Costs Endorsement
COURT FILE NO.: ES-808-15 DATE: 2016-08-10 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CARLA DAWN LEVERETTE WOOLNOUGH, Applicant AND: GRAHAM NEAL DARE and BRYAN ROBERT DARE, personally and in their capacities as the Estate Trustees of the Estate of Carl Merner Dare, Respondents
BEFORE: The Honourable Mr. Justice D.A. Broad
COUNSEL: C. David Freedman, for the Applicant Kelly Charlebois, for the Respondents
1The parties have been unable to settle the issue of costs and have now delivered their written costs submissions.
2The respondents seek costs of the application on a full indemnity basis in the total sum of $45,880.37 comprised of fees in the sum of $40,119, HST on the fees in the sum of $5215.47 and disbursements in the sum of $545.90. They also seek costs in respect of the applicant’s motion for leave to introduce additional affidavits following the completion of cross examinations on a full indemnity basis in the total sum of $9268.83 comprised of fees of $8202.83 and HST thereon in the sum of $1066.33.
3The respondents state that the applicant vigorously pursued the application seeking their removal as estate trustees, motivated solely by the her desire to advance her personal interests with respect to occupying and purchasing the Cottage Property, being an asset of the estate in which she had no preferential rights. They say that the applicant raised serious unfounded allegations against them and attempted to displace them as estate trustees on spurious grounds. They submit that, in these circumstances, the applicant should pay the full costs associated with her unsuccessful application and the remaining beneficiaries of the estate should not bear the burden of her actions.
4The applicant submits that there is no basis upon which full indemnity costs should be ordered and that only partial indemnity costs should be payable in respect of the application and no costs should be ordered in respect of the motion for leave to introduce the additional affidavits. She says there is no evidence that she acted reprehensibly or wantonly or that her conduct in the litigation was egregious or worthy of chastisement. Moreover she states that she sought no financial advantage in the litigation but rather sought the removal of the respondents as estate trustees solely to ensure that she would be permitted to pay fair market value on a sale of the cottage to her. She submits that to hold her sentimental attachment to the cottage against her as an improper motivation is unfair. She also argues that, as a matter of public policy, a beneficiary of a trust must be able to seek the protection of the court and cannot be punished for so doing unless she acted egregiously in the litigation.
5The applicant submits that the respondents are not entitled to costs in respect of the motion for leave to admit the additional affidavits, given that it was not ruled upon by the court.
6Finally, the applicant argues that the costs claimed by the respondents are excessive, and, in particular, points to 36.2 hours of counsel time to prepare for and participate in cross examinations and 14 hours to research well-settled law and to draft the respondent’s Factum as being excessive.
7The applicant submits that the respondent’s costs, including disbursements and HST, should be limited to $10,000 “given the relatively simple nature of the issues and evidence in this matter.”
Analysis
8In the case of Johnston v. Lanka Estate, 2010 ONSC 4124 (S.C.J.) Pattillo, J. ordered that the costs of the estate trustees in responding to an unsuccessful application by two beneficiaries for their removal be paid by the applicants on a substantial indemnity basis, to be paid by the applicants proportionately from their distributive shares of the estate. Justice Pattillo commented at para. 44 that to order that the estate trustees’ costs be paid by the estate in general would unfairly impact on the respondents and the remaining beneficiary. The applicants were unsuccessful on their application and should be required to pay the costs personally. At para. 45 Justice Pattillo stated that to award the estate trustees anything less than substantial indemnity costs would require them to supplement their legal costs from their own pockets and would indirectly penalize them accordingly.
9To similar effect, costs were ordered to be paid, on a substantial indemnity basis, by the applicants following an unsuccessful application to remove estate trustees where the application was found to have been “doomed to failure from the outset” in the case of Radford v. Radford Estate, [2008] O.J. No. 3526 (S.C.J.) (see para. 122).
10The applicant relies upon the case of Sawdon Estate v. Sawdon, 2010 ONCA 101 (C.A.) for the proposition that the normal costs rules apply in estate and trust litigation.
11In Sawdon the dispute concerned several bank accounts which the testator placed, prior to his death, into joint names with two of his five children, with instructions that following his death the funds in the accounts were to be distributed equally among all of his children. A charitable beneficiary claimed that, upon the testator’s death, the funds in the bank accounts formed part of the estate by right of a resulting trust. The trial judge held that the presumption of resulting trust had been rebutted and ordered that the funds in the bank accounts were not part of the estate. The trial judge ordered the charitable beneficiary to pay the estate trustee’s trial costs on a partial indemnity basis and refused the estate trustee’s request for an order that the estate indemnify him for the balance of his trial costs.
