COURT FILE NO.: CV-22-00690163-00ES DATE: 20230815
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
JASON WILLIAMS and RUSSELL WILLIAMS Applicants
– and –
CAROLYN P. CRATE AND JAMES R. CRATE, in their capacities as Estate Trustees of the Estate of ALAN ARTHUR WILLIAMS, Deceased Respondents
Counsel: Gwendolyn L. Adrian, for the Applicants Charles Baker, for the Respondents
HEARD: June 19, 2023
Reasons for Judgment
Dietrich J.
1Alan Arthur Williams (the “Deceased”) passed away on September 27, 2021, at the age of 84 years. He is survived by his two sons, Jason Williams (“Jason”) and Russell Williams (“Russell”) (collectively, the “Applicants”).
2The Deceased left a last will and testament, dated December 9, 2019 (the “Will”), in which he appointed his lawyers, Carolyn P. Crate (“Ms. Crate”) and James R. Crate (“Mr. Crate”) (collectively, the “Respondents”), as the Estate Trustees of his estate (the “Estate”). He appointed The Bank of Nova Scotia Trust Company (“Scotiatrust”) as the alternative Estate Trustee. Mr. Crate drafted the Will, which includes clauses regarding executors’ compensation.
3Pursuant to the terms of the Will and a subsequent agreement, following the payment of the Deceased’s debts and the payment of nine legacies to various family members and friends, the Applicants are entitled to the residue of the Estate, to be divided equally between them. [1]
4The Respondents essentially completed the administration of the Estate within a year of the Deceased’s death. In August 2022, Mr. Crate sent the Applicants a final report and a brief, informal accounting of the Estate assets. As part of that reporting, the Respondents included an Interim Distribution Statement and Releases for each of the Applicants to sign.
5The Interim Distribution Statement included the executors’ claim for compensation of $300,000 plus HST of $39,000.
6The Applicants signed the Interim Distribution Statement approving the executors’ compensation but now object to that compensation sought by the Respondents. They do so on the basis that when they signed the Interim Distribution Statement and the Releases, they did not understand, and they were not told, that they were waiving their right to object to the claim for compensation and the accounting. The Applicants also object to the quantum of the legal fees incurred by the Respondents, and paid to their own law firm, Fahey Crate Law Professional Corporation (“Fahey Crate”), in the total amount of $96,706.73, as shown in the informal accounting.
7The Applicants seek an order declaring the amount of compensation, if any, owed to the Respondents; an order apportioning the compensation between the Respondents, if necessary; and their costs of this application.
8For the reasons that follow, I find that the Respondents are entitled to executors’ compensation in the amount of $194,933.84, to be divided between them on a quantum meruit basis, as they can agree.
Procedure – The June 2023 Affidavit
9The evidence in this application is adduced by Jason, in his affidavit affirmed November 16, 2022 (“Jason’s Affidavit”), by Russell, in his affidavit affirmed November 16, 2022, and by Mr. Crate, in his affidavit sworn January 13, 2023 (the “January 2023 Affidavit”), his affidavit sworn May 12, 2023 (the “Supplementary Affidavit”), and his affidavit sworn June 19, 2023 (the “June 2023 Affidavit”), just days before the hearing.
10The Applicants objected to the admission of the June 2023 Affidavit, on which they have not had an opportunity to cross-examine. The June 2023 Affidavit is three paragraphs long, and its purpose is to add to the evidentiary record the “Release and Approval Re Accounts of Estate Trustees” and the “Release of Estate Trustees” signed by each of Jason and Russell on August 23, 2022 (the “Releases”).
11Despite the fact that the Respondents had no good reason for failing to include the Releases in the January 2023 Affidavit or the Supplementary Affidavit, I admitted the June 2023 Affidavit into evidence. In my view, its admission is not prejudicial to the Applicants. The Releases are referred to in the January 2023 Affidavit, in which Mr. Crate stated: “Jason and Russell signed releases and approved accounts.” The Releases could have been appended as an exhibit to that affidavit. The Releases are also referred to in Mr. Crate’s reporting letter dated August 20, 2022 (the “Final Reporting Letter”), in which he stated: “An Interim Distribution Statement together with Releases and Approval of Accounts will be attached for your review and execution.” The Releases are also referred to in Fahey Crate’s “Calculation of Legal Fees Based on Tariff”, a copy of which was sent to the Applicants and their counsel. The Applicants do not deny that they received the Releases, that they signed them, or that they have copies of them. Further, in Mr. Crate’s email to the Applicants’ counsel dated September 22, 2022, he attached certain files and offered to provide copies of the Applicants’ signed Releases. I am satisfied that the Applicants and their counsel have had ample opportunity to review and consider the signed Releases in advance of the hearing of the application. They did not cross-examine Mr. Crate on the January 2023 Affidavit or the Supplementary Affidavit. Mr. Crate’s counsel did not object to giving the Applicants an opportunity to cross-examine Mr. Crate on the June 2023 Affidavit if they chose to do so. The Applicants did not seek an adjournment of the application for this purpose.
Background Facts and Evidence
12According to the Applicants, the Deceased was not a skilled reader or writer. It is undisputed that the Deceased had little formal education. He attained an eighth-grade education in England, following which he worked there as a wallpaper hanger. Following his immigration to Canada in 1975, he worked in construction.
13The Deceased’s wealth arose largely from a $16-million lottery win in 2010.
The Deceased’s Estate Planning
14Regarding the Deceased’s estate planning, Mr. Crate’s evidence is that the Deceased, who retained Mr. Crate to assist him in legal matters from time to time, invited him to attend a meeting at the Deceased’s residence on December 1, 2017. In attendance at that meeting were the Deceased, Mr. Crate, and the Deceased’s Scotia Wealth Management advisors, Susan Elliott (“Ms. Elliott”) and Tony Gariati (“Mr. Gariati”). Mr. Crate’s evidence is that, at that meeting, they discussed changes the Deceased wished to make to his estate plan, and Ms. Elliott explained to the Deceased the benefits of adding Scotia Wealth Management as a co-Estate Trustee to act together with the Respondents.
15In the January 2023 Affidavit, Mr. Crate stated that Ms. Elliott reviewed an information package with the Deceased, and she told the Deceased that a Compensation Agreement would have to be signed if Scotia Wealth Management [2] were named as an Estate Trustee in the Will. Mr. Crate’s evidence is that a copy of the Compensation Agreement was reviewed at the December 1, 2017 meeting in his presence and that Ms. Elliott reviewed sample calculations of executor’s compensation with the Deceased. Ms. Elliot has not provided any evidence in this application.
16The Compensation Agreement is dated December 15, 2017, some two weeks after the meeting with Ms. Elliott and Mr. Gariati. It is only signed by the Deceased and not by Scotiatrust. There is no evidence regarding the circumstances under which the Deceased signed the Compensation Agreement. The Compensation Agreement does not include the signature of a witness.
