COURT FILE NO.: 02-08/11

DATE: 20131216

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF STEFANIE ABER, deceased, and

IN THE MATTER OF THE PASSING OF ACCOUNTS

BETWEEN:

Aber Estate, Contested Passing of Accounts

Lisbeth A. Hollaman, for the Estate Trustee

Gregory M. Sidlofsky, for the Objector

HEARD: May 21 and 25, 2013

CAROLE J. BROWN J.:

REASONS FOR DECISION

Background

[1] This trial concerned a contested passing of accounts. Erna Schneider was the attorney for property and, subsequently, estate trustee for her mother and father, Stefanie and August Albert Aber. Ms. Schneider applied to pass the attorney accounts, dated September 13, 2002 to February 29, 2008, and the estate accounts, dated March 1, 2008 to November 1, 2010. A Notice of Objection to the passing of these accounts was filed by Hilda Heston-Cook, the sister of Ms. Schneider, on April 8, 2011, which gave rise to this trial.

The Parties

Ernestina Schneider

[2] Ernestina (“Erna”) Schneider resides at 143 High Park, Toronto, where she has resided with her husband since 1967. She worked as a secretary until her retirement. She is now 72 years old. Ms. Schneider and her family lived approximately one block from her parents’ home in the High Park area of Toronto, and had lived near her parents for many years. She testified that she, her husband and three children had a close relationship with her parents and spent time together with them on holidays and at the cottage. She testified that her family was always available for her parents.

[3] As her parents aged, Ms. Schneider rendered them increasing assistance.

Brunhilde Heston-Cook

[4] Brunhilde (“Hilda”) Heston-Cook, Ms. Schneider’s sister and the objector in this matter, had left Toronto as a young woman. She went to the United States, where she married and resided. She currently resides with her husband in Texas. She has lived in the United States since the age of 29 and returned to Canada to visit her parents one to two times per year.

[5] She is the residual beneficiary of the estate.

[6] It was clear throughout the proceeding that there was serious animosity between the sisters. It was also clear that Ms. Heston-Cook did not trust Ms. Schneider.

The Parties’ Parents

[7] The parties’ parents, Stefanie Aber (date of birth: August 18, 1913) and August Albert Aber (date of birth: April 16, 1912) resided at 243 High Park, Toronto, and had resided there since 1967.

[8] Ms. Aber was assessed as not competent to handle her personal and financial affairs on or about September 5, 2002 and Ms. Schneider thereafter acted as power of attorney. Mr. Aber was assessed as incapable of handling his financial affairs in or about September of 2002, after which Ms. Schneider acted as his power of attorney until his death on February 12, 2004. His estate passed, pursuant to his Will, to his wife, Stefanie Aber.

[9] As power of attorney for her parents, Ms. Schneider paid all expenses (including property taxes and household expenses such as snow removal, appliances and repairs thereto, other services related to the home, and groceries); employed and supervised caregivers from 2002 to 2008; filed remittances for income taxes; attended to the parents’ investments, which consisted mainly of Canada Savings Bonds and Guaranteed Investment Certificates; and did all of the parents’ banking. With respect to these duties, she kept all receipts, and kept ledgers with the expenses noted. She also attended to her parents’ needs and medical appointments. She generally did all of the grocery shopping, although she was assisted on occasion by her husband and son. She testified that she visited her parents twice a day to ensure that they were doing well and to supervise the caregivers. When the caregivers were not there, she took care of her parents herself. With respect to the home maintenance, she looked after all of the home maintenance and repair requirements. She testified that she, her husband and son maintained the garden, which her parents loved, that her husband and son did the yard work, including mowing the lawns, clearing the snow in winter, and doing the routine home maintenance and repairs. She testified that, in essence, she ran two households.

Dates of Death

[10] As indicated above, the parties’ father died on February 12, 2004, at which time his estate passed to their mother. Ms. Aber died on March 1, 2008. On May 6, 2008, the Ontario Superior Court of Justice issued a Certificate of Appointment of Estate Trustee with a Will to Ms. Schneider.

[11] Pursuant to the Will, Ms. Schneider inherited the home of her parents located at 243 High Park in Toronto, valued at the time of death, for probate purposes, at $890,000, and personal effects and household goods valued at $4000. Ms. Heston-Cook received a distribution of $100,000. The residue of the estate was to be divided between the sisters. Further, joint accounts held in the name of Stefanie Aber and Erna Schneider were, pursuant to their mother's wishes, to be divided equally between the sisters, which was done. Only the residue remains to be distributed between the sisters.

2003 Application

[12] On July 10, 2003, Ms. Heston-Cook filed two applications for orders that Ms. Schneider pass the accounts with respect to the management of the property of August Aber and Stefanie Aber under power of attorney, that Ms. Schneider produce all supporting documentation related to the financial affairs of Mr. and Mrs. Aber and that she produce their Wills. Ms. Heston-Cook maintained that the applications were brought at the request of her father who, along with her mother, was allegedly upset because they did not know where their finances or financial documents were.

[13] The evidence before the Court included an affidavit sworn by August Aber which stated that he was aware of the application brought by Ms. Heston-Cook and that he was “opposed to Hilda receiving any information with respect to any of my property”. Further, he stated: “I am aware that Hilda has asked that Erna be made to produce a copy of my will. I do not wish to have her see my will before I die”.

