Court File and Parties

COURT FILE NO.: 452/10 DATE: 20180803 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: SALVATORE SABETTI, MARY LOUISE SABETTI, LISA ANNE SABETTI, and FRANCESCO ANTONIO SABEITI, beneficiaries of the Estate of Victoria Eugenia Carola Jimenez Valdes, Deceased, Applicants

AND:

LUIS FRANCISCO SILVA JIMENEZ and MAURA GABRIELA SILVA JIMENEZ, estate trustees of the Estate of Victoria Eugenia Carola Jimenez Valdes, deceased, Respondents

BEFORE: S.F. Dunphy J.

COUNSEL: Andrew Sheremeta, for the Applicants Michael W. Kerr, for the Respondents

HEARD at Toronto: In Writing

Reasons for Decision - Costs

[1] On June 5, 2018, I released my reasons dismissing Mr. Sabetti’s application (neutral citation: 2018 ONSC 3523) against the trustees of his deceased wife’s estate. I awarded the respondent estate its costs with the scale and amount to be addressed in written submissions to be submitted by each side.

[2] I have had an opportunity to review the parties’ written submissions and am releasing my decision on costs.

Position of the parties – Respondent Estate

[3] The respondents cite the Court of Appeal decision in McDougald Estate v. Gooderham, 2005 CarswellOnt 2407, 255 D.L.R. (4th) 435 (C.A.) at para. 80 for the proposition that the traditional view on costs in estate litigation has been displaced and the modern approach is to follow the costs rules in civil litigation unless one or more public policy considerations apply. The respondents submit that the “loser pay” principle brings needed discipline to the estate litigation process.

[4] In this regard, the respondents point to the wide-ranging affidavit of Mr. Sabetti, the nine court appearances this application generated, the lack of merits of the application, the numerous and baseless allegations of intentional misconduct and dishonesty advanced by the applicant and the various admonitions on the matter of costs made by judges who have dealt with this matter in its lengthy path to a hearing on the merits. They submit that Mr. Sabetti was well aware of the costs exposure he was running from the earliest stages of this application and he cannot have failed to be aware of the considerable expense he was putting the Estate to in responding to him.

[5] The respondents lay particular emphasis upon the conduct of the applicant, some of which was summarized in my June 5 reasons and much more of which is summarized in their written submissions.

[6] The respondents submitted an outline of costs reflecting partial indemnity costs of $132,712.91, substantial indemnity costs of $181,465.35 and full indemnity fees of $210,716.81. The foregoing reflects fee reductions agreed to by respondents’ counsel relative to normal hourly rates of $39,073. The respondents ask for a “higher scale” than partial indemnity but have left the matter otherwise in my discretion.

Position of the parties – applicant Mr. Sabetti

[7] The applicant submits that he is an elderly pensioner on a fixed income. His yearly income from the Estate has been approximately $20,000/year. He submits that it was not reasonable for him to expect to be subjected to a significant costs award and genuinely believed that he required the court’s advice and direction because of the “important public policy consideration of ensuring that estates are properly administered and that Wills should be interpreted to meet a beneficiary’s needs and the testator’s wishes”.

[8] He submits that there has been no reprehensible behavior on his part and costs ought not to be punitive in nature. While the modern approach of “loser pay” in costs is now applied, this must be balanced with reference to the public policy considerations and even under the modern approach estates may be ordered to pay costs of litigation. The applicant suggests that the application was necessitated by ambiguities in the testator’s drafting and the public policy in accurately interpreting the will justified his intervention. In all the circumstances, he submits that he should not pay costs to the successful Estate, but should instead receive his own costs. The issues raised were reasonable and required direction.

[9] Finally, the applicant submits if he should be ordered to pay any costs, these should be paid from future income distributions.

[10] Mr. Sheremeta represented Mr. Sabetti only in the latter stages of this application. His bill of costs for the period of time he represented Mr. Sabetti amounted to approximately $13,000 on a partial indemnity basis and $19,500 on a full indemnity basis (both figures rounded).

Discussion and analysis

[11] There is no basis for me to revisit my decision to award the respondents their costs.

[12] Whatever can be said of the merits of Mr. Sabetti’s “partial intestacy” claim, it was always a strained and technical point that ran contrary to common sense and the clearly expressed intention of the testator.

