CITATION: Owen Estate v. Owen, 2017 ONSC 5673
COURT FILE NO.: 11-51771
DATE: 20170928
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
E. JANE MURRAY, ESTATE TRUSTEE DURING LITIGATION FOR THE ESTATE OF BARBARA OWEN
Moving Party
– and –
VICTOR OWEN, PHILIP DAVID OWEN, and PAMELA DENICE OWEN-LAFRANCE
Responding Parties
E. Jane Murray, for the Moving Party
Pam MacEachern, for the Responding Party, Pamela Denice Owen-Lafrance
Philip D. Owen, self-represented
HEARD: September 8, 2017
REASONS FOR decision
beaudoin j.
[1] The Estate Trustee During Litigation (ETDL) brings this motion for directions pursuant to rule 75.06 (1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for approval of the proposed distribution of the balance of the estate of Barbara Owen.
[2] The sole issue to be decided is whether one of the beneficiaries, Ms. Pamela Denice Owen-Lafrance, (Pamela) is entitled to be reimbursed for her legal fees in the amount of $40,000 which she claims were necessarily incurred and for the benefit of the estate. Pamela seeks the payment of her legal fees, first from Philip David Owen’s (Philip)’s share of the estate, then the balance from the estate. The ETDL takes no position on this issue other than to note that it is not apparent that all of the costs being claimed benefited the estate as a whole.
[3] No responding materials were served or filed by Victor Martin Owen (Victor). Although, the ETDL advises that he does not consent to the request made by Pamela.
[4] Philip did attend the motion and filed responding materials at that time. He opposes the relief sought by Pamela. He takes the position that Pamela has not paid the lawyers working for her and that those costs should not be reimbursed. He claims that it is not reasonable or fair that he should pay for his sister’s lawyer’s fees. He denies any wrongdoing in this matter.
Background
[5] The late Barbara Owen died on June 26, 2011, at the age of 85. She was survived by her three children, Pamela, Victor and Philip. At her death, Barbara Owen had a will dated October 11, 1996 which named her three children as her estate trustees and which instructed that her entire estate be divided and distributed in equal shares to them.
[6] At the time of her death, Barbara Owen was the defendant in an action commenced by Philip in which he claimed ownership of a condominium unit and a parking space owned by her. These were the major assets of her estate. In light of the litigation, E. Jane Murray was appointed as ETDL by way of the order of Justice Annis dated September 15, 2011.
[7] Prior to Barbara Owen’s death, Pamela had acted as her mother’s attorney for property and as litigation guardian in the civil proceeding brought by Philip against his mother. Pamela initiated the process to have Ms. Murray appointed as the ETDL. Justice Annis ordered the estate to pay Pamela’s costs in the amount of $16,025.06. He further ordered that $8,500 of that amount be recovered by the estate against Philip.
[8] Pamela had incurred legal fees as litigation guardian in the amount of $24,254.77 in defending Philip’s claims prior to her mother’s death. The ETDL agrees that these fees are to be paid in full from the estate. Pamela claims however that she continued to incur legal fees with respect to Philip’s litigation against the estate after Ms. Murray was appointed. She argues that these fees were reasonably incurred to defend Philip’s fraudulent claims against the estate and that her separate legal representation benefited the estate.
[9] She does not seek any further reimbursement of any legal fees incurred prior to her mother’s death or before the order of September 15, 2011. As noted, those legal fees have been resolved.
[10] The litigation commenced by Philip was ultimately resolved after Philip was criminally convicted on March 1, 2013 of four offences including defrauding Barbara Owen of the condominium parking space, perjury in the form of making a false land transfer tax affidavit; using a forged document – a transfer deed of land, and a breach of his recognizance. An appeal of that conviction was dismissed on June 23, 2015.
[11] After the appeal was dismissed, Philip’s claim against the estate was resolved. He agreed to the dismissal of his claim and consented to judgment against him on the counterclaim for $21,649.81. Costs were to be decided by way of written submissions.
[12] Pamela’s counsel made submissions on costs including costs incurred by the estate prior to Ms. Murray’s appointment. As a result of those submissions, Justice Kershman ordered Philip to pay costs to the estate on a full indemnity basis in the amount of $60,500 for the period prior to death, and $30,000 to ETDL. The amounts ordered were less than the amounts claimed; ($67,558.79 and $33,394.73 respectively).
