Rhonda Reddy Applicant And: THE Estate of Franz Schinagl as represented by Carter Schinagl as administrator, CARTER SCHINAGL in his personal capacity, ANDREW BROWN JACQUELINE WALSH v. JENNESSA GOODLAND, 2022 NLSC 73

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Reddy v. Schinagl (Estate) , 2022 NLSC 73 Date : April 20, 2022 Docket : 202101G6332 202101G4701 In the matter of the Estate of Franz Schinagl, late of St. John’s, in the Province of Newfoundland and Labrador, Canada, deceased Between: Rhonda Reddy Applicant And: THE Estate of Franz Schinagl as represented by Carter Schinagl as administrator, CARTER SCHINAGL in his personal capacity, ANDREW BROWN JACQUELINE WALSH and JENNESSA GOODLAND RespondentS

AND : 202101G4701 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Between: CARTER SCHINAGL , as Administrator of the Estate of FRANZ SCHINAGL , deceased, of St. John’s, in the Province of Newfoundland and Labrador THE Applicant And: CARTER SCHINAGL, in his own right First Respondent And: RHONDA REDDY Second Respondent And: Jacqueline Walsh Third Respondent And: Jennessa Goodland FOURth Respondent Before: Justice Valerie L. Marshall Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: April 5-6, 2022

Summary: Application for removal of administrator of the estate, and substitution of Scotiatrust, as administrator pendente lite . HELD: Order granted. Appearances: Melissa M. Saunders Appearing on behalf of Rhonda Reddy Rebecca L. Munden Appearing on behalf of Carter Schinagl and the Estate of Franz Schinagl Cletus E. Flaherty and Jacob Elyk Appearing on behalf of Andrew Brown Sophie E. St. Croix Appearing on behalf of Jacqueline Walsh D. Lynne Butler Appearing on behalf of Jennessa Goodland Mark P. Sheppard Appearing on behalf of the Attorney General of Newfoundland and Labrador Paul M.

McDonald Appearing on behalf of Scotiatrust Authorities Cited: CASES CONSIDERED: Re: Adrian Fleming Estate , 2006 NLTD 112 ; O'Dea Estate (Re) , 2019 NLSC 178 ; Class v. Smith , 2018 ONSC 623 STATUTES CONSIDERED: Judicature Act , R.S.N.L. 1990, c. J-4 ; Intestate Succession Act, R.S.N.L. 1990, c. I-21 ; Family Relief Act , R.S.N.L. 1990, c. F-3 ; Children’s Law Act , R.S.N.L. 1990, c. C-13 ; Corporations Act , R.S.N.L. 1990, c. C-36 RULES CONSIDERED: Rules of the Supreme Court, 1986 S.N.L. 1986, c. 42,

Schedule D REASONS FOR JUDGMENT Marshall, J. : INTRODUCTION [ 1 ] Pursuant to

section 123 of the Judicature Act , R.S.N.L. 1990, c. J-4 , Rhonda Reddy seeks an order removing Carter Schinagl as administrator of Franz Schinagl’s estate; and an order substituting the Bank of Nova Scotia Trust Company (“Scotiatrust”) as

administrator pendente lite. [ 2 ] Carter Schinagl contests the application. BACKGROUND [ 3 ] Franz Schinagl (the “Deceased”) died intestate on April 23, 2021. [ 4 ] On May 31, 2021 Carter Schinagl was appointed administrator of Franz Schinagl’s estate. Carter Schinagl is the son of the Deceased; he was born during the marriage of the Deceased and his ex-wife, Yvonne Tobin. [ 5 ] Several claims have been made against the Deceased’s estate. [ 6 ] The claim of the Applicant, Rhonda Reddy, arises from her assertion that she was the common-law partner of the Deceased, for several years.

She resided with him up to the date of his death. On May 7, 2021 solicitors for Ms. Reddy forwarded correspondence to the solicitors for the Deceased’s estate, advising that Ms. Reddy would be asserting a claim with respect to the estate. [ 7 ] In November of 2021, the Applicant commenced court action 202101G6332 seeking not only the removal of Carter Schinagl as administrator, but also numerous other orders. These orders included: an order respecting a vehicle (a 2019 Ford Escape) and real property located at 524 Thorburn Road, St.

John’s; an order seeking relief under the Intestate Succession Act, R.S.N.L. 1990, c. I-21 ; an order seeking relief under the Family Relief Act , R.S.N.L. 1990, c. F-3 ; an order declaring that Rhonda Reddy and the Deceased were engaged in a joint family venture, and accordingly seeking entitlement to the assets owned by the Deceased; an order seeking remedies for unjust enrichment; and an order for other relief, including costs. [ 8 ] Jacqueline Walsh, another ex-wife of the Deceased, is also claiming against the estate.

She commenced court proceedings against the estate in Family Division seeking payments pursuant to a separation agreement. [ 9 ] Jennessa Goodland and Andrew Brown claim that they are biological children of Franz Schinagl, each with different mothers. Subsequent to the appointment of Carter Schinagl as administrator of Franz Schinagl’s estate, Ms. Goodland and Mr.

Brown informed the estate’s lawyers that they were each claiming entitlement to the estate. [ 10 ] In December of 2021, Andrew Brown filed an originating application in Family Division seeking an order for paternity, and a declaration that Franz Schinagl is his father. [ 11 ] Although Ms. Goodland has not had a paternity test, there was an order for child support issued in 1990, which required Franz Schinagl to pay child support for Jennessa to her mother. [ 12 ] Carter Schinagl did not provide anyone with notice of his petition for letters of administration.

Rather, in his petition for letters of administration he indicated that he was the only next of kin of Franz Schinagl. He asserts that he first became aware of Jennessa Goodland in June of 2021, when her lawyer forwarded correspondence to the Deceased’s estate lawyers.

Similarly, he asserts that he first became aware of Andrew Brown through correspondence received by the Deceased’s estate lawyers in September of 2021. [ 13 ] In August of 2021, as a result of the claims of Jennessa Goodland, Jacqueline Walsh and Rhonda Reddy, an originating application was filed with the Court (matter 202101G4701) by Carter Schinagl as administrator, seeking several orders and directions. Andrew Brown was not a named party in that application as his claim was made following the issuance of Carter Schinagl ’s application for directions. [ 14 ] Ms.

