COURT FILE NO.: 17-74763 & 18-76346
DATE: 20210924
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Christina Rudin-Brown and Jeanne Brown
Applicants
AND
Carolyn Emily Brown, Gordon Russell Brown and Public Guardian Trustee
Respondents
AND BETWEEN:
Gordon Russell Brown
Applicant
AND
Carolyn Emily Brown, Christina Rudin-Brown and Jeanne Brown and Public Guardian Trustee
Respondents
Ian B. McBride and Natalie Scott, Counsel for Christina Rudin-Brown and Jeanne Brown
Rodrigue Escayola, Counsel for Carolyn Emily Brown
Gordon Russell Brown, Self-represented
Gordon Russell Brown, Self-represented
Rodrigue Escayola, Counsel for Carolyn Emily Brown; Ian B. McBride and Natalie Scott, Counsel for Christina Rudin-Brown and Jeanne Brown
HEARD: In writing
COSTS ENDORSEMENT
Justice H. J. Williams
[1] I have reviewed the written costs submissions of Christina Rudin-Brown (“Missy”) and Jeanne Brown dated May 18, 2021, the written costs submissions of Gordon Russell Brown dated August 6, 2021 and Missy and Jeanne’s written reply submissions dated August 13, 2021.
[2] The reply submissions included the current value of Carolyn Emily Brown’s assets, which is approximately $1.2 million.
A brief overview of the trial decision
[3] Carolyn is Missy and Gordon’s mother and Jeanne’s sister-in-law.
[4] In May 2018, Kershman J. had declared Carolyn to be incapable of managing her property and her personal care.
[5] In my trial decision, I concluded that powers of attorney Carolyn signed in September 2016, naming Gordon as her attorney for property and for personal care were not a result of her own “full, free and informed thought”. I found there were suspicious circumstances surrounding the execution of the powers of attorney, that Gordon failed to prove that Carolyn had capacity to sign the powers of attorney and that there was evidence of undue influence.
[6] I concluded that, in accordance with a power of attorney for property Carolyn had signed in 2009, Jeanne should act as Carolyn’s attorney for property and Jeanne’s son Carter Brown should be the alternative attorney.
[7] I also concluded that Missy and Jeanne should act as Carolyn’s guardians of the person.
Missy and Jeanne’s position with respect to costs
[8] Missy and Jeanne say that Gordon should be responsible for their costs.
[9] Missy and Jeanne say Gordon’s conduct warrants costs payable to them on a substantial indemnity scale. They say that Gordon acted in an abusive manner, advanced a position that had no merit and ran up the cost of the litigation unnecessarily. Alternatively, they seek costs on a partial indemnity scale.
[10] In two case management endorsements, on in August 2018 and on in January 2020, Kershman J. ordered that contributions to the parties’ legal fees be paid from Carolyn’s assets. Missy and Jeanne received a total of $100,000.00 and Gordon a total of $115,000.00. In his August 2018 endorsement, Kershman J. said the $50,000.00 he ordered payable to Missy and Jeanne and the $65,000.00 to Gordon would be considered an advance against any future entitlements Missy and Gordon may have to a share of Carolyn’s estate when Carolyn passes away.
[11] Missy and Jeanne say Gordon should be ordered to pay to Carolyn the $100,000.00 they received from her assets and the $115,000.00 he received, in order to return Carolyn’s assets to the state they would have been in were it not for the litigation. Missy and Jeanne say the amount Gordon should be required to pay on account of their costs would then be reduced by $100,000.00.
[12] Missy and Jeanne say the $215,000.00 Gordon should pay to Carolyn and any further costs he is ordered to pay to them should form a first charge on Gordon’s share of Carolyn’s estate.
Gordon’s position with respect to costs
[13] Gordon seeks his costs on a substantial indemnity basis.
[14] Gordon argues that Missy and Jeanne should not receive any costs from Carolyn’s assets or her estate.
[15] Gordon says that Missy and Jeanne’s application was without merit and frivolous and that Missy and Jeanne acted in bad faith by seeking to overturn wishes Carolyn had expressed before she was declared incapable.
[16] Gordon, who was represented by counsel at trial but represented himself when he filed his costs submissions, also asked for costs for loss of potential income, mental anguish and loss of affection due to what he described as [Missy and Jeanne’s] slander campaign.
