Endorsement

Court and Parties

Court File No.: CV-22-00676037-00ES
Date: 2025-04-25
Ontario Superior Court of Justice

Re: Frank Iannace, Applicant
-and-
Peter Iannace, Estate Trustee with a Will of the Estate of Mario Iannace, deceased, and in his personal capacity, Respondent

Before: Frederick L. Myers
Counsel:
Steven Fehrle, for the Applicant
Chris Argiropoulos, for the Respondent
Heard: 2025-04-25

Background

[1] The applicant and the respondent are brothers. Their father died on October 29, 2020. He was 89 years old.

[2] The father had a will that named both brothers as estate trustees and made both 50:50 residuary beneficiaries.

[3] On July 17, 2020, just over three months before his death, the father made a new will that disinherited the applicant and left his estate to the respondent. The respondent was named the sole estate trustee.

[4] The applicant seeks to set aside the new will. He alleges that the father lacked testamentary capacity when he signed the will. The applicant also alleges that his brother procured the new will by exercising undue influence over their father.

[5] Today the applicant seeks certificates of pending litigation against two properties, preservation orders, and disclosure of transactions by the estate.

[6] The motion is largely granted as set out at the end of this endorsement.

Additional Key Facts

[7] There is a colourful family dynamic that I do not need to illustrate for today’s purposes.

[8] At the time that he signed his new will, the father saw a lawyer. But the respondent was with him and the lawyer at all times (apart from one five-minute absence). The respondent also acted as his father’s translator as the father had some issues with formal English.

[9] At the time the father signed his new will, the applicant was also ill. There was apparently at a least a question about whether he would survive. Whether this was something grounded in reality or something someone told the father is not clear to me.

Serious Issue to be Tried

[10] The applicant has shown that there is a serious issue to be tried as to whether the father’s new will was procured by undue influence and is therefore void.

[11] By contrast, I see no evidence at all of incapacity. Even if the medical records disclosed a real concern about the father’s capacity (and were properly in evidence), the lawyer’s notes seem to be a thorough and compelling answer on this issue.

[12] But the applicant only needs one or the other ground to put the validity of the will in issue.

Suspicious Circumstances

[13] Even if capable, the father was clearly in a weakened physical condition. He and the respondent chose to ignore the lawyer’s important advice to allow her to try to ensure that the will was the product of the father’s free and independent choices.

[14] With the respondent present at all times and acting as translator, even if he did not specifically intervene, the risk exists that his presence and translating importuned the father or prevented the lawyer from being able to canvass the father’s volition effectively.

[15] As but one example, the father apparently believed that he had some form of assurance from the respondent that if the applicant survived then the respondent would see him receive some fair share of the estate by “inter vivos transfers” from the respondent. But that is not contained in the will.

[16] While the issue may have been mentioned in front of the lawyer, it is not surprising that the father would not be very receptive to a suggestion that he should not leave the applicant’s future entitlement to the respondent’s goodwill. How would the father be expected to react to a perceived challenge to the respondent son’s trustworthiness with the respondent (on whom he relied) present? Would the lawyer not have been better able to recommend to the father in a private meeting that even with the most trustworthy beneficiary, trust in such oral assurances is not prudent? Might she have explained that the father’s apparent fear that the applicant’s death would interfere with the father’s estate was not well founded? The risk of the applicant’s death could have been drafted around simply, for example: by making the gift to him contingent on the applicant surviving the father for a period of months or years, or giving him only a life interest, or using a trust with its own succession.

[17] If the lawyer had a private opportunity to convey this type of advice, with an independent interpreter, and the father was content to exclude the applicant from the will still, how much stronger would the respondent’s case be now?

[18] Similarly, with the respondent interpreting, he has raised a concern that simply did not have to be available. At one level he was obviously motivated (consciously or unconsciously) to favour himself. But even more innocently, instead of assiduously translating the lawyer’s exact words, might he have filtered things said to simplify them for his father or to avoid upsetting him? These questions would not even exist had they listened to the lawyer and obtained an independent translator.

[19] I wish to be clear that I am dealing only with the question of whether the applicant has shown that his claim of undue influence is not frivolous. Is there some evidence which, if believed, could amount to suspicious circumstances? If a judge at trial finds there to be suspicious circumstances surrounding the creation of the will, then the burden could well fall on the respondent to disprove a presumption of undue influence.

[20] For the purposes of this motion only, I find that there is sufficient evidence to conclude that the applicant has established a prima facie case, a serious issue to be tried, and has surmounted the minimum evidentiary threshold on the issue of undue influence.

