SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 52924/11
DATE: 2012/03/08
RE: Ashley Darlene Sekulich and Andre Sekulich, a minor by his Litigation Guardian Jacqueline Darlene Sekulich ,
Applicants
AND:
Radovan Sekulich, Executor of the Estate of Ranko Sekulich, Deceased, The Office of the Children’s Lawyer
Respondents
BEFORE: Turnbull, J.
COUNSEL:
Malte von Anrep, Counsel, for the applicants
Terry Hill, Counsel, for the defendant Radovan Sekulich
No one appearing for the Office of the Children’s Lawyer
HEARD: March 8, 2012
ENDORSEMENT
1The applicants seek three heads of relief on this motion:
a. Repayment of a $2500.00 retainer paid to the Estate Trustee’s former solicitors from the assets of the Estate, and
b. An order denying the Estate Trustee compensation for work he has done on the estate in his capacity as Estate Trustee, and
c. The Costs of this application.
2The respondent Radovan Sekulich (Radovan) is the brother of the deceased Ranko Radovan. Ranko was previously married to the applicant Jacqueline. They had two children of their marriage, the applicants Ashley and Andre who are the sole beneficiaries under their late father’s will.
3Ranko died on October 17, 2008. His will named his brother Radovan as Estate Trustee. By order of Parayeski J. dated November 12, 2009, Radovan was ordered to produce and bring before the Court any paper or writing purporting to be testamentary relating to the late Ranko, to file an application for Certificate for appointment of Estate Trustee and to file with the court a statement of the nature and value at the date of death of Ranko of each of the assets of the Estate. These matters were ordered to be done within 20 days.
4Radovan obtained Certificate of Appointment of Estate Trustee with a Will on March 31, 2010. This was approximately 17 months after his brother’s death. In his affidavit, Radovan offered some explanation for the delay in dealing with this estate. As Mr. Hill explained in his submissions, part of the delay was caused by the suspension of the lawyer he retained being by the Law Society of Upper Canada. When that occurred, his new counsel wrote to the Law Society on December 29, 2009 [1] for his former solicitor’s file and the original will. That letter was sent approximately six weeks after the order of Parayeski J. and about three weeks after the matters ordered by him were to have been completed. The Law Society finally delivered the original will to Radovan’s counsel by letter dated January 10, 2010.
5In the meantime, Radovan’s solicitor did deliver a letter outlining the assets of the estate on December 7, 2009 [2] and today, the parties agreed that the assets were pretty much of the same value as indicated in that letter.
6However, Radovan continued to fail to provide a full accounting of the nature and value of the assets with supporting documentation. The applicants contend that he failed to make appropriate enquiries to ascertain the nature and extent of assets of Ranko’s estate, including the commuted value of Ranko’s pension despite having been provided with information to make such enquiries.
7In her affidavit filed on this application, Jacqueline has outlined her efforts to get the information from Radovan on behalf of her children. Those efforts are outlined in detail in paragraphs 10 to 16 of her affidavit.
8In a letter dated June 3, 2012, counsel for the applicants wrote to Radovan’s solicitors and indicated that unless information that had been requested was forthcoming, they had been instructed by their clients to bring a motion to remove Radovan as Estate Trustee. In the same letter, at the top of page 2, a request was made to have the Estate Trustee enquire of the Canadian Automobile Workers’ Union about the disposition of the pension monies to which Ranko may have been entitled when his former long term employer ceased its business operations. On June 2, 2011 a written enquiry was made to the CAW by the solicitor for Radovan [3] . It suggests that prior efforts had been made to contact the CAW without success. However, the letter from the applicants’ solicitor to counsel for Radovan on June 3, 2011 [4] clearly indicates that there should have been no trouble contacting the appropriate person at the CAW and events proved that to be correct, for the necessary information was received from the CAW within a few days afterwards.
9I find it significant that in that same letter of June 3, 2011, counsel for the applicants noted that his office nor his clients had had any contact from Radovan or his lawyers since December 2010. Not surprisingly, the applicants had finally brought this application on April 29, 2011 seeking the removal of Radovan as Estate Trustee, an accounting with the passing of accounts and an order denying Radovan any compensation as an Estate Trustee.
10The application was adjourned a number of times. Finally, in December 2011, the respondent filed his affidavit which provided the applicants with much of the information which they had been seeking. However, as noted elsewhere in this ruling, some of that information was confusing and inaccurate.
11The application was partly heard by Taliano J. on December 8, 2011. During the hearing of that motion, counsel for the respondent sought an adjournment of the matter to allow Radovan’s and Ranko’s mother to sign and file an affidavit with respect to certain relevant issues. Hence, the application was adjourned to today.
