared on the Motion to Approve the Bassett Settlement without necessity for leave and the Motions for Approval were factually and analytically intertwined. Also, Mr. Caylor’s affidavit evidence, filed in compliance with r. 7.08(4)(b), was unchallenged and the responding parties consented to leave being granted.

[28] In accordance with r. 7.08(4)(d), Mr. Caylor exhibited to his affidavit the minutes of settlement dated May 17, 2024 (the “May 17, 2024 Minutes of Settlement”), which, like the Bassett Minutes of Settlement, had the objective of settling all issue arising from the Pollock Application and the Ketchen/Bassett Application. The May 17, 2024 Minutes of Settlement addresses the variation of the Trust agreed upon by the parties, building on the Second Amended and Restated Trust Deed. The parties agreed to both the variation of the terms of the Trust and on the operational implementation of the governance provided by the proposed varied Trust, the principal terms of which include the following:

(a) The parties agreed that the Second Amended and Restated Trust Deed was valid and would form the basis for the variation to the Trust. (b) The parties agreed to seek a consent order in the form of a draft consent order attached to the May 17, 2024 Minutes of Settlement that would vary the terms of the Second Amended and Restated Trust Deed to change the governance of the Trust, including as follows: i. the appointment of seven General Trustees of the Trust, consisting of the appointment of the initial Chair of the Board of General Trustees and the six independent General Trustees. ii. The appointment of the Chief Executive Officer of Drake International, as one management General Trustee. iii. the creation of the Charitable Foundation and the institution of a Board of Charitable Trustees to be comprised of three independent members, one management member and one member of the Ketchen family, as selected by Mr. Ketchen, together with the appointment of the individuals to serve in these positions. iv. The appointment of the Chief Executive Officer of Drake International, as one management Charitable Trustee. v. the formation of a “Family Council” in connection with the Trust, with informational rights in respect of the Trust and the opportunity to ask questions and provide input in regard to Drake International, and the appointment of Mr. Ketchen as Chair of the Family Council. (c) The payment of Mr. Ketchen’s costs and expenses in connection with the Applications. (d) The execution of a Full and Final Mutual Release between Mr. Ketchen and the Pollock Parties.

[29] After the initial hearing of this Motion on May 22, 2024, the Pollock Parties delivered a Fresh as Amended Notice of Motion in the Ketchen Settlement, supported by the second supplemental affidavit of Lincoln Caylor affirmed May 27, 2024, the affidavit of Alexander Payne affirmed May 27, 2024 and the supplemental affidavit of Mr. Manasse sworn May 30, 2024.

[30] Mr. Caylor and Mr. Payne deposed that the parties entered into an Amending Agreement dated May 27, 2024 that was exhibited to Mr. Payne’s affidavit of that day (the “Amending Agreement”), that amended paragraph 2 of the May 17, 2024 Minutes of Settlement to modify the draft Order that the parties jointly seek to vary the Trust and to implement the terms of the Trust. I will refer to the May 17, 2024 Minutes of Settlement as modified by the Amending Agreement as the “Ketchen Minutes of Settlement.” The further version of draft order agreed upon by the parties and annexed to the Amending Agreement delineates the draft order into two parts: in paragraphs 1–5, those court declarations and orders that are required to approve the Bassett Settlement and the Ketchen Settlement, including the variation of the Trust; in paragraph 6, those terms that the parties have agreed upon in implementation of the Ketchen Settlement and which the parties jointly requested be included in the order.

[31] In summary, the Ketchen Settlement proposes to resolve the Applications while establishing a governance model for the Trust and for Drake International, corresponding proposed amendments to the Trust deed, and the selection of the individuals proposed to carry out positions of responsibility as General Trustees and Charitable Trustees.

[32] In addition to seeking an order under r. 7.08 to approve the Ketchen Settlement, the Fresh as Amended Notice of Motion sought an order nunc pro tunc appointing Mr. Manasse as litigation guardian in the Ketchen/Bassett Application effective November 15, 2023.

E. THE APPOINTMENT OF THE LITIGATION GUARDIAN

[33] Rule 7.01(1) provides that “[u]nless the court orders or a statute provides otherwise, a proceeding shall be commenced, continued or defended on behalf of a party under disability by a litigation guardian.” Rule 7.02(2) provides that no person, except the Children’s Lawyer or the Public Guardian and Trustee, shall act as litigation guardian for an applicant who is under disability until that person has filed an affidavit that contains the evidence specified in Rule 7.02(2)(a)-(h), inclusive.