17The Compensation Agreement provides, among other things, that Scotiatrust, as Estate Trustee, would be entitled to compensation on “Capital Receipts” as follows:
Capital Receipts: 4.5% on the first $1,000,000 3.5% on the next $1,000,000 2.5% on the next $3,000,000 2.0% on the next $5,000,000 0.5% on the balance
(the “Capital Receipts Formula”)
18The Compensation Agreement does not include compensation for capital disbursements.
19The Deceased executed the Will approximately two years after he signed the Compensation Agreement. He did not appoint Scotiatrust as a co-Estate Trustee, to act together with the Respondents, but he appointed it as an alternative Estate Trustee. There is no evidence to suggest that Scotiatrust signed the Compensation Agreement at that time or at any other time.
20The Will includes two provisions regarding executors’ compensation. Paragraphs 7 and 9 read as follows:
I DECLARE that any Trustee of my Will who is a lawyer shall be entitled to charge and to be paid all usual professional fees or other charges for any business transacted, time expended, and acts done by him or her or his or her firm in connection with the administration of my estate and the trusts declared by my Will or by any Codicil to it, including acts which a Trustee not being a lawyer could have done personally.
I DIRECT that my Estate Trustee shall be entitled to receive, and shall be paid out of my estate, as compensation for acting as such, of and under this my Will, the fees, reimbursement and other compensation provided for in the Compensation Agreement between the Bank of Nova Scotia Trust Company and me signed on the 15 th day of December 2017, prior to the execution of my Will, which Agreement is hereby incorporated into this my Will.
21Mr. Crate’s affidavit evidence is that he explained the terms of the Will to the Deceased and he was satisfied that the Deceased knew how much it would cost to administer the Estate, including estate administration tax payable, income taxes, legal fees, and trustee compensation.
22Mr. Crate’s further evidence is that he “made [the Deceased] fully aware of the compensation to be paid under the terms of this Agreement” and “that Estate Trustees can claim up to 2.5% of income and 2.5% of disbursements, and legal fees would be in addition to that to obtain a Certificate of Appointment of Estate Trustee with a Will.” Mr. Crate’s evidence is that the Deceased fully understood and accepted this level of compensation and knew that higher compensation would be paid under the terms of the Compensation Agreement.
23The Applicants’ evidence is that after the Deceased won $16 million in a lottery, the Deceased could be both excessively generous in making gifts and suspicious that someone was attempting to take something from him. Regardless, the Applicants say that the Deceased was consistent throughout his lifetime in ensuring that any work done for him was done at a fair and reasonable price.
The Estate Administration
24The Applicants’ evidence is that on the day following the Deceased’s death, Mr. Crate advised them that, as Estate Trustee, he could take $400,000 from the Estate, and that when Russell questioned Mr. Crate about whether he would actually do that, he responded that he “would probably take two.” The Applicants’ evidence is that they thought Mr. Crate was joking when he made this comment.
25Around this time, Mr. Crate began to administer the Estate. In a reporting letter to the Applicants, dated October 15, 2021 (the “First Reporting Letter”), he advised that Ms. Crate’s involvement in the administration of the Estate would be limited and that he would be the contact person.
26In the First Reporting Letter, Mr. Crate also advised the Applicants, among other things, that:
- he would make an application for a Certificate of Appointment of Estate Trustee with a Will (the “CAET”), which would involve making an inventory of assets, including the Deceased’s residence but not the three rental properties in Uxbridge (the “Uxbridge Rental Properties”) because they were owned jointly by the Deceased and the Applicants; and he would let them know the exact amount of the estate administration tax;
- he would obtain an appraisal for the Deceased’s residence;
- much of the Deceased’s jewellery was given away, sold, or stolen; Durham Regional Police would report its findings on the possible theft in due course; and he would follow up with Rutledge’s Jewellery for further information on the Deceased’s missing jewellery;
- he would follow up on vacation vouchers purchased by the Deceased to determine whether any were refundable;
- he would detail cash and investments with Scotiabank and ScotiaMcLeod;
- he would pay the legacies;
- once he obtained the CAET, he would sell the Deceased’s residence, register survivorship applications (regarding the Uxbridge Rental Properties), pay out specific bequests, and likely provide an interim distribution; and
- all accounting would be completed by Porter Hetu, an accounting firm, including filing tax returns and applying for the tax clearance certificate.
27In the First Reporting Letter, Mr. Crate also stated that “the legal fees for obtaining the CAET and filing the requisite Estate Information Return … will be in the range of Eighty Thousand to One Hundred Thousand Dollars ($80,000.00 - $100,000.00) plus disbursements and HST. Estate Trustee compensation will be billed separately, as discussed.”
28In the Final Reporting Letter, Mr. Crate reported, among other things, that:
- the Deceased’s assets, at the time of his death, included cash and investments with Scotiabank and Scotia Wealth, his principal residence, the Uxbridge Rental Properties, and several high-end automobiles;
- at the time of the Deceased’s death, a large amount of cash, jewellery and the Deceased’s dog were missing from his residence; a police investigation followed, and no charges were laid;
- the remaining jewellery was delivered to the beneficiaries;
- the vehicles were transferred to the beneficiaries;
- a refund was obtained for one travel voucher but not for the other four;
- funeral arrangements were carried out and paid for;
- at the date of death, the Deceased held assets with a total value of $8,505,548.11, which does not include the value of the Uxbridge Rental Properties ($2,225,000) “as these properties were owned jointly and thus do not form part of the assets of the deceased”;
- he advertised for creditors and paid a creditor for work done on the pool;
- he set out a list of 14 capital receipts paid into Fahey Crate’s mixed trust account and a list of 37 capital disbursements paid from the same trust account (including the payment of the nine legacies, two interim distributions and a payment to Fahey Crate in the amount of $96,706.73);
- $126,840 was paid in estate administration tax directly from Scotiabank;
- the Deceased’s VISA credit card and an investment line of credit were paid from the Scotia Wealth account;
- the sale of the Deceased’s residence closed on July 11, 2022; the net proceeds were deposited into the Fahey Crate estate trust account; and the transaction was reported on separately;
- survivorship applications regarding the Uxbridge Rental Properties were registered on March 31, 2022; and
- three tax returns were filed and taxes owing were paid; and upon receipt of notices of assessment, a final clearance certificate would be applied for.
29Regarding executors’ compensation, the Final Reporting Letter stated as follows:
As previously discussed, Estate Trustee[s] Compensation is paid on capital receipts and disbursements paid out in the administration of the estate…. Roughly, 2.5% on receipts and 2.5% on disbursements is charged, depending on the complexity of the estate.
