Court File and Parties

COURT FILE NO.: 7893/18 DATE: 2019-06-20 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CATHARINE MELISSA MITCHELL, Applicant/Moving Party AND: MARCIA WAGG, In Her Capacity as Estate Trustee of the Estate of Judith Lynne Mitchell, deceased, Respondent/Responding Party

BEFORE: Kurz J.

COUNSEL: Ruzbeh Hosseini & Joan Kasozi, for the Applicant/Moving Party Gillian Fournie, for the Respondent/Responding Party

HEARD: April 1, 2019

Costs Endorsement

[1] This was a motion by the Applicant, Catherine Melissa Mitchell (“Catherine”), for a finding that the Respondent, Marcia Wagg (“Marcia”), is in contempt of the order of Shaw J. of this court of September 19, 2018 (“the order”). I found that Marcia was not in contempt of the order and invited her to make her costs submissions. She has done so.

[2] Marcia seeks her partial indemnity costs from Catherine of $6,518.69 for the period prior to her February 14, 2019 offer to settle; $12,388.34 on a substantial indemnity basis thereafter; and $2,859.73 in disbursements plus HST. All of these figures add up to $21,766.76.

[3] Marcia’s full indemnity costs for the motion, inclusive of disbursements and HST is $32,414.89. In addition to the $21,766.76 she seeks from Catherine, Marcia seeks an order that the estate of the late Judith Lynne Mitchell pay the balance of her full indemnity costs, totaling $10,648.13 ( $32,414.89 - $21,766.76) , as part of a blended costs award (see Swadon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101 (Ont. C.A.) at para. 82 93-5, and Goodman Estate v. Geffen, [1991] 2 S.C.R. 353 (S.C.C.)).

[4] Marcia argues that she was the successful party in this motion, so she should presumptively be entitled to costs. She adds that she should be entitled to an enhanced scale of costs against Catherine because:

a. This motion was hastily brought, b. Melissa did not accept her reasonable offer to the settle the motion; and c. This was a very important proceeding, being quasi-criminal in nature.

[5] Marcia adds that the remainder of her costs should be paid from the estate because I made no finding of misconduct against her. Thus she argues that this is an appropriate case for blended costs.

[6] Despite her lack of success in this motion, Catherine claims her costs as well. For that reason I allowed Marcia to make brief reply submissions, dealing only with that costs request.

[7] Catherine seeks her partial indemnity costs of $28,111.47, out of actual costs of $46,009.89. Despite the result in which her contempt motion was dismissed, she argues that she was “mostly successful” and thus should obtain her costs. She argues that what Marcia did was purge her contempt at the last minute (although Catherine insisted on proceeding with the motion to find Marcia in contempt in any event).

[8] Catherine argues that the factors that I should consider are:

a. The seriousness of the relief sought, a finding of contempt; b. That this is a motion to compel Marcia to honour a fiduciary duty; i.e. to account; c. Marcia did not attend the motion before Shaw J., where the original order was made. This fact evinced a “cavalier attitude” towards those fiduciary duties; d. Marcia incorrectly described this litigation as “aggressive”. In doing so she ignored numerous requests to pass her accounts; e. Marcia’s behaviour in moving to vary the order of Shaw J. and to bring her own action against the estate (creating conflict of interest) made this motion unnecessarily complex. f. Despite my dismissal of her motion, Catherine claims that she was “primarily successful” in it. She points out that before hearing argument on the contempt, I granted (on consent) other relief that she had requested; namely a non-dissipation order, further financial disclosure, as well as an informal accounting. g. She continued by claiming that I “…made [my] findings [against Marcia] given the lack of adequate disclosure and deficient accounting filed by the Respondent on the eve of the contempt hearing.” The “finding” that she points to is part of a question that I asked during Ms. Fournie’s submissions about why I should not order certain disclosure at the time when it would likely be requested during a passing of accounts.

Applicable Law Regarding Costs

[9] Section 131 of the Courts of Justice Act grants this court the discretion to determine the costs of a proceeding or step in a proceeding.

[10] The Ontario court of Appeal has stated that “[m]odern cost 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 behaviour by litigants. (Fong v. Chan (1999), O.J. No. 4600 (O.C.A.) at para. 22.).

[11] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.), at para. 10 Perell J. of this court reformulated and supplemented those purposes 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. (See also: Talwar v. Grand River Hospital Board of Directors, 2018 ONSC 6645 (Ont. Div. Ct.)).

[12] Under R. 57.01(7) of the Rules of Civil Procedure, the court is to “… devise and adopt the simplest, least expensive and most expeditious process for fixing costs …”

[13] Under R. 57.03(1) of the Rules of Civil Procedure, a court that hears a non-exceptional contested motion shall fix the costs and order that it be paid within 30 days unless it is satisfied that a different order would be more just.

