Court File and Parties

COURT FILE NO.: 01-0555/15 DATE: 20190522 SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE ESTATE OF ANDREW HRABOVSKY, deceased

RE: Gayle Shannon, Applicant AND: Michael Hrabovsky and Glenn Hrabovsky, both in their capacities as Estate Trustees with a Will of the Estate of Andrew Hrabovsky, deceased, and in their personal capacities, Respondents

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: Kira E. Taylor, for the Applicant Stephen M. Werbowyj, for the Respondents

HEARD: In Writing

COSTS ENDORSEMENT

[1] The applicant was successful in this application in setting aside the last will and testament of the deceased on the basis of lack of testamentary capacity but was unsuccessful in her claim of undue influence on the part of the respondent Glenn Hrabovsky. Capitalized terms herein that are not defined have the meanings ascribed to them in the Court’s Endorsement dated November 2, 2018.

Applicable Law and Positions of the Parties

[2] The applicant seeks costs of $41,519.65 on a full indemnity basis, which includes disbursements of approximately $6,500. The respondents seek their costs on a substantial indemnity basis in the amount of $118,077.55, which includes disbursements of approximately $4,750.

[3] The principles governing an award of costs in estate litigation were reviewed by Gilese J.A. in Sawdon Estate v. Water Tower Bible and Tract Society of Canada, 2014 ONCA 101; (2014), 119 O.R. (3d) 81 at paras. 84-86:

The historical approach to costs in estate litigation created the danger that estates would be unreasonably depleted because of unwarranted or needlessly protracted litigation. Consequently, it has been displaced by the modern approach set out by this court in McDougald Estate v. Gooderham, [2005] O.J. No. 2432, 255 D.L.R. (4th) 435 (C.A.), at paras. 78-80: the court is to carefully scrutinize the litigation and, unless it finds that one or more of the relevant public policy considerations apply, it shall follow the costs rules that apply in civil litigation. That is, the starting point is that estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, except in those limited circumstances where public policy considerations apply.

The public policy considerations at play in estate litigation are primarily of two sorts: (1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered. In terms of the latter consideration, because the testator is no longer alive to rectify any difficulties or ambiguities created by his or her actions, it is desirable that the matter be resolved by the courts. Indeed, resort to the courts may be the only method to ensure that the estate is properly administered.

In any event, where the problems giving rise to the litigation were caused by the testator, it is appropriate that the testator, through his or her estate, bear the cost of their resolution. In such situations, it ought not to fall to the estate trustee to pay the costs associated with having the court resolve the problems. As Kruzick J. observed in Penney Estate v. Resetar, [2011] O.J. No. 490, 2011 ONSC 575, 64 E.T.R. (3d) 316 (S.C.J.), at para. 19, if estate trustees were required to bear their legal costs in such situations, they might decline to accept appointments or be reluctant to bring the necessary legal proceedings to ensure the due administration of the estate.

[4] The applicant submits that an order requiring the Estate to pay the respondents’ fees would be unjust to her and to the other beneficiaries of the Estate given the quantum of those costs, much of which she considers inflated as a result of certain actions of the respondents addressed below.

[5] The respondents suggest that the principle that it is appropriate that a testator’s estate bear the cost of the resolution of problems giving rise to litigation caused by the testator should apply in the present case. They say that, in resisting the application, Glenn was merely honouring his obligation as an estate trustee to propound the last will of the Testator and thereby ensure that the estate of the Testator (the “Estate”) was properly administered. On this basis, the respondents suggest that the usual costs regime in civil litigation should not apply and that, instead, Glenn should be entitled to his costs on a substantial indemnity basis from the Estate. I note that there is no evidence that Michael incurred any material costs in his personal capacity that were not related to Glenn’s response to this application and, accordingly, I have proceeded on the basis that Glenn’s costs represent the respondents’ costs.

General Considerations

[6] The following general considerations are relevant to the determinations herein.

[7] First, given the radical differences in the 2006 Will and the 2007 Will, as well as the relatively modest amounts payable under each Will to the children of the applicant and of Glenn, this was essentially a contest between Glenn and the applicant.

[8] Second, there were two principal issues in this application – the Deceased’s testamentary capacity and the allegation of undue influence on Glenn’s part. The applicant succeeded on the first issue; the respondents succeeded on the second issue.