Reddy’s court proceeding (matter 202101G6332), and Carter Schinagl ’s court proceeding (202101G4701), were ultimately ordered to be case managed together. [ 15 ] Following a case management meeting held on January 28, 2022, it was ordered that these matters would be heard together for the purpose of determining the request for the removal of Carter Schinagl as administrator of the Deceased’s estate, and the request for appointment of an administrator pendente lite .

As a result, the interlocutory application considered in this decision was filed by Rhonda Reddy on February 3, 2022. [ 16 ] The relief sought by Rhonda Reddy is at paragraph 26 of her interlocutory application, as follows: “26. The Applicant seeks the following:

a) An Order removing Carter Schinagl as Administrator of the Estate;

b) An Order appointing the Public Trustee of Newfoundland and Labrador, or a professional trust company, as Administrator pendente lite of the Estate pursuant to

section 123 of the Judicature Act , R.S.N.L. 1990 c. J-4 ;

c) An Order that Carter produce to the Administrator pendente lite appointed, all documents in its power, possession and/or control related to the assets of the Estate within 10 days of the date of this Order;

d) An Order that Carter be removed as a director of Supreme Holdings Ltd. and that the Administrator pendente lite , or a representative thereof, be appointed in his place and stead; and

e) An Order that the Applicant be paid her costs of this application on a full indemnity basis out of the Estate.” [ 17 ] Carter Schinagl , Jacqueline Walsh, Andrew Brown and Jennessa Goodland filed reply briefs and/or affidavits in reply. Jacqueline Walsh, Andrew Brown and Jennessa Goodland all agreed that Carter Schinagl should be removed as administrator. The Attorney General did not take a position. [ 18 ] Rhonda Reddy’s interlocutory application was served on the Public Trustee.

The Public Trustee did not consent to the prospect of being appointed as administrator, in substitution of Carter Schinagl . [ 19 ] The hearing of Rhonda Reddy’s interlocutory application proceeded on April 5 and 6, 2022. In addition to affidavit evidence, the Court allowed cross-examination of Carter Schinagl and Rhonda Reddy. [ 20 ] Carter Schinagl contested the application for his removal as administrator. However, at the hearing he agreed to the appointment of Scotiatrust as administrator pendente lite , in the event that the Court granted the request for his removal.

Rhonda Reddy, Jacqueline Walsh, Andrew Brown and Jennessa Goodland also all agreed to the appointment of Scotiatrust as administrator pendente lite. The consent of Scotiatrust to that appointment was provided in Court. Rhonda Reddy’s interlocutory application and evidence [ 21 ] Ms. Reddy made several allegations against Carter Schinagl in her interlocutory application, in her affidavits, and in her evidence in cross-examination. [ 22 ] Ms. Reddy’s evidence clearly indicated the acrimony between herself and Carter Schinagl . She alleged misconduct by Carter Schinagl in his role as administrator.

At paragraph 4 of her affidavit filed on February 3, 2022, she stated as follows: “4. For the reasons detailed below, I fear that Carter will not administer the Estate in a manner that is neutral and impartial. Rather I believe that his self-interest as a residual beneficiary of Franz’ Estate will cloud his ability to act in this role. Since his appointment, Carter’s conduct justifies my concern. Carter has threatened, stalked and bullied me. He has taken property that was gifted to me by Franz.

He appears to be using Supreme Auto (defined below), a company owned by the Estate (at least in part) as his own piggy bank. Without careful thought or analysis, he appears to be vehemently opposing the claims asserted by the Jennessa Goodland (“Jennessa”) and Andrew Brown (“Andrew”) , both of whom are asserting that Franz was their biological father.” [ 23 ] As stated, Carter Schinagl did not provide notice to anyone of his application to be appointed as administrator of his father’s estate. He asserted that he was not aware of Ms. Goodland and Mr. Brown until some time after his appointment. However, Ms.

Reddy’s evidence was that Carter Schinagl was made aware of the paternity claim of Jennessa Goodland, prior to his applying for letters of administration. [ 24 ] Rhonda Reddy elaborated that the day after Franz Schinagl died, Franz Schinagl’s brother (Scott Schinagl) told Ms. Reddy that Franz Schinagl had a daughter, and possibly a son; and he also told Ms. Reddy their mothers’ names. Ms. Reddy asserted that in early May of 2021, she subsequently asked Carter Schinagl if he knew that he had a sister.

Yet, her evidence did not suggest that she informed Carter Schinagl of a potential brother. [ 25 ] Further on this, Ms. Reddy’s evidence was that she then subsequently attended a meeting with Carter Schinagl and his lawyer, Greg Stack. This meeting was in early May of 2021, and the day after Ms. Reddy had allegedly asked Carter Schinagl if he knew that he had a sister. She alleged that during that meeting, Greg Stack also informed Carter Schinagl of Jennessa Goodland, and that Ms. Goodland had an entitlement to a share in the Deceased’s estate. [ 26 ] Ms.

Reddy’s application also suggested that she suspected the value of the Deceased’s estate was greater than the inventory filed by Carter Schinagl . In her supplementary affidavit, she referred to a Scotia iTRADE account, and she provided the documentation which had been received from Carter Schinagl ’s counsel on March 24, 2022. The value of that account was close to $1.8 million. This was not included in the inventory filed with the petition for administration.

The inventory filed by Carter Schinagl totaled $1,815,000. [ 27 ] Rhonda Reddy further asserted that since Franz Schinagl’s death, Carter Schinagl had appointed himself director of Franz Schinagl’s company, Supreme Holdings Ltd. Supreme Holdings Ltd. operated the autobody business known as Supreme Auto. Rhonda Reddy thought that Franz Schinagl owned all the shares of Supreme Holdings Ltd. [ 28 ] Further on this, Rhonda Reddy expressed concerns about Carter Schinagl ’s “lack of knowledge of the business and his ability to adequately manage this company” (at paragraph 16 of her affidavit).

She noted that Carter Schinagl had removed from her “property (and others)”, equipment and vehicles registered in the name of Supreme Auto (paragraph 18 of her affidavit). The property located at 524 Thorburn Road is the property where she resided at the time of Franz Schinagl’s death. [ 29 ] Ms. Reddy asserted that the Deceased owned three properties; 524 Thorburn Road, 1193 Thorburn Road and a Florida condominium. Rhonda Reddy also expressed concerns as to the status of these properties.

