Court File and Parties

COURT FILE NO.: CV-18-798-ES DATE: 2019-04-03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE CANADA TRUST COMPANY, EXECUTOR AND TRUSTEE OF THE ESTATE OF SARAH McMAHON GRAFTON, DECEASED, Applicant AND: STEWART GRAEME ROSS, JOHN GORDON ROSS, JAMES GRAFTON ROSS and JAMES HENRY ROSS, Respondents

BEFORE: Mr. Justice D.A. Broad

COUNSEL: Jeramie Gallichan, Counsel for the Applicant Mark A. Radulescu, Counsel for the Respondents Stewart Graeme Ross, James Grafton Ross and James Henry Ross Steven D. Gadbois, Counsel for the Respondent John Gordon Ross

Costs Endorsement

[1] The parties have been unable to settle the issue of costs and have now delivered their written submissions on costs.

[2] The Canada Trust Company, the executor and trustee of the Estate of Sarah McMahon Grafton, submits that the respondent John Gordon Ross (“Gordon Ross”) has engaged in behaviour worthy of sanction and requests that he personally pay Canada Trust’s costs on a substantial indemnity scale in the amount of $30,460.68. This amount includes the total sum of $12,330 for Canada Trust’s motion to dismiss Gordon Ross’ motion for failure to comply with court orders or, in the alternative, for security for costs before Justice Emery, the costs of which were reserved to the judge hearing the motion of Gordon Ross, and the total sum of $21,515.20 for the costs of that motion.

[3] The substantial indemnity costs claimed by Canada Trust for its security for costs motion comprise $10,911.50 in respect of fees and HST of $1,418.50. The substantial indemnity costs claimed in respect of Gordon Ross’ motion comprise fees in the sum of $19,040, inclusive of attendance to argue the motion and HST of $2,475.20.

[4] The respondents Stewart Graeme Ross, James Grafton Ross and James Henry Ross (the “responding respondents”) claim substantial indemnity costs against Gordon Ross in the sum of $10,239.25 comprised of fees of $6,352.20, fee for appearance in the sum of $2,340, HST on fees in the sum of $889.16 and disbursements, inclusive of HST in the sum of $657.89. In the alternative, the responding respondents seek an award of costs at the high end of the partial indemnity scale.

[5] Canada Trust submits that the motion before Justice Emery was necessary as a result of Gordon Ross failing to comply with the orders of Justice Harper, Justice Nightingale and Justice Gordon and after Canada Trust became aware of other outstanding cost awards against him. The motion resulted in the consent order of Justice Emery by which Gordon Ross agreed to pay the outstanding costs due to Canada Trust prior to the hearing of his motion to amend the passing of accounts. Canada Trust states that Gordon Ross could easily have avoided the motion for security for costs and the related expenditures by simply complying with the previous court orders. It submits that it is therefore reasonable that he reimburse Canada Trust for its avoidable costs on a substantial indemnity basis.

[6] Canada Trust points out that Gordon Ross was without standing to bring his motion seeking payment of a claim to the estate of Sarah Margaret Ross and he should therefore be liable for Canada Trust’s substantial indemnity costs. Moreover, Canada Trust argues that the motion to amend the passing of accounts was an unnecessary delay and was made unnecessarily complex by Gordon Ross’ conduct.

[7] Canada Trust argues that there is no good reason to depart from the general rule that provides estate trustees with full-indemnity or substantial indemnity costs. It states that it is not fair that the estate be burdened with the costs of the motion brought by Gordon Ross.

[8] The responding respondents submit that from the commencement of Gordon Ross’ motion he was non-compliant with the court’s orders, thereby requiring the responding respondents to participate in additional steps and to incur additional costs. The orders with which Gordon Ross failed to comply with the orders of Justice Harper of November 1, 2018 requiring Gordon Ross to commence his motion by November 30, 2018 to be heard by the Court in the week of January 21, 2019, and in the order of December 13, 2018 of Justice Nightingale ordering Gordon Ross to deliver his sworn affidavit by noon on December 17, 2018.

[9] The responding respondents submit that Gordon Ross’ motion was destined to fail which should have been readily apparent to him. They say that an award of costs on a substantial indemnity basis is warranted in order to mark the court’s disapproval of Gordon Ross’ conduct. They submit that any costs awarded to them or to Canada Trust should be payable by Gordon Ross personally and not from the estate or the cottage trust so as not to burden the responding respondents with any portion of the costs award.

