Court File and Parties

Court File No.: CV-16-5492-00 Date: 2017 03 22

Ontario Superior Court of Justice

BETWEEN:

Fred Gerritse and Dinah Louise Teffer J. de Vries and A. Alizadeh, Counsel for the Applicants/ Responding Parties Applicants/ Responding Parties

- and -

The Hospital For Sick Children, Canadian Cancer Society, Jan Korte, Frieda Korte, Monique Seiler Korte, Daniel Korte, Rietje Buddingh, Theodorus Buddingh, Hennie Buddingh, Ingrid Buddingh, Peter Verbeek and Adeline Blanchette R. D’Ambrosio, Counsel for some of the Respondents / Moving Parties Respondents/Moving Parties

HEARD: February 7, 2017

Reasons for Decision on Costs

CONLAN J.

I. Introduction

[1] These Reasons resolve the issue of costs with regard to a Motion that was heard in Brampton on February 7, 2017 and decided on February 9th: Gerritse et al. v. The Hospital for Sick Children et al., 2017 ONSC 973 (“Decision”).

[2] To understand the background and the nature of the Motion that was heard, set out below are paragraphs 1 through 17 of the Decision referred to above.

The Background

[1] On June 26, 2016, Johanna Maria Schaefers (“Johanna”) died. She was 95 years old. Her husband had died many years earlier, in a car accident. Johanna had no children. Her sister, who also had no children, predeceased Johanna.

[2] An Application has been brought by Fred Gerritse (“Fred”) and Dinah Louise Teffer (“Dinah”).

[3] Fred alleges that he is the half-brother of Johanna.

[4] In the event that it is found that Johanna died intestate, Fred stands to be the lone heir.

[5] Dinah is Johanna’s niece.

[6] The Application brought by Fred and Dinah challenges the validity of two purported Wills made by Johanna, one dated December 4, 1998 and the other dated April 27, 2006.

[7] According to Fred and Dinah, the 1998 Will is a forgery, and the 2006 Will must be declared invalid because of suspicious circumstances surrounding its execution and a lack of testamentary capacity on the part of Johanna.

[8] If Fred and Dinah are correct, that would leave Johanna’s 1959 Will as the governing document.

[9] At the time of Johanna’s death, there were no surviving beneficiaries under the 1959 Will. Hence, the intestacy rules would prevail.

[10] Many of the Respondents have not filed a Notice of Appearance. Those who have are (i) Jan Korte, Frieda Korte, Monique Seiler Korte, Daniel Korte, collectively the “Kortes”, and (ii) Adeline Blanchette (“Adeline”).

[11] Adeline was Johanna’s close friend. Adeline’s husband, Respondent Peter Verbeek, was Johanna’s long-time lawyer.

[12] The Kortes are beneficiaries under Johanna’s 2006 Will. Thus, they have an interest in ensuring that the said Will is not declared invalid.

The Motion

[13] The Kortes and Adeline, all represented by the same counsel, bring a Motion to, among other things, stay the Application “pending a determination of the paternity for the applicant, Fred Gerritse”.

[14] The Motion also includes a prayer for other relief, however, I decline to deal with anything herein except the issue of the stay. My reading of the Endorsement of Emery J. made on January 31, 2017 is that only two matters were put to February 7th – the Application itself and the stay Motion.

[15] As the Application itself will be dealt with later by way of a consent timetable Order, the only item for this Court to decide is the stay Motion.

[16] Succinctly put, the Kortes and Adeline argue that Fred does not share the same father as the late Johanna. In other words, Fred and Johanna are not half-siblings.

[17] The Kortes and Adeline intend to apply to the Court to challenge the right of Fred to bring the Application at all. In the meantime, pending the determination of Fred’s paternity, the Application challenging the two Wills in 1998 and 2006 ought to be stayed, argue the moving parties.

[3] The stay request was dismissed. Other relief sought in the Motion was adjourned.

[4] This Court described the test for a stay in the following manner, at paragraph 20 of its Decision.

