COURT FILE NO.: CV-19-184-00
DATE: 2022-02-08
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Anne Winkworth
N. Wainwright, for the Applicant
Applicant
- and -
Robert Murray, James Murray, and the Estate of Evelyn Rose Murray
Robert Murray, Respondent in person,
M. Holervich, for the Respondent James Murray
Respondents
HEARD: January 31, 2022, via video conference at Thunder Bay, Ontario
Mr. Justice F. Bruce Fitzpatrick
Decision on Motion for Directions
Background
[1] Evelyn Rose Murray (“Evelyn”) died August 27, 2014. It has taken seven years and five months and seven court attendances to get to the point where this estate is almost wrapped up.
[2] Evelyn executed a will that named her children, the applicant, Anne Winkworth (Anne) and the respondent Robert Murray (Robert) as estate trustees. Anne, Robert and their brother, the respondent James Murray (James), are the residual beneficiaries under the will.
[3] James commenced an application in November 2018 under CV-18-0546. It sought an order requiring Anne to account for her management of Evelyn’s estate property and for an order removing Anne as estate trustee. James asks on this application, that in the interests of justice, I order that application dismissed without costs. I agree this is an appropriate thing to do in the context of giving directions in this decision on what will hopefully be the last contested court proceeding on this estate.
[4] The matter first came before me in June 2020. There had been three prior attendances before other Justices of the Superior Court at Thunder Bay. The pandemic was in its early days and the parties were doing their best in the circumstances. Still, by that point, the administration of the estate was not going well. While the parties had finally agreed to sell Evelyn’s house, they did not agree on how the proceeds were to be divided. I directed that Anne have her costs of the motion fixed at $2,000 inclusive of disbursements and HST which would be a first charge on the proceeds once the house sold. The house sold in December 2020.
[5] No agreement could be reached on the distribution of the residue of the estate. Two subsequent attendances proceeded before me where I set the questions to be determined on this motion. The questions are:
Will the estate be required to pay all the legal fees of Anne, James and Robert? Anne claims $40,851.21. Robert claims $37,099.49 and James will provide the quantum of his claim for legal fees together with all legal bills in support of this claim on or before October 15, 2021;
How much should Anne be charged in respect of her daughter's occupation of 269 Ray Court from 2018 to 2020;
How much should James be charged in respect of his occupation of 269 Ray Court from approximately August 2014 to March 2015;
How much should Anne be charged for a 2006 Infiniti RX car previously owned by Evelyn;
How much does Robert need to repay the estate from monies advanced to him previously. It will not be more than $6,200.00;
What is the entitlement, quantum and express division of executor's compensation for Anne and Robert?
[6] A further case conference order of January 4, 2022 directed that parties to file fresh affidavit evidence in support of their position on the six issues. The Court also directed that the documents be filed on Caselines and the exhibits to the affidavits be hyperlinked. Despite their best efforts, counsel could not get their affidavits to work with hyperlinks. We worked through this problem as best we could at the hearing of the motion.
[7] The residue of the estate in the trust account of Anne’s counsel as at the date of the hearing is $370,222.39.
[8] I will now deal with each question in turn.
Issue 1. Will the estate be required to pay all the legal fees of Anne, James and Robert?
[9] Anne asks the estate to pay her $30,000 inclusive of HST and disbursements for legal fees she argues she has expended in her capacity as estate trustee. Anne proposes the estate pay Robert $10,000 in respect of legal fees he has expended in his capacity as estate trustee.
[10] Robert and James say that neither estate trustee should have any of their legal fees paid by the estate.
[11] I agree with Robert and James on this particular question. I do so because I am concerned on the evidence that the legal services rendered for which payment is sought were done more for Anne in her capacity as beneficiary than in her capacity as estate trustee. There are 13 accounts for which Anne seeks payment. This application for directions was commenced by Anne in her personal capacity in March 2019. Only $9,092.02 of the fees now sought were incurred prior to a large account of $8,882.72 in April 2019. The accounts all contained adequate and detailed particulars of the services rendered. A review of the April 15, 2019 account demonstrates the services for that account were largely in support of preparing the within application. In my view, this was work for Anne, not fees reasonably spent to advance the interest of the estate at large. As the litigation was contested after that point, I conclude that those services were to advance Anne’s position in the litigation and not to benefit the estate at large.
[12] The fees for counsel set out in the accounts I reviewed were very reasonable as between a lawyer and their own client. That does not mean however it is reasonable to have them paid by the estate.