We are bound, however, to follow the Scotia Wealth Management Compensation Agreement [Agreement], signed by Mr. Williams on December 15, 2017, and incorporated by reference in his Will.
The Agreement speaks to compensation on fees related to capital receipts as follows:
4.5% on the first $1,000,000.00 3.5% on the next $1,000,000.00 2.5% on the next $3,000,00.00 2.0% on the next $500,000.00 0.5% on the remaining balance
The Agreement is silent on the issue of compensation on disbursements.
A separate spreadsheet will be provided to address this issue.
30The Final Reporting Letter also stated that “an Interim Distribution Statement together with Releases and Approval of Accounts will be attached for your review and execution”, and “Estate Trustee Calculations are attached for your reference and discussion.”
31Based on the record, it is unclear which “Estate Trustee Calculations” were attached to the Final Reporting Letter because the attachments to the Reporting Letter are not included in the exhibit where the Final Reporting Letter is found. It is likely that the “Estate Trustee Calculations” that were included are the ones referred to in the January 2023 Affidavit and attached as Exhibit “A”. In that affidavit, Mr. Crate stated that he calculated the compensation under the Compensation Agreement to be $444,729.49 but reduced the compensation to $300,000 plus HST. This calculation is consistent with the claim for $339,000 (inclusive of HST) in compensation shown on the Interim Distribution Statement.
32Each of the Applicants signed the Interim Distribution Statement on August 23, 2022. Above the signature line, a statement reads: “The undersigned beneficiary waives passing of accounts by the Estate Trustee and approves the Executor’s Compensation, if any and within accounting and agrees to the interim distribution as set out therein.”
33On August 23, 2022, each of the Applicants also signed a “Release and Approval re Accounts of Estate Trustees” and a “Release of Trustees.”
34The Applicants’ evidence is that that they were told by Mr. Crate that if they did not sign the documents, they would not receive their respective $1,837,784.75 distribution.
Positions of the Parties
35The Applicants submit that the Respondents are not entitled to the $339,000 in executors’ compensation they seek, and that the Estate should not be responsible for the legal fees in the amount $96,706.73 that the Respondents incurred and paid to their own law firm, Fahey Crate.
36The Applicants also submit that the skill and ability employed by the Respondents to administer the Estate in no way justify compensation of $339,000 (including HST). They contend that the Estate administration was straightforward, involved relatively few transactions, and that the Applicants took on the labour-intensive tasks of maintaining, repairing, clearing, and preparing the Deceased’s residence for sale.
37The Applicants further submit that there is no justification for the quantum of the legal fees paid to Fahey Crate, which were not described in the April 21, 2022 invoice, and which were calculated, in part, based on a tariff that has been abolished.
38The Applicants assert that the Respondents owed them a fiduciary duty as beneficiaries of the Estate, and they should not have breached that fiduciary duty by putting themselves in a conflict of interest in relying on a compensation provision that Mr. Crate included in the Will for the benefit of himself and Ms. Crate, his spouse. The Applicants submit that the Respondents acted in their own self-interest to enrich themselves to the detriment of the Applicants and took no step to protect the Applicants as beneficiaries, including by encouraging them to obtain independent legal advice before signing the Interim Distribution Statement and the Releases.
39The Respondents submit that they are entitled to the compensation they seek. They contend that the Will permits them to claim compensation in accordance with the Compensation Agreement and that the Compensation Agreement would allow for compensation in excess of $300,000 plus HST. Further, the Respondents submit that even if they are not entitled to compensation in accordance with the Compensation Agreement, they would be entitled to a similar amount of executors’ compensation based on the “rule of thumb” percentage calculations used to calculate compensation in estates of average complexity where there is no compensation agreement. Mr. Crate asserts that the Estate was not a simple estate to administer. The Respondents also submit that the Applicants signed documents approving the compensation claimed and releasing the Respondents, and that the Respondents should be able to rely on those documents.
40Regarding the legal fees paid to Fahey Crate, the Respondents submit that the Applicants cannot object to these fees because the Applicants were advised in the First Reporting letter that the fees for applying for the CAET and filing the estate administration tax return would be within the $80,000 to $100,000 range, and the Applicants did not object at that time.
Issues
41The issues in this application are as follows:
- Are the Respondents entitled to rely on the Compensation Agreement for the purposes of calculating their executors’ compensation?
- If the Respondents cannot rely on the Compensation Agreement, how should their executors’ compensation be determined?
- Did the Respondents properly incur and pay to Fahey Crate $85,500 in legal fees, plus disbursements and HST (for a total of $96,706.73), related to their administration of the Estate?
1. Are the Respondents entitled to rely on the Compensation Agreement for the purposes of calculating their executors’ compensation?
42Mr. Crate submits that he explained to the Deceased the terms of the Will and that he was satisfied that the Deceased understood them. Mr. Crate also submits that the Deceased knew how much it would cost to administer the Estate including the executors’ compensation. Mr. Crate further submits that the Deceased insisted that the Respondents receive the same compensation that would have been paid to Scotiatrust for the same work that Scotiatrust would have done if appointed, and for this reason, the Compensation Agreement was incorporated into the Will.
43For the following reasons, I find that the Respondents are not entitled to rely on the Compensation Agreement for the purposes of calculating their executors’ compensation.
44First, paragraph 9 of the Will provides for compensation payable to the Respondents based on a Compensation Agreement made between Scotiatrust and the Deceased. In fact, there is no such Compensation Agreement. While it appears that the Deceased signed a copy of the Compensation Agreement on December 15, 2017, nearly two years prior to signing the Will, there is no evidence that Scotiatrust ever signed the Compensation Agreement or otherwise agreed to its terms. By Mr. Crate’s own evidence, Ms. Elliott told the Deceased that a Compensation Agreement would have to be signed if Scotiatrust were named as an Estate Trustee in the Will. Scotiatrust was named as an alternative Estate Trustee under the Will, but it never signed the Compensation Agreement.
45The only evidence that suggests the Deceased was reminded of the Compensation Agreement, some two years after he signed it, is Mr. Crate’s own evidence, stating that he “made [the Deceased] fully aware of the compensation to be paid under the terms of the Agreement” and that he was “satisfied that the [Deceased] fully understood … that a higher compensation rate would be paid under the terms of the compensation Agreement”, as compared to a calculation whereby 2.5 per cent would be applied to capital and income receipts and disbursements.
46There is no evidence of Mr. Crate providing his advice or confirming his advice to the Deceased relating to executors’ compensation, in writing. Nor is there any evidence that Mr. Crate recommended that the Deceased obtain independent legal advice with regard to the executors’ compensation that the Respondents would be claiming from the Estate. Mr. Crate’s evidence is not corroborated by any other material evidence and does not meet the requirement of s. 13 of the Evidence Act, R.S.O. 1990, c. E.23.
