2021 QCCA 1700, 2021 QCCA 1700

Succession de Vaia 2021 QCCA 1700 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-029052-206 (500-17-107668-199) DATE: November 15, 2021 CORAM: THE HONOURABLE MARK SCHRAGER, J.A. CHRISTINE BAUDOUIN, J.A. FRÉDÉRIC BACHAND, J.A. IN THE MATTER OF THE SUCCESSION OF THE LATE GEORGE VAIA: THE LICKING COUNTY FOUNDATION APPELLANT – Plaintiff v.

JOSHUA WALLACE RESPONDENT – Defendant and JAMES LEE VAIA CHERYL VAIA JIM VAIA ANN VAIA ESTATE JOHN VAIA IMPLEADED PARTIES – Petitioners and FRANCIS ZALMAN IMPLEADED PARTY – Applicant and HELENE SMITH ALEXANDRA KATERINA BACOPOULOS ALEXANDER VON GERNET DOROTHEA HELMER LUIS MENA DELGADO DAVID HUGHES CARLO MIGLIOZZI YORDAINE IBARRA RIVERA, in her capacity as tutor to her minor child TOMMASO MIGLIOZZI IBARRA IMPLEADED PARTIES – Impleaded parties and SHERI ABERBACK, in her quality as liquidator of the succession of the late George Vaia SÉGUIN RACINE, AVOCATS LTÉE IMPLEADED PARTIES JUDGMENT [ 1 ] On appeal from a judgment of the Superior Court, District of Montreal (the Honourable Mr.

Justice Marc St-Pierre), of August 18, 2020.

[ 2 ] For the reasons of Justice Schrager, J.A., with which Justice Baudouin, J.A., concurs, THE COURT: [ 3 ] ALLOWS the appeal in part for the sole purpose of adding the following orders to the conclusions of the judgment of the Superior Court: ORDERS Sheri Aberback, in her quality as liquidator of the succession of the late George Vaia to pay by way of reimbursement to the Appellant the sum of $35,000 representing legal fees incurred for the benefit of the succession, with interest at the legal rate reckoned from the sixty-first (61 st ) day following the present judgment; ORDERS Séguin Racine, Avocats Ltée to remit to Sheri Aberback of MNP Ltd in her capacity as liquidator of the succession of the late George Vaia the sum of $45,946.29 held in trust by the said law firm; [ 4 ] THE WHOLE , each party to assume its own costs in appeal. [ 5 ] While agreeing with the addition of these two conclusions, for other reasons, Justice Bachand, J.A., would allow the appeal in order to intervene regarding other conclusions of the Superior Court judgment.

MARK SCHRAGER, J.A. CHRISTINE BAUDOUIN, J.A. FRÉDÉRIC BACHAND, J.A. Me Antonio Iacovelli MILLER THOMSON For the Appellant Joshua Wallace Unrepresented Date of hearing: September 30, 2021 REASONS OF SCHRAGER, J.A. I. INTRODUCTION AND FACTS [ 6 ] This is an appeal from the judgment of the Superior Court, District of Montreal (the Honourable Mr. Justice Marc St-Pierre), rendered on August 18, 2020, which contains multiple conclusions concerning the succession of the late George Vaia . [1] In

summary, the judgment changes the status of Sheri Aberback from “provisional” to “permanent” liquidator, declares that the succession must reimburse $10,000 of lawyer’s fees incurred by four heirs (other than the Appellant) for the benefit of the succession and dismisses the Appellant’s applications to have the succession reimburse its lawyer’s fees.

The judge made no conclusion against the Respondent, Joshua Wallace, the previous liquidator, and dismissed his cross-application. [ 7 ] The appeal raises mainly issues concerning the reimbursement of sums charged by the Respondent to the succession. [ 8 ] The damages sought by the Respondent in a cross-application were not awarded and the Respondent has not instituted an incidental appeal, so the Court is not seized of such conclusions, notwithstanding their presence in the Respondent’s brief. [ 9 ] George Vaia died on October 3, 2017 and left a will naming multiple heirs to receive various legacies from his succession.

The Licking County Foundation is named as an heir in the will. It is a foundation located in a small county located in the state of Ohio. [ 10 ] On May 30, 2018, the Respondent was appointed as a replacement liquidator following the resignation of the initial liquidator. The Respondent did not accede to the Appellant’s requests for information and the relationship therefore deteriorated. On or around April 25, 2019, the Appellant instituted proceedings for the replacement of the Respondent as liquidator.

