COURT FILE NO.: 16-56128 DATE: 20200204

ONTARIO SUPERIOR COURT OF JUSTICE

IN THE ESTATE OF Jacqueline Pearl Graham, deceased

BETWEEN:

Timothy Graham Applicant – and – Robert Graham, Steven Graham and Christine Graham Respondents

Counsel: Derek Fazakas, for the Applicant Brian Duxbury, for Robert Graham No one appearing for Steven Graham and Christine Graham

HEARD: In Writing

COSTS DECISION

Justice L. Sheard

Overview

[1] By judgment issued on June 11, 2019 (the “Judgment”), after three hearing days, I set aside the Last Will and Testament (the “Will”) and Power of Attorney (“POA”) signed by the parties’ late mother, Jacqueline Pearl Graham (“Jackie”). The Will named Jackie’s son, Robert Graham (“Robert”), a respondent, as Jackie’s estate trustee and sole beneficiary, and as Jackie’s attorney for property. Also set aside was the transfer to Robert of Jackie’s house (the “House”), Jackie’s only significant asset.

[2] Shortly before Jackie’s death on January 8, 2016, Robert used the POA to transfer title of the House to himself. He moved into the House and was still living in it at the time of the hearing. The effect of the Judgment was to return title of the House to the estate. It has now been sold for $610,000.

[3] The setting aside of the Will resulted in Jackie’s estate being distributed upon an intestacy to Jackie’s four children.

[4] For the reasons set out in the Judgment, I found that as the successful party, Timothy Graham (“Tim”) was entitled to his costs from Robert personally and not from the estate. In the event the parties could not reach agreement on costs, they were invited to make written submissions to me, which they have now done.

[5] Throughout the litigation and on the first day of the hearing, Tim and Robert were represented by counsel. On the first day of the hearing, the parties agreed that the application should proceed on the basis of the paper record. They also agreed that, while the application was governed by the rules applicable to applications, I could have resort to the extended powers found in r. 20.04 of the Rules of Civil Procedure (see Rubner v. Bistricer, 2018 ONSC 1934, 36 E.T.R. (4th) 79, at paras. 104-108).

[6] I accepted the submissions of the parties and allowed the application to proceed in a summary manner, taking into account that: i) there was a full evidentiary record, which included affidavits from key witnesses, including the drafting lawyer; ii) the key witnesses had been cross-examined on their affidavits; iii) Jackie’s medical records had been produced; iv) Jackie’s estate consisted essentially of a modest house; and, v) the costs of proceeding by way of trial risked consuming the estate.

[7] At the end of the first day of hearing, a second hearing day was set for October 5, 2018. On that return date, Robert advised that he was then representing himself. He asked for an adjournment so he could prepare for the hearing and, also, so he could bring a motion for leave to deliver new materials. At Robert’s request, the hearing was adjourned to February 22, 2019.

[8] Robert failed to bring a motion for leave to deliver new materials on this application. Instead, he simply filed new materials, which were accepted by the court office. When the hearing resumed on February 22, 2019, Tim objected to the court considering Robert’s new materials. For reasons given on that date, Robert was not allowed to refer to his new materials and the hearing proceeded on the basis of the materials previously filed.

[9] Tim challenged the Will on grounds usual to will challenges: i) lack of testamentary capacity or knowledge and approval of the contents of the Will; ii) that the Will was prepared as a result of Robert’s undue influence exerted upon Jackie; iii) that suspicious circumstances surrounded the making of the Will; and, iv) that Robert, as propounder of the Will, could not meet the legal burden on him, to show that the Will was valid. Tim advanced similar challenges to the POA and to Robert’s transfer to himself of the House.

