COBOURG COURT FILE NO.: CV 11/12
CORRECTED DATE: 20180516
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF ROBERT GEDDES PATERSON, deceased
BETWEEN:
Carol-Anne Seguin, Mary Elizabeth Paterson and Florence-Margaret Gordon
Plaintiffs
– and –
Lori Dianne Pearson
Defendant
David J. Gillespie and Ashley-Rose Gillespie, for the Plaintiffs
Andrew J. Felker, for the Defendant
HEARD: By Written Submissions
Corrected Reasons on Costs: The text of the original Reasons was
corrected on May 16, 2018 and the description of the correction is appended.
REASONS ON COSTS
H.K. O’CONNELL J.
1I have the costs submissions provided by counsel for the two lawyers who testified at trial, as well as those of the parties to the litigation.
2I will deal with them in this order: the submissions of Ms. Stephens, counsel to Ms. Jacob and the submissions of Mr. Oelbaum, counsel to Mr. MacDonald. I will then deal with the issues of the submissions of the costs of the parties at trial.
Costs of Ms. Jacob and her Counsel
3My colleague, Glass J. made allowance for counsel who testified at trial to file costs submissions for the court to consider.
4For Ms. Jacob, counsel who provided evidence at trial and at discovery, Ms. Stephens seeks costs for both of Ms. Jacob’s attendances. Ms. Stephens argues, among other pointed submissions, that Ms. Jacob should not have to assume the costs of any parties’ dispute, when the witness is a non-party to that dispute. Ms. Jacobs was never a party to the litigation.
5To quote Ms. Stephens:
It appears unreasonable to the non-party to assume the costs of any portion of the parties’ dispute, particularly where there is never a claim made against the drafting solicitor. The parties in this case never made any claim against Ms. Jacob. It must be acknowledged that there are potential cost consequences arising from will challenges where the parties seek to involve the drafting lawyer.
6Ms. Jacob, it is argued, should be compensated for her time, and in that regard, Ms. Stephens cited case law where a lawyer, and in another case an accountant, were awarded costs as non-parties to the litigation.
7Finally, it is argued that Ms. Jacob should receive her costs for the need to retain the services of Ms. Stephens. Citing LaFarge Canada v. Khan, 2008 6869 (ON SC), 89 O.R. (3d) 619 counsel notes that Justice Strathy, as he then was, held that a modest sum for the preparation and attendance at discovery was appropriate.
8Justice Strathy recognized that as a general rule a witness pays his or her own counsel, but where a witness’s credibility was in issue and the evidence subject to challenge, an exception was appropriate.
9Particularly at discovery, counsel’s role for the non-party witness ensures the witness has protection via counsel, as distinct from trial, where the presiding judge ensures that the witness is treated fairly.
Costs of Mr. MacDonald and his Counsel
10Mr. Oelbaum sets out his position succinctly and fairly. He argues that in the context of the case at bar, that the plaintiffs opposed the setting aside of an order that they obtained on an ex-parte basis, which did not provide counsel with protection of the deemed undertaking rule. I note that Ms. Stephens had noted this as well.
11I hasten to add that the costs of the motion before Glass J., and the issue of the deemed undertaking were settled on consent.
12It was in that same order that Glass J. allowed Mr. MacDonald, as well as Ms. Jacob, to seek their costs for attendance at examination for discovery or any hearing, the seeking of which would be at the discretion of the trial judge.
13As Ms. Stephens did, Mr. Oelbaum set out the authority to award costs in favour of a non-party. In a nutshell, Mr. Oelbaum submits that discovery of a non-party gives the litigants, “significant benefit. It is not fair to ask the will drafting lawyer to bear the costs of the litigants’ dispute. It is submitted that the litigants must understand that there are cost consequences arising from will challenges which should be borne by the parties to the litigation themselves.”
14Mr. MacDonald should, counsel argues, be compensated for his time. Mr. Oelbaum cites the same caselaw as Ms. Stephens in this respect.
