Court File and Parties
COURT FILE NO.: CV-15-21758 DATE: 20170222 ONTARIO SUPERIOR COURT OF JUSTICE
In the Estate of Louis Joseph Rocheleau, Deceased
BETWEEN:
Denise Leclerc, Power of Attorney for Rachel Simonne Rocheleau Applicant – and – Paul Rocheleau, Chantal Bondy and Nicole Rocheleau Respondents
Counsel: Elizabeth A. Papp, for the Applicant David M. Sundin, acting as agent for the Respondent Nicole Rocheleau
HEARD: Written submissions
Reasons on Costs
verbeem J.:
Background
1The applicant, Denise Leclerc (Denise), brought an application to determine whether the proceeds of a joint bank account formerly held by her father, Louis Rocheleau (Louis), deceased, and his daughter (and the applicant’s sister), Nicole Rocheleau (Nicole), passed to Nicole on Louis’ death pursuant to a right of survivorship or whether the proceeds formed an asset of Louis’ estate.
2Denise brought the application in her capacity as her mother Rachel Rocheleau’s (Rachel) attorney for property and personal care. Rachel is the sole residual beneficiary of Louis’ estate. Prior to his death, they were married for 63 years. Rachel and Louis have seven children, including the applicant and the respondents, Paul Rocheleau, Chantal Bondy and Nicole Rocheleau. The latter three act as the estate trustees for Louis’ estate.
3Prior to his death, Louis deposited the cumulative amount of $156,418.40 into a joint bank account in his name and Nicole’s name at the financial institution PC Financial (the PC account). At the time of Louis’ death, the PC account balance was $67,071.66.
4Despite her role as one of the trustees of Louis’ estate, Nicole took the position that the proceeds of the PC account were gifted to her by her father and ultimately passed to her, in their entirety, on his death, pursuant to a right of survivorship.
5For reasons dated November 21, 2016, I concluded that the proceeds of the PC account were presumptively impressed with a resulting trust in favour of Louis and thereafter the estate. Based on the evidence before me, I found that Nicole failed to rebut that presumption. Specifically, she failed to establish that the proceeds of the PC account or the beneficial right of survivorship associated with it were the subject of a valid and completed inter vivos gift made by Louis to her. The evidence did not persuade me, on a balance of probabilities, that Louis possessed the requisite donative intent in that regard and, in any event, Nicole did not purport to accept the alleged gift until sometime after Louis passed away. Therefore, I concluded that Nicole held the funds in the PC account in trust for the benefit of Louis’ estate as at the time of his death and continued to do so at the time of judgment. As a result, I concluded that the proceeds of the PC account properly form an asset of Louis’ estate and are subject to distribution in accordance with the terms of his Last Will and Testament.
6I ordered that the sum of $67,071.66 (the balance of the PC account as of April 14, 2014) forms part of the estate of Louis Rocheleau and I ordered that Nicole Rocheleau fully account to the estate for that amount, together with applicable interest, forthwith.
The Parties’ Costs Submissions
7At the conclusion of submissions on the application, the applicant submitted a costs outline seeking approximately $53,000 as full recovery of her costs. The respondent’s counsel appeared on a limited retainer for the purpose of arguing the application. He was not provided with the costs outline prior to the hearing and, therefore, had not received instructions or developed a position with respect to its content. As a result, in my reasons for judgment, I granted leave to Nicole to deliver a response to the costs outline of not more than four (4) pages within 60 days of the date of the judgment and leave to the applicant to deliver a reply within 20 days of receipt of any response.
8Under cover of letter dated January 19, 2017, Nicole delivered written submissions on costs, in which she factually asserts the following:
a) On August 22, 2013, Louis sold the matrimonial home that he shared with Rachel (who suffers from Alzheimer’s and is incapable of managing her own affairs) and deposited the net proceeds into a joint bank account with Nicole.
b) Beginning in approximately July of 2013 and continuing until Louis passed away on April 14, 2014, Louis and Rachel lived with Nicole and her family at Nicole’s house where they were cared for by Nicole. Since Louis’ death, Nicole has continued to care for Rachel in Nicole’s home.
c) She used the money from the PC account (as well as her own funds) to provide support for her parents and continues to use her own funds to provide support for Rachel.
d) Denise brought the application for, among other things, an order declaring that Nicole does not have an interest in the PC account and that the PC account is an asset of the estate of Louis.
e) The $67,071.66 held in the PC account on the date of Louis’ death were eventually transferred into a separate account in Nicole’s name only. In June of 2014, that account, among others, was frozen at the behest of the applicant. As of January 13, 2017, the amount in the new account totals $68,919.01.