Positions of the parties with respect to costs

[10] In his costs submissions, Tim seeks a total of $79,057.70 calculated as follows:

(i) Legal Fees $60,000 (ii) Disbursements $ 9,947.79 (iii) H.S.T. on fees and disbursements $ 9,109.91 Total: $79,057.70

[11] Tim states that his lawyer billed him fees totalling $67,965.75. The $60,000 he claims represents approximately 88% of that amount, before H.S.T. Tim claims the full amount of his disbursements with H.S.T.

[12] Tim explains that the H.S.T. figure of $9,109.91 was calculated based on the full amount of the fees charged ($67,965.75 x 13% = $8,835.55) plus H.S.T. of $274.36 paid on the disbursements.

[13] Tim argues that Robert should pay costs on a higher than partial indemnity scale by reason of Robert’s refusal to view the evidence with any objectivity, making settlement impossible. Tim submits that Robert ignored the court’s comments on the first day of the hearing, identifying “red flags” concerning how the Will and POA came to be prepared and signed, and choosing to proceed without a lawyer on the second day of hearing.

[14] Tim also asserts that Robert was “intransigent” when he “ignored” Tim’s offer to settle the litigation on terms that were more favourable to Robert than the Judgment. The offer was served on February 13, 2019, after the first day of hearing. For that reason, it cannot be considered a r.49 offer.

[15] In Robert’s costs submissions, he argues that he was unable to meet his burden by reason of the “frailties or inadequacies” of the drafting lawyer and the application of the applicable law, not easily understood by a lay person.

[16] Those submissions must be considered in context: Until some time after the first day of hearing, Robert had been represented by senior counsel. While Robert did represent himself thereafter, the pleadings were by then complete, the evidence known and the facta and briefs of law filed. It is reasonable to assume, which I do, that by the end of the first day of the hearing, Robert knew or ought to have known of the frailties in his case and the tests he would have to meet.

[17] Robert correctly submits that the outcome of the proceeding turned “in large measure on the applications of presumption and onus”. Robert further submits that in the Judgment the court appears to have agreed with his submissions that he and his wife were helpful to Jackie in her final days, thereby creating a “complex context” to determine their intentions and motives in assisting Jackie and the impact of those on Jackie’s decision-making.

[18] Robert’s submissions overlook the factual findings contained in the Judgment that: the Will was what Robert wanted and what Robert told Jackie she should do; Robert misled Jackie about her daughter Christine's wishes concerning the Will; Robert was not truthful in his promise to Christine to "share" the inheritance with her; and Jackie trusted and was completely dependent upon Robert and his wife in her final weeks and days, and did what Robert wanted her to do.

[19] They also fail to consider the help offered and given to Jackie by Tim and Christine, who were excluded in the Will.

[20] Robert also submits that the costs claimed by Tim are too high, when compared to the fees and disbursements incurred by Robert. When he terminated the services of his lawyer, Robert states that he had been charged about $41,500 plus H.S.T. in fees and disbursements.

[21] Robert further submits that Tim’s costs submissions are “punitive on the issue of costs”. Robert asks the court to consider that he must pay his own fees and if he is also ordered to pay what Tim seeks, Robert could be left with nothing from Jackie’s estate.

[22] There is little sway in the foregoing submission, given that Robert’s actions in the making of the Will and the transfer to himself of Jackie’s only asset would have left Tim and Jackie’s other two children with nothing from Jackie’s estate.

[23] Of greater merit is Robert’s submission that the court ought to apply the usual principles applicable to costs as found in Boucher v. Public Accountants Council (Ontario), (2004), 71 O.R. (3d) 291 (C.A.).

Analysis

[24] I first address Robert’s submissions concerning the impact upon him, as a self-represented litigant, of the complexity both of the law and the facts in this case. The law concerning suspicious circumstances is well-known. The test for testamentary capacity is also well known. Robert’s submissions that, as a lay person, he could not appreciate the complexities of this case, hold little water given that Robert was represented by a lawyer until after the hearing commenced.