CPL on Hamptonbrook Drive

[21] If the applicant succeeds at trial and has the new will set aside, then, under the prior will, he will have a 50% interest in the estate and, accordingly, in the Hamptonbrook Drive property. That is a claim going to title and provides a prima facie basis to grant a CPL in favour of the applicant.

No CPL on Steeles Avenue

[22] The applicant does not have a prima facie case to ownership of the Steeles Avenue property. The property is owned by a corporation. The parties’ father owned 50% of the shares of the corporation. Their late uncle (and now their cousin) holds the other 50% of the shares.

[23] I flatly reject the submission of the applicant that the estate of the father owns any interest in the Steeles Ave. property. It is still the fundamental rule of corporate law that a corporation is a separate legal person from its shareholders. The shareholders do not own the corporation’s property. Salomon v. Salomon & Co. Ltd., [1895-9] All E.R. 33 (H.L.)

[24] There is no question that the father’s estate owns his 50% of the shares of the corporation. That gives it no interest in title to the Steeles Avenue property.

[25] But Mr. Fehrle is correct that an applicant or plaintiff can still be entitled to a certificate of pending litigation even if he does not directly claim ownership of the land in question. In Chilian v. Augdome Corp. (C.A.), para 55:

What is required is that "an interest in land" be "in question" in the proceeding. Almost invariably, I would think, this would be in the form of a claim of some kind, which, if substantiated, would adversely affect the defendant's interest in the land.

[26] In Chilian, minority shareholders claimed that an option granted by the corporation in relation to certain land claims was void based on corporate impropriety. So, the scope of the ownership interests in the land held by the corporation and the option holder were in issue.

[27] Similarly, in Cosentino v. Alilovic, 2020 ONSC 1050, siblings claimed that their sister improperly had their ailing parent restructure her corporate holdings so that the sister received 95% of the voting shares in the corporation. She then used her overwhelming voting control to cause the corporation to surreptitiously sell a substantial property without the siblings’ knowledge. The siblings sought to invalidate the sale and unwind the corporate restructuring based on the oppression remedy among other corporate law issues. The corporation’s title to its land was squarely in question in the proceeding even though the applicant shareholders did not own the corporation’s land.

[28] Finally, while I am concerned about the ongoing validity of the holding in Chilian that allows a CPL to issue where a shareholder makes claims that involve a corporation’s title to its property, I agree with my colleague Dunphy J. in Snook v. Royal Stone Interlocking Concrete Ltd., 2021 ONSC 3476, para 43, that “I shall leave such bravery to others situated at a different level of our courts than I.”

[29] Here, the applicant accepts that a corporation owns the Steeles Avenue land. He accepts that the father’s estate now owns the father’s 50% of the shares of the corporation. There is no claim involving the corporation’s title to the land as there was in Chilian and Cosentino. The corporation’s interest in land is not in question in this proceeding. Nothing in this proceeding risks adversely affecting the corporation’s title to its property.

[30] The corporation has sold the Steeles Avenue property. Closing is set for the end of May. The applicant is content to receive a share of the net proceeds of sale. He does not challenge the sale or ask me to hold it up.

[31] So, there is no basis for a CPL to issue regarding the Steeles Avenue land.

[32] The applicant asks however, that the court should add the corporation as a party and order it to hold 25% of the net sale proceeds for the applicant in case he succeeds in having the will set aside.

[33] There is no basis to add the corporation as a party or to make any order against it. The applicant has no claim against the corporation for 25% or any amount of its property even if the applicant is a 50% beneficiary of the father’s estate.

[34] The corporation will do as it pleases with its assets subject always to the corporate law. It may well distribute the proceeds of sale to the shareholders and liquidate. It may do something else with its money if its corporate objects allow and its board of directors and shareholders so decide.

[35] If the applicant is correct that he may own beneficially 25% of the shares of the corporation, he still could not veto a shareholder resolution calling for a fundamental corporate change (that requires 66 2/3% shareholder approval by special resolution). But he might have an oppression remedy in some circumstances. And, if that happens, he may have rights. As of today however, he advances no facts on which to base any claim or relief against the corporation or its property.

A Claim against the Estate for Proceeds

[36] If the corporation distributes to its shareholders the net proceeds of sale of Steeles Avenue and the estate of the parties’ father receives its 50% of the proceeds, then the applicant does indeed have a claim to own beneficially 50% of the 50% received by the estate.

[37] On that basis he asks the court to order the estate to hold 50% of that 50% for him under Rule 45.02 of the Rules of Civil Procedure, RRO 1990, Reg 194.

[38] Rule 45.02 allows the court to order preservation of an identifiable fund where a claim is made against it and the balance of convenience supports the order. (See: Sadie Moranis Realty Corporation v. 1667038 Ontario Inc., 2012 ONCA 475, para 18).

