DIVISIONAL COURT FILE NO.: DC-19-2514 DATE: 2021/04/12
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Ellies R.S.J., Swinton and McCarthy JJ.
BETWEEN:
ABRAHAM FEINSTEIN
Matthew P. Sammon and Sarah Bittman, for the Applicant (Respondent in Appeal)
Applicant (Respondent in Appeal)
– and –
MICHAEL FREEDMAN, SHIRA SCHNECK, RACHEL FREEDMAN, ELI FREEDMAN, JOSHUA PRIZANT, SARAH PRIZANT, and JACOB FREEDMAN on behalf of THE JARVIS FREEDMAN INSURANCE TRUST and THE RIVA FREEDMAN TRUST
Gregory Sidlofsky and Robert Alfieri, for the Respondents (Appellants)
Respondents (Appellants)
HEARD at Ottawa (by videoconference): February 24, 2021
OVERVIEW
1The appellants appeal the amount of compensation and disbursements allowed to the respondent as a trustee under s. 61 of the Trustee Act, R.S.O. 1990, c. T.23. They also seek leave to appeal the amount of costs awarded to the respondent for the passing of his accounts.
2The appellants are beneficiaries and successor trustees of two trusts set up by a successful Ottawa businessman for the benefit of his family. The respondent is a respected senior Ottawa lawyer who agreed to act as the sole trustee of one of the trusts after the incumbent trustees, including the four adult children of the settlor of the trust, were removed by court order because of the animosity that had developed between one of the children and his three siblings.
3After a trial on the passing of the respondent’s accounts, Riopelle J. held that the respondent should be compensated based on the hourly fee he stipulated at the time he agreed to act as trustee, subject to a reduction for certain “shortcomings” in what the trial judge held were otherwise ably-discharged duties on the part of the respondent. The trial judge also allowed the respondent full reimbursement for the fees of two lawyers he had retained from his law firm to assist him in his role as trustee.
4The appellants argue that the trial judge failed to provide adequate reasons for his decision, erred in law by not finding that the respondent was in a conflict of interest by hiring his colleagues, and allowed unreasonable compensation to the respondent for his work as trustee.
5The trial judge awarded the respondent his full indemnity costs from the trust for the passing of his accounts. The appellants submit that the trial judge deviated improperly from the “loser-pays” principle by not reducing the amount of costs awarded to the respondent in the same way he reduced the respondent’s compensation as trustee. They also submit that neither the respondent nor the lawyers from his firm were entitled to their costs because they represented themselves in the proceedings.
6I would dismiss the appeal and deny leave to appeal the costs award.
7Contrary to the submissions of the appellants, when read in the context of the specific objections made by the appellants to the respondent’s accounts and the rest of the record, the trial judge’s reasons were adequate. The appellants have failed to provide any legal authority by virtue of which the respondent was presumed to be in a conflict of interest merely by retaining members of his own firm and they have failed to point to any evidence to show that such a conflict in fact existed here. The appellants have also failed to establish that the trial judge erred in deviating from the usual tariff for trustee compensation on the facts of this case, which required the respondent to try to maintain peace between factions of a warring family and to balance the interests of the beneficiaries of the trust of which he was trustee with those of a trust of which he was not.
8With respect to the issue of costs, there are no grounds to believe that the trial judge erred in concluding that the respondent should be fully indemnified because his costs were incurred for the proper administration of the trust. The cases relied upon by the appellants in support of their argument that none of the lawyers, including the respondent, should recover their trial costs are readily distinguishable because, in this case, the respondent was seeking compensation for himself and for the members of his firm in relation to the proper administration of a trust by a trustee, and not as a lawyer and his partners trying to justify their fees charged to a client on a private retainer.
BACKGROUND FACTS
9Unfortunately, the background facts in the dispute between the surviving members of the Freedman family have been told too often by too many judges and former judges. Each time the story is told, it gets a little longer. This appeal marks at least the fifth time the family’s troubles have been before a court. Sadly, the story must be told again. To do so, I have borrowed liberally from the decisions of the judges and former judges who have preceded me, and from the respondent’s factum.
The Trusts
10Jarvis Freedman became wealthy by investing in Ottawa area real estate. He and his wife, Riva, had four children: Jacob, Jonathan, Rose-Anne, and Joshua (the “Siblings”). In 1985, Jarvis was dying. To provide for his family, he set up two trusts that year. One was an inter vivos spousal trust, taking effect while Jarvis was still alive. The Riva Freedman Trust (“the RFT”) owns most of the preferred shares of Freedman Holdings Inc. (“FHI”), a company which holds most of the real estate once owned by Jarvis. Because the preferred shares are voting shares, whomever controls the RFT effectively controls FHI.
11Under the terms of the instrument which created the RFT, Riva is the only person entitled to any income from the preferred shares of FHI, the amount of which lies within the discretion of the trustees. Upon Riva’s death, the assets of the RFT are to be transferred to the other trust.
12The other trust is a testamentary trust. The Jarvis Freedman Insurance Trust (the “JFIT”) was created by the terms of Jarvis’s will. It holds the common shares of FHI and is a minority shareholder of that company. As the holder of the common shares, the JFIT is entitled to any income earned by FHI beyond that paid to Riva under the terms of the RFT. The Siblings are the income beneficiaries of the JFIT. They are also its trustees.
13Under Jarvis’s will, the executors of his estate have the power to appoint the trustees of the RFT. Jarvis initially named two trusted advisors, Arnell Goldberg and Peter Unsworth, as executors of his estate. He also provided that his children could become executors when the original executors felt they had matured enough to handle the responsibility of managing two trusts. Over time, the Siblings did become executors of the estate. They also became directors of FHI.
14The capital beneficiaries of the JFIT and the RFT are the 13 grandchildren of Jarvis and Riva (the “Grandchildren”). Under the terms of the trust instrument, on January 13, 2035, the remaining capital of the JFIT (including the capital of the RFT) will be distributed equally to the Grandchildren. Thus, by the terms of the trusts, a tension was created between the Siblings and the Grandchildren; between the present and the future. The less the Siblings draw from FHI and the better the stewardship of its capital, the more the Grandchildren stand to inherit. It is this tension that led to a bitter battle between the Siblings.
The Conflict over Management of FHI
15Jarvis died in November 1985. Following his death, Jonathan became primarily responsible for managing FHI. In 2005, Jacob, Rose-Anne, and Joshua (the “Majority Siblings”) became concerned about the fact that FHI was not producing much, if any, income. By that time, Unsworth had resigned as a trustee of the RFT. Because of their concerns, the Majority Siblings began to work with the remaining trustee, Goldberg, to improve FHI’s management. This led to increased acrimony between Jonathan and the Majority Siblings.
