ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 11-50448
DATE: 2012/05/02
IN THE MATTER OF THE ESTATE OF PERCIVAIL HECTOR GORDON, DECEASED
BETWEEN:
HELEN GORDON VENABLES
by her litigation guardian, Michael Venables
Applicant
- and -
PETER LOCKHARD GORDON,
Executor and Trustee of the Estate of PERCIVAL HECTOR GORDON
Respondent
COUNSEL: Joseph W.L. Griffiths, for the Applicant
Matthew Estabrooks, for the Respondent
HEARD IN OTTAWA: By Written Submissions
DECISION AS TO COSTS
BEAUDOIN J.
[ 1 ] On December 15, 2011, I removed the Respondent as executor and Trustee of the Estate of Percival Hector Gordon. The Applicant now seeks her costs on a full indemnity basis. She claims that all of her costs were incurred through the unreasonable and reprehensible conduct of the Respondent. In the alternative, she claims substantial indemnity costs on the basis that she had made a valid Rule 49 Offer that was consistent with the relief obtained on the Application.
[ 2 ] The Applicant submits furthermore that the Respondent should bear the costs personally as the dispute did not arise out of any ambiguity or omission of the testator’s will or other conduct of the testator. [1]
[ 3 ] The Applicant had launched a previous Application which resulted in a mediated settlement in February 2009. At that time, she had spent more than $100,000.00 in legal fees. The Applicant now claims that her decision to forego costs in the previous proceeding was predicated on an understanding that the Respondent would abide by the terms of the settlement. Since he failed to do so, she claims that she should be entitled to the costs of both Applications, namely, $120,296.28.
[ 4 ] In the alternative, the Applicant seeks her costs of the second Application on a full indemnity basis. She claims these could have been avoided if the Respondent had simply fulfilled his duties as a Trustee and pursuant to the Agreement reached. In this case, the amount sought is $19,220.35.
[ 5 ] The Applicant refers to her Rule 49 offer of August 3, 2011. In that offer, she proposed two choices to resolve the Application: the Respondent could resign as Trustee and agree to the appointment of an arm’s length Trustee; or the Respondent could agree to take the necessary steps to wind up the Trust. The Applicant was successful in that I ordered the appointment of an arm’s length Trustee.
[ 6 ] The Applicant adds that the costs outline submitted at the time of the hearing did not account for fees incurred through her former solicitors in the context of the Application (an additional $6,000.00).
[ 7 ] On a substantial indemnity basis, the costs claimed are $14,681.20.
[ 8 ] In reference to the factors set out in Rule 57.01(1), the Applicant notes that the Respondent delayed the hearing of the Application and complicated matters unnecessarily by advancing arguments ( forum non conveniens ) that he knew or ought to have known would be unsuccessful given the history of the earlier proceedings.
[ 9 ] In addition, the Applicant submits that the Respondent should be required to bear his own costs of the litigation. To date, it appears that the Respondent has indemnified himself for his own legal costs by taxing the Trust with his solicitors’ legal accounts. To that extent, the Applicant seeks an order requiring the Respondent to reimburse the Trust for all legal monies paid out to his own legal counsel, since it was his own conduct that precipitated the litigation.
[ 10 ] The Respondent submits that a reasonable costs award for this Application which he characterizes as “simple” and which took a half day of argument is $7,000.00, including disbursements.
[ 11 ] He denies that any steps taken by him were reprehensible in the meaning of the case law. He claims that he simply engaged in the ordinary thrust and parry of litigation and that he was well within his rights to test the jurisdiction of the court and that he has already paid the costs of that motion. He submits that his conduct as a Trustee is irrelevant to an assessment of costs as are the costs incurred in the previous application.
[ 12 ] The Respondent claims that Rule 49 is not engaged since it was made on August 3, 2011 and the Application was scheduled for August 18, 2001 on which date the Respondent brought a motion on jurisdictional issues and sought an adjournment of the Application. That motion was dismissed and those costs have been paid. The Respondent claims that only those costs incurred after August 3 rd can be considered and that only 12 hours can be claimed at the substantial indemnity rate.
[ 13 ] The Respondent adds that the expectation of a losing party is one of the factors to be considered and he notes that the costs outline served at the Application claimed a total of $7,262.00 in fees. The Respondent claimed $6,438.00 in fees. The Respondent submits that there is no supporting evidence for the amounts claimed and queries the claim for costs for fees incurred through the Applicant’s former solicitors since Mr. Joseph Griffiths was counsel throughout.
