2010 ONSC 7244, 2010 ONSC 7244

CITATION : D’Angelo Estate, 2010 ONSC 7244 St. Catharines Court File No.: 8069/10 Date: December 29, 2010 SUPERIOR COURT OF JUSTICE – ONTARIO RE: THE ESTATE OF FAUST D’ANGELO, deceased BEFORE: The Honourable Mr. Justice J.W. Quinn COUNSEL: Peter A. Mahoney, for Emidio D’Angelo and Denise D’Angelo, the moving parties HEARD: November 17, 2010, at St.

Catharines ENDORSEMENT I INTRODUCTION [ 1 ] This is a motion without notice made in writing pursuant to rule 37.12.1(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and brought under rule 74.15(1) (i). [ 2 ] The moving parties are the applicants for a Certificate of Appointment of Estate Trustees with a Will. However, they also ask that a monitor be appointed by the court. [ 3 ] Is a monitor a person or position recognized by Ontario courts? If so, should an appointment be made in the circumstances of this case? [ 4 ] After reviewing the material filed, I sent word to Mr.

Mahoney, counsel for the moving parties, regarding additional issues to be addressed. Comprehensive written submissions followed. II BACKGROUND 1. The facts [ 5 ] Faust D’Angelo (“the deceased”) died on August 10, 2009. At the time of his death, he resided in the City of St.

Catharines, Ontario. [ 6 ] In his Last Will and Testament (“Will”), the deceased appointed a son, Emidio D’Angelo (“Emidio”), and Emidio’s daughter, Denise D’Angelo (“Denise”), as his executors and trustees (“co-executors”). [1] The co-executors reside in the City of North Tonawanda, in the State of New York, one of the United States of America. [ 7 ] Pursuant to the Will, the deceased’s estate is to be divided amongst Emidio and his three surviving siblings in equal shares.

The estate has a total value of $1,520,962, consisting of real estate in Ontario, along with bank and investment accounts. [ 8 ] The co-executors are obliged to obtain a Foreign Executors’ Bond (“bond”). To that end they made application to The Dominion of Canada General Insurance Company (“insurer”). However, the insurer advised that it was not prepared to issue a bond unless a resident administrator was added to the estate in addition to the co-executors. The insurer advanced two reasons for its position: 1.

The value of the assets of the co-executors is considerably less than the value of the deceased’s estate; and, 2. Based upon past experience with other foreign executors, the insurer is concerned that, should the foreign executors, upon administering the estate, not take steps to have the bond cancelled, the insurer would be required to compel the foreign executors to do

so. [ 9 ] The insurer has now modified its request and advised Mr. Mahoney that it will issue a bond to the co-executors if a member of Mr. Mahoney’s law firm is appointed by the court as a monitor for the purpose of monitoring the administration of the estate by the co- executors and providing consent to any disposition of estate assets or distribution of estate funds by the co-executors. [ 10 ] Thomas Wall, a lawyer with Mr. Mahoney’s firm, has agreed to act as court-appointed monitor. 2.

The order sought [ 11 ] The order sought by the moving parties was filed in draft form and contains these provisions (I have omitted the Schedules): 1. THIS COURT ORDERS that upon Emidio D’Angelo and Denise D’Angelo filing with the Court a Foreign Executors Bond in the amount of $1,520,962.56 in the form attached as

Schedule “A” to this Order, a Certificate of Appointment of Estate Trustees With a Will in the Estate of Faust D’Angelo shall issue to Emidio D’Angelo and Denise D’Angelo in the form attached as

Schedule “B” to this Order. 2. THIS COURT ORDERS that Thomas Wall is hereby appointed as a Monitor, an officer of the Court, to monitor the administration of the Estate of Faust D’Angelo by the Estate Trustees With a Will, with the powers and obligations set out herein. 3. THIS COURT ORDERS that the Estate Trustees With a Will shall advise the Monitor of all material steps taken by the Estate Trustees in the administration of the Estate of Faust D’Angelo. 4. THIS COURT ORDERS that the Monitor, (

a) monitor the administration of the Estate of Faust D’Angelo by the Estate Trustees With a Will; (

b) consent to any disposition of estate assets, disbursement of estate funds or distribution of estate funds by the Estate Trustees With a Will which the Monitor believes is appropriate. 5. THIS COURT ORDERS that the Estate Trustees With a Will shall not dispose of any estate assets or disburse any estate funds or distribute any estate funds without the written consent of the Monitor. 6.