The Respondent contested those proceedings, but ultimately resigned on June 25, 2019, six days before the date set for the hearing. By judgment of the Honourable Justice Chantal Masse, J.S.C., on June 11, 2019, Ms. Aberback was appointed as provisional liquidator until her confirmation as permanent liquidator by the judgment under appeal, though this conclusion was not appealed.

II. JUDGMENT [ 11 ] The judge determined that it was legitimate for the succession to reimburse the professional fees incurred by the Respondent as liquidator in accordance with

Article 789 C.C.Q. [2] As for fees paid to his company, his wife’s company and his daughter, the judge accepted the explanations the Respondent gave in his testimony and believed those payments to be legitimate expenses of the succession. [3] He did not allow the Appellant to have its legal fees reimbursed by the succession. [4] Finally, the judge did not order Séguin Racine, Avocats Ltée to remit the monies they hold in trust because he considered he could not make an order against an impleaded party. [5] III.

ISSUES IN APPEAL [ 12 ] The following are the grounds requiring resolution in appeal: 1) The legitimacy of the reimbursement of legal fees incurred by the Respondent; 2) The legitimacy of the expenses charged to the succession by the Respondent; 3) The Appellant’s entitlement to the reimbursement of its legal fees; 4) The judge’s refusal to issue an order against the law firm of Séguin Racine, Avocats Ltée to remit $45,946.29. IV.

DISCUSSION 1) The legitimacy of the reimbursement of legal fees incurred by the Respondent [ 13 ] In principal, the liquidator of a succession has a right to the reimbursement of expenses, including legal fees incurred in the execution of his mandate: 789. The liquidator is entitled to the reimbursement of the expenses incurred in fulfilling his office. 789. Le liquidateur a droit au remboursement des dépenses faites dans l’accomplissement de sa charge. He is entitled to remuneration if he is not an heir; if he is an heir, he may be remunerated if the will so provides or the heirs so agree.

Il a droit à une rémunération s’il n’est pas un héritier; s’il l’est, il peut être rémunéré, à la condition que le testament y pourvoie ou que les héritiers en conviennent. If the remuneration was not fixed by the testator, it is fixed by the heirs or, in case of disagreement among the interested persons, by the court.

Si la rémunération n’a pas été fixée par le testateur, elle l’est par les héritiers ou, en cas de désaccord entre les intéressés, par le tribunal. [ 14 ] This entitlement includes the right to reasonable legal fees incurred to defend an action to remove the liquidator. [6] Exceptionally, a court may refuse such a reimbursement or condemn a liquidator personally to pay costs where he has exceeded his mandate by instituting patently ill-founded proceedings or has otherwise acted in bad faith, [7] so that one can conclude that the fees incurred were of no benefit to or not in the interest of the succession. [8] [ 15 ] The Appellant concludes that the Respondent should be condemned to reimburse all fees paid out by the succession to lawyer Lynda Fortier, who was engaged by the Respondent in his capacity as liquidator.

At the hearing, counsel retreated somewhat, claiming only that such portion of the fees as are unreasonable should be paid back to the succession by the Respondent. Counsel added (despite no such conclusion in the notice of appeal or brief) that the Court should send the file back to the Superior Court, conceding that the record does not allow for the determination of what portion, if any, of Mtre Fortier’s fees is unreasonable. [ 16 ] The judge was silent on the reasonableness of the fees in question and the record before us does not permit a proper adjudication of that point.

I underline that this is not a dispute between a client and its lawyer or between a party who has undertaken to pay the fees of its co-contracting party in the event of litigation. [9] Rather, this is a claim against the former liquidator of the succession to reimburse the fees charged by the succession’s lawyer, the payment of such fees having been authorized by the liquidator. [ 17 ] The judge was satisfied on the basis of the proof adduced that the professional fees paid by the Respondent, including in large measure the fees paid for defending against the instant proceedings, including his removal as liquidator, were incurred in good faith and within the scope of his mandate. [10] Indeed, there is no proof that the Respondent acted dishonestly.

This is not a test of the Respondent’s competency or effectiveness as liquidator of the succession. In such regard, I underline that the proof and hearing on the matter of the Respondent’s removal as liquidator never took place, because he resigned. [ 18 ] The judge’s findings of fact are entitled to deference on appeal, [11] particularly since the good faith of the Respondent is

presumed (Article 2805 C.C.Q. ). The jurisprudence referred to above does not contradict the principle that absent palpable error of fact there is no room for appellate intervention. The record (including Mtre Fortier’s invoices) does not demonstrate that the fees were so unreasonable that one should conclude that by paying them, the Respondent acted dishonestly or exceeded his mandate as liquidator.

