ONTARIO

SUPERIOR COURT OF JUSTICE

ESTATES LIST

COURT FILE NOS.: 05-047/13;
CV-14-10171-00-ES

DATE: 20141218

IN THE MATTER OF THE ESTATE OF CHAIM NEUBERGER, deceased

BETWEEN:

EDIE NEUBERGER in her capacity as the named Estate Trustee of the Primary Will of Chaim Neuberger and in her capacity as the named Estate Trustee of the Secondary Will of Chaim Neuberger

Applicant
(Responding Party on the Motion)

– and –

MYRA YORK in her personal capacity, in her capacity as the named Estate Trustee of the Primary Will of Chaim Neuberger, in her capacity as the named Estate Trustee of the Secondary Will of Chaim Neuberger and in her capacity as the Attorney for Property or Attorney for Property de son tort for Chaim Neuberger, EDIE NEUBERGER in her personal capacity, ADAM JESIN-NEUBERGER, SHAWNA JESIN-NEUBERGER,

JEREMY JESIN-NEUBERGER,

JESSICA JESIN-NEUBERGER,

JACLYN JESIN-NEUBERGER,

SONNY YORK, SPENCER YORK and LAURA YORK

Respondents
(Moving Parties on the Motion

Ian Hull and David Freedman,

Co-Counsel for the Responding Party Edie, Neuberger, in her capacity as an Estate Trustee

Aaron Blumenfeld and Ewa Krajewska, Co-Counsel for the Moving Party, Myra York, in all capacities

Clare E. Burns and Bianca La Neve,

Co-Counsel for the Moving Parties, Sonny York, Laura York and Spencer York

Shael Eisen and Pia Hundel, Co-Counsel for Adam Jesin-Neuberger, a Respondent and a Responding Party on the Motion

WRITTEN SUBMISSIONS ON COSTS

endorsement: greer j.

[1] On November 21, 2014, I released my decision in this Motion brought on by the Respondents, Myra York and her children, Sonny, Spencer, and Laura, which arose out of the Will challenge being brought on by the Applicant Edie Neuberger and her son Adam, respecting the Will of the late Chaim Neuberger. He was the father of Myra and Edie.

[2] In para. 124 of my decision, I said if the parties could not reach an agreement on Costs, they were to serve and file written submissions on the terms set out in the paragraph. They have now done so.

[3] The Respondents were completely successful in their Motion. I found that the Applicants, Edie and Adam, were estopped from bringing on their Will challenge respecting Chaim’s 2010 Wills. I also found that Adam was essentially a “straw man” in the litigation. Their attempts to prove Chaim’s Wills in solemn form were dismissed by me on the grounds of estoppel by representation and/or convention.

[4] The Respondents, as the Moving Parties, seek an Order for Costs on a Partial Indemnity basis of $240,940.35 for Myra, as one moving party, who had her own separate counsel, and $177,486.21 for Sonny, Spencer and Laura York, as moving parties, with their own separate counsel. All Moving Parties ask for their Costs to be paid solely by Edie personally. In the alternative, they say that Edie and Adam should be liable on a joint and several basis, given that Adam is an adult and chose to participate in the Will challenge. They say that Edie and Adam should pay these Costs from their own assets and not from any of the assets forming part of the Estate of Chaim Neuberger (“Chaim”). They say no such Costs should be paid either directly or indirectly from #179 or any of its subsidiaries. These corporations are the assets which flowed to Edie and her children through Chaim’s Will and his Estate freeze. Since 4 of Edie’s other children chose to take no part in the litigation, it is their position it would cause these children’s interests in the Estate to be depleted through no fault of their own.

[5] In para. 5 of their Costs Submissions, the Moving Parties list 13 findings in my Endorsement relating to show that they were entirely successful on their Motion to strike the challenges being made by Edie and Adam, respecting Chaim’s Wills. They relate to Edie’s actions in dealing with the Estate for 15 months before she commenced her Application to challenge the Wills. No explanation was ever given by Edie as to why it took so long to bring on the challenge.

[6] In my Endorsement, I analyzed how the two main Supreme Court of Canada cases, Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., 1970 3 (SCC), [1970] S.C.R. 932 and Ryan v. Moore, [2005] S.C.C. 38, which set out the factors giving rise to a finding that estoppel applies to the case at Bar.

