Court File and Parties

Court File No.: CV-20-000040-00 Date: 2021-02-18 Superior Court of Justice - Ontario

In the Estate of Sandra Lee Vaughan, deceased.

Re: Tracey Lynn Matchett, in her capacity as Estate Trustee of the Estate of Sandra Lee Vaughan, Applicant And: Janice Lynn Durant, Respondent

Before: Muszynski J.

Counsel: Areta N. Lloyd, for the Applicant Liam D. Rafferty, for the Respondent

Heard: In Writing

Endorsement

[1] The sole remaining issue on this Application to Pass Accounts (the “Application”) is whether the Applicant, Tracey Lynn Matchett, the Estate Trustee of the Estate of Sandra Lee Vaughan (the “Applicant”), should be awarded increased costs of the Application on a full indemnity basis.

[2] The Respondent, Janice Lynn Durant (the “Respondent”), is one of two beneficiaries of the Estate of Sandra Lee Vaughan (the “Estate”) and a beneficiary of a testamentary trust, the Janice Durant Trust (the “Trust”). The Respondent objects to the Applicant’s request for increased costs.

Issue

[3] Is the Applicant entitled to increased costs of the Application on a full indemnity basis?

Result

[4] For the reasons that follow, I find that the Applicant is entitled to increased costs of the Application fixed in the amount of $24,182.47 inclusive of disbursements and HST. Further, I find that the increased costs shall be payable to the Applicant from the Respondent’s portion of the Estate.

Position of the Parties

[5] The Applicant submits that the actions of the Respondent caused her to incur legal fees that warrant a claim for increased costs on a full indemnity basis. The Applicant requests that the increased costs be payable from the Respondent’s portion of the Estate so as not to penalize the other beneficiary.

[6] The Respondent submits that it would be a mistake to bifurcate the issues of “costs” on the passing of accounts and “legal costs” on the passing of accounts as both provide compensation for the same thing. Further, the Respondent submits that increased costs are not warranted as this was an uncomplicated matter, there were no formal objections filed, and the Application was made necessary by the actions of the Applicant.

Background Facts

[7] Sandra Lee Vaughan (the “Deceased”) died on July 17, 2017 in Fredericton, New Brunswick.

[8] The Applicant was appointed as estate trustee in the Deceased’s will dated January 11, 2011. Probate was granted in New Brunswick on July 26, 2017.

[9] The Applicant is a niece of the Deceased. The Applicant has no contingent interest in the Estate. Her compensation was specified in the will as a percentage of the net estate.

[10] The Deceased had two children: the Respondent, Janice Durant; and her son, Stephen Edwards. The Deceased created a testamentary trust for each of her children.

[11] Scotiabank manages the Estate’s assets through the Deceased’s financial advisor who works out of an office in Toronto, Ontario.

[12] The Estate was liquidated in June 2018 and the trust settled in March 2019. A clearance certificate was applied for in April 2019 and granted on November 19, 2019. At that time, the estate lawyers prepared an accounting and release. This all took place in New Brunswick.

[13] The Deceased’s son, Mr. Edwards, reviewed the accounts as prepared by the Applicant and signed a release in December 2019 in New Brunswick.

[14] The Deceased’s daughter, the Respondent, would not travel to New Brunswick and would not sign the release. Instead, after months of being unresponsive she brought an ex parte motion in Ontario, where the Respondent resides, seeking an order requiring the Applicant to file an Application to Pass Accounts. In support of her motion, the Respondent filed an Affidavit wherein she made allegations of impropriety and negligence against the Applicant in relation to her role as estate trustee. The allegations were unsupported by the evidence and include the following assertions:

a. “Despite repeated requests, the Respondent has not advised me as to the extent of my entitlement.”

b. “Despite repeated requests, the Respondent has not provided me with a copy of my late mother’s will.”

c. “For the first two or three months, the Respondent was paying me the sum of One Thousand Dollars ($1,000.00) monthly from out of the account at Scotia Wealth Management. After that time, she reduced that amount to Five Hundred Dollars ($500.00) monthly, with the explanation that any more would be too much. She has not elaborated further in this regard.”

d. “The Respondent has not provided me with financial documents or any accounting for review and has not provided me with a copy of the Will. The Respondent said that I would get my copy of the Will after I came down to sign the papers in person.”

e. “The Estate has been administered since 2017 and no accounting has been provided to date and there has been no explanation given.”

[15] As a result of the Respondent’s ex parte motion in Ontario, an Order to Pass Accounts was issued on February 21, 2020 (the “Ontario Order”).