As such, the Court cannot conclude that the judge committed a reviewable error. [ 19 ] Returning the case to the Superior Court, as the Appellant requested at the hearing, is inappropriate since it goes beyond the Appellant’s conclusions in the notice of appeal. We are not seized of a request to present new evidence, which could open the door to an order returning the file to the Superior Court pursuant to

Article 380 C.C.P. [ 20 ] Moreover, returning a case for a second chance to prove that which did not convince the first instance judge initially is not permissible. Before the Superior Court, the Appellant had every opportunity to adduce all evidence necessary for its case. Indeed, all of Mtre Fortier’s invoices were filed along with numerous email exchanges. The documentary record is extensive. Mtre Fortier was not called as a witness, but she was present at the trial. The Respondent testified and was cross-examined.

The Appellant does not point with any precision to the evidence that it would adduce should the case be returned to the Superior Court.

The present case is not an example of a situation where there was a deficiency in the proof that the judge could or should have pointed out to the parties, thereby erring by not doing so. [12] Equally, since the Appellant presented its proof regarding the fees incurred and paid by the Respondent on behalf of the succession to Mtre Fortier and the judge refused to draw the conclusions sought by the Appellant, this is not a case in which the file should be returned to the lower court for additional proof to be adduced.

It is not for this Court to redo the trial, to reevaluate the evidence or to go so far as returning the file to the lower court so that the parties can try to remedy any deficiencies in the record.

Whatever reaction the undersigned might have to the value of the services rendered by Mtre Fortier, it is not for an appellate judge, in the absence of manifest error on the facts, to seek to substitute his opinion for that of the trial judge. [13] 2) The legitimacy of the expenses charged to the succession by the Respondent [ 21 ] As seen above, the liquidator is entitled to reimbursement of expenses incurred for the succession. [ 22 ] Despite the lack of documentation, the judge accepted the Respondent’s testimony wherein he explained and justified, as legitimate expenses of the succession, sums paid to his daughter, his wife’s company and his company, the whole representing approximately $12,500. [ 23 ] Again, the judge’s findings are entitled to deference in the absence of an error of law or palpable error of fact.

Regarding the latter, I underline that though the evidence is lacking in detail as to the services rendered to the succession by his wife and daughter, the evidence presented was not contradicted. 3) The Appellant’s entitlement to the reimbursement of its legal fees [ 24 ] The jurisprudence and doctrine recognize that a beneficiary such as the Appellant may receive reimbursement for legal fees incurred for the benefit of all the heirs in the interest of the administration of the succession. [14] [ 25 ] On this issue, the judge held as follows: [38] The Court it is of the opinion that the services rendered by the Foundation's lawyers did not benefit the succession, such that it will not declare that their professional fees will be paid by the succession. [39] The only benefit to the succession from the work done by the plaintiff's lawyers was the application for the appointment of a (permanent) liquidator.

This application was not contested at the hearing and it appears to the Court that awarding an amount in professional fees solely for this item is not justified. [ 26 ] Although the judge did not cite the applicable jurisprudence, he invoked a correct principle. As to the application of that principle to the facts before him, the judge did recognize that the proceedings to replace the Respondent and to appoint Ms. Aberback as liquidator of the succession were useful and benefited all the heirs. While the appointment of Ms.

Aberback was not contested before the judge on July 6 and 7, 2020, the matter initially proceeded before Chantal Masse, J.S.C., on June 11, 2019. She appointed Ms.

Aberback as liquidator on a provisional basis, on an application by the Appellant, while dismissing the similar application of other heirs to appoint a different liquidator. [15] The Respondent contested the Appellant’s application until almost the last moment – he resigned on June 5, 2019. [ 27 ] The detailed invoices (totaling $146,799.16) of the Appellant’s lawyers filed in evidence disclose considerable time devoted to the matter of the succession – including the proceedings to replace the liquidator – for drafting, research and court appearances.

Based on the evidence and keeping in mind that fees should be reasonable, the sum of $35,000 should be awarded to the Appellant to compensate for the legal fees expended to replace the Respondent as liquidator. The judge committed a palpable and overriding error in not doing so, given his own conclusion that the appointment of Ms.

Aberback to replace the Respondent benefited all of the heirs. 4) The judge’s refusal to issue an order against the law firm of Séguin Racine, Avocats Ltée to remit $45,946.29. [ 28 ] As noted above, former attorneys of the Respondent still hold $45,946.29 in trust, being the balance of the sum of $57,475.00 after payment of their invoices for services rendered. [ 29 ] On advice from the office of the syndic of the Barreau du Québec, the attorneys have refused to remit these monies to the current liquidator of the succession, Ms. Aberback, without a court order.

The judge refused to issue such an order since Séguin Racine, Avocats Ltée was not a defendant in the proceedings, but had merely been named as an impleaded party.

