All In The Family (Business): Abuse Of Process By Re-litigation In Commercial And Estates Proceedings

• Published date: 24 September 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Trials & Appeals & Compensation
• Law Firm: Dentons
• Author: Ms Kathryn McCulloch and M. Theresa Cesareo

In Ntakos Estate v Ntakos¹, Justice Schabas of the Ontario Superior Court heard various motions for summary judgment and dismissal in three related proceedings arising from decades-old (and previously litigated) disputes about a closely held family business.

In this lengthy decision that grants motions and dismisses the claims, the Court provides fulsome discussion on many issues relevant to commercial and estates litigators. The Court canvassed limitation periods (pursuant to both the Limitations Act, 2002, and the Trustee Act), releases, the appropriateness of summary judgment and abuse of process.

This blog post provides a short summary of the factual background and provides some key takeaway points for commercial and estates litigators on these common issues.

Factual and procedural background

Dupont Construction Supplies Ltd. was truly a family business. It was founded and owned by three brothers: John, Gus and Ted Ntakos. After John's death, his shares passed to his wife, Anna. Ted and Gus remained in control of Dupont but disagreed about its financial affairs. Several of the Ntakos family members worked in the family business. John's children (Peter, Olga, and Tammy), inherited shares from their mother, Anna, and the acrimony continued.

The disagreement between Gus and Ted culminated in Ted's departure from the business in 2005. In 2006, the Peter, Olga and Tammy brought an action against Gus alleging that he had misappropriated funds from Dupont and orchestrated an improper accounting of shareholder distribution and benefits. The Plaintiffs also alleged negligence and breach of fiduciary duty against Dupont's solicitors. The 2006 Action was settled in 2012 against Gus and in 2015 against Dupont's solicitors and broad releases were provided in both instances.

Current proceedings

Anna's Estate and Dupont commenced an estates action against Gus, and Dupont's solicitors and accountants in May 2019. The Plaintiffs in the Estates Action pleaded the same factual circumstances that were the subject of the 2006 Action. Within the Estates Action, it was alleged that new evidence of misconduct of Gus and Dupont's solicitors and accountants came to light that would have influenced the outcome of previous proceedings and settlements.

Shortly thereafter, the Peter, Olga and Tammy (in both their personal capacities and on behalf of Anna's Estate), Dupont and others commenced a separate estates application seeking declarations that certain minutes of settlement and a release be found void ab initio, among other things.

Ted and Gus had each commenced separate proceedings relating to many of the same issues. The Plaintiffs, Peter, Ola, Tammy, Dupont and another family holding company were all represented by the same counsel.

Justice Schabas heard motions by Gus and Dupont's solicitors for summary judgment and/or to strike out various of the proceedings on the basis that they were statute-barred, res judicata, an abuse of process and a nullity because of the settlements and releases arising from the 2006 Action.

In the result, the Court found that both the Estates Action and the Estates Application...