[20] The law is well-settled as to what is required for a stay to be granted in this type of situation. Special circumstances are required. This must be viewed as one of the clearest of cases. Two conditions must be met, both of which the moving parties have responsibility to demonstrate on a balance of probabilities: (i) that continuance of the Application would work an injustice because it would be oppressive or vexatious or would amount to an abuse of process, and (ii) the stay would not cause an injustice to the Applicants. [Leung Estate v. Leung, 2004 CarswellOnt 1366 (S.C.J.)], at paragraph 28, citing the decision of Justice Blair, as His Honour then was, in Canadian Express Ltd. v. Blair (1992), 1992 ONSC 7535, 11 O.R. (3d) 221 (Gen. Div.).

[5] At paragraph 21 of its Decision, this Court concluded that the moving parties had failed to establish either one of the two conditions that must be met for a stay to be entered.

[6] The parties have been unable to agree on costs. Written submissions have been filed.

II. The Positions of the Parties on Costs

[7] Mr. Gerritse and Ms. Teffer request their full indemnity costs in the total amount of $53,515.30, almost all of which is comprised of fees.

[8] The fees, however, are not confined to the stay Motion.

[9] $41,768.75 are devoted to that Motion, while $10,600.54 relate to the appointment of Scotiatrust as the estate trustee during litigation.

[10] That appointment was made by Bloom J. on January 17, 2017, on consent but allegedly not without significant costs being incurred by Mr. Gerritse and Ms. Teffer in trying to persuade the other side to agree to the appointment, such persuasion only becoming effective very shortly before the Court date before Justice Bloom.

[11] Mr. Gerritse and Ms. Teffer suggest that the moving parties be responsible, jointly and severally, for $24,000.00 of the $53,515.30 in costs being claimed. The remaining amount would be paid out of the Estate.

[12] The moving parties submit that each side ought to be awarded its costs, fixed at $7500.00 all-inclusive on a partial recovery basis, for the appearances at Court both on January 17th and February 7th, to be paid out of the Estate.

[13] Alternatively, it is suggested by the moving parties that the issue of costs of the stay Motion be reserved to the Justice who hears the Application or the balance of the Motion that this Court declined to entertain in its Decision rendered on February 9th.

III. Analysis and Conclusion

The Basic Legal Principles

[14] Generally speaking, costs ought to be decided after each step in a proceeding, including after a motion.

[15] It is the normal course that a successful party on a motion be entitled to receive some costs.

[16] Quantum of costs is discretionary. The overriding objective is to make an award that is fair, just and reasonable in all of the circumstances.

[17] Both sides appear to agree that the leading authority on the issue of when it is appropriate to make an award of costs to be paid out of the estate is the decision of the Court of Appeal for Ontario in McDougald Estate v. Gooderham, 2005 ONCA 21091.

[18] The key paragraphs of that decision are 74 through 80, 85, 91 and 92, all set out below.

[74] The appellants seek their costs from the estate, on a substantial indemnity basis, in any event of the outcome of the appeal. Alternatively, if unsuccessful on appeal, they seek an order that their costs be paid from the estate on a partial indemnity basis or that they bear their own costs.

[75] As support for their primary position, the appellants point to the fact that the traditional rule in estate litigation is that the estate bears the costs of all parties. They say that the traditional rule should apply because: the dispute could have been avoided had the will been drafted more clearly or had the attorneys handled Ms. McDougald’s affairs in a consistent fashion; they played no role in the events giving rise to the dispute; the legal issues relating to the doctrine of ademption and the interpretation and application of the Act were not straightforward; and, if successful, all of the residuary beneficiaries will benefit financially, therefore it is just that all the residuary beneficiaries bear the costs of the litigation, which is the effect that the requested costs award would have.

[76] The respondent asks that costs follow the event.

[77] In my view, it is appropriate that the appellants pay costs to the respondent on a partial indemnity basis. In explaining why I have reached this conclusion, it is useful to begin by considering the basis upon which costs are awarded, at first instance, in estate litigation.

[78] The practice of the English courts, in estate litigation, is to order the costs of all parties to be paid out of the estate where the litigation arose as a result of the actions of the testator, or those with an interest in the residue of the estate, or where the litigation was reasonably necessary to ensure the proper administration of the estate. See Mitchell v. Gard (1863), 3 Sw. & Tr. 275, 164 E.R. 1280 and Spiers v. English, [1907] P. 122. Public policy considerations underlie this approach: it is important that courts give effect to valid wills that reflect the intention of competent testators. Where the difficulties or ambiguities that give rise to the litigation are caused, in whole or in part, by the testator, it seems appropriate that the testator, through his or her estate, bear the costs of their resolution. If there are reasonable grounds upon which to question the execution of the will or the testator’s capacity in making the will, it is again in the public interest that such questions be resolved without cost to those questioning the will’s validity.