[16] After receiving the Ontario Order, in detailed correspondence to counsel for the Respondent dated May 7, 2020, counsel for the Applicant provided a fulsome account of the Applicant’s attempts to informally pass accounts in New Brunswick and information to refute the allegations of impropriety. The Applicant also suggested that an informal accounting would be preferable over a formal accounting in order to save costs. The correspondence stated, in part:

a. “…my client is concerned with your choice to litigate rather than reach out to ascertain the facts and to assist Ms. Durant (“Janice”) in a non-adversarial manner, which is the most that was required. This estate and the trust are too small to fund this kind of approach.”

b. “Had you reached out to Ms. Matchett (“Tracey”) or one of her family members, or Jennifer Mills, the estate’s solicitor in New Brunswick, prior to bringing a motion, you would have learned that Tracey had in fact, been trying to informally pass her accounts with Janice just before you were retained.”

c. “…the proper jurisdiction is likely New Brunswick. Irrespective of this, it is not appropriate to escalate costs regarding this issue because Tracey has had informal accounts which she has wanted to present to Janice since December 2019.”

d. “It alarms my client that many of the sworn statements in Janice’s affidavit are false. Had you reached out at the first instance, or brought the motion on notice, you would have learned this.”

e. “Janice spent 3 or 4 days reviewing her mother’s estate in July 2017, including her Will and the extent of her entitlement.”

f. “Janice received all of her jewelry that was located in her mother’s last residence, a nursing home, and other items she was gifted in the Will in July 2017. Not all of these items were actually found and it appears that her mother may have disposed of some of them prior to her move to the nursing home.”

g. “In November 2017, Scotia advised Tracey that Janice’s funds would not last Janice’s lifetime if she continued to withdraw $1,000 per month. Tracey consulted with Janice, who agreed to reduce her draw to $500 per month.”

[17] The Respondent was initially resistant to the proposal of proceeding by way of an informal accounting. In correspondence from counsel for the Respondent to counsel for the Applicant dated May 21, 2020 it was agreed that the Respondent was ultimately content to proceed with the passing of accounts on an informal basis. The same letter, however, contained additional demands and terms required by the Respondent in relation to the Ontario Order requiring the Applicant to initiate the Application.

[18] Due an inability of the parties to agree on a process, the Applicant filed the Application with this court on July 14, 2020. The Application Record included: an affidavit from the Applicant; an affidavit from Mary Ellen Vaughan (the Respondent’s cousin); a reconciliation of the assets, statement of unrealized assets, outstanding liabilities, and trustee compensation with supporting documentation for all of the above. The affidavits include evidence to refute the allegations of impropriety contained in the Respondent’s original affidavit. The Application was returnable on October 20, 2020.

[19] The Respondent did not file a notice of objection. Counsel confirmed that the matter would proceed to an uncontested hearing on October 20, 2020.

[20] On October 2, 2020, the Applicant served a Request for Increased Costs (Estate Trustee) together with a Costs Outline requesting that she be awarded full indemnity costs payable out of the Estate.

[21] The Respondent opposed the request for increased costs in writing on October 8, 2020 by way of unsworn submissions by counsel.

[22] The Applicant filed a Supplementary Application Record, including another affidavit of the Applicant, sworn October 9, 2020 to address the issue of her claim for increased costs and to respond to the most recent unsworn allegations. The Supplementary Application Record was served on the Respondent and included a copy of the draft Judgment

[23] On October 20, 2020, the Application to Pass Accounts proceeded before Justice Kershman on an uncontested basis. The same date, a Judgment on Passing of Accounts issued. The relevant terms of the Judgment are as follows:

a. THIS COURT ORDERS that the costs of the passing of accounts (excluding the applicants legal costs) shall be payable out of the capital of the Estate are as follows:

To Areta N. Lloyd Professional Corporation, solicitor for the estate trustee $4,159.35 and HST of $540.72 for a total of $4,700.07; and

To Liam D. Rafferty, solicitor for Janice Lynn Durant, $1,750.00, and HST of $221.00 for a total of $1,971.00; and

b. THIS COURT ORDERS that the legal costs of the parties shall be determined by any judge available to hear the motion on November 24, 2020.

[24] On November 2, 2020 a case conference was held to address the scheduling of the motion for increased legal costs. At that time, counsel agreed that the issue of the Applicant’s claim for increased costs could be dealt with in writing. Each party filed a factum and book of authorities in support of their position.

Analysis

General Principle Governing Estate Trustee Costs

[25] The starting point for the legal analysis is the accepted principle that estate trustees are generally entitled to be fully indemnified for all costs properly related to the administration of the estate, including legal costs. [See Geffen v. Goodman Estate, [1991] 2 SCR 353].