She further described some encounters with Carter Schinagl in relation to the property at 524 Thorburn Road, where she continued to reside until March of 2022. She asserted that Carter Schinagl “threatened to ‘forcefully’ remove me if I did not leave” (at paragraph 34 of her affidavit). She further alleged that Carter Schinagl changed the locks on 524 Thorburn Road, and stalked her on the property (at paragraph 35 of her affidavit). Her evidence was that Carter Schinagl had removed Franz Schinagl’s urn, as well as a safe from that property.

In addition, she alleged that Carter Schinagl inappropriately took “my Ford Escape” vehicle which had been registered in the name of Supreme Auto, but allegedly given to her by the Deceased (at paragraphs 37 and 38 of her affidavit). [ 30 ] Rhonda Reddy apparently moved out of 524 Thorburn Road around March of 2022. In the process of moving out, Ms. Reddy removed furniture and items which she alleged had been acquired by her, or with Franz Schinagl. She further suggested that she left

behind items which had belonged to her and Franz Schinagl, including appliances, a hot tub and a sauna. [ 31 ] After Franz Schinagl died, Rhonda Reddy confirmed that she did not pay the household bills, while continuing to reside at 524 Thorburn Road. [ 32 ] With respect to 1193 Thorburn Road, where Carter Schinagl resides, Rhonda Reddy noted that Carter had evicted her daughter, Kassie.

While Franz Schinagl was alive, Kassie had paid rent to him of $600 per month, and Carter paid $800 per month. [ 33 ] In cross-examination, Rhonda Reddy was asked what she did with Franz Schinagl’s personal belongings, after his death. She indicated that she donated his clothing subsequent to his death. With respect to his wallet, Rhonda Reddy indicated that it had been lost two to three weeks prior to his death. With respect to his phone, she indicated that she destroyed it by burning it. She suggested that Franz Schinagl had told her to do so after he died.

Carter Schinagl’s response to the interlocutory application [ 34 ] Carter Schinagl responded to Rhonda Reddy’s allegations, and he provided further evidence in Court regarding the exercise of his duties as administrator. [ 35 ] To begin with, Carter Schinagl was adamant that he had no knowledge whatsoever of the existence of Jennessa Goodland and Andrew Brown, prior to his filing the petition for letters of administration. He suggested that Rhonda Reddy fabricated evidence. Specifically, he alleged that contrary to what Ms.

Reddy had indicated, Greg Stack did not actually inform him of Jennessa Goodland at the meeting with Ms. Reddy which occurred in early May of 2021. He explained that the purpose of that meeting was to figure out the next steps in respect of his father’s estate. [ 36 ] Upon becoming aware of the claims of Jennessa Goodland, Rhonda Reddy and Jacqueline Walsh, Carter Schinagl shortly thereafter proceeded with filing his application to the Court seeking directions.

Carter Schinagl insisted that he only became aware of Jennessa Goodland’s claim when his lawyer received correspondence from Jennessa Goodland’s lawyer in June of 2021. Similarly, he became aware of Andrew Brown’s claim in September of 2021, after he had already filed the application for directions. He noted that no caveats were filed at the time he filed his notice for petition for letters of administration. [ 37 ] With respect to the paternity of both Andrew Brown and Jennessa Goodland, Carter Schinagl noted that such has yet to be proven by way of genetic testing.

His evidence was that all he wanted was proof of paternity. He recognized that if that proof existed, then they would have a share in his father’s estate. He confirmed that he had no prior knowledge of the child support obligations respecting Ms. Goodland.

He asserted that his application for letters of administration were made on the honest and reasonable belief that he was the only beneficiary, and the only issue of the Deceased. [ 38 ] Further with respect to the paternity claims asserted by Jennessa Goodland and Andrew Brown, Carter Schinagl stated at paragraph 61 of his affidavit filed in reply, as follows: “61. Regarding my vehement opposition to the claims asserted by Jennessa Goodland and Andrew Brown, these are again evidence of the fact that I have acted prudently and responsibly in my role as Administrator of the Estate.

My opposition of Jennessa Goodland and Andrew Brown’s claims have nothing to do with greed or my own self-interest as a residual beneficiary, but merely as a cautionary measure for the benefit of the Estate. It would be irresponsible to believe the claims of Jennessa Goodland and Andrew Brown without unequivocal proof of the contrary.

It is unreasonable that the Applicant would expect me to not challenge the claims of the alleged children and merely accept them at face value.” [ 39 ] With respect to his handling of Franz Schinagl’s estate, Carter Schinagl’s evidence was that after being appointed as administrator, he entered an estate assist agreement with Scotiatrust. He explained that pursuant to the agreement, Scotiatrust employees help him with administration of the estate. For example, Scotiatrust holds the estate funds, pays the bills of the estate, and advises Carter Schinagl respecting what he is required to do.

Scotiatrust advised him with respect to obtaining appraisals of the properties located at 524 Thorburn Road and 1193 Thorburn Road. Scotiatrust is paid 2.5 percent of the value of the estate. [ 40 ] Carter Schinagl ’s evidence was that he could not, on his own accord, take money from the Deceased’s estate account. When he needs to be reimbursed for estate related expenditures made by him, he sends the receipts to Scotiatrust, and then receives the money from them. [ 41 ] Carter Schinagl was questioned on the contents of the inventory he had filed with his petition for administration of the Estate.

With respect to the real property valuation of $800,000, he indicated that there were mortgages on 524 Thorburn Road and 1193 Thorburn Road. [ 42 ] With respect to his valuation of furniture at $5000, his evidence was that this was an estimate. [ 43 ] Carter Schinagl ’s evidence was that he was endeavouring to sell 524 Thorburn Road through a real estate agent; and he was in the process of readying the property for sale. As a result, he is selling items from the property. He said that he sold the sauna for the amount of $1000. The cash for that sale is in an envelope where he resides, being at 1193 Thorburn Road.

