Court File and Parties

Court File No.: CV-21-0202-00 Date: 2024-06-13 Superior Court of Justice – Ontario

Between: Brian Buday, Applicants And: Paul Buday, Her Majesty The Queen in the Right of Canada as represented by the Minister of National Revenue and The Queen in Right of Ontario as represented by the Minister of Finance, Respondents

Before: Madam Justice T. J. Nieckarz

Counsel: R. Bodnar, for the Applicant Ms. Chaudary for Minister of National Revenue J. Fiore for Minister of Finance Glen Buday, self-represented interested party

Heard: May 23, 2024, at Thunder Bay, Ontario

Decision On Motion

Overview

[1] The Applicant brings this motion for the following relief:

a. An Order permitting the Application to continue in the absence of a person representing the estate of the Respondent, Paul Buday (“Paul”);

b. An order vesting title to the property legally described as PT MINING LOCATION 5Z SAVIGNY’S SURVEY MACGREGOR AS IN TBR256432; T/W TBR256432 (PIN 62496-0526), municipally known as 1123 Cedar Bay Road, (the “Property”) in the Applicant (“Brian”); and

c. Various incidental relief.

[2] Paul was the owner of the Property. Paul is Brian’s father. Paul died on August 18, 2021. There is a holograph Last Will and Testament and a Codicil, which has some specific gifts named, but otherwise divides the residue of the estate equally between Paul’s two sons. The validity of Paul’s Will has yet to be determined.

[3] The basis for the relief claimed may be summarized as:

a. The estate trustees named in Paul’s holograph Will are his two sons, Brian and Glen. Glen is a non-party to the proceeding but was served with the motion. Brian and Glen’s interests are in conflict with each other, but also with Paul’s estate. The Estate is impecunious and there is no one else willing to act as litigation administrator.

b. Approximately 30 years ago, Paul told Brian he was gifting the Property to him. In reliance upon that promise Brian built a home and outbuildings on the Property, significantly increasing its value. Title to the Property was never transferred to Brian. In the meantime, several writs/executions have been registered against title to the Property for tax debts accumulated by Paul. Brian has been able to negotiate a settlement of those debts with the Minister of National Revenue (“MNR”) and the Minister of Finance (“MOF”), but before paying that settlement and having the liens discharged, Brian wants to ensure that he has title to the Property.

[4] Glen disputes the relief claimed. He argues that:

a. Despite their differences, there is no reason why he and Brian cannot act as litigation administrators and sit down to work out the issues presented by the Application without further litigation.

b. Glen disputes that Paul intended to gift the Property to Brian. He argues the fact that title was not transferred, and that Paul used the Property over the years as collateral for various loans, proves this to be the case. Glen argues that all his father ever intended to do was provide Brian with an affordable place to live. He further argues that as a beneficiary of Paul’s estate, and someone who is jointly liable for the tax debts that form the basis for the writs/executions, his interests are compromised if title to the Property is vested in Brian.

[5] The Department of Justice Canada and MOF appeared on this motion but took no positions. They provided useful information as to the tentative settlement with Brian to remove the writs/executions against title to the Property.

[6] Dorothy (Dianne) Wright, common-law spouse of Paul was served, but did not appear. She takes no position on the Application or this motion.

[7] The motion is effectively summary judgment on the primary claims in the Application. The Applicant acknowledges that if the motion is granted, the Application is resolved.

[8] For the reasons that follow:

a. the Application shall continue in the absence of a person representing the estate of Paul; and

b. the request for a vesting order shall be determined as part of the Application as set out below.

Facts

[9] Brian alleges that in or about January 1993, Paul gifted to him the Property. At the time of the gift the Property had a structure on it that Brian describes as a “shack”. He says it was in a state of disrepair. It had four walls and a roof, although the roof was rotted. The structure was filled with garbage, had no electricity, no plumbing, no heat, and no internal walls.

