Court of Appeal for Ontario

CITATION: Smith Estate v. Rotstein, 2011 ONCA 833

DATE: 2011-12-23

DOCKET: C52105

BEFORE: Armstrong, Epstein and Karakatsanis JJ.A.

In the Matter of the Estate of Ruth Dorothea Smith, deceased

BETWEEN

Lawrence Jerome Berk Smith, Executor and Estate Trustee of the Estate of Ruth Dorothea Smith, deceased

Moving Party (Respondent)

and

Nancy-Gay Rotstein, Marilyn Chapnik Smith, Cynthia Joy Smith, Ilyse Jan Smith, Natalie Jill Smith, Tracey Tremayne-Lloyd Smith and Claude R. Thomson, Trustee of the I. & R. Trust settled on November 7, 1991

Responding Party (Appellant)

Counsel:

• Earl A. Cherniak, Q.C., and Jasmine Akbarali, for the appellant
• Richard H. Shekter, and Debra L. Stephens, for the respondent

Heard: January 26, 2011

On appeal from the judgment of Justice David M. Brown of the Superior Court of Justice, dated April 15, 2010, with reasons reported at 2010 ONSC 2117, 56 E.T.R. (3d) 216, and the costs order dated July 30, 2010, with reasons reported at 2010 ONSC 4487, 59 E.T.R. (3d) 279.

COSTS ENDORSEMENT

Introduction

[1] This appeal concerned the application of the so-called General Rule of Probate Law (“General Rule”) which is said to require that all testamentary documents be proven or probated at the same time.

[2] In a motion for summary judgment, the motion judge ordered that partial probate be issued to the respondent, Lawrence Smith, in respect of his mother’s will and in respect of the first and second codicils of the will, upon payment of the usual fees. The motion judge also required, as a condition of ordering probate, that the respondent file an undertaking to hold back $250,000 from the distribution of the estate until such time as a certificate of appointment is issued in respect of the third or fourth codicils, or both.

[3] The appellant, Nancy-Gay Rotstein, the daughter of the testatrix, appealed the judgment of the motion judge. Her primary ground of appeal was a claim that the judgment breached the General Rule, which requires that all five testamentary documents should have been admitted to probate together.

[4] The appellant also sought leave to appeal the motion judge’s order for costs in the amount of $737,580.29.

[5] We dismissed the appeal in respect of the General Rule (“the appeal on the merits”). However, we granted leave to appeal the motion judge’s order for costs (“the costs appeal”). On the costs appeal, we set aside the costs award and referred the issue of the quantum of the fees claimed back to the motion judge for reassessment.

[6] This endorsement deals with the costs of both the appeal on the merits and the costs appeal.

The Position of the Respondent

[7] The respondent seeks his costs of the appeal on the merits on a full indemnity scale in the amount of $72,420 or on a substantial indemnity scale in the amount of $59,537. He submits that such an award is called for because the appeal is a continuation of a “‘reprehensible[,]’ ‘harassing[,]’ and ‘meritless’ Will challenge” brought by the respondent.

[8] In the event that the court is not prepared to order costs on a full indemnity or substantial indemnity scale, the respondent submits that the court consider his offer to settle the issues on appeal, which was outstanding until the commencement of argument before this court. This submission is advanced on the basis that the failure of the appellant to “beat” the offer on the appeal triggers the costs consequences of Rule 49. In the alternative, the respondent argues that the court should consider deferring its costs award on the appeal until the motion judge conducts his reassessment or that the court make alternative costs awards contingent on whether the respondent does better or worse than his offer to settle.

[9] In respect of the costs appeal, the respondent submits that success was equally divided so each party should bear his or her own costs. Specifically, the respondent submits that success was equally divided because the appellant succeeded on two of her arguments on costs and the respondent succeeded in upholding the motion judge’s decision that costs should be awarded on a full indemnity scale.

The Position of the Appellant

[10] In response, the appellant argues that given the divided success in respect of the appeal on the merits and the costs appeal, it is appropriate that each party bear its own costs – especially since there was a significant dollar value associated with the issue on which the appellant was successful on the costs appeal.

[11] The appellant also submits that the appeal should not be divided into two parts – the merits and the costs – as the respondent suggests. She argues that there is, in fact, only one appeal before the court.

[12] The appellant further argues that, contrary to the respondent’s allegations, her conduct in respect of the appeal cannot be characterized as improper in any way.