Costs in Substitute Decisions Act cases
[17] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C. 43, provides that the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court. Although discretionary, a court must fix costs on a principled basis. (Davies v. Clarington, 2009 ONCA 722, at para. 40.)
[18] Rule 57.01(1) of the Rules of Civil Procedure sets out the factors the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, in exercising its discretion under section 131 of the Courts of Justice Act to award costs:
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
[19] Missy and Jeanne referred me to the decision of Price J. in Arvanitis v. Levers, 2017 ONSC 3758, which considered the principles applicable to costs in cases involving incapable individuals and the Substitute Decisions Act, 1992, S.O. 1992, c. 30. In my consideration of this matter, I have relied heavily on that helpful decision.
[20] In Arvanitis, Price J. noted that the principles the court has articulated for determining liability for costs in estate litigation apply equally to proceedings under the Substitute Decisions Act. In both types of proceedings, the purposes of costs orders generally (indemnifying the successful party, sanctioning unreasonable conduct and encouraging settlement) must be balanced with the public policy objectives of giving effect to the intentions of grantors or testators, who are no longer able to speak for themselves, and to ensure that their estates are properly administered. In proceedings under the Substitute Decisions Act, the public policy objectives that must be considered and balanced are to give effect to the intentions of persons, when competent, to name those who, in the event of future incapacity, are to be entrusted with their personal care and property, and to ensure that those they choose as their attorneys for property administer their estates properly. (Arvanitis, at paras. 70 and 81.)
[21] The central issue to be addressed when dealing with costs in an SDA proceeding is, “when a parent is declared incapable and a guardian appointed over her property, to what extent must the incapable parent’s assets bear the costs of continuing litigation amongst her disputatious children?” (Arvanitis, at para. 82, citing Fiacco v. Lombardi, 2009 ONSC 46170 at para. 1.)
[22] It can no longer be said in estate matters, including matters under the SDA, that parties and their counsel can reasonably expect all of their costs to be paid for by the assets of the testator or incapable person. “The trend for some time now has been to examine the nature of the dispute and the conduct of the parties. Although in most cases it is also possible to consider which party is the “successful” party, that is not as significant a factor in these types of cases provided it can be said that the parties are properly motivated by the best interests of the person under a disability and are acting reasonably.” (Arvanitis, at para. 94, citing Ziskos v. Miksche, 2007 CanLII 46711 (ON SC), at para. 56.)
Analysis
Entitlement to costs
[23] Missy and Jeanne were the successful parties. I am satisfied that they were motivated by Carolyn’s best interests. There is no doubt that Missy was worried that Carolyn might have been influenced to change her will to eliminate Missy as a beneficiary. However, Missy and Jeanne’s application, properly, did not seek relief in respect of the will and I am satisfied that the relief sought was intended to honour the intentions Carolyn had expressed at a time when she was known to be capable of making her own decisions.
[24] Gordon was unsuccessful at trial. In my trial decision, I found that Gordon’s prime motivation had been to ensure that Carolyn’s house was not sold, so that he could continue to live there. I found that Gordon had not acted in Carolyn’s best interests for many years and that in several respects he had been motivated by his own self-interest rather than what was best for Carolyn. I found that, by taping all of Carolyn’s telephone conversations and planting recording devices in her purse, ostensibly to gather evidence against Missy, Gordon had shown a complete disregard for Carolyn’s interests.
[25] I find that Missy and Jeanne and entitled to costs and that Gordon is not, subject to my comments below in respect of the January 2020 advances from Carolyn’s assets ordered by Kershman J.
Who should pay Missy’s and Jeanne’s costs?
[26] Although I have found that Missy and Jeanne were motivated by Carolyn’s best interests in this litigation, it does not necessarily follow that their costs should be paid by Carolyn. It was Gordon’s conduct that prompted Missy and Jeanne to start their application. Missy had become concerned that Gordon was asserting too much control over Carolyn and possibly also over her finances and that Carolyn was vulnerable. Several months before Missy and Jeanne issued their notice of application, Missy had suggested to Gordon a joint decision-making arrangement for Carolyn, which he rejected. I have summarized, above, my reasons for declaring the powers of attorney Gordon arranged for Carolyn to sign to be invalid, which included lack of capacity and undue influence. Although it was not in issue, Gordon had, at the same time, arranged for Carolyn to change her will to leave the residue of her estate to him.
