Kmech v Dorosh, 2023 ABKB 457

Court of King’s Bench of Alberta Citation: Kmech v Dorosh, 2023 ABKB 457 Date: 20230803 Docket: ES03 119312 Registry: Edmonton Between: Sharilyn Kmech Applicant/Cross Respondent - and - Grant Dorosh Respondent/Cross Applicant _______________________________________________________ Reasons for Decision of the Honourable Justice Douglas R. Mah _______________________________________________________ A. Background [ 1 ] Grant Dorosh and Sharilyn Kmech are brother and sister and both beneficiaries under their late mother’s estate. Mr. Dorosh is also the personal representative. They engaged in litigation over Mr.

Dorosh’s handling of the estate. That litigation was seemingly resolved by a Consent Order signed by Justice Michalyshyn on November 27, 2020. But the parties then disagreed on whether the Consent Order reflects what the agreement actually is and how it should be implemented. As a result, the issues forming the latter dispute landed before me for decision in a special chambers application. I am asked to determine the following: • Whether the Consent Order correctly says that Ms. Kmech is entitled to 50% the gross proceeds of the sale of certain property, as opposed to the net proceeds; • Whether Mr.

Dorosh, as personal representative, is entitled to an assessment under the Rules of Court of Ms. Kmech’s full- indemnity legal fees related to the former litigation, which the Consent Order says must be paid from the same sale proceeds;

• Whether Ms. Kmech is required to reimburse the estate for Bennett Jones’ $10,000 legal bill related to removal of a caveat filed by Ms. Kmech in respect of the property that was sold; • Whether Mr. Dorosh is in contempt of Justice Michalyshyn’s Order for failing to pay all of the 50% of gross proceeds of sale and failing to pay the full-indemnity legal costs as rendered, to date; and • Who should pay the costs of the application before me, including whether Mr. Shymko, counsel for Mr. Dorosh, should be personally liable for those costs. B.

The Original Litigation, the Consent Order and the Caveat [ 2 ] Iris Dorosh, the mother, died intestate in 2004. She was survived by her husband Walter, and her three children, the third of whom is Aileen Dorosh. The estate has been in administration for 19 years. Walter died in 2018. [ 3 ] Ms. Kmech was unhappy with Mr. Dorosh’s administration of their mother’s estate. In her affidavits, Ms. Kmech recites many criticisms of her brother’s handling of the estate over the years, including: • By 2020, he paid cash portions of the estate to the other beneficiaries and himself but not Ms.

Kmech. • He came up with a plan in 2004 to pay out the beneficiaries. Ms. Kmech was not consulted about the plan. It contemplated Ms. Kmech’s share being paid from the proceeds of the sale of the former family home. Despite coming up with the plan in 2004, Mr. Dorosh failed to take steps to sell the former family home until the Consent Order was entered into in 2020. • He mismanaged assets by allowing people, including Aileen but some of whom were strangers, to stay in the home rent-free. • He failed to account when requested or at all. [ 4 ] Mr. Dorosh denies any mismanagement.

He explains the delay in selling the house in his affidavit evidence. Basically, their ailing father and their sister Aileen, who was also experiencing health issues of a sort, needed a place to live. He said he took appropriate steps to preserve the assets. [ 5 ] At any rate, as a consequence of Ms. Kmech’s dissatisfaction with Mr. Dorosh’s performance as personal representative, she brought a motion in February 2020 to have him removed as personal representative and to appoint a third-party in his stead. Ms.

Kmech also filed a caveat on the land that comprised the former family home on April 21, 2020, claiming an interest as a beneficiary under the Intestate Succession Act . [ 6 ] The matter was to be heard at a special chambers application on November 27, 2020. Instead, the Consent Order of that date was signed by Justice Michalyshyn to resolve the matter. [ 7 ] Mr. Dorosh was self-represented at the time the Consent Order was negotiated and entered. It required him to sell the house by March 1, 2021 and then distribute 50% of the gross proceeds to Ms.

Kmech, another $10,000 to himself as compensation as personal representative, and then a further $23,068.50 to himself as beneficiary. [ 8 ] By mid-March 2021 Mr. Shymko had come on board as Mr. Dorosh’s counsel. Mr. Dorosh then (through his counsel) took the position that only 50% of the net proceeds, as opposed to gross , were payable under the Consent Order and that Ms. Kmech’s full- indemnity legal fees, also ordered in the Consent Order to be paid from the sale proceeds, needed to be assessed before they were payable. [ 9 ] Ms.