[14] The general principles for the exercise of my discretion in determining costs are set out in R.57.01(1) of the Rules of Civil Procedure. They include:

• The result of the proceeding; i.e. success. It is trite that there is a presumption that the successful party is entitled to their costs.
• However a court is entitled to award costs against the successful party in the appropriate circumstances (R. 57.01(2).
• offers to settle,
• the principle of indemnity,
• the reasonable costs expectations of the unsuccessful party for the step for which costs are claimed,
• the amounts claimed and recovered in the proceeding,
• the apportionment of liability,
• the complexity of the proceeding,
• the importance of the issues,
• the conduct of any party that tended to shorten or unnecessarily lengthen the proceeding,
• the propriety or necessity of the of step in question or the errors made in it,
• a party’s denial or refusal to admit anything that should have been admitted, and
• any other relevant matter.

[15] Those factors lead to the general principle set out in Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (O.C.A.). There, the Ontario Court of Appeal stated at para. 24 that costs awards should reflect "what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties."

[16] Recently, in Beaver v. Hill, 2018 ONCA 840 at para. 10, the Ontario Court of Appeal clarified that proportionality and reasonableness are the touchstone considerations to be applied in fixing costs in family law matters. While the Family Law Rules "embody a philosophy peculiar to a lawsuit that involves a family" (see Frick v. Frick, 2016 ONCA 799, 132 O.R. (3d) 321, at para. 11), it seems to me that the principle in Beaver v. Hill, 2018 ONCA 840 should apply equally in non-family civil litigation matters.

[17] Rule 49.10 of the Rules of Civil Procedure applies to the costs consequences that arise from offers to settle in all civil proceedings, including motions (see R. 49.02(2) of the Rules of Civil Procedure). It reads as follows:

Costs Consequences of Failure to Accept

Plaintiff’s Offer

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing; (b) is not withdrawn and does not expire before the commencement of the hearing; and (c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

Defendant’s Offer

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing; (b) is not withdrawn and does not expire before the commencement of the hearing; and (c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

Burden of Proof

(3) The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of subrule (1) or (2).

[18] Despite the wording of R. 49.10 of the Rules of Civil Procedure, R. 49.13 of the Rules of Civil Procedure allows the court, in exercising its discretion with respect to costs, to take into account any offer to settle made in writing, the date that the offer was made and the terms of the offer.

Costs Principles in Estates Law Should Generally Follow Those in Ordinary Civil Matters

[19] In Bilek v. Salter Estate, [2009] O.J. No. 2328, (Ont. S.C.J.), D.M. Brown J., as he then was, wrote that the principles that apply to the determination of costs in estate matters should generally follow those in ordinary civil litigation cases. Citing the decision of the Ontario Court of Appeal in McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), Brown J. wrote that:

…estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure, except in a limited number of circumstances where public policy considerations permit the costs of all parties to be ordered paid out of the estate. Those limited circumstances exist where the litigation arose as a result of the actions of the testator or those with an interest in the residue of the estate, or where the litigation was reasonably necessary to ensure the proper administration of the estate: McDougald Estate, paras. 78 to 80.

(See also Swadon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101 (Ont. C.A.) at para. 84.)

[20] Brown J. added his view that with the “heightened emotional dynamics” of most estate litigation, it should attract an even greater need for a “loser pay” mode for costs. He stated at para. 6 that such a process would “…[bring] needed discipline to civil litigation by requiring parties to assess their personal exposure to costs before launching down the road of a lawsuit or a motion.” It would “… inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.”

Application of Legal Principles to the Facts of this Case

[21] The starting point here is that Marcia, not Catherine was the most successful party in this motion. Catherine brought and insisted on proceeding with a contempt motion but failed to succeed in it. She stated that she was “mostly successful” because of the consent orders that I made on April 1, 2019 to provide certain disclosure.

[22] With respect, that statement is mainly incorrect. I dismissed the central head of relief that she claimed, a motion for contempt. I found that Marcia made good faith efforts to comply with the disclosure terms of the Shaw J. order. I made that finding even though there is a question as to whether the order would have been made had the letter of Mr. Button of September 6, 2018 been brought to her attention (which it should have been). I have more to say about that letter below.

[23] Even after Marcia agreed to the further and expedited disclosure on April 1, 2019, some of which was not part of the original disclosure request, Catherine insisted on continuing with the motion. I frankly do not see how she can argue that she was successful in this motion and entitled to costs.

[24] While Catherine claims that Marcia’s conduct in not passing accounts and creating a conflict of interest with her claims against the estate unnecessarily complicated this motion, I generally disagree, subject to certain comments below. I say this because, as set out in my endorsement of April 2, 2019:

a. For reasons still not clear to me, Catherine’s counsel failed to advise Shaw J. of Mr. Button’s letter of September 6, 2018. That letter stated that Mr. Button would not be acting for Marcia in the estates litigation. It requested confirmation that it was necessary to respond to Catherine’s action (see paras. 5-7 of my April 2, 2019 endorsement). As stated above, I question whether Shaw J. would have made her order had she been aware of the letter. b. As I stated in my endorsement of April 1, 2019, I also question whether Shaw J. would have made her order had she been aware of the serious issues as to Judith’s capacity and whether Marcia exercised a power of attorney from June 17, 2007 until Judith’s death. However Shaw J. was not provided with the opportunity to hear from both sides in this proceeding.

[25] Both of the facts above, on their own, demonstrate the unnecessary nature of this motion. The following facts buttress that conclusion:

a. Marcia’s lawyers tried to explain the reasons that she was unable to comply with all of the terms of the Shaw J. order after it was made. Their entreaties fell on deaf ears. b. Marcia’s lawyers attempted to negotiate the terms of financial disclosure that she was required to make and when that failed, brought a motion for directions, which I adjourned to another date. c. About two weeks before the motion was argued before me Catherine amended her notice of motion to request further relief that was not contemplated in the timeline set out in the endorsement of Fitzpatrick J. of January 10, 2019. Marcia agreed to some of it (leading Catherine to claim victory) while other parts were adjourned to be heard with Marcia’s motion for directions. d. I found that Marcia and her previous counsel, Ms. Maher, made good faith attempts to provide Catherine with all necessary disclosure before the motion was brought before Shaw J. e. Marcia attempted to negotiate reasonable deadlines for her to pass her accounts. f. It was unreasonable for Catherine to assume that Marcia had greater access to the records of third party records holders than she actually had available to her.

[26] Put bluntly, this motion should not have been brought. Shaw J. should have been made aware of the facts that I set out in my April 2, 2019 endorsement before she was asked to make an order based only on one-sided materials.

[27] Marcia’s offer to settle of February 14, 2019 closely matched my decision in this motion. She offered to:

a. Apply to pass her accounts by April 8, 2019. She actually did so on March 27, 2019; b. Apply to pass the pre-death accounts of Judith Lynn Mitchell within six weeks of receiving the relevant bank statements; c. She maintained her right to contest an obligation to pass the second set of accounts as she argued that she was not Ms. Mitchell’s attorney for property before her death. I noted in obiter in my April 1, 2019 endorsement that there were compelling reasons to find that Ms. Mitchell had capacity to handle her own finances before her death. d. Marcia’s pending motion for directions would be adjourned sine die. It was adjourned on consent to a fixed date.

[28] This motion was important to Marcia. The penalty sought was a quasi-criminal one. She was required to assiduously defend the motion.

[29] As stated above, the fact that this is an estates matter does not excuse the conduct of this motion or insulate Catherine from its costs consequences. This motion appears to be a manifestation of the “heightened emotional dynamics” that Brown J. spoke of in Bilek v. Salter Estate, [2009] O.J. No. 2328, (Ont. S.C.J.), which require costs discipline to ensure that decisions in such matter are made with a “modicum of reasonableness”.

[30] Nothing in Catherine’s costs submissions challenged the propriety of the bills of costs of Marcia’s counsel. In fact at each of the full, substantial and partial indemnity levels, the fees that Catherine’s counsel claims are greater than those claimed by Marcia’s counsel. Clearly the fees charged by Marcia’s counsel meet Catherine’s reasonable expectations.

[31] Further, in light of the issues at stake and the factors set out above, I find that the amounts claimed are fair and reasonable in the circumstances of this unnecessary motion.

[32] Accordingly, I order that Catherine pay to Marcia her partial indemnity costs of $6,518.69 for the period prior to her February 14, 2019 offer to settle, $12,388.34, on a substantial indemnity basis thereafter, and $2,859.73 in disbursements plus HST, for a total of $21,766.76. That amount shall be paid within 30 days.

[33] I do not order that the estate pay the remainder of Marcia’s full indemnity costs. She is not without her faults in this motion, although those faults pale next to an unnecessary motion. I have spoken in my April 1, 2019 endorsement of Marcia’s less than expeditious manner of moving forward some elements of her disclosure and the passing of accounts. Further, her decision to sue the estate did add an element of complication to which I referred in my questions to counsel during argument and comments in my endorsement. I cannot place those faults at the feet of the estate.

Kurz J. Date: June 20, 2019