COURT FILE NO.: CV-21-2189
DATE: 20221214
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Shelley Anne Woloski, Applicant
AND:
Ollie Woloski, Steven Morrison in his capacity as attorney for property for Ollie Woloski, Cathy Joanne Morrison, Debra Elizabeth Jackson, Gregory Michael Woloski and Kaitlyn Joleen Jackson, Respondents
BEFORE: Justice C. Boswell
COUNSEL: Ellen M. Snow for the Applicant
Sandra Monardo for Steven Morrison, Litigation Guardian of Ollie Woloski
HEARD: December 9, 2022
costs ENDORSEMENT
[1] The court is tasked with assessing the costs of this estate litigation.
OVERVIEW
[2] Bill Woloski had a will. It was dated October 22, 2009. It was pretty standard fare. He named his wife, Ollie Woloski, to be his estate trustee. If she was unable or unwilling to take on that role, he named his son-in-law, Steven Morrison, in her place. He left all of his estate to his wife, provided she survived him for 30 days. If she did not survive him his son, Gregory Woloski, was to get $20,000 and the balance of the estate was to be divided equally between his four children.
[3] On the same date that he made his will, Bill Woloski also signed a power of attorney for personal care. He named his wife as his prime attorney, with Steven Morrison being the first alternate and his daughter, Cathy Morrison, being his second alternate.
[4] Some time after October 22, 2009, Ollie Woloski’s health deteriorated. She fell into a state of mental incapacity from which she has never recovered. For reasons not evident in the record before the court, a falling out ensued between Bill Woloski and the Morrisons regarding Ollie Woloski’s ongoing care.
[5] On February 29, 2016 Donald McKee wrote a letter to Bill Woloski. Mr. McKee was a lawyer retained by Cathy and Steven Morrison. Mr. McKee referenced the falling out between Bill Woloski and the Morrisons. He told Bill Woloski that the Morrisons were resigning as his attorneys under his power of attorney for personal care. He also said the Morrisons thought Bill Woloski should make a new will.
[6] Bill Woloski took Mr. McKee’s advice. He executed a new will on June 2, 2017. In his revised will he named his daughter, Shelley Woloski, as his estate trustee. He directed that if his wife, Ollie, survived him for 30 days, his estate was to be held in trust for her care. This is not surprising, given that she was mentally incapacitated by this time. Should his wife not survive him, or otherwise following her death, the balance of the residue of his estate was to be divided equally among his four children.
[7] Bill Woloski suffered a stroke shortly after he executed his revised will on June 2, 2017. He passed away on March 30, 2021, leaving an estate valued at roughly $430,000.
[8] Shelley Woloski applied for a certificate of appointment as estate trustee of the estate of Bill Woloski in April 2021. Steven Morrison filed an objection to the application in his capacity as attorney for Ollie Woloski under a power of attorney for property executed by her on October 22, 2009. Mr. Morrison challenged the validity of the June 2, 2017 will asserting that Bill Woloski lacked the testamentary capacity to make it and that it was the result of undue influence.
[9] As a result of Steven Morrison’s objection, Shelley Woloski commenced this application on June 17, 2021 seeking, amongst other things, a declaration that the June 2, 2017 will was valid. This application was commenced in Newmarket.
[10] On November 16, 2021, Steven Morrison commenced an application in the Superior Court in Toronto, on behalf of Ollie Woloski. In his application, he sought, amongst other things, a declaration that the June 2, 2017 will was invalid and that the October 22, 2009 will was valid. In the alternative, he sought to replace Shelley Woloski as estate trustee in relation to the June 2, 2017 will.
