Court File and Parties

COURT FILE NO.: 12-53276

DATE: 2013/12/12

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: IAN HAWKINS, Plaintiff

AND:

THE ESTATE OF JOHN PATTERSON HAWKINS, Defendant

BEFORE: Master MacLeod

COUNSEL:
E. Jane Murray, for the Plaintiff, Ian Hawkins

Eric Lay, for the Defendant by Counterclaim and Plaintiff by Counterclaim, Kent Hawkins

Andrew J.F. Lenz, for the Defendant, Estate and Limerick Farms Ltd.

J. P. Zubec, for Carl Hawkins & Garry Kingsley, Defendants to 2d counterclaim

HEARD: November 29th, 2012

COSTS AWARD

[1] This endorsement deals with costs of the motion heard on November 29th, 2012. That motion was brought by Ian Hawkins and Kent Hawkins. The motion was unsuccessful for the reasons released on January 29th, 2013. I declined to remove the estate trustees.

[2] I must now deal with the costs of the motion. Counsel had requested to make submissions in writing and had agreed to a timetable for exchange of submissions. I have now received and reviewed those submissions.

Should costs be fixed and payable?

[3] The first question is whether costs should be fixed and payable now, awarded on some other basis or reserved to the trial judge. Of course the general rule on motions is that set out in Rule 57.03 (1). That rule provides that unless the court is satisfied that a different order would be more just, the court shall fix the costs of the motion and order them paid within 30 days. While the court retains discretion to award costs on a different basis, this is the presumptive “pay as you go” approach.

[4] One reason for deferring costs might be a question as to who should be responsible for the costs. Traditionally in estate litigation for example costs were often ordered to be paid by the estate. This was so when the litigation arose as a result of the actions of the testator or the residual beneficiaries or where the action was reasonably necessary for the proper administration of the estate.[^1] The modern Canadian approach however has been to apply the ordinary costs rules on the basis that it is unjust to the other beneficiaries to reward the person who unsuccessfully challenges the estate at the expense of the other beneficiaries.[^2] I had alluded to this in paragraph 67 of my reasons in which I had indicated that I might be persuaded to reserve the costs of the motion to the trial judge.

[5] This action is not really estate litigation in the traditional sense. Ian and Kent do not claim the entitlements they seek as beneficiaries. Rather they are attacking the estate by suing it to enforce agreements allegedly made by their deceased father before his death. If they are successful in this the estate will be greatly diminished but it will still be distributed in accordance with the will. That is they are not attacking the will itself. They are in essence claiming to be creditors of John Patterson Hawkins or owners of property he attempts to dispose of as part of his estate.

[6] Had they been successful on the motion to remove the estate trustees there might have been real injustice in ordering the estate to pay their costs because they might ultimately be unsuccessful in the litigation and it is that very litigation which would have been the basis for the alleged conflict of interest. It is less clear that there is any injustice in applying the ordinary rule when the plaintiffs have been unsuccessful on such a motion because even if they succeed in the litigation the attempt to remove the estate trustees will have been an unnecessary expense.

[7] A similar situation is encountered in injunction motions. In such cases the party who obtains a temporary injunction to preserve their rights pending trial may ultimately be unsuccessful at trial. The courts have therefore shown a reluctance to award the successful plaintiff costs of the interlocutory injunction motion.[^3] The rationale does not necessarily apply when the party seeking the injunction is unsuccessful and the motion is successfully resisted.[^4]

[8] After due consideration of the submissions of all parties, I am of the view that costs should indeed be fixed and payable in accordance with the approach mandated by Rule 57.03 (1).

The scale of costs

[9] Costs are generally to be awarded on a partial indemnity scale. In simple language that generally means that the successful party receives a reasonable contribution towards the cost of bringing or resisting the motion but is not fully indemnified. Indeed, though the costs actually incurred and indemnity for those costs are factors to be considered, the overall objective of fixing costs is to determine what it is reasonable and fair for the unsuccessful party to pay.[^5]

[10] There is nothing in the circumstances of this motion that would justify awarding costs on an extraordinary scale. Partial indemnity costs are appropriate.

How many sets of costs and who should pay?

[11] The next question is who should be entitled to costs, who should pay and how many sets of costs should be awarded. This issue arises because the motion was brought by Ian and Kent who are separately represented. It was resisted by the estate and by the estate trustees in their personal capacities. Thus there were four sets of lawyers involved and four parties amongst whom to allocate the costs.

