SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 12-54651
DATE: 2012/11/21

RE: James Guzzo, Applicant

AND

Shaye Green a.k.a. Barry Guzzo and Barry Green, Respondent

BEFORE: Mr. Justice Robert J. Smith

COUNSEL: Ryan D. Garrett, for the Applicant
No one appearing, for the Respondent

HEARD: By written submissions

E N D O R S E M E N T R E G A R D I N G C O S T S

Overview

[ 1 ] James Guzzo brought an application to have Shaye Green a.k.a. Barry Guzzo and Barry Green, hereto and after referred to as Barry, removed as co‑executor of the estate of Maria Guzzo.

[ 2 ] Barry did not respond to the application and based on the uncontradicted evidence filed, Barry was removed as a co-executor of the estate.

[ 3 ] The uncontradicted evidence was that Barry failed to properly carry out his duties as an executor by misappropriating estate funds in the amount of $18,651, by frustrating the sale of shares in ManuLife Financial leading to a loss to the estate of approximately $100,000, by commencing a baseless lawsuit against James Guzzo and Lee Donaldson in the name of the estate without the consent of the co‑estate trustee, frustrating the sale of the property located at 56 Hawthorne Avenue, and by commencing an appeal to the Canada Revenue Agency (“CRA”)in the name of the estate without the authority of the co‑estate trustee in an effort to increase the amount of taxes that the estate was obliged to pay to the CRA.

[ 4 ] As a result of the above conduct, the applicant requests that costs be awarded on a substantial indemnity basis and that those costs be payable personally by Barry.

[ 5 ] The applicant seeks costs on a substantial indemnity scale in the amount of $19,133.93.

Factors

[ 6 ] The factors to be considered when fixing costs are set out in Rule 57 of the Rules of Civil Procedure and include in addition to success, the amount claimed and recovered, the complexity and importance of the matter and the principle of proportionality, the conduct of any party which unduly lengthened the proceeding, whether any step was improper, vexatious or unnecessary, or taken through negligence mistake or excessive caution, a party’s denial or refusal to admit anything, any offer to settle, the principle of indemnity, scale of costs, hourly rate claimed in relation to the partial indemnity rate set out in the Information to the Profession effective July 1, 2005, the time spent, and the amount that a losing party would reasonably expect to pay.

Success

[ 7 ] The applicant was successful on his application to have Barry removed as a co‑executor.

Complexity and Importance and Proportionality

[ 8 ] The issue was not complex as it was unopposed and was important to the applicant.

Conduct of Any Party

[ 9 ] I agree with the applicant’s submission that Barry’s conduct as alleged, misappropriating estate funds and frustrating the sale of shares and the property owned by the deceased as well as appealing to attempt to increase the amount of taxes payable by the estate amounts to unreasonable conduct which should be sanctioned by an award of costs.

Scale of Costs, Hourly Rates and Time Spent

[ 10 ] The Ontario Court of Appeal in the decision Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, the Court held that substantial indemnity costs are only expressly authorized in two circumstances: firstly, where an offer to settle under Rule 49 is exceeded and secondly, where a party has engaged in reprehensible, scandalous or outrageous conduct justifying sanction by the court.

[ 11 ] I am satisfied that the allegations against Baird in the application, which are uncontradicted, namely that a co‑executor has taken money from the estate for his personal use and frustrated the sale of shares and also his actions of appealing to CRA in the name of the estate and commencing actions without the consent of his co‑executor, appealing the income tax to increase the amount of taxes paid by the estate, amount to scandalous conduct that merits sanction and on award of substantial indemnity costs.

[ 12 ] While I agree that substantial indemnity costs should be awarded, the application was unopposed and I find that 73 hours for preparation of the application materials is not proportional to the complexity of the matter. I find that the hourly rates are reasonable given the experience of counsel.

Costs Payable by the Estate or by the Respondent

[ 13 ] The applicant seeks to have the costs that are awarded payable by Barry personally and not from the estate. The test for when legal costs are payable personally or payable from the estate was set out in McDougald Estate v. Gooderham, 2005 21091 (ON CA), 255 D.L.R. (4th) 435, at para. 78‑80.

[ 14 ] At paras. 79 and 80, the Court stated:

[79] Traditionally, Canadian courts of first instance have followed the approach of the English courts. While the principle was that costs of all parties were ordered payable out of the estate if the dispute arose from an ambiguity or omission in the testator’s will or other conduct of the testator, or there were reasonable grounds upon which to question the will’s validity, such cost awards became virtually automatic.

[80] However, the traditional approach has been – in my view, correctly – displaced. The modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations set out above applies, to follow the costs rules that apply in civil litigation. …

[ 15 ] I find that the costs incurred by the co‑executor did not arise from an ambiguity or omission in the testator’s will or other conduct of the testator, nor were there reasonable grounds upon which to question the will’s validity. The costs have been incurred as a result of the Barry’s reprehensible conduct and his failure to perform his duties as an executor. Therefore, I order that the costs be paid personally by the respondent, Barry and not be payable from the estate.

Amount the Unsuccessful Party Would Reasonably Expect to Pay

[ 16 ] Again, as discussed above, the hourly rates are reasonable however I will reduce the preparation time and find that the losing party would reasonably expect to pay approximately $10,000 in legal costs for an unopposed application.

Disposition

[ 17 ] Having considered all of the above factors the respondent, Shaye Green also known as Barry Guzzo and Barry Green is ordered to pay costs James Guzzo in the amount of $10,000 plus HST plus disbursements of $1,363.89.

R. Smith J.

Date: November 21, 2012

COURT FILE NO.: 12-54651

DATE: 2012/11/21

ONTARIO SUPERIOR COURT OF JUSTICE RE: James Guzzo, Applicant AND Shaye Green a.k.a. Barry Guzzo and Barry Green, Respondent BEFORE: Mr. Justice Robert J. Smith COUNSEL: Ryan D. Garrett, for the Applicant No one appearing,for the Respondent ENDORSEMENT REGARDING COSTS R. Smith J.

Released: November 21, 2012