[34] On October 17, 2023, Mr. Manasse swore an affidavit compliant with Rule 7.02(2)(a)-(h) on the following evidence: Mr. Manasse deposed that he is aware that Mr. Pollock has been found to lack capacity at various times over the recent years; he consented to act as Mr. Pollock’s litigation guardian; he has no interest in the litigation adverse to Mr. Pollock; he is aware of his liability to personally pay any cost award; and both he and Mr. Pollock are ordinarily resident outside of Ontario. In his affidavit sworn April 17, 2024, Mr. Manasse explained that he is a lawyer authorized to practice law since 1978 in the state of New York, since 1979 in the state of Connecticut and since 1986 in France where he currently practices. Mr. Manasse swore that he has known Mr. Pollock for more than 40 years and that he has acted as his lawyer and adviser in France, both personally and for Drake International.

[35] An adult is a person under disability only when an absentee within the meaning of the Absentees Act, R.S.O. 1990, c. A.3, or when found to be “mentally incapable within the meaning of section 6 or 45 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (“SDA”), in respect of an issue in the proceeding, whether the person has a guardian or not” [emphasis added]. [2] In Huang v. Braga, 2016 ONSC 6306, the court set out a two-part test for determination of whether a Litigation Guardian is required under r. 7, as follows: (a) the person must appear to be mentally incapable with respect to an issue in the case and; (b) as a result of being mentally incapable, the person requires legal representation to be appointed by the court. [3]

[36] Assessing disability for the purposes of r. 7 is different than the determination of capacity under the SDA because the capacity assessment required for Rule 7 is “in respect of an issue in the proceeding.” [4] Section 6 of the SDA sets out a test for the determination of incapacity in management of property that is substantively similar to the Trust Deed Capacity Definition that was applied by Dr. Dean in his January 2022 finding that Mr. Pollock was incapable to manage property. [5]

[37] I accept Dr. Dean’s opinion that Mr. Pollock was incapable, for the purpose of the Trust Deed and for the purpose of the issues raised by these Applications. I do not see a disagreement in the reports prepared by Dr. Koretz on September 5, 2022 and Dr. Plotkin in his report of October 17, 2022 (although not in his report of February 24, 2022). Mr. Manasse deposed that by reason of having known Mr. Pollock personally and professionally for over 40 years, he has observed that Mr. Pollock struggles with his memory and his hearing and requires assistance with active day-to-day management of Drake International, although he remains clear on his intentions for the succession plan set out in the Trust.

[38] Mr. Ketchen and Ms. Bassett do not dispute that the Pollock Application was properly brought by Mr. Manasse as litigation guardian for Mr. Pollock. I so find.

[39] The Ketchen/Bassett Application was brought against Mr. Pollock without a litigation guardian. Indeed, this Application sought an order that “Manasse is not permitted to act as litigation guardian of Bill in proceedings related to the Trust.”

[40] Rule 7.03(1) provides that “[n]o person shall act as a litigation guardian for a … respondent who is under disability until appointed by the court” except in circumstances that are inapplicable to this case. Rule 7.03(4) provides that “[a] person who seeks to be the litigation guardian of a … respondent under disability shall move to be appointed by the court before acting as litigation guardian” (emphasis added). Rule 7.03(5) provides that “[w]here a … respondent under disability has been served with an originating process and no motion has been made under subrule (4) for the appointment of a litigation guardian, [an] … applicant, before taking any further step in the proceeding, shall move for an order appointing a litigation guardian for the party under disability.”

[41] Here, the parties alleged that Mr. Pollock was a party under disability at the time that the Ketchen/Bassett Application was brought. The Pollock Parties did not bring a motion for the appointment of a litigation guardian in the Ketchen/Bassett Application, as required by r. 7.03(4). Mr. Ketchen and Ms. Bassett did not bring a motion for the appointment of a litigation guardian before taking any step in the proceeding, as required by r. 7.03(5).

[42] In their Fresh as Amended Notice of Motion, the Pollocok Parties seek an order for the appointment of Mr. Manasse as litigation guardian for Mr. Pollock as a respondent in the Ketchen/Bassett Application, nunc pro tunc, effective the date of delivery of the Notice of Appearance in the Ketchen/Bassett Application: November 15, 2023. In accordance with r. 7.03(10), Mr. Manasse filed an affidavit in support, as did Mr. Caylor in an affidavit sworn May 27, 2024. Mr. Ketchen and Ms. Bassett consented to this relief. I grant this order, for the following reasons.