[13] The appellant states that Rule 49 does not apply to an offer made pending appeal, and even if the court were to take the offer into account, it is impossible for the court to determine at this time whether the respondent obtained a better result in the appeal than contained in his offer. The appellant also rejects the submission of the respondent that the court consider deferring its costs award until the motion judge conducts his reassessment or that the court make alternative costs awards contingent on whether the respondent does better or worse than his offer to settle.

Analysis

[14] Whether the proceeding before us constituted one appeal or two separate appeals is not determinative of what we have to decide. That said, we are of the opinion that the appeal on the merits and the appeal on the costs are separate appeals.

[15] We reject the respondent’s submission that this is a case for either full indemnity or substantial indemnity costs. There is no basis for it. The argument advanced on appeal by the appellant was on a narrow question of law. The appellant accepted the findings of fact made by the motion judge. It cannot be said, with credibility, that the prosecution of the appeal on the merits represented a continuation of what the respondent describes as the “‘reprehensible[,]’ ‘harassing[,]’ and ‘meritless’ Will challenge” before the motion judge.

[16] We do not accept the respondent’s submission concerning the application of Rule 49 or Rule 49-like consequences. Rule 49 does not apply to appeals. This court has, on an earlier occasion, said that an offer to settle an appeal prior to argument may be taken into account when fixing costs: see Douglas Hamilton Design Inc. v. Mark (1993), 66 O.A.C. 44. However, this power of the court is exercised only on rare occasions. It follows from the above that we see no merit in deferring our decision on costs until the costs below are reassessed. Similarly, we do not accept the suggestion that we should approve two bills of costs contingent on the outcome of the reassessment.

[17] As to the costs appeal, we do not accept that each party should be responsible for its own costs. Costs of $737,580.29 for a three day summary judgment have been set aside. This represents a significant victory for the appellant at this stage. The fact that the motion judge’s order for full indemnity costs was upheld in favour of the respondent does not suggest that there was equal success. The full indemnity issue was not a major issue in the costs appeal. The issue that occupied, by far, the greater part of counsel’s and the court’s time was the respondent’s bill of costs and the critique of the bill by counsel for the appellant. The appellant succeeded on this issue.

[18] In our view, the respondent is entitled to his costs of the appeal on the merits on a partial indemnity scale. The appellant is entitled to her costs of the costs appeal on a partial indemnity scale.

The Respondent’s Costs for the Appeal on the Merits

[19] The respondent has provided a bill of costs on a partial indemnity scale in the amount of $40,145. In considering the appropriate quantum, we observe that a part of the respondent’s factum and much of his argument in our court was taken up with a review of the facts and, in particular, a review of the conduct of the appellant. None of this was at issue in the appeal. However, we accept that it was necessary that the factual matrix be understood in order to dispose of the legal issue. Nevertheless, some discount of the respondent’s bill is necessary, which is attributable to the excessive attention to the facts that were not in issue. We would therefore apply a discount of $5,000.

[20] The respondent’s bill includes a claim for $2,279 for a motion to deliver the certificate of appointment of estate trustee with a will. This item is not properly chargeable to the costs of the appeal. It relates to the probate of the will and should be deducted from the respondent’s bill.

[21] In the result, we would award the respondent his costs of the appeal on a partial indemnity scale fixed at $32,866, inclusive of disbursements and applicable taxes.

The Appellant’s Costs for the Costs Appeal

[22] The appellant filed a partial indemnity bill of costs, which covered both the appeal on the merits and the costs appeal. The total bill is $40,357.47. There is no breakdown of the costs between the two appeals. The respondent suggests an appropriate allocation to the costs appeal would be 25% of the docketed hours and 10% of the disbursements on the appellant’s bill of costs, which produces a figure of $9,273.30. We accept the approach taken by counsel for the respondent. We therefore fix the award of costs to the appellant for the costs appeal on a partial indemnity scale in the amount of $9,273.30, inclusive of disbursements and applicable taxes.

Disposition

[23] In the result, the respondent is entitled to set off the $9,273.30 against the respondent’s award of $32,866. The respondent is therefore owed $23,592.70 by the appellant for its remaining costs of the appeal on the merits.

“Armstrong J.A.”

“G.J. Epstein J.A.”

“Karakatsanis J.A.”