He explained that he has not yet deposited that amount, but has a receipt for the sale. [ 44 ] With respect to the $10,000 value ascribed to motor vehicles in the inventory, he indicated that there was a Trans Am and Porsche safely stored and located in the garage at 524 Thorburn Road. These vehicles are unappraised. [ 45 ] With respect to Supreme Holdings Ltd., Carter Schinagl indicated that he owned 49 of the 100 shares. These 49 shares were transferred to him by his father in July of 2018. The common shares certificates of the company were attached to his affidavit.

In the inventory, Carter Schinagl valued the estate’s 51 percent interest in the business as $1,000,000. This amount was based on advice he received from an uncle, whom he said was an accountant/operations manager at another company.

[ 46 ] Carter Schinagl confirmed that he is the sole director of Supreme Holdings Ltd. Franz Schinagl had been the sole director until his passing. After his father’s death, Carter Schinagl ’s decision to appoint himself as director was based on the fact that he was a shareholder, and the legal personal representative of the majority shares of the Deceased’s estate.

He did this in “the interest of continuing business operations without interruption and in order to access business accounts for the benefit of the company and the Estate” (paragraph 30 of his affidavit). [ 47 ] Carter Schinagl ’s evidence suggested that it was pure speculation that he had not acted appropriately with respect to the business, Supreme Holdings Ltd. He explained that he has acted prudently and responsibly as director.

He detailed how he has continued to run the day-to-day operations of the company with his uncle, Scott Schinagl, who operated the business alongside the Deceased for many years (paragraph 32 of his affidavit). [ 48 ] Carter Schinagl ’s evidence was also that he did indeed reclaim business assets registered in the name of Supreme Holdings Ltd., for the benefit of the company. He removed these from properties that were occupied and/or controlled by Rhonda Reddy “out of an abundance of caution and a fear that the Applicant might try to claim or cause damage to them” (at paragraph 33 of his affidavit).

These assets included trailers, a motorcycle, a boat and the Ford Escape vehicle. He indicated that he is preserving and maintaining the company assets, and he took issue with the Applicant’s characterization of his using the company as his “personal piggy bank”. [ 49 ] Carter Schinagl ’s evidence was also that he was the designated beneficiary of a life insurance policy, as well as his father’s RRSPs. [ 50 ] Further, with respect to the Scotia iTRADE account, Carter Schinagl confirmed that this was not included in the inventory he had filed.

He explained this was due to his being unable to access the information respecting his father’s investments, until after he was appointed as administrator of the estate. He learned of the Scotia iTRADE account after he had hired Scotiatrust. Carter Schinagl indicated that he was unaware of his obligation to file an amended inventory. [ 51 ] Carter Schinagl confirmed that the CPP death benefit was also not reflected in the inventory. [ 52 ] Carter Schinagl was unable to say what amounts have been paid by Scotiatrust as expenses for the Deceased’s estate.

However, Carter Schinagl indicated that he could access that information from Scotiatrust. [ 53 ] Carter Schinagl did confirm that he is driving a 2014 Jeep, which is registered in the name of Supreme Auto Sales. He did not pay Supreme Auto Sales for the Jeep. [ 54 ] With respect to his father’s real estate properties, he explained that he has done his best to take care of the properties. Further, with respect to 524 Thorburn Road, he agreed that he had concerns regarding the upkeep and maintenance of the property while it was occupied by Rhonda Reddy.

However, he indicated that he maintained it to the best of his ability, given his limited access to same. Since Ms. Reddy moved out, he has been preparing that property for sale. [ 55 ] With respect to 1193 Thorburn Road, Carter Schinagl confirmed that he previously paid $800 per month rent to his father, prior to his father’s death. However, he has not paid any rent for the property since his father’s death. He does pay some bills, but the estate pays the mortgage, insurance and property taxes.

Carter Schinagl indicated that he was prepared to pay the back rent which he owed for 1193 Thorburn Road. [ 56 ] Carter Schinagl confirmed that he evicted Kassie because she had stopped paying monthly rent after Franz Schinagl died. Carter Schinagl has since rented her apartment for the sum of $850 per month. [ 57 ] With respect to the acrimony between Carter Schinagl and Rhonda Reddy, his evidence was that he has endeavoured to extend Ms. Reddy kindness and patience.

He explained that he did not provide notice of his petition for administration to Rhonda Reddy because she was a common-law partner of the Deceased, and therefore had no entitlement to a share in the estate pursuant to the Intestate Succession Act . [ 58 ] Carter Schinagl maintained the position that he has acted prudently and responsibly as administrator of his father’s estate. The responses of Jacqueline Walsh, Andrew Brown and Jennessa Goodland [ 59 ] Jacqueline Walsh filed a response to Rhonda Reddy’s interlocutory application. Ms.

Walsh’s response referenced her separate action taken in Family Division, and she indicated that she agreed with Ms. Reddy’s request to remove Carter Schinagl as administrator, and to substitute an administrator pendente lite . Ms.

Walsh’s response further indicated that in light of the various claims advanced against the estate, she was of the view that there was a “substantial risk” that Carter Schinagl would not act in a manner “equitable to all claimants and potential beneficiaries of the Estate, and/or to act in the best interests of the Estate as a whole” (paragraph 6 of Jacqueline Walsh’s response to Rhonda Reddy’s interlocutory application). [ 60 ] In Andrew Brown’s response to Rhonda Reddy’s interlocutory application, he also indicated agreement with the removal of Carter Schinagl as administrator, and appointment of an administrator pendente lite .

He further agreed with Rhonda Reddy’s request that Carter Schinagl be removed as director of Supreme Holdings Ltd. [ 61 ] In Mr. Brown’s response, he referenced his own application filed with Family Division seeking an order pursuant to sections 7 and 8 of the Children’s Law Act , R.S.N.L. 1990, c. C-13 declaring that the Deceased was Mr. Brown’s father.

Carter Schinagl , as administrator, filed a response to that application agreeing to the request for leave to obtain a blood or other genetic test, but disagreeing with the claim for an order declaring that the Deceased is the father of Andrew Brown, until such has been unequivocally proven by way of paternity testing. [ 62 ] In Jennessa Goodland’s reply brief, she indicated that she was willing to undergo paternity testing. She further suggested that she intends to file an application requiring that Carter Schinagl undergo paternity testing.

