CITATION: Richard v. Quesnel (Estate), 2021 ONSC 7404
COURT FILE NO.: CV-21-85714
DATE: 2021/11/09
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: NATHANIEL RICHARD, MIRA DEPATIE and NOLAN MERPAW, minors by their litigation guardian, THE CHILDREN’S LAWYER, Applicants
-and-
WILBUR QUESNEL, Estate Trustee for the Estate of Shawn Quesnel, SABRINA QUESNEL, KIMBERLEY HOULE, THE CANADA LIFE ASSURANCE COMPANY and INDUSTRIAL ALLIANCE, Respondents
BEFORE: Madam Justice Sylvia Corthorn
COUNSEL: Lucas Cutler, for the Applicants (moving parties on the motion)
No one appearing for the Respondents
HEARD: October 21, 2021
ENDORSEMENT
Introduction
[1] Shawn Quesnel (“the Deceased”) died intestate in October 2019. At the date of his death, the Deceased was married to the respondent, Kimberly Houle and the couple were estranged.
[2] The Deceased had four children – the applicants (“the Children”) and the respondent, Sabrina Quesnel. Ms. Houle is the biological mother of Mira Depatie and Nolan Merpaw.
[3] In June 2020, the respondent, Wilbur Quesnel was appointed as estate trustee pursuant to a certificate of appointment of estate trustee without a will. I refer to the Deceased’s estate as “the Estate”.
[4] The Estate’s assets are estimated to include the following: (a) approximately $150,000 of assets in Ontario; (b) proceeds from a policy of life insurance, with the respondent, Industrial Alliance, in the amount of $47,500; and (c) proceeds from a policy of life insurance, with the respondent, The Canada Life Assurance Company (“Canada Life”) in the amount of $25,000. The named beneficiary of both life insurance policies is Ms. Houle.
[5] Upon learning of the existence of the two life insurance policies, the Office of the Children’s Lawyer (“OCL”) put both insurers on notice that an application would be commenced on behalf of the Children. The OCL explained to the insurers that the Children’s position is that the Deceased did not make adequate provision for their support. The OCL advised the insurers that, to address that inadequacy, the Children would be seeking relief pursuant to the Succession Law Reform Act, R.S.O. 1990, c. S.26 (“SLRA”). The OCL asked each insurer not to distribute the proceeds of their respective policies until the Children’s application in that regard is determined.
[6] Industrial Alliance responded to the OCL with confirmation that it had not yet distributed the proceeds of its policy and that, pending an order of the court, it would not distribute the proceeds. Canada Life responded by informing the OCL that it had already distributed the proceeds to Ms. Houle.
[7] This proceeding was commenced in early February 2021 – after Industrial Alliance responded and before Canada Life responded to the communication from the OCL. The relief sought by the Children on the application includes the following:
a) A declaration that the Children are dependants of the Deceased within the meaning of Part V of the SLRA;
b) An order, pursuant to s. 72(1)(f) of the SLRA, that the proceeds of all life insurance policies are deemed to form part of the Estate; and
c) An order for payment out of the Estate to provide for adequate support of the Children.
[8] Ms. Houle has not co-operated with counsel for the Children with respect to either service of documents or the $25,000 in life insurance proceeds she received from Canada Life. The Children previously obtained an order for substituted service of documents on Ms. Houle. They now bring this motion pursuant to r. 45.02 of the Rules of Civil Procedure, R.R.O. Reg. 194, for an order requiring Ms. Houle to pay the $25,000 of life insurance proceeds into court pending a final determination of the application.
The Issue
[9] The single issue to be determined on this motion is whether the Children are entitled to an order, pursuant to r. 45.02, for interim preservation of the $25,000 in life insurance proceeds paid by Canada Life to Ms. Houle.
[10] For the reasons that follow, the relief requested is granted.
Analysis
[11] Rule 45.02 provides that “[w]here the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just.”
[12] As discussed at para. 20 of Carfagnini v. White Estate, 2014 ONSC 3575, the test for granting relief under this rule is essentially the same as that to be met in support of a request for injunctive relief. Justice Greer therein referred to the three-part test set out in RJR – MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311.