[10] The structures that are on the Property now are significantly different than in 1993. Brian is a tradesperson and built a larger home on the Property himself. Brian also conducts his business from the Property. An Opinion of Value was obtained from a realtor (not a certified appraiser), valuing the Property between $640,000 – 660,000 as at June 2022.

[11] In 2020, Brian discovered that there were several writs/executions registered against the Property. Those executions total $2,045,246.25.

[12] The executions are for unpaid taxes to the MNR and MOF related to the ownership and operation of a business by Paul and Glen. Brian says that Glen has been fighting the MNR and MOF over the tax arrears for decades. As of March 2024, approximately $190,000 of the total owing remains subject to appeal. The balance of $1,855,246.25 is not subject to appeal. The sale of a real property on which the business was operated offsets a small part of the debt.

[13] There are also mortgages registered against the Property that are held by a private lender, Peter Boban. Mr. Boban has also passed away and his Estate seeks to enforce the mortgages. These mortgages were registered prior to the alleged gift to Brian. Brian has negotiated payment of those mortgages to satisfy the Estate’s obligation in full, provided that the Property is vested in him.

[14] Paul died three months after the commencement of the Application. Brian says that prior to his death Paul supported his Application. He says that Paul was prepared to consent to the relief sought in the Application, but died before his consent could be obtained in writing.

[15] Other than the Property, there are no assets of any significant value in Paul’s estate. He had limited personal property, which he owned primarily with his common law spouse. Paul had less than $3,000 in his personal bank account. Other than the Property, there are no assets to satisfy the tax debts.

[16] Brian says that neither he nor Glen have taken steps to administer Paul’s estate because of these proceedings and because there are significantly more debts owed by the estate than there are assets.

[17] Brian has negotiated a settlement with the MNR and MOF. The settlement will allow him to retain the Property and will resolve all liability of Paul for the tax debt. It was unclear as of the time of arguing the motion, but after Brian pays MNR, Glen may still have some liability for the balance owing. MOF have confirmed that the settlement will be in satisfaction of all amounts owed and there will be no amount owed by Glen.

[18] The Applicant has provided in his book of authorities Buday v. R., 2019 TCC 128, 2019 CCI 128, 2019 CarswellNat 2330. At paragraph 2 of the case, it states that the MNR was unclear as to who the true owner of Buday Auto Sales was, and therefore to be safe, the Minister assessed both Paul and Glen for the entire alleged unreported income. This decision was upheld by the Tax Court of Canada. This is the basis for Glen’s liability to MNR.

[19] Brian fears that given the opportunity, Glen will continue his fight with the MNR and MOF through this Application and will jeopardize the agreements he has reached. Brian also fears that his brother, who he describes as “litigious”, will unnecessarily increase the cost of this proceeding to fight with him over the Property. Decisions from litigation Glen has previously been involved in do not cast him in a favorable light. For example, in Buday v. Garcia, 2012 CarswellOnt 10883, in finding that their action was frivolous and vexatious, it was noted that a previous deputy judge and tribunal found Glen and Paul’s conduct and character to be “…ludicrous, deliberately evasive and condescending, deceitful…so reprehensible that it casts a negative shadow on their ability to operate honestly and with integrity and within the law.” In Buday v. R., Glen was found to be not credible (at para. 29).

Analysis

Dispense with Litigation Administrator

[20] The holograph Will and Codicil have not been probated. There are some irregularities with the Will. The named executors, Brian, and Glen have taken no steps to administer the estate.

[21] I am satisfied that neither Brian nor Glen, nor the two of them jointly, should act as litigation administrator in this proceeding. Their interests conflict with that of the Estate and each other. Brian’s conflict is obvious in that he has commenced a proceeding seeking to have the primary asset of the estate vested in him. Glen, as a beneficiary and co-debtor to the MNR has an interest in the Property not vesting in Brian and having as much of the value of the Property as possible go towards discharging the debt. The animus between Brian and Glen is evident from Glen’s affidavit. It belies Glen’s statement that the two brothers can sit down over a beer to resolve these issues. Neither Brian nor Glen can act neutrally in the best interests of the estate.

