Milavsky v Lashyn, 2016 ABQB 410

Court of Queen’s Bench of Alberta Citation: Milavsky v Lashyn 2016 ABQB 410 Date: 20160721 Docket: 4801 139446; FL01 10034 Registry: Calgary Between: Marilyn Theresa Milavsky Plaintiff - and - Dwayne Lashyn, Charlene Molotsky and Gregory Milavsky, Executors of the Estate of Harold Philip Milavsky, Deceased Defendants And Between: Action Number FL01 10034 Marilyn Theresa Milavsky Plaintiff - and- Dwayne Lashyn, Charlene Molotsky and Gregory Milavsky, Executors of the Estate of Harold Philip Milavsky, Deceased; 353396 Alberta Inc; and Gregory Milavsky, Dwayne Lashyn and Charlene Molotsky, each as Trustees of each of The Harold Milavsky Family Trust, H.

Milavsky Residential Trust, The Harold Milavsky Grandchildren’s Trust and Harold P. Milavsky Descendants’ Trust Defendants

_______________________________________________________ Memorandum of Decision of A. R. Robertson , Q.C., Master in Chambers _______________________________________________________ Overview [ 1 ] The late Harold Milavsky was a successful businessman. Mr. Milavsky had children with his first wife. He established a Family Trust in 1980, and later several other trusts, ostensibly for the benefit of his children, grandchildren, and other descendants. [ 2 ] Marilyn Milavsky was his girlfriend from time to time during Mr.

Milavsky’s first marriage to Miriam Milavsky and, after his divorce from Miriam, during his common-law relationship with Gail Sanders. Harold and Marilyn Milavsky co-habited common- law, eventually married, then divorced. She brought these proceedings (actually two actions now joined) to resolve matrimonial property issues. He died before her matrimonial property claim was resolved, although they were divorced before his death. [ 3 ] I will refer to the Estate of Mr. Milavsky simply as the “Estate”, and to Marilyn as “Ms. Milavsky”.

Miriam Milavsky will be “Miriam” and Gail Sanders will be “Gail”. [ 4 ] Although they first co-habited about 10 years before their marriage in 1999, Ms. Milavsky seeks disclosure of records and information going back much earlier, covering the time when he was married to Miriam and then later lived common-law with Gail. She wants production to go back approximately 36 years. I have concluded that she is not entitled to production of records going back that far. [ 5 ] Ms.

Milavsky also seeks production of records relating to three corporations that she has not sued, either from the defendants or from the non-party corporations. I have concluded that she is not entitled to record production for these corporations, although to some extent she is entitled to the records through the defendants. [ 6 ] There is a dispute about a Notice to Admit served by the Estate in these proceedings. One of Ms. Milavsky’s counsel responded to it, but he did not either admit or expressly deny any of the things alleged. The Estate argues that Ms. Milavsky is deemed to have admitted its contents.

I have concluded that she is not to be deemed to have made the admissions. [ 7 ] Both Ms. Milavsky and the defendants have asked questions and made requests for undertakings from the other. I make individual rulings on them in

Schedule “A” to this memorandum of decision. Previous Court Applications [ 8 ] The claim was started in 2010, or about six years ago. The parties have been to the Court of Queen’s Bench at least six times on Chambers applications: twice for

summary judgment ( 2011 ABQB 342 and 2015 ABQB 395 ), about removal of Ms. Milavsky’s counsel (unreported, February, 2012); about bifurcating damages from liability (unreported 2012); a confidentiality order over producible documents ( 2014 ABQB 321 ); and for an advance award of costs ( 2016 ABQB 333 ). [ 9 ] The case has been to the Court of Appeal twice: on appeal from

summary judgment ( 2011 ABCA 231 ) and from an order declining the bifurcation of issues ( 2013 ABCA 253 ). Case Management [ 10 ] The proceedings are in case management. The issues before me were referred by the case management judge, Tilleman, J. The case is scheduled for an eight-week trial starting in October of this year, only a few months hence. [ 11 ] The case management judge has directed that 18 questions that relate to conduct have been taken “off the table” before me.

He directed the remainder of these applications to be heard by me (with one possible exception, discussed below), to facilitate the case management process. The Claims and the Issues Before Me [ 12 ] Although the Estate and the Trustees of the Trusts are represented separately, their interests are largely aligned, so generally I will discuss the dispute as involving only two “sides”. [ 13 ] Both sides of the dispute want questions and undertaking requests answered by the other, and each faces objections.

Although there are some question-specific arguments, there are broad issues before me involving whether some of the information sought is relevant and if so, whether it is material. That analysis starts with the pleadings. [ 14 ] Therefore, after six years of litigation and at least eight prior formal applications and appeals, I am required to rule on what the claim is about. There is a significant void between their positions as to what is claimed.

Factual Background [ 15 ] Mr. and Ms. Milavsky began cohabiting in either late 1989 or spring 1990, they married in 1999, and they separated in 2009. However, Mr. Milavsky began to suffer from mental incapacity in 2004, and was declared to be mentally incompetent in 2009. They were divorced in 2011 and Mr.

Milavsky passed away in 2012. [ 16 ] There are a number of significant events that preceded their co-habitation. [ 17 ] In 1980, long before their steady relationship began, he established the Harold Milavsky Family Trust (the “ Family Trust ”), initially under the supervision and professional advice of Joseph B. Katchen, Q.C., who acted as trustee from 1980 until 2000. The defendant Mr. Lashyn replaced Mr. Katchen as trustee, and he continues to act as trustee of that Trust. The other trustees are Gregory A. Milavsky and Charlene K. Molotsky, who are adult children of Mr. Milavsky.

Gregory Milavsky is apparently known as “Greg”, and I will refer to him by that familiar name for clarity. [ 18 ] Mr. Lashyn’s February 10, 2016 affidavit sets out that when the Family Trust was funded it had $40 million in it. [ 19 ] In 1985 a residence in Millarville, Alberta was bought by Mr. Milavsky. He and Ms. Milavsky were not yet married. Subsequently, he transferred the title to the Millarville property to himself and Ms. Milavsky as tenants in common. [ 20 ] Mr.

Milavsky acquired shares in Milfive (a corporation discussed below, later amalgamated with Quantico Capital Corp.) before he began cohabitating with Ms. Milavsky. [ 21 ] Other significant events occurred after they began co-habiting. More Trusts [ 22 ] The corporate defendant 353396 Alberta Inc. is the registered owner of a residential condominium in the Eau Claire area of Calgary that Mr. Milavsky had bought in 1986. Mr. Milavsky transferred title to the corporation to settle the Harold Milavsky Residential Trust (the “ Residential Trust ”) in 1992 while he and Ms.

Milavsky co-habited, but before they were married. When the Residential Trust was created, he retained a life estate for Mr. Milavsky and Ms. Milavsky. In 2009 Mr. Lashyn replaced Mr. Katchen, the legal counsel who had advised on the Trust who also acted as trustee, and now he, Greg, and Charlene K. Molotsky are the trustees. [ 23 ] In 2001 the “21 year rule” came into play, requiring a distribution of the assets from the Family Trust. This led to the legal obligation to do a distribution, leading, in turn, to the creation of M5 Holdings Ltd. for the benefit of the beneficiaries of the Family Trust.

It took their interest in the Family Trust assets, then in the range of $39 million. Mr. and Ms. Milavsky were married by then and it was long before their separation. [ 24 ] Also in 2001, The Harold Milavsky Grandchildren’s Trust (the “ Grandchildren’s Trust ”). Paragraph 74 of Mr. Lashyn’s May 6, 2016 affidavit sets out that Ms. Milavsky attended at the offices of Felesky Flynn and she was given an explanation regarding the “21 year rule” and the need for the reorganization that led to the Grandchildren’s Trust, and she was given details of that reorganization including the creation of that Trust. [ 25 ] Ms.

Milavsky was the settlor of the Grandchildren’s Trust. [ 26 ] The Estate says that Mr. Milavsky never made any contribution to the Grandchildren’s Trust. In 2001 the Grandchildren’s Trust was issued shares in Quantico. This was described by counsel as a “double estate freeze”, for the benefit of the grandchildren. They were to be the beneficiaries of any growth within the Grandchildren’s Trust. [ 27 ] A fourth trust was set up in 2004, the Harold P. Milavsky Descendants’ Trust (the “ Descendants’ Trust ”), again, during marriage, before separation. Mr.

