CITATION: Sentineal, et al. v. Sentineal, 2016 ONSC 6529
COURT FILE NO.: 54995/14
DATE: 2016/10/24
ONTARIO
SUPERIOR COURT OF JUSTICE
In the Estate of Frederick Clement Sentineal, Deceased
BETWEEN:
JACK SENTINEAL, TRUSTEE FOR THE ESTATE OF FREDERICK CLEMENT SENTINEAL
Plaintiff
- and -
JEFFREY SENTINEAL
Defendant
Bruce Macdonald, for the Plaintiff
Brian Banfield, for the Defendant
The Honourable Mr. Justice J. R. Henderson
C O S T S E N D O R S E M E N T
[1] This proceeding was commenced as an application by the plaintiff (hereinafter called “Jack”) to pass his accounts as trustee for the estate of his father. Jack’s brother, the defendant (hereinafter called “Jeff”), objected to the estate accounts. The application was converted to a trial that was conducted over the course of approximately four weeks, and involved numerous contentious matters. My written decision was released on August 16, 2016.
[2] Both parties now make written submissions for costs in their favour. Jeff requests that he be awarded costs against Jack personally. Jack requests that he be awarded costs against Jeff personally. In the alternative, Jack seeks an order that his costs be paid out of the estate.
THE LAW
[3] The traditional approach to costs in an estate proceeding is that the estate trustee is entitled to full indemnity for all costs incurred on behalf of the estate. See the decision in Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353 at para. 74. That is, because the trustee is responsible for taking all reasonable steps in the administration of the estate, the trustee should not be personally responsible for the costs incurred as a consequence of discharging that responsibility. As the trustee is acting on behalf of the estate, all legal costs should be paid out of the estate.
[4] This traditional approach has been modified in recent years to permit the court to make costs orders in accordance with the ordinary rules that apply in civil litigation. In that respect, see the case of McDougald Estate v. Gooderham (2005), 2005 CanLII 21091 (ON CA), 255 D.L.R. (4th) 435 (OCA) at paras. 77 to 80.
[5] Further, in the case of Sawdon Estate v. Sawdon, 2014 ONCA 101, it has been held that blended costs orders are available. At para. 99 of the Sawdon Estate case Gillese J. wrote:
…If the court were to find that the losing party’s conduct unnecessarily increased the costs of litigation, it should be open to the court to order that party to pay a part of the estate trustee’s costs, while at the same time ordering the estate to pay the balance of the estate trustee’s costs. Put another way, the estate ought only to bear the costs reasonably associated with ensuring that it is duly administered….
[6] Accordingly, in my view, the court must consider costs in estate litigation matters in two stages. At the first stage, the court must consider the merits of the costs claimed as between the parties by considering the conduct of the parties, any offers to settle, and the remaining factors set out in Rule 57.01 of the Rules of Civil Procedure. At the second stage, the court must consider whether the legal costs incurred by the estate trustee should be paid out of the estate.
COSTS AS BETWEEN THE PARTIES
[7] A successful litigant is presumptively entitled to his/her costs. In the present case, neither Jack nor Jeff can be described as the successful party. Both had mixed success.
[8] Jack successfully achieved a passing of the estate accounts. However, Jack was unsuccessful in his requests that he be paid approximately $50,000 for management fees, that Jeff pay approximately $48,000 for occupation rent, that Jeff pay the account of Crawford, Smith and Swallow, and that Jeff pay a $5,000 legal bill.
[9] Further, Jack was ordered to reimburse the estate for the sum of $5,362 because of his failure to file the estate tax returns on time. Still further, I found that Jack was not entitled to reimbursement from the estate for legal costs incurred on behalf of Jack’s corporations.
[10] Jeff achieved some success by reducing the amounts that Jack claimed Jeff owed to the estate, as mentioned above. However, Jeff was unsuccessful in his requests that Jack be denied executor’s compensation, that Jack be denied reimbursement out of the estate for his legal costs, that Jack reimburse the estate for the value of four automobiles, that Jack reimburse the estate for the value of the household contents, and that Jack pay Jeff’s legal costs of an interlocutory motion.
[11] Further, I found that Jeff had deliberately interfered with Jack’s ability to deal with the estate chattels, and that Jeff deliberately converted estate chattels by selling the chattels and keeping the proceeds of sale for himself.
[12] Both of the parties delivered offers to settle, but I find that neither offer to settle engages the provisions of Rule 49 of the Rules of Civil Procedure. Jack’s offer to settle expired on May 11, 2015, well before the commencement of the trial. Jeff’s offer to settle included terms that Jack was not to be reimbursed out of the estate for any of his legal costs, and that Jack’s request for executor’s compensation be substantially reduced. Therefore, I find that neither offer to settle is useful with respect to the costs claimed as between the parties.
[13] For these reasons, I find that neither party is entitled to payment of any costs personally from the other party.
COSTS OUT OF THE ESTATE
[14] Jack submits that this proceeding to pass the estate accounts was part of his fiduciary responsibilities as estate trustee. Therefore, Jack requests full reimbursement out of the estate for the legal costs of this proceeding in the total amount of $187,597.09.
[15] Given my findings with respect to costs as between the parties, the payment of the full amount of the estate trustee’s legal costs out of the estate is not appropriate. There are only two beneficiaries of this estate, namely Jack and Jeff, who are each entitled to a 50 percent share of the estate. Therefore, any expenses that are paid out of the estate are, in essence, paid 50 percent by each of Jack and Jeff. Thus, if I were to grant Jack’s request, then Jack’s legal costs would be paid 50 percent by Jack and 50 percent by Jeff; whereas Jeff’s legal costs would be paid 100 percent by Jeff. This, in my view, would not be a fair and just result.
[16] There is no doubt that some of Jack’s legal costs were properly incurred for the routine administration of the estate. Those costs would include charges for the preparation of the application to pass the estate accounts, along with the assembly of the supporting documentation. Those routine estate legal costs, however, are only a small part of the extravagant legal costs for this four-week trial of all of the issues.
[17] For these reasons, I order that Jack is to be reimbursed out of the estate for the legal costs related to the preparation, organization, and submissions with respect to the passing of the estate accounts, which I fix at a total of $10,000 all inclusive. All other legal costs incurred by Jack with respect to this proceeding are to be borne personally by Jack.
SUMMARY AND CONCLUSION
[18] For the reasons set out above, I order the following:
- Neither party is entitled to payment of any costs personally from the other party;
- Jack is entitled to reimbursement out of the estate for his legal costs with respect to the passing of the estate accounts, fixed at $10,000 all inclusive.
J. R. Henderson J.
Released: October 24, 2016
CITATION: Sentineal, et al. v. Sentineal, 2016 ONSC 6529
COURT FILE NO.: 54995/14
DATE: 2014/10/24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JACK SENTINEAL, TRUSTEE FOR THE ESTATE OF FREDERICK CLEMENT SENTINEAL
Plaintiff
- and -
JEFFREY SENTINEAL
Defendant
COSTS ENDORSEMENT
J. R. Henderson J.
Released: October 24, 2016