9Within the factual matrix that she submits, Nicole makes the following submissions:
a) She is an estate trustee and as such she is entitled to be indemnified for all reasonably incurred costs in the administration of the estate, including the legal costs of an action reasonably defended (to the extent that costs are not recovered from another person): see Geffen v. Goodman Estate, [1991] 2 S.C.R. 353; and Brown v. Rigsby, 2016 ONCA 521, 350 O.A.C. 236, at para. 11.
b) She was acting in her capacity as estate trustee for the estate of Louis and as caregiver for her mother Rachel throughout the litigation and, accordingly, she is entitled to recovery of her costs from the estate and/or from the proceeds of the PC account. In that regard, she states that she has incurred the following legal fees and expenses:
Lawyer’s fees and disbursements: $ 9,590.20 Expenses for Rachel’s Care (32 months): $30,656.68 Total: $40,246.88
c) She calculates her entitlement to compensation for her mother’s care on the basis of expenses in the amount of $852 paid to the Alzheimer’s Society, $10,180.35 paid for private PSW assistance, $4,784.33 for Rachel’s personal needs, and $14,840 for Rachel’s “share of household expenses” ($530 per month for 28 months). Nicole maintains that she incurred all of these expenses, personally, after her father passed away in April of 2014.
d) She acknowledges that expenses incurred for Rachel’s care are “outside of the scope of the court’s authority in awarding costs” but submits that the amounts she has personally expended for Rachel’s care are a relevant consideration for the court in determining whether or not Nicole should be personally responsible for costs. (She submits that she should not be.)
e) The litigation itself arose as a result of the testator’s actions. Specifically, Nicole posits that the litigation arose as a result of Louis’ decision to place funds into a joint account rather than to make an outright inter vivos gift of the proceeds of the sale of his matrimonial home to her during the course of his life. Therefore, Nicole submits that any costs that are ordered to be paid to the applicant ought to be paid out of the estate as opposed to being paid by her in her personal capacity.
f) Finally, the applicant’s success at trial was limited. The applicant sought recovery of the entirety of the amounts that were deposited into the PC account by Louis during the course of his lifetime (totalling $156,418) but she only recovered judgment for the balance of the joint account at the time of Louis’ death, specifically the sum of $67,071.66. The applicant’s request for costs in the amount of $52,403.35 is therefore not proportional or reasonable.
10For her part, Denise submits the litigation was commenced solely as a result of Nicole’s actions, particularly her assertion that the proceeds of the PC account were a personal gift to her as opposed to an asset of the estate. On the hearing of the application, Nicole was unable to provide evidence to substantiate her claim and she failed to rebut the presumption of a resulting trust. As a result, Denise submits that costs should be payable by Nicole, personally, on a “full recovery basis”.
11In addition, Denise submits the following:
a) She was completely successful in the litigation. The entire amount of funds held in the joint account, as at the date of Louis’ death, was recovered as claimed in the application.
b) The proceedings were lengthened unnecessarily by Nicole’s conduct, particularly her failure to focus on the issue in the application. The majority of material Nicole filed was not relevant to the proceeding. In addition, Denise submits that Nicole failed to adequately respond to her solicitor’s repeated requests (at least 12) to provide specific evidence in her possession.
c) As a result of Nicole’s non-attendance at the return of the application on June 21, 2016, it was adjourned and Nicole was ordered to deliver the evidence she intended to rely on, if any, within one week. Once her evidence was received, the applicant was required to amend her factum to address additional issues raised therein. Denise also observes that Nicole repeatedly late filed material which led to undue delay at each step of the litigation process.
d) Nicole engaged in improper, vexatious or unnecessary steps in the proceeding which served to increase costs. Denise maintains that Nicole failed to focus on the issue raised in the application and instead used the proceeding as an attempt to express her resentment towards the applicant in her role as their mother’s attorney for personal care and property and to express her desire to have the applicant removed in that regard.
e) Nicole ought not to recover any of her own costs from the estate. She was, in Denise’s view, acting in her own self-interest at all times.
f) Any costs that Nicole claims associated with the care of Rachel Rocheleau are irrelevant.
Summary of the Parties’ Requested Costs Awards
12Nicole requests a costs award in accordance with the following terms:
The applicant’s costs should be paid by the estate on a partial indemnity basis;
In the alternative, the applicant’s costs should be paid by the estate on such terms as the court may deem just and reasonable;
In the further alternative, the applicant’s costs should be paid on such terms as the court may deem just and reasonable;
Nicole’s costs should be paid by the estate and/or from the monies in the PC account on such terms as the court deems just.