[26] The Applicant in this case correctly identifies the public policy rationale behind this principle. No one would volunteer to act as an estate trustee if they were required to bear personal financial responsibility for the costs of estate administration.

Uncontested Nature of Application to Pass Accounts

[27] The Respondent submits that since the Application was uncontested, there is no basis to award the Applicant increased legal costs above and beyond what was already ordered by Justice Kershman (i.e. $4,700.07). Further the Respondent states that this case can be distinguished from Geffen v. Goodman Estate wherein there was litigation commenced against the estate trustees personally.

[28] The Applicant submits that while the Application ultimately proceeded on an uncontested basis, due to the serious nature of the original allegations made by the Respondent it was necessary to provide a fulsome response. This required efforts that went above and beyond preparing a traditional Application to Pass Accounts. In particular, the Applicant prepared two affidavits to rebut the Respondent’s allegations of wrongdoing or neglect.

[29] I find that the affidavits filed by the Applicant and Mary Ellen Vaughan in support of the Application provide a complete answer to the allegations raised by the Respondent. For example, both affiants confirm that they were in attendance with the Respondent when the Deceased’s will was reviewed, which is in stark contrast to the allegation made by the Respondent that she was never allowed to see the will. Similarly, both affiants confirm that there was a specific discussion, and agreement, with the Respondent about reducing her monthly stipend from the trust. Again, this is contrasted to the Respondent’s claim that her stipend was unilaterally reduced by the Applicant with no explanation. The Applicant’s evidence goes further and provides details about the attempts she made to offer the Respondent informal accounting and resolve the estate in New Brunswick before the Ontario Order was sprung on her without notice.

[30] I find the evidence of the Applicant and Mary Ellen Vaughan to be reliable and credible. I find that it was necessary and prudent for the Applicant to have filed both affidavits considering the serious allegations raised by the Respondent. At the time that the Application Record was prepared, it was still unknown as to whether the Respondent would be filing a formal objection.

[31] Where the evidence put forward by the Applicant conflicts with the evidence of the Respondent, I prefer the evidence of the Applicant. The Respondent’s allegations are not supported by any other written record.

[32] I do not accept the Respondent’s submission that since the Application was uncontested, increased costs should not be awarded. While the Application was uncontested in the end, I find that the communication between the counsel and the allegations made by the Respondent leading up to the hearing suggested otherwise. I find that it was incumbent on the Applicant to rebut the allegations in a fulsome court record as she did.

Ontario Order / Application to Pass Accounts

[33] As noted above, the Ontario Order requiring a passing of accounts here was obtained without notice to the Applicant. The Respondent submits, even still in the context of this motion for increased costs, that her actions were justified as the Applicant was withholding both information and access to trust funds. I reject the Respondent’s submission.

[34] I find that there would have been no need for the Applicant to incur the expense associated with the Application had the Respondent simply engaged with the estate lawyers in New Brunswick.

[35] There is speculation contained in the Applicant’s materials regarding the potential influence family members in Ontario are having on the Respondent. Regardless, it is ultimately the Respondent’s actions that resulted in this Application which, I find, was unnecessary.

Compensation was “Generous”

[36] The Respondent states that the Applicant’s compensation was “generous”. It is on this basis that the Respondent states that the Applicant should not be entitled to additional legal costs. The Respondent relies on the case of Laing Estate v. Laing Estate, [1998] O.J. No. 4169 as providing a standard approach to estate trustee compensation as a percentage of the estate. The Respondent further relies on the case of Bott Estate (Trustee of) v. Macaulay, [2005] O.J. No. 3493 to suggest that estate trustees should receive compensation on a quantum meruit basis rather than a percentage of the estate.

[37] Unlike the cases referenced by the Respondent, here, the Deceased’s will specifically set out a formula for compensation. This notable difference renders the cases relied upon by the Respondent as irrelevant. In any event, I find that the compensation in this case to be entirely reasonable and note that it was already fixed by the October 20, 2020 Judgment of Justice Kershman which was unopposed.

Reasonableness of Legal Costs Claimed

[38] The Applicant has put forward a detailed Costs Outline seeking full indemnity costs in the total amount of $28,882.54, which broken down is as follows:

a. Legal fees of $24,713.90;

b. HST of $3,213.22; and

c. Disbursements of $955.83.

[39] In the Applicant’s Costs Outline, it is conceded that the Application itself was not complex. However, I have found that it was entirely unnecessary given the process that was underway in New Brunswick. I have also found that it was appropriate for the Applicant to prepare and file two very detailed affidavits in order to refute the Respondent’s baseless allegations.