[13] The legal fees now claimed by Pamela include fees incurred with respect to getting the orders of Justice Annis issued, transferring the estate file to Ms. Murray, and providing her with supporting documents and information. There were further communications with the ETDL and attendances for the criminal trial. The bulk of the fees were incurred for Pamela’s preparation for and attendance at the pre-trial conference, preparation for and attendance at trial and preparation of submissions for costs. Further fees have been incurred in relation to the issues relating to the final distributions.
[14] Pamela argues that the legal fees she incurred relating to the criminal case directly benefited the estate since her evidence resulted in the condo and parking spot forming part of the estate. Philip’s conviction also put an end to his claim against the estate, thereby saving the estate legal fees in that civil action.
[15] Although Pamela was not a party to Philip’s claim against his mother and her estate, she maintains that she needed legal representation throughout and offers three main reasons. First, she had significant knowledge of the history of this matter and of Philip’s various claims. Second, the passing of accounts proceedings, of which Pamela was a party, were joined with the civil claim after Philip’s objections to the accounts required them to be formally passed. Third, as ETDL, Ms. Murray maintained that she was prevented from advancing a position that benefited one beneficiary over the other, and that she could not advance arguments that Philip should be personally responsible for reimbursing the estate’s legal fees incurred in the civil action.
[16] Pamela submits that it is fair and just for her to be reimbursed for her legal fees incurred in this estate litigation after the appointment of the ETDL and that she should not be out-of- pocket as a consequence of Philip’s actions. To the extent that it may be necessary, she submits that it is appropriate for all of the beneficiaries to share in the cost of her successful efforts to recover and protect estate assets which ultimately benefited Victor as well, since he will receive a larger sum from the estate as a result of her efforts.
Analysis and Conclusion
[17] McDougald Estate v. Gooderham, (2005), 2005 21091 (ON CA), 255 D.L.R. (4th) 435 (Ont.C.A.) sets out the rules with respect to estate litigation at paras. 79 and 80:
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. …
[18] Those public policy circumstances do not exist in this case. Here, the costs were incurred because of Philip’s criminal actions and the general costs rules for civil litigation, namely that an unsuccessful party pays, subject to Court’s consideration of all the relevant factors under Rule 57.
[19] The Court of Appeal has also held that blended costs of boards are within the court’s discretion; the awards being paid through a combination of the losing party and the estate.[^1]
[20] In Bank of Nova Scotia v. Kuklis, 2017 ONSC 3069, at para. 26, the Court interpreted the process outlined in Sawdon as a three-step process for costs awards in estate litigation:
- The first step is to determine which, if any, individual is personally liable for the costs of an estate trustee.
- The second step is to determine the scale and quantum of costs to which the estate trustee is entitled and the apportionment of those costs as between the individuals adverse to the estate trustee.
- The final step is to determine whether the circumstances warrant a blended order. If so, then the difference, if any, between the estate trustee’s full reasonable costs and the costs awarded against one or more of the individuals adverse to the estate is to be paid from the estate.
[21] The case law cited by Pamela is applicable where costs are claimed by a trustee or by a party to the litigation. In civil litigation, costs awards are generally limited to parties although non-parties may claim costs in a number of scenarios; for example: the examination of a non-party, production of documents from a third party, costs of a person affected by an order. These are all instances where someone has been drawn into the litigation by a party.
[22] Pamela is a beneficiary of the estate and was never named as a party, although she was indirectly involved because the passing of her attorney accounts was joined to the civil action by Philip. From my review of her affidavit, the passing of accounts was not the main focus of the litigation and Philip consented to judgment on the passing of the accounts at the pre-trial. Pamela’s legal fees as litigation guardian before her mother’s death will be paid in full.
[23] Pamela’s entitlement to costs can only arise from the Court’s discretion to award costs under section 131(1) of the Courts of Justice Act, R.S.O. 1990, C. C.43 which provides:
Costs
131 (1) 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.
[24] I conclude that legal costs incurred by a beneficiary that are necessary or of benefit to the estate can be claimed in the same manner as costs claimed by a trustee.
