Ontario Superior Court of Justice

Court File No.: CV-24-0009-00
Date: 2025-02-21

Between

Dawn Christine Spellman (Applicant)
and
Steven Mark Spellman (Respondent)

Appearances:
D. Judson, for Applicant
No one appearing on behalf of the Respondent

Heard: Thursday, October 31, 2024, in Fort Frances, Ontario via Zoom
Justice: S. J. Wojciechowski

Reasons on Motion

Introduction

1The plaintiff, Dawn Christine Spellman (“Dawn”), brings this motion against the defendant, Steven Mark Spellman (“Steven”), for default judgment as follows:

i. awarding general damages to Dawn Spellman in the amount of $178,201.21;
ii. awarding aggravated, exemplary and punitive damages to Dawn Spellman in the amount of $50,000;
iii. orders regarding the distribution of the Estate of Rosemary Anne Spellman (“Rosemary’s Estate”);
iv. pre- and post-judgment interest; and
v. costs.

2The motion of Dawn Spellman was argued on October 31, 2024. After hearing submissions from D. Judson on behalf of Dawn Spellman, without anyone appearing on behalf of Steven Spellman despite being properly served with the motion materials, I made the following orders:

1. Service of the plaintiff’s motion materials is effective as of October 22, 2024.
2. The plaintiff shall be awarded general damages of $178,201.21, in addition to aggravated, punitive and exemplary damages in the amount of $50,000.
3. The proceeds of Rosemary’s Registered Retirement Income Fund (“RRIF”) account at the Royal Bank of Canada (“RBC”) numbered 406563783, which are payable to the defendant as a named beneficiary, estimated by the plaintiff to be valued at an amount which does not exceed the amounts awarded in paragraph 2, shall be paid by RBC to the plaintiff. The plaintiff shall provide an accounting of the amount paid by RBC to the plaintiff from Rosemary’s RRIF to the trustee of Rosemary’s estate in a form which is acceptable to the trustee. Any amount received by the plaintiff from RBC pursuant to this paragraph shall be credited to the plaintiff’s entitlement to share in any distribution of Rosemary’s estate.
4. Until full reasons with respect to the plaintiff’s motion are released, including the value of the plaintiff’s entitlement to share in the distribution of Rosemary’s estate, the order of Pierce J. dated May 30, 2024, which, in part, prohibits distribution from Rosemary’s estate, remains in effect.
5. The plaintiff shall forthwith serve a copy of this endorsement and resulting order on RBC, by email to the Fort Frances branch, and on the defendant by sending a copy via email to 2runaz1@gmail.com, and by mail to 502 1st Street, P.O. Box 631, Kipling, Saskatchewan, S0G 2S0.

3These are now my reasons for my decision of October 31, 2024.

Background

4Dawn was born on November 8, 1964, and is currently 60 years old. She resides in Fort Frances, Ontario and lives with multiple sclerosis, which creates mobility and other health challenges.

5Dawn is dependent on benefits from provincial social and disability support programs.

6Steven is Dawn’s brother and the current administrator of the Estate of Donald William Spellman (“the Donald Estate” and “Donald Spellman”) who was the father to both Dawn and Steven. Donald Spellman died on March 23, 2018, without leaving a will, and at the time of his death both Donald Spellman and Steven resided in New Brunswick.

7On April 19, 2018, to support the administration of the Donald Estate, Dawn renounced her right to participate as an estate trustee in the Donald Estate. This was done on the basis of representations from Steven that he would administer the estate in accordance with the law. In addition, at the time, Dawn’s physical limitation would have impeded her ability to act as an estate administrator, and Steven was the only family member living in New Brunswick, which was where the assets of the Donald Estate were located.

8Rosemary Anne Spellman (“Rosemary Spellman”) is the mother of Dawn and Steven and was married to Donald Spellman for twelve years. Rosemary Spellman and Donald Spellman were divorced for many years at the time of Donald Spellman’s death.

9Rosemary Spellman died on January 20, 2024. Pursuant to the terms of her will, Dawn’s son, David Spellman, was appointed as the administrator of her estate (“the Rosemary Estate”).