[43] First, Mr. Manasse’s affidavit of October 17, 2023, filed in support of acting as litigation guardian in the Pollock Application, supports his appointment as litigation guardian in the Ketchen/Bassett Application. Mr. Manasse has now supplemented this with his affidavit of May 30, 2024, confirming that he has no interest in the Ketchen/Bassett Application contrary to the interests of Mr. Pollock and acknowledged responsibility for costs, if any, in the Ketchen/Bassett Application.

[44] Second, the Ketchen/Bassett Application seeks the same core relief as the Pollock Application, specifically, the need to appoint appropriately qualified people to serve as General Trustees of the Trust and the need to implement a governance structure that ensures the ongoing viability of the Trust.

[45] Third, the same finding of disability that supported the appointment of Mr. Manasse as litigation guardian in the Pollock Application supports the appointment of a litigation guardian for Mr. Pollock in the Ketchen/Bassett Application.

[46] Fourth, Mr. Manasse has, since November 2023, functionally acted as litigation guardian for Mr. Pollock in the Ketchen/Bassett Application, which proceeded in tandem with the Pollock Application, without opposition or challenge by Mr. Ketchen and Ms. Bassett.

[47] Fifth, the filing of evidence by Manasse in both the Pollock Application and the Ketchen/Bassett Application supports a finding that he is engaged with Mr. Pollock and is in a position to discharge his role and duty as a litigation guardian for Mr. Pollock. Mr. Manasse is proximate to Mr. Pollock in France and swore that based on his engagement with Mr. Pollock, Mr. Manasse understands that Mr. Pollock requests and agrees that Mr. Manasse act as his litigation guardian.

[48] I have considered whether a person resident outside of Ontario can act as a litigation guardian under r. 7.03. Here, both Mr. Manasse and Mr. Pollock reside in France. In Walma (Litigation guardian of) v. Cleverly, [1999] O.J. No. 3810 (S.C.), Justice McKinnon held that a litigation guardian must have permanent residence in Ontario. [6] In Berkelhammer v. Berkelhammer Estate, 2012 ONSC 6242, Justice Chapnik disagreed, holding that permanent residence in Ontario is only one factor to be considered in approving the appointment of a litigation guardian but is not determinative. [7] I agree with this holding. I will explain why.

[49] Rule 7.02(2)(e) requires that the proposed litigation guardian state “whether he or she and the person under disability are ordinarily resident in Ontario.” Rule 7.02 does not disqualify an out-of-province resident from acting as a litigation guardian, but only identifies the residence as a factor to be considered with all other factors. Further, r. 7.02(2)(b) requires that the proposed litigation guardian confirm “that he or she has given written authority to a named lawyer to act in the proceeding.” The litigation guardian thereby must be represented by an Ontario lawyer before the Ontario court, which addresses any concern about accountability on behalf of the litigation guardian in Ontario. Last, r. 7.06(2) provides the court with authority to remove and substitute the litigation guardian where it appears to the court that a litigation guardian is not acting in the best interests of the party under disability, providing the authority to address any detriment to the party under disability should a complication arise by reason of the litigation guardian being out-of-province. [8]

[50] Last, I am persuaded that the failure by all parties to comply with the Rules - the Pollock Parties, r. 7.03(4) and Mr. Ketchen and Ms. Bassett, r. 7.03(5) - is an irregularity for the purposes of r. 2.01. All parties acted, throughout, as if Mr. Manasse had been appointed as litigation guardian for the purposes of both Applications. This is an appropriate application of r. 2.01 because the appointment of Mr. Manasse as litigation guardian in the Ketchen/Bassett Application nunc pro tunc will further the just determination of the matters in dispute, which are wholly resolved pending court approval. Accordingly, the order appointing Mr. Manasse as litigation guardian for the Ketchen/Bassett Application shall be nunc pro tunc to the date of the delivery of the Notice of Appearance by the Pollock Parties in the Ketchen/Bassett Application, namely, November 15, 2023.

[51] On these reasons, an order shall issue nunc pro tunc effective November 15, 2023, appointing Mr. Manasse as litigation guardian for Mr. Pollock as a respondent in the Ketchen/Bassett Application.