[13] The affidavit material filed in this matter makes clear the animosity among these siblings. The application pitted Anne against her brothers. This was a personal battle not a battle to advance the reasonable administration of this estate. I do not see the problems giving rise to this litigation as being caused by the testator Evelyn. By the time this application was commenced in 2019, the difficulties had arisen because of the inability of these three parties to take a reasonable position on the disposition of the main estate asset, the house at 269 Ray Court. There was nothing in the will that made it particularly difficult to administer. Perhaps in hindsight, the clause requiring the trustees to hold the property for two years to give any of the beneficiaries the right to purchase at a discount was misguided. That clause assumed the beneficiaries would cooperate. They did not. Not the fault of the testator in my view.
[14] Practically a request for payment of legal fees is really a veiled request for costs of this litigation on a full indemnity basis. I would not award Anne costs of this application based on what I have seen thus far. Neither would I award James or Robert anything for their legal fees or costs on this application.
[15] Accordingly, for the reasons stated no party will have their legal fees paid from the residue of this estate.
Issue 2. How much should Anne be charged in respect of her daughter's occupation of 269 Ray Court from 2018 to 2020
[16] Anne’s daughter Erin occupied 269 Ray Court from June 2017 to January 2018. She paid $1,000 per month to the estate for that period. At that time, a less than satisfactory tenant was occupying another portion of the property. I accept Anne’s submission that Erin’s occupancy was protecting the estate asset.
[17] Erin had other accommodations as of January 2018. To entice her to remain in the property, Anne made the unilateral decision to allow her to remain living in the property rent free. Robert and James were not consulted about this decision. I accept the submission of James that the provisions of section 9 of the Estate Administration Act R.S.O. 1990 had the legal effect of vesting the property in all three beneficiaries as of August 28, 2017.
[18] Erin lived in the property full time from January 2018 to May 2018. She moved out in May 2018 but continued to stay in the house every so often to maintain it until it was sold in 2020.
[19] Anne submits her portion of the residue should not be reduced by Erin’s occupation. Robert argues Erin should have been charged $1,000 per month for all the time she occupied the premises. Robert candidly admitted he had no actual knowledge of her occupation or the benefit to the estate. James points out that Anne had no authority to make this decision. However consistent with his overall position that the residue should simply now be divided three ways, he did not offer a quantum that should be applied in respect of this question.
Analysis
[20] I agree with the submissions of Robert and James that Anne had no authority to permit her daughter to live in the property rent free. It was an error on her part to do so notwithstanding the arguable benefit of having someone in the house to protect it while the dispute over the sale was ongoing. However, the direct benefit was to Erin of being able to live rent free. The estate should have pursued her for payment at the time. It is too late to do so now. Robert has to bear some responsibility for this mistake as well. However, I do not see it as appropriate to reduce Anne’s share by any amount in respect of this issue.
Issue 3. How much should James be charged in respect of his occupation of 269 Ray Court from approximately August 2014 to March 2015
[21] There is no issue James resided in the property from August 2014 to March 2015. He did not pay anything in respect to his occupation. Anne argues the estate incurred $8,601.20 in utilities, water, telephone and cable for this time. James points out that he did not occupy the entirety of the property. An accounting was prepared by Anne for the period August 27, 2014 to April 30, 2021. The accounting expressly acknowledges that James’ share for hydro and water expenses was $4,674.04. Clause 3(b) of Evelyn’s will provided that during the two-year post death period while the property was to be held pending potential sale to any of Anne, Robert or James;
…During such two years, if any child or children of mine wish to reside at the said property, that child or children must pay all the utilities, including water, telephone and television for such time period and follow all terms and conditions in any lease that my Trustees may require such child or children to sign.
[22] Anne submits James residual share should be reduced by $5,676.79 (2/3rds of $8,601.20) and those monies be split between herself and Robert. Robert and James argue no such reduction should be made.
Analysis
[23] Anne and Robert ignored the express provisions of Evelyn’s will regarding James paying for utilities while he lived there. This was another technical mistake in their administration of the will. However, it is an understandable one. It suggests compassion and reasonableness in the moment. Trying to go back on that decision later during litigation does not impress.
[24] In this case as Erin got to live rent free at Ray Court, I see it as just that James should be given the same courtesy. Accordingly, I do not see it as appropriate to reduce James’ share by any amount in respect of this question.