Kmech was paid the sum of $98,177.58 on March 29, 2021, being 50% of the net sale proceeds. Although the property was then sold to a third-party, Ms. Kmech refused to discharge her caveat because she felt that she had not received her full due under the Consent Order, namely 50% of the gross sale proceeds plus the unassessed amount of her full-indemnity legal fees. [ 10 ] The law firm of Bennett Jones was retained by Mr. Shymko to apply to the Court to remove the caveat, on the grounds that the Consent Order of November 27, 2020 obliged Ms. Kmech to execute any documents required to conclude the sale.

That application was also ultimately resolved by a Consent Order of October 25, 2021 whereby Ms. Kmech’s counsel agreed to a discharge of the caveat on condition that Mr. Shymko withhold the sum of $42,000 in trust pending resolution of the gross versus net issue and the issue of whether the full-indemnity legal fees could be assessed or not. [ 11 ] Ms. Kmech has a lot of negative feelings about her family that arise from her childhood. She is estranged from her siblings. The way the estate has been administered has worsened those feelings.

The two siblings involved in this litigation agreed to a mutual no- contact provision as part of the November 27, 2020 Consent Order. My observation is that the parties distrust and resent one another and those feelings have made this litigation more difficult. C. “Gross” versus “Net” Issue [ 12 ] There is no dispute that the Consent Order of November 27, 2020 plainly says that Ms. Kmech is to be paid 50% of the gross proceeds, not 50% of the net proceeds. Counsel for Mr. Dorosh says there has been a drafting error in the Consent Order. Mr.

Shymko says that I should exercise discretion under Rule 9.12 to correct a mistake in the Consent Order signed by Justice Michalyshyn by making it say 50% of net . In the alternative, Mr. Shymko argues that if the change was intentional then Ms. Kmech’s counsel, Mr. Tomic, had a professional obligation to alert Mr. Dorosh, who was a self-represented litigant at the time, that the 50% of net earlier discussed had been changed to 50% of gross .

[ 13 ] Mr. Tomic in response says there is no mistake. He says that converting from 50% of net to 50% of gross in the final form of Order forwarded to Mr. Dorosh for consideration was a deliberate choice on Ms. Kmech’s part. He further asserts that Mr. Dorosh had plenty of opportunity to review the draft Consent Order, even to consult legal counsel, and chose to sign the Consent Order with an affidavit of execution attached, as is. Therefore, Mr. Dorosh is bound by exactly what the Consent Order says. [ 14 ] It is also suggested by Ms. Kmech’s counsel that Mr.

Dorosh is being disingenuous in saying that the change from net to gross is a mistake. He earlier tried to suggest that Ms. Kmech had actually confirmed in Court before Justice Michalyshyn that she had agreed to payment of 50% of the net proceeds. Mr. Shymko, now representing by Mr. Dorosh, refused to order the transcript, so Ms. Kmech’s counsel did so. The transcript revealed that no such thing had been said to Justice Michalyshyn. Mr. Tomic suggests that Mr. Dorosh/Mr. Shymnko then shifted strategies to saying the 50% of gross is a drafting error. [ 15 ] Mr.

Tomic also points out that between November 23, 2020 and March 19, 2021 no issue was raised about gross versus net . It was at that point that Mr. Shymko was retained and it was Mr. Shymko who noted that in over 40 years of practice, he had never encountered a situation that called for payment based on gross proceeds as opposed to net proceeds. [ 16 ] Ms. Kmech’s counsel says that Mr. Shymko’s experience is irrelevant. Ms. Kmech chose to use gross proceeds as the basis instead of net proceeds and Mr. Dorosh agreed by signing the Consent Order. [ 17 ] In terms of the drafting error argument, Mr.

Shymko points out that: • A letter of November 9, 2020 from Mr. Tomic to Mr. Dorosh on the proposed settlement terms for the Consent Order stated that “the net proceeds from the sale of the house shall be distributed…” • A follow-up email of November 18, 2020 from Mr. Tomic to Mr. Dorosh says “paragraph 1.j is modified as follows: 50% of net proceeds will be paid to Sharilyn.” • In the November 19, 2020 email for Mr. Tomic to Mr. Dorosh, which attached the Consent Order that was actually executed, there is no specific mention of a change from net to gross . [ 18 ] Mr.

Dorosh apparently didn’t notice the change from net proceeds to gross proceeds. He deposes that if he had known about this change, he would not have signed the Consent Order. I am to infer that the references to net proceeds in the first two communications must mean that the use of the word gross in the Consent Order that accompanied the third communication is a drafting error. [ 19 ] Mr. Tomic says that rather than being an error, the change from net to gross was per his client’s instructions, to make up for delay in payment and lost opportunity. I interpret this explanation to mean that, in the end, Ms.

