COURT FILE NO.: CV-19-1857-00

DATE: 20210113

SUPERIOR COURT OF JUSTICE - ONTARIO

IN THE MATTER OF THE ESTATE OF JOSEPH PHILIP JOY

RE: MICHAEL RONALD McGRATH, Applicant

AND:

JOANNE JOY, DEXTER RAMSUNDARSINGH and MICHAEL McGRATH JR., by his Litigation Guardian, THE OFFICE OF THE CHILDREN’S LAWYER, Respondents

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL: Kavina Nagrani and Giancarlo Mignardi, for the Applicant

Orie Niedzviecki, for the Respondent, Dexter Ramsundarsingh

Judith L. Turner, for the Respondent, Joanne Joy

Barrie M. Hayes, for the Respondent, Michael McGrath Jr., by his Litigation Guardian, The Office of the Children’s Lawyer

HEARD: BY WRITTEN SUBMISSIONS

COSTS ENDORSEMENT

[1] An Application by Michael McGrath to admit a note as a holograph will, was heard on November 19, 2020. The testator was Joseph Joy (Jody). For reasons released on December 2, 2020 the Application was dismissed, the Applicant having failed to prove the testamentary capacity of Jody at the time the note was prepared just before he committed suicide.

[2] The Applicant Michael McGrath (Michael) was the stepson of Jody. He was not named as an Estate Trustee in the note or in Jody’s 2016 will. He was named as a beneficiary in the note as well as the earlier will. The respondents were Jody’s spouse, Joanne Joy (Joanne), Jody’s minor stepson, Michael McGrath Jr. (Michael Jr) and Jody’s friend and business associate, Dexter Ramsundarsingh (Dexter).

[3] The parties were unable to agree about costs and all have made submissions.

The 2016 Will

[4] Before dealing with costs submissions the 2016 will bares scrutiny. It was Jody’s last will prior to the suicide note. It was not prepared by a solicitor, but it was typed, signed by Jody and witnessed by two witnesses. It has not yet been admitted to probate. It named as executor Steve Ramsundarsingh, Jody’s business partner. Steve has renounced his right to administer the Estate so an administrator with will annexed will be needed to assist with administration of the Estate.

[5] Several assets of Jody as mentioned in the will create issues that will require an agreement between various parties or judicial determination. For example, Jody left his cabin in Newfoundland and money to maintain it, to Michael and Michael Jr. But Joanne suggests in her affidavit that the cabin was jointly owned by Jody and his father and would devolve to his father.

[6] There are two life insurance policies mentioned in this will. The first policy is for $500,000. Jody stated that this policy was to be divided as follows: $300,000 to Michael Jr in trust until age 27, $150,000 to Michael and $50,000 for cabin maintenance paid out at the rate of $5000 per year for ten years.

[7] The second policy was for $600,000 “to be paid to my wife Joanne Joy after taxes has been paid”. [emphasis added]. It is unclear what taxes are being referred to. Is it taxes on the policy, if any, if owned by the company? Is it income taxes on the Estate? Is it referring to probate or administration fees?

[8] The proposed holograph will would have stripped Joanne of her only interest in the 2016 will, the $600,000 life insurance policy.

[9] Michael also sought to strip Dexter of the bequest of Jody’s preferential shares in his electrical companies, valued at $274,500 by an accountant, The proposed holograph will stated that he was leaving everything to Michael and Michael Jr. Michael submitted that the note was therefore not a codicil, or in the alternative if it was found to be a codicil it voided any gifts to Joanne or Dexter.

The Respondents’ Costs Submissions

[10] The three Respondents Joanne, Dexter, and Michael Jr. all seek costs. The issue of whether the suicide note was a holograph will was vitally important for both Joanne and Dexter.

Joanne Joy

[11] As the successful party Joanne Joy seeks full indemnity costs in the amount of $31,665.67 allocated as follows: from Michael as Applicant $20,892.74, and from the Estate $10,762.93. Joanne further submits that the costs against the Applicant be attached to Michael’s interest in Jody’s $500,000 life insurance policy bequeathed in the 2016 will. Joanne acknowledges that the testator, Jody, was partially responsible for the litigation.

