COURT FILE NOS.: CV-08-00014621-00ES and CV-19-615298-0000
DATE: 20221221
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOHN VEIGA
Applicant
– and –
MARGARET VEIGA, in her personal capacity and in her capacity as Estate Trustee of the Estate of Rita De Jesus Bernardo, deceased, LUCY VEIGA and IRENE VEIGA
Respondents
– and –
WATCHTOWER BIBLE & TRACT SOCIETY OF CANADA
Applicant
– and –
MARGARET VEIGA, ESTATE TRUSTEE OF THE ESTATE OF RITA DE JESUS BERNARDO, DECEASED
Respondent
Praniet Chopra and Brendan Donovan, for the Applicant
Margaret Veiga, Self-representing
Elaine Yu, for the Respondent, Irene Veiga
D. Grant Fedorak, for the Applicant
Margaret Veiga, Self-representing
HEARD: October 18 and 19, 2022
reasons for decision
dietrich j.
[1] The outstanding issues in these applications have been the subject of a dispute among three grandchildren of the late Rita De Jesus Bernardo (the “Deceased”), which began in 2010. The grandchildren are the applicant John Veiga (“John”), and his sisters, the respondents, Margaret Veiga (“Margaret”) and Lucy Veiga (“Lucy”).
[2] The Deceased died on August 28, 2008. In her last will and testament dated May 4, 2000 (the “Will”), the Deceased appointed Margaret as Estate Trustee. She left a $20,000 legacy to Watch Tower Bible and Tract Society of Canada (“Watchtower”), and she directed a division of the residue of her estate (the “Estate”) among John, Margaret and Lucy equally.
[3] John brought an application against Margaret, as Estate Trustee, and others; Margaret brought a cross-application, and later, Watchtower commenced an application in Brampton against Margaret, as Estate Trustee. Justice Hainey ordered that the Brampton application be heard in Toronto together with the other applications.
[4] In his application, John asserted that he was entitled to more than a one-third share of the Estate because he was a dependant of the Deceased, and he had made substantial improvements to the Deceased’s residence at 550 Dovercourt Road, in the City of Toronto, in the Province of Ontario (the “Dovercourt Property”) to convert part of it into rental units. John was residing at the Dovercourt Property at the time of the Deceased’s death. The Dovercourt Property is the only significant asset of the Estate.
[5] Margaret, qua Estate Trustee, and John, each with the assistance of legal counsel, entered into a settlement agreement in November 2010 (the “Settlement Agreement”). Under the Settlement Agreement, the Dovercourt Property would be conveyed to John concurrent with a payment he would make to the Estate. The Settlement Agreement also imposed certain other obligations on John relating to the Dovercourt Property. Following the execution of the Settlement Agreement, Margaret attempted to set it aside or have it declared unenforceable. John succeeded in obtaining an order on a summary judgment motion confirming that the Settlement Agreement was valid, binding and enforceable. Specific performance of the Settlement Agreement, being the conveyance of the Dovercourt Property to John, however, was contingent on an accounting for expenses paid, and financing costs, among other things.
[6] John submits that Margaret, who is now self-representing in this matter, has delayed the specific performance of the Settlement Agreement for the past nine years. He asserts that she did so by, among other things, breaching timetables ordered by the court, serving three notices of appeal, demanding a judicial review, writing to the Chief Justice of the Superior Court of Ontario, emailing various notices of motion, taking action to set aside orders, threatening lawyers, and making allegations of bias against judges, all of which led to the delay in the implementation of the Settlement Agreement. John also asserts that Margaret has not provided an accounting of her administration of the Estate and disclosure of Estate information despite court orders to do so.
[7] Margaret submits that she did not unduly delay the administration of the Estate or the specific performance of the Settlement Agreement. She asserts that her efforts were aimed at ensuring that John comply with the terms of the Settlement Agreement. She contends that he has still not done so.
[8] On June 9, 2019, the parties appeared before Wilton-Siegel J. to seek advice and direction on the administration of the Estate. In his order dated June 9, 2019 (the “Wilton-Siegel Order”), Wilton-Siegel J. identified a number of remaining issues to be addressed arising out of the within applications. In these Reasons, I will address each of these remaining issues in turn. I will also address two remaining issues that were not specifically identified in the Wilton-Siegel Order but are important to the proper administration of the Estate. They are Margaret’s obligation to account for her administration as Estate Trustee, and John’s obligation to fully comply with paragraph 11 of the Settlement Agreement.
Preliminary Matters
a) Margaret’s request for an adjournment and my recusal
[9] At the outset of the return of this hearing, Margaret asked that the matter be adjourned, and that I recuse myself from hearing the application on the basis of bias.
[10] Margaret alleged that I showed bias at the hearing I held on June 24, 2022, and in this hearing because I did not permit her to bring forward her materials; to show the court certain orders made by the court; to show the court her accounting; and to bring a motion to set aside my order vesting the Dovercourt Property in John. Margaret asked that the application be adjourned to allow her to bring a motion before the Chief Justice of the Superior Court of Justice to address the issues in the within applications that, in her view, have not been properly addressed, and to case manage the applications.
[11] The court rose to allow me to consider Margaret’s submissions. Following the recess, I ruled that there was no air of reality to Margaret’s claim that I exhibited bias, actual or perceived. I found that no right-minded person who was reasonably informed of the relevant facts of this case would conclude that I had conducted myself in a manner that raised a real or perceived apprehension of bias or a lack of objectivity toward Margaret.
[12] My reasons for coming to this conclusion included the following. Margaret is a self-represented litigant who has considerable experience litigating this matter, which was commenced in 2008. She also benefited from independent legal advice when the Minutes of Settlement were negotiated and signed. Notwithstanding this experience, Margaret failed to file any sworn material in response to the issues to be decided today. Margaret says that she intends to bring her own motion, but she has not prepared a notice of motion or affidavit evidence in support of her motion.
[13] Notwithstanding, I did permit Margaret to bring to my attention unsworn materials that she presented to the court and uploaded to Caselines. Margaret was also free to direct me to orders of other judges, most if not all of which have been uploaded to Caselines. I also permitted Margaret to bring to my attention the Estate accounting that she prepared but is incomplete.