Kmech decided to seek a slight increase in the settlement for herself in recognition of the 16 years she had to wait for payment. Mr. Tomic also says that in the November 19, 2020 email, Mr. Dorosh was specifically advised that the Consent Order now attached was slightly different, although it was not specified how it was different. The exact sentence reads: “The Consent Order incorporates the terms of our discussion and adds a few points that our client insists on it [sic] order to resolve this matter.” [ 20 ] I note that there is a thread that runs through Mr. Tomic’s communications to Mr.

Dorosh: • In the November 9, 2020 letter, he concludes by urging Mr. Dorosh (although not requiring him to do so) to obtain independent legal advice. • In the November 18, 2020 email, he sets out the framework for the settlement (which includes the 50% of net sale proceeds) but also says “Once you confirm that this represents a basis upon which you would be prepared to settle (i.e. essentially a counteroffer), then I will take this back to Sharilyn for her instructions.” This sentence means that Ms.

Kmech had still to review and provide input into the framework. • In the November 19, 2020 email, it appears that Ms. Kmech had by then reviewed and provided input and clearly states that she was now insisting on adding a few points. [ 21 ] From the foregoing sequence of communication, I do see that Mr. Tomic was well aware that Mr. Dorosh was self- represented, that he was advising Mr. Dorosh that the final settlement to be approved by Ms. Kmech could change from the proposed framework and, finally, that it in fact did change. [ 22 ] That Mr.

Shymko, who came on the file some time in mid-March, 2021, had never seen a distribution based on gross proceeds as opposed to net proceeds in 40 years of practice did not change what Mr. Dorosh had agreed to. [ 23 ] I cite from Farm Credit Canada v Chan , 2021 ABCA 168 at para 20 : ... a person cannot sign a document and then claim he or she did not understand it because he or she elected to rely entirely on what others did or did not tell him or her about the document’s contents. The chambers judge found, based on the evidence before him, that the appellants were careless in signing the documents.

We see no basis for interfering with this finding. Carelessness plainly forecloses the non est factum defence. [ 24 ] The present case is not a non est factum case since there is no dispute about the fundamental character of the document that was signed. Rather, the dispute is about whether it should be one word or another in the Consent Order that gives rise to a difference in payment of the relatively insignificant amount of $5,822.42. But I suggest that the principle still applies that a person cannot escape an obligation by saying that he didn’t read the document properly or failed to notice something.

This would be more so, where the person is specifically told that something has changed from last time. It was also not fine print; it was plain.

[ 25 ] I conclude there was no drafting error here and therefore there is no case for the application of Rule 9.12. I also point out that there was no allegation of deception. Mr. Dorosh did not say he was tricked into signing the Consent Order. Rather, I find that he was careless and did not even realize that the net had changed to gross until it was pointed out to him by Mr. Shymko. [ 26 ] Mr. Shymko argued that Mr. Tomic had a professional obligation to draw the specific change to Mr. Dorosh’s attention. If that had been done, at least this part of the dispute would not have emerged.

But as I said, there was no allegation of bait-and-switch. Mr. Dorosh also had eight days to carefully read the draft Consent Order or even consult legal counsel before the attendance before Justice Michalyshyn. Apparently, he did neither. There is a limit to the extent to which Mr. Tomic, as the lawyer representing the other side, must also act as the keeper for Mr.

Dorosh who chose to be a self-represented litigant at the time. [ 27 ] Moreover, there is greater mischief in allowing a signatory to a Consent Order, even if self-represented, to escape an obligation in that Consent Order by simply saying that he didn’t notice it. There are so many self-represented litigants in the civil justice system now that the practice of resolving matters by Consent Order would collapse if this were allowed. [ 28 ] Accordingly, Mr. Dorosh as personal representative of Irish Dorosh’s estate is ordered to remit the balance of $5,822.42 to Ms. Kmech. D. Assessment of Costs [ 29 ] Mr.

Dorosh, as personal representative, argues that as the payor of the legal fees, he is entitled to assess those fees under the Rules of Court. Ms. Kmech’s position is that Mr. Dorosh was apprised in advance of the approximate full-indemnity costs and then signed a Court Order saying he would pay them, which Court Order does not allow for assessment. Mr. Dorosh was told in the same November 9, 2020 letter that the legal fees were in the approximate amount of $27,000 and then in the same November 18, 2020 email that they were anticipated not to be higher than $33,000. The actual amount billed by Mr.