[11] The applications were resolved by Minutes of Settlement executed on April 21, 2022. The essential terms of the settlement are as follows:
(a) Steven Morrison, on behalf of Ollie Woloski, abandoned his dispute over the validity of the June 2, 2017 will and withdrew his objection to Shelley Woloski being appointed estate trustee;
(b) Shelley Woloski was named the beneficiary of a RIF owned by Bill Woloski at the time of his death. She agreed that Ollie Woloski would be substituted as the beneficiary. The RIF was valued at roughly $31,000; and,
(c) Once Shelley Woloski attends to the expenses and liabilities of the estate of Bill Woloski, the residue of the estate is to be transferred to Ollie Woloski. Ollie Woloski will keep $30,000 of that residue and Steven Morrison, as her attorney for property, will distribute the balance among the four Woloski children in equal shares, as inter vivos gifts.
[12] The parties could not agree on costs as part of their settlement. Instead, they agreed that the issue of costs would be determined by the court.
THE PARTIES’ POSITIONS
[13] It must be appreciated that costs are being assessed on two levels here. It is important not to conflate the two. Different principles apply at each level.
[14] First, there is a dispute as to party and party costs in the litigation. Second, there is a dispute as to Shelley Woloski’s entitlement, as estate trustee, to be reimbursed by the estate of Bill Woloski for the expenses she has incurred in the litigation.
Steven Morrison’s Position
[15] Mr. Morrison’s position on costs is rather aggressive.
[16] By way of background, I assessed Mr. Morrison’s costs as litigation guardian in this proceeding in a hearing held September 8, 2022. At his request I fixed the costs he incurred on behalf of Ollie Woloski in this proceeding and the Toronto proceeding at $61,863.91 on a full indemnity basis. Those costs were payable from the property of Ollie Woloski.
[17] Mr. Morrison asserts that those costs have now risen to some $74,478.31, given additional fees and disbursements that have been incurred since September 8, 2022.
[18] Mr. Morrison submits, on behalf of Ollie Woloski, that Shelley Woloski should be compelled to personally pay Ollie Woloski’s costs fixed, on a partial indemnity scale, at $44,686.97. In the alternative, he submits that no costs should be ordered.
[19] The request for partial indemnity costs is largely grounded in the assertion that Ollie Woloski was the successful party in the litigation – that the resolution reflected a capitulation by Shelley Woloski to much of the relief sought by Mr. Morrison in the proceeding he commenced in Toronto on Ollie Woloski’s behalf.
[20] Mr. Morrison further urges the court to reject Shelley Woloski’s request to be indemnified by Bill Woloski’s estate for her costs incurred in this litigation. He contends that she acted unreasonably throughout the litigation and that her actions have consistently been motivated by self-interest and greed. She sought, he argues, to control the trust in favour of Ollie Woloski, which would have seen her paid regular fees for service. Moreover, as trustee she would have controlled the trust funds set aside for Ollie Woloski, allowing her to hold back funds with a view to benefiting herself as a residual beneficiary. Her intent, Mr. Morrison suggests, was simply to keep Mr. Woloski’s funds from coming under his control, as attorney for property for Ollie Woloski.
Shelley Woloski’s Position
[21] Shelley Woloski submits that each party should bear their own costs in the context of the litigation. It was settled. The settlement was a reasonable compromise. She takes issue with Mr. Morrison’s assertion of success in the litigation and indeed, contends that he achieved nothing of meaningful value to Ollie Woloski, despite incurring substantial costs.
[22] Shelley Woloski argues that there should be no question regarding her entitlement to be indemnified by Bill Woloski’s estate for the costs she has incurred in the litigation. She is his estate trustee. She is presumptively, she says, entitled to be reimbursed for her reasonable expenses, unless there is evidence that she has acted unreasonably or for her own benefit. Neither is the case here.
[23] Shelley Woloski submits that the reasonableness of her legal expenses is patent when considered against the costs incurred by Mr. Morrison, which were substantially higher.
THE GOVERNING PRINCIPLES
Party and Party Costs
[24] There was once a time when the presumption in estate litigation was that everyone’s costs would be paid by the estate. That time has long passed. In McDougald Estate v. Gooderham, 2005 21091 (ON CA), [2005] O.J. No. 2432 at para. 79, the Court of Appeal for Ontario held that “[t]he modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and…to follow the costs rules that apply in civil litigation.” The only exception to that general rule is where, for public policy reasons, it is appropriate that the estate bear the litigants’ costs. See also Bilek v. Salter Estate, 2009 28403 (ON SC), [2009] O.J. No. 2328 at paras. 5 and 6.