[63] In her reply brief, Ms. Goodland also indicated that she was not alleging misconduct by Carter Schinagl. Rather, she assertedthat Carter Schinagl was in a conflict of interest, and she expressed concern as to his running of the Deceased’s business. Ms. Goodlandagreed with the order that there be an administrator pendente lite appointed in place of Carter Schinagl. ISSUES [64] The following issues are to be determined by the Court: 1. Should Carter Schinagl be removed as administrator of the Estate of Franz Schinagl? 2.

If so, should Scotiatrust be appointed as administrator pendente lite of the Estate of Franz Schinagl? 3. What further orders, if any, should be made? ANALYSIS ISSUE 1: Should Carter Schinagl be removed as administrator of the Estate of Franz Schinagl? [65] The Court’s authority for removal an executor or an administrator of an estate is contained within

section 123 of the JudicatureAct, which states as follows: 123. Upon the application of a person interested in the estate of a deceased person, the court may, by order, remove an executor oradministrator upon the same grounds that the court may remove a trustee, and may appoint some other person to act in the place of theexecutor or administrator so removed. [66] To recap, counsel for Rhonda Reddy submitted that Carter Schinagl should be removed as administrator of the estate of FranzSchinagl. Similarly, counsel for Jacqueline Walsh, Andrew Brown and Jennessa Goodland all agreed with this request.

Counsel for theAttorney General took no position on the application. Carter Schinagl contested the application. [67] Rhonda Reddy’s counsel submitted that independent oversight of the Deceased’s estate was required. Rhonda Reddy’s counselasked the Court to consider the evidence of Carter Schinagl’s failure to file an amended inventory to include the Scotia iTRADE account,his inability to relay what the expenses of the Deceased’s estate were to date, and his failure to pay rent at 1193 Thorburn Road after hisfather died.

Counsel further noted that the evidence was that Carter Schinagl had sold some assets of the Deceased’s estate, and that hehad not yet deposited the cash received. Counsel further referenced Carter Schinagl’s failure to provide parties with relevant documentsuntil requested. [68] Counsel also questioned Carter Schinagl’s knowledge with respect to Supreme Holdings Ltd., including his inability to relaywhether there were minute books and when dividends were declared.

Counsel further referenced the evidence that Carter Schinagl wasusing assets of Supreme Auto for his own benefit; specifically he was driving a vehicle registered in the name of the company. [69] Further, counsel submitted that on the balance of probabilities, the Court should find that Carter Schinagl knew of JennessaGoodland at the time he filed his petition seeking letters of administration; and he therefore failed to provide the requisite notice to Ms.Goodland. Some counsel suggested this supported a finding of misconduct.

Counsel further submitted that Carter Schinagl was unableto act impartially as administrator of his father’s estate. [70] Carter Schinagl’s counsel submitted that he should remain as administrator. She submitted that he has not actedinappropriately. Rather, the evidence is that he has endeavoured to maintain and maximize the value of assets of the Deceased’s estate. For example, Carter Schinagl was in the process of preparing 524 Thorburn Road for sale.

With respect to 1193 Thorburn Road, heevicted the tenant (Kassie) who was not paying rent, and rented that part of the house for higher rent than Kassie had originally paid hisfather. [71] Carter Schinagl’s counsel further submitted that he has acted prudently and responsibly, with honesty and integrity. Shepointed to the evidence that Carter Schinagl retained professionals to assist him with the administration of the Deceased’s estate,including Scotiatrust.

Further, his father’s brother continues to assist with the running of the business. [72] Counsel for Carter Schinagl submitted that any conflict of interest arising as a result of his being both a beneficiary andadministrator of the Deceased’s estate was not sufficient to justify his removal. [73] The Court was referred to the leading case of Re: Adrian Fleming Estate, 2006 NLTD 112 in which Chief Justice Green (as hethen was) set forth the legal principles for the Court to consider in an application for removal of a trustee or personal representative.

Atparagraphs 11 to 14, he stated as follows: 11 The removal of a trustee or personal representative is something that will not be lightly undertaken. Before doing so, the court hasto be satisfied that it is in the interests of the beneficiaries generally that removal should occur. As Lord Blackburn stated in Letterstedtev. Broers and Another [1881-85] All E.R. 882 (PC) at p. 887 (a case cited consistently by courts in this province) the court's "main guidemust be the welfare of the beneficiaries".

If it is clear that the continuance of the trustee or personal representative in office would bedetrimental to the execution of the trusts or the administration of the estate, the court may remove him or her. 12 The grounds upon which a trustee, and hence an executor or administrator, may be removed include: positive misconductamounting to abuse of trust; endangerment of the estate or trust property; want of honesty or reasonable fidelity; lack of proper capacityor ability to execute the duties of office; and conflict of interest. See, Letterstedt; Re Hickey Estate, [2002] N.J.

No. 225; Re HickeyEstate, [2004] N.J. No. 52; Powers v. Powers Estate, (NL SC), [1988] N.J. No. 19; Tapper v. Sair-Segev, 2003

MBQB 243 , (2003) 178 Man. R. (2d) 271 (Q.B.) 13 The existence of friction or hostility between the administrator and one or more of the beneficiaries will not normally be enough,in itself, to ground the administrator's removal, nor will mere suspicions that the administrator will favour one beneficiary over another,especially where the personal representative has no personal interest in the property in the estate. See, Letterstedt; Powers; and Elton v.Elton Estate, [2005] N.J.

No. 96 Furthermore, an isolated mistake or a technical breach of trust may not be enough, if done in good faithwith the best interests of the beneficiaries in mind. On the other hand, consistent administration of the trust or estate in a manner thandoes not maintain an even hand between beneficiaries will often be enough to justify removal. 14 As far as removal for conflict of interest is concerned, the court has an inherent power, as part of its jurisdiction relating to estateadministration, to effect removal in such circumstances to ensure that an estate is properly administered.

A conflict of interest occurswhenever the personal interest of the personal representative conflicts with the interests of others for whom he or she has a duty to act.Clearly, whenever a person who is entitled to a share in an estate is appointed an administrator of that estate, there is a possibility that heor she will act improperly to favour himself or herself over other beneficiaries. Yet, the rules of court expressly contemplate that suchpersons may serve and, indeed, have a right of priority to appointment, as administrator. See, Rule 56.02.