[25] In Marziliano Estate v. Ebrekdjian, 2012 ONSC 1488, Justice Stinson heard a motion to approve the sale of estate property. After directing the sale, he approved the ETDL’s bill of costs. Two former estate trustees brought motions for costs. At para. 4, he said:
As was stated in McDougald Estate v. Gooderham, 2005 21091 (ON CA), [2005] O.J. No. 2432 at para. 85 (C.A.):
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.
I am therefore alert to the principle that an award of costs payable by an estate in favour of a beneficiary who participates in estate litigation should not be the ordinary course to follow. That said, I have concluded that this is a situation in which an order for Ms. Van Dyke’s costs to be paid out of the estate is appropriate. (Emphasis mine)
[26] He did go on to award one of the former Trustees her costs and said this at para 7:
7 Turning to the subject of the scale of costs, Ms. Van Dyke seeks full indemnity costs. Once again, she is supported in her request by the ETDL. I agree that full indemnity costs are appropriate in this case for Ms. Van Dyke. Certainly as regards the issue of production of documents, her involvement was necessitated by the failure of others to discharge their obligations, and in the pursuit of the discharge of her own obligations as an estate trustee. As regards her involvement in the sale approval process, the court found it helpful to have the position of a beneficiary of the estate articulated by counsel. Ms. Van Dyke was entitled to be represented and given the controversies that have accompanied so many aspects of this estate and its administration, it was reasonable for her to proceed as she did. In all of circumstances, I believe it would be unfair to force Ms. Van Dyke to absorb her own legal costs, provided that they are reasonable.
[27] In that case, the court noted that Ms. Van Dyke’s counsel represented not only her interest as a beneficiary but also as a former estate trustee. Her bill of costs was $9,266 inclusive of disbursements and HST. The estate property was valued at $1.2 Million. The ETDL’s costs were assessed at $56, 296.18.
[28] In this case, Pamela will receive her full costs of $24,254.77 incurred while she was litigation guardian. I am satisfied that she was required to participate in the litigation after the appointment of the ETDL to a limited extent since she had to pass her accounts. Her counsel’s submissions increased the value of the estate by $60,500 and therefore the estate benefited from that work. I have difficulty in awarding her any costs for her time as a witness in the criminal proceedings where she was a necessary witness and where the Crown had an obligation to prepare her. I am not satisfied that she needed her own counsel to communicate with the ETDL to the extent that it was done or to prepare her to give evidence. The parties awaited the outcome of the criminal trial and the matter was resolved without argument.
[29] Philip has already been ordered to pay full indemnity costs of $30,000 for the time after the ETDL was appointed; the same period for which Pamela seeks an additional $40,000. Acceding to her request would require the estate to pay full indemnity costs for two counsel. This is hard to justify given the modest value of the estate, namely $426,170.06 (inclusive of the costs awards against Philip).
[30] I concur that courts should be cautious in extending an award of costs in favour of one beneficiary who participates in litigation unless that participation is necessary or found to be of benefit to the estate. While the factors set out in Rule 57 can be of assistance, the ultimate test in assessing costs is one of reasonableness. I believe that the appropriate amount of costs payable by the estate to Pamela is $25,000. This reasonably compensates her for the fees that she incurred and is proportionate to the additional amounts she recovered for the estate.
[31] Philips’s unlawful conduct deprives him of any entitlement to his remaining share in his mother’s estate. I therefore make a blended order directing the estate trustee to pay that sum first from Philip’s share, and the balance from the estate.
Mr. Justice Robert N. Beaudoin
Released: September 28, 2017
CITATION: Owen Estate v. Owen, 2017 ONSC 5673
COURT FILE NO.: 11-51771
DATE: 20170928
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
E. JANE MURRAY, ESTATE TRUSTEE DURING LITIGATION FOR THE ESTATE OF BARBARA OWEN
Moving Party
-and-
VICTOR OWEN, PHILIP DAVID OWEN, and PAMELA DENICE OWEN-LAFRANCE
Responding Parties
REASONS FOR decision
Beaudoin J.
Released: September 28, 2017
[^1]: Sawdon Estate v. Sawdon, 2014 ONCA 101, 119 O.R. (3d) 81 at para. 93