Court File and Parties

COURT FILE NO.: CV-20-84458-ES (Ottawa)

DATE: 20220912

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sandra MacDonald Lamarche and Cynthia MacDougall, Applicants

AND:

Donna Ferguson and Joan McCosham, Respondents

BEFORE: Graeme Mew J.

COUNSEL: Michael N. Bergman, for the Applicants

Kathleen McDormand, for the Respondents

HEARD: In writing

COSTS ENDORSEMENT

[1] The applicants unsuccessfully sought an order for an accounting in relation to the estate of Alice MacDonald and, in particular, concerning a sum of $393,755 said to be outstanding or otherwise unaccounted for. An order was also sought for the respondents, who were trustees of Alice MacDonald’s estate, to distribute any outstanding balance of the estate.

[2] In my endorsement of 28 July 2022, I dismissed the application on the grounds that further litigation between the beneficiaries of Alice MacDonald’s estate and the estate trustees was both an abuse of process and foreclosed by a previous judgment: Lamarche v. Ferguson, 2022 ONSC 4412.

[3] In my endorsement, I indicated that I was presumptively of the view that the applicants should pay the respondents’ costs, and that if costs could not be agreed, I would receive submissions.

[4] The parties have now provided me with their submissions. The successful respondents seek costs on a full indemnity basis in the amount of $133,321.98 or, alternatively, costs on a substantial indemnity basis in the amount of $120,363.76 (both figures inclusive of disbursements and HST).

[5] Noting that their own full indemnity costs amount to approximately $51,700 (inclusive of taxes and disbursements), the applicants submit that the respondents should receive costs on a partial indemnity basis up to a maximum of $25,000.

[6] I would note that the application was prepared on the basis that it would be argued on its merits. In the event, however, when the application came on for hearing, I directed that counsel address only the issues of abuse of process and the effect of this court’s previous decision.

[7] The applicants do not take the position that they should not pay costs. The two issues that emerge from the submissions are the appropriate scale of costs and the principle of proportionality.

[8] The respondents say that as estate trustees, they should be fully indemnified for the costs and expenses which they incurred in defending the application. Although named as respondents in their personal capacity, the allegations made by the applicants related solely to the respondents’ administration of the estate of their late mother.

[9] Further, or in the alternative, the respondents argue that the allegations made against them were tantamount to unfounded allegations of fraud which would justify an award of full indemnity costs. Reliance is placed on the Court of Appeal’s recent pronouncement in 2651171 Ontario Inc. v. Brey, 2022 ONCA 205, at para. 12, that “unfounded allegations of fraud may attract serious cost consequences as a form of chastisement and a mark of the court’s disapproval because of their extraordinarily serious nature that go directly to the heart of a person’s very integrity”.

[10] I have reviewed the two affidavits of Sandra MacDonald-Lamarche sworn on 12 March 2020 and 17 February 2022 respectively. While Ms. MacDonald-Lamarche is quite clear that she does not believe that certain sums in her late mother’s account have been fully accounted for, she makes no allegations of fraud or dishonesty. I do not, therefore, accept the respondents’ argument that full indemnity costs should be awarded on such basis.

[11] The applicants argue that the respondents, having vehemently taken the position that the administration of the estate was completed, cannot now say that they should be treated as estate trustees entitled to be fully indemnified for defending this application as part of their duties as estate trustees.

[12] I find this argument somewhat disingenuous. The reason that the respondents were sued by the applicants is because of the allegation by the applicants that the respondents, as estate trustees, have failed to properly account for funds which should have formed part of the estate. Indeed, the relief sought in the application included a request for an order requiring the respondents to distribute any outstanding balance of the estate.

[13] Furthermore, the application was entirely without merit. It was not dismissed, as the costs submissions made by the applicants suggest, because the applicants took too long to commence their application. It was dismissed because it was an abuse of process and because it was foreclosed by a previous judgment of this court, consented to by the applicants, that “the estate may now be distributed subject to the payment of any outstanding liabilities”.

[14] In view of the foregoing, I see no principled reason why the respondents, as estate trustees, should not be fully indemnified for the expenses they have incurred as a result of the application.

[15] That said, the principle of proportionality must also be considered. There is a vast disparity between the legal fees incurred by the applicants and respondents respectively. It is well established that the reasonable expectations of the parties are a relevant factor in fixing costs.

[16] As the applicants observe, the respondents’ legal team consisted of no less than nine different fee-earners who spent a total of 262 hours, of which 224 hours was spent by senior counsel. Although the time incurred by fee-earners on behalf of the applicants was not much less (215 hours), the time spent by senior counsel was considerably less.

[17] I should say that I do not question that the time spent by the respondents’ lawyers, and the corresponding fees, were properly incurred. I take no issue with the hourly rates charged. The applicants came to the hearing with all issues on the table, and the respondents had to be ready to address all of those issues.

[18] I take into account as well that approximately $400,000 was in issue.

[19] Ultimately, the only bases that I see for adjusting the amount claimed by the respondents are the disproportionate amount of time spent by senior counsel and the reasonable expectations of the applicants.

[20] The extent of the indemnity provided to the respondents should be proportionate to the nature of the dispute and the applicants’ reasonable expectations. Taking all of the foregoing into account, I fix the costs payable by the applicants to the respondents in the all-inclusive amount of $100,000.

Mew J.

Date: 12 September 2022