[27] In this case, it is appropriate for Gordon, and not Carolyn, to pay Missy’s and Jeanne’s costs, again, subject to my comments below in respect of the January 2020 advances ordered by Kershman J.
What is the appropriate scale of costs?
[28] I am satisfied that this is a rare case in which costs on a substantial indemnity basis are warranted.
[29] Gordon was ably represented at trial by a capable counsel who was civil and efficient in court. Even so, the lawyer’s salutary effect on the trial was not enough to offset the effect of Gordon’s conduct leading up to and during the litigation.
[30] Missy and Jeanne started their application because of Gordon’s failure to act in a reasonable manner. They tried to deal with their concerns about Gordon’s domination over Carolyn and Carolyn’s well-being without litigation. The evidence showed that Gordon manipulated Carolyn and that, to the extent that there was distrust between Carolyn and Missy or between Carolyn and Jeanne, Gordon was responsible.
[31] The following paragraphs from my trial decision, in which I considered whether Gordon exercised undue influence, exemplify the conduct of Gordon that, in my view, justifies an order for costs on a substantial indemnity basis.
[156] I find that the relationship between Carolyn and Gordon at the time the powers of attorney were signed in September 2016 triggers the presumption of undue influence. Carolyn was 86 years old at the time and, more significantly, was suffering from memory lapses and confusion. Family members thought Carolyn should consider moving to an assisted living situation before her condition worsened. By September of 2016, Gordon had been living with Carolyn for 12 to 14 years. Carolyn wanted to stay in her own home, and she needed Gordon in order to stay there. Carolyn had accepted Gordon’s narrative that she should no longer trust Missy, Dr. Salamon or Jeanne. There was evidence from Carolyn Mossman that Gordon was verbally abusive toward Carolyn. In 2008, Carolyn had called the police after they had a fight. On July 4, 2016, Missy had accused Gordon of treating Carolyn like a slave. I find that Carolyn was highly dependent on Gordon at this time and that theirs was a relationship with the potential for domination.
[157] To rebut the presumption of undue influence, Gordon must show that Carolyn gave Gordon her powers of attorney as a result of her own “full, free and informed thought.” (Geffen, citing Zamet v. Hyman, [1961] 3 All E.E. 933 at p. 938.)
[158] There is ample evidence that the 2016 powers of attorney were not a product of Carolyn’s full, free and informed thought.
[159] I have already mentioned that, during cross-examination on one of the RBC notes, Gordon admitted that he told Carolyn to change her powers of attorney to give him exclusive authority. There was no informed reason for Carolyn to do this, even if she was worried that Missy wanted to force her out of her house. Missy was not Carolyn’s sole attorney for personal care; Missy and Gordon shared this responsibility. Missy had no control over Carolyn’s property; Jeanne was Carolyn’s attorney for property. However, Carolyn had stopped trusting Jeanne, just as she had stopped trusting Missy. Carolyn was relying on Gordon, who had persuaded that that Missy was trying to remove her from her home, to prevent Missy from doing so. Gordon told Carolyn to change her powers of attorney and she did so.
[160] I have also already referred to Ms. Whitwam’s evidence, which I have accepted, that Carolyn said that Gordon had told her to have the documents she brought to The Three Sisters on September 9, 2016 signed and witnessed.
[161] Gordon admitted that he had suggested that Carolyn change her powers of attorney to make him her attorney to protect them from Missy’s existential threat. Gordon was unable to explain, however, how Carolyn’s change to her will, cutting Missy and Zachary out as beneficiaries and leaving Gordon the entire residue of her estate, would protect Carolyn in any way or help her to stay in her home. There was no reason for Carolyn to have made this change to her will at this time. I have already referred to the note of the RBC advisor who wrote that Gordon had admitted that he had told Carolyn to change her will to give him sole authority. I am satisfied that Gordon said this to the RBC advisor and also that Gordon had indeed told Carolyn to change her will.