[14] I did not allow Margaret to bring a motion to set aside the vesting order that I had already granted. At the June 24, 2022 hearing, I decided that the matter of the vesting order was res judicata. Margaret advised the court that she had appealed my June 24, 2022 decision but withdrew the appeal because she preferred to appeal to the Chief Justice of the Superior Court of Ontario.
[15] I declined to adjourn the matter to permit Margaret to appeal to the Chief Justice of the Superior Court of Justice to review and case manage this case. Margaret has already been advised by the Divisional Court that she is not precluded from writing to the Chief Justice but that her request is vexatious.
[16] In my view, my conduct in this matter does not demonstrate partiality. An apprehension of bias must rest on strong grounds and compelling and cogent evidence. Margaret had not adduced such evidence. I declined to recuse myself.
b) Irene Veiga’s request to be excused
[17] Irene Veiga (“Irene”) is the daughter of the Deceased and the mother of John, Margaret and Lucy. She is not a beneficiary under the Will. She has been drawn into the litigation, in part, because Margaret alleges that Irene lent money to John to renovate the Dovercourt Property for which she has not been repaid. Margaret also alleges that Irene is incapable of managing property and in need of a litigation guardian and a guardian of property. Margaret has brought a guardianship application, which has not been scheduled.
[18] Irene is represented by counsel in this matter, and she submits that she is capable of managing her property. Irene further submits that she has no interest in the proceedings and asks to be excused from the hearing. She confirms that she is not seeking any costs. Irene is excused.
Background Facts and Chronology
[19] The Municipal Property Assessment Corporation assessed the value of the Dovercourt Property at $694,000 on January 1, 2008.
[20] Pursuant to the Settlement Agreement, John was permitted to receive the Dovercourt Property on an as-is basis, provided that he pay the Estate $340,000 at the time of transfer. The value over and above $340,000 was agreed to be John’s share of the Estate. John also agreed to pay all land transfer tax or conveyancing taxes, and he agreed not to sell the Dovercourt Property within 36 months of the transfer without first offering a right of first refusal to Margaret and Lucy. The Settlement Agreement also contemplated the setting aside of $20,000 for Estate expenses, and provided that John would be responsible for one-third of any Estate expenses in excess of the $20,000, including all costs of the Dovercourt Property paid by the Estate between the date of death and the date of transfer. In addition, $20,000 of the $340,000 was to be paid to Watchtower, $20,000 was allocated to Estate expenses, and Margaret and Lucy would each receive $150,000.
[21] Pursuant to paragraph 11 of the Settlement Agreement, John was required to declare all rent received in respect of the Dovercourt Property “in his own tax returns and to re-file any tax returns for past years.” John also indemnified the Estate Trustee and the Estate from any tax liability regarding the rental income.
[22] Each of Lucy and Margaret, as beneficiaries, signed a form of “Consent and Acknowledgment of Beneficiaries”, which was attached as Schedule “A” to the Settlement Agreement.
[23] After the Settlement Agreement was signed, Margaret challenged its validity on the basis that John was in breach of its terms. Accordingly, she reasoned that the Dovercourt Property could not be conveyed to him.
[24] Margaret attempted to settle the issues with John arising out of the Settlement Agreement on June 21, 2012. Her offer was contingent on John complying with paragraphs 8 and 11 of the Settlement Agreement.
[25] Justice Stinson granted summary judgment on John’s motion to enforce the settlement. Justice Stinson found that the Settlement Agreement was valid and binding. In his endorsement dated November 14, 2013 (the “Summary Judgment Order”), Stinson J. invited the parties to appear before him for “clarification or related relief.”
[26] The parties appeared before Stinson J. at case conferences to seek direction on how to deal with the accounting and adjustments to determine the purchase price John would ultimately pay, taking into account expenses relating to the Dovercourt Property that Margaret had paid personally, and financing costs that John may have incurred because of the delay in the transfer.
[27] Margaret filed a notice of appeal of the Summary Judgment Order but, ultimately, did not pursue it. Justice Stinson declined to give further direction until the issues of the appeal were resolved. More than two years passed.
[28] On January 15, 2016, Margaret served a notice of intention to act in person.
[29] Justice Stinson directed that a motion be brought to deal with the accounting issues once it became clear that the parties could not resolve them on their own. On August 2, 2016, having heard the motion, Stinson J., in a written endorsement, ordered the parties to circulate written submissions regarding a) the financing cost John would have incurred had the Dovercourt Property transaction been completed on December 20, 2010; and b) the expenses that the Estate had borne since December 20, 2010 (e.g., property tax, utilities and insurance), including expenses referred to in paragraph 10 of the Settlement Agreement for which John was liable to pay one-third. In his endorsement, Stinson J. directed that if, having circulated this information, the parties could not agree on a Statement of Adjustments, and the amount to be paid by John, by September 16, 2016, then the parties were to file sworn affidavits and make written submissions to the court for Stinson J.’s review, following which he would rule on the terms on which the transfer would take place. Alternatively, if the parties, reached a consensus, Stinson J. would issue a vesting order. Justice Stinson also invited the parties to make written submissions on the issues that Margaret asserted were outstanding if she and John could not resolve them between themselves. Justice Stinson’s endorsement stated that he would address costs once the outstanding issues had been resolved. Both parties filed written submissions by September 30, 2016. Justice Stinson did not release a decision regarding these submissions.
[30] In the summer of 2018, counsel to Watchtower brought an application in the Brampton court to investigate why the Estate had not been administered and the legatee had not been paid. A number of attendances were held in the Brampton Court before the matter was transferred to this court. It is Watchtower’s evidence that at the hearings in the Brampton Court, Margaret never disclosed the existence of the Settlement Agreement.
[31] In March 2019, Margaret circulated draft motion materials, and the parties consented to a timetable for the exchange of motion materials for a motion to be heard on May 24, 2019. Margaret advised the parties that she was unwell and needed more time to file her motion materials. The parties accommodated her request, but she never served and filed finalized motion materials.
[32] Watchtower proceeded with its motion on May 24, 2019 to have Margaret removed as an Estate Trustee and replaced by Brian Blosser, an accountant. Justice Conway granted Watchtower’s motion. Justice Conway found that Margaret was too invested in her own issues, which were clouding her judgment as Estate Trustee.