12Counsel advised the court that most of the issues on this application have been settled in the interim and the three issues remaining to be determined are listed in paragraph 1 of this endorsement. I will deal with them in the same order as they are listed.
Repayment of $2500.00 Retainer
13Radovan retained counsel to assist him with certain work related to the estate. He paid that law firm a retainer of $2500.00 from estate funds. The account which was rendered by the lawyers is found in the Respondent’s Application Record at tab 39. I have reviewed the account and on its face, I can not say that it was unreasonable for those services to be conducted by a solicitor. The account itemizes services for which the average person acting as an Estate Trustee would typically require assistance. Hence, I find the estate did benefit from the services rendered and the respondent should not be required to personally pay those costs.
Denial of Estate Trustee Compensation
14The applicants submit that Radovan should be denied any compensation as an Estate Trustee due to the dilatory and negligent way in which he has managed this estate. I consider this motion to be premature in light of the fact that the Estate has not been completed and the Estate Trustee has not presented his account for compensation.
15Section 61 of the Trustee Act, R.S.O. 1990, c. T-23 puts the onus is on the Estate Trustee to establish his claim for compensation is a “fair and reasonable allowance”.
16In Re Jeffery Estate , [1990] O.J. No. 1852 (Surr Ct.) at p. 4 ., Killeen J. was required to assess the Accounts of an Estate Trustee and determine the compensation for the Estate Trustee. Justice Killeen cited Re Toronto General Trust and Central Ont. Railway (1905), 6 O.W.R. 350 and found that the following factors are determinative in assessing compensation:
(a) the size of the trust;
(b) the care and responsibility involved;
(c) the time occupied in performing the duties;
(d) the skill and ability shown; and,
(e) the success resulting from the administration
17In discussing the factors to consider in calculating the compensation of an Estate Trustee, the learned Judge wrote at p. 5 :
...the audit judge should first test the compensation claims using the percentages
approach and then, as it were, cross-check or confirm the mathematical result against the five-factors approach...
18The Ontario Court of Appeal has also provided some guidance to audit judges that time alone cannot be the dominant consideration in fixing compensation. Further the Court of Appeal approved Justice Killeen’s approach in Re Jeffery Estate in determining fair and reasonable compensation. Laing Estate v. Hines , 1998 6867 (ON CA) , [1998] O.J. No. 4169 (C.A.) at p. 5.
19Hence, it is necessary to have the Accounts of the estate and the compensation sought by the Estate Trustee before the court in order to determine the amount of compensation sought by the Estate Trustee.
20Therefore the motion to deny the Estate Trustee any compensation is dismissed but strictly without prejudice to the right of the applicants to argue that he is not entitled to compensation for the reasons urged upon this court, in the event he should seek compensation.
Costs of This Application
21The applicants seek their costs of this application. They contend that this entire matter is a history of continuous enquiries to determine the assets of the estate and to understand the information that was being provided. Counsel noted that it was only when the respondent Radovan finally filed his responding affidavit in this matter in December 2011, that the applicants could “put all the dots together”. They argue that the failure of the Estate Trustee to comply with clear order of Parayeski J. in November 2009 resulted in two years of needless legal expenses for which the two young beneficiaries of Ranko’s estate should not be responsible. The total value of the estate appears to have been only approximately $40,000.00 and I must say that as I look at this matter, it should not have been an overly complicated matter. In essence, it involved the production of bank account records, the CAW information and a proper listing of expenses with supporting information.
22Mr. von Anrep argued that from the time of issuing the application in April 2011, the respondent was given until December 2011 to provide the needed information. Even then, the application had to be adjourned to obtain a supplementary affidavit from Radovan’s mother with respect to two issues of significance to the applicants. One of those related to the sum of $95,000.00 which the applicants believed was to be part of the estate and on which queries were made to the respondent’s solicitor as far back as in June 2011 [5] . He further noted that even the Statement of Receipts, Disbursements and Distribution found at tab 40 of the Respondent’s Application Record is inaccurate. It contains $63,000.00 of disbursements, some of which were gratuitously paid by Lepsova Sekulich for her son’s funeral. I am well aware that those accounts were to be filed within 20 days of the order of Parayeski J. dated November 12, 2009 and they were not prepared and served on the applicants until over two years later and under the deadline of this pending application.
23Counsel for the applicant reviewed that affidavit of Lepsova Sekulich sworn December 22, 2012 with his clients and decided not to cross examine on it. Counsel were subsequently able to settle the application, subject only to the issues listed in paragraph 1.
24Mr. Hill argued that in the total context of all that has transpired in this matter, the respondent is not totally responsible for the delays. For example, he noted that in December 2010, well before the Application was issued, counsel for the respondent wrote to the CAW seeking the information relative to any benefits to which Ranko may have been entitled. [6] He noted the reference to unreturned phone calls and the follow up letter of June 2, 2011 as evidence of the difficulty the respondent was having in getting the CAW information. As a result, he urged the court to not find that it was the fault of the Estate Trustee that the CAW information was slow forthcoming.