[14] At the hearing of the applications before Sachs J. on September 10, 2003, the applications were dismissed and Ms. Heston-Cook was ordered to pay costs of the application to Ms. Schneider in the amount of $7000. Further, Ms. Heston-Cook was ordered to pay costs with respect to the legal fees of her father, who was represented by his own lawyer, in the amount of $4000. None of these costs were ever paid by Ms. Heston-Cook. All legal fees were paid from the estate.

Passing of Accounts and Objection

[15] Ms. Schneider retained the services of David McGregor and Associates to prepare the estate accounts in March 2008. The administration of the estate was commenced and, on November 25, 2008, the estate trustee’s accounts were provided to Ms. Heston-Cook for her review. In response, Ms. Heston-Cook requested copies and breakdowns of all investment accounts and a detailed accounting of other items. She further questioned the executor compensation as well as the power of attorney fees. Additional details, information and accounting were sought over the next 14 months. The Notice of Objection was served on April 8, 2011.

Based on the documentation in evidence, including the correspondence between counsel for Ms. Schneider and Ms. Heston-Cook, the delays in the passing of accounts are attributable to (a) numerous requests by Ms. Heston-Cook for additional details, information and documentation regarding the account statements prepared by counsel for the estate in the format required by this Court; (b) subsequent requests by Ms. Heston-Cook that the estate trustee accounts be prepared by a certified accountant pursuant to standard accounting practices rather than in the form required by the Court in order that they could be submitted for audit, if Ms. Heston-Cook deemed necessary; (c) delays from the time that the estate trustee accounts prepared by the accountant were provided to Ms. Heston-Cook in March 2009 until Ms. Heston-Cook retained counsel, attended in Toronto to review all accounts and supporting documentation, requested additional documentation and ultimately filed the Notice of Objection in April 2011. She did testify that while she was attempting to obtain additional documentation, she was also undergoing treatment for breast cancer. She admitted that she had never told her sister nor had she apprised Mr. McGregor that there were delays due to her undergoing said treatment. Her evidence was that “there was no reason to do so”.

Statutory Framework and Case Law

Compensation for Attorneys for Property

[16] The Substitute Decisions Act, 1992, S.O. 1992, c. 30, (“the Act”) governs powers of attorney and guardians. There is no requirement to pass accounts on a regular basis in the Act. The duty is simply to keep accounts of all transactions: s. 30(6). Section 42 of the Act provides that the court may require the passing of accounts by order. Accounts are usually passed when the incapable person dies. In this case, Ms. Schneider waited until the death of her mother before passing the accounts.

[17] Entitlement to compensation for attorneys for property is found within s. 40 of the Act, which stipulates that a guardian of property or attorney under a continuing power of attorney may take a compensation, monthly, quarterly or annually, from the property in accordance with the prescribed fee scale. Percentage rates for compensation are set forth in regulation 159/00 as follows: at 3% on capital receipts and capital disbursements; at 3% on revenue receipts and revenue disbursements; and 3/5 of 1% on the annual average value of the assets as a care and management fee.

[18] These percentages are not, however, conclusive. The court must still be satisfied that the compensation calculated in accordance with the percentages would be fair and reasonable. To that end, the governing principles are essentially those applicable to determining compensation for executors: Sworik (Guardian of) v. Ware (2005), 18 E.T.R. (3d) 132 (Ont. S.C.J.), at paras 118-21.

Compensation for Executors

[19] Entitlement to compensation for executors is found within s. 61 of the Trustee Act, R.S.O. 1990, c. T.23, which provides that “[a] trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice”.

[20] While the legislation confers the right to receive compensation, it does not stipulate prescribed rates or a formula for calculation. Principles applicable to the assessment of compensation pursuant to s. 61 are set forth in the case of Laing Estate v. Hines (1998), 1998 6867 (ON CA), 41 O.R. (3d) 571 (C.A.). The court held, at pp. 573-74, that the audit judge should first test the compensation claims using the “percentages” approach and then cross check to confirm the mathematical result against the five factors approach set out in the case of Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (H.C.), at p. 354:

1. The size of the trust;

2. The care and responsibility involved;

3. The time occupied in performing the duties;

4. The skill and ability displayed; and

5. The success of the administration.

[21] Percentage guidelines have been developed by the courts to assist in quantifying compensation in an effort to bring more predictability to the assessment of the trustee's compensation. Since 1975, the Ontario guidelines or tariff has been as follows: fees charged against capital, at 2 1/2% on capital receipts and on capital disbursements; fees charged against revenue, at 2 1/2% on revenue receipts and revenue disbursements; a care and management fee, at 2/5 of 1% per annum on the gross value of the assets under administration. See Laing Estate, at p. 573.

[22] Pursuant to the case law, the trustee will not be disentitled to compensation because of any errors made in the administration of the estate where the trustee’s position was reasonable: Re Goodfriend Estate (2003), 4 E.T.R. (3d) 10 (Ont. S.C.J.), at paras. 23-24.

