COURT FILE NO.: 18-37546-00ES DATE: 2021-01-18
ONTARIO SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF FRANÇOISE POITRAS
BETWEEN:
YVES POITRAS, in his capacity as Trustee for the Estate of Françoise Poitras Applicant
– and –
CANADIAN CANCER SOCIETY et al. Respondents
COUNSEL: Jolyane Boivin for the Estate Trustee Nathalie Scott for the Canadian Cancer Society and nine other charitable beneficiaries No one acting for Marie-Andrée Descoteaux and other individual beneficiaries or for the Office of the Public Guardian and Trustee
HEARD: In writing
DECISION ON TRUSTEE COMPENSATION AND LEGAL COSTS
Justice Sally Gomery:
[1] This is an application to pass the Estate Trustee’s accounts. Objections raised by the respondents have been resolved except for:
(i) The Estate Trustee’s compensation; and
(ii) Each party’s entitlement to costs of this application and what portion of those costs should be paid from Estate funds or by another party.
(i) The Estate Trustee’s compensation
[2] The Estate Trustee seeks $21,941 for his services in administering the Estate of the late Françoise Poitras since her death on March 10, 2016.[^1]
a. Background
[3] At the time of her death in March 2016, Françoise Poitras was 101 years old. She had no children or living siblings but was survived by nieces and nephews. Based on the accounts filed by the Estate Trustee had cash, investments and jewelry worth almost $600,000 and a few minor debts.
[4] Madame Poitras’ will was a two-page, handwritten document she signed in December 1997. She made gifts of $5,000 apiece to each of five charities and $10,000 to each of her two remaining sisters. If her sisters predeceased her, the total of $20,000 was to be distributed equally to another five charities. All ten charities named in the will are well-established charities, such as the Canadian Cancer Society, the Salvation Army, and the Heart and Stroke Foundation of Ontario.
[5] In her will, Madame Poitras stated that her failure to make any gifts to her nieces, nephews and other family members was not an oversight but a deliberate decision. Her will did not identify, however, who should receive the residue of her Estate.
[6] Given the incomplete nature of the will, the Estate Trustee applied to the Court for directions in August 2016. In June 2017, nine of the ten Charitable Beneficiaries (collectively, the “Charitable Beneficiaries”) and Madame Poitras’ eight surviving family members (the “Individual Beneficiaries”) consented to an order whereby they would split the residue of the Estate, and the Estate Trustee’s compensation, his legal costs, and those of the Charitable Beneficiaries would be paid from Estate funds as a capital disbursement.[^2] The order issued in July 2017 also provided that the lawyers for the Charitable Beneficiaries and the Estate Trustee would agree on the terms of a release to be signed prior to payment of an interim distribution.
[7] In May 2018, the Estate Trustee appointed in Madame Poitras’ will, her cousin Albert Poitras, died. He was succeeded by his son, the current Trustee Yves Poitras, on October 30, 2018.
[8] On July 19, 2019, the Estate Trustee applied to the court for a passing of accounts. The Charitable Beneficiaries served a notice of objection on October 22, 2019. A mediation in December 2019 did not settle the outstanding issues, although the parties did agree to a procedural timetable.
[9] On August 14, 2020, I heard a motion by the Estate Trustee for a determination of the appropriate wording of the interim release so that he could make an interim distribution of the Estate funds. The Individual Beneficiaries supported the motion. The Charitable Beneficiaries opposed it, arguing that the application for passing of accounts made an interim distribution inappropriate. I granted the motion, finding that there was no reason to postpone an interim distribution on the terms proposed by the Trustee. I sought further submissions on the wording of the release.
[10] On September 28, 2020, having received these submissions, I held that the release to be signed by the Beneficiaries should combine elements proposed by both the Trustee and the Charitable Beneficiaries. I also set a timetable for steps required to adjudicate the Trustee’s compensation and costs, so that the Estate could be wound down.
b. Legal principles governing the compensation of an estate trustee
[11] Under section 61(1) of the Trustee Act, RSO 1990, c T.23, a trustee is entitled to “such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice”.
[12] In Laing Estate v. Hines, 1998 CanLII 6867; 41 OR (3d) 571 (ON CA), the Court of Appeal set out the process for determining the compensation payable to an estate trustee based on the probate value of the estate. Standard compensation is the sum of 2.5% of each of capital receipts, capital disbursements, revenue receipts and revenue disbursements. A trustee may also be entitled to an additional management fee, generally calculated as 2∕5 of 1% per year of the gross value of the estate. The award of an additional fee is the exception rather than the rule; Re Archibald Estate, 2007 CanLII 22653 (ONSC).
