McArthur v. McArthur and Harman, 2019 ONSC 7232
CITATION: McArthur v. McArthur and Harman, 2019 ONSC 7232
COURT FILE NO.: DC 52/18 DATE: 20191220
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Glithero, D.L. Corbett and Favreau JJ.
B E T W E E N:
WILLIAM OSLER McARTHUR
Plaintiff/Appellant
- and -
MARILYN McARTHUR and CAROLYN HARMAN
Defendants/Respondents
COUNSEL:
Peter C. Card, for the Appellant
Judith Turner, for the Respondents
Heard at Oshawa: June 19, 2019
REASONS FOR DECISION
D.L. Corbett J.:
[1] The Appellant appeals summary judgment on a counterclaim granted against him for $26,475.44, plus costs of $10,000, in connection with his objection to his late brother’s will.
Summary and Disposition
[2] The judgment below is predicated on incorrect legal premises. There is no cause of action for bringing civil proceedings other than abuse of civil process. That cause of action was neither alleged nor proved and the facts do not meet the test for the tort of abuse of civil process.
[3] As an alternative basis for decision, the motions judge ordered the Appellant to pay estate administration expenses (interest and penalties owed by the estate to CRA) as legal costs. These expenses are not legal costs and may not be included in a costs award.
[4] For the reasons that follow the judgment below is set aside, the counterclaim is dismissed, and the costs award of estate administration expenses is set aside, with costs of the counterclaim and this appeal to the Appellant, netted against litigation costs properly awarded against the Appellant for the main action.
Background
[5] The Appellant is the eldest brother of the late Frank McArthur. The Respondents are the Appellant’s sisters.
[6] Frank MacArthur died on August 23, 2013. His will is dated four days before his death. It names the Respondents as estate trustees and beneficiaries; the Appellant is neither a trustee nor a beneficiary.
[7] The Appellant filed a Notice of Objection to the issuance of a Certificate of Appointment of Estate Trustee with a Will on January 26, 2015 (the “Objection”). He issued a statement of claim in respect to this Objection on September 14, 2015. The Respondents filed a statement of defence and counterclaim on November 10, 2015. Examinations for discovery took place on November 23, 2016 and June 12, 2017.
[8] The Respondents moved for summary judgment. In response to the motion for summary judgment, the Appellant withdrew his Objection. In this way the Appellant abandoned his primary claim[^1] and an order to this effect was made on June 13, 2017; the balance of the motion for summary judgment on the counterclaim and for costs was put over to July 11, 2017.
[9] On July 11, 2017, the motions judge granted summary judgment on the counterclaim and awarded costs against the Appellant including estate administration costs for interest and penalties owed by the estate to CRA.
The Judgment Below
[10] The motions judge’s handwritten endorsement is as follows:
This motion proceeded as a combined request for summary judgment on the counterclaim and costs. The Notice of Objection was withdrawn on consent and by Court Order on June 13, 2017. Whether by summary judgment or by costs, the Estate Trustee Defendants are entitled to recover from the Plaintiff the sum of $26,475.44 representing the penalties and interest payable by the estate to CRA as a result of their being no estate trustee to pay the income tax liability of the estate for seventeen months. There can be no genuine issue for trial of the estate’s right to recover this amount. The quantum is not disputed and in any event has been properly proven. The inability to pay by the estate was directly solely caused by the Plaintiff’s Notice of Objection, which prevented the proper administration of the estate. The evidence is clear that the Will was produced to the Plaintiff in November 2014. He became aware through the letter of December 4th, 2014 from the drafter of the will, Mr McLennan, that the Will simply mirrored a holograph prepared by the deceased a short time before. As well the Plaintiff was unable to point to any other lawyer who might have prepared another Will. Finally, the entire objection of the Plaintiff appears to have been without merit. Otherwise the Plaintiff would not have withdrawn the Objections and we would still be looking at litigation involving validity of the Will. I am not prepared to infer that the estate trustees would not have gone ahead to pay the amount owing to CRA had they been duly appointed; that is not only speculative but is contrary to common sense – even if the lands were not sold, other assets or line of credit could have been utilized so as not to incur penalties and interest with CRA. There is no genuine issue for trial. The penalties and interest incurred by the estate are directly related to an objection filed which was ultimately abandoned without adjudication by the Court. In my view, to embark on an ex post facto consideration of the merits of an abandoned claim would not only be futile but would also be unnecessary. The Plaintiff must be taken to have known that the counterclaim was still outstanding. The counterclaim clearly set out the interest and penalties of CRA as a head of damages.