F. ANALYSIS OF THE APPROVAL SOUGHT UNDER RULE 7.08

(a) Applicable Principles

[52] These Motions for Approval were brought on the basis of r. 7.08, which provides that no settlement of a claim made by or against a person under disability … is binding on the person without the approval of a judge.” Rule 7 is a codification of the court’s parens patriae jurisdiction to act in the protection of those who cannot care for themselves, as explained by the Court of Appeal in Wu Estate v. Zurich Insurance Co. (2006): “[t]he duty of the Court is to examine the settlement and ensure that it is in the best interests of the party under disability”. [9]

[53] The framework for analysis is not a comparison of what might have been capable of being achieved upon a full determination at trial, but rather whether the settlement is reasonable and in the disabled party’s best interests. [10]

(b) Analysis of the Bassett Settlement

[54] Mr. Payne deposed that the Bassett Settlement is in Mr. Pollock’s best interests for the following reasons:

(a) Mr. Pollock unequivocally wants Ms. Bassett’s removal from the Trust and from his personal care and property management and achieves this through Ms. Bassett’s agreement to relinquish any role under the Trust or any power of attorney. (b) The payment of $250,000.00 (USD) to Ms. Bassett is less than the amount provided by the Second Amended and Restated Trust Deed, and therefore spares monetary exposure of the Trust’s assets. (c) The compromise payment to Ms. Bassett is less than the projected costs of advancing the Applications to a hearing. (d) The Bassett Settlement contributes to bringing stability to the ongoing operations and management of the business of Drake International and thereby the Trust’s primary asset. (e) The Bassett Settlement narrowed and focussed the remaining issues in the Application and fostered the continued dialogue that led to the Ketchen Settlement.

[55] Mr. Manasse supported and adopted the reasons provided by his lawyer, and added that he consulted with Mr. Pollock regarding the settlement with Ms. Bassett and he confirmed his support for this settlement. Mr. Manasse agreed with Mr. Payne that the Bassett Settlement is advantageous for Mr. Pollock.

[56] I accept the grounds provided by Mr. Payne and supported by Mr. Manasse for approval of the Bassett Settlement on behalf of Mr. Pollock. The Ketchen/Bassett Application presented the risk that Ms. Bassett would be found to be a General Trustee which was contrary to Mr. Pollock’s intentions. There was a risk that Ms. Bassett would be found to be Mr. Pollock’s attorney for property and personal care, contrary to Mr. Pollock’s current intention that Ms. Bassett not be involved in his affairs. The Bassett Settlement provides Mr. Pollock with immediate closure and certainty of result in his dealings with Ms. Bassett without the uncertainty of ongoing litigation at an advanced age.

[57] An order shall issue that the terms of the Bassett Minutes of Settlement are hereby approved on behalf of Mr. Pollock.

(c) Analysis of the Ketchen Settlement

[58] The Pollock Parties retained Deloitte LLP and Deloitte Inc. (collectively, “Deloitte”), RHR International LLP (“RHR”) and Odgers Berndtson Canada Inc. (“Odgers”) to provide advice regarding governance structures for the Trust and leadership assessments, including in matters of succession planning and identification of appropriate people to act as General Trustees or as trustees of the Charitable Foundation. As part of this mandate, Deloitte delivered a Governance Report dated March 19, 2024 that makes recommendations regarding the governance of Drake International and a Foundation Governance Report dated March 19, 2024 that makes recommendations regarding the governance of the Charitable Foundation and regarding a “microboard” to support Mr. Pollock in his decision making. RHR provided recommendations on candidates to fill executive positions, and Odgers identified candidates to serve as General Trustees and Charitable Trustees.

[59] The Pollock Parties showed that the Ketchen Settlement involves the implementation of the governance structure recommended by Deloitte and the appointment of appropriate individuals identified by Odgers.