47Regardless, in my view, there can be no incorporation of the Compensation Agreement by reference because there was no Compensation Agreement between the Deceased and Scotiatrust. The Deceased could have entered into a Compensation Agreement with the Respondents, but he did not.
48Second, even if the Compensation Agreement had been duly signed and incorporated into the Will, such that the Respondents could rely on it, Mr. Crate, in calculating the compensation the Respondents are seeking, erred in his compensation calculation. First, Mr. Crate calculated the Estate’s capital receipts to be $8,336,738.08 [3], and then he applied the Capital Receipts Formula set out in the Compensation Agreement. That calculation resulted in executors’ compensation of $221,734.76. However, Mr. Crate’s calculation did not stop there. He then applied a rate of 2.5 per cent to all capital disbursements made from the Estate prior to August 10, 2022 (not including legal fees paid to Fahey Crate) and he applied a 2.5 per cent rate to the funds remaining to be distributed (not including executors’ compensation). The additional compensation on the capital disbursements amounted to $222,994.73, for a total claim of $444,729.49. Of that amount, the Respondents agreed to take $300,000 plus HST as executors’ compensation.
49The Compensation Agreement does not provide for compensation on capital disbursements. Mr. Crate provided no rationale or justification for the Respondents’ claim to the additional $222,994.73. Had the Respondents been able to rely on the Compensation Agreement, based on the Capital Receipts Formula, the Respondents’ entitlement to compensation would have been capped at $221,734.76.
50Having rejected Mr. Crate’s calculation of executors’ compensation based on a combination of the Compensation Agreement and the application of a rate of 2.5 per cent to capital disbursements, I am left to consider whether the Respondents’ request for $300,000 plus HST as executors’ compensation is fair and reasonable.
2. How should the Respondents’ executors’ compensation be determined?
51The Respondents submit that if they cannot rely on the Compensation Agreement, their request for executors’ compensation should still be found to be fair and reasonable based on the “rule of thumb” percentages commonly applied in estates of average complexity. Those percentages are 2.5 per cent of capital receipts and disbursements and 2.5 per cent of revenue receipts and disbursements.
Law
52Section 61(1) of the Trustee Act, R.S.O. 1990, c. T.23 (the “Trustee Act”) provides as follows:
61(1) 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.
53The language of the Trustee Act is broad, but Teetzel J., in Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (H.C.), set out five factors that have been recognized as appropriate in determining what is “fair and reasonable” compensation for the purposes of s. 61(1). These factors are a) the magnitude of the trust; b) the care and responsibility springing therefrom; c) the time occupied in performing its duties; d) the skill and ability displayed; and e) the success which has attended its administration: Toronto General Trusts Corp., at para. 20.
54Further predictability in the assessment of a trustee’s compensation has developed through the use of a percentage of the value of the estate. Though these percentages are sometimes referred to as “tariff” guidelines, they are not sanctioned by statute or regulation. They are also sometimes referred to as “rule of thumb” guidelines.
55The guidelines are described in Re Jeffery Estate (1990), 39 E.T.R. 173 (Ont. Surr. Ct.), at para. 13, as follows:
[I]n Ontario, at least, 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.
56In Re Jeffery Estate, at para. 16, the court held that the audit judge should first test the compensation claims using the “percentages” approach and then, cross-check or confirm the mathematical result against the “five-factors” approach set out in Toronto General Trusts Corp.. See also the leading case of Laing Estate v. Hines (1988), , 41 O.R. (3d) 571 (C.A.).
Analysis
57Applying these legal principles to the facts of this case, I must determine an appropriate quantum meruit award for the Respondents.
58Mr. Crate submits that he has already done the work of applying a 2.5 per cent rate to the capital receipts. In fact, he has done it twice, using two different values for the capital receipts. Attached to the January 2023 Affidavit is a copy of the Trust Ledger, which shows capital receipts of $8,336,738.08; capital disbursements (to August 10, 2022) of $5,148,163.63 (not including the $96,706.73 paid to Fahey Crate); and capital disbursements remaining to be made of $3,877,354.91 (not including $339,000 on account of executors’ compensation). Mr. Crate applied the 2.5 per cent rate to each of these figures and arrived at allowable executors’ compensation of $434,056.42. Of this amount, he submits the Respondents should be entitled to $300,000 plus HST.
59After the Applicants commenced their application, Mr. Crate did a second calculation of executors’ compensation in support of his position that the Respondents are actually entitled to an even greater amount of compensation using the percentages approach. In the Supplementary Affidavit, Mr. Crate stated that his calculations as set out in the January 2023 Affidavit are incorrect because the value of the Estate was not the $8,505,548.11 figure that he used; [4] rather, the value of the Estate’s capital receipts was $10,775,538.11. Mr. Crate submits that the Estate assets were undervalued at $8,505,548.11 because the valuation did not include the value of the Uxbridge Rental Properties, recorded as being $2,250,000. Mr. Crate attached to the Supplementary Affidavit calculations to show that when the 2.5 percentages were applied to this higher Estate value, the allowable executors’ compensation would be $546,556.42. Mr. Crate submits that notwithstanding that the Respondents should be entitled to collect this greater amount of compensation, they would nonetheless be content with $300,000 plus HST.
60Both of these calculations are at odds with a third calculation set out in a “Calculation of Executors Comp AUG 2022” document that Mr. Crate produced to the Applicants’ counsel in response to her request for details regarding the Respondents’ calculation of allowable compensation. The calculation in this document relies on a value of $8,336,738.08 as the value of the capital receipts. It shows allowable compensation of $417,724.62 and a reduction to that amount resulting in a claim for compensation of $275,000 plus HST of $35,750, for a total of $310,750.
61I can give no weight to Mr. Crate’s second calculation based on an Estate value of $10,775,538.11. Mr. Crate has provided no sworn evidence in support of his conclusion that the Uxbridge Rental Properties are Estate assets, notwithstanding that they were owned by the Deceased and the Applicants jointly at the time of the Deceased’s death. Mr. Crate’s position is unsupported by the evidentiary record, and it is contrary to his own advice to the Applicants in the First Reporting Letter, and in the Final Reporting Letter, that the Uxbridge Rental Properties passed outside of the Estate. Consistent with that advice, it appears from a document produced by the Respondents entitled “Calculation of Legal Fees Based on Tariff” that Fahey Crate prepared and registered survivorship applications resulting in the title to these properties vesting in the Applicants as surviving joint tenants. There is no evidence that the Respondents paid estate administration tax in respect of the Uxbridge Rental Properties once they concluded that they were Estate assets.