[13] His other main claim was in relation to the Mexican estate. Those claims, ill-founded from the start, were pursued relentlessly if groundlessly. It cannot be said of this claim that the testator somehow contributed to the necessity of dealing with the matter in court by reason of some ambiguity in her will. This is an issue that emerged from Mr. Sabetti’s frustration that he was receiving so little income from an estate that he considered could afford to pay him more. However justified he may have felt with that conclusion, it was clearly the direct result of the will and the fact that so much of the estate consisted of an asset over which the estate had no effective control (the interest of the estate in the Mexican estate of the testator’s mother).

[14] Apart entirely from the ill-founded nature of what I would characterize as Mr. Sabetti’s primary complaints, the manner in which this application has been conducted contributed very heavily to the costs of responding to the matter being as high as they have been. Mr. Sabetti has conducted himself as if he were “playing with the house’s money” – precisely the sort of approach that the discipline of a loser pay costs regime is intended to discourage.

[15] One example among others illustrates this point.

[16] On January 31, 2017, Justice Conway issued a ruling on the matter of the standing of Mr. Sabetti’s son Frank. She found that the respondents had been entirely successful on the standing issue and awarded them costs as against Frank. As regards the applicant Salvatore Sabetti, she found the “remaining costs with respect to Salvatore are reserved to the judge hearing the application and are fixed at $5,000 payable in the cause”. She further admonished Mr. Sabetti that he and not his son would be arguing the application if he did not retain counsel – something she urged him to do.

[17] The application came up for a hearing on the merits on September 21, 2017 before Favreau J., but was not able to be heard. Her ruling that day speaks volumes:

This application was scheduled for a full day today. The applicant attended with his son, Frank Sabetti, on the expectation that he would argue on his behalf. Frank Sabetti is not a lawyer and Justice Conway has already directed that he cannot represent his father in this matter. Counsel, Justin de Vries, was requested to attend after this issue was raised. Mr. de Vries is not yet retained.

After adjourning the matter to permit Mr. de Vries to confirm his retention or permit Mr. Sabetti to prepare to represent himself, Favreau J. dealt with the issue of costs thrown away that the respondents requested be paid on a substantial indemnity basis, ruling:

This is certainly a case in which this request should be considered and it is to be decided by the judge hearing the application.

[18] As I noted in my earlier reasons, Mr. Sabetti came to the hearing before me with a lawyer who once again was unprepared to argue the case on the merits, although retained and on the record this time.

[19] Mr. Sabetti’s submissions suggest a plea of impecuniosity without actually coming forward to say so. I have absolutely no evidence before me to suggest that Mr. Sabetti is impecunious. Apart from the income from his wife’s estate, Mr. Sabetti received his wife’s interest in the matrimonial home as a result of a transfer made shortly before her death and has made no disclosure of his own resources. I attach no weight to that plea.

[20] There is no basis to depart from the loser pay regime in this case. Mr. Sabetti has been the cause of the estate burning through the better part of a quarter million dollars with only an indirect and highly diluted impact upon his own entitlements. He has done so after receiving numerous warnings of the risks he was running. A significant portion of the expenses incurred have been due to the inefficient manner in which the claim was pursued. By this I reference the adjournments, the failure to prepare, the large number of peripheral issues raised that the estate was required to defend no matter how meritless. As well, he has raised the stakes with groundless suggestions of misconduct and wrongdoing.

[21] In all of the circumstances, I find that an award of substantial indemnity costs is called for. The successful respondents have advanced a claim of $181,465.35 in substantial indemnity costs, being just under 90% of their (discounted) full indemnity costs claim. The applicant has taken no material issue with the respondents’ outline of costs and I have found no material issue upon my review of it. I am reducing that substantial indemnity claim to $155,000 in recognition of the fact that a fixed costs award (not on a substantial indemnity basis) was made by Conway J. for at least a portion of the costs incurred and to arrive at a figure that I view as reasonable in the circumstances. This award is inclusive of that earlier award by Conway J. of costs in the cause.

Disposition

[22] The applicant is therefore directed to pay the respondents $155,000 in costs of this application. The respondents shall be entitled to offset this award of costs against any distributions payable to Mr. Sabetti from the estate until this costs award is paid in full.

S.F. Dunphy J. Date: August 3, 2018