[40] The lawyer with carriage of the file, Areta Lloyd, was called to the Ontario Bar in 2015 and billed an hourly rate of $395.00. A legal assistant was billed at the rate of $100.00 per hour for administrative work. I find these rates to be reasonable.

[41] Ms. Lloyd billed a total of 59.62 hours related to: receiving instructions from client; communicating with client; correspondence with counsel for the Respondent; preparation of accounts for the Janice Durant Trust; preparation of accounts for the Estate of Sandra Lee Vaughan; drafting the Application; preparing the affidavit of the Applicant; preparing the Affidavit of Mary Ellen Vaughan; preparing additional material for request for increased costs including supplementary Application Record. The legal assistant billed a total of 11.64 hours in relation to the administrative tasks associated with preparing the above noted material, service and court filing. I find that the time docketed to complete these tasks to be reasonable.

[42] As I found above, this Application was entirely unnecessary. Based on the evidence contained in the record, I conclude and find that the Applicant has performed her duties as estate trustee in a prudent manner. Counsel for the Applicant specifically identified to counsel for the Respondent early on that the estate and trust were “small” and an adversarial approach was not warranted. When faced with the Ontario Order, the Applicant provided counsel for the Respondent with information that should have been satisfactory. This reflected a prudent and economical approach. When the Respondent continued to make demands and allegations, the Applicant had no choice but to abide by the Ontario Order and file a detailed court record. I find that the tasks completed related to the Application to be reasonable.

[43] The October 20, 2020 Judgment of Justice Kershman provided for payment of the costs of the Applicant’s passing of accounts in the amount of $4,700.07, inclusive of HST, and reserving the issue of the Applicant’s claim for increased legal costs to the subject motion. I agree with the Respondent that, in this case, the costs associated with passing of accounts and legal costs associated with passing of accounts should not be bifurcated as both provide compensation for the same thing. The Costs Outline provided by the Applicant on the subject motion does not account for the costs fixed in the October 20, 2020 Judgment. The Costs Outline appears to provide a complete description of the costs incurred by the Applicant in responding to the Application in its entirety. To ensure there is no double recovery, I find that it is reasonable to reduce the Applicant’s claim for increased costs as set out in the Costs Outline by the amount already ordered to be payable by virtue of the October 20, 2020 Judgment.

[44] An order shall issue fixing the increased full indemnity costs owing to the Applicant in the amount of $24,182.47 ($28,882.54 - $4,700.07 = $24,182.47).

Payment of Costs from the Respondent’s Share of Estate

[45] The Applicant’s position is that any award of increased costs should be payable from the Respondent’s share of the Estate. The Applicant submits that the other beneficiary, Stephen Edwards, should not be negatively affected by the actions of the Respondent.

[46] In support of her position, the Applicant relies on the case of Bedont Estate (Re), [2004] O.J. No. 2015. In Bedont Estate (Re), costs were awarded against a beneficiary personally for making baseless allegations that required the estate trustee to incur considerable expense. Although the beneficiary in Bedont Estate (Re) made formal objections, which were all deemed “unrealistic” by the court, the overarching principle is nonetheless applicable. When considering whether the costs should be paid out of the estate, the court acknowledged the negative effects on the other beneficiaries.

[47] The Respondent submits that requiring her to pay costs personally would be punitive and contrary to public policy. Specifically, the Respondent claims “…when a beneficiary, in the face of uncertainty and opacity, seeks refuge in the exercise of the only right available to her to compel an accounting of the Trustee, the Trustee’s response in such circumstances must be to satisfy and allay any fears of the beneficiary, prove the justness of her administration, and dutifully discharge her obligations for which she is paid.”

[48] It was the Respondent that chose not to engage in the New Brunswick process. I do not accept that there was “uncertainty and opacity” in this case. The Respondent always had the ability to access the information she was entitled to as a beneficiary.

[49] The circumstances in this case are similar to those in Bedont Estate (Re). Like the judge in that case, I also find that it is appropriate to order that the increased costs payable to the Applicant be payable from the Respondent’s portion of the Estate. The other beneficiary, Stephen Edwards, should not be penalized by the Respondent’s actions.

Conclusion

[50] An order shall issue requiring the Respondent, Janice Lynn Durant, to pay the increased costs of the Applicant, Tracey Lynn Matchett in her capacity as Estate Trustee of the Estate of Sandra Lee Vaughan, relating to the Application fixed in the amount of $24,182.47 inclusive of disbursement and HST, such amount shall be payable from the Respondent, Janice Lynn Durant’s, portion of the Estate.

Muszynski J. Date: February 18, 2021