The Respondent has Borrowed $1 million and Granted Several Mortgages against Hamptonbrook

[39] The fact that the respondent has mortgaged the Hamptonbrook property up to $1 million without any notice to the applicant is troubling. The respondent has known that the applicant objects to the will since 2021. The applicant commenced this proceeding in January, 2022. The parties attempted mediation that year. While this application has moved at a glacial pace, the respondent has had no compunction about encumbering an asset while he has actual notice of the applicant’s claim to equal entitlement to be estate trustee and to share in the estate.

[40] Mr. Argiropoulos faults the applicant for not seeking a CPL sooner. I agree with him that no third-party lender would likely have lent with a CPL in place. But a CPL is not injunctive. It just gives notice of a competing claim. Of course lenders will not likely give security in face of notice that someone else claims to be the proper legal representative of the borrower and also claims priority to 50% of the property possibly ahead of their new security. But had the respondent told its lenders that he had actual notice of such a claim even if not yet supported by a CPL, would the lenders have advanced? Ought the applicant to have needed a CPL to preclude the respondent from encumbering a substantial asset while his authority and ownership stake were under challenge in this proceeding?

[41] The applicant submits that the $1 million in debt raised by the respondent is 80% of the value of the Hamptonbrook property. In any event, the precise numbers do not matter. The essence of the applicant’s submission is that the respondent is willing to act unilaterally to encumber assets without even notice to the applicant before doing so.

[42] The respondent did not give particulars of his use of the funds advanced under the mortgages that he placed on Hamptonbrook. He provides a general unsupported narrative about using as much as $500,000 to pay for renovations to the property. The other money – if advanced – might have been used for the business run on the Steeles Avenue property or otherwise.

This Case is about Money

[43] The respondent makes another important point applicable to both properties. The applicant does not want title to the land. He wants money. The respondent submits that what the applicant is seeking in this motion is really just execution before judgment. He is asking for security to make enforcement easier if he wins his will challenge somewhere down the line.

[44] The respondent makes the point that this application has proceeded slowly. The last time I saw the parties at a scheduling conference, the applicant wanted an order to examine the father’s doctor before setting the application down for a hearing. I agree with the respondent, that the applicant seems to still be fishing for evidence for a capacity claim five years after the father passed away. It is time to cut bait.

[45] As set out above however, I am satisfied that there is a prima facie case of suspicious circumstances. I am satisfied that the applicant therefore has a prima facie claim to have a beneficial interest in the Hamptonbrook property and to the identifiable fund that will be created when 50% of the net Steeles Avenue proceeds of sale are received by the estate.

[46] Relief therefore can issue unless the balance of convenience weighs against doing so.

The Balance of Convenience

[47] Assessing the balance of convenience looks at the same question whether under Rule 45.02 (See: Sadie Moranis Realty Corporation v. 1667038 Ontario Inc., 2012 ONCA 475, para 18) or for the purposes of a CPL (See: 572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.), paras 10-18): Who is hurt more – the estate if I grant relief or the applicant if I deny relief? What is the balance of equities or the balance of inconvenience?

[48] The respondent and father bullied ahead with the will in face of legal advice that the respondent was taking risks of empowering the applicant to bring this proceeding. It is similar behaviour to the respondent’s approach of bullying ahead encumbering up the Hamptonbrook property while this proceeding was already under way without so much as a, “would you mind…” or a, “by your leave…” or even a simple, “take notice that…”.

[49] I understand Mr. Argiropoulos’s submission that the lawyer’s post-meeting memo can be seen as covering herself from liability risks whereas her contemporaneous notes showed that she did what she ought to have done without any real indication of undue influence on the facts as she saw them. But I do not slough off a memo to cover a lawyer’s risk. If Mr. Argiropoulos is correct, he is saying that the lawyer felt that to ensure that she was meeting the standard of practice required of her, she had to formally reiterate her advice that the respondent and the father were taking risks by ignoring her request for a private meeting with the father with an independent translator present. The respondent confirmed in his testimony that there was no financial issue with hiring a translator. The father and he just decided it was unnecessary.

[50] That, to me, demonstrates a rather brazen assessment of the legalities and the importance of the issues. The whole reason the alleged influencer is not supposed to be at the testator’s meeting with counsel is to guard against the very risks at play here. I have already hypothesized above that the lawyer might have accomplished a great deal more to assure everyone of the voluntariness of the father’s testamentary wishes had the parties proceeded appropriately.

[51] By proceeding as they did, the respondent and the father allow for others to consider questions like: Why was the father uncomfortable without the respondent present? Did he fear he might forget what he was supposed to do? Did he need the respondent to translate despite giving an appearance of understanding? Why the hesitancy to have an independent translator? Was there something he or she might tell the father that the respondent did not want him to hear? Why did the respondent want to stay with the father and lawyer? Was his simple presence a physical reminder to the father of the respondent’s potential impact on his life?