Tomic’s firm was $35,798.21. Mr. Dorosh further complains that the actual accounts rendered lack any meaningful detail. [ 30 ] From my review of the Court file and after reading counsel’s briefs and hearing their submissions, I conclude the following: • Justice Michalyshyn in the Consent Order of November 27, 2020 determined costs under Rule 10.31; • Mr. Dorosh, as the party required to pay the costs, is entitled to a bill of costs under Rule 10.35; and • further, Mr.

Dorosh is entitled to have the bill of costs assessed in accordance with Rules 10.36(2) and 10.41. [ 31 ] Being advised in advance of the probable amount of the legal costs does not amount to an acceptance of the final total rendered nor a waiver of the right of assessment under the Rules of Court. Moreover, no specific amount was mentioned in the Court order, meaning the final amount was left open. While the Consent Order does not say that the legal costs may be assessed, it similarly does not say that they cannot be assessed. Therefore, the Rules of Court apply by default. [ 32 ] Mr. Shymko on behalf of Mr.

Dorosh may proceed with the assessment and take out another Appointment for Assessment of Costs on a mutually convenient date. E. Bennett Jones’ Bill [ 33 ] The filing of the caveat was predicated on Mr. Dorosh’s representation to Ms. Kmech in a January 11, 2013 email that she has a half share in the house according to the 2004 plan. Ms. Kmech registered the caveat to protect that interest. The apparent resolution of the earlier litigation by way of the November 27, 2020 Consent Order did require her to execute any documents to give effect to the settlement.

Because of what happened subsequent to the entering of that order, as described above, Ms. Kmech took the position that Mr. Dorosh had not performed his end and therefore she was maintaining the caveat until Mr. Dorosh had made up the difference between the net and gross numbers and paid her full-indemnity legal fees without challenge. [ 34 ] It is quite true that as early as June 23, 2021, Mr. Shymko offered to hold back the amount in dispute ($42,000) in exchange for a registrable discharge of the caveat. Mr. Tomic responded that Ms. Kmech would only discharge the caveat if Mr.

Dorosh withdrew the request to assess the full-indemnity legal fees, the disputed funds were paid to a certain third-party, and the remaining issues submitted to an early intervention case conference (EICC). [ 35 ] The purchaser of the property had actually resold the property and it had been subdivided. Thus, the need to discharge the caveat became acute in mid-September 2021. Mr. Shymko was in a conundrum because he was under an obligation to provide a registrable discharge of caveat to the purchaser’s lawyer. That led to Mr.

Shymko bringing on Bennett Jones to advance an application to discharge the caveat. [ 36 ] Mr. Shymko advised the Court that Bennett Jones was retained because he felt that counsel with a higher order of litigation skills was required to do the application. Bennett Jones charged $10,000 for its services, which the estate paid. [ 37 ] Ms. Kmech apparently distrusted Mr. Shymko. He had been involved in advising Mr. Dorosh back in 2004 with respect to the plan to pay out the beneficiaries.

She felt that plan was made behind her back and resulted in delay in her receiving her proper or any share of the estate for a period of some 16 years. For that reason, she would not agree to Mr. Shymko simply holding the funds. [ 38 ] Mr. Tomic said that Ms. Kmech wanted the comfort of a further Court Order requiring the funds to be held in trust, pending resolution. This is exactly the Court Order that was put in place on October 25, 2021 as a result of the application brought by Bennett Jones and which resulted in the caveat being removed.

[ 39 ] It seems to me that counsel for either of the parties, at any time prior to the involvement of Bennett Jones, could have taken steps to engage the other side and put the same Consent Order in place. It did not require Mr. Shymko retaining a litigation “big gun” or a further legal fee of $10,000. [ 40 ] I view the engagement of Bennett Jones as an unnecessary expense that was brought about by the intransigence of both parties. However, given Ms. Kmech’s wish to have a Court-backed assurance that her position was protected, Mr.

Dorosh’s side should simply have offered the Consent Order in the same form that was eventually entered following Bennett Jones’ involvement. [ 41 ] In the result, I do not order Ms. Kmech to reimburse the estate for any part of the Bennett Jones bill, and Mr. Dorosh’s application in that regard is dismissed. F. Contempt [ 42 ] Ms. Kmech also asked the Court to find Mr. Dorosh in contempt of the Consent Order of November 27, 2020 for failing to pay the amount required based on gross proceeds and failing to pay the full-indemnity costs as rendered.