[7] In para. 116 of my decision, I quote from Ryan, supra, where the Court says that the doctrine of estoppel by convention exists to promote transactional security, noting that Estate Freezes such as the one Chaim directed be done to his assets, do just that. The payments by Edie and Myra to CRA for income taxes incurred at death, I said, is a transactional certainty that leads to estoppel. In total, these taxes were approximately $25,000,000.

[8] The Moving Parties say that the principle of “loser pays”, should be applied under these circumstances, and that Edie’s 4 other children should not be penalized for failing to support the position taken by Edie and Adam.

[9] Edie and Adam were each represented by separate counsel on the Application. The Applicant, Edie, says that her own Costs are $209,066.65 inclusive of disbursements and HST. Adam says his Costs are $110,424.55 inclusive of disbursements and HST. They say that the Costs asked for by the Moving Parties are, “… unreasonably high in the circumstances.” They say that Costs should not be a purely mathematical calculation of actual costs incurred. Reasonableness, as a principle, also must be considered. Edie’s and Adam’s Costs are also calculated on a partial indemnity scale.

[10] In addition, Edie and Adam say that the Moving Parties unnecessarily brought on a Motion on February 27, 2014, seeking an adjournment of the original return date. In addition, they say that the Moving Parties should not have examined Sharon Goldberg nor re-examined Edie, as they did not rely on that evidence. Lastly, they say the Moving Parties refused to provide copies of Chaim’s earlier 2004 Wills until immediately before the hearing date.

[11] They say they should not have to pay any Costs, as their legal steps were “Based on the available medical evidence, which overwhelmingly suggests that the Deceased’s capacity was compromised when he executed the impugned wills …”. They say it was reasonable for them to question the validity of the Wills.

[12] Edie says that the Costs of all parties should be paid by the Estate, “…given the novel application of estoppel principles”, used to bar a Will challenge brought within the applicable limitation period. In the alternative, Edie says if the Moving Parties are to be awarded some Costs, there should only be one award made to the two groups of Moving Parties. In addition, she says the accounts should be sent to an Assessment Officer for review and that the time spent on the Dolman Affidavit should be determined by the Judge hearing the Application, since the amount of $22,526.55 is grossly excessive.

[13] Edie objects to having Arthur Fish’s time on this matter as she says he has been in practice 30 years and does not do litigation. His time was 169.30 hours at $71,606.40. She also objects to Myra’s lawyers and the York Children’s lawyers, being 5 in number for the same issue.

Analysis

[14] S.131(1) of the Courts of Justice Act, R.S.O. 1990, C. c-43 says that Costs of and incidental to a proceeding or a step in the proceeding are in the discretion of the Court, and it may determine by whom and to what extent the Costs shall be paid. In my view, I am in a much better position than an Assessment Officer, in this case, to determine the Costs. It was a lengthy 2-day Motion, where the litigants each had 2 counsel present throughout. It is clear from the dockets I have reviewed and from the Bills of Costs, that senior counsel for each party represented, had worked with and relied on junior counsel while the Motion proceeded over those 2 days.

[15] In determining Costs, the factors are set out in subrule 57.01(1) of the Rules of Civil Procedure, R.S.O. 1990, Reg. 194. Therefore, while rates and hours do not have to be fully mathematical in calculations of quantum, they are a guideline. The principle of reasonability must be taken into account, and the question must be asked about what a losing party would deem as reasonable.

[16] The Estate had a significant value of over $125,000,000 and was complex in structure, after the Estate Freeze took place. The issue of the Will challenge was important to all parties but for different reasons. Edie moved to challenge the Wills as she was unhappy that the corporate interests in her share of the Estate were less in value than Myra’s interests. Myra, on the other hand, brought on her estoppel Motion, as she accepted that Chaim understood how his Estate Freeze would operate and how it gave interests to his grandchildren as well as his 2 daughters, Edie and Myra. She also accepted the fact that Chaim’s corporate and tax advisors, as well the drafter of his Wills, were experienced lawyers and accountants who Chaim had dealt with over many years. The issues were important to all parties.

[17] In my view, the Moving Parties are entitled to their Costs on a Partial Indemnity basis. No Costs, however, shall be paid out of the Estate. There were no drafting errors in the Wills. Neither Will would have been the subject of a Will Interpretation Motion by the Court. Chaim cut out none of his next-of-kin as beneficiaries in his Will. All his children and grandchildren were beneficiaries in the Wills.