Care and Management Fees

[23] The approach to be taken to care and management fees is not entirely settled by the case law. On the one hand, “care and management fees are routinely awarded in Ontario”: Carmen S. Thériault, ed., Widdifield on Executors and Trustees, 6th ed., loose-leaf (2007-Rel. 6) (Toronto: Carswell, 2002), vol. 1, ch. 11, at p. 11. This routine approach deals with care and management fees on the same basis as the fees charged against capital and income, awarding them in accordance with the usual percentage provided the outcome is fair and reasonable: Schifrin Estate, Re (1993), 49 E.T.R. 191 (Ont. Gen. Div.), at paras. 17-20. On the other hand, another line of cases treats care and management fees as extraordinary awards that should not be made routinely, but only in special circumstances. One argument in support of this view is that “routinely or automatically awarding a care and management fee would be double counting for the quantum meruit encompassed by the percentage award made on the incoming and outgoing capital and revenue”: Archibald Estate, Re(2007), 36 E.T.R. (3d) 219 (Ont. S.C.J.), at para. 23. Another recent case suggested that a care and management fee would be appropriate either (1) where the Will “creates a continuing trust that requires ongoing investment and management beyond the executor’s year”, or (2) where “litigation prevents immediate distribution for an appreciable period of time and management of the monies is required”: Irwin v. Robinson, 2007 CarswellOnt 6368 (S.C.J.), at para. 70.

[24] The latter line of cases appears to have a superior pedigree. Significantly, Laing Estate v. Hines(1998), 1998 6867 (ON CA), 41 O.R. (3d) 571 (C.A.), post-dates the case relied upon by the estate trustee, Schifrin Estate, Re (1993), 49 E.T.R. 191 (Ont. Gen. Div.). In Laing Estate, at p. 574, the Court of Appeal adopted a passage from Jeffery Estate, Re (1990), 39 E.T.R. 173 (Ont. Surr. Ct.), at p. 179, which described the care and management fee as an “extra allowance … based on special circumstances”.

[25] Ultimately, though, whichever analytical approach is taken, the test and therefore the outcome should be the same. The management fee, if any, should be fair and reasonable compensation for the estate trustee’s efforts in the particular case. “[T]he search is for an appropriate quantum meruit award in a unique setting”: Jeffery Estate, Re (1990), 39 E.T.R. 173 (Ont. Surr. Ct.), at p. 179. Really, then, neither care and management fees nor any other part of an estate trustee’s compensation should be awarded as a matter of routine adherence to fixed percentages. Every case requires a careful examination of the facts to determine whether the compensation sought would be fair and reasonable.

[26] One case in which a care and management fee at the tariff rate was awarded on similar facts was Macivor Estate, Re, 2011 ONSC 4175, 2011 CarswellOnt 6843. See, in particular, para. 33:

I find that Nancy [the estate trustee] is entitled to the full compensation that she claims, which is based on the standard percentages. The estate, consisting mainly of an investment portfolio, [and] a house and its contents, was not complicated, but was time-consuming to administer. Nancy worked hard to fulfill her responsibilities and did so with diligence. She accounted to her siblings for all the steps she had taken, and involved them in important decisions. She kept them informed about the steps she had taken, her authority for doing so, and the amount and formula for the compensation she claimed for discharging her responsibilities. She responded to their concerns and complaints.

Compensation where the Estate Trustee is also a Beneficiary

[27] The objector relied on Hill Estate, Re, 1994 CarswellOnt 3945 (Gen. Div.), at para. 10, for the proposition that where a bequest is made to an estate trustee, it should be excluded from consideration in fixing compensation. In Hill Estate, the court in turn relied on Re Mortimer, 1936 58 (ON CA), [1936] O.R. 438 (C.A.), for that rule. However, it failed to consider Re Cohen (1977), 1 E.T.R. 80 (Ont. Surr. Ct.), at p. 85, which addressed Re Mortimer as follows:

An examination of Re Mortimer … reveals that in the first instance the executor endeavoured to pay himself compensation on his own legal account which was disallowed on appeal. However, this case is not authority for the proposition [that all transactions in which money is paid by the executor from the estate to himself are excluded from compensation]. It seems clear to me that an executor has a duty to pay the legacies and bequests no matter to whom they are left by the will. This could include himself in his personal capacity, and as this is part of the executor’s administration of the estate he is entitled to compensation on the items in question.

[28] Re Cohen was followed in Atwell Estate (Re) (1997), 19 E.T.R. (2d) 234 (Ont. Gen. Div.), at para. 7, and Stanley Estate (Re) (1996), 13 E.T.R. (2d) 102 (Ont. Gen. Div.), at para. 9. Re Cohen represents the correct interpretation of Re Mortimer and is a complete answer to the contention that bequests that the estate trustee paid to himself in his personal capacity should be excluded from compensation. Re Mortimer did not purport to lay down any such general rule, and there is a clear distinction between the payments to beneficiaries which an executor is duty-bound to make regardless of their identity and payments made by an executor to himself which are the result of choosing to hire himself and consist in essence of collecting his own bill for legal services.

Issues

[29] The major issues on this contested passing of accounts, as defined by the Notice of Objection, with certain objections subsequently withdrawn, are as follows:

1. The compensation claimed by Ms. Schneider as power of attorney and estate trustee. The objector, Ms. Heston-Cook, submits that it is not fair and reasonable given that it was a simple estate that was managed by Ms. Schneider as attorney and subsequently as trustee.