That fact alone, therefore, willoften not be sufficient to constitute a conflict of interest justifying removal. Where, however, the nature of the personal interest of theadministrator is such that he or she will inevitably, or even will likely, be placed in a conflict situation with respect to specificdecisions involving the administration of the estate that may have the effect of the administrator not maintaining an even handbetween beneficiaries or place him or her in a difficult situation with respect to maintaining impartiality, that will be enough.In Re Walter W.

Shaw Co., (SK KB), [1922] 3 W.W.R. 119, MacDonald J. said at p. 120 that "The question iswhether it would be difficult for the trustee to act impartially, not whether, in fact, it would or would not do so". [emphasis added] [74] Considering the grounds for removal of an executor or administrator (as described by Chief Justice Green at paragraph 12 ofRe: Adrian Fleming Estate), in my view the ground of conflict of interest is the only ground raised which warrants consideration inRhonda Reddy’s interlocutory application.

Contrary to the submissions of some counsel, the evidence does not establish misconduct byCarter Schinagl. I conclude this after carefully reviewing all the affidavit evidence, and all the evidence from cross-examination at thehearing. I am satisfied that Carter Schinagl did indeed believe that he was the only next of kin of Franz Schinagl when he filed hispetition for letters of administration; and that he cannot recall being told otherwise prior to his filing the petition. [75] Moreover, Carter Schinagl was a very compelling witness. His evidence withstood the rigors of cross-examination.

In anyevent, Carter Schinagl’s legal counsel received Jennessa Goodland’s claim in June of 2021; and in a timely manner, Carter Schinagl filedhis application for directions regarding not only Jennessa Goodland, but also Rhonda Reddy and Jacqueline Walsh. The fact that CarterSchinagl sought the Court’s directions supports a finding that he has acted appropriately, and with integrity, as administrator of hisfather’s estate. [76] I accept that Andrew Brown was not included in that application for directions because Mr.

Brown’s claim was not broughtforward to Carter Schinagl’s legal counsel until after Carter’s Schinagl’s application had been filed. [77] Further, although Carter Schinagl may not have been a technically perfect administrator of his father’s estate, nevertheless theevidence supports a finding that he has generally executed his overall duties as administrator with care and diligence; and he has acted ingood faith. His credible evidence supports his contention that he has acted for the purpose of maintaining and maximizing the assets ofthe Deceased’s estate.

As submitted by his legal counsel, Carter Schinagl prudently obtained the advice of professionals, and he evensigned on to an estate assist agreement with Scotiatrust to help him carry out his duties as administrator of the Deceased’s estate. [78] When considering whether Carter Schinagl should be removed as administrator on the ground of conflict of interest, the trueissue to be determined is whether Carter Schinagl “will inevitably, or even will likely, be placed in a conflict situation with respect tospecific decisions involving the administration of the estate that may have the effect of the administrator not maintaining an even handbetween beneficiaries or place him or her in a difficult situation with respect to maintaining impartiality” (paragraph 14 of Re: AdrianFleming Estate). [79] In other words, the Court must consider the potential for Carter Schinagl to be in a conflict of interest.

If the potential forconflict likely exists, it would be difficult for Carter Schinagl to act impartially. [80] Further on this, I refer to Justice Orsborn’s comments in O'Dea Estate (Re), 2019 NLSC 178 regarding the reluctance of courtsto appoint a trustee where there is a potential for conflict. Justice Orsborn referred to the Ontario case of Class v. Smith, 2018 ONSC623 and he stated as follows, at paragraph 25: 25 Courts are not comfortable appointing a trustee where there is a potential for conflict. I refer, for example, to Class v.

Smith, 2018ONSC 623, at paragraphs 39-40: 39 The general rule is that the court does not appoint a party litigant as Estate Trustee during Litigation. Where there is conflict,impropriety is alleged and/or where the moving party has a significant interest in the outcome of the litigation, it would not beappropriate to appoint a party as Estate Trustee. Even when the interim administration of an estate requires minimal services and isstraightforward, potential conflict necessitates the appointment of a neutral Trustee; see Sherbourne v. Shanks, [2005] O.J. No.2622 (Ont. S.C.J.).

40 The court must maintain a level playing field. The fiduciary duties of an executor or trustee can be inconsistent with a party's ongoing litigation interests. Neither side should be able to use their control over the estate to benefit themselves or to prejudice the other. The estate should be neutral to the positions of the parties in the litigation. The estate assets should be administered to the maximum advantage of the beneficiaries. A trustee who is in an adversarial position towards a beneficiary should not normally be left in charge of trust property: see Mayer , Dempster v.

Dempster Estate (2008), 45 E.T.R. (3d) 139 (Ont. S.C.J.) . [ 81 ] After carefully considering the submissions of all counsel, the affidavit evidence filed, the evidence adduced during cross- examination, and the above referenced case law, I find that it will likely be very difficult for Carter Schinagl to maintain impartiality as administrator of the Deceased’s estate.

The potential for conflict exists. [ 82 ] This finding is primarily based on the evidence that Carter Schinagl has an unavoidable significant interest in the outcomes of the various Court proceedings and claims involving Rhonda Reddy, Jacqueline Walsh, Jennessa Goodland and Andrew Brown. The proceedings subject to this interlocutory application are currently adversarial in nature.

The outcome of the various proceedings and claims in relation to the Deceased’s estate will significantly impact Carter Schinagl ’s share of the proceeds of this estate, including the extent of his shareholdings and control of the business Supreme Holdings Ltd. [ 83 ] The evidence is that this is a significant estate, with the current inventory indicating an estate valuation of $1,815,000; and in addition, the Deceased’s Scotia iTRADE account was about $1.8 million dollars.

In my view, Carter Schinagl ’s significant personal interest in the outcome of the Court proceedings would indeed make it difficult for him to act impartially. [ 84 ] Further, in my view the likelihood and inevitability of Carter Schinagl being placed in a conflict situation as administrator also arises from his role as a shareholder and director of Supreme Holdings Ltd.

Particularly, Carter Schinagl’s duty as a director, being a duty of loyalty and good faith owed to the company, will potentially conflict with his duty as administrator of the Deceased’s estate. [ 85 ] By way of example, it may be in the best interests of the Deceased’s estate to immediately sell Franz Schinagl’s shares in the company; or, as suggested by Mr. Brown’s counsel, it may be in the best interests of the Deceased’s estate to seek to windup the company. As director, Carter Schinagl may not view such options as being in the best interests of the company.