If I am wrong in my disposition of the summary judgment on the counterclaim, I would in any event award the amount to the Defendant for costs. The Court is granted a wide discretion in determining costs and the principles of indemnity weigh heavily in the exercise of my discretion. With very little to go on, the Plaintiff elected to tie up the proper administration of the estate while he pursues otherwise fruitless litigation against the Will. We are long past the days when Objector could expect to be spared exposure to costs in estate litigation cases. Estate trustees are entitled to be indemnified for all reasonably incurred costs in the administration of an estate. There were no ambiguities or difficulties caused by the Testator. There are no public policy reasons why costs should be denied to the estate. Costs should follow the result. The estate has successfully resisted the objection and action of the Plaintiff. I would fix costs of $10,000 in favour of the estate and payable forthwith by the Plaintiff. In addition to this and the reason set out above, the Plaintiff shall pay the estate a further $26,475.44. Order to go accordingly. The balance of the motion in respect to the Plaintiff’s claims on personal property is adjourned sine die returnable by either party on seven days’ notice.
[11] The motions judge gave brief handwritten reasons. There is nothing inappropriate in this: in a busy court, with a matter of this kind, a swift handwritten endorsement is often better than a lengthy set of written reasons – otherwise court business would grind to a halt. Where the court gives brief handwritten reasons, they are to be read generously and practically on appeal, to construe the disposition with appropriate deference to the court that immersed itself in the record. In this case, the handwritten endorsement explains clearly why the motions judge came to the decision he did. It is a sufficient basis for appellate review. I would add, in fairness to the motions judge, that the legal principles upon which this appeal turns apparently were not brought to his attention when the motion for summary judgment was argued before him.
Standard of Review
[12] The decision of the motions judge is reviewable in this court on a standard of correctness on questions of law and on a standard of palpable and overriding error on questions of fact.[^2]
(a) No Claim for Pursuing Litigation
[13] The allegations upon which the counterclaim is based are set out in the statement of defence and counterclaim as follows:
In the defence:
- The Estate must be administered. There is substantial income tax debt owing to Canada Revenue Agency that must be paid. Assets of the Estate need to be sold to satisfy the debt. An Estate Trustee during litigation must be appointed.
In the counterclaim:
- The Defendants, Plaintiffs by counterclaim, counterclaim against the Plaintiff, Defendant by counterclaim as follows:
(a) For damages equal to the amount of interest and penalties that the Estate… is liable to pay Canada Revenue Agency due to the inability of the Plaintiffs by counterclaim to liquidate estate assets to pay the debt resulting from the litigation commenced by the Defendant by counterclaim. The full amount of damages will be determined immediately prior to trial.
(b) Damages equal to the amount of any other losses incurred by the Estate… that flow from the inability of the Plaintiffs by Counterclaim to administer the Estate resulting from the litigation commenced by the Defendant by Counterclaim.
This quotation is the entire counterclaim.
[14] On its face the counterclaim is a claim for damages “resulting from the litigation commenced” by the Appellant. This claim does not disclose a cause of action.
[15] Commencing and pursuing litigation is not an actionable wrong. Commencing and pursuing losing litigation is not an actionable wrong. Commencing and pursuing vexatious and frivolous litigation or litigation that is an abuse of process is not an actionable wrong.
[16] There is one qualification and two exceptions to this principle.
[17] The qualification is an award of legal costs: a losing party may be liable for legal costs. In fixing those costs the conduct of the party (including the merits of the litigation) may be taken into account.
[18] Neither of the two exceptions arise in this case. They are:
a. where by statute, regulation, or common law principle, an award of damages may be available for wrongful recourse to certain kinds of legal process; or
b. where the tort of abuse of civil process is pleaded and proved.
