ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF WALTER ALEXANDER SCOTT, Deceased

Paul Dancause, for the Estate Trustee, The Bank of Nova Scotia Trust Company

Callum Scott, Objector, Self Represented

HEARD: April 13, 2012

REASONS FOR JUDGMENT ON PASSING OF ACCOUNTS

James J.

[ 1 ] This matter involves an application by Bank of Nova Scotia Trust Company, estate trustee of the Estate of Walter Alexander Scott, deceased, (the “testator”) for approval of the estate accounts for the period June 16, 2009 to June 30, 2011.

[ 2 ] A notice of objection was delivered by Callum Scott, one of the children of the deceased, (the “objector”).

[ 3 ] The notice of objection includes the following contentions:

a) the estate trustee is not entitled to compensation as it has not followed the terms of the Will;

b) the estate trustee inappropriately made a partial payment of the cash legacies;

c) the estate trustee improperly requested a release from the beneficiaries of the legacies at the time of distribution;

d) the estate trustee inappropriately delayed distributing the whole of the cash legacies until satisfied there were sufficient funds available to cover the obligations of the Estate;

e) land was sold for too low a price;

f) bills for the consumption of water were paid by the Estate;

g) the estate trustee is responsible for the return of certain personal property claimed by the objector.

[ 4 ] Mr. Scott’s objections are addressed in a reply prepared by the solicitor for the estate trustee.

[ 5 ] The testator’s Will created a trust in favour of his surviving spouse that essentially allows her a life estate in the matrimonial home subject to broad discretionary powers vested in the estate trustee. The upkeep costs were to be paid out of the residue. The testator gave a cash legacy of $40,000 to each of his four children. The estate trustees were directed to pay the income generated by the residue to his spouse and empowered the estate trustee at paragraph 5.1 to pay to or for the benefit of his spouse “any amount of the capital of the residue of my estate as my estate trustees in their absolute discretion consider appropriate, to meet what my estate trustees decide are special or unusual circumstances, and without regard to the interests of any other beneficiaries ” (emphasis added). This and other provisions make it clear that the testator intended to enable the estate trustee to exercise its discretion in making decisions regarding the administration of the estate.

[ 6 ] That the objector may not agree with how the estate trustee exercised its discretion must yield to the fact that it was the testator’s decision to give this power to the estate trustee. There is no evidence that establishes that the estate trustee abused its discretionary power or acted in bad faith.

[ 7 ] The testator’s four children are the residual beneficiaries.

[ 8 ] The estate assets included cash, the matrimonial home, land and several mortgage receivables totaling in all about $760,000.

[ 9 ] The objector is clearly greatly vexed by the manner in which the estate has been administered and has waged a campaign against the estate trustee that includes letter writing to the C.E.O. of Scotiabank, protests at the local branch of the bank and constructing websites that are critical of the estate trustee and how the estate has been administered.

[ 10 ] The objections advanced by the objector are ill-informed and without merit. For example, central to the objector’s complaints is his objection to a document entitled Receipt and Release for Cash Legacy (the “release”) that he was asked to sign when $20,000 of the $40,000 cash legacy was distributed. The use of similar documents is standard practice when making distributions but the objector said no amount of revising could make the document acceptable; he objected to having to sign anything. The objector’s refusal to execute this document resulted in the funds being paid into a trust account for his benefit. Later, when the second installment was to be paid, the objector again refused to sign a release. The estate trustee utilized an alternate form of documentation that did not require signature by the objector but the objector refused to cash the cheque. As a result, the estate trustee seeks permission to pay the entire amount of the objector’s cash legacy into court.

[ 11 ] The objector says the reference to the word “legacy” in the proposed release will disentitle him to his share of the residue. He assumes that his residual gift is encompassed by the term “legacy” even though the term does not prima facie include the residue. The words “legacy” and “residue” are not synonymous. Assurances by the estate trustee were insufficient to dissuade the objector of his unwarranted concerns.

[ 12 ] There was an issue regarding the payment of water bills when water consumption was not part of the cost of upkeep of the home but the solicitor for the estate trustee indicated that this has been corrected. In any event small errors that are capable of correction are not grounds for refusing to approve the accounts.

[ 13 ] As for the executor’s compensation, this issue is covered by a fee agreement signed by the testator. There was no evidence that fees charged by the estate trustee were not in compliance with this agreement.

[ 14 ] In the result, a judgment approving the accounts will issue in accordance with the draft judgment provided by the solicitor for the estate trustee.

[ 15 ] The estate trustee seeks an order requiring the objector to pay legal costs. The basis for this request is that while the estate is usually responsible for the expenses associated with the passing of accounts, in this case the costs have increased substantially due to the numerous objections advanced by the objector. The solicitor for the estate trustee indicated that the costs associated with an uncontested passing of accounts are typically around $3500. In this case, however, because of the objections, the estate trustee expended substantial additional sums to prepare responding material and to prepare for and attend court. He estimates the additional cost at about $4,000.

[ 16 ] This case was unusual because in addition to noting his objections, the objector used the hearing for the passing of the accounts as an opportunity to expound on what he contended were errors and inadequacies of the estate trustee, whether related to the passing of accounts or not.

[ 17 ] On the issue of responsibility for payment of legal costs, I think the following factors are relevant (in no particular order):

i) an estate inevitably incurs expenses associated with the passing of accounts and it would be inappropriate to transfer expenses usually associated with this process to another;

ii) recovery of legal costs on a substantial indemnity basis is reserved for unusual and extraordinary situations where the usual order for partial indemnity is not appropriate or adequate;

iii) no one appeared for, and no submissions were made on behalf of, the objector’s siblings requesting that the objector be required to pay legal costs;

iv) costs usually follow the event meaning the unsuccessful party usually pays something on account of legal costs;

v) it is common, but not required, in estate matters for litigation costs to be borne by the estate rather than the beneficiaries;

vi) this was the initial passing of accounts and subsequent passing(s) of account will be necessary;

vii) the objections were unmeritorious. The objector had ample opportunity to inform himself of the law and practice regarding the administration of estates but seemed determined to persist in advancing his own misinformed opinions;

viii) the objector gratuitously maligned various individuals including the testator’s solicitor who drafted the Will and personnel in the employ of the estate trustee.

[ 18 ] Should it be the family’s burden to bear the financial consequences of their sibling’s unsuccessful objections or should the objector be required to pay some or all of the costs associated with his unsuccessful opposition to the passing of accounts?

[ 19 ] In my view, some amount ought to be charged to the objector. It is a valid consideration to hold that there are financial consequences to unnecessary and unsuccessful litigation. As the additional costs attributable to the position taken by the objector are estimated at $4,000, an order will issue allowing the estate trustee to deduct from the funds belonging to the objector the sum of $2,000 plus HST and apply this amount to the estate trustee’s costs of passing the accounts. The balance of the costs associated with the preparation for, and attendance on, the passing of accounts will be paid out of the estate.

Mr. Justice Martin James

DATE RELEASED: April 30, 2012

COURT FILE NO.: Pembroke File CV-12-086

DATE: April 30, 2012

ONTARIO SUPERIOR COURT OF JUSTICE IN THE ESTATE OF WALTER ALEXANDER SCOTT, Deceased REASONS FOR JUDGMENT Mr. Justice Martin James

DATE RELEASED: April 30, 2012