Lashyn acted as a trustee of those Trusts from its inception, and the other trustees are, again, Mr. Lashyn, Greg, and Charlene K. Molotsky. [ 28 ] The Trusts are associated with three corporations that are not parties to the action: Milfive Investments Ltd. , Quantico Capital Corp. , and M5 Holdings Ltd. The trustees of the Trusts are also directors of Quantico and M5. Milfive was consolidated with Quantico years ago. Quantico is the continuing corporation. Legal Steps [ 29 ] In 2007, Ms. Milavsky retained Ms.

Heather McKay, Q.C., to advise on her rights on possible separation and divorce a possible post-nuptial agreement, and to formalize her interest in certain retirement assets held by Mr. Milavsky. [ 30 ] Mr. and Ms. Milavsky retained Retired Judge Michael Porter to mediate an agreement. The mediation was unsuccessful. [ 31 ] In 2008 Ms. McKay transferred the file to Dunphy Best Blocksom where she was initially assisted by Ms. Julia Turnbull until Ms. Wendy Best took over the file. [ 32 ] Ms. Milavsky began divorce and matrimonial property proceedings in February 2009.

Shortly before a certificate of readiness was filed, Ms. Milavsky (through Ms. Best) filed a second action, a claim against the Family Trust, the Grandchildren’s Trust and the Descendants’ Trust. No prior notice of this claim was given to Mr. Milavsky or his advisors, and by then Mr. Milavsky had been declared mentally incompetent. [ 33 ] Ms. McKay’s file was later produced and the Estate’s counsel has discovered in it a note that says, “trusts can’t be attacked it appears as to their construction.” [ 34 ] Ms. Best withdrew by a Notice of Ceasing to Act on October 8, 2010, and Ms.

Laurie Allen was retained on November 10,

2011. She remains one of Ms. Milavsky’s lawyers. The Nature of the Dispute [ 35 ] The essence of Ms. Milavsky’s argument is that Mr. Milavsky used the Trusts in an effort to make himself “divorce proof” from her, meaning that the alleged main intent was to keep assets out of her reach in the event of a divorce. She says she knew little of the Trusts and that their matrimonial assets were improperly transferred into the Trusts. She pleads unjust enrichment and fraudulent conveyance.

She also asserts that the limitation periods raised by the defence are not applicable because of fraudulent concealment. [ 36 ] She also now asserts that the Trusts are all “shams”, although one issue before me is whether that assertion has been pled – that is the reason I must review the pleadings to decide what the claim is about. The defendants say the allegation of sham is a new invention, first raised almost six years into the claim, essentially on the eve of trial. [ 37 ] Counsel for Ms. Milavsky Ms. Allen explained her concern is that the lack of transparency is a “cancer” in family law matters.

She stated that here the basic question is whether all or substantially all of the matrimonial assets were transferred. She asserted that all of the documents Ms. Milavsky asks for are producible, given the relationship of the parties to the corporations, and what Ms. Milavsky wants to find out at this point is if the practice that she says was started with the prior romantic partners continued. [ 38 ] In reply, the Estate as well as the four Trusts point out that the Family Trust was set up before the long-term relationship between Mr. and Ms.

Milavsky began, the Residential Trust was set up after they began co-habiting but long before they were married, and she was aware of all of the Trusts throughout. In fact, they point out that she specifically signed documents confirming both knowledge of the Trusts (she was a witness to some documents and the settlor of one), and that she supported their existence. As the settlor of one Trust, she clearly had some knowledge and participation. [ 39 ] Paragraph 45 of Mr. Lashyn’s May 6, 2016 affidavit sets out that Ms. Milavsky was the signatory witness to the 1992 gift to the Family Trust. Ms.

Milavsky says that she did not understand the documents that she was asked to sign. [ 40 ] Paragraph 47 of the May 6, 2016 affidavit asserts that Ms. Milavsky understood that Mr. Milavsky was never a beneficiary of the Family Trust and that Ms. Milavsky’s understanding went back to the 1990’s, as she disclosed in her questioning on May 5, 2015, at page 16 lines 10 – 16 of the transcript. [ 41 ] Paragraph 49 of Mr. Lashyn’s affidavit also deposes that she has acknowledged that she is not aware of any assets accumulated during the course of their relationship that were transferred by Mr.

Milavsky to the Family Trust. She admitted this in her questioning at page 566 lines 22 – 27. [ 42 ] Therefore, the Estate and the Trusts argue that the Family Trust assets were never matrimonial assets and there is a valid limitations defence to any claim against the Family Trust in any event. [ 43 ] The defendants say that the Trusts were set up to ensure that Mr. Milavsky’s children, his grandchildren, and later his descendants benefited from the wealth that he had created, to lawfully avoid payment of taxes, and not for any improper purpose. This Application and the Context [ 44 ] Ms.

Milavsky seeks 38 answers, either to undertakings or to questions to which objections were raised. There are 77 such requests for answers sought by the Estate, for a total of 115 disputed questions. [ 45 ] It is necessary to have these issues resolved early in order to take the appropriate follow-up steps taken before the trial in October. Counsel advises that they have two dates for conferences with the case management judge in August.

Time is tight. [ 46 ] My approach will be to address in this memorandum of decision the broad issues about the answers to questions and responses to undertaking request and to address some general comments (sometimes not so general, to make specific points). I will rule on the specific demands for answers in

Schedule “A” . [ 47 ] I will also address the demand for production from non-parties, and then the Notice To Admit, which are distinct matters from the specific questions as between the parties. The Estate’s Questions of Ms. Milavsky [ 48 ] The defendants assert that many of the allegations that Ms. Milavsky makes in her amended statement of claim and otherwise contradict either (

a) what she has said under oath earlier or (

b) what has been revealed from a review of her previous solicitor’s file. Ms. Milavsky’s previous solicitor was Ms. McKay. Her file was privileged, but it was produced (by her current counsel) to defendants’ counsel pursuant to a consent order whereby both sides produced certain previous solicitor’s files. [ 49 ] With privilege over that file waived, the file was produced for its examination. They assert that they have found evidence in that file that makes it clear that what she now says as to her lack of participation in, knowledge of, and affirmation of the Trusts is false. Ms.

Milavsky swore an affidavit on March 29, 2011 and the defendants assert that much of that evidence is also false. They claim she now declines to answer many of the questions put to her in questioning in connection with those alleged contradictions. [ 50 ] Although counsel for Ms. Milavsky agrees that questions relating to Ms. MacKay’s file are “fair game”, they argue that many of the questions to which objections are made relate to Ms. McKay’s file and are not appropriate questions of Ms. Milavsky. [ 51 ] Counsel for Mr.

Milavsky argued that her file and its contents are relevant and material at least for the purposes of the limitation issues, because the basic question is about what Ms. Milavsky knew, and when in connection with her husband’s assets, the trusts, the corporations, the settlement of the trusts, and the transfer of assets. He argues that the impugned questions are proper.

Ms. Milavsky’s Questions of the Estate [52] Ms. Milavsky argues that many of the records and information she asks for are necessary to establish the quantum of herdamages and therefore they are relevant and material to that extent, at a minimum. She also wants them so that she can assess andpresent her “sham” argument. [53] Ms. Milavsky asserts that she has had great difficulty getting records produced, and the current refusal to answer questions issimply part of that same pattern.

Documents were initially not produced without a confidentiality order, which was ultimately grantedalthough apparently on terms less protective than the defendants originally sought. The Landscape [54] Both parties seem to be determined to make everything an issue. Battles are fought to defend every hill within sight andbeyond, without regard to their significance of the outcome. Little regard seems to be had to the Foundational Rules or the change in theAlberta Rules of Court many years ago requiring that document production be limited only to things that are both relevant and material.

Previously the test was whether the records to be produced or the topics of questions asked were things that “touch on the matters inissue”. That test was thought to be too broad, so the Alberta Rules of Court were amended in 1999 to rein in both extensive production ofnon-helpful records and extensive demands for production of records that are not material.