[60] Mr. Caylor submitted that the Ketchen Settlement is in the best interests of Mr. Pollock for the following reasons:

(a) The proposed revisions to the Second Amended and Restated Trust Deed reflect the changes to implement the advice of the professional governance advisors and to enable the General Trustees to carry out their mandate consistent with Mr. Pollock’s intentions, as discerned from the Trust Deed. (b) The Ketchen Settlement achieves Mr. Pollock’s goal of having General Trustees appointed who have the knowledge and experience to achieve the purposes of the Trust, including the creation of the Charitable Foundation. (c) In compliance with Deloitte’s recommendation on governance, most of the General Trustees are independent of Drake International and have the skill, experience and knowledge required for their appointment. (d) The Ketchen Settlement achieves Mr. Pollock’s goal of forming the Charitable Foundation and appointing appropriate Charitable Trustees, comprised of individuals who have the required knowledge and experience to achieve the purposes of the Trust. Most of the appointment that were identified by the advisors are independent of Drake International. (e) The proposed General Trustees and Charitable Trustees collectively have significant relevant business, charitable and international experience and are prepared to act. (f) The Family Council proposed by the Ketchen Settlement will permit input, and benefit, from the perspective of Mr. Pollock’s family, through Mr. Ketchen. In his role as Chair of the Family Council, Mr. Ketchen will have input while not directly responsible for the management of the business of Drake International, consistent with Mr. Pollock’s intention. (g) The advisors and Mr. Manasse’s lawyers have prepared a structure for a “microboard” to assist Mr. Pollock, to be comprised of members who share a close personal and/or professional relationship with Mr. Pollock and to create a supportive network of trusted people who can assist Pollock in making informed decisions about his personal and professional affairs.

[61] Mr. Manasse supported and adopted the reasons provided by his lawyer, and added that he had direct involvement in the four days of mediation and had regular discussions with Mr. Pollock during that time. Mr. Manasse deposed that Mr. Pollock’s consistent view is that Mr. Ketchen does not have the requisite skill or experience to manage Drake International or the Trust, and that appropriate persons and governance structure must be implemented to achieve the purposes of the Trust. Mr. Pollock is the sole current beneficiary of the Trust.

[62] I accept the grounds provided by Mr. Caylor and supported by Mr. Manasse for approval of the Ketchen Settlement on behalf of Mr. Pollock. These competing Applications were heavily contested with an extensive evidentiary record and mediated over the course of four days. The Ketchen Settlement alleviates the litigation risk that Mr. Ketchen is found to be a duly appointed General Trustee, contrary to Mr. Pollock’s intentions. It alleviates the risk of uncertainty and instability in the operations of Drake International and thereby preserves the viability of the Trust that may be caused by prolonged litigation. I thereby accept that the Ketchen Settlement is reasonable and in the best interests of Mr. Pollock.

[63] Subject to my determination of the variation of the Trust agreed upon by the parties, which I will turn to next, an Order shall issue that the terms of the Ketchen Minutes of Settlement, are approved on behalf of Mr. Pollock.

G. THE VARIATION OF THE TRUST

[64] As explained, the variation of the Second Amended and Restated Trust Deed is a fundamental component of the Ketchen Settlement. The parties have agreed to the variation of the Second Amended and Restated Trust Deed set out as Schedule 1 to the draft Order at Schedule A of the Amending Agreement (the “Proposed Varied Trust Deed”). [11]

[65] The Variation of Trusts Act provides the court with authority to vary a trust. Section 1(1) provides that the court “may, if it thinks fit, by order approve on behalf of … any person having directly or indirectly an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting … any arrangement … varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts.”

[66] Section 1(2) of the Variation of Trusts Act provides: “The court shall not approve an arrangement on behalf of any person coming within clause (1) (a), (b) or (c) unless the carrying out thereof appears to be for the benefit of that person.”

[67] In Re Irving (1975), Pennell J. held that the power to vary a trust is “extremely broad” and framed by an assessment of the best interests of the person beneficially interested, as follows:

The form of words used in s. 1 of the Act makes it clear that the Court's power is an extremely broad one. It has the power to "vary or revoke all or any trusts or enlarge the powers of the trustee". It may do this for "any arrangement by whomsoever proposed and whether or not there is any other person beneficially interested". The Court is to be governed throughout by "what it thinks fit" and its only other direction is that it "shall not approve an arrangement ... unless the carrying out thereof appears to be for the benefit of that person". The thrust of s-s. (2) seems to be that the status quo should be upheld under any trust unless positive factors are shown to be in favour of the variation or revocation of the trust on a rather general principle of it being for the benefit of the person on whose behalf the Court is approving the variation. [12]

[68] In consideration of the principles set out in Re Irving, as applied by the Court of Appeal in Finnell v. Schumacher Estate, [13] Morawetz CJ held, in Eaton v. Eaton-Kent, 2013 ONSC 7985, that the Court will approve the variation of a trust where the following is established:

