Court File and Parties

COURT FILE NO.: CV-11-0528-00ES DATE: 20190708 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BRUCE HOWARD BLAKE, KATHRYN JOAN HOMES, and PATRICIA RUTH GEDDES, Applicants AND: KENNETH GEORGE BLAKE and KENNETH GEORGE BLAKE, in his capacity as the Estate Trustee of the Estate of Ainslee Elizabeth Blake, Respondents

BEFORE: Regional Senior Justice Peter A. Daley

COUNSEL: Edwin Upenieks, for the Applicant, Patricia Ruth Geddes Gregory Sidlofsky, for the Respondent, Kenneth George Blake, personally and as Estate Trustee

COSTS ENDORSEMENT

[1] The respondent Kenneth George Blake, in his personal capacity, and as the Estate Trustee of the Estate of Ainslie Elizabeth Blake brought a summary judgment motion seeking an order dismissing this application. The motion was dismissed: 2019 ONSC 1464.

[2] The applicants, who are represented by separate counsel, seek costs of the motion on a substantial indemnity basis against the respondent Kenneth George Blake in his personal capacity.

[3] The respondents submit that if costs are awarded to the applicants they should be on a partial indemnity basis and that the quantum of costs awarded should reflect the fact that much of the time devoted to responding to the motion will be of value in the continued litigation.

[4] In considering the costs of this summary judgment motion I will examine the following: (1) costs entitlement; (2) the respondents’ liability to pay costs; (3) the conduct of the respondents’ counsel and the resulting cost implications; (4) the scale and quantum of costs.

Costs Entitlement:

[5] The applicants, having been successful in defending the summary judgment motion, are prima facie entitled to costs of the motion. This motion was not a close call, and other than for the most troubling circumstances which are discussed in more detail below, there are no factors surrounding this case that would warrant a departure from the general rule that the applicants are entitled to costs.

The Respondents’ Liability to Pay Costs:

[6] The applicants seek an order that the respondent Kenneth George Blake pay any costs awarded to them in his personal capacity and not out of any assets remaining in the estate of Ainslie Elizabeth Blake.

[7] The respondents offered no submissions with respect to the applicants’ position that Kenneth George Blake should be found liable personally for the costs of this motion.

[8] Historically in estate litigation, courts had followed the approach that the 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 where there were reasonable grounds upon which to question the will’s validity. This application and the summary judgment motion brought by the respondents do not arise from any of these circumstances, but rather are connected with the respondent Kenneth George Blake’s personal conduct both as a power of attorney for the deceased, while she was alive, and as her estate trustee in the administration of her estate.

[9] As noted by the Ontario Court Of Appeal in MacDougald Estate v. Gooderham, at paras. 80 and 92, the traditional approach to the awarding of costs out of estate assets has been 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 cost rules that apply to civil litigation.

[10] None of the public policy considerations examined by the court in MacDougald are engaged in this case, as the objections made by the applicants in this estate proceeding are entirely related to the conduct of the respondent Kenneth George Blake and are not in any way connected with errors or deficiencies with respect to the validity of the deceased’s will, where typically the costs that would follow such litigation would be paid out of the estate assets.

[11] This litigation, including the summary judgment motion is entirely connected with the alleged misconduct of the respondent Kenneth George Blake both in his personal capacity, as power of attorney and estate trustee. In the event costs of the motion were ordered paid out of whatever assets remain, the funding of the payment of those costs would be coming out of the applicants’ respective shares of any undistributed estate assets to which they may be entitled.

[12] This is a clear case where, having instituted the summary judgment motion and having failed on that motion, the respondent Kenneth George Blake must be found personally liable for the cost of the motion. The costs incurred should not be borne by the estate and ultimately the applicants, if they have any remaining interest in the estate.

The Conduct of the Respondents’ Counsel and the Resulting Cost Implications:

[13] The conduct of counsel for the respondents gives rise to some very serious concerns regarding counsel’s understanding and recognition of his duty as an officer of the court and his duty of candor with counsel opposite.

[14] As indicated in my reasons for decision on the summary judgment motion, it was urged on behalf of the respondents that summary judgment should be granted dismissing the application on three principal grounds, namely that the application could not proceed due to the fact that matters raised in the application were res judicata, secondly the application was out of time as a result of an intervening limitation period and thirdly there were broad allegations that there was no genuine issue requiring a trial.

[15] Of these three grounds, other than the assertion of the intervening limitation period, the other grounds were easily disposed of.

[16] The only decision that counsel referred to during the oral argument of the summary judgment motion that indirectly bore on the question of whether or not a Notice of Objection filed in estate matter was subject to any limitation period was the decision of the Court of Appeal in Armitage v. The Salvation Army, 2016 ONCA 971. As noted in my reasons, this decision dealt with the question of whether or not applications for the passing of accounts under the Substitute Decisions Act, 1992, S.O. c. 30 are subject to the two-year limitation period provided for in the Limitations Act, 2002.

[17] The question as to whether a Notice of Objection is a “claim” that is subject to the Limitations Act, 2002 was considered in the first instance by Mulligan J in Wall v. Shaw, 2018 ONSC 1735, 2018 ONCS 1735, 20 CPC (8th) 100.