16In 2006, the Siblings entered into an agreement designed to bring some peace to their troubled family and to keep their disagreements from spilling into the legal system. Among other things, they agreed that any dispute among the trustees of RFT would be resolved either through discussion, mediation, or arbitration. Sadly, the agreement failed to achieve its objective.
The Conflict Spills into the Courts
17In 2007, the Majority Siblings used their powers as executors under the will to appoint themselves, together with Sidney Goldstein, as trustees of the RFT. Goldstein was Rose-Anne’s advisor, and later her husband. Their appointment as trustees gave the Majority Siblings control over the composition of the board of directors of FHI.
18Later that year, the Majority Siblings dismissed Jonathan as president of FHI. Jonathan took legal recourse. By the end of the year, five separate legal proceedings had been commenced:
(a) Riva commenced an application against the Majority Siblings, who had taken the position that she had no right to any income under the terms of the RFT (notwithstanding the terms of the trust document).1
(b) Goldberg commenced an application in the name of FHI to have the Siblings removed as directors of FHI for acting in a way that was prejudicial to the RFT’s interests.2
(c) Jonathan commenced an application against the Majority Siblings and Goldstein relating to control over FHI and his dismissal from the company.3
(d) The Majority Siblings commenced an application to have Goldberg removed as a trustee of the RFT, alleging misconduct in the handling of the trust.4
(e) Jonathan’s daughter, Liat Ben-Choreen, commenced an application to have all the trustees of the RFT removed and replaced by an institutional or an independent trustee either agreed upon by the existing trustees or appointed by the court.5
19It was Ben-Choreen’s application that led to the appointment of the respondent as the sole trustee of the RFT.
The Proceedings to Remove the RFT Trustees
20Ben-Choreen’s application came before Parfett J. in September 2008. Riva, the Siblings, Goldberg, and Goldstein were all named as respondents. So, too, were the minor Grandchildren, who were represented by the Office of the Children’s Lawyer (the “OCL”).
21For reasons released on October 15, 2008 (the “Appointment Decision”), Parfett J. held that, given the numerous court applications, the ongoing litigation, and the ongoing arbitration, “without an independent voice that all of the parties trust to assist with decision making, the operations of the RFT and consequently FHI will grind to a halt.” Accordingly, Parfett J. ordered that all the trustees of the RFT be removed and that, in their place, either an institutional trustee or an independent trustee be appointed. She ordered that, if the parties could not agree on an independent trustee, the court would appoint one.
The Appointment of the Respondent as the Sole Trustee
22The respondent was called to the bar of Ontario in 1965. He has been at the same Ottawa law firm, Soloway Wright, since his call to the bar and is a well-respected practitioner of commercial real estate law.
23Following Parfett J.’s Appointment Decision, Alan Litwack, counsel representing the Majority Siblings, approached the respondent to ask that he act as the independent trustee for the RFT. Litwack wrote to the respondent by email on November 21, 2008, advising him that the hearing before Parfett J. was scheduled to resume the following week and asking him to confirm his willingness to act as sole trustee by sending an email in a form suggested by Litwack. The respondent replied on November 24, 2008. He used the form suggested by Litwack, but added that out-of-pocket expenses and disbursements would constitute additional charges and that insurance would have to be obtained. In addition, as requested, he filled in a blank in the form by adding in his hourly rate of $400. Based on that email message, Parfett J. made an order on November 26, 2008 appointing the respondent as the sole trustee of the RFT. Unfortunately, her order did not include the respondent’s hourly rate.
The Respondent’s Work as Trustee
24Over the course of the next four years as trustee, the respondent:
(a) attended board meetings of FHI;
(b) met with the Siblings or their lawyers, including Goldstein;
(c) worked to improve the financial reporting of FHI;
(d) commissioned a report on the management of the FHI properties;
(e) monitored the dividends declared by FHI to ensure a proper balance between the income beneficiaries of the RFT and the capital beneficiaries of the JFIT, on one occasion intervening to do so;
(f) investigated and assessed potential independent directors for FHI;
(g) commenced litigation against Goldberg for failing to renew a life insurance policy on the life of Riva to cover tax obligations of the trust arising upon her death while Goldberg was a trustee (the “Goldberg Litigation”);
(h) arranged the placement of alternative insurance on Riva’s life;
(i) persuaded Jonathan to agree to further financing for FHI as proposed by the Majority Siblings;
(j) responded to a motion brought by Jonathan to make him a party to the arbitration regarding Jonathan’s dismissal from FHI (the “Dismissal Arbitration”); and
(k) persuaded the Siblings to attempt to settle the Dismissal Arbitration by participating in a mediation.
25The respondent retained two members of his firm to assist him in his role as trustee. The first was Kenneth Webb, an expert in trust and estate law. The second was Peter Hagen, a well-known and respected litigator. The respondent had known both lawyers for decades.
The Resignation Litigation
26In early 2012, the respondent gave notice that he wished to resign as trustee of the RFT. The OCL, as well as Jonathan and his adult children (the “Ben-Choreen Parties”), reacted by taking the position that the respondent could not resign until a replacement had been appointed by the court. The Majority Siblings took the position that they could appoint themselves as replacement trustees because of their position as executors of Jarvis’s estate. The OCL and the Ben-Choreen Parties argued that the Majority Siblings had acted in a manner that favoured the income beneficiaries over the capital beneficiaries and that, therefore, they ought not to be permitted to appoint themselves. Accordingly, the respondent brought an application for directions. The OCL brought a cross-application for the appointment of an institutional trustee.
27The application and cross-application came before Parfett J. in January 2013. The respondent was represented by Hagen. The evidence before Parfett J. included a report prepared by the respondent dated August 31, 2012 in which he stated that, in his opinion, the dividends declared by FHI during his trusteeship were commensurate with net income.
28Parfett J. dismissed the OCL’s counter-application and allowed the executors of Jarvis’s estate to appoint themselves as trustees: Reasons for Decision dated March 18, 2013 (2013 ONSC 1616, the “Resignation Decision”). She held that there was no evidence of abuse of discretion by the potential trustees in their capacity as directors of FHI that would permit or require her to interfere with the terms of the will that otherwise allowed the executors of the estate to appoint the trustees of the RFT. She awarded the respondent his full indemnity costs for the proceeding on the basis that his application was necessary for the proper administration of the estate: endorsement dated July 7, 2013 (2014 ONSC 4420, the “Resignation Costs Endorsement”), at para. 10. She allowed the OCL’s partial indemnity costs and those of the other parties to be paid out of the estate on the same basis.
