Court File and Parties

COURT FILE NO.: CV-15-5378-ES DATE: 2020 04 21 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

SANDRA KROLEWSKI and EDWARD MEDEIROS Applicants Antal Bakaity, for the Applicants

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MARIA NATALIA MONIZ personally and in her capacity as estate trustee for the ESTATE OF THE LATE EDUARDO MEDEIROS Respondents Peter W. Carey and Dylan O’Leary, for the Respondents

HEARD: Written Submissions

COSTS ENDORSEMENT L. Shaw J.

OVERVIEW

[1] On January 3, 2020, I released my reasons in this matter (see Krolewski v. Moniz, 2020 ONSC 53). I found that the respondent was the successful party and was entitled to costs. I invited the parties to file a Bill of Costs, written submissions and any relevant offers to settle if they could not agree on the quantum of costs. I have now received and reviewed those submissions. These are my reasons regarding the quantum of costs and whether those costs should be payable by the applicants or by the estate of the late Mr. Eduardo Medeiros (“the estate”).

BACKGROUND

[2] On June 30, 2015, Mr. Medeiros passed away after a short battle with cancer. He executed a Will on June 8, 2015 (the “2015 Will”). The respondent, Maria Natalia Moniz, Mr. Medeiros’ common-law spouse for eighteen years, was named as Executor. In his Will, he bequeathed any stocks or RRSPs owned by him to the applicants, his adult children Sandra Krolewski and Edward Medeiros, to be divided equally. He also bequeathed his vehicle to his son. The residue of his estate was left to Ms. Moniz.

[3] On June 8, 2015, he also executed a transfer that changed ownership in his home from tenants in common with Ms. Moniz to a joint tenancy with Ms. Moniz. The transfer of ownership was registered after his death by Mr. Medeiros’ long-time lawyer who had drafted both the Will and the transfer.

[4] At the time of his death, the assets that Mr. Medeiros’ owned consisted primarily of his RRSPs and his one-half interest in the home he owned with Ms. Moniz.

[5] In December 2015, the applicants commenced an application seeking to set aside the 2015 Will on the basis that Mr. Medeiros lacked knowledge and approval as to its contents and lacked testamentary capacity based on the presence of suspicious circumstances and undue influence by Ms. Moniz. Their position was that his prior Will, executed in 2004 (the “2004 Will”), was the valid Will. Under that Will, Ms. Moniz would have only received 1% of Mr. Medeiros’ one-half interest in their home. The balance of the estate was bequeathed to the applicants.

[6] In my reasons released January 3, 2020, I found that the applicants had failed to rebut the presumption that Mr. Medeiros had testamentary capacity when he signed the 2015 Will. I found that the applicants had not proven, on a balance of probabilities, that there were suspicious circumstances surrounding the 2015 Will. I also found that they had not proven, on a balance of probabilities, the presence of undue influence. I therefore concluded that Mr. Medeiros’ 2015 Will was valid and dismissed the application. I also ordered that the Certificate of Pending Litigation registered on title to the respondent’s current residence be discharged.

[7] For the reasons that follow, I find that the respondent, Maria Natalia Moniz, is entitled to costs on a partial indemnity basis in the sum of $46,349.74. The costs shall be payable by the applicants.

POSITION OF THE PARTIES

[8] The respondent is seeking costs on a partial indemnity basis in the amount of $63,282.82, plus disbursements in the sum of $7,010.41, inclusive of H.S.T., for a total of $70,293.23.

[9] The applicants’ position is that the costs claimed are excessive. They propose that the appropriate quantum of costs is $20,000.00. The applicants also submit that costs should be paid by the estate, or, in the alternative, that fifty percent of the costs should be paid by the estate.

ANALYSIS

[10] I will first deal with the quantum of costs claimed. Then, I will address who should pay those costs.

Quantum of Costs

[11] The starting point in determining costs is s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended. Section 131 provides that subject to the provisions of an Act or rules of court, costs are in the discretion of the court, which may determine by whom and to what extent the costs shall be paid.