13Denise requests a costs award on the following terms:
a) The applicant’s costs should be paid by the respondent Nicole personally on a full recovery basis;
b) In the alternative, the applicant’s costs should be paid on such terms as the court may deem just and reasonable;
c) The respondent Nicole’s costs should not be paid by the estate nor from the monies in the PC account and no costs should be awarded to her.
Disposition
(a) Nicole should not be awarded costs payable by the estate.
14The correct approach to resolving whether Nicole’s costs should be payable by the estate is set out in McDougald Estate v. Gooderham. The approach set out therein balances the traditional public policy reasons for paying costs out of the estate “[w]here the difficulties or ambiguities that give rise to the litigation are caused, in whole or in part, by the testator” against the rationale for cost rules that ordinarily apply in civil litigation (“the need to restrict unwarranted litigation and protect estates from being depleted”): see McDougald Estate, at paras. 78 and 85; see also Reid Estate v. Reid Estate, 2010 ONSC 3800, 59 E.T.R. (3d) 312, at para. 4.
15In my view and consistent with the foregoing principles, Nicole is not entitled to recover her costs of this application, or any part thereof, notwithstanding her capacity as one of the estate trustees of Louis’ estate. Trustees are entitled to be indemnified from the estate when acting reasonably and not for their own benefit: see Geffen, at p. 391. However, where an estate trustee acts unreasonably or in his or her own self-interest, he or she is not entitled to indemnification from the estate: see Brown v. Rigsby, 2016 ONCA 521, at para. 11.
16In my view, it cannot be credibly said that Nicole was acting reasonably for the benefit of the estate in this litigation. To the contrary, she maintained that an asset held by the testator at the time of his death belonged to her, in her personal capacity, as the result of an inter vivos gift (of the proceeds of the PC account and/or the beneficial right of survivorship to the funds in the PC account at the time of Louis’ death). She maintained her position to judgment, despite the absence of cogent and persuasive evidence establishing a donative intent on the part of Louis to make the inter vivos gift she alleged and despite her own evidence that she did not accept the alleged gift prior to Louis’ death.
17I am satisfied that the ordinary cost rules that apply in civil litigation should be followed in this case. The litigation was not caused by Louis Rocheleau’s decision to open a joint account with his daughter Nicole (with whom he resided and shared living expenses with at the time). Rather, the litigation arose because of a dispute about the legal effect of his decision to do so. The parties agreed that a presumption of resulting trust attached to the proceeds of the PC account. The onus was on Nicole to rebut that presumption through cogent evidence. She failed to do so. Had she been successful, she would have enjoyed a personal benefit with respect to the funds in the PC account, at the expense of the estate.
18In the circumstances, I find that an award of costs to Nicole payable by the estate would not only deplete the estate’s assets, it would be unfair and unjust to the estate’s residual beneficiary, Rachel. Nicole’s litigation position was not designed to gather, preserve or protect the assets of the estate available for distribution to the beneficiary. Her position was designed to preserve a personal benefit which she alleged was conferred on her by her father. The circumstances do not warrant ordering that her costs be paid by the estate.
(b) Should costs be awarded in favour of Denise and, if so, from whom?
19A successful party does not have a right to costs, but it does have a reasonable expectation that a costs award will be made in its favour. Normally, costs follow the event and are awarded on a partial indemnity basis payable forthwith (within 30 days). Discretion can be exercised in exceptional circumstances to depart from any of those “norms”: see DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at para. 5; and Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal refused, 2014 ONCA 353.
20As a result, absent a compelling reason, costs should follow the event. In this case, Denise was successful on the application. As the successful party, she has a reasonable expectation that costs will be awarded in her favour and the award will be payable within 30 days. In my view, there is no reason to displace her expectation in that regard.
21Further, despite Nicole’s submission to the contrary, I find the applicant’s costs should be payable by Nicole personally, and not by the estate. As I previously observed, Nicole’s position in the litigation was designed to secure a personal benefit for herself ostensibly at the expense of the residual beneficiary of the estate. She was unsuccessful in that regard. An order that the applicant’s costs be paid by the estate would effectively amount to an order that the residual beneficiary be responsible for her own costs. In all of the circumstances, that result would not be a just one. Since Nicole was pursuing a result that would benefit her personally, she ought to have known that she would be exposed to costs in her personal capacity if she was unsuccessful.
(c) In what quantum should costs be fixed?
22The question of quantum remains.
23In determining the quantum of costs payable, the following principles are applicable.
24An order of costs is discretionary. Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides the following:
Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
25The discretion to award costs must be exercised in accordance with the facts and circumstances of the case and in accordance with the factors set out in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”): see Andersen v. St. Jude Medical Inc. (2006), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), at para. 22, leave to appeal refused, 2006 CarswellOnt 7749 (C.A.).