[19] The first exception has no application in this case. Examples of where it can arise are:
a. Where a party is called upon to honour an undertaking as to damages given to the court to obtain interlocutory injunctive relief.[^3] In this context, damages awarded flow, not from the litigation, per se, but from the injunction granted on the strength of the undertaking as to damages.[^4]
b. Where a party overstates the value of a claim for lien it registers pursuant to the Construction Act.[^5] Again, the damages awarded do not flow from the litigation, per se, but as a direct consequence of the overstatement of the value of the claim for lien.
These are merely examples of the first exception and are not intended as an exhaustive list. There is no statute, regulation, or common law principle to award estate administration costs (other than legal costs and disbursements) arising from bringing estate litigation.
[20] The second exception likewise has no application in this case. The test for the tort of abuse of civil process is:
(a) the plaintiff has been subjected to a legal process by the defendant;
(b) this has been done predominantly to further some indirect, collateral and improper purpose;
(c) some definite act or threat has been made in furtherance of that purpose; and
(d) some measure of special damage has resulted.[^6]
The counterclaim makes allegations in respect to (a) and (d), but not in respect to (b) and (c).
[21] The test for the tort of abuse of civil process is difficult to meet and only arises in unusual cases. As stated in Fleming on Torts:
The essential elements of abuse of process are: first, a collateral and improper purpose, such as extortion, and secondly, a definite act or threat, in furtherance of a purpose not legitimate in the use of the process. Some such overt conduct is essential, because there is clearly no liability when the defendant merely employs regular legal process to its proper conclusion, albeit with bad intentions.[^7]
[22] As argued by Perell J. in learned commentary:
One corollary rule of the requirement that the improper purpose must be a purpose outside of the action is that the mere bringing of a lawsuit with its inherent consequences will not provide the foundation for liability for the tort of abuse of process. It follows that a litigant has no tort claim for having to suffer the notoriety and invasion of privacy, the possible harm to reputation, the emotional stress, the inconvenience, the waste of time, and, save for a recovery of costs, the expense of vindictive and possibly unmeritorious proceedings. These consequences are the sometimes unfortunate incidents of a public adversary system to resolve civil disputes.
This corollary rule has the effect of substantially narrowing the scope of the tort of abuse of process, which narrowness is regarded as salutary because it stops a proliferation of abuse of process claims that might themselves be an abusive means to discourage access to justice. Many claims for the tort of abuse of process have failed because the plaintiff’s complaint focuses only on having been sued and his or her complaint ultimately amounts to not much more than that he or she will be discomfited simply by being sued in a likely unmeritorious action.[^8]
[23] On the findings of the motions judge, the Appellant brought unmeritorious litigation which he eventually abandoned. The consequence of these findings may be an adverse costs award. If there is litigation misconduct, that award could be on an elevated scale. But these findings do not give rise to a cause of action. There is nothing in the factual matrix of this case to suggest that the counterclaim is bad merely as a result of deficient pleading. The counterclaim is dismissed as failing to disclose a cause of action.
(b) Estate Administration Costs are not Legal Costs
[24] The motions judge correctly stated the applicable costs principles in estate cases: the “old” approach, where the estate paid everyone’s costs (absent litigation misconduct) has given way to the “loser pays” approach in civil litigation, with discretion to award costs against an estate if the litigation was caused by or was a result of circumstances pertaining to the testator.
[25] I see no basis to interfere with the motions judge’s conclusion that the Appellant was the “losing party” and should indemnify the “winning parties” for legal costs and disbursements of the main action.[^9]
[26] “Costs” in this context refers to litigation costs, not estate administration costs. Fees and disbursements included in litigation costs that may be awarded are set out in Tariff A of the Rules of Civil Procedure. Consequential losses from litigation are not included in Tariff A. Item 35 of the Tariff, covering appropriate items not expressly enumerated in the Tariff, states:
Where ordered by the presiding judge or officer, for any other disbursement reasonably necessary for the conduct of the proceeding, a reasonable amount….
Consequential losses and expenses are not incurred “for the conduct of the proceeding”. The motions judge erred in principle in including interest and penalties payable by the estate to CRA in legal costs awarded against the Appellant. That order is set aside.
