COURT FILE NO.: CV-20-002027-00ES
DATE: 2021-12-15
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE ESTATE OF OLGA G. SUBOCH, deceased
BETWEEN:
SUSAN JANINE SUBOCH
Applicant
-and-
ANDREW PETER SUBOCH in his personal capacity and in his capacity as estate trustee of the estate of Olga Grace Suboch, KATHERINE ANNE SUBOCH, JACKSON SUBOCH, SYDNEY SUBOCH, AVIVA SUBOCH and THE CHILDREN'S LAWYER
Respondents
David Wagner, for Susan Janine Suboch
Andrea Lusk, for Andrew Suboch, Katherine Suboch, Jackson Suboch and Sydney Suboch
HEARD: December 2, 2021
PENNY J.
REASONS FOR JUDGMENT
Overview and Issues
[1] This application to pass accounts concerns the estate of Olga Grace Suboch, who died on July 22, 2015. Olga was pre-deceased by her husband and survived by their three children: Andrew Suboch, Katherine Suboch and Janine Suboch. Andrew is the Estate Trustee appointed in Olga’s will.
[2] Beyond lump sum bequests to grandchildren and nephews, which have all been distributed, Olga’s estate is split equally between her three children.
[3] The assets of the Estate consisted of:
(a) 41 Geraldton Crescent - the Deceased’s principal residence;
(b) bank and investment accounts;
(c) a 100% interest in Kajaan Investments Ltd. Kajaan is a holding company which held a 50% interest in SHOD Investments Ltd. SHOD in turn is a holding company that owned two real properties: 1) a small strip mall 42/48 Dundas Street; and 2) a small apartment building at 2535 Bloor Street. Both properties have been sold and the funds allocated as between Kajaan and SHOD’s other 50% shareholder, Olga’s brother; and,
(d) jewelry and other personal items.
[4] The total value of the estate at the time of Olga’s death was about $8 million although that value increased prior to the realization of real estate holdings. Total value is estimated at just under $10 million. The majority of the Estate has now been distributed. As of January 8, 2020, the assets remaining in the Estate are cash and shares of Kajaan.
[5] The initial accounts were revised after receiving Janine’s notice of objections. Among other things, the claimed compensation was reduced from $282,644.31 to $267,859.96 to relect some of Janine’s concerns.
[6] Janine also commenced an application to remove Andrew as estate trustee in December 2019. The application was never argued and was not pursued at the hearing of this matter. This was because, her counsel said, the administration of the estate is now almost complete and no purpose would be served by seeking to remove Andrew at this point. Instead, Janine asks the Court to deny Andrew any compensation for his role as Estate Trustee, or at least to allow only reduced compensation.
[7] There are essentially three issues:
(1) Should the accounts be approved as submitted or only with revisions ordered by the Court?
(2) How should compensation paid by the Estate Trustee to Katherine Suboch (for management of the Kajaan’s interest in the apartment building and the Dundas Street stores from the date of Olga’s death until the properties were sold in 2018 and 2020) be treated? and,
(3) What if any compensation should be allowed to the Estate Trustee having regard to his conduct generally and to the factors set out in Laing Estate v. Hines, 1998 CanLII 6867 (ON CA)?
Analysis
[8] Janine has raised many concerns about the form content of the accounts. Some objections are purely technical points; points which in substance have no underlying impact on the amounts reflected in the accounts themselves. Others involve what are, in the scheme of things, extremely small amounts which, even collectively, would hardly justify the time and expense involved in bringing and arguing this application. More importantly, with one exception which I will deal with separately below, the financial impact of the transactions objected to is less than $15,000. The Estate Trustee has already agreed to reduce his compensation by more than the financial impact of these objections.
[9] While I accept that there are perhaps some “technical errors” in the presentation of the accounts, it must be remembered that this was a large, somewhat complex estate, whose administration has extended over five years. Sometimes, perfection is the enemy of the good. I am not prepared to reject the accounts on the basis of minor, technical errors, largely because the cost and delay that would result from making such an order would far outweigh any discernible benefit.
[10] An estate trustee is not required to meet a standard of perfection; rather, the standard of care of an estate trustee with respect to maintaining accounts is the standard of a person using ordinary care and diligence in managing their own affairs: Toller James Montague Cranston (Estate of), 2021 ONSC 1347.
[11] Andrew has been asked to account for several years of activity. His mother did not keep electronic records and his accounting fell in the middle of a world-wide pandemic. Where he is not able to provide vouchers to Janine’s satisfaction, he (or Katherine) has provided an explanation for the reasons for the expense or documentation to justify the amount of expense charged to the estate. If there are items which cannot be explained, they are de minimus. Andrew appears to have acted honestly and in good faith and the accounts, in all the circumstances, meet the standard of ordinary care and diligence required.
[12] The one specific issue that does warrant further consideration is the question of compensation to Katherine for her management of Kajaan’s indirect interest in the properties co-owned by Kajaan, through SHOD, with Olga’s brother, Don Hrehorsky. The accounts show that Katherine has received payments of about $66,000 for her management role of the properties over the period from Olga’s death in 2015 until the Dundas property was sold in 2018 and the apartment building was sold in 2020. Mr. Wagner says that the amount is, in fact, more than that now.