[18] Mulligan J concluded that a Notice of Objection in an estate proceeding is not subject to the limitation period within the Limitations Act, 2002 and his decision was subsequently upheld by the Court of Appeal sitting as the Divisional Court: 2018 ONCA 929 (Div. Ct.), which was released on March 14, 2018.

[19] The summary judgment motion in this matter was argued on September 19, 2018. As noted neither counsel brought to my attention the decision in Wall v. Shaw during their submissions nor at any time prior to the release of my decision on the motion.

[20] In the course of considering my decision, while under reserve, given the lack of helpful authorities on the application of a limitation period to the Notice of Objection, I reviewed the law by considering the jurisprudence and the applicable statutory language.

[21] During my review of the law, and without any ingenious or in-depth research on my part, the first instance and appeal decisions in Wall v. Shaw came to my attention. These decisions were directly on point with the limitation issue as raised by the respondents and immediately disposed of their submissions on the limitation period.

[22] In the course of considering the law in this area, while my decision was under reserve, an estates litigation blog commentary dated November 16, 2018, also came to my attention entitled “Is a Notice of Objection to Accounts Subject to a Limitation Period?”

[23] It is most noteworthy that this blog was written by solicitor Charles Wagner on behalf of his law firm Wagner Sidlofsky. This is the one and the same law firm that the respondents’ counsel practices with. This is a small specialized firm practicing in the area of estate litigation.

[24] In the blog written by Wagner he reviewed in detail the decision of Mulligan J in Wall v. Shaw, however he did not make reference to the appeal decision which upheld Mulligan J’s decision, although that decision was released by the Court Of Appeal in March, 2018.

[25] Given the respondents’ counsel’s close professional association with Wagner I have easily drawn the factual inference that the decision of Mulligan J in Wall v. Shaw was known to him by at least November 21, 2018, when the blog was published, if not earlier.

[26] Furthermore, I have also reached the very troubling conclusion that counsel for the respondents purposefully did not bring the decision in Wall v. Shaw to the attention of the court during submissions on the motion or while my decision was under reserve. The decision was directly on point with the issue at stake on the summary judgment motion and the decision was adverse to the interests of the respondents.

[27] The Rules of Professional Conduct and the Model Code of Professional Conduct from the Federation of Law Societies in Canada both state in r. 5.1-2(i) that:

When acting as an advocate, a lawyer must not:

(i) Deliberately refrain from informing a tribunal of any binding authority that the lawyer considers to be directly on point and that has not been mentioned by the other party.

Other rules that consider counsel’s duty include:

(a) Duty of Competence (r. 3.1-2, commentary [2]):

[T]he lawyer should keep abreast of developments in all areas of law in which the lawyer practises.

(b) Duty of Advocacy

Rule 5.1-1: When acting as an advocate, a lawyer shall represent the client resolutely and honourably within the limits of the law while treating the tribunal with candour, fairness, courtesy, and respect. [Emphasis added.]

Rule 5.1-2(e): When acting as an advocate, a lawyer shall not … (e) knowingly attempt to deceive a tribunal or influence the course of justice by … misstating facts or law …

[28] Many apt observations were made by the authors of the paper A Lawyer’s Duty to the Court (Undated) by Robert Bell and Caroline Abela, online: https://www.advocates.ca/Upload/Files/PDF/Advocacy/InstituteforCivilityandProfessionalism/Duty_to_Court.pdf.

[29] The authors state at p. 4:

A lawyer’s duty to the court also helps define the limits of the zealous representation of a client. The need to create ethical boundaries within an adversarial system was addressed by Gavin MacKenzie in his article The ethics of advocacy, The Advocates’ Society Journal (September, 2008), at 26-7:

Adversarial tactics tend to escalate despite the best of intentions in a competitive system. Lawyers adopt adversarial tactics…because to refrain from doing so would put their clients at a competitive disadvantage relative to the clients of lawyers who show no such restraint…We should be sceptical of justifications of questionable conduct that appeal to the ethics of the adversary system.

On one hand, lawyers are asked to “raise fearlessly every issue, advance every argument and ask every questions, however, distasteful…”. [1] On the other hand, a lawyer’s duty to the court may take priority over the interests of the client. Without such limits being adequately defined and respected, the profession risks an ethical race to the bottom.

[30] Counsel before the courts have a positive duty to make full disclosure of all the binding authorities relevant to a case, including all authorities on point whether they support or undermine the position being urged upon the court, even if opposing counsel has not cited such authority.

[31] This duty, however, should not be misconstrued as requiring the lawyer to present a disinterested account of the law. Lawyers are obliged to distinguish those authorities which do not support their client’s position thus, while a lawyer does not need to assist an adversary and is permitted to be silent on certain matters, they are not permitted to actively mislead the court: A Lawyer’s Duty to the Court at p. 7.