[162] One of the recorded conversations between Gordon and Carolyn as they reviewed Missy and Jeanne’s application record was as revealing as it was uncomfortable to listen to. Although this tape was made in December 7, 2017, 15 months after the powers of attorney were signed, it provides insight into what Gordon was telling Carolyn and the extent to which she had become dependent on him, at least by that time. Early in the recording, Carolyn says to Gordon: “I trust you. If I can’t trust you, what am I going to do?” Later, Carolyn says that Gordon had thought she was going to be ambushed by Dr. Salamon. At one point, Gordon says: “Missy just wants you locked up. Because she is a psychopath.” Later, Gordon says that Missy doesn’t care about the money, “she just wants you locked up.” Gordon tells Carolyn that Jeanne is a “great, sly actor” and that Jeanne helped Carolyn write Carolyn’s old will, which had given everything to Jeanne and her son Carter[^1]. Gordon explains to Carolyn that, in their application, Missy and Jeanne are asking to become guardians of her property. Carolyn asks, “when do I get it back?” Gordon says: “Never. That’s what they are hoping.” Gordon says that he is the one with a legal background and that “they” are just a bunch of jealous shrews. Carolyn says she wants to telephone Missy and asks Gordon if she is putting herself in danger if she calls her. Somewhat ironically, Gordon replies by telling Carolyn that she is in danger of being manipulated by Missy.
[163] There is no reason to think that Gordon’s conversations with Carolyn leading up to the execution of the powers of attorney on September 9, 2016 were any different from the conversation of December 7, 2017, in which Gordon denigrated Missy, Dr. Salamon and Jeanne and misled Carolyn about Missy’s and Jeanne’s intentions.
[164] I accept the opinion of Dr. Sarazin that Carolyn would have been vulnerable, and Dr. Shulman’s opinion that Carolyn would have been extremely vulnerable to influence at the time she signed the powers of attorney.
[32] Gordon’s conduct also added to the length and expense of the litigation. For example, in written materials filed with the court, in discussions with medical and financial professionals and in his testimony, Gordon repeatedly described Missy as a psychopath and a drug addict. He also filed highly personal documents belonging to Missy, obviously for the purpose of casting her in a bad light and embarrassing her. Missy was forced to file supplementary materials to respond to Gordon’s allegations and to respond to the allegations at trial.
[33] Missy and Jeanne served an offer to settle and made several settlement overtures. Gordon did not respond and did not serve any offers of his own.
[34] Gordon also failed or refused to follow some of Kershman J.’s case management orders, including an order to stop recording Carolyn’s conversations.
[35] Finally, in his costs submissions, Gordon continued his attack on Missy and Jeanne (whom he had described at trial as having “something reptilian about her”), accusing them of an “ongoing attempt to defraud the Court and extort the Respondents” and of waging a defamation campaign.
[36] For these reasons, fully recognizing that they are the exception and not the rule, I consider substantial indemnity to be the appropriate scale of costs in this case.
Amount of costs
[37] I have reviewed Missy and Jeanne’s bill of costs and Gordon’s costs outline.
[38] Missy and Jeanne’s actual costs were $260,580.24, all-inclusive, which included fees of $199,789.00, HST on fees of $25,972.57, disbursements of $31,444.69 and HST on taxable disbursements of $3,373.98.
[39] Missy and Jeanne seek all-inclusive (fees, disbursements and HST) substantial indemnity costs of $238,004.08.
[40] Gordon’s actual costs were approximately half the amount of Missy and Jeanne’s, $132,036.35. The actual fees charged by Gordon’s lawyers were $122,188.00.
[41] I have considered the factors in Rule 57.01(1), including the experience level of the two lawyers who represented Missy and Jeanne, their hourly rates and the hours they worked. I consider the lawyers’ hourly rates and the hours they worked to be reasonable. There may have been some duplication of effort because both lawyers attended the trial, but both also actively participated. The two lawyers represented their clients effectively in the context of a difficult and often tense family dispute, without ever turning up the temperature, which undoubtedly would have had the effect of prolonging the process.
[42] The issues in the litigation were of moderate complexity. Given that the best interests of an incapable person were at issue, I consider the proceeding to have been important. I have already found that Gordon’s conduct lengthened the duration of the proceeding.
[43] The outcome at trial was not as or more favourable for Missy and Jeanne than their offer to settle, which referenced Carolyn’s will, when the will was not in issue at the trial. Nonetheless, Missy and Jeanne had made efforts to resolve the litigation, in addition to serving their offer twice, which were not reciprocated by Gordon. Gordon’s indifference to Missy’s and Jeanne’s attempts to avert and then settle the litigation is a significant factor in my costs assessment.