12The charitable beneficiary was unsuccessful on its appeal of the substantial disposition of the trial judge. The estate trustee sought leave to appeal the costs order and, if leave was granted, cross appealed, arguing that he should be entitled to indemnification from the estate for his legal costs not recovered from the charitable beneficiary. The Court of Appeal allowed the cross-appeal, upholding the trial judge’s decision to award partial indemnity costs against the charitable beneficiary, and ordering that the estate indemnify the estate trustee for his costs in excess of that amount.
13At para. 84 Gillese, J.A., writing for the Court, stated that “the starting point is that estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, except in those limited circumstances where public policy considerations apply.” At para. 85 Gillese, J.A. identified the public policy considerations at play in estate litigation as primarily consisting of two sorts: (1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered.
14At para. 86 Gillese, J.A. held that where the problems giving rise to the litigation were caused by the testator, it is appropriate that the testator, through his or her estate, bear the cost of their resolution.
15It is noteworthy that Sawdon Estate was not concerned with an application to remove estate trustees, but rather concerned a dispute arising from the manner in which the testator himself had arranged his affairs.
16In my view the application in the present case engaged both public policy considerations identified in Sawdon Estate, namely the need to give effect to a valid will that reflects the intention of the testator and the need to ensure that the estate are properly administered. The testator in the present case chose the estate trustees to administer his estate. The applicant sought their removal in order to advance her own private interests, as distinct from her interests which she shared with the other residuary beneficiaries. As such, she sought to undermine the choice made by the testator, through his will, in appointing the respondents as his estate trustees charged with the responsibility of administering his estate.
17In my view the principles in Sawdon Estate are not inconsistent with the principle applied in Lanka Estate and Radford Estate that it would be manifestly unfair for the remaining beneficiaries of the estate to bear any of the estate trustees’ costs associated with successfully responding to the applicant’s application for their removal. In light of the policy considerations identified in Sawdon Estate it is not necessary, for substantial indemnity costs to be awarded against the applicant, that she be shown to have acted egregiously or in a manner worthy of chastisement.
18The respondents should therefore be entitled to costs on a substantial indemnity basis against the applicant.
19With respect to the question of quantum, the applicant takes issue with particular aspects the respondents’ Costs Outline, namely counsel time for preparing for and attending on cross examinations and for preparation of the respondents’ Factum. It is noteworthy that the applicant has not provided her own Costs Outline setting forth the time spent by her counsel on these matters, which would have served as a helpful measure of her reasonable expectations with respect to her liability for costs if unsuccessful on the application.
20The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in subrule 57.01(1) of the Rules of Civil Procedure, including the principle of indemnity and the amount of costs that an unsuccessful party could reasonably expect to pay.
21It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, [2005] O.J. No. 160 (Ont. C.A.)).
22The absence of a Costs Outline from the applicant makes it very difficult determine what her reasonable expectations were in respect of costs. Moreover, little support is offered for her argument that the time spent by counsel for the respondents on the cross examinations and on preparation their Factum was excessive. In addition, the basis for the applicant’s argument that the issues and the evidence were “relatively simple” is hard to ascertain. One is left to wonder whether the applicant’s submission in this respect would have been the same had she been successful and she was the party seeking costs.
23I do not find the Respondents’ claim for costs to be unreasonable or disproportionate in light of the serious issues raised by the applicant and the potential impact on the administration of the estate posed by the application. In my view the amount claimed by the respondents’ for costs should have been within the reasonable expectation of the applicant.
24With respect to the costs of the applicant’s motion for leave to file additional affidavit material following the completion of cross examinations, the fact that it was not necessary for the court to make a determination on that motion does not relieve the applicant from responsibility to pay the respondents’ costs in responding to it. It simply reflects the fact that the application itself was not meritorious rendering it unnecessary to make a determination on the motion. It is noted that the applicant filed the additional affidavit material prior to obtaining leave and included references to the additional affidavit material in her Factum, despite the respondents’ demand that she not do so. It was perfectly reasonable for the respondents to oppose the motion for leave, and it should have been within the applicant’s reasonable expectation to pay costs of the motion, even if it was ultimately found not to be necessary to make a ruling on it.
Disposition
25For the reasons set forth above it is ordered that the applicant pay costs to the respondents in respect of her unsuccessful application for their removal as estate trustees, fixed on a substantial indemnity basis in the sum of $45,880.37, and in addition, the applicant is ordered to pay costs to the respondents in respect of her motion for leave to admit new affidavits, fixed on a substantial indemnity basis, in the sum of $9268.83.
26In the circumstances of this case, since the distribution of the balance of the residue to the beneficiaries, including to the applicant, will be delayed until April 9, 2020 under the terms of the will, it is not appropriate to order that the costs be paid by the applicant out of her distributive share of the estate, rather than personally. The foregoing amounts shall therefore be paid by the applicant within 30 days of the date hereof.
D.A. Broad J.
Date: August 10, 2016