[12] There is no doubt that this Application was an all or nothing proposition for her. She risked losing the only estate asset left to her, the $600,000 insurance policy. The application was akin to a summary judgment motion. Affidavits were served and filed, and cross-examinations were conducted.

Dexter Ramsundarsingh

[13] As another successful party Dexter seeks substantial indemnity costs of $20,764.46 from the applicant and an additional $4,930.04 to be paid from the Estate if the court awards Joanne full indemnity costs. Dexter risked losing the bequest of Jody’s electrical company’s shares. Dexter submits that he was forced to respond because the Applicant sought to interpret the note as disinheriting not only Joanne but Dexter too.

[14] There is merit in this submission, the Application as filed sought:

A Declaration that the interpretation of the holograph will reflects the intention of the Deceased for his estate to be inherited wholly by the Applicant, Michael and his son, the deceased grandson, in equal shares.

Michael McGrath Jr.

[15] Michael McGrath Jr.’s interest was represented by his Litigation Guardian the Office of the Children’s Lawyer. It is submitted that the Children’s Lawyers’ participation was necessary on public policy grounds. Costs are sought against the Applicant. Full indemnity costs are said to be $36,681.80 Costs as sought are $26,478.90 allocated as follows: $17,475.87 against Michael McGrath and $9,002.73 against the Estate.

Michael McGrath

[16] Michael McGrath submits that the Applicant alone should not bear the consequences of the actions of the Deceased who left a suicide note that was testamentary in nature. The Applicant further submits in his costs submissions at para (w): “because all parties participated in the herein Application, it follows that, if costs are payable by the Deceased’s Estate, all parties’ inheritances thereunder should therefore be impacted proportionally.”

[17] Michael McGrath further submits that there is no residue fund in the 2016 will as drafted and the $500,000 insurance policy left in large part to Michael should not be used to pay the costs of this Application.

[18] The Applicant points to the second insurance policy left to Joanne “after taxes have been paid.” [emphasis added]. The Applicant submits that this wording extends to any debts of the Estate including costs awards and therefor costs ought to be drawn from this fund. I disagree. The 2016 will was drawn without the benefit of a lawyer. I am not in a position to say what taxes Jody was referring to when he made this legacy. That is not an issue that is before me. But in my view, that wording cannot be read so broadly as to include litigation costs created years later.

[19] The Applicant also submits that the costs of Steve as Respondent were totally unnecessary. Again, I disagree. Steve’s legacy, the companies’ shares, were at risk. Michael’s Application makes it plain that the proposed holograph will should leave everything to Michael and his son, whether it was found to be a codicil or a will. As the factum states at para 63:

it may have been plausible to declare the Suicide Note a codicil to the 2016 Will, but for the standalone sentence in the Suicide Note that says, “Everything goes to my stepson Michael + grandson MichAel” (sic).

Analysis

[20] It is well settled that s.131 of the Courts of Justice Act R.S.O. 1990, c.C.43 provides considerable discretion on the issue of fixing costs. The principles set out in r.57.01 of the Rules of Civil Procedure also give guidance to the court.

[21] Modern costs rules with respect to estates were the subject of a review and summary by Strathy J. (as he then was) in Zimmerman v. Fenwick, 2010 ONSC 3855. As Strathy J. stated at para. 4:

The following principles are applicable to this issue:

(a) the costs of a proceeding are in the discretion of the court and the court may determine by whom and to what extent costs should be paid;

(b) estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime;

(c) as a general proposition, the principle that the “loser pays” applies to estate litigation;

(d) in the determination of costs, the court must have regard to the factors set out in Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but, at the end of the day, the court’s responsibility is to make an award that is fair and reasonable, having regard to all the circumstances, including the reasonable expectations of the parties;

(e) the court’s discretion to award costs on a full indemnity basis is preserved by rule 57.01(4)(d);

(f) full indemnity costs are reserved for those exceptional circumstances where justice can only be done by complete indemnity.

[Citations omitted.]