(a) The basic intention of the testator, or settlor will be kept alive by the proposed variation. (b) The proposed variation is for the benefit of all persons who become interested in the trust. (c) A prudent adult motivated by intelligent self-interest, and a sustained consideration of the expectancies and risk of the proposal made, would be likely to accept the benefit to be obtained on behalf of those for whom the court is acting. [14]

[69] These principles underlie the objective, succinctly stated by Pennell J. in Re Irving and adopted by the Court of Appeal in Finnell, as follows: “The spirit of the Act, as I read it, permits pruning of the trust in order to promote fruitfulness, but the root is to be preserved.” [15] Put into effect, the court’s jurisdiction under the Variation of Trusts Act does not extend to changing the “the whole substratum” of the trust, or otherwise draft a new trust. [16] The Court cannot undertake a “complete reconstruction of the trust”, so as to “thwart the intention of the” settlor. [17]

[70] In consideration of these principles, the Pollock Parties submitted, and I accept that the proposed variations to the Second Amended and Restated Trust Deed as set out in the Proposed Varied Trust Deed do not change the core elements and objects of the Trust. The assets settled in the Trust remain unchanged. The purposes and objects of the Trust remain unchanged. The sole current beneficiary remains the same. Twenty of the twenty-one Bequests that the General Trustees are directed to pay upon the death of the settlor, Mr. Pollock, remain the same, both in amount and beneficiary designation. The only change in the beneficiary designations is that the bequest to Ms. Bassett of $350,000.00, is removed by the Bassett Settlement.

[71] Mr. Youdan, Mr. Manasse and Mr. Fischer all deposed that Mr. Pollock’s intention in settling the Trust was that Drake International continue to carry on business profitably to generate funds to carry out the charitable goals of the Trust, including the creation of the Charitable Foundation for under-privileged students. This intention is evident from the Trust Deed, alone. This intention is not changed by the variations in the Proposed Varied Trust Deed, which relate to refinements in governance, management, and administration to ensure the continued viability of the Trust. All the beneficiaries benefit from proper functioning of the Trust.

[72] The proposed variations further the intentions of the Trust by clarifying the powers of the General Trustee and appointing knowledgeable and skilled individuals to act as General Trustees and Charitable Trustees and the Family Council. I accept the Pollock Parties’ submission that the variations are for the benefit of the sole current beneficiary, who consents to the variations, and of the future beneficiaries of the trust. I have noted the consent of Mr. Ketchen to the proposed variations.

[73] Last, I am satisfied that the third part of the test set out in Eaton is met. In my view, a prudent adult motivated by intelligent self-interest, and a sustained consideration of the expectancies and risk of the proposal made, would be likely to accept the benefit to be obtained through the variations.

[74] An Order shall issue that the Trust Deed, as previously amended most recently on and dated March 8, 2022, will be further amended and restated in the form attached as Schedule 1 to Schedule A of Amending Agreement, with such amendments being in force as of the date of this Order and, without the need for any further signature or other step to formalize, authorize or implement the Amended and Restated Deed as governing the Trust. The Amended and Restated Deed shall be annexed as Schedule 1 to the Order.

H. DISPOSITION

[75] On the basis of these reasons, I order:

(a) Mr. Manasse is appointed as the litigation guardian of Mr. Pollock for the purposes of the application brought in Ketchen/Bassett Application, nunc pro tunc to November 15, 2023, when the Pollock Parties delivered their notice of appearance in the Ketchen/Bassett Application. (b) The terms of the Minutes of Settlement between the Pollock Parties and Ms. Bassett, executed on March 19, 2024, are approved on behalf of Mr. Pollock. (c) The terms of the Minutes of Settlement between the Pollock Parties and Mr. Ketchen, executed on May 17, 2024 and amended by Amending Agreement dated May 27, 2024 (the “Amending Agreement”), are approved on behalf of Mr. Pollock. (d) The Deed of the Bill Pollock Trust (the “Trust”), as previously amended most recently on and dated March 8, 2022, will be further amended and restated in the form attached as Schedule 1 to the draft Order at Schedule A to the Amending Agreement, with such amendments being in force as of the date of the Order and, without the need for any further signature or other step to formalize, authorize or implement the Amended and Restated Deed as governing the Trust. (e) The capitalized terms that are not defined in the Order will have the meaning ascribed to them in the Amended and Restated Deed. (f) The terms agreed upon by the parties in furtherance of the implementation of the settlement between the Pollock Parties and Mr. Ketchen, as set out in paragraphs 6 (a) to (j), inclusive, of the draft Order attached as Schedule A to the Amending Agreement shall be ordered on the consent of the parties.