Decisions of this nature will likely cause conflict for him in the dual role as director of the company, and administrator of the Deceased’s estate. Again, it would be difficult for him to act impartially in this regard. [ 86 ] Having said this, I recognize that an actual conflict of interest arises only if one, or more, of the claimants has an entitlement to the Deceased’s estate. In other words, if Carter Schinagl is the only person entitled to the Deceased’s estate, then no such conflict exists.

Nevertheless, for the purposes of this application I need only determine if a potential conflict situation is likely. Further, at this point in the proceedings, the claims do not appear to be frivolous, and remain to be determined. Consequently, the potential for conflict very much exists. [ 87 ] Based on the foregoing, I find that it would be difficult for Carter Schinagl to act impartially as the administrator of the Deceased’s estate. I am satisfied that he should now be removed as administrator, pending the resolution or determination of the Court proceedings.

ISSUE 2: Should Scotiatrust be appointed as administrator pendente lite of the Estate of Franz Schinagl? [ 88 ] A court’s authority to appoint an administrator pendente lite is contained in

section 121 of the Judicature Act , which states, as follows: 121.

(1) The court may appoint an administrator of the estate of a deceased person pending a proceeding concerning the validity of the deceased's will, or for obtaining, recalling or revoking letters of probate or administration.

(2) An administrator appointed under subsection (1) has all the rights and powers of an administrator appointed in the usual manner except the right to distribute the residue of the estate.

(3) An administrator appointed under subsection (1) is subject to the control of the court and shall act under its direction. [ 89 ] In this case, there are several claims and court proceedings involving the Deceased’s estate. In light of the nature of the various legal proceedings involving the estate of Franz Schinagl, I am satisfied that the Court is authorized to appoint an administrator pendente lite in substitution of Carter Schinagl; pending final adjudication of the various court proceedings.

I add that complex issues have been raised, including constitutional issues, and it is therefore likely that the estate litigation will be ongoing for a significant period of time. [ 90 ] The Public Trustee was served with Rhonda Reddy’s interlocutory application. However, the Public Trustee did not consent to being appointed administrator pendente lite . The Court could still appoint the Public Trustee as administrator pendente lite .

Nevertheless, in the circumstances of this case, it stands to reason that Scotiatrust be appointed. [ 91 ] Scotiatrust has already been actively involved in the Deceased’s estate, due to the estate assist agreement between Carter Schinagl and Scotiatrust. As well, according to counsel, the fees to be charged by Scotiatrust are less than those which would be charged by the Public Trustee. Further, the Court has been provided with an order, represented as a consent order, setting forth the terms of appointment for Scotiatrust.

For clarity, Scotiatrust consented to its appointment; and Carter Schinagl , Andrew Brown, Jacqueline Walsh and Jennessa Goodland all consented to the terms of the order presented, in the event that Carter Schinagl was to be removed as administrator. [ 92 ] The consent order describes the terms of appointment of Scotiatrust, as well as the ensuing obligations of Carter Schinagl , as follows:

ORDER Before the Honourable Justice Marshall on the 6 th day of April, 2022, UPON READING the Interlocutory Application of Rhonda Reddy, the Response of Carter Schinagl, and the affidavits filed, including the affidavit of Rhonda Reddy sworn February 22, 2022 and April l , 2022, the affidavit of Carter Schinagl sworn on February 16, 2022, and upon hearing the submissions of all counsel for the parties, the Attorney General of Newfoundland and Labrador taking no position, and on reading the Consent to Act filed on behalf of the Bank of Nova Scotia Trust Company; IT IS HEREBY ORDERED as follows: 1) Carter Schinagl be and is hereby removed as administrator of the estate of the late Franz Schinagl (the " Deceased " and the " Estate ") pending final adjudication of the litigation herein. 2) That the Bank of Nova Scotia Trust Company (" Scotiatrust ") be and is hereby appointed as administrator pendente lite of the Estate, without bond, pending final resolution of the litigation herein and that Letters of Administration shall be issued to Scotiatrust upon the filing of the necessary supporting documentation which application shall be expedited by the Registrar. 3) That all property and assets of the Estate be and are hereby vested in Scotiatrust from the date of this Order and that Scotiatrust shall be entitled to immediate possession of all property and assets of the Estate. 4) That any party in possession of any assets of the Estate shall immediately advise Scotiatrust and shall provide immediate delivery of any such assets upon request by Scotiatrust. 5) That from the date of this Order, until further order of this Court, Scotiatrust shall have full authority and power to collect and/or gather all Property, including any jointly held property, from any financial institution, or other persons or entities, whether situate in Canada or elsewhere. 6) That Scotiatrust is hereby authorized to exercise those powers given by law to an administrator, including such powers given to an administrator under the Trustee Act , RSNL 1990, c T- 10 .

Without limiting the generality of the foregoing, this is to include the foregoing rights and powers:

a) to gather in and take full account of the assets and liabilities of the Deceased and of the Estate;

b) to be entitled to take custody and control of the assets of the Estate and identify and recover any monies and/or property which were held by the Deceased, either jointly through a corporation or otherwise, prior to and on the date of the Deceased's death, regardless of whether these assets were transferred out of the name of the Deceased;

c) to pay all debts, testamentary expenses and all income taxes of the Deceased and of the Estate;

d) to obtain information, records and files relating to the assets and liabilities of the Deceased in the same manner and to the same extent the Deceased would have been able, if alive;

e) to obtain an appraisal of any real estate comprising the assets of the Deceased; and,

f) to be at liberty to appoint an agent or agents and seek such assistance from time to time as the administrator pendente lite may consider necessary for the purposes of performing its duties hereunder and to pay those agents and representatives, including the administrator's legal counsel, from the Estate.