[12] The moving parties should be jointly and severally liable for the costs as they acted in unison and took the same position on the motion. The question is whether the costs incurred by the estate and by the estate trustees should be considered separately and give rise to two costs awards?

[13] Mr. Lenz acts for the estate and Mr. Zubec acts for Garry and Carl in their personal capacities. There is no doubt that since there are allegations made in the litigation against Garry and Carl in their personal capacities and outside of their function as trustees, it is prudent that they have their own counsel separate from the estate. Currently Mr. Lenz takes instructions from the estate trustees but if they should subsequently be removed or resign the estate would still require counsel and it would not be appropriate that Mr. Lenz act for both. Nor can there be any doubt that all parties have the right to appear and be heard on a motion such as this. Though I found there was no conflict of interest justifying removal of the trustees, it would have been presumptuous to assume this was the inevitable outcome of the motion.

[14] It does not necessarily follow that the moving parties should be liable for two sets of costs. I acknowledge that Mr. Lenz and Mr. Zubec divided the work and tried to avoid duplication but some level of duplication was inevitable. The actual costs incurred by Garry and Carl were apparently $12,259.50 and for the estate $15,248.00. The combined request for partial indemnity costs is $16,565.20.

[15] I have concluded there should be one set of costs allocated between the estate and the estate trustees in their personal capacity but in fixing the amount I should have regard to what work was done by which law firm. Duplication should be avoided but the responding parties should not be penalized for having divided the work between the two sets of counsel.

[16] In summary I will fix the amount on the basis of a single set of costs but allocate it to each of the responding parties (ie the estate and the personal defendants). The moving parties will be jointly and severally responsible for the costs.

The quantum of costs

[17] I have addressed the principle of indemnity and made reference to the costs actually incurred. The responding parties seek approximately 2/3 of their actual costs as partial indemnity costs. This is because “substantial indemnity costs” are defined in Rule 1.03 as 1.5 times what would otherwise be awarded in costs. It does not follow that partial indemnity costs are 2/3 of actual costs. While a reasonable way to prepare a costs outline, the proper approach for the court is to fix the partial indemnity costs applying all of the factors in Rule 57 and then if substantial indemnity costs are appropriate, to apply the multiplier. Of course the court also retains the discretion in truly extraordinary cases to order full indemnity.[^6] In this case since I am awarding partial indemnity costs, the actual hours spent and the actual hourly rates are relevant but not determinative.

[18] This was not a complex legal motion. It was rendered time consuming by the necessity of putting the complex family background before the court. Various allegations and counter allegations were made and had to be answered. Simply describing the relationship between the parties, the claims to various tracts of land and the nature of the litigation in a readily comprehensible manner occupied much of the material and much of the evidence.

[19] Counsel for Kent Hawkins submits that the combined actual costs of the responding parties are more than three times the total combined actual costs of the moving parties. This he suggests is reason to consider the costs incurred by the responding parties and sought by them to be unreasonably high. I have examined the time claimed. I cannot reach the conclusion that this motion was significantly “overlawyered”. The relief sought on the motion was drastic relief which threatened to significantly disrupt the administration of the estate and conduct of the litigation. It was reasonable to take it seriously and to stoutly resist it.

[20] Having regard to the time actually spend and the costs actually incurred, the significance of the motion, the factual complexity of the material and the result, I conclude that the reasonable costs are closer to those requested by the responding parties than those proposed by the moving parties. Nevertheless as indicated above, I am reducing the costs somewhat to take into account an element of duplication. I am also reducing them slightly to address the principles of reasonableness and proportionality though I should not in doing so be thought to criticize either the time spent or the actual hourly rates.

[21] In conclusion I fix the costs of the motion at $13,500.00 on a partial indemnity scale. I allocate $9,000.00 of that amount to the estate and $4,500.00 to Carl & Garry personally. The moving parties shall be jointly and severally liable for the costs thus awarded. In recognition of the intervening holiday season I will extend the time for payment to March 1st, 2014.

Master MacLeod

[^1]: See McDougald Estate v. Gooderham (2005) 2005 21091 (ON CA), 255 D.L.R. (4th) 435 (On. C.A.) @ para 78 – 80

[^2]: McDougald Estate, supra @ paras. 80 – 85.

[^3]: See Penn-Co Construction Canada v. Constance Lake First Nation (2008) 76 C.L.R. (3d) 125 (S.C.J.)

[^4]: Penn-Co Construction, supra @ para. 10

[^5]: Boucher v. Public Accountants Council for the Province of Ontario (2004) 71 O.R. (3d) 145 (C.A.)

[^6]: See Rule 47.01 (4)