[79] Traditionally, Canadian courts of first instance have followed the approach of the English courts. While the principle was that costs of all parties were ordered payable out of the estate if the dispute arose from an ambiguity or omission in the testator’s will or other conduct of the testator, or there were reasonable grounds upon which to question the will’s validity, such cost awards became virtually automatic.

[80] However, the traditional approach has been – in my view, correctly – displaced. The modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations set out above applies, to follow the costs rules that apply in civil litigation. Four cases usefully illustrate this modern approach.

[85] The modern approach to awarding costs, at first instance, in estate litigation recognises the important role that courts play in ensuring that only valid wills executed by competent testators are propounded. It also recognises the need to restrict unwarranted litigation and protect estates from being depleted by litigation. 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.

[91] In ordering the appellants to pay costs, I act on the principle that the same rules that govern costs in civil litigation at the appeal level apply to unsuccessful appellants in estate litigation. I see nothing in the circumstances of the parties to warrant departing from that principle.

[92] The appellants are two of the eight remaining residuary beneficiaries of the estate. They are entitled to a relatively small portion of the residue of the estate. None of the other residuary beneficiaries took a position in the application by the estate trustees, the appellants’ counter-application or the appeal. The matters that concerned the appellants were thoroughly dealt with below. Arguably, such matters would have been fully explored and resolved by means of the application alone. Be that as it may, the application judge gave thoughtful, cogent reasons in granting the respondent’s application and dismissing the appellants’ counter-application. The application judge allowed the appellants their costs, payable out of the estate of the testator. To require the estate to bear the costs of the appeal for all parties would be to make all of the residuary beneficiaries pay for the application, the counter-application and the appeal when only the appellants embarked on such litigation and on the appeal. Application of the usual costs rule, however, results in the estate bearing only that portion of the respondent’s costs not recovered from the appellants.

The Legal Principles Applied to This Case

Should Costs be Reserved?

[19] There is no cogent reason to delay the issue of costs.

[20] The moving parties’ bald assertion that any award of costs at this juncture is premature could be applied to any proceeding that has not yet been finally determined even though a motion has been adjudicated on.

[21] The moving parties’ reliance on the fact that its Motion returnable at Court on February 7th was not determined in its entirety is misplaced.

[22] That reality is not the fault of Mr. Gerritse and Ms. Teffer. Based on the Endorsement made by Justice Emery on January 31st, the relief that was adjourned by this Court in its Decision was never put to February 7th to begin with. It should not have formed part of the Notice of Motion returnable at Court on February 7th.

[23] Costs of the stay request will be decided now.

Who Should Be Awarded Some Costs?

[24] Clearly, Mr. Gerritse and Ms. Teffer were entirely successful in resisting the request for a stay of the Application.

[25] There is nothing in the costs submissions filed by the moving parties to cause this Court to depart from the normal presumption that the successful parties deserve some costs.

[26] Mr. Gerritse and Ms. Teffer will be awarded some costs, and the moving parties will not. Having been wholly unsuccessful on the stay request, there is simply no reason to give the moving parties some costs, whether to be paid out of the Estate or otherwise.

Quantum and Scale of Costs

[27] On quantum of costs, I disagree with the moving parties that there is anything excessive, duplicitous or unreasonable about the time spent by counsel for Mr. Gerritse and Ms. Teffer, or the distribution of the work, or the hourly rates.

[28] This Court also disagrees with the moving parties that there lacks enough detail in the Bill of Costs filed by counsel for Mr. Gerritse and Ms. Teffer to allow for a determination of the reasonableness of the amounts being claimed.

[29] Mr. de Vries strikes this Court as a real expert in the area of estate litigation. On the key issues of the test for a stay and how that test has been applied in the estates arena, his submissions on the Motion, both written and oral, were most helpful.

[30] This Court will not be reducing the hourly rates or the time spent by counsel for Mr. Gerritse and Ms. Teffer.