The Donald Estate

10Steven retained a New Brunswick lawyer, T. Allison Gerrish, to assist with the administration of the Donald Estate. It was anticipated that this would be a simple exercise, since the laws of New Brunswick provided that in situations where there was no will, an inheritance would be divided in equal shares amongst the beneficiaries, who were Steven and Dawn.

11After Dawn’s renunciation, Letters of Administration were granted on June 14, 2018. Steven was named the Administrator of the Donald Estate.

12The Donald Estate consisted of financial assets, two motor vehicles, various tools, and a residential property located at an address municipally known as 2242 Route 880, Head of Millstream, New Brunswick (“the Residence”). The estimated value of the Donald Estate as of June 14, 2018, was $410,003.41.

13The Residence was sold on December 13, 2019, for $100,000 with the assistance of T. Allison Gerrish. Following the sale of this property, T. Allison Gerrish left the distribution of the assets of the Donald Estate entirely to Steven.

14The only monies paid by Steven to Dawn from the Donald Estate was $12,500. No other monies have been distributed, and despite Dawn’s attempts to communicate with Steven and ascertain the status of the administration of the Estate of Donald, Dawn has not heard from Steven.

15In her efforts to get information relating to the Donald Estate, Dawn enlisted the services of the Northwest Community Legal Clinic in Fort Frances (“the NCLC”). As a result of information obtained by the NCLC from T. Allison Gerrish, Dawn was advised that she should have received at least $200,000 from the Donald Estate. However, Dawn did not know how much personal property formed part of the Donald Estate, nor the amount which the Donald Estate received as a result of the sale of this personal property.

16On June 19, 2020, Dawn commenced an application in the Probate Court of New Brunswick seeking a Citation to Pass Accounts. An order was made by McLellan J. on August 7, 2020, requiring Steven to pass the accounts of the Donald Estate within 20 days. No such application to pass accounts was made, and on September 22, 2020, a Warrant of Arrest for Steven’s arrest for contempt was issued by the Probate Court of New Brunswick. This warrant remains outstanding.

17At no time has Steven made any effort to pass the accounts of the Donald Estate.

18Dawn has not heard from Steven, and she is not aware of any efforts made by Steven to properly distribute the Donald Estate. The only information Dawn received as to Steven’s location came when Steven heard that his mother had passed away, and he contacted David Spellman in order to demand his share of the Rosemary Estate.

19According to the terms of the will of Rosemary Spellman, both Steven and Dawn are equal beneficiaries to her estate.

20From what Dawn was told by her son, David Spellman, Steven now resides in Kipling, Saskatchewan.

21A Statement of Claim framing the issues between Dawn and Steven was issued seeking various orders and the production of information relating to the Donald Estate. In addition, Dawn requested that the administration of the Rosemary Estate be paused until issues with the distribution of the Donald Estate were addressed.

22On May 30, 2024, Dawn obtained an order from Pierce J. which included the following relief:

i. confirmation that the Statement of Claim was served on Steven in Kipling, Saskatchewan effective May 11, 2024;
ii. a direction that Steven provide an email address for service;
iii. that Steven account for the assets of the Donald Estate by July 19, 2024;
iv. that the distribution of the Rosemary Estate be put on hold until further order of the court or the consent of Steven and Dawn; and
v. a direction that T. Allison Gerrish, counsel in New Brunswick who assisted Steven with the administration of the Donald Estate, to produce information detailing where funds of the Donald Estate were deposited or transferred.

23T. Allison Gerrish provided documents as per the order of Pierce J. to Dawn. However, to date, Steven has not complied with any of the other relief ordered on May 30, 2024.

24As a result of the production of documents from T. Allison Gerrish, the assets of the Donald Estate were determined to be as follows:

1. the net sale proceeds for the sale of the residence of Donald Spellman total $98,991.73;
2. the legal fees of T. Allison Gerrish payable by the Donald Estate total $2,291.66;
3. the total of monies held by CIBC was $232,768.37, based on the following:
   a. the value of the CIBC Tax Free Savings Account asset was $59,034.07 on January 2, 2018;
   b. the value of the RRIF asset with CIBC was $69,321.86 on January 2, 2018;
   c. there was a balance in the CIBC chequing account of $33,318.74 on January 2, 2018; and
   d. the balance of the E-Advantage account with CIBC on January 2, 2018 was $71,093.70;
4. the value of personal property items of Donald Spellman total $63,819.00.