Issue 4. How much should Anne be charged for a 2006 Infiniti RX car previously owned by Evelyn
[25] In 2006, Robert bought Evelyn a brand-new car. He paid approximately $70,000 for it. Evelyn owned it on the date of her death. I did not have evidence of the value of the car on the date of death. Robert consented to have the 2006 Infiniti transferred into Anne’s name in 2015. Anne still owns the car.
[26] Anne argues her share should not be reduced in any amount to reflect the value of the car. Robert argues that the car was worth $25,000 as at the date of Evelyn’s death. Accordingly, Anne’s residual share should be reduced by $16,500 (2/3 X $25,000) and those monies split between himself and James. James takes no position on the issue.
Analysis
[27] At the hearing, counsel for Anne made the fair and appropriate concession that with hindsight, the car should have been sold shortly after Evelyn died. It was not. Anne continues to benefit from this estate asset. There is no reason she should benefit from this estate asset without paying for it. I do not have reliable evidence to place a market value on the car as at the date of death. I am making a best guess. My best guess that the car would have sold for net to the estate of around $10,000 in the fall of 2015. I order that Anne’s share of the residue be reduced by $6,600.00 (2/3 X $10,000.00) and James’ and Robert’s residual share shall be credited $3,300.00 each.
Issue 5. How much does Robert need to repay the estate from monies advanced to him previously.
[28] Robert admits he borrowed $5,000 from the estate. He is prepared to pay that back. Anne argues that he also should pay back $5,000 that Evelyn gave him shortly before she died. As well Robert used estate funds in the amount of $1,200 to pay for plans to update 269 Ray Court. Anne argues these funds were of no benefit to the estate but instead were to aid in Robert’s plans to buy the house. James takes no position on this issue.
Analysis
[29] Any amounts of money Robert got from Evelyn before her death are not a concern of the estate unless they are mentioned in the will. They are not. If there was some evidence that the monies were loaned by Evelyn to Robert prior to her death, the estate would have had a duty to collect the debt. In my view, there is no such evidence before me on this application. In any event the limitation for such a claim is long past. Robert does not have to pay the estate back for the $5,000 he got from Evelyn before she died.
[30] I am also not persuaded that the amounts paid for plans for Ray Court were not for the benefit of the estate. At best, his decision could be characterized as a poor one in his capacity as estate trustee. However, that does not impose a liability on him to pay back those particular funds.
[31] Robert does have to pay back what he admits he has to pay back. I see no basis to impose interest on the amount of the loan. Accordingly, Robert’s residual share shall be reduced by $3,300.00 (2/3 X $5,000.00) and Ann and James residual share shall be credited $1,650.00 each.
Issue 6. What is the entitlement, quantum and express division of executor's compensation for Anne and Robert.
[32] The estate trustees cannot agree on the total value of the estate. Anne says it was $978,201.00. Robert says it should be valued at $830,500.00. Anne argues she should receive 75% of any executors’ compensation awarded and Robert should receive 25% based on the respective share of responsibility they undertook to complete this estate. Anne calculates these amounts to be $36,682.53 to her and $12,227.51 to Robert.
[33] Robert argues executor compensation should be awarded. Robert argues it should be shared 50/50 between himself and Anne. He argues each executor should receive $20, 750.00
[34] Both Anne and Robert argue that compensation should be fixed at 5% of the total value of the estate.
[35] James argues no executor compensation should be paid.
Analysis
[36] In Ontario, a trustee is entitled to fair and reasonable compensation for the care, trouble, and time expended with respect to an estate. Section 61(1) of the Trustee Act R.S.O. 1990 c. T.23 gives discretion to a Justice of the Superior Court to set the quantum of executor compensation. It is submitted that estate practitioners use a rough 5% of the total value of the estate assets to compensate executors in circumstances where the administration is uncontested and successful. I am aware of a practice referred sometimes as “tariff” which was articulated in the decision of Killeen J. in Jeffery Estate (Re) [1990] O.J. No. 1852 which stated:
in Ontario at least, a practice has developed of awarding compensation on the basis of 2 1/2% percentages against the four categories of capital receipts, capital disbursements, revenue receipts and revenue disbursements along with, in appropriate cases, a management fee of 2/5 of 1% per annum on the gross value of the state: see Dickson & Wilson, Ontario Estate Practice, 2d ed. (1986) at pp. 474-5. However, cases such as Re Kennedy [1944] O.W.N. 734 and Re McPherson [1945] O.W.N. 533, make it clear that the award of a management fee requires special circumstances and will not be allowed automatically or routinely. Beyond this, of course, the cautionary words of the Re Atkinson case, supra, emphasize that the use of percentages must not become a ritual.