Many of the things sought by both sides to adispute might arguably be peripherally relevant, but many are not material - that is, the evidence would not assist in the resolution of theissues pled. [55] There is also a dispute as to whether many of the questions have already been answered – at least, whether they have beenanswered properly. Some of the Previous Applications and Appeals [56] The defendants applied for partial

summary judgment in 2011 before Hawko, J. He dismissed much of Ms. Milavsky’sclaims on the basis of limitation periods having expired. [57] Ms. Milavsky successfully appealed Justice Hawko’s

summary dismissal of the claims, based on both an affidavit swornMarch 29, 2011 as to (

a) the extent of Ms. Milavsky’s knowledge regarding the Trusts, (

b) the alleged transfers of matrimonial propertyto those Trusts, and (

c) Mr. Milavsky’s alleged attempt to fraudulently conceal information and assets from her. The defendants assertthat the fact that these assertions were false only became apparent to them later, particularly upon a review of her former solicitor’s fileonce it was produced. [58] At the Court of Appeal, she argued that her claim included a fraudulent conveyance component, although it was not expresslymentioned in the statement of claim.

That is, the appeal partly turned on what the claim was about. [59] The Court of Appeal accepted that the facts supporting a claim of fraudulent conveyance under the Statute of Elizabeth hadbeen made in her statement of claim, although the cause of action was not expressly pled: 2011 ABCA 231, at para. 30. Fraudulentconcealment had been raised in reply to the limitations defence, and the Court said (at paragraph 37) that it should expressly be pled in areply. What is the Claim About? [60] The purpose of the Trusts was stated to be to preserve assets for Mr. Milavsky’s family members, at least as I understand it.

The Residential Trust also provided for a life estate to Mr. and Ms. Milavsky in the Eau Claire condo. [61] Reference is often made to “fishing expeditions” in discussions about the extent of questioning and demands for recordproduction. In order to “fish” the topic of the questions must be relevant to the claim and defence as pled.

The limit of materiality isexceeded when the information or record sought is only tertiary information that might lead to some secondary information that in turnmight lead to something actually relevant and material: NAC Constructors Ltd. v Alberta Capital Region Wastewater Commission,2006 ABCA 246 , at para. 12 and 13.

In NAC Constructors, the Court said, “Questions seeking information that couldreasonably be expected to lead to facts or records of secondary relevance (that is, questions asking for information that is only of tertiaryrelevance) need no longer be answered.” Furthermore, the Court pointed out that the test is whether the information will significantlyhelp determine one or more issues raised in the pleadings. [62] Some of Ms. Milavsky’s questions amount to fishing for evidence to prove her new theory of the case that the Trusts shouldbe set aside. That presumes that that theory is part of the claim.

I have concluded that it is not. She is not entitled to fish for evidence tosupport this new theory, at least not without an order allowing another amendment of her claim. [63] Ms. Milavsky started her lawsuit in 2010. She recast it in 2012. She wants to recast it again in 2016 but she says that this newapproach is not a re-casting of the claim – that it was always part of it. But her argument previously revolved around what, if any,matrimonial property was improperly moved into the Trusts, and whether Mr.

Milvasky used his talents as a businessman to grow themwithin the Trusts without benefitting the marriage. [64] Her new theory of the case involves setting aside Trusts going back 36 years. She argues that there was a pattern of behaviourgoing back to Mr. Milavsky’s marriage to Miriam, through his common-law relationship with Gail, and it continued through their own

common-law relationship and marriage.

Production of everything is now sought, all in an attempt to establish that the trial judge should look past the Trusts, or declare them void from the beginning. (Exactly what the remedy would be we do not know, because the amended statement of claim does not say.) She asks for production of such things as Trust financial statements, their bank accounts, their income tax returns, their Canada Revenue Agency assessments, the consideration paid upon the settlement of the trusts, corporate financial statements, the corporations’ income tax returns, their CRA assessments, profits paid by way of dividend, shares issued and exchanged, and more. [ 65 ] Some of the “evidence” that she presents is that Miriam, his first wife, claimed that he had made his estate “divorce proof” against her.

That case was not tried, so the allegations were not proved. Mariam’s claim was settled. She also presents evidence that Gail made a similar claim, but her claim was settled as well. Although she has no evidence that Trust funds were used to pay the settlements, she wants all records of the settlement produced, so that she can see if they were. [ 66 ] A “sham” is a thing that is not what it is purported to be. Was that allegation part of this claim?

The trial judge could still find that he had improperly transferred assets to the Trust without finding that the Trusts were anything other than what they are, without finding them to be invalid or that their legal existence should be questioned in any way. [ 67 ] I have concluded that the amended statement of claim does not assert that the Trusts were shams. There are several reasons why.

Her Plea Does Not Advance The “Sham” Claim This Would Be a Significant Challenge to Claim [ 68 ] Attacking the validity of trusts and estate freezes where the parties have consistently filed returns with Canada Revenue Agency is a significant challenge. The Court of Appeal expressed some skepticism of an attempt at the reversal of unequivocal positions previously taken with CRA by the parties in Jensen v Jensen , 2009 ABCA 272 , at para. 56 . As settlor of one of the Trusts, Ms. Milavsky had taken

part in establishing that Trust, which involved stating positions to CRA as to how certain assets were owned; how capital gains taxes should be paid, by whom, and when; what income was earned or loss suffered on the assets, by whom and when; who have been trustees with corresponding obligations; and who have been elected and served as corporate directors and have the resulting obligations under the Income Tax Act (Canada) (as well as the Business Corporations Act and Employment Standards Code ).

If she intended to take on this significant challenge, one would have expected it to be stated clearly in the statement of claim, or at least in the amended statement of claim. The Alberta Rules of Court Have Mandatory Pleading Requirements [ 69 ] The Alberta Rules of Court set out the requirements of pleading certain allegations. Assertions such as the ones made now must be pled clearly. They were not. There is no assertion in the amended statement of claim expressly setting out that the Trust indentures were illegal or invalid and setting out the grounds upon which that is asserted. Ms.

Milavsky was a settlor of the Grandchildren’s Trust. She asserts in her March 29, 2011 affidavit that when she signed she did not know what a “settlor” was. However, she does not plead or assert non est factum , and rule 13.6(3)(

e) would require that plea to be stated expressly if she were arguing that the trust indenture that she signed was invalid. [ 70 ] Many other potentially relevant assertions are mandatory requirements in a pleading, if the intent is to argue them: rule 13.6(3).

The amended statement of claim does not assert that either the trust indenture she signed or the other trust indentures were signed under duress, or fraud, or by misrepresentation, or by undue influence, all of which are required to be pled specifically by that rule. [ 71 ] Paragraph 12 of the amended statement of claim sets out a general claim about how Mr. Milavsky structured his business affairs: The plaintiff says that [Mr.

Milavsky] intentionally structured the ownership of his business affairs, including companies, partnerships, joint ventures and trusts and specifically intended to and did transfer assets to all or some of 353396, the trustee defendants and other third parties to defeat the legitimate claims of the plaintiff. [ 72 ] She argues that this is a sufficient plea. However, this paragraph does not suggest that the Trusts themselves were shams or that they should be set aside or disregarded. It acknowledges, indirectly, the validity of their existence, as recipients (albeit improperly) of the assets.

It asserts that they were part of a structure he employed to defeat her claims, but it does not suggest that they were “sham” trusts any more than 353396, Quantico, M5 or Milfive were “sham” corporations. She Has Not Sued the Parties Affected [ 73 ] A judgment setting aside the Trusts would directly affect the interests of Quantico, including the former Milfive (which was consolidated with Quantico), M5, the interests of the adult children of Mr. Milavsky from his prior marriage, his grandchildren, and others – all of whom have not been made a party to the lawsuit.

If their interests are to be adversely affected – and that is clearly the intent of Ms. Milavsky’s new claim – then it would seem that they should be parties. The Family Trust Will Have Worked to Her Benefit [ 74 ] If Ms. Milavsky is successful here in setting aside the Trusts as shams, she will have benefited from their existence in the early years. According to her theory, at least the Family Trust was used to protect Mr. Milavsky’s assets from Miriam and Gail, while she and Mr. Milavsky were having an inappropriate relationship, and the consequence will be that they were preserved for her to claim against.

If the Family Trust were invalid, then the matrimonial property settlements with Miriam and Gail should likely have been different. Mr. Milavsky would likely have had fewer assets available to him as a result. She wants access to the records of those settlements, but not for the purpose of correcting prior wrongs done to Miriam or Gail; rather, she wants to see if Trust funds were used

to reach the settlements, and she wants the assets of the Trusts found to be available to her matrimonial property claim. [75] If this were the result that she saw on the horizon at the outset of the claim, it would not have been clear to anyone else thatshe was trying to prove that the structure from which she was indirectly, if not directly, benefitting was invalid from the very beginning –at least, not without that being said clearly in the statement of claim. The Recent Invention and Clairvoyance [76] Furthermore, counsel for Ms.