[ 30 ] The judge thus committed an error of law. The courts have all the requisite powers to issue the orders that are necessary for, and incidental to, the exercise of their jurisdiction, [16] so that it is not surprising that the case law is replete with examples of orders, both of a monetary nature (including condemnations) and a non-monetary nature, against impleaded parties or “mis en cause”, without discussion of whether the party should have figured as a defendant.

What matters is that the party against whom a conclusion is sought is a party, not the label attached to such party. [ 31 ] In this proceeding, it would have been surprising to see Séguin Racine, Avocats Ltée named as a defendant, since its only interest was peripheral, that is, concerning the return to the proper party of monies it received from the Respondent and continues to hold in trust and in respect of which it does not contend to have any right of retention. [ 32 ] The Court will make the order.

Since the Appellant’s conclusions do not seek interest and the Court is unaware of whether the amount was placed in a general trust account or an interest bearing account, the capital amount of $45,946.29 requested will be ordered returned to the succession, care of Ms.

Aberback in her capacity as liquidator of the succession. * * * [ 33 ] In view of the foregoing, I propose to allow the appeal in part and to issue orders as follows: ORDERS Sheri Aberback, in her capacity as liquidator of the succession of the late George Vaia, to pay by way of reimbursement to the Appellant the sum of $35,000 representing legal fees incurred for the benefit of the succession, with interest at the legal rate reckoned from the sixty-first (61 st ) day following the present judgment; ORDERS Séguin Racine, Avocats Ltée to remit to Sheri Aberback of MNP Ltd., in her capacity as liquidator of the succession of the late George Vaia, the sum of $45,946.29 held in trust by the said law firm; [ 34 ] I would not award costs to either party given the mitigated outcome of the appeal.

MARK SCHRAGER, J.A. REASONS OF BACHAND, J.A. [ 35 ] I have had the benefit of reading the reasons of my colleague Justice Schrager. I agree with his proposed disposition of the second and fourth grounds of appeal. However — and with the greatest of respect — I come to the conclusion that the legal fees incurred by the respondent should not be borne entirely by the succession.

Moreover, in light of that conclusion, I would increase the proportion of the appellant’s legal fees that ought to be borne by the succession. * * * [ 36 ] As noted by my colleague, [17] the judge ruled in the respondent’s favour after having found that the latter had incurred the impugned legal fees in good faith and while acting within the context of his mandate. [18] In doing so, the trial judge erred in law. Given the Court’s decision in Bell c.

Molson , [19] he ought, instead, to have considered whether the respondent had acted in a manner consistent with his duties as liquidator and whether the fees were objectively incurred for the benefit of the succession. [20] The Court made clear in Bell that a liquidator is not entitled to be reimbursed from the succession merely because they acted in good faith. [21] [ 37 ] I am mindful that, later in his judgment, the judge noted in passing that “nothing in the evidence suggests that Mr.

Wallace […] acted other than in the best interest of the heirs”. [22] This finding could lead one to believe that his earlier — and erroneous — use of a while-acting-within-the-context-of-his-mandate test had no bearing on the outcome. However, that second finding is equally problematic, albeit for different reasons. First, it amounts to a conclusory finding that is supported by no analysis of the extensive evidence invoked by the appellant.

Moreover, a review of the record shows that the proposition that nothing in the evidence even suggests that the respondent acted improperly cannot reasonably be sustained. * * * [ 38 ] It is worth noting at the outset that the judge found those fees, which totalled approximately $110,000, to have essentially arisen out of the application filed by the appellant on April 25, 2019. [23] By that time, the respondent had been acting as liquidator for almost one year, and little progress had been achieved towards the liquidation of the succession.

No proper inventory had been made, and the appellant’s requests for books and vouchers [24] had, for the most part, gone unanswered. But most strikingly, the respondent had responded to the appellant’s legitimate requests for information in a manner that was at best uncooperative and at worst unexplainably acrimonious, belligerent and threatening. As he would later admit, he generally viewed the appellant’s lawyers as “annoyances”, as

“flies” that deserved to be “swatted” because they kept him from doing his work. [25] Moreover, shortly before filing its application, the appellant had received a formal demand letter prepared by Mtre Lynda Fortier, the lawyer retained by the respondent, characterizing its previous requests as illegal and abusive, and claiming damages in the amount of $40,000. [ 39 ] After April 25, 2019, the respondent spared little effort to resist the appellant’s attempt to remove him as liquidator. He filed an application seeking the dismissal of the appellant’s application on various technical grounds.