25On June 24, 2024, Dawn noted Steven in default for failing to serve a defence.

26A motion was then brought before Nieckarz J. on July 4, 2024, seeking information from RBC and CIBC relating to Donald Spellman and the Donald Estate. As a result of compliance with the order of Nieckarz J., RBC confirmed that an account had been opened for the Donald Estate by Steven whose address was 501 1st Street, Kipling, Saskatchewan, S0G 2S0, with an email address of 2runaz1@gmail.com. These are the addresses which were used to serve documents upon and communicate with Steven.

27The RBC documents also confirmed that $98,990.95, representing the total amounts deposited to the Donald Estate bank account, was withdrawn and deposited into an account owned by Steven.

28As a result of the information provided by CIBC, it was determined that an account was set up for the Donald Estate. Deposited into that account was $221,058.46, and $221,002.11 was withdrawn, with the balance of $56.35 going towards CIBC service charges.

29The monies which were withdrawn from the CIBC account for the Donald Estate were distributed such that $175,009.76 was transferred to Steven, $12,500 was transferred to Dawn, and the remaining funds totaling in excess of $33,000 was paid to third parties for either the benefit of Steven or the Donald Estate.

30Specifically, $2,169 went towards an insurance policy covering the residential property of Donald Spellman. The remaining monies were paid to Doug’s Recreation Ltd. for the purposes of purchasing a truck camper and some additional recreational products or accessories for Steven.

31Following the paper trail, documents and information obtained by Dawn from the Canadian Imperial Bank of Commerce, the Royal Bank of Canada, Pearson Insurance, and a recreational vehicle dealer known as Doug’s Recreation, confirm that the assets of the Donald Estate available to be distributed totaled $381,402.41. This includes personal property of the Donald Estate, which was valued in the probate documents at $63,819.00, and it is assumed that Steven retained or sold these.

32If the Donald Estate was worth $381,402.41, this would result in an entitlement of $190,701.21 to both Dawn and Steven.

33Since being appointed administrator of the Donald Estate, Steven has evaded and been non-responsive to orders of the Probate Court of New Brunswick and the Superior Court of Justice of Ontario to account for the assets of the Donald Estate. As such, from the information gathered by Dawn, instead of providing Dawn’s share of the Donald Estate to her, Steven instead transferred $368,902.41 to himself. Acknowledging that Dawn already received $12,500, Steven stole, converted or misappropriated $178,201.21 in excess to his entitlement from the Donald Estate.

The Rosemary Estate

34Based upon information provided by David Spellman, the estimated value of the Rosemary Estate is $244,911.00, making Dawn and Steven’s equal share being $122,455.50.

35Looking at what Dawn is owed as her share from the Donald Estate which is $178,201.21, even if the entire amount of Steven’s share from the Rosemary Estate was transferred to Dawn – in other words, Steven’s share of $122,455.50 goes to Dawn – this would still leave a balance owing to Dawn of $55,745.71 from her share of the Donald Estate.

36David Spellman also discovered that, in addition to the assets of the Rosemary Estate, there existed a Registered Retirement Income Fund (“the Rosemary RRIF”) at the Royal Bank of Canada worth $206,250.76. The beneficiaries of the Rosemary RRIF are listed as Dawn and Steven, which means that the monies in the Rosemary RRIF do not form part of the Rosemary Estate and instead can be distributed directly to the named beneficiaries.

37Both Steven and Dawn are therefore entitled to receive approximately $103,125.30 each from the Rosemary RRIF. However, at the present time, due to the order of Pierce J. dated May 30, 2024, distribution of the assets within the Rosemary Estate were frozen pending further order of this court. Recognizing that significant monies were owing to Dawn from the Donald Estate and the Rosemary Estate, my order of October 31, 2024, required the Rosemary Estate to pay out the monies in the Rosemary RRIF to Dawn, subject ultimately to an accounting.