[22] The costs of parties engaged in estate litigation were addressed by Gillese J.A. in Neuberger Estate v. York 2016 ONCA 303 and paras 24 and 25:

[24] In estates litigation in Ontario, the historical approach to costs has been displaced in favour of one in which the costs rules in civil litigation apply both at first instance and on appeal, unless the court finds that one or more of the relevant public policy considerations dictate that costs (or some portion thereof) should be paid out of the assets of the estate: McDougald Estate v. Gooderham (2005), 2005 CanLII 21091 (ON CA), 255 D.L.R. (4th) 435 (Ont. C.A.), at para. 80; see also Sawdon Estate v. Sawdon, 2014 ONCA 101, 370 D.L.R. (4th) 686, at para. 101. The public policy considerations at play in estate litigation are primarily of two sorts: (1) where the difficulties or ambiguities that give rise to the litigation are caused, in whole or in part, by the testator; and (2) the need to ensure that estates are properly administered.

[25] Blended costs awards, in which a portion of costs is payable by the losing party and the balance is payable out of the estate, are available at first instance and on appeal, in the discretion of the court, where one or more of the relevant public policy considerations are found to be engaged: Sawdon, at paras. 93-100 and 107.

[23] This application was akin to a summary judgment motion. As Regional Senior Justice Daley noted in Blake v. Blake 2019 ONSC 4062 at para 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.

[24] I am satisfied that Mr. McGrath acted unreasonably in attempting to have this suicide note admitted into probate as the holograph will of Jody. I say so for following reasons:

• Mr. McGrath was not an Estate Trustee seeking the guidance of the court in the administration of the estate, rather he was pursuing his self-interest in an attempt to oust the legacies to Joanne and Dexter in Jody’s 2016 will, and to further the legacies to himself and his son.
• Mr. McGrath’s own expert was not able to opine on Jody’s testamentary capacity upon a review of materials supplied to him for his expert report.
• Mr. McGrath was represented by counsel throughout and knew the burden of proving testamentary capacity fell to him.
• Mr. McGrath was aware of Jody’s alcohol and drug abuse. As he stated in his supplementary affidavit “the fact that Jody consumed alcohol and smoked hash on the date he took his life is not surprising.”
• The affidavits of Jody’s sister Anne Marie Joy, and Jody’s business partner Steve Ramsundarsingh spoke to an awareness of Jody’s regular alcohol and hash oil consumption.
• The affidavits of Joanne, Dexter and Arlene Hamlyn spoke to consumption that day, and evening.

[25] The Estate bears some burden here because of the actions of Jody in preparing this note before his death, but Michael acting solely as beneficiary must face cost consequences as the unsuccessful party.

[26] I am satisfied that blended costs awards are appropriate here. The three respondents are entitled to their costs as follows:

(a) the Litigation Guardian is entitled to costs as sought in the amount of $26,478.98 allocated $17,475.87 against Michael McGrath and $9,002.73 against the Estate.

(b) the Respondent Dexter Ramsundarsingh is entitled to substantial indemnity costs of $20,764.46 from Michael McGrath and $4,930.04 against the Estate.

(c) the Respondent Joanne McGrath is entitled to full indemnity costs of $31,665.67 allocated as follows: $20,892.74 from Michael McGrath and $10,762.93 against the Estate.

[27] Because of the wording of the 2016 will I am uncertain if there is any residue in the Estate. Much will depend on a determination of Jody’s proposed gift of his cabin and the $50,000 he proposed to set aside for maintenance. Joanne McGrath has paid funeral expenses but there will no doubt be other estate expenses and debts, as well as taxes.

[28] I am further satisfied that these costs awards against the Estate ($9,002.73, $4,930.04, and $10,762.93) are debts of the Estate to be dealt with accordingly.

[29] Order to go fixing costs against the Estate, as set out herein, payable within 30 days of this judgment.

[30] Order to go fixing costs against Michael McGrath payable within 30 days of this judgment failing which the specific bequest to Michael of $150,000 shall form a fund to pay the costs against him.

MULLIGAN J.

Date: January 13, 2021