Court File and Parties
COURT FILE NO.: CV-16-1090 DATE: 20200814
ONTARIO
SUPERIOR COURT OF JUSTICE
In the matter of the Estate of the Late Joseph Edmond Beaulieu
B E T W E E N:
Roger Cardinal, in his capacity as Testamentary Trustee, Applicant / Respondent
Counsel for Applicant: Sophie Sauve and Christian Pilon
- and -
Ginette Perreault, in her capacity as Estate Trustee and power of attorney for property of Joseph Edmond Beaulieu, Roger Gosselin and Benoit Cardinal, Respondents / Applicants
Counsel for Respondents: R. Dean Allison, Lawyer for Ginette Perreault, nobody attending for Roger Gosselin and Benoit Cardinal
ENDORSEMENT ON COSTS
Tzimas J.
INTRODUCTION
[1] This endorsement concerns costs on account of Mr. Cardinal’s original Application to the court for directions in relation to Joseph Edmond Beaulieu’s estate and Mrs. Ginette Perreault’s Application for the passing of accounts for the estate of Joseph Edmond Beaulieu.
[2] Mr. Cardinal’s original application resulted in a number of orders directed to Mrs. Perreault including that she bring an Application to pass accounts. Ms. Perreault consented to the court order on the eve of the hearing of the application. The consent order was dated April 26, 2016 and it reserved costs to the judge who would hear the Application for the passing of accounts.
[3] After some delay, Mrs. Perreault brought her Application to pass accounts. Although there were difficulties associated with the scheduling of the Application, eventually the hearing took place over two days: August 8, 2017 and July 6, 2018. My decision was released on December 11, 2018, see 2018 ONSC 6902. The parties were invited to resolve various outstanding issues, including that of costs.
[4] The court did not hear anything from the parties for several months. Then, last August, counsel for Mr. Cardinal advised me that there remained a number of outstanding issues that prevented the finalization of the judgment on the passing of the accounts as well as the terms to the final order. Following written submissions by the parties, in October 2019, I released an endorsement seeking to clarify certain disagreements between the parties, see 2019 ONSC 5734. Costs submissions were not immediately forthcoming but eventually they were received at the end of January 2020.
[5] For the reasons that follow, I have concluded that Mr. Cardinal is entitled to costs of the original Application on a partial indemnity basis. At 60 per cent of his full indemnity costs, I fix his costs at $18,000. I have also concluded that Mrs. Perreault is entitled to costs of her Application for the passing of accounts, which I fix at $48,000. The net sum owing personally by Mr. Cardinal to Mrs. Perreault comes to $30,000.
BACKGROUND
[6] My reasons for judgment, 2018 ONSC 6902 and my subsequent endorsement, 2019 ONSC 5734 outlined in substantial detail Mr. Cardinal’s objections, Mrs. Perreault’s corresponding responses, and ultimately my findings for each objection. I do not propose to repeat that analysis in any detail except where it is necessary to explain the relationship of those findings to my findings on costs. Accordingly, this endorsement ought to be read together with my Reasons for Judgment and my Endorsement of October 9, 2019.
POSITION OF THE PARTIES
a) Mr. Roger Cardinal
[7] Mr. Cardinal seeks costs of $89,683.60 on a full indemnity basis. Broken down to the various activities, he claims $25,406.62 for his Application for Directions that resulted in the court order of April 26, 2016, and $64,276.98 for the Passing of Accounts Application. He submits that he should never have had to bring his Application for Directions. In his view, as an estate trustee, he had an obligation to review Mrs. Perreault’s accounting of the estate. Had Mrs. Perreault been willing to provide him with a full informal disclosure, he would not have had to incur any legal costs.
[8] On the subject of the Passing of Accounts application, although he acknowledged that the success was divided, in other parts of the submission he described Ms. Perreault as the losing party. He claims costs of $64,276.98.