[25] The public policy reasons that might justify an order that all costs come out of the estate include: (1) circumstances where difficulties or ambiguities in the will that gave rise to the litigation are the fault of the testator; or, (2) where there are reasonable grounds upon which to question the execution of the will or the capacity of the testator. See McDougald at para. 78.
[26] The record before me does not support a conclusion that there is a public policy reason that might support an order that all parties’ costs be paid out of Bill Woloski’s estate. The June 2, 2017 will is not ambiguous. And while Mr. Morrison challenged the capacity of Bill Woloski at the time he executed the June 2, 2017 will, I have no evidentiary basis to conclude there were reasonable grounds for him to do so.
[27] In the result, the costs of the litigation, as between the parties, are to be assessed in accordance with the principles that generally apply to the assessment of costs in civil litigation. Those principles may be briefly stated.
[28] The court’s discretion to award costs is grounded in section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43 and is guided by Rule 57.01 of the Rules of Civil Procedure.
[29] Rule 57.01 lists a number of factors for the court to consider in the assessment of costs which include, but are not limited to the following:
(a) the result in the proceeding;
(b) any offer to settle;
(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 improper, vexatious or unnecessary or taken through negligence, mistake or excessive caution;
(g) the principle of indemnity; and,
(h) the concept of proportionality, which includes at least two factors:
i. the amount claimed and the amount recovered in the proceeding; and,
ii. 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.
See Elbakhiet v. Palmer, 2014 ONCA 544.
[30] The weight to be applied to any of the enumerated, or other, factors in any given assessment may vary. It is, however, now well-settled that the overarching principles to be observed in the exercise of the court’s discretion to fix costs are fairness, proportionality and reasonableness: see Beaver v. Hill, 2018 ONCA 840; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); and Moon v. Sher (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440 (C.A.).
[31] By convention, costs will be awarded to a successful party and will generally be measured on a partial indemnity basis: Bell Canada v. Olympia & York Developments Limited et. al. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.).
[32] In the overwhelming majority of cases, the assessment of costs occur following an adjudication, whether on a motion, application or trial. Occasionally, as here, the court is called upon to conduct a costs assessment following a settlement.
[33] Counsel referred me to a line of authority that supports the principle that the court will be slow to make a costs award where a proceeding is settled on all issues save for costs. See, for instance, Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304 at paras. 24-34 and Kearney v. Hill, 2017 ONSC 6306 at para. 27.
[34] It is important to be careful how such a principle is interpreted and applied. I do not understand any of the cases referred to me as suggesting that there is a presumption that costs will not be awarded where the parties have reached a settlement. If there were such a presumption, then parties would never settle on the basis that costs are to be assessed by the court. Such a term would be meaningless. And if it’s meaningless, it will be of no assistance as a means to push otherwise substantively settled proceedings across the settlement finish line.
[35] Where parties have managed to resolve the substantive issues between them but have left the issue of costs to be litigated, it is incumbent upon the court to give meaning to the parties’ agreement and to exercise its discretion to fix costs in accordance with the principles that guide that discretion.
[36] What I take from the cases cited to me is that the court must be particularly cautious in the way it approaches the “success” factor in the assessment of costs. Success is typically the most significant factor going to the issue of entitlement, though it also bears on the issue of quantum.
[37] In some instances, it might be patently obvious who the successful party has been in the litigation, notwithstanding a negotiated resolution. Other times it may not be so obvious. The caselaw is consistent in recognizing that the court should not attempt to run a “phantom trial” in an attempt to determine which party might have been successful on which issue had the matter actually proceeded to trial.
[38] Moreover, the court must be mindful of the fact that there may be a wide range of motivations for parties to settle at any given point in time and on any particular terms. See Dhillon v. Dhillon Estate, 2009 58607 (ON SC), [2009] O.J. No. 4459 (S.C.J.) at paras. 20-21. Those motives – which may bear on the issue of “success” – are generally not known to the court.