Milavsky admitted that it was only in January 2016 that she had identified evidence produced bythe defendants that caused her to believe that the Trusts were shams – about six years after the statement of claim was issued, and aboutthree years after the Court of Appeal is now said to have discerned this theory of the case. [77] But what did the Court of Appeal say? Ms.

Milavsky argues that in 2013 the Court of Appeal described the issue as she nowasserts, and that the wording in the amended statement of claim is sufficient to support that view. [78] The Court specifically addressed what the issue was between the parties. At 2013 ABCA 253, at paragraph 7, the Court saidthat Ms. Milavsky “argues that she was not claiming damages but, rather, whether transfers to the trust have defeated her claim for anequitable division of matrimonial property and spousal support....

She maintains that the financial affairs of the trusts are relevant andcritical to her claim.” The Court of Appeal made a reference to “settlement” in paragraph 8 of its decision, but the passage was, “Theappellants [the Estate and Trusts] acknowledge that the ultimate issue between the parties is whether the settlement of and/or thetransfers of property to the trusts while Harold Milavsky was in a spousal relationship with the Respondent are capable of being set asideand, if so, how much should be conveyed to her.” In the next paragraph, the Court said the issue as described by the Chambers Judgewas, “whether Mr.

Milavsky’s transfers of property to the trust have defeated [the Respondent’s] claim for an equitable division ofmatrimonial property and a reasonable amount of spousal support”. [79] (The italics are mine.) [80] But the Court of Appeal was not suggesting that they were re-stating the issue as stated by the Chambers judge and that hisdescription of it was wrong, and I do not read the Court of Appeal’s

summary of the issue as suggesting that the Court believed that theissue involved setting aside the Trusts completely. They stated that the issue was whether “the settlement of … property to the Trusts”included property that might be found to be matrimonial assets and if so, whether the settlement of it should be set aside. [81] Ms. Milavsky’s counsel argues that they meant whether “the settlement of ... the trusts ... are capable of being set aside”.

That is a possible grammatical analysis, but it is not consistent with the circumstances overall: the reference to “whether transfers to thetrust have defeated her claim”; their reference to the chambers judge’s description of the issue; and the limited production directed atparagraph 15 of its decision, where they said, “We are satisfied that under the close supervisions of the case management judgeproduction can proceed on an incremental basis, perhaps beginning with the bare financial statements of the trusts.

Thereafter, as thejudge may direct, additional production could be ordered.” If the Court were recognizing that the entire trust structure was being calledinto question on the basis that they were shams, this direction as to limited initial production would seem to make little sense. [82] Furthermore, since the “sham” argument was not even put forward by her counsel until 2016, this part of her argumentpresumes clairvoyance by the Court of Appeal in 2013 about a claim that had eluded her own counsel until 2016. [83] A review of unreported reasons of the former case management judge, McIntyre, J., in his February 8, 2012 decision(addressing the application to dismiss Ms.

Milavsky’s counsel) discloses that when he briefly summarized the claim as he understood it,at page 3, line 39 and following, he said, “The constructive trust claim was started in May of 2010, and this claim is about property thatHarold allegedly transferred to the trusts, including almost $6 million while they were living together common law.” This tends toreinforce my view that the “sham” argument was not part of the claim as it was described by Ms. Milavsky prior to this year.

The Purpose of Pleadings [84] The Alberta Rules of Court require more than reliance on clairvoyance by the opposing party and the court to understand whatthe case is about. "[P]leadings are not a meaningless ritual incantation or medieval superstition; they fulfil the first rule of naturaljustice, knowledge of the case against one": Waquan v. Canada, 2002 ABCA 110 , 303 A.R. 43, 2 Alta. L.R. (4th) 1, at para.85.

Conclusion on the Scope of Claim [85] It is not correct to say that this case involved, from the beginning, or even from the time that it was amended in 2013 to addthe fraudulent conveyance claim, an assertion that the Trusts were shams. [86] To return to the fishing analogy in the context of disclosure, Ms. Milavsky is fishing for evidence that the Trusts were shams,but she has cast her line in the wrong pond. If she wants to fish in that pond, she must portage to it, i.e., she must apply to amend herclaim. That issue is not before me. Notice to Admit [87] Counsel for Ms.

Milavsky questioned whether this issue was appropriate for me to hear, because it was not clear to him thatJustice Tilleman had referred it to me. However, given the late registration of this concern (on the second day of oral argument), thetiming of the application in relation to the up-coming trial, and the timing of the next appearances before Justice Tilleman, I determinedthat it would be more efficient to proceed. It was my understanding that Justice Tillmann had referred several matters to me, and he hadcalled me specifically to advise of that. However, he did not say to me precisely what the matters were.

I understood that theapplications set out what was being referred me - or the concern would have been raised in a reply brief or at the outset of oral argument,when Counsel pointed out that certain aspects had been expressly not so referred.

[ 88 ] In the circumstances, the pragmatic approach was to proceed. If either side concludes that my decision is wrong, the correct step is to appeal – to Justice Tilleman, in these circumstances. [ 89 ] The Estate served a Notice to Admit containing 807 paragraphs. Many of them referred specifically to the source record (by production number) or evidence given by Ms, Milavsky in questioning (by page and line number), or some other evidentiary source. Ms. Milavsky’s counsel acknowledged service of the Notice to Admit and requested an extension of time to respond.

The time was extended to about six weeks after service. [ 90 ] Ms. Milavsky made no complaint as to the sufficiency of the extension to the deadline that was granted, but in her appearance at one of two intervening case management meetings, her lawyer Ms. Allen addressed the pending Notice to Admit and said that Ms. Milavsky was not responding to it. On May 24, 2016, counsel for Ms. Milavsky posed this question to the judge: How long do you think it would take Mrs. [sic] Milavsky’s lawyers to do a response to 807 paragraphs? We have said, no, we’re not responding to this.

Sir, I’m to the point, I only stepped back in on this file in December and I’m to the point now where I am saying, cost, cost, cost, we are not doing this. It’s up to the trial judge to decide whether that was a reasonable decision. We say it was because we say, you know what, you could prove these facts faster and cheaper than doing an 807-page notice to admit and then having the lawyers’ response. You could prove the vast majority of that quicker and more cost-effectively. So to my mind, that’s just a red herring. Those things do nothing to cut costs. [ 91 ] On the last day for a response, Ms.

Milavsky’s co-counsel simply wrote to advise that they were not responding. There was no express denial in his reply to the Notice to Admit, and there was no express admission. Her counsel simply advised that there would be no admission, and he gave reasons why: Your Notice to Admit, comprising 807 individual notices to admit, is objectionable because the requested admissions: - cover ground previously canvassed in your extensive questioning for discovery of Ms.

Milavsky; - are not material or relevant to any matters in dispute between the parties; - are privileged; - call for admissions that go to the ultimate legal issue(s); and - deal with issues of “conduct”. [ 92 ] Counsel for Ms. Milavsky asserted that the Estate would proceed on the basis that the requested admissions were deemed to have been made. Ms. Milavsky’s counsel’s response was: You are free to proceed however you wish, but Ms.

Milavsky has not admitted anything in Notice to Admit No. 2 [the Notice to Admit in question]. [ 93 ] I have concluded, with reservations, that no facts have been admitted. [ 94 ] The Estate argues that simply refusing to respond to a Notice to Admit is a non-response, and the result, following rule 6.37(3) is that everything in the Notice to Admit “is presumed to be admitted”. The Estate also notes that there was a case management meeting in the intervening period, and had Ms.

Milavsky wanted to set aside the Notice to Admit, presumably on the grounds upon which she now relies, that application could have been brought. But it was not. [ 95 ] Rule 6.37(3) provides that a Notice to Admit, once served, results in a presumption of admission unless there are one of two alternate responses: [T]he party to whom the notice is addressed service on the party requesting the admission a statement that (

a) denies the fact or the opinion, or both, for which an admission is requested and sets out in detail the reasons why the fact cannot be admitted or the opinion cannot be admitted, as the case requires, or (

b) sets out an objection on the ground that some or all of the matters for which admissions are requested are, in whole or in part, (

i) privileged, or (ii) irrelevant, improper or unnecessary. [Emphasis added.] [ 96 ] Sub-rule (5) states: A denial by a party must fairly meet the substance of the requested admission and when only some of the facts or opinions for which an admission is requested are denied, the denial must specify the facts or opinions that are admitted and deny only the remainder. [ 97 ] Sub-rule (8) provides that, “On application, the Court may set aside the notice to admit.” [ 98 ] Nowhere in the reply, or the follow-up email, does it specifically say that Ms. Milavsky denies any of the things alleged.