[37] In Re Jeffery Estate Killen J. went on to measure the percentage approach against five factors first articulated in the seminal case Re Toronto General Trusts Corp and Central Ontario Railway (1905) 6 O.W.R. 350. At page 354 of that decision the five factors are set out;
(a) the size of the trust;
(b) the care and responsibility involved;
(c) the time occupied in performing the duties of trustee;
(d) the skill and ability shown by the trustee;
(e) the success resulting from the administration of the estate by the trustee.
[38] The continuing validity of the five factor analysis was affirmed recently in the decision of the Divisional Court in Feinstein v Freedman [2021] O.J. No. 1882 where at paragraph 70 the Divisional Court cited with approval the use of the five factors by the Justice whose decision on executor compensation was under review. Counsel for both Anne and James referred to the five factors in arguing for, and against, respectively, the proposition that there is entitlement to executor compensation in this matter.
[39] In my view, both estate trustees are entitled to receive executor compensation from the proceeds of the disposition of the estate assets before the residue of the estate is determined and divided. I say this because there is no question that both Anne and Robert expended time, took care, and were the recipients of a great degree of trouble in the course of their duties administering the estate. The fact that the testator directed a “hold period” of two years for the main estate asset guaranteed that the administration of the estate would require effort for which compensation is just and fair. Having said that, the quantum of the compensation is an entirely another matter.
[40] I do not have the numbers before me in the material filed to do a “tariff” calculation as per the formula in Re Jeffery Estate. I have only the total value of the asset which ranges from $830,500.00 to $978,201.00. In any event, this estate is what I would describe as a significant one in dealing with the first of the five factors.
[41] Anne was responsible for administering the real property. Robert was responsible for administering the liquid assets. In my view, administering the real property was more complex than administering the liquid assets for this estate. Tenants were involved. Tenants can complicate life for a landlord. They did. I cannot say on the evidence the sale of the Ray Court property was handled efficiently or effectively. I do not think Anne acted in the best interests of the estate by not forcing Erin to pay rent. Robert took advantage of his position to live rent free at Ray Court. Perhaps the siblings were getting along then. However, overall, both estate trustees exercised some degree of care and responsibility in administering the estate.
[42] The time spent is a difficult aspect to assess. If Anne’s evidence is to be believed she spent an “enormous amount of time administering this estate”. Given the nature of the assets and the value, I am of the view her assessment of her time spent is inflated. She argues Robert was not seriously involved in the administration. Robert responds by saying Anne kept information from him. At some point Robert’s arguments rings hollow as well. If someone is preventing you from doing your job you have to do something about it within a reasonable time. Laying back and complaining later will not suffice.
[43] The skill and ability shown by the trustees was not outstanding. Anne and Robert demonstrated significant ability in finding ways not to cooperate to complete the estate administration. Robert is a skilled property manager. In my view, he did not deploy these skills in finding a way to dispose of the real property of the estate. This is because Anne was supposed to do it. However, in 2016, once the two-year hold period was up, it seems to me conflict among trustees would have led an experienced property manager to engage outside assistance to either come to a resolution or litigate the matter. Anne had to bring this matter forward to court. I have found she did so on her own behalf. Nevertheless, Robert remained a trustee at all material times. He bears some responsibility for the overall lack of skill that was shown in marketing and selling the two properties.
[44] Ultimately this estate appears to be on the verge of being wrapped up. It has taken too long. This does not reflect well on the results achieved by the trustees. All three siblings are to blame for the conflict that has brought them here. Competent counsel have been, and are, involved in this matter. Still the parties had to argue this application. In my view this demonstrates the level of success of estate administration as being low. I think being an estate trustee means having to compromise. It does not mean taking a last opportunity to obtain vindication or revenge for past wrongs. The vitriol demonstrated in the materials of all three residual beneficiaries was telling. The executors were 2/3 of the overall problem. Compensation should not be substantial to reflect the overall poor results and wasted time and funds needed to draw this matter to a close.
[45] I am awarding total estate trustee compensation of $25,000.00. This is a best estimate quantum. It is benchmarked against the submissions of the parties which is to say I am awarding about half in rough terms what they submit they should receive. I am of the view that the lack of success here lands on both Anne and Robert. I see no reason to split the compensation in any way other than 50/50 between Robert and Anne. Anne and Robert will receive $12,500.00 from the residue before the balance is ultimately divided.