29With the exception of Jonathan, all of the parties appealed the Resignation Decision, sought leave to appeal the Resignation Costs Endorsement, or both. Again, the respondent was represented on the appeal by Hagen. He, too, sought leave to appeal the Resignation Costs Endorsement, asking that the costs be paid not by the estate, but by the OCL and the parties who had supported the OCL, including the Ben-Choreen Parties, and that those parties be denied their costs.
30The Court of Appeal dismissed all the appeals and requests for leave to appeal: 2014 ONCA 205. With respect to the issue of costs on the appeal, the Court of Appeal held that, because the uncertainty that had prevailed at the time the respondent applied for directions no longer existed at the time the appeal was brought, the ordinary “loser-pays” regime should apply and the costs of the successful parties should be paid by the OCL and the Ben-Choreen Parties: 2014 ONCA 446, at para. 20. The court ordered that those costs should be paid on a partial indemnity basis, except for the costs of the respondent, which it ordered be paid on a full indemnity basis: para. 24.
The Passing of the Respondent’s Accounts as Trustee
31The respondent remained in his position as sole trustee of the RFT until the appellate process ended. On November 21, 2014, he applied to pass his accounts. By then, he had been acting as the trustee for more than five and one-half years.
32The respondent sought compensation for his work as trustee in the amount of $347,197, net of disbursements and taxes. Of that amount, $58,000 had been paid on his interim accounts, leaving $289,197 outstanding. In addition, the respondent sought payment in the gross amount of $307,713.12 for the accounts rendered by Webb and Hagen (the “Professional Fees Disbursement”). Of that amount, the sum of $223,097.17 had already been paid by way of settlement proceeds and costs awards, leaving $84,619.95 outstanding.
33Seven of the Grandchildren (children of Jacob and Rose-Anne) and Jacob in his capacity as trustee of JFIT and RFT objected to both the amount of compensation sought by the respondent and to the amount of the Professional Fees Disbursement. They made three arguments against the amount of compensation sought as trustee. First, they argued that the respondent’s overall fees should be reduced to $226,564.15 in accordance with the “ordinary” tariff for trustees. In the alternative, they argued that the respondent had agreed to cap his compensation at $4,000 per month. Finally, they argued that the respondent was requesting unreasonable compensation in light of certain things he did that they said were unnecessary, and certain things they contended he ought to have done but failed to do. They maintained that the respondent forced them into a mediation in advance of the Dismissal Arbitration that was doomed to failure from the outset, that he had improvidently settled the Goldberg Litigation, and that he had failed to show his support for the dividends paid by FHI early enough to avoid or reduce the dispute that led to the Resignation Litigation.
34The objectors made the same three arguments against the amount sought by the respondent for the Professional Fees Disbursement. In addition, they argued that the respondent was in a conflict of interest and breached his fiduciary duties to the trust by hiring members of his own law firm to provide legal services.
35With one exception, the trial judge dismissed all of the objections. In a decision dated June 21, 2019, the trial judge held that the respondent was entitled to be paid the hourly rate he had stipulated at the time he agreed to be appointed, that there was no agreement to cap his fees, and that he ought to be awarded more than what the tariff ordinarily might allow. However, he also held that the amount of compensation ought to be reduced because of certain “shortcomings” by the respondent in the performance of his duties. These included failing to provide invoices on a timely basis, failing to provide billing information when requested on several occasions, failing to communicate on several matters of interest, failing to clarify that he did not consider his fees capped, and failing to keep the beneficiaries informed as to the status or outcome of pending litigation.
36Taking these shortcomings into account, the trial judge awarded the respondent the full value of his disbursements, including the Professional Fees Disbursement, and awarded him compensation of $224,197 in addition to the $58,000 that had already been paid, for a total of $282,197. The trial judge invited written submissions on costs if the parties were not able to agree on them.
37Not surprisingly, the parties could not agree. The respondent sought full indemnity costs in the amount of $192,350.26, inclusive of taxes and disbursements, and invited the court to apportion that amount between the trust and the appellants. The objectors sought full indemnity costs of $293,947.75, also inclusive of taxes and disbursements, $183,552.62 of which they sought from the trustee personally on a partial indemnity basis, with the balance of $108,147.77 payable from the trust. Accordingly, a further hearing was later held with respect to the issue of costs.
38In an endorsement dated May 15, 2020, the trial judge held that both the respondent and the objectors were entitled to their full indemnity costs from the trust because both the passing of accounts and the objections to those accounts were necessary for the proper administration of the trust in this case.
39The appellants appeal the trial judge’s decision on the compensation and disbursements and seek leave to appeal his decision on costs.
ISSUES
40The appellants raise the following five issues:
(1) Did the trial judge err in law by failing to provide adequate reasons regarding the passing of accounts?
(2) Did the trial judge err in law by failing to find that there was a conflict of interest in the respondent retaining members of his law firm?
(3) Were the compensation and disbursements allowed by the trial judge fair and reasonable?
(4) Should leave be granted to appeal the costs awarded to the respondent?
(5) If so, should the costs award be set aside and the costs reduced?
41Before I proceed to deal with these issues, however, I would like to address the standard of review.
STANDARD OF REVIEW
42A judge who fails to provide adequate reasons commits an error of law: R. v. Sheppard, [2002] 1 S.C.R. 869, 2002 SCC 26, at para. 28. As the appellants correctly submit, alleged errors of law are reviewable on a correctness standard: Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33, at para. 8. However, alleged errors of fact are reviewable on the more deferential standard of palpable and overriding error: Housen, at para. 10.
43In a case such as this, where the appellants allege inadequate reasons, care must be taken not to allow the less deferential standard of review applicable to errors of law to erode the more deferential standard of review applicable to errors of fact. As Doherty J.A. put it in Law Society of Upper Canada v. Neinstein, 2010 ONCA 193, at para. 4:
I am dubious about the merits of arguments claiming that reasons for judgment are inadequate. Experience teaches that many of those arguments are, in reality, arguments about the merits of the fact finding made in those reasons. By framing the argument in terms of the adequacy of the reasons, rather than the correctness of the fact finding, an appellant presumably hopes to avoid the stringent standard of review applicable to findings of fact.
44In my view, this comment applies to the appellants in this case. Their factum on the appeal relating to the compensation and disbursements exceeded this court’s 30-page limit by 7 pages. The first twenty-six of those pages were taken up by references to evidence the appellants argue should have dictated a different result at trial. However, the appellants do not go so far as to allege that the trial judge committed an overriding and palpable error with respect to the facts he found. Instead, they allege that he failed to explain how he found them. To avoid the possibility of applying the wrong standard of review on the reasons issue, I have focused on whether the trial judge’s reasons explain the conclusions he reached so as to permit meaningful appellate review, and not on whether the evidence relied upon by the appellants should have caused him to reach different conclusions.
