ONTARIO

SUPERIOR COURT OF JUSTICE

BARRIE COURT FILE NO.: 12-0001ES
DATE: 20120810
CORRIGENDA: 20120829

IN THE ESTATE OF MARY THEOTOS EVELYN PATTERSON, deceased

BETWEEN:

DAVID PATTERSON Applicant (Estate Trustee) – and – RODERICK PATTERSON and PENNY CHAITNARINE Respondents

M. Vallee, for the Applicant (Estate Trustee)

Respondents Self-Represented

HEARD: August 3, 2012

REVISED REASONS FOR DECISION

The original Reasons for Decision (released August 10, 2012) has been corrected – see appended Notice of Corrigenda

DiTOMASO J.

THE APPLICATION

[ 1 ] The Estate Trustee David Patterson (David) brings this application to pass accounts in respect of the Estate of his deceased mother, Mary Theotos Evelyn Patterson who died on June 4, 2008.

[ 2 ] Mrs. Patterson died leaving three children David, his brother Roderick Patterson (Rod) and daughter Penny Chaitnarine (Penny).

[ 3 ] Rod objects to the passing of accounts and filed notice of objections dated May 23, 2012. Said Notice of Objection to Accounts was addressed in David’s Affidavit with exhibits filed sworn July 30, 2012.

[ 4 ] In reply to David’s Affidavit and Response to Notice of Objection to Accounts, Rod delivered a packet of documents on the return of this hearing on August 3, 2012. The packet of documents was made exhibit #1 on the hearing.

[ 5 ] At the hearing, the Estate Trustee David testified in respect to the accounts and the objections raised by his brother Rod. In turn, David was cross-examined by Rod and there was short re-examination by counsel for the Estate Trustee.

[ 6 ] Rod was asked by the court whether he was going to testify or call any evidence. Although the process was explained to him in detail, he declined to testify or call any other evidence on the hearing.

[ 7 ] The parties were then called upon to make submissions which were heard including submissions as to costs.

THE PASSING OF ACCOUNTS HEARING

The Evidence of David Patterson

[ 8 ] Rod objects to the passing of the accounts while his sister Penny has no objection. David testified that he is an account manager with the Bank of Montreal and that he and his brother Rod initially were joint trustees in respect to the Estate of their deceased mother. Rod renounced his role as Trustee on November 4, 2008 and within a month’s time, David opened an Estate account at the CIBC on December 4, 2008. No Estate account was opened prior to that date following the death of Mrs. Patterson on June 4, 2008 because Rod could or would not sign the necessary documentation to open the account. I accept the evidence of David in this regard which is supported by exhibits attached to his Affidavit.

[ 9 ] Although he was cross-examined by Rod regarding the one month delay in opening the account between November 4, 2008 and December 4, 2008, I find that this was not an unreasonable period of time for David to do so given circumstances in his personal life, his employment and his attempts to deal with this Estate.

[ 10 ] I should make it clear at this time that David was a credible witness who testified in a straightforward and forthright manner. He was not evasive but quite to the contrary, was responsive to the questions asked of him both in-chief, cross-examination and re-examination regarding his knowledge and actions with respect to the administration of his mother’s estate. I accept his evidence as being credible and reliable.

[ 11 ] Put to him was the Application Record for Passing of Accounts for the period December 4, 2008 to February 15, 2012 and in particular Tab 4A of that Brief.

[ 12 ] In respect of receipts for said period, he confirmed that the receipt page totalling $266,681.46 was accurate. It also accurately reflected an outstanding loan from Mrs. Patterson to Rod in the amount of $8,000 supported by a Promissory Note for the benefit of the Estate. Rod never disputed at any time that there was a loan or that the loan was still outstanding. There is an entry dated November 20, 2009 regarding the proceeds of the house sale to Penny in the amount of $191,011.87 being the net proceeds of sale deposited into the CIBC account.

[ 13 ] Still at Tab 4A of the Summary, disbursements for the period totalled $230,862.52. David went through the disbursements and in particular the interim disbursements to Penny, Rod and himself. I am satisfied that the interim distributions were fair and equal to all the beneficiaries in all the circumstances.

[ 14 ] Evidence was given in respect of the late filing of the 2008 Income Tax Return, penalties associated with that late filing and David’s appeal which ultimately was rejected by Revenue Canada. When asked why there was delay in respect of the filing of the return, David testified that there were employment issues together with marital problems which caused him to divert his energies from administering the Estate.

