COURT FILE NO.: CV-19-0184-000
DATE: 2019-08-30
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANNE WINKWORTH
Applicant
- and -
ROBERT MURRAY, JAMES MURRAY and the ESTATE OF EVELYN ROSE MURRAY
Respondents
D. Shanks, for the Applicant
M. Holervich, for the Respondent Robert Murray D. Humphreys, for the Respondent James Murray
HEARD: Via Written Submissions at Thunder Bay, Ontario
Mr. Justice D.C. Shaw
Decision On Costs
[1] This is a decision on costs of a motion for directions.
Background
[2] Evelyn Murray executed a will that names her children, the applicant, Anne Winkworth, and the respondent, Robert Murray, as estate trustees. The parties agree that although the will directs that the residue of the estate is to be divided into three equal shares, with one share to Evelyn’s son, the respondent, James Murray, and two shares to Anne, nevertheless, Robert is entitled to receive one of the two shares payable to Anne. The effect is that the three siblings are equal beneficiaries of the estate.
[3] Evelyn died on August 27, 2014.
[4] The value of the estate for probate was approximately $834,000. The last significant asset of the estate that has not been dealt with is a home at 269 Ray Court in Thunder Bay.
[5] The only other remaining estate asset appears to be an account at the Royal Bank, which as of March 19, 2019 had a balance of $2,674.50.
[6] Evelyn’s will made certain provisions for the home, including the following:
After the period of two years from the date of my death, or sooner, if any of my said children shall have survived me and if he or she wishes, he or she shall have the right to purchase from my estate my said property at fair market value, less ten (10%) per cent of the fair market value.
[7] Robert and James, together, wish to buy the home. There has been disagreement between them and Anne as to the terms of sale.
[8] On March 4, 2019, Anne brought an application for directions regarding the sale of the home.
[9] Robert brought applications for an accounting of Anne’s conduct as an estate trustee and for removal of Anne as estate trustee.
[10] On May 16, 2019, in the within application, Smith J. made the following order, on consent of all parties:
On Consent, Order to issue as follows:
Fair market value of the subject property for the purpose of any sale to the children of Evelyn be established at $493,000.00 in accordance with the June 15, 2017 valuation.
Any one of the children of Evelyn can make an offer to purchase the property for Fair Market Value, less 10%, within twenty-one (21) days of the Court’s Order, and the Trustees shall respond within 7 days of receipt of any offer and thereafter any child of Evelyn may, if no offer has been accepted, then any of the parties may within 14 days return before the Court for further direction, on any of these applications. (CV-18-0546-00 and the cross application brought by James Murray, the Respondent in CV-19-0184-00) failing which the property shall be listed for sale with Andrew Lawrence of Royal Lepage Realty in Thunder Bay for a price as recommended by Andrew Lawrence or as otherwise directed by the Court.
Any offers to purchase the property will be forwarded to Robert and James by Anne.
The estate trustees will have the authority to accept or reject any offer which is received.
All sale proceeds, less reasonable expenses, will be deposited into the estate bank account, namely account number 03444-54021076 at the Royal Bank of Canada 290 Memorial Avenue branch in Thunder Bay, unless otherwise ordered by the Court.
Costs of today reserved to the Justice hearing any of the applications.
[11] After the order of May 16, 2019 was made, Robert and James submitted an offer in the amount of $147,900, which represented one third of the price established by the order, namely, $493,000, less 10 per cent. That offer was rejected by Anne.
[12] Robert and James submitted a second offer, in the amount of $493,000, less 10 per cent, with a deposit of $25,000, and a balance payable of $122,900, for a total of $147,900. The figure of $147,900, again, represented one third of the established price of $493,000, less 10 per cent. This offer was rejected by Anne.
[13] Robert and James took the position that on the purchase of the home they should receive credit for each of their one third beneficial interests in the home.
[14] They did not want to pay the estate the full $493,000, less 10 per cent, and then receive their one third shares on the final distribution of the estate.
[15] Anne took the position that if Robert and James wanted to buy the home, they should pay the price established by the order of Smith J., namely $493,000, less 10 per cent. That money would be paid to the estate and used to pay the estate’s expenses, following which the balance remaining would be distributed, with each of the three beneficiaries to receive one third.
[16] Because the parties could not agree on the terms of sale set out in the order of Smith J. of May 16, 2019, they appeared before me on a motion for further directions.
[17] I ordered that if Robert and James wished to purchase the home, they must pay the fair market value of $493,000., less 10 per cent, namely, $443,700, in full, to the estate.
[18] Costs of the motion before me for directions were reserved, pending receipt of written submissions. Those submissions have been received and reviewed.
Submissions
[19] Anne seeks costs payable personally by the respondents and by the estate on a blended basis. She proposes that costs be awarded as follows:
a) $12,252.83 payable on a full indemnity basis from the estate up to the appearance before Smith J., on May 16, 2019, and
b) $6,224.85 payable by the respondents personally, on a substantial indemnity basis, for all costs incurred after May 16, 2019.
[20] The respondents dispute Anne’s claim for costs for several reasons, including:
a) The costs claimed are excessive;
b) The respondents acted reasonably;
c) The applicant was seeking to have sole control over any sale of the home;
d) The applicant depleted the estate’s bank account to the benefit of her daughter;
e) The will did not direct the procedure to be followed if a beneficiary wanted to purchase the property;
f) The order of May 16, 2019 did not specify whether a beneficiary could utilize their share toward the purchase price.
