COURT FILE NO .: 05-40/07
DATE: 20120629
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Estate of John Johannes Jacobus Kaptyn, deceased
BEFORE: G.R. Strathy J.
COUNSEL:
Jordan Oelbaum , for Simon Kaptyn
Ronald Bohm , for Henry Kaptyn
Stephen Grant , for the Estate Trustees, Simon Kaptyn and Henry Kaptyn
M.W. Kerr , for Jason and Jonathan Kaptyn
D. Dochylo , for the Office of the Children’s Lawyer
T.G. Bastedo, Q.C. , for Doreen Kaptyn
Alex Kaptyn, self-represented
HEARD: By written submissions
E N D O R S E M E N T (C O S T S)
[ 1 ] This endorsement deals with the costs of various proceedings in connection with the Kaptyn Estate, including motions heard May 20, 2011 ( Kaptyn Estate (Re) , 2011 ONSC 3491 , [2011] O.J. No. 2626), April 5, 2011 ( Kaptyn Estate (Re) , 2011 ONSC 2212 , [2011] O.J. No. 1631) and April 13, 2012 ( Kaptyn Estate (Re) , 2012 ONSC 2299 ).
[ 2 ] I will begin by briefly summarizing the law concerning the assessment of costs on motions in estate matters. I will also explain the approach I propose to take with respect to the costs of the proceedings at issue. I will then identify the major steps during the period in question. Finally, I will set out my disposition of the costs claimed by each party.
General Principles and Approach
[ 3 ] The award of costs in estate litigation is governed by the general principles set out in s. 131 of the Courts of Justice Act , S.O. 1990, c. C. 43 and rule 57 of the Rules of Civil Procedure , R.R.O. 1990, reg. 194. It is also subject to the proportionality principle set out in rule 1.04(1.1): see Smith Estate v. Rotstein , 2010 ONSC 4487 , [2010] O.J. No. 3266 (S.C.J.). The objective is to make an award that is fair and just in all the circumstances, having regard to the reasonable expectations of the parties. Fairness requires that the award of costs be proportional to the importance and complexity of the issues and the amounts involved.
[ 4 ] In the particular circumstances of estate litigation, the Court of Appeal has said in McDougald Estate v. Gooderham , 2005 ONCA 448 , [2005] O.J. No. 2432, 199 O.A.C. 203 that a departure from these principles may be justified in will challenge or will interpretation cases where either:
(i) reasonable grounds existed upon which to question the execution of the will or the testator's capacity in making the will; or,
(ii) where the difficulties or ambiguities in the will that gave rise to the litigation were caused, in whole or part, by the testator.
[ 5 ] On the other hand, as the Court of Appeal noted in that case, at para. 85, “Gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation.” The court observed in the same paragraph that estates must be protected from depletion by unwarranted litigation.
[ 6 ] I was appointed pursuant to Rule 37.15 to hear all motions in connection with this estate. I have exercised that jurisdiction for almost two years. In the interim, I have heard several motions and I have participated in a number of case conferences and teleconferences with the parties and counsel. As a result, I have gained considerable insight into the challenges facing the estate, the underlying causes of some of those challenges, and the diligence and reasonableness of the various parties in addressing those challenges.
[ 7 ] It has been observed on a number of occasions, that this estate has been paralyzed by the inability of the estate trustees to reach agreement on even the simplest issues. The relationship between them has been described as “dysfunctional”. Most, if not all, of the motions with which I am dealing were made necessary because the trustees could not agree and I was put in the position of being the “third trustee”. The failure to reach agreement has resulted in the retainer of multiple lawyers and advisors, has generated excessive and unwarranted litigation, has delayed the distribution of the estate, and has driven the costs up, up, up.
[ 8 ] I propose to apply two general propositions to the awarding of costs of the proceedings at issue. First, as a general proposition, the parties other than the estate trustees, namely Doreen Kaptyn (Doreen), the Office of the Children’s Lawyer (OCL) and the grandchildren of the testator, should have their reasonable costs paid out of the estate. Doreen has been drawn back into litigation that should have been resolved several years ago. The OCL has fulfilled, in a very helpful and independent way, a public responsibility in protecting the rights of minors and contingent interests. The grandchildren were not responsible for the litigation. The distribution of their bequests has been unconscionably delayed.
[ 9 ] That is not to say that these parties, particularly Doreen and the grandchildren, should recover all their costs. The proportionality principle will come into play to limit their costs, where appropriate, to an amount that is objectively appropriate as well as fair and reasonable. A fair balancing of the costs may require each party to bear some proportion of their own costs. The grandchildren, in particular, are not entirely free of responsibility for escalating the disputes.
[ 10 ] The second general proposition is that, in the circumstances of this case, in most instances, the costs should be paid out of the estate. In the event that the estate does not have sufficient funds to pay any portion of the costs awarded, without an abatement, the estate trustees will be jointly and severally liable for the costs, to be apportioned as between them in the amount of 80% payable by Henry Kaptyn (Henry) and 20% by Simon Kaptyn (Simon), in proportion to their respective shares in the residue of the estate.
[ 11 ] I realize that it takes two to disagree and that the acrimony between the trustees is probably long-standing and attributable to circumstances of which I have no knowledge. Nevertheless, in terms of the motions and issues with which I am dealing, it is my view that Henry has generally taken an unreasonable, self-interested and poorly-informed position and Simon has generally taken a more reasonable, balanced and informed position. In all the circumstances, it is reasonable that Henry should bear the substantially greater share of the costs.
[ 12 ] I will now summarize the chronology and the motions for which costs are at issue.
August 6, 2010 :
[ 13 ] Brown J. released his interpretation decision.
December 17, 2010 :
[ 14 ] Brown J. advised counsel to approach me as the Rule 37.15 judge to put in place a plan to adjudicate the remaining issues.
January 18, 2011 :
[ 15 ] I ordered the estate trustees to put in place a plan of distribution within 30 days.
April 5, 2011 Motion :
[ 16 ] This was the motion brought by Simon for the implementation of a plan of distribution. The motion was supported by Simon’s sons, Jason and Jonathan and by the OCL. It was partially opposed by Henry. My reasons are self-explanatory. Some issues were deferred for further consideration on the motion heard May 20, 2011, discussed below. I directed a trial of the PAC issue.
[ 17 ] As my reasons indicate, Simon was substantially successful on the motion. His proposal was supported by KPMG and by the OCL. Henry opposed Simon’s plan, but failed to back up his opposition with any cogent evidence or expertise. In general, Henry’s submissions were unhelpful.
[ 18 ] In contrast, it was Simon who took the initiative to have the distribution plan prepared and brought before the Court. Simon was prepared to make appropriate concessions. He accepted the wisdom of some form of “compensation order” proposed by Henry at the 11 th hour, to compensate the trust for Henry’s children for the reduced marketability of the CII shares.
[ 19 ] I ordered that Simon’s plan of distribution be implemented, except for the distribution of the shares of the gifted companies, which was adjourned. The estate trustees were to bring a motion for directions as to whether corporate taxes should be paid from the date of death to the date of distribution.
(Motion chronology and remaining paragraphs continue exactly as in the source decision.)
G.R. Strathy J.
Date: June 29, 2012