[ 15 ] Further, he did not have at his disposal all of the T4 and T5 documents which ultimately he had to obtain from Revenue Canada. When he first became aware of the penalty, he proceeded with the appeal which was ultimately dismissed some eight to nine months later.

[ 16 ] Rod contends that the sum of $1,350.98 relating to the late filings of the 2008 Income Tax Return is directly attributable to delay on the part of David. I do not agree. Quite to the contrary, I conclude on the evidence that while David could have acted with greater dispatch, there are reasonable explanations for what happened regarding to the 2008 Income Tax Return. I accept those reasonable explanations and do not find that David ought to repay any interest and penalty fees to the Estate regarding the 2008 Return.

[ 17 ] I accept David’s evidence that the cash summary for the period of December 4, 2008 to February 15, 2012 as found at Tab 4A accurately reflects the cash position of the Estate for that period.

[ 18 ] At the last page of Tab 4A of the Application Record is a schedule of distribution.

[ 19 ] That schedule of distribution was revised in accordance with exhibit #3 which essentially reflects two changes.

[ 20 ] The first change takes into account the loan of Rod so that the total value of the Estate is the sum of $266,681.46.

[ 21 ] The second change reflects updated legal fees and disbursements in the amount of $22,329. That sum, includes additional legal fees for the month of July and August to and including this hearing. The pre-bill dated August 2, 2012, which I accept, is in the amount of $5,409.72. The balance of legal fees for August is the sum of $1,875.50, which I also accept.

[ 22 ] I accept the net available for distribution figure in the amount of $208,934.41 after taking into account Estate expenses of $35,481.05 and the updated legal fees and disbursements in the amount of $22,329. I accept David’s evidence in respect of the distribution to Rod, Penny and himself. On a three way equal division of the net available for distribution of $208,934.41, each sibling was entitled to a distribution of $69,694.80, less previous advances.

[ 23 ] Exhibit #3 shows that for Penny after advances, she owes the Estate $1,793.67 and acknowledges that this amount is to be repaid.

[ 24 ] Both David and Rod are each entitled to a final distribution of $3,644.80. I accept David’s calculations as accurate in respect of Exhibit #3.

[ 25 ] When asked whether or not he obtained a Certificate of Appointment and how Ms. Patterson’s house was sold without one, David testified that he acted on the advice of counsel that no Certificate was necessary and further, the house was conveyed by way of purchase and sale agreement prepared by a solicitor. Both Rod and Penny were content with the transaction. Rod was content with the value of the house. He did not require an appraisal. He was content with the sale of the house to his sister.

[ 26 ] David was cross-examined at some length by Rod. Some of the cross-examination was not relevant to the issues before the court on the passing of these accounts. Some time was spent asking David whether he had produced a Statement of Assets from the date of death dated June 4, 2008. I accept David’s evidence that he requested the CIBC to provide such a list of assets of June 4, 2008. It was explained to him by a representative of the CIBC that they would provide him with information as of June 12, 2008 and that’s what they did. He produced this Statement to Rod. There were two joint accounts held by Mrs. Patterson and her daughter Penny. In any event, those accounts passed to Penny and do not form any valid objection on this Passing of Accounts.

[ 27 ] David was questioned about a list of items found in Mrs. Patterson’s safety deposit box. Similarly, this line of questioning was not relevant to any valid objection raised by Rod regarding this Passing of Accounts.

[ 28 ] Rod proceeded to use his Notice of Objection to Accounts as a guide to cross-examination.

[ 29 ] Regarding ss. 2(c), David was questioned about HGR’s services from February 16, 2012 to February 29, 2012. Although there was a legal account in the amount of $723.20, it was alleged that materials did not disclose such an account. David testified that there was such an account for that amount and that payment of the account was subsequent to February 15, 2012 being the last date for the accounts period.

[ 30 ] David was cross-examined regarding the absence of statements or invoices for any entries attached to the accounts. I accept David’s evidence that the documentation was prepared and always available for Rod to inspect. The documentation was voluminous and was not the subject for email. An offer was made to Rod and his counsel to undertake a document review to be paid for by the Estate in order to satisfy themselves that the Estate was being administered properly. This was declined by Rod.