THIS COURT ORDERS that the Monitor shall not take possession of the property and shall take no part whatsoever in the administration or supervision of the administration of the estate and shall not, by fulfilling his obligations hereunder, be deemed to have taken or maintained possession or control of the property of the estate or any part thereof. 7. THIS COURT ORDERS that the Monitor shall incur no liability or obligation as a result of his appointment or the carrying out of the provisions of this Order save and except for any gross negligence or wilful misconduct on his part. 8.

THIS COURT ORDERS that, within two years of the date of issuance of the Certificate of Appointment of Estate Trustees With a Will, the Estate Trustees With a Will shall file estate accounts with the Court and take out an appointment for passing of such accounts. III DISCUSSION 1. Jurisdiction (

a) rule 74.15(1) [ 12 ] Rule 74.15(1) of the Rules of Civil Procedure authorizes the making of orders for assistance in respect of estates: 74.15

(1) In addition to a motion under

section 9 of the Estates Act , [2] any person who appears to have a financial interest in an estate may move, (

a) Order to Accept or Refuse Appointment - for an order (Form 74.36) requiring any person to accept or refuse an appointment as an estate trustee with a will; (

b) Order to Accept or Refuse Appointment - for an order (Form 74.37) requiring any person to accept or refuse an appointment as an

estate trustee without a will; (

c) Order to Consent or Object to Proposed Appointment - for an order (Form 74.38) requiring any person to consent or object to aproposed appointment of an estate trustee with or without a will; (

d) Order to File Statement of Assets of the Estate - for an order (Form 74.39) requiring an estate trustee to file with the court a statementof the nature and value, at the date of death, of each of the assets of the estate to be administered by the estate trustee; (

e) Order for Further Particulars - after receiving the statement described in clause (d), for an order for further particulars bysupplementary affidavit or otherwise as the court directs; (

f) Order to Beneficiary Witness - for an order (Form 74.40) requiring a beneficiary or the spouse of a beneficiary who witnessed the willor codicil, or who signed the will or codicil for the testator, to satisfy the court that the beneficiary or spouse did not exercise improper orundue influence on the testator; (

g) Order to Former Spouse - for an order (Form 74.41) requiring a former spouse of the deceased to take

part in a determination undersubsection 17 (2) of the Succession Law Reform Act of the validity of the appointment of the former spouse as estate trustee, a devise orbequest of a beneficial interest to the former spouse or the conferring of a general or special power of appointment on him or her; (

h) Order to Pass Accounts - for an order (Form 74.42) requiring an estate trustee to pass accounts; and (

i) Order for Other Matters - for an order providing for any other matter that the court directs. [13] The moving parties rely upon the general, catch-all provisions of rule 74.15(1)(i). (

b) do the co-executors have standing under rule 74.15(1)(i)? [14] To have standing under rule 74.15(1) of the Rules of Civil Procedure, a moving party must be a “person who appears to have afinancial interest in” the estate. [15] Emidio is a residuary beneficiary under the Will and, as such, has a financial interest in the estate thereby making him an eligiblemoving party under rule 74.15(1)(i). [16] Denise, on the other hand, is not a beneficiary. Her only financial interest in the estate consists of her entitlement to claimcompensation as a named executor.

