Court File and Parties
Court File No.: 2192/11 Date: 2016-08-15 Superior Court of Justice - Ontario
Re: STAR SWEETNAM, Plaintiff And: DIANNE LESAGE and TERRY DOOLEY, in their capacities as estate trustees of the Estate of Martin Arthur Williamson, Defendants
Before: Gray J.
Counsel: Gregory M. Sidlofsky and Brendan Donovan, for the Plaintiff, Star Sweetnam Ian M. Hull and Doreen Lok Yin So, for the Defendant, Dianne Lesage Mark Penfold, for the Defendant, Terry Dooley
Costs Endorsement
[1] In my reasons for judgment, I invited the parties to file written submissions with respect to costs. Those submissions have now been filed.
[2] Counsel for Star Sweetnam submits that his client was entirely successful in having the two relevant wills declared invalid, and should be entitled to costs on a substantial indemnity scale in the amount of $389,599.45.
[3] Among other things, counsel refers to two Offers to Settle made by Star Sweetnam. The first offer was made on April 26, 2012. Under that offer, Ms. Sweetnam would receive the cottage; her father’s ashes; and her father’s wedding ring.
[4] The second Offer was served on March 7, 2016. Under that offer, Ms. Sweetnam would receive $2.5 million from the estate.
[5] Counsel submits that pursuant to my judgment Star will receive the benefit of the entirety of the estate, which is worth approximately $7.5 million, less whatever is owing to the Estate Trustee During Litigation. Accordingly, it would be unjust to permit the defendants to recover their costs, and any costs owing to Ms. Sweetnam, from the estate. If they are so entitled, it will mean that Ms. Sweetnam will be paying those costs even though she was successful in the litigation.
[6] Counsel submits that under the modern rules relating to estate litigation, the normal costs rules apply, with some modification. Generally speaking, the successful party is entitled to costs. Estate trustees are entitled to be indemnified out of the estate for their costs, including costs they must pay to another party, provided they have acted reasonably.
[7] In this case, counsel submits that the estate trustees have acted unreasonably, by refusing to accept reasonable offers to settle.
[8] Counsel submits that if Terry Dooley is entitled to any costs from Ms. Sweetnam, they should be paid by Dianne Lesage.
[9] Counsel for Dianne Lesage submits that Ms. Lesage was obliged to propound the will. He submits that his client acted reasonably throughout, and is entitled to costs of her own, which she claims in the amount of $641,642.47 on a substantial indemnity basis, payable out of the estate. Furthermore, counsel submits that Ms. Lesage should not have to personally bear any costs awarded to Ms. Sweetnam, and should be entitled to defray any such costs out of the estate.
[10] Counsel submits that a case where a will is propounded is in the nature of an inquisitorial process, as opposed to being strictly adversarial. Counsel submits that the court has a duty to determine the issues raised in such a proceeding, and it is the duty of the proponents of the will to place before the court all relevant evidence for the court’s consideration.
[11] Counsel submits that Ms. Lesage had no choice but to take a position consistent with the testator’s expressed intentions, and she should not be penalized for so doing.
[12] Counsel submits that Ms. Sweetnam’s Offer to Settle in the amount of $2.5 million should not affect the matter, since it would not have left sufficient assets in the estate to satisfy potential claims for dependants’ relief for Grace Pater and Lise Boudreau. Furthermore, counsel submits that the court is not required to consider the costs consequences of offers to settle in estate matters to the same degree as would be the case in ordinary litigation.
[13] Counsel submits that Ms. Sweetnam was unsuccessful in a number of claims she made based on undue influence, proprietary estoppel and dependants’ relief. Furthermore, she abandoned some additional claims at trial.
[14] For these reasons, counsel submits that Ms. Lesage should be awarded her own costs out of the estate in the amount of $641,642.47, and if any costs are awarded against her she should be allowed to recover those costs from the estate.
[15] Counsel for Terry Dooley claims costs in the amount of $104,995.60 on a substantial indemnity basis.
[16] Counsel submits that Mr. Dooley was not propounding the will and did not voluntarily enter into the litigation. Counsel submits that Mr. Dooley was brought into the litigation personally as a result of an allegation that he had exercised undue influence in the making of one of the testator’s wills. Counsel points out that that allegation was dismissed by me, and no evidence whatsoever was tendered to support it.
[17] For these reasons, counsel submits that Mr. Dooley should not be required to pay any costs, and he should be awarded his own costs in the amount of $104,995.60.
Analysis
[18] There are some unique features here that complicate the issue of costs. First, since the wills were held to be invalid, Mr. Williamson’s estate passes as an intestacy, and Star Sweetnam will receive the entire estate. Thus, if any costs are awarded against or are recoverable from the estate, in reality they will be paid by Star Sweetnam.
[19] Second, Star Sweetnam made two Offers to Settle that were considerably less favourable to her than the result of the trial. Under the first Offer to Settle, made in 2012, Star would have received the cottage, her father’s ashes, and a wedding ring. While I have no evidence as to the value of the cottage, I can assume that the totality of the settlement proposal was a fraction of the overall value of the estate.
[20] The second Offer to Settle made shortly before trial, was for $2.5 million.