[33] In July 2019, Margaret advised John’s counsel that she would be filing her motion record soon.
[34] The within applications were eventually transferred from the Civil List to the Estates List.
[35] On December 9, 2019, McEwen J. wrote an endorsement directing Margaret to produce for Mr. Blosser: a) all Estate bank statements and records; b) all Estate tax returns; c) a listing of all Estate assets; d) payment of all insurance and property taxes since the death of the Deceased; and e) any documents she intended to rely on for the implementation of the settlement to support her claim for reimbursement.
[36] Counsel to Watchtower wrote to Margaret three times between December 2019 and January 2020 to remind her of McEwen J.’s order that she deliver certain Estate documentation to Mr. Blosser.
[37] On March 13, 2020, McEwen J. scheduled a motion before him on June 4, 2020 to deal with the Dovercourt Property and related issues. There is no evidence in the record before the court of a motion having been heard by McEwen J. on June 4, 2020.
[38] On July 14, 2020, Margaret circulated a notice of motion for direction in which she sought that “all the outstanding issues in the estate matter be dealt with so that the estate can be properly accounted for, the taxes may be filed for the estate and the rental income collected by John Veiga and not provided to the estate, and a final administration of the estate can be accomplished”, among other relief, including a setting aside of the orders of Stinson J., Conway J., and McEwen J., and an order that the summary judgment of Stinson J. be set aside or stayed.
[39] On June 9, 2021, the parties appeared before Wilton-Siegel J., who spent a full day with them attempting to resolve, or at least identify, remaining issues. The Wilton-Siegal Order set out 11 issues to be addressed, including the conveyance of the Dovercourt Property to John. The Wilton-Siegel Order provided that if John could provide satisfactory evidence to Mr. Blosser, as Estate Trustee, that John had reported on his own tax returns all of the rental income from the Dovercourt Property from the date of the Settlement Agreement, then an order vesting the Dovercourt Property would issue, provided that, at the time of the conveyance of the Dovercourt Property was made to John, John transferred to Mr. Fedorak’s trust account $340,000 to the credit of the Estate.
[40] In the Wilton-Siegel Order, Wilton-Siegel J. suggested that Stinson J. deal with various outstanding issues “if he is able.” Justice Stinson declined to do so on the basis that he had last dealt with the case on a substantive basis eight years earlier. Justice Stinson directed that the matter be dealt with by a judge on the Estates List.
[41] On May 4, 2022, Mr. Blosser confirmed that John had satisfied him that all of the post-Settlement Agreement rental income had been reported in John’s income tax returns, and Mr. Blosser signed a consent to the vesting of the Dovercourt Property in John.
[42] Because John had complied with the condition precedent to the vesting order, as set out in the Wilton-Siegel Order, I signed the vesting order on June 24, 2022, and scheduled a two-day hearing at which the unresolved issues as listed in the Wilton-Siegel Order would be heard.
[43] Margaret sought leave to appeal my June 24, 2022 Order. Justice Corbett, on behalf of the Divisional Court, directed the Registrar to issue a notice pursuant to r. 2.1 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) that Margaret’s motion for leave be dismissed as an abuse of process because it appeared to be a collateral attack on the Wilton-Siegel Order and was an abuse of process. Margaret’s appeal was dismissed pursuant to the r. 2.1 notice. Later, Margaret withdrew her motion and requested leave from the Chief Justice of Ontario to bring a motion under r. 59.06 to set aside or vary my June 24, 2022 Order. Justice Corbett directed that a motion under r. 59.06 and the grounds provided by Margaret would be an abuse of process.
[44] This hearing is the two-day hearing I scheduled on June 24, 2022 to address the remaining outstanding issues as identified in the Wilton-Siegel Order.
The Unresolved Issues
[45] As identified in the Wilton-Siegel Order, there were, following the Stinson Summary Judgment Order, certain financial adjustments that needed to be made to determine whether the final purchase price that John would pay at the time of the conveyance was more or less than $340,000.
[46] I will address each of the issues identified in the Wilton-Siegel Order, as well as two other outstanding issues in the Estate administration.
1. The transfer of title to the Dovercourt Property to John pursuant to the Settlement Agreement
[47] The Wilton-Siegel Order directed the vesting of the title to the Dovercourt Property in John subject to a condition precedent. Once the condition precedent was met, the Wilton-Siegel Order directed that the vesting order issue. The condition precedent was met, and the vesting order issued as part of my June 24, 2022 Order.
2. Comfort to the Estate Trustee (Mr. Blosser) that John, as the beneficial owner of the Dovercourt Property, had included all rental income since the date of the Settlement Agreement in his personal income tax returns
[48] Mr. Blosser signed a consent on May 4, 2022 indicating that, in his capacity as Estate Trustee, he was satisfied that John had “included all rental income from the [Dovercourt Property] in his income tax returns, in accordance with paragraph 1. of the [Wilton-Siegel Order] …” Once this condition precedent had been met, a vesting order issued on June 24, 2022, with the express consent of Mr. Blosser. At the same time, John paid into Mr. Fedorak’s trust account $340,000, as required by the Wilton-Siegel Order.
3. Discharge of a Certificate of Pending Litigation
[49] The certificate of pending litigation registered by John against the Dovercourt Property was discharged as part of my June 24, 2022 Order, which vested the Dovercourt Property in John.
4. Margaret’s claim against John for reimbursement of property expenses since the date of the Settlement Agreement
[50] It is not disputed that Margaret paid certain expenses relating to the Dovercourt Property after the date of the Settlement Agreement. John does not disagree that Margaret should receive reasonable reimbursement for Dovercourt Property-related expenses paid by her on behalf of the Estate. However, he insists on being provided with the relevant vouchers in support of these expenses and proof that Margaret paid these expenses personally.
[51] John submits that Margaret has failed or refused to provide receipts, invoices, or other particulars evidencing the expenses she has allegedly paid.
[52] On December 9, 2019, McEwen J. ordered Margaret to produce within seven days “any documents she intends to rely upon for the implementation of a settlement to support a claim by her for reimbursement”. John asserts that Margaret has failed to do so.