[12] Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, sets out the factors to be considered by the court in exercising its discretion with respect to costs in accordance with s. 131 of the Courts of Justice Act. The factors relevant to this case are:

(a) the result of the proceeding; (b) any offer to settle; (c) the principle of indemnity; (d) the reasonable expectations of the unsuccessful party; (e) the amount claimed and recovered; (f) the complexity of the proceeding; (g) the importance of the issues; and (h) other issues relevant to the question of costs.

[13] I will now review each of these factors as it relates to this case.

a. The Result of the Proceeding

[14] In this matter, Ms. Moniz was entirely successful as the 2015 Will was found to be valid and the applicants’ application was dismissed. The only issue is quantum and who should pay.

b. Offers to Settle

[15] Ms. Moniz referred to letters dated July 13, 2016, October 12, 2016 and October 3, 2017 from her lawyer to the applicants’ lawyer offering to settle the matter. In the first two letters, Ms. Moniz proposed that the application be dismissed without costs. In the last letter, the proposal was to withdraw the application and pay Ms. Moniz’s reasonable legal expenses incurred to date.

[16] I find that the letters from Ms. Moniz’s counsel do not comply with r. 49.10(1)(b) of the Rules of Civil Procedure and therefore do not trigger the costs consequences of r. 49.10. Nonetheless, these letters may be considered in exercising my discretion as to costs.

[17] The applicants did not file any evidence of offers to settle this matter. The applicants’ submission is that they proposed mediation which was rejected by the respondent. What is left unexplained is why, if the applicants wanted to resolve the matter without proceeding with the litigation, they did not make an offer to settle, or at the very least, respond to Ms. Moniz’s correspondence regarding a dismissal without costs. Even if the applicants did not consider Ms. Moniz’s offer to be reasonable, they ought to have responded if their true intention was to resolve the matter through mediation. The applicants’ position that they wanted to resolve this matter is at odds with their lack of any offer to settle and their lack of response to the respondent’s offer.

c. The Principle of Indemnity

[18] When considering the principle of indemnity, I am required to consider the costs outline, including the time spent by counsel and the rates charged. The Bill of Costs sets out the tasks performed during certain time periods. The first was for the period of December 2015 to January 2016 in responding to the application. The second was for the period of January 2016 to December 2017 and involves various work including obtaining and reviewing medical records and reviewing the file from counsel who prepared the Will. The third was for the period of January 2018 to December 2018 and includes work on a motion, including preparing affidavits.

[19] The last time period was for January 2019 to January 2020. This period constitutes the bulk of the work. The legal fees incurred during that period totaled $63,308.50. This involved work done conducting cross-examination on affidavits, preparing and attending at the hearing, and work done following the hearing involving the Certificate of Pending Litigation.

[20] While the rates charged were appropriate, there appears to be some duplication. Mr. Carey was the senior lawyer who had carriage of this file. Another lawyer, Mr. O’Leary, also spent a great deal of time on the file. In the last time period, between January 2019 and January 2020, Mr. Carey docketed 80 hours and Mr. O’Leary docketed 56.2 hours. Both attended at the final hearing and at other court attendances. It is not clear to me why two counsel were necessary, particularly when one considers the size of the estate in dispute. This is a factor I have considered in exercising my discretion.

d. The Reasonable Expectations of the Unsuccessful Party

[21] I must also consider the reasonable expectations of the unsuccessful party when fixing costs. An unsuccessful party can reasonably expect to pay the successful party’s costs. However, the applicants did not file a Bill of Costs or provide any information regarding the fees they incurred. That would have been of assistance in assessing whether the quantum proposed by the respondent is excessive or within the reasonable contemplation of the applicants: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.).

[22] The applicants assert that the fees incurred by the respondent were not reasonable and that they could not have reasonably foreseen that amount of costs. In my view, while the applicants could reasonably have expected to pay the respondent’s costs, the amount sought is disproportionate given the value of the estate that was in dispute.