62In argument, Mr. Crate took the position that the Applicants were holding the Deceased’s interest in the Uxbridge Rental Properties in trust for the Deceased, though he adduced no evidence of a written trust declaration or other evidence of the terms of the alleged trust. Mr. Crate has also not adduced copies of the title documents regarding the Uxbridge Rental Properties or the survivorship applications that his firm, Fahey Crate, prepared and registered on title. There is reference to a trust arrangement regarding the Uxbridge Rental Properties in the Will at subparagraph 3 g; however, that paragraph states that the trust declarations “terminate upon [the Deceased’s] death and [his] interest in said properties shall pass to [his] sons”. Subparagraph 3 g appears to be a declaration of ownership and not a devise of the Uxbridge Rental Properties of which the Applicants were already registered owners.
63Based on the evidentiary record, I cannot conclude that the Uxbridge Rental Properties are assets of the Estate. For all intents and purposes, other than for the purposes of calculating their own compensation, the Respondents have treated these properties as though they were not Estate assets, and Mr. Crate advised the Applicants accordingly.
64Mr. Crate’s application of the rate of 2.5 per cent to the capital receipts and the capital disbursements is very informal, and it appears that his only source document is the Trust Ledger. As noted, his method of determining the total capital receipts as a basis for the value of the Estate’s assets is not clear or consistent.
65For the purposes of determining the Respondents’ executors’ compensation, I will use $8,336,738.08 as the value of the capital receipts, $5,148,163.60 as the value of the capital disbursements made, and $3,877,354.91 as the value of the remaining capital be distributed as of August 10, 2022 (excluding $339,000 on account of executors’ compensation). [5] These numbers appear to be the numbers that the Respondents used in the “Executor’s Compensation Calculations” that were included with the Final Reporting Letter. The Applicants have not disputed these numbers, but they object to the Respondents’ request for compensation based on 2.5 per cent of each of them.
66I agree with the Applicants that the application of 2.5 per cent to each the capital receipts and the capital disbursements in this case would result in excessive executors’ compensation for the Respondents, even with a reduction in the award from $434,056.42 to $300,000 plus HST. When the five factors, as set out in Toronto General Trusts Corp. are applied, a downward adjustment to the Respondents’ request for $300,000 in compensation is appropriate.
67The Applicants submit that a nominal percentage should be applied to the capital receipts and disbursements in this case because the administration of the Estate was very straightforward and easy, and that the only significant factor was the size of the Estate. The Applicants propose that the executors’ compensation be calculated at 0.5 per cent of $8,505,548.11, resulting in total executors’ compensation of $42,527.74. They submit that this amount would compensate Mr. Crate for more than 120 hours of work at a rate of approximately $300 per hour, despite the fact that, in their view, he did not likely spend even half that time administering the Estate. The Respondents did not keep detailed dockets of the time they spent on the Estate administration.
68The Respondents submit that the Estate was not a simple estate to administer because it involved dealing with beneficiaries (legatees) located in the United Kingdom, the United States of America, Grenada and Ontario, and it involved a sale of the Deceased’s residence and survivorship applications for the Uxbridge Rental Properties, a police investigation, and drafting an agreement to collapse the trusts established for the Applicants under the Will, among other tasks.
69I do not agree with the Applicants that executors’ compensation at the rate of 0.5 per cent would result in fair and reasonable compensation given the Respondents’ responsibilities and efforts. However, I do agree that the administration of the Estate was straightforward and relatively easy for the Respondents to administer. The Deceased’s investments, other than real estate, were largely liquid and invested in four Scotiabank bank or investment accounts. The Respondents were not required to, nor did they, make any investment decisions. The Applicants specifically requested that the liquid funds not be invested pending distribution.
70The Respondents had little responsibility regarding the real property owned by the Deceased. The Uxbridge Rental Properties passed to the Applicants by right of survivorship, which required little more than obtaining an appraisal for tax purposes and preparing and registering survivorship applications. Regarding the Deceased’s residence, the Respondents do not dispute that the Applicants took on the lion’s share of the work to maintain, repair and prepare the residence for sale. It was the Applicants who found a realtor who was prepared to charge a lower commission than the realtor that Mr. Crate recommended.
71The Deceased owned very valuable automobiles, but they were distributed in specie to the Applicants, which required little time or skill. Once the agreement collapsing the trusts was prepared and signed, the residue of the Estate was distributed to the beneficiaries outright.
72Apart from dealing with the Estate assets and the Uxbridge Rental Properties, the Respondents spent some time locating a couple of the legatees and sending cheques to the nine legatees in payment of their legacies.
73The Respondents also retained Fahey Crate to investigate suspicious circumstances regarding the Deceased’s death and to investigate a possible theft of some of the Deceased’s cash and jewellery. Fahey Crate spent some time on this task liaising with the Regional Police, but no charges were laid. The Respondents do not appear to have prepared a comprehensive report for the Applicants on these issues or on their own efforts to recover property that may have been stolen. The matters were covered in the Final Reporting Letter in a couple of lines.
74The number of transactions undertaken by the Estates Trustees was approximately 50, and several of them simply involved writing a cheque to pay a bill or make a distribution to a legatee. The Respondents did not prepare a formal accounting and their brief accounting appears to be a variation of the Trust Ledger. The Respondents did not provide any details regarding their accounting and calculations until the Applicants retained their own lawyer, who requested a more detailed accounting. The Respondents’ accounting is not easy to follow. As noted, the value of the Estate assets changed from one document to another, without explanation, as did their calculations of allowable compensation and their actual claim for compensation.
75The Respondents also retained Fahey Crate to carry out some of their executors’ duties, as shown on the “Calculation of Legal Fees Based on Tariff” document. This document shows that Fahey Crate, and Mr. Crate, in particular, were engaged to locate the Deceased’s dog, retrieve house keys, deal with travel voucher refunds, make inquiries regarding the Deceased’s jewellery, and attempt to unlock the Deceased’s laptop and cell phone, among other tasks, for which he charged his hourly rate. The Will permits a Trustee who is a lawyer to charge his professional fees for estate administration tasks that could be done by an Estate Trustee who is not a lawyer; however, to the extent that the work being done is executors’ work, the fees paid for those services should be deducted from the compensation otherwise payable to the Respondents.
76The Applicants submit that the percentage applied to each of the capital receipts and disbursements should be adjusted downward to factor in two things: a) the fact that the administration of the Estate was very straightforward, involved few transactions, and was essentially completed within less than a year’s time; and b) the fact that the Respondents breached their fiduciary duty to the beneficiaries by preferring their own interests (i.e., maximizing their compensation) to the detriment of the beneficiaries.
77In applying the factors set out in Toronto General Trusts Corp., I find that while the magnitude of the Estate is significant, the care and responsibility springing from it was not onerous. As noted, the distribution of the Estate assets was an outright distribution, and certain valuable properties, such as the vehicles, were distributed in specie. Regarding other assets, such as the Deceased’s residence, the Applicants, as residual beneficiaries, took on most of the responsibility relating to its sale, including identifying a realtor, who agreed to a lower commission on the sale. The time spent by the Respondents on these tasks was not significant. The entire Estate was distributed, except for a $200,000 holdback, in less than one year. The administration of the Estate did not require a lot of skill and ability.