[53] Margaret submits that she did produce evidence of her expenses to both Mr. Blosser and to McEwen J., and that McEwen J. reviewed it. Justice McEwen does not refer to his review of the expenses in any of his endorsements that form part of the record. The record includes an Estate accounting, including some quarterly reporting, produced by Margaret. Based on the record, this accounting appears to have been sent to John’s counsel as well, and John’s counsel appears to have relied on it in making an offer to settle on December 11, 2013.
[54] Margaret’s accounting shows that the value of the Estate at August 27, 2008 was $695,127.83, comprised of the Dovercourt Property ($694,000) and personal property and bank accounts ($1,127.83). The accounting also lists “Liabilities/Expenses Paid by the Estate Executor.” These expenses include the following expenses relating to the Dovercourt Property a) home insurance for 2008 – 2013; property taxes for 2008 - 2012; and utility bills (sewage and water) for 2011-2012. The expenses also include accounting fees, legal fees, including the fees for the preparation of the Settlement Agreement, and legal fees for the administration of the Estate (more than $44,000), and estate administration tax ($7,840). Based on the accounting, Margaret submits that her out-of-pocket expenses totalled $96,262.04 minus $1,127.83 (the Deceased’s bank account proceeds) and equaled $95,134.21. Margaret’s accounting also shows an estimated loss of rental income of $2,200 per month from rental units on the 2nd and 3rd floors of the Dovercourt Property.
[55] In terms of voucher support, Margaret did provide vouchers in support of property taxes owing by the Estate, a property insurance reinstatement statement paid by the Estate, a receipt for accounting fees (retainer) of $300. Margaret’s accounting did not include copies of invoices for the legal fees or for the utility bills.
[56] Given that John had conceded that Margaret had personally paid expenses on behalf of the Estate but had not proven that she had personally paid all of the expenses shown in her accounting, I gave Margaret, a self-represented litigant, one more opportunity to provide proof of payment. She was given three weeks from the hearing date to provide additional documentation in support of her position that she, personally, paid each of the expenses shown in her accounting, and to provide any other accounting information in support of her claim. Margaret did not provide any additional proof or accounting.
[57] That said, based on the record, I was able locate information relating to Margaret’s expenses, that John appears to have accepted and on which he relied. When Stinson J. invited the parties to attempt to resolve this outstanding issue respecting the expenses incurred by Margaret, so that the amount payable by John to the Estate for the Dovercourt Property could be calculated, and the Dovercourt Property conveyed, John’s counsel did a calculation. On December 11, 2013, John’s counsel calculated a purchase price which, included $35,723.31 in recognition of the expenses Margaret paid for home insurance for 2010 (one month) - 2013; property taxes for 2010 (one month) - 2013; and utilities for 2011-2013. These figures appear to be based on the voucher material provided by Margaret to John as part of her accounting. Given that John appears to have relied on Margaret’s accounting and accepted that she made these payments, when he made an offer in December 2013, I am prepared to find that Margaret did personally pay at least $35,723.31 for these expenses for which she should be reimbursed from the Estate. I am also prepared to find that Margaret paid $300 to Melissa Coulson as a retainer for accounting services. Margaret included a receipt for this payment in the vouchers. Unfortunately, without further proof from Margaret respecting the payments of the other expenses, for example, legal fees and estate administration taxes, I cannot find that she personally paid these expenses. I find that Margaret is entitled to $36,023.31 on account of expenses incurred by her, qua Estate Trustee, for which she is entitled to be reimbursed from the Estate. This amount is owing by John to Margaret, as John alone benefited from these payments in respect of the Dovercourt Property.
5. Margaret’s claim against John for costs in this proceeding
[58] Margaret’s accounting shows that the Estate incurred legal fees of $5,747.82 payable to Jordan Atin; legal fees of $10,317.17 to Preben Schmidt; and legal fees of $27,500 to DeRusha Law Firm. However, her accounting does not include invoices from these law firms, or evidence of receipt of payment. Margaret prepared a summary of the payments made to DeRusha Law Firm showing the date of payment, the amount of payment, and the number of the Royal Bank cheque used to make each payment. However, her accounting does not include any copies of the Royal Bank cheques. It ought to have been a straightforward exercise for Margaret to obtain a receipt from each of these law firms as proof of payment of the fees by her. Margaret does not appear to have done so. Accordingly, I find that Margaret has not proven that she personally paid these accounts on behalf of the Estate. Margaret has also not demonstrated that she is entitled to costs as a self-representing litigant.
[59] John submits that Margaret should not be entitled to any costs payable by John, or the Estate, or any other party.
6. John’s claim against Margaret for costs in this proceeding
[60] As directed by Stinson J., John served and filed his bill of costs and written submissions on December 10, 2013. Margaret served and filed costs submissions as well. Justice Stinson did not issue any ruling relating the costs. Any costs awarded to John would affect the amount he would pay to the Estate for the Dovercourt Property, after appropriate adjustments were made for the expenses Margaret had incurred.
[61] As of June 9, 2019, being the date of the Wilton-Siegel Order, John’s claim for costs was $79,000 on a partial indemnity basis and $115,000 on a substantial indemnity basis. Based on an updated bill of costs, dated May 2021, submitted in this hearing, John’s costs up to and including a hearing on June 7, 2021, are $89,969.30 on a partial indemnity basis, and $129,351.43 on a substantial indemnity basis, plus disbursements of $11,257.68 and HST. I note that the updated bill of costs includes an amount for fees claimed by Barry Fish & Associates ($911). It is not clear why this claim is being made by John’s counsel.
[62] In addition, John submits a bill of costs for this hearing and hearings leading up to it after May 2021. In this October 17, 2022 bill of costs, John seeks costs of $11,512.10 on a partial indemnity basis, and $17,268.15 on a substantial indemnity basis, inclusive of HST.
[63] At this hearing, John relies on the written costs submissions he made to Stinson J. in December 2013. Specifically, he submits that a) he was successful in obtaining summary judgment; b) Stinson J. found that Margaret made oral submissions that were at odds with her testimony on cross-examination; c) John made a r. 49 offer on October 18, 2012, that would have allowed him to purchase the Dovercourt Property for $340,000 minus his legal fees at that time of $52,654.48, being $287,345; and d) Margaret made unsupported allegations that John was committing elder abuse against Irene.