[23] In concluding that the costs sought are not reasonable, I have also considered the steps taken in this litigation. While there were a number of dates scheduled for motions to be heard by the court, the only date on which there was a contested hearing was the final hearing before me on July 15, 2019. The first order made on December 2, 2015 was without notice to Ms. Moniz. On the next return date, the parties reached an agreement regarding the Certificate of Pending Litigation. Between 2015 and 2019, the matter was before the court on various dates, but was adjourned. The motion on July 13, 2018 to convert the application to an action was adjourned. There was another motion in December 2018 to discharge the Certificate of Pending Litigation that was not heard. When the parties were before the court on March 28, 2019, Bloom J. order that the application and motion to discharge the Certificate of Pending Litigation be adjourned to a long motion date.

[24] In addition to these court dates, there were two days of cross-examinations of the witnesses who swore affidavits and of the applicants’ expert.

[25] According to the Bill of Costs filed by counsel for Ms. Moniz, her actual legal fees were $93,360.00. I am unaware of what fees were incurred by the applicants, making it difficult to assess the reasonable expectations of the parties regarding costs. Based on a matter that was heard in less than a full day and no previous contested motions, in my view, the fees incurred by the respondent would not be within the reasonable expectation of the applicants.

e. The Amount Claimed and Recovered

[26] The amount claimed by the applicants and recovered by the respondent was not substantial. In this litigation, the only asset in dispute was Mr. Medeiros’ one-half interest in his home, which in my reasons, I found was approximately $284,500.00. This was the amount that was in dispute as the balance of Mr. Medeiros’ estate, being his RRSPs, passed directly to the applicants as they were named as beneficiaries. The other one-half interest in the home was owned by Ms. Moniz.

[27] The size of the estate and the actual amount in disputes helps to put in perspective the amount of time spent by counsel and the involvement of more than one lawyer on the file. It also assists in putting into perspective the reasonable expectations of the applicants.

[28] When I consider the amount in dispute, in my view, the fees claimed by the respondent are neither reasonable nor proportionate.

f. Complexity of the Proceeding

[29] This matter was of moderate complexity. It involved issues of testamentary capacity, suspicious circumstances and undue influence. However, the legal principles were not in dispute. This also leads me to conclude that the involvement of more than one counsel on behalf of the respondent was not necessary.

g. Importance of the Issues

[30] As I indicated, the applicable legal principles are well-established and not in dispute. Furthermore, the matter did not have any significance beyond that of the parties involved with this litigation.

h. Other Issues Relevant to Costs

[31] The respondent’s position is that there are other factors that I should consider in assessing costs.

[32] First, Ms. Moniz was required to personally pay the costs of Mr. Medeiros’ funeral of approximately $30,000.00 as there was no money in the estate and the applicants refused to share or contribute to that cost, despite several requests.

[33] Second, after the application was heard, Ms. Moniz had to bring two motions to lift and replace the Certificate of Pending Litigation as she sold the house she was living in and bought another home with her daughter. While these motions were on consent, Ms. Moniz was still required to pay legal fees to obtain the orders.

[34] I do not consider these two factors to be relevant to a determination of the quantum of costs, but rather factors to consider in who should pay the costs.

[35] I also do not agree with the applicants’ submission that a reasonable amount of costs given all of these factors is $20,000.00. It would have been of assistance to have evidence regarding the legal fees incurred by the applicants in order to assess the reasonableness of the respondent’s costs. However, no such evidence was received.

[36] When I consider the totality of the factors set out herein, in my view, costs on a partial indemnity basis in the amount of $40,000.00 plus disbursements of $6,349.74, inclusive of H.S.T., for a total of $46,349.74, is an appropriate quantum of costs.

Who Should Pay the Costs?