78In carrying out their administration of the Estate, the Applicants submit that the Respondents breached their fiduciary duties to the beneficiaries. In particular, each of the Applicants deposed that he was told that he would not receive an interim distribution (of nearly $2 million) in August 2022 unless he signed a “statement agreement” to waive a passing of accounts and a statement approving the executors’ compensation and the executors’ accounting. Both Applicants also deposed that they did not appreciate that by signing the Interim Distribution Statement and the Releases, they would be precluded from raising any objection to the accounting or to the executors’ compensation claimed at any later time.
79Further, the Applicants submit that the Respondents were in a conflict of interest when they asked the Applicants to sign the Interim Distribution Statement and the Releases. They assert that they relied on the Respondents to act in their best interests, as beneficiaries, and not to prefer their own interests as Estate Trustees. The Applicants contend that because they were relying on Mr. Crate for legal advice regarding the Estate, and he was aware of their reliance on him, he should have recommended that they obtain independent legal advice regarding the Interim Distribution Statement and the Releases, which were for the benefit of the Respondents and not the beneficiaries.
80The Respondents assert that they discharged their fiduciary duties to the Applicants. They submit that each of the Applicants signed the Interim Distribution Statement and the Releases without question. Therefore, the Applicants have no standing to challenge either the executors’ compensation or the accounting. They further submit that they had no obligation to advise the Applicants to obtain independent legal advice and that the lack of independent legal advice does not vitiate the signed documents.
81There are some general principles around conflicts that should be noted. As aptly stated in Class v. Smith, 2018 ONSC 623, 38 E.T.R. (4th) 326, at para. 40:
The fiduciary duties of an executor or trustee can be inconsistent with a party’s ongoing litigation interests. Neither side should be able to use their control over the estate to benefit themselves or to prejudice the other. The estate should be neutral to the positions of the parties in the litigation. The estate assets should be administered to the maximum advantage of the beneficiaries.
82In Sheard Estate (Re), 2013 ONSC 7729, 94 E.T.R. (3d) 130, Mesbur J. considered an estate in which the beneficiaries sought to set aside a release and require the executors to pass accounts. Her Honour provided this guidance, at para. 26:
Executors must have their administration approved and be discharged. There are two ways of doing so. First, they may apply for a passing of accounts. Alternatively, they can avoid the cost and delay of a passing, and instead ask the beneficiaries to approve their administration and provide for their informal discharge directly. Releases have been commonly used to do this for decades in Ontario. It is common and quite proper, to accompany a payment to a beneficiary with a release, which the beneficiary is asked to execute and return. [Footnotes omitted.]
83As stated, releases are commonly used. In the case of Eve v. Brook, 2016 ONSC 1496, 2016 CarswellOnt 4167, the court stated that “[a]n estate trustee is entitled to request a release and waiver before making a distribution, provided that the beneficiaries are advised. If the beneficiary does not agree, the estate trustee will be required to formally pass their accounts and the beneficiary will have an opportunity to make the objections”: at para. 110.
84The practice of an estate representative making a distribution to a beneficiary contingent on being released has been criticized by the courts. In Brighter v. Brighter Estate (1998), 74 O.T.C. 329 (Gen. Div.), the estate representative notified a beneficiary that his share “ will remain in the estate account and [be] released upon receipt of release of executrix and approval of accounts ” (emphasis in original): at para. 8. Justice Sheard commented, at para. 9:
In the course of argument it was submitted that the executrix was justified in requiring the release and approval referred to in the letter, as a precondition to a final distribution to Alan. It was further submitted that if Alan had requested a partial distribution of his share of the residue, it would have been made without requiring him to first sign a release of the executrix, but simply to sign a receipt. Even accepting the latter assertion, which somewhat strains credibility in the circumstances, there is no validity to either proposition. An executor’s duty is to carry out the instructions contained in the will, which in this case was to distribute the residue equally among the three children of the testatrix. The executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor’s performance of duties as trustee, or the executor’s compensation or fee. It is quite proper for an executor (or trustee, to use the current expression) to accompany payment with a release which the beneficiary is requested to execute. But it is quite another matter for the trustee to require execution of the release before making payment; that is manifestly improper. [Emphasis added.]
85In the case of Rooney Estate v. Stewart Estate, [2007] O.J. No. 3944 (Sup. Ct.), the estate solicitor demanded a release from the beneficiary before delivering his accounts, and he also implied that payment to the beneficiary was conditional upon delivery of a release. In that case, in which the estate trustee/beneficiary had delegated most of her duties as estate trustee to the solicitor, the court noted that the failure to suggest independent legal advice was a vitiating factor in terms of the releases.
86In the case at bar, the Applicants’ evidence that they were told that unless they signed the Releases, they would not receive their distributions, is not refuted by the Respondents. Further, there is no evidence to suggest that the Respondents advised their clients, the Applicants, that there were two ways to bring the Estate administration to an end. As Mesbur J. explained in Sheard Estate (Re), the estate trustees could either apply for a passing of accounts or ask the beneficiaries to approve their administration and provide for their informal discharge directly. I find that the Respondents chose the latter without explaining to the Applicants that a passing of accounts was another available option, and what that option would entail. There is no discussion, or even mention, of a passing of accounts in the Final Reporting Letter. The only reference to a passing of accounts appears in the Release and Approval Re Accounts of Estate Trustees, where it is stated: “It is hereby understood and agreed that in order to save the Estate the expense of an audit, I do hereby waive an audit of the accounts.” Without the benefit of advice on the passing of accounts option, the Applicants would have been at a distinct disadvantage. As noted in the Eve case, at para. 10, “[a]n estate trustee is entitled to request a release and waiver before making a distribution, provided that the beneficiaries are advised ” (emphasis added).
87The Respondents had control of the Estate bank account, and until the Applicants signed the Releases, they would not receive their distributions. The distributions to the Applicants did not “accompany” the Releases as noted by Mesbur J. in Sheard Estate (Re) and Sheard J. in Brighter Estate. The Respondents were essentially holding the Applicants’ distributions hostage until the Applicants signed the release and waiver documents prepared by the Respondents. This approach was to the Applicants’ disadvantage and to the advantage of the Respondents. As Sheard J. noted in Brighter Estate, “[t]he executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor’s performance of duties as trustee, or the executor’s compensation or fee…. that is manifestly improper”: at para. 9. I find that it was a breach of the Respondents’ fiduciary duty to the Applicants to impose a condition on their receipt of a substantial interim distribution without explaining the options to them and without warning them of the consequences of signing the release and waiver documents.