[9] Third, the relative merits of the two issues raised in the application were, in my view, very clear. With respect to the Testator’s testamentary capacity, there were simply too many incongruities together with the Testator’s own actions after his execution of the 2007 Will to find that the Testator had testamentary capacity at the time he executed the 2007 Will. It is therefore overly simplistic to suggest that, in propounding that Will, Glenn was merely carrying out his obligation to administer the Estate as the estate trustee. On the other hand, the applicant had no evidence of any action on Glenn’s part to support her claim of undue influence. Whatever she may have believed, something more was required to succeed in this claim.

[10] Fourth, it is apparent that the applicant and Glenn viewed these two issues through the lens of their own long-standing acrimonious relationship. I think this had two consequences. It increased the amount of time spent by their respective counsel on this matter and, more importantly, it resulted in each party actively pursuing a claim that had little chance of success.

Findings

[11] Based on the foregoing, I reach the following conclusions.

[12] First, from the perspective of the parties, I consider that success was divided. As such, the parties should only be entitled to the portion of their fees that are referable to the issue on which they were effectively successful, subject to Glenn’s claim for reimbursement as an executor which is addressed below.

[13] Second, based on a review of the relevant documentation in the record and the relative amount of time spent on the two issues at the hearing of the application, I find that approximately 2/3 of the fees of each of the parties related to the issue of testamentary capacity and the remainder related to the issue of undue influence. Accordingly, as the successful party, the applicant should be entitled to approximately two-thirds of her fees reasonably attributable to the issue of the Testator’s testamentary capacity and the respondents should be entitled to approximately one-third of their reasonable fees attributable to the issue of undue influence.

[14] Third, the applicant had to bring the application to obtain a determination of the Testator’s testamentary capacity. The respondents’ expectations for fees, based on their costs outline for this part of the proceeding, would be materially higher than the applicant’s costs. The applicant should therefore be entitled to her reasonable fees on a substantial indemnity basis that are referable to this claim from the Estate. On the other hand, as mentioned, in my view there was no merit to Glenn’s opposition to the application in respect of this issue. I consider that, in opposing the motion in these circumstances, Glenn transcended his role as an estate trustee in propounding the 2007 Will and effectively opposed the application in his personal capacity. The respondents should therefore be denied reimbursement from the Estate of their costs in respect of this claim.

[15] Fourth, the Court rejected the applicant’s alternative claim of undue influence. She is therefore not entitled to her costs in respect of this claim. The respondents do not seek any costs against the applicant personally. As the estate trustee, Glenn was entitled to resist this claim on behalf of the Estate in the context of his administration of the Estate, notwithstanding that the claim alleged undue influence on his part. It is also relevant that, as mentioned, there was no support for this claim in the record pertaining to actions on Glenn’s part. Accordingly, in respect of the undue influence claim, the respondents are entitled to be reimbursed by the Estate for their reasonable fees on a substantial indemnity basis.

Quantum

[16] Turning to the quantum of the fees of the parties, I note the following considerations.

[17] First, the issues were of moderate complexity from a legal perspective but were factually detailed resulting in both counsel spending a considerable amount of time on this litigation.

[18] Second, counsel devoted roughly the same amount of time to the matter. In total, applicant’s counsel expended 233.7 hours, of which 45 hours was time of a law clerk. The respondent’s counsel spent 204.6 hours on the matter. Most of the difference in the absolute amount of the fees of the parties is attributable to substantially lower hourly rates of the applicant’s counsel and law clerk.

[19] Third, the applicant says that the application was delayed twice as a result of the respondents’ actions. Of these, the Court cannot assess the significance of the failure to meet the timetable for cross-examinations. However, it does appear from the record that the respondents unduly delayed the application in respect of the applicant’s amendment of her Notice of Application. In addition, in my view, the respondents added undue complexity to this proceeding by introducing the extensive medical records of the hospitals that treated the Testator. By themselves, without examination of any of the authors of those records, these medical records were of limited probative value. In any event, the Court did not find these records to be supportive of the Testator’s capacity.

Conclusions

[20] Given the foregoing considerations, I find that reasonable fees on a substantial indemnity basis for the entire proceeding would be $90,000, plus disbursements, representing $60,000 in fees in respect of the testamentary capacity issue and $30,000 in fees in respect of the undue influence claim. I note however that the applicant’s pro-rated fees for the issue of testamentary capacity on a substantial indemnity basis amounts to approximately $23,300.

[21] Based on the foregoing, I find fair and reasonable fees in this application to be $30,000 payable to the applicant in respect of the issue of testamentary capacity and $34,750 payable to the respondents in respect of the issue of undue influence, in each case on an all-inclusive basis and to be payable by the Estate.

Wilton-Siegel J. Date: May 22, 2019