[9] Mr. Cardinal relied on the requirements of section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43 and Rules 49 and 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. He submits that as estate co-trustee he had an obligation to request an accounting from Mrs. Perreault, the proceeding was rendered complex by Mrs. Perreault’s failings, the issues he raised were important, and that in the circumstances, the costs claimed are reasonable.
b) Mrs. Perreault
[10] Mrs. Perreault submits that she should receive her costs on a full indemnity basis. In her view, apart from the court’s rejection of her claim to a $14,000 management fee and a reduction to her revenue disbursements by $6,000, the overall outcome to her Application to Pass Accounts vindicated her and amounted to an overwhelming rejection of Mr. Cardinal’s pronounced challenges of her conduct. In her view, she was obliged to undertake steps solely on the basis of allegations by Mr. Cardinal that were held to be unfounded and totally disproportionate to the value of Mr. Beaulieu’s estate, which at the time of his death had a value of $339,312.68.
[11] Mrs. Perreault was especially critical of Mr. Cardinal’s insistence that the Application proceed in French when Mr. Cardinal and his counsel were fully bilingual. This increased her costs substantially because her own lawyer did not speak French and had to have everything translated and required an interpreter for all attendances in court.
[12] As to who should pay for the costs, Mrs. Perreault submits that Mr. Cardinal should be personally responsible because of his unfounded allegations. She says that the beneficiaries should not be penalized by “Mr. Cardinal’s unilateral and unfounded actions”.
ANALYSIS
[13] My overriding concern with the submissions by both parties is the continued and persistent lack of self-awareness of the respective weaknesses in their conduct and approach to the case. That, combined with a revisionist view of this litigation creates a misleading impression of what occurred and neglects the fact that at the end of the day, the gross value of Mr. Beaulieu’s estate came to only $339,000 or so. If both parties were to be awarded the costs they seek, the only real beneficiaries of Mr. Beaulieu’s estate would be the lawyers who represented each side, with nothing left for the beneficiaries.
[14] In my view, both parties lost perspective over this litigation. They became entrenched in their views and positions and missed several opportunities to reach a settlement. This observation as well as my findings that follow are essential pillars to my ultimate decision and reconciliation of the respective claims.
[15] To begin with, Mr. Cardinal had a right to ask for an accounting from Ms. Perreault. The request for various records, as outlined eventually in the court order of April 26, 2016, was reasonable and should not have required an Application for the subject disclosure. Ms. Perreault’s initial resistance to the requested accounting, and then the multiple exchanges between the lawyers for each side before the ultimate consent to the April 26, 2016 order was astonishing and problematic. Her persistent view in these costs submissions that the accounting was not necessary, combined with her counsel’s persistent complaints about the proceeding being conducted in French suggested to me a continued lack of understanding of the magnitude of Mrs. Perreault’s obligations as estate trustee.
[16] I have little doubt that Mrs. Perreault’s resistance played into Mr. Cardinal’s suspicious disposition. Even if those suspicions proved to be unfounded and grossly exaggerated, Mrs. Perreault, and / or Mr. Allison must take responsibility for their initial mismanagement of Mr. Cardinal’s requests. They should never have resisted his initial overtures. The fact that eventually Mrs. Perreault consented to a court order was of little value given that her consent materialized only at the court’s doorsteps and after Mr. Cardinal had incurred significant legal costs.
[17] Mr. Cardinal also had a right to request a proceeding in French and should not be burdened with Mr. Allison’s translation costs he incurred to enable his participation. Whatever motivated Mr. Cardinal to insist on a French hearing, albeit suspect given his and his counsel’s fluency in English, is beside the point. Mr. Allison’s inability to speak French was a shortcoming only on his part, especially since his own client also spoke French and communicated with Mr. Cardinal in French. I find that the multiple exchanges between counsel about the language for the hearing and Mr. Allison’s persistence compromised the communications and fed into an unrelenting stubbornness and further suspicions over Mrs. Perreault’s conduct.
[18] It would have been far more efficient and less costly for Mrs. Perreault to be represented by a bilingual lawyer. I reject Mr. Allison’s suggestion that Mrs. Perreault could not find any counsel to represent her in French. To the extent that Mrs. Perreault agreed to be represented by Mr. Allison, the costs associated with all translation needs must be borne by her.