15Mr. MacDonald should also receive costs. The argument of Mr. Oelbaum mirrors that of counsel for Ms. Jacob.
16Finally, Mr. Oelbaum argues that he should receive costs as Mr. MacDonald’s counsel, for work with respect to the discovery, attending at discovery, and dealing with undertakings.
Position of Mr. Gillespie for the Plaintiffs in relation to the Submissions of Counsel for Ms. Jacob and Mr. MacDonald
17Mr. Gillespie sets out his position at page 4 of his submissions. He concedes that costs should be awarded for the non-party counsel, on a partial indemnity basis as sought and payable out of the estate. Counsel also references the decision in LaFarge Canada v. Khan.
18Mr. Gillespie sets out 3 paragraphs as to why his position should prevail. I have considered those closely.
Conclusion on Fees payable to the non-party Counsel and to their Solicitors
19Costs for the setting aside of the original order that allowed for provision of the protection of the deemed undertaking rule were agreed on consent. It is unfortunate that that order was sought and obtained in the first place, but the sanction for doing so by way of costs awarded to set it aside was obtained.
20That part of the chronology of this case is therefore insignificant save and except the direction of Glass J. that the lawyers who were non-parties could seek their costs, inclusive of compensation which clearly references costs of counsel and costs of their counsel.
21I agree with Mr. Gillespie that the estate should pay the costs of the non-party lawyers on the partial indemnity scale that Mr. Oelbaum and Ms. Stephens note in their bill of costs.
22Clearly the evidence of Ms. Jacob and Mr. MacDonald was required in their capacity as fact witnesses at trial. Their evidence was critical. It matters not for an assessment of costs, given their role, that I accepted it completely on the defendant’s side of the ledger.
23I therefore award those fees in the sum of $2,590.53 for Ms. Jacob’s attendance at discovery and trial, and $2,688.50 for Mr. MacDonald’s same attendances, payable out of the estate.
24I would not award costs to counsel for the non-parties, in this case.
Submissions of Mr. Felker for Ms. Pearson
25I will cite certain features of Mr. Felker’s argument on costs. They are concise and written with vigour.
26Mr. Felker cites the decision in McDougald Estate v. Gooderham,1 which sets out that the general principle that “loser pays” applies to estate litigation. This principle and the other guiding features of McDougald have been followed in other cases involving estates, including the 2010 decision of the Superior Court in Smith v. Rothstein.2
27Mr. Felker also notes the impact of an offer to settle and the demarcation point between partial and substantial indemnity recovery on costs.
28Mr. Felker submits, accurately, that the defendant, Ms. Pearson, was entirely successful. Mr. Felker notes that “the payment of any costs by her or the estate damages her.”
29Furthermore, Mr. Felker submits that the litigation had no merit.
30In relation to proportionality, Mr. Felker points to the modest value of the estate and the fact that the defendant had to incur substantial legal costs. Counsel cites the Smith case for the proposition that proportionality considerations “should not result in a reduction of otherwise payable costs where the unsuccessful party has forced a long and expensive trial.”
31Under the rubric, Scale of costs to be Awarded, Mr. Felker sets out the history of offers made during the litigation, including a much more substantial offer on the eve of trial.
32Finally, Mr. Felker argues that the strategy of the plaintiffs is a consideration inclusive of the consequences of discovery of the two will drafting solicitors, which he argues should have precipitated a reconsideration of the plaintiff’s case.
33In addition, Mr. Felker argues that the opinion of the expert, Dr. Shulman, called by the plaintiffs was not complete because the report was not based on all of the information necessary for an informed opinion, by virtue of the fact that Dr. Shulman was not provided with all of the information that he required.
34I hasten to add that Dr. Shulman was an exemplary expert witness as I said in my judgment. He analyzed and considered what he had to formulate his report, but his information was deficient because he was missing material that would have informed his opinion had he had it, for the period post January 2009 when the wills were actually executed.