[39] In summary, my view is where the parties have reached a negotiated resolution of all substantive issues in a proceeding but have left the issue of costs to the court’s discretion, the court should consider and apply the usual principles that govern the exercise of its discretion, subject to the need to be particularly cautious about the assessment of the matter of success.
Trustee’s Expenses
[40] Shelley Woloski seeks reimbursement from the estate of Bill Woloski for the legal expenses she incurred in promoting and carrying out the trust set out in his June 2, 2017 will.
[41] She relies on s. 23.1 of the Trustee Act, R.S.O. 1990, c. T.23 which provides as follows:
23.1 (1) A trustee who is of the opinion that an expense would be properly incurred in carrying out the trust may,
(a) pay the expense directly from the trust property; or
(b) pay the expense personally and recover a corresponding amount from the trust property
(2) The Superior Court of Justice may afterwards disallow the payment or recovery if it is of the opinion that the expense was not properly incurred in carrying out the trust.
[42] Section 23.1 is consistent with the common law. In Geffen v. Goodman Estate, 1991 69 (SCC), [1991] 2 S.C.R. 353 at para. 74, Wilson J. confirmed a long standing principle that “trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred.” This principle is generally only departed from where the trustee has acted unreasonably or for his or her own benefit. See also Sawdon Estate v. Sawdon, 2014 ONCA 101 at para. 82.
DISCUSSION
Party and Party Costs
[43] Ollie Woloski’s claim for costs is grounded in the assertion that, notwithstanding the negotiated settlement, the court should conclude that she has been successful in this litigation. I do not accept that assertion and, in the result, am not prepared to award her costs.
[44] In my view, no party has been successful in this proceeding.
[45] There is nothing in the evidentiary record before me that would tend to justify the legal fees spent on this dispute. Indeed, I have some difficulty understanding why Steven Morrison thought it necessary to challenge Bill Woloski’s June 2, 2017 will at all.
[46] The challenge was based on what appears to me to be an ill-conceived notion that Bill Woloski lacked testamentary capacity on June 2, 2017 or that the will was the result of undue influence.
[47] There is no evidence before me to suggest that Bill Woloski lacked testamentary capacity. On the contrary, on its face the June 2, 2017 will appears eminently rational. It is largely consistent with the October 22, 2009 will save in the following two respects:
(a) A change in the named estate trustee. There are two rational reasons supporting that change. First, Ollie Woloski was mentally incapacitated and could not act as an estate trustee. Second, Steven Woloski had had a falling out with Bill Woloski and had essentially asked, through a solicitor’s letter, to be removed as alternate estate trustee; and,
(b) A change in the manner in which the residue of the estate was to be managed. In the October 22, 2009 will, the residue was left outright to Ollie Woloski. But given her incapacity, it was entirely rational that Bill Woloski establish a trust for his wife.
[48] All that is to say that the changes reflected in the June 2, 2017 will appear rationally connected to changes in the circumstances of Bill and Ollie Woloski’s lives. There is absolutely nothing untoward, suspicious or unfair about the changes made in the June 2, 2017 will.
[49] There is also no evidence that Shelley Woloski had any part to play in the amendments to Bill Woloski’s will. There is no evidence that she influenced her father in any way, much less unduly.
[50] Finally, all of Bill Woloski’s children were treated equally in the June 2, 2017 will. Steven Morrison argues that Shelley Woloski was favoured because, as trustee, she would be able to charge fees to the estate for managing the trust. That, to me, is a weak argument. As I have said, it made eminent sense for Bill Woloski to establish a trust for his incapacitated wife. Someone had to manage that trust. Whether Shelley Woloski would have actually charged fees for doing so, and how much those fees might have amounted to, can only be speculated about. But in any event, whoever managed the trust was entitled to charge fees for services rendered, in accordance with the law of this Province. There is nothing nefarious about that. Nor, in my view, can it be considered unfairly favourable to Shelley Woloski. It was entirely Bill Woloski’s choice who he named as estate trustee. He picked Shelley Woloski. There is nothing wrong with that.