45I will have more to say about the standard of review applicable to the costs appeal when I get to the issues raised in that matter.
ANALYSIS
Issue 1: Did the trial judge err in law by failing to provide adequate reasons regarding the passing of accounts?
46A trial judge’s reasons for decision serve three main functions: to explain why the decision was made, to provide accountability, and to permit appellate review: R. v. R.E.M., [2008] 3 S.C.R. 3, 2008 SCC 51, at para. 11. The ability of the reasons to fulfill this last function is the yardstick against which their adequacy is measured. As Binnie J. succinctly put it on behalf of the Supreme Court of Canada in Sheppard (para. 28):
The simple underlying rule is that if, in the opinion of the appeal court, the deficiencies in the reasons prevent meaningful appellate review of the correctness of the decision, then an error of law has been committed.
47Although R.E.M. and Sheppard were criminal cases, the principles expressed in those case apply equally to civil cases such as this one: D.M. Drugs Ltd. v. Barry Edward Bywater (Parkview Hotel), 2013 ONCA 356, at para. 35; Maple Ridge Community Management Ltd. v. Peel Condominium Corp. No. 231, 2015 ONCA 520, at para. 13.
48The appellants submit that the trial judge’s reasons were inadequate with respect to the objections they made to the respondent’s accounts. They maintain that the trial judge said nothing about whether the Professional Fees Disbursement was reasonable or necessary, or whether the respondent’s compensation should have been reduced because of it. I am unable to agree.
49I start by acknowledging why the appellants might question the adequacy of the trial judge’s reasons in this case. The trial lasted eleven days. The trial judge reserved his decision for more than seven months, and then delivered only five pages of typewritten reasons with handwritten corrections. However, the adequacy of reasons is not measured by word count, nor are the reasons required to stand on their own. In R.E.M., the Supreme Court pointed out that reasons for decision must be read in the context in which they were delivered (para. 16):
It follows that courts of appeal considering the sufficiency of reasons should read them as a whole, in the context of the evidence, the arguments and the trial, with an appreciation of the purposes or functions for which they are delivered (see Sheppard, at paras. 46 and 50; R. v. Morrissey (1995), 1995 3498 (ON CA), 22 O.R. (3d) 514 (Ont. C.A.), at p. 524).
50As I hope to demonstrate, when the reasons of the trial judge in this case are read in the context of the objections made by the appellants and the rest of the record, they permit meaningful appellate review.
51In this part of my analysis, I will address the appellants’ submissions about the adequacy of the trial judge’s reasons as they relate to the objections that the work done was unnecessary or unreasonable, that the ordinary tariff should have been applied, and that the respondent agreed to cap his fees. For the sake of convenience, I will deal with the adequacy of the trial judge’s reasons about the amount of compensation allowed when I address the appellants’ submission that the amount allowed was unreasonable.
Unnecessary and Unreasonable Work
52As I said above, the appellants made overlapping objections in their Amended Notice of Objection about the respondent’s compensation and about the Professional Fees Disbursement. They alleged that the fees of both the respondent and the professionals he retained were unreasonable because they were incurred, in part, in connection with:
(a) the failed mediation, which the appellants submit the respondent ought to have known would fail because of the issues involved;
(b) the Goldberg Litigation, which the appellants submit was settled improvidently for $75,000 when the appellants say it should have been settled for something in the range of $1,000,000; and
(c) the Resignation Litigation, which the appellants submit could have been reduced in scope or eliminated altogether if the respondent had defended the dividends paid by FHI earlier than he did.
53The appellants contend that the trial judge failed to address these objections. As I will explain, this contention ignores the record; in particular, the Amended Notice of Objection.
54The trial judge’s reasons were broken down into sections that corresponded precisely to these and the other issues raised by the appellants in their Amended Notice of Objection. Unlike the appellants, however, the trial judge dealt only once with the objections based on unnecessary or unreasonable services as they related to both the Professional Fees Disbursement and the respondent’s compensation. He disagreed with the appellants regarding all the overlapping allegations.
55Under the heading “The failed mediation”, the trial judge found that the respondent wanted to promote a resolution of the Siblings’ dispute and highlighted the fact that the respondent retained a very successful mediator to try to do that (para. 8). He referred to the evidence of Hagen and the respondent, who testified that they felt it was worthwhile to try to bring peace to the Freedman family. He also referred to the evidence of Jonathan and Rose-Anne who both testified that they, too, had hoped the mediation would succeed. It was implicit in the trial judge’s reasons that he found that trying to prevent discord among the Siblings was part of the respondent’s mandate as trustee and that he acted reasonably in requiring the Siblings to try to mediate their dispute.
56It is clear from the trial judge’s reasons that he reached the same conclusion with respect to the efforts of the respondent and his advisors regarding the Goldberg Litigation. Under the heading “The Goldberg litigation”, the trial judge referred to the evidence that the respondent had, through a personal contact, managed to find an insurer who would underwrite a policy of insurance on Riva’s life notwithstanding her age and the fact that she was living in Israel. He also referred to evidence that Hagen, who was handling the litigation, was of the view that it was not worth pursuing it to trial in light of an expert’s report that the damages had been significantly reduced due to the procurement of the policy the respondent had managed to obtain on Riva’s life.
57It is similarly clear that the trial judge disagreed with the appellants’ objection that the respondent was responsible for the protracted nature of the Resignation Litigation. Under the heading “Failure to take a position”, the trial judge referred to the evidence that the respondent had, indeed, filed an affidavit in the Resignation Litigation and undergone cross-examination on it. He held that, by doing so, the respondent had kept legal costs to a minimum and yet shared the necessary information.
58In a separate section of his reasons entitled “Analysis”, the trial judge wrote that the respondent had “discharged his duty to the best of his considerable abilities during some very trying years” (para. 12). The trial judge highlighted the fact that FHI had prospered under the respondent’s watch and that the respondent had managed to “keep an even hand among the different beneficiaries” (para. 13). These comments make it clear that the trial judge disagreed with the appellants’ argument that the respondent had acted beyond the scope of his duties as trustee, or that he acted unnecessarily or unreasonably. It was therefore not necessary for the trial judge to say anything further about whether the respondent’s compensation ought to have been reduced because of the time he or his advisors spent in connection with these aspects of his duties.
59Thus, contrary to the appellants’ submissions, the trial judge did provide adequate reasons for his decision to dismiss the appellants’ objection that the amount sought for the Professional Fees Disbursement and for the respondent’s compensation were unreasonable because they included unnecessary or unauthorized work.