But in oral argument, counsel who wrote the letter was clear that he felt that his letter was a proper response to the Notice to Admit, and that none of the things set out in the Notice to Admit were admitted. He asserted that the issue is now one of costs. That is, at the conclusion of the trial, counsel for the Estate will be allowed to argue that Ms. Milavsky should have admitted some or all of the contents of the

Notice to Admit, and if she should have, there could be a costs remedy. [ 99 ] The most charitable

interpretation of the letter and email sent in reply to the Notice to Admit, combined with the assertions made to the case management judge, is that the response approaches the sort of response contemplated by rule 6.37(3)(b). On its face, it asserts that all of the requested admissions are not relevant and material and they are all privileged, and that they are all improper. [ 100 ] That is manifestly not a correct assessment of all of the Notice to Admit. Many of the things stated in it are obviously relevant, material, and admissible facts.

Counsel for the Estate made references in the Notice to Admit to source documents and transcripts, so that responding to it would be straightforward in many cases. However, it is easy to understand why Ms. Milavsky would not have wanted to admit many of the things alleged, because they are conclusions, not facts, or they are otherwise objectionable. [ 101 ] Regardless of my reading of the Notice to Admit, the rule does not contemplate that a Court in chambers would be permitted to question the assessment of admissibility made by the responding party.

Schuttler v Anderson , 1999 ABQB 174 addressed the assessment of reasons for a denial of a Notice to Admit (under the previous rule, 230.1), at para. 12. That approach would seem to apply to objections based on admissibility as well. [ 102 ] Since the Notice to Admit was not simply ignored, and at least some kind of explanation was given for an answer, my conclusion is that no admissions have been given. [ 103 ] However, I feel compelled to comment that this kind of reply to a Notice to Admit offends the purpose of the rule.

It is not appropriate to decide unilaterally that responding to it would not save trial time. The fact that it is 807 paragraphs and therefore said to be too much to deal with is difficult to comprehend, given the massive amounts of evidence, the fact that Ms. Milavsky wants to retrace history for 36 years, and the number of court appearances and appeals brought so far. She is prosecuting a lawsuit complicated factually and legally, and she is trying to complicate and expand it even more with the assertions of sham. Many of the things in the Notice to Admit seem clearly to have been previously admitted by Ms.

Milavsky. Refusing to admit them now introduces unnecessary confusion into the dispute. [ 104 ] As I mentioned above, the approach is to make everything an issue. Even things that should not be in dispute are disputed. No ground is surrendered, regardless of the artillery required to maintain it, no matter that no military advantage would result. Records from Non-Parties [ 105 ] The application for the production from third parties is for a variety of financial and other records from companies owned by or associated with the Trusts, Milfive, M5, and Quantico. Ms.

Milavsky’s application asks primarily for the existing defendants to produce those documents, but the application goes on to say, in paragraphs 31, 37, 43, 50, and 56 that, “in the alternative, Milfive, M5 or Quantico are the only sources of these documents and may be required to produce these documents at the trial of this Action .” It does not expressly ask that they produce the records before the trial. [ 106 ] Ms. Milavsky’s application makes no reference to rule 5.13, the applicable rule, which is required by rule 6.3(2)(

d) if in fact it is to be relied upon. The application here simply refers to “the Alberta Rules of Court , and such further and other statutes, regulations, rules and authorities as counsel may provide and this Honourable Court may permit”. Nonetheless, it was served on Milfive, Quantico and M5. They participated in the hearing by separate counsel from the Estate and the Trustees. I will refer to them collectively as the “corporations”. (I do not include 353396 Alberta Inc. within that definition.) [ 107 ] I have concluded that the corporations need not produce the records. [ 108 ] Ms.

Milavsky argues that the records are producible, in part because of her assertion that the Trusts are shams. I have concluded that that claim is not part of this dispute. [ 109 ] Ms. Milavsky does not see the fact that she has not sued the corporations as being an impediment to seeking production from them. Even though her application did not mention rule 5.13, she relies on it. However, she makes it clear that her primary application relates to record production from the existing defendants.

One factor is that rule 5.13 requires the court to order that the costs of production by the non-parties be paid by the party asking for them. Production from a party does not carry that burden, except in a costs award. [ 110 ] The argument as regards Milfive/Quantico and M5 starts with the claim that they were closely associated with Mr. Milkavsky. [ 111 ] Ms. Milavsky asserts that Mr. Milavsky worked for Milfive and Quantico for free, when he should have been paid.

She sees both Quantico/Milfive and M5 as being part of the improper structure devised to divert matrimonial assets, because the directors of M5 and Quantico/Milfive are the trustees who, to some extent, are the beneficiaries of the trusts. They are his adult children from his first marriage. [ 112 ] Although she asserts this in connection with the sham argument, it also applies to her existing claim based on fraudulent conveyance and unjust enrichment.

As these corporations are essentially controlled by the Trusts, or controlled by the people who control the Trusts, she argues that he used the Trusts and the corporate structure as part of an overall plan to thwart her entitlement to matrimonial assets. She says that growth in the businesses within the Trusts resulted from his time, contacts, energy and expertise that he gifted to the corporations, and therefore the growth was made to occur two legal steps away from the marriage. Counsel for Ms. Milavsky acknowledged that this kind of claim is “novel”. [ 113 ] At one point in previous proceedings, Mr.

Milavsky said that Milfive was his “banker”. Ms. Milavsky says this means that he simply controlled the company, and that he used its funds held by it whenever it was convenient. He was not disinterested in its management. [ 114 ] Given the fact that Mr. Milavsky’s personal expenses were reimbursed by one or more corporations, she asserts that there was a

pattern of behaviour with Milfive/Quantico that demonstrates intention. She argues that although Mr. Lashyn gave evidence that Quantico (Milfive) never paid Mr. Milavsky’s personal expenses, Mr. Milavsky previously gave evidence that Milfive did pay for renovation expenses, “as my banker”. She points to Exhibit “L” to Mr. Marlowe’s affidavit, being in turn an affidavit of Mr. Milavsky sworn January 23, 1990, which attaches an invoice from an interior design company addressed to Mr. Milavsky which was paid by Milfive. The text of that affidavit says it was paid “through [Mr.

Milavsky’s] account with Milfive Investments Ltd.” [ 115 ] It is with this backdrop that Ms. Milavsky wants access to documents relating to the shareholder’s loan as between Quantico/Milfive and Mr. Milavsky. She wants to know how the money was used. [ 116 ] Also, she claims to be entitled to know if Milfive or Quantico used its own funds for Mr. Milavsky’s expenses. She refers to an affidavit filed in first wife’s Miriam’s proceedings. The affidavit is of Mr. McDonald, now a member of the Alberta Court of Appeal but then practising law and representing Mr. Milavsky’s first wife.

He attached as an exhibit an excerpt from a transcript of his examination for discovery of Mr. Milavsky in 1985 in which Mr. Milavsky explained that the role that was going to be played by Milfive: “Milfive was going to be a subsidiary of the trust”. At that time, the “trust” would have been the Family Trust. [ 117 ] She argues that M5 is a related company because, as shown on a corporate structure attached as Exhibit 5 to the affidavit of Mr. Lashyn sworn March 22, 2011, M5 owns preferred shares of Quantico, and M5 itself is owned partly by the Family Trust (as to voting preferred shares) and partly by Mr.

Milavsky’s five children (as to common, non-voting shares). [ 118 ] In response, the defendants say Mr. Milavsky’s “banker” comment is consistent with Milfive functioning as an actual bank – he had funds “on deposit” by way of a shareholder’s loan, and from time to time the loan was paid down to him. This is just like a bank account at a real bank. The reference to Milfive being Mr. Milavsky’s “banker” is in the transcript of Mr. Lashyn’s questioning on January 21, 2016. Mr. Lashyn explained that Mr. Milavsky was using Milfive as his banker, “in a sense that Harold had money on deposit with ...

Milfive, and he took that.

So as costs came in, he charged against that amount that Milfive owed him, yes.” [ 119 ] They also say that M5 was established to hold assets for which the adult children were beneficiaries of the Family Trust. [ 120 ] The corporations argue that although some records might be within the possession or power of the defendants in their capacity as trustees of the Trusts, the records sought (which the corporations say are not set out with sufficient particularity) are not relevant to the alleged impropriety of transferring matrimonial assets to the corporations through the Trusts. [ 121 ] In my view, the records that Ms.