[44] That Missy’s and Jeanne’s legal fees and disbursement were higher than Gordon’s in this case is not surprising. Gordon was self-represented for a period of time and did not have a lawyer when, for example, he filed a substantial second application record in January 2019. Missy’s and Jeanne’s case involved more witnesses than that of Gordon, including two expert witnesses. Missy’s and Jeanne’s lawyers also examined two non-party lawyers and prepared the joint book of documents relied on at the trial.
[45] In all of the circumstances, I consider substantial indemnity fees of $150,000.00 to be an amount Gordon, as the unsuccessful party, could reasonably expect to pay in this case. With HST of $19,500.00 on the $150,000.00 and $34,818.67 in disbursements and HST, the total is $204,318.67. For the sake of simplicity, I award Missy and Jeanne $200,000.00, payable by Gordon.
[46] I must also consider the $100,000.00 paid to Missy and Jeanne and the $115,000.00 paid to Gordon from Carolyn assets further to Kershman J.’s orders of August 30, 2018 and January 15, 2020.
[47] On August 30, 2018, Kershman J. ordered that the $50,000.00 paid to Missy and Jeanne at that time be considered an advance to Missy from her share of Carolyn’s estate when Carolyn passes away, and that the $65,000.00 paid to Gordon at that time be considered an advance to Gordon from his share of Carolyn’s estate.
[48] The January 15, 2020 order provided a further $50,000.00 payment both to Missy and Jeanne and to Gordon, for a total of $100,000.00. These amounts were intended to apply to legal fees relating to the trial. Kershman J. ordered that the lawyers for the parties were to remain as lawyers of record until the conclusion of the trial and that there would be no change or removal of the lawyers without leave granted by him. Unlike the August 30, 2018 order, the January 15, 2020 order did not state that the funds were to be considered an advance from Missy’s and Gordon’s shares of Carolyn’s estate. I conclude that these two $50,000.00 payments were intended to ensure that the trial proceeded as scheduled and in an orderly manner and that Kershman J. intended that Carolyn, who was represented by counsel under s. 3 of the SDA at the time, contribute these amounts to the parties’ costs.
[49] The $200,000.00 I have ordered Gordon to pay Missy and Jeanne shall be reduced by the $50,000.00 Missy and Jeanne received under Kershman J.’s January 15, 2020 order.
[50] The $50,000.00 payment to Gordon under Kershman J.’s January 15, 2020 order shall be, as I have found Kershman J. intended, considered to be a contribution by Carolyn to Gordon’s costs and Gordon shall not be required to repay that amount to Carolyn.
[51] In the result, I make the following orders:
(1) Gordon shall pay Missy and Jeanne $150,000.00 in costs. ($200,000.00 less the $50,000.00 contribution from Carolyn.)
(2) The $65,000.00 Gordon received under Kershman J.’s August 30, 2018 order shall be repaid to Carolyn, failing which, it shall be paid to Carolyn’s estate as a first charge against Gordon’s share in the estate.
(3) The $50,000.00 Missy and Jeanne received under Kershman J.’s August 30, 2018 order shall be repaid to Carolyn, failing which, it shall be paid to Carolyn’s estate as a first charge against Missy’s share in the estate.
[52] Missy and Jeanne may make further written submissions with respect to the mechanism of payment, for example, whether the $150,000.00 payable to them by Gordon should be paid from Carolyn’s assets and treated as an advance on Gordon’s share of Carolyn’s estate, whether the $150,000.00 should be considered a first charge against Gordon’s share of Carolyn’s estate and whether any set-offs may be appropriate.
[53] Missy and Jeanne’s further submissions may be made within 14 days. Gordon may make reply submissions within 14 days of receipt of Missy and Jeanne’s submissions.
Released: September 24, 2021
COURT FILE NO.: 17-74763 & 18-76346
DATE: 20210924
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Christina Rudin-Brown and Jeanne Brown
Applicants
AND
Carolyn Emily Brown, Gordon Russell Brown and Public Guardian Trustee
Respondents
AND BETWEEN:
Gordon Russell Brown
Applicant
AND
Carolyn Emily Brown, Christina Rudin-Brown and Jeanne Brown and Public Guardian Trustee
Respondents
costs endorsement
Madam Justice H. J. Williams
Released: September 24, 2021
[^1]: Carolyn never signed a will which gave anything to Jeanne or Carter. Carolyn’s previous wills divided her estate among her three children and then, after the death of one of her daughters, among her two surviving children, Missy and Gordon and her grandson, Zachary.