Court File and Parties

COURT FILE NO.: 05-162/16 DATE: 20170704 ONTARIO SUPERIOR COURT OF JUSTICE (ESTATES LIST)

IN THE MATTER OF THE ESTATE OF JOHANN RUBIN, also known as JAY RUBIN, Deceased

BETWEEN:

ANNIE MAYER in her capacity as an Estate Trustee of the Estate of JOHANN RUBIN and in her personal capacity Applicant

-and-

MORRIS ERIC RUBIN in his capacity as an estate trustee of the Estate of Johann Rubin and in his personal capacity, IDA RUBIN in her capacity as an estate trustee of the Estate of Johann Rubin and in her personal capacity, SARAH WERNER in her capacity as an estate trustee of the Estate of Johann Rubin and in her personal capacity, Arsandco Investments Limited in its capacity as trustee for the Estate of Johann Rubin and in its personal capacity, Faigy Esther Hammer and THE OFFICE OF THE CHILDREN’S LAWYER Respondents

BEFORE: F.L. Myers J.

COUNSEL: Peter Griffin and Arieh A. Bloom, counsel for the applicant. Henry Juroviesky and Nancy Tourgis as his agent, counsel for Morris Eric Rubin, Ida Rubin, Sarah Werner and Faigy Esther Hammer Clare E. Burns and Bianca V. La Neve, counsel for the non-parties Anne Rubin and Ray Rubin in their capacities as estate trustees for the Estate of Joseph Rubin and Eric Rappaport and Sharon Slansky in their capacities as estate trustees for the Estate of Abraham Rappaport.

COSTS endorsement

The Motion

[1] By endorsement dated May 29, 2017, reported at 2017 ONSC 3498, the court appointed an Estate Trustee During Litigation to manage the estate of Johann Rubin while this litigation among the estate trustees and beneficiaries plays out.

[2] The applicant proposed the appointment of the ETDL and succeeded on the motion.

[3] The respondent estate trustees/beneficiaries and the non-parties opposed the motion.

[4] The applicant seeks costs on a full indemnity basis against her co-estate trustees/beneficiaries. She asks that the non-parties and the respondent Arsandco be jointly and severally liable for a portion of the costs payable by the respondents equal to her costs calculated on a partial indemnity basis.

[5] In my view, it is fair and reasonable that the respondent estate trustees/beneficiaries pay to the applicant within 30 days her costs of the motion calculated on a partial indemnity basis in the amount of $52,000. In addition, the non-parties represented by Ms. Burns and Ms. La Neve are jointly and severally liable with the respondent estate trustees/beneficiaries to pay those costs within that time period. No costs are ordered against Arsandco as it properly took no part in the motion.

Full or Partial Indemnity

[6] The applicant seeks costs on a full indemnity basis. She submits that the responding estate trustees/beneficiaries engaged in reprehensible conduct on the motion. They stonewalled the applicant during the proper cross-examination of Ms. Werner. They also brazenly distributed funds to themselves during the litigation. However, the complaints regarding the respondents’ conduct were dealt with in the substance of the outcome. Their procedural response to the motion, apart from the handling of one cross-examination, was not so clearly in the reprehensible category as to warrant a punitive costs award on this motion.

Costs should not be deferred to Trial

[7] The responding estate trustees/beneficiaries argue that they succeeded in rebutting the major part of the applicant’s motion. The applicant argued for an ETDL on the principal basis that Johann Rubin’s estate was structured inappropriately and was being managed throughout in an inappropriate manner. Without making any definitive findings, I indicated that the structural issue alone would likely not have led me to appoint an ETDL. However, I did find that the manner in which the respondent estate trustees/beneficiaries managed the estate vis-à-vis their mother’s involvement (or lack of involvement) was an independent basis to appoint an ETDL.

[8] The respondents argue that in light of their success on the major issue for trial, it is premature to assess the costs of the motion. They say that they may well win the case if the main structural issue is decided in their favour and, if that occurs, then there never was a need for an ETDL.

[9] The respondents liken the situation to the granting of an interlocutory injunction. It is quite typical for costs of an interlocutory motion to be ordered to be paid to the winner of the main litigation for the reasons argued by the respondents. See Sharpe, Robert J., Injunctions and Specific Performance, loose‑leaf ed. Toronto: Canada Law Book, 1992 at pages 2 – 91.

[10] In this case however, the rationale for deferring costs does not exist. This motion was not won or lost based on a serious issue needing to be resolved later. Rather, the applicant succeeded due to the acts of the respondent estate trustees that established that they could not surmount the conflict between their personal interests as defendants in the litigation and their duties as fiduciaries in charge of an estate and trust. The respondents might well have succeeded on the motion if all that was in issue was the appropriateness of the estate’s tax structure. However, the applicant was well within her rights to move based on the conduct of the respondent estate trustees and I see no reason therefore to deviate from the usual rule that costs should be recoverable by the successful party.