Holdback
[46] The estate is presently awaiting a clearance certificate from the Canada Revenue agency. Counsel advise their anecdotal experience in dealing with such issues from CRA does not permit a reasonable estimate as to when this may be completed. Suffice to say they are not confident it will occur before summer 2022. Counsel for Anne indicated he expected “a few more” bills for the estate from the accountants. Despite his best efforts, those accounts have not been forthcoming.
[47] All parties acknowledged that some holdback should be maintained from the residue to protect against future expenses. Anne and James advocated for $25,000.00. Robert suggested $10,000.00. $25,000.00 seems prudent given all that has happened to date. This amount of holdback will not prejudice any of the parties.
Final Result
[48] In my view, the activities of the executors on this estate have been fully reviewed and vetted during this litigation. There is no further need for Anne or Robert to pass their accounts for any activities they undertook as estate trustees for the period August 27, 2014 to February 1, 2022. Their accounts are deemed passed.
[49] I find the residue available to be divided between the three residual beneficiaries is $370,222.39. $25,000.00 will remain in the trust account of Anne’s counsel to be distributed equally between the residual beneficiaries upon mutual consent in writing or further court order.
[50] $345,222.39 is available for distribution now to the residual beneficiaries subject to my rulings above about various deductions.
[51] Executor compensation will be paid first to Anne and Robert of $12,500.00 each. This leaves $320,222.39 of residue to be divided equally subject to the deductions I will demonstrate in this rough chart:
Issue Anne Robert James
equal split $106,740.79 $106,740.79 $106,740.79
4: car -$6,600.00 +$3,300.00 +$3,300.00
5:loan +$1,650.00 -$3,300.00 +$1,650.00
Total $101,790.79 $106,740.79 $111,690.79
[52] Based on the findings and calculations noted above, I therefore direct counsel for Anne to forthwith distribute the non-holdback trust funds held to the parties as follows:
Anne $114,290.79 ($101,790.79 + $12,500 executor compensation)
Robert $119,240.79 ($106,740.79 + $12,500 executor compensation)
James $111,690.79
Total $345,222.39
Costs
[53] James and Robert advocated for an equal three way split of the residue at the hearing of this matter. This would have resulted in each residual beneficiary receiving $115,074.13 ($345,222.39 /3). By my calculations only Robert did better, by about $4,000.00 following this hearing than a strict three way split of the residue.
[54] Robert did not have counsel for this hearing. In any event, I would not be prepared to award him any costs for the hearing. James and Anne did have counsel. If counsel for James or Anne made a Rule 49 offer in writing to settle, open between on or after October 6, 2021 and clearly open at the beginning of the hearing, that specified their client would receive less than what I have awarded here if the offer was accepted, I would be prepared to entertain brief written submissions as to costs. If a party has made such a written offer and is seeking costs, they shall serve the party(s) against whom they seek costs a one-page submission which attaches the offer to settle within seven days. That party or parties shall respond within a further seven days with a one-page submission as to costs. The parties will then forward their submissions in word format to my judicial assistant within three days of the last submission being served.
[55] I advise I am only prepared to consider costs submissions for the hearing of January 31, 2022. Just the hearing. This is not an invitation to seek to relitigate all the costs incurred in this entire litigation. At best, I would see the period as October 6, 2021 to the date of the hearing as being eligible for a cost submission and award.
[56] I am limiting the length and scope of these costs submissions because I note the propensity of these parties to have treated this process as an arena to air their personal grievances against each other. It is time to move on and wrap up this estate. I do not wish to prolong the problems caused among these three siblings. Counsel should temper any submissions regarding costs given that context.
[57] If I have not heard from any of the parties by 15 days following release of these reasons, I will treat the matter of costs as resolved.
[58] Counsel for Anne can rely on these reasons as a basis to distribute the residue forthwith as ordered above prior to any further determinations as to costs. If an order is required to finalize this estate or give effect to these reasons, I invite counsel to prepare a draft order, circulate it and obtain consent. If consent is not forthcoming the parties may book a 30 minute case conference before Fitzpatrick J. to settle the order.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: February 8, 2022
COURT FILE NO.: CV-19-184-00
DATE: 2022-02-08
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Anne Winkworth
Applicant
- and -
Robert Murray, James Murray, and the Estate of Evelyn Rose Murray
Respondents
DECISION ON MOTION FOR DIRECTIONS
Fitzpatrick J.
Released: February 8, 2022