[19] My finding that Mr. Cardinal had a right to request an accounting does not diminish the fact that at some point in the course of the litigation, Mr. Cardinal lost perspective and credibility. His unfortunate attack on Mrs. Perreault’s integrity and personal dignity, without even a basic evidentiary foundation for his allegations, undermined his concerns over some of Mrs. Perreault’s improvident decision. As the hearing progressed, the inquiry on whether Mrs. Perreault’s expenses were reasonable and consistent with her fiduciary obligations as estate trustee and as attorney for Mr. Beaulieu was overtaken by the challenges to her personal integrity. That shift was an afront to the various thankless tasks that both Mrs. Perreault and her husband undertook to care for Mr. Beaulieu, while he was still alive, and then to manage his estate after he died. Mrs. Perreault was simple-minded in the way she approached her obligations but there was no foundation to the allegations that she acted in bad faith or that she misappropriated any funds. I refer to my specific findings on this point at paragraphs 5, 14, 43, 47, 60-63, 66-68 and 73 of my Reasons for Judgment. Regrettably for Mr. Cardinal, this loss of perspective comes with serious consequences.
[20] At Mrs. Perreault’s end, the submissions that she should be fully indemnified for her costs, her continued view that the passing of accounts was not necessary, and the further view that she was successful, despite my rejection of almost $20,000 in claimed expenses, distorts the outcome and causes me serious concern. While I agree with Mr. Allison’s submission that my findings regarding her integrity vindicated her against Mr. Cardinal’s challenge, Mrs. Perreault’s claims were not without their difficulties and by no means can the outcome be described as an absolute success. Mrs. Perreault has to take responsibility for her failings and for the fact that her resistance fed into Mr. Cardinal’s suspicions. In short, there ought to have been any resistance to Mr. Cardinal’s requests.
[21] Against these overriding findings, and before I make my specific findings, it is useful to review the applicable principles in the awarding of costs.
[22] Section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43 provides the court with the discretion to award fair and reasonable costs. Such discretion is to be exercised in accordance with the considerations set out in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:
GENERAL PRINCIPLES
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1) ; O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1.
[23] In Davies v. Clarington (Municipality), 2009 ONCA 722, [2009] O.J. No. 4236 the Court of Appeal identified reasonableness in the circumstances as the overarching principle to be applied in the awarding of costs. Epstein J.A. adopted the elements to be considered in the assessment of reasonableness in the circumstances, as they were outlined by the Divisional Court in Andersen v. St. Jude Medical Inc. (2006), 264 D.L.R. (4th) 557 and they bear repeating here:
The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Boucher v. Wal-Mart Canada Corp., [2004] OJ. No. 2634, Moon v. Sher, [2004] O.J. No. 4651, and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 75 O.R. (3d) 638 (C.A.).
A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 118 A.C.W.S. (3d) 341 (Ont. C.A.), at para.4.
The reasonable expectation of the unsuccessful party is to be considered in determining an amount that is fair and reasonable; rule 57.01(1)(0.b).
The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases, [if they can be found], should conclude with like substantive results”: Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.), at p.249.
The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher.
[24] Epstein J.A. concluded at para. 52:
As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”
[25] In the context of estates litigation, it is useful to note the Ontario Court of Appeal’s direction that the modern approach to fixing costs in such cases is to carefully scrutinize the litigation and to follow the costs rules that apply in civil litigation, unless public policy considerations dictated otherwise, see McDougald Estate v. Gooderham, at paragraph 80.
[26] In this instance, there are effectively two costs claims for my consideration. The first concerns the original Application for Direction and the second concerns the Application for the Passing of Accounts. Having regard for the specific requirements of Rule 57.01, I find that the rates claimed by counsel for both sides are reasonable and proportional to their level of expertise. The hours they spent mirror each other more or less and therefore I have no difficulty concluding that each side had or ought to have had a realistic understanding of what they could expect to pay in costs if they were to fail in their respective challenge.
[27] Insofar as the complexity and the significance of the issues are concerned, the request for the passing of the accounts was reasonable but the allegations that Mrs. Perreault misappropriated funds or otherwise acted in bad faith were unreasonable and unfounded and complicated the process very significantly. Moreover, the issues were rendered complex by the entrenchment by both sides. As to the parties’ conduct in the litigation, as I already explained in my overriding observations, Mr. Cardinal’s allegations against Mrs. Perreault’s personal integrity were reprehensible. But Mrs. Perreault did not do herself any favours by resisting Mr. Cardinal’s initial inquiries. From a costs point of view, Mrs. Perreault would have been in a far better position if she had been efficient in her response.