Her counsel argues that contempt is established because the Order is clear and unambiguous, that Mr. Dorosh obviously knew about the Order because he had endorsed it and was present in Court when it was granted, and that he wilfully failed to carry out his obligations under that Order. With regard to the elements of civil contempt, Mr. Tomic referred me to Holden (Village) v Sen , 2019 ABQB 472 at para 20 . [ 43 ] As stated during the hearing, contempt is a quasi-criminal offence which requires proof of mens rea beyond a reasonable doubt.

I find that intent has not been proven beyond a reasonable doubt, on this record, for the following reasons: • It is not unbelievable that Mr. Dorosh, much after the fact, thought that the word gross was a drafting error. I say this because the word net had been used by Mr. Tomic in the November 9, 2020 letter and November 18, 2020 email as the basis for payment. Even Mr. Dorosh’s assertion, later proved wrong, that Ms. Kmech had confirmed before Justice Michalyshyn that the basis of payment would be net proceeds, is consistent with the belief in a drafting error.

The fact that I have found that there was no drafting error and that the use of the word gross was intentional on the part of Mr. Tomic/Ms. Kmech doe not render Mr. Dorosh’s stated belief in a drafting error so implausible that it does not raise reasonable doubt with regard to intention. When it came time to actually pay, he asserted that belief and engaged counsel to correct what he contended was a drafting error.

While he did not pay based on gross , he did pay some $98,177.58 on March 29, 2021, being 50% of the net sale proceeds, leaving only $5,822.42 unpaid and then instructed counsel to make an application under Rule 9.12 to relieve him of the obligation to pay the remaining balance. In the circumstances, I cannot say there was a wilful and deliberate flaunting of the Order. • Similarly, I have already ruled on the question of whether the full-indemnity costs are capable of assessment.

Justice Michalyshyn’s Consent Order did not say that the costs must be paid “as rendered” or “unassessed”, so the position taken by Mr. Dorosh was reasonable. Mr. Dorosh is and always was prepared to pay the costs once assessed. Again, in the circumstances, I cannot find the requisite intent. [ 44 ] Therefore, the application to cite Mr. Dorosh in contempt is dismissed. [ 45 ] I acknowledge Mr. Shymko’s other argument that contempt is not available because the default alleged against Mr. Dorosh relates to an Order for the payment of money: Rule 10.52(3)(a)(i).

I have not resolved in my own mind whether failure to carry out a settlement in the form of a Consent Order, which involves distributing the sale proceeds of an estate asset in a certain way, falls within the meaning of “an Order to pay money” which is the exception set out in the Rule. Given my ruling above, I do not have to answer this question (at least not today). G. Costs of this application [ 46 ] Mr. Dorosh seeks costs from Ms. Kmech from March 15, 2021 to and including this proceeding, on a full-indemnity basis. Ms. Kmech requests costs from Mr.

Dorosh from November 27, 2020 to and including this proceeding on a full-indemnity basis. Both sides say the other has been unreasonable and has acted in bad faith. [ 47 ] Further, in the brief submitted on Ms. Kmech’s behalf, her counsel also asks that Mr. Dorosh’s counsel, Mr. Shymko, be held personally liable for Ms. Kmech’s full-indemnity costs. Ms. Kmech contends through her counsel that Mr.

Shymko has engaged in an abuse of process by first falsely representing what happened in the hearing before Justice Michalyshyn (when he wasn’t there), refusing to order the transcript from that hearing, and then changing the reason for not complying with the Order to an allegation of drafting error. [ 48 ] For the following reasons, I direct that the parties bear their own costs of these proceedings from November 27, 2020 to date: • There has been divided success in the application before me. • The issues here are of relatively minor monetary value and should have been resolved in an EICC.

It seems to me that part of the motivation for engaging in this application and cross-application was the dislike of each party for the other, which took the form of intransigence. • I find there is no basis for any award of costs against Mr. Shymko personally. While he was apparently involved in the early going of the estate (back in 2004), he did not start acting for Mr. Dorosh in this litigation until sometime in mid-March 2021. I do not think that Mr. Shymko believing his client with respect to what was said by Ms.

Kmech before Justice Michalyshyn, his refusal to order the transcript (which is an expense), nor the assertion of a drafting error which I already said was not so implausible, amount to censurable conduct of any sort. Mr. Shymko was simply taking and acting on instructions from his client. I do not perceive any injury to the administration of justice that would attract a sanction of personal costs against a lawyer.

Heard on the 25 th day of July, 2023. Dated at Edmonton, Alberta this 3 rd day of August, 2023. Douglas R. Mah J.C.K.B.A. Appearances: Predrag Tomic & Angela Beierbach, Field LLP for Sharilyn Kmech William J. Shymko for Grant Dorosh