Decision

38It is clear from a review of the evidence that Steven has seriously breached his fiduciary duty owed to Dawn as the administrator of the Donald Estate.

39Based upon the fact that Steven transferred the bulk of the Donald Estate to himself personally, used funds from the Donald Estate for his own personal benefit, ignored court orders from New Brunswick and Ontario to account for his conduct, moved to Saskatchewan to avoid the jurisdictions of New Brunswick and Ontario, and while served with the Statement of Claim failed to respond with the filing of a Statement of Defence, it was appropriate to note Steven in default and for Dawn to bring this motion seeking judgment.

40Steven’s conduct was highhanded, self-serving, and shocking, warranting a consideration of Dawn’s arguments that an order for punitive damages is appropriate.

41Based upon the evidence filed, Dawn’s condition and situation was described and included the following:

• she was 59 years old at the time this matter was heard;
• she suffers from multiple sclerosis;
• her vision is impaired;
• she has arthritis;
• she has fallen on a number of occasions due to the combination of the first three factors;
• she uses a walker as a mobility aid; and
• she is entirely dependent on ODSP as well as assistance from friends.

42It is clear that if Dawn had received her inheritance from the Donald Estate back in 2019, her last five or six years would have been much more comfortable and enabled her to access additional health care as well as purchase additional mobility assistive devices.

43In assessing the claim of punitive damages, there is no doubt that during the administration of the Donald Estate, Steven was well aware of the physical state and financial status of his sister, Dawn. Steven made the decision to distribute the Donald Estate contrary to the directions of his father, Donald Spellman, notwithstanding that Dawn was vulnerable and suffering from a disability. In order to avoid the implications associated with the manner in which he inequitably, illegally and immorally distributed the Donald Estate, he absconded from New Brunswick and took up residence halfway across the country in Saskatchewan. I have no difficulty finding that his conduct as the estate trustee for the Donald Estate was not carried out in accordance with the fiduciary duties which he owed to Dawn.

44Counsel for Dawn referred me to the following excerpt from the case of Spisak v. Spisak, 2023 ONSC 4726, 91 E.T.R. (4th) 122:

[79] In addition to damages for his losses arising from the Respondent’s breaches of fiduciary duty, the Applicant seeks punitive damages of $50,000. In making this request, the Applicant relies on Walling v. Walling, 2012 ONSC 6580, 84 E.T.R. (3d) 146, and Queripel v. Shaddock et al., 2023 ONSC 3114.

[80] In Walling, the court found the impugned trustee’s indifferent use of estate funds for his own personal use as an egregious example of a breach of fiduciary duty. The court awarded $100,000 in damages. In Queripel, the court found the trustee’s conduct egregious, abhorrent, and dismissive of court authority and awarded $50,000 in punitive damages.

[82] This case can be distinguished from the Walling case. In Walling, the estate trustee also breached court orders and failed to account for his administration of the estate. However, his conduct was more egregious. He took advantage of his vulnerable young nephews, squandered their relatively modest inheritance, took chattels from the estate and gave them away, failed to include his nephews in their father’s funeral, and caused them serious emotional harm.

[83] In Queripel, the court awarded punitive damages against an estate trustee who, apart from a single email, failed to communicate with vulnerable beneficiaries for 20 years. She also failed to respond to any correspondence from the solicitor representing the majority of the residual beneficiaries of the estate, and she failed to account for her administration of the estate. That estate trustee was also in breach of court orders, and she withheld documents that ought to have been produced.

[84] I find that the facts in Queripel can also be distinguished from the facts in the case at bar. The Respondent in this case was not dealing with a particularly vulnerable beneficiary in the Applicant. She did respond to his correspondence, although not to his satisfaction. She did delay in the administration of the Estate, but she explained to the Applicant that delay was because of her admission to hospital and the recovery that followed. It was approximately 15 months (as opposed to 20 years) between the date of the Deceased’s death and the date on which the Respondent delivered the bad news that there were no funds in the Estate. During that time, there was communication between the Applicant and the Respondent.

