Erickson Estate v Axsen, 2024 ABKB 10

Court of King’s Bench of Alberta Citation: Erickson Estate v Axsen, 2024 ABKB 10 Date: 20240105 Docket: 2301 05197 Registry: Calgary Between: Daniel Parent, Executor of the Estate of Beverly Erickson, and Daniel Parent Plaintiffs/Respondents - and - Croft Axsen, Judy Benteau, JMC Jencor Mortgage Corporation, Northern Premier Capital Inc., Northern Premier Equities Inc., Northern Premier Investments Netherland (Canada) Ltd., Northern Premier Investments Netherland B.V., Miwa Weninger, Weninger Properties Inc. and Japanab International Inc.

Defendants Croft Axsen, Judy Benteau, Northern Premier Capital Inc., and Northern Premier Equities Inc. Applicants Corrected judgment: A corrigendum was issued on February 6, 2024; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Endorsement of the Honourable Justice J.S. Little

_______________________________________________________ I. Introduction [ 1 ] The applicants Croft Axsen, Judy Benteau, Northern Premier Capital Inc., and Northern Premier Equities Inc. seek to set aside the Order of Justice Romaine granted ex parte on May 8, 2023. I will call this the Freezing Order. It restrained the defendants, three individuals and their related corporations, from dealing with any of their exigible property and required third party institutions to disclose financial records. II.

Preliminary Matters [ 2 ] While counsel in her application does not specifically refer to Rule 9.15 or 9.16, I note first that under Rule 9.15(2), such an application is to be brought within 20 days of the order being served on or coming to the attention of the defendant. Counsel agree that this requirement has been waived. [ 3 ] Secondly, I note that under Rule 9.16, such an application is to be brought before the judge who granted the order unless the court otherwise orders.

That is clear as well from paragraph 14 of Justice Romaine’s order: “All applications to vary or discharge this Order or arising out of the issuance or enforcement of this Order, shall be heard by the Judge who issued this Order unless otherwise directed by the Judge.” [ 4 ] Exceptions can be made when that judge is not available or when, for example, it was issued some time ago in morning chambers and the issuing judge would not likely be in a better position than any other judge to re-think the matter.

In this case, counsel agree that Justice Romaine consented to having it heard by another or others since she was starting a long trial. In addition, two other justices of this Court have heard applications to vary the Freezing Order by permitting the release of funds for living expenses. III. Test on Review [ 5 ] On an application to review an ex parte attachment order or Mareva injunction, the onus to establish all elements of the test for such an order or injunction remains on the party that brought the original application: Civil Enforcement Act s. 18(6)(

a) and Secure 2013 Group Inc. v Tiger Calcium Services Inc. (Tiger Calcium) at para 169. [ 6 ] The elements for an attachment order are found in sections 17(1) and 17(2) of the Civil Enforcement Act, paraphrased as: 1. The claimant had or was about to commence proceedings to establish its claim, 2. There is a reasonable likelihood that its claim would be established, and 3. There are reasonable grounds for believing that the defendants are or are likely to be dealing with their exigible property in a manner that would likely seriously hinder the plaintiff in the enforcement of a judgment. [ 7 ] Further, section 18(6)(

c) permits the Court on a review to terminate the order if it is satisfied that the claimant failed to make “full and fair disclosure” of material information. That

section is permissive, but our Court of Appeal has held that failure to disclose material facts may be a stand-alone ground for setting aside an attachment order and that the obligation of full and fair disclosure applies as well to obvious defences: Tiger Calcium at paras 47 and 48). [ 8 ] Counsel for the applicants has summarized the elements for a Mareva injunction as well. I do not find it necessary to deal separately with those elements. IV. Statement of Claim and Factual Background [ 9 ] In a 189 paragraph statement of claim filed April 22, 2023, Mr.

Parent in his own capacity and as executor of the estate of his common law partner Beverly Erickson (Erickson) pleads that: • Mr. Parent and Erickson had struggled with addiction issues for many years, which left them vulnerable to others taking advantage of them. • Mr. Axsen and his partner Ms. Benteau were among those who took advantage. • Mr. Axsen did so by persuading Erickson to invest in various real estate schemes up until 2007, taking advantage of her ultimately fatal illness to extract money from her for his own use. • On her death in 2008, Erickson was worth in the region of $9,000,000. • Mr.

Axsen, as trustee of a trust for Mr. Parent created in Erickson’s Will, misappropriated those trust funds and converted them to his own use.

• In collaboration with Ms. Benteau, he conspired to convert those misappropriated funds by having Ms.

Benteau purchase property in her own name. [ 10 ] Headings in the statement of claim include “Wanton Breaches of Trust”, “Morally Reprehensible Actions and Omissions by Axsen as Trustee”, “Oppression and Corporate Violations”, “Conversion”, “Conspiracy”, and “Knowing or Dishonest Assistance”. [ 11 ] Relief sought includes judgment in debt for $8,000,000, punitive damages of $400,000, an accounting of the spousal and earlier trusts going back to 2007, bank statements going back to 2009, and production of records from the defendants and a number of third parties such as financial institutions, accountants, and lenders. [ 12 ] Tiger Calcium tells us, at paras 172-174, that either party may adduce additional evidence on a review of this nature.