[37] The respondent did not address in her submissions who should pay the costs. The applicants’ position is that the costs should be paid by the estate, or in the alternative, a portion of the costs should be paid by the estate.

[38] In support of their position, the applicants rely on Olenchuk Estate (Re), [1991] O.J. No. 2624 (C.J.), Graham v. Graham, 2020 ONSC 784, and Papageorgiou v. Walstaff Estate, [2008] O.J. No. 3081 (S.C.).

[39] In Olenchuk Estate, the court found that although unsuccessful in his will challenge, the losing party should not have to pay all of the costs associated with the challenge, but only the costs related to the issue of undue influence, which the court found to have been an unjustified allegation: pp. 2-3. Where the issues of testamentary capacity were justified, the losing party should be relieved from the costs of their successful opponent.

[40] In Graham, the court found that it is open to a court to order that costs be paid from the estate in certain circumstances, such as when there was a reasonable basis for the will challenge: para. 29.

[41] The applicants assert that it was reasonable for them to challenge the 2015 Will and that the costs they incurred in doing so should be paid by the estate as it was the testator’s conduct or fault that led to the challenge. They point to the evidence that Mr. Medeiros waited until close to the end of his life to change his Will and did not involve his family in that decision. Furthermore, the applicants assert that it was reasonable for them to challenge the 2015 Will given Mr. Medeiros’ declining health at the time he executed the 2015 Will.

[42] If I were to order that the estate pay the costs, the respondent would not receive anything as there is no value to the estate – it has no assets. After his death, Mr. Medeiros’ one-half interest in the house passed to Ms. Moniz due to the change in ownership from tenants in common to joint tenants. Ms. Moniz was living in the house and sold it before the application was commenced. She purchased a new home and then sold that one after the application was heard. She then bought another property. The only other asset passed to the applicants was Mr. Medeiros’ RRSPs and his vehicle. The estate therefore has no assets to pay the costs.

[43] In my reasons released January 3, 2020, I found that there was no evidence led by the applicants regarding their claim of undue influence. Furthermore, their own capacity expert concluded that based on her review of the medical file, there was insufficient evidence to conclude that Mr. Medeiros lacked testamentary capacity. This was not a case where there were competing expert opinions regarding testamentary capacity. In my view, the applicants’ own expert did not support their position.

[44] In addition, I found that the expert relied on erroneous information that the applicants had not received anything from their father’s estate when in fact, they were beneficiaries of his RRSPs. I consider this another significant factor. The applicants could have and should have corrected the information relied upon by their expert.

[45] Based on the opinion of the applicants’ own expert and the sparse and limited evidence the applicants presented to support their position that their father lacked testamentary capacity, I find that that the challenge to the 2015 Will based on lack of testamentary capacity was not justified.

[46] The only factor that might have favoured the applicants’ position that there were suspicious circumstances surrounding the 2015 Will was the evidence from Mr. Medeiros’ lawyer that Mr. Medeiros told him that his children no longer saw him. I found that this was not accurate as the undisputed evidence was that the applicants were seeing their father every day after he was diagnosed with terminal cancer. That in and of itself, however, is not a reason to find that the estate should pay the costs.

[47] In view of all of the circumstances, it is my conclusion that it is fair and reasonable that costs should be paid by the applicants and not the estate.

ORDER

[48] For the reasons outlined above, I order that the applicants, Sandra Krolewski and Edward Medeiros, pay costs in the amount of $46,349.74 to the respondent, Maria Natalia Moniz, by October 1, 2020.

L. Shaw J. Date: April 21, 2020

COURT FILE NO.: CV-15-5378-ES DATE: 2020 04 21 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: SANDRA KROLEWSKI and EDWARD MEDEIROS Applicant

• and - MARIA NATALIA MONIZ personally and in her capacity as ESTATE TRUSTEE FOR THE ESTATE OF THE LATE EDUARDO MEDEIROS Respondent COSTS ENDORSEMENT L. Shaw J. Released: April 21, 2020