[31] I disagree with the successful parties, however, that the appropriate scale of recovery is full indemnification. No justification for that is set out in their written costs submissions except to say that they were wholly successful on the stay request. It is implied that the stay Motion should never have been brought at all as it stood no chance of success, and the appointment of Scotiatrust ought to have been consented to right away.

[32] Even assuming those things to both be true, I see no reason to award costs on a full indemnity scale. There is plenty of case law to support the notion that even estate trustees, for whom there is often a presumption that full indemnification should be awarded, are not always granted their costs on a full indemnity basis.

[33] None of the authorities filed by Mr. Gerritse and Ms. Teffer support the notion that full indemnification is appropriate.

[34] In fact, a reading of McDougald Estate, supra, although an appeal, suggests that the costs awarded there did not amount to full indemnification.

[35] Further, the decision of the Court of Appeal for Ontario in Sawdon Estate v. Sawdon, 2014 ONCA 101, although clear authority for a blended costs award to be paid in part by an unsuccessful party and the rest out of the estate, does not clearly indicate that the costs awarded there amounted to full indemnity.

[36] Even if the costs awarded in Sawdon Estate, supra were full recovery, the claimant there was the estate trustee, and trustees are often treated differently than others involved in the litigation.

[37] Costs will be awarded in favour of Mr. Gerritse and Ms. Teffer in the amount of $27845.00 for fees plus $1146.01 for disbursements, for a total of $28,991.00 (rounded down by one cent).

[38] The $27845.00 represents approximately two-thirds of the $41,768.75 in fees claimed by Mr. Gerritse and Ms. Teffer regarding the stay Motion.

[39] In my view, that scale of recovery, two-thirds, is appropriate, and the total amount of $28,991.00 is fair, just and reasonable in all of the circumstances, including a consideration of the reasonable expectations of the losing side.

[40] The $7500.00 suggested by the moving parties is, simply put, woefully low.

Should There be a Blended Costs Award?

[41] The only thing left to decide is whether the proposed split of costs suggested by the successful parties is reasonable. They have recommended that the moving parties pay about 45% of the costs awarded, with the remaining 55%, approximately, to be paid out of the Estate.

[42] There is no dispute by the moving parties that this Court has the authority to make a blended costs award. Sawdon Estate, supra clearly indicates so.

[43] I agree with Mr. Gerritse and Ms. Teffer about four things: (i) the stay request was weak and was not reasonably necessary; (ii) the moving parties seem bound and determined to continue with interlocutory motions rather than pursue their interests in the context of the Application as a whole, which they are perfectly capable of doing; (iii) the Estate ought not be used as a shield to fund these interlocutory steps, incentivizing the moving parties with the comfort that the costs associated with these interlocutory matters will be borne by all, and (iv) there exists no public policy consideration here to justify all of the costs awarded being paid out of the Estate.

[44] In my view, therefore, a blended costs award is appropriate but with a slightly different distribution: one-third (rather than about 45%) to be paid by the moving parties, and two-thirds (instead of approximately 55%) to be paid out of the Estate.

[45] Thus, the moving parties shall pay to Mr. Gerritse and Ms. Teffer costs in the total amount of $9663.66. The Estate shall pay to Mr. Gerritse and Ms. Teffer costs in the total amount of $19,327.34.

[46] That is the Order of the Court regarding costs of the stay Motion.

Costs Related to the Appointment of Scotiatrust

[47] One final item. This Court has not dealt with costs related to the appointment of Scotiatrust as the estate trustee during litigation. That is deliberate, for three reasons.

[48] First, the appointment was ultimately made on consent, and normally no costs are awarded in those instances.

[49] Second, this Court’s Decision on the stay Motion did not contemplate entertaining costs submissions on the matter of the appointment. That is clear from a plain reading of paragraph 40 of the Decision.

[50] Third, the exercise of this Court’s discretion to not deal with costs related to the appointment does not necessarily foreclose the possibility of counsel raising that issue with the Judge who ultimately disposes of the Application. In my view, the Endorsements of Justices Bloom and Emery, combined, would allow for counsel to at least make that request, although I must say that I suspect that no costs would be awarded.

[51] In any event, the Application Judge would surely be in a better position than I to assess that issue. This Court’s involvement in the proceeding was limited strictly to the stay request.

CONLAN J. Released: March 22, 2017