[13] A judge is not, however, bound to order compensation based on the probate value of the estate. Although a calculation based on this value is a good starting point, the judge must ultimately determine, in the circumstances of the case, what compensation is “fair and reasonable”; In Re Atkinson, [1952] 3O.R. 685 (CA), at p. 698. In making this decision, the court should consider five factors set by the High Court in Re Toronto General Trusts and Central Ontario Railway (1905), 6 O.W.R. 350 (H.C.) and endorsed in Laing Estate:
i. The total value of the estate;
ii. The care and responsibility involved in its administration;
iii. The time spent by the trustee in administering the estate;
iv. The skill and ability shown by the trustee; and
v. The success of the administration.
c. What is a fair and reasonable compensation for the Estate Trustee in this case?
[14] In support of his application to pass accounts served in July 2019, the Estate Trustee filed a statement of accounts for the period of March 10, 2016 to May 31st, 2019. As of May 30, 2019, interest in the amount of $13,567 had been earned on capital receipts of $592,239. There were no revenue disbursements. Capital disbursements of $98,538 included payment of amounts owing at Madame Poitras’ death, funeral expenses, probate fees, accounting fees, and provincial and federal income tax owing for 2016. The biggest set of expenses, by far, were legal fees paid to the Estate Trustee’s lawyers.
[15] The Trustee’s proposed compensation of $17,608 is based on the standard calculation of 2.5% of each of capital receipts, capital disbursements, and revenue receipts. He seeks an additional management fee of $4,332, again using the standard formula. This would bring his total compensation to $21,941.
[16] In his submissions, the Trustee contends that the compensation sought is reasonable given the relatively large size of the Estate, the complexity arising from the number of beneficiaries, and the ambiguity of Madame Poitras’ holograph will. He argues that any delays in administrating the estate were not his fault. He justifies his request for an additional management fee based on the amount of time he had to spend answering questions asked by the Individual Beneficiaries and dealing with the lawyers for the Charitable Beneficiaries.
[17] The Charitable Beneficiaries contend that the Trustee’s total compensation should be no more than $10,565. Drawing on Pachaluck Estate v. DiFebo, 2009 CanLII 20705 (ONSC), they argue that a multiplier of 1.5%, rather than 2.5%, should apply to capital receipts and disbursements and revenue receipts and that no additional management fee is warranted. In their view, the Trustee’s compensation should be reduced because he took an unreasonable position on the wording of an interim release and failed to pay specific bequests to them until ordered to do so.
[18] I conclude that the Estate Trustee is entitled to compensate based on the usual formula, but not an additional management fee.
[19] Weighing the five factors in Laing Estate, the value of the Estate was significant, but management of the assets of the Estate was straightforward. The Trustee paid Madame Poitras’ debts. He did not have to liquidate any assets aside from her jewelry. By investing funds in GICs, he ensured that the value of the Estate was not eroded by inflation.
[20] The administration of the Estate was, however, contentious from the outset. Madame Poitras’ holograph will did not identify residual legatees. The Individual Beneficiaries contended that she might have been suffering from cognitive decline when she signed it. As a result, the Estate Trustee had to hire legal counsel and seek directions from the Court. In addition to eight Individual Beneficiaries, he had to deal with counsel for the ten Charitable Beneficiaries.
[21] The Charitable Beneficiaries argue that the Estate Trustee’s administration was less than ideal. For example, in their notice of objection, they allege that he did not provide information in a timely way. These allegations are unsubstantiated. An affidavit sworn by Christine Arcari, a member of the Charitable Beneficiaries’ legal team, focusses on the negotiations over the wording of the interim release. These respondents have not produced any evidence regarding the alleged problems with the Trustee’s accounts, aside from a letter noting the absence of an affidavit by the Estate Trustee filed as part of the application record. This was remedied, and he was cross-examined.
[22] The evidence shows that the Estate Trustee (or rather his father) promptly applied for a certificate of appointment and sought directions from the Court within three months of Madame Poitras’ death. Settlement of the main issue — who was entitled to the residue of the Estate — was also achieved relatively quickly, given that there were twenty parties involved (taking into account the Public Guardian and Trustee).
[23] The Charitable Beneficiaries argue that the Estate Trustee should have brought an application to pass accounts sooner. The lawyer for the Estate Trustee advised the respondents that he intended to bring an application in early 2019 but did not do so until that summer. At his cross-examination in January 2020, Monsieur Poitras acknowledged that, as the Estate Trustee, he was responsible for moving the administration forward, and that it had taken too long. I agree that the application could have been filed earlier. In the context of the file as a whole, however, this delay was relatively minor.
[24] The much longer, two year plus delay in moving this matter forward, was due to the dispute about the wording of the interim release. I will have more to say about this in the context of costs. For now, I note simply that there is absolutely no justification for the failure of legal counsel to resolve this issue promptly after the settlement. I do not however fault the Estate Trustee for this. Having hired legal counsel, he was entitled to rely on their advice and assistance in crafting standard legal documents.