[ 31 ] I accept the evidence of David that there was no non-disclosure regarding statements and invoices. There is evidence to support David’s testimony that when answers and documentation were requested, David responded and provided that information and documentation.

[ 32 ] Rod had alleged that the firm of HGR had acted improperly in respect of the administration of the Estate. There is no evidence in this regard and I reject the allegation entirely. Rod cross-examined David regarding how HGR was retained. The evidence shows that both Rod and David sign a direction to obtain a copy of their mother’s Will from another law firm. The file notes of HGR for June 5, 2008 (date after their mother’s death) shows that HGR was being retained to assist in the administration of the Estate of their mother. I conclude that on the evidence the HGR firm was being retained not as solicitors for the executors or beneficiaries personally but rather as solicitors for the Estate.

[ 33 ] I accept the evidence of David that all documentation requested by Rod was supplied as requested if they were within his control. I have found David was prepared to make available for inspection documents for review but this offer rejected by Rod.

[ 34 ] Regarding the objection that no rent was collected on the residential property for 17 months, I accept the evidence of David that the continued occupation of the home by Penny and Mr. Greeley saved the Estate considerable cost of a property manager. It was also preferable for insurance purposes that the house be occupied rather than left vacant. Penny had lived with Mrs. Patterson prior to her mother’s death and continued to live in the home after her death. I conclude this arrangement was in the best interests of the Estate.

[ 35 ] I reject any allegation that there was any suggestion that the home should have been sold for more than it did. There was an offer in the amount of $208,500 but this offer was not acceptable and was rejected. David testified that the offer was reviewed with Rod’s counsel. Further, real estate values declined which contributed to a lower purchase price.

[ 36 ] The critical point in cross-examination related to the legal expenses which had been incurred in respect to the administration of the Estate. It was Rod’s position that the sum of approximately $22,000 incurred by the Estate Trustee was unreasonable and unnecessary because David did not provide an asset list. David testified that he provided a full accounting of all information and all information was provided to Rod or his lawyer. The offer to review all of the documentation by Rod and his lawyer was refused. David rejected the proposition that all of the legal accounts are to be paid by David. The matter of legal fees incurred by Rod was a matter entirely between Rod and his own solicitors and not fees incurred on the account of the Estate. David testified that he tried to administer the Estate as best he could given the circumstances he faced. He did as much as he could without the assistance of counsel but would consult his solicitors when it was necessary and he followed their advice.

[ 37 ] Rod did not cross-examine at any length in respect of any particular legal account.

[ 38 ] On cross-examination, David testified that he had acted impartially and fairly in the administration of this Estate without favouring any beneficiary over another.

No Viva Voce Evidence by Roderick Patterson

[ 39 ] Rod declined to testify on this contested Passing of Accounts.

ANALYSIS

[ 40 ] I find that David both through his viva voce evidence and on his Affidavit with exhibits sworn July 30, 2012 has answered to the satisfaction of this court all of the objections raised by Rod. Both David’s viva voce evidence and his Affidavit material support my finding that he acted reasonably and fairly as Estate Trustee in this matter in all the circumstances. I specifically find that there is no evidence that David was guilty of any mismanagement or inappropriate conduct regarding his administration of his mother’s Estate. I believe that he did the best job that he could as Estate Trustee and in that capacity faced a number of challenges.

[ 41 ] Those challenges came primarily from his brother Rod. As evidenced in the cross-examination of David, Rod was not content with the answers received regarding a statement of assets or inventory of the Estate as of the date of death. David continually explained that he obtained the best information that he could from CIBC and provided that information to Rod. Rod continued to pursue the matter notwithstanding that there were two joint accounts held by both his mother and sister which in the end became the property of his sister. There was evidence in the affidavit materials and a passing reference in David’s viva voce evidence that Rod had some issue with his sister being a beneficiary in their mother’s Estate.

[ 42 ] I find that there were repeated requests by Rod for information which David addressed to the best of his ability. I accept that statements, invoices, documentation and information were available to Rod. Both he and his lawyer were invited to participate in a document review funded by the Estate in order to satisfy themselves that the Estate was being administered in a proper fashion. This offer was declined.

[ 43 ] I do not accept that the legal fees incurred by the Estate are excessive due to any misconduct or delay on the part of David. This is clearly not borne out by the evidence. Cross-examination by Rod failed to disclose any particulars that would establish that the accounts were either excessive or unnecessary. Rather, I accept that a part of the legal fees were attributable to having to respond Rod’s requests.