[76] The Pollock Parties filed on the CaseLines folder for the Pollock Application, in the bundle for the hearing of the Motions for Approval (006), a final version of the draft Order, as Doc. A:54, at Master pp. A3660 to A3684. As the final version of the draft Order accords with my disposition of these Motions for Approval, an Order shall issue in the terms of the final version of the draft Order. I will sign the Order.

Justice A.A. Sanfilippo Date: June 7, 2024

Footnotes

[1] By Endorsement of April 19, 2024, I ordered that the Motions for Approval shall comply with all Rules and Practice Directions for the hearing of civil motions and applications in Toronto Region, including Part VI(G) (Publication Bans) of the Consolidated Civil Provincial Practice Direction of the Ontario Superior Court of Justice (amended February 1, 2024). Any sealing of a court record on a motion for approval must comply with the principles set out by the Court of Appeal in S.E.C. v. M.P., 2023 ONCA 821, 97 R.F.L. (8th) 54. The Pollock Parties did not seek a sealing order. The Motion Records that were filed were not redacted except that the affidavit of Mr. Alexander Payne sworn April 17, 2024, filed on the Motion for Approval of the Bassett Settlement exhibited the application records delivered in these Applications and a small number of documents in these application records were redacted from the time of their initial filing. I am satisfied that any of the redactions contained in the application records that were material to the Motions for Approval, such as to the First Amended and Restated Trust Deed and the Second Amended and Restated Trust Deed, have been corrected by the parties’ filing of unredacted versions. In my assessment, any redactions that remain are immaterial to the Motions for Approval.

[2] Rules of Civil Procedure, r. 1.03(1)(b).

[3] Huang v. Braga, 2016 ONSC 6306, 24 E.T.R. (4th) 285, at para. 18, leave to appeal refused, 2017 ONSC 3826 [Huang v. Braga].

[4] W. M. v. Office of the Public Guardian and Trustee, 2017 ONSC 5887, [2017] O.J. No. 5180; Haddad (Estate) v. Haddad, 2023 ONSC 5637, at para. 17.

[5] Substitute Decisions Act 1992, S.O. 1992, c. 30, s. 6: “A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.”

[6] [1999] O.J. No. 3810 (S.C.), at para. 8: “In my view, Rule 7.02 requires that a Litigation Guardian have permanent residence in Ontario. The primary object in requiring that is that there must be someone before the court to answer for the propriety of the action and through whom the court may compel obedience to its orders.”

[7] 2012 ONSC 6242, at paras. 14–15.

[8] Gronnerud (Litigation Guardians of) v. Gronnerud Estate, 2002 SCC 38, [2002] 2 SCR 417, at paras. 18–22.

[9] (2006), , 268 D.L.R. (4th) 670, at para. 10 (Ont. C.A.), applying E. (Mrs.) v. Eve, [1986] 2 SCR 388, at paras. 73, 75-77.

[10] Spicer v. Wawanesa Mutual Insurance Company, 2023 ONSC 3221, 35 C.C.L.I. (6th) 257, at para. 14.

[11] Amending Agreement, Exhibit A to the affidavit of Alexander Payne affirmed May 27, 2024, CaseLines bundle 006, Doc. A:41, Master pp. A3236-A3266; Draft Order as Schedule “A”, at Master pp. A3242-A3265; Amended and Restated Deed as Schedule “1”, at Master pp. A3248-A3264. The Draft Order, together with its Schedule “1” Amended and Restated Deed, was also filed as Schedule “A” to the Fresh as Amended Notice of Motion, CaseLines bundle 006, Doc. A:38, at Master pp. A3105-A3133.

[12] Re Irving (1975), 11 OR (2d) 443 (S.C.), at para. 13. See also, Donovan W.M. Waters et al., Waters’ Law of Trusts in Canada, 5th ed (Toronto: Thomson Reuters Canada, 2021), at 27.II – The Inherent Jurisdiction of the Court (online).

[13] , 74 O.R. (2d) 583 (C.A.), at para. 18.

[14] 2013 ONSC 7985, [2014] 3 C.T.C. 99, at para. 22.

[15] Re Irving, at para. 48; Finnell, at para. 18.

[16] Re Irving, at para. 16.

[17] Re Irving, at para. 17.