[64] The court is authorized to make an award of substantial indemnity costs where an offer to settle has been made pursuant to r. 49. John made such an offer, but as will be seen below, based on the accounting relating to the purchase price that I find to be appropriate, it is unlikely that John will get a more favourable result than his offer. In all likelihood, John will have to pay a purchase price in excess of $287,345.
[65] Regardless of his offer, John submits that Margaret’s conduct since 2013, including her failure to fully account and to disclose Estate information to Mr. Blosser, her breaches of timetabling orders, her collateral attacks on prior orders, her vexatious efforts to thwart the implementation of the Settlement Agreement, her spurious claims about lawyers and judges all militate in favour of an award of substantial indemnity costs.
[66] There is little doubt that Margaret was misguided in a number of her attempts to advance her case, including persistent attempts to appeal, vary or set aside orders, her threats to report John’s counsel to the Law Society of Ontario, and her accusations of bias. Justice Conway found that Margaret allowed her judgment to become clouded owing to her personal investment in the issues in dispute, and as such could not properly carry out her duties as Estate Trustee. As a self-represented litigant, Margaret does not have a deep knowledge of court procedure. Her conduct in the litigation has certainly caused irritation and some delay, but I do not find that Margaret engaged in conduct that qualifies as reprehensible justifying an award of costs on an elevated scale.
[67] John was successful on the summary judgment motion, and he is entitled to his costs on a partial indemnity scale. Based on John’s bill of costs dated May 2021, his partial indemnity costs relating to the summary judgment motion (netting out the costs of Barry Fish & Associates), including the preparation of his costs submissions and work regarding Margaret’s notice of appeal of the summary judgment, amount to $35,212.90. I find his disbursements of $11,257.68 to be high, including photocopying charges and binding at nearly $5,000, notwithstanding this litigation has been ongoing for more than 12 years. Also, this bill of costs includes disbursements up to June 7, 2021, some of which would not relate to the summary judgment motion heard October 23, 2013. I would reduce the disbursements amount payable by the Estate to $7,500. Therefore, the total costs payable to John from the Estate respecting the summary judgment are $48,265.58, inclusive of HST.
[68] John shall be entitled to an additional award of costs, on a partial indemnity basis, in respect of his bill of costs dated October 17, 2022. That bill of costs includes John’s counsel’s time related to obtaining and registering the vesting order. I fix those costs at $5,000, inclusive of HST.
[69] I do not include in the costs awarded to John costs for the case conferences and the motion that followed the Summary Judgment Order. Those case conferences and the motion related to attempts by the parties, as directed by Stinson J. to attempt to resolve between themselves the adjustment and accounting issues, including Margaret’s claims for expenses of the Dovercourt Property paid by her or the Estate, and John’s claims respecting financing and claims for costs. In my view, at that time both parties were, in good faith, attempting to resolve the accounting issues, and they were complying with Stinson J.’s direction. There was no winner or loser in that process established by and overseen by Stinson J. to resolve the issues that needed to be resolved before the Dovercourt Property could be conveyed to John. The process was necessary to determine what amount John would pay to the Estate for the Dovercourt Property, accounting for all proper adjustments. As noted, at that time, John accepted that Margaret was owed money for expenses she had paid relating to the Dovercourt Property. It is appropriate that each of John and Margaret bear their own costs for this process.
[70] John asserts that costs payable to him should be borne by Margaret personally, and not by the Estate. I disagree. All actions taken by Margaret relating to the Settlement Agreement, prior to her removal in 2019, were taken by her as Estate Trustee. I am satisfied that she was pursuing John’s compliance with the Settlement Agreement, and in particular paragraph 11, for the benefit of the beneficiaries of the Estate, as well as herself. If the Canada Revenue Agency (“CRA”) determined that the rental income was income of the Estate, and there were no assets remaining in the Estate, both the Estate Trustee and the beneficiaries would be liable of the unpaid tax, interest and penalties.
7. John’s claim against Margaret for payment of forgone net rental income from the Dovercourt Property since the date of the Settlement Agreement
[71] John submits that the Settlement Agreement signed in 2010 provided that Margaret, qua Estate Trustee, would transfer the Dovercourt Property to John for $340,000. John further submits that if Margaret had honoured the Settlement Agreement, John would have obtained ownership of the Dovercourt Property on or before November 30, 2010. John asserts that as a result of the 12-year litigation, he could not obtain permits to perform the necessary renovations to rent out the basement suite of the Dovercourt Property because he was not the registered owner on title. John further asserts that Margaret breached the Settlement Agreement by refusing to transfer the Dovercourt Property to John following the Summary Judgment Order that declared the Settlement Agreement to be binding and enforceable. John contends that Margaret’s breaches of the Settlement Agreement sound in damages or equitable compensation, or both.
[72] John has been pursuing his claim for lost income in case conferences and written submissions since at least June 2016, though lost income was not an adjustment that Stinson J. listed in the items to be included in a Statement of Adjustments. The Wilton-Siegel Order nonetheless includes the lost income issue with the other accounting issues to be addressed in this hearing.
[73] John estimates that he lost income of $119,883 from June 2011 to July 3, 2020. He calculates this income based on historical averages of rental prices for one-bedroom apartments in Toronto using data from the Canada Mortgage and Housing Corporation website. John submits that if he had charged just $1,000 per month for the basement apartment from May 2011 to October 2022, he would have earned $149,000.
[74] I reject John’s claim for lost rental income on a couple of grounds. John has not adduced any evidence to show that he ever applied for permits to perform the necessary improvements to rent out an apartment in the basement of the Dovercourt Property, or that, if he did apply, he was refused such permits. John has also not adduced any evidence to show that he sought Margaret’s assistance as the Estate Trustee, and legal owner of the Property, in an application for the necessary permits. Similarly, John did not adduce evidence to show that such permits were necessary or that he applied for similar permits when he renovated the Dovercourt Property during the Deceased’s lifetime to add apartments on the second and third floors. Based on John’s affidavit sworn July 13, 2020, at the time those renovations were done, his grandmother’s property, generally, was being managed by his mother, Irene, who had been granted a power of attorney for property. He deposed that Irene, as attorney for property, asked him to renovate the Dovercourt Property to create a suite for the Deceased on the third floor. There is no evidence to suggest that Irene applied for a permit, or was required to apply for a permit, to allow the renovations to proceed.
