Court File and Parties

Newmarket Court File No.: CV-18-135091 Date: 20190225 Corrected Date: 20190910 Superior Court of Justice - Ontario

Re: Carleen Ann Ford and Laura Lee Kramer, Applicants And: Seta Mazman, Respondent

Before: The Hon. Madam Justice A.A. Casullo

Counsel: N. Milton, Counsel for the Applicants D. Pomer, Counsel for the Respondent

Heard: By written submissions

Corrected Endorsement: The text of the original Endorsement was Corrected on September 10, 2019 and the description of the correction is appended.

Costs Endorsement

CASULLO J.:

[1] The Applicants are the nieces of the deceased, Mary Leonard. The Respondent is a close and long-time friend of the deceased.

[2] The Applicants are the sole beneficiaries of Mary’s estate. The Respondent was appointed estate trustee in Mary’s will.

[3] On January 21, 2019, I released my decision ordering, inter alia, that the Respondent be passed over as estate trustee, and the Applicants be appointed estate trustees.

[4] I invited the parties to reach an agreement as to costs, which they were unable to do. Accordingly, the following is my costs endorsement.

Positions of the Parties

[5] The Applicants seek costs of $32,307, plus HST of $4,199.91, plus disbursements of $1,026.15, for a total of $37,533.06, payable by the Respondent personally. The Applicants submit that any costs awarded against the Respondent be set-off against any compensation found to be due to the Respondent upon the court-ordered passing of her accounts.

[6] The Respondent submits that a more appropriate award of costs is in the range of $7,500, plus disbursements, the entirety of which should be borne by the estate.

Costs Principles Applicable to Estates Litigation

[7] The costs of a proceeding are in the discretion of the court.

[8] With respect to estates litigation, The Court of Appeal in MacDougald Estate v. Gooderham, [2005] O.J. No. 2432 held that:

[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 costs 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.

[9] And, at para. 85:

[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.

[10] Estate trustees who incur legal costs in the course of estate litigation can typically expect those costs to be paid out of the estate. This is in accord with the long-standing maxim that executors are entitled to indemnification for all costs reasonably incurred during the estate’s administration.

[11] However, the Court of Appeal recently held that an estate trustee will not be entitled to indemnification if their actions were unreasonable, or for costs expended defending the personal interests of the estate trustee. See Brown v. Rigsby, 2016 ONCA 521, 20 E.T.R. (4th) 171, para. 11.

[12] Mary Leonard died on April 3, 2017. Initially, the parties were ad idem following her death, but within three months, the Applicants were no longer on speaking terms with the Respondent. For inexplicable reasons, the Respondent was displaying outright hostility toward the Applicants, unreasonably delaying the administration of the estate.

Offer to Settle

[13] The Applicants served an offer to settle in June 2018 which remained open until the hearing. The offer was better than the outcome obtained by the Respondent in the Application.

Analysis

[14] Rule 57.01 of the Rules of Civil Procedure identifies the factors a court may consider when exercising its discretion to award costs:

In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or the lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defending by a different lawyer; and

(i) any other matter relevant to the question of costs.

[15] While the factors set out above provide guidance when a court is assessing and fixing costs, as Boswell J. held in Nesbitt v. Jeffery, 2018 ONSC 7285:

Regardless of the particular factors considered relevant by the court on any given assessment, it is now well-settled that the overarching principles to be observed in the exercise of the court’s discretion to fix costs are fairness, proportionality and reasonableness: see Beaver v. Hill, 2018 ONCA 840; Boucher v. Public Accountants Council for the Province of Ontario (2004), , 71 O.R. (3d) 291 (C.A.); and Moon v. Sher (2004), , 246 D.L.R. (4th) 440 (C.A.).

[16] As the Court of Appeal stated in Boucher, the court should also look to fix costs that are fair and reasonable having regard to the expectation of the parties. While I do not have the benefit of the Respondent’s bill of costs to review, I anticipate it would be higher than the $7,500 Respondent’s counsel posits as reasonable in the circumstances.

[17] The application was of significant importance to the Applicants. It became necessary solely due to the breakdown in the relationship between the parties. The hearing was not overly complex, and took the better part of a day to argue.

[18] I am mindful that an estate trustee should be fully compensated for any reasonable costs incurred in the administration of the estate. However, the actions of the Respondent are far from reasonable. I was not provided any rationale as to why her animus became necessary in the administration of her good friend’s estate.

Conclusion

[19] Having regard to the overarching principles of proportionality, fairness and reasonableness, I award the Applicants their costs of the application in the amount of $25,000, plus HST of $3,250, plus disbursements of $1,026.15, for a total of $29,276.15, to be paid by the Respondent personally. This amount shall be set-off against any executor compensation that may become due to the Respondent.

[20] The issues of executor’s compensation and the passing of accounts are still to be determined. In the interests of continuity, I will remain seized of this matter.

CASULLO J.

Date: September 10, 2019

September 10, 2019 – Correction:

The citation in the second line of para. 15 has been corrected to read: Nesbitt v. Jeffery, 2018 ONSC 7285.