Court File and Parties
COURT OF APPEAL FOR ONTARIO DATE: 20220315 DOCKET: C68222
Strathy C.J.O., Roberts and Sossin JJ.A.
BETWEEN
Cheryl Leonard Moving Party (Appellant)
and
Zara Zychowicz Respondent (Respondent)
Counsel: Marc A. Munro, for the appellant Andrew L. Keesmaat and Simone A. Bilato, for the respondent
Heard: February 15, 2022 by video conference
On appeal from the order of Justice Paul R. Sweeny of the Superior Court of Justice, dated February 21, 2020, with reasons reported at 2020 ONSC 662, 56 E.T.R. (4th) 81, and from the costs order, dated March 23, 2020, with reasons at 2020 ONSC 1713.
Reasons for Decision
[1] This appeal involves a dispute between two cousins concerning the will of their late aunt, Helene Polomock (the “Testatrix”), who died on April 4, 2011. The central issue on the application was whether the Testatrix had testamentary capacity when she executed a will on October 23, 2007 (the “Will”), approximately four years prior to her death.
[2] The Will named the respondent, Zara Zychowicz, as estate trustee and sole beneficiary. The appellant, Cheryl Leonard, had been named as the estate trustee and sole beneficiary in an earlier will, made in 2002 (the “earlier Will”).
[3] The appellant brought an application to declare the Will invalid and to require the respondent to surrender her appointment as estate trustee. She asserted that there were suspicious circumstances surrounding the execution of the Will, that the Testatrix lacked testamentary capacity as well as knowledge and approval of the Will’s contents, and that the Testatrix had been subjected to undue influence around the time she signed the Will.
Decision Below
[4] The application judge dismissed the application. After setting out the factual background and the issues, the application judge identified the relevant principles, summarized by Cullity J. in Scott v. Cousins (2001), 37 E.T.R. (2d) 113 (Ont. S.C.), and extrapolated from the authorities, including Vout v. Hay, [1995] 2 S.C.R. 876. The appellant does not assert that the application judge erred in his statement of the applicable principles or that he erred in the application of those principles. As we explain below, the appellant’s submission is that the application judge made a finding of testamentary capacity in the absence of evidence.
[5] The application judge acknowledged that the Testatrix had longstanding mental health issues and had been diagnosed with bipolar disorder. He found that the Will had been executed with the requisite formalities and concluded that it could be presumed that the Testatrix knew and approved of its contents. He also found there were no suspicious circumstances raised concerning the preparation of the Will, nor was there evidence of undue influence. However, he was prepared to accept that there was some evidence raised by the appellant of suspicious circumstances concerning the capacity of the Testatrix, so as to put an onus on the respondent to prove testamentary capacity.
[6] Having considered the evidence on capacity, including the expert evidence, the application judge found that the respondent had discharged her onus and the Will was valid. In coming to that conclusion, he largely rejected the evidence of the appellant’s expert, Dr. Shulman. He found that Dr. Shulman’s evidence had been “tainted” by a summary of facts prepared by appellant’s counsel – a summary that had been admittedly created “with advocacy in mind”.
[7] The application judge preferred instead the evidence of the respondent’s expert on capacity, Dr. Pachet, which he accepted. Dr. Pachet opined that there was no substantive or conclusive evidence that the Testatrix did not meet the test in Banks v. Goodfellow (1870), L.R. 5 Q.B. 549, at p. 565, when she executed the Will. There was no evidence to suggest that she did not know the nature and effect of a will, her natural beneficiaries, or the extent of her assets. There was no evidence that she was delusional when she executed the Will. In sum, in Dr. Pachet’s words, “[h]er cognitive impairment and degree of executive dysfunction would not have been viewed as a significant threat to her testamentary capacity.” The application judge found that Dr. Pachet’s evidence was consistent with other evidence, including medical evidence, which indicated that the Testatrix had been functioning well and was not subject to delusions when she executed the Will.
[8] The application judge dismissed the application and awarded costs to the respondent in the amount of $75,175.
Submissions on Appeal
[9] First, the appellant submits that the application judge found that there were suspicious circumstances concerning the capacity of the Testatrix. He submits, however, that the application judge erred in relying on the presumption of capacity to make a determination of capacity in the absence of material evidence. The appellant submits that this was an error of law, and the standard of review is therefore correctness. She points to the fact that the solicitor had no notes or recollection as to the testamentary capacity of the Testatrix, and no contemporaneous record of her knowledge and approval of the Will.