[75] Further, the Summary Judgment Order did not result in a vesting order. Justice Stinson found the Settlement Agreement valid, binding, and enforceable, but he did not include a vesting order in the Summary Judgment Order. In the Summary Judgment Order, at para. 45, Stinson J. states: “Additionally, in view of the fact that John had enjoyed occupancy of the Dovercourt Property over the past several years but has not paid the purchase price and in view of the fact that expenses associated with maintaining the property (e.g. taxes, insurance, maintenance, etc.) have been incurred by various parties, some sort of accounting will be necessary.” Justice Stinson then invited the parties to appear before him again if the parties were unable to agree on a suitable process for resolving the accounting issues or fixing a closing date.
[76] The parties appeared before Stinson J. again on April 25, 2014, to “address the steps required to implement the judgment.” Justice Stinson deferred the case conference that had been scheduled because Margaret submitted that she would appeal the summary judgment and seek leave to extend the time to file a notice of appeal. Ultimately, Margaret abandoned that appeal. The parties were back before Stinson J. on March 3, 2016, to pursue the steps needed to implement the summary judgment both in relation to the real estate and accounting issues, as well as costs. On that date, Stinson J. directed a one-day hearing to deal with these matters and set a timetable.
[77] Following that hearing, on August 4, 2016, Stinson J., issued an endorsement, which stated that the purpose of the hearing was “to permit a proper calculation of the sum due by John Veiga in order to receive a conveyance of the ‘Dovercourt Property’.” Justice Stinson directed John to provide details of the financing costs he would have incurred had the transaction been completed on December 20, 2010; and he directed Margaret to provide details of all expenses incurred by the Estate to determine John’s liability for his one-third share. John’s counsel was directed to prepare a statement of adjustments based on this information, and if the parties could not agree, they were directed to file sworn affidavits and written submissions by September 30, 2016, on which Stinson J. would rule as to the amount that John would pay for the Dovercourt Property. Justice Stinson also permitted Margaret to pursue with John’s counsel “outstanding issues” raised by her cross-application. If the parties could not resolve the issues, they were directed to make written submissions on those issues as well, on which Stinson J. would rule. Because the parties could not agree on the statement of adjustments, each submitted written materials to Stinson J. by September 30, 2016, as directed by him.
[78] It can be said that Margaret did cause delay by attempting to appeal the Summary Judgment Order. While she was pursuing that appeal, which required a request for leave to extend the time to file the appeal, Stinson J. declined to work with the parties to resolve the accounting issues. That delay extended for more than two years. Margaret’s evidence is that she could not advance the appeal for two years while her mother was ill and hospitalized. However, Margaret cannot be held responsible for any delay while the parties were awaiting Stinson J.’s ruling on their written submissions, which never came.
[79] By December 9, 2019, when the parties were before McEwen J., they were still sorting out which payments were owed by whom in order to calculate the amount that John would be required to pay the Estate for the Dovercourt Property. Justice McEwen ordered that both Margaret and John submit records respecting the payment of insurance and property taxes since the Deceased’s death. Justice McEwen also ordered Margaret to produce other documentation and the accounting that she had been asked to produce earlier.
[80] Although not referred to by Stinson J. in any of his endorsements, para. 11 of the Settlement Agreement required John to account for all rental income earned at the Dovercourt Property since the Deceased’s death. Margaret was very much alive to this issue. On July 14, 2020, she wrote to John’s counsel, with a copy to counsel for each of the parties, and Lucy. In her email, she states: “The estate taxes are required to be filed properly with a full accounting of the rental income kept by John Veiga being confirmed to have been paid to the Canada Revenue Agency and prior to a distribution of the estate. I have advised all parties that I object to the distribution of the estate without the rental income taxes, interest, and penalties being paid to the Canada Revenue Agency and a clearance certificate to confirm the rental income taxes were fully disclosed to the CRA. … I have had the rental tax income issues before your client since 2008.” John himself acknowledged this obligation as late as May 26, 2022. In his affidavit sworn that day he states: “I agreed to personally declare all rent received in respect of the [Dovercourt Property] in my own tax returns.” However, there is no evidence to show that John has, in fact, accounted for the rental income between the date of the Deceased’s death and the date of the Settlement Agreement. Both Margaret and Lucy maintain that he has not.
[81] While it is true that Wilton-Siegel J. did not list this issue as one of the remaining issues, it cannot be ignored. Justice Stinson found that the Settlement Agreement was valid and binding. Therefore John is bound to comply with paragraph 11 of the Settlement Agreement. Paragraph 11 states that he will: “personally declare all rent received in respect of the Dovercourt Property in his own income tax returns and will re-file any income tax returns for past years. John hereby indemnifies the Estate Trustee and the Estate from any liability with respect to income and the payment of tax exigible thereon.” [emphasis added]. There is nothing in the Settlement Agreement or in the record that releases John from this obligation, notwithstanding his agreement to indemnify the Estate for any taxes owing should the Estate be found to be liable for tax on rental income following the Deceased’s death. In my view, the fact that Wilton-Siegel J. limited the period of John’s accounting of the rental income for the purposes of the vesting order, does not excuse John from his obligation under the Settlement Agreement. This accounting by John will undoubtedly also be a concern to Mr. Blosser who, in his capacity as Estate Trustee, is now potentially exposed to personal liability for any taxes assessed by the CRA as owing by the Estate.
[82] It was not until Wilton-Siegel J. issued his order dated June 9, 2021 that a date for the vesting of the Dovercourt Property was determined. Even then, the vesting depended on John, rather than Margaret, taking steps to address the condition precedent to the vesting. The onus was on John to prove to Mr. Blosser’s satisfaction that John had refiled his personal tax returns to account for the rental income earned in the Estate since the date of the Settlement Agreement. This taxation issue was a legitimate issue for Margaret to pursue as Estate Trustee. Until the income had been reported on John’s income tax returns, there was a risk that it would be attributed to the Estate, and as Estate Trustee, Margaret could have been held personally responsible for unpaid taxes, interest and penalties. A similar risk remains respecting rental income earned between the Deceased’s death and the date of the Settlement Agreement.