[52] All these questions may be totally misplaced. There may be nothing at play but the most innocent and generous care for the father by a son. But the respondent has yet to share the estate with the applicant by inter vivos transfers despite the applicant surviving the father. Moreover, the respondent stripping equity from the Hamptonbrook house without notice is also significant. If he was improving the value of the house for better recovery for the estate, why not share the information with the applicant even if the respondent thinks the applicant’s case is weak?

[53] In all, I am left with a real concern that the applicant has a prima facie case, brought on by the acts of the respondent and the father, and the continuation of the same type of approach by the respondent in this proceeding that may leave the applicant with a very empty judgment. An unrecoverable judgment is a recognized form of irreparable harm. See: American Cyanamid Co. v. Ethicon Ltd., [1975] UKHL 1, p.4.

[54] This is not just execution before judgment. It is protecting a party from the non-speculative risk that a fiduciary is acting in conflict of interest to favour himself and leave the corpus of the fiduciary estate empty.

[55] I am not finding that the applicant is going to win or even that he has a strong case. But he has a real case that deserves exploration due, in large part, to the respondent ignoring legal advice and then taking unilateral, undisclosed (surreptitious?) steps that may have depleted the estate with actual knowledge of the existence of this claim. Is this the proper stance of an estate trustee who knows that his source of authority is challenged?

[56] Against the risk of irreparable harm to the applicant, the estate and the respondent suffer perhaps from the added costs and delay of this litigation. Delay can be minimized by aggressive scheduling discussed below.

[57] If the respondent is concerned about the cost-benefit of proceeding, one can always settle civil litigation. If a litigant is not prepared to accept what is on offer at any given moment, then he or she is effectively saying that they are content with the cost-benefit analysis of proceeding.

[58] The applicant will suffer a real risk or irreparable harm absent relief. The estate and the respondent suffer nothing like that by holding the status quo. It follows that I find that the balance of convenience favours the applicant.

Outcome

[59] I grant leave to the applicant to issue and register a CPL against the Hamptonbrook property.

[60] I order the respondent as estate trustee of his father’s estate to pay into court to the credit of this application 50% of all sums that the estate receives or becomes entitled to receive from Iannace Investments Inc. traceable to the sale of its Steeles Avenue property.

[61] If Iannace Investments Inc. decides that it will not distribute 100% of the net proceeds of sale of the Steeles Avenue property to its shareholders immediately after the sale of the property closes, the respondent shall advise the applicant forthwith in writing.

[62] I also order that within thirty (30) days, the respondent shall provide the applicant with an informal accounting listing the receipt and disbursement of all funds borrowed under mortgage security against the Hamptonbrook property from the date of death of the father to the present time. The list shall show all funds received by date, source, and amount, and disclose, at minimum, the dates and uses (in narrative form) of the funds advanced. To the extent that any funds advanced under mortgage(s) against Hamptonbrook are not yet consumed, the respondent shall provide the applicant with the particulars of the current location, investment, or deposit of these remaining funds. All transactions disclosed (money received, money spent, and money held) shall be supported by first level back-up documents i.e. cheques and statements showing funds received, moved, or held. At this stage, further detail is not required as it is not yet clear whether any of this will become an issue or not.

[63] Finally, both sides are of the view that a trial will be required. I direct counsel to discuss a quick schedule to have this action ready for trial before the end of this year. This will be a short trial with only a few key witnesses. There is already affidavit evidence and cross-examinations pinning the parties. Perhaps some brief oral discovery and a schedule for any additional trial affidavits may be required. Counsel are to arrange a case conference before any judge to implement an agreed schedule to get them to trial soon.

Costs

[64] The applicant succeeded on the motion. The request for a CPL on Steeles Avenue was an overreach and I told the applicant so in a prior endorsement. Nevertheless, the respondent seems to have needed to hear a court tell him that he is in a lawsuit in which his entitlement to act as estate trustee is in issue.

[65] At least the claim of undue influence is not frivolous. The burden may well be on him at trial to disprove wrongdoing. Credibility will be in issue and that makes the outcome even harder to handicap.

[66] In my view it is fair and reasonable for the applicant to be partially indemnified for the costs incurred in bringing the respondent to heel.

[67] The quantum of costs claimed by both parties is close to the same. Both are within the range of reasonableness for hours and rates. I order the respondent to pay the applicant his costs of this motion on a partial indemnity basis fixed in the amount of $6,623.43 all-inclusive.

Frederick L. Myers
Date: 2025-04-25