He also filed a 16-page statement of defence, supported by an 11-page sworn statement, in which he asked the Superior Court to order the appellant to post a surety in the amount of $1,000,000 while counterclaiming for damages of more than $575,000. [ 40 ] Meanwhile, Mtre Fortier indicated to the other heirs that the respondent intended to file with the syndic of the Barreau du Québec a formal complaint against the appellant’s lawyers in relation to their allegedly “unethical tactics […] and outrageous costly proceedings”. [26] Mtre Fortier also began to make disbursements to other heirs, but she did so only to those who agreed to sign a legal document mandating her, going forward, to represent them throughout the liquidation process. [ 41 ] Then, on June 5, 2019, a group of heirs who had not retained Mtre Fortier — and who had therefore not received any money from the succession — filed their own application seeking the respondent’s removal.

They alleged that he had acted negligently, incoherently and “in flagrant violation of his fiduciary duties”, and they placed particular emphasis on his discriminatory treatment of heirs who had refused to retain Mtre Fortier as their lawyer.

Later that day, with no prior warning and little explanation, and after having incurred legal fees of close to $110,000 — essentially in relation to the appellant’s application dated a few weeks earlier, as the trial judge found — the respondent resigned as liquidator of the succession and left for Egypt. [ 42 ] Six days later, the Superior Court granted the appellant’s application on an interim basis.

Shortly thereafter, the newly- appointed liquidator started issuing reports that brought to light a number of irregularities in the respondent’s administration of the succession. * * * [ 43 ] Liquidators act as administrators of the property of others charged with simple administration. [27] As such, they are under duties of prudence and diligence, and they must act honestly and faithfully in the best interest of the beneficiaries of the succession, [28] who include the heirs.

And where — as is the case here — there is a plurality of beneficiaries, liquidators are under an additional duty to act impartially in their regard. [29] Moreover, a liquidator cannot recover from the succession legal fees incurred while resisting an application for their removal that was ultimately successful. [30] [ 44 ] In my view, it is clear from the record that the respondent breached a number of his duties as liquidator. [ 45 ] First, he undoubtedly failed to comply with his duty of impartiality by making disbursements only to heirs who had agreed to retain Mtre Fortier.

It can safely be assumed that a portion of Mtre Fortier’s legal fees were incurred in connection with the respondent’s action in this regard, and those fees cannot be said to have been objectively incurred for the benefit of the succession as a whole. [ 46 ] Furthermore, the respondent acted imprudently and negligently, at the very least, in his response to the appellant’s application. He initially chose to contest it vigorously, incurring in the process legal fees that can safely be assumed to total several tens of thousands of dollars, before suddenly changing course on June 5, 2019.

Given the lack of satisfactory explanation for his about-face, as well as the fact that the broader context shows that his removal as liquidator was most probably warranted, I fail to see how it could be said that those fees were objectively incurred for the benefit of the succession.

They rather amounted, in all likelihood, to a significant waste of resources that fit within a broader pattern of unexplainably uncooperative and belligerent behaviour toward the appellant. [ 47 ] It bears adding that there is very little evidence in the record that could support a finding that a significant portion of the work carried out by Mtre Fortier between April 25, 2019 and June 5, 2019 was objectively incurred for the benefit of the succession. [ 48 ] For these reasons, I am of the view that the judge made a reviewable error when he ruled that the respondent did not have to bear any of Mtre Fortier’s legal fees.

The Court should intervene and order that he bear, at a minimum, a substantial portion of the fees that were incurred from April 25, 2019 onwards. [ 49 ] Incidentally, I add that, even if the judge had made no error as to the applicable test and correctly found that Mtre Fortier’s fees had been incurred for an appropriate purpose, I would nevertheless have concluded that the Court had to intervene, because he failed to consider whether the amount of those fees was reasonable.

My colleague is of the view that the reasonableness of those fees is not directly in issue, [31] but, with respect, I am unable to reconcile that statement with the holding in Bell to the effect that, while considering whether fees incurred by the administrator of the property of others ought to be borne by the beneficiary, judges must assess their reasonableness. [32] * * * [ 50 ] I end with brief observations regarding the third ground of appeal.

In light of my conclusion in relation to the first ground of appeal, I am of the view that the legal fees the appellant ought to be able to recover from the succession should not be limited to those it incurred while seeking the respondent’s removal as liquidator. They should include the fees it reasonably incurred to pursue its claim that the respondent had to bear Mtre Fortier’s fees, as they were also incurred for the benefit of all the heirs and in the interest of the administration of the succession.

FRÉDÉRIC BACHAND, J.A. [16]

Article 49 C.C.P. ; Shatilla v. Shatilla , [1982] C.A. 511 , p. 516 .