[25] Having weighed the relevant factors, I conclude that compensation of $17,608 is fair and reasonable, given the value of the Estate and time and effort that the Estate Trustee necessarily devoted to it over the last four and a half years. I recognize that this amount may be slightly higher than what is warranted based on the standard calculation, because of adjustments that I am directing to the accounting for capital disbursements. I am nonetheless persuaded that it is appropriate in the circumstances.
[26] As noted earlier, the award of a special management fee is exceptional. In the circumstances of this case, I do not find that such an award is justified.
(ii) Legal Costs
[27] The Estate Trustee, the Charitable Beneficiaries, and the Individual Beneficiaries each seek legal costs from the other or from Estate funds.
b. Legal principles governing the award of legal costs in estate litigation
[28] An estate trustee is generally entitled to be indemnified “for all reasonably incurred costs in the administration of an estate”, including “the legal costs of an action reasonably defended, to the extent these costs are not recovered from another person”; Brown v. Rigsby, 2016 ONCA 521, at para. 11.
[29] The Ontario Court of Appeal has held, however, that estate litigation operates subject to the general costs regime set out in s. 131 of the Courts of Justice Act and rule 57 of the Rules of Civil Procedure; McDougald Estate v. Gooderham (2005), 2005 CanLII 21091 (ON CA), 255 D.LR. (4th) 435 and Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101. Further to this regime, the winning party in estate litigation is usually entitled to reasonable costs from the losing party. As observed in Salter v. Salter Estate (2009), 2009 CanLII 28403 (ON SC), 50 E.T.R. (3d) 227 (Ont.S.C.), at para. 6:
Given the charged emotional dynamics of most pieces of estates 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 decision about whether to litigate estate-related disputes.
[30] As a result, a court may deny cost recovery by an estate trustee, in whole or in part, if the trustee “has acted unreasonably or in substance for his or her own benefit, rather than for the benefit of the estate”: Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, at 391. An order for an estate trustee to pay legal costs personally is appropriate where it promotes public policy objectives such as the need to give effect to a valid will, and the need to ensure that estates are properly administered; Sawdon Estate, at para. 85.
[31] If, on the other hand, the court concludes that the estate trustee acted reasonably in litigation with beneficiaries and other parties, it may either require the other party or parties to pay costs or, more typically, make a blended order requiring the losing party to pay some costs and the estate to pay the balance; Sawdon Estate, at para. 97.
[32] In fixing costs, I must again determine the fair and reasonable amount that a party should pay in the particular circumstances of the case, rather than an amount fixed by actual costs incurred by the successful litigant; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3rd) 291 (C.A.) at para. 26.
b. Is the Estate Trustee entitled to recover his legal costs?
[33] The Estate Trustee seeks full indemnity costs of $25,728.78 for the period up to the end of September 2017, and a further $59,530 for the period from September 29, 2017 forward. He asks that the first amount be approved as a payment already made from Estate funds, and that the Charitable Beneficiaries be ordered to pay the second amount. In the alternative, he asks that the costs incurred since the 2017 settlement be paid in part by the Charitable Beneficiaries and the balance from Estate funds.
[34] The Charitable Beneficiaries contest the Trustee’s right to recover his full costs. The Individual Beneficiaries contend that, together, the legal costs claimed by the Trustee and the Charitable Beneficiaries against the Estate are grossly disproportionate.
[35] I will first determine who should pay for the Estate Trustee’s reasonable legal costs, and then determine whether the amounts he has claimed are reasonable.
(i) Who should pay for the Trustee’s reasonable legal costs?
[36] I conclude that some of the Estate Trustee’s reasonable legal costs should be paid by the Estate, and some by the Charitable Beneficiaries.
[37] The 2016 application for directions was necessary because Madame Poitras’ holograph will was incomplete and ambiguous. In their June 2017 settlement, the parties agreed that the Estate Trustee’s costs arising from the application would be paid as a capital disbursement from Estate funds, and this provision was included in the court order based on the settlement. At that point in the proceedings, everyone recognized that the process of resolving how the residue would be distributed gave rise to legitimate legal expenses by the Estate.
[38] This does not mean that the court has no role in approving the Estate Trustee’s legal costs for this period. Neither the settlement nor the order gave the Trustee carte blanche to use Estate funds for his legal costs. But the assumption is that, if legal costs in connection with the settlement were reasonable, the Estate should reimburse the Trustee for them.
[39] The Charitable Beneficiaries take a different position with respect to legal costs incurred by the Estate Trustee for the litigation from October 2017 forward. They argue that, following the settlement, his lawyers delayed the distribution of Estate funds and increased costs for all parties by taking unreasonable positions, failing to provide information and refusing to negotiate a settlement of all issues. As a result, they contend that the Estate Trustee should not be compensated by the Estate for legal costs paid during this period.