[21] While counsel for Ms. Lesage explains the refusal to accept the second offer on the basis that it may have left insufficient assets to pay potential claims by Grace Pater and Lise Boudreau, counsel offers no explanation for refusing to accept the first offer.
[22] Under the modern principles relating to estate litigation, the historical practice of ordering an estate to bear costs of all parties has been replaced by the ordinary costs principle that the loser pays: see McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.). However, generally speaking, estate trustees are entitled to be indemnified for all reasonably incurred costs, including legal costs of an action, to the extent that they are not recovered from another party: see Geffen v. Goodman Estate, [1991] 2 S.C.R. 353; Hawden Estate v. Watch Tower Bible and Tract Society of Canada (2014), 2014 ONCA 101, 119 O.R. (3d) 81 (C.A.); Neuberger Estate v. York, 2016 ONCA 303, [2016] O.J. No. 2151 (C.A.); and Brown v. Rigsby, 2016 ONCA 521. That general principle is subject to the overriding proviso that the estate trustees have acted reasonably. Where they have acted unreasonably, the trustees may not recover their costs from the estate: Brown v. Rigsby, supra, at para. 14.
[23] Before dealing with the costs issue itself, I will dispose of two subsidiary points.
[24] I do not think the dismissal of Ms. Sweetnam’s claims based on undue influence, proprietary estoppel and dependants’ relief affect the matter very much. As I noted in my reasons for judgment, it was, strictly speaking, unnecessary for me to deal with those issues once I declared the wills invalid. Essentially, they became moot. Thus, the only remaining relevance they have is whether they should result in some reduction of Ms. Sweetnam’s claim based on the amount of time they took at trial. In my view, the overwhelming portion of the trial was taken up with the testamentary capacity issue. That said, I will discount Ms. Sweetnam’s claim by 20 per cent based on a rough estimate of the amount of time the other issues took at trial.
[25] I do not accept Mr. Dooley’s submission that he was not a propounder of the will. He, together with Ms. Lesage, applied for a Certificate of Appointment as Estate Trustee. He has never renounced his appointment as an estate trustee, and it is likely, at this stage, that he could not renounce: see Dueck v. Chaplin, 2015 ONSC 4604, [2015] O.J. No. 3795 (S.C.J.), at paras. 42 and 43. In my view, he stands on the same footing as Ms. Lesage in terms of costs of this proceeding. Of course, this does not affect his entitlement to costs, including legal costs, that he has incurred as the Estate Trustee During Litigation, and which will be dealt with on the passing of his accounts.
[26] In my view, Ms. Sweetnam was entirely successful and is entitled to costs. I have reduced her claim of $389,599.45 by 20 per cent, and thus fix her entitlement at $311,679.56, all-inclusive.
[27] The question is whether the trustees should be entitled to recover that amount from the estate. If they do, it means Star Sweetnam will be paying the unsuccessful parties’ costs, even though she was successful. I do not think that is fair or equitable.
[28] Furthermore, I think the trustees acted unreasonably by failing to accept either of the Offers to Settle made by Ms. Sweetnam. In particular, the first offer, representing a fraction of the value of the estate, was made before any significant costs of the litigation were incurred. No explanation has been offered for refusing to accept that offer.
[29] As far as the second offer is concerned, I am not convinced that the refusal to accept that offer was reasonable either. The reasons offered by Mr. Hull are less than compelling.
[30] I am far from saying that the non-acceptance of an offer to settle, standing alone, constitutes unreasonable conduct attracting costs consequences for an estate trustee. I simply say that in this circumstance it was unreasonable and does attract costs consequences. While the outcome of litigation is, of course, unpredictable, it should have been apparent to the trustees that this litigation carried significant risks for the estate. Those risks could have been eliminated, and still have left fairly large amounts to be paid to the named beneficiaries, if either of the rather modest offers had been accepted. Instead, the trustees chose to soldier on and incur significant costs. I do not think they should be rewarded by having their costs paid by Ms. Sweetnam.
[31] I also note that this litigation was not conducted as a proceeding that simply consisted of the trustees putting forward the evidence in a non-contentious way for the consideration of the Court. This was hard-fought litigation from day one. Ms. Lesage, in particular, conducted the proceedings in a very adversarial manner. Among other things, she retained private investigators to look into Ms. Sweetnam’s activities. Her claimed costs of $641,642.47 are almost double the claimed costs of $389,599.45 of Ms. Sweetnam, and more than six times the claimed costs of $104,995.60 of Mr. Dooley. Ms. Lesage was perfectly entitled to conduct the litigation in such a fashion, but where she does so and loses, she should not be surprised to be treated like an ordinary litigant who loses.
[32] I am also constrained to say that the amount claimed by Ms. Lesage, $641,642.47, is grossly excessive. Had I ordered costs paid to her, I would have awarded no more than half of that.
[33] Accordingly, I order that the costs of Ms. Sweetnam, fixed in the amount of $311,679.56, all-inclusive, be paid by Ms. Lesage and Mr. Dooley, jointly and severally. They shall not recover those costs from the estate.
[34] For the same reason, I order that the claims for costs of Ms. Lesage and Mr. Dooley be rejected, and that they not be entitled to recover their costs from the estate.