35Mr. Felker ends by saying that the plaintiffs were “only interested in one thing: complete and utter capitulation.”
Submissions of Mr. Gillespie for the Plaintiffs
36Mr. Gillespie argues that the estate should bear the costs of the litigation.
37Mr. Gillespie says that the litigation was reasonably brought. Although acknowledging the change in law post McDougald Estate, that case speaks of exceptions that must be considered in the analysis.
38Mr. Gillespie argues that the case at bar is within the exception, and in that regard is similar to the decision in Tate. v. Gueguegirre.3
39The case at bar is also like Driscoll v. Driscoll where although unsuccessful at trial, the plaintiff was not stuck with costs but rather those were ordered payable by the estate.
40Mr. Gillespie also argues that the following factors are germane to the decision on costs: Ms. Pearson was a paid caregiver at relevant times; there was evidence of withdrawal of services by Ms. Pearson at material times; Ms. Pearson’s threats; the active involvement of Ms. Pearson in the arrangement for and contents of the wills; the nature of the relationship between the deceased and Mr. Pearson; and the report of Dr. Shulman.
41The plaintiffs, who are of modest means advises counsel, took a reasonable approach in challenging the wills. It is therefore in the interests of justice and equity that they should not be personally liable to the defendant, Ms. Pearson, for her costs, and that their own costs should be payable out of the estate.
42The plaintiffs seek “only partial indemnity costs, in the amount of $174,650.27 all inclusive.” This amount of costs is discounted from the $227,073.80 that Mr. Gillespie says were actually incurred.
43Mr. Gillespie submits the case was complex and of high importance to the plaintiffs.
44Reasonableness, propriety, and proportionality call out for this result, argues Mr. Gillespie.
45Mr. Gillespie argues contra to the position of Mr. Felker in relation to the scale of costs. His submission is all costs should be payable out of the estate on a partial indemnity basis.
46Finally, Mr. Gillespie argues that this was not a case where his clients sought “total and complete capitulation” nor is it a case of a flawed expert report. The plaintiffs did not proceed on a scorched earth policy. This is a case where the issue of undue influence had to be litigated and was reasonably brought.
Conclusion on Costs: Who pays and what Amount
47Mr. Felker seeks costs of his client in the amount of $176,801.86 all inclusive. This amount is based on an argument of partial indemnity to the date of February 2013 and full indemnity thereafter.4
48I largely agree with the position of Mr. Felker.
49I concluded that the plaintiffs had not made out the case for undue influence. I noted that the evidence of the two solicitors who drew the wills was to be completely accepted and I found their actions and precautions in drawing the wills was beyond reproach. I did so in the context of all of the evidence.
50Likewise it was clear that Dr. Shulman did not have material post January 2009 that very well could have altered his report. As noted, that was because he was never given it.
51I am also cognizant that the discovery process exposed both solicitors, Jacob and MacDonald, to examination. There was nothing at trial that suggested that their evidence at discovery was a useful tool to impugn their credibility. I accept that their evidence was therefore well telegraphed to the plaintiffs.
52This is not a case I find that rests on the same footing as Driscoll5 where Justice Rutherford eloquently and very persuasively set out why the general rule of “loser pays”, was not applicable to that case. I recognize it is not a fixed rule of “loser pays”. But I see no reason why that should not be the case in the case at bar.
53I also note that the costs of the plaintiffs and defendants, with the discount of Mr. Gillespie and with the add-on of a suggestion of elevated costs based on ‘bettering an offer’ by Mr. Felker, are quite similar. Leaving out the request for full indemnity costs post second offer, the costs sought by Mr. Felker are actually quite a bit lower than those that Mr. Gillespie says should be payable to his clients out of the estate.
54I use the positions of counsel to evaluate reasonableness and fairness. I cannot say that the costs therefore as sought by Mr. Felker for his client are not reasonable or fair. They are to the contrary very, very reasonable and fair.