26Rule 57.01(1) of the Rules sets out the factors which may be considered by a court when exercising its discretion under s. 131 of the Courts of Justice Act and specifically provides the following:
In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
27Fixing costs is not a “mechanical” exercise. A consideration of experience, rates charged and hours spent is appropriate but is subject to the overriding principle of “reasonableness”, as applied to the factual matrix of the particular case, with a view to balancing “compensation of the successful party” with “the goal of fostering access to justice”: see Boucher v. Public Accountants Council (Ontario).
28The quantum awarded should reflect an amount that the court considers to be fair and reasonable within the factual matrix of the particular case rather than a precise measure of the actual costs of the successful litigant: see Zesta Engineering Ltd. v. Cloutier, at para. 4.
29The applicant’s counsel, Ms. Papp, was called to the bar in 1995. The applicant requests full recovery of her costs, premised on Ms. Papp’s actual rate charged at $300 per hour and her paralegal’s actual rate charged at $50 per hour. The applicant claims full indemnity for the 139.1 hours that Ms. Papp spent on this matter and the 5.6 hours spent by her paralegal. The fees claimed total $42,985, with associated HST of $5,588.05. The applicant also seeks full recovery of disbursements incurred in the amount of $3,185.47, together with associated HST of $390.58. In the result, the applicant claims total costs inclusive of HST and disbursements of $52,149.10.
30In my view, the actual rate charged by Ms. Papp is exceptionally reasonable. The applicant sought recovery of the total of the proceeds that Louis deposited in the PC account (in excess of $150,000) and recovered judgment slightly in excess of $67,000, representing the proceeds in the joint account at the time of Louis’ death. The amount ultimately recovered by the applicant was a function of the withdrawals that Nicole made from the joint account prior to Louis’ death. It remains that liability was apportioned exclusively against Nicole in the sense that she was required to fully account for the balance of the proceeds in the PC account at the time of Louis’ death.
31The issues in the proceeding were of moderate complexity. While the parties generally agreed on the applicable legal framework, the application of those principles was somewhat complicated by the nature of the evidence adduced by Nicole, which included a significant amount of irrelevant information as well as several conclusory statements that were simply not supported by the evidence, as filed.
32I am satisfied that Nicole’s conduct in the proceeding unnecessarily added to the costs incurred by the applicant. She failed to provide evidence in a timely manner in response to several requests by the applicant’s counsel, she failed to attend examinations for discovery in person as originally scheduled (which necessitated examinations by written interrogatories), she failed to attend mediation in person and she failed to file materials in a timely manner. I have not considered Nicole’s failure to attend the original scheduled hearing of the application before Campbell J. in 2016, because the costs associated with that attendance were fixed by him at that time.
33Despite the foregoing considerations, I am not persuaded that it is appropriate to order that the applicant recover her costs on a “full recovery” basis from Nicole. This was a dispute about the legal effect of Louis’ gratuitous transfer of funds into a joint account which he held together with Nicole. As it relates to the issues in this proceeding, Nicole was not alleged to have engaged in a breach of trust or a breach of fiduciary duty, and there have been no findings made in that regard. While Nicole’s conduct in the proceeding was not optimal, I do not find that it was scandalous, oppressive, high-handed or a product of bad faith. Neither party advised me of any offers to settle and, as a result, it does not appear that the cost consequences set out in Rule 49 are applicable in this instance. In the result, there is no compelling basis to depart from an award of costs on a partial indemnity scale.
34Ms. Papp has submitted complete and detailed dockets evidencing the amount of time that she spent in association with this proceeding. While a review of the hours spent is appropriate, it is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum awarded must reflect an amount that the court considers to be fair and reasonable within that factual matrix.
35Despite the path that led it there, this application was the subject of a relatively brief one half day hearing before the court. Given the amount in dispute, the amount recovered, the apportionment of liability, the conduct of the respondent Nicole in the proceeding (which added to its delay), the rates charged and hours spent by applicant’s counsel and the principles of “proportionality” and the “reasonable expectations” of the losing party, I find that it is fair and reasonable to award the sum of $22,500 in fees plus applicable HST of $2,925, together with disbursements in the amount of $3,185.47 and HST on disbursements of $390.58 to the applicant as partial indemnity costs, for a total of $29,001.05. Those costs shall be payable to the applicant by the respondent Nicole Rocheleau within the next 60 days. In arriving at that quantum, I have reviewed the disbursements claimed by the applicant and I have concluded that they all appear to be reasonable.
36Order to go in accordance with the foregoing.
Original signed by Justice Gregory J. Verbeem
Gregory J. Verbeem Justice
Released: February 22, 2017