[51] Shelley Woloski applied for a declaration that the June 2, 2017 will was valid. She got that declaration in the end. That fact tends to support a conclusion that Shelley Woloski was the more successful party in the end. Steven Morrison’s counsel urged the court, however, to look beyond this superficial success and to focus on the real substantive terms of the settlement.
[52] In particular, Ollie Woloski claims that the real substantive achievement in the litigation is that she managed to get the residue of Bill Woloski’s estate out of the control of Shelley Woloski. I do not see how that is a win. Bill Woloski expressly created a trust to manage those funds for Ollie Woloski’s benefit. His express wishes are not being honoured. Not only that, but the overwhelming majority of the residue is no longer going to be held in trust for Ollie Woloski, but rather paid out to her children as inter vivos gifts. I fail to see how that is a win for Ollie Woloski.
[53] I accept that Ollie Woloski achieved some success in that the designation of Bill Woloski’s RIF was changed. But in the grand scheme of things, that is small beer. It does not, in my view, justify a costs award in favour of Ollie Woloski.
[54] I also accept that Ollie Woloski made a number of offers to settle the proceedings between November 2021 and March 2022. Those offers do appear to be the basis of the negotiated settlement. But given that the applications have settled, the cost consequences provided for in r. 49 are not triggered. The offers suggest that Mr. Morrison, on Ollie Woloski’s behalf, made reasonable and concerted efforts to resolve the proceedings. That is to his credit. Having said that, those efforts do not change my opinion that (1) the challenge to Bill Woloski’s will was ill-conceived; and (2) no party has had any real success in these proceedings.
[55] My general impression, in the all the circumstances, is that the proceedings are the result of a personal conflict between Steven Morrison and Shelley Woloski. That conflict has essentially cost Ollie Woloski, a vulnerable, mentally incapacitated nonagenarian, a combined $110,000 in legal fees. Not to mention the roughly $400,000 in inter vivos gifts she is now compelled to make.
[56] There is no winner here.
[57] There will be no award of costs as between the parties.
Trustee’s Expenses
[58] Shelley Woloski is entitled to be reimbursed from the estate of Bill Woloski for her legal fees reasonably incurred in applying for a declaration as to the validity of his June 2, 2017 will. She was essentially compelled to do so when Steven Morrison filed his objection to her application for a certificate of appointment as estate trustee. She is also entitled to be reimbursed for the expenses she incurred in responding to Steven Morrison’s Toronto application.
[59] There is no basis to conclude that Shelley Woloski was at any time acting for her own benefit. The underhanded motives attributed to her by Steven Morrison are based entirely on speculation. There is no evidence before me upon which I could draw a reasonable inference that Shelley Morrison was driven by selfish motives.
[60] Moreover, her defence of the June 2, 2017 will appears entirely reasonable. It was, as I indicated, a patently rational and reasonable testamentary document. Bill Woloski enjoyed the testamentary freedom to make it and his wishes should not be easily set aside.
[61] In accordance with statute and common law, Shelley Woloski is entitled to be reimbursed for her reasonable expenses. I am satisfied that the amounts sought are reasonable and proportionate, having regard to the importance and complexity of the issues, the amounts at stake and the positions taken by the parties.
[62] Given that Ollie Woloski’s net share of the residue of Bill Woloski’s estate is fixed, any amount reimbursed to Shelley Woloski for expenses reasonably incurred by her does not, in the end, affect Ollie Woloski. But it does affect Shelley Woloski’s three siblings. None of them, I note, has taken issue with the amount being sought by way of reimbursement.
[63] In the result, I find that Shelley Woloski is entitled to be reimbursed by the estate of Bill Woloski in the amount of $38,676.13, being $31,329.10 in fees, $1,341.95 in disbursements and $4,072.78 in HST.
C. Boswell J.
Date: December 14, 2022