Milavsky wants need not be produced by the corporations. They are not parties, the application did not invoke rule 5.13, and rule 5.13 is to be used as a “last resort” way to get at relevant and material records. The records should first come from the litigants themselves, if reasonably possible. An “alternative” argument that the non-parties be directed to produce them, as made here, is almost always going to fail. The party seeking the records must first show that they cannot be obtained from the opposing party.

When the litigant is opposing on the basis of relevance, materiality, or admissibility (as here), until the court rules on those issues the reason for non-production is not that they cannot be accessed; the reason for non-production is the refusal by the party. If they are not found to be relevant and material, or they are found to be inadmissible, then they would not be ordered to be produced by anyone. If they are relevant and material, and admissible, then the party would be directed to produce them.

Records and Information From the Defendants [ 122 ] However, my conclusion at this point is not a ruling that the records are not relevant, not material or not admissible, just that the corporations need not produce them. But I do not order production as far back as Ms. Milavsky asks, and not in the detail that she asks. I have previously addressed the “sham” argument. The consequence is that records that precede Ms. Milavsky’s co-habitation with Mr. Milavsky need not be produced in relation to these topics. The claim is about fraudulent conveyances and unjust enrichment. Without some basis to establish that Ms.

Milavsky was a “creditor or other” as referenced in the Statute of Elizabeth before they began co- habitation, there is no reason to go back earlier than then. [ 123 ] In light of the fact that there was not much separation between the Trusts and the corporate entities, and in particular because of Mr. Milavsky’s reference to one of the corporations as his “banker”, she argues that he was not truly disinterested in the gifts to the trusts and their business undertakings.

Accordingly, she wants balance sheets, general ledgers, financial statements, and a host of other financial records of the corporations even though she acknowledges that the fraudulent preference that she asserts was as between Mr. Milavsky and the Trusts, not between him and the corporations. [ 124 ] Some of the records are not relevant and material because of a claim made against the corporations – none has been made – but they relate to the quantum of the claim Ms.

Milavsky puts forward about matrimonial assets having been moved into the Trusts, and the alleged use of the corporations as part of an improper scheme. [ 125 ] It goes without saying (although given the high conflict dispute here I feel it must be said) that I am not ruling on the merits of this argument. I understand the defendants’ argument that the Trusts were established properly, that any assets transferred to the Trusts were done so with proper consideration, that Quantico and Milfive were run by Mr. Lashyn and Greg, not Mr.

Milavsky, and if there was proper consideration for the transfer then the fact that the value grew afterwards within the Trusts is not Ms. Milavsky’s concern. I am simply recognizing that the claim and its quantum have been raised in the amended statement of claim. If they were moved into the Trusts improperly, then it seems that there is a live argument that the values at the time of the transfers are not the proper or only measures.

As long as this remains a live issue, the trial judge needs the tools to make a ruling on quantum if the claim is successful. [ 126 ] Many of the records are within the power of the defendants to produce. The Alberta Court of Appeal has ruled that where there are multiple corporate entities, all managed on a global basis as a single business unit, records within the control of one corporation are within the control of the parties at the top of the organizational chart: Dow Chemical Canada ULC v Nova Chemicals Corporation , 2014 ABCA 244 at para. 13 and 14 .

The Court said at para. 14, “A litigant cannot insulate itself from record production and questioning by the simple expedient of putting the management of its business in the hands of a third party.” Ms. Milavsky argues that that is analogous to the Estate and the Trusts’ relationships with the corporations. To deny production would allow the defendants to hide behind the corporations. She argues that the question to be asked is whether decisions are made on a global scale with respect to the

corporate structure. She concludes they are made that way, and therefore the documents in the possession of the corporations are producible. [ 127 ] Although it is easy to find a distinction between Dow Chemical and this case, because the management could be traced upwards in Dow Chemical through the ownership chart to one central controlling party and here there is not one single individual or entity at the top, the controlling minds here are largely the same.

For example, if Greg is a trustee, and a director of the corporations, and is or was a beneficiary of some of the Trusts, and a shareholder of M5, he cannot pretend that he does not have access to the financial records of the corporations. He has a legal right to access them, and that is the test: Thornton v Swirski-Cowndon , 2016 ABQB 88 at para. 20 . [ 128 ] The records are confidential, but that is not a reason not to produce them. If the corporations believe the records are so sensitive that they should not be produced, they could apply for that relief, or at least apply for a formal confidentiality order.

But the implied undertaking of confidentiality would apply to his production of corporate records, and perhaps the confidentiality order in place (I have not reviewed it) protects them, and if the issue is whether the management of the corporations should be consulted, that is hardly an obstacle. It appears to be the same people. [ 129 ] I will discuss the competing arguments as to the various questions asked and undertakings sought that are the subjects of the application generally here, with general comments about the dispute and counsels’ submissions. I will address them specifically in

Schedule “A” . The Categories of the Impugned Questions asked by Ms. Milavsky [ 130 ] Ms. Milavsky’s counsel batched together the requests for information in eight categories: 1. Financial Documents of or Pertaining to Milfive, M5, or Quantico. 2. Corporate Records of or Pertaining to Milfive, M5, or Quantico. 3. Financial Records of or Pertaining to the Trusts. 4. Financial Records of or Pertaining to Harold Milavsky. 5. Reimbursement of Harold Milavsky’s Expenses by Quantico/Milfive. 6. Correspondence of Dwayne Lashyn and the Trustees. 7. Information of or Pertaining to Greg Milavsky or Dwayne Lashyn. 8.

Legal Documents of or Pertaining to Harold Milavsky [ 131 ] As to Categories 1 and 2 , her explanation of relevance and materiality is that Quantico paid Mr. Milavsky a bonus, which he then gifted to the Descendants’ Trust, which then loaned the funds to Quantico in what one might describe as a “serpentine” manner. She asserts that this is matrimonial property, and that it was not disclosed. [ 132 ] The explanation given in reply is that the unusual movement of money was to avoid tax consequences. The transcript of questioning of Mr. Lashyn, at exhibit “C” of Mr. Marlowe’s affidavit, page 141 shows Mr.

Lashyn’s evidence of a taxable dividend of $3.5 million by M5 and a non-taxable capital dividend of $2.4 million, also from M5, and a reference to a heading in financial records titled “Loans and Notes Receivable to M5 Holdings Ltd.” He indicated that the loan increased by $5.5 million in 2005 as between the Family Trust and M5. Mr. Lashyn testified that M5 paid a dividend to The Family Trust, and “The Family Trust in turn lent a good chunk of that money back less the income taxes”, interest free. This is a very detailed explanation. It is relevant to Ms.

Milavsky’s claim for the calculation of the quantum of damages to see how this significant flow of money occurred in and out of Mr. Milavsky’s hands. The underlying annual statements, but not all the detailed records asked for, are necessary for review. To the extent they have not been produced, they must be. To the extent that money has been paid directly from the trusts to Mr. Milavsky, the inquiry is relevant and material. But generally it is simply the change in value within the Trusts that might be relevant and material to a quantum assessment.

It is reasonable to assume that the values have been increased for the benefit of the Trusts or the beneficiaries, or if they have decreased it is despite best efforts, and not reasonable to review every financial record created in the process. [ 133 ] As to Category 3 , Financial Records of or Pertaining to the Trusts, Ms. Milavsky argues that the applicable test for determining whether these documents are “relevant and material” was addressed Weatherill (Estate of) v.

Weatherill , 2003 ABQB 69 , at paragraph 16 , where the Court discussed issues such as a person’s state of mind, which can only be proven indirectly. The Court said, When a state of mind is in issue, it can generally only be proven by demonstrating a pattern of conduct of the person whose state of mind it is. In deciding whether a particular document is material, one must take a very pragmatic view, viewing the situation from the perspective of the party who must prove the fact in question.

At an interlocutory stage of proceedings, the Court should not measure counsels’ proposed line of argument too finely; if counsel can disclose a rational strategy in which the disputed document plays a material part, that should be sufficient. Again it must be remembered that the purpose of the Rule was to avoid abusive, excessive, and unnecessarily expensive discovery, not to cut off legitimate lines of inquiry. [ 134 ] In the circumstances, she argues that Mr. Milavsky’s actual use of the corporate entities might be the best evidence of the state of mind of Mr.