[28] As to the applicable scale, although both sides sought full indemnity, neither provided any legal foundation for such a claim. The most authoritative pronouncement on the awarding of costs on an elevated basis is found in Davies. Following a review of various decisions, Epstein J.A. concluded that elevated costs should be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.
[29] With these overriding findings, I turn, first, to Mr. Cardinal’s original Application. I agree with his submissions that he should not have had to bring any Application for Directions. Mrs. Perreault’s reaction and resistance to that original request set the stage for an ugly debacle that should have been avoided but I would not describe her conduct as reprehensible. Having witnessed Mr. Cardinal’s behaviour in court and the extent of his anger, I take with some grain of salt his counsel’s submission that the litigation might have been avoided altogether if Mrs. Perreault had cooperated at the very beginning.
[30] I also agree that Mrs. Perreault’s consent at the court’s doorsteps was of little value, as it came a little too late and in the face of an inevitable outcome. Her counsel’s persistent resistance to a French proceeding added unnecessarily to the costs. Having regard for the claim of approximately $24,000, the considerations anticipated by Rule 57.01, including the proportionality of costs relative to the issue at hand and the size of the estate, a fair and reasonable cost award is $18,000 in favour of Mr. Cardinal and payable by Mrs. Perreault.
[31] Next, on the passing of accounts, absent the allegations concerning Mrs. Perreault’s integrity, the reduction in expenses would have attracted some costs in Mr. Cardinal’s favour, as my findings validated some of his questions about the claimed expenses. Alternatively, I may have been prepared to allow for a modest costs award to be paid out of the estate to both parties. But such possible outcomes were effectively obliterated by Mr. Cardinal’s attack on Mrs. Perreault’s integrity and specifically his allegations that she misappropriated funds and acted in bad faith. Given my outright rejection of those allegations, Mrs. Perreault is entitled to some costs.
[32] As for quantum, although reprehensible conduct and allegations can attract costs on a substantial indemnity scale, that assumes that there are no other difficulties with the costs claimed. In this instance, Mr. Allison’s Bill of Costs is not without its challenges.
[33] First, I disallow those expenses claimed for translation. For the reasons already discussed above, Mr. Cardinal should not be burdened with those costs or the time that counsel spent resisting the request.
[34] Second, Mr. Allison’s Bill of Costs includes a claim for the time spent opposing the original Application. Given my awarding of costs to Mr. Cardinal, Mr. Allison’s time for the activities related to Mr. Cardinal’s Application must be deducted. The problem with this requirement is that Mr. Allison failed to break down the specific hours he spent on each task. Although, as explained in Boucher, my task is not to undertake a line-by-line scrutiny of a counsel’s dockets, some basic breakdown would have assisted my overall assessment. In the absence of such information, I use my assessment of $18,000 in costs to Mr. Cardinal as one measure on an appropriate reduction to Mr. Allison’s claim.
[35] Fourth, I cannot ignore the fact that while Mrs. Perreault was entirely successful on those claims related to her personal integrity, my reduction of her accounts by $20,000 means that she was not entirely successful with her accounting. Full success would have entitled her to an award with substantial indemnity as the basis. Less than full success means costs of something less than substantial indemnity.
[36] When I take all of these considerations and deductions into account, and when I consider the proportionality of what was in issue and the size of the estate, I come to the conclusion that a fair and just costs award in Mrs. Perreault’s favour is $48,000.
[37] That leaves the question of reconciliation between Mr. Cardinal’s entitlement to costs in the sum of $18,000 and Mrs. Perreault’s entitlement to $48,000. The set-off results in a net award to Mrs. Perreault in the sum of $30,000.
[38] As to whether that net cost should be deducted from the estate as an expense or be payable by Mr. Cardinal personally, I conclude the latter. Impugning somebody’s integrity in the absence of a credible evidentiary foundation is reprehensible. The estate and the remaining beneficiaries should not be burdened by Mr. Cardinal’s decision to pursue allegations that lacked any evidentiary foundation. It is one thing to challenge somebody for ill-advised or misguided actions or decisions. It is quite another to impugn one’s integrity. Mr. Cardinal’s decision to engage in the latter has its consequences.
CONCLUSION
[39] Given the foregoing analysis, Mrs. Perreault is entitled to her costs which I fix at $30,000, payable personally by Mr. Cardinal.
Tzimas J.
Released: August 14, 2020