2. Cash transactions which appear in the accounts as capital disbursements (CDs), which Ms. Heston-Cook claims are not accounted for; these comprise, in greatest part, groceries, household expenses, supplies and medications.

3. The valuation of the house as it appeared in the power of attorney accounts (original assessment in 2002) and subsequently in the estate trustee accounts (as at 2008), which Ms. Heston-Cook argues is overstated by $100,000.

4. Costs of roofing repairs in 2004 and 2006, which Ms. Heston-Cook argues should be deducted from the estate trustee’s compensation, as she argues that the trustee received a personal benefit related to the roofing repairs when she inherited the home.

5. Legal fees which Ms. Heston-Cook says were awarded to Ms. Schneider personally, but paid out of the estate, and which should be deducted from the compensation awarded to her.

Analysis of issues

Compensation

[30] Ms. Heston-Cook objected to the amount of compensation claimed by Ms. Schneider regarding her duties as attorney and as estate trustee. Ms. Heston-Cook maintained that the estate was simple and the amount of compensation claimed should reflect this. She argued that the compensation sought is excessive and should be reduced.

[31] Ms. Heston-Cook took issue with the management of the estate and the investments made. She maintained that the estate assets minus the home amounted to $600,000 and were mainly in CSBs, GICs and bank accounts, which did not require maintenance or care. She argued that the management was not executed properly, that the investments should have been placed in vehicles other than CSBs and GICs, and that an investment advisor should have been retained, which would have produced a greater return. Further, she took issue with the fact that a CSB was liquidated just after the death of their mother and before maturity, resulting in a loss of interest of $266.66.

[32] With respect to the responsibilities that Ms. Schneider assumed as attorney for property regarding the home, the caregivers, etc., she argued that there was no evidence of how much time was spent at these tasks, that Ms. Schneider was retired in any event such that these responsibilities did not impact on her career or income, that the responsibilities assumed did not require skill, that the results of the management of the investments were minimal and should have been done through a financial advisor.

[33] A letter dated July 15, 2011 sent by counsel for the estate trustee in response to the Notice of Objection and adduced in evidence at the hearing indicates that, when the objection was raised, counsel for the estate trustee responded to this objection indicating that Ms. Schneider “did not delegate the day to day care and administration of her parent[s’] affairs to professionals and undertook these tasks personally”. It was noted that Ms. Schneider “became the primary caregiver for her parents and carried out their wishes to stay in their home as long as … their health and finances allowed them to”. Ms. Schneider's “role in the administration of their affairs was more than someone who performed banking, paying bills and record keeping. As primary caregiver, some of the tasks [she] undertook were making appointments, taking parents to medical appointments, arrang[ing] for medical supplies, medications and in home nursing assistance, purchas[ing] household items (groceries etc.), house maintenance, payroll and record keeping”. As regards the objection regarding the amount of time expended, counsel responded that, while they did not see how the objection related to the original assets and to compensation claimed thereon, Ms. Schneider “spent a minimum of 2 hours a day on average being the primary caregiver for her parents/mother”. Ms. Schneider “cared for her parents/mother for the period September 12, 2002 to March 1, 2008 which represents a total of 1,994 days. 1,994 x 2 hours/day = 3,988 hours at minimum that [she] spent caring for her parents/mother”.

[34] Ms. Heston-Cook argued that, because Ms. Schneider acted first as attorney and then as estate trustee, the prospect of overcompensation arises: that assets previously being managed were, as estate trustee, subject to compensation for receiving the assets and distributing them, and therefore the compensation should be reduced accordingly. With respect to the accounting, I note that the real estate, namely the house, is only shown under the estate accounts where the house was brought into the estate and distributed, and is not shown under the attorney accounts. Therefore, no double dipping occurred in the accounting and no overcompensation arises in that regard.

[35] Ms. Schneider testified that, with respect to the types of investments used for her parents assets, she essentially kept the assets in the same investment vehicles used by her parents. With respect to the issue of the CSB liquidated prior to maturity, she testified that the estate lawyer, Mr. McGregor, advised her to liquidate it immediately because it was anticipated that the estate would be wound up quickly. She testified that, had she known that there would be a delay in distributing the assets, the bond would not have been cashed at that time. I am satisfied that the early cashing of the bond was, at most, an innocent error and that there was no mismanagement in this regard.

[36] The objector further argues that the percentage for management fees should be reduced due to the small estate and the value of the management, which she argues was minimal.

[37] Counsel for the estate trustee argues that the objection to the management of liquid assets is new, and was raised for the first time at the hearing. She argues that the only objection in the Notice of Objection relates to the home, and this is the only objection which can properly be raised. The estate trustee argues that the facts in the instant case are much like those in Bedont Estate, Re (2004), 9 E.T.R. (3d) 59 (Ont. S.C.J.), at paras. 7, 43, where the objector’s distrust of and conflict with the estate trustee resulted in “considerable delay and expense”, and where the estate trustee “was faced with a difficult administration and knew, from the outset, every decision would be challenged”.

[38] Both parties agreed that the applicable principles are those set forth in Laing Estate v. Hines (1998), 1998 6867 (ON CA), 41 O.R. (3d) 571 (C.A.), but disagreed on the application of those principles to the facts of this case. These amounts are discretionary and ultimately depend on what this Court considers to be fair and reasonable.

