Court of Appeal for Ontario

Date: 20240205 Docket: COA-22-CV-0125

Before: Roberts, Sossin and Dawe JJ.A.

Between:

Betty Scheibler as the administrator of the Estate of Milton Edward Westover, deceased Plaintiff (Appellant)

And:

Joseph Allen Jolicouer, Joanie Marie Jolicouer aka Joan Marie Jolicouer and Debra Lee Westover-Morriseau Defendants (Respondents)

Counsel:

Alnaz I. Jiwa, for the appellant Robin A. Lepere, for the respondent, Debra Lee Westover-Morriseau Douglas W. Judson, for the respondents, Joseph Allen Jolicouer and Joan Marie Jolicouer

Heard: December 19, 2023

On appeal from the judgment of Justice F. Bruce Fitzpatrick of the Superior Court of Justice, dated August 4, 2022, with reasons at 2022 ONSC 4550, and the costs order, dated November 28, 2022, with reasons at 2022 ONSC 6684.

Reasons for Decision

[1] The appellant, Betty Scheibler, as the litigation administrator of the estate of her late father, Milton Westover, appeals the dismissal of the action in this estate dispute concerning an impugned transfer of Mr. Westover’s farm and house property to her sister and her brother-in-law. The appellant also seeks to appeal the costs award made against her personally. The action was commenced in 2017 by Mr. Westover who died in 2018. The action was continued by the appellant, as the litigation administrator of his estate.

Dismissal of the Action

[2] The appellant repeats on appeal the unsuccessful allegations that, in 1997, her father’s property was transferred without his authorization to the respondents – her sister, Joanie Marie Jolicouer, and her sister’s husband, Joseph Allen Jolicouer – as aided by their other sister, the respondent Debra Westover-Morriseau. She alleges that they used her father’s power of attorney to carry out the transfers without her father’s authority or knowledge. The appellant also challenges the trial judge’s determination that the action was statute-barred. Finally, the appellant alleges that the trial judge pre-judged the case.

[3] We are not persuaded that the trial judge made any reversible errors in dismissing the action. In essence, the appellant is asking this court to retry the case.

[4] The trial judge made no palpable and overriding errors in his assessment of the evidence and in his findings of fact and credibility, including the inferences that he reasonably drew from the evidence. He correctly applied the governing legal principles. His findings are firmly rooted in the evidence and were open to him to make on the record before him.

[5] In particular, the outcome of the trial turned on the trial judge’s findings that the parties’ father knew about and authorized the transfer of his property to the Jolicouers in 1997, from which he considerably benefitted, and that there was no evidence given at the trial that supported the allegations of conspiracy and fraud. In particular, the trial judge accepted Ms. Westover-Morriseau’s evidence, including that her father instructed her to transfer his property for the reasons the trial judge fully explained. The trial judge also found that the transfer was done for valuable consideration, despite the discrepancy between the agreement price and the amount paid, and that it was carried out openly with the assistance of Mr. Westover’s accountant and a lawyer. The trial judge found no evidence that the transfer was done for consideration below fair market value. Mr. Westover was an elderly widower and mostly retired from farming. The Jolicouers were the only family members interested in continuing to farm the property. Mr. Westover was a joint tenant and continued to live on the property. Until the dispute arose in 2015, he daily took his meals with the Jolicouers. Mr. Westover even acknowledged in his 2015 will, after the dispute arose, that the transfer of the house property into joint tenancy was for estate planning purposes.

[6] As the trial judge rejected the appellant’s allegations of fraud and conspiracy, and as Mr. Westover became aware of the deficiency in the payment of consideration in 1997, the trial judge concluded, correctly in our view, that the ultimate 15-year limitation period under s. 15(2) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, had expired by the time the action was commenced in 2017.

[7] We see no basis to interfere with the trial judge’s conclusions.

[8] We also reject the suggestion that the trial judge was biased. There is no merit to the allegation. The issue was never raised before the trial judge and the record reveals nothing that could support an allegation of prejudgment or bias or displace the strong presumption of judicial impartiality. The trial judge’s reasons demonstrate his fair, even-handed and thorough consideration of the evidence and the issues before him.

Costs Appeal

[9] Regardless of the appeal’s outcome, the appellant seeks leave to appeal the trial judge’s costs award that she pay 67% and the estate pay 33% of the respondents’ substantial indemnity costs. As the appellant conceded at trial that the respondents were entitled to substantial indemnity costs because of her unsubstantiated allegations of fraud, she does not challenge on appeal the substantial indemnity level of costs ordered by the trial judge.

[10] The appellant seeks leave to appeal on the narrow issue that the trial judge’s costs order is plainly wrong because he erred in principle in ordering that the appellant, as the estate administrator, pay the respondents’ costs personally, when there was no basis for such an award.

[11] While we allow leave to appeal, we dismiss the costs appeal. Costs awards should only be set aside on appeal where there is an error in principle or the costs award is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27; Sawdon Estate v. Sawdon, 2014 ONCA 101, 119 O.R. (3d) 81, at para. 77. For the reasons that follow, although costs against an estate trustee personally are generally rare, we conclude that the trial judge made no error in ordering them in the circumstances of this case.