[10] Gordon Ross submits that his position in maintaining the claim of his mother and her estate for reimbursement for capital improvements to the cottage was an honourable one, taken at a time when his entitlement under her estate is unknown and therefore any pecuniary gain to himself as result of his position is unknown. He says that the hearing of the issue was required as a result of an issue with the drafting of the Will of Sarah McMahon Grafton and the maintenance of the position taken by Sarah Margaret Ross in her lifetime, via her estate.

[11] Gordon Ross submits that he ought not to bear any of the costs, including his own, of an honourable position, but rather they should be borne by the Estate.

[12] There is no indication in Gordon Ross’ submissions that he takes issue with the time or the hourly rates of counsel for Canada Trust or of the responding respondents as set forth in their respective Costs Outlines. The only issue he takes with Canada Trust’s claim for costs in respect of the motion before Justice Emery is his submission that Canada Trust’s material failed to disclose that it was holding $400,000 in trust, to which Gordon Ross would be entitled to a ¼ share.

Guiding Principles

[13] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "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."

[14] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in subrule 57.01(1) of the Rules of Civil Procedure, including, in particular:

(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.

[15] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, [1999] O.J. No. 4600 (Ont. C.A.) at para. 24).

[16] Justice Perrell in the case of 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.) reformulated the purposes of the modern costs rules, at para. 10, as follows:

(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.

[17] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, [2005] O.J. No. 160 (Ont. C.A.)).

[18] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson [2002] CarswellOnt 1007 (Ont. C.A.) and Macfie v. Cater, [1920] O.J. No. 71 (Ont. H.C.) at para 28).

Discussion

[19] I accept the submission of Canada Trust that there is no good reason in the present case to depart from the general rule that an estate trustee is entitled to be provided with full-indemnity or substantial indemnity costs, in the absence of unreasonable conduct on its part. Nor is there any reason that the estate should be burdened with the costs of Gordon Ross’ motion (see Re Prong Estate, 2011 ONSC 1446 (S.C.J.) per. D.J. Gordon, J., at paras. 7 and 11, citing Goodman Estate v. Geffen, [1991] 2 S.C.R. 353 (S.C.C.) at para. 75).

[20] In my view, Canada Trust acted reasonably in bringing the motion before Justice Emery seeking dismissal of Gordon Ross’ motion for failure to comply with previous orders. It was the successful party on that motion by obtaining an order that the outstanding costs awards against Gordon Ross be satisfied as a condition of his being permitted to proceed with his motion. Canada Trust is entitled to costs on a substantial indemnity basis against Gordon Ross for that motion as claimed.

[21] Similarly, Canada Trust is entitled to costs on a substantial indemnity basis for the costs of responding to Gordon Ross’ motion. The assertion that Gordon Ross’ motives in bringing the motion were “honourable” does not, in my view, provide a “very good reason” to depart from the usual rule in civil litigation that costs follow the event. It should have been clear to Gordon Ross that he lacked standing to bring the motion and that any claim of the estate of Sarah Margaret Ross for reimbursement for capital expenditures, which he sought to have reflected in the accounts of the Estate of Sarah McMahom Grafton, would be barred by the applicable limitation period. No dispute having been taken to the time or hourly rates of Canada Trust’s counsel, the costs which it claims must be regarded as having been within Gordon Ross’ reasonable expectations.

[22] Canada Trust is therefore entitled to substantial indemnity costs against Gordon Ross in the total sum of $30,460.68, inclusive of taxes and disbursements, as claimed.

[23] For the same reasons, the responding respondents should be entitled to costs against Gordon Ross for successfully responding to his motion. However, I am not satisfied that Gordon Ross’ conduct in failing to comply strictly with the orders of Justice Harper, Justice Nightingale and Justice Gordon rose to the level that would warrant an award of substantial indemnity costs to the responding respondents.

[24] I would award costs against Gordon Ross to the responding respondents on a partial indemnity scale in the sum of $8,692.12 in respect of fees, 1,129.99 in respect of HST thereon and $657.89 for disbursements and HST, for a rounded total of $10,480.

Disposition

[25] It is therefore ordered that the respondent John Gordon Ross pay costs as follows:

(a) to the Canada Trust Company, Executor and Trustee of the Estate of Sarah McMahon Grafton, deceased, in the sum of $30,460.68;

(b) to the respondents Stewart Graeme Ross, James Grafton Ross and James Henry Ross in the sum of $10,480.

[26] These amounts are to be paid within 30 days hereof.

D.A. Broad, J. Date: April 3, 2019