[39] With respect to the compensation sought during the time that Ms. Schneider was power of attorney, I find that the amounts sought based on the statutory percentages are proper and justified and should be granted as sought.

[40] As regards the amounts sought for estate trustee compensation, I have followed the principles as set forth in Laing Estate and find the amounts sought to be fair and reasonable based on the percentages approach as cross-checked against the five applicable factors.

[41] While the estate was not complicated, it was time-consuming due to the delays occasioned by the numerous demands by the objector for more and more detailed explanations of expenditures, much of which had been provided previously. Ms. Schneider spent considerable amounts of time from February of 2011 onward dealing with Ms. Heston-Cook’s demands to provide further information with breakdowns of the accounting and backup documentation. Ms. Schneider displayed skill and ability in performing her duties. I do not find Ms. Heston-Cook’s arguments that Ms. Schneider mismanaged the administration of the estate, nor that her administration of the estate was unsuccessful, to be persuasive, and reject those arguments.

[42] Having taken into consideration the legislation and regulations, the principles set forth in Laing and the evidence before me, I find that the compensation sought by Ms. Schneider as attorney and as estate trustee is fair and reasonable, and is only subject to the adjustment ordered at paras. 68 and 78, below.

Cash transactions

Grocery/Household Expenses

[43] Ms. Schneider, as power of attorney, maintained thorough records, including all receipts regarding groceries, household supplies, and household expenses paid for her parents, and after her father’s death, for her mother. She identified the expenses, supported by the receipts, which she meticulously kept in envelopes sorted by year. These matched the amounts in the accounts, listed as capital disbursements, which accounts are sought to be passed.

[44] Ms. Heston-Cook submitted that the amounts spent on groceries and household supplies were excessive and alleged that said amounts included amounts for the estate trustee’s own groceries. She did, however, acknowledge that, as she is from the United States, she does not know what would be reasonable for groceries in Canada. She stated that when she did go to visit her parents, on one occasion, there was “no food in the refrigerator”. When asked if she had taken her parents out to dinner, she stated that she had not. Further, when asked if she purchased any food for her parents, she replied that she had not; that they had a caregiver and questioned why she would buy them food.

[45] As regards the amount spent on groceries, Ms. Schneider testified that she attempted to purchase the foods that her parents liked, which included some European foods that they enjoyed. She further testified that sufficient amounts of food were purchased to properly feed her parents and also the caregiver who ate with them and, on one occasion, food was purchased for their priest who came to dinner. She was able to identify all of the items paid. With respect to Ms. Heston-Cook’s allegations that Ms. Schneider included in the amounts for her parents’ groceries, groceries for her own family, there were receipts on which the estate trustee had crossed out certain items. She testified that she normally cashed her parents’ groceries out separately if she was shopping for both households at the same time, but that if items of hers went through with the parents’ groceries by error, she would delete those amounts for purposes of her record-keeping. Those deleted items were not included in the accounting. In reviewing the receipts produced in evidence, there were very few receipts on which appeared crossed out items. With respect to Ms. Heston-Cook’s allegations that excessive amounts were expended by Ms. Schneider on her parents’ food, Ms. Schneider testified that prior to her father’s death, from April 2003 to February 2004 an average of $480 per month was spent on their food. Following the death of her father, approximately $290 per month was expended for food. Having reviewed the accounts, I am satisfied that the amounts spent on food for her parents were reasonable, justifiable and justified based on all of the receipts in evidence. I do not find the subject expenses to have been excessive.

[46] Ms. Schneider maintained the same careful records as regards the expenditures for household supplies and medical equipment. Having reviewed the evidence and heard her testimony, I am satisfied that these amounts were also reasonable, justifiable and justified. I do not find them to be excessive.

[47] Having observed Ms. Schneider, the estate trustee, giving her evidence, having reviewed the copious documentation which she kept as estate trustee and supporting documentation produced on this passing of accounts, I find Ms. Schneider’s evidence to be forthright, candid and credible. Ms. Schneider was very careful with her records as both power of attorney and estate trustee, as indicated by the voluminous ledgers and records of account.

[48] I am satisfied that the records and the accounts presented were all recorded, identified and accurately accounted for with respect to expenses for the parents. I am satisfied that the amounts expensed were reasonable.

Medical Expenses and Records

[49] With respect to the medical expenses and records related thereto, Ms. Schneider testified that prescription receipts, over-the-counter drugs and equipment were listed under medical rather than miscellaneous. This also included medical equipment, such as bath benches, bath mats, a heart-monitoring machine, and incontinence diapers. All records regarding medical expenses were kept in the same way as those regarding groceries, household supplies and housekeeping expenses, as described above.

[50] With respect to the numerous objections to the cash transactions, and numerous detailed items reviewed, including those indicated above and many others, Ms. Schneider went through all of them to explain them, to explain the receipts for the expenditures and to reconcile them with the cash accounts. I am satisfied that all cash transactions have been properly and accurately accounted for and that the monies were properly and reasonably spent on the parents’ needs.

Pension Cheques

[51] With respect to the pension cheques cashed and given to the parents, Ms. Schneider testified as follows. Their mother had always handled finances previously. She had originally received pension monies, which she handled herself. She used these monies for groceries and household expenses until February of 2003 when the cheques for that month went missing. After this, Ms. Schneider had the pension cheques deposited directly into her parents’ bank account and began to withdraw money from the accounts to pay for groceries and household expenses, which her mother had previously paid for from the pension cheques.