55I turn now to the issue of the offer. I agree with Mr. Felker’s submission that the second offer precipitates substantial indemnity recovery from the point it was received. There is no argument that it does not meet the requirements of a Rule 49 offer.
56I do not see a reason, however, to order full indemnity recovery post the second offer which was very reasonable.
57The last piece requiring analysis is that of whether the “loser pays” principle should be employed or whether this is a case where the estate should pay the costs.
58I see no reason for the estate to pay the costs as argued by Mr. Gillespie. I do not see this as a case that falls in the genre as suggested by Mr. Gillespie. I have considered the second offer. It was very reasonable and indeed I find exceptionally so for the parties as a whole.
59I reject that rejection of that offer should be informed by the fact that the plaintiffs had incurred costs that Mr. Gillespie notes based on his work and rate of pay were substantial.
60The notion of “cutting one’s potential losses” comes to mind. A litigant cannot forge ahead in the face of an offer like this one because of the incurring of costs to that date, otherwise offers would never have real persuasive teeth.
61I find that there was an informed decision by the plaintiffs to have this case heard with the foreknowledge as trial loomed of the hill that they would be facing.
62They full well knew the evidence of the solicitors. Dr. Shulman was provided with half a loaf, if not less, of the complete information that he would have needed to have provided a full opinion, and an opinion that it is clear would very likely have been much adapted given his own comments at trial and the factors that occurred post January 2009 in relation to the circumstances of Mr. Paterson and Ms. Pearson, and the vast improvement in his mental health, inclusive of his seeking out and having excellent solicitors with a substantial pedigree in will drawing and will related concerns.
63However, for the discovery portion of the litigation and the importance of that exercise to a case like this, I would order costs payable to the plaintiffs in the amount of $36,000 all inclusive, from the estate. I have done so as this is basically the midway point between what Mr. Felker and Mr. Gillespie say were the costs incurred for that part of the litigation including preparation and attendance at discovery.6
64It is only this portion that will be deducted from the amounts sought by Mr. Felker, which makes for costs payable to his client on a partial indemnity basis to the date of the second offer and substantial indemnity recovery from the date of February 28, 2013.
65To have in this case the estate pay for the costs as suggested by Mr. Gillespie, would not be in accord with the principle of “loser pays” and my finding of no circumstances to do otherwise, save and except what I have said about the discovery portion of the proceedings.
66Finally, to have placed the burden of costs on the estate would eviscerate the value of the estate which is properly in the hands of Ms. Pearson. It is her legacy as required by the wishes of Mr. Paterson.
67It would leave her with virtually nothing. It would make for litigation that was undertaken and defended vigorously and quite successfully, to be completely rendered nugatory. It would deprive the defendant of her well-deserved just desserts.
68It would also make the offer exercise a useless tool to encourage settlement short of a long trial.
69Order to go in accord with these reasons on costs.
H.K. O’CONNELL J.
Released: May 16, 2018
May 16, 2018 – Corrections:
The citation on page 1 now reads: Seguin v. Pearson, 2017 ONSC 5620
The (first) release date at the top of page 1 now reads: 20170922
Page 1 under style of cause, “HEARD: By Written Submissions” has been added
Page 2, paragraph 3 now reads: Glass J.
Page 3, paragraph 13 now reads: caselaw
Page 7, paragraph 61 now reads: half a loaf
Pages 3-8: continued numbering after paragraph 13
Page 8: removed paragraph 70
Footnotes
- 17 E.T.R. (3d) 64.
- 2010 ONSC 4487
- 2013 ONSC 720 (Sup. Ct.)
- Mr. Felker also provides costs on a substantial indemnity basis in his materials.
- 2016 ONSC 6013
- It should be noted that the midway point would be $41,000, roughly but that includes more than just prep and attendance at discovery, and review of pleadings and the like before discovery. I have therefore adjusted the amount downward to $36,000 on an educated guess basis after reviewing the submissions on that issue.