Both parties have now filed additional evidence and transcripts of questioning. Clearly they do not agree on the facts. But certain of them are uncontested: 1. Mr. Axsen was a friend of Mr. Parent and Erickson. 2. In addition to their friendship, the parties had a history of involvement in various real estate activities. 3. Erickson died in 2008. In her Will, she appointed Mr. Parent as her personal representative and Mr. Axsen as trustee of a spousal trust established for Mr. Parent. The entire residue was to be dealt with in that spousal trust. 4.

When the Will was probated, the value of the inventory of the estate as sworn by Mr. Parent was $2,154,147.96. That was comprised of three parcels of real estate having an aggregate net value of $1,750,000 and about $400,000 of other property. 5. On August 30, 2022, Mr. Parent filed a handwritten application for Advice and Direction (the Estate Application) respecting the Erickson estate, pleading “mismanagement of trust, fraud” and seeking “discharge of caveat, discharge of trustee, restitution, and transfer of all paperwork”. 6.

The affidavit filed in support of that the Estate Application can only be described as rambling and incoherent but refers to the spousal trust in 2009 owning 18 properties for which Mr. Axsen had not provided an accounting. Among the numerous exhibits are various statements and ledgers from 2008 to 2011 and lawyers’ reporting letters and cheques from 2010. 7. Mr. Axsen filed affidavits in response in which he deposed that Mr. Parent continued, as he had been before Erickson’s death, to be involved in the day-to- day management of the real estate properties that formed part of the spousal trust. 8.

The Estate Application was dismissed by now ACJ Nixon on October 22, 2022, with costs payable to Mr. Axsen. [ 13 ] It was against this backdrop that Mr. Parent, through counsel who is not Mr. Parent’s counsel for this review application, attended before Justice Romaine on May 5, 2023 to obtain the Freezing Order. V. Disclosure [ 14 ] Before examining whether Mr. Parent has satisfied the three elements for an attachment order, I will deal with the stand-alone issue respecting full and frank disclosure. [ 15 ] The Estate Application was for substantially the same relief Mr. Parent seeks in his statement of claim.

That application was dismissed summarily. Counsel did not refer to the Estate Application in his submissions to Justice Romaine. Counsel for the applicants refers to that as a critical omission because it renders the current action a collateral attack on the disposition of the earlier Estate Application and because there was no mention at the ex parte hearing of the response affidavits filed by Mr. Axsen which directly contradicted the allegations made by Mr. Parent in the affidavit he used to obtain the Freezing Order. [ 16 ] I agree.

Though this action was commenced by a statement of claim and the Estate Application by a different process, both allege fraud and breach of trust by a trustee and seek removal of the trustee. They amount to claims for the same thing. I do not accept the argument that the earlier action is distinguishable because it did not claim damages for breach of trust. It referred to money having been stolen by the trustee and wanted the court to order “restitution and damage against all parties that were part of the frauds”. [ 17 ] I do not accept the argument of counsel for Mr.

Parent that “the fact that an ill-informed application brought in morning chambers by an unrepresented Applicant and predictably dismissed would have been of little interest or benefit to the Court”. The obligation of the lawyer making an ex parte application was to disclose that fact. The decision about its relevance was a call to have been made by Justice Romaine. [ 18 ] Nor did counsel make any reference at the ex parte application to any defences that the defendants may have. Those include limitations defences.

Certain of the allegations made in this action, and in the estate application, refer to transactions among Mr. Parent, Erickson, and Mr. Axsen as early as 2007 when Erickson was still alive. Sixteen years having passed since that time, it is unacceptable for counsel with an obligation to make full and frank disclosure of defences not to have addressed that issue. [ 19 ] There were other significant omissions. [ 20 ] Counsel at the Freezing Order application referred to the spousal trust as having been seeded with $9,000,000. That flies in the face of Mr.

Parent’s application for probate, which fixed the value at $2,154,147.96. The difference is more than a rounding error. And its relevance is that the plaintiff is arguing that a $9,000,000 trust has been squandered over the fifteen years since Erickson’s death, leaving the plaintiff in poverty. The argument for squandering becomes far less compelling if it is based on $2,000,000 not lasting fifteen years as opposed to $9,000,000.

[ 21 ] Counsel also referred at the ex parte application to the Erickson Will as having incorporated the prudent investor rules from the Trustee Act to govern the spousal trust. More accurately, the will states that “ my Trustee shall be at liberty to make investments under

section 3 of the Trustee Act (Alberta)”. Being given permission to follow those rules is far different from requiring that they be followed. After all, this trust was to be seeded with the residue of the estate, not with cash. No evidence was adduced respecting how management of the three properties comprising the residue could be done in compliance with the prudent investor rules. [ 22 ] Tiger Calcium at para 174, relying on Hansraj v Ao , 2004 ABCA 223 , tells us that this type of order may be set aside by reason that the ex parte applicant failed to disclose material facts. I find that to be the case here.