[52] Their father received a Bricklayers’ Pension (two cheques in the amount of $50 and $63 for a total of $113) paid monthly. Ms. Schneider continued to give this money to her father as “pin money” to help maintain his feeling of independence, although he was incompetent to manage his finances. He used it for small expenditures and gifts to family members. Ms. Heston-Cook submits that this was an improper use of funds, that it bespoke mismanagement and that it had an impact on the amounts in the estate (and in the residue which was ultimately to be distributed). Ms. Heston-Cook further submits that most of the money was used for gifts to Ms. Schneider's children and grandchildren (although this was not clear from the evidence before me).

[53] Ms. Schneider testified that the monies from the pension cheques were given to afford some independence to her parents who, until 2002, had always handled their own finances and kept their own financial records. From February 2003, when the pension cheques for that month went missing, the larger cheque was, thereafter, deposited directly into the parents’ account. Ms. Schneider testified that she continued to cash the father's two smaller pension cheques in the amounts of $50 and $63 and to give them to him directly. On cross-examination, when she was asked why she did this, given that her father had been found to be suffering from dementia and unable to handle his own financial affairs or personal care, she testified that it was only $113, a small amount per month, that her parents had sufficient assets to permit this, that it provided him with a sense of independence, and that her father was entitled to the monies. When further cross-examined as to whether she did this knowing that her children would benefit from monetary gifts given by the father, she testified that her father gave gifts to many people and again that it was only $113 per month, which was his pension and to which he was entitled. Ms. Schneider testified that monetary gifts were also given by her parents to Ms. Heston-Cook's children. I find that Ms. Schneider provided these small amounts to her father on a monthly basis in good faith and not for some ulterior motive to benefit herself and her family, as was suggested by the objector, Ms Heston-Cook. I do not find that there was any improper use of the funds to which Ms. Heston-Cook took objection. I find that they were properly and reasonably managed.

Estate Assets

Value of Parents’ Home

[54] Ms. Heston-Cook objects to the valuation of the real property and submits that the value should be reduced. She has produced expert evidence which values the home as at March 1, 2008 at $750,000.

[55] The estate accounts for the period September 13, 2002 to February 29, 2008, during which time Ms. Schneider acted as power of attorney for her mother, list her mother’s original assets in the amount of $1,408,742.21, including the home located at 243 High Park Avenue valued at $630,000. The estate accounts for March 1, 2008 to November 1, 2010 list the original assets as totaling $1,507,118.52, including the family home located at 243 High Park Avenue, valued as at March 1, 2008 for purposes of probate at $890,000. A Toronto Property System Report was admitted in evidence (Exhibit 7). It indicates that the subject property was, for tax purposes, assessed at $630,000 for the tax year 2008, with the “2008 current value” stated to be $779,000. The Municipal Property Assessment Corporation (MPAC) Property Assessment Notice for the 2010-2012 property tax years assessed the value of the subject property on January 1, 2008 as $779,000 (Exhibit 9). The original fair market value of the home actually used for the attorney accounts was reduced by the estate trustee to reflect a reduced fair market value used by the objector of $546,000.

[56] Ms. Schneider testified that their parents’ home, which was approximately 100 years old, is located in High Park. It is a three-story home, with a basement. It contains five bedrooms, one full bathroom on the second floor and one in the basement, as well as two half-baths. She testified that it had not been renovated, but was in “move-in” condition.

[57] Ms. Schneider produced a letter of opinion prepared by Village Park Realty Inc., dated March 14, 2008, which provides an estimate of the fair market value of the subject property as at March 11, 2008. The letter of valuation was prepared for purposes of probate. The realtor from the subject brokerage firm, Donovan Clarke, opined that the value of the property, in fee simple, as at March 11, 2008, was $890,000.

Donovan Clarke

[58] On behalf of Ms. Schneider, Mr. Clarke testified. He has been a real estate salesperson since 1987, specializing mainly in residential properties, and has worked in the High Park-Roncesvalles area of Toronto for 27 years.

[59] He described the home, which is 90 to 100 years old and located on a 43 x 200' lot, as a typically “High Park” home. The house is 2 1/2 stories, with a basement, a living room, dining room, kitchen, den and two-piece bath on the first floor. On the second floor there are four bedrooms and one four-piece bath. On the third floor there is one bedroom, one kitchen, one two-piece bath and an additional room, which is essentially an open area. The basement is not finished and needs upgrading. There is a double detached garage. The home is of double brick construction, stuccoed over, but Mr. Clarke conceded that this was an assumption, as he had not seen the brick under-structure. The plumbing and electric wiring have not been upgraded.

[60] In order to prepare the opinion, he viewed the property, compared it with other comparable properties which had sold recently, and arrived at a value of $890,000 for purposes of probate. He had visited the interior of one of the comparable properties. He reviewed all of the comparables and distinguished them. With respect to the Toronto Property System Report, which indicated an assessment of $630,000 and current value of $779,000, he testified that the actual market value is generally higher. In cross-examination, he stated that he is not certified for appraisal work and has not previously testified or been qualified as an expert in litigation.

