COURT FILE NO.: CV-21-53
DATE: 20220110
SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE ESTATE OF Mabel Johnson, Deceased
RE: Nancy Johnson, Applicant
AND
Janice Johnson, in her personal capacity and in her capacity as Estate Trustee of the Estate of Mabel Johnson, Deceased, Hugh Johnson, Kelsey Johnson, Bradley Johnson, Holy Trinity United Church, Foster Parents Plan and Foundation for Children, Respondents
BEFORE: Madam Justice Heather J. Williams
COUNSEL: Kimberly A. Whaley and Bryan Gilmartin, counsel for the Applicant
Jean-Pierre Quintal, counsel for the Respondent, Janice Johnson
HEARD: In writing
COSTS ENDORSEMENT
A brief summary of the application
[1] The applicant, Nancy Johnson, had sought disclosure relating to the estate of her late mother, Mabel Johnson, including medical records, financial records, and the notes and files of the lawyer who prepared Mrs. Johnson’s last will.
[2] The applicant alleged that the circumstances surrounding the execution of Mrs. Johnson’s last will on August 12, 2015 were highly suspicious. The applicant did not receive a share of Mrs. Johnson’s estate in the 2015 will, although her sister (the respondent estate executor, Janice Johnson (“the respondent”)) and their brother, Hugh Johnson, did. The applicant said Mrs. Johnson had treated her three children equally in her previous will, signed in 2007, and that Mrs. Johnson’s decision to disinherit her was “inexplicable.” The applicant also argued there was evidence that Mrs. Johnson lacked capacity to execute the will.
[3] I dismissed the application. I found there was a rational and entirely understandable reason for Mrs. Johnson to have prepared a new will in August 2015 to remove the applicant as a beneficiary: The applicant had named herself as the beneficiary of some of Mrs. Johnson’s investment accounts and had then refused or failed to provide Mrs. Johnson with an accounting. Mrs. Johnson had started a court proceeding against the applicant to rectify the situation. There was evidence the two remained estranged from late 2014 until Mrs. Johnson’s death. Although there was evidence that Mrs. Johnson had been diagnosed with dementia by April 2015, there was also evidence that she was “very sharp” and knowledgeable about her finances one month later. Mrs. Johnson’s long-time lawyer, Mr. Leach, who prepared and witnessed the 2015 will had obviously felt comfortable taking instructions from Mrs. Johnson in August 2015. There was no evidence of undue influence. I concluded that the issues raised by the applicant had all been adequately answered by the respondent.
The positions of the parties with respect to costs
[4] The successful party, the respondent, seeks costs of $9,174.60, comprised of partial indemnity fees plus HST of $7,404.87 up to and including the hearing of the application and substantial indemnity fees plus HST of $1,769.73 for preparation of her costs submissions. The respondent seeks substantial indemnity costs for the costs submissions because I had encouraged the parties to settle costs, and the respondent says the applicant did not offer to pay any of the applicant’s costs.
[5] The respondent seeks this costs order against the applicant but says that to the extent that the costs are not recoverable from the applicant, they should be paid by the estate.
[6] The applicant argues that any costs payable to the respondent should be paid by the estate. The applicant also seeks $18,208.49 from the estate, representing her costs on a full indemnity basis. The applicant’s claim for costs is based on policy reasons. The applicant says she should not be required to pay her own costs when the impetus for her application was concern over whether her mother had testamentary capacity when she made her 2015 will.
A brief summary of the law with respect to costs
[7] 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.)
[8] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, 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.
[9] The Court of Appeal has made it clear that the fixing of costs does not begin and end with a calculation of hours times rates. It says the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay rather than an amount fixed by the actual costs incurred by the successful litigant. (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 26.)
[10] Traditionally, the costs of all parties in estate litigation were paid by the estate. In McDougald Estate v. Gooderham, 2005 1091 (ON CA), Gillese J.A. held that in Canada, the traditional approach had been displaced and that the modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the court finds that one or more of certain public policy considerations applies, to follow the costs rules that apply in civil litigation.
[11] The public policy considerations at play in estate litigation are primarily of two sorts: (1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered. (Sawdon Estate v. Sawdon, 2014 ONCA 101, at para. 85.)
Analysis
[12] I will turn first to the applicant’s position that any costs to which the respondent is entitled should be paid by the estate, and not by the applicant, and that the estate should also pay the applicant’s costs.
[13] The applicant relies on McDougald Estate and argues that her application fits into a public policy box and that all costs should therefore be payable by the estate. The applicant says she brought her application because of concerns that her mother lacked testamentary capacity to give instructions for the 2015 will. The applicant argues that if there are reasonable grounds to question a testator’s capacity, litigation will qualify as an exception to the “loser pays” costs principle. (Orfus Estate v. Samuel & Bessie Orfus Family Foundation, 2013 ONCA 225.)
[14] I reject the applicant’s position for the following reasons:
(1) Although there was evidence that Mrs. Johnson had been diagnosed with dementia by April 2015, I found that much of the applicant’s evidence in support of her concerns about her mother’s capacity was exaggerated, misleading or without foundation: See my reasons for decision, paras. 27, 28 and 29.