[27] This does not mean that estates cannot be managed while estate litigation is outstanding. An estate in litigation often has obligations. The parties may seek directions and approval from the court to take necessary steps in respect to the estate while litigation is outstanding.[^10]
Costs
[28] The motions judge ordered litigation costs of $10,000 against the Appellant for the action and the counterclaim. I would reduce this award by $1,000 to reverse the costs of the counterclaim, leaving a balance of $9,000 in costs payable by the Appellant for the main action. I would award the Appellant his costs of the counterclaim, fixed at $1,000, leaving a net amount of $8,000 owing by the Appellant to the Respondents for the proceedings below.
[29] The Appellant is entitled to his costs of this appeal, which I would fix at $2,000. This shall be netted against the costs below, leaving, in the result, an order that the Appellant pay the Respondents net litigation costs of $6,000, inclusive.
Order
[30] I would allow the appeal, dismiss the counterclaim, and set aside the costs award below. The Appellant shall pay net costs of $6,000 to the Respondents, inclusive, for costs of the claim, the counterclaim and the appeal.
___________________________ D.L. Corbett J.
I agree: ___________________________ Glithero J.
I agree: ___________________________
Favreau J.
Date of Release: December 20, 2019
CITATION: McArthur v. McArthur and Harman, 2019 ONSC 7232
COURT FILE NO.: DC 52/18 DATE: 20191220
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Glithero, D.L. Corbett and Favreau JJ.
BETWEEN:
William Osler MacArthur
Appellant
– and –
Marilyn MacArthur and Carolyn Harman
Respondents
REASONS FOR DECISION
D.L. Corbett J.
Date of Release: December 20, 2019
[^1]: Apparently issues remain about personalty claimed by the Appellant; that issue is not before us. [^2]: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235, paras. 8, 10 and 36. [^3]: Rules of Civil Procedure, Rule 40.03. [^4]: I note that the undertaking as to damages arose first at common law, and was later incorporated into the Rules of Civil Procedure: it is open to the court to recognize new situations where an exception should be made to the general principle. There are no circumstances in this case that would justify such an innovation. [^5]: Construction Act, SO 2017, c.24, s.35. [^6]: Hawley v. Bapoo (2005), 76 OR (3d) 649, 134 CRR (2d) 86 at paras. 85-86 (SCJ), appeal allowed on other grounds 2007 ONCA 503, 227 OAC. 81 (C.A.), applying Metrick v. Deeb (2003), 172 OAC 229 (C.A.), leave to appeal refused [2004] SCR viii. [^7]: Quoted with approval in Metrick v. Deeb (2003), 172 OAC 229 at 230-231 (C.A.), leave to appeal refused [2004] SCR viii. [^8]: Hon. Justice Paul Perell, “Tort Claims for Abuse of Civil Process” (2007), 33:1 Adv. Q 193 at 203. See also Klar and Jeffries, Tort Law (6th ed., 2017), pp. 87-90; J. Irvine"The Resurrection of Tortious Abuse of Process" 47 CCLT 217; Harris v. GlaxoSmithKline Inc., 2010 ONCA 872, leave to appeal to SCC denied [2011] SCCA No. 85; Rowe v. Unum Life Insurance Co. of America, [2006] OJ No. 1897 (SCJ), paras. 251-257; Westjet Airlines Ltd. v. Air Canada, [2005] OJ No. 2310 (SCJ); Lee v. Globe & Mail (2001), 52 OR (3d) 652 (SCJ); Scintilore Explorations Ltd. v. Larache, [1999] OJ No. 2847 (SCJ); Metropolitan Separate School Board v. Taylor (1994), 21 CCLT (2d) 316 (Ont. Gen. Div.); Teledata Communications Inc. v. Westburne Industrial Enterprises Ltd. (1990), 71 OR (2d) 466 , 65 DLR (4th) 636 (HCJ); Grainger v. Hill (1838), 4 Bing (NC) 212. [^9]: McDougald Estate v. Gooderham, 2005 CarswellOnt 2407 (Ont. CA). [^10]: Rules 14.05(a), (b) and (d) and 75 of the Rules of Civil Procedure.