[61] Mr. Clarke was not a certified home appraiser, but, over his career, has focused on the High Park area where the parents’ home was located. His valuation of the home was conducted in 2008 for probate purposes and not for this litigation. He had viewed the home both from exterior and interior. His valuation of $890,000 was significantly higher than the MPAC value. He used as comparable properties one restored and renovated home with a larger lot size listed at $1,115,000, which sold for $1,171,000 (148 High Park), a four-plex rental property which was comparable in lot size and listed at $1,100,000, which sold for $1,605,000 (245 High Park), and a home purchased to be used as a daycare which was smaller in lot size and had only two rather than two and one half stories, listed at $769,000, which sold for $735,000 (167 High Park). When asked in cross-examination to explain how he had determined that the value was more than $100,000 greater than the MPAC valuation, Mr. Clarke indicated that that is what he thought or estimated it to be; that he arrived at the figure as a “gut feeling, a fair amount”.

Barry Lebow

[62] On behalf of Ms. Heston-Cook, Barry Lebow testified. He had been retained to give an opinion on the value of 243 High Park for purposes of this litigation. Mr. Lebow is a registered broker with RE/MAX Ultimate Realty Inc. He has worked in industrial and commercial real estate, although his specialization was described as being in the senior market, estates and divorces. He was a certified home appraiser who had been accepted as an expert witness on numerous occasions in various real estate litigation proceedings in Ontario. He did not specialize in the High Park area but had experience in the area and was familiar with it and with valuations with respect to the properties in that area. He owned property there. His valuation was a retrospective appraisal, conducted in 2013, for purposes of this litigation, and within a very short timeframe. He was able to view the exterior of the home, but not the interior. He made assumptions about the interior, some of which were incorrect, including the number of bedrooms and bathrooms, which he underestimated. He also did not consider that there was a live-in suite on the top floor. He was of the opinion that this did not make an appreciable difference in his valuation, which was lower than the MPAC valuation of $779,000 in 2008. He noted that the last assessed value for the property for 2013 was $824,000.

[63] He testified that he had been a real estate agent for 40 years, was an appraisal valuation expert, although he was no longer a member of the Appraisal Board, and was familiar with High Park. He testified that he had had previous involvement in litigation/arbitration regarding High Park. He produced his opinion on May 16, 2013, having been retained for purposes of this litigation on May 15, and conceded in cross-examination that he had a very limited time frame in which to produce the opinion. While he did not view the interior of the property, he testified that he had reviewed MPAC files, the number of rooms, the square footage of the rooms, found comparables in the area, which had sold, and eliminated those comparables that had been heavily renovated. In arriving at his opinion, he also considered the location, its proximity to Bloor Street, which in his opinion enhanced the value of a property, and its construction, which he described as stucco and not solid brick, although he conceded in cross-examination that this was simply an assumption which he nevertheless stood by. Further, he took into account what other properties had sold and not sold in the area. He considered that it was a very attractive lot and home and was saleable at the time in the general market for $750,000, and opined that as at March 11, 2008, the property had a value of $750,000.

[64] In preparing his retrospective appraisal he considered comparable properties which had sold in 2007 and 2008 and used those sales available at the effective date, which in this case was March 11, 2008. He used four comparable properties, including two used by Mr. Clarke, namely 167 High Park and 245 High Park. He had not visited the interiors of any of the comparables. He considered 167 High Park to be most similar to the subject property, with five bedrooms and two full baths, although it had a narrower lot frontage which, in his opinion, was offset by the superior location closer to Bloor Street. This property sold for $735,000. The other similar home, located 109 High Park had a narrower and less deep lot, again offset, in his opinion, by its location closer to Bloor Street. The property sold for $685,000 in 2007, which he time-adjusted upward to $735,000-$745,000.

[65] While 245 High Park was adjacent to the subject property, he did not consider it to be comparable to the subject property. It sold for $1,650,000 in 2007. Finally, 272 High Park, a larger, renovated duplex in a less desirable location, was also considered superior. It sold in 2007 for $749,000. He concluded, based on the foregoing analysis, and using a direct sales approach, which was also used by Mr. Clarke, that the property valuation as at March 11, 2008 was $750,000. Mr. Lebow dismissed Mr. Clarke’s valuation, indicating that Mr. Clarke was not known to him, had no known or indicated “designations or cache[t]”, that there was no analysis in his letter of valuation and that two of the three properties on which Mr. Clarke relied were not truly comparable.

[66] I am of the view that both opinions were deficient in certain respects. Mr. Clarke's report did not include an analysis to support the value arrived at, although I do take into consideration that his report was for purposes of probate and not litigation. On the other hand, while Mr. Lebow’s was based on careful analysis, I am cognizant of the fact that he did not do an inspection of the interior, made incorrect assumptions regarding the interior and did not know that there was a live-in suite on the top floor, which included bedroom, bathroom, kitchen and a large additional area. I am of the opinion, considering the opinions, comparables and the testimony of both Mr. Clarke and Mr. Lebow, that the valuation is most fairly and reasonably found between the two opinions, i.e. between $750,000 and $890,000. I consider the valuation of Mr. Clarke to be high and that of Mr. Lebow to be low. I have considered the MPAC assessments for 2008 ($779,000) adduced in evidence by both experts, and for 2013 ($824,000) proffered in evidence by Mr. Lebow, although I note that the MPAC assessments are generally lower than the actual property valuations, and also that property valuations are generally based on comparable sales and not on the MPAC assessment. I am of the view that a fair valuation of the subject property, after having considered all of the evidence, should be $820,000. The final accounting should be adjusted to reflect this amount for the real estate, with the calculation of compensation based on the new adjusted total.