[40] The Individual Beneficiaries are outraged by the legal costs incurred by both the Trustee and the Charitable Beneficiaries. They say that they agreed to a settlement in June 2017 in order to avoid a long and costly legal battle. Their concession did not bring about the desired result. The lawyers involved on the file spent the next three years bickering about the terms of a simple, one-page interim release form and the Trustee’s compensation, even though his demand was calculated based on an accepted formula. The Individual Beneficiaries did not know what was happening. Because they did not file a notice of objection to the Trustee’s application to pass accounts, they were not copied on the correspondence between counsel on the file. They say that their calls and emails to the lawyers went largely unanswered. It was not until August 2020 that the Individual Beneficiaries belatedly obtained the right to participate in the application to pass accounts and learned why no interim distribution had been made.
[41] I am reproducing a portion of the Individual Beneficiaries’ submissions, which I found compelling. They eloquently capture the anger and bewilderment of ordinary people upset by legal maneuvering that, from their perspective, added nothing of value and would reduce their share of Madame Poitras’ Estate significantly:
Tous les frais qui se sont accumulés par la suite pour produire le formulaire de dégagement de responsabilité de l’exécuteur testamentaire de même que ceux encourus par les discussions sur les frais réclamés par l’exécuteur testamentaire ne doivent pas nous être attribués. Nous le répétons, les tractations des deux bureaux d’avocats sur ces deux points mineurs ont été faites sans que nous n’y soyons associés de quelque façon que ce soit. De plus, force est de constater que toutes ces heures de travail n’ont apporté aucun résultat. En effet, il a fallu que le 25 septembre dernier la Cour ordonne la rédaction du dit formulaire et ce dans un délai de 24 heures pour que nous l’obtenions enfin.
[42] I agree with much of the criticism expressed by the Individual Beneficiaries, and understand why the proceeding has, in their words, left a bitter taste in their mouths.
[43] Some of the delay in this proceeding was caused by events outside the control of any party, such as the death of the original Estate Trustee and the partial shutdown of the courts due to the Covid-19 pandemic. The Trustee’s lawyers are also not blameless. Based on the affidavit evidence in the court record, however, I conclude that most of the delay was attributable to the conduct of counsel for the Charitable Beneficiaries.
[44] To explain why I have reached this conclusion, I must review the events after June 2017 in some detail.
[45] Pursuant to the settlement reached in June 2017, the lawyers for the Charitable Beneficiaries (“MBC”) were responsible for drafting an interim release. They did not present their first draft to the Trustee’s lawyers until nine months later, on March 12, 2018. No explanation has ever been provided for this delay. The lawyers for the Estate Trustee (“M&L”) responded a day later, asking that language be added that would release the Trustee from any claims and indemnify him for any third party claims up to the amount of the interim payment received.
[46] On May 10, 2018, MBC forwarded a further draft to M&L. M&L again responded within 24 hours, indicating that the proposed terms were acceptable to the Estate Trustee and to the Individual Beneficiaries.
[47] A few days later, however, counsel at MBC changed its mind about the release it had itself proposed. It sent a further email to M&L, saying that more qualifying language should be added to the draft. M&L objected to the new terms. As a result, the wording of the interim release continued to be a source of dispute.
[48] Following the repudiation by MBC of its own May 10, 2018 draft, M&L said it would seek a court ruling on the issue. The lawyer in charge of the file asked opposing counsel for her availability for a motion. Instead of providing dates, in June 2018, counsel at MBC asked that M&L seek the input of the Individual Beneficiaries on the further language that MBC was now proposing.
[49] At this point, the death of the original Estate Trustee gave rise to new procedural steps. In July 2018, M&L advised MBC that a new certificate of appointment would have to be obtained before the releases could be finalized. This was delayed to October 30, 2018 because MBC did not deliver signed consents on behalf of each of their clients until the end of September.
[50] Around this same time, a new lawyer at MBC assumed carriage of the file for the Charitable Beneficiaries. In late September 2018, she advised her counterpart at M&L that she was not sure whether a form of interim release had been agreed upon by the parties. The Estate Trustee’s lawyer pointed out that she had agreed to the draft provided to her on May 10, 2018, but that MBC had then changed the terms. The Trustee’s lawyer nonetheless agreed with MBC’s new suggestion that the parties simply use a standard form of interim release distributed at a CLE program on estates administration.
[51] In December 2018, counsel at M&L followed up by sending a draft interim release to MBC based on this standard form. Having heard nothing a month later, in late January 2019 she wrote again, asking when she might expect to receive copies of the release signed by the Charitable Beneficiaries. Counsel at MBC then indicated that some of her clients refused to sign without still further language clarifying that their obligation to indemnify for third party claims was limited to the interim distribution payment they received. This email suggests that the preceding year-long correspondence between lawyers on the terms of the interim release took place without MBC verifying exactly what its clients were prepared to sign.