The Tariff and the Alleged Monthly Cap
60In addition to the objections referred to above, the appellants objected to the compensation sought by the respondent on two further grounds. First, they contended that the ordinary tariff required that the respondent’s compensation be reduced to the sum of no more than $226,564.15. In the alternative, they argued that the respondent had agreed orally to cap his fees at $4,000 per month.
61The appellants submit that the trial judge failed to provide any analysis or explanation as to why he refused to accept either argument. Again, this submission ignores the record, in my view.
The Tariff
62Under the heading “The hourly rate”, the trial judge explained that, as a commercial real estate lawyer, the respondent did not understand that his hourly rate should have been set out in the order appointing him as trustee. The trial judge held that the respondent had a legitimate expectation that he would be paid his hourly rate, based on the template that he had completed at the request of Litwack. He found that $400 per hour was not unreasonable, especially given that the rate did not increase at all in the 65 months during which the respondent acted as the sole trustee.
63The trial judge also held that the fact that Rose-Anne and Jacob testified they were not aware of the fee arrangement did not mean that the arrangement did not exist. I interpret this as a nice way of saying that he did not believe their evidence. His disbelief was not unfounded. Jacob, the only Majority Sibling who was a party to the proceeding, testified that he was, in fact, aware of the hourly rate. Indeed, a copy of the respondent’s message to Litwack of November 24, 2008 was filed as an attachment to an affidavit sworn by Jacob in the proceedings before Parfett J.
64The trial judge went on to deal specifically with the submission that the respondent’s compensation should be reduced in accordance with guidelines that have become known in estate matters as “the tariff”. The tariff is based on the decision in Re Jeffery Estate (1990), 39 E.T.R. 173 (Ont. Surr. Ct.), in which Killeen J. held that, in Ontario (p. 178):
a practice has developed of awarding compensation on the basis of 2 1/2 per cent percentages against the four categories of capital receipts, capital disbursements, revenue receipts and revenue disbursements, along with, in appropriate cases, a management fee of 2/5 of 1 per cent per annum on the gross value of the estate…
65Killeen J. held that the result of this calculation should be measured against five factors identified in the earlier case of Re Toronto General Trusts Corp. and Central Ontario Railway (1905), 6 O.W.R. 350 (H.C.), to determine whether the tariff amount is appropriate. The five factors identified in Toronto General Trusts are (p. 354):
(1) the size of the trust;
(2) the care and responsibility arising from the size of the trust;
(3) the time occupied in performing the duties of trustee;
(4) the skill and ability displayed by the trustee; and
(5) the success resulting from the trustee’s efforts.
66The decision in Jeffrey Estate was approved of by the Ontario Court of Appeal in Laing Estate v. Hines (1998), 1998 6867 (ON CA), 41 O.R. (3d) 571, 167 D.L.R. (4th) 150, at para. 9.
67The tariff in this case would have resulted in compensation of $226,564.15. The objectors submitted that the $400 per hour fee was excessive when compared to the result of the tariff. The trial judge rejected that argument. He wrote (para. 5):
The tariff applies to the administration of routine short[-]term estates, particularly of recently deceased persons. The on-going administration of the RFT is more complex.
68The appellants argue that the trial judge did not explain how or why he concluded that managing the RFT was more complex. They point to the fact that the respondent did not take an active role in managing the FHI, which the Siblings managed as directors. Again, I disagree.
69As he did with the other objections referred to above, the trial judge explained himself under the “Analysis” section of his reasons. There, he referred to the fact that the “RFT seemed to be constantly involved in some sort of litigation” during what he referred to as “some very trying years”. As I pointed out above, the appellants do not challenge these findings of fact. Nor could they.
70Without referring specifically to the case, the trial judge went on in this section to refer to other evidence relevant to the Toronto General Trusts factors, including how well FHI prospered under the respondent’s watch, how the respondent monitored the dividends, how he procured the life insurance, and how he managed to convince Jonathan to agree with the Majority Siblings on an important business matter. All of these factors weighed in favour of the trial judge’s conclusion that this was not a routine trust administration.
71Thus, contrary to the submissions of the appellants, the trial judge did explain why the tariff failed to adequately compensate the respondent.
The Alleged Flat Monthly Fee Agreement
72The trial judge also explained why he rejected the appellants’ objection based on the allegation that the respondent had agreed to cap his fees at $4,000 per month.
73At trial, the appellants relied on evidence from Rose-Anne, Jacob, and Goldstein that the respondent had agreed during meetings with them to accept a flat fee. As proof of the agreement, they also relied on evidence that FHI had budgeted $4,000 per month for the respondent’s fees and that the respondent had never told them that the fees would be more than that.
74Under the heading “$4000 A Month”, the trial judge explained why he rejected this evidence and accepted the respondent’s testimony “that he intended to, and expected to, pass his accounts at the end of the trusteeship”. He wrote (para. 6):
Viewed from that perspective the [four] accounts which he did submit and which are divisible by $4000 a month could be considered as a payment on account, subject to revision at the end of the trusteeship.
75I interpret the trial judge’s reference to the four accounts in the first part of this sentence as a reference to the form of the four accounts. Only the first of the four accounts contained a breakdown of the services rendered. Even that account, however, did not show the time spent on each task. The account was entitled “Interim Account” and was for an even $10,000. The other three accounts were for $24,000 each (all figures exclusive of taxes and disbursements), were entitled “Interim Account Summary”, and contained no breakdown of the services rendered. The final account was not paid by FHI, who insisted on further information before doing so. In the end, the total fees paid were $58,000 ($10,000 + $24,000 + $24,000). As I interpret the trial judge’s reasons, he found the form and the amount of the accounts to be consistent with the respondent’s evidence that he expected to be paid based on his hourly rate once his accounts were passed and that he had not agreed to cap his fees as alleged.
76The trial judge also accepted the respondent’s evidence because of an inconsistency in the evidence of Jacob. At trial, Jacob testified that (October 18, 2018, transcript, at p. 84, Appeal Book and Compendium, Vol. 1, at tab 10):
[F]rom time to time we’d [meaning he and Rose-Anne] be asking Mr. Feinstein if there were any additional charges or any additional bills, or anything that we should be aware of. And in particular when it came towards the end of 2011, we didn’t receive an invoice for the last six months of 2011. So, my sister started making inquiries with Soloway Wright accounting department, or billing department…in terms of whether there were any outstanding invoices for us.
77Earlier, Jacob had testified that FHI had not paid the fourth invoice from the respondent dated June 30, 2011 because the respondent had failed to provide FHI with a breakdown of the services rendered for FHI versus the RFT. There would be no need for Jacob or Rose-Anne to ask if there were any additional invoices before June 30, 2011 if there was a flat fee arrangement because all the invoices rendered included both fees and disbursements. Likewise, there would be no need for Rose-Anne or Jacob to ask if there were additional invoices after June 30, 2011 because FHI had no intention of paying any further invoices until it received the information it had requested.