[25] Given the evidence, including the facts that had been agreed upon by the parties when Robert was represented, it could have come as no surprise to Robert that a court could conclude that suspicious circumstances existed concerning the making of the Will and that the due execution of the Will and POA would be insufficient, on their own, to discharge the burden on him as propounder of the Will and the POA.

[26] With respect to fixing costs, the starting point is s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 as amended, which 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.

[27] The overriding objective in a cost award is that it be fair and reasonable. In part, what is reasonable is determined by the expectations of the parties, and, in particular, the reasonable expectations of the losing party.

[28] Robert refers to the 1991 decision in Olenchuk Estate, Re (1991), 43 E.T.R. 146 (Ont. Gen. Div.) which makes reference to an 1863 decision of Sir J.P. Wilde concerning who should pay the costs of an unsuccessful will challenge. In Olenchuk, the court determined that, although unsuccessful in his will challenge, the “loser” should not have to pay all the costs associated with the challenge, but only the costs related to the issue of undue influence, which allegation the court found to have been unjustified. Where there was a reasonable basis to question the testamentary capacity of the testator, the court in Olenchuk held that costs ought not to be awarded against the challenger.

[29] Although the law has evolved since 1991, it may still be 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. Olenchuk was considered in the more recent decision of Papageorgiou v. Lyons (2008), 42 E.T.R. (3d) 305 (Ont. S.C.).

[30] In Papageorgiou, the propounder of an unsigned will was unsuccessful in establishing it as a valid will. He was unrepresented. The court did not question that the estate trustee of a valid will was entitled to her full indemnity costs but, rather, whether the applicant should be required to bear those costs or whether a portion should be paid from the estate.

[31] Despite finding that the applicable legal principles were well-established and well-understood (at para. 15), and that the litigation could not be attributed to the fault of the testator (at para. 16), the court nonetheless concluded that the applicant should pay one-half of the costs claimed and that the balance should come from the estate (at para. 18).

[32] While the facts here may be distinguishable from those in Papageorgiou, that decision confirms the court’s discretion to determine costs in a manner that is fair and appropriate in the circumstances of the case, which may include awarding payment from the estate of a portion of the costs.

[33] Here, I have found as a fact that the Will and POA were of Robert’s making. Jackie had never had a will or a power of attorney, and, but for the actions of Robert and his wife, Jackie would have died intestate, leaving an estate that included the House. For that reason, Robert is liable for costs of the litigation caused by his actions.

[34] Robert submits that Tim’s costs are excessive and should be fixed at $35,000 for legal fees plus H.S.T. together with the disbursements claimed by Tim of $9,947.79.

[35] I do not accept Robert’s submissions that the time spent, or the hourly rates charged, are excessive. I find the fees of $60,000 claimed by Tim to be appropriate and reasonable. In reaching that conclusion, I consider that, while the onus may have ultimately shifted to Robert, Tim was the applicant and had first to establish that suspicious circumstances existed, thereby shifting the onus to Robert.

[36] I also do not accept Tim’s argument that Robert should pay costs on a higher than partial indemnity scale. As noted, Tim’s offer cannot be considered a r. 49 offer. In applying modern costs principles, I can find no basis to order that Robert should pay more than partial indemnity costs. I therefore fix partial indemnity costs payable by Robert at $39,000 plus H.S.T for a total of $44,070 plus disbursements and H.S.T. totalling $10,222.15, for a total costs award against Robert of $54,292.15.

[37] It would be unfair and inequitable to Tim, however, if my costs order were to stop there. To do so would leave Tim significantly out of pocket for fees he incurred to the benefit of other siblings who, by reason of Tim’s actions, will now share equally with Tim in the distribution of Jackie’s estate. For that reason, I find that it is fair and reasonable for a portion of Tim’s costs to be paid from Jackie’s estate. Accordingly, in addition to the costs payable by Robert to Tim, I award Tim costs in the further amount of $21,000 plus H.S.T. for a total of $23,730, which amount is to be paid from the estate.

L. Sheard

Released: February 4, 2020