[52] In March 2019, in the face of the parties’ ongoing inability to agree on the terms of the interim release, M&L advised that its client would apply for a passing of accounts. This application was filed four months later, in July 2019. The Charitable Beneficiaries served a notice of objection on October 22, 2019. They and the Estate Trustee were ordered to participate in mediation within the next 60 days. Although they did not resolve their dispute at the December 2019 mediation, they each undertook in writing to take steps, within set deadlines, to advance the file. The Trustee agreed to provide an affidavit, within 45 days, setting out his position in response to the notice of objection and attaching updated accounts for the Estate. The Charitable Beneficiaries agreed to provide a new draft version of a release within 20 days of receipt of this disclosure, provided it was satisfied with the adequacy of the information received.
[53] M&L, on behalf of the Estate Trustee, complied with his undertaking by delivering an updated affidavit and accounts on January 31, 2020. MBC, on behalf of the Charitable Beneficiaries, then had until February 20, 2020, to provide a new draft interim release. It missed this deadline, delivering a draft only on April 8, 2020 along with a settlement offer. The Trustee rejected this draft release on the basis that it contemplated a final, rather than an interim, distribution of Estate funds. M&L could not however obtain an immediate hearing to resolve the issue due to the temporary shutdown of the courts in mid-March 2020 due to the Covid-19 pandemic.
[54] In late June 2020, counsel at M&L requested a remote hearing of the Trustee’s motion to obtain a ruling on the interim release. This request was granted on July 3, 2020, and the motion was heard in August. I ultimately concluded that the appropriate interim release combined elements proposed by both the Estate Trustee and the Charitable Beneficiaries.
[55] MBC sent a letter to M&L on June 24, 2020 that betrays, in my view, some of the attitude that prevented an earlier resolution of this file. The tone of the letter is at times sarcastic and patronizing. The author states, incorrectly, that the only motions being heard in Ottawa at the time were those deemed urgent. She derides the Trustee’s time estimate for the hearing, even though it proved to be sufficient. She insinuates that M&L might not have instructions; this is particularly ironic given her own acknowledgement in January 2019 that her firm had not, in the preceding year, obtained instructions from the Charitable Beneficiaries on the wording of an interim release. Finally, she threatened to seek costs personally against the Estate Trustee if he pursued an “unnecessary hearing” rather than agreeing to the final settlement of the issues she had proposed in April 2020.
[56] To recap, the lawyers for the Charitable Beneficiaries delayed the resolution of the Estate in the following ways:
• They failed to produce a draft interim release for nine months after agreeing to a consent order requiring them to do so;
• They twice proposed draft releases which were accepted by opposing counsel in May and December 2018, but then changed their minds or received instructions from their own clients that the wording was inadequate;
• They failed to respond to a request to provide dates for the hearing of a motion to resolve the issue in May or June 2018;
• They did not promptly provide signed consents for the appointment of a new Estate Trustee;
• They did not provide a further draft release within the deadline set out in their written undertaking in December 2019 and, when they did so, it was a release for a final, rather than an interim distribution; and
• They resisted the Estate Trustee’s request in June 2020 to set a motion date to resolve an issue that had been ongoing for the preceding three years, because they did not agree with his approach.
[57] The lawyers for the Charitable Beneficiaries argue that the resolution of the litigation was delayed because the Estate Trustee did not comply with some procedural requirements or failed to respond to requests for clarification and further information in a timely way, and because he did not apply to pass accounts until July 2019. Some of these criticisms are founded. Reviewing the evolution of the file as a whole, however, by far the single greatest obstacle to the resolution of the Estate has been the dispute over the wording of the interim release. The failure to resolve this issue, which should have been easily and quickly settled, is largely attributable to MBC’s conduct.
[58] The Charitable Beneficiaries also argue that the Estate Trustee should have accepted their April 8, 2020 settlement offer. The terms were as follow:
(a) The Charitable Beneficiaries would withdraw their notice of objection and consent to the passing of accounts presented by the Estate Trustee;
(b) The Trustee would receive compensation of $21,941 for his management of the Estate;
(c) The Trustee would recover legal costs of $14,008 from the Estate on the application; and
(d) The Charitable Beneficiaries would recover legal costs of $50,000 from the Estate for their legal fees.
[59] The April 8, 2020 letter was not a formal r. 49 offer. It could nonetheless be relevant to my determination of costs under r. 57.01(1). If I found that the Trustee or the Estate would have achieved a better result had the offer been accepted, this would be a factor that would weigh against ordering the Charitable Beneficiaries to pay the Trustee’s costs, or at least those incurred since the offer was made.