25He further noted that almost $20,000.00 was paid for Ranko’s funeral expenses by his mother Leposava Sekulich and that she has not sought re-imbursement from the estate. Had she done so, there would be virtually nothing to distribute at this time as counsel have indicated that there will only be approximately $19,500.00 to distribute to Andre and Ashley.
26Mr. Hill further urged the court to consider that aside from the accounting in this small estate, there were really two major issues which were driving the continuing dispute between the parties. The first was the issue of the alleged sum of $95,000.00 held by Leposova Sekulich for the applicants (her grandchildren) which is agreed never did exist. Secondly, shortly before his death, Ranko transferred ownership of his home to his mother and the circumstances around that transfer has resulted in parallel litigation. Mr. Hill noted that counsel for the respondent did attempt to reply to some of those issues in his letter of May 26, 2010.
Analysis
27Section 27(1) of the Trustee Act , supra, provides the standard of care for Trustees in dealing with property.
In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments .
28The standard of care of a trustee in managing the assets is a man of ordinary prudence in managing his own affairs. The standard is applied to professionals and non-professionals. Fales v. Canada Permanent Trust Co., 1976 14 (SCC) , [1977] 2 S.C.R. 302 (S.C.C.) at 315.
29An Estate Trustee is bound to perform his/her duties in a prudent and timely manner. While a standard of perfection is not required, a standard of transparency, reasonable timeliness and accurate accounting is mandatory.
30On a complete review of this record, I do not find that the Estate Trustee has met the standard required of him. Due to the lack of information provided, the delay in providing it and the inaccuracy of some of the information provided, I find that the applicants had no choice but to bring this application to the court. They are young people and understandably need the funds their father intended for them so that they will have the means to pursue their post secondary education. They waited a reasonable period of time before commencing the litigation process and gave adequate notice that resort would be made to the Courts if satisfactory answers were not forthcoming. Once the application was brought, the respondent had seven full months to respond and only on December 5 th , 2011, three days before Taliano J. began to deal hear the application, did the applicants receive much of what they had been seeking.
31Hence, I find that the applicants are entitled to their costs of this application. It would be most unjust that the costs ordered against the Estate Trustee be paid to the applicants from the Estate proceeds as it effectively would mean the beneficiaries were paying the costs of these proceedings which were necessitated by the conduct of the respondent.
Assessment of Costs of this Application
32Mr. von Anrep has provided the court with a Costs Outline as required under Rule 57. I have considered the extensive experience of Mr. Stratton and Mr. von Anrep at the bar, 37 years for the former and 45 years for the latter. I have reviewed the services provided in the account and the hourly rates charged and find them necessary and very reasonsable.
33However, I do not feel that full indemnity costs should be awarded in this matter. There has been divided success in the application as Radovan has not been removed as Estate Trustee due to the fact that there is basically just the disposition of funds left to be completed. In addition, due to the “underlying” issues relating to the non-existent $95,000.00 fund and the house transfer, I am satisfied a certain amount of the time incurred related to those issues which were not directly before the court on this application. I also have taken into account the fact that the assets of the estate are not significantly different from what was reported by Radovan’s solicitor in his letter of December 7, 2009.
34I allow the applicants their costs of this application on a partial indemnity basis which are fixed in the sum of $9,500.00 plus HST.
35I allow the applicants their disbursements fixed in the sum of $600.00 plus HST. I have reduced the photocopying charge as some of that has to be included in “overhead” costs which are reflected in counsel’s hourly rates.
Conclusion:
36The applicants’ motion to disentitle the respondent to his Estate Trustee’s compensation is dismissed without prejudice to the applicants to argue that he is not entitled to compensation, in the event he should seek compensation.
37The applicants’ motion to compel the Estate Trustee to repay the $2500.00 retainer paid to counsel from Estate proceeds is dismissed.
38The applicants are entitled to their costs of this application in the amount of $9,500.00 plus HST and their disbursements fixed in the sum of $600.00 plus HST, both amounts payable by the respondent Radovan Sekulich.
39If counsel can not agree on the costs of today’s attendance, I will receive brief written submissions forwarded to the Trial Co-ordinator at St. Catherines together with a Costs Outline as required under Rule 57, on or before March 25, 2012.
Turnbull J.
Date: March 8, 2012
[1] Application Record of the Respondent, tab 13
[2] Application Record of the Respondent, tab 14
[3] Application Record of the Respondent, tab 35
[4] Application Record of the Respondent, tab 36
[5] Respondent’s Application Record, tabs 36 and 38.
[6] Respondent’s Application Record, tab 33.