(2) In her affidavit, presumably to underscore her concerns about her mother’s capacity, the applicant said that in the August 2015 will, her mother had “inexplicably” disinherited her. In my reasons, however, I found that Mrs. Johnson’s motivation for disinheriting the applicant was rational and entirely understandable. Mrs. Johnson’s decision to cut the applicant out of her will was not a sign of incapacity and her reason for doing so would have been well-known to the applicant.
(3) If the applicant’s motivation for this litigation had been to satisfy herself that her mother had capacity to make the August 2015 will, the applicant would have had no reason to continue the litigation after she received the respondent’s application record. The affidavits of the respondent and Hugh Johnson included details about Mrs. Johnson’s capacity at the relevant time which should have been reassuring for the applicant. In her affidavit, for example, the executor noted that the will had been prepared and witnessed by Mrs. Johnson’s long-time lawyer, Bruce Leach, who had known Mrs. Johnson for more than 40 years. The executor included a copy of Mr. Leach’s affidavit of execution as an exhibit. In his affidavit, Hugh Johnson described Mrs. Johnson as being active and alert in 2014 and 2015. He said Mrs. Johnson’s cognitive abilities at that time were “generally excellent” and he attached a newsletter article and photograph that showed that Mrs. Johnson had been selected by staff at her retirement home to take part in a computer literacy program The respondent’s record also included an affidavit from lawyer Ron Gervais who had met with Mrs. Johnson in May 2015 and described her as “very sharp”. Mr. Gervais said he had no concerns about Mrs. Johnson’s capacity nor any concerns that she may have been acting under the influence of another person. As I said in my reasons, Mr. Gervais’s evidence did not prove that Mrs. Johnson had the capacity to execute a will four months after he met with her. It did, however, neutralize any suggestion that the dementia diagnosis mentioned in a doctor’s note in April 2015 necessarily meant that Mrs. Johnson lacked the capacity to execute the will in August 2015.
[15] Further, in August 2015, Mrs. Johnson had removed the applicant as a beneficiary under her will and had divided her estate between her other two children, the respondent and Hugh Johnson. I found that Mrs. Johnson had a valid reason for changing her will and I was not satisfied that there was evidence that she lacked capacity to do so. The costs orders sought by the applicant would have the effect of benefiting the applicant for attacking Mrs. Johnson’s will to the detriment of the respondent and Hugh Johnson. Such an order would be contrary to Mrs. Johnson’s testamentary intentions.
[16] As I have rejected the applicant’s arguments in respect of the public policy basis for her application, the costs rules in civil litigation apply. As the respondent was the successful party in the application, it is appropriate for the applicant to pay the respondent’s costs. The applicant is not entitled to costs.
[17] I have considered the factors in Rule 57.01, reproduced above. I have also considered the bills of costs filed by both parties.
[18] I have concluded that the costs requested by the respondent are entirely reasonable. The costs sought by the respondent are about half the costs of the applicant. The $350 hourly rate of the most senior lawyer representing the respondent, Mr. Quintal, who was called to the bar in 1990 and is based in Pembroke, is less than half the $800 hourly rate of the most senior lawyer representing the applicant, Mr. Whaley, who was called in 1995 and is based in Toronto. Mr. Quintal’s hourly rate is also $25 less than the hourly rate of the most junior lawyer representing the applicant, Mr. Gilmartin, who was called to the bar in 2020.
[19] The respondent seeks partial indemnity costs for the application hearing and substantial indemnity costs for her costs submissions. I do not consider the respondent’s argument that the applicant should have done more to try to settle the costs issue to justify an award of substantial indemnity costs. The respondent shall have her costs of the application and for preparation of the costs submissions on a partial indemnity basis.
[20] The applicant shall, therefore, pay the respondent costs of $8,758.19 ($7,404.87 plus $1,353.32), inclusive of fees and HST.
[21] If the respondent is unable to collect all or a portion of her costs from the applicant, she shall be indemnified by the estate. Such a “blended” costs order has been sanctioned by Ontario’s Court of Appeal. (Sawdon, at para. 93.)
Disposition
[22] For these reasons, I order the applicant to pay the respondent costs of $8,758.19, inclusive of fees and HST. I order that if the respondent is unable to collect her costs, or all of her costs, from the applicant, the respondent shall be indemnified to the extent of any shortfall by Mrs. Johnson’s estate.
Date: January 10, 2022
COURT FILE NO.: CV-21-53
DATE: 20220110
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE ESTATE OF Mabel Johnson, Deceased
RE: Nancy Johnson, Applicant
AND
Janice Johnson, in her personal capacity as Estate Trustee of the Estate of Mabel Johnson, Deceased, Hugh Johnson, Kelsey Johnson, Bradley Johnson, Holy Trinity United Church, Foster Parents Plan and Foundation for Children, Respondents
COUNSEL: Kimberly A. Whaley and Bryan Gilmartin, counsel for the Applicant
Jean-Pierre Quintal, counsel for the Respondent, Janice Johnson
COSTS ENDORSEMENT
Madam Justice Heather J. Williams
Released: January 10, 2022