[60] I do not, however, find that acceptance of the April 2020 offer would have led to a better result for the Estate. The Estate would have had to pay legal costs to the Charitable Beneficiaries which, for the reasons set out below, I conclude they are not entitled to recover. The Trustee would also have had to limit the recovery of his legal costs to an amount below what I conclude he is entitled to recover.
[61] Applying the principles applicable to costs in estate litigation, I find that the Trustee is entitled to be reimbursed for his reasonable legal costs after the June 2017 settlement. There is no evidence that he seriously mishandled the litigation. There are no policy objectives that militate for an order requiring the Trustee to absorb his own legal costs, unless I find that some of these costs claimed are unreasonable.
[62] I also find that some of these costs should be paid by the Charitable Beneficiaries. They are obviously not responsible for the problems with Madame Poitras’ holograph will and hence should not bear any portion of the Trustee’s costs in obtaining a settlement of this issue. Thereafter, however, the Trustee was overall the successful party in the litigation between the parties. Although I ruled that some of the wording proposed by the Charitable Beneficiaries should be incorporated into the interim releases, I rejected their arguments that the motion to approve an interim release was unfounded and that the Trustee’s compensation should be significantly reduced. I have also found that the conduct of the litigation by the Charitable Beneficiaries gave rise to significant delays and increased costs for all parties. Had it not been for MBC’s repeated repudiation of terms that it itself had proposed, and its failure to verify if those terms were acceptable to its clients, the Trustee probably would have been able to settle the Estate without a formal application to pass accounts.
[63] Taking all of this into consideration, I conclude as follows:
• The Trustee’s reasonable legal costs for these proceedings up to the end of September 28, 2017 should be paid by the Estate.
• The Charitable Beneficiaries should be ordered to reimburse the Estate, on a partial indemnity basis, for the Trustee’s reasonable legal costs for the period from September 29, 2017 forward. This means that the Charitable Beneficiaries shall be required to pay 60% of the Trustee’s reasonable legal costs for this period.
• The Trustee should be entitled to recover the balance of his reasonable legal costs for the period from September 29, 2017 forward from the Estate.
(ii) What are the Estate Trustee’s reasonable costs?
[64] I will consider first the legal costs claimed for the period up to the end of September 2017, then those claimed from that date forward.
a. Legal costs to September 28, 2017
[65] In my August 14, 2020 endorsement, I ordered the lawyer for the Estate Trustee to file a draft bill of costs “for legal work she has done in this case and the amount which, in her submission, her client should recover from either the Estate or the Charitable Beneficiaries”. I expected, as a result, to receive a bill of costs that would cover the entire trusteeship. This turned out not to be the case. M&L has since confirmed that the legal costs incurred during the first eighteen months after Madame Poitras’ death are not mentioned in the bill of costs. The only evidence with respect to those costs is an invoice from M&L dated October 27, 2017 in the amount of $25,729, and an entry in the Estate’s accounts showing that this amount was paid from Estate funds three days before the invoice was even issued.
[66] This state of affairs reflects a misapprehension about the court’s role.
[67] The parties apparently assume that the court has no role in approving the reasonableness of the costs incurred during this first period. This assumption is based on a term of the June 2017 settlement agreement, whereby the Trustee’s “costs and compensation claim, as well as the Respondents' costs, be paid from the capital of the Estate and not from the residue of the Estate”.
[68] This assumption is wrong. The 2017 court order based on the agreement states that the residue of Madame Poitras’ estate is to be distributed “as per” the parties’ settlement agreement. This does not amount to an order permitting the Trustee or the Charitable Beneficiaries to charge the Estate whatever legal costs they like. At most, the agreement and the order require that the costs be considered a capital disbursement. The reasonableness of those costs, however, remains subject to the court’s scrutiny in the context of this application to pass accounts.
[69] As a result, I must determine whether the amount charged by the Trustee’s lawyer for their work during the first period ($25,729) was reasonable, even though these costs are not addressed in M&L’s bill of costs.
[70] Unfortunately, the invoice for this work provides me with limited insight into the basis for the fees charged by M&L during this period. There is no indication of who at the firm did the work. Their professional qualifications or experience are not indicated. Neither is their hourly rate. There is no record of how much time each professional took to do the work detailed in the invoice, or how much time was recorded cumulatively.
[71] As a result, based on the invoice, I cannot tell whether an appropriate legal team was assembled to work on this file, whether they charged reasonable rates, whether work was delegated appropriately or whether specific steps took a reasonable amount of time to complete.
[72] I nonetheless conclude that the total amount is reasonable, for two reasons.
[73] First, as will be discussed further below, the bill of costs and underlying invoices for the period as of September 29, 2017 show that the file was appropriately staffed and that the hourly rates charged by team members were consistent with market rates. I do not have any reason to think that M&L’s staffing changed significantly over time. I can therefore infer that the composition of the legal team appointed to the file up to September 28, 2017 and their rates were reasonable.