78I believe that this is the evidence to which the trial judge was referring when, at the conclusion of his discussion under this heading, he wrote (para. 6):
This [the respondent’s evidence] accords with the fact that both Jacob and Rose-Anne are still inquiring about whether there are other fees being charged after this arrangement was put in place.
79Clearly, then, the trial judge did provide reasons explaining why he dismissed the appellants’ allegation that there was an agreement to bill a flat fee. But the appellants do not stop there.
80As part of their challenge to the trial judge’s ruling regarding the respondent’s compensation, the appellants also argued before this court that the beneficiaries of the RFT had no knowledge of the respondent’s $400 hourly fee. However, this argument was not raised in the Amended Notice of Objection and, therefore, was not made before the trial judge. I would not give effect to it on the appeal. It contradicts the appellants’ argument that the respondent agreed to cap his fees, which argument is based on the premise that the Majority Siblings had the authority to reach such an agreement on behalf of all the beneficiaries as directors of FHI.
81For these reasons, I would dismiss the appeal as it relates to the adequacy of the trial judge’s reasons concerning the allegations of unnecessary and unreasonable work, the appropriateness of the tariff, and the allegation that the respondent had agreed to cap his fees. As I indicated earlier, for the sake of convenience, I will address the adequacy of the trial judge’s reasons relating to the amount of compensation he allowed when I address the issue of whether that compensation was fair and reasonable.
Issue 2: Did the trial judge err in law by failing to find that there was a conflict of interest in the Respondent retaining members of his own law firm?
82In addition to objecting that the Professional Fees Disbursement was unnecessary and unreasonable, the appellants objected to the amount of the disbursement on the basis that the respondent was in a conflict of interest by hiring members of his own firm. The trial judge disagreed. He held that there is no prohibition against retaining lawyers in the same firm as the trustee. I can see no legal error in the trial judge’s conclusion.
83In support of their submissions, the appellants rely on the decision of my fellow panel member, McCarthy J., in Steven Thompson Family Trust v. Thompson, 2012 ONSC 7138. However, that case does not stand for the proposition that a trustee may not retain members of his own firm.
84In Thompson Family Trust, McCarthy J. identified certain “substratum duties” on the part of every trustee. Referring to D.W.M Waters, The Law of Trusts in Canada, 2nd ed. (Toronto, Ont: Carswell, 1984), at pp. 690-695, he summarized those duties as follows (at para. 22):
(a) no trustee may delegate his office to others;
(b) no trustee may profit personally from his dealings with the trust property, with the beneficiaries or as a trustee; and
(c) a trustee must act honestly and with that level of skill and prudence which would be expected of the reasonable man of business administering his own affairs.
85It is immediately obvious that none of these duties expressly precludes a trustee from hiring members of his own firm. Nor can such a prohibition be extrapolated from the decision of my colleague in Thompson Family Trust.
86Thompson Family Trust involved a family business that had been owned by two brothers. One of the brothers transferred his 50% ownership to a trust before he died. The trustee at the center of the case was an accountant who had resigned as trustee when a conflict arose between the beneficiaries of the trust and the surviving brother. The conflict arose because the trustee’s firm had acted for the business while both brothers were alive. However, after he resigned as trustee, the accountant was hired as an advisor to the new trustees, the parents of the brothers.
87McCarthy J. reduced the compensation to the trustees because the advisor they retained was in a conflict of interest, not because the trustees were in such a conflict. In other words, there was a conflict of duty in fact in Thompson Family Trust because the accountant had acted previously for both brothers, one of whose interests later conflicted with those of the beneficiaries of the trust created by the other. McCarthy J. held that, in retaining the accountant, the trustees had improperly delegated their duties and failed to fulfill their duty to act with reasonable prudence, in breach of the first and third substratum duties listed above: paras. 34-35.
88McCarthy J. also disallowed certain disbursements incurred by the trustees, including the accountant’s fees and the cost of a report commissioned by the accountant and prepared by his former accounting firm. However, McCarthy J. disallowed these disbursements because they were unnecessary and did not benefit the trust, not because of the accountant’s conflict of interest: paras. 37 and 40.
89Thus, Thompson Family Trust does not stand for the proposition that a trustee is placed in a position of conflict simply by hiring members of his own firm to advise him. The decision stands, instead, for the proposition that a trustee will not be compensated or reimbursed for disbursements related to services that do not benefit the trust. As I have already pointed out, the trial judge in this case did not find that any of the services rendered by Webb or Hagen were unnecessary and the appellants challenge only the adequacy of the trial judge’s reasons in that regard, not his findings.
90Although they have appealed on the basis that the trial judge erred in law, the appellants also seem to submit that the trial judge erred in fact. They submit that the respondent was in a conflict of interest because “he could not be expected to monitor and limit the work his colleagues were doing or the time they were spending.”
91The appellants rely on two messages written by the respondent in support of their argument. The first was his message of November 24, 2008, the one in which he agreed to act as trustee. In that message, he wrote that “in the event it becomes necessary to provide services…outside my area of expertise, I would engage independent third parties to provide these services.”
92The second message was written on December 23, 2008. In that message, the respondent wrote to Rose-Anne and Jacob:
I would like to retain Ken Webb of this office to review the will, the trust agreement and the court order and provide me with an independent opinion in respect of the parameters of the trust. In view of the fact that Ken Webb is in this office, I would ask you to confirm that this is acceptable otherwise I will retain somebody outside of the office. It is my intention that all other legal counsel should be independent of this law firm.
93Notwithstanding the last sentence in his December message, the respondent later retained Hagen without seeking permission from the Majority Siblings.
94As I understand the appellants’ submissions, they suggest that these messages represent some sort of an admission by the respondent that he would be in a position of conflict by hiring members of his firm or that he had agreed not to do so. Neither of these arguments were accepted by the trial judge.
95The respondent explained at trial that his intention changed over time. Under cross-examination, he denied that hiring either lawyer placed him in a position of conflict. He testified (transcript, October 12, 2018, p. 111, l. 15):
I hired the most competent people I could find to do a job. I hired Mr. Webb who is favourably commented on by the Court of Appeal [in the Resignation Litigation]. I hired Mr. Hagen who has won awards in advocacy. I hired extremely competent people, that I trusted.
96The respondent also testified under cross-examination that there would be no impediment to him raising concerns regarding Webb’s or Hagen’s account, if he had any (transcript, October 12, 2018, p. 111, l. 30 to p. 112, l. 7).