[10] Second, the appellant seeks leave to appeal the costs award. She notes that the appellant’s counsel did not render any accounts, did not keep dockets, and simply filed a bill of costs, which her counsel describes as “fabricated guestimates.”
[11] We do not accept these submissions.
Testamentary Capacity
[12] We begin with the standard of review. The appellant submits the standard of review is correctness and that we are free to substitute our opinion on capacity for the application judge’s. We do not agree.
[13] The determination of testamentary capacity involves the application of a legal standard – the test in Banks v. Goodfellow – to a set of facts. The question, therefore, is one of mixed fact and law. If the application judge has applied the correct standard, has considered the requisite elements of that standard and has made no error in principle, either in the application of the standard or otherwise, the decision will only be set aside if the judge has made a palpable and overriding error in the assessment of the evidence: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 26, 36; see also Wilton v. Koestlmaier, 2019 BCCA 262, 48 E.T.R. (4th) 12, at paras. 22-23.
[14] On the other hand, where the application judge has made an error in principle, for example, by failing to consider the requisite elements of the legal test or standard, or has erred in the application of that test or standard, the court is entitled to intervene. For a recent example of such intervention, see this court’s decision in McGrath v. Joy, 2022 ONCA 119.
[15] The application judge correctly identified the Banks v. Goodfellow test with respect to testamentary capacity and considered its elements.
[16] The appellant has not identified any palpable and overriding error in the application judge’s assessment of the evidence.
[17] We disagree with the appellant’s submission that the application judge made a finding of suspicious circumstances concerning the capacity of the Testatrix. Rather, the application judge was prepared to accept that the appellant had adduced “some evidence of suspicious circumstances with respect to capacity such that [the respondent] has the onus of proving testamentary capacity.” He was satisfied, however, that the respondent had discharged that onus.
[18] The application judge was entitled to discount the evidence of Dr. Shulman because his opinion was based on a summary of facts, prepared by counsel, that was patently neither objective nor fair.
[19] As the application judge noted, the summary of the evidence provided to Dr. Shulman may well have affected his appreciation of the evidence. For example, Dr. Shulman stated in his report that “[t]he stark difference in the two Wills of 2002 and 2007 reflect radical changes in [the Testatrix’s] thinking about potential beneficiaries.” In fact, the only change of substance between the two wills was the substitution of one niece, the respondent, Zara Zychowicz, for another, the appellant, Cheryl Leonard. In light of the Testatrix’s circumstances, and the terms of her previous wills, this can hardly be described as a “radical” change. The Testatrix had no children, her husband had sufficient means and, as the application judge found, “the circumstances surrounding the preparation of her prior Wills shows that [the Testatrix] was ambivalent about her beneficiaries.” She had named her half-brother John, the respondent’s father, as the residual beneficiary of her will in 1989. When she gave instructions for the earlier Will, she initially wanted both the appellant and the respondent to be beneficiaries, but ultimately settled on the appellant alone. The Will subsequently identified the respondent alone as the sole beneficiary. As the application judge noted, this was not indicative of a radical change in her thinking so as to call her capacity in question.
[20] In assessing the weight to be given to the expert evidence, having discounted the evidence of Dr. Shulman, the application judge was entitled to prefer the expert evidence of Dr. Pachet. He quoted Dr. Pachet’s evidence:
Overall, based upon the documents reviewed there is no substantive or conclusive evidence to suggest that [the Testatrix] did not meet Banks vs. Goodfellow criteria when she executed the Will dated October 23, 2007. There is no evidence to suggest she would not have known the nature and effect of a Will, her natural beneficiaries, or the extent of her assets. Her cognitive impairment and degree of executive dysfunction would not have been viewed as a significant threat to her testamentary capacity. As well, there was no indication of a challenge to her decisional capacity in association with her personal matters or financial affairs prior to or at the time she changed her Will in 2007.
... based upon the documentation reviewed there is no substantive evidence that [the Testatrix] was delusional or paranoid when she executed the 2007 Will.... While the rationale regarding her choice of beneficiary in 2007 was not documented in a fulsome manner, there is no substantive information to argue that delusions or paranoid ideations were influencing her estate disposition at that time.
[21] A judge’s findings of fact based on the acceptance of expert evidence and their preference of the evidence of one expert over another is entitled to deference and should not be disturbed in the absence of a palpable and overriding error in the assessment of the evidence. The appellant has demonstrated no such error.
[22] The appellant’s core submission, however, is that having found that the presumption of capacity was not available, the application judge erred in finding testamentary capacity in the absence of affirmative evidence. She submits, for example, that the application judge erred in finding that the paucity of evidence of medical visits during the period of 2005 to 2009 was consistent with Dr. Pachet’s opinion and supported the view that the Testatrix was functioning well and was not under any delusions.