[22] Brian has made efforts to find an appropriate litigation administrator but has been unsuccessful. Paul’s common law spouse does not agree to act in this role. A family friend has also declined. Brian’s counsel has contacted local lawyers, but they too have declined. Brian attributes the unwillingness of anyone to assist to Glen’s litigious nature and the lack of funds in the estate to compensate a litigation administrator, or at least to pay any fees they incur with respect to the litigation.

[23] Rule 10.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that when an estate has an interest in a proceeding but there is no executor or administrator of the estate, a judge may order the proceeding to continue in the absence of a person representing the estate, or alternatively appoint a person to represent the estate in the proceeding.

[24] The Applicant cites Sloan v. Fox Estate, 2011 CarswellOnt 5178, at paras 14-17, and O’Connor v. Dell, 2022 CarswellOnt 11003, at paras. 20-22, in support of his Application. While the facts of these cases are quite different than the case at hand, there are some factors identified in those cases as instructive in determining whether a proceeding should continue in the absence of a litigation administrator.

[25] In this case, the estate clearly has an interest in the proceeding. The Property in question is owned by the deceased. In the holograph Will executors are named, but given the conflict that exists as between each other and with the interests of the estate, it is unlikely that either of them will be successful in becoming an Estate Trustee. If they agreed, it would be different. No one else is willing to act. In this respect, it may be said that there is no executor or administrator of the estate. The preconditions for the exercise of my discretion under the Rule have been met.

[26] As was the case in Sloan and in O’Connor, Paul’s estate is impecunious. The value of his debts greatly exceeds the value of his assets, even if the Property were to be included as an asset of Paul. This makes it unlikely that someone other than Brian or Glen will be willing to act for the estate given the pending litigation. Brian and Glen have the greatest interests in this litigation. Brian, because he says he is the beneficial owner of the Property, and Glen as a beneficiary of Paul’s estate, but also as someone who is jointly liable for some of the tax debt that forms the subject of the writ/executions.

[27] Also relevant to a determination of this issue is whether the litigation could have any impact on the estate. On the one hand it could be argued that it does not. If the Property is not vested in Brian, it will be sold to satisfy the executions, and nothing will fall into the estate.

[28] On the other hand, Glen argues that if the MNR and MOF are willing to negotiate the reduction in Paul’s tax debt with Brian, they should also be willing to negotiate it with the estate. If the Property is sold to satisfy the negotiated amount, there will be funds left to distribute equally between the beneficiaries of the estate.

[29] Glen’s argument calls for speculation. While it is possible that the settlement offer will still be available if the Property is not vested in Brian, it is also possible that the settlement was reached on the basis that Brian had an ownership claim against the Property, which if successful, could negatively impact the MNR and MOF. Regardless, given that both beneficiaries are participating in this litigation, their interests could be said to be protected such that the expense of an additional litigation administrator for the estate is unnecessary.

[30] Overall, I agree with the Applicant that the interests of justice require the Application to proceed without a litigation administrator.

Vesting Order for the Property

[31] I find that a limited trial of an issue is required with respect to the request for a vesting order. More evidence is required from both parties to supplement their affidavits filed in this proceeding. I am unable to resolve the conflict in the evidence based on the limited record before me.

[32] Specifically, Brian says that his father gifted the Property to him but simply did not follow through with the transfer to give effect to the gift. Glen says that a gift is contrary to what his father told him and his father’s actions. Neither Brian nor Glen provides any further details as to the conversations they had with Paul.

[33] Brian says that his father was prepared to transfer the Property to him after commencement of this litigation. Glen says this is not the case and his father told him something entirely different. I am uncertain as to whether there is additional evidence not before me to resolve the conflicting evidence.