Roof Repairs

[67] Ms. Heston-Cook argued that Ms. Schneider benefited from repairs to the roofs of the parents’ home in the summer of 2004, when her mother was still living there. She argued that Ms. Schneider inherited the home four years after the repairs were done, that the roof had a 30 year warranty and that the cost of the roof should be prorated on the basis of a 20 year roof life. Ms. Heston-Cook argues that their mother only resided in the house for four years after the repairs, while Ms. Schneider will have 16 years use of the roof and therefore the cost should be attributed 20% to the estate and 80% to Ms. Schneider and compensation reduced thereby.

[68] Ms. Schneider testified that the roofs on the parents’ home had not been replaced for 30 years. The evidence indicated that the flat and shingled roofs were “in immediate need of repair”, and that, without repair, water would have continued to leak into the third floor of the home and the garage, where things were stored.

[69] Ms. Schneider inherited the home, pursuant to the Will, four years after the major roofing repairs were completed and two years after the garage was completed. She took the property in the condition it was in at the time of the inheritance.

[70] Counsel for Ms. Schneider submitted that, if the cost of the roof were to be reduced, it would be done not by a direct reduction of the compensation, but by reducing the itemized capital disbursements and applying the percentage to the reduced amount.

[71] I am satisfied that the roof repairs were done because they were necessary due to leakage into the third floor of the home and the garage, where things were stored. These repairs were in the nature of maintenance and not improvements. Had Ms. Schneider not attended to the repairs of the roof which were required at that time, and while her mother was living in the home, she would have been in breach of her fiduciary duties as power of attorney for property. There is no basis on which to reduce Ms. Schneider's compensation. I do not find that she received a personal benefit by virtue of having had the roofs repaired during her mother’s lifetime.

Legal fees

[72] In 2003, Ms. Heston-Cook applied to the court to obtain financial disclosure of the accounts of the power of attorney and of the father’s will. At that time, their father was still living and indicated that he did not want the documents sought to be disclosed to Ms. Heston-Cook. Both Ms. Schneider and Ms. Heston-Cook retained counsel. At the hearing of the applications, Sachs J. dismissed the applications and ordered Ms. Heston-Cook to pay costs to Ms. Schneider in the amount of $3500 and to her father in the amount of $4000. With respect to the second application regarding accounting for their mother's affairs, judgment was granted the same day with costs payable by Ms. Heston-Cook in the amount of $3500. These costs were never paid. Instead, the lawyer’s fees were paid out of the parents’ assets and claimed as capital disbursements in the accounts prepared regarding the period for which Ms. Schneider was attorney. The legal fees incurred by Ms. Schneider, as attorney, were in the amount of $7712. Mr. Aber's legal fees amounted to $6005.83.

[73] While Ms. Heston-Cook maintained in January 2003 that it was at her father’s request that she initiated legal proceedings regarding accounting of her parents’ financial affairs, the affidavit filed by August Aber dated August 27, 2003 in the 2003 application clearly indicates that he was opposed to disclosure of his financial information or his Will to Ms. Heston-Cook before he died.

[74] Ms. Heston-Cook argues that Ms. Schneider’s legal expenses should not have been paid from the parents’ assets, but are her personal expense.

[75] I note that the $7000 in costs was ordered to be paid to Ms. Schneider, and not to “Ms. Schneider as attorney”. However, the application was brought by Ms. Heston-Cook against Ms. Schneider seeking an order requiring her to pass the accounts in respect of the management of the property of August and Stefanie Aber under a power of attorney for property and that she produce the Will of each of the parents. It is clear that the application was brought as against Ms. Schneider as attorney for person and property of August and Stefanie Aber. Ms. Schneider, responding to the application, was responding as attorney for person and property. Accordingly, her fees were properly paid from the parents’ assets. With respect to the other legal fees paid from the estate, I am satisfied, on all of the evidence before me, that these were properly paid from the estate as these related to management and administration of the parents’ estate. I do not find any reason or justification for reducing the amounts paid from the estate for legal fees.

Conclusion

[76] While the objector sought a reduction in the amount of the original assets to the accounts submitted to be passed, the only adjustment to be made is to the value of the home, as set forth above. With respect to all other items to which objection is taken, I find them to be without merit. With respect to the legal fees, I order that the outstanding Orders of Sachs J. dated September 10, 2003, ordering Ms. Heston-Cook to pay costs of the application regarding the legal fees of Ms. Schneider and her father, be satisfied by deducting the amount of $7000 from Ms. Heston-Cook’s distribution.

Costs

[77] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of these Reasons.

Carole J. Brown J.

Released: December 17, 2013

COURT FILE NO.: 02-08/11

DATE: 20131216

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF STEFANIE ABER, deceased, and

IN THE MATTER OF THE PASSING OF ACCOUNTS

BETWEEN:

Aber Estate, Contested Passing of Accounts

REASONS FOR DECISION

CAROLE J. BROWN J.

Released: December 16, 2013