[ 14 ] In reply, the Applicant cites the recent decision of Marziliano Estate , 2012 ONSC 1488 , where Justice Swinton held that it would be unfair to force an unsuccessful beneficiary to absorb her own legal costs in circumstances where she was required to intervene to ensure that others discharge their obligations.
[ 15 ] The Applicant repeats her allegations of unreasonable behaviour on the part of the Respondent, that went beyond the usual “thrust and parry” of litigation. She says that this is not a case where two litigants held reasonable but differing views on the proper administration of an Estate and submitted their dispute to the court for a determination of the issues. The Applicant emphasizes that this case was precipitated by the Respondent’s intentional and unjustified breach of his duties and responsibilities to act in good faith and in the best interests of the Applicant. Having forced the Applicant to go to court, the Respondent engaged in delay. The original return date of the Application was March 31, 2011. The Respondent, having been served in January, did little to address the situation until he retained counsel in March 2011. The adjournment to August 18, 2011 was conditional that the matter would proceed on that date. Just 10 days before the return of the Application, the Respondent brought a jurisdictional motion, which he should have known would be unsuccessful. The Applicant points out that her first offer to settle was made on March 8, 2011. It mirrored the second offer but did not contain a second option.
[ 16 ] The Applicant’s solicitor refers to a statement authored by the Respondent that indicates that he had incurred legal costs of more than $14,500.00 by November 2011. For that reason, she claims her costs claims are within the reasonable expectation of a losing party. Details of the disbursements have been provided.
Conclusion
[ 17 ] I am satisfied that the Applicant is entitled to her costs on a full indemnity costs. While the Rule 49 offer is one factor in arriving at that decision, I make the award of costs on this scale as a result of the conduct of the Respondent in this matter, which I conclude was reprehensible within the meaning of Davies v. Clarington (Municipality) 2009 ONCA 722 , 100 O.R. (3d) 66. He breached the terms of a mediated Agreement and I concluded that he had adopted an indifferent attitude towards them. He attempted to stay these proceedings when a similar attempt with respect to the earlier proceedings had failed. He withheld funds from the Applicant without a legitimate reason. He made his own investment decisions and concedes that losses were incurred but was evasive as to the amounts. He ignored the conflict of interest that he faced while being both a residuary beneficiary and a manager of the Trust. He claimed to rely on the advice of a third party but did not produce any admissible evidence to support his argument. I was satisfied on all the evidence that the Respondent had allowed the continued conflict with his half‑brother, Michael, to interfere with the proper exercise of his discretion as a Trustee and that this required his removal.
[ 18 ] I know of no decision that would allow the Applicant to recover costs of a previous proceeding that has been settled. As noted, the Respondent’s breach of the Agreement is nevertheless relevant to the quantum and scale of costs in this proceeding. I conclude that the full indemnity amount of $19,220.35 is within the reasonable expectation of the Respondent having regard to his own statement that he paid his counsel $14,500.00 from Trust funds before the preparation and attendance on the Application. I therefore award the Applicant her costs in the amount of $19,220.35, which are to be paid by the Respondent personally, as this dispute arose out of his misconduct and not out of any issues involving the Estate proper. The Respondent is also required to refund all fees paid out of Trust to his own counsel.
Mr. Justice Robert N. Beaudoin
Released: May 2, 2012
COURT FILE NO.: 11-50448
DATE: 2012/05/02
ONTARIO SUPERIOR COURT OF JUSTICE IN THE MATTER OF THE ESTATE OF PERCIVAIL HECTOR GORDON, DECEASED BETWEEN: HELEN GORDON VENABLES by her litigation guardian, Michael Venables Applicant - and - PETER LOCKHARD GORDON, Executor and Trustee of the Estate of PERCIVAL HECTOR GORDON Respondent COUNSEL: Joseph W.L. Griffiths, for the Applicant Matthew Estabrooks, for the Respondent DECISION AS TO COSTS Beaudoin J.
Released: May 2, 2012
[1] See McDougald Estate v. Gooderham , 2005 ONCA 435 , 255 D.L.R. (4th) 435 (Ont. C.A.)