88Regarding the need for an estate representative to advise the beneficiaries to obtain independent legal advice, in Sheard Estate (Re), Mesbur J. noted at para. 31 that “though it might have been better for the estate trustees’ lawyer to suggest independent legal advice to the beneficiaries before signing the releases”, this itself is not fatal to their enforceability. On this point, I find that the Sheard Estate (Re) case is distinguishable from the case at bar. In Sheard Estate (Re), the estate trustees were two other family members, not lawyers also advising the estate trustees (themselves). In the case of the Applicants, they were relying on the Respondents not only to administer the Estate but also to advise them as beneficiaries. There is no evidence to suggest that the Respondents ever made the beneficiaries aware of their right to confer with counsel regarding the legal language included in the Releases.
89I agree with the Applicants that the Respondents did not always discharge their fiduciary duties in the administration of the Estate. I find that the Respondents ought to have taken greater care to produce an accounting that was much more comprehensive, consistent, and transparent than the accounting they produced. Also, the Respondents ought to have been mindful of the fact that they were in a conflict of interest in asking the Applicants to sign documents, drafted by the Respondents, waiving their right to challenge the executors’ compensation, waiving their right to a passing of accounts, and releasing the Respondents from liability. The Applicants were asked to do so without the benefit of independent legal advice, or advice from Mr. Crate, on whom they were relying for legal advice related to the Estate. There is no evidence to suggest that the Applicants had any other lawyer providing them with advice at the time they signed the Interim Distribution Statement and the Releases, which release the Respondents from all claims with respect to the Estate. In failing to recommend independent legal advice in the circumstances of this case, or, at a minimum, to explain the consequences of signing the documents to the Applicants before they signed them, I find that the Respondents put their own interests ahead of the beneficiaries of the Estate, to whom they owed a fiduciary duty. This failure ought to be factored into their entitlement to executors’ compensation.
90In the result, I find that a downward adjustment of the percentage to be applied to the capital receipts and disbursements is appropriate. I would reduce the percentage from 2.5 per cent to 1.5 per cent. The executors’ compensation payable to the Respondents, based on the percentages, would be:
- 1.5% of capital receipts of $8,336,738.08 = $125,051.07;
- 1.5% of capital disbursements (disbursed) of $5,148,163.60 = $77,222.45; and
- 1.5% of capital disbursements (remaining as at August 10, 2022) of $3,877,354.91 = $58,160.32
for total compensation of $260,433.84 plus HST. However, this amount will be subject to a further downward adjustment to address the matter of the legal fees incurred by the Respondents, as Estate Trustees, and paid to Fahey Crate.
3. Were the legal fees paid to Fahey Crate properly incurred and paid?
91In the First Reporting Letter, Mr. Crate wrote:
We have discussed the legal fees for obtaining the CAET [Certificate of Appointment of Estate Trustee] and filing the requisite Estate Information Return on more than one occasion but I wish to confirm in writing that legal fees will be in the range of Eighty Thousand to One Hundred Thousand Dollars ($80,000 - $100,000) plus disbursements and HST. Estate Trustee compensation will be billed separately, as discussed. I will endeavour to keep you informed by email, as requested, as this matter progresses.
92Based on the evidentiary record, Fahey Crate sent one invoice to the Respondents for legal services provided to them regarding the Estate, dated April 21, 2022 (the “Fahey Crate Invoice”). Fahey Crate issued a second “invoice”, which listed disbursements and other charges from the trust account established to hold Estate funds. It did not include any charges for legal services.
93The description of the legal services on the Fahey Crate Invoice was a single line: “Application for CAET/CAET Estate Information Return”. Under the heading “Professional Services Details”, there is another line: “Estate of Alan Arthur Williams – DOD Sep 27/21 Fixed Fee $85,500.” Added to the fixed fee is $1,115 for HST, and disbursements of $84.28 plus HST of $7.45, for a grand total of $96,706.73.
94Fahey Crate did not keep detailed dockets recording the legal services they provided to the Respondents as Estate Trustees. When the Applicants’ counsel wrote to Mr. Crate suggesting that he had not recorded his time, on October 12, 2022, Mr. Crate’s counsel produced a breakdown of the $96,706.73 amount in the “Calculation of Legal Fees Based on Tariff” document. It is undated. In that document, the value of the Estate is shown as $9,306,548.11. No explanation is given for this higher Estate value, which is different than the $8,505,548.11 Estate value, and the $8,336,738.08 Estate value that the Respondents relied on in other documents. Mr. Crate submits that Fahey Crate calculated the legal fees, in part, using a “tariff” guideline found in a University of Toronto Press 2011 Ontario Legal Directory (86th Annual Edition), edited by Lynn N. Browne (the “Directory”). He attached copies of the relevant pages of the Directory as an exhibit to the January 2023 Affidavit.
95First, I note that such “tariff” guidelines no longer apply in Ontario, and the tariff calculation relied on by Mr. Crate finds no support in current jurisprudence. As noted by Cullity J. in Bott Estate v. Macaulay (2005), , 76 O.R. (3d) 422 (Sup. Ct.), at para. 24:
Absent any special agreement between the estate trustee and the solicitor, the solicitor will generally be entitled to charge only on the normal quantum meruit basis and the reasonableness of the fees can be questioned on an assessment under the Solicitors Act. The amount of an acceptable fee will then depend on factors such as the amount of time, labour and trouble involved, the degree of skill and responsibility applied, what has been accomplished, and other matters referred to in rule 58.06 of the Rules of Civil Procedure.
96In the same case, at para. 25, Cullity J. noted that the tariff set out in Appendix B to the surrogate court rules, which permitted a solicitor to charge for legal services to an executor based on percentages of the value of the estate, was abolished and “the normal quantum meruit approach should apply.”
97Second, I note that in calculating its legal fees charged to the Estate, Fahey Crate did not apply the “tariff” guidelines as set out in the Directory. The “tariff” guidelines are suggested for estates of average complexity and provide a rate of 3 per cent on the first $100,000 of estate value; 1.25 per cent on the next $400,000; 0.5 per cent on the next $500,000; and on the excess over $1,000,000, additional fees are to be determined according to the general criteria set out in the preamble. The preamble provides as follows:
The solicitor’s fees, which may be based on the value of the estate, the responsibility and professional skill required, the difficulty and novelty of the issues, the results achieved, and the time involved, are reviewable by a judge on a passing of estate accounts or by an Assessment Officer on an assessment under the Solicitors Act.
98Fahey Crate charged 3 per cent of $100,000 ($3,000), 1.25 per cent of $400,000 ($5,000), and 0.5 per cent on the next $500,000 ($2,500) of Estate value. On the excess value over $1,000,000, there is no evidence to suggest that Fahey Crate considered the general criteria set out in the preamble as justification for the amount claimed. Rather, it simply applied the 0.5 per cent rate to the entire $8,306,548.11 of Estate value remaining and included an additional $41,532.74 as part of the “tariff” amount charged to the Respondents as Estate Trustees. Fahey Crate calculated the total “tariff” amount to be $52,032.74, which it rounded down to $52,000. The Respondents have provided no justification for the additional $41,532.74 in fees charged as part of the “tariff” amount.