The Non-Parties Injected themselves into the Litigation and were Unsuccessful

[11] The non-parties represent two other families whose assets are intertwined with those of the parties. In effect, the non-parties accepted the assets of the estate of Johann Rubin into their corporate structure so that each of the three families’ estates now holds an undivided beneficial interest in one-third of the assets of the nominee corporation Arsandco. The other two families feared that the appointment of an ETDL for the Johann Rubin estate, and especially an institutional ETDL, might impact negatively on their management of their own assets.

[12] I do not accept that substituting temporarily one director of a corporation with a professional fiduciary has any detrimental impact on the other directors, the shareholders, or the beneficiaries of assets held in trust by the corporation. The issue of who represents each family is the business of that family only. The imposition of an ETDL for the Johann Rubin estate may well necessitate some greater formality in the operation of Arsandco. However, requiring a corporation to comply with its constitution and the law is not a form of prejudice. I note that Arsandco has been willing to accept directions concerning the Johann Rubin estate from Morris Rubin and Sarah Werner despite knowing that a majority of three members of the Rubin family is required for the estate to make decisions and that Ida Rubin was not participating in any meaningful manner. I make no express finding of wrongdoing. But neither do I accept the legitimacy of an alleged concern with the presence of an experienced director who might ensure that proprieties are observed.

[13] I reject the non-parties’ request for costs from the Johann Rubin estate. There is no basis why the estate should be saddled with the costs of strangers who chose to inject themselves unsuccessfully into a family dispute especially where one side of the family was already advancing the position that the non-parties advanced.

[14] The non-parties argued that the court had no jurisdiction to appoint an ETDL except in the limited circumstances referred to in s. 28 of the Estates Act, RSO 1990, c E.21 and perhaps in some very exceptional circumstances. This legal argument occupied the bulk of the analysis in my endorsement. It is not fair to suggest that the non-parties were not fully opposed to this motion.

The Applicant’s Costs should be paid by the Respondents rather than the Estate

[15] Finally, I do not see this as a case in which the estate of Johann Rubin ought to pay the costs of the parties. That would make the applicant effectively fund a piece of the costs incurred due to the conflict of interest of the other side. This motion did not involve a neutral question of interpretation or some issue that needed to be resolved to benefit all parties. It was adversarial as among the parties and in such circumstances, the successful party ought to be entitled to look to the unsuccessful parties for payment of her costs.

Fixing the Quantum of Costs

[16] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[17] The applicant seeks costs of approximately $87,000 on a full indemnity basis and $59,750 on a partial indemnity basis. She argues that the proceedings were lengthened and made more complex by the refusal of the respondents to make disclosure and by their failure to obey the court ordered schedule; twice.

[18] The hourly rates of counsel for the applicant are quite reasonable. The division of labour between Messrs. Griffin and Bloom was very efficient. While one can argue that there was some overkill in the degree and amount of preparation, in my view, counsel ought to strive to be fully prepared. I am loathe to undermine those efforts especially where, as here, unbriefed issues did arise for which Mr. Bloom was fully prepared. Absent palpable unreasonableness, I will not measure the effort of successful counsel too finely. Their efforts succeeded after all.

[19] I note that in para. 39 of my endorsement appointing the ETDL, I required all parties to deliver Costs Outlines regardless of their position on costs. The non-parties incurred legal fees and disbursements of over $63,000 which Ms. Burns and Ms. La Neve calculate on a partial indemnity basis at approximately $32,750. That is a conservative calculation of approximately only 50% of full costs. In light of their own costs and the fact that they did not have the expensive procedural responsibilities of the actual parties, the amounts claimed by the applicant fall readily within a range that the non-parties ought to have reasonably expected.

[20] The responding trustees/beneficiaries chose not to deliver a Costs Outline despite the court’s clear direction requiring all parties to do so. They had three senior counsel representing them at the hearing of the motion. In the absence of a Costs Outline, I can only infer that their costs were equal to or above those claimed by the applicant.

[21] The applicant’s claim for partial indemnity fees as a percentage of her fees on a full indemnity basis is somewhat above the prevailing 60% guideline. Subject to adjusting that percentage, in the circumstances, in my view, it is both fair and reasonable that Morris Eric Rubin, Ida Rubin, Sarah Werner, Faigy Esther Hammer, Anne Rubin and Ray Rubin in their capacities as estate trustees for the Estate of Joseph Rubin, and Eric Rappaport and Sharon Slansky in their capacities as estate trustees for the Estate of Abraham Rappaport, be jointly and severally liable to pay the applicant her costs of the motion on a partial indemnity basis in the amount of $52,000 within 30 days.

F.L. Myers J.

Date: July 4, 2017

[1] No one opposed the standing of these non-parties on this motion. I am not to be taken to have granted them standing or recognized any basis for them to have standing to participate in any other step in this proceeding.