Milavsky regarding the true intent as to the existence of the Trusts. To the extent that assets were transferred to the Trusts, and that he lent money to the Trusts and they were re-paid, or that the Trusts paid his expenses, I agree that this enquiry is within the scope of her pleading. [ 135 ] However, she is looking for all financial statements of the Family Trust back to its inception, including documents regarding the loans as between the Family Trust and Milfive. In light of my ruling about the “sham” argument, there is no basis for records going back

that far. [136] As to Category 4, Financial Records Regarding Harold Milavsky, she is looking for any information regarding his bankaccounts. [137] In particular, she wants records of the repayment of loans from his son Greg that were used by Mr. Milavsky to acquire aresidence in Millarville that was occupied by Mr. and Ms. Milavsky. She believes this might have been Trust money. However, as Iunderstand the evidence, there is no evidence to demonstrate this; it is merely suspicion.

Nonetheless, she wants the file regarding theacquisition of the residence, including documents relating to the source of funds, and including credit card statements from the time, aswell as any promissory notes or other finance documents relating to the acquisition of the Millarville property. [138] Without some basis for the suspicion, this is fishing. No fishing allowed without evidence of fish in the pond: Franco v.Hackett, 2000 ABQB 241 , 262 A.R. 127, at para. 34. [139] Under Category 5, Reimbursement of Mr.

Milavsky’s expenses by Quantico/Milfive, she wants to see how Trust money andthe money on deposit were, or may have been, used by Mr. Milavsky to pay personal expenses. Since she claims that the trusts are“shams”, therefore improper use of the Trust money is relevant and material. I have ruled on the “sham” claim. But, as discussed above,it is also relevant and material in respect of the quantum issue. Despite the propriety and consideration issues I have recognized, to whatextent might it be appropriate to claim that assets improperly transferred to the Trusts remained within Mr.

Milavsky’s control, such thatthe increase in value should be taken into account is assessing Ms. Milkavsky’s claims? Perhaps that increased value would haveoccurred within the marriage had they not been transferred. This is an assessment issue for the trial judge. [140] As to Category 6, the Correspondence of Dwayne Lashyn and the Trustees, she asserts that Mr. Milavsky did not use email,and his assistant Anne Hamilton sent and received emails for him. The defendants have been able to recover some email from othersources, but Ms. Milavsky asks that Mr.

Lashyn be directed to check that all the emails that might exist as between him and the trusteesor between him and the beneficiaries, have been produced, if they do exist. [141] There appears to be no evidence that there are any emails not produced; she simply asks for confirmation. Furthermore, therequest is very broad. This is fishing for something that might possibly lead to something that might be material.

It is not material; it isat best tertiary information. [142] As to Category 7, Information of or Pertaining to Greg Milavsky or Dwayne Lashyn, she wants to see their daytimers anddocuments that they signed for which they were responsible. [143] In Mr. Lashyn’s April 4, 2011 affidavit, in paragraph 3, he explains that Mr. Milavsky did not run Quantico; he did: The fact is that the plaintiff [Ms. Milavsky] has no real knowledge of Quantico and its operations. I have managed the operations ofQuantico for over 20 years.

Harold Milavsky’s significant time commitment with all his corporate and volunteer boards, as detailed in hisresume and history of his involvements, a copy of which is attached hereto and marked as Exhibit “A”, prohibited him from being ableto actively manage Quantico and the related operations, and it had never been contemplated that he would be so involved. To suggestthat, as claimed by the plaintiff in paragraph 6 that Harold Milavsky was the controlling mind of the trusts and Quantico is completelyincorrect and unsubstantiated.

Furthermore, to suggest that Harold Milavsky benefited from the trusts that he had deliberately set up forthe benefit of his children and grandchildren is an insult to him as well as incorrect. I have detailed in my earlier Affidavit and theApplication the history of the trusts and the funds and assets provided to the trusts. [144] Exhibit “A” to his affidavit lists a multitude of for-profit boards and non-profit boards and organizations in which Mr. Milavskywas involved, as well as many government panels or conferences and other community organizations he participated in. [145] As to Mr.

Lashyn’s involvement in Quantico, that is where he worked. He is now the managing director. Quantico wasincorporated by the Family Trust in 1992 to pursue business opportunities. Quantico and Milfive were consolidated shortly after,Quantico being the continuing corporation. [146] Since Ms. Milavsky cannot examine the late Mr. Milavsky as to whether or not he was involved in the growth of thecorporations, she wants to know what Mr.

Lashyn was doing during that period in this regard, she wants to know what transactions hemanaged, and as well, she wants to know what Greg, who is indicated as president of Quantico, was doing. If in fact it was Mr. Lashynand/or Mr. Greg who built up Quantico, what did they do to that end? [147] This involves the question of materiality. Assuming that it is relevant what Mr. Lashyn and Greg did in their jobs, how is itmaterial? Ms. Milavsky has tendered no real evidence to suggest that they were not growing the business, and that in fact it was Ms.Milavsky’s contributions that caused the business to grow.

Her affidavit of March 29, 2011 makes it clear that her belief that Mr.Milavsky was “the centre of a financial universe .... in which Quantico and the Trusts orbited” is not based on direct knowledge of whathe did for the corporations. The evidence is uncontradicted that Mr. Milavsky was heavily involved in many other activities. Thisaspect of Ms. Milavsky’s attempt at proving that he was gifting his talents and energy to the business is attempted by fishing for tertiaryevidence (that Messrs. Lashyn and Greg were not the cause of the growth) without any evidence to support it other than her belief thatMr.

Milavsky was in charge of everything to do with the Trusts, Quantico, and Milfive. Her view of the evidence (that Mr.

Lashyn is theCEO and has run the company for many years and that Greg is the president) is that because she does not believe it, they mustdemonstrate what they have done for the last several decades in an attempt to prove tertiary evidence (i.e., that they did not do as much asthey say), to demonstrate secondary evidence by the absence of their contribution (i.e., that someone else did besides either of them), inhopes of demonstrating what she expects will be relevant and material evidence that would significantly assist in resolving the issuesraised (i.e., that Mr.

Milavsky was that “someone else”, and that he gifted talents, contacts, and energy that should have enriched thematrimonial assets). [148] The evidence from the defendants has been provided in some detail: in his May 6, 2016 affidavit, Mr. Lashyn deposes that since1990 he has been primarily responsible, in coordination with Greg, for the accounting, tax planning, tax filings and preparation of all

documents related to the trust defendants, and they were responsible for the reorganization of Quantico and Milfive in 2001, working extensively with Craig Jones, Q.C. In addition, he coordinated with Mr. Jones (now Mr. Justice Jones of the Court of Queen’s Bench) and he dealt with all required documentation, legal steps and tax filings with respect to the disposition of the assets of the Family Trust in the creation of the Grandchildren’s Trust. [ 149 ] Tertiary evidence of the detail of the transactions and other work that Mr.

Lashyn and Greg did is not material: see NAC Constructors Ltd. v Alberta Capital Region Wastewater Commission , supra . This is fishing. No fishing allowed without evidence that there are fish in the pond, and a reasonable amount of fish: Franco v. Hackett , supra . [ 150 ] As to Category 8 , Legal Documents of or Pertaining to Harold Milavsky, she wants to know what Mr. Milavsky was doing initially. She asserts that Mr. Milavsky had gifted away assets without her knowledge or consent. She notes that former common-law wife Gail sued Mr.

Milavsky, the numbered company, Milfive, the Family Trust, and Gail made similar allegations. She wants to know how Mr. Milavsky was able to effect settlements with the prior claimants, being his first wife Miriam, and Ms. Sanders. In particular, the question is whether he used Trust funds to settle those claims. In this regard she asks that the defendants make appropriate inquiries of the solicitors involved for their settlement documents. She has snippets of information, such as Mr.

MacDonald’s affidavit, she argues that state of mind is an issue, and she argues that the pattern of conduct is important. [ 151 ] Counsel asserts that Ms. Milavsky wants a complete history of Mr. Milavsky’s interaction with the Trusts and the corporations since 1980 in an attempt to demonstrate a pattern Ms. Milavsky believes can be shown. Again, my prior ruling as to the “sham” argument addresses much of this.

Counsel For the Estate: The Relevant and Material Records have Already Been Produced, and Questions Answered [ 152 ] Counsel for the Estate advises that all of the financial records relating to the establishment of the Grandchildren’s Trust have been disclosed as part of the production. Things produced need not be produced again. [ 153 ] He further asserts that the evidence is clear that many of the things Ms. Milavsky wants to question about have been made clear in records already produced.