[23] We do not accept the appellant’s submission that the application judge relied on the presumption of capacity to find capacity or that he found capacity in the absence of material evidence. The application judge’s findings of fact in relation to testamentary capacity were the product of his assessment of all the evidence.
[24] In addition to Dr. Pachet’s evidence, there was ample evidence before the application judge to support the Testatrix’s testamentary capacity and the absence of undue influence. This included:
- the evidence of the respondent’s father, the half-brother of the Testatrix, who held her power of attorney executed the same day as the Will and who described her as independent, capable of living alone and capable of making her own property, banking and financial decisions as well as her personal care decisions;
- the evidence of a longstanding neighbour, who talked to the Testatrix almost every day, and described her as “very smart”, aware of what was going on around her, capable of making decisions in her best interests and showing no signs of hallucinations or paranoia;
- the evidence of the solicitor who prepared the Will, who had a long-standing relationship with the Testatrix, who had obtained a satisfactory capacity assessment in relation to the earlier Will, and who did not recall or note any concerns about the Testatrix’s capacity in relation to the Will – his contemporaneous notes indicate the Testatrix was “upset” with the appellant and thus gave instructions to remove her from her will;
- the evidence of the Testatrix’s family physician for more than 10 years prior to her death, to the effect that there had been no change in her testamentary capacity between January 2002 (when the original capacity assessment was performed by that same physician) and September 2007 or shortly thereafter (when the Will was prepared and executed) or even in psychiatric and geriatric notes up to 2010; and
- the absence of any evidence, in the extensive medical record produced on the application, that the Testatrix lacked capacity, or had a mental illness that affected her capacity, at the time she gave instructions for the Will or signed the Will.
[25] This evidence, together with the evidence of Dr. Pachet, which he accepted, fully supports the application judge’s conclusions on the issue of testamentary capacity. The appellant has identified no palpable and overriding error in his assessment of the evidence.
Costs Awarded Below
[26] We turn to the issue of costs.
[27] In post-hearing costs submissions, the appellant submitted that no costs should be awarded because the respondent’s counsel had not rendered accounts, had not kept dockets, and had essentially copied the bill of costs of appellant’s counsel.
[28] The application judge found that the absence of dockets did not preclude an award of costs, but it did make the determination of costs more challenging. He had before him, however, a bill of costs prepared by respondent’s counsel, setting out time spent and hourly rates charged. The respondent claimed costs on a partial indemnity basis of $190,000.
[29] The application judge awarded the respondent costs of $55,175 in fees and $20,000 for disbursements, for a total of $75,175, inclusive of HST. Those costs were payable by the appellant, as opposed to payable out of the estate.
[30] In this court, the appellant renews the following submissions: (a) awarding costs amounts to a “windfall” in this case and no costs should be payable because the respondent’s counsel sent no bills to the respondent and kept no dockets; (b) the respondent’s costs should be paid out of her own share of the estate; or (c) each party should bear her own costs.
[31] A court should set aside a costs award on appeal only if the judge has made an error in principle or if the costs award is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.
[32] We see no basis on which to interfere with the application judge’s decision on costs. He considered the principles applicable to the award of costs and how those principles apply in estates litigation. The appellant has failed to identify an error in principle or to establish that the award was plainly wrong.
[33] The application judge did not err in requiring the appellant to pay costs, particularly having regard to his conclusion that there were no reasonable grounds upon which to question the execution of the Will or the capacity of the Testatrix. Furthermore, while it is certainly preferable to keep dockets, even where the client will not be billed until the completion of the matter, the fact that respondent’s counsel had not issued accounts, and had no dockets, was not an automatic bar to the recovery of costs. The application judge must do the best they can in such circumstances and this application judge did so.
[34] In any event, and stepping back for a moment, we find the costs award reasonable. The claim related to a $500,000 estate; the application hearing lasted four and a half days; there was expert evidence on both sides, multiple affidavits, and a very substantial documentary record: in addition to the Appeal Book and Compendium, we have before us nine volumes of exhibits. The costs awarded were proportional and well within the appellant’s reasonable expectations.
Disposition
[35] For these reasons, the appeal is dismissed. We grant leave to appeal costs but dismiss the costs appeal.
[36] Costs of the appeal to the respondent in the agreed amount of $15,000, inclusive of disbursements and all applicable taxes.
“G.R. Strathy C.J.O.” “L.B. Roberts J.A.” “L. Sossin J.A.”