[83] Once John provided the proof satisfactory to Mr. Blosser, the vesting order was issued and a hearing date to deal with remaining issues was set. Though Margaret attempted to set aside the vesting order, she was unsuccessful, and the vesting order was not stayed pending her request for leave to appeal, therefore, she caused no material delay. I find that each of John and Margaret contributed to the delay in resolving the issues arising out of the Estate and the conveyancing of the Dovercourt Property to John.
8. Lucy’s claim for her costs against Margaret
[84] Lucy did not appear at the hearing today, and she did not make any written submissions on costs. Lucy did incur some legal costs earlier in these proceedings when she was represented by counsel.
[85] Mr. Fedorak, who is counsel for Watchtower, and not for Lucy, advised the court that Lucy had been in touch with him to advise him that she was not able to attend at court and that she asked him to advise the court that she would like to have her costs paid. Without any submissions from Lucy herself on costs, I cannot make a costs award in her favour. I decline to award any costs to Lucy.
9. Irene’s claim for her costs against Margaret or John, or both
[86] Prior to being excused from the hearing, Irene, through her counsel, confirmed that she is not seeking any costs in this proceeding. I decline to award any costs to Irene.
10. Watchtower’s claim against Margaret or John, or both, regarding its legacy
[87] Watchtower seeks its legacy of $20,000 plus five per cent interest.
[88] John submits that Margaret was the Estate Trustee (prior to Mr. Blosser’s appointment) and that he had neither the authority nor the responsibility to pay the legacy.
[89] John further submits that the Settlement Agreement expressly provided for the payment of $20,000 to Watchtower, and that John’s efforts to enforce the Settlement Agreement only assisted Watchtower in getting paid sooner. John further submits that he fully supported Watchtower’s 2019 motion to remove Margaret and replace her with Mr. Blosser. John opposes any request that he pay any interest on Watchtower’s legacy.
[90] Margaret submits that she would have liked to pay Watchtower its legacy, but the Estate had no liquidity, and she had already paid several Estate expenses personally.
[91] There is no dispute that Watchtower is entitled to its legacy of $20,000. There are sufficient assets in the Estate to pay the legacy in full. And since June of this year, when John paid $340,000 into the Estate, the Estate is in a position to pay the legacy. The Settlement Agreement expressly provides for the payment of the $20,000 legacy.
[92] As for interest on the legacy, the case law is clear that interest is payable. In Rivard v. Morris, 2018 ONCA 181, 141 O.R. (3d) 36, the Ontario Court of Appeal confirmed that the common law “rule of convenience” continues to apply, and it has not been subsumed by r. 65.01 of the Rules.
[93] The presumption is that legacies will be paid out within a year following the testator’s death (sometimes referred to as the “executor’s year”). Where payment is delayed beyond one year, and there is no specific provision for delay in the will, interest is payable. As noted in Rivard, at para. 53, the payment of interest is not connected to fault or even impossibility.
[94] In Rivard, the Court of Appeal did not conclude whether a discretion exists that would allow a judge to deny interest in a given case, but it did state that if such discretion exists, interest should only be denied in the clearest of cases. The Ontario Court of Appeal also declined to determine whether the court has discretion to vary the rate of interest where the rule of convenience applies. The rule of convenience provides for five per cent simple interest. In Rivard, the Court of Appeal overturned the trial judge’s decision to exercise his discretion not to award interest.
[95] However, in Rivard, at para. 58, Paciocco, J.A. observed that “the ‘rule of convenience’ is a rule of equity, and discretion is a hallmark of equity. Courts should arguably have the authority to adjust a rule of equity that produces unfairness.”
[96] In Campbell Estate v. Campbell, 2021 ONSC 2424, 68 E.T.R. (4th) 286, Gilmore J. exercised her discretion to vary the five per cent interest rate. Justice Gilmore did so on the basis that an award of interest at five per cent would result in a windfall for the claimant, which would not have been intended by the testator. Instead of a five per cent rate of interest, Gilmore J. awarded a rate of interest equivalent to a Canadian GIC investment.
[97] In the case at bar, I am similarly inclined to vary the interest rate prescribed by the rule of convenience. Watchtower is entitled to a legacy of $20,000. The interest on the legacy would amount to more than 50 per cent of the legacy itself. I am not persuaded that the Deceased intended such an enhanced legacy in this Estate, the assets of which had a date of death value of less than $700,000, and in respect of which residue of the Estate was left to the Deceased’s three grandchildren. With John’s claim settled, Margaret and Lucy have a maximum entitlement of only $150,000, less a share of the Estate expenses, including the costs of Watchtower.
[98] I take judicial notice of the fact that interest rates, generally, between 2009 and 2022 were less than five per cent, and considerably less so in some of those years. I find that an interest rate of two per cent is a fairer result in the circumstances.
[99] There is no need to further delay the payment of Watchtower’s legacy now that there is liquidity in the Estate. Watchtower shall be entitled to its legacy of $20,000 plus interest at two per cent for the period commencing on the first anniversary of the Deceased’s death to the date of payment, which payment shall occur not later than December 31, 2022.
[100] I find that the interest payable on Watchtower legacy is an Estate expense that must be borne equally by the residual beneficiaries. The fact that the Estate had no liquidity was not a problem of Margaret’s creation. As noted, I do not find that the delays in the Estate were entirely attributable to Margaret. Both Margaret and Lucy maintained their position that John had not complied with the Settlement Agreement insofar as his accounting of the rental income was concerned. I agree that he did not. It was not until John provided copies of his refiled tax returns to Mr. Blosser in 2022 that Mr. Blosser could be satisfied that John had properly accounted for the rental income post the Settlement Agreement. Based on the record, John continues to be in breach of the Settlement Agreement respecting the rental income between the date of the Deceased’s death and the date of the Settlement Agreement.