[21] In my view, this decision on costs should be limited to the particular issue that was before me on June 13, 2019.
[22] I note that in his order of May 16, 2019, Smith J. stated that “costs of today reserved to the Justice hearing any of the applications.”
[23] The Confirmation for the Application filed for the hearing on June 13, 2019 stated that the only issue to be heard before me was:
To obtain further direction from the court with respect to the Offer to purchase the Ray Court property dated May 22, 2019.
[24] My decision of June 20, 2019 was limited to providing further directions arising out of the order of Smith J.
[25] There are issues raised in the affidavits filed on the application which were not argued before me, including: Anne’s claim to be entitled to control any sale of the home; the position of Robert as a co-estate trustee; the occupancy of the home by Anne’s daughter; the terms of listing the home for sale; the relationship, if any, between Anne’s claim for estate trustee compensation and the sale of the home; whether Robert was requiring a “finders fee” if the home was sold; Anne’s claim that she was solely responsible for maintaining the home, managing tenants and paying the costs of the home from the estate’s account.
[26] The issues raised in those affidavits were before Smith J. He held, on consent, that the costs of the application, including the proceeding before him for directions, were to be decided by the judge hearing any of the applications, i.e. the within application and the two applications brought by Robert. I did not dispose of the within application nor were the other applications before me.
[27] I will therefore limit my costs order to the matter that was before me. Costs leading up to the order of Smith J. are to be dealt with as Smith J. ordered.
[28] The matter before me was relatively uncomplicated, implementing the terms of the will in the context of the order of Smith J.
[29] Anne was the successful party. There is no reason to deprive her of the costs to which she would be reasonably entitled as an estate trustee whose position in regards to the direction sought from the court was for the benefit of the estate.
[30] As noted by the Court of Appeal in Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, at para. 84, the modern approach is that estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime except in those limited situations where public policy considerations apply.
[31] Those public policy considerations are the need to give effect to valid wills and the need to ensure that estates are properly administered. The Court of Appeal cited with approved the observations of D.M. Brown J., as he then was, in Salter v. Salter Estate (9009), 2009 CanLII 28403 (ON SC), 50 E.T.R. (3d) 227 (Ont S.C.J.), at para. 6
Parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically follow to fund their litigation. The “loser pays” principle brings 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.There is no reason why such discipline should be absent from estate litigation. Quite the contrary. Given the charged emotional dynamics of most pieces of estate litigation, an even greater need exists to impose the discipline of the general costs principle of “loser pays” in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.
[32] In the instant case, the public policy considerations listed by the Court of Appeal underly the estate trustee’s position on the proceeding before me. Her obligation, although she is also a beneficiary, is to give effect to the intentions of the testator and to realize the assets of the estate. She is entitled to be indemnified from the estate for her costs as estate trustee, to the extent that she is not indemnified by the respondents.
[33] Should the respondents be required to pay partial indemnity costs, as they would if they were the unsuccessful parties in ordinary civil litigation?
[34] In my view, for the reasons set out by Brown J. in Salter, the respondents, as the unsuccessful parties, should pay partial indemnity costs.
[35] As stated by the Court of Appeal in Sawdon, at para. 97:
The availability of the blended costs order gives the court the ability to both respect the public policy considerations that may be involved and maintain the discipline of which Brown J. spoke.
[36] I have reviewed the applicant’s Bill of Costs for the time docketed after the May 16, 2019 appearance before Smith J. Some of the time docketed does not deal with preparation or attendance at the hearing before me. Some of the clerk time appears to be secretarial work, which is properly covered in the hourly rates of counsel.
[37] I also regard the actual hourly rates of the two counsel for the applicant, of $565 and $300, from which their partial indemnity rates of $339 and $180 are calculated, to be higher than the respondents could have reasonably anticipated. The respondents have produced their own Bills of Costs, for comparison purposes. The hourly rates for their counsel, who have 32 and 26 years of experience, are $350 and $375, respectively. The applicant did not have to prepare any new affidavits for the hearing before me and relied on the material that was before Smith J. I have previously noted that the issue on the hearing was not particularly complex.
[38] The respondents, although unsuccessful on the hearing, cannot be said to have acted unreasonably.
[39] The overriding principle in assessing costs is reasonableness. I have determined that it is fair, reasonable and proportional, to assess costs of the June 13, 2019 hearing, payable by the respondents, jointly and severally, at $3,500, all inclusive. The estate shall indemnify the applicant in the further sum of $5,000, all inclusive. The costs as assessed shall be paid within 30 days.
[40] This decision and the findings are without prejudice to the positions of the parties with respect to costs up to and including May 16, 2019 in this application and with respect to any other applications involving the parties.
“original signed by”
The Honourable Justice D. C. Shaw
Released: August 30, 2019
COURT FILE NO.: CV-19-0184-000
DATE: 2019-08-30
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANNE WINKWORTH
Applicant
- and -
ROBERT MURRAY, JAMES MURRAY and the ESTATE OF EVELYN ROSE MURRAY
Respondents
DECISION ON COSTS
Shaw J.
Released: August 30, 2019
/lvp