Is this sufficient to give her standing under rule 74.15(1)(i)? Yes. In my opinion, the financial interestcontemplated by rule 74.15(1)(

i) may be direct, indirect or contingent. An entitlement to claim executor’s compensation is a contingentfinancial interest in the estate. (

c) right to grant of probate v. conditions attached to grant [17] “There is a considerable difference between the right to the grant of probate and the conditions upon which a grant may be made.The latter are definitely within the jurisdiction and discretion of the Court”: see Re Knox, (BC SC), [1963] B.C.J. No.397, 40 D.L.R. (2d) 397 (B.C.S.C.) at para. 8 and the authorities therein cited. [18] I agree with the finding in Re Knox. While there is a very limited discretion given to the court when it comes to granting probate,the discretion to attach conditions to the grant is wide.

The court may construct such conditions as are necessary to achieve the wishes ofthe testator, to properly administer the estate and to otherwise do justice in the circumstances of the case. Jurisdictionally, appointing amonitor is such a condition. 2. Court-appointed monitors (

a) recognized in Ontario? [19] Mr. Mahoney provided me with several Ontario cases where the court has appointed a monitor (I had never heard of the practice). [20] In Ontario Society for the Prevention of Cruelty to Animals et al. v.

The Toronto Humane Society et al., 2010 ONSC 608 ,the court, at para. 2, appointed “a monitor of the business and financial affairs of [The Toronto Humane Society (“the THS”)] and toprovide the court with information about how the THS is administering its charitable trust,” in an application where it was alleged thatthe THS had breached the trust created for its charitable purpose and a wide range of relief was sought under the Charities AccountingAct, R.S.O. 1990, c. C.10.

At para. 94, the court relied upon “the inherent jurisdiction of this court to supervise charities and section10(1)[3] of the [Charities Accounting Act] to appoint [a Chartered Accountant with Deloitte & Touche LLP] to act as monitor of thebusiness and financial affairs of the THS and to inquire into and to report on the charity’s financial health . . .” [21] Courts have also appointed monitors under the oppression remedies in the Ontario Business Corporation Act, R.S.O. 1990, c.B.16, despite that statute referring neither to monitors nor the power to appoint them:[4] see, for example, Holden v.

InfolinkTechnologies Ltd. et al., (ON S.C.);[5] and Waxman v. Waxman, (ON S.C.). [22] Further recognition of monitors can be seen in Bank of Montreal v. Locilento Investments Inc. et al., (ON S.C.).Although it is not clear from the decision, this appears to be a motion for the appointment of a receiver where, at paras. 2 and 4, thecourt, concerned that to do so would trigger the precipitous revocation of a Liquor Control Board of Ontario licence for the business inquestion, instead appointed a monitor of the business “with full day-to-day control of the operations.”[6] (

b) definition [23] Interestingly, none of the cases that I have mentioned defines “monitor.”

[24] The term “monitor” is not included in Black’s Law Dictionary, 7th ed. (St.

Paul, Minn.: West Group, 1999). [25] In Dukelow and Nuse, The Dictionary of Canadian Law (Scarborough: Carswell, 1991), “monitor” is defined (but only within thecontext of receiverships) as “a person appointed by a security holder to review and report on the cash flow, accounts payable and assetsof a debtor’s business . . .” [26] In The New Shorter Oxford English Dictionary, the meaning of the verb “monitor” is “observe, supervise, keep under review . . .”and the noun is “a person who monitors something . . . a person who . . . gives advice or warning as to conduct.” [27] It would seem that there is no magic to the use of the term “monitor” and that there is no need to engraft on it anything beyond itseveryday meaning. [28] I state the obvious when I say that a monitor must have the necessary skills to perform his or her duties as required in thecircumstances of each case and the order of appointment should be as specific as possible in delineating those duties. 3. “Officer of the court” [29] Paragraph 2 of the order sought on this motion refers to the monitor as being an “officer of the court.” (

a) definition [30] “Officer of the court” is defined in Black’s Law Dictionary as: . . . a person who is charged with upholding the law and administering the judicial system. Typically officer of the court refers to a judge,clerk, bailiff, sheriff, or the like, but the term also applies to a lawyer, who is obliged to obey court rules and who owes a duty of candourto the court. Also termed a court officer. [31] I do not agree that “court officer” and “officer of the court” necessarily are synonymous.

