Craparotta Estate, 2015 ONSC 1222
COURT FILE NO.: 14-1355
DATE: 20150224
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
IN THE POWER OF ATTORNEY OF PROPERTY OF IGNAZIO CRAPAROTTA
T. Rynard, for the Attorney, Frank Craparotta
M. Adams, for the Objector, Ignazio Craparotta
HEARD: February 17, 2015
VALLEE, J.
Introduction
[1] Frank Craparotta, who is the attorney for his father Ignazio Craparotta, pursuant to a power of attorney, brings this application to pass his accounts for the period August 12, 2013 to August 22, 2013. For ease of reference, I will refer to Frank Craparotta and Ignazio Craparotta by their first names. Ignazio filed a Notice of Objection with respect to the accounts. During the time in which Frank was managing Ignazio’s affairs, his house was sold. He objects to Frank’s including certain amounts relating to the sale in the capital receipts and disbursements, namely:
the sale proceeds of $250,404.09;
real estate broker fee 50% being $8,941.25;
legal fees for real estate transaction 50% being $1,137.07; and
holdback regarding final disbursements 50% being $75.
If these amounts are included in the accounts, the amount requested by Frank for compensation is $9,804.56. If they are not included, the compensation amount is significantly less.
Issue – What is the appropriate amount of compensation for Frank, taking into the account the extent of his participation in the sale of the home?
Test
[2] In Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350, 1905 CarswellOnt 449 (Ont. H.C.) the court set out five factors to consider when determining appropriate compensation for an attorney or trustee. They are as follows:
The magnitude of the trust;
The care and responsibility springing therefrom;
The time occupied in performing its duty;
The skill and ability displayed;
The success which had attended its administration.
[3] In Re: Jeffrey Estate, (1990), 39 E.T.R. 173, 1999 CarswellOnt 503 (Ont. Surr. Ct.), the court commented,
To me, the case law and common sense dictate that the audit judge should first test the compensation claims using the “percentages” approach and then, as it were, cross check or confirm the mathematical result against the “five-factors” approach set out in Re: Toronto General Trusts and Central Ontario Railway, supra….the result of this testing process should enable the judge to determine whether the claims are excessive or not and, in the result, will enable the judge to make adjustments as required. The process is not scientific but is not intended to be: in the estate context, it is a search for an award which reflects fairness to the executor; in a real sense, the search is for an appropriate quantum merit award in a unique setting.
Objector’s Position
[4] Frank provided to the court a series of emails which set out his involvement with the sale. Ignazio signed the Agreement of Purchase and Sale. Frank had relatively little involvement. He should be compensated for what he actually did, meaning his handling of Ignazio’s funds. Frank did not receive or distribute the cheques relating to the three items challenged. Therefore, those items should not be included in capital disbursements within the accounts.
The Attorney’s Position
[5] The emails show that Frank was involved in the sale process. He is entitled to compensation with respect to his efforts. The court has the discretion to determine an appropriate amount of compensation.
Analysis
[6] Frank provided a number of emails that he sent between August 28, 2013 and October 10, 2013. These are with respect to the sale of the house. Ignazio and his wife, who were separated, had different positions regarding the value of the property. The emails show that Frank was involved in the following:
Facilitating discussions between Ignazio and his wife with respect to negotiating a sale price.
Retaining real estate counsel.
Liaising with the real estate agent.
Notifying the various utilities with respect to the sale.
Obtaining cancellation of the home insurance policy.
Liaising with the real estate lawyer with respect to documents required.
Having Ignazio sign the required warranty and providing it to the real estate lawyer.
Arranging appointments with various people to attend at the real estate lawyer’s office to sign various documents.
[7] Frank has included the three contested items in the capital disbursements which total $10,153.32. Nevertheless, Frank did not receive bill for these amounts. He did not write the associated cheques. Rather, the sale funds were received and disbursed by the real estate lawyer.
[8] If the proceeds of the sale of the home are included in capital receipts and the three items are included in capital disbursements, the calculation of compensation is as follows:
3% of capital income $7,860.39 ($262,013.15 x 3%)
3% of capital disbursements $1,944.17 ($64,805.66 x 3%)
Total: $9,804.56.
[9] If the proceeds of the sale are not included in the capital receipts and the three items are not included in the capital disbursements, the calculation is as follows:
3% of capital receipts $348.27 ($11,609.06 x 3%)
3% of capital disbursements $1,639.57 ($54,652.34 x 3%)
Total $1,987.84
[10] Aside from the sale proceeds and expenses relating to the sale of the house, Ignazio’s estate is modest. As noted above, the capital receipts are $11,609.06. The capital disbursements are $1,639.57. Ignazio’s asset as of August 12, 2013 was a bank account containing $5,414.68. Using the percentage approach, Frank requests compensation of $9,804.56. When this is compared to this small estate, the relatively little required care, responsibility, and time required to manage it, $9,804.56 is excessive. I was not provided with any authority to support Frank’s position that the sale proceeds and expenses should be included in the Attorney’s accounts when the Attorney did not receive or manage the funds.
[11] Accordingly, I conclude that on a percentage approach, Frank’s compensation is determined to be $1,987.84. However, according to Re: Jeffrey Estate, I may consider an appropriate quantum merit award. Given the noted assistance that Frank provided regarding the sale of the home, I conclude that a fair amount for Attorney compensation is $3,000.
Costs
[12] Both parties took unreasonable “all or nothing” positions on this matter. Given the size of this modest estate, the issue should have been negotiated. There shall be no costs of this application.
VALLEE J.
Released: February 24, 2015