[18] As was said by Madam Justice Gillese in McDougald Estate v. Gooderham, 2005 21091 (ON CA), 2005 CarswellOnt 2407, 199 O.A.C. 203, in 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.”

[19] In Boucher v. Public Accountants Council Ontario, 2004 14579 (ON CA), 2004 CarswellOnt 2521 (O.C.A.), the Court in para. 38, said that when the Court is deciding what is fair and reasonable in the circumstances of the case, the expectations of the parties concerning the quantum of a Costs award, must be taken in determining how much the losing party shall pay.

[20] Mr. Justice Newbould, in Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc. 2013 ONSC 5213 (Ont. S.C.J.), in para. 15, discusses the issues of hourly rates and the levels of seniority of counsel involved, which must be considered by the Court when fixing Costs payable by the losing party.

[21] In Davies v. Clarington (Municipality), 2009 ONCA 722 (O.C.A.), the Court at para. 52 said that the overriding principle is reasonableness, in setting a Costs award. The Estate in question is a very large estate of over $125,000,000. I found that the principles of estoppel by convention and representation applied to stop Edie’s and Adam’s Will Challenge from proceeding further. Given the complexities of an estate freeze and what would happen in the estate administration, at this late date, if the estate freeze had to be unwound after the estate had been administered for nearly 15 months, the amount of time spent by counsel, on all sides, was considerable.

[22] The successful parties were Myra and her children, Sonny, Spencer and Laura. The children’s counsel was Clare Burns, who was called to the Bar in 1991. She has practised law in Ontario for 23 years. Her hourly rate on a Partial Indemnity scale is $390 per hour, being 60% of her “standard rate” of $650 per hour. Her co-counsel, Bianca La Neve was called to the Bar in 2002, and has practised for 12 years. Her rate on a Partial Indemnity basis is $240 per hour. Others working on the file were Law Clerks and Students, whose Partial Indemnity rates varied from $150 - $90 per hour. Their Bill of Costs in total, for fees plus HST is $161,018.22 plus disbursements of $14,573.44 plus HST of $1,894.55, for a total Bill of Costs of $177,486.21. These counsel were the ones who attended on the cross-examination of Sharon Goldberg and the further cross-examination of Edie. Although Edie says this was a waste of time, I disagree with that position. Ms. Goldberg is a lawyer and a friend of Edie. Edie discussed Chaim’s mental state with her. In addition, since Edie had previously denied having any knowledge of the contents of the 2002 Wills and denied discussing them with Ms. Goldberg, it was later proven on further cross-examination of Edie, that she was wrong on both accounts.

[23] All of the 7 accounts rendered to the York children were sent to me in a sealed envelope. I have reviewed them in detail. They show full Costs charged to the clients. In those rendered for the period February 4 - March 7/14, and the last 2 bills, in my view there was some duplication of time between Clare Burns and Bianca La Neve especially in February, March and August. In addition, there was excessive student time of H. Peglar, and time spent obtaining Affidavits of Service from the Court. Finally, a Law Clerk, Ray Bellon also attended the 2-day hearing with both counsel there. In each case, I have reduced the total time spent by each and reduce the total fee by $10,500, and reduce the HST accordingly by $1,365. I award the York children, Sonny, Spencer and Laura Costs which I fix at $165,621 in round figures.

[24] Myra York’s counsel was Aaron Blumenfeld, who was called to the Bar in 1995. He has practised law for 19 years in Ontario. He was assisted by Ewa Krajewska, who was called to the bar in 2009. She has practised law for 5 years. Aaron Blumenfeld’s Partial Indemnity rate is $345 per hour and Ewa Krajewska’s is $234 per hour. They were assisted by Law Clerks and Students at various rates of $192 - $117 per hour. They were also assisted by Arthur Fish, a Senior Counsel in the firm, called to the Bar in 1985. He does not litigate in Court but was assisting with the complexities of the corporate structure, the estate freeze and dealing with the accountants. His reduced partial rate varied was billed at $398 per hour. His total billings were about $71,000 and were objected to by Edie’s counsel as he was said by her and Adam to not be a litigant. In my view, Arthur Fish performed the service of the senior solicitor in the litigation and the person with the corporate expertise that was required to brief counsel on how to analyze the estate freeze and accounting matters.