[74] Second, based on my experience in reviewing costs submissions in Ottawa litigation, the total amount charged is within the expected range of fees and disbursements. This was not a routine estate matter, given the legal questions arising from the incomplete holograph will and the number of interested beneficiaries. Although the application for directions was resolved on consent, M&L had to set the stage for a settlement to occur.
[75] This conclusion is borne out by a comparison of the legal costs claimed by the Estate Trustee for this period ($25,729) with those claimed by the Charitable Beneficiaries ($25,957) for the same period. I would have expected, if anything, that the Trustee’s costs would be slightly higher, because of the work required to put the application together, and the general rule that a moving party incurs more costs than a responding party.
[76] I accordingly conclude that the legal costs incurred by the Trustee from March 2016 to September 28, 2017 were reasonable and that he was therefore entitled to have the invoice for this work paid from Estate funds.
b. Legal costs from September 29, 2017 to date
[77] The Estate Trustee seeks an additional amount of $59,530 in legal costs from September 29, 2017 to date. Its supporting evidence again leaves much to be desired.
[78] The bill of costs filed by M&L in November 2020 does not identify everyone who worked on the file. The status and qualifications of Carine Plamondon and Thierry Henry, who together recorded almost 38 hours on the file, are not described on the bill in any way, even though M&L charged out their time at $195 an hour (in the case of Plamondon) and either $95 or $195 an hour (in the case of Henry). Their total fees amount to $6,303. It is only by referring back to a bill of costs filed with the application to pass accounts that I see that these individuals were lawyers who were called to the bar in 2019 and that Mr. Henry had also worked on the file as an articling student.
[79] The bill furthermore does not state when members of the Trustee’s legal team worked on the file and what precisely they were doing. It simply lists the total time recorded by each individual for various categories of work, such as “Exchange of emails and telephone conferences with opposing parties and client after first order obtained in 2017” and “Order for Direction 1”. These categories are furthermore not described. I originally assumed that “Order for Direction 1”, for example, referred to the 2016 application for directions, and had to seek clarification from M&L on this point.
[80] Some further details emerge on M&L’s invoices issued on May 25, 2018 ($5,827); Nov. 11, 2018 ($4,789); Dec. 4, 2019 ($22,786); and August 5, 2020 ($14,820). They list specific tasks performed. They again do not, however, show who did what or how much time was spent on each task or cover any work for the period prior to September 29, 2017. Furthermore, as the Charitable Beneficiaries point out, there are approximately thirty “mise à jour” entries, sometimes twice in one day.
[81] Notwithstanding these issues, I conclude that the total costs claimed by the Trustee are on the high end of the acceptable range, but not unreasonable.
[82] Once the parties settled the question of how the residue of the Estate would be divided, the remaining issues were very straightforward. All that the Trustee and the Charitable Beneficiaries had to do was agree on the terms of the interim release and the Trustee’s compensation.
[83] M&L was ultimately obliged, however, to prepare an application to pass accounts and a motion to authorize an interim distribution, and to do the work arising in connection with these procedures. It was required, for example, to respond to a notice of objection, attend a mediation, attend a hearing and a case conference, prepare written submissions, and respond to the court’s directions. Throughout, M&L had to deal with opposing counsel who did not respond diligently or constructively to attempts to move the file forward.
[84] I understand why, in the view of the Individual Beneficiaries, a bill of $59,530 seems excessive. But the file was appropriately staffed, and the hourly rates of the team members involved was consistent with their experience, their qualifications, and the local market. For the most part, M&L took appropriate steps to move the file forward. The problem, as previously mentioned, was that they were unable to resolve the terms of the interim release from June 2017 to September 2020, despite prompt and largely positive responses to MBC’s proposals. This is also what gave rise to the numerous “mise à jour” entries. When a file languishes over months or years, this inevitably results in duplication of work, as the lawyers working on it must repeatedly refresh their memory of what has occurred.
[85] In hindsight, the Estate Trustee could have applied to pass his accounts and then moved for an order on the terms of the interim release more quickly. But it could not control the main causes of delay (and therefore increased costs): the conduct of counsel for the Charitable Beneficiaries and, to a lesser extent, procedural steps required after the death of the original Estate Trustee and a delay in early 2020 arising from Covid-19.
[86] In the circumstances, although I understand the Individual Beneficiaries’ reaction to the legal bills in this case, I do not find the Trustee’s costs to be outside the range of what a person would reasonably expect to pay.
[87] I accordingly find that the Estate Trustee is entitled to recover $59,530 for the period beginning September 29, 2017. Sixty percent of this amount ($35,718) shall be paid by the Charitable Beneficiaries. The balance of $23,812 shall be paid by the Estate prior to the final distribution of the residue.