[12] It is now well-established that estate litigation, like all civil litigation, is subject to the general civil litigation costs regime. The historical approach in estate proceedings that all parties’ costs are paid out of the estate has been displaced by the modern approach to fixing costs in estate litigation that seeks to ensure estates are not depleted through the costs of unnecessary litigation and the assets of an estate are not treated “as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation”: Salter v. Salter Estate (2009), 50 E.T.R. (3d) 227 (Ont. S.C.), at para. 6; Johnson v. Johnson Estate, 2022 ONCA 682, 81 E.T.R. (4th) 7, at para. 21, leave to appeal to S.C.C. refused, 40477 (April 6, 2023); Sawdon, at para. 96; McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), at paras. 75-80. The same rules that govern costs in civil litigation at the appeal level apply in estate litigation: McDougald Estate, at para. 91; Sawdon, at para. 101.

[13] Exceptions to the general approach may arise in limited cases where public policy considerations apply and mandate a different result: McDougald, at paras. 75-85; Johnson, at para. 21; Neuberger Estate v. York, 2016 ONCA 303, 131 O.R. (3d) 143, at para. 24, leave to appeal refused, [2016] S.C.C.A. No. 207; White v. Gicas, 2014 ONCA 490, 98 E.T.R. (3d) 197, at para. 70. Public policy considerations include the need to give effect to valid wills that reflect the intention of competent testators as well as the proper administration of estates: Sawdon, at para. 85; Gicas, at paras. 71-72.

[14] Estate trustees are generally “entitled to be indemnified for all reasonably incurred costs in the administration of an estate”: Brown v. Rigsby, 2016 ONCA 521, 350 O.A.C. 236, at para. 11. Saddling estate trustees personally with legal costs where litigation was caused by the testator might well discourage them from initiating reasonably necessary legal proceedings to ensure the due administration of an estate: Sawdon, at para. 86; Gicas, at para. 72. However, this is not an absolute rule. A court may order otherwise if an estate trustee has acted unreasonably or in substance for their own benefit, rather than for the benefit of the estate: Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, at p. 391; Sawdon, at para. 82. That is the case here.

[15] The trial judge made explicit findings that the appellant unduly influenced her father to make the claims he made in the action. The trial judge also found that the appellant’s continuation of the action was primarily to benefit herself and her father’s other beneficiaries, rather than her father, who died shortly after the litigation was commenced, or his estate. The only basis for the action impugning the property transfers were the clearly unsubstantiated allegations of fraud and conspiracy. As a result, the trial judge found that the appellant’s testimony to further the action and the unsubstantiated allegations of fraud and conspiracy was self-serving.

[16] Further, the appellant’s continuation of the action was not reasonable. While her father commenced the action, he died a little over a year after starting it. It was the appellant who continued it and pursues the claim on appeal, more than five years after her father’s death. Litigation is very expensive. Fraud and conspiracy allegations are notoriously difficult to prove and, if unsubstantiated, can result in a higher level of costs awarded to the successful party, as was the case here: Unisys Canada Inc. v. York Three Associates Inc. (2001), 44 R.P.R. (3d) 138 (Ont. C.A.), at para. 15. The appellant cannot rely on her role as estate trustee as licence to engage unreasonably in estate-funded litigation that was of no real benefit to the estate nor to its proper administration, and had no genuine prospect of success: McDougald, at paras. 81-82. The appellant did not take reasonable steps to ascertain whether the litigation should be continued after her father’s death. The trial judge properly accounted for the portion of the costs attributable to the appellant’s unreasonable decision to continue the litigation: see, e.g. Avdeeva v. Khousehabeh, 2023 ONSC 6402, 90 E.T.R. (4th) 165, at paras. 44-56.

[17] To properly administer her father’s estate, the appellant was obliged to review her father’s bank accounts and documents. A simple review of Mr. Westover’s bank records and real estate documents would have revealed the transfers and their transparent circumstances. Moreover, as evidenced by his lawyer’s notes, the fact that Mr. Westover did not blame Ms. Westover-Morriseau but described the transfers as a “misunderstanding” belied any allegation of fraud and conspiracy. It does not appear that the appellant took any steps to investigate the allegations of fraud and conspiracy. Rather, as also found by the trial judge, the appellant had done little to administer the estate and had enjoyed living rent-free in Mr. Westover’s home for several years. She pursued litigation that chiefly benefitted her because of her free living arrangements and the possibility of enhancing her portion of the estate.

[18] The trial judge’s findings were open to him to make. They supported an award against the appellant personally because she had acted unreasonably and substantially for her own benefit in encouraging her father to start the action and in her continuing the action on the basis of the clearly unsubstantiated allegations of fraud and conspiracy against her siblings.

[19] Accordingly, the appeal is dismissed. Leave to appeal costs is granted but the costs appeal is dismissed.

[20] This appeal was meritless and of no benefit to the estate. It was founded on the same baseless allegations that were rejected at trial, as well as equally baseless allegations of bias against the trial judge. The respondents are entitled to their costs on a substantial indemnity basis from the appellant personally, in the all-inclusive amounts as follows:

1. Ms. Westover-Morriseau – $10,000;
2. The Jolicouers – $10,000.

“L.B. Roberts J.A.” “L. Sossin J.A.” “J. Dawe J.A.”