[25] In addition, Edie and Adam objected to the expense of Steven Dolman’s bill of $19,935 (after a 10% discount), as a disbursement. They said Myra should bear that expense. Mr. Dolman’s report was necessary because Edie questioned Myra and others about “missing assets”. The Dolman Report is referred to in my Endorsement, and in my view it helped both groups of parties in this litigation.

[26] Myra’s Account in total is $247,941.25 which includes fees of $184,201.50 plus HST of $23,946.20, plus disbursements and HST of $39,793.55. In reviewing all their Bills of Costs, I note that there is duplication in some of the entries of Aaron Blumenfeld and Arthur Fish as show in January 2014 accounts, and where Arthur Fish spends over 6 hours two days in a row. This also appears to be the case on February 6, where he says he spent 8.10 hours and February 17, where he spent 8.40 hours and February 18 where all 3 lawyers spent long hours. Further on June 20-24, 2014, someone listed as “J. Kabouchi” spent 13½ hours on a memo for Aaron Blumenfeld “re confidential issue”. I cannot see where that relates to this Estate. I therefore reduce the fees on this account by $13,000, and reduce the HST by $1,690 and reduce the Dolman Report disbursement by half $9,967.50. I therefore reduce that Account fee to $171,210.50, and reduce the HST on disbursements by $1,295.78. The total with reductions account is fixed at $171,210.50 plus $22,256.20 HST plus disbursements of $25,043.61 plus HST on disbursements of $3,255.66 for a total of $221,765.97.

[27] The Costs of these moving parties, Myra, Sonny, Spencer, and Laura I order to be paid personally jointly and severally by Edie and Adam personally, fixing Edie’s portion as 75% and Adam’s as 25%. They shall be paid within 30 days of this Order. They opted to act together on this Will Challenge. Since Adam entered the picture later in time, and with little real knowledge about the Estate and its assets, I have ordered each to pay a percentage based on participation. I make them joint and several, given Adam’s evidence that his family would likely pay his costs.

[28] The Orders shall go accordingly. Interest shall run on the amounts so awarded after 30 days and as long as they remain unpaid, with interest at the Courts of Justice Act rate.

[29] I am re-sealing the Invoices presented by counsel for Sonny, Spencer and Laura and these will be returned to their Counsel. I make no reference to the “Objection” filed by Edie’s counsel to the Reply of the Moving Parties. There is no reply to a Reply.

[30] Edie and Adam shall pay their own legal bills personally and they shall not be debited from corporate assets in the corporations in the Edie assets that pass to her and her children under the Wills.

[31] If counsel wish to have copies of invoices in their materials returned to them, they may contact Olga Misko at 416-327-7474 after 2 weeks of receipt of this Endorsement.

Greer J.

Released by fax December 18, 2014

TYPED VERSION TO FOLLOW

COURT FILE NOS.: 05-047/13;
CV-14-10171-00-ES

DATE: 20141218

ONTARIO

SUPERIOR COURT OF JUSTICE

ESTATES LIST

IN THE MATTER OF THE ESTATE OF

CHAIM NEUBERGER, deceased

BETWEEN:

EDIE NEUBERGER in her capacity as the named Estate Trustee of the Primary Will of Chaim Neuberger and in her capacity as the named Estate Trustee of the Secondary Will of Chaim Neuberger

Applicant
(Responding Party on the Motion)

– and –

MYRA YORK in her personal capacity, in her capacity as the named Estate Trustee of the Primary Will of Chaim Neuberger, in her capacity as the named Estate Trustee of the Secondary Will of Chaim Neuberger and in her capacity as the Attorney for Property or Attorney for Property de son tort for Chaim Neuberger,

EDIE NEUBERGER in her personal capacity,

ADAM JESIN-NEUBERGER, SHAWNA JESIN-NEUBERGER, JEREMY JESIN-NEUBERGER, JESSICA JESIN-NEUBERGER, JACLYN JESIN-NEUBERGER, SONNY YORK,

SPENCER YORK and LAURA YORK

Respondents
(Moving Parties on the Motion)

ENDORSEMENT

Greer J.

Released by fax December 18, 2014

TYPED VERSION TO FOLLOW