That is sufficient to set aside the Freezing Order. VI. Elements Required for an Attachment Order [ 23 ] I will, nevertheless, deal with whether the plaintiff has met his onus to satisfy the test for an attachment order. [ 24 ] The first element, being an existing or proposed action, is satisfied. [ 25 ] The remaining two elements are problematic. [ 26 ] The plaintiff must show a reasonable likelihood that he will establish his claim. Mr.

Parent, for the ex parte application, deposed in paragraph 59 of his affidavit that the Erickson estate should have included an “[i]nheritance from her aunt in 2008, which was about $230,000 or more cash plus land in Wetaskiwin which I think was worth around $340,000” together with “millions” in a Mortgage Investment Plan and some other cash.

In paragraph 31 of his affidavit filed for this review application, he refers to “an inheritance of close to $1,000,000 that was pending from the death of Beverly’s aunt, Evelyn.” While credibility cannot be assessed through affidavit evidence, this type of imprecision does not bode well for Mr. Parent’s chances of establishing his claim. [ 27 ] As to Mr. Parent being a passive beneficiary reliant on Mr. Axsen’s management of the real estate in the spousal trust, what the evidence assembled by Mr.

Axsen shows is that these parties were both actively involved in real estate transactions before and during the relevant periods and that Mr. Parent was keenly aware of how assets in, and possibly outside of, the spousal trust were being employed. By way of example only, Mr. Axsen’s November 7, 2023 affidavit includes as an exhibit a November 14, 2018 email from Mr. Parent to Mr. Axsen in which Mr. Parent requests an advance of funds to complete renovations on two properties and informs Mr.

Axsen that he has reduced the price on two other properties he is looking to sell. [ 28 ] In addition, the examples of breach of trust and breach of fiduciary obligations pled by Mr. Parent give rise to obvious limitations issues. [ 29 ] Counsel for Mr. Parent now argues that the limitation periods did not run until more recently because Mr. Parent’s addiction issues rendered him a person under a disability, for whom the operation of a limitation period is suspended by virtue of s. 5(1) of the Limitations Act .

Alternatively, he argues that the limitation period is suspended under s. 4(1) during any period of time the defendant fraudulently conceals the injury for which a remedial order is sought. [ 30 ] Both of those may amount to triable issues, though the business-like tone of the email to which I referred above does not support an argument that Mr. Parent’s brain was addled by drugs or alcohol in 2018. That is but one example that shows how Mr. Parent’s evidence may not be strong enough to establish a reasonable likelihood of success. [ 31 ] At the very least, the length of time during which Mr.

Parent as beneficiary appears to have been happy with the administration of the spousal trust militates against him making an ex parte application for a quick remedy. [ 32 ] From all of the evidence adduced, I have no doubt that Mr. Axsen was not a meticulous bookkeeper and that he may have had only a passing acquaintance with the fiduciary responsibilities of a trustee. But given what appears to be his active participation in this relationship for close to fifteen years, I am not persuaded that Mr. Parent has a reasonable likelihood of establishing his claim.

I will, instead, venture that there is only a possibility of establishing his claim. [ 33 ] Respecting the final element, namely removal or dissipation of assets, counsel at the Freezing Order relied upon a representation that Mr. Axsen had transferred one of the properties out of the spousal trust to Mr. Parent directly. He provides no particulars such as the date or value of that transfer, nor does he explain why a transfer of trust property from the trust to its beneficiary is sinister. It is consistent with Mr. Axsen volunteering to resign as trustee, as he did in the course of the Estate Application.

It certainly does not support an attachment order which requires some evidence that assets are being improperly moved. [ 34 ] I am not satisfied that Mr. Parent has satisfied his onus to establish the required elements for an attachment order. One last point. Counsel for Mr. Axsen argues that counsel at the ex parte application did not provide any justification for the breadth and term of the Freezing Order. That counsel did, however, give an explanation as to why certain relief sought but not granted, namely a change in signing authority over certain corporations, was required.

Justice Romaine dealt with that request by permitting the matter to be heard on notice the following week to further refine the terms of the Freezing Order. VII. Conclusion [ 35 ] The Freezing Order granted by Justice Romaine May 8, 2023 is set aside as against the applicants Croft Axsen, Judy Benteau, Northern Premier Capital Inc., and Northern Premier Equities Inc. [ 36 ] As the successful parties, the applicants are entitled to costs.

[ 37 ] Counsel for the applicants seeks full indemnity costs to be assessed under Rule 10.37. If counsel are unable to agree on the quantum of costs, whether full indemnity or otherwise, both are to provide to me, by January 31, 2024 written submissions not exceeding five pages. Heard on the 15 th day of December, 2023. Dated at the City of Calgary, Alberta this 5 th day of January, 2024. J.S. Little J.C.K.B.A. Appearances: Peter R.S.

Leveque Miles Davison LLP for the Respondents Kaila Eadie and Angad Bedi Jensen Shawa Solomon Duguid Hawkes LLP for the Applicants _______________________________________________________ Corrigendum of the Endorsement of The Honourable Justice J.S. Little _______________________________________________________ Citation changed to reflect Erickson Estate v Axsen.