97With respect to the respondent’s messages and his evidence, the trial judge wrote (para. 11):
The use of the word “independent” in the email is ambiguous and can reasonably be interpreted as meaning that without advice he may not be able to deal with litigation or trust matters, in which case he will get such advice as he needs from another counsel, internal or external.
98The appellants submit that the trial judge was wrong to conclude that there was no conflict of interest in the circumstances of this case. I am not persuaded that he was.
99As counsel for the respondent correctly submits, the trial judge’s decision on this issue was a matter of judicial discretion. It was the product of the application of a legal standard to a set of facts. Therefore, it is entitled to deference on appeal. It will only be interfered with if the trial judge applied the wrong legal standard or based his conclusions on irrelevant factors or on factors to which he attached inappropriate weight: Chapters Inc. v. Davies, Ward & Beck LLP (2001), 2001 24189 (ON CA), 52 O.R. (3d) 566 (Ont. C.A.), at para. 43. To use the language in Housen, this issue raises a question of mixed fact and law: Housen, at para. 26. As the court held in Housen (at para. 36):
Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact” and is subject to a more stringent standard. The general rule … is that, where the issue on appeal involves the trial judge's interpretation of the evidence as a whole, it should not be overturned absent palpable and overriding error. [Citation omitted.]
100I can see no palpable and overring error of fact in the trial judge’s conclusion that the respondent was not in a conflict of interest in this case.
101In any event, I agree with the submission made on behalf of the respondent that the appellants cannot now complain about a conflict of interest when they acquiesced in the respondent’s hiring of Webb and Hagen: Serniak v. Teitel, 2004 9130 (Ont. C.A.), at para. 1.
102For these reasons, this ground of appeal should fail, in my opinion.
Issue 3: Were the compensation and disbursements allowed by the trial judge fair and reasonable?
103Although the trial judge dismissed the appellants’ arguments that the tariff should apply and that the respondent had agreed to cap his fees at $4,000 per month, he did find that the respondent’s performance as trustee had suffered from certain shortcomings, as I indicated earlier. The appellants maintain that the trial judge failed to adequately explain how he took those shortcomings into account in fixing the respondent’s compensation.
104I agree that the trial judge could have been more explicit about how he arrived at the amount of compensation he allowed. However, the reasons are adequate when one considers the highly discretionary nature of a judge’s task once the tariff has proven inadequate and become obvious when one does the math.
105Section 61(1) of the Trustee Act provides:
A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.
106As the Court of Appeal noted in Laing Estate, the fixing of compensation under s. 61(1) “is far from an exact science”: para. 10. Once the tariff has proven inadequate, the exercise becomes a highly discretionary one. Counsel for the appellants demonstrated this during argument when he was asked how this court might arrive at a more appropriate amount of compensation. He suggested a reduction of 30 to 40 percent based on nothing more than a “holistic review” of the accounts. The trial judge’s reduction of the respondent’s account appears to have been undertaken on a much more precise and principled basis than the one suggested by counsel for the appellants.
107As counsel for the respondent points out, after referring to the shortcomings in the respondent’s work as trustee, the trial judge reduced the compensation sought by exactly $65,000 (from $289,197 to $224,197). This coincides perfectly with the number of months the respondent acted as trustee, as the trial judge mentioned in para. 4 of his reasons, and represents a reduction of precisely $1,000 per month. Thus, contrary to the submissions of the appellants, how the trial judge arrived at the amount of compensation is clear. The final question is whether the amount arrived at was fair and reasonable.
108In Laing Estate, the Court of Appeal reaffirmed that the trial judge’s discretion should not be interfered with unless “there is an error in principle, or if, in its opinion, the amount allowed is grossly insufficient or excessive” ( para. 10). I can find no error in principle, nor does the amount allowed appear to be excessive.
109In my view, the reduction applied by the trial judge was fair and reasonable given the very troubled waters through which the respondent was required to navigate the RFT and the success with which his efforts were met. As counsel for the respondent also points out, in the end, the compensation allowed by the trial judge amounted only to some $300 per month more than the $4,000 per month cap the appellants argued should be imposed. That seems fair and reasonable to me.
110For these reasons, this ground of appeal should also fail, in my view.
Issue 4: Should leave be granted to appeal the costs awarded to the respondent?
111The trial judge awarded the respondent his full indemnity costs for the passing of accounts in the amount $192,350.26, inclusive of taxes and disbursements, and ordered that they be paid by the RFT. These costs were comprised mainly of fees charged to the respondent by members of his firm for services rendered in connection with the passing of accounts.
112The appellants seek leave to appeal the trial judge’s cost award. In support of their request, they make two submissions. First, they submit that the respondent’s costs should have been reduced commensurate with the reduction in his compensation. Second, they submit that the respondent should be denied the full value of his costs on the basis that he and the lawyers he retained were appearing on behalf of themselves and, therefore, should be awarded only their lost opportunity costs, in the same way as other self-represented litigants. In my view, neither argument meets the test for leave.
113The test for leave to appeal a costs award is a stringent one. To obtain leave, an appellant must show “strong grounds upon which an appellate court could find that the trial judge erred in the exercise of his or her discretion”: Brad-Jay Investments Ltd. v. Szijjarto (2006), 2006 42636 (ON CA), 218 O.A.C. 315 (Ont. C.A.), at para. 21, leave to appeal to S.C.C. refused, 31879 (June 21, 2007) [2007 CarswellOnt 4071 (S.C.C.)]; Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, 119 O.R. (3d) 81, at para. 77. An appellate court will not set aside a costs award unless it can be shown that the trial judge made an error in principle or that the costs award was plainly wrong. The appellants’ submissions fail to meet this test.
114In making their first submission, the appellants rely on jurisprudence establishing that the normal “loser-pays” principle that applies in most civil litigation applies equally to estate litigation: McDougald Estate v. Gooderham (2005), 2005 21091 (ON CA), 255 D.L.R. (4th) 435 (Ont. C.A.), at paras. 78-80. They contend that, because the respondent did not succeed at obtaining all the compensation he sought, he should have his costs reduced accordingly. However, the loser-pays principle is subject to two important exceptions in estate litigation. One of those exceptions is based on the need to ensure that estates are properly administered. Thus, the loser-pays principle will not apply, and a trustee will be fully indemnified for his costs, where the trustee acted reasonably throughout and for the benefit of the estate: Sawdon Estate, at paras. 82-85.
115The trial judge considered this exception and the decision in Sawdon Estate and held that the respondent was entitled to full indemnification in this case because he had not “acted unreasonably or in substance for his own benefit rather than that of the estate” (para. 11). The trial judge applied the same principle to the appellants’ costs. He awarded the appellants their full indemnity costs, in the all-inclusive amount of $292,947.75, and ordered that those costs also be paid by the trust. I note that the appellants do not seek to disturb this ruling, even though, as the trial judge noted, they lost on nearly every issue.