I would regard a “court officer” as a“court employee.”[7] Thus, “officer of the court” has a broader scope.[8] [32] There does not appear to be any statutory definition for “officer of the court.” (

b) is a monitor an officer of the court? [33] A court-appointed receiver is an officer of the court: see Bennett on Receiverships, Second Edition, (Toronto: Carswell, 1990) at180;[9] and a trustee in bankruptcy is an officer of the court: see Houlden & Morawetz, Bankruptcy and Insolvency Law of Canada(Toronto: Carswell, 2001) at 1-61.[10] Consequently, I see no reason why a court-appointed monitor would not be an officer of the court.Indeed, the very nature of the appointment renders a monitor an officer of the court. [34] Of course, in the circumstances of this case, the quick answer may be that Mr.

Wall, the proposed monitor, is a barrister andsolicitor and, therefore, he is an officer of the court pursuant to s. 29 of the Law Society Act, R.S.O. 1990, c. L.8.[11] (

c) primary responsibilities of an officer of the court [35] Mr. Mahoney submits, and I agree, that one may describe the duties and responsibilities of an officer of the court by analogy tothose historically identified with receivers. Consequently, I consider the primary responsibilities of an appointed officer of the court to bethreefold: (1) to act fairly, honestly, impartially and as a fiduciary, on behalf of all persons having a financial interest in the subject-matter of the appointment; (2) to comply with the powers granted in the order of appointment; and, (3) to be accountable both to the courtthat made the appointment and to those persons in (1). (

d) duties of the monitor [36] The duties of the monitor in this case, therefore, are: (1) to monitor the actions of the co-executors; (2) to ensure that dispositionsmade by the co-executors are consistent with the proper administration of the estate; (3) to comply with the terms of the order ofappointment: and, (4) to otherwise be faithful to the responsibilities of an officer of the court. 4.

Threshold of liability [37] Initially, I was concerned that paragraph 7 of the order sought sets out a very lenient threshold of liability (“gross negligence orwilful misconduct”), that is to say, it takes a high level of wrongdoing by the monitor before liability will attach to his conduct).

Mr.Mahoney submits that the wording of the threshold is taken from the Superior Court of Justice Commercial List Model CCAA[12] InitialOrder (Long Form), paragraph 29, pursuant to which a monitor under the CCAA “shall incur no liability or obligation as a result of itsappointment or the carrying out of the provisions of this order, save and except for any gross negligence or wilful misconduct on itspart.” [38] A Commercial List Users’ Subcommittee[13] drafted the Model CCAA Initial Order. [39] In Re Collins & Aikman Automotive Canada Inc., (ON SC), [2007] O.J.

No. 4186, 37 C.B.R. (5th) 282,Spence J. had occasion to deal with an objection to the liability threshold under paragraph 29 of the Model CCAA Initial Order. Atparagraphs 128-130, Spence J. writes: [128] The specific wording in paragraph 29 of the Initial Order is consistent with the standard limitation of liability protectionsgranted to monitors under the standard-form model CCAA Initial Order, which was authorized and approved by the Commercial ListUsers’ Committee on September 12, 2006.

[129] That is, of course, not determinative but it suggests that the clause has received serious favourable consideration from members of the bar in a context unrelated to particular party interests. [130] The monitor submitted in its factum a list of twelve recent CCAA proceedings in which orders have been granted with similar provisions to the limitation of liability in this case.

This would seem to suggest that in those cases the clause limiting liability was not disputed or, if it was, the Court found the clause to be acceptable. [ 40 ] Although Spence J. was addressing the liability threshold in a different factual situation than the one before this court, his comments are apt regarding the seriousness with which one should treat the liability clause in the Model CCAA Initial Order. In my view, it is sensible to incorporate the same threshold in the order sought at bar. [14] I see no reason to do otherwise. 5.