99Further, according to the Directory guidance, the “tariff” for legal fees is intended to cover all aspects of the administration of an estate of average complexity, including:
[R]eviewing and advising on the deceased’s assets and liabilities, the entitlement of creditors, the beneficiaries and heirs, the terms of the Will… the duties and rights of the estate trustee; Preparing the application for certificate of appointment of estate trustee; Preparing documents to transfer assets of the deceased to the estate trustee; Advising as to and preparing documents to distribute assets in specie to beneficiaries and to obtain releases of the estate trustee and reporting to the estate trustee in connection with above matters.
However, the “Calculation of Legal Fees Based on Tariff” includes the “tariff” amount, as interpreted by Fahey Crate, of $52,000, plus $33,500 for “additional fees”. The inclusion of these “additional fees” is inconsistent with the Fahey Crate Invoice, in which the fee is described as “a Fixed Fee”.
100Included in the “additional fees” are fees for services that fall squarely into the category of estate administration tasks intended to be covered by the “tariff”. These include: “Meeting with clients to review estimate of fees for probate/ET compensation”; contact tracing re beneficiaries; preparing documents to transfer assets to the beneficiaries and registration; meetings with Scotia Wealth re assets; phone calls with beneficiaries; preparing documents and releases; preparing and filing the estate information return; and reporting, billing, and meeting with clients to review and provide supporting documents. In my view, Fahey Crate is double counting for each of these services – once as part of the “tariff” amount, and a second time as “additional fees.” Accordingly, I find that the Respondents, as Estate Trustees, should not be indemnified for any of the fees they paid based on the “tariff” amount. In addition to the double-counting, the Applicants’ evidence is that there was no meeting to review the estimate for probate fees for which the Respondents paid Fahey Crate $1,160 in fees, and the Applicants also allege that the time spent by Mr. Crate on other Estate administration tasks is artificially inflated.
101Regarding the “additional fees”, I find that these fees fall into two categories. Some of the fees are charged for work that would routinely be done by lawyers, such as survivorship applications, transmission applications, and an agreement collapsing the trusts. Other tasks shown on the “Calculation of Legal Fees Based on Tariff” are tasks that are the responsibility of the Respondents but were delegated to Fahey Crate. These include such tasks as locating the Deceased’s dog and keys to the residence, making an inventory of the contents of the Deceased’s residence, dealing with the Deceased’s jewellery and travel vouchers, etc. Based on the description of the services provided for “additional fees”, I find that approximately $20,000 can fairly be allocated to legal fees, and the remaining $13,500 can fairly be allocated to executors’ duties delegated to Fahey Crate.
102In the result, I find that the Respondents, as Estate Trustees, are entitled to be indemnified from the Estate for legal fees of $20,000 plus HST and all disbursements included in the Fahey Crate Invoice plus HST. The $13,500 paid to Fahey Crate for executors’ work shall be deducted from executors’ compensation. The Respondents are not entitled to be indemnified for the legal fees they paid based on the “tariff”, as at least some of these fees appear to have been paid for services also covered under “additional fees”, and the balance of the fees cannot be justified on a quantum meruit basis. The $52,000 paid as a “tariff” shall, therefore, also be deducted from the executors’ compensation.
103Accordingly, the allowable executors’ compensation of $260,433.84 plus HST shall be reduced by $65,500 ($13,500 + $52,000) plus HST. The net result is that the Respondents shall be entitled to executors’ compensation of $194,933.84 plus HST, to be divided between them, on a quantum meruit basis, as they can agree.
Disposition
104An order shall issue:
- declaring that the Respondents are not entitled to rely on the Compensation Agreement for the purposes of determining their executors’ compensation; and
- declaring the executors’ compensation payable to the Respondents to be $194,933.84 plus HST, to be divided between them on a quantum meruit basis, as they can agree.
Costs
105The parties have uploaded their respective costs outlines to Caselines. Having been told by counsel that offers to settle have been exchanged between the parties, I have not reviewed the costs outlines as any claim for costs may be affected by the offers. If the parties cannot agree on the matter of costs, any party seeking costs in this application shall serve and file written costs submissions not exceeding three pages in length (not including a costs outline or bill of costs and offers to settle, if any) within 14 days of the date of these Reasons for Judgment. Any party wishing to respond shall serve and file similar written costs submissions within 14 days thereafter. Reply submissions may only be made with leave.
Dietrich J. Date: August 15, 2023
Footnotes
1The terms of the Will contemplated the establishment of a trust for each of the Applicants, from which each would receive an annuity payment every six months. On the death of the first of the Applicants to die, the assets forming part of the deceased Applicant’s trust would pass to the surviving Applicant. Relying on the rule in Saunders v. Vautier (1841), 41 E.R. 482 (Ch. Div.), the Applicants and the Respondents, as Estate Trustees, entered into a written agreement whereby the trust for each Applicant would be collapsed, and the residue of the Estate would be distributed outright to the Applicants in equal shares.
2It is likely that Mr. Crate meant to say Scotiatrust, which is a corporate trustee, as opposed to Scotia Wealth Management, which is not.
3How Mr. Crate arrived at the value of $8,336,738.08 as the value for the capital receipts is unclear. It is inconsistent with the capital receipts value of $8,505,548.11 that he included in the Final Reporting Letter as the Estate’s capital receipts. In the Supplementary Affidavit, Mr. Crate also refers to $8,505,548.11 as the value of the Estate’s capital receipts on which he relied to calculate the executors’ compensation. However, based on the “Fahey Crate Law Professional Corporation Client’s Trust Ledger (Date Range: Oct 26, 2021 – Aug 10, 2022)” (the “Trust Ledger”) to which the “Executor’s Compensation Calculations” are attached, the total capital receipts are $8,336,738.08. The “Executor’s Compensation Calculations” are likely the calculations that were provided to the Applicants with the Final Reporting Letter, but as noted, that is not clear from the record. The difference between the $8,505,548.11 capital receipts value and the $8,336,738.08 capital receipts value may be the difference between the date of death estimates of value as compared to actual value received, but the difference is not explained. Neither the Respondents nor the Applicants rely on the same capital receipts value consistently in this application.
4As noted, he actually used the $8,336,738.08 figure.
5Since August 10, 2022, the Respondents made a further distribution of $1,837,784.75 to each of the Applicants. Following that distribution, the amount remaining is a $200,000 holdback, proposed executors’ compensation of $339,000 (inclusive of HST) and legal disbursements of $1,785.41.