116In making their second submission, the appellants rely on cases in which courts have held that lawyers who represent themselves in disputes over their fees are permitted to recover costs only on the basis of their lost opportunities, like other self-represented litigants, and not on the basis of their hourly rates: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.); Bennarroch v. Fred Tayar & Associates P.C., 2019 ONCA 228; Atkinson v. Whaley Estate Litigation, 2019 ONSC 4646. The appellants submit that the trial judge should have applied these cases and reduced the respondent’s costs award substantially. In my opinion, the appellants’ reliance on these cases is misplaced. The cases are readily distinguishable for two reasons.
117First, the lawyers in the cases relied upon were appearing as lawyers for themselves. The situation here was different. The respondent was not appearing as a lawyer at all; he was appearing as a trustee. The lawyers who represented the respondent also did not appear for themselves; they appeared for the trustee. The fact that the dispute was about fees charged by lawyers acting as or for the trustee does not turn the lawyers into self-represented litigants.
118More importantly, none of the cases cited were ones in which the lawyers involved were acting on behalf of a trust. As I have indicated above, there is an important public policy in favour of the full indemnification of trustees for costs they have reasonably incurred for the benefit of the estate. To apply the jurisprudence relied upon by the appellants in this context would defeat that policy. The trial judge thus made no error in principle by refusing to do so.
119The appellants have also failed to demonstrate that the trial judge’s costs award was plainly wrong. That would be difficult to do in a case where the appellants’ own full indemnity costs were roughly $100,000 more than those of the respondent in the same proceeding.
120For these reasons, I would not grant leave to appeal the trial judge’s costs decision.
Issue 5: If so, should the costs award be set aside and the costs reduced?
121Given my conclusion that leave to appeal the costs award ought not to be granted, I need not consider what award might be made in its place.
CONCLUSION
122For the foregoing reasons, I would dismiss the appeal and refuse to grant leave to appeal the costs award. Although they were brief, the trial judge’s reasons permit appellate review when examined in the context of the record. Together, they make it clear that the trial judge rejected the appellants’ evidence that the respondent had agreed to cap his fees and preferred instead the evidence of the respondent that he agreed to act as trustee for a fee of $400 per hour and that the interim accounts he rendered were to be deducted from his overall fees on the passing of accounts. The appellants do not allege that the trial judge committed any palpable and overriding error in his factual findings, nor could they.
123The trial judge committed no legal error in holding that there is no conflict of interest created by a trustee hiring members of his own law firm, and the appellants can point to no palpable and overriding factual error in the trial judge’s conclusion that no conflict of interest existed in the circumstances of this case.
124While the trial judge’s reasons could have been more explicit about how he arrived at the amount he allowed for compensation, the figures show that he reduced the respondent’s compensation by the equivalent of $1,000 per month for shortcomings in his performance as trustee. The amount arrived at was reasonable in the circumstances, being only about $300 more per month than the amount that the appellants alleged they had agreed to pay.
125Finally, there are no grounds to believe that the trial judge erred in the exercise of his discretion regarding costs. He considered the principles normally applicable to civil litigation and found that they did not apply because of the public policy in favour of the proper administration of trusts. He applied that policy consistently by ordering that both the respondent’s and the appellants’ costs be paid by the trust. The trial judge committed no error in principle by refusing to treat the lawyers involved in the passing of accounts as self-represented litigants, rather than as a trustee and his professional advisors. The amount awarded was not plainly wrong when one considers that it was approximately $100,000 less than the trial judge awarded the appellants, who were far less successful.
COSTS
126If the parties cannot agree on costs of the appeal, they may make written submissions, through the Divisional Court office in Ottawa, limited to five typewritten pages, excluding attachments, as follows:
(1) by the respondent, within 20 days of the release of these reasons; and
(2) by the appellants, within 10 days of the receipt of the respondent’s written submissions.
___________________________ Ellies R.S.J.
I agree
Swinton J.
I agree
McCarthy J.
Date of Release: April 12, 2021
CITATION: Feinstein v. Freedman, 2021 ONSC 1493
DIVISIONAL COURT FILE NO.: DC-19-2514 DATE: 2021/04/12
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Ellies R.S.J., Swinton and McCarthy JJ.
BETWEEN:
ABRAHAM FEINSTEIN
Applicant (Respondent in appeal)
– and –
MICHAEL FREEDMAN, SHIRA SCHNECK, RACHEL FREEDMAN, ELI FREEDMAN, JOSHUA PRIZANT, SARAH PRIZANT, AND JACOB FREEDMAN on behalf of THE JARVIS FREEDMAN INSURANCE TRUST and THE RIVA FREEDMAN TRUST
Respondents (Appellants)
REASONS FOR JUDGMENT
Ellies R.S.J.
Date of Release: April 12, 2021
Footnotes
- The application was settled by an agreement that provides Riva with $4,000 per month as long as she does not oppose the Majority Siblings in any decisions they make as trustees of the RFT or as directors of FHI: Reasons for Decision of Parfett J. dated October 15, 2008 (“Appointment Decision”), at para. 10.
- Goldberg’s proceeding was commenced early in 2006 and was stayed pending the determination of the other applications: Appointment Decision, at para. 10. It was resolved by way of the 2006 agreement referred to earlier: Reasons for Decision of Arbitrator Chadwick (“Arbitration Decision”), dated April 30, 2018, at para.25 (see below). According to Arbitrator Chadwick, it was commenced as an action, rather than an application, as indicated by Parfett J. in the Appointment Reasons. Nothing turns on this.
- The application was stayed under the terms of the 2006 agreement that required the dispute to proceed to arbitration. The Honourable James B. Chadwick, Q.C., a former judge of this court, was appointed as the arbitrator. He made a temporary order that all decisions of the board of directors of FHI had to be unanimous: Reasons for Decision of Parfett J. dated March 18, 2013 (2013 ONSC 1616) (“Resignation Decision”), at para. 13. The arbitration proceeded to a hearing in 2017. The arbitrator dismissed Jonathan’s claim and ordered that he repay the sum of $144,000 that he had diverted from a subsidiary of FHI to fund an undisclosed real estate development in Israel, in addition to interest of more than $100,000 and costs of more than $200,000: Arbitration Decision, at para. 111.
- The record is not clear as to the outcome of this application. It may have been resolved at the same time as the Goldberg application referred to above. According to the Arbitration Decision, Goldberg was deceased by April 30, 2018 (: para. 20).
- The arbitrator later found that Jonathan was behind this and the Goldberg applications: Arbitration Decision, at para. 20.