[101] Further, John has had the benefit of a significant appreciation in the value of the Dovercourt Property since the date of the Deceased’s death, as well as the benefit of rental income from at least two rental suites in the Dovercourt Property. It is fair that he, as a residual beneficiary of the Estate, who received a considerably larger share of the Deceased’s Estate than any other residual beneficiary, contribute to the interest amount owing to Watchtower.
11. Watchtower’s claim against Margaret or John, or both, for costs in this proceeding
[102] Watchtower also seeks its costs of $35,000 on a partial indemnity basis, and disbursements of $3,219.62. With tax, the total costs it seeks are $43,067.92. These costs are more than twice the amount of the legacy. However, the time spent by Watchtower’s counsel includes bringing the motion to have Margaret removed and replaced as an Estate Trustee, which appears to have led to a number of appearances in the Brampton Court, without resolution before its application was transferred to Toronto. Watchtower’s bill of costs (to May 20, 2022) shows 117.1 hours at $350 per hour, which would result in $40,985 on a full indemnity basis. Watchtower submits that it has “stopped counting” since May 20, 2022 and seeks costs on a partial indemnity basis of $35,000 plus disbursements and HST. Without any details of the time spent between May and October, 2022, I cannot calculate whether $35,000 accurately reflects costs on a partial indemnity scale. Partial indemnity costs on $40,985 would likely be in the $16,290 to $20,490 range. In any event, in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), the Court of Appeal for Ontario confirmed that, in addressing costs, overall, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.
[103] In my view, Watchtower’s costs are fairly borne by the Estate. Until Wilton-Siegel J. ordered John to pay $340,000 into the Estate, once he had accounted of the rental income following the date of the Settlement Agreement, there was no liquidity in the Estate with which to pay the legacy. There is no principled basis on which these costs should be visited on Margaret personally.
[104] In my view, costs of $17,500, plus disbursements of $3,219.62, and HST, for a total of $23,413.17, are fair and reasonable in the circumstances of this case.
[105] In the result, Watchtower’s entitlement from the Estate will be $20,000 for the legacy, interest of approximately $5,300 (depending on when payment is made), and costs of $23,413.17.
12. Margaret’s failure to produce documents, make disclosure, and fully account
[106] Margaret’s failure to produce all Estate-related documents, to respond to Mr. Blosser’s requests for disclosure, and to fully account for her administration of the Estate, as she was ordered to do is not an issue that Wilton-Siegel J. included in the schedule to the Wilton-Siegel Order. However, it remains an important outstanding issue. Margaret was ordered by Conway J. to deliver all documents relating to the administration of the Estate to Mr. Blosser by June 24, 2019, and she was again ordered by McEwen J. to deliver all such documents within seven days of December 19, 2019. Based on the record, she has not done so. In July 2020, Mr. Blosser asked Margaret to provide full disclosure regarding the Deceased’s bank accounts, and particulars of a loan. Margaret has not made this disclosure. Margaret continues to be bound by these obligations.
Disposition
[107] I make the following orders:
Mr. Blosser shall arrange to pay to Watchtower, by not later than December 31, 2022, its $20,000 legacy, plus simple interest thereon at the rate of two per cent from the date of the first anniversary of the death of the Deceased until the date of payment. Mr. Blosser shall also arrange for the payment to Watchtower of its costs of $23,413.17. Such payments shall be made from the funds paid by John to the Estate currently held in trust by Mr. Fedorak.
Margaret shall be entitled to reimbursement from John for certain payments she made in respect of the Dovercourt Property in the sum of $36,023. Such amount shall be added to the $340,000 purchase price paid by John to the Estate and allocated to Margaret’s share of the residue.
John shall be entitled to his costs of and related to the summary judgment motion on a partial indemnity scale in the amount of $48,265.58. The total costs payable to John are $53,265.58, inclusive of disbursements and HST, which amount shall be deducted from the sum of $340,000 plus $36,023 (Margaret’s reimbursement) plus $2,926.39 (being John’s one-third share of the amount payable to Watchtower over and above the $20,000 reserved for expenses) plus one-third of all Estate expenses going forward that are not covered by additional Estate assets discovered or recovered by the Estate Trustee, if any.
John shall not be entitled to any amount of damages or equitable compensation payable out of Margaret’s share of the Estate, or the Estate, generally for any lost rental income.
Margaret shall not be entitled to any costs.
John shall comply with paragraph 11 of the Settlement Agreement in respect of the rental income earned from the Dovercourt Property for the period from the Deceased’s death to the date of the Settlement Agreement. Copies of John’s relevant tax returns shall be delivered to Mr. Blosser before March 31, 2023.
Margaret shall comply with all outstanding court orders and respond to Mr. Blosser’s requests for production and disclosure. Margaret shall deliver to Mr. Blosser the disclosure he has requested by January 31, 2023, failing which Margaret risks being found in contempt, and the penalties that flow from such a finding. Without this disclosure, Mr. Blosser cannot determine the distribution of the Estate.
If Margaret has not provided such disclosure to Mr. Blosser by January 31, 2023, or if John has not delivered the aforementioned tax returns to Mr. Blosser by March 31, 2023, Mr. Blosser may, on notice to the parties, arrange a case conference before me.
Costs
[108] Success on this hearing as between John and Margaret has been divided fairly equally. Accordingly, each shall bear their own costs of this hearing, which, in the case of John, are included in his bill of costs dated October 17, 2022.
Dietrich J.
Released: December 21, 2022
COURT FILE NOS.: CV-08-00014621-00ES and CV-19-615298-0000
DATE: 20221221
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOHN VEIGA
Applicant
– and –
MARGARET VEIGA, in her personal capacity and in her capacity as Estate Trustee of the Estate of Rita De Jesus Bernardo, deceased, LUCY VEIGA and IRENE VEIGA
Respondents
– and –
WATCHTOWER BIBLE & TRACT SOCIETY OF CANADA
Applicant
– and –
MARGARET VEIGA, ESTATE TRUSTEE OF THE ESTATE OF RITA DE JESUS BERNARDO, DECEASED
Respondent
REASONS FOR DECISION
Dietrich J.
Released: December 21, 2022