Cost of monitor [ 41 ] The order sought on the motion is silent as to who will be responsible for the cost of the monitor. Mr. Mahoney submits that this matter may be approached in one of two ways: (1) the cost of the monitor should be regarded as a necessary estate expense to allow the co-executors to carry out their duties; or (2) the cost should be paid out of (that is, deducted from) the co-executors’ compensation on the basis that the monitors, effectively, are assisting the executors in their duties. [ 42 ] In my view, I need not rule on the matter or otherwise address the issue of the cost of the monitor.

It is irrelevant for my purposes and may be left to the judge on the ultimate passing of accounts. 6. Do the beneficiaries have a say in the appointment of a monitor? [ 43 ] I do not regard the appointment of a monitor as an issue requiring approval or input from the beneficiaries. The motion for the appointment is brought by the co-executors as part of what they perceive to be their duties and it (the motion) will be judged along with the rest of their duties on the final passing of accounts when the matter of compensation is addressed. 7.

Why not renounce and appoint the proposed monitor as estate trustee? [ 44 ] If the co-executors were to renounce, Mr. Wall, the proposed monitor, could be appointed to administer the property of the deceased. This would eliminate the need for a monitor. However, wherever possible, the court must give effect to the wishes of the testator (who selected the co-executors) and, for that reason alone (without even addressing the implications of s. 29 of the Estates Act, R.S.O. 1990, c. E.21), the renunciation approach is not desirable. 8.

What if the beneficiaries were to waive the bond requirement? [ 45 ] If a bond were not required, there would be no need for a monitor. [ 46 ]

Section 6 of the Estates Act deals with the discretionary requirement of security for non-resident executors: 6.

Letters probate shall not be granted to a person not resident in Ontario or elsewhere in the Commonwealth unless the person has given the like security as is required from an administrator in case of intestacy [15] or in the opinion of the judge such security should under special circumstances be dispensed with or be reduced in amount. [ 47 ] There are no “special circumstances” [16] here that would warrant dispensing with, or reducing, the security; and, even if the beneficiaries were to consent to waiving the requirement of a foreign executors’ bond, it would be problematic convincing the court that the consent was fully informed as to all attendant risks. 9.

The form of the Certificate [ 48 ] Rule 74.04 of the Rules of Civil Procedure provides for an application for a Certificate of Appointment of Estate Trustee (“Certificate”). [ 49 ] The Certificate itself is set out in Form 74.13: (Title) CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE WITH A WILL This CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE WITH A WILL is hereby issued under the seal of the court to the applicant named above. A copy of the deceased’s last will (and codicil(s), if any) is attached. DATE ……………………………. …………………………………. Registrar [ 50 ] The Certificate requested by the moving parties (attached as

Schedule “B” to the order sought) is described as a “Certificate of Appointment of Estate Trustees with a Will and Court-Appointed Monitor.” May one tamper with rules-prescribed forms? Yes. [ 51 ] Rule 1.06(1) states:

1.06(1) The forms prescribed by these rules shall be used where applicable and with such variations as the circumstances require. [ 52 ] The forms prescribed by the rules are not sacrosanct. They may be modified “as the circumstances require.” Thus, I see no difficulty with the form of the Certificate being varied to permit reference to a court-appointed monitor. IV CONCLUSION [ 53 ] The motion is allowed and the relief sought is granted. The order appointing a monitor shall issue in the form filed. [ 54 ] I am grateful to Mr.

Mahoney for his helpful written submissions. _________________________________ The Honourable Mr. Justice J.W. Quinn RELEASED: December 29, 2010 [14] Perhaps, as Mr. Mahoney submits, this threshold makes sense when one considers that the monitor will not be performing the duties of the co-executors but merely monitoring the co-executors in the performance of those duties. I further observe that although Mr. Wall, the proposed monitor, is a barrister and solicitor who normally would be liable for acts of simple negligence, as a monitor, he is subject to the more lenient threshold.