He says that the values of the corporations are not in issue because of the records produced. [ 154 ] However, the test at this stage is whether the information and records sought is relevant and material. This is not a

summary judgment application. The transfers to the Trusts is in issue. I cannot tie the hands of the trial judge in a potential assessment of damages. [ 155 ] Counsel pointed out that since 1990 no matrimonial property had been gifted to the Family Trust or the Grandchildren’s Trust or the Residential Trust. With respect to the Residential Trust, there had been an asset that had been transferred into it (the condominium), but both parties received the life estate as consideration. [ 156 ] In regard to the Descendants’ Trust, and a bonus that was paid in 2007 and 2008, Ms.

Milavsky’s knowledge of the Trust is detailed in the Estate’s reply brief at tab 2, an excerpt from the transcript of Ms. Milavsky’s own questioning. She acknowledged that she learned about the Descendants’ Trust in 2008. [ 157 ] Details of Mr. Milavsky’s redemption of shares, which she questions, are provided, in part, in paragraph 40 of the affidavit of Mr. Lashyn sworn May 6, 2016 (the “serpentine” transactions relating to the redemption are discussed above). That specifically discloses that by December 31, 1989, Mr.

Milavsky redeemed $2,414,101 worth of shares in Milfive for his personal use, including for the acquisition and improvements of the condominium in Eau Claire, in which he resided. According to the Estate, that preceded their cohabitation. If so, that is not relevant to this claim. [ 158 ] A minute book was maintained for the Family Trust, and he advises that this has been produced, along with the financial statements and tax returns for the Family Trust. [ 159 ] He also notes that there were a variety of drafts of agreements prepared before Mr. and Ms. Milavsky were married.

Although no prenuptial agreement was ever finalized and signed, the drafts disclose that it was understood that he would be providing management services to Milfive, later Quantico, it specifically identified the Gail Sanders litigation, and the existence of the Family Trust. This is specifically set out in paragraph 71 of Mr. Lashyn’s May 6, 2016 affidavit. It also notes that she was a witness not only to the 1992 gift to the Family Trust but also to a trust minute dated December 31, 1993. [ 160 ] In paragraph 92 of his May 6, 2016 affidavit, Mr.

Lashyn deposes that there were no capital improvements to the Eau Claire condominium between 1990, when their cohabitation began in 1992, when beneficial ownership was transferred to the Residential Trust, and in fact there were no capital improvements made to the condominium subsequent to December 15, 1992. [ 161 ] In paragraph 123 of the same affidavit, he asserts that there was no improper transfer of property to the various trusts, except one transfer of approximately $912,000 of matrimonial property inadvertently contributed to the Descendants’ Trust by virtue of a calculation error that Mr.

Lashyn made, and it was disclosed to Ms. Milavsky in 2007 and 2008. [ 162 ] Speaking about the categories as asserted by Ms. Milavsky, listed above, regarding Category 1, he points out that the corporations are not parties, and the issue in the lawsuit is whether there were improper conveyances to the trusts, not to the corporations. [ 163 ] He also asserts that the value of Quantico is not in issue.

No matrimonial property was transferred to any of the Trusts improperly, except the $912,000 amount just mentioned. [ 164 ] Accordingly, he argues that questions about the corporations and their financial records are not relevant to the matrimonial property claim.

[ 165 ] As to the corporate records of the corporations, the argument is the same. M5, in particular, received no assets from the trusts at all. It was a corporation that was set up to hold assets for which the children were beneficiaries. [ 166 ] But, as mentioned, the application before me is not for

summary judgment. These submissions as to the evidence seem focused on the argument that the defendants will be successful. [ 167 ] Regarding Category 3, Financial Records Relating to the Trusts, defence counsel says that many of the questions have been answered already. [ 168 ] It became clear an argument that Ms. Milavsky’s counsel does not accept that they have been answered properly. I will address the questions/requests for undertakings individually in

Schedule “A”, but it is extremely difficult for this Court to rule on whether a question has been answered properly. The expectations of the party asking the questions have been so different from the expectations of the party answering that that void may have caused the belief that the answers were inadequate. My rulings may address that problem.

Furthermore, the quantity of record production, the number of parties and counsel, and the volume of questioning transcripts make a precise ruling on this issue a challenge. [ 169 ] Accordingly, I reserve the jurisdiction to make rulings on whether questions/undertakings that I have ruled were proper have actually been answered. [ 170 ] Counsel for the Estate argued that many of the other questions and undertakings to which objections have been made are simply not relevant.

Many of the answers, it would appear, have not been accepted as being complete, even though the answer is, for example, that the defendants have inquired of Gowlings (formerly Code Hunter) as to the file relating to the legal proceedings relating to the first marriage, and the file does not exist - but for some reason that answer is not accepted. For 353396 Alberta Inc. and Dwayne Lashyn as Trustee [ 171 ] Counsel for 353396 Alberta Inc. and Dwayne Lashyn expresses concerns that some representations made on behalf of Ms. Milavsky are offensive to her.

She points out that the claim against the Trusts was commenced May 10, 2010, and the defence was filed on behalf of the numbered company, before the trustees of the Estate were even named as defendants - that occurred in 2012. The defence on behalf of her clients was filed March 15, 2011. From that time until May 31, 2011 Hawko, J, was the case management judge. [ 172 ] Before the Court of Appeal reversed the

summary judgment in favour of all Trusts other than the Descendants’ Trust in July of 2011, her office served an affidavit of records on behalf of the Trusts. Furthermore, she says the affidavit of Dwayne Lashyn sworn March 22, 2011, attaching records as exhibits, was very detailed. Later, numerous documents were specifically produced, including financial statements for the Trusts, the various trust indentures, income tax returns, and over time 2,192 records were produced by the defendants totalling 8,096 pages.

She described this production as “fulsome”. [ 173 ] She points out that all of the documents relating to the transfer of property have been produced, the issue has been identified (not as now claimed by Ms. Milavsky), and there is no proper complaint about difficulties or delays in production. For Ms. Milavsky in Reply [ 174 ] Counsel for Ms. Milavsky submits that there is a “rational explanation” for the theory of the plaintiffs for the production of records, answers to undertakings, and answers to questions, as described in Weatherill . He re-asserts that much of the claim involves Mr. Milavsky’s state of mind.

The compartmentalization of the parties’ responses as to whether a witness could answer a question when produced in one capacity, when he was also sued in another, is a real concern to Ms. Milavsky. Records and Information from Ms. McKay’s File [ 175 ] A number of the allegations specifically set out in Ms. Milavsky’s affidavit from March 2011 are challenged based on records found in Ms. McKay’s file, and a the Estate wants to find out what evidence she will give at the trial. This is, of course, one of the most common (and proper) uses of transcripts from questioning. [ 176 ] There were various reasons for Ms.

Milavsky’s objections. Some related to relevance and materiality, others relate to questions which would be at least difficult for Ms. Milavsky to respond to, along the lines of, “What did you not know at the mediation?”, and others related to asking questions of Ms. McKay. Ms. Milavsky has declined to answer questions designed to explain Ms. MacKay’s handwriting, or to find out whether Ms. McKay recalls telling Ms. Milavsky something, or advising whether Ms. McKay provided to Ms.

Milavsky something that had been provided to her. [ 177 ] She also finds objectionable questions that are described as “pure credibility-type” questions. Counsel for the Estate argues that the question is focused on simply, “What are the facts?” without regard to a pure attack on credibility. [ 178 ] One of the questions related to whether Ms. Milavsky’s later counsel had access to Ms. McKay’s file at the time the March 2011 affidavit was drafted. It was relied upon in the appeal from

summary judgment before the Court of Appeal. This relates to an argument as to whether or not Ms. Milavsky has “clean hands”. The point is that she swore an affidavit which the Estate believes it can demonstrate was untrue, and I presume the argument is that both she and her solicitor knew that the affidavit was untrue at the time it was sworn.

No doubt the answers will form the grist of the cross-examination mill at trial – after all, the Estate is trying to show inconsistent answers under oath – but the Estate argues that the inconsistent evidence is also relevant to the equitable claim of unjust enrichment, and again there is the basic need is to know what evidence she will give at trial. [ 179 ] Many of the questions are said by counsel for Ms. Milavsky to have been “asked and an

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