[13] Revising that well-known three-part test to a motion for an interim preservation order under r. 45.02 leads to the following criteria. The moving party must: (a) establish a right to a specific fund; (b) demonstrate that there is a strong prima facie case; and (c) demonstrate that the balance of convenience favours granting the relief requested.
[14] For the purpose of the first criteria, the Children rely on s. 72(1)(f) of the SLRA. That section provides as follows:
Subject to section 71, for the purpose of this Part, the capital value of the following transactions effected by a deceased before his or her death, whether benefitting his or her dependant or any other person, shall be included as testamentary dispositions as of the date of the death of the deceased and shall be deemed to be part of his or her net estate for purposes of ascertaining the value of his or her estate, and being available to be charged for payment by an order under clause 63(2)(f) …
(f) any amount payable under a policy of insurance effected on the life of the deceased and owned by him or her[.]
[15] I am satisfied that the Children’s claim for relief pursuant to s. 72(1)(f) of the SLRA with respect to the life insurance proceeds from Canada Life meets the criteria of establishing a right to a specific fund.
[16] I turn next to the second criteria. The Children range in age from 8 to 16. The Estate assets, excluding the proceeds from the two life insurance policies, have an estimated value of $150,000. If the proceeds from the Industrial Alliance policy are added to that amount, the estimated value of the Estate assets is increased to $197,500. Is there a strong prima facie case that $197,500 is not adequate to provide for the support of the Children?
[17] The Deceased’s support obligations exist not only from this date forward; those obligations date retroactively to the date of death on October 2019. As of that month, Nolan Merpaw was six years old; Mira Depatie was just shy of her ninth birthday; and Nathaniel Quesnel was 13 years old. The Deceased’s support obligations could extend beyond the Children’s respective 18th birthdays and continue while they pursue post-secondary education. Even if the support obligations extend only to the Children’s respective 18th birthdays, there would still be a total of 26 years of support obligations (12 for Nolan, nine for Mira, and five for Nathaniel).
[18] In summary, there is a strong prima facie case that either of $150,000 or $197,500 is not adequate to fulfill the Deceased’s support obligations. I find that the Children have a strong prima facie case to relief pursuant to s. 72(1)(f) of the SLRA.
[19] Turning to the last criteria, Ms. Houle did not respond to the motion. She has not provided a substantive response of any kind with respect to the $25,000 in life insurance proceeds she received from Canada Life. There is no evidence from her with respect to the issue of the balance of convenience.
[20] The OCL’s best estimate as to when Canada Life paid the $25,000 to Ms. Houle is that the payment was likely made within two to three weeks of the date of death – meaning in late October or early November 2019. Two years may have already passed since Ms. Houle received the proceeds. There is no evidence as to her financial circumstances or her ability to pay the funds to the Estate if called upon to do so in the future. The more time that passes, the greater the possibility that the funds have been exhausted by Ms. Houle and that she is and would remain unable to pay the funds to the Estate.
[21] I am satisfied that the balance of convenience favours granting the interim preservation order requested by the Children.
Disposition
[22] For the reasons set out above, I order as follows:
The respondent, Kimberley Houle shall pay into court, to the Accountant for the Ontario Superior Court of Justice, the sum of $25,000, which amount was received by her as the proceeds of life insurance from the respondent, The Canada Life Assurance Company.
The funds paid into court pursuant to paragraph 1, above, shall remain in court pending a final determination of the application herein or a further order of the court.
Costs
[23] This is the second motion pursued by the Children for interim relief. In July 2021, they obtained an order for substituted service of documents on Ms. Houle. Pursuant to the July 13, 2021 order of Somji J., the Children were permitted to serve Ms. Houle with both the application record and the motion record for the motion now before the court by (a) sending the documents to her by mail at her last known residential address, and (b) emailing the documents to her at her personal email address. Justice Somji reserved the costs of that motion to the judge hearing the motion for relief pursuant to r. 45.02.