g) to have the property of the Deceased situate at Largo Florida (the " Florida Property ") appraised and marketed for sale subject to any limitations on the sale of the Florida Property under the laws of the State of Florida or the federal laws of the United States applicable therein;

h) to have all other real properties of the Deceased appraised and marketed for sale; Scotiatrust may enter into an agreement of purchase and sale with any of the parties herein, including Carter Schinagl , in respect of the purchase of any of the Deceased's real properties (including the Florida Property) so long as Scotiatrust is satisfied that the purchase price is that of fair market value based on the average of two independent appraisals; In the event there is a disagreement as to any of the parties in respect of any sale to a party hereto, Scotiatrust may apply to Court seeking directions, including an Order approving of the sale;

i) in respect of any real property of the Deceased (including the Florida Property pending any sale thereof) to lease, collect rent, maintain, repair, safeguard, insure, inspect and otherwise take reasonable steps and incur reasonable expenses to protect the interest of the Estate in such real property, with such expenses to be paid from the Estate;

j) to obtain an appraisal of any real or personal property comprising the assets of the Deceased; 7) Scotiatrust shall receive compensation out of the assets of the Estate, in accordance with the attached Fee

Schedule "A" together, with disbursements incurred in the course of performing its duties plus applicable HST, subject to the further review by the court, if required, on a passing of accounts application.

Scotiatrust shall be and is hereby authorized to pre-take this compensation on a monthly basis and such remuneration shall be a first charge against the assets of the Estate; 8) Scotiatrust shall not be liable for any act, omission, or decision made prior to its appointment, including any obligation to account for anything prior to its appointment hereunder and/or any liability to Canada Revenue Agency in respect of any taxes owing, interest and/or penalties accrued. 9) Scotiatrust shall cause the next tax return to be filed on or before April 30, 2022 and any related tax liabilities to be satisfied to the extent that the Estate liquidity will allow, with any unsatisfied liability to accrue interest and/or penalties thereafter in accordance with Canada Revenue Agency policies. 10) The Respondent Carter Schinagl shall forthwith advise Scotiatrust of the existence of any and all property and assets of the Estate of which he has knowledge and shall delivery all such movable property to Scotiatrust at its request. 11) That Carter Schinagl shall, within 30 days of the date of this Order, account for his administration of the Estate to date by providing accounts to Scotiatrust and to all of the parties, which accounts must include the information required pursuant to

section 129 of the Judicature Act , RSNL 1990 c j-4 . 12) The Respondent Carter Schinagl shall provide to Scotiatrust each month a monthly cash flow statement and an operational update concerning Supreme Holdings Limited which Scotiatrust may make available to parties interested in this Estate. 13) Scotiatrust may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder. 14) The parties' costs of this application shall be paid as follows: DATED at St. John's, in the Province of Newfoundland and Labrador, this 6 th day of April, 2022. [ 93 ] A fee

schedule is attached as

Schedule ‘A’ to the consent order. [ 94 ] I find that all the terms of the consent order are acceptable and appropriate in the form provided; except the order shall be dated in accordance with the date of this decision, and clause 14 of the order shall reflect the order for costs. [ 95 ] I add that the style of cause of all subsequent court filings in these proceedings shall be amended to accordingly reflect the

substitution. ISSUE 3: What further orders, if any, should be made? [ 96 ] As stated, the above referenced consent order addresses not only the terms of appointment of Scotiatrust, but also the obligations of Carter Schinagl. Carter Schinagl is obliged to advise Scotiatrust of the existence of property and assets of the Deceased’s estate, and to account for his administration to date.

The consent order further requires Carter Schinagl to provide monthly cash flow statements and operational updates concerning Supreme Holdings Ltd. [ 97 ] Rhonda Reddy had initially requested that Carter Schinagl also be removed as director of Supreme Holdings Ltd. Such request was made without reference to the procedures under the Corporations Act , R.S.N.L. 1990, c. C-36 . Further, the evidence did not support a finding that Carter Schinagl should be removed as director of Supreme Holdings Ltd. [ 98 ] The only other order to be determined is with respect to costs.

I have considered that this was a contested application, the outcome of which is that Carter Schinagl has been removed as administrator of the Deceased’s estate, pending the outcome of the Court proceedings. He is not removed as director of Supreme Holdings Ltd. There is no finding of misconduct by Carter Schinagl . Rather, the removal was caused by the extent of the potential for conflict, which arises due to the various claims involving the Deceased’s estate. [ 99 ] With respect to costs, I note that at this point in time, none of the claims have been established in the current proceedings before the Court.

The outcomes of the Court proceedings have yet to be determined. [ 100 ] Considering all the circumstances, it is my view that full indemnity of costs is not appropriate. Rather, the appropriate order for costs is payment of the costs of this interlocutory application from the estate of Franz Schinagl, in accordance with Column 3 of Rule 55 of the Rules of the Supreme Court, 1986 S.N.L. 1986, c. 42,

Schedule D , to be paid by the Deceased’s estate (through Scotiatrust) to Carter Schinagl , Rhonda Reddy, Jacqueline Walsh, Jennessa Goodland and Andrew Brown. CONCLUSION [ 101 ] Based on the foregoing analysis, and after considering the case law, the submissions of all counsel for all parties, and the evidence before the Court, it is ordered that: 1. Carter Schinagl shall now be removed as administrator of the estate of Franz Schinagl, pending final adjudication of these Court proceedings; 2.

In substitution, the Bank of Nova Scotia Trust Company (“Scotiatrust”) shall be appointed as administrator pendente lite of the estate of Franz Schinagl. Accordingly, the style of cause of subsequent court filings in these proceedings shall be amended to reflect this substitution; 3. The consent order provided at the hearing of this application respecting the terms of the appointment of Scotiatrust, and the obligations of Carter Schinagl , shall be granted in its entirety, and in the form provided, except it shall be dated with the date of this decision, and costs shall be as next described; 4.

Costs of the application shall be paid on a Column 3 basis in accordance with Rule 55 of the Rules of the Supreme Court, 1986 to Carter Schinagl , Rhonda Reddy, Jacqueline Walsh, Jennessa Goodland and Andrew Brown. These costs shall be paid from the Estate through Scotiatrust. [ 102 ] As a final comment, I note that Ms. Goodland’s first name is incorrectly spelled in the style of cause for 202101G4701. That style of cause is hereby amended to reflect the proper spelling being “Jennessa”. Her first name is correctly spelled in 202101G6332. [ 103 ] Order accordingly. _____________________________ Valerie L.

Marshall Justice