[ 44 ] Further, Rod submitted that he had incurred his own legal expenses of $15,000 as a result of numerous attempts to obtain information and disclosure from his brother and in attempts to force his brother to pass accounts. Rod submitted that either David or the Estate should reimburse him for his legal fees. I do not agree. I am of the view that it was unnecessary for Rod to incur the legal fees that he did. If he had accepted the offer of a document review funded by the Estate legal expenses most certainly would have been minimized for all concerned. His continued and repeated requests for information and disclosure were largely unproductive given the ultimate findings by this court on this hearing with respect to Rod’s objections.

[ 45 ] In the end, for the reasons I have given, I have found Rod’s objections to be without merit. It is unfortunate that it took a contested hearing on the passing of these accounts to arrive at such conclusion. I find that all of Rod’s objections have been satisfactorily answered and the accounts as presented shall be passed.

SUBMISSIONS AS TO COSTS

[ 46 ] On behalf of the Estate Trustee, it is submitted that the legal expense of $22,329 should be paid by Rod personally. It is submitted that he alone is responsible for the legal expense which he claims is either excessive or unnecessary. I am not prepared to make this finding. I am not satisfied that Rod is entirely at fault as a result of his conduct with the result that he should pay $22,329 to the Estate.

[ 47 ] Neither do I agree with Rod’s position that he has incurred unnecessary legal fees as a result of the conduct of either HGR or his brother David. There was no evidence to support this submission either against HGR or his brother the Estate Trustee. The evidence discloses that Rod retained counsel in respect of a number of issues that concerned him not the least of which was whether his adopted sister Penny ought to be a beneficiary. Rod refused to sign bank documents which would have facilitated the opening of the Estate account with the CIBC. This was a relatively simple matter which should have been done quickly and without any issue. The failure to do so by Rod involved their Uncle Dave, who, in the end, was left exasperated and withdrew as mediator. I should also add that Rod brought requests for a Passing of Accounts before McDermot J. on a without notice basis. McDermot J. was of the view that it was inappropriate to do so and ordered that the matter be brought on notice. Counsel for the Estate Trustee assisted Rod in preparing the necessary court order for the Passing of Accounts and having said order issued and entered. I do not agree that $15,000 representing Rod’s legal expense ought to be borne by anyone but himself. Certainly, I reject Rod’s claim that either the Estate or his brother David is responsible for Rod’s legal expense and, accordingly, I find that he is responsible to pay his own legal costs. Legal fees and disbursements incurred by the Estate in the amount of $22,329 is properly payable from the capital of the Estate which includes $7,284.72 still payable to HGR Graham Partners LLP.

[ 48 ] Upon my review of exhibit #3 and monies that remain for final distribution, I find that there is very little left for distribution. Penny’s distribution is in a negative position. She would end up owing the Estate $1,793.67. David and Rod each have $3,644.80 available for distribution. The haemorrhaging in respect of this Estate must and will end now. Both the Estate and Rod have incurred considerable legal expense. Rod and the Estate will bear their own legal expenses. To make any other order under the circumstances would most certainly wipe out whatever small amount remains to be distributed in respect of Mrs. Patterson’s Estate as between Rod and David. It would also complicate an Estate not worth complicating. Such a result would be totally perverse in all the circumstances and not acceptable to this Court.

CONCLUSION

[ 49 ] Having found that the objections of Rod have been satisfied, there shall be Judgment on Passing of Accounts in the Estate of Mary Theotos Evelyn Patterson, deceased. This Court declares that:

1. The Estate accounts as filed by the applicant for the period from December 4, 2008 to February 15, 2012 are hereby passed;

2. the receipts of the applicant for the period are $266,681.46;

3. the disbursements of the applicant for the period are $230,862.52;

4. costs of the Passing of the Accounts are allowed and payable out of the capital of the Estate to HGR Graham Partners LLP in the amount of $7,284.72;

5. the Estate shall be distributed in accordance with the updated Schedule of Distribution attached as Schedule A;

6. the Judgment on Passing of Accounts for signing may be presented to me.

DiTOMASO J.

Released: August 29, 2012

NOTICE OF CORRIGENDA

1. Further to my Reasons for Decision released August 10, 2012, I attach hereto a copy of the updated Schedule of Distribution which should have been attached to those reasons as Schedule A as per para. 49 item 5.