[34] Glen also says that the Property was important for Paul, as he used it to secure loan financing from time to time. I do not see any registered charges that suggest this is the case. There is also no evidence from Glen as to the specific loans that were secured by the Property. Glen will require proof of this allegation if he wishes a court to accept it. Given that Glen is self-represented, an opportunity should be provided for him to verify these claims as they could be important to a judge in ascertaining Paul’s intention.

[35] I do not accept Glen’s argument that Paul would have properly documented a gift of the Property and the fact that he did not is indicative of his lack of intention to affect a gift. Based on the difficulties Glen and Paul had with the CRA and MOF, and the comments made about the state of their paperwork in the Tax Court decision, it does not surprise me that this alleged gift was not properly documented.

[36] Glen said orally at the motion hearing that his father still stayed at the Property over the years and used it as a family camp. These oral statements were not properly before the court as evidence in a sworn affidavit.

[37] Brian’s evidence is silent as to the use, if any, his father made of the property since the alleged gift in 1993. Both Glen and Brian will need to address this issue. If Glen has any proof of his allegation, he will need to produce it to Brian’s lawyer in advance of the trial and adduce that evidence at trial.

[38] With respect to the expenses for the Property, Brian has provided verification of some of what he has spent over the years. Noticeably absent is any indication as to who paid the property taxes and insurance for the property. These expenses are often associated with ownership and further evidence will be required.

[39] In considering the conflicting evidence I am mindful of the various findings against Glen with respect to credibility. It will be for an application judge to make the ultimate determination of credibility as between Brian and Glen. I find that this cannot be done based on the written materials before me. It will require some very limited oral evidence and cross-examination at the hearing of the Application. Timelines for productions and limits on oral evidence are set out by me below to ensure that this litigation does not become protracted and even more expensive than it already has been. It shall remain focused on the issue at hand and not whatever other disagreements there are between these two brothers. If Glen wishes to continue to contest Brian’s request for relief, he must be aware that he is exposing himself to a claim for payment of Brian’s legal costs associated with this motion and the Application.

Order

[40] It is ordered that:

a. The Application shall continue in the absence of a person representing the estate of the Respondent, Paul Buday.

b. The title of proceedings shall be amended accordingly.

c. A trial of the issue of the vesting of the Property shall take place.

d. The trial of the issue shall be no more than 1 day in duration. Depending on the number of witnesses to be cross-examined, a half-day may suffice.

e. A special date shall be obtained from the trial coordinator for the trial of the issue. If there are any difficulties in scheduling, I may be spoken to.

f. The trial may proceed virtually, or hybrid (Glen appearing virtually and Brian in person).

g. Subject to the discretion of the application judge, all evidence-in-chief shall be completed by way of sworn affidavits, with any documents relied upon by either Glen or Brian to be attached as exhibits to those affidavits.

h. Any person swearing an affidavit in support of either Glen or Brian must be present at the trial for cross-examination unless the other party advises in advance that they do not intend to cross-examine the person.

i. Subject to the discretion of the application judge, cross-examination of Glen or Brian shall be limited to no more than one hour, while cross-examination of any collateral witnesses shall be no more than a half hour.

j. No documents shall be admitted into evidence at trial unless they have been produced to the other party at least 30 days in advance.

k. Brian shall deliver any supplementary affidavits no later than July 26, 2024.

l. Glen shall serve on all other parties and file with the court any supplementary affidavits he is relying on no later than August 30, 2024.

m. Any reply affidavits shall be delivered no later than September 13, 2024.

n. The Applicant’s factum shall be delivered no later than 14 days prior to the hearing of the Application.

o. Glen’s factum (if any) shall be served on all parties and filed with the court no later than 7 days prior to the hearing of the Application.

p. If any of the other parties to this Application wish to file evidence or a factum, they shall do so in accordance with the timelines provided for Glen’s materials.

q. If there are any other trial management issues, or if the schedule set by me is problematic, an appointment shall be scheduled before me by Zoom immediately.

“originally signed by”

The Hon. Madam Justice T. J. Nieckarz

Released: June 13, 2024