[13] Mr. Wagner complains that there is no evidence supporting the reasonableness of the payments made to Katherine to perform this role of property manager. He further complains that, if Katherine is to be paid for managing Kajaan’s interest in the properties, the value of those properties should be excluded from the capital amounts used to calculate the Estate Trustee’s compensation. I cannot accept these submissions.
[14] Katherine is the President, Secretary and Treasurer of Kajaan. As such, she has a long history of being paid via Kajaan distributions to compensate her for her management and oversight of Kajaan’s interest in the properties. This dates back to well before Olga’s death. Further, the evidence is clear that Don was uncooperative with the Estate after Olga died. SHOD was owned half by Kajaan (Olga’s company) and half by Don. There was no shareholders’ agreement. As a result, the process of liquidating Kajaan’s indirect interest in the properties was a long and arduous process. Kajaan’s interest in the properties had to be managed in the meantime. Katherine was appropriate for this role as she had been doing it already. The work had to be done; Katherine did the work. The amounts in issue are not unreasonable given the history of payment, the overall values of the properties themselves and the difficult circumstances that prevailed throughout the period of realization.
[15] Nor am I prepared to reduce the Estate Trustee’s compensation on account of Katherine’s property management role. Katherine looked after the Estate’s interest in maintaining the properties pending sale; the Estate Trustee looked after the actual realization of value for the benefit of the Estate, including negotiating with, and eventually suing, Don so the properties could be sold. While Mr. Wagner may be right that an estate trustee who delegates every one of his responsibilities to paid agents ought not to be paid under the tariff as well, this case is far removed from such a scenario.
[16] I make no adjustment for the management fees paid to Katherine.
[17] Janine argues that Andrew has administered the Estate with an uneven hand, disadvantaging her at every turn. She argues that this conduct was sufficient to have him removed from office, and so it is equally sufficient to deny him any compensation for his actions as Estate Trustee.
[18] Both sides filed lengthy affidavits, largely defending the righteousness of their own positions and disparaging the opposite party. These conflicting positions cannot be reconciled on a paper record.
[19] In any event, the existence of animosity between an estate trustee and a beneficiary is not, standing alone, a basis for removal of the trustee. Nor, in my view, is it a basis to deny the estate trustee compensation. Janine has received all the interim distributions that her siblings have received. Andrew’s role as Estate Trustee obliged him to realize on the assets promptly. Janine had no right to remain in her mother’s home indefinitely. The Estate offered to pay her rent for her own accommodation. The arrangements for the payment of a bequest to Olga’s grandchildren were explained and, in my view, do not support the animus Janine attributes to Andrew. He has a reasonable explanation for setting up those payments as he did.
[20] I would not deny Andrew compensation on the basis of alleged misconduct or lack of even handedness.
[21] The proper approach to estate trustee compensation is to look, not only to the “tariff” of 2.5%, but overall to five factors concerning the administration of the estate. The five factors cited in Laing v Hines come from the 1905 decision in Re Toronto General Trust and Central Ontario Railway:
(i) magnitude of the trust;
(ii) care, responsibility and risks assumed by the fiduciary;
(iii) time spent by the fiduciary in carrying out his responsibilities;
(iv) skill and ability required and displayed by the fiduciary; and
(v) results obtained and degree of success associated with the efforts of the fiduciary.
[22] The value of the Estate is upwards of $10 million. The Estate Trustee took on most of the work himself, delegating to paid professionals in only certain, specific instances. He spent over 500 hours on estate administration matters. The assets increased in value under his administration. There have been substantial interim disbursements to the beneficiaries, the first within six months of Olga’s death.
[23] Taking into account all factors, I find $267,859.96 fair and reasonable compensation for the Estate Trustee in this case.
Costs
[24] Janine’s application to remove Andrew as Estate Trustee was, in the end, effectively abandoned. I award the Estate Trustee partial indemnity costs of $20,000 (all inclusive) for this application, payable by Janine out of her next distribution.
[25] If successful on the passing of accounts, Janine would have sought partial indemnity costs of $48,400. The Estate Trustee seeks partial indemnity costs of $36,147. In the circumstances, I award the Estate Trustee costs of $35,000 (all inclusive) for the passing of accounts application, also payable out of Janine’s share of the next distribution.
Penny J.
Released: December 15, 2021
COURT FILE NO.: CV-20-002027-00ES
DATE: 2021-12-15
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE ESTATE OF OLGA G. SUBOCH, deceased
BETWEEN:
SUSAN JANINE SUBOCH
Applicant
-and-
ANDREW PETER SUBOCH in his personal capacity and in his capacity as estate trustee of the estate of Olga Grace Suboch, KATHERINE ANNE SUBOCH, JACKSON SUBOCH, SYDNEY SUBOCH, AVIVA SUBOCH and THE CHILDREN'S LAWYER
Respondents
REASONS FOR JUDGMENT
Penny J.
Released: 2021-12-15