[24] At the conclusion of this motion, counsel for the Children filed a bill of costs. What should have been filed was a costs outline. A bill of costs is filed only after a matter has been finally disposed of by way of a trial, an application, or a motion that results in a disposition of the proceeding: r. 57.01(5). A party seeking costs of an interim motion is required to file a costs outline: r. 57.01(6).
[25] Regardless of the fact that the incorrect type of document was filed, it would be neither expeditious nor efficient to require counsel for the Children to file a costs outline: r. 1.04(1). The court is in a position to fix costs of the motion for substituted service and the motion pursuant to r. 45.02 based on the information set out in the bill of costs.
[26] In deciding whether to award the applicants their costs of the two motions, the scale upon which costs are awarded (if awarded), and the quantum of costs payable (again, if costs are awarded) I rely on the factors listed in r. 57.01. I do so without listing each such factor.
[27] First, I am satisfied that the Children are entitled to their costs of both motions. It is clear from the affidavit evidence that Ms. Houle was avoiding service of documents. It is also clear that Ms. Houle did not respond to the substantive issue of the $25,000 in life insurance proceeds that are the subject of the application and this motion. By her conduct, Ms. Houle left the Children with no choice but to commence the application and bring both motions.
[28] Second, when considering the scale on which costs are payable, I find that Ms. Houle’s conduct is such that the Children are entitled to their costs on the substantial indemnity scale. Leaving aside that her conduct is considered as “litigation conduct”, she is the biological mother of two of the applicants. Her failure to respond to a matter that addresses their best interests, let alone the best interests of all of the Children, is conduct that warrants sanction in the form of costs awarded on the elevated scale: Davies v. Clarington, 2009 ONCA 722, at para. 40.
[29] Third, with respect to quantum, I have considered the following points:
• The hourly rates charged by each of the three timekeepers whose time appears in the bill of costs are reasonable based on their respective years of call;
• The total number of hours docketed for two motions is reasonable. There does not appear to be duplication of effort. A factum was prepared which addressed both the procedural issue of substituted service and the substantive issues on the motion pursuant to r. 45.02; and
• The disbursements are reasonable.
[30] The total fees, based on the full indemnity scale and excluding HST, are $7,147.56. On a partial indemnity basis, the fee portion of the costs claimed is $4,645.92 (excluding HST). That figure is based on 65 per cent of the full indemnity fees. That percentage falls within the requisite range for the calculation of partial indemnity fees: Marcoccia v. Ford Credit Ltd., 2009 ONCA 317, at para. 53.
[31] I find the partial indemnity fees in the amount of $4,645.92 to be reasonable. The fees payable on the substantial indemnity scale are therefore $6,968.88 (again, excluding HST). In accordance with r. 1.03, substantial indemnity fees are calculated at 1.5 times the partial indemnity fees. To that amount, I add HST of $905.95. I fix the disbursements (for courier and photocopies, inclusive of HST) at $74.00.
[32] In summary, I order that Kimberley Houle pay to the applicants their costs, of this motion and of the motion for substituted service, on the substantial indemnity scale and fixed in the amount of $7,948.83 ($6,968.88 + $905.95 + $74.00). Those costs shall be paid forthwith.
Madam Justice Sylvia Corthorn
Released: November 9, 2021
COURT FILE NO.: CV-21-85714
DATE: 2021/11/09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: NATHANIEL RICHARD, MIRA DEPATIE and NOLAN MERPAW, minors by their litigation guardian, THE CHILDREN’S LAWYER, Applicants
-and-
WILBUR QUESNEL, Estate Trustee for the Estate of Shawn Quesnel, SABRINA QUESNEL, KIMBERLEY HOULE, THE CANADA LIFE ASSURANCE COMPANY and INDUSTRIAL ALLIANCE, Respondents
BEFORE: Madam Justice Sylvia Corthorn
COUNSEL: Lucas Cutler, for the Applicants
No one appearing for the Respondents
HEARD: October 21, 2021
ENDORSEMENT
Madam Justice Sylvia Corthorn
Released: November 9, 2021