[88] Since M&L has already received payment for some of this work from Estate funds, the Charitable Beneficiaries shall pay their share of the funds to the Estate prior to the final distribution.
[89] I will make one final observation about the Estate Trustee’s legal costs. When I sought clarification regarding what was included in his lawyers’ bill of costs, counsel from M&L indicated in an email to the court that “the total amount could be increased in accordance with the future steps in the attempt to resolve this matter”. Although I have approved the Trustee’s costs to date, the work that remains to wind up the Estate is very limited and the legal fees going forward should be very limited too. The Estate Trustee has a duty to ensure that the costs incurred by the Estate are reasonable. The court will not authorize his reimbursement by the Estate for any further costs to the extent that they are unreasonable.
c. Are the Charitable Beneficiaries entitled to recover their legal costs?
[90] Based on their November 23, 2020 bill of costs filed, the Charitable Beneficiaries’ total legal costs since the beginning of this litigation amount to $62,373. The Charitable Beneficiaries seek $25,957, the costs incurred in connection with the settlement of the application for directions in June 2017. They also seek reimbursement, on a partial indemnity basis, of the balance of their legal costs, which I calculate as $21,850 (60% of $36,416). They contend that these costs should be paid by the Trustee or, in the alternative, shared by the Trustee and the Estate.
[91] I agree that the Charitable Beneficiaries should be fully reimbursed for their legal costs in connection with the 2017 settlement. I further find that $25,957 is a reasonable amount for these costs, despite shortcomings in the materials filed by MBC.
[92] Like M&L’s bill, MBC’s bill of costs omits significant information that would assist me in assessing the reasonableness of the work done and the costs incurred. Five members of the legal team are identified by name. It is unclear, on the face of this bill, whether all of these individuals are lawyers. Their qualifications and years of experience are not mentioned. The bill also indicates that one or more unnamed law clerks and articling students also recorded time on the file.
[93] The bill communicates almost nothing about what members of the legal team actually did while recording time on the file, or when they did. Entries fall into three categories: “Written and telephone attendances with opposing parties, all clients, and internally”; “Review and drafting of documents, preparing documents to be served and filed”; and “Attendance at Court proceedings, including preparation time”. I cannot tell what level of effort was incurred at any particular stage of the proceedings. No invoices or dockets are attached.
[94] Given this lack of information, I would be reluctant to award the Charitable Beneficiaries any legal costs, were it not for the factors that led me to conclude that a similar level of costs was reasonable for similar work done by counsel for the Trustee.
[95] With respect to the balance of the Charitable Beneficiaries’ legal costs, I have already reviewed the chronology of this litigation is detail. Given my findings and the principles animating estate litigation, it should come as no surprise that I conclude that the Charitable Beneficiaries are not entitled to recover any further costs from either the Trustee or the Estate.
d. Are the Individual Beneficiaries entitled to recover their legal costs?
[96] Although they are not currently represented by legal counsel, the Individual Beneficiaries seek $2,939 as reimbursement for expenses they personally incurred for travel and hotel costs to attend the successful settlement negotiations in June 2017. The Estate Trustee supports this request. The Charitable Beneficiaries do not oppose it.
[97] I find that these costs were incurred as a result of the ambiguity created by Madame Poitras’ holograph will, and that their reimbursement by the Estate is consistent with sound public policy.
Disposition
[98] The application to pass accounts is granted, subject to the following adjustments:
(i) The Estate Trustee is entitled to compensation of $17,608 from Estate funds;
(ii) The Individual Beneficiaries are to be indemnified by the Estate for legal expenses of $2,939 in relation to this Court proceeding;
(iii) The Estate Trustee is entitled to be indemnified for $85,259 in legal costs in connection with this and prior litigation in connection with the Estate. Of this total amount, $35,718 shall be paid by the Charitable Beneficiaries and $49,541 ($25,729 plus $23,812) shall be paid from Estate funds; and
(iv) The Charitable Beneficiaries are entitled to be indemnified by the Estate for $25,957 in legal costs.
[99] The fees and costs set out above shall be accounted for prior to the final distribution of the residue of the Estate to the Beneficiaries.
[100] I remain seized with this file for the purpose of the adjudication of any further disagreement between the parties with respect to the reasonableness of legal costs that the Trustee, or any other party, proposes should be paid from Estate funds. Given the drain on Estate funds by legal costs to date, I would hope that this proves unnecessary.
Justice Sally Gomery
Released: January 18, 2021
[^1]: In these reasons, I have rounded up all figures to the nearest dollar.
[^2]: Although a named respondent in these proceedings, the Lung Association is not represented by the law firm on record for the other Charitable Beneficiaries and did not file a notice of objection to the application to pass accounts. The Association is therefore entitled to share in the residue of the Estate pursuant to the 2017 order but has no liability for any of the costs at issue in these reasons.