45In the present case, Steven knew that his sister was a vulnerable beneficiary who had renounced her right to be involved in the administration of the Donald Estate and who had trusted Steven to carry out his fiduciary obligations. At no time has he acknowledged his conduct, and in fact has ignored court orders directing him to account or explain his actions.

46Similar to Queripel, I find Steven’s conduct to be egregious, abhorrent, and dismissive of court authority.

47The cases of Norberg v. Wynrib, [1992] 2 S.C.R. 226 and Peppiatt v. Nicol (1998), 71 O.T.C. 321 (Ont. Gen. Div.), approve of the statement found in Fiduciary Duties in Canada by Mark Vincent Ellis, Carswell, Toronto, 2000 at page 20–32.1:

Where the actions of the fiduciary are purposefully repugnant to the beneficiary’s best interests, punitive damages are a logical award to be made by the Court. This award will be particularly applicable where the impugned activity is motivated by the fiduciary’s self interest.

48This excerpt accurately describes Steven’s conduct. Accordingly, I accept the submissions of counsel for Dawn that punitive damages in the amount of $50,000 shall be paid by Steven, and that these damages be paid out of his share of the Rosemary Estate.

49Finally, in light of the findings above, including the fact that Steven ignored the claim Dawn advanced and, despite being properly served, did not respond to the order of Pierce J. dated May 30, 2024, I determine that Dawn is entitled to her costs on a full indemnity basis, again to be paid by Steven from his share of the Rosemary Estate.

50In reviewing the Bill of Costs submitted by Dawn, I determine that the rates and amount of time charged are reasonable, as are the disbursements incurred to advance this matter.

51Fees and HST shall be assessed in the amount of $15,065.73, plus disbursements in the amount of $614.56, totaling $15,680.29.

Conclusion

52Resulting from the misconduct of the defendant, Steven Mark Spellman, in accordance with these reasons, the plaintiff, Dawn Christine Spellman, is entitled to judgement in the following amount:

Balance Owing to Dawn from the Donald Estate
$178,201.21

Punitive Damages
$50,000.00

Legal Costs including HST and Disbursements
$15,680.29

TOTAL
$243,881.50

53Judgement shall be granted to the plaintiff such that the defendant is ordered to pay the plaintiff $243,881.50, plus pre-judgement and post-judgement interest calculated pursuant to the Courts of Justice Act as of the date this motion was heard, being October 31, 2024. This judgement amount of $243,881.50 includes the amounts for Dawn’s outstanding share of the Donald Estate totaling $178,201.21, and punitive damages of $50,000, which were both referenced in my endorsement of October 31, 2024.

54Based upon the evidence filed, I have also determined that the defendant is owed monies pursuant to his equal share entitlement to the distribution of the Rosemary Estate. Specifically, the following estimated amounts are owing to the defendant, Steven Mark Spellman:

One half of the Rosemary RRIF
$103,125.30

One half of the Rosemary Estate
$112,455.50

TOTAL
$215,580.80

55I say “estimated amounts” in that since the hearing of this motion, undoubtedly the assets which were frozen by the order of Pierce J. dated May 30, 2024 have accumulated interest.

56The outstanding one-half equal share of the Rosemary Estate to which the defendant, Steven Mark Spellman, is entitled shall be paid forthwith to the plaintiff, Dawn Christine Spellman, in order to partially satisfy the judgement against the defendant in the amount of $243,881.50 plus pre-judgement and post-judgement interest. In addition, any monies outstanding to the plaintiff, Dawn Christine Spellman, from her one-half equal share of the Rosemary Estate shall be distributed to Dawn.

57The defendant, Steven Mark Spellman, shall not be entitled to any distribution of the Rosemary Estate nor the Rosemary RRIF, save and except if the value of his one-half share in both the Rosemary Estate and the Rosemary RRIF calculated as of the date of this judgement totals more than $243,881.50 plus interest.

58To the extent that there are issues arising from this judgment which impact the distribution of the Rosemary Estate, any party, including the executor of the Rosemary Estate, David Spellman, may apply to the court and seek directions.