[32] As to counsel’s obligation to inform the court as to relevant authorities, two principles emerge: (1) where lawyer knows of a relevant authority, the failure of the lawyer to inform the court of that authority could be seen as an attempt to mislead the court; (2) where a lawyer does not know about authority, ignorance may nonetheless be no excuse. Lawyers have a duty to conduct reasonable research on points of law that are known in advance to be contentious. Thus, while this may not amount to a deliberate misrepresentation, counsel nevertheless may be found to be in breach of their duty to the court for failing to have conducted reasonable research as to relevant authorities.

[33] The following factors are also relevant to counsel’s duty to the court:

(a) binding decisions, in particular, must be raised if relevant: Roman Catholic Episcopal Corp. for the Diocese of Sault Ste. Marie v. Axa Insurance (Canada), 2015 ONSC 4755, at para 15;

(b) cases that are not binding but are persuasive need not necessarily be provided to the court, however counsel should nonetheless raise a case if it is on point and from the same jurisdiction. Counsel must be mindful of the fact that decisions from courts of the same level may be binding (under the rule of horizontal stare decisis);

(c) where it is submitted that the lawyer did not know of the authority, in determining whether the lawyer ought to have known (in terms of reasonable research), the court may ask whether the authority was easy to find – if for instance, the case is particularly unique and involves a narrow and specialized area of law it may be less likely that the lawyer could have found the case through reasonable research and the duty to provide that authority may therefore not have been breached. However, if the lawyer practices in a specialized area such as estates litigation, that duty would be present in a case such as this;

(d) counsel cannot decide on their own whether or not a case is distinguishable. If it is relevant and on point, they must bring the case to the attention of the court and allow the judge to determine whether or not the case can be distinguished from the facts before the court or from another decision.

[34] The foundations for counsel’s duty to the court include: (a) ensuring that the judicial system functions effectively and that judges make properly informed decisions. Judges cannot be expected to know all of the applicable law in a case. If the decision is wrong due to the failure to apply the relevant case, this would have significant impact on the public if the precedent is applied in future cases: Glebe Sugar Refining Co. v. Trustees of the Port and Harbour of Greenlock, 1921 S.C. (H.L.) 72; (b) the duty is in keeping with the duties of competence in the application of advocacy principles as noted; (c) the duty further reflects recognition of the scarcity of resources in the courts. The court cannot be expected to conduct its own independent research in every case. When lawyers fail to bring forward relevant authorities, this can unduly increase the length of litigation when that authority is later discovered (or is raised on appeal), which in turns results in a hardship to the parties and the administration of justice.

[35] Apart from professional discipline or reprimand, the penalty for counsel’s failure to comply with their duty to the court is typically reflected in the costs awarded: McGregor v. Crossland, 1997 CarswellOnt 2303 (Gen.Div.), at para 61.

[36] Taking into account the factual inferences I have drawn with respect to the respondents’ counsel’s failure to bring the decision in Wall v. Shaw to the attention of this court and having regard to the principles and case authorities referenced above, I have concluded that counsel did breach his duty to this court by failing to have brought the decision to the attention of the court.

Scale and Quantum of Costs:

[37] As a result of the clear breach of duty by counsel for the respondents, I have concluded that this is a proper case for the award of substantial indemnity costs in favour of the applicants.

[38] It was urged on behalf of the respondents that the reasonably anticipated award of costs against the respondents, if unsuccessful, would be in a measure similar to the time spent and expense incurred by the respondents in bringing the summary judgment motion.

[39] I disagree.

[40] There is no symmetry whatsoever as between the costs incurred to launch and argue a summary judgment motion as compared to the time and expense that may necessarily be incurred by a party responding to such a motion. This is especially so given the fact that for the responding party the outcome could be “all or nothing” and as they are required to put their best foot forward, significant time and expense is typically incurred by a respondent on a summary judgment motion.

[41] Counsel for the applicant Patricia Ruth Geddes took the lead in marshaling the evidence and making submissions during the summary judgment motion and counsel sought substantial indemnity costs of $60,000 inclusive of disbursements and HST in the order of approximately $7,000.

[42] Counsel for the applicants Bruce Howard Blake and Kathryn Joan Homes also sought substantial indemnity costs, inclusive of HST in the sum of $31,695.13.

[43] The issues at stake on the summary judgment motion, which also involved consideration of the issues outstanding in the application were somewhat legally and factually complex.

[44] Further, the amounts potentially at stake are significant in that they may be in excess of $1,000,000.

[45] Having concluded that the applicants are entitled to substantial indemnity costs and having considered their detailed submissions and costs outlines, I am satisfied that the costs as claimed on that scale were reasonably incurred in responding to the summary judgment motion and are proportionate to the issues at stake and the money involved.

[46] In the result, the respondent Kenneth George Blake personally shall pay forthwith the cost of the applicants as follows: (1) to the applicant Patricia Ruth Geddes the all-inclusive sum of $60,000; (2) to the applicants Bruce Howard Blake and Kathryn Joan Homes jointly the all-inclusive sum of $31,695.13.

[47] An order shall issue accordingly.

Daley RSJ. Date: July 8